Taskforces to work under the purview of the Central Bank, strong push on reforms
WB study finds economy as closed as 1970 due to tariffs and para-tariffs
By Uditha Jayasinghe
Getting aggressive on improving investment, the Government has appointed a dozen taskforces, one for each pillar of the Ease of Doing Business rankings, under the purview of the Central Bank to move Sri Lanka up the ladder and make it globally competitive.
Central Bank Governor Dr. Indrajit Coomaraswamy, delivering a lecture titled ‘Development Challenges in Sri Lanka’, organised by the Institute of Certified Management Accountants of Sri Lanka recently called on the private sector to support Government efforts to improve investment and exports.
One of the key reforms overseen by the Central Bank is evaluating how the country can move up the Ease of Doing Business Rankings, where it has failed to impress despite repeated promises by the Government.
Last week Sri Lanka slipped three positions to languish at number 71 in the latest ranking of global competitiveness by the World Economic Forum whilst neighbouring giant India emerged as the best performer.
The WEF’s Global Competitiveness Report 2016/17 identified Sri Lanka as the most advanced economy in the South Asian region but noted the country has slipped three positions to 71st out of 138 countries assessed, but with a stable score.
“After years of conflict, the country needs to concentrate on triggering the efficiencies that will drive further growth—for example, by restructuring the labour market and investing in technological readiness, where it lags significantly behind economies at a similar stage of development,” the WEF’s GCR said.
Countries were assessed on 12 pillars and Sri Lanka’s performance was mixed under three sub-indexes Basic Requirements ranked at 64, Efficiency Enhancers (83) and Innovation and Sophistication Factors (46).
The pillars and Sri Lanka’s respective global ranking were Institutions (64), Infrastructure (57), Macroeconomic Environment (73), Health and Primary Education (37), Higher Education and Training (68), Goods Market Efficiency (66), Labour Market Efficiency (128), Financial Market Development (64), Technological Readiness (101), Market Size (60), Business Sophistication (53) and Innovation (43).
In terms of the most problematic factors for doing business, the WEF Executive Opinion Survey 2016 listed policy instability as the biggest concern followed by access to financing and inefficient government bureaucracy and tax rates. Dr. Coomaraswamy acknowledged that the Government had struggled on the policy front but praised the Finance Ministry for keeping revenue targets in line to keep the International Monetary Fund (IMF) supported fiscal consolidation program largely on track.
“There is much more that needs to be done but we have made a start,” the Governor said, pointing out that in addition to the taskforces on ease of doing business, the Government had also established a one-stop-shop for investors at the Board of Investment (BOI).
“The Government is also working on a national trade policy to rationalise the way forward with several free trade agreements that are currently being negotiated. An anti-dumping law is also likely to reach Parliament before the end of this year,” he said.
One of the biggest challenges to economic liberalisation is the number of tariffs and para-tariffs, which a recent World Bank study had highlighted as being responsible for keeping Sri Lanka’s economy closed at the same level it was in 1970, the Governor said.
He called on the private sector to “unzip their wallets” after the Budget and policy statement by the Prime Minister is delivered to be the key stakeholder in driving growth forward.