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Sri Lanka’s banks are currently experiencing considerable change. Regulatory matters are a prominent concern, alongside the ups and downs of loan growth and economic policy. A careful balancing act is being performed as a result, with those able to tread the narrow path recording healthy bottom lines and continued service expansion in 2018. The year ahead will likely see this trend continue. There is an expectation that an election year may see some fiscal loosening overall, to the benefit of credit growth – particularly in the consumer segment. Meanwhile, meeting the new regulatory standards accompanying the rollout of Basel III and International Financial Reporting Standard 9 requires some significant changes in the way lenders do business. Following a global trend, digitalisation and financial technology are changing the industry, and the next few years look set to be transformative. This chapter contains an interview with Indrajit Coomaraswamy, Governor, Central Bank of Sri Lanka.

Sri Lanka’s economy has been making progress in recent years, which should stand it in good stead during the potentially difficult times ahead. Major efforts have been made to instil greater fiscal discipline, and modernise monetary and exchange rate policy, while steps have also been taken in the management of government expenditure and the maximising of public sector revenue. Meanwhile, trade and foreign direct investment have continued to rise, and infrastructure development is gradually moving Sri Lanka towards realising its long-term goal of becoming an essential transportation and trans-shipment centre for the Indian Ocean and South Asia. There has also been positive progress in establishing the island as a tourism destination and in mobilising the population to help cultivate a more entrepreneurial, gender-balanced and inclusive economy. This chapter contains interviews with Rajendra Theagarajah, Chairman, Ceylon Chamber of Commerce; and Krishan Balendra, Chairman, John Keells Holdings.

Trade and investment activities in Sri Lanka benefit from the country’s location along busy Indian Ocean trade routes, abundant agricultural and industrial exports, and a young, skilled workforce. Just 19 km separate its southern-most port from a global shipping lane carrying two-thirds of the world’s oil and half of its container shipments. This makes local ports a natural staging post for cargo destined for India and Pakistan, with some 30% of the former’s container traffic currently trans-shipped through Sri Lanka. The country has also been making strides in attracting international stakeholders to develop trade, transport and logistics infrastructure, becoming a major destination for foreign direct investment (FDI) in the process. Higher inflows have benefitted the broader economy; 2018 was the highest year on record for FDI, with $2.3bn worth of investments made. This chapter contains interviews with Parag Khanna, Founder and Managing Partner, FutureMap; Champika Malalgoda, Director-General, Board of Investments; and Thilan Wijesinghe, Chairman, National Agency for Public-Private Partnership.

Sri Lanka has long served as an important strategic destination in the Indian Ocean, catering to merchants and travellers from South-east Asia, India, the Middle East and East Africa. While much of the country’s recent history has been tainted by a decades-long civil war, post-conflict euphoria brought with it a sense of renewal and optimism. A coalition administration elected in 2015 pledged its commitment to inclusive governance and economic reform, a rebalancing of foreign policy, and reconciliation with its ethnic minorities. However, the coalition has diverged on several key policy issues, leading to delays in the legislative agenda and culminating in a constitutional crisis that saw the prime minister removed from office by the president in October 2018, only to be reinstated two months later following a ruling by the country’s highest court. This chapter contains interviews with President Maithripala Sirisena; and Ganeshan Wignaraja, Executive Director, Lakshman Kadirgamar Institute; and a viewpoint from Prime Minister Ranil Wickremesinghe.

This chapter contains selected listings of some of the country’s top hotels, contact details for embassies, ministries and organisations, helpful tips for business and leisure travellers and other useful suggestions for travel to Sri Lanka.

This chapter examines the legal system of Sri Lanka, focusing on raising loans via the Active Liability Management Act No. 8 of 2018; liberalising foreign land ownership through the Land Restriction on Alienation Act No. 21 of 2018; the Nation Building Tax (Amendment) Act No. 20 of 2018, which covers tax exemptions and exemption periods; the Value-added Tax (Amendment) Act No. 25 of 2018; and the investigations and impositions included under the Anti-dumping and Countervailing Duties Act No. 2 of 2018. This chapter contains a viewpoint from John Wilson, Managing Proprietor, John Wilson Partners.