SL failed to capitalise on strategic location: Verite Research

By Nishel Fernando

Despite decades of celebrating its strategic position, Sri Lanka has fundamentally failed to capitalise on its prime location, a critical factor that remains the key to unlocking its potential as a developed nation, asserted prominent economist and Verite Research Research Director Subhashini Abeysinghe.
Speaking at the CA Sri Lanka Tax Symposium in Colombo yesterday, Abeysinghe delivered a stark critique of the nation’s economic strategy, arguing that a reliance on outdated industries and a protectionist mindset have squandered the immense opportunities offered by its geographical advantage.
“Sri Lanka has been boasting a lot about location, connectivity and we have been living in a region that has been growing the fastest but what have we done? With all the locations, we have hardly made use of it,” she stated.
Abeysinghe pointed to the success of other small nations like Singapore, Hong Kong and Taiwan, which have leveraged their locations to become global economic powerhouses.
“Hong Kong and Singapore realised they have only one thing: the location. Let’s do everything possible to make the location work,” she explained.
She contrasted this with Sri Lanka’s approach, which she argued has been inward-looking and focused on protecting legacy industries rather than fostering innovation and competitiveness for the global market.
“The real challenge for Sri Lanka is that two-thirds of what we have. We have tea; we have apparel. These are comparative advantages of the 80s and 90s. That’s not the model for the growth we want. That’s not the way we want to generate foreign exchange.”
The economist criticised the nation’s export and investment strategy.
She stated, “We are not thinking of what the world needs. That is the mindset change we want to see. If you want to produce for the world market, you need to constantly understand what the world needs.”
She highlighted Taiwan, a country with a similar population size but half the landmass of Sri Lanka, which has become a geopolitical linchpin by producing over 50 percent of the world’s advanced computer chips. This was achieved, she explained, through the creation of science parks that fostered collaboration between the universities, private sector and research and development entities.
Abeysinghe also drew a sharp contrast between Sri Lanka’s policy of protecting the struggling industries and South Korea’s model of rewarding success. 
“South Korea is exactly the opposite. They actually kept on giving subsidies, giving assistance to the companies that succeed and withdrawing assistance from the companies that fail because that is doing justice to the taxpayers’ money.”
For Sri Lanka to progress, she concluded, it must shift from protecting the vulnerable sectors to actively promoting the industries with global potential by facilitating access to technology, skills and the necessary infrastructure.