Annual Report 2010 - Ministry of Finance and Planning

Ministry of Finance and Planning Sri Lanka > Annual Report 2010Investment and SavingsIn order to increase the total investment to 33-35 percentof GDP with sustained commitment of public investmentof 6-7 percent of GDP, the private investment needs to beraised from the current level of around 15-17 percent ofGDP to about 25-30 percent of GDP during the 2010-2016period.Total gross investment of the country increased to 27.8percent of GDP in 2010 from 24.5 percent in 2009. Theweak private sector investment has recovered stronglyfrom 17.9 percent of GDP in 2009 to 21.6 percent in 2010,while public investment declined marginally from 6.6percent of GDP in 2009 to 6.2 percent in 2010. Privatesector investments are mainly in the manufacturing,telecommunications, tourism and construction sectors. Afavorable trend in private investment was observed duringthe year as indicated by a better performance in privatesector credit and a noticeable increase in the imports ofinvestment goods during that period.The Government expects to double the levels of inflowsparticularly in tourism, urban development, IT/BPOservices, pharmaceutical and renewable energy etccompared to the Foreign Direct Investment flows of 1.5percent of GDP during the past decade. In addition to theabove targets, the current market capitalization of 2.2trillion (or 40 percent of GDP) from the CSE is expectedto increase to more than 50 percent by 2016.The Foreign Direct Investment (FDI) inflows declinedby 14 percent from investment commitment of USD 601million in 2009 to USD 516 million during 2010 whichwould be due to changes in global capital flows after theglobal financial crisis.The main contribution of FDIs to the manufacturingsector during 2010 was attracted by textile, wearingapparel, leather products and chemical coal, petroleumcoal and plastics. In addition to the above, for the 2011Budget, the government has opened the capital accountin order to improve the private investment.The net amount for the issuance of Treasury bills andbonds in 2010 was Rs. 433 billion and Rs. 83 billion,respectively. The total stock turnover improved drasticallyto Rs 570.3 billion in 2010 from Rs 142.5 billion in 2009.Chart 1.70 > Foreign Direct Investment 2005-2010Chart 1.71 > Total Stock TurnoverUS $ million1000800600400200Turnover (Rs. billion)60050040030020010002005 2006 2007 2008 2009 2010Year02005 2006 2007 2008 2009 2010YearSource: Board of InvestmentSource: Colombo Stock Exchange133