By Siri Gamage –
Economy and its Woes in the Debt Trapped Sri Lanka: Is there an Alternative Economic Development Model?
During the Yahapalanaya government of President Sirisena and Prime Minister Wickremesinghe, it appears that a concerted effort is being made to invite foreign investors of various sorts, primarily from the Asian region, supported by multilateral agencies and bilateral agreements. Such efforts seem to follow in the footsteps of export-led growth strategy adopted by former President J.R. Jayewardene presently under a national government of the two main political parties and minority parties. Though the efforts of the government to enter into contracts and MOUs with foreign entities and partners seem to attract political comment, very little economic comment, particularly critical, is forthcoming. Long term social and cultural consequences of promoting foreign investor-oriented and export led growth is also not being critically reflected upon.
In this article, I examine the two main layers of the economy, who benefits from the foreign investor-oriented economic development and the potential for creating a large subservient and dependent class (or classes) with a view to generate further critical/constructive discussion. It is suggested that the political and civic leaders whose loyalties are for the long-term national interest take the scenario discussed here seriously and develop ‘a political and economic strategy’ that can serve the national interest rather than the investor interest. It is hoped that the conceptual distinction made between two layers of the economy –one highly integrated to the global economy and the other not so – can serve as a vehicle for understanding the context and risks of following a foreign investor driven economic development strategy for the unreconciled nation.
Super Economy (Supiri Arthikaya) vs. National Economy (Jathika Arthikaya)
When we talk about the national economy, economists usually talk in terms of various sectors, e.g. agriculture and mining, manufacturing, tourism, services. In this era of globalisation and multinational corporation activities, we have to make a distinction between the Super economy and the national economy. The former refers to the multinational corporate sector with their manufacturing plants, marketing and service outlets, export facilities, offices, and commercial plantations. Multinational companies generally come under the BOI purview, as they are large-scale investors. Such entities can be private sector companies or state owned depending on the country of origin. If the company is from a country like China, the entity can be state-owned. These entities operate under the laws applicable to the BOI sponsored projects, services (such as education and health) and various industries and commercial activities.
The capacity of the government to control such entities is very limited. These entities are responsible to their superiors and shareholders in the origin countries. Decisions pertaining to their operations are taken in the world capitals where their headquarters are located. To protect their interests, they obtain professional services of accounting, legal, and other services from abroad and if necessary locally. This supra layer of economic activity (and service provision) is at the top of the economic pyramid of a developing country like Sri Lanka but in the day to day political discourses inside and outside the parliament this layer seems to be out of bound for critical scrutiny. It is almost taken as a given and a blessing for the country’s economy and future prosperity. Take for example the tourism sector. The more foreign investments coming to the country is considered as a blessing. What harm such ventures are inflicting on the country’s public space, core values and customs, etc. are not even discussed. That is how far we have been brain washed about the merits of foreign investments over decades of governance based on neoliberal, free market economy doctrine couched in the globalisation discourse with a positive slant.
If there is any foreign control of the country’s resources, workforce, and any threat to national sovereignty there is no any other agency that have detrimental effects than this layer. Its impact on the so-called ‘national economy’ that means the rest of economic activities not connected to this layer or global economy is not even mentioned? Yet, the impact of this supra layer and its activities on the national economy can be substantial not only in terms of foregone business, trade and manufacturing opportunities for the local agriculturalists, manufacturers, entrepreneurs but also the extensive competition brought about by this layer plus the import trade to the consumer market. In the political discourse, finger is pointed at a given country if not a given minority ethnic community as the cause for the country’s economic woes.
This supra layer of economic activity is organised around the profit motive. Various entities are operating as part of a regional or global network of similar entities managed by highly efficient managerial staff and a mainly local workforce being employed at subsistence level wages (wages that are just enough to live, no surplus). The entities and their owners appropriate surplus produced by such workforce. Government is receiving a tax benefit but in many instances these entities have been offered tax holidays extending to a period of decade or more. Thus the benefit can mainly be in terms of the employment for the local population and its ability to participate in the consumer market.
National economy is not given the priority that it should be given. Instead of making the national economy the vanguard of economic development by allocating necessary policy, planning, project formulation and funding, it is left to mend for itself in an incoherent manner. A few companies that are primarily family based continue and sometimes expand, e.g. Maliban, Dilma tea. But the political leaders are more inclined to chase the investors from overseas with dollar investments rather than encouraging local investors. Assistance is provided to local investors and companies, mainly to market their products and services through seminars held overseas. Banking sector provides loans but the emphasis put on the national economy is secondary compared to the emphasis given to the supra layer. This sort of economic philosophy cannot revive local industries, service sector, and manufacturing unless teamed up with the supra layer actors in some fashion. Therefore the talk about joint ventures. However, in joint ventures the foreign partner holds high hand. Unlike other countries in Asia with a diaspora spread across the world, Sri Lanka does not seem to tap the expertise available in the Sri Lanka diaspora overseas other than paying lip service. Some countries have a separate ministry to handle diaspora activities (this is not a suggestion to add another minister to the already inflated cabinet).
The argument put forward by advocates of the free market, neoliberal economic model that promotes further expansion of the Supra economic layer of the economy and further incorporation of the national economy in the global and regional economies (similarly designed) is that the foreign investments are needed to generate more employment and income for the locals. Without such investments, our land, water, roads, workforce (untrained) etc. will remain idle (no talk about the capacity of local entrepreneurs to do the job by linking up with foreign entrepreneurs and companies). For example The Island (29.04.2017) under the heading ‘Korea Exim Bank, ADB to draw blueprint for Colombo-Trinco economic Corridor’ reports that these entities whose investment capital comes from the rich classes of the world believe that ‘it becomes increasingly important to synergise industry, infrastructure, logistics, and urbanisation to create more jobs and income’. The experts working for Korea Exim Bank will target four areas. 1) Urabanization strategies and creation of small cities, 2) trade facilitation at international level, 3) investment promotion and investor outreach activities, 4) promotion of entrepreneurship and innovative industries and enhancing the competitiveness of small and medium size enterprises (SMEs). This is only one example among many that attempts to further integrate Sri Lanka’s economy, particularly it’s under developed areas with the global economy. A further discussion on the need for developing export-oriented economic development for Sri Lanka is found in Kumar David’s recent article in Colombo Telegraph (30.04.2017) with the title ‘Sri Lanka’s Muddled Politicos can Learn from Andhra’ where he seems to agree on the need for large-scale foreign investment with the backing of a council of subject experts organised at the top.
This model is not a new panacea for the country’s ills. Since 1977 we have been under the spell of a similar economic development model. We need to question what progress we have made, where are we headed, who benefitted? If we follow Wallerstien, capitalism requires further deepening where it is developed and expanding where it is not developed. Sri Lanka’s investment drive involving countries such as China, India, Japan and to some extent others like Indonesia, Malaysia, South Korea, Singapore is in line with this logic.
Lanksns, particularly those with a modicum of ability at critical thinking and analysis need to see through the long-term negative outcomes of such economic model nakedly followed by other Asian countries that we try to emulate, and inturn these Asian countries are emulating from the industrialised West and the USA. Countries like South Korea, Malaysia, Singapore, and even cities like Dubai no doubt exemplify a high degree of incorporation to the global economy, development of supra economy and national economy) and in the process improve their infrastructure, employment and income generation for some segments of the population including the working class, professional class etc. Likewise, local entrepreneurs have enhanced their operations together with foreign joint ventures servicing the economic activities such as trade, construction, manufacturing.
But have these societies created more egalitarianism and humanism in the end? Have these efforts made by the political leaders with the support of economic experts made these societies more unequal? Sure, they have developed more roads, ports, cities, high-rise apartments, metro lines, railways, office buildings, shopping malls, tourist hotels and more. But who is accessing these facilities more and who has the rich pockets to sustain the high lifestyle promoted by the entities associated with the supra layer (other than public transport and shopping malls)? It is the high end of the social class scale –both local and foreign who tend to benefit disproportionately from the further expansion of the supra layer or economy. In Dubai, while visiting a highly developed part of the city (Colombo’s mega city to be developed by the Chinese will look like this in time to come) I asked an expatriate who generally lives in the posh apartments or gated residential communities. He told me that it is basically the expatriates working for multinational companies, as the rent is unaffordable by the workers from South Asia etc.
The societies that we are trying to emulate in the economic arena are not renowned for providing welfare for the needy in their own countries. Investment-oriented economic development model facilitates the interests of the foreign investors and to an extent the local bourgeoisie and their political masters. The professional class also benefits to an extent by allowing them to earn fees for their services and getting their children to obtain an education in a foreign country (or in a local service facility) to be able to work for the global corporate sector for higher pay and conditions. The lower middle class and the working class plus the poor –by far the majority segments of the population in the country- are at best able to earn a living wage only. Members of these classes abound in the streets and trains in the above referenced countries that we tend to emulate – working as domestic workers, cleaners of shopping malls, drivers, labourers in construction sites etc. If we follow the same model of economic development, we will increase the dependence and subservience of the majority population to the local and foreign investor classes and the professional class while sacrificing our natural resources for the economic gain of these upper classes.
The economic and social disparities thus created and the curtailed political and human freedoms of the reference countries we try to emulate speak volumes about the absurdity of the foreign investment-oriented economic development model that we so highly speak about for Lanka’s development. I am not arguing that we should not have foreign investment in sectors and places where necessary on a limited scale. My argument is that if the country follows the current model based on the political push being given by the Prime Minister and those around him (see Kumar David’s article), we will surely end up with highways, factories, enhanced ports, high rise buildings etc. but in the end lose the plot when social problems start to creep in. We need to think about the long-term consequences.
We don’t talk anymore about the Sarvodaya philosophy but foreign scholars and students take our ideas and admire them. Neither do we talk about the cooperative principles and the movement with people participation. Our left parties (or whatever remaining of it) do not talk about how to re-organise the production and manufacturing systems – unlike their counter parts in Cuba etc.? They don’t talk about ways and means of encouraging grassroots democracy. We don’t want to explore good ideas and models from the NGO or INGO sectors. Instead we brush them off with the same brush. Our economists are busy playing the games of statistics and econometrics with no clear ideas for locally-driven development without being subservient to foreign capital and investors that appear as multinational companies and various state entities from those countries whose investor class have accumulated more capital. Our social scientists are busy reproducing knowledge (throries, concepts, methods and research agendas) while denigrating our own indigenous knowledge. Our educationists are busy advocating the benefits of foreign/international education to fill the gaps left by our ruling class in the university intakes.
Our technocrats and bureaucrats are busy in managing the workforce that we send to countries that have ‘advanced economically’ in various parts of Asia and elsewhere. Our political leaders are busy negotiating another deal for more investment, more infrastructure development, more transfer of land, ports, and other valuable entities to foreign hands. Our religious leaders are sleeping at the wheel as if no harm will be dawned upon the country if it follows the same model of export-led growth that JR initiated and his nephew is reviving in a hurry.
It is only a handful of critically thinking individuals who seem to engage with this impending outcome in a far-sighted manner. Many are focusing on the personalities or day-to-day politics or indeed the issue of the day without spending much needed intellectual energies on this long-term scenario. Means of empowering the working class, lower middle class and the poor are limited to a few trade union activities primarily focused on wage increases –nothing more. Yet a political project based on an alternative economic and social vision is highly required with the participation of thinking classes (this may or may not include Viyath Maga) and the nationalist political and civic leaders.
It is here that the Joint Opposition (JO), the JVP, left parties, worker organisations, civil society organisations looking for Yahapalayanaya etc. need to reflect deeply and postulate an alternative economic development model based on national sovereignty, welfare and well-being for all, protection of the environment and public spaces, egalitarianism, and even the political and human rights. I have attempted to highlight the need for postulating an ‘alternative economic development model’ based on our own foot that does not require us to be subservient to foreign investor capital and investor classes plus the entities that have made us more dependent rather than independent (e.g. IMF, World Bank, ADB, and a whole set of other suppliers of foreign capital). There are ideas for such a model from highly placed critical thinkers in the global south including from India (e.g. Amarthya Sen, Arundathi Roy). Sociologists like Raeywin Connell from the University of Sydney (read her Southern Theory 2007 and other writings) have been arguing about the need to place more emphasis on the thinkers in the global south and their ideas by social scientists rather than reproduce the economic and social theories plus jargon from the global –imperialist north. Some of my publications also (see Research Gate for details) touch on this subject.
Our social scientists including Dr. Dayan Jayatilleka need to spend more time articulating the potential vagaries of the foreign investor-oriented model being promoted currently for the many rather than unsuccessfully attempting to divert attention on personalities in the political arena. If the current model is continued, elitism and privilege for the upper classes including the professional class will be enhanced, control of public lives and limitations of political and human rights will be increased. Ultimately, Sri Lanka for sure will be fair game for the global investors –amidst competition from key players – as it will become a big shopping mall connected by highways, by-passes, metro lines and luxury cars while making a large segment of the population subservient and dependent. That is where the long-term risks to national sovereignty and independence really lie. Whether the country is governed by a Rajapaksa, Sirisena or a Wickremesinghe this much needs to be understood by those working in the space of national interest.
Jagath Fernando / April 30, 2017
We are in a debt trap no doubt about it.
Only way out is to increase exports and no other way. Unfortunately nothing much done over the last few years. The days are gone where you borrow and build infrastructure such as roads and airports unles they can pay for themselves.
What do we need to:
2Improve productivity in agriculture
3Curtail recruitment to govt sector unless to essential services
4Efficient legal system
55Simplified tax system needs broad base it
6Trade as much as possible with neighboring countries SAARC
7Simplified laws and regulations
8English and IT education
9Limit Tuk tuks and encourage drivers to move into vocational employment
isharath / May 1, 2017
Increase exports is easier said. There must be a demand for our products in the market. To create such products, we don’t just have the skills and know-how to come up with such innovative ideas
What is the number of products we introduced in the export market compared to India, let alone China? Then how many new products we started to import into local market?
I am sure you can imagine the difference. State sector is a curse for our development. And politicians too know it, but who has the courage to cut down on that counter-productive segment to put their vote bank in trouble?
Kalupahana / May 2, 2017
Many thanks for this excellent article Dr. Siri.
Fact is that those who created the massive debt trap and stole from Sri Lanka should be investigated and put behind bars and the funds they stored in off shore accounts in Panama, Dubai Singapore brought to pay off the national debt.
Sri Lanka needs to investment in education, Research and Development at this stage, but the fact is that the Prime Minister Ranil Wickramasinghe’s Economic Policy is being drafted up in Washington DC. by the Fake Development Experts at the right wing Millennium Challenge Corporation (MCC), according to US govt interests, in league with fake development experts at Harvard’s Center for International Development, with Ricado Hausmann and his deep divers and big data analytics! Finally, Asian, i.e. Korean and Japanese “investment’ in Sri Lanka, with India is part of the great US game with China. Let us make no mistake!
Dodo / May 2, 2017
Quite correct, Siri, we need a discussion on INEQUALITY and the current development model that benefits the global capital and global 1 percent.
But let us not forget that MEga city megalaomaniac Pathala Champika Ranawaka, Sinhala Buddhist Racist Chinese Emperor of Sri Lanka in waiting who is pushing the environmentally and socially destructive Chinese port city is one of the biggest threats to peace and inclusive social development in Sri Lanka. He should be on the watch list of all progressive forces for social justice – even as we need to take a long terms strategic view of Sri Lanka’s development policy to benefit the working people rather than the global 1 percent and the super economy where global capital rules and 8 individuals own more than half the world’s wealth according to OXFAM.
UK Citizen / April 30, 2017
Perhaps a better option would be to go after the Racketeers who have stolen $$Billions from the people of Sri Lanka.
I’ve read that almost $20 Billion was transferred out of the country during the Rajapakse years.
Investigate, Prosecute and seize assets – nothing difficult.
The current system of impunity and zero accountability needs to end – the country is going nowhere until this is done.
Sri Lanka doesn’t need the IMF – there’s more than enough stolen money available to get the country back on its feet imho.
Ranil Jayantha Wijeyesekera / April 30, 2017
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Ranil Jayantha Wijeyesekera / April 30, 2017
For out economy we need to have a healthy worl force. We need product to marker.
We have to do Research and Development in fields carefully selected areas to develop our country. Students, Teachers, University researchers, and specialist in the field should participate.. The Research should be headed by the government and they could collect funds from the companies with a pre decided market share. Japan and China developed this way. They sent large amounts of personnel to specialize abroad. They translated books. Herbs and naturopathy is a field we can develop our own Ayurd3eva with China TCM and India Ayurveda and Acupuncture equivalent mamba.
With Ayurveda and Yoga, Buddhist Meditation and massage Government Hospitals should give people the choice of Integrated Medicine. The total cost of Heath Care will come down. We should also encourage the use of organic home gardens. We should not eat flesh, alcohol or smoking. We must congratulate the President for his stand in this subject. Tourist should be supplied with spa and Integrated Medicine at a lower cost. This base will help us to supply a growing World Market in these products with special emphasis on the European Common Market. Distance help in Integrated Health Care should be developed gradually. Meditation and yoga as well as Ayurdeva could be a option for government and Semi Government organizations and private organization. A emphasis should be on helping addiction of drugs, smoking and use of alcohol.
justice / April 30, 2017
People like you, including politicians who praise Ayurveda, never get themselves admitted to an Ayurvedic Hospital when they fall sick.
They always go to a General/Provincial Hospital.
Some even go abroad = Singapore is a popular destination.
Mallaiyuran / April 30, 2017
“The Research should be headed by the government and they could collect funds from the companies with a pre decided market share. Japan and China developed this way.”
Let’s hope this would not become another “Upper House” idea Old Royal came out with to employ some 8th grade imbecile politicians.
This what we wrote earlier ” Singapore is not a federal state, Swiss is a federal state”. They both have solved their ethnicity problem and leading in economy. In areas like Democracy, Civilizations .. Lanka we has unlearned what it had learned in Colonial time.
There is massive amount of knowledge is available outside. Just leaving that will open the door. Lankawe is resorting to Ponni, the famous War Criminal General to suppress SAITAM opponents because those protests, as per the Old Son Prince, is being held only to toppe Yahapalanaya. This is taking out a thorn with another thorn, not really a civilized way.
If SAITAM cannot be fixed and it cannot teaches medicine to the locals, how the new Chinese Herb medicine can be taught? Has the Old Royal (The Joint Comedy Club) has pre approved learning Chinese Medicine? It’s because that the $18 Billion reserve has gone down now?
Douglas / April 30, 2017
Who is not in debt? In Sri Lanka every citizen is in debt to the “estimated” amount of Rs. 4000.00 a month. (I believe this amount is correct. If not pl. correct me). All the Governments in all the countries with deficit Budgets are in debt. That also means all the people in the world are in debt. The problem is not “Debt”; but HOW we MANAGE it. The problem with Sri Lanka is the haphazard manner the debts are acquired and the lack of proper planning to manage and service such debts. To make matters worse, the debts have become the source of making illegal income for a large segment of the political and administrative machinery. This has gone beyond correction and recovery. It has been proved well with the latest development of the “Bond Scam” of Yahapalanaya Government.
jimsofty / May 1, 2017
Sri lanka leaders are not smart enough to develop Sri lanka. Everything they do is to in the next election.
Sri lanka is borrowing confidently because of women working in the middle east and boys working in South Korea send money. So, the govt sectr is major employer. Whether govt employees contribute or not their salaries are increased, they are promoted. Govt also borrows as there won’t be no tommorw because, they have the insurance from these people working overseas. govt does not know the loss of wealth because of broken families, dysfunctional families etc.,
AS the importa are tweice that of exports, Sri lanka can not expect any economic freedom.
Mallaiyuran / May 1, 2017
There are many illusions put in here by author. There is point in opening comment boxes for them.
The author is misinterpreting profit based investments. Profit seeking industries theoretically wish to maximize their profit. They will do anything that will increase the profit and avoid anything that will reduce the profit.
Let’s put that with the culture. Suppose a workman has to be hired to super economic firm. (There is nothing as such economy). Then suppose that all the Sinhala workmen are very cultural-ists. Then if the company demands them to come with pants, the company has to pay them to drop off the sarong. Sinhala workers are not going to give it up for nothing. Then the return for the profit motive company is dwindling. BOI will authorize the foremen to let the workers come with Sarong or Amude. Then the culture is protected. Instead of that, if our Sinhala Appe Aanduwa pays for the workers to wear only Sarong and keep up the culture during the work time, then the workers will see the culture as medium to milk from government but not will be attached to it. People will themselves balance between economy and culture; neither Aanduwa nor Kandy can impose the culture on them.
Tourism has some habit of exploiting sex and drug behaviors. That is mainly because of the short fall of law and order. In Galle, a Local Government leader raped a Russian girl and murdered her British boyfriend. British government had to have got into that to have the law and order established. When Old Royals were in power, two years ago, the census said that the fastest growing Industry in Lankawe was sex industry. This was/is happening without any improvement in tourism. Tourism may not lower the local culture than that.
Mallaiyuran / May 1, 2017
Now, blaming Ranil as who is going to spoil the Buddhist culture amounts to refusing to identify why Sinhalese were getting into Drug and Sex Industry without super economic activities in Old Royal period.
Same misinterpretation is existing with tax too. Earlier, economists thought simulating Demand side of a market economy may activate a stagnating economy. Then it was thought supply side is better. Both have their up and down. It is matter for economists. But FDI may minimize the bad part of both. A foreign company may want to invest in Lankawe only if it sees an economical advantage. If it sees a better advantage somewhere else, it will go there. If nothing found, there is no prospects for that company for new investments. Appe Aandu has no say in that other than, if they like, renegotiating a $250 million Nuraicholai contract for $540 million. For simplicity lets we look at labor only, not other variables. If Lankawe’s labor is highly productive and cheap and Company A insists on Tax Break then Aanduwa can wait for Company B to come. That is how competition works. There the loser is Company A, who missed the opportunity and Company B will run the A out of the market eventually. If Lankawe labor is lousy and government gives tax break, Company A will get engaged and it will work both, Lankawe and Company A. A new investment in a stagnating economy does not simply infuse some wages and products, it introduce a multiplier effect for the whole economy to get energized. Government is not losing any corporate taxes with Company A, because it never existed earlier. But it could not gain either. But it will gain on the payroll taxes and Sales taxes. Those all never existed.
Siri Gamage / May 1, 2017
All what you say make sense from the point of view of the Foreign companies. I and the readers understand the fact about the profit making interest of such entities. But the question I pose is whether this is the only way a government can develop national economy? What about other sectors of the economy that are not controlled by FDIs? How do we improve productivity in those industries and economic ventures without the interference of our politicians but as part of a national economic development strategy? How do we create a level playing field for indigenous industries, entrepreneurs, manufacturers> Without government intervention(not political) a country can’t do this. Unless we do this and place priority only for the FDIs and multinational companies/Chinese state run companies etc.we will compromise our national sovereignty one day. Because the developed countries of the West, USA, China,India etc.will want to safeguard their investments in the face of any political challenges/upheavals that may arise in the future and will want to send their troops and ships for this purpose.
My point is rather than borrowing more and depending more on FDIs the country has to find another way. Examples are available from Scandinavian countries, Cuba etc. Neoliberal free market economy and globalisation are under attack even in Developed Western countries and USA. We should take the clue early.
Mallaiyuran / May 1, 2017
I am not against developing of any particular sector. Here I have, no usfull data with me. In fact there may be a lot of ground to develop the rural economy. My job is to point out the incompleteness in thoughts – invoking additional thoughts.
Lankawe has already lost major part of its sovereignty because of war loans. This has nothing to do with yet to be taking place foreign investments. Lankawe is standing at a stage of no return path on losing sovereignty for superpower’s defense competition. I personally believe that there is no way Lankawe politicians will be able to put out India, China, America and Russia (-in future) from their defense activities in Lankawe. Before Freedom, we had Tamil Nadu, then Arabs, the Europeans at our door and in house. British time was the safest time for Lankawe on its defense, with moderate freedom after 1910s. Current is the most vulnerable period, while minorities has no freedom at all.
UN…. to …IMF activities bound create aberration in the independence of small & foolish nations. (Not much on Taiwan, Norway, Singapore……). The currency part on international trade is forcing muscle flexing even between superpowers. US tells China and China tells back US how to maintain their currencies. They go for compromise of their sovereignty. Balancing those massive storms whirling on the sky with Lankawe’s poor’s belt tightening is not a solution. World is not going to jump into Neo – Liberalism with a Jet Shoot. It is going to be zig-zag. Exaggerating the fear of losing sovereignty will not help. Further, Sinhala Politicians’ developments are never going to be symmetrical throughout the different planes and dimensions. It could be NM or Colvin or anybody-No fix exist for that. ….. May be, Muslims are managing – …with Middle East’s help.
Mallaiyuran / May 1, 2017
It is meaningless for North- Easterners & Up country people believe on these “Sovereignty Protection”, which, in fact they lost forever in 1600s, and they go hungry now. Tamils sees seeking economic freedom through Neo-Liberalism is a path to get recognized their equality in job opportunity, English language usage and regaining part other lost rights.
I remember a discussion I had with one of my Point Petro friend who had some connection to the topic, at the end 1960s. We were comparing weaving Palmyra Leaves products with Dumbara Straw products. (There was an essay in our English text book about Dumbara Straw works for “Comprehension” and our discussion was after the class). He described why the leaves products lacking much behind to straws. The first problem was trapper families are not in Handcraft, so it was expensive to employ trappers for Handcrafters – Caste system blocks vertical synergy. He said taller the tree more reluctant the trapper willing to climb –valuable material lost to nature due to lack of technology. The dyes used in North were very primitive and the products cannot be used in rains. I think now the situation may be worse than those days. Trees and the cultivation methods yet to have to see any biotech. Manufacturing is 100% hand work- no new technology; Materials have not seen new advancement. Products are not standardized for weight, stress, volume……quality certification, standardized price, marketing techniques…….Families cannot depend on these income. In that case, banning plastic containers is not going to improve their income. Collaborating with Chinese, Malaysian & Europeans Handicraft companies for their technology is the only one will bring some food on their banana leaves after they toil with the Palmyra leaves. Basically same formula is needed for Southern straw workers too.
Mallaiyuran / May 1, 2017
From DS time’s Galoya project to JR’s Mahaweli project, internal farming was taken care (mainly in south) at the expense of ignoring foreign exchange earning Estate Development and cash crop exports. These are biased retaliations rather than developments for all citizens. This is what eventually induced to sell women to Middle East to earn badly needed foreign exchange. We need foreign exchange to steer the country in parallel with the word.
$52 Billion loan cannot be paid back by improving local industries. Traditional industries farming, fishing, handicrafts are minuscule-d by size and number of mushrooming, Oil, High tech, automotive, furniture, assembled house building….Industries. We need them to pay back the loan and job creation. That will ease the tension between the majority and minority on cutthroat completion on issues of Sinhala only for jobs or Standardization for education.
I just tell a joke (not really) here. Tamils are too proud of their classical language. But they could not establish it even to Indian government. They went to fetch an advocate from California, USA, Professor George Hart. He did the trick and it worked with Indian government. Just feeling jealous at Whites and explaining it many other ways is not advancing. They know it; We need them. “If they can do it we can do it “is a slogan for future days. Not for looming loan interest.
A snail sliding a little bit and recoiling into shell is not progressing. Developed nations are flying rockets.
When entire world goes to North, we cannot follow Cuba to south. Cuba is not a modern economic power house. It’s a country left behind with 19th century ideological experiments. Singapore is on our door way. Ignoring it and going to Cuba is “kani iruppa, kAy kavarnthaRRu. (Consuming unripe sour, leaving ripened sweet”)-Thirukkural: 100 ”
Mallaiyuran / May 1, 2017
The essay is assuming the past of Lankawe after freedom is an experiment of Capitalistic economy. That is not correct; that did not take place. South Korea, Japan and Singapore alone are witness of where Lankawe would be now, if that experiment had taken place. So far there is no clear model is existing of empowering only the lower strata and having achieved economic miracle. Vietnam is minor example of own indigenous efforts. That’s all. But Finland, Denmark, Norway… are said to income better distributed countries than Cuba.
Why did we Build Hangbangtota Port? Only because Government wanted it. Is that what capitalism about? There was no shipping industry explosion necessitated that. It is same story with Mattala airport. This is not demand side stimulation and Dr.Gamage well understand that. So, government is the one who has to take off its hand from economy of Lankawe.
The building of Colombo megapolis is not what Colombo residents or Gampaha residents asking for. It is being done only because government wants it. China wants a job. Can Ranil put out an open tender for companies to quote on that? Will he give that out a western Company? None of them will undertake the same way nobody was prepared to undertake Hangbangtota project. Is that how Dubai, which is built it megapolis or any other UAB countries are selling their land to China? Why would one confuse really how the capitalist economy work with Lankawe’s robberies? What happened to EPF and Central bank? Why somebody calls that as what a Capitalistic economy is?
ETCA is not something like making contract with China to build a Megapolis. It is only a protocol laying down process for future trading. Dr.Gamage’s misinterpretation on that is serious defect in his arguments.
Siri Gamage / May 2, 2017
I thank you for elaborating further on your argument as to why we need foreign investments and technology. You provide very interesting and down to earth examples in support of your argument. I agree that we need some foreign investments and ethnology also to improve Lankave industries etc. But this has to be done on a case by case basis after a through study,investigation, analysis and policy formulation as part of a National Strategy. The South, North, East, West,Centre etc. requires unique plans to suit their needs and context.
But the current practice of going round the world with ‘a begging bowl’ and alienating our national resources and strategic places like ports to invite foreign direct investments in a large scale can have unintended consequences if not handled with caution.
There are local industries that need further expansion. They require more marketing help, resources to expand(currently they have to obtain commercial rate loans I guess), export markets to sell their products and services. Government has to support them to do this. Instead, what is happening is that the door is open for foreign companies to import their products and services to sell to our people. To add to this an import trade has grown by locals who import anything from used car parts to motor bikes, three wheelers, rice, spices, Ayurvedic medicine, drugs,sugar,cloths and everything that a human being needs and does not need. (IN Kandy town there is a night market where they even sell imported, used underwear together with other cloths.Can you believe?) To make things worse, anything produced in Sri Lanka are considered low quality. If imported best quality. This is our psyche.
Foreign debt has to be re-negotiated. But not with the aim of borrowing more and engage in the same game. This is what politicians and bureaucrats like. Unless there are $$s no projects, nothing happens. Wheels of bureaucracy don’t turn. If there is a white skinned consultant or advisor coming and giving advice the local authorities are wiling to listen. If a Sri Lankan gives advice, it is not advice. This is how the colonial mindset is ingrained in the day to day life.
How many products are there even from the North and East that the country can export? What sort of industries should be promoted in those provinces? Is there a government plan to attract investments from Tamil and Muslim expatriates to this region? (I understand many people depend on income received from their relatives who work overseas so they have become idle.). Instead of such forward thinking and planning, what the government is doing it seems inviting industrialists from India and possibly other countries to come and invest! What will do this to the provinces? Where will the profits go? What will be the labour control like by the Indians? Will the Indians marry some people in the two provinces and elsewhere and settle? How will that impact on the local population and its interests?
So there are too may unintended consequences of adopting FDI first strategy even though it may provide the government with some $$s to repay the loans. The other strategy of encouraging and promoting local industries etc. is a far better option to plan and promote – as you say with some limited foreign investments and technology- if we are to get out of the debt trap in the long term. Doing the same thing that has failed us for decades and building megapolis, Chinese city etc. will serve the interests of rich capitalists of the world via multinational and state owned companies(Chinese), and fill the offices and apartments with professional class from abroad and move the Sri Lankan working class, middle class further away from Colombo.
Asoka / May 3, 2017
Gamage touting failed ideas as usual. Leftwing economics is a faliure. Actually Sri Lanka is a very closed market. From Rata Perata onwards average tariff rates have become very high compared to Asia etc. This is being done in the name of protecting local entrpernuers but used to protect inefficent industries run by cronies (think of Dammika perera’s industries). Steel is another example where Rajapaksa cronies were given protection. Result is they got rich. Poor Sri Lankans got their house costs massively increase. And these people are talking about some national economy stuff.
Sri Lanka is in a perfect location. We need to globlalize.
Radical program of de-regulation and liberalization needed to go in the direction of a free market and free trade. Things needed
1) Removal of tariffs to match east asia
2) Simple taxation.
3) removal of arbitary rules
4) Privatisation of most state owned companies.
5) Skilled migration program and incentive program for expats to come back (this is how to solve knowhow)
6) Legal system reforms. Separate business courts run in private sector efficiency, greater reliance of arbitration should be encouraged (Port city this is the play of PM)
7) Special Free Economic Zones. Starting with Hambantota, where we import economic rules of Hong Kong.
These ideas are failures. Siri Gamage and the nationalists tried this since 2004, result is faliure and stagnation. This is what Venzuvela followed. Now the people in that country is eating dogs because of hunger. Cuba is not a model.
Hong Kong is a model. Australia is a model. New Zealand, Switzerland. If you are leftwing even Seweden and scandanavia, not these venezuvela failed policies advocated by misguided leftwingers like Siri Gamage.
Sri Lanka also desperately needs better educated professors of economics in university. Siri Gamages in the university system is a disaster with these type of silly ideas.
N Wimaladasa / May 5, 2017
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