Investors at a key investment forum in Colombo this week were eager to ascertain the status of the Board of Investment (BOI) following an exclusive Sunday Times report last week that the 32 year-old institution would be abolished and replaced with a more effective body with wider powers.
While BOI Chairman Jayampathi was non-committal when drawn to comment on the future of the institution at an investor forum titled “Sri Lanka Unveiled - Importing Wealth” which saw the participation of 10 businessmen from the US and Canada along with a host of local participants, an email poll by the Business Times showed that most respondents were in favour of a new organization replacing the BOI.
Dr. Indrajit Coomaraswamy, former Director Economic Affairs at the Britain’s Commonwealth Secretariat who was present at the meeting, told this newspaper the BOI should be restructured as it still existed as an old model. A vibrant investment promotion agency is vital for the country after the end of the war to attract much needed foreign direct investment, he said. The poll among 400 respondents which drew responses from former top chamber officials and also former BOI chiefs, found 53.8% saying they were in favour of the BOI being scrapped and replaced with a new investment promotion agency.
Some 23 % were opposed to the change while another 23 % were undecided essentially because a government announcement was yet to be made about the change. The Sunday Times report last week quoted officials as saying the BOI was found to be outdated and lacked vibrancy particularly at a time when Sri Lanka had to move fast to attract investments and catch up on lost time from nearly 30 years of conflict. It also said tax incentives would be reduced and instead a conducive environment with better infrastructure offered as the government was losing revenue from these tax holidays and other tax breaks.
At the forum the BOI Chairman however noted that the institution’s scope and structure should be widened and that the tax system would be broad based in the November budget, adding that the BOI will take a new shape to meet the present needs. Forum Moderator Rishard Cambell, Chief Executive Officer Thani Group told the Business Times that he was not satisfied with Mr Bandaranayake’s response and they would have to wait till the next budget before going ahead with plans to invest in Sri Lanka. The government should give tax concessions and other incentives to attract investors, he said. However he said their mission in Sri Lanka was successful and they hope to make the first move before the entry of other investors.
The email poll sought responses to two questions with the second one being whether tax holidays and incentives should be reduced for foreigners. Here 43.5 % of the respondents were against cutting incentives while 38% favoured cuts while 19 % were undecided.
Dr. Coomaraswamy, who was also a top official at the Finance Ministry when Ronnie de Mel was the minister in the 1980s, was of the view that there was no need for generous tax concessions to investors as the investment climate had improved.
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