FDI rise proves SL’s business-friendly ethos - The Guardian

Three reasons to invest in Sri Lanka

* Globally competitive: ranked 52nd out of 142 countries in the World Economic Forum’s latest index

* Educated workforce: literacy rate of nearly 95 percent – one of the highest in the developing world

* Location: just north of the shipping lanes connecting Asia to the West; and only 32km from India

In 2011, for the first time, Foreign Direct Investment (FDI) into Sri Lanka broke the US$1bn (£640m) mark. That might not seem a lot compared to its much larger Asian neighbours, but it is growing fast: FDI is on course to rise 70 per cent this year, says UK’s The Guardian in a report by Keyur Patel titled ‘Areas for Investment’ published recently.

“This is a testament to the island’s business-friendly ethos,” it adds.

The report adds: “In 2012, it climbed nine places in the World Bank’s Ease of Doing Business index, the highest jump by any country from 2011-2012. It fared better than all of the BRICs (Brazil, Russia, India and China) – commonly recognised as the world’s big 4 emerging markets – and in the “protecting investors” sub-category, ranked as high as 46th.

Under what is known as the Mahinda Chintana, Sri Lanka seeks to become a regional hub in five key areas: maritime, aviation, power and energy, commerce, and knowledge. M.M.C. Ferdinando, chairman of the Board of Investment, believes that FDI can inspire major economic transformation.

“Investors gain commercial benefits while the country should enjoy new sources of foreign exchange, creation of employment opportunities and technology transfers,” he says. “It should be a win-win situation.”

Sri Lanka is the only country to have signed free trade agreements with both India and Pakistan, giving investors in more than 4,000 products duty-free access to around a fifth of the world’s population. Since the agreements came into force, bilateral trade with India has grown more than five-fold, while trade with Pakistan has trebled. The island also has bilateral investment protection agreements with 27 countries, including the UK.

Last July, when Sri Lanka looked to international markets to raise US $1bn, its 10-year bond sale was over-subscribed by a factor of seven. Ajith Nivard Cabraal, governor of the Central Bank, cites this as evidence that the country’s growth story is being recognised. “Our bonds are trading at par or above, even in today’s context of the worst of times,” he points out.

Cabraal believes that Sri Lanka’s economy is “the most balanced and resilient” in South Asia, noting: “Our per capita income (currently around £1,800 per annum) is increasing at the fastest rate in the region, which proves that there is a new momentum in our economy”.

Moreover, he argues, if that figure rises to £2,500 – targeted within 5 years – the economy will enter an “auto-pilot” which will propel it to a new level altogether.”