DEVELOPMENT is dependent on investment. Realising this the government put together a Budget that is focused on spurring more investment from both inside and outside the country, which has received overall approval from the private sector.However, the need for Foreign Direct Investments (FDI) as well as supporting local business has had a spanner thrown in the works due to two developments.
The first is that a fresh VAT fraud is under investigation. The Inland Revenue Department (IRD) despite keeping mum on the subject had to admit to weekend newspapers that the CID was conducting investigations.
This further underscores the challenge posed in implementing the Budget proposals that have focused on reducing tax thresholds but still withstands the need for structural changes to the system so that collection and repayment is done more efficiently.
The second is the fact that if the Budget is implemented to the letter, then around 200 foreign projects that have not yet gotten off the ground might have to fold up and leave. The Board of Investment (BOI) itself under danger of being revamped is striving to re-evaluate the earmarked projects and deal with the delays in an equitable manner.
Dismissing FDI in a haphazard manner might send off the wrong message to the world. However, it must be considered that Sri Lanka is also within its rights to insist on certain deadlines or give those resources to other investors who might be able to get their acts together faster. With two elections and several political scenarios taking place within the country, the foreign investors are also challenged to focus exclusively on business.
Added to these two hurdles was another incident that reached the hearts of many people. The death of a massive elephant, a tusker no less, during transportation has called for the humane treatment of animals. Tuskers are a strong symbol of Sri Lanka and they play a pivotal role in attracting tourists to Sri Lanka, not to mention a plethora of natural wealth that cannot be dismissed by any means.
Building business is important. Nonetheless, the right processes need to be in place before they can bear fruit. This is not up to the government alone but all stakeholders have a responsibility in ensuring that the resources of Sri Lanka are used wisely. It took the death of a magnificent creature to make people realise the importance of taking care of what Mother Nature has bestowed on us.
In similar fashion the multi-million VAT fraud extensively reported several years ago and resulted in tighter regulations and stringent checking seems to have failed in its task. Thousands of VAT refunds are backlogged as a result of the new regulations, yet they seem to have not done their job in preventing wrongdoers but rather in making the honest people’s lives more difficult.
The BOI regulations could have the same result. Therefore the time has come for people to look at the means and not just the ends. At the end of this VAT investigation the process for repayment and collection must be made more efficient and not just cumbersome — a challenge that must be dealt with if VAT scandals are not to hit headlines again.
Consideration must be given for “why” something happened and it must not be allowed to get lost in regulations and excuses. The development of Sri Lanka cannot happen until the right processes are in place and it is this that will pose the greatest challenge.