Conducive environment for exporters - Cabraal

by Gamini WARUSHAMANA

“The Government will consider the best model for the pension scheme and upfront payment of gratuity of private sector employees as proposed in the budget, considering reservations raised by the private sector on adverse impact on cash flow of businesses”, said Governor of the Central Bank Ajith Nivard Cabraal. He was addressing a seminar in Colombo organised by the Exporters Association of Sri Lanka (EASL).

He said that one objective of this pension scheme is to increase national savings in the country. The low level of national savings is considered as a major obstacle for economic development.

There are millions of employees who work in the informal sector of the economy who do not have EPF benefits. “Our labour force is over eight million but only around 1.5 million contribute to EPF. The proposed pension scheme is for the welfare of these employees”, Cabraal said.

“We are very conscious of the challenges faced by the export sector.

This recognition led us to address them in the 2011 budget. 2009 was a very challenging year for our exporters as well as all other countries and consumer demand dropped in all countries.

This year there is a 12 percent improvement. We passed a period of extraordinary turmoil. It was extremely difficult to manage the macroeconomic situation. However, our exporters survived and went forward”, he said. Cabraal said an enabling environment has been created in the country for exporters as well as other economic sectors.

This is due to development programs launched by the government for long term economic growth. During the last five years government invested huge money for infrastructure development.

There is development in roads, ports and power supply.

“We have begun developing the business environment. There should be an enabling environment for business and functioning of banks, ports, customs and the tax system have to be improved.

We identify them one by one and you will see significant improvements. You will be able to do businesses much easier”, he said. Labour productivity is another issue we have recognised and soft reforms are taking place. During the last five years there was healthy labour relations in the country, and it was not by accident. The President listens to trade unions and this will continue. There will be good labour relations in the country.

Cabraal said that the only relief provided by the budget is not the 5 percent salary increase to the public sector employees. All benefits enjoyed by the citizens of the country as a result of improved infrastructure are relief measures.

During the last 14 months interest rates have reduced by 10 percent and this is a relief to borrowers. Their interest payment has reduced and now they save money and this can be considered as an income.

He said that the government maintains a sound macroeconomic environment and the economy is strong.

“This enabled us to relax exchange controls. It makes doing business easy. We maintain a stable exchange rate considering the national interest.

The country ratings have improved and it will make your borrowing easy and cheaper”, he said.