The newly elected government while encouraging foreign investors would also provide similar benefit to the local entrepreneurs as well, the newly elected State Minister of Finance and Capital Markets and Public Enterprise Reform Ajith Nivard Cabraal said, while assuming duties at the Ministry of Finance in Colombo.
“While encouraging FDI we must create a level playing field for both local and foreign investors,” he said. “We will also take steps to move up in the Doing Business Index cutting red tape and creating a better environment for investors.”
“Sri Lanka must move forward in line with the global economy but we must at all times keep our Sri Lankan identity intact.
He said that the government will strengthen banking and financial sectors and Capital Markets. “We must also take steps to strengthen ailing Finance Companies and prevent them from collapse.”
He also said he would be working closely with the media as they are the best ‘medium’ to carry on the ‘work they do’ to the people.
Following is a Q&A with State Minister of Finance and Capital Markets and Public Enterprise Reform Ajith Nivard Cabraal.
Q: From an accountant to Governor and then a Minister: How do you review your journey?
A: it’s a long journey from where valuable insights were gained. I must firstly thank both the President and Prime Minister for having confidence in me and appointing me to this key position. We must also thank the people for giving the government a two thirds majority to turn around the country. Even before the Ministers took oaths our areas of work has been streamlined which means we can start work from day one.
The President has given us targets and deadlines. With a two thirds majority backing us, we cannot wait without delivering what the people elected us for: a prosperous Sri Lanka.
Looking back after I finish my tenure as a Minister I will not have any excuses for not fulfilling my given tasks. I hope to achieve many of my targets within the first three and a half years of my office.
Q: How do you see the current status of the economy?
A: The then Yahapalana government completely broke the smooth economic fabric which the previous Mahinda Rajapaksa government achieved and created. The development drive and program to add key infrastructure was completely halted. Sri Lanka’s economic growth rate was lowered close to under developed Afghanistan and we have a daunting task to rebuild it. In addition the present covid pandemic has put additional pressure on the new government.
However firstly we will honor all international debt at the right time as Sri Lankan has never defaulted on them.
Many local industries and services suffered significantly due to high taxes by the previous government, curfew, lockdown and dying up of tourism due to global covid Pandemic.
Q: What steps have been taken to correct these?
A: The government after the election of Gotabaya Rajapaksa addressed these issues and provided financial relief.
This segment still needs to be supported by way of cash grants, tax breaks, loan and interest moratoriums, quick release of new loan facilities and most importantly as concessionary interest rates and we will continue this work.
The government will keep on introducing novel tools such as providing employment to 100,000 under privileged families an initiative never done by any government before. This is one initiative which is coordinated by the Special President Task Force appointed to seek and implement measures to drive away poverty.
The Government will provide special benefits to entrepreneurs who want to start industries outside Western provide and several such novel measures would be introduced to stimulate the economy and most importantly to bridge the regional economic disparity.
“The new Government will introduce a “People-centric Economy. We will work towards having a stable rupee and keep interest rates at competitive levels. Inflation will be maintained at a single digit level. The Finance Ministry will create the environment necessary to achieve this goal by introducing tax reforms, monetary and banking regulations, and financial backup.”
Many initiatives and benefits would be taken and offered to woo FDI and for this the Colombo Port city would be an ideal platform.
Most importantly due to mismanagement of the previous Yahapalana government people have lost faith in the government and Finance Ministry. We will also take measures to correct this and raise the confidence of people towards us.
Q: What steps do you plan to take with regard to Finance Companies?
A: Due to high interest rates and other benefits offered thousands of unsuspecting clients have deposited their hard-earned savings with Finance Companies.
Due to lack of regular check and balance system by authorities some of the Finance companies acted arbitrarily and crashed. About five Finance companies have closed down and though this ‘crash’ was on the cards the previous government authorities did not take precautions against the collapse.
Firstly the Finance Ministry will review the policy on finance companies and if necessary introduce new regulations to prevent their future collapses and also explore the possibility of rebuilding some finance companies.
Q: What incentives are offered to local entrepreneurs and exporters?
A. Local entrepreneurs and exporters are not only major contributors to earn foreign exchange but are also key players in creating employment.
Exporters are today challenged by shrinking demand due to the Covid Pandemic especially from Europe and North America. Though export segments such as tea, rubber, and apparel have registered swift recoveries in recent months some others are fighting for survival and the government will assist them with nemours ways. The exporters too should think new and create new products to the local export basket.
The Finance Ministry will create the environment necessary to achieve this goal by introducing financial backup, tax reforms and export friendly monetary and banking regulations.
We will certainly take a series of new measures to cut red tape and improve on the Global Doing Business Index.
Q: How do you plan to revive some of the loss making State institutions?
A: Most of the present government MP’s, Ministers, think tanks along with the President and Prime Minister were closely monitoring the economic developments of the country long long before an election was even announced. We saw the weaknesses and strengths of the economy and have identified an economic development package which also includes the reviving of State institutions.
Many ask us if we can ‘do this’, I say YES certainly we can do it since we planned solutions for them during the last three four years. Now it’s a matter of implementing them. Most importantly we now have a strong leadership and a clear vision to execute this plan.
Q: What would be the urgent initiatives in your agenda?
A: Firstly it would be to support the covid affected businesses and help to revive them since the government managed the spread and treatment of the covid pandemic much better than all the other countries in the world.
The key to this is the successful method that was implemented in contact tracing thus stopping the spread of the virus.
This is a major plus point for Sri Lanka not only to woo FDI but also increase investments to the government security market. I see a huge opportunity to woo major global corporations to not only invest in the Port City but also move their regional officers to it.
Development of the capital market too is a priority and we hope to bring in new legislation towards promoting this segment.
We have also identified Start up as a key area that needs support and will provide them with capital at very attractive rates.
Q: Do you see the impact of Covid pandemic declining?
A: Though some sectors may take longer time to recover, I see some areas improving. With the global demand for oil picking up in the future purchasing power of the Gulf nations would pick up.
This will help to increase foreign remittances.
“In the export segment we already see a demand for apparels, fish, tea, rubber and also new products like personal care equipment. In May, the exports started to recover and by June bounced back close to pre-crisis level. This is already evident as we see an increase in export revenue.
Exports should be more innovative and start exporting new products targeting the ‘new normal’
Essential sectors and utilities such as pharma, healthcare, power, energy, and telecom had the least impact from Covid.
With a strong political leadership we expect more FDI.
A stronger rupee by the end of first half is also expected.
Fact file...
Having gained his primary education at St Peter’s College, Colombo and St. Sebastian’s College, Moratuwa, Ajith Nivard Cabraal then moved to accounting studies and as an accountancy student he gained an Eisenhower Fellowship in 2000.
In 2005, Cabraal set up Cabraal Consulting Group his own management consulting company specialized on corporate governance (strategic planning, mediation) and turnarounds.
Due to his vast knowledge and experience he was appointed as a Board Member and also headed many business organizations and institutions of a professional or regulatory nature. He also served as Chairman and/or Director of many quoted and unquoted public companies as well.
These included Institute of Chartered Accountants of Sri Lanka, South Asian Federation of Accountants, Business Recovery and Insolvency Practitioners Association of Sri Lanka, National Institute of Business Management, Postgraduate Institute of Management, University of Moratuwa, Securities and Exchange Commission of Sri Lanka, the Strategic Enterprises Management Agency, Sri Lanka Accounting and Auditing Standards Monitoring Board, Committee on Corporate Governance in Sri Lanka)
Cabraal was an internationally recognised consultant in Corporate Governance and was also the Chairman of the Corporate Governance Committee which developed the first Code of Best Practice on Corporate Governance in Sri Lanka.
Cabraal was also a Fellow in the 2000 Multi- Nation programme of the Eisenhower Foundation, USA.
In a bid to give back to his Alma Mata, he was also the President of the St Peter’s College Old Boys’ Union from1996 to1999.
As an accountancy student in Colombo, Cabraal met Mahinda Rajapaksa, who was studying law at Sri Lanka Law College. Cabraal was then appointed as chief economic advisor to Rajapaksa during the latter’s term as Prime Minister, contributing to his manifesto (Mahinda Chintana). In 2005, Cabraal resigned from all his private positions to work full-time for the government.
Effective July 2006, Cabraal was appointed 12th governor of the Central Bank of Sri Lanka until January 2015. The beginning of Sri Lanka’s economic recovery after the end of the civil war fell into his term.
He took many difficult decisions to ensure fiscal and monetary stability of the country.
He was also head of the Steering Committee and took a multi member team to St. Kitts in a bid to get Sri Lanka elected as the host country for the Commonwealth Games and ended close second to Victoria, Australia.
He was also actively promoting the SLPP political agenda and was appointed National List Member of Parliament after the landslide victory of Mahinda Rajapaksa, he was appointed State Minister of Finance and Capital Markets and Public Enterprise Reform.
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