Daily News Editorial

A sound strategy

07 November 2016

Sri Lanka, which has emerged as a Middle Income country, is moving into an era where it is becoming less dependent on foreign loans and aid and more dependent on trade and investment. This is the correct approach, since loans, sometimes obtained on commercial rates, have to be paid back eventually by the people. On the other hand, trade and investment generate funds that can be used for development without being tied up in debt servicing.

Prime Minister Ranil Wickremesinghe has become a firm proponent of trade and investment for Sri Lanka and has stressed the case for the country at many recent international forums. However, instead of being confined to the traditional economics of export of goods, he has expanded the ambit to include a digital and knowledge economy.

Taking part in the Ministers’ Dialogue Panel Discussion at the 15th Asia - Pacific Conference of German Business held at the Hong Kong Convention and Exhibition Centre a few days ago, the Prime Minister said the Government has recognized the need for a digital economy and is taking measures to digitalize the administration in order to successfully face future economic and social challenges.

The Prime Minister said Sri Lanka is inviting investors to the country is an effort to bring a digital economy. Although some sections of the industry like the apparel industry have been fully or partly digitalized, there are many other sectors that still lag behind. Hence the need to attract more investment in that direction.

The Premier mentioned two steps taken with regard to digitalization - free Wi-Fi zones have been set up throughout the country for the benefit of younger generation and Advanced Level students will be provided with free tablets loaded with their curricula soon. Moreover, university students will be provided credit to purchase laptops and special attention has been focused on providing vocational training in various fields to school leavers. With school education being made compulsory till Year 13, GCE Ordinary Level will no longer be a watershed examination that leaves a large number of students in the lurch, unable to proceed further with higher education.

Another factor mentioned by the Prime Minister was the priority accorded to Information Technology (IT). There is a need to increase the number of institutions giving IT training. IT and higher education will be a viable area for foreign investors looking for new opportunities in Sri Lanka. The latter will help Sri Lanka to gain foreign exchange from overseas students.

The Prime Minister was able to convince the affluent global audience present in Hong Kong on Sri Lanka’s new dynamism in its quest for a digital and knowledge economy. He is likely to repeat this message also in Hong Kong next month as the Keynote Speaker at the “World in 2017” event organised by the prestigious Economist magazine at the JW Marriot Hotel. This will be another opportunity to highlight the fresh opportunities available in Sri Lanka in IT, education, BPO and other emerging sectors.

The Premier has also emphasised time and again the significance of Sri Lanka’s geographical location, almost at the centre of Dubai and Singapore, Asia’s twin commercial hubs. Sri Lanka is around four hours flying time from both cities and is ideally poised to become another financial hub given its strategic position as the gateway to the one billion plus SAARC market. Even from Hong Kong, Colombo is only around five hours away. Sri Lanka’s participation in the “One Road, One Belt” modern Silk Road initiative that will eventually link 60 countries in Asia and Europe is another plus point for investors from the region.

It is also vital for Sri Lanka to cut the red tape further to facilitate Foreign Direct Investments (FDI). There has been a downturn in global FDIs due to the recession in many markets, the oil glut and price fall and several other factors, but Sri Lanka can still attract quality FDIs if the right conditions are provided.

Sri Lanka has the unenviable rank of 107 in the Ease of Doing Business rankings and aims to be within the top 70 by 2020, which is essential to boost investor confidence. Under this plan, the Government will streamline the processes of starting a business, registering property, paying taxes, enforcing contracts, resolving insolvency, trading across borders and regulating the labour in addition to establishing a single window for FDI. Sri Lanka’s upcoming trade agreements with India (ETCA), Singapore and China will also be a boon for trade and investment.

The Budget 2017, to be unveiled on Thursday, is expected to contain a bevy of measures aimed at spurring local and foreign investment including lower tax regimes. The Government must also invite more foreign business delegations to visit Sri Lanka and see for themselves the investment opportunities available. Sri Lanka in turn must make its presence felt at more foreign trade shows. A combination of strategies will be needed to make Sri Lanka shine brighter on the world investment stage.