Sri Lanka's investment opportunities
Sri Lanka's probusiness regulatory system, streamlined approval process, tax incentives and strategic location in the South Asian region, have opened new and varied horizons to foreign and local investors. There were 138 projects, with an estimated investment totaling Rs 24,439 million contracted from January to October, 1997. Foreign and local investment accounted for Rs 14,683 million and Rs 9,755 million respectively. The projects approved include housing, radio and television networks, diesel power generator plants, and leather and steel plants, epitomizing the expanding opportunities for both foreign and local investors. These enterprises will generate more than 25,000 employment opportunities at capacity operation.
In regards to export processing zones (EPZs), the Kandy Industrial Park is an important concept in the planning of regional development in Sri Lanka. It enables foreign and local entrepreneurs to locate their industries in selected zones while using indigenous raw materials for the manufacture of products.
The Kandy Industrial Park has three enterprises in commercial operations with others in the pipeline. Two major EPZs at Katunayake and Biyagama are reaching saturation point. A new export processing zone has been established at Malwatte and an industrial park is being set up at Mirigama.
High performance levels achieved by Board of Investment (BOI) enterprises are evident in the fields of export earnings and employment generation. The value of annual export earnings registered a sharp increase from Rs 3,827 million in 1985, Rs 17,525 million in 1990, to Rs 113,363 million in 1996. Exports of BOI companies involving a diverse range of goods, including garments, rubber and leather products, electrical and electronic items as well as nonmetallic mineral products have maintained the momentum attained during the past decade. Exports of BOI enterprises accounted for 80.1 percent of Sri Lanka's manufactured exports in 1996.
The 1990s have witnessed a perceptible shift in the sectoral composition of investments, resulting in the services sector emerging as the single largest sector in terms of both the number of projects contracted and the quantum of investment.
Collaborative ventures have been set up for such projects as the development of urban and industrial infrastructure, cellular mobile services, data communications, ship repair services, specialized warehouse services, television stations, and business radio communications networks.
Reputed companies from Asia, Europe, North America and Australia have set up high profile and successful ventures to tap the growing opportunities offered by the Sri Lankan market.
In keeping with the liberal investment policy of Sri Lanka, BOI offers one of Asia's finest incentive packages to investors, covering a broad spectrum of industrial activities. They consist of the enhanced package of incentives for new and existing industries as well as the incentives traditionally available to BOI enterprises.
The enhanced incentives are in line with and in addition to the new and existing concessions available through the Inland Revenue Law. The objectives of the enhanced incentives are to promote the diversification of Sri Lanka's export industries toward higher technology and value addition; and to promote investment in large development projects with special emphasis on infrastructure.
Sri Lanka's investment laws are transparent and automatic across a wide range of sectors. The BOI Law has wide-ranging powers to grant exemptions from identified laws of the country, including Inland Revenue, Exchange Control, and Customs. The BOI is structured to function as a central facilitation point to investors.
Sri Lanka offers one of the most liberal environments for investment anywhere in Asia.
* Total foreign ownership is permitted in virtually all areas of the economy.
* There are no restrictions on repatriation of earnings, fees and capital and on foreign exchange transactions relating to current account payments.
* The safety of foreign investments is guaranteed by the constitution.
* A sophisticated legal and regulatory framework covering, among others, intellectual property, settlement of disputes through arbitration and company law.
* Bilateral investment protection agreements with 20 countries and double tax relief agreements with 25 countries.
* Equal treatment for foreign and local investors under the investment and general laws of the country.
In addition, Sri Lanka possesses a comparative advantage in South Asia in terms of location, human resources, tourist potential, sectors for investment, infrastructure, electronics, light engineering, recreation and leisure projects, agriculture, dairy and livestock projects, mining and processing of nonrenewable resources, computer software, rubber products, gems and jewelry, textiles, garments and accessories, and services.