Sri Lanka seeks to emulate Singapore

BusinessSri Lanka is moving past its history of ethnic strife and seeking to emulate Singapore as one of the region’s premier trading and financial hubs, Dr. Harsha de Silva said.

“Our focus is going to be on creating the most competitive economy in this part of the world,” Harsha de Silva, who helped draft the United National Party’s economic policy, said. “We are going to have to play in a different league,” he said.

The UNP won the most seats in an election on Monday after pledging to create jobs and heal wounds stemming from a bloody civil war that ended in 2009. Prime Minister Ranil Wickremesinghe, the party’s leader, will lead the government for another term.

The ruling party wants to revive growth that slowed to a two-year low with moves to make it easier for the private sector to do business. It has also pledged to avoid discriminatory policies that may stoke tensions between the Sinhalese majority and Tamil minority.

Sri Lanka’s challenges to compete with Asia’s economic powerhouses are immense: Loss-making state-owned firms dominate an economy four times smaller than Singapore that relies mostly on tourism and exports. Access to financing, an inefficient bureaucracy and tax issues are the top impediments for Sri Lankan businesses, according to the World Economic Forum. In the 1950s, the situation reversed.

Sri Lanka’s trade deficit in June widened 51.9 per cent to $689.2 million from $453.7 million a year earlier, central bank data showed on Friday.

Exports for the month were $944.1 million, down 4.2 per cent from a year earlier. Imports rose 13.5 per cent to $1.63 billion.

The trade deficit for the first half of 2015 widened 15.6 per cent to $4.09 billion. Sri Lanka’s balance of payments showed a $791.7 million deficit for the first six months of this year, compared with a $1.95 billion surplus in the same period last year.

Meanwhile, the Sri Lankan rupee traded weaker on Friday after a state-run bank, through which the central bank usually directs the market, raised the currency’s peg against the dollar by 10 cents, allowing the exchange rate to depreciate to 134.00.

The market had expected the central bank to allow a slight depreciation in the rupee, in line with other regional currencies that have declined against the dollar.

The rupee traded at 134.00 per dollar, 0.07 per cent weaker from Thursday’s close of 133.90.

“There is a huge importer demand and no exporters are converting dollars,” said a currency dealer, asking not to be named. “State banks are also selling reluctantly.” The market expects some business-friendly economic policies and more dollar inflows after the centre-right United National Party (UNP) won Monday’s parliamentary election. (Gulf Today)

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