The BOI administers Export Processing Zones (EPZ) located in Katunayake (190 hectares), Biyagama (180 hectares), Koggala (80 hectares), Pallekele (100 hectares), Malwatte (25 hectares) Mirigama (264 hectares), and Wathupitiwela (125 hectares). A new zone established at Seethawaka (186 hectares).

Industrial Parks located in Mawathagama, Polgahawela, Horana and Mirijjawela.

Infrastructure facilities at the Katunayake and Biyagama zones include reliable power supply, treated water, telecommunication systems, paved road network, security systems and chain-link fencing.
The Katunayake Export Processing Zone has served as a model zone in the Asian region. Both zones are mature and almost fully occupied.

Located in the deep South, the Koggala zone was established with the purpose of locating industry outside of Colombo. The zone, 16 kilometres from the Port of Galle, is envisaged as the nucleus for the development of the Southern province of Sri Lanka. The establishment of an international airport, container terminal and extension of road, rail and infrastructure have been proposed. Industries for the local market are also to be located in this zone.

Export producers and industries for the local market are also to be found at the industrial parks in "Pallekele" which is situated in the scenic hill country of the Central Province. The Pallekele industrial park is ideally suited to non-polluting, high technology investments such as electronic and computer equipment manufacture.

Foreign investors may also locate enterprises outside export processing zones or industrial parks. They may lease the site or purchase land outright and the BOI will assist potential investors in choosing a site. State land is allotted usually on a 30-year lease; 99 year leases may also be approved on a case-by-case basis depending on the nature of the project.

Credit and Banking Facilities

Banking in Sri Lanka is of high international standard and more than 15 foreign banks have branches here. Significantly, some of these branches have been established more than 100 years.

Sri Lanka also has two large state banks and more than five local private banks operating. Two development finance institutions and several merchant and investment banks are also active

An enterprise which has entered into an Agreement with the BOI under Section 17 of the BOI Law and granted exemptions from exchange control regulations may:

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Open and operate a foreign currency account with any Foreign Currency Banking Unit (FCBU) of a commercial bank.

Open and operate a Sri Lankan currency account with any commercial bank.

Enterprises not eligible for offshore banking or a FCBU account facilities may:

Open and operate a Sri Lankan Currency Account with any commercial bank.

Access the domestic credit market on a routine basis subject to the following rules:

Joint ventures with majority resident ownership may freely access the domestic credit market on the same terms as fully resident-owned companies.

Joint ventures with majority non-resident ownership may access the domestic credit market on a case-by-case basis with prior approval from the Central Bank; however access to concessional Central Bank refinanced credit is not available.

Export oriented enterprises may borrow in foreign currency to finance imported inputs to execute export orders through a domestic commercial bank, subject to Central Bank Regulations.

Following the recent liberalisation of exchange control, exporters of goods and services, who are not eligible for offshore banking or FCBU facilities are permitted to open foreign currency accounts with commercial banks and to deposit their export proceeds in such accounts. Alternatively, they may retain their export proceeds abroad.

The Central Bank of Sri Lanka is the monetary authority of the country. It ensures financial stability by the prudent use of monetary policy instruments and manages the automated cheque clearing sys tern for the commercial banking system.

It also determines the daily buying and selling rates for the US Dollar against the country's Rupee and the rates are published daily. The exchange rates of other major international currencies are determined by supply and demand within the commercial banking system.

 

The normal period of work allowed is 45.5 hours per week in a factory and 45 hours in a shop or office, excluding one hour of rest per day.

The leave entitlement for office employees is seven days of casual leave and 14 days of annual vacation. Factory employees are entitled to 14 days of annual leave. Employees are not entitled to medical leave under any statute. However, medical leave up to a maximum of 21 days per year is usually allowed under collective agreements. Maternity leave is available for a period of 84 working days.

Although the law requires one and a half days break each week, most organisations work longer hours during the week days and give two full days' break on Saturday and Sunday. The full moon day of each month, of religious significance to Buddhists, is a holiday in Sri Lanka.

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Employers contribute a minimum of 12 per cent of an employee's earnings to the Employees Provident Fund (EPF), while the contribution of the employee is eight per cent. These contributions can be higher at the discretion of the employer. Employers also contribute three per cent of earnings of each employee to the Employees

Trust Fund (ETF). An employee who is in employment for more than five years continuously is entitled to a gratuity payment which amounts to half a month's salary for each year of service.

The contract of employment between employer and employee specifies the terms such as remuneration, period of probation, leave, holidays and the period of notice to be given by either party prior to termination of employment.

Satisfactory standards must be maintained at all work places with respect to ventilation, lighting, welfare amenities and health and safety.

The Department of Labour of the Ministry of Labour and Vocational Training is responsible for the administration and enforcement of all labour laws. The Department has powers of conciliation in industrial disputes and can refer such disputes to compulsory arbitration where necessary. It is illegal for a union to continue a strike after a matter has been referred to arbitration.

The BOI's Industrial Relations Department offers guidance on labour relations.

The BOI has its own Environment Department to address the environmental issues and provide guidance to investors in implementing measures to mitigate any adverse environmental impacts.

Each project proposal, whether the project is located within or outside the EPZ, is subjected to an environmental assessment and any significant environmental impacts are identified. The details of this assessment are discussed with the investor who may be required to obtain the required technological guidance.

In terms of the National Environmental Act, the industries which discharge, deposit or emit waste into the environment should obtain an Environmental Protection Licence (EPL). For granting of location approval and issuing of EPL for projects within the Export Promotion Zones of BOI, the Board is empowered to enforce the provisions of the National Environmental Act.

For enterprises located outside the zones, granting of location approval and issuing of EPL are carried out by the BOI with concurrence from the CEA. The required confirmation is obtained by the BOI on behalf of the investor and the investor deals only with the BOI.

As per the Environmental Impact Assessment (EIA) regulations currently in force, EIA is carried out in a specified manner for those projects listed under the Act. The BOI will assist the investor implementing the procedures.

The BOI has its own Environmental Monitoring Laboratory and conducts environmental monitoring and compliance checks with the national discharge standards.

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The Resident Guest Scheme has been introduced by the government as part of a package of incentives for prospective foreign investors and professionals who can contribute to the economic and socio-cultural development of the country.

A potential investor under this scheme should remit to Sri Lanka a minimum of US$ 150,000 and US$ 25,000 for each dependent or an equivalent in a convertible currency. In addition to the initial deposits, an investor should remit sufficient funds for the upkeep of him or herself and his dependents. Funds remitted to Sri Lanka by a foreign investor should be invested in an approved project. Under this scheme a qualified investor is given a five year residence visa.

The following outward remittances are allowed under the prevailing exchange control and tax regulations:

Any unutilised balance in excess of the minimum requirement of the investor.

Capital gains and income from investment.

Sale proceeds of investments wit~h Central Bank approval.

A Resident Guest who intends to obtain Sri Lankan citizenship may apply to the BOI on completion of five years of residence. Citizenship will be considered only on the basis of the applicant's contribution to the soclo-economic development of the country during the period of residency.

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Source: Board of Investment (BOI) , Sri Lanka