Attractive business opportunities in Sri Lanka

by Asif Nazeer on 08-11-2011 in Doing Business

 

Attractive business opportunities in Sri Lanka
 
There are a number of parameters that determine the business opportunity or scope in any area. In spite of the presence of several risk factors, business owners normally count some positive factors before starting business in a new area. The things that the business owners love to exploit are: good transport system, skilled human resources, cheap raw materials, friendly constitution of the nation, no political disturbances, presence of probable customers, etc. Let’s have a look on some of the positive factors that Sri Lanka offers to the business owners.
 
Skilled and cost effective human force:
 
It has been recorded that currently Sri Lanka has 35% work force of the total population of the country. Due to high level of education, it has a literacy rate of 92%. Moreover, 50% of students has completed their higher studies and are getting trained by technical or business courses. English is highly spoken in all parts of Sri Lanka and also used as the main language for the business purposes. So, these data prove that there are plenty of skilled labors in Sri Lanka. Also, the country has a very low labor cost per worker in manufacturing.
 
Friendly and transparent laws of the state
 
The legal agreement with the Board of Investment (BOI), the explicit incentives are given to an entitled company, which comprises holiday taxes or preferential tax rates, exemptions from customs duty and foreign exchange controls, stay applicable for the whole life of the enterprise.
 
Constitutional support for the investors
 
Sri Lanka has a great record for its political credibility in all over the world. All political parties in this part of the world are committed to support the free market economy and individual liberty. Moreover, there are so many protections in the constitution for the foreign investors. Through an encouragement to the bilateral investment agreements, a strong protection is provided by a constitutional guarantee to the overseas investors. 
 
The Parliament of the Constitutional Guarantee of Investment Protection Agreements guarantees a protection to the foreign investments by the acceptance of two third majorities. Under article 157 of the country's constitution, “the agreement enjoys the force of law and no legislative, executive or administrative action can be taken to contravene the provisions of a bilateral investment agreement otherwise than in the interests of national security.” 
 
The validity of the Bilateral industrial agreement is ten years and it will be extended automatically if not ended by one of the involved parties. The next extension will be for another ten years. There is a clause in Sri Lankan constitution that provides: defense against nationalization, enough compensation when required, allowance of earnings, capital and business fees. The defined countries for which this Bilateral Investment Protection Agreements is applicable are: Belgium/ Luxembourg, Canada, China, Denmark, Egypt, Finland, France, Germany, Iran, India, Italy, Indonesia, Japan, The Republic of Korea, Luxembourg, Malaysia, The Netherlands, Norway, Pakistan, Romania, Singapore, Sweden, Switzerland, Thailand, the United Kingdom and the United States of America.
 
Recently, a team of 13 members from Kerala has visited Sri Lanka to see the country’s business prospects. The result is very interesting. So, here I will share some of them with you. They found Tourism as a big aspect of Sri Lanka. The country is targeting 2.5 million tourists by 2016 against the targeted 0.85 million in 2011. To achieve this target Sri Lanka needs around 50000 hotel rooms and around 50000 work force. Clearly this is a huge area that a private concern may look to invest. They’ll also get ample of support from the Sri Lankan govt. for this. Big hotels, restaurants, guest houses would be an upcoming demand in Sri Lanka.
 
The report from 13-member TiE Kerala also illustrates that Education is another field that is growing in Sri Lanka. Schooling sector will be a great area to invest. Apart from that investing into management colleges, technical colleges, technical training institutes would be a great deal to make. There are thousands of potential students who are interested to join in these fields of education. Mr Ravi Deecee, a delegate, said that education as Sri Lanka's current capacity in these disciplines was inadequate. Sri Lankan govt. is really looking for good investors in these fields. Commenting on the outcome of the visit, Wing Commander K. Chandrasekhar, Executive Director of TiE Kerala, said that there are plenty of opportunities for the investors in Sri Lanka. Apart from this agriculture, tea sector, and textile are the most profitable industries in Sri Lanka that may attract the interested investors.
 
Sri Lanka is a founder member of Multilateral Investment Guarantee Agency (MIGA). This is for securing the non-commercial risks. If there is any kind of mishaps or disputes, the investors can lodge their complaints under the rules of the International Chamber of Commerce. Insurance for the property can also be secured or obtained by in foreign currency via foreign or domestic insurers. 
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