Financial Times

Bourse no judge of economy, political situation
Wimal Weerawansa, the Janatha Vimukthi Peramuna's parliamentary leader and media spokesman, believes the new alliance between the JVP and the SLFP can save this country from an impending disaster.

In this comprehensive interview on the JVP's policies on the economy and business with The Sunday Times FT reporter Suren Gnanaraj, the suave and well groomed parliamentarian talks on many sectors aimed at assuaging the concerns of Sri Lanka's business over the new front.

How do you intent to convince the private sector of your alliance's proposed economic policy?
We have formed an alliance together with the SLFP to form a government. To build a strong an honest public sector and a private sector which is responsible to the people. We hope to use both sectors collectively to build the country's economy. We do not propose an economy in which you isolate the private sector and build an economy on the strength of the public sector.

It must be noted that within the alliance, the JVP's economic policies will not be implemented 100 percent, nor will the SLFP's economic policies be implemented 100 percent. The SLFP believes in an open economy and the JVP believes in a strengthened public sector policy. Therefore, we hope to strike the right balance in implementing policies, which are acceptable to both parties. It's a compromise.

Therefore, the private sector which generates its income through fair means, which is socially responsible and respects law and order would have nothing to fear in relation to the economic policies that we have proposed for the country.

Investors are believed to have viewed the alliance negatively as the market was on a downward spree following the announcement of the alliance. What are your thoughts on this?
If one were to attribute the decline in the stock market to the news of the new alliance, then the fact that it rebounded on the day we signed the agreement would mean that investor faith has been restored. However, we are of the view that the stock market fluctuations are based on much broader economic principles. We are making a huge mistake if we going to judge the country's political and economic situation through the stock market.

We do not believe that the stock market declined because of the news of the alliance; neither do we say that the market rebounded following the signing of the agreement. It is a wrong interpretation to say that the stock market fluctuations last week were purely as a result of political developments in the country.

What do you feel are the benefits the private sector can accrue from this new alliance?
We believe that the private sector expects a disciplined society and a public sector which is efficient and rid of bribery and corruption. The private sector is constantly seeking new opportunities for investment and we hope to create a conducive environment for development through a manufacturing based economy. At present, many of the local industries have fallen and are in urgent need of revival, for which we would focus our immediate attention. We also hope to provide more opportunities and assistance to the private sector and both local and foreign investors who plan to set up new industries in the country.

The alliance also plans to improve local agriculture on a big scale. Would this mean that there would be a slash on imported food items?
We would be looking at restricting imports on food items, which can be locally manufactured. The food imports amount for the biggest portion of the country's total expenditure. Our food bill on imports is US $ 68 billion, whereas, the cost of our net fuel imports, (having deducted the revenue generated through re-selling fuel to airlines and ships) - fuel being a natural resource which is not available in the country, amounts to only US $ 48 billion. We spend a colossal amount on imports despite our ability to locally produce these food items.

This country has a proud history of an agriculturally self-sufficient civilisation. With such a proud history, we must hide our face in shame at the fact that our biggest expenditure is imported food items. Even King Coconut water is being imported and sold in cans in the local market. If you look at fruits, we have the capacity to produce the country's total requirement.

Therefore, the alliance intends to give our indigenous entrepreneurs every possible encouragement to develop agriculture and local industries. I'm not advocating a ban on imported wheat flour, but I believe that the country needs to create a right market for rice flour based products to take precedence in our daily diet. We need to create a change in the consumer culture where people will get used to buying food that is being produced within the country. For such an eventuality, we need to introduce the right technology in to the manufacturing process to ensure quality and quantity in our local products.

As an Indian minister once said when asked about his policy on globalisation, 'Micro chips yes, potato chips no', we too hold a similar view. What we can locally produce and manufacture, we must do so. What we can't … let us import. This is the best method to retain foreign exchange rather than send young mothers as housemaids to the Middle East to bring us foreign exchange.

If you look at milk powder, Sri Lanka has the potential to develop its own dairies to meet its total requirement. Instead all milk powder today is imported. A few dairy importers may be alarmed by my statement but we must realise that none of the powerful nations has developed by shutting down its door to local industries.

What type of plans do you have to develop local industries?
Initially we hope to promote local industries using local raw materials and local technology, and if possible bring in foreign technology to develop the quality of our industries. Overnight, we may not be able to manufacture big things, but we need to make a start. We even import safety pins and it's about time that we start manufacturing these items. Manufacturing agricultural equipment would be a huge plus point to develop the agricultural sector of this country. We pledge to give maximum support to investors, both local and foreign who plan to set up industries in the country.

How do you hope to find the capital for these projects?
The government is certainly in a position to pump capital to help revive local industries if it can eliminate all forms of bribery, corruption and unnecessary state expenditure. I believe that these savings would be sufficient to help establish and improve our local industries. Just look at Micro Car, the first Sri Lankan car. The Minister of Finance in last year's budget failed to prevent the increase of imported vehicles coming into the country, which in the long run was a detriment to our local manufacturer.

The new alliance on the other hand views such an investor (Micro Car) as a valuable asset to our country, and our policies on imports would revolve around such an investor, to ensure that it has an opportunity to grow. We must be proud of such investors and give them every possible means of encouragement. If we develop our local industries, Sri Lankans living abroad will start investing again in their motherland.

They may not all be millionaires, but there are plenty of Sri Lankans living abroad who are rich and capable enough to invest in this country and we must make every effort to attract such investments. When the gospel spreads that the government of the day is promoting local investments and industries in a manufacturing based economy, we would begin to attract good investors, who would be keen to set up new industries in the country as opposed to those investors who prefer to buy over state corporations and rob all its resources. This concept is nothing new and it was successfully adopted by India, China and Malaysia.

What type of development strategy do you hope to implement for industries in the North and East?
An alliance led government will make every effort to uplift the welfare of the people living in the North and East. We hope to focus specially on increasing employment opportunities, educational facilities and developing agricultural and industrial production in those areas.

How are you going to fund such projects?
The truth is that this country will have sufficient funds once a manufacturing based economy is in place and we reduce the amount of bribery and corruption in this country.

In 2001, the JVP insisted that the SLFP refrains from signing FTA's with other countries for a period of one year. With the government on the brink of entering into an FTA with the USA, is your perception on FTA's still the same?
We hope to discuss such issues at length and come to a final agreement. The Free Trade Agreements will be based on terms, which are fair and beneficial to both sides. I don't want to comment on whether we a have problem with signing FTA's or not, but what I'm saying is that we hope to discuss these agreements at length and make decisions which are fair and beneficial to the country.

Have you commenced discussions with the international community and foreign donors about your economic policies?
We haven't had any formal talks with any foreign parties. However, we have had informal talks at different levels with foreign investors and they have been very positive.

What is your message to the private sector, which is currently viewing the new alliance with a lot of suspicion?
There is a lot of speculation and a lot of misinformation about the objectives and the motives of this alliance and my advice to the private sector is to refrain from being misled by such wrong information. You have nothing to fear. We hope to bring about a positive change in our society and the benefits of these changes will undoubtedly be enjoyed by the private sector.

Do you have plans to have a series of talks with the private sector business community?
Yes, definitely. Representatives of both the SLFP and the JVP hope to meet the business community as members of the new alliance and we hope to address their concerns shortly. We are looking forward to such a discussion.

Will the JVP and the SLFP contest the next election as individual parties or as a joint alliance?
We will contest as one party.

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