By Nadini Perera
Ceylon FT: The country must establish rule of law and create an environment for attracting Foreign Direct Investment (FDI) in a ‘do or die’ scenario over the next three years, an economist said.
“When it comes to FDIs particularly for a developing economy, we need inflow of money. This could come through many mechanisms, such as loans, or investments made by multinational enterprises. The importance of this is; we have currency stability on one side, and long term gains such as employment growth, opportunities, promotion of industries and Sri Lankan products across the world, on the other,” said Siddhartha Nanayakkara who is reading for his Ph.D in Investment Economics, to Ceylon FT.
Although a significant gap was seen last year with the set FDI target, US$ 2.5 billion is a realistic target for this year, provided the necessary strategy is implemented to tap into the large scale investments already in progress.
“Key prerequisites for attracting FDIs to the country are good governance, rule of law and a strong and independent Judiciary. At the moment there are a lot of contradictory statements being said about rule of law and that the Judiciary is being influenced and so on. But here, we need to be very realistic; the Judiciary generally adapts to the governing mechanism. “I would say, one of the best things for the government to do right now is to bench mark ourselves with international Judiciary systems akin to Singapore and the UK and try to adapt to a lot of these most relevant policies, so that the foreign investors would see Sri Lanka as a very independent country, where people would opt for a system as a mutually benefitting system across countries.
If we can do that, then that in itself will be an FDI for us. Then people will start coming and investing here, opening up offices and so on, and this is what is happening in Singapore. You pay US$ 10,000 for a company registration and you open up an office. If we can adapt to a system like this getting US$ 2.5 billion could happen within no time – just through a smooth registration process.”
“As a young economist I see the next three years crucial in our decision making capacities – if we do it right it will be the best, if we do it wrong we are going to be one of the worst economies in the world. The coming three years will be ‘do or die’ for the government and all other stakeholders involved. The government will have to decide. They should ask, ‘Are we going to do it the right way by putting in the right processors in place? Are we putting the right people in the right places? Are we taking the right initiatives with measured risk? Or, Is the follow up in place?'”.
By Nadini Perera