Economic transformation in Asian countries and lessons for Sri Lanka on new ways of earning

Whenever dollars run short, we borrow. We restrict imports. We restructure debt. We seek international help. These steps have saved us many times. Managing a shortage and ending it for good are two different jobs. We have done the first. We have hardly begun the second. So how does a nation end it for good? Some of our Asian neighbours found the answer. Their stories should give every Sri Lankan hope. Each of them lacked something the experts thought it needed. One was refused by the World Bank, others by the world’s biggest companies or by their own neighbours. None of them grew rich by doing more of what they already did. Each one found a new way to earn that nobody expected of it, and backed it with courage when others would not. Each one created an income that did not exist before. That is how their economic transformation started

Most of us still remember the queues of 2022 for fuel, gas, medicine and food, and the long nights of waiting, never knowing whether anything would be left by the time we reached the front. Shelves were empty because the country had run out of dollars. We promised ourselves then that it would never happen again. Yet history gives us reason to worry

Since 1965, Sri Lanka has entered into 17 lending arrangements with the IMF. Many brought reform, relief and recovery. Yet time and again, sooner or later, the shortage of foreign exchange returned. Before 2023, the last year Sri Lanka earned more from the world than it paid out to the world was 1977.

That is nearly half a century of living beyond our dollar income. A country cannot keep its promise to its children with borrowed dollars.

We have been managing shortages

Whenever dollars run short, we borrow. We restrict imports. We restructure debt. We seek international help. These steps have saved us many times. Managing a shortage and ending it for good are two different jobs. We have done the first. We have hardly begun the second.

So how does a nation end it for good? Some of our Asian neighbours found the answer. Their stories should give every Sri Lankan hope.

Written off by the world, they rose anyway

When Singapore left the Federation of Malaysia in 1965, few expected it to survive. It was a small island with no natural resources, no industry and limited land. It depended on the outside world even for its water, and unemployment was close to 9%. Three years later, Britain announced it would close its military bases on the island, which provided thousands of jobs. As much as a fifth of Singapore’s economy was put at risk. 

Singapore did not wait to be rescued. With no oil of its own, it built one of the three largest oil refining centres in the world. Its own Prime Minister later said the country had no natural advantage except that it had the idea and made it happen.

South Korea wanted a steel mill but had little iron ore of its own. The World Bank turned down its loan request and judged the plan premature. A consortium of seven Western steelmakers, formed to raise the capital, failed and was dissolved. Korea refused to give up. It turned to Japan, which agreed to lend most of the money. The Pohang mill poured its first iron in 1973, and within little more than a decade it was the biggest single steel plant in the world.

Korea’s leap into large shipbuilding followed the same path. Shipowners gave Korean builders a cold reception, and Japan refused to share its technology. Hyundai’s founder, Chung Ju-yung, travelled the world with a photograph of an empty beach in Ulsan and a 500 won banknote showing a turtle ship, a symbol of Korea’s shipbuilding past. A Greek shipowner took the risk and ordered two giant tankers. Hyundai broke ground in 1972. By 1983, it was the largest shipbuilder in the world.

In the late 1960s, Penang had lost its free port status and was suffering severe unemployment, with no natural resources to fall back on. In 1972, Malaysia opened its first free trade zone there, and Intel came the same year. Within three years, that one plant was doing more than half of Intel’s assembly work. Penang grew into one of Asia’s great electronics centres.

In the mid 1980s, Morris Chang set out to build a company that would make only chips designed by others, a business model the world had never seen. He asked Intel, Toshiba, Hitachi and Sony to invest. All of them said no. Only Philips came in from abroad, with Taiwan’s government as the largest shareholder. That company, TSMC, is now one of the most important manufacturers on earth.

Around the same time, Gulf Air cut back its services to Dubai. Dubai answered by starting an airline of its own. Emirates flew its first flight in 1985 with a handful of aircraft and $10 million in start-up funding. The same year, Dubai opened the Jebel Ali Free Zone with just 19 companies. Today the zone hosts more than 11,000 businesses, Emirates is one of the world’s largest international airlines, and oil, once a third of Dubai’s economy, has shrunk to a tiny share of it.

What they had in common

Look closely, and a pattern appears. Each of them lacked something the experts thought it needed. One was refused by the World Bank, others by the world’s biggest companies or by their own neighbours. None of them grew rich by doing more of what they already did.

Each one found a new way to earn that nobody expected of it, and backed it with courage when others would not. Each one created an income that did not exist before. That is how their economic transformation started.

Why not Sri Lanka?

Now think of what we start with. Sri Lanka has more land, more natural resources and more people than Singapore had in 1965. We sit beside one of the busiest east-west shipping routes in the world. Our people are educated and skilled, and hundreds of thousands of Sri Lankans work and build businesses across the globe. Our exporters have shown for decades that they can compete with the best.

If Singapore could build a refining industry without a drop of oil, and Korea a steel industry with little iron ore, what could Sri Lanka build with everything it already has?

The answer may already exist. It may be in the mind of an engineer in Colombo, a university student in Kandy, a teacher in Jaffna, an entrepreneur in Galle or a Sri Lankan professional in London. The next billion dollars may be sitting in an idea that no decision maker has heard yet.

Sri Lanka has every reason to follow the Asian path, and no reason to be the exception.

The clock is already running

Hope alone will not do it. Neither will plans that stay on paper. New earnings take years to mature. Hyundai needed eleven years to go from an empty beach to the top of world shipbuilding. The dollars Sri Lanka will need in the 2030s must be planted now and nurtured.

The signs of need are already here. 2025 gave us real reasons to feel proud: record remittances above $8 billion, tourism earnings of about $3.2 billion and a third year of current account surplus. The Government’s discipline deserves credit for this, and many began to feel the danger had passed.

2026 has reminded us how quickly the picture can change. With the conflict in the Middle East pushing up costs, the current account slipped back into a deficit of $291 million for January to August. The merchandise trade deficit widened to $7.2 billion, from $4.3 billion a year earlier. Tourist arrivals fell. By the end of September, the rupee had lost 6.3% against the dollar since the start of the year.

There are quieter signals too. The dollars the Central Bank bought from the market fell from $1.76 billion in the first half of 2024 to $0.56 billion in the first half of 2026. And the IMF’s latest review assumes Sri Lanka will return to international bond markets for $3 billion in 2027 and 2028. The Government has rightly said these are the IMF’s assumptions, not its own projections. But the assumption tells us something important: unless new earnings grow fast enough, borrowing remains the default way to fill the gap.

Our reserves of around $6.9 billion have been rebuilt with great care. But reserves are savings, not income, and our traditional earners each depend on things we do not control, from jobs in other countries to peace in the wider world. Hoping they will be enough is not a plan.

Every new dollar we earn is a dollar we will not need to borrow.

The door is already open

On 22 September, the National Business Facilitation Centre, ViYASA, opened under the Presidential Secretariat, built on the President’s own concept. Its purpose is to clear the administrative and regulatory barriers that slow down investment and business. This is a far-sighted step, and it deserves the support of every Sri Lankan who wants this country to succeed.

Here lies a rare opportunity. Most new earning ideas need several institutions to say yes. They belong to no single ministry, so for decades they have had nowhere to go. Many simply died on a desk. The Centre sits above those divisions. It can become the national home for new foreign exchange earning and saving pathways, alongside its work of removing bottlenecks.

By now, the Centre may already have received proposals for new ways of earning foreign exchange. Some of those may be substantial foreign exchange inflow pathways holding the first seeds of Sri Lanka’s own transformation.

Giving the Centre the role of evaluating these ideas and helping them through to activation could be set in motion in the fewest working days possible. The door the President has opened can become the door through which Sri Lanka walks out of its dollar trap for good.

A call to the Chambers of Commerce and Industry and to every Sri Lankan

Some of our most valuable ideas can come from people who have never sat in a planning meeting.

To our chambers of commerce, trade associations and professional bodies: call your members together, hold brainstorming sessions, sift the ideas and bring the strongest ones to the Centre. One good idea, carried forward by a chamber with the weight of its members behind it, can open new dollar income paths that no single company could open alone.

To our universities: which services could your faculties sell to the world? To Sri Lankans working overseas: which partners and markets could you bring home? To our industrialists: what could we make here that the world would buy, or that we now import without need?

You do not need a detailed feasibility study to start. You need an idea, and the courage to put it forward. Start today: write your idea down, talk it over with your chamber or professional body, and have it ready to submit. Every Sri Lankan who brings a workable idea becomes part of building the country’s future.

Facilitating business and removing bottlenecks is exactly the help most new foreign exchange earning paths will need, so in spirit they already belong within its work. But what is implied is easily overlooked; what is assigned gets done. What remains, then, is a small decision with a very large reach: to name the receiving and activating of new foreign exchange earnings and saving paths as a specific mandate of the Centre, assign it as a direct responsibility, and allow the whole nation to take part. This does not replace any existing policy. It adds to what is already being done. It does not cost the Treasury a fortune. It costs only attention, and the will to act before the next storm rather than during it. Each of the Asian transformations described here began with a bold decision, taken early and carried through with courage

To the President and those who decide

The hardest step, creating the Centre, has already been taken. Facilitating business and removing bottlenecks is exactly the help most new foreign exchange earning paths will need, so in spirit they already belong within its work. But what is implied is easily overlooked; what is assigned gets done.

What remains, then, is a small decision with a very large reach: to name the receiving and activating of new foreign exchange earning and saving paths as a specific mandate of the Centre, assign it as a direct responsibility, and allow the whole nation to take part.

This does not replace any existing policy. It adds to what is already being done. It does not cost the Treasury a fortune. It costs only attention, and the will to act before the next storm rather than during it. Each of the Asian transformations described here began with a bold decision, taken early and carried through with courage.

Because new earnings take years to mature, every month we wait today becomes a month of shortage in the years ahead. The best answer to any bond assumption is a pipeline of new earnings strong enough to make it unnecessary.

Imagine a Sri Lanka where anyone with an idea that could earn the country a dollar knows exactly where to take it. Imagine our children growing up never knowing what a fuel queue or fuel quota looks like.

That is a legacy worth building. One day, other nations may tell Sri Lanka’s story the way we now tell Singapore’s and Korea’s. And it must begin now. Let us keep doing well what we already do. But let us also give the whole nation a reason, and a place, to discover what we have not yet begun to do.

After decades of spending more than it earned, it is time Sri Lanka opened innovative new pathways for more dollars to flow in than the country needs for spending.

(The author, CEng FIMechE FIET (UK) CEng FIE (SL), is Founder and Chairman of the KIK Group of Companies, an export-oriented engineering and switchgear assembly manufacturer and a Presidential Export Award winner, and serves on the Executive Committee of the Free Trade Zone Manufacturers’ Association of Sri Lanka. The views expressed are his own. He can be reached at [email protected].)