World Economic Forum 2016 showcased country’s potential:

Changing global marketplace to benefit Sri Lanka

by Shirajiv Sirimane - Rohana Jayalal

Several top global investors who met Prime Minister Ranil Wickremesinghe on the sidelines of the World Economic Forum in Switzerland showed their willingness to invest in Sri Lanka.

Prime Minister Ranil Wickremesinghe met Microsoft International officials (Europe, the Mid East and Africa) on Friday. He also met representatives from Philips Lighting Solutions, Netherlands, Chief Executive Officer, Eric Rondolat, Tata Chairman Cyrus Mackenzie and its Asian Region Chairman Kevin Snyder and Chairman, Bahrain Petroleum, Sheikh Salman bin Kalifa al Kalifa.

He said that he wants to woo investors to use Sri Lanka as an economic hub for South Asia as well. “For this purpose many special programs have been launched to encourage investors.”

Deputy Minister of State Enterprise Development, Eran Wickramaratne said Sri Lanka will be a future economic hub and a niche manufacturing destination producing goods for regional and global value chains, particularly light engineering products and also a location for high-value agricultural products such as fruits, vegetables and dairy, to service the rapidly growing tourism sector and for exports, especially, to the Middle Eastern and Indian markets.“The World Economic Forum 2016 in Davos afforded the Government an opportunity to showcase the changes in Sri Lanka. Our message to all, was that in an international environment which is insecure and volatile, Sri Lanka is now peaceful, has consolidated democracy and revived the economy. It stands ready for takeoff and to play its role as a responsible member of the global community of nations,” he said.

Prime Minister Ranil Wickremesinghe addressing investors at the World Economic Forum said Sri Lanka is formulating a broad program to make it a trade and economic hub in Asia.He said drawing the economic map of Sri Lanka for 2030 lies in the hands of investors, adding that the Government has made all arrangements for this purpose.

The Premier said a Development Agency is to be set up in place of the Investment Board and Economic Development Board.

He also said discussions are being held with the International Monetary Fund for a stand by arrangement considering the current volatile global economic situation.The Premier held talks with heads of many large scale trading companies and called upon business leaders to invest in Sri Lanka. He drew special attention to the investment opportunities in Sri Lanka following the recent change in the country.

Business leaders at discussions expressed their willingness to bring in large scale investments to Sri Lanka within this year.

The Prime Minister also held bilateral talks with Sweden Prime Minister Stefan Löfven and Turkish Prime Minister Ahmet Davutoglu on the sideline of the forum.

Over 2,000 world leaders and economists attended the Forum at Davos in Switzerland which concluded yesterday. It is the first time in history that a Sri Lankan leader attended the World Economic Forum on a special invitation.

“Sri Lanka is strategically placed to benefit from a changing global marketplace. It is equidistant between Europe and the Far East on the major East-West shipping lanes. We have easy access to the lucrative Middle Eastern market and rising African market, while the growth engine that is India lies only 20 miles away,” the Deputy Minister said.

“Our government’s vision is for the private sector to be the engine of growth, with exports and FDI playing vital roles. The government is making a concerted effort to improve investment policies, the ease of doing business rank, trade policy and trade facilitation,” he said.

The new Constitution would improve Sri Lanka’s feeble performance in attracting foreign direct investment.

The new Constitution would improve the progressive elements of Sri Lanka including democracy, transparency, good governance and adherence to law and order, which would embolden investors to give increased prominence to Sri Lanka when evaluating their investment options, the Deputy Minister said.

He said internationally exposed management skills of local expatriates are the need of the hour if the country is to achieve its economic targets in the near future.

“Everyone only talks of capital and technology, but I think, the focus should be on management. Sri Lanka is targeting five billion US dollars in foreign direct investments (FDIs) in the next two or three years,” the Deputy Minister said.

It will be a challenge with the prevailing global climate but the government is very positive because Sri Lanka could attract this kind of investment.

A tangible example of what the government is working towards is the Western Province Megapolis Project. This development will cover several cities in and around Colombo. There will be a financial district and zones dedicated to the logistics, industry, IT and entertainment. By 2030, the project area is expected to have a population of 8.5 million people and a per capita income of US$ 30,000.

There will be a major role for the private sector and public and private partnerships in implementing this project and laying the groundwork for the future of the economy, in general.

“We see industrialization and urbanization as key drivers of modernization. We will create 45 new industrial parks around the country which will be developed and managed by the private sector. Five second tier cities will also be developed, as part of the government’s program to promote urbanization.

“It takes time to initiate projects. We have focused on continuing some of the projects that have been launched. Our focus is to help investors to implement the decisions already taken,” he said.

“When it comes to infrastructure such as road projects, our intention is to complete all road projects that had been launched by the previous government. As a government we are committed to honour the contracts undertaken by the previous regime. But if we think there has been over-expenditure and over-estimation, they will be discussed and we are doing our best to see what concessions we could get from some of the existing agreements,” the Deputy Minister said.

“If you were to look at infrastructure such as roads, the financial return is low. When the financial return is low we cannot attract private capital. Private capital flows in only if the returns are high. If we borrow money at market rates for construction work, we will have to pay high interest rates. When looking at projects such as roads where there is only long-term return, the Prime Minister and the government is absolutely right to look at multilateral agencies, other institutions and soft loan windows because we will get it at low interest rates which means the debt burden will be much lower for the country. Returns will come after a long time,” he said.

“The economic return on the Hambantota Harbour can be improved. The question is about initially investing carefully in stages. The Mattala Airport is much more problematic. It was a very poor decision and a bad choice. When I say, poor decision and bad choice, I mean, it is all time bound. Twenty years from now some may say it was a good decision. Economic and financial decisions are time bound. Now that it has already been built there is no point in grumbling about it. We have to regard it as sunken cost. We have to look at different ways in which we can make returns,” Wickremaratne said.