To achieve the targeted economic development in Sri Lanka, every Sri Lankan must contribute, said Murtaza Jafferjee, CEO, JB Securities Ltd, responding to a member of the audience at a Colombo event when the question was raised as to whether people are willing to forgo many of the holidays Sri Lankans enjoy.
It was a challenge posed by Mr Jafferjee when he spoke on "The need to Focus on Total Factor Productivity in Sri Lanka" at a discussion on "Towards Making Sri Lanka a Financial and Commercial Hub”, organized by Pathfinder (organization) in Colombo last week.
In the same tone, he said that he is a Muslim and there are two public holidays for Muslims. There are only around 6% of Muslims in Sri Lanka and he said that he could not understand as to why the other 94% of the non-Muslims also enjoy a holiday which is mainly in Muslims, losing so many man-hours in the country's economy.
There were three presentations by W A Wijewardena, former Senior Deputy Governor, Central Bank speaking on "The development of Sri Lanka as a Financial and Commercial Hub", Mr Jafferjee's presentation and Nisthar Cassim, Editor Daily FT, speaking on "A Perspective from the Financial Press".
Dr Anura Ekanayake, Chairman, Ceylon Chamber of Commerce, presented the private sector perspective. The consensus of all the presentations raised doubts as to whether this hub status could be achieved and whether the tremendous groundwork that has to be in place could be achieved as there are other countries which are already on the path to become hubs.
Mr Jafferjee said that Sri Lanka ranked at 79th out of 133 in terms of Business Competitiveness and in these rankings India was at 49 and Vietnam at 75, Pakistan at 101 and Bangladesh at 106.
Improving competitiveness will depend on improving basic requirements and under same rating Sri Lanka's basic requirements rankings are: Institutions 73, infrastructure 64, macroeconomics stability 128, health and primary education 47 and, under efficiecy enhancers: higher education and training 65, good market efficiency 45, labour market efficiency 111, financial market sophistication 65, technological readiness 85 and market size 63.
Innovation factors under the same ratings are: business sophistication 42 and innovation 46. He said that in Sri Lanka though competitiveness improved, it was slipping since 2007.
He said that the view points on Total Factor Productivity (TFP) or higher economic growth are GDP growth, higher labour productivity, increase employment, higher TFP higher capital intensity investment in human resources, technical progress, economic restructuring.
He said that the sources of TFP growth could be achieved by investment skills upgrading, technical progress (technological or organizational advances) economic restructuring (shift of resources to more productive activities). The factors that regard economic restructuring are rent seeking, trade protection, regulatory barriers and an inflexible labour market. The path to growth is productivity and labour participation. He said that productivity growth could be achieved by investment in infrastructure such as roads and electrification, reforming labour laws, improving workforce skills.
Mr Wijewardena said that Sri Lanka has a right to achieve hub status as during the ancient kings like Parakramabahu, Sri Lanka was a trade hub and this is proved as Roman Gold Coins that were used for trading are still found in Sri Lanka.
He said that the five hubs proposed are complementary to each other such as navel, airport, commercial, banking, power and knowledge.
But he drew attention to a galaxy of negatives that would hinder achieving this hub status such as poor infrastructure facilities, poor transportation, and poor knowledge and ICT base. He said the country's road network is bad and the buildings are old and dilapidated and the electricity power supply has to be improved.
He said that there is a shortage of water and said that by 2013 there would be less water for agriculture and said that IT penetration of Sri Lanka is the lowest in South Asia.
Mr Wijewardene noted that Sri Lanka has challenges as there are other developed hubs elsewhere in the world, places like Singapore, Hong Kong, and even India are moving ahead. He said that Sri Lanka has to compete with other hubs such as China which is becoming the commercial hub and South Korea is becoming the knowledge hub.
He said that in the international market place, a new different language to English called 'Globish', is developing fast and Sri Lanka which is ambitious to achieve hub status should be well acquainted with this new language.
Mr Cassim said that before Sri Lanka becomes an international hub it must get the domestic conditions right. He said that he is speaking about listed companies and a few years back consolidation was not allowed in the banking sector which resulted in a negative impact.
Dr Ekanayake was optimistic and said that during the 30 year war while half the land area and 2/3rd of the territorial waters were under siege, Sri Lanka still maintained a growth rate of 5.5 % and this can be improved.
He said that it is time to change attitudes adding that although the world has changed, SriLankans are still living in the past.
He said that things must be changed such as youth are seeking permanent jobs in the government service while no youth is prepared to take to agriculture. He said that men or women prefer to slave in the Middle East rather than work here.
At the open forum Dr Harsha de Silva, economist and now opposition parliamentarian who was in the audience, blasted the idea of a hub status and ridiculed the idea of Sri Lanka becoming an energy hub.
Dr de Silva said that things have first to be put to right where the government has promised that as a solution to ethnic strife, the 13th amendment would be implemented, but nothing is in sight.He said that the Colombo South Harbour project was initiated long before the Mahinda Chinthanaya came in but did not take off the ground earlier. He said that the private sector was kept off in many areas of development and they are handled by the government and said that the government is involved in lot of banking activities.