By Yakuta Dawood
The Uchimunai island located in Kalpitiya, owned by Sri Lanka Tourism authorities, is proposed to be handed over to a sole investor – most likely to an foreign country that will develop the island into a tourist attraction in Sri Lanka, The Sunday Morning Business learns.
A top official source from the Tourism Ministry, who wished to remain anonymous, told The Sunday Morning Business that the purpose of considering this measure was due to the extensive development required prior to constructing any tourist hotels or major developments in the island.
The official said that the island did not have electricity, water, proper road development, or required infrastructure.
“I visited this island last week. The problem is to develop it – it requires huge investment. Therefore, we want to give this to a big investor. The investor will have to install water distillery machines to collect water from the sea and so on; they will have to bring investment for electricity generators and solar power. Infrastructure is also not in place as it is a small island. We want to give the entire island or part of it to a new sole investor, otherwise it will be very difficult to develop it,” the official explained.
Further, commenting on the hotel investment that was scheduled to be brought into the Uchimunai island this year, the official said that the initial proposal by a Switzerland-based investor who had expressed interest in investing $ 420 million was now hanging by a thread due to the present economic situation faced by Sri Lanka.
According to the official, the last confirmation date which was given to investors was 31 January 2022, but there had been no updated verification from the Swiss investors as of yet.
“If they don’t give any kind of verification, we will probably cancel it next week and look for new investors. They did mention that the final word would be given after meeting Prime Minister Mahinda Rajapaksa, but they have not informed us of anything yet. We have to give them a chance so we didn’t cancel it but before end February, we want to make a decision,” the official mentioned.
The official said that two investors from India and the United Kingdom were expected to discuss the project if the Swiss investor were to withdraw.
Elaborating on why the Swiss investor was reconsidering, the official emphasised that the present economic crisis – including the dollar problem, uncertainty in the market, trade union protests, etc. – had led to investors being discouraged.
“These are not good for investment; they are thinking twice or thrice before investing in Sri Lanka,” the official added.
Attempts to reach the Urban Development Authority (UDA) and Board of Investment (BOI) to get more information about this plot of land and the project proved futile.
Meanwhile, commenting on the investment climate, the official said that due to the establishment of the Investor Relations Unit (IRU) within the Sri Lanka Tourism Development Authority (SLTDA), Sri Lanka would have a good year in terms of securing new investments.
“It is a one-stop location for investor approvals, proposals, and fulfilling all requirements on behalf of the investor. It’s prepared and published; therefore we think that 2022 will be a good year for attracting investors,” the official said.
As per the authorised information, the recent improvements to the investment approval process have cut down the time taken for project approvals by 40% and further improvements are in the pipeline with an effective facilitation mechanism.
From March 2020 to June 2021, the Government was able to attract over $ 950 million in investments, which will be dedicated to revitalising the country’s tourism sector.
A total of 64 project proposals have been received, while 38 projects have received approval, amounting to an approximate value of $ 102.38 million. These ventures will be executed under the auspices of the SLTDA.
Speaking about these initiatives and highlighting some of the key policies designed to encourage international investment and expedite the process, SLTDA Chairperson Kimarli Fernando stated: “This new era of strategic investment is like nothing the country has seen before and is set to launch Sri Lanka’s tourism sector into a brave new future. We have taken great care to streamline the investment process, so it is more in line with what international investors expect. This includes a master document which merges the requirements of all Government agencies into a single, easy-to-use application for investors.”
Likewise, the BOI figures provided on request by The Sunday Morning Business show that in 2019, the contribution from European countries rose by 7% in comparison to the total contribution of 6% in 2018, by successfully attracting a total amount of 13% of FDIs from EU member countries out of the overall FDIs received that year.
The BOI in 2020 received 15% of its overall FDIs from EU countries and then witnessed a gradual increase up to 18% as of the third quarter of 2021, amidst the prevailing Covid-19 pandemic.
Out of the total investment of $ 558 million received by Sri Lanka as of the third quarter of 2021, EU member countries had invested a total of $ 100.88 million.
The level of interest shown by global investors is a positive sign for things to come and indicative of the immense potential in the local tourism sector. Foreign investment is a key driver of economic growth, as is revenue generated via tourism. As one of its primary exports, tourism remains Sri Lanka’s calling card to the world.
Uchimunai island to be given to sole investor
20 Feb 2022
Uchimunai island to be given to sole investor
20 Feb 2022