19 May 2010 | By: Mohamed Hairul Borhan

Singapore companies should leverage on the Sri Lankan government’s efforts to rebuild the country after successfully ending its decades-long civil conflict, said Chua Taik Him, Deputy CEO for IE Singapore.

Speaking at the ‘iadvisory seminar series – Business opportunities in Sri Lanka’, he said that the end of the conflict would bring peace, stability and progress for Sri Lankans and open new opportunities for businesses. He urged Singapore companies to tap on Sri Lanka’s rich natural resources, and find opportunities in the infrastructure and tourism sectors.

He said, “Sri Lanka has been active in promoting tourism and tourist arrival figures have doubled from May 2009 to Dec 2009. Singapore companies can offer a range of services to serve Sri Lanka’s growing local tourism sector, from consultancy, hospitality training, hotels operations and management, interior design to investment in tourism infrastructure.”

Ajith Nivard Cabraal, Governor for the Central Bank of Sri Lanka, said that the tourism sector is expected to expand significantly in the near term. He expects arrivals to jump from about half a million presently to about 2.5 million by 2016. To cater to this anticipated increase, he said investments into the tourism sector would treble over the next six years.

Jayathri Samarakone, Sri Lanka’s High Commission to Singapore, added that the Sri Lankan government was also aiming to strengthen the domestic economy by promoting exports and creating major hubs for shipping, aviation, commerce and finance to spur the country’s economic development.

She said, “The two key impediments for growth – war and lack of political stability, have been redressed. For the first time in (Sri Lanka’s) post independent political history, a separate Cabinet Minister has been appointed to spearhead economic development.”

Excellent location

Among the key reasons being touted to potential investors other than its rich natural resources and current stable political situation is its location, right in the middle of the Indian Ocean. Sri Lanka is just a short stone-throw away from India, the second largest population in the world, and is located along the most important and busiest shipping routes.

In addition, the country provides generous tax holidays (three to 15 years) for foreign investors and has in place special preferences tariff for the exportation of Sri Lankan products to both India and Pakistan. Dumida Ariyasinghe, Executive Director (Investment Promotion) for the Board of Investment of Sri Lanka (BOI), said that the safety of foreign investments is guaranteed by the Sri Lankan Constitution.

In most sectors, companies can also be fully-owned by foreign investors and there are no restrictions on the repatriation of earnings, he added. Mr Ariyasinghe also said that Sri Lanka has signed a bilateral investment protection and double taxation relief agreement with more than 20 countries, including Singapore.

Increasing interest from Singapore companies

All these incentives, in addition to warming bilateral business relations, have proven effective in generating interest among Singapore companies in Sri Lanka. As at the end of 2009, Sri Lanka is Singapore’s 38th largest trading partner in 2009, with bilateral trade amounting to S$1.2 billion. Interest has continued to grow, with total trade between the two countries in the first quarter of 2010 having increased by almost 100 per cent compared to a year ago.

Mr Chua added, “IE Singapore had also received an increasing number of enquiries from Singapore companies about Sri Lanka, and we are optimistic about continuing this momentum of growth in our bilateral trade and business relations.”

Among the Singapore companies which currently have a presence in Sri Lanka include the Shing Kwan Group, which developed the World Trade Center in Colombo, as well as Ghim Li, which owns a textile production facility in Galle, which is about 120 kilometres south of Colombo.