Industry

“SL still has huge potential and excellent facilities to attract FDI”

Though Sri Lanka has huge potential and excellent facilities to attract foreign investment but over the years, ethnic conflict (1983 to 2009), unpredictable policies, ever-changing laws, regulations and taxes that are unpredictable, the rule of law and corruption has thwarted foreign investments.

Investment flows into the country have been low and on average garnered less than US$1 billion except for the year 2018 when Foreign Direct Investment (FDI) was recorded at $2,071 million in inflows and loans. According to the Ministry of Finance official, 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. Sri Lanka is targeting $1billion in foreign investment in 2024.

“Other countries in the region, for example Vietnam which also recovered from a bloody conflict, have speedily advanced in securing foreign investment. Compared to Sri Lanka’s paltry-less-than-$1 billion annual FDI, newcomer Vietnam (which also suffered a long-standing bloody internal conflict) has averaged $7.53 billion FDI from 1991 to 2024,” he said.

Between 2010 and 2019, according to the Board of Investment of Sri Lanka, the top 10 investing countries in Sri Lanka were China, Hong Kong, India, the UK, Malaysia, the Netherlands, Singapore, the United Arab Emirates, Mauritius and the U.S. Companies like Adani Corporation, Sinopec, RM Parks in collaboration with Shell, alongside various other sectors including ITC, BPO, Tourism, and Manufacturing, are witnessing increased investment.

Throughout 2023, countries such as China, India, the US, Hong Kong, UAE, France, Korea, Germany, and Singapore emerged as prime investment destinations, according to the BOI. In a significant acknowledgment of its contribution towards the development and growth of the national economy, Dialog Axiata PLC, Sri Lanka’s number 1 connectivity provider, was recognised by the Board of Investment as the largest FDI single contributor up to date.