Recent IPS Study Takes a Closer Look at Manufacturing Sector Investments in Sri Lanka

17 September 2018
IPS, Sri Lanka

A recent study by the IPS revealed that, although Foreign Direct Investment (FDI) inflows to Sri Lanka have ‘recovered’ in 2017, hitting the much touted USD 1 billion landmark, the underlying bottlenecks of poor ease of doing business, attracting the wrong ‘types’ of investments, and policy uncertainty have prevented Sri Lanka from ushering in optimal FDI gains throughout the post-war period.

An entry/exit analysis found that, compared to the number of entrants (202), twice as many firms have exited (410) in the post-conflict period from 2009 to 2016, while exits are relatively higher than entrants (665 vs. 469) even in the long term.

These findings are mentioned in IPS’ latest publication ‘Firm-level Analysis of Manufacturing Sector Investments in Sri Lanka’, authored by IPS Research Officer, Kithmina Hewage, and Research Assistant, Harini Weerasekera.

They recommend that while the broader requirement of ‘policy consistency’ is challenging to achieve, quick-wins such as speeding up the approval process for investors and re-orientation towards attracting more efficiency seeking FDI into the country, should be prioritised in the short-term.