### Expert Panel: Why Sri Lanka Struggles to Attract FDI 📈

A high-level symposium featuring experts from the US, China, and India has diagnosed key structural and corporate failures hindering Sri Lanka’s foreign direct investment (FDI) inflows. Key Figures & Performance • Annual FDI Inflow: Currently ~US$ 1 Bn, representing only 1% of GDP, significantly trailing the 3–4% seen in competing emerging markets. • Corporate Returns: Analysis of the top 25 listed firms shows only 5 consistently generate returns above the cost of capital. • China's Outbound Investment: Reached US$ 174 Bn in 2025, presenting a massive untapped opportunity for local partnerships. Critical Bottlenecks • Private Sector Accountability: Experts noted that tax incentives are no longer a differentiator; investors prioritize "responsibility, discipline, and performance." • Ecosystem Gaps: Beyond tax breaks, the country lacks a cohesive ecosystem involving skilled labor, industrial land, and streamlined logistics. • Institutional Weakness: A significant lack of professional and technical capacity to negotiate and manage Free Trade Agreements (FTAs) compared to regional peers like Vietnam. High-Potential Sectors • Tourism: Strategic focus needed on India’s 1.4 billion population, specifically major urban hubs. • Manufacturing & ICT/BPM: Opportunities to integrate into regional supply chains (e.g., Chennai industrial clusters) and leverage the skilled technology services workforce. • Logistics: Leveraging the strategic maritime location, provided there is better regional connectivity and a healthy national airline. Strategic Outlook To transition into an intermediate production hub, Sri Lanka must shift from serving a small domestic market to an export-oriented model backed by a stable legal system and consistent policy. _(Based on provisional 2025/26 data)_.