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Reform drive to transform Sri Lanka needs legislative backing: Harsha

ECONOMYNEXT – Sri Lanka’s Prime Minister Ranil Wickremesinghe has articulated a series of third generation reforms needed to create a knowledge based, highly competitive market economy, Deputy Foreign Minister Harsha de Silva said.

"Now it is up to Parliament to urgently bring in the necessary legislation as proposed by the Prime Minister to give effect to the far sighted and inclusive policy reforms that will see Sri Lanka emerge as the most dynamic and rapidly developing economy between Dubai and Singapore," De Silva said in a statement.

He said liberalization of factor markets, boosting agriculture, independent management of the Employees Trust Fund, better management of state enterprises are some, changing regressive taxation are part of a comprehensive reform package.

Meanwhile the Prime Minister also referred to a ‘competitive exchange rate’ raising fears among some analysts that an 80s style export drive based on a cheap labour, with wages and capital destroyed year after year by currency devaluation may be on the cards.

The full statement by Deputy Minister De Silva is reproduced below:

PM articulates program to create highly competitive social market economy in Sri Lanka

The 3rd generation economic reforms, as referred to and presented by Prime Minister Ranil Wickremesinghe today in Parliament, has gone beyond even what was expected by most towards restructuring the economy to prepare for the next wave of sustainable growth in Sri Lanka. It provides the platform to create the knowledge based highly competitive social market economy that we promised in the run up to the election to create a million new high-paying jobs. It is perhaps the first time in modern economic history of the nation such a comprehensive set of reforms that encapsulates the entire economy was enunciated. The proposed restructuring of state owned enterprises and the creation of holding corporation to manage them by a board appointed by the constitutional council and the creation of the national wealth fund, inter alia by amalgamating the EPF and ETF, once again, to be managed by an independent body that includes trade unions is a most important break from the past to deal with the past where chronic losses were recouped by regressive taxes on the people while the savings of the hard working people were plundered.

The wide ranging reforms of factor markets, in particular the unique proposal to transfer title deeds to those who have been enjoying state property on various permits will create a market both for agricultural land and equally importantly for residential property in the urban and suburban areas.

The sharp focus reiterated more than once on the need for Sri Lanka to become a trading nation of high value products and services I feel will become the rallying call for a structural shift upwards in foreign investments. The mention by the Prime Minister for the need to accede to the Trans-Pacific Partnership has a deep meaning both in terms of his thinking on free trade and equally importantly on the need for reforms in external trade in the coming years. Not stopping at industrial products and IT enabled services the proposals to link rural agricultural production with the growing demand for specialized food for the booming middle class in the Indian subcontinent is another path breaking initiative which will help reduce inequalities in the distribution of the new wealth that would certainly get created across the nation. Bringing back the cooperative structure in agriculture in the soon to be reformed land markets will help break the shackles that have for a long time been around the hard working farmers of this country.

It was indeed a proud moment for me and others who over several years been associated with the Prime Minister on the need for such reforms to hear the pronouncement today in Parliament. (Colombo/Nov05/2015)

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