Efforts to spur growth brings positive results

M Ali Hassen

The post conflict multi pronged development measures taken by the government has brought fruitful results with upward trends in the GDP growth. The economic, social and demographic indicators have shown a steady growth. The economic indicators such as GDP, per capita income have improved well while the unemployment has also come down from around 25 percent to 15 percent by now.

In June this year the government drastically reduced the import tariffs on vehicles. This has doubled the State revenue from the imports. Director General of Customs Department Sudarma Karunarathna has said that as a result of the drastic tariff reduction, car imports to Sri Lanka have risen sharply during the last three months. According to latest figure some 450 to 500 vehicles are being cleared daily.

Economic revivals

In order to facilitate the fast clearance of these vehicles the Customs Department has attached more officers to the vehicle unit in the long room and even the working hours have been extended up to 8.00 pm from 4.00 pm.

Previously since 2008 there was a high import tariffs on vehicles which resulted in a halt to car imports.

In October 2009, only 370 vehicles have been cleared from the Customs representing a sharp drop of 54 percent compared with 2008.

The Government took a bold decision and brought down the tariffs drastically in June this year, a move to invigorate growth in the island in its post-conflict revival.

Apart from the lowered tariffs the government has also proposed tax reforms to simplify the tax process that would do away the complications that prevails in the system as proposed in the budget 2010.

A committee of independent persons consisting of economists and eminent personalities from the corporate sector is expected to hand over its report next month to the President who is also the Finance Minister.

The post conflict era has brought immediate economic revivals in the fields of tourism, agriculture and fishery industries. A tourism master plan encompassing the development of coastal resort areas inclusive of North and the East has already brought desired local and foreign investment enabling the industry to increase the availability of number of rooms.

Leisure destination

Tourism is a vital area in the policy framework - Mahinda Chintana of President Mahinda Rajapaksa. It has been identified as capable of effectively driving the country’s socio economic development. The program’s vision for the tourism sector is to make Sri Lanka the foremost leisure destination in the South Asian Region.

A dramatic rise in visitors has enabled vast development of Sri Lanka’s infrastructure. New hotels and better road networks are currently being built island-wide to cope with the increasing popularity.

Several hotel giants are undertaking expansion, refurbishment and major re-development plans in order to meet increased demand for hotel rooms.

The Government has already identified over 10,000 acres of State and private lands in major coastal areas and construction and improvement works have already begun under the leadership of Economic Development Minister Basil Rajapaksa. All this will help accommodate the exponential increase in tourist arrivals. The island is now well on its way to meeting its target of 2.5 million inbound visitors by 2016.

The development activities in this sector with the idea of increasing the availability of number of room from 15,000 at present to 55,000 by the year 2016 are well within its reach covering all areas of the country ensuring the dividends of country’s development to all masses equally.

Foreign exchange reserve

The strong macro economic fundamentals have strengthened the country’s foreign reserve.

The Government spokesman Media and Information Minister Keheliya Rambukwella when asked about the government stance on the losing of GSP plus facility explained that since the government has strengthened the macro economic fundamental it could face the eventualities positively.

“Presently we have a foreign exchange reserve of 6.2 Billion US $ sufficient to meet the import needs for more than six months and we are optimistic of increasing it to around 7.5 Billion US dollars at the end of the third quarter”. He had expressed the confidence.

The rate of inflation has recorded a downward trend showing a salutatory macro economic outcome. Country’s US Dollar 43 billion worth economy has registered a strong rebound with Sri Lanka recorded an economic growth rate of 8.5 percent in the second quarter of 2010, the highest ever recorded quarterly GDP growth since 2002. All three major sectors of the economy agriculture, industry and services registered significant growth rates of 5.1 percent, 9.2 percent and 8.8 percent respectively, in the same period.

Rapid recovery

The other areas that see the flourishing future are the rapid recovery in the financial and capital market performance, the consolidation in the service and infrastructure expansion such as telecommunication, highway and expressway networks.

Apart from the above all positive trends and consequent to favourable weather, extra land available for cultivation during the Maha season with around extra one hundred thousand acres of land coming under paddy cultivation in the North and East after the defeat of terrorism and the recovery in livestock and fishery sector, the growth in plantation agriculture and industries, the economy is projected to be buoyant than estimated in the year 2010.

Due to success in the systematic implementation of the public policy frameworks as envisaged in the Mahinda Chintana, Sri Lanka could anticipate 8 percent growth in the current year to carry forward its massive reconstruction and rehabilitation effort in the post conflict era.

The writer is Information

Department Director