Sri Lanka to Ease Foreign Exchange Controls to Attract More FDIs in 2025

July 13, 2025 | Ethera Business News

Tag: Policy Reforms | Sri Lanka | FDI Growth

In a strategic move to revive investor confidence and accelerate economic recovery, the Government of Sri Lanka has announced plans to liberalize foreign exchange regulations in 2025. The initiative aims to attract higher volumes of foreign direct investment (FDI) and encourage reinvestment of export earnings.

According to Treasury sources, the new reforms will simplify remittance processes, relax repatriation rules, and enable easier access to foreign currency accounts for both local and international businesses.

Key Reforms Expected:

Relaxed capital account restrictions for foreign investors
Faster repatriation of profits and dividends
Permission for exporters to retain a larger share of forex earnings
Streamlined approval process for foreign-funded projects
Enhanced compliance clarity under the Foreign Exchange Act

Officials confirmed that the Cabinet has approved the drafting of a comprehensive Amendment Bill to the Foreign Exchange Act No. 12 of 2017, which is expected to be presented in Parliament by the fourth quarter of 2025.

“Our focus is on rebuilding investor trust, stabilizing the currency, and making Sri Lanka a more predictable and open destination for global capital,” said a senior official from the Ministry of Investment Promotion.

The move follows rising calls from local chambers of commerce, exporters, and global investors for a more agile and responsive forex framework. In 2024, Sri Lanka recorded a modest uptick in FDI flows—driven largely by port logistics, tourism, and manufacturing—but experts believe greater capital liberalization is necessary to sustain growth.

Implications for Entrepreneurs and Investors:

Encouragement for reinvesting profits into local operations
Easier access to external funding via overseas borrowing
More confidence in joint ventures, mergers, and acquisitions
Greater clarity for compliance and tax remittance processes

The reforms are also expected to benefit Sri Lankan exporters operating overseas, including those in the Maldives, UAE, and Africa, by offering flexibility in managing international earnings.

Stay tuned to Ethera Business News for updates, investment opportunities, policy developments, and strategic insights.