Financial Times

Uncertainty affects foreign investment
The political crisis that erupted last week had an immediate impact on investor confidence with foreign investors who had projects in the pipeline putting their decisions on hold and a senior government official casting doubt on economic growth targets.

"The president's action in removing three ministers and suspending parliament has created a lot of economic instability," said Board of Investment chairman Arjunna Mahendran. "We are having difficulty in bringing in investors; foreign investors who were to invest in Sri Lanka are holding back their investments. The investments would have created about 10,000 jobs. These jobs are in jeopardy as well."

The state of emergency declared by the president has only sent all the wrong signals, he said. "When a state of emergency is declared, investors become nervous that war will resume. No one would want to put their money down in a country where there is political uncertainty," he added.

Talking about business confidence Mahendran said, "The stock market is a good indicator of what business confidence is like. Since there is no indication of violence the stock market may recover."

Even though business continues as usual, Mahendran said that the projected economic growth target of 7-9 percent may not be achievable. "The two political parties should work together, they must sort things out. There are talented people on both sides. We want political stability for further economic growth," he said.

Asked whether he thinks business leaders should try to bring the two parties together, he said: "I don't think the business community could bring the two parties together."

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