Sri Lanka’s business climate stands as the island’s strongest attraction for Foreign Direct Investment (FDI), a factor which must be greatly improved on through targeted reforms, Ceylon Chamber of Commerce (CCC) Chairperson and Lion Brewery CEO, Suresh Shah said.
“It is clear that Sri Lanka requires significant FDIs in order to develop. However, our domestic market is too small and we do not have large amounts of valuable natural resources.
While technology has potential here, further skills development through far-reaching reform of the country’s education system is required.
“Therefore our main attraction currently is our business environment, something which must be improved as a matter of priority,” Shah noted.
Speaking at a public seminar on the theme “Bridging the investment gap” organized by the Pathfinder Foundation, Shah noted that such improvements, as evidenced by indicators like the World Bank’s Ease of Doing Business Ranking would therefore be crucial to sustaining economic growth momentum going forward.
“It is not enough to make piecemeal improvements, instead we must strive to at least break-in to the top 20 of these indices if we are to attract the kind of FDI necessary to drive this economy forwards,” Shah asserted.
The example of Georgia was cited by Ministry of Investment Promotion Director General (Investment) Nihal Samarappuli, who following the nation’s 2003 Rose Revolution, made a series of 17 targeted reforms which propelled the country into 8th position on the index.
In that context, Shah noted that Sri Lanka must also exert caution with regard to external perceptions of the country, pointing to the issue of foreign ownership as one of the potential stumbling blocks on the path to increased FDI.
“The issue of foreign ownership of land is something which must be dealt with carefully in order to ensure that we are not sending out the wrong signals. Preventing foreign companies from owning land may be seen as a the wrong kind of message.
“If such companies could be encouraged to come to Sri Lanka, we would stand to benefit immensely not just from the immediate impact of their investments but also in terms of knowledge, skills, technology, and process transfers,” Shah stated.
He added that such conditions could potentially lay the foundations for driving Sri Lanka’s technology and manufacturing industries towards increased participation in global markets.
“Ultimately Sri Lanka must find ways to compete in areas other than cost. Therefore high-tech manufacturing is a must and this will definitely require investments in education and in the 6 hubs envisioned by the government,” he concluded. (CF)