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Saturday, March 2, 2024

Sri Lanka should boost relations with all major powers; SL exports 60% to US and EU;01% to China : economist

Sri Lanka should be friendly all major powers and ensure that relations are strengthened with nations that matter to the core economic interests of the country, a top international economist said.
“It strikes me that Sri Lankan foreign policy, which of course includes foreign economic policy – is completely lopsided,” Razeen Sally, a former London School of Economics professor who is now with Singapore’s Lee Kuan Yew School of Public Policy said.

 “Because the picture we have is of China as first friend. But old friends had been alienated and some potential friends like India has been kept at arms length.

“Now it strikes me that that batting order comes directly counter to Sri Lanka’s core economic interests.”

Sally was speaking at the Lakshman Kadirgamar Institute for International Relations in Colombo. He is a specialist in global trade, especially in relation to Asia.

He said simple arithmetic showed that about 60 percent of Sri Lanka’s merchandise exports went to the US and EU.

“So it is not rocket science, but simple common sense for Sri Lanka to have good relations with the Western powers because Sri Lanka needs them more than they need Sri Lanka,” Sally said.

Six percent of Sri Lanka’s exports went to India, but natural geography dictated that it could be much higher.
 “There is everything to be said of much stronger economic linkage between Sri Lanka and the four states of South India,” Sally said.

“If there is to be a way for Sri Lanka to get into global supply chains as quickly as possible beyond the garment story in other areas of manufacturing and many areas of services – even areas like agro food processing and fisheries, the route lies through South of India and the link up and presence of more south Indian companies here in Sri Lanka”.

“But that of course is held at arms length for a combination of chauvinistic reasons and defensive economic reasons of some business here.”

Sri Lanka also needed to improve macro-economic policy and institutions which have been weakening for several decades. There were also increasing micro-level interventions by the state.

Sally said China is one of three major powers in Asia along with India, and Japan. China was becoming increasingly active in the global arena whereas Japan was taking a backseat.

“China accounts for one percent of Sri Lanka’s exports,” Sally said. “There is everything to be said to be on good terms with China but in terms of actual potential for Sri Lankan business China is the lowest on the list of addressed so far.

“The answer is that it is important to be friends with lots of people – with all the major powers – not just with one at the expense of others.”


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