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Sunday, 10 February 2013





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Government Gazette

Unity and reconciliation, the need of the hour - Minister Dr. Sarath Amunugama

Senior Minister for International Monetary Cooperation and Deputy Finance and Planning Minister Dr. Sarath Amunugama said the need of the hour is ethnic unity and reconciliation. If our people remain disunited, then it will be very difficult for us nationally and internationally.

The Minister in an interview with the Sunday Observer said that certain people who donít wish this country well or are very shortsighted only espouse narrow-minded causes. This is bad for Sri Lanka and has to be stopped somehow. When we explain Sri Lanka's position at the international fora we could tell them with pride that many infrastructure development projects have been launched in the North and the East. We have rebounded very fast from the terrorist situation. We must not allow the ethnic misunderstanding to continue.

Dr. Amunugama said President Mahinda Rajapaksa in his address at the 65th Independence Day celebrations made a fervent appeal to stop promoting religious, cultural and racial extremism in the country. The President who condemned these tendencies made clear his image of a unified and trustworthy country. As the President said it is important that we should go for ethnic understanding and reconciliation. Else our development will be at stake. The President made two points in his speech. One is that external forces should not meddle in our internal matters. The President also emphasised that we must put our own house in order as all communities are equal and hence foreign countries need not interfere as reconciliation and peaceful environment are in place.

The Minister said if our people are united and safeguard human rights, then we need not worry about what others think. There is nothing wrong in being an advocate of human rights. Sri Lanka has a good record of agitating on behalf of human rights. He said that he doesn't agree with the position that we should treat those who are talking about human rights as our enemies. On the other hand, we must set our own house in order and make sure that there are no complaints regarding human rights violations. Today in the modern world, we canít say our rules need not bother others or their rules need not bother us. That is not possible.

Excerpts of the interview:

Q: How do you evaluate President Mahinda Rajapaksa's Independence Day address that the UN charter does not warrant any member State to threaten or use force to undermine the territorial integrity or political independence of another or intervene in domestic matters?

A: I think President's speech at the 65th Independence Day celebrations is very important. It clearly spelt out Sri Lanka's position particularly on the post-war situation. The post-war period is marked by various opinions as to how the country can move forward. The President in his speech made two points. One is that we don't need the interference of external forces in our internal matters. The President emphasised that we must put our own house in order, that all communities are equal and foreign countries need not interfere because we are providing that sense of reconciliation and peaceful environment that they are prescribing to us. Anyway that is our policy. So I think the speech has to be taken together. Please don't interfere in our domestic affairs. We ensure that there will be no grievances or misunderstandings between different communities. The President made a fervent appeal to check this situation. Religious, cultural and racial extremism is becoming manifest in this country, particularly racial extremism. The President condemned this and gave his image of a unified, trustworthy country.

Q: It is reported that Sri Lanka Army has saved Rs.1,500 million last year in terms of labour in health, education, sports and urban development projects. How worth is this contribution in the context of national development?

A: I think one of the best things that happened after the war is the very positive way which the Armed Forces have been deployed under the leadership of Defence Secretary Gotabaya Rajapaksa. Usually when a war is over, soldiers are demobilized. As a result of this demobilization, they go back to the society and often they cannot adjust themselves. You can't expect a soldier who has been trained to kill to live a particular type of life and go back to his home simply because the war had ended and carry on as though nothing has happened. So the decision to use them for national development is a good and creative one. We are a country where there has been an end of a war. It has led to different types of anarchy in the country. Even now we see some of the crimes at village level are committed by army deserters and various other people associated with arms. The Sri Lankan Government has deployed them wisely for development purposes. I can say on behalf of the Finance Ministry that they all are paid their salaries. The fact that there is no war does not mean that they have been forgotten. They are paid their salaries. They are looked after well and various facilities are provided. So it's only right they may be used very constructively in the development process.

Q: How feasible is Sri Lanka targeting a 7.5 percent growth in her GDP and overall reduction of budget deficit to 5.8 percent of the GDP while maintaining a mid single digit inflation rate in 2013?

A: According to the Presidentís Budget Speech, these are the targets set for 2013. If you look at the last year, we had achieved our targets particularly on the fiscal gap. So we will also keep that fiscal discipline. At the same time, we have to invest in development. So we are hopeful that we can stick to those targets.

Q: The unemployment rate in the first and second quarters of 2012 has recorded 3.90 percent, the lowest so far. Even such a percentage is not a salutary feature for a developing country like Sri Lanka which has a predominantly agricultural base. Your views?

A: I donít think it has reached such a dangerous situation. There are many factors. One is the migration. About 1.5 million Sri Lankans are working abroad. The Army is also employing a large number of people. The integration of the North and the East has led to productive agricultural development. Tourism programs have also led to development. The Government has generated more employment opportunities in the state sector. So the unemployment figures are coming down. But we have a problem in making sure that they go into productive employment. Generally Government service is considered desirable but the question is whether it is productive as much as we would like. My own view is that we have to go slow on the growth of public sector and encourage private sector to employ more and more people. Then that will lead to greater productivity in the country. Mere expanding the public service is not likely to increase productivity.

Q: It was reported that five industrial zones and several tourist zones are to be set up in the North to resolve unemployment. Could you elaborate on this?

A: We are still a predominantly agricultural country and we can see that agricultural productivity is improving. Of course, the rise of technology is pushing people out of rural areas. They donít want to be agriculturists. Fortunately, people are joining the Armed services. There are those going to the Middle East. There are lots of opportunities in the tourism sector as well. We canít still say whether the people are being directed to the proper areas such as the service sector and manufacturing sector. There has been a decline in the manufacturing sector worldwide, because advanced countries are facing a slow down in growth. Consequently the opportunities are getting less. Even if we manufacture, how are we going to sell? So we have to concentrate on the agriculture and the service sectors particularly through tourism and financial services. In the manufacturing sector, we may have to find a new strategy of linking up with the manufacturing hubs in our region. For example Chennai is fast developing as an industrial centre in South Asia. They will need so many things in the supply chain. So we have to get used to that.

Q: By now dozens of foreign banks have their branches operating in Sri Lanka. What is their actual contribution to Sri Lankan economy by way of investment or any other means?

A: When our economy is growing at 7 or 8 percent, it means there is more money in circulation and the financial institutions are expanding. Those days we found that since banking services were limited, a lot of finance companies and other financial institutions were coming up. It is better that the banks do this job. The Government has given lots of incentives to the banks. But this year we are hoping that they will concentrate more on small and medium scale industries. That is the backbone of our economy. That is why new state banks are concentrating on that. We have to remember that today we have a distorted banking system, because money from state banks is siphoned off by the Electricity Board and the Petroleum Corporation. They have huge debters. That means the money made available for investment is limited. So the Government will have to tackle this question and make the banks more development-friendly rather than mere banks that are lending to the Government and state-owned enterprises. So we have to make the banking sector more responsible. That is the question.

Q: Regional economic groupings namely ASEAN, Shanghai Cooperation and other similar organizations have been mutually beneficial to its members. Cannot Sri Lanka seek membership in these groupings to secure export markets for our products?

A: We are members of SAARC. That is our regional grouping. But we can have associate status or observer status with other regional groupings. There is no difficulty in it. The fact of the matter is in SAARC, India is the dominant partner. If you look at the automotive industry and other small light machinery, all that is coming now from India and China. The trade patterns are changing. So as you rightly say, we have to look more into regional cooperation when it comes to manufacturing sector. Still our tea and rubber industries are very much western-oriented. I think the time has come for us to look at regional markets, because I donít think we can ever do away with the advanced economies. For example, take the textile industry. It is useless to talk about the garment industry in the context of regional cooperation. We have to export to the countries that are paying high prices for our products. We have to have international trade, intra-regional trade as well as regional trade.

Q: There is a school of thought which advocates that the actual independence dawned on Sri Lanka only in 2009 when the country was liberated from terrorism. How do you view this?

A: So long as there was a conflict in the country, we couldnít talk of independence. Certainly we had political independence. We couldnít grow economically as a nation, due to the 30 year terrorist war. Even before that there was communal rivalry. Our post-independence period shows that we had not been able to resolve the ethnic and other issues. Therefore, in this post-conflict period, we must solve those issues. Otherwise, the post independence period would have been marked by the conflict situation which had prevented us from becoming the economic power-house we could have been. It is very important as the President mentioned in his Independence Day address that we should go for ethnic understanding and reconciliation. Without that, again our development process will have to be compromised.

Q: The Opposition alleges still our external trade amounting to around 70 percent is with USA and European Union while a greater trade imbalance continues with China and India. Is there any worthwhile substance in this argument and if it is so why not the situation rectified?

A: If you were to look at the type of goods we manufacture, basically tea and garments, its market is not so much a regional. It can be so in the future as a substantial middle class is emerging in India, China and South East Asia. However, it may change in the future. But at present, we have to depend largely on western markets. We also have to remember the new concept of supply chains. Its better that we jointly explore foreign markets. Changes are taking place everywhere. If we take tourism for example, earlier 80 percent of our tourists were from Western Europe. Today Indians, Chinese and others from the region are visiting us and the pattern of tourism is changing. Similarly the market will also change. For the moment, the specific nature of our products is directed more towards the developed countries.

Q: Are we on track to achieve the target of US$ 4000 per capita income given the global economic challenges?

A: That is our target. There are some signs of recovery in the American and European economies. Our important areas of tourism and foreign remittances are improving. The last point I want to make is productivity. We must emphasize on productivity. We canít have rights without responsibilities. If we look at the question of garments, people say that the garment factories are getting closed and workers are losing their jobs. It is because these trade unionists and various other people are making Sri Lanka uncompetitive. If we are uncompetitive in the market, then nobody will invest here.

It is our responsibility to ensure that through human resources development, publicity and efficient administration we are well positioned for growth. It does not happen automatically. We have to emphasise on productivity in every work place and every farm. People must produce more. Then only we can integrate ourselves into the global market. If we are always talking about salaries and drawing more and more benefits without contributing and if our productivity does not go up, then we are going to face problems.

Q: The visit of American State Department delegation and the talk of a procedural resolution at the UNHRC sessions portend a difficult situation for Sri Lanka. Are we fully armed to meet this challenge?

A: As we have to explain our position in the international fora, we have completed a large number of development projects in the North and the East. I think Sri Lanka can be proud of its infrastructure development. We have rebounded very fast from the war situation. I must also add that we must not allow this ethnic misunderstanding to spread. Certain people who don't wish this country well or are short-sighted espouse narrow-minded causes. That is bad for Sri Lanka. This has to be checked somehow. If our people remain disunited, then it will pose difficulties nationally and internationally. Hence the need of the hour is ethnic unity and reconciliation.

Q: The Western world invokes the bogey of human rights in developing countries with utter disregard to the loss of precious human lives in Iraq, Afghanistan, Libya, Mali and Pakistan. Would you like to explain this contradiction?

A: If you were to look at this problem seriously, there is nothing wrong in being an advocate of human rights. Sri Lanka has a good record of agitating for human rights. So I don't agree with the position that we should treat those who are talking about human rights as our enemies. On the other hand, we must set our own house in order and make sure that there are no complaints on human rights violations. Today in the modern world, we can't say our rules need not bother others or others' rules need not concern us. That is not possible. So on the platform of safeguarding basic human rights, we can all come together. If our people are united to safeguard human rights, then we need not worry about what others think of.

Q: Won't there be any problem of holding CHOGM in Sri Lanka despite reservations by certain Commonwealth countries such as Canada and certain British politicians as well?

A: I don't have any inside information. So I can't really comment on it. But as far as I can see there are so many Commonwealth countries whose people have visited us and they have seen the impressive work done in the North and the East. It is very important that we convey this message properly to the countries in the Commonwealth. I hope that we can have this meeting as scheduled.

Q: How has your civil service expertise helped you in your dealings in public finance, public debt and financial discipline with World Bank, ADB and similar aid-giving organisations?

A: Well, in the civil service, we were an elite and we had wide experience. We know how to interact with the people. This has helped in my dealings with the IMF, World Bank and ADB and bilateral economic relations as well. We must remember that we should always give off our best. We have the capacity - people with the background. Sri Lanka must always select the right people and the civil service, I believe, was one way of selecting those people and ensuring that we are working at peak productivity. Its like a car. If you have a good car, you could run smoothly. There is no point in having a good car and just parking it. We need to get our act together.



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