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VAT to drive one-third of Sri Lanka’s projected revenue increase in 2025

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VAT to drive one-third of Sri Lanka’s projected revenue increase in 2025

April 01, Colombo (LNW): A significant portion of Sri Lanka’s anticipated Rs. 922 billion increase in government revenue for 2025 will be fuelled by value-added tax (VAT), according to an analysis by PublicFinance.lk, a local economic research platform.

Government revenue—excluding provincial council income and grants—is projected to reach Rs. 5,012 billion in 2025, marking a 23 per cent rise from Rs. 4,090 billion in 2024.

Treasury estimates place the total revenue at Rs. 5,125.96 billion, with tax revenue alone contributing Rs. 5,012.4 billion. Provincial councils are expected to generate Rs. 83.56 billion, while foreign and domestic grants will add Rs. 30 billion to the national coffers.

VAT remains the most significant driver of revenue growth, projected to generate an additional Rs. 305 billion in 2025, accounting for one-third of the total revenue increase. VAT alone will make up 32 per cent of total government income, reflecting its central role in fiscal planning.

A breakdown of the tax revenue sources highlights that VAT on imports is set to yield Rs. 193 billion, while the excise duty (special provisions), driven largely by motor vehicle duties, is forecasted to bring in Rs. 215 billion, with vehicle-related taxes contributing Rs. 171 billion.

Taxes on international trade and income are expected to rise, generating Rs. 174 billion and Rs. 141 billion, respectively. Other taxes and levies will add Rs. 51 billion, while non-tax revenue is estimated at Rs. 37 billion.

The government is also forecasting an economic growth rate of 5 per cent in 2025, with total tax revenue reaching 13.9 per cent of GDP, while overall revenue is projected to be 15 per cent of GDP.

Export earnings from goods and services are expected to contribute Rs. 19 billion, and capital expenditure is forecasted to account for 4 per cent of GDP. The primary surplus is estimated at 2.3 per cent of GDP, with the budget deficit being expected to stand at 6.7 per cent of GDP.

Price of milk tea increases following rise in imported milk powder costs

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Price of milk tea increases following rise in imported milk powder costs

April 01, Colombo (LNW): Tea shop and restaurant owners across Sri Lanka will increase the price of a cup of milk tea by Rs. 10, following the government’s latest hike in imported milk powder prices, the All-Island Restaurant Owners’ Association has confirmed.

The decision comes in response to the 4.7 per cent price increase on imported milk powder, which has driven up costs for businesses reliant on the essential ingredient.

As a result, a 400g packet of imported milk powder now costs approximately Rs. 50 more than before.

The price adjustment took effect from midnight yesterday (31), with restaurant owners citing rising operational expenses as a key factor in the decision.

Many small-scale businesses, particularly those in urban and suburban areas, are feeling the strain of increased costs, as imported milk powder is a staple ingredient in preparing milk tea—one of the most popular beverages in Sri Lanka.

Sri Lanka ready to send medical team to Myanmar following earthquake

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Sri Lanka ready to send medical team to Myanmar following earthquake

April 01, Colombo (LNW): The Sri Lankan government has announced its readiness to dispatch a team of medical professionals to Myanmar to assist those affected by the recent earthquake, demonstrating its commitment to international humanitarian aid.

Health Minister Dr. Nalinda Jayatissa stated that a specialist medical team, including doctors, nurses, and emergency response personnel, has been assembled and is prepared to travel to Myanmar as soon as the necessary clearance is received from the authorities there.

Speaking at a briefing in Kalutara, the minister reaffirmed Sri Lanka’s solidarity with Myanmar during this challenging time, highlighting efforts to provide not only medical expertise but also essential medicines, equipment, and relief supplies to those in need.

“The government is actively coordinating with Myanmar’s Embassy and the Ministry of Foreign Affairs to facilitate this humanitarian effort. We have conveyed our willingness to deploy the medical team as soon as we receive approval from Myanmar’s authorities, and we stand ready to assist whenever they call upon us,” Dr. Jayatissa stated.

Schools reopen for second term amid health advisory

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Schools reopen for second term amid health advisory

April 01, Colombo (LNW): The Ministry of Education has announced that the second phase of the first school term for the 2025 academic year will commence today (01) for all government schools and government-approved private institutions. This follows the conclusion of the first phase of the term on March 14.

However, as part of religious observances, the Ministry has granted a special holiday for Muslim schools today in recognition of the Ramadan festival, ensuring that students and staff can participate in the celebrations.

Meanwhile, health authorities have urged parents and school administrations to remain vigilant about the increasing spread of chickenpox among children.

Medical professionals have advised parents to monitor for early symptoms such as fever, rash, and fatigue, and to keep affected students at home to prevent further transmission within school environments.

Lanka IOC announces fuel price reduction

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Lanka IOC announces fuel price reduction

April 01, Colombo (LNW): Lanka IOC has announced a revision of fuel prices, effective from midnight on 31 March, in line with the recent adjustments made by the Ceylon Petroleum Corporation (CEYPETCO).

As per the latest update, the price of 92 Octane petrol has been reduced by Rs. 10 per litre, bringing the new retail price down to Rs. 299 per litre.

Similarly, 95 Octane petrol has seen a Rs. 10 per litre reduction, with its revised price now set at Rs. 361 per litre.

Despite these reductions in petrol prices, all other fuel categories will remain unchanged, as no adjustments have been announced for diesel, super diesel, or kerosene.

CEYPETCO announces petrol price reduction from midnight

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CEYPETCO announces petrol price reduction from midnight

April 01, Colombo (LNW): The Ceylon Petroleum Corporation (CEYPETCO) has confirmed that petrol prices have been reduced from midnight March 31, offering slight relief to consumers amid ongoing economic pressures.

According to the latest revision, the price of Petrol Octane 92 and Petrol Octane 95 will be reduced by Rs. 10 per litre, while prices of all other fuel types will remain unchanged.

The revised fuel prices are as follows:

  • Petrol Octane 92 – Rs. 299 per litre (Rs. 10 reduction)
  • Petrol Octane 95 – Rs. 361 per litre (Rs. 10 reduction)
  • Auto Diesel – Rs. 286 per litre (No change)
  • Super Diesel – Rs. 331 per litre (No change)
  • Kerosene – Rs. 183 per litre (No change)

Heavy showers about 100 mm expected across island (April 01)

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Heavy showers about 100 mm expected across island (April 01)

April 01, Colombo (LNW): The atmospheric conditions are getting favourable for afternoon thundershowers in the most parts of the island for next few days from today (01), the Department of Meteorology said in its daily weather forecast today.

Showers or thundershowers will occur at several places in the most parts of the island during the afternoon or night. 

Heavy rainfall of about 100 mm are likely at some places in Central, Sabaragamuwa, Western, Southern and Uva provinces and in Kurunegala and Polonnaruwa districts. 

Misty conditions can be expected at some places in Western, Sabaragamuwa, Central, North-central and Uva provinces and in Galle, Matara and Kurunegala districts during the morning.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.

Marine Weather:

Condition of Rain:

Showers or thundershowers will occur at several places in the sea areas off the coast extending from Puttalam to Trincomalee via Colombo, Galle, Hambantota and Batticaloa during the evening or night. 

Winds:

Winds will be South-easterly or variable in direction and wind speed will be (20-30) kmph.

State of Sea:

Sea areas around the island will be slight.

Temporarily strong gusty winds and very rough seas can be expected during thundershowers.

Alipay’s Expansion into Sri Lanka: A Boon or a Challenge?

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Alipay’s Expansion into Sri Lanka: A Boon or a Challenge?

By: Staff Writer

March 31, Colombo (LNW):The introduction of Alipay+ into Sri Lanka’s digital payment ecosystem presents both opportunities and challenges. On the one hand, it offers a seamless payment experience for international tourists and business travelers, boosting the local economy.

On the other, concerns such as data security, foreign dominance in the digital payment sector, and potential impacts on local financial institutions must be considered. This analysis explores the implications of Alipay’s entry and assesses whether it will serve Sri Lanka’s long-term economic interests.

In a significant development for Sri Lanka’s tourism and digital economy, LankaPay, the country’s National Payment Network, has collaborated with Ant International to enable Alipay+ transactions nationwide. This initiative allows over 400,000 LANKAQR merchants to accept mobile payments from tourists and business travelers via 14 international e-wallets integrated with Alipay+ in the initial phase.

Alipay+, a cross-border mobile payment solution by Ant International, connects over 1.7 billion users worldwide through 36 international e-wallets and banking applications. Under this system, visitors from 10 countries and regions can scan LANKAQR codes at Sri Lankan businesses and complete transactions as they would in their home countries.

Edward Yue, General Manager for Southeast Asia, Australia, and New Zealand at Ant International, emphasized the benefits of the partnership. He noted that the national LANKAQR infrastructure, developed by the Sri Lanka Central Bank and LankaPay, provides a strong foundation for digitalizing local businesses while enhancing interoperability and global connectivity.

The Alipay+ integration includes notable partners such as Alipay (China), AlipayHK (Hong Kong), MPay (Macao), Hipay (Mongolia), GCash (Philippines), Changi Pay and OCBC Digital (Singapore), Touch ‘n Go eWallet and MyPB by Public Bank Berhad (Malaysia), Naver Pay and Toss Pay (South Korea), TrueMoney (Thailand), BigPay (Malaysia, Singapore, Thailand), and Tinaba (Italy).

This initiative aligns with Sri Lanka’s broader economic objectives. According to the Sri Lanka Tourism Development Authority (SLTDA), the country experienced a 38% rise in tourist arrivals in 2024 compared to the previous year. For 2025, Sri Lanka targets attracting 3 million visitors and generating $5 billion in tourism revenue. The integration of Alipay+ is expected to facilitate this growth by enhancing the digital payment experience.

Channa de Silva, CEO of LankaPay, described the partnership as a milestone in Sri Lanka’s financial sector, stating that it would improve payment convenience for tourists and business travelers while increasing foreign exchange inflows. The LANKAQR system, introduced in 2020 by the Central Bank of Sri Lanka and managed by LankaPay, ensures standardized and interoperable QR code-based transactions, integrating consumers, banks, and merchants into a unified payment network.

Beyond digital transactions, Alipay+ offers additional benefits to merchants by connecting them with tourists through mobile app-based digital services. This could provide businesses with new opportunities to engage international customers and enhance their market reach.

However, Alipay’s expansion into Sri Lanka also raises certain concerns. While the platform streamlines cross-border payments, it increases reliance on a foreign financial network, potentially limiting growth opportunities for local payment providers. Additionally, data security and privacy issues may arise as international companies handle large volumes of user data.

Looking ahead, Ant International and LankaPay plan to further expand Alipay+ e-wallet acceptance and launch joint marketing efforts to encourage digital transactions across Sri Lanka. If properly managed, this collaboration could bolster tourism and the broader digital economy. However, Sri Lanka must carefully navigate regulatory and security challenges to ensure that the benefits of Alipay+ integration outweigh any potential risks

Sri Lanka’s Rising Potential in the Global Supply Chain and Investment Market

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Sri Lanka’s Rising Potential in the Global Supply Chain and Investment Market

By: Staff Writer

March 31, Colombo (LNW): James Johnstone, Co-Head and Portfolio Manager of the Redwheel Emerging and Frontier Markets Team, has highlighted Sri Lanka’s strategic potential in global manufacturing through foreign joint ventures.

Speaking at the ‘Invest Sri Lanka’ Investor Forum, organized by the Colombo Stock Exchange (CSE) and the Securities and Exchange Commission (SEC), he addressed over 100 foreign investors and fund managers, underscoring the nation’s economic prospects.

Redwheel, a global investment management firm established in 2000, specializes in investment strategies across developed and emerging markets, including equities, convertible bonds, and income solutions. Johnstone emphasized that Sri Lanka has strong prospects in services and commodities, aligning with Redwheel’s Frontier Markets Equity Strategy’s three key growth pathways. He also identified several Sri Lankan companies as attractive investment opportunities under this framework.

Johnstone commended Sri Lanka’s recent macroeconomic stabilization efforts and noted that tourism and remittances are poised to drive growth. However, he pointed out that Sri Lanka’s market capitalization, at just 15% of GDP, lags behind regional peers like Vietnam (59%) and Indonesia (40%). A stable currency, he stressed, is crucial for further financial growth.

As of March 31, 2025, Sri Lanka’s capital market is rebounding strongly, mirroring broader economic recovery trends. The All Share Price Index (ASPI) and the S&P SL20 index registered remarkable returns of 49.7% and 58.5%, respectively, in 2024, reflecting renewed investor confidence. Additionally, the market recorded a net foreign inflow of USD 66.5 million and a record capital raise of USD 568.61 million in the same period.

Government-led economic reforms have been instrumental in this turnaround. The National Export Development Plan (2025-2029) aims to accelerate export-driven growth, while expanding Free Trade Agreements (FTAs) with ASEAN countries promises to enhance trade opportunities. Furthermore, the introduction of a National Tariff Policy is expected to create a more predictable trade environment, benefiting both domestic and international investors.

The March 2025 ‘Invest Sri Lanka’ forum in Colombo attracted over 100 international delegates and around 400 local participants, highlighting the country’s progress since the 2022 economic crisis. Key regulatory officials reaffirmed Sri Lanka’s financial stability and predictability, reinforcing the nation’s readiness to attract global capital.

Sri Lanka’s external sector has also shown notable improvement, with February 2025 reporting a higher current account surplus than the previous month. Overall, the country’s capital market is on a strong growth trajectory, fueled by economic reforms, increased investor confidence, and strategic initiatives for long-term sustainability.

Sweden-Sri Lanka Business Council Reports Strong Growth and Optimism for 2025

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Sweden-Sri Lanka Business Council Reports Strong Growth and Optimism for 2025

By: Staff Writer

March 31, Colombo (LNW):The Sweden-Sri Lanka Business Council (SSLBC) has reported significant growth in Swedish business engagement with Sri Lanka, along with strong optimism for 2025. According to the council’s 2025 Membership Survey, the past five years have seen steady expansion, with particularly notable growth in 2024.

The survey results reflect a growing interest among Swedish companies in Sri Lanka, evident in the increase of SSLBC members from 75 to 100 in just two years. SSLBC Secretary General Leif I Ohlson highlighted the positive trends, stating,

“The results are encouraging. Our members have strengthened their business relations with Sri Lanka, and we are witnessing a rising interest from the Swedish business community.” However, he also pointed out ongoing concerns regarding visa processes for business visits, conferences, and trade fairs, urging relevant authorities to take action.

Conducted in February 2025, the survey gathered responses from half of the SSLBC’s members, spanning industries such as IT, manufacturing, trade, food, and tourism. Notably, 75% of respondents have been operating in or with Sri Lanka for at least three years.

Key findings from the survey indicate that nearly 60% of members reported business growth in Sri Lanka over the past five years, with a similar proportion experiencing expansion in 2024 alone. Confidence in Sri Lanka’s business environment has surged, with 70% expecting positive developments in 2025— a stark contrast to the 25% in 2023 when the country was still recovering from the 2022 fiscal crisis.

Moreover, optimism remains high regarding individual business prospects. Over 60% of members anticipate further growth in their Sri Lanka-related ventures this year.

The survey also identified the top business priorities for 2025. The most pressing concern is the availability of skilled labor, cited by 74% of respondents. Other key issues include clear and predictable import/export regulations (47%), financing (44%), improved flight connections (37%), stable payment flows (35%), Sri Lanka’s image in Swedish media (34%), and transportation infrastructure (29%).

Sri Lanka’s highly educated workforce, particularly in the IT sector, continues to attract Swedish companies. Competitive salary structures further enhance the country’s appeal. However, the survey reveals that only a small number of companies have received support from Swedish or Sri Lankan trade promotion agencies. While recent improvements have been observed, more efforts are needed to facilitate business development.

Ohlson emphasized the importance of on-ground presence and peer-to-peer experience sharing, recognizing SSLBC’s role in fostering these connections. Established in 2006, the council currently has 100 members across IT, manufacturing, consumer goods, food, and tourism sectors. Collectively, these businesses generate over 2,000 jobs in Sri Lanka.

SSLBC remains committed to enhancing member value through knowledge sharing, networking, and advocacy. By strengthening ties between trade organizations, business intermediaries, and companies in both nations, the council continues to play a pivotal role in stimulating Sweden-Sri Lanka business relations.

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