Executive Focus: Rishad Bathiudeen, Minister of Trade and Commerce, Sri Lanka
What are the best opportunities for investment in Sri Lanka?
BATHIUDEEN: Sri Lanka is a very small country with a population of roughly 20m people and a $59bn GDP and after the end of three decades of conflict, Sri Lanka has been witnessing an economic renaissance and has become stable and safe. The Central Bank projects GDP to grow to $100bn by 2016. Among the GCC countries, the governments of Saudi Arabia, UAE, Qatar, and Palestine, have taken notice. For example, Qatar has noticed our progress and recently made a high level visit to Sri Lanka. Soon after, they announced a $1bn investment plan that will be focused on developing Sri Lanka's infrastructure and tourism sectors. The Singapore Business Federation and the Sri Lanka Singapore Business Council of the Ceylon Chamber of Commerce in Colombo recently signed an agreement to improve cooperation between the two organizations which shows the increasing business confidence on Sri Lanka in South East Asia, and more importantly, expectations of high tech knowledge transfer to the country. China, our second largest trade partner, has already been investing in the development of our infrastructure. In fact, China has invested more than $1bn in Sri Lanka. I also want to emphasise that before specifically pointing out any sectors, that manufacturing or value addition for export in any industry in Sri Lanka alone could be an opportunity. The manufacturer has the potential to maximize on Sri Lanka's FTAs with India and Pakistan thereby accessing the growing South Asian market. In short, intraregional trade is a significant opportunity we offer to the international investor. Another opportunity is tourism. In the new economic upswing last year, Sri Lankan tourism grew by 40% compared to 2010. This year we are expecting it to increase by another 40% and we project $2.75bn earnings by 2016. Currently, we only have 15,000 hotel rooms available but this is set to increase by 35,000 in the next five years. Arrivals are expected to increase from 855,975 in 2011 to 2.5m by 2016. As a result, we call international investors to come in to this sector. Apart from these, the other broad opportunities are in infrastructure development, IT, real estate, technology and farming as well. Of course, these are the "broad sectors" rather than "specific sectors".What initiatives has the Ministry of Trade and Commerce implemented in order to make the investment process easier in Sri Lanka?
BATHIUDEEN: As the Minister in charge of International Trade and Commerce, it is my mission to visit foreign economies and spread the message of Sri Lanka's economic resurgence and invite cross border investment communities to partner with us. Any foreigner, specially investors with a good track record, has the ability to invest in Sri Lanka. We do not have any restrictions when it comes to foreign investments. The funds of foreign investors are safeguarded by our constitution. My Ministry pioneered many FTAs, specially the Indo-Lanka FTA and Lanka-Pakistan FTA, so that potential investors coming to our country will gain open access to these two markets through our FTAs. In 2011, we renewed our trade with the Middle East in a very big way. For the first time, a high level delegation from Dubai arrived in Colombo to conduct the Sri Lanka - UAE Joint Business Forum. In May 2012, we facilitated the historic MoU between the Singapore Business Federation and the Sri Lanka Singapore Business Council of the Ceylon Chamber of Commerce in Colombo to improve cooperation between the two organizations which shows the increasing business confidence on Sri Lanka. More recently, I have successfully led Sri Lanka's trade delegation to Kunming Trade Fair in China. This has brought the Chinese government's attention on measures to increase trade ties with the Chinese market. We also promote foreign investments to the country. For the past few years, an increase in foreign investments has helped facilitate the growth of our GDP, which in 2011 was 8.3%. For this year, we are expecting our GDP to rise by 7.2%. FDI inflows in 2011 exceeded the Government's target of $1bn last year, with this year's target at $ 2bn. The global banking giant HSBC says that a high numbers of potential investors from China, India and Singapore were making inquiries to them about Sri Lanka.Which sectors of the economy are you expecting to experience the most growth over the next 2-5 years?
BATHIUDEEN: I would say that not just one or two sectors, but our overall economy itself is in a growth phase. Sri Lanka's main export is apparel though rubber products. Gems and jewellery are also gaining in importance lately. The largest markets that we export to are the United States and Europe. 70% of the garments that we export are going to the European market. Sri Lanka's other key export is tea. Currently, we are inviting people to invest in our industrial sector. As a result, our industrial sector increased to 22.1% in 2011. As for "specific sectors" with growth potential, I would say that warehousing, vehicle assembly, deep sea fishing, cold stores, apparel, IT/BPO services and outsourcing such as call centres, urban commercial and leisure property development, agriculture, agro processing and agro technology, marina and related commercial property development, fish canning and processing factories, fresh vegetables and fruit exports, tourist transportation and tourist leisure activities, shipping, and logistics show promise. These investments options are also part of becoming the economic hub of Asia as per the vision of His Excellency the President Mahinda Rajapaksa.Regarding tourism, how is the relationship between Sri Lanka and the Middle East? How do you expect this relationship to further develop in the future?
BATHIUDEEN: Typically, many people from the Middle East spend their vacations in Europe. However, in the past year, there have been a lot of people from the GCC (Gulf Cooperation Council) countries visiting Sri Lanka. As a result of this increase in visitors, we are starting to invest more heavily in the hotel industry. We must increase the number of available hotel rooms in Sri Lanka in order to boost our tourism sector. What is interesting is that other tourism destinations are now looking to us to operate joint tour packages. Such official requests have come not only from the Maldives and Seychelles, but even from Palestine. In 2004, only 10,450 tourists from the Middle East visited Sri Lanka but by 2009, this figure rose to 23,750. This year, January's Middle East tourist arrivals alone jumped by 70% in comparison to January 2010. We believe that joint tour packages with other tourist destinations, introducing tour packages with special attractions for businessmen and investors from the Middle East, introducing visa procedural relaxation or easing for Middle Eastern countries, specially for investors, promoting trade cooperation through mutual exchanges including business and trade delegations and more importantly B2B exchanges, will go a long way to strengthen not only the tourism relations but even our centuries long historic relations with the Middle East.