Sri Lanka’s BOI celebrates four decades of investment

BOI-40YEARS

In celebration of The Board of Investment of Sri Lanka, the country’s central facilitation point for investors stepping into its 40th year, a ceremony was held at the Katunayake Export Processing Zone, on 15th September. Graced by His Excellency the President, Maithripala Sirisena, Prime Minister, Ranil Wickremesinghe, Minister of Development Strategies and International Trade, Malik Samarawickrama and several key ministers, the event which was hosted by Chairman BOI, Dumindra Ratnayake and Director General, Duminda Ariyasinghe, was also well attended by significant members of the investment community, along with employees of the BOI and BOI companies, both past and present.

The proceedings commenced with the opening of the Exhibition Centre and the unveiling of a sculpture of former President J.R. Jayewardene.

Chairman BOI, Dumindra Ratnayake in his welcome address stressed on the BOI’s contribution to the economic transformation of the country, while confirming the organization’s continued commitment towards delivering on its mandate to be a driving force of the economy.

While both the President and Prime Minister addressed the gathering, a highlight of the celebrations was the distribution of awards to “Outstanding BOI Enterprises’ by both the President and the Prime Minister. 40 such organizations were honored based on criteria such as investment value, employment generation and length of operation in Sri Lanka.

In addition to this, recognition of service, of both employees of BOI enterprises as well as BOI staff themselves took place with Hon. Malik Samarawickrama, Minister of Development Strategies and International Trade along with BOI Chairman, Dumindra Ratnayake and Director General, Duminda Ariyasinghe presenting the awards.

Since its establishment in 1978, the BOI has contributed immensely to the Sri Lankan economy, by means of enhanced export earnings, diversification of the export base, creation of employment opportunities, transfer of advanced technology and skills, local skills development, infrastructure development, rural development and poverty reduction. With 1,700 projects in commercial operation and providing almost half a million employment opportunities, the BOI remains a significant change agent in transforming Sri Lanka’s economy from a largely agrarian base into the modernized, manufacturing and services based platform it is today.

Among the top 10 countries that have invested in Sri Lanka are countries from the Asian region including Malaysia, Hong Kong, China, India and Singapore.

Table: Top 10 Countries invested in Sri Lanka (2005-2016)

Rank Country Total Foreign Investment

US $ mn

1 Malaysia 1,452
2 Hong Kong 1,145
3 China 1,110
4 United Kingdom 1,001
5 India 991
6 Netherlands 778 778
7 Mauritius 610
8 Singapore 584
9 United Arab Emirates 575
10 United States of America 406

Source: Board of Investment of Sri Lanka

Industries operating under the BOI contribute over 70% of the country’s total export earnings and 85% of the national industrial export earnings.

New products include garments, machinery, electronics & electrical accessories, automotive components, rubber, plastics, ceramics & related products and building equipment. In 2016, export earnings from the apparel industry exceeded US $ 4 billion. Sri Lanka has become a major supplier of apparel to the United States and the European Union, representing 87% of total apparel exports in 2016.

Agricultural exports limited to primary products were gradually converted to value added products and manufacturing industries. As a result, foreign exchange earnings from agricultural products have also increased. Export of tea in consumer packets or tea bags, rubber tyres and tubes, coconut based products such as mattresses and rugs are popular examples. Sri Lanka has also become the market leader in solid tyres in the global market. Camso Loadstar, a leading global solid tyre manufacturing company undertakes its manufacturing business in Sri Lanka.

The BOI has greatly facilitated the generation of employment as foreign investments generate a large number of employment opportunities. This is mainly done through investments in manufacturing industries and service sectors. To date BOI approved investment projects have created about 500,000 direct employment opportunities. Female employees represent a higher percentage than male employees in the BOI projects. Out of the total number of employees in the EPZs operating under the Board of Investment of Sri Lanka, 57% represent female employees.

Furthermore, there are many forms of indirect employment opportunities and income generating activities that have been created by the investment projects of the BOI. Providing lodging facilities for the employees of the export processing zones, providing transport services and opening of shops are a few examples.

Among the investment projects operating under the BOI, a high level of investments can be seen in the specialized manufacturing industries, communication sector, tourism sector, logistic services, knowledge services and infrastructure sector projects. In the specialized manufacturing industries one of the most highly specialized is the production of sensors for aircrafts and export to the world market. These devices are also exported to Europe and USA for Airbus 330. Factors such as the high quality of the product and 100% accuracy have paved the way for these products to being exported to companies holding world famous brand names.

The maritime cable system (SEA-ME-WE 5), which is connected to 17 countries worldwide, covers a wide spectrum of the telecommunication industry. This new cable system has become a major factor to get effectively connected to the Internet services. Based on the support of the maritime cable system (SEA-ME-WE 5), Sri Lanka expects to achieve the digital social goals of “SMART 2020” and also to become the most attractive data management center in the region by the year 2020.

Travel & Tourism as well as the logistics sector are sectors with high potential for new investment and creation of job opportunities. Many world renowned brands in both of these sectors are in the process of expanding their business operations in Sri Lanka.

The BOI has also identified the Knowledge services sector as a high potential sector for attracting investment and creating employment opportunities of a high standard. A number of internationally reputed companies in this sector are already operating businesses in Sri Lanka under the BOI facilitation. A trend of attracting youth towards the knowledge services sector can be expected by creating job opportunities for youth with higher educational qualifications, through the investment projects in this sector.

With regards to infrastructure, many power projects have already been started with foreign investment in the infrastructure sector. In addition, large scale infrastructure projects such as port development and construction of highways undertaken with the partnership of the Government have had a great impact on attracting foreign investment.

The Colombo harbor handles over 5 million of 20 foot TEUs of cargo annually with the services of four container terminals. The Colombo port is ranked as the 23rd best port by the Alphaliner index, 2017. The strategic geographical positioning of Sri Lanka in the region is a highly beneficial factor when undertaking transportation within Asia and to European countries within a minimum time period.

The Board of Investment of Sri Lanka currently provides services to about 1,700 investment projects to operate their business. The BOI staff provide effective services throughout from the point of start up to operating one’s business, providing all facilitation and protection.

The staff provided by the BOI comprise professionals such as lawyers, engineers, accountants and economists as well as graduates and postgraduate qualified executive officers. The Board of Investment of Sri Lanka is the only investment promotion agency in South Asia that directly provides custom services to investors, thus making the BOI special in its facilitation service.

BOI staff have also been privileged to be part of training programmes conducted by Harvard University’s Centre for International Development, Mc Kinsey Consulting and the World Bank Group.

The Board of Investment of Sri Lanka has given priority to attract foreign investment to achieve the development goals set out in line with the government’s economic strategies. Accordingly, the establishment of 6 new investment zones by the year 2020 is a main target. Promotion activities are under way to attract investors to establish carefully selected industries in the new zones and also to invest in the new service sectors. Enhanced national exports of the country by producing new goods and services for export and creating employment opportunities of high standard are the other targets of these investments. The Board of Investment in Sri Lanka is in the fore front to contribute towards the sustainable development of the country by generating suitable employment opportunities for the educated youth and thereby increasing their standard of living.

The Board of Investment (BOI) has commenced introducing a new business model, the first being the signing of an Agreement of Expressing of Interest with an investor to develop a new export processing zone in Milleniya in the Kalutara district. What is significant about this model is that the investor is responsible not only for the development of the zone but also to attract new investors to the zone.

The BOI is also taking steps to attract more investment through the bilateral free trade agreements with India and Pakistan. Expectation for attracting new investments will be further enhanced by the prospective bilateral free trade agreements proposed to be signed between China and Sri Lanka, as well as Singapore and Sri Lanka, in the near future. “The Board of Investment of Sri Lanka is committed to be an active partner in the Country’s economy and play its role as the engine of growth”, said Chairman Ratnayake.

(Media Release)