FDI, including foreign borrowings of Board of Investment Sri Lanka (BOI) companies, increased considerably, reaching the historically highest level in 2018.
Total FDI inflows, inclusive of foreign loans received by companies registered with the Board of BOI, amounted to US dollars 2,136 million, in 2018, in comparison to US dollars 1,910 million in 2017.
Meanwhile, FDI, excluding foreign loans obtained by BOI companies, also increased notably to US dollars 1,611 million, in 2018, from US dollars 1,373 million in 2017, according to Central Bank Annual Report 2018.
FDI inflows, excluding foreign loans to BOI companies, comprised US dollars 1,148 million of net inter-company debt, US dollars 225 million of reinvested earnings and US dollars 238 million of net investments in equity during the year. A notable reduction in reinvested earnings was recorded in 2018 compared to the previous year implying relatively less profits declared by DIEs during the year. In addition, there was a significant repayment of inter-company debt amounting to US dollars 426 million in 2018, negatively impacting net FDI inflows during the year. Foreign loans obtained by BOI companies from non-related parties amounted to US dollars 525 million, in 2018, compared to US dollars 538 million in 2017.
FDI inflows in 2018 were mainly received by the Hambantota International Port Group (Pvt) Ltd, amounting to US dollars 828 million, of which US dollars 682 million was received by the government as proceeds of the long lease of Hambantota port during the year. In 2018, FDI inflows were channeled largely to projects related to ports, telecommunications, housing and property development and hotels, while FDI inflows to the manufacturing sector remained moderate.
Based on the country of immediate investor, the top five source countries of FDI in 2018 were China, Hong Kong, India, Malaysia and the United Kingdom. Meanwhile, direct investments made by Sri Lankan companies in foreign countries, which resulted in a net acquisition of assets, amounted to US dollars 68 million, in 2018, in comparison to US dollars 72 million in 2017.
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