Sri Lanka: FDI is on the rise

Sri Lanka is rewriting its economic story. After enduring the economic collapse of 2022 and the devastation of Cyclone Ditwah in late November 2025—the deadliest disaster since the 2004 tsunami—the nation has emerged with renewed global confidence. The Board of Investment (BOI) recently reported that 2025 foreign direct investment (FDI) has increased by 72%, reaching a record $1.06 billion—the first time foreign investment in the country has crossed the trillion-dollar threshold.

Foreign investors are not just maintaining their existing positions but are making new, long-term bets on the country’s future in the form of greenfield investments that involve very high risk and very long return horizons, says Hirotaka Mizutani, Founder & Representative Director of management consultancy One Step Beyond.

“Notably, 24 new greenfield projects contributed $134 million, representing about 13% of total FDI,” he added. “This far exceeds the historical trend of 2% to 10%.

This is reinforced by Singapore ($318.9 million), India ($213.7 million), and France ($122.5 million), followed by the Netherlands and Luxembourg. New capital is also flowing from the US, Malaysia, and Hong Kong. By sector, manufacturing led with a 46 percent share of new capital, followed by port development (26%), tourism (11%), telecommunications (6%) and property development (5%).

Sri Lanka: ‘The Middle Place’

Although a small piece of the investment pie, the real estate sector is considered a great opportunity. Indika Hettiarachchi, an independent market consultant and strategist, notes that Sri Lankan real estate offers attractive entry costs as the economy stabilizes. He argues that by maintaining strategic neutrality, the island provides a secure alternative to Middle Eastern regions disrupted by the Iran war.

“This loyalty was demonstrated in a dramatic way during the 2026 International Cricket Council Men’s T20 World Cup, when Colombo successfully hosted high-stakes matches such as the India-Pakistan match, showing investors that the nation’s emergence as a regional center is increasingly compelling,” he adds.

Sri Lanka’s reputation as a stable “neutral zone” has increased investor confidence and capital inflows. Sinopec’s 3.7 billion oil refinery project in Hambantota, due for completion in 2025, is the country’s largest FDI and is central to addressing its energy challenges. This commitment comes on top of other major projects, including the $1.4 billion Colombo Port City development and the $700 million Adani Group terminal.

Meanwhile, China Harbor Engineering Company Port City Colombo confirmed a commitment of 300 million FDI in January 2026.

Besides protecting the nation’s energy and port development, investments are diversifying into high-value areas, such as information and communication technology, renewable energy, and the “Green and Digital Economy” mandate that includes the 2030 Digital Economy Strategy and the use of quartz in the solar supply chain.