Sri Lanka is a skills powerhouse, with the best living environment in South Asia, a senior official said.
Additionally, Sri Lanka is the place to work, live and enjoy life,
Sanjaya Mohottala, chairman of the Board of Investment tolad a forum Wednesday.
“We have an extremely educated, trainable and capable workforce,”
“Digital literacy is close to 50%. 30% of the population are computer literate. We also have an almost 100% youth literacy rate.”
The full context of the speech is below
Investing in Asia Next Growth Haven
Chairman BOI, Mr. Sanjaya Mohottala
Good morning, good afternoon, good evening, wherever you are. We have over a thousand potential investors who have signed up for this three day event. Thank you for your time. Many of you have seen and experienced how mesmerizing Sri Lanka and its hospitality can be. But beyond this beauty, there’s so much more. Please allow me to introduce to you the hidden gem of Asia.
My presentation will focus on the strong fundamentals Sri Lanka possesses its growth ambitions which are doubling GDP and policy and investment orchestration to realize it, resulting in investment opportunities for investors to make
Sri Lanka, Asia’s next growth haven
Strategically located strong economy with access to emerging and established markets, that’s what Sri Lanka is
Postwar Sri Lanka has grown rapidly, averaging a GDP growth of 5% CAGR, despite recent challenging years. The country is at the inflection point with US$4000 per capita GDP, which is around three times South Asia’s average, with the right policy orchestration. This is when typically economies take off. The next wave of rapid growth is anticipated in South Asia and East Africa. Sri Lanka is very strategically positioned to leverage growth opportunities. In addition, with two world class ports and three international airports, Sri Lanka is a transshipment hub and is fast becoming the epi-center of South Asia.
Sri Lanka is also able to trade with its South Asian neighbours without any hindrances, providing access to closely over three billion consumers from one strategic location. It is a skills powerhouse, with the best living environment in South Asia. Additionally, Sri Lanka is the place to work, live and enjoy life. We have an extremely educated, trainable and capable workforce. Digital literacy is close to 50%. 30% of the population are computer literate. We also have an almost 100% youth literacy rate.
As you saw in the beginning of this presentation we are an island of Charm. We have something for everyone, whether it be business or leisure. We have been recognized frequently and rated number one as the most livable city and with the highest quality of life in South Asia. Sri Lanka’s decade of growth is offering multi-sector investment opportunities. Traditionally, we are known for our tea, rubber, coconut and apparel. But if you look at this chart, you’ll see that Sri Lanka has much more to offer a potential investor. As outlined in his manifesto, His Excellency, the President, Hon. Gotabaya Rajapaksa, we have laid the foundations to double the GDP during the next decade, taking advantage of strong fundamentals that the country had to offer and also the economic tailwinds. By creating a compelling investment, climate and specific investment opportunities, Sri Lanka offers a Win-Win for investors as well as its nationals.
Let me start from the top and explain what this means.
In order to achieve the vision of doubling the GDP over the next 10 years. Sri Lanka has identified six catalytic sectors and key subsectors to attract investment to usher inclusive growth.
Let me start with manufacturing. Today, BOI companies account for 85% of all industrial exports from Sri Lanka. While supporting existing industries to expand, BOI is also looking to orchestrate and help several key manufacturing sectors to take root in the country to reach US$ 1 billion export or import substitution by 2025. Let me provide a few examples. Pharmaceutical manufacturing and upstream apparel, which I will speak later at lengthand electronics manufacturing, especially taking advantage of emerging technology platforms like graphite, which in turn, can take advantage of high purity vein graphite that is available in Sri Lanka, and graphene extraction technologies again, which are available and patent in Sri Lanka.
We are looking to earn a US$ 3 billion dollar export revenue by 2025. Again, I will take you though in detail later on.
The revised plan post covid is to achieve close to USD 8 billion dollars in terms of revenue, ushering in four million tourists, more than doubling the tourist market we had in 2019, creating lucrative investment opportunities in the sector.
Agri and food processing
We are looking to add USD 3-5 billion dollars additional export revenue through rubber products, agri and food processing and through the export of fisheries. Sri Lanka is already known to be the global capital for solid tyres. Top tyre manufacturers have already taken root in Sri Lanka, along with tyre exports and vibrant rubber based products manufacturing close to US$ 1 billion worth of exports today. With the recent expansions and the projects in the pipeline, the overall exports expect to reach US$ 1.8 billion by 2023, well on the way to create a US$2.5 billion export market by 2025. Given the recent policy thrust to embrace organic farming, global food manufacturers have an unprecedented opportunity to take advantage of sourcing organic produce for food processing to cater to rising global wellness trends. With our vast coastlines and extensive exclusive economic zones, Sri Lanka can increase aquaculture and marine exports multifold, emulating countries like Indonesia and the Nordics, which have effectively harnessed its aquatic resources.
Other services and infrastructure
Then comes other services and infrastructure. Sri Lanka has been sought after as a manufacturing destination by 1200 foreign companies currently investing in Sri Lanka. With the completion of the port city and its legislation to support service related sectors to take root like trading, banking, insurance and maritime services, this would be an attractive destination, much like of Dubai, Qatar and Labuan for companies looking to set up their headquarters or regional hubs. As the country doubles GDP, infrastructure such as apartments, road networks and rapid transits would be required to cater to an upwardly mobile urban population, creating unprecedented opportunity for infrastructure investors.
Now let’s look at the strategic enablers to keep the compelling low cost advantage, create ease of doing business and create a low risk business environment for the investors. As a government, which is pro-development, it has taken many steps to improve the country’s competitiveness and future readiness. Many initiatives are underway to ensure current cost competitiveness is maintained, significantly improving the ease of doing business. We have already introduced a tax policy consistency, and above all, a stable government in place. In addition, the much awaited port city law has created a premium investment destination to catalyze the thrust sectors I spoke to you about earlier.
Doubling the GDP in 10 years, Sri Lanka becomes Asia’s next growth haven. With investors capitalizing on the investment opportunity outlined and the government’s focus on inclusive growth, Sri Lanka can achieve a sustained GDP growth north of 7% and export and services income earnings of more than US$ 30 billion by 2025.
Building on the strong talent pool to facilitate and shift into a knowledge based economy, government has set in motion education reforms to align to future talent needs and also measures to increase the quality graduate output by three times. Sri Lanka will continue to maintain its liberal investment policies, allowing 100% foreign ownership and to repatriate earnings without any hidden taxes or constraints. Let me take you through a few select sectors that offer significant investment opportunities over the next three days. In depth and detailed sessions and one-on-one sessions will be held for investors covering all the sectors that I outlined.
A Dedicated Pharma zone with industry leading incentives $1B+ opportunity by 2025
The Sri Lankan Government has taken measures to build a strong local pharma industry to cater to the country’s needs, and to build a new export vertical taking advantage of the skilled talent pools, existing pharma operations as well as the geopolitical shifts we have all seen and experienced. A state of the art 400-acre pharma zone is being built adjoining the Hambantota port and the international airport, with easy access to both sea and air logistics. The environmental and other pre-clearances allow for any type of drug manufacturing to take place from APIs to generics to oncology, thereby reducing set up time significantly for any potential investor. To support this strategic initiative, the Government is offering generous tax breaks up to 10 years and customized incentive packages will be offered for larger investors.
World’s most ethical apparel sourcing destination
Sri Lanka has a strong heritage in apparel and has been exporting since the mid-1960s. Apparel sector employs nearly 400,000 direct employment, servicing some of the world’s most popular brand names. Sri Lanka is the most ethical sourcing destination in terms of fair labour practices. Building on these strong fundamentals by expanding upstream capabilities, we are looking to be the most environmentally friendly sourcing destination as well. Opportunity exists for investors to set up factories to localize up to US$1 billion worth of raw material imports to increase supply chain resilience and supply chain agility and cater to growing demands of manufactures and buyers.
Sri Lanka is the fastest growing ICT hub in South Asia and we are aiming for US$3 billion exports, doubling what we do today by 2025. Dubbed the island of ingenuity, Sri Lankan code powers multiple stock exchanges, boardrooms, banks, theme parks and many other critical entities. Sri Lanka looks to double ICT related exports by investing in developing world class talent pools, enabling infrastructure such as high-speed internet even down to the rural communities, developing 5 focused technology IT parks and introducing new legislation to orchestrate and catalyze the startup eco system. And we have already seen the benefits. A Global player like HCL who set up recently in Sri Lanka are expanding rapidly to take advantage of the quality talent pool Sri Lanka offers. Recognizing the importance of this sector, the Government has introduced 0% corporate taxes for ICT companies.
TOURISM – the best place to visit targeting US$8 billion worth of revenue, 4 million tourist arrivals post covid by 2025. Whether you are a Sun, Sea and Sand seeker or love 2500 years of heritage, or are into wellness or looking for one of the best destinations for wildlife or looking for a melting pot of cuisines, Sri Lanka offers something unique and caters to whatever your heart desires. It is this that makes us “SO Sri Lanka”. To take advantage of this growth, there are investment opportunities in the hospitality industry, especially in world class hotels, medical tourism and wellness, in building world class theme parks, and the breakout sessions and sector sessions will provide you with and in-depth look at the opportunities available.
Growth is enabled by low cost of doing business in Sri Lanka. The 2021 budget of the new government broadly outline a 5-year policy consistency with regard to tax structure, giving much needed certainty for investors beyond attractive tax holidays that have been provided to equalize or better incentives that are offered by competing countries. As mentioned in the beginning, Sri Lanka offers one of the lowest productivity adjusted labor costs across all segments. Further, the labour force is far more loyal compared to competing destinations and salary inflation is one of the lowest in the region. For investors, BOI provides tax free capital good importation, reducing startup costs and more importantly, providing the lowest power cost in the region according to the Jetro survey. All of this, combined with labour cost and location advantages provide a compelling investor value proposition in Sri Lanka.
We are here to create High ease of doing business. There is a concerted effort underway by the government to push Sri Lanka to the top tier in ease of doing business. Since coming into power last year, the government has taken many initiatives to improve ease of doing business. To name a few, Legal reforms are being carried out, appointment of committees to look into de-regularization, a commission for customs reforms, a cabinet subcommittee to support investments in place and many more. Hon. Minister Nivard Cabral, State Minister for Money & Capital Markets & State Enterprise Reform has been entrusted to address issues pertaining to the ease of doing business to bring Sri Lanka to the top tier by 2025.
Operate in a stable and low risk business environment, Sri Lanka is ranked as the most peaceful country in South Asia. With its progressive investor friendly laws and further policy reforms that are underway, it is backed by a strong democratic institution and investor protection is guaranteed by the constitution, providing for a low risk business environment, which is waiting to be made use of for attractive business opportunities.
COLOMBO PORT CITY – The gate way to South Asia, The new addition to Colombo’s Central Business District, the Colombo port City with its newly minted legislation, aims to be on par with Dubai, Qatar and Labuan to facilitate service sectors and encourage business to set up regional HQ’s to serve close to 3 billion consumers in the region. For the real estate Investors, this offers significant opportunity to capitalize on key infrastructure builds such as hospitals, international schools, entertainment districts, mixed development projects, marina and convention centers, which are just a few options that come to my mind.
In Summary, Sri Lanka offersexiting opportunities for investors. We are looking to double our GDP within this decade. Six key thrust sectors have been identified and the policy orchestrations are under way. An Investor friendly business environment is being created for you to take advantage of.
Sri Lanka is home for over 1200 foreign companies as of today, who have been in Sri Lanka for many years. Nearly 50% of capital formation that took place in 2020 by BOI companies came from existing investors expanding their footprint to take advantage of global opportunities. It tells you the conviction they have on Sri Lanka’s opportunities and it competitiveness as a sourcing destination. Throughout the three-day conference you will hear testimonials from investors across multiple industries in respective breakouts outlining their experience in doing business in Sri Lanka.
As the chairman of BOI, I invite all of you listening today to consider Sri Lanka as your next investment destination and look forward to placing your logo here. We will help you make the most of this opportunity, as the apex investment promotion entity, and we will help you make the most of this opportunity and provide end to end facilitation to help you set up in the shortest possible time.
Sri Lanka is the next growth heaven. Take advantage.