World Bank offers encouraging signs for Sri Lanka business
The country has vastly improved the ease of doing business, according to a recent World Bank survey that ranks it higher on that measure than any other South Asian country.
S.P. Samy, a leading importer of essential commodities to Sri Lanka, always wanted to diversify his businesses. A Tamil from Jaffna, he wanted to invest in the hospital industry, but the war was an impediment.
Six months ago he opened a 39-room hospital in Jaffna through a Rs. 600m ($4.6m) project facilitated by the Board of Investment of Sri Lanka.
“Peace is the most important prerequisite for business. After the war ended, we have a stable situation in Sri Lanka. I am happy to start this business. In my hospital, there are two operating theatres and two labour rooms. Also, there are 60 beds. Sri Lanka is a good country to do business. I feel it as a Tamil businessman,” Samy told Khabar South Asia.
Sri Lanka’s improved business climate is reflected in a recent global survey by the World Bank. “Doing Business 2013” names Sri Lanka as one of ten countries that have improved the ease of doing business over the last year, by computerising processes for starting a business, getting credit, registering property and trading across borders.
In the review of business regulations in 185 countries, Sri Lanka bettered its ranking to 81st from 89th for ease of doing business. “It marks the first time since 2005 that a South Asian economy has ranked so high,” the report noted, according to Lanka Business Online.
World Bank managing director lauds progress
After a November 15th-19th visit to Sri Lanka, World Bank Managing Director Sri Mulyani Indrawati said the Bank was satisfied with Sri Lanka’s progress.
According to a November 21st World Bank press release, Indrawati emphasised the importance of growing the private sector in order to make Sri Lanka the “Wonder of Asia”. She also highlighted the significance of bridging regional and income disparities to build a sustainable economy.
Indrawati met with President Mahinda Rajapaksa and other top officials, as well as representatives of the private sector, the opposition and the media. She also visited villagers in Jaffna to learn about their experiences as beneficiaries of projects financed by the World Bank Group.
“The sustainability of the recent economic success will depend on the capacity of the government to establish the adequate environment that attracts the private sector. I am convinced that, learning from experiences of other Middle Income Countries, the country will succeed. The Bank Group stands ready to partner with Sri Lanka in this endeavour,” she said.
She congratulated Rajapaksa on Sri Lanka’s emergence from conflict and for the growth achieved in 2010 and 2011, but stressed the need to ensure lasting peace through shared and inclusive growth, the press release said.
Some roadblocks remain
Despite the improvements, however, the outlook is not always rosy for local industrialists based in the north. Chairman of the Chamber of Commerce and Industry of Jaffna K. Poornachandran said high bank interest rates remain discouraging, even though wartime hurdles have been removed.
“There are high interest rates offered by local banks. It has affected profit margins of business operators. It has to change. Also, we encounter some obstacles in getting clearance for industrial work,” Poornachandran told Khabar.
V. Sivagnanasothy, Secretary of the Ministry of Traditional Industries and Small Enterprise Development, said the Central Bank had introduced refinancing schemes for doing business in the north and east after the war was over.
“At my ministry, I receive a large number of applications from prospective investors. There are soft loans. The interest rates are minimal. Recently, we had an exhibition in Jaffna. People’s participation was encouraging. I think business will flourish under the improved situation,” Sivagnanasothy told Khabar.