Reform window still open: Expert

• KPMG India Chairman and CEO Arun Kumar believes leadership should place relentless focus on execution 

Sri Lanka’s current economic environment offers a window of opportunity for implementing crucial structural reforms and advancing towards greater competitiveness, KPMG India Chairman and CEO Arun Kumar said yesterday.

Speaking at the Sri Lanka Economic Summit organised by the Ceylon Chamber of Commerce, Kumar pointed out that despite significant productivity growth in the post-war period, it has been challenging for Sri Lanka to diversify exports resulting in its share of global trade declining gradually.

Unlike its East Asian neighbours, Sri Lanka’s export structure has been static for years, he said, reflecting a lack of competitive forces to drive trade dynamism, innovation, and diversification.

“Reforms to ease the business environment and trade, now at the early stages of implementation, can become catalysts and enablers for accelerated growth. Other countries that have pursued infrastructure scale-up have learned that business environment liberalisation is also required for private sector-led growth.”

“To this end, the current economic environment offers a window of opportunity for evaluating structural weaknesses and working towards enhancing competitiveness,” he added.  

The Government’s focus on making the country more open to the world could pay dividends in this environment, he noted. “The key, as we have seen in India, is that the leadership places relentless focus on execution. Sustained commitment will be required to see reforms through.”

Touching on Sri Lanka’s geographical importance, Kumar pointed out that China, Japan, India and the US would continue to be key foreign players for the country.    

“Internationally, the Bridge and Road Initiative, into the designs of which Sri Lanka falls, has been viewed with suspicions by some that this global investment and lending program amounts to a debt trap for vulnerable countries around the world, fuelling corruption and autocratic behaviour in struggling countries. 

“It is important in this context for Sri Lanka to take a well-informed approach to also engage with the rest of the economies in the region.” 

Finalising free trade agreements (FTAs) with many of the major regional powers over the next year or so would be desirable as balancing and enhancing measures, he advocated. These would be supported by further liberalisation measures the Government remains committed to. 

“Fiscal reforms to enhance sustainability of government finances and public infrastructure investments need to continue.  There is also a requirement to create a governance mechanism to implement projects successfully.”

“Legal frameworks, regulatory policies and strengthening the overall policy environment is imperative.  Engagement with the private sector to boost efficiency of infrastructure services can also be explored.”