INVESTMENT OPPORTUNITIES IN SRI LANKA. Sri Lanka Total Land Area: 65,610 s.q. km Population: 20.48 Million Commercial capital & largest city: Colombo.

INVESTMENT OPPORTUNITIES IN SRI LANKA

Sri Lanka

Total Land Area: 65,610 s.q. km Population: 20.48 Million Commercial capital & largest city: Colombo Currency: Sri Lankan Rupee (LKR) GDP Growth Rate: 7.3% (2013) Per Capita GDP Income: US$ 3,280 (2013) Literacy rate: 95.6%

Facilitation Body for Foreign Investments

The Board of Investment of Sri Lanka

The central facilitation point for investors for assistance and advice throughout the investment process 36 yrs of experience, an engine of growth creating a considerable impact on the country's economic

development Committed towards continuously improving the country's investment climate BOI companies today employ over 470,000 workers 65% % of Sri Lankan exports and 86% of the country's industrial exports Agreement with the BOI remains valid for the life of the enterprise . Provisions unalterable by successive govts. Facilitates investors on a sector-focused approach, covering all vital areas of the economy. Country specific information, can be obtained from Country Desk Officer pertaining to the origin of your

investment.

Note :- An investment application form can be obtained from the relevant sector.- Duly completed application forms need to be handed over to the relevant sector heads. - The sectors will act as relationship managers for all investors in their sector, from project evaluation to

implementation to post - investment aftercare.- Hours of Operation are Monday to Friday : 8.30am to 4.30pm (GMT +5.30)

Why Sri Lanka?

• Peaceful domestic environment, favorable government policies & improved investor confidence commendable performance in 2013

• The improved performances in all key sectors high economic growth• Services sector: largest contributor to national economy 56.8%• The strong economic performances lifted country's per capita income

graduated to middle income status from the list of Poverty reduction & Growth Trust (PRGT) eligible countries

• Government plans to transform Sri Lanka into a strategically important economic centre by developing five strategic hubs:

• Knowledge hub• Commercial hub• Naval & maritime hub• Aviation hub• Energy hub

• Development of hubs based on Sri Lanka's strategic location & resources

A) Strong Resilient Economy

Pioneer of economic liberalization among South Asia (3+ decades ago) Government has embraced Strategies and policies conducive for international investment embraced Transparent investment laws that aim to foster foreign direct investments:

Why Sri Lanka?B) Supportive Government Policies

Index of World Economic Freedom Rankings -2014

Country World Ranking Country World Ranking

Singapore 2 Indonesia 100

Korea, South 31 India 119

Malaysia 37 Pakistan 126

Thailand 72 Bangladesh 131

Philippines 89 China 137

Sri Lanka 90 Vietnam 147

Burma 162 Nepal 149

Iran 173

o Total foreign ownershipo No restrictions on repatriation of earnings, fees, capital, and on forex transactions relating to current account payments.o Safety of foreign investment - guaranteed by the constitution.o Existence of a transparent legal and regulatory framework, covering all prerequisite business law enactments.o Bilateral investment protection agreements (28 countries) & double taxation avoidance agreements (38 countries)o Founder member of the Multilateral Investment Guarantee Agency (MIGA)o According to the Index of Economic Freedom (2014), Sri Lanka has been ranked 90 of 186 countries

Efforts intensified to attract investments to target sectors in which Sri Lanka has strong foundation for growth + to areas where it is nationally important to develop.

Incentives to induce high value investment to priority sectors. BOI promotes diversification of Sri Lanka's industry and services with special focus on advanced technology and value addition.

Amendments to the tax system overall tax regime for all sectors will be less complex and at a lower rate across the economy.

Target Sectors Actively Promoted by Sri Lanka through Board of Investment (BOI)1. Target Sectors Actively Promoted by Sri Lanka through Board of Investment (BOI)

2. Export Oriented Manufacturing

3. Export Oriented Services

4. Tourism, Tourism Related Projects

5. Infrastructure Projects

6. Higher Education/Skill Development

7. Value Added Strategic Projects

8. Agriculture (Agro Processing, Fish Based Industry, Dairy)

9. Establishment of Industrial Estates, Special Economic Zones, Knowledge Cities.

Why Sri Lanka?B) Supportive Government Policies (contd..)

2011: most literate population in South Asia - 94.2% (Male: 91.1% and Female: 93.5%) Investment in public education a competent, intelligent, trainable workforce that's comfortable

with high tech production and services 50% of the students who have completed higher education are trained in technical and business

disciplines Business language: English Well educated and energetic, skilled and semi-skilled human resources are readily available at

competitive wage rates.

Why Sri Lanka?C) Educated and Adaptable Workforce

Literacy Rates of Selected Asian Countries in 2011

Country Literacy Rate % World Ranking

Thailand 94.1 84Indonesia 92 94Malaysia 92.5 92Sri Lanka 94.2 83Vietnam 92.8 91India 74.1 139Bangladesh 55.9 164Pakistan 62.2 159 Source : UNDP Report, 2011

Labour force: 49.8 % of the population - men 67.8% & women 33.4% Reputed for its precision, quality and productivity Skilled and semi-skilled workers at competitive wage rates Renowned for high caliber professional skills esp. in Financial

Accounting and Marketing sectors World class reputation in the production of high end garments and

lingerie markets

Why Sri Lanka?C) Educated and Adaptable Workforce (contd…)

Wage Rates - 2013Country Min. Wage

(USD/Month)[probationer to skilled

worker]

Factory Worker Monthly Base Salary (USD/Month)

BangladeshSri LankaPakistanVietnamIndiaIndonesiaThailand

39 - 109 *73 - 82 *

82145

28 - 155 *226

9.85 / Day

74108173113276239345

Source: Investment related costs in Asia and Oceania, 23rd Survey, JETRO, 2013

Situated at the crossroads of major shipping routes connecting South Asia, Far East and the Pacific with Europe and the Americas.

Located next to the fast growing Indian sub-continent with close proximity to Southeast Asia and the Middle East.

Strong air connectivity with over 100 weekly flights to India alone. Connected to the SEA-ME-WE III and IV (South East Asia – Middle

East – Western Europe) fibre optic communication backbone with over 11 communication satellites orbiting above the south of the country.

Why Sri Lanka?D) Location and Connectivity

The most liberalized economy in South Asia 1978: Open market free economic policies adapted Successive governments further liberalized the economy, leading to

deregulation, greater privatization and opening the economy to international competition

Transparent investment laws aim to foster foreign direct investments 100% foreign ownership of companies permitted ie. local partners for

foreign investments - not required 100% repatriation of annual earnings/ profits permitted ie. re-

investment of proportion in the business – not stipulated Never defaulted international debt obligations Commercial laws are based on British laws + highly independent

judicial system Safety of foreign investments guaranteed by the Constitution ie.

foreign owned assets cannot be expropriated

Why Sri Lanka?E) Vibrant Business Environment

Strong Intellectual Property law in line with WIPO and WTO regulations

Guaranteed national treatment ie. no discrimination between a local and a foreign investor

Insurance cover against political risk from Multilateral Investment Guarantee Agency (MIGA) (Sri Lanka is a signatory)

Sense of security & financial advantage (due to the attractive tax holidays) guaranteed by : Bilateral Investment Protection Agreement with 28 countries Double Tax Avoidance Agreements with 38 countries including Saudi Arabia

on limited basis Dynamic and resilient private sector - possible joint venture partnership

for foreign investors. Concessions granted under an agreement with the Board of Investment –

for qualifying investment projects - remain valid over the lifetime of the enterprise

Why Sri Lanka?E) Vibrant Business Environment (contd…)

One of the safest countries in the world to invest Mechanisms in place to protect investors: Article 157 of the constitution guarantees the safety of

investment protection treaties and agreements approved by parliament by a two thirds majority

Signed Bilateral Investment Protection Agreements (IPA) with 28 countries

Independent system of courts which can redress any concerns of investors

Bilateral Double Tax Avoidance Agreements with 38 countries.

Why Sri Lanka?F) Investment Protection and Double Taxation

Australia

Belgium-Luxembourg

China

Czech Republic

Denmark

Egypt

Finland

France

Germany

India

Indonesia

Iran

Italy

Japan

Republic of Korea

Kuwait

Malaysia

Netherlands

Norway

Pakistan

Romania

Singapore

Sweden

Switzerland

Thailand

United Kingdom

USA

Vietnam

Bilateral Investment Treaties signed with:

Australia

Bangladesh

Belgium

Canada

China

Denmark

Finland

France

Germany

Hong Kong (Limited)

India

Indonesia

Iran

Italy

Japan

Korea (Republic of)

Kuwait

Malaysia

Mauritius

Nepal

Netherlands

Norway

Oman (Limited)

Pakistan

Philippines

Poland

Qatar

Romania

Russia

Saudi Arabia (Limited)

Singapore

Sweden

Switzerland

Thailand

UAE

United Kingdom

USA

Vietnam

Double Taxation Avoidance Agreements signed with:

• Granting of Tax Holidays from 4 -12 years depending on the value of the Investment

• Min. Investment LKR 25 ml/ $ 0.25 ml• Corporate tax for Export Oriented Activities (90% export)/ Tourism/

Construction, Industry/ Petroleum Exploration• Duty Free Imports : Capital Goods and Raw materials for Export Oriented

Activities, Capital Goods only (for all other categories)• Exemption from Exchange Control: For Companies that export goods (Minimum

90% of total output) and for companies receiving earnings in Foreign Currency for export services

Why Sri Lanka?G) Incentives for Investments

Colombo city: A cosmopolitan living environment Abundant nightlife, world-class shopping, theatre, cafes, art & star

class hotels Comfortable housing: Luxury condominium apartments ideal for

expatriates Internationally recognized institutions of healthcare & excellent

medical facilities Educational institutions of international standards World-class recreational sites Equable climate throughout the year Unparalleled natural beauty

Why Sri Lanka?H) Quality of Life

Only country in the world that has Free Trade Agreements with both India and Pakistan Market access on a duty free basis to a total market size of 1.5 Billion people - middle

class of 500 Mn people (size of entire European Union) Indo-Sri Lanka FTA (2000) : 100% duty free access to India for 4,232 products. Trade

growth by 5+ times. Pakistan-Sri Lanka FTA (2005) : 100% duty free access to Pakistan for 4,686 products.

Trade growth by 3 times. [Note: 1) To qualify under the above FTAs products need to be wholly produced or have

a domestic value addition of 35% value addition FOB level, 2) The HScode transformation needs to be at the 4 digit level for the ISLFTA and 6 digit level PSLFTA. Details provided the BOI website ]

By locating in Sri Lanka, a company can gain preferential trade access to two large regional blocs under the South Asian Free Trade Area(SAFTA) and Asia Pacific Trade Agreement (APTA)

Non -Reciprocal market access to EU and the USA, Japan, Canada, Russia etc, under GSP FTA with China under negotiations

Why Sri Lanka?I) Access to Key Markets

Preferential market access for products of Sri Lanka origin

The Sri Lankan government has launched an ambitious program of physical infrastructure development to completely upgrade the sea, air, road, power and telecom backbone of the country. Main features of this program:1) Sea Port and Airport Development: Colombo South Port Expansion• The Sri Lankan government has declared its intention to develop the country as a leading regional aviation, navigation and trading hub in South Asia• Development of maritime & aviation transportation is infrastructure development agenda. •Focus: To expand the capacity and improve the efficiency of existing ports through modernization and construction of new ports and airports in strategic locations.

Why Sri Lanka?J) Rapidly Developing Infrastructure

World Port ranking: No. 1 in South Asia Total container throughput 4 Mn. TEUs Transshipment cargo 70% 33 major shipping lines 14 feeder services Capacity to be increased - 12 million TEUs 12 new berths Will be the deepest port in the region New port being constructed in South Eastern Sri Lanka

Colombo South port development (under construction)

2) Hambantota Port Development

Phase I of the project, the Mahinda Rajapaksa Magampura Port, was inaugurated in November 2010.

The port is expected initially to function as a service and industrial port and later be developed to handle transshipment cargo.

Phase II of the port is underway at an estimated cost of US$ 800 Mn. The port is ideally located to serve the main East-West shipping lane connecting Europe and the Middle-east with South East Asia.

The bunkering facilities at the Port of Hambantota, set up at a cost of US$ 76.5 million, and the tank farm has commenced commercial operations.

Out of the 14 tanks it has, eight tanks will be used to store marine fuel, three will store aviation fuel and three remaining tanks will be used to store liquid petroleum.

The aviation fuel stored in the Hambantota Port is to be used for the Mattala Airport, the second international airport currently being built in Hambantota.

Why Sri Lanka?J) Rapidly Developing Infrastructure (contd…)

3) Expansion of Bandaranaike International Airport

A project is under way to expand the island's first international airport at Katunayake, 35 km north of Colombo.

The project includes the expansion of the transit area, construction of new baggage-reclaim area, multi storied car park and widening of the existing runway.

A feasibility study is being carried out for a second runway.

a) Colombo - Katunayake Expressway - CKE (25km) The Colombo – Katunayake Expressway connects the Colombo City and the International Airport at Katunayake. It

consists of four Interchanges at New Kelani Bridge, Peliyagoda, Ja-Ela and Katunayake. The Contract value of the project is US$ 292 Mn. Construction was completed and opened for the public on 27th of October 2013 by his Excellency the president Hon. Mahinda Rajapakse.

The CKE will reduce the travel time between Peliyagoda and Katunayake to 20 minutes from the earlier time of 1.5 hours using Peliyagoda-Puttalam road (A003).

The quick travel between the Bandaranaike International Airport and the capital of the country with enhanced safety will surely help to boost the country's economy in addition to providing pleasant travel to the road users.

Why Sri Lanka?J) Rapidly Developing Infrastructure (contd…)

4) Development of High Mobility Road Network Road development in the country, which was left behind last few decades due to the war, has been

given prominence by the government. The national Road Master Plan has already been prepared, which focuses on the construction of

highways, widening of highways, reduction of traffic congestion, road maintenance & rehabilitation and bridge rehabilitation & reconstruction.

It has become an urgent necessity for further investment in road network, thus the development of road network has become a major determinant factor in attracting new investments to the country.

b) Southern Highway (126km) The longest expressway being built in Sri Lanka. The construction of a four-lane highway from Colombo to Matara will be a

catalyst for the economic and social development of the Southern region and promotion of and inter-regional transport network. The highway was opened for public on 27th November 2011.

The section of Southern Expressway from Pinnaduwa (Galle) to Godagama (Matara) has been opened to public on 15th March 2014.

This section also consists of 4-lane capacity similar to the earlier section from Kottawa to Pinnaduwa. The maximum operating speed for this section is also 100 kmph.

Now the Southern Expressway from Kottawa to Godagama (Matara) is in operation. It is expected to extend the Southern Expressway from Matara to Hambantota with the intention of linking Mattala Airport and Hambantota Harbour to the Commercial Capital, Colombo in future.

c) Outer Circular Highway - OCH (29.2km) The outer Circular Highway (OCH) is located in the Colombo Metropolitan Region and passes through two administrative districts, namely Colombo

and Gampaha. This highway runs around 20 km away from the City centre of Colombo, connecting radial routes and has a total length of 29.2 km. The northern end of the highway is located at Kerawalapitiya on Colombo-Katunayake Expressway and the southern end is located at Kottawa on

Colombo-Ratnapura-Wellawaya-Batticaloa (A004) road where Southern Expressway meets OCH. Outer Circular highway from Kottwawa to Kerawalapitiya will link seven trunk roads and the Colombo – Katunayake and the Southern Expressways. The expressway is implemented in three phases as given below; Phase 1: Section from Kottawa to Kaduwela (11km) - Commenced in December 2009. (Phase 1 completed and opened for public in March

2014) Phase 2: Section from Kaduwela to Kadawatha (8.9km) - Commenced in 2012. Phase 3: Section from Kadawatha to Kerawalapitiya (9.2km)

Why Sri Lanka?J) Rapidly Developing Infrastructure (contd…)

d) Colombo - Kandy Highway (99km)

The proposed North – East Expressway (Colombo – Kandy Expressway) begins at Kadawatha of the present Colombo – Kandy (A1) Road (at the access point of the Outer Circular Highway) and links with Katugastota– Kurunegala – Puttalam (A10) road at Hedeniya and Kandy– Jaffna road (A9) at Katugastota.

The length of this road is 99 km. Construction of the North - East Expressway is mainly divided into two construction phases viz.

Phase I (Kadawatha–Ambepussa) – 48.2 km and Phase II (Ambepussa– Katugastota) - 50.7 km.

The expressway is expected to be built as a privately financed toll road and will be later expanded to Jaffna and Trincomalee.

The cost for the first phase of the road project is estimated to be one billion US dollars.

Why Sri Lanka?J) Rapidly Developing Infrastructure (contd…)

SEA-ME-WE IV fiber cable network

• Most advanced Telecommunication Industry in South Asia• Sri Lanka is being developed as regional hub for telecommunications• Fastest growth sector driven by public private partnership• Development of faster and more efficient technologies• Fiber Optic Cables with

– SEA-ME-WE III – SEA-ME-WE IV (Connectivity Bandwidth - 1.32 terabits per second)

Telecommunications Technologies GSM (Global System for Mobile communication)

3.75G and 4G services HSPA (High Speed Packet Access technology )

Video conferencing, video streaming, mobile TV, music streaming and high speed internet

CDMA

Why Sri Lanka?K) Developed Infrastructural Facilities: Telecommunications

Main Power Sources

• Hydro - 45%

• Thermal - 55%

•Total capacity – 1780 mw

Pipeline Projects• Trincomalee Coal Fired Plant (500 MW) • LNG Power & LNG Terminal (600 MW)

New Constructions• Norochcholai Coal Fired Plant (300 MW - 2011, Additional 600 MW – 2013)• Upper Kothmale Hydro Power Plant (150 MW - 2012)

Why Sri Lanka?K) Developed Infrastructural Facilities: Power

Tea, Rubber, Coconut Spices Gems Mineral sands and rare earths such as Mica,

Phosphate, Salt, Silica Sand, Feldspar, Graphite , Calcium Carbonates

Fishing grounds Oil and Gas deposits Nature Tourism

Why Sri Lanka?L) Natural Resources

Sri Lanka’s Total Export Values

Year

Sri Lanka’s Exports to Thailand

Sri Lanka’s Imports from Thailand

Total Trade

2006 38 205 243

2007 47 231 278

2008 77 298 375

2009 63 271 334

2010 84 316 400

2011 76 491 567

2012 66 460 526

2013 57 428 485

2014 54 462 516

Value in Millions of US Dollars Source of data: Dept. of Commerce, Sri Lanka

Production & ExportsA) Garments

• Industry with 3 decades of experience• 300 export oriented manufacturing plants• A flagship green manufacturing destination World 1st LEED Certified plant

Asia’s 1st carbon neutral facility

INTERNATIONAL BRANDS SRI LANKAN BRANDS

160 million kg of natural rubber produced annually

130,000 hectares under cultivation

Products: sheet rubber, sole crepe, latex crepe, technically specified rubber & centrifuged latex.

Accounts for 20% of solid tyre market

Industrial & surgical gloves with gamma irradiation facilities

Production & ExportsB) Rubber

• History of over 130 years , accounts for 20% market share today

• 330 million kg production accounting for 9% share grows in 200,000 hectares

• Adheres to ISO 3720 quality standard & ensures cleanest Tea with minimum Residue Limit.

• World’s first ozone friendly Certification Mark - grown 100% ozone-friendly

Production & ExportsC) Ceylon Tea

TEA BRANDS

• Pure Ceylon cinnamon – with unique flavor and

aroma

• 85% of world market share

• Produce a range of spices , pepper cloves,

nutmeg, mace & cardamom

• Supply high quality essential oils for cosmetics &

pharmaceuticals

Production & ExportsD) Spices

•Single largest supplier of bristle coir fiber

•Environmental friendly production

Products: • Desiccated coconut - Bakery & Confectionary • Coconut milk powder, cream & oil• Coco fibre pith, coco pots & poles for Horticulture • Coir brushes and brooms • Coir mats & carpets for flooring & for winter season• Geo textiles to prevent soil erosion.

Production & ExportsE) Coconut Products

• A rich variety of industrial minerals such as Graphite, Ilmenite, Rutile, Zircon, Quartz, Feldspar, Clay, Kaolin, Apatite, Silica sand, Garnet sand, Mica, Calcite and Dolomite.

• The Pulmoddai beach sand deposit is the most important non ferrous mineral reserve in Sri Lanka.

• Sri Lankan graphite popular for its high purity

Production & ExportsF) Mineral Products

EProducts: Tableware Wall & floor tiles Ornaments

Strengths Highly skilled workforce State-of-the-art technology In-house R & D facilities Abundant supply of raw materials Ensure design confidentiality International quality standards

Production & ExportsG) Porcelain & Ceramics

BRANDS

Yachts, Leisure , Pleasure boats Passenger, Sports, Rescue, Coast guard and

Petrol boats Fishing boats Boat building accessories

Fishing gear Propellers Life jackets Safety equipments

Production & ExportsH) Boat Building

Banking, financial, insurance, mobile

applications and HRM

Offshore Accounting & Legal services

Medical diagnostics & engineering services

Architectural/Construction services, Quantity

Surveying

Other export services

Ayurvedic herbal healthcare

Printing services

Globally Competitive industry

Clean and Green technology

Top CIMA student population

2nd highest pool of UK qualified

Accountants

Over 300 ICT/BPO/KPO Companies

Sub sectors Why Sri Lanka?

ServicesICT / BPO Services

MNCs Operating in Sri Lanka Global Brands Served

Leading Global Investments in Sri Lanka

Project Locations (for industrial manufacturing and processing businesses): a) BOI administered Export Processing Zoneb) Industrial Park (with required infrastructure facilities) on long-term lease basis.

Other Locationsa) Purchase a privately owned land on outright purchase or lease basis.b) Government owned lands* available for long term lease under different

government agencies.

*Acquisition of government lands involve a comparatively longer process and valuation is based on current market price.

Setting up in Sri Lanka

Department Contact Designation Contact Officer Location

Investment Promotion

Executive Director(Investment Promotion)

Mrs. Renuka WeerakoneTel: +94 112427003 [email protected] Level 26

Director (Investment Promotion)

Mrs. Nilupul De Silva Tel: +94 112427042 [email protected] Level 26

Director(Business Intelligence Unit)

Mr. Vidharshan Fernando Tel: +94 112427050 [email protected] Level 26

Project Appraisal

Director(Services and Utilities)

Mr. Nelson KumaratungaTel: +94112427093 [email protected] Level 24

Director (Manufacturing)

Mr. Udaya WijayakulathilakaTel: +94 112427093 [email protected] Level 24

Senior Deputy Director(Tourism, Knowledge Services

& Agriculture)

Mr. Gamini JayathilakaTel: +94 112427090 [email protected] Level 24

Senior Deputy Director (Apparel)

Mr. H SenevirathnaTel: +94 112427094 [email protected] Level 24

Senior Deputy Director(Infrastructure)

Mr. Ranjan SiberaTel: +94 112427086 [email protected] Level 24

Project Implementation

(Project Implementation) Mr. Duminda Ariyasinghe Tel: +94 112427032 [email protected] Level 26

Executive Director (Project Implementation)

Mr. Duminda Ariyasinghe Tel: +94 112427032 [email protected]

Level 26

Senior Deputy Director (Project Implementation)

Mr. Ajith WijeweeraTel: +94 112427399 [email protected]

Level 26

Monitoring Executive Director(Project Monitoring)

Mr. Shivan De Silva Tel: +94 112427203 [email protected]

Level 26

Director (Project Monitoring)

Mrs. Chandrani Samarakoon Tel: +94 112427345 [email protected]

Level 26

Thank you