August 29, 2022
Council President de Silva, honorable members of the board, and friends – thank you for the invitation to speak with you this afternoon. All of you in this room are not only spectators but real advocates for strengthening the investment and trade climate in Sri Lanka and bilateral trade with the United States. I know we all love to watch a good cricket match as spectators- but it’s time for us to get in the game, and each do our part.
Sri Lanka is facing one of the most challenging periods in its economic history. Critical supply chain disruptions to fuel and electricity hamper business operations in nearly every industry. Every day, in every conversation I have, Sri Lankans tell me they are worried about the future and prospects for the next generation. Sri Lanka’s challenges are undoubtedly serious. But they are not insurmountable.
Looking around the room, I see the many familiar faces of those of you who attended the Ceylon Chamber annual meeting, like Manjula de Silva, Secretary General of the Ceylon Chamber. I laid out five steps then, steps that I think Sri Lanka must take to revive its economy. I won’t go through them all again now, but this council, working closely with the Embassy, is perfectly situated to help Sri Lanka accomplish two of these essential steps. First, the council is a critical voice in advising the government on how to reform the business environment. Second, you are a primary engine for growing trade and investment.
Let’s start with the commercial environment, and its greatest strength, its people. Sri Lanka must find ways to invest in its workforce. One way is by drawing on the talents and energy of Sri Lankan women. Gender parity, with women literally at the table and in leadership roles, is critical to economic growth. Looking around this room, it’s clear we need more women in business. This is something I heard loud and clear when I met with Sri Lanka’s female MPs across political parties, who number only 12 out of a total of 225 members in parliament.
We need to ensure that women have equal access to funding for their small and medium-sized enterprises that operate in so many villages and towns across the island. Last week, I joined 100 women entrepreneurs at an investment training event, part of a State Department-funded three-year project, “Women’s Empowerment through Economic Inclusion.” It was so exciting to see so many women, so many great ideas, and so many businesses about to take off. Their energy, ideas, and expertise give me great hope for the road ahead.
Currently, Sri Lanka has a once-in-a-generation opportunity to create an economy that is more dynamic and resilient to modern challenges. To do this well, decision-makers need to hear from a diverse community of partners, including the business community. They need to understand how new policies, regulations, or legislation will impact your company, your workers, and your customers.
Let me share just one example. Sri Lanka can seize the current moment to shift to green technology and renewable energy sources. If there is anything the fuel crisis has taught us is that the time to switch to renewables is now! This is an area where Sri Lanka stands to benefit from the cutting-edge technology that American companies have to offer, as well as access to U.S.-based project finance. Clean power is also a priority focus of the Build Back Better World partnership that President Biden announced with our G7 partners last year.
It is also important to make sure that there are no unreasonable obstacles to foreign investors as they look for opportunities in Sri Lanka and bring in the capital that the country desperately needs. U.S. foreign direct investment in Sri Lanka has been stagnant at about $13 – $17 million per year since 2015. Our businesses are concerned about consistency and transparency in government decision-making, and above all, predictability.
The United States remains Sri Lanka’s largest single country export market, so our contributions to Sri Lankan prosperity are, in this regard, unparalleled. Sri Lanka can and should grow its exports to and investments in the United States – this is an area my team and I are truly excited about. Our bilateral trade relationship amounts to about three percent of Sri Lanka’s GDP. By our estimates, Sri Lankan exporters to the United States provide direct employment for at least 180,000 people here. This is the type of economic partnership we should all be looking to expand. Investment in the United States is another opportunity for the Sri Lankan private sector. Businesses investing in the United States, regardless of industry, gain competitive advantages from one of the most open markets on the planet. The United States offers the largest consumer market on earth with a GDP of $20 trillion and 325 million people. Companies of all sizes help make innovation in the United States a global enterprise, benefiting from – and contributing to – a flourishing ecosystem for invention and inspiration.
This is a defining moment in Sri Lankan history and the United States continues to stand by Sri Lanka during these challenging times. In response we’re delivering assistance that is already making a tangible difference in the lives of Sri Lankans. Just this year, we have announced $120 million in new financing for small and medium-sized businesses, $27 million for the Sri Lankan dairy industry, and over $30 million in new humanitarian, technical and food security assistance to benefit Sri Lanka’s most vulnerable communities. Last Friday, I announced 320 metric tons of split yellow peas through Save the Children to nourish thousands of schoolchildren across Sri Lanka, part of our five-year $26 million commitment. As a mother, I know I would want my child to go to school to be free to learn and play, and not worry about going hungry. This is in addition to all the support we announced in 2021: $265 million for Sri Lankan SMEs and the launch of our $19 million USAID Sri Lanka Energy Program, which has already resulted in agreements with VEGA Innovations and David Peiris Motors to develop the country’s electrical vehicle sector. I expect to have more announcement and more assistance in country soon.
The United States remains a friend and partner for Sri Lanka’s prosperity, and I look forward to our shared future and success in overcoming the present-day challenges. We welcome the steps Sri Lanka has taken to go to the IMF and begin debt restructuring talks. These will be tough, but the United States supports the government’s decision to engage the IMF because the IMF represents the best tools, approaches, and resources to enable Sri Lanka to overcome this crisis and get back on a path to recovery and growth. And for talks to succeed, every creditor must accept equal, comparable treatment without delay. We heard President Wickremasinghe last week calling on all creditors to sing from the same hymn sheet, and that includes China.
There is also a need to address social safety nets for those vulnerable communities most affected during these times. The calls from many in the private sector, including those of you in the room, civil society, media and politicians for a true effort towards both political and economic reforms which are so intertwined, will be critical to maintain. That means good governance, clean procurement, transparency, and anti-corruption measures. There is much work that needs to be done and for the country to come together to do this work. Now is the time.
The United States will continue to redouble our efforts to support Sri Lanka on this path – that means support through the IMF, financing for SMEs, fertilizer and seeds for farmers, and helping strengthen public financial management systems. Let’s not be spectators but each of us take on the responsibility to ensure Sri Lanka gets back to sustainable economic growth and prosperity for all. Thank you.