At present, the BOI is looking at attracting investment various sectors such as export oriented manufacturing, export oriented services, tourism and tourism-related projects, infrastructure project, higher education and skill development, agriculture and/or agro processing and fish based Industry development, dairy development, establishment of industrial estates, special economic zones, knowledge and many other sectors.
Key Sectors for Investment Promotion
At present, the BOI is looking at attracting investment various sectors such as export oriented manufacturing, export oriented services, tourism and tourism-related projects, infrastructure project, higher education and skill development, agriculture and/or agro processing and fish based Industry development, dairy development, establishment of industrial estates, special economic zones, knowledge and many other sectors49.
Legislation governing foreign investments
The principal law applicable to foreign investment is BOI Law No. 4 of 1978 and amendments introduced in 1980, 1983 and 1992 and Regulations made under the Act50. The BOI was established in 1978 as the Greater Colombo Economic Commission. In 1992, the Commission was reconstituted as the Board of investment of Sri Lanka51.
Depending on the nature of the investment and mode of operation, a number of regulatory and legal requirements such as labour-related laws and land-related laws, may also need to be considered prior to commencement of a business.
Potential Investments in Sri Lanka
- Knowledge Services
The knowledge services sector, which encompasses IT software development, Knowledge Process Outsourcing / Business Process Outsourcing industry, IT and IT enabled services and IT Training Centres, has tremendous potential to emerge as a key growth sector in Sri Lanka. Given the quality of students with good level of English and literacy, and the proximity to India, Sri Lanka is in an ideal position to develop into a high value added IT / KPO services provider. The industry has set the target of export revenues of US$ 1 billion and employment of 100,000 by 201652.
- IT Software Development
There are over 100 software development operations in Sri Lanka, which cater both independent and captive markets. Sri Lankan companies have been able to develop software products of their own which have earned them international recognition.
Leading software companies include Millennium Information Technology (Pvt.) Ltd, Virtusa(Pvt.) Ltd, Industrial and Financial Services, R & D International (Pvt.) Ltd. (IFS), Metatechno Lanka Company Ltd.,and WSO2 Lanka (Pvt.) Ltd.
a. KPO(Knowledge Process Outsourcing) BPO(Business Process Outsourcing) Industry
The KPO / BPO industry is an emerging sector in Sri Lanka. Since 2000, the KPO / BPO sector has come a long distance, and has been able to attract some of the KPO / BPO giants in the world. Sri Lanka is growing in reputation for niche areas of financial and other related-professional services, transaction processing and document management, and call centre services, thanks to growing accounting graduates pool53.
Leading KPO/BPO companies include: HSBC Data Processing Lanka (Pvt.) Ltd., WNS Global Services (Pvt.) Ltd., R R Donnelly Outsource (Pvt.) Ltd, Copal A, mba (Pvt.) Ltd., Hellocorp (Pvt.) Ltd.
b. IT Enabled Services
IT enabled and IT related services sector requires extensive use of information technology for the provision of services such as server farms, business services, etc. At present, there are nearly 30 companies, which operate under the Board of Investment of Sri Lanka. Dialog Business Services (Pvt.) Ltd, Hayleys Business Solutions (Pvt) Ltd., and Mphasis Ltd. are some of the leading companies in this segment54.
c. IT Training Centres
In an effort to develop Sri Lanka’s knowledge services, the education industry has been identified as one of the key areas of interest of the Sri Lankan Government. In order to ensure a consistent work force flow to meet the growing employee requirement of the knowledge services industry, IT training has been identified individually and has been given priority. There are around 20 IT Training Centres under the BOI, Sri Lanka Institute of Information Technology (Guarantee) Ltd. (SLIIT), and Asia Pacific Institute of Information Technology Lanka (Pvt.) Ltd. (APIIT).
d. Tourism Industry in Sri Lanka
In the 12thcentury, the explorer Marco Polo wrote that Sri Lanka was the finest island in the whole world. For centuries, it had been a tourism destination, particularly for European travelers. The advantage of Sri Lanka as a tourism destination is threefold. Firstly, it is an authentic tourism destination. Secondly, it is a compact island of 65,610 sq. km. where a tourist can travel the length and breadth of the country within a few days. Thirdly, the diversity of the tourism characteristics is unparalleled. In 2010, the tourism authorities has positioned the country in 8 different distinct characteristics, namely beaches, heritage, wildlife, scenic beauty, mind and body wellness, festivals, sports and adventure and essence55. For instance, the essence of Sri Lanka includes its uniqueness such asits art and culture, spices, tea, gems, handy crafts, etc.
Before 2009, the tourism industry was very unstable, picking up in certain years followed by decline due mainly to the terrorist attacks. Tourist arrivals to the country was fluctuating around 400,000-500,000 for decades. However, after the expulsion of terrorism, tourist arrivals and revenues have grown steadily. The country aims to earn US$2 billion by 2016 by attracting 2.5 million tourists56.
According to the Sri Lanka Tourism Development Authority, the number of tourists visiting Sri Lanka has increased drastically. From January to June 2016, nearly a million tourists have entered into Sri Lanka57 . The main reason for the influx of tourists is the end of the war and the uniqueness and lower costs of travel in Sri Lanka.
In 2015, there were 1.8 million tourists with the reported revenue of US$ 2.8 billion. The government estimates that there will be a further increase in tourist arrivals to Sri Lanka in 2016 - in the range of 2.5 million tourists with an expected revenue of US$ 3.5 billion58.
The Board of Investment (BOI), the agency tasked with attracting Foreign Direct Investments (FDI) to Sri Lanka, has been playing a pivotal role in attracting top tier tourism and hotel investors to the country. Companies that have already committed major investments include the premier Asian luxury hotel chains. Furthermore, international hotel brands such as Sheraton brand of Starwood Hotels and Resorts, Marriott International, Hyatt Hotels Corporation, Movenpick Hotels & Resorts Management and Onyx Hospitality Group, have signed management agreements with local hotel companies59.
Ranking and Global Recognition:
● Sunday Times UK in September 2015, recognized Sri Lanka as the “Destination of the Year for British Tourists&rdquo60;
● UNESCO, “Home to 8 World Heritage Sites”
Sri Lanka aiming at Asian hub Status
Sri Lanka aims to create an Asian shipping hub capable of competing against Singapore and Dubai by taking the advantage of Sri Lanka's position - 31 kilometers off India's southern coast, and its close proximity to the international shipping lanes linking the Far East, West Asia, Africa and Europe61.