Barriers to foreigners starting a business
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Hi all,
I am interesting in starting a business in Sri Lanka but understand this may be difficult as a foreigner.
I am seeking information as to what barriers I may face and how I will be able to overcome them. If you could answer any of the following questions, I would greatly appreciate it.
Is it true foreigners cannot buy land? Is this likely to change in the near future?
If land is obtained under the 99 year lease agreement, are there restrictions on what can be done to that land?
Is it possible to own the business outright, without having a local partner?
Are there any proposed infrastructure updates currently taking place or due to take place in the near future? (i.e. better road or rail access to the east coast from the west?).
Is there a minimum investment required to start a business?
I have a few more questions but i'll start with these. Thanks in advance for your help!
best way is find a lawyer in sri lanka and get advice from him.
Hi Porzoni
Sri Lanka’s Government actively promote inward foreign investment and have produced a guide you can find on line which answers most of the questions you ask, and a few more you have not asked. I would recommend you Google “One Stop Unit Investor Guide SLTDA” and digest the content. Makes fascinating reading if you are serious about investing in Sri Lanka’s tourism industry
To answer some of those questions – if you have enough money to invest, you can buy land as a foreigner without a local partner – you will have to do it through a Sri Lankan Limited Company, which is easily set up. Yes, you can own the business outright so there is no need for leasing the land. There are constant improvements to Sri Lanka’s road infrastructure – it has improved immeasurably in the last two decades (Colombo to Arugam used to be a full day trip – now you can do it easily in 6 hours overnight, and about 8 hours in the day). Forget rail access – the railway system was built by the Brits and has hardly been touched since.
As I see it, you have two main problems:
1st: The level of investment required to gain residency
2nd: Getting land in Arugam Bay. Even if you reach minimum investment levels, the cost of land in Arugam is prohibitively high and there is not much of it left, so it is getting more expensive. Was quoted Aus $395,000 per acre for beach-side land last October and about $200K per acre inland. They price in Rupees per perch (160 perches to an acre) and you’ll buy nothing for less than 100,000 Rupees per perch
I see from your intro that you are experienced in hostels. There is a hostel currently for sale in Arugam (called the Long Hostel) which has been up and running for about a year. Cost is 60 million Rupees (Aus $500,000 give or take)
So if you have half a million Aus dollars to spend, I think you’d be up and running in no time at all!
Good luck
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