The Government in the first decade and a half of the 21 century has decided to enter the transportation sector -- international and local sectors including infrastructure like ports and airports - with a bang.
Sri Lanka has made colossal investments in this sector, and the sum total of these projects run into billions of dollars. The investments include Hambantota port and airport, South Port in Colombo, Oluvil project, Mihin Air, and the Southern Express Highway to name the big ones. The Kandy highway is also on the cards. It appears that Sri Lanka is determined to choose this sector to fast-track development and perhaps leapfrog the lost development.
The investments and the repayments of borrowings have to be weighted against any restraint that may be caused to the Lankan economy. As much as the above mentioned transport sector investments may have indirect and direct benefits, borrowings on the other hand also have a spillover effect directly and indirectly over the economy.
The economic viability of these investments varies. One aspect is that Hambantota port and airport, South Port in Colombo, and Mihin Air may have to compete globally for a rightful market share, where at times even missing a critical opportunity is considered fateful; and on top of all that our competitive prices must be good enough to yield a profit. While on the other hand the Southern Expressway is not still part of the international transport network, which means, till now the benefits of this investments are intended locally to resuscitate the economy to do well globally.
Even if the highway is extended till Hambantota port and airport, the question to ask is whether transshipments will go through it, or how far the local produce will get into these roads to connect the two economic ports/airports at either end? If the rod is intended to benefit the proposed investment zones (say, the one in Hambantota) the question still has to be posed as to what the country will get as a return for the massive investment. Yet, an answer may come from an optimist that such roads will have a great marginal social benefit that offset the marginal economic costs, for example; easing the traffic congestion, effective fuel consumption, increase in tourism, etc. while we started the first decade and half of this century with the transport sector, we may have to finds means to effectively utilize these investments for the next two decades to shield ourselves from debt default. It is indeed a bold step to make considerable investments in a short period in a fragile economy, and certainly a decision that an idealist may not take. It will be a pyrrhic victory for Sri Lanka if and when these transport sector investments catapult Sri Lanka into a developed country. |
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