New vision - new era

By Dhaneshi YATAWARA

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Rising with domestic aspirations

Economy with a continuous growth rate of over 6% for four years

Sri Lanka’s economic growth rate for the past three decades had been moderate but lagging behind those achieved by the dynamic, emerging economies in East Asia. In addition, there has been a perpetuation of income disparities, both among income earners and geographic regions. It is clear that in the past the economic growth has largely bypassed the rural areas in the country and concentrated in the Western Province. In the case of income groups, the disparities appear to be even wider.

During the next ten years our population is expected to increase upto about 22 million from the present 19.7 million. The labour force is expected to reach a level of 10.9 million. The unemployment rate is declining. There could be some tightening of the labour market conditions with the possible increased demand for labour with the ongoing expansion of the world economy, aging population in many countries including Sri Lanka, and expected expansion of domestic economy. However, we need to ensure that the gain made in employment is sustained and the new entrants to the labour force, projected to be around 2.8 million during the next ten years are well prepared to be gainfully employed and their productivity level raised.

Another major challenge will be eradicating poverty, affecting about 23 percent of the country’s population.

Sri Lanka needs a considerable catch-up in growth rate not only to secure its place in the region as a newly emerging country, but also to ensure that the country’s economy is capable of providing better livelihood for all citizens, including those who are in abject poverty.

Enduring vision

Based on this strategy, a long-term development program for 2006 - 2016 has been prepared within the broad policy framework of ‘Mahinda Chinthanaya’.

The formulation of the program has undergone an intensive consultative process involving sectoral Ministries and other relevant agencies. The new approach integrates the positive attributes of market economic policies with the domestic aspirations by providing necessary support to domestic enterprises and encouraging foreign investments. Within the macro economic parameters the program includes ten-year policy frameworks for various sectors of the economy covering sector visions, issues, challenges and strategies.

Such a substantial leap forward would not only require careful planning and implementation but also favourable external conditions. The challenge caused by the recent massive rise in world oil prices has had adverse impact on the economy and the country needs to prepare for any further shocks in the area.

Sri Lanka has faced the recent challenges reasonably well making the necessary adjustments in petroleum product prices, facing the realities in the world market conditions. The country also has made considerable progress in the post-tsunami recovery and reconstruction efforts while the speed of recovery in some parts of the country has been constrained due to the prevailing LTTE threats.

Agriculture and industry

Mavil Aru anicut after liberation

Moragahakanda project in process

New and old bridges at Manampitiya

Accelerating economic growth needs a significant up - scaling of investment and improving overall productivity level. In all sectors, new growth areas are emerging. In the agriculture, the non-traditional products such as fruits and vegetables, poultry livestock, fisheries etc., are expected to make a greater contribution to output and income generation. The support to this sector is continuing. All three major sectors - agriculture, industry and services are expected to grow faster. Manufacturing and services industries are also expected to show greater dynamism.

The more dynamic industries within these major sectors identified are electricity, port services, transport, telecommunication services, small and medium scale businesses including personal services and many new manufacturing activities - catering to both external and domestic markets.The ‘ten year plan’ focuses on an annual growth of more than 4% - 5% in the agriculture sector. The input by the Government under ‘Mahinda Chinthanaya’ for agriculture gives particular emphasis on achieving food security and raising incomes for small farmers. The strategies adopted include, increasing competitiveness through application of modern technology, improved cultural practice and shifting to commercial agriculture. The role of the Government includes agricultural research and extension, facilitating the supply of quality seed and planting material, assistance to marketing and credit as well as providing production incentives in the form of subsidies and transfers.

World market

International competitiveness of Sri Lanka’s industry needs to be improved if the development of the sector is to be sustainable. The industrial policy places emphasis on assisting the small and medium scale industry sectors, micro enterprises and self-employment ventures as a part of the shared growth strategy. Government intervention focuses on creating a sound incentive structure, which are for new investments as well as facilitating the access to technology and credit, developing skills and entrepreneurship, maintaining standards and performing regulatory functions among others.

The Government under the ‘Mahinda Chinthanaya’ focuses more on improving the macro economic environment, upgrading the public service delivery including improving the efficiency of State-owned strategic enterprises, promoting technology and as well as facilitation of private investment in new industrial zones.

Tourism

The Mahinda Chinthanaya’s ten year horizon plan targets to promote Sri Lanka as the most attractive tourist spot in the region. Tourism being a sector which has a vast potential for contributing to employment and foreign exchange earnings is expected to make major strides under the plan. Plans have been prepared to cater to a large volume of high spending tourists including those from emerging Asian markets. There will also be greater emphasis on developing domestic tourism as well as a further strengthening of the role of the Government in setting standards, providing investment incentives and regulations in this sector.

Social development

Under the ‘Mahinda Chinthanaya’ - development framework for 2006 - 2016, many areas such as education, health, livelihood development and social protection, disaster management, water supply and development in lagging regions are given priority. This approach will give a further impetus to Sri Lanka’s satisfactory performance so far in moving towards the Millennium Development Goals. The existence of large regional differences in social indicators has necessitated the preparation of a number of region-specific strategies including those for the North and East and the Plantation workers.

Developing infrastructure

Randora - Infrastructure Investment plan, under the ‘Mahinda Chinthanaya’ ten year development frame work’, envisages channelling a large share of investment to developing the basic infrastructure and other services in the rural areas - i.e. electricity supply, telecommunication services, supply of drinking and irrigation water, access roads, agricultural storage, health and education facilities.

The plan for electricity aims at a substantial expansion and diversification of generation capacity by implementing the long delayed coal power and hydro projects as well as new fuel/LNG based projects, development of renewable energy sources, rationalizing the tariff structure and increasing access to electricity by all consumers particularly covering the remote areas.

The national, provincial and rural roads improvement program is already underway. Roads in the remote, rural areas are to be developed under ‘Maga Neguma’, various regional development projects and provincial programs. Problems related to waste disposal, water and air pollution are accorded priority. While the public sector plays the key role in the development of water and sanitation sector, the community participation in the sector is encouraged.

Under the Randora infrastructure development program the Water Supply scheme for Jaffna, the greater Dambulla Project, Hambanthota port development, Weerawila Air port, Norochcholai and Trincomalee coal power plants, Northern highway, Hydro power plant in Upper Kotmale, Southern transport development project are included at present.

Caring for terror victims

Thousands of people were displaced since they left their homes taking a handful of their assets in fear of LTTE offensives. After liberating the East last year, the Government along with the security forces started resettling people in their original homelands.

After the liberation, people started returning to their homes. The innocent people would never had the slightest hope for a peaceful future. Now they are armed with the right to elect their representatives unlike in the gloomy past, the era of LTTE’s omnipotent ruling. The much acclaimed Eastern Provincial Council election and the reintroduction of democracy was a welcome news for the entire country. Many were with various views on holding the provincial Council elections. Yet, after the liberation of the Eastern Province, the former Tiger stronghold, people started to smell fresh fragrance in the wind.

If President Mahinda Rajapaksa, as the Commander - in - chief, did not take the decision to let the Security Forces march in and liberate the East from the clutches of the Tigers the restoration of law and order, development and democracy would have been just another dream for Sri Lanka.

In the North we sense the winds of change with the victories received by our valiant soldiers.

Fruits of success

It is expected that year 2008 will be able to produce a fiscal report encouraging the agricultural and industrial sectors as well as the expanding service sector.

It is the first time in the post independence era that our economy is experiencing a steady growth of over 6% continuously for four years. Indicating growth in the relevant sectors, the first three quarters of 2008 shows a 6.9% growth rate in the G.D.P. This surpasses the remarkable achievement in 2007 where the rate was 6.6%. The achievement is gained in a backdrop where the crude oil and world food prices fluctuated continuously and extensively, and also in a world economy where the European and American economies are facing severe setbacks as well as high-rated inflation not to mention the war against terrorism.

It is noteworthy that the unemployment rate came down to 5.3% during the second quarter of 2008 from the 6% reported in 2007, the labour force of the country grew up to 7.51 million in 2008 showing a 2% growth rate, according to the Finance Ministry latest reports.