'Regional disparities should be addressed'

By Gamini Warushamana

To achieve the economic development plans of the government and reach $ 7,000 per capita income by 2020, Sri Lanka should address regional disparities in development and problems related to marginalised groups, Managing Director, Hayleys Agriculture Holdings Limited, Rizvi Zaheed told the Economic Summit 2014, in Colombo last week.

It was organised by the Ceylon Chamber of Commerce.

The country's macroeconomic fundamentals are strong and this should extend to micro level via rural-centric approach. Growth should spread throughout the country and inclusion of lagging regions and marginalised and underrepresented groups such as women is a challenge.

Today, 45 percent of the GDP comes from the Western province and the other provinces are far behind. Therefore, in surpassing $ 7,000 per capita income, the first step is achieving $ 4,000 per capita income and building a solid platform to extend it to the regions.

It also needs effective implementation of a policy framework.

“Unless we check these disparities that lead to inequality in income distribution even at higher per capita GDP, several problems such as youth unrest are inevitable,” he said.

He outlined the issues in economic growth in 2011 and 2012. The agriculture sector hardly made any contribution to growth in both years due to the drought and in 2013 it declined further.

In the industrial sector, over half the growth was from construction related economic activity while service sector growth was driven by domestic trade and transport.

He said that since 30 percent of the country's workforce is in the agriculture sector, the slow down in the sector combined with construction related growth has not resulted in short-term consumer benefits.

Therefore, even with higher GDP growth it has adversely impacted consumer spending. Zaheed said that there are huge opportunities in the agriculture food supply chain that Sri Lanka can tap to boost overall economic growth and achieve the expected targets by 2020.

The biodiversity of Sri Lanka offers tremendous opportunities for producing a range of fruits and vegetables and high-value horticultural products. Regional markets such as the Maldives and the Middle East have grown over the past decade. Enormous opportunities for processed fruits and vegetables are now available in Europe and Asia. Globalisation has created opportunities such as year round supply of fresh and processed agri products, sustained demand and the setting up of globally linked supply chains.

There are huge opportunities in the processed food export market and Sri Lanka has not yet tapped that market. In 2013, the percentage of processed food exports was only 17 percent which is low compared to Thailand's 75 percent and Vietnam's 45 percent.