Northern Expressway BOT agreement to be signed in July
A Build-Operate-and-Transfer (BOT) agreement for a proposed expressway linking Colombo to Sri Lanka’s North, which will also tie in the nation’s hill country, is likely to be signed in July 2014, according to Treasury Secretary Dr. P.B. Jayasundera.
Speaking at this week’s lecture on “Key Economic Themes in Asia and their implications for Sri Lanka”, a part of the Eminent Speaker series at the MILODA Financial Studies Academy, the training institute of the Ministry of Finance and Planning, Dr. Jayasundera also opined that this country had “managed many social challenges by reducing poverty to 6 per cent”, while also adding “we have given an assurance to the World Bank to move US$ 2-a-day poverty below 10 per cent”.
Meanwhile, the keynote speaker at this event, AIA Group Chief Executive and President Mark Edward Tucker, signalled that, while Sri Lanka was on track for significant growth in line with its five hub strategy, its most recent ranking of 90th on the Economic Freedom Index was a issue to be considered, especially if this country was to achieve commercial hub status the likes of Singapore. It was also an indication that Sri Lanka could be in danger of being caught in the theoretical ‘Middle Income Trap’.
While noting that Sri Lanka had a clear ambition and ability to succeed economically, he also opined that the country’s transition to embrace a free market economy had to intensify. Mr. Tucker also added that its tourism industry had to start attracting higher end consumers, with its commensurate world-class quality in terms of traveller experiences. He also commented that considering the benefits offered by leading international tourist destinations, Sri Lanka’s competitive edge of climate, beaches, heritage, etc alone would not stand up in the long term.
At the same time, Mr. Tucker also advised that existing industries too had to focus on quality above all else, since there were many, more populous nations, which could better Sri Lanka in terms of pricing. He also added that this country’s greatest advantage could well prove to be the development of new fields of high value business, such as in the technology sector, which was dependent on unleashing and nurturing the next generation of entrepreneurs to compete at the same level as existing Asian ‘winners’.
Further, Mr. Tucker also made additional recommendations that could help the country, most important of all being Sri Lanka needing to earn a reputation for zero tolerance for corruption at all levels. He also advocated the need for a strong private sector banking system; a renewed emphasis on privatisation; firm central bank control of inflation, interest rates and foreign exchange rates; and rock solid current account financing of public expenditure, and systematically reducing public debt and dependence on foreign aid.
Commenting on some of the challenges to be faced by Asia in general, wherein even pessimistic GDP growth forecasts signal the region will become a US$ 65 trillion economy with 3.4 per cent annual GDP increases leading up to 2050, Mr. Tucker indicated that Asia could be impacted significantly by a global demand and supply resource gap that, by 2030, will see the requirement for oil and gas rise by 25 and 30 per cent, respectively, while the need for water as well as food prices will also climb upwards of 40 per cent during the same period.
Mr. Tucker also outlined the following themes for future Asian growth successes, namely advancement of free trade; decreasing state enterprise control from its present, ‘commanding heights’; improved infrastructure investment; significant private sector participation in social and welfare provisions; and the nurturing of education, innovation and entrepreneurship. He also highlighted the following; the future drivers for Asian growth, including rebalancing, but not eliminating, export-led demand; more frequent adjustment of exchange rates to commercial and market reality; need for investment capital on an unprecedented scale; and greater government commitment to energetic sponsoring of large scale privately funded infrastructure projects.