Full Speech – Presidential Export Awards 2021 : President Gotabaya Rajapaksa
Honourable Ministers and State Ministers
Your Excellencies
Award Winners
Distinguished Invitees
Ladies and Gentlemen:
It gives me great pleasure to address you this evening.
At the outset, I congratulate the companies being recognised at this event for their outstanding performance in the last two years.
I also convey my great appreciation of our export industries more broadly for their continuing service to Sri Lanka’s economy.
I am especially pleased to note that exports have now not only recovered to pre-pandemic levels but have in fact reached record highs.
I warmly commend all who contributed to this great accomplishment.
Even as we celebrate the success of Sri Lanka’s export performance tonight, however, we must also face the reality of our current situation.
We are at a very challenging moment in our country’s history.
The COVID-19 pandemic has had a devastating impact on Sri Lanka.
The human cost of the pandemic was severe, with many lives lost and many more left bereft.
Its economic consequences were also severe.
During the 1st and 2nd Quarters of 2020, we had no choice but to place the entire country on a continuous lockdown for two and a half months.
Although necessary for public health, this lockdown and the shorter ones that followed, combined with the global economic down turn resulting from the pandemic, affected nearly every sector of our economy.
Daily wage earners, self-employed persons, those engaged in cottage industries and in small and medium enterprises were all drastically affected.
Many businesses shut down, many individuals lost their livelihoods, and many families were pushed into poverty.
The tourism industry, which had already suffered greatly after the Easter Sunday attacks, was completely devastated.
This sector was not only one of the country’s largest employers but also one of our main earners of foreign exchange revenue.
With many Sri Lankans employed abroad losing their jobs, we also lost vital foreign exchange usually received through their remittances.
The restrictions necessary to prevent the spread of the virus even after the lockdowns were lifted means that economic productivity has not yet fully recovered.
As leading manufacturers, many of you would have been required to stop operations at your factories from time to time because staff members were found to be COVID-positive.
Although these precautions are necessary from a public health perspective, they can have a significant impact on our economy.
It should also be noted that Government spending had to be increased greatly during the pandemic.
Daily wage earners and the poor had to be supported throughout the lockdowns through grants of cash and dry rations.
Several industries including tourism had to be supported with debt moratoria.
Health care costs, including testing, provision of personal protective equipment, medical supplies, and treatment costs all increased greatly, and the costs involved in quarantine were largely borne by the Government.
Our extremely successful vaccination campaign, which has by now seen 84% of those over age 16 being fully vaccinated, has also come at a significant financial cost.
All this expenditure,combined with the loss of revenue resulting from the economic impact of the pandemic, has drastically affected the financial position of the Government.
Our foreign exchange reserves in particular have been badly depleted.
This is especially concerning given the high external debt position Sri Lanka had even prior to the pandemic.
For decades, successive Governments have tried to ensure that the fruits of Sri Lanka’s economic growth are fairly distributed amongst the public.
This has led to consistently high expenditure on infrastructure, services, and social welfare programmes that benefitted the wider population.
Cumulatively, these efforts have resulted in Sri Lanka providing a relatively higher quality of life than other countries at similar income levels.
Our systems of free education and free healthcare, for example, are the best in the region.
Despite high expenditure, however, the desire of Governments to encourage business activity and foster economic growth led to low tax regimes resulting in continuous budget deficits.
Our development programmes were therefore largely sustained through funding provided by multilateral donors, other countries, and through debt raised in international financial markets.
This has resulted in the country being in an adverse debt repayment position today.
Sri Lanka owes over 4 billion US dollars in external debt repayments in 2021 and 2022, including sovereign bonds repayments of 1 billion dollars and 1.5 billion dollars respectively.
We must also pay nearly 1.3 billion dollars in interest costs alone in 2022, with the proportion of commercial debt to concessionary funding having increased greatly in past decades.
This had left Sri Lanka with very little fiscal space in which to manoeuvre when the external shock of the pandemic occurred.
The present crisis Sri Lanka faces, then, has a lengthy, complex, history.
It has been significantly worsened by the current global economic situation and its immediate outlook.
The pandemic continues to rage across many parts of the world.
Some European countries are considering lockdowns in the weeks ahead to avert more deaths taking place on a large scale.
This could affect the recovery of our tourism sector, as well as global demand for our exports.
Global supply chain constraints are also affecting nearly all industries today.
Rapidly rising energy costs and freight costs are contributing to shortages and higher prices world over.
In fact, global price levels have now reached record highs, with many regions experiencing their worst inflation figures in nearly three decades.
The economic consequences of these ongoing issues will continue to impact Sri Lanka in the months to come.
Managing this situation and keeping the country on the path to prosperity will require policy interventions, especially in the short term, that may be unpopular.
I know that many of you are critical of these interventions.
I urge you to recognise and understand that these measures are being imposed because we have little other choice in our present situation.
Once the immediate crisis is overcome, some of these interventions can be mitigated.
Several policy interventions, however, such as the restrictions on certain imports in place since last year, have had beneficial consequences.
They have created space for new local industries to develop.
It is essential that these new industries are fostered intelligently.
Instead of short-term profiteering through reducing quality and creating artificial shortages, these new industries should strive to create quality products that could become globally competitive.
This will be to everybody’s benefit.
The best way for our economy to grow in the medium to long term is by creating new export products while expanding into new export markets.
Sri Lanka has amazing potential.
It is blessed with abundant natural resources, an educated and productive workforce, and a geostrategic positioning we can greatly benefit from.
Several of our export crops, notably Tea, Cinnamon, Pepper and Areca Nut, are considered the finest in the world.
We must capitalise on the opportunities this provides and undertake more value addition to these crops prior to export.
We also have great yields of fruits and vegetables, much of which is wasted because of issues including cold chain weaknesses.
If this wasted produce is instead processed in Sri Lanka and exported to global markets, much more economic value can be created and captured within the country.
It is in this context that the Government’s policy of encouraging a more environmentally-friendly and health-conscious organic agriculture in Sri Lanka needs to be seen.
As consumers around the world become more sensitive to the impacts of climate change, there will be increasing opportunities for export of organic, green, agricultural products.
Once appropriate certification and traceability mechanismsare in place,such exports can be priced at much higher levels than our agriculture sector currently enjoys.
There are therefore significant opportunities for investments into organic fertiliser, organic agricultural production and processing, and for fostering new export marketsforthis produce.
Infusing more technologytoincrease agriculturalproductivity and improve traceability will alsocreatefurther value that will benefit our economy in the long run.
I strongly encourage you to explore such opportunities that can generate great long-term value to youwhile also benefitting our nation.
Similar opportunities exist around Sri Lanka’s many mineral resources too.
We should phase out exporting these minerals to more advanced markets in their raw form.
Instead, we must focus on developing value-added industries around them domestically.
The business community has a clear role to play here too.
In addition to investing in this space, businesses and entrepreneurs should foster partnerships with leading global companies that can transfer the technology needed to develop advanced industriesaround these resources in Sri Lanka.
The export of organic agricultural produce and developing value-addedindustries for our mineral resources are among many potential routes for Sri Lanka’s export expansion.
Export diversification in South East Asian countries have greatly contributed to their improved economic performance over decades.
There is no reason for Sri Lanka not to follow suit.
The Government and the private sector must work hand in hand to make this happen.
The Government will play its part by supporting and facilitating new initiatives proposed by the private sector, and by providing attractive incentives for Foreign Direct Investment into strategically important industries.
We will also ensure that remaining impediments to the performance of export industries will be quickly resolved.
One of the most significant issues Sri Lankan industries face is the high cost of energy.
It is sad that despite being blessed with so many sources of renewable energy, so much of Sri Lanka’s power is generated through fossil fuels.
This not only greatly increases the cost of power supply but is also very harmful to the environment.
That is why I have set a clear target for Sri Lanka to generate 70% of its energy from renewable sources by 2030.
With a concerted effort by all stakeholders, it may be possible to achieve this target even earlier, there by ensuring that Sri Lankan industries enjoy the benefit of cleaner, cheaper power soon.
Other corrections necessary to create a more conducive environment for business, including streamlining regulations and maintaining policy consistency, are also of high priority going forward.
These steps will support our economic recovery and help us achieve greater prosperity in future.
Assuccessful exporters, however, all of you have perhaps the most important role to play.
You must use your experience, capability, financial strength,and your extensive international networks to create new export markets for existing Sri Lankan products, and to create new Sri Lankan products for us to export.
This will be essential for us to create a better future for all Sri Lankans.
If we strive to work hard and intelligently towards this in the coming months and years, I have every confidence we can build the foundations of a successful and much more prosperous tomorrow.
Thank you.
President Gotabaya Rajapaksa