Only $20 bn FDI raised by BOI in 40 years
Sri Lanka’s Foreign Direct Investment (FDI) has failed to achieve the desirable impact amidst the present economic setback, policy uncertainty and political instability along with the removal of tax concessions including tax holidays, a ministerial consultative committee report has revealed.
The Board of Investment (BOI), now acting as an intermediary rather than facilitator, has been directed to provide actual FDI data to the Central Bank and the Treasury as it should be armed with clear record on foreign investment projects and the actual value of investments, the committee advised.
Since the establishment of this export promotion entity approximately 40 years ago, the institution has managed to attract only US$20 billion in FDI, it added.
It has been observed that the average annual FDI inflow has been merely $ 500 million. The Ministerial Consultative Committee on Investment Promotion observed that there were no investments coming under the new enhanced capital- based package and BOI data on FDI inflows in the past five years should be clearly communicated to the Central Bank and the Treasury enabling them carry out negotiations with the International Monetary Fund (IMF).
It has been observed that the granting of tax exemptions was one of the BOI’s main roles until the responsibility moved to the Ministry of Finance (MOF) in 2011.
However the lack of clarity in BOI records of FDI inflows, number of project proposals received and number of projects approved or registered has confused actual data.
The removal of tax concessions including tax holidays for investors has triggered the slowdown in FDI inflow, several BOI officials said, the consultative committee minutes indicated.
With no plans and strategies properly being implemented, the BOI has become a burden to the state as a dormant institution after four decades of poor performance in its role of investment facilitator, the foreign investment report of the Finance Ministry revealed.
Another main accounting practice of the BOI was the inclusion of foreign loans to Direct Investment Enterprises in annual FDI while publicising dollar earnings of existing free trade zone enterprises
The BOI has attracted foreign direct investment (FDI) inflows amounting to $713 million in the first nine months of 2022, which is 71 per cent of the 2022 full-year target of $1 billion, State Minister of Investment Promotion Dilum Amunugama said recently.
However according to Finance Ministry estimates computed by using mathematical models, the FDI in 2022 will be in the region of $476 million excluding foreign loans obtained for ongoing projects.
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