Flash Report / Sri Lanka

Sri Lanka Investor Forum - Day 3 Key Takeaways

  • Keynote address
  • Keynote - International Financial Corporation
  • Insights from MNC CEO’s in SL

Day 3 was yet another strong lineup of both local and international speakers, discussing areas of corporate debt, the startup ecosystem and deregulation. There were a wide number of deep dive sector sessions in agri, banking, pharma and digital to name a few. Day 3 also saw a number of country specific sessions tailor made to showcase unique investment opportunities in Sri Lanka. The welcome address was given by Mr. Dumith Fernando – Chairman, CSE and Chairman, Asia Securities, while the keynote was delivered by Mr. Nivard Cabraal, the State Minister of Money, Capital Markets and State Enterprise Reforms.

Keynote address

  • Improving SL’s macro indicators and the Ease of Doing Business score is essential to drive investor confidence. There is a concerted effort by the Government towards improving this

  • Government aims to improve SL’s Doing Business score to be within the top 25 countries by 2025

  • In terms of Port City, the infrastructure is taking place. Need to ensure that steady inflows are attracted at this point. Forecasts approximately USD 4.5bn added to the economy in the medium term

  • The Port City, Hambantota port and other key infrastructure projects are key drivers to take SL to the next phase of growth

  • At present, the govt has spent LKR 131bn on COVID-19 management. Approx. 33% of the total loan portfolio of the country received a moratorium to ensure business continuity

  • The country has successfully finalised swaps and other inflows to support the external account, negating the impact of low tourism revenue for the past two years

Keynote - International Financial Corporation

  • SL’s pre-COVID growth deceleration highlights structural weaknesses, including market entry barriers due to strong SOE presence, limited access to land & finance, & macro imbalances affecting the investment climate

  • A greater role for the private sector is crucial to boost growth and enhance productivity

  • The “Country Private Sector Diagnostic” (CPSD) process looks at a 3-pillar strategy, with recommendations for reforms & policy actions to mobilise private investments & solutions to development challenges. These are;

  • Islands of Excellence – 3 industries of focus; i) Information and Communication Technology (ICT), ii) Resource-based industries and iii) Light specialized manufacturing, 2) Strengthen the innovation eco ecosystem: Realising the full potential of producing value-added goods and services for export; Public policies must be more oriented towards commercial efforts to this regard, and 3) Scaling of tourism – Focus on higher value-added tourism products where SL should take advantage of the country’s natural resources and promote nature-based and wellness tourism; private sector is vital to boost tourist accommodation

Insights from MNC CEO’s in SL

  • Unilever invests approximately EUR 2mn/year on capex in SL, and have added EUR 18mn to the top line in the last 5 years

  • Unilever basket per capita is EUR 12.00 in SL compared with approximately EUR 3.00 in the region. This is higher than countries like Malaysia

  • Increased focus and growth in Unilever exporting from SL due to help and facilitation by the Govt

  • From HSBC’s perspective, foreign investors coming to SL mainly want 1) market expertise, 2) know how, 3) regulatory knowledge and 4) access to potential JV opportunities

  • HSBC is well positioned to cater to this demand, because of its long established relationships with SL businesses

  • Positive on the following sectors: Apparel, Tourism, Ports and Logistics, Special Economic Zones and Infrastructure

  • Dialog has been the market leader in the telecom space since 2000. Is one of the largest investors in SL – annual FDI of approximately USD 50mn

  • The company offers one of the cheapest broadband services in the world, and for Dialog, the skilled, educated talent pool is an advantage in the local market

  • Sri Lankan regulator has been consistent and forward looking – this has been supportive of the business

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