Sri Lanka poll 'deters investors'

Investors fear the election will upset the peace process

Foreign companies are delaying plans to invest in Sri Lanka ahead of next month's general election, the country's Board of Investment (BOI) has warned.

The vote was called after bitter rivalry between the prime minister and President Chandrika Kumaratunga.

The BOI said that companies such as the Four Seasons and Hilton hotel chains are waiting to see the outcome of the poll before investing.

Investments have dropped off since the political crisis erupted in November.

Approvals down

Before the stand-off, monthly investment approvals amounted to $250m, BOI chairman Arjunna Mahendran told the AFP news agency.

That level has dropped to about $100m, he said.

[Investors] want... a clear signal that the country is committed to carrying out peace talks with the Tigers Arjunna Mahendran, BOI chairman

Last November, the president took control of three ministries and the security forces, accusing Prime Minister Ranil Wickramasinghe of conceding too much to Tamil Tiger rebels.

Mr Mahendran said investors were concerned the crisis could upset the ongoing peace process with the rebels.

"If not for the action taken in November, we would by now be approving about $300m-350m worth of investments monthly," Mr Mahendran told reporters.

He said the downturn "translates to a loss of about $150m since November," and the loss of 15,000 jobs.

Four Seasons and Hilton had intended to open hotels in Sri Lanka but put their plans on hold until after the election.

"Investors are not really too interested in the problems between the president and the prime minister... All they want is a clear signal that the country is committed to carrying out peace talks with the Tigers," Mr Mahendran said.