Balancing Investor Friendly Land Policies and the National Interest

As a factor of production, land is a crucial determinant of a country’s economic prospects. Under-utilized land undermines opportunities for gainful employment and wealth creation. It is important to recognize that the real value of land is not in itself but in the economic activity it facilitates. It also self-evident that land cannot be taken out of the country. In an economy, which is characterized by both a savings-investment gap and a deficit in the current account of the balance of payments, it can be counter-productive to introduce legislation which would deter foreign investment that can release the full value of large extents of under-utilized land. Discouraging foreign investment in a crucial factor of production, such as land, can transmit negative signals more broadly which will discourage much needed non debt-creating external inflows which are essential to achieve the government’s growth targets. It is a matter of concern, therefore, that the government is bringing forward legislation which could reduce foreign investment which can address the savings gap and the current account deficit in a sustainable manner.