The potential of resilience-building in Sri Lanka

Wednesday, 2 May 2018 00:00 - - {{hitsCtrl.values.hits}}

By J.P. Fabri and

David Borg

All countries and governments today face numerous challenges. With a global environment that is becoming more dynamic, complex and diverse; exposure to global shocks are a key threat to the stability of any country.

What matters in today’s world is the strategy and capacity to respond to these adverse shocks. In addition, competitiveness pressures demand countries’ and governments to find new opportunities for growth. In today’s world, countries need to be resilient.

Resilience refers to a country’s ability to recover quickly from a negative external shock and, the ability to identify and reap opportunities. It is indeed a pre-condition for economic growth and development.

Building resilience is a transformative process that builds on the capacity of individuals, their communities and institutions to lessen the impacts of shocks, internal or external, natural or man-made, economic, health-related, political or social.

We believe that resilience-building has the potential of ushering a new era of growth in Sri Lanka. Our experience from other small states, primarily Malta, demonstrates that a policy effort towards building resilience can leave long-lasting effects on an economy and society.

As a small island state characterised by inherent vulnerabilities, Malta has managed to carve its economic success based on an economic vision based on the power of regulation. Malta’s jurisdictional innovation has allowed it to build a thriving economy, generating quality jobs and sustaining a generous welfare state. One can define it in as an economic miracle but it at its core lies the belief that regulation can provide opportunities.

Today, Malta’s economy thrives on so-called regulated industries and on the innovative way the Maltese jurisdiction was used to attract investments and economic sectors.

The financial services sector is the most obvious example. Today we have a robust financial jurisdiction that has attracted a diversity of players in sectors such as banking, insurance, trusts, funds and pension schemes. The sector remains a key contributor to economic activity.

Asset registration such as the ship register, aviation and yachts are also prime examples of jurisdictional innovation. Today Malta continues to have one of the largest ship registers in the world and its aircraft register has already attracted some of the world’s largest players.

Even if we look at the manufacturing sector, primarily the pharmaceutical industry, it is Malta’s regulatory structure that has given birth to this important sector. In fact, pharmaceutical companies present in Malta set-up shop here to take advantage of the country’s legal framework that allows the development of generic drugs ahead of patent-expiry.

Resilience-building offers the potential for small states to not only build their capacity to absorb negative shocks. More importantly, it allows countries to identify niche areas and to develop new economic sectors. Our experience demonstrates that resilience-building does contribute to economic development.

(The writers are Directors of ARQ Group, a professional services firm in Malta and will be visiting and addressing an event in Sri Lanka on Friday 4 May at The Kingsbury.)