Various media reports have made unsubstantiated statements that the Board of Investment, functioning under the Ministry of Development Strategies and International Trade alleging that the institution has failed to attract or facilitate investment, particularly foreign direct investment into the country. The Ministry states that these allegations are baseless.
Foreign Direct Investment into Sri Lanka had been performing poorly, but with the efforts that BOI was taking, it has begun to turn around.
Following are the uncompromising moves that the Board of Investment has taken from 2015 upto now;
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 realised FDI figure of US $ 1.9 bn. for 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. for the restructuring of Hambantota Port. The targeted FDI value for year 2018 is US $ 2.5 bn and at the end of the first half of the year, a sum of US $ 1.4 bn. is realised.
No new export processing zones have been built for the past 18 years. By now, almost all 16 zones operated by the BOI are full, except Meerigama EPZ and the Mirijjawila Export Processing Zone that is now being integrated and developed as the Hambantota Industrial Zone. In 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 NWS and DB.
A significant volume of investment is in the pipeline for year 2018, around US $ 32 bn., most of which are in export oriented manufacturing. Implementing most of these projects are delayed due to issues pertaining to land allocation and various delays in 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 BOI and respective line ministries/state agencies.
A special program was initiated to promote re-investment encouraging the existing investors to reinvest, expand or upgrade their businesses through facilitating and solving their bottlenecks. Accordingly, by end of first quarter 2018 around US $ 25 mn. re-investment was recorded.
BOI has identified the targeted sectors for attracting FDI 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 mechanise 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 programs are being implemented to attract FDI in the export manufacturing sectors of electric and electronic products, food and beverage, ship and boat building, IT/BPO, pharmaceuticals, automobile parts and services.
One other strategy was to target specific markets to attract FDI. The intention was to attract leading global business players to invest in Sri Lanka. Within 2018, such targeted investment promotion programs were successfully held in Germany, Japan, and Singapore. It is expected to undertake another investment promotion program in Mumbai in the first quarter of 2019.