By: Staff Writer
November 01, Colombo (LNW): Sri Lanka’s attempt to rejuvenate foreign direct investment (FDI) continues to hit friction despite recent headline numbers, as concerns linger over the efficiency of its principal investment‐promotion body, the Board of Investment of Sri Lanka (BOI), and the clarity of its reporting.
In a statement issued October 21, 2025, BOI Chairman Arjuna Herath reported that FDI inflows (including foreign commercial loans to BOI‐approved enterprises) for the first nine months of 2025 reached US$ 827 million, representing a 138 % increase compared to the same period in 2024.
According to the breakdown, equity capital amounted to US$ 133 million; reinvested retained earnings US$ 132 million; intra‐company foreign borrowings US$ 231 million; and long‐term foreign commercial loans US$ 331 million.
Local investment from 163 BOI-registered projects amounted to US$ 326 million in this period. These figures, while headline‐grabbing, raise questions about substance and speed of actual investment flows, especially given the still‐complex approval environment. The BOI was tasked under the country’s new Economic Transformation Act (ETA) to streamline investment approvals one target being to reduce approval times from 269 days to 82 days. But analysts say that despite legislative reform, bureaucratic delays and overlapping regulatory layers continue to hamper investor momentum.
Furthermore, critics note that the BOI’s methodology aggregating equity, retained earnings, intra-company loans and commercial borrowing into a single “FDI” figure clouds true foreign capital inflows. One independent commentary described the US$ 827 million claim as “book-keeping” rather than new cross-border investment, warning that much of it reflects reinvestment by existing investors rather than fresh foreign funds.
In practice, key projects such as the Colombo West International Terminal (CWIT) invested US$ 229 million, and new tyre‐manufacturer CEAT OHT Lanka Pvt Ltd injected US$ 111 million, together contributing significantly to the total.
But the concentration of major hubs means that broader investor participation and speed of green-field start‐ups remain more muted than the total number suggests.
For Sri Lanka’s government, the challenge is now two-fold: to convert headline-worthy figures into tangible operational capacity, job creation and export growth; and to ensure that the BOI’s facilitation mechanisms move at pace and with transparency. With the reform agenda still unfolding, delayed approvals, ambiguous accounting categories and investor wariness around policy consistency could dampen the boost implied by the nine-month numbers.
As one senior economist put it, reforms are necessary but not sufficient—the institutional machinery must deliver. For Sri Lanka’s FDI push to move beyond optics into real impact, the BOI must bring its bureaucracy down, clarify its reporting, and ensure that capital translates into jobs, factories and sustainable growth.
