Investment promotion and protection agreements will boost FDI: Mangala

29 January 2016 06:38 am - 0     - {{hitsCtrl.values.hits}}

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The government has taken initiatives to sign investment promot ion and protect ion agr eemen ts to encourage foreign direct investment (FDI) to the country, Foreign Affairs Minister Mangala Samaraweera told Parliament recently.
The minister said the current depressed situation in the economy, due to over-borrowing and low tax-revenue, obstructed the generation of jobs and thereby economic growth.

He noted that the government was finding difficult to obtain further aid as Sri Lanka has graduated to a lower-middle income country, which according to the minister, leaves the government with the only choice of looking for FDI and private sector-led growth. “Signing these agreements helps ensure that there is a transparent and level playing field for all investors. There is nothing to fear from these agreements; all they do is protect investors from expropriation, ensure fair compensation and ensure that companies can repatriate their profits,” Samaraweera said. He added that a study of investment agreements around the world showed that Sri Lanka was lagging and is thus at a disadvantage when competing for investment.

It is believed that there are around 3000 investment promotion and protection agreements in effect around the world. China, according to the United Nations Conference on Trade and Development (UNCTAD), has 138 such agreements. India has signed 97. The UAE has 61, Singapore has 71 and Vietnam has signed 81. “Until the House passed 12 agreements last December, Sri Lanka had only 28 agreements in effect, while China has 138, India 97, United Arab Emirates (UAE) 61, Singapore 71 and Vietnam 81,” Samaraweera pointed out. Advantages obtained from these agreements are said to be vast. The protection agreements will act not only upon foreign investors but also local ones who are doing business abroad. “First, these agreements are not one-sided – investor protection cuts both ways. They also cover investments by Sri Lankan companies abroad – which amount to a total stock of over US $ 600 million.’’
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