Most people are in favour of the Board of Investment (BOI) being dismantled (see results of email poll on Page 1) but there is skepticism that a new unit could be yet another Rajapaksa-controlled institution.
One respondent said the BOI was politicized when a close confidante of the Rajapaksa regime who apparently funded the first presidential election campaign was appointed to run it.
“It was the wrong person for the job. Having realized that this time around, the government has replaced him with a more fitting person who can run the operation professionally. But at this crucial time, the BOI is about to get another shot of ‘politicization’,” he said, calling for the need to end haphazard management and have sustained policies to run the country.
A local economist called for a level playing field for foreign or local investment for the entire country. “One can hope that the move (to change the BOI) is to strengthen and attract foreign investment and that it will not be one where vested interests are given free imports and tax free allowances,” he noted.
Another respondent claimed the BOI was the most corrupt institution but was not in favour of its dismantling, saying it needs to be made efficient.
According to another respondent, tax incentives are not the best way to attract FDIs. What is needed is economic policies that are clear, business friendly and stable with strong institutions led by capable and independent people.
Laws and administration of justice should be good, efficient and fair; integrity of financial statements strong; transaction costs low; contracts enforceable; property rights secure; flexible labour laws and good infrastructure. “This is more important that tax incentives,” this respondent said.
A former employee of the organization when it was launched as the Greater Colombo Economic Commission, had this to say:
“There are two types of projects approved by the BOI. One category is not entitled to any tax benefits. Such companies are only allowed to accept FDI's and employ foreign consultants for limited periods of time. The other category is entitled to tax and duty waiver packages which vary for different categories of projects from time to time.
The GCEC was set up by President J.R. Jayewardene in a hurry in 1979 when he quite correctly realized that this country is unable to attract any FDI's unless we find a way to circumvent the pro socialistic and antiquated laws and by laws. In fact one section of the original GCEC Act reads as follows: ‘The provisions in this Act supercede any provision in any other law in force in the country’. The idea was to attract foreign investment as quickly as possible without waiting for the revision of all outdated and investor repelling laws.
The GCEC Act was successful in achieving this goal to a large extent. In fact the first EPZ (Export Processing Zone or FTZ) at Katunayake was a tremendous success. In fact in a very few years it became much bigger than the Shannon FTZ in Ireland which was used as a model in setting it up.
Then it was felt that the entire country could easily be turned into an EPZ. However none of the subsequent rulers had the vision or the courage to do what is needed to achieve this goal. Sri Lanka's notorious and vicious bureaucracy too smothered all attempts to achieve this end. Great economic successes in the world such as Hong Kong attribute their success to small government, freedom from interference and deregulation.
Strict controls and repressive regulations serve only the vested interests of unproductive regulators and stall rapid economic development. Sri Lanka is a case study in over regulation and bureaucratic bungling hampering rapid economic progress. In fact we have the dubious 'honour' of having the largest bureaucracy per capita in the world. Investors have a choice. They do not want to come to an over regulated, bureaucratic economy when they are received with open arms by countries with a more conducive investment climate.” |
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