The study has identified the biggest pain point which influences the lack of FDIs being non-conducive policy. Policy reform will serve as a critical enabler that will set-in place the appropriate ecosystem to attract FDIs into Sri Lanka. Critical cogs in the wheel of FDIs will need to be identified, relevant policy streamlined and bottlenecks eliminated.

Whilst the thrust in infrastructure development is considered as an important factor in attracting FDIs, the heavy capital expenditure (Capex) requirement cannot be overlooked. At present there does not seem to be sufficient fiscal room for the incumbent Government to engage in an explosive Infrastructure development drive. The thrust in the short to medium term should be to expedite the bringing online of the existing infrastructure projects that are currently funded and underway.

A conducive fiscal environment at a latter point in time will allow Sri Lanka to actively partake in infrastructure led growth. However, in order to further reinforce the economic impetus and positive spillover that is envisaged due to the development drive in infrastructure projects, it is vital to draw up a 10 year roadmap showcasing all potential investible infrastructure projects which can be showcased on a prioritised basis to both local and foreign stakeholders. It is essential that this road map is endorsed by all parties concerned to ensure continuity of such projects in the event that a change in regime is to take place. This will showcase further stability to prospective investors.

The majority of the factors that need to be aligned in order to facilitate the flow of FDIs into Sri Lanka, whilst not being Capex heavy, is weighted greatly around policy reform. The recent taskforce that was set-up to curb and mitigate the spread of COVID-19 has been effective. A similar taskforce should be set-up to fulfil the policy reform mandate in a short space of time.

The time is now to proactively seek out policy reform by putting in place the people, comprising of public sector officials, private sector practitioners and industry think-tanks to formulate, amend, and finally implement actionable policy to improve the attractiveness of Sri Lanka as a key FDI destination in the region.

Eight key variables that influence and attract FDIs into countries with particular reference to six regional competitors will be discussed further.

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Reference - Published by Daily FT