An investor friendly BoI

Level playing field for both local and foreign investors

Young business tycoon Dhammika Perera assumed duties as Chairman and Director General of the Board of Investment (BoI) on Tuesday. However, he is not new to the BoI, as he had served on its Board for more than a year, by the time he was elevated to its chairmanship.
The general public, as well as most Sri Lanakan investors, do not have a positive impression of the investment promotion body. It was not very long ago, a certain politician declared in public, that, if there was no institution called BoI, we could have flourished as a nation. Can Dhammika Perera, successful as one of Sri Lanka’s leading businessmen, redeem the much maligned BoI?
The Nation Economist met Mr. Perera to find out his ideas to convert this institution into a more business friendly organization, to deliver the expected results.

Excerpts of the
interview:

By Indika Sakalasooriya
Q. What is your first priority at the BoI?
A. Well, to put it in a nutshell, I’m very keen on changing some of the rigid BoI policies and systems that have been practiced in the last decade. This would be my first priority.

Q. BoI or, what was then known as GCEC, was created during President J.R. Jayewardene’s time, to get away from government bureaucracy. However, now, the BoI has become another bureaucracy by itself. Don’t you think it needs a complete overhaul?
A. Since I assumed duties only yesterday, I am not in a position to give a proper response. Once I am more familiar with the subject, I would be in a better position to tell you something important later. However, for the moment, I don’t think that the BoI needs a complete overhaul. I’m confident that I can make things run smoothly again.

Q. As an investor, what were your experiences with the BoI?
A. Well, I have to confess that my experiences with the BoI were not very pleasant. I can remember obtaining BoI approval for my Rocell Bath Ware factory. I had to wait for almost six months. I think, that was a very good example of the inflexible and lethargic bureaucratic system the BoI had been practising. Another incident was when I wanted to build a factory last year. The BoI said that I couldn’t do that, because there were other factories. From that I understood that the BoI was there, not only to promote investment but also, to discourage investment. I should also mention that, although the BoI has nine receptionists, each for all the nine floors they occupy at the World Trade Centre, an investor always has to come through the back door, to get anything done. As an investor, I experienced this and it is my duty, to put an end to these malpractices.

Q. So, do you think that those experiences will help you to improve the system?
A. Definitely, they will. The first thing I did, after assuming duties, was reduce the 12-page application form investors had to fill, to get BoI approval for any project, to a single page. I know how tiresome that process is. The investor cannot fill that form by himself, because it is highly unlikely that the BoI would accept it. Therefore, the investor has to go to a consultant and spend about Rs.150,000, to get it filled. Thus, I can tell you, that my experiences with the BoI, as an investor, will compel me to create more investor friendly policies.

Q. How many are on the BoI staff at the moment? Will you be recruiting new personnel to make it efficient?
A. At the moment, there are 1,100 personnel working in the BoI. Yes, I’m thinking of recruiting about 100 graduates, because the cadre at the BoI is insufficient.

Q. After assuming duties as Chairman, you said that local investors will be afforded the same incentives granted to foreign investors. Will it affect the much needed foreign investment at the moment?
A. No, it will not. This institution is called the Board of Investment. People are under the notion that the BoI is only to promote Foreign Direct Investment (FDI). It is not true. It is true that FDIs bring foreign currency into the country. However, again they take their money back to their countries, on various pretexts such as buying machinery. Hence, there is nothing in it for us. What we should pay attention to is how these FDIs help the economy, nothing else. If we encourage local investment, especially, export oriented businesses, through the BoI, by granting them equal opportunities and incentives as the foreign investors, the volume of investment will definitely increase. As a result, the country gains.

Q. What are the main sectors where incentives will be granted to local investors?
A. Services sector has very good potential. At the same time, education, apparel and the agro chemical sectors are also very important areas that local investors should pay attention to.

Q. What are the main countries we can target for investment?
A. I can’t tell you that at the moment, because my attention is focused very much on restructuring BoI policies. That identification will take some time.

Q. In your view, what is the best way to promote investment? Is it by having seminars, road shows etc. or, arranging individual meetings?
A. Whatever it is, the most important factor is that they should be targeted in specific ways. Unlike in the past, we are not going to market what we have in our country or, what we are going to give the investors. First, we select several countries and identify their economic and investment strengths. After identifying them, we create an attractive package for them and market it to the relevant country, through trade shows, seminars etc. Without customised targeting, promotional campaigns are a waste of money. It is good that the BoI hasn’t expended much on promotional campaigns earlier. It would have been a sheer waste of resources.

Q. You have said that by offering the same incentives, we would be able to stop local investors from investing overseas. What would be the annual volume of such investments?
A. No. I didn’t say that we should stop them. In the same way that foreign investors come to Sri Lanka, our people too, should have businesses in other countries. What I meant was that, we should afford local investors equal opportunities, so that, if the return is high, it is possible that they would not opt to invest in businesses abroad. My understanding of the problem is that local investors do not have a proper understanding of what the BoI is about. The opportunities and incentives they are eligible to, from the BoI, are not effectively communicated. Therefore, to bridge that gap, within the next fortnight, we intend launching a small publication called “Investment Opportunity”, which would contain all the facts and figures pertaining to investment opportunities in Sri Lanka.

Q. The targeted FDI for this year is US$ 4 billion, when last year it was only US$ 604 million. As you can see, there is a big gap. Don’t you think this target is too ambitious?
A. No. I don’t think it is too ambitious or unachievable. A new oil refinery worth US$ 2.5 billion is due in Hambantota. That alone is in excess of half the target. However, you can’t expect the funds to come into the country immediately, because the realization process will take time. Also, there are several power projects such as the Trincomalee Power Project with an investment of Rs.500 million, that will contribute to the rest of the target. In fact, Dr. Amunugama has decided on that target for the BoI, only after careful analysis of the situation..

Q. There is a serious charge against the BoI that it is not monitoring factories set up with BoI concessions, to ensure that the facilities guaranteed are not withheld when they come into the country?
A. Yes, I accept that there are problems in monitoring. However, I am confident that, as a team, we can find remedies for that. In fact, as for everything else, monitoring too, needs transparent and clear policies. First, we’ll attempt to rectify the shortsighted policies and uplift the standards of the institution. Failing which, the only option would well be to restructure the institution.

Q. How could the BoI help in developing the provinces as proposed in the government’s 10-year development plan?
A. The book that I mentioned earlier “Investment Opportunity”, has all the investment projects mentioned in it, including the projects in remote areas. Meanwhile, we are planning to have three new Free Trade Zones, one each in Trincomalee, Puttalam and Matara, in addition to small regional ones.

Q. In your view, what are the main impediments to developing the BoI into an effective institution?
A. As a matter of fact, I don’t see much problems. Definitely not big enough that we cannot find solutions to them. The problem is only one of mismanagement. For example, there is a 180-acre zone in Seethawaka. It has only 28 factories with 15,000 employees. There is still enough land and space in that zone that could be utilized to profit from but, what has happened is that some of the land has been blocked. Hence, nobody can use them. This is what I meant by mismanagement. As I said, there are no problems that we cannot solve. However, if we fail to do so, within a reasonable period of time, then, I am to be blamed.

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Dialog TV takes Sri Lanka by storm

By Marianne David
Based on cutting edge technology, Dialog TV took Sri Lanka by storm with its state-of-the-art satellite digital video broadcasting, DVD quality picture, stereo quality sounds, and its line-up of top channels.
Turning around the trend of television viewing in Sri Lanka, DialogTV, with its tag line of ‘Wake Up To The Next Generation Of Satellite TV,’ boasts a wide range of international content, including CNN, BBC, HBO, Cinemax, AXN, ESPN, Discovery Channel, MTV (Music Television) and Cartoon Network, amongst many others.
Dialog TV is operated by Asset Media, a subsidiary of Dialog Telekom Limited. Heading the Dialog TV team is Dialog Telekom General Manager (Sales and Marketing) Nushad Perera.
In an interview with The Nation, Perera said that Dialog Telekom has now become a quadruple player. The company is the first in South Asia, to enter the quadruple player field – boasting of a mobile operation, a fixed line operation, a broadband operation, and a media operation.
Speaking of the challenges faced by DialogTV, Perera said that challenges included reinstating confidence in customers, after the suspension, re-awakening the whole organization, because it had been in limbo, and taking the product to the hands of the consumer.
Elaborating on the challenge of taking the product to the consumer, Perera said, “Traditionally, viewers don’t pay to watch TV. We are coming in with a game plan, saying ‘here is a television media where you have to pay, to watch TV.’ Then, we have to build massive value, to attract the consumer.”
In order to do this, Dialog TV structured the product into three categories – Super 500 with 16 channels, Great 900 with 25 channels and Value 1400 with 29 channels, plus the local channels.
“We recently got the ICC World Cup, which was the main puller. We spent a lot of money on that. There was no return on investment, because we paid a massive amount, to get the rights. However, we chose to do so as a confidence building mechanism. It was also a way of telling the consumers that we are here permanently,” added Perera.
Dialog TV is now moving into adding more and more channels into the network. “There is space in the satellite. We had two transponders and both of them are full, so, we have now bought two more transponders. Therefore, we can add more channels and improve the quality even further,” explained Perera.
When Dialog TV took over CBN Sat, there were 10,000 subscribers. Dialog TV has managed to increase the number of subscribers to 22,000 within three months. The company is currently adding 4,000 customers a month.
Explaining the rationale behind the ‘buy one, get one free’ spot promotion, Perera said, “That was a loss to us, because we are giving the equipment free. However, we wanted to test certain price points. We found the results overwhelming, which meant that consumers were willing to pay about Rs. 9,000 for the connection.”
Dialog TV has also taken the step of investing in distribution and installation. Distribution is vis-à-vis all Dialog centres, of which, there are around 300 across Sri Lanka.
Dialog TV also formed 50 fully trained and skilled installation crews operated by Dialog TV to carry out installations for customers. A team comprises of two people plus a vehicle. Once a customer’s payment is realised, Dialog TV provides the connection within three days.
Dialog TV has also been successful in getting large enterprises in Sri Lanka, including 95% of Sri Lanka’s star class hotels, connected to DialogTV. This includes John Keells Resorts, Aitken Spence Group, Confifi, Trans Asia, Cinnamon Grand, Hilton, etc.
“We have also connected most of the apartment complexes. We have a dedicated enterprise solution, where we run a single cable and connect all the apartments,” added Perera.
As for signal quality, Perera said, “What we must emphasise is that, with satellite TV, rain degrades the signal quality to a certain extent. When there is heavy rain, signals do not penetrate. This is a worldwide phenomenon beyond the control of Dialog TV. In Sri Lanka, by and large, this is limited to 10 to 20-minute spells.”
Another challenge faced by Dialog TV was to motivate the staff. “We put the cart before the horse, where we showed the staff the potential of the product and we infused some of Dialog GSM’s key players into the organisation. Key people were brought into the organisation from many divisions and we infused the Dialog energy into the defused CBN Sat,” asserted Perera.
As for the challenge of instilling confidence in the people, while the Dialog name itself created a lot of confidence in the product, people were skeptical whether Dialog could carry it through, after the events that led to the closure, said Perera.
Therefore, the Dialog technical team did a complete study of the system and Dialog TV partnered only its very reliable business partners.
“We made it a point to ensure that it was absolutely ethical and honest, in all the dealings we carried out. We were transparent with any organisation. We also obtained all the clearances and catered to all the legal requirements,” Perera emphasised.
So, what’s next from DialogTV? “More channels coming in. You could expect us to bring in the digital experience into television. Right now, people are not accustomed to seeing good quality, high definition TV. We are on a pilot project now, results of which we could announce within four weeks. Then, we can bring in a high definition digital experience into television,” Perera pledges.
Dialog TV also plans to increase the number of channels to about 50, by the end of the year and provide value for money.
“We will continue to provide value for money. That has been Dialog’s framework. It’s in our blood. We can promise that, if we offer a discount for any of our new packages, it will be extended across the board to all existing subscribers,” he concluded.

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