E-commerce in Sri Lanka has grown significantly with the increased use of the internet and smart devices, especially during the COVID-19 pandemic. According to the Information and Communication Technology Agency (ICTA) of Sri Lanka and the United Nations Conference on Trade and Development, Sri Lanka’s Digital Economy was 4.37 percent of GDP in 2022. The increase has been driven by increased utilization of e-payments, e-banking, online medical consultations, and e-sports. Approximately 43 percent of the estimated 11 million internet users have made online purchases. The Western Province is the largest ecommerce market geographically, accounting for around 50 percent of total orders. Products purchased most frequently online are electronics, apparel, and personal care products. Around 56 percent of the internet users state they purchased a product or a service after seeing an advertisement on the Internet.
All commercial banks have online banking services. Travel companies, hotels, and a few large retailers have online trading services. eCommerce companies offer customers in Sri Lanka access to millions of global products. The government has committed to increase the use of online applications and payments for government services. Additional government web portals for filing of tax returns, payment of taxes, renewing of revenue licenses are also available.
Most of the global eCommerce sites, including PayPal, are available in Sri Lanka for overseas purchases but have limitations due to an inadequate refund mechanism and inward receipts. A 2.5 percent stamp duty applies to usage of credit cards issued by Sri Lankan banks for transactions converted into a foreign currency. Transactions in local currency are exempted from this duty.
The government is currently using an e-service gateway to streamline certain government services. The Inland Revenue Department has recently enabled filing of tax returns through the Inland Revenue web service portal (http://www.ird.gov.lk/en/eServices/SitePages/Home.aspx). Vehicle revenue licenses can be renewed online (www.erevenuelicense.motortraffic.wp.gov.lk)
Assessment of Current Buyer Behavior in Market
Domestic B2C eCommerce sites have seen a significant growth since within the last several years. A wide variety of consumer products can be purchased through eCommerce sites including groceries, apparel and electronics (https://www.kapruka.com/, https://www.daraz.lk/, https://takas.lk/, https://www.keellssuper.com/, Small and medium enterprises are also increasingly using social media sites to advertise products, take orders, and accept payments.
Cross border eCommerce is limited to purchases of products from popular overseas sites such as eBay and Amazon. Numerous local eCommerce companies sell imported goods.
Local eCommerce Sales Rules & RegulationsThe Electronic Transactions Act No.19 of 2006 facilitates eCommerce by removing legal barriers and ensuring legal certainty both within Sri Lanka and internationally. Several other laws also support eCommerce such as the Evidence Act No. 14 of 1995, Payment and Settlement Systems Act No. 28 of 2005, Payment Devices Frauds Act No 30 of 2006, and the Computer Crimes Act of No 24 of 2007. Following the ratification of the UN Electronic Commissions Convention (UNECC) by Sri Lanka in 2015, the government amended the Electronic Transactions Act in 2017 to provide greater legal validity for eCommerce and eBusiness providers, and ensure international validity of such e-contracts.
Currently, Sri Lanka does not have a local body to regulate eCommerce businesses. Increased competition from international eCommerce sites such as booking.com and Airbnb have resulted in demands by the Tourist Hotels Association of Sri Lanka (THASL) for the government to consider regulating eCommerce businesses.
eCommerce Intellectual Property Rights are protected under several laws:
Evidence (Special Provisions) Act No.14 of 1995, The Intellectual Property Act No. 36 of 2003, Electronic Transactions Act No. 19 of 2006, and the Computer Crimes Act No. 24 of 2007. An infringer who offers counterfeit products for sale online could be held liable under the Intellectual Property law.
Local eCommerce Business Service Provider Ecosystem
Internet access is growing. The International Telecommunication Union (ITU) reported in 2018 that 58.8 percent of the population has mobile-broadband access and 34.1 percent of the population uses the internet regularly. Mobile phone penetration is also high reaching 115.1 per 100 inhabitants. Sri Lanka’s private telecommunications companies have led the expansion of 3G and 4G and have started pilot applications of 5G technology. Financial institutions are also developing the related services of payment gateways to offer reliable online payment services to support the expansion of eCommerce.
There are no in-country events focused on ecommerce at present.