Reviving the Jaffna Peninsula as a Regional Economic Hub

This report is compiled by Hajara Saleeth, Research Fellow, Colombo Initiative, Sri Lanka.

On 19 January 2022, the Observer Research Foundation (ORF) in collaboration with Colombo Initiative and the Sappani Foundation organized the discussion “Reviving the Jaffna Peninsula as a Regional Economic Hub”. This is the second webinar in a series of events hosted under this tri-lateral research partnership. The panel emphasized on Jaffna’s emergence as a regional economic hub and was moderated by Dr. Vinitha Revi. The participants discussed and provided some key recommendations to develop the region.

Mr. M.A. Sumanthiran, the Member of Parliament for Jaffna, delivered the keynote address and stressed on the following suggestions:

• Education: Post-war Jaffna, possesses enormous potential for development in the education sector since it has all the required infrastructure. Reviving Jaffna as an economic and educational hub will attract human capital that has migrated to different parts of the world and is still interested in returning and assisting the community.
• Accessibility to region: Physical proximity to the Indian coast creates opportunities in terms of trade. However, accessibility to the region needs to be improved through projects such as developing the Palali Airport as an international airport and developing the KKS Harbour and Talaimannar ferry line. If the aforesaid projects are implemented, regional economic activity can commence and sustain successfully.
• Language affinity: Jaffna inhibits a large English and Tamil-speaking population. Therefore, Tamil-speaking community can attract business from Tamil Nadu, while Sri Lanka can use Jaffna as a business gateway to the rest of India. It is thus ideally placed to function as a regional economic hub. With the right incentives and encouragement Jaffna can be transformed into a special economic zone in which South Asian, Far East, or even African countries can participate. This can guide the country out of its economic crisis too.

Ms. P.S.M. Charles, a member of the Sri Lankan Election Commission and a former Governor of the Northern Province, came up with a few suggestions as well:

• Connectivity: Connectivity to Jaffna needs to be improved at three levels namely, locally, regionally, and internationally.
• Clarity of development and stakeholder engagement: She stressed that development activities in the Northern region face a lot of resistance from the local community since the locals want their input and consultation. Therefore, it is essential to hold dialogues with the local community and create clarity for all stakeholders to avoid such opposition. It is vital to have clarity of what to develop, when to develop and how to develop.
• Reviving war-torn industries: War has stalled industries that were generating economic activity in the region. Reviving the Jaffna Peninsula as a regional economic hub requires reviving the existing industries in the region. Some of these potential industries are the chemical factory in Paranthan, cement factory in KKS, saltern in Elephant Pass and tile factory in Oddusudan. Their revival will create jobs and economic sustenance in the region.
• Preventing migration: A large part of the population has already migrated or made plans to migrate. Therefore, economic revival should focus on reducing migration and creating opportunities within the region.

Mr. A. Natarajan, the former Consul General of India to Jaffna, shared his experiences by emphasizing the following themes:

• Connectivity: Connectivity is the most important priority to revive the regional economic hub. Direct air services between Chennai and Jaffna is one such suggestion. He also recommended both India and Sri Lanka to involve more in improving infrastructure, and the latter should bear more responsibility to host this infrastructure and cooperation.
• Continuation of existing development projects by the Government of India: Several previous investments from the Government of India are left in idling due to Sri Lanka’s lack of interest. The Achchuveli Industrial Park is a mere case in point. While the Government of India can provide development aid, the responsibility to continue those projects fall on the host Government. The high cost of investment and high charges of the Board of Investment (BOI) is indirectly discouraging Indian investors too.

Mr. Jeevan Gnanam, a Sri Lankan venture capitalist, put forth a few recommendations too:

• Youth participation: Reviving Jaffna as a regional economic hub requires improving youth participation in the economy. Therefore, the activities that are planned under the regional economic hub should aim to engage the youth population, while creating attractive job opportunities for them.
• Enabling investments: Agriculture and technology industries are the most promising sectors in the Jaffna peninsula. Focusing on them can revive Jaffna as a regional economic hub. “Enabling Investments” can also be opted in these sectors, where investments in the local population advance the local community to gain financial independence. This can enable market access, knowledge, connect diaspora and also introduce new business models. Further, impact investors should go beyond the traditional agriculture products and indulge in ‘enabling investments’ in the value-added products of the agriculture industry.
• Upgrading university curriculum: The curriculum of Jaffna University needs to be upgraded on the new verticals of the IT industry such as Artificial Intelligence (AI) and robotics. This initiative will enable the IT graduates employable upon graduation while also addressing the human resource requirements of the industry.

Mr. N. Sathiya Moorthy, a Distinguished Fellow and Head of ORF’s Chennai Centre, concluded with the following recommendations:

• The connectivity of a sea bridge between Jaffna and India is suggested.
• Changes to education system: The current education system does not produce enough technocrats required for the development of the Jaffna Peninsula. This is evident with the low ratio between the university admissions and candidates who passed Advanced Level examinations, which is below the national requirement. Thus, university entrance in the region needs to be increased to address the talent shortage.
• Empowering war widows: The male causalities during the inter-war period has left the Northern region of Sri Lanka with over 19,000 women-headed families. These families can be supported by promoting knitting industries in the region. They can be trained as skilled workers in the knitting industry, regardless of their educational qualifications.
• The sincerity of governments: The Government of Sri Lanka needs to interact with sincerity in its initiatives to truly develop the Jaffna Peninsula.