{"id":32587,"date":"2014-08-20T11:38:05","date_gmt":"2014-08-20T15:38:05","guid":{"rendered":"http:\/\/dbsjeyaraj.com\/dbsj\/?p=32587"},"modified":"2014-08-20T11:38:05","modified_gmt":"2014-08-20T15:38:05","slug":"five-pillars-of-nation-building-are-national-security-food-security-energy-security-environment-security-and-macroeconomic-security","status":"publish","type":"post","link":"https:\/\/dbsjeyaraj.com\/dbsj\/?p=32587","title":{"rendered":"Five Pillars of Nation Building are National security, Food security, Energy security, Environment security and Macroeconomic security"},"content":{"rendered":"


\nBy
\nDr.P.B.Jayasundera<\/strong>
\n
\n(Following is the full text of Keynote Address by Secretary to the Treasury Dr. P.B. Jayasundera titled \u2018Sri Lanka: Challenges to a Rising Nation\u2019 at the Defence Seminar 2014)<\/strong><\/p>\n

Good Morning to all.<\/em><\/p>\n

Professor G.L. Peiris, Minister of External Affairs, Lalith Weeratunga, Secretary to the President, Gotabaya Rajapaksa, Secretary to the Ministry of Defence and Urban Development, the Commanders and the officers of Sri Lanka tri-services, distinguished delegates, ladies and gentlemen, I am indeed honoured and privileged to be the Keynote Speaker of this 2014 Defence Seminar organised by the Sri Lanka Army, being attended by a rich audience and will be addressed by renowned resource persons from around the world.<\/p>\n

I wish to thank the Commander of Sri Lanka Army Lieutenant General Daya Rathnayake and his able Director Training Brigadier Ralph Nugera for inviting me to speak to this high profile gathering.<\/p>\n

\u2018Sri Lanka: Challenges to a Rising Nation\u2019 \u2013 the subject assigned to me to speak at this prestigious event, compelled me to spend some time to research on our country\u2019s post independent journey towards what it is today, and in this process several milestones we as a nation have passed are in fact eye openers to be able to understand challenges from a historical perspective, since history has a tendency to repeat itself in the future.<\/p>\n

It is equally important to review the present phase of development and how it has been managed while passing many barricades along the journey to be able to understand the challenges of the present, since the present will invariably be the history of the future. I also thought that it is important to view challenges from a past and present perspective, to be able to visualise future perspectives and equip ourselves to facilitate the management of contemporary challenges in our transition from a middle income economy.<\/p>\n

<\/p>\n

The transition from a middle income economy involve targeting to achieve $ 7,500 per capita by 2020, like we have already raised our per capita from $ 1,200 in 2005 to $ 2,400 in 2009, and from there towards $ 4,000 in 2015 \u2013 in an extremely challenging environment. I will also touch upon the visionary comments expressed by none other than Takehiko Nakao, President of the Asian Development Bank when he visited Sri Lanka in June 2014, on the likely journey of Sri Lanka towards an advance economy by 2035. <\/p>\n

My overall aim is to register the point that history is in fact an analysis of how the past has been managed that provides lessons learnt, facilitating us to manage the present with proper checks and balances and thereby prevent the repetition of bad experiences of the past to gain high altitude in future.<\/p>\n

My speech is structured with five parts<\/strong>.<\/p>\n

Part I<\/strong> explains how the post independent events pushed this nation towards becoming a marginalised nation by 2004, followed by the underlying strategic shift in 2005 through the adoption of Mahinda Chinthana: The National Vision of Sri Lanka. <\/p>\n

Part II<\/strong> gives an overview of the current phase of development in a globally challenging environment. <\/p>\n

Part III<\/strong> outlines how the challenges in the transition were managed from confrontation to consensus building and how graduation from a low income to middle income economy, were managed. <\/p>\n

The likely developments the country would face as an emerging economy towards reaching $ 7,500 per capita by 2020 and the challenges ahead of us will be covered in Part IV. <\/strong><\/p>\n

The last<\/strong> section presents some concluding reflections. The speech will be approximately one hour.<\/p>\n

Distinguished delegates, ladies and gentlemen, at the outset let me say that the conduct of a seminar of this nature, being held in this peaceful surrounding, at this venue which is in the heart of the Colombo city, attended by this rich audience representing about 40 countries and specifically on the topic assigned to me, could have been an event far from reality or and on top of it, the very subject itself could not be of relevance to us prior to 18 May 2009 \u2013 being the day on which the 30-year terrorist conflict came to an end \u2013 a historic moment to our nation, probably as important as gaining independence in 1948 considering the long struggle we had against terrorism to secure democracy, peace and development.<\/p>\n

Therefore, we should at the outset express our gratitude and place on record our appreciation for the invaluable sacrifices and contributions made by Sri Lankan tri-services and their families. It is to them that President Mahinda Rajapaksa entrusted the task of carrying out a humanitarian operation to liberate us from terrorism a few months after he assumed leadership of this nation. It is they who made enormous sacrifices to complete this task during 2006-2009 while supporting a \u2018zero causality theme\u2019.<\/p>\n

We all know that this bold decision was taken after having exhausted all options available at local level, while experiencing continuous drawbacks from an international standpoint, and in the backdrop of escalating mass scale terrorist attacks. Two major events influenced this move. They reflect true humanitarian considerations behind this move. One was the Kebithigollewa bomb attack on a packed bus carrying innocent villagers to the nearby town \u2013 on Thursday morning of 15 June 2006. It killed over 64 innocent people including 12 children and leaving 75 others injured.<\/p>\n

The other compelling reason was the capture of the Mavil Aru irrigation and water supply scheme by LTTE terrorists, and closure of sluice gates, denying access to water to the innocent villagers and people in that area \u2013 on 26 July 2006. This is how so called internationally monitored peace accord was respected by the LTTE \u2013 a gross abuse and violation of human rights. I still remember the absolute frustration we went through having to live and work in such surrounding and how all of us as a nation felt that \u2018enough is enough\u2019, expecting the Government to liberate the nation from brutal terrorism which caused us enormous sufferings for nearly three decades, the best part of lives of my generation.<\/p>\n

The astute and visionary leadership of the President of Sri Lanka for spearheading this once considered impossible task, the amazingly talented and committed Defence Secretary Gotabaya Rajapaksa for managing this high risk task as the Chief Accounting Officer of the Ministry of Defence, deserve special recognition with a round of applause from all of us. I am sure that the global community who truly stand against terrorism and are committed to eradicate terrorism in the interest of humanity, peace and development, feel the same.<\/p>\n

I wish to quote the words of Dr. Subramanian Swamy \u2013 the renowned former Minister of India, Economist and the present Chairman of BJP Committee on Strategic Action, during his recent visit to Sri Lanka: \u2018I have known no other country which has so decisively finished terrorism of this kind and this is no ordinary terrorism\u2026 If you look around the world people have had no country which had a kind of clear success in eliminating terrorism as you have.\u2019 He went on to say, \u2018Today even Tamils up in the North admit that at least they know that when their children go to school they would return back in the night. When their husbands go to work they would return back in the night.\u2019 That is the stability and certainty the end of war has brought about to our country, for which the credit should no doubt go primarily to the bold leadership of the President, the committed Defence Secretary and the tri-services.<\/p>\n

I must also mention that the role of post conflict tri services is equally humanitarian and development oriented as they shared their professional skills in de mining activities and resettlement of displaced people, looking after their own colleagues and families who became victims in this conflict, an architectural and engineering skills in restoring historical buildings and flood protection and urban sanitation besides entering into performing arts and sports as well.<\/p>\n

It was sheer determination and not heavy military, human or financial resources that made it possible. As Finance Secretary, I know that they fully appreciated the financial difficulties that we had confronted. I like therefore to begin my speech by quoting former South African President late Nelson Mandela who once said \u2018The greatest glory in living lies not in never falling, but in rising every time we fall\u2019.<\/p>\n

Part I \u2013 A marginalised nation<\/strong><\/p>\n

Sri Lanka gained independence in 1948 from the British, who ruled the country in the process of a colonial rule that commenced in 1505 with Portuguese taking over the country, then by a Dutch rule in 1658 followed by the British in 1815. The economy in early 1950s enjoyed external assets equivalent to 12 months of country\u2019s import requirement. The country was economically second only to Japan in the entire Asia. Nevertheless the post-independent developments in Sri Lanka were grim.<\/p>\n

Political instability, short-term populist policies, experimenting extreme development models by different political parties that formed Governments, lack of a long term national vision for the country and inability to position the country in the proper global perspectives made Sri Lanka a lagging nation with a \u2018dismal-rate\u2019 of growth of 3% by mid 1970s with an unemployment as high as 25% of the labour force and a youth insurrection in 1971. The absence of a policy strategy to ensure food security, the lack of adjustments to the global oil price hike witnessed from early 1970s to build an energy efficient economy and continued expansion of the regulatory regime that weekend private sector initiatives, made economic management essentially inefficient.<\/p>\n

Although the economy was reopened in 1977 with liberalisation and deregulation, creating high expectations to recapture what the nation lost for 30 years since independence, by 1980 the economy lost macroeconomic stability with a high fiscal deficit, monetary expansion, loss of international reserves, high depreciation in exchange rates and inflation. The general strike in 1980, civil riots in 1983 saw the beginning of the nearly 30 year LTTE terrorism.<\/p>\n

Then the southern insurgency in 1987\/88, the change of Governments in 1988, 1994, 2001 while being engaged in managing a conflict trapped economy which badly demanded a development agenda that would facilitate its people to move away from poverty and the low income trap, were critical milestones that led the country to be further marginalised in the world economy which was truly growing.<\/p>\n

The key lesson from this long period since 1977is that compromising national security and macroeconomic security were prime factors that prevented the economy from emerging on its own comparative advantage and strengths. The Asian Tsunami struck Sri Lanka in December 2004 taking nearly 40,000 lives, wiping out around 100,000 houses displacing many and destroying schools, hospitals, infrastructure and private property. This incident alerted the country on the adverse impact of climate change and that environment security cannot be overlooked in the process of development.<\/p>\n

Although the country has witnessed certain improvements in human resource development and in selected private sector activities, while recording around 4.5% average growth in GDP, the overall outlook was so grim with poverty and unemployment remaining high, external reserves falling substantially to a level not sufficient to import even three months of country requirements of imports and the Budget running a high deficit of around 10% of GDP for decades, on top of an accumulated debt exceeding GDP. These factors provide us a picture of the Balance Sheet that the country was managing when the President was elected as the leader of this nation in 2005.<\/p>\n

Ladies and gentlemen, if Sri Lanka is to emerge on its own comparative advantage and strengths with an integrated global economy framework, the challenge is to restore security of the five pillars which I referred to earlier namely, food security, national security, macroeconomic security, environment security and human resource security. Managing this task is the underlying success story of development since 2005.<\/p>\n

As Albert Einstein said, \u2018Out of clutter, find simplicity. From discord, find harmony. In the middle of difficulty lies opportunity\u2019. This supports the underlying philosophy of \u2018Mahinda Chinthana: The Vision for a New Sri Lanka\u2019.<\/p>\n

Part II \u2013 Strategic shift in 2005<\/strong><\/p>\n

The post 2005 National Development Strategy \u2013 \u2018Mahinda Chinthana: Vision for the Future\u2019 prioritised post-tsunami rehabilitation and reconstruction, implementation of several national infrastructure projects that remained stalled for years, revitalisation of agriculture and adopting bold policy decisions connected with the National Budget and macroeconomic management. The post-tsunami reconstruction and post conflict rehabilitation, resettlement and reconstruction have provided a unique transformation to those in affected areas while transforming mined lands into green fields.<\/p>\n

The Government also recognised that along with restoring national security and peace, infrastructure development should also be put in place through public investment as a critical component, such as a well connected road and expressway network, a globally competitive port and airport network, an irrigation and water distribution network and a strong telecommunication network together with well distributed urban and township development. This would in turn create opportunities while enabling the produce of rural farmers to have access to local and global markets places and for investment in the real economy to go beyond Colombo and a few other cities.<\/p>\n

The progress made in infrastructure creation, which the nation was desperately demanding for decades since independence is strong. The country has a new expressway connecting the two international airports in the Western Province and Southern Province. Steps are under way to build a Northern Expressway and Ruwanpura Expressway to connect Colombo and network with national highways to North and East. Railway connectivity is to be established between major townships across the country.<\/p>\n

These expressways and the railway network are to be connected through national highways and provincial and rural roads, through Government\u2019s Inclusive Road Development Strategy to be promoted several themes, such as tourism, exports, logistics, IT\/BPO services, high learning educational establishments and townships, for rapid development.<\/p>\n

Progress in power generation and distribution is another success story. As of now the country is benefiting from a power generating capacity of 4,100 MW consisting of diversified power sources as against 2,014MW of power largely dependent on oil in 2005. Renewable energy including hydro and solar are being added to an improved transmission and distribution system. <\/p>\n

Almost 100% of households in the country will enjoy access to electricity by the end of this year. Investments have been lined up to double the refinery, aviation and bunkering storage capacity as well as to modernise the pipeline distribution system over 2015-17 to further improve an energy based economy and energy security. Public investment in irrigation and water supply remains a priority to enable several areas of non-irrigated land to be cultivated, improve water treatment facilities and provide pipe borne access to drinking water to all households by 2017. Investments have been also directed to contain non-revenue water in Colombo to below 18 percent, by 2017. Urban infrastructure development include the construction of 50,000 urban housing units to house shanty dwellers in a well developed township environment in the city of Colombo and to relocate Defence Headquarters to release prime urban land for alternate commercial and property development, greater Colombo flood protection scheme to convert suburban townships as environment friendly living areas and transform historical buildings as up-end shopping complexes capable of attracting tourists and move on to an integrated urban development strategy to make growth oriented cities in provinces. Parallel with these public investment initiatives, private investments including FDIs are encouraged for urban property development, construction of tourist hotels with international network arrangements and reclaim 450 acres of land to build a new port city and attract foreign direct investments from global investors looking for competitive locations.<\/p>\n


\nPart III \u2013 Managing Challenges<\/strong><\/p>\n

This transformation was not without challenges. Ending the costly war against terrorism itself was a major challenge. Dr. Subramanian Swamy, a well-respected personality in India in his recent speech in Colombo said, I quote, \u201c\u2026as an Indian I can say that most Indian share this view we are proud of your President for decisively finishing a sinister terrorist organisation which was a threat to our country too and therefore let no activity in the international arena subtract from that. Sometimes I wonder whether these whole human right issues have been contrived to bottled down or to be little or reduce this massive achievement.\u201d<\/p>\n

Respecting human rights and welfare, several thousands displaced consequent to the 2004 tsunami and those who felt hostage in the 2009 LTTE final phase were provided food, shelter and sanitation adhering to best global standards. Amazingly no epidemic was recorded and maternal and child mortality even in such circumstances was maintained at zero level reflecting how well the humanitarian side of development was managed with determination. Ex-combatants were put on rehabilitation programs and social integration initiatives. Some have recruited to Sri Lanka police and government services.<\/p>\n

The de-mining of almost entire mined land, rebuilding conflict-torn areas with livelihood development, restoration of provincial councils and local authorities in such areas through democratic elections, removal of emergency laws that prevailed for years as though they are normal laws, removal of road barriers and security checkpoints, handling war risk insurance payments, restoration of housing and sanitation, public service delivery mechanism, schools, hospitals, police stations, court houses, market places, etc. were features managed in a salutary manner in the process of taking the country forward using domestic resources, borrowed funds and mobilisation of foreign aid by the Government. Trilingual policy has been promoted. A task force headed by Secretary to the President fully funded by the national Budget has been engaged to ensure that the recommendations of the Lessons Learnt and Reconciliation Commission are implemented by relevant agencies in a timely manner.<\/p>\n

On the economic front, the US and UK financial fallout in 2008\/09, the sharp rise in oil prices, the US fiscal crisis and the Euro zone economic crisis in 2011\/12, and the global economic slowdown placed the already weaned Sri Lanka on another wave of economic challenges. While many countries differed responses, Sri Lanka was able to take bold corrective economic measures such as allowing greater flexibility in exchange rate regime, adjustments to fuel, electricity and water tariff, monetary policy tightening to manage excessive credit expansion and several reform initiatives such as reorienting taxation strategy towards broadening its base, improved debt management strategies.<\/p>\n

The Government secured $ 2.5 billion a three year Stand-By Credit Arrangement from the IMF to place the country on emerging global order and this was the only successful IMF program carried out uninterruptedly in this country as all previous programs carried out by past regimes suspended half way through due to unsuccessful implementation. We are humbly proud today as we have already paid back half of IMF borrowings reflecting country\u2019s economic strength.<\/p>\n

This success was because of the fact that the Government adopted a \u201cpeace in workplace\u201d approach instead of \u201cblood on the street\u201d approach, in carrying out these challenging reforms. On top of all these, getting the much needed infrastructure facilities in place, addressing macro economic outlook and many structural challenges through pragmatic reform initiatives were not easy by any yardstick.<\/p>\n

The Sri Lankan economy grew at an average growth rate of 7% since 2005 to date, a break from the past pattern of unstable growth that averaged around 4.5%. Over the same period, trade grew by almost fourfold in US$ terms. The economy has brought about a globally integrated manufacturing sector that has a lead in up-end apparels and breaking grounds into newer areas such as IT- enabling services, diversified tourism, high valued tea, medium and high technology industrial activities such as shipbuilding, electrical transformer manufacturing etc. and a buoyant service sector that now account for around 60% of GDP.<\/p>\n

This year, the projected growth is 7.8% and the performance of manufacture of exports, tourism led services, construction industry and domestic consumer demand during the first six months of the year is conducive for such growth. The Service Sector is moving beyond 60 percent of GDP, reflecting a value chain growth in primary, secondary and services activities and the structural shift in the economy. Inflation is mid single digit and nominal growth is now driven by a high real growth \u2013 a sharp departure from the past when high nominal growth was nothing but attributable to inflation.<\/p>\n

Year-on-year inflation averaged at 4.9% in the first half of this year. There is a steady build-up of reserves \u2013 now at $ 9 billion and the volatility of the Rupee is contained. The buoyant growth of export earnings from goods and services, inflows from tourism and overseas remittances keep the current account deficit well financed. There is stability in the balance of payments transactions due to buoyant inflows against moderate outflows, providing an environment conducive for exchange rate management. The fiscal deficit of around 3.7% of GDP in the first half of the year is in line with the annual target of 5.2%.<\/p>\n

Reduced rates of interest, stable movements of the exchange rates, a lower fiscal deficit complemented by better performance of large State Owned Business Enterprises parallel with high growth are supportive to further reduce Public Debt to GDP closer to 70% in 2015.
\nUnderpinning the notable progress made through several bold policy and development initiatives, Sri Lanka has performed well in the region in terms of many global indices. The country is well placed in the World Rule of Law Index and the Global Peace Index, being on top in South Asia. It is also placed high in the region as per the Global Infrastructure Index, Economic Freedom Index, Ease of Doing Business Index and Global Competitiveness Index. <\/p>\n

The Human Development Index ranks Sri Lanka among the top 10 in the Asian region, while presently commanding the second highest number of Chartered Accountant students in the world only next to UK. With the high rate of enrollment for medicine, engineering, commerce, law, nursing, teaching and technical fields, the country is well positioned to attract professional services and related industries \u2013 and move from unskilled labour intensive industries to skilled and technology based industries.<\/p>\n

Sri Lanka is among the top 50 leading service locations in the world in the delivery of IT\/BPO and other knowledge services, having advanced to the 21st place. The evolving regulatory arrangements are conducive to promote clinical trials and research, which is primary to develop health care services to an advanced stage having mobilised the country\u2019s medical specialists, scientists and technicians, while also developing several facets of the pharmaceutical industry. In terms of per capita income too Sri Lanka is on the top of South Asia. Securing a position among the top 10 position in Asia of all these indicators remains our ambition.<\/p>\n

As once said by Donald Trump the American business magnate, investor and author, we need to \u201cget going. Move forward. Aim high. Plan a takeoff. Don\u2019t just sit on the runway and hope someone will come along and push the airplane. It simply won\u2019t happen. Change your attitude and gain some altitude\u2026\u201d<\/p>\n

Part IV \u2013 A journey towards a high income economy 2020<\/strong><\/p>\n

The Government has set ambitious development goals for 2020, being the year that reaches the third five years of \u2018Mahinda Chinthana \u2013 National Vision\u2019 development strategy, which is in keeping with the first five year program of 2005-2009 and the second covering 2010-2015.
\nSurpassing $ 7,500 per capita income in 2020 remains the income goal. Maintaining a 97% employment level with an increased number in the skilled categories of the workforce remains our employment objective. A zero maternal and child mortality and longer life expectancy of near 80 years, along with 100% secondary school enrolment and higher computer literacy, form our human development foundation targets. All districts to be made poverty free in terms of poverty headcount, while also freeing them from communicable and non-communicable deceases and malnutrition are the poverty reduction goals. A lower single digit inflation being the price stability goal, will gear improved financial management and supply side in the real economy. In this context, the underlying economic growth rate needs to be accelerated beyond 8%.<\/p>\n

This scale of economic growth depends on the level of investments, its productivity, improvements in the policy environment and institutional setup to do business efficiently, application of research, technology and innovation, macroeconomic stability, national security and law and order. It is a much more challenging task than the previous two five- year phases, similar to an airplane that takes off on a long-haul flight, where the year 2020 will only be a stop-over destination.<\/p>\n

This long journey needs to be supported through a strong National Budget which will bring macroeconomic security. It will be possible when the Budget continues to channel an increased volume of resources in support of core public investments in physical infrastructure, with parallel private investments shifting towards 30% of GDP from the current level of 24% of GDP. Equally, the Budget needs to divert a large volume of funds for the development of human resources and research and technology in excess of 6% of GDP, towards creating a productive and demand driven human resource base.<\/p>\n

Complementing the thrust of the social responsibility of the Government, public spending on social security needs to be protected with special emphasis on the elderly and vulnerable groups. Channelling enhanced public expenditure to rural centric development initiatives and agriculture, fisheries and livestock is the core of the all inclusive development strategy of \u2018Mahinda Chinthana: Vision for a New Sri Lanka\u2019 to further strengthen food security. <\/p>\n

All these are viable only if the nation is capable of providing resources for national security, which is a primary responsibility of the Government. Our challenge in the years ahead while moving ahead in this journey towards success, is to engineer the national Budget in line with these considerations.<\/p>\n

I would argue that these multifaceted considerations along with public investments in infrastructure done by the Government and state enterprises at a stable level of 6.9% of GDP, have helped to sustain increased private investments \u2013 including FDIs from 17.6% of GDP in 2009 to 24% of GDP in 2014, with considerable efficiency improvements as well.<\/p>\n

The challenge in this regard is to raise private investments to 30% by 2020, focusing areas in which Sri Lanka has an edge while raising public investments to 8% \u2013 and bring total investments to near 40% along with continued efficiency improvements thorough improving the ease of doing business, and through technology, research, skills and manpower resource development.<\/p>\n

Benchmarking success stories in development is important as much as making investment for growth, to keep pushing the growth momentum. Sri Lankan tea, which remained a primary export commodity for many years with a less than $ 600 million export income has gained momentum in recent years and is gaining grounds through many homegrown brands and an expanded domestic value chain, having entered high-end markets covering advanced and emerging economies, international hotel chains and airlines capable of surpassing $ 2.5 billion export earnings. This journey to achieve higher export earnings backed by a strong plantation economy and to retain its global recognition is being supported through recent Budget initiatives.<\/p>\n

Apparel is another great success story that has concentrated on international branded clothing manufacturing, while maintaining high quality, being sensitive to timely delivery, adopting best business practices, ethics and respect to decent labour practices in good working environments and above all having looked at emerging markets such as India, China, Brazil, Japan and Russia.<\/p>\n

Like our success stories of the apparel and tea industries, the Government also pushed certain other areas to take a further lead in terms of Country\u2019s growth strategy. The Government supported IT\/BPO business, which was around $ 200 million in 2007, and moving towards surpassing over $ 1 billion export earnings and creating around 100,000 well-paid employment opportunities by 2015 in the newly created policy and infrastructure environment supported by emerging skills in the labour force. This industry now projects $ 5 billion net export earnings, by 2022. Along with the skills development drive, the remittance income from overseas employment by Sri Lankan people is expected to cross the benchmark figure of $ 10 billion by 2016.<\/p>\n

In 2013, the Government created a legal framework to develop free ports and bonding facilities to build a logistic services economy. New investments realised in logistic services, prospects of relocation of global business headquarters and the generation of new activities having combined many inputs mobilised to free port areas have paved way for Sri Lanka to capitalise on its strategic location supported by newly built infrastructure at Magam Ruhunupura and greater Colombo city. The logistic industry and provision of services have just begun to attract Sri Lanka as a destination in which headquarters of economic operations could be setup. <\/p>\n

New aspirations of a marine economy is emerging with new prospects created having rationalised charges imposed on importers and exporters, the creation of the Shipping Corporation, the proposed setting up of a Marine Industry Regulatory Authority, coupled with a low tax regime for professionals.<\/p>\n

Manufacture of electrical products, machinery and spare parts has also gained momentum. The energy sector related activities that are expanding similarly, include the manufacture of high quality electrical equipment, electrical wires and cables. Shipbuilding and boat manufacturing have set the tone for high-tech industrial development. Local enterprises have made a dent in the manufacture of multiday fishery boats, agricultural machinery such as combined harvesters, etc. <\/p>\n

The jewellery industry has also recorded a notable expansion in exports as well as in domestic trade. Manufacture of construction material, ceramics, tiles and sanitary ware, office and household furniture, home d\u00e9cor, etc. provide new scales of investment opportunities to meet middle income aspirations. In promoting trade towards a greater volume of exports and import substitution, the trade and tariff strategy has been suitably directed in recent years. Free Trade Agreements with India and Pakistan as well as the proposed Free Trade Agreement with China to be launched shortly are being approached to secure a greater volume of trade with these large emerging markets. Our Government shares the view of the newly elected Prime Minister of India Narendra Modi, who said \u201cSell anywhere but manufacture locally\u201d.<\/p>\n

Tourism is becoming a lead industry, both in terms of foreign and local tourism and it is expected to record a turnover of $ 2 billion by way of foreign earnings in 2014, which is expected to be $ 5 billion by 2020. This has opened an array of opportunities benefitting those engaged in extending home stays and boutique type hotel facilities, indigenous medical practices combined with the country\u2019s matured Western health system, hair and beauty care services, high quality herbal hair and body care products development, gift and souvenir manufacturing, furniture manufacturing, transportation, local agriculture and has pushed the expansion of the construction industry. <\/p>\n

These are some of the visible changes in the emerging economic structure of Sri Lanka and these new activities should create the next wave of growth. Almost all of them are in the hands of the corporate private sector and SMEs. Tea, rubber, spices, herbs, fruits, vegetable, poultry and apparel products and even high quality bottled water have entered a longer value chain process from simple labour usage to skills, technology and quality becoming brand driven businesses to be able to secure high prices and attracted up-end emerging markets.<\/p>\n

Supporting this emerging scenario, while consolidating the new tax policy and fiscal policy strategy, a revenue administration and management system and an integrated treasury management system are being lined up to be fully operationalised by 2015. Concerted efforts are being made to simplify overlapping regulations, taxes and levies that have crept into the system due to the building up of layers of operational institutions, to reduce transaction costs and make doing business easier particularly to SMEs. The automation of the Sri Lanka Customs import export documentation process is being operationalised. Work is in progress for the provision of 24 x 7 Centralised Cargo processing facilities for cargo exports, to further facilitate exports.<\/p>\n

In the process of advancing towards upper middle income per capita, the Government has recognised the importance of legal and financial sector reforms as announced in the 2014 Budget. In the legal sphere \u2013 reducing laws delays, setting up dedicated courts to handle commercial disputes and expedite early dispensation of such cases could be heighted as dire needs.<\/p>\n

It is encouraging to note that introduction of technology to Courthouses, promoting Court Assisted Mediation and revision of Superior Court Rules are in progress to reduce delays, among other reform initiatives that are being implemented.<\/p>\n

The financial sector needs to be repositioned to meet the needs of an emerging economy, crossing its traditional boundaries through new and diverse economic activities while also gaining ground in the region. The operation of a large number of small financial institutions with a low capital base is a constraint to satisfy regulatory standards, particularly in the backdrop of financial instruments getting diversified. It is in this background that the 2014 Budget proposed a medium term consolidation process to strengthen financial institutions that is now in progress. IT is another area of priority in policy and institutional development. Here again an inclusive policy strategy is being implemented in recent times bringing IT into both education and work places. These are steps taken to strengthen best practices in our governance structure.<\/p>\n

Ladies and gentlemen, let me stress that in the process towards graduating as an high middle income economy, the remaining facets of poverty will have to be addressed, while taking safeguards to protect vulnerable groups, uplift livelihood avenues and provide gainful employment opportunities to low income households and while conserving Sri Lanka\u2019s biodiversity and environment. Achieving a high income economy will make sense only if it moves parallel to addressing problems encountered in distant areas still vulnerable to adverse weather conditions such as droughts. Incentive structures and institutional settings should be geared towards promoting advanced water management technologies and drought resistant cultivation practices among farmers to address climate related risks, including having in place stand-by funding support to mitigate extreme risks.<\/p>\n

Considering the importance of the rural agrarian economy, the SMEs, food security and environment priorities, the continuity of the present rural centric approach towards development is likely to provide greater prospects to become a high per capita nation that is free from poverty and has an acceptable level of equity with regard to household and regional income distribution. In this process, given the high standards that are already achieved, it is equally important to target a zero maternal and child mortality and address emerging challenges of non-communicable diseases among the population to improve quality of life and productivity of the workforce and maintain a healthy population whose life expectancy on average would be 80 to 85 years during the next 10 years. Hence surpassing a higher per capita growth process has been made inclusive.<\/p>\n

This brings together the synergy of underlying five hubs namely, shipping, aviation, energy, trade and commerce and tourism, forming the foundation to drive the economy as a strategic global destination. You would see that it is structurally different from the legacy up to 2005 that I explained. It needs to double and a well integrated effort by the tri service, the civil service and the private sector, working on this common national vision.<\/p>\n

Part V \u2013 Conclusion<\/strong><\/p>\n

In Sri Lanka, the post 2005 development journey and the post conflict take – off are vision driven, by the extraordinary leadership of His Excellency the President Mahinda Rajapaksa who helped the country to reach calm waters having sailed in rough seas, while placing the economy on an inclusive development strategy. The country now has strong prospects of reaching $ 7,500 per capita by 2020 and entering a transitional phase to become an advanced economy by 2035. <\/p>\n

Succeeding this challenging transformation demands further strengthening of the ongoing rural centric development strategies to facilitate livelihood development and food security, a social security system for the vulnerable, a preserved natural environment with bio diversity, infrastructure development, uncompromising national security and peace, law and order and maintaining continuity from a policy perspective to boost business confidence to advance the country steadily. Hence, we need to place trust in the nation building strategy of Mahinda Chinthana: National Vision, to make 20\/35 development goals, a reality.<\/p>\n

Sri Lanka as an emerging nation, which is increasingly integrating with the global economy needs to be attentive to development taking place around the world. Advanced G7 nations as shown in the recent Economist magazine, are performing below the potential growth in their countries owing to productivity lags, aging population as well as aging infrastructure. All these nations are heavily indebted and run high fiscal deficits requiring difficult reforms with strong political commitment.<\/p>\n

The recent financial crisis along with the slowdown witnessed by these economies, have raised many structural problems connected with labour markets and immigration policies. Newly emerged BRICS nations too have slowed down and are faced with constraints to sustained high growth rates similar to those of past 20-30 years due to compressed demand from advanced economies as well as strong exchange rates, high labour and material costs, environmental issues and social safeguard concerns.<\/p>\n

Initiatives are under way to form a new multilateral bank of BRICS nations, a bank of SARRC nations and a bank for Asian Infrastructure Investment Bank led by China to address capital needs of emerging and developing countries as well as to address repeatedly unheard concerns of developing countries for years by existing multilateral financial institutions like the World Bank and IMF. The use of trade sanctions has undermined the thrust of global trade and investment arrangement under WTO. Similarly the stand taken by the newly elected Government of India recently to oppose WTO led trade reforms in respect of agriculture in the interest of food security reflects voice of Asia on this matter. <\/p>\n

The lead in Asia Pacific region in the global economy signals for a new economic order. The operation of NGOs in a non-regulatory environment has become a threat to financial management, inclusive development and law and order itself. Widespread terrorism has threatened shipping, aviation and financial transactions that risks trade, tourism and investments. Computer crimes, drug trafficking, smuggling are certain other facets of risks associated with the global economy.<\/p>\n

Adjusting to manage these risks and de risking the economy suitably are also challenges that we need to be mindful of, without being complaisant with the many good achievements made so far.
\nChallenges are not new. Every failure in history is a lesson to learn as to why challenges should not be overlooked or mismanaged. Our history has amazingly rich days of glory and national pride not second to any other country and the human tendency is to boast about such glorious days. But we know that we have also had bad times, full of misery. <\/p>\n

We could be mindful of possible risks, judging by historical experiences. I feel that although history is the past, the present and the future invariably become history. For us, the year 2005 is now history. Our balance sheet in 2014 is distinctly different from 2005 and in fact richer than then. Yet in 2020, the year 2014 would be history. Therefore, we should be determined to manage the present and future well, if we are to become a nation that can speak of a proud history. We should therefore try to prevent the recurrence of historical mistakes.<\/p>\n

This compels us to ensure that nation building is made on a solid foundation \u2013 on the five steady pillars that I noted earlier, namely, national security, food security, energy security, environment security and macroeconomic security, while also not compromising human resource development, peace and prosperity.<\/p>\n

Managing all these require us to be vigilant at all times in all aspects of our respective responsibilities in public life. The countries need to be vigilant to national security risks as well as economic and environment risks. It is sad if we have to say at any time that we underestimated the risk as now we see in respect of the Ebola virus.<\/p>\n

I believe that success comes as our President in every aspect of his management has shown that \u201cstart by doing what is necessary; then do what is possible; and suddenly you are doing the impossible\u201d.<\/p>\n

Thank you, and my best wishes to Defence Seminar 2014.<\/em><\/p>\n

Tweet<\/a><\/div>","protected":false},"excerpt":{"rendered":"

By Dr.P.B.Jayasundera (Following is the full text of Keynote Address by Secretary to the Treasury Dr. P.B. Jayasundera titled \u2018Sri Lanka: Challenges to a Rising Nation\u2019 at the Defence Seminar 2014) Good Morning to all. Professor G.L. Peiris, Minister of External Affairs, Lalith Weeratunga, Secretary to the President, Gotabaya Rajapaksa, Secretary to the Ministry of …<\/p>\n

Continue reading ‘Five Pillars of Nation Building are National security, Food security, Energy security, Environment security and Macroeconomic security’ »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[12],"tags":[],"_links":{"self":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/32587"}],"collection":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32587"}],"version-history":[{"count":1,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/32587\/revisions"}],"predecessor-version":[{"id":32588,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=\/wp\/v2\/posts\/32587\/revisions\/32588"}],"wp:attachment":[{"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32587"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32587"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dbsjeyaraj.com\/dbsj\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32587"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}