U.S. and foreign companies expressed concern on inconsistent and unpredictable policies, including taxation, customs procedures, and regulatory approvals of the Sri Lankan government headed by President Maithripala Sirisena .
U.S. and foreign companies have also raised concerns regarding opaque public tendering processes and widespread corruption.
The current government has publicly committed to business process reforms and has moved up the World Bank’s Ease of Doing Business Index in 2019. However, overall progress remains slow and uneven, heads of US companies said.
The government generally supports import substitution. Importers to Sri Lanka face high import duties and other taxes.
A variety of taxes have effectively increased Sri Lanka’s tax rates on a range of imported items to between 60 and 100 percent of the cost, insurance, and freight (CIF) value of the product.
Agricultural imports face stiff health regulations that sometimes exceed global standards. For example, genetically-modified (GM) regulations restrict imports of U.S. agriculture commodities, they claimed.
Congested roads slow the movement of goods throughout the island, although the Government of Sri Lanka is working towards improving road infrastructure.
Unreliable power supplies, particularly outside the capital, force manufacturers and service providers to install on-site generators.
Businesses cite a lack of sufficient labor supply as a major hindrance for operating in Sri Lanka.
Qualified workers are in short supply as a result of the education system producing too few engineers, technicians, scientists, and English speakers.
Business representatives complain that the rigid labor laws, including exceptionally high severance pay regulations, make it difficult to adjust staff size and composition to market conditions.
There are also numerous and overlapping labor regulations that are often difficult for investors to understand.
Piracy is a problem for U.S. rights-holders in music, film, software, and some consumer products. Sri Lanka also lacks anti-competition laws
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