Sri Lanka developing new investment policy: BOI chief
COLOMBO (EconomyNext) – Sri Lanka’s investment promotion office is developing a new policy framework with the help of, economic, environmental and legal experts, an official said.
A panel made up of Indrajith Coomaraswamy, Saman Kelegama, Avanthi Jayatillke and Arittha Wickramanayake was advising the Board of Investment of Sri Lanka, its Chairman Upul Jayasuriya said.
"They are from different sectors, economic, environmental, and legal," Jayasuriya said. "We are in the process of coming out with a policy.
"Once that is done and we will identify the sectors and the zones we will promoting.
"We have not yet identified the sectors that we will be promoting, but it will be a mix in the zones."
He said the exercise will be completed in a "three to four weeks," he said.
When bureaucrats identify specific sectors for promotion given extra incentives capital can be mis-directed to areas where interventionists pre-determine, rather than areas that have the highest return or the most innovation.
Countries that are among top recipients of foreign investment such as the US, has no specific promotion regime, allowing for the most innovation in new areas.
Hong Kong which has drawn high levels of investments despite its small population, has no specific incentive regime to mis-direct investments to sectors pre-planned by bureaucrats rather than investors. But they have rule of law and secure property rights.
Hong Kong’s economy which had no intervention for decades, consistently outperformed Singapore, until the run up the handover to China in the mid-1990s, when Singapore overtook the Chinese territory.
In Japan, where there was a high level of intervention from the Ministry of Trade and Industry, the two most visible export industries in the cars and electronics grew despite interventionist obstacles placed by the government which were fought by firms like Honda and Sony in particular.