Sri Lanka will attract US $ 1.5bn in FDIs this year: BOI chief

• Says FDIs so far this year stand at US $ 1bn against US $ 800mn last year
• Majority of FDIs coming from foreign firms already having operations on ground
• Global consultancy McKinsey helping to screen out dubious investments 

By Chandeepa Wettasinghe

Sri Lanka has attracted US$ 1 billion in Foreign Direct Investments (FDI) this year so far, mainly from foreign companies already operational in the country, and the economy is on track to reach US$ 1.5 billion in FDIs by the end of 2017, according to Board of Investment (BoI) Chairman Dumindra Ratnayaka.

“It’s an optimistic plan. We’re hoping to bring about US$ 1.5 billion this year. Hopefully, there are a few projects, which are new projects, which are finalized and which should come in,” Ratnayake told a breakfast meeting organized by the Ceylon Chamber of Commerce in Colombo, yesterday.

The country is expected to receive over US$ 400 million as the first tranche of the Hambantota Port lease to China in December, which would boost FDIs.

Sri Lanka attracted US$ 801 million in FDIs in 2016.

“This year, we will almost double the investments which we had last year. A majority of the investments are coming from existing prospects. They are expanding here. They are investing in different areas,” Ratnayaka said. He said that a survey conducted on already existing FDI projects gave this information, since in the past there was no clear mechanism to collect such data.

“It’s because these FDI data is based on realized investment, not committed investment. When somebody comes and signs an agreement, the numbers are pretty much higher, but it’s meaningless because always, the committed investments are not realized. So these are realized investments,” he said.

Ratnayaka was not able to mention from which countries most of the FDIs have flowed into Sri Lanka. However, if the US$ 1.5 billion target is reached, it would be the second highest year for FDIs, after the US$ 1.69 billion which was attracted in 2014, mainly from China.

Ratnayaka said that the aim is to attract US$ 2.5 billion next year, US$ 3 billion in 2019, and US$ 5 billion by 2020.

“Rather than focusing on big names, we want to focus on people who bring in investments. What matters is not the name. What matters is people who will bring in investments to manufacture and export. That’s the best value addition we can have to our economy, and the bigger the value addition we have in our country, the better,” he said.

He said if big names choose to enter Sri Lanka, that is positive, but the focus is on enthusiasm to invest in Sri Lanka.

“We lost them (big names), now let’s not cry about that and focus on people who want to come here,” he added.

He also outlined that the global consultancy firm McKinsey has set up a process to screen out dubious investors who are looking to use Sri Lanka as a base for nefarious activities such as money laundering, and to only forward genuine investments up the project approval ladder.

Ratnayake also said that there is a challenge to change the FDI dynamic from 60 percent in infrastructure and the remainder on other areas, to 60 percent in exports and manufacturing.