No point in bringing in FDI for projects that don’t produce returns: State Minister

From left: IPS Research Fellow Dr. Bilesha Weeraratne, Distinguished Fellow of the Centre for Policy Dialogue Bangladesh Dr. Debapriya Bhattacharya, Ministry of Development Strategies and International Trade Advisor Anushka Wijesinha, State Minister of National Policies and Economic Affairs Dr. Harsha De Silva, IPS Executive Director Dr. Dushni Weerakoon and Central Bank Additional Director Dr. Roshan Perera

During a panel discussion at the Saman Kelegama Memorial Conference, State Minister of National Policies and Economic Affairs Dr. Harsha De Silva denounced protectionist policies, noting the importance of diversifying Sri Lanka’s export basket. He warned that Sri Lanka could not remain competitive in the goods basket that the country was focusing on today, given the high costs of production.

He also claimed that there was no point in bringing in Foreign Direct Investment (FDI) for projects that don’t produce any returns; instead Sri Lanka should focus on bringing in right type of investments so that the country can produce more complex, tradeable goods. 

The State Minister added that Sri Lanka was an Indian Ocean country, not a South Asian country. Therefore prosperity was linked to trading, he further explained.

The conference was organised by the Institute of Policy Studies of Sri Lanka (IPS) to honour its former Executive Director, late Dr. Saman Kelegama, around the theme ‘Managing Domestic and International Challenges and Opportunities in Post-Conflict Development: Lessons from Sri Lanka’. It was attended by eminent economists both in Sri Lanka and overseas.

The Advisor to the Ministry of Development Strategies and International Trade Anushka Wijesinha noted that it was also important to communicate why export diversification and FDIs were so crucial. 

“It is all about the ‘me economy’. Therefore, you need to make people understand how the economic agenda of the government impacts them personally,” he pointed out. 

He further added that Free Trade Agreements (FTAs) alone would not improve exports; educating people on how to make use of the FTAs was also necessary.  Echoing similar sentiments, Distinguished Fellow of the Centre for Policy Dialogue, Bangladesh, Dr. Debapriya Bhattacharya, claimed that diversification, productivity growth, particularly labour productivity, and tackling inequality is the recipe for growth in a post-conflict context.  

Meanwhile, the importance of focusing on the knowledge aspect of the economy, and the need to bridge the prevalent skills gap was also discussed during the panel. 

An important component of promoting a knowledge economy was fostering active learning, Central Bank Additional Director Dr. Roshan Perera pointed out. 

In the same vein, IPS Research Fellow Dr. Bilesha Weeraratne highlighted that a more flexible migration policy would allow second and third generation Sri Lankans abroad to come back and contribute to the economy, especially in the Science, Technology, Engineering, and Mathematics (STEM) sector. 

The panel was moderated by IPS Executive Director Dr. Dushni Weerakoon.