Achieving even last year’s economic growth, a tough task, says former CB Deputy Governor | Sunday Observer

Achieving even last year’s economic growth, a tough task, says former CB Deputy Governor

‘Immediate measures must be taken to restore law and order which is key to revive the economy’.   Pic: Hirantha Gunathilaka
‘Immediate measures must be taken to restore law and order which is key to revive the economy’. Pic: Hirantha Gunathilaka

The government must enforce law and order and observe the rule of law and bring all the culprits of the Easter attacks before the law, irrespective of caste, creed and politics, which will be a good message to prospective foreign and local investors to change their perceptions about the country, former Central Bank Deputy Governor W.A. Wijewardena said.

“This is how other countries that came under terrorist attacks rebuilt confidence in the economy. All those who are now engaged in mob violence must be dealt with severely to avoid a recurrence of ‘Black July’ which took place in 1983,” he said, adding that as of now those instigating and involved in violence know that they could easily get away from the long arm of the law.

He said the initial bomb attacks was a temporary setback but the follow-up to the attacks has sent out negative sentiments about the country to prospective investors who have turned their back in search of other destinations to invest.

“We have discouraged foreign investors and encouraged local investors to look for alternative countries to invest. Today, local and foreign investors feel unsafe to venture into risky territory,” Wijewardena said, adding that the government has failed to protect the property rights of the people which are the cornerstone for the functioning of any economy.

He said a large number of businesses run by Tamils were destroyed by mob violence in 1983, which the government could not control.

Recalling how Motorola and Harris Corporation, two tech giants which had agreed to set up factories in the Greater Colombo Economic Commission finally pulled out from the country to relocate operations in Malaysia following the 1983 clashes, he said Sri Lanka lost high tech foreign direct investments. As a result of the turbulence in the country all what we got was investments in the apparel sector referred then as investments in lingerie.

Before 1983, Motorola and Harris Corporation had plans to set up plants in the export processing zone in Sri Lanka. Marubeni, Sony, Sanyo, the Bank of Tokyo and Chase Manhattan Bank had investments in the pipeline for Sri Lanka in the early 1980s.

“The economy has not been performing well since 2013 and since then there has been a slowdown in growth reaching 3.2 percent last year. Estimates by the World Bank and the Asian Development Bank show that economic growth in Sri Lanka for the next five years will be around 3.5 percent. It will be a tall order to achieve even last year’s growth rate,” Wijewardena said, adding that on top of the bad economic performance those with vested interests are trying to gain political mileage from the present situation and taking the country back to what it was 30 years ago.

While recognising the importance of collective measures launched to boost the tourism sector which was hit the most by the recent attacks, the former senior banker said that incentives to promote tourism will be futile if immediate measures are not taken to restore law and order in the country which is key to revive the economy. Sri Lanka Tourism announced insurance coverage for foreign visitors and special tour packages including reduction in air fares to lure in visitors to the country.

Tourism industry experts anticipate tourist arrivals to dip by around 30 percent this year following the April 21 mayhem. 

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