Critical policy reforms, regional participation advocated to overcome Ditwah
Calling for the need for discipline to tackle the devastating disaster caused by Cyclone Ditwah, which has left a trail of destruction in the country for months to come, Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva pointed out that the government can spend about US $1 billion a year in the aftermath of rebuilding the country.
“Where is this cash coming from? We have spent more than $ 600 billion as of October. The government expenditure isn’t the only way to move this ship forward. We need private sector investment, such as in power, which is crucial for improving productivity. Labour productivity is critically important.”
Wading through water with valuable provisions. Pic by Indika Handuwala
Raising concerns about the bloated public sector in the country, at the second session of the Sri Lanka Economic and Investment Summit organised by the Ceylon Chamber of Commerce, titled “Beyond Stability: Designing the Next Phase of Sri Lanka’s Economic Playbook”, he said that hard labour reforms as well as capital market reforms are critical. “We cannot or shouldn’t rely on cost-cutting to boost our buffers. Trade and investment policy reforms are critical. It is important not to mess up the discipline that we set up in all sectors and seek foreign investment for structured capital. The state-owned reforms are important to critically link with both the private sector and the public sector.” Referencing Sri Lankan Airlines, he raised a question on how the national carrier deals with its debt portfolio.
He told the Sunday Times Business on the sidelines of the summit that the government should concentrate on rebuilding and supporting communities to recover. “They should encourage both local and foreign direct investments in this endeavour instead of getting back into further debt. So, my criticism is that by delaying the SOE reform law and reversing existing legislation to close the opportunities for FDI flow, we will get ourselves back into another fix.”
The importance of a dedicated trade office and national single window was noted by Rajitha Jayasuriya, Group Legal Director at MAS Holdings, who added that Sri Lanka’s regional competitiveness is critical in terms of the devastating Ditwah disaster.
With access improving, the situation remains fluid, with major disruptions to transportation and road infrastructure hindering workers’ ability to reach their workplaces, she said, noting that the apparel industry is not seeking food or relief items but logistical support from the government to facilitate the movement of workers, inputs, and finished goods. While export processing zones have stabilised, factories outside these zones have experienced considerable damage, and it may take three to four months for operations to normalise, she also noted. “The 20 per cent tariff negotiated by the government was a big relief for us. There was an immediate reset as Sri Lanka is seen as not the most expensive in the region with this tariff negotiation.
” When comparing Vietnam directly with Sri Lanka in terms of synthetic wear, Sri Lanka is in the top list, she said, noting that the supply chain verticality in the country is low compared to Vietnam. Ms. Jayasuriya said Sri Lanka’s trade access remains limited, related to Vietnam, which benefits from over 12 major free trade agreements, providing lower entry costs and greater market certainty. She urged that this is a critical moment for Sri Lanka to reposition itself strategically. “We need multiple free trade agreements, such as the Regional Comprehensive Economic Partnership, which is extremely important. Around 30 per cent of the global population is centred in this region. We need to make sure Sri Lanka is regionally competitive.”
Restoring connectivity is critical, she said, because there are more than 1000 employees stuck in the central region without any connectivity. “They are stuck in terms of getting food and aid to people in the shelters; this is a priority.”
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