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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

Manufacturing

322.4

307.7

359.8

333.9

257.0

Agriculture

18.0

7.2

8.5

5.7

3.9

Services

270.6

367.7

263.3

506.3

255.4

Infrastructure

455.0

596.6

786.8

682.5

453.4

Total

1066.1

1279.2

1391.4

1528.4

969.7

Source: Annual Report 2015 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 October 2016, 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.