Foreign investment necessary to wipe out poverty, economist says

Although fixing Sri Lanka’s economy is not easy, the model of foreign direct investment flows into the Asia Pacific region in countries such as Vietnam, Thailand, Malaysia, Singapore and other countries was worth looking, according to Economics Prof. Prema Chandra Athukorala from the the Australian National University.  Speaking on the topic “Foreign Direct Investment and Manufacturing for Export and Emerging Trends and Opportunities for Sri Lanka” in Colombo last week at a forum organised by Advocata Institute, a Colombo-based free market think tank, he said his theory was based on research done by him on FDI inflows into those countries.

He said there is no panacea for economic development but there is one avenue which had been very effective in drawing direct foreign investment for promoting manufacture for exports.  To reduce poverty it was necessary to generate employment and the use of labour as a resource is necessary as one cannot start at the top end with sophisticated machinery without training unskilled labour. “Countries such as Malaysia Thailand Singapore and now Vietnam have used labour resources to eradicate poverty. We cannot ignore globalisation if we are to emulate developed countries such as Singapore to eradicate poverty and not remain like Myanmar.

Although some ministers have voiced their opinion to bypass manufacturing and to focus on the tourism sector, manufacturing was absolutely necessary to generate employment to eradicate poverty with unskilled workers. Foreign investment is also needed to generate employment and countries like Japan relies on foreign investment and the technical know how. It comes as a package with market linkages.”  Foreign investment is an important component for a country like Sri Lanka to start big industries like MAS Holdings, Brandix, Hirdaramani and others. “We need foreign investment to link up with the global market chain.” Referring to international brands such as Nike, he said different components of the shoe were produced in five countries including Vietnam and Sri Lanka.

Read the article on Sunday Times