Business

Policy certainty: The real investment test for Sri Lanka in 2026

Published

6 months ago

2026/03/23

This rendering illustrates the Ambuluwawa cable-car project’s final appearance if it were completed

When Arjuna Herath assumed duties as Chairman of the Board of Investment of Sri Lanka, he quite correctly sent a clear message: Sri Lanka intends to position itself as an investor-friendly destination. The message was reinforced during a visit by a high-level delegation from the USSri Lanka Business Council, where officials spoke of renewed confidence in the country’s economic trajectory.

The optimism is not without foundation. After years of crisis, Sri Lanka has begun to stabilize. Foreign direct investment crossed the psychological threshold of about US$1 billion in 2025, exports climbed to more than US$17 billion, and tourist arrivals reached record levels. These numbers suggest that international capital is once again willing to take a second look at the island. Yet statistics alone do not tell the whole story.

The deeper question facing policymakers in 2026 is whether that early interest can be sustained. For investors, confidence is rarely built on incentives alone; it rests on the expectation that rules will remain consistent once a project begins. In other words, predictability matters more than promises.

That tension between optimism and uncertainty is now emerging as the central theme in Sri Lanka’s investment narrative.

On the one hand, authorities are signaling reform and openness. On the other, several recent developments have reminded investors that implementation can still be uneven. One widely discussed case involved the proposed Ambuluwawa cable-car project in the hill country, where a cross-border investor withdrew after reportedly spending about US$3.5 million. The developer, Amber Adventures (Pvt) Ltd, had planned a US$12.75 million tourism venture but later said the project was halted despite earlier technical clearances from multiple agencies.

Regardless of where the merits of the dispute lie, the episode left a familiar impression in investment circles: timelines and approvals can appear uncertain once projects move from paper to construction.

A separate case in the renewable-energy sector has generated similar concerns. Policy resets and prolonged negotiations reportedly discouraged a major regional developer. Governments everywhere reserve the right to renegotiate contracts, but when processes appear open-ended, investors begin to factor in higher risk.

This is why policy certainty may be the most powerful – and least expensive – stimulus available to Sri Lanka in 2026.

The macroeconomic outlook already underscores this point. Analysts expect moderate growth in the range of about 3 – 4 percent this year, while the International Monetary Fund has projected roughly 3.1 percent, linking stronger expansion to steady reform implementation rather than new borrowing. In other words, execution matters more than announcements.

Institutional efficiency also plays a role. With more than a million cases pending in Sri Lanka’s courts, businesses often see legal delays as an additional cost of operating in the country. Reducing that backlog – particularly in commercial disputes – would signal that contracts and administrative decisions can be resolved within predictable timeframes.

Tourism offers another illustration. Visitor arrivals have surged, yet revenue growth has lagged because spending per traveller remains modest. Improving digital payments, mobility and dispute resolution may prove just as important as marketing campaigns if Sri Lanka hopes to extract greater value from the sector.

All in all, these signals reveal a simple truth. Sri Lanka does not necessarily lack investor interest; it risks losing momentum if processes remain uncertain.

For policymakers, the challenge therefore lies in bridging perception and practice. Codifying approval timelines, digitizing government services, and completing a handful of transparent public-private partnerships could quickly demonstrate that decisions in Sri Lanka are not only possible but reliable.

If that credibility gap is closed, the message delivered by the BOI chairman that Sri Lanka is open for business – will resonate far more strongly in global boardrooms. Because in frontier markets, the most valuable incentive is not a tax break or subsidy. It is certainty.

By Sanath Nanayakkare

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Business

ADB approves $100 million loan to boost skills development and jobs for youth in Sri Lanka

Published

9 hours ago

2026/10/2

Thilina Walpola

The Asian Development Bank (ADB) has approved a $100 million results-based loan to help Sri Lanka transform its technical and vocational education and training (TVET) system, equip more young people with industry-relevant skills, and strengthen the country’s competitiveness and inclusive growth.

The Skills Development System Transformation Program will support the Government of Sri Lanka’s efforts in improving the quality and relevance of skills training, strengthening links between training providers and industries, and expanding employment opportunities for youth. The program will increase women’s employment opportunities in nontraditional jobs in fields including automotive technology, engineering, information and communications technology, construction, and renewable energy.

“A skilled workforce is essential to Sri Lanka’s long-term economic transformation and competitiveness,” said ADB Country Director for Sri Lanka Shannon Cowlin. “This program will help create stronger pathways from education to employment by making training more responsive to industry needs, expanding opportunities for young people and women, and ensuring that graduates have the skills required by a modern and evolving economy.”

Though Sri Lanka’s economy is recovering, it faces skills shortages in priority sectors, high youth unemployment, and low female labor force participation. Many employers report difficulty finding workers with the skills needed in a changing economy.

Aligned with the Government of Sri Lanka’s Technical and Vocational Education and Training Sector Strategic Framework 2026–2035, the nationwide program will be implemented from 2027 to 2031 and is expected to directly benefit more than 100,000 young people through improved access to quality, employment-oriented training.

Business

USD 40.84m pipeline to secure aviation fuel supplies to BIA

Published

9 hours ago

2026/10/2

Thilina Walpola

By Ifham Nizam

The government has cleared a USD 40.84 million and Rs. 8,548.75 million contract to build a dedicated aviation fuel pipeline from Muthurajawela to Bandaranaike International Airport (BIA), alongside a massive new fuel storage facility with a capacity of 92,000 cubic metres.

Energy Minister Anura Karunatilaka said the project represented a major investment in strengthening the infrastructure underpinning Sri Lanka’s aviation fuel supply and ensuring more reliable fuel availability at the country’s main international airport.

‘This project will provide the infrastructure required to strengthen the reliability and continuity of aviation fuel supplies to Bandaranaike International Airport, Karunatilaka said.

The contract has been awarded to China Petroleum Pipeline Engineering Company Limited, following an international competitive procurement process in which three bids were received.

The project will see a new aviation fuel storage tank complex constructed at Muthurajawela, together with the associated infrastructure required for handling and transferring aviation fuel.

Business

CSE activity up, turnover weak at Rs. 1.4 billion

Published

9 hours ago

2026/10/2

Thilina Walpola

By Hiran H Senewiratne

Trading activity on the Colombo Stock Exchange (CSE) gathered pace yesterday as global fuel prices began to show signs of easing, according to market analysts.In this context, both indices moved upwards. All Share Price Index up by 67.97 points while S and P SL20 up by 8.30 points.

Turnover stood at Rs 1.4 billion with seven crossings. Those crossings were reported in Sampath Bank 1.7 million shares crossed to the tune of Rs 238 million and its share price traded at Rs 140, Access Engineering two million shares crossed to the tune of Rs 159 million and its share price traded at Rs 79.50, LOLC one million shares crossed to the tune of Rs 129 million and its share price traded at Rs 129, HNB 100,000 shares crossed to the tune of Rs 38.4 million and its share price traded at Rs 384, JKH 1.9 million shares crossed to the tune of Rs 35 million and its share price traded at Rs 18.60, Hayleys 100,000 shares crossed to the tune of Rs 22.50 million and its share price traded at Rs 225 and Richard Pieris 847,000 shares crossed to the tune of Rs 22 million and its share price traded at Rs 25.50.

In the retail market top seven companies that have mainly contributed to the turnover were Sampath Bank Rs 114 million (813,000 shares traded), JKH Rs 100 million (5.3 million shares traded) LB Finance Rs 49 million (325,000 shares traded), HNB Finance Rs 30 million (27 million shares traded), HNB Rs 27 million (70000 shares traded), NTB Rs 25 million (82000 shares traded ) and Lanka IOC Rs 21 million (666,000 shares traded). During the day 65 million shares volumes changed hands in 10433 transactions.

The Banking and manufacturing sector counters performed well. In the banking sector Sampath Bank let the market while manufacturing sector especially JKH also significantly performed well. With the fuel revision Land IOC also a significant stock at the floor.

Meanwhile, First Capital Treasuries said that Ramesh Schaffter resigned as a Non-Independent Non-Executive Director with effect from October 1, to facilitate the restructuring of the company’s board.

Yesterday the Central Bank announced the US Dollar rate as against rupee. The rupee was quoted flat at Rs 330.65/80 to the US dollar in the spot market , while bond yields dropped, dealers said.