Opportunities and challenges from five hubs - Cabraal
- Stresses five hubs strategy is beneficial as it touches more people but need to improve productivity, equip workforce, create jobs and ensure seamless transition
The Government’s five hub strategy would bring opportunities as well as create new challenges for Sri Lanka such as improving productivity, realigning the workforce, job creation and seamless transition to the new sectors, Central Bank chief Ajith Nivard Cabraal said yesterday.
Speaking to the gathering at the Daily FT and Colombo University MBA Alumni Association forum, Cabraal gave exhaustive details on the formulation of the five hub strategy in the ‘Mahinda Chinthana’ as a method of maintaining 8% plus growth as well as navigating Sri Lanka out of the middle income trap.
He said that the five hubs + tourism strategy, a brainchild of President Mahinda Rajapaka is benefiucial as it touches more people enabling them towards prosperity.
“Each hub has tremendous potential to create new value and new economic activity,” Cabraal said.
He recalled that just like the apparel sector has grown in 30 years from about $ 20 million industry to a $ 4 billion industry, the new hubs (which he described as ‘new stars’) have the potential to grow as much or substantially more over the new few years.
“We can now envisage the six hubs taking our economy to new heights in the future,” Central Bank Governor added.
Cabraal in his speech noted that the Government had prepared well to unleash the potential. The first step for the Government was to invest heavily in ending the war and achieving peace. Then political stability was gained and maintained. Subsequently the Government concentrated on rehabilitation and reconstruction projects to shore up the war damaged areas.
“We opened up new avenues of investment. We opened up the T-bills market and encouraged banks to borrow from abroad, new financial instruments were brought in, Private-Public Partnerships were promoted and new investors were encouraged to come into the country. This is all because 33% of GDP was needed as investment for 8% growth. So about 22% comes locally, 5% foreign and 6% from the Government,” he said.
To fulfil this demand for investment, Cabraal emphasised each company has to “create stars” – new avenues to supply new investment. This was the thinking that led to the birth of the five hubs strategy and since tourism already existed it eventually became six.
“Each hub targets great potential we have within this country. IT and BPO has grown from a US$ 83 million industry to US$ 600 million today and the Government has set a target of US$ 2 billion by 2020. Similarly, transport has grown from US$ 70 million to US$ 1.9 billion and will be US$ 6 billion in six years’ time.”
Cabraal went on to say the current trend of growth with low inflation will continue to be the main mantra, especially since the current high-performing export industries such as apparel will continue to evolve alongside the five hubs. Other labour intensive industries such as agriculture will have to double productivity to adjust to the brain drain that will take place as sectors from the five hubs siphon off employees.
The Government is also targeting employment creation for 400,000 new school leavers who join the job market each year. “There is no better way to ‘be inspired’ than to know a job awaits you when you leave school,” he said, punning on the seminar’s theme ‘Be Inspired’. |