Infrastructure, investment, FDI pay dividends - Dr. Amunugama

by Uditha Kumarasinghe

* Good, rational management a must

* Speed up decision - making process

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Public Administration and Home Affairs Minister Dr. Sarath Amunugama has been appointed District Leader for Kandy for the forthcoming General Election. He is the most senior Minister in the district having been in politics for nearly 20 years. Previously he was a member of the former elitist Ceylon Civil Service and served as Government Agent, Director of Information and a Permanent Secretary.

He was also Chairman of Lake House. To his credit Dr. Amunugama negotiated the establishment of the Sri Lanka Rupavahini Corporation and the State Film Corporation during his tenure as the Permanent Secretary to the Ministry of Information and Broadcasting. Subsequently he held many Minister Portfolios including Finance, Education, Public Administration and Home Affairs, Irrigation, Industries and Investment Promotion.

He holds a Ph.D. from University of Paris and is one of the few politicians to obtain a doctorate in a specialised field. Dr. Amunugama in an exclusive interview with the Sunday Observer spoke on many important matters relating to the economics and the politics of the country.

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Q: Sri Lanka has just become a middle income status country. What are the economic policies that drove Sri Lanka to this position?

A: There are several important indicators of strong economic growth in our country. We have to remember that the resilience of our economy could be maintained in spite of several crisis. First was the oil crisis. Next came the financial crisis in the Western World and then followed the food crisis.

But more than all these we had the scourge of ethnic war. Now the major problem which ruined Sri Lanka, the war has been finished by President Mahinda Rajapaksa. So we can look forward to speedy economic growth. What helps us in this scenario is firstly the conflict has ended. Secondly we are in a position to exploit our inherent strength. What are our strengths?

The most important one is that we are now facing the future as an integrated country. During the last 30 years, the North and the East as a war zone made a little or no contribution to the economic growth. But today we can see the contribution made by the North and the East in such areas as agriculture, tourism, fisheries and various other growth spheres which are to be integrated into the mainstream development priorities of the country.

If we take agriculture as an example, we find all the reservoirs are located in the Central Province. But the water flows down to the Eastern Province. But if we integrated them into a network of reservoirs and feed new paddy lands, we can get the biggest return for the country. So we can make a big thrust in the agricultural areas.

We are already self-sufficient in paddy. We should also look into other crops like potatoes, chilies and onions which have the potential for spectacular growth and help save foreign exchange.

We should also have ensure a rapid growth in sugar and milk production. Sugar production was largely confined to the Eastern Province. We can get it back on track again. The most important achievement on our part is that we have developed a very good human resource. That is because our people have had the opportunity of receiving a good education during the last 60 years, thanks to the free education scheme. We have a high rate of literacy and also a high rate of adaptability.

Our people can comprehend things more easily than others in our region. These are all plus factors which can now be utilised for the common good. Our target is to go for a Per Capita income of US$ 5,000 as there is wealth we have created in the country.

But we should have a new concept for the future. The new concept is based on five “hub status” for Sri Lanka to start with we want to make Sri Lanka a navel hub, air hub, modern technology hub, a science hub and finally a financial hub. During the war, we succeeded in creating a valuable human resources far advanced in their respective specialised areas.

For an example, the Navy used sophisticated technologies on the sea, we have an Air Force which has a very talented group of pilots and maintenance engineers. We have computer “whizz-kids” as well. Now that the war is over these valuable national resources could be harnessed in the context of development.

Q: The Government want to increase the Per Capita income to US$ 4,000 at the end of the President’s second term. Is this a realistic target?

A: I think this is quite a realistic target. Because we have to speed up our growth momentum now. Once our growth takes off, it will be quite possible. For example in the tourism sector, we are now getting around 500,000 tourists per year.

I think this year, we may be going beyond that target and we may get close to 600,000 tourists. But when we look at regional tourism, getting two million tourists is nothing. We have to have several sectors which can generate over one billion or more US dollars. Our foreign employment sector is yielding around US$ 3 billion; garment sector US$ 2 billion; tea industry US$ 1.6 billion.

There is no reason why our IT sector, BPO sector, gem and jewellery sector and particularly our tourism sector should not become multi billion dollar operations. If all these things are taking place in an environment of growth, we should be able to go reach those targets.

Q: Will it be possible to increase the rate of our economic growth in the coming years?

A: Of course, we can. It can be done easily. Due to the economic downturn which affected our export markets, the rate of growth came down from about 6 percent to 4.5 percent. Now we can catch up because many of those impediments are not there now. The internal and external situation is favourable. Oil prices are stable. Our infrastructure projects have begun to pay dividends. The foreign remittances are on the increase and the tourist industry is fast recovering. Our foreign exchange reserves are excellent. So we should be all right.

Q: What are the main challenges ahead for the Sri Lankan economy in the coming years?

A: I think the main challenges are how to bring good and rational management into our enterprises. We have a history of large scale State intervention. Our economy was a Statict Economy. All the big undertakings like petroleum, electricity, railways and transport were largely public sector enterprises.

But today they all are running at a loss. Whether this was caused by the very nature of the public enterprises or whether it was badly managed, this need not go into now. But the fact is that these are all a drain on the treasury. So we must turn this around. Many of the Ministers have said that they have plans with them to encourage growth and make unproductive areas a zero burden on the budget.

The recent infrastructure investments will help in making these enterprises more profitable. For example, a large scale investment in power and energy sector will make the Ceylon Electricity Board (CEB) more viable. We have to remember that the investment is made not by the Board itself but by the country at large.

It is a contribution made by the country to make the CEB more economically viable. So this is a huge investment. It is for those corporations to become viable State ventures. This is one of the main challenges before us today.

I think the second challenge is to speed up the decision-making process in regard to the investments both by private sector and public sector. The BOI experienced many difficulties for lack of coordination. Something like 20 approvals have to be obtained from various governmental authorities before an investor could get going. This has to be very seriously looked into and remedied. Because we are not the only girl on the beach! There are other countries which are competing for investments. If we take Asia, Vietnam, Thailand and India are our competitors. There is a large-scale investment going on in China at present.

Now Indonesia is also in the field as a competitor. These are countries which are streamlining their investment procedures in the public and private sectors. One of the most important things which we have to do, is to make sure that an investor comes into Sri Lanka. Now there is no war. We have to have good administrative initiatives which will help the investors to move fast. In Sri Lanka, we have a bloated bureaucracy. We have 1.2 million people in public service and five lakhs of pensioners. This is a huge liability on the treasury. So we must not allow this bloated bureaucracy to be an impediment to investment and growth. They must be made very much pro-growth. That is the challenge of the future.

Q: Sri Lanka recently received US$ 300 million from Russia. Likewise, are you confident of more foreign aid flowing into Sri Lanka over the next few years?

A: In my view, we are having more than adequate State to State foreign exchange flows. Because this adds to our debt burden. It has to be used productively to create wealth. Now I think we have come more or less to the height of our foreign State to State investments.

What is important now is not to get more funds but to see that the funds that we have got in the energy, transport, roads and ports sectors are utilised to ensure a high level of efficiency. When an investment is made, we can do a lot. But where we can have a good thrust is in foreign direct investments and foreign funding for local projects. Because, there the investor brings the money.

The country is not liable to repay him. He has to set up his factories and enterprises. Then he can earn his own profit. But the money is not considered a liability of the country. According to my view, it is very important to seize State to State loans and ensure better efficiency and rapidly expand the private sector and foreign direct investments. That should be our strategy.

Q: What will be the impact of oil exploration and exploitation on our economy?

A: If not for the oil problem, we would have registered a much faster growth in those difficult years. We must remember that the high price of oil affects every such sector as tourism, airline, manufacturing and agriculture sectors. If we can find our own oil and make a breakthrough, it will not only effect a massive saving but attract lots of money and attention for a faster growth. When the oil prices were high, we had to stop investments in other sectors to pay staff salaries.

All that money we got by way of foreign exchange from foreign employment, we had to pay them back to the Middle East for the payment of oil bill. If we can find oil or crude oil at a stable price, then countries like Sri Lanka will immensely benefit. Upto now we have been put into the category of non-oil producing countries. If we can move into the oil-producing range or even to hold the light in the neutral way, I think it’s a big gain for this country not only in terms of saving foreign exchange but having cheaper energy and also being a centre of attraction for more investments.

Q: What will be the economic impact of the new port and airport projects such as Hambantota?

A: We are now building the “hub concept”. We have tremendous possibilities of using our location on the sea and air routes and becoming the centre between far East and Middle East, just a few kilometres away from one of the world’s biggest emerging markets. We should be able to use this “hub status” to create wealth and prosperity in this country.

Q: Will the UPFA get a bigger mandate at the forthcoming General Election?

A: Definitely we will get a massive mandate. We have just concluded not only the Presidential Election but also the Provincial Council Elections. So the direction is very clear. The public has a big faith in President Mahinda Rajapaksa. They have faith in our party as well.

I should also say in this Parliamentary election we are facing the people with confidence because a lot of work has been done by the government at village level. One of the main strategies of Mahinda Rajapaksa’s economic plan is to have a more balanced growth. It means the areas which didn’t have investment particularly the village areas are getting much more. We have 12,500 Grama Niladari units in our country. Each one is getting over million rupees annually.

For example, concrete roads are adding lot of value to our rural areas. They are becoming “agricultural” roads. Three wheelers are going all over the places and lots of youths are self-employed as three wheel drivers. Rural produce is coming to market more expeditiously and children find it easier to go to schools now. It is creating a sort of rural revolution.

People don’t understand that. Particularly the people who live in Colombo don’t understand the social and the economic revolution that is taking place in rural areas. That was one of the major factors that contributed to 1.8 million majority votes of President Mahinda Rajapaksa. Rural folk are beginning to speak and they are speaking for our party.

Q: There have been many allegations of corruption. What will the Government do to reduce the waste and corruption?

A: There are so many allegations. But very little of it or nothing has been proved. With the use of the new technology particularly SMS and IT technology, people can communicate with each other instantly. Usually the role of the mass media is getting limited by the take over from the little media.

That is person to person contact. That is used in Sri Lanka for lots of allegations and gossips. So they create a feeling of tension. But none of these have been investigated. What I want to say is that there are structures which are in place in case of corruption. But not a single vote of no confidence against the Government has been presented in Parliament. If there is so much of corruption, the Opposition must bring a vote of no confidence and prove it in Parliament. Nobody has gone to courts or to legitimate agencies of Government with their complaints.

The powers are really devolved on the secretaries of ministries, on Ministers. So nobody has pointed out to secretaries that they have been corrupt. What has happened in Sri Lanka? As I noticed earlier, there is a huge investment in infrastructure growth. This creates a lot of new opportunities and the people who have failed are constantly criticising. When the economy expands, people feel there are more opportunities for corruption. But the fact is that the work is getting done.

There is so much of talk because of the growth of interpersonal message systems and the infrastructure is also expanding very fast so that the people can make allegations. But just because of that we can’t stop doing work. We have to go ahead.

Q: Can the Opposition, which now seems to be in disarray, be a threat to the Government at the General Election?

A: I don’t think so. They don’t even know whether they will come under a common symbol or a common name. Actually the other political parties have been betrayed by Ranil Wickremesinghe. He has taken them for a ride and having cleared his name as a serial looser. Because now Wickremesinghe won’t be identified as a serial looser by making Sarath Fonseka another looser. So he is satisfied. That may be alright for him personally but it is a disaster for any democratic opposition.

Q: Will the Government change the constitution after the General Election victory?

A: That of course is a matter which has to be considered by the President. At the moment, our agenda is to win the parliamentary election. The President will take some decision later on. But at the moment all attention is on the election itself.

Q: At present the Opposition attempts to organise various demonstrations and bring people into street urging them not to accept the Presidential Election result. Your comments?

A: The point is the Opposition got a humiliating defeat. Nobody can argue with 1.8 million vote difference between the winner and the looser. Even in the election petition, they have not referred to computer fixing. All the time they were talking about fixing the results by the use of computers.

But it’s not there in their own submission. We can see that what they are saying is not credible at all. Anybody who went through the last Presidential Election count will know that it is not possible to interfere with the manual count which is then sent to the computer. So they themselves are not pushing that as a complaint. All these show that they are trying to create an environment in Sri Lanka which will delay growth and present a bad image of the country to the foreign audience.

For example, all the time the JVP were complaining that foreign media was giving a bad image and the people don’t understand what is happening. Now they are also contributing to it.

I think it’s a very bad thing that serious political parties are taking up these issues which they should not use to embarrass the country. So internationally we are being embarrassed. Even nationally they are trying to embarrass us. By doing that they want to create problems in relation to various issues like the GSP plus. All the time they were saying that there was an international conspiracy to discredit Sri Lanka. But they themselves are now doing things which will bring discredit to the country.

Q: How do you view the decision taken by the People’s Friendship University of Moscow to offer an honorary doctorate to the President?

A: It is a great thing. Because the Lumumba University was a grand gesture on the part of then Soviet Union to help the developing countries. It was a decision to help all distinguished young students and give them a modern training.

It has also helped to forge sound as one of the academic relationships between Russia and the developing world. When a university like Lumumba confers that doctorate to the President, it means that they have recognised the value of Sri Lanka and the importance of a Leader like President Mahinda Rajapaksa. So it is a grand gesture on the part of the Russians to accept President Rajapaksa as a very serious person and as a good friend with a tremendous potential for the future.