Business Times

BOI confusion continues despite 30 investment project approvals

By Bandula Sirimanna

Despite approving 30 foreign and local investment projects out of 57 applications in the first five months of this year, an element of chaos continues at Sri Lanka’s premier investment promotion agency the Board of Investment (BOI) owing to the restructuring of the whole foreign investment process in the country. A re-structuring plan worked out by a British consultant at a heavy cost to the Sri Lankan taxpayer to reorganize the set up as part of an overall strategy to revamp the organization is yet to be fully implemented and employees are in two minds about their future and job security, BOI employees said.

CPC in management crisis
The Ceylon Petroleum Corporation (CPC) is facing a management crisis due to lack of top level human resources in its current team. The CPC is struggling to manage its operations with second tier officials as most of the senior officials with expert knowledge in handling petroleum import and distribution operations have either resigned or retired and no replacements have been made so far, CPC trade union officials alleged.

A trade union leader told the Business Times that several senior officials of the corporation have resigned due to disagreements with Chairman Harry Jayawardane who used to scold senior officials using abusive language. On the other hand the CPC chairman who has wide powers in administration and policy in accordance with the CPC Act is always away from the island or engaged in his private business spending very little time for corporation activities. This has created a chaotic situation at the CPC, he revealed.

The Senor Refinery Manager and Chief Legal Officer were among the top officials who resigned from the CPC recently while the Chief Commercial Manager was among the top officials who retired recently. The CPC is operating without a Chief Accountant.
A senior official of the Ministry of Petroleum resources noted that Minister Susil PremaJayantha has directed the chairman to fill the top level vacancies of the corporation including the post of Chief Executive Officer but no action has been taken so far.

As a result the CPC is not in a position to tackle complex technical issues, he added. There is an urgent need to streamline the operation at CPC to tackle the current administration crisis, he stressed.

Some of these employees have no work due to the government’s decision to limit the BOI work mainly for large scale investors. From doing everything from the application stage to the commercial operation, many aspects of the BOI’s work now comes directly under the Economic Development and Finance ministries, they alleged. Part of the work was also vested with the Inland Revenue Department under the 2011 budget proposal. Under the present set up many of the smaller investments (less than US$ 3 million) will be operating under the normal tax regime and will not be come within the purview of the BOI. However export companies as well as import substitution industries will benefit from operating under BOI facilitation,

Several investors told the Business Times that the BOI is in a complete mess, which has been reported in the past by this newspaper, and its officers are not interested in assisting investors. Investors have been sent from pillar to post as no one knows‘who is doing what’, a local investor alleged. Earlier BOI desk offices provided BOI brochures clearly detailing the procedures and its work but such material is not available now. The investment promotion agency is running short of printed application forms for investment approvals to be issued to investors, they revealed. Under this set up it is better for the government to hand over the BOI functions to the private sector, an investor said.

However a senior official of the BOI said that the institution is undergoing a transition period and its current mandate and functions may change in the future. He noted that despite various obstacles they manage to fulfill requirements of investors within two or three days, but that in some cases it might take several months.

When contacted to seek clarification over these allegations Deputy Director General BOI A.M.C. Kulasekera said the Sri Government is devising a system that would be more convenient for foreign investors to set up industrial ventures in the island. Action has already been taken to ease legal impediments and other time consuming project approval procedures of various state agencies and line ministries, he said. The BOI has to re-print its brochures as its functions and mandate have been changed, he revealed. The BOI has approved 30 Foreign investment projects out of 57 applications received during the first five months of this year, he said adding that the balance 27 foreign investment projects are in the pipeline. Total investment of these 30 projects is in the region of US$1.2 billion. Mr. Kulasekera said.

He said that several months are needed for an industrial, tourism or any other project to get off the ground in Sri Lanka. “You cannot even build a factory within six months under the present circumstances,” he said. Approvals from line ministries, pradesheeya sabhas and other relevant state agencies should be obtained before starting the construction work of a factory. “This situation cannot be avoided at present and therefore we should be happy about the Foreign Direct Investment inflows to the country in spite of all these barriers,” he said. The inflow of US$ 236 million in realized foreign investments for January to March this year is an increase of almost 160% compared to the corresponding period in 2010, he said.

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