The budget for the fiscal year 2018 consists of many proposals
and recommendations just as much as the budget for the previous year. Yet from
the previous experience, it is unlikely that majority of these proposals will
come into effect. This year, the budget has many proposals regarding
enterprises and foreign direct investments. But we cannot be satisfied with
these nor cannot hope for them to have any major impact on our economy.
Proposal 147 allows foreigners to purchase apartments below
the fourth floor and allows foreign companies to buy lands in sri lanka. Yet
the question is, How is this going to
attract foreign investors? Why would companies and individuals residing in
foreign countries invest their capital in lands, building and assets in sri lanka?
If we consider our environment, it is clearly visible that the major
infrastructure is available mainly around the urban areas yet rural areas do
not contain such infrastructure. Also, majority of the acquirable lands are
positioned away from urban surrounding.
Sure, someone might argue about the highways and fly-overs
yet it is clearly visible even after many years since their construction, they
have not returned on the investments and we are still in the same place as we
were, or perhaps a bit below.
In addition, when it comes to lands, Sri lanka is not the
country that has the major advantage. Neighboring nations such as India,
Pakistan, Myanmar & Bangladesh have vast uninhabited lands as major
industries require bulks of lands.
Also, when we consider about the foreign exchange rates, it
is not a new news that LKR keeps falling and losing its value compared to USD.
So, we must think by allowing foreigners purchase our lands, is it truly the
companies that buy them? Or foreign individuals that have no business intention
as in foreign currency it will be easy to purchase our “LKR” valued lands.
Under proposals 145 and 146, the budget has allocated Rs.
500 million to convert manual administration process into automated and online
based process. These systems are equivalent to ERP systems (Enterprise Resource
Planning systems) and it is a well-known fact that they cost a significant sum
of money and it takes hours and days of trained and professional effort to
implement. The primary question that comes to anyone’s mind is if this Rs.500
million is enough for such a major transition?
Moving on, these new transitional movement is taken to speed
up the business process and registration times in order to attract investors.
Yet what we must remember is that these are still only proposals and such
budget proposals were enlisted in budgets since 2011 and none of these
movements were able to implemented properly due to the lack of Knowledge,
Expertise, Skills and Attitudes of the employees and other personnel. A lot of
tax payer’s money was wasted on such failed transitional movements and the real
question is whether our workforce is ready for such conversions to automated
and online process? Are they properly educated for them? Are they willing to
accept these changes? The most obvious answer is “No”. No measure is taken to
address these significant and critical areas.
The next most important fact to consider is the cost of
labour. When compared with the labour cost of our neighboring countries such as
India, Bangladesh and China, our cost of labour is very high. Most of the
enterprises in western countries shift their operations into this region (Asia)
because of this lower cost benefit. If we do not have the advantage, and if the
budget has not allocated funds for any strategy how can we compete with other
counties in attracting foreign investments?
However, an important point to consider is that Sri lanka
has a well educated and a healthy workforce when compared with our neighbours.
Some foreign investments and enterprises are not 100% based on cost of labour.
Our medical and health facilities are also much better than our neighbours. But
the funny thing is, the budget has not allocated a single rupee to empower this
talented workforce of Sri Lanka which is useful to attract foreign investments
and businesses. It doesn’t matter how much the politicians speak about a
“Knowledge based economy”, without any strategy to accomplish it, these are
nothing but null words.
To sum up, if we consider the facts that we analyzed above,
we can say that the budget proposals are so vague and have no specific goal
towards attracting the foreign investments in the highly competitive regional
economic environment. It has allocated its funds without considering the root
causes of the various problems Sri Lanka has experienced over the past few
decades in attracting foreign investments. We can clearly say that this budget
provides no support to encourage the flow of foreign direct investments into