Prof. G.L.Peiris speaks |
Minister of Export Development and International Trade G.L. Peiris is flying to India shortly in a bid to whip up enthusiasm amongst US companies there to invest in Sri Lanka as the war winds down.
Addressing an EU Sri Lanka business summit organized by the European Chamber of Commerce of Sri Lanka (ECCSL) on Wednesday, he said he was hoping to meet companies active in New Delhi, Mumbai and Hyderabad in this initiative.
The government, he added, is focused on building up trade and investment in infrastructure development, healthcare, agriculture and other sectors in the post-conflict era.
Prof. Peiris said terrorism which is considered to be the most fundamental challenge to the government is about to be overcome and consigned to history, adding that terrorism has prevented the exploitation of Sri Lanka’s development to maximum potential.
The government is trying to consolidate existing markets such as the European Union and the US and find new markets in countries such as Turkey, Vietnam, Brazil, Mexico and former Soviet Union states. He said the EU gives Sri Lanka an advantage with its GSP+ scheme on which Sri Lanka is currently engaged in a complex process of negotiation in Brussels to extend the facility. Prof. Peiris said there are certain conditions on several matters but Sri Lanka will not submit to an investigation.
In order to mitigate the effects of the global financial crisis in Sri Lanka, he said the government has intervened in several key industries. The apparel industry which brought in US$3.1 billion to the country in 2008 is facing problems although its performance has improved over the last three months. The conditions for the stimulus package to the apparel sector to enable it to remain competitive were no retrenchment and the government gave companies 5% of its total quantum of foreign exchange earnings.
He said the ceramics industry in which Sri Lankan companies are performing well has also run into problems due to falling demand and falling income in export countries. The government has reduced the price of furnace oil, diesel and kerosene for industrial purposes. Furthermore, companies will most likely be able to sell more of their products in the local market following modifications in their Board of Investment (BOI) agreements. The industry has asked for a 10% increase to the current quota of 20% which Prof. Peiris said the government is likely to agree to.
BOI’s Director of Promotions and Mega Projects Vidharshan Fernando said the development of the north and east is a key issue for the government and are looking to attract investors in fundamental areas such as services, agriculture, education and hotels and leisure holidays. Mr. Fernando outlined the tax incentives for investors which include anywhere from five to 10-year tax holidays based on a minimum investment and the number of persons employed in the eastern province. He said an investment mission to the northern province has been scheduled only after August 2009.
In the services sector for the east, the government is looking to create training institutions, hospitals and hotels amongst others. Five year tax holidays require a minimum investment of Rs.30 million and 50 persons employed while a 10-year tax holiday requires a minimum investment of Rs.30 million and 200 persons employed.
In the agriculture sector in the east, which Mr. Fernando said is considered to be the most difficult area by the BOI, the government is looking at several projects in farming with advanced technology, distribution, collection and marketing. A 10-year tax holiday requires a minimum investment of Rs.15 million and 20 persons employed.
In the education sector also in the east, Mr. Fernando said there are five, eight and 10-year tax holidays depending on the number of people employed. BOI registered training institutions will be exempted from Value Added Tax (VAT). Mr. Fernando added that the relocation of industry or factories from Colombo and the Gampaha Districts to the north or east will be eligible for tax concessions. Furthermore, the rehabilitation of sick industries other than apparel will be given a 10-year tax exemption with conditions.
Mr. Fernando said the BOI has identified Trincomalee as a Special Economic Zone and that future plans include a proposed coal project with the Ceylon Electricity Board (CEB). He added that around 4000 rooms are required in the eastern region for hotels and leisure holidays. Around 400 acres of land is to be developed for tourism in Pasikudah Beach.
There is also an event scheduled to be held in June in Arugam Bay which is expected to attract wind surfers.
Mr. Fernando said assistance is also required by way of financial grants or aid schemes for small and medium enterprise (SME) development. |
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