BOI eyes larger Hambantota zone, new incentive scheme for investors

• Bigger zone at Hambantota port planned for clean energy, EV production and vehicle parts
• New incentive scheme in the works; priority for existing flagship investors
• First-ever national land database with ownership details now at BOI
• Policy consistency, labour reform flagged as key to unlocking more FDI

BOI Board Member Vish Govindasamy

The Board of Investment (BOI) is working on a new incentive scheme and plans a larger investment zone at Hambantota International Port, a BOI Board Member said yesterday, while naming policy inconsistency and labour laws as key brakes on foreign direct investment (FDI).

Speaking at the investment panel of the Sri Lanka Economic and Investment Summit (SLEIS) 2026, BOI Board Member Vish Govindasamy said the agency would like a bigger zone at the Hambantota port to support clean energy, electric vehicle (EV) production and vehicle parts, as the port brings in most of the country’s vehicle imports. Logistics is a key focus area, he said, with almost 300 ships passing Sri Lanka daily.

Govindasamy conceded that incentives had not been attractive of late. Export-oriented companies currently receive incentives negotiated industry by industry, while significant incentives are reserved for investments of over $ 50 million under the Strategic Development Projects Act. A new incentive scheme for future investors is now being worked out, he said.

Since most FDI in Sri Lanka has come from existing investors reinvesting, those investors must also be encouraged, he added. “Most of our investors, once they invest, continue to invest. We need to make sure those flagship investors are given priority going forward,” Govindasamy said.

He identified policy consistency as the most important reform. “One of the things that has not worked for us in the past is inconsistent policy. Overnight changes in policy have not allowed us to attract more FDI,” he said. Investors needed clear policies over three, five, seven and 10 years, without regulations being applied retrospectively, he added.

Labour reform, discussed for decades, is also essential as Sri Lanka is not competitive on labour compared with its neighbours, Govindasamy said, calling for the workforce to be built up through the education system to meet the needs of priority sectors. Policy, labour reform and incentives were the immediate requirements to attract FDI, he summed up.

On land, a major hurdle for investors, the BOI now holds the first full database of all land available for investment, with ownership identified, he said. Much of it belongs to State agencies such as the Forest Department, environmental authorities, defence forces and wildlife authorities, whose clearances the BOI can help obtain. Govindasamy stressed that the land must be used without environmental harm, which was a serious concern for Sri Lanka.

Investors can set up anywhere in the country, but the BOI also operates 17 zones, including its main zone opposite the international airport. Three new zones in the North are under development, and Govindasamy invited investors to consider developing them on a build-operate-transfer (BOT) basis. Some 278 active companies in BOI zones export about $ 3 billion, he said.

The BOI acts as a one-stop shop, coordinating approvals across agencies, and its applications are fully digitised. However, Govindasamy admitted coordinating 30 to 40 agencies remains a big challenge, and approvals involving environmental clearance take longer due to stringent regulations. The BOI is working to ensure investors obtain all approvals through it without having to deal with multiple agencies.

Sri Lanka allows 100% foreign ownership in all but a few sectors, such as banking and coastal fishing, and 100% profit repatriation, with initial investments brought in through designated bank accounts that allow profits and principal to be repatriated at any time. The country is a signatory to the World Bank’s Multilateral Investment Guarantee Agency (MIGA) and has double taxation relief agreements with 46 countries.

Sri Lanka’s free trade agreements (FTAs) with India and Pakistan give investors access to about 1.7 billion consumers, rising to around two billion with Singapore, Govindasamy said. India has been one of the largest investors in Sri Lanka, both directly and through other countries. The BOI, he added, currently favours companies setting up for export rather than for the domestic market.