August 07, Colombo (LNW): The Sri Lanka Economic Transformation Bill aims to convert Sri Lanka into a competitive, export-oriented, digital economy, with goals including sustainable debt, modernized agriculture, and inclusive growth.
The Bill targets a 5% annual GDP growth by 2027, a public debt to GDP ratio below 95% by 2032, unemployment below 5% by 2025, Net Zero emissions by 2050, and increased female labor force participation, reaching 40% by 2030 and 50% by 2040.
The Bill addresses the shortcomings of previous laws by providing specific sector-focused support, aimed at boosting investment and restructuring debt.
However, concerns have emerged regarding the lack of penalties for failing to meet these ambitious targets, raising questions about accountability and enforcement.
Nonetheless, setting high economic goals without penalties may foster a collaborative environment for developing favorable regulations between businesses and policymakers, finance ministry sources said.
The Bill proposes replacing the Board of Investment (BOI) of Sri Lanka Law with the Economic Commission to overcome inefficiencies, political interference, and inadequate support for diverse economic activities observed under the BOI.
It also suggests establishing specialized bodies: the Economic Commission of Sri Lanka (EC), Investment Zones Sri Lanka (Zones SL), Office of International Trade (OLT),
National Productivity Commission (NPC), and the Sri Lanka Institute of Exports and International Trade.
Decentralizing functions and responsibilities among these autonomous bodies aims to ensure timely decision-making and efficient operation without the bottlenecks associated with a single large entity like the BOI.
However, the success of these reforms hinges on competent individuals, not just the enactment of the Bill. There is a risk of creating ineffective bodies if flawed provisions allow political interference in appointing members to the Economic Commission and other institutions.
To achieve true progress, appointments must be based on merit. Section 27(4) of the Bill allows the Economic Commission to sponsor training programs for personnel in investment and trade, enabling them to gain international perspectives and practices that can be implemented locally.
An intriguing aspect of the Bill is the equal treatment of local and foreign investors, both eligible for the same incentives. Domestic investors must register their investments with the Economic Commission, ensuring they receive regulatory compliance assistance and access to incentives.
The Bill mandates a 15-day response requirement for ministries and government departments to address inquiries or requests from the Economic Commission regarding approvals, authorizations, or permits for investors, streamlining processes and reducing delays. The lack of defined timelines in the BOI Law contributed to unpredictability and bureaucratic inefficiencies.
The establishment of ‘Invest Sri Lanka’ by the Economic Commission aims to help local businesses access potential investors and partnerships, enabling them to tap into new markets domestically and internationally.
Section 50(e) of the Bill aims to create a dynamic, well-supported private sector by bridging the gap between local businesses and potential investors, fostering an environment conducive to growth and innovation.
The Office of International Trade’s authority to accept development assistance from various sources, including organizations like the World Bank, IMF, or United Nations agencies, enhances its capabilities and resources.
The Bill proposes investment zones for a wide range of industries, including manufacturing, technology, scientific research, high-tech agriculture, tourism, recreational enterprises, business services, and livestock enterprises.
