Financial Times

Cost of doing business in Sri Lanka reducing with the end of war -- Amunugama

The cost of doing business in Sri Lanka is on the way down with the end of the war, said Minister of Public Administration and Deputy Minister of Finance, Sarath Amunugama. “The cost of investing and doing business in Sri Lanka is reducing with the end of terrorism. Many technical aspects to investing in Sri Lanka, such as freight rates, insurance and other financial arrangements that added to the cost of doing businesses in Sri Lanka, are now being re-negotiated. These costs are on the way down and as we go down the road we will be more and more competitive,” Minister Amunugama told a packed room of business representatives on Thursday, at the inauguration of the ‘BizPact Invest in Sri Lanka,’ symposium.

The symposium is aimed at attracting investments into the regions, including the war affected Eastern Province, and was organised by the Business For Peace Alliance, a regional business network.
The government says it is also working on improving the political climate in the North and East, to reduce political uncertainty that stifles business growth.

“Another element hindering businesses was the political situation. But as far as this is concerned, within about one year of freeing the East, we have restored democracy to the Eastern Province. We will do the same in the North. Many of the Tamil Political parties representing the North will face elections soon. With gradual devolution of power some of the peripheral problems will be solved. So a political settlement is well on the way,” said Dr. Amunugama.

Infrastructure bottlenecks to investment, are also being targeted. “Infrastructure inadequacies were a major obstacle to investment in Sri Lanka. But we have started dealing with some of the key areas such as power, roads and ports,” he said.

Power supplies, a key business concern, are to be upped through coal and hydro generation, over the next few years. The Norachcholai coal power plant, financed by China, is expected to add 300 megawatts of power to the national grid in 2010 and will go up to 900 megawatts over the next few years. The Upper Kothmale hydro scheme, financed by Japan will add 150 megawatts in 2011 and the Uma Oya hydro scheme, financed by Iran will add another 100 megawatts later. This growth in power supply is expected to directly reduce business operating costs.

“By 2010 we will be in a position to provide steady power supplies at reasonable rates to businesses,” said the Minister. The Minister also told businesses that Sri Lanka can be used as an entry point into India, one of the world’s fasted growing consumer markets. Sri Lanka already has free trade agreements with India and Pakistan that gives preferential access to many products, into these two countries. Sri Lanka also has about 140 flights per week into different locations in India.

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