In a recent speech at the Economic Freedom Summit organized by Advocata Institute, Thilan Wijesinghe the Chairman of TWCorp shed light on the critical aspects of attracting Foreign Direct Investment (FDI) to Sri Lanka. Drawing on decades of experience in both the private and public sectors, he outlined key historical successes, current challenges, and proposed solutions to rejuvenate the country's investment landscape.

Video of Thilan's speech:

Historical Successes

Thilan highlighted a pivotal period between 1995 and 2000 when Sri Lanka experienced a six-year stretch without entering an IMF program. During this time, sound macroeconomic management and policy consistency played a crucial role in achieving an average Equity FDI of $150 million – a 50% increase compared to the post-war era. Robust strategies, including the establishment of Export Processing Zones (EPZs) and targeted infrastructure development, propelled the country's economic growth.

Current Challenges

His speech underscored the shift in FDI mix over the last decade, with 90% of reported investments stemming from debt or retained earnings reinvested. The need for a strategic approach to investment incentives was emphasized, pointing out the drawbacks of the Strategic Development Project (SDP) Act. In his speech Thilan called for a reassessment of the investment criteria, urging greater transparency and coordination among key government agencies.

Proposed Solutions

Several recommendations were put forth to address the challenges and reinvigorate Sri Lanka's investment landscape. Key proposals included:

1. Introduction of a New PPP Law: Emphasizing the importance of Public-Private Partnerships (PPPs) in attracting FDI, Thilan advocated for a new PPP law and updated guidelines to streamline the evaluation process.

2. Rethinking Investment Incentives: He further proposed a comprehensive review of existing incentives with input from external specialists, the finance ministry, and the International Monetary Fund (IMF).

3. Amendments to Boi Law: Instead of an overarching new law, Thilan suggested interim changes to the Board of Investment (BOI) law, including expanding the board and incorporating provisions from the SDP Act.

4. Special Economic Zones (SEZs): The need for a new SEZ law was highlighted, promoting the declaration of strategic areas like Hambantota and Trincomalee as SEZs to facilitate social and industrial infrastructure development.

5. Public-Private Collaboration: Thilan stressed the importance of enhanced coordination between various government bodies, such as the BOI, PPP Agency, State Enterprise Reform Unit, Port City Commission, and the Ministry of Finance.

Conclusion:

In conclusion, Thilan's speech articulated a comprehensive vision for revitalizing Sri Lanka's investment landscape. By addressing historical successes, current challenges, and proposing strategic solutions, the country can position itself as an attractive destination for FDI, fostering economic growth and development. The success of these proposals hinges on transparent policies, effective collaboration, and a commitment to creating an environment conducive to investment.

Click here to download the presentation