Sri Lanka Country Profile

Land Administration

Individual Corruption

In order to speed up procedures, such as to issue a deed, bribes are paid to officials in the land registration offices. Land transactions have allegedly favoured the family and friends of politicians. Eighty percent of Sri Lanka's agricultural land is state-owned and only leased to farmers. There are some concerns because peasant rights to the land are not well-defined, although there has been some progress in land registration, land rights reform as well as the rights to sell and lease land. However, peasants still have to bribe in order to obtain proper documentation on land lease.

Business Corruption

In principle, property rights are secured within the industrial and service sector, and foreign investments are guaranteed protection by the constitution. Most problems with the guarantee of property rights involve locals rather than foreign companies, e.g. with land entitlements. Eighty percent of all land in Sri Lanka is state-owned.

According to the US Department of State 2009, foreign investors are permitted to buy land from private sellers, but the government has introduced a 100% transfer tax for foreigners. Companies can lease land. Most plantations are located on state-owned land, but are normally leased to the private sector on 50-year term leases. Companies should be aware that concerns have been raised as to the proper definition of property rights. Furthermore, companies may encounter corruption when dealing with land registration officials.

Although the property registration pertaining to land ownership is said to be quite reliable, the forging of documents and fraud have also been registered. The government has taken steps to address these problems.

Political Corruption

According to the Transparency International Sri Lanka Sri Lanka Governance Report 2008, the former President Chandrika Kumaratunga had appropriated a wetland area near Parliament for public purposes, but then decided instead to give the land to a private developer to create a golf course and luxury housing. The Supreme Court ruled that this constituted abuse of power and betrayal of public trust, and the President was fined approximately USD 30,000. This was the first time a former President had been indicted and convicted in Sri Lanka.

According to the Transparency International Global Corruption Report 2008, when the Mahaweli Dam was constructed, corruption was one of the reasons why the government neglected to provide resettled households with compensation, which was otherwise agreed upon with the donors of the project.

Frequency

The World Bank & IFC: Doing Business 2009:
- It takes 8 procedures and 83 days to register property at an average cost of 5% of the property value.