Time to Invest in Sri Lanka. Chinese Ambassador to Sri Lanka Ambassador Qi Zhenhong delivered a speech at Sri Lanka Investment Forum 2021.
It is a pleasure for me to participate in Sri Lanka Investment Forum 2021. This year’s forum is held against the backdrop of Sri Lanka’s current combat against COVID-19. It is timely, necessary, and of great significance in facilitating Sri Lanka’s economic recovery in the post-pandemic era.
Pros and cons of investing in Sri Lanka
The friendship between China and Sri Lanka goes way back in history, and the friendly exchanges and mutually beneficial cooperation of our people are even better enhanced today. Sri Lanka’s National Policy Framework“Vistas of Prosperity and Splendour” is being embraced by the Belt and Road initiative of China. As a result, more and more Chinese businesses are investing here in increasingly diverse areas, ranking first on the list of FDI stock in Sri Lanka. And I think the following factors are behind Sri Lanka’s attraction for foreign investors:
First, its strategic location. Backed by the South Asian subcontinent, Sri Lanka is in very close proximity to the key shipping route connecting Asia and Europe. This shipping lane covers two-thirds of the world’s crude oil shipments and half of container transport. As the maritime hub between East and West, Sri Lanka is endowed with easy accessibility to Southeast Asia, South Asia, the Middle East, Africa and Europe having great potential for investments in logistics parks and overseas warehousing.
Second, its enabling policy framework. After ending the civil war in 2009, the Sri Lankan government has strived to incrementally improve the regulatory framework for foreign investment, continuously better the investment climate, actively seek cooperation opportunities and negotiate trade agreements with its partners. As the agency built specifically to administer foreign investments, the Board of Investment has done elaborate work in promoting and encouraging foreign businesses to invest in Sri Lanka.
Third, its welcoming platforms. Sri Lanka has established ten plus government-led export processing zones, industrial parks and other platforms dedicated to drive investments. Through these platforms, the investors enjoy different types of benefits in areas such as review and approval, tax incentives, foreign exchange control, land leasing, and supporting services, and thus are more inclined to invest. The brand-new Colombo Port City and the up and running Hambantota Port project are also platforms of similar nature that the Sri Lankan government strongly supports. I do hope our Chinese companies would seize this historical opportunity.
On that note, I would like to also point out some of the difficulties or bottlenecks one might encounter in the process: First, by having a relatively small-scale economy, Sri Lanka’s industry is not strong. Its development of the supply chain and supporting facilities is far from perfect. Second, although the policies to attract foreign investment are in place, the following problems still exist at the stage of implementation: lack of concrete measures, cumbersome administrative procedures, lengthy coordination process among government agencies and inefficiency in decision-making etc.. Much remains to be done in terms of investment facilitation. Thirdly, Sri Lanka has a dynamic environment of public opinion. Among the diversified views, unfortunately, there are at times baseless accusations and attacks on Chinese businesses.
Suggestions to further improve the investment environment
After introducing the pros and cons of investing in Sri Lanka, I would also like to share my humble suggestions with friends in Sri Lanka, on how to improve its investment environment, taking into consideration of lessons learnt in China’s over 40 years reform and opening-up.
First, to better create the favorable policy framework. Only with the guarantee of the right policies, could we expect foreign investment to take root and bear fruit. Therefore, it is important for the Sri Lankan government to ensure the consistency, stability, transparency and effectiveness of its investment policies to the largest extent. As such, China and Sri Lanka need to continue our efforts promptly to carry out the outline of the medium and long-term plan for investment cooperation and development between our two countries signed in 2017. At the same time, negotiations on the China-Sri Lanka FTA should be resumed as soon as possible. If a timely agreement can be reached, it will surely further promote our bilateral trade and investment.
Second, to better shape the friendly business environment. Only by creating an easy-to-do-business environment and providing favorable conditions for investors, the host country can obtain an early advantage from the get go, in the increasingly competitive world to attract international investment. As mentioned earlier, we count on the Sri Lankan government’s efforts to further streamline its review and approval processes, promote digitalization in the administration and improve the efficiency of government services provided (for instance, to establish the electronic one-stop-shop for investors), with the view to minimizing the cost of communication and coordination between businesses and authorities.
Third, to better cultivate the pro-business atmosphere of public opinions. We note that in recent years, there have been false attacks targeting Chinese businesses in the media while discussing the Colombo Port City and Hambantota Port from time to time. The accusation sometimes even labels the Chinese government for creating “debt trap” and “colonialization” in Sri Lanka. Those groundless accusations have to some extent affected the healthy atmosphere for our extensive cooperation. As a matter of fact, those Chinese companies took on the projects at the request of the Sri Lankan government in an hour of need, rather than “taking advantages” as claimed by some.
The Belt and Road Initiative is guided by the principles of extensive consultation, joint contribution and shared benefits, with the view to achieving the win-win outcome, rather than the “zero-sum” game. I believe, in order to properly address the difficulties encountered in bilateral cooperation, both sides should always keep in mind the mutually beneficial nature of our cooperation and our strong partnership as a whole. We should neither overlook the prominent problems arising in key projects because of our friendship, nor can we allow anxiety to cloud our judgement over short-term gains and losses: we need to avoid the mentality of feeling on the losing side when the projects are making progress with promising benefits; or to throw blame around when the projects are moving slow or temporarily hindered.
All in all, despite existing challenges, the time has come to invest in Sri Lanka. I sincerely believe, with the strong commitments by the Sri Lankan government to address those challenges, as well as the wisdom of our experienced investors, we are looking at an extremely promising future of our investment cooperation ahead.