Private sector needs to wake up and grow up: Amunugama
Saturday, 23 August 2014 00:00
Calls on corporates to make good use of infrastructure development and create comparative advantage
By Senuri De Silva
The private sector should adjust its future planning to make good use of the massive investments being made by the State in infrastructure development for its own benefit, according to a top Government official.
Speaking at the Postgraduate Institute of Management (PIM) forum on Wednesday on public and private sector partnership,
Minister of International Monetary Co-operation and Deputy Minister of Finance and Planning Dr. Sarath Amunugama said: â€śThe private sector is not taking meaningful cognisance of this big infrastructure development, which is being done in its own interest to create its own comparative advantage in the global competitive arena.â€ť
The Minister explained that it was important for the private sector to focus on gaining a comparative advantage when competing in the global economy.
"We cannot talk about private sector and public sector cooperation unless the firstly the private sector begins to grow up, begins to wake up and try to adjust its future planning in terms of this massive infrastructure, which is basically something it should exploit and make good use of â€“ Dr. Sarath Amunugama"
He said: â€śIn this global economy, the crucial factor is what is called comparative advantage. You canâ€™t talk of manufacturing or investment unless you look at all the factor variables that go into production and intensify and make the greatest use of your strengths. Why should national and international people invest unless you can exploit that comparative advantage?â€ť
Private and public partnerships make it possible for the private sector to gain a comparative advantage in the global economy. For instance, the state invests in infrastructure development for the benefit of the private sector, which should then make use of these opportunities to further economic development.
As he said: â€śThe private sector cannot invest in infrastructure development. This is a duty of the State. By making such investments the State creates more opportunities for the private sector to take advantage of; if it fails to do this, the comparative advantage that could develop the nation is lost.â€ť
The Minister went on to explain the role of the state in this partnership: â€śThere are two types of infrastructure that need to be developed; hard infrastructure and soft infrastructure. This is where the State must intervene because in no country can the private sector create by itself create the hard and soft infrastructure which will enable the private sector which has no specialised skill of maximising their advantage to really function and compete globally. That is where the State must look at how it can contribute.â€ť
Infrastructure development such as building ports, airports and roads also creates new avenues for the State to collect funding, while developing facilities such as energy and water also serves a social welfare function by improving the standards of living among the regional population but as the Minister pointed out, its most notable function is to promote this cross sector partnership. â€śThe public sector doesnâ€™t realise that this huge investment in infrastructure is basically to its advantage,â€ť he charged.
Dr. Amunugama added: â€śExcept for few blue chip companies in Sri Lanka, I doubt that the private sector has seriously engaged in finding out how to make use of these big investments in infrastructure. Public finance is different; we may get more income from the harbour and the airport, but thatâ€™s not what Iâ€™m talking about. What Iâ€™m talking about now is, has the private sector really, seriously tried to analyse what benefits â€“ in its own interest â€“ it can draw from this massive investment in infrastructure?â€ť
The Minister expressed his disappointment in the private sector which has failed to identify the efforts taken by the State to support this private and public sector partnership. â€śWe cannot talk about private sector and public sector cooperation unless the firstly the private sector begins to grow up, begins to wake up and try to adjust its future planning in terms of this massive infrastructure, which is basically something it should exploit and make good use of.â€ť