Vision of change:


High levels of public expenditure and rapid industrial expansion supported a long period of robust macroeconomic growth, averaging more than 6% between 2008 and 2014, as the country embarked on a period of post-war reconstruction. With this boom moderating in recent years, a series of ambitious reforms and corrective monetary and fiscal policies are helping maintain stability and reinvigorate the economy.

6 10 16 17 21 22 29 37 38 40 41 43 44 Page 50 Sri Lanka in brief Inclusive governance: Consistent growth and positive population indicators continue to be attributes of the post-civil war period Interview: President Maithripala Sirisena Renewed influence: Alongside fiscal reform, new and reinstated trade deals look set to drive economic progress Viewpoint: Prime Minister Ranil Wickremesinghe On the road: China’s Belt and Road Initiative is reshaping Asia Big business: Export outflows and investment inflows are set to grow based on a multipronged approach Interview: Greg Hands, UK Minister of State for Trade Policy Business Barometer: Sri Lanka CEO Survey Interview: Malik Samarawickrama, Minister of Development Strategies and International Trade Here to help: Reforms are laid out to improve the investment climate Viewpoint: Stuart Tait, Regional Head of Commercial Banking, Asia Pacific, HSBC Global village: Medium-term prospects suggest globalisation is set to continue for the foreseeable future 45 47 48 50 60 61 62 63 65 66 70 76 77 79 80 86 91 92 93 94 Targeting tariffs: A new strategy aims to increase trade volumes and investment by lowering a number of taxes and simplifying policies Interview: Dumindra Ratnayaka, Chairperson, Board of Investment Unlocking concessions: Reinstatement of trade preferences with the EU benefits key industries Vision of change: The reform agenda is leading a transition towards sustainable, longterm development Duties to serve: Tax reforms and the new Inland Revenue Act aim to bolster the federal budget Interview: Mangala Samaraweera, Minister of Finance and Media Interview: Changyong Rhee, Director, IMF Asia and Pacific Department Allied forces: The government looks to support increased investment through the utilisation and diversification of public-private partnerships Interview: Rajendra Theagarajah, Chairman, Ceylon Chamber of Commerce Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economies A new era: Long-awaited regulatory reforms, moderate credit growth and strong macroeconomic indicators bode well for the sector Interview: Indrajit Coomaraswamy, Governor, Central Bank of Sri Lanka Open market: Strong growth at private banks offers a number of new opportunities for investors Credit where due: More moderate lending growth forecast for Sri Lanka’s banks due to stricter monetary policies Fintech revolution: Financial technology solutions are driving the evolution of the sector landscape Market overhaul: Significant reforms look to strengthen regulation, increase efficiency and broaden the range of products available in Sri Lanka Interview: Ray Abeywardena, Chairman, Colombo Stock Exchange Interview: Dilshan Wirasekara, Director and CEO, First Capital Market analysis provided by First Capital On the up: Stock market Tools of the trade: Bond market Evolving environment: Alongside regulator policies, the sector is developing as firms capitalise on an underpenetrated market Reassuring trend: New reinsurance programmes are bolstering coverage against natural disasters in emerging markets Interview: Ajith Gunawardena, CEO, Ceylinco General Insurance Plotting the course: State planning sets the groundwork to address electricity shortages, while incorporating long-term development Interview: Ranjith Siyambalapitiya, Minister of Power and Renewable Energy Multi-pronged approach: Reliability issues for hydro and thermal point to liquefied natural gas as the medium-term energy fix Clean goals: Embracing potential to be a renewable energy powerhouse Stepping carefully: Authorities strive to overcome energy output challenges Transformation period: Strategies are being adapted in order to maintain sector competitiveness Interview: Nandana Ekanayake, CEO, Siam City Cement (Lanka) New horizons: Government targets new markets and supports small businesses to boost export economy Under the auspices of the newly released economic development strategy Vision 2025, moves are being made to transform the country into a trans-shipment and logistics hub. Recent years have seen authorities create a more supportive environment for private and foreign players, showing that the sector is open for investment.

96 100 102 104 110 111 113 115 118 122 123 Page 131 Park life: Expansion of economic zones under way in order to attract international investment The rise of retail: Long-term forecasts are strong with new projects in the pipeline Charting development: National strategies increase private investment across the transport sector Interview: Julian Bevis, Senior Director, Group Relations, South Asia, Maersk Group Hit the road running: On the back of significant improvements across the nation’s roads, the government secures funding for further upgrades Unloading debts: Authorities sell off majority stakes in state-owned infrastructure From the ground up: Positive developments amid a year of unfavourable weather that dampened output across multiple agricultural segments Interview: Navin Dissanayake, Minister of Plantation Industries Protecting producers: Crop insurance and other programmes aim to lessen the effects of adverse climate conditions on farmers Powering ahead: Large projects are moving forward despite rising input costs Building the base: Steady progress is made on the foundation of the new port city Interview: Qitao Liu, Chairman, China Communications Construction Company Centre of attention: The country’s fastchanging demographics are driving demand in a range of different property segments Buying in: Proposed laws set to accelerate foreign interest in local property Interview: Anthony Couse, CEO, JLL Asia Pacific Interview: Sumedha Ratnayake, DirectorGeneral, Urban Development Authority Sustainable urbanisation: As urban populations undergo rapid growth worldwide, authorities strive to create efficient spaces 125 126 131 138 139 141 145 150 151 154 159 160 161 166 167 168 169 Full steam ahead: The fast-growing tourism industry is poised to become a key contributor to economic expansion Interview: Sutheash Balasubramaniam, Managing Director, Sri Lanka Tourism Promotion Bureau Central focus: Additional air routes and niche offerings are expected to increase the number of Indian visitors Positive outlook: Increased connectivity and international collaboration are driving ICT development Interview: Jeevan Gnanam, CEO, Orion City Getting started: As it works to overcome initial funding problems, the island is emerging as an important location for highvalue start-ups Strong demand: Despite issues with network speed, the sale and usage of smartphones is growing steadily Sharing responsibility: Private health care providers to fill infrastructure gaps as demand rises Promoting pharmaceuticals: As health care provision expands, demand for both local and imported pharmaceutical products is steadily rising Untapped potential: Efforts are under way to expand access and enhance quality in education Interview: Lakshman Dissanayake, ViceChancellor, University of Colombo On the job: Development and promotion of technical and vocational training key to improving employment rates PwC Duties explained: Application of tax rules for companies and individuals Viewpoint: Sujeewa Mudalige, CEO, PwC Sri Lanka John Wilson Partners Reformed revenue: Notable updates to the Inland Revenue Act and Foreign Exchange Act instituted by Parliament Viewpoint: John Wilson, Managing Proprietor, John Wilson Partners Unwind in style: Hotel listings Listings: Important phone numbers Facts for visitors: Useful tips for travelling in Sri Lanka 172 178 179 182 189 190 192 194 198 202 206 207 212 218 220 226 228 231 232 Traditionally the backbone of the economy, agriculture represented 7.1% of Sri Lanka’s GDP in 2016, with rural agriculture, forestry and fisheries industries the source of income for more than 2.1m locals. As investment in technology from the private sector increases, the authorities are looking to modernise productivity and help mitigate Page 145 Renewed growth in the construction industry is being supported by a combination of mega-projects with international partners, strong domestic demand and public infrastructure investments. Following a slowdown in 2015, the sector is once again enjoying double-digit growth and an ever-increasing presence of global investors.

Page 154 As Sri Lanka’s second-largest industry after textiles and garments, tourism represents an opportunity to generate revenue and create jobs. With the number of visitors expected to reach 4.5m by 2020, sector authorities are looking at developing new markets while simultaneously preserving assets, conserving the environment and involving locals.

Page 172 As the first country in South Asia to roll out a nationwide 4G network, the mobile market is highly competitive and home to a number of major tech companies. Connectivity is improving quickly, innovation is broadly supported and the government is making significant investments in e-governance.

Page 182


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