Reforms to improve investor climate Sri Lanka - Opportunity Sri Lanka
Reforms to improve investor climate Sri Lanka

Reforms to improve investor climate Sri Lanka

Sri Lanka has regressed in terms of Doing Business Ranking, falling to 110 from its’ earlier position of 79 as of 2012. Improving investor climate will be paramount to Sri Lankan economy moving forward according to many stakeholders especially given the government objective of having an investment target of 35% GDP.
Central Bank Governor Indrajit Coomaraswamy commented on this and was quoted “Our location and excellent international relations can trump the head wings coming from the global economy. But we need to get right; our policy framework, macroeconomic policy framework, investment climate, investment policy, trade policy and trade presentation. If we can bring all this together and the government is trying to do that, we in Sri Lanka can go with a growth model based on external demand”.
Sri Lanka although had been expecting a significant FDI to come in, the result has not successful. The government has largely managed only to attract FDI in only a few areas and large development projects are yet to proceed as there are many obstacles to investments being injected to the economy. It is expected that the Sri Lankan government will place a greater onus on improving the Investor confidence and the overall investor climate in Sri Lanka.
According to Ministry of Development Strategies and & International Trade Sri Lanka (MODSIT), “concerted action is being taken to improve the investment climate and strengthen trade facilitation. This is reducing transaction costs (the hassle factor) of doing business”. The 2017 budget speech by the former Finance Minister “investment climate is of much importance and needs urgent attention to sustain our investment targets. An ambitious reform program to strengthen “Ease of Doing Business” and to create the positive environment for the upcoming entrepreneurs to invest and also making it conducive for enterprises to enter new markets, grow and create employment opportunities will be addressed”. Is also indicative of the commitment of the government to improve investor climate.
According to studies done by institutions such as the Path Finder Foundation it is likely that the government will focus on “To promote mainly Foreign Direct Investment (FDI), the Government is focusing on improving the country’s performance on the Ease of Doing Business Index (DBI), of International Finance Corporation/ World Bank”.
It is further expected that the government will focus on two areas, first being policy amendments and the second being overcoming operational challenges and addressing delays as it tries to ensure investor climate is attractive for potential investors.


The government can be expected to make significant steps towards identifying the challenges that affect the Doing Business Ranking, especially in areas such as Starting a business, taxations, Registration processes and offering more incentives to investors. It can also be expected that significant strides will be made to alter fully at the least partially the legal frame work regarding foreigner’s property holding in Sri Lanka. Programmes such as providing increased number of residency visas for investors who bring in investment over a certain threshold will be supplementing the overall reforms of the Investor Climate.
However, there will be challenges especially in overcoming various public perception and resistance especially with regard to foreign land holding and also with certain supreme court judgements that presently pertain to foreign investments.
Despite such setbacks and challenges OSL, expects the investor climate to improve significantly in the recent future as the government in fully committed and has the political capital required to push through such reforms and also due to the support it has received from global institutions such as the world bank and the IMF.

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Article Code : VBS/AT/14062017/Z_3

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