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2009-05-14
Good morning to all of you and welcome to the Regional Development Policy Dialogue Workshop. I am very pleased that all of you could take time out of your busy schedules and travel to be with us here today.
I am especially pleased that you could come today because quite frankly – we need your help. You each bring with you an understanding of the opportunities and challenges in Sri Lanka. YOU are the backbone of a new and prosperous Sri Lanka. We need your expertise to help us spur economic growth that will benefit all Sri Lankans, but especially those who have been affected by the conflict in the East.
The U.S. Agency for International Development, or USAID, is committed to helping conflict-affected communities return to normalcy as quickly as possible. We know that it’s important to increase human security in the Eastern Province. It’s critical that people can live in peace and safety as they rebuild their lives. To do so, we also know that economic security is vital – people need jobs that allow them to take care of their families. Businesses need stable conditions so they can start or expand their operations.
USAID’s programs in the East are focused on increasing human and economic security. Our activities are organized so they do not harm individuals or communities that participate, and to ensure that members of all ethnic groups have the opportunity to participate and benefit.
We support a variety of programs that strengthen local governance, build and expand critical small scale infrastructure like schools and hospitals, recruit and train a multi-ethnic police force in Eastern Province, train and counsel ex-combatants, and reunite children affected by armed conflict with their families.
USAID is helping to rebuild conflict-affected communities through several programs that focus on creating new jobs and improving business opportunities. One of our programs, Partnership for Eastern Economic Revitalization, or PEER, will work with select private sector partners to create jobs and improve incomes. Our Development Credit Guarantee program partners with Lanka Orix Leasing Company, or LOLC, to provide low-interest credit and micro-finance to spur small business growth.
And finally, we are spurring economic growth through a three-year program that is working in Eastern Province, Anuradhapura District, and Monaragala District – Connecting Regional Economies or CORE.
The goal of this new USAID program is to reduce income disparities between the East and the more developed Western Province. This program will work in five areas, which include:
· Increasing livelihood options for vulnerable populations, especially focusing on women, youth and other vulnerable populations in conflict-affected areas
· Improving the competitiveness of value chains
· Supporting value chain services and business development services
· Strengthening the workforce
· Encouraging a business enabling environment at national, provincial and local levels to make it quicker, easier, and less expensive for private sector companies to grow their businesses in Sri Lanka.
The USAID program, CORE, has established offices in Ampara, Trincomalee, Anuradhapura and Colombo because we know that sustainable economic development will need staff in those communities to build relationships and leverage opportunities.
CORE will focus on creating investment-friendly conditions so that sustained economic development by the private sector can continue. CORE will also work to reduce the risk for private investment in the former conflict areas in Eastern Province. But we also know that economic development cannot be contained to a single location, so we need to support economic growth in those areas that adjoin Eastern Province. That is why we are also working in Anurahapura District and Monaragala District.
CORE has organized this workshop today, and it is appropriate because the program works to establish connections between regions, social groups, public and private sectors, professional associations and academia, commercial firms and NGOs, business value chains and economic sectors, up-stream and down-stream activities, policymakers, researchers and experts, both local and international.
We recognize that much as already been accomplished in the East during a very short period of time, through the combined efforts of the Government of Sri Lanka, Provincial Authorities, donors, the private sector, and NGOs. This has provided a good foundation for further development in the Eastern Province.
Our workshop today is designed to bring together officials who have a strong interest in supporting increased economic development in the East. We believe that by all working together, there is much we can accomplish. Together, we can make a positive impact on economic growth in the East. USAID hopes that the CORE program will be a catalyst in this process.
USAID believes that CORE can contribute in a meaningful way to a number of national and local policy issues, by accessing national and international experts and resources.
· CORE will strive to assist national and local authorities and businesses to improve the regulatory framework of the economy and build local capacity, which will lead to greater economic growth, reduced poverty and a lasting peace.
· A particular area that often attracts attention in any policy-related work is tax policy. There are signs that improvements in this area may be helpful, but tax policy continues to be an obstacle to economic growth in Sri Lanka. The 2009 World Bank’s Doing Business survey ranked Sri Lanka as number 164 out of 181 countries in the category of paying taxes. And, according to a recent survey by the World Economic Forum, tax rates and tax regulations were the third and fourth biggest obstacles to making the country more competitive.
· An example of another problem related to tax policy is the value added tax rules. VAT tax refunds have been identified as a potentially serious problem.
· Coordination of activities amongst various national and provincial ministries and agencies in many areas deserves the attention of policymakers. Also, the efficient and effective implementation of the provincial devolution of power seems to be of urgent importance. Further efforts to empower and build the capacity of provincial councils are needed.
· Problems related to property rights have also been highlighted as a deterrent to economic growth . We believe that strong and transparent private property rights are a foundation for a modern competitive market economy.
· Tourism development is another area where international experience could be helpful, and the CORE project could facilitate the transfer of such experience.
· The finance sector, especially the microfinance sector, deserves a lot of attention. A considerable amount of money has been directed to the Eastern Province, but the allocation and use of those funds can still be improved. In particular, some improvement in the legal, regulatory and supervisory frameworks of local-level microfinance seems possible.
· There are a host of issues concerning the operations of local markets and public sector participation that affects institutional arrangements and prices. Local monopolies exist, and they reduce market efficiency.
· Business executives have indicated three issues of concern to us - the need for improved stability and transparency of foreign trade policies, the frequent changes in trade tariffs, and non-tariff payments and procedures.
· Finally, I would like to congratulate the Government of Sri Lanka for its handling of the global financial and economic crisis. Unfortunately, no country could be spared the downturn, but we may be able to use some of the strategies used by the Government of Sri Lanka to support development in the East.
Today’s workshop is just the beginning, and there will be a lot for us to do together. While it’s easy to make a list of problems with possible solutions, the real challenge is to prioritize the issues and then agree on a plan of action for the most immediate tasks. The USAID project, CORE needs your expertise and support to do this.
This prioritization and selection process cannot be done well without the involvement of all stakeholders. We need you to tell us not only what is NEEDED, but what is POSSIBLE within the existing limitations and capacity of the project. USAID will count on your guidance, your active support and your involvement in all stages of this process. We want to be realistic and select attainable goals, but we also strive to be creative and ambitious.
We hope the workshop today will provide an opportunity for all of you to exchange views that will raise awareness, clarify priorities, and determine options. I urge you to speak openly, to share your ideas generously, and to participate fully in this process. Your involvement will help ensure that our USAID programs are productive and effective, and that CORE is using every opportunity to increase economic opportunities for residents in the East.
Before closing, I want to especially address our government colleagues. Often official government action to improve a policy or practice, or to remove a barrier can make a big difference to help the private sector create jobs and increase productivity. Such actions create a better business environment. And, a better business environment increases confidence and attracts investment, which drives economic growth and provides benefit to the entire region.
Today’s workshop is the beginning of a journey together. We are all committed to successful economic development in eastern Sri Lanka that will benefit all citizens.
Again, welcome and thank you for being with us here today.
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