Making our people rich

Making our people rich

By Ranil Wickremesinghe

Sri Lanka and India, working as an integrated marketplace, offer
strong opportunities for potential investors. Together, we can offer
greater economies of scale and build a more competitive commercial
environment.

NEARLY SIX decades ago, momentous things happened in both our
countries [India and Sri Lanka]. We made our people free. We
established institutions and secured a system of Government where the
people were able to elect the Parliament and enjoy basic democratic
freedoms. This was our success story. We did this whilst elsewhere in
the third world democracy failed, or never took off. But just as much
as we have had successes we have also had failures. The most glaring
of which was our failure to make our people rich while many others
around us succeeded.

Consider for a moment what has happened in China. At its inception,
the People's Republic had no reserves. Chiang Kai-Shek had fled to
Taiwan taking all the reserves including gold. Despite years of
failure during which ineffective measures to spur economic growth were
tried, once the free market reforms took place in the late 1980s China
started to grow. Today it is emerging as an economic miracle with a
rapidly transforming economy and increasing prosperity for their
people.

There are other examples. South Korea turned its economy into a
powerhouse before granting her people real political freedoms.
Indonesia was single-minded in improving its economic performance and
has only recently adopted more genuine democratic processes. Even
Vietnam, one of the few remaining communist countries, has been
attracting increasing amounts of foreign investment and looks set to
achieve great economic strides in the near future.

In the 1950s, we in Sri Lanka were at the top of the Asian economic
league. Today we are near the bottom. Once places like Singapore and
Malaysia looked to us as a model but not any more. But why should this
be? For the current, widely accepted view is that a functioning
democracy is essential for sustainable economic growth and
development. Nevertheless, the evidence from both our countries is
that this is not necessarily the case.

Today, as we look forward to the challenges that must be met to
improve the lives of our people, we should look back at the many
changes that have taken place in the global economy during the last 50
years. In the last century, commerce and markets tended to work within
national boundaries. Even when there was trade between countries, this
happened broadly through Government controlled channels. But today we
have a market system, which no longer respects national boundaries in
the same way.

Increasingly we see business taking place directly between customers
in one country and suppliers in another country, with little or no
direct governmental involvement. These changes are best described in a
recent book, The Shield of Achilles, by Philip Bobbitt. He argues that
the "nation-state" that arose with the industrial revolution is in the
process of being replaced by the "market-state". I quote, "In the
market-state, the marketplace becomes the economic arena, replacing
the factory. In the marketplace, men and women are consumers, not
producers... " He argues critically that in future, leaders will be
judged by their ability to provide more and better economic
opportunities to their people. In this new world, goods, services,
finance and even ideas are crossing borders and moving around the
world seemingly at the speed of light. As leaders, either we keep up
with the changes or we become irrelevant to the needs of the people.
To create new jobs and improved incomes both of our countries will
have to accelerate the process of integration with the world economy.
This means removing the barriers to all types of trade and investment.
That is why joint initiatives such as the Doha Development Round
launched by the World Trade Organisation and the growth in bilateral
and regional trade agreements are vital.

It is why we have been working with your Government here in India to
fast track trade liberalisation. Both India and Sri Lanka are seeking
agreements with other potential partners. This suggests that there may
be scope to move towards interlocking agreements and use these as
building blocks for genuine trade liberalisation. If we can do this,
it will benefit the entire region .

Look at the economic map of our region and you will see why Sri Lanka
and India, working as an integrated marketplace, offer strong
opportunities for potential investors. Together, we can offer greater
economies of scale and build a more competitive commercial
environment. Together, we have the potential to emerge as one of the
most dynamic regional markets in Asia and the world.

One example is tea. If India and Sri Lanka tea industries were to join
forces and build on our combined strengths, there could be huge
returns. Apparel manufacturing is another area where both of our
countries have achieved a measure of success. With the ending of the
Multi Fibre Arrangement in 2005, we will face many challenges in
remaining competitive. That is why transport and logistics capacities
to ease the moving of goods across our borders will help our exporters
to make real cost savings and hence improve competitiveness. The ICT
sector is another area where both countries are growing. This is one
of our best opportunities for rapid growth in employment and enhanced
incomes. The more we try to compete in traditional ways, erecting
barriers and maintaining a relatively narrow local perspective, the
less likely we are to succeed. The more we open up and seek to build
networks and integrate globally, the greater are our chances of
success.

As trade and investment barriers between India and Sri Lanka come
down, we can expect that for a great many industries, the core market
will be defined by south India and Sri Lanka. Among the most immediate
benefits from this Comprehensive Economic Partnership Agreement will
be those realised in the states physically closest to Sri Lanka,
particularly the southern States of India. There are a number of
obvious examples. Tourism is an important industry for both India and
Sri Lanka, with enormous potential for further growth and development.
Within about an hour it is possible to fly easily between many cities
in south India, Sri Lanka or the Maldives. These destinations offer an
enormous range of possibilities for tourists — beaches, mountains,
cultural heritage sites, wildlife and pristine natural settings.
Higher growth in tourism means large increases in employment and
better incomes, especially in the rural areas, where the need for jobs
is greatest.

If we step back and look at this sub-region as a single market, it is
clear that there are many more opportunities that we can offer
tourists. By working together and taking advantages of our relative
strengths, we can develop a much richer and more competitive menu of
attractions with which to build our respective sectors, making us much
more competitive together. Obviously, these are not activities that
can develop rapidly and efficiently on their own at the local level,
but must be part of a larger regional and global process. They will
require improved power and transport services as mentioned earlier.
And they will also require the much-improved communications and IT
services that are emerging today. The world has changed and
integrated, regional markets are fast becoming the means for economic
and political success.

Turning to infrastructure, over the past 50 years we have failed to
provide efficient, cost effective transportation and port facilities.
The cost of such things is very high and can easily become political
liabilities when not made. Yet they produce massive benefits over a
long period of time.

But again let us think regionally rather than nationally. Imagine a
fully interconnected electric grid stretching from Nepal to Sri Lanka,
where countries in the region could readily trade electricity. We
would all benefit from such imaginative regional planning.

Let me finish then by discussing the prospect of building a land
bridge between Rameswaram in Tamil Nadu and Talaimannar in Sri Lanka.
One of the final steps in integration. With road and rail links this
would be a major step towards sub-regional economic integration and
would offer both sides of the Palk Straits huge economic benefits. Nor
do we see the Sethu Samudram project as inconsistent with the
development of the land bridge. Both projects are compatible. Sri
Lanka's role in the sub-regional economy would tend more towards the
provision of services. Not only the ports and airports, but also by
supplying financial, logistics and business development services. Both
building the land bridge and the consequent economic activity,
especially the global marketing base, will provide employment to large
numbers of people and raise incomes substantially in South India as
well as in Sri Lanka. A win-win development that could change the
economic map of our region.

Let us build a common future from our common past. All it requires is
the imagination, the leadership and the commitment to shake off the
shackles of the past, bring peace to this part of the region to make
our people rich.

(Excerpted from the Millennium Lecture-2003 delivered by the Prime
Minister of Sri Lanka. The lecture was organised by The Hindu Media
Resource Centre for Sustainable Development, M.S. Swaminathan Research
Foundation, in Chennai on August 23.)

Related Stories:
Get farmers out of subsistence farming, says Ranil
Sri Lankan PM calls for single regional market

© Copyright 2000 - 2004 The Hindu