Your Next Investment Destination

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SRI LANKA
Your Next Investment Destination
Board of Investment of Sri Lanka
Korea
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Contents

• Sri Lanka
• Factors for the Investment decision
• Investment opportunities
• Korean investment in Sri Lanka
• Board of Investment of Sri Lanka
• Reality
• Recap

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Sri Lanka
Air Routes

• Island Nation of 65000 Sq. Kilometers
• Population of 20 Million
• Strategically connected to major
  shipping and air routes to the East and
  West
• Peace and Stability
• Never defaulted on international debt obligations

Sea Routes
B o a r d o f I n v e s t m e n t o f
S r i L a n k a
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Operating Environment
WHY SRI LANKA?

• Political Environment
• Strong Democracy
• Executive Presidency and a Parliament of 225
  members
• Presidential Parliamentary elections held
  every 6 years
• President sworn in for a 2nd term in November
  2010
• Government has a 2/3 majority support in
  Parliament
• Focus is now on rapid economic growth

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Operating Environment Cont.
WHY SRI LANKA?
Business Environment

• Total Foreign Ownership
• No restrictions on Repatriation of Earnings
• Safety of Foreign Investments Guaranteed by the
  Constitution
• Strong Intellectual Property law in line with
  WIPO regulations
• National Treatment is guaranteed
• Signatory to the Multilateral Investment
  Guarantee Agency (MIGA) of the World Bank.
• Investment Protection Agreement and Double
  Taxation Relief Agreement with over 25 countries,
  including Korea.

B o a r d o f I n v e s t m e n t o f
S r i L a n k a
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Economic Indicators
WHY SRI LANKA?
2005 2006 2007 2008 2009 2010
GDP growth 6.2 7.7 6.8 6.0 3.5 8.0
GNP per capita (US) 1,226 1,402 1,599 1,966 2,033 2,368
Inflation 11 10 15.8 22.6 3.8 5.9
Curr. Ac. Balance Deficit ( of GDP) -2.7 -5.3 -4.3 -9.5 -0.5 -2.9
Foreign reserves (months of imports) 5.7 4.7 5.3 3.1 8.3 7.7
Unemployment rate () 7.2 6.5 6.0 5.4 5.8 4.9
Source Central Bank of Sri Lanka 2010

Rs/ US Won/US
2007 106 929
2008 108 1100
2009 112 1275
2010 113 1136
2011 110 1160
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Factor Costs
WHY SRI LANKA?
(USD)
Korea Sri Lanka India Thailand Vietnam China
Labour (Monthly) Shop floor 1219 102 196 231 104 379
Labour (Monthly) Managers 2437 627 1,116 1,341 822 1,199
Power Business (per Kwh) Power Business (per Kwh) 0.05 0.09 - 0.28 0.06 0.11 0.11 0.028 0.104 0.08
Water Business (per cum) Water Business (per cum) 0.04 0.46 0.22 - 2.19 0.29 - 0.48 0.39 0.9
Office rent (per sqm) Office rent (per sqm) 50 9.50 15.83 26.03 45.54 19.77 27.5 56.5 46.9 67.4
Housing Housing 1867 1,400 1,753 5,480 1,430 1,977 2,100 2,700 2,630 6,591
Telephone - Local (per min.) Telephone - Local (per min.) 0.03 0.01 0.08 0.009 0.09 0.012 0.03
Internet (Broad band monthly charges) Internet (Broad band monthly charges) 26.67 53.93 83.34 24.18 73.01 183.936 43.9
Source JETRO survey 2010
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Ease of Doing Business Rankings
WHY SRI LANKA?
Sri Lanka India Bangladesh Vietnam China
Ease of doing business (overall) 102 134 107 78 79
Starting a business 34 165 79 100 151
Trading across borders 72 100 112 63 50
Enforcing contracts 137 182 179 31 15
Closing a business 43 134 101 124 68
Source Doing Business 2011- IFC
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WHY SRI LANKA?

• Market access
• Free Trade Agreements with India Pakistan
• Indo-Lanka FTA - 100 Duty free
  access to India for
• 4,232 products
• Pakistan-Sri Lanka FTA - 100 Duty free
  access to Pakistan for 4,686
  products

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Market access Contd
WHY SRI LANKA?
DUTY FREE MARKET ACCESS
Products Exporting from Korea Exporting from Korea Indo-Lanka FTA Pak-Lanka FTA
Products India Pakistan Indo-Lanka FTA Pak-Lanka FTA
Rubber based products By 2012 - 1.25 2013 0 5,10,20,35 Nil Nil
Electronic and Electrical 0 3.75 5,10,20,35 Nil Nil
Automobile Motor Spare Parts 0 5 35 Nil Nil
Pharmaceuticals 0 5 10 Nil Nil
Medical Equipment By 2012 - 1.25 2013 - 0 5 Nil Nil
Source Department of Commerce- Sri Lanka
Department of Commerce - India

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WHY SRI LANKA?
MARKET POTENTIAL (USD Mn.) - 2010
Indias imports from the World Koreas export to India Pakistans imports from the World Koreas export to Pakistan
Rubber Based Products 1323 23 336 5
Electrical Electronic Equipment 25333 1746 2441 44
Parts Accessories of Motor Vehicles 4600 1310 144 4
Pharmaceutical 1107 8 317 14
Medical Equipment 3260 59 474 4
Source Trade Map- International Center/UNCTAD
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WHY SRI LANKA?
Labour Force

• 49.8. of the population - Men 67.8, Women
  33.4
• 92 Literacy rate
• Reputed for its precision, quality and
  productivity
• Skilled and semi skilled workers at competitive
• wage rates
• Renowned for high caliber professional skills
• World class reputation in the production
• of high end garments and lingerie markets

B o a r d o f I n v e s t m e n t o f
S r i L a n k a
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INFRASTRUCTURE - Airports
WHY SRI LANKA?
KKS
Palali
Aviation Hub

• Mattala 2nd international airport
• Modernisation of the Katunayake International
  Airport

Vavunia
Mattala International Airport
Trincomalee
Hingurakgoda
Mattala International Airport
Katunayaka International Airport
Polonnaruwa
Sigiriya
Batticaloa
Ampara
Mattala International Airport
Colombo
Ratmalana
Katukurunda
Domestic Airports to be renovated
Koggala
Weeravila
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Flights from Sri Lanka to other major destinations
WHY SRI LANKA?

• City Flights Per Week
• India (All Cities) 97
• Dubai 39
• Singapore 21
• Bangkok 16
• Kula Lumpur 16
• London 13
• Hong Kong 09
• Paris 04
• Frankfurt 04
• Tokyo 03
• Beijing 04
• Shanghai 03

Total number of flights per week from Sri Lanka -
464
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WHY SRI LANKA?
INFRASTRUCTURE - Ports
Kankesanthurai Port (KKS Port)
Ports Development

• Colombo South Port
• Hambantota Port
• Galle Port to a Tourism Port
• Oluvil Port
• KKS Port

Trincomalee Port
Colombo South Port
Oluvil Port
Hambantota Port
Galle Port
B o a r d o f I n v e s t m e n t o f
S r i L a n k a
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INFRASTRUCTURE - Colombo Port
WHY SRI LANKA?
Colombo South port development (under
construction)
World Port Ranking

• No. 1 in South Asia
• Total container throughput 4 Mn. TEUs
• Transshipment cargo 70
• 33 major shipping lines
• 14 feeder services

• Capacity to be increased - 11.7 million TEUs
• 12 new berths
• Will be the deepest port in the region
• New port being constructed in South Eastern Sri
  Lanka

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WHY SRI LANKA?
Transit Time - Colombo Port
Port Transit Time
Port Transit Time

• Japan
• Yokohama - 10 Days
• Singapore - 03 Days
• Australia
• Sydney - 11 Days

• India
• Tuticorin - 8 Hrs
• Cochin - 1 Day
• Chennai - 2 Days
• Kolkatta - 2 Days
• Mumbai - 3 Days
• Karachi - 4 Days

• Middle-East
• Dubai - 5 Days

• Europe
• Rotterdam - 16 Days
• U.K.
• Southampton - 14 Days

• USA
• New York - 20 Days

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WHY SRI LANKA?
Jaffna
INFRASTRUCTUREExpressways Highways
Northern Highway

• Colombo - Katunayake Expressway (25km)
• Southern Highway (130km)
• Outer Circular Highway (28km)
• Colombo - Kandy Highway (98km)
• Katunayake - Padeniya - Anuradhapura (153.3km)

Anuradhapura
Katunayaka-Anuradhapura Highway
Kandy
Colombo-Katunayaka Highway
Colombo-Kandy Highway
Outer Circular Highway
Colombo
Southern Highway
Southern Highway Extension
Hambantota
Matara
B o a r d o f I n v e s t m e n t o f
S r i L a n k a
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WHY SRI LANKA?
INFRASTRUCTURE - Power

• Pipeline Projects
• Trincomalee Coal Fired Project (500 MW)
• LNG Power LNG Terminal (600 MW)

• Main Power Sources
• Hydro - 45
• Thermal - 55

• Total Capacity 1780 mw

• Under Construction
• Norochcholai Coal Fired Project (300 MW -
  2011, Additional 600 MW 2013)
• Upper Kothmale Hydro Power Project (150 MW -
  2012)

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INFRASTRUCTURE - Telecommunications
WHY SRI LANKA?

• Most advanced Telecommunication Industry in
  South Asia
• Sri Lanka is being developed as regional hub for
  telecommunications
• Fastest growth sector driven by public private
  partnership
• Development of faster and more efficient
  technologies
• Fiber Optic Cables with

• SEA-ME-WE III
• SEA-ME-WE IV
• (Connectivity Bandwidth - 1.32 terabits per
  second)

Telecommunication technologies

• GSM (Global System for Mobile communication)
• 3.75G and 4G services
• HSPA (High Speed Packet Access technology )
• Video conferencing, video streaming, mobile TV,
  music streaming and high speed internet
• CDMA

SEA-ME-WE IV fiber cable network
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WHY SRI LANKA?
INFRASTRUCTURE
Export Processing Zones -Owned by The Board of
Investment

• Export Processing Zones - 12

Trincomalee EPZ (Proposed)
Proposed EPZ in Trincomalee
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Natural Resources
WHY SRI LANKA?

• Tea, Rubber, Coconut
• Spices
• Mineral sands
• Phosphate
• Fishing grounds
• Gems
• Oil and Gas deposits

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Incentives for Investments
WHY SRI LANKA?

• Granting of Tax Holidays from 5 - 7 years
  depending on the value of the Investment (Minimum
  US 3Mn) in Fixed Assets.
• Tax holidays of up to 25 years and waivers from
  other local Taxes and Levies for Mega Projects
• Corporate tax for Export Oriented Activities (90
  export)/Tourism/Construction Industry 12
• Duty Free Imports - Capital Goods and
  Raw materials
• (for Export Oriented Activities)
• - Capital Goods only (for all other
  categories)
• Exemption from Exchange
• Control - For Companies that export
  goods (Minimum 90 of
  total output)
• and
•   - For companies receiving earnings in
  Foreign
  Currency for export services (Minimum 70)

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Quality of Life
WHY SRI LANKA?

• Health Care up to International Standards
• World-class Education
• Prestigious Hotels / Leisure Facilities
• Modern Office Complexes
• Luxury Residential Apartments
• Finance and Banking

Sri Lanka India Pakistan Bangladesh Thailand Vietnam China
Human Development Index 0.658 0.519 0.490 0.469 0.654 0.572 0.663
HDI Ranking 91 119 125 129 92 113 89
Source Human Development Report 2010
Luxury Apartments Havelock City
Prestigious Hotels / Leisure Facilities
Modern Office Complexes
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Quality of Life Contd
WHY SRI LANKA?

• A cosmopolitan living environment
•  
• Abundant recreational facilities
•  
• Unparalleled natural beauty
•  
• Equable climate throughout the year

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WHY SRI LANKA?
Sri Lankas Planned Investment Strategy Contd

• Basic Infrastructure
• Cement ( 450 Mn), Tyres ( 75 Mn), Textile (
  100 Mn), Pharmacuticals ( 200 Mn), Agriculture
  ( 50 Mn), Dairy Milk Food ( 500 Mn)
• (as import substitution)
• Other Sectors
• Tourism ( 2500 Mn), IT/BPO ( 100 Mn), Branded
  Garments and Logistics Hubs ( 200 Mn), Gems (
  50 Mn).
  
  (Large forex earnings potential)
• Value Added Tea ( 100 Mn), Rubber ( 100 Mn),
  Spices ( 100 Mn), Handlooms ( 50 Mn).
  
  (Huge
  employment and forex earnings potential)
• Commercial Infrastructure (Port terminals ( 1000
  Mn), Renewable Energy and Power Generation (
  1000 Mn), Waste Disposal ( 500 Mn), Industrial
  Zones /IT Parks ( 200 Mn) ).
  
  (Infrastructure Development)
• Urban property Development ( 500 - 750 Mn )

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WHY SRI LANKA?
Other Investment Opportunities

• Colombo - Kandy Expressway 120 Km ( 800 Mn.)
  
  (PPP Basis)
• Water Supply and Drainage projects
  
  (PPP Basis)
• Housing for the Underserved ( 700 Mn.)
  
  (Direct Investment)
• Oil and Gas Exploration
• Oil and Petrochem Refinary

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Korean Investments in Sri Lanka

• Number of projects (In operation) - 42 (under
  BOI purview)
• Employment - more than 5,000
• Investment - USD 60 Mn.

Major Korean Investors
Company Activity
Keangnam lanka (Pvt) Limited -Keangnam Enterprise Ltd Housing Property Development
Ceramic World (Pvt) Limited Ceramic World Porcelain Figurine Tiles
Elphis Lanka (Pvt) Limited Eland World Ltd Skirts, Jeans, slacks, Under Garments
J and D Venture (Pvt) Limited - Textile Printing
Korean SPA Packaging (Pvt) Limited Garment Accessories Ancillaries
Busan Dipping Ko Lanka (Pvt) Limited- Rubber Thread Bands and Beadings
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The Board of Investment of Sri Lanka

• The principle Agency for Promoting, Approving,
  and Facilitating Foreign Direct Investment (FDI)
• Established by an Act of Parliament
• Significant Powers To Grant Exemption from
• Corporate Tax
• 
  Customs Duty
• Exchange Control
• Operates 12 Export Processing Zones
• Liaise between Investor and Ministries/ Line
  Agencies/Other Approving Authorities.
• Provides Investor After-Care

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Reality
Sri Lanka, the fastest growing Asian economy
after China

• Sri Lanka has emerged from a decadeslong war,
  and is enjoying
• an economic revival. It is currently the
  second-fastest growing
• Asian economy after China , a fact not lost upon
  the IMF,
• Which recently upgraded Sri Lanka to middle
  income
• emerging market status

Teo Chee Hean Singapore Deputy PM and Defense
Minister 15 November 2010- 6th International
Conference of South Asia
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Reality

• Sri Lanka has been ranked as the 4th best country
  in Asia for Investments. Thailand, China and the
  Philippine are ahead of Sri Lanka. (In ranking
  the countries the survey has taken into
  consideration education, health, quality of life,
  economic dynamism and political environment as
  indicators.)

• The Global Investment Promotion Benchmarking 2009
  study conducted by World Bank/IFC has ranked the
  Board of Investment of Sri Lanka as the best in
  South Asia for investor promotion and
  facilitation.

• Sri Lanka will be placed among the top 10
  fastest growing economies in the world, placed
  8th with a growth rate of 6.3

- Economist Intelligence Unit 2010
- World Bank/IFC
- News Week 2010 August
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Recap
WHY SRI LANKA ?

• Political stability and the most liberal
  Investment environment in
  South Asia
• Improving economic indicators
• Best factor costs amongst competing Investment
  Locations
• Ease of Doing Business Rankings
• Duty Free market access to the 2nd largest
  market in the world
• Skilled labour force
• Logistics Hub / Strategic Location
• Natural Resources
• Attractive Incentives
• Quality of life / HDI ranking
• Investment facilitation and after-care

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Sri Lanka - Your Next Investment Destination
Thank You
www.investsrilanka.com