Spotlight: Econ Op-eds in Summary (Week ended 21st July' 21)
1. Warning signs for Sri Lanka’s IT-BPM sector
By: Professor Rohan Samarajiva
Sri Lanka is currently at risk of losing its competitiveness against other South Asian countries in the IT-BPM sector. The silver lining in this case, is that the sector is less vulnerable to policy mismanagement unlike in the case of agricultural or manufacturing industries and stands to benefit from high-value exports for the country if corrective action is taken.
The AT Kerney’s GLSI index ranks Sri Lanka in the top 25 South Asian countries in the IT-BPM sector. This ranking is strongly supported by its cost competitive advantages against regional peers, although it ranks below Bangladesh in terms of people availability and skills. This is partially attributable to the smaller labour force the country possesses, which has deterred the upscaling of the sector and resulted in investments being redirected to other countries.
A proposal to rebalance AT Kerney’s GLSI index to include a higher weight on digital resonance, if passed, could lead to Sri Lanka plummeting in rank and no longer being considered in the Top 25 Asian countries. Policies which were promised to be implemented a decade ago were unfruitful, and unless strong corrective measures are undertaken, the country will not be able to achieve the $5 bn IT-BPM exports mark.
2. How will the economic crisis be resolved?
By Nimal Sanderatne
The country is at a crucial point with an escalating economic crisis as well as widespread social upheavals. The severe crisis related to external finances, foreign debt repayments and import requirements are decreasing external reserves significantly, adding on to the economic crisis.
Sri Lanka’s fiscal deficit is also widening due to government expenditure on containing Covid. Despite import restrictions, imports are on the rise. However, exports have been satisfactory so far. But external risks lie with work disruptions and risk of losing GSP plus. Lack of fertilizer too threaten a decrease in tea exports.
Public expects Sri Lanka to go to the IMF. However, seeking assistance from IMF or reversing the ban on fertilizer could be controversial in certain public context. But in the long run government will surely have to focus on more sustainable solutions.
(Compiled by: Promodhya Abeysekara, Malitha Goonerathne & Mariyan Perera)
Disclaimer: This information has been compiled from sources believed to be reliable but Frontier Research Private Limited does not warrant its completeness or accuracy. The bullet points provided for each summarised opinion article is written by Frontier Research and has no connection to the respective author. Furthermore, the information contained in these reports/emails are confidential and should not be shared publicly. Disclosure, copying and distribution is strictly prohibited.