Frequently asked questions about the Sri Lankan crisis - and our answers.
Answers by Yudhanjaya Wijeratne and Nisal Periyapperuma
We’re stretched a bit thin, but we’ll do our best to answer and keep this updated.
1. If we look at successful countries like China, they earn massive amounts of foreign currency through exports - especially luxury goods, electronics and fashion. Why can’t we do the same?
China is an insanely large country. It has a population of 1.402 billion (1402000000)- that’s a little over 18% of everyone alive in the world right now. For comparison, Sri Lanka has a population of 21 million people (21000000).
In terms of population, China is 66.76 times the size of Sri Lanka. Here’s a lovely map from the World Economic Forum that lets you visualise this:
This means that China has both a huge labor force and a naturally enormous domestic market. This is what enables companies like Xiaomi to not just rise, but thrive: when there are hundreds of millions of people to both create and buy your product at home, you can create, sell and sustain product businesses. Successful domestic businesses then sell outside the boundaries of their country.
China also has a unique advantage: it has, for the longest time, been almost entirely self-sufficient in energy. It has incredible coal, hydroelectric, and even petroleum resources. The natural resource differences between our two countries make China an impossible roadmap to compare to, much less use here.
To do ‘the same’, we need to pick countries that have the same circumstances as us.
It’s also important to understand that the Chinese economy didn’t get here out of nowhere. The present structure of the Chinese economy is the result of continuous reforms since 1978, including constitutional reforms, and economic stimulus packages. While lifting many out of poverty, the road there was brutal and pretty uneven, especially across urban-rural splits.
So is this possible? If yes, what we’re talking about is decades of work at least. We’re having trouble keeping the lights on right now. Given the differences in the countries, we say it’s just not feasible to model ourselves on China.
2. Many countries have universities that bring foreign students, and thus foreign currency. Why can’t we build off this plan? (This would also create jobs for unemployed graduates in the country).
Sure, education can be exported. In 2014-2015 it was estimated that international students generated at least £25.8 billion for the UK economy. Certainly money flows out of the country whenever a student from Sri Lanka goes overseas to study.
What we need to ask ourselves is why people would come here to learn.
Is it for the high quality of education? Here’s are three different rankings of world universities: Times Higher Education, CWUR, TopUniversities. Notice where our universities rank: behind hundreds of others. Sure, we may not all agree with these ranking systems, but perception of the value of a degree is practically quite important.
There is, of course, the option of getting in foreign universities. However, there is one small problem.
In 2010, the government had plans to allow the setting up of private universities. Talks were underway with 15 foreign universities, including Monash and Beijing State University. What happened was protests and unrests across all 25 of Sri Lanka’s national universities. Their viewpoint is: they work hard for education, and this will create a two-tiered structure where all the resources go to private education and even less to public education.
This may be one viable way forward (I don’t think it’ll solve all our problems), but we will have to genuinely address the grievances of protestors.
3. Sri Lanka has a 46% digital literacy rate. Why don’t we encourage industries that can take advantage of that, like business process outsourcing (call centres, back office admin, etc) and IT services?
So we looked at how this literacy rate is measured by the department of Census and Statistics.
Here’s something from their own document: ”Definition for computer literacy: A person (aged 5-69) is considered as a computer literate person if he/she could use computer on his/her own. For example, even if a 5 years old child can play a computer game then he/she is considered as a computer literate person.”
So most people report themselves as being able to search for information, create logins, install an app, and so on. So in effect, this seems like a good idea, even better than initially expected.
Good ideas like this usually get picked up. Indeed, significant efforts have been made in Sri Lanka; there’s a whole wave of around 300 companies that exist here because of BPO. Sri Lanka is an offshore development hub for even Fortune 500 companies, and Colombo, in particular, has been noted for being an attractive place for BPO. It can’t single-handedly carry our economy, but there’s money in it.
The snag is that you can’t do BPO if you don’t have electricity.
This isn’t to wave away the idea altogether. It’s to point out that we have been doing this for a while, and it’s heavily reliant on power, telecommunications, and all the other pieces of the modern world. And we’re competing with India, Bangladesh, and other countries doing BPO. India has literal millions in the industry. In the absence of being able to function, others who can do the job can and will do the job.
4. This fuel for electricity business is unsustainable. It’s a hot country with lots of sunlight. Can’t we bring in solar? What if we fundraise for solar for the national grid (or figure out subsidies)?
We completely agree that this fuel business is unsustainable. And it’s not just us: the CEB knows it, too. We wrote a piece recently where we looked at the power generation in the country, how CEB is run, and why we have powercuts, and it’s clear that since 2019 the CEB top brass have been saying ‘we need to make this sustainable, we need to make this profitable.’
Mind you, we also have anecdotal reports of CEB being really anti-solar... but assume everyone got the the same table.
Right now there are a few hurdles in the way.
Firstly, solar, as we know, isn’t consistent production. You need batteries to store the energy and release it to the grid, or your need to reroute in a smart manner: let the solar kick in during the day, let the generators run at night.
Second, we don’t produce panels, inverters, or batteries, so we’ll have to import them. And that means buying them with dollars.
Let’s look at the Tesla Powerwall, which is often brought up in these arguments, and do some quick maths.
In 2020, Sri Lanka’s peak power requirement was 2,717 megawatts (MW). A megawatt is 1000kW. 2,717 mW is 2,717,000 kW. You’d need 271,700 Tesla Powerwalls to supply that energy. That’s $2717,000,000. In words: $2.717 billion.
And this isn’t really enough. We’re using the Powerwalls’ peak power rating here: consistent output is half that. So double the figure. $4.3 billion at least. Then add costs of construction, wiring, engineering the grid . . .
And we haven’t even got to costs of the solar cells yet.
Solar is a worthy objective, but the simple truth is we don’t have the money for this right now. Our reserves of dollars are under $2 billion, and that’s counting the gold. Unless you know someone with a cool $4.3 billion to toss around, this is a much longer-term task.
There are a number of existing programs you should be aware of, such as the Rooftop Solar project. None of them are planning to replace the national grid: to be realistic about this, it’s going to take a lot of money and time.
- https://www.adb.org/projects/50373-002/main#:~:text=The Project provides long-term,Participating Financial Institutions (PFI).