Sri Lanka and Belize Investment Report

Executive Summary

Investing in a foreign economy was once seen by light-hearted investors as a frightening endeavor plagued by risk and uncertainty. Regrettably, for fear of not taking a stab in the dark, the aforementioned investors missed out on major investment opportunities in China. The sudden explosion of China's economy flicked on the light for anybody left in the dark. Many experts agree that investing in Asia can yield a great return, however the economic growth might be a bubble, and there's no telling when it could collapse. It is also no secret that every country has a different history and culture than our own, and corruption is not uncommon in government officials. With this being said it is assumed that a certain level of political unrest fogs many of the less stable countries. One such country is Sri Lanka, located in the Indian Ocean not far off the Southern tip of India. Sri Lanka has shown incredible growth, especially considering it was in the wrecking path of the Asian tsunami of 2004. The wave washed away hundreds of thousands of lives, billions of dollars in property, and a tsunami of tears. As the streets dried, like a flower after the first rain of spring, Sri Lanka began to flourish. People began to work together to rebuild their torn nation. The Liberation Tigers of Tamil Eelam (LTTE), a militant separatist group worked out a cease-fire agreement, putting a twenty-one year civil war on hold. Architects began to design new, improved structures to replace what was lost in the flood. Although no amount of work could bring back the lives lost, like a rose that grows from concrete, Sri Lanka has shown its determination to outgrow the tight spot it found itself planted.

Unarguably Asia is not the only feasible continent to invest in. While Asia may be in a boom, there is an established and consistent supermarket in our own back yard, or two doors down to be more precise. Latin America has just about anything you could possibly want to invest in, in a setting that is much closer to home. While government corruption is a threat anywhere in the world, Latin American countries (And those adjacent to Latin America) stand on a stable political foundation. Belize is a shining example of such a country. Belize is not a true part of Latin America, contrary to popular belief because romance languages are not officially spoken there. From this point forward we will use Central America instead of Latin America. Belize is not a large country, closely comparable to Massachusetts. While tourism and agriculture have been a stable cash cow for some in Belize, it seems the nouveau riche of Belize earn their dollar in recent oil exploration. This however only widens the poverty gap, which is a huge gap. Belize is the west coast of the Caribbean Sea as well as the Gulf of Honduras, situated to the East of Mexico and Guatemala. Belize trades its government stability for high unemployment, poverty and an unsustainable foreign debt. The debt constricts the governments budget for social programs that would aid with the aforementioned issues.

This report will guide you through the process of contrasting variables (in this case Sri Lanka and Belize) important to an investor, as well as aid you in making a well informed decision. Throughout this report you will begin to gain an understanding of the significant indicators that effect investments, and be able to clearly distinguish what to look for and what to stay away from. At the conclusion of this report you, the reader, should have full confidence in the decision of where the venture is most unassailable. Throughout the document Belize and Sri Lanka will be compared as possible countries for an investment in an undecided industry. The industry is not specific because that is not the interest of the comparison, but to determine what outside factors can effect the entirety of an economy not a particular industry. The factors that are being deliberated are geographical and physical factors such as location and climate; political considerations namely the stability of the country politically; economic indications to help foreshadow upcoming economic issues and opportunities; and lastly cultural factors will be discussed that by themselves may have a somewhat profound impact on the economy and foreign investment.

One very influential factor a savvy investor should look at when choosing a destination for their capital is the geographical location of the country. Sri Lanka is situated to the south of India, conveniently placing it near trading lanes in the Indian Ocean. While this makes a great stop off point for ships carrying goods to or from the country, the island does see "occasional cyclones and tornadoes" (CIA WFB, 2007) but the occurrence of the cyclones is not often, happening only every couple years. Lareef Zubair of the Sri Lanka Meteorology Network explains that "cyclones usually are steered to Sri Lanka only during the North-East Monsoon period and only during this period can they be expected to make landfall" (Zubair, 2003). In 2004 Sri Lanka was struck by the Asian tsunami, which devastated the coastline. Seismologist McCloskey found that the earthquake and tsunami torn region of Sumatra, Indonesia; the source of the Asian tsunamis trigger quake, is at risk for another earthquake (As cited by Roach, 2005). For an investor this would mean taking on a huge risk. Belize is frequented by devastating hurricanes from June to November, as well as coastal flooding, especially in the south. (CIA WFB, 2007). The hurricane activity in Belize however is not as frequent as you might think. Hurricanes are more common in North Carolina and Florida (National Hurricane Center, 2004). Both countries obviously have severe weather, but Belize is an obvious choice due to the ever-present threat of another horrific tsunami occurring in Sri Lanka.

Belize is more politically stable than Sri Lanka. Belize has strong ties to the United Kingdom as a member of the commonwealth, the Crown is represented by a Governors General in parliament. It also is a signatory member of CARICOM. (Worldbank, n.d). Prime Minister Said Musa leads the People's United Party for its second consecutive term, bringing positive change with fiscal and monetary policy changes. He plans to cut fiscal deficit from 9% of the GDP to 3%, increase revenues and improve the countries standing on its huge debt. These are only a few of the positive changes taking place in Belize politics. Belize has assumed its role as a bridge between the Caribbean community and Central America. Sri Lanka has a system of Provincial Councils, elected in 5 year terms, wherein the leader of the council serves as chief minister to the province. The level of political violence is unacceptable. LTTE militants are in a struggle to overthrow the