ETCA will destroy Sri Lanka’s IT sector– Lasantha Wickramasinghe
Posted on May 9th, 2017

By Umesh Moramudali and Rathindra Kuruwita Courtesy Ceylon Today

The proposed Economic and Technology Corporation Agreement (ETCA) with India has caused many a controversy, and in this interview with Ceylon Today Secretary of the Society of Information Technology Professionals, Lasantha Wickramasinghe, explains how ETCA will affect the country’s economy, and the reasons for opposing it.
Following are excerpts of the interview:
?: What are the major reasons for IT professionals to oppose ETCA ?
A: First, if you analyze the impact of this agreement on Sri Lanka’s balance of payments, it is not that difficult to understand that ETCA is detrimental to our country’s economy. Unfortunately, Sri Lanka has not engaged in any fruitful dialog in this regard.
Secondly, the government is far behind its mandate for good governance; the way it is conducting the ETCA negotiations with India completely ignoring the voice of local stakeholders and with no transparency in the process. In fact, the government took measures to legalize its lack of transparency by excluding the Right to Know about international trade agreements by its Right to Information Bill.
Thirdly, Information Technology is the largest net foreign exchange earning industry in the service sector next to tourism. This industry should be identified as a sector with a huge potential as it is one of the few sectors that has a competitive advantage over other countries. Sri Lanka should develop the IT sector to earn more foreign exchange and provide more jobs to Sri Lankan youth.
As we concentrated on tea, rubber and coconut over several decades and then apparel and tourism in the last two decades, now, Sri Lanka should keep its eye on the IT sector. But, ETCA will destroy our competitive advantage in the IT sector. It is not a problem only of the IT sector. It is a problem for all citizens of Sri Lanka as we will lose the ability to earn foreign exchange through this sector which will have a direct impact on the lives of everybody.
?: How do you see ETCAs impact on the overall economy?
A: Sri Lanka’s main problem is the huge balance of trade, the gap between the imports and exports which is around 8.5 billion USD annually. Out of that more than 3.5 billion USD comes from trade with India and this has been widening over the years. This is not bearable for our economy. Hambanthota Port is supposed to be sold or leased for 99 years to earn 1.2 billion USD. That is a one-time earning. We create a trade deficit of 3.5 billion USD annually with India. You can see where we are heading due to our increasing trade deficit with India. We will have to sell more and more resources which are capable of earning foreign exchange for the country, each year, in order to mitigate the deficit of one year. So what should we do? We should learn from India. India has no Free Trade Agreement with China though China is its biggest trading partner. That is because India has a trade deficit with China. India is negotiating with China to reduce the trade deficit. India knows that natural tendency of flow of goods and services are more towards India from China than the other way around. Our case is similar to that. Signing of the ETCA will increase the outflow of money from Sri Lanka which will lead to a decrease in foreign reserves, an increase in national debt, devaluation of the Sri Lankan rupee and ultimately a crisis in Balance of Payments. On that day, no one will be responsible. That is why we demand that good governance be the process and a national trade policy prior to any negotiation of a trade pact.
?: Why do you claim that the ETCA will destroy our competitive advantage in IT sector?
A: First we need to identify is that we have a competitive advantage in the IT sector. That is why the IT sector has been rapidly growing in Sri Lanka. If we are in a position where we have a competitive advantage in a sector that is growing globally, the country must pay careful attention to that sector.
In 2007, the revenue from the industry was about USD 200 million. In 2015 it was around USD 900 million. In 2007, workforce was around 33,000. Now, it is around 90,000. You can see the growth. The industry is growing as it has been able to attract both local and foreign investors.
Why have those investors chosen Sri Lanka over India? That is the most important thing that the government needs to be aware of. But during the discussions, we held with the Ministry of International Trade, we realized that they know nothing about this though they are keen to sign agreements in a hurry.
Top tier talent, low cost operations, and our cultural adaptability have made it a logical choice for many global companies to invest in Sri Lanka. Those are our global competitive advantages. India also can provide low cost operations. So Sri Lanka was winning some investments over India due to top tier talent and cultural adaptability. Strategically, Sri Lanka should be positioned as a destination for product engineering work in the IT industry.
If the ETCA is signed, the Sri Lankan job market will be virtually merged with the massive Indian job market with their enormous number of unemployed IT professionals where 95 per cent of them are unfit for take up software development jobs as per an Indian research. They will be able to arrive to Sri Lanka even without being employed by any company as free-lance professionals. Once they arrive here they would benefit from the “National Treatment” which explains as having the same right as Sri Lankan citizens. This will definitely lead to the reduction of salary levels in Sri Lanka and the value of IT professionalism. This decline will not be marginal but very much significant. This will lead to destroy the balanced system we have had to attract the required talent pool to the industry from Sri Lanka. That will lead to the Sri Lankan IT industry to absorb more and more Indian employment. Ultimately the investors will not experience the above mentioned competitive advantage of top tier talent in Sri Lanka. Then, they will have very good reasons to shift their investments to India where they have closer access to a massive market and a huge number of employees.
From the IT industry’s point of view, ETCA will be a bridge to take the investor from Sri Lanka to India. This will kill the Sri Lankan IT industry which is the largest net foreign exchange earning service industry next to tourism.
ETCA is not just a FTA. It covers trading of goods, trading of services, investments and migrations. ETCA builds a legislation bridge between the two countries. Then India needs to merge Sri Lanka to India physically as well. Our Prime Minister held discussions with the Indian Minister of Highways during his last visit to India on the proposed bridge joining Sri Lanka to India.
?: Is there a shortage of employees in the IT sector in Sri Lanka?
A: No. The supply and demand for IT graduates is well balanced. There are some areas which do some over production of IT graduates while some areas show some sort of a shortage. What should be done is, balance out this gap by improving the collaboration between the industry and the academia.
?: How should the Government intervene in developing the IT sector?
A: First of all, the government should not blindly open the Sri Lankan IT industry to India without properly identifying our competitive advantage and the potential of the industry. That will murder the industry. They should formulate a national trade policy by obtaining the support of the stakeholders where IT can be identified as one of the major industries that the country should try to evolve as a service industry. If you look at India’s national trade policy, they have given very high prominence to the IT sector in their trade policy.
The office space has been an issue. The government should make sure that infrastructure like office space is ample to support the growth.
Apart from that government should have a vision to create Sri Lankan entrepreneurs in the IT industry. Entrepreneurship in the IT industry may start with one bright idea with a small capital investment, but that has to be supported and looked after. Universities should try to enhance the entrepreneurial mind set among IT students. Government should allocate more funds for IT education and innovation. The government should encourage banks to grant lending facilities for IT related start-ups to encourage innovations in the sector; because in the IT sector the market can be the entire globe. If one or two start-ups in the IT industry could break its boundaries to be a global product that can bring a fortune to the county.
?: Would we not have opportunities by having access to the Indian job market?
A: Why should we try to access less paid Indian job market in the current situation, where we already have a demand from highly paid job markets like Australia, America and Europe? Many Sri Lankan IT professionals are working abroad and I think we should encourage that move to earn foreign exchange instead of earning foreign exchange by selling our mothers to the Middle East.
?: You are involved in drafting trade policy. How is the progress so far?
A: Professionals’ National Front which comprises wide range of professional bodies and trade unions such as Organization of Professional Associations, Government Medical Officers Association, Inland Revenue Trade Unions Joint Committee, Customs Officers Union, Society of IT Professionals, National University Teachers Association, Railway Professionals Trade Unions Alliance, Public Service United Nurses’ Union..etc established an independent commission with respected personnel to obtain the views of stakeholders and general public towards national trade policy. The co-chairmen are former vice chancellor, University of Colombo Prof. W.D. Laxman and former Attorney General Palitha Fernando. We are not involved in drafting the trade policy. It is the all stakeholders such as Cabinet Ministers, MPs, chambers, professional institutions, intellectuals, importers, exporters, and professionals who share their experiences and submit proposals to the commission. The commission will then identify the key elements of the national trade policy. The report will be handed over to the President and to Members of Parliament.
?: Is the Government support satisfactory?
A: Some Cabinet Ministers made oral and written submissions to the commission. We appreciate that. It is widely accepted, even by the World Trade Organization that those agreements should be analyzed and negotiated based on one’s national trade policy.
But the government is rapidly engaged in ETCA discussions without any transparency and without a national policy on trade. That is unacceptable and the people of this country and the next generations too will have to pay the price of these baseless acts. Also it is clear that the Sri Lankan negotiation team lacks the negotiating capacity and the reliability as well. What can you expect from a weak negotiation team comprised of individuals with vested interests of a country without a national trade policy negotiating a comprehensive agreement with its regional super power who as a clear agenda? Professionals’ National Front’s demand a halt to these unfavourable negotiations at least until a national trade policy is created; required regulations for the professionals are identified and formulated. Otherwise Sri Lanka will move into much bigger issues.

4 Responses to “ETCA will destroy Sri Lanka’s IT sector– Lasantha Wickramasinghe”

  1. Ananda-USA Says:

    India is the SOURCE of ALL of Sri Lanka’s PROBLEMS: KEEP India OUT OF Sri Lanka!

    Controversies dog Modi’s second visit to Sri Lanka
    Tue, May 9, 2017, 06:16 pm SL Time, ColomboPage News Desk, Sri Lanka.

    May 09 (BDN) Indian Prime Minister Narendra Modi will be on a day’s visit to Sri Lanka on May 12 to be the chief guest at the Vesak celebrations, a UN-backed International Buddhist event in Colombo; and to inaugurate an India-built hospital in Dikoya in Central Sri Lanka, home to lakhs of tea plantation workers of Indian origin.

    Modi’s first visit in 2015 took place when his government in India and the Sirisena-Wickremesinghe government in Sri Lanka were new, and were enjoying a honeymoon with their respective subjects. But the Indian PM’s second visit is mired in controversy.

    A deep and growing resentment is palpable in Sri Lanka over India’s pushy bid to establish its presence in the island to counter China’s moves to find a foothold here.

    Admittedly China’s moves have also triggered some resentment, but reactions to India’s counter moves have been infinitely more severe. Both the majority Sinhalese and the minority Tamils have grouses against India and the Modi regime in New Delhi.

    The majority Sinhalese (70 percent of the population) are worried about the erosion of their country’s sovereignty as a result of the Indo-Lankan government proposal to sign an Economic and Technical Cooperation Agreement (ETCA). The signing of a wide ranging and comprehensive MoU on economic projects on Apr 25 this year, which has been presented to the Sri Lankan people as a fait accompli, has drawn flak.

    The Sinhalese fear that the India-funded economic projects could be Trojan Horses for Indian infiltration and arrogation of the country’s economic resources.

    As for the minority Tamils, they are disappointed that India under Modi, is more interested in economic development, trade and investment to further its own interests than in helping the Tamils secure post war economic, livelihood and political rights. The Tamils consider the latter to be India’s historical and moral responsibility flowing from a past in which India had shaped the issue to a great extent.

    Modi’s India thinks that economic development and economic integration of Sri Lanka under its aegis, will create opportunities for the Tamils to advance, and help soothe ethnic tension created by the 30 year war. But the Tamils think that constitutionally guaranteed political rights and devolution of power to the Tamil-majority areas will alone ensure ethnic reconciliation and integration, a line India had taken for 30 years but has abandoned now.

    The Sinhalese (who are 70 oercebt of the population) are anxious about India’s intentions, and the Tamils (12 percent of the population) are glum and indifferent, if not anxious.

    The Muslims (8 percent of the population) view Modi with disdain as a Hindutva zealot who is persecuting Muslims in India, especially Kashmir, and fighting against Pakistan, an Islamic country they have a natural affinity for.

    Though divided on many issues, especially rising Islamic fundamentalism in the island and the world, Sinhalese and Muslims look upon Pakistan as a true and consistent friend � a country which has stood by Sri Lanka during the Tamil Tiger terrorist era; supported it in international human rights forums; and refrained from interfering in its internal political affairs.

    However, the one million strong Indian Origin Tamils many of whom live in the tea plantations in the Central Highlands, are a different kettle of fish.

    The Indian Origin Tamils are happy that India is turning its attention away from the Sri Lankan Tamils of the Northern and Eastern Provinces and looking at them at long last. The hewers of wood and drawers of water of Sri Lanka are now feeling wanted by India. Modi will not only be inaugurating a 100-bed modern hospital to serve them but will also address them at a public meeting and go into a huddle with their leaders.

    The Indian Tamils not only have economic problems but are educationally backward. They need land rights and adequate electoral representation under the proposed electoral reforms. They demand delimitation of electoral constituencies in such a way that more of them can get into elected bodies from the provincial to the national level.

    The Indian Origin Tamil leaders are expected to take up these issues when they meet Modi. And in all likelihood, Modi will take them up with President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe when he meets them next.

    But this is not to the liking of the Sinhalese majority. CA Chandraprema, political commentator in The Sunday Island has already dubbed the Indian Origin Tamils as “India’s fifth column” in Sri Lanka.

    Commentators like Chandraprema and Dayan Jayatilaka have strongly objected to the MoU signed in New Delhi on April 25 which lists a number of projects in which India is to collaborate with Sri Lanka. Though these are “Joint Ventures” for the development of the energy, ports and other sectors in Sri Lanka, the Sinhalese nationalists view them as arrogation of vital sectors by India. They fear that Sri Lanka’s strategic assets will be partially if not fully in India’s hands in due course.

    India is to refurbish and use 85 giant World War II vintage oil tanks in Trincomalee, each with a capacity of 12,000 mt, as a Joint Venture with the Ceylon Petroleum Corporation. But this is seen by Sri Lankan nationalists as alienation of a national asset. The Sri Lankan parliamentary Committee on Public Enterprises (COPE) had only recently called for the cancellation of the 2003 agreement by which a total of 99 giant oil tanks in Trincomalee were handed over to India for development and use.

    The April 25 MoU on economic projects talks of setting up power plants using LNG jointly with India; and developing the Trincomalee port and the Eastern Terminal in the Colombo port. Plans have been drawn up for establishing industrial estates jointly in several parts of Sri Lanka.

    But India’s interest in the Eastern port of Trincomalee and building a highway to link Mannar in the North West with Trincomlee is the North East is seen as a way of establishing Indian presence in the Tamil-majority North and East which have traditional ethnic ties with Tamil Nadu state in India. The alleged plan to build a bridge between India and Sri Lanka across the Palk Strait in the North West, has been dubbed “traitorous” by Dayan Jayatilaka.

    Sri Lankans also fear that along with Indian financial and technical aid will come Indian service personnel who will take away jobs from Sri Lankans. This is the reason why Sri Lankan trade unions and professional bodies are opposing the Economic and Technical Cooperation Agreement (ETCA) even though the proposed agreement does not envisage personnel movement across borders except in the ship building and IT sectors.

    Sri Lankan professionals have been asking the government to spell out a National Policy on foreign trade and investment agreements and demanding prior consultation on these. But till date, no national policy has been drawn up and consultations have only been perfunctory.

    This, along the alleged bid to hand over 99 oil tanks to India, triggered a crippling nation-wide petroleum workers strike a day before Prime Minister Wickremesinghe went to India to finalize the MoU. which was signed on April 25. More recently, in May, there was a nation-wide one-day strike against ETCA.

    Experienced Indian diplomats and senior Sri Lankan ministers are skeptical about the implementation of the Apr 25 MoU and the signing of ETCA. Former Ambassador M Bhadrakumar says that signing of MoUs by India have meant nothing as hundreds of them are languishing unimplemented.

    Patali Champika Ranawaka, Sri Lankan Cabinet Minister of Megapolis (urban development), says that the Indian public and private sectors are very tardy in implementing projects in Sri Lanka. The Chinese and Koreans are far better and quicker he says. Many existing projects are languishing and some have been cancelled, Ranawaka points out.

  2. Fran Diaz Says:

    Thank you so much, Ananda, for your constant vigilence.

    Since Independence and for the last 30 yrs or so, INDIA has caused endless trouble for Sri Lanka in terms of many thousands of lives, funds and reputation.
    So far, whenever INDIA decides to go EAST, Lanka also MUST go East, or else …
    If INDIA goes WEST, then Lanka also must go entirely to the West !

    INDIA also tries to solve their South INDIAN problems via Lanka.

    What is the meaning of this nonsense ?
    It appears that Sri Lankans cannot even ‘shake a whisker’ without INDIAN reaction, usually adverse.
    This is NOT Democracy.

    INDIA’s two largest partners in the Economy are China first, and the USA second.
    It’s ok for INDIA to go East & West, but not for Lanka ?

  3. Dilrook Says:

    These are India’s largest export industries. Carefully look through them to identify how expansion of these will destroy corresponding Lankan industries.

    1. Gems, precious metals: US$43 billion (16.5% of total exports)
    2. Mineral fuels including oil: $27.7 billion (10.6%)
    3. Vehicles: $15 billion (5.7%)
    4. Machinery including computers: $13.6 billion (5.2%)
    5. Pharmaceuticals: $13 billion (5%)
    6. Organic chemicals: $11.3 billion (4.3%)
    7. Clothing, accessories (not knit or crochet): $9 billion (3.5%)
    8. Electrical machinery, equipment: $8.2 billion (3.1%)
    9. Knit or crochet clothing, accessories: $7.9 billion (3%)
    10. Iron, steel: $6.4 billion (2.5%)

    (Source: “”)

    India is the source of all our problems.

    The only solution is to have a Chinese military presence in the island. Sadly, some fools (calling them patriots) are opposed to this and these fools are searching for a non-existent and elusive middle ground in Lanka-India relations. If they were not so daft, they would have realised by now that there exists no such middle ground in India-Lanka relations. India’s mottos is – you are either with us (to exploit you to the maximum) or you are with them. What other country has more disputes with all its neighbours than India and what other country has nuclear weapons pointed towards them from both sides!

    Just as Ranil, Sirisena and others of this regime must take responsibility for this economic apocalypse, those patriotic fools that oppose/d Chinese military bases in Sri Lanka must also take the blame.

  4. Ananda-USA Says:

    By allowing unemployed Indian IT worders into Sri Lanka when we already have a competitive advantage over India, we will drive down quality and IT wages. That will motivate Sri Lankan IT workers to look for work in other countries where they can earn more.

    That leads to the loss of our ONLY high-techhigh-techworkers and permanently replacing them with foreign, mostly Indian Tamil, workers who are not as good as our own, increasing permanently the Tamil Community in Sri Lanka and exacerbating the ethnic problem already threatening to divide the country.

    When we lose our SOLE advantage in high-tech we will have to again revert to production of low-technology non-competitive agricultural products decreasing our income and lowering our living standards.

    What kind of ASININE ECONOMIC POLICY is this? Halt the ETCA NOW!

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