ROLE OF THE BUSINESS COMMUNITY IN
RECONCILIATION
---NATIONAL CONFERENCE ON
RECONCILIATION:
SESSION 2
Key Note Address:
Ajith Nivard Cabraal
Governor
Central Bank of Sri Lanka
24th January 2012
1
TO SET THE STAGE, IT WILL BE USEFUL TO
QUICKLY EXAMINE THE “RUN-UP” TO
THE “RECONCILIATION”…
2
For 30+ Years, Terrorism sapped the energies
of our nation…
• Up to about 2008/09, development planning
in the North and the East was almost
unthinkable.
• During such time, the North and the East
areas were the centre stage in the
debilitating war that engulfed the entire
country.
• In fact, from 2006 to 2008, our main mission
economically, was to just maintain services
in these areas.
3
From mid 2006 to mid 2009, we faced massive
challenges from the point of view of the economy
• The LTTE, its proxies and its sympathizers
were fully aware and conscious that if the
economy were to falter or collapse, victory
would be theirs.
• That is why many devious steps were taken
by them to damage and destroy key
economic centres and discourage economic
stakeholders.
4
The Central Bank’s challenges included the
constant battle against terrorist financing…
• Terrorist funding was key to the launch of
successful terrorist attacks and the continuation of
the LTTE agenda.
• Massive inflows of funds supported the terrorism
effort in Sri Lanka
• Diverse methods were used to raise and transmit
these funds
5
The effects of the “War on Terror”
were felt, not only in
the North and the East,
but also by
the entire economy…
6
We faced well disguised, but serious
“economic interventions”…
• There were attempts to indirectly pressurize
Sri Lanka to halt or dilute the final
humanitarian effort. For example:
– Threat of withdrawing GSP+ concessions at
sensitive times
– Deliberate delay in the approval of IMF-SBA in
March/April 2009
7
We faced massive mis-information campaigns
that were designed to affect Sri Lanka’s
economy, funding sources, cost of borrowing,
country ratings, etc…
• Every perceived negative factor from an economic
point of view was given deliberate and wide
publicity – locally and internationally
• Hence, a massive effort had to be launched and
maintained to convey the positive features of the
economy. Even in the future, these efforts have to
be continued, in the interest of economic stability.
8
We faced the significant impact and burden of
the “War on Terror” on the economy…
• Difficulty in maintaining investor confidence
in the midst of uncertainty
• Intense human suffering
• Political uncertainty
• Inefficient allocation of resources
• Productivity losses
• Destruction of infrastructure
• Under-utilisation of production capacity
9
We faced the Central Bank suicide bomb attack
– 9/11 style – 2,050 days before 9/11/2001
• 500kg of explosive laden suicide truck smashed into the
Central Bank on 31 January 1996.
• Unprecedented loss of human lives and destruction of
property, threatening the national economy.
• 41 Central Bank officers lost their
lives and over 150 employees
were critically injured.
• 30 were blinded or permanently
incapacitated.
• In addition, over 90 persons were
killed and 1,300 civilians injured.
Sadly, it took the world 2,050 days to
understand what a suicide attack is!
10
We faced suicide attacks on economic centres in
addition to human, religious and public targets…
– The Bandaranaike International Airport
– Hotels and Tourist Attractions
– Railways and Public Transport
– Kolonnawa and Sapugaskanda oil installations
11
We suffered a Massive Human Cost…
• The cruel acts of terrorism destroyed thousands of
human lives and physically maimed further
thousands.
• The economic and social costs in terms of human,
physical, and environmental damage ran into
billions of rupees.
• The overall economy suffered, with a heavy
negative impact on tourism, investment and
productivity.
12
We incurred a Very Heavy Indirect Cost too…
• The actual overall cost of the conflict not only included direct
expenditure on the conflict, but also the indirect costs due to:
– Imbalances in the macro-economy
– Regional disparities in economic development
– Loss of opportunities for growth
– Destruction of capital assets
– Development foregone during the thirty year period
• Though the overall effect is difficult to quantify, the reduction in
economic growth of the country due to terrorism has been
estimated at around 1-2% annually.
13
Finally, the “War on Terror” was successfully
concluded on 19th May 2009…
14
When we look back on the post-war period of
2 years, we can now say that the cost of Sri Lanka’s
“War on Terror” was a vital investment…
• Many previous governments did not pursue
“Defeat of terrorism by military means” with
enthusiasm, because of the perceived massive
“cost” that it was supposed to entail, and the
tough economic decisions that needed to be
taken as a consequence.
• Hence, an analysis of the cost of the military
effort during the past 4 years, 2006 to 2009,
may be a useful guide for the future.
15
How much was Sri Lanka’s Defence Expenditure from
2006 to 2009?
2006
2007
2008
2009
Total
Rs.
bn
US$
bn
Rs.
bn
US$
bn
Rs.
bn
US$
bn
Rs.
bn
US$
bn
Rs.
bn
US$
bn
Defence
Cost
106
1.0
134
1.2
176
1.6
189
1.7
605
5.5
% of GDP
3.6
3.8
4.0
3.9
3.8
• Sri Lanka expended about 4% of its GDP per annum on
defence over the 4 years, 2006 to 2009.
– For a country that has been plagued by terrorism, this quantum of
Government spending on defence, indicates restraint and thrift in
waging the counter terrorism effort.
• The final result where Sri Lanka emerged as the first country
to defeat terrorism, shows that Sri Lanka has been able to
expend its resources in an efficient and productive manner.
16
It may be useful to compare Sri Lankan
“military spending” with other countries…
Military spending (% GDP) in selected countries
Korea South 2006
2.7
Cambodia 2005 est.
3.0
Indonesia 2005 est.
3.0
Pakistan 2007 est.
3.0
Colombia 2005
Cuba 2006 est.
Russia 2005
3.4
3.8
3.9
Sri Lanka 2008
4.0
USA 2005 est.
4.1
China 2006
Baharain 2006
Singapore 2005 est.
Morocco 2003 est
Turkey 2005 est.
Israel 2006
Iraq 2006
Saudi Arabia 2005 est.
Oman 2005 est.
4.3
4.5
4.9
5.0
5.3
7.3
8.6
10.0
11.4
Source : CIA World Fact Book
Ministry of Finance & Planning (GOSL)
17
Sri Lanka’s “defence cost” compares very
favourably with other “Wars on Terror”…
A Report submitted to the US Congress on 28 September 2009 estimated US war costs as follows:
Item
Total cost incurred by the US Govt
up to 2009 (US$ bn)
Training cost incurred by the US Govt
up to 2009 (US$ bn)
•
•
Iraq War
Afghanistan War
Total
683.0
227.0
910.0
23.2
15.8
39.0
For the FOUR YEARS, 2006 – 2009, the cost incurred by Sri Lanka on the
LTTE war was US$ 5.5 bn. This included cost of aircraft, ships, tanks,
ammunition, other equipment, training, food for soldiers, uniforms, etc.
In contrast, the cost incurred by the US government on training of their
forces in Iraq and Afghanistan amounted to US$ 39 bn!!
So, our 4-year defence cost is only about 14% of the training cost
of US troops in the Afghanistan War!
18
Overall, extraordinary economic benefits accrued to
the country when terrorism was finally defeated…
• Return to a high economic growth trajectory – 8%
• Greater efficiency in allocation of all economic resources
• Higher utilization of production and capital capacities: eg. Ports, tourism,
and marked productivity improvement
• Improved political and economic stability and investor confidence
• “Brain drain” changing to “brain gain”
• Improved fiscal management leading to better macroeconomic
fundamentals
• Prevention of regular destruction of property and loss of lives, which
took a heavy toll on the economy and morale of investors
• New opportunities being seized by the private sector
These benefits would clearly indicate that the modest investment
on defence paid off!
19
The Northern and Eastern Provinces of 18,640 Km2
(28% of land area) and about 2.9 million people
(14% of total population) were not in good shape at
the time the conflict ended…
• Education and health services were at a basic level
• Roads, highways, and railways were virtually nonexistent in many parts of the Provinces
• Transport facilities were marginal
• Banking and financial services were highly limited
• Even data from these two Provinces were not
available to measure the extent of the weaknesses.
Much had to be done… soon!
20
Therefore, after the defeat of terrorism, an
extraordinary effort had to be made to restore
“normal life” in the North and the East.
What did such effort entail?
•
•
•
•
•
•
Rapid de-mining
Speedy resettlement
Quick restoration of Livelihood
Extensive infrastructure restoration and upgrade
Sustained investment in the North and the East
New initiatives by the Banking Sector
21
The rapid de-mining effort contributed immensely
to restore normalcy…
• In a space of around 2 years, hundreds of thousands of deadly
landmines have been cleared and destroyed by the Army field
engineers and other agencies in a land area of nearly 2,000 Km2.
– The areas include Jaffna, Mullaitivu, Trincomalee, Batticaloa,
Polonnaruwa and Vavuniya districts.
– From Oddusudan to Nedunkerni, the area has been almost completely de-mined.
– Currently, de-mining processes are underway in parts of Kilinochchi, Mannar,
and Muhamalai to Paranthan.
– Most residential areas and roads in Wanni have been de-mined.
• A large number of forces personnel have been engaged in demining, and the services rendered in de-mining has a massive
commercial value, which is now being assessed.
• The newly acquired national expertise in de-mining could
perhaps be applied on a commercial basis in the future in
other countries which may need services of this nature.
22
Resettlement took place at an extraordinary
pace…
• According to the Ministry of Nation Building, as of May 2009,
there were 342,916 IDPs in 30 relief villages established by
the Government.
• Since then, this number had rapidly declined with the
resettlement of the IDPs: and, as of December 2011, there
were only about 10,000 IDPs in the relief villages.
• A huge investment was made by the Government to achieve
this outcome.
23
The United Nations commended the
Government for this effort…
Neil Buhne (UN Resident & Humanitarian Co-ordinator in Sri Lanka) said
in April 2010: (One year after the end of the conflict)
“… the ‘humanitarian catastrophe’ predicted by some quarters when
almost 300,000 people escaped from the Vanni between January and
May 2009, was averted…”
“… Two statistics reflect well the basic effectiveness of this government
led effort to assist them; a nutrition survey of children in the Menik
Farm camps in May 2009 found levels of acute malnutrition of 35%. By
December the level was 13.5% which is comparable to the national
average. Another is the increasing progress and strong partnership on
demining, spurred by the Government’s own commitment of
resources…”
“…I personally met regularly, sometimes many times in a day, with
Government counterparts…”
24
From the Central Bank’s
point of view,
our main challenge was the
Quick restoration of Livelihood
while ensuring
Financial Inclusiveness
in the North and the East
WE HAD STARTED ON THE EFFORT, WELL
BEFORE THE CONFLICT WAS OVR…
25
What is “Inclusive Growth”?
• Inclusive growth refers to two inter-linked facets of
development which aim at:
– A high pace of growth which increases the
opportunities and incomes.
– A broad-based pattern of growth, which will benefit
all stakeholders, across sectors, leading to rapid poverty
reduction.
• So, both pace and pattern of growth are critical for
achieving a high degree of inclusive growth.
THIS IS WHERE THE BUSINESS COMMUNITY COMES IN…
26
Robert Zoellick, President of the World Bank
says:
“Globalisation must not leave the ‘bottom
billion’ behind.
Poverty breeds instability, disease, and
devastation of common resources and the
environment.
Poverty can lead to broken societies that can
become breeding grounds of those bent on
destruction and to migrations that risk lives.”
27
We can take pride that reasonable inclusive
growth has taken place in Sri Lanka recently…
• In 2011, the Sri Lankan economy is estimated to
record an impressive overall growth of 8.3%. The first
time in history to record over 8% growth in two
consecutive years.
• The Government and the Central Bank are focused
on ensuring that the benefits of rapid economic
growth percolate down to grass root levels.
• Poverty in Sri Lanka has
come down to 8.9 % in
2009/2010 from 15.2%
in 2006/2007, as per the
Poverty Head Count
index.
Poverty HCI
Sector
2006/07
2009/10
15.2
8.9
Urban
6.7
5.3
Rural
15.7
9.4
Estate
32.0
11.4
Sri Lanka
28
In order to create sustainable inclusive economic
growth, Financial inclusiveness is vital…
• Financial inclusiveness is where people of working age have
access to a variety of quality financial services:
– at affordable prices,
– in a convenient manner,
– with dignity.
• So, sustainable financial strategies should encompass
improving the range, quality and availability of financial
services to the underserved and financially excluded.
• Financial inclusiveness is increasingly being seen as
important to the goal of poverty reduction and the
achievement of the Millennium Development Goals.
THIS OBVIOUSLY NEEDS THE CREATION OF NEW OPPORTUNITIES
29
Why was Financial Inclusiveness so important in
the North and the East in the Sri Lankan context?
• To support Government efforts to promote
regionally balanced growth and development
• To increase economic activities and create
employment opportunities in the North and
the East quickly
• To distribute financial resources in a fair
manner
• To further promote savings and investment
• To ensure high, sustained and inclusive growth
30
In order to promote
Financial Inclusiveness
in the North and the East,
what was done
over the past 2 1/2 years?
31
Quick restoration and creation of livelihood
opportunities …
-
Many vocational training centres have been established by both public and private
organisations.
Restrictions on fishing have been removed.
A large number of new bank branches has been established and the existing ones in
the North and the East have been re-established.
Thousands of cattle, goats and poultry have been distributed to households.
A large number of boats, motors and nets have been distributed.
The Central Bank has started several new credit lines and added to the existing
schemes in the North and the East. These schemes have provided extensive access
to finance, which has greatly assisted the people of these two Provinces to restart
their IGAs/livelihood.
32
Disbursement of thousands of Bank Loans on a “fast track”
approval basis in the Northern and Eastern Provinces...
Eastern Province
Name of the Loan Scheme
Sarusara
* During the year 2011
No. of
households
benefitted
* 9,772
Total amount granted
(Rs. mn)
(as at 31 Dec. 2011)
*
582
Prabodini
18,123
818
Abiwurdhi
1,709
276
Eastern Development
6,892
1000
Provincial Development
313
116
Saubagya
176
67
Post Tsunami Credit Lines
117
42
46,874
2,901
Total
Northern Province
No. of loans
granted
Total amount granted
(Rs. mn)
(as at 31 Dec. 2011
15,508
2,000
8,534
459
Name of the Credit Line
Vaddikkin Wasantham
Prabodini
Sarusara
* During the year 2011
*
27,502
*
2,709
Abiwurdhi
611
93
Provincial Development
907
637
Saubagya
149
128
56,112
6,026
Total
33
Issue of new regulations by the Central Bank to
facilitate bank lending…
• Central Bank introduced a Credit Guarantee Scheme for the benefit of the
farmers in the Killinochchi, Mullaitivu and some parts of the Mannar district
who have been facing difficulties in obtaining short-term cultivation loans
under “Sarusara” due to their inability of providing title deeds to establish land
rights/ownership.
• Central Bank also introduced another innovative Credit Guarantee scheme in
which the Central Bank will guarantee up to Rs.200,000/- per farmer in case
of default arising due to a land ownership dispute. The scheme has facilitated
banks to disburse more cultivation loans to farmers who are in possession of
lands, disregarding their land ownership status.
34
Establishment of two Provincial Offices in the North
and the East by the Central Bank
•
Facilitating loan schemes operated
by the Central Bank, including:
–
–
–
•
•
Awakening North, Liquid milk
production, eradication of poverty,
SME
Fisheries sector development
Palmyrah products
Arranging credit facilities along with
entrepreneurship development
services to resettled IDPs to restart
their livelihood
Conducting financial literacy
programmes to create awareness of
the formal sector financial facilities
and services
35
Wide extension of loan facilities…
The Central Bank actively engaged
in livelihood development and
Income Generating Activities (IGAs)
of the conflict affected households
in the two Provinces under six
credit lines implemented through
Participating Financial Institutions
(PFIs).
36
Provision of loans for projects under the Poverty
Alleviation Loan Scheme
An initiative taken to
link small producers
in Jaffna with large
trade networks.
37
Conduct of many education and awareness
programmes...
An education programme conducted at
Vembady Girls School
Discussion of the developments in the area
38
Rapid and far reaching Infrastructure Restoration and
upgrade
Road reconstruction
• Access restrictions on A9 totally lifted. A9 highway development commenced from
Galkulama to Medawachchiya & from Vavuniya to Mankulam, Nawatkuli to Mannar
• A32 (Puttlam to Mannar), A35 (Paranthan to Mullaitivu) & Paranthan to Poonakari
are already under construction
• Mankulam/Mulativu
• Jaffna/KKS
Restoration of electricity
• Sampur Coal Power Project
• Extended power supply to Mankulam, Kilinochchi and Vavuniya
• New Electrification scheme in Vavuniya
• Lighting Sri Lanka – North and East
Construction of bridges
• Kinniya bridge and Trincomalee bridge completed
• Mannar bridge & causeway completed
• Sangupidy bridge completed
• Navakkuli
• Many other smaller bridges completed
39
Rapid and far reaching Infrastructure Restoration
and upgrade
Railway
• Vavuniya/KKS
• Madawachchiya/Madhu
• Madu/Thailimannar
• Omanthei/Pallai
Water supply
• Major Jaffna Peninsular water supply scheme
completed
• Mannar/Vavuniya
Restoration of health services
• 164 major health institutions constructed
• Medical equipment and hospital furniture
supplies provided
Large number of small scale sanitation constructions
• 14,539 latrines constructed
• 10,891 wells cleaned
Irrigation
• 5 major irrigation schemes and 115 minor
irrigation schemes are in the process of
completion
• Iranamadu
• Giant Tank
40
Initiation of Market Linkages for Small Producers...
• The opening of the A9 and other roads has provided access for the
farmers in the North and the East to reach the rest of the country.
• The Dambulla market is now open to the Jaffna farmers, with
nearly 35-40 lorry loads per day making its way. They are also
linked with other economic centres in Ekala, Meegoda, etc.
• Co-operatives and supermarket chains have improved their ties
with farmers to purchase their produce
• Production societies have been formed to
organise farmers and share knowledge
• A few months ago, the Central Bank
felicitated the most successful beneficiaries
of the Poverty Alleviation Microfinance
Project.
– These farmers from Jaffna, notably women,
had been able to get an excellent harvest
and earn incomes that many of them would
have thought impossible during the conflict
period.
41
Formation of Self Help Groups (SHGs) in the
Northern and Eastern Provinces…
• SHGs are one of the key vehicles for financial inclusiveness for people
with low income
• The progress made by SHGs in the North and the East under the
Poverty Alleviation Microfinance Project II (PAMP II) implemented by
the CBSL has been very encouraging, and is as follows:
Performance under PAMP II in the Northern and Eastern Provinces : 2008 - 2011
District
Northern Province
No. of low
No. of groups income people
formed by PFIs
registered
with PFIs
5,891
29,141
8,534
Amount of
loans
disbursed
(Rs.mn)
459
No. of loans
disbursed
Eastern Province
7,336
43,161
18,123
818
Total
13,227
72,302
26,657
1,277
42
Many new initiatives and strategies are being introduced
by the Banking Sector in 2011…
We have addressed the “chicken and egg” situation!
Bank of Ceylon
• Further strengthen the poverty alleviation loan scheme to facilitate lower
income people in the Northern and Eastern Provinces.
• Develop a new product channel in collaboration with Cargills (Ceylon) Ltd to
promote sale of products from the Jaffna Peninsula.
• Establish 26 Extension Offices (EOs) in the North and the East
• Organise small groups of low income people in the two Provinces for purposes
of granting facilities
• Launch of a housing loan scheme for IDPs in the Northern Province in
collaboration with the Ministry of Rehabilitation.
Sampath Bank
• Open 6 branches in the North and the East
Seylan Bank
• Open 4 branches and 4 Extension Offices
43
New initiatives by the Banking
Sector in 2011
People’s Bank
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Funding for large scale hotels, hospitals and other economic activities
Commence social mobilisation programmes
Provide non financial services for micro entrepreneurs & loans under PAMP- II
Establish microfinance villages
Upgrade 47 branches and 41 Service Centers
Open 11 New Service Centers and 3 new ATM machines
Establish Microfinance Desk in every branch and service center
Recruit 557 new employees from these areas in 2011
Develop SMEs in tourism, commercial, industrial, renewable energy sectors
Fund identified agro-based industries, storage of paddy and farm
mechanisation
Fund Multi-day boats, ice factories and livestock sectors
Provide facilities for Coop-cities and mini Coop-cities
Provide credit facilities to the MPCS and other co-operatives
Provide credit facilities for housing and commercial building
44
New initiatives by the Banking Sector in 2011…
National Savings Bank
• Open 2 to 3 branches
• Promote “Smile” savings accounts with the
collaboration of the local post offices.
• Expedite the loan processing time, by empowering
the branch managers of Jaffna and Badulla
branches to authorise housing and personal loans.
Housing Development Financing Corporation
• Open 2 branches in the North, and 2 branches in
the East.
• Introduce a fast track housing loan scheme, having
gold as security.
State Mortgage and Investment Bank
• Open Vavuniya Extension Office
Sri Lanka Savings Bank Ltd
• Carry out microfinancing activities in the North
and the East.
45
New initiatives by the Banking Sector in 2011…
Pan Asia Bank
• Open 3 branches in the North and the East
Lankaputhra Development Bank Ltd
• Open 1 branch in Jaffna in 2011
Indian Bank
• Establish its Jaffna branch
• Finance Self Help Groups, microfinance and
agricultural sector
Pradeshiya Sanwardana Bank
• Open 5 branches in the North and 12 branches in
the East
• Introduce a new microfinance scheme
46
New initiatives by the Banking Sector in 2011…
DFCC Vardhana Bank Ltd
• Open 4 branches in the North and the East
• Introduce Vardhana Garu Saru (VGS) FD and savings schemes
for Senior Citizens above 50 years
• Launch Islamic Banking and Internet Banking
Indian Overseas Bank
• Open 2 branches in the North
Sanasa Development Bank Ltd
•
Open a branch in Mullaitivu and 3 Extension Offices
MCB Bank Ltd
• Open a branch in Batticaloa
• Introduce Islamic Banking Pawning Scheme as a new product
in Batticaloa
47
New initiatives by the Banking Sector in 2011
HSBC
• Expand lending activities in Jaffna through the designated SME business
development officer.
• Install safe deposit lockers to enhance the quality of service to the clientele.
• Lend to investors in the Achchuveli Industrial Park and develop supply chain
financing opportunities.
• Channel approximately US$ 200 mn for projects, which includes a solar power
project, fisheries harbour project and several bridge construction projects.
48
How did the North and the East perform in 2010?
North
• In 2010, the Northern Province recorded the highest
nominal growth rate of all Provinces, at 22.9% following
a high growth rate of 12.1% in 2009.
• The contribution to the country’s GDP by the Northern
Province increased to 3.4% in 2010 from 3.2% in 2009.
East
• In 2010, the Eastern Province recorded a nominal growth
rate of 18.7%, which followed by high growth rate of
13.4% in 2009.
• The contribution to the country’s GDP by the Eastern
Province increased to 5.9% in 2010 from 5.8% in 2009.
49
What lies beyond 2012?
• There is a clear drive towards holistic development in the
North and the East to ensure that people sustain their
economic achievements and translate them into a way of
life.
• We expect that the range of investments
made in these Provinces will result in a
nominal growth rate of over 20% per annum
in these Provinces, from 2012 onwards for
the next 5 years.
50
Ensuring Financial Inclusiveness
in the North and the East
over the next few years
will need several drivers:
51
Physical Accessibility
•
•
•
•
Today, the road network is being expanded and will
continue to expand at an unprecedented, accelerated
pace.
With the continuous upgrading of the road network,
we expect trade, business, enterprise and investment
to increase significantly.
Farmers in the North have now found new competitive
markets in the South and were able to sell their
produce at market prices.
Simultaneously, many businesses expanded their
networks to the North and the East, giving people in
those areas an opportunity to benefit by higher level
of services and high quality goods.
52
Banking Accessibility
• Bank of Ceylon, People’s Bank and others operated banking services
to IDPs from “container offices” soon after the end of the war. These
banks provided a valuable service to IDPs by providing much needed
safekeeping facilities and money transfer facilities.
• The Northern and Eastern Provinces have immensely benefited by
the 2:1 rule in branch opening that requests commercial banks to
open two branches outside the Western Province for every branch
they open in the commercially developed Western Province.
• “Mobile banking” systems have been encouraged.
• The Central Bank works with financial institutions to raise awareness
of formal banking activity. Banks have been requested to open SME
centres and to promote SHGs.
• Awareness programmes are also conducted to encourage the public
towards formal sector deposit opportunities.
53
Skills and Training Accessibility
Language Accessibility
• The Central Bank conducts entrepreneurship development
programmes with other financial institutions for people with low
income and for small and medium scale entrepreneurs.
– Best practices are introduced to obtain better yields in agriculture
and livestock, and higher profits in SME and other Income
Generating Activities (IGAs)
– Focused training programmes include book keeping, doing business,
leadership skills and export market orientation.
• Former combatants are trained on mechanical and electrical skills,
guided by the SL Army and private companies.
• The universities in the North and the East conduct market
oriented degree programmes.
• Several language labs or computer-based language courses have
been set up.
54
Technology and ICT Accessibility
• The Universities in the North and the East
have established state-of-the-art computer
laboratories with the assistance of
international development partners.
• Private sector computer training institutes
and cyber cafes are flourishing in these
Provinces.
• Many young persons have been given bank
loans to establish internet cafes.
55
In order to maintain these conditions, new infrastructure
investments in 2011 to 2014 are also being focused:
Major Investments:
-
-
Rehabilitation of key roads, railroads, hospitals, and bridges
Restoration of industries that closed down because of the violence
Implementation of large scale irrigation schemes
Implementation of projects for providing electricity and water
Establishment of vocational training centres, and technical colleges
for skills development
Upgrade of fisheries harbours
Development of tourist attractions
Minor Investments:
-
Rehabilitation of village tanks, canals, and minor irrigation systems
Reconstruction of damaged houses and shopping areas
Provision of furniture, equipment for schools and hospitals
Provision of boats, fishing gear, etc. for fishermen
56
Needless to say, we are putting our money
where our mouth is…
Estimated Plan of Vadakkin Wasantham : 2011 - 2013
Rs. million
Social Protection and Livelihood Development
12,876
Improving Economic Infrastructure
150,375
Strengthening Social Infrastructure and Fostering Social Services
25,010
Revitalization of Productive Sectors
24,297
Human Settlement Development
39,025
Total
251,583
Source: Ministry of Finance & Planning
57
In 2011 alone, the planned major investments
in the North were substantial
Investment Area
National, Provincial & Rural Roads
Railway
Electricity
Ports/ Harbours
Water Supply
Housing
Irrigation & Agriculture
Health
Education & Skills Development
Sports, Culture and Tourism
Resettlement
Livelihood
Other
Total
Rs. million
20,186
8,900
5,308
56
2,273
1,514
2,130
1,293
1,131
246
5,025
237
2,631
50,930
Source: Ministry of Finance and Planning
58
Already massive investments have been carried
out in the East : 2006 – 2010…
Investments already carried out in East: 2006 - 2010
Rs. million
Resettlement
Economic Infrastructure
Productive Sector
Social Infrastructure
Total
12,242
94,124
4,075
5,643
116,084
Source: Ministry of Finance & Planning
59
Major investments were carried out in the East
too, in 2011…
Investment Area
National, Provincial & Rural Roads
Railway
Electricity
Ports/Harbours
Water & Sanitation
Housing
Irrigation & Agriculture
Health
Education
Sports, Culture & Tourism
Resettlement
Livelihood
Other
Total
Rs. million
12,356
1,147
1,363
1,591
1,614
1,134
2,459
529
592
791
1,040
395
1,600
26,611
Source: Ministry of Finance and Planning
60
Our Actions over the Past 2 1/2 Years have borne
fruit…
• The GOSL has provided a satisfactory enabling environment to
facilitate economic activities
• The CBSL has taken decisive steps to implement a financial
inclusiveness strategy.
• The private sector, both formal and informal, have responded
very well and continues to respond
• As a result, financial inclusiveness in the North and the East
has gone beyond the traditional practice of touching only the
poorest.
– The reality of the North and the East inclusiveness is that it has encompassed
the large scale businesses with opportunities and facilities of the formal banking
and regulated financing sectors.
– The expansion of banks has provided people not only credit, but also an
important source of mobilising national savings.
61
At the same time, the two provinces have
demonstrated a major appetite for Economic Activity…
• To accommodate this appetite, banks have
already expanded to these regions. There
were 324 bank branches and extension
offices in the North & East in 2010, and this
increased to 385 by 2011.
• The expected natural growth of bank branch
networks is a clear indicator of the expected
economic growth in these regions.
62
But the private sector needs to take hold of these
opportunities and venture into these areas. Thee is a
huge growth potential in these area and plenty of
investment opprotunities…
EASTERN PROVINCE
NORTHERN PROVINCE
• Trincomalee port is a natural harbour
whichhas the potential to become a
major commercial and industrial hub for
the South Asian region.
•
•
•
•
•
•
•
• Large stretches of beautiful beaches and
ecological conservation areas can
support a vibrant tourism industry
• Untapped productive agricultural crop
land with low population density can be
developed for high intensity and
productive agricultural enterprises
Fertile agricultural lands
Mineral ores
Forests
Palmyrah based industries
Wet lands
Beautiful beaches and coral deposits
Value addition for fruit, vegetables and
seafood
• Livestock and fishery resources can be
developed substantially
• Value addition of seafood
• Livestock and fishery resources can be
developed substantially
63
ALREADY, SOME INTERESTING INVESTMENTS
HAVE ALREADY TAKEN PLACE:
•
•
•
•
•
Yaal Hotel by Jetwing, Jaffna (66 rooms)
Fortune Premier, Pasikudah (60 rooms)
Holiday Resort, Pasikudah (50 rooms)
Anilana Properties, Trincomalee (70 rooms)
ICC Hotel, Trincomalee (50 rooms)
 CARGILLS/BOC DIARY PROJECT
 HUGE INVESTMENT IN FISHERIES/AGRICULTURE
64
In the budget for 2012, the government provided several
tax and concessions to encourage investment in
agriculture, fisheries…
2009
2010
2011
Northern
Province
20,485
28,136
81,762
Eastern
Proviince
216,148
244,523
262,764
2009
2010
2011
21,210
33,600
45,040
Eastern Province 68,480
92,240
87,210
Northern
Province
65
The North and the East have already made a critical
contribution to Sri Lanka’s recent Economic journey…
• The natural calamities of last year and early this year
destroyed a significant amount of agricultural crops. This
would have created chaos in domestic markets having a
severe impact on prices and inflation.
• However, ample stocks of key agricultural crops that
arrived in the market from the North and the East,
helped mitigate adverse price pressures to a great
extent.
• The farmers in these Provinces
also received a good price for
their produce!
66
The success over the past 2 1/2 years has been
extraordinary and we clearly surprised the World!
But, that is because…
• We prepared for the post-war period, before the war ended
• We worked to the plan
• We displayed deep commitment
• However, this is only the beginning.
• There are huge benefits the entire country, including the North
and the East can look forward to, with the contribution
expected from the North and the East.
• In that context, we must not allow various forces within and
outside our nation (however well meaning they may sound)
to destroy our unity or distract us from our mission.
67
There is no shortcut to prosperity…
• Developing an economy, at national, provincial or
even at village level, is a complex balancing act.
• As much as we may believe that world class
infrastructure, well regulated financial services,
steady inflow of foreign remittances and demand
for goods, will be adequate for our progress, we
must not relax or be complacent…
• Hence, hard and smart work over the next decade
is vital to maintain the balance and the growth
momentum.
68
As a nation however, we can be satisfied…
• Our country has been able to achieve 8% growth and over
US$ 2,000 per capita income, even though we did not
enjoy a smooth, easy passage.
• Our journey was marked with many obstacles, which we
overcame. Every obstacle overcome, was a lesson learnt.
Mahinda Chintana – Vision for the Future (December 2009):
“The fact that we have been able to achieve a sustained and
uninterrupted growth in a most challenging era while facing the
ongoing conflict was an amazing achievement. I am therefore
confident that we will be able to now maintain a continuous growth
rate of 8% per annum, during the next six years.”
69
Based on our achievements so far, we can certainly
have hope…
Mahinda Chintana – Vision for the Future (December 2009):
“In the next few years, we will face two major economic challenges.
One, will be to ensure that the growing economic prosperity and the
benefits of recent developments will filter down to all our people.
Two, will be to lay the foundation for long term sustainable
development.
In the same manner that we faced and overcame the previous
challenges, I am certain that we can face and emerge victorious
against these new challenges as well.”
This is exactly what inclusive growth and
Financial Inclusiveness is all about!
70
THE BUSINESS COMMUNITY MUST NOW
RESPOND …
WE MUST NOT WAIT FOR FOREIGNERS, OR
OTHERS TO DO WHAT WE MUST DO.
THEY WILL COME. BUT THEY WILL
COME, AFTER US!!
WE MUST BE CONFIDENT THAT
WE CAN DELIVER ON THAT PROMISE.
For the sake of our country,
We must…
71