Positive signals to the world
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Many years ago, when the late Lalith Athulathmudali was Trade Minister, the cry “export or perish” was very much in the air to signify how important exports were to the Sri Lankan economy.I was reflecting on how the country is suffering due to a lack of proper policy measures to strengthen and firm the country’s export drive particularly in today’s context where we are struggling with a shortage of dollars, when I heard the unmistakable tune of Aldoris, the choon- paan karaya’s tuk-tuk coming down the lane.
At the gate to greet him was the trio, today in a jolly mood for whatever reason. “Miss, mama davas thunak indana polime hitiya (Miss, I spent three days in a fuel queue),” said Aldoris as he opened the back of his vehicle to serve piping hot buns.
“Oya wasanawanthai. Mage gamey inna nadeyo davas thuna-hatharak indala thiyenawa polime, eth indana labila ne (You are lucky, some of my relatives in the village spent 3-4 days and still didn’t get fuel),” said Kussi Amma Sera.
“Thathve thavath ugra wenawalu, amathi kiyanawa. Eya kiyanawa indana thava avuruddakatawath seema karanna wei kiyala (The situation is worsening, the Minister is saying. He says fuel imports would have to be restricted at least for another year),” noted Serapina.
“Eya, ehema kiyanne kohomada? Eya visadum hoyanna oney-ne, nethnam mokada aanduwe inne (How can he say that? He has to find a solution, otherwise what is the use of being in the government),” asked Mabel Rasthiyadu.
As the trio purchased their breakfast from Aldoris, the phone rang in the house. It was Ruwanputha, my young economist-friend. “I am very worried about Sri Lanka’s future economic prospects. We seem to be losing on all fronts with political, economic and social instability. Many young people want to go abroad and such an exodus would have serious repercussions on our human capital,” he said, in a worried tone.
“Whatever is being stated by the government at the moment is only triggering negative headlines. There’s nothing positive coming from the authorities or whether they have a proper game plan to overcome the crisis,” I said. “Another new issue is that the International Monetary Fund (IMF) wants Sri Lanka to discuss a debt restructuring plan with China, our biggest lender, and until then the negotiations with the IMF will be on hold,” he said. Exports, as discussed earlier, are the way forward, a point that has been repeatedly stressed by fellow columnist Prof. Sirimal Abeyratne who says that the forward path to growth and prosperity lies with exports and foreign direct investment. Meanwhile, former Governor of the Central Bank Dr. Indrajit Coomaraswamy was recently quoted as saying that he believes it will take the Sri Lankan economy at least five years to get back to where it was, provided certain tough steps are implemented by the new Wickremesinghe government.
While assailed by these thoughts, I got another call on Thursday morning from a business contact who had more depressing news to share: It appears that multiple garment and tea firms are looking for overseas locations for business owing to serious disruptions to production because of the uncertainty in Sri Lanka. Apparently, customers and buyers are concerned about delivery schedules, given the political uncertainty. Garments and tea are among Sri Lanka’s largest exports.
“Several companies in these two sectors are considering relocating abroad as buyers have lost confidence in the ability of companies here to deliver on time. Dubai and Bangladesh are among countries that come into the picture for relocation. This is very negative for Sri Lanka; people will lose jobs and it’s bad for the economy. The promoters of the ‘Aragalaya’ must also think of the loss of jobs to people because of the political uncertainty,” he said, adding that buyers are worried that there could be repeated political changes since the protesters are now demanding that President Ranil Wickremesinghe resign.
“How can we do business in such uncertain times,” he asked, noting that something needs to be done to stop the rot while imploring the political powers in the country to work together – setting aside differences – to overcome the crisis. “That’s a tough ask but that’s what needs to be done. Unfortunately, we don’t have statesmen these days who can rally their political parties and work on one agenda,” I said.
Sri Lanka is repeatedly missing the bus in its economic growth cycle. The hackneyed reference to Singapore once looking at Sri Lanka as a business model has now transformed to Sri Lanka becoming a basket case of how to ruin an economy. Take garments for example: Started as a cottage industry in the 1970s, it transformed to a huge industrial enterprise in the mid-1980s with entrepreneurs like the Amaleans, Omars and Hirdaramanis taking the industry by storm and servicing the world’s biggest brands. Over the years the industry progressed but as Sri Lanka’s costs became uncompetitive, these high-end companies relocated some of their facilities to Bangladesh, Africa and India. Sri Lanka was once among the biggest garment suppliers to the world after China but that position has been surpassed by Bangladesh.
A few months ago, Sri Lanka borrowed foreign cash from Bangladesh, a poorer country than Sri Lanka, to tide over the foreign exchange crisis and recently secured approval to delay the payment of the loan. For the record, export earnings in Bangladesh surged to US$52.5 billion in 2021 from $42.2 billion in 2020. But the situation has changed rapidly due to the global economic crisis and latest reports indicate that this South Asian country, similar to Sri Lanka’s plight, is now seeking a bailout package from the IMF of $4.5 billion since foreign reserves have fallen to $39.79 billion in mid-July from $45.33 billion in the same 2021 period.
Sri Lanka is on a precarious slope. On one side, the IMF is calling for policy reforms and tight controls including the restructuring of state-owned enterprises, while on the other hand, the opposition is calling for polls and people are unsure whether the new President will survive or whether the ruling SLPP will pull the rug under his feet through a parliamentary vote if he doesn’t do their bidding. All this creates uncertainty which is detrimental to business optimism. Then calculate the number of hours spent by people waiting in fuel queues for days resulting in hundreds of lost hours of productivity.
While many countries are speeding ahead with progressive developments and futuristic projects, we are stuck in a rut on tackling the current crises with no positive future in sight. Business leaders are imploring all sides of the political spectrum to come together instead of wallowing in the mud together. The message: Enough is enough; ejecting presidents should stop, buyers need to know that the country can turn around positively and deliver on schedule.
As I sipped my second mug of tea, munching on a bun, my reflections were similar: The politics has to stop, at some point and the country must get back into a positive frame and send a message to the world that Sri Lanka is back in business.
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