Sri Lanka is grappling with an increasing number of foreigners engaging in business activities while on tourist visas, a situation the government has now prioritized addressing. Prime Minister Harini Amarasuriya recently discussed the issue in Parliament, acknowledging that the government is aware of the problem and is in the process of formulating a mechanism to stop such illegal operations.
This concern was raised by SJB MP Mujibur Rahman, who specifically asked about the involvement of Israeli nationals in business activities in Sri Lanka while on tourist visas. The Prime Minister responded, highlighting the government’s determination to tackle the issue. “We are discussing the measures to be taken against that and are in the process of formulating a mechanism to stop such illegal activities,” Amarasuriya stated.
The Sri Lanka Tourism Development Authority (SLTDA), which oversees the country’s tourism sector, has also admitted that unauthorized foreign-run businesses have become a growing issue. SLTDA Chairman said that over the past two years, agencies responsible for monitoring such activities had been too complacent. However, now that the issue has been brought to light, the SLTDA is working alongside the Department of Immigration and Emigration and the police to identify and close down illegal foreign-run businesses.
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One key concern is the role of local communities, many of whom lease their properties to foreigners operating businesses like guesthouses, small cafes, and even large-scale tourism operations. These businesses often thrive in the informal sector, where many foreign nationals on tourist visas are allowed to work. While some locals benefit economically from these arrangements, there is growing pressure to ensure that such operations comply with the law. Fernando emphasized, “We really cannot go ahead with unauthorized establishments or people without the right visas doing business.”
To navigate this complex issue, the government has proposed a framework where foreign investors can engage in business legally, with clear parameters for foreign ownership. For large-scale operations, foreign nationals must apply for approval from the Board of Investment (BOI) and ensure they hire local employees. For small and medium-sized businesses, the government suggests a joint venture model, where foreigners can own up to 49% of shares while the local partner holds the majority stake.
In a recent pilot operation, SLTDA officers visited several unlicensed businesses, finding that many foreigners were operating in partnership with locals, though without proper SLTDA registration. While the businesses had some form of registration, they were still technically violating regulations.
As the discussion continues, Prime Minister Amarasuriya and the government are committed to ensuring that the country attracts foreign investment, but only through legal channels. “We’re not against foreigners doing business in Sri Lanka, but they must follow the formal processes,” she emphasized, addressing concerns that a crackdown could harm local communities who rely on income from foreign-run businesses. The government’s strategy aims to strike a balance between fostering growth and ensuring that business operations remain legal, transparent, and beneficial to the Sri Lankan economy.
