RENAISSANCE OF THE ECONOMY OF SRI LANKA
Posted on November 3rd, 2018

BY EDWARD THEOPHILUS

The change of political administration Sri Lanka has given an opportunity to a renaissance of Sri Lanka in relation to many aspects of the country, which may be different areas.  Terrorist war in the country had caused to backward the unity and the economy of the country, however, the strategies used by Mr Mahinda Rajapaksa’s government was able to eliminate the terrorism and the economic policies had been used by the former government under the leadership of Mr Ranil Wickramasinghe created a mess in the country in relation to many aspects.  The new political and social environment created appointing former president Mr Rajapaksa to Prime Ministership would be a convincing chance to many reforms and uniting the country as a one nation and renaissance of the economy

The economy in modern era divulge as a dynamic and idiosyncratic force that reflect the power of a country and it is subject to changes by the influences of macroeconomic factors. The pace of influence in different macroeconomic factors shall be varied from one country to other.  This situation makes affliction to develop effective policies for a long-term stability and it also seems that predicting the success of contemporary policies in the future might not effective as in the past and current information may not exactly relevant to the future. The economic cycles during the past century helped policy makers and ordinary people for adaptation to the changing economic environment. Although the public has experienced hardships when economic downturns incurred, economies had been gradually recovered in medium term.

The last economic recession that Asian nations faced was in 1997-98 in the 20th century, which radically depreciated the foreign value of many Asian currencies and the depreciation of Indonesian currency was beyond the expectation. Some Asian leaders such as Mahathir Mohamod in Malaysia blamed American currency speculators for such a financial crisis and Thaksin Shinawatra in Thailand interested in developing Asian bond market with a view to using Asian savings in Asia than investing them in Western bond market and borrowing from domestic banks for development purposes.  Sri Lanka also had an idea to combine with Asian bond market, but it was not successful due to heavy involvement in war spending and the economy during the war period did not support to successfully develop a corporate bond market.

During the twentieth century, it seemed that people had more wants in addition to needs and the twenty first century appears that wants are becoming needs because of the influence of dynamic factors such as environment, competition and technology.  To understand the change of attitudes of Sri Lankans in relation to economic needs, we should look at the changes from the point of views of technology and how dynamic factors are vital to analyse without a deviation of the economy as rural and urban. Many disparities have been appeared in rural and urban development process since 1950s, it was observable that the government spending mechanism had not focused the reducing or eliminating disparity in urban and rural area. It can be seen that rural people are demanding never ending supports from the government and urban people make large spending for wants. There is a conflict in wants and needs in the country, the economic planners of the country have not seen this issue, which was the disguised causal factor for ethnic and many other issues in Sri Lanka.

The existence of imbalance development was not the wish of rural people and such situation was motivated to the origination of LTTE and JVP movements.  Economic planners have become impotent to maintaining a balanced growth and development of the country, although it was an easy task in a small country like Sri Lanka. The poverty of rural people was fundamentally supported to origination of Sinhala and Tamil radical groups, later these groups were used by international power players and currently many politicians in the country have become refugees of international power playing politics. On the other hand, it also seems that Sri Lanka has been relegating an anarchic situation because of the lack of right vision and blindly following misguided politics like Mr Wickramasinghe played.

However, this doesn’t mean that policy makers should act like emasculate people, when the service and intelligence of them are desperately needed by the country at this moment. Politicians of the country are seemed to be stupids, who are covetous for money and attempting to make something out of all development projects of the country.  Although the yahapalana advocates used Gobbles theory during 2015 elections they have not departed from disgrace politics, but they were like gophers in the dark involved in more and more corruptions.

The other vital point that Sri Lanka has been depending on the economic advices of Western economists, who provided advices consistent with the ideology and needs of Western countries. The experience also indicate that Sri Lanka had encountered many difficulties changing policy focus from time to time due to imbalance growth and development needs. Western economic advisors lightly consider the elimination of development disparities between urban and rural development and clearly knowing the corruption of project implementations attempted hide the truth from people.  If they disclosed to public about corruptions with a responsibility, people would have not supported corrupt politicians and the West wanted to achieve their hidden goals using supportive politicians in Sri Lanka.  It was the mythical aspects of Wickramasinghe government.

The next vital point regarding economic renaissance is that the government policy needs to focus on addicting to public welfare by a large volume of people in the country.  Government welfare is a part of many countries in the world and it is an essential part of the government spending, which cannot be eliminated. Late 1980s many countries in the world attempted to change the policy of welfare spending as an incentive for employing people without addicting welfare benefits.  Sri Lanka attempted to change subsidies in1952, but it was not success because there were not alternative strategy people to earn without depending on subsidies.  The politicization of the welfare system by political parties as a strategy to gain the power has been a vicious dilemma and the dependence on welfare by people never reduced as planners expected.  New government needs to develop strategy to get the participation of welfare recipients to economic activities helping them to be independent with a greater supervision.

The concentration on too much welfare without educating people on the negative impact on the economy has pushed the country to a vicious circle of poverty. This situation has been reflecting since independence. Although some politicians talked about giving a fishing rode, it has not actively implemented with a view to attracting poor people.  The demanding of welfare has not changed despite political rhetoric and promises during the elections and the right policies have not been focused by the governments.

The purpose of the 13th amendment to the constitution was to give more power to regional Sri Lanka to implement vigorous economic policies at regional level eliminating or reducing the growing disparities between the urban and rural areas, notwithstanding the practical and actual results, provincial governments had not been played the desired role and have worsened the corrupt economy.  The bottom to top planning approach was not implemented to achieve the expectation regional Sri Lanka. The delegation of the central government power to regional country had been used as a debating point for a long time and such debate did not focus on the achievement of objectives and reasons for the failure. Sinhala people displayed an apathy to this matter and Tamil politicians were talking about the insufficiency of delegated power rather than using the granted funds and the authority for eliminating economic disparities between urban and rural level.

The political motivation to change the economic policies should be with good objectives and the ultimate achievements need to be educated to people before implementing and during the past four years, people have realized that vicious manipulation was done during the election period in 2015.

The new government needs to focus in the renaissance of the economy while working on micro economic reforms in public institutions, it should develop macroeconomic targets as macroeconomic performs impact on the long-term stability of the economy and the living standards of people.  There are many macroeconomic factors in which the rate of economic growth, the exchange value of domestic currency unit, foreign reserve, inflation, interest rate, budget deficit, foreign reserves, investment, unemployment, population growth, foreign and domestic debts, balance of payment adjustment, trade balance and terms of trade are highly significant macroeconomic variables and they are factors could be quantitatively monitored and make remedial management when variations incurred.  The new secretary of the Ministry of Finance is a quantitative analyst, he can effectively managed macroeconomic variables for renaissance of the economy in medium term.

While the planning and monitoring process is under the arrest of macroeconomic factors, the production and service sectors should be improved by microeconomic reforms, which strongly support to enhance productivity in individual organizations reducing imports and saving foreign exchange outflow, which would be an incentive for increase in foreign reserves and assets. The working successfully in this way the government can gradually increase the foreign value of Sri Lanka rupee and other macroeconomic factors also ameliorate reducing unemployment giving a clear signal to the world that the renaissance of the economy began and the stability of the country is under the control of the government.  It will be an inward trend of foreign and domestic investments and many positive signs will reflect the economy such as reducing debts, increasing GDP and per capita income and creating a balance budget.

The renaissance of Sri Lanka’s economy is not an impossible task, but it needs a right political leadership and sacrifice of people with determination to achieve objectives.  When people were in an innocent situation without hopes during LTTE war period, Mr Mahinda Rajapaksa rose and gave a political leadership to eliminate the war giving a fresh hope to people. Unfortunately, UNP, JVP traitors associated with foreign forces to reverse renaissance.  However, the traitors failed with three years period, as Alexander Gerschenkron stated in the history,  the more backward a country’s economy, the more strongly its industrialization tend start discontinuously as a sudden great spurt proceeding a  relatively high rate of growth of manufacturing output Sri Lanka tends to begin a strong growth and the renaissance of the economy.

One Response to “RENAISSANCE OF THE ECONOMY OF SRI LANKA”

  1. Ananda-USA Says:

    JLL comments on the Western Region Megapolis Masterplan’s sustainability and progress

    Nov 03, Colombo: In its monthly Compass bulletin, real estate consultancy Jones Lang Lasalle examined the relevance of the Western Region Megapolis Masterplan to Sri Lanka’s ambitions of improving citizen wealth and rapid economic growth.

    The statement also questioned the sporadic nature of the progress reported by the project since March 2017, noting that a cornerstone of the government’s modernization policy must be more frequently communicated to the public.

    The Western Megapolis Development Plan was first conceptualized in 1998 by the newly established Urban Development Authority, leading to a first version in 2002.

    The newest version of this plan was revealed in January 2016 under the newly established coalition government at the time, as the Western Region Megapolis Masterplan.

    This was pitched, and has since been floated, as a cornerstone of the government’s strategy to bring Sri Lanka to upper middle and then high-income status. This ambitious plan sets targets of tripling per-capita income in the western region to USD 12,000 by 2020, creating 500,000 jobs, and making the western region one of the 10 most livable cities in Asia to reverse current brain drain trends.

    For this ambition two transformations are necessary, notes JLL. Spatial transformation of the urban western region is one, the national economy’s structural transformation is another.

    The plan flagged three broad national issues: issues arising from congestion pressures being exerted on urban infrastructure, services and amenities due to messy urbanization; weak enabling environment to propel Sri Lanka to high-income status; and the lack of a framework to harness the benefits of a knowledge based, innovation driven economic environment, characterized by the new industrial revolution and smart cities. The plan aimed to address all these weaknesses.

    There are other institutional challenges to be overcome as well. A lack of appropriate land use policy, ad-hoc development and planning, a mono-centric urban spatial structure, and a poor public transportation system are a few of these challenges that the plan must maneuver.

    “Transforming the western region into a world class metropolis in such sensitive times brings immense challenges in delivering the high-level goals of diversity, inclusivity and sustainability that the plan promises,” says Steven Mayes, Managing Director of JLL Lanka (Pvt) Ltd.

    “If this wish list is to be accomplished then infrastructure and public transformation will be key. If we look at public transport, developing the planned LRT (Light Rail Transit) system will be paramount.”

    Mr Mayes also noted that the Government of Sri Lanka must carefully examine the robustness of the PPP model to underwrite the additional capital sums necessary to upgrade existing bus and rail systems and to initiate the water bus transport system, utilizing existing waterways, envisaged in the master plan.

    JLL also highlighted the importance of regularly updating the news portals used by the government with details on the progress of the Megapolis plan.

    The current website- http://www.megapolis.gov.lk -reveals no new entries since June 2017, while the consultations portal has not been updated since March 2017.

    “The sustainability of this project will also depend to a significant extent on public engagement and support- communicating what the progress is, even if it is minor, will help to build ownership and awareness. More importantly it’s the government’s duty to inform the public of the progress- or lack of- that is being made with one of Sri Lanka’s most ambitious development plans in recent history.”

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