It is told that any form of business needs to be started with a lot of investment. Well, I must it is just a myth of theory. For those who have proper research in what business they want to do and how to start and function a business will understand that there is not need to invest any large amount of money in business, especially for a startup business.
Sri Lanka is a country which is the most happening business where foreigners would love to come and start export business in Sri Lanka;
Reasons, why foreigners would like to start an export business in Sri Lanka, are as follows;
- Continuous increase in the country’s economy
- The steps hare not complicated to start a business in Sri Lanka
- Process of starting a business is smooth
- Employer opportunities
- Various fields to start a business in Sri Lanka.
Sri Lanka is a country which apricates foreigners to start business in the country. Although there are some restrictions for foreigners to start business in Sri Lanka. The liberty to start a business for foreigners is comparatively lesser than the locals in the country. However, it is considered as the best South-Asian countries to start business.
Some of the factors to keep in mind for foreigners to start an export business in Sri Lanka;
- When you are starting a business in Sri Lanka you first need to know which industry or field you want to start business.
- Understanding the type of business which you want to do is very important since there are different rules and regulations for different type of businesses. In certain fields foreigners are not allowed to do certain type of businesses.
- Recommended and a must to have a local Company Secretary in the business. the secretary of the company should be a highly qualified person who can help in the registration of the company.
Businesses which cannot be done by a foreigner in Sri Lanka:
There are businesses where foreigners have the right to have 100% and 40% to have the ownership of the company. But there are few companies which they cannot own or work. Some of the businesses where foreigners cannot work or own are as follows;
- Money lending business
- Gold exchange business
- Loan business
- Fishing in coastal
- Investment for Retail Trade which is less than US$1 million
- Security services which includes management security in a company.
Businesses where foreigners have only 40% of the ownership rights:
- Education sector
- Shipping companies
- Travel agencies
- Mass communication
- Fishing industry
- Mass communication sector
- Products such as tea, rubber, timber, coconut, cocoa, spices, rice and sugar
- Mining and primary resources such as non-renewable natural resources
- Goods under Sri Lanka exports under the international restriction of quota
Businesses where foreigner ownership depends on the percentage given by the line ministry:
- Merchandising, mining of gems
- Industry involving in the production of coins, currency and security documents
- Manufacturing industry such as medicines, drugs, alcohol and poisons
- War tools such as arms, guns, military vehicles and bombs
- Coastal shipping
- Air transportation
Businesses where foreigners have 100% ownership rights:
Apart from the above 3 categories mentioned above, a foreigner as the right to have 100% ownership in their business. Some of the businesses which they can fully own are as follows;
- Gyms (various types of exercise categories such as boxing, karate, etc.)
- Book shops
- Law firms
- Accounting firms
- Pubs and other recreational business
Company secretary for the export business in Sri Lanka:
It is recommended for foreigners to have a local professional Company Secretary (CS) since it will be easy for them to coordinate with the country’s rules and regulations in order to start a company. It is best that from the beginning you need to be ready with a CS so that they can help you with the company registration and help in setting up the company. The CS needs to be professional, knowledgeable and also a person who you can trust in.
Related article for foreign investors: Can a foreigner open a bank account in Sri Lanka? Yes! The answer is here.
Board of Investment (BOI):
BOI is a registration recommended for every foreigner to register in order to do business in the country. The cost is quite huge but it is recommended since it has other benefits. The minimum cost to invest in a company in order to be eligible to do the registration of BOI is around USD $250,000.
The following are the benefits through BOI;
- Tax benefits
- Proper information for setting up a company
- Automatically issued investment residence visa which can last for 3 years
- After 3 years it can be renewed again
Facts of Sri Lankan export business:
- It is found that around US$ 11.2 billion worth of goods are global in 2018
- It is resulted that the dollar is in a dip of -1.1% from 11.3$ billion worth of shipments in 2014
- From 2017 to 2018 the Sri Lankan export reduced in -4.9%
- The Sri Lankan export transportation cost around $500 for every resident from South Asian country.
- Top 10 Sri Lanka’s export accounted to 80.4% for the overall global value of shipments
- Among the top 10 exports, ships and boats are the fastest growing by 93.5% since 2017
- The second place where the export system of this industry is continuously improving is gems and metals where the percentage increased up to 53% due to costliest stones and diamonds
- The exports which secured the country’s third place are machinery where it the fastest export gaining products which increased up to 49.8% continuously after every year.
Top 10 exports in Sri Lanka
Below are the top exporters’ list in Sri Lanka;
|Knit and crochet||US$ 2.9 billion||25.8%|
|Clothing and accessories excluding nit and crochet||US$ 2.2 billion||19.4%|
|Coffee, tea and spices||US$ 1 billion||9.3%|
|Rubber and rubber products||US$ 926.9 million||8.3%|
|Ships and boats||US$ 542.6 million||4.9%|
|Gems and metals||US$ 408.3 million||3.7%|
|Machinery||US$ 309 million||2.8%|
|Electrical machinery and equipment||US$ 308.6 million||2.8%|
|Fish||US$ 264.9 million||2.4%|
|Chemical goods||US$ 124.5 million||1.1%|
Sri Lanka has numerous export business opportunities. As a foreigner you need to have good research on the restricted fields and it is recommended to go to sectors where you can have a 100% ownership. For example, when you want to start a small-scale business then there will be restrictions depending on the type of sector chosen whereas when you have a restaurant business in Sri Lanka there will no restrictions and you are free to do your business.
Is it mandatory to do the BOI registration?
Yes, it is mandatory to do the BOI registration for the company.
How much does it cost to register a company in Sri Lanka?
It cost around 120,000 in which 50% should be pay in advance
How long does it take to complete the registration process?
Minimum 3 months and maximum 1 year