BY EDWARD THEOPHILUS

Without any difference of the government and opposition policies, all prefer foreign direct investments (FDI) as they positively impact Sri Lanka’s economy. Especially foreign direct investments play a massive role to improve macroeconomic variables such as foreign reserves, employment, GDP growth, international trade, and terms of trade, and many others.  Foreign direct investments are a strong approach to attracting private investors to economic activities and indirectly, it is a way of privatizing the economy and promoting the contribution from the private sector.

Delusions on the privatization policy emerged as a result of the misguided interpretations of Marxist political parties, today, JVP plays a major role in this arena and if it analyses the economic policies since the 1930s, it would clear that the Sri Lanka government preferred private sector participation to economic activities with the hope that many people to contribute the economic system. Foreign direct investments are a profitable way of using private capital in the country and the positive aspect of the participation of private investors in economic activities is it prevents misuse of capital for anti-social or wishes against the general public. Delusions on private participation in economic activities need to be changed if the country wants rapid economic growth and the distribution of economic benefits to the lower level.    

Dr. Priyath Bandu Wickrama, an excellent port management expert, recently explained bona fide information about Colombo port management participating in Derana TV program 360. Dr. Priyath Bandu described why Sri Lanka needs to attract private capital and such policy makes a positive impact on the economy despite vicious talks of JVP and leftists. Many trade union members have an idea and the perspectives of port management and they never attempted to let down the concept of privatizing port management.  Dr.Priyath Bandu indirectly said that the Port Authority needs to attract private capital for development purposes and Janatha Vimukthi Preramuna is groping in dark without properly understanding the issue. JVP had this issue since its beginning and leaders of the party were not educated by policymakers as they had a misguided thrust to catch the power of an armed struggle.

Colombo port has several terminals to develop and they may be East, West, and North terminals and Sri Lanka’s government has no sufficient funds to invest in these terminal developments as it has many commitments to diversified fiscal areas. JVP trade unions which do not represent at least 5% of working people, despite the true situation, they make big talks and media highlight them reflecting that JVP is against foreign direct investments, and why this 3% of support from the entire working class, disadvantage 97% of people in the country? Most probably, JVP is struggling to regain the political power they had in 2015 or before, but mythical policies would not be appreciated by learned voters in the country.

India also works against foreign direct investments in Sri Lanka, and the objection may have associated with two vital points. One is direct investment going to Sri Lanka, India needs to attract them and the second is working against Chinese investment in the South Indian zone consider would be profitable to India. Should Sri Lanka suffer from the Indian attitudes? The answer is no. Sri Lanka is an internationally recognized sovereign state with the power to make its own decisions.

In this environment, the only option available to Sri Lanka is attracting foreign direct investment from Chinese companies and the settlement of Indian debts as soon as possible. Sri Lanka should appreciate the supports extended by India and it should not beg from India as it forces Sri Lanka to respect the hegemony of India. The best action that has been taken by the government against the Indian hegemony is the settlement of the US $ 400 million swap agreement accepting a US $ 1500 million swap agreement with China. To successfully operate Hambantota port, the Colombo port city, and the terminals of Colombo port, Sri Lanka needs a massive foreign direct investment from Chinese companies, and as I reiterated the idea since 2014, Sri Lanka needs a currency swap agreement of US $ 25 billion and improve the rupee value to a higher level.

Foreign direct investments in Sri Lanka have limited to a small area and it should be expanded to regional areas. The productivity and competitiveness improvement of the rural economy, which comprise agriculture and small industries need overseas experience that will come with foreign direct investments.  As planned by Mr.Gotabaya Rajapaksa, foreign direct investments play a crucial role for the country, and from the Hambantota port area to Colombo North, Sri Lanka can allure a trillion of foreign direct investment if the dilutions on foreign direct investments and privatization remove from the minds of people.

 Sri Lanka has many options to attract direct foreign investments to make structural changes in the country. The secret of attracting foreign direct investment is available of projects that could be delivered direct returns in addition to tax benefits. The weakness of Sri Lanka is project development for foreigners contribute investments are dearth and the political authority doesn’t encourage project initiations appealing foreigners to making investments.

A vital option for the government to attract foreign direct investment is to develop a port region (corridor) from the south of Batticoloa to North Mulaititu. This is a quite large area that could attract a large investment volume and about five million tourists from East Europe, China, Korea, Japan, and India. If a tourist spends the US $ 100 during the stay in Sri Lanka, the region can contribute $ 500 million annually to foreign exchange revenue, and a large sum of the population could shift from the Western province to this area making a balance of population distribution. 

It will change the political landscape of the country and people going overseas for employment especially female migration for domestic services could be massively restricted and 500000 new employment will be created from service industry such as health, education, leisure, and others.  The best economic advantage from this port region is the appreciation of the Sri Lanka rupee by a large scale of foreign exchange earning, and captivation of a large volume of foreign direct investments.

The pressure on Colombo and Hambantota ports will ease and many Sri Lankan employees overseas when they come back to the country could be employed in the new economic corridor. India might oppose this type of mega-development project as India wants to gain this type of large investments. From Mulaithiu North to Batticoloa South needs a toll highway and electric double line rail system and domestic airport to transfer passengers from Mattala and Katunayake.  The South of this economic corridor is closer to Polonnaruwa, Sigiriya, and Dambulla.  China can extend its foreign investments in this corridor.  At least two harbors for international containers handling in line with the Silk Road and, transshipment purposes could be established in the area with massive foreign direct investments and another port could be established for the fishing purpose. This type of development project would bring a large volume of foreign direct investments and support to make a strong economic and security association with China. Many garment factories in the Western province could be relocated in now economic corridor.

During the past one and half decade, Chinese investment came to Sri Lanka, but Indian objections were subjected to creeping the investment flow as Sri Lanka’s government faced to stand between China and India. Under the Non-aligned policy, Sri Lanka cannot go against India because India is a very good trade partner, however, Sri Lanka could not be a yes man when India objects to foreign direct investments from China. How to settle this issue needed to be considered by foreign policymakers.