It has now been generally recognized that an open economy is the best means for ensuring general prosperity. However, successive Sri Lankan governments have continued to practise statism while claiming the opposite. Such inconsistency, which leads to perpetuating inefficiencies, and often to crony capitalism, will destroy any economy.

It should be definitely recognized that, in a free economy, state intervention is permissible only to ensure that there is a level playing field. This means ensuring social development, in particular with regard to education, so that equality of opportunity is increased. It can include special support for particular areas or industries, provided the purpose is self-sustainability within a clear time frame rather than unlimited subsidizing.

What should be particulatly avoided is abuse of state power for political goals, as in the sudden creation of jobs before elections. This contributes to economic stagnation.

Meanwhile the power of the bureaucracy to hinder productive activity continues unchecked. The private sector is still restricted by excessive need for permits and licenses, while in the public sector, with no incentives for action, the situation is worse. Sri Lanka still suffers badly from ancient financial and administrative regulations that promote inefficiency. Though there has been talk of reform, progress is far too slow, and there is no indication of an awareness of principles with regard to such the necessary change.

The Liberal Party therefore proposes the following –

1. Ensuring the primacy of the private sector in the economy and reducing the powers of state and the bureaucracy to a necessary minimum.
2. Repeal of ancient regulations, and the creation in the public sector of a concept of budget holders responsible for formulating and implementing effective work plans. Special units to review progress and monitor finances would be set up, and a system of incentives based on productivity would be introduced.
3. The preparation and implementation of carefully targeted plans for infrastructural development so as to widen the impact of a successful market economy. Sustained investment in highways, and a more productive use and development of the railway network will be particular priorities. Sri Lanka is perhaps the only country in Asia where there has been steady deterioration in the service provided by railways over the last 50 years.
4. A reform to the tax system to facilitate capital accumulation, investment, entrepreneurship, employment, growth and international competiveness.
5. A review and reform of labour laws to make them more conducive to efficiency and price stability, while promoting investment and developing employment opportunities.
6. The building up, together with the private sector, and in particular in selected rural areas, of tertiary level training and education to broaden skills and competencies in the workforce, and to encourage entrepreneurship.
7. The promulgation of strong anti-Trust legislation to prevent monopolies in the private or public sectors, and the strengthening of a Monopolies commission dedicated to ensuring competitive conditions with regard to all goods and services for the benefit of the public.
8. The establishment of a Constitutional Right to private property as a pre-condition for a market economy.