Sri Lanka hotelier says bribery, red tape deterring investors

EconomyNext – A top Sri Lankan hotelier has said corruption and inefficient regulation were delaying or deterring local and foreign investment in the island’s fast-growing tourism industry.

"If somebody is not willing to pay the authorities and ministries, you can rest assured you will take 12 -18 months, if you are lucky, to get approval," declared Hiran Cooray, Chairman of Jetwing Hotels group.

"But you can get it in three months if you pay your way and get everything cleared," he told a legal forum organised by the Bar Association of Sri Lanka Thursday.

The regulatory system, inherited from the regime of former president Mahinda Rajapaksa, who was ousted in the January 8 presidential poll, was ineffective and discourages investors.

"That’s one of our key challenges – getting approval (for new projects)," said Cooray, whose Jetwing group, one of the earliest investors in hotels, owns and operates 20 properties with several more planned or under construction.

"Whenever we send our papers for approval, the authorities first look at how to stop it," he said.

"The only way you can activate it is if you give something and because we don’t we have to budget 12-18 months – wait 12-18 months where they (authorities) find different excuses not to give approval."

Cooray said tourism is not "just a hotel, a van to travel in and a beach to relax on" but includes a lot more experiences Sri Lanka can but still does not offer.

"There are lots of obstacles to offering these experiences," he said, describing how new projects were blocked by corrupt officials or inefficient regulation. Jetwing refused to pay bribes or lobby politicians.

A boat built for Jetwing is still "sitting on" the southern Bentota river after being completed last year.

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"We still have not got approval to sail," Cooray explained. "We had to go to over 20 line ministries seeking approval."

The company is now finally awaiting approval from the Central Environmental Authority.

"This country is not ready to give investors approval if someone wants to do something new," Cooray complained.

"First they said the fish will die. I said boats have been sailing on this river for centuries."

Then the chairman of the Pradeshiya Sabha (local government body) blocked the project.

"I finally went to see him and he told me ‘but you did not buy bricks and sand from us’. I said there was no need for bricks and sand as this is a boat."

It took Jetwing about six months to get Pradeshiya Sabha approval for the boat.

Cooray said that while local investors might have the patience given their commitment, foreign investors were unlikely to tolerate lengthy delays.
 
Cooray said a ‘one-stop-shop’ office in the tourism authority meant to speed up investment was "literally non-functional."

"It’s a stop – not a shop. If you go there you get stopped," he said noting how he had proposed closing it when he served on the board of the tourism authority.

"There’s no point in having people who can’t make a decision. It’s useless – just employing people."

Regulation was required but it needs to be effective.

"We have to have processes – some people come with crazy projects – but sensible regulation."

 

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