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| Tuesday, 2 March 2004 |
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Frank appraisal of economy Observations made by prominent businessmen at the recent Lanka Business Report CEO Forum make for interesting reading. (Daily News, February 24). Their views can be described as a frank appraisal of the present state of the economy, the relationship between the government and the private sector and the latter's role in development. These comments are all the more relevant in the light of current political developments, especially the General Election which is just one month away. One of their main points was that recent budgets have been artificially balanced, with heavy emphasis on foreign aid. The US$ 4.5 billion pledged at the Tokyo donor summit in June has been much hyped and touted as a panacea for all ills. There is no doubt that foreign assistance is vital in the context of the massive rehabilitation task in the North-East, but a little dose of reality will not be out of place. As Chairman of the Joint Business Forum Mahendra Amarasuriya warned at the CEO Forum, Sri Lanka must be very cautious when utilising these funds. If not properly used, future generations will have to pay this back at the rate of Rs. 200 per dollar. Even if all assets are sold, the country will still not be able to settle all its debts, he added. Privatisation does have its benefits, the main one being strengthening the Treasury. But as several speakers at the CEO Forum stressed, there is a far better option than relying outright on foreign aid and privatisation: Foreign Direct Investment (FDI). Sri Lanka has seen a rise in FDI in the recent past. This is a trend that must be not be allowed to fade away. Unfortunately, we lack some of the basic requirements that help attract more FDIs. Infrastructure development is virtually at a standstill. The only silver lining is that some of the expressways are about to be built. Foreign investors are naturally wary of setting up base in a country that does not have a reliable power supply, good roads and world-class telecommunications. Colossal sums have been wasted on feasibility studies of projects which have never got off the ground. The government that is elected to power on April 2 must give priority for infrastructure development, bearing in mind its direct impact on foreign investment and the country's overall development. No room should be left for any form of corruption in this regard. Transparency and accountability must be maintained in all transactions. It is heartening to note that several private sector leaders have mentioned the "dubious role" played by some local businesspersons in dealings with politicians which makes the private sector a counter-party to acts of corruption. Their suggestion for a Code of Ethics for politicians as well as for the business community must be seriously considered. The notion that the political establishment is absolutely corrupt whereas the private sector is lily-white is clearly outdated. Uplifting the level of local industries is equally important. The CEO Forum was told that Sri Lanka imports 90 per cent of its sugar requirements while two sugar factories remain closed. This is a totally unacceptable state of affairs. Developing such local industries will help save foreign exchange and provide employment to thousands of youth. Such action will also address another concern expressed at the Forum the uneven income distribution in different areas of the country. The Western Province gets 46.5 per cent of the country's total earnings, while other provinces get less than 10 per cent each. Redressing this imbalance will be another challenge for the next government. The private sector should increase its level of interaction with the government and the State administrative machinery. Regular meetings should be arranged between private sector representatives and ministers/senior officials to exchange ideas and proposals. This will lead to a more active role for the private sector in development and nation building. The government elected to power next month must consider the private sector as a worthy partner in the search for peace and prosperity. |
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