BUSINESS BOI

BOI currently facilitates investors on a sector-focused approach. These sectors (together with special units to handle high profile projects and regional initiatives) cover all vital areas of the economy.

Board of Investment of Sri Lanka (BOI) The Board of Investment of Sri Lanka is the central facilitation point for investors. They provide assistance and advice throughout the investment process. The Board of Investment of Sri Lanka completes 36 years of existence in 2014. In this time, it has acted as an engine of growth creating a considerable impact on the country’s economic development. The BOI is structured to function as a central facilitation point for investors. BOI is committed towards continuously improving the country’s investment climate. The Board of Directors drawn from the Private and Public sectors and its several departments are geared to facilitating the investment process.BOI companies today employ over 470,000 workers. They account for nearly 65% of Sri Lankan exports and 86% of the country’s industrial exports. The BOI is therefore a significant agent of Social Change and its existence of over 36 years has radically transformed Sri Lanka both economically and socially, placing the country in a position where it can compete in an increasingly globalized world. Significantly, when you sign an agreement with the BOI, the provisions embodies in the agreement remain valid for the life of the enterprise. If you wish to obtain country specific information, you may also contact the Country Desk Officer pertaining to the origin of your investment.

Note :
– An investment application form can be obtained from the relevant sector.
– Duly completed application forms need to be handed over to the relevant Sector Heads.
– The sectors will act as relationship managers for all investors in their sector, from project evaluation to implementation to post – investment aftercare.

Hours of Operation are Monday to Friday : 8.30am to 4.30pm (GMT +5.30).
Setting up in Sri Lanka
Introduction
As an investor, you may select the following options to locate your project within Sri Lanka:
Locate your project within a BOI administered Export Processing Zone or Industrial Park (withrequired infrastructure facilities) on long-term lease basis.
These zones/parks are more suitable for industrial manufacturing and processing businesses.
Locate your project outside zones
– Purchase a privately owned land on outright purchase or lease basis.
– There are government owned lands available for long term lease under different government agencies.
Acquisition of government lands involve a comparatively longer process and valuation is based on current market price.

Why Sri Lanka?
Strong Resilient Economy
– Peaceful domestic environment, favorable government policies and improved investor confidence have facilitated all the key sectors to demonstrate a commendable performance in 2013.
– The improved performances in all key sectors of the economy contributed towards the high economic growth.
– With a 56.8% contribution, the services sector remains the largest contributor to the national economy.
– The strong economic performances in Sri Lanka have lifted country’s per capita income substantially, which has enabled the country to be graduated to middle – income status from the list of Poverty reduction & Growth Trust (PRGT) eligible countries.
– The government has planned to transform Sri Lanka into a strategically important economic centre by developing five strategic hubs; a knowledge hub, a commercial hub, a naval & maritime hub, an aviation hub, and an energy hub, taking the advantage of Sri Lanka’s strategic location & resource

Supportive Government Policies Sri Lanka pioneered South Asia’s economic liberalization over three decades ago. Liberalizing many areas of the economy, the government has embraced strategies and policies that are more than conducive for international investment. In fact the policy environment is undoubtedly, compelling. The following transparent investment laws aim to foster foreign direct investments.
– Total foreign ownership is permitted across almost all areas of the economy.
– No restrictions on repatriation of earnings, fees, capital, and on forex transactions relating to current account payments.
– Safety of foreign investment is guaranteed by the constitution.
– Existence of a transparent and sophisticated legal and regulatory framework. Covering all prerequisite business law enactments.
– Bilateral investment protection agreements with 28 countries and double taxation avoidance agreements with 38 countri
Sri Lanka is a founder member of the Multilateral Investment Guarantee Agency (MIGA), an investment guarantee agency of the World Bank. This provides a safeguard against expropriation and non-commercial risks.
Index of Economic Freedom measures the pro-business policy environment of a country. According to the Index of Economic Freedom – 2014, the country has been ranked 90 of 186 countries

 

Index of World Economic Freedom Rankings -2014

Country

World Ranking

Country

World Ranking

Singapore
Korea, South
Malaysia
Thailand
Philippines
Sri Lanka
Burma

2
31
37
72
89
90
162

Indonesia
India
Pakistan
Bangladesh
China
Vietnam
Nepal
Iran

100
119
126
131
137
147
149
173

In line with the government’s policy, efforts are intensified to attract investments to target sectors in which Sri Lanka has strong foundation for growth as well as areas where it is nationally important to develop. By offering incentives to induce high value investment to priority sectors, the BOI promotes diversification of Sri Lanka’s industry and services with special focus on advanced technology and value addition. The government has made necessary amendments to the tax system of the country that the overall tax regime for all sectors will be less complex and at a lower rate across the economy.

Target Sectors Actively Promoted by Sri Lanka through Board of Investment (BOI)
– Target Sectors Actively Promoted by Sri Lanka through Board of Investment (BOI)
– Export Oriented Manufacturing
– Export Oriented Services
– Tourism, Tourism Related Projects
– Infrastructure Projects
– Higher Education/Skill Development
– Value Added Strategic Projects
– Agriculture (Agro Processing, Fish Based Industry, Dairy)
– Establishment of Industrial Estates, Special Economic Zones, Knowledge Cities.

Educated and Adaptable Workforce In 2011, Sri Lanka possessed the most literate population in South Asia and one of the highest in the developing world with a literacy rate of 92.2% (91.1% and 93.5% respectively for females and males). Extensive investment in public education has produced a workforce that is not only competent but intelligent, trainable and comfortable with high tech production and services. Approximately 50% of the students who have completed higher education are trained in technical and business disciplines. English is widely spoken and is the main language used by the business community. Well educated and energetic, skilled and semi-skilled human resources are readily available at competitive wage rates.

Literacy Rates of Selected Asian Countries in 2011

Country
Literacy Rate %
World Ranking
Thailand
Indonesia
Malaysia
Sri Lanka
Vietnam
India
Bangladesh
Pakistan
94.1
92
92.5
94.2
92.8
74.1
55.9
62.2
84
94
92
83
91
139
164
159

Wage Rates – 2013

Country

Min. Wage
(USD/Month)

Factory Worker Monthly Base Salary (USD/Month)

Bangladesh
Sri Lanka
Pakistan
Vietnam
India
Indonesia
Thailand

39 – 109 *
73 – 82 *
82
145
28 – 155 *
226
9.85 / Day

74
108
173
113
276
239
345

Location and Connectivity Sri Lanka is situated at the crossroads of major shipping routes connecting South Asia, Far East and the Pacific with Europe and the Americas. Sri Lanka is strategically located next to the fast growing Indian sub-continent with close proximity to Southeast Asia and the Middle East. The country has strong air connectivity with over 100 weekly flights to India alone.

Vibrant Business Environment Sri Lanka is ranked as the most liberalized economy in south Asia. In 1978, the Island adapted open market free economic policies, and successive governments have further liberalized the economy, leading to deregulation, greater privatization and opening the economy to international competition. Transparent investment laws aim to foster foreign direct investments. Sri Lankan commercial laws are based on British laws and country has a highly independent judicial system. Sri Lanka has dynamic and resilient private sector, which if necessary can be joint venture partners for foreign investors.  However, foreign investors are allowed to own 100% ownership of a investment. Concessions granted under an agreement with the Board of Investment – for qualifying investment projects – remain valid over the lifetime of the enterprise.

Investment Protection and Double Taxation Sri Lanka is the one of the safest countries in the world to invest in due to a number of mechanisms in place to protect investors.  Article 157 of the island’s constitution guarantees the safety of investment protection treaties and agreements approved by parliament by a two thirds majority. Sri Lanka has signed bilateral Investment Protection Agreements (IPA) with 28 countries. The country has a very independent system of courts which can redress any concerns of investors. Sri Lanka also has bilateral Double Tax Avoidance Agreements with 38 countries.

Sri Lanka: Double Taxation Avoidance Agreements

Australia
Bangladesh
Belgium
Canada
China
Denmark
Finland
France
Germany
Hong Kong (Limited)
India
Indonesia
Iran

Italy
Japan
Korea (Republic of)
Kuwait
Malaysia
Mauritius
Nepal
Netherlands
Norway
Oman (Limited)
Pakistan
Philippines
Poland

Qatar
Romania
Russia
Saudi Arabia (Limited)
Singapore
Sweden
Switzerland
Thailand
UAE
United Kingdom
USA
Vietnam

Sri Lanka: Bilateral Investment Treaties

Australia
Belgium-Luxembourg
China
Czech Republic
Denmark
Egypt
Finland

France
Germany
India
Indonesia
Iran
Italy
Japan

Republic of Korea
Kuwait
Malaysia
Netherlands
Norway
Pakistan
Romania

Singapore
Sweden
Switzerland
Thailand
United Kingdom
USA
Vietnam

Quality of Life Sri Lanka is truly a great place to live and a great place to work. A country of many facets, if offers a spectrum of experiences, people and places that awaits to be discovered. For those who choose to make Colombo their home, a cosmopolitan living environment awaits. Social life is never a miss in this city, with abundant nightlife, world-class shopping, theatre, cafes, art and host of star class hotels that dot the island. The expatriates and their families will enjoy a quality living environment in Sri Lanka with comfortable housing, good healthcare and medical facilities, excellent educational institutions with international standards, and world-class recreational sites. There is a wide selection of comfortable housing in Sri Lanka including luxury condominium apartments ideal for expatriates. Internationally recognized institutions of Healthcare market have chosen Sri Lanka as a destination for health tourism. A dozen private and public hospitals operate in Colombo with.

Location and ConnectivitySri Lanka is situated at the crossroads of major shipping routes connecting South Asia, Far East and the Pacific with Europe and the Americas. Sri Lanka is strategically located next to the fast growing Indian sub-continent with close proximity to Southeast Asia and the Middle East. The country has strong air connectivity with over 100 weekly flights to India alone. Sri Lanka is connected to the SEA-ME-WE III and IV (South East Asia – Middle East – Western Europe) fibre optic communication backbone with over 11 communication satellites orbiting above the south of the country.

Access to Key Markets Sri Lanka is the only country to have Free Trade Agreements with both India and Pakistan, giving duty free access to over 1.3 billion consumers from the island. The Indo-Sri Lanka Free Trade Agreement (ISLFTA), which came into effect in year 2000, provides strategic access from Sri Lanka for over 4,200 products (at zero duty) to India, which is the world’s second most populous market. The Pakistan – Sri Lanka Free Trade Agreement (PSLFTA), which came into effect in year 2005, provides strategic access from Sri Lanka for nearly 4,500 products (duty free from 2008) to the Pakistan market. Since the agreement was signed bi-lateral trade between Sri Lanka and India have grown more than 5 times and bi-lateral trade between Sri Lanka and Pakistan have grown 3 times. In order to qualify under the two free trade agreements products need to be wholly produced or have a domestic value addition of 35% value addition FOB level. The HScode transformation needs to be at the 4 digit level for the ISLFTA and 6 digit level PSLFTA. Both agreements require sufficient process. For more details, please click here : ISLFTA , PSLFTA. In addition, by locating in Sri Lanka, a company can gain preferential trade access to two large regional blocs under the South Asian Free Trade Area (SAFTA) and theAsia–Pacific Trade Agreement (APTA).

Fast Developing InfrastructureThe Sri Lankan government has launched an ambitious program of physical infrastructure development to completely upgrade the sea, air, road, power and telecom backbone of the country.
The following are the main features of this program

Sea Port and Airport Development The Sri Lankan government has declared its intention to develop the country as a leading regional aviation, navigation and trading hub in South Asia. Therefore, the development of maritime & aviation transportation is at the forefront of the government’s infrastructure development agenda. The focus of these developments is to expand the capacity and improve the efficiency of existing ports through modernization and construction of new ports and airports in strategic locations.

Major Sea Port and Airport development:
Colombo South Port ExpansionThe Colombo South Port expansion project with three terminals, each terminal having capacity of 2.4 million TEUs per annum, will increase the capacity of the Colombo Port by 160% upon completion. Construction work of the breakwater has been completed. The first terminal, a join venture between the Sri Lanka Ports Authority and China Merchant Holdings Ltd, was built under a 35 year build operate and transfer agreement with SLPA. The terminal was opened for commercial operation on 5th August 2013.

Hambantota Port DevelopmentPhase I of the project, the Mahinda Rajapaksa Magampura Port, was inaugurated in November 2010. The port is expected initially to function as a service and industrial port and later be developed to handle transshipment cargo. Phase II of the port is underway at an estimated cost of US$ 800 Mn. The port is ideally located to serve the main East-West shipping lane connecting Europe and the Middle-east with South East Asia. The bunkering facilities at the Port of Hambantota, set up at a cost of US$ 76.5 million, and the tank farm has commenced commercial operations. Out of the 14 tanks it has, eight tanks will be used to store marine fuel, three will store aviation fuel and three remaining tanks will be used to store liquid petroleum. The aviation fuel stored in the Hambantota Port is to be used for the Mattala Airport, the second international airport currently being built in Hambantota.

Expansion of Bandaranaike International AirportA project is under way to expand the island’s first international airport at Katunayake, 35 km north of Colombo. The project includes the expansion of the transit area, construction of new baggage-reclaim area, multi storied car park and widening of the existing runway. A feasibility study is being carried out for a second runway.

Development of High Mobility Road NetworkRoad development in the country, which was left behind last few decades due to the war, has been given prominence by the government. The national Road Master Plan has already been prepared, which focuses on the construction of highways, widening of highways, reduction of traffic congestion, road maintenance & rehabilitation and bridge rehabilitation & reconstruction. It has become an urgent necessity for further investment in road network, thus the development of road network has become a major determinant factor in attracting new investments to the country.

Development of High Mobility Road Network Road development in the country, which was left behind last few decades due to the war, has been given prominence by the government.

The national Road Master Plan has already been prepared, which focuses on the construction of highways, widening of highways, reduction of traffic congestion, road maintenance & rehabilitation and bridge rehabilitation & reconstruction. It has become an urgent necessity for further investment in road network, thus the development of road network has become a major determinant factor in attracting new investments to the country.

Major road development:
Colombo – Katunayake Expressway – CKE (25km)The Colombo – Katunayake Expressway connects the Colombo City and the International Airport at Katunayake. It consists of four Interchanges at New Kelani Bridge, Peliyagoda, Ja-Ela and Katunayake. The Contract value of the project is US$ 292 Mn. Construction was completed and opened for the public on 27th of October 2013 by his Excellency the president Hon. Mahinda Rajapakse. The CKE will reduce the travel time between Peliyagoda and Katunayake to 20 minutes from the earlier time of 1.5 hours using Peliyagoda-Puttalam road (A003). The quick travel between the Bandaranaike International Airport and the capital of the country with enhanced safety will surely help to boost the country’s economy in addition to providing pleasant travel to the road users.

Southern Highway (126km)The Southern Expressway is the longest expressway being built in Sri Lanka. The construction of a four-lane highway from Colombo to Matara will be a catalyst for the economic and social development of the Southern region and promotion of and inter-regional transport network. The highway was opened for public on 27th November 2011. The section of Southern Expressway from Pinnaduwa (Galle) to Godagama (Matara) has been opened to public on 15th March 2014. This section also consists of 4-lane capacity similar to the earlier section from Kottawa to Pinnaduwa. The maximum operating speed for this section is also 100 kmph. Now the Southern Expressway from Kottawa to Godagama (Matara) is in operation. It is expected to extend the Southern Expressway from Matara to Hambantota with the intention of linking Mattala Airport and Hambantota Harbour to the Commercial Capital, Colombo in future.

Outer Circular Highway – OCH (29.2km)The outer Circular Highway (OCH) is located in the Colombo Metropolitan Region and passes through two administrative districts, namely Colombo and Gampaha. This highway runs around 20 km away from the City centre of Colombo, connecting radial routes and has a total length of 29.2 km. The northern end of the highway is located at Kerawalapitiya on Colombo-Katunayake Expressway and the southern end is located at Kottawa on Colombo-Ratnapura-Wellawaya-Batticaloa (A004) road where Southern Expressway meets OCH. Outer Circular highway from Kottwawa to Kerawalapitiya will link seven trunk roads and the Colombo – Katunayake and the Southern Expressways.

The expressway is implemented in three phases as given below;
Phase 1: Section from Kottawa to Kaduwela (11km) – Commenced in December 2009. (Phase 1 completed and opened for public in March 2014)
Phase 2: Section from Kaduwela to Kadawatha (8.9km) – Commenced in 2012.
Phase 3: Section from Kadawatha to Kerawalapitiya (9.2km)

Colombo – Kandy Highway (99km) The proposed North – East Expressway (Colombo – Kandy Expressway) begins at Kadawatha of the present Colombo – Kandy (A1) Road (at the access point of the Outer Circular Highway) and links with Katugastota– Kurunegala – Puttalam (A10) road at Hedeniya and Kandy– Jaffna road (A9) at Katugastota. The length of this road is 99 km. Construction of the North – East Expressway is mainly divided into two construction phases viz. Phase I (Kadawatha–Ambepussa) – 48.2 km and Phase II (Ambepussa– Katugastota) -50.7 km. The expressway is expected to be built as a privately financed toll road and will be later expanded to Jaffna and Trincomalee. The cost for the first phase of the road project is estimated to be one billion US dollars.

BOI Administered ZonesSri Lanka’s export processing zones and industrial parks have been a linchpin in the industrial development and inflow of foreign direct investment into Sri Lanka. The country’s economic development zones are seen as benchmarks of successful implementation of zone development strategies. You may First Contact the Manufacturing Sector, How to Setup in this Sector.

Other Privately Managing Zones In addition to BOI administered zones, there are specialized sector specific privately owned industrial parks. Apparel and Related Industries : MAS Fabric Park, Thulhiriya – www.masfabricpark.com IT / Knowledge Services : Orion City IT Park, Colombo 9 – www.orioncity.com