June 13, 2013 / 2:31 PM / 6 years ago

Sri Lanka wants FDI to boost exports and import substitution

COLOMBO, June 13 (Reuters) - Sri Lanka wants foreign direct investment tailored to boosting sluggish exports and to import substitution, according to a government document seen by Reuters on Thursday.

Export revenue fell 8.1 percent in the first quarter of 2013 to $2.36 billion, which the central bank blames on economic slowdown in Sri Lanka’s main export destinations such as the euro zone and the United States, the government’s data showed.

The document showed the cabinet has decided to mobilise FDI, targeted at $1.5 billion this year, into processing spices plus animal husbandry and poultry farming with import substitution in mind.

“Foreign investment in assembling vehicles, refining petroleum products, and manufacturing boats for the export market should be encouraged,” it said.

“In order to protect local investors, it was decided that foreign investment should not be encouraged in small-scale agricultural industries, retail trade, manufacturing of steel and cement and beauty-care related products.”

Government spokesman Keheliya Rambukwella said the new decision would not affect existing FDI in steel and cement.

Tokyo Cement company (Lanka) PLC, Holcim, Thatta Cement, Bhuwalka Steel are leading cement and steel companies in Sri Lanka with foreign holdings.

Sri Lanka expects its economy to grow 7.5 percent this year, fuelled by major infrastructure projects. Growth last year slowed to 6.4 percent from a record high of 8.2 percent in 2011. Growth in exports eased to 9 percent in 2012 from 23.8 percent the previous year. (Reporting by Ranga Sirilal; Writing by Shihar Aneez)

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