Sri Lanka’s post war economic growth dominated by a debt funded, state driven construction boom – Mangala

Finance Minister Mangala Samaraweera said that Sri Lanka’s post war economic growth was dominated by a debt funded, state driven construction boom that was unsustainable. He made these remarks at a networking event organised the Board of Investment (BOI), yesterday.

Addressing an audience that comprised of key players in Sri Lanka’s economic development, the Minister said that The focus of this government since coming to power has been to improve the investment climate to encourage further expansion of the existing investments and attract new investors.

“As a part of this economic reform agenda, a number of measures are being implemented to facilitate private investment. These reforms include the elimination of para- tariffs, opening of a “Single Window” for investment approvals, promotion of identified sectors for investment, the establishment of new export-processing investment zones, and digitization of public services”, the Minister said.

Minister Samaraweera said that the government is in the process of entering into new strategic trade agreements with a significant focus on investment. Along with EU GSP + facility, Sri Lanka will have duty free market access to India, China, Pakistan, Singapore and Europe.

“As the FTAs come into effect, investors will have opportunities to link into regional and global value chains, with Sri Lanka as a fulcrum of activity”, Samaraweera said.

He also said that the government is keen to maintain investor confidence as Sri Lanka’s track record in policy stability has not been perfect and underscored the government’s resolve to consolidate a set of rules based, predictable and consistent policy framework.

"Open ended tax holidays have been replaced by targeted capital allowances which directly reward the investment in capital. There are also benefits for investment in R&D and the IT sector, and for investments in the Northern Province. Strategic sectors such as exports, tourism, and IT are taxed at a concessional corporate tax rate of 14%. These incentives are expected to be superior to previous regimes of open ended tax holidays", Samaraweera added.