Tuesday, September 17, 2019

‘Urgent reforms necessary to expand good governance to economy’

Finance Minister Mangala Samaraweera yesterday said two urgent reforms were necessary to expand good governance to the economy, focusing on critical bottlenecks to growth; namely macroeconomic stability, State Owned Enterprises (SOEs) and tariffs.

He said, first, the State needs to cease to have operational control over SOEs operating in competitive markets. Chinese reformers often used to say “The state guides the markets, the markets direct the enterprises.” He was speaking at the Sri Lanka Economic Summit themed, ‘Re-calibrating Sri Lanka’s economic trajectory towards 2025’ organized by the Ceylon Chamber of Commerce in Colombo yesterday. The state can remain an owner of assets without having operational control. It can list SOEs operating in competitive markets, and use the listing proceeds to settle Sri Lanka’s debt or invest in funds that track the Colombo Stock Exchange, he said.

Second, in the case of natural monopolies, such as railways, the state needs to create a holding company with a de-politicized board. For example, by subjecting board appointments to Constitutional Council approval.

Samaraweera said the country’s export sector has been crippled by para-tariffs caused by businessmen influencing politicians. “This has also led to large increases in prices. For example, last year cement cost more in Sri Lanka than in Malaysia, Thailand, Bangladesh, India and Pakistan.

This affects construction of both factories and houses. As envisioned in the Budget, we need to go back to the simple, non-discretionary three-band tariff structure that we had in the early 1990s by eliminating non-tariff barriers. This will de-politicize our border tax-policy and bring huge benefits to exporters and consumers.”

“The lessons of our past could not be clearer. Prosperity requires us to move even more decisively in the direction of more democracy, more reconciliation, more rule-of- law, more depoliticization, more openness, more competition and more reform,” he said adding that “this is the direction that Sri Lankans will choose once again.’ (Full speech on page VII)

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