Can the new leadership duo revive BOI?

Last week, President’s economic advisor cum former Ernst & Young (EY) Sri Lanka Managing Partner Duminda Hulangamuwa was appointed as Chairman of the Board of Investment (BOI), filling the post which remained vacant for about 6 months after the resignation of Arjuna Herath, who too was a partner at the reputed audit and professional services firm as well as a chartered accountant like his successor.

Historically, the chairmanship of the premier investment promotion agency has been held by an individual who is politically close to the top leadership of the Government. Under Ranil Wickremesinghe presidency, his close ally Dinesh Weerakkody headed the BOI while Thilan Wijesinghe steered the high-profile institution during the administration of Chandrika Kumaratunge. Many believe that it was during the tenure of Wijesinghe, the apex investment promotion institution had its best days when it was instrumental in attracting high-value, strategic foreign investments and contributing immensely towards the nation’s economic development. However, over the last few decades, numerous analysts as well as economists have raised question marks over the effectiveness of the BOI while sceptics have criticised the premier state institution for its alleged lethargy, inefficiency and being a bottleneck in terms of attracting FDIs to the country instead of fulfilling its mandate of facilitating foreign investments.

Hulangamuwa’s assumption of the top seat of the BOI also coincides with the retirement of its Director General Renuka Weerakone, who has been replaced by Dr. Sulakshana Jayawardena – an SLAS veteran who previously served as Director General of Corporate Affairs of the Finance Ministry.   The appointment of an SLAS officer to provide the executive leadership to the BOI perhaps might not go down well with its employees as administrative service officers are renowned for introducing strict internal controls and cumbersome procedures that invariably cause unwarranted delays and too many hierarchies. At a time when the country is seeking to accelerate foreign direct investment inflows and restructure its investment facilitation framework, it would have been ideal to have a more enterprising personality as BOI DG as opposed to an individual whose professional career has been spent entirely in the public service.

Despite the end of the civil war in 2009, Sri Lanka’s track record in terms of attracting FDIs has remained below par. No meaningful reforms have been undertaken to entice investments into the country. Bureaucratic delays and sudden policy reversals have made it difficult to win the confidence of investors. On the other hand, the shrinking labour force due to migration of both skilled and unskilled labour and ageing population has reduced the island’s appeal for low-cost, mass-scale manufacturing investments.

Upon assuming office, the new BOI Chief pledged to transform the agency into a genuine “one-stop shop” for investors, as part of a renewed push to close the country’s persistent trade deficit and accelerate export growth. More than ever, Sri Lanka needs to focus on non-debt foreign inflows like exports and FDIs to aid economic recovery and become a high-income economy. The Hulangamuwa and Sulakshana combination have a highly challenging task ahead and the Government would be hoping the duo would be able to steer the BOI to achieve the ambitious economic development agenda of the NPP administration.