During President's second term in office:

Govt’s target - increasing per capita income to US$ 4,000

By Uditha Kumarasinghe

Deputy Economic Development Minister Lakshman Yapa Abeywardena said President Mahinda Rajapaksa faced the major challenge of defeating terrorism during his first term. The necessary environment has now been created for him to take forward the country during his second term. The Deputy Minister in an interview with the Sunday Observer said during the second term of the President, the major economic goal of the Government is to increase the per capita income to US$ 4,000. The Minister is confident that the President would make Sri Lanka the "Wonder of Asia" during his second term of office.

Q: President Mahinda Rajapaksa is due to begin his second term this month. How would you describe his outstanding economic achievements in his first five years as President?

A: We should focus attention on two aspects. First, we should consider the situation in the country when the President assumed office in 2005. The three decade terrorism was the key challenge faced by the country. The President did not have a majority in Parliament for a stable Government. Even the country's security situation also faced a serious threat. It was in this scenario that President Rajapaksa assumed his first term of office. Therefore, we should consider how the President faced to that situation.

The former leaders stet change their decisions due to various local and international pressures. President Rajapaksa even gave a six months time frame to LTTE leader Vellupillai Prabhakaran to come for negotiations. The President created the environment conducive to hold negotiations with the participation of senior Government Ministers. The President had learnt from experience that this would not bring positive results and decided to defeat the LTTE by military means.

When military operations against the terrorists continued, the country had to face international pressure. The international community also indirectly imposed various restrictions similar to economic sanctions on Sri Lanka and delayed the grant of loans and increased the interest rates. However, the President took a bold decision to defeat LTTE terrorism without yielding to international pressure. This is the nature of a true leader which is most significant when compared to the former leaders.

The leaders who ruled our country in the past had two major problems. One was the need to safeguard their political career. The other was the fear of death. President Rajapaksa however took the bold decision in the interest of the country but at a great risk to his life. He formed a stable Government with the support of a large number of Opposition MPs including those in the UNP and other Leftist parties. Amidst the military operations against the terrorists, the President ensured the country's uninterrupted development.

Terrorism has since been eradicated and a conducive environment has been created for the President to take forward the country in his second term in a more successful manner. During the first quarter of this year, we achieved over 8 percent economic growth, which has continued up to the second quarter as well. The Government has launched a series of mega development projects while taking the initiative to develop infrastructure facilities in rural areas.

While embarking upon the development priorities, the President is also maintaining a close touch with the people. The President also goes from district to district to review the progress of development activities in the periphery. Now we are in the process of making Sri Lanka into the "Wonder of Asia".

Among all former leaders, President Rajapaksa is the only leader who has the ability to successfully continue politics and governance to suit the country. Most of the former political leaders were unable to succeed and they failed after several years. However President Rajapaksa has realised these objectives as he is always with the people. We are fully confident that we could make Sri Lanka the "Wonder of Asia" during the President's second term.

Q: What are the major economic goals under the Mahinda Chinthana Idiri Dekma in the next five years?

A: During the past few years, steps were taken to develop infrastructure facilities. Increasing income avenues of the people within the next five years is our major economic goal. Our target is to increase the per capita income to US$ 4,000 within the next five years.

Q: Sri Lanka's sovereign bonds had been over-subscribed several times. Why does the international community has such confidence in Sri Lanka's economy?

A: Among the indicators, Sri Lanka has been named one of the best countries to live in. We have also come into the circle of 32 countries which can be visited freely without any fear. Sovereign bonds are over-subscribed due to the stability created in the country. At present there is a political and economic stability in our country. Therefore, the people are keen to invest in sovereign bonds.

Q: The Stock Exchange too has been breaking all records. Does this signify renewed investor confidence in Sri Lanka?

A: There are two reasons for this. One is that our local investors have been helped a great deal. They have invested their hidden wealth in the Stock Market. In addition, lots of joint ventures have found its way to Sri Lanka. Both these facts have facilitated the Stock Market to reach a record-breaking position.

Q: The Opposition has made allegations that the economy is being mismanaged and the debts are too high. What are your views?

A: We are among the countries which repay their foreign loans. The percentage of foreign loans has dropped drastically. Even the Opposition is well aware of this situation. They however make baseless allegations to gain political mileage, because the masses do not have a proper understanding of these loans. Earlier the Opposition misled the people that the IMF would not grant loans to Sri Lanka. The IMF has even released its fourth tranche to Sri Lanka. Foreign countries and the international community have realised that Sri Lanka is moving forward with stability. Consequently there is no difficulty to negotiate foreign loans.

Q: What are the Government's plans to bring down the cost of living?

A: It is difficult to bring down the cost of living in any country. As a remedy, steps should be taken to provide avenues for the people to draw a sufficient income to meet the rising cost of living. The Government would introduce a methodology to increase the income level of the people.

At present the prices of minor export crops have increased. When world tea prices drastically dropped, the Government provided fertiliser subsidy to tea smallholders as well. However, we imposed a condition that the fertiliser subsidy will be removed when the price of a kilo of tea leaves increases to Rs. 45. Even if the price of a kilogram of tea leaves has exceeded Rs. 60, the Government still continues the tea fertiliser subsidy. The Government is well aware of this situation. The fertiliser subsidy however continued in the hope of encouraging the tea smallholder to increase his incomes. The intention of the Government is to encourage the people to increase their incomes.

Q: What are the benefits of the Government taking over Shell Gas?

A: The first step is to break the monopoly. The competition among the monopolists results in prices being increased arbitrarily. With the takeover of Shell Gas operations, the Government hopes to pass the benefit to the consumers in keeping with the gas price fluctuations in the World Market.

Q: Sri Lanka is now regarded as a Middle Income Country. Consequently, there will be a reduction of foreign aid and grants. What are the plans to increase trade and exports to earn more income?

A: The Opposition attempted to give a wrong impression that the country would be put into a great difficulty as we could not retain the GSP Plus facility. Most of our garment products are exported to America. They did not give us GSP Plus at all.

There are nearly 7,000 vacancies in companies in the Free Trade Zone. Many employment opportunities are available in our country. Sometimes, we don't have skilled persons to fill these vacancies. We can't become debtors to foreign countries forever. A developing country has to face such situations. Steps should be taken to produce high quality products so that it could attract a demand from countries worldwide. We can't expect relief from foreign countries forever. The GSP Plus facility was given to us as a measure of relief during the tsunami. There is no possibility of retaining it forever. We could face such situation as Sri Lanka has become a middle income country at present.

Q: There is a belief that our tax system is very complicated. Are there any plans to streamline the tax system and get more people into the tax net?

A: Yes. It will be sorted out during the forthcoming Budget. The Finance Ministry also appointed a committee to reform the existing tax system. The Finance Ministry Secretary has said that they would implement a simple tax system based on the recommendations by this committee. Some people have evaded the payment tax. Of a simple tax system is introduced, it will facilitate tax collection.

Q: What will be the benefits to the people in the forthcoming budget?

A: Before the Budget, it is difficult to comment on its benefits. But I hope that the Budget would create opportunities for people to tap more income sources.

Q: The Opposition says that the Government is planning to add more taxes to consumer goods. Is there any truth in this?

A: The Opposition made this same allegation during the last election as well. But the people rejected them as baseless allegations. Therefore, this is not a big issue for the Government.

Q: Our foreign reserves are very strong and it is said that the rupee has appreciated. What are the steps taken to protect our exporters?

A: Firstly, we would prevent imports which are harmful to local products. When the rupee appreciates, the interest rates of the banks will drop. The Government wants to implement a common interest rate and the benefits would be passed on to the people.

Q: The subject of tourism also comes under the purview of the Economic Development Ministry. Can you comment on the progress of the tourism sector?

A: Tourist arrivals have recorded a 36 percent increase compared to last year. Travel advisories imposed by some countries have been lifted. I got the restriction on Japanese tourists against travelling to the North and the East lifted when I visited Japan recently.

The travel ban imposed on Sri Lanka by some European countries has also been lifted. They have recommended Sri Lanka where tourists can travel safely. Sri Lanka has also come into the category of 32 countries which can be visited freely. All these plus factors have led to promote our tourism industry.

Our target was nearly 500,000 tourists arrivals by the end of this year. We however hope that nearly 650,000 tourists would visit Sri Lanka by the end of this year. At present over 30 major hotels in Sri Lanka have received hundred percent bookings for November and December this year. We are confident that we would reach our target.

We have already given permission to the investors to construct new hotels at Pasikuda, Kuchaveli and Trincomalee. Two or three new hotels have also been set up in the South. Over 2,000 rooms will be constructed in these hotels. Our target is to construct 40,000 hotel rooms by year 2016.