BOI Says Structural Reforms Key as FDI Tops $1 Billion

Board of Investment Chairman Arjuna Herath said Sri Lanka must push ahead with structural reforms to attract between $2 billion and $2.3 billion in foreign direct investment, stressing that the country cannot compete with larger economies on fiscal concessions.

Speaking at the Nations Trust Bank Investment Forum, Herath said Sri Lanka lacks the fiscal space to offer incentive-heavy regimes and must instead focus on cost competitiveness, policy certainty and institutional efficiency.

The BOI said this week that FDI inflows surpassed $1 billion in 2025, describing it as an early sign of recovering investor interest. However, Herath cautioned that inflows remain well below the levels required to support sustained growth.

He identified high electricity and construction costs as key constraints and said the Government aims to reduce power tariffs through renewable energy projects. Herath also said proposed legislation, including an Investment Protection Act, is intended to strengthen investor confidence and avoid policy reversals.

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