By Cheranka Mendis
What thwarts Sri Lanka’s economic progress is the people’s inability to stick to a well-developed plan, Chairman Securities and Exchange Commission (SEC) Dr. Nalaka Godahewa said on Friday.
Addressing the launch of an Investment Analysis Training Program by Amba Research Lanka, Godahewa noted that the key reasons behind a slow growth in the country’s economy are the incapability of institutions, especially in the Government sector, to map out a future plan and to stick to it despite changes such as shifts in management.
“In Sri Lanka there are two things that hinder our development,” Dr. Godahewa said. “One is that we are not very good at planning, particularly at the Government and institution level, planning is not something we think about it. Every time management changes it is a different strategy. Very rarely do we hear about three, four, five year strategies.”
Even if a well-planned road map that covers five years is introduced, if a management change takes place, a new strategy is introduced doing away with the old even before completion of the set targets.
“The second thing is that even if we plan and present a nice story, we don’t implement it. We vary rarely implement it,” he observed. “These are two inherent weaknesses in our system which we need to address if we want to develop and grow.”
Assuring that the future will be very different; Godahewa claimed that a well-focused plan to develop the capital market is now in place. Working with industry stakeholders, key challenges within the market have been identified and a plan has been mapped out to overcome these and achieve greater results in the near future.
A target has been set to build the market capitalisation to account for 50% in the country’s GDP by 2016. Going on the same pace, the CBSL Roadmap has also identified that GDP has to be US$ 100 billion by 2016, to work out to a US$ 50 billion capital market in 2016,
“We looked at the rest of the world to see what percentage the capital market is in a country’s GDP on average could be in a country such as ours. It was noted that capital market percentage of GDP is between 70-80% in the said category,” Godahewa said. “We are currently at 30%.” In a developed country capital market is bigger than the GDP as seen in Singapore (285%), Malaysia (170%), etc., “so we set a target to reach at least 50% of GDP by 2016.”
To reach this, SEC together with the industry has formulated a 10-point action plan addressing the primary objectives of developing the market; ensure proper regulation infrastructure, and investor safety.
Under the 10-point plan, SEC will look into improving education and awareness on the market, amending the SEC Act, bringing the right regulation legislation support, infrastructure development, new products, and creating a bigger debt market, etc.
“In most of the countries, debt market is bigger than equity, whereas in our case debt market is only 2%,” he admitted. “We want to have at least US$ 10 billion debt market by 2016, which is why we got a lot of concessions for debt market development from the last budget.”
He commented that the country has been slow in grasping full economic potential of the post-war country. “Already, my personal opinion is that we are a little slow. We have not done justice to the time that has passed.” He acknowledged that it is now, after four years since the ending of the civil war that plans are coming into place, accepting correct though processes.
“We are still struggling to be united on an economic front,” he observed. While a War Council chaired by President was formed to overcome the 26-year military campaign which triggered discussions and thoughts that led to the defeat of the terrorists, there is no clear body that looks in to economic development in a similar manner, Godahewa said.
“In economics we don’t have that. A few individuals are still pulling the strings. The country cannot go forward like that.” What is needed is a think tank and a powerful group of people working together, putting plans in place and diligently working towards implementing them.
All hope is not lost, he added. “It is not there, but it will come. Sooner or later realisation will dawn on the people and it is then that we be able to start speeding up the economic progress. We have to get ready now.”