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The Government's industrialisadon strategy calls for the expansion, diversification and upgrading of its industrial base, as well as promotion of foreign investment in virtually all sectors of the economy. (A small restricted list applicable to foreign investors can be found on page 55 of this brochure).

Within this broad policy framework, the BOI has identified priority sectors for attracting foreign and local investments. A description of several of these sectors follows.


Private investors are active in telecommunications services such as cellular telephone services, wireless local loop systems and pay telephone networks. Investments in the power sector, ranging from mini-hydro systems to large-scale generation plants and the port sector are also being implemented.
Other opportunities in infrastructure investments include housing & property development, hospitals, voice and data communication systems, public transport and environment. Foreign ownership up to 100 per cent is allowed in these ventures.

Sri Lanka has all the required attributes for successful investment in the electronics industry. For example, the status of Sri Lankan workers as among the best educated and most trainable in South Asia is especially relevant.
Many industries manufacturing for export are already located here. Products manufactured include head-stacks for computer disk drives, magnetic heads for audio and video equipment, ferrite core transformers and household appliances.

Research and development facilities and "troubleshooting" expertise for the electronics industry are available locally at the Arthur C. Clarke Centre for Modern Technologies. The Centre will also prepare and deliver customised training packages.



There are several investment opportunities in the manufacture of products such as electrical machinery, houseware such as fans, room airconditioners, refrigerators, small engines and metal furniture. Investments also can be made in fabrication subcontracting for many products.

Sri Lanka has a long tradition in the manufacture of machinery used in the tea industry. These skills can be harnessed and easily extended to the manufacture of all types of food processing machinery. Each year, Sri Lanka's education system produces a large number of workeis proficient in the skills requited for the light engineering industry.


Studies undertaken in Sri Lanka show that the local light engineering industry compares well internationally for both its efficiency and competitiveness.

This is of significance as manufacturing operations in light engineering products are among the first to move to lower cost locations when labour costs increase.

The island exports products such as precision tools, moulds and electrical enclosures and manufactures high quality water pumps and agricultural machinery for the local market


The garment industry has been one of the fastest growing industries in Sri Lanka. Growth has been stimulated by a very large installed capacity, a high level of technical and managerial skill and sophisticated marketing know-how

There are excellent investment opportunities in the production of up-market, higher quality and better designed garments to meet the needs of sophisticated markets around the
Investment potential also exists in the manufacture of high quality fabric to meet the needs of the expanding garment export industry, yarn, embroidery and interlining. The value of annual imports of fabric is estimated to be more than US $1.2 billion. Also in demand are accessories such as zippers and buttons. The value of annual imports of accessories is estimated to be more than US$100 million.

Sri Lanka has a large pool of young educated people with skills in computer programming. Software engineers qualified in computer science offer levels of skills that are among the best in the world. rhe government has actively encouraged the spread of computer literacy by providing duty concessions on all hardware imports.

The country already serves as the headquarters for one of the largest software development companies in South-East Asia. Furthermore, low cost offshore data entry operations have thrived here since the early 1980s. Investors can now take advantage of increased sophistication and knowledge to set up offshore software development units.

Software development is carried out in most current languages. This environment is further enhanced by modern data transmission and telecommunication systems and complementary hardware.


The island is the world's fifth largest exporter of natural rubber, generating over 100,000 tonnes annually. More than 60 per cent is exported in an unprocessed form.

On the manufacturing front, Sri Lanka is the world's leading supplier of solid rubber tyres for off-road vehicles. Major investments have also been made by producers of healthcare and surgical rubber products, where high quality raw material is of primary importance. Globally, there is good demand for rubber tiles and floor coverings. In addition, shoe producers obtain rubber heels and soles from Sri Lanka.

Opportunities for investment include the manufacture of tyres, tubes and automotive rubber products, especially by relocating these facilities from high cost industrialised or industrialising countries.

Sri Lanka's tropical climate is ideal for large-scale export-oriented investments in areas such as foliage, cut flowers and exotic fruits and vegetables.

East-Asia also offers an
expanding and adjacent market for shellfish and other products of

mariculture and aquaculture. In addition to primary production, Sri Lanka also requires processing and storage facilities to help exports.


Sri Lanka is well-endowed with minerals and these form an important export category. For example, the local graphite is of premium quality and offers many processing opportunities in graphite lubricants, flake graphite, carbon brushes, refractory bricks and midget electrodes.

Other minerals include heavy metal mineral sands, clays, dolomite and apatite. The mineral sands contain around 75 per cent titanium dioxide - the opaque white pigment used in paints. Traditionally, these have been exported in unprocessed form.

The presence of quartz, ball clay, silica and feldspar offer opportunities in the ceramics and glass industries. Sri Lanka has about 75 per cent of the raw material required to manufacture such products. The country's porcelain is ranked among the best in the world.

Large deposits of phosphate are also available for the manufacture of fertilizer.

For centuries, the island has been famed for its precious gems. The availability of these precious stones

and of superior manufacturing skills highlight Sri Lanka's potential as an international centre for j ewellery.

The traditional lapidary trade boasts superior skill levels. These skilled operators have contributed to our diamond cutting and polishing industry becoming one of our most recent export success stories. This expertise is matched by very competitive cutting charges and excellent craftsmanship, especially for the smaller stones where labour costs are significant.

In addition, jewellery is now exported to Germany, Japan, the Middle-East and the United States.

Exporters of gems, diamonds and jewellery have been granted an open-ended exemption from income tax.


Sri Lanka hosts around 400,000 tourists each year with the potential for this figure to increase substantially.

Growing acceptance of Sri Lanka as a major tourist destination offers excellent opportunities for strategic investments in the leisure industry.

Further opportunities exist for warehousing complexes and cargo and container facilities. The strategic location of Sri Lanka on international shipping routes offers many opportunities for ship repairing, ship breaking and entrepot trading.
Even among Sri Lankans, there is an unsatisfied demand for recreation and leisure facilities due to an increase in disposable incomes.

Although there is investment potential in hotels and resorts, an attractive alternative lies in the development of leisure complexes such as golf courses and theme parks. The island offers some magnificent locations for such investments.

Source:Board of Sri Lanka (BOI) - Sri Lanka.
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