Sri Lanka has been a key trading hub in the Indian Ocean since ancient times and its star is once again on the rise. Known for its stunning beaches, an abundance of UNESCO World Heritage sites and the perfect cup of tea, the country’s popularity as a tourist hot spot has soared in recent years.
Along with a burgeoning tourist trade, Sri Lanka has a growing exports industry, which includes textile and garments, tea, rubber and spices. This island nation’s geographic location makes it a strategically important location for global trading routes. The country provides universal access to primary education and has made great strides in recent years in achieving gender parity in general education, helping to pave the way for a bright future.
HSBC Sri Lanka was established in 1892 and has a proud history of more than 125 years in the country. The bank serves customers through three global businesses: Commercial Banking, Global Banking and Markets, and Wealth and Personal Banking.
As the largest international bank in the country, HSBC provides a comprehensive range of cross-border and financial services to suit both personal and business needs. Our funding capability combined with the strength of the HSBC network gives us the edge in funding large scale projects.
Whether you’re moving to the region, working in the area, or purely investing or doing business in Sri Lanka, HSBC can deliver a world-class banking experience supported by in-depth local market expertise.
I look forward to seeing you here!
24, Sir Baron Jayathilaka Mawatha, Colombo 1, Sri Lanka
1 World Population Review, 2020
2 World Bank Group, 2019
3 World’s Top Exports, 2019
4 Sri Lankan Government, 2020
5 PwC, 2020
Positioned as a key trading hub in the Indian Ocean for over 1,000 years, the tear-drop shaped island south of India has one of the strongest economies in Southeast Asia. A Democratic Socialist Republic, it boasts a low unemployment rate, and the economy is topped up by remittances from overseas workers. It has bounced back after some troubled times, with growing tourism. A sign of upbeat economic feelings, 15,000 acres of land at Sri Lanka’s Hambantota International Port has been earmarked for development of various industries.
After receiving USD1.4 billion in Foreign Direct Investment (FDI) from China, Port City (Colombo), situated on major shipping lanes in the Indian Ocean, saw its land reclamation phase completed by the end of 2019. It will become a hub for global trade, and with assistance from Sri Lanka’s National Agency for Public Private Partnerships, there are calls for investor proposals to build a hospital, international school, convention centre and hotel at the port.
Featuring a wealth of historical and cultural sights, Sri Lanka is a beautiful country with much to see. Transportation between these sights is slightly difficult, as trains and buses can be outdated and run slowly or on a delayed timetable. Ground transportation is necessary, as domestic flights are few and far between, but there is an abundance of taxis, hire cars with drivers and tuk-tuks.
Population growth rates have been on a steady decline due to decreasing birth rates, but the total population does continue to increase. Two universities feature in the Times Higher Education World University Rankings – University of Peradeniya is the highest ranked in Sri Lanka at 401-500. Of total expenditure in Sri Lanka, 14.5% is on education, and there is an 18.97% rate of enrolment in higher education.
The civil war ended in 2009, and Sri Lanka has been working hard to turn around its fortunes. The economy grew at an average rate of 5.8% between 2010 and 2017, transitioning to a manufacturing and services-oriented economy. With that, poverty decreased from 15.3% in 2006 to 4.1% in 2016.
Famous for its stunning location in the Indian Ocean, Sri Lanka is more than just a burgeoning tourist destination.
Sri Lanka’s recovery from its 30-year civil war has led to a boom in reconstruction. With its highly-educated population, rule of law, strong relationships with the UK and free trade agreements with India, Pakistan and Singapore, the island is a gateway for those seeking to do business in the region. Moving away from a predominantly rural economy, Sri Lanka has seen growth in service industries and manufacturing. Its position on the Maritime Silk Road makes it a key point on the Chinese Belt and Road Initiative (BRI) with a Sino–Sri Lankan free trade agreement under negotiation.
for ease of doing business (in a survey of 190 measured economies by The World Bank)
Sri Lanka is the world’s fourth largest tea producer, and it is where the quintessentially British Lipton Tea was first founded back in the 1880s. Tea has remained a key export product ever since.
Tourism is one of the country’s main sectors, with growth in both international and domestic tourists, attracted by Sri Lanka’s stunning beaches and ancient heritage. The country’s agriculture is focused on tea, coconuts and rubber. Sri Lanka is one of the world’s leading suppliers of brown fibre from coconuts and ranked thirteenth amongst global rubber producers in 2017.
Read on to discover more about the dos and don’ts of doing business in Sri Lanka and how trading in or with the country could help boost the future growth of your business.
While corporation tax currently stands at a standard rate of 28%, tax rates of 14% and 40% also apply to profits from specific businesses. Nation Building Tax (NBT) was abolished with effect from December 2019 and the Economic Service Charge (ESC) was abolished with effect from January 2020.2
High and flexible import tariffs, as well as the application of other import taxes such as VAT, can increase costs for suppliers. Additionally, in early 2020, import restrictions were placed on items including flour, sugar and liquor. Changes to import duties are used as the main trade policy lever by the Sri Lankan Government.3
Following the 2004 tsunami that claimed thousands of lives, as well the impact of severe drought and seasonal flooding, action on climate resilience is a key focus for the Sri Lankan economy.
Corruption levels remain high across the region, with Sri Lanka no exception. There has been little improvement in this in recent years
1World Bank Group, 2019