By Nishel Fernando Courtesy The Daily Mirror

• Highlights major investment risks in the project
• BOI shifting its strategy to prioritise quality FDI” that ensures long-term national benefits over merely chasing high investment figures   

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Arjuna Herath

The head of Sri Lanka’s Board of Investment (BOI) has characterised the highly anticipated US$ 3.7 billion Sinopec oil refinery in Hambantota and Adani Group’s renewable energy project as fragile investments,” acknowledging the significant uncertainty surrounding their realisation.

Joining a panel discussion at the recent CA Sri Lanka Tax Symposium in Colombo, BOI Chairman Arjuna Herath underscored the agency’s commitment to attracting quality FDI” rather than merely chasing investment figures, even as it works diligently to bring large-scale projects to fruition.

There is a lot of pressure on us to try and achieve numbers of FDI,” Herath said. But where is this FDI coming from? What are these FDIs? I think it’s important to understand and work on quality FDIs.”

His remarks shed light on the precarious nature of high-value foreign investments in the current economic climate. We have seen FDI proposals that are on the table which are dwindling apart,” he noted.

The BOI chief directly referenced the Adani project, which has faced significant hurdles and saw the Indian conglomerate withdraw from a major wind power component earlier this year following government-led renegotiations. 

I think you should not be too disturbed with those because if you really look at Adani, we all know what the Adani’s investment was like,” he remarked, implying the complexities and potential downsides of such ventures.

Despite the challenges, Herath assured that the BOI is actively engaged in negotiations to secure these investments. We are working very hard… but not at any cost, right? Because it might not be a quality investment at the end of the day. So, that’s the context in which we operate,” he emphasised, reiterating the primacy of national interest and long-term value over expediency. 

Recent reports indicated that the Sinopec refinery project is currently stalled over disagreements regarding the extent of its access to the domestic market.

Herath’s comments come as Sri Lanka navigates a delicate path of economic recovery heavily reliant on foreign direct investment. He acknowledged the bold” and courageous” steps taken by the government on economic reforms but cautioned that the resulting stability is still delicate. Reforms are very sensitive… And you get to reforms and start destabilising the stability that we have achieved now is a sensitivity that the government is dealing with,” he said, advocating for a patient and carefully timed approach.

In a challenging global environment for foreign investment, Herath candidly questioned Sri Lanka’s current competitive edge. What do we offer? Why would a foreign investor come? Either we have market access, or we are close to supplies, or we have human resource skills and some excellent, unique properties, but all these things are not on our side,” he said.

However, he highlighted Sri Lanka’s strategic location and successes in niche markets like solid tyres, where the country holds a 35 percent global market share, as key advantages. The BOI is also focusing on fostering local investment and creating specialised economic zones for pharmaceuticals and textiles to drive growth.

He emphasised cautious optimism with a clear strategic focus.

I totally agree that we must go for quality more than quantity,” he concluded.