## FDI Strategy: High Reforms vs. Tax Holidays? š
The Sri Lankan government and BOI present a multi-pronged, yet contrasting strategy to boost Foreign Direct Investment (FDI) as global competition intensifies. ā¢ Key Targets & Performance 2026 Target: US$ 1.5 Bn - US$ 2.0 Bn. 2025 Realized FDI: Over US$ 1 Bn (provisional), a 72% YoY increase. Top Sectors: Manufacturing (46%), Port Development (26%), and Tourism (11%). Top Sources: Singapore, India, France, Netherlands, and Luxembourg. ā¢ Strategic Divergence BOI Stance: Chairman Arjuna Herath emphasizes hard structural reforms (lower costs, institutional efficiency) over "concession-heavy" regimes the state cannot afford. Ministry Pitch: Deputy Minister Chathuranga Abeysinghe is offering tax holidays of up to 15 years to attract UAE investors. Port City: Positioned as a services-led hub for financial services, IT & digital exports, and logistics. It recently secured a US$ 300 Mn FDI commitment for Phase II. ā¢ Critical Challenges Execution Gap: Critics warn that "strategy without execution is hallucination," citing the need for targeted campaigns rather than general pageantry. Infrastructure: Success depends on reliable electricity and global connectivity to compete with regional hubs like the UAE (which drew US$ 45 Bn in 2025).