In a sharp and somewhat unusual criticism of the investment climate in Sri Lanka, the US said the country was a challenging place to do business, marking public sector corruption and an unpredictable economic policy environment as significant challenges for American firms. This put down came even as Sri Lanka is seeking to project itself as a major investment destination with the construction of a China-aided 1.4 bn USD Colombo Port City that is pitted as a financial hub, with the potential to create 83,000 jobs and bring in up to $15 billion in investments.

The US Department of State, in its 2021 Investment Climate Statement, also highlighted high transaction costs and inefficient delivery of government services, besides opaque government procurement practices among major investor concerns.

The statement, published in the Department of State website, also spoke of issues like contract repudiation, cronyism, and de facto or de jure expropriation.  

It said public sector corruption was a constraint on foreign investment.  

“While the country generally has adequate laws and regulations to combat corruption, enforcement is weak, inconsistent, and selective,’ it said.

“US stakeholders and potential investors expressed particular concern about corruption in large infrastructure projects and in government procurement,” it added.

The statement said though the Sri Lankan government pledged to address these issues, the Covid-19 response remained its primary concern. 

“Historically, the main political parties do not pursue corruption cases against each other after gaining or losing political positions,” the statement said.

(SAM)