March 10, 2016 (LBO) – “This is the best time to invest in Sri Lanka,” Minister of Finance Ravi Karunanayake urged at the successful Investment and Business Conclave 2016 organised by the Ceylon Chamber of Commerce, raising the question ‘Why is it the best time to invest in Sri Lanka?’
Admitting that everything is not ‘hunky-dory,’ Ranjith Fernando of the Urban Development Authority (UDA) said though Sri Lanka is still struggling, the international community is ready to help make changes, and the government is on the right track with ‘Yahapalanaya’ which translates to “a just government.”
Fernando stressed on the value of transparency, and Karunanayake said taxes in Sri Lanka have been lowered to match some of the lowest tax rates in the world.
Although tax incentives are attractive, it is not the only reason to invest in Sri Lanka, they said.
The work environment and ethical standards as well as the preferential access to two very large and fast growing markets are further reasons. Minister of Public Enterprise Kabir Hashim highlighted that Sri Lanka has highly skilled workers who are educated and speak fluent English.
The Investment and Business Conclave which concludes today was put together in about two months with the support of Sri Lanka’s foreign missions. This was a commendable feat, an official of the foreign ministry said.
More than 125 foreign participants from 27 countries and 130 Sri Lankan corporate executives were seen mingling at the conference.
Khazanah and Temasek models
Minister Kabir Hashim said Sri Lanka is studying successful models in the world and will localize them to suit Sri Lanka. The main models looked at are the Khazanah model of Malaysia and the Temasek model of Singapore.
Taking Singapore Airlines as an example of which 49 percent is owned by the government of Singapore, while the airline is managed by the balance 51 percent of private owners, the minister said Sri Lanka wants investments in which the government would have an equity stake but operations are to be managed by the investor. He also urged investors to pursue a partnership with the private sector and SOE’s.
“Sri Lanka has not had a luxurious budget to make known to the rest of the world all the benefits of investing in Sri Lanka” Head of Board of Investments (BOI), Upali Jayasuriya, said. Hence the reason that foreign investors may be hearing of these incentives for the first time.
Jayasuriya assured investors that should they address the BOI directly, he would issue a written ruling on the incentives that are on offer for those who are look to invest in Sri Lanka.
Although some participants seemed sceptical, many participants from Asian countries with worse traffic jams and more environmental pollution than Sri Lanka appeared to be receptive to the ideas presented.
Blue Ocean vs Red Ocean
Pierre Pringiers, Chair of Camso Loadstar shared his story of success and 30 years of experience in Sri Lanka. Investors enjoy the first mover advantage and low competition at this point in time as Sri Lanka is a ‘Blue ocean’ as opposed to a ‘Red ocean,’ referring to W. Chan Kim and Renée Mauborgne’s concepts.
Pringiers shared how he located his plant in the Weligama, Mirissa area long before the Southern expressway was built, while everyone tried to deter him by stating that it’s over 150km away from Colombo.
The initiative paid off, once the highway came into existence and travel time was cut down to a mere hour and half from Colombo to Weligama. “It is a greenshoot for something that will become big” was Pringiers opinion of investing in Sri Lanka.
The city today is the result of unplanned development. Which is why the ‘Metropolis Act is to come into legislature within the next 2 months’ said Ranjith Fernando. All 9 provinces of Sri Lanka will undergo change, while there will be a re-planning of the cities in the Western region with the assistance of Singapore.
Further there will be development of specific areas such as Trincomalee in the East Coast with Singapore looking into developing the city and port and a joint venture operation between Singapore, Japan, India and the government of Sri Lanka to promote tourism in the East coast said minister Malik Samarawickrama.
Kandy, a walking city
The historical city of Kandy is also to be extended due to overcrowding and it is to be made into a ‘walking city’. Samarawickrama urged investments on a PPP or Joint Venture basis.
Traffic in Colombo will ease with the implementation of the Mass transport initiative. Chair of the UDA stated that a ‘light railway’ will be implemented in Colombo with the assistance of Japan, as it is the most cost effective solution.
Further, government offices will be relocated to the Battaramulla area making Colombo the Commercial Capital, and also clearing up large areas of land, in central locations.
A booklet will be published by the UDA which will indicate all the land available and land will be leased on a 99 year basis. “Water, electricity and drainage to be supplied to developers of these lands on government expense,” Fernando said.
Dollar denominated board
Further, with the SEC Act coming into place, the Securities and Exchange Commission of Sri Lanka will have powers to regulate and thereby create a level playing field stated chairman of the Colombo Stock Exchange, Vajira Kulathilaka.
A dollar denominated board, was one of the options they were exploring, he added.
The Colombo Stock Exchange will be brought to a world-class level. BOI will be a ‘One-Stop-Shop’ where the BOI will not be the regulator but the facilitator. Also the BOI will work 16 hours a day from 6.00 am to 10.00 pm local time in order to better serve investors, Jayasuriya said.