By: Staff Writer

April 10, Colombo (LNW): The recent claim that Sri Lanka lost a billion-dollar foreign direct investment (FDI) due to the collapse of the Adani wind power project has reignited debate about the true costs and benefits of foreign investments. While FDI is often seen as a lifeline for developing economies, this incident underscores the need to critically assess the terms and implications of such deals, especially when national sovereignty and legal integrity are at stake.

Sri Lanka has long offered generous incentives to foreign investors—tax holidays and regulatory leniency—often ignoring the hardships faced by local entrepreneurs burdened with taxes and bureaucracy. The expectation was that FDIs would boost exports and counterbalance import costs. However, not all investments achieve this goal. Projects that primarily serve the local market and repatriate profits in foreign currency, such as the proposed Adani venture, can worsen the forex crisis instead of easing it.

The Adani deal, in particular, raised significant red flags. It was pushed forward despite violating Sri Lanka’s Electricity Act, which requires competitive bidding for energy projects over 25 MW. This project was accepted without such a process, under the false claim that it was a government-to-government deal—an exception allowed by the law. However, Adani Green Energy Ltd. is a private company, rendering that justification invalid. The Sri Lanka Sustainable Energy Authority (SLSEA) and other agencies went ahead anyway, even spending public resources to facilitate the project, ignoring legal protocols and environmental regulations.

One key point of contention was the proposed tariff of $0.0826/kWh, far higher than the rates paid for similar projects in India, which average around $0.04/kWh. Given Mannar’s superior wind yield, Sri Lanka should have secured a lower rate, closer to $0.03/kWh. President Anura Kumara Dissanayake rightly rejected the inflated tariff demand, a stance that likely led to Adani’s withdrawal.

Critics argue that the claimed $1 billion loss is exaggerated. The actual investment was around $442 million, with expected revenues allowing full recovery in just 3.5 years. Over 20 years, Sri Lanka would have paid nearly $2.8 billion in foreign currency—a steep price for a modest upfront investment. Such terms compromise national energy security and strain limited foreign reserves.

Moreover, local renewable energy developers face systemic neglect. Many invested based on false assurances from past officials, only to be left unsupported. Despite contributing significantly to the country’s 2051 MW non-conventional renewable energy (NCRE) portfolio, local players often face resistance, unpaid fees, and regulatory hurdles.

The lesson is clear: Sri Lanka must prioritize strategic, law-abiding investments that genuinely benefit the country. Renewable energy resources like wind, solar, and biomass can be harnessed domestically without sacrificing economic independence. Rather than courting foreign investors at any cost, the government should empower local developers with fair rupee-based tariffs and remove bureaucratic roadblocks. Saving dollars by reducing fossil fuel imports is more sustainable than risky attempts to attract foreign capital.

Strong leadership and a commitment to national interest are essential to avoid future missteps and secure long-term energy and economic security for Sri Lanka.

By: Staff Writer

April 10, Colombo (LNW): In a significant move to foster foreign direct investment and enhance Sri Lanka’s global economic profile, Port City Colombo joined the ‘Invest Sri Lanka’ Business Forum 2025 as a Platinum Partner. Held on April 3 in Bangkok, Thailand, the event brought together high-level officials and business leaders to spotlight Sri Lanka’s renewed potential as a thriving investment hub in South Asia.

Organised by the Embassy and Permanent Mission of Sri Lanka in Thailand in partnership with the Thai-Sri Lanka Chamber of Commerce, the forum aimed to promote Sri Lanka as an emerging destination for strategic foreign direct investment (FDI) from Southeast Asia. The event took place at the Grande Centre Point Surawong Hotel and coincided with the BIMSTEC Summit, further reinforcing regional cooperation.

Gracing the occasion as Chief Guest, Prime Minister Dr. Harini Amarasuriya delivered a keynote speech that emphasized Sri Lanka’s political stability, ongoing economic recovery, and infrastructure development. She expressed optimism about the country’s transformation into a regional success story and extended an invitation to Thai investors to be part of this progress.

The forum was also attended by distinguished guests such as Sri Lanka’s Ambassador to Thailand and Permanent Representative to UNESCAP, E.A.S. Wijayanthi Edirisinghe, Joint Foreign Chambers of Commerce Chairperson Vibeke Lyssand Leirvag, and Chairman of the Thai Chamber of Commerce, Dr. Poj Aramwattananont.

Port City Colombo’s presentation was a key highlight of the event. The team showcased the project’s long-term vision, investor-friendly regulatory environment, and its potential to attract high-value, sustainable investments. As a designated special economic zone focused on the export of modern services, Port City Colombo was presented as a cornerstone in Sri Lanka’s strategy to foster innovation and economic transformation.

During the networking session that followed, Port City representatives engaged with potential investors and business leaders to explore collaborative opportunities in policy and investment. Discussions revolved around enhancing economic ties and mutual growth between Sri Lanka and Thailand.

Speaking on behalf of the organisers, President of the Thai-Sri Lanka Chamber of Commerce, Dilan Samarakoon, praised the event’s success and lauded Port City Colombo’s strategic involvement. He highlighted the forum’s role in deepening economic connections and promoting sustainable development in alignment with the chamber’s goals.Port City Colombo’s engagement at the forum reaffirmed its commitment to positioning Sri Lanka as a premier destination for global investment and economic innovation, marking yet another milestone in the country’s journey toward long-term prosperity.

By: Staff Writer

April 10, Colombo (LNW): Sri Lanka is showing signs of steady economic recovery in 2025, following the deep crisis that gripped the nation in recent years. Key economic indicators reflect growing resilience. Inflation has remained moderate compared to past highs, foreign reserves have seen gradual improvement, and the country is on track with its debt restructuring and fiscal reform goals. Increased tourist arrivals and healthy remittance inflows continue to support foreign exchange earnings. As structural reforms take root, Sri Lanka is transitioning from stabilization to a more sustainable growth model, signaling cautious optimism for the years ahead.

According to the Asian Development Outlook (ADO) April 2025, released by the Asian Development Bank (ADB), Sri Lanka’s economy is expected to grow by 3.9% in 2025 and 3.4% in 2026. This follows a notable rebound in 2024, fueled by broad-based sectoral recovery that began in the latter part of 2023. The momentum continued through 2024, with inflation easing significantly due to cuts in energy prices, rising private sector credit, and steady improvements in foreign reserves. The tourism sector and remittances have also remained strong contributors.

ADB anticipates that Sri Lanka’s recovery will persist over the next two years. As uncertainties related to national elections and debt restructuring begin to diminish, investor sentiment is expected to improve, leading to greater private investment. However, consumer demand may remain soft due to expected inflationary pressures.

Several risks could impact the outlook. These include global trade uncertainties, particularly the recently announced U.S. tariffs on Sri Lankan imports, potential setbacks in the reform process, and inconsistencies in macroeconomic policy. The ADB notes that the baseline growth projections were made before the U.S. announced new tariffs on April 2, and as such, the impact of these new measures is not fully reflected in the forecasts.

“Difficult reforms are beginning to yield visible results following the recent economic crisis,” said ADB Country Director for Sri Lanka, Takafumi Kadono. “It is encouraging to see stabilization and movement toward long-term debt sustainability. Continued reform is critical to building resilience and reviving growth.”

While commendable progress has been made in areas such as fiscal consolidation and restructuring debt, the country still faces high debt vulnerability. The public debt-to-GDP ratio is not expected to fall below 95% until 2032. Building robust external and fiscal buffers, along with structural reforms to enhance trade and private sector-led growth, remains essential.

ADB continues to support Sri Lanka through financial assistance and strategic partnerships that promote inclusive, sustainable development across the region.

By: Staff Writer

April 10, Colombo (LNW): A recent statement by Janatha Vimukthi Peramuna (JVP) General Secretary Tilvin Silva has stirred political and economic debate in Sri Lanka. Silva claimed that the previous Ranil Wickremesinghe-led government, along with the Rajapaksa family, tried to sell the state-owned dairy company MILCO to India’s Amul.

He alleged this deal was halted thanks to the intervention of the current National People’s Power (NPP) administration, which raised the issue with Indian authorities.

Silva’s comments have sparked significant controversy, with economic analysts warning that such politically charged statements risk undermining decisions that lack transparent legal grounding or economic rationale. Critics suggest that the NPP government’s approach might be exposing itself to legal scrutiny due to the nature of the deal and its sudden discontinuation.

The agreement in question involved a collaborative effort between India’s National Dairy Development Board (NDDB), Gujarat Cooperative Milk Marketing Federation Ltd (which markets the Amul brand), and Sri Lanka’s Cargills (Ceylon) PLC.

Officially supported by the Indian government, the joint venture aimed to boost Sri Lanka’s dairy sector by increasing domestic milk production and reducing reliance on imports. The project was formalized during Indian External Affairs Minister Dr. S. Jaishankar’s visit to Colombo in October 2023, following a bilateral agreement signed in July 2023 between relevant ministries from both countries.

This initiative was seen as part of a broader effort to modernize Sri Lanka’s livestock industry and deepen economic ties between the two nations. However, after the change in Sri Lanka’s government in September 2024, the new administration chose to backtrack on the previous plan, citing a desire to independently develop the domestic dairy sector, particularly through revitalizing state-owned enterprises like MILCO.

Since then, no official statement has been released by the Indian government regarding the fate of the Amul-Cargills partnership under the new Sri Lankan leadership.

Legal experts emphasize that if the agreement was purely a private partnership between Cargills and Amul/NDDB, with no involvement of state-owned assets or guarantees, the Sri Lankan government cannot unilaterally cancel it.

Governments generally lack the authority to terminate private joint ventures unless such agreements involve state property, regulatory approvals, or public resources like land, tax benefits, or the involvement of institutions like MILCO or the National Livestock Development Board (NLDB).

In Sri Lanka’s legal system, any government action to obstruct or cancel a valid commercial contract must follow due legal process. Affected parties would be entitled to challenge such moves in court or through arbitration, particularly under contract or investment law.

The government could only intervene legally if there were breaches of national law, threats to public interest or national security, or if the agreement contradicted constitutional provisions or state policy. While a new government can shift its policy stance, it cannot invalidate existing agreements without just cause.

Ultimately, the Amul-Cargills controversy highlights the complex intersection of politics, law, and economics—and the risks governments face when policy decisions intersect with binding legal agreements.

By: Isuru Parakrama

April 10, Colombo (LNW): A segment aired by CNN has drawn attention to Sri Lanka’s unexpected inclusion in the list of nations affected by the United States’ latest tariff proposals, sparking questions about the rationale behind the Trump administration’s broader trade strategy.

The televised discussion featured anchor Erin Burnett and Brent Neiman, an economics professor at the University of Chicago, who both expressed doubts over the logic used to determine which countries would face the new levies.

Burnett questioned whether Sri Lanka truly warranted such measures, pointing out that the country’s trade with the US is relatively modest in scale and does not present a significant imbalance.

“Americans buy a lot of clothes from Sri Lanka, but Sri Lanka doesn’t buy many gas turbines from America. That’s not a trade imbalance that needs to be corrected,” she remarked, highlighting the lack of proportionality in the decision.

Professor Neiman reinforced this view, suggesting that the inclusion of smaller economies such as Sri Lanka, Jordan, and Zambia raised concerns about how the tariff calculations were made.

He described the strategy as evidence of a “mistaken philosophy,” questioning whether the formula behind these reciprocal tariffs genuinely reflects the realities of global trade dynamics.

The Trump administration’s tariff scheme—introduced as part of its ‘America First’ economic agenda—has already provoked significant market turbulence and widespread criticism from both allies and analysts.

The central argument for the policy has been the need to redress trade imbalances with countries that export significantly more to the United States than they import.

However, critics argue that the calculations behind these imbalances are simplistic and fail to take into account broader economic relationships, service trade, and investment flows.

Following mounting backlash from business leaders and international partners, the White House announced a 90-day delay in implementing most of the proposed tariffs, with the exception of China, which remains subject to the harshest rates.

The announcement has brought some temporary relief to global financial markets, which had suffered dramatic declines in the days leading up to the pause.

Nevertheless, the episode has reignited debates over the effectiveness and coherence of the current US trade posture. For smaller economies like Sri Lanka—whose export profile is largely composed of garments and tea, and which has limited leverage in bilateral trade disputes—the implications of such policies are significant.

Analysts warn that being swept into broader geopolitical and economic battles could risk destabilising fragile industries and complicate diplomatic ties with Washington.

With Sri Lanka continuing to navigate the economic and diplomatic fallout from its unexpected listing, questions remain over how the Trump administration intends to balance domestic political messaging with the complex realities of global trade relations.