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Fourth EU – Sri Lanka dialogue on investment and trade strengthens economic ties

(UTV|COLOMBO) – The Ministry of Development Strategies and International Trade and the Board of Investment of Sri Lanka conducted for the fourth time a dialogue with the European Union Embassy and embassies of representative countries of the Union.

The European Union delegation was led by Ambassador of the European Union to Sri Lanka Tung-Lai Margue, who was assisted by representatives of other EU member states.

The countries represented were France, Germany, the Netherlands and the UK but also included delegates from Spain who are posted in New Delhi but accredited to Sri Lanka. Also participating were representatives of the European enterprises operating under the BOI. Representatives of the European Chamber of Commerce in Sri Lanka (ECCSL) also participated at the dialogue.

The Sri Lankan side was led by Minister of Development Strategies and International Trade Malik Samarawickrama, Director General of the BOI Duminda Ariyasinghe and Chairperson of the Export Development Board.

Chairman of Sri Lanka Ports Authority Parakrama Dissanayake and Director General Sri Lanka Tourism Development Authority Malraj Kiriella also participated in the dialogue.

A number of leading Sri Lankan institutions dealing with investors and other economic issues were also present at the meeting. These included among others the Health Ministry, and vital institutions such as the BOI and Inland Revenue Department.

Minister Samarawickrama welcoming the EU delegation commended the close relations between the two sides that have been built over the years. Ambassador Margue thanked the Minister for organizing the meeting which had been held previously in July 2017.

Subsequent to that meeting, the European Union was able to hold formal discussions with the Ministers of Finance and of Health in Sri Lanka in November 2017.

The Ambassador added that the EU was studying Sri Lanka’s current budget since it reflected some of the country’s political and economic objectives, which met some of the recommendations of the World Bank and of the International Monetary Fund.

The Ambassador said the budget would lead to the creation of a more favorable business environment and several progressive outcomes would arise from such efforts. This included evaluating the possibility of foreign investors owning land in Sri Lanka, as well as economic packages that would promote the development of small and medium enterprises, notably in the Northern Province.

The new budget also encourages investment in new sectors such as the IT industry as well as the Agricultural sector. The Ambassador also added that it was positive that under the budget, environmental issues were to be addressed by the Government of Sri Lanka. Promotion of electric cars in the country was also a significant new move on the part of Sri Lanka. He stated that the EU felicitated the Government of Sri Lanka in its efforts, particularly in the area of seeking to boost investments in the country.

Minister Samarawickrama said the current budget of the Government of Sri Lanka was the most outward orientated budget that the country had adopted since the era of the late President J R Jayewardene.

One of its strengths was the development of a very comprehensive Inland Revenue Act.

However, a vital area that needed to be addressed was improvement on the “Ease of Doing Business” since success in this area would impact very positively on investment and trade.

The Minister said Sri Lanka warmly welcomes investors from the EU and would greatly appreciate if the EU mission could disseminate within the Union, a message that the Government of Sri Lanka is indeed very keen to welcome them to develop new industries in the country.

The objective of the Government was to make every industrialist an exporter. At the same time there is a commitment on the part of Sri Lanka to develop the Northern Province and many concessions have already be given to promote economic activity in the former conflict affected areas.

In that respect investors from the European Union can indeed play a vital role as Sri Lanka’s partners, developing this area to help address the differences that exist within the country. The Minister stated that he was looking forward to continue this dialogue every three months and addressing whatever issues that may exist concerning EU companies based in Sri Lanka.

A number of subjects were discussed by the Sri Lankan side and the EU delegation. These included the need for a definition of what constitutes “used cars” in Sri Lanka. In addition to this the EU delegation spoke of a need for Sri Lanka to formulate environmental standards that are consistent and of a very high level.

The Minister also spoke of Sri Lanka’s objective to develop container terminals located on both the Eastern and western coasts in the Island. The European Union Chamber of Commerce discussed their need for addressing issues of noise pollution at certain tourism locations as well as the Island’s objective to develop a strong dairy sector.

Discussions also covered the future development of a dry port in the area of Bloemendhal.

At a macroeconomic and strategic level the European Union represents an important source of investment for Sri Lanka.

In the period 2005 – 2016, EU enterprises operating under BOI invested an estimated US$ 2.5 billion in Sri Lanka.

The bulk sectors for investment were manufacturing (other than textile and apparel) US$ 557 million; textile and apparel manufacture (US$ 327 million); telecommunications (US$ 617 million): Airline services (US$ 325 million); and power generation (US$ 255 million).

The leading European Union countries in terms of FDI to Sri Lanka are the United Kingdom with 90 projects under BOI (of which 54 exporters), Germany (42 projects, 31 exporters), the Netherlands (29 projects, 14 exporters), Sweden (20 projects, 13 exporters) Italy (18 projects, 14 exporters, France (13 projects, 10 exporters) and Belgium (10 projects of which 6 exporters).

The EU-Sri Lanka dialogue therefore offers considerable opportunities to creating opportunities for attracting European investment to Sri Lanka.

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