HSBC perspective on Sri Lanka’s future and FDI focus

Monday, 20 November 2017 00:00 - - {{hitsCtrl.values.hits}}

As an entity that deals with investors around the world HSBC Sri Lanka and Maldives Chief Executive Officer (CEO) Mark Prothero touched upon the reforms that Sri Lanka needs to fast-track if it wants to emerge as an attractive foreign investment destination.

He recalled that Sri Lanka has historically underperformed on FDI with countries such as Vietnam, Cambodia and Myanmar far outstripping it. Prothero noted that potential clients ask HSBC about ease of doing business in the country, policy consistency, corruption, political stability and what is the speed of getting investment approved before deciding on investment. These are all areas where the Budget and government policy is focusing on and improvement is hoped for to increase FDI numbers.

Moving on to what could be thrust areas for the Government, Prothero also focused on sectors that are already having significant potential.

The type of investment that we don’t already have can drive the country forward, whether it’s different technology we don’t yet have, or different skills would benefit Sri Lanka.” Sri Lanka also needs to diversify exports and become more like an East Asian economy as well as tap into opportunities from China’s One Belt One Road project - HSBC Sri Lanka and Maldives Chief Executive Officer (CEO) Mark Prothero

“Construction is the obvious one, Port City, the Western Megapolis Project, Hambantota are all clearly going to result in a construction boom for many years to come. Tourism is the next obvious one. We have such a diverse range of things to offer for tourists and there is a wealth of value to be extracted from the natural resources we have. The ICT space is another sector where we should see more investment. For this growth you need very high internet and mobile penetration, which we do have and you need an educated workforce so there is no reason why that should not continue to grow. BPO should also be something that can attract investment.”

Agriculture was an area where Sri Lanka had an incredibly low level of investment last year, about $ 2 million and this would need attention, he said, pointing out that increased technology input would be a driver of growth for the low productivity sector. Logistics also has potential as the Budget has proposed liberalisation of the sector.

“The type of investment that we don’t already have can drive the country forward, whether it’s different technology we don’t yet have, or different skills would benefit Sri Lanka.” Sri Lanka also needs to diversify exports and become more like an East Asian economy as well as tap into opportunities from China’s One Belt One Road project, he said.

The discussion also centered on considering the continued exemption of tax for investors who have purchased Sri Lanka Development Bonds (SLDBs), which the Treasury Deputy Secretary S.R. Attygalla said the Government had already factored into the tax rate.