By: Staff Writer

May 18, Colombo (LNW): In a renewed push to attract much-needed Foreign Direct Investment (FDI), Sri Lanka’s Board of Investment (BOI) Chairman Arjuna Herath this week led a strategic meeting with ambassadors and diplomatic representatives from Sri Lanka’s foreign missions.

The gathering, steered by BOI’s Director-General of Human Resources and Mission Development, Sumith Dissanayake, focused on aligning diplomatic efforts with the nation’s ambitious economic goals.

Herath emphasized the importance of targeted global marketing and smart incentive frameworks to position Sri Lanka as an appealing investment hub. He urged the ambassadors to leverage their international networks to promote opportunities and forge strategic partnerships that could revitalize the island’s economic landscape.

Despite these proactive steps, Sri Lanka’s journey to attracting $5 billion in FDI by 2025 is riddled with challenges. The nation’s investment climate has long suffered from policy inconsistency, political uncertainty, and economic volatility—factors that dampen investor sentiment. According to the U.S. Department of State, frequent changes in investment regulations, especially around election periods, contribute to a “wait-and-see” mindset among foreign investors.

Adding to investor hesitancy is the country’s limited infrastructure and reliance on foreign borrowing, which exposes the economy to external shocks. Inconsistent reserve levels and a complex regulatory environment further compound the problem.

The World Bank and other multilateral agencies have consistently highlighted the need for deep structural reforms to make Sri Lanka more investment-friendly, calling for better policy coherence, reduced red tape, and greater legal predictability.

Although Sri Lanka has historically attracted up to $2.37 billion in FDI, current inflows remain modest. Investment as a percentage of GDP stood at 22.9% as of September 2024. However, there have been bright spots.

Foreign portfolio investments saw a notable increase of $146 million during the same period, signaling investor interest—albeit in more liquid, short-term instruments rather than long-term development projects.

The government is aware of the stakes. With mounting fiscal pressures and the need for sustainable economic recovery, attracting FDI has become a top national priority. Reform agendas are being rolled out, but implementation remains slow due to bureaucratic inertia and political distractions, particularly in the lead-up to national elections.

Experts suggest that unless Sri Lanka can provide a stable, predictable, and investor-friendly climate—with clear legal frameworks and improved infrastructure—the $5 billion target may remain out of reach. The recent diplomatic outreach, while encouraging, must be matched by tangible policy action on the ground to transform intent into investment.

 As Sri Lanka stands at a crossroads, the coming months will be critical in determining whether the nation can truly become a regional investment magnet—or miss yet another opportunity.

By: Staff Writer

May 18, Colombo (LNW): The Ceylon Electricity Board (CEB) has proposed an 18.3% increase in electricity tariffs for the period of June to December 2025, citing projected financial losses and the need to ensure the long-term sustainability of Sri Lanka’s power sector. The proposal has been submitted to the Public Utilities Commission of Sri Lanka (PUCSL) for review and approval.

The proposed hike has sparked widespread debate, especially in light of the CEB’s recent profitability. In 2023, the utility reported significant gains—Rs. 61.2 billion for the Board and Rs. 75.7 billion for the Group—primarily driven by reduced dependence on expensive thermal power due to improved rainfall and a steep tariff increase implemented in October 2023. The positive trend continued into 2024, with the CEB posting a first-quarter profit of Rs. 88.3 billion, marking a stark contrast to its Rs. 35.3 billion loss during the same period in 2023.

Despite the current proposal for a tariff increase, the PUCSL had previously mandated a 20% reduction in electricity tariffs effective from January 17, 2025. This decision was based on a projected Rs. 44 billion surplus for the first half of the year. Additionally, the Ministry of Power and Energy announced in December 2024 that electricity rates would remain unchanged through June 2025, citing sound financial management and the use of accumulated profits to offset an expected revenue gap of Rs. 39 billion.

However, President Anura Kumara Dissanayake recently signaled a shift in policy, stating that a tariff revision would take place on June 1, 2025. He emphasized the necessity of adopting cost-reflective pricing models in line with recommendations from the International Monetary Fund (IMF). The President also highlighted the CEB’s substantial legacy debt of Rs. 220 billion, confirming that a portion of this liability would be incorporated into the upcoming tariff structure.

The CEB argues that the proposed tariff adjustment is essential to address a projected deficit of Rs. 42.2 billion for the second half of 2025. According to the utility, the proposal was developed using a comprehensive analysis that considered current tariffs, fuel costs and availability, hydro inflows, future price trends, energy demand, infrastructure requirements, and macroeconomic conditions.

Under PUCSL’s tariff methodology, end-user electricity rates are based on the revenue requirements of the CEB, assessed through the Bulk Supply Transaction Account (BSTA). This financial mechanism helps track mismatches between revenue and costs, ensuring that future adjustments reflect the economic realities of the power sector.

The PUCSL has announced that it will conduct a public consultation process before reaching a final decision. The outcome is expected to be revealed during the first week of June 2025.As discussions unfold, the key challenge remains balancing the financial health of the CEB with affordability for consumers. While the Board cites pressing financial obligations and infrastructure demands, the public and regulatory bodies continue to scrutinize whether another tariff hike is truly warranted in light of recent financial surpluses.

By: Staff Writer

May 18, Colombo (LNW): Sri Lanka’s leading telecom operator, Dialog Axiata PLC, posted a strong financial performance in Q1 2025, with revenue rising 4% year-on-year (YoY) to Rs. 43.3 billion. Growth was driven across its Mobile, Fixed Line, Digital Pay TV, and Tele-infrastructure sectors. However, quarterly revenue declined by 5% due to a strategic reduction in low-margin international wholesale operations.

Core revenue increased by 20% YoY to Rs. 41.4 billion, while Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) jumped 45% YoY to Rs. 19.7 billion. Despite quarter-on-quarter (QoQ) declines of 2% in core revenue and 7% in EBITDA, Dialog achieved a significant YoY net profit growth of 49% to Rs. 4.1 billion. QoQ net profit dropped 39%.

The Group contributed Rs. 14.8 billion to government revenue, including Rs. 4.5 billion in direct taxes and Rs. 10.3 billion in consumption taxes. Capital expenditure rose 36% YoY to Rs. 3.7 billion, while Operating Free Cash Flow surged to Rs. 12.3 billion—up 71% YoY.

Dialog’s mobile network was independently rated as the country’s leader in 5G experience, coverage, and overall performance.

At the entity level, the company accounted for 74% of group revenue and 72% of EBITDA. Consolidation of the Airtel business and stable consumer pricing lifted company revenue by 26% YoY to Rs. 32.3 billion. Company-level EBITDA surged 63% YoY to Rs. 14.2 billion, with net profit rising 78% YoY to Rs. 2.9 billion.

Dialog Television maintained a strong base of over 1.6 million subscribers. Its revenue remained stable YoY at Rs. 3.1 billion, while EBITDA grew 3% YoY to Rs. 475 million. The segment recorded a net loss of Rs. 367 million.

Dialog Broadband Networks reported Q1 revenue of Rs. 9 billion, down 38% YoY due to the planned international business scale-down. However, its core fixed services grew 6% YoY to Rs. 7.8 billion, and EBITDA rose 24% YoY to Rs. 5 billion. Net profit stood at Rs. 1.6 billion.

Despite short-term impacts, Dialog remains committed to innovation and leadership in Sri Lanka’s broadband and ICT landscape.

By: Staff Writer

May 18, Colombo (LNW): Business optimism in Sri Lanka has taken a step back, as reported in the May edition of LMD, a leading business magazine. According to the latest LMD-PepperCube Business Confidence Index (BCI), there’s a noticeable decline in corporate sentiment, reflecting increasing caution among business leaders.

The magazine reveals that businesspeople have scaled down expectations for economic recovery compared to the previous month. The BCI, based on a survey conducted in early April, dropped from 73% in March to 66% in April – a 7% decline in the number of participants who believe the economy will improve over the next 12 months.

At the same time, 25% of respondents now expect the economy to remain unchanged, up from 19% previously, while the percentage of those predicting a downturn has risen slightly to 10%.

Sales expectations have also dipped for the second consecutive month. Only 78% of executives now anticipate improved sales volumes in the year ahead – a six-point decline from March. This downward trend began in February, ending a brief period of growing optimism seen earlier.

“This reflects a broader sense of caution across the corporate landscape,” said an LMD spokesperson, emphasizing that the momentum gained in prior months appears to be fading.

Despite the setback in sentiment, LMD notes that Sri Lanka’s business confidence levels, although declining, remain above the historical average. The BCI fell from 128 points in the fourth quarter of 2024 to 123 points in the first quarter of 2025. For context, the long-term average since 2014 stands at 82.93 points, with highs of 136 in 2014 and lows of 20 in 2020 during the height of the COVID-19 crisis.

While business confidence has weakened, other economic indicators offer a more nuanced picture. Export earnings grew by 5.3% in the first quarter of 2025, driven by strong performances in textiles, spices, and tea. Additionally, the Central Bank of Sri Lanka has maintained an accommodative monetary policy to help ease inflation and promote recovery.

Nevertheless, challenges remain. Fiscal consolidation efforts and the need to sustain export momentum are pressing concerns, especially as the country continues to manage its trade deficit and debt obligations.

The latest issue of LMD, including this analysis, has been released in print and distributed digitally via WhatsApp and social media, offering deeper insights into Sri Lanka’s evolving economic landscape.