Rohantha Athukorala
As we celebrate the first year of eradicating the LTTE, I will never forget the experience I had in the North of Sri Lanka when I was heading Economic Affairs for the Government Peace Secretariat exactly a year ago. The final battle was in full operation at that time and after finishing my assigned tasks in Jaffna, I was en-route to Colombo on the C130 military aircraft and we had to make a stop in Anuradhapura to pick seriously injured soldiers from Puthumathalan on that day.
“Sri Lanka - the Miracle of Asia” |
Even though it was mentally tough to see the seriously injured soldiers brought straight from the battlefield, when I spoke to them I was amazed at the dedication and commitment demonstrated. One soldier with a severe chest injury told me ‘Sir I am going to come back and finish the LTTE’.
Being part of the public sector at that time, I realized that it is time that the other half of the public sector, now shoulder this same responsibility and re-build the economy and one side has done its task even at the expense of losing their lives. I guess the time is right for us to evaluate what we have achieved in the last year.
Visionary community
While there has been many a development in the political arena in the last one year, to my mind the last year was spent on building a visionary community. After the Presidential election we saw how film stars, sportsmen, businessmen and many young professionals wanting to be part of governing the country. To my mind this infusion of young blood into the system is an indication that we are in the process of being an economic tiger in Asia.
I also believe that the general mass has also accepted the common vision and voted in a set of leaders who now almost make up a two thirds majority, thus, giving the ability to initiate serious policy reforms.
The key question now is will those hard decisions be taken this year so that the benefits can come to Sri Lanka by 2011.
A point that needs to be noted is that I see that the private sector has also become positive to the changing business environment. Gone are the days when business plans had statements like Raging war in the North of Sri Lanka or Political instability due to a coalition government. Given the exit of these statements, we now have a private sector that can also plan strategically for the future and do the internal reforms.
I guess the many hotels that are being closed in the next few months for re-furbishment, clearly demonstrate this forward thinking perspective.
Hard decisions
While I agree with the many sentiments expressed of Sri Lanka becoming the miracle of Asia, I feel the need of the hour is to accept the reality and correct it before we start chasing dreams.
The reality is that Sri Lanka was targetting at curtailing the GDP deficit to 7 percent last year but ended the year at 9.8 percent. If we are to drive down the expenditure and get fiscal discipline we have to correct the many State run enterprises that were losing in 2009. Recent data reveals that almost 1 percent of the
Apparel: high potential industry |
GDP or around 45 billion rupees is the opportunity cost for Sri Lanka due to this loss making ventures.
CEB is in the red at 7.4 bn, CPC is at a staggering 12.3 bn, SLTB is at 5.1 bn in the red and SriLankan Airlines at a crazy 12.2 bn to name a few.
Hence, the only way out is to re-structure and re-model these loss making State ventures. It can be done just like what we saw in the case of British Telecom, Indian Railways and Singapore Airlines to be specific.
But it requires hard decisions which are not going to be popular politically or by the trade unions. However, it has to be done if we are serious about putting our economy in shape.
The best way forward is a private-public partnership approach. However, for this to materialize, we need to make sure that the regulatory environment is conducive. If not, just like the privatized tea industry, we will see the private sector in a Catch 22 situation than driving ruthlessly for value addition.
Engagement of IMF
It is important to understand that in the Sri Lankan economic menu, we must continue the engagement with the IMF. The logic being that the IMF helps Sri Lanka to have in its radar the importance of implementing fiscal discipline. We have no option but the expenditure has to be reduced significantly. The Government of the Maldives is a classic example for us. From a 27 percent GDP deficit it has been reduced to 18 percent last year and the target set for this year is 8 percent which is an outstanding performance.
Being part of the donor conference in the Maldives that garnered 313 million dollars as grant money into the country, President Rasheed very proudly stated that a 20 percent salary cut was accepted by the public sector that led the way for the curtailment of expenditure that won the respect of the donor community including the IMF. I guess its time Sri Lanka takes a cue from this initiative.
Slide to war
Research done globally reveals that half the countries who achieve peace slides back to a conflict mainly due to the citizens of the country not taking responsibility for the actions to determine their future. Countries like Rwanda made sure it will not happen like the issues between the Tutsis and Zulus with focused on post conflict strategies. It is paramount that every Sri Lankan understands that unless we each shoulder some responsibility we cannot get Sri Lanka back into the 7 percent+ GDP growth levels.
Also we need to understand that if the country grows, then we grow and this can lead to sustainable growth. If not peace is only an illusion. Let me get specific again so that this article is a real piece and not just entrepreneurial academics.
As per the labour force survey of 2002, the labour force participation is at 50.3 percent nationally whilst in the North it had dropped to 33.8 percent and 40.3 percent in the East. This data can directly be reflective to the health gaps in these regions. 46 percent of the children below five years of age in the North and the East are underweight compared to the 29 percent of the rest of the country.
The percentage of babies born underweight in the country is 18 percent but the reality is that in the North and the East it is as high as 26 percent. These figures are worse in the districts like Batticaloa and Vavuniya, where one -half of the children are underweight which gives us an insight to the tension that exists within a family in comparison to one’s relations in the other parts of the country. I guess post the resettlement process in the North these indicators must be at a lower ebb and we have to address this as a priority so that the economic disparity can be addressed.
Value addition
Tea: another potential industry |
The key to driving growth and increasing household income is by driving value addition. If we examine this indicator, Sri Lanka’s performance in 2004 is not bad in relation to similar countries in South Asia but the fact is that we must aim to get closer to countries like Singapore and Malaysia where only in the agricultural sector is at a mammoth 7,108 USD per person as against Sri Lanka’s 951 USD.
We also must drive up industrial value addition from 3,187 USD to the levels as 18,295 USD that Malaysia operates on. What’s worrying is the declining industrial exports in 2010 and low investment on R and D of the agricultural sector which means we are not taking the high ground to arrest this situation.
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