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Foreign investors seek greater legal certainty before investing in Sri Lanka
German Industry and Commerce in Sri Lanka Chief Delegate Andreas Hergenrother (Pic by Nishendra Silva)
German companies in discussion regarding potential upcoming investments here
by Sanath Nanayakkare
Legal certainty was a fundamental principle for foreign investment across the world, important even for potential German investors, Andreas Hergenröther, Chief Delegate of German Industry and Commerce (AHK Sri Lanka) told The Island yesterday:
“The reliability of the legal framework in Sri Lanka is essential for foreign investors. We have seen many changes since the beginning of 2020; so many gazette notifications and operating instructions which appear quite confusing for foreign investors and trading partners,” he said.
Elaborating Andreas said: “Of course, we understand that there is a scarcity of foreign currency in the country. On the other hand, it has to be understood that foreign companies operating in Sri Lanka need a clear framework which they can rely on. We hope that when the Covid-19 situation improves, there will be a coherent, transparent investment and trade policy for foreign investors to continue their businesses without uncertainty. They need an operating framework upon which they can plan on their mid-term and long-term prospects. This is very necessary because investors do not want to invest in a scenario that they do not fully understand”.
“For Foreign direct investors including German investors the reliability and predictability of legal frameworks are of very high importance not only with regard to Sri Lanka but worldwide. We fully understand the current situation in the aftermath of Covid-19 where decision makers need to make quick decisions and sometimes the impact of these decisions may not be foreseeable or predictable, but the continuous changing of the business landscape is a major challenge, because what investors mostly need is legal certainty. This fact was further confirmed at a survey we conducted among 160 CEOs and representatives of German companies and their Sri Lankan partners”.
“Of course, Sri Lanka is a sovereign country. Every country has to find its own way to promote foreign direct investment and even during the pandemic, we received some requests for potential investments in Sri Lanka. These requests were much related to certain product groups that are on very high demand and they are also related to free market access to mainly Pakistan and India. Sri Lanka offering free trade access to these two countries is a clear advantage, but it would give much more advantage if Sri Lanka would have free trade agreements (FTAs) with South East Asia (ASEAN), People’s Republic of China and East Asia. Such broad-based market access would definitely increase the potential of Sri Lanka to promote its foreign direct investments”.
“Currently these potential investors are gathering information about Sri Lanka and how they could run their operations from here. Once the airport reopens these investors will be keen to come to Sri Lanka and hold detailed talks with the decision makers here”.
“With regard to these investors’ wish to invest in Sri Lanka, AHK Sri Lanka has initiated talks with Sri Lankan institutions – mainly the Bureau of Investments (BOI). These companies are currently evaluating the situation and will likely visit here to see the ground realities for themselves before making the decision to invest”.
“These companies are from the medical sector, rubber related sector and another one in the field of logistics; namely a Multi-Country Consolidation service. There is another ongoing project in the field of chemicals. These companies are continuously having discussions with the authorities here. In fact, AHK Sri Lanka initiated talks at the time of the lockdown via video links with Sri Lankan decision makers on particular challenges facing German companies in Sri Lanka as well as upcoming projects”.
When asked to name these companies, Andreas said “it should remain confidential as the talks are still at an initial stage”.
“Once the health crisis improves, the decision makers of these companies will visit Sri Lanka to evaluate the legal framework. AHK Sri Lanka and German investors are very satisfied with the talks they have had with Susantha Ratnayake- the Chairman of BOI. He is doing everything he can to support the investors to come here and we have a very close relationship with the BOI. In fact, German companies have been in close contact with the BOI”.
“A level playing field is something very important to build confidence in foreign investment. In this context, we have supported a lot in the initiative of liberalization in the field of freight forwarding and shipping in Sri Lanka. In this regard, we held many conferences as we strongly believe that once foreign ownership will be possible in the field of freight forwarding and shipping, more foreign direct investments will come to Sri Lanka. And with those freight forwarding and logistics companies, their key customers will also follow suit. This convergence would enable Sri Lanka to transform from a transshipment hub into a ‘true logistics and a trading hub’. And then the ideal would be to have companies here that assemble, manufacture and/or make value addition under the scheme of Multi-Country Consolidation.
“The minimum capital requirement for Multi-Country Consolidation in Sri Lanka is US$ 3 million and US$ 5 million for Entrepot Trade. The potential investors are not ready to put three or five million dollars on the table. When it comes to investing, companies in the freight forwarding sector want to have full ownership and not be a minority shareholder of 40%. Currently the law [in Sri Lanka] allows maximum 40% shareholding for freight forwarding and shipping companies”.
When asked why the foreign companies in the freight forwarding sector wanted full ownership, Andreas said, “These companies have reporting obligations and internal compliance rules which have been made more severe in the past years, therefore, it is important for them to determine the processes and operations inside the companies according to their standards. Furthermore, companies compare different Foreign Direct Investment Destinations in the world. Nowadays most of the ‘hub-countries’ offer full ownership to freight forwarders and encourage investments under the scheme of Multi-Country-Consolidation”.
The Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka) was officially inaugurated on 27th March 2018, with the purpose of enhancing the bilateral economic relationship between Germany and Sri Lanka. AHK Sri Lanka is part of the German Chamber Network supported by the Federal Ministry for Economic Affairs and Energy. With 142 locations in 92 countries around the world, the members of the German Chamber Network (AHKs) offer their experience, connections and services to German and foreign companies. AHKs are located in all countries of particular importance to German companies and are closely connected to the Chambers of Industry and Commerce (IHKs) in Germany. Together they support German companies with building up and extending their business relations to foreign countries, representing in total 3.6 million German companies.
During the past years, AHK Sri Lanka) has been a reliable partner for many Sri Lankan institutions such as BOI and EDB. Committed to investment and export promotion, more than 20 business delegations have been organised in both directions. Further, AHK is planning to take four business delegations to promote exports in the sectors of agriculture/food, PPE, rubber, and energy efficient industrial solutions in the fourth quarter of 2020,
On 21st of August AHK Sri Lanka will organize a joint webinar with Deutsche Bank and Allianz on ‘Planning and Risk Mitigation in Times of Economic Uncertainty’.
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Heat Index at ‘Caution level’ at some places in the Western, Sabaragamuwa, Southern and North-western provinces and in Monaragala and Mannar districts
Warm Weather Advisory
Issued by the Natural Hazards Early Warning Centre of the Department of Meteorology at 3.30 p.m. on 11 March 2026, valid for 12 March 2026.
The public are warned that the Heat index, the temperature felt on human body is likely to increase up to ‘Caution level’ at
some places in the Western, Sabaragamuwa, Southern and North-western provinces and in Monaragala and Mannar districts.
The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.

Effect of the heat index on human body is mentioned in the above table and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.
ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated.
Dress: Wear lightweight and white or light-colored clothing.
Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well.
For further clarifications please contact 011-744649
News
Power sector reforms jolted by 40% pay hike demand
The government’s sweeping electricity sector restructuring programme ran into fresh turbulence yesterday, with authorities warning that meeting a 40 percent salary increase, demanded by striking power sector unions, could push electricity tariffs up by nearly 100 percent.
Chairman of the National Transmission Network Service Provider (NTNSP), Nusith Kumaratunga, issuing the warning at a media briefing, said the additional salary burden would significantly escalate operating costs in the newly formed power sector companies.
According to Kumaratunga, granting the 40 percent salary increase would raise the monthly wage bill by about Rs. 1.8 billion, amounting to nearly Rs. 22 billion annually, placing enormous pressure on the already fragile financial position of the electricity sector.
“If that additional burden is passed on to consumers, electricity tariffs may have to increase by close to 100 percent,” he said.
The briefing was organised by the management of the successor companies created following the restructuring of the Ceylon Electricity Board (CEB).
Kumaratunga said electricity sector trade unions had presented 64 demands in the wake of the restructuring exercise.
“Out of the 64 demands, 62 have already been agreed to,
while the remaining two have been referred to President Anura Kumara Dissanayake for discussion,” he said.
He explained that the majority of the demands related to the continuation of privileges previously enjoyed by employees under the CEB structure.
“During the initial round of discussions itself, the boards of directors agreed to 59 of those demands,” he noted.
Among the concessions already granted was the continuation of bonus payments, similar to those previously paid by the CEB, at least temporarily, until a performance-based incentive system is introduced.
The management had also agreed to grant an allowance of Rs. 11,000, in addition to the existing cost-of-living allowance, bringing the average additional monthly benefit to around Rs. 17,000 per employee, he said.
Kumaratunga stressed that management had approved all demands that could be granted at the ministerial level.
However, he said the proposed 40 percent salary increase would be difficult to justify, particularly at a time when other segments of the public service were not receiving similar benefits.
He also revealed that unions had requested that a 25 percent salary adjustment, granted to senior executives in 2024, be extended to all employees, with retrospective effect from January 1, 2024.
Granting such a request would require amending an existing Cabinet decision, which the boards of directors of the newly established companies do not have the authority to do, Kumaratunga explained.
He pointed out that the newly created electricity sector companies had only commenced operations on Monday, and their work had already been disrupted by the ongoing trade union action.
“It is difficult to understand why the strike continues when the vast majority of demands have already been addressed,” he said.
However, the Ceylon Electricity Board Engineers’ Union clarified that the 40 percent salary increase was not their primary demand.
Union representatives said that the electricity sector employees were originally due for a salary revision in January 2027, but the ongoing restructuring had raised concerns that the scheduled increase might not materialise.
“That is why we requested at least a reasonable percentage increase in order to secure some form of salary revision,” a senior electrical engineer said.
The dispute comes at a critical moment as the government presses ahead with the unbundling of the CEB into separate generation, transmission and distribution entities, a reform programme, officials say, is aimed at improving efficiency and attracting investment to Sri Lanka’s troubled power sector.
However, the restructuring has been strongly opposed by trade unions, which argue that the reforms could undermine employee security and weaken state control over a strategic national utility.
With industrial action continuing and tariff hikes looming as a possibility, the confrontation between the government and electricity sector unions appears set to intensify in the coming days.
By Ifham Nizam
News
UN scientific research ship here amidst ban on such vessels
A UN vessel arrived in Colombo yesterday (11) to conduct a month-long marine scientific survey in Sri Lanka’s Exclusive Economic Zone (EEZ). This is the first foreign scientific research vessel here since President Ranil Wickremesinghe banned such visits on January 1, 2024, for a period of one year. However, the ban remains in place with the NPP government yet to announce its new decision on the issue.
The following is the text of statement issued by the Foreign Ministry yesterday: “On the invitation of the Government of Sri Lanka, the United Nations-flagged vessel R/V Dr. Fridtjof Nansen, under the Food and Agriculture Organisation (FAO), is scheduled to arrive in Sri Lanka today to conduct a marine scientific survey in Sri Lanka’s Exclusive Economic Zone (EEZ) in collaboration with the Ministry of Fisheries, Aquatic and Ocean Resources and the National Aquatic Resources Research and Development Agency (NARA).
R/V Dr. Fridtjof Nansen supports countries in collecting critical scientific data for sustainable fisheries management and in understanding how climate change is affecting marine ecosystems. The survey, spanning 32 days, will focus on assessing marine living resources and marine ecosystems, providing updated scientific data that will support Sri Lanka’s sustainable fisheries management and ocean governance. During the mission, scientists will undertake a range of activities, including hydro-acoustic surveys to estimate the biomass and distribution of key fish stocks in Sri Lankan waters; assessment of marine pollution levels; and biodiversity monitoring.
An important component of the programme is capacity building. The mission will bring together Sri Lankan scientists from NARA and other national institutions with international experts, promoting scientific collaboration and knowledge exchange.
Sri Lanka previously hosted the R/V Dr. Fridtjof Nansen in 2018, when the vessel conducted a comprehensive survey of Sri Lanka’s continental shelf and upper slope, in collaboration with national institutions. Earlier, Nansen surveys were also carried out in Sri Lankan waters in 1978–1980, reflecting a long-standing scientific partnership under the Nansen programme.
Sri Lanka’s participation in this survey reflects the country’s continued commitment to sustainable fisheries, marine ecosystem protection, and international scientific cooperation in the Indian Ocean region.”
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