COLOMBO, May 24 (Reuters) – Sri Lanka is anticipating international direct funding inflows to rise by a fifth to $1.3 billion this yr, a authorities official mentioned on Wednesday, with India more likely to play a lead position regardless of the Sri Lankan financial system going through its worst disaster in many years.

Although it was pushed to the brink final yr by energy cuts, persistent shortages of gasoline and meals and hovering inflation, Sri Lanka managed to lift its FDI by 38% to $1.08 billion, information from the Board of Investment (BoI) confirmed.

Part of the bump got here from India, which needs to maintain China’s enlargement in its neighbour in verify. India’s Adani group signed up for 2 wind energy vegetation price $442 million final yr.

In the primary quarter, Sri Lanka has already acquired proposals price $600 million, mentioned BoI Director General Renuka Weerakone, with 22 new tasks and 6 expansions.

“The acid test is really in what comes in, that is what really helps the economy,” she advised Reuters.

Sri Lanka is banking on data know-how, photo voltaic and wind, bunkering and mineral processing to draw investments.

India’s MCS Group has signed a $20 million deal for mineral processing, the most important Sri Lanka has acquired thus far in 2023, Weerakone mentioned.

Other international locations are additionally eager.

“Japan is very interested in minerals, so is China,” she mentioned. “The raw material we have is something we can really pitch to get new investments.”

Sri Lanka has untapped deposits of graphite, phosphate and different minerals to draw traders however coverage frameworks are but to be up to date, making a bottleneck for FDI, Weerakone added.

Over the final decade, China has invested about $3 billion in Sri Lanka, accounting for almost 1 / 4 of its FDI, whereas India made up about $1.3 billion. In the final two years, India took the lead, adopted by the United Kingdom in 2022 and Netherlands in 2021.

Sri Lanka can be drawing up plans to determine new islands for traders to assist resuscitate its $4 billion tourism trade.

Reporting by Uditha Jayasinghe, Editing by William Maclean

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