The Board of Investment of Sri Lanka recently hosted a delegation consisting of senior officials from Chinese People’s Political consultative Conference of Shanghai (CPPCC). The delegation consisted of 6 senior officials of the communist party of China (Shanghai chapter) and was led by Mr. Xu Yibo, Vice Chairman of the CPPCC Shanghai Committee. The delegation had come on a fact finding mission to develop a greater co-operation between China and Sri Lanka.
In the course of their visit, the delegation inspected the infrastructure in Sri Lanka notably the Port and International Airport at Hambantota.
The delegation was welcomed by Mr. Upul Jayasuriya, Chairman of the BOI, who briefed them on the role of the BOI as the sole Sri Lanka Government institution established by law to attract Foreign Direct Investment. He added that by law the BOI is empowered to sign agreements with companies, to set up investment projects in Sri Lanka.
Furthermore the Chairman stated that Sri Lanka is the most business friendly country in South Asia and has entered into free trade agreements with both India and Pakistan. This signifies that if any of 4000 identified items are produced in Sri Lanka with 35% value added. These products can be exported to India to Pakistan duty free. Hence Sri Lanka was the gateway to South Asia and Chinese enterprises may seriously consider investing Sri Lanka to access those very large South Asian markets.
Jayasuriya told the delegation that Sri Lanka’s relations with China had been particularly friendly. Currently the Port city project is progressing at a speed. Furthermore China has built in Hambantota both the Port and International Airport. And the Government also signed an agreement on the Hambantota Port where Chinese companies can be established.
At a political level there had been the visit of China’s President Xi Jinping to Sri Lanka and also the visit by Sri Lanka’s President to China. However relations between the two countries go back a long time.
In 1949 Sri Lanka recognized the People’s Republic of China, the first non-communist country to do so. In fact in 1952 the two countries signed the Rice-Rubber Pact where China bought Sri Lankan rubber from more than the market price and Sri Lanka got access to 250,000 metric tons of rice from China at a time when the island suffered an acute shortage.
China and Sri Lanka have extended into many agreements including Trade Co-operation (1982) Investment Protection (1986) and double taxation avoidance (2003). Since 2013 Sri Lanka and China are engaged in negotiation to enter into a Free Trade Agreement.
Hence relations have been excellent and there was a need to look at the future and strengthen relations even further. Jayasuriya also told the Chinese side that Sri Lanka is currently engaged in the transformation of the City of Colombo. He added that the first stage is the transformation around Beira Lake, where there is considerable opportunities for investment. Hence Chinese enterprises who are interested in investing overseas should seriously consider this excellent opportunity.
Jayasuriya also added that the BOI has the statute and power to grant visas for fast movement into Sri Lanka. There is a double taxation agreement between both countries. He concluded by requesting the Chinese delegation to invite investors to visit Sri Lanka in the future and also to nominate a contact person to coordinate contacts between Sri Lanka and Shanghai.
Also participating at the discussion was Mr. Zhang Xinsheng, Member of the Standing Committee of The CPPCC Shanghai Committee Chair of Committee for Economic Affairs of The CPPCC Shanghai Committee who added that “Sri Lanka is a golden place to invest”. He stated that Shanghai being China’s major economic centre has considerable industrial potential which had grown exponentially in the last 30 years. This included manufacture of automobiles of aerospace products, the development of Port infrastructure and so many major economic activities. The cutting edge industries of China are often located in Shanghai.
In addition Shanghai also hosts Headquarters of many foreign companies and is China’s business capital. Mr. Zhang added that it would be important to find out which would be the best industries for Sri Lanka or those sought by the Government of Sri Lanka.
The BOI Chairman responded by adding that Sri Lanka’s main interest is currently in manufacturing products with higher value added and technology component which would result in the transfer of knowhow into the country as well as boost her exports. One area that Sri Lanka is particularly interested is in the assembly motor vehicles and the manufacture of automotive parts.