Business Report: Analyzing FDI Opportunities in Sri Lanka's Market

This report provides a comprehensive analysis of Sri Lanka as an emerging market for foreign direct investment (FDI). It begins with an overview of Sri Lanka's strategic location, high literacy rate, and positive diplomatic relations. The report delves into the political environment, highlighting the democratic government and challenges like inefficiency and labor regulations. The economic environment is assessed based on GDP growth, gross national savings, and government budget balance. Social factors, including population size and education quality, are also considered. The technological environment is examined through investments in research and development. The report identifies resources for competitive advantages, such as natural resources and strategic geographic location. It also addresses the influence of foreign exchange and reserves, as well as trade policies, including liberalization and special economic zones. The report concludes with recommendations for Sri Lanka to attract more strategic agreements, foreign investors in research and development, and investments in the manufacturing sector to enhance domestic infrastructure. It highlights Sri Lanka's free trade policies, strategic location, and access to the Indian subcontinent market as key advantages.

Business across
borders
Country: Srilanka

Introduction
• Gaining in popularity of FDI in the recent time.
• More countries are competing against themselves
in attracting more investments.
• It is important for the organizations to effectively
determine the external environments.
• Identifying the challenges and opportunities.

Overview of the country
• Sri Lanka is located in the Southern part of India
and Indian sub continent.
• Effective facility of water transportation and sea
ports.
• High level of literacy rate of 92 percent.
• Positive diplomatic relationship with the neighboring
countries.

Political environment
• Establishment of democratic government.
• Challenges of government inefficiency.
• Labor regulations and tax rates are also major
challenges.
• Initiation of business friendly policies.

Economic environment
• Positive growth rate of GDP.
• However, growth rate is fluctuating in nature.
• Sri Lanka is ranked at 38 in terms to gross national
savings.
• Low ranking of Sri Lanka in terms of government budget
balance.

Social environment
• Smaller size of population of 20 million.
• Access to the educated and skilled employees.
• Ranking of 57 in terms of domestic market size.
• Ranking of 60 in terms of quality of education system.

Technological environment
• Increasing trend of investment in research and
development.
• Majority of the investments are coming from the public and
government sector.
• Ranking of 90 in terms of availability of latest technologies.

Resources for gaining
competitive advantages
• Access to diverse natural resources.
• Access to international sea routes.
• Strategic geographic location.
• Free trade agreements with other countries.

Influence of foreign
exchange and reserve
• Lower valuation of Sri Lankan currency.
• Trend of foreign reserves is fluctuating in nature.
• Is having both negative and positive implications.