At a recent Business Dialogue event hosted by the Advocata Institute at Queens Hotel Kandy, Prof. Sirimal Abeyratne emphasized the need for Sri Lanka to significantly increase its annual export volume, which has stagnated at around USD 12 billion since the onset of the open economy in 1977.
Prof. Abeyratne compared Sri Lanka’s export performance to that of other countries which opened their economies after Sri Lanka. For instance, Singapore, despite being smaller, nets around USD 515 billion in annual exports, surpassing India’s USD 340 billion. Similarly, Thailand, Malaysia, and Vietnam reported exports of USD 870 billion, USD 352 billion, and USD 371 billion respectively in 2022.
He noted that Sri Lanka’s reliance on trade for tax revenue stands at 18%, compared to much lower figures in India (4.5%), Vietnam (3%), Thailand (2%), and Singapore (0%). The stagnation in Sri Lankan exports is partly attributed to a lack of foreign direct investment (FDI), which has propelled export growth in other countries. FDI not only boosts exports but also creates employment, reduces poverty, and enhances tax revenues.
Prof. Abeyratne highlighted that while global FDI was around USD 200 to 300 billion 60 years ago, with 75% of projects flowing between developed countries, this trend shifted post-2000, with significant FDI flowing to developing countries in Asia. Asia now attracts USD 1,500 to 2,000 billion annually, totaling approximately USD 1.5 trillion over the past 25 years—about 60% of global FDI.
In contrast, Sri Lanka attracts only around USD 1 billion in FDI annually, a fraction of what Singapore receives. This is primarily due to bureaucratic hurdles and inconsistent policies. To attract more FDI, Sri Lanka needs to address these issues and improve its Doing Business Index.