Interview: Malik Samarawickrama
Which sectors offer the most promising opportunities for foreign direct investment (FDI)?
MALIK SAMARAWICKRAMA: There is immense potential in tourism, manufacturing, logistics, ICT and large-scale infrastructure. Boosting FDI, in particular exporting-catalysing FDI, is a government priority. The government’s target is $5bn by 2020, up from $1.63bn in 2017, and this is seen as realistic.
Hambantota Port has already been restructured. Converting it into a public-private partnership (PPP) project with China Merchant Port Holdings and the interconnected Hambantota Industrial Zone will attract sizeable manufacturing and process-oriented FDI. This includes petrochemicals, chemical and synthetic materials, and logistics. The proposed Horana, Milleniya and Bingiriya export processing zones, and the Charlie-Mount in Weligama offer further FDI opportunities. They are earmarked for the manufacturing of automotive and electrical/electronic components and sub-assemblies. They are also open to pharmaceuticals and other manufacturing or process-oriented sectors.
Development of and improvements in transport infrastructure, including elevated highways and light rail transit, is also being considered under the PPP model to attract FDI. The Port City and the Financial City will allow ample FDI flow through real estate and tourism projects. Overall, Sri Lanka presents a variety of opportunities for FDI in a stable business environment in South Asia. The free-trade agreement (FTA) with Singapore is considered a significant step forward, signalling to the world that Sri Lanka is ready for business. The other FTA negotiations with India and China will position Sri Lanka as an attractive investment destination in the fast-growing South Asian subcontinent.
The Board of Investment is being restructured to become an FDI promoter and facilitator, moving away from its role as a mere regulator and administrator. These opportunities are strengthened by updated laws and the establishment of new ones. One example is the Inland Revenue Law, which will become effective on April 1, 2018. Additionally, the National Trade Policy and the new Exchange Management Act will together establish a transparent and a stable policy for investors.
How will the EU Generalised System of Preferences Plus (GSP+) impact Sri Lanka’s exports?
SAMARAWICKRAMA: The EU GSP+ was a lost opportunity, and regaining it was necessary for the economy to regain momentum. The results are already visible in the apparel segment, which has gained its lost ground. There are many other industries that can enjoy such benefits, which can also attract FDI. The agriculture sector – particularly fruits and vegetables, aquaculture, agro-processing and horticulture – is a key growth area in the medium term. Investors with proven experience in developing high-quality and competitive products can easily exploit such opportunities. We encourage them to do so, as it enables us to grow exports and attract FDI. This can also contribute to national economic growth and value-added employment.
What challenges can arise from the country’s shift towards a knowledge-based economy?
SAMARAWICKRAMA: Sri Lanka is an outlier in the subcontinent, with a high UN Human Development Index score of over 0.75 and a 93% literacy rate – comparable to advanced regional economies. The government has invested heavily in the health, education and well-being of its people. However, more must be done to meet human resource demands, especially in manufacturing and commerce. I consider this to be more of an opportunity than a challenge. We are reforming our tertiary and vocational education systems to develop an educated workforce and give them the skills needed in a knowledge-based economy. This can be easily built on the foundation of a highly literate society. Liberal trade policies and catalytic FDI, combined with critical know-how, will enable Sri Lanka to accelerate the transition.
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