Since the onset of the pandemic, the world has witnessed crisis after crisis – including supply chain shocks, the rapid rise of interest rates and inflation, and wars – first in Europe and then the Middle East.
“It has been very challenging in terms of global foreign direct investments (FDI),” noted Anemoi Investments Director Anarkali Moonesinghe on LMDtv.
“There was a substantial slowdown in FDI in 2022 but we’re seeing a rebound. If you look at the first half of 2023, global foreign direct investments reached about US$ 440 billion, which is almost triple the previous year’s fourth quarter,” she added.
She then focussed on the picture at home: “It’s been a very difficult environment with the instability brought on by an exchange rate that devalued sharply, high interest rates, and the challenges we faced in 2022 with the lack of access to petroleum and electricity – all of which made Sri Lanka unstable and unattractive for foreign investors.”
Yet, Moonesinghe is optimistic about the country turning the corner: “The government and Central Bank of Sri Lanka have certainly addressed many of the above issues, and we’re on a path of reform. With the IMF programme, we’re beginning to see stabilisation, which gives foreign investors comfort that Sri Lanka is taking a more sustainable path.”
She also highlighted the importance of improving the ease of doing business.
“Obtaining approvals and permits [must be made] more efficient,” she explained, stressing: “We must address concerns like the lack of available land for industrial enterprises, and have labour laws that facilitate not only hiring and training, but also restructuring and laying off labour when required.”
And Moonesinghe asserted that “we must also look at the skill sets the country has – since we face challenges in terms of access to export markets,” adding that “the government is looking at free trade and multilateral agreements – especially with East Asia and ASEAN countries, which will definitely help.”
“Sri Lanka needs to figure out how to integrate itself into the region and ASEAN, so that we can attract investors and make them feel there are good incentives to be based in the country,” Moonesinghe elaborated.
She believes that the country’s newfound stability is helping to secure long-term sustainability and ongoing reforms are building confidence among investors.
“We can see a pipeline of state owned enterprises set to come into the market,” she added, citing another example of initiatives contributing to improving investor confidence.
Moonesinghe stressed: “There’s significant potential for FDI but we must have policy consistency – foreign investors need to be confident that once investments are made, they’re secure.”
In addition to what governing entities and businesses must do to help position Sri Lanka as an investor-friendly destination, she shed light on the role that individuals need to play to make it attractive: “Each of us individually has to understand that when it comes to building ourselves, nothing is easy and nothing is free.”
She noted: “We must hold our elected leaders accountable – and equally, we have to hold ourselves accountable. We need to be civic-minded.”
“We need to look at going beyond merely wanting government jobs and pensions,” Moonesinghe declared, adding that people need to be reskilled “so that they can move on to jobs in the private sector.”
She stated: “We want young people to be excited to work in the private sector and engaged in wanting to create something different.”
“It’s been a tough 18 months; many people are facing very challenging times,” Moonesinghe observed, adding: “So I hope that over the next 18 to 24 months, people can have stability in their lives with better access to incomes so that their hard work pays off.”
She summed up: “Hopefully, we will grow from a stronger foundation that’s being laid right now; and in 10 years, we’ll be a much stronger nation for that.”
