“Our objective is to make Sri Lanka the most competitive nation in the Indian Ocean and to develop the island as a mega city for the region that will go between Singapore and Dubai, thus make it competitive and the time has come for us to think how we are going to do it.”
- Ranil Wickremesinghe
Sri Lankan Prime Minister, at the Sri Lanka Economic Forum 2016
A year since the victory of incumbent Sri Lankan President Maithripala Sirisena, the rainbow coalition, despite huge promises of reform, has not delivered on everything. However, to its credit, it has managed (with some success) to introduce newer and more outward-looking policies. First, freedom of expression has been fully restored. The trend of blocking media sites has ended, and the safety of media personnel, restored. Second, independent commissions such as the Commission to Investigate Allegations of Bribery or Corruption have been fully restored. Third, a foreign policy rebalance between West and China is in the process of being re-established.
The January 2016 Sri Lanka Economic Forum brought with it some excellent thoughts from global leaders such as Ricardo Hausmann, Joseph Stiglitz and George Soros. Prime Minister Wickremesinghe stated, “Sri Lankans who voted for the change and those who didn't vote should unite to build this nation to the height achieved by nations like Singapore.” Soros said that Sri Lanka should lower its expectations as there is a clear sign of global economic slowdown this year. The US$27 billion Soros Fund Management (SFM) is looking to invest US$300 million initially in the economy – a good start at the beginning of the year. Economist Montek Singh Ahluwalia said that revenue as per GDP was 12 per cent when it should be 20 per cent. Comprehensive tax reforms are needed to increase revenue to 18 to 20 per cent of the GDP in the next few years.
Containing the fiscal deficit to 5 per cent of the GDP should continue to stabilise the economy. To reduce fiscal deficit, it is important to focus on increasing revenue and decreasing government expenditure – a difficult task to undertake in the present political context. Losses incurred by public enterprises are a huge fiscal burden that need to be addressed.
Politicians who offer employment merely to satisfy the electorate should be stopped. An example is that of the Ceylon Fishery Harbours Corporation, which had a little over 800 employees in 2009. Today, 1800 people are employed for the same lot of harbours. Once a profitable Corporation, it is currently incurring losses with its extensive employee numbers. In the same way, a large cabinet with nearly 100 ministers leads to the wastage of state resources.
It was against this socio-political and economic backdrop in mind that Wickremesinghe participated in the World Economic Forum in Davos – a conference where he could interact with top minds, investors and political leaders – to plan his strategic economic agenda for the country. For the first time in 10 years, Sri Lanka had high level political representation at Davos. In fact, this author, during two visits to Davos, was the only government representative from Sri Lanka, and without much support from the government. The tide has changed, and it is for the positive.
Standard of Living
The government should focus on improving the citizens’ quality of life by providing the best possible solutions to problems, instead of discussions about unfruitful political gossip. Unfortunately, most of Sri Lanka's headlines have been to the contrary.
For instance, 2,700 people, i.e. an average of 7.5 people every day, were killed in road accidents in 2015 – an increase compared to 2014. Given how there were numerous references to Singapore at the Sri Lanka Economic Forum, an example from Singapore is in order. On 25 December 2015, the Prime Minister of Singapore, Lee Hsien Loong, opened the Downtown Line 2 (DLT2), an extension to their existing public rail network, that is set to ease traffic. As Lee stated, “With a new MRT line and extension to be opened next year onwards the network will double to 360 km by 2030. It will be comparable to London, New York and Tokyo, this means eight in 10 homes will be within a 10 minute radius.” There are several important lessons and practices Sri Lanka could import from Singapore.
The World Economic Forum has categorised Sri Lanka as an efficiency-driven economy (stage 2) in this year's global competitiveness index. It is an achievement, for Colombo has moved up from factor-driven (stage 1). Almost all South Asian countries are still on stage 1 or in transition. Sri Lanka should aim to move from efficiency-driven to the next stage of transition, and then to innovation-driven by 2030. A goal to double per capita to reach US$7000 by 2020 and to improve all sectors of the economy, should be set.
Given its tremendous human resource potential, Sri Lanka has the capacity carry this out. However, in order to become the region’s top workforce not just in terms of size but also quality, this valuable resource requires training. Investment in research and development and improvement in educational systems and universities should be the government’s priority. The Moratuwa University could be Sri Lanka's own MIT or IIT.
Improving transparency and strengthening mechanisms to fight corruption are important areas that require focus. Optimising the productivity of the government’s loss-making institutions, strengthening and encouraging the private sector to expand, combating sexual abuse, and enforcing child protection rights, are among the neglected areas that should be addressed.
The government will announce the new constitutional assembly to draft the new constitution with public participation. After this, it will be sent for approval, and then, referendum. It is a task that will reset several core areas of the present governance structure; and therefore, should ideally be undertaken after debate and dialogue with the public. Malicious campaigns to create fear could be created and government should steer through this carefully with stakeholder participation.
The recent surge in nationalism resulting from a Sinha Le (Sinhalese blood) campaign that has gone viral on the internet is definitely not a positive sign as it could manifest in the worst form of nationalism. Instead, nationalism should be used to preserve one’s languages. This sort of appreciation for languages will create interest among theyounger generations to learn and appreciate a language such as Sinhala – a dying language according to UN.
As a nation, Sri Lanka has suffered tremendously in the past, and should now move towards uniting all ethnic groups via genuine reconciliation processes. President Sirisena demonstrated a sincere sign of reconciliation on the day he completed a year in office: he pardoned the Liberation Tigers of the Tamil Eelam assassin, Sivaraja Jenivan, who had attempted to assassinate the former in 2006. The pardon was an act of remembering the past but also forgiveness in order to create a better future. This is a great deed and signals the kick-starting of brave and genuine efforts towards the reconciliation process.
Sri Lanka possesses the potential to achieve great heights. With correct processes in place, and collective effort to create a better political culture, the country could spur its economic growth to overcome its challenges, both internal and external.