Building on President’s Call in Tokyo, Harsha Calls for Greater Trade Integration for Debt Sustainability

Harsha de Silva, MP, delivered a poignant speech in Parliament recently building on the speech by President Ranil Wickeremasinghe at the Nikkei Asia Forum in Tokyo. He called for a change of mindset in the legislature and argued for greater trade integration for debt sustainability.

He started by acknowledging Japan's significant contributions during the crisis and highlighted several key areas of support. Among them, he mentioned that Japan supplied $46 million worth of diesel to hospitals, ensuring uninterrupted healthcare services. Additionally, Japan provided $6.5 million of food aid, supplementing the previous million already given.

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MP Harsha commended Japan's efforts in assisting women and other micro-entrepreneurs who faced hardships by extending $1.5 million in aid, as well as providing .
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5 million of free fertilizer to aid 250,000 farmers. Furthermore, he acknowledged Japan's provision of $4 million through the UNDP for agriculture.

Building on the President's comments at the Nikkei Conference in Tokyo, Japan, regarding trade integration and debt sustainability, MP Harsha emphasized the need for Parliament to move beyond petty politics and gazettes. He called for all Parliament members to unite in determining the future of the country, raising three key points.

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Firstly, he asserted that trade integration and debt sustainability are strongly correlated, highlighting the importance of greater trade integration for stronger debt sustainability. Secondly, MP Harsha dispelled the myth that severe import restrictions and export encouragement are the solutions, stating that Sri Lanka is currently one of the most closed countries in the region. He stressed the failure that would result from closing borders and implementing high tariffs and duties. Finally, MP Harsha emphasized the significance of trade integration in attracting foreign direct investment (FDI), advocating for Sri Lanka to become a partner in producer-driven global production networks by vertically integrating into complex production with investments from established brands. He expressed deep concern over Sri Lanka's lack of progress in comparison to its neighboring countries, which successfully transitioned from the apparel industry to electronics and biotech sectors. MP Harsha attributed this stagnation to the detrimental consequences of past consumption-driven loans and ill-conceived projects, which ultimately burdened the nation with significant foreign debt.

He also highlighted Japan's critical role as an investment partner in Sri Lanka's fledgling electronics and electrical components sector. Citing Professor Premachandra Athukorale, he noted that it is Japanese investments that are driving the fledgling mid-sized electrical and electronics component industry, adding that export volumes had reached $500 million according government statistics but could be closer to $1 billion if categorized more appropriately.

Shifting focus to the strained relations between Sri Lanka and Japan, MP Harsha pointed out specific instances that have contributed to this situation. He criticized the government for unilaterally canceling agreements without consulting the Japanese, particularly the $2.2 billion Light Rail Transit (LRT) project. The government at the time justified its decision by deeming the project costly and unsuitable for metro Colombo. However, he questioned the government's sudden change in stance, highlighting that the minister responsible for urban development now acknowledges the LRT as the best transport solution for Colombo. This contradiction raises concerns about whether political support or personal interests influenced the government's decisions.

Harsha further expressed disappointment regarding the Eastern Container Terminal, which was intended to be a tripartite agreement between India, Japan, and Sri Lanka. However, the government unilaterally canceled this agreement as well, mirroring the pattern seen with the LRT project. He noted that the President's current meetings with former and current Prime Ministers of Japan as well as the Nikkei forum to seek investments are undermined by the government's previous actions, which have strained relations with Japan.

Citing a recent media response by the Japanese Ambassador, MP Harsha highlighted the issue of governance and transparency in economic policies. The Ambassador had expressed concerns about frequent changes in policies that have caused a loss of trust among Japanese businesses. He specifically mentioned the incident involving the Minister of Aviation, who was initially sacked due to corruption allegations but later reinstated to the same position. Such incidents undermine trust and confidence, both among the Japanese business community and on an international scale.

Dr. Harsha de Silva expressed his gratitude to the Japanese people for their assistance during the crisis. However, he emphasized that for long-term debt sustainability and economic growth, Sri Lanka needs to prioritize trade integration, break down protectionist barriers, and build trade and investment bridges not only with Japan but also with countries like China, India, the EU, and the US. He emphasized the necessity of a change in mindset and ideology, urging politicians to think beyond marginal changes and embrace a broader perspective for the betterment of Sri Lanka's future.

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