Dhananath Fernando  00:19
Hello, hello, everyone! Thank you very much for joining back. And as you know, we are discussing about the book that authored by Dr. Sarath Rajapatiran, and we have discussed 10 chapters so far. And today we are going to discuss about the 11th chapter, that is the future of globalisation. Dr. Rajapatiran, welcome back to our programme.

Dr. Sarath Rajapatirana  00:38
Thanks to be back,

Dhananath Fernando  00:40
Dr. Ajit, now in this chapter we discuss about the future of globalisation, and in the earlier chapters basically we discuss globalisation through more globalization-friendly policies, and we talked about the politics about it and multiple aspects of it. So how do you evaluate the future of globalisation? Because in the recent past we had COVID, and then during President Gotabaya's time there was tax cuts. We had to look at it on foreign direct investment. There are multiple aspects when you look at the future of globalisation. Yes. Where do we where do we start?

Dr. Sarath Rajapatirana  01:19
I think we have we start from the history part.

Dhananath Fernando  01:23
Okay.

Dr. Sarath Rajapatirana  01:23
Then what what has happened since we took globalisation from Sri Lanka point of view, and then we, as you say, then we introduce the two concepts we used globalisation friendly and unfriendly policies. How would they play out in the future? That would be the question. Right. Yeah. Now, also there are some other implication compared to the earlier period. These periods are more politicised because government changed completely.

Dhananath Fernando  01:57
Very interesting observation. Yeah,

Dr. Sarath Rajapatirana  01:58
government changed completely, and that we cannot continue the same same way as we done in the past. Because in the past, particularly after 1977, we were prepared. The country was prepared to do globalisation friendly, but they also paused when President Gotabey became came to power, and that group were not very was not very amenable to globalisation friendly policies. You can see from the way they have conducted policy under them, there are so policy problems created. So I'll be happy to talk about the policy problem because that is going to our future. First of all,

Dhananath Fernando  02:51
yes. What's the policy problems, Dr. Padilla? I think there are

Dr. Sarath Rajapatirana  02:53
three major ones.

Dhananath Fernando  02:54
Okay,

Dr. Sarath Rajapatirana  02:55
first is that the person who came to power or person who had no background in running economy, so this is a completely amateurish problem. And then also that the view of the world that they had after, which we changed in 1944 got back again. So after the present position, it is not as global as friendly as you and I would like. So there's a problem there, and finally. We can see the the situation with respect to what are the essential things we are doing, particularly to growth going. I don't see that happening very much, so that's very important thing to address, because the personages have changed.

Dhananath Fernando  04:04
Absolutely. So, doctor, going back to the future of globalisation, not going back to the future of globalisation, but in the recent past, you mentioned about some of the globalisation unfriendly policies and the very important observation that the governments change quite fast, and probably their worldview impact the future of globalisation, and the policy recipe that they are going to bring out will pretty much determine the future of globalisation. Now, this started with COVID. I mean, yes, COVID 19. Yes, and like completely shutting down borders. Everything was generally not seen as globalisation because globalisation is more

Dr. Sarath Rajapatirana  04:42
open,

Dhananath Fernando  04:43
open and trade. So how do you see it in that context? Do you think I'm not asking a political question, but basically the political leadership got influenced by the remedial action that the entire world took during COVID-19 on like closing down borders and thinking. That is the solution. How do you see it on even on a global scale?

Dr. Sarath Rajapatirana  05:04
I think that it closing is always a problem to me,

Dhananath Fernando  05:09
as we understood even from through

Dr. Sarath Rajapatirana  05:11
COVID. Right, it's not going to work. But the point is, they came with some baggage. The new administration came into power. I'm not criticising them. I'm just saying neutrally what they were trying to do. In the past, we see from their behaviour, they didn't like globalization-friendly policies. They think that we we were that the economy should be put under more control. That is the type of view that the pre-change in government situation was that they are so. But I think what we can do is to look at how they have what they have done since coming into power, particularly after led by Goda Ber Rajapaksa, who has no background in running a country or dealing with the economics of the country to Asia?

Dhananath Fernando  06:10
Got it. And then also there was tax cuts that happen. Yes,

Dr. Sarath Rajapatirana  06:14
I am going to come to that. One of the three big problems we created. First of all, the tax rate was 12%

Dhananath Fernando  06:22
Yeah,

Dr. Sarath Rajapatirana  06:23
reduced from 12% to 8% Is a VAT basically?

Dhananath Fernando  06:27
Yeah,

Dr. Sarath Rajapatirana  06:28
it was reduced to from 12% to 8% Just becoming the most difficult tax situation in this country compared to other countries, so so what happened was that we didn't get jump revenue, and therefore with little limited revenue, we couldn't do many many things. We already had a problem when the new government came into power. Their policies were different, as they have to be, as we understand. So, so if we apply that criterion to going into the future, I am not very hopeful that we will we will do well. I am not very hopeful when it is sort of the system thinking in the past pre 1977, was to take control of the economy. That was their way of thinking about it. I really don't think, and I may be wrong, that that has changed.

Dhananath Fernando  07:34
Right?

Dr. Sarath Rajapatirana  07:34
Yeah. Maybe they are not doing as much as they wanted to, but there is that problem. Got

Dhananath Fernando  07:41
it. And Dr. Ajay, you mentioned about three things that we did. It quite went wrong. One was the tax cuts. Do you want to move on to this other two as well?

Dr. Sarath Rajapatirana  07:52
Tax cut is one.

Dhananath Fernando  07:54
Another one is is it the fertiliser?

Dr. Sarath Rajapatirana  07:56
Yes, fertiliser ratio. And the change in the leadership, which which was very difficult, appointing Gotabay Rajapaksa, who only had been sort of a person who worked in the army, and so therefore there was no leadership coming from him, and when they chose people to lead, they also had no background, as we know. The people who advocated to have policies that were going to build the future, so without without further liberalisation, I. what we need now, which is sort of anathema to those people, what we need now is another approach, which is to allow. We don't have to say globalisation friendly all the time. Policies that are good for the growth of the economy. What are the increasing the productivity of this country? And that means you have to have reforms. Without reforms, you can't go forward.

Dhananath Fernando  09:12
Thank you, Dr. Ajay. So we discussed about the future of globalisation and what mistakes that we did and how we basically, basically how the policies that we are going to bring out kind of going to determine

Dr. Sarath Rajapatirana  09:25
the

Dhananath Fernando  09:25
future of globalisation. Also, in your chapter, in chapter 11, you also kind of shed light into Sri Lanka's FDI's and also a little bit on the international trade and also on the labour migration. Do you want to share your thoughts on that aspect as well, on looking at more future of globalisation in Sri Lanka's context?

Dr. Sarath Rajapatirana  09:49
Yes, I mean, what we if we what is crucial now for us is to get our productivity growth going, meaning that helps. Development of the country, so that we, without getting into that, then we can't progress very well. Two is that, but the government have promised the IMF, for example, to do certain things are not being done. For example, The promise to introduce reforms, improving the improving the the current state of affairs. I think that is what we that they agreed, and IMF has proposed to have to have a reform period. So IMF is more towards getting

Dhananath Fernando  11:01
stability.

Dr. Sarath Rajapatirana  11:02
Sorry,

Dhananath Fernando  11:03
getting stability

Dr. Sarath Rajapatirana  11:04
is it stability? Whereas the real is not the IMF, but the other part of it from the World Bank. So when they work together, it is very helpful, and I don't see at this moment any idea that they are going to work together.

Dhananath Fernando  11:26
Understood. So, Dr. Ayabadina, in terms of the the future, you said like what we need to do is like having kind of more reforms to open up for like open up rather than like you know having reforms to support the future of globalisation as a country, what kind of I think we have discussed broadly about the reforms, but are there anything particular that you need to pinpoint, considering how it is going to shape up in a more global context? Because globally also,

Dr. Sarath Rajapatirana  12:00
we have to be more competitive. That is the point. How can we be more competitive? Is the question

Dhananath Fernando  12:06
in terms of price, in terms of yeah quantity,

Dr. Sarath Rajapatirana  12:10
yeah, all those things. And I don't see that happening. There are certain doubt about

Dhananath Fernando  12:18
it.

Dr. Sarath Rajapatirana  12:18
There's not a very clear idea what they are going to do, and so we-it's very difficult to predict because we don't know which way it will go. Yeah, but from looking at the best thing is to look at history and say what happened and why it happened type of thing, right? So, go to our boxer. Dr. Ajay, in

Dhananath Fernando  12:49
in moving forward, because political sensitivity seems to be quite, as you said, it seems quite frequent and sensitive.

Dr. Sarath Rajapatirana  13:01
Yeah.

Dhananath Fernando  13:01
If the worldview is quite different to like, if it's you know if the political parties or the leadership who get elected, if they have sort of a more globalisation unfriendly sort of a leaning or an inclination, what would be like the consequences, or like how how could we how should we then visualise our future?

Dr. Sarath Rajapatirana  13:29
Yeah, our future oh it will be bleak. Okay, because that is from history, you know. Many we try to control the economy the way we try to do pre Period.

Dhananath Fernando  13:46
You mean the 1970s? 70s.

Dr. Sarath Rajapatirana  13:47
After 77, there was the change. So now, when the new people came, they had no respect for, they had no understanding. First of all, to be very fair, they had no understanding what had to be done. stabilisation path took well because some people who know the subject matter were involved in it, and now it is more challenging to have go forward from the current situation because we have to really figure out what is it we are going to do to get GDP growth growing, which means that we have to get productivity growth rising. The only way to increase productivity growth is to have a competitive economy, and that is not happening because first of all there is some reluctance to open up the economy, and some reluctance. So without it, that means that we can't expect them to take reforms of the type that are needed to get growth going.

Dhananath Fernando  14:55
Understood. So, Dr. Ajitan, we spoke about Chapter 11. In your book, the future of globalisation in Sri Lanka, the the policy challenges of a globalisation in Sri Lanka is the title of the book. So, any final thoughts under this chapter that the readers who are interested should keep in mind? Any final thoughts on this chapter?

Dr. Sarath Rajapatirana  15:19
No, there are essential things we have to do if we want to go forward. I would go to the extent of saying removing some of the barriers to our our situation, reducing tariffs, and then we are in a very difficult situation compared to the past. mr. Trump had not happened in the past, but it has now happened. So that those are challenges that that is be under not not in our control. What so the earlier period pre 77 period, there are no such difficulties now, which we are facing. Those difficult not only as the rest of the world it seems have to be have to deal with this what is happening in the United States.

Dhananath Fernando  16:05
Absolutely. So, Dr. Abhatra, thank you very much for joining today's conversation. We discussed about the chapter 11, the future of globalisation in Sri Lanka, and we are looking forward to seeing you with chapter 12. Yeah. And for our viewers, so if you haven't watched all our chapters. You can find it on our YouTube as you watch as a playlist, so you can go through all the chapters. Again, this book was not authored. I mean, this conversation is not to promote the book or like asking you to buy the book. It's more an academic book which he has kept for references in many libraries around the world. But it is important that we understand the fundamentals of why globalization-friendly policies are quite important, and what are the lessons that the history teaches us when we have globalization-friendly policies versus globalization-unfriendly policies. At the same time, we also invite you to become an Advocata insider, which is just 12,000 rupees a year, 1000 rupees a month. You get exclusive analysis on exchange rate, interest rates. At the same time, on the property market, the vehicle market, and multiple segment, including the stock market. So those are the the offers that we have. At the same time, by becoming an Advocata insider, you are mainly supporting the policy reforms in Sri Lanka, while you get some exclusive benefits, your support is to continue the work that we do as an independent, non-partisan think tank. So we have the independence to provide unbiased analysis on the economy and also back the much-needed economic reforms, as Dr. Rajapatina says, for more towards globalization-friendly policies. With that, Dr. Rajabadan, we'll see you. Looking forward to seeing you in our next episode. Thank you very much. Make sure you subscribe us atvocata institute, and there are multiple programmes coming up on Advocata Institute as well as our singular channel is Advocata Plus, and our Tamil platform is Advocata Kural, and we are available in any social media platform, including Instagram, WhatsApp, TikTok. You can you should be able to find us in any platform. We'll see you with the next episode next week.


Transcribed by https://otter.ai