NPP pledges strong digital transformation in state sector- Chathuranga Abeysinghe

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National Executive Committee Member of the National People’s Power (NPP) and Colombo District Candidate Chathuranga Abeysinghe in an interview with the Sunday Observer outlined his views on the strategic reforms that the NPP has drawn up to create a conducive environment for economic expansion and its digital transformation drive to improve Government efficiency and transparency.

He said the NPP has planned a strong digital transformation in the state sector looking at some critical initiatives including the digital ID, land taxation and transportation. The NPP has also formulated plans for a significant overhaul of Sri Lanka’s industrial policy and it will give consistency and direction for both local and foreign investments.

Excerpts of the interview

Q: Has the NPP presented a comprehensive economic strategy aimed at steering the country towards stability and sustainable growth?

A: The NPP has presented an integrated policy which includes an economic policy that covers all the areas that need to be addressed in growth starting from education and health.

From an economic perspective, we have shared a separate policy in terms of how we would stabilise the economy in the short term and the initiatives to be taken to improve industrial capacity and growth. This policy was presented at the Presidential Election. Apart from that, we have presented separate detailed policies on particular industries which we think are very important.

Q: There is a need for strategic reforms designed to create a conducive environment for economic expansion which includes fiscal consolidation, debt sustainability and rejuvenation of critical industries essential for long term prosperity.

Your Views?

A: That is why we had a separate economic forum and shared our views on this particular aspect. There are seven pillars in our economic renaissance policy such as stabilisation of the economy and the people’s lives, fiscal and monetary consolidation and certain aspects of bringing technology to stabilise revenue collection. So, there is a particular pillar of stabilisation. The other pillar is about the conducive environment for investments. During the past 40 years, we received only US$ 21 billion in FDIs. There are a few things that we wanted to put in place due to this favourable environment for both local and foreign investments.

One is policy consistency and secondly providing a one-stop-shop for investments to thrive and third pillar is strengthening domestic production. Fourthly, under the industrial policy, we would support the low cost industry providing necessary technological and skills support. The fifth pillar is about how we connect to the global value chain and the sixth is about the Government’s role in economic development and its facilitator role. Lastly, it’s about ensuring a zero tolerance corruption policy. The economic transformation is a comprehensive policy that we have present in a very detailed manner with summaries and details to share.

Q: The NPP has proposed to establish a specialised relief bank to manage non-performing loans within the Small and Medium-sized Enterprise (SME) sector. Can you explain?

A: Currently, our Non-performing Loans (NPL) are estimated to be about Rs.1.7 trillion and the SME sector is short of about Rs.350 billion. When the NPL rates are higher than what the economy can withstand, the concept to transfer loans from commercial banks to the interim banks can be brought in for a temporary period. That is the solution we want to bring in. At the same time, there will be many negotiations with the banks to help the SME sector to restructure the loans. But now since we can’t do that, we are thinking of setting up a relief bank providing clearance to both commercial banks as well as the SME sector to continue their businesses. Now the businesses are under the Parate Law and most of them are vulnerable. This is the only possible solution and we are planning to do it in the next Budget.

Q: Has the NPP outlined plans for a significant overhaul of Sri Lanka’s industrial policy to bolster Sri Lanka’s competitiveness in global markets and attract much-needed foreign investments?

A: Yes. Firstly, Sri Lanka didn’t have a strong industrialisation policy for the past 20 years and we want to bring that as a strong point under the national planning unit. We have identified various industries which have good potential. In the short term, it will be more on IT, the tourism industry and marine services from the service sector. On the industrial manufacturing side, we have the opportunity in agriculture exports, fisheries and some industries of assembling and vehicle components. In the long term, it will also be about minerals. Likewise, we want to focus and have a strong strategy to move forward in selected areas.

Therefore, this industrial policy will focus mostly on classification of industries, providing a lower cost base for industries and helping the industry with tax policies that will enable them with lower taxes on inputs and certain other incentives for technological transformation. There will be special focus on the SME sector to ensure that they have the capacity to finance it and get the requisite expertise and assistance from the Government to help it in international trade, especially in certification and product consolidation. It will assist the Government foreign services to bridge the gap between trade and investment among other countries. The NPP industrial policy will give consistency and direction for both local and foreign investments.

Q: Digital transformation also features prominently in the NPP’s agenda, recognising its critical role in improving Government efficiency and transparency. Would you comment?

A: The main problem that we hear from every industry or business is about the inefficiencies of the state sector services. We have planned a strong digital transformation in the state sector looking at some critical initiatives including the digital ID, land taxation and transportation. There are few initiatives which will start soon but the entire goal is to have digital technology helping us with efficiency and transparency. Therefore, the NPP has a policy of Government digitalisation.

Apart from that, digitalisation is also considered an economic driver for digital goods and services. We think we can reach up to about US$ 5 billion revenue within the next five years. It would also enable the entire economy with digital means, allowing the digital economy to be about US$ 15 billion by another five years. Lastly, it’s about the digital transformation of our industry. Our industries are very primitive which have not used modern technology and the Government will also facilitate this. All this will enable the local IT sector to create more IP than being a service oriented industry.

Q: Addressing governance and corruption issues would be another crucial aspect of the NPP’s strategy. How will the future NPP Government address these issues?

A: This has been the cry for a long time. The people have not seen accountability of what has taken place so far. Number one, the NPP political will is there to ensure nothing untoward when going forward and that is the key aspect. Another aspect is taking action on the issues or the corruption that had taken place. We will not manipulate or influence the judicial process starting investigations from the CID to the Attorney General’s Department by allowing the cases to be handled independently through the legal system.

That is the facilitation that the NPP Government will do. We will resource the legal departments to fast track some of these well-known, identified and verified cases. We will expedite the process within the current law and not interfere politically in any means for anybody who is getting convicted.

Q: Do you feel that the current tax system is unfair to employees?

A: Currently, the tax system is very unfair not only to employees but also for a country to grow. We feel it is not fair for the middle class to be taxed on the income of Rs.100,000 and pay a very high tax at a very lower income level. Because Sri Lankan professionals and businessmen have also to bear education, transportation and health needs as well. Therefore, we want to increase the current initial threshold to Rs.200,000 as the minimum and widen the tax brackets. Then the maximum tax threshold will be reached after a particular value. These changes are planned for the next year’s Budget as well. The Government has estimated the amount of tax reduction that it would introduce and the alternative methods of recovering that amount and it will be discussed with the IMF soon.

Q: The Opposition is alleging that the NPP Government has not been able to fulfill most of the promises it made on the political stage. What is your comment?

A: The NPP campaign from 2019 up to now, is very clear on our policy. Whatever things we have shared are based on a policy.

We never gave quick expectations or untenable things. At present, the Opposition is talking about immediate benefits that we promised but those benefits can only be passed by the next Budget. Now we are running an Interim Government with three Ministers under the previous Government Budget which was agreed upon with the IMF. Therefore, we don’t want to derail that.

The benefits to the people will come in two-fold. One is that the Budget that will be presented in the first quarter of 2025, and also the strategy that will be implemented with regard to essential goods and services, especially in terms of importation of essential goods. At present, the entire market is distorted and it will take a little time to bring the right structures into it. This has been very well articulated in our policy. The Opposition will always try to find something that they can find fault with and say that was promised. I think the people are smart and the previous election was not based on that kind of promises.

Q: Are you working towards a two- thirds majority or will even a simple majority of 113 MPs could fulfill the NPP Government’s agenda?

A: A simple majority would be enough for us and that is what we have been campaigning for. Except for the Constitutional amendment, we don’t need a two-thirds majority to implement most of the other policies.

We believe it is good for the country if the entire Parliament can work towards the Constitutional change. However, a strong majority Government will help execute what we have promised the people.

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