Opportunities abound for investment in Sri Lanka

Economy August 25, 2014 01:00

By Petchanet Pratruangkrai

6,588 Viewed

Thai firms urged to form joint ventures in many sectors to explore local market and export to third countries

Greater opportunities are waiting for Thais to trade and invest in Sri Lanka in various sectors, as its government has opened the country up for development since the end of the civil war, according to both Thai and Sri Lankan officials and investors.
“After the end of the civil war in May 2009, Sri Lanka’s economy has grown considerably,” said Thai Ambassador to Sri Lanka Nopporn Adchariyavanich. “With emerging growth, it has high demand for many things, which Thai investors should explore.” 
He noted that not only did the domestic Sri Lankan market offer high potential, but the country could serve as a business springboard to neighbouring countries.
Nopporn relayed this message during a media trip to Sri Lanka organised by his embassy last week. 
He pointed out that Sri Lanka was attracting more investment from China, India, and Asean countries now that it enjoyed political stability and strong economic growth.
Plenty of opportunities are awaiting in many sectors, including agriculture and agricultural industries, processed foods, fishery, retail and wholesale, construction and property development, hotels and other accommodation, management, imported used cars, restaurants, spas, and tourism and hospitality services.
Sri Lankans are having higher purchasing capacity each year, with annual gross domestic product growth not less than 7 per cent. This year, the economy is projected to grow by 7.3-7.5 per cent.
Annual income per capita was about US$3,280 (Bt105,000) last year, but the government aims to boost that to $4,000 by 2016 and to $7,000 by 2020. Unemployment is about 4.5 per cent, and inflation 6-7 per cent.
Labour is quite cheap compared with nearby countries, as well as in Asean. For instance, an unskilled labourer earns about 500-600 rupees per day (Bt125-Bt150 per day), and a skilled labourer about 1,000-1,200 rupees per day.
Most Sri Lankans can communicate in English.
However, the electricity cost is quite high at about 15-20 US cents per kilowatt. The office rental fee is $15-$18 per square metre, compared with about $20 in Thailand.
Nopporn said Thai enterprises should consider forming joint ventures with local enterprises in many sectors. Alternatively, they should look for local partners, as they have a better understanding of the market and connections with government agencies.
“If they invest in Sri Lanka, Thai enterprises will not only get [access to] a domestic market with a population of about 21 million, but also [opportunities] for exporting to third countries. Sri Lanka has export privileges with the United States, and the European Union under the Generalised System of Preferences, while it also has free-trade agreements with India and Pakistan.” 
Sri Lankan Economic Development Minister Basil Rajapaksa said the country now had political stability and the government was focused on improving living standards and economic growth.
“The Sri Lanka government has many projects to promote development such as the road network, the port, telecommunications, and industrial development,” he said.
The Sri Lankan government plans to send a trade mission to Thailand next year.
Lakshman Jayaweera, chairman of the Board of Investment of Sri Lanka, said his agency offered tax holidays ranging from four to 12 years, along with tax incentives at export-processing investment zones in 12 areas nationwide.
It also offers land leases of up to 99 years.
So far, Malaysia is the largest foreign investor in Sri Lanka, followed closely by mainland China, Hong Kong, India, Japan and South Korea.
According to the embassy, investment from Thailand in Sri Lanka is still small, worth about Bt386 million last year. This was mainly in the textile and jewellery industries.
Investment by Thais
However, some Thai hotel groups now are investing in Sri Lanka. Centara Group and Onyx (under the Amari Group) have signed hotel-management contracts. 
Nihal Fernando, deputy director-general of the Urban Development Authority (UDA), said his government planned to develop many areas in Colombo as shopping malls, trading and business centres, tourist attractions, and housing projects.
“Thai investors are welcome to offer their development plans to the UDA so that the government will offer contracts and land for development,” he said.
Some Thai enterprises that have already invested in Sri Lanka are encouraging more Thai firms to invest here.
Stephan Anthonisz, chief executive of Softlogic Properties, owner of Centara Ceysands Resort and Spa in Sri Lanka, said Thai hotel enterprises could form joint ventures with local partners, as Thais have high expertise in this industry.
Natthapong Khonprasert, plant manager of Bischoff Gamma Lanka, a Thai-owned producer of embroidery in Sri Lanka supplying many garment manufacturers worldwide, said great opportunities were waiting for Thai investors because the country was developing.