By: John S. Morlu II, CPA
Business Unusual: Navigating Sri Lanka’s Real-World Business Climate
It’s not always smooth. But it’s definitely not boring. Here’s what it really takes to do business in Sri Lanka.
Sri Lanka isn’t just a beach vacation with spicy food — it’s a place where business gets done, often quietly, often stubbornly, often brilliantly.
So what’s the real deal with doing business on the island once known as Ceylon? Here’s your crash course — real, raw, and revealing.
1. The Formal Meets the Informal
Business in Sri Lanka lives in two dimensions:
- The formal economy: registered companies, tax files, boardrooms, audits.
- The informal economy: handshake deals, off-the-record payrolls, and a vast network of “cousins” who make things happen.
If you don’t know how to navigate both, your operations may stall.
Foreign investors often expect German-style punctuality. What they get is an elegant dance between tradition, hierarchy, and improvisation.
Advice: Get a trustworthy local partner who understands the dance — and respects both drum beats.
2. Ease of Doing Business? Improving… Slowly
Sri Lanka ranks in the middle tier globally when it comes to:
- Starting a business
- Registering property
- Getting electricity
- Resolving disputes
Yes, there’s paperwork. And yes, government departments still love a good physical file.
But recent digital reforms (Revenue e-filing, e-registries, e-land portals) are slowly improving the game.
Tip: If you value speed, outsource bureaucratic steps to a local law or advisory firm. Trying to “DIY” the process is the fastest way to burnout.
3. Taxes, Compliance, and the Rule of Flexibility
Sri Lanka has a fairly straightforward tax code — in theory.
- Corporate tax: 30% standard (with lower rates for SMEs and IT exporters)
- VAT: 18%
- PAYE: Tiered (progressive)
- Import duties: Complex and sometimes unpredictable
But don’t be surprised if rules shift midstream.
- Tax holidays can vanish.
- Incentives get “reinterpreted.”
- Customs procedures vary based on who you ask.
Golden rule: Get everything in writing. From the right person. With an official stamp.
4. Workforce: Educated, Loyal, and (Usually) Underdemanding
Sri Lanka boasts a young, literate, and multilingual workforce. You’ll find:
- Skilled engineers and IT professionals
- Strong accountants and auditors
- Creative marketers and designers
Labor laws are employee-friendly — so hiring and firing requires care.
Also, cultural sensitivity matters:
- Respect for hierarchy is strong.
- Direct confrontation is discouraged.
- Positive feedback works better than fear.
Smart businesses invest in upskilling. Sri Lankan employees, once empowered, are extremely loyal.
5. Business Culture: Conservative but Creative
Don’t let the suits fool you.
Sri Lanka’s business leaders are a blend of old-school decorum and new-school agility.
Relationships matter. Trust takes time. But once built, it’s strong.
Expect:
- Formal greetings and honorifics
- Strategic ambiguity (you’ll often hear “we’ll look into it”)
- Indirect disagreement (“Let’s revisit this later” = no)
Pro tip: Learn a few words in Sinhala or Tamil. It unlocks doors — even if everyone speaks English.
6. Growth Sectors to Watch
Despite macro challenges, these sectors are booming:
- ICT and software exports
- Tourism and wellness travel
- Renewable energy infrastructure
- Agri-tech and organic farming
- Digital payments and fintech
- Logistics and e-commerce
Sri Lanka’s size is an advantage — it’s a manageable sandbox to build, test, and scale.
7. Diaspora and Foreign Ties
Sri Lanka has a large, engaged diaspora in Canada, the UK, Australia, and the Middle East.
Diaspora remittances ($6B+) are a major inflow — but they also bring networks, investments, and advisory support.
Multilateral donors (IMF, ADB, WB), friendly governments (India, China, Japan), and growing trade partners (EU, ASEAN) are all part of the business chessboard.
Understanding the geopolitical influences behind business deals is key — China might fund a port, India may want a stake in energy, and Japan may prefer grants over loans.
8. The Challenges (Keepin’ It Real)
Let’s not romanticize.
Sri Lanka still struggles with:
- Red tape and administrative delays
- Sudden regulatory changes
- Currency risks and repatriation issues
- Corruption in procurement and licensing
But those who thrive here? They don’t complain — they adapt.
And they find arbitrage opportunities where others see chaos.
Final Word: It’s Not Easy. But It’s Worth It.
If you want plug-and-play business, go to Singapore.
If you want big margins, high talent, and strategic positioning — and you’re willing to build long-term — then Sri Lanka is your move.
Just bring your patience, your playbook, and your favorite stamp pad.
This is business — the Sri Lankan way.
About the Author
John is an entrepreneur, strategist, and founder of JS Morlu, LLC, a Virginia based CPA firm with multiple software ventures including www.FinovatePro.com, www.Recksoft.com and www.Fixaars.com . With operations spanning multiple countries, John is on a mission to build global infrastructure that empowers small businesses, entrepreneurs, and professionals to thrive in an increasingly competitive world. He believes in hard truths, smart execution, and the relentless pursuit of excellence. When he’s not writing or building, he’s challenging someone to a productivity contest—or inventing software that automates it.
