Sri Lanka Information

FOREIGN INVESTMENT

With the ending of the 30-year civil conflict, Sri Lanka is poised for aggressive growth in several key economic sectors. With almost all the areas open for foreign investment, Sri Lanka has recorded 5.5 percent economic growth for the first quarter of 2016.18

The priority sectors that have been identified for potential investment are tourism and leisure, infrastructure, knowledge services, utilities, apparel, manufacturing, export services, agriculture, information technology and education.

Sector

2011

2012

2013

2014

2015

2016

2017

Manufacturing

322.4

307.7

359.8

333.9

257.0

247.7

346.6

Agriculture

18.0

7.2

8.5

5.7

3.9

1.9

1.049

Services

270.6

367.7

263.3

506.3

255.4

211.9

317.8

Infrastructure

455.0

596.6

786.8

682.5

453.4

339.5

1043.5

Total

1066.1

1279.2

1391.4

1528.4

969.7

800.9

1710.3

Source: Annual Report 2017 by Central Bank of Sri Lanka

Inflows of Foreign Direct Investment (FDI) in 2015 amounted to US$ 969.7 million, compared to US$ 1,528.4 million in 2014, reflecting a year-on-year decline of around 36.6 percent19. The decline in FDIs in 2015 could be attributable to several reasons. Firstly, two national elections held during the year prompted investors to adopt a “wait and see” approach until the political environment stabilized. Secondly, with the possibility of the rate hike by the Federal Reserve of the US, many investors were reluctant to invest in emerging markets in the backdrop of continuous outflows, particularly from securities markets of emerging economies. Thirdly, the suspension of the Colombo Port City Project due to the government’s decision to review the project, also adversely affected FDI inflows20. However, with the resumption of the Colombo Port City (later renamed as Colombo Financial City) in  2019, the volume of FDI is expected to grow for the next years.

With diverse agro zones for agro based industry and access to a large fishing area, Sri Lanka has much to offer for both local and foreign investors in the agriculture, livestock and fisheries sectors.

New Government policy in terms of trade and investment

There are many reasons why companies select Sri Lanka as their investment destination. It all starts with positive leadership, policies and peace. Sri Lanka is an open economy and has heavily invested to develop its infrastructure to face the challenge of attracting high performing industries.

The Board of Investment of Sri Lanka (BOI) is the apex agency of the government promoting and facilitating foreign direct and local investment in priority sectors of the economy. The BOI plays a pivotal role in transforming the Sri Lankan economy to become a globally competitive manufacturing and services export hub. The BOI wishes to strengthen its departments by recruiting dynamic individuals with high integrity and stamina for hard work.

(Read Full Text of BOI Investment Document)

However the economy is currently attempting to transition from a rural based farming economy to an urbanized economy, oriented around becoming a manufacturing, shipping and service hub for the South Asian Region with a strong tourism sector. Tourism in particular has seen strong growth since the end of the civil war, serving as a driver to the Sri Lankan economy.

Sri Lanka fares better than its economic peers on the human development index, with social indicators that rank amongst the highest in the South Asian Region and are on par with middle-income countries. Notably, average life expectancy has seen a consistent increase, with the country now facing an aging population. While the poverty headcount has steadily decreased. Income disparity remains high. Sri Lanka ranks 20th of 156 on the Gini Index.

There has however been an economic slowdown in the past three years due to a high debt schedule and a bloated civil service. In order to counter this, the Government announced " Vision 2025 Plan " in September 2017, which aims to strengthen the country through good governance that promotes inclusive and equitable growth.

Why you need to look at Sri Lanka for investments

  • Gateway to the world – located in dynamic Asia with easy access to air and sea routes of the world.
  • Opportunities to further enhance the outreach to promote products once the proposed FTAs are in operation with China, Malaysia, Japan and Thailand in addition to existing FTAs with India, Pakistan and Singapore.
  • Growing economic Hub with favourable policies – Colombo Port City Project
  • Fast developing infrastructure - opportunities through the Western Region Megapolis Project
  • Strong policies in place for protecting international investors and business partners
  • High quality of Life
  • Sri Lanka's proposed Financial City aims to become the prominent financial hub in the region and it has commenced to attract foreign investments from Indian, South Asian, and Middle East region as well as from European countries
  • Educated and Adaptable Workforce
  • New urbanization initiatives with new opportunities for investment
  • One of the lowest corporate tax rates in the region