Eran says poor FDI inflows is due to lack of confidence in Govt.
Saturday, 13 September 2014 01:28
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The slow build-up of Foreign Direct Investment is due to the lack of confidence in Government policy, the failure to enforce the law without fear or favour, and the large corrupt payments that have to be made to politicians and officials, according to the main opposition United National Party.
UNP Parliamentarian Eran Wickramaratne told the House this week that while Vietnam and Sri Lanka were comparable in the ’90s, today Vietnam attracted foreign investment of 10 times more than Sri Lanka.
Raising the issue of another project under the Strategic Development Act, Wickramaratne said AVIC International will undertake a mixed development project with accompanying tax concessions.
“The company had previously made an advance payment of $ 54.5 million for a hotel project on the Galle Face water front. It did not proceed with it as the government refused to sell the land outright. Instead AVIC purchased private land and was also given Cabinet approval for the purchase of an adjacent block of land,” he told Parliament.
The MP questioned the rationale in Cabinet approving the sale of land to foreigners when the Government has already stated its position on not selling land and bringing laws to prohibit the sale of land.
Wickramaratne was of the view that what could not be done directly was being done indirectly. He said there was direct and indirect tax, direct and indirect corruption, direct and indirect beneficiaries.
“Most projects approved under the Strategic Development Projects Act benefitted from State Land or State Resources. Therefore, it was necessary for the projects to be transparent,” Wickramaratne asserted.
He said many projects that were unsolicited ones.
“These projects are the open doors to corruption. There is no market mechanism to set price. Therefore, the commissions are included in the arbitrary pricing,” he charged.
Wickramaratne charged that the country loses twice on these proposals by not having the benefit of competitive pricing, while providing tax benefits. He was particularly critical that the decline in tax revenue results in drastic reductions in health and education spending.
Health expenditures had risen from Rs.40.5 billion to 142 billion, education from Rs. 57 billion to 146 billion, while roads increased from Rs. 20 billion to 178 billion in the period 2005 to 2013, the UNP MP said.
