Sri Lanka, which is recovering from last year’s economic crisis, hopes to further strengthen bilateral relations with India and increase trade and investments. The Sri Lankan state minister of Finance Sheehan Semasinghe acknowledges India’s substantial help to his country (almost $4 billion between January and July 2022) and claims that India’s G20 Presidency has helped Sri Lanka’s speedy recovery. He was speaking at the sidelines of Invest Sri Lanka initiative organised in Mumbai in association with the Confederation of Indian Industry.
Q: What is your comment on Sri Lanka’s recovery from last year’s economic crisis and on India’s contribution in this regard?
A: Our economy is stabilising, the debt recovery process is underway. I must say that the G20 Presidency of India helped Sri Lanka’s speedy recovery.
Sri Lanka’s inflation returning to single digit levels and strong institutional and legislative reforms leading to declining interest rates, create opportunities in both equity and fixed income markets and lower rates. Thus, in the short-term, there will be clear investment opportunities from sectors such as tourism, logistics and renewable energy and in the long term there will be opportunities from export manufacturing, technology and value-added agriculture.
Our economy is getting stabilized. We are stabilizing in a faster way than we anticipated. We are confident that with all the reform agenda in place by 2024 we will be expecting the economy to grow. The first step required for the debt restructuring has been completed by us, by getting approval from the Parliament. Within the next couple of weeks, we may conclude the DDO (Domestic Debt Optimisation) process. And none of the decisions which have led to the crisis will not be repeated. We are bouncing back stronger than in the past. “
The government has introduced a new Anti Corruption Act and also the parliamentary budget office to further improve transparency. The government has also enacted the Public Finance Management Act to build up confidence and it will set up a new agency titled Board of Investment to enhance confidence of investors and facilitate their investments in the country.
In addition, the Investment Promotion and Protection Agreement and Agreement of Double Taxation have been improvised as Sri Lanka wants to continue to give preferential treatment to Indian investors.
The government has relaxed few import repatriations and it will do away with more such curbs in September. One of them is with regard to curbs on import on automobiles, especially passenger vehicles including cars. The government will remove these curbs in phases but from September import of construction vehicles will be permitted as the economy is recovering fast.
Further, the government has adopted a liberalisation policy for power and energy sectors. The government has allowed liberalisation of distribution of fuel and also electricity generation and supply. The government is promoting renewable energy.
Our economy is getting stabilized. We are stabilizing in a faster way than we anticipated. We are confident that with all the reform agenda in place by 2024 we will be expecting the economy to grow. The first step required for the debt restructuring has been completed by us, by getting approval from the Parliament. Within the next couple of weeks, we may conclude the DDO process. And none of the decisions which have led to the crisis will not be repeated. We are bouncing back stronger than in the past.
Q: How Sri Lanka hopes to further boost its trade and investment with India?
A: Indian has been a major investor. Sri Lanka’s strategic location is an ideal location for investors in the Indian Continent. Excellent shipping links to both the west and the east coasts of India, combined with the robust logistic operations create a high value proposition for many sectors.”
Indian Rupee is now a designated currency in Sri Lanka. Besides, Sri Lanka is also looking at deepening engagements with India with many sectors such as energy, transport etc. connectivity. In July this year a MoU was signed between the two countries on renewable energy cooperation and discussions were also held on electricity grid connectivity. This would help Sri Lanka to reduce the electricity generating cost, which would substantially improve economic competitiveness.
Inflation returning to single digit levels and strong institutional and legislative reforms leading to declining interest rates, create opportunities in both equity and fixed income markets and lower rates. Thus, in the short-term, there will be clear investment opportunities from sectors such as tourism, logistics and renewable energy and in the long term there will be opportunities from export manufacturing, technology and value-added agriculture. Tourism is growing fast and we hope to have tourist arrival of 5 million.
We are looking forward to having investments from different areas where the Government has their priorities. There are different avenues opening in Sri Lanka, as we have controlled our fiscal conservatives and also shown a lot of transparency in our Government structure.
Further, we are looking at establishing a green economy with digitization and a very vibrant economy. Thus, this would be the ideal time for investors from India to invest in Sri Lanka.
The government has held interaction with Adani Group for its investment in the power sector. Further, the government is also paying due attention to the petroleum pipeline from the Southern part of India to Sri Lanka which will ensure affordable and reliable supply of energy.
Q: China is rapidly growing its economic footprint. Prime Minister Narendra Modi during his meeting with Sri Lankan President Ranil Wickremesinghe has clearly told him that Colombo must take into account India’s national security interest before collaborating with third power. What do you say?
A: Sri Lanka is committed to protect the national security interest not just of India but other countries too. We take equal position. We are open to the world and whatever comes before us we are happy to negotiate and express our opinion. Undoubtedly, national security is important and we will make sure that it is not disturbed.
