Entrepreneurs outside Board of Investment zones often face lengthy approval processes, with some projects requiring special gazettes and parliamentary approval, making it nearly impossible for independent investors to navigate the system without government intervention.
Sri Lanka plans to allocate 50,000 acres of land for industrial development, a significant step toward addressing the country’s historically low land availability for industries. The announcement was made by Thilaka Jayasundara, Secretary to the Ministry of Industries, during an economic forum organised by the Ceylon Chamber of Commerce.
Jayasundara highlighted that Sri Lanka has only 0.4 percent of its land designated for industrial use, far below the international norm of around 3 percent. To bridge this gap, the government aims to increase industrial land allocation to 1 percent by 2030.
“For allocating the lands, we identified 50,000 acres for industries with the support of all relevant government institutions responsible for land allocation,” Jayasundara stated. She assured that the Ministry of Industries could complete the allocation process within 22 days and issue long-term lease agreements to investors within an additional 62 days, significantly streamlining the process.
Bureaucratic Red Tape
Private investors in Sri Lanka have long struggled to secure land for industrial purposes, with bureaucratic red tape and restrictive land laws posing significant obstacles. Land acquisition for private industries has been notoriously difficult, with many investors citing the process as a “nightmare.”
Historically, Sri Lanka’s land ownership structure has been heavily influenced by colonial policies. While freehold land ownership developed under colonial rule, large tracts of land were nationalised after independence, limiting private ownership to a maximum of 50 acres. Moreover, various laws have designated vast areas exclusively for agricultural use, further restricting industrial expansion.
Entrepreneurs outside Board of Investment (BOI) zones often face lengthy approval processes, with some projects requiring special gazettes and parliamentary approval, making it nearly impossible for independent investors to navigate the system without government intervention.
By expediting land allocation and simplifying administrative procedures, the Sri Lankan government aims to attract more local and foreign investment, boosting economic growth and industrialisation. The new initiative is expected to create jobs, enhance manufacturing capabilities, and drive economic diversification in the country.
Despite these positive steps, challenges remain. Analysts suggest that while the government’s commitment to accelerating land allocation is a welcome move, the success of the initiative will depend on its effective implementation and the reduction of bureaucratic inefficiencies that have historically hindered industrial investment.
As Sri Lanka moves toward its 2030 target, the coming years will determine whether these land reforms can translate into tangible economic gains and a more investor-friendly business environment.
Annual Growth 6.4 Per Cent
The mixed economy of Sri Lanka was worth 27.60 LKR trillion ($84 billion) by gross domestic product (GDP) in 2023 and $318 billion by purchasing power parity (PPP). The country had experienced an annual growth of 6.4 percent from 2003 to 2012, well above its regional peers. This growth was driven by the growth of non-tradable sectors, which the World Bank warned to be both unsustainable and inequitable. Growth has slowed since then. In 2022, Sri Lanka faced a severe economic crisis, characterised by high inflation, and political instability. However, the country stabilised faster than expected in 2023 due to key economic reforms and fiscal discipline. By 2024, Sri Lanka re-entered the path of economic growth, with a renewed focus on sustainable development.
Sri Lanka has met the Millennium Development Goal (MDG) target of halving extreme poverty and is on track to meet most of the other MDGs, outperforming other South Asian countries. Sri Lanka’s poverty headcount index was 4.1 per cent by 2016. Since the end of the three-decade-long Sri Lankan Civil War, Sri Lanka has begun focusing on long-term strategic and structural development challenges and has financed several infrastructure projects.
High foreign debt, economic mismanagement under the governments of Gotabhaya and Mahinda Rajapaksa, and lower tourism revenue led to the country defaulting on its sovereign debt in April 2022. The economy contracted 7.8 per cent in 2022, and the percentage of the population earning less than $3.65 a day doubled to around 25 per cent of the population. On March 20, 2023, the IMF loaned US$3 billion to the country as part of a 48-month debt relief program.
