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By Ashwin Hemmathagama
– Our Lobby Correspondent
The Government has approved $4.6 billion worth of Foreign Direct Investment (FDI) projects in the first seven months of 2019, International Trade and Development Strategies Minister Malik Samarawickrama told Parliament yesterday.
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International Trade
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The Minister also outlined additional regulatory changes being made to attract more investments, by improving Sri Lanka’s performance in the Ease of Doing Business rankings compiled by the World Bank. He also said that while $ 4.6 billion in projects were approved, agreements for $ 4.1 billion were signed, and noted that implementation will likely go on till about 2024.
“In 2018, the Board of Investment (BoI) approved projects worth $ 2,431 million and agreements were signed for almost for half of them. In this year during the first seven months, projects to the value of $ 4.6 billion were approved, and agreements were signed for projects worth $ 4.1 billion. These are long-term projects and the implementation will take three to four years,” explained the Minister, outlining the progress of the export sector.
In its efforts to improve the country’s ranking in the Ease of Doing Business Index, the Government has moved new regulations, rescinding the scheme introduced in 1985 to register exporters, in order to help the Sri Lanka Customs and the Department of Inland Revenue.
Moving the new regulations, published in the Gazette Extraordinary No. 2118/60, in Parliament, Development Strategies and International Trade Minister Malik Samarawickrama held it is no longer required to register exporters, as Government agencies are capable of finding the details using other methods, and rescinding outdated regulations will ease the burden on exporters, and will increase country rankings in the Ease of Doing Business Index.
“As per the Export Development Board Act, the scheme was introduced to register all the exporters, and this was done in August 1985. The main reason at that time was two of the Government agencies – Sri Lanka Customs and the Inland Revenue Department – found this information necessary for their work. However, we have realised the removal of these will effectively contribute to Sri Lanka’s Ease of Doing Business Index. There are other ways and means of finding who the exporters are, and we have prepared a new Gazette to revoke the earlier Gazette,” he said.
According to the Minister, the global economy has slowed due to the ongoing trade war between the United States and China, resulting in global growth being reduced to 3-3.1% by the World Bank. Many other countries caught in the trade battle were forced to reduce their growth predictions for 2019. As a result, India has adjusted its growth to 5%, and China to 6-6.5%, forcing many other countries, including Sri Lanka, to follow.
“However, our exporters have done extremely well, despite the adverse trading conditions in the world and the issues we had locally. Firstly, we had this unconstitutional coup in October 2018, followed by the tragic Easter bombings in April this year. In spite of this, we have recorded export turnover in goods and services of $ 17 billion. This has been the highest-ever recorded in Sri Lanka. During the first seven months of this year, our export turnover has been indicated at $ 9.5 billion. But the target was $ 18.5 billion. I am sure we will be able to get close to that in the way we are progressing. So far, there has been a 6.6% growth in the export of goods and merchandise during the first seven months,” said Minister Samarawickrama.
Moving on to praising the resilience of exporters, the Minister congratulated their efforts, along with the support extended by the Sri Lanka Export Development Board (EDB) and the Ministry of Development Strategies and International Trade, and many other State establishments directly and indirectly involved.
“We have taken many steps to achieve the target of $ 28 billion by 2025. Firstly, we worked to diversify the product base. As a result, a National Export Strategy was implemented. It was developed by the EDB, our Ministry, and the private sector. The National Export Strategy identified six new sectors – boat building, IT services, wellness tourism, spices and concentrates, food processing, electrical and electronic components. We need to continue the exports of traditional products as well. We have identified new markets to enter into. There is a lot of scope exporting into Asia, India, China, and East Asia,” he said.
In order to increase the number of exporters, the EDB has commenced the 2000 Exporter program, setting guidelines to establish 2000 new exporters, by way of conducting awareness seminars in different parts of the country.
“As far as I know, 750-800 new exporters were identified as a part of the 2000 Exporter program. Then we have the market access program where the EDB provides funding and matching grants for these exporters. Finally, we are looking at launching one village, one product program, similar to what was done in Thailand some time back. Hopefully, this would commence before the end of this month,” he said.
“As far as the exports are concerned, we are on the right track. When our Government took office, the exports as a percentage of GDP were around 13% to 14%. Now it has gone up to 20% of GDP. But if we are to improve the economy, and if we are to get away from all these loans taken from time to time, I think our exports should reach at least $ 35 billion, and a percentage of GDP above 30%,” he added.
He also said Foreign Direct Investments (FDIs) would play a significant role in this endeavour.
“We also need to ensure we bring in export-oriented industries to the country. This needs the mindset among our politicians, the bureaucrats, and among our people. It is time that we look at high-value investments, of course it will take 3-4 years to bring the results. But we must make the start. In this regard, we are pleased to inform the BoI has taken steps in this direction. The total FDI that came into Sri Lanka from 1978 to 2018 is only $ 17.3 billion. But during the last five years, we were able to get $ 5.8 billion, which is over 33% growth. Of course, some of the projects came from the previous regime, but the funding came, and the projects started, recently.” (AH)
