We are meeting our targets against odds

For a country such as Sri Lanka, grappling with a heavy debt burden, the industrial sector is of vital importance to its economic future. The direction in which the country's industries develop will have a significant bearing on its ability to generate investment, employment, exports and sustainable economic growth. Understanding where the industrial sector is heading, therefore, offers important insight into the country's prospects for the future. In this interview, the Minister of Industry and Entrepreneurship Development, Sunil Handunnetti discussed the Government's plans for the industrial sector, the challenges it faces and the opportunities ahead. Excerpts of the interview: Q: One of the recent photographs on your Facebook page shows you enjoying a piece of watermelon at a roadside shop. Despite your busy schedule, do you still find time for such moments? A: It was not because I had free time. The photograph was taken when we stopped briefly at a roadside shop while returning from Mannar. We had gone to Mannar to open a warehouse and an administrative building for the Salt Corporation. For 40 years, the Corporation had not had such facilities there. Q: What was the situation there before these facilities were set up? Was salt being produced without a proper warehouse and administrative building? A: There was a very small place that had been used as a warehouse, but it was a temporary structure made of iron and aluminium and covered with sheets. The building used as the administrative office was actually the manager's official residence. Without obtaining funds from the Treasury, we built a proper administrative building using the Salt Corporation's own funds. On our way back from Mannar, we also visited Eppawala Phosphate. Q: Wasn't the phosphate operation supposed to be shut down? A: Yes. But today, the operation is generating enough income to fund new vehicles and machinery. We also built a new warehouse for Rs. 79 million, well below the original estimate of Rs. 129 million, without compromising quality. We are also conducting research with the Anuradhapura Municipal Council on producing fertiliser by combining phosphate with waste, with fewer chemical compounds for use on fruits and vegetables. Sri Lanka's phosphate has very low heavy-metal content, and we are also researching its use in poultry feed. Previously, our phosphate was exported only in granular form. We are now developing new products, including coconut fertiliser. We also invited investment for our main project, attracting 14 investors through a transparent process. Going forward, we will also supply fertiliser to the domestic market. Q: Many small and medium-scale entrepreneurs lost their invested capital during the 2019–2022 economic crisis and were forced to abandon their businesses. Is there a programme to help them? A: Yes. Many entrepreneurs faced severe debt and insolvency during that period. We have since worked with the banks and resolved more than 80 percent of these cases. Previously, such entrepreneurs were largely outside the State machinery. One of our first challenges was to make them aware that the Ministry's support extends to the village level. Problems can be addressed through Regional Industrial Committees, and we have now established District Industrial Councils in all 25 districts as well as Regional Industrial Councils. Q: When a business becomes profitable and demand for it increases, many people tend to enter the same field. In some countries, this is regulated to prevent market saturation. Do we have a mechanism to address this? A: First, we need to recognise that a similar problem exists within the public sector itself, with several institutions providing the same services. For example, the Small and Medium Enterprise Development Division, the Entrepreneurship Authority and the Industrial Development Board are doing largely similar work. With Cabinet approval, we are now bringing these three institutions together to create a single Entrepreneurship Development Authority. This will eliminate duplication and allow us to provide a more coordinated service. We will then prepare business plans for entrepreneurs based on their needs, with Entrepreneurship Development Officers providing support at the local level. This will help address the problem. Q: What is the Government's plan for developing and expanding industrial parks across the country? A: There are 17 industrial parks under the Industrial Development Board and another 33 under the Ministry, including the one in Ekala. They are spread across the country, but many lack a long-term development plan. We are now developing the concept of industrial villages, bringing together industries, raw materials and related activities in specific areas. For example, we plan to develop a lac industry village in Matale as a tourist attraction, while similar models could be developed for the Ambalangoda puppetry and Pilimathalawa brass industries. This will cover not only traditional industries; we are also developing a technology park in Kurunegala, which has the potential to become an industrial centre because of its land availability and highway access. At present, land available for industrial use accounts for only 0.03 percent of the country's total land area. Our target is to increase this to one percent by 2030. Another major challenge is finding skilled workers. We have discussed this with the Vocational Training Authority and rehabilitation institutions, and new courses are needed to better match training with the requirements of industry. Q: You recently visited Australia to meet potential investors. What did you hope to achieve, and what was the outcome? A: It was a successful visit. We met Sri Lankan engineers, accountants and other professionals and were able to resolve some of the issues that had been holding back investment. They were surprised that the Minister responsible for the subject and senior officials of the Board of Investment came to meet them. Previously, the investment environment was not conducive, with commissions and other barriers involved. Labour costs are high in Australia, so these investors are keen to explore opportunities here. Some supply products to leading global brands, and they have told us they are ready to invest if we can provide land and other facilities. They are willing to work with us. Q: Investors still complain that getting projects off the ground is difficult and time-consuming. What are the main obstacles? A: We have to acknowledge that some of our laws and regulations are outdated. Land is one of the biggest issues, both for investment and mineral resources, and we need to resolve it quickly. We have already taken steps to simplify permits for sand and soil by establishing District Mineral Resources Committees, which can make decisions at district level. The Presidential Secretariat is also working on a land bank by identifying underutilised land for productive investment. This has already helped build investor confidence. There have been no allegations that politicians have demanded bribes, although some problems remain at the official level. Today, the bigger issue is delays rather than bribery. The tax system is another problem because it is overly complicated and involves too many different taxes. Our industrialists are willing to pay taxes and have confidence that their money will be properly used. We are discussing ways to simplify these processes. If we can address these issues along with infrastructure, I believe investment can move forward much more smoothly. Q: It has been two years since the Government came to power. How much more time is needed to bring the industrial sector to the level you are aiming for? A: Unlike a road or a new bus, the work of the Ministry of Industry is not always immediately visible. For example, we have completed a National Tariff Policy, which will soon be presented to Parliament and is expected to resolve many tax-related issues. We are also moving towards a single-point system for investors, expanding training and developing markets. That is why we are holding the Expo trade exhibition in January 2027, after 28 years. We expect 1,500 international buyers and 800 international industries to participate. The objective is to bring buyers and sellers together. Our target is to double export earnings from the current US$18 billion to US$36 billion by 2030. This will not be easy, but we must achieve it. We have taken our entire history to reach US$18 billion, and we now have to double it within five years. The reason is simple: we must begin repaying our debt without taking on new debt. The way forward is to reduce unnecessary import expenditure and increase export earnings, while carefully protecting the needs of our people. This is where the answer lies.