BOI to raise FDI, spearhead development

By Lalin FERNANDOPULLE

The BOI will increase foreign direct investment to around five percent of the GDP from the current two percent over a five-year period, said Chairman/Director General, BOI, Jayampathi Bandaranayake.

Road construction in progress in the North

He said the end of the conflict has strengthened Sri Lanka's potential as a destination for investments and added that the Board targets US$ 1 billion foreign direct investment next year.

"The BOI is confident that it could reach its goals easily due to the effective leadership and strategic planning.Flow of investments were a bit sluggish this year due to the effects of the global financial turmoil and the elections during the first quarter", the BOI chief said.

The BOI, the premier investment promotion institution in the country had come under scrutiny in the recent past due to the slow pace of growth in investments which are essential to accelerate development and boost economic growth.

A plan to restructure the BOI has been on the cards for some time and the institution is expected to take steps in this regard to raise the FDI figures and spearhead development in the country.

Bandaranayake said the BOI cannot be satisfied with the level of investments drawn to the country during the disturbed period of around two percent of the GDP.

"A different approach is vital to attract investments as the previous concession regime with modifications has been viewed as non effective", he said.

Tax reductions and simplifications proposed in the 2011 Budget will encourage investors. The tourism and construction sectors will benefit due to the concessionary duty granted on goods and raw material.

Too many taxes and its complex structure have dissuaded investors and have stifled progress of development projects in the country.

Bandaranayake said the Board hails the measures taken in the 2011 Budget to create an investment and business friendly environment in the country.

"An environment that encourages investors is essential for industries and businesses to thrive. The BOI will translate the new opportunities into investments that are vital for the country's economic growth and ensure an improved quality of life for the less affluent in the country", the BOI head said.

Tourism, agriculture, urban development, ports and aviation, education and healthcare are some of the sectors that have been identified as opportunities for investment.

"Harmonising the approach of all government agencies to have consistent standards is vital to create transparency and clarity and bring about speed in the flow of investments", the BOI chief said.

The one-stop-shop concept of the BOI has been only talk and not turned into a reality. Bottlenecks, administrative lethargy and procedural delays discourage investors and creates a bad image of the country as a destination for investment. Bandaranayake said the much spoken of one stop shop concept stems from the need for consistency, clarity, speed and the removal of bottlenecks.

The BOI expects the level of FDI to reach the 2009 figures which was US$ 600 million by end of the year.

"The figures of investments realised are not a true reflection of the investment activity that prevails currently due to the gestation period from the time of the investment proposal received to the actual realisation of the investment which would take around two to three years.