Business
‘VAT surge threatens Sri Lanka’s housing and foreign investments’
By Rohan Parikh
In the intricate case of Sri Lanka’s economic rejuvenation, the recent surge in the Value Added Tax (VAT) to 18 percent, coupled with the removal of certain industries from the exemptions list, has emerged as a focal point for concern among foreign investors assessing the country’s economic climate.
This shift, occurring within the context of an already sophisticated taxation structure, presents multifaceted challenges that, if left unaddressed, could potentially impede the nation’s growth trajectory, particularly within the critical housing development sector.
Investments in housing development surpass the realm of mere financial transactions; they are integral components of economic growth and societal development. The recent VAT hike, however, casts a shadow over the sector, raising the cost of projects and thereby creating formidable barriers for middle-class and first-time homebuyers.
This potential restriction threatens to stifle the housing sector’s innate ability to serve as a driver of economic stability.
The housing sector’s influence extends beyond bricks and mortar, reaching into the heart of local employment and manufacturing industries. This phenomenon, often referred to as the ripple effect, manifests when increased housing demand generates a surge in business for local manufacturers, including those producing doors, windows, pipes, wires, and other construction materials.
Consequently, this heightened demand directly stimulates job creation in these manufacturing sectors.
However, the introduction of the new VAT regime introduces an element of risk to this interconnected economic ecosystem. While the heightened VAT aims to augment the state’s revenue pool, there is a potential downside—deterrence for both local and foreign investors.
Investors, whether domestic or international, seek clarity, consistency, and predictability in tax regimes. The added burden of increased VAT may well tip the scales against investments that are crucial for sustaining economic growth.
In this intricate web of economic interactions, the call for relief or adjustments to the current taxation model becomes ever more urgent. Such measures are necessary to safeguard the housing sector and acknowledge its far-reaching impact on the broader economy.
Beyond attracting investments, a more balanced tax strategy has the potential to stimulate job creation, making housing more affordable for the middle-class and first-time buyers, who are the bedrock of societal stability.
The delicate balancing act between managing state revenue and propelling economic growth necessitates careful planning and consideration. The government, in navigating this complex terrain, holds a unique opportunity to transform challenges into opportunities, nurturing the housing sector while simultaneously fortifying state reserves.
A thriving housing sector will undoubtedly have a ripple effect, creating jobs and driving demand for local industries, contributing to a resilient and self-sufficient economy. The Sri Lankan Government’s response to the VAT hike should prioritise foresight and prudence, facilitating relief or adjustments to fortify the housing sector’s crucial role in economic growth. A nuanced tax strategy is essential, not just for attracting foreign investments, but for ensuring accessibility to housing, fostering a sustainable and inclusive economic future for Sri Lanka.
(The writer is an international investor with experience in the South Asian real-estate market, and is also the Chairperson of Iconic Developments)
Business
HNB Finance bags 2 CMA Reporting Awards 2025
HNB Finance PLC has been honoured with two prestigious accolades at the CMA Excellence in Integrated Reporting Awards 2025, reaffirming the company’s commitment to transparency, good governance, and integrated business performance.
At this year’s ceremony, HNB Finance PLC was awarded Second Runner Up – joint in the category of “Best Integrated Report , Finance and Leasing Sector”, and also received a Merit Award in recognition of its continued efforts to enhance reporting quality and strengthen stakeholder communication.
The CMA Excellence in Integrated Reporting Awards, organised annually by the Institute of Certified Management Accountants (CMA) of Sri Lanka, acknowledge organisations that demonstrate superior financial reporting standards aligned with global best practices. Winners are assessed on key criteria such as financial performance and strategic management, corporate governance and compliance, innovation and digital transformation, sustainability practices, and professional excellence.
Chaminda Prabhath, Managing Director/CEO of HNB Finance PLC, commented on the recognition, “These awards reaffirm our commitment to upholding the highest standards of integrated reporting and transparent financial disclosure. At HNB Finance, we remain focused on delivering sustainable long-term value through robust governance frameworks, prudent financial management, and continuous innovation. The acknowledgement by CMA Sri Lanka reflects the disciplined efforts of our teams across the organization and motivates us to further enhance our reporting quality, strengthen ESG integration, and reinforce our stakeholder centric approach.”
Business
ComBank joins ‘Liya Shakthi’ scheme to further empower women-led enterprises
The Commercial Bank of Ceylon has reaffirmed its long-standing commitment to advancing women’s empowerment and financial inclusion, by partnering with the National Credit Guarantee Institution Limited (NCGIL) as a Participating Shareholder Institution (PSI) in the newly introduced ‘Liya Shakthi’ credit guarantee scheme, designed to support women-led enterprises across Sri Lanka.
The operational launch of the scheme was marked by the handover of the first loan registration at Commercial Bank’s Head Office recently, symbolising a key step in broadening access to finance for women entrepreneurs.
Representing Commercial Bank at the event were Mithila Shyamini, Assistant General Manager – Personal Banking, Malika De Silva, Senior Manager – Development Credit Department, and Chathura Dilshan, Executive Officer of the Department. The National Credit Guarantee Institution was represented by Jude Fernando, Chief Executive Officer, and Eranjana Chandradasa, Manager-Guarantee Administration.
‘Liya Shakthi’ is a credit guarantee product introduced by the NCGIL to facilitate greater access to financing for women-led Micro, Small, and Medium Enterprises (MSMEs) that possess viable business models and sound repayment capacity but lack adequate collateral to secure traditional bank loans. Through NCGIL’s credit guarantee mechanism, Commercial Bank will be able to extend credit to a wider segment of women entrepreneurs, furthering its mission to drive inclusive economic growth.
Business
Prima Group Sri Lanka supports national flood relief efforts with over Rs. 300 Mn in dry rations
Prima Group Sri Lanka has pledged assistance valued at over Rs. 300 million, providing essential Prima food products to support communities affected by the recent floods across the island. This relief initiative is being coordinated through the Ministry of Defence to ensure the timely and effective distribution of aid to impacted families.
As part of this commitment, Prima Group Sri Lanka donated a significant stock of Prima dry rations to the Government of Sri Lanka on 30 November. The consignment will be distributed across multiple severely impacted districts. These supplies will support families facing disruptions to daily life, ensuring they receive assistance as recovery efforts continue.
The handover took place at the Ministry, where the donation was received by the Secretary of Defence, Air Vice Marshal (Retired) Sampath Thuyacontha. Representing Prima Group Sri Lanka, Sajith Gunaratne – General Manager of Ceylon Agro Industries Limited, and Sanjeeva Perera – General Manager of Ceylon Grain Elevators PLC, officially presented the donation.
Prima Group has been standing with the people of Sri Lanka for over 40 years, and this donation reflects its broader commitment to the nation during challenging times. As relief operations continue across the island, the company remains focused on helping families rebuild their lives and supporting the ongoing recovery process in collaboration with the Government Authorities.
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