Foreign investments

Sri Lanka not getting foreign investment as fast as expected, says finance minister

ECONOMYNEXT – Sri Lanka is not getting foreign investment as quickly as expected, with investors becoming picky and political controversy over the sale of domestic assets, Finance Minister Basil Rajapaksa has said.

“We pin great hopes on foreign investment,” Finance Minister Basil Rajapaksa told parliament.

“But I also said in my budget that it’s political, it’s a moot point. In some ways it’s interpreted as a national asset that’s given to foreigners. So we have to deal with that in a thoughtful way and cautious.

“As a result, foreign investment will come as fast as expected.”

The then Sri Lankan opposition launched an anti-privatization and anti-foreign investment political ideology around 2003, backed by the Janatha Vimukthi Peramuna, who said the move was “selling national assets”.

It was embraced by the Sri Lanka Freedom Part which began to take over already privatized companies such as SriLankan Airlines and Shell Gas now Litro from the state.

Strict laws were then passed to prevent foreigners from buying land.

Sri Lanka is now trying to sell a number of properties in Colombo to attract foreign investors. In 2011, a number of private companies were also expropriated, which further complicates matters.

Rajpaksa said foreign investors are also looking for profit and will go to countries with better operating conditions and conditions.

“So foreign investors can go for a better country, where more is given, where they can earn more, where they can earn faster, they can go,” Rajapaksa said.

“So we’re saying we’re doing it carefully and in a process. But we don’t think we’ll get foreign investment as fast as we think or as fast as we expect.

Sri Lanka recorded $398 million in foreign direct investment inflows through June 2021.

“We have to look at the dollar percentage,” he said. “Also remember that when a foreign investor comes, they also take dollar returns. He can bring in the first year, but from the following year he withdraws them.

“So we’re looking for a way to keep the money in the country.”

His remarks came amid attempts to sell part of a power station to a US company, which is linked to compulsory fuel purchases.

The chairman of Sri Lanka’s Board of Investment also resigned last week, amid a dispute with unions in part over a team of well-paid executives hired to fast-track projects.

Sri Lanka has also seen an exodus of foreign investors from the bond and equity markets amid increased monetary instability stemming from the activist central bank involving the targeting of the overnight money rate with liquidity injections. (Colombo/December 12, 2021)