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| Friday, 6 February 2004 |
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BOI targets $ 500 m investments by Latheef Farook The Board of Investment (BOI), set up 25 years ago to attract foreign investment to the country, is planning to undertake a major restructuring and promotional campaign to achieve a billion dollar target a year foreign investment by 2006. Though ambitious, top BOI officials are confident that this target could be achieved. Last year the country attracted $ 240 million compared to $ 83 million in 2001 and this year's earmarked target is $ 500 million. The achievement so far is not something to be proud of and many attribute this to the ethnic crisis and the related negative publicity discouraging foreign investors. Meanwhile BOI plans to restructure its operations on the successfully tried Singapore and Ireland models which concentrate on promotion and emphasise project facilitation rather than incentives. Under the new scheme more funds will be allocated to promotional activities than regulatory functions. The BOI spends only about 10 per cent of its total expenditure on promotions while the remaining 90 per cent is spent on regulatory functions. But under the envisaged plan the investment on promotions will be initially increased from the current 10 per cent to between 20 and 30 per cent until this figure reaches 50 per cent. At present the BOI has four departments covering functions such as promotion, appraisals, research and media. These four departments will be restructured to create five different departments covering areas such as leisure, infrastructure, and vertical integration of textiles, electronics and agro-industries. As pat of this overall program the BOI also plans to undertake a major human resources development program to upgrade the skills of its workforce to meet the needs of the time. Once trained these specialists in fields such as tourism, textiles, IT, shipping, logistics and infrastructure will be despatched abroad to meet investors all over in the BOI's campaign to attract more and more investors. The envisaged changes will be based on the recently released Investment Policy Review of Sri Lanka which is expected to reduce the five-year tax holiday to three years besides involving other relevant ministries and state institutions involved in reviewing project proposals based on their merits. The BOI officials feel that in judging project approval based on their merits, officials could have more discretion compared to the present system of following a rulebook on investment limits. They also feel that there is little risk of corruption if necessary safeguards are in place. Under the existing requirement the BOI sets a minimum investment limit which may be unfavourable to attract smaller investments in certain priority areas. For example a minimum investment of $ 150,000 required for export ventures and $ five million in the case of other ventures. The island with one of the most liberal economic regimes in Asia established a free zone, under the name Greater Colombo Economic Commission, in 1978 which was later reconstituted in 1992 as BOI, to attract foreign investment. Today there are eight free zones covering all parts of the country and over the years they, together with three major industrial parks, have become linchpin of economic development and inflow of FDI. All foreign investments were guaranteed by the Constitution besides offering other incentives such as total foreign ownership and repatriation of foreign exchange without any restrictions. The BOI companies account for 60 per cent of all Sri Lankan exports and for 80 per cent of the country's industrial export. Last year the BOI approved 499 projects compared to 385 in the previous year. (Courtesy Gulf News) |
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