Mandated to woo foreign investments the BOI which is under restructuring is promoting the perfection of learning via trial and error though at some cost.
The latest is the BOI going back to a single sheet application form which the new administration originally abandoned when it took over in May last year and akin to reinventing the wheel introduced a cumbersome 14-page format.
There was no rationale for the introduction of an exhaustive format but insiders alleged it was more an act of “change for the sake of change” which irked prospective investors who had either been previously informed or were aware of swift facilitation on the basis of a single page initial documentation.
However employees said this week the “one pager” has been reintroduced much to the relief of all stakeholders, a move which is reported to be on the orders from the top.
BOI is currently being restructured to become efficient and effective whilst the incentives regime is being rationalised.
Analysts said the task of boosting Foreign Direct Investments (FDI) remains daunting despite highly improved country profile post-war.
BOI is beset with an embarrassing achievement of attracting an FDI flow of only US$ 450 million last year, the lowest ever figure under President Mahinda Rajapaksa regime.
This disappointing performance widely seen as a indictment on the President’s and the Government’s zeal to woo foreign investors especially after heralding peace, was after averaging around US$ 600 to $ 900 million FDIs between 2006 and 2009 (see table), most parts of which had the height of war against terrorism.
Employees attributed the lowest FDI flow in 2010 to irrational changes, inconsistent policy regime and lack of effective marketing whilst outsiders pinned it on lack of confidence at ground level and overall delay in decision making
Some also cited global recession with many other Asian nations seeing a dip in FDIs. Either way there is less amount of FDI being ploughed into post-war Sri Lanka so far, as it has been largely bilateral funded (loans and grants) projects especially promoted by China, India and a few others that have taken place.
However largely on the confidence of on-going restructuring and improving country profile, the BOI’s new regime has recently gone public that FDI flows in 2011 will be well over US$ 1 billion. Owing to a few unsolicited strategic deals such as Shangri-La Hotel and CATIC to build luxury hotels and commercial complexes as well as Malaysia’s Axiata making a fresh commitment of US$ 200 million this year, the FDI inflow in 2011 is expected to be higher than recent years’ lowest figure achieved in 2010.
Recently the BOI in a statement said that the organisational changes, which had sparked controversy, are continuing as planned with due consultation and consent of majority of the staff of the BOI.
Despite the legacy of lowest ever FDI figure in 2010, in February this year the BOI announced a new strategy to raise FDI in Sri Lanka to the desired level of 4 to 5 % of GDP over the next 3 year period. That statement also said the FDI this year is expected to reach the highest ever achieved by the country and will be well in excess of US$ 1 billion.
The changes aim to focus the BOI’s resources on priority investment projects most critical to national development – thereby accelerating job creation and income growth in all areas of the country. The expected outcomes are the speedy raising of income levels of all people of the country in a move to achieve the vision of being the “The emerging Wonder of Asia”.
“With the end of the war and the dawn of a new era of opportunity for Sri Lanka, we in the BOI need to take a lead in defining investment priorities and marketing these to investors, rather than just responding to proposals only” the statement quoting BOI Chairman Jayampathi Bandaranayake said. “And, once companies are ready to invest, the BOI needs to do everything possible to get their business started, by intervening directly on behalf of the investors with the relevant line agencies,” it added.
The core of the new organisation structure will be Sector-focused Investor Relations Teams. These teams (together with special units to handle high-profile projects and regional initiatives) will cover all vital sectors of agriculture, manufacturing, services including tourism and infrastructure. Each team will work with the ministries and agencies in their sector to develop a joint sector strategy, identify investment priorities and promote these to target companies. The same teams will act as relationship managers for all investors in their sector, from project evaluation and implementation to post-investment aftercare.
In addition, an integrated Investor Solution Centre will be established to guide investors through the business start-up process. The Centre will assist investors with all aspects, including access to land, environmental and construction approvals, as well as legal, financial and labour requirements, bringing together disparate departments to better serve investor needs.
The proposed changes have been developed and communicated through an extensive consultation and awareness building process with all levels, departments and unions of the BOI. “We are encouraged by the enthusiastic support that we have received from the vast majority of staff in the BOI and the unions to have a real opportunity of serving the country and to bring about the desired change for a better Sri Lanka,” BOI Chairman said in February. This communication process will continue as each phase is implemented over the next three months.
As confirmed by protests by employee unions the restructuring process hasn’t been smooth but remains daunting as in the case of ensuring over $ 1 billion in FDI flows in 2011.