Northern province tops reform agenda amid absence of enabling biz environment: ILO

• Reforms rolled out thus far have not been able to deliver desired outcomes
• Obtaining suitable land, complicated licensing process and political resistance remain challenges for investors

Sri Lanka’s Northern province has always been at the top of the agenda for most policy reform initiatives but the region still lacks an enabling business environment, the International Labour Organisation (ILO) said. 
As the reforms rolled out thus far have not been able to deliver the desired outcomes, investments in the Northern province continue to be constrained by several bottlenecks, which have stunted private sector expansion in the region, an ILO assessment carried out in partnership with Ernst & Young revealed. 

The findings of the study revealed that the main challenge for the investors venturing into the Northern province is in obtaining suitable land, despite the ample availability. A significant portion of the land in the province comes under the purview and protection of the Wildlife Conservation and Forestry Departments. 
Although the Jaffna district has a low forest coverage when compared with the other districts in the province, most lands are fragmented into small plots and therefore are not suitable for large-scale commercial investments. 

Further, the complicated approval process in acquiring land, competing claims of land ownership and secondary occupation of land adds to the woes, resulting in the approval and business licensing process taking anywhere from six months to five years. 
“At present, this is a serious constraint, as it leads to noteworthy opportunity costs and high levels of frustration among investors,” the ILO said in its knowledge brief. 

Another key issue is the lack of skilled labour for both specialised and management roles. This impacts the competitiveness of the province. During the study, it was noted that several BOI projects in the Northern province were compelled to be wound up, due to difficulties in finding skilled labour. 
The study also highlighted undue political influence and resistance as a major obstacle for private sector investments in the region, especially for large-scale projects.  To iron out the prevailing issues, the ILO stressed the need to establish a long-term robust development strategy and consistent policy framework for the Northern province. 

There is also an urgent need to review the existing bureaucratic structure, regulations and formalities to create an enabling business environment for investors.   Furthermore, the ILO said government also need to play a role in bridging the gaps and confidence in nurturing strong relationships amongst the resident population and outside investors.