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Recently,
I have just attending the Annual Meeting of New Champions of the World
Economic Forum, often dubbed as the ‘Summer Davos’. During this event, I
had the privilege of hearing Premier Li Keqiang speak of the progress
that China is making to grow the Chinese economy, despite the various
challenges. I was particularly encouraged to hear from him that the
Chinese government is taking many measures to further open up the
economy to foreign partners.

As
you know, Sri Lanka and China are long-standing friends. Our economic
and cultural cooperation go back many centuries, and we consider China
an important and reliable partner. I believe we now have the opportunity
to take our partnership to even greater heights, with a focus on
industrialization and investment.

Already,
China has invested a substantial amount in Sri Lanka in infrastructure
projects over the past decade. We value China’s engagement with us on
the Belt and Road Initiative. We believe it’s now time for you to invest
in production facilities in Sri Lanka. We would like to invite Chinese
industrialists to set up their plants in Sri Lanka and make use of the
preferential tariff access particularly to the European Union countries
and the US. We are also aware that cost of production is rising in South
China and it’ll be advantageous to produce in Sri Lanka and re-export
to China. We are even willing to look at providing special economic
zones for Chinese investors. Sri Lanka is currently building several new
industrial zones in the North West and Southern part of the country.
This provides new land availability with all the clearances done and
ready for investors.

This
is just one of many initiatives underway to make Sri Lanka an
attractive investment destination. Let me give you an overview of the
current economic context and some other ongoing initiatives underway.

The
Sri Lankan macroeconomy is strong. Despite pressures from external
economic conditions as well as the tragic Easter Sunday bombings, our
macroeconomic fundamentals remain strong and resilient. By end April our
gross foreign reserves stood at US$ 7.2 Billion, and our currency has
appreciated by 3.3% during the year up to mid-June. The trade deficit
has continued to narrow each month this year. Last week Sri Lanka
successfully raised US$ 2 billion in international sovereign bonds,
which were three times oversubscribed, clearly highlighting global
investors’ continued confidence in Sri Lanka and their positive outlook
on Sri Lanka’s economic growth story. Last year was also a good year for
exports and FDI, which reached all-time highs.

The
Government has taken numerous initiatives to re-orient the economy,
from a growth model that was heavily dependent on debt-fueled public
spending, to one that is driven more by the private sector, trade, and
FDI.

Last
year we passed a new Foreign Exchange Act, that brings very
contemporary and business-friendly approach to managing foreign
exchange. We also passed a new Inland Revenue Act, and it provides a
progressive, modern, and transparent income tax policy. The tax
incentives are now firmly written into the law and is based on regime of
generous investment allowances.

The
tax incentive is very clear – until you recover your investment – in
machinery, equipment, and buildings – you do not have to pay any
corporate income tax. Where the investment is over US$ 100 million, you
will not have to pay corporate income tax until 150% of your investment
is recovered. Even once you do start paying taxes, the top rate of
income tax is now lower than many countries in the region and if you are
an export-oriented industry then you pay half this rate.

We
are committed to improving the ease of doing business and improving
investor facilitation. Already, the time taken to registering a new
business has been cut from 6 days to just 1 day. Finding land and
registering property is being halved from nearly two months in the past
to just three weeks. We are introducing an ‘Electronic Single Window’
that will link together dozens of state agencies dealing with
international trade. Sri Lanka jumped 11 places this year in the World
Bank’s ‘Ease of Doing Business Index’ and we hope to rise further this
year, towards our goal of 70th position by 2020.

These
initiatives are being complemented by comprehensive trade policy
reforms. In the last budget, protectionist para-tariffs on over 1,200
items were removed, with the rest slated for removal this year and next
year. To leverage on our location and to expand market access, we are
expanding our trade and investment links with a diverse set of countries
– US, EU, India, China, Singapore, Japan. One year ago, a landmark Free
Trade Agreement with Singapore came into effect, which is a modern
agreement that covers not just goods, but also services, investment,
e-commerce, government procurement, telecommunications, and financial
services. We are working on three more bilateral trade agreements- a
Comprehensive FTA with China, an Economic and Technology Cooperation
Agreement with India and an FTA with Thailand. We also have the GSP Plus
trade concessions to the European Union, which gives duty free access
on over 6,200 tariff lines, as well as GSP access to the US market. As a
Chinese investor in Sri Lanka you will have the benefit of preferential
market access to all these large markets, and from a very attractive
location in the Indian Ocean.

Colombo
is becoming a hub in the region. The Colombo Port is ranked the 22nd
Best Port in the World, and 13th Best Port Connectivity in the World. 33
major shipping lines call at our Port. You can have your South Asian
headquarters in Colombo and enjoy the benefit of being located in a
clean and livable city, in a strategic geographic location. From Sri
Lanka you can reach out to India, South Asia, East Asia, as well as
Africa and the Middle East.

When
you invest in Sri Lanka, total foreign ownership is allowed and you
have no restrictions on the repatriation of your profits. The safety of
foreign investments is guaranteed under our constitution. And you can
obtain land on a long 99-year lease basis. For example, the recent
investment by China Merchant Holdings in the Hambantota Port is on this
same basis, and they were also granted ‘Strategic Development Project’
status, which entitled them to special incentives.

In
finding companies to partner with in Sri Lanka, you will realise that
Sri Lankan companies are committed to good corporate governance,
financial reporting under high international standards, and
environmental and labour sustainability that is far ahead of the rest of
South Asia.

Moreover,
our road and telecoms infrastructure is very good – with 3 new
expressways coming up by 2020, electricity available in 100% of
households, and 4G mobile connectivity in all districts.

While
all of these features point to the fact that Sri Lanka is a promising
investment destination, I am sure a question that you all may have is –
“is Sri Lanka safe for investment, given the recent events?” Let me
assure you – Absolutely, Sri Lanka IS safe for investment. The security
forces very quickly dismantled the terrorist group after the Easter
Sunday bombings and all those responsible have committed suicide and
others connected have been apprehended. We are confident that the
security situation is now well under control. At the same time, we must
bring to your notice that none of the industries have been affected as a
result of the bombings and none of the export orders were cancelled or
delayed. This is a testament to the resilience of the economy.

We
have now initiated many programmes to get the economy back on track,
including promotion activities in the area of tourism. Tourism arrivals
have already been steadily picking up and several countries – including
China – have removed their travel advisories.

Since
China and Sri Lanka have very cordial and long-standing relations, we
expect the Chinese government, the state-owned enterprises, the Chinese
private sector and the people of China to come forward once again to
show their solidarity by investing in Sri Lanka, doing business with Sri
Lanka, and visiting Sri Lanka.

As
I mentioned at the start, we are keen to promote manufacturing
investments especially, where we can provide better jobs for our people
and improve their living standards. Even though some of you may know Sri
Lanka for our tea and our idyllic beaches, you should also know that
our manufactured products are part of global supply chains. We are a
world leader in solid rubber tyres, surgical and industrial gloves,
electronic sensors and wire harnesses for cars, specialised sports
apparels, and IT software for global stock exchanges.

I
hope you will consider bringing your business to Sri Lanka. Come to Sri
Lanka to take advantage of our great geographic location, our port
connectivity and efficiency, our preferential tariff access to large
markets in the region, and our human resource pool that is highly
literate and highly trainable.