Lanka’s FDI $ 751m - the highest recorded

CB Governor tells BBC’s Hard Talk:

Japanese Telecom giant NTT sold its stake in Sri Lanka Telecom (SLT) at a profit to the Malaysian investor and Sri Lanka’s FDI was US$751 mln, the highest recorded and when the country went for a US$ 500mln bond issue last October we had subscription for US$ 1.6 bln, said Central Bank Governor Ajith Nivard Cabraal responding to questions posed by Stephen Sackur on Hard Talk, a program conducted by BBC World.

Cabraal said that Sri Lanka is in no way politically isolated as we have seen many countries investing in Sri Lanka and we have very good partnerships between Sri Lanka and other countries.

Expressing his views on Sri Lanka’s biggest bilateral donor, Japan, reviewing its strategic aid and EU considering whether or not to review the GSP+ the Governor said that Japan has not in any way pulled out at all but has been very supportive of Sri Lanka and we have a very good relationship with Japan and it is continuing.

As regards the EU I have been personally advising the government from the point of view of the Central Bank that it is time the government as well as the private sector who are engaged in the industry do not rely only upon concessions to do their businesses.

We are moving towards a free market economy right across the world and it is important that Sri Lanka also recognises that they have to do business in the marketplace without concessions but if they do get concessions it is very welcome. Sooner or later the EU will not give this concession because it is a special concession that they are giving.

There will come a time when Sri Lanka will have to stand on its own and export like any other country because there were many countries exporting to the EU. So the moment you have these additional concessions to buttress you to export, your productivity drops.

Your own methods will not be as stringent as you would like to see.

Sri Lanka’s apparel industry is a very mature industry - we have very good standards.

We are an exporter of garments without guilt. There are many good things going for the garment industry. We are advising the industry not to rely upon specific concessions to do business.

In answer to a question as to whether there is a cronyism and nepotism problem, he said there may be certain instances where you may have certain projects where there can be leakages but the total number of projects handled in Sri Lanka today is around US $ 4.5bln. Earlier, the biggest phase of development we had in infrastructure development projects was about US$1 bln back in the early 1980s.

Today we are having two new ports, one airport, three major highways and three new powerplants being built all of which are essential for the country’s growth in the future and those are important facets of development for the country.