Editorial Courtesy The Island

President Maithripala Sirisena, speaking at a gathering of North Western Province entrepreneurs in Kurunegala on Saturday, highlighted the all-pervasive ill-effects of unbridled economic liberalisation. Citing an example, he lamented that children no longer engaged in the pleasurable pursuit of making kites; instead, he said, they flew imported kites the local market was flooded with.

Time was when children not only made colourful kites, Vesak lanterns etc but also fashioned toys out of virtually anything they got hold of. But, no longer are they interested in any such leisurely pursuits thanks to cheap imports and screen-based entertainment. Their mindset represents, in microcosm, the world view of Sri Lankans in general and their rulers in particular. President Sirisena went on to stress the need for protecting local industries and being cautious in handling foreign investment. Some foreign investments were even fraught with the danger of undermining the country’s sovereignty, he said.

One cannot but agree with President Sirisena on this score. But, the question is why the yahapalana government’s policies are out of sync with his. Take the leasing of the Hambantota Port to China for example. The government has had to lease the Trincomalee oil tank farm to the Indian Oil Company (IOC) to placate India. What it will have to offer to the US and other world powers which want to have a finger in the Sri Lankan pie is anyone’s guess. Warships of powerful nations which don’t reciprocate Sri Lanka’s friendship now call at the Colombo Port the way feudal lords used to pay unwelcome visits to their vassals’ wives and daughters!

Unequal contest is disastrous for local industries which need state protection for survival, as is common knowledge. The government has put the Sri Lankan footwear industry in jeopardy by allowing an India leather giant to set up shop here as a Board of Investment project. This will cause many local footwear companies to shut up shop. It is not being argued that the door must be slammed in the face of foreign investors in the name of protecting local industries. There has to be healthy competition. The IOC’s entry into the local petroleum market jolted the Ceylon Petroleum Corporation (CPC) into transforming its ‘cowsheds’ into modern filling stations and improving its service. But, it will be a colossal blunder to allow the IOC to gobble up the CPC and monopolise the petroleum sector. Blatantly lopsided economic pacts with other countries will be the kiss of death for the local industries. The ETCA (Economic and Technological Cooperation Agreement) is a case in point.

It is also imperative that big-time Sri Lankan companies, driven by corporate greed, be restrained from endangering the survival of small businesses. The ever expanding supermarket chains with some of their suburban outlets the size of village kades are driving small-time retailers out of business. This presages trouble for the consumer who will eventually be at the mercy of ruthlessly profit-seeking supermarket giants.

Dirigisme is, no doubt, an anachronism in the modern world, but the onus is on the state to make interventions wherever necessary to prevent the exploitation of the public. Nowhere in the world is found perfect competition which is said to make the consumer the king. Markets are always manipulated by cartels which are the order of the day as evident from the increasing prices of rice in the local market. There has been no shortfall in the paddy supply, we are told, but the rice prices continue to rise. The same goes for coconuts whose farm-gate prices remain relatively low; the middleman is obviously making unconscionable profits at the expense of producers and consumers.

Now that President Sirisena has convincingly argued his case for protecting local industrialists and treading cautiously in accepting foreign investment, he ought to prevail on his coalition partners to operate within the ideological parameters he has set. He should ask his Finance Minister why there has been a budget proposal for a para tariff reduction which will suddenly expose local industries to stiff external competition without sufficient time to adapt and shift their production into new areas. This ill-conceived measure could create short-term unemployment, take its toll on economic growth and, therefore, warrants a rethink. Let the President be urged to tell anyone who refuses to toe his line to go fly a kite.