On Investment Promotion & Protection Agreements

 By Mangala Samaraweera –January 26, 2016

Mangala Samaraweera -Minister of External Affairs

This government was elected on a mandate to create one million jobs within five years by increasing investment and boosting exports.

It is now the responsibility of the government and this House to make that vision a reality. The Prime Minister’s Economic Policy Statement delivered here on November 5th last year, as promised, outlined more detailed plans to boost investments, exports and growth so that Sri Lanka could meet this target by 2020. He said that:

“In order to achieve these results, we have to encourage foreign investment and investment by individuals. We lag behind the other countries in the region when it comes to meeting investor requirements.”

This echoes President Maithripala Sirisena’s election manifesto which says on page 20

“I will prepare the Sri Lankan economy….by diversification of investment and non-reliance on investments from a single country.”

Achieving this vision for job creation, raising standards of living and reduced dependency on single countries is not an easy task.

First, the previous government had left the economy in a state of crisis. The number of unemployed Sri Lankans basically remained the same between 2009 and 2014. There was no investment – FDI was at war time levels. Exports fell to 16.7 percent of GDP from 33.3 percent in 2000. The growth we had, according to the previous government’s cooked up statistics, was fueled by unsustainable and poorly negotiated borrowing.

Second, we are now heading into a period of global instability and economic uncertainty. George Soros, one of the most farsighted investors in the world, speaking at the Economic Forum in Colombo, warned that the world could be on the verge of another serious economic crisis. So investors are increasingly reconsidering expansion abroad – especially in frontier markets like Sri Lanka. So we will have to stand out – we will have to compete harder and smarter than the others.

So the question for the government is, in such a difficult domestic and international climate, how do we attract investment, generate jobs and growth while also ensuring that we reduce our dependency and risk? How do we do this when governments across the emerging world are asking the same questions and taking concerted action to answer those questions?                Read More