A new consulting firm will be appointed by the Finance Ministry to promote Sri Lanka as an attractive destination for Foreign Direct Investment (FDI).
Cabinet approved a proposal by Prime Minister Mahinda Rajapaksa in his capacity as Finance Minister to take the necessary steps to obtain the services of a “leading international consulting firm” which contributes to the promotion of FDI, a statement released by the Government Information Department said.
Approval was given after Cabinet acknowledged the need to "implement a well-designed combination of centralised marketing and coordination strategies to demonstrate the attractiveness of Sri Lanka to investors."
The move comes after Cabinet last month approved the appointment of a new high-level ‘Investment Management Committee’ to be headed by the Treasury Secretary, to evaluate and fast-track investment proposals received by the Government.
Sri Lanka has traditionally struggled to attract substantial amounts of FDI, with the situation becoming more challenging following the Easter attacks and COVID-19. In 2019 the country attracted USD 793 million, which dipped to USD 548 million last year largely due to virus impact, data released by the Central Bank showed.
ICRA Lanka, a subsidiary of Moody’s Investment Services, releasing their Economic Highlights report on Monday, predicted FDI could slip to as low as USD 200 million in 2021 as global recovery continues to impact international investment.
However, the Government has projected FDI for 2021 at USD 2 billion with the possibility of Port City lease sales bringing in an additional USD 1 billion.
Sri Lanka is strongly focused on attracting investment to bolster reserves and help meet an estimated $ 6 billion in outflows for this year.
Of this amount, about USD 4.3 billion has been earmarked for debt repayments. Sri Lanka has to repay an average of USD 4 billion in debt for the next few years and requires better performance from investments and exports.
Nonetheless, previous attempts to establish ‘one-stop-shops’, ‘single investment windows’ and integrated committees, to fast-track FDI has yielded limited results.
Last year, Sri Lanka only managed to improve one notch in the World Bank’s ‘Ease of Doing Business Index’, moving to 99th, up from 100th in 2019, out of 190 economies across the world.
According to the World Bank, Sri Lanka maintained its score obtained in the 2019 edition for the second consecutive year, at 61.8 points.