The 2025 Sri Lanka Investment Climate Report, issued by the US State Department, sharply criticizes the island nation’s unstable foreign investment environment and limited investment inflows. The report, designed to support businesses and the government in enhancing foreign investment, provides key recommendations for Sri Lanka to achieve economic stability.
Abolish BOI, Enforce Economic Transformation Act, US Recommends!
The US State Department’s report primarily recommends that the Sri Lankan government abolish the Board of Investment (BOI) and expedite the implementation of the Economic Transformation Act.
- BOI Bureaucracy: Despite being the main investment promotion agency, the report highlights that maintaining a consistent and open relationship with BOI officials is a challenge for foreign investors.
- Approval Delays: The report also states that obtaining investment approvals from the BOI is an extremely difficult and time-consuming process.
Immediately Establish 5 Institutions Under the Economic Transformation Act
The US State Department suggests that Sri Lanka can promptly establish the five institutions outlined in the Economic Transformation Act.
The 5 Institutions to be Established under the Economic Transformation Act:
- Zone – Sri Lanka
- Economic Commission
- Office for International Trade
- National Productivity Commission
- Sri Lanka Institute for International Trade
Act Passed, But Institutions Still Absent
The report further emphasizes that although the Economic Transformation Act was passed in July 2024 by the previous Ranil Wickremesinghe government to abolish the BOI, the related institutions have not yet been established.
To attract foreign investment, the report additionally recommends removing investment barriers, eliminating bureaucracy, preventing approval delays, maintaining policy stability, and privatizing state-owned enterprises.
