Malik outlines Sri Lanka’s forward march with focus on opening more to the world

Development Strategies and International Trade Minister Malik Samarawickrama signing an agreement between Sri Lanka and South Korea as President Maithripala Sirisena and his South Korean counterpart Moon Jae-in look on last week

It is a great pleasure to be here on this occasion, where our two countries are seeking to expand our trade and investment partnerships. 

Korea has been a longstanding partner of Sri Lanka, in supporting infrastructure development, knowledge and cultural exchange, and technical cooperation. It is now an opportune time to take our partnership to new heights. 

Why do I say that it is an opportune time? Under the leadership of President Sirisena and Prime Minister Wickremesinghe, our Government has taken numerous initiatives to make Sri Lanka a respected nation and a formidable economic player in the Asian region once again.

The focus of the Government is to shift the economic growth model from one that was heavily dependent on public infrastructure spending, to growth driven more by private enterprises, exports, and Foreign Direct Investment. 

Sri Lanka has been most successful during times of greater outward orientation – when it was more open to exports and FDI. But for some time during the past decade we had slipped on this, and growth was driven more by domestic activity. Our Government is now firmly focused on making the country more open to the world and become an attractive place to do business. 

Attracting foreign investment is a key priority of the country right now, and this is where a lot of our policy initiatives are being undertaken.

The Board of Investment is now reorienting itself to become much more responsive to investors needs and it is headed by private sector leaders with a track record of international business expertise. The approvals and facilitation process for foreign investors is being completely streamlined, with decisions being taken quicker and more transparently than ever before. 

We are also committed to improving the ease of doing business. Yes, we have slipped on the rankings recently but that has only made us more determined to double up our reform efforts. By next year you will see the results – on registering a new business, finding land and registering property, and easier international trade through an ‘Electronic Single Window’ and so on. 

To leverage on our location and expand market access, we are signing a slew of trade agreements with other countries – Singapore this year, India and China by next year. We also recently regained the GSP Plus trade concessions to the European Union and have an ongoing trade and investment partnership with the US. Through our preferential market access, anyone locating in Sri Lanka would be able to access nearly three billion people!

With our excellent strategic location, we have also become attractive for Belt and Road projects from China. The new Logistics and Industrial Zone in the south of the country – in Hambantota – is being developed with Chinese investment and we expect a lot of investor interest in this. Three other industrial zones are also being setup, including one in partnership with the Rojana Corporation of Thailand. We invite Korean firms to come and do the same – to set up industrial zones and bring export-oriented Korean firms to do business from those zones, and access the whole South Asian region and beyond. 

On the exports front, we are launching a new ‘National Export Strategy’ with a focus on competitiveness and innovation. The aim is to build more and more export brands from Sri Lanka – ranging from high value and high quality food and beverages, to leisure boats, IT services, and electronic components. 

While we are of course very keen to attract Korean investment to Sri Lanka, we are even keener to attract Korean know-how and technology to Sri Lanka. We have observed with great admiration the impressive development that took place in Korea, and this was largely driven by technological advancement. Korea is now a leading player in new technologies and hi-tech manufacturing, and through our economic partnerships I would like to see Sri Lanka benefit from that expertise. 

More broadly on the macroeconomic front, we are taking measures to build strength and resilience. Our Parliament recently passed a new Inland Revenue Act, providing a progressive, modern, and transparent income tax policy. The tax incentives regime is now firmly written into the law, and is based on investment allowances. The top rate of income tax is now lower than many countries in the region. Other revenue reforms – VAT reforms, predictability in tax incentives, automation of revenue administration – are all part of the fiscal reforms. 

On monetary policy – the Central Bank has moved towards a more competitive exchange rate, and a proactive monetary policy stance, to avoid “stop-go” cycles of instability, and provide more direction and certainty to the business community. 

The National Budget 2018 that was announced just last week has some of the strongest announcements of liberalisation we have seen in years – including removing para-tariffs on 1,200 imported items. The Budget also announced very progressive steps towards UN sustainability goals – by declaring that all Government vehicles will be either hybrid or electric by 2025, and dramatically reducing taxes on electric cars. 

Other policy initiatives include comprehensive new programs to support innovation and entrepreneurship as well as skills training. We are fully aware that without a focus on these areas we cannot go from middle income to high income, like what Korea managed to do. 

I wouldn’t be able to capture the range of all the initiatives we are taking – but for anyone who is curious on the new prospects emerging in our economy, I welcome you to visit and we can help you identify opportunities that suit you.

The total trade between our two countries is now just under $ 400, and has been steadily increasing. Our exports to Korea over the last five years have been growing by 7% each year, but there is a lot more potential to grow this further. We would also like to diversify our exports to Korea, beyond the current focus on apparels, coconut products and rubber products. Sri Lanka is keen to be a partner of Korea’s supply chain especially in automobiles and electronics products.

In concluding, let me thank you for being such generous hosts, and I look forward to supporting you to forge mutually beneficial trade and investment partnerships with Sri Lanka.

“Kam-saham-ni-daa” [Thank you].