- Budget’s, Chinthana’s 8% growth target
An economist picked holes on the Government’s Mahinda Chinthana policy document that envisages the economy to grow by 8% and to double the per capita g.d.p. income to U.S.$ 4,000 by 2015.
Professor Srimal Abeyratne, Senior Lecturer, Colombo University’s Economics Department, speaking at a seminar on Wednesday said that the country can grow at 8% if investments increase to 40% of g.d.p.
Those goals were also highlighted by Treasury Secretary Dr. P.B. Jayasundera at another seminar held earlier during the day on Wednesday on Budget 2010 which was presented in Parliament on Tuesday.
He said that the budget was a roadmap to achieve an 8% growth rate beginning from this year.
Abeyratne continuing however said that currently investments were in the region of 25-26% of g.d.p.
But the ground reality is that after Sri Lanka liberalized its economy in 1977, the value of the foreign direct investment (f.d.i.) stock upto 2008 was U.S.$ 4.3 billion. In contrast in China it was U.S.$ 378.1 billion, Hong Kong (U.S.$ 835.8 billion) and Vietnam (U.S.$ 48.3 billion), he said.
It was also pointed out at this seminar that in 1990, both Sri Lanka’s and Vietnam’s export earnings were at U.S.$ two billion. But since then Vietnam has surged ahead to reach an export figure of U.S.$ 61 billion, while Sri Lanka was struggling at a mere U.S.$ eight billion.
Emphasising the importance of the West for the country’s economic growth, Abeyratne said that the E.U. and the U.S.A. provide 40% of the island’s tourism, 60% of its export markets and 40% of its f.d.i. “That’s why we are worried about the future of the generalized system of preferences plus (g.s.p.+),” he said.
“Russia, India and China are not our market place.”
Abeyratne also questioned the Government’s ability to attract 2.5 million tourists by 2016 considering the bad publicity the island receives over the internet such as uncollected garbage and the danger of disease as a result, scavenging animals and the country’s law and order situation.
He said that the country achieved an 8% growth rate only twice, in 1968 and 1978.
Abeyratne asked as to how the State could intervene to create 5,000 small and medium enterprises (s.m.e.), while at the same time transform 200 of those into large enterprises, as envisaged by the Government.
For rapid growth to take place there need to be reforms, he said.
Abeyratne also stressed the importance of liberalizing the country’s education system.
“Six months ago India opened-up its higher education system, but I don’t think there are even 10 foreign students in our universities,” said Abeyratne.
“We are entrapped by our 92% literary ratio, but in the outside world we are nowhere,” he said.
It was said that because of Sri Lanka’s skewed education system Sri Lanka scored poorly on the “skills” indicator in a business process outsourcing survey.
Abeyratne further said that though g.d.p. per capita income has doubled since 2004, there were questions as to whether the standard of living or the purchasing power of the masses had increased. Inflation was the cause for this not to take place, he said.
Abeyratne said that the Government envisages making Sri Lanka an air, sea, I.T. energy and commercial hub. He said that Singapore without producing any oil, sells 10% of the world’s oil by being an energy hub with eight of the world’s top multinational oil companies establishing offices in this city state.
It was also pointed out at this seminar that the Government plans to attract 10,000 ships to the Hambantota Port by 2016. But the Colombo Port, considered as a regional hub, attracts only 5,000 ships annually.