Sri Lanka: Sri Lanka’s main investment promotion agency, the Board of Investment of Sri Lanka (BOI) says it is facing huge challenge catering to the project requirements of BOI approved companies owing to lack of available resources, mainly land, buildings and raw materials, know-how and most importantly, lack of skilled manpower in the country.
Manilal Ranasinghe, Deputy Director-Investment Promotion of BOI expressed theses views in an interview with Daily News business on the sidelines of a pre-budget seminar, organised by Business Economics Faculty of University of Jayewardenepura under the theme, ‘Striving for Export Competitiveness’ at the Lakshman Kadirgamar Institute in Colombo recently.
He said main task of the BOI is to attract investors who were looking to tap foreign markets like India Pakistan, Singapore and member countries of the European Union.
Ranasinghe said it is an essential to develop small scale industrial zones covering every district to woo more local and foreign investors to invest in Sri Lanka.
Commenting on challenges faced by BOI in attracting FDIs into Sri Lanka, he said it takes considerable time to obtain approvals for investment proposals due to various other government organizations involve in the approval process and archaic government circulars delay this process to a great extent.
“In addition, there is a scarcity of ready-made buildings available for new investors to set up their projects immediately. If private property developers are encouraged to build factory buildings in remote areas to cater to the requirements of these investors, in turn investors, they will go to remote areas or set up investment projects,” he said.
In order to attract more FDIs to the country, he proposed the government to provide maximum security to foreign investors and to take measures to popularise the country’s location advantage among other regional competitors while assisting investors to get the necessary approvals without any delay to commence investment projects in Sri Lanka.
In order to promote agricultural sector FDIs, he suggested establishing a new agriculture equipment hiring centres to enable small scale farmers to obtain services for their land preparation, land cultivation, water supplying services and labour requirements.
“In addition it is also necessary to identify suitable lands for agricultural sector and to introduce an attractive incentive package for local multinational manufacturing companies to promote agri investments in Sri Lanka,” he said.
“In addition, foreign investor who wishes to set up projects in Sri Lanka will be looking for a workforce, trained up to their expected standards. To redress the lack of skilled workforce, we need to introduce special industry training programs, in association with BOI industries and various other industries that come under the purview of the Industrial Development Board. It is also essential to introduce awareness programs with relevant government departments to educate industry people on new technologies in their respective sectors,” he said.
He also pointed out the need to upgrade the existing government technical and other training institutes, operating island wide to the international standards, providing them with necessary funds, buildings and equipment.
Going forward, he said it is essential to implement new strategies to promote FDIs into Sri Lanka such as export diversification measures by identifying sectors and new value added products, promotion of project clusters, establishment of new export processing zones, new incentive scheme compatible with WTO commitments, based on common employment threshold and common investment threshold.
“Furthermore we need to tap into global production network by utilizing bilateral and regional trade and investment arrangements, encourage investments of services and manufacturing industries in lagging regions, promote environment friendly green activities that use energy saving technologies or use alternative energy and establish separate zones for environment sensitive projects, he said.
“Also, we need to organize business forums in other countries and find out export markets. It is also essential to find joint venture partners for local investors while encouraging existing investors for re-investments,” he said.
Speaking on BOI contribution towards economic transformation in Sri Lanka, he said there are about 768 projects in commercial operation under the section 16 of BOI Act while another 1,700 projects are in operation in Sri Lanka under the section 17 of BOI Act.
Likewise, there are about 200 projects, waiting implementation after signing agreements in Sri Lanka.
“Altogether, there are about 2,500 projects, operating under the BOI arm at the moment,” he said.In terms of projects in commercial operation under section 17 of BOI Act, manufacturing and apparel sectors have taken the leading position, representing 50 percent of total projects.
In terms of projects in commercial operation under the section 17 of BOI Act, there are about 405 projects in the apparel sector while 442 in manufacturing sector, 308 in utilities and infrastructure sector and 166 projects in tourism sector.
In addition, there are about 143 and 133 projects in knowledge services and agriculture sectors respectively.
He said these 2,500 projects have created almost 500,000 direct employment opportunities.
In addition to that, these projects have also created another 500,000 indirect job opportunities in the area of transport operations, canteen operations, container handling, special services and many more.
Ranasinghe further said that there are about 50,000 job opportunities available at 16 BOI projects at the moment. As per the targets, set during the period 2018-2020, BOI sources said it is expected to achieve US $ 2.5 billion FDI (Estimated FDI) in 2019 and US $ 3 billion in 2020. In terms of realized FDI, BOI is expected to achieve US $ 1.6 billion in 2018, US $ 1.8 billion in 2019 and US $ 2 billion in 2020.
In terms of exports by BOI companies, BOI is expected to receive US $ 7,900 million, US $ 8,000 million and US $ 8,400 million in the years 2018,2019 and 2020 respectively.
As per the cumulative FDI inflows in Sri Lanka during the period 2005-2017,China is the leading investor in Sri Lanka (US $ 1,738 million) followed by Malaysia (US $ 1,540 million), Hong Kong (US $ 1,441 million, India (US $ 1,164 million),U.K (US $ 1,067 million), Netherlands (US $ 850 million), Singapore (US $ 665 million), Mauritius (US $ 610 million), UAE (US $ 593 million), the USA (US $ 444 million) and Japan (US $ 331 million).