Sri Lanka is well-poised to usher in a decade of growth with a sound strategic plan launched to create a business-friendly investment climate in the country, said BOI Chairman SanjayaMohottala striking an optimistic note that the economy will be on a growth trajectory soon with a host of plans to woo in domestic and foreign direct investments in the pipeline. Focusing on immediate near term plans, the chief of the country’s investment body said a top priority of the BOI is introducing policy reform on the back of tax incentives given to strategic sectors, getting the Eravur fabric park running while expediting work on the Pharmaceutical manufacturing zone in the South and building new zones for rubber, agri processing and electronic goods assembly.
The fabric park in the East will enable Sri Lanka to save over USD500 million in import substitution while resuscitating the region’s dormant economy. “The apparel zone in the East will be a fillip to employment creation and a shot in the arm to the local economy which is yearning for fresh life lines,” Mohottala said.
On the pharma zone in Hambantota the BOI chief said work on the strategic initiative comprising stakeholders of key institutions under the Presidential Task Force. “Currently over 80% of the country’s pharmaceutical needs are met via imports while the rest is supplied by local manufacturing plants including the State Pharmaceutical Manufacturing Cooperation with an estimated value of Rs. 18 billion annually,” he said.
Pharmaceutical expenditure has shown a rapid growth during the past years and it is expected to reach a value of US$ 750 million with the growth rate expected to accelerate with more patients relying on private healthcare and expensive but needed interventions.
This dedicated pharmaceutical zone’s objective is to meet around 40 percent of the local demand for pharmaceutical products while creating the path way to a US 1 billion independent export vertical by 2025.
Declared as a “Strategic Development Project” the zone is to be set up on 400 acres in Hambantota and will be implemented in two stages of 200 acres each.
The apex body for investment targets USD 2 billion in foreign direct investments this year up from last year’s USD 750 m in realised investments. “Last year’s realised FDI stood at around USD 700 million. Another USD 700 million was invested by BOI companies achieving USD 1.5 bn in capital formation which was a commendable achievement given the challenges. “Companies reinvesting means that they are expanding and strengthening their operations, to take advantage of supply chain shifts. This is the acid test that any new investor should be considering,” Mohottala said.
However, everything is not hunky dory according to Mohottala who outlined moves such as re-drafting the BOI Act, fast-tracking approvals for investments outside EPZs, among a host of critical initiatives that will ensure clarity and certainty from start to end of the investment process. He said that improving a country’s Ease of Doing Business (EODB) ranking is critical to drive investments. Sri Lanka’s EODB ranking has certainly notched up but there is still room left to excel in the indices. The tax concessions granted in the 2021 Budget as part of a strategic move to attract investments is something noteworthy. “State Minister of Money, Capital Markets and State Enterprise Reforms, AjithNivardCabraal and the BOI with key stakeholders are working on boosting the country’s EODB rankings,” Mohottala said.
The BOI, the key investment promotion agency of Sri Lanka was set up in 1992 expanding the scope of the Greater Colombo Economic Commission set up in 1978.
Sri Lanka is considered an attractive destination for investment due to its strategic geographic location at the crossroads of major shipping routes to South Asia, the Far East and the continents of Europe and America, making the country a convenient port of call for shipping lines and airfreight services. Sri Lanka’s proximity to the Indian sub-continent positions the country as a gateway to a market of 2.1 billion people.