Sri Lanka’s FDI Figures under Scrutiny amid Global Economic Pressures

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By: Staff Writer

July 03, Colombo (LNW): As Sri Lanka navigates a fragile recovery from its recent economic crisis, government officials continue to present varied data on Foreign Direct Investment (FDI), raising concerns over the authenticity and consistency of reported figures.

With global investors exercising increased caution due to volatile international markets, energy insecurity, and inflationary pressures, the reliability of these optimistic projections has become a key talking point among economists and opposition critics.

Despite this, the Board of Investment (BOI) has released figures suggesting renewed investor confidence and a marked increase in capital inflows.

The BOI recently announced a significant rise in FDI inflows and investment proposals during the first half of 2025 compared to the same period last year. Citing the government’s commitment to macroeconomic stability and consistent policy reforms, the BOI claimed it had received 79 investment proposals by June 2025.

These included 40 Greenfield projects and 39 expansion proposals, collectively valued at US$ 4.67 billion. Of this, US$ 3.89 billion is expected from foreign sources, with the remaining US$ 770 million to come from local investors—an 18% increase over the previous year’s figures.

The proposals span multiple sectors including manufacturing (especially tyre and track production for export), mineral processing, apparel, energy, tourism, agriculture, real estate, and ICT.

Investors from countries such as Canada, China, India, Singapore, Switzerland, South Korea, Australia, and the Netherlands were among those who submitted proposals, indicating continued interest in Sri Lanka’s potential as a regional investment hub.

There has also been a significant uptick in expansion efforts by existing ventures, particularly in telecommunications, ICT, rubber-based manufacturing, port development, and apartment construction. These expansion proposals amount to an estimated US$ 322 million.

From January to June 2025, the BOI approved 48 projects—28 new and 20 expansions—valued at US$ 499 million, marking a 28% year-on-year increase. These projects are projected to generate around 10,000 employment opportunities once fully operational.

Meanwhile, actual realized FDI during the first quarter of 2025 reached US$ 203 million—a dramatic 90% increase from US$ 107 million in Q1 2024. Notably, 41% of this was directed toward port development, 34% to manufacturing, 20% to tourism and leisure, with the remainder spread across ICT, agriculture, property, and telecom sectors. Realized local investment also rose to US$ 87 million, up 32% from the previous year.

BOI-registered enterprises continue to play a vital role in Sri Lanka’s export economy. Between January and April 2025, these firms recorded merchandise exports worth US$ 2.66 billion—7% higher than in the same period of 2024. This accounts for 59% of total national merchandise exports and 73% of industrial exports.

 Adding to the positive outlook, the BOI reported increased foreign engagement, having hosted delegations from over a dozen countries—including Japan, Germany, India, China, and the UAE—during the first half of 2025.

While the BOI’s figures offer a hopeful narrative of economic resurgence, experts emphasize the importance of independently verified data and long-term policy consistency to sustain investor trust amid a still-challenging global investment climate.

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