The US State Department has raised concerns about inconsistencies in Sri Lanka’s foreign investment policies, according to its 2025 Investment Climate Report for the island nation. The report highlights that senior officials within the National People’s Power (NPP) government frequently criticize private sector-led economic growth.
While the NPP government collaborates with the International Monetary Fund and provides assurances to investors, the report notes that many investors remain hesitant due to the government’s historical anti-Western and Marxist-influenced ideologies.
The American department further states that maintaining consistent and open dialogue with the Board of Investment of Sri Lanka, the primary investment promotion agency, has proven challenging.
Institutional Corruption Persists in Protected Sectors
Other issues hindering investment in Sri Lanka include excessive regulations, legal uncertainties, and a lack of responsiveness from officials.
The report also cites the withdrawal of Adani Green Energy, an Indian company, from a $400 million renewable energy project in Sri Lanka’s Northern Province. The reason provided by Adani was the Sri Lankan government’s attempts to renegotiate a previously awarded contract.
Despite the President’s public commitment to eradicating corruption and improving government transparency, and a noted decrease in high-level political bribery demands under the new administration, the report observes that institutional corruption continues, particularly in sectors protected by entrenched privileged groups.