After just nine months as director general, Sanjaya Mohottala was appointed chairman of Sri Lanka’s Board of Investment (BOI) in late 2020. Here he shares the island’s new FDI roadmap, plans for new free trade zones and BOI’s sustainability push.
Q: What are the key aspects of BOI’s FDI roadmap launched last year?
A: BOI is responsible for expanding sectors Sri Lanka is already good at, and building sectors that are important for its economic development. In that light we have identified five sectors and 17 subsectors, which we aim to transform into billion-dollar export sectors over the next five years. We believe they can help lift the entire economy, and move the country’s GDP per capita from around $4000 to $8000 over 10 years.
Q: What are those five strategic sectors?
A: First is manufacturing, including pharmaceuticals. Today almost 90% of our medicine is imported, but Covid-19 is forcing some manufacturers to sub-license operations, set up in new destinations and improve supply chain resilience. That gives us a bit of a tailwind. Another manufacturing area of focus is electronics.
Sri Lanka has almost 100 electronic producers, a lot of the raw materials needed to make next-gen electronic components, and a highly educated workforce. Then there is rubber, specifically tyre manufacturing where we have most of the world’s top brands including Michelin.
Second is our information and communications technology sector, which has built the innovative software and technology that run airlines, theme parks, cruise lines, even the London Stock Exchange. It’s our fastest growing sector with ambitious targets to increase start-ups to 1000 and annual revenue to $2-3bn by 2025.
Third is tourism, where the focus includes high-end offerings, health and wellness, and MICE [meetings, incentives, conferences and exhibitions]. Four of the world’s top 10 hotel chains are already in Sri Lanka, and we expect more to follow. Next is agriculture where we are pushing for investment in everything from food processing to aquafarming. And last is infrastructure, which can improve our FDI attractiveness.
Q: Unctad has recognised BOI’s success in sustainable investment. How are you continuing this?
A: Sri Lanka is the world’s most ethical sourcing destination, particularly for apparel. We are building an environmentally friendly fabrics zone in Eravur, in the country’s east, which should open next year. This year we are doing a sustainability audit of our 14 existing free zones, pushing for more green energy and better waste management. Top of my mind is the need to ensure all companies operating in our zones can take advantage of green credentials when selling overseas.
Q: How do Sri Lanka’s network of free zones serve the country and investors?
A: BOI is the landlord of each zone and they are directly managed by us. They house close to 300 large enterprises, provide around 150,000 jobs and generate a significant portion of our exports. In addition to the fabrics zone, we are building a pharma manufacturing zone in Hambantota in the south, and the plan is to build three more free zones in the next two years.
For companies the advantage of being in a zone is a streamlined setting-up process, and making use of all available facilities like electricity and import and export processing. It’s a truly one-stop shop experience.
Q: The government is targeting $2.5bn FDI in 2021. How will it achieve this?
A: Despite the disruption caused by Covid-19, in 2020 BOI managed to ink deals worth around $1.8bn. So this year we are looking at a figure north of $2bn-worth of investment, which will translate into FDI over the next one to two years.
There are already significant investments lined up for the Port City project, which will revamp the whole of Colombo, and this year’s government budget offers tax breaks for investments of $10m or more in the five strategic industries. We have been focused on building and maintaining a healthy pipeline, which will support the challenging FDI targets set by the government.