Ministry of Dev. Strategies and Int’l Trade rejects allegations

It was observed that various media reports have made unsubstantiated statements that the BOI has failed to attract or facilitate investment, particularly foreign direct investment into the country. Those allegations are baseless

The Ministry of Development Strategies and International Trade yesterday rejected allegations that the Board of Investment (BOI) has failed to attract or facilitate investment, particularly foreign direct investment into the country.

“It was observed that various media reports have made unsubstantiated statements that the BOI has failed to attract or facilitate investment, particularly foreign direct investment into the country. Those allegations are baseless.”

Issuing a statement the ministry said:

“Foreign Direct Investment into Sri Lanka had been performing poorly, but with efforts that the BOI was taking, it has begun to turn around. Following are the series of actions taken by the Board of Investment during the period of 2015 to date;

• There has been consistent growth on the cumulative value of investments attracted, both in terms of new projects approved and ongoing projects implemented. It is to be noted that such growth was seen when the government took a deliberate decision to suspend the SDP Act as well as the granting of fiscal incentives by the BOI, until the enactment of the new Inland Revenue Act.

• The realized FDI figure of US $ 1.9 bn. for the year 2017, as stated in the Annual Report of the Central Bank, was the highest FDI received thus far and this value includes only a sum of US $ 292 mn. utilised for the restructuring of the Hambantota Port. The targeted FDI value for 2018 is US $ 2.5 bn and at the end of the first half of the year a sum of US $ 1.4 bn has come in.

• There has been a lack of export processing zones being built in the past 18 years. As of now, almost all 16 zones operated by the BOI are full, except the Mirigama EPZ and the Mirijjawila Export Processing Zone that is now being integrated and developed as the Hambantota Industrial Zone. As a consequence, a substantial number of industrial zones are located outside the BOI Zones. Existing zones also lack essential infrastructure, water, waste-water and solid waste treatment facilities etc. and these are being duly addressed at present. In view of above, it was decided to develop three new zones, in Hambantota, Millaniya and Bingiriya and these are being meticulously pursued, albeit delays in land allocation and development of requisite infrastructure by relevant state agencies; i.e. RDA, CEB and the NWSDB.

• A significant volume of investment in the pipeline for year 2018, around US $ 32 bn, most of which are in export oriented manufacturing. Implementing most of these projects have been delayed due to issues pertaining to land allocation and various delays in the respective line ministries, which are beyond the direct control of the BOI. These projects are diligently pursued by the officials of the ministry in conjunction with officials of the BOI and respective line ministries/state agencies.

• A special programme was initiated to promote re-investment, encouraging existing investors to reinvest, expand or upgrade their businesses through facilitating and solving their bottlenecks. Accordingly, by end of first quarter 2018, US $ 25 mn. worth of re-investment was recorded.

• BOI has identified the targeted sectors for attracting FDIS and enhancing export revenue through an in-depth research study in collaboration with Harvard CID and the World Bank group. In identifying the target sectors, special focus has been placed on export oriented mechanized goods as well as services with a view to enhance foreign exchange earnings and also to diversify Sri Lanka’s export basket. Accordingly, investment promotion programmes are being implemented to attract FDIS in the export manufacturing sectors of electric and electronic products, food & beverage, ship and boat building, IT/BPO, pharmaceuticals, automobile parts and services.

• One other strategy was to target specific markets to attract FDIS. The intention was to attract leading global business players to invest in Sri Lanka. Within 2018, such targeted investment promotion programmes were successfully held in Germany, Japan and Singapore. It is expected to undertake another investment promotion programme in Mumbai in the first quarter of 2019.