SRI LANKA Trends and Developments Contributed by: Ayanthi Abeyawickrama, Varners
changes are expected to codify rules-based, time-bound eligibility criteria for tax exemptions and to remove the current approach based on discretion of the officers. SOE Restructuring Without Privatisation With the change in administration following the Presidential elections in September 2024, the new government has decisively moved away from privatisation as a policy tool. The previous government’s plans for partial or full divestment of major state-owned enterprises (SOEs) have been shelved. Instead, the current administra - tion has expressed its commitment to retaining public ownership of key strategic enterprises while pursuing a programme of internal restruc - turing and operational reform. The government’s SOE reform agenda focuses on improving efficiency, reducing financial loss - es, and strengthening governance and account - ability mechanisms within SOEs. Key entities under this reform initiative include: • Ceylon Electricity Board (CEB); • Sri Lankan Airlines; • Ceylon Petroleum Corporation (CPC); • Sri Lanka Telecom (SLT); and • Sri Lanka Insurance Corporation (SLIC). The goal of the restructuring process is to enhance these entities’ financial performance and service delivery without altering ownership structures. Proposed reforms include the intro - duction of: • performance benchmarks; • independent oversight boards; • debt restructuring; and • enhanced public reporting requirements.
The emphasis is on preserving strategic national assets while ensuring that they operate on sound commercial and operational principles. These SOEs have traditionally operated as monopolies or dominant players in strategic sectors but have also been fiscally burdensome. Reforms are expected to improve their opera - tional efficiency, corporate governance and abil - The Cabinet has approved significant increases to minimum wage levels. Effective April 2025, the national minimum monthly wage was increased by LKR9,500 to LKR27,000, and the minimum daily wage was raised to LKR1,080. A further increase to LKR30,000 per month and LKR1,200 per day has been approved to take effect from January 2026. These changes aim to improve income security amidst rising living costs. In parallel, the government has announced its intention to introduce a new Consolidated Labour Law to replace the patchwork of exist - ing employment statutes. The proposed reform seeks to harmonise disparate legislation – including the Wages Boards Ordinance, the Shop and Office Employees Act and the Indus - trial Disputes Act – into a single, modernised legal framework. This new law is expected to address long-standing regulatory inconsisten - cies, simplify compliance, enhance worker pro - tections, and promote greater formalisation and flexibility in the labour market. Tourism Recovery and External Trade Pressures Tourism has rebounded strongly, with over 1.1 million arrivals recorded in the first half of 2025 and total tourism earnings exceeding USD1.7 billion. June alone saw a 12.1% increase in rev - ity to attract investment. Labour Market Reform
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