Financial Times

New approvals system, organizational structure in April
Tougher approvals from BOI
By Feizal Samath
The Board of Investment (BOI), Sri Lanka's premier investment-approval body is tightening the rules next month with a new system of approvals aimed at weaning out foreign investors with a dubious past, an issue that has plagued the agency for many years and drawn a lot of criticism.

BOI Chairman Saliya Wickremasooriya described the new approval process as "significantly more robust and transparent than now" while presenting no additional delay or inconvenience to the investor.

"Full details will be released after the organizational changes are announced in April. They will render our investment selection significantly more transparent, efficient, and likely of success," he said in an interview last week.

Asked about BOI-approved companies like GoldQuest and Fair Pharma that have a questionable past, Wickremasooriya said, "Irrespective of projects being eligible for approval under investment regulations, the BOI will be more selective in its approvals in the future.

He said a closer rapport would be developed with line agencies to discuss possible implications of proposed projects to minimize potential frauds. The new rules, as part of a complete overhaul of the BOI structure in April, comes in the wake of serious questions being constantly raised over the BOI approval of dubious companies and organizations particularly Chinese Medical centres which have turned out to be brothels, massage parlours or herbal drug companies. He said the BOI would

be introducing an effective and efficient compliance monitoring system comprising monitoring teams operating under specific guidelines visiting enterprises at random. The team will audit the enterprise for technical compliance, approval condition compliance, financial compliance and BOI regulation compliance. If any enterprise has not adhered to the BOI agreement to which approval has been granted the Board would be notified and suitable action taken, he said explaining the new regulations.

A two-stage application and appraisal procedure is to introduced with a "Go/No Go" first stage and a detailed sector-based application package to collect the information required for a full socio-economic analysis of the project. Approval will include a compulsory interview with the investor /developer to minimize any gray areas of the proposal, and to internally understand what type of monitoring would be required when the enterprise is in commercial operation, according to the new rules.

Wickremasooriya concedes that the BOI doesn't have a proper monitoring system because "many companies register for one line of business and then change their pursuits." The new approval process involves much more due diligence, and not simply the granting of approvals on the basis of conforming to regulations. The background, financial credibility and past practices of the enterprise/investor will form an essential part of this, and the BOI reserves the right to decline any project, according to the new rules.

Part of the new organisation will be a Policy division, which, when combined with the new sector-based detailed approval procedure, will help to increase investment quality. "The BOI has also introduced several new clauses in the agreement designed to protect the public and the State, while still leaving the investor with the full shelter our Constitution affords," the BOI chairman said.

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