The downside risk which Sri Lanka should guard against includes high youth unemployment, growing poverty in the Northern, Eastern, North Western, Uva and Sabaragamuwa provinces and a lack of trust in the North and East, domestically, and the decline of the USA and EU economies, the moving of power from the West to the East, the volatility of petroleum and the need to export more and more to South Asia and the rest of Asia, on the world stage. This is according to outgoing Ceylon Chamber of Commerce (CCC) Chairman Dr. Anura Ekanayake, who was speaking at the CCC's 172nd Annual General Meeting held on the evening of July 28 in Colombo.
Elaborating on the local downside risk, he noted that, while national unemployment was at 4.5% overall, youth (18-24 years old) unemployment was at 18.1%. Additionally, 10.7% of the GCE A/L qualified youth was also unemployed. All this while almost all industries claim labour shortages. He also noted that many historical conflicts, including the the 30-year war and the Southern uprisings, were contributed to by unemployed youth. Further indicated, while poverty in the Western province was at 4.2%, poverty in Northern, Eastern, North Western, Uva and Sabaragamuwa provinces was as high as 10%, and this must be addressed by the creation of sustainable value chains within the provinces.
Also, on the political front, he suggested that focusing on economic issues alone for the North and East was not enough and that there had to be trust built through mutually beneficial business transactions and the creation of value chains.
CCC's newly-elected 2010/2011 Chairman, Susantha Ratnayake, advised the gathering that Sri Lanka's business community could no longer hide behind its traditions or continue the way they had done previously but needed to get more competitive, adding that he was disappointed that the peace dividend had as yet proved to be elusive.
Also speaking at the event, World Bank Country Ditrector for Sri Lanka and the Maldives Diarietou Gaye noted that considerably high input costs, including one of the highest electricity tariffs in the world and costly labour, as well as rigid labour laws, could prove negative to foreign direct investment, which was currently less than 1% of Sri Lanka's total Gross Domestic Product, just US$ 435 million in 2010 and down from its 2008 peak of US$ 690 million.
She also stated that "to become an effective middle income country Sri Lanka needs to focus on building strong institutions and a practical governance structure that benefits its entire people" and that this had to be "coupled with increased investments in infrastructure and human capital."
Additionally, she also pointed to the steps taken by former war-torn countries Rwanda and Georgia, also highlighting that they had quickly climbed the World Bank's Doing Business rankings, and suggested that "[perception], image and information and communication are key factors that make this century what it is. Let us use them well to help disseminate the good news."
Ms. Gaye also revealed that there was a new World Bank project planned for 2012, via its private sector IFC arm, which is currently pending board approval, the Metro Colombo project; which would employ better flood management for, and the cleaning up of, Colombo's main canals with a view to make more land available in Colombo for private sector use. |
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