Financial Times

Investment: rhetoric and reality
Despite all the rhetoric about the peace process and economic reforms the private sector it seems has still not put its money where its mouth is. Otherwise it would not have been necessary for Prime Minister Ranil Wickremesinghe to summon the captains of industry and the tycoons and tell them to get on with it. The government, it appears, is worried by the lack of private sector investment although it has created the conditions for such investment with the ceasefire and economic reforms.

Businessmen would naturally be wary of putting in big money before the last shot has been fired in this conflict. After all they have seen previous peace efforts that appeared to be going well fail all of a sudden and in spectacular fashion. They still harbour fears that the same might happen this time too, given the LTTE's belligerent and intransigent behaviour, the way the government is trying to appease the rebels, and the steady erosion of our sovereignty by the concessions made to the Tigers.

The private sector is understandably worried that if things go wrong and the war does resume it is investors who would suffer and see their investments go up in smoke.

Undoubtedly private sector investments are desperately needed to help generate jobs and speed up the economic recovery and provide the kind of relief or 'feel-good' effect that people sorely need. The people, who would ultimately decide the fate of any proposed solution to the ethnic problem, would then be able to see and feel the benefits of market capitalism and the ceasefire without which they are not going to support a peace deal.

A key concern that emerged at the meeting with business leaders seems to be the urgent need to provide jobs. Going by past experience it would not be unrealistic to believe that the government is worried about the need to give jobs to its own supporters - to maintain their loyalty, especially since Wickremesinghe would obviously be eyeing the next presidential election.

And especially because now the government cannot fill government departments and corporations with its supporters, as governments used to, because of foreign donor pressure and conditions. So the alternative appears to be to twist the arm of the private sector and get companies to create a few extra jobs here and there.

But the private sector has its own concerns such as the government's inability to control corruption and raise the efficiency of administration.

Despite repeated proclamations about the government's commitment to good governance, transparency and other such buzzwords that seem to be fashionable these days, Wickremesinghe's failure to take action against the corruption, blatant abuse of power and crude behaviour by his own Cabinet ministers is not only damaging the administration's reputation but also creating a serious impediment to implementation.

Because of his apparent inability or unwillingness to reign in his ministers, Wickremesinghe is earning a reputation for being weak and indecisive, hardly the attributes that would inspire confidence in hard-nosed businessmen, particularly foreign ones.

It is all very well for the government to tell the private sector to get down to business.
The private sector can turn around and tell the government to get its act together. The government should first put its own house in order before telling the private sector what to do.

After all this is supposed to be a free market economy where the government is only supposed to create an environment conducive for business and leave the rest to the private sector. The environment, it seems, is still not conducive enough.

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