by Professor Sunil J.  Wimalawansa

Pre-requisites for economic development and the need for a new constitution

The stagnation of the Sri Lankan economy since gaining independence from the British is striking.  This is due to selfish politicians lacking: a vision for the country, forward-looking policies, and long-term national development plans (e.g., for clean water).  The failure to address social and economic issues and plan and implement future needs via education, agriculture, land reforms, infrastructure development, and judicial system has been a disaster for the county.  

It is disturbing to see the trend of focusing only on short-term policies/projects that provide self-gain for politicians at taxpayers’ expense.  In conjunction with rotten amendments, adding to the flawed 1977 constitution, opened doors for prevailing widespread corruption at each level of the government.  No wonder the country is not progressing.  To achieve success, each of these factors must be addressed candidly, especially replacing the constitution with the abolition of the executive presidency, without loopholes, and assuring the full independence of the judiciary from the executive branch. 

In addition, it is essential to replace outdated laws to improve the social condition and prevent further deterioration of values and the Hela culture.  Politicians are eager to expand the alcohol and tobacco industries and dish out liquor licenses like new year’s gifts to their cronies.  These will not only fatten the pockets of politicians but also increase businesses/profits for hospitals and undertakers.  Such unscrupulous activities by ministers dramatically increase criminal activities and ill health and erode the country’s culture, social, and economic status.  Instead of expanding licenses, it should curtail importing alcohol, enact a law to stop issuing new liquor licenses and revoke 500 licenses each month.  This would allow a gradual reduction of legitimate and controlled outlets to what it had in 1970.

Adverse effects and increasing healthcare costs due to poor decision-making

As described above, a new vision for Sri Lanka and proper decision-making and implementation of projects will lead to major economic and social benefits.  Besides, the positive impacts of seemingly such measures would tremendously impact the well-being of families and the country, reduce healthcare costs, improve law and order, and lessen prison burdens.  Government must have the courage to implement these—if it cannot, it should declare a general election and let others do it.  It must implement what is best for most constituents, despite the objections from conflicted officials, individuals, and groups—influential stakeholders.  The loss of revenue from the loss of liquor licenses and tobacco promotions/advertisements will be more than offset by healthcare savings, less absenteeism and increased productivity, and improved law and order.

Another critical area is the significant harmful effects on the population’s health from the mushrooming of the fast-food (junk food) industry.  Adverse impacts of this mainly affect children from the upper-middle class.  The grossly unwise decision by the government to approve to copy of the failed disastrous junk food system in Sri Lank is a sad story.  A few years ago, the author directly warned the government authorities and via local television discussions about the impending harmful effects of approving multi-national companies selling unhealthy fast food in Sri Lanka (and other developing countries).  These unwholesome foods contain empty calories (loaded with high-fructose and pork fat/lard) with no nutritional value, having a major impact on causing childhood obesity and diabetes. 

These harmful fast-food ingredients include fructose-corn syrup, fried in cheap oil used often, lard (saturated fats), and refried cooking oils (extremely unhealthy) containing trans fat.  These not only increase cancer risks but also obesity, diabetes, reduced immunity, and poor educational performance.  Based on the evidence, the author predicts that mentioned harmful effects will double” every five years.  Deviating from the traditional healthy, Sri Lankan balanced diet by the gullible younger generation, provided by their parents, will be a healthcare nightmare for the country.  Children are carried away (i.e., brainwashed) by falsified television and billboard advertisements.  Parents unknowingly or knowingly feed their children into this disaster: partly to show off their status to peers and to satisfy children’s naïve demands.

Unfortunately, the government and the media support this to generate revenue for themselves but accelerate the impending disaster due to short-term financial gains.  This is conflicted by the taking commissions and bribes with the disguise of generating tax revenue.  Politicians focused on these short-term gains by compromising our children’s and grandchildren’s health—this is not the first time the government failed to put the country first. 

It is time to think about the longer-term negative public health consequences, especially regarding childhood obesity, diabetes and associated mental and physical medical disorders, escalating healthcare costs, loss of productivity, and a significant increase in morbidity and mortality and premature deaths.  With the approval of fast-food industry licenses, the government imposed harmful effects on our children.  It was a dangerous and short-sighted measure to increase revenue and bribes—an act against the health of our children.  One should not copy and blindly implement such harmful measures that will increase the cost of healthcare, which costs more than ten times the expected tax revenue.  The detrimental effects of this poor policy will start manifesting in our society within five years.

It is not too late for the government to reverse this unthoughtful, damaging, and dangerous miscalculation, albeit a profitable short-term business.  Government should consider replacing the fast-food promotions with a campaign to educate the public on using local nutritious food and promote home gardening, as the author’s family foundation (Wimalawansa Foundation) and others have been doing for a while.  Taking the proper actions will prevent billions of rupees from being wasted in years to come.  Emphasis must be on preventative health, not expanding and funding acute care by building hospitals.

Instead of cheap labour, the country should export high-skill jobs

The country should not depend on loans from the World Bank, IMF, or any other lender.  In comparison, expanding the exportation of tea, rubber, coconut, gems, and skilled labour, alone.  It must develop tourism and diversify exports by small and large businesses, especially the manufacturing sector and new ventures to earn more foreign exchange.  Similarly, the country should not depend on remittance from Middle Eastern jobs and reliance on fossil fuels for its energy.  Both these sectors have major uncertainties—sudden changes could lead to a significant punch to the economy.  Unemployment is rising with stagnant entrepreneurs and a lack of creating new jobs.  Consequently, many professionals and skilled workers take their expertise to other countries—Sri Lanka is losing talent.

The government provides little or no assistance or guidance and neglects the welfare and safety of persons going and already serving in Middle-Eastern countries.  Instead, it boasts about the millions of USD remittances it receives.  It has miserably failed to consider the significant negative impact of such labour exports.  These include but are not limited to abuses of men and women, mutilation, deaths, particularly of women, and the significant destruction of their families left behind.  No government organisation, including foreign embassies, are properly monitoring this vulnerable group and taking any tangible actions to prevent destructive practices (e.g., destruction of family units and social destruction) and protect against the abuse of our citizens.  However, while doing nothing to protect this workforce, the government is happy to enjoy the benefits from remittances, disregarding the victimisation of these families.

Many people who had gone for these low-paid jobs in the Middle East had been harassed and abused (physically, sexually, and mentally) and were not fed properly or paid their salaries before returning home.  Despite thousands of complaints, none of the successive governments addressed these serious irregularities and crimes against humanity.  Despite not being paid the agreed amounts for slavery, many had to buy their way out of the misery to come home alive.  Despite these miseries, agents and go-betweens continue exploiting these poor folks to the maximum without protecting them.  What justice!

People who go to Middle East countries under such difficult conditions risk their lives and let their families at home get devastated.  As discussed above, the Sri Lankan government should create skills training opportunities and let the industry generate suitable jobs within Sri Lanka for their employment with reasonable wages.  That will eventually negate the urge to go to the Middle East.  The government has the moral, ethical, and legal responsibility to take substantive steps to do the above, monitor these ill fates, and fix this tremendous problem harming our society.

Exporting higher paid jobs—e.g., allied health to the West

New ways of thinking are necessary to break the vicious cycle of slavery mentality and dependence.  For example, instead of exporting low-wage unskilled (i.e., domestic help and construction work) and semi-skilled labour to middle-east as described above, Sri Lanka should establish training highly skilled labour centres as described across the country.  Highly trained nurses are one example of great demand in Western countries.

Creating specific programs to properly train nurses, a few thousand per year, with high-end skills, like intensive care units and emergency room (ER) experience, so that they can be employed in these counties with over ten times guaranteed salaries than otherwise received in the Middle East.  These higher-paying jobs also come with much respect and safety.  For example, the US alone is currently short of 130,000 trained nurses required annually—the demand continues to increase.  Such training with high-end nursing skills can be accomplished between two to four years of structured, standardised training programs.  This concept is not different from the value-added exports of commodities.

In contrast, the current unskilled labour export to the Middle East with high risks and meagre wages only benefits the intermediaries and the government, not their families.  The above-mentioned proactive measures will provide a window of opportunity for the transition from the current misery to success, minimising social disruptions, improving safety, and overcoming poverty with marked improvement of earning capacities (i.e., over 10-fold higher guaranteed salaries).  These would also benefit the foreign exchange inflow, reduce the deficits, and allow debt servicing without taking additional loans.

Why is Sri Lanka not progressing as expected?

Apart from cheap labour, good weather, and a reasonable percentage of the population’s ability to communicate in English or another foreign language, the Sri Lankan government offers nothing unique to attract FDIC—foreign firms to invest in Sri Lanka.  Despite this, more wealth” and resources are available in Sri Lanka that have not been realised and marketed.  Consequently, investors are hearing only rampant red tape and corruption at a high level, lack of appropriate infrastructure, bureaucratic delays, etc., that reduce the enthusiasm of potential investors.  The Sri Lankan approach had been backward, and must change the negative attitudes and be proactive in messages and offerings to attract FDIC.  These would eventually result in higher-end jobs and more taxes.

Achieving long-term benefits would not come automatically (i.e., no free lunch).  Ad-hoc measures to solve problems will not work for a better future for Sri Lanka.  The country must carefully plan and implement reasonable measures and sustainable and income-generating programs propagated by its foreign missions.  One example in the recent past is the protracted delays and inefficiency (and pilferage) in implementing the post-tsunami reconstructions in Sri Lanka and the lack of accountability for donated funds.  Anyone visiting the affected areas (even now, after 16 months) realises that the small NGOs, charities, and individuals genuinely contribute to the recovery process, housing, job creation, and rehabilitation.  However, the government and large NGOs are taking credit with self-publicity but providing minimal assistance to needy people (No Action, Talking Only—like NATO).

Status of the tsunami funds

Most tsunami relief funds went to the government or international organisations (I-NGOs) like the Red Cross.  Both groups did little work, and the remaining money failed to reach the intended destinations.  Furthermore, some economically-advanced (large) donor countries like the USA, which pledged financial assistance for tsunami relief, never made that promise a reality.  Even after 16 months, it has been estimated that approximately 20% of the needed tsunami reconstruction has been achieved.  Individual donors and small local charities accomplished more than two-thirds of it.  Meanwhile, the government received more than USD 100 million in donations—what happened to that fund is unclear.

Furthermore, the recent exposure of several scandals and investigations highlighted large-scale corruption at high levels of administration—government organisations and large NGOs.  Unfortunately, they failed to implement a practical, cost-effective tsunami reconstruction plan in the country.  This conflicted and unwise decision led to a significant loss of opportunity for the country to construct a series of brand new model cities—e.g., constructing energy-efficient clean cities that Prof PA de Silva and we proposed immediately after the tsunami.  We provided the government with specific ideas and drawings with cost estimates: it did nothing.  Although committees were appointed, little was achieved due to ego-centred thinking, inexperienced committee members, and political bickering and giving construction contracts to cronies without bidding or following.

We estimated that with the money pledged for tsunami reconstruction (assuming it was used correctly), entire tsunami-affected southern and eastern coastal regions would have been rebuilt with energy-efficient, environment-friendly, planned cities by now, without accessing governmental funds.  Yet the governmental organisations failed to consider any of these out-of-the-box, highly cost-effective novel alternative development plans—since there were no commissions, they buried them.  

Instead, the current government opted to do nothing.  It relies on individuals and charities to rebuild homes and villages in the exact locations without future expansion plans, modernisations, or embedding any safety considerations.  In contrast, a well-planned semi-urban development approach that we proposed would have provided comprehensive housing structures and all needs for these self-sufficient mini-cities (including power), given long-term self-sustainable employment, and improved the livelihood and economy.  So, why aren’t these happening and what happened to tsunami funds?

What kind of economy are we referring to?

Sri Lanka must develop more innovative ways of improving its economy.  The hard fact is that many big lenders are not interested in developing the country but focus on the return for themselves.  Their motives for lending money to Sri Lanka and other developing countries contradict what one would expect from them—there is no compassion or philanthropy in lending money.  The condition the IMF is imposing is to push their masters’ globalisation and marketing agenda and ensure they can get the money back.

Ironically, due to heavy pilferage and high overhead costs, only a tiny proportion of the loans or donated funds reach the earmarked projects or go to the intended beneficiaries.  Sometimes, the donor country takes back more than a third of the funds donated or a grant to cover their expert consultation.  Another third is wasted on commissions, luxury travel, and hotel costs for them and their paid consultants.  The situation is similar with most international non-governmental organisations (I-NGOs) that are supposed to help developing countries—many of these are scams to enrich themselves with donated funds. 

Sri Lanka is not different: it has been estimated that these NGOs, less than 20% of the donated funds and 40% of the grant funding used for the intended purposes.  The rest goes into their expenses, administrative and overhead costs (including business class flights and hotel bills for their officials, acquiring expensive high-consumption vehicles and other luxury items, air-conditioned travel, etc.), and for unaccounted itemised as ‘other costs’.  In some instances, money raised from the public was siphoned to do unrelated and unapproved activities like unethical religious conversions.  One example is some I-NGOs’ widespread, ongoing efforts on forceful religious conversion.

Part four addresses loan traps, the inability to service loans, and the possibility of future bankruptcy in Sri Lanka.