Financial Times

Investment targets remain pipe dream
A former President of this nation is believed to have said that God must be a Sri Lankan. Despite all our “down” situations, the nation finds some unexpected “pull-up” opportunities that mitigate many of the significant negative issues that emerge in the nation from time to time. Can the business sector continue to rely on this hope?

In situation analysis assessments, should the business sector presume that despite the many negatives in the operating environment, that some positive business opportunities will emerge, which will in the end yield competitiveness related growth options to them?

The Global Competitiveness Report 2005-2006 released on 28 September, 2005, is a valuable tool for shaping economic policy and guiding investment decisions. It is one of the leading monitors of the competitive condition of economies worldwide. Produced in collaboration with leading academics and a global network of 122 partner institutes, “The Global Competitiveness Report” has expanded its geographic coverage over the years and now assesses 117 economies.

The Global Competitiveness Report is a contribution to enhancing the understanding of the key ingredients of economic growth and prosperity. By highlighting the strengths and weaknesses of an economy, policymakers and business leaders are offered an important tool to assist them in the formulation of improved economic policies and institutional reforms.

The World Economic Forum has noted that some countries are able to grow on a sustained basis for prolonged periods and in the process pull large segments of the population out of poverty, whilst others stagnate or worsen, actually seeing an erosion of living standards. Sri Lanka clearly falls into the latter category. It is time that the business sector asks the question – can and should something be done to redress the drivers of negative assessment.
The recent report places Sri Lanka in position 98 out of 117 countries, as against the previous study with a position of 72 out of 104 countries. In comparison Bangladesh was in position 110 vs 102, Pakistan 83 vs 91 and India 50 vs 55.

These global rankings are a combination of growth and business competitiveness indexes. The latter has a component that assesses the quality of the national business environment including an assessment of institutional governance, corruption, law and order, public sector efficiency and effectiveness. A new measure in this area is “legal corruption” seen as the rules of the game, laws and institutions which are used via influence peddling to capture benefits to vested interests.

The recent uttering of a big chief at an annual general meeting appears to more than justify the down-graded ranking Sri Lanka received in the global competitiveness assessment, especially in the area of national business environment.

It was reported that according to the big chief, some of the police, customs, RMV officials and lawyers, including those in high positions in these services, are highly corrupt and that they, and even their progeny, would find themselves facing untimely deaths after prolonged agony.

The police officers were purportedly deemed as a useless lot from whom one has to protect oneself rather than the reverse. The above publicly-made assessment from the one in the highest position of arbitrative and judgmental assessment reflects the current state of law, order, governance in Sri Lanka, and the operational state of the revenue collection arms of government. Law, order and governance and revenue commitments are so fundamental to business function in any nation and are the prime drivers of investments, growth and prosperity of a nation.

If in Sri Lanka the application of the rules of the game, laws and institutional effectiveness are at such low ebb, it is time for all to awaken and take note, as the foreign direct investment targets set by the Board of Investments are only pipe dreams in such an environment.

The Wise Old Owl can afford to say “Deyyio Sakki” or “May God bear witness” and fly away. The business sector can of course either remain believers in that “God is a Sri Lankan” and presume that whatever the state of law, order and the key drivers of business and the economy that these will not impact on them because the heaven will deliver plenty of growth and competitiveness opportunities.

In the alternative they can wake up, be brave enough to state the obvious, be counted as a voice seeking due accountability for good governance and seek a radical remedial change that will provide a better and far improved operating environment. Over to you the Chamber Leaders, the ball is in your court!

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