Prof. Ranjith Bandara,
PhD (Qld.,) Emeritus Professor, University of Colombo

Investment promotion has been Colombo’s default strategy for two decades. The real barrier to foreign capital was never Sri Lanka’s pitch — it is Sri Lanka’s paperwork and administrative complexity.

For more than two decades, investment promotion has been one of Sri Lanka’s key development strategies. Successive governments have introduced investment incentives, established export-processing zones, strengthened promotion agencies, and dispatched delegations to road shows and conferences across the world. The message abroad has remained largely unchanged: Sri Lanka is open for business, and the opportunity is real.

That opportunity is not in question. The island sits strategically alongside some of the world’s busiest shipping lanes in the Indian Ocean. It has a relatively well-educated workforce, established commercial institutions, a strong tourism base, natural resources, and direct access to a South Asian market of well over a billion people. On paper, Sri Lanka should be attracting foreign capital on a much larger scale.

It is not. And the reason is not that the world has failed to hear Sri Lanka’s investment pitch. The problem is that promoting an investment opportunity and delivering the conditions promised to investors are two very different things — and Sri Lanka has historically devoted far more energy to the former than to the latter.

A recovery that still falls short

There has been genuine improvement recently. According to UNCTAD figures, inward FDI rose from roughly US$759 million in 2024 to US$1.04 billion in 2025 — the strongest performance since 2022, when inflows reached US$884 million, before falling back to US$713 million in 2023.

That trajectory is welcome. Yet, in the context of what Sri Lanka needs, it remains modest. Set against a GDP exceeding US$100 billion, US$1 billion in FDI represents roughly 1% of national output — only a fraction of what an economy pursuing serious industrialisation, technological upgrading and export expansion requires.

For comparison, Vietnam, a country against which Sri Lanka is often benchmarked, attracted more than US$20 billion in FDI in 2025 alone. Nobody expects Sri Lanka to match that scale overnight. But the gap is instructive: global capital is mobile, and investors have choices. Sri Lanka is not merely competing against its own past performance. It is competing with India, Vietnam, Indonesia, Bangladesh, Malaysia and Thailand, all pursuing the same global pool of investors.

Moreover, the issue is not only the quantity of investment, but also its quality. A country does not simply need short-term capital inflows; it needs investment that brings technology, managerial expertise, links to global markets, skills development, productivity gains and long-term export capacity. FDI policy should therefore move beyond asking, “How much investment came in?” It should also ask: “How much did that investment contribute to productivity, exports, technology transfer and the quality of employment?”

That leads to the question that should sit at the centre of national economic strategy: why, specifically, should an investor choose Sri Lanka over these alternatives?

Real obstacle is cumulative friction, not a single flaw

Investors do not evaluate countries on rhetoric. They compare them, line by line, on production costs, energy prices, logistics, taxation, regulatory predictability, political stability, labour relations, infrastructure quality, and the speed and reliability of approvals.

Sri Lanka is not catastrophically weak in any single one of these areas. The problem is cumulative. Small inefficiencies and delays across multiple fronts eventually add up to a high overall cost of doing business, even when no single obstacle appears decisive on its own.

This cumulative friction can be particularly damaging to small and medium-sized foreign investors. A large multinational may be able to employ legal advisers, consultants and government-relations teams to navigate a complicated administrative system. A medium-sized investor may be unwilling or unable to bear those additional costs. An unnecessarily difficult administrative environment therefore does more than delay investment — it can reduce both the number and diversity of investors willing to enter the country.

Bureaucracy is a central part of that friction. Investors routinely have to navigate multiple agencies with overlapping mandates and, at times, inconsistent rulings. The deeper problem is not regulation itself, but the absence of clear procedures and predictable timelines.

A guaranteed 60-day approval process is workable, even if it is not ideal. A process that may take one month or may take six is not. Investors can price a known delay into a project. What they struggle to price is uncertainty.

And uncertainty has a real financial cost. Every month that a project waits for approval can mean higher financing costs, delayed machinery orders, missed market opportunities and, ultimately, the possibility that the investor relocates the project to another country. Administrative delay is therefore not merely an inconvenience within government offices; it is a national competitiveness problem.

A genuine single-window system — one application, one digital file, one responsible case manager and fixed statutory deadlines — could do more to improve investor confidence than another round of tax incentives.

But a genuine single window must be more than a single desk at which applications are submitted. All relevant agencies should be digitally connected through the same platform. The investor should be able to see where an application stands, which agency or officer is responsible, what requirements remain outstanding, and when a decision is legally due. The investor should not have to become the coordinator of government agencies.

Policy volatility compounds the problem. Investors can plan around relatively high taxes. They cannot plan around taxes, incentives, import rules and foreign-exchange controls that shift unpredictably with every change in government or fiscal circumstance.

Such instability embeds a “policy-risk premium” into every long-term investment decision. That cost may never appear directly in headline statistics, but Sri Lanka pays it through investments that are delayed, scaled down or never made.

The answer is not to freeze every policy permanently. Economic circumstances change and governments must retain the ability to respond. What matters is that changes are introduced with reasonable notice, clear transitional arrangements and predictable implementation periods. Long-term investors do not require a world in which nothing changes; they require a system in which change itself can be anticipated.

Administrative discretion adds another layer of risk. Where licensing and approval outcomes depend more on relationships than on published, rule-based criteria, investors correctly interpret that as exposure — to delay, arbitrariness or worse.

Digitising approvals, publishing statutory timelines, reducing unnecessary discretionary authority and opening public procurement to transparent competition would reduce this risk directly. The governance benefits of such reforms would extend well beyond the investment climate.

None of this is an argument against labour protection. Strong labour standards are entirely compatible with a competitive investment environment, as many advanced and emerging economies demonstrate. The problem arises when industrial relations become unpredictable or politicised. That is a governance problem that can be addressed, not an unavoidable trade-off between worker welfare and competitiveness.

Nor is low labour cost, on its own, a winning strategy. What investors ultimately price is unit labour cost, which reflects productivity as well as wages. A country that competes purely on cheap labour while tolerating high energy prices, logistics delays and regulatory friction is not really offering investors a cost advantage — it is offering a false economy.

Physical infrastructure, too, is only part of the picture. Reliable electricity and serviced industrial land matter, but so does the institutional architecture around them: efficient customs, functioning courts and arbitration mechanisms, digital government services, reliable certification systems and predictable regulatory enforcement.

Investors are not simply buying land and electricity. They are buying access to a functioning business ecosystem.

From announcements to outcomes

Perhaps, the most consequential shift Sri Lanka needs is in how it measures its own success.

For too long, the metric has been approvals granted, memoranda signed and projects announced — announcements rather than outcomes.

What should matter instead is capital that actually enters the country, factories and businesses that actually commence operations, jobs that genuinely materialise, exports that expand, and investors that remain and reinvest.

The gap between approved investment and realised investment is where much of Sri Lanka’s promise has historically evaporated. Closing that gap requires dedicated project management and systematic follow-through, not another press release.

Every major investment project should therefore have clear post-approval responsibility. If a project is stalled because of land, electricity, a licence, customs, infrastructure or financing, the problem should be identified quickly and escalated to the appropriate authority.

The present logic must be reversed. Rather than forcing the investor to move from ministry to ministry and agency to agency searching for solutions, government should have a system that actively identifies and removes obstacles preventing an approved investment from becoming operational.

The performance of investment-promotion institutions should likewise be measured not by the number of MoUs signed or approvals issued, but by capital actually invested, projects implemented, jobs created, exports generated and reinvestment secured. This would begin to close the institutional gap between investment promotion and investment implementation.

Global competition is only intensifying. The sectors now driving some of the largest FDI flows worldwide — semiconductors, artificial-intelligence infrastructure, renewable energy, advanced manufacturing, pharmaceuticals and critical minerals — are increasingly dominated by economies capable of offering subsidies on a scale Sri Lanka cannot realistically match.

That reality should clarify Sri Lanka’s strategy rather than discourage it. If Sri Lanka cannot out-subsidise its competitors, it must out-execute them.

Speed, certainty and administrative efficiency are not consolation prizes. For a country in Sri Lanka’s position, they may be among the most valuable incentives it can offer. Unlike large cash subsidies or tax concessions, they can be delivered at relatively low fiscal cost once the right systems are established.

The policy choice ahead

Sri Lanka’s renewed international engagement — including recent outreach to markets such as Australia — is a reasonable and necessary part of any investment strategy. No country can attract capital it never asks for.

But promotion without domestic reform is ultimately a roadshow with too little behind it. A conference can bring investors to the table; only institutional efficiency determines whether they sign, build, operate, expand and stay.

The government now faces a straightforward choice, and it is one that should be measured in policy rather than rhetoric: continue treating FDI primarily as a promotional challenge, or commit to a genuine Investment Competitiveness Programme.

Such a programme should include a true digital single window, enforceable approval timelines, a stable multi-year tax framework, reduced administrative discretion in licensing, and a public dashboard that tracks actual investment outcomes rather than signed intentions.

That dashboard would also be an important instrument of public accountability. Information such as the value of approved investment, the value actually realised, average approval times, causes of delay and performance by responsible agency should be publicly available. Such transparency would not only strengthen investor confidence; it would also create accountability across government institutions for the speed and quality of implementation.

Most importantly, FDI reform should not be viewed as providing special privileges to foreign investors. Clear rules, faster approvals, efficient public services, transparency and policy stability are equally important to domestic entrepreneurs.

Making Sri Lanka easier for a foreign investor is therefore, in the final analysis, about building a more efficient economic system for every business operating in Sri Lanka.

The question Sri Lanka’s policymakers should now be asking is no longer, “Have reforms been introduced?” Instead, it is this: “Has investing in Sri Lanka actually become easier?”

Once the answer to that question is in the affirmative, the country may find that it needs far fewer roadshows. Because the most persuasive advertisement for Sri Lanka will not be a delegation travelling abroad. It will be an investor already operating in Sri Lanka telling the next investor: “The system worked.”

by Shelton Dharmaratne

Sri Lanka is now confronted with an issue that goes far beyond the retirement age of a few judges. At stake is something infinitely more valuable, the confidence of the people in the independence, impartiality and dignity of the judiciary.

An intervention by Emeritus Professor A. N. I. Ekanayaka deserves serious public attention because it identifies a fundamental danger: when the conditions of judicial tenure are altered in circumstances that generate public suspicion, the damage may extend far beyond the immediate legislation.

The government has proposed the 22nd Amendment to the Constitution, under which the retirement age of Supreme Court judges would rise from 65 to 67 and that of Court of Appeal judges from 63 to 65. The Bill also proposes increasing the maximum number of Court of Appeal judges from 19 to 24.

There may be perfectly legitimate arguments for increasing judicial retirement ages. Longer life expectancy, accumulated judicial experience, the need for additional judges and the enormous backlog of cases can all be discussed rationally. Indeed, the government has presented judicial capacity and the expansion of the court system as reasons for the proposal.

But that is not the whole question.

The more fundamental question is why now; why in this manner, and why should the public be expected to accept an alteration of the constitutional tenure of sitting superior-court judges without the fullest possible consultation and reassurance?

That question cannot simply be dismissed as political opposition or resistance to reform.

The Bar Association of Sri Lanka has expressed precisely this concern. Its July resolution states that security of tenure is an essential safeguard of judicial independence and questioned the absence of demonstrated compelling necessity, objective evidence and comprehensive consultation. The Commonwealth Lawyers Association similarly warned that constitutional reform should not be undertaken piecemeal or ad hoc and emphasised the importance of public and stakeholder consultation. More recently, the UN Special Rapporteur on the independence of judges and lawyers raised concerns that the proposed change, in its reported form and implications, could affect judicial independence, separation of powers and public confidence in the courts.

These concerns deserve to be heard—not because every criticism of the government must necessarily be correct, but because the judiciary is different from every other institution of the State.

A government can survive criticism. A political party can survive defeat. An administrative department can survive controversy. But a judiciary cannot function effectively if the public begins to believe that judges may owe their continued tenure to the political authority that changes the rules governing their retirement.

Justice must not only be done; it must also be seen to be done.

This is where Professor Ekanayaka’s proposal deserves particular consideration. He does not suggest that judges should determine whether the proposed retirement age is a good or bad policy. Instead, he appeals to those judges who might personally benefit from the proposed extension to voluntarily declare that they will retire according to the existing retirement provisions and will not personally take advantage of the extension.

That would be an extraordinary act of judicial statesmanship.

Such a declaration would immediately separate the individual judge from the political controversy surrounding the legislation. It would tell the country: My loyalty is not to my position. My loyalty is to the institution of justice.

It would also remove much of the suspicion that inevitably arises when a constitutional amendment appears capable of benefiting people already occupying the very offices affected by it.

This is not an accusation against any individual judge. Nor should it be interpreted as suggesting that judges who remain in office under a new law would necessarily act improperly. That conclusion would be unfair and unjustified.

The issue is one of institutional perception.

If the public sees the government changing the constitutional retirement framework while particular judges are approaching retirement, suspicion is almost inevitable. Even a completely independent judge may then find that the credibility of a perfectly lawful judgment is questioned merely because of the circumstances surrounding his or her continued tenure.

That is an intolerable burden to place upon the judiciary.

Sri Lanka’s constitutional history provides ample reason for caution. The country has previously witnessed bitter confrontations between political power and judicial independence. The lesson from such episodes should not be that one political party was uniquely guilty while another is uniquely virtuous. The deeper lesson is that no government, however popular, should ever become so confident of its own righteousness that it regards institutional criticism as an obstacle to be overcome by parliamentary numbers alone.

A two-thirds majority is a constitutional instrument. It is not a substitute for wisdom.

And if the Supreme Court ultimately determines that a referendum is constitutionally required, that constitutional process must be respected without political intimidation, triumphalism or resentment. The question should not be whether the government has sufficient political strength to prevail. The question should be whether the constitutional order has been strengthened or weakened by the manner in which the change is pursued.

This is, therefore, not fundamentally an NPP issue, a JVP issue, an Opposition issue or a government Issue. It is a Sri Lankan issue.

The beneficiaries of the proposed extension should also understand this. If the amendment eventually becomes law, accepting its benefits may be entirely lawful. But legality and legitimacy are not always identical concepts. A judge who voluntarily declines a personal benefit arising from a controversial alteration of tenure would send a message of exceptional moral strength.

The people of Sri Lanka need such reassurance.

The government should, therefore, pause, consult the Judiciary, the Bar, academics and wider civil society, and demonstrate that judicial reform is being undertaken for the enduring benefit of justice rather than for the immediate convenience of government.

And the judges, who may personally benefit, have an equally historic opportunity.

They can rise above the controversy.

They can voluntarily relinquish the personal advantage.

They can demonstrate that the office is greater than the office-holder, the Constitution is greater than the government, and justice is greater than political power.

If they do so, they will not merely be retiring from judicial office; they will be leaving behind something far more important, a renewed measure of public faith in the proposition that, in Sri Lanka, justice remains above politics.

By Panduka Karunanayake

Eric J. de Silva’s passing last June, just short of his ninetieth birthday, marked the end of a remarkable life. Quietly and poignantly, it also took our nation a step closer to the conclusion of an era – when its public service had consummate skill, genuine commitment and steadfast reliability and when its education system produced citizens who gave it stability and continuity for pride and growth. On a personal note, it meant the loss of someone who had grown so endeared to me over the last twenty years or so that it didn’t feel very different to losing my father.

Dr. Usvatte, a contemporary of his, has already written an appreciation that described why his life was remarkable. I shall not vainly try to outdo it. And since this is an appreciation and celebration of a life, let me not dwell on bleak prospects either, like the end of an era. Let me focus on him, and especially on what he meant to me.

Dr Usvatte intimated to me that he now has only one surviving friend from the Ramanathan Hall of the late-1950s. What rich anecdotes and priceless lessons might they share with us, if only we cared to listen – as Eric Uncle (as I had called him) did, when I listened!

I first met Eric uncle in the early 2000s. By then he was retired from the public service and was continuing to serve the nation as a well-known public intellectual in the English print media. He was publishing beautifully crafted articles quite frequently in his favourite newspaper, The Island. I too was writing, but under a pseudonym because I still lacked confidence – my writing was probably already good, but I knew it lacked something. That ‘something’, as I found out, was in the fall that our education system had suffered between the 1950s and my own 1980s.

I had already heard his name as a civil service celebrity. But his simple, unassuming way dissolved my anxieties away, and his reputation didn’t jar our rapport. We promptly found our common interest: Sri Lanka’s education system.

Eric uncle, who had already read my pseudonymised articles and had liked them, gladly offered to help me to improve my writing. I spent many Saturday mornings with him, like a pupil at his schoolteacher’s feet, me with a pencil and him with a red pen. He showed how to move phrases around or even replace a cumbersome phrase with just a couple of words, to make that elusive difference. He explained what to write and what to leave out and advised what to say, what to leave unsaid – and yet create all the effect one wanted, perhaps even more. After he had done his bit, my articles were shorter, punchier, much clearer and more likeable to both ally and opponent. It was he who suggested to me after some months that I was now ready to give up my pseudonym. It felt like another graduation!

For me, Eric uncle was the best example of ‘the educated Ceylonese’ (a phrase I picked up as a schoolboy reading Alistair MacLean novels, which too had been written around the 1950s, unsurprisingly) and ‘the elite Ceylon Civil Service’. If you read his articles in The Island, his book on education reforms (Education Reforms and Other Essays, Sarasavi Publishers 2013) and memoirs (A Peep Into The Past, Sarasavi Publishers 2022), you too will get a glimpse of it. The former book was a detailed recollection focused on the mid-1990s education reform process, the likes of which on any policymaking saga in our country has probably never been published before or since.

The writings of many like him, which have appeared as memoirs, newspaper articles or Internet blogs, could serve many more ‘pupils’ like me in the future. Or has artificial intelligence deceived us into thinking that it is no longer necessary to ‘scorn delights and live laborious days’?

I would add one anecdote that he shared with me that hasn’t appeared in his public writings. This occurred when he was the secretary of Education during the J.R. Jayewardene government. A UNP Member of Parliament visited Eric Uncle’s office in Colombo to discuss how to fill a vacancy for principal in a school in his electorate. The MP straightaway stated whom he wanted appointed. Eric Uncle calmly asked for all the details and wrote them down and promised to look into it and report back. A few days later, he called the MP – and told him what he narrated to me, with the subtlest of chuckles. He assured the MP that he had carefully studied the dossier, and that the MP’s favourite was nowhere near even the top three on the list – and gave ‘the assurance’ that as long as he was the secretary, the favourite would not fill that vacancy. But he then told the MP (roughly translated): “Honourable MP, there is however one thing that you could do. The next time you meet the President at DDC meetings, you can tell him what I told you and ask the President to take any action. I am ready to go home even tomorrow.”

Of course, he would have known quite well that the MP would not follow that strategy, because even J.R. knew about what it meant when Eric uncle took a stand. But still, to say that to a governing MP, when one was still in one’s early-forties and was responsible for a family of four young children, must rank somewhere right at the top when it comes to integrity and fortitude.

The best part is not that he stood up for what he believed was right. Rather, it is that he created a glowing example that would render into silence all governing MPs and protect all his subordinate officers in the ministry throughout the island for as long as he was its secretary. That was the metal of the man. This was the Ceylon Civil Service. And it was the product of an education system that we actually possessed in the 1950s. For, what is a society and culture if not the product of education?

In his book of memoirs, he retained praise for only two politicians who, as it turned out, were both dead (Sirimavo Bandaranaike and M.D. Banda). I joked with him that this was quite appropriate, because the only good politician is a dead politician. He of course had a hearty laugh, but at the same time, he did see in many politicians of those days genuine efforts that were frustrated by circumstances they had no control over – this will come through in his memoirs if you read between the lines.

The memoirs would also show the versatility of his official career: its coverage included local government, defence, film, education, labour, human resource development, training of administrative officers and so on and it’s fair to say that he excelled in all those domains. But during his post-retirement days as a writer and public intellectual, it extended even wider. He studied many new issues, analysed challenges with pragmatism and, after careful analysis and with clear justification, stood firmly for what he believed was right – by writing it clearly and dispassionately, but never boringly or pompously. That was why I said that his service to the nation was continuing even after retirement. When rational, impartial and upright people like him become public intellectuals, the value to the nation is hard to measure. How can one say that there is a place only for graduates who have job-related competencies and not the broader outlook of ‘a liberal education’?

An evocative episode was his newspaper debate with a famous retired professor from a faculty of medicine on the pages of The Island on generic versus brand prescribing by doctors. Eric uncle’s arguments were pragmatic and well-grounded, while the professor’s remained ideological and often expedient. Eventually, The Island organised a face-to-face debate between the two gentlemen at the Sri Lanka Foundation Institute. Eric uncle arrived in the morning, quite characteristically carrying a small file of crucial documents. The professor didn’t show up. Eric Uncle of course made no song and dance about the no-show. Prabath, The Island editor, had wisely arranged some speeches for the audience in case the debate didn’t materialise. Eric Uncle sat next to me somewhere in the back of the hall throughout, dutifully and silently waited until everything was over, thanked Prabath and drove away. And as far as I can recall, he didn’t write on the topic again.

He was a master at not letting experiences, preferences or beliefs get in the way of his reasoning; he would recognise them quickly, both in his own thinking and in mine, clearly articulate them and decisively leave them out of subsequent discussion. Quite wisely, he saw them as the Achilles heel of an argument. And when he wrote, he showed great discipline in leaving some matters out of an article – for him it was paramount that it didn’t say anything that hurt others feelings (even when others ridiculed him!) or diminished another’s stature in the public eye. In all this, he was keenly aware of how much he was a part of the whole – and how every part needed to play its rightful role for the weal of the whole.

One of my happiest moments with him was, in 2021, when I presented him with the first copy of my book on education and showed its dedication page to him: ‘To Eric Uncle’. There isn’t much that a pupil can give a teacher, just as there isn’t much that the clay can give a sculptor. But at least, if there was any merit in the sculpture, then the sculptor would be holding it in their hands then. That is when the sculpture best feels at home.

To have known Eric uncle, and a few others like him, in this way is blissful because one then knows the value of a true education and the nature of a gentleman to his fingertips – and is heartbreaking too, because one also knows that in our country this has almost all gone now.

Let me offer my condolences to his family on their loss and wish Eric Uncle the Supreme bliss of Nirvana.