Disclosing another dimension of the national unity government’s new economic policy, a senior government bureaucrat said the new administration would not continue the traditional policy of industry protectionism, unless in an extreme case of national significance, instead would create a level playing field with free capital and trade to promote healthy competition.
While this policy could be unpopular, “all the time, we cannot expect the government to protect the industries,” said Industry and Commerce Ministry Secretary T.M.K.B. Tennakoon.
He said the government was considering establishing a new institute for promoting competitiveness among the industrialists.
Hence, the government urged the industrialists to leverage their value chains, trade and marketing strategies to build competitiveness both locally and internationally without knocking on the door of the treasury for reliefs and concessions.
Speaking at the 12th Annual General Meeting of the Sri Lanka Ceramics and Glass Council, Tennakoon told that the industries should not depend on the government for relief all the time and the forthcoming budget has also curtailed a lot of such unnecessary expenditure to spend on promoting investments and competition.
“We cannot sustain the belief that the government must provide all services and solutions,” he added.
The former regime pursued the economic policy of increasing exports while curtailing imports via import taxes and import substitution under the guise of protecting the local industries. But this strategy proved to be highly counterproductive.
While free trade benefits the ordinary Sri Lankan, narrowing competition will only benefit the crony capitalists.
On the contrary, under the new regime, Sri Lanka is to pursue a pro-Western trade and foreign policy and the government is mulling free trading agreements (FTAs) with Singapore and the United States while deepening the existing FTAs with India and Pakistan.
According to Tennakoon, Pakistani Premier is due in Sri Lanka in January while the Indian Prime Minister is also expected by May 2016.
“Therefore, there will be a free flow of capital, free flow of goods and free flow of personnel,” he added.
The government’s industrial policy recognizes the industries as the live wire in the Sri Lankan economy and the ministry has submitted a policy paper designing the action plan for the small and medium enterprise sector development.
Sri Lanka has bypassed industrialization to become a service economy and the sector comprises of little over 30 percent of gross domestic product while the service sector accounts for 60 percent.