World Bank gets straight to the point on charting a new FDI path for Sri Lanka
By Sanath Nanayakkare
Faris Hadad-Zervos, World Bank Country Director for Sri Lanka, Maldives and Nepal skipped the usual preliminaries at the recent Sri Lanka Invest Forum (SLIF) and came straight to the point and told the participating global investors that Sri Lanka’s potential for attracting investment and creating an equally attractive business environment for new entrants was very clear, and if and when the right combination of things were in place this would become an ideal time to come and invest in Sri Lanka.
Speaking at the plenary session of SLIF on June 7, 2021 he said: “Let’s remember friends, not to focus today much on what Sri Lanka was, is and what it will be. We care about that but the reality is, the investors don’t. They don’t focus on what Sri Lanka is, what it was and what it will be, but what Sri Lanka is versus other countries from an investment point of view. And that’s the name of the game,”
Further speaking the World Bank Country Director said,”
Covid has likely triggered the biggest economic fallout since the Second World War.. I commend Sri Lanka on the many achievements in containing the pandemic in the past two weeks. The government’s management of the health crisis has been recognised worldwide and the measures it has taken to contain the ongoing wave.”
“The Sri Lankan government is focused on addressing its macro fiscal challenge and creating an enabling environment for investment in the short to medium term. We all agree on that and that’s why we are here. FDI has a huge role to play in helping to leverage the potential and diversity of growth in Sri Lanka.”
“In our analytical work, we have identified that some sectors such as textile/clothing, ICT services, Sri Lankan firms are expanding its global footprint, becoming globally competitive moving up the value curve, to diversify its growth and to offer more sophisticated products in different markets. You are showing the potential in these sectors. They have scaled up with the latest outside technology and experience to drive Sri Lanka for transformation. Where can the policymakers tap into the ecosystem to drive innovation in the large existing manufacture sectors such as apparel, ICT and high-tech products to fully harness Sri Lanka’s competitive advantage and integrate into the global value chain further? “
“Then the Tourism sector is the second largest export earner accounting for close to 55% of GDP before the pandemic. Tourism investments were around 10% of total FDI before the crisis. Now we are looking at the light at the end of the Covid tunnel, let’s build back better and greener. It’s time to address logistics, connectivity and shortage of skills to build a service oriented workforce so critical if Sri Lanka is to attract more high value Tourism services. But Sri Lanka’s distance to the frontier markets [in this regard] remains vast. And this is not me speaking about a shortcoming but rather a massive upward potential for a country with very positive horizons.”
“Sri Lanka’s FDI performance in 2019 was less than we wanted it to be.- at 1% of FDIs while Vietnam, Malaysia were able to attract 6% and 2.5% respectively. Sri Lanka aims to attract $ 5 billion FDI by 2025. We believe that this is entirely doable and is realistic given its rich natural resources, strategic location , highly literate workforce and available opportunities for investment.”
“If and when the right combination of things are in place , this becomes an ideal time to come and invest. This alternatively rests on a collective set of policies and practices that make up an investment ecosystem ranging from the improvement of the investment climate and elimination of unnecessary regulatory burdens and to enhancing responsiveness of bureaucracy in order to deliver effective FDI services. What we have seen in other countries is that investment promotion is the beginning of the story and not the end. The name of the game is attracting and retaining investment.”
“Also for the immediate term, the government will face a challenging balancing act between fiscal sustainability and jump starting the economic recovery. All countries are grappling with this. This is not unique to Sri Lanka. So what is the recommendation here? Use this pandemic to turn challenges into opportunities, to tackle the fundamental core issues that existed before the pandemic to build back better, greener and to be more agile. We are believers in the vast potential of Sri Lanka and that’s why we are here today.”
“We need to recognise that the government is focusing on and is trying to balance between fiscal sustainability supporting economic recovery, saving lives and catering to emerging post- pandemic spending needs. We have to recognise that this is a very difficult balancing act.”
“We have to agree that economy depends on production, labour and capital and optimal productivity. These were all affected by Covid leading to prolonged school closures, unemployment, digital barriers in education, reduction in overall investment etc. These will affect growth everywhere. Public investments are likely to be held back by revenue constraints. Sri Lanka is not unique in the world to this unfortunate thing.”
“On the macro fiscal perspective, Covid has aggravated Sri Lanka’s long standing debt vulnerability which pre-existed.. So it is not that Covid created all these problems. Covid exacerbated them and brought to the surface some structural issues that existed, and we have seen sharp contractions in export activities, the largest in recent times.”
“So it is not an easy task contraction in output, lower revenue collection have led to rapid deterioration of fiscal deficits and GDP ratios across the world. No country is immune, so what are the priorities?.First, from a World Bank’s perspective, a policy dialogue is important. When we talk to the policymakers here, it’s agreed that let’s get the debt thing tackled to give more space in the future.”
“Sri Lanka has high debt services obligations that obviously constraints fiscal growth moving forward. We have to focus on this. The government is tackling it. Opportunities for debt financing is limited. Domestic revenue mobilisation is very important which must be central to addressing pressure on public expenditure in the future. I would say, let us keep the momentum on global integration. The government is focused on it and that is commendable. Let us put the export earnings as a key measure over GDP, to follow. Export earnings over GDP – let us follow that over time and see what happens. It would require constant touch-ups to policies. When it comes to import trade regime, I know the government’s policy. I respect it. Let’s address tariffs, para tariffs and barriers to ensure predictability in this regime. While there is no right or wrong policy, look at the role of imports; when does it help exports and domestic industry. Let’s get them in”,: he said.
Once again, AIA ran for their lives – Proud sponsor for the 3rd consecutive year.
AIA Insurance was humbled to be a part of Run For Their Lives 2023, in raising funds for the Apeksha Cancer Hospital. The charity run aligns with AIA’s brand purpose of helping people live healthier, longer, better lives with focus on the prevention and management of Non-Communicable Diseases in Sri Lanka. The company will continue its commitment to fight NCDs and actively engage in creating awareness on leading NCDs in the country, AIA said in a news release.
“With AIA’s goal of making a positive impact on one billion lives by 2030, participants at RFTL were encouraged to make a pledge for a healthy habit that could help prevent illness and remain healthy in the long run. The participants also took part in a real-time survey that measured their unhealthy habits and recommended healthy lifestyle habits. Participants were also instantly rewarded for taking part in the wellness games and the free BMI sessions organised by one of AIA’s wellness partner Vida Medical Clinic,” it said.
Exterminators PLC records 48% in capital gains and dividend payout of Rs. 31.5 M one year after listing
Exterminators PLC, Sri Lanka’s premier pest tech and environmental enhancement technology company, celebrates one year on March 30th, 2023, upon its listing on the ‘Colombo Stock Exchange’. Founded with an initial investment of Rs. 75,000 way back in 1998, today’s market capitalization is over Rs. 470 million and the company also created history by becoming the first pest management company in South Asia and emerging and developing markets to be listed on the stock exchange. During the first nine months of the FY22-23, the revenue increased by 37%, the gross profit by 29%, the operating profit by 29%, the profit before tax by 63% and the net profit by 62%. The GP margin is 73%, the NP margin is 27% and the capital gain is 48% as of March 28, 2023. The company’s dividend payout in 2022 was LKR 31.5 million, which included a cash dividend of LKR 14 million and a scrip dividend amounting to LKR 17.4 million.
Marlon Ferreira, Managing Director of Exterminators PLC said: “We anticipate that the pest management and agricultural sectors will have significant growth in the mid- to long-term in Sri Lanka and the emerging developing markets. The company is expecting to reduce operational and administration costs due to the creation of synergies within divisions, which would have a positive impact on the bottom line and in turn create value for all stakeholders Operating from four locations in Colombo, Kandy, Malabe, and Dambulla, the company has set in place the necessary groundwork to expand to several key cities on the island and has plans to setup the global business expansion project in the first quarter of the financial year 23/24.
Fcode Labs wins two awards at e-Swabhimani
Flingo and CarromBot, two products by Fcode Labs (Pvt) Ltd, a leading software development and digital solutions company, were adjudged winners at the e-Swabhimani Awards, an initiative of the Information Communication Technology Agency of Sri Lanka aimed at recognizing excellence in digital applications. This gala event was held recently in Colombo for the 11th consecutive time. CarromBot, an AI-based robot that can play a carrom game on its own, was awarded as a Winner in the Digital Entertainment category. The robot identifies the correct piece to shoot, the power, and the angle to shoot.
Flingo, a mobile application where you can draw art and chat in real time with your friends and loved ones, won a Merit award at the ceremony. Flingo provides a sophisticated set of drawing features and a smooth user experience for the users. Fcode Labs (Pvt) Ltd is a company based in Sri Lanka and Singapore that focuses on Digital Transformation, Digital Product engineering, AI, and Blockchain services.
Founded in 2018, it now comprises 60-members that work on developing high-quality Software products. Further details of the company can be accessed on their website www.fcodelabs.com. This is not the first time that Fcode Labs has won e-Swabhimani awards. The company was awarded in 2018 and 2019 for their innovative products. Recently it was also recognized as the 35th best workplace to work in Asia (Small to medium category) by Great Place to Work.
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