Standfirst: Former Cabinet Minister and President’s Counsel Faizer Musthapha has told NewsLine that Sri Lanka’s ambition of attracting serious foreign direct investment will ultimately depend on the standards of corporate governance practised by its companies and the effectiveness of their boards of directors.
As Sri Lanka continues its efforts to attract greater volumes of foreign direct investment, former Cabinet Minister and President’s Counsel Faizer Musthapha has said the country’s long-term success will depend as much on corporate governance as on economic policy.
Speaking exclusively to NewsLine, Musthapha said international investors today examine far more than balance sheets and tax incentives before committing capital. Increasingly, they seek confidence that companies are well governed, boards exercise effective oversight and minority shareholder rights are properly protected.
“Good corporate governance is no longer optional,” Musthapha said.
“If Sri Lanka wishes to compete with the world’s leading investment destinations, companies must demonstrate the highest standards of accountability, transparency and board responsibility. Serious investors are looking for confidence as much as opportunity.”
Musthapha, who has served in several ministerial portfolios during his political career and continues to maintain an active legal practice, said governance standards increasingly influence international investment decisions.
He observed that investors today routinely assess the quality and independence of boards, the effectiveness of internal controls, the protection afforded to shareholders and the overall integrity of corporate decision-making before committing substantial long-term capital.
His assessment was echoed by an international businessman of Sri Lankan origin with significant experience investing across several jurisdictions, who spoke to NewsLine on condition of anonymity.
“Our policies must make investment happen,” the businessman said.
“Too often, promising commercial ventures become entangled in years of litigation, arbitration or, in some instances, both. Investors expect disputes to arise from time to time, but they also expect systems that resolve them efficiently and fairly. When legal battles become the defining feature of an investment, confidence inevitably suffers
He said certainty, predictability and confidence in institutions had become every bit as important as fiscal incentives when international investors evaluate prospective destinations.
Business analysts have increasingly drawn similar conclusions. In an environment where capital is highly mobile, countries compete not only on labour costs or taxation but also on governance, regulatory certainty and the credibility of their institutions.
For Sri Lanka, the message is becoming increasingly clear. Economic recovery may attract initial interest, but sustaining investor confidence requires strong institutions, responsible boards, transparent corporate practices and a legal framework that commands trust.
As the country seeks to position itself as a preferred destination for international capital, corporate governance is no longer simply a compliance requirement. It has become a strategic economic asset.
Be that as it may, governance ultimately determines whether investment merely arrives – or chooses to stay.
