With new policies in place, a system where there is consistency in policy and unchanging laws, regulations and taxes, Foreign Direct Investments (FDIs) should grow to USD 4 to 5 billion in the next decade, a Finance Ministry official said.
The new Government following the ascension of National People’s Power (NPP) Presidential candidate, Anura Kumara Dissanayake, has promised a corrupt-free Government and an administration bereft of the usual practice of mismatched policies and the rule of law, which to a larger extent would help to boost the country’s standing in the global realm of foreign investment.
Sri Lanka is one of Asia’s fastest growing economies – notwithstanding the disruption from the Covid-19 pandemic and the economic crisis in 2022, has huge untapped potential to grow speedily in the next decade with foreign investment thanks to the emergence of the Port City, Colombo which is drawing investor- interest from across the world. Facilities such as the Cinnamon Life integrated resort – with the largest number of hotel rooms and the biggest convention and conference facilities among hotels – that opened recently, enhances the value proposition that Sri Lanka offers to would-be investors. Investment flows into the country have been low and on average garnered less than US$1 billion except for 2018, when Foreign Direct Investment (FDI) was recorded at $2,071 million in inflows and loans.
According to the Ministry of Finance, from 2014 to 2023, Sri Lanka’s FDI experienced significant fluctuations. In 2023, Sri Lanka received $724 million in net FDI including inflows and loans. Sri Lanka FDI was recorded at $96.3 million in the quarter ending March 2024, compared with $250.9 million in the previous quarter.
According to the Board of Investment (BOI), FDI in Sri Lanka has largely concentrated in tourism, real estate, mixed development projects, ports and telecommunications in recent years.
Sri Lanka has everything that a foreign investor requires – except the right policies which have been enunciated by the new Government.
In a significant acknowledgment of its contribution towards the development and growth of the national economy, Dialog Axiata PLC was recognised by the BOI as the largest FDI single contributor up to date.
The top 10 significant foreign investors, according to the BOI, are: 1. Dialog Axiata, 2. Hambantota International Port Group 3.CHEC Port City Colombo 4. Bharti Airtel Lanka 5. Waterfront Properties 6. Shangri-La Hotels Lanka 7. Colombo International Container Terminals 8. Hutchison Telecommunication Lanka 9. Welcomhotels Lanka 10. Ansell Lanka
Foreign investors can purchase up to 100% of equity in Sri Lankan companies in permitted sectors. Investors may open an Inward Investment Account (IIA) with any commercial bank in Sri Lanka to bring in investments.
The Central Bank said the economy is on a positive growth trajectory, driven by economic diversification and service-sector development in information technology (IT) and IT-enabled services.
Apart from the plethora of free trade zones established by the BOI, investment opportunities are available in the newly-established fabric producing zone in Eravur in the Eastern Province which would help sourcing of fabric (currently imported from China and India) for Sri Lanka’s garment manufacturers catering to global brands.
