16 November 2015
A fourth wave of policy reforms
The economic policy statement presented by the new Government has
vowed to introduce a reform program laying a firm foundation to place the
economy on the right track so that it can sustain growth and prosperity.
The statement has identified different reform regimes introduced in the
country since 1978 and calls the current reform programme as the Third
Wave of such reforms. The first and the second reforms, according to the
statement, had been introduced by J.R. Jayewardene in 1978 and R.
Premadasa in 1989.
However, the statement had missed the third wave of reforms implemented
by Chandrika Bandaranaike Kumaratunga from 1994 to 2001. Her reform
program too was not completed as was the case of the two previous
programs. But it was during her period that reforms were introduced to
telecom, airline, plantation and gas sectors. When this third wave of
reforms is considered, the current program proposed is not the third wave
but the fourth wave of reforms.
Political consensus a must
for proper
implementation of a plan
The existence of three
previous uncompleted reform
programs demonstrates one
fundamental flaw in economic
reforms of the country. That is,
failing to get political
consensus for reforms surely
derails the whole program
once the political power has
been changed.
This was evident when the current Prime
Minister attempted an economic reform
program when he held onto power during
2002-2004. The initial ground work for
reforms were laid by him but they were all
thrown away when the power changed
hands in 2004. The market is not happy
about the country attempting reform
programs with a lot of fanfare and then
throwing them away midway through by
successive governments.
Private sector demands continuity in
policy
This was an issue raised at a recent
seminar held in Colombo by the Sunday
Times Business Club to discuss the
forthcoming budget. At the discussion
time, the audience wanted to know how
the continuity of the current policy
package could be ensured in a
background of failures in the past.
Two suggestions were made. One was to get a political consensus for the
reform program and it was pointed out that the current political gettogether by the two rival parties which have the prospect of forming future
governments offers the ideal opportunity for building such a consensus.
The other was to establish a policy management mechanism so that
effective implementation of the current policy package could be assured.
Hence, signing off the policy package by the two main political parties
which have come together to form the new Government is a must. This
should simultaneously be followed by the establishment of effective
implementation machinery.
Promoting exports at the centre of the policy
The EPS of the Government is a skeleton that has outlined what the
Government is planning to do to deliver prosperity to the nation in the
future. The skeleton, as has been presented by the Prime Minister, is three
pronged, namely, the emphasis placed on exports for creating wealth, the
need for introducing new technology to transform the production mix of the
country and measures to make available the fruits of developments
inclusively to people at large. This skeleton has to be developed into an
implementation plan consisting of three main components in it. One should
be cautioned that it would not be a plan in the way plans were formulated
in old centrally planned economies. Rather, it would be plan containing
guiding principles for the Government to achieve its objectives in the most
efficient and effective manner.
Production should be in value-added areas
First, it has to set the physical targets which the plan aims at achieving at
the national level. For instance, it has to clearly lay down the rate of growth
which the country aims at achieving in the next 5 to 10 year period in the
form of a rolling plan where the targets are revised continuously in each
subsequent year based on the emerging ground realities and the
developments of the global markets favourable or unfavourable the
country is faced with.
These national targets in the plan have to be broken into sectoral targets
and sectoral targets into separate programs and program targets. The
programs have to be further broken into action plans with separate time
frames for each action plan. For instance, the action plan, say, of the
coconut sub sector, should elaborate on the introduction of technological
breakthroughs that enable the sector to capture the world market by newly
invented and innovated value added products.
A qualifying candidate, for example, is the use of virgin coconut oil in the
production of cosmetics, drugs or health foods. The call for such scientific
breakthroughs should come from the sector itself that has to work with the