Friday Aug 29, 2025
Friday Aug 29, 2025
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BOI Chairman Arjuna Herath
The BOI is positioning Sri Lanka as an investment hub in South Asia, with rising interest from Indian-based US companies, and those from Japan, and Vietnam in addition to investors from India and China.
BOI Chairman Arjuna Herath told Daily FT that investors have immense potential to use the island as a gateway to South Asia and European markets.
Herath told Daily FT that apparel buyers from India and Indian apparel manufacturers, facing high reciprocal tariffs from the Trump administration, are considering subcontracting and order-sharing with Sri Lankan producers. “We have been talking to Sri Lankan apparel manufacturers to consider these arrangements because one way we all can deal with global trade uncertainties is to strengthen South-South collaboration,” he said.
A consortium of US firms operating in India has also begun exploring opportunities in Sri Lanka. The US Chamber of Commerce in India engaged the BOI in discussions that may include joint ventures. “The US Chamber of Commerce in India has a mandate to build partnerships in South Asia, and they are showing a keen interest in Sri Lanka. We hope to advance the India Plus One model, which will be beneficial for both countries,” Herath said.
Japanese and Vietnamese investors are also reviewing the BOI’s planned industrial zones.
Earlier this month a delegation from Vietnam’s ROX Group visited Sri Lanka and met with President Anura Kumara Disanayake to discuss potential investments in an industrial zone, renewable energy, and real estate. The ROX Group specialises in developing special economic zones and industrial parks.
The industrial park arm of ROX Group has attracted more than $ 3.5 billion in foreign direct investment from over 500 investors representing 22 countries, according to company data. The unit has developed 14 industrial parks across Vietnam, covering about 3,000 hectares, over the past 27 years.
Herath said Sri Lanka is also promoting itself as a staging point for Chinese firms looking to extend supply chains into the subcontinent and beyond.
Herath said the BOI operates 15 industrial parks and special economic zones that are now at 90% capacity. Seven new zones are planned, two of which will open by the end of 2025. Kankesanthurai in the Northern Province will dedicate 300 acres to apparel, IT, and other industrial ventures. “There is a captive source of labour for apparel manufacturing in the North, with the closest apparel manufacturers located in Killinochchi. We also see demand for tech ventures and training centres, which we hope to attract to this location,” Herath said.
A second site in Paranthan, also in the North, will be a 200-acre zone for chemicals and industrial manufacturing. The State-owned Paranthan Chemicals Company will operate a factory in the zone, and private investment will be sought through a joint venture under a public-private partnership (PPP) model.
Five more zones are set for 2026. Mankulam will focus on agriculture, dairy, and fisheries processing and exports. Iranawila will be for tourism-related investments. Eravur will support apparel raw materials through backward integration. Hambantota will be developed as a pharmaceutical hub. Kappalthurai in Trincomalee will target logistics and large-scale industry. Additionally, two IT parks in Kurunegala and Galle will be developed on a PPP basis.
The expansion follows a sharp rebound in foreign direct investment. Realised inflows reached $ 507 million in the first half of 2025, more than double the $ 252 million a year earlier. In the same period, 57 new projects worth $ 569 million were approved, including $ 320 million in foreign investment.
Herath said the performance reflects growing confidence in reforms and the investment climate. The Government is also in talks with the IMF on further concessions to attract investment and reduce debt.
Herath’s remarks point to a broader strategy to anchor Sri Lanka in shifting supply chains. By engaging Indian-based US ventures, drawing interest from Japan and Vietnam, and offering a platform for Chinese exporters, the BOI is presenting the country as a neutral but strategic link in Asia’s trade network.
