Economic growth and development cannot be achieved without conscious conceptualisation, policy formulation and effective implementation. There is a tendency to neglect these in the euphoria of the war victory and favourable developments in the foreign reserve position. The preoccupation with the presidential election too is a distraction from the business at hand. Rash election promises rather than well-thought out and realistic strategies are what could be heard these days of electioneering.
A welcome change was Minister Mahinda Samarasinghe’s speech on December 10 at the Best Corporate Citizen Awards Ceremony 2009 organised by the Ceylon Chamber of Commerce. He struck the correct note when he expressed his perspectives for economic development emphasising the prerequisites for development in a concise and effective manner. His presentation was holistic in approach and covered several important areas that economists are prone to neglect as well. The factors noted by Mahinda Samarasinghe, Minister of Disaster Management and Human Rights deserve to be underscored.
The implication of what he said was that economic growth cannot be achieved easily and with mere rhetoric as it requires a number of conditions to be put in place. He rightly emphasised a number of non-economic conditions that are vital for Sri Lanka’s development. Among them was the most important factor of corruption that we hope he will try to eradicate from within the government.
The Minister was candid and realistic on this vital issue of corruption. He stressed that corruption was an issue that needs to be addressed to achieve rapid economic growth. He pointed out that “It is no wonder that there is a close correlation between indices which show countries with high incomes and development and other indices which measure perceptions of corruption. The least corrupt countries are invariably those that are doing the best economically. Corruption leads to poor decision-making which has a negative impact on development and growth. It is heartening to note that several Sri Lankan businesses have joined the United Nation’s Global Compact against Corruption. This is an area where the public and private sectors must work together to address a critical challenge.” He told the largely business community: “Business is seen as one of the key elements of this global phenomenon. Representing the supply side of corruption, businesses must be sensitized to the corrosive and deleterious consequences of corruption on national economic growth.”
He emphasised that if the country is to double next year’s economic growth from the present level of 3.5 percent this year to the projected seven percent in 2012 there was a need for collective and cohesive thinking and a coordinated strategy for growth and development that is sustainable as well as being equitable. In fact such a coordinated strategy is imperative to achieve the doubling of per capita income by 2020 that the government is aspiring to achieve. In other words he impliedly and quite rightly pointed out that growth will not occur automatically. This is a significant point as many appear to think that the cessation of the war itself would be adequate for rapid economic growth.
The end of the war will most certainly result in some growth as sectors and activities in the North and East that remained dormant will now come into production. Some of this increased production has already occurred in agriculture and fisheries and more progress in these activities are likely soon. Even where these economic activities are concerned supportive co-ordinated measures would enhance these developments. However there are other economic activities like the abandoned industries in the North that require investment for their resuscitation. The Minister was not speaking of this autonomous growth resuscitation but the higher levels of growth of 7 and 8 percent that is needed for sustainable growth with equity. He said “we need to adopt strategies that will enable us to exploit the unlimited possibilities that the defeat of terrorism has created. To do this, increased inflows of investment and sound economic management are hugely significant.”
Interestingly he placed an emphasis on private remittances from abroad as a significant source of development funds. In his words, “Attracting increased investment and remittances from overseas investors, expatriate Sri Lankans and migrant workers is a key component of the Government’s approach in this connection.” Private remittances have been an important source of funds to bridge the persistent trade deficit and provide relief for the balance of payments. This year’s figures are particularly impressive as the remittances covered the trade deficit and in fact turned it into a significant surplus. There has been an increasing trend in private remittances from about 5 percent to 10 percent. The Minister is of the view that this source of funds for investment could be enhanced by conscious policies to restructure the workforce that migrates. “We also need to gradually change the profile of our expatriate workforce from semi-skilled to more skilled levels” he asserted. Quite a significant proportion of remittances are from professionals working abroad and from expatriates for other reasons.
The Minister also emphasised the need to attract foreign investors. Although there have been a number of investors who have been speaking about the country’s prospects, their ultimate decision to invest depend very much on the policy framework, predictability of policies and good governance. The extent of corruption and indeed the perception of the incidence of corruption would play an important part in encouraging investment.
Most significant was the close connection he brought out between democratic rights and economic growth and the converse relationship between economic growth and political stability. He claimed that the “socio-political changes envisaged after the military gains for reconciliation initiatives include democratisation and political inclusion and the empowerment of people who had no democratic voice nor space to express themselves under the forcible domination of the Liberation Tigers of Tamil Eelam.
Further he argued that these “will all come to naught if we do not secure economic stability. This is why we need to move forward contemporaneously on many fronts, chiefly the economic front.” It is of course open to question as to whether the efforts at reconciliation with the minorities are adequate, in the right direction and at an adequate pace. It is however incontrovertible that economic gains and development would be crucial in a durable and sustainable peace. Among the many other issues he stressed as necessary for development were the maintenance of law and order, the guarantee of physical security, creating a consciousness of constructive partnership and mutual confidence among the diverse parts of Sri Lankan society, regional development and the need to work towards freedom from want.
Fulfilling these multifaceted conditions is a massive task that the political leadership must address once the heated round of electoral politics is over. Rapid economic growth is not possible without these conditions being fulfilled. |
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