Positive week for Sri Lanka
View(s):It was an unusually busy and crucial week for Sri Lanka in both a political and economic context. Former British Prime Minister Tony Blair was the first in the line of high-profile visitors, meeting top dignitaries in the government amidst reports that his firm would be hired as a highly—paid consultant to the government, followed by Pakistan Prime Minister Nawaz Sharif, Norwegian Foreign Minister Borge Brende and finally George Soros and Joseph Stiglitz for a high-powered economic summit, with the duo headlining an impressive team of Harvard University dons, World Bank and development specialists along with local experts like W.A. Wijewardena, Sirimal Abeyratne, Murtaza Jafferjee, Nishan de Mel and Muttukrishna Sarvananthan.
The economic summit was the pièce de résistance of the week, keenly followed not only in Sri Lanka but abroad in terms of new policies and development decisions. Prime Minister Ranil Wickremesinghe’s objective to create a mega city between Singapore and Dubai provides a hint of the development that the country is aiming for and assembling for this purpose a powerful international team of advisers most likely to include Soros, the billionaire investor and philanthropist who has courted praise and controversy over the past few decades, and Stiglitz, the Columbia University economics Professor and Nobel Laureate. The mega city concept would also be keenly watched by Sri Lanka’s powerful neighbours India and Pakistan, both in terms of how they could piggy-back on this development and also to make sure Colombo doesn’t steal the economic show in the region.
The week’s events coincidentally or not happened on the eve of the first anniversary of Maithripala Sirisena’s rise to office on January 8, 2015 when he ousted his former ‘boss’ Mahinda Rajapaksa at the presidential poll. The week’s positive economic developments were spoken of many times during the numerous celebrations held on Friday to mark the anniversary.Wickremesinghe is leading Sri Lanka’s drive to leapfrog to a Singapore-styled model with huge investments and shift to a knowledge-based economy from a traditional tea, rubber, coconut and garments growth. The government is hoping investments in Colombo and the metropolis under the Megapolis City development will stimulate growth and investment in the village through a trickle-down effect, spread wealth creation and help rural communities to also enjoy the fruits of development. It’s an ambitious goal to achieve in the five years of the Maithripala-Ranil government which ends in 2020.
Both the 85 year-old Soros and 72 year-old Stiglitz’s presence is no small change for Sri Lanka. Their views still matter in the world and would be of immense benefit to the country. Soros, a Hungarian-American financier, businessman and notable philanthropist, has a net worth of US$27.3 billion as of January 2016, according to media reports, and any investment decision he makes or advice offered is followed closely by investors and currency markets akin to the popular saying “when the US sneezes the world catches a cold’. With China’s surge as an economic powerhouse, economists will soon also be saying; “when China sneezes the world gets cold feet!” Soros has also been hauled up before the law. He was convicted in France in 2002 of insider trading and ordered to repay 2.2 million euros.
The ruling was affirmed by the French Supreme Court in 2006 but the court reduced the penalty. A few years earlier, Malaysia Prime Minister Mahathir Mohamed said Soros – then hedge fund chief of Quantum – may have been partly responsible for the East Asian economic crash in 1997. But Mahathir is said to have withdrew this allegation a few years later when Soros visited Kuala Lumpur.Stiglitz is a former senior vice president and chief economist of the World Bank and best known for his criticism of laisser-faire policies, free market pundits and institutions like the International Monetary Fund and the World Bank. How the government will use the services of these business and economic icons is yet not known.
Prime Minister Sharif’s visit is also very significant given Islamabad’s desperation to erase the country’s image as a war-tattered country and reflected a strong desire for Sri Lankan businesses to invest there. The visiting Prime Minister wooed the Colombo business community saying the right things at the right time so much so that many local businessmen were very impressed by Sharif and his team. Responding to earlier calls, the Pakistan High Commission is also opening a commercial and trade desk to increase trade and investment ties in addition to easing the visa process for Sri Lankan business visitors.While local investors exuded confidence in investing in Pakistan, continuing political uncertainty is unlikely to see a rush of investments even though Sharif spoke of strong economic achievements and restoration of peace and stability.
On the same day (Wednesday) he addressed a small group of business personalities at a breakfast meeting in Colombo, the Pakistani Prime Minister was tackling a crisis back home where an Indian air base near the Pakistan border had been attacked allegedly by border-crossing Pakistani militants.Subashini Abeyasinghe, senior researcher at Verite Research, was quoted by Reuters as saying that she sees limited business opportunities for Sri Lanka and Pakistan because of political and security problems in Pakistan. “The current political security concerns make Pakistan less attractive,” Ms. Abeyasinghe had said.
Many Pakistanis however are keen to invest in Sri Lanka and this was reflected in a number of agreements and MoUs signed during Sharif’s visit. The Prime Minister’s trip was not all about trade, economy and culture. Political issues also figured and when a Business Times reporter asked Sharif, at the business breakfast forum on Wednesday, whether Colombo could play a role as a go-between in mending fences between Pakistan and India through people-to-people contact and business relationships, the Prime Minister was positive and welcomed the suggestion. The response surprised many including a top banker who told the Business Times reporter later, “I was wondering how he would handle your politically-loaded question. But he handled it well.”
Thus the first year of a new government which promised good governance, transparency and accountability has ended on a positive note with a promise of high-level expertise from global experts, investment and closer business relations with Pakistan and hopes of a mega city development on the lines of Singapore and Dubai. All that remains to be seen is speedy action on the fraud and corruption of the former regime which would further improve Sri Lanka’s prospects of being the new kid in the block for investors eyeing Asia.