ECONOMYNEXT – Sri Lankan farmers should shift into higher value agriculture to avoid being trapped in low-wage subsistence farming, Minister of Finance Mangala Samaraweera said.
The government needs to undertake more difficult and challenging reforms in order to drive future economic growth and development, he told the “CEOs Forum 2018”, organised by the Postgraduate Institute of Management Alumni Association.
“This entails improving the competitiveness of the economy, so that output per employee is higher, and this would be reflected in higher real wages.”
To drive competitiveness, economic resources must be diverted into activities that optimise output per worker, Samaraweera said.
“This requires a shift of economic activity into sectors where Sri Lanka is globally competitive and move out of sectors where we cannot compete.”
In agriculture, Samaraweera noted, about 30% of the labour force accounts for only around 9% of GDP.
"By 'protecting' uncompetitive agriculture, we are in effect trapping farmers in low wage economic activity,” he said.
"It is clear that we need to gradually shift into higher value agriculture in order to improve output per farmer, and thus income per farmer.”
To get there Sri Lanka needs investment and technology – both foreign direct investment and domestic private investment.
"This same principle applies to all economic sectors; many of which are uncompetitive but have been protected, stifling competition, innovation, and real wage growth, whilst imposing high costs of protection on consumers,” Samaraweera said.
The government has embarked on a shift in the economic trajectory of Sri Lanka from a protected domestic market driven economy, to a more outward oriented economy.
"The future of our economic growth must be through exports, entrepreneurship, FDI, and private enterprise,” Samaraweera said.
Sri Lanka needs private investment creating jobs in globally competitive sectors.
"We have in the past been successful in sectors such as apparel and ICT, but this needs to be expanded in many more sectors."
The government is implementing an economic programme that includes gradual liberalisation of the economy to attract private investment and instil more competition, while providing a safety net for those adversely affected by competition, Samaraweera said. (COLOMBO, 04 September, 2018)