Opening doors for investment

POLITICAL volatility and war often scare away investors, who are astute enough to know that business suffers heavily under such circumstances.

The absence of both these inhibitory factors has helped Sri Lanka to attract foreign investments to the tune of US $ 234 million last year alone.

That is a rise of over 13 per cent compared to the previous year. The Board of Investment of Sri Lanka (BOI) has approved 524 projects last year.

A peaceful environment and political stability have certainly helped this cause. This year too many foreign investors have lined up to start projects here.

Many feared a total breakdown of the Government machinery following the exit of the JVP from the ruling coalition, which resulted in a minority Government. But such fears were unfounded.

This stability should continue after the Presidential Election on November 17. That will give a clear message to investors that regardless of the person or political party in power, the liberal, investor-friendly economic environment continues.

Finance, Planning, Industry and Investment Promotion Dr. Sarath Amunugama recently outlined Sri Lanka's investor-friendly policies to Japanese investors in Osaka.

Speaking at the Joint Annual Discussion of the World Bank/IMF in Washington, Dr. Amunugama expressed optimism that the current year's economic growth would exceed 5.5 per cent. Foreign and local investments should contribute substantially to this tally.

Investment expenditure in 2004 has increased by 11.7 per cent over the previous year, thereby increasing the Investment/GDP ratio to 25 per cent. However, as Dr. Amunugama has pointed out, this is still below the desirable level.

Enhanced Foreign Direct Investment will help bridge this gap. Apart from direct investments in projects, the influx of foreign equity funds and Stock Exchange purchases will also contribute to this effort.

Foreign Direct Investment has a multitude of advantages. It provides employment to local youth, even though top management positions are usually reserved for expatriates. The export of their products brings foreign exchange to the country.

Foreign investments can often be a source of funding for massive infrastructure projects which the Government alone is not able to fund. Foreign investments in the services sector widen its scope.

It is vital for the BOI and other relevant agencies to seek new avenues for foreign investments. The message that Sri Lanka is one of the most investor-friendly nations in Asia should be spread internationally. The facilities and concessions granted to investors must be given more publicity.

Trade shows and business missions are among other ways to promote Sri Lanka as an investors' paradise. While these should continue to be held in the traditional investment markets such as Japan and Korea, we should also seek new markets around the world.

Our doors should be open to investors seeking to make new products and launch new services here. That will increase our investor base and add variety to exports. The provision of infrastructure facilities throughout the country will also encourage more investors to start projects in areas other than the Western Province.

However, the authorities must not neglect foreign-local joint ventures and 100 per cent local investments. Their well-being is essential for a vibrant local economy aiming for better times ahead.