Sri Lanka; Liberalize it!

Freedom is good. And not only for the general public. It is also great for the lining of politicians’ pockets. Sadly though, it seems to me that our leaders are too myopic and short termist even in that age old art they seemed to have perfected; corruption. Just imagine the opportunities for bribes, commissions and other various nefarious under the counter transactional opportunities that would pop up if Sri lanka became a mini commercial hub like Hong Kong!

Liberalization has worked in almost every example of a fast developing country we can lay our eyes on. China started the process in 1979 and their GDP has grown over an average annual rate of 9.4% ever since. India started much later, in the early 1990s. And the reforms they inacted led to the booming economy that is India today.

They went about this with a mixed strategy of increasing competitive advantages by specializing in trade areas, squeezing the public sector and encouraging more private investment, reducing tariffs and encouraging foreign investment, providing for a more versatile and dynamic work force and importantly, installing a culture of industrialism and ambition in their people.

Although there were significant differences in their individual approaches one critical factor stands out like a black man at a kkk reunion; consistency. Both these nations consistently followed the same initial drive and strategy with little or no directional change ever since they were implemented. In the case of China, it was centrally administered and controlled by the unchallenged authority of the Communist Party. But India notably, went through several years with little or no change in economic policies since their implementation, despite several changes in rulers.

This has hardly happened in Sri Lanka, one minute we’re opening up the sluice gates of imports and the next we are all about ‘ganna apey de’ (buy our own goods). Subsequent governments have always tried to prove their superiority by completely changing the economic playing field. Such destruction sadly evidences their complete lack of regard to established knowledge. One just has to look at successful nations to realize that the one thing that made them successful was consistent public policy over the course of many years. the US for instance, is an amazing political entity. Their single minded focus and vision based on the ideals of the founding fathers have continued over almost three centuries and look where they are today.

Unfortunately or otherwise, the drive for economic growth lies in the hands of the key that turns the ignition; and that key is the government or the leadership of this country. So far i must say things are looking a bit positive with investment flowing in and confidence on the up (Calamander has just started an exclusive Sri Lankan private equity fund see video below – thanks Thinu!) but only time will tell if this improvement in our fortunes is due to the propeller effect of the war being over or the actual financial competency of our authorities.

The Chamber of Commerce, Jaffna is upset; they are unhappy because the government is going about most of the development in the North East through state administered funds and entities. Large industries like chemicals, cement, fisheries, infrastructure etc have tremendous potential to improve the lot of the North Eastern general public.

The Chamber is of the opinion that carrying out these projects should be put in the hands of the savvier and more efficient private sector. They have the understanding of the locality, they definitely have the money and heaps of incentive to boot. In my opinion, handing over the reconstruction of the North East to private local business interests would be an awesome point for the government to kick start the process of liberalization. Lesser government in business is better business for everyone.

  1. Chavie said:

    “Lesser government in business is better business for everyone.” – totally!

  2. maf said:

    OK we should liberalise but how do you handle the lack of trickle to the rural economy when you liberalise? 60+% of the country lives outside of the western province. As it is 58% of the economy comes from services – would you import these as well? also there are 1.5 mil farmers in this country who live off toiling the earth. think of these constituents to the political leadership.

    imho there is a point to liberalise for a small country such as ours. MR&co are doing the right thing concentrating on building infrastructure in the rural areas and allowing Colombo to grow less fast. i believe the model that is more appropriate maybe that of New Zealand’s and its journey to a market economy from the 80″s and 90’s

    • Whacko said:

      Ideally, complete liberalization will only work if the whole world is completely liberalized so no, thats not what im saying should happen. Even india and china were largely protective of their local population and industry during their growth. Pehaps the government is on the correct path lets hope so! but there is nothing wrong with providing incentive to private local investment imo. As for NZ i am not too familiar with their reforms but i think they also involved strong policies of privatization and tariff reduction…

  3. Thinu said:

    cheers for the citation.. more of the like will come your way 😉

    • Whacko said:

      glad 😀

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