Being neighbourly
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Sometime back in around 1990 in Mumbai, I was sharing a lift with a journalist colleague when he inquired about the use of mobile phones in Sri Lanka, then introduced in 1989. He was amazed that Sri Lanka was ahead of India in launching this useful product.While Sri Lanka introduced sweeping economic reforms in 1978, India’s reforms came much later in 1991 with the architect of these reforms being Finance Minister Manmohan Singh. India’s GDP in 1987 was US$275,460 million which then ballooned to $4 trillion in 2024, whereas Sri Lanka’s GDP in 1987 was $8.2 billion rising to $84 billion in 2024, not as speedily as India.
Thus it has always been a case of missed opportunities for Sri Lanka despite being ahead of the curve in the region, being the first to initiate economic reforms. We once again missed the bus!
This was also the conversation I had with Ruwanputha, my young economist-friend, on Thursday morning. “I say, why do you think President Anura Kumara Dissanayake visited Vietnam instead of a western country as his third foreign visit after India and China,” he asked.
“Well Vietnam, being a Communist country, has a commonality with the ruling NPP in sharing the same philosophy and also being a good neighbour in the region,” I said. “What is interesting is that Vietnam’s economy has been described as a ‘mixed socialist-oriented market economy’,” he said.
“In many ways, Sri Lanka is facing the same policies,” I said. “I think the President also wanted to learn how a Communist country had succeeded with a mixed, neo-liberal model of governance,” he said.
During the Sri Lankan President’s visit to Vietnam, he also met with the leadership of the Vingroup Company, one of the largest conglomerates of Vietnam and invited the company to invest in Sri Lanka. This group’s revenue is said to be almost 1.1 per cent of the GDP of Vietnam.
While Sri Lanka’s economic path, after the first round of reforms in 1978, has been lagging behind in follow-up reforms to take the country to the next level of a middle-income economy, Vietnam has been speeding ahead, starting late compared to Sri Lanka, in initiating economic reforms in 1986. That country has become a middle income country from being one of the world’s poorest nations, whereas Sri Lanka is far behind, after being among the first off the blocks in South Asia to embrace free market reforms.
Vietnam aspires to become a high-income country by 2045, according to the World Bank. In contrast, Sri Lanka by 2028 must start repaying its foreign loans and debt which were suspended recently under an IMF-backed-reforms path. Sri Lanka would probably borrow again to settle these loans.
The World Bank said Vietnam, once a war-ravaged nation, is a remarkable development success story. Its economic reforms since the launch in 1986, coupled with beneficial global trends, have helped propel the country from being one of the world’s poorest nations to a middle-income economy in one generation. Real GDP per capita soared from less than $700 in 1986 to almost $4,500 in 2023, a more than six-fold increase. This is while the share of the population living in poverty with less than $3.65/day (in 2017 purchasing power parity) plummeted from 14 per cent in 2010 to less than 4 per cent in 2023.
“Thanks to its solid foundations, the economy has proven resilient through different crises. Economic growth was projected to reach 6.1 per cent in 2024 and 6.5 per cent in 2025, up from 5 per cent in 2023, driven by increasing global demand and restored domestic consumer confidence. Vietnam has also made significant educational progress, achieving universal primary education in the early 2000s with a net enrolment rate above 98 per cent. Vietnam’s learning-adjusted schooling averages 10.2 years, second only to Singapore in ASEAN, and its human capital index is the highest among lower middle-income economies,” the World Bank added.
Over half of all people in Vietnam lived on less than $2 a day in 1993. Today, fewer than 3 per cent of people live below the poverty line.
Here are some economic-related comparisons between the two countries – both nations once wracked by war: Sri Lanka’s (SL) GDP is estimated at $85 billion, whereas Vietnam’s GDP is $500 billion; SL reforms began in 1978, Vietnam in 1986; SL economic growth 5 per cent in 2024, Vietnam 6 per cent; SL per capita $3,833, Vietnam $4,323; SL forex reserves $6 billion at end-2024, Vietnam $81 billion; SL FDI $1-2 billion, Vietnam $38 billion; SL tourist arrivals 2024 – 2 million, Vietnam 17.5 million.
While Vietnam’s human rights record is appalling, according to rights’ defenders who accuse the country of having high levels of corruption, censorship and environmental issues, it still attracts foreign investments.
With thoughts of how Sri Lanka has ‘missed the bus’ on many occasions to transform this country to a rich state just like Singapore, I went to the kitchen as I got the tantalising odour of hot ‘kimbula bunis’. Picking up one and also a second mug of tea, I watched through the kitchen window, the trio in conversation under the margosa tree.
“Aanduwa palaath sabha chandey dinuwata, egollangey janapriyathwaya wetila (The government won the local government elections but its popularity has fallen),” said Kussi Amma Sera.
“Ow, Jathika Jana Balawegaya hithuwey udinma dinai kiyala (Yes, the NPP had expected a clean sweep at the polls),” noted Serapina.
“Viruddha pakshayey inna kota kegahala angili dik karanna lesi. Eth aanduwa karana kota prashna godak thiyenawa (When in opposition, it is easy to shout and point fingers but when you govern the problems are enormous),” said Mabel Rasthiyadu.
Getting back to today’s discourse on Sri Lanka and Vietnam, it must be recorded that Sri Lanka (when it was known as Ceylon in the 1960s) had the best social indicators – health, public sector and education – in Asia and was far ahead of countries like Singapore. In fact, other countries were learning from Ceylon to replicate this model. So, what happened to Sri Lanka, is our sad lament today!
As I wind up today’s column, Sri Lanka has become a basket case on how ‘not to grow’, as politicians from all shades of opinion now battle to form governing groups in local government authorities, not because they want to serve the people ‘faithfully’ but to boost their own, selfish interests!
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