January-November FDI rises to US$ 550mn

• Unlikely to achieve US$ 750mn FDI target set for 2020
• SL achieved US$ 793mn in FDI in 2019

The foreign direct investments (FDI) into Sri Lanka increased to US$ 548 million in January through November, from US$ 345 million end-June in 2020, but not enough to meet the revised US$ 750 million target set for this year.

Sri Lanka was estimated to have received US$ 793mn in FDI in 2019. Sri Lanka wasn’t hopeful anything more than US$ 300 million in direct investments into job creating businesses during 2020 as the prospects turned gloomy with the pandemic, but the quick rebound since June prompted authorities to set a US$ 750 million FDI target. 

Sri Lanka is expecting at least US$ 3 billion worth of foreign investments in 2021 to Colombo Port City, Hambantota port and other industrial zones being planned throughout the country. 

Few parties, including local investors have already announced their plans on these zones with the most recent one being the Browns Investment PLC’s US$ 450 million investment for a mixed development project in the Colombo Port City.

Full or even a partial accomplishment of the government’s FDI target and at least a partial recovery in the tourism trade in 2021 could take care of the country’s foreign debt obligations this year, despite the foreign debt bogey promoted by various parties.

This is apart from the envisaged US$ 2-3 billion saving from the narrowing trade deficit in 2021, premised on the suspension of non-essential imports and the modest crude oil prices. 

Sri Lanka’s past record in attracting FDIs has been less impressive and even the reported numbers defy the reality, some argue. 

For instance, according to data presented by Indika Hettiarachchi, a professional in the private equity sphere, out of the US$ 5.3 billion received as direct investments during the five years to 2019, the actual cash flows into the country had been US$ 3.5 billion in the form of new equity and debt investments. 

Meanwhile, US$ 2.5 billion has been repatriated as dividends by these firms to their parent companies abroad.