Too many cooks spoil FDI soup

Faraz Shauketaly

COLOMBO (News 1st) – There appears to be mixed signals from the Government of Sri Lanka on its policy on Foreign Direct Investments. Statements by three senior members of the government to the Ceylon FT yesterday has added to the confusion.

Amidst heightening calls from the private sector for tax incentives including tax holidays for FDIs, the government has hinted it would accommodate private sector concessions on a case-by-case basis. The private sector suggests that concessions or tax holidays are a key ingredient to kickstart FDI and investment by the local economy.

Speaking to the Ceylon FT, Minister of Strategic Development and International Trade Malik Samarawickrama said there won’t be Corporate Tax levies from FDIs until investors fully recovered the costs of investments.

State Minister of Finance, Eran Wickramaratne, however, says otherwise.

Wickremeratne states that the Government was, in fact, willing to consider the requests from the private sector though the existing structure of incentives for the private sector still remains there even as of now. The State Minister also added that the present structure of incentives was such that they were awarded on the basis of the quantum of investments brought in and that bigger the FDIs, the bigger the concessions would be.

State Minister of National Policies and Economic Affairs, Dr Harsha de Silva meanwhile said that the government will make an attempt to accommodate firm private sector requests, but that they have to be within the existing structure.

Senior Banker Rusiripala Tennakoon speaking to News1st commented on the 3 views expressed by the ministers. While noting that providing concessions to foreign investors is definitely important, Tenakoon stated that it seems the Government is at a point where they are desperately attempting to bring down FDI’s no matter what the terms and conditions attached to them are.  Tenakoon called on the Minister to stop speaking about impractical solutions and get their house in order, to bring political and economic stability back to the country.