COLOMBO (EconomyNext) – Sri Lanka’s new government will loosen regulations to attract more foreign investment, Finance Minister Ravi Karunanayake has said.
Almost three decades of civil war and years of misrule, meant that “Sri Lanka missed the opportunity to be to India what Hong Kong is to China,” he said in his keynote address to the Asian Investment Conference organised by Credit Suisse at session moderated by Sharhan Mushin, who is head of financial institutions group for the Asia Pacific region, which covers Sri Lanka.
The forum draws institutional and hedge fund investors as well as high-net-worth individuals and business leaders who seek access to influential ideas and actionable advice.
Karunanayake said the new government is keen to attract foreign investment to stimulate export-led growth and help alleviate poverty.
The government intends to revise investment rules to attract overseas flows and strengthen trading relationships with other nations through free trade deals planned with China and the U.S. adding to existing ones with India and Pakistan.
Karunanayake acknowledged that the external account is a problem.
With almost half the country’s public borrowing denominated in foreign currencies, Karunanayake said he favours a stronger rupee to reduce debt servicing costs.
However, since a stronger currency penalizes exporters, the solution, he said, is to ease barriers of entry for foreign investment which would raise skill levels and efficiency.
Karunanayake forecasts economic growth this year of 7-7.5 percent driven by sectors like tourism, agriculture and petroleum.
He identified logistics, infrastructure and housing as sectors that need more attention.