Decline in private sector credit growth ‘not a healthy trend’ – new IASL Chairman
View(s):Sri Lanka’s private sector credit growth estimates are currently at 2 per cent up to June 2014, a continuation of its “sharp” decline (7.5 per cent in 2013, 17.6 per cent in 2012, and 34.5 per cent in 2011), which is “not a healthy trend”, according to Nlam Jayasinghe, the newly-elected Chairman of the Industrial Association of Sri Lanka (IASL).
Further, he also noted that it is “acknowledged that the contribution to GDP by the services sector will remain high at nearly 60 per cent, 58.1 per cent to be exact in 2013. The industry sector is second largest contributor to GDP at 31 per cent and has grown by 9.9 per cent in 2013. Most of our members represent the factory industry sub sector that is the largest contributor to the manufacturing sub sector that has grown by 7.9 per cent in 2013, and contributes 15 per cent towards GDP. Is this adequate? As in the more developed countries, cannot the contribution from the factory industry sub sector be increased to 20 per cent of GDP in the next 10 years to enable a more significant contribution? I strongly believe that if there is a sound and clear industrial policy framework and a conducive and investor friendly environment this is achievable”.
Mr. Jayasinghe, speaking at the AGM of the association held recently in Colombo, also commented that there is a “clear need for trained labour and managerial talent within industry on a day-to-day basis. Sri Lanka’s overseas remittances have become one of the most significant revenue stream to Sri Lanka’s economy. Worker remittances in 2013 amounted to Rs. 827 billion, which will probably increase to Rs. 900 billion this year. In 2013, 293,000 Sri Lankans have travelled overseas on employment an increase of almost 4 per cent over the last year. When we are in need of indigenous labour and knowledge at home, can we continue to trade our knowledge and sweat on a continuous basis? Cannot we reverse this trend and re-deploy these professionals and workforce in local industries in a more dignified manner in their own surroundings with minimum social costs. I firmly believe we can”.
Mr. Jayasinghe also added that most companies represented by the IASL have “grown during an era of conflict over the past 25 years, which may not have enabled those companies to prove their true potential. However, despite such constraints, some companies particularly those in the apparel sector, and also a few others, have proved that they are, ‘world class’.
Post conflict, we are in a unique situation that Sri Lanka can be envied by most in the region. Everything around us is not perfect, and there are some impediments, and it will be so even in the future. But today we are free to go about our business, interest rates are far more conducive to borrowers, exchange rates are free of sudden volatility, inflation is relatively stable, infrastructure developments have taken place at a pace that we haven’t witnessed before”.
(JH)