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
Thoughts for Unduvap Poya
Unduvap Poya, which falls today, has great historical significance for Sri Lanka, as several important events occurred on that day but before looking into these, as the occasion demands, our first thought should be about impermanence. One of the cornerstones of Buddha’s teachings is impermanence and there is no better time to ponder over it than now, as the unfolding events of the unprecedented natural disaster exemplify it. Who would have imagined, even a few days ago, the scenes of total devastation we are witnessing now; vast swathes of the country under floodwaters due to torrential rain, multitudes of earth slips burying alive entire families with their hard-built properties and closing multiple trunk roads bringing the country to a virtual standstill. The best of human kindness is also amply demonstrated as many risk their own lives to help those in distress.
In the struggle of life, we are attached and accumulate many things, wanted and unwanted, including wealth overlooking the fact that all this could disappear in a flash, as happened to an unfortunate few during this calamitous time. Even the survivors, though they are happy that they survived, are left with anxiety, apprehension, and sorrow, all of which is due to attachment. We are attached to things because we fail to realise the importance of impermanence. If we do, we would be less attached and less affected. Realisation of the impermanent nature of everything is the first step towards ultimate detachment.
It was on a day like this that Arahant Bhikkhuni Sanghamitta arrived in Lanka Deepa bringing with her a sapling of the Sri Maha Bodhi tree under which Prince Siddhartha attained Enlightenment. She was sent by her father Emperor Ashoka, at the request of Arahant Mahinda who had arrived earlier and established Buddhism formally under the royal patronage of King Devanampiyatissa. With the very successful establishment of Bhikkhu Sasana, as there was a strong clamour for the establishment of Bhikkhuni Sasana as well, Arahant Mahinda requested his father to send his sister which was agreed to by Emperor Ashoka, though reluctantly as he would be losing two of his children. In fact, both served Lanka Deepa till their death, never returning to the country of their birth. Though Arahant Sanghamitta’s main mission was otherwise, her bringing a sapling of the Bo tree has left an indelible imprint in the annals of our history.
According to chronicles, King Devanampiyatissa planted the Bo sapling in Mahamevnawa Park in Anuradhapura in 288 BCE, which continues to thrive, making it the oldest living human planted tree in the world with a known planting date. It is a treasure that needs to be respected and protected at all costs. However, not so long ago it was nearly destroyed by the idiocy of worshippers who poured milk on the roots. Devotion clouding reality, they overlooked the fact that a tree needs water, not milk!
A monk developed a new practice of Bodhi Puja, which even today attracts droves of devotees and has become a ritual. This would have been the last thing the Buddha wanted! He expressed gratitude by gazing at the tree, which gave him shelter during the most crucial of times, for a week but did not want his followers to go around worshipping similar trees growing all over. Instead of following the path the Buddha laid for us, we seem keen on inventing new rituals to indulge in!
Arahant Sanghamitta achieved her prime objective by establishing the Bhikkhuni Sasana which thrived for nearly 1200 years till it fell into decline with the fall of the Anuradhapura kingdom. Unfortunately, during the Polonnaruwa period that followed the influence of Hinduism over Buddhism increased and some of the Buddhist values like equality of sexes and anti-casteism were lost. Subsequently, even the Bhikkhu Sasana went into decline. Higher ordination for Bhikkhus was re-established in 1753 CE with the visit of Upali Maha Thera from Siam which formed the basis of Siam Maha Nikaya. Upali Maha Thero is also credited with reorganising Kandy Esala Perahera to be the annual Procession of the Temple of Tooth, which was previously centred around the worship of deities, by getting a royal decree: “Henceforth Gods and men are to follow the Buddha”
In 1764 CE, Siyam Nikaya imposed a ‘Govigama and Radala’ exclusivity, disregarding a fundamental tenet of the Buddha, apparently in response to an order from the King! Fortunately, Buddhism was saved from the idiocy of Siyam Nikaya by the formation of Amarapura Nikaya in 1800 CE and Ramanna Nikaya in 1864 CE, higher ordination for both obtained from Burma. None of these Niakya’s showed any interest in the re-establishment of Bhikkhuni Sasana which was left to a band of interested and determined ladies.
My thoughts and admiration, on the day Bhikkhuni Sasana was originally established, go to these pioneers whose determination knew no bounds. They overcame enormous difficulties and obtained higher ordination from South Korea initially. Fortunately, Ven. Inamaluwe Sri Sumangala Thero, Maha Nayaka of Rangiri Dambulla Chapter of Siyam Maha Nikaya started offering higher ordination to Bhikkhunis in 1998 but state recognition became a sore point. When Venerable Welimada Dhammadinna Bhikkhuni was denied official recognition as a Bhikkhuni on her national identity card she filed action, with the support of Ven. Inamaluwe Sri Sumangala Thero. In a landmark majority judgement delivered on 16 June, the Supreme Court ruled that the fundamental rights of Ven. Dhammadinna were breached and also Bhikkhuni Sasana was re-established in Sri Lanka. As this judgement did not receive wide publicity, I wrote a piece titled “Buddhism, Bhikkhus and Bhikkhunis” (The Island, 10 July 2025) and my wish for this Unduvap Poya is what I stated therein:
“The landmark legal battle won by Bhikkhunis is a victory for common sense more than anything else. I hope it will help Bhikkhuni Sasana flourish in Sri Lanka. The number of devotees inviting Bhikkhunis to religious functions is increasing. May Bhikkhunis receive the recognition they richly deserve.” May there be a rapid return to normalcy from the current tragic situation.”
by Dr Upul Wijayawardhana
Opinion
Royal Over Eighties
The gathering was actually of ‘Over Seventies’ but those of my generation present were mostly of the late eighties.
Even of them I shall mention only those whom I know at least by name. But, first, to those few of my years and older with whom speech was possible.
First among them, in more sense than one, was Nihal Seneviratne, at ninety-one probably the oldest present. There is no truth to the story that his state of crisp well-being is attributable to the consumption of gul-bunis in his school days. It is traceable rather to a life well lived. His practice of regular walks around the house and along the lane on which he lives may have contributed to his erect posture. As also to the total absence of a walking stick, a helper, or any other form of assistance as he walked into the Janaki hotel where this gathering took place.
Referencing the published accounts of his several decades-long service in Parliament as head of its administration, it would be moot to recall that his close friend and fellow lawyer, J E D Gooneratne, teased him in the following terms: “You will be a bloody clerk all your life”. He did join service as Second Assistant to the Clerk to the House and moved up, but the Clerk became the Secretary General. Regardless of such matters of nomenclature, it could be said that Nihal Seneviratne ran the show.
Others present included Dr. Ranjith de Silva, Surgeon, who was our cricket Captain and, to the best of my knowledge, has the distinction of never engaging in private practice.
The range of Dr. K L (Lochana) Gunaratne’s interests and his accomplishments within each are indeed remarkable. I would think that somebody who’d received his initial training at the AA School of Architecture in London would continue to have architecture as the foundation of his likes /dislikes. Such would also provide a road map to other pursuits whether immediately related to that field or not. That is evident in the leadership roles he has played in the National Academy of Sciences and the Institute of Town Planners among others. As I recall he has also addressed issues related to the Panadura Vadaya.
My memories of D L Seneviratne at school were associated with tennis. As happens, D L had launched his gift for writing over three decades ago with a history of tennis in Sri Lanka (1991). That is a game with which my acquaintance is limited to sending a couple of serves past his ear (not ‘tossing the ball across’ as he asked me to) while Jothilingam, long much missed, waited for his team mates to come for practices. It is a game at which my father spent much time both at the Railway sports club and at our home-town club. (By some kind of chance, I recovered just a week ago the ‘Fred de Saram Challenge Cup’ which, on his winning the Singles for the third time, Koo de Saram came over to the Kandana Club to hand over to him for keeps. They played an exhibition match which father won). D L would know whether or not, as I have heard, in an exhibition match in Colombo, Koo defeated Frank Sedgman, who was on his triumphant return home to Oz after he had won the Wimbledon tournament in London.
I had no idea that D L has written any books till my son brought home the one on the early history of Royal under Marsh and Boake, (both long-bearded young men in their twenties).
It includes a rich assortment of photographs of great value to those who are interested in the history of the Anglican segment of Christian missionary activity here in the context of its contribution to secondary school education. Among them is one of the school as it appeared on moving to Thurstan road from Mutwal. It has been extracted from the History of Royal, 1931, done by students (among whom a relative, Palitha Weeraman, had played a significant role).
As D L shows, (in contra-distinction to the Catholic schools) the CMS had engaged in a largely secular practice. Royal remained so through our time – when one could walk into the examination room and answer questions framed to test one’s knowledge of Christianity, Buddhism, Hinduism and Islam; a knowledge derived mostly from the lectures delivered by an Old Boy at general assembly on Friday plus readings from the Dhammapada, the Bhagavad Gita, the St. John’s version of the Bible or the Koran recited by a student at senior assembly on Tuesday / Thursday.
D L’s history of Royal College had followed in 2006.
His writing is so rich in detail, so precise in formulation, that I would consider this brief note a simple prompt towards a publisher bringing out new editions at different levels of cost.
It was also a pleasure to meet Senaka Amarasinghe, as yet flaunting his Emperor profile, and among the principal organisers of this event.
The encounter with I S de Silva, distinguished attorney, who was on Galle road close to Janaki lane, where I lived then was indeed welcome. As was that with Upali Mendis, who carried out cataract surgery on my mother oh so long ago when he was head of the Eye Hospital. His older brother, L P, was probably the most gifted student in chemistry in our time.
Most serendipitous perhaps was meeting a son of one of our most popular teachers from the 1950s, – Connor Rajaratnam. His cons were a caution.
by Gamini Seneviratne
Opinion
“Regulatory Impact Assessment – Not a bureaucratic formality but essentially an advocacy tool for smarter governance”: A response
Having meticulously read and re-read the above article published in the opinion page of The Island on the 27 Nov, I hasten to make a critical review on the far-reaching proposal made by the co-authors, namely Professor Theekshana Suraweera, Chairman of the Sri Lanka Standards Institution and Dr. Prabath.C.Abeysiriwardana, Director of Ministry of Science and Technology
The aforesaid article provides a timely and compelling critique of Sri Lanka’s long-standing gaps in evidence-based policymaking and argues persuasively for the institutional adoption of Regulatory Impact Assessment (RIA). In a context where policy missteps have led to severe economic and social consequences, the article functions as an essential wake-up call—highlighting RIA not as a bureaucratic formality but as a foundational tool for smarter governance.
One of the article’s strongest contributions is its clear explanation of how regulatory processes currently function in Sri Lanka: legislation is drafted with narrow legal scrutiny focused mainly on constitutional compliance, with little or no structured assessment of economic, social, cultural, or environmental impacts. The author strengthens this argument with well-chosen examples—the sudden ban on chemical fertilizer imports and the consequences of the 1956 Official Language Act—demonstrating how untested regulation can have far-reaching negative outcomes. These cases effectively illustrate the dangers of ad hoc policymaking and underscore the need for a formal review mechanism.
The article also succeeds in demystifying RIA by outlining its core steps—problem definition, option analysis, impact assessment, stakeholder consultation, and post-implementation review. This breakdown makes it clear that RIA is not merely a Western ideal but a practical, structured, and replicable process that could greatly improve policymaking in Sri Lanka. The references to international best practices (such as the role of OIRA in the United States) lend credibility and global context, showing that RIA is not experimental but an established standard in advanced governance systems.
However, the article could have further strengthened its critique by addressing the political economy of reform: the structural incentives, institutional resistance, and political culture that have historically obstructed such tools in Sri Lanka. While the challenges of data availability, quantification, and political pressure are briefly mentioned, a deeper analysis of why evidence-based policymaking has not taken root—and how to overcome these systemic barriers—would have offered greater practical value.
Another potential enhancement would be the inclusion of local micro-level examples where smaller-scale regulations backfired due to insufficient appraisal. This would help illustrate that the problem is not limited to headline-making policy failures but affects governance at every level.
Despite these minor limitations, the article is highly effective as an advocacy piece. It makes a strong case that RIA could transform Sri Lanka’s regulatory landscape by institutionalizing foresight, transparency, and accountability. Its emphasis on aligning RIA with ongoing national initiatives—particularly the strengthening of the National Quality Infrastructure—demonstrates both pragmatism and strategic vision.
At a time, when Chairmen of statutory bodies appointed by the NPP government play a passive voice, the candid opinion expressed by the CEO of SLSI on the necessity of a Regulatory Impact Assessment is an important and insightful contribution. It highlights a critical missing link in Sri Lanka’s policy environment and provides a clear call to action. If widely circulated and taken seriously by policymakers, academics, and civil society, it could indeed become the eye-opener needed to push Sri Lanka toward more rational, responsible, and future-ready governance.
J. A. A. S. Ranasinghe,
Productivity Specialty and Management Consultant
(rathula49@gmail.com)
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