Regional integration: Prioritise low-risk, high-return opps.

Sri Lanka’s regional integration should be driven by pursuing high-return, low-risk opportunities like payment settlement connectivity and data sharing, Central Bank Governor Dr. Nandalal Weerasinghe said, speaking at the Asia in 2050 Roundtable in Bangkok last week (7).

“Rather than having a much broader integration, integration in areas where you get immediate benefits, for example payment settlement connections and data sharing, these easier low-hanging fruits, will be much more effective in the short run, while moving towards integration,” Dr. Weerasinghe said, speaking on Sri Lanka’s agenda to integrate with the rest of the South Asian region.

At present, The Central Bank of Sri Lanka (CBSL) and its public-private-partnership with LankaPay operates a national payments infrastructure which includes a Real-Time Gross Settlement (RTGS) system, LankaSettle, and the Common Electronic Fund Transfer Switch (CEFTS), which help real-time cross-border transfers.

In February, Telecommunications Regulatory Commission of Sri Lanka (TRCSL) Chairperson Waruna Sri Dhanapala said a number of Sri Lankan private sector banks had progressed in discussions with multinational payments technology company Paypal, to enable the service for Sri Lankan freelancers and small businesses.

However, official confirmation on the matter is still to be made public.

“ASEAN integration is still at 22%, the assessment is that it goes up to 50%, in 25 years in 2050. In that context, if you look at South Asia, it is a much less integrated region. Our inter-region trade is less than half of ASEAN. All of us within the South Asian block are closed, protected economies,” Dr. Weerasinghe said, commenting on the regional differences.

For South Asia, he added that the next best way to integrate is to enable grid connectivity, pursuing a regional energy agenda. “The easiest way of integration is energy security. When you look at the capacity of South Asia in terms of renewable energy, Nepal and Bhutan’s potential over the past few decades has not been utilised. Why this hasn’t been utilised is because of regulations, restrictions, and fear of opening up to investments from abroad.”

“In Sri Lanka we have a huge windpower, solar power potential. Why can’t we have this investment open up and have a grid connection with India, to the region? These are examples of regional integration that would be easily beneficial and that can lift the region.”

While Sri Lanka’s grid connectivity with India in the past three years has faced intermittent progress, High Commissioner of India to Sri Lanka Santosh Jha in January said that plans underway to connect with the Trincomalee energy hub have moved from the technical stage to the financial stage.

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