Sri Lanka is increasingly becoming a hotspot for foreign entrepreneurs seeking to tap into South Asia’s growing markets. But one question frequently asked is: “Can a foreigner start a business in Sri Lanka with 100% ownership?” The answer is yesβwith a few important caveats based on the industry and regulatory requirements.
Letβs break it down.
β Yes, 100% Foreign Ownership is Allowed β in Most Sectors
Foreign nationals can start and fully own a business in Sri Lanka in a wide range of sectors. Some of the most popular industries that allow 100% foreign ownership include:
- Information Technology (IT)
- Software and app development
- Business Process Outsourcing (BPO)
- Construction
- Tourism and hospitality services
In these sectors, foreigners can own and run a company without requiring a Sri Lankan partner, making the investment process relatively straightforward.
β οΈ But Some Industries Have Restrictions
Not every industry is fully open. Some are capped at 40% foreign ownership unless special approval is obtained. These sectors include:
- Education
- Travel agencies
- Mass media and communication
- Freight forwarding
- Shipping agencies
- Deep-sea fishing
- Timber-based industries using local timber
- Mining of natural resources
- Agriculture (tea, rubber, cocoa, spices)
To exceed the 40% cap in these sectors, youβll need approval from the Board of Investment (BOI) or the relevant Line Ministry.
π« Sectors Reserved Exclusively for Sri Lankans
Some industries are entirely off-limits to foreign investors:
- Pawn brokering
- Money lending (unless via licensed foreign banks)
- Private and public security services
- Coastal fishing
- Retail trade with an investment under USD 5 million
In these areas, foreign ownership is prohibited either completely or under very strict conditions.
π‘οΈ Special Approval and Incentives via the BOI
The Board of Investment of Sri Lanka (BOI) plays a crucial role in approving foreign-owned businesses. If your industry is partially restricted, you can apply to the BOI for clearance.
BOI-approved businesses may enjoy:
- 100% foreign ownership
- Tax holidays and investment incentives
- Fast-track approvals and clearances
This route is often necessary for large-scale or sensitive business ventures.
π Bonus Route: Port City Colombo (Special Economic Zone)
If you’re interested in full ownership with added perks, look no further than Colombo Port CityβSri Lankaβs new Special Economic Zone (SEZ).
Businesses set up here enjoy:
- 100% foreign ownership
- Full capital and profit repatriation
- Tax incentives
- A dedicated regulatory authority
Itβs a strategic option for high-tech, financial, or globally focused ventures.
π§ Final Summary
| Industry Type | 100% Ownership Allowed? | Notes |
|---|---|---|
| IT, construction, BPO, tourism | β Yes | No special approvals needed |
| Education, shipping, mining, agriculture | β οΈ With BOI Approval | Up to 40% foreign ownership without BOI |
| Pawn brokering, money lending, small retail | β No | Reserved for Sri Lankan nationals only |
| Port City Colombo | β Yes | SEZ status with full ownership and benefits |
π Planning to Start a Business in Sri Lanka?
Before setting up your company:
- Identify your business sector
- Check ownership limits
- Consider BOI approval or SEZ registration if needed
- Hire a licensed company secretary and legal consultant
Whether you’re setting up a tech startup, a distribution company, or a regional trading hub, Sri Lanka offers significant opportunitiesβas long as you navigate the rules wisely.
Need help tailoring your business plan to Sri Lanka’s foreign ownership laws? Drop your questions in the comments!
