• Proposed by PSC on ease of doing business 

The Parliamentary Select Committee (PSC) to study the ease of doing business in Sri Lanka has proposed the establishment of an international standard arbitration centre at the Port City and the introduction of Key Performance Indicators (KPIs) to appraise the performance of public officers, as the Government aims to improve Sri Lanka’s ranking on the new Business Ready (B-READY) index to be introduced by the World Bank Group in end-2023.

Speaking to The Sunday Morning Business on Sri Lanka’s poor ranking on the Ease of Doing Business index prepared in 2020 by the World Bank where Sri Lanka was ranked 99 globally, PSC Chair MP Madhura Withanage revealed that the World Bank had discontinued the Ease of Doing Business index and would be introducing a new B-READY index. Therefore, the PSC will be focusing on the specific topics considered by this index and how Sri Lanka should approach them.

According to the World Bank, the B-READY index will consist of three main pillars, which are the regulatory framework, public services, and efficiency. Furthermore, the B-READY index topics are organised following the life cycle of the business and its participation in the market: opening, operating (or expanding), and closing (or reorganising) a business. 

Accordingly, the 10 topics in the B-READY index are business entry, business location, utility services, labour, financial services, international trade, taxation, dispute resolution, market competition, and business insolvency.

Withanage stated: “Over the past few months, we have had numerous discussions with various groups of entrepreneurs, chambers, and organisations to identify the specific weakness in Sri Lanka’s business environment. Accordingly, it was identified that the entire process of opening a business in Sri Lanka was unnecessarily complicated. Entrepreneurship in Sri Lanka is around 2.2% and we believe that the difficulty in opening a business is one of the key reasons for such low entrepreneurship levels.”

Commenting further, he stated that the PSC had identified the need to reform the inefficient use of land by State institutions. “Government institutions such as the Railways Department, Urban Development Authority, Land Reform Commission, Mahaweli Authority, and the respective provincial councils own a massive area of land in Sri Lanka. These are lands that could be used to establish industries, agricultural projects, energy projects, and other revenue generating business ventures. Instead, these lands are left to run wild. 

“Less than 1% of the total land area in Sri Lanka is dedicated for commercial activities. There is a huge issue in the country concerning making efficient use of land. When foreign investors come to Sri Lanka, the Board of Investment doesn’t have information to provide regarding the land that is available and suitable for their respective projects. Therefore, there is a huge need for the establishment of a land bank to ensure the efficient use of State lands.”

Withanage further pointed out that the lack of initiative among public officials to facilitate investments had been identified as one of the key hindrances to entrepreneurship in Sri Lanka. Therefore, the PSC has proposed the introduction of KPIs to appraise public sector performance.

“The tenure of a minister is temporary. In contrast, public officials have a permanent position within these State institutions. Therefore, they have an overarching duty to ensure the smooth functioning of the respective State institution. 

“However, there doesn’t appear to be much motivation among public officials to do so, because there is no performance appraisal of the work done by them. Therefore, we are proposing the introduction of KPIs to appraise the performance of all public officials.”

He further stated that the PSC had taken steps to develop a quantitative definition for Small and Medium Enterprises (SMEs) for the first time in Sri Lanka and accordingly, any business which involved an investment of less than Rs. 750 million would be classified as an SME. 

Withanage noted that the PSC had also proposed the establishment of an international standard arbitration centre in Port City. 

Accordingly, the PSC has proposed moving the defunct Colombo International Arbitration Centre (CIAC) established by the previous Yahapalana regime in 2015 from the World Trade Centre (WTC) to the Port City and this is currently in the process of being implemented.