CB Governor outlines agriculture productivity challenges
Finance Minister Ravi Karunanayaka took part in the Commonwealth Finance Ministers’ Summit held in Washington on Thursday on the sidelines of the annual Meetings of the World Bank (WB) and the International Monetary Fund (IMF). Picture shows the Sri Lankan minister with other finance ministers
South Asia is hot on the heels of East Asia to become the world’s next middle-income region. But to catch up its neighbours, South Asia and its firms – especially in industries such as light manufacturing, auto and agribusiness – will need to compete on a global scale, panellists at the World Bank annual meeting emphasised in Washington this week. At the event it was highlighted that across South Asia, firms like Sri Lanka’s Dilmah, and India’s electronic firm Dixon and many others are contributing to the region’s competitiveness. In this endeavour, Sri Lanka’s agricultural policy needs to focus on overcoming massive productivity challenges arising out of low productivity and low income livelihood of rural people as the country’s 30 per cent of the workforce is involved in this sector and its contribution to the economy is 10 per cent of the GDP.
Central Bank Governor Dr. Indrajit Coomaraswamy made this observation when he addressed the World Bank’s annual meeting event: How Can South Asia’s Firms Better Compete?” in Washington on Thursday. The event was organised in connection with the release of a new World Bank Group report this week. He noted that the rural people are trapped in low productivity and low income livelihoods in spite of receiving water, subsidised fertilizer and guaranteed price for their agriculture produce. The problem at present is deciding on policy reforms to effectively contribute to sustained growth, while mitigating existing constraints and future challenges, he added. The agriculture sector employs and sustains a majority of the population, and exerts impact on poverty, food security and related social issues; he said adding that this sector needs significant attention to achieve sustainable development goals.
He pointed out Sri Lanka has no choice other than according high priority to innovation as the country faces an aging issue much early in its production process. The government has given triple tax concessions for research and development activities while linking local universities with business in providing knowhow, he added. Sri Lanka’s economic growth is projected to grow at 5 per cent in 2017, up from 4.8 per cent 2016 and driven by increased private consumption and postponed investment in 2015. It is imperative for Sri Lanka to expedite high priority structural reforms to increase competitiveness improve governance and consolidate its fiscal balance in order to ensure sustained growth and development, the World Bank Group report stressed.
“South Asia has tremendous potential to increase incomes and gain market share in exports through policies that enhance productivity and investment,” said Annette Dixon, World Bank South Asia Vice President. “If the region harnesses its productivity potential, it could be the fastest growing exporting region, for instance, tripling its share in global exports of electronics and motor vehicles by 2030,” she opined. “South Asia’s leading firms have risen to standards of global excellence, demonstrating that world class levels of operational performance, efficiency, and innovation can be achieved with the right management, technology and worker training,” said Anabel Gonzalez, the World Bank Group’s Senior Director for Trade and Competitiveness.
She added “These flashes of brilliance across a growing number of areas, locations, and leading firms can provide inspiration for reforms and serve as examples for millions of rising firms in the region.” With around one million people entering the workforce each month and a growing urban population, South Asia can seize the opportunity to become the next manufacturing and export powerhouse through the right mix of reforms and investments, the report, released this week, said.
South Asia will be home to more than a quarter of the world’s working adults by 2030 and should take advantage of a confluence of positive forces, such as favourable demographics, increasing education levels, growing cities, and rising labour costs in East Asia. To realize this potential, countries should work diligently to increase regional and global integration, take advantage of agglomeration economies, strengthen firm capabilities, and improve the business environment. The region’s great competitiveness potential can be shown by the success of its leading firms, the report pointed out.