Sri Lanka - Your Investment Destination

Content

• Location

• Target sectors for Japanese Investment

• Why Sri Lanka

• Market access

• Market Potential

• Location

• Labour

• Infrastructure

• Factor cost

• Business environment

• Natural resources

• Japanese Investments in Sri Lanka

• HSBC report

• Opportunities

• Key sectors in the economy

• Top 10 Investments in Sri Lanka

• Board of Investment of Sri Lanka

• A Little Story

Sri Lanka

Sri Lanka

Pakistan

• Island Nation of 65000 sq. Kilometers

• Population of 20 Million

• Literacy Rate – 92%

• System of Government

Democracy

Executive Presidency

Parliament consists of 225 members

Elections every 06 years

• The Law is based on British Law

• Never defaulted on international debt obligations

• The War with the Terrorists is over.

Sri Lanka

Target sectors for Japanese Investment

• Electrical and Electronics

• Rubber based products

• Auto parts

• ICT

Why Sri Lanka?

Special Tariff Preferences for Sri Lankan products

• Indo-Lanka FTA - 4,232 products (zero duty)

• Pakistan-Sri Lanka FTA - 4,686 products (zero duty)

• EU GSP + - 7,200 products (zero duty)

Why Sri Lanka?

MARKET ACCESS

Why Sri Lanka?

MARKET ACCESS Contd…

Products

Exporting from Japan

Indo-LankaFTA

Pak-LankaFTA

EU GSP +India Pakistan EU

Rubber based products 10%

5%,10%,20%,35% 8% Nil Nil Nil

Electronic and Electrical

7.5%5%,10%,20%,35%

Nil Nil Nil

Automobile & Motor Spare Parts

10% 35%Nil Nil Nil

Why Sri Lanka?

MARKET POTENTIAL (USD Bn.)

India Pakistan EU

Rubber Based Products

1.82 0.37 66

Electrical & Electronic

Equipment

22.45 3.78 570

Parts & Accessories of Motor Vehicles

2.33 0.16 144

LABOUR FORCE

• 49.8. % of the population - Men 67.8%, Women 33.4%

• Steep learning curve

• 2nd highest pool of members of the Chartered Institute of Management Accountants (CIMA) of the UK

• World class reputation in the production of the high end garments and lingerie markets.

Why Sri Lanka?

INFRASTRUCTURE- Colombo AirportPassenger movement

5 Mn / Annum

Cargo movement250,000 tons / Annum

Highest number of flights to India from any country

New Airport inthe Southern Region

Why Sri Lanka?

• Gateway to the Indian subcontinent

• Port expansion - 9 Mn. TEU’s

- 12 new berths

- US$ 1.6 Bn. project

• New port being constructed at the South Eastern tip of Sri Lanka.

World Port Ranking

• No. 1 in South Asia

• Total container throughput 4 Mn. TEUs

• Transshipment cargo 70%

• 33 major shipping lines

• 14 feeder services

Why Sri Lanka?

INFRASTRUCTURE - Colombo Port

INFRASTRUCTURE Location - Colombo Port Contd…

Sea Routes

Centrepoint on the

East/West sea routes

Gateway to the Indian

subcontinent

Why Sri Lanka?

Chennai - 2 Days

Kolkatta - 2 Days

Cochin - 15 Hrs

Mumbai - 4 Days

Tuticorin - 8 Hrs

Karachi - 3 Days

Indian Sub Continent

Japan

Yokohama - 9 Days

Australia

Sydney - 11 Days

Europe

Amsterdam - 18 Days

Middle-East

Bahrain/UAE - 5 Days

USA

New York - 21 Days

Dubai

New York - 5 Days

Singapore - 3 Days

U.K.

Southampton - 14 Days

Felixstowe - 14 Days

Thames - 14 Days

Port Transit Time

Port Transit Time

Port Transit Time

INFRASTRUCTURE Transit Time - Colombo Port Contd…

Why Sri Lanka?

INFRASTRUCTURE - Telecommunications

International Operators

Maxis Telekom Telekom Malaysia Bharti Airtel - India Telia AB Sweden Hutchison Whampoa HK VSNL/ Tata Millicom Singapore Telecom

• Most advanced in South Asia

• 3.5 G Mobile Service launched

Why Sri Lanka?

• Fiber Optic Cables with – SEA-ME-WE III – SEA-ME-WE IV

(Connectivity Bandwidth - 1.32 terabits per second)

SEA-ME-WE IV

fiber cable network

Why Sri Lanka?

INFRASTRUCTURE – Telecommunications Contd…

INFRASTRUCTURE - Power

Pipeline Projects

• Trincomalee Coal Fired Project (500 MW)

• LNG Power & LNG Terminal

Main Power Sources

• Hydro - 45%

• Thermal - 55%

Under Construction• Norochcholai Coal Fired Project (300 MW - 2010, Additional 600 MW – 2013)

• Upper Kothmale Hydro Power Project (150 MW - 2012)

Why Sri Lanka?

Factor costsJapan Sri Lanka India Thailand Vietnam China

Labour – Shop floor Managers

3061-3542 112 - 170 135 - 312 232 - 361 79 - 126 192 - 290

4466-6580 309 - 768 520 - 1020 1234 - 2050 391 - 736 995 - 1655

Power – Business (per Kwh)

0.109 0.15 - 0.20 0.10 - 0.11 0.08 0.049 - 0.056 0.08 - 0.09

Water - Business (per cbm) 0.40 0.45 1.54 0.29-0.48 0.28 0.30

Office rent (per sqm)22.0 – 39.6 9.82 21 - 28 19.6 55 34

Housing 2782 - 4637 1500 2048 - 3200 1962 4168 2570 - 3420

Telephone - Local (per min.)International (per min.)

24.35 0.0053 - 0.030 0.03 0.10 0.002 - 007 0.03

5.4 0.64 0.92 1.80 1.21 - 1.44 2.2

Internet (Broad band monthly charges)

41.97 71.76 76.79 27.00 186.3 34.5

Why Sri Lanka?

(USD)

Source : JETRO survey

Our Business Environment

Total Foreign Ownership

No restrictions on the Repatriation of Earnings

Safety of Foreign Investments Guaranteed by the Constitution

Commercial Law is based on British Law

Strong Interlectual Property law in line with IPO regulations

National Treatment is guaranteed

Signatory to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank.

Why Sri Lanka?

Our Business Environment (contd….)

Investment Protection (over 20 Countries)

• Australia

• Belgium

• Canada

• China

• France

• Germany

• India

• Indonesia

• Japan

• Korea

• Luxembourg

• Malaysia

• Netherlands

• Pakistan

• Singapore

• Thailand

• UK

• USA

Why Sri Lanka?

Double Taxation Relief (over 30 countries)

• Belgium

• Canada

• China

• France

• Germany

• India

• Japan

• Jordan

• Korea

• Malaysia

• Netherlands

• Pakistan

• Saudi Arabia

• Singapore

• Thailand

• UAE

• UK

• USA

Why Sri Lanka?

Our Business Environment (contd….)

Natural Resources

• Tea, Rubber, Coconut

• Spices

• Mineral sands

• Phosphate

• Fishing grounds

• Gems

• Oil and Gas deposits

Why Sri Lanka?

Japanese Investments in Sri Lanka

• Cumulative Investment - US$ 350 Mn

• Number of projects

(In operation) - 60

• Employment - more than 12,000

Major Japanese Investors

Company Activity

Noritake Lanka Porcelain (Pvt) Ltd Porcelain table ware and fine casual ware

Colombo Dockyard (Pvt) Ltd Ship building and repairing

Colombo Power Power plant

FDK Lanka (Pvt) Ltd Magnetic heads for floppy disk drives

Tos Lanka (Pvt) Ltd Electronic components

Tropical Findings (Pvt) Ltd Costume jewellery

Okaya (Pvt) Ltd Electronic components

Hong Kong Bank (HSBC) Report

• The Civil war is finally over, boosting confidence and leading a rush to invest in Sri Lanka.

• We think there are great untapped opportunities, however many challenges remain.

• The end of the war has brightened the country’s growth prospects ; we look for GDP to average 4% (up from 3.2%), accelerating to 6% in 2010.

• In our mind, the country has great potential to develop Tourism and BPO, not to mention, to attract FDI in to the manufacturing sector.

Highlights from HSBC Global Research dated 25th May 2009

Other Opportunities

Roads

• Colombo –Kandy Expressway 100Km - US$ 500 M

Power

• Development and Improvement of Transmission Systems - US$ 250 M

• Medium and Low Voltage Network Development - US$ 100 M

• Rural electrification - US$ 130 M

Railways

• Upgrading of Colombo –Matara Railway line - US$ 150 M

• Matara – Kataragama Rail extension - US$ 250 M

• Kundasale /Dambulla/ Habarana new railway line - US$ 200 M

• Eastern Railway Lline Rehabilitation - US$ 35 M

Other Opportunities Contd…

Special Economic Zones

• Trincomalee Export Processing Zone - US$ 80M

Tourism

• Kalpitiya Tourist Resort - US$ 300M

• Nilaveli , Passikuda, Arugambay Tourist Resorts - US$ 100M

Township Development

• Greater Trincomalee Development Phase 1 - US$ 150M

• Panchikawatte Triangle Development - US$ 180M

Public Private Partnership (PPP) projects

Other Opportunities

• Refinery

• Investments in the North & East in the sectors of Agriculture. Vocational Training schools, Fisheries, Dairy Development & Tourism

PPP Projects

Projects

within B.O.I.

Estimated

Investment

( US$ )

1 Development of Knowledge City – Henegama 100 Mn

2 Augmentation of Water & Wastewater Facility – Seethawaka Industrial Park 8.5 Mn

3Development of Textile Manufacturing Zone/Industrial Park at Perth Estate,

Horana.30 Mn

Projects

facilitated for

other agencies

Estimated

Investment

( US$ )

2Development of Modern Bus Terminal at Bastian Mawatha (UDA / Sri Lanka

Railways)80 Mn

3 Transworks Towers at Pettah (UDA/Central Bank) 200 Mn

Key Sectors in the Economy

Apparel/ Textile

• Major contributor to economy • Apprx. 44% of the total exports• Pioneer in Green factories

World-class Sri Lankan companies include:

• MAS Holdings• Brandix• Hirdramani

Software Industry

• A highly literate workforce

• Easily trainable & strong analytical skills

• Low levels of attrition

• High linguistic adaptability

• Leading companies include Millennium Technologies, Virtusa, IFS, hSenid

BPOs

Our Success stories

• HSBC• WNS• OfficeTiger/ RR Donnelly• Amba Research

• World’s 2nd largest pool of UK-licensed Financial Accountants

• Connected to SEA-ME-WE 3 & 4 fiber optic network

Gems & Jewellery

One of the fastest developing gem cutting and finishing centers in the world

Main importers are USA, Switzerland, Thailand, Hong Kong, Japan, France, Germany, Singapore and Indonesia.

Key investors

• Blue Diamonds• Colandiam• Tropical Findings• Paradise International

Tourism

Focus on up market tourism Many opportunities for investors

• Tourism related infrastructure• Theme parks• Air, rail or water based transportation• Thematic tours and trails • Golf courses

Showcase hotels:

• Kandalama Hotel• Saman Villas Hotel• Elephant Coridor• The Fortress

Rubber Sector

• World’s largest manufacturer of solid rubber tyres

• A growing contributor to manufactured exports• Leading international glove supplier

Our Success stories

• Ansell - Australia• CEAT - India• Loadstar - Belgium• Trelleborg - Sweden

Top 10 Investors

Name of Enterprise Nature of Business Country

1 Dialog Telecom Cellular Telecom Network Malaysia

2 Srilankan Airlines Airline UAE/Sri Lanka

3 Tigo/ Celltel Lanka Cellular Telecom Services Luxembourg

4 South Asia Gateway Terminals Port Development UK, Netherlands, USA

5 Loadstar Solid Rubber Tyres Sweden

6 AES Kelanitissa Power Generation USA

7 Holcim Cement Switzerland

8 Prima Group Flour Bran & Pollard Singapore

9 Overseas Reality Property Development Singapore

10 Lanka IOC Petroleum (Retail) India

The Board of Investment of Sri Lanka

Functions

• The Principal Agency for Promoting, Approving , and Facilitating, Foreign Direct Investment (FDI)

• Created by an Act of Parliament.

• Significant Powers - To Grant Exemptions from :

» Corporate Tax

» Customs Duties

» Exchange Control

• Operates 12 Export Processing Zones

• Liaises between Investor and Ministries / Line Agencies / Other Approving Authorities

Incentives

• Granting of Tax Holidays from 3 - 15 years depending on the Investment category.

• Duty Free Imports : Capital Goods and Raw materials

(for Export Oriented Activities)

Capital Goods only

(for all other categories)

• Exemption from Exchange

Control : For Companies that export goods and

Services (Minimum 80%)

and / or

For companies receiving earnings in Foreign Currency (Minimum 80%)

The Board of Investment of Sri Lanka

Best Investment Promotion Agency in South Asia

- World Bank/IFC

• The Global Investment Promotion Benchmarking 2009 study conducted by World Bank/IFC has ranked the Board of Investment of Sri Lanka as the best in South Asia for investor promotion and facilitation.

• BOI received a score of 64 out of 100, increasing its score by 29 points mainly due to its improved website, www.investsrilanka.com

• In the latest issue of Global Investment Promotion Benchmarking 2009, the BOI Sri Lanka, has been described as the only “Good” performing Investment Promotion Intermediary (IPI) in South Asia.

FDI Trends and Projections (2001-2010)

82181 171 233

287

603734

888

601

1000

0

200

400

600

800

1000

1200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

US$ Mn.

A Little Story !!!

www.investsrilanka.com

Thank You

Sri Lanka - Your Gateway to the World