The Curionomist Podcasts | A Chat with Eric Miller on Why Sri Lanka is Primed for Logistics Success

We recently launched the ‘Multi Country Consolidation’ initiative in Sri Lanka under a new project by the Global Alliance for Trade Facilitation where Sri Lanka is only the second country in Asia to be selected for such project. The aim is to provide a new dimension of competitive advantage for the Colombo Port, which despite its fast growth, natural geographic advantages, efficient terminal operations, and impressive liner connectivity, is facing fresh challenges from other ports in the region. For the launch of the MCC project, the GATF’s lead for Sri Lanka visited the country and I caught up with him in this latest edition of the ‘Curionomist Podcasts’ to discuss Sri Lanka’s logistics potential.

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Have Economists Failed to Interrogate Sri Lanka’s Post-War Development Approach? – Reflections from the Kelegama Memorial Conference

The IPS held the ‘Saman Kelegama Memorial Conference’ recently, which had a bunch of thought provoking sessions exploring a number of topics anchored to the theme of ‘post-conflict development’. The session on ‘Smarter Development for Sustaining Peace’, which looked at the strategies Sri Lanka adopted for economic recovery and development, post-war, has been nicely recapped on the IPS’s blog here. While the session was very insightful, particularly the perspectives of Ramani Gunatilake, Udan Fernando, Dilani Gunewardena and Ganga Tilakaratna, I felt that a couple of pertinent issues were missed in the session and I chose the Q&A segment to highlight these. Especially since the session was about exploring ‘Sri Lanka’s strategies of post-conflict development’.

The first remark was of the ‘model’ or approach of post-war development that was followed by Sri Lanka, and the need to interrogate the consequences of that approach. I would argue that the defining feature of Sri Lanka’s post war recovery approach was that building of, or giving away of, assets. On one hand we had the Government at the time focussing almost entirely on building assets – it was connective infrastructure (like roads, bridges, causeways, etc) and social infrastructure (hospitals and schools). On the other hand we had some NGOs that were giving assets, for example donors who were giving families cows. (I did a podcast about this ‘cow dropping syndrome’ previously on the blog).

Of course at the time, the reconstruction of built assets would have been priority and no-one is faulting that. But from an academic and research perspective we never really got around to interrogating that post-war recovery approach. What were the factors that led to that approach at the time? What were the drivers of that approach and what did that mean for the way in which it was done? Could it all have been done differently? What lessons did that approach throw up for the for other governments and for donors, in other post-war or conflict-affected settings? What are the consequences today of that particular approach followed then?

Unfortunately, this kind of interrogation has just not been done by economists in Sri Lanka, and sadly this session too disappointed on that front.

There was another notable element that the session did not cover, and yet again is something that economists in Sri Lanka have failed to interrogate, while political science, sociology, and human rights researchers have done a creditable job of covering extensively. That is, what I called in the session “the elephant in the room, or rather the ‘camouflaged elephant’ in the room”. I was referring to the role of the military. This was yet another defining feature in Sri Lanka’s post-war recovery and development journey and there hasn’t been a strong discourse among the economics fraternity on this.

Both of these issues were issues that Dr. Kelegama did deliberate on and from time to time did articulate in different forums – publicly or in private groups. I hope that in next years edition of the ‘Saman Kelegama Memorial Conference’ we can have a more pointed and more systematic interrogation of the defining features of Sri Lanka’s post-war development approach, with a special emphasis on the two elements highlighted above.

 

Cover image copyright Anushka Wijesinha, Batticaloa 2009. 

Dire Data, the 2018 Economics Nobel Prize, and Making a Dent in Climate Change

It has been a great week for advancing the climate change mitigation and adaptation agenda. The IPCC (Intergovernmental Panel on Climate Change) just released its latest report asserting that the world has just 12 years to get climate change under control or face the rather dire consequences of a 2-degree celsius rise in temperatures. It conveys a rather scary and bleak message, but also has a hopeful connotation – if economies get a grip on climate change (yes, a big “if”), rising temperatures can be stemmed at 1.5 degrees. According to the Washington Post article on the latest report,

Most strikingly, the document says the world’s annual carbon dioxide emissions, which amount to more than 40 billion tons per year, would have to be on an extremely steep downward path by 2030 to either hold the world entirely below 1.5 degrees Celsius, or allow only a brief “overshoot” in temperatures. As of 2018, emissions appeared to be still rising, not yet showing the clear peak that would need to occur before any decline. Overall reductions in emissions in the next decade would probably need to be more than 1 billion tons per year, larger than the current emissions of all but a few of the very largest emitting countries. By 2050, the report calls for a total or near-total phaseout of the burning of coal.

Alongside the release of this incisive and alarming report, was the announcement of this year’s winners of the Sveriges Riksbank Prize – more often known as the ‘Nobel Prize in Economics’ – was won by two economists who have done much to demonstrate to the world the link between economic growth and climate change and also the power of technological advancements to do something about the challenges emanating from global climate change. This year’s winners are William Nordhaus of Yale University and Paul Romer of NY Stern School of Business and former World Bank Chief Economist. Nordhaus is widely acknowledged as the first person to create an economic model that described the interplay between the economy and the climate. Romer, meanwhile, has shown how economic forces govern the willingness of firms to produce new ideas and innovations – an area I am personally very passionate about. I am particularly excited that Romer is one of two winners. His work has focussed on the positive side-effects of technological progress and has often argued that market economies left to their own devices tend not generate enough new ideas and that there is a role for well-designed government action to stimulate more innovation. This echoes the views and work of Marianna Mazzucato, among others.

I was in the North Central Province this week, and saw the power of technological advancements and economic incentives to promote a more climate-friendly trajectory. Jetwing Lake, a mid-sized hotel located in the Dambulla area owned by local tourism giant Jetwing Hotels, has moved wholeheartedly intro green initiatives. And they are being rewarded for it. Earlier this year the international travel body PATA awarded a ‘Gold’ award to Jetwing Lake for their sustainable operations.

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As I turned off into the dirt road leading to the property, you suddenly come across a solar farm (pictured above). I later learned that Jetwing Lake hosts one of the largest solar installations in a Sri Lankan hotel, generating 300kW. Moreover, their solar installation features ‘bifacial panels’ which generates electricity from both sides of the panel increasing yield by 15%. Apparently its the first commercial project in the country to have these bifacial panels. The solar plant generates over 40% of the hotels daily energy needs.

They’ve also installed solar as the roof for hotel’s guest and staff car park (pictured below).

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They also have an biomass boiler onsite that generates steam using over 2,000kg of cinnamon wood, that is otherwise thrown away by cinnamon peelers. This steam powers  a vapour absorption chiller which generates 100% of the hotel’s air conditioning needs.

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Pictured above is their effluent treatment plant where waste water is treated on-site and reused to irrigate the gardens, as flushing water in toilets, and for the cooling towers.

The circular economy truly at work, right here in Sri Lanka.

Linking back to the Nobel winners – Romer’s work on the potential of technological progress to drive a new growth trajectory is at play here, where with the advancements made in pollution abatement technologies, photovoltaic panels, etc., are being deployed to show how a sustainable growth path can be forged and can also garner valuable global recognition. Imagine initiatives like this multiplied across the tourism sector in Sri Lanka, and multiplied across more sectors in Sri Lanka, and multiplied globally – we can make a dent in global climate change, and hopefully avoid the dangerous 2-degree celcius tipping point.

 

(All images copyright Anushka Wijesinha.)

Arancha González on Trade

During her recent visit to Sri Lanka for the launch of the National Export Strategy, the head of the International Trade Centre*, Arancha González, held a session for the business community. I was fortunate to have chaired that session during which she shared some very interesting perspectives on the current trends in the global economy. Here are some of my key takeaways:

She emphasized that “We are in a turbulent landscape” where there are dangerous trade winds; “probably even a hurricane – the hurricane of unilateralism”.

She asked, how can we protect our countries? and went on to argue that in order to do so, countries must focus on “Facilitating trade, not blocking it”. She added that we must focus on “creating jobs, not just protecting existing jobs” and asserted that protectionism is actually self-harming and wont protect jobs.

Arancha emphasized the importance of improving competitiveness of our economies – “everyone has to up the game and every player is constantly changing, constantly on the move”. As part of this, countries need to ensure inclusiveness of trade – in particular do more to support youth entrepreneurship for men and women.

The ITC chief observed that in Sri Lanka, the proportion of firms connected to global markets is low and the country needs to invest more in regional cooperation and integration. She credit Sri Lanka’s ongoing trade reforms, and said “It is intelligent to build up a network of trade agreements”.

She made an important argument that it is actually technology, not trade, that is causing the stress to workers during this era of rapid globalization, and asserted that, “If governments had done better on helping those who lose out – better social policies – there would be less opposition to trade”.

In concluding, Arancha called on Sri Lanka to support multilateralism and multilateral institutions, especially as smaller countries would need it to buffet against the wave of unilateralism. She said, “Frankly I don’t see who wins in a world where might is better than right”.

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*The ITC is is a multilateral agency which has a joint mandate with the World Trade Organization (WTO) and the United Nations through the United Nations Conference on Trade and Development (UNCTAD). The ITC supported the development of the National Export Strategy in Sri Lanka, under financial support from the European Union Trade Related Assistance Project.

Takeaways from the Singapore Business Forum on the FTA

Last month I attended a business forum in Singapore held to generate awareness and interest among the Singaporean business community around the opportunities in Sri Lanka, anchored to the SLSFTA. I recap here four of the most memorable quotes by different speakers:

Wilson Lim, Executive Director of Commonwealth Capital (owners of recently opened restaurant ‘Pastamania’, which is part of their franchise) on why his company chose to enter Sri Lanka:

“The reason we chose Sri Lanka as our first entry into the region is that compared to the rest of South Asia, Sri Lanka has higher per capita income and better doing business indicators.”

Sonny Bensily, Managing Director, Prime Structures Engineering Pte Ltd (who did the ‘external dressing’ structure for the Marina Bay Sands, and are now doing one for the Cinnamon Life project) on his perspective on doing business with Sri Lankans:

“Sri Lankans are special people – they are genuine, hospitable, hardworking, and won’t short change you”

Minister S. Iswaran, Minister-in-charge of Trade Relations and Minister of Communications and Information, Government of Singapore on his message for Singaporean businesses:

“The SLSFTA has enabled partnership possibilities for both sides, now we need need sustained effort from both sides. […] Todays turnout is a reflection of the interest in opportunities in Sri Lanka, and this interest is growing very fast”

Francis Chong, Deputy Chief Trade Negotiator, Ministry of Trade and Industry, Government of Singapore, speaking on the FTA negotiations with Sri Lanka and the main highlights of that process:

“Sometimes in trade negotiations we tend to go round and round, but with [Sri Lanka’s Chief Trade Negotiator] K. J. Weerasinghe, it was not like this – he answered forthrightly, candidly, and truthfully”

In my remarks as a panelist in the final session, I summarized  three reasons why looking at Sri Lanka is a good bet for Singaporean firms:

a) Frontier market exposure – You get exposure to all the sectors that are growing in a frontier market, particularly with the lifestyles of a growing middle income population, as well as sectors like tourism, logistics, retail, property development, etc.

b) Regional play – Using Sri Lanka as a springboard and a testbed to the wider South Asian market, as well as access on preferential terms to large regional markets like India, China, and Pakistan; not many countries have this unique market access.

c) Good partners – In Sri Lanka you will find good partners; many companies are used to doing business with the West and the requirements of Western partners, including product compliance, business practices, etc.

‘Sri Lanka Beyond 70’ – Technology, Economy, and Inclusion

Last week, the Bandaranaike Centre for International Studies hosted a timely seminar on ‘Sri Lanka at 70 Years Since Independence’, and I was invited to speak on ‘Economic perspectives for the future’. Given the vast subject matter that could be given on this, I thought I’d ask my intern what someone like him would like to hear at a session like this. “Technology is going to shape our future. How will Sri Lanka latch on to it?”, was his response. I expected the BCIS audience at this seminar to consist primarily of students, and so my intern’s suggestion was a wise one. Anchored to the themes of technology, the economy, and inclusion, I weaved together a speech that essentially called for Sri Lanka to do more to invest in skills to help our people be ready for, and take advantage of, the tectonic technology shifts that are taking place now and will continue to accelerate. I reproduce the speech, in full, below.

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Perspectives on Economic Freedom in Sri Lanka: Moving the Debate Forward

Keynote Address at the Advocata Institute and Fraser Institute ‘Economic Freedom Summit 2017’, 12th October 2017.


 

 

In my remarks today I will highlight some aspects of economic freedom – from my own perspective – that might find some resonance with you and try and provide some food for thought to take forward the discussion on economic freedom in Sri Lanka.

It is by no means an exhaustive investigation of economic freedom in Sri Lanka – and I’m sure you’ll find many things you felt I didn’t touch on and felt I should have. Rather, I’ll aim to give you perspectives to ponder on.

My keynote will be in three main Parts. Part 1 is one some thoughts on policy orientations and the role of the state. In Part 2, I flag a couple of examples of contradictions in our economic debate, where I think the lens of economic freedom needs to come in very strongly. And Part 3 is about creating a popular narrative around economic freedom.

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