Board of Investments of Sri Lanka

Foreign Direct Investments in Sri Lanka can be very exciting as the nation boasts a forecasted annual Economic Growth Rate of 3.4% in 2021 alone and projected about a rate of 4.7% in the next year of 2022. However, as interesting as Foreign Direct Investments in Sri Lanka can be, it could also get quite complexed if you don’t know your way around the process.

What Exactly are Foreign Direct Investments? It is when an Investments are made by an entity or an individual in one country to an organization situated in another country. Obtaining a long-term stake or expanding one's already existing company into a foreign country is also forms of foreign direct Investments. Sri Lanka as a developing nation, booms with Investments opportunities for foreign investors with lucrative industries such as the Maritime Sector, Tourism, Information Technology, Manufacturing, Agriculture, Food Processing and etc.

In contrast to closed economies, foreign direct investments are generally made in open economies with a trained workforce and above-average growth opportunities for the investor. International direct Investments usually requires more than just financial investments. It can also contain an extension of management or technological capabilities. The primary characteristic of foreign direct Investments is that it maintains either operative ownership over the company or at least a considerable leverage on the decision-making of the foreign company.

The Sri Lankan government made a major decision to implement a global standard virtual framework to boost the country's business environment and promote foreign investments by initiating a governmental agency named Board of Investments of Sri Lanka or BOI in short which was previously known as Greater Colombo Economic Commission (GCEC). The Board of Investments (BOI) is Sri Lanka's sole governmental agency in charge of promoting, authorizing, and aiding Foreign Direct Investments (FDI) that flows to Sri Lanka. According to their official website, during its tenure of 40+ years since its inception, there have been more than 1400+ companies under the purview of the Board of Investments of Sri Lanka. While carrying out its primary function of Investments promotion, the Board of Investments also focuses on sector-based investor targeting, while also focusing on aftercare, guiding, and controlling investor activities to support companies to achieve their full potential.

One can approach the Board of Investments as any other routine negotiation where you present the proposal to the BOI to initiate the first rounds of discussions. Once the discussions have spun in a productive standstill, to conclude the discussion, an agreement can be signed with the Board of Investments to officially start your project. The signed agreement will be valid until the completion of the project upheld by the Constitution of Sri Lanka.

Any investor who wishes to legally initiate in Foreign Direct Investments in Sri Lanka through the BOI, they must undergo the following two steps:

Understanding your project type and submitting the relevant documents ­– Like any other business venture, the regulation of any Foreign Direct Investments are overseen by a specific act in a country, in this case, The BOI Act. More specifically, your project will be either purview under the Section 16 or 17 of this act. Section 17 is only applicable if you are expanding a company that is already existing under the Board of Investors or setting up a new company under act 17 of the BOI Act. On the other hand, Act 16 is concerned with transferring or issuance of new shares of an existing company under BOI to foreign investors or setting up a completely new company with 100% foreign shareholding. The minimum investment, rules & regulations, payments & fees, and terms & conditions will differ according to the section that your project will fall under

Incorporating the business under the Companies Act – Firstly to register your business, you will have to get approval for the selected business name. Then you will be needed to submit the required Company Registration Forms and Articles of Association to the Department of the Registrar of Companies. Finally, you will have to give the public a Notice of Incorporation via a gazette in the governmental publications in all three official languages of Sri Lanka, which should include the company registration number, name of the company and registered address of the company.

The Sri Lankan Board of Investments (BOI) supports and advises the investors in the Investments process. It is developed to serve as a focal key point of communication for investors, with the goal of improving the Sri Lankan Investments climate. Board of Investments, which has been operating in Sri Lanka for more than 38 years, has had a major effect on the country's economic growth. With the goal of making Sri Lanka the most favoured destination for sustainable Investments in Asia, the Board of Investors is seeking to draw and secure sustainable investments to enhance the use of resources and talents through thorough promotion and excellent investor facilitation, all while based on the satisfaction with the natural environment as a significant contributor to the country's growth.

It should be noted that as a developing nation, Sri Lanka’s Investments policy revolves around the country's overall growth plan and is centred on sustainable development goals. Therefore, it can be said that projects that contribute to Economic activities, Mutual reinforcement of public and private Investments, Development of decent work opportunities and Enhancing sustainability will be most favoured.

A significant aspect of investing in Sri Lanka as a foreign investor is mapping out your project while knowing the relevant rules and regulations. It's critical that you comprehend and incorporate these crucial information into your BOI project proposals. As a new foreign investor, if you are unsure, there are a lot of professionals in Sri Lanka dedicated to helping new foreign investors throughout the whole process of Foreign Direct Investments.

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