Sri Lanka targets US $ 2b in FDI

by Naalir Jamaldeen

Sri Lanka is targeting US$ 2 billion in Foreign Direct Investment (FDI) this year. Last year the country received FDI of US$ 1.3 billion, Investment Promotion Minister Lakshman Yapa Abeywardena said last week.

He said FDI to the country doubled from a year earlier to US$ 442 million during the first quarter of this year. The tourism industry attracted 36 percent of the investments, utilities - 26 percent, infrastructure – 15 percent, industry - seven percent and apparel - four percent.

The BOI hopes to achieve economic development by attracting local and foreign investment through job creation and increasing foreign exchange earnings, according to Minister Abeywardena.

He said that in 2013, BOI achieved an FDI inflow of US$ 1,391 million. This is a four percent increase compared with FDI received in 2012 of US$ 1,338 million. In the first quarter of 2014, FDI received was US$ 442 million and this is a 100 percent increase compared to US $ 219 million for the corresponding period of 2013.

Minister Abeywardena said that forty approvals were granted in the first quarter of 2014 and 38 agreements were signed. Fourteen projects launched commercial operations, while construction work on 31 projects is progressing.

Of the 40 approved projects, a large number fall under the services sector such as hotels, holiday bungalows, housing and mixed development projects, he said.

The Government introduced the Strategic Development Act in 2008 to change the economic landscape of the country. To date, 17 projects have been identified under this Act. The Colombo Container Terminal, Sampur Coal Power project, UCLAN University, UK, Shangri-La Hotels (Colombo and Hambantota), Steel Corporation, Welcome Hotel, Sino-Lanka Hotel, Sri Lanka Gateway Industries (Pvt) Ltd, Cairn Lanka, Water Front, Lake Leisure and Queensbury have been granted Parliamentary approval.

US$ 1 billion in FDI was received from these Strategic Development Plan (SDP) projects. Parliamentary approval is in the process of being obtained for the CHEC Port City, a mega project under the SDP Act.

The BOI is a major contributor to the export revenue of the country. BOI projects contribute 65 percent of the annual export revenue, while 85 percent of annual industrial exports come from BOI enterprises.

In 2013, total export earnings by BOI enterprises was US$ 6,606 million and this is an eight percent increase compared to the previous year’s US$ 6,125 million.