Publishing a short but important list of deficiencies in the public sector, the Treasury has criticized the state apparatus for impeding crucial private sector investments in the country, calling on the government to take meaningful steps to reverse this trend.
Despite policy reforms towards private sector development, private sector investment is constrained by several factors which need urgent corrective actions by strengthening the institutional set up, the Treasury said in its 2011 Annual Report.
It highlighted the following issues that needed serious attention of the authorities:
= Inefficient approval process that take investors to multiples agencies.
= Lack of focus investment priorities and project proposals in priorities.
= Price controls on some selected commodities such as milk, poultry, and cement etc instead of using pricing formula and regulatory supervision.
= Inadequate flexibility by line Ministries and agencies to promote private sector into commercial activities.
= Inadequate long term funds and institutional support to SMEs.
= An absence of coordinated promotional effort by BOI, Tourism Authorities, EDB, Tea Board and Foreign Employment Bureau due to highly compartmentalized operations and bureaucracy.
= Outdated institutional setting in investment promotion agencies and inadequate professional skills.
"In the context of expected private investment of around 26-30 percent of GDP, in addition to public investment of around 6 percent, promotional agencies are required to re-strategise their role on a priority basis," the Treasury said.
"As the country is endowed with improved infrastructure, improved skilled and productive labour force, favourable tax and incentive environment and emphasize on a number of activities for export development and import replacement industries together with new opening for infrastructure development with the participation of private sector, the promotional agencies are expected to develop new strategies with strong commitments. The cabinet subcommittee on investment is expected to coordinate this task in addition to reforming respective organisations to deliver better results," the Treasury said.
As previously reported in The Island Financial Review, Dr. P. B. Jayasundera has called on the government to remove political appointees in state institutions replacing them with competent professionals.