By: Staff Writer
March 13, Colombo (LNW): Sri Lanka continues to struggle with attracting substantial foreign direct investments (FDIs), with most private-sector deals averaging only $20 million—far below the $400-500 million transactions required to create a significant economic impact, according to Standard Chartered Bank Sri Lanka CEO Bingumal Thewarathanthri.
Speaking at SCB’s Annual Global Research briefing, Thewarathanthri emphasized the need for policy consistency to improve the ease of doing business, which would, in turn, encourage steady FDI inflows. While there is a promising pipeline of smaller investments driven by local investors, he noted that major deals are necessary to drive large-scale economic progress.
One of the key challenges, he pointed out, is the frequent shifts in economic policies, particularly in areas such as investment laws, land regulations, and tax structures. He highlighted that successive governments have made changes to these policies every few years, creating uncertainty and discouraging long-term investors.
Looking at past FDI performance, Thewarathanthri mentioned that Sri Lanka has attracted only around $20 billion in total over the past 20-30 years. Notable exceptions include the 2012 Shangri-La investment and the over $1 billion investment in the Hambantota port in 2017, both of which were driven by private-sector initiatives.
Despite these challenges, he remained optimistic that sustained policy stability and business-friendly reforms would gradually boost investor confidence. He cited Vietnam as an example of a country that has successfully leveraged policy consistency to attract significant FDI, whereas Sri Lanka’s inconsistency has hindered investor trust.
Beyond policy concerns, he also pointed to issues such as limited land access, inadequate capital availability, and infrastructure gaps as additional barriers to attracting investment. He criticized the prolonged policy development process for the Colombo Port City project, arguing that more effort should have been spent on enhancing its appeal to investors rather than delaying its implementation.
“Sri Lanka cannot afford to make short-term policy shifts every election cycle. To attract the kind of FDIs that will drive real economic growth, we need a stable, long-term economic policy framework,” he stressed.
