The Singapore-Sri Lanka FTA

Tuesday, 21 August 2018 00:00 - - {{hitsCtrl.values.hits}}

I refer to the comments made by Wasantha Samarasinghe in another newspaper of 19 August. He opposes it because it could destroy the free industrial enterprises we have in our country.

I am afraid he is right. It is true that our future lies with integration with the world free trade area to get a large export and re-export market for goods produced or transhipped from our country. We do not have scarce raw material or even labour in excess now and no serous unemployment problem for labour.

Due to irresponsible post-Independence deficit financing funded by money creation as well as the granting of excessive demands of our trade unions we are today a high cost country with high cost of labour. Labour is also no longer in surplus since a large number of our workers have gone to work in the Middle East.

Since the productivity of our labour is relatively lower than workers in Singapore or other neighbouring countries, the free import of labour will make it uncompetitive to employ our labour domestically unless wages are depressed to match productivity. Of course many of our surplus labour have gone to work in the Middle East.

But are we ready for the influx of workers from neighbouring countries like Bangladesh since they are affiliated to a different ethnicity and religion? So a Free Trade Agreement with Singapore could pave the way for foreign workers from countries like Bangladesh and Malaysia to come in and it will be difficult to monitor their stay here to be limited to the contract periods given our weak administration and the religious affiliation in the east.

While from an economic point of view this is not objectionable, it will be objected to from a social point of view. It will change the religious if not the ethnic background of our people, even assuming that the original Sinhalese did come from Bengal, the modern Bangladesh. So this issue should be carefully examined.

We may have to wait till the whole world adopts free trade rather than jump the gun and risk the import of cheap labour of different ethnic and religious background, which will create social problems arising from differences in religion if not ethnicity although it will be economically beneficial.

While free trade in goods has much to recommend it, the free movement in labour however valid from an economic point of view has socially harmful consequences which as a small nation we cannot ignore. So let us proceed with caution and limit liberalisation only to skilled technical workers who are scarce in our country.

– R.M.B Senanayake