Future of our economy and nation will be what we make of it: Hans

CCC Chairman Dr. Hans Wijayasuriya

Following is the address by Ceylon Chamber of Commerce Chairman Dr. Hans Wijayasuriya at the Sri Lanka Economic Summit 2020 Ceylon Chamber of Commerce

Our Chief Guest this morning, His Excellency Gotabaya Rajapaksa, President of the Democratic, Socialist Republic of Sri Lanka, Keynote Speaker Honourable Nirmala Sitharaman, Minister of Finance and Corporate Affairs of the Republic of India, Guest of Honour Honourable Nivard Cabraal, State Minister of Money and Capital Markets, and State Enterprise Reforms, His Excellency Gopal Baglay, High Commissioner for India in Sri Lanka, Past Chairs of the Ceylon Chamber of Commerce, Distinguished Delegates, Board and Secretariat of the Ceylon Chamber, ladies and gentlemen, Ayubowan, good morning and welcome to the inaugural session of the Sri Lanka Economic Summit 2020. 

Your Excellency President Rajapaksa, the Ceylon Chamber is singularly honoured by your participation in the Economic Summit. We look forward to Your Excellency’s address later this morning. Our extreme gratitude also goes out to the Honourable Nirmala Sitharaman and Honourable Nivard Cabraal for gracing the summit with their esteemed presence and keynote contributions. 

The 2020 edition of the summit is themed ‘Road Map for Take-Off – Driving a People Centric Economic Revival’. The Chamber stands honoured that the summit has brought together a galaxy of policymakers, experts, business leaders and international thought leaders, to deliberate on the short run take-off and accelerated growth thereafter, of the Sri Lankan economy.  

Post-COVID economic revival – public-private shared vision 

The year 2020 and the COVID-19 pandemic have inflicted on our nation and the world at large – economic, social and life impacts of unprecedented proportion. Sri Lanka in particular was on the cusp of recovery from the Black Swan event of Easter 2019 only to be faced with the COVID-19 crisis. 

The Chamber has espoused the view that an accelerated post-COVID recovery will be predicated on the effective execution of a Public-Private shared vision for economic revival and social sustenance. A vision based on three founding principles.

First, people centricity: Primacy for the protection of life and livelihoods whereby Sri Lanka’s employment, human development and socio-economic indicators are secured as an immediate priority. 

Second, the ambition of a ‘V-shaped’ – take-off.

Third, the need and appetite for exceptional, bold and innovative measures which include exceptional stimuli, restraint and calibration to enable the regeneration of growth. 

The principles of people centricity and the bold ambition of accelerated take-off are embodied in the theme for this year’s summit  

Private sector an equal partner in economic revival 

It is our view that the private sector is an equal partner in securing an accelerated economic recovery. 

Sri Lanka’s private sector has been quick to transform, commencing with employment preservation via adjustment of production and service portfolios alongside the retraining and redeployment of human capital. Equal focus was directed at re-engineering supply and value chains with primacy for domestic supply eco-systems and the sustenance of SMEs. 

It is imperative that Sri Lanka’s private sector continues to be competitive and agile and continues to expand employment opportunities. The private sector has demonstrated that leading the resurgence as opposed to hoping for brighter externalities can deliver transformative results.

The chamber is confident that the private sector will continue to transform ahead of the curve and thereby form a cornerstone of the nation’s economic revival.  

Post-COVID outcomes – emboldening results 

The challenges faced by the Sri Lanka, its Government and economy are singularly unprecedented. In this context, we congratulate the Government on the management of the economy through these exceptional times – in particular the structured approach underlying the country’s economic revival framework. 

Specifically, the calibration of export and import trajectories has enabled stability with respect to macro indicators such as the trade deficit, balance of payments, currency and reserves ratios. 

A sharp export recovery to levels on par with the previous year stands testimony to the resilience of Sri Lanka’s export sectors, and the effectiveness of the revival strategies adopted by the government and the private sector. It is emboldening to see the recovery of both traditional and non-traditional exports and the diversification of the export basket which augurs well for the period ahead. 

The chamber is appreciative of the opportunity provided to share its views both at a macro and national level, as well as at a level of sectoral detail, with the high offices of His Excellency the President, the Honourable Prime Minister and the Task Force for Economic Revival and Poverty Alleviation.  

External-internal inter-play: Challenging terrain for vertical take-off 

This first two sessions of the economic summit will focus on the external and internal dimensions of post COVID-19 economic recovery. On the global front assumptions and expectations continue to be disrupted. Responses of governments, markets and trading blocks to the multiple waves of the pandemic, challenge us with a volatile external environment. 

In Sri Lanka’s context, the runway for take-off is by no description a straight line nor smooth in terrain among others, the balancing act between growth and debt will remain a call-out a for precise navigation. 

Equally, the synchronisation of key policy levers across fiscal, monetary, investment, industrial and social development spheres will be pivotal in securing stability while achieving accelerated growth. From among the recovery levers, FDI and Export growth will be pivotal and have been duly prioritised in the Budget 2021.  

Doubling down on internal development levers 

While the dynamics of external economic levers remain uncertain, building our own certainty leveraging internal resources is a fundamental tenet of accelerated economic revival. The centre of gravity therefore shifts towards the competitiveness of domestic industries. 

The reconfiguration of global trade and the re-emergence of local commerce will no doubt create opportunity for nations and companies to punch above their weight through the leverage of skills, technologies and enabling policy environments. 

This year’s Economic Summit includes sessions focused on the upgrading of value add via a shift towards local resourcing and the leveraging of advanced and inclusive digital technologies. 

The summit will also discuss the transformation of the Agriculture sector which has rightly received pivotal focus from the government, and provides livelihoods for a near 25% of the nation’s population. 

While the narrative on food security reshapes global supply chains with a tilt towards domestic sufficiency. Sri Lanka needs to resolve pre-pandemic issues in the sector such as transportation and storage leveraging on smart technologies to boost production and limit wastage. A key parallel outcome will be the revitalising of the village economy as a catalyst of bottom up stability. 

Citizen centricity and digital inclusion will remain in focus across these development levers. 

While shifting the centre of gravity in the direction of domestic production and resourcing, will recalibrate outflows to be more in synchronisation with inflows,  

External sectors – Reshaped for the new normal 

Equal emphasis needs to be applied to the external sectors in preparation for the progressive relaxation of travel and trade restrictions. A topic addressed at this year’s summit will be the resurgence of tourism within the context of the new normal with specific focus on the resurgence of livelihoods across the tourism value chain.  The transition of the remarkable recovery trajectory of the export eco-system to a sustainable long run growth gradient remains of overarching importance, in order for our economy to reach the cruising altitudes of 7% growth within the next five years.

Export growth will be predicated on the flow through of domestic production outcomes to the competitiveness of the nations’ external facing manufacturing and services sectors. The protection and refreshing of the inward remittance flow through the diversification of knowledge service exports will also be pivotal in bolstering the growth curve. 

 Economic revival and middle income escape – two-pronged challenge 

Today we stand at an important juncture of our nation’s economic and social trajectory. Our concern for our nation’s economy, and therefore the long-term well-being of our people are reflective of economic realities, accentuated by the impacts of the COVID-19 pandemic. 

A $ 84 dollar economy pre-COVID, we are likely to close 2020 at 80 b. Our economic growth before and through the COVID crisis ranks among the lowest in the SAARC region, indicative in absolute and relative terms of the confines of the middle income trap, a condition prevalent over the past several years. 

We therefore have on one hand the challenge of achieving vertical take-off from the fulcrum of the COVID-19 downturn while on the other, having to navigate an escape from the middle income trap. 

Achieving both these objectives while operating within a very tight fiscal space and perfecting the balancing act between growth and debt is a multi-faceted challenge that the private sector and public sector needs to embrace together.  

A framework for economic acceleration 

The Ceylon Chamber has recently completed the Post-COVID edition, of the Sri Lanka Economic Acceleration Framework – which envisions reaching a growth rate of 7% within three years leading to the transformation of the $ 84 b economy in 2019 to a $ 127.5 b economy in 2026. 

The SEAF is the output of 17 committees within the chamber eco-system comprising of more than 100 economists, analysts and sector leaders, and encompasses without limitation the dimensions of quantitative targets, policy reform, sectoral focus, transformation and governance.  

Quantum shift in fiscal, external and socio-economic indicators 

The acceleration framework envisions quantum improvements in primary macro and fiscal indicators such the primary balance, budget deficit and tax revenue as a percentage of GDP. The Economic acceleration framework also addresses also addressed the uplift of external sector indicators such as the export-import balance, reserves in months of exports, and FDI and current account balance as a percentage of GDP.

In addition to fiscal and external sector indicators, the acceleration framework also defines holistic resurgence to include the securing of an elevated position in terms of Human and Social Development Indices relative to our regional and global peers, while in parallel achieving a step change in Reputational and Confidence metrics such as Global Competitiveness Index, Ease of Doing Business Index and the Global Innovation Index. 

Focus on balanced sectoral growth 

Our view is that at a sectoral level, sustainability calls for balanced growth overall with an overweight significance being directed at sectors in focus in the new normal. 

Sectoral growth will be dependent on the establishment of fundamental enablers such as energy, digitisation and SME facilitation.  

 A nexus of public and private sector contributions 

Quantum acceleration of the economy will require a synchronisation of public and private sector inputs. The application of policy levers will proxy to needle moving Government contributions to the acceleration of the economy. 

Infrastructure investments will remain foundational. Prevailing fiscal challenges will however call for the deployment of innovative and optimised financing mechanisms including but not limited to Public-Private Partnerships and specialised infrastructure financing instruments. 

The motivation and upscaling of private sector risk participation will also be a pivotal ingredient in the enabling of growth, and should be facilitated via appropriate partnership mechanisms. 

High return on deploying policy levers 

We believe that the judicious application of the policy levers available to Government will deliver disproportionate returns. Efficient and timely execution of mega projects would also move the needle. Productivity and efficiency, will be pivotal in converting Policy in to execution and ultimately in the delivery of growth.

Through successive editions of the acceleration framework the chamber has stressed the need for policy and reform agendas with respect to trade, labour, public sector and SOEs, capital markets and targeted welfare among others. It is encouraging to see positive movement on several of these dimensions within the policy agenda of the Government.  

Empowering take-off – The role of Government 

The role of Government and the efficacy of its delivery will be pivotal to the achievement of the vertical take-off we aspire to. 

The battle against COVID has demonstrated the systemised capacity of the Government and public sector. This capacity and potential spans process, systems and people. The expectation of Government would be to convert this systemised capacity and potential in to the delivery of a step change in economic value creation. 

A parallel call on Government would be for a high degree of commitment towards the strengthening of fiscal and monetary disciplines, maintenance of macro stability and the elevation of sector competitiveness alongside a progressive approach to global market access. 

Staying the course of fiscal consolidation will be pivotal in maintaining positive sentiments of Global Rating agencies as well as in motivating foreign direct investments which together will bolster the sources and cost of capital require to drive growth. 

Therefore, and not withstanding post-COVID imperatives, we look forward to a recommitment of Government focus towards the recalibration of public sector expenditure, the empowerment and upskilling of the civil service, a concerted effort towards SoE reform and Public-Private Partnerships as modalities of capital mobilisation. It is a singular honour that the Honourable Prime Minister of Sri Lanka will flag off the keynote session on ‘Empowering Take-off’ – a discourse centred on efficient government and a re-envisioning of the role of State-Owned Enterprises on the fabric of the national economy. 

We are confident that an efficient and revitalised Government machinery in combine with private sector positivism can rapidly energise business confidence locally, as well as globally among foreign direct investors – in combine setting a fresh trajectory for economic growth in the years ahead  

A holistic framework for inclusive economic acceleration 

The Chamber’s view of a sustainable acceleration framework is a holistic one spanning the vertical, horizontal and overarching dimensions of sectoral, enabling and policy levers. This matrix anchors the Chamber’s discourse with Government as part and parcel of its ethos of a private-public shared vision for accelerated economic revival. 

Through the institution of a network of ‘State-Ministries’ the Government has signalled its commitment to a Programmatic approach to delivery and performance management. The Chamber’s Acceleration framework highlights the State ministry structure as a vehicle to demonstrate the value of granular delivery tracking and pan-ministry harmonisation. 

Winning in an era of exponential change 

The future which frames our economic resurgence represents an era of exponential change – the rules of global competitiveness will be redefined, opening up a phenomenal opportunity for smaller and agile nations. 

Three mega trends in particular will have a defining influencing on this future. 

The First Megatrend – the 4th Industrial Revolution is centred on the democratisation and exponential broadening of the affordability and availability of technologies such as Cloud, Artificial Intelligence, Robotics, 5th Generation Networks and the Internet of Things. 

Technology applied correctly has the power to bridge asymmetries in opportunity, eliminate disparities in the access to basic human rights such as information, education and health – and in cumulation flatten the rich-poor gradient – a pre-requisite for the smooth ‘take-off’ of a multifaceted economic revival. These technological advancements will also provide the opportunity for smaller nations to catch up with the legacy dominions and likewise for single country businesses to reach out and be globally competitive. 

Technology advancement with respect to connectivity, digitisation and automation will enable the second megatrend – the power of eco-systems and pervasive globalisation. 

Increasingly, the competitiveness of individuals, businesses and nations would depend not only singular strengths but more on the power and competitiveness of the physical and virtual ecosystems of which they are a part. The future will be one where the large cannot flourish without the small and it is always more profitable to include rather than exclude, which leads to the third mega trend which will guide businesses towards an inclusive and sustainable form of capitalism – stakeholder capitalism as espoused by the World Economic Forum. This thesis negates the contradiction between capital growth motives and social development outcomes – which points to the eminence of a people centric approach to economic revival.  

Consolidating and pivoting on fundamental strengths 

Maintaining a resolute focus on people centricity, it is important to pivot on our fundamental strengths of which there are many – not least our strategic location and hub potential, resilience, and human development and competitiveness rankings relative to South Asian peers. These strengths should bolster our efforts to enhance our competitiveness and accelerate economic growth.  

The economy is what business makes of it 

The future of our economy as well as our nation will be what we make of it. 

We are born to a nation blessed with world class talent. We have in our midst Large, Medium and Small Enterprises who in their own right, are global, regional and domestic champions. Also a private sector which has collectively weathered many waves of economic, political and external turmoil and has consistently bounced back to a trajectory of growth. 

We now enjoy the foundational security of a strong and stable Government as well as strong signals of policy consistency and continuity as espoused in Budget 2021. 

We may have been bruised by the twin shocks of the Easter 2019 attacks and the COVID-19 pandemic in quick succession, but now need to capitalise on the twin positives of low interest rates and Budget 2021 growth incentives. 

The call of the hour is therefore to have no forbearance for despondence. As the engine of growth of the Sri Lankan economy, we need to be resolute in our commitment to remobilise a growth trajectory and to lead the solution, rather than take refuge in being part of the problem. 

It is for us to achieve take-off with collective energy and to do so with singular focus and positivism. 

I thank you for your patience and welcome you once again to the Sri Lanka Economic Summit 2020.