Infrastructure open for private investment

by Gamini Warushamana

Senior Minister Dr. Sarath Amunugama said that Sri Lanka welcomes private investments in infrastructure development and the Colombo South Port is an ideal example that blue chip companies are investing in Sri Lanka.

He said that private investment in highways and other sectors too are welcome. The lack of private projects coming in is not due to the government’s policies but because the private sector in Sri lanka is weak and ‘ dead scared’ to start such new projects. The Minister was addressing a seminar organised by the Council for Business with Britain held last week. Minister Amunugama accepted that the government failed to achieve the FDI target, US$ 1 billion last year and only around US$ 600,000 foreign investments were achieved. Amunugama who held the portfolio of Investment Promotion over several years under the present regime said that corruption and other weaknesses of the investment promotion agency BOI is one reason for the failure.

He said that Sri Lanka has become the safest destination for investors in the South Asian region. The situation has reversed and the security situation in neighbouring countries such as India, Pakistan as well as Thailand has deteriorated. Colombo is becoming a greener and cleaner city. Sri Lanka provides all facilities for investors on par with any country, Vietnam, China or India to attract FDIs. Already huge investments are coming in to the tourism sector for construction of new hotels and expansion projects. IT, Banking and Financial Services are the other sectors that the government expects new investments for, in the coming years. “We expect FDI inflow to pass the US$ 1 billion mark this year,” he said.

Neighbouring a fastest growing economy in the world India, Sri Lanka has the advantage of becoming a financial and service hub. The growth stories of Singapore that neighbours Malaysia and Indonesia and Hong Kong neighbouring China as well as the rapidly developing Mauritius neighbouring growing South African economies are similar.

Commenting on the interest rate policy he said that after long years our interest rates are higher than inflation and the government is attempting to maintain a positive interest rate.

A few years ago inflation was over 25 percent and now it has reduced to 5 per cent. Maintaining an interest rate and inflation is a difficult balancing act. We are committed to maintain free market economic policies. Even under difficult conditions with massive capital outflows, Sri Lanka did not restrict capital repatriation. This policy is now giving dividends and capital is flowing in today.

The Minister said that although the heavy rains caused floods and severe damages in most parts of the country the positive side is that huge hydro power capacity accumulated with all the reservoirs being filled to their full capacity.

The estimated value of this hydro power capacity is over US$ 2 billion, he said.