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GCR highlights obstacles to business growth

Policy instability, bureaucratic inefficiency, access to financing, corruption and inflation are the key factors that obstruct growth in businesses in Sri Lanka, states the Global Competitiveness Report (GCR) of 2006-2007.

Sri Lanka was ranked 79 of 120 developed and emerging economies for sustained economic growth indicating a slight progress from the previous year.

Inconsistency in policies, poor infrastructure facilities, crime and corruption are major obstacles for corporate growth and economic development in the country said CEO, The Lion Brewery Ceylon Ltd. Suresh Shah speaking on Global Competitiveness Ranking- A private Sector Perspective at the Colombo Hilton.

An investment growth of 35 to 40 percent is necessary to sustain an eight percent GDP growth rate in the country. The rate of investment in 2005 was 26.5 percent of the GDP of which domestic savings were 17.2 percent. Attracting Foreign Direct Investments (FDIs) is important to meet the required investments, he said. To attract FDI market size, political and macroeconomic stability, modern infrastructure, investor friendly regulatory framework, good governance and skilled professional labour are necessary, Shah said.

Policymakers and business leaders should use the GCR to raise GDP growth, alleviate poverty and encourage local entrepreneurs to penetrate international markets. To boost GDP growth it is paramount that investments and exports are increased, he said.

According to the GCR, Sri Lanka's health and higher education, innovation and business sophistication standards are higher than Pakistan, Bangladesh, Nepal but behind Singapore, Hong Kong, Taiwan and India which have progressed rapidly in these areas over the years.

Economists and research analysts said that the GCR and the ranking of Sri Lanka meant little in terms of practical indications for economic growth and viable policy reforms. The indicators were academic and not forceful enough to make changes to global economic reforms.

Ceylon Chamber of Commerce, Chairman, Mahen Dayananda said that Sri Lanka had a long way to go in achieving economic development but has come halfway down the road.

"We need to boost our exports with value added products and build a good image to compete in the international markets with confidence. Sri Lanka's tea, rubber and spices need value addition and branding for sustained market growth", Dayananda said.

Senior Economist World Economic Forum Dr. Irene Mia said business sophistication, innovation and finance markets in Sri Lanka are good and encouraging.

The GCR is a guide and an indicator as to how economies function and perform.

(LF)

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