Sri Lanka examines constraints in doing business in Colombo
President Mahinda Rajapaksa is currently in discussion with relevant authorities on investor related issues pertaining to re-considering the minimum amount on BOI investments and land ownership by overseas nationals for business in Sri Lanka.
Currently, authorities were in discussion with the President on re-considering the minimum amount foreign investors need to invest in the country, Deputy Economic Development Minister M.L.A.M. Hisbullah said last week.
These observations were made during an interview with the Business Times with Deputy Minister Hisbullah and the Belgium business delegation visiting Colombo on the sidelines of the latter’s “Multisectoral Trade Mission to Bangladesh and Sri Lanka”.
The seminar and visit was organized by the European Chamber of Commerce in Sri Lanka.
Mr. Hisbullah observed that the reason for prescribed levels of investments was to protect the local investors. They were now looking at allowing lower investments from areas that were not ventured into in Sri Lanka.
In addition, they were also in discussion even with President Rajapaksa on the minimum amount on overseas investments adding that Economic Development Minister Basil Rajapaksa had also been in discussion on this matter.
Mr. Hisbullah also noted that Minister Rajapaksa had been in discussion with the Indian authorities on the Free Trade Agreement (FTA) related issues concerning investors on entering the neighbouring market.
He noted that they welcomed investments in the hospitality sector in addition to other areas as this was a key focus area of the government.
However, investors opined that they were not satisfied with the current issues pertaining to the purchase and ownership of land by overseas investors and pointed this out as a deterrent to entering the hotel sector.
Belgium Consul for Sri Lanka Pierre Pringiers termed the land restrictions on ownership as having a “freezing effect” and asked for full clarity.
He also noted that the FTA that Sri Lanka signed with India and Pakistan were also critical since they sought to enter these markets via Colombo.
In this respect, he highlighted that a tobacco company and another sausage manufacturer that sought to enter India was unable to do so but it was currently on the list under the FTA with Sri Lanka. The tobacco company had looked at manufacturing cigars in Colombo and exporting to India and from there to rest of the world, Mr. Pringiers said however, this proved futile as they were unable to penetrate the market via the FTA with Sri Lanka.
During his speech to the business community in Colombo, he noted that they were concerned about the minimum threshold on investments at US$500,000 as it would directly affect any SMEs seeking investing in the country.
Belgium investments in the country were already engaged in the hospitality sector and Lodestar was one of them that moved into the hydropower, yacht, boat building and marina industries, Mr. Pringiers said.
During the interview the Flanders Investment and Trade organisation’s Trade and Investment Commissioner Jos De Clercq said that a majority of their delegation was SME based industries with the larger ones engaged in dredging, engineering, construction and infrastructure development. Investments worth between Euro 500, 000 to one million were seeking opportunities during this visit that comprised 14 companies.
However, he pointed out that they required a clear list from the BOI on the possible investments in the country.
Belgium is currently the fourth largest market in the EU having trade ties with Sri Lanka. A large number of exports from Sri Lanka to Belgium were in diamonds and rubber and imports were in diamonds, malt extracts and pharmaceuticals.
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