Sri Lanka has placed most of its eggs in the ‘Tourism’ basket, to revive the island’s economy and grow. The move has opportunities and challenges as tourism is affected by disruptions, volatility and instability, all of which remain risks for Sri Lanka and the Indian Ocean region. Domestically, there is much to be done to aid the growth of tourism and to reap its benefits for the economy. There needs to be a change in mindsets, ease of access to services, digitisation and more activities which will help tourists remain on the island and spend more while they are here. There is also a debate on how to attract tourists who are big spenders.
In July this year, Sri Lanka has recorded the arrival of 1,204,046 tourists so far this year, marking a notable increase compared to the same period in 2024, the Sri Lanka Tourism Development Authority (SLTDA) reported. India remains the top source market with 250,047 visitors, followed by 112,732 tourists from Russia and 111,464 from the United Kingdom. In early July alone, 36,002 foreign tourists arrived in Sri Lanka. Of these, 8,053 were from India, representing 22.4% of the arrivals. Other countries contributing to July arrivals include the UK with 3,562 visitors, Australia (2,674), China (2,362), and Germany (1,553), reflecting Sri Lanka’s growing appeal to diverse international markets.
However, increasingly there are complaints by locals and visitors about tourists who have illegally begun to operate businesses and hospitality services in Sri Lanka. Over the last few years, investigations were carried out pertaining to Russian tourists who are operating businesses in the island while on tourist visas, and strong action is to be taken against such tourists if found guilty of the same, according to the Sri Lanka Tourism Development Authority (SLTDA). Foreign nationals overstaying their visas and engaging in unauthorised business activities has become a serious issue in Sri Lanka. This trend, particularly observed among Chinese, Russian, Ukrainian, and Israeli visitors, has affected local hospitality and tourism operators, who argue they are being sidelined as foreign-run enterprises exploit local loopholes. Despite the Government’s recent issuance of a gazette to increase fines for visa overstays, questions linger over enforcement and the broader impact on tourism. However, several legal loopholes weaken the effectiveness of this provision, especially regarding overstaying and unauthorised business activities by foreign nationals.
The tourism industry remains one of Sri Lanka’s primary economic pillars, with locals heavily reliant on tourist spending to sustain their businesses. Foreign nationals setting up exclusive, non-transparent operations undercut local livelihoods. “The situation creates an unbalanced competition,” a guesthouse owner said, adding: “When foreigners run tourism businesses without oversight, it impacts our industry and leaves locals struggling.”
Another issue which has become a serious concern is that the island is now facing a surge in cybercrime, largely involving foreign nationals. Between September and October of last year, the Sri Lanka Police detained nearly 200 individuals, mostly Chinese nationals, linked to various online fraud schemes and financial scams. Authorities revealed that these individuals often conducted large-scale cybercrime operations from their hotel rooms, hidden under the guise of temporary accommodation.
Police reported recent raids on hotels where Chinese nationals were found involved in cybercrimes, confiscating hundreds of pieces of digital equipment. In one operation, officers seized mobile phones, laptops, USB wires, routers, and other computer parts, suggesting organised cybercrime activities spanning several months. Hotel owners have also expressed concern over the risks posed to their properties and reputations. A hotelier in Panadura, noted that foreign cybercriminals used local hotels as temporary bases, putting local businesses at risk of becoming associated with illegal activities.
As such, Sri Lanka needs to quickly more to plug the gaps in legislation and enforcement on such matters. Failure to do so will invite unwarranted trouble and ruin the destination's reputation.