{"id":110272,"date":"2020-12-31T17:53:07","date_gmt":"2021-01-01T00:53:07","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=110272"},"modified":"2020-12-31T17:56:42","modified_gmt":"2021-01-01T00:56:42","slug":"the-economic-policymakers-must-aim-to-build-a-high-volume-of-foreign-reserves-part-one","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2020\/12\/31\/the-economic-policymakers-must-aim-to-build-a-high-volume-of-foreign-reserves-part-one\/","title":{"rendered":"THE ECONOMIC POLICYMAKERS MUST AIM TO BUILD A HIGH VOLUME OF FOREIGN RESERVES- PART TWO"},"content":{"rendered":"

BY EDWARD THEOPHILUS<\/em><\/span><\/h2>\n\n\n

In the 20th century, many developed\ncountries considered establishing SOVERIGN WEALTH FUNDS and policy advisors of\nSri Lanka with the strong hope of Mannar basin oil deposits advised the\ngovernment to start Sovereign Wealth Fund, but the government is still talking\nMannar basin oil deposits rather than realizing the oil and gas productions.\nThe reality of Gas and oil production is that less than 15% of revenue could be\ngenerated from oil and gas fields in developing countries where oil and gas\ndeposits are having, and if Sri Lanka\u2019s Mannar basin would be successful only\nto gain 10% to 15% of total revenue that will gain from the project, and the\nrevenue flow could use to build a sovereign wealth fund. However, the\nexpectation of people could be realized as expected might be a vital question.\nIf Sri Lanka invests such money, it would be successful in initiating a\nSovereign Wealth Fund. Sri Lanka needs to be careful about Rogue traders’\nstrategies and speculative investment strategies to secure the Sovereign Wealth\nFund.  Sri Lanka had experienced a\nCentral Bank bond scam in 2015 and it is the best example that there is a\npossibility to emerge rogue dealers in the country and the manipulation to\nexploit foreign reserves could be incurred. <\/p>\n\n\n\n

To maintain an expected level of\nforeign reserves, Sri Lanka could get a variety of policy actions.<\/p>\n\n\n\n

\u2022          The\neconomic policy process should focus on creating a production economy and a\nbalanced growth in the country. The idea of creating a production economy\nshould be the first concentration and agricultural producers in Sri Lanka are\nlacking knowledge, skills, and experience in productivity enhancement and\nshould be educated and trained in the enhancement of productivity and\napplication of technology. The contribution rate of agriculture to GDP could be\nincreased to 40% by the modernization of production, and more than $750 million\nannually could be saved, and generate a positive impact on saving foreign\nexchange reserves.  China could help Sri\nLanka for the improvement of the agricultural sector and promoting Chinese\ninvestment in the sector. Many agricultural imports could be stopped if the\ngovernment policy converges maintaining a proper plan for agricultural\nproducts. The current system is to encourage production when there is a\nshortage, for example, turmeric production is encouraged by the government and\nmany imports could locally produce, and the policymakers need to identify the\nitems and educate formers to participate in the production of such items if\nthere will be an excess of production, how to deal with the situation? The\ngovernment needs to educate people to maintain buffer stocks of various\nagriculture items. A Dutch administrator in Indonesia, Boake has written about\nsocial dualism and the situation created in the past. Economists of Sri Lanka\nmust understand how to deal with social and technical dualism to adopt a\nproduction economy.  The cultural\nbehavior of people in Sri Lanka is not different from Indonesians when\nlaunching the concept of the production economy. The government has taken steps\ndespite the government policy criticized by rouge businessmen in the country\nurging to allow many agricultural items and the recent policy step of\nMr.Gotabaya Rajapaksa to promote milk production would positively support the creating\nproduction economy.      <\/p>\n\n\n\n

\u2022          In\nthe effort of making a production economy, the contribution from the industrial\nsector will be a massive quantity. Many industrial products such as household\nitems, radio, TV, fridges, washing machines, computers can easily produce in\nthe country if encourage foreign investments, especially Chinese investment,\nand quality controls need to attract higher demand from the domestic market and\nexcess to export.  Many Asian countries\nadopted the strategy, especially Taiwan, Hong Kong, Thailand, South Korea, and\nJapan.  It was successful and the secret\nof building a billion of foreign reserves in Taiwan was the creating production\neconomy, and the culture of Asian countries stimulated people to consume\ndomestic products rather than directing import controls. The concept of\ncreating a production economy saves magnitudes of foreign exchange reserves\noutgoing and could create employment opportunities for increasing labor\nforce.  The concept of a production\neconomy connecting to industrial products might be opposed by European\ncountries and some Asian countries. \nGermany has already expressed animosity for import controls, and that is\nthe reality and the government of Sri Lanka must firm on its policy.\nInternational association with China would be helpful and especially the policy\nof Xi Jinping will help Sri Lanka in the effort to build a production-based\neconomy and increase in contribution from the industrial sector. <\/p>\n\n\n\n

\u2022          The\nother significant strategy is to make arrangements for half-completed\nindustrial products export to China, and after the improvement of quality, they\ncould be exported to other countries as products of China. The concept of the\nfinal product is a joined product of China and Sri Lanka, and both countries\nwill be benefited from the arrangement. \nThis should be negotiated with China. As the secretary to the Ministry\nof Finance stated without importing vehicles, China can cooperate to produce\nand assemble vehicles required to the country. This policy supports earning more\nthan $10 billion annually and at least five billion of them could transfer to\npermanent reserves. If Sri Lanka associates with China building the Silk Road,\nit needs clear supports to achieve the aims of the country.<\/p>\n\n\n\n

\u2022          Sri\nLanka should stop releasing foreign exchange for undergraduate education and\ntraining programs. The country can educate and train people for undergraduate\nprograms. The direct effect of releasing foreign exchange for undergraduate\neducation and training is the waste of foreign exchange and disadvantage to\ndomestic education and training.  If it\nevaluates the contents of education and training programs in developed\ncountries, there is no difference in the contents of local programs. Many\nundergraduate programs in Sri Lanka are comparable with programs in developed\ncountries, and the government needs capacity building in the country than\nreleasing foreign exchange to go overseas. <\/p>\n\n\n\n

  • Major contributing services to foreign reserves by tourism\nand foreign employment should be reset while having a clear hope of\ncontributing volume but the pace of contribution to GDP needs reducing.<\/li><\/ul>\n\n\n\n

    The major weakness in the plan\nimplementation process in Sri Lanka is the details of plans, the monitoring,\nand variance, remedial management process to achieve the objectives of the\noriginal plan are not provided to people and many plans implementation has\nbecome white elephants. If it investigates the plan implementation process\nduring the past 50 years it could be seen that the plan implementation process\nwas not consistent with proper monitoring and remedial management and many\nplans were covered by political clouds. \nThe role of the opposition has been the monitoring of government policy\nimplementation and expressing of remedial strategies of the opposition.<\/p>\n\n\n\n

    Playing politics with the management\nof foreign reserves is the Boeotian method of the policy management process and\nthe government needs to call unity in the management of foreign reserves that\nare beneficial to the country beyond the politics. Mr.Gotabaya Rajapaksa should\ngive a clear approach to the government and opposition politicians. Whichever\npolitical party is in power the volume of foreign reserve base ($ 25 billion)\nshould not be changed.     <\/p>\n\n\n\n

    HAPPY NEW YEAR TO MY READERS!<\/p>\n","protected":false},"excerpt":{"rendered":"

    BY EDWARD THEOPHILUS In the 20th century, many developed countries considered establishing SOVERIGN WEALTH FUNDS and policy advisors of Sri Lanka with the strong hope of Mannar basin oil deposits advised the government to start Sovereign Wealth Fund, but the government is still talking Mannar basin oil deposits rather than realizing the oil and gas […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[],"class_list":["post-110272","post","type-post","status-publish","format-standard","hentry","category-edward-theophilus"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/110272","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=110272"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/110272\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=110272"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=110272"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=110272"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}