The Island Editorial

Volkswagen and Hoaxwagen

07 January 2017

 

People’s resentment towards governments in power finds expression in creative cynicism for want of a better alternative. The irate public coined a pithy slogan to vent their frustration under the Rajapaksa regime—unta Lamborghini apita badagini (‘Lamborghinis for the ruling clan and pangs of hunger for us’). They once described the situation under a previous government thus: manthrilata kaar, golayanta baar, janathavata soor—‘cars for MPs, liquor bars for their henchmen and intoxication for the masses’. An automobile plant, for which the government laid the foundation stone in Kurunegala the other day with much fanfare, after promising a mega Volkswagen manufacturing facility, has come to be dubbed the ‘Hoaxwagen’ project!

The government is in this predicament, hoping for a providential wind of foreign investment to propel the national economy, which has been in the doldrums for months, due to the absence of a proper strategy. The yahapalana leaders apparently did not expect victory in Jan. 2015. They benefited from the post-truth politics in that year, but, now, their very political survival hinges on their ability to make good on their promises. The Rajapaksa-led oppositional forces, troubled by political cold turkey, are running around like a headless chicken because they did not anticipate a crushing defeat and had no plans for the worst case scenario.

The incumbent administration has failed to attract FDIs not because it lacks a powerful ministry to satisfy the needs of prospective investors. The previous government had a super ministry run by a member of the ruling family, but it, too, failed to realise its investment targets. The real problem is that the country is not geared to boost the inflow of foreign investment owing to the over-politicisation of the national economy and inefficiency and malpractices on the part of the investment promotion institutions helmed by cronies of the ruling party. No project gets approved unless several palms are greased as is public knowledge. No wonder Sri Lanka finds itself near the bottom of the ease of doing business index; its regulatory environment is not conducive to the commencement and operation of a business at all. However, if an ease of doing ‘underhand’ business index were to be prepared this country would be ranked among the first ten nations.

The change of government in 2015 has not brought about a radical change in the sphere of investment promotion as well. Instead of trying to create a super ministry, the government ought to remove the square pegs in round holes in the investment promotion sector and create an investor friendly environment. Cronyism, nepotism or party affiliations must not be allowed to take precedence over professionalism. There are many brilliant technocrats with proven integrity and they must be hired to promote investment and manage the economy.

Meanwhile, Cabinet Spokesman Rajitha Senaratne has said Sri Lankans have the bad habit of opposing any development project just for the sake of doing so. One cannot but agree with him on this score. The SLFP and its allies opposed the accelerated Mahaweli development programme and the free trade zone projects under the JRJ government. They ridiculed the late President Ranasinghe Premadasa’s garment factory programme, claiming that Sri Lankan girls were being made to stitch jangi (underwear) for suddhis (white women). The same goes for the expressway projects under the previous government. Among the bitterest critics of them were many UNP big guns. Ironically, today, they cannot do without those hassle-free roads.

It needs to be added that criticism of development projects is not all that bad in that it makes governments act with some restraint. If there had been a strong Opposition capable of giving the Rajapaksas a scare perhaps an airport would not have been built at Mattala and the cost of the Hambantota Port construction would have cost the public purse less. However, the divestiture of state assets must not pass for development!

Intra-coalition disputes have also impeded the government’s development programme considerably. Members of the two main parties in the ruling coalition are at daggers drawn while exchanging political sweet nothings for the consumption of the public. The attendant political uncertainty has taken its toll on investor confidence. No foreigner in his proper senses will want to invest his hard earned money in a country where the ruling party bigwigs are tightening their grip on one another’s jugular.

The government has a long way to go before it is able to attract FDI. It has to get its act together on the economic front. Rhetoric and media bashing won’t do.