Sri Lanka your investment Destination
Strategically located on the major shipping routes of South Asia and the Far East, the island of Sri Lanka is emerging as one of the most attractive best investment locations in the South Asian Region. Sri Lanka has positioned itself as the “Services & Trading hub” of the vast Indian subcontinent. An investment bonanza that is being made available under the Belt and Road initiative, especially the Maritime Silk Road, could revive the glory days of the ancient Silk Route for Sri Lanka.
Further, Sri Lanka’s proximity to the Indian sub-continent positions the country as a gateway to a market of 1.3 billion people. These factors have combined to generate keen interest in the country’s logistics sector, as well as from manufacturers looking for opportunities in the South Asian region.
The government has rolled out several pro-business policies and incentive schemes under the auspices of the Board of Investment (BOI). Any foreign venture in Sri Lanka must receive BOI approval prior to establishment. The board grants a number of incentives to new companies provided that they satisfy certain eligibility criteria. Investors are provided with preferential tax rates, constitutional guarantees on investment, exemptions from exchange control and 100% repatriation of profits and capital. Tax holidays, concessionary rates and duty exemptions are also available in certain circumstances for export-oriented enterprises.
Section 16 of the BOI’s governing legislation, the BOI Law, permits 100% foreign ownership in certain sectors, although manufacturing activities, agricultural processing and export-oriented service projects generally fall under the purview of Section 17, in which approval for projects where foreign investment exceeds 40% of the total project value is granted on a case-by-case basis.
Projects approved under Section 17 are eligible for a host of government incentives, including duty exemptions, tax concessions and holidays, and exchange control exemptions. For example, companies which export more than 90% of goods produced – or 60% within the apparel and ceramics segments – are entitled to Customs duty exemptions on capital goods and raw materials. Non-export-oriented projects are exempt from import duty exemptions for project-related capital goods. Agreements reached with the BOI remain valid for the life of the project.
Access to Key Markets
Sri Lanka’s strategic location provides great opportunities to enter into free trade and partnership agreements with several Asia’s trade powerhouses.
Free Trade Agreements
The Indo - Lanka Free Trade Agreement (ISLFTA)
§ Effective year :2000
§ Market Access (No. of items with zero duty): 4228 tariff lines (6-digit level)
§ Population: 1.35 Billion
The Pakistan - Sri Lanka Free Trade Agreement (PSLFTA)
§ Effective year :2005
§ Market Access (No. of items with zero duty): 4676 tariff lines (6-digit level)
§ Population: 212 Million
Sri Lanka - Singapore FTA (SLSFTA)
§ Effective year :2018
§ Market Access (No. of items with zero duty): Gives access to investments and services beyond trade in goods
§ Population: 5.6 Million
§ Market Access (No. of items with Zero Duty): 6,400 tariff lines (8-digit level)
§ Population: 445 Million
§ Market Access (No. of items with Zero Duty): 3,500 tariff lines (8-digit level)
§ Population: 328 Million
These markets alone combine to present an opportunity to reach over 2 billion people, when establishing your enterprise in Sri Lanka.
An added advantage for a company locating to Sri Lanka is the preferential market access gained to two large regional blocs under the South Asian Free Trade Area (SAFTA) and the Asia-Pacific Trade Agreement (APTA).
Educated and Adaptable Workforce
Sri Lanka comprises of a highly versatile and skilled workforce which is cost competitive, highly productive and bilingual. Majority of the Sri Lankan workforce consists of highly qualified professionals having extensive experience in, numerous fields such as information technology, manufacturing, finance and accounting, fashion design and law.
Fast Developing Infrastructure
Sri Lanka has experienced significant improvements to available infrastructure which has been recognized as a national priority by successive governments. These include an ambitious program to develop and completely upgrade seaports around the island, the international airports, roads in the city of Colombo and highways connecting to other parts of the country and power and telecommunication facilities.
Sri Lanka often referred to as the ‘pearl of the Indian ocean’, is claimed by both locals and expats alike as a truly great place to live and work. A country of many facets, Sri Lanka offers a spectrum of experiences, cultures and places for those who enjoy diversity and variety. The country’s expansive beaches, rolling hills, rainforests and cosmopolitan cities make Sri Lanka an eclectic experience for all.
Sri Lanka has entered into 28 Bilateral Investment Promotion and Protection Treaties (BITs) so far, providing a protection to foreign investments within the country. Sri Lanka is developing its model BIT with a view of catering to the needs of covering the aspects of sustainable development principles in attracting foreign investments
Avoidance of Double Taxation
Relief from double taxation for foreign investors;
Sri Lanka has entered in to Double Taxation Avoidance Agreements with 44 countries to eliminate or mitigate the incidence of juridical double taxation and avoidance of fiscal evasion in the international trade (or transactions).
Following the establishment of the Katunayake zone, BOI became involved in a massive expansion in EPZ schemes and has established 12 economic zones in the country since 1978, including nine EPZs, two industrial parks, and one export processing park (Board of Investment of Sri Lanka, March 2012).
An export processing zone, or EPZ, is an area set up to enhance commercial and industrial exports by encouraging economic growth through investment from foreign entities. Incentives such as tax exemptions and a barrier-free environment are the main attractions of an EPZ.
Services Provided by BOI in Zones
- Approval and facilitation for Export / Import Documentation & Recommendation of expatriate visa
- Engineering approvals such as building plans, site clearance, issuance of certificate of conformity & provision of dedicated infrastructure facilities such as centralist water and sewerage treatment facilities
- 24 x 7 Cargo Verification
- Advisory service & guidance on industrial relations
- 24 x 7 fire service with firefighting, monitoring & advisory services
- 24 x 7 overall security coverage
- Environment monitoring, advisory & laboratory services
- Day care centers, Sport and recreation facilities, leisure parks
- Internal transport facilities, bus terminals
- Centralized solid waste handling mechanism
- Provision of lands for prospective project