photo Rice and Curry in Sri Lanka
Business in Sri Lanka
| Best room rates in Sri Lanka

Sri Lanka Business

Overall the economy in Sri Lanka hasn`t been doing too well since the Rajapakse Government has taken over the country in autumn 2005.

The Sri Lankan Rupee is now much less worth and all prices have gone up a lot with inflation rates of up to 20%.

In addition tourism hasn't come up despite the end of the civil war, which had triggered much higher expectations.

In fact the prices have gone up far too high for being attractive to large amount of tourists, who are getting much better offers in neighboring regions like Indochine, where Cambodia and Vietnam have become explosive.

Foreign investment has also been hit badly by disallowing the possession of land and by the over-all fairly dismal economic situation in Sri Lanka.

Even big loans from China and some Western countries couldn't improve the situation, and now not only the $2,5 billion IMF loan is going to be a big burden for future generations.

Now one has to see, where Ranil Wickramasinghe and Sirisena will be taking the country in the years to come.

photo Ranil Wickramasinghe Sri Lanka
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Ranil Wickramasinghe

In 2005 Ranil Wickramasinghe had lost the election against Mahinda Rajapakse by an inch alongside his running mate Keheliya Rambukwella, but now he has the chance, to do good things for Sri Lanka by refurbishing it's business and economy.

Watch a 2005 election video

photo sleepy drunk in Sri Lanka
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Sleepy Tourism business

Tourism was named to be a key industry for Sri Lanka, but for example the destruction of Unawatuna Beach or the shaky situation of Sri Lanka's new airline Mihin Lanka have not really looked like a great success.

With still only 1,2 million tourists the overall tourism statistics still look fairly slow, what is primarily caused by prices, that remind more of central London and Paris than of a developing country, so that any rapid increase is unlikely to happen in Sri Lanka.

At the same time the tourist areas are seeing an overflow of rooms and constructions, so that most investors are likely to fail with their hospitality projects.

Rooms rates of around $70 for a basic room near the beach or some $150 for some upscale experience are certainly not competitive on international markets as well as the prices for the heavily taxed alcohol products, which cost the consumers five times more than in for example Cambodia, where a fine 0.3 draft beer on a lovely beach starts a $50c and where good cocktails begin at $1 during happy hours.

The same applies to meal prices also in Thailand, where a tasty dishes become available at around $2.

That's why now Cambodia is comfortably ahead of Sri Lanka with already 4 million tourists per annum and who come to see the Angkor Wat temples and beautiful beaches and some truly amazing small islands.

Also the overall service and entertainment quality at restaurants, bars and hotels seems to be no longer competitive in Sri Lanka, what may explain the disastrous return rates.

So it will be interesting to see, how the new government will tackle these problems, which will surely prevent any regular growth in tourism and business development in Sri Lanka.

Currently most property investors are rushing into Cambodia, where some solid growth is primarily based on a healthy price level.

For example a nicely furnished 3 floor, 5 bedroom villa with a big terraces and some nice view can be bought for around $100.000 and buyers won't even have any visa issues like in Sri Lanka as the one year business visa is for grab upon arrival for a moderate fee of $360 and without any complications.

At the same time the Sri Lankan governments have seemed to do everything in order to discourage foreigners from living and investing in Sri Lanka.

But will they ever change?

 

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