Meeting the traget of a billion dollars of FDI in 2008 seems to rest on foreign investment continuing at a high rate in telecom. After all, in the first half of the year, telecom brought in USD 291 million, out of a total of USD 425. However, the increasing hostility to the sector driven by the JHU plus the decline in people’s buying power pulled down profits last quarter. The largest mobile operator, Dialog, stated that its capital expenditures for the coming year will be cut by about 25 percent at an investment briefing recently. One cannot draw conclusions from one quarter, but do not be surprised if the first half of 2008 turns out to be the high point of investment in the sector.
Contrary to jingoistic claims that foreign owned telcos draining out local resources, the telecom sector continues to bring in new investment from outside. In Pakistan, at one point, 50% of the FDI was telecom. If the breakdown is provided, it may well be that the telecom sector accounts for 50% of FDI in Sri Lanka too. “The BoI recognized Dialog Telekom as the company with the highest level of realized investment in 2007 totalling 328 million dollars in 2007.” Dialog Telekom, which has over four million subscribers, secured the top slot in investment rankings for the third year in succession having being recognized as Sri Lanka’s largest investor in 2005 and 2006 with investments of 90 million dollars and 150 million dollars.