BOI’s new processes boost Sri Lanka’s investment climate

In the current international environment where there is very strong competition for trade and investment, a select group of international institutions have established ranking systems based on internationally acceptable variables.

Investors and decision-makers decide in which country to invest based on these ranking measures.

The stakes are very high as most countries nowadays have free market economies and therefore seek to attract investment a Board of Investment Release said.

This is because investment levels have a significant impact on levels of employment, influx of foreign exchange, technology transfers and other economic benefits.

Furthermore FDI is a resource that a nation can create if certain conditions can be improved.

The World Bank doing Business Ranking 2008

According to a study conducted by the World Bank, Sri Lanka though placed 101st out of a total of 178 countries, has performed well in some of the criteria that the World Bank uses to ascertain the business friendliness of economies of countries.

According to the World Bank, a high ranking on the ease of doing business index means that the regulatory environment is conducive to the operation of business.

This index averages the country’s percentile ranking on 10 topics, made up of a variety of indicators, giving equal weight to each topic.

The ten leading countries in order are Singapore, New Zealand, USA, Hong Kong-China, Denmark, the UK, Canada, Ireland, Australia and Iceland. Interestingly Sri Lanka is ahead of a number of economically more developed and larger countries, which have considerably more resources or industries. These include Russia (106), Argentina (109), India (120), Brazil (122), Indonesia (123), and Egypt 126).

Where has Sri Lanka performed well?

Among the 10 criteria used by the World Bank, Sri Lanka was placed 29th in the category “starting a business”, 64th in “protecting investors” 60th in “trading across borders” and 39th for “closing a business”.

Sri Lanka is with the more successful States in these criteria and this could be attributed to the New Companies Act, which is very liberal.

The efforts made by the investment promotion agency of the Government, the BOI, to speed up the application process are another important factor. The Board of Investment of Sri Lanka now offers over the counter approval for most projects. Hence Sri Lanka has become a more investor friendly country in a number of respects.

A number of steps were taken in this direction.

The first was the initiative taken by Chairman and Director General of the Board of Investment of Sri Lanka Dhammika Perera, to examine personally all pending BOI project proposal files and clear those that had no reason to be kept on hold.

Perera, who is a leading entrepreneur in Sri Lanka, had stated that the single biggest impediment to investment was the lengthy period of time taken to process applications.

These delays had frustrated potential investors and compelled them to look elsewhere.

Another factor identified, this time by Minister of Enterprise Development and Investment Promotion, Dr Sarath Amunugama, was the complex nature of the documentation that the BOI required investors to fill prior to approval.

Since many of the questions asked by the BOI were not absolutely necessary, the 12 page document that had been in use for many years was replaced by a much more investor friendly one-page document.

Investors could obtain approval if everything was in order with this simplified application form.

Only exempt from this were projects where environmental approvals were needed.

The third improvement on the part of the BOI was the assigning of dedicated BOI officers for each investor.

The objective of the BOI was to create a service reminiscent of that offered by a major bank, where personalized service would ensure that the investor is “not lost” at any stage of the application process.

For very large projects such a major commercial investors or infrastructure projects, Dr Amunugama established a dedicated Mega Projects Unit consisting of senior and highly experienced officers of the BOI.

These changes within the BOI have played an important in improving the business climate of Sri Lanka and making the island more investor friendly.