Sri Lanka could attract up to US$ 4 bn FDIs next year: FinMin

Sri Lanka could look forward to up to US$ 4 billion in Foreign Direct Investments (FDIs) next year, despite a disappointing FDI performance in recent times, Finance Minister Ravi Karunanayake said at a media briefing recently.
“(We’re expecting) US$ 3-4 billion. They will be in petroleum refineries, power generation, dairy industry and fisheries,” Karunanayake said.
China is expected to infuse over US$ 1 billion in the purchase of 80 percent of the shares in the Hambantota Port from the Sri Lankan government, while the budget has also outlined the inflow of US$ 1 billion through the listing and the sale of shares of non-strategic government institutions.
Karunanayake’s comments come at a time when Sri Lanka’s FDIs for the first 8 months of this year—including loans to Board of Investment (BOI) companies—has been just US$ 335.9 million, a 37.1 percent drop compared to US$ 533.8 million year-on-year (YoY).
In contrast, the BOI had signed investment deals for future investments valued at over US$ 1.5 billion last year. Sri Lanka’s FDIs, including loans to BOI companies, had been US$ 969.7 billion in 2015, below the government’s target of over US$ 1 billion, while the highest number of US$ 1.53 billion was recorded in 2014, when the former regime signed an agreement with a Chinese state-owned company to start the first phase of the Colombo Port City. According to analysts the political uncertainty had hampered FDI inflows in 2015, while policy uncertainty had continued the dampened performance in 2016.
Criticising past action, Karunanayake had reportedly said that the current regime would separate BOI loans from true FDIs, though the practice has now continued for over one year and eight months since the government Karunanayake represents took over.
Further, Karunanayake recently denied that government was not in talks with China to provide 15,000 acres in Hambantota for an industrial park, which China had linked to over US$ 5 billion in FDIs.
Both the sale of the shares in the Hambantota Port, and the possible allocation of 15,000 acres of land to China had resulted in heavy protests in the said region.