- Seeks private sector backing to spur exports and growth
- New incentive package to be introduced to IT/BPM sector
- Government to bring Investment laws to implement NSW
By Nishel Fernando
While acknowledging the delays in the government’s reform agenda, Prime Minister Ranil Wickremesinghe urged private sector backing to spur growth with enhanced coordination, and vowed to fast-track the reforms which are lagging behind.
Delivering the closing remarks at the Sri Lanka Economic Summit 2018 yesterday, Prime Minister said, “In terms of getting the next round of reforms through, we are behind in time, about 6-8 months, by now we should have implemented many of the reforms.
We are still talking about it and getting ready for the next budget. We are trying to catch-up with the lost time. We got a new tax structure, which raised its own complications and are now getting them sorted out through the next budget.
However, he noted that government succeeded in stabilising the macroeconomic indicators while insisting that the private sector support is crucial to spur growth at the next stage. Wickremesinghe blamed the bureaucracy, large number of ministries as well as the drought for the delays.
“Bureaucracy moves slowly and certainly you have to overcome more hurdles as there are more ministries. That’s the cost of stability. At least the stable environment what we had achieved won’t be reversed,” he stressed.
The Premier revealed that the government would soon bring in an investment law to implement the National Single Window (NSW) for investments.
“We are working on the Single Window for investments now and planning to introduce it as law. The investment law which would include NSW, will look at the aspects of Ease of Doing Business Index,” he added.
Wickremesinghe also announced that the government is working on introducing a new incentive package for the knowledge sector which had been left behind in the capital depreciation allowance introduced by the government this year, removing the tax holidays.
“We have incentives that include land; the only sector which is left behind is knowledge sector. We are working on a good package for them,” he said.
The Premier acknowledged the issues faced by the private sector as a result of rupee deprecation and high interest rate. However, he urged the private sector to keep an eye on the global economic landscape while pointing out that global economic landscape had shifted during past six months.
He promised to engage more with the private sector in order to resolve issues faced by them particularly in terms of bureaucracy.
“Issues with the bureaucracy can be resolved for all. Let’s take the 10 departments that matters the most to you. With monthly meetings, we will cover the issues along ministry secretaries. Let’s reduce the delays, reduce heartaches and see how we can move forward together,” he said.
Wickremesinghe insisted that competiveness and exports are crucial to solve Sri Lanka’s debt problem. According to him, Sri Lanka has US$4 billion in debt servicing for next year.
“By 2025, if we will have a positive record. We can assure that debt is behind us, and we can tackle the issue of debt to less than 60 percent of GDP, maybe even to 55 percent.” he pointed out.
However, he said that Sri Lanka’s private sector has its limitations in expanding the exports baskets.
“We have GSP Plus. We can export 6000 goods under it and can we find 60? Do you get 60 big items being exported under general categories? We don’t. We have on opening there which we haven’t even utilised,” he added.
Hence, he stressed that foreign investments are crucial to expand the product range. However, he extended government support for the domestic industries in order to become more competitive.
Phase one of Central expressway to begin in 2 months
The Prime Minister revealed that the construction of the Chinese funded phase one of Central expressway would begin in 2 months, after settling the compensations, while the other key infrastructure deployment projects such as free trade zones are also progressing with delays.
“In terms of connectivity, we are still working on the Central expressway, because under the new laws, we have to pay the compensations before the Exim Banks start giving us the money. We are completing that process, so that part one and part three will come in, giving us the road to Galagedara.
“The Chinese will start section one of it next month or the month following it,” he said.
“China Exim Bank earlier granted a US$1.1 billion loan to construct the first phase of Central expressway. We will have one new harbour and a new airport coming in. “The government is planning to setup an investment stretch between Hambantota and Kandy, which would include several large free trade zones since 1994.
“We are working on three at the moment; altogether we have planned five, Hambantota being the largest of it. But we are going through a process of acquisitions which is the most time-consuming,” he added.