Road development necessary to boost growth, investment
By Sunil Karunanayake
Our columnist discusses the state of road maintenance in Sri Lanka
today and calls for more government responsibility here if the country
is to promote foreign investment.
the coverage and network of roads in Sri Lanka falls within reasonable
levels, the quality and further development has fallen well below
the efforts of Mahaveli Development, Gam Udawa (Village Reawakening)
movement and the most recent Maga Neguma has contributed in some
measure, a major effort is required to meet the emerging demands
of economic activities. In the absence of a strong railway network,
road transport plays a key role in both goods and passenger movement.
It’s no secret but a matter of regret that the entirety of
the country’s main export crop tea is moved from estates to
the port through a highly strained road network.
development which gave birth to new townships like Girandurukotte
and the Gam Udawa, did reshape rural life with new hope. Maga Neguma
too was able to carry out urgent repairs in the rural areas. Poor
infrastructure has been clearly identified as a deficiency in the
investment climate and we have repeatedly spoken of high concentration
of economic activity in the western province,
Central Bank attributes excessive delays in road construction to
funding issues due to its dependence on the government budgetary
process. Continuing budgetary constraints and importance attributed
to other critical areas has resulted in low priority for road development.
government needs to look beyond its own resources to accelerate
the development of this vital sector. Speedy resolution of land
acquisition is another issue. The Road Development Authority (RDA)
maintains 11,661 km of national roads and 4429 bridges. Provincial
and local governments maintain approximately 90,000 km. Despite
many obstacles the southern expressway jointly funded by the Asian
Development Bank (ADDB) and Japanese Bank for International cooperation
(JBIC) is progressing though the original target of completion by
2006 may not be a possibility. The Colombo – Katunayake, Colombo
– Kandy expressways and the Colombo outer circular highway
have not commenced yet.
recent study carried out by the ADB, JBIC and World Bank reveals
that developing countries in East Asia need to spend more than a
trillion dollars over the next five years in roads, water, communications,
power and other infrastructure to cope up with rapidly expanding
cities, increasing populations. ADB vice president Geert van der
Linden states that governments clearly have significant incentives
for improving their investment climates and making sure that reliable
public policies are in place to attract the right kind of investment.
Infrastructure has been a key driver of economic growth and reducing
January the World Bank announced a major development plan for the
Sri Lanka Road sector through the “Road Sector Assistance
Project” by providing a US$ 100 million credit to the Sri
Lankan government. This project will cover a network of 630 km of
national roads. The credit backed by a 10-year grace period carries
a service charge of 0.75% with no interest being charged. The government
is financing 30 % of the project with US $ 44 million and will also
pursue to establish the much-needed Road Maintenance Trust Fund
as a mechanism to progress the maintenance of national and provincial
to the World Bank, the Ministry of Highways will oversee the execution
of the road sector assistance project. Both local and foreign contractors
will take part in the improvement process.
prevailing acute road congestion in the city at a tremendous cost
due to fuel wastage and loss of working hours and poor productivity
itself is yet another strong argument to emphasize the need for
good road networks. As proposed in the budget 2003 today every road
user is contributing towards a road fund by paying Rs 1 per litre
of petrol and Rs 0.50 per litre of kerosene. Perhaps this source
of revenue is yet retained by the government and not released for
the intended purpose.
has been a key driver of economic growth and for reducing poverty.
Governments can no longer postpone neither the importance nor priority
of the road network if it is to provide a conducive investment climate
to raise the level of investment. Achieving the targeted 8% growth
rests heavily on the improvement of infrastructure in the whole
country. Given the untapped potential in the agriculturally-based
rural economy a developed road network could move many out of the
Lanka needs to take a leaf from the East Asian experience where
electric power generation, telephone connections and paved roads
have been increasing progressively. The government must be fully
committed to put the World Bank aid package into good use and not
let the traditional slow disbursement associated with aid usage
hamper the progress.
(The writer could be contacted at firstname.lastname@example.org)
featured in World Bank website
An article by Sunil Karunanayake, The Sunday Times FT's regular
columnist on corporate and macro economic affairs titled "Role
of Micro financing in Poverty Reduction & Tsunami Rebuilding"
was recently featured in the web page (http://www.cgap/clear/Sri_lanka.shtml)
of the Paris-based World Bank affiliate CGAP (Consultative Group
to Assist the Poor).
article appeared in The Sunday Times FT on November 6, 2005.
CGAP is a global resource center for micro finance formed by a consortium
of 28 public and private development agencies. Karunanayake, a Chartered
cum Management Accountant, is presently the Project Director of
the Institute of Chartered Accountants of Sri Lanka.