Hambantota: the catalyst in resurgence

By Shirajiv SIRIMANE

Ignored for several decades by colonial rulers as well as successive governments, Hambantota today is being converted to one of the most important economic land markets of the country.

A new international harbour and airport, along with an international convention centre are being built. Peacock Beach Hotel is re-investing to convert their two star property to a four star while the private sector too has stepped in to reinforce capital to the area.

The new Board of Investment (BOI) Chairman cum Managing Director, Jayampathi Bandaranayake too stamped this point.

In a special interview with the Sunday Observer he said that Hambantota will play an important part in Sri Lanka's future development and in the resurgence of the economy of the country. "That's why the BOI will be focusing on the South to attract planned investments in and around the new mega city."

Excerpts from the interview:

Q: The new harbour and airport in Hambantota, how important would they be for the country?

A: Hambantota will be a new city built from scratch and will have an excellent infrastructure, which is an important selling point for the BOI when seeking to attract new investment, with excellent connectivity such as through the Southern Highway and also air connectivity.

What is important to understand is that Hambantota will be unlike any other city, with a brand new international airport, favouring direct access to investors and airfreight capability. It is a new dimension of development for this country inviting potential investors from within as well as abroad.

We will also soon appreciate the significance of having a new harbour, which is at the crossroads of some of the busiest shipping lanes in the world. The port will play a keyrole in the development of the country and will be one of the busiest as Asian economic development will fuel a growth in demand for shipping services.

Q: How positive were Indian investors?

A: We have to understand that for any investor, including those who came from India, a picture is worth a thousand words. What I mean by that is that there is no better way of understanding the situation in a country, than to get a first hand impression, from travel and by holding discussions with all the important stakeholders in that country. That's precisely what the Indian entrepreneurs who came to Colombo were able to do during the IIFA event.

Based on my own discussions with the Indian entrepreneurs and from the statements they made at the forum, I would say that the Indian side was very positive, optimistic and even pleasantly surprised as to the immense potential of this country both as a travel and investment destination.

What better assurance could Indian investors obtain than the warm welcome and support they received from President Mahinda Rajapaksa who in his keynote address spoke of some of the challenges that were overcome to make Sri Lanka an attractive destination and how this will be sustained. Q: What are the investment targets for 2011?

A: The BOI has set a target of achieving US$ 1 billion in terms of FDI in 2010, as per the existing plans of the BOI.

There are a substantial number of investment agreements signed as legally binding agreements running into a few billion dollars in FDIs .

We need to deal with fasttracking and realising these investments by understanding what these impediments to implementation are. This country has great scope to improve implementation of its existing programmes without creating yet more programs.

On an urgent basis we are negotiating with the potential investors as well as state agencies to understand and deal with the impediments to fast implementation.

We will reaffirm our targets once this exercise is over and I can say with certainty that if we are focused and are single-minded in implementation with the many connected organs of State working in harmony towards the goal of national development, we will surprise ourselves as to the true potential of this country.

Q: What would be tourism's role in this?

A: The role of tourism in the national economy has always been important. Tourism will grow in importance now that hostilities have ceased and peace has returned. The characteristic smile is fast returning to the faces of the millions of Sri Lankans particularly the less privileged. Also, as a result of the return of the Northern and Eastern Provinces, Sri Lanka's tourism product has much more to offer than what it had before.

Finally, tourism is able to provide many opportunities for direct and also indirect employment. My concern is the availability of trained and competent people to fill the many job opportunities that will open up over the next three to five years.

It is important to consider tourism as a strategic industry with the potential of becoming the single biggest earner of foreign exchange. Hence tourism needs to be continually upgraded and that can be achieved through investment.

That is why the Government has tasked several agencies to co-ordinate the various services to increase the current hotel room capacity of 15,000 by an additional 50,000 by 2016. This involves not just attracting investment but also developing of training centres and other faculties, creating the necessary skilled human resources upon which this service industry ultimately depends.

Q: How do you see the CEPA Agreement?

A: This matter I understand is currently under discussion, and the Government has always been committed to advancing the cause of extending the partnership with India whilst at the same time addressing the concerns of the local industrialists who have experienced or anticipate practical difficulties in entering the Indian markets.

I can only say that in principle the direction of heading towards greater linkages with the Indian economy is the way forward. As we traverse this journey it is important to address the fears of those that have been affected by some bad experiences in entering the Indian market under the FTA. This is a democracy and the views of all stakeholders are important.

However at the end of the day, Sri Lanka needs to make an informed decision on this subject. I also believe that the Indian side too needs to take a strategic view of making this a success even if it appears to them that they are over extending themselves. This perhaps is the first concrete step to a greater integration of the SAARC region.

Q: Are there any negative impacts on the reduction on the import duty on the vehicle imports? A number of companies may want to manufacture cars in Sri Lanka.

A: Since this issue is a matter concerning trade predominantly, I will not offer a specific view on the subject as it needs greater study. However the high duty applicable to vehicle imports to Sri Lanka was one incentive for manufacturers to look at assembling in Sri Lanka.

We need to study the value addition of the few enterprises that entered this field and operated under the former duty regime. The overall national benefit of lower duties and hence greater imports of vehicles is a choice to the tourism sector which need not through the complexities of duty free concessions needs to be examined.