An organization that is at the forefront of securing Foreign Direct Investment to Sri Lanka is the Board of Investment. The individual tasked with leading and positioning Sri Lanka as a compelling investment destination is its Chairman Sanjaya Mohottala. We caught up with him for a conversation and to gain a perspective on the challenges at hand and the progress made so far.
I understand that this is a difficult time economically and for organizations such as the BOI, but let’s start off with some positives. Ever since you assumed duties at the BOI last year, can you take us through some of the worthy initiatives that you have been working on?
One of our key initiatives has been to conceptualise our future through the development of a cohesive and far reaching strategy. Our aim is to double per capita GDP for the country within this decade by transforming Sri Lanka into a lucrative Investment hub.
This strategy includes ten-point strategic priories to create a compelling investment climate in the country to springboard from. It consists of identifying thrust sectors, policy orchestration, focused approach in attracting target investments we need on the one hand and also providing end to end support to facilitate the setting up of investment in the country.
In this regard I am happy to note that we are developing two new industrial zones, one being in Eravur, and the other in Hambantota. The zones have been dedicated for apparel and Pharma respectively with the aim of achieving import substitution and exports of USD1Bn from each of the sectors. We are also looking at developing one or two more zones within the country for agri-processing and rubber and technology.
On top of this, with the guidance of the Hon. Basil Rajapaksa, the BOI, along with other line agencies, have set the foundation to build upto 10 large scale dairy farms, and provide necessary land for feed cultivation and other requirements. I am pleased to say that renowned international and local investors and other stakeholders have demonstrated interest to invest in these initiatives. By developing these large scale farms at top the pyramid, we expect the benefits to trickle down to medium scale farms and then to the rural households who tend to few cattle there by reaching the goals of achieving inclusive growth as well as being self-sufficient in milk production in the medium to long term
To equalize the playing field and place Sri Lanka on par with other countries like Malaysia and Thailand, we have been able to initiate and offer tax breaks for new investors investing in thrust sectors as outlined in the 2021 budget.
With these initiatives, despite the pandemic, in 2020 alone, BOI has granted approvals for 143 projects worth USD 2.2Bn, and had seen capital formation of USD1.4Bn, of which, 50% was received as FDI and the balance was invested by BOI local companies expanding their manufacturing footprint taking advantage of compelling value proposition Sri Lanka offers
Speaking on the pandemic, we have also been instrumental in facilitating and supporting businesses during the COVID pandemic so that they can remain open and in operation throughout. Support has come in many forms to keeping our zones open and providing critical services 24×7, to issuing curfew passes for companies to function while adhering to Ministry of Health guidelines. I must take a moment here to appreciate the efforts made by the Ministry of Health, covid-19 task force and all other agencies for supporting us in developing pragmatic and practical guidelines for these companies to continue operation unhindered and thereby, for our economy to remain open during these trying time.
We have also initiated migrating the customs process online with Sri Lankan Customs Department which would provide for a more efficient service with the Sri Lanka customs. As we speak, we are also looking at further enhancements jointly, which we are planning to launch in due course.
A multi-pronged outreach programme has also been launched to elevate Sri Lanka’s image with investors and persuade them to invest in Sri Lanka. Recently concluded Sri Lanka Investment Forum 2021 (SLIF2021) a three day virtual investor conference jointly organized by the Board of Investment, The Ceylon Chamber of Commerce and the Colombo Stock Exchange featured over 100 speakers, virtually attended by 1500+inevestors, showcased a catalogue of almost fifty large scale FDI projects valued at over USD 5 billion, detailing opportunities to invest in Sri Lanka across multiple sectors ranging from hospitality and leisure, infrastructure, renewable energy to oil and gas. We have also deepened relationships with the diplomatic community, and we are working with the Sri Lankan high commissions of targeted countries to convert potential leads.
The BOI is also partnering with multiple stakeholders in the form of industry associations such as SLASSCOM, business chambers, key institutions, and policy makers who are all contributing much needed muscle power to facilitate the attraction of investments into the country.
This is just a few of the initiatives that has been rolled out last year or so.
During your address on the day you assumed duties you spoke of how Sri Lanka can be enhanced as an attractive investment destination. If you could give that speech today, what would you change in it?
The opportunity still remains large, where both Sri Lanka and potential investors alike can benefit significantly. Looking back over the past 1.5years, several critical aspects of key metrics like the ease of doing business and policy implementation have been set in motion, while other policies have already been implemented, and while still more policies are in the process of being implemented.
The path that Sri Lanka has opted to take to be a regionally competitive powerhouse continues to remain relevant. However, speed is of the essence and we need to double down swiftly, implement initiatives, and catch up on lost time due to the Covid-19 pandemic.
For those potential investors who are willing to make use of this emerging opportunity at the earliest, I would ask them to look at Sri Lanka a lot more seriously than they may have looked at the country one year ago.
One compelling reason I would ask potential investors to observe is Sri Lanka’s resilient economy, which has contracted by just over 3%, largely attributable to the loss of economic activity suffered as a result of lockdowns, business disruptions and due to the setbacks due to lack of tourism – one of our key thrust sectors, owing to the pandemic and also the Easter 2019 attacks. When we look at some other countries, we see how their economies have contracted by much more, and only on account of the pandemic.
That resilience accrues as a result of the country’s ability to manage the economic slump experienced by tightening our belts and keeping the economy alive through the turmoil.
You are a keen supporter of technology transfer, upskilling the workforce, and the need to grow the ICT/tech knowledge sector of the economy. Why is it relevant today?
As we progress, Sri Lanka will transition from a factor/investment driven economy to a knowledge driven economy. The transition will enable the country to experience a significant economic uplift and create an upwardly mobile workforce whose skills can be kept relevant in an evolving technology and ICT landscape.
For this to take shape, the government has already taken measures to develop a talent pool that can cater to this need in the short and medium to long term. In the short term, entities such as SLASSCOM, ICTA and Ministry of Higher Education has been implementing a well-orchestrated plan to build tech parks, working with universities to increase the number of seats for technology graduates, providing online education, changing curriculum etc . The government is also implementing and further evaluating additional initiatives to re-skill non-IT graduates by retraining them in ICT, so that they too could contribute meaningfully to the growth trajectory of the country.
But we do recognize the need to infuse 3X -5X the number of graduates both from government and private universities, if we are to fulfill this ambition on a continuous basis. It is here that we need to work cohesively with private universities and establish avenues for deserving individuals to attain globally recognized and relevant education that can facilitate this as well.
Furthermore, as a country, Sri Lanka has a young talent pool with a near perfect literacy rate and at least 30% who are computer literate. This signifies the makings of a very capable and potential workforce of the future. However, we also recognize that language capability, especially the English language, is also a vital component that our workforce needs to be conversant in. It is also important for us as a country to place more emphasis on introducing curricula that incorporates critical thinking, reasoning, innovation and leadership skills, which are important requirements for jobs of the future.
How can BOI become a one stop shop to enhance ease of doing business and provide seamless investment facilitation?
Currently, we strive to ensure all applications are processed within the same week through a structured process and then granted approval. Our newer zones are built in such a way that clearances required are obtained in advance for multiple types of activities anticipated to be engaged in these zones. A case in point is the zone dedicated for pharma in the Hambantota, where all pre-requisite environmental approvals have been obtained for any type of drug manufacturing. We are also in the process of introducing online approval and finalizing the re-modernization of the BOI to provide visibility of the investment approval pathway.
How are you overcoming the obstacles/red tape or bureaucracy that prevents the BOI from achieving this feat?
Our fundamental objective is to achieve the doubling of per capita GDP and the cornerstone to achieve this is agility in responsiveness. Recognizing this need, the BOI has been elevated as an entity that provides direction to the economy and has been brought directly under the purview of His Excellency the president.
In addition, to facilitate policy orchestration and resolve challenges that cut across multiple sectors, a cabinet subcommittee for investments has also been set up, along with a standing committee, to evaluate complex investment proposals, which is chaired by the Secretary to the Treasury.
The appointment of the honorable Minister Namal Rajapakse to look into and resolve any issue pertaining to new investments taking off the ground, has also paved the way for a more streamlined issue resolution, which is a very welcome initiative.
We are also happy to note that the BOI’s close relationship with key regulatory bodies such as the CEA and other ministries that provide critical infrastructure like power and water, has resulted in issues that come under this purview to be resolved in a timely manner.
The COVID-19 global pandemic has had far and wide ranging impact on not just Sri Lanka but the world over. How does a small economy as that of Sri Lanka stay afloat in such troubling times?
As I have already mentioned, Sri Lanka has always been a resilient nation, and the country has emerged out of many challenges it has experienced over the last few decades. Today the country has risen to a per capita GDP of $4000. This means that as consumer affluence grows there is a heavy reliance on imports to fulfill their needs. However, as the country continues to cope with the setbacks faced by the tourist industry that generates $4bn annually to the country as a result of the pandemic, we must work together as one nation and balance economic activities in terms of inflows and outflows and ensure the liquidation and timely conversion of foreign exchange receipts to achieve overall stability of the economy over time.
The Port City has been sanctioned by parliament. What are your views on the Port City? The Economic Commission?
For us to gain traction in our economy, a service hub like the Port City is a vital necessity. This is a symbiotic partnership that has the potential to accelerate our growth story and position us lucratively on the world stage of investment.
As we move forward, Port City will host 80,000 -100,000 occupants who will require not only office space, but also accommodation, recreation, food and entertainment requirements, which will need to be sourced and supplied from beyond the Port City.
This will result in a multiplier effect which will be much larger and more transformative for a country like Sri Lanka. We believe that it is a much needed and much required part of the national agenda.