Dec 07, 2016

BOI tumbles amidst highly compartmentalized bureaucracy

The Board of Investment Sri Lanka (BOI) becomes a stumbling block for attracting foreign direct investment in the island, official sources revealed. The low level of foreign direct investment becomes serious constraint to sustained rapid economic development as a result of inefficiency of the BOI officials.

The country has been unable to attract the kinds of investments that would have multiplier benefits to the economy from increased exports and transfer of technology.

Absence of coordinated promotion by BOI, Tourism authorities, EDB, Tea Board, Foreign Investment Bureau and the highly compartmentalized bureaucracy, he argued, were disincentives for foreign investors.

Outdated institutional setting in investment promotion agencies and inadequate professional skills were also deemed to be deterrents for the promotion FDI.

The general perception of the investors was that the BOI is an inefficient institution filled with arrogant management with no interest to promote new investment/projects. The situation goes to a step more to the extent that some now fear the entity is also getting crippled with extortionist rackets staged by the "inner circle" closely operating with the top, a foreign investor said.

If one consider the cumulative profits expatriated by the existing BOI companies and deduct them from the FDI, the total FDI contribution of the BOI will be a "Minus" number.

As the total agreements signed this year to date is approx 35 Million USD, then the real number can be even "Minus One Hundred Million USD" leave alone the cost of sustaining the BOI which can further run into millions more, an independent government audit officer revealed.

The last annual report published by BOI was in 2011.....Latest reports are not in public domain

Upul-Jayasuriya-Chairman-BOI has become a liability to the institution, several investors claimed. He has worked together with Rohan Fernando at Edna and currently appointed him as consultant/board secretary of BOI.

In order to cover the inefficiency and losses, the BOI has haphazardly increased the ground rent in all the free trade zones according to a recent circular)....This too was a short cut to show "Increased Revenue" whereas the increase is coming out of exploiting the existing investors, Not from any increase of new investors, a senior official said.

Inside sources confirm that there is a "Creation" of fake legal work with regard to many contracts unnecessarily and outside legal firms and lawyers were brought in paying huge fees whilst the internal lawyers are not used for the said purpose. Looks like the legal affiliation linked to the top is damaging the entity and making it "Board of Investigation" instead of "Investment”, an official said.
However, it looks like year 2016 (based on the performance so far) will only have 0.3% of the GDP as the total FDI, he pointed out.

This means a historically LOW FDI performance and a very scary situation which needs immediate attention and thus the need for the BOI regain direction and get back to genuine investment promotion.

At the current rate, the BOI will not even attract USD 300 Million as FDI this year. Despite the big USD 5 Billion talk and fake investment announcements, the entity has lost direction and innovation. A senior investor confirmed speculations about rising inefficiency, willful delays soliciting indirect paybacks and most unfortunately rising "Extortionist Rackets" harassing genuine investors are making the BOI a place which will never be desired by any serious investor to step in to.