Some thoughts on attracting large and medium scale foreign investors
Nimal Sanderatne, in his column ‘Imperatives For Economic Development ’in the Sunday Times of August 9 writes under the heading ‘Fiscal consolidation an economic prerequisite and priority for development’ explaining the current financial status of the country in a nutshell, identifying the reason for the major crisis our economy is facing today, namely the ever widening fiscal deficit.
The writer has touched on most known and unknown reasons for such crises, but it would have been more informative if areas such as corruption and its ramifications were also discussed. Corruption in the country has kept away most foreign investors as they face unnecessary red tape. If they come, they will generate jobs for skilled and unskilled workers and better revenue for the country. The plight is no government has been able to curtail this evil.
The COVID-19 situation has given Sri Lanka an opportunity to seek lucrative foreign investments since the government has curtailed the pandemic admirably, where other countries have lagged behind. The WHO has recognized this. In the present scenario, if the government takes firm steps to eradicate corruption that takes place when foreign investments are negotiated, securing and attracting large and medium scale foreign investors will not be a dream.
To address the ever-widening fiscal deficit, the remedy is to improve exports by offering our exporters and entrepreneurs the best facilities. They include soft import costs for raw materials and equipment among others. This will see higher local capital investments and will improve investor efforts to bring new business ideas that will generate higher revenue to the country. While attracting foreign investors, a strategy should be in place to encourage the deployment of underutilised capital of the local business sector and pave the way to expansion of businesses. They will then be presented with more export opportunities to trade their products in the global market.
A short-term tactical approach (borrowing more money) will not be effective. Long-term efforts and strategies to meet objectives to overcome the struggles of the public(debt servicing cost) have to be launched. The systems should be in place and accountability of the government officials needs to be assured.
Saman Jayasena Via email