MODELS OF MARKET ENTRY
1. Which are the key points that require attention when importing items
. Sri Lanka’s unique geographic location
gives many advantages to operating an
import or export business. The Port of
Colombo (known as Port of Kolomtota
during the early 14th Century Kotte
Kingdom) is the largest and busiest port in
Sri Lanka and the Indian Ocean. However,
understanding the processes, and
regulations you need to follow can be
difficult without the proper guidance.
In June 2020, the government imposed
temporary import suspensions on a range
of goods deemed non-essential in a bid to
protect the exchange rate after it came
under pressure after governments’ efforts
to minimize the impact of COVID-19 on the
economy.
to Sri Lanka
.
The government has eliminated most When the customs authority does not
license controls, with a few items accept the declared value and determines
remaining under license control mainly for the value in accordance with the GATT,
health and national security reasons. the importer has a right to appeal the
Poultry and some types of agriculture decision to the Director General of
commodities are under import license Customs. The Customs Ordinance allows
control with agricultural commodities also an importer to clear the imported goods
requiring non-GMO certification. Sri Lanka provisionally from Customs custody
reserves the right to prohibit GM pending a final determination on value.
agricultural commodities based on the However, this option is not available to an
precautionary principle. importer where fraud is suspected. U.S.
The import of drugs is subject to the companies have expressed concern that
approval of the Drugs and Cosmetic the Sri Lanka Customs valuation system is
Devices Committee of the Ministry of susceptible to misuse and is not
Health. consistently applied.
The Ministry of Defense controls the The Sri Lankan government has taken
import of firearms and ammunition for use steps to improve trade facilitation in line
by the armed forces, police, and civil with the WTO Trade Facilitation
security. Certain military-related or dual- Agreement. A National Trade Facilitation
use items are prohibited or controlled. Committee (NTFC) was established in
Remote-controlled toys are also under 2016. Sri Lanka launched an online trade
license control for public security reasons. information portal in July 2018. All required
There are restrictions on the import of trade-related information is available on
toxic and hazardous chemicals and the portal as of April 2022
pesticides. Used and reconditioned air (https://srilankatradeportal.gov.lk/).
conditioners and refrigerators are under
license control for environmental
protection.
Sri Lanka requires import licenses for
more than 400 items at the six-digit level
of the Harmonized Tariff Schedule, mostly
for health, environment, and national
security reasons. Importers must pay a fee
to receive an import license. Import
licenses for meat products may be
required based on the health or disease
status of livestock in a particular country or
area.
Duties are calculated using the actual
transaction value of the goods (as
evidenced by the commercial invoice or
another contract of sale document). If the
value of the goods cannot be established
by this method, Sri Lanka Customs will
attempt to establish the value of the goods
using methods in line with Article 7 of the
GATT.
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 2. Where should attention be given in terms of establishing the business
Starting a business in Sri Lanka could be
profitable if you have the right business
plan and strategy. The government of Sri
Lanka is providing many opportunities to
attract more foreign or direct investment.
There are also several important factors
that affect success when starting a
business in Sri Lanka. These include the
climate, the local market, the availability of
resources, and the personal qualities of
the founders. If you have the right mix of
skills and determination, you can start
your own business in Sri Lanka.
The legal status and scope of the
company must be defined and clarified
under Sri Lankan law, in what capacity the
company will work, and the range of
services and business it will be involved in
within Sri Lanka must be clarified.
Starting a business in Sri Lanka can be
expensive and challenging. There are
many different costs and regulations that
need to be considered when setting up a
business in this country. Some of the most
common costs associated with starting a
business in Sri Lanka include:
Legal fees: These fees can range
from nominal to very high, depending
on the complexity of the case. It is
important to consult with an attorney
beforehand to determine what these
costs will be.
Marketing and advertising: This cost
can range from very small amounts up
to several thousand dollars per month,
depending on the size of the business
and the competition. It is important to
determine what type of marketing
efforts are necessary and where they
should be concentrated.
Finance: Finance can be tight in Sri
Lanka, so it is important to have a
solid plan for funding your business. In
addition, it is helpful to consult with a
financial advisor to get an idea of how
much money you will need to start
your business and grow it over time.
Business equipment: Business
equipment can cost anywhere from a
few thousand dollars to tens of
thousands of dollars.
in Sri Lanka?
.
It is important to decide which type of
equipment is necessary for your
business and how much money you
will need to spend on it. Additionally, it
is helpful to research which
businesses in Sri Lanka use which
types of equipment.
.Marketing materials: Marketing
materials can range from low-cost
items like flyers or T-shirts, up to more
expensive items like website design. It
is important to determine what types of
materials are necessary and where
they should be placed to maximize
their impact.
Labor costs: Labor costs can vary
significantly between businesses in Sri
Lanka. It is important to determine how
much labor you will need and whether
you can find local workers or contract
out the work. Additionally, it is
important to consider how much
overtime pay employees may want or
need during busy seasons.
In Sri Lanka, there are three main
business licenses: Small Business License
(SBL), Medium Business License (MBL),
and Enterprise Zone License (EZL). If you
are starting a company with less than 10
employees, you can apply for an SBL
license. If you are starting a company with
more than 10 employees, you will need to
obtain an MBL license. And if you are
starting a company in an enterprise zone,
you will need to obtain an EZL license.
Once you have obtained your license, it is
important to start preparing your business
for operation by conducting an initial
constitution and by studying the Business
Administration Manual (BAMS). The
BAMS is an essential tool for organizing
your company and contains detailed
instructions on how to run your business.
Once you have completed all of these
steps, it is time to start selling products or
services! The first step is to identify who
your target market is.
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 3.
If you want to start a construction
company in Sri Lanka, it is important to
know what the required steps are to begin
the process. The first step is to have a
valid business license. If you are applying
for a license, be sure to read the Licensing
Requirements Section of the Sri Lanka
Business Registration website. There you
will find detailed information on the types
of licenses available and what specific
requirements must be met. Through the
Registrar of Companies online site eRoc
system, you need to register your
company name. The registration of the
company name will be valid for three
months.
Before setting up a new company, the
secretary must be designated, and
consent must be signed between the
director and the company secretary. In
accordance with Article 221(1) of
Companies Act No. 7 of 2007 each and
every company new or old must have a
director and secretary. As for the fee,
there is no specific number; it depends on
the type of company.
After the complication of the above-
mentioned processes, the company is
required to submit the documents as
follows to the Department of Registrar of
companies:
From 1: Registration of Company
Form 18: Consent and certificate of
director
Form 19: Consent and certificate of the
secretary
One copy of the Article of Association.
Is it difficult to initiate the construction procedure?
All documents are submitted by scanning
the original and uploading it through the e-
ROC website and the payments are made
online.
After the incorporation of the company, it
must give public notice by the company
within 60 days.
This law is per section 9 of Sri Lanka’s
Companies Act Number. 1566/32, dated:
12, September 2008. The information
should be published in Government
Gazette and any daily newspaper in three
languages; English, Sinhala, and Tamil.
The notice must be given within sixty days
of incorporation, and it will be published in
newspapers within two weeks.
The company must then register itself with
the tax authorities and complete the form
along with the necessary documents
including Form 1 and acquire a Tax
Identification Number (TIN). No charge is
applied for this work. Takes about 1 day to
complete this work. The physical presence
of the applicant or a representative of the
applicant is a must at the time of
registration.
The company will get permanent VAT
registration if the revenue of the company
is equal to or more than LKR 3,000,000
per quarter or LKR 12,000,000 per year.
Companies must register with the
Department of Labor to obtain the
Employees Provident Fund (EPF)
registration number. Registration with the
EPF must be done within 14 days of hiring
the first employee. The fund is
government-owned and maintained by the
Central Bank. No separate registration is
required to register with the Employees
Trust Fund (ETF). ETF uses the same
EPF number for their monthly
contributions. Companies must also pay
gratuities to employees that have been
employed for more than 5 years. The
gratuity provisions do not apply to
companies that have fewer than 15
employees. There is no pension scheme
for private sector employees. Businesses
that engage in activities of a dangerous
nature should obtain special Factories
Ordinance checkups.
here are several steps involved in initiating
a construction project in Sri Lanka.
.
The process is lengthy and it requires
more than six different government
departments. While requesting a building
permit, proof of ownership must be
obtained and submitted. The three pieces
of papers needed to prove ownership are
acquired by a lawyer operating on behalf
of BuildCo: a non-vesting certificate, a
certificate of ownership, and a building
and street line certificate. At the Colombo
Municipal Council's Single Window
Counter (SWC), all three certificates may
be acquired once (CMC).
BuildCo can submit the application for a
building permit along with all the building
designs and other paperwork after
ownership verification has been
established. The UDA has made online
applications mandatory, and the only
people who can register to use the system
are chartered engineers or architects.
Then you need to Obtain a building permit
from the Urban Development Authority
(UDA) which application form costs LKR
150.00. The owner(s) and a qualified
individual must both sign the application in
order to get a certificate of conformity.
Only the names of the owners are used to
issue the certificate of conformity (COC). It
is a mandate to obtain a COC for the
constructed building before occupying the
new building which may cost LKR 29, 103.
Once you got the above approvals from
the Sri Lankan government, you need to
apply for essential utilities like electricity
and water. To obtain the water connection,
BuildCo must submit an application to the
National Water Supply and Drainage
Board. After that, BuildCo receives an on-
site inspection, pays the water installation
costs, LKR 31, 000, and signs an
agreement with the Board connection will
be given within 1 month. Obtaining
electricity process is also like this process
but with a different department. An
application should be submitted to the City
Office of the Ceylon Electricity Board to
obtain electricity.
Starting a business in Sri Lanka could be
profitable if you have the right business
plan and strategy. The business
registration procedure in Sri Lanka is
straightforward and hassle-free. The
government of Sri Lanka is providing many
opportunities to attract more foreign direct
investment.
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In developing, countries the administrative
framework for the registration of property
seems to be inefficient and ineffective in
coping with the dynamics of the land
markets. In Sri Lanka, it could be
presumed that the land registration system
has not been effective in dealing with the
development requirements of the country.
The five elements of the quality of land
administration index in Sri Lanka are equal
access to property rights, reliable
infrastructure, information transparency,
geographic coverage, and land dispute
resolution. The project's most current
round of data gathering was finished in
May 2019. (Report DB 2020, source)
Property registration is one of the essential
services that people demand daily. The
prevailing system compels citizens to pass
through many processes that consume
more time, along with required interaction
with multiple institutions.
The first step is to obtain an updated
survey plan of the property. To verify that
the boundaries on the ground have not
altered, it is advised to obtain a new
updated plan of the property and the
building if it is 10 years old or older. This is
also recommended if the survey plan is
outdated. To obtain the Building and
Street Line Certificate, this is also
necessary.
4. What’s the process behind property registration
The second step is to have a title search The deed is sent for registration to the
must be carried out at the relevant Land relevant land registry – Now “1 Day Deed
Registry. According to section 17(a) of the Registration Service is available”. Once
Notaries Ordinance No. 1 of 1907, the the notary provides the signed copy of the
Notary shall search or cause to be transfer deed, the land registry starts to
searched the registers in the land registry process new deed registration and shares
to ascertain the state of the title regarding the information with the CMC to update
such land and whether any prior deed the ownership details.
adversely affecting any interest in such
land has been registered before drawing The Colombo City Council will require the
any deed or instrument affecting any name of the new company to be registered
interest in land or other immovable as the new owner. A Notary Public must
property. properly complete and submit an abstract
of title form to the appropriate Local
The next step is to Obtain a Non-vesting Authorities.
certificate/Ownership certificate/Building &
Street Line certificate from CMC. The According to the World Bank’s Doing
Certificate of Conformity, which attests to Business 2020 report, Sri Lanka ranked at
the building's approval as a construction, the 138th position with a Doing Business
must also be obtained by the buyer from score of 51.9 in the Registering a Property
the seller. Indicator. Sri Lanka ranked top in the
South Asian region in registering property.
As per Section 2 of the Prevention of
Frauds Ordinance, the Deed of Transfer
must be signed by the seller company in
the presence of two witnesses and a
Notary Public.  After that, you need to
obtain the market value from the Provincial
Department of Revenue. Before or after
the payment of stamp duty the instrument
of transfer is forwarded to the office of the
Provincial Department of Revenue of the
Western Province to obtain the market
value of the property. The department's
valuer will decide what amount is
appropriate and offer it. The balance must
be settled if the instrument is submitted
after the stamp duties have already been
paid and the department finds after an
investigation that the amount paid is
insufficient. "Instrument with duly paid
stamp duties" certification will be provided
by the department. By making sure the
stamp duty was paid in accordance with
the value given by the Provincial
Department of Revenue, the instrument
won't be recalled later for an examination
of its value and won't be denied
registration.
The payment of stamp duty at a
nominated bank needs to be done – Bank
branch counter is available within the CMC
single counter premises. Submit the
deposit slip to the Western Province
Revenue Department counter at the Single
Window Counter and attest to it.
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 5. Is it difficult for foreign businesses to enter the market in Sri Lanka?
Due to an unmanageable debt load and
ongoing deficits on both the government
budget and the international balance of
payments, Sri Lanka is currently
undergoing an economic crisis that is
making it difficult to exchange foreign
currencies (forex). The lack of foreign
currency has made it impossible to import
essentials such as food, medicine, and
fuel. The scarcity of foreign exchange,
banking limitations put in place to preserve
foreign exchange, and the nation's poor
credit rating have all had an influence on
trade and commercial operations. For both
domestic and international businesses,
inconsistent and uncertain rules regarding
taxation, customs processes, and
regulatory clearances are a major cause
for concern.
Businesses cite a lack of sufficient labor
supply as a major hindrance to operating
in Sri Lanka. Qualified workers are in short
supply as a result of the education system
producing too few engineers, technicians,
scientists, and English speakers.Initial
indicators suggest that the economic crisis
is prompting an increased number of
skilled workers to leave Sri Lanka and
seek employment abroad, further
aggravating the shortage of qualified labor.
Business representatives complain that
the rigid labor laws, including exceptionally
high severance pay regulations, make it
difficult to adjust staff size and composition
to market conditions. There are also
numerous overlapping labor regulations
that are often difficult for investors to
understand.
Which market entry would be good?
products and services.
To be competitive, a country needs to
develop strong growth policies and heed
the voices of those left behind by the
change. The country needs to make its
own investments to close the income gap
and build a resilient economy. It must
continue to promote the economic and
social aspects of the nation. The
government should make these measures
available for all. The government should
also make sure the privet sector is a full
partner in Sri Lankan’s economy.
6. Reference List
Official Website of the International
Trade Administration
https://www.trade.gov/country-commercial-
guides/sri-lanka/
Starting A New Business In Sri Lanka
https://www.sfconsultingbd.com/sri-lanka-
foreign-company-registration/starting-a-
new-business-in-sri-lanka/
DOING BUSINESS ARCHIVE
https://archive.doingbusiness.org/en/data/
exploreeconomies/sri-lanka
Sri Lanka Customs website
https://www.customs.gov.lk/business/impo
rting-goods/

Sri Lanka has a considerable middle class

that is interested in purchasing Western
goods and services. It is a lower-middle-
income nation. The nation has
considerable infrastructure requirements in
the areas of ports, public housing, water
projects, and public transit. The
government has ordered that all
development initiatives must follow a build-
own-operate-transfer model with no debt
capital-funded projects due to its
unsustainable public debt levels. Sri Lanka
needs a variety of services and high-end
goods as a tourism hub. Sri Lanka also
aims to establish itself as a logistics and
technological center for the area, , which
opens a market for the export of IT RDS MADSHIKA 5
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