Sunday Leader Editorial

Leap-Frogging Into The Developed World

Sunday 08th November 2015

 

Prime Minister Ranil Wickremesinghe announced his brave vision for a spanking new Sri Lanka in his ‘Third Generation Economic Reforms’ address to parliament on Thursday. It is an outline of a comprehensive economic plan for the future hitherto not considered for which much thought and hard work would have gone in. It is not possible to do justice to this plan in this account that is written scarcely 24 hours after its delivery, and we would confine our comments to a brief view of it on our first reading.

The first generation reforms Wickremesinghe refers to is that of President J.R. Jayewardene’s  reforms after he swept the 1977 polls and was able to usher in drastic economic changes without much protests with his 4/5^th majority in parliament. The Jayewardene reforms shifted the economy from the Mixed Socialist Economic Policies of the Bandaranaikes, so devoutly followed, to an unabashed Market Economy which was a move of great foresight. India which had been ploughing on with the so called Nehruvian-Gandhian economic policies shifted to a Market Economy only 10 years later. The Second Generation Reforms are those of President Premadasa which was basically a continuation of the Jayewardene reforms while the Third set of Reforms are those presented by him with President Maithripala Sirisena.

Wickremesinghe claims that with the January 8 and parliamentary election victory the issue of Geneva resolutions brought against Sri Lanka was hanging like the Sword of Damocles over the country even threatening international sanctions but that has been cleared, and the entire market of the world was now open to Sri Lanka.

Indeed the world market may be open to Sri Lanka now, but he is well aware of how hard it is to enter this competitive market. To do so, he says the economic foundations must be right, and Sri Lanka must have a knowledge based Social Market Economy built on social justice principles. There can be no valid objection to an economic system based on principles of social justice, but in Sri Lankan politics valid reasons for objections are not required. The opposition opposes anything that is proposed.

The Prime Minister says that in his opinion the right political climate has been created to build a strong economy. The main objective in forming a national government by the two main political parties in the country was to provide a common platform to deliver long term social economic policies that can solve the key economic problems of the country.

True, there is a national government in place trying to achieve such objectives, but there is also an extremely disruptive opposition within the UPFA determined to wreck every move made by the government. With such opposition, the economic miracles performed by Park Chung-hee of South Korea or Lee Kuan Yew of Singapore or even J.R. Jayewardene are not possible. Gen Park Chun Hee was a military dictator and Lee Kuan Yew himself saw to it that he had no opposition, and Jayewardene broke the back of a very powerful trade union movement that rose against him.

The Sirisena-Wickremesinghe government is a democratic government elected on the ticket of Good Governance. So Wickremesinghe will have to find a way out of this political impasse.

Some of the proposals such as empowering three million citizens to become land and house owners, priority for middleclass housing schemes in sub-urban and semi-urban areas were long awaited and so far confined only to political rhetoric. They can be of immense benefit to the working class who today have to part with a quarter or half their monthly income on house rents. Housing schemes built on sustained plans that will have neighbourhoods created with hospitals, schools, shopping complexes etc., are still dreams which the middleclass is longing for.

Prime Minister Wickremesinghe says ‘the biggest challenge of all is to lift ourselves up from the economic abyss the Rajapaksa administration placed this country through procedures that were erratic economic processes and irregular practices’. To uplift the people’s income levels while creating one million jobs, Sri Lanka has to enter a market bigger than the local market and find space in the world market. He lists a number of steps that have to be taken to achieve this objective one of which is foreign investment; some others most Sri Lankans are still not familiar with.

Two years are required for consolidation of these plans, and then moves will be made to go forward.

If his vista of sweeping economic reforms materialises it will take Sri Lanka from a backward Lower- Middle Income country in which 46 per cent earn less thant $ (US) 2 per day into a prosperous Middle Income Country like say South Korea or Singapore. One vital factor that is lacking appears to be the personnel required for implementation for such a sophisticated economic plan. It requires people with a committed work ethic like the so called Confucian work ethic of the Chinese and those beyond China such as in Singapore. Expertise and innovative talents are required among indigenous people as well as contributions from foreigners. A change in the insular Sri Lankan mindset is required beyond those who object even to a rival institution producing fellow/professionals.

Wickremesinghe’s thinking is in accordance with global trends of economic development. Sri Lanka has to leap-frog out of the hole it is in, if it is to jump into the developed world.