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by Channa Kasturisinghe

The total Foreign Direct Investment inflow into Sri Lanka was US$ 217 million during the year 2000, an increase of US$ 30 million compared to the previous year, according to the World Investment Report 2001 published yesterday by the United Nations Conference of Trade and Development (UNCTAD).

The report stated that Sri Lanka was among the top 20 economies in the developing Asia and Pacific. However, the FDI inflows into Sri Lanka as well as the other South Asian countries were still below the 1997 peak. Sri Lanka recorded US$ 435 million FDI inflows into the country during the year 1997.

The FDI inflows into South Asia were almost unchanged compared to the previous year while the subcontinent's largest recipient, attracted US$ 2.3 billion only a slight increase compared to US$2.1 billion the previous year.

The Board of Investment of Sri Lanka, Deputy Director General (Investment) M.P.T Cooray, introducing the report at the United Nations Information Centre in Colombo said Sri Lanka worked towards creating a conducive environment for FDI.

"Sri Lanka clearly established the fact that we were going for a more liberal tariff policy. We have removed the barriers provided required infrastructure. We should not disheartened by the temporary set backs that affect the country's investments but should look to new ways of promoting FDI inflow into the country," Mr. Cooray said.

The report also stated the FDI flows to and from developing Asia hit record levels last year and termed North-East Asia - Hong Kong, and China; the Republic of Korea and Taiwan Province of China "the brightest spot for FDI in the developing world".

Inflows to the three economies of NorthEast Asia reached US$ 80 billion last year. Their share of total FDI in developing Asia soared from an annual average of 16 per cent during the first half of the 1990s to over 55 percent in 2000.

FDI inflows to China last year remained at a level similar to 1999, but rose by 20 percent during the first half of 2001 alone as compared to the same period in 2000, to US$21 billion.

"The record US$ 143 billion in inflows, a 44 percent increase over 1999 was primarily due to an unprecedented FDI boom in Hong Kong, China. With US$ 64 billion in inflows, it overtook mainland China as the single largest FDI recipient in Asia, and was also the top source of outward FDI, with US$ 63 billion.

South East Asia's share of total FDI in developing Asia continued to shrink, from over 30 percent in the mid 1990s to 2000 largely due to significant divestments in Indonesia since the onset of the financial crisis," the report stated.

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Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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