Honorable Minister Malik Samarawickrama, Secretary Ministry of Development Strategies, members of the head table, distinguished invitees and colleagues. I have the great pleasure of welcoming all of you to the launch of the South Asia Flagship Report in Sri Lanka. Every year the World Bank publishes a Flagship report on South Asia, last year the report focused on urbanization. This year we looked at the competitiveness of the region.
This report combines a critical mass of quantitative analysis using the latest data and tools available with a rich set of industry and company case studies to draw new insights on what the region needs to do to realize and sustain its great competitiveness potential.
Rising labor costs in East Asia are steering global investors towards South Asia as a possible cheaper alternative. At a time of declining global growth and trade, South Asia—home to a quarter of humanity—has the potential to boost global growth as both a major exporter and consumer market. This is good news, not only for South Asia but for the world as a whole.
South Asia will play an important role in the global development story as it takes its place in the Asian Century. It has the world’s largest working-age population, a quarter of the world’s middle-class consumers, the largest number of poor and undernourished in the world, and several fragile states of global geopolitical importance. With inclusive growth, South Asia has the potential to change global poverty.
As Sri Lanka aspires to become a higher middle income country, a significant transformation needs to take place: from an inward-oriented government driven economy, to an export-oriented private sector led one. The need for this transformation has been identified by the Honorable Prime Minister in recent statements, recognizing that the sources of growth over the past decade (mainly construction and non-tradable sectors) cannot be sustainable in the long run and cannot be the source of more and better jobs that the population, and especially the youth, aspires to.
At the World Bank we also recognize the need for the transformation pursued by the Government and we commend the Honorable Prime Minister for his vision. Going from vision to action will take a significant effort across the various institutions within the Government, and will require a close partnership with the private sector and civil society.
As you will see in the presentation, there are very good examples of success of Sri Lankan entrepreneurs, showcasing the strong potential that the country has. But there is much that can be done to unleash that potential across the board. For example:
• Enhancing the ability of the country to attract and retain foreign investment, which has traditionally been a mechanism to bring new technologies and production processes and create linkages to global value chains
• Improving the investment climate by reducing the cost of doing business and enhancing the predictability of the laws and regulations
• Enhancing the ability of Sri Lankan firms to export by reducing policy and regulatory barriers to trade
• Fostering innovation through a closer collaboration between research and academia and the private sector
• Enhancing skills and knowledge in order to equip the youth with the tools to access better jobs, and to equip firms with the human resources needed to enhance productivity.
• Rethinking the role of the public sector, from one of market participant and creator of jobs to one of enabler of private sector entrepreneurship
The World Bank is very glad to be a partner in this important endeavor and we are committed to continue to support the country through its journey of transformation. To help unleash the country’s development potential, the World Bank sets out a program of knowledge work, technical assistance and investments to support the Government of Sri Lanka in implementing its reforms to eradicate poverty and achieve shared prosperity. The Bank’s strategy can be grouped into the following 3 strategic priorities:
• The first, improving Macro-Fiscal Stability and Competitiveness - to help the country transition to a more robust, competitive, and globally integrated economy and create better-paying private-sector jobs for the bottom 40 percent of the population. In particular, the Sri Lanka Competitiveness Development Policy operation in the amount of $100 million is supporting the countries’ reform agenda by reducing obstacles to private sector competitiveness, establishing transparent and well managed public institutions and improving fiscal sustainability. We also have the Agriculture Sector Modernization Project for Sri Lanka, a $125 million project which aims to support increasing agriculture productivity, improving market access, and enhancing value addition of smallholder farmers and agribusinesses.
• The second, promoting Inclusion and Opportunities for All - to support the government’s objective to better distribute the benefits of the country’s growth to all citizens, particularly the most vulnerable and marginalized. Remediating the concentration of poverty in urban areas and increasing female labor force participation through education are also priorities of the inclusion agenda.
• And the third, boosting Green Growth, Improving Environmental Management, and Mitigating Natural Disasters and the Effect of Climate Change - To help improve the country’s capacity to mitigate the environmental impacts of economic transformation and better manage Sri Lanka’s resources natural resources.
Thank you for your attention and on behalf of the World Bank group we look forward to continuing to work with you on this very important agenda. We believe it is South Asia’s turn; and even more Sri Lanka’s turn!
