Ambitious plans and sobering realities: THE WORLD WILL NOT WAIT FOR SRI LANKA TO REFORM

Sri Lanka's ambitious target of generating $25 billion in merchandise exports by 2030, requires an annual export growth rate of 12%, which seems improbable without reform

- By Mathisha Arangala

In a 1996 speech to the Singapore Press Club, Lee Kuan Yew addressed the challenge of ensuring Singapore’s survival beyond his leadership and laid out the core principle of its success. He explained that Singapore prospered by “creating first-world conditions in a third-world region” and becoming “a base camp from which entrepreneurs forayed into the less developed areas around it”.

It did this by offering speed, certainty and clean governance at a time when larger neighbours could not. The lesson for Sri Lanka is obvious. On scale, we are outmatched. A single Indian state surpasses our market size, while Vietnam’s labour force is seven times larger. While Vietnam operates around 400 export parks and is heading towards 500, we have just 15. We will never surpass our neighbours on land, labour, or market size; these are key investor attractions we lack. Therefore, Sri Lanka must compete differently.

Governance and the Cost of Doing Business Matter More for Small States

Sri Lanka must learn from other smaller economies that have excelled in exports and FDI. Nations like the Netherlands, Hong Kong, Switzerland, and Singapore consistently rank among the world’s top exporters despite their size. They win by delivering what larger administrations struggle to sustain: ruthless efficiency, reliable rules, and clean government.

Global rankings provide clear evidence of this, quantifying the very conditions that attract capital. High placings for small nations in the World Bank’s Doing Business report, for instance, signal an environment where contracts are enforced and bureaucracy is minimal. Strong scores on Transparency International’s Corruption Perception index, where countries like Denmark and Singapore top the rankings, are a direct measure of low corruption risk.