Mahinda Chintana – But where is the implementation?

Leading economists, donor agencies and civil society representatives called on the government to ‘implement’ the ambitious Mahinda Chintana framework and disseminate the true information relating to the status of the economy in the country, while addressing the macro economic issues in the country.

While discussing the framework at a workshop organised by CIMA Sri Lanka Division last week, they conceded that the strategies ‘look good on paper’, but the country has not seen implementation as effectively since the document was made public. Naoko Ishii, World Bank Country Director remarked that 8 to 10 growth as forecasted by this framework is not necessarily unachievable, but it is a concern ‘where this growth comes from’.

“In this regard, there is a lot of room to increase total factor productivity where the country can gain from,” she said, noting that the document has recognition of the usage of land, energy and research and development but implementation requires a lot of political stamina.

“According to the framework, the private sector investment should increase to 25 percent from 21 percent within the next five years, but I would like to ask the private sector if the present situation is conducive for investment. However I would also like to note that there is still business confidence, but maybe I am missing something here.”

Ishii noted that the Western Province contributes 51 percent of the Gross Domestic Product (GDP) as opposed to the rest of the regions which collectively gives 49 percent. “It is not very clear in the document how these regions are integrated to the Western province, despite the ‘spirit’ being there,” she said.

She also said that soft sectors such as telecommunications also need to show growth in these sectors for them to grow. “Soft sector connectivity has to be emphasised in the Mahinda Chintana strategy in terms of implementation,” Ishii said. Dr. Harsha de Silva, Leading Economist, LirneAsia, pointed out that the Mahinda Chintana strategy is not linked to the medium term budgetary framework if the country.

“If there is this connection, the implementation does not become mere rhetoric as we are now experiencing,” he explained. De Silva pointed out that the national budget airline, Mihin Air is not in the Mahinda Chintana document, nor is it in the budget. “According to recent newspaper reports, the lease payment for a month for the second aircraft for Mihin Air is US$ 1 million.

This is what people see, we do not see an airport in Weerawila, a coal power plant in Sampur or a power plant in Norochcholai,” he said, adding that the new airport together with many other new projects seem to be concentrated in a particular constituent, which does not say much for development in the country.

He also said the priorities are misplaced in the Chintana document and it lacks realism. “Reforms are sacrificed, tough decisions are not made, the funding and implementation are vague and there is ample room for ‘bad governance,” he said. De Silva reiterated that liberalisation in trade, industry and investment have to take place to realise growth in these sectors.

“Due to the liberalization in trade, industry and investment and because of the proximity Colombo has to the port, the Western Province has grown disproportionately to the rest of the country. This same theory should apply to the other areas. Western Province has over 70 percent of the apparel factories,” he explained, adding because of the reforms in trade and investment, the private sector has invested in them.

“Liberalisation in agriculture is a necessity for the private sector to get into this sector. Without reforms in agriculture, where 32 percent of people are employed, the private sector will not invest,” he further explained, adding that presently what the country sees is subsistence agriculture and not commercial agriculture. “For commercial agriculture we need large investments and the Mahinda Chintana document does not support this,” he said.

Former Treasury Secretary Charitha Ratwatte, representing the civil society, said that if the government ‘seriously expects the people to plan their lives’, they need to be credible and tell the truth about the economic situation in the country. He said that the Chintana framework is based on assumptions and when these assumptions change, those ‘changes’ happen they need to be informed to the public.

He said that it is pointless focusing ‘too much’ on GDP growth itself. “The only indicator of a country's economic health is not GDP,” he said, adding that the government must factor in other indicators such as trade balance, inflation, the value or the rupee, etc. “They must disseminate all these information to make a complete picture so that the people can plan their lives accordingly,” he said.

He said that a high GDP figure does not mean that the country is healthy. “You cannot take the height and the weight of a man and say he is healthy. His blood sugars, liver function, heart condition amongst other things have to be factored in to say that he is healthy. GDP growth is also like that,” he said.

Ratwatte said that when a country is rated by a rating agency the management of the economy is reflected in the rating. “A rating agency measures the capacity of the managers of a country to adjust, plan and internalise the changes in the macro environment,” he said. He said that Sri Lanka is a resilient economy and that there should be fundamental reforms in education, the disparity of the growth in the western province against the rest of the country should be addressed and that the archaic laws in land titling have to be dealt with in order to see real development.

M.R. Shah from the Ceylon Bank Employees Union (CBEU), representing the viewpoint of the unions said that the strategies are ‘good on paper’ but it is questionable whether a development plan could be implemented in a war situation. “There is a war mentality. This war has to be stopped. We spend Rs.140 billion on the war annually. There is no winning situation for anyone in this war,” he said, adding that the economic condition in the country is deteriorating because of the war.

He said that development essentially means security to the people, but there is no security in the country. “There are many types of laws that have been introduced contrary to this situation. The journalists do not have the right to write and there are random traffic jams due to security checks where we are delayed for two three hours on the road. This is not development,” he said. Shah berated the state for not curbing corruption.

“We have not had so much corruption ever in this country like we are having now. So many millions are being looted from the country,” he said, adding that transparency and accountability have become invisible.