by Saman Indrajith
Enterprise Development and Investment Promotion Minister Prof. G. L. Peiris on Tuesday said the highest ever inflow of foreign direct investment to the country was reported during the first six months of this year. He said the stable economic and political conditions resulting from the current peaceful atmosphere was prime factor behind the growth.

"The BOI records a threefold increase in foreign direct investments. Local investment showed an increase of 56 per cent during the period between January and July 2003. These are unique achievements. The peaceful atmosphere prevailing in the country throughout the last 19 months, the longest cease-fire since the war broke out 20 years ago, has brought the country back on the track of development," Minister Peiris told a press conference. Commercial operations, which commenced during the first half of the year have over 33,000 direct employment opportunities and an estimate of 15,000 indirect jobs. Compared with the 19,768 jobs created in the first half of the year 2002, this is unique, he said.

Minister Peiris said the Board of Investment recorded the highest ever inflow of foreign direct investment to the country of Rs. 17 billion (US $170 millions) during the first half of this year. This clearly places the institution on the right track to achieve its 2003 FDI target of Rs. 30 billion. "It is an increase of 300 per cent over investment during the first half of the year 2002, which recorded only Rs. 5.5 billion (US $50 million)," he said.

Stable economic and political conditions in the country with the ongoing peace process was a predominant factor behind the increased inflow. Recent one-on-one discussions between senior government ministers and officials with company directors in Japan, China, Singapore and Malaysia have shown a significant increase in optimism on Sri Lanka’s growth prospects, he said.

"We expect Malaysian investments in Sri Lanka to double this year. The anticipated free trade agreement between Singapore and Sri Lanka will usher greater flow to the country," he added.

The first half of the year also saw a better spread of investment, both sector wise and on a geographical basis and a noticeable increase in the pace of realisation of investment. The BOI investment portfolio now represents many other sectors, apart from the traditional agreements and jewellery industries, to more sophisticated sectors such as telephone, television and radio communications networks, electrical and electronic goods, fabricating metal, warehousing and freight forwarding as well as more value added software development.

"There is also increasing interest among international investors, who are looking towards diversification in the Asian region, in the Information Technology sector in Sri Lanka, especially due to the availability of higher level technology skills within the island," the minister said.

The BOI sector accounts for a significant proportion of the country’s exports and imports earnings and contributed 69 per cent to the total exports from Sri Lanka, whilst accounting for 36 per cent of the total imports into Sri Lanka, during the first half of the year. Exports for January-June 2003 valued at US $ 1,650 million is a 16 per cent increase over US $ 1,419 million in the first six months of the year 2002, he said.

BOI Chairman Arjuna Mahendran, and Secretary to the Ministry of Investment Promotion Ranjith Fernando were present at the conference.