June 28, 2016
Good evening, ladies and gentlemen. I’m delighted to join you for the 177th Annual General Meeting of the Ceylon Chamber of Commerce, the country’s oldest and most influential business organization. It is my great honor to be chosen as your chief guest.
I would like to begin by congratulating Chairman Ranatunga and the other officers on being reappointed to serve another year at the helm of this august organization. In this great moment of opportunity for Sri Lanka, the Chamber can play a big role in creating a brighter future for this country.
Sri Lanka’s exciting transformation began in January 2015, when voters gave their mandate to President Sirisena to implement a reform agenda aimed at restoring democracy and human rights, establishing transparent governance, and rooting out corruption. The Sri Lankan people resoundingly endorsed this reform agenda again last August when they elected a parliamentary coalition committed to democracy, good governance, and economic growth under the leadership of Prime Minister Wickremesinghe.
With its renewed commitment to rule of law, equal administration of justice and economic opportunity for all, the government of Sri Lanka is moving beyond the acrimony of the past toward a future that is inclusive, just, peaceful, and prosperous. The international community has embraced this positive vision and extended its considerable support, providing enormous dividends for the Sri Lankan people.
Today, ladies and gentlemen, it pleases me to report that American relations with Sri Lanka are at an historic high. As President Sirisena and Prime Minister Wickremesinghe lead their government in moving ahead with needed constitutional reform, national reconciliation, and fulfilling their United Nations commitments, the United States will remain steadfast in our support of efforts to rebuild the economy, advance good governance, and ensure that all Sri Lankans can enjoy equal rights, equal opportunities and the full benefits of post-conflict development and prosperity, regardless of their ethnicity or origins.
American Partnership with Sri Lanka
The United States has provided development and humanitarian assistance to Sri Lanka for 60 years, improving countless lives. We have made substantial investments in every sector from agriculture to enterprise development, education, healthcare, energy and natural resources, good governance and humanitarian activities.
This year, U.S. assistance will total approximately $40 million, and we have requested similar amounts for the coming years. As a result of the Government of Sri Lanka’s commitment to good governance, the Millennium Challenge Corporation is evaluating Sri Lanka for a threshold program that can potentially unlock millions of dollars in additional assistance to facilitate economic reforms that can boost growth and create jobs.
Our efforts to strengthen Sri Lanka’s economy have not been limited to financial assistance. So far this year, the United States has trained more than 50 business executives and government officials in best practices for the tourism and energy industry, two sectors with great promise for expansion. Another 100-plus officials from Sri Lanka Customs and other agencies have received training on World Trade Organization compliance and related trade issues. We will also work to boost government expertise on public financial management. And we are bringing in local and foreign experts to lead workshops to promote entrepreneurship and build job skills to suit the needs of employers.
The U.S.-Sri Lanka Partnership Dialogue is a new avenue of engagement that concluded the first round of talks in February. These discussions are organized around four pillars, one of which is economic cooperation, including empowering women and improving the investment climate. In April, we hosted the U.S.-Sri Lanka Trade and Investment Framework Agreement Council meeting (TIFA) in Washington, further intensifying our trade and business relations.
A Bright Vision for Sri Lanka’s Future
Our ever-strengthening relationship has given me the chance to travel all around Sri Lanka, assessing both the impact of current assistance and the opportunities for further cooperation. I am amazed by the enormous economic potential rooted in the country’s solid base of human and physical capital and strategic position in a fast-growing and dynamic region. No matter where I go, whether it’s Trincomalee, Jaffna, Hambantota, or in and around Colombo, I can’t help but wonder how impressive this country will be when all Sri Lankans – regardless of ethnicity or socio-economic background — can achieve their full potential.
Imagine, friends, a Sri Lanka where every child can receive an excellent education and aspire to the greatest offices in the land, regardless of ethnicity. Imagine a Sri Lanka where any child can achieve her dream of leading the Armed Forces, any child can be President, any child can achieve a dream of prosperous, rewarding, meaningful employment, a happy family life, with no need to travel abroad to seek financial security.
Friends, can we imagine a future in which a young person in Sri Lanka can open a business, engage in entrepreneurial activity, hire and manage staff, expand operations, and become a success, all the while benefiting from minimum red tape and regulation, and maximum support from transparent, helpful, and enabling government bureaucracy and institutions?
Can we realize a future where any citizen can get in the car in Colombo and arrive in Trinco or Jaffna in just three or four hours? Imagine a high-quality highway around the island, with spokes connecting inland population centers. Imagine a modern railroad network that connects four thriving international seaports which in turn serve as gateways to markets across the Indo-Pacific. Imagine passenger and cargo airports around the country that unlock prosperity and connectivity for people who currently are far removed from global markets.
As Sri Lanka looks toward building the infrastructure needed to bolster future economic growth, government and the private sector may wish to consider the public-private partnership model as adopted by many of the world’s leading economies. PPPs help overcome the lack of public funds needed to build infrastructure by mobilizing private sector finance and by helping improve project preparation, execution and management. Designing, structuring and implementing bankable PPPs is a challenging and complex endeavor, the success of which depends on a sound enabling environment.
Friends, imagine Sri Lanka staking its claim as the foremost logistical and transportation hub in the region. Imagine this economic activity powered by a market-determined mix of energy sources, the backbone of which could be renewable energy. Imagine an electricity grid ringing the country that is open to independent power producers.
How much prosperity could a Special Economic Zone in Hambantota or Trincomalee achieve? Allowing private enterprise to operate in such zones free of restrictive regulation, where the private sector can determine the best business opportunities, will generate much needed FDI and jobs. Such SEZs could incorporate world class competitive practices and regulations that allow Sri Lankan and foreign companies to leverage this island’s central location and human capital to create efficient enterprises which can compete on par with other countries around the South and South East Asian region.
I feel confident that young Sri Lankans would prefer to keep their talent and skills at home to invest in the future of their country, create jobs, and develop new wealth. By nurturing and retaining its top talent, and developing labor standards that are competitive with other efficient markets in the Indo-Pacific region, Sri Lanka can ascend to the top tier of specialized IT services, advanced medical treatment, and financial services. Imagine this diverse workforce living in readily available and affordable housing island-wide, with excellent infrastructure and civic amenities.
Benefits of a Sound Policy Environment
Ladies and Gentlemen, the central ingredients needed to achieve this vision are predictable, sound, and consistent economic policies that are friendly towards workers and investors. Government-owned enterprises can help by ensuring a level playing field that will allow the private sector to flourish and inject needed tax receipts into government coffers. The government’s economic policy can facilitate the achievement of this vision by freeing the private sector to operate under efficient legal and regulatory regimes that match or exceed the policy environments of the most economically advanced countries in the Indo-Pacific region. Legitimate businesses will readily comply with easily understood and transparent regulations.
To achieve this vision, one of the most difficult obstacles to surmount is the scarcity of foreign investment. As the Ceylon Chamber of Commerce stressed in its 10 Principles to Guide the Transformation of the Sri Lankan Economy, “Sri Lanka’s rapid growth is crucially hinged on attracting capital from abroad.” Foreign investors also provide access to cutting-edge technology and exposure to best business practices, an additional fuel for economic growth.
Attracting foreign direct investment will require Sri Lanka to overcome stiff regional competition. India, Bangladesh, Indonesia, Vietnam, Myanmar, Cambodia, and others in the Indo-Pacific region are courting the same investors. To win investment dollars, Sri Lanka can give itself a competitive edge by establishing clear and consistent policies in all areas of the economy. Clear, consistent policies are the cornerstone for creating an attractive environment for investors, both foreign and domestic. Policy clarity and consistency level the playing field, create transparency and provide predictability, and these are things investors crave.
The IMF’s decision to provide Sri Lanka a $1.5-billion loan gives the government a meaningful opportunity to undertake needed fiscal and economic reforms. To address the short-term imbalances and medium-term challenges identified by the IMF, the government has articulated a reform program built on six pillars: lower budget deficits, monetary policy reform; higher government revenues; state enterprise reform; stronger public financial management; and supporting higher trade and investment. Sri Lanka’s performance under this program is not only vital to create a stable economy, but will also send a signal to the international business community regarding the attractiveness of Sri Lanka as a destination for FDI.
An essential element of any country’s business climate is ensuring new entrants have an opportunity to operate effectively. Even as the government adopts and applies clear, consistent macro-economic policies that say “open for business,” investors also want to hear encouraging messages from the private sector. Government and the private sector can and should welcome all legitimate newcomers, from domestic start-ups to established multinational firms. New entrants in the market can provide new ideas, vitality, and helpful competition that can benefit the entire economic eco-system. With the correct mix of predictable, sound, and consistent economic policy, there will be plenty of opportunity for the newcomers as well for Sri Lanka’s well-established blue-chip companies.
Today, many of the best local firms realize their future growth may lie outside of Sri Lanka, and they are looking to expand in regional and global markets. Many are embracing foreign investors because they have experience and expertise in these markets. These firms and investors can be partners in prosperity. As Chamber members, it is your happy duty to continue to explain to government and the electorate why economic policy changes are desirable, policy changes that make an inviting economic environment for FDI that is needed to propel Sri Lanka toward long-term economic prosperity.
Friends, to conclude my remarks, I want to stress that U.S. investors steer trillions of dollars of investment toward the most attractive, steady, predictable business opportunities worldwide. U.S. companies lead the world in efficiency, innovation, technology, environmental responsibility, ethical behavior, corporate social responsibility, and employee relations. These world class American companies are always seeking to invest and do business in nations with predictable, sound, and consistent economic policy. With the Ceylon Chamber of Commerce’s policy leadership, I am sure Sri Lanka can become such a nation.