The Board of Investment of Sri Lanka (BOI) has celebrated a significant milestone in 2025, claiming that foreign direct investment inflows exceeded $1 billion an increase of 72% over the previous year. While this announcement has been presented as proof of renewed global confidence and institutional transformation, deeper scrutiny of the BOI’s calculation methods raises serious doubts about the actual FDI position in Sri Lanka.
A closer look at the data reveals that only $167 million of the reported $1,057 million inflows came from equity capital. The remaining sum comprises $213 million in re-invested earnings, $567 million in intra-company borrowings, and $110 million in foreign commercial borrowings. In other words, more than three-quarters of the FDI inflows are not new foreign money entering the country, but financial manoeuvres within existing multinational structures or external loans that do not directly improve Sri Lanka’s foreign currency reserves.
This raises a key question: is Sri Lanka truly attracting fresh international investment, or is the BOI simply repackaging internal financial movements as FDI?
The practice of counting intra-company loans and re-invested earnings as FDI has been criticized globally for inflating investment figures. Unlike equity capital, these flows do not represent a fresh transfer of foreign assets into the host economy. In fact, intra-company borrowings can be easily reversed, and re-invested earnings simply indicate that existing investors are reinvesting profits already generated locally an accounting entry rather than a new inflow.
If Sri Lanka’s FDI statistics are dominated by such components, the real signal of investor confidence is weakened. Equity inflows are widely regarded as the most reliable indicator of new foreign investment because they reflect long-term commitments, job creation, and transfer of technology. Yet in 2025, equity made up only 16% of the BOI’s reported FDI.
Furthermore, the BOI’s heavy reliance on “continuation and expansion projects” suggests that much of the reported investment is tied to existing businesses rather than fresh entrants. Only 13% of total inflows came from new projects approved in the year, which questions the sustainability of the claimed recovery.
The BOI’s presentation of the figures appears designed to signal success and build confidence. But if the statistics are not grounded in actual capital inflows, the government risks overstating economic resilience at a time when Sri Lanka desperately needs genuine foreign investment to stabilise its economy.
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