Features
Need for moving from geo-politics to geo-economics
Speech made by Ajith Nivard Cabraal, State Minister of Money, Capital Markets and State Enterprise Reforms at the Trade and Investment Forum organised by the Pakistan High Commission on 24th February 2021.
Honourable Prime Minister Imran Khan, Honourable Prime Minister Mahinda Rajapaksa, Honourable Ministers, My dear friends.
First of all, I want to thank the organizers of this Pakistan-Sri Lanka Trade and Investment Conference for inviting the Sri Lankans to commit their cooperation to you. As your Foreign Minister just mentioned, I believe this Forum would offer great opportunities for our two countries to co-operate effectively, and I am eagerly looking forward to that. At the same time, I think it’s a privilege to be able to speak at a Forum where two Prime Ministers represent their country’s economic spheres, which is also a very rare occasion.
Honourable Prime Ministers, our two countries have come a long way since we gained independence: you, in 1947, and we, in 1948. Over the last 73 odd years, we have broken free from many shackles of Colonialism. We are finally beginning to “think big” of our respective economies and focus on the next era of our respective countries. I have listened to speeches of the Pakistan Prime Minister as well as that of our own Prime Minister, and have seen a common trait. That is, they both talk about bringing the poverty levels down and making sure that the fruits of development reach every section of the country’s people. Those are very important outcomes that we all need to be focusing on.
Honourable Prime Ministers, by 1992, within 45 years of being independent, Pakistan was able to win the Cricket World Cup under your current Prime Minister, by beating England. We in Sri Lanka were very happy to watch him play Cricket, but when he played against us, we were not so happy! Nevertheless, we have been regularly delighted with the exploits of the Cricket team of Pakistan. Perhaps as a result of their successes, we also took a cue, and by 1997, 49 years since our own independence, we beat Australia to become the World Cricket champions. Since you had already beaten England to become champions by then, the two countries which started Cricket (England and Australia) were both beaten by two countries of the subcontinent, which then showed the world that we can do it!
Unfortunately, however, we have not done so well in other areas, such as cooperation in trade and investment. As your Foreign Minister just mentioned, the targets that we have set for ourselves in this sphere seem to be quite low. We should not be looking at 300 or 400 million dollars of trade and investment. We should really be looking at a lot more, given the relationships that we have, the friendships that we enjoy, and the way in which we have cooperated with each other. We should be talking about trade and investment between ourselves in the billions of dollars. Let’s therefore see whether today could be the day where we start on that target. Hopefully, today we will find ways and means by which we can co-operate to achieve those goals.
Honourable Prime Ministers, we all know that there is a resource gap in our countries, and that such resource gap has to be filled with investment. In the Colonial times, many of those countries that reached high per capita incomes, didn’t fill the resource gap with investment. They took the dubious step to conquer other countries and forcibly grab resources. By doing so, they were able to reach the prosperity levels that they are at today. But our two countries have not done it that way. We have accessed resources and investment legally and honourably. We invited and received investments. We took loans. We traded in a fair manner. We played by the rules. That is how our countries have progressed and developed.
So, let’s see how we can do even better. In my view, to do that successfully, we have to make sure that we invest in each other’s countries. I was a former Governor of the Central Bank, and my experience tells me that we have been mainly investing in the West for too long. We have invested in those countries based on the “credit ratings” given by various Western credit rating agencies. Then, we get about a 1 per cent return. But, when those countries’ investors invest in our economies, we pay about 7 per cent as interest, due to our supposedly “poor credit rating”. Have you also ever wondered as to why when we lend money to the West, it is called an “investment”, but, when they lend money to us it is a called a “loan”? Not only that. In accordance with that strange arrangement, we suffer from an interest differential of around 6 per cent on our reciprocal investments. On that basis, if we have forex reserves of 10 billion dollars and our market borrowings are higher than that, we will have a 6 per cent up-front negative carry on our total reserves. That works out to about six hundred million dollars, which is a lot of money!
Against this background, I think we need to think as to how we can co-operate with each other and in particular, as to where we can invest in each other’s economies and countries. Your State Bank of Pakistan and our Central Bank of Sri Lanka should now be looking at ways and means by which we can co-operate in our respective forex investments. These are the big tickets that can make an impact in our cooperation. That’s a very important part where we can make a significant difference in the way we do business and investment between our two countries in the future. In addition, we must also promote trade within our private sectors.
My dear friends, Prime Minister Imran Khan made a fervent plea recently for a Post-Covid moratorium to provide some real financial support to the countries that need to deal with the fall-out of the pandemic. Sadly, it has not yet been favourably responded to, by the global financial community. Our President also made a similar plea a few months ago. But unlike what happened immediately after the tsunami, the world monetary authorities have been very slow in responding to these calls. If an year’s grace was given to the emerging nations for the forex payments that had to be made in that year to the multilateral institutions, it would have made a huge difference to those nations which have had to grapple with the sudden drop in their foreign receipts as a result of the pandemic. Let’s therefore agree to work together to achieve that kind of a global outcome, which is essential for the continued growth of our countries.
Honourable Prime Ministers, Pakistan is a 300-billion-dollar economy. We are an 80-billion dollar economy. In that context, I think if we can work out a scheme where our two countries have trade relationship of at least a billion dollars very soon. That would be a great outcome for both our countries.
Let’s also make our respective countries preferred destinations. Let’s make Pakistan a preferred destination from Sri Lanka, and Sri Lanka a preferred destination from Pakistan. Let’s visit each other’s countries frequently. Let’s play a little more cricket as well. Maybe some club teams, school teams, or over-50 cricket teams (I can also participate then!), women’s teams, can play each other. We can also have exchanges of students. We already have that happening. In fact, we have to be grateful to Pakistan for providing 1000 scholarships to our kids to study in their universities. Let’s make films together. Let’s organize exhibitions. Deepening our co-operation in various ways is essential if we are to make our relationship meaningful and profitable.
Honourable Prime Ministers, I welcome the Pakistan Foreign Minister’s suggestion that we should now move from geo-politics to geo-economics, and why not? I think that’s an excellent basis for future co-operation, when we are reshaping our respective economies. We must keep that in mind, because I think it would be an important factor when we push forward our own economies. In that regard, I must also proudly mention that Sri Lanka is today emerging from economic stagnation which dragged us down over the last five years. In fact, Sri Lanka has been able to go through the recent difficult period with the Covid pandemic, even while maintaining low interest rates and protecting the value of our Rupee.
Honourable Prime Ministers, going forward, a continuous pipeline of investments would be a priority for us in much the same way that it will be for you. So, come invest with us. In the same way, Sri Lankans could invest with you. We have the Port City which is an exciting value proposition. We have the Hambantota Industrial Zone. We would like you to consider making investments there too. I also know you have some great industries in Pakistan. You have the Pharma industry. In fact, I met some of them last night and had wonderful conversations. Let’s see whether we can develop some partnerships in that field, as well.
Let’s now promote a sustainable South-South dialogue and partnership. One of the best economists of our country in the 1980s, Dr. Gamani Corea who was the Secretary General of UNCTAD, was the man who first proposed the “South-South” cooperation. Unfortunately, that laudable concept didn’t get enough traction at that time, but today would be a good day for us to take that initiative forward. That would be a tribute to that great man as well.
Prime Minister Imran Khan, we deeply appreciate the time you have spent here in Sri Lanka and the fact that you have been the first visitor to Sri Lanka after the pandemic. We greatly value your visit and we hope that today’s event would be the fore-runner for a great partnership. You have been involved in great partnerships in the field of Cricket and I think you know very well about the value of good partnerships. Let’s hope that the great partnership we are starting today would be a truly winning partnership for both Sri Lanka and Pakistan.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
US sports envoys to Lanka to champion youth development
Rahuman questions sudden cancellation of leave of CEB employees
