Opinion
Export-led economy or import substitution?
Sri Lanka is facing its worst economic crisis. Although successive governments may have contributed to this state of affairs, the present government stands directly accused of causing a total collapse of the economy. Three main reasons are given for this sudden downturn; the drastic tax reductions, the fertiliser ban and depletion of dollars due to artificial jacking up of the rupee causing a dollar and rupee crisis. These policies may have succeeded under different circumstances but not when the country is ravaged by a pandemic. However, the inability to foresee the unsuitability of such policies at this time is the failure of our leadership and their economic advisers. There are about 54 countries which are in debt crisis at present but none of them are as hopeless as Sri Lanka.
Historically, the reason for the weakening of the economy is the fact that the expenditure on imports has been higher than the income from exports under successive governments since 1977. In 2014, Sri Lanka spent USD 19 billion on imports while the export earnings have been just USD 11 billion. To meet the difference, we had to borrow and as a result got into debt which at present is about USD 50 billion. Worse, we have been borrowing to live high, pay back loans and even for vanity projects.
Most of the developing countries are deeply in debt and often the debt is much more than their total export earnings. This is a situation that countries with export-led economies have to cope with. Export-led growth attempts to promote the expansion of gross domestic product and per capita income with inflows from export earnings but this seldom happens.Sri Lanka’s earnings from exports was only 23% of the GDP in 2014 and it has been around that figure since 1977. If exports are to be increased to a significant level, we may have to borrow heavily to start export-oriented projects on a large scale which would take us deeper into debt, making repayment almost impossible.
Foreign direct investments and foreign funded industry are the other sources of foreign exchange. What attracts investors mainly is the cheap labour available in the developing countries. Thus, the governments of developing countries are forced to keep wages low to attract investors. The workers may be deprived of an improvement of their living standards that growth is supposed to bring. A good example is Sri Lankan estate workers.
People in countries with export-led economies must produce what people in another country want. The economy therefore depends on foreign demand, when the demand declines the economy suffers. For instance, when the Covid pandemic hit the rich countries the demand for garments dropped and the garment industry suffered. Another problem is access to foreign markets and the competition among producing countries. Further, the governments of the countries which import these items may control the quantities they import through taxes and sometimes through politically motivated sanctions. Thus, the export-led economies are at the mercy of the rich countries.
The global economic system controlled by the Western powers through the Bretton Wood Twins and Washington Consensus does not encourage developing countries to seek alternative means of growth. They give aid to those who follow their instructions which are geared for capital development at the expense of labour. Self-sufficiency is discouraged. Instead, they must remain as suppliers of few commodities and cheap labour to the global market. Sri Lanka supplies tea, garments and cheap labour to West Asia. We have not looked at alternative models. We have not attempted to produce our essential needs, such as food, medicine, building materials, etc. Though these can be locally produced, we import them using foreign exchange earned by exporting tea, garments and cheap labour. And when the demand for these falls, as it happened at the height of the pandemic, our economy becomes so weak that a bungling government could send it crashing.
In 2021, while its economy was struggling, Sri Lanka imported fruits and vegetables worth USD 380 million out of a total of USD 6 billion spent on non-essentials such as cheese, butter, ice-cream, bottled water. We need only USD 300 million to import chemical fertiliser. This was while the farmers were protesting and agriculturists were opposing the fertiliser ban. This, I see as a consequence of not having a well-developed national economy and an import-substitution programme. Self-sufficiency in food was not considered important, and catering to the super rich and tourists became a priority.
Now, the question is whether Sri Lanka will continue with export dependency. More importantly, are we going to spend more than we earn and live beyond our means? Are we going to borrow more and depend on foreign largesse? Don’t these loans and gifts come with strings attached? Will we have to cough up a few more ports or grant federalism?
What has happened has happened, there is no point in crying over spilt milk. The solution lies in our ability to learn to live within our means. We must never import more than we export, if we have no gas we must learn to find alternatives. The energy-efficient Anagi stove made of clay can be used even in Colombo flats. This could develop into an excellent cottage industry which could supply both the stove and firewood made of wood chips, sawdust or paddy husks compressed into cakes for easy storage and use in the stove. If instead the government, to pacify the protesters, import gas with borrowed dollars we will sink deeper in the debt mire. We must get along on a shoestring until we can stand on our own feet. Even IMF loans have their serious disadvantages and no country up to now has developed with IMF aid.In the long run, what Sri Lanka should do is to adopt a strategy to strike a balance between strengthening the domestic demand and export orientation. Import-substitution is a suitable policy for countries which want to come out of the debt trap. Heavy indebtedness, whether for an individual or a country, is a fetter that could restrict forward movement and freedom. It has made us part with ports, fuel storage facility, and sign agreements inimical to the national interest.
Sri Lanka, being predominantly an agricultural country, must give priority to the development of agriculture. Our aim should be to curtail our dependence on imported food items, which could be produced locally. More than 50% of export earnings go for import of food items, half of which could be locally produced. Everything required for agriculture––fertiliser, pesticides and weedicides, seeds and machines––should be locally produced. Big investors may not be interested, for they cannot expect high returns, as the local market is small. Yet, the small farmers could be made into small entrepreneurs and assured of reasonable returns on their investment if the exploitation by rice mill owners and middlemen could be eliminated by government intervention. By this means a quarter of the export bill could be reduced.Renewable energy policy should be fully implemented to reduce expenditure of fuel imports. CEB engineers are not very co-operative and their resistance has to be overcome. The capacity of the petroleum refinery also should be enlarged making use of facilities available at Sapugaskanda, Trincomalee and Hambantota which would further reduce the cost of fuel imports.
Small industries mainly for local needs such as electrical items, kitchen utensils, building materials, small electronic items, fabrics, could also be gradually developed with the aim at import substitution.Sri Lanka has to learn experience and decide whether to continue with the export-led economy, which, as shown above, is subject to external factors beyond our control and which has several disadvantages, including debt accumulation and the threat of sudden collapse. Time is opportune for use to think of import-substitution. The present crisis may offer a good opportunity to make virtue out of necessity and give priority to local production.
N. A. de S. Amaratunga
Opinion
Nonalignment, neutrality, morality and the national nnterest
The terms ‘nonalignment’ and ‘neutrality’ are being touted in local and global news due to Sri Lanka’s denial to Iran to dock three of its naval vessels in national harbors for an unplanned ‘goodwill visit’ between 9 and 13 March, and refusal to the United States to land two of its fighters at the civilian airport in Mattala between 4 and 8 March. Intriguingly, both requests were received on the same day, 26 February 2026, just 48 hours prior to the onset of hostilities.
Though Sri Lanka denied permission for the so-called ‘goodwill visit’ its Navy and Airforce rescued over 30 Iranian crew members and recovered over 80 bodies when their ship, the IRIS Dena was sunk by the US Navy and allowed another Iranian ship, the IRIS Bushehr to dock in Trincomalee as it claimed technical difficulties. This was done only after taking the ship under Sri Lankan control, by separating its sailors from the ship and bringing it to Colombo, thereby ensuring it no longer had any offensive military intent.
The Sri Lankan President in a press conference in Colombo on 5 March noted on the Iranian issue, “our position has been to safeguard our neutrality while demonstrating our humanitarian values.” As he further noted, “amidst all this, as a government, we have intervened in a manner that safeguards the reputation and dignity of our country, protects human lives and demonstrates our commitment to international conventions.” Explaining what he meant by neutrality, he noted, “we do not act in a biased manner towards any state, nor do we submit to any state … we firmly believe that this is the most courageous and humanitarian course of action that a state can take.” On the US issue, the President observed in Parliament on 20 March, “they wanted to bring two warplanes armed with eight anti-ship missiles from a base in Djibouti” and “we turned down the request to maintain Sri Lanka’s neutrality.”
In both incidents, in addition to reiterating Sri Lanka’s neutrality, the other point that has been emphasis+ed is Sri Lanka’s long-standing official position of ‘non-alignment.’ As the President noted in his parliamentary speech, “with two requests before us, the decision was clear… we denied both in order to avoid taking sides.” Suddenly, the concepts of neutrality and non-alignment are in the forefront of Sri Lanka’s political discourse after a considerable time, but it has emerged more in a rhetorical sense than at a considered policy position at the level of government thinking and popular acceptance.
I say this because two crucial concepts are missing in these conversations and pronouncements. These are ‘morality’ and ‘national interest’ even though they are irrevocably linked to the previous concepts which would be meaningless if adequate heed is not paid to the latter two. Let me be clear. I agree with Sri Lanka’s position with regard to both incidents and the diplomatic and statesman-like way both were handled. It brought to the fore something on which I have written about in the past. That is, the necessity and the reasonable possibility of smaller states to take clear positions when dealing with powerful countries. Sri Lanka has done so this time.
However, both neutrality and nonalignment cannot be taken out of context merely as terms. They must be situated in a broader historical and political context which can only be done if morality and national interest are not only brought into the equation, but also into policy and the public consciousness. Non-alignment as an international relations concept found its genesis at the time of the Cold War on the basis of which nations, which mostly consisted of former European colonies or what were known collectively at the time as the ‘Third World’, decided not to join major power blocs of the time, i.e. the US and the Soviet Union as well as former imperial centers.
At least, this was the official position and, in this sense, indicated a desire to follow an independent path stressing national sovereignty and national interest, rather than neutrality in the conventional sense. But in practice, even in the heyday of the Nonaligned Movement’s influence in the 1970s, many of its members were very clearly aligned to one or the other of the superpowers based on matters of political necessity and simple survival. The formal dictionary meaning of neutrality is, “not taking sides in a dispute, conflict, or contest, often implying a position of impartiality, independence, or non-participation.” These are the two rhetorical positions Sri Lanka took with regard to both incidents referred to above.
But both decisions should have been more specifically taken, and the local and global discourses emanating from them cautiously guided, based on principles of morality and national interest. These do not contradict nonalignment and neutrality in their general sense. Sri Lanka’s decision to not approve docking or landing rights to both warring countries in this context is correct. But where is morality? It is partly embedded in the President’s stated interest in ensuring no further lives were lost.
What is missing in this moral position however is the clearly articulated fact that the war against Iran by the US and Israel are illegal, immoral and contradicts all applicable international laws and conventions. Sri Lanka’s statements and what is publicly available on the President’s and the Foreign Minister’s reported conversations with Gulf leaders are inconsequential and bland. Despite Iran’s bleak track record when it comes to democracy and human rights within, the country has stood by Sri Lanka during the civil war years supplying weapons when very few states did, and also when Sri Lanka was named and shamed in the circus of the UN’s Human Rights Council for almost two decades. Taking a position regarding the illegality of the war against Iran does not mean Sri Lanka cannot be neutral or non-aligned. It could have still taken the same decision it has already taken. But it would have been able to do so from a moral high ground.
The other reason often given for harping on neutrality and non-alignment is the fear of being reprimanded by the mad men and women currently holding power in the US. But the Republican Party or President Trump are not the Caesars of the Roman Empire. Trump’s term ends in January 2029. The Republican Party is already feeling the negative consequences of the war at home. Given the chaos Trump has brought in, which has added to the cost of living of US citizens, the needless expenditure the war has burdened the US taxpayers with, and the US’s continued marginalisation in the international order, it is very unlikely any of the present practices (note: not policies) will be carried forward in the same nonsensical sense. This is precisely the time to take the moral high ground. If we do, and continue to do so, it will become apparent that we as a nation act upon principles and laws. Such continuity will earn the country respect in the global arena even though not necessarily make us popular. This is a crucial asset small nations must have when dealing with global powers. But this must be earned through consistent practice and not be the result of accidents.
This is also where national interest comes in as a matter of policy. Sri Lanka needs to reiterate not only for the present but also for the future that its decisions are based on national interest. This could include permitting the US or any other country to land or dock in a future conflict if it benefits us in terms of local defense. But such a decision should not be a decision forced upon us. This is not old-school nonalignment or neutrality. Instead, it is about taking a position – not a particular side – in the interest of safeguarding the national interest as a matter of principle and taking the moral high ground in international relations which will ensure both nonalignment and neutrality in a pragmatic and beneficial sense in the long term.
Our leaders and our people need to learn how to be pro-Sri Lankan both in domestic and global matters as a national operational principle.
Opinion
Question of integrity and corporate liability in Transnational Higher Education in Sri Lanka
According to a paper commissioned by Anthony Welch for the 2021/2022 UNESCO Global Education Monitoring Report on “Non-state actors in Education Across Asia”, the rise of Transnational HE was underpinned by tensions between growth in demand, and, on the other hand, the inability or unwillingness of many governments to finance this expansion sufficiently (UNESCO & Welch, 2021). Globally, almost 70 million, or one in three of all students, are now enrolled in private HEIs (UNESCO & Welch, 2021). This pattern is similar and highly diverse in Asia where more than 35% of students are in the private sector.
However, enhance transparency in governance in Transnational education is of paramount importance as there is a corporate liability disregarded at a greater extent by the private HE mushrooming in this country. As Transnational Higher Education attracts many students, the responsibility of the relevant authorities should strengthen the integrity of governance of this sector and increase accountability.
On the other hand, corruption perception index in the 2025 (CPI) released by Transparency International, Sri Lanka, showed significant improvement, rising 14 places to rank 107th out of 182 countries, up from 121st in 2024. Despite such a movement ahead, accountability lies among the Private HEIs engaged in Transnational HE to prevent any risk leading to corruption.
Having considered the aforementioned scenario following cases, encountered in the recent past and I wonder what “higher education” do they offer.
Risk of corruption
An applicant, being a sole proprietor, has signed an agreement with another agent of private HEI in Nachchaduwa, Anuradhapura (Registered office), where operating office being the, Rathmalkatuwa, Inamaluwa, Kandalama, Dambulla, without looking at the agreements entered with the Foreign University by the respective agents. Sub agents are not aware on what conditions the principal foreign university has imposed, whether the respective university is authorised to offer such programmes in overseas. Have they been accredited in their countries by the accreditation authorities, despite their listing in the World Higher Education Database and Association of Commonwealth Universities. Whether these private HEIs are blacklisted organisations need to be checked with National Information Centres of the respective countries. All agents operating Transnational HE should be accountable and responsible as they are serving the poor students of this country who ultimately face consequences when they go on searching for employment opportunities. They are facing many issues with respective Qualification Frameworks operating in those countries.
Fake Credentials and Fabricating Documents
There are massive complaints regarding the issuance of fake certificates and forgery in Higher Education forwarded by many parties. Some organisations themselves print certificates without obtaining original certificates from the principal foreign university. Poor students do not know this situation of the higher education provider.
Call for State organisations to be aware of Transnational HE
There are many state organisations without proper verifications on credentials engage in recruitment of their employees just based on the listing of world higher education database and Association of Commonwealth Universities without further checking on the existence of such programmes in the respective countries with their accreditation authorities.
Recently while World Higher Education Database and UKEnic has clarified on the nonexistence of a respective university, there are instances where institutions that were accredited in the past but were not accredited now. The respective Universities in certain instances were listed and not currently listed due to non-acceptance by the accreditation authorities. Therefore, organisations need to be cautious about the accreditation of such universities in the respective countries as Sri Lanka is haunted by a massive network of agents and subagents of foreign HEIs operated as designated centres, appointed agents.
There are many ways to do Transnational education. There is distance education done with a local partner. There are several forms of arrangement in transnational education such as franchising arrangements, partnerships with local providers, either at the programme level or (occasionally) at the level of creating a whole new institution, branch campuses. However, there is a necessity of some kind of regulation as there is an escalation of fraud.
Overall regulations governing the operations of Transnational HE in Sri Lanka as a country aim to reach Sustainable Development Goals (SDG 4) was deemed as transparent and not fully understood by stakeholders, there are no local mechanisms to affirm and benchmark the quality of Transnational Education programmes to that of the local HE standards. There is a sense of flexibility in forging Transnational Education partnerships though the absence of regulations, which may over time negatively impact public perceptions of Transnational Education’s quality
Despite these circumstances there are countries that maintain their Agent network through proper training and licensing system to facilitate their regulation.
Transparency of Agents engaged in Transnational HE
A parent has made a complaint against a leading HEI for misleading through an unauthorised three-year degree programme (two-year top-up) and causing irreparable career damage and mental distress, wasting money and time. When she forwarded the matter to the Chief Executive, New Zealand Qualification Authority (NZQA) for entry into the teaching profession, she was informed that the HEI concerned was not permitted to engage in such programmes overseas. The question is how the MOU was signed and how programmes were offered in Sri Lanka.
Where is the corporate liability and integrity in these activities?
by Dr. Janadari Wijesinghe
Opinion
Tassil passes away
Tassil Samarasinghe passed away on Monday, March 16, 2026. Fondly known as ‘Kunjan’ to his family and close friends, Tassil hadn’t been in the best of health over the past few years. He experienced difficulty maintaining his balance, and, therefore, walking, which probably caused the fall at home, and resulting in an head injury, which took his life.
Tassil was my school friend. We were members of the 16th Colombo Cub pack and scout troop at S. Thomas’ College, Mt. Lavinia, in the 1950s and ’60s. I remember how he played Ali Baba’s mother in the scout concert, produced and directed by our scout master, the late Mr. Wilson I. Muttiah.
We were also next-door neighbours in Mt. Lavinia. During school holidays, in the early morning, Tassil and I would go on long walks, along the beach, sometimes helping the fishermen to draw in their nets. Tassil was a good conversationalist and highly opinionated, even as a teenager.
In those days a fellow beachcomber was former Prime Minister Sir John Kotelawala. We used to put our feet on his fresh footprints in the sand, and declare that we were walking in his footsteps!
The rest of the day we would play cards (304) with his mother and some of the boarders staying at their home. Then my family moved away to Colombo, but I was always a welcome guest at the Samarasinghe residence.
One of Tassil’s many hobbies, in addition to collecting stamps and playing bridge, was breeding ornamental fish in large ground tanks. I, too, was bitten by the aquarium fish bug. He was also a lover of good music, like his older brother Nihal – known to Thomian cubs and scouts of that era as ‘Local’ – who rose to fame as ‘Sam the Man’, the acclaimed Sri Lankan western musician, singer and band-leader.
In school, Tassil was popular with our GCE O-Level English teacher Mr. A.S.P. (Shirley) Goonetilleke.
After leaving school, Tassil and I were members of the Rotary Club together, where we would occasionally meet. Tassil married Shirani and they had two children, Tilani and Viswanath. Unfortunately, Viswanath lost his life in a bicycle accident several years ago.
I extend my deepest sympathies to Shirani, Tilani and family.
“You will always remember
Wherever you maybe,
The School of your boyhood,
The School by the Sea.
And you’ll always remember
The friendships fine and free,
That you made at S. Thomas’
The School by the Sea.”
(Rev Canon Roy H. Bowyer-Yin)
Farewell, dear friend. May you attain the supreme bliss of Nibbana.
‘GAF’
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