Financial Times

Investment risks and business in Jaffna
Our current series of reports about the state of business in Jaffna reveal in stark detail the neglect of the region and the lethargic attitude of those decision makers, both in the government and the private sector, who could make a difference and speed up the peninsula's economic revival. There is a huge difference between the rhetoric and the reality. There has been a lot of talk about 'investing in peace' and much publicised visits by politicians, corporate big wigs and heads of business chambers, but the private sector has invested very little money in Jaffna.

Despite the flying visits to Jaffna by business chamber delegations immediately after the truce last year, most of the problems that were highlighted at the time still remain unsolved. Take the case of agriculture. About 30-40 percent of all agricultural produce that is sent to the south goes waste owing to damage or contamination. Surely there is a business opportunity here - to provide better packaging?
The people of Jaffna compare the neglect of their region with the alacrity with which politicians rushed to provide aid after the devastating floods in the southern province earlier this year.

Banks are not willing to give the loans that are badly needed to start businesses. Banks require collateral to secure loans, but the reality is that most of the industrialists have lost their land and houses as a result of the war. Farmers are still reluctant to cultivate land because of mines or because some of the best lands are in high security zones, although with the re-opening of the A-9 route they have finally managed to find a better market for their produce.

Nearly half of the educated workforce is said to be struggling to find jobs to match their qualifications - a dangerous situation as has been demonstrated in both the north and the south. Hence the need to encourage them to set up their own businesses or create self-employment opportunities.

In the fisheries sector the lack of cold storage facilities remains a big problem. The cold storage facility promised by the Federation of Chambers of Commerce and Industry of Sri Lanka in Vavuniya remains just that - a promise.

There seems to be certain encouraging developments such as UNDP's 'Invest in Peace' initiative with International Alert to highlight market potential in each region.
And business chambers in Jaffna do have plans for investments of their own without waiting for money to come from Colombo. They are trying to raise capital from within the region, from visiting Tamil expatriates and those living in the West who send money. They are also trying to revive businesses that had thrived before the war.
Many industrialists are said to be keen on re-starting their businesses, but are short of start-up capital. They bemoan the absence of special loan schemes to help small and medium scale entrepreneurs, as in the south.

It is natural that businessmen are wary of investing money in Jaffna given the stalemate and uncertainty over the peace process, which remains suspended, and the intransigence of the Tigers. But surely basic issues like cold storage facilities and bank loans should not be too difficult to arrange. As M. Ramadasan, President of the Yarlpanam Chamber of Commerce, has told this newspaper why, despite the ceasefire, investors are still reluctant to set up new industries in the region, everybody is waiting for a permanent settlement.

But, he warns, the people of Jaffna can't wait much longer. There is an urgent need for investment to create the jobs that could wean youth away from militancy. Investors must take risks. The path to peace lies in their hands as much as it is the responsibility of the government.

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