BY EDWARD THEOPHILUS

In terms of economics, investment considers as an essential requirement of an economy for its expansion and an effective variable for solving many macroeconomic problems in a country. Classical economic theory indirectly ruled that investment should be equal to savings but the dynamism and macroeconomic problems in countries have forced many governments go beyond the equilibrium condition.  Many countries need to stress in budget spending as recurrent spending and capital spending that force to go beyond the classical theory. When there is a gap between the investment and savings, the borrowing to cover the gap would be the best option, if any other measures such as taxes and charging for government services, grants from overseas, excess from public enterprises and selling public assets would not practically possible.

The direct result of the borrowing option may increase in indebtedness and creating many fiscal problems in a country. The debt service also increases when the budget spending uses the borrowing as a way of covering the budget deficit.  Therefore, increase in investment from domestic and foreign revenue (without debt) and direct foreign investment is a difficult task unless like President Premadasa did, the printing money for government spending.  This is a summary of investment in terms of economic theory and it should not forget the factors that as Schumpeter pointed out in relation to investment and entrepreneurship, investors would not motivate for investment in Sri Lanka without reasonable and competitive returns. 

The role of the managers of the economy would be supposed to act within constraints and going to targets without creating unfavourable effects from scam investors to the country.  This is a hard task as dynamism, competition, technology and social culture such as environmental variables seem to be impact on the decision-making process of investment and related issues in investment management.  Many countries including developed countries as well as developing countries have faced to these wider problems and there is an intense competition for attracting investments in developed countries and developing countries.  The best example is, we can see that America is competing with its friendly countries to attract investment and sometimes it gets unfriendly decisions violating or hating USA decisions from friendly countries.

Anfractuous strategy of certain investors in some countries in the competition of attracting investments has become a significant problem to many countries like Sri Lanka and other developing countries. The competition has led to increase in corruptions in Sri Lanka that has different faces at different levels and anfractuous strategy of dishonest investors have created political, social and international cooperation related problems in Sri Lanka. The major weakness in Sri Lanka appears that the nature, practice and purposes of corruption elements in relation to investment have not accurately identified by the responsible authority due to serious debility in investment analysis and political influences toward the investment decision making. The investment analysis process has no transparency with a participation of opposition and responsible independent cognizant personnel and it is a closed process of the analysis, which promotes or allows to anfractuous strategy of so-called potential investors. The process is trusted by the government politicians as many members of the analysis and decision making are henchmen of government politicians. I have seen a video cut and a budget debate in the parliament of Sri Lanka that a government politician was too much talking about possibly a fake investment in Hambantota area, and an ancestor of the politician was a highly corrupt person during the initiation of the market economic system.

In the investment analysis process, there may be unique policies at bureaucratic level but they are unknown to public as well as politicians. The practical environment in Sri Lanka has undisclosed and hidden corrupt elements.  Transparency in this process is hidden as it might generate risk to decision making as well as investors decisions.

Many Asian countries have been encountered crookedness related issues in investment and international politics also contributed a considerable influence to this scam investments. For example, Chinese investments in Sri Lanka are demurred by India for purely a reason that India wants to attract such investments than going to Sri Lanka and such international politics suffer Chinese investments in Sri Lanka and such politics does harmful suffering to public in the country preventing investments.  The popular Indian protest to surrounding countries is that Chinese investment in South Asian countries would be a threat to Indian security. No South Asian countries want to challenge India on the ground of investments.

Sri Lanka has faced to anfractuous strategy of so-called potential investors from 1960s and the government development projects were subject to such strategies and an unpublished secret in relation to foreign investments in Sri Lanka is that 40% – 50% of total foreign direct investments goes to corrupt personnel and people of Sri Lanka don’t enjoy the real economic benefits of foreign investments. For example, many irrigation projects can be highlighted.

As I understand the first large scale anfractuous strategy of foreign investors recorded in relation to the project of developing Oil Tanks in Trincomalee, which was subject to investments of Indian and Singapore companies.  When look back we can see that Sri Lanka has failed successfully developing the oil tank project and generate benefits. Another Oil Refinery Project also was subject to talk but nobody seen the outcomes.   Since then many project proposals originated but many become failures.

We heard many international reports that dishonest investment strategists were punished in USA, UK, Germany, Russia and many other countries and a considerable number of these crooks were Indian investors. One LTTE related sinner investor was punished in USA.  This mean that investors from India, China, Malaysia, Singapore and many other countries must be subject to an intelligent analysis before they going to politicians’ platform and TV plays. After 2015, this situation in Sri Lanka has an upward trend as in the name of yahapalanaya politicians as well as crooks of political parties have associated with these scam investors to show off public that yahapalanaya was doing the right thing.

How can avoid this situation.  It is essential to develop strong policies for investment for both side investors and investee and such policy needs to be educated to public and investors. There is no argument that a Sharpe competition exists between countries to attract investors providing opportunity to scam investors.  Although Sri Lanka desperate for investments it should not consume poison from investment in scams.