18 September, 2021

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Covid, International Business & Sri Lanka

By Krishmal Fernando –

Krishmal Fernando

Ancient history articulates self-sufficient economies or autarkies. But in the world we live now, ‘International Business’ has become an essential part of the day to day lives. Cross-border transactions of goods, services, technology, capital, and knowledge now have become essential for an economy to function smoothly and advance further. This ultimately results in substantial interdependencies among economies. This being more notable when economies comprise more international businesses. Thus even a minor incident in one economy can quickly convert to a global crisis.

During the past two decades, Sri Lanka’s uncompetitive trade position had continuously resulted in negative trade balances. Sri Lankan economy was negatively affected as its two main export destinations, the European Union and the USA had a severe outbreak of COVID-19 during the first wave. Swift measures enacted by the SL government helped the nation to control the first wave of COVID-19. However, these measures had a particularly negative effect on tourism, manufacturing, and transportation, while collapsing global demand had a negative impact on the textile industry. World Bank reported a 3.6 percent contraction in the Sri Lankan economy in 2020. According to CBSL, Sri Lanka recorded a trade deficit of 840.30 USD Million in April of 2020 which is closer to the highest trade deficit record low of -1100.70 USD Million in November of 2011. During the past few months, Sri Lanka was able to successfully narrow down the record-breaking trade deficits due to a larger decline in imports compared to the decline in exports. On a cumulative basis, the trade deficit of US$ 7.997 billion in 2019 had decreased to US$ 5.978 billion in 2020.

After the ‘Third Wave’ and the outbreak of Delta variant, will there be a ‘Fourth Wave’?, How long can Sri Lanka maintain the current import barriers? What are the strategies of Sri Lanka to face pressure from global trade? How effectively can Sri Lanka boost its exports and tourism? Most importantly, how can Sri Lankan healthcare professionals maintain their renowned control over the COVID-19 spread? As a nation, these are few challenges we should overcome strategically.

In order to overcome this vital and challenging period, first and foremost the Sri Lankan healthcare professionals collaboratively with the general public should adhere to the health guidelines which are necessary to flatten the curve. If the pandemic goes out of control, Sri Lanka will have to experience the tragic stage which India struggles to overcome at present. Secondly, Sri Lankan policymakers should design policies to acquire a competitive advantage rather than the natural advantage in the export and tourism industries. The nations who achieve high economic growth, have adopted different approaches and strategized their trade policies according to the environmental reforms. Thirdly, Sri Lanka should create a sound internal cushion in order to face the external shocks and to reduce the vulnerability. Minimizing the degree of dependency by strengthening the local production and demand would divert the Sri Lankan economy from dependency to interdependency in international trade to a greater extent. Furthermore, to maintain the import barriers Sri Lankan policymakers need to come up with creative strategies to promote import substitution while carefully reading and critically analyzing the current import structure. The fate of the Sri Lankan economy will be determined by the aforesaid questions and the solutions.

*Krishmal Fernando – Assistant Lecturer, Department of International Business – Faculty of Management and Finance – University of Colombo

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Latest comments

  • 3
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    Wonder if the writer is hoping to catch the eye of the ‘viyathmaga’ intellectuals to be invited to the club to provide the solutions to his suggestions for post COVID development because I don’t see the point of this write up. We all know state of the economy & the impending fate, so what are these ”…policies to acquire a competitive advantage rather than the natural advantage in the export and tourism industries” when SL has already lost the GST+ concessions for exports to EU & confirmed already as a failed state when it comes to tourism & aid? As for ”…creative strategies to promote import substitution while carefully reading and critically analyzing the current import structure…”, its just ambiguous words, when in actual fact, SL currently doesn’t have the technical expertise nor the infrastructure to attract direct foreign investment for local manufacture & production of most necessities.

    I expect better than just words from an academic of the Colombo Uni faculty of Management & Finance.

    • 4
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      Raj , he seems to be already a card holder of Viyathmaga club just like our retired surgeon doctor. According to him each wave is inadvertently helping to narrow down trade deficits. Thanks to Covid.

      • 2
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        Covid-19 is part of hybrid cyber and bio-war fare and global surveillance project, babe Krishmal Fernando. Covid-19 is a numbers game based on false positive PCR tests, and a DATA HOAX , and alpha, beta, gama, delta, epsilon, lambda. A joke with strains to promote fear and lockdowns to destroy emerging economies in the Global South, Brazil, India, China, Russia, South Africa and make America Great Again! Covid-19 is promoting DE-Globalization and re-gobalization in the Global South through travel restrictions and hybrid maritime Tread war in the Indian Ocean which is why MV Peral and MT Diamond came to Lanka to pollute its Seas. Wake Up Krishmal from your daydream of American and EU capitalist tosh!
        Covid-19 is also a project to promote Global Surveillance and Global Governance by the DIGITALIZATION of Economies and Society, Big Data Surveillance and the institution of Covid-19 Test, trace Track Global Surveillance systems though the USAID gifted Covid-19 hospital in Iranawilla, to ensure and the capture of local and national institutions by the biggest Rogue State in the world – the American Deep State and its military business industrial and intelligence complex, that promotes Bill Gates, Jeff Bazos etc. and its EU Corporate allies particularly Big Phamaceutical companies making billions on Covid-19 vaccines.

        • 2
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          Krishmal, The US Deepstate and Davos clique staged the Covid-19 Global ‘Re-Set’ based on a data hoax and printed Trillions of dollars as “Covid-19 bailouts’ channelled through Black Rock and other Hedge Funds, which also use India’s front companies Adani and Ambani in order to asset strip and reboot US-EU colonialism in Asia, Africa and Latin America and Indian Ocean Region, and to crash tbe emerging BRICS economies.
          Here are some REAL suggestions for Economic Growth:
          1. Sri Lanka should be taxing and charging Submarine Undersea Data cable (UDC) companies and International Corporations that use Lanka’s Maritime Exclusive Economic Zone and Extended Economic Zones (EEZ), rather than selling off its lands via Selendiva and Energy and transport systems.
          2. Sri Lanka should stop exporting its valuable Rare Earth Minerals and Rare Earth Elements (Zircon, Titanium, Graphite etc. mineral sands and Graphite which is also used for Graphene based Pfizer and Moderna vaccines and start value addition and rather ensure TRANSFER OF TECHNOLOGY and start manufacturing solar panels and batteries etc. with its valuable Rare Earths.
          3. Fisheries sectors should be upscaled as Lanka has a huge Exclusive economic Zone but its fisheries resources are looted by foreign trawlers.

      • 1
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        “Sri Lanka should create a sound internal cushion in order to face the external shocks and to reduce the vulnerability. Minimizing the degree of dependency by strengthening the local production”
        The author was probably not even born in the 70’s when this strategy was tried (and failed). Oh yes, we had local radios for example, without FM, even though there was an SLBC broadcast which could be picked up on imported ones. There was plenty of unsold passion fruit juice in warehouses but not enough rice. The present regime has started on the same path.
        There is something basically wrong with an economy where the price of diesel is exponentially linked to the price of everything else. A cup of milk tea (all local ingredients) costs 60 rupees with diesel at 125. But in India, the same item costs 20 rupees with diesel at 225!
        Where does this distortion come from?

    • 1
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      Hi Raj,
      Thank you very much for sharing your opinion.

  • 3
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    Krishmal Fernando, Lanka has no credibility hence any facts provided by government needs to checked and rechecked. Today DM news says SL health system is exhausted as Delta goes out of control. Further it says almost all hospitals have run out of beds and need for oxygen has created fears of running out of supply. 600, 000 in WP still await their second dose of vaccine. Almost two months ago I had expressed concerns of such dire situation. But if you see the daily Covid report for the past one month the numbers are pretty much the same . Mortality of 40 to 50 and few hundreds infected daily. This has been the case since Gotha intervened to change the death rate from 101 to 15. Countries who have been transparent have reported a graph/curve to show the infectivity with daily fluctuations. There is a significant rise followed by flattening. Where as in Lanka almost for a year we had < 10 deaths and <1000 infected. Followed by abrupt second wave which again is stage managed by Gotha. You being an analyst and statistician know these reported numbers , just cant be true. When a national crisis is stage managed by our government how on earth can we believe in what they say ???

    • 2
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      DM headline today and other Covid-19 stories on the DM front page do not have names of the authors , or the sources of their information and just vaguely say health ministry officials.
      Daily Mirror newspaper is a Fake New paper which like Ada Derana is hyping up Covid-19 fear and Delta and calling for Lockdowns to destroy the economy so that US hedge Funds can asset strip and promoting vaccination culture to benefit big Pharma. DM and Ada Derana promote untested vaccines when there is NO Covid-19 emergency in Sri Lanka.
      How and where can we log a protest against this media outfit that seems to be in the pay of big Pharma and WHO and the Covid-19 Fake news and fear psychosis that it is media outfit is generating? Probably also doing in the Lankadeepa paper and the Tamil news too.

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        Also US Govt. is the most indebted country in the planet and has printed Trillions of dollars as Covid-19 Bailouts, as the USD is the world reserve currency. But now it is clear that the Western financial system is a huge Ponzi scheme of Debt and derivatives.
        Please watch the Kaiser Report on RT.
        Time to dump the USD which will soon crash as both Russia and China are de-dollarizing. Even tiny El Salvador is now using Bitcoin.
        The US economy like the Washington Consensus is intellectually and morally bankrupt.
        Dump your USD asap. Krishmal Fernando!

      • 4
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        Dinuk I have heard enough of your deluded thought process it will be ridiculous talking sense to you other than praying. Have you ever thought may be the news is fake but not those occupying hospital beds. You better go back to cutting those cables and looking for graphite leaving the sick, for doctors.to take care. There are few of your kind who desperately seek attention in social and other media calling Covid as bluff ended becoming casualty. Even yesterday there was one in Instagram. Karma is a bit ch capable of outdoing you.

  • 3
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    OMG Dinuk, did you here. Capital Maharaja group chairman Rajamahendran died of Covid complications. Must be U.S conspiracy what do you think ????

    • 2
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      Chiv,
      Or is it Freemason baas-unnehes?

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