Financial Times

From Suren Gnanaraj in Jaffna

Last week's working visit by Prime Minister Ranil Wickremesinghe to China turned out exactly the way he wanted - success. This was also how he described the four-day trip that included meetings with Chinese leaders and the Chinese business community.

China is becoming the most powerful economy in the world. Thus it made a lot of sense that the Premier was accompanied by a high-powered business delegation that included the likes of captains of industry like Tilak de Zoysa, Vivendra Lintotawela, Nihal Abeysekera, Harry Jayawardene and Hari Selvanathan, among others.

The Premier initialled agreements with Chinese leaders in which an outright grant of Rs. 360 million as economic and technical aid and Rs. 2.3 billion has been offered to Sri Lanka. A lot of the goodwill shown by the Chinese stems also from the admiration for the late Sirimavo Bandaranaike well known amongst the old guard in China. She may not be a household name anymore but China has always been one of Sri Lanka's biggest supporters both during the good times and the bad times. As our RAM columnist suggests elsewhere in this section, it makes sense to encourage more investments from Chinese businesses for re-export particularly since it's the world's largest marketplace and also, soon, would roll out tourists in the thousands.

Unlike in the past when Sri Lanka depended on western tourists, there are rapid changes in arrival patterns. While Indians are slowly emerging as the largest number of visitors to Sri Lanka, Chinese - now in small numbers - would overtake India if Sri Lankan authorities go the right way in tapping this giant market.

Most Sri Lankan businessmen returned home comforted by the fact that they were able to set up networks, find partners and in some cases actually clinch deals.

However, the path to Chinese investment is far from rosy. Apart from understanding Chinese ways of doing business, there are also a few bottlenecks here that continue to stifle investment like the country's bureaucracy for instance. That was even evident during the question and answer session with the Premier when he addressed the Beijing business community.

One Chinese businessmen said he is yet to get a reply to a proposal that he made in 2000 to Sri Lankan authorities for a railway project. "The proposal was sent in 2000 but we have not had any response to the proposal. Can you tell us why?" was the gist of what he said. Wickremesinghe didn't give a straight answer to the question but instead spoke at length about plans to revamp the railways.

Graetian Gunawardene, chairman of Hands International, also had a bone to pick with the bureaucracy. He told The Sunday Times a monorail or MRT proposal with Chinese collaboration that he had submitted some months ago was being unnecessary held up in some government office.

Wickremesinghe's overseas visits are now often organised as a trade and investment mission with a team of businesspersons accompanying the premier while the Board of Investment organises a business conference.

There are fewer state or ceremonial visits. However, if the focus is to attract investment as the way forward, the Foreign Ministry is working backwards in this drive.

Sri Lanka's overseas missions are either heavily understaffed or lack basic facilities needed for the new initiative. The Sri Lankan embassy in Beijing is understaffed while the commercial councillor struggles to cope with a heavy workload sans a computer or a telephone, an issue that astonished many Sri Lankan businessmen. This would delay any follow up action needed by the embassy on potential joint ventures.

The trade councillors also need to be investment-savvy or get a quick course on ways of doing business or investment issues at the BOI. While their expertise is essentially trade, having served for many years in the Commerce Department, their experience on investment may be found wanting particularly in an environment where countries are competing with each other to attract investors from China or the US for instance.

In the US, Sri Lanka's private sector has engaged a reputed US lobbyist to push our case for trade benefits. Mission officials need to be suave in dealing with prospective Chinese investors in a survival-of-the-fittest environment.

It's unfair to expect trade officials, however experienced they are, to be the key to foreign investment if they are not given hands-on training.

These are issues that deserve urgent government attention. However much the government and the private sector promote investments, it's like flogging a dead horse if the state apparatus doesn't gear itself for the new investment demands.