Sri Lanka’s confusing investment signals

Feb 21, 2010 (LBO) - I am often asked about how Sri Lanka is doing after the war. How much investment has come in, now that the LTTE monkey is off our backs. I tell them about the USD 500m from Shangri La. The other 500m investment by the Chinese aerospace conglomerate CATIC. Billion in the last few months, late finish, but still not bad. The new year started with USD 150m by Dialog Axiata. Is this good, is this enough, I am asked. Not enough really, I am compelled to say. Lot of lost time to catch up on.

More sectors than tourism and telecom that have been starved of investment. What is the explanation? Twenty months after the decapitation at Nanthikadal, why is the expected acceleration not taking place? The answer lies in bad signals. Easiest to explain with an analogy. Colombo’s traffic (mis)management Twenty years ago Colombo had few traffic lights. Those days, there were raised platforms for traffic policemen giving manual signals. We could see them. We knew when we could go and when we had to stop. In the 1990s they started installing traffic lights, replacing the manual signals. The traditionalists hated them. I recall the intricate routes my driver used to take when I was at the Telecom Regulatory Commission. Having come from the US, I was amused by his aversion to traffic lights. Now we have both. First thing I have to do when I get to an intersection is check for the police officer (or officers in some cases). There is no fixed place, the old structures having long been taken down. You have to scan the whole intersection. When there is more than one officer, you have to decide which one is the Man. If no policeman, you then look at the lights. At the complex Devi Balika intersection, I found the policeman. I was instructed to turn. Into a moving bus. I stopped. All I got was a sheepish smile. You could feel angry when they do these things. But I feel sorry for these guys. It’s just a matter of time before a car goes over their feet. They stand in the middle in sun and rain with traffic moving around them. No high platforms to make them visible. No concrete barrier to protect them. Sometimes not even the white gloves. Is traffic not manually directed in other countries? It is. But they put the lights on blink when they do that. It is only in Sri Lanka that the drivers have to deal with two parallel systems of signals.

A cop saying go and the light saying no. Investment signals In these conversations about post-war investments, I get asked about human rights. I say, no, that is not the problem. It’s the confusing signals, just like the traffic lights of Colombo. Is there a Board of Investment (the “one-stop shop”)? Is it being reorganized? Is the question being asked before the budget or after? Were the marquee hotel investments made through the BOI? Or through the Ministry of Economic Development? Does the BOI matter if land is involved? Is it better to go to the Ministry of Defence in that case?

Who does one talk to? Who is the decision maker? When you are a foreign investor, you need clear answers. But foreign investors can no longer just go to the defanged BOI. Or maybe they have to pay their respects there too, like we sometimes decide to go through an intersection guided by the traffic lights. What’s wrong with dual? But surely, we manage. Perhaps many of my readers do not think the dual signals they navigate everyday are anything unusual. I might even get some complaints about what I have written here. The test is whether the traffic moves, they will say. When the policeman is guiding the traffic, it moves. He makes spot judgments that the unthinking traffic lights cannot. Why impose American standards on us? This works. I have no objection to manual overrides. But just put the traffic lights on blink. Make sure the policeman has white gloves and reflectors. And give him as much protection as possible. If you so like police directing traffic, bring back the traffic signal boxes. Bring back the police from the North and put them all on the roads. Dismantle the traffic lights and sell them for salvage value. Whatever. One set of signals is all I ask for. That is what any foreign investor would ask for as well.
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One set of signals. Safer driving. More investment. Why not? Rohan Samarajiva heads LirneAsia, a regional think tank. He was also a former telecoms regulator in Sri Lanka. To read previous columns go to LBOs main navigation panel and click on the 'Choices' category.