Urgent remedy for upheaval in urban-based downturn

The political crisis in October 2018 and followed unfortunately by the 21 April Easter Sunday ‘Terror Bombings’ have destabilised the country and its economy. Consequently, signals that have been conveyed to the international investors/community and the private sector regarding the lack of confidence in the political stability and security in Sri Lanka has been the major cause. 

This is a misfortune as the situation prior to the above events was different. Sri Lanka was identified as one of the safe places to be in Asia and the best and most popular tourist destination. In addition, with the stabilisation of the country, the climate for investment, economic prosperity and business opportunities was increasing as several mega projects such as the Colombo International Financial City (Port City) and the Hambantota Port Development Project and other Infrastructure Projects were in the process of getting finalised for implementation.

However, in the aftermath of the tragic incidents, the projects under construction such as One Colombo, a three-tower project, comprising the 80-floor Ritz Carlton, 77-floor JW Marriott and the Residential Tower of a similar height and the 800-luxury roomed Waterfront Mixed Development by John Keells, the ITC Twin Tower Project (Hotel and Apartment Complex), and many more under construction have been affected. 

The developers are thoroughly shaken regarding the future viability of their projects/investments. At the same time, several more projects in the pipeline and some currently under construction are on hold. A few other projects are proceeding at a slower pace.  

The good news is that the security system countrywide is strengthening, leaving less opportunity for any future attacks by terror groups. Trust the same intensity will be continued in the future. However, the outlook for the next six months, with the Presidential Election and a further period of six months for the General and Provincial Elections, the country may have a destabilising effect.  

Therefore, in order to overcome the above scenario, the international and private investors of the projects described above should be given enormous confidence and motivation to ‘fast track’ their current projects. 

At the same time, the private sector professional consultancy firms, contractors, real estate developers, tourism and commercial sector, material manufacturers and suppliers and traders are all in a serious plight. 

The money is not circulating, causing all companies hardship to meet the basic requirements such as payment of salaries, statutory payments and in servicing loans. It has become common across all companies in the private sector and if not addressed urgently, will result in an irrevocable social and economic upheaval. 

Since the Government is not urgently addressing the above issues and also has limitations to overcome the crisis, it should immediately instruct the reservoirs of funds, such as the banks, to facilitate on an urgent basis with guarantees provided by the Government. This is similar to the moratorium granted to the Tourism Sector recently which should be extended to the aforementioned businesses in the construction industry.

At the same time, the Department of Inland Revenue and other state agencies should also be instructed to differ collecting the statutory taxes and dues for a period of around six months by the Government, with no penalties to be imposed thereon. 

In this connection, if these state agencies require Parliamentary approval for such actions, there should be a unanimous decision to be taken in the same way it was done for the passing of the Emergency Regulations. 

If the above strategy could be considered favourably, within a short period, the pace of the urban-based development in different parts of the country could rapidly increase with sustainability and stability to reactivate the overall social and economic conditions in the country. 

Furthermore, other public investment projects already under construction will continue and the projected development goals of the country will be achieved.