ECONOMYNEXT – Sri Lanka is moving to combat the bad reputation gained from expropriation of businesses in 2011 and a land tax that discriminated against foreign investors, the head of the island’s investment promotion agency said.
"These are wrong steps that were taken," Upul Jayasuriya, Chairman of Sri Lanka’s Board of Investment told a forum in Colombo where a country report by UK-based Oxford Business Group was launched.
Jayasuriya said the discriminatory land tax on foreigner had since been removed.
But once wrong steps were taken, it took a long time for the effects to go away, he said.
The BOI was created after opening up of the economy in 1978 with a constitutional guarantee against expropriation.
The constitutional guarantee came after Sri Lanka’s post independent rulers in the first decades after gaining self-determination from the British violated property rights of citizens and foreign investors through waves of expropriations and Venezuela style ‘land reform’.
The 2011 expropriation even drew heavy fire even from Marxists in the parliament as it was an ad hominem law which stopped victims from seeking judicial redress. Lawmakers also faulted the Supreme Court for permitting the law to be presented to parliament.
There have been calls to reverse the expropriation law to send a strong signal to domestic and foreign investors that their property rights were protected as the constitution said. Other critics say Sri Lanka’s retrostpective corporate taxes slammed in 2015 also hurt the investment environment.
Jayasuriya said Sri Lanka was also identifying other areas that need to be corrected to improve the country’s ‘Ease of Doing Business’ ranking compiled by the Word Bank.
The time taken to resolved contract disputes in court was too long he said.
Sri Lanka working on a program involving judges dealing in commercial cases. But lawyers were also to blame for the delays, Jayasuriya, himself a lawyer, said.
UK-based Oxford Business Group launched its 2017 report on Sri Lanka show-casing opportunities, and the business and economic environment of the island, helpful to investors.
"Sometimes overlooked, Sri Lanka has a fascinating story to tell, which most recently includes 15 years of continuous growth," OBG’s Managing Editor for Asia, Paulius Kuncinas said.
"With ambitious plans that include transforming the country into an international transport hub and driving new growth in the greater Colombo region, the government’s bid to take Sri Lanka’s development to the next level looks to be well on track."
Sri Lanka is planning to draw more foreign investment into the country with a range of reforms in trade and services. (Colombo/June20/2017)