From Investment to Economic Transformation: Does Sri Lanka Need One Integrated Development Agency?
“Efficiency is doing things right; effectiveness is doing the right things.” — Peter Drucker
Author: Prof. Asoka S.Seneviratne
Introduction
Sri Lanka’s next economic challenge is to turn stabilisation into sustained economic transformation. Restoring macroeconomic stability was necessary, but stability alone cannot deliver higher productivity, competitive production, expanding exports or improved living standards. The country must strengthen its capacity to generate employment, raise household incomes and earn the foreign exchange needed to finance essential imports and meet its external obligations.
This challenge raises an important institutional question. The Board of Investment (BOI) promotes investment, the Export Development Board (EDB) develops exports, and the newly established National Business Facilitation Centre (NBFC) seeks to address administrative barriers facing investors and businesses. Each institution has a legitimate mandate, but their functions are closely interconnected.
Should these functions continue to operate through separate institutional structures, or should Sri Lanka examine the possibility of bringing them together within one integrated national economic-development agency?
The question is particularly relevant as Sri Lanka approaches the scheduled conclusion of its current International Monetary Fund (IMF) programme in March 2027. The next phase must build on stabilisation by strengthening the productive capacity needed to sustain economic recovery.
The case for integration is not simply about reducing the number of government agencies. It is about determining whether public institutions can work more effectively together to connect investment, production, exports and foreign-exchange generation with Sri Lanka’s wider economic-transformation objectives.
Three institutions, one economic process
Consider the journey of an investor seeking to establish a competitive export-oriented enterprise in Sri Lanka.
The investor must first be attracted to the country. The project then requires land, utilities, licences, regulatory approvals and other government services. Once established, the enterprise must develop its productive capacity, recruit and train workers, establish relationships with domestic suppliers and compete in international markets. Finally, it must generate sustainable export earnings and contribute to the country’s foreign-exchange capacity.
From the investor’s perspective, these are not separate journeys. They are stages of one economic process.
The BOI’s responsibilities include investment promotion, facilitation, export-processing zones and investor aftercare. The EDB, established under the Export Development Act No. 40 of 1979, is responsible for export development and promotion, market development, product development and assistance to exporters. The NBFC has been established to coordinate with government institutions and address administrative obstacles affecting investors and entrepreneurs.
The mandates are different, but the economic objectives overlap.
The BOI needs a strong export-development framework to help ensure that investment contributes to internationally competitive production. The EDB needs new productive investment, technology and capacity to expand the range and value of exports. Both depend on efficient business facilitation, including coordination with government agencies responsible for approvals and infrastructure.
The question is therefore not whether these institutions perform useful functions. It is whether their functions could be organised more effectively around a shared economic mission.
What the NBFC reveals about institutional fragmentation
The establishment of the NBFC brings this question into sharper focus.
The Government has identified fragmented approval processes, administrative delays, agencies operating in silos, and overlapping institutional responsibilities as barriers to investment. Such obstacles can affect land access, environmental approvals, regulatory licences, utilities and other services required by businesses.
This raises a fundamental institutional question. If the BOI already facilitates investment, why is an additional institution needed to coordinate administrative processes across government?
One explanation is that the barriers extend beyond the BOI’s authority. Investment facilitation may require cooperation from ministries, regulators, and public institutions whose decisions cannot be controlled by the investment-promotion agency alone. That is a legitimate problem. However, it also presents an opportunity to reconsider the institutional architecture.
Establishing another centre may improve coordination, provided it has a clear mandate and sufficient authority to perform its functions. But if the underlying problem is fragmentation, the Government should also examine whether existing arrangements can be redesigned to reduce fragmentation at its source.
Three institutions may each perform their individual responsibilities competently while the overall system remains inefficient. Investors and exporters experience the Government as a whole, not as separate institutional mandates. When investment is delayed, exports fail to materialise or a regulatory bottleneck prevents a business from expanding, who is ultimately accountable for the economic outcome?
The problem is not necessarily duplication of every function or demonstrable waste of public resources. Without a detailed analysis of budgets, staffing and responsibilities, such conclusions would be premature. The more immediate concern is whether divided responsibilities weaken coordination, accountability and strategic focus.
International experience: lessons and limitations
Sri Lanka does not have to invent an entirely new approach. Rwanda, Costa Rica and Georgia provide useful examples of how investment promotion, business development, export promotion and facilitation can be organised within more integrated institutional frameworks.
Rwanda established the Rwanda Development Board (RDB) in 2008 through the merger of eight government institutions. Its responsibilities encompass investment promotion, business registration, investment facilitation, export-related development, special economic zones and other functions supporting private-sector development.
Its investment approach also illustrates an important distinction between attracting investment and attracting investment that contributes to economic transformation. Project assessment can consider factors such as employment, skills and knowledge transfer, local sourcing, export potential and linkages with the domestic economy. Investment promotion should not be judged solely by the volume of investment attracted. Its contribution to the productive capacity of the economy matters equally.
Costa Rica offers another perspective. PROCOMER, established in 1996, combines trade and investment promotion functions within a framework that emphasises exports, investment, business linkages and trade facilitation.
Its experience highlights the importance of connections between international investment and domestic enterprises. An investment that develops local suppliers, transfers technology, creates skilled employment and generates sustained export earnings can make a different contribution from one that remains weakly connected to the domestic economy.
For Sri Lanka, the question should therefore extend beyond how much investment is attracted. It should also ask what that investment contributes to productivity, technology, domestic enterprise development and export competitiveness.
Georgia provides a further example through Enterprise Georgia, which operates across business development, investment and exports. Its investment-promotion functions were brought into the organisation in 2017 to strengthen synergies between support for investment and other stages of business development.
These three countries differ from Sri Lanka in their economic structures, institutional arrangements and development circumstances. Their models should not be copied mechanically. Nor does their experience, by itself, prove that merging Sri Lanka’s three institutions would produce better results.
Nevertheless, they demonstrate a common institutional principle: investment, enterprise development, export promotion and business facilitation can be approached as interconnected components of economic development rather than isolated administrative responsibilities. The relevant lesson is not that integration automatically improves performance, but that it can provide a framework for coordination whose effectiveness must be demonstrated through measurable results.
From three mandates to one economic mission: Accountability must be measured by outcome
Sri Lanka could consider establishing an integrated institution, provisionally called the Sri Lanka Economic Development and Investment Agency (SLEDIA), by bringing together the relevant functions of the BOI, EDB and NBFC.
Its mission would be to attract and retain productive investment, strengthen globally competitive Sri Lankan enterprises, expand exports, deepen domestic-global business linkages and accelerate productivity-led economic transformation.
The proposed institution would not need to eliminate the specialist expertise accumulated within the existing organisations. Instead, it could organise that expertise within clearly defined divisions.
An Investment Division could attract and retain domestic and foreign investment while supporting investors throughout the life of their projects. An Export Development Division could help enterprises develop products, access international markets and integrate into global value chains. A Business Facilitation Division could coordinate with relevant public institutions to resolve administrative bottlenecks.
An Investor Aftercare Division could help existing investors expand production and exports rather than allowing established projects to stagnate. A Domestic Linkages Division could connect multinational enterprises with Sri Lankan small and medium-sized businesses, suppliers and service providers.
A Market Intelligence and Competitiveness Division could identify opportunities in which Sri Lanka has the potential to compete internationally, while a Strategic Projects Division could coordinate projects of national economic importance.
The purpose would not be to create a larger bureaucracy under a new name. It would be to organise existing capabilities around a common objective and clarify responsibility for the economic results they are expected to deliver.
However, integration should remain a policy option to be tested against alternatives. Strengthening the existing institutions and establishing more effective coordination mechanisms may, in some circumstances, achieve similar results at lower cost. The Government should establish which approach offers the greatest economic benefit before deciding on an institutional merger.
The most important change would not be organisational. It would be a change in accountability.
An integrated agency should not be judged primarily by the number of investment approvals issued, companies registered, trade fairs attended or meetings held. These are activities, not necessarily economic outcomes. Its performance should be assessed against measurable results, including investment actually realised rather than merely approved; additional export earnings; the net foreign-exchange contribution of supported projects, where measurable; new products and markets; employment and productivity gains; technology and skills transferred; domestic suppliers linked to international businesses; and the expansion and retention of existing investors. The time required to resolve investor bottlenecks should also be measured.
These indicators would help distinguish between investment that is announced and investment that becomes productive. They would also allow the Government to evaluate whether institutional reform is generating additional economic benefits rather than merely shifting responsibilities among agencies.
The objective should be to establish clear accountability for the entire investment-to-export process. An investment approval would no longer be treated as the final achievement. It would be the beginning of a process whose ultimate success depends on production, competitiveness, exports and economic value added.
One front door, but independent regulators
Integration must not be confused with concentrating every economic function within one institution.
The Central Bank should retain its independence in conducting monetary policy. Tax administration, Customs, environmental authorities, local government and other regulatory bodies must continue to exercise their statutory responsibilities.
An integrated development agency should not be able to override legitimate regulatory requirements merely to accelerate a preferred investment. Nor should its investment-promotion objectives compromise transparency, environmental safeguards or the fair application of the law.
The appropriate principle is one coordinated front door for investors and businesses, supported by independent regulators exercising their lawful responsibilities. The agency should help investors navigate the system, coordinate administrative processes and identify obstacles requiring resolution. Decisions should remain with the legally responsible authorities.
Any reform would also require a detailed review of legislation, staffing, budgets, assets, information systems and existing international commitments. Consultation with public officials, investors, exporters and domestic businesses would be essential. The transition should preserve valuable institutional knowledge while establishing clear responsibilities and safeguards against excessive concentration of administrative power.
A post-2027 institution for economic transformation
The timing of this debate is important.
Sri Lanka’s current IMF Extended Fund Facility was approved in March 2023 as a four-year programme, with the arrangement scheduled to expire in March 2027. The programme has emphasised fiscal and debt sustainability, rebuilding external buffers, financial stability and structural reforms. These remain important objectives. But maintaining stability and transforming the productive structure of the economy are not the same task.
Sri Lanka continues to face substantial public debt and external financing requirements. The country therefore needs sustained foreign-exchange earning capacity to support essential imports, meet external obligations and reduce vulnerability to future shocks. That capacity cannot be created by monetary policy alone. Nor can it be achieved simply by attracting foreign direct investment or establishing additional business-facilitation arrangements.
It requires a productive economy that can continuously generate competitive goods and services, diversify exports, raise productivity and strengthen domestic enterprises. An integrated development agency could contribute to that process by connecting investment promotion with export development and effective business facilitation. It would not replace sound fiscal policy, monetary discipline, debt management or wider structural reforms. Rather, it could become one institutional mechanism through which those broader policies support productive economic activity.
The Government should therefore commission an independent institutional review to assess the feasibility and likely benefits of integration. The review should compare the proposed agency with alternatives, including strengthening the existing institutions individually and establishing more effective coordination among them. It should assess costs, legal requirements, implementation risks and measurable economic benefits. The decision should be based on evidence, not on the assumption that a merger is inherently more efficient.
Conclusion: From facilitation to transformation
Sri Lanka’s challenge after March 2027 is not simply to preserve the stability it has regained. It is to make that stability the foundation for sustained economic transformation. This requires a productive economy capable of generating competitive goods and services, expanding exports, raising productivity, and strengthening domestic enterprises.
An economy that attracts investment without developing competitive production and exports may fail to overcome its external constraints. An economy that promotes exports without sufficient productive investment may struggle to expand supply. And a business-facilitation centre that leaves underlying institutional fragmentation unresolved may add another administrative layer without delivering the desired results. The objective must therefore be to organise relevant public capabilities around a shared national economic mission.
The establishment of the NBFC provides an opportunity to examine whether the BOI, EDB and business-facilitation functions can be coordinated more effectively, including through an integrated development agency. The international experience of Rwanda, Costa Rica and Georgia demonstrates that such institutional arrangements are possible, but it does not establish that a merger would necessarily deliver better results in Sri Lanka.
The ultimate test is whether Sri Lanka can convert investment into productive capacity, productive capacity into competitive exports, and exports into sustained foreign-exchange earnings that strengthen external resilience and support higher living standards.
Investment → Production → Exports → Foreign Exchange → Debt-servicing Capacity → Higher Living Standards (Truly, low cost of living is related to Higher Living Standards).
This is the economic chain that should guide the institutional debate.
The choice is not simply between three institutions and one. It is between organising public institutions around separate administrative mandates and organising them around the economic outcomes Sri Lanka needs.
The Government should seriously examine whether one integrated development agency could help move the country from investment facilitation to economic transformation that maximizes foreign exchange earnings, the ultimate goal.
(The writer served as the Special Adviser to the Office of the President of Namibia from 2006 to 2012 and was a Senior Consultant with the UNDP for 20 years. He was a Senior Economist with the Central Bank of Sri Lanka from 1972 to 1993. He can be reached at asoka.seneviratne@gmail.com.)