Economic Development | Speeches

Comprehensive economic development strategy enunciates Sri Lanka's vision

Inauguration of the Sri Lanka Development Forum

Kandy, Sri Lanka

May 16, 2005

Venerable Sir,
Mr. Chairman, Minister of Finance,
Hon. Prime Minister,
Ministers,
Excellencies,
Distinguished Ladies and Gentlemen,

I would first like to take this opportunity to welcome you all here especially the representatives of the World Bank, The International Monetary Fund and representatives of donor agencies and the donor community to this second development forum for Sri Lanka to be held in this country. This one is the first to be held in rural Sri Lanka in an ancient Royal Capital rich and alive with a truly Lankan pre colonial history, an era that vibrated with peaceful cohabitation between the four communities, the four religions that inhabited this land during the reigns of Sri Lankan Kings. We see here today a gathering of representatives of all the states and agencies that have contributed significantly to our country’s development process- economic, social, human and cultural. I am happy to extent my most sincere appreciation on behalf of the government and peoples of Sri Lanka to all of you, for the generous assistance and support you have given us through the years to transform the tragedy of underdevelopment and poverty into a new era of enlightenment prosperity and peace for all our peoples.

We meet here today, as has been mentioned by the two speakers before me, four and a half months after the greatest single natural tragedy the world has known for many millennia. A tragedy, which left us bereft of nearly 40,000 lives of our people stretching from the North through the East, through the Southern and the Western coastal line of our country. I would also like to take this opportunity as my Minister of Finance before me to extend our heartfelt gratitude to the governments and especially the citizens of all your countries for the massive support which was spontaneously extended to us from the very hour the Tsunami was announced through the media all over the world. It was perhaps the first time ordinary citizens of countries contributed massively, more than their governments.

Permit me, Ladies and Gentlemen, to reflect for a moment when nearly five months ago on 26th December 2004 in the immediate aftermath of the Tsunami people from all over the world… a large number of them perhaps who have not even visited our country… rose up in one magnificent moment to extend their support to the peoples of our country without even being asked by their governments or by anybody else. It gave us hope once again, in a world a lot of us believed had been dehumanized, mechanized through the so- called globalization and modernization and technology. That people- humans could reach out across every known divide and territorial boundaries, ethnic, religious and every other divide to extend their hand of solidarity and friendship to peoples right across the globe, was a moment which gave us hope once again in the possibility of co-operation between peoples, between peoples organized into states and into governments. It has given us once again an opportunity to build an organization, one collective organization which group humans, from across the globe organizations, such as United Nations Organizations, regional organizations, which have I believe, if I am not wrong, as its basic objective, bringing together of the collective will of the peoples of the world in a common dream of assisting each other to rise up from the horrors of poverty of under development, of ignorance, of ill health to strive towards what we called development, prosperity and peace.

So, Ladies and Gentlemen especially all those of you representing your countries and your agencies, once again a very big thank you. Let me now descend from those heights that we were hovering in for a few moments - the heights of greatness that the human spirit can some times achieve- back to the ordinary world of us humans and look at the main objective for which me meet here today and for the next two days. We are here to talk about the development programmes of Sri Lanka for the next few years. My government has for nearly 11 years tried to do several things in planning our economic developments strategy. We have enunciated a vision. The vision, a development which is comprehensive, which integrates the major sectors of our society economic development which would combine all sectors of the population. Especially the 40% of our population that still lives in poverty. It has also included the social cultural development of our peoples. This vision we based ourselves upon is to formulate a six year economic development plan which then evolves annual action plans for the various sectors of the economy. The basic premise on which we founded that vision was several. Firstly, it consisted of strengthening the macro economic indicators of our economy without which we know that no economic development is sustainable reducing inflation, reducing interest rates, reducing the budget deficits making state enterprises profitable, disposing of those enterprises which were not considered strategy and letting in the private sector into the development process in a more effective and constructive way.

Our economic vision also consisted of a very important focus given to poverty reduction. Not through free doles to the people as the Sri Lankan economy was want to do from colonial days, but more by empowering our people through education, through good health systems, through the development of rural economic infrastructure. Also by making available easy credit technological know how, marketing facilities to the small and medium Sri Lankan Entrepreneurs, various incentives of this sort have been offered by several governments even before 1994 when we first took the reigns of government, but we streamline these systems, brought in new incentives focusing mostly on the possible development of our small farmer sector and small and medium industrialists and entrepreneurs who account for more than 50% of our gross domestic production even today.

We also had a vision of diversifying our exports away from dependence on primary agricultural products and into industrial and services production. For this purpose we had to urgently undertake reforms in the education sector, develop the health sector and develop the hitherto heavily neglected rural infrastructure. I would like to say that we have achieved many successors in these fields but we have much more to do. Telecommunications, the road network, power supply, safe water supply has increased significantly in the last 10 years in the rural sector.

The Sri Lankan enterprise has seen considerable development making maximum use of the various incentives that have been afforded to them. The Free Trade Agreements with India and now with Pakistan have begun to give us benefits especially for the local medium scale industrialists. We also have a policy of developing Sri Lanka making use of its geographically strategic location as a Air Sea Cargo for the region for this purpose we have undertaken a massive development of the port services and the aviation services and the airport sector. Some work has successfully been completed in these two areas but there remains much more to be done. The new development strategy that will be announced today gives further details of the plans that have been made for these development sectors.

We also believe that while we develop our economy and afford opportunities for our people especially for our young people for modern access to modern education technological know how that we have to also focus urgently on the need for scientific and technological research which still remains at a very imperial level. We have taken some steps in developing these sectors we have had good results. We need to do much, much more, in these areas. As for poverty reduction programs we evolved and overture, a new program 10 years ago, to poverty reduction which we called the Samurdhi program its main objective was to give financial support to the poorest sectors of our society whilst very quickly moving the amount of poverty arrange to various income generation opportunities and income generation possibilities. This has not yet happened. This is one of the areas where if we are honest enough we cannot boast of success. We have the plans, the plans have not yet taken off. A large section of the population has been brought into the network of receiving ad old as it is call in some countries. They have been organized to a great extent into various projects which have taken off time to time but the main objective of making them self –sufficient, self-sustaining through various income generation projects either India agricultural sector for the small media industrial enterprises sector, has yet to take off.

Last year with the change of government we designed a new program for this purpose called ‘Gami Pubudu’ program and ‘Jana Pubudu’ which are simply two nice sounding names for re-organizing the people, the low income groups into self help programs of small and medium economic activity in the agricultural enterprises field. The new development strategy places special emphasis on these programs and we hope to give special attention to the implementation of this programs. Several ministries have responsibilities in implementing these programs , small and medium enterprise, enterprises ministry together with the agriculture ministry and several others.

I personally, believe that there is a great future for poverty reduction in these programs and we have received significant support from the World Bank, from the Asian Development Bank and many of the donors. In this field there is an attempt at a similar program the Gami Diriya Program under a world Bank funding project. Which is just taking off quite well. We also recognize that no economic development would be sustainable – no poverty reduction programs would be effective for more than a couple of years unless there is political stability and peace in the country.

We base our vision on a strong democratic politico-social structure which respects the fundamental rights of every single one of our citizens and one which would accord the freedoms that all our citizens wish to live in a democratic society. This would mean that all our peoples must have all their basic fundamental needs assured to them. One ethnic community or one group of people simply because they happen to be the majority community cannot help itself to all the fruits of development.

We envision that every single community living in this country must have the ability and equal opportunities to access the privileges of economic and social development. The failure to recognize this and the failure to implement this in 56 years of independence led to dire consequences even before an unending war and conflict in two provinces of our country. The fall out of the conflict in the Northern and Eastern Provinces has had a terrible effect on the rest of the country. It has had a very serious effect on our economic development. It has caused immense damage to our sociopolitical fabric; it has left more than half our population psychologically an emotionally traumatized. It is a problem Sri Lankans still have not even begun to resolve. We believe very strongly and I know that every single partner of this Government, there are nine such partners; we have all agreed that it is necessary to negotiate and that war is not the solution. We have agreed that we need peace urgently in order to achieve that social and political stability. We have agreed peace is required to move our country away from poverty and to achieve prosperity and an enlightened development strategy. I will not bore you with the various efforts that different governments undertook to achieve these objectives.

In 1994 for the first time in independent Sri Lanka, my first Government enunciated a comprehensive practical vision for the resolution of the ethnic conflict that was destroying this country. Several Governments under my Presidency have tried to move this process forward. Sometimes effectively, at other times not so effectively but certainly it has moved forward. The efforts each Government made did move the process forward, they may have had shortcomings and some of them certainly did. However the main objective of moving towards the path of negotiation and democratic engagement was maintained, as opposed to a military conflict. Efforts to resolve the ethnic problem in Sri Lanka have certainly made positive forward strides.

Now we move to the second part of the challenge we are faced with. The new development strategy, I believe that document has been distributed to you Ladies and Gentlemen. The Ministry of Finance in consultation with all stake holders and the donor community has evolved a development strategy. The second part of the document deals with the recent Tsunami disaster and the process of reconstruction to repair the damages caused by the disaster. I will not attempt to enunciate the damage; I think every body here knows about it. Within three weeks of the Tsunami disaster the Government successfully completed an assessment of damage caused and the approximate cost of it, together with the initial designs for reconstruction.

The Ministries of the Central Government, Provincial Councils concerned together with civil society and a significant input from the private sector that were invited to the co-ordination agency which I setup. It is the Task Force for Rebuilding the Nation, commonly called TAFREN today. TAFREN co-coordinated the efforts of the various agencies, at the central and provincial levels and district administrations; by mid January TAFREN came up with the needs assessment report. This was an estimate of what we believed would be required for reconstruction. The World Bank, the Japanese aid agency and ADB undertook a separate need assessments exercise and brought out their report little later. We find that the two reports are very similar in content because we have tried to make an honest assessment of the reconstruction of the damaged infrastructure. We estimate that this would cost between 1.5 – 2 billion dollars. In formulating the reconstruction we attempted not to strictly repair what was damaged, back to the levels at which the infrastructure existed before the Tsunami disaster. We surmised it would be prudent to rebuild what was damaged whilst also modernizing those infrastructures, whilst rendering them more suitable to our present needs. For instance when we repair a damaged school, where perhaps only one classroom was washed away, we planned to build several more classrooms perhaps with new equipment. That would be if the relevant donors were willing to offer us the funding. The same is true in the case of hospitals, roads and all other infrastructure that needed to be repaired. One significant advantage that I see in this process is that out of the 11 districts that were affected by the Tsunami – two were very slightly affected, that is the Western and Gampaha Province, of the other nine, seven are in the most poverty stricken belt of Sri Lanka. The three districts of the North the three Eastern districts and the Southern most district of Hambantota are the most poverty stricken. There are few more districts that were not affected by Tsunami. At least in these seven districts, together with the other two districts in the South we would be able to rebuild and convert this disaster into an opportunity for sustained and positive prosperity in these regions. There will be new needs; such as the transport services, the transport services are in a very bad state, perhaps the most bankrupt state owned institutions in this country. The public transport systems, the railways and the bus systems have been consistently neglected by successive governments for the past several decades, they are still not any where near taking off. However the private transport sector is contributing massively, to the economic development of our country. Vehicular transport, not only luxury vehicles, but the comparatively cheaper three wheel transport systems and private buses are now offering what the state own transport sector as consistently and sadly failed to offer. These are two sectors that we have concentrated on and we face very serious challenges and problems in developing.

We need the honest participation and commitment of all stake holders concerned to undertake the development of this sector before it faces a total bankruptcy. There are few other very important and essential sectors of the economy such as power which is facing very serious crises. The solutions are at hand we do not lack options. We are not devoid of solutions to take these institutions forward, but we need to do much politically and otherwise before we can successfully turn these institutions around so that they will not be the burden they are today on our economy. We do not follow a policy of privatization of all economically strategic enterprises. My Government has clearly stated that these enterprises there are roughly about a dozen enterprises which we believe are strategically important for the economy and must continued to be owned by the government, but we have to inject a modern management into these institutions, what is needed is a modern forward looking leadership from the Ministers and the Government and the executives of those institutions. We cannot turn around it circles and be stuck in the outdated archaic, concepts which we entertained during the days of closed economy.

I must assure you, Excellencies, Ladies and Gentlemen, It takes a lot of time and effort politically within the government and outside to convince people, it requires a massive theoretical and conceptual restructuring of the political minds and political vision if we were to save these state enterprises without letting them crash – without having them being taken over in a bad state by the private sector and if the government was to continue to manage them. We will have to first restructure our thinking and our political vision and together with our economic strategies. We have undertaken this exercise too and I believe we could successfully conclude it.

The post tsunami reconstruction work has begun surely, there have been pledges made by all our donor countries and donor the agencies. Some of the have already singed the agreements; especially the UN agencies, the World Bank, the IMF the ADB and some countries. The others are in the process of negotiations to sign the agreements. Implementation of the agreements that have already will begin within the next two months. That the projects related to the agreements and also the others we hope will be concluded soon, so we can start on all these projects in the third quarter of this year.

I would like to mention here one golden opportunity, one little ray of light that has come through the Tsunami disaster, for whatever the reasons. That is….. the hope of co-operation between the Government and its agencies and rebel LTTE group, at least in development work in the North and the East. This has opened up some opportunities for new and positive action. Soon after the Tsunami the LTTE proposed for the first time in the history of this conflict, that the Government and the LTTE work together along with elected representatives of the other communities that live in the North and East. They were only talking about the North and East and that we should attempt to work together within some kind of administrative arrangement. This is called by all sorts of names; some people try to make it out to be a Frankenstein and frightening operation. Let me sure you, it is none of this. It is a simple administrative mechanism – a simple administrative arrangement which deals with the repair rehabilitation of a two Kilometer strip of coastal area in the six districts in the Northern and Eastern provinces, areas which were affected by the Tsunami. It is exclusively to reconstruct and rebuild the infrastructure that has been damaged by the Tsunami waves.

It does not handle funds. It is supposed to recommend to the government those projects which need to be done, the details of how it should be done, the monies to be expended. the government agencies will perhaps streamline this arrangement if required, once the work is implemented, this administrative arrangement will monitor the work and report any shortcomings and try to have them done as required.

This is the first time the LTTE has accepted to work within the framework of the sovereign state of Sri Lanka. It is the first instance the LTTE has accepted to work with the Muslim and the Sinhala representatives. In the Eastern Province there are around 200 Sinhala families who have been affected. I am not talking about people in the South and the West, they have accepted to work with the Muslim representatives on equal terms; also with the Government in an administrative arrangement by giving their ideas and contributing to the reconstruction projects. This is only formalizes what already exists today in the North and East. In the past seven or eight, one of my first governments offered to begin development work in conflict areas while the war was continuing. It was first refused to by LTTE even rejected then they quietly accepted. Government agencies together with the donor community have undertaken and implemented many development projects in North and East.

Several bridges and roads have been built, repairs and development of schools, hospitals and power supplies schemes were implemented.

Now we have undertaken the repair of the irrigation systems in North and East. in short we are doing what is required to bring back normalcy to the lives of the Tamil and Muslim peoples and to a lesser extent Sinhala people who live in the war ravaged areas. We have worked in cooperation with the LTTE. Especially in the North in the LTTE held areas a considerable amount of development work has happened. Government officers in discussion with the LTTE’s Development Secretariat have done much work. They have not obstructed in its work. They have, where ever required facilitated it. All that is happening now is a formalization of what has continued over six years and what is happening even today in the non tsunami affected areas of Jaffna, Mullaitivu, Kilinochchi, districts in the North and Trincomalee, Batticaloa, Ampara in the East even in the LTTE held areas.

The government at least – the major part of it believes that this is a good opening to build confidence between the government and the LTTE on the one hand and between the government and the Tamil people on the other. Let us not forget for a moment that the entire Tamil community of this country lost faith in the commitment of any Sri Lankan Government to address their development needs. Especially since that certain Black Day, in July of 1983. Since then no Government of Sri Lanka has offered the Tamil people assistance except ours.

They lost all hope that they could expect justice from within the Sri Lankan State. Since the offer of a negotiated settlement to the Tamil people with all guarantees given for safety of all their rights and also to the Muslims and other communities who live in North East offered by my first government in 1994 and then there were the development efforts we undertook which I described little while ago. Ever since then our people are beginning to have some hope. That they can now look within one state of Sri Lanka and expect equal opportunity and justice within that state similar those enjoyed by the other peoples of our country.

I believe the administrative arrangement commonly called the Joint Mechanism is not part of the peace process. Certainly it is an administrative arrangement to bringing all stake holders into the Tsunami reconstruction process in the North and the East. It does open many doors towards a final negotiated settlement and to reach a final solution, to the ethnic problem of Sri Lanka.

We believe that our steadfast commitment to this cause will auger well, despite various objections from extremists from various groups. I know all of you here, Sri Lankans and representatives of the international community and a vast majority of the Sri Lankan people stand with us; with this confidence and through dialogue with all the major stake holders of this country we will be able to move forward. My Government believes in democratic dialogue in every important move we have undertaken, even in this field I have personally kept all partners of Government and the entire country briefed at every stage and the various processes we have undertaken towards the resolution of this conflict.

We will continue to do so and we hope and pray that all stake holders will act responsibly and in the national interest. It is our fervent hope that even for a moment, one magnificent moment we put a side party and personal interests for the sake of the nation. Governments are elected by the people to take decisions, sometimes difficult decisions, and sometimes dangerous ones. We are fully aware that lives of some us are in extreme danger by this decision we are now called upon to take on this issue. Those of us who have agreed to take on responsibility, need to have the courage to face up to the challenges that come along with responsibility. There will be challenges…. quite definitely from outside and also from within, from the extremists in our society. The terrorist extremist from the North and East and the extremists from the so called South.

We need the support of the world – we need the support of the brave Sri Lankans. I know that the majority of my Government… most of them stand steadfastly behind me. The dialogue which we opened in the last three months with my party with all the other parties of government has demonstrated that to us. That the majority of my Government stands firm with me. The majority of the people have already spoken. The rest is left to be seen.

Excellencies, Ladies & Gentlemen I would in conclusion like to a ensure you that we have a Government, that has the courage, that has the commitment not only for personal power that can go beyond the greed for power, one’s own party , own self and think what is best for the entire nation. What we are able to achieve will depend in the immediate future- the next few weeks. the intelligence and the sincerity of all those who call themselves leaders in the political arena of this country and leaders of civil society whose support we need and of course the blessings and support that we have continually received from the international community in addition to your financial support.

I would like to thank the donor community especially the World Bank for its support to the government of Sri Lanka, the Finance Ministry for its efforts to organize this conference today. After three years this forum will discuss the major development issues of our country and all other related matters such as conflict resolution and so on.

I would also like to thank the UN special representative, President Bill Clinton for having sent his envoy to us here to give us support for our conference and pledged their assistance to our Tsunami reconstruction process. I would also like to express a word of sincere gratitude to the outgoing President of the World Bank Mr. James Wolfensohn who has given strong support to Sri Lanka not only in our hour of need at the time Tsunami Disaster struck, but right through the duration of his Presidency once again thank you to all the donor countries, the donor agencies of the UN and others for the continued support you have given us and for having selected Sri Lanka as one of the countries from among around 150 developing countries to which you have given and will continue to give financial and other assistance in our efforts at comprehensive development of our countries.

Thank you!
(Transcript from recording)