The World Economic Forum (WEF) hosted its annual India Economic Summit in New Delhi this week and here are five takeaways from a Sri Lankan perspective.
1. Sri Lanka pivots away from SAARC to BIMSTEC
In a well-received speech at the inaugural session, Prime Minister Ranil Wickremesinghe outlined Sri Lanka’s economic strategy with an emphasis on improving regional connectivity through trade agreements and economic cooperation. Quite notably, however, the prime minister did not mention SAARC even once during his speech and almost exclusively concentrated on strengthening economic opportunities in the Bay of Bengal region.
Whilst not an explicit declaration, the content of the speech and subsequent statements by the prime minister and other ministers signified an intent by the government to concentrate on regional cooperation through BIMSTEC rather than SAARC. In fact, Minister Malik Samarawickrama was keen to emphasize that “SAARC is not dead”. However, most of the policy measures discussed in regards to SAARC were at the bilateral level rather than the regional level. Therefore, whilst Sri Lanka will likely continue to develop its bilateral ties with Pakistan at the bilateral stage, it appears that its regional focus is now firmly on BIMSTEC. This is a key foreign policy as well as economic policy change that will be of particular interest in the future, albeit a foreseeable one given the gridlock in SAARC due to Indo-Pakistan politics.
2. India’s growth an opportunity for Sri Lanka
South Asia is said to become the fastest growing sub-region in the world and this growth is expected to be driven mainly by India. With China rebalancing its economy and western economies still in recovery from the 2008 recession and bracing themselves from Brexit, India will undoubtedly become the focal point for trade and investment over the next decade or so. India’s biggest challenge is to sustain its current growth and the Modiadministration has increased its focus on the manufacturing sector through the “Make in India” campaign. The economic growth paired with complementary policies are expected to attract large amounts of FDI into India and this will also create opportunities for its neighbours, especially Sri Lanka.
The most obvious opportunity is in establishing Sri Lanka as a logistics hub for the Indian sub-continent. The Colombo port, for example, is uniquely positioned with easy access to both the Eastern and Western coasts of India. In addition, the country can also position itself as a Knowledge Process Outsourcing (KPO) hub. Rather than aim at attracting BPOs, Sri Lanka can leverage its strength in qualified professionals in the KPO sector (accounting, legal services, etc.). Similarly, the country is also in a position to attract FDI that aims to gain access to the Indian market. The proposed ETCA with India will be crucial in this regard. Leveraging these opportunities, however, will depend on complementary and consistent policy measures in Sri Lanka. Therefore, Sri Lanka faces a watershed moment in its economic future in either leveraging India’s growth for its own benefit or lose out due to protectionist and nationalist interests.
3. The forum reaches out to the developing world
The World Economic Forum was formed to strengthen public-private dialogue on economic affairs around the world. However, over the years, the Forum developed a reputation as a platform for private sector interests and thereby a lack of focus on developing countries, especially those from the public sector. It appears that the Forum has recognised this criticism and is taking proactive measures to increase the input of developing countries in the Forum’s work and provide a stronger platform for developing countries to put forth its views. Sri Lanka, in particular, seems to be reaping the dividends of this shift with ample opportunities being provided for public officials to engage with the private sector and attract investment. For instance, the Sri Lankan delegation – headed by the prime minister and several Ministers – were given an exclusive session to engage with current and future business partners. Going forward, however, it is vital that Sri Lankan authorities take advantage of this situation and take the initiative in engaging with the Forum and its partners rather than rely on the Forum coming to them.
4. Technology – A double-edged sword
Technology has played a significant part in India’s emergence as a global economic (and arguably political) superpower. This has become even more apparent by the rapid rise of start-ups in India. Technology has not only become an avenue for job creation and industrial growth, but also provided solutions to address some of India’s biggest social issues such as maternal mortality, public health provision, education, and rural empowerment. Many noted that the government’s “Start-up India” campaign has especially helped with changing social perceptions about entrepreneurship in the country – which was a key obstacle for entrepreneurship in the country. This highlights the fact that the government’s role is not to fund start-ups, but rather create a conducive environment for innovation and entrepreneurship. Sri Lanka should learn from this experience and look towards facilitating greater entrepreneurship and innovation among small and medium enterprises (SMEs). Another factor highlighted by many was the creation of a capital market for SMEs through the National Stock Exchange of India. This initiative has provided greater flexibility and finances for SMEs to pursue ventures that have created significant dividend to the national economy.
On the flip side, however, technology is also replacing traditionally labour-intensive jobs and the growth of artificial intelligence will only exacerbate the situation further. Commonly referred to as the Fourth Industrial Revolution, developing countries such as India and even Sri Lanka will be faced with a dilemma of creating employment generating economic growth. In order to succeed in this task, governments need to improve the skillset of its labour force, especially those currently in vulnerable industries such as low-skilled, labour intensive jobs. Therefore, educational and labour reforms are urgently required to ensure adequate “skilling” in order to effectively meet the challenges of the future.
5. Youth – Disrupt and shape
One of the most striking factors during the Summit was the prominence given to youth. Unlike many international conferences which grant “youth representation” simple lip-service, the Summit was able to fully integrate the younger demographic into its programme. This was mainly facilitated by the role of youth in disrupting traditional economic and social mechanisms in India, which is thereby shaping a future that is more inclusive. Ritesh Agarwal (the 22-year -old founder of Oyo Rooms) and Aditi Gupta (founder of Menstrupedia), for example, were emblematic of this rapid disruption of traditional platforms of power and influence, which has contributed to India’s growth from within.
In a nutshell
Amidst its rapid emergence, India faces innumerable challenges such as gender parity, inclusive growth, and other socio-economic factors. The country’s eventual success in addressing these challenges, however, lies with the ability to innovate, disrupt, and shape. Its successes also depend on their regional partners, and therefore, rather than be left behind, Sri Lanka should embrace the opportunity and chart its own course that can complement India’s rise for its own growth.
Kithmina Hewage is a political-economist and attended the Summit as a member of the Global Shapers Community, a multi-stakeholder initiative of the World Economic Forum.