Sri Lanka has to free consumers, liberalize factor markets, slash state controls: PM
ECONOMYNEXT – Sri Lanka has to move to the next generation of reforms, liberalizing factor and product markets and also reduce state controls and approvals that hold back entrepreneurs, Prime Minister Ranil Wickremesinghe said.
Sri Lanka has import duties and other controls on poorer consumers that benefit businesses and also controls on services and domestic markets that businesses themselves has to wade through to get simple approvals.
"Firstly there has to be a change in the mind-set of the private sector. From crony capitalism are we going to the next generation of reforms?" Prime Minister Wickremesinghe told an annual economic forum by the Ceylon Chamber of Commerce.
The forum is themed on pushing exports to 50 billion dollars.
"People want jobs, people want income, people want social mobility. Are we providing that or not? If we are doing so we have to be open, we have to do the next round of reforms. How some of you will judge it you do not know.
"Some will look at it as being painful for themselves. Pain cannot be imposed on a larger section of the people."
"We can’t have import substitution and ask for 50 billion dollars in exports."
Wickremesinghe said Sri Lanka had trading and dominating trading across the Bay of Bengal and up to China during the Anuradhapura and Polonnaruwa periods.
He said Sri Lanka also needed markets. The US and EU remained important markets. Wickremesinghe said action will be taken to restore fish exports to the EU and also GSP+, while negotiating a free trade deal with China.
He said demographics favoured India where there was a large young population. The United States also had a young population.
Despite action by nationalists to limit immigration the US remained open to immigration with liberals winning part of the battle still, which was a key reason for better demographics in that country.
He said the US market had to be "tackled after the 2016 election in that country".
Sri Lanka however had to be competitive and attractive.
"We have to get into the next generation of reforms in factor markets," Wickremesinghe said.
Wickremesinghe said domestic labour and land markets had to be freed.
The United National Party wanted to simplify land transfers and wanted to give free hold to 2.5 million people who held land given by the state under non free-hold basis
According to his party’s strategy for a ‘competitive social market economy’ in Sri Lanka the government had a key role to play and ensure that rules were enforced.
"You can’t be going to the government to get permission to get for everything you do, to bargain your way."
Even to get a building permit money had to pass hands, he said.
He said authoritarianism, which was practised after the war had failed to deliver the goods and a free society was the answer.
The Western Province should be made into a ‘megapolis’ of eight million people. All Asian countries had grown with large cities, he said. (Colombo/Aug04/2015 – Update II corrected para 7 "We can’t have import substitution and ask for 50 billion dollars in exports.")