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Increased textiles and garment exports to the United States and Europe helped push up overall export earnings in January this year compared with the same month last year.
The trade deficit narrowed to $131 million in January this year from a larger deficit of $228 million in January 2001 because of the higher export earnings and a contraction in spending on imports, the Central Bank said.
Export earnings in January 2002 rose 2.7 per cent to $343 million compared with earnings amounting to $334 million in January, 2001. However, earnings in January 2002 were 12.2 per cent lower than that of December, 2001.
Earnings from textile and garment exports increased by 16 per cent to $183 million in January, 2002, largely owing to higher volumes of garments to USA and European countries.
But unit prices were considerably lower falling by 12.5 per cent year-on-year to $5.57 a piece on average.
Garment exports volumes increased by almost 33 per cent to 33 million pieces this January compared with the same month last year.
The Central Bank also said the volume of textile imports increased by 15 per cent continuing the positive growth experienced since September, 2001. This indicates the potential improved garment exports in the coming months. Accordingly, expenditure on textile imports increased by 12.5 per cent.
Although the combined value of all other industrial exports declined by 3.7 per cent this January compared with the value in January, 2001, two other major industrial export industries, rubber based products and machinery, and mechanical and electrical equipment, increased by 16 per cent and 19 per cent, respectively.
Earnings from agricultural products also declined by 3.1 per cent to$76million owing to lower earnings from the three major plantation crops, the Central Bank said.
Despite the increase in export volumes, earnings from tea declined by 4.4 per cent to $55 million in January, 2002 year-on-year owing to lower export prices.
In January, 2002, tea production fell by 1.4 million kg, but export volume increased by 1.2 million kg reflecting a drawdown of the existing stocks.
Even though the average price of tea remained lower than the previous year, it was the highest average price recorded after April, 2001.
Minor agricultural exports increased by 30 per cent largely due to an increase in the export of cloves.
The Central Bank said imports of non-food consumer goods fell by half, mainly of sharply lower imports of motorcars and cycles and radio receivers and televisions.
Investment goods imports fell by 34.8 per cent due to significantly low imports of machinery and equipment, transport equipment and building materials. However, all these sectors recorded higher imports than in December, 2001.
Ravi Karunanayake, Minister of Commerce and Consumer Affairs declared open the Sri Lanka Trade Centre at Premadasa General Trading premises in Dubai on March 24. The trade centre will function at two levels to promote Sri Lankan products and services.
Display space has been provided for various products. The trade centre will also be a manufacturer's representative office for the region. Left to right: Suranjith Premadasa, chairman of Premadasa Group, Minister Ravi Karunanayake, and D. Wijeyasinghe, director, Premadasa Group.
The Chamber of Construction Industry, Sri Lanka (CCI) has urged the government to identify at least five lead projects – at the end of the new regime's 100-day programmes – to kickstart the economy and has proposed solid infrastructure, urban regeneration, north-east rehabilitation, power generation and airport and seaport development.
Solid infrastructure
Chamber president Surath Wickramasinghe, in a letter to Prime Minister Ranil Wickremesinghe, has said the chamber is fully supportive of the southern highway and also urges the immediate implementation of the Colombo-Trincomalee highway.
The letter says:
The southern highway will serve Katunayake, Kandy, Kurunegala and will extend upto Habarana and Trincomalee. From Habarana, the highway will branch to Anuradhapura and Jaffna to the north and to Polonnaruwa and Batticaloa to the east. Its implementation could be expeditiously undertaken by assigning each part of the Colombo-Trincomalee network to different donor and funding agencies, not only for its feasibility study, but also for its construction.
The chamber believes that it is also necessary to construct an elevated expressway above the railway line between Peliyagoda and Kottawa with links to the port of Colombo and the Seethawaka Free Trade Zone.
Urban regeneration
Most of the prime land in Colombo is under-utilised through obsolescence. One only has to go up to a high-rise building in Colombo to identify the vast expanse of land that is ready for regeneration to develop a compact and economically vibrant city. These lands can be used to develop housing for all income groups, commercial and office development. In addition land for entertainment, leisure and recreation activities, which are essential for a modern city, could also be accommodated in the regeneration process. Most countries in the developed world are constantly regenerating their run-down areas to make them environmentally attractive and economically competitive. These projects could be easily implemented by the establishment of public/private partnerships with the state being required only to act as a facilitator.
North-East rehabilitation
The CCI is of the view that taking into account the cultural, traditional and socio-economic background of the north-east, its rehabilitation and redevelopment should be undertaken essentially under the leadership of local consultants and contractors. The donor and funding agencies should be advised accordingly.
Power generation and telecommunications
It is imperative for the long-term development of this nation that it should not face power crises. Accordingly, the CCI is of the view that the already identified power plants at Hambantota, Trincomalee and Norochchalai should be implemented.
In the case of Hambantota, the EIA and the financial and technical feasibility studies for an oil refinery and power plant have been approved. This project could commence immediately through a public/private partnership. The government should therefore set up the corporate mechanism for its implementation.
The decision to implement Norochchalai should be taken. Thereafter tenders for the construction of the plant and the delivery of coal to the power plant should be called simultaneously.
The next two or more years will be difficult with the government having to take tough but unpopular decisions to put the economy back on the rails, Milinda Moragoda, Minister for Economic Reform, Science and Technology warned last week.
The government needs the support of the private sector to explain to the people the importance of economic reforms such as privatisation of state enterprises and to win their acceptance, he said.
"Life in the next few years will be tough for all of us," he told the Annual General Meeting of the International Chamber of Commerce (Sri Lanka Chapter).
"But the potential rewards are huge. If we take the tough decisions now then we might hope to save some of our state-owned enterprises. They will change and you will not recognise them as they are today."
The government needs private sector support to share in the hardships and to lead from the front, Moragoda said.
"We also need you to help us explain to the public why privatisation is so necessary and what the rewards will be for everyone."
Privatisation, he said, is "the burning issue" that the private sector is pressing for but is viewed with suspicion by the public.
"It is what everyone doesn't want to talk about. It is what people fear the most. It is seen as the businessman's panacea and the ordinary mans demise," he said.
"For businessmen, it is seen as a get-rich-quick fix. For politicians it is seen as selling away our state assets. For the ordinary man it spells change and job losses. It is hard to dispel such fears when in the past privatisation in Sri Lanka has not always been a huge success," Moragoda said.
Privatisation, he said, is a necessary evil that we have to face up to.
"But we also have to explain to the people the benefits of privatisation. We have to explain that it takes time to turn around an ailing enterprise and we have to explain that although everyone benefits at the end, some may suffer during the process."
Workers in those industries that are privatised will have greater hope of a better future for them and their families, he said.
"Certainly their working conditions will be better and their chances of a better wage will be greatly enhanced," he added.
There would be a greater willingness on the part of international investors to come in and invest in the island, he also said.
Workers who lose jobs will not be abandoned to their fate, he said.
"We shall implement voluntary retirement and other compensation schemes so that there is a safety net for those affected by downsizing."
The international community has become "fed up" of seeing Minister after Minister reaching out with the begging bowl for funds to support ailing state enterprises, he said.
Governments are the keepers of taxpayer's money and the conduits of international aid, Moragoda said.
"They have a responsibility to spend that money wisely and efficiently," he said. "Yet past governments have spent with a carefree attitude and in a way that would never be acceptable elsewhere in the world."
Placing businesses in the hands of government to administer is the worst of all available choices, he said.
"Businesses have to be lean and hungry to succeed in the market place. Businessmen understand the dynamics of the market place in a way that government never can. At the end of the day they are responsible to their shareholders. The result is that if you put Government in charge of a business producing a consumable, ultimately this will fail. That is precisely what has happened in Sri Lanka," Moragoda said.
With privatisation governments cannot go half way, he said referring to privatisation of Air Lanka which "became an expensive charge on government funds" that was now under investigation.
"You cannot go half way; you have to go all the way or not at all," he said.
This was where Government control has failed the people the most, he pointed out.
"For Government controlled industries use taxpayer's money to keep the workers in non existent jobs. As taxpayers we should all be angry about this. For when our taxes are spent in this way our own jobs deteriorate and our standard of living falls," he said.
"Likewise, the workers do not get a true wage for their work," he added. "Workers in such industries know that past governments can and have subsidised their industries. After all, governments have always seemed to have unlimited funds.
"So the workers are cheated too. They have to work with inferior equipment as governments pay wages but never invest in new machinery. They earn low wages because governments want to employ as many people as possible for as little money as possible. All round everyone is cheated," Moragoda said.
In Sri Lanka, the problem was even more complicated because past privatisations have not been a huge success.
In the case of sugar "there are parts of the sugar industry that few private companies would want to buy," Moragoda said. "For the workers in those industries there is little choice but unemployment and fallow fields."
The economy is in a "dire mess" with no money in the coffers to subsidise such enterprises any more," he said.
The international community will not give the money to subsidise such industries any more, he added.
"For them it is a case of bad money being thrown after more bad money."
The reality, Moragoda said, was that "we have to privatise just to pay back the money we borrowed to support state-owned enterprises in the past." If this is not done then the debt will grow ever larger each year until the economy is declared bankrupt.
"On the other hand, if we start to reduce our debt in this way then we can hope to achieve two things," Moragoda said. "First the revival of those industries albeit in a slimmer version. And second we can put our own finances in order which in turn allows us to invest in new sectors such as health and education and a better infrastructure to support new industry."
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