Sri Lankan reforms essential to attract foreign investors

Constraints like productivity, infrastructure, reforms and red tape need to be addressed to attract foreign direct investments (FDI) to Sri Lanka, said Dr. Ganeshan Wignaraja, an ADB official and academic delivering a lecture on the subject of “Whether the era of export –led growth has ended and its implication for Asia and Sri Lanka”.

Speaking at the Lakshman Kadirgamar Institute auditorium at Horton Place Colombo 7 in an event organised by the Advocate Institute in Sri Lanka, Dr. Wignaraja said it was not the end to exportled growth rate in Asia but to a much slower pace in the coming years.

Sri Lanka liberalised its economy in 1977 during the period of the J.R Jayewardene’s government to emulate Singapore’s success story and following the election of the new government in 2015, the government’s strategy has been on an export-driven economy to boost the country’s economy.

“Countries such as South Korea, Taiwan, Hong Kong and Singapore have succeeded in the past in attracting both foreign and domestic investment to expand their export trade to the tune of US$700 billion. However the exports were significantly affected during the 2008-2009 period due to global financial crises that resulted in a recession of the global economy. A much slower growth has been predicted for Asian economies in future according to a forecast made by the International Monetary Fund (IMF),” he added.

He said although tourism brings in revenue to the country, Sri Lanka has not capitalised in the manufacture of electronics goods, machinery and the IT sector like that of India. “India’s expansion of the IT sector did not come to Sri Lanka but went to the Philippine’s due to English speaking Philippine graduates and due to its large population.”

He said exports are critical for a small nation like Sri Lanka as the US is coming out of a recession. Sri Lanka has not benefited much from exports in comparison to countries like Thailand, South Korea, Taiwan, Hong Kong and Singapore. It is also important to attract mega development projects from countries like China for its development. China is present in distant countries like the US, Europe and India to promote their high tech products.

Dr. Wignaraja is the advisor to the Chief Economist of the Asia Development Bank (ADB) in Manila. He was previously the Director of Research of ADB in Tokyo Japan.