Investments imbroglio!

By Cassandra Mascrenhas and Cheranka Mendis

The thorny issue of the need for higher investments and factors for their lack or slow pace dominated the first day of the Sri Lanka Economic Summit of the premier private sector lobby Ceylon Chamber of Commerce yesterday.  

Treasury Secretary Dr. P.B. Jayasundera set the stage for “investments” to ring throughout the day when in his keynote speech called for higher private sector investments if the country were to achieve over 8% economic growth.  Noting that public investments had more than doubled from about 2.5% in early part of the decade to over 6% of GDP by 2010, Dr. Jayasundera said that private sector share though high had more or less remained stagnant between 21% and 21.6%.  

“For the economy to grow by over 8% we need investments. Whilst the Government is creating an enabling environment through public investments the private investments must rise to 26% of GDP over the next few years from the present 21.6%. The Government which has more than doubled the level of public investments will remain committed and supportive by maintaining it at 6.5% of GDP,” Dr. Jayasundera told a packed inaugural ceremony of the two-day Ceylon Chamber Economic Summit titled “Driving growth through fast track implementation.” As per data presented by Dr. Jayasundera, public investment between 2000 and 2004 averaged 2.5% and during 2005 to 2010 it had increased to 5.5% whilst a high 6.6% is being envisaged between 2011 and 2016.  “In the early part of 2000, private investment remained high at around 21% and the public investments were only 2.6% of GDP. During this period, private investments came largely because of the privatisation programmes; so government assets shifted to the private sector and the private sector invested in those areas, as well as in the apparel industry,” Dr. Jayasundera explained.

From 2005 to 2010, private investment has increased from 21% to 21.6% and that increase is not from public enterprises that were privatised, instead Jayasundera made it clear that it was the net private investment.

                      He said that the Government in turn has more than doubled its investments and that has created a massive infrastructure development phase.

“From 2011 onwards, the Government is committed to maintain a public investment programme of 6 to 7% of GDP because the Government will continue to support infrastructure development over the next 10 years. In parallel private sector investment must move up to 26% of GDP and that 5% increase must occur within the next five to six years,” Treasury Secretary asserted at the inauguration at which Economic Development Minister Basil Rajapaksa was the chief guest.

Whilst Dr. Jayasundera drove home the point that more private investments are needed, seemingly private sector view was different. In kicking off the Summit, Steering Committee Chairman Prof. Lakshman R. Watawala said that there was a disparity between investment projects approved and those implemented. This he said to reinforce the theme of the Summit.

During the first plenary session focusing on “Attracting investments: The ease of doing business” a participant asked the panel what the private sector perception was. The question being referred by the moderator to premier blue chip JKH Chairman Susantha Ratnayake who is also Vice Chairman of the Chamber sharing his personal view noted that two years since the end of war much higher investments could have taken place but it hadn’t. “I was expecting a peak in investments but it hadn’t as indicated in Dr. Jayasundera’s presentation of private investments remaining at 21% of GDP level. We need to see investments increase sooner than later,” Ratnayake added.

On the first day of the Summit being held at the host hotel Cinnamon Grand three plenary sessions were held focusing on “attracting investments – the ease of doing business”; “Financial sector challenges,” and “Growth opportunities in tourism,” with a plethora of experts expressing their views.

Day two today will involve two plenary sessions in the morning dealing with “New growth opportunities in ICT/BPO” and “Higher education and skills development. In the afternoon the Summit participants will attend breakout sessions focusing on 1) Logistics — Ports, shipping and aviation, 2) Agriculture, plantations and food security, 3) Healthcare and health insurance and, 4) Construction, with each having subject specific experts as key speakers and panelists.

The Summit will be wrapped up with a session titled “Breaking the bottlenecks in development” featuring MPs Champika Ranawaka, Navin Dissanayake, Rauff Hakeem, Sajith Premadasa, Dr. Harsha de Silva, M. Sumanthiran and Vijtha Herath.