A damning audit has exposed how vast tracts of prime investment land lie unused, millions in dues remain unpaid, and regulatory lapses continue to undermine Sri Lanka’s credibility at a time when the economy can least afford it.
A newly released audit report has raised serious concerns about wasted land, unpaid state revenue, and regulatory failures within Sri Lanka’s Board of Investment, casting doubt on the country’s ability to attract and manage foreign investment during a fragile economic recovery.
The Board of Investment, long portrayed as the backbone of Sri Lanka’s industrial growth and foreign direct investment strategy, has been flagged for underperformance and administrative weaknesses by the National Audit Office. The 2024 annual audit, signed by Acting Auditor General Dharmapala Dhammanpila, reveals that thousands of acres of land under BOI management have remained idle for years, while significant amounts owed to the state have gone unrecovered. These findings emerge at a critical moment, as Sri Lanka struggles to restore investor confidence following prolonged economic instability and political upheaval.
According to the audit, 1,834 acres of land across sixteen BOI investment zones have been left fallow, with no evidence of development or productive economic activity. This unused land reflects a wider pattern of inefficiency, as an additional 789 acres located outside designated BOI zones have also remained vacant. The scale of unutilized land highlights not only missed economic opportunities, but also a failure to convert scarce national resources into job creation, export growth, and industrial expansion at a time when Sri Lanka urgently needs new revenue streams and foreign capital inflows.
Adding to these concerns is the persistent issue of unpaid dues owed to the state by BOI approved institutions. As of December 31, 2014, more than Rs. 184 million had not been recovered, representing a 25 percent increase compared to the previous year. More alarmingly, over Rs. 380 million, equivalent to 21 percent of the total outstanding amount, had remained unpaid for more than four years. These long standing arrears raise serious questions about the BOI’s enforcement capacity and its ability to ensure that approved investors meet their contractual and financial obligations.
The audit also draws attention to weaknesses in environmental governance. The BOI, which is required to issue environmental protection licenses in consultation with the Central Environmental Authority, reportedly granted licenses to 210 institutions across ten investment zones during 2023 and 2024 without obtaining mandatory approval from the CEA. This bypassing of established procedures exposes potential gaps in regulatory oversight and raises concerns about environmental compliance, particularly at a time when global investors place increasing emphasis on sustainability, environmental standards, and regulatory transparency.
For international investors and development partners, the audit’s findings point to deeper structural challenges within Sri Lanka’s investment framework. The BOI has historically played a central role in attracting foreign direct investment in key sectors such as manufacturing, tourism, infrastructure, and technology. However, the report suggests that its ability to manage land efficiently, recover public funds, and uphold regulatory standards is being tested, even as Sri Lanka seeks to rebrand itself as a competitive and reliable destination for global investment.
As Sri Lanka looks outward for capital, trade partnerships, and economic revival, the effectiveness of the BOI and the credibility of its governance systems will remain under close scrutiny. How swiftly and transparently these issues are addressed may ultimately shape the country’s future standing in the regional and global investment landscape.
