Sri Lanka to be the next Malaysia in 15 years: CB Governor
Monday, 14 October 2013 00:00
Sri Lanka’s current macro fundamentals are similar to that of Malaysia in 1993, and while the latter took 20 years to build it to the status that it is now enjoying, Sri Lanka will be able to reach the status of the present day thriving Malaysia within the next 15 years, CBSL Governor Ajith Nivard Cabraal said.
Addressing the SLAEA AGM last Friday, Cabraal noted that with the current progress made and the envisioned development, industries such as apparel with large contributions and impact to the local economy must be alerted of the changes that are likely to occur in the country within the next few years.
When the country reaches the US$ 100 billion economy as anticipated, things will change drastically, he noted.
“It won’t be business as usual as you see today,” he warned. People will demand better salaries; opportunities will be created in many fields when the five hub concept and connected activity open up resulting in labour migration and changes in labour composition.
“You must be ready for that. How you would deal with productivity and its improvement is vital in the next few years. You (apparel industry) must be ready the same way you were ready for GSP+ discontinuation, Multi Fibre Agreement coming to a close and low cost competition.”
Malaysia went through the ‘same process’ without falling into the middle income trap, Cabraal reflected. In order to follow this lead, Sri Lanka has decided on promoting the five hubs plus tourism concept as growth structures while depending on industrialisation of the country which would lead to productivity over the next few years.
“Malaysia had a scheme where they allowed people to migrate from one sector to the other with the conviction that they would double the production with half the labour – i.e. four times productivity over a period of 10 years. They came very close to achieving this.” Sri Lanka must carry out similar activities in order to reach the status Malaysia is in now, in the future.
“We have just begun the journey,” Cabraal acknowledged. “Malaysia in 1993 and Sri Lanka now have great similarities in macro fundamentals. Look at where Malaysia is today and picture Sri Lanka in the same manner, not in 20 years but in 15.”
The possibility to reach similar status in a shorter time than Malaysia is stems from the fact that Sri Lanka is putting in place a better growth model, with more qualified people and more quality lifestyles. To fashion the said journey, the State has now taken steps to form new FTAs, free ports and improve road network among others. “We must also work hard and understand that these transitions won’t take place overnight and by accident. People have to fashion it.”
The private sector will have a larger role to play and harder challenges to face. The good news however is that the country is now stronger, more resilient and has space to deal with issues better. The Government hopes to bring down inflation to 5% in 2014.