Sri Lanka will soon stop exporting any product which is without value additions, including materials such as sand as well as minerals, unless they are part of the value added chain, as articulated in the budget, said the country's Treasury Secretary Dr. P.B. Jayasundera on Tuesday.
He added that this would not be a violation of World Trade Organisation terms. Dr. Jayasundera made these comments as the keynote speaker at a Breakfast Meeting held on Thursday in Colombo organised by IT-BPO body SLASSCOM, and which featured a number of top corporate and public sector leaders.
Dr. Jayasundera further noted that the recent budget was not just for 2011 but an indication of the government's policy to grow the economy to reach exports of US$ 20 billion in 2020 from today's US$8 billion. Stating that traditional Sri Lankan businesss such as tea, rubber, coconut, etc. were not enough to get the economy above US$ 10 billion, he said that the government was focusing on "enabling" 10 sectors to grow, with each becoming US$ 1 billion industries in the medium term; including IT (US$300 million), clinical trials and research, telecommunications and tourism (US$ 400 million).
He also implied that government agencies affiliated with these sectors, such as the country's Board of Investment (BOI), tourism authorities, etc., would be restructured to facilitate "enabling" functions.
Dr. Jayasundera said that Sri Lanka's defence budget had in recent times become an investment to build infrastructure, so public works projects such as ports, roads, irrigation and water, power, etc. could be completed soon. All the while maintaining public investment at 6% to 7%.
He also indicated that, while the current investment in the economy was 25% to 27%, 19% of this came from the private sector and 2% from foreign investment. Meanwhile, current growth is 7.1%, as of the first quarter of 2010, a figure he says will likely continue for three more quarters of this year or even longer, eventually becoming 8%. Also, to achieve this 8%, private sector would have to increase its investment to 35% with foreign investment would also increase to 4% to 5%. He added that he was quite optimistic that inflation for 2010 would not go above 7% to 8%.
Blaming what he called the "BOI regime" for inconsistencies in the country's tax system; Dr. Jayasundera noted that the banking sector was privy to 65% to 70% taxes while the private sector in general was affected by 40% taxes. He further indicated that this would soon be resolved even if the country had to forego certain tax revenues for two to three years.
Commenting on the currently beleaguered apparel sector, Dr. Jayasundera opined that, while he was still optimistic that this sector would grow to its planned US$ 5 billion target in the next seven years, this would now have to be achieved by diversifying target customer destinations to emerging markets. |
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