Looking afresh at Lalith's prophetic words 'export or perish' in today's competitive world
Excerpts from the Lalith Athulathmudali oration, "Sri Lanka: The way forward" delivered by President Ranil Wickremesinghe on Wednesday, at the BMICH
Iwas thinking of when I first met with Mr. Lalith Athulathmudali. He was a lawyer and a lecturer at the Law College and I was an apprentice under Mr. H. W. Jayewardene QC, before I took my oath as a lawyer. The day I took my oath, I invited Lalith to come to my oath party. Another person I invited was a young lawyer older than me, and a Member of Parliament, Mr. Gamini Dissanayake. There were two other Members of Parliament I invited since I knew them. One was the Chief Opposition Whip, Mr. R. Premadasa and the then Leader of the Opposition Mr. J. R. Jayewardene.
I think the destiny of the country and the destiny of the UNP was to a large extent tied in the interaction between all these members. Lalith, like me and Gamini, was eager to see a modernised UNP.
Why did I join the UNP? My family has been UNPers from the start. But what attracted me as a modern UNPer was what was called the Kalutara Declaration of the 1963 UNP Convention which was a draft done by Mr. Dudley Senanayake and J. R. Jayewardena which laid the ground for a social democracy.
We had envisaged as a party, from the time of Mr. D. S Senanayake for a capitalist economy and the fact that we wanted to do away with hunger, illiteracy, and disease. That was in 1947.
The next most important part was trade. The subject was given over to Lalith. Later on, shipping was added to him. There were going to be other major projects, which were to be the impetus for development. One was going to be the Greater Colombo Economic Zone which the President (J.R. Jayewardene) kept for himself and the other one was the Mahaweli programme which was given to Gamini Dissanayake. That is how we started (in 1977). Lalith's job was trade.
Trade didn't have the flashiness of the other jobs, but nevertheless it was important. At that time we were a socialist economy, everything was controlled and President Jayewardene had to proceed cautiously. And what did he do? He took seven electorates in the Gampaha District starting from Negombo and ending with Biyagama where the normal laws of an open market economy were applied and special concession were given in the two investment zones of Katunayake and Biyagama.
But Lalith realised that we can't get export only from those areas. We need to have the rest of the country also involved. Therefore, he started the Export Development Board to promote exports outside the economic zone.
He undertook the development of Sri Lanka's main port, the Colombo port. You are getting two big areas of development activity around Colombo. On one side was Colombo, the trading hub, and the port, and the other side, the Greater Colombo Economic Zone. Then, into the rural areas came this massive development programme which really developed the North Central province, parts of the East and the whole of the Kandy district.
So these were the driving forces of growth. I was then the Minister of Education. Lalith came up with this idea of scholarships for those who want to go to the university. He introduced the Mahapola scholarship. It is the first time that we funded individuals for free education and not the institutions.
Unfortunately, we didn't carry it through with our institutions. And you have, the universities which are today taking money direct from the government and which have not developed, unfortunately, structured around the University Grants Commission, the UGC. I think we have to rethink that mechanism. Rather than funding the student, there was a need to fund the universities and thereby had courses that were employment oriented.
But in addition, the university ran their external courses so there are external students and every year we had to take in about an additional 10,000 students which contributes to the 500,000 excess employees in the government service. We have to keep free education and make it more meaningful.
Then came Lalith's next stint as the Minister of Agriculture where he started modernising the villages and looking at modernising agriculture and looking at exports and then his stint as the Minister of (Higher) Education.
Lalith was also the Minister on National Security. Much had been said of this, so I will not cover that. I will refer to the contribution he had made both to the economy and to the development of Sri Lanka. It was then in 1991 that we all parted ways. Lalith decided he will leave the UNP and I thought that I will stay with the UNP.
I felt that the party mattered and the party had to be strengthened. He felt there had to be change and that he had to go out. And then the politics of Sri Lanka took a different turn altogether. By 1993, Lalith was assassinated. That was a great loss to the country. Within a week, President Premadasa was assassinated. And by the end of next year, Gamini was no more.
The drivers of the development programmes, the people who were to shape the country were no longer there. And then we had to look at a new phase. By that time, the world was also changing. The whole concept of social democracy had gone further forward. And it was known then as what we call today, a social market economy.
So when I became President, it was partly because we didn't follow Lalith's advice. He said "export or perish".
We didn't export, and the economy perished. Now, the whole issue was how do you restart it again? What is the type of economic model we need? Are we going in with a completely open new liberal economic model or something else? I thought we should stay on with the social market economy. It has to be vibrant.
It cannot be otherwise. And if we developed what was relevant for today, a highly competitive economy with social protection. It has to be highly competitive, highly competitive globally. It has to be an export oriented economy. So we have included what Lalith said, 'export or perish'. And we brought in an issue which was not important at the time Lalith or the others were living, that is the issue of climate change and an environmental friendly economy, green and blue economy - the green and blue economy, a word that was given to us by the late Mangala Samaraweera at that time, And finally, what Lalith again laid the groundwork for and what I also work for - a digital economy So it's a highly competitive economy, which is export oriented, which has social protection, which is environmentally friendly, and the characteristics is a blue green economy.
We can't be begging anymore. We can't be going to countries and asking for loans anymore. We have to learn to stand on our own feet. When India's economy fell in 1991, I was the Minister of Industries at that time. They decided to come up by themselves. China was destroyed by the Cultural Revolution and Deng Xiaoping decided that he will bring it up. Germany, destroyed by war decided to come up by themselves. Now what the hell are we doing getting aid all the time?
We must aim high. We can't aim low. We are looking at a 25-year programme. Many of us won't be there when it ends. But we will be 100 years of independence in 2048. I was born one year after Independence in 1949 and we were second to Japan. Today, we are just above Afghanistan. Let us make up our mind that we are going to build this economy and we can do it.
We must have an open market economy, highly competitive. It won't come overnight. Gradually over a period of five years we must aim to sustain a growth of 7%. Easier said than done, but it can be done and international trade as a percentage of GDP must equal 100 or more. We are not doing it overnight, but certainly over 5- 6 years, which we have to do.
And annual growth rate from new exports should be US$3 billion. Investment annually must be US$3 billion and we have to create an internationally competitive workforce, highly educated and highly skilled. It has to be employable skills, not otherwise. So all this is what we have to aim at and we have to go for it. Before that, we have to stabilise the economy. If we are to improve we have to reduce the public sector debt from 110% of the GDP to 100% of the GDP in the medium term. We have to bring inflation under control to a single digit and interest rates I presume have peaked and will gradually come down to a moderate and a single digit level.
The exchange rate will become stable and strong and with this has to come the growth enhancing structural reforms.So we are not looking at the four years for the stabilisation programme and the modernization afterwards.
We tried state ownership. We have tried mixed economies. We tried to run it with corporations, the trillion of rupees that we have lost and made us poorer than we were in 2019. And when you look at the future, one of the biggest new areas of development is Sri Lanka as a logistics centre. Sri Lanka, that can be a feeder to most of the Asian countries, a transhipment hub first with the Colombo port.
Then in Hambantota we have another port, with which can we reach out to Africa and Trincomalee on the eastern side of the Indian Ocean. So here we are. This is what we have. Now these are what Lalith started. These exports will help the large rural areas to increase our paddy production. We have a big market for export. The Middle East requires food. Singapore, requires food and many other growing markets. There would be at least 500 million more people from Saudi Arabia to Indonesia by 2050 not counting the hundreds of millions on East Africa and South Africa. These are your big markets for food exports.
These are the areas we are looking at, highly automated manufacturing because lower-wage economies will be in Bangladesh, Myanmar and even in India. We have to be jump ahead. Our tourist industry has to now reorient itself to high level tourism. We can't have 10 million tourists coming in paying $100 $150 a night. It's better to have 2 million tourists at $500 to 1,000 a night.
So let's see how we can build this society.
The last time when Lalith, Gamini, Premadasa, Jayewardene, all of us started, it was derailed by a war. I don't think there is going to be a war in the country, but the consequent, the after-effects have to be actually rectified. And we decided after the budget debate is over, during the following week that the party leaders and the Speaker will meet and the Government will discuss how we can resolve the outstanding issues.
One thing we can all work together is, if you remember a large number of people who have graduated, thanks to what Lalith has done, let's work together both for the University and for a better Lanka, where those who graduate, those who do post-graduate degrees from that university can exist.
So let's see how we can build this society. The last time when Lalith, Gamini, Premadasa, Jayewardene, all of us started, it was derailed by a war. I don't think there is going to be a war in the country, but the consequent, the after-effects have to be actually rectified. And we decided after the budget debate is over, during the following week that the party leaders and the Speaker will meet and the Government will discuss how we can resolve the outstanding issues.