The Sri Lankan government is introducing new visas for foreign investors investing in the Sri Lankan economy. The government hopes to support the ailing economy.
Sri Lankan economy on the verge of collapse
Sri Lanka is facing major economic problems. This is partly due to the Covid-19 pandemic, which almost stalled tourism completely in the country. Tourism is a major source of income for Sri Lanka: in 2019 it accounted for 12.5% of the countryʼs Gross Domestic Product (GDP). By 2020, this percentage was down to 0.8 per cent. Although the country seemed to be slowly recovering, the situation has deteriorated dramatically due to the war in Ukraine. Sri Lanka has structural shortages of important products like food, medicine and fuel. The price of diesel has risen by more than 100 per cent, and general inflation is around 20 per cent. The electricity network is regularly out of order and many Sri Lankans are unable to use their cars due to lack of fuel. Government officials say this is the worst crisis since the country gained independence and warn that large-scale famine is imminent.
As a result of these problems, mass protests are taking place daily. The government is blamed for not doing enough to solve the problems. There are therefore already signs that major political changes are afoot in Sri Lanka. The opposition has recently introduced a bill to completely overhaul the government system.
Visas for investors
To help the struggling economy, the Sri Lankan government is trying to make the country more attractive to foreign investors. One of the ways the government is trying to do this is by offering special visas to investors. Foreigners who invest a minimum of $75,000 in the Sri Lankan economy are eligible for a visa to Sri Lanka with a validity of five to ten years. These visas also allow these individuals to transfer their families to Sri Lanka. For foreigners who deposit a minimum of $100,000 in a government-recognised commercial bank, Sri Lanka also offers visas with a validity of ten years.
It is remarkable, but not surprising, that investments are calculated in US dollars. The country has a severe shortage of foreign currency and the Sri Lankan currency, the rupee, has plummeted in value due to economic problems. The value of the rupee is currently the lowest in the countryʼs history.
Large setback for tourism sector
In Sri Lanka, there was hope that the tourism sector would rapidly recover from the coronavirus pandemic as vaccination coverage increased worldwide. However, the war in Ukraine has dashed these hopes. Travellers are turning to other destinations. This is especially noticeable in the number of travellers from India. A large part of the tourists to Sri Lanka come from India, but this number has declined significantly recently. Visas for Sri Lanka can be applied for some time again, but the UK government warns of security risks due to the large-scale demonstrations that are taking place in the country.