An Island Ready for Investment

Sri Lanka once again stands on the verge of an economic breakthrough. Improving macroeconomic fundamentals supported by an active push towards implementing key policy reforms by the unity Government has brought about a much needed sense of stability to the island economy.

Economic stability critical for investments

Over the past year alone, the country has made several advances both in strengthening its fiscal balances and in setting the stage for a higher growth trajectory over the medium term. Coordinated efforts by the Government and key institutions together with the support of the IMF have been essential in achieving these developments. Similarly, efforts to ensure continued stability, balancing both the political and economic fronts, are imperative to realising the success story the island nation has dreamt of.

Private sector investment to drive growth

Increased investment from the private sector is envisaged to play a key role in driving economic expansion. To this end, initiatives to channel foreign investments into services related activities and export oriented businesses have been a highlight in the Government’s economic priorities.

Proposed initiatives such as the Western Region Megapolis and the Colombo Financial City are set to bring in much needed foreign investment into the country.

In addition to these large scale projects, strategies to promote growth in export sectors provide ample opportunities for foreign investment, particularly through Small and Medium Enterprises (SMEs), which are the backbone of the Sri Lankan economy. Recent developments such as regaining of the GSP plus are expected to see a boost in goods exports. Active negotiations for a number of Free Trade Agreements (FTAs) would further aid in improving the nation’s export base. 

Opportunities for SMEs are manifold

SMEs account for over 75% of the enterprises within the country, and contribute towards more than half of the country’s GDP. Successive governments have continued to prioritise the development of SMEs given its immense potential in the country’s push for Foreign Direct Investment (FDI) and export growth. Recent strategies have aimed to improve international connectivity of SMEs in global supply chains and reduce the level of trade restrictions they are exposed to. Further to this, a number of concessions have been granted to this sector, including the provision of subsidies to improve their access to capital. As such the opportunities for investment in SMEs are manifold. However, there is much more that can be done to incentivise this sector and ensure that it is given its due opportunity to thrive.

Sri Lanka shows great promise in achieving the desired growth and placing itself as an attractive destination for investment, with opportunities both in large-scale developments as well as smaller-scale investments in growing sectors such as Tourism, Business Process Outsourcing (BPO’s) and Knowledge Process Outsourcing (KPO’s), and other export related industries.