Sri Lanka held its first parliamentary elections since the conclusion of the country's 30-year-long civil war in April 2010 with President Rajapska winning an overwhelming majority. Despite being plagued by civil war for many years, the country has managed to maintain a democracy and sustain a relatively stable level of economic development with strong market economy and a liberal free trade and investment regime. However, corruption remains a large problem in Sri Lanka. One of the characteristics of Sri Lankan corruption is cronyism and nepotism in the appointment of civil servants at all levels of administration. While companies cite corruption as a major constraint on business operations, the level of corruption is still considered moderate compared to countries in South and Southeast Asia. Several recent reports also indicate that there is a slight decline in democratic governance. 

Positive developments in relation to corruption and investment:

• Starting a business in Sri Lanka has become simpler and quicker, now requiring four procedures and taking an average of 35 days.
• In order to minimise corruption in the payment and collection of tax, attempts have been made to reduce red tape by introducing standard tariff rates.

Risks of corruption:

• The level of corruption is alarmingly high in public procurement. It is estimated that the percentage of a public sector contract paid in bribes has tripled in recent years.
• Corruption is fairly common in the lower courts, and those willing to pay bribes have better access to the legal system.
• Public officials and politicians are required by law to declare their assets, but the requirement is not followed in practice. Moreover, the few declarations that are made are not audited, opening the way to illicit enrichment.
• Sri Lanka's anti-corruption legislation is not efficiently enforced and investigative bodies are characterised by insufficiently qualified staff.
• Sri Lanka does not have whistleblower protection, resulting in a general reluctance on behalf of citizens, and private and public sector employees to report corruption.