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Just as in other parts of the country, the Eastern Province having received a face lift since the end of war is now ready than ever to accommodate profitable businesses and is confident in its capabilities to contribute to the overall economic growth of the nation.
With the intention of attracting potential investors to set up businesses, the Ministry of Agriculture, Animal Production and Development, Rural Industries Development, and Fisheries of the Eastern Province, in collaboration with the Ministry of Economic Development and Ministry of Investment Promotion facilitated the ‘Invest in East’ forum in Colombo last week.
The Forum, which is the first international investment promotion event focusing on eastern Sri Lanka, drew a full house audience including about 200 local and foreign investors representing over 25 countries in addition to top government officials present.
Optimistic of the outcome that Invest in East would bring to the region, Eastern Province Chief Minister Najeeb A. Majeed said: “It is a geographical fact that the sun rises in the Eastern Province, but with this event the economic sun will rise in the West and as a result the sun will shine bright and clear over the Eastern Province.”
The need for a promotion platform for the east
The Eastern Province was considered a backwater in the economic map of Sri Lanka although it had magnificent resources. Its main productive employment was in the government sector and the majority of its population were seeking foreign employment as low skilled labourers.
Local economic activity was low skill based, used outdated technologies, and met the market needs of only the immediate neighbourhood as it could not benefit from the economies of scale, or engage in backward and forward linkages.
“The cultural backwardness of the Eastern Province prevented it from thinking big, of exploiting wider possibilities of exploring new avenues or be committed to innovation. The world is changing rapidly and if we do not change with it, we will be left in the economic and cultural stage of Veddahs, who, it might be remembered, refused to embrace change. There was a reason for this,” asserted Majeed at the event which featured Economic Development Minister Basil Rajapaksa as chief guest, and Minister of investment promotion Laskhman Yapa Abeywardena as guest of honour, along with Justice Minister Rauff Hakeem.
However, he noted it is possible for the region to leapfrog from its backwardness straight into a modern economy since the possibilities to seize employment and wealth creating opportunities for Eastern Sri Lanka are enormous.
To set the ball rolling, Majeed said the Government has developed an Eastern Development Plan in six major development areas such as agriculture, industry, infrastructure, human resources, institutional development, and environment, where for each a stream of possible projects have been proposed.
What makes the east attractive for investments?
The Eastern Province, which comprises of the Trincomalee, Ampara and Batticaloa Districts, is the second largest province in Sri Lanka, bordering five out of the nine provinces, with easy access to them, their resources and facilities.
Its long coastline with golden sandy beaches, a large number of inland waterways, a splendid mix of forest and agricultural lands and the magnificent Trincomalee Harbour, positions the Eastern Province as an attractive investment destination.
With the region having the largest diversity in terms of ethnicity and religion, the majority of the population are bilingual, conversant in Sinhala and Tamil, whereas a sizeable population are conversant in English, affording a special advantage in communication and interaction to any prospective investor.
Although the three decades of civil disturbance associated with terrorism had drastically curtailed the development of the east, it has enormous potential to develop many sectors in mega scale, opined Eastern Province Governor Retd. Rear Admiral Mohan Wijewickrama.
“The 30 years of internal strife bled both human and material resources in the country in general and the Northern and Eastern Provinces in particular. Now it is important to put on record the fact that the Government has taken numerous measures to uplift these regions, bringing immense benefits to its economy and people,” he said.
The Eastern Revival program, an accelerated development agenda put in motion to rapidly develop all sectors in the province ensures the untapped wealth of both human and material resources that are available in abundance are harnessed.
Post-war development
The development programs carried out under Eastern Revival concentrated on improvement to livelihood, education, health, sanitation, and welfare of people whilst encompassing a mega renaissance in the commercial activities to boost the industries, fisheries, agriculture, livestock and tourism sectors.
Construction of main road networks, bridges, irrigation systems, harbours, and fisheries anchorages, along with the introduction of investment promotion zones, industrial parks, and power plants, are few other development activity carried out to sustain the development.
Furthermore, the Trincomalee Harbour with the China Bay and Mud Cove jetties that used to be a major attraction during the 70s and 80s, prior to the war, is observed to be swinging back to its former glory.
Acknowledging the free flow of goods and services, Wijewickrama said: “The Eastern Province is bracing herself to enter in to an era of prosperity and development and the Trincomalee Harbour could play a major role. It is pertinent to note that any investor would like to pitch his tent in an environment conducive for sustenance of the business. Some of the ingredients are the peaceful environment, easy access to raw material and the easy disbursement of products, proper infrastructure facilities and its comparatively low cost labour market. Compared to other countries in the region, the incentives offered to the prospective investors here are immense and attractive.”
Availability of large talent pool
Following the end of the war, which prevented any access for gainful employment, large numbers of youth from all ethnic groups in the province eagerly await for an opportunity to fulfil their aspirations. Wijewickrama said that those, who left their villages to the city and commercial hubs in search of greener pastures and working in the metropolis under trying circumstances, will opt to return to their homes if they can procure gainful employment. “This means, there will be an abundant supply of skilled workers and tradesmen readily available for the entrepreneurs to select from.”
He added that this is in no way underestimating the efforts of the Government in increasing the numbers of its skilled workforce through technical colleges and vocational institutes since many of such institutions have been newly setup or reactivated in most places in the province.
Untapped potential
With the east being one of the most diverse and resourceful provinces in Sri Lanka, Institute of Policy Studies Executive Director Dr. Saman Kelegama highlighted there is immense potential present in the region that is yet to be untapped.
With the east currently contributing approximately 25% of the national rice production, 20% of fish production, and 15% of milk production, Dr. Kelegama opined these areas could be further explored.
During the war years it was noted that only half of the cultivable paddy land in the east was made use of. With regard to fish production, ocean and inland lagoon fishing were restricted. Despite having the largest cattle population in Sri Lanka, milk production was far below potential. These were just few areas pointed out where more could be done.
Nevertheless the situation improved with the ‘Reawakening of the East’ (Nagenahira Navodaya) being launched in 2007 that focused greatly in improving infrastructure such as electricity, water, housing, and rebuilding of roads to name a few.
While the foundation is laid for lucrative businesses to kick-off or further extend, Dr. Kelegama identified as ideal for investments, five key areas which are agriculture and agribusiness, extractive industries and resource-based manufacturing, fisheries and aquaculture, leisure and tourism, and animal production and livestock.
Need for promoting investment at Provincial Council level
With there being no set mantra to attracting FDIs, Dr. Kelegama opined this is best done when investments are promoted at PC level.
He justified his statement by stating that there may be niche opportunities for investment in every province which may be outside the focus of the central Government. “Investment facilitation will be successful only when the investor understand the local environment and has access to local decision makers. Currently, companies are eager to obtain minute information of the location which only the local authorities will be able to brief upon. Therefore creating a provincial level Investment Promotion Agency (IPA) is essential,” he said.
Under Item 2 of List 1 of the 9th Schedule of the 13th Amendment, a PC can initiate development plans and promote investment but whatever FDI that the PC attracts will take place with the concurrence and under the purview of the Central Government and the Board of Investment (BOI).
Once in business, the monitoring and supervision of the FDI in the province can be done by the PC together with the BOI. Thus to promote investments it is imperative for the PC to formulate strategies, engage in marketing, target and facilitate investors, while providing investor after care.
With regard to the pre-conditions required for investment promotion work, Dr. Kelemaga stressed that the country’s overall investment environment should be “right”. “Addressing ‘Doing Business Indicators’ to improve the business climate will not work; what is required is to work on the overall big picture of the business framework,” he added.
Current trade climate and private sector contribution
In the year 1990 the country’s economy stood at $ 20 billion and by 2013 it increased up to about $ 67 billion. While it is the service sector that contributed to almost 60% of this growth, UNOPS National Portfolio Development Head Rohantha Athukorala acknowledged that it is the private sector that drives 80% of the nation’s economy.
To help understand the significance of this contribution, Athukorala presented the total advertising spends of the private sector over the years. In 2006 what was Rs. 19 billion shot up to Rs. 31.4 billon in 2008 and further increased to Rs. 56.76 billion in 2011.
Focusing on the Eastern Province which has a population of 1.5 million people, it is observed to be a group that focuses towards consumption. From 1997 to 2001 the east had a growth of 4.9%, whereas from 2002 to 2004 (which was also the period of cease fire) the growth increased to 5.8%.
Shortly after, the province grew by 13.3% and now it is keeping up with the momentum.
From the private sector angle it is observed that the key players in the region are the telecom industry, followed by banking services, and financing and leasing.
Furthermore, looking at the consumer durables market, that enjoys a 40% market share in that region, has been progressing in a fast paced manner. When taking to account some leading brands such as ‘Singer’, its revenue increased from Rs. 11 billion to Rs. 20 billion in just two years.
In the retail business, brand such as ‘Cargills’ saw an increase in revenue from Rs. 30, 874 million in 2010 to Rs. 48, 256 in 2012. Furthermore, in the beer business, the revenue of Lion Breweries shot up from Rs. 7, 919 million in 2010 to Rs. 17, 649 million in 2012.
Having given a feel of the prevailing opportunities in the east, Athukorala noted: “There is a strategic development happening from a growth, brand, and private sector angle. And that is the kind of balance that we want to see happening in the country.”
Pix by Upul Abayasekara
