Sri Lanka has golden opportunity for institutional reforms: Eran
COLOMBO (EconomyNext) – Investors should look at Sri Lanka from long term perspective and take into account that fundamental institutional reforms are underway which will improve investor protection and rule of law, Deputy Investment Minister Eran Wickramaratne said.
Sri Lanka was now working on constitutional changes that will rebalance the powers to the executive and the parliament. Other changes will also see the public service being made independent and judicial independence strengthened.
"Investors should look at the country from a long term perspective," Wickramaratne said. "They should take into account there has been a change. This change was largely about creating a good governance framework.
He said by appointing the most senior judge in the Supreme Court as the Chief Justice and removing an earlier incumbent who was appointed and acted in controversial circumstances the judiciary had been given a chance to asserts its own independence.
He said an independent judiciary was vital for contracts to be enforced and especially if there was a dispute with the state as a counterparty, investors had to have an assurance that justice will be done.
Reforms involving a constitutional council to make senior appointments will make the public sector independent and strengthen key institutions. Institutional weaknesses have been cited as a negative for Sri Lanka’s sovereign credit.
The new administration has come under fire for some of their spending proposals, particularly a steep salary hike for the state sector and other subsidies which ordinary people including the poor may have to pay dearly in the future, perhaps through a currency depreciation.
Some one-off taxes – which will help reduce the possibility of currency depreciation – has also come under fire for undermining rule of law and traditional concepts of tax justice.
But Wickramaratne said some of the spending and taxing proposals were needed to ‘win the social peace.’
Sri Lanka now had a rate opportunity for the two key political parties to get together and create a better institutional framework for freedom and rule of law.
President Maithripala Sirisena from the Sri Lanka Freedom Party is now the President and Prime Minister Ranil Wicrkramasinghe is from the United National Party.
"We have got a golden opportunity. When I say we here I am talking about the government and the main opposition party – the UNP and Sri Lanka Freedom Party in particular.
"We had this opportunity in 2000 when President Kumaratunga brought a new constitution to parliament to address some of the issues we are taking about today.
"But unfortunately at that point in time, the UNP in opposition did not did not vote for that change. Of course it had its reasons but I would still regard it as a missed opportunity 15 years ago
"Those opportunities do not always arise in a country or society for the two main parties to get together in supporting reforms.
"Now we have another opportunity, we have to look at this opportunity very carefully because if we miss it I may take 20 to 25 years for it to happen again."