New investment law to override legislation
protecting environment,  archaeological sites

*Investment environment not conducive
enough to attract FDIs, says senior minister

*Got moves to expedite availability of land


By Mario Andree

A senior minister said the investment climate was not conducive enough to attract sufficient investments to achieve the economic status Sri Lanka aspired to and the government was planning to introduce a new investment law which would override existing legislations aimed at protecting the environment and archaeological sites if needed.

Senior Minister of International Monetary Co-operation, Dr. Sarath Amunugama said that much more needed to be done to attract foreign investments. According to the 2011 budget, the public sector investment should be 7 percent of GDP while private sector investment was projected to be 28 percent of GDP, in order to achieve the expected economic growth rate of above 8 percent.

He said the public sector investments were on track. However, private sector investments were still behind, performing only at 11 percent of GDP.

Sri Lanka has been identified as a favourable location for investments despite several issues holding back investments.

Accesses to ideal locations for investments are blocked by several legislations such as the archaeological act, environmental act, and several others, the senior minister said.

The government has proposed to introduce a new investment law in addressing these issues, he said, "we will bring an investment law which would override other legislations if needed."

He said Sri Lanka now has a strong foreign reserve position which was growing day-by-day. However, these reserves need to be utilized. The private sector should venture into foreign territory thereby using these reserves and strengthening and improving Sri Lanka’s per capita income, Dr. Amunugama said.

Economists argue that for a real growth rate of 8 percent of GDP, a gross investment rate of nearly 34 percent of GDP is required. During the past five years, the gross rate of investment has been only 27 percent of GDP. With domestic savings too low at 17 percent, more FDIs would be required to bridge the investment-savings gap.

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