15 August, 2020

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Sri Lanka Reflects A Trend Of Leaders With Military Backgrounds Doing Better In Asia

By Arjuna Mahendran

Arjuna Mahendran

Several Asian countries have, from time to time, turned to leaders with a military background to restore their economic fortunes at times when civilian administrations were found not upto the task. In the aftermath of the Korean war, the so-called East Asian ‘flying geese’ countries’ economic transformation under the stabilising influence of military leaders commenced the East Asian recovery. Their example was subsequently emulated in Thailand, the Philippines and Indonesia. A defining feature of these periods was a focus on maximising investment and moderating excessive growth in consumption. This experience bears some lessons for Sri Lanka as it emerges from the double shock of the Easter bombings and Covid-19.

After the second world war, Japan (under General MacArthur), Taiwan, and South Korea witnessed the emergence of leaders with military backgrounds who set in motion development programmes for their respective countries, which emphasized investment over consumption. They benefitted from generous flows of aid under the Marshall Plan and the presence of large US military bases, prompted by the desire to keep communism at bay. Crucially, these countries prudently opted to funnel the aid flows into investment rather than adopting populist measures to facilitate excessive consumption.

In stark contrast Pakistan and Burma, which also had military governments, could not hope to secure funding from the fading British empire which had lost its financial might after world war 2 and was rapidly disengaging itself from the subcontinent. In fact the entire subcontinent which had favourable sterling reserves after world war 2 and the ensuing Korean war, proceeded to squander those hard currency reserves in the 1950s and 1960s on populist vote-buying consumption-oriented economic policies. This ‘tale of two Asias’ explains why East Asia and ASEAN nations pulled rapidly ahead in the development stakes, leaving the subcontinent trailing. However, the inclusion of Pakistan and Myanmar on the China Belt and Road project has reversed the under-performance of both countries in recent decades.

Singapore’s Lee Kwan Yew once remarked, ‘imagine what it would be like if Suharto let Indonesia became another Burma’. Mr Lee’s comparison of Mr Suharto and Mr Ne Win of Burma in the early 1960s was stark but drove home his point. Had Mr Suharto followed Mr Ne Win’s road to socialism, Indonesia would have sustained slower economic growth, ASEAN would not have come into existence, and the Southeast Asian export-led economic miracle might not have happened. Indonesia’s economy grew rapidly under Suharto’s group of Berkeley-educated technocrats and has prospered thereafter as a thriving decentralised democracy. A key element of Suharto’s success was his policy of ‘dwifungsi’ or “dual function”. This was used to justify the military permanently increasing its influence in the Indonesian government, including reserved military-only seats in the parliament, and top positions in the nation’s public service. Key appointments of persons with military backgrounds were made in all levels of government in Indonesia, including city mayor, provincial government, ambassadorships, state-owned corporations, the judiciary, and Suharto’s cabinet.

The region has moved on from such extensive involvement of the military in the day-to-day running of countries’ affairs. But successive regimes led by General Prem in Thailand, (1980-88), General Ramos in the Philippines (1992-98) and General Yudhoyono in Indonesia (2004-14) provide useful illustrations on how leaders with a military background can build consensus when internecine disputes among factions of political elites result in their inability to agree on how to resolve burning national issues related to internal security and economic policy. All these countries witnessed for brief periods, increasing policy paralysis as elites bickered and the bureaucracy remained rudderless on the sidelines, until the soldiers entered the political fray and restored a sense of direction. I believe Sri Lanka encountered just such a situation in 2019 when it elected retired Col. Gotabaya Rajapaksa as President.

It can be queried whether the lessons from the south-east Asian experience of neo-liberal trade and investment-driven policies are suitable for the post-covid world where trade protectionist barriers are rising globally. That issue will take time to be resolved, as the epidemic shows no signs of abating and the outcome of the November Presidential election in the US will have a strong bearing on the outlook for global trade protectionism. But closer home, there is a need to boost domestic savings which lag regional peers. Sri Lanka’s national savings ratio is around 25 percent which is much lower than Thailand (34%), Indonesia (33%), Myanmar (30%). This matters because the 27% of national income that Sri Lanka spends on investment is clearly insufficient to propel economic growth to above 5% annually, a rate of growth which necessarily must exceed the average rate of interest which the country pays on its external debt. Hence the government’s push to raise investment activity is a step in the right direction. It has to be accompanied by a corresponding rise in domestic savings. It is quite likely that domestic savings will rise in Sri Lanka in line with global trends, as people consume less in the face of greater uncertainty about the future. Already there are signs that local investors are channelling their savings into the domestic bourse as foreign investors exit. Funnelling these savings into viable investment projects will be key to successful economic recovery in the medium-term. The stabilisation of the value of the Rupee against the US Dollar suggests that flight capital leaving the country has now abated. This is an important development when considering that the steep fall in the Rupee against the US Dollar between July 2018 and June 2019 resulted in the consequent reduction of Sri Lanka’s per capita dollar income and a consequent relegation of the country to lower middle income status.

Significantly, the Sri Lanka government has already implemented measures to encourage the banking system to keep up the pace of lending and skew bank lending flows away from consumption and towards investment. This would not have happened under the laissez-faire approach adopted by bank regulators in the past which resulted in banks ramping up their lending activity towards funding consumer activity which gave banks high short-term returns under a high interest-rate regime. An example of this was the reorientation of the NDB and DFCC away from their deliberate focus on project lending by broadening their scope to encompass retail consumer banking which arguably diluted the national effort to stimulate greater flows of direct investment. The recent imposition of import controls has likely dampened the prospect of another consumerist lending binge after the forthcoming general election. What is called for now is a higher degree of coordination of investment planning and promotion activity between the relevant ministries, banks, the BOI, EDB, SLTDA, IDB etc. which will give banks a degree of confidence in their lending plans. Refinance schemes are already in place to funnel bank credit into priority sectors. These measures should further strengthen the domestic agricultural, construction, tourism and SME sectors which will foster reasonable growth of the economy. Keeping the supply side of the domestic economy strong is key to ensuring no resurgence of domestic inflationary pressure, in the face of greater monetary outlays.

The decision to continue to expand coal-power capacity is timely in anticipation of the rapid growth of the Port City and East container terminal in the medium-term. In the longer-term there is the potential to capitalise on Sri Lanka’s existing concessional access to the EU markets by ramping up manufacturing and agro-industries. Efforts to develop a manufacturing zone in the Hambantota port vicinity were abruptly halted by the previous regime in the face of public protests. The post-general election period may bring about more clarity on the new government’s intention to resume the development of the Magampura master plan extending the urban infrastructure around the new port and airport in the south. The completion of the extended southern highway opens up new possibilities for locating logistics and manufacturing spaces over a larger hinterland which may face less public opprobrium, than before, when implemented. Sri Lanka has not developed a new export processing zone since the late 1990s but an opportunity now presents itself in the post-covid period, to invite investors to build new zones. Given the land-scarcity in Sri Lanka with its dense population, building new zones are desirable since they make it easier for investors to rapidly secure space with clear title. Historically the BOI has always been able to easily fill new zones with industries and warehousing once built and I have no doubt that this will work once more.

The strategy outlined above of raising investment flows through clear and credible guidance to the banking sector, combined with the facilitation of economic zones is precisely what successful south-east Asian nations did when they grew their economies rapidly from the 1980s onwards. Sri Lanka missed out on that momentum because of the civil conflict. But the election in 2019 of a President with a military background who favours working with technocrats hints at a bright future for the country as it puts behind it the fratricidal politics of divided elites who were demonstrably incapable of maintaining domestic peace and harmony nor credibly articulating the economic way forward. History tends to rhyme. Leaders with military backgrounds were mostly responsible for the emergence of Asian miracle economies over the last 70 years. Now it is Sri Lanka’s turn.

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Latest comments

  • 15
    4

    So, Arjuna Mahendran is becoming Gota’s newest and most ardent supporter!
    .
    I’m too old to be readjusting my thoughts all the time. Young people had better look sharp. It’s your future that is at stake.
    .
    Two highly sophisticated persons have told me that this website is blocked:
    .
    https://www.lankaenews.com/
    .
    Yet I can access it. There’s a lot of news in the Sinhala Section, but
    .
    Some drug rehabilitation centre in a place called Kandakadu in the Eastern Province appears to have reported 252 new cases of Coronavirus TODAY. That’s the news in Sinhala. English hasn’t been updated since that significant report by the Alliance of Independent Professionals on June 30th. I can’t read Tamil, but there seems to be little there, either.
    .
    I hope that other readers will try to make sense of what is going on!

    • 12
      4

      Yes Arjuna seems to be plotting a come back

    • 12
      2

      Mr. Arjuna Mahendran is lavish in his praise of military leader, including the yet-to-deliver Gota. As one who believes that there is no smoke without fire, I wonder what high appointment is being prepared for Mr AM ? If Karuna could be an SLFP vice- president after killing hundreds of soldiers, what’s a mere bond scam, eh?
      There is no denying that AM is a good economist, ( maybe too good for his own good? ), but efficiency is the order of the day under Gota.

    • 14
      3

      We live in strange times no doubt!. Arjuna Mahendran alias Harjan Alexander is changing colours like a Chameleon. Has he been advised by his Mentor Ranil.W.to attempt to strike a deal with President Gota? If Sergeant Sunil Ratnayake who was given a death sentence could be pardoned why not Alexander the Great!?

    • 5
      0

      I thought AM may be not criminal. But srilanken media report it futher the he is alleged criminal.

      The very same allegations are on Rajapakshes be them Gotler, Namal, Mahinda or anyone else in that crook family…
      :
      So this may be the reason, why AM feels that MILLITARY leaders have been doing well in Srilanka, or this man should have been on his head to see it really.

      As our good commenter Mr SM has addeda above second covid cluster cases has gone up rapidly today.
      :
      MaCO has made it very clear that his warnings as an EC which they issued 3 weeks ago, is still not gazettled by Gotler s administration. People should raise the question why ?

      https://www.youtube.com/watch?v=bkB0-wFloB8

    • 4
      0

      Dear SM,

      Please listen to the video below… I think I could agree with Hirunika fully. I think anyone with some sanity would have to ..
      .
      https://www.youtube.com/watch?v=sS2vIJTD8u8

      See we enjoy the oil price reduction of 15% for the last 4 months but you guys dont even raise the question as to why bitch s sons dont care about any kind of price reductions … oil prices are connected with almost everything ina country. ::::

      What have they been doing with the funds being manipulated by the govt ? Where is the transparency and accoutablity ? RTI and others were implemented by previous govt.. today media dont even raise any crucial questions.

    • 3
      0

      Dear SM,
      .
      see how come they have not gazetted it yet.
      .
      http://www.dailymirror.lk/breaking_news/General-Election-EC-wants-health-guidelines-to-be-gazetted-soon/108-191706
      .
      If school going children would be caught by the virus, how quickly the numbers could go up …. the real danger before the people is really hight Mr SM.

      • 0
        0

        If a plane would be ready to start – but technical staff would not do the job well – plane loads of passengers would have to face anxities… likewise, bitch s sons led srilanka today play with innocient people and their vulnerable mind set for their political survival.
        I have no doubt that the numbers of COVID cases would go exponentially in Srilanka in next few weeks. So that holding an election would remain to a dream.
        :
        Not holding elections, but first protecting the nation from being caught by the virus SHOULD be made clear to the nation:
        .
        MEDIA institutions, over to you- please act independently but being morally and ethically be bound so that the message could WAKE Up the nation caught by Rajapkshe crocodiles.

  • 8
    5

    A very impressive write up from Arjun Mahandran.

    Who is Arjun Mahendran is irrelevant and beside the point.

    Let us look at what he says, not who says?

  • 5
    4

    Dear Sir, Mr,. Sinhala_Man,
    I highly doubt if the author of the article is the real Arjun Mahendran ( AM) , former governor of the Central bank, or any pseudo- author claiming to be AM. There are many sophisticated media units of several movement and opposition members who’d harp on any leads and create and circulate misinformation.
    Be sure to verify any electronic info you receive before enacting on such. We in Sri Lanka live in a world of misinformation and fake news, that too when such are originated from the state media institutions.

    As said by you, the next generation of Sri Lankans need to be more aware, cognitive and above all be active about whats happening in and around them socially, spiritually , and also politically.

    • 6
      1

      Dharshana W,
      if it is the case, CT is reponsible to have published unauthentic articles. Please CT … OVER TO YOU !
      confirm us if the author by name A Mahendran is the same person who is alleged to have been the master mind of central bank bond scam .. Thank you. If you would further allow any fake WRITERs to abuse your WEBSITEs, that will definitely destroy your recognition already achieved over the years. We always respect your websites and are thankful to you and your courage.

      • 1
        2

        His photograph is there!
        .
        What more do you want? NIC number? And all this asked without marching up to Gota and telling him that when his nomination was accepted we hadn’t checked his citizenship.
        .
        Perhaps, I should start questioning whether I am me.
        .
        I suggest that Dharshana W. should read up on subjects like solipsism:
        .
        https://en.wikipedia.org/wiki/Solipsism
        .
        If Dharshan desires it, I can show him a photograph of myself by providing a link to one of the handful of articles written by me.
        .
        PaniniEdirisinhe (NIC 48 3111 444V) aka “Sinhala_Man”

        • 2
          0

          Dear Sinhala Man,

          Not many are that genuine as you are. So it is not about you. I believe AM is playing with srilanken govt knowing that srilanken rulers would never catch him even if he may be guilty of the bond scam. May well be, Mahinda Rajaakshe and his involvement in that bond scam is multiple time more than anyone elses. The real face of Mahinda Rajakshes is not yet known to srilankens.

        • 0
          0

          SM,
          until Udayanga Weeratunga was caught by current govt, his was also everywhere and made published that he was on the INTERPOLE list. But I dont believe that his name was on the list.
          Srilanken state published it misleading its own people. Manipulating the naive mindset is premediateed act of Rajapakhe politics. This should be exposed by Srialnken media. But media is the most powerful mafia than the drug trafficking inthe country today.
          May be western world recognizes AM as genuine than srilanken Mahinda Rajapakshe. Mahinda Rajakshe is though a populistic leader for rural masses in the country.
          :
          Now Udayanga Weeratunga a man who is believed to have robbed out billions in Sirlanken currency regarding that MIG purchase deal. Sirisena govt deliberately avoided catching him becasue Rajapakseh could go into jails if UW was then caught.

    • 9
      0

      Leela,
      There is no doubt that Arjuna M could write an article like this. He is highly educated (even if he is less than honest). He was the BOI Chairman in 2002. He spent a lot of time as a senior banker in UAE. So there is no doubt about his ability, unlike Nivard Cabral.

      • 1
        0

        I dont believe that AM is on the list of INTERPOLE. So was the case with Udayanga Weeratunga who is now on bail thanks to Rajakshe brothers.. If any alleged high criminals would be listed in interpole searches, they would not be able to escape easily. This is not a joke.
        And how can the kind of alleged criminal be allowed to publish articles from their hideouts ? How can CT or any other websites be unaware of the truthful and reliable information of their columinists ?
        :
        I think all is clear with AM and he knows it very well as a singaporian, that he is no means guilty for the inevitable system error that had evidently repeated in the high days of MR ‘s govt than that of MS-RW. MS himself kept the information away from the release and may be JVPrs exaggerated going an extra mile. JVPrs are hearted but their dont seem to have the political maturity about srilanken local politics. What can politicians do if people would stay stupid eternally ? General knowledge of the people in SL are similar to that of Pakistan – even if Pakis’s literacy rate is not even 40%. Buddhagama beliefs have made the average people stupdier over the years.

      • 0
        0

        OC
        You have captured the characteristic English understatement with “even if he is less than honest”.

  • 7
    7

    Investors, local as well as foreign don’t care much for democracy. What they want is political stability. Some people keep on boasting about democracy in Sri Lanka but that did not create the right environment for promoting investors which is a pre-requisite for economic development.
    Under the democratic system Sri Lanka had since independence, this country produced a Sinhala megalomaniac terrorist in the South that played havoc on two occasions, a Tamil megalomaniac terrorist in the North who played havoc for three decades, racist separatist Tamil politicians who played hell for their political advancement and Wahabi Muslim terrorists who never allowed this country to have peace, security and political stability.
    With the democratic system and ‘Wal Booru Nidahasa’ we had Sri Lanka failed.

    • 6
      3

      Dear Eagle,
      “With the democratic system and ‘Wal Booru Nidahasa’ we had Sri Lanka failed.”
      Didn’t you take your pills today? Why have you forgotten to blame the colonial parasites?
      Or are you admitting that the colonial parasites did a much better job of running the country than Native Sinhalayo?

      • 0
        3

        This comment was removed by a moderator because it didn’t abide by our Comment policy.

        For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2

      • 8
        0

        OC,
        .
        No point of talking to Eagle Evil, who is proved to be demented person: He does not seem to have any other terms than
        .
        Native Sinhalayo
        Wellala caste
        Rajapakshe brave leaders instead born bastards
        :
        I have no doubt men of EE nature are totally isolated in their mental asylums. :
        :
        OC@ what happened to our beloved BOY – Pasqual ? There are rumours he should have been dead by COVID… is that true ?

  • 6
    3

    The author’s presentation is objective, rational and realistic. Instead of calling names, the substance should be passed through the prism of implementability. When Lenin said “Give me ten revolutionaries and I shall overturn the world” he referred to the difficulty of identifying that breed even in such meagre numbers. The CCS was a dying service since 1963 and is long since not even visible.

    Of late public service is a mere nursery in which talent shows itself and moves out abroad, or to the private sector or for self – employment. In the coming days, months and years if number one be gutsy and self-willed, the abler ones will be picked by his own criteria, E- Code and Service Minutes notwithstanding. Reflected Authority will become the order of the day.

    • 0
      0

      CCS was dead and buried in 1963 and reborn as Ceylon Administrative Service, renamed as Sri Lanka Administrative service after 1972
      .
      Hundreds are recruited every year and it is no match to CCS.

      However SLAS has to hold higher managerial responsibilities with development added to their job description.

      Prof C.Suntharalingam resigned from CCS during colonial era,claiming that he was not born to issue only gun licences.
      That in a nutshell sarcastically denounce he list of duties assigned to CCS officers.

  • 10
    3

    Arjuna Mahendran talks about investment under military but failed to mention anything about Buddhist Sinhala Fundamentalism and instability. Not a single nation prepared to invest for a military government. He thinks the militarisation can stop people revolution when there is no food to consume and people die from poverty. Day by Day Buddhist racism rise its peak under military dictatorship which end up in bloodbath every 10 years is a characteristic of Srilanka.

  • 12
    4

    AFTER AUGUST 5TH THERE WILL BE A SPECIAL TASK FORE FOR ECONOMIC REFORM AND THE HEAD OF THIS WILL BE NONE OTHER THAN BRIGADIER ARJUNA MAHENDRAN.

  • 0
    3

    People are tired of the mismanagement by governments elected by the flawed proportional representation system. President Gotabhaya Rajapaksa has lived up to his expectations by controlling the COVID-19 pandemic, drug mafia and bringing some discipline to the administration by appointing capable military officers.

    He needs FDI and foreign aid to accelerate the economy hard hit by the Covid-19 impact. After the election, he needs to review the Japanese funded Light Railway project and the road development projects under the MCC grant aid, even if opposed by his parliamentary group.

  • 2
    4

    Dear Sir

    Thank you for the article. We could have done a lot in the past 10 years under Hon MR since 2009 if not for the TNA wasting time on “Constitutional assembly” and Provincial Councils and the “cost of elections” and the further delays in Nation Building and brining people together activity. What a squander for the nation this folly allowed in the parliament to state they are not responsible and is the LTTE and they have nothing to do with the death and misery of the our beloved Nation.

    Now having heard the criminals speak (who are awaiting trail for their killings in Jaffna) am glad we are entering a stable leadership period for a discussions in Nation Building. This can only be done after this folly are all put away behind the bar for their connivance with foreign agencies in the first place and their crimes in Jaffna since 1970 specifically.

  • 2
    2

    It is everything OK with Lankawe economy. You support anybody you want, thinking can help you to get out of the mess you and Ranil created. But take the past as lesson before you plunge into something new. Show some capacity to learn, beyond your economic lessons you want to teach to others.

  • 5
    2

    If the writer of this article is the same Arjuna Mahendran who was involved with the Bond scam and now under Interpols search list it is not a difficult task to bring him back by Gotabaya Rajapakse who brought back KP to the country but later released him without any legal investigation. It clearly shows the Mahinda Rajapakse family government and Ranil government still have some close relationship with him. They do not want arrest him or charge him because like KP, they would have benefitted from Arjuna Mahendran. It is surprising why Buddhist Sinhala Buddhists are silent.

  • 2
    1

    Atjuna

    Dont worry Gotha who conquered COVID 19 single handedly by catching them and roasting them will turn the Economic Fortunes around even though he failed in the US as a businessman

    • 0
      0

      Now, he is teaching economics to Royals, but when he was CBG, he didn’t do anything better than sheepishly copying and getting caught the fraudulent bond trading system of Cabal, who seems to be the inventor of that crooked system to fund the war. The climax is current Military leadership, in November, 2019 campaigned to capture and bring this guy back to Lankawe in order to get Sinhala Buddhists’ Votes. I think not just Tamils even Sinhalese believe the nature of the things in Kaliyukam. That is the only explanation for why this guy is praising and pontificating the down rotten hellish Hitler Government.

  • 0
    0

    Arjuna Mahendran mentioned in this article a number of countries-Thailand, Philippines, Indonesia, Burma,South Korea and even Singapore that had accelerated economic development due to military rule.

    He recommends more investment than consumption as a secret of success.

    We have to examine whether these claims could be validated.

    If so is it due exclusively military rule or any strong government could achieve the same results by adopting similar polices, but democratically.

    Or a little bit of totalitarianism could play the trick.

    • 0
      0

      ” He recommends more investment than consumption as a secret of success.” That is a complex notion. He might do this after hearing King bashing the CB employees recently. He probably suggesting that the belt tightening time is on the horizon like was in NM Perera time; though like time that need not to uplifts Lankawe to Miracle of Asia. Demand high at higher price should be there to supply take place to produce at the possible cost. All countries are freeing lot of money to consumers to re-boost their slackened economies. There is perceptual ideal (optimum) ratio for each economy that what the best combination of spending and saving is. There is no single formula for all economies. There is no perfect calculation possible, but by studying the systems of the economy in question, economists can say whether people have to consume more or save more. Economist in the world now thinks people shod spend.

    • 0
      0

      US government is giving it Covid- 19 payments in dated debit cards. People get those have no other way but to spend it soon (Though they can save what is in their bank account). Any kind Investment has a cost. It is easy to understand when it comes as loan. The ROI of the project should be higher than Interest, for loan capital start to yield benefits. That is why the massive loans poured into White elephants are only costing the sovereign Lands in Lankawe to China. Same case with Garments industry, Estate Industry too. Belt tightening of consumers is not the solution. Belting the Politicians and CB managers is the solution.

  • 0
    0

    No decent country should have a military dictatorship.Eventually they will fail as it is not the trend.

  • 1
    0

    *
    AM says:
    “Leaders with military backgrounds were mostly responsible for the emergence of Asian miracle economies over the last 70 years.”
    Which Asian Miracle economies have had military rulers in charge? South Korea? Taiwan? Hong Kong?….
    Singapore shone better under the present military man’s father. Bangladesh whose economy is taking an upturn shed its military rule 20 years ago.
    I think that the writer is trying hard to strike a link between Singapore and Sri Lanka. That should delight folks who still dream of making this country another Singapore.
    *
    You may have heard the Tamil proverb “சோழியன் குடுமி சும்மா ஆடுமா?”
    (Sorry a good translation escapes me. I will paraphrase it as “The cunning one does nothing without purpose”.)

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