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| Tuesday, 27 April 2004 |
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Boost for local industry The Government is determined to find a balanced method in handling the economy while giving pride of place to the local industry. This is the crux of the United People's Freedom Alliance's (UPFA) economic policy, spelled out by Finance Minister Dr. Sarath Amunugama in an interview with the Daily News. It is heartening to note that the UPFA government has decided to uplift the local industries, which are essential for the vitality of the economy. No country can hope to develop itself without paying attention to its industries which have the potential to generate thousands of employment opportunities for youth. Inviting more foreign investors to set up projects too achieves this objective. Dr. Amunugama has rightly noted that the previous government's low tax regime for certain imports such as canned fish, wheat flour, sugar and milk food hampered the local industries and farmers. Paddy farmers are badly hit by the lack of a guaranteed price and buying mechanism. Local producers and farmers were badly affected as they were unable to compete with cheap imports. For example, Sri Lanka has enough sugar plants to meet domestic requirements. However, increasing taxes and duties alone will not be a solution. The authorities must make a concerted effort to boost local production and encourage the producer with a special emphasis on improving the quality of local products. Local products must match foreign ones, quality-wise. Consumers will be reluctant to buy them otherwise. All concessions and incentives too must be given to local industrialists and cultivators. The government has already restored the fertiliser subsidy, which will cost Rs. one billion. It views this as an investment since overall agricultural production would increase and it would help increase the flow of money to the farmers. As the Minister points out, the Co-operative Movement must also be regenerated for strengthening economic activity at village level. It is also essential to encourage the manufacture of consumer durables (refrigerators, washing machines, TVs etc) locally. These represent a huge market, especially in booming rural areas. The new Finance Minister has emphasised that the government does not expect the private sector to handle each and every aspect of the economy. The private sector is the engine of growth, but this does not mean that privatisation is a panacea for all ills. There have been many examples of 'failed privatisations' here and abroad. This is why the State must maintain control over some sectors that directly affect the masses such as health and education. The Minister has also addressed the serious issue of under-utilisation of local and foreign funds. Many projects pivotal for economic development had been put on hold by the previous government. The Minister has singled out the Kotmale hydropower scheme as one such project. The Japanese government had already allocated funds for this project, which would substantially increase the power output. The government must also explore the possibility of reviving the much-talked about coal-fired power station and other similar projects. Many donors have complained that Sri Lanka's rate of aid utilisation is very low. Other South Asian nations fare much better in this respect. If urgent measures are not taken to increase the rate of aid utilisation, donors will not want to commit themselves to further projects in Sri Lanka. Foreign aid, however, is only one way of funding development projects. Gaining foreign exchange through trade is another way of ensuring funds for the country's development. The authorities must strive to increase our exports, especially of non-traditional products, and seal more free trade pacts with friendly countries. Sri Lanka should play a central role in invigorating trade within SAARC countries. The new Finance Minister and his officials must maintain a dialogue with the leading business chambers, industrialists and people's organisations on economic policies of the government. Their inputs will be invaluable in chartering the future economic course of the new government. |
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