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SRI LANKA: Former Battle Zone In Search of A Business Boom

Amantha Perera

PARANTHAN, Sri Lanka, Aug 24 2010 (IPS) - It is an odd location to open a new restaurant, right in front of a row of buildings whose roofs have been blown off by artillery fire and whose walls are pockmarked by gunfire.

Once isolated from the rest of Sri Lanka because of the war, Jaffna is now basking in the limelight. Credit: Amantha Perera/IPS

Once isolated from the rest of Sri Lanka because of the war, Jaffna is now basking in the limelight. Credit: Amantha Perera/IPS

But the new Rusi Restaurant in Paranthan town in Kilinochchi district here in the north of Sri Lanka, is all set to make big business in what was not so long ago a war zone.

The restaurant lies on the side of the A9 highway, where heavy battles were fought less than 20 months back. That was when Sri Lankan government forces fought pitched duels with the Liberation Tigers of Tamil Eelam (LTTE), whose stronghold had been in the north, where most minority Tamils in this majority-Sinhalese nation, live.

The Tigers fought a bloody war for almost 30 years, demanding a separate Tamil state until their military defeat in May 2009. That allowed the government to wrest control of a large swath of land that had been under Tiger control in the north for over a decade.

Today, most of the close to 300,000 civilians who fled the fighting in these areas, known collectively as the Vanni, have returned home. Reminders of the war, like blown-out buildings, unoccupied houses, skull-and-bone signs warnings of mines, remain.

But these are beginning to compete for attention with a new set of arrivals — newly painted business premises like Rusi, or rest stops on the roadside set up by government military units and enterprising returning displaced persons to serve the tens of thousands of visitors who travel on the A9 and visit the north, especially during holidays.


For many who have experienced the worst the war had to offer, it is commerce and trade that will help this devastated region shed its war baggage.

“If trade booms between the north and the south, lot of the grievances that the northerners have faced for so long, will vanish,” Rasiah Janakumara, head of the Chamber of Commerce in Jaffna, the northern city that is the cultural and political nerve centre of the Tamils, told IPS.

Like never before, Jaffna is reaping the benefits of permanent peace. Every weekend, at least 100,000, or at times more than 250,000, mostly Sinhalese visitors from the south throng the Jaffna Peninsula.

Guesthouses — dozens of new ones have been set up — are booked for weeks. Restaurants are doing bumper business, as are the small timers in the Jaffna bazaar. The ‘classified’ sections of the weekend newspapers are full of tour advertisements to Jaffna.

From a negative growth rate during the war, the north will show double- digit growth rate in 2010, economists say. GDP growth in the Northern Province is so far at 14 percent this year, the Central Bank says. Trade between north and south had fallen to a virtual standstill, but economists say that it is growing at similar if not higher rates, though exact figures were as yet unavailable.

Jaffna’s tide changed in January 2010, when the A9 was reopened to civilian traffic after being closed since August 2006. “Certainly, as would be expected with the decisive end of war, the Jaffna economy is booming in comparison to its state during this time last year,” said economist Muttukrishna Sarvananthan of the Point Pedro Institute of Development in Jaffna.

During the war, when Jaffna was cut off from the rest of the country, prices of goods often doubled and shortages were common. The reopening of the A9, the area’s only road link with the rest of the country, has stopped this slide.

“Heightened economic activities and linkages with rest of the country have created employment and livelihood opportunities to unemployed and underemployed people, especially youths, and increased the demand for local produce like fish, vegetables, fruits, traditional local snacks, handmade cookware and crafts that in turn has increased household incomes considerably,” Sarvananthan observed.

The Vanni, which witnessed the war’s last bloody battles, has not yet reaped the same peace dividend as Jaffna. Investments and new businesses have only begun to sprout there and parts of the Vanni, especially interior areas in the east and west, remain closed to the rest of Sri Lanka.

“The war was hard, very hard,” Nishanthini Daniels, a resident in the Vanni town of Kilinochchi, the former Tiger political hub, said in an interview. “But slowly, we are getting back to normal. It will take time, a lot of time, but at least now we can hope.”

Sarvananthan argues that that bottlenecks to commerce have to be removed if the north’s true potential is to be achieved, including through the freer flow of goods and produce from the north to south.

“Economic growth since May 2009 in the North is restricted due to the slow pace of return and resettlement of IDPs (internally displaced people), oversecuritisation of the process of normalcy, lack of freedom of movement within the Vanni, and government command and control over the process of economic revival,” he told IPS.

Despite the increase in trade and income, the Northern Province’s impact on national Gross Domestic Product (GDP) remains marginal. Between 2008 and 2009, its share of national GDP increased only by 0.1 percent, from 3.2 to 3.3 percent, despite the war’s end and the influx of development projects.

 
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