Sri Lanka to ease foreign ownership restrictions

DUBAI (Reuters): Sri Lanka will allow foreigners full ownership of businesses if they invest more than $ 10 million, a Minister said, and the measure will likely be introduced within two months.

The proposed change comes as the $ 59 billion economy is struggling to attract Foreign Direct Investments (FDI) into the island nation despite gradually stabilising macroeconomic economic conditions since the end of the war in 2009.

Sri Lanka achieved only half of its FDI target of $2 billion last year, and has lowered its target to $ 1.5 billion in 2013.

At present, foreign investors can own up to 40% of a Sri Lankan business, with the remainder held by local partners.

“It is almost finalised and in one or two months it will come (into force),” Deputy Minister of Economic Development Muhammad Hizbullah told Reuters on the sidelines of a tourism exhibition in Dubai.

Since the end of the war, Sri Lanka has seen a surge in tourism investment, but investments into other sectors have been far below expectations and economists have attributed some of the Government’s inconsistent economic and investment policies for the shortfall in FDI.