US flags bureaucratic failures in investment framework
Sri Lanka’s Board of Investment (BOI) fails to act as a true “one-stop shop” for investors due to scrappy authority, lengthy approval processes, and poor communication, which undermines investor confidence, the US State Department’s 2025 Investment Climate Statement revealed.
The report notes that despite the BOI’s role of investment promotion, its efforts are hampered by a lack of inter-ministerial coordination and issues like inconsistent policies and regulatory hurdles.
This investment promotion agency struggles to function as a one-stop shop because its authority is fragmented across multiple government departments, leading to long and frustrating approval processes for investors
It struggles to function effectively due to lengthy approval processes that frustrate potential investors.
Investors report challenges in having a consistent and open dialogue with the investment agency. Other key impediments include unnecessary regulations, legal uncertainty and poor bureaucratic responsiveness.
Foreign investors consistently report high transaction costs, unpredictable policies, and opaque procurement procedures, the report pointed out. The State Department expressed concern on the government’s action to stall the implementation of Sri Lanka’s Economic Transformation Act (ETA), passed in July 2024 setting parametres to abolish the BOI in favour of five new agencies:
The report states that Sri Lanka can unmistakably stabilise and strengthen its foreign investment climate by establishing five institutions under its new Economic Transformation Act. They include the Sri Lanka Economic Commission, Office for International Trade, National Productivity Commission, and Sri Lanka Institute for International Trade. They are collectively to streamline regulatory processes, enhance investors’ confidence, and ensure greater policy stability, towards an investor-friendly and more predictable regime.
However, the report highlights that there are recurring problems in the BOI which it refers to as a monumental deterrent to foreign investors. It gives credit to the criticism regarding the agency’s over-bureaucracy, policy inconsistency, and chronic delays in the clearance of projects.
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