BOI’s role critical in overcoming forex challenges-BOI Chief | Sunday Observer

BOI’s role critical in overcoming forex challenges-BOI Chief

19 December, 2021
Raja Edirisuriya
Raja Edirisuriya

The present forex challenges are mainly due to falling remittances from expatriate workers, and all-time low earnings from the pandemic-stricken tourism sector. Heavy foreign debt settlements have also added pressure to the local currency. Against this background, the role of the BOI is critical, in terms of attracting export catalysing FDI, said newly-appointed BOI Chairman Raja Edirisuriya in an interview with the Sunday Observer on Friday.

He also spoke of re-examining BOI rules and regulations in achieving near-term and long-term goals to boost the Sri Lankan economy as well as strategies to be adopted.

Excerpts of the interview:

Q: How would the BOI rules and regulations be re-examined in keeping with ‘Vistas of Prosperity’ manifesto of the President?

A: The President’s manifesto clearly articulates the following economic ambitions to which the BOI is a key contributor: economic growth of 6.5% or higher, GDP per capita above $ 6,500, an unemployment rate below 4% and a stable Rupee.

Considering its overall contribution to the economy, it goes without saying that the Board of Investment is a key orchestrator in making these goals a reality.

With a focus on growing export-catalysing Foreign Direct Investment and expanding our country’s services sector, the BOI’s efforts directly impact economic growth, per capita income and creates direct and indirect employment opportunities across a number of sectors.

Exports of goods and services will further boost foreign remittances - which is the need of the hour to stabilise the Sri Lankan currency.

All of the above needs to be taken into consideration against a volatile and competitive global economy which is still adjusting to the shocks of the pandemic.

Once this is established, we need to examine what is needed to make the BOI an agile and resourceful organisation, to deliver this tough task. To this end, we have identified the following:

Step one would be enabling the BOI to provide a seamless and effective service towards facilitating investment. This requires some amendments to be brought in to strengthen and empower the BOI law. These include revising Schedule B of the BOI Law No. 4 of 1978 to include recent laws on taxation, foreign exchange and trade; reinstating powers that were previously vested within the BOI in respect of granting approval for project proposals - BOI should be the sole authority in approving FDI projects; and revising the existing BOI regulations in respect of investment thresholds, investment criteria etc.

Q: What are the BOI’s near term and long term goals?

A: Any near term goals have to be aligned with the long term goals mentioned before and will be prioritised based on the effective contribution towards these long term goals and economic ambitions. They are as follows:

Introducing and refining policies to boost five key verticals (thrust sectors) that have been identified for export diversifications: ICT; manufacturing - pharmaceuticals, value added apparel, electronics and electrical products, rubber products; agriculture and fisheries; tourism and hospitality; and infrastructure. Introducing a new ‘Single Window’ platform to streamline and ease the application process addressing time lags and other administrative bugs.

Essentially, simplifying the processes at the BOI and selected line agencies, via a virtual platform, with formal inter-agency partnerships and service level agreements, including performance monitoring and evaluation systems. Such a platform will deliver process simplification and transparency related to project approval. Digitisation of the organisation is already underway, with significant improvements already rolled out with respect to customs handling, via the BOI’s Investor Services Department. Integration of the BOI Visa recommendation system with the Ministry of Defense has also been completed, and integration with the Department of Immigration will be done shortly. This momentum will be maintained through proposed improvements to the internal management information system along with a comprehensive revamping of the BOI website which already includes details of Structured Government and Private Sector Projects opportunities and an online Job Bank among other recently developed elements.

The long term objectives we have identified mirror those of the President. They are: doubling total investment as a percentage of GDP from 2.6% in 2019 to 5.0% by 2026, increase FDI as a percentage of GDP from 1.4% in 2019 to 3.5% by 2026, increase Annual FDI from $ 1.2 Bn in 2019 to $ 4.1 Bn by 2026, increase Local Investment from $ 1 Bn in 2019 to 1.7 Bn by 2026, and to increase annual export earnings from BOI merchandise sector from $ 7.9 in 2019 Bn to US$ 13 Bn by 2025.

Q: What is the BOI’s current contribution to the economy and how would it be boosted?

A:Since its establishment in 1978, the BOI has been a pillar of the Sri Lankan economy, through enhanced export earnings, diversification of the export product basket, creation of employment, technology and skills transfer and infrastructure, as well as rural development and poverty reduction.

At present, about 1,600 enterprises operate under the purview of the BOI, of which 280 projects are operating within its zones. These projects range across manufacturing industries, tourism, utilities and infrastructure to agriculture and service sectors, with over 800 projects in the manufacturing sector including apparel. The total employment through BOI enterprises exceeds 520,000.

At present, BOI enterprises account for over 85% of national industrial exports and an estimated 66% of our country’s total export earnings.

Q: What are the new strategies the BOI would adopt to attract investment?

A: The BOI is building capacity in zones and sector specific infrastructure, and there is an ambition to create $1 Bn export verticals in the textile and pharmaceutical sectors, as an extension to initiatives currently under-way which will initially focus on backward integration of local supply chains for the apparel industry and import substitution for the pharmaceutical sector.

Further emphasis has been placed on establishing four zones focused on agro-processing, electric and electronic appliances, steel and heavy industry as well as the ICT sector in Hambantota, Henegama and Sooriyawewa and Mirijjawila.

The BOI will also have to collaborate with the Department of Commerce and the Foreign Ministry to increase the number of preferential trade agreements Sri Lanka enjoys with foreign markets, which is a key component of the value proposition we can offer investors.

Another essential factor will be a favorable and predictable policy environment which I believe is being created a lot of good work already underway, starting with the tax reforms in end 2019 and the budget proposals introduced in 2022.

Q: What is the BOI’s role in overcoming the current forex challenges?

A:The present forex challenges are mainly due to falling remittances from expatriate workers and all-time low earnings from the pandemic-stricken tourism sector. Heavy foreign debt settlements have also added pressure to the local currency.

Against this background the role of the BOI is critical, in terms of attracting export catalysing FDI. This will not only ease domestic pressure by creating employment, but more so, it will deepen and widen our country’s export basket, and boosting exports is the need of the hour, given that it directly impacts our country’s forex receivables. FDI also impacts the foreign reserves via capital formation and import substitution which limits forex outflows.

We can see an encouraging trend where merchandise exports of BOI companies in 2021 stand at USD 7.5 Bn which shows a double-digit growth of 23% compared to 2020 while surpassing 2019 year-to-date export revenue as well.

Q: What strengths would you bring from your past experiences in your new role as the BOI Chairman?

A: In early 2006, former President Mahinda Rajapaksa appointed me chairman of Sri Lanka’s State Engineering Corporation. I was able to turn around this loss making entity with five thousand employees within the short space of nine months, recording an operating profit of Rs. 103 million by the end of 2006 - the first profit recorded since 1981.

I was also tasked with the re-launch of Mihin Lanka in 2009, so I am no stranger to challenges.

I also count considerable administrative experience overseas as Administrator and the City Engineer with the City of Chino, California, a position I held for almost 16 years. I believe my experience and overseas exposure will bring in key perspectives that will help transform the BOI into an even more efficient, investor oriented organization.

Q: What are your other roles apart from the BOI Chairmanship and how would they correlate?

A: I assumed duties as the Executive Project Management Director for Colombo Port City Development Project in December last year. As you may know, the Colombo Port City Development Project was recently gazetted as a National Prioritized Project, directly under the purview ofthe President.

The BOI also falls directly under the purview of the President. Therefore, I believe my roles will be complementary to each other, as we spearhead economic development through these critical players in the national economy- the BOI and Port City.

Q: What is your message to the BOI staff and prospective investors?

A: While appreciating the contribution of the BOI staff and also the BOI enterprises, in reviving the pandemic-stricken economy and boosting exports, I extend my hand to all staff to join me in working together towards making the Government’s key objectives of economic prosperity for all citizens, a reality.