Foreign investment in Sri Lanka has recorded a remarkable surge in 2025, with inflows reaching US$827 million between January and September. The strong upswing reflects rising investor confidence, economic stability, and the success of pro-investment reforms implemented by the government and the Board of Investment (BoI).
Foreign investment in Sri Lanka climbs sharply as reforms and stability attract investors
Sri Lanka is witnessing a powerful resurgence in foreign investment, marking one of the strongest inflow periods in recent years. According to the Board of Investment (BoI), the country attracted US$827 million in foreign direct investment (FDI) between January and September 2025 — a 138% increase compared to the same period in 2024.
The figure underscores a significant rebound in investor sentiment and highlights the nation’s growing appeal as a stable and reform-driven destination for global capital. The BoI attributes this sharp rise to a combination of fresh capital inflows, reinvested earnings, and strategic financing by foreign-owned companies.
Of the total investments, US$133 million came from direct equity contributions, US$132 million from reinvested profits, US$231 million from intra-company loans, and US$331 million through long-term foreign commercial borrowings. These diverse sources reveal not only new investor participation but also a strong commitment from existing enterprises to expand operations in Sri Lanka.
BoI data further shows that US$124 million of total FDI originated from new project agreements signed in 2025, while the remaining 85% was derived from reinvestments and expansions by companies already operating in the country. This pattern suggests that current investors are both confident and optimistic about Sri Lanka’s economic direction.
Stability and Reform Drive Confidence
Officials from the Board of Investment emphasize that this momentum stems from a combination of regulatory reforms, improved investor facilitation, and political stability. These factors have created a more predictable and transparent environment for both local and international investors.
A senior BoI spokesperson noted that the recent surge demonstrates “the depth of confidence global enterprises have in Sri Lanka’s reform agenda and growth potential.” The improved ease of doing business and streamlined approval processes have also been critical in accelerating project implementation.
The current growth in foreign investment in Sri Lanka is not only about numbers but also about sustainability and diversification. The inflows have been concentrated in key growth sectors, including manufacturing, renewable energy, logistics, services, and infrastructure, with investors focusing on long-term returns and regional integration.
Sectors Leading the Inflow
Manufacturing remains one of the most active segments, supported by a steady rise in exports and the establishment of value-added industries. Sri Lanka’s strategic geographic location continues to attract regional players seeking access to South Asian and Indian Ocean markets.
The renewable energy sector has also gained traction as investors look toward solar, wind, and bioenergy projects aligned with the government’s clean energy agenda. In addition, services and logistics have emerged as strong performers, particularly with the expansion of port facilities and the modernization of trade infrastructure.
Experts believe that the influx of capital in these sectors will translate into job creation, technology transfer, and improved export competitiveness — key factors in strengthening the country’s economic resilience.
Investor Sentiment and Future Outlook
The BoI’s latest report confirms that Sri Lanka’s policy consistency and macroeconomic stability have played a pivotal role in restoring investor trust. The agency continues to focus on facilitating projects more efficiently through digital approvals, aftercare services, and investor protection mechanisms.
Officials expect the full-year FDI figure for 2025 to exceed US$1 billion, supported by several high-value proposals currently under evaluation. This projection, if realized, would represent one of the strongest FDI performances for Sri Lanka in recent memory.
Economists note that continued growth in foreign investment could provide much-needed support for foreign exchange reserves, improve trade balances, and enhance the country’s global competitiveness. However, they also stress the importance of sustaining structural reforms, ensuring policy consistency, and strengthening infrastructure to maintain investor momentum.
As Sri Lanka enters the final quarter of 2025, the overall sentiment among investors remains cautiously optimistic. With its renewed focus on stability, sustainability, and reform, the nation appears poised to transform its investment landscape and re-establish itself as one of South Asia’s most promising destinations for foreign capital.