Consistent policies for growth

Friday, 25 May 2012 02:30 - - {{hitsCtrl.values.hits}}

Consistent policies have always been a challenge for Sri Lanka, but its importance has been brought to the forefront by the World Bank and the US on the same day, which shows the growing urgency for more commitment from stakeholders, particularly the Government.

The World Bank releasing a statement on its ongoing Country Partnership Strategy (CPS) hinted that from 2012 to 2016, the funding organisation will engage in a larger loan portfolio with the Government. However, it also called on for a more liberalised investment climate.

The World Bank identified some challenges as constraints for the country to achieve its growth ambitions. One important area identified in the CPS is improving the investment climate and increasing the efficiency of the public spending. This is seen as an area that needs urgent intervention if the country wants to achieve its investment targets.

Achieving the planned growth and development will also require structural shifts in the economy. Boosting international competitiveness and supporting the internal integration of the economy will also require a series of policy changes, it pointed out.

From a social standpoint, improving living standards and social inclusion warrants increasing the quality of services to be at an expected level of a middle income country. Ensuring equitable access to high quality services is essential.

Inconsistent policies and lack of transparency is preventing foreign companies from investing in Sri Lanka, US Ambassador Patricia Butenis told a conference on Wednesday, calling for the Government to reduce red tape and improve good governance.

Butenis admitted that she has had a “spotty” record in improving imports from the US to Sri Lanka and getting foreign companies to invest due to the myriad of challenges in starting a new business. She pointed out difficulties in registering property, bidding for tender procedures and confusing tax regimes as among the main reasons for the reluctance. One legal hiccup was the controversial assets Takeover Bill that was passed in Parliament last year.

Butenis went on to praise the Government on its hub policy and strong economic growth, but stressed that liberalisation of investment laws was needed if large and long-term foreign investment is to reach Sri Lankan shores.

Nonetheless, the Ambassador, who wraps up her tenure in Sri Lanka this year, emphasised that Sri Lanka has great potential to experience strong economic growth and that Government policies are in line with these expectations.

Yet, the corruption, delays, red tape and deep politicisation hampering investment has long been felt not only by the business community but also the masses who have to fork out bribes for the simplest task. Inconsistent policies have shut out or driven away business in a number of sectors and caused loss of employment and revenue to Sri Lanka.

Sri Lanka is enjoying its eighth year as a middle income country according to the Finance Ministry and it is time that the peace dividend is improved through the Government’s dedication to consistent policies supported by transparency and good governance. Not only would this boost investment, but it would also filter down to the basic levels of public service, thus improving tax yields. Creating such a win-win situation has been delayed too long.