EU-Sri Lanka investor dialogue to boost trade and investment from Europe

A meeting was organised by the Board of Investment of Sri Lanka and the Ministry of Development Strategies and International Trade to address outstanding matters concerning investors from the European Union.  

The Sri Lankan side was led by Development Strategies and International Trade Minister Malik Samarawickrama assisted by his Ministry Secretary Chandani Wijewardhana, Managing Director of the Agency for Economic Development Mangala Yapa, BOI Chairman Upul Jayasuriya, BOI Director General Duminda Ariyasinghe and Export Development Board Chairperson Indira Malwatte.

The European Union consists of 28 members states and is considered the world’s largest trading block with a cumulative GDP of ¤ 16.5 trillion. The EU was traditionally Sri Lanka’s premier source of FDI and remains one of the country’s major trading partners in terms of exports and imports.

The European Union delegation was led by Ambassador of the European Union to Sri Lanka and the Maldives, Tung Lai Margue, who was assisted by the ambassadors and commercial counsellors of European Union countries which maintain embassies in Sri Lanka.  

These included Deputy Head, Political, Trade and Communications section, Delegation of the European Union to Sri Lanka and the Maldives, Roshan Lyman, Deputy Head of Mission, Embassy of the Republic of Italy, Dr. Giandomenico Milano, Ambassador, Embassy of the Kingdom of Netherlands, Joanne Doornewaard, Deputy Head of Mission, Embassy of the Kingdom of Netherlands, Eva-van Woersem, Head of Commercial Section, Embassy of the Federal Republic of Germany, Gerhard Trumper, Economic Counsellor, Embassy of France in Sri Lanka and the Maldives Hugues Reydet. 

In addition to a number of senior officials of Sri Lankan ministries and departments, the BOI was involved in the discussions and was present at the meeting.  

Samarawickrama welcomed the European Union delegation and stated that ideally this group should meet once every quarter to resolve at very short notice whatever issues that may exist or arise. He thanked the EU for recommending that the GSP+ facility be restored to Sri Lanka, adding that the matter was now awaiting final approval from the European Parliament.

Another very positive development was the end of the ban on Sri Lanka’s fisheries products.  Minister Samarawickrama spoke of the need to improve exports, further mentioning fruits, vegetables, floriculture and horticulture products as additional goods to be exported to the EU.

Sri Lanka is currently experiencing 6%-7 % economic growth and interest rates are very attractive. He added that he wanted various countries to have ratings which would be on par with those of India.  

On the political front, Minister Samarawickrama said that the National Unity Government had enabled democracy and reconciliation in Sri Lanka and had been following a policy which stressed establishing a vibrant market economy but which was socially orientated.

Economic development was being promoted in all regions of the country to bring about greater integration for all.  

At the international level, Sri Lanka was seeking to actively develop comprehensive free trade agreements with both China and Singapore. Another development was ETCA with India and Pakistan.

The objective of this policy was to ensure that Sri Lanka would be highly integrated within the Asian region, which augurs well for regional trade and investment.  

Economic corridors

There were also steps to improve the business environment by looking at restructuring export trade in order to make Sri Lanka a more competitive country.  

Currently, the Prime Minister was working at rebalancing the economy of Sri Lanka with the development of major economic corridors such as the South Western one encompassing Kandy, Colombo and Hambantota and the North Eastern one which includes Jaffna and Trincomalee.

The country will also focus on developing and strengthening three ports, namely Colombo, Trincomalee and Hambantota. Furthermore, there will be four major airports in the country at Colombo, Hambantota, Hingurakgoda and Palali.

Areas of development in Sri Lanka in the future will be around the western megapolis, major tourism projects throughout the island, the Kandy City Development and the economic rejuvenation of the Northern Province.

Samarawickrama stated that these would be important opportunities for the investors from the European Union to look at in the future. Among the other reforms that the Minister spoke of were changes which would be implemented in the next few months, the establishment of a single window for investment whereby investors will obtain approval for their projects within a timeframe of just two weeks.  

Samarawickrama stated that the BOI Chairman is currently taking measures to bring about these changes. He added that by March 2017 there would be a new structure that would focus on investment promotion. He concluded by stating that Sri Lanka was now ready for business and that 2017 would be a very crucial year where major improvements would be introduced and would play an important part in the country’s future economic development.

European Union Ambassador Margue responded on behalf of the European Union and representatives of the other European Union member states.  He stated that EU-Sri Lanka dialogue was a useful tool both to attract new investors and help those already in the country.

In terms of economic importance, the EU is Sri Lanka’s first trading partner representing 31% of all of Sri Lanka’s exports.  It is also Sri Lanka’s second-largest source of imports.  

Ambassador Margue added that the EU imported an estimated $ 1.6 billion worth of garments and was also involved in building up further economic ties with Sri Lanka such as new EU-funded trade, lifting the fisheries ban and working towards the restoration of new GSP+ benefits for Sri Lanka.

GSP+ restoration

Hence the EU and Sri Lanka have worked very closely together and on the fisheries sector and have developed very close cooperation. Sri Lanka now has a very efficient fisheries set-up which is unique in the region. Furthermore, Sri Lanka now has good governance and has met the EU standard for GSP+ to be restored.

The European Parliament now has to pass through the GSP+ restoration to Sri Lanka and once that is complete Sri Lanka will have duty free access to the European Union market on all of its products.  

Hence fisheries products and agricultural products, which the Minister had mentioned, will also be covered under the GSP+ agreement and will be able to enter the European Union duty free.   The Ambassador also stated that one very positive aspect of the GSP+ agreement was its potential for bringing about backward integration which will help in the manufacture of yarn in Sri Lanka which is needed by Sri Lanka apparel manufacturers for their production.

The Ambassador stated that the dialogue would be an excellent platform to address items issues that impact investment such as the lease of land, ownership of property and the possible awarding of a five-year visa for investors in Sri Lanka.

The Ambassador concluded by saying that the EU and Sri Lanka had been strong partners historically and at present these relations were being further strengthened.  He wished every success to the EU-Sri Lanka business dialogue.

The agenda of the discussion included subjects such as the five-year visa to be accorded to foreigners residing in Sri Lanka. This was being considered in a favourable light.

Another area which was discussed included transparent tender procedures to ensure that companies from the EU could also bid for Sri Lankan Government tenders. The Sri Lanka Government was seeking the possibility of setting up a central portal where planned projects would be listed.

Both sides also discussed matters relating to customs including facilitation and also a clear definition of what constitutes ‘used cars’.  The individual European Union delegation brought to the attention of the Sri Lanka side specific instances of companies that needed assistance. The question of colour coding food with different sugar levels was also raised by the EU side. 

Hence the Ministry of Development Strategies and International Trade and the BOI by relaunching the EU-Sri Lanka Business dialogue was confident of the emergence of stronger economic ties with the European Union, Sri Lanka’s premier trading partner and the world’s largest trading block. Favourable conditions have been created for greater levels of trade and investment inflows.