Financial Times

Private sector still depends on handouts - CB

In a private sector-led economy, it is essential to remember that the role of the government should be that of a facilitator with a clean and efficient government, said A.G. Karunasena, head of the Central Bank's Research Department, in a recent overview of the Sri Lankan economy.

Economic achievements could be attributed to the progress in the peace process, improvements in macroeconomic management, renewed efforts for structural reforms, removal of the war risk insurance premium, favourable weather conditions, power supply continuity and the recovery of the global economy. But the most important factor was the restoration of a peaceful environment under the ceasefire agreement, he said at a public meeting at the Central Bank's training centre.

A reduction in government domestic borrowings made more financial resources available to the private sector and facilitated interest rate reductions, supporting private sector led economic recovery. Reduced demand for credit by the government facilitated the accommodation of the expanding private sector credit demand without resulting in additional inflationary pressure.

He said that even after 25 years the private sector was still trying to depend on subsidies and some concessions and loans whereas the private sector should take the lead role in development.

Karunasena said that public spending should be reduced which meant the civil service, subsidies and welfare benefits would be cut and noted that provision of security to ministers and others was an additional cost to public spending.

Reflecting on Central Bank's 2002 annual report, he said that overall, the macroeconomic stability improved as a result of a reduction of the fiscal deficit as well as the external current account deficit.

Karunasena said that despite the increased consumer demand, inflation declined to a level of 9.6 percent in 2002 from 14.2 percent in 2001, and was due to the combined effect of a tight monetary policy stance pursued by the Central Bank since mid-2000. On the fiscal front, despite shortfalls in revenue, the current account deficit, primary deficit and the overall deficit declined, benefiting from strong expenditure rationalization and improvements in Treasury cash management and public debt management.

"The performance of the economy in 2002 was below the level required to reduce poverty and raise per capita income levels on a more sustainable basis. Addressing major casual factors effectively is essential in ensuring future growth prospects. A national consensus and improvement in transparency and accountability of public policy should be in place," he noted. (QP)

Shell LiveWIRE's young biz awards in August

Sixty young entrepreneurs island-wide have applied for the 2003 "Young Business Start-up Awards" (YBSA) competition sponsored by the Shell LiveWIRE Trust, a 20 percent increase from last year, the company said.

LiveWIRE is a community investment initiative of Shell Sri Lanka, aimed at encouraging youth entrepreneurship in the island. Applications for the YBSA that closed on April 30, targets young people in business and is being held for the fourth consecutive year.

Entries for the awards competition were received from Colombo and the suburbs, and from 11 other districts - Nuwara Eliya, Kandy, Kegalle, Ratnapura, Hambantota, Matara, Galle, Kalutara, Negombo, Polonnaruwa and Anuradhapura. The applicants consist of 26 females and 32 males, while their businesses range from organic vegetable production and jewellery manufacturing to IT servicing and optical wear designers.

Nearly Rs. 500, 000 in prizes will be on offer at this year's competition, with the winner receiving a substantial cash prize, free publicity, and vital networking business links.

The YBSA will have three regional heats in Kandy, Induruwa and Negombo next month before the national finals in Colombo in August. These regional heats, LiveWIRE's Project Manager Piyumi Samaraweera said, enables more regional representation and provides more opportunities for regional start-up businesses to compete in this prestigious competition. It gives young entrepreneurs much needed exposure and boosts their levels of confidence.

Industrial fair a flop?

By Quintus Perera
The International Industrial Fair and Exhibition held at the BMICH from May 17 to 22 appeared to be a flop. It was more like a Sri Lanka consumer fair with a few locals seen purchasing clothes and footwear.

Organisations who participated included the Sri Lanka Chamber of Small Industries (SLCSI), Ministry of Industries, Ministry of Foreign Affairs, Ministry of Enterprise Development, Industrial Policy and Investment Promotion, Ministry of Tourism, Export Development Board, National Craft Council, Board of Investment, Convention Bureau and Industrial Development Board.

A spokesman for the SLCSI, K. Chandrasekaran said no western countries were represented at the fair while only a few Sri Lankan industrialists participated. He attributed the failure of the event due to the lack of publicity. This was the first exhibition held in the Sirimavo Bandaranaike Memorial International Exhibition Centre. The Industrial Fair and Exhibition was meant to showcase Sri Lankan products and for foreign manufacturers to display their products with a view to establishing trade links.

Chandrasekeran said that some of the Indian companies who were to participate in the fair could not clear their consignments in time from the Customs due to the long Vesak holidays and were deprived of the opportunity to display their products.

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