AMCHAM presents insights on FDI and U.S. investor perspectives in Sri Lanka

Jul 18, 2018 (LBO) - In order to facilitate continued investment within Sri Lanka it is important to have clarity on the FDI landscape, and identify potential barriers as well as possible solutions, the American Chamber of Commerce (AMCHAM) in Sri Lanka said. The Chamber releasing a statement said that these are the key objectives addressed in a recently released whitepaper by the American Chamber of Commerce (AMCHAM) in Sri Lanka in collaboration with global strategy consulting firm Stax. “Sri Lanka is at an economic crossroads,” points out Dr. Kumudu Gunasekera, President of AMCHAM, “the private sector is increasingly becoming a primary focus for trade and investment growth, and as such it is important to ensure that policy reforms are directed towards improving investment promotion and business conditions within the country.” The report also looks at several recent developments that will impact the quantum of FDI of the next few years. This includes a couple of flagship investment projects, as well as reforms such as the new tax incentive scheme. In addition to reforms carried out at a regulatory level, there is still a need to engage on issues such as the lack of transparency and corporate governance in the local business environment, in order to improve FDI inflows from the U.S. Foreign Direct Investment (FDI) is a key indicator in assessing a nation’s growth. For Sri Lanka, it has become the cornerstone of a much-needed economic growth platform. However, for potential investors evaluating the country, there are several concerns that immediately spring up: multiple sets of data on FDI could lead to confusion; conversations with local stakeholders could also result in an unfavorable view of business conditions within the country. The report brings together various FDI related statistics from multiple sources, in order to paint a comprehensive picture of the quantum of FDI coming into Sri Lanka. It also combines expert insights from various regulatory authorities to provide a clear understanding of why FDI inflows trended the way they did, and what investors could expect over the coming few years. Complementing this is a detailed analysis of private sector perceptions of the local business environment, and their view on major operational views faced by potential investors. Growth in FDI inflows into Sri Lanka has stalled over the last couple of years, mostly due to the removal of certain tax concessions granted to incoming investors. FDI inflows in 2016 were pegged at US 898 million dollars, with telecommunication, tourism, and manufacturing being key areas of investment. As Sri Lanka looks to position itself as an attractive FDI and trade destination in its pursuit of economic reform, it will need to address concerns voiced by the business community. The AMCHAM report highlights some key issues that emerged from conversations with U.S. investors and other affiliated businesses, including policy instability and labor constraints (60 percent of respondents cited these two points as being top operational challenges).