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International Finance Corporation (IFC), the private sector lending arm of the World Bank  Group is looking at an investment pipeline of about $ 875 million, including a focus on what it  calls the islands of excellence, over the next five years, IFC’s Vice President for Asia and  Pacific, Alfonso Garcia Mora said yesterday. He also believed that Sri Lanka can realise its  development aspirations by promoting a private sector-led growth model — one that spurs  further growth and creates jobs for its people through innovation and agility. 

“In Sri Lanka, we have learned through experience that straight jacketed investments are not  necessarily an effective solution. Instead, we needed to be innovative and respond to the needs  of people and times.” He also called for a greater focus on the private sector to support Sri  Lanka›s aspiration to return to upper middle-income status in the medium-term and fully  develop islands of excellence in the long-term. 

A bigger role of the private sector is crucial to boost growth and enhance productivity, at a  time when the Government does not have the resources to make the investments necessary to  propel Sri Lanka to an Upper Middle-income country. A greater contribution of the private  sector can also be a source of much needed fiscal revenue that would allay some of the current  fiscal pressures. Garcia Mora said a new wave of growth could be fuelled by sectors such as  ICT, resource based and light specialised manufacturing industries — as recommended by an  upcoming report by IFC and the World Bank, the Country Private Sector Diagnostic (CPSD)  for Sri Lanka. Leaders in these sectors have already shown their high level of sophistication — offering a glimpse of the country’s potential to build a knowledge intensive industry. “These  pioneers offer a solid base on which Sri Lanka’s industry could flourish, targeting regional and  new international markets,” Garcia Mora said. 

“These islands of excellence sector have the potential to grow further and contribute to export  earnings and offset some of the challenges posed by a stagnant tourism sector.” Building and  sustaining a knowledge intensive economy requires significant inflows of foreign direct  investments. 

But given that Sri Lanka›s small market size and limited resource base, Government policy  makers as well as private entrepreneurs must look towards increasing regional engagement to  overcome the constraints imposed by the market size. “Sri Lanka can attract more FDI if the  

country is seen as an entry point to the larger economies in the region,” Vice President Garcia  Mora said. 

“Therefore, pivoting country’s growth trajectory requires strong linkages between public  policies and the private sector, with a more diverse array of incentivising schemes and publicly  funded facilities to provide space for innovation, as well as better links between university  research and commercial use.” Supporting growth-enabling sustainable infrastructure is a key  element of IFC’s country strategy for Sri Lanka by 2026. IFC’s track record in Sri Lanka goes  back over 50 years.