Sri Lanka’s export sector has shown strong resilience and steady recovery in the first half of 2025, achieving a total export value of US$ 8.34 billion, reflecting a 6.7% growth compared to the same period last year, according to the Export Development Board (EDB).

The combined exports for June 2025 alone reached US$ 1.46 billion, marking an 8.73% year-on-year growth, driven by solid performance in both merchandise and services. Merchandise exports rose by 6.85%, reaching US$ 1.15 billion, while services exports were estimated at US$ 309.6 million, representing a growing share of national export income.

For the January–June 2025 period, merchandise exports totaled US$ 6.5 billion, up by 5.86% from the previous year. Meanwhile, services exports surged 9.78% to reach US$ 1.83 billion, underscoring the increasing contribution of Sri Lanka’s knowledge-driven sectors such as ICT/BPM, Construction, Financial Services, and Logistics & Transport.

Key Sectoral Highlights:

Tea Exports: Tea, accounting for 12.8% of merchandise exports, earned US$ 132.97 million in June 2025, rising 9.21% year-on-year. The increase was driven by robust demand for Tea Packets (+25.53%) and Instant Tea (+49.65%). Export volumes grew 11.02%, with notable gains in shipments to Iraq (+82.99%) and Libya (+172.38%), despite a sharp drop in exports to Iran (-55.31%).

Coconut-Based Products: A standout performer in June 2025, this category grew 59.62% year-on-year. Subcategories recorded sharp increases: Coconut kernel products (+88.56%), fiber products (+33.61%), and shell products (+13.09%). Key items such as Coconut Oil (+97.09%) and Coconut Cream (+131.26%) saw strong global demand.

Apparel & Textiles: The sector saw modest growth of 3.71%, totaling US$ 463.12 million in June 2025, reflecting gradual recovery in global fashion markets.

Gems & Jewellery: Estimated to grow by 26.96% to US$ 37.9 million, aided by steady demand and value addition.

ICT/BPM Exports: One of the fastest-growing service sectors, ICT/BPM exports jumped 34.12%, earning US$ 147.18 million in June alone.

Transport & Logistics: This sub-sector generated US$ 148.18 million, growing by 12.39%, reinforcing its role in export service expansion.

Food & Beverages: Earnings rose 28.33%, reaching US$ 47.43 million, driven by a 46.44% boost in processed food exports.

 Areas of Concern:

While several sectors recorded growth, others faced downturns:

Spices & Essential Oils fell 27.16%, mainly due to a 57.13% drop in pepper exports.

Seafood exports declined 23.83%, with fresh/chilled fish falling 63.35%.

Ornamental Fish dropped sharply by 54.66%, totaling just US$ 1.07 million.

Rubber Products dipped 1.04%, driven by a 66.67% fall in sheet rubber.

Electrical & Electronic Components contracted 5.58%, totaling US$ 34.19 million.

Despite isolated setbacks, Sri Lanka’s export performance in the first half of 2025 reflects a promising trajectory, with diversified growth across traditional and emerging sectors, positioning the country to better navigate global economic challenges.

Sri Lanka Customs has detained nearly 1,000 BYD electric vehicles (EVs) at the Colombo Port over alleged discrepancies in their declared motor capacities—raising red flags under the island’s newly revised vehicle import tax regime.

The controversial move comes just months after the government restructured its import tax system, where electric vehicle excise duties are now strictly based on motor output (in kilowatts). Customs officials say the detentions are in line with these updated rules to prevent significant tax revenue losses.

Nearly 1,000 Chinese-manufactured BYD electric vehicles, imported into Sri Lanka in six consignments, have been detained by Sri Lanka Customs over disputes regarding their declared motor power output, which is now a critical determinant of applicable excise duty under the country’s latest vehicle tax regulations.

The vehicles, mostly of the BYD Atto 3 model, were declared as having 100 kilowatt (kW) motors. However, Customs suspects that these cars may actually have 150kW motors—an allegation with significant financial implications, as the tax rate increases steeply with higher motor capacity under the new framework.

 According to official sources, the excise duty on a 100kW EV is approximately Rs. 2.4 million, whereas the duty on a 150kW model can be as high as Rs. 5.4 million. The dispute could result in an estimated additional Rs. 4 million in tax per vehicle if the declared capacity is found to be inaccurate.

The detentions, though controversial, are being justified by Customs officials under the latest tax regulations implemented by the government on 1 February 2025. The revised vehicle import tax structure reintroduced excise duties on EVs based on motor capacity (kW), a system that was once challenged but now fully reinstated and expanded.

Current EV Tax Structure in Sri Lanka (Effective Feb 2025)

Motor Power (kW)      Age of Vehicle            Excise Duty Rate

Up to 100 kW < 3.5 years       200–300% of CIF value

100–200 kW   < 3.5 years       300% of CIF value

> 200 kW        < 3.5 years       Higher tiers apply

All categories  > 3.5 years       200% duty across board

Additional levies include:

Customs Import Duty (CID): 30% of CIF value (20% base + 50% surcharge)

Luxury Tax: 60% on EVs with CIF values exceeding Rs. 6 million

VAT: 18% on total value (CIF + taxes)

Social Security Contribution Levy (SSCL): 2.5% of dutiable value

This structure reinforces motor capacity (in kW) as a core determinant of vehicle taxation. Customs officials argue that strict enforcement is essential to prevent under-declaration and protect state revenue, especially given the government’s tight fiscal position.

The agents for BYD in Sri Lanka, JKCG Auto, have maintained that the imported vehicles are 100kW variants manufactured to suit specific market needs, such as those in Singapore and Nepal. “These configurations are provided directly by the manufacturer and are not unique to Sri Lanka,” a company spokesperson said.

Globally, variations in EV motor ratings are common. For instance, Singapore permits lower kW models to qualify for its Category A entitlement scheme. Even Tesla offers a down-rated 110kW Model Y in Singapore for the same reason.

However, concerns persist that manufacturers may be downgrading software ratings without physically altering the motor, making enforcement difficult. A 100kW-rated car could share the same physical motor as the 150kW version but offer lower performance. According to reviews, the BYD Seal’s 100kW version takes 10 seconds to go from 0–100 km/h, while the 150kW variant takes just 5.9 seconds.

Earlier this year, during a session of the Parliamentary Committee on Public Finance, several members’ highlighted cases where identical EV models were being taxed differently based on the declared motor rating. At the time, Customs Spokesman Seevali Arukgoda acknowledged the complaints and confirmed that an investigation had commenced.

While over 1,000 BYD vehicles have already been cleared and sold to end users, the current detentions mark a significant shift in enforcement under the revised tax code. Industry stakeholders now await clarity on how Customs will assess manufacturer documentation and real-world vehicle specs in the weeks ahead.

:Sri Lanka’s renewed diplomatic push under President Anura Kumara Dissanayake’s leadership marked a significant milestone this week, with his first official State visit to the Maldives laying the groundwork for stronger economic cooperation and regional integration. In the context of shifting geopolitical and economic dynamics in the Indian Ocean, this visit signaled a fresh start in bilateral relations, anchored in mutual development and strategic collaboration.

The visit—timed with the 60th anniversary of formal diplomatic ties between Sri Lanka and the Maldives—emphasized economic diplomacy, as both countries aim to emerge stronger from recent economic setbacks. President Dissanayake’s discussions with Maldivian President Dr. Mohamed Muizzu placed particular emphasis on boosting trade, investment, tourism, fisheries, and renewable energy cooperation.

Following high-level talks, President Dissanayake expressed Sri Lanka’s intent to “diversify the economic relationship” and invited greater Maldivian participation in Sri Lanka’s growth sectors. “Maldivian investors can always look at Sri Lanka as a trusted destination,” he said, outlining incentives such as investor-friendly Technology Parks and single-window systems to facilitate smoother investment processes.

Target sectors for collaboration include IT and Artificial Intelligence, agro-processing, real estate, tourism, fisheries, and urban infrastructure. Notably, Dissanayake highlighted opportunities for joint ventures in Sri Lanka’s growing digital economy, underscoring its push to become a regional tech hub.

Tourism and trade also featured prominently in the talks, with both leaders agreeing to improve air connectivity and enhance cross-border travel. With the Maldives being a major employment destination for Sri Lankan workers, such developments could further boost remittance flows and cultural ties. Additionally, new tourism packages are expected to be jointly developed, recognizing the sector’s shared importance to both island economies.

Fisheries cooperation, especially regarding transit routes and sustainable marine practices, was described as a “mutual economic imperative” due to the heavy maritime dependence of both nations. President Dissanayake also pushed for broader collaboration in ocean-based economic activities, including port development and fishing logistics.

On renewable energy, the President reiterated Sri Lanka’s ambitious target of generating 70% of its electricity from renewables by 2030. He extended an invitation for Maldivian collaboration on clean energy initiatives, noting Sri Lanka’s national program, Clean Sri Lanka, aligns closely with the Maldives’ sustainability agenda.

In addition to economic matters, legal and diplomatic agreements were formalized during the visit. A treaty on mutual legal assistance in criminal matters was signed, enhancing judicial cooperation and law enforcement coordination between the two countries. The agreement allows cases to be received, processed, and executed through designated Central Authorities.

Moreover, a Memorandum of Understanding on diplomatic training and information exchange was signed between the Foreign Service Institute of Maldives and Sri Lanka’s Bandaranaike International Diplomatic Training Institute. This MoU is expected to strengthen institutional ties and improve capacity-building in both foreign ministries.

President Dissanayake’s engagement with the Sri Lankan expatriate community and plans to address a business forum in Malé further demonstrate the administration’s commitment to deepening economic engagement and people-to-people ties. The visit, observers say, not only enhanced bilateral cooperation but also positioned Sri Lanka as a proactive regional partner in a rapidly changing Indo-Pacific geopolitical environment.

Sri Lanka’s decision to impose an 18% Value-Added Tax (VAT) on global digital payment platforms like PayPal and Stripe from October has sparked growing concern among the country’s freelance and digital workforce. The move, aimed at boosting government revenue under International Monetary Fund (IMF) guidance, threatens to place new financial burdens on thousands of Sri Lankans who rely on online platforms for their livelihoods.

The new tax measure brings foreign digital service providers into the local VAT net, aligning with international frameworks like those of the Organisation for Economic Co-operation and Development (OECD). However, critics argue that the government is pushing ahead without addressing significant enforcement and implementation gaps — and at a time when the country is trying to grow its $4 billion digital economy to $15 billion by 2030.

While the Inland Revenue Department (IRD) has clarified that VAT will be charged only on the service value and not on the 2.5% stamp duty already imposed on foreign card transactions, the confusion has persisted. Freelancers and digital entrepreneurs — many of whom use platforms such as Fiverr, Upwork, PayPal, and Stripe — say they’ve received no clear guidance or communication on how the tax will be applied in practice.

Experts point out that the tax design is fundamentally flawed when it comes to gig economy transactions. For example, when a Sri Lankan hires a freelancer through Fiverr, the platform often takes a 30% cut from the freelancer’s earnings — not the client’s payment. This means the Sri Lankan user may not be the party remitting payment directly to the platform, making enforcement of VAT nearly impossible without compelling the platforms themselves to collect and remit the tax.

“In other countries, the law makes platforms like Fiverr liable for VAT collection. Sri Lanka hasn’t reached that point,” noted a senior tax advisor. “The current model assumes that non-resident freelancers earning from Sri Lankans will voluntarily register for VAT, which is practically unenforceable.”

Another challenge lies in the legal classification of digital goods and services. Under the VAT Act, tailor-made software is treated as a service and taxed accordingly, but off-the-shelf software downloaded from app stores is classified as a good — which may be outside the digital VAT scope. These ambiguities make it difficult for digital service providers and consumers to understand their obligations.

Cybersecurity expert Asela Waidyalankara warned that the tax risks undermining the country’s digital development goals. “Gig workers and freelancers form the backbone of our digital economy. This tax will directly raise their costs and limit their competitiveness globally,” he said. Most freelancers operate on fixed contracts with international clients, giving them little room to renegotiate fees mid-project to account for new taxes. “They’ll either absorb the extra cost or risk losing business,” he added.

Waidyalankara also emphasized Sri Lanka’s limited capacity to enforce cross-border tax compliance. “Large economies can demand compliance from global tech giants. Sri Lanka can’t,” he said, suggesting that the country must rethink its approach and consider practical enforcement models.

As Sri Lanka seeks to modernize its tax regime under IMF oversight, balancing revenue goals with the survival of its digital workforce remains a complex and urgent challenge.

The Yala season paddy harvest is now in full swing across several areas in the Ampara District, with farmers reporting higher yields compared to previous seasons.

Harvesting is actively underway in the Nintavur, Sammanthurai, Pottuvil, Addalaichenai, Akkaraipattu, Alayadivembu, Thirukkovil, and Irakkamam Divisional Secretariat areas.

Farmers cultivating white rice report average yields of 130 to 140 bushels per acre, while red rice cultivators are recording 100 to 110 bushels per acre. The good weather conditions have contributed to these improved harvest outcomes.

However, the increase in supply has caused paddy prices to decline. Initially, a 66 kg bag of white rice paddy fetched around Rs. 6,500, but prices have now dipped to Rs. 6,200. Similarly, the price of red rice paddy, which started at Rs. 6,900, has decreased to Rs. 6,500 per bag.

The widespread use of combine harvesters, which can harvest 8 to 10 acres per day, has eliminated the need for manual labour in the fields. Several harvesters are now in operation across the district.

Despite the overall success, some areas such as Arakotty and Eripantham reported a decline in yields due to blight and leaf-roll diseases affecting the paddy crops.

Farmers remain optimistic about the season and hope that the yields will help stabilize their livelihoods, even as they contend with market price fluctuations.

The third session of the Joint Committee on Economic and Technical Cooperation between Sri Lanka and Turkiye concluded in Colombo, marking a significant milestone in the strengthening of bilateral relations between the two nations.

The high-level talks focused on deepening cooperation across a wide range of sectors including trade, investment, agriculture, education, maritime affairs, transport, health, tourism, and technology.

The Sri Lankan delegation was led by Minister of Trade, Commerce, Food Security and Cooperative Development, Wasantha Samarasinghe, while the Turkish delegation was headed by Minister of National Education of Turkiye, Yusuf Tekin.

In 2024, bilateral trade between Sri Lanka and Turkiye reached US$257 million, with Sri Lanka’s exports totaling US$137 million and imports from Turkiye amounting to US$120 million. Approximately 70% of Sri Lanka’s exports to Turkiye comprised tea, while other key exports included garments, activated carbon, coconut-based products, and retreaded tires.

Both sides emphasized the need to explore untapped trade potential and improve market access. Special attention was given to leveraging the Generalized System of Preferences (GSP) offered by the Turkish Government to boost the competitiveness of Sri Lankan products.

The Committee reviewed opportunities for business-to-business matching, discussed a trade fair calendar, and highlighted the upcoming Sri Lanka Expo 2026, scheduled for June next year, as a key event for trade promotion.

On investment cooperation, both delegations identified promising sectors for targeted promotion, including food processing, renewable energy, ICT, medical devices, and rubber-based products. Collaboration in science, technology, and digital transformation was also underscored as a priority.

Discussions also focused on enhancing logistics and maritime connectivity, with joint interest in R&D collaboration in emerging health technologies. Notably, tourism was highlighted as a growing area of cooperation, with Turkish tourist arrivals to Sri Lanka increasing by 78% in 2024.

Turkish Airlines’ daily operations to Colombo were acknowledged as a key enabler of growing people-to-people and commercial ties.

Both countries agreed on the importance of concluding key bilateral instruments, including the Customs Cooperation Agreement and the Double Taxation Avoidance Agreement, to facilitate trade, enhance the investment climate, and build investor confidence.

Minister Samarasinghe reiterated Sri Lanka’s commitment to an ambitious reform agenda focused on export-led growth, infrastructure development, and digitalization, in line with the national vision of “A Prosperous Country – A Beautiful Life.” He welcomed Turkiye’s continued engagement and support in this effort.

The session concluded with both parties signing an Agreed Report, reaffirming their commitment to advancing cooperation in the identified priority areas.

President Anura Kumara Dissanayake reaffirmed Sri Lanka’s unwavering commitment to strengthening bilateral relations with the Republic of Maldives, stating that the two nations will move forward not only as close friends but also as partners united by a common vision and purpose.

He made these remarks during a special state dinner hosted by Maldivian President Dr. Mohamed Muizzu at Kurumba Maldives Resort on Monday (28), as part of his official state visit.

Addressing the gathering, President Dissanayake expressed his appreciation for the warm hospitality extended by the Government of Maldives and underscored the historical depth of Sri Lanka-Maldives relations.

“This visit reaffirms the enduring friendship, mutual respect, and shared aspirations that unite our two countries. As neighbours in the Indian Ocean, our futures are intertwined,” the President said.

He highlighted the 60th anniversary of diplomatic ties between Sri Lanka and Maldives, calling it a timely and meaningful occasion to reflect on a legacy of goodwill and cooperation.

President Dissanayake recalled Sri Lanka’s role in supporting Maldivian independence in 1965, including hosting the signing of the Maldivian Declaration of Independence in Colombo. He also noted that the national anthem of Maldives was composed by Sri Lankan maestro Pandit W. D. Amaradeva, a fact both countries take pride in.

Reflecting on people-to-people ties, President Dissanayake said:

“We are proud of the thousands of Sri Lankans who have contributed to Maldivian society, especially in education, healthcare, and professional services. Similarly, we value the strong presence of Maldivians in Sri Lanka — whether for education, healthcare, or tourism — as a bridge between our two nations.”

The President also shared a personal anecdote from his Maldivian counterpart, who revealed that both his English and Physics teachers were Sri Lankan. “This shows the human dimension of our relations — built not only on policy but on trust, respect and shared lives,” he added.

Touching on tourism, he noted that the Maldives remains among the top ten countries whose citizens visit Sri Lanka. He extended an invitation to Maldivians to continue discovering Sri Lanka as their “second home.”

Looking ahead, President Dissanayake stressed the importance of enhanced cooperation in areas such as maritime security, blue economy initiatives, and multilateral collaboration, aiming to build a peaceful and sustainable Indian Ocean region.

“I am confident this visit will deepen cooperation, broaden understanding, and elevate the friendship between our two countries to new heights,” he concluded.

The President was accompanied by Foreign Affairs, Foreign Employment and Tourism Minister Vijitha Herath, along with senior government officials.

Transport Deputy Minister Prasanna Gunasena announced that the schedule of the Batticaloa night mail train has been revised in an effort to prevent elephant-train collisions, prioritising wildlife safety over operational convenience and revenue.

Speaking to the media yesterday, the Deputy Minister said the departure time from Colombo Fort has been changed from 7:00 p.m. to 11:00 p.m., aiming to reduce accidents involving elephants, particularly in areas where herds cross railway tracks during nighttime.

“We understand the change may inconvenience passengers and cause financial losses to Sri Lanka Railways, but protecting elephants is imperative,” he stated.

He added that the train engine has been replaced with a power set, which offers wider front visibility for the driver, allowing for earlier detection of elephants on the tracks. “This will help drivers react swiftly and prevent collisions,” he said.

Deputy Minister Gunasena stressed that while the measure may not completely eliminate the problem, it is a crucial step toward ensuring both rail safety and wildlife conservation.