German firms in Sri Lanka committed for further investments: survey

From left : BOI Director General  Duminda Ariyasinghe, Allianz Asia Pacific Chief Operating Officer Dr. Ruediger Schaefer, AHK Sri Lanka Chief Delegate Andreas Hergenroether, Minister of Development Strategies and International Trade Malik Samarawickrama, Ambassador of Germany to Sri Lanka Jörn Rohde and, EDB Chairperson Indra Malwatte , National Chamber of Commerce President Sujeeve Samaraweera
Pic by Pradeep Pathirana 

• But concerned about political stability, reliability of governmental framework and energy prices
• Allianz expects Sri Lanka’s GDP to grow by 3.5% this year, 3.8% in 2019 and 4.0% in 2020
• German FDIs to Sri Lanka currently stands around US $ 1.2 billion

By Nishel Fernando 

The majority of German businesses operating in Sri Lanka are either planning or considering making further investments in Sri Lanka over the next two years, a survey conducted by the German Industry and Commerce in Sri Lanka (AHK Sri Lanka) has revealed. 

“German companies are very much interested in investing at new locations in Sri Lanka. This year, 46 percent of the participants stated that they are planning investments in new locations in Sri Lanka  within the next two years and 31 percent German companies in Sri Lanka are considering to do so,” AHK Sri Lanka, Chief Delegate, Andreas Hergenroether said. He revealed this at the re-launch of ‘Top German Brands Sri Lanka’ organised by AHK Sri Lanka, this week.

However, Hergenroether pointed out that German businesses are concerned about the reliability of governmental framework, political stability, finding and retaining qualified staff as well as increasing commodity and energy prices. According to the survey, 45 percent of the German companies believe that the government tender procedures are not transparent with only 20 percent expressing a positive perception. 

Delivering the keynote speech at the event, Allianz Asia Pacific Chief Operating Officer Dr. Ruediger Schaefer said that Sri Lanka’s economic activity would gradually pick up over the next few years despite external shocks.

Allianz expects Sri Lanka’s GDP to grow by 3.5 percent this year, 3.8 percent in 2019 and 4.0 percent in 2020.

However, Dr. Schaefer noted that weak public finances and heavy reliance on external financing have put the economy under the radar of investors.  He stressed that the continuation of the government’s reform agenda is paramount to gain investor confidence. He also advised the government to pursue more transparent policymaking, fiscal consolidation and immigration reforms to attract FDI and boost growth.  Referring to the survey, Hergenroether noted that 63 percent of the respondents had a neutral or improving perception of the overall economic condition of the country.  “Forty three percent evaluated that the Sri Lankan economic situation will be unchanged for another two years; 28 percent felt the situation will worsen in next two years and 20 percent of the respondents expect an improving economic situation,” he stated. 

Meanwhile, Dr. Schaefer said the European Union (EU) should play a bigger role in Sri Lanka’s infrastructure development as the world has become a multi-polar system, where China is playing a major role.  German Ambassador to Sri Lanka, Jörn Rohde highlighted that Germany is increasingly becoming an important market for Sri Lanka.  “After Brexit, the German market will become even more important to Sri Lanka. I already see exports from Sri Lanka to Germany rising in 2018, compared to last year. 

A lot of these companies are represented by agents. I think we want these companies to manufacture here in the future. For that, it’s important the business climate improves continually.” Hergenroether added that German brands could play a decisive role and become strategic partners for the much-needed transfer of know-how and technology for local industries become more competitive.

The event was attended by representatives of leading German brands such as Allianz, DHL, BASF, SAP, TUI, Linde, Siemens, Kramski, Haeefele, OBO Bettermann etc.  

Sri Lankan exports to Germany grew by 13 percent year-on-year (YoY) in 2017 to 653 million euros while imports from Germany increased by 81 percent to 570 million Euros. The German FDI to Sri Lanka currently stands around US$ 1.2 billion.