The Ceylon Chamber of Commerce (CCC) launched the working draft of Sri Lanka Economic Acceleration Framework (SEAF) 2020-25, on September 17, 2019.
The document has identified over 140 interventions that require to be implemented in driving Sri Lanka’s GDP from US $ 89 billion (2018) to US $ 134 billion by 2025, propelling GDP growth in the period to an average of 6.8 percent.
The following 12 areas have been identified as priority areas for economic development in the 2020-25 period.
To achieve this growth trajectory, the CCC has proceeded on the assumption that there will be social and gender inclusiveness, sustainability and good governance.
1. Preservation of national security and ethnic harmony
- A strong strategy to safeguard national security and eliminate threats.
- Promotion of a common Sri Lankan identity.
- Zero tolerance of divisive practices and attitudes.
- Enforce law and order and inspire respect for rule of law.
2 Public sector reforms and SOE reforms
- Reorient the public sector to deliver a high-quality service to the people with a strong focus on productivity and pay for performance principles.
- Develop a rational basis for the assignment of subjects and functions to ministries to avoid duplication, inconvenience to the citizen and an unnecessary drain on public funds.
- Appoint knowledgeable and competent persons to key positions of government.
- The inability to introduce state-owned enterprise (SOE) reforms has been largely due to a lack of political will and this needs to be addressed urgently. Establish a parliamentary committee comprising members across parties with a focus to reduce the burden of SOEs.
- A communication strategy that outlines the necessity for reforms of the SOEs needs to be articulated urgently. This will help gain a national consensus on the way forward.
- Identify the impact of subsidised pricing for SOEs both in terms of the cost of underpricing and the financing cost due to subsiding pricing. Shift the cost of subsidisation, where needed, to the Treasury to understand the actual performance of the SOE.
- Establish an oversight committee to monitor implementation of government development programmes, comprising public sector as well as private sector representatives.
- Develop an action tracker for all government initiatives, mandatory quarterly progress reports and a sound public communication strategy should be devised.
4 Achieving macro-targets
- Establish an independent public debt office/agency and implement the Medium-Term Debt Management Strategy (2019-2023) to mitigate the on-going debt risks.
- Establish a permanent secretariat to fast-track the relevant reforms required to improve Sri Lanka’s Ease of Doing Business ranking (target of 40 by 2025) as well as other non-index issues, which are impacting the business climate of the private sector.
- Set up specially designed industrial zones, which reduce bureaucratic red tape and provide a plug and play model for investment.
- Provide consistency in the tax regime in the period leading up to 2025 and avoid the application of retrospective taxes.
5 Leveraging hub potential
- Leverage on Sri Lanka’s strategic location and other key strengths to become a maritime and logistics hub for the region.
- Develop the capacity of the East and West Terminal of Colombo Port replicating past successful public-private partnership (PPP) models to increase the current throughput from the seven million TEUs (in 2018) to a potential throughput of 15-16 million TEUs by 2025.
- Develop and support the tourism industry by recognition of it as a key export services industry that will enable the sector to enjoy similar facilities to other key export sectors.
- Facilitate the development of the country as a retail hub with the efforts taken to promote the tourism industry.
- Fast-track the expansion of Bandaranaike International Airport to aid to overcome the current deficiencies. How much capacity by what date?
6 Energy security
- Formulate a holistic national energy policy cutting across all sectors and aimed at long-term energy security.
- Maximise the use of indigenous energy sources consistent with the country’s social, environmental and economic development goals.
- Restructure and standardise the bidding processes including requests for proposals (RFPs) to increase competition, compare bids accurately and capture maximum long-term economic value.
7 Digitisation to fast-track growth
- Sustain the significant advancements already made on the digital front in order to remain globally competitive.
- Implement a Digital ID system to seamlessly connect with its citizens to offer services such as banking, health and payment of taxes.
- Enact data protection legislation.
8 Streamlining SME ecosystem
- Establish a single authority to ensure progress of small and medium enterprises (SMEs), amalgamating the existing agencies.
- Establish a credit guarantee institution to facilitate access to finance.
- Develop a centralised SME database to capture the current information to be used in policymaking.
9 Trade-related reforms
- Reduce various domestic barriers to trade while boosting competitiveness.
- Expedite implementation of trade facilitation programmes.
- Establish a rational tariff structure that promotes the macroeconomic growth objectives of the economy.
10 Modernising agriculture
- Adopt a sound national agricultural policy that will focus on promoting self-sufficiency in the main crops.
- Reform statutes applicable to the sector (e.g. Seed Act, Land Reform Act, Paddy Lands Act) to incorporate the current trends to ensure progress.
- Identify opportunities for exports that will enhance Sri Lanka’s image as an agriculture exporter and knowledge transfer to improve overall quality.
- Post-harvest losses should also be minimised through the common user cold supply chains and sustainable practices.
11 Key enablers for growth: Health and higher education
- The focus of higher education and tertiary education institutions need to be aligned to meet the industry needs and to make graduates employable.
- It is also necessary to support the progression of research to commercialisation. This requires strong collaboration with the private sector.
- There is a need for a serious focus on addressing the issue of non-communicable diseases, which cause a significant impact on productivity.
- The health sector needs to be made more efficient by more effective utilisation of healthcare assets through PPPs.
12 Capital markets
- Introduce the Central Counterparty, Delivery vs. Payment System and new capital market products and services to gain wider retail investor participation in the stock market.
- Enable pension and provident funds to have more broadly diversified portfolios with strong fund management capabilities.
- Implement the Collective Investments Scheme (CIS) code to enable Exchange Traded Funds and Real Estate Investment Trusts.