The Hon. Kathiravelu Shanmugam Kugathasan

¶ 01 Hon. Chair, in this debate on the 2025 Budget in relation to the Ministry of Industries and Enterprise Development, I wish to share my views.

¶ 02 Economists like David Ricardo, through the theory of comparative advantage, showed that nations prosper by specializing in sectors where they can produce at lower cost and then trading freely. Industrial goods typically have higher price elasticity of demand than agricultural goods; hence countries specializing in industry tend to become developed, while those relying primarily on agriculture remain less developed. Sri Lanka must become an industry-led nation.

¶ 03 In this Budget, about Rs. 4.8 billion is allocated for recurrent and Rs. 8.6 billion for capital—Rs. 13.4 billion in total—for the Ministry. This is Rs. 3.9 billion more than last year and is welcome, but still inadequate to transform the sector. For example, only Rs. 26 million is allocated to revive the Kantale Sugar Factory in Trincomalee—this needs at least ten times more to have impact. I urge increased allocations.

¶ 04 Globally, countries like South Korea and Germany allocate 5–7 percent of their budgets to industry and entrepreneurship, prioritizing R&D, technology adoption, and SME support, thereby becoming competitive. In contrast, Sri Lanka allocates around 0.3 percent, undermining competitiveness and domestic industrial growth.

¶ 05 India and Vietnam are driving revolutions in digitization, green energy, and export-led manufacturing—creating jobs and attracting FDI. Our industrial and entrepreneurial sector faces key challenges: - Limited access to finance, especially in rural areas; - Outdated technology and processes reducing productivity; - Lack of export diversification, over-reliance on tea and apparel; - Skills mismatch between education and modern industry needs.

¶ 06 I propose: - Allocate at least 5 percent of the Budget to industry and entrepreneurship, focusing on R&D, technology upgrading, and SME support. - Drive digitization (like India’s Digital India) to modernize firms. - Invest in renewable energy technologies to cut costs and align with global sustainability. - Diversify exports into high value sectors such as IT services, pharmaceuticals, and agro-based value addition. - Improve access to finance via a dedicated fund for startups and SMEs, low-interest loans, grants, and partnerships with international financiers for technical and financial support. - Strengthen skills through industry-aligned curricula and vocational programs; reduce the education–employment gap. - Promote public–private partnerships to spur innovation.

¶ 07 On State-Owned Enterprises: Sri Lanka has 527 SOEs, many loss-making due to politicized appointments, weak management, overstaffing, operational inefficiencies, and corruption. Solutions include PPPs, right-sized restructuring, cooperative-style management, digitization, strong audit/monitoring, and continuous cost controls.

¶ 08 Sri Lanka can become a South Asian hub for innovation and entrepreneurship by learning from successful countries, fixing our weaknesses, creating jobs and exports, and accelerating growth. Industrial and entrepreneurial development is not just economics; it empowers our youth to dream and achieve. I urge the Hon. Minister to implement these proposals boldly so we can build a prosperous, innovative, globally competitive Sri Lanka. Thank you.