11/28/13 Sundayobserver.lk: Features | FDI flow increases 20 percent: Sri Lanka on track towards 7.5 percent growth rate

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Su nda y, 22 Sep tem ber 20 13

A n artis t's impress ion of the Krrish Tower

The plan of the C olombo – Katunayake Expressway (P eliyagoda

Interchange)

The Lotus Tower, which would be the talles t building in South A s ia

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FDI F LOW IN CRE ASE S 2 0 P ERC ENT:

Sri Lanka on track towards 7.5 percent growth rate

By Sh ira j iv S i r im ane

Sri Lanka is on track to achieve a growth rate of 7.5 percent

in 2013, which is one of the highest growth rates in the

world for the year. This rate was 6.4 percent in 2012; Sri

Lanka’s economy grew 6.8 percent during the second

quarter this year.

In its monthly policy review, the Central Bank said foreign

inflows from tourism, workers’ remittances, Foreign Direct

Investments and foreign loans to local banks contributed to

the economic expansion.

This is why the Opposition and certain elements try to

generate negative publicity and try to put brakes to this

development. One of the first targets in this drive was the

Krrish Tower followed up by Shangri-La Colombo. These

elements said these projects had got stalled and the

investors are abandoning them.

The Krrish Group of India paid Rs. 150.8 million recently for

their property at Transworks, the Fort. Minister of

Investment Promotion Lakshman Yapa Abeywardena said

they have to pay only Rs. 589.7 million more. “This would

be paid by the end of the year,” he said.

Value of land

The Minister said, as agreed, the Krrish Group has also

added the 12 percent fine that was imposed when the

agreement was signed. The total value of the land was Rs. 4,495 million.

Minister Abeywardena last week put the record straight on Shangri-La and forwarded a document from the

company, reassuring that they would continue with the project.

Vice Chairman of Shangri-La, Madhu Rao said the Sri Lankan Government's decision to relocate the military

headquarters to facilitate a foreign investment project was the best testimony to show that the country is

investor-friendly.

“What more testimony do you need from a government

which has agreed to relocate its military headquarters to

allocate land to a foreign investor?” Rao asked, when he

addressed a group of Hong Kong-based fund managers at

an event organised by the Colombo Stock Exchange and

Securities Exchange Commission to help attract investors

to Sri Lanka.

He said, when entering Sri Lanka, the company didn't have

to deal with anyone else other than the Government to

facilitate the proposed investment. The Shangri-La

executive also said that the approvals sought were given

quite fast and that the company has no complaints about

the efficiency of the bureaucracy.

Shangri-La has invested US$ 500 million on two leisure

properties which would come up in Colombo and Hambantota.

China - Lanka FTA

Sealing the relationship between Sri Lanka and China further, China, for the first time in Asia, will sign a Free

Trade Agreement (FTA) with the island this November.

This is a unique and exclusive FTA, extended and offered

only to Sri Lanka, giving the opportunity for Lankan

entrepreneurs to export to the large Chinese market, thus

opening a new era of trade. Sri Lanka's apparel sector

would be one of the first beneficiaries while many other

Lankan products too would see a new export market.

China's economy continues to grow and per capita income

too is rapidly increasing. This has resulted in China no

11/28/13 Sundayobserver.lk: Features | FDI flow increases 20 percent: Sri Lanka on track towards 7.5 percent growth rate

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Katunayake Expressway (Katunayake Interchange)

longer being a nation providing cheap labour. The result is

that manufacturing is getting more expensive and it has

become cheaper for the country to import goods.

The strong political relationship between the two countries

is the main reason which has enabled Sri Lanka to sign this

historic FTA.

‘Doing business’ ranking improves

Meanwhile, in the ease of Doing Business Rankings 2013,

Sri Lanka is ranked the 81st most business friendly

country out of 144 countries, ahead of India (132),

Bangladesh (129), China (91), Indonesia (129), the

Philippines (138) and Vietnam (99).

In addition Lanka’s

poverty headcount was

falling according to KPMG,

which said in a statement

that Sri Lanka’s poverty

count is down and leads

South Asia’s HDI with high

literacy rates. Sri Lanka’s

Prosperity Index has also

improved.

International Ratings

Section of BOI Website

Sri Lanka is the second

highest improver in the

Doing Business Index of

2013 of the IFC/World

Bank. Sri Lanka, though

rated 81st out of 144

countries, is ranked the

2nd highest in the

countries that have made

efforts to improve in

terms of business

friendliness after Poland.

Sri Lanka’s strengths are

in the following areas:

1. Registering property

2. Getting credit

3. Trading across borders

Sri Lanka was placed

second after Poland

among the countries that

had made the most

improvements in the field

of business friendliness.

FDIs increase by 20

percent

Foreign Direct Investment (FDI) flows to Sri Lanka, in the first half of 2013, reached US$ 430 million. It is

expected to reach two billion US dollars after the completion of the year, according to the plan spelt out earlier

this year. This is a 20 percent increase as against the previous year.

During the first half of 2013, most investments were made in the infrastructure sector, totaling US$ 284.2

million, followed by US$ 174.36 million for manufacturing, US$ 79.1 million for services and US$ 2.6 million for

agriculture.

The single largest investment was on the Colombo International Container Terminal, a Chinese/Hong Kong

project that represented an investment of US$ 116.2 million. It was followed by investments made by Cairn

Lanka Pvt Ltd, from UK/Mauritius (US$ 29.4 million) and MAS Fabric Pvt Ltd, from Hong Kong (US$ 25.5 million),

which were some of the large-scale projects approved by the Cabinet.

Another major investment was Waterfront Properties Pvt Ltd, by the John Keells Group, which is a mixed

development project. The total value of the project will be US$ 850 million and would create 3,000 direct

employment opportunities.

Lake Leisure Holdings Pvt Ltd is the second major project that was also approved by the Cabinet of Ministers

and would also operate under the Strategic Development Act.

This is to be located at D.R. Wijewardene Mawatha and would become an integrated resort, with an investment

11/28/13 Sundayobserver.lk: Features | FDI flow increases 20 percent: Sri Lanka on track towards 7.5 percent growth rate

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value of US$ 350 million and would generate 2,600 direct employment opportunities and more indirect jobs.

Both projects would be completed in 60 months.

Another project that would bring in more foreign exchange to the country would be the tallest building in South

Asia, the Lotus Tower.

The height of the building will be 350 metres and it would be a free-standing tower with a podium four storeyes

high. It has an eight-storeyed tower head and an antenna with a steel frame. The Foreign Direct Investments,

while bringing foreign exchange and generating more revenue to the country, would help the country move

closer towards its goal of becoming the Wonder of Asia.

EM AIL | P R IN TAB LE VIE W | F EED BAC K

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