Dr.Harsha de Silva on new foreign policy initiatives or ‘ Economic Diplomacy ’
Posted on December 4th, 2015

Courtesy The Daily Mirror

Sri Lanka’s foreign policy was misaligned with the economic policy in the recent past. the country lost the qualification to be a beneficiary of the ‘GSP Plus’      facility due to short sighted foreign policy. Export income which stood around 35% of GDP in 2004 declined to 14% last year.The  Prime Minister’s vision is to promote Sri Lanka as a trading country and it’s relations with the outside world as one of  economic diplomacy.‘Sri Lanka will pursue new policy initiatives and rebuild its relations’ he said The Prime Minister has also commented that in our international relations China is as important to us as any other country.

Addressing  the members of the United Professionals Group on Thursday, 26th November at Sri Kotha, Dr. Harsha de Silva said, The narrow and petty minded foreign policy  pursued during the last decade saw an  unhealthy downward trend  that  led to a decline of  the country’s economy.  An oft repeated slogan was that the UNP was conspiring with the US and the West to get rid of the then president who won the war for the country and western interests  were trying to engulf the country.  Sri Lanka was perceived as the black sheep of the global community as a result of this short-sighted foreign policy. The current dynamic market based trading economy , first introduced by late President  J.R. Jayawardena and continued to be  followed ,  is dismally misaligned with the foreign policy that was pursued  in the recent past.  The foreign policy did not support economic policy and as a result, it led to an unsustainable  equilibrium in economic  and foreign policy ”.

He went on to say that, due to this  high-handed attitude and failure  to address the issues properly,  the country lost the qualification to be a beneficiary of the GSP Plus facility granted by the US and the EU. Local industries, particularly the garment industry which provided employment to thousands,  virtually collapsed. This affected mainly the small and medium level garment factories but large companies that had contracts for branded products were able to survive. The employment opportunities  and livelihood available to  the people  therefore suffered.

Sri Lanka was blind to what was happening in the world and because of the paranoia  that Sri Lanka should not engage with certain countries, our relations with many economically influential countries have soured deeply and as a result,  the bilateral trade agreements , especially with India did not see the light of day. We  were  precluded  from negotiating  and including terms  more favourable.  Export income which stood at around 35%  of GDP in 2004 declined to 14% last year.  Instead of exporting goods and services of Sri Lanka, it was compelled to export ‘ human beings ’or practise ‘ neo-slavery ’ to earn dearly required foreign exchange. The poor workers  so  employed  were called by catchy phrases like ‘ RATA VIRUWO ‘ but there were hardly any gains for them .” Dr. Harsha added that the new government,  with the  vision and wisdom of our leaders,  President Sirisena and Prime Minister Wickremasinghe,   had  to think differently   and  take a fresh look at everything. We had to formulate and pursue a foreign policy envisaging  friendship with all countries,  that would ultimately benefit Sri Lanka in the long run. That is to say we needed  to  provide services to  our customer, meaning the world,  and then reap the economic benefits.  Kudos to Foreign Minister Mangala Samaraweera who painstakingly  rebuilt  our relations with many countries that were offended by the previous regime. The government’s  new thinking is that, we would not send people out but we will export our goods and services ”. Sri Lanka will invite investments that will help to produce exportable goods of high quality. We will try and enter the US market, the largest in the world on a higher scale.

He also said that the  Prime Minister’s vision was that Sri Lanka should be a trading country and it’s relations with the outside world was one of  ‘economic diplomacy’, which was a new paradigm.  Sri Lanka cannot depend on the global trade envisaged by the World Trade Organization or outcomes of the  ‘Doha round ’ which was not successful  but  engage with the appropriate regional economic groups  such as Trans Pacific Partnership (TPP  accounts for nearly 40 % of world trade ) and other mutually beneficial  bilateral agreements.  Vietnam, a country which had its exports around US $ 2 billion in 1990 almost on par with Sri Lanka, had grown to US $ 120 billion in 2014 compared to Sri Lanka’s US $ 11 billion. Vietnam will soon join the TPP .  Due to the new trends in  foreign relations coupled with  internal developments in the fields of democracy, good governance and human rights, Sri Lanka  had earned so many accolades, the country was invited to participate at the Open Government Partnership Conference  in Mexico where 66 countries participated. He had the privilege to participate along with Wijedasa Rajapakshe, Minister of Justice  at this conference.  Ms. Samantha Powers, US cabinet member of President Obama’s government and US representative at the UN,  in her address spoke eloquently  about Sri Lanka’s new developments in such glowing terms that our country earned tributes from many representatives present.  So,  considering all these aspects, the new policy initiative is economic diplomacy in foreign relations. Sri Lanka’s relations with other countries will be focused on it along with  other considerations like cultural ties  being  given due cognizance.  US will soon engage with Sri Lanka in further economic participation.”

In answering  a question from the audience,  Dr. Harsha explained that Sri Lanka maintained her good relations with China as before and would like to see more investments rather than loans from that country. The Prime Minister has himself commented that China was as important to us as any other country.”
Responding to another question, Dr. Harsha explained that the GSP Plus facility was not renewed due to our failure to enact  certain legislative requirements that were agreed upon.  However, these aspects are being pursued  with  vigour. An enormous amount of documentation is needed to be completed.

Germany  is keenly supporting our request to restore the GSP Plus facility which is expected  to be finalized next year.  USAID is also reconsidering the  extension of its facilities here.”   In conclusion, he reminded the participants of the famous quote from  President Clinton’s campaign: ‘It’s the economy that’s stupid  !’ drawing laughter from the audience.

Earlier, Mr. Kanishka  Jayasinghe, President UPG   whilst welcoming  Dr. Harsha de Silva stated:” This meeting was somewhat like the OPA’s  ‘ meet the people ‘ discussions  at which President Maithripala Sirisena himself  had participated then as a minister.  Today’s participants  include  members of  the National Association of Professionals in Engineering, Technology and Science (NAPETS ) and  the  Young Professionals Organization (  YPO) ”.   He said that since Dr. Harsha was a friend of all three organisations and because he himself declined a  formal introduction, he was  inviting Dr. De Silva to  address the gathering.  Dr. Mohan Abeyratne proposed the vote of thanks.
M.T.P. 

– See more at: http://www.dailymirror.lk/98235/dr-harsha-de-silva-on-new-foreign-policy-initiatives-or-economic-diplomacy?#sthash.MK0YkoRw.dpuf

8 Responses to “Dr.Harsha de Silva on new foreign policy initiatives or ‘ Economic Diplomacy ’”

  1. LANKAPUTHRA Says:

    Above article was published on Daily Mirror on December 4th 2015. My question is what is this Mee Haraka De Silva saying? “One has to maintain her good relationship with China as before? That means the relationship MR government had with China? This is the full story. Ranil Punk tried to audit all projects funded by China, but before that Ranil Punk tried to audit the Railway project by the prestigious Indian Company based in California, USA. Dr. Patel Chief Engineer and Director of R&D, told Ranil Punk to get lost and told him nothing will be audited with already signed contracts. Again Ranil Punk called Muslim OBAMA told him what happened. Don’t forget Ranil Punk was deported by Monmohan Singh’s Government. so he did not have VISA to go there. Muslim Obama then told him send Mangala Smareweera to meet the New Foreign minister and tell him to issue him a Diplomatic VISA on his new passport as the Prime Minister. He then told Prime Minister Mody, that he will never again ask for auditing any INDIAN projects. He came back with his tail between his legs.

    2. Chinese wanted Mee Haraka De Silva removed from Air Port and Hambantotta Harbor Projects. Again Ranil Punk Spoke to Muslim Obama and Muslim Obama through Dr. Mendis gave him the order that Mee Haraka De Silva should be given a different portfolio, so he was removed.

    3. By that time Mee Haraka De Silva has done enough harm to Mattala Air Port by getting Rice Commissioner to store Rice at the Air Port Terminal. Rice sacks were put on Computer terminals some got bent. He then secretly got his contractor to ship the them to Singapore to sell them there. No one wanted to touch them because they were state of the art proprietary systems and very few air ports had such systems. No one will touch them because Chinese government will take Legal action for any company that attempts to re sell them. Mee Haraka De Silva did the maximum harm to the Air Port, so that it will take Half Billion Dollars to put the Air Port in to action. WHY DID MEE HARAKA DE SILVA DO THIS? Because this Air Port and the Hambantoota harbor is the crown Jewels of Mother Lanka. It does not belong to MR but to the people of Mother Lanka. The history of the air Port and the Harbor are very long. It started with Canadian company Hunting Survey did a survey to find out of the fecesability of an air port. Then they realized that British, American and Australian air lines will loose passengers and they abundant the project, but for MR he never gave up. There are no Air Ports to Match this automated Harbor and Air Port in any near by country except in Los Angeles, California, USA. Birth 10 which is owned by Los Angeles Municipality. These other names in the article must know the history of this air port and the harbor, before asking Mee Haraka De Silva to address a gathering at the Air Port.

  2. sena Says:

    As he is alluding in the article he is prescribing exactly what JR did for which he got a big zero while increasing national debt immensely. No big multinational invested in his open economy. When Rajiv dropped parippu and pasted a forced agreement on his forehead to be signed and the West looked the other way, JR said Sri lanka has no friends. Those who forget the history are condemn to repeat it. With our freely educated professional idling and not building a knowledge based economy Sri lanka has to dance to the tune of donors.

  3. Cerberus Says:

    I am not an economist or a Doctor but by just Googling I got the following numbers for export performance in 2004 vs 2014. In 2004 overall exports were $ 5,467 Million from the World Bank statistics (http://wits.worldbank.org/CountryProfile/en/Country/LKA/Year/2004/Summary). According to the Sri Lanka Central Bank report in 2014 it was $ 11.113 Million. To my uneducated mind it appears that it had grown by almost 103% between 2004 and 2014. I am not sure where he pulled the numbers out of. I may be wrong but it appears he has different numbers to what is in the Central Bank reports. The GSP was removed because Sri Lanka did not cooperate with the Western powers and let Prabahakaran escape to the West as they wanted in one of the rescue ships they wanted to send for him. The moment the UNP quislings came into power and were bending over to please the Western masters the GSP was reinstated. The difference between aid from China and aid from the West is Chinese give it with no strings attached while the West which includes the IMF and World Bank always gives it with a lot of strings attached.

  4. Fran Diaz Says:

    Suddenly, after Britain received help from China, China is ok for Lanka to deal with. Rule Britannia !

  5. LANKAPUTHRA Says:

    It is disgraceful that a well educated person like Dr. Mohan Abeyratne proposed a vote of thanks to Mee Harak de Silva. What do you know about Mee Haraka De Silva. This is what I know. Go read the Hansard and you will find it. In the Parliament Mee Haraka made fun of Chinese Engineers. He said that there is ROCK in the channel so that even small ships cannot use this harbor. Chinese Ambassador went to Mee Harak De Silva’s office and told him that this rock will be blasted and the worlds largest container Carrier can berth here. Then he Invited Mee Haraka to visit the harbor. when he came with entourage, Sinhala work men stopped him for obvious reasons. He turned back and complained to MR. MR then called the trade Union leaders and asked them to allow him because he is the operation spokesperson for harbor and airport development. This is the time RANIL PUNK was making fun out of the military. LTTE is in Pamankada and not Ali Mankada. Remember soon after the MR lost Ranil Punk started to audit all Chinese funded projects. Remember suddenly Ranil Punk backed off and that is why Mee Hraka was removed. See how Mee Haraka started his sermon “Sri Lanka wants to have good relations with China. No wonder the meeting was held at SRIKOTHA? He has show up. In my opinion Mee Haraka has a PhD in Economics from London School of Economics, I do not think he can explain to some one what a qui Squared distribution is? I feel Mangala Samaraweera is taking his place and Ranil Punk wants some one to do Photo comparisons. Mee Haraka De SIlva hasn’t got that knowledge produce charts and distribution statistics. If Mee Haraka has a little bit of brains, he should take photographs and show that there are no ships at the harbor and state all because of MR. This Air port and the Harbor is an automated complex system that very few ports have. Mee Hraka destroyed it by getting the Rice Commissioner to store rice bags on the terminal. I can go on and on but for Dr. Mohan Abeyratne this adequate.

  6. Nanda Says:

    Cerberus,
    From the link you have given,
    In 2004, exports were 5.5 and imports 7.0. You can see below GDP = 20.66
    In 2014, exports grew to 11.3 but Imports rocketed to 19.2. You would like to read GDP =75 almost 4×2004.

    Now, if your consider as percentages , 5.5/20.6 = 26% and 11.3/75 = 15%. So, as a percentage of out total income it has gone down from 26% to 15%. You can see the widened gap on the graphs.
    From where the GDP came then ? Not from products. Must be people. Actually not so band we can produce people for export.

    Now please chose the country Malaysia.

    In 2004 exports = 126 and GDP = 125 more than 100% I don’t know how.
    In 2014 exports = 234 and GDP = 327 more than 72% also dropped but you can see the two graphs of imports and exports almost parallel.

    We can take a lot of bad examples, worse than us.
    But let us be positive and take Vietnam for inspiration,

    In 2004 exports were 26 and grew to 132 in 2013. GDP growth 49 to 171. Therefore the exports percentage improved from 50% to 80% . From the graphs you can see trade gap actually narrowed.

    In your link you can compare with a lot of other countries.

    I agree that IMF try to thrust their political agenda on us whereas Chinese don’t care. But Chinese too have their own interests.

    Anyway, this human export is not good for the country, as it is mostly middle east. When the oil dries out or if we go against Allah , we have no income left. So, basically from 2004 to 2014 Allah hu Akbar !

  7. Nanda Says:

    Beyond Politics – Government need to do something about this. We have to get rid of Ashok Leylands and 3 wheelers

    Sri Lanka transport reforms seen delayed by politics

    Dec 06, 2015 11:07 AM GMT+0530 | 0 Comment(s)

    ECONOMYNEXT – A Sri Lankan transport expert has called for a change in the country’s policy on vehicle imports saying excess capacity in many forms of road transport and unsuitable equipment raised costs with reforms delayed by politics.

    The country was spending 500 billion rupees importing mostly road vehicles and another 300 billion rupees on fuel imports, said Amal Kumarage, Senior Professor of the Moratuwa University’s Department Transport & Logistics Management.

    “We are mortgaging our future taking loans. It’s a policy that needs to be reversed,” he said. “Also there’s poor productivity on most vehicles – they are not productively used.”

    The services provided by three-wheeler auto rickshaws can be done with just one-third of the existing fleet.

    “It costs only six rupees per kilometer for the three-wheeler to travel, yet people pay 45 rupees. The difference is the inefficiency of the driver waiting just to have 20-30 kilometers of commercial running,” Kumarage told a recent forum.

    “We have excess capacity in equipment like buses, trucks and three-wheelers. We have more equipment than what we require and not much of good quality.”

    Kumarage said it was a politically sensitive issue with about 100,000 people in the land passenger transport industry and nearly a million driving three-wheelers and taxis.

    “A large number of people are dependent on transport for a living and that’s politically sensitive,” he said. “But to provide more money in the hands of transport providers is to increase inefficiency.”

    There also also an oligopolistic price system in transport with 2-3 operators powerful enough to set prices, from big players to three-wheelers at junctions, making the whole system less efficient.

    The country must look at spending less on fuel and reducing private vehicle imports and improve public transport so people don’t have to use private vehicles, Kumarage told the forum by the Chartered Institute of Logistics and Transport Sri Lanka.

    Vehicle standards also need to be improved to reduce accidents and emissions.

    “Ninety percent of vehicles coming here would not be allowed in a developed country,” Kumarage said.

    “The quality of public transport is poor with railways 75 years behind its time, buses 25-30 years behind.”

    Sri Lanka needs to ensure transport becomes an asset for development rather than a liability.

    “Today transport has become more of a liability,” Kumarage said. “In 2014 we spent around 11 percent of the value of what we do just for mobility – not even logistics – just movement of people.

    “So how can an economy be efficient when 11 percent of our effort is spent on just mobility? When mobility costs decrease exports will be more competitive.” (Colombo/December 06 2015)

  8. Nanda Says:

    DEFINITION of ‘Gross Domestic Product – GDP’ – This explains why GDP< exports in some countries ( Singapore).

    Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory. Put simply, GDP is a broad measurement of a nation’s overall economic activity.

    Gross domestic product can be calculated using the following formula:

    GDP = C + G + I + NX

    where

    C is equal to all private consumption, or consumer spending, in a nation's economy, G is the sum of government spending, I is the sum of all the country's investment, including businesses capital expenditures and NX is the nation's total net exports, calculated as total exports minus total imports (NX = Exports – Imports).

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