Sri Lanka has now got breathing time with the International Monetary Fund sanctioning a long-term loan of 3 billion USD, of course with some pre-conditions. IMF has said that it would disburse the amount in different stages and has insisted on corruption-free administration and implementation of certain policy measures. The Sri Lankan government has no other option than accepting all conditions put forth by IMF.
IMF should not be blamed for insisting on some conditions to be accepted by Sri Lanka for availing the loan, as IMF would justifiably like to ensure that its loan money would be used properly and adequately in Sri Lanka so that the repayment would be done as per the promises. After all, IMF is a financing institution and not a charitable body and critics of IMF in Sri Lanka should realise this.
Sri Lanka is now at such a stage that it cannot allow its economy to slip down and it is a compelling need to ensure that it would be firm on the recovery path by properly and adequately utilizing the IMF funds.
Despite the recent troubles faced by Sri Lanka on the economic front, it is necessary to recognize that the country has basic and inherent strength by way of natural resources, which it should quickly identify and exploit to its advantage. What Sri Lanka urgently needs today is a proactive industrial policy in tune with the ground reality. The fact is that Sri Lanka does not have any significant investment capability and it also does not have the engineering and technological expertise that is required to make a big leap forward in the industrial front. In such circumstances, there are two countries that Sri Lanka can emulate.
Several decades back, China’s economy was not in good shape, though China now is one of the countries with strong economic and industrial strength in the world. What China did earlier was that it threw open it’s market to global companies and also liberalised the investment policies to facilitate setting up of industrial projects in China by multinational companies in a big way. This became a win win situation for both multinational companies and China and helped China to expand it’s economy and technology base to a spectacular level. Of course, Sri Lanka does not have big market space to offer to international companies but can certainly facilitate international companies to invest in Sri Lanka in a big way by adopting appropriate strategies.
Several decades back, Singapore’s economy was also in a bad shape and today Singapore is one of the well-developed city-state in the world. Singapore could achieve this status, despite it’s several limitations, by creating confidence amongst multinational companies to invest in Singapore and by facilitating investor-friendly policies
Both China and Singapore have ensured that the interest of overseas investors would be fully protected. In the case of both China and Singapore, the governments have been firm and did not allow local politics or vested interests to create doubts and apprehensions amongst prospective overseas investors or create bottlenecks for their operations in any way.
What Sri Lanka should do now is to offer it’s mineral and other resources to be used as feedstock for the overseas companies to set up projects in Sri Lanka. There are several resources in Sri Lanka of which two are discussed here as examples.
Sri Lanka has good deposit of ilmenite /rutile minerals which are feedstock for the production of titanium dioxide pigment, which is used extensively in paint and coatings and other areas. Ilmenite/rutile is also the feedstock for titanium metal which is a strategic metal used in several military hardware, aeronautics and so on. International demand for titanium dioxide is now around 6 million tonnes per annum and the demand is now increasing steadily by 3 to 4% per annum. The global demand trend for titanium metal is also very vibrant.
Sri Lanka has got a good deposits of graphite of high quality. Several value-added products can be produced from graphite such as graphite crucibles and so on. Further, with the rapid growth of electric vehicles around the world which require lithium-ion batteries, high-purity graphite for use as anode in lithium-ion batteries is in great demand all over the world with growth in demand exceeding 10% per annum. Sri Lanka should facilitate the setting up of large-size high-purity graphite anode projects.
Many other mineral and natural resources are available in Sri Lanka and multinational companies and overseas organisations would find such resources as an attractive feedstock for setting up projects in Sri Lanka.
In the last few weeks, it is reported that Sri Lankan government is taking active measures to promote tourism in Sri Lanka, which is as it should be. But, the tourism industry alone cannot enable Sri Lanka to get out of the present economic crisis.
Ensuring rapid growth of massive industries in Sri Lanka with overseas investment and technology, would promote employment generation, strengthen the technology base and skill development in Sri Lanka and promotion of several ancillary industries and contribute to foreign exchange earnings in a big way. The such overseas investment would change the face of Sri Lanka in a positive manner as a growth centre.
What is urgently needed is that Sri Lankan government should formulate a proactive industrial policy in appropriate areas and do road shows around the world to attract investment from abroad. The strategy adopted by China and Singapore should give a good lead for Sri Lankan policy planners.