Foreign Direct Investment (FDI) would reach around US$ 1.5 billion this year which is relatively not bad, but promising, given the October 2018 political upheavals and this year’s April terrorist attacks, said the Board of Investment of Sri Lanka (BOI) Chairman Mangala Yapa addressing the media on the status of FDIs for 2019 last week. According to statistics, foreign direct investments to the tune of around US$ 750 million has flown into the country during the first two quarters this year.
“We will end the year with around US$ 1.5 billion in FDIs,” Yapa said adding that the country has the potential to attract over US$ 3 billion in the coming year ‘provided there are no political and security hiccups’. The BOI set a target of attracting US$ 3 billion in FDIs this year. The country recorded FDIs to the tune of US$ 2.36 billion last year, a 12 percent increase(?) over US$ 1.19 billion recorded a year earlier.
However, a dearth of skilled workers and professionals is a major setback to attracting foreign direct investments to the country.“We were unable to provide 5,000 skilled workers, when Japanese automobile and ship building investors, keen to invest in Sri Lanka, requested this from us during our discussions with them in Japan,” a top official of the BOI said, adding that country needs technical training to increase the number of skilled workers in the manufacturing sector if the country is to woo in large scale investors.
According to the BOI, to-date 465 projects have been approved of which 205 or 44 percent were expansion of existing investments.
The sectors include manufacturing, 65 projects (24 from the apparel sector), agriculture- five, tourism and leisure- five, infrastructure- six, knowledge services - four and utilities- six (including the two petroleum refineries-chemical processing).
The estimated investment of the projects is around US$ 36.4 billion and the envisaged employment is around 94,000. The investment in the two refinery projects is US$ 27 billion and the others amount to around US$ 8.5 billion. Agreements for 375 (or 81 percent of projects) have been executed with an estimated investment of US$ 33.87 billion including the two major refinery projects.
Of the projects executed, 262 (56 percent) have commenced their implementation stage while 138 (30 percent) have commenced commercial operations.
The cumulative FDI flow to the country from 2016 to third quarter 2019, is around US$ 5.6 billion (31 percent) of the total investment flow of US$ 18.166 billion from 1978 to September 2019.
Development of three new export processing zones (EPZ) doubling the land extent in EPZs from 3,415 acres to 6,415 acres have been undertaken by the BoI to facilitate FDIs.
The EPZs will be set up at Wagawatta comprising 150 acres for manufacture of rubber tyres with an envisaged investment of US$ 350 – 400 million for substantial value addition and export, Hambantota 2,200 acres with an investment of US$ 29 billion in petroleum and petrochemicals and 1,100 acres at Bingiriya for miscellaneous industry which will be developed under three phases. The first phase comprise 164 acres, second 282 and third 667 acres. The estimated capital investment for the development of the zones is Rs. 2.5 billion of which Rs. 1.6 billion has already been used. The BOI focuses on export catalytic FDI, high local-value-addition, creating high income generating employment, and business and environment sustainability. BLURB - “We were unable to provide 5,000 skilled workers, when Japanese automobile and ship building investors, keen to invest in Sri Lanka, requested this from us during our discussions with them in Japan,” a top official of the BOI said