Financial Times

Investors seek MIGA guarantees for Lankan projects
Foreign investors have already sought guarantees from the Multilateral Investment Guarantee Agency (MIGA) for projects in Sri Lanka, MIGA's Executive Vice President, Motomichi Ikawa said. MIGA, a member of the World Bank Group, looks forward to working closely with institutions like the Board of Investment, the Sri Lanka Export Credit Insurance Corporation, and the Ceylon Chamber of Commerce, to build their capacity to share crucial information on investment opportunities with foreign investors, he said during a visit to the island last week.

"Partnerships are critical for the recovery process in post-conflict environments," he said. "MIGA is committed to participating in and helping the country during this vital recovery process," Ikawa said. "Already, with the peace process holding, we have received numerous applications from investors interested in procuring MIGA guarantees for projects in Sri Lanka. "We stand ready to carry out our responsibilities, not only in assisting the economic recovery of the country, but to ultimately bring hope and prosperity to Sri Lanka's people who have been traumatized by decades of civil war."

The Multilateral Investment Guarantee Agency has a key role to play in helping foreign investors "tap the promise of peace" and take advantage of the many investment opportunities in Sri Lanka, Ikawa told a press conference. The event is one of a host of activities undertaken by Ikawa and a group of MIGA delegates during a three-day sojourn in the country.

The visit was spurred by a bilateral meeting between Ikawa and Prime Minister Ranil Wickremesinghe during the Tokyo Donor Conference on Sri Lanka held in June 2003. In addition to meeting with the prime minister, MIGA representatives also held talks with A.S. Jayawardena, Governor of the Central Bank, Ravi Karunanayake, Minister for Commerce and Consumer Affairs, and high-level Treasury, Ministry of Enterprise, and Board of Investment officials. The delegates also met with private sector representatives.

In addition, Ikawa gave a keynote address on the role of the private sector in infrastructure development at the Chamber of Commerce Convention. "Sri Lanka no doubt holds tremendous potential for business and investment," he said, "not merely because of the island's strategic location, but also because of its highly educated and intelligent pool of human resources and the ability of the business community to quickly adapt to difficult situations. Yet it has not been immune to the terrible ravages of war and civil disturbance."

Conflict-afflicted economies need high levels of investment. Battered infrastructure needs to be rehabilitated. Run-down public utilities have to be refurbished and modernized to meet the demands of a modern economy. Employment has to be generated. "In all these areas, foreign direct investment and the private sector will have to play a crucial role. But to attract foreign investment in a conflict-affected environment is undoubtedly a difficult task," said Ikawa.

It is precisely for such an environment that MIGA was created. As a member of the World Bank Group, MIGA promotes foreign direct investment into emerging economies by offering political risk insurance (guarantees) to investors and lenders, and by helping developing countries attract and retain private investment through its technical assistance and dispute mediation programs. Since its inception, MIGA has supported 66 projects with guarantees worth nearly $1.7 billion in 18 conflict-affected countries, representing 13 percent of the agency's gross portfolio. Sri Lanka is one of the original shareholders of MIGA.

MIGA's outstanding portfolio consists of one contract of guarantee in the infrastructure sector worth $1.68 million. This project is estimated to have facilitated $71.1 million in additional foreign direct investment.

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