For a Socially-Equitable, Environmentally-Safe, Self-Reliant and
he recent declaration made by Finance Minister Ravi Karunanayake, in the midst of the government’s on-going campaign to shore up its foreign exchange reserves, that ‘no questions would be asked’ from Sri Lankan nationals who bring back to the country the monies that they hold in foreign banks – a move described by many as a virtual amnesty for foreign exchange remittance -- has triggered a diverse spectrum of public opinions supporting as well as opposing the idea.
While the opposing arguments are based mainly on the almost inevitable violation of legal and regulatory provisions, including those in the Money Laundering Act, supporting arguments simply tend to compromise those issues of legality and morality in favour of the expected short-term relief to the country’s financial system and the economy.
However, besides the legal and moral issues, the financial and economic risks that are often associated with such relaxation moves should be thoroughly studied in advance, particularly in view of such bad examples as those of Iceland, where the entire financial system of the country collapsed following the pull-out of funds by Britain and the rest of Europe in the wake of the European recession. For Sri Lanka, economists argue, prudent alternative strategies to attract foreign investments, including those from China and India, are needed to make the country an “Investment Hub” in the lines of Singapore and Dubai.
Certain issues prevalent in the complex environment of international trade and investment, merit our attention. For example, what is the strategic response of the Indian Ocean Region, including Sri Lanka to the ‘Trans Pacific Partnership’, which is effectively the Asia-Pacific strategy of the Obama administration for ‘Pivoting Asia’, in Obama’s parlance, that has been fast gathering momentum with countries surrounding China such as Vietnam, Malaysia and Singapore, in addition to Japan, strengthening economic partnerships across the Pacific? Another pertinent issue is the recovery of the US economy, which has seen the return of investment-funds that left US since 2008. In the meantime, the financial market crisis in China has affected the US financial markets. Thus US investments amounting to at least a few billion dollars, in Sri Lanka’s stock Market and Treasury Bonds, run the risk of divestiture.
Economic analysts mainly attribute the unrealistic economic performance statistics of the Mahinda Rajapaksa Administration, to two artificially-manifested growth bubbles: First the ‘credit bubble’ and then the ‘construction bubble’. The construction bubble is already bursting in the face of current challenges of the economy.
The financial and economic risks that are often associated with such relaxation moves should be thoroughly studied in advance, particularly in view of such bad examples as those of Iceland where the entire financial system of the country collapsed following the pull-out of funds by Britain and the rest of Europe in the wake of the European recession
In this context, what are the major reforms desired in the macro-economic environment for realizing socially equitable, environmentally sustainable, self-reliant, and stable economic growth?
The following five strategic objectives are identified, for the same, in the lines of an analysis by a contemporary Sri Lankan economist: Economic self-reliance for national independence; autonomy and freedom from debt; economic growth and resilience for national development and for reduced vulnerability to domestic and international shocks; economic equity for sustained social harmony and for greater domestic-effective demand; economic sustenance of the environment and natural resources and economic patriotism for valuing and upholding national products, assets and heritage.
Toward this end, ten spheres of economic activity requiring priority intervention are identified below (the sequential order signifying no ranking).
First is the stabilization of the monetary sector and the exchange rate, thereby mitigating the present issues of exchange rate and balance of payment. Second is the increase of fiscal revenue through rationalizing the tax regime. Third is the managing of public debt where the comparative figures for Sri Lanka rank high. Fourth and fifth respectively are measures towards attracting more FDI and promotion of export and trade. Sixth is the development and stabilization of capital markets. Seventh and eighth respectively ensuring efficiency and effectiveness of State-owned enterprises and development of small and medium enterprises sector. The ninth is the power and energy sector, for which a comprehensive development plan titled, ‘Sri Lanka Energy Sector Development Plan for a Knowledge-based Economy 2015-2025’ was developed and launched with the objective of achieving energy self-sufficiency by 2025 and 100% green energy by 2035 with wide participation of all stakeholder groups in March 2015 during my tenure as the minister of power and energy.
The key thrust areas comprehensively covered in the development plan include: Integrated national energy policy formulation; a cleaner future through green energy; conservation and efficient use of energy as a national priority; Customer satisfaction in service and quality; timely development of infrastructure; efficient energy sector institutions and good governance; innovative financing for a diverse energy sector; and investment in R&D for cutting-edge product development.
The tenth area for priority economic action is Research and Development. A comprehensive ‘National R&D investment Plan’, based on ten thrust areas and ten types of strategic interventions with a view to facilitate transformation of our national economy into a knowledge-based, innovation-driven economy was developed in 2014 during my tenure as the minister of technology and research.
The plan specifically advocates the increase of R&D related investments by the public and the private sectors to a minimum of 1% of GDP to ensure rapid ‘multiplication effect’ on the economic output.
As for the foreign policy environment, it is almost a foregone conclusion that in pursuit of our geo-political as well as economic interests, the guiding principle should clearly be ‘non-alignment’, decidedly avoiding any irrational allegiance to any of the global geo-political power centres, be it Washington, Beijing or elsewhere.
As regards the UNHRC Resolution, although it was disadvantageous to have been in a position of co-sponsoring, it nevertheless provided a vital opening to avoid a large-scale containment of Sri Lanka by the West using the human rights issue.
With the resolution mandating an investigation into war crimes, its provisions should be effectively used in the first place to appropriately deal with the war crimes and gross HR violations perpetrated by the LTTE terrorists.
While effective measures should be taken to control the free flow of historically-unfounded and socio-politically invalid ideals of separatism, propagated abuse of democratic freedoms, the Tamil society should decisively end its susceptibility and gullibility to those destructive ideals, which have only proven to serve the interests of the opportunistic political survival of their proponents, at the expense of gross destruction to the whole nation and to the Tamil society in particular, certain sections of which may still need a decisive shift in ideology from the Utopian paradigm of ‘separatism’ to that of a ‘socio-economically advanced and geo-politically strong one Sri Lankan nation’.