Reforms and Investor Confidence | Daily News

Reforms and Investor Confidence

President Ranil Wickremesinghe delivering the Budget 2023 in Parliament on Monday.
President Ranil Wickremesinghe delivering the Budget 2023 in Parliament on Monday.

The budget for 2023 spelt out reforms to attract foreign and local investments to boost the sagging economy. “There is a need for simplifying and making existing arrangements efficient to create a more business-friendly environment,” President Ranil Wickremesinghe said in his budget speech. “Accordingly, measures are required to reduce costs, procedures and times, and to improve transparency enabling to create a healthy business environment. Hence, I propose to allocate Rs 200 million to the Ministry of Investment Promotion to introduce the necessary reforms in this respect,” he said.

For several years, there were demands for drastic liberalisation of regulations to attract foreign investments. Experts always showed how countries like Singapore, Korea and Vietnam attracted foreign investors by offering strong incentives and how the investments helped them to leap into the higher bracket of developed nations.

Realising this imperative need, President Wickremesinghe presented a reforms-filled Budget 2023, in his capacity as the Minister of Finance earlier this week. The budget is aimed at making the Government less of a burden on the Treasury and the Government would make reforms to change the economy.

At the same time he dismissed the critics who alleged that the reforms were done due to the conditions laid down by the International Monetary Fund (IMF). “The economic reforms we are bringing are not limited to the reforms agreed upon with the IMF. The economic reforms proposed by the IMF are limited to economic stabilisation only,” he said.

He did not refrain from telling the people about the truthful situation in the country. “There is no future for the country by continuing on this popular path. There is no prosperity for the country by giving concessions while being in debt to others. So, let’s get out of this situation now. Let’s change our thinking patterns.”

This week two top-level foreign delegations also told Prime Minister Dinesh Gunawardena about the need for reforms to attract investors. President of the Chinese Association for Friendship with Foreign Countries, Ambassador Lin Songtiyan, who came with the message of friendship from President Xi Jinping, said what is needed to attract foreign investments is to enact necessary legal reforms. During his meeting with the Prime Minister, he said Hambanthota, Trincomalee and other economic Zones as well as the Colombo Port City could attract global investors if necessary reforms are enacted and an investor-friendly atmosphere is quickly established.

He added that Sri Lanka has all the ingredients such as a strategic location in the centre of the Indian Ocean, highways, ports and also skilled youth resources needed for leap forward in industrial and agricultural development.

The Prime Minister assured the Chinese delegation that the top priority of the Government is to establish necessary legislation to ensure speedy clearance of investment proposals submitted by foreign partners. He said Sri Lanka seeks investments in new areas such as solar power, wind power and other alternative energy resources.

Ambassador Songtiyan said solar power and wind power should be given top priority as new energy sources are essential to attract foreign investments. “Once these are in place you can attract big investors not only from China but also from the USA, Europe, India and Japan,” he said. Referring to Prime Minister Gunawardena’s virtual address to the International Conference on Hybrid Rice Varieties held in China earlier this week, Ambassador Songtiyan said China is ready to set up a pilot project for hybrid rice cultivation in Sri Lanka.

The Korean delegation that called on the Prime Minister on Tuesday (15) also stressed the need for reforms to attract foreign investments and the Prime Minister assured them that the Government would enact necessary reforms to create an investor-friendly environment.

Special Envoy of the Minister of Foreign Affairs of Korea, Ambassador Han Dongman said Korean development agency KOICA will increase its assistance and development cooperation assistance. He also said further assistance will be extended for youth skills development in information technology and added that virtual teaching facilities could be extended to existing IT training centres by Korean IT experts.The Prime Minister called on Korean business houses to invest in new areas such as solar power, wind power and other alternative energy resources as well as agriculture and fisheries sectors.

The economic situation is making slow but steady progress and the budget will boost the confidence in the Government. The Ceylon Chamber of Commerce (CCC) said that the National Budget for 2023 contains many laudable reform proposals which, if implemented in a timely manner, will complement the on-going fiscal reforms outlined.

The Chamber in a statement said it is refreshing to see that the direction of the Budget is towards reforms as compared to unsustainable relief measures seen in past Budgets. The reduction in allocation towards discretionary expenditure could have also facilitated a greater allocation towards social protection programmes, the CCC stated.

It also stressed the need for proper implementation of the budget proposals. The lack of implementation of Budget proposals in successive national Budgets has reduced the credibility of the national Budget process and limited the reform process only to the speech. The implementation of National Budget 2023 with set timelines and goals will provide credibility to the Budget process as well as the success of reforms.

“We hope the proposed Presidential Task Force established to monitor the implementation of Budget proposals will be proactive in sharing updates on a timely basis with the public providing accountability and transparency,” the Chamber said.

It acknowledged that the Budget aims to address many of the issues faced by entrepreneurs and investors related to land, labour, productivity and tariffs. “We welcome the plans to establish several new economic zones to attract foreign investment and suggest that infrastructure development and management of these zones are entrusted to the private sector under a PPP framework. Leasing out unutilised and unproductive land belonging to JEDB, SLSPC and LRC to grow exportable crops is also a positive move to release more land for economic activities that can boost forex inflows,” the Chamber said and expressed the hope that many of the reforms outlined in the Budget will move forward the discussions with the IMF and creditors as well as driving economic growth and development trajectory of the country.

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