he much needed foreign direct investments (FDIs) to the country during the first half of this year (1H14) has risen by as much as 51 percent to US $ 817 million over the corresponding period of last year, Sri Lanka’s Investment Promotion Minister said.
Minister Lakshman Yapa Abeywardena said tourism related projects accounted for 60 percent of total FDIs in the first half.
The investment-hungry Sri Lanka targets US $ 2.5 billion worth FDIs for 2014.
In 2013, Sri Lanka’s US $ 2.5 billion tourism target was revised down multiple times to US $ 1.5 billion, yet the country managed to achieve only US $ 1.39 billion despite the much hyped Commonwealth Business Forum held last November.
Post war Sri Lanka’s FDI targets continued to falter, and independent observers attribute the failure to government’s inconsistent policy framework, lack of law and order, poor governance and rigid bureaucracy in most state institutions.
“We received US $ 10 million from Shangri-La during the first 6-months of this year and a further US $ 0.5 million from Krrish during last 2-months,” Minister Abeywardena told the media yesterday. Hong-Kong based leisure group Shangri-La is currently building a US $ 450 million 661-room luxury hotel in Colombo, facing Galle Face Green promenade and another US $ 120 million 375 room hotel in Hambantota that is to be opened next year.
During the 1Q14, the country attracted FDIs worth US $ 442 million, a 100 percent increase from the same quarter in 2013.
Meanwhile the Executive Director – Research and Policy Advocacy at the Board of Investment, Dr. Nihal Samarappuli said the board targets to achieve FDI of US $ 5 billion in 2016, equal to 5 percent of the US $ 100 billion economy.
At present, Sri Lanka’s FDIs remain woefully low at 2 percent of GDP, not sufficient to maintain 8 percent economic growth projected by the Central Bank.
“If you look at the past, 72 percent or US $ 7.1 billion of FDIs were received during the last eight years,” Dr. Samarappuli said.
From 1978 to 2013, Sri Lanka has received only US $ 9.9 billion worth FDIs.
During 2002 and 2013, the world’s FDIs have more than doubled from US $ 600 billion to US $ 1,460 billion while 52 percent of it have trended towards developing nations as against the 27 percent in 2002.