The BOI has been playing a major role in the attraction of FDI since it was set up in 1978 after the liberalization of the economy in 1977. The setting up of the export processing zones in Katunayake, Biyagama, Koggala, Pallekele, Seethawaka and Horana together with other smaller zones have provided economic development, employment and a one stop shop to those investors located in these zones.
The BOI has a wide variety of powers and is directly under the President of the country and is the most powerful agency that really has the powers to play a very major role in the economic development of the country. It is of great significance in the present context after the end of 30 years of instability and war. This should be realized by all concerned especially those in the government sector and its strengths utilized to bring in the FDI and private investment in projects that will really accelerate the growth and development of Sri Lanka.
Sri Lankan Presidents have utilized the BOI as an important vehicle to expedite economic development in the country. Today industry, infrastructure, hotels, IT sector, ports, airports, roadways are some of the targeted sectors which could be developed with private sector investment as well as with public private partnership popularly known as PPP projects.
Many have not realized the powers given by the constitution to the BOI to speed up investment as well as to cut across bureaucracy creating a fast track for FDI and the much needed confidence among foreign investors. Some of the main powers given to BOI are to: 1) Grant of Tax incentives (Power of Inland Revenue Act); 2) Undertake the import and exports of the BOI enterprises and also give duty free concessions (Powers of Customs Ordinance); 3) Exchange control powers where banks could open foreign currency banking accounts with the approval of BOI.
The BOI Act has powers which no other organization has to act as a one stop shop and facilitate the much needed foreign investment and also to earn the much needed foreign exchange by promoting export oriented projects.
The BOI covers the entire country and is therefore the only organization that can really take the initiative to spur economic development throughout the country. Hence it is very essential to identify the sectors that could really bring in the real econoic benefits to the country. The sector that could take off the fastest is the tourism sector.
Therefore both existing and new projects should be promoted. This would involve the expansion, modernization, refurbishment of existing hotels and expansion to new locations by starting new enterprises. In order to incentivize the investors they should be given incentives for the existing hotels on predetermined criteria and also for setting up new projects as new companies or expansion of existing ones.
There are criteria already determined such as non difficult, difficult and most difficult areas and also how on expansion tax incentives should be given to existing enterprises including the duty free concessions on imports. Also a one stop shop of all the areas of approvals including environment and building approvals should be set up under the BOI so that investors should not have to go to various ministries or agencies for approval. A cabinet sub-committee should be set up to consider matters such as land, environment, building approvals that need special approval to go ahead and should meet once a week to expedite matters.
The other most important areas are the infrastructure such as roads, waste disposal, power, PPP projects, university campuses, housing, water supply and drainage, export processing zones, IT parks and BPO centres. The BOI and Finance Ministry should set up a separate Public Private Sector (PPP) unit to service infrastructure projects. All the relevant ministries should be coordinated so that they could make use of this unit to formulate project proposals for PPP which once approved by the Cabinet of Ministers could be made public to obtain offers.
Additional Free Trade Zones could be set up in Hambantota, Trincomalee, Jaffna, Ratnapura, Puttalam, Badulla, Pollannaruwa and could be spread to other areas throughout the country.
One of the main criteria that could attract foreign investors is the ease of setting up projects and also the operation of these factories or projects without any problems thereby expediting economic development.
Considering all these positive characteristics and the main role BOI could play it is strongly recommended that the BOI should once again be brought under the direct control of the President and be used as the main vehicle to drive the economy in Sri Lanka and also create confidence among the foreign and local investors.
With the inflow of FDI and opening up of new and expansion of existing projects the benefit will flow to the common man by creating more job opportunities and people could also enjoy a better living standard showing the direct benefits of the freedom that has been won after 30 long years.