Our governments preach untiringly the importance of foreign businesses and investments for Sri Lanka. For a capital deficient and technology poor country it is essential to attract both money and knowhow. Whether it is direct investments in projects, foreign businesses setting up office here or investments in real estate or the stock market, we want them.
But try as hard as we may – promotions, road shows, various concessions to investors, constant visits to foreign countries by our dignitaries, international agreements – we haven’t got the desired results. In comparison to neighbouring countries like Thailand, Malaysia and Singapore, the volume of foreign investments we have attracted are miniscule and that too mostly in to low-tech and low return areas; not the kind industries or ventures that can push a country rapidly towards a qualitative jump in terms of development.
Despite nature having blessed this island generously and as argued often, placed it strategically in terms of international trade routes, we have not caught the attention of international business nor attracted investments sufficient to make a decisive difference. Like in many other things, we expect investors to flock in because we have nice beaches. Believing in our own propaganda, we ignore the reality.
Reality is an everyday experience. What millions of Sri Lankans encounter when dealing with organs of the government is far from doing business with ease or ease of doing business, as these ideas are commonly understood. If the people of this country find it so difficult to do their everyday business, surely we cannot create another reality only for the foreign investors, by just wishing for one. After the garlands, drummers and the dances, the foreign investor must function in this reality. And that is horrendous.
Here are experiences of two Sri Lankans which illustrate the reality of our public service. Both are known to me well.
Dehiwala/Mt. Lavinia Municipality
The first is a retired bank executive who owned a commercial property in the Dehiwala/ Mt. Lavinia municipal area. He had rented the property to a business for a number of years. After a few years the tenant reneged and stopped paying his rent. With great difficulty, including lengthy legal action and police intervention, my friend persuaded the tenant to vacate the property. The elderly landlord, emotionally and financially exhausted by his desperate effort to regain his property, decided to sell.
Naturally, the prospective buyer required title and other documents. To obtain documents like the Non-Vesting Certificate, my friend had to go to the Municipality Office. According to him the Dehiwala/Mt. Lavinia Municipal Council office is a nightmare of indiscipline, indecorous levity and when least expected, a pompous officiousness.
The title ‘office’ is a misnomer here, while the public wait: the staff walks about casually, chat with each other loudly, eat at their desks and have long conversations on their mobile phones. After a lengthy bureaucratic process requiring several visits to the Council office, when my friend’s file was eventually located, it was in a shocking state, a dilapidated folder with several loose documents tucked carelessly into it.
Then the bad news; apparently his former tenant whose business required a Business License from the Municipality had not obtained one for eight years. The Council will not give any document to the landlord unless he made good the default of his former tenant! Although shaken by this obvious injustice, my friend decided that it will be meaningless to argue the rights and wrongs of the rule with the slovenly municipal employees. So he pleaded with the officer for some relief.
The officer had then directed him to another officer, obviously more senior, sitting in a cubicle. This officer after listening to my friend had advised him to pay just two years’ business license fee and in a softer voice told him to “just look after the officer who directed you here”.
My friend is a pragmatic man and understood the message. He did as told and gave the first officer Rs. 10,000. The Non-Vesting Certificate was immediately issued by the Municipality.
“I am happy that I sold the land in the Dehiwala/Mt Lavinia Municipality area. Going to that office is a degrading experience. It feels good to escape from the clutches of a Municipal Council like that.”
In the second case, a friend of mine who lives overseas decided to develop an inherited property in Rajagiriya by building a commercial cum residential building. He had friends who guided him.
The first day he went to the Kotte Urban Council, the officers there were bureaucratic, giving him a time frame of about three months to approve the plans, and that too only if all his documents were in order. They had told him, portentously, that a committee has to approve his plans and that this committee included representatives from the Urban Development Authority and other Government officials. My friend could not wait that long.
He had gone to the Council office with a ‘contact’ and passed money around lavishly. Some officers, particularly females, to whom my friend felt uncomfortable giving direct financial inducements, he had passed on boxes of foreign chocolates, dresses and shirts. He had his approval within a week.
I can add to this an example of another aspect of the state of our Public Service today. This is in relation to the offer of a long-term lease of an agricultural land owned by a Government institution. The bidder was a foreign company which had got into a partnership with a local party. They wanted the land for a tourism-related development. The draft contract provided by the Government institution was in Sinhala; if the bidder wanted to understand it, he had to get it translated.
One of the local partners showed the document to me. I did not need a translation. It was a very poorly-drafted document with many repetitions and irrelevancies. Obviously most of the clauses in it were from a cut and paste exercise, with little relevance to the subject matter. On the face of it, the contract was hardly a balanced document; clause after clause was heavily loaded in favour of the landlord (Government), with copious descriptions of methods of payment and so on.
A person acquainted with international commercial agreements would be taken aback by the crudeness of this one-sided approach. But in the course of discussing the document we discovered that there were many loopholes, irregularities and contradictions which made the contract mostly meaningless. In any event, the local partners were nonchalant about the menacing nature some of the clauses, there is no seriousness here, they assured me.
Our Public Service is manned completely by products of our education system, perhaps even the best it can produce. Clearly, the three R’s of old do not suffice today. At a very basic level; to answer the phone politely, reply a letter within a reasonable time, respond meaningfully to an inquiry or request, seems too much to expect from the public servants of today.
Years of politicisation has diminished them, today’s Public Service is programed only to respond to the call of the politician. We need an education system that can produce something different altogether. If we are serious about competing effectively, we must find men of integrity; dedicated, upright as well as capable; with greater minds and a larger vision than what we now have. The future of the country depends on our ability to produce such men.
About 1,600 miles to the East of Colombo is a small island called Singapore. In size, it is only about 720 sq. kms. (Sri Lanka is 65,000). Its population is 5.5 million compared to Sri Lanka’s 20 plus million. These are about the only areas where we have a lead; in terms of GDP, Singapore is about $ 295 billion while we are a modest $ 82 billion (app). Where per capita income is concerned, Singapore is among the richest countries, commanding a per capita income of $ 53,000, while we in Sri Lanka have a per capita income of only $ 3,870 (app).
In the Transparency International ‘Perception of Corruption Index’ Singapore stands at an admirable number 7, better than even countries like the Netherlands, Canada and Germany. Sri Lanka is at a lowly 95, worse than Rwanda, Senegal, India and China.
For some of the reasons for this embarrassing gap between our tiny neighbour and us, we could profit by referring to a recent book – ‘The Fourth Revolution – The Global Race to Reinvent the State’ by John Micklethwait and Adrian Wooldridge.
I quote therefrom –
“Lee has always made it clear that Singapore is open for business: There are few places where it is easier for a big multinational to set up shop, where tariff barriers are lower, where taxes are more manageable. But at the same time the State guides the economy. It chivvies local businesses up the value chain-betting first on manufacturing, then on services and now on knowledge economy.
“‘I do not believe that democracy necessarily leads to development. The exuberance of democracy leads to undisciplined and disorderly conditions. Having seen other countries in the neighbourhood torn apart by ethnic strife, he has no qualms about forcing people live in mixed neighbourhoods in order to prevent ethnic polarisation.
“Good government in turn relies on an educated elite of ‘good people’ running the country. No country works harder at perfecting its civil servants than Singapore, nor follows such an unabashedly elitist model. It spots talented youngsters early, luring them with scholarships, and then spends a fortune training them; those who reach the top are richly rewarded, with pay packages of as much as $ 2 million a year, while those who falter are thrown overboard.
“Sitting around a table with a group of Singaporean mandarins is more like meeting junior partners at Goldman Sachs or Mckinsey. The person on your left is on secondment at a big oil company; on your right sits a woman who between spells at the Finance and Defence Ministries has picked up degrees from the London School of Economics, Cambridge and Stanford. High-fliers pop in and out of the Civil Service College for more training: The Prime Minister has even written MBA-style case studies for them.”
When looking for foreign investments, such is the field we compete in.