Sri Lanka is gearing up to implement significant reforms aimed at enhancing investment and export activities within the next 90 days, as highlighted by Chathuranga Abeysinghe, the Deputy Minister of Industry and Entrepreneurship Development. He characterized 2026 as a pivotal year for reform in the nation.
Among the proposed changes are the introduction of the Investment Protection Act and Public-Private Partnership (PPP) Bills to Parliament, as stated by Abeysinghe. This initiative comes in response to delays in executing essential reforms that Sri Lanka pledged to undertake as part of its agreement with the International Monetary Fund (IMF).
In its latest report, the IMF underscored the importance of the PPP Act for enhancing governance, provided it delineates institutional responsibilities, boosts transparency, and ensures improved fiscal scrutiny. Abeysinghe remarked during the BELGOULUX Economic Forum at Port City Colombo that the country’s investment policy, promotion strategies, and land regulations have historically posed significant challenges for attracting investments.
He noted that the cumbersome process of securing land and necessary resources for business establishment has deterred potential investors, often taking between two and three years to navigate. “This is a substantial change we are implementing,” he added.
Abeysinghe further admitted that Sri Lanka is “20 years behind” in making the structural adjustments needed for diversifying exports and attracting foreign direct investment. He pointed out that barriers such as market access, regulatory frameworks, the business environment, and labor reforms remain key challenges hindering economic growth and investment opportunities in the country.
The IMF report indicated that any modifications to the Board of Investments Act and the incentives under the new Investment and Trade Commission Act should incorporate eligibility criteria that are rules-based, limiting the types and duration of incentives while enhancing transparency.
The government has recognized and is addressing the factors that have previously stifled investment in Sri Lanka. A new Investment Promotion Act has already been enacted, including provisions for the development of the Colombo Port City. However, Abeysinghe cautioned that labor reforms might not be achievable within the current year.
