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DateLine Sunday, 30 September 2007

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Small and medium scale industries, backbone of national economy

Chairman of the Kurunegala Pradeshiya Sabha, Patrick Karunasinghe said that small and medium scale industries are considered the backbone of Sri Lanka's national economy.

They account for about 70 per cent of all industrial establishments, 30 per cent of the total industrial output and 31 per cent of employment. It is therefore essential that they are assisted and developed to compete in international markets.

Industrial Sector in Sri Lanka comprises a range of large corporate forms, small and medium scale enterprises as well as micro household businesses that are based on self-employment activities. Sri Lanka's industrial policy has been designed to address key challenges and issues.

Karunasinghe said that the industrial sector accounts for 27 per cent of the GDP and employs 1.8 million people. During the last decade the average annual growth rate of the industrial sector has been 6.2 per cent. The sector comprises 78 per cent of the value of Sri Lankan exports.

The chairman said that while significant diversification of industrial activities have taken place during the last three decades, textile and garment sector accounts for the largest share of manufacturing activities and exports.

The textile and garment sector has more than 950 factories in Sri Lanka providing direct employment to almost 300,000 workers. It generates more than 3 billion American dollars in the export earnings per year, amounting to one-half of the country's export earnings.

Sustaining the contribution of the apparel industry in a quota free environment as well as accelerating the process of industrialisation in other products with high value additions including new knowledge based products will be focus of the new industrial development strategy.

During the period of 2001-2005 the relative share of the manufacturing sector in the GDP remained declined. Hence there is a need to introduce an aggressive industrial policy to increase the contribution made by the manufacturing sector through an accelerated industrialisation process, he said.

He said that the Mahinda Chinthana advocates an approach where domestic enterprises can be supported while encouraging foreign investments. It integrates the positive attributes of the liberal market economy with domestic aspirations.

The Mahinda Chinthana envisages more effective industrial harmony, higher value added and productivity driven industrialisation. It stands on "knowledge-based" and "technology-intensive" development.

The proposed paradigm is a shift from the "import-based" industries to higher value added industries.

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