Attempts by successive governments to roll back the economic liberalization policies introduced in 1977, by bringing in protectionist measures, has weakened the economy and made it less dynamic, State Minister of Finance Eran Wickramaratne told guests at a post-budget seminar organized by the National Chamber of Exporters (NCE) last week.
He said that the economy will be less competitive and weak with trade contracting to alarming levels when State centric and protectionist measures are in place. Exports have plummeted to a low level from around 33 percent of the GDP in the year 2000 to around 12 percent in 2016.
 Eran Wickramaratne |
The current export structure of the country is typical of a low middle income country where there is little diversification of products and markets by few large companies.
“If we are to propel export growth as percentage of the GDP we need to break the present export structure. We need to get more new companies to the export chain, make the export procedures less cumbersome, reduce para tariffs, which is currently around 7,000 lines, in the next three years,” the Minister said.
A para tariff is an extra fee or tax imposed on an item in addition to the tariff stated on the country’s tariff schedule. “Therefore, in the first phase we will abolish 1,200 para tariffs that do not have Customs duty to make trade more dynamic and competitive,” Wickramaratne said.
He said all reforms will be done with due consultations and not in vacuum. “We will bring in legislation to put a halt to anti dumping practices and non viable trade measures to avert fallout from trade liberalization,’ the minister said.
However, trade experts commenting on the views expressed at the forum said inconsistent and ad hoc policy measures would not help in the long run to boost trade and revive economic growth.
“We need stable and consistent economic policies as in many developed countries where policies remain irrespective of who rules the country,” a trade expert said.
Economists said fluctuating policies from the time of Independence by successive governments have brought catastrophe to the economy which is still far behind many regional economies.
“Lee Kuan Yew admired Sri Lanka and wished Singapore to be like it. However, down the years the situation has completely reversed. We need to urgently put the economy back on track with sound and stable policies,’ an economist said.
The minister highlighted the measures taken through the 2018 Budget to support small and medium scale entrepreneurs under the theme ‘Enterprise Sri Lanka’.
“We have introduced numerous measures, such a low interest loan schemes for SMEs without collateral, which is not an easy task,” the Minister said.
He said opening an EXIM bank needs large sums of capital. It’s not an easy task. “We had development banks and regional banks. The idea behind all these is to create an apex bank to provide long term loans. We have allocated funds for research and development in agricultural products, fisheries, fruits and vegetable exports. The national intellectual property office will be upgraded to be acceptable to global markets,” Wickramaratne said.
However, the minister said that budgets alone cannot change the destiny of a country. Each one needs to take responsibility and a vital play for the country.