Investment Climate Reform Program to Improve the Ease of Doing Business Index of Sri Lanka

Continuing from 2017, the Ministry of Development Strategies and International Trade (MoDSIT) coordinated the “quick win” activities identified in 2017 with the eight task forces under the Investment Climate Reform Program to improve the Ease of Doing Business Index (EoDBI) of Sri Lanka. As mandated by the Cabinet of Ministers in 2017, the eight task forces namely starting a Business, Dealing with Construction Permits, Registering Property, Getting Credit, Trading Across Borders, Protecting Minority Investors, Enforcing Contracts and Resolving Insolvency worked hard to achieve their targets. This year was a remarkable year for Sri Lanka as the country moved up 11 positions in the “Ease of Doing Business Ranking – 2019” from 111 to 100 position. In the Ease of Doing Business Index – 2019 report the World Bank evaluation team has recognized four major reforms of Sri Lanka.

During the year of 2018 some remarkable targets were achieved by these task forces. The Department of Registrar of Companies of the Starting a Business Task Force automated the process of issuing business registration number (e-ROC project) from 02.04.2018. The Colombo Municipal Council (CMC) of the Registering Property Task Force launched a Single Window Counter to issue ownership, non-vesting and street line certificates in 3 days from 02.03.2018. Extending the Single Window Counter further CMC started issuing fire, drainage and solid waste management certificates from 27.04.2018 in 3 days covering the Issuing Construction Permits activity. The e-Land Registry (e-LR) project of the Registering Property Task Force also launched the land registry folio search facility in Colombo land registry as a pilot in 17.01.2018. Further, the Department of Commerce of the Trading Across Borders Task Force with the assistance from World Bank successfully launched the Trade Information Portal (TIP) on 20.07.2018. The National Single Window blueprint for Trade Facilitation was also completed in July, 2018 by the technical team hired by the World Bank. The Department of Customs also completed the implement of electronic payment system at Customs. The USAID of Sri Lanka who is assisting the Enforcing Contracts Task Force completed the comprehensive assessment report for commercial courts in January 2018. Under the resolving insolvency task force, the Department of Registrar of Companies also appointed an Official Receiver to facilitate the company winding up process. This is the first time in the history of Sri Lanka that an official receiver was appointed.

As the EoDBI evaluation cycle for 2019 ended in 30.04.2018, the task forces had to complete the reform activities before the dead line to be recognized by the World Bank EoDBI evaluation team and to be reflected in the 2019 DBI assessment report which was released on 31.10.2018. MoDSIT also submitted the official government response (the Reform Memorandum) to the World Bank EoDBI team which included the reforms and other data corrections/explanations made by the Task Forces.

As the usages of the new developments are also considered by the World Bank EoDBI team, MoDSIT held a press briefing on 9th March 2018 to inform the general public about the key developments of the registering property task force. Further, to brief the new developments of the Investment Climate Reform program to the EoDBI data respondents of Sri Lanka, MoDSIT organized an awareness session on 16th March 2018 with the assistance from eight task forces.

From the 2018 Budget, Rs. 475 million was allocated to MoDSIT to implement two main projects under the investment climate reform program. Out of this Rs. 475 million, Rs. 150 million was allocated for the e-LR project. This e-LR project is a major activity of the Registering Property task force. The balance Rs. 325 million was allocated for the TIP and National Single Window for Trade Facilitation project. MoDSIT provided facilities to the World Bank technical team who developed TIP and funded the marketing activities of the TIP under this project.

MoDSIT is continuing the monitoring and coordinating part of the Investment Climate Reform program with the eight task forces. Some of the activities which are currently in progress. MoDSIT also requested technical assistance from the World Bank to initiate the Task Force on Paying Taxes as it is another component of the EoDBI.

 

Investor Facilitation

  •  Single Window Investment Facilitation Task Force (SWIFT)

OBJECTIVES

With the introduction of SWIFT, it is expected to reduce the time consumed for investment approval by 20%.

By successfully implementing this initiative, SWIFT will be able to continuously improve service delivery times, thereby improving country’s doing business ranking in the annual World Bank survey.

EXPECTED OUTCOMES

The overall expectation of the SWIFT is to make it easy to invest in Sri Lanka by reducing approval lead time for investment projects and it aims to achieve the following three outcomes:

  • Design and implement a function-based (Virtual) SWIFT for investor services
  • Process simplification of the agencies that are expected to be part of the SWIFT
  • Help to increase transparency in the approval process

Initially a One Stop Shop unit was physically established at BOI premises where the representatives of key regulatory agencies were housed. They were supposed to facilitate approvals and to do the interagency coordination. However, Physical OSS faced several deficiencies considering its absence of Interagency formal partnership and the non-existence of a performance monitoring & evaluation system.

With the intention of minimizing the said deficiencies, the Single Window Investment Facilitation Taskforce (SWIFT), a virtual web platform (SWIFT Web Portal) has been established by BOI with the approval of Cabinet of Ministers on 09.05.2018 to fast track the approval process of the line agencies within a set time period.

At present, twelve Memorandum of Understanding (MOUs) has been signed between the BOI and line agencies to give a legal framework for granting approvals/permits/licenses by the line agencies within a stipulated time period which is reflected in Standard Operating Procedures (SOPs) attached to the MOU. Continuous negotiations are being carried out with the remaining line agencies for signing MOUs and it is expected to connect all line agencies as soon as possible.

 

 

Existing Investors

 

  • Investor Dialogue
    • EU-Sri Lanka Investor Dialogue

Re-launched the EU-Sri Lanka Investor Dialogue in 2017. Three rounds of EU-SL Investor Dialogues have been held in 2017 and in 2018, another two rounds of EU-SL Investor Dialogues held in 2018 (22th February 2018, 04 July 2018). 7th EU- Sri Lanka Investor dialogue held on 17 October 2018. In this dialogue, about 34 issues have been raised by the European member countries and 0ut 0f 34, there were nearly 17 policy related matters and 16 company related issues.

 Improvement of EU Investment in BOI Companies

• In 2016, EU Investments in Sri Lanka was USD 204.65 Mn (26% of total investments received)

• In 2017, EU Investments in Sri Lanka was USD 211.10 Mn (12% of total investments received)

 

Main Issues raised at EU-Sri Lanka Investor Dialogue

  • Issuing VISAs for investors
  • Establishment of transparent tender procedure in the government procurements
  • The need for a single online portal to facilitate the ease of doing business
  • To allow foreign owned companies to lease land on long term basis
  • Trade Facilitation Issues
  • The need for acceptance of Digital Signature and promotion of a paperless concept
  • Need for a Dry Port
  • Use of Term “Energy” on Food and Drinks Labels
  • Reimbursement of VAT for some of the EU companies etc.

 

  • Sri Lanka, Japan Government – Private Forum

 Both sides thoroughly strengthen Sri Lankan public-Japanese private dialogue between BOI, IRD, etc. and JCCI (Japanese Chamber of Commerce and Industry), through holding “Government-Private Joint Forum” annually hosted by Embassy of Japan in Sri Lanka and JCCI with participation of Sri Lankan Minister(s) in charge of the problems and its quarterly follow-up meetings with BOI and other Sri Lankan authorities.

The Board of Investment of Sri Lanka, in collaboration with the Japanese Chamber of Commerce and Industry of Sri Lanka (JCCISL) organized the Annual Japan Sri Lanka Government-Private Joint Forum on Friday, 24th August, 2018 at the BOI Auditorium, 8th Floor, as a platform for Japanese investors to discuss the issues encountered by them with officials of relevant Stakeholder Ministries/Agencies.

 This was 10th consecutive forum and Chaired by the BOI Chairman. 30 members of JCCISL participated at this event and 14 issues were discussed. Representatives from Ministry of Finance, Department of Inland Revenue, Airport & Aviation Services (Sri Lanka) Ltd Road Development Authority, and Sri Lanka Ports Authority participated at the Forum and actions will be taken to solve the issues faced by the members of JCCISL. The follow up is being done by the BOI.

 

Investment Promotion

  • Working Group for Promoting Re-investment

A working Group for promoting re-investment was established with a given mandate of encouraging existing investors to reinvest, expand or upgrade their businesses through facilitating and solving their bottlenecks.

Further, this Group also entrusted with identifying new potential investors through existing investors channels.

Objectives of this Group are to promote re-investment and attract new investments through;

  • Utilizing leading business community & existing investors.
  • Assisting & guiding throughout the project cycle.
  • Creating investor confidence.

During 2018, the re-investment has contributed to realize FDI with a value of USD 24.75 Mn.

 

 

Improving Investment Infrastructure

  •  New Industrial Zones

According to the objectives of the government and more fully described in the Budget Proposals of year 2016, 2017 & 2018 development of new industrial zones in various parts of the country has been given high priority. Technical Services Department of BOI has undertaken preliminary work of these sites. Public-Private Partnerships would be one of the most preferred models as done in the case of Lanka Industrial Estates (Pvt) Ltd at Sapugaskanda as well as MAS Fabric Park implemented by the MAS Group at Thulhiriya.

The Budget Proposals of 2017 among other things has also targeted to enhance the utilization of expressways in the country through industrialization taking place in the expressway corridors called ‘Economic Corridors’. Possible sites within the Expressway Corridors are being identified for further study for development of new industrial zones.

Out of the lands identified as suitable for developing investment zones, the development activities with five sites namely Bingiriya, Milleniya, Mawathagama, Wagawatta and Charlie Mount Estate - Matara have already begun and they are in different stages of development process in collaboration with other line agencies.

Currently there are 12 EPZ/IPs operating under BOI, last of which was developed in the year 2000. Therefore, the zones developed under this program will be the new additions after 18 years.

BOI pays special attention on environmental aspects when identify lands and developing new zones to accommodate investment projects specially with waste management requirements and ensure that all project activities within zones are to be facilitated in accordance with the National environmental Regulations.

  • Millaniya Industrial Zone

The estimated cost for the project is Rs.8.3bn & 1bn (Mobilization Advance) has been paid for providing infrastructure facilities to the Zone boundary. Construction works commenced for water supply 500 m3/day (Stage I). 500 mm dia. Line for 10,000 m3 per day- Stage II, design and preparation bidding documents are in progress.The constructions have been commenced to Provide initial power requirement (up to 10MW) to the Zone and dedicated power line from Wagawatta proposed GSS to Millaniya Industrial Zone for 20 MW supply. A mobilization advance payment of Rs.336mn has been released out of Rs.1100mn total cost of the project.

  • Bingiriya Industrial Zone

The estimated cost for the project is Rs.2.2bn & 116mn (Mobilization Advance) has been paid for providing infrastructure facilities to the Zone boundary. Construction works commenced 1000 cum /day (initial demand) from Chilaw Water Supply Scheme (Stage I). Way leave assessment is in progress to supply electricity. Procurement of material for power supply is in progress. Started preliminary works to supply 2MVA power line to Bingiriya. Road Development Authority is being carried out designing and commenced the construction of a two-lane road for Bingiriya – Tuntota (Dummalasooriya) in stage 1. Valuation for the proposed land was received and payment should be selected to NLDB.

  • Foreign Direct Investment 2018

Foreign Direct Investment Received during 2018 is amounted to US$ 2,367 Mn which is the highest ever recorded FDI inflow to Sri Lanka. This shows an increase of 38% compared with the US$ 1,710 Mn worth of FDI received in 2017.

  • Exports from BOI Companies

During 2018, the companies under BOI have exported products with value of US$ 8,495 Mn, a 10% increase compared with the year 2017.

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