Thanks to the Amcham President Shirendra Lawrence, members of the Board, and everyone here! It’s good to be back among friends.
Last year, we marked 75 years of the Sri Lankan/American relationship by focusing on People, Progress, and Partnership. As that celebration of 75 years concludes, it’s time to acknowledge where we are, then turn the page and look to the future. Here we are, at the dawn of a new year, just days before Sri Lanka’s Independence Day commemoration, to review the outlook for this year. I’ve already ticked off one of my new year’s resolutions: hiking up to the summit of Sri Pada/Adams Peak a few weeks ago to see the sunrise. What summits can Sri Lanka reach this year?
Just a few months ago, we were proud to announce the International Development Finance Corporation’s investment of $553 million in the Western Container Terminal at the Port of Colombo. Why was this so incredibly important? Beyond the large dollar amount, which is DFC’s second largest exposure in the entire Indo Pacific region; beyond the critical injection of private sector financing this country needs; beyond the confidence building signal it sends to potential investors and financiers that we believe in Sri Lanka’s future, it demonstrates the United States’s continuing commitment to the prosperity of Sri Lanka.
But building that future won’t be easy. The commitments required by the IMF as part of the Extended Fund Facility program call for government reform measures in both tax compliance and combatting corruption. These are hard steps, and not always popular. Sri Lanka has taken difficult measures to put the country on a long-term sustainable footing and comply with the IMF commitments. But the people of Sri Lanka deserve and continue to demand openness, transparency, and accountability from their leaders as the process of reforms moves forward. The new higher VAT rates have been a hit on the average Sri Lankan and your businesses. We understand that while there may be short term necessary pains, the public deserves to know that such measures are being taken looking at the wholeness of the problem and endemic issues that must be addressed in a structural, sustainable way, fair and transparent to all.
That includes not just raising taxes but eliminating tax loopholes, and addressing government inefficiencies, particularly in state owned enterprises. It means digitalizing customs to raise revenue and reduce corruption. Creating predictable customs duties and streamlined processes would encourage importers, who want to import more to Sri Lanka but are worried about the uncertainty in the import process. Unpredictable customs fees discourage importers and limit the amount of customs revenue the Sri Lankan government can collect. This shifts the burden of tax revenue further onto the shoulders of the people, who can’t bear much more. Earlier this week, I met with the National Chamber of Exporters who relayed some of their challenges – red tape, regulatory challenges, and unpredictability that impact their businesses. Exports and private sector growth will be the engine of recovery, but they need the space and support to thrive. As the largest export market for Sri Lanka, the United States can help be part of the solution.
It’s important that the government of Sri Lanka carry out reforms. But it’s also important to explain those reforms to the people in a clear manner. It makes for slower, but better legislation and reforms. One example is the Online Safety Bill. The Centre for Policy Alternatives reported from a poll earlier this month that more than 70 percent of Sri Lankans were unaware of the bill before its passage. When major global tech companies characterize the bill as “unworkable” and stifling innovation and democracy, instead of actually addressing online crimes, frankly this sends a negative signal in Sri Lanka’s path towards reform and recovery. Previous bills, such as the Personal Data Protection Act, took much longer to craft, but did a better job of taking stakeholder feedback into account. To work on legislation and reforms that will be durable, enforceable, and wise, the Sri Lankan government will need to do better in the future. This will be key to improving the business climate.
But businesses shouldn’t just sit back and wait for the Sri Lankan government to act. The private sector has a crucial role to play. Business leaders, like all of you in this room, have a role to play. You’re not only purveyors of goods and services; you’re also community thought leaders. One powerful example of this comes from the American south, during our country’s struggle for civil rights in 1964. Dr. Martin Luther King, Jr. (whose birthday we just commemorated on January 15) had just been awarded the Nobel Peace Prize for his non-violent struggle for racial equality. When Atlanta’s business leaders refused to attend a banquet in his honor, the Coca-Cola company’s president at the time, J. Paul Astin, weighed in.
He had spent 14 years in South Africa and had seen firsthand what apartheid had done to that country’s economy. He publicly said, “Coca-Cola cannot stay in a city that’s going to have this kind of reaction and not honor a Nobel Peace Prize winner.” How courageous is that during those times? The city’s business leaders relented, and they honored Dr. King. Atlanta continued to grow into a city that’s now an economic powerhouse. Thamari and Lakshan from that same Coca-Cola company are in the room with us today and Coca-Cola is a valued member of our own AmCham community. Coca-Cola in Sri Lanka today leads the way in eliminating waste, better stewarding water, taking care of local communities, and taking action to combat climate change. I know all of you share in these priorities. I also encourage you to raise your collective voices to push the Sri Lankan government to fight corruption and create a stable business environment.
Two years ago, I looked across this audience and only saw one woman on AmCham’s board. I challenged you to increase that number, and you’ve done it! I’m heartened to see four women now serving on this board, including the newest member, Neela Marrikar. This is a positive step. This could be a symbol for all economic growth in Sri Lanka. Economic growth should always be inclusive growth. There’s little point in growing an economy if it doesn’t lead to better lives for all participants, including women.
One example to follow is Tania Polonnowita Wettimuny, group managing director at IAS Holdings. Since founding the company in 2016, she has overseen dramatic growth and is now employing more than 300 people across four companies. She has also served as the first female chairperson of the Sri Lanka Logistics & Freight Forwarders Association. In the same way that this group needs 20 more Tanias, the country of Sri Lanka needs thousands more like her. And the good news is that you have them; they are waiting in the wings! They need examples like Tania and encouragement from the rest of us to take up the leadership roles of the future.
We’re hopeful as we look ahead to that future. We see a resurgence of U.S. investment interest in Sri Lanka. We also see some companies in Sri Lanka like GRI Tires, Melwa, Fortude, and M.A.S. who are making investments in the United States. We all know that trade and investment are a two-way street. We believe that these investments in the United States, if wisely made, will lead to economic growth both in Sri Lanka and in the United States.
For anyone who wants to look at how investing in the United States can help drive growth that benefits Sri Lanka, we invite you to attend the SelectUSA Investment Summit in June at Baltimore’s National Harbor. Today is the last day to sign up at the Early Bird discounted price. If you want more information, you can see Andrew Shinn, one of our economic officers, who is here today. He can help you get signed up.
Even as we see a resurgence of interest in two-way investment, we also see challenges ahead that will require leadership. Both of our countries will have elections this year. We need to do all we can to stabilize the business environment. As leaders, we need to think about both the medium-term and the long-term. In the medium term, we need to create an environment that’s conducive to trade, investment, and business expansion. One with transparent governance, where corruption is no longer tolerated. In the long term, we need to raise up a generation of leaders to take our place. There are several ways we should be doing this. Prabhash Subasinghe provides one example: he brought his daughter Saanya into GRI’s marketing leadership.
Saanya was educated in the United States, at my alma mater Columbia University, and returned to Sri Lanka to work with GRI. I had the chance to talk with her about six months ago at the U.S. Embassy, where we talked about empowering women leaders. And Harry Jayawardena has similarly recruited his daughter Stasshani to work with him at Aitken Spence. Stasshani, another impressive up-and-coming leader whom I’ve also met with, is another beneficiary of U.S. training and education. Other leaders are looking to middle ranks to find successors to mentor. Every one of our organizations needs to think more about tomorrow’s leaders. To do that, we need to use our proactive priority-setting power to drive our organizations to identify and train future leaders – both women and men- at all levels. They will, after all, inherit the world we have worked so hard to build.
I’ll end with a thought about Apple. Apple just became the world’s most valuable brand, beating out Microsoft, Google, and Amazon. Apple increased its brand value by 74% in the past year. The top four global brands are American. Nearly 50 years after it was created, after almost going bankrupt, after facing tumultuous management changes, how did Apple become the world’s most valuable brand? It took innovation, openness to making mistakes, and creativity — all things that Sri Lankans can be and Sri Lankan companies can do. We should see Sri Lanka’s own Apple take seed here and grow to be a global leader. The United States government is cheering for you, and we stand ready to partner to create an environment that enables you and the next generation of companies to succeed. Let’s all hike up our own summits this year, whether in our personal lives, in your companies, or for Sri Lanka as a country. Thank you.
By U.S. Embassy Colombo | 31 January, 2024