Sri Lanka Implements Landmark Investment Law to Attract Foreign Investors

Sri Lanka is actively pursuing foreign direct investment (FDI) by introducing a groundbreaking law to simplify the investment process. 

The country is rebounding from an economic crisis and restructuring its foreign debts and public institutions, creating an attractive environment for foreign investors.

Recovery and Economic Restructuring:

Sri Lanka has navigated the early stages of debt restructuring discussions with the International Monetary Fund (IMF) and has significantly reduced inflation. 

The country’s ability to address the economic impact of the COVID-19 pandemic was hampered, but it has since made substantial progress.

New Investment Law for Foreign Investors:

The upcoming investment law, set to be unveiled by the first quarter of 2024, aims to protect the rights of foreign investors and enhance Sri Lanka’s investment-friendliness. 

It will offer various incentives for foreign investors, including free land ownership rights. An Investor Facilitation Centre will be established to address investor issues.

FDI Target and Economic Recovery:

Sri Lanka’s Board of Investments (BOI) has set a target of $1.5 billion in FDI for 2023, with $211 million realized in Q1. The country aims to expedite economic recovery by focusing on the agriculture, tourism, and investment sectors.

Sri Lanka is optimistic about resolving pending issues in its debt restructuring discussions with the IMF, although meeting all IMF conditions may be challenging. Successful debt restructuring is essential for the country to achieve a 2.3% primary budget surplus by 2025.

IMF Acknowledges Sri Lanka’s Progress:

An IMF mission commended Sri Lanka’s recovery efforts and recognized the population’s remarkable resilience. The country’s economic stabilization efforts and increased international reserves indicate progress.

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