Impulsive, irrational, unscientific decision-making retards economic development

Aserious defect of the Government has been its impulsive, irrational and unscientific decision-making. Impulsive and irrational decision-making affects the economy adversely. Ill-considered and unscientific decision-making has been a serious flaw impacting the economy adversely. It is an obstacle to economic development.

The most recent instance is the sudden decision to re-impose the death sentence – a move that could have serious consequences for the country’s exports. Earlier, the Government made a costly mistake in banning the import and use of glyphosate that reduced the tea harvest and denied the country significant foreign exchange earnings.

Other mistakes

Several other Government decisions have been changed owing to a lack of foresight and careful consideration of the consequences of policy decisions. When decisions taken by one arm of the Government are reversed by another, it creates considerable uncertainty about economic policies and in turn erodes investor confidence.

The decision to re-impose the death sentence in a bid to eliminate the narcotics drug menace was taken suddenly and announced with much fanfare at a rally in Kandy. President Maithripala Sirisena, perhaps, considered it a popular move. However, it is not an effective deterrent for trafficking in drugs or even for murder as experiences of other countries show.

Civilised countries have done away with the death sentence as it has not proven to be a deterrent to serious crimes. Furthermore, Sri Lanka has signed a UN resolution to not carry out the death sentence. Therefore the decision to re-impose the death penalty goes against the UN resolution to abolish the death penalty.

This decision flouting the country’s international commitment demonstrates the ill-considered manner of decision making.

Although the Cabinet is said to have agreed unanimously to implement this decision, several ministers, including the Finance Minister, has publically stated that they were opposed to the re-imposition of the death penalty. Perhaps it was a majority decision rather than cabinet consensus.

International opposition

No sooner Sri Lanka made this decision than several nations such as Canada, Britain, France, Germany, Italy, the Netherlands, Romania and Norway and the European Union -- asked President Sirisena to maintain the moratorium and to uphold Sri Lanka's tradition of opposing capital punishment. They said that they opposed capital punishment "in all circumstances and in all cases" and that “the death penalty is incompatible with human dignity, does not have any proven deterrent effect, and allows judicial errors to become fatal and irreversible.”

Withdrawal of GSP Plus

The decision also saw the European Union threatening to withdraw the GSP Plus concession that the unity government had managed to regain. The withdrawal of the GSP plus concession would be a serious threat to the economy. Nonetheless, the President has gone on record as saying that he will implement the death sentence even if the EU withdraws the GSP Plus facility.

The withdrawal of the GSP Plus concession will be a serious setback to export growth. The country cannot afford a massive loss of exports. It will increase the already large trade deficit, affect the balance of payments adversely and weaken the country’s debt repayment capacity. The broader repercussions would be the retardation of economic growth, reduce employment and decrease incomes of people.

The country’s exports fared badly after GSP Plus concessions were withdrawn. Fortunately, restoring the rule of law and good governance practices and friendly relations with western countries enabled the Government to regain the GSP Plus status from the EU. Consequently, there was an upsurge of exports from March 2017.

In the first five months of this year, industrial exports of US$ 3.6 billion were nearly 10 percent higher than that of the first five months of last year and there is every prospect of the growth in exports accelerating. Export earnings from textiles and garments increased significantly due to the higher demand from the EU and the US. The removal of the ban on fisheries exports to the EU and the restoration of GSP Plus facility, increased earnings from seafood exports significantly during the past 12 months.

Severe blow

If the President carries out the death sentence, then the EU withdrawal of the GSP Plus concession would be a severe blow to the country’s exports. It is estimated that this facility confers a benefit of about US$ 350 million each year. The withdrawal of the EU concession would be a disincentive to exporters and would sabotage the Government’s effort to increase exports substantially. On the one hand, the Government proposes an export development strategy that envisages the increase in exports to US$ 28 billion in 2022, and, on the other, the Government makes a decision that would jeopardise exports substantially. Such is the contradiction in policies that would impact on the economy by such ill-considered impulsive decisions.

Glyphosate blunder

Not so long ago, the Government took a decision to ban glyphosate without consulting the scientific community. The Director of Agriculture, Chairman and Director of the Tea Research Institute and other eminent agronomists were not consulted before the decision was announced. Their unanimous advice was that the use of glyphosate should be allowed. The irrational decision-making process is evident in the fact that the National Economic Council had studied the issue and recommended the import of glyphosate. But this decision, too, was over turned.

The consequence of this decision was a drop in tea production and an estimated loss of US12 billion. Furthermore, by the use of an alternate method of weed control the country lost the important Japanese market.

Tea is the largest agricultural export and, in terms of domestic value addition, is the country’s largest export. This ill-considered decision was a serious blow both to tea plantations and smallholders. It was akin to attempting to kill the goose that was laying the golden eggs.

Reversal

Fortunately after much prevarication, the decision was reversed and the tea crop is recovering to its earlier levels.

Although much of this confusion is due to the Government being a coalition, the two issues discussed were due to the absence of a proper decision-making process. Those knowledgeable on particular issues are often not consulted.

Way forward

The country cannot go forward without the Government’s decision-making process being based on in-depth scientific and rational study. Impulsive decision making has no place in a knowledge-based competitive modern society.