The Democratic Socialist Republic of Sri Lanka is strategically located in the Indian Ocean and is the gateway to the emerging markets of South Asia, Pacific Rim and the Middle East. Affectionately termed the “Pearl of the Indian Ocean”, Sri Lanka has a population of over 20 million and the commercial capital is Colombo. In February 2010, the average foreign exchange rate for 1 Canadian dollar (CAD) was 107.15 Sri Lanka Rupees (LKR).

The island nation is considered to be the Regional Hub and one of the most lucrative investment locations in the world. Over the past two decades, successive governments have adhered to free-market policies with a liberalized and open economy. This has created a policy environment and climate conducive for the inflow of Foreign Direct Investment (FDI). Due to the high priority given for rapid industrialization, quality infrastructure, logistical and service facilities have been carefully designed and developed. Today, the Port of Colombo is ranked number one in South Asia, amongst the top ten in the region and twenty-sixth in the world according to the Lloyd’s register.

The Free Trade Agreement (FTA) between Sri Lanka and India, which was signed in March 2000, has also added greater impetus for Sri Lanka to expand its business scope and potential as it provides direct access to the vast Indian market of one billion people. The regulatory framework governing FDI in Sri Lanka is considered to be the best in Asia as per international organizations such as Japan International Corporation Agency (JICA). The country’s investment laws are transparent and automatic across a wide range of sectors. Other salient factors that should be taken into consideration when doing business with Sri Lanka are:

• Total foreign ownership is permitted in almost all areas of the economy;

• There are no restrictions on repatriation of earnings, fees and capital, etc;

• Bilateral Investment Protection Agreements (IPAs) with 20 countries and Double Tax Relief Agreements with 25 countries.

• A sophisticated legal and regulatory framework covers intellectual property, settlement of disputes through arbitration, company laws, etc;

• The safety of foreign investment is guaranteed by the Constitution of Sri Lanka;

• Equal treatment for foreign and local investors.

Sri Lanka offers an attractive investment portfolio to the Canadian investor. Numerous opportunities are available in the following areas:

• Economic Infrastructure – Railways, Highways, Aviation, Power & Energy, Ports, Posts, Telecommunication & Media and Irrigation;

• Human Settlements - Water Supply, Urban Environmental Sanitation, Housing and Regional Development;

• Industry – Industrial Infrastructure, Tourism and Technology Transfer;

• Human Resource Development – Education, Skills Development, Sports, Culture & Arts and Health;

• Agriculture – Agriculture, Plantations, Livestock, Fisheries and Forestry.

In 2008, Sri Lanka recorded a GDP growth rate of 5.95 per cent with an inflation rate of 15.80 per cent. For the same year, economic indicators record the country’s GDP at CAD $39.60 billion (Services sector contributing 53.6%, Industry – 26.3% and Agriculture – 20.1%). The country’s major exports include Apparel (finished garments), Handloom and Textiles, Tea, Spices, Herbal products, Footwear, Leather products, Rubber products, Tableware, Handicrafts & Gift items, Metal and Metal products, Gems and Jewellery, Home décor, Wood products, Refined Petroleum and Coconuts & Coconut products.

© Canada Sri Lanka Business Council

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