Development Bill to remove obstacles to growth, new tax incentives
View(s):The government will regulate and properly plan development activities in the country with the aim of accelerating economic growth and promote Foreign Direct Investments (FDI), moving away from the present system of foreign investment project approvals. A Development Special Provisions Bill has been finalised by the Prime Minister’s Ministry National Policy and Economic Affairs for this purpose and it will be submitted for the cabinet approval soon, official sources revealed. The proposed bill has provisions to expedite foreign investment project approvals, spur job growth and boost the economy by helping to train workers and investing in new technologies, a senior official of the ministry told Business Times.
It will remove the obstacles facing investors and businesses concerning obtaining of land and buildings. More provisions of the draft bill provide for land ownership to be given to registered investors who meet the required criteria, without being affected by the Land Restriction and Alienation Act. It will regulate the use and management of land and buildings, and the design and construction of buildings; make provision for the maintenance and conservation of land and buildings where appropriate; and for other purposes. It also offers tax incentives to foreign and local companies that will locate in economically depressed rural areas in the country, a senior official said adding that the proposals will facilitate the government’s one million job programme within five years.
Foreign Minister Mangala Samaraweera told parliament recently that “in order to achieve these (economic growth) results, we have to encourage foreign investment and investment by individuals. We lag behind other countries in the region when it comes to meeting investor requirements”.
Sri Lanka’s FDI inflow has been disappointing, reveals new research findings contained in the Systematic Country Diagnostic (SCD) conducted by the World Bank Group. ”FDI inflows to Sri Lanka have been largely focused on infrastructure (inclusive of real estate development), with a relatively small proportion reaching sectors of the economy that are associated with global networks of production.”
However, it looks like year 2016 (based on the performance so far) will only have 0.3 per cent of the GDP as the total FDI. This means historically low FDI performance, a senior economist told the Business Times. He noted that this was a very scary situation which needs immediate attention and thus the need for the president and the prime minister to make the Board of Investment (BOI) regain direction and get back to genuine investment promotion. At the current rate, the BOI will not even be able to attract US$300 million as FDI this year. Despite the $5 billion talk and investment announcements, the entity has lost direction and innovation, he pointed out.
The BOI has signed 16 new project agreements for the first two months of this year, a media release issued by the investment promotion agency revealed adding that those agreements represent a cumulative future investment of $110 million. The BOI and Export Development Board are expected to become implementing arms of a new, higher level policy and strategy body on development and international trade consisting of ‘proven performers from both private and public sectors following the enactment of Development special provisions bill soon, official sources said. -(Bandula)