The US Commercial Service based in Chennai in partnership with AmCham Sri Lanka led a trade delegation comprising of US companies based in India, recently. A business forum to discuss the investment opportunities and current business in climate was held at the Galle Face Hotel, Colombo recently.
In his welcome address Chargé d’ Affairs ad interim Andrew Mann emphasised the keen interests expressed by the current Sri Lankan Government to boost bi-lateral relations with the United States and the creation of an equal level field for Foreign Direct Investment (FDI) in Sri Lanka.
It was also mentioned that the US government recognises Sri Lanka as a critical partner in trade and has engaged in assisting and creating investment opportunities whilst making the country more attractive for business by creating transparent businesses and basing businesses on best practices and eliminating corruption.
It was expressed by Mann that good governance is essential to create business opportunities in Sri Lanka and such has been understood by the current Government to generate revenue for the company and for the job growth in the country.
Several large companies have already made a mark in Sri Lanka and such corporate giants are looking to invest in small medium enterprises that are engaged in innovation that will create more jobs and there are many businesses in Sri Lanka looking for joint ventures and there is high potential for partnerships. Mann also mentioned that American companies are not the only ones that are keeping an eye on Sri Lanka in order to create commercial ties.
Introductory remarks were made by AmCham Sri Lanka President Asanka Ratnayake at the event, where he mentioned that the correct policies are in place to attract investors to the country, creating a conducive environment for foreign investment.
It was also mentioned that there exists enormous opportunity for trade between the United States and Sri Lanka and Ratnayake emphasised on the opportunities available for the delegates present at the event and during their stay in Sri Lanka and to understand in detail the manner in which they can set up their businesses in Sri Lanka.
An introduction to the delegation from India was made by the Principal Commercial Officer (PCO) John Fleming, who with the assistance of his team had taken the key initiative to bring together individuals from diverse business corporation in India and to see what opportunities exist for this delegation, in Sri Lanka.
The delegation consisted of Arizona Tools Company, Authentix, The ELS Educational Services, HTC Global Services, Saggezza India, Underwriters Lab India, Asiana Hotel, Cognizant Technology Solutions as well as the $ 8 billion Fortune 500 company, OshKosh India.
AmCham Sri Lanka Vice President Felicio Ferraz also addressed the delegation on his experience of doing business in Sri Lanka as CEO of Ceylon Tobacco Company. Ferraz stated that the people in Sri Lanka are very well educated and has produced a high number of talented individuals in Sri Lanka who are willing to grow and is keen to work for reputed multinational companies who have set up in Sri Lanka.
Introductions were made by Sri Lanka Association of Software and Service Companies (SLASSCOM) Director Hariharan Padmanaban, in relation to the IT and Business Process Outsourcing (BPO) sector in Sri Lanka.
Sri Lanka ranked as one of the top 20 destinations for BPO industry
It was mentioned that Sri Lanka is ranked as one of the top 20 destinations for the BPO industry and the standards are growing even more with local parties looking for international partnerships to reach further heights in relation to the industry.
Padmanaban further explained that Sri Lanka is where you can find a tier-one location, for a tier-two price, in relation to IT, and the Sri Lankan Government along with Information and Communication Technology Agency (ICTA) will be of assistance to set up businesses in relation to IT in Sri Lanka.
Board of Investment of Sri Lanka (BOI) Executive Director of Investment Renuka Weerakoon whilst addressing the gathering mentioned that currently there are a lot of investment opportunities in Sri Lanka and so much so that companies that are ranked by Fortune as the top 100 companies are looking to set up their businesses in Sri Lanka.
It was mentioned that BOI is a one stop shop for those interested in investing in Sri Lanka and BOI will assist the investors by providing the necessary information to set up their businesses and also liaise with relevant government authorities to ensure smooth establishment of the business, and the operations thereafter.
Remarks regarding the current business climate in Sri Lanka were made by Rajendra Theagarajah who is the Director/Treasurer – AmCham Sri Lanka and also a Director and the Chief Executive Officer of National Development Bank PLC. Theagarajah whilst having vast experience in the banking sector explained to the delegates the drastic changes that took place in the country after the end of the civil war.
Presentation on ‘Doing Business in Sri Lanka’ was conducted by KPMG Manager of Corporate Finance Dushani Corea and KPMG Principle Shiluka Gunawardane. It was mentioned by Corea that inflation remains in single digits and have been the lowest rates within the past five years, but credit growth is not much as expected in post war but this year the credit growth rate has picked up.
Mismatch in skills set
It was explained that there is a mismatch in skills set, as graduates are not meeting the needs of the private sector and therefore the Government is at a critical stage of having to enhance the standards in the tertiary sector.
In 2014, it showed an increase in FDI in hospitality, harbour projects, Colombo city project but Sri Lanka is still lagging behind from the development that was projected, post war. The reasons for the delays in reaching the targets have been due to the challenges that exist due to budget deficits being in place especially due to election spending.
Key considerations to attract FDI are: political stability, economic growth and simplification of procedural surroundings.
It was also mentioned that Sri Lanka has improved its status in the World Bank’s Doing Business Rankings where Sri Lanka has gained momentum from being in the 105th place in 2014 to being in the 99th place in 2015.
Corea explained that the legal procedure of setting up business has been made quick and easy and the BOI has been made a one stop shop that will assist the investors to establish their businesses when channelling their investment through the BOI.
It was also mentioned that foreigners cannot own land in Sri Lanka but could lease land up to 99 years by paying a land lease tax and it was mentioned that Sri Lanka does not charge capital gain tax.
Compelling reasons to invest in Sri Lanka
Gunawardane explained to the delegation that the compelling reasons to invest in Sri Lanka are the expected accelerated development, strategic location and access to markets, investor friendly environment, open economy, skilled labour force, small but attractive market, international trade agreements and untapped natural resources.
During the event, the questions and answers session was moderated by Peter Zirnite, where it was expressed that proper procedures are in place to protect Intellectual Property (IP) in Sri Lanka and AmCham together with the US embassy are assisting to create awareness and put in place the right measures to protect IP and it was also mentioned the Sri Lankan government’s willingness to protect IP in the country.
Questions were raised by the delegates as to what steps have been taken by the government to address the unemployment rate in the country, and it was mentioned by Padmanaban that from BPO perspective the Government apart from the university education provided the Government along with the private sector has also been investing in tertiary education and as a result Sri Lanka has a high number of professionals who are well able to be engaged in the BPO industry.
With the conclusion of the Commercial Service Trade Mission, the delegates at the event were able to obtain an insight into the investment opportunities available in Sri Lanka and to make the right connections during their stay in Sri Lanka.
Published in DailyFT, Sri Lanka on July 10, 2015 (http://www.ft.lk/article/443895/US-Commercial-Service-delegation-explores-opportunities-in-SL-via-AmCham).
Words by Radhi de Silva