Comment

Public-private partnerships

The private sector is usually identified as the engine of growth and correctly so. After all, private companies stimulate the economy, provide employment to a large number of people, invest funds in vital sectors and keep many of the service industries running.

Nevertheless, recent events here and abroad have proved that the private sector alone should not be considered as the guardian of the economy.

Countries which placed undiminished trust in the private sector as the driver of the economy have learned a better lesson as banks and financial institutions collapsed one after the other. Massive scandals have surfaced at many multi-national giants and locally, we have witnessed the fall of several mega corporate entities.

The lesson here is that some sort of Government involvement and regulation is necessary for the private sector to thrive. This very same theme was discussed at the recent G20 Summit in London, where the world’s biggest economies noted that Governments have to be involved in managing the economy.

But this should not be limited to controlling and regulating the private sector per se. There is an even better process whereby the synergies of both sectors could be harnessed for the country’s overall development.

Indeed, a partnership between the public and private sector is the way forward.

The basic premise behind public-private partnerships is a division of resources and expertise. One sector alone might not be able to handle a particular project on its own, which calls for a combination of financial and other resources to implement it.

The process minimizes delays, cuts costs and offers both sectors to share their knowledge and experience for the country’s benefit. Facing the world economic crisis will be another major challenge for the public and private sectors. Partnerships between the two sectors will be invaluable in this regard.

There already are many such partnerships which have given the economy a boost. One example is the power sector. The Ceylon Electricity Board actively works with the private sector to generate and purchase power.

The private sector is also trialling wind power and solar power projects, which the Government authorities alone cannot finance. Public-private partnerships are also evident in telecom, health, education and infrastructure development. Many private sector companies are also engaged in corporate social responsibility programs through the Government.

The newly liberated North as well as the East are promising areas for public-private partnerships - literally. The Northern region will need a massive injection of capital for resettlement, rehabilitation and development.

The Government alone will not be able to handle this task, without private sector participation. The need for such public-private partnerships for the North was stressed at a recent seminar on Investment and the Private Sector in Colombo.

Expert resource persons who participated in the seminar pointed out that agriculture, fisheries, livestock, dairy, tourism and manufacturing sectors could be developed in the North and the East as the economic potential of this combined area is unlimited.

The availability of over 15,000 kilometres of land for development is also another plus point for the region. Virtually no development has taken place in the North for nearly three decades. The potential for new projects is almost limitless.

Several speakers at the seminar including Central Bank Governor Ajith Nivard Cabraal called for a fresh approach to the region’s development. This would include innovative economic products and investments, ideally through public-private partnerships and joint ventures.

Indeed, there will be many opportunities for the private sector in post-conflict Sri Lanka as peace will become a reality very soon with the eradication of terrorism.

The Government and private sector chambers should jointly study viable projects all over the country and also invite more foreign investors to come in especially to areas emerging after decades of terrorism.

The people and the economy should feel the tangible benefits of fruitful cooperation between the public and the private sectors in a variety of spheres.