Impediment to FDI: Industry responds to Treasury

Responding to a recent Treasury statement listing out a series of issues which had impeded foreign direct investment as well as private sector investments, industry sources alleged that this was nothing but the failure on the part of Treasury officials.

Sources said that the list was more of a "Mea Culpa Mea Culpa, Mea Maxima Culpa" from the Treasury. "Isn’t this a magnificent confession by the Treasury mandarins of their own failure to facilitate FDI and Private Sector Investment?," they queried.

"The report refers to an inefficient approval process. Simplifying the approval process is the responsibility, function, and duty of the Treasury. One has only to hark back to the days when there had been excellent institutional arrangement in the BOI and UDA to expeditiously deal with and conclude FDI and investment proposals. Who dismantled these institutional arrangements, sources asked.

An irate executive said: "The ill advised Pensions Bill drawing resources from the EPF was the brainchild of the Treasury. This created havoc by way of worker unrest culminating in the death of a worker at the Katunayake Free Trade Zone. The upshot has been the resurgence of trade union activity in the Katunayake Zone with troublemakers targeting several FTZ Companies in KEPZ so much so that at least two companies were contemplating even closure in the face of militant trade unionism spawned by the ill conceived Pensions Bill of the Treasury. Besides, garment factories lost batches of skilled workers who retired fearing the loss of their EPF funds. This has created an unprecedented crisis in the Apparel Industry. The Treasury Bosses who interact only with the big league in business are unaware of these developments in the BOI Zones.

"The Treasury Report laments the fact that BOI has outdated institutional settings and inadequate professional skills. Treasury mandarins have overlooked the functioning of the BOI continuously for over 15 years starting from the Chandrika Kumaratunga regime. Several Chairmen have come and gone. The last being a distinguished professional and a corporate personality Jayampathy Bandaranayake, who served for a short stint and left abruptly in frustration. Constant changes in the BOI system, contradictions in policy related to investment criteria, Incentives and ad hoc imposition of levies and duties have frustrated investment and halted expansion projects.

BOI sources lamented that the organization has been experiencing several treasury initiatives in the name of re-structuring and reorganization. The last such initiative was under an international consultant Simon Bell who came up with recommendations to revamp the BOI on par with investment promotion agencies in other global destinations which were attracting FDI. However Simon Bell’s well intentioned effort was thwarted by the Treasury mandarins who were more interested in guarding their turf. Bell’s report is gathering dust on the shelves of Treasury mandarins who keep harping on the need for reorganization as a panacea for all ills," they said in disdain.

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