[As delivered]
August 15, 2019
Ambassador Teplitz: — This gathering represents a very diverse array of economic sectors. I really think this is the future of the Sri Lankan economy that we’re looking at here. I want to thank Acting President, Presantha Jayamaha, and I want to thank Nuzreth Jaladeen in particular, for inviting me to speak; and also Nuzreth for her efforts to increase engagement between the Chamber and the Embassy. We want to continue to build on that. Over the past few years I think we’ve struck up a very good partnership, and I know there’s a lot more that we could be doing.
One of my primary goals as Ambassador really speaks to that. We want a good partnership, because of course one of my goals is to advance an agenda of economic prosperity for the United States and for Sri Lanka. My team is constantly looking for new opportunities and new ways to connect American businesses with Sri Lankan partners to support an open, fair, and reciprocal economic environment that welcomes foreign investment.
Economic diplomacy, in fact, is what we call that. It’s one of the foundation stones of our engagement overseas. Of course, promoting bilateral trade is a good thing all by itself. I’m sure nobody would disagree with that. But economic diplomacy is about more than increasing trade statistics. It means opening new and untapped markets. It means identifying opportunities for small and medium enterprise. It means promoting opportunities for women entrepreneurs. And it means addressing key impediments to trade and investment, whether that’s regulations, fees, non-tariff barriers, or even cultural misunderstanding so there’s more opportunity for all.
For me in particular, this means leveraging the whole U.S. Embassy team in Colombo to promote economic diplomacy and achieve a win/win environment. I’m joined by our new economic chief, Susan Walke, who is here tonight. I hope many of you have a chance to meet her. She will help in leading that effort. We want a win/win environment that’s going to benefit both of our countries. To do that, we know we must listen to the business community, take on your concerns, and work with the Sri Lankan government on solutions that work.
American economic diplomacy is about shared prosperity and the shared values implicit in our way of conducting business. Earlier I used the words open, fair, and reciprocal in describing our desired economic environment. I hope that’s the economic environment you desire as well, because we believe these are important qualities for all economies. They offer transparent and competitive economic growth. These qualities – open, fair, reciprocal, and let me add two new words, transparent and competitive – create a level playing field for private sector engagement. They also promote the sovereignty of nations by ensuring mutually beneficial arrangements and freedom from business practices that create financial vulnerability. They support the generation of new ideas, and they give young entrepreneurs a way to unleash their potential. Americans focus on these values because we believe they are responsible for much of the economic growth and resulting poverty alleviation the world has seen over the last 70 years.
In Sri Lanka, since independence, the United States has furnished more than $1 billion in grants and direct development assistance. Over the last 70 years, that’s $1 billion in assistance – not a single dollar given as a loan. And we continue to work to foster long-term growth and shared prosperity for both of our countries. Over 10,000 households have directly benefited from U.S. government assistance, and these households’ gross income is now in excess of $10.7 million – just with some of our near-term projects. More than 5,000 micro-enterprises have benefited from our support, with total sales reported by all investment grantees of $68 million. Again, near-term projects – not over the life of 70 years, but just in the last few years.
And importantly, in a country that needs female work force participation – needs this participation to increase economic growth and the potential of the economy for everyone – overall female participation in U.S. government programs has been reported at 26 percent. These are results that we hope are replicated, over and over and over.
I want to highlight three programs that might be of interest to you, because I think they directly support economic growth. And in some cases these programs have been the subject of misinformation or disinformation in the media. Notwithstanding, of course, the presence of our media guests here, but I want to make sure that you have the facts. These programs I think showcase the government’s approach – the U.S. government’s approach – to achieving the kind of growth I was talking about: free, fair, open, reciprocal, and transparent. These programs also showcase the fact that we believe economic growth has to be aligned in partnership with the private sector.
You Lead is one of these programs. Our colleagues at USAID have been working with a number of private sector partners – including the Sri Lankan Tourism Alliance on their Love Sri Lankan initiative – to support the industry’s quick recovery from the Easter attacks. You Lead also supports revisions to the entrepreneurship curriculum in Sri Lanka and provides vocational and technical educators with new tools to inspire young entrepreneurs. So we may have worked with some of you in this very room.
Biz+ is another program where we have partnered with more than 60 small and medium sized businesses across multiple sectors all over Sri Lanka. And the results have been impressive. Biz+ support has improved infrastructure development, empowered women, helped small business owners in the rural economy, amplified and improved production volume, increased profitability, improved workplace coordination, and supported international standards for financial and management practices – crucial for the competitiveness of Sri Lankan business.
Biz+ supported businesses have leveraged $22 million in private capital. They have created more than 8,000 jobs and generated about $25 million in economic impact from business investment, jobs, and income growth. These are substantial results. This translates into 8,000 families with a stable, reliable income – a real source of pride for me and my team at the Embassy.
Finally, let me talk about the Millennium Challenge Corporation Development Assistance Grant. You’ve certainly heard about this in the media. The government of Sri Lanka and MCC have been talking more about it in order to clarify what this assistance program is really about. Let me tell you more.
We first worked collaboratively – the government of Sri Lanka and the government of the United States – over the last two years to develop this program. The purpose is to catalyze economic growth. Some of you may even have participated in some of the workshops and focus groups that were tasked with identifying the projects that would be part of this proposed, five-year program. It will be funded with a $480 million grant. That’s almost half a billion in grant aid from the people of the United States to the people of Sri Lanka. This is not a loan. Not a single rupee of debt will be added to the balance sheet of Sri Lanka as a result of this program.
What will the program accomplish? Well, there are two components – transportation infrastructure and land administration. Both of these were chosen because they are identified as significant binding restraints on economic growth here in Sri Lanka. Many of you in your businesses I’m sure are aware of the key challenges posed in these sectors, and that’s why they were identified as key elements of the program.
So what will happen in these sectors? Let’s start with transportation. This development agreement is going to fund improvements to over 205 kilometers of roads in greater Colombo – roads on which two million people travel daily. It will result in significantly reduced traffic congestion during peak hours. And this will include improved bus services which half the population relies on to get to work. So an advanced traffic management system is a key element of this program.
The agreement will also fund upgrades to provincial roads in the Central Sabaragamuwa and Uva Provinces which are among the poorest regions in the country. But these regions are very productive. They’re producing tea, rubber, fruits, and vegetables. In other words, they’re the very places where particularly small entrepreneurs need to get their goods to market. They need a reliable road network and a network to the ports and the markets of Colombo to support their businesses.
On the land administration side, this assistance will fund the Sri Lankan government’s existing programs – programs that help improve the documentation and mapping of state land, as well as help Sri Lanka citizens gain more title to their land by converting their deeds into digital form which will protect their paperwork from loss, damage, or theft. I want to emphasize that these are existing programs of the government. No new programs are envisioned under the MCC Development Assistant Program. It’s to help fund existing programs to complete implementation on the part of the Sri Lankan government. I’m emphasizing this because there has been so much bad and false information out in the public space specifically about this program. I really want to clarify a few more things. I hope you’ll indulge me for just a minute.
In response to the priorities of the Sri Lankan government and studies analyzing barriers to economic growth, this program was designed to address key portions of transportation infrastructure and to implement the government’s planned reforms. This program was developed out of extensive consultation with the government, private sector, civil society, academia, and is based on solid academic, economic analysis that highlighted these sectors as key areas to grow.
Under this agreement Sri Lanka will retain oversight and control of all aspects of the supposed project – all the roads undergoing improvement, every traffic signal and bus network that is upgraded, every aspect of the effort to digitize land records and to produce accurate land surveys. The United States will not own, will not control, or in any way administer any land under this agreement.
The MCC has a fixed implementation period of five years, so we’re making an agreement for a program that has a limited time frame. Five years is the implementation period. There’s an additional 18 months to two years set aside on the front end to get everything ready – final feasibility studies and all the renderings in place so that within the five-year clock, the programs can be completed on time. I’m sure you can appreciate that to spend $480 million, five years is actually a pretty small window to accomplish that task. We want to be ready for rapid program implementation, so the total lifetime of the project is no more than seven years. This is not an enduring agreement. It’s a one-time program.
Another feature of the MCC program is transparent partnering with the private sector. I encourage all of you to take a look at the procurement, partnership, and investment opportunities you can find on the MCC website. It’s under the Work With Us page on the MCC website, which can be reached at MCC.gov, so it’s very easy to find. We’re looking for partners with whom we can work, and in fact MCC really is an approach to development with the private sector in mind.
I want to give you a little context for MCC. Millennium Challenge Corporation is a U.S. government development assistance agency. It’s a sister agency to USAID with whom some of you are probably more familiar. It has a very unique and time-bound approach to development assistance. Through MCC, we have invested $14 billion in 37 compacts or agreements in 29 countries around the world since 2004. This is a significant volume of development aid that has been spent by the United States around the world to help people to remove barriers to economic growth and to help people rise out of poverty.
I’ll give you a couple of examples of the types of compacts in other places; in other countries. In the country of Georgia, for example, the U.S .government is increasing the number of internationally accredited degrees in science, technology, and engineering and medicine – a very different type of arrangement than what is proposed here for projects. In Senegal, another country where we have an agreement, they wanted to strengthen the power sector to meet the growing demand for reliable electricity. And in Nepal, where I was previously a U.S. Ambassador, I had the honor of signing the first MCC compact in South Asia. Funds there are helping to address the problem of low energy supply and high energy transportation costs by constructing energy transmission corridors.
We believe all of these compacts deliver for the countries in which they are implemented, and they deliver globally to help with growth everywhere. With the 24 compacts that have been completed – and compact is just another word for an agreement – it means that globally, millions of people now travel more than 3,480 kilometers of roads which connect businesses to markets and fuel domestic and international trade that were built or upgraded through compact projects.
Additionally, more than 300,000 households, businesses, and community organizations now have legal rights to their land. This is particularly empowering for female heads of household. It has increased individual access to credit and reduced land-related conflict. I am confident that similar results can be obtained from an MCC development program in Sri Lanka – a grant with a limited time duration but very ambitious project ideas.
The U.S. government however, is not the only one investing in Sri Lanka’s future. I want to bring my remarks back to the reason many of you are here. U.S. companies have invested over $300 million in Sri Lanka, generating hundreds of high-end, high-quality jobs in industries ranging from manufacturing to IT business services and nearly everything in between. As I said, you all are the future of the Sri Lankan economy.
As U.S. companies are looking in particular – but companies from other countries too -to de-risk their investments from China, I see even more potential here to invest in these sectors and elsewhere – and more potential for Sri Lanka to attract these investors, particularly in light manufacturing.
An important component of American economic diplomacy is to advocate for specific changes that could improve the business environment – changes that make for an open, fair, more transparent, and more competitive economy. Based on feedback from you and other business leaders, my team and I will continue to advocate for crucial legal reforms and modernization, as well as for predictable and consistent regulatory environments.
Strong intellectual property rights protections, for example, have become increasingly important in any country wishing to compete for U.S. business and wishing to capitalize on the digital economy. Without this fundamental right there’s no incentive to innovate, because there’s no reward for innovation. The technology sector in Sri Lanka is going to depend on a modern IPR regime.
With regard to predictable and consistent regulation, we continue to support rules that create enforceable rights and common understanding among suppliers, customers, and employees. Rules also should be shaped with input from the private sector among other stakeholders. So we will continue to encourage and advocate that government listen to the voice of business.
I’m proud to say that doing business right is also part of the American brand. It contributes to the value proposition of doing business with American business, and I hope it’s something that can be appreciated by the people of Sri Lanka. During her visit with several AmCham members on Monday, Acting Assistant Secretary of State, Alice Wells, talked about how U.S. businesses are at the forefront of maximizing the social and economic benefits from private partnership.
I think this is a point worth repeating here, because our companies have become the model for responsible business conduct around the world. That is part of the American brand. And the United States is working to expand economic opportunity around the world through our economic diplomacy because we know that open, fair, reciprocal, and transparent economies improve lives and raise standards.
The world is a safer and more secure place when strong, sovereign, and capable nations partner together, so we are looking forward to a long and fruitful partnership with Sri Lanka – building on the last 70 years of bilateral ties and looking to the future with an open, fair, reciprocal, and transparent economy that raises standards that attract investment and provide opportunity for all.
Thank you very much.
