Investment interest from US gains momentum

By Cheranka Mendis

*** from the Daily Mirror 14th Oct 2009 ***

Several key US firms have shown interest in investing in Sri Lanka and have held meetings with their local counterparts in the island for the first time in this regard.

As the Government plans to invite foreign investors to observe and witness the positive business climate in the country and the conducive environment for infrastructure and investment activities, the Department of Commerce and the Sri Lankan embassy in Washington organized a private- public partnership conference yesterday that was attended by over 40 US firms seeking to invest in Sri Lanka and 30 leading local business entities.

While claiming that the present situation in Sri Lanka is conducive for investment and infrastructure development and heralds new opportunities, Minister of Enterprise Development, Investment Promotion and Media, Anura Priyadarshana Yapa stated yesterday that the US was still the largest and the most important market in the world, and also the largest single market for Sri Lankan exports, with imports amounting to almost USD 1.63 billion worth of goods every year.

“At present Sri Lanka exports close to USD 1.63 billion worth of goods to the US every year while our imports from the US remain rather modest with some USD 200-300 million. Approximately 80% of Lanka’s exports to the US consist of apparel and textiles, with the other key areas being gems and jewellery, rubber and plastic products, sea food, tea and spices while Sri Lanka imports machinery and equipment, electrical appliances, paper and products from the US”.

The value of US imports from Sri Lanka under the GSP programme was USD 172.05 million

in 2008, accounting for 9.1% of overall US imports from Sri Lanka that year. During the first 7 months of 2009, the value of such imports stood around USD 68.5million.

While stating that Sri Lanka is one of the most promising destinations for investment for the US, Minister Yapa noted that the country was also centrally located for business partners from countries such as India and Saudi Arabia and was ideal for the world’s shipping lines.

Also the many international and regional agreements Sri Lanka has under its belt would be an added bonus for the US companies interested in investing in the country. “Free trade agreements such as the Indo-Sri Lanka and Pakistan-Sri Lanka agreements which enable duty free entry of goods manufactured in Sri Lanka to the particular countries and the agreement with the EU, which again gives access duty free entry to the EU countries, could evenly benefit the companies”.

The sound political and financial system stability now prevailing in the country along with the infrastructure development initiative currently under way would heighten one’s confidence in investing in Sri Lanka, the Minister said. Many infrastructure development projects have been implemented within the past 3 years including ports, coal power plants in Norochcholai and upper Kothmale, rural and urban road development, said Governor of Central Bank, Ajith Nivard Cabral. “We have now almost 4,000 km of new roads in the country,” the Governor noted. “As investors the opportunities are varied,” the Governor said adding that “there have been a lot of money invested on education and skilled labour and now we have a working force with exceptional skills in IT and English”.

Tourism along the lines of gem and Jewellery, fisheries, vegetation and agro were stated as some of the industries holding many opportunities for the US investor. “With the target of achieving 2.1 billion tourists by 2016, we are now taking steps to boost the tourism industry. Tourist arrivals have been fast growing and we should now look to encourage people to stay longer and spend more,” Governor Cabral said. “Gems and jewelry, fisheries, tea and even vegetation can be turned into billion dollar industries with proper management. The tea industry which is 150 years old has the potential to grow into a USD 3-5 billion industry with the introduction of new methods of cultivation”. Oil exploration was also mentioned. Poverty alleviation has been recorded as 15% in 2007 which has been targeted to be only 5% by 2013.

“The Sri Lankan economy has been resilient over time with a 3½ % growth projected for this year, inflation down to 1%, the IMF agreement coming through etc. Sri Lanka is taking note to bypass some of the other countries who took the slow march to development and therefore now is the best time for the US investors to come forward before the market gets heated up in 2-3 years,” Governor Cabral noted. It was also disclosed that Sri Lanka’s per capita income which was at USD 1,020 in 2003 increased to USD 2014 in recent years. However it was revealed that this figure will almost double in years to come with USD 3,000 projected for 2011 and USD 4,000 projected for 2014.