management know-how, and access to export markets-that are desperately needed in developing countries. However foreign capital can play an important role in raising investment levels so as to accelerate economic growth in Sri Lanka as in the case of many other developing countries which are handicapped by inadequate domestic savings. The purpose of this study is to examine the Government Policy on Foreign Investment in Sri Lanka. FDI increased initially due to the favourable investment environment created by the 1977 reforms. During the 1983-89 period, the incentives for FDI were eroded by the setbacks in the foreign trade and payments liberalisation momentum and the macroeconomic disequilibrium. Even though FDI was felt down in year 2000, there were increasing trend in FDI up to year 2008 and FDI was diminished as a result of global financial crisis in year 2009. Basically due to the secure macroeconomic environment, Sri Lanka reached highest level of FDI in 2014. The prospect for a significant expansion of FDI inflows in to Sri Lanka, however, do not seems too bright. To attract further investment, it is paramount that Sri Lanka be able to provide policy stability.
This article focuses on Indonesia’s progress in improving its policy framework for investment and asks what more can be done to attract high quality investment into the country.
Find out more at www.oecd.org/investment
Foreign Direct Investment. Political Economic Digest Series - XVIAkash Shrestha
In this issue, we will be discussing about Foreign Direct Investment (FDI).
Foreign Direct Investment has been a very productive tool for the economic growth of many countries. Recently after the government made the decision to celebrate 2012/13 as investment year and after the agreement with India i.e. Bilateral Investment Promotion and Protection Agreement, the topic of Foreign Direct Investment has been highly discussed among the lawmakers, policymakers and general public. The examples provided in this issue of different countries regarding FDI has shown how the growth rate is positively affected by the investment from outside the country.
Foreign Direct Investment (FDI) Flows in Nigeria: Pro or Economic Growth Averse?iosrjce
This study investigates the empirical relationship between Foreign Direct Investment and economic
growth in Nigeria. The work covered a period of 1981-2009 using an annual data from Central Bank of Nigeria
statistical bulletin. A growth model via the Ordinary Least Square method was used to ascertain the relationship
between FDI and economic growth in Nigeria. The study also added Gross Fixed Capital Formation with a
view to capture theeffect of domestic investment on the growth of the economy for the period under review.
Interest Rate and exchange rate were also added as control variables in the model. Granger causality test was
also employed to determine the direction of causality between FDI and economic growth in Nigeria. The result
of the OLS techniques indicates that FDI has a positive and insignificant impact on the growth of Nigerian
economy for the period under study. GFCF which was used as a proxy for domestic investment has a positive
and significant impact on economic growth.Interest rate was found to be positive and insignificant while
exchange rate positively and significantly affects the growth of Nigeria economy. Therefore, government should
provide an enabling environment that will encourage foreign investors to invest in Nigeria economy by
addressing the security challenges in the country, providing investment friendly environment by improved
regulatory framework as well as encourage domestic investment.
This article focuses on Indonesia’s progress in improving its policy framework for investment and asks what more can be done to attract high quality investment into the country.
Find out more at www.oecd.org/investment
Foreign Direct Investment. Political Economic Digest Series - XVIAkash Shrestha
In this issue, we will be discussing about Foreign Direct Investment (FDI).
Foreign Direct Investment has been a very productive tool for the economic growth of many countries. Recently after the government made the decision to celebrate 2012/13 as investment year and after the agreement with India i.e. Bilateral Investment Promotion and Protection Agreement, the topic of Foreign Direct Investment has been highly discussed among the lawmakers, policymakers and general public. The examples provided in this issue of different countries regarding FDI has shown how the growth rate is positively affected by the investment from outside the country.
Foreign Direct Investment (FDI) Flows in Nigeria: Pro or Economic Growth Averse?iosrjce
This study investigates the empirical relationship between Foreign Direct Investment and economic
growth in Nigeria. The work covered a period of 1981-2009 using an annual data from Central Bank of Nigeria
statistical bulletin. A growth model via the Ordinary Least Square method was used to ascertain the relationship
between FDI and economic growth in Nigeria. The study also added Gross Fixed Capital Formation with a
view to capture theeffect of domestic investment on the growth of the economy for the period under review.
Interest Rate and exchange rate were also added as control variables in the model. Granger causality test was
also employed to determine the direction of causality between FDI and economic growth in Nigeria. The result
of the OLS techniques indicates that FDI has a positive and insignificant impact on the growth of Nigerian
economy for the period under study. GFCF which was used as a proxy for domestic investment has a positive
and significant impact on economic growth.Interest rate was found to be positive and insignificant while
exchange rate positively and significantly affects the growth of Nigeria economy. Therefore, government should
provide an enabling environment that will encourage foreign investors to invest in Nigeria economy by
addressing the security challenges in the country, providing investment friendly environment by improved
regulatory framework as well as encourage domestic investment.
Foreign capital inflow in india- analysis , impact , measure , wayforwardAman Sindhwani
Foreign Investment In India ,Need for foreign capital, factors affecting foreign Inflows , Capital Flows in India , impact , Measures and a way forwards
The present situation of foreign direct investment in Bangladesh comes next in the report. This part shows us foreign direct investment in Bangladesh is increasing gradually though still not up to the satisfactory level with some necessary statistics. The foreigners perceive Bangladesh as a country of natural disaster and political instability which is another reason for the low flow of invest able funds.
This was presented by CA. Sudha G. Bhushan as a key note speaker in the national seminar on Foreign INvestment Flows in India organised by Lala Lajpat Rai Institute of Management.
Growth and Development of FDI on Indian EconomyIJMER
India has been attracting substantial of foreign direct investment since last few decades,
highly in services sector, telecommunications, software products, real estate etc. FDI are highly
promoting manufacturing sector of India’s exports & attracting more number of earnings on Foreign
exchange, Institutional Investments, MNCs and speeding up our economic growth through Technology
transfer, Employment generation and improved access to managerial expertise, global capital, product
markets and distribution network. FDI bring out the generation-wise innovation, hidden technology,
spending more on research & development to retain our strength in the globalised competitor
products. Indian economy is going to over track the developed and developing countries. Recently, due
to the recession most of the countries have not able to run their investment as well, but India has been
managed better then developed country without elevated struggling. This paper analyzes the growth
and development of FDI and it discussed the Indian economic growth through FDI. In addition it
explains and showed the various sector-wise FDI performances in India
Determinants of Foreign Direct Investment in Nigeriaijtsrd
Extant literature is replete with the benefit of attracting Foreign Direct Investment FDI into an economy, it not only provides developing countries with the much needed capital for investment it also enhances job creation, managerial skills as well as transfer of technology. However, attracting and sustaining FDI inflow in Nigeria have remained a teething problem. This study therefore examined the determinants of foreign direct investment in Nigeria. Specifically the study provides empirical evidence on the influence trade openness, market size, infrastructure, human capital, labour force, natural resources, exchange rate and inflation rate on Foreign Direct Investment FDI in Nigeria using an econometric regression technique of the Ordinary least square OLS . The findings of the study also show that trade openness, market size, infrastructure, exchange rate and inflation rate are statistically significant in explaining the foreign direct investment in Nigeria while human capital, labour force and natural resources are statistically insignificant in explaining the growth of foreign direct investment in Nigeria. The study recommends that The government should make polices that will create a business friendly environment to attract FDI inflows in economy. The government should provide the needed leadership and also ensure political stability in the country. This will attract investors to take the advantage of the market size of the country to FDI into the economy. The government should make policies that will favour trade openness. Trade openness is found to be factor that attracts investors invest in the country. This is lesser barriers to trade encourages investment and the government should provide the needed infrastructure. Necessary infrastructures that will reduce the cost of doing business should be the watch word of every government. Dibua, Emmanuel Chijioke | Edoko, Tonna David | Onwuteaka, Ifeoma Cecilia "Determinants of Foreign Direct Investment in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-5 , August 2019, URL: https://www.ijtsrd.com/papers/ijtsrd25293.pdfPaper URL: https://www.ijtsrd.com/management/public-sector-management/25293/determinants-of-foreign-direct-investment-in-nigeria/dibua-emmanuel-chijioke
Foreign capital inflow in india- analysis , impact , measure , wayforwardAman Sindhwani
Foreign Investment In India ,Need for foreign capital, factors affecting foreign Inflows , Capital Flows in India , impact , Measures and a way forwards
The present situation of foreign direct investment in Bangladesh comes next in the report. This part shows us foreign direct investment in Bangladesh is increasing gradually though still not up to the satisfactory level with some necessary statistics. The foreigners perceive Bangladesh as a country of natural disaster and political instability which is another reason for the low flow of invest able funds.
This was presented by CA. Sudha G. Bhushan as a key note speaker in the national seminar on Foreign INvestment Flows in India organised by Lala Lajpat Rai Institute of Management.
Growth and Development of FDI on Indian EconomyIJMER
India has been attracting substantial of foreign direct investment since last few decades,
highly in services sector, telecommunications, software products, real estate etc. FDI are highly
promoting manufacturing sector of India’s exports & attracting more number of earnings on Foreign
exchange, Institutional Investments, MNCs and speeding up our economic growth through Technology
transfer, Employment generation and improved access to managerial expertise, global capital, product
markets and distribution network. FDI bring out the generation-wise innovation, hidden technology,
spending more on research & development to retain our strength in the globalised competitor
products. Indian economy is going to over track the developed and developing countries. Recently, due
to the recession most of the countries have not able to run their investment as well, but India has been
managed better then developed country without elevated struggling. This paper analyzes the growth
and development of FDI and it discussed the Indian economic growth through FDI. In addition it
explains and showed the various sector-wise FDI performances in India
Determinants of Foreign Direct Investment in Nigeriaijtsrd
Extant literature is replete with the benefit of attracting Foreign Direct Investment FDI into an economy, it not only provides developing countries with the much needed capital for investment it also enhances job creation, managerial skills as well as transfer of technology. However, attracting and sustaining FDI inflow in Nigeria have remained a teething problem. This study therefore examined the determinants of foreign direct investment in Nigeria. Specifically the study provides empirical evidence on the influence trade openness, market size, infrastructure, human capital, labour force, natural resources, exchange rate and inflation rate on Foreign Direct Investment FDI in Nigeria using an econometric regression technique of the Ordinary least square OLS . The findings of the study also show that trade openness, market size, infrastructure, exchange rate and inflation rate are statistically significant in explaining the foreign direct investment in Nigeria while human capital, labour force and natural resources are statistically insignificant in explaining the growth of foreign direct investment in Nigeria. The study recommends that The government should make polices that will create a business friendly environment to attract FDI inflows in economy. The government should provide the needed leadership and also ensure political stability in the country. This will attract investors to take the advantage of the market size of the country to FDI into the economy. The government should make policies that will favour trade openness. Trade openness is found to be factor that attracts investors invest in the country. This is lesser barriers to trade encourages investment and the government should provide the needed infrastructure. Necessary infrastructures that will reduce the cost of doing business should be the watch word of every government. Dibua, Emmanuel Chijioke | Edoko, Tonna David | Onwuteaka, Ifeoma Cecilia "Determinants of Foreign Direct Investment in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-5 , August 2019, URL: https://www.ijtsrd.com/papers/ijtsrd25293.pdfPaper URL: https://www.ijtsrd.com/management/public-sector-management/25293/determinants-of-foreign-direct-investment-in-nigeria/dibua-emmanuel-chijioke
Industrial Policy, Fiscal Policy and Licensing PolicyPRASOON VERMA
The presentation on Industrial Policy of India, Fiscal Policy of India and Licensing Policy of India and can be used to learn and present as economics assignment
Microfinance and the Challenge of Financial Inclusion for Sme’s Development i...IOSRJBM
This paper examined microfinance and the challenge of financial inclusion for SMEs development in Nigeria. The study adopted two separate econometrics models for capturing and testing for significance in the stated objectives between 2005 and 2015. The first model determined whether financial inclusion improve the financial well-being of low-income savers in the study period. The second investigated the impact that micro finance has on the performance of small and medium scale enterprises. Each of the models was subjected to the Ordinary Least Square regression to determine the appropriateness of models estimated. Findings from the empirical results in model one (1) and two (2) indicated relationship between financial inclusion in Nigeria, microfinance, and small business enterprises over 10 years period of study. The study found out that there is a significant relationship between financial inclusion and financial well – being of the low income earners. Empirical finding that examines the relationship between microfinance and small business in Nigeria indicates that there is a negative significant relationship between loan to small enterprises and loan to rural areas in Nigeria in the period under study. The study suggests therefore that financial inclusion will have a positive significant impact on the development of small business if the plan to include everyone works in Nigeria.
Corporate Capital of Domestic and Foreign Firms in Africa – An Empirical ReviewIOSRJBM
The study evaluated the existence and nature of systematic competition for corporate capital between local and foreign firms operating in major African economies. The study is motivated by the debate that foreign firms have easier access to corporate capital than domestic firms, and that the problem in the global financial market might push foreign firms to rely more on domestic financial markets for funds. To achieve the goal of this study, both microeconomic and macroeconomic data were sourced from diverse sources – including the World Bank's Global Development Indicators' database and the individual annual financial reports of firms. The data generated a total of 351 firms based in 11 African countries over a period 2009 to 2014. The results show that the average ratio of total liabilities to total assets is slightly higher among the listed foreign firms (at 48.8 percent) than among the listed domestic firms (47.9 percent), although the differences does not appear significant at conventional levels (t-statistic = 0.601; prob.>t = 0.548). For the whole sample also, it is shown that foreign firms have higher long-term liabilities to total asset ratio than domestic firms, and that the difference is significant at 10 percent level. Whereas the average long-term debt ratio among foreign firms stands at 12.1 percent, for domestic firms, the level is 10.7 percent (t-statistic = 1.751; prob.>t = 0.080). In none of the four sub regions, though, does the difference in the long-term debts ratio significantly differ between domestic and foreign firms. Consistent with the statistical evidence, the descriptive results seem to suggest that the survey evidence reported by the World Bank that in Africa, foreign firms are more profitable, larger, more valued in terms of investments in fixed assets, and older than domestic firms is not true. However, as shown in this report, such differences, with the exception of asset tangibility and age, are not very significant at conventional levels. This suggests that the major source of competition for corporate finance in Africa may be on the extent of collateral value and the reputation that arises from firm age
Improvement for Criterion for Minimum Solution of Inventory Model with Algebr...IOSRJBM
For algebraic method to find the minimum point and value of inventory models, we derive the criterion to guarantee the existence and uniqueness of the interior optimal solution. Our findings will help researchers and practitioners apply inventory models in their research without referring to partial derivatives of calculus.
The Relationship between Foreign Trade and Financial Performance of the Liste...IOSRJBM
The main objective of this study was to determine the relationship between foreign trade and financial performance of the listed manufacturing companies in Nigeria. The study focused on the 32 listed companies randomly drawn from the 74 listed manufacturing companies in Nigeria. The secondary data extracted from the financial statement of these companies were subjected to both descriptive and inferential statistics. The result shows a significant positive relationship between the two variables. It was therefore recommended that the management and the board of directors of the listed manufacturing companies should intensify efforts on how the locally produced products will be able to penetrate into the foreign countries as it was discovered that majority of the goods produced by the manufacturing companies in Nigeria are consumed locally
The Relationship between Dividend Policy and Shareholder’s Wealth (A Case Stu...IOSRJBM
This research is about the relationship between dividend policy and shareholder’s wealth from 37 mining companies listed in Indonesia Stock Exchange (IDX) from 2011 to 2013. Independent variable which is used in this research are dividend policy and profitability. Dividend policy is measured as dividend per share (DPS) and profitability is measured as Return On Equity (ROE). Dependent variable which is used in this research is shareholder’s wealth. Shareholders’ wealth is measured as Market Price Per Share (MPPS). Investment opportunity which is measured as fixed asset growth, is used as moderating variable which can strengthen the relationship between independent and dependent variable. The result of this research proves that dividend policy has significant influence to shareholder’s wealth, while investment opportunity, as a moderating variable, is proven to strengthen the relationship between dividend policy and shareholder’s wealth.
Understanding Attitudes towards Gasoline Import Demand in Viet NamIOSRJBM
Even with its vast reserves of oil and gas potential, the government has put this fuel resource the top of priority sectors for development, as it views as central to national economic growth as well as energy security, Viet Nam has remained a net importer of petroleum products over the past eight years. On another word, Gasoline importation has been a superior absorbability on the economy of Viet Nam, the determinants of the refined oil products imported activities analysis have been found no study yet. This paper aims to suggest the leading factors affecting import demand performances for petroleum products. The autoregressive distributed lag modelling framework (ARDL) have applied to this research; we estimated various short-run and long-run import demand models for Gasoline using time series study over the period 1995-2015. The results showed that the application of gas is stable prices in both the long and short term. Other principal operators of gas import probably are the real effective exchange rate, domestic petroleum production, and population growth. Moreover, a real economic activity found the most active and influential driver of gasoline demand accordance with the inelastic and elastic coefficients estimated in the short-run and long-run, respectively.
Cost-Volume-Profit Analysis as a Management Tool for Decision Making In Small...IOSRJBM
This study aimed to figure out if small business enterprises utilize cost volume profit (CVP) analysis as a management tool for decision-making process in Bayero University Kano, with a view to shed light on the reality of the use of CVP analysis as a decision-making tool in small business enterprises. The study population is made up of the entire small business enterprises within Bayero University, Kano. Primary source of data were utilized using structured questionnaires. The hypotheses were tested using Mann-Whitney U test and Pearson correlation coefficient. A very weak relationship (0.02) was recorded, it was discovered that there is no statistical significant difference between having the knowledge of a management accounting tools and its application. The study concludes that small business enterprises utilize CVP ignorantly and it is recommended
From Local to Global- Indian Organic Produce an OverviewIOSRJBM
Organic products have a growing market both in India and globally. The study focuses to explore the strengths and weaknesses of this industry so as to tap the global demand and achieve the export target for organic products. The study will aim to perform SWOT analysis and develop TOWS matrix which will provide an insight to the players of Organic market at all levels. The strategies framed are completely based on the researcher’s interpretation of the information collected from secondary sources and telephonic interviews of the agencies
Analysis of Internal, Market & Economic Based Financial Performance Measureme...IOSRJBM
The aim of this study is to investigate the financial performance of 10 commercial banks listed on Dhaka Stock Exchange. In this paper, financial performance has been measured by using three indicators. Internal–based performance measured by Return on Assets, Market-based performance measured by Tobin’s Q model (Price / Book value of Equity) and Economic–based performance measured by Economic Value adds. The correlation and multiple regression of annual time series data is used to find the impact of bank size, credit risk, operational efficiency and asset management on financial performance measured by the three indicators, The study rejected the null hypothesis and it is found that there exist statistically significant impact of bank size, credit risk, operational efficiency and asset management with ROA and Economic Value Added. On the other hand Tobin’s Q has insignificant impact on financial performance of commercial banks
Factors Influencing Purchase Decision of InstitutionalBuyers in Bangladesh: T...IOSRJBM
The Bangladeshi poultry industry is gradually becoming a leading industry in the Bangladeshi market. It is a labor- intensive sector which does not require lengthy training. Almost anyone can be engaged in the poultry farming because it can be done either on a larger scale or in one’s backyard. The purpose of the study is to identify the institutional buyer preference and to find out the purchase criteria factors which influence the purchase decision of the institutional buyers of poultry chickens in Bangladesh. A total of 110 respondents from 8 different categories of institutional buyers, who were directly related to poultry business were randomly selected to be the respondents for the collection of information within the Dhaka Metro City. All factors were randomly selected towards the collection of relevant information following pretested questionnaire. Advance statistical tools were applied for analysis of collected data. A factor analysis was conducted to identify the purchase criteria factors i.e. Brand, Freshness, Halal, How chicken are raised, Meat Cuts (Breast / Leg), Nutrition Value, Packaging, Price Sensitivity, Processed, Production Technology and Taste. Findings from the factor analysis showed that packaging, processed, production technology, taste and how chicken are raised have a significant effect on the selection of purchase criteria of the institutional buyers and their preference..
Effect of Public Services Quality on Satisfaction and Its Implication on Publ...IOSRJBM
: This research aims to determine: 1) The influence of the public services quality on public satisfaction at Samsat Office Kendari City. 2) The effect of public services the quality on public trust at Samsat Office Kendari City. 3) The effect of public satisfaction on public trust at Samsat Office Kendari City. 4) The mediate effect of public satisfaction in strengthening the influence of public services quality on public trust at Samsat Office Kendari City.The design of this research is associative (causal) design. The object of this research is the people who employ Samsat Office services. The samples were taken by purposive sampling (designation intentionally) which employ 110 respondents. The analysis used is descriptive statistical analysis and analysis of Partial Leas Square (PLS).This research concluded that: 1) The public services quality significantly influence the public satisfaction on Samsat Office Kendari City. it indicated that the good quality of public services is reflected by accountability, responsiveness, orientation to service and efficiency indicators which will increase the public satisfaction which is reflected by their attitude to respect service officers, abide by the rules, is proud of the work of the officers, has the spirit and initiative, and avoid of conflict. 2) The quality of public services does not significantly affect the public trust on Samsat Office Kendari City. This means that the public service quality at Samsat Office Kendari city cannot increase public trust significantly caused by the public tust in the service officer has not been optimal. 3) Public satisfaction has significant effect on public trust on Samsat Office Kendari City. This means that the public satisfaction will increase public trust which is reflected by the increasing of public trust in the service facilities. 4) Public Satisfaction mediates the effect of public services quality on public trust on Samsat Office Kendari City. This means that public satisfaction can strengthen the influence of public services quality on public trust.
Impediments and Inducements to Youth Entrepreneurship Development in Sylhet R...IOSRJBM
The purpose of this paper is to explore and identify the key impediments and constraints that obstruct young people from starting and running a new venture and at the same time, inducements and stimuli that trigger youths to entrepreneurial activities. Data were collected from 80 young entrepreneurs of Sylhet, Bangladesh through a questionnaire gleaned from the literature review following a convenience and purposive sampling technique. Findings revealed, insufficient personal savings, high interest rate, and negative attitude of financial institutions to young entrepreneurs due to high default rate are the major impediments to obtaining start-up fund, being their own boss and earning more money are the prime inducements to engage in business. Parents and teachers influenced most to start business while financial risk reported as the most critical demotivator. Managing fund and fierce competition are main problems in running the business successfully. Lack of vocational education and training and inappropriate and inadequate curriculum and study programs are the key educational constraints, unsupportive tax regulations, complex business registration procedure are the leading administrative and regulatory barriers, dearth of information on available business support services and lack of training and business counseling are the major impediments of business support services. The implications of the study bear far-reaching ramifications to the concerned stakeholders for facilitating and encouraging youth entrepreneurship development by addressing the start-up constraints and problems
An Overview of Export Performance of Agricultural Products in IndiaIOSRJBM
Exports are the basis of the overall growth performance of any country. By increasing the rate of exports, any developing country can pave a way for the development by earning international liquidity thereby; sort out the problem of reserves to start up of any project to come out the circle of poverty. So, it becomes a paramount importance for the country like India to start export promotion measures to boost up the pace of its exports and India has already taken many steps to increase the level of its exports. It is concluded from the results of the study that Cotton raw including waste, iron ore, plastic and linoleum and transport equipment has been observed as the products in which exports have been increased at the maximum rate, whereas exports of Tea, Iron and steel, Mica and Leather and Manufacturing have been identified as the area in which satisfied results have not been achieved. So, it is suggested by the results of study that government should promote exports of different sectors by providing different incentives to different sectors to avail the opportunity and fill up the gaps as well. Indian agricultural export has undergone significant changes during recent times. In this context, the present study has analysed the trend in exports of agricultural commodities from India, the changes in the comparative advantage, the Indian agricultural export scenario has witnessed during the past decade and the prospects for further boosting the agricultural export. The study has also analysed the comparative advantage of India’s exports, through revealed comparative advantage (RCA). The RCA was improving in case of cotton, maize, and certain fruits and vegetables over time, but declining in case of some spices, rice and wheat. In case of plantation based spices and other commodities, India is gradually losing its comparative edge, mainly to Asian countries. The study has so identified yield improvement through growth in total factor productivity (TFP) as a potential factor that would result in generation of exportable surpluses and boosting India’s export
Job Satisfaction and Faculty Turnover Intentions: A Case of Pakistani Univers...IOSRJBM
Retaining faculty members has been a problem in many universities for decades. When competent teachers quit, they depart with critical knowledge and experience that are essential for maintaininga competitive advantage. The aim of this study was to measure the impact of four facets of job satisfaction on turnover intentions of faculty members of different universities of Rawalpindi/Islamabad. A 16-item, selfadministered questionnaire was used to gather data on independent and dependent variables. In questionnaire, researchers used 5 point Likert scale for variables to measure respondent’s possible responses. 110 questionnaires were completed and returned back. Pearson Correlation and Multiple Regression tests were used to test the hypothesis. The results showed that the three facets of job satisfaction i.e. remuneration, supervisory support and work life policies have significant and negative relationship with turnover intentions while recognition has insignificant relationship with turnover intentions and this relationship did not support the researchers’ prediction. Results have been discussed andrecommendations have been made for universities’ administrations.
Health System in India: Opportunities and Challenges for EnhancementsIOSRJBM
One of the basic vitalities of good living is quick access to essential services like health care. But many times it could mean a condition of life and death for an individual who is unable to get the access to these services. Thus an important part of social sector development is incomplete without adequate health care facilities. The quality of human health is the foundation upon which the realization of life goals and objectives of a persona, the community or nation as whole depends. It is both an end and means of development strategy. The relationship between health and development is mutually reinforcing- while health contributes to economic development, economic development, in turn, tends to improve the health status of the population in a country. India as a nation has been growing economically at a rapid pace particularly after the advent of New Economic Policy of 1991. However, this rapid economic development has not been accompanied by social development particularly health sector development. Health sector has been accorded very low priority in terms of allocation of resources. Public expenditure on health is less than 1 per cent of GDP in India. This research paper focuses on the current status of the Indian healthcare industry, the challenges faced plus the comparison of few selected Indian states based on health indicators. Furthermore comparison of India with some developed and developing countries is also employed in order get the clear picture of the health sector. In order to boost the development line, some opportunities in the health care industry are also discussed and necessary policy implications. Regarding in this connection India lags behind in regard of health improvement as compared to U.S.A, Canada, China, and Brazil, but contrary to other developing countries like Pakistan, Bangladesh the scenario is better with life expectancy, Mortality ratios, health care spending speak volumes about the healthcare status. When analyzed through the prism eye, within India there are large disparities amongst states in achieving health outcomes as well. Before liberalization the improvement was at a snail’s pace, but after liberalization the whole picture changed because the key initiatives to improve the current healthcare standard a two prong strategy focusing on the infrastructure needs and the technology solution were implemented, which resulted in the healthy scenario of the healthcare industry. Healthcare sector, a leading weapon as the contributor to GDP (approx.8%) is thus the matter to be deeply looked into, so that golden harvest is reaped.
Total Quality Management (TQM) Practices toward Product Quality Performance: ...IOSRJBM
The purpose of this research was to test and analyze the effect of TQM practices impelementation which consists of leadership, strategic planning, customer focus, information and analysis, people management, and process management to product quality performance. The population were 108 food and beverage companies in Makassar, Indonesia. Respondents are production managers or operation managers. Sample technique which used is population sampling. Method of analysis which use both descriptive statistic and Structural Equation Modelling (SEM). Data processing uses two statistic tools i.e: IBM SPSS and AMOS 19.00. The findings of research indicate that leadership has significant effect on product quality performance, strategic planning has significant effect on product quality performance, customer focus has significant effect on product quality performance, information and analysis has significant effect on product quality performance, people management has significant effect on product quality performance, and process management has significant effect on product quality performance. Leadership factor has dominant effect on product quality performance (critical ratio = 9.760 > t-table = 1.960; and probability = 0.000 < α = 0.05).
The Influence of Work Culture, Work Stress to the Job Satisfaction and Employ...IOSRJBM
This research was carried out starting from the phenomenon of the performance which was not maximized by the employees of State Treasury Service Office in Jakarta. Based on the literature there was a suspicion that the performance which was not maximized due to a weak work culture, work stress and the decreasing of job satisfaction. The purpose of this research was to quantify and explain the relationship between variables of work culture, work stress, job satisfaction and employees performance in the State Treasury Service Office Jakarta. The research method was using quantitative methods. Research locations were located in six State Treasury Service Offices in Jakarta with samples of 152 employees. Data analysis technique was using Partial Least Square (PLS) with the help of Smart program. The results showed that the work culture has no effect on job satisfaction. Work stress has no effect on job satisfaction. Work culture affected to the employee performance. Work stress had no effect on employee performance. Job satisfaction had no effect on performance. The implication of this research was to establish a strong working culture to decrease work stress and increase job satisfaction which ultimately improved employee performance.
Work-Life of Indian Railway's Drivers (Loco-Pilots)IOSRJBM
Railways’ Drivers / Loco-Pilots are the most important person in executing the huge task of transporting nearly 25 Million passengers and more than 2.8 Million Tons of freight daily with the help of 2,29,381 wagons, 59,713 coaches and more than 9,213 locomotive engines of various kinds(www.Indian railways, Wikipedia).To transport 25 million passengers and millions of tons of freight and that too with taking care of both the traveler’s convenience and safety is not a mean task, the driver on whose sincerity the journey of a train depends. If he is not capable of carrying his responsibilities then the efforts of the other employees go waste, in this sense we can say that he is the most important person of the railways. The job of a Railway Driver demands hard work and great presence of mind along with courage to handle diverse conditions. For this one should have discipline, patience, responsibility, punctuality, commitment, courage and above all self-confidence. The job requires lots of hard work, stamina, alertness of mind, adaptability to follow difficult time schedules too. But the main and remarkable, highly appreciable role of Railway drivers is the only who works with full honesty, in day & night, in heavy cold, hot & Rainy weather. For Railways’ drivers operating on long distance routes, overnight stays in various locations will be necessary. Furthermore, it can be stressful, as delays and hazards on the track are not uncommon. His cab of the train should be relatively comfortable but it may be quite cold, hot and noisy.
Liquidity Determinants of Sharia and non Sharia StocksIOSRJBM
This study was conducted to analyze and testing stock liquidity differences of sharia and non sharia stock and determinants of sharia and non sharia stock of manufacturing industry at Indonesia Stock Exchange in 2009-2010. Dependent variable of this study is stock liquidity, measured by relative spread and depth. The Independent variable are insider ownership, institutional ownership, blockholder ownership, and foreign institutional ownership, trading volume, stock price, return volatility, Market to book value, dividend policy and size. In addition, this research is also supported by qualitative data obtained from in-depth discussions with key informants, including investment managers, stock exchanges institution and stock brokers. The results showed there is no liquidity difference, both for relative spread and depth of sharia a non sharia stocks. In sharia stocks, trading volume and dividend policy has a negative effect on relative spread, whereas in non sharia stock the trading volume, stock prices and company size has a negative effect on relative spread. Institutional ownership has negative effect, while foreign institutional ownership, trading volume, dividend policy, and size has positive effect on sharia stock liquidity. For non sharia stock, the trading volume, stock prices and company size has a positive effect on depth.
Motivating Employees Creativity through Suggestion System – An Empirical StudyIOSRJBM
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Data file handling has been effectively used in the program.
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The Government Policy on Foreign Direct Investment in Sri Lanka
1. IOSR Journal of Business and Management (IOSR-JBM)
e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 19, Issue 2. Ver. I (Feb. 2017), PP 58-64
www.iosrjournals.org
DOI: 10.9790/487X-1902015864 www.iosrjournals.org 58 | Page
The Government Policy on Foreign Direct Investment in
Sri Lanka
* K. M. Panditharathna, ** Dr. Lakmini V.K. Jayatilake
*Assistant Lecturer – Department of Commerce and Financial Management, Faculty of Commerce and
Management Studies, University of Kelaniya, Sri Lanka.
** Senior Lecturer – Department of Commerce and Financial Management, Faculty of Commerce and
Management Studies, University of Kelaniya, Sri Lanka.
Abstract: Unlike other forms of capital inflows, FDI almost always brings additional resources such as
technology, management know-how, and access to export markets-that are desperately needed in developing
countries. However foreign capital can play an important role in raising investment levels so as to accelerate
economic growth in Sri Lanka as in the case of many other developing countries which are handicapped by
inadequate domestic savings. The purpose of this study is to examine the Government Policy on Foreign
Investment in Sri Lanka. FDI increased initially due to the favourable investment environment created by the
1977 reforms. During the 1983-89 period, the incentives for FDI were eroded by the setbacks in the foreign
trade and payments liberalisation momentum and the macroeconomic disequilibrium. Even though FDI was felt
down in year 2000, there were increasing trend in FDI up to year 2008 and FDI was diminished as a result of
global financial crisis in year 2009. Basically due to the secure macroeconomic environment, Sri Lanka reached
highest level of FDI in 2014. The prospect for a significant expansion of FDI inflows in to Sri Lanka, however,
do not seems too bright. To attract further investment, it is paramount that Sri Lanka be able to provide policy
stability.
Keywords: Foreign Direct Investment (FDI), Economic Development, Investment, Policy, Sri Lanka
I. Introduction
Foreign Direct Investment (FDI) is play an important role in economic development. Closed economy
do not allow access to foreign savings. Therefore such economy has to finance through domestic savings. But in
an open economy investment can be finance using domestic sources as well as using foreign savings. There are
two kinds of foreign savings, they are; official foreign saving and private foreign saving. Foreign grants and
foreign aids are coming under official foreign savings and private foreign savings can be categorize as external
commercial borrowings, portfolio investment and foreign direct investment. Through FDI emerging countries be
able to achieve higher FDI level than their capacity.
Infrastructure facilities of a country are directly influence to upturn the productivity as well as
economic development. Therefore infrastructure facilities such as roads, telecommunication services, electricity,
and water supply are essential to the economic development. In 1977 Sri Lanka introduced open market
economy and FDI industrialization but most of other south Asian countries introduced FDI liberalization
policies after year 1980. When compare with other south Asian countries with Sri Lanka concerned US $ 40
million annual average FDI inflows (Jayathilake, 1999)
With the purpose of stimulating domestic investment and industrialization process in Sri Lanka main
objective of this study is to examine the Government Policy on Foreign Investment in Sri Lanka. In order to
achieve this objective, study has evaluated the Foreign Investment policy in the period after independence, and
during the period of 1977 to 2015.
II. Foreign Investment Policy before 1977
Since independence, various governments of Sri Lanka have issued policy statement regarding foreign
investments. Some of these documents have come out as White papers devoted to the subjects and others were
included in the Budget Speeches. All policy statements in that area have given indications as to several
important questions that arise when considering the subject of foreign investment. These include: the area of
which foreign investments are invited, the relationship of foreign capital to local capital, investment guarantees,
regulations regarding movements of funds and tax incentives.
The budget speech 1949-50 is one of the first documents in post-independent Sri Lanka that included a
section which spelled out a specific state policy regarding foreign capital. There was a general, open invitation
to foreign capital and, “……the government has framed its policy not only to enable further foreign capital to be
invested in Ceylon, on particular felids of investment in which the aid of foreign investment is desirable, and
2. The Government Policy on Foreign Direct Investment in Sri Lanka
DOI: 10.9790/487X-1902015864 www.iosrjournals.org 59 | Page
under conditions which safeguard the mutual interests already existing in Ceylon, to apply the same principles.”
(Budget Speech 1949-50).
In 1955, during the time of the second parliament under the United National Party (UNP), the first
expanded policy statement on foreign investment was presented to the Parliament by the Finance Ministry under
the document entitled “Government Policy in Respect of Private Foreign Investment in Ceylon”. It was the first
comprehensive policy statement on this matter and it reflected the same open ‘open door’ attitude as was
expressed by the earlier Budget Speech. This policy statement specified the government’s policy regarding some
area, such as the generation of partnership between foreign and local capital, the employment of local materials,
exchange restrictions on the movement of funds, taxation, the allocation of raw materials, and labour and the
problem of future nationalization.
The Ten Year Plan (1959-68) contained policy statements of foreign investment which were more
specific and more detailed. The Plan called for political guarantees against unwarranted nationalization, along
with specific incentives. It also stated the state’s position regarding adequate compensation that could freely be
remitted from the country in case of nationalization. The purpose behind this might have been to assure the
foreign investor that the populist sentiments prevailing in the country after the establishment of the new
government in 1956 did not pose any threat to them. Some of the thinking included in the plan was influence by
the ideas of foreign economists who visited the country during this period. According to the Ten Year Plan,
foreign investments are desirable specially for the process of industrialization in developing countries; direct
investments are preferable to loan arrangements; it is best to invite on a somewhat temporary basis, where the
investor will begin a project, continue to work on it for some times getting a return on their investment during
this time and then transfer ownership after a certain period to local hands. The sentiments of the Ten Year Plan
were reiterated in the Budget Speech of 1960 with an important clarification. Certain industrial sectors were
reserved for the state sector. This was the beginning of the expansion of the state sector in industrial
development. Apart from this, foreign investment were welcomed and the government gave guarantees
regarding the repatriation of profit.
The prevailing positive attitudes towards foreign investment that were reflected in these documents ran
into difficulties due to foreign exchange problems faced by the country in the 1960s. In his maiden Budget
Speech of 1964-65, N.M. Perera as the Finance Ministry declared a moratorium on all remittance of profits,
dividends, interest and other investment income for a period of one year in the first instance. Similar curbs were
introduced on the transfer of capital by the budget. Announcement were made about amendments to the
exchange control act and Import control legislation in order to curb import and exchange malpractices. These
measures directly affected the investment climate of the country.
The United Nation Party government came in to power in 1965 and action was taken to mend Sri
Lanka’s image in the eyes of foreign investors in order to encourage an inflow of capital to ameliorate the
adverse effect on industrialization of the foreign exchange shortage. It was announce in the 1965 Budget Speech
that the moratorium on dividends payable abroad would be removed in stages and in March 1966 the
government published a White Paper entitled “Government Policy on Private Foreign Investment”. The White
Paper had the effect of narrowing the exclusive domains of public enterprise, as determinant under the previous
government. Certain basic industries viz. Cement, Ceramics, Paper, Mineral sands, Caustic soda and Chlorine,
Plywood, Steel, Tyres and Tubs, Fertilizers and Petroleum were to remain in the state sector, through the White
Paper stated that the proposal of private foreign participation in these industries which would be considered. In
the rest of the industrial sector, foreign participation was particularly welcomed in the production of import
substitute and of goods with export prospects. The role of FDI in the export development drive received official
recognition for the first time in this White Paper which spelt out the ‘ability to export a greater part of output’
As the most important criterion of the foreign investment approval procedures. The White Paper stated that once
approved, the foreign investor enjoy the following benefits:
i. Free remittance of interest, profit and dividends.
ii. Free remittance of proceeds of the sale of liquidation of investments.
iii. Freedom to employ foreign managerial and technical personnel, though Ceylonese substitutes should be
progressively trained and employed.
iv. Limited but reasonable remittance of funds for the maintenance of foreign personnel.
v. Free remittance of reasonable royalty payments, technical service fees, etc.
vi. Transference abroad of the savings of the foreign personal on retirement.
vii. Security from expropriation and any form of discriminatory treatment. It is further stated that there is no
intention to nationalize any private undertakings, but if this was to become necessary, prompt, effective and
adequate compensation would be paid.
The White Paper not only restored the earlier attitude towards foreign investment but also began to set
the trends that continue even today. The key aspects of this trends was the laying of emphasis on export-
orientation in attracting foreign investment, and also the emergence of new areas such as tourism and fishing for
3. The Government Policy on Foreign Direct Investment in Sri Lanka
DOI: 10.9790/487X-1902015864 www.iosrjournals.org 60 | Page
foreign investors. The idea of export processing zones appeared for the first time in the 1966 White paper. A
Foreign Investment Advisory Committee (FIAC) was set up at the Ministry of Planning to function as the
official body in charge of approving and monitoring FDI.
With the change of government in 1970, the foreign investment approval procedure turned out to be
more selective and stringent. However, in line with the government’s commitment to the export diversification
drive, export oriented foreign investment was accorded preferential treatment. The Five Year Plan (1972-76)
had a section on the role of foreign investment and subsequently the government issued a White Paper on
foreign investment in 1972. As far as fundamental principles were concerned these documents also continued
the trend set in 1966, the emphasis on export orientation and the opening up of areas such as fishing and tourism
for foreign investors were clearly seen. The idea of Export Processing Zone was more concrete, with
Thrincomalee being mentioned as possible site. The difference between these documents and those of 1966 was
in the inclusion of several additional criteria in considering the investments. Such criteria as the use of local raw
materials, and the use of intermediates technology were included. A package of production and incentive s for
export oriented firms introduced by the Five Year Plan.
The policy shift in favour of export oriented foreign direct investment since mid-1960’s, however,
occurred in an overall policy and political context which was highly unfavourable to private sector in general
and export production in particular. Reflecting the cumulative impact of stringent trade controls, high exports
taxes and overvalued exchange rate, the overall incentive structure of the economy was characterized by a
significant ‘anti-export bias’ throughout this period.
The government in power during 1970-77, in compliance with its election promise of ‘the
establishment of the socialist society’, acted to consolidate the dominance of the public sector in the economy.
The increased government intervention, coupled with various controls, effectively marginalised the private
sector in the economy. Despite the policy rhetoric of promoting FDI in practice, the government vacillated
between a perceived need for and political suspicion of FDI. For instance, in 1974, the Ministry of Planning
came up with a plan for setting up an Export Processing Zone in Trincomalee, but it did not received Cabinet
approval because of strong opposition by the left of centre members in the coalition on grounds that it posed a
threat to national sovereignty. In approving foreign investment in export oriented ventures, the government’s
preference was for joint ventures with capital participation of government corporations and foreign
manufacturing firm. The perceived crowding out effect on indigenous industry was a major consideration in
approving private sector joint ventures. For instance, according to ministry of industry records, at least 17 joint-
venture proposals to set up export-oriented garment factories were rejected during the period 1970-76 on the
ground that [purely locally owned companies could succeed without foreign capital in this diffused-technology
product area.
III. Policies after 1977
The change of the government in 1977 marked a turning point in economic policies in Sari Lanka. It
was realized that the restrictive policies that were followed during the earlier period constrained domestic
economics activities and resulted in a slow growth process, In order to revitalize the economy, therefore, action
was taken to dismantle administrative controls and to encourage private sector production activities. The
promotion of export-oriented FDI turned out to be a pivotal element in the new policy.
The most important single effort at promoting FDI was the setting up of the Greater Colombo
Economic Commission (GCEC) in 1978 with wide-ranging powers to facilitate FDI in fully export-oriented
ventures. The GCEC was empowered to approve foreign investment in Export Processing Zones (EPZs), which
were to be specially design to serve as foci for the development of infrastructure to the standard required by the
export-oriented firms, or in locations with in an area of authority covering approximately 160 square miles
situated north of Colombo. The incentive package offers by GCEC included: complete foreign ownership
facility in investment projects, a tax holiday for up to 10 years with complete tax exemption for remuneration of
foreign personnel employed, royalties, and dividends of shareholders during that period; and duty exemption for
importation of equipment, construction material and production inputs. Subsequently, GCEC firms were
provided with unlimited access to foreign currency credit at interest rates prevailing in world financial markets,
under the Foreign Currency Banking Units (FCBU) scheme introduced in 1979. In addition to these incentives,
firm located within EPZs are provided with industrial services – serviced sites, building plants, power, water and
telecommunication services at subsidized rates and assistance with customs clearance procedures.
The Katunayaka Export Processing Zone (KEPZ) was established in 1978 on site of 200 hectares as the
first export promotion zone in the country. It is located near the Katunayake International Airport which has
locational advantages for foreign investors who required air transportation for both imports and exports. The
second EPZ was set up in 1985, at Biyagama on site of 140 hectares. Both these zones provide infrastructural
facilities developed to international standard, with low cost, easily buildable land, reliable sources of power and
water, sophisticated security systems, and modern telephone services which include direct dialling, telex and
4. The Government Policy on Foreign Direct Investment in Sri Lanka
DOI: 10.9790/487X-1902015864 www.iosrjournals.org 61 | Page
facsimile. The EPZs also provide an on-site administration complex with banks, customs, a medical clinic, a
post office, sports facilities and cargo forwarding agencies. Commencing initially with the garment industry,
these zones have diversified into a range of other products such as leatherwear, gloves, electronics, horticultural
products, security printing, ship repairs, jewellery, gems and diamonds, plastics, etc.
In June 1991 the GCEC launched its third Export Processing Zone in Kogalla, 80 miles South of
Colombo, on a land area of 80 hectares. The fourth industrial estate was established in 1994 at Pallekele, Kandy,
developing an area of approximately 250 acres. Unlike other three Export Processing Zones, the industrial park
at Kandy was planned to accommodate both foreign investment projects. Hence it was named as an Industrial
Park. The fifth industrial estate was established in 1996 at Attanagalla with the aim of developing 10 industrial
plots. The BPI has taken further steps to setup mini export processing zones in Malwatta, Mirigama and
Watupitiwala by providing the requires infrastructural facilities The Malwatta mini EPZ will accommodate 11
industries, after completion of its construction work. The Mirigama mini EPZ, extending over 40 hectares has a
capacity for 15 industrial units. The wathupitwala mini EPZ is expected to be completed in mind 1999. The
Wathupitiwala mini EPZ consists of 27 hectares for 20 industrial plots.
The fiscal incentives and other concessions applicable to foreign investment in area and enterprises under GCEC
law are summarized as follows:
i. 100 percent tax exemption on corporate income for between 5-15 years, reckoned from the first the first
profit making year.
ii. Concessionary tax of 2 percent to 5 percent for further 15 years after expiry of the tax holidays
iii. No income tax on the remuneration of foreign personnel during the tax holiday period.
iv. Free remittance of earnings of foreign personnel.
v. Double taxation relief on earnings of expatriates from countries with which Sri Lanka has entered into
Double Taxation Relief Agreements.
vi. Free repatriation of capital and proceeds on liquidation.
vii. Exemption from controls on imports, exports, transfer of shares and dividends, transfer of capital and
proceeds, on liquidation etc.
viii. No tax on royalties and dividends of resident and non-resident shareholders during the tax holiday period
ix. No ownership restrictions – no limits on the ownership of equity of foreign investors.
x. Free transfer ability of shares within and outside Sri Lanka
xi. No tax on the transfer of shares
xii. Duty free imports of construction materials, raw materials, plant, equipment and other project related to
goods.
xiii. Duty free exports.
Subsequently after 15 year of liberalization, the granting of tax holidays was done away with and
replaced by a 15 percent preferential tax for a period of 20years. Duty free imports and exports to enclave areas
were permitted.
While GCEC package was to act as the major set of instruments for promoting export oriented
industrialization, many elements of the 1977 policy package were aimed at improving the general investment
climate in the country for both local and foreign firms. These elements included the removable of most
quantitative restrictions on import trade, considerable relaxation of controls on capital and profit repatriation and
exchange rate depreciation. With regards to these concessions and incentives, the non-GCEC (i.e. FIAC
approved) joint venture firms were treated equally with locally owned firms. There was no major change in the
policy towards foreign ventures which do not meet the criterion of ‘full’ export-orientation. Such project had to
go through the normal approval procedure of FIAC. Majority local ownership continued to be the general rule of
approving such projects. However under the new policy emphasis on export oriented industrialization, FIAC
was empowered to adapt more liberal ownership criteria (going even up to 100 percent foreign ownership)
depending on the export potential of the projects. As an important part of FDI policy, steps were also taken to
enter into Investment Protection Agreements and Double Taxation relief Agreement with major investing
countries. The former agreements were further granted by Article 157 of the Constitution of Sri Lanka.
In addition to these policy initiatives, which foreign investors generally found highly attractive, the
potential climate of the country during the first six years or so after the general election of 1977 was also much
in line with the investor expectations. After the election of 1977 was also defeat in 1977, the traditional
opposition was disarray, and the decline of the left-wing parties was accompanied by the weakening of trade
unions. In July 1980, the government crushed a major public sector strike using emergency powers and the
police, and no major trade union challenge emerged in subsequent years. All in all, during the immediate post-
1977 years Sri Lanka scored well on various factors relevant to foreign investors ‘ perceptions; the international
news media soon dubbed Sri Lanka ‘the new investment centre of Asia’.
5. The Government Policy on Foreign Direct Investment in Sri Lanka
DOI: 10.9790/487X-1902015864 www.iosrjournals.org 62 | Page
The investment climate, however did not remain that favourable for long. Debilitating elements were to
emerge on many fronts. In the sphere of macroeconomics management, the government commitments to a
massive public sector investment programme aggravated the fiscal imbalance, raised costs of domestic resources
and generally increased inflationary pressures in the economy. In the political arena, sigs of policy instability
resulting from internal power struggles within the ruling party were to emerge by 1982. The major blow
however, came with the escalation, since 1983, of the long-standing political rivalry between the two major
ethnic groups in the country. Gradually over time, this conflicts led to extensive civil war with in the north and
the east of the country. Largely due to Indian government pressures, the Sri Lankan regime in power decided to
introduce, through the provincial council system a political solution was sought to the problem of escalated civil
war conditions in the above areas of the country. The make thing worse, the above constitutional reform proved
to be a catalyst for the eruption of a wide-spread armed insurrection launched by radical Sinhala extremists in
the rest of the country. In the years 1987-89 witnessed the entire socio-politico-economic system in the country
getting into turmoil and crisis. In the face of controlling political instability there was little scope for economic
policy.
In 1989, the government managed to restore some political stability within the country outside the
Northern and Eastern provinces by violently crushing the rebellion in the rest of the country. The post-1989
years have anyway seen a more vigorous adoption of market-oriented policies. These policy initiatives included
an ambitious privatisation programme, a rationalization of the tariff controls except those on a limited range of
strategic items, the removable of exchange controls on current account transactions in successive stages
culminating in the abolition of foreign exchange surrender requirement on export transactions in March 1993,
and permitting all BOI approved exporters to borrow foreign currencies from FCBUs for the purpose of
financing imports required to execute export orders.
In the sphere of FDI promotion, FIAC was abolished and its activities were placed under GCEC in
January 1990, with a view to creating a ‘one stop investment promotion centre’ which could facilitate and speed
up investment approval within a unified policy framework applicable to both import-substituting and export-
oriented investors. The reformed GCEC was named the Board of Investment (BOI) in November 1992. A new
investment policy statement was announced in November 1990 introduced several important changes to the
foreign investment policy framework; first, the historical reliance on the case-by-case approval procedure was
abandoned and a new system based on the concept of automatic investment approvals was introduced; second,
various restriction on the activities and ownership structures of joint-ventures were lifted; third, foreigners were
permitted to purchase up to 40 percent of shares of existing quoted companies without approval; and fourth, the
GCEC was empowered to private free-trade zones status to foreign investors in all parts of the country in order
to facilitate the development of close linkages between the FDI activities and the domestic economy at large.
The favourable developments notwithstanding, Sri Lanka still far short of regaining the ‘investment-
centre-in-Asia’ image which prevailed in the immediate aftermath of the 1977 policy reforms. There are many
disturbing elements which hinder foreign capital participation in the economy, particularly in long term
ventures. The ethnic conflicts seems to defy any quick political solution, and the economy continues to be
burdened by the massive defence expenditures and their consequences for macroeconomic stability.
IV. Policies After 2000
The adversative effect of the September 11 attack in 2001 to pentagon was cause to felt down FDI
flows in Sri Lanka. Furthermore, same year there was LLTE attacked to Sri Lanka international airport, those
are adversely affected to the FDI flows. After 2002 slightly favourable economic environment was visible in the
country due to the peace agreement with the LTTE. Although the LTTE withdrew from negotiations and the
government decided to crush the rebels in 2005, FDI flows into the sector have shown a steady growth over
2003-2010 (Thilakaweera, 2011)
In 2006, the country received the highest-ever FDI inflows, surpassing the previous highest level
recorded in 1997. The total FDI inflows reached the highest-ever level of US dollars 604 million in 2006,
surpassing the previous record level of US dollars 450 million in 1997, which included privatisation proceeds of
around US dollars 301 million. The increased investment flows could be attributable to the substantial increase
in reinvestment of retained earnings by the existing BOI companies, especially those in the services sector, and
new initiatives by the BOI to attract higher investments including the setting up of 300 factories in less
developed regions under its Nipayum Centre programme. The FDI inflows consist of equity capital of US
dollars 81 million, loans and advances of US dollars 75 million by the shareholders, foreign loans of US dollars
124 million and the reinvestment of retained earnings of US dollars 324 million by the existing companies. The
acceleration of the basic infrastructure development in the form of roads, highways and power supply, etc.,
while maintaining an enabling business environment that ensure property rights, sound and fast dispute
settlement and a greater labour mobility, would help achieve even higher levels of FDI. Meanwhile, FDI
6. The Government Policy on Foreign Direct Investment in Sri Lanka
DOI: 10.9790/487X-1902015864 www.iosrjournals.org 63 | Page
outflows decreased to US dollars 30 million in 2006 from US dollars 38 million in 2005 as only a few selected
local companies invested abroad during the year. (Central Bank of Sri Lanka, 2006)
An increasing tendency in Foreign Direct Investments (FDIs) can be seen in 2007 and reached US$
734 million, more than US $ 130 million above 2006 recorded level. Sri Lanka achieved this FDIs level without
any proceeds from privatization of government enterprises and improved the investor sureness in county long
term development expectation. That increasing trend in Foreign Direct Investment continued in 2008 and
reached to US dollar 889 million, more than US $ 150 million above the level recorded in 2007. The significant
development should be viewed in the backdrop of financial turmoil, the world is experiencing and the absence
of any proceeds from privatization of government enterprises. This reflects the continuous investor confidence
in long-term development projects in the country.
In 2007, the FDI inflows exceeded the previous peak level recorded in 2006 reflecting the incessant
investor confidence on the Sri Lankan economy and the prevailing investor friendly investment regime in the
country. The gross FDI inflows with the foreign loans gained by the companies which approved by BOI reached
a best level of US dollars 734 million in 2007 from US dollars 604 million in 2006, because of shrill increase in
reinvestment of retained earnings by present BOI companies. Nipayum Centre programme which was initiated
by BOI companies have promoted investment in fewer developed areas has also contributed to the greater
investment flows in 2007. To attract higher level of foreign investment, county should increase basic
infrastructure such as roads, highways and power supply to international standards and promote more Public-
Private Partnership arrangements in major infrastructure projects that are currently undertaken solely by the
government with borrowed funds. It is also essential to create an enabling business environment that safeguard
property rights, faster allocation of lands for new investments, sound and fast dispute settlement and greater
labour mobility to achieve higher levels of FDI (Central Bank of Sri Lanka, 2007)
In year 2008, FDI inflows recorded higher level than 2007 mainly as a result of improved reinvestment
of retained earnings. (Central Bank of Sri Lanka, 2008)
FDI together with loans during 2009 diminished to US dollars 601 million after reaching a record high
of US dollars 889 million in 2008, global financial crisis on the foreign financial flows was the main reason for
this decrement. The global financial recession caused in the drying-up of novel equity investments and foreign
loans directed to the FDI initiatives. The maximum FDI inflow was received from China, that is US dollars 145
million and UK and India FDI inflows were US dollars 80 million and US dollars 78 million, respectively.
Through telecommunications, power and energy industries earned more FDI inflows from China, UK and India.
For the meantime, FDI outflows declined to US dollars 20 million in 2009 from US dollars 62 million in 2008.
Lower realisation of the outward FDI projects approved in previous years reflecting the influence of the global
financial crisis was the main cause for this (Central Bank of Sri Lanka, 2009) Again FDI recorded level
including loans was decreased during 2010 to US dollars 516 million from US dollars 601 million in 2009. Even
though in nature FDI is long-term, comparable to year 2008 the influence of the global financial crisis on
foreign equity and debt inflows continued to have an effect on the FDI. However, the increase in the
reinvestment of retained earnings indicates signs of recovery in FDI. (Central Bank of Sri Lanka, 2010)
Sri Lanka documented the uppermost FDI inflows in 2011. FDI improved to US dollars 1,066 million
in 2011 related to US dollars 516 million in 2010. During the year, US dollars 110 million of loans were
received by the Board of Investment (BOI) approved companies, compared to US dollars 39 million in 2010
(Central Bank of Sri Lanka, 2011).
FDI sustained to be a main inflow to the financial account of the BOP notwithstanding global
economic performance. FDI with loans received by the BOI approved companies, recorded its maximum inflow
in year 2012, it is US dollars 1,338 million. Following reasons were caused to improvement of FDI
i. Investor confidence in the long-term investment potential in key emerging sectors
ii. Macroeconomic stability in the country.
FDI sector wise composition continued to reflect increased investments in large scale development
projects and developing sectors. Highest share of FDI that is 44.6 per cent received from Infrastructure sector
with key investments in ports and container terminals, telephone and telecommunication networks, power
generation and housing and property development. 31.9 per cent of FDI attract from service sector in 2012 and
8.8 per cent for the tourism sector and the manufacturing sector attracted 23 per cent of FDI in 2012. Due to the
enlargement of the tourism industry and improved foreign investment in education, communication and
information technology sectors, more direct investment is expected in 2013 and beyond. FDI outflows increased
to US dollars 85 million in 2012 from US dollars 60 million in 2011. (Central Bank of Sri Lanka, 2012)
Foreign direct investment maintain stable position in 2013 with the steady retrieval in the global
economy and improved stable macroeconomic environment. Total direct investment was US dollars916 million
in year 2013 (Central Bank of Sri Lanka, 2013)
7. The Government Policy on Foreign Direct Investment in Sri Lanka
DOI: 10.9790/487X-1902015864 www.iosrjournals.org 64 | Page
Total foreign direct investment remain strong in year 2014. Total foreign direct investment related inflows was
US dollars 1,685 million in 2014 with respect to the US dollars 1,437 million in 2013. Direct investment related
inflows are as follows;
Infrastructure sectors - 42.2 per cent
Services sectors - 36.8 per cent
Manufacturing sector - 20.7 per cent
(Central Bank of Sri Lanka, 2014)
Total foreign direct investment was decreased significantly in 2015. Total FDI inflows along with foreign loans
was 1,161 million, in 2015. This was a sharp moderation compared to the US dollars 1,635 million and US
dollars 894 million, respectively, recorded in 2014. The decline in FDIs in 2015 can be attributed to several
reasons.
1. Two national elections held during the year prompted investors to adopt a wait and see approach until the
political environment stabilises.
2. Numerous investors were unwilling to invest in emerging markets in the backdrop of continuous outflows,
particularly from securities markets of emerging economies.
3. The suspension of the Colombo Port City project due to the government’s decision to review the project,
also adversely affected FDI inflows during the year
(Central Bank of Sri Lanka, 2015)
V. Conclusion
Foreign capital plays an important role in raising investment levels so as to accelerate economic growth
in Sri Lanka as in the case of other developing countries. In the present study, an attempt was made to
investigate the pattern and policy on foreign direct investment in Sri Lanka, during the period of 1949-2015. The
response by foreign investors to the economic policy took place in 1977 was remarkable. Between 1979 and
1997, FDI inflows have ranged from maximum of 2.02 percent of GDP in 1993 to a minimum of 0.06 percent of
GDP in 1978 with the average for the period remaining at 1.0 percent of GDP.
In year 2001 Foreign Direct Investment felt down due to the impact of September 11 attack to pentagon
and LTTE attacked to the Sri Lanka International Airport. After 2002 Foreign Direct Investment slightly
increased because of the peace agreement with LTTE. There were increasing trend in Foreign Direct Investment
to 2008 as the results of improve investment of retain earnings, but in year 2009 Foreign Direct Investment was
diminished as a result of global financial crisis. Even though Sri Lanka reached highest level of Foreign Direct
Investment in year 2014 mainly due to the steady macroeconomic environment, in year 2015 of Foreign Direct
Investment significantly fallen down by reason of two national elections which held during year 2015, Investors
unwillingness of investing emerging markets and suspension of the Colombo Port City project.
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