Why Invest in Sri Lanka
- Sunday, 14 February 2016
Highly Encouraging Government Policies
Sri Lanka was the first country in the south Asia to liberalize many areas of the economy. Government policy offers very attractive incentives to investors. These incentives include;
- Total foreign ownership is permitted for many areas in the economy
- No restrictions on repatriation of earnings, fees, capital, and on forex transactions relating to current account payments
- Safety of foreign investment is guaranteed by the constitution
- Existence of a transparent and sophisticated legal and regulatory framework
- Covering all prerequisite business law enactments
- Bilateral investment protection agreements with 27 countries (including Brazil) and double taxation avoidance agreements with 38 countries (including Brazil)
In addition to the above, investment has a safeguard against expropriation and non-commercial risks since Sri Lanka is a member of the Multilateral Investment Guarantee Agency (MIGA).
Strong Resilient Economy
Sri Lanka has been able to maintain a very healthy progress during the last couple of years, despite several global and domestic challenges. The economy recorded a healthy economic growth rate of 6.4 per cent in 2012 while the preceding two years witnessed a robust growth rate of over 8 per cent. The inflation rate has been maintained at single digit level since 2009 keeping the consumer confidence.
Peaceful domestic environment, favorable government policies and improved investor confidence have facilitated all the key sectors to demonstrate a remarkable performance continually during the last few years.
Highly Educated and Adaptable Workforce
Sri Lanka has a highly literate population with a literacy rate of 92.2% (2012).
Extensive investment in public education has produced a workforce that is not only competent but intelligent, trainable and comfortable with high tech production and services. Approximately 50% of the students who have completed higher education are trained in technical and business disciplines. English is widely spoken and is the main language used by the business community.
Economic and Social Infrastructure
Massive infrastructure development projects implemented over the last few years and measures taken to strengthen the human capital base have resulted in expanding the productive capacity of the economy.
The Government of Sri Lanka has taken special measures to develop a sound economic infrastructure base especially in the areas of ports, airports, roads, railroads, irrigation, energy and water supply.
Sri Lanka is a firm proponent of international laws and UN’s rights of labour, children and women. The country has an edge over its regional competitors because of its stringent adherence to child labour laws and endorsement of gender equality.
Sri Lanka leads the South Asian region in human development indices with its high literacy rate and national health indicators. The country has a high life expectancy of 75.1 years (2012) and a low infant mortality rate of 9.5 per 1,000 live births (2009).
Strategic Location and Connectivity to the Rest of the World
Sri Lanka is situated at the crossroads of major shipping routes connecting South Asia, Far East and the Pacific with Europe and the Americas. Sri Lanka is strategically located next to the fast growing Indian sub-continent with close proximity to Southeast Asia and the Middle East. The country has strong air connectivity with over 100 weekly flights to India alone.
Sri Lanka is connected to the SEA-ME-WE III and IV (South East Asia – Middle East – Western Europe) fibre optic communication backbone with over 11 communication satellites orbiting above the south of the country.
Access to Key Markets in Asia
Sri Lanka is the only country to have separate Free Trade Agreements with both India and Pakistan. These two Agreements provide duty free access to a market base of over 1.4 billion consumers. In addition to these two agreements, Sri Lanka is a member of South Asian Free Trade Area (SAFTA) and the Asia–Pacific Trade Agreement (APTA). By locating in Sri Lanka, a company can gain preferential trade access to key markets in Asia.
Indo-Sri Lanka Free Trade Agreement (ISLFTA):
- The ISLFTA provides duty free access for over 4,200 Sri Lankan products (India is the world’s second most populous market in the world after China). Since the agreement was signed bi-lateral trade between Sri Lanka and India have grown more than 7 times. Sri Lanka’s exports to India have grown more than 9 times.
- The ISFTA has created market for new products manufactured in Sri Lanka. These products include bottle coolers, MDF boards, furniture, apparel, rubber gloves, glass bottles, processed meat products, confectionary & bakery products, new pneumatic tyres, copper wires, boats, trailer parts, tiles, bath wares, rubber slippers, marble, electrical panel boards, machinery parts, multi-walled paper sacks, Insulated wiring sets and cables, jewellery items, cocoa products, animal feed, ceramic products, cosmetic products etc.
- Following are the new potential products which can be exported under the ISFTA.
Transmission apparatus, electrical apparatus, motor vehicle parts, automatic data processing machine parts, polyethylene, electronic integrated circuits, newsprint rolls or sheets, aircraft parts, computer data storage units, medicaments, cashew nuts, dried shelled black or green gram beans, printing machineries, static converters, parts of vacuum pumps, taps and similar appliances, cargo vessels, diesel and semi-diesel engine parts, electric power handling transformers, appliances used in medical or veterinary sciences, dried shelled leguminous vegetables, tire cord fabric made of nylon or other polyamides and viscose, bicycle parts, chemicals, mineral substances, non industrial diamonds.
Pakistan – Sri Lanka Free Trade Agreement (PSFTA):
- The Pakistan – Sri Lanka Free Trade Agreement (PSFTA) provides duty free access for nearly 4,500 Sri Lankan products. Since the agreement was signed bi-lateral trade between Sri Lanka and Pakistan have grown more than 4 times. Sri Lanka’s exports to India have increases by around 3 times.
- A range of new products have penetrated into the Pakistan market after the implementation of the PSFTA. These new products include items such as sports goods, edible oil, porcelain tableware & kitchenware, ceramic tiles, furniture, electrical switches and sockets, herbal cosmetic products and plastic articles, gems & Jewellery, paints, glass paintings, leather products, frozen fish, prawns, lobsters, crabs, cut flowers and foliage, fresh pineapple, tamarind with seeds and aquarium fish.
- Following are the new potential products which can be exported under the PSFTA.
paints & varnishes, activated carbon, apparel & clothing accessories, pheumatic tyres, inner tubes of rubber, surgical gloves, rubber gloves, gasket/washers/other seals of rubber, trunks suitcases and similar containers, hand bags, gloves mittens and knitted, belts of leather, cases, boxes , crates, handles for tools, brooms or brushes, doors, door- frames and thresholds, statuettes and other ornaments of wood, labels, badges ad similar woven articles, t- shirts singlets and other vests of cotton knitted, gloves impregnated, coated or covered with plastics or rubber, gloves, footwear, tiles, ceramic wares, tableware and kitchenware, toilet articles of porcelain, parts of electrical transformers, electrical plugs or sockets, electrical apparatus, precious or semi-precious stones, bicycles, office and bedroom furniture, prefabricated buildings, brooms and brushes, cut flowers, foliage, bananas, pineapple, avacados, papaya, strawberries, durians, sweet biscuits, jams, fruit jellies, preserved fruit & other parts of plants, mixture of juices, sauces, food preparations, coir
South Asian Free Trade Area (SAFTA):
- All the products other than 1241 products lines to Bangladesh; 150 products lines to Bhutan; 868 products lines to India; 681 products lines to Maldives; 1257 products lines to Nepal; 1072 products lines to Afghanistan and 1169 products lines to Pakistan can be exported to respective member countries on duty free/preferential duty basis.
- Following are the new potential products which can be exported to some of the key member countries under the SAFTA.
desiccated coconut, vegetable fats, non –Industrial diamonds, coconut milk powder, gloves, Antibiotics, refined copper (unwrought), rubber articles, wire bars
margarines, optical instruments, antibiotics, parts of aero planes & helicopters, Parts & accessories of automatic data processing machines
Non industrial diamonds, Coir fibre pith, Rubber tyres, Worked precious stones, Gloves, Fish (frozen), Electrical transformers, Board and panel of apparatus
worked precious stones, pepper, rubber tyres, gloves, cinnamon quills, wire bars, standard wire cables of copper, electrical transformers
desiccated coconut, pepper, cinnamon quills, antibiotics, parts of aero planes & helicopters, worked precious stones, other rubber articles, margarine
copra, coconut milk powder, pepper, cloves, other fabrics dyed (cotton), aluminum alloys, fish, cinnamon quills, gloves, Refined copper (unwrought)
Asia–Pacific Trade Agreement (APTA):
- Sri Lanka can export 1697 product lines to China, 570 product lines to India, 1367 to product lines South Korea and 209 product lines to Bangladesh on duty free/ preferential duty basis under the APTA.
- Following are the new potential products which can be exported to some of the key member countries under the APTA.
Fish fillets and fish meat, herrings & cod, Citrus fruit, Desiccated coconuts, sweet potatoes, water chest nut, cuttle-fish & squid, Betel nuts, Bananas and plantains, prepared feed additives, Fruits (pineapples, mangoes, avocadoes, guavas, mangosteens), vegetable juices, Personal toilet preparations shaving preparations, Hair preparations, shampoos, Tiles, Mattress, Panty hose, tights, tobacco, Footwear, Inner tubes of rubber, Sacks and bags, Worked monumental / building stone & art, wind-jackets, overcoats, capes Oil-cake, Board & panels, Plastic packing goods, lids, caps, closures, Wire, Ice skates & Rollers skates , Interchangeable tool, woven fabrics of glass fibres, Footwear, crude coconut (copra) oil
Pepper, Natural graphite, Zinc oxide, Gloves, overcoats, raincoats, car-boats, capes, cloaks, Fixed capacitors, Machines for balancing mechanical parts, Lead monoxide, Rock drilling or earth boring tools, Tobacco
To South Korea:
Cut flowers; Cloves; Fruits; Dried fruit; Margarine; furniture; Article of plastic; Footwear; Electronic integrated circuits and micro assemblies; Refined copper and copper alloys, Insulated wire/cable; Board & panels; fuses; Electrical capacitors; Meat of bovine animals; Beauty/make-up & skin-care preparations; Printed circuits; Aircraft parts; Sacks and bags; Woven fabrics; bakery products; confectionery; Garment; Knitted or crocheted fabrics; Shawls, scarves etc; Prepared or preserved meat, meat offal; Tableware, kitchenware; toiletry articles; Coconut (copra); Medicinal plants; Umbrellas and sun umbrellas; Diamonds; Imitation jeweler; Panty hose etc; Carpentry of wood; Fishing vessels and factory ships; Buttons, button moulds etc; Sausages; Children‘s books; Paints & varnishes; Carpets and other textile floor coverings; Cocoa paste; Artificial flowers; Cocoa beans; Women's overcoat; Blankets and travelling rugs; Rubberized textile fabrics; Mineral & aerated waters; Cocoa butter; Hair preparations; Vegetable saps & extracts; toilet preparations shaving preparations, deodorant; Fish; Copper wire; Cigars & cigarettes; Prefabricated buildings; Mica; Ferrous waste and scrap; Worked monumental/building stone & art; Medicament mixtures; Animal or vegetable fertilizers; Stationery; glass bottles; Springs and leaves for springs; kitchen or tableware For more details on trade Agreements visit http://www.doc.gov.lk
Fast Developing Infrastructure
Development of Sea Port and Airport:
The government has declared its intention to develop the country as a leading regional aviation, navigation and trading hub in South Asia. Following are the major projects under taken by the Government to achieve this target.
- Colombo South Port Expansion
- Hambantota Port Development
- Expansion of Bandaranaike International Airport
- Development of a second International airport at Mattala
Development of High Mobility Road Network:
Government’s ‘National Road Master Plan’ focuses on the construction of highways, widening of highways, effective road maintenance & rehabilitation and bridge rehabilitation & reconstruction. Following are some of the major road development projects in progress;
- Colombo - Katunayake Expressway (25km)
- Southern Highway (126km)
- Outer Circular Highway (28km)
- Colombo - Kandy Highway (98km)
- Katunayake - Padeniya - Anuradhapura (153km)
Development of Power & Energy Sector:
Ambitions planes are under way to increase the national grid from 2817 MW to 4732 MW (by 2016). Major power projects undertaken by the Government to achive this target include;
- Norochcholai Coal Power Project
- Upper Kothmale Hydro Power Project (UKHP)
- Trincomalee Coal Power Project
Telecommunication Infrastructure Development:
Sri Lanka is connected to the South East Asia-Middle East-West Europe 4 (SEA-ME-WE IV) project, the submarine cable system linking South East Asia to Europe via the Indian Sub-Continent and Middle East. SEA-ME-WE 4 fiber optics cables provide a bandwidth capacity of 1.28 terabits per second, with a 25 year guaranteed lifespan for the technology. This revolutionary submarine cable system offers Sri Lanka an immense bandwidth advantage, and paves the way to make Sri Lanka a globally competitive business hub.
Vibrant Business Environment
Sri Lankan economy was liberalized in 1978. Since then, successive governments have further liberalized the economy, leading to deregulation, greater privatization and opening the economy to international competition. Now Sri Lanka is ranked as the most liberalized economy in south Asia. Transparent investment laws aim to foster foreign direct investments. Sri Lankan commercial laws are based on British laws and country has a highly independent judicial system.
Sri Lanka has dynamic and resilient private sector, which if necessary can be joint venture partners for foreign investors. However, foreign investors are allowed to own 100% ownership of an investment. Concessions granted under an agreement with the Board of Investment (BOI) - for qualifying investment projects - remain valid over the lifetime of the enterprise.
Investment Protection and Avoidance of Double Taxation
Sri Lanka is one of the safest countries in the world to invest in due to a number of mechanisms in place to protect investors. Article 157 of the country’s constitution guarantees the safety of investment protection treaties and agreements approved by parliament by a two thirds majority.
Sri Lanka has signed bilateral Investment Protection Agreements (IPA) with 27 countries including Brazil.
Sri Lanka also has bilateral Double Tax Avoidance Agreements with 38 countries including Brazil.
For more details visit http://www.investsrilanka.com