Regulatory & Policy News
View all(96)Low Global Integration Favours Sri Lanka Under EU 'Buy European Only' Policy 📈
The EU’s move toward strategic autonomy via a 'Buy European Only' policy may inadvertently benefit Sri Lanka due to its low integration into high-tech global supply chains. According to Frontier Research, the policy prioritizes EU-produced goods in strategic sectors, but current impacts on Sri Lanka remain indirect. Key Economic Insights • Core Exports Safe: Traditional sectors like tea, rubber, and apparel & textiles are not currently targeted as the EU remains highly reliant on these consumer goods. • GSP+ Dependency: Export earnings face a direct threat only if the policy dilutes GSP+ preferences; however, no clarity on such changes has been provided yet. • Strategic Opportunity: Protectionism in high-tech may cause low-tech manufacturing to "trickle down" to Sri Lanka as China and ASEAN focus on restricted high-tech fields. • Tech Barriers: If Sri Lanka shifts into ICT/BPM, medical services, or electronics, stricter EU eligibility rules could create significant market access barriers. Priority EU Sectors • The policy specifically targets high-value industries: Defence, AI, Space, Quantum Technology, Clean Tech, and Payment Systems. _Note: Analysis based on provisional research data regarding EU strategic shifts as of February 2026._
New Investment Framework: Beyond Tax Holidays 📈
The Sri Lankan Treasury has introduced a new scheme targeting tourism, manufacturing, agriculture, and educational technologies with tax holidays of 6–10 years. • Investment Thresholds: Minimum requirements range from US$ 50 Mn to US$ 300 Mn, with job creation targets between 100 and 250 positions. • Tourism Sector: Projects must reach a US$ 300 Mn minimum to qualify for the maximum 10-year tax relief. • Structural Challenges: Despite these incentives, experts warn that "red tape," opaque bureaucracy, and inconsistent policies remain significant barriers compared to regional competitors. • Proposed Reforms: The focus is shifting toward long-term enablers rather than fiscal concessions: • Establishing a "single-window" digital approval mechanism. • Strengthening legal safeguards and property rights. • Ensuring macroeconomic stability to offset exchange rate volatility. • Investing in infrastructure (logistics/ports) and human capital. _Note: Analysis suggests that while tax holidays signal intent, deep institutional reform is required to attract high-quality, sustainable global capital._ ---
EDB Promotes UK Market Expansion via DCTS 📈
The Sri Lanka Export Development Board (EDB) conducted an awareness session on 11 February 2026 to help exporters leverage the UK’s Developing Countries Trading Scheme (DCTS). • Key Market Opportunity The UK remains Sri Lanka's second-largest export destination. Under the DCTS (effective from 1 Jan 2026), over 92% of Sri Lankan product lines qualify for duty-free access, enhancing competitiveness in a major global market. • Sector Breakthrough: Apparel & Textiles Apparel manufacturers—representing 73% of exports to the UK—now enjoy a "game changer" advantage. They can source up to 100% of raw materials (including synthetic fabrics) globally while maintaining zero-tariff access, removing previous regional sourcing constraints. • Regional Sourcing & Diversification Beyond apparel, sectors like ICT/BPM, tea, and rubber benefit from the Asia Regional Cumulation Group. This allows Sri Lanka to source inputs from 18 countries and still qualify for preferential UK tariffs, supporting supply chain flexibility. • Strategic Impact • Tariff Savings: Estimated potential to save over £69 Mn annually if fully utilized. • Trade Growth: Experts project an incremental export boost of US$ 150 Mn to US$ 300 Mn in the medium term. • Simplified Procedures: Removal of the "double transformation" rule and streamlined documentation to reduce compliance costs.
Major Shareholders Reduce Stakes in Cargills Bank 📈
Related parties of Cargills Bank PLC have disposed of a combined 10.05% stake in the market to align with regulatory requirements. The move follows a CBSL directive to reduce the Cargills Group voting interest to 15% by 2029. • Transaction Breakdown: Cargills (Ceylon) PLC: Sold 6.05% for Rs. 509.3 Mn. CT Holdings PLC: Sold 4.00% for Rs. 337.5 Mn. Trading Range: Shares were transacted between Rs. 8.90 and Rs. 9.70. • Shareholding Post-September 2025: Cargills (Ceylon) PLC: 37.09% (Lead shareholder). CT Holdings PLC: 23.62%. Public Holding: 39.14%. • Strategic Context: The divestment is a critical step for the banking sector entity to meet CBSL corporate governance standards regarding ownership diversification. Cargills Bank must also raise capital to meet the Rs. 20 Bn minimum requirement by 2029.
### CEB Proposes 13.56% Electricity Tariff Hike for 2Q 2026 📈
The Ceylon Electricity Board (CEB) has submitted a formal proposal to the PUCSL requesting a 13.56% increase in electricity tariffs for the second quarter (April 01 to June 30, 2026). This follows a rejected 1Q revision due to procedural delays. • Financial Impact The CEB estimates a total deficit of Rs. 15,847 million for the period. Total projected costs stand at Rs. 136.5 billion against a revenue of Rs. 116.9 billion at current rates. • Generation Mix (Total: 4,578 GWh) Hydro: 1,218 GWh (26.6%) Thermal: 1,957 GWh (42.7%) Renewables: 1,402 GWh (30.6%) • Sales Forecast Total sales are estimated at 4,230.3 GWh. Direct CEB sales account for 3,774.7 GWh, while sales to LECO are projected at 455.6 GWh. • Proposed Domestic Unit Rates 0–30 units: Rs. 4.50 to Rs. 5.11 31–60 units: Rs. 8.00 to Rs. 9.08 61–90 units: Rs. 18.50 to Rs. 21.01 Over 181 units: Rs. 61.00 to Rs. 69.27 The revision aims to ensure financial stability and supply reliability, particularly as the sector undergoes restructuring and manages costs from previous weather-related infrastructure damages. The PUCSL will now review the proposal and seek public feedback before a final decision.
Probe Expands into Unchecked Container Release at Colombo Port 📈
The Parliamentary Select Committee (PSC) met for three consecutive days last week to expedite investigations into the unauthorized release of 323 containers from the Colombo Port. The probe focuses on the bypass of mandatory physical inspections, a critical breach of customs protocol. • Core Findings & Evidence: Senior officials, including Sri Lanka Customs Director General Seevali Arukgoda, provided evidence regarding the clearance process. The investigation seeks to identify accountability for the release of these "red-flagged" containers without required security checks. • Committee Oversight: Chaired by Justice Minister Harshana Nanayakkara, the PSC aims to conclude the inquiry within three months. The committee is tasked with submitting policy recommendations to reform logistics and port administration to prevent future revenue loss or security risks. • Key Leadership Changes: Ports and Civil Aviation Minister Anura Karunathilaka has officially resigned from the committee. A replacement member is expected to be appointed shortly to maintain the cross-party composition of the 12-member panel. _Note: Investigations are ongoing based on provisional evidence recorded from customs and port authorities._
ICAO Pledges Technical Support for Sri Lanka’s Aviation Growth ✈️
• International Collaboration: The International Civil Aviation Organization (ICAO) has assured continuous support to maintain Sri Lanka’s aviation industry as safe, efficient, and sustainable. This comes ahead of a critical international audit scheduled for later this year. • Industry Outlook: ICAO Regional Director Tao Ma noted that the global aviation industry is projected to grow threefold over the next 20 years. He highlighted that developing the necessary human resources to meet this expansion will be a primary challenge for the region. • Compliance & Standards: The Civil Aviation Authority of Sri Lanka (CAASL) was commended for maintaining standards in alignment with ICAO regulations. Technical guidance will be provided to ensure the country successfully navigates the upcoming 2026 audit. • Human Capital & Leadership: • Rehan Wanniappa was designated as an ICAO Global Champion for the Asia-Pacific. • Prabath Kularathna and Dr. Upuli Sachithra were appointed as Sri Lankan Ambassadors. • Several retired Directors General were felicitated for their contributions to infrastructure and safety advancements. • Diplomatic Engagement: Discussions were held with the Minister of Ports and Civil Aviation to strengthen bilateral ties and ensure the long-term sustainability of the transport and tourism nexus. 📈
Fisheries Crisis Averted: President Steps In 📈
President Anura Kumara Dissanayake has intervened to resolve a nine-day Satyagraha protest by madel (beach seine) fishermen, following a high-level meeting at the Presidential Secretariat. • The Core Dispute: Fishermen had been protesting a government ban on using tractor-mounted winches for hauling nets. While operators cite labor shortages, the government and environmentalists raised concerns over ecological damage and the impact on approximately 37,000 small-scale fishers. • Key Outcomes: • Immediate Suspension: Protesters officially called off their strike following the discussion. • Joint Action Plan: All parties agreed to propose a balanced solution within a short period to protect livelihoods without compromising marine safety. • Follow-up Talks: Formal negotiations involving all stakeholders are scheduled to commence this Monday. • Financial Relief: Agreement was reached to involve the Ministry of Finance to address leasing and payment issues faced by mechanized operators during the transition. • Sector Context: The fisheries sector remains a vital economic pillar, contributing roughly 1.9% to GDP. The government is currently prioritizing the National Fisheries and Aquaculture Policy to balance modernization with sustainable resource management.
## Universal High-Speed Broadband Target Set for 2029 📈
The Sri Lankan government has outlined a strategic timeline to provide all citizens with high-speed connectivity by 2029, addressing key infrastructure gaps in the ICT/BPM and digital sectors. • Infrastructure Requirements Capacity Expansion: Nationwide capacity must increase by 25% to ensure universal access, specifically targeting schoolchildren. Tower Rollout: 100 new towers are scheduled for installation in 2024. However, between 600 and 1,000 additional towers are required to meet full demand. Connectivity Gap: While current internet coverage is at 98%, officials clarified this does not yet equate to high-speed broadband standards. • Commercial & Regional Strategy Private Sector Role: A commercial model for tower deployment will be developed, allowing private sector participation via a bidding process. Digital Literacy: The Sectoral Oversight Committee emphasized strengthening digital literacy outside Colombo, utilizing District Secretariat offices for coordination. • Budgetary Oversight The plans were reviewed during 2026 Budget allocation discussions for the Ministries of Digital Economy and Science and Technology.
Armenia Launches Temporary Visa-Free Entry for 113 Countries 📈
Armenia has announced a temporary visa exemption effective until July 1, 2026, aimed at boosting tourism and enhancing international business travel connectivity. • Eligibility Criteria: Residents of 113 countries holding valid residence permits from the US, EU Member States, Schengen Area, or GCC countries (UAE, Bahrain, Qatar, Saudi Arabia, Kuwait, and Oman) can enter visa-free. • Stay Conditions: Eligible visitors can stay for up to 180 days within a one-year period, provided their residence permit is valid for at least six months upon entry. • Market Context: The move follows a significant growth trend in Armenia's travel and hospitality sector. • January 2026 arrivals: 179,409 (up 28.6% YoY). • 2025 total arrivals: 2.26 million (up 2.5% YoY). • Economic Impact: This policy is designed to encourage spontaneous travel and longer exploratory journeys, potentially benefiting service exports and global connectivity for residents in high-income regions, including the Middle East.
TPA Conditions GSP+ Support on Land Rights & Equality 📈
The Tamil Progressive Alliance (TPA) has urged the European Union to link the continuation of GSP+ trade concessions to verifiable progress in human rights and land security for the Malayaga Tamil community. During high-level talks in Colombo, the TPA emphasized that preferential market access must depend on ending the "structural exclusion" of plantation workers. • Key Demands & Rights The TPA, led by MP Mano Ganeshan, highlighted that GSP+ credibility relies on the actual implementation of international conventions. Demands include secure land titles, an end to modern slavery-like conditions in supply chains, and the inclusion of Malayaga Tamil families in the national Rs. 5 million housing scheme, rather than inferior recovery frameworks. • Sector Impact The community remains the backbone of the tea and apparel & textiles sectors—Sri Lanka's primary export earners. Despite the apparel sector topping US$ 5.01 Bn (+5.42% YoY) and tea earnings reaching US$ 1.51 Bn (+4.74% YoY) in 2025, the TPA reports persistent intergenerational poverty and landlessness among these workers. • Trade Context The EU remains Sri Lanka's second-largest export market. Currently, 61% of exports to the EU utilize GSP+ benefits. While the government seeks to re-apply for the facility after the current cycle ends, the TPA warns that ignoring minority land rights and labor dignity undermines the governance logic of the agreement.
### US Tariffs: Sri Lanka Faces Regional Competitiveness Gap 📈
The Opposition has raised concerns over Sri Lanka's current trade position, noting that the country now faces higher US import duties on apparel compared to its regional peers. This follows recent trade deals secured by competitors that have realigned the South Asian export landscape. • Comparative Tariff Rates India: 18% (following a recent interim trade framework). Bangladesh: 19% (reduced from 20% under a new reciprocal agreement). Sri Lanka: 20% (current reciprocal rate as of February 2026). • Impact on the Apparel Sector Garments constitute approximately 70% of Sri Lanka’s total exports to the US. The 20% tariff, while lower than the initially proposed 44%, remains a significant barrier compared to the concessions secured by India and Bangladesh. Industry analysts warn that even a 1-2% difference in duties can shift major orders to regional alternatives, threatening the 300,000+ jobs within the apparel & textiles industry. • Economic Risks Based on provisional projections, the sector could face potential export losses of up to US$ 220 Mn annually under the 20% regime. Competitors like Bangladesh have also secured "zero-tariff" clauses for specific goods made with US-sourced raw materials, further widening the competitiveness gap. _Note: This summary is based on current market data and official statements as of February 13, 2026._