Sri Lanka’s quiet regulatory shift: Can evidence-based rules unlock new growth?

Tuesday, 30 December 2025 01:43 - - {{hitsCtrl.values.hits}}

Science and Technology Ministry Director (Planning) Prabath Chaminda Abeysiriwardana

Following are excerpts of an interview with Science and Technology Ministry Director (Planning) Prabath Chaminda Abeysiriwardana about why a regulatory shift matters.

Sri Lanka is positioning itself for recovery and long-term growth while trying to rebuild institutional credibility. Beneath the high-profile reform headlines sits a quieter but essential shift: changing how regulations are made.

In 2025, the Ministry of Science and Technology (MoST) revived efforts to introduce Regulatory Impact Assessment, or RIA, a structured process used globally to analyse different policy options before rules are introduced. The initiative is supported through technical assistance from the United Nations Industrial Development Organisation (UNIDO) under the EU-funded BESPA-FOOD programme, and is now being embedded within the country's National Quality Infrastructure agenda.

Seven pilot projects, launched through a dedicated workshop, are now underway across key regulatory agencies, marking the first practical application of RIA in Sri Lanka. These initiatives signal a tangible step toward embedding evidence-based policymaking into the country’s regulatory framework.

Q: Why is the Ministry prioritising Regulatory Impact Assessment now?

A: For many years, regulations in Sri Lanka have been designed mainly from a control-and-compliance mindset. They often aim to solve real issues, but without fully considering how they affect businesses, citizens, or Government efficiency. When rules are made without proper analysis or consultation, they can increase costs, delay investment, and reduce competitiveness.

RIA helps us design regulations more thoughtfully. It also ensures that rules are introduced only when they are genuinely needed. We start with the problem, test different options, assess the costs and benefits, and consult the people who will be affected. This approach leads to rules that are more effective, easier to implement, and more trusted because the solutions are practical and fair to the people they impact.

For a country trying to accelerate growth, predictable regulation - rules that are clear, steady, and not defined differently by different entities - is not a luxury. It is part of the foundation of economic recovery.

For many years, regulations in Sri Lanka have been designed mainly from a control-and-compliance mindset. They often aim to solve real issues, but without fully considering how they affect businesses, citizens, or Government efficiency. When rules are made without proper analysis or consultation, they can increase costs, delay investment, and reduce competitiveness

Q: Sri Lanka first introduced RIA in 2018. What is different in 2025?

A: In 2018, the Consumer Affairs Authority introduced RIA through training, but the effort paused when leadership changed. In 2025, we made a deliberate decision to revive it as part of a national reform agenda. This time, RIA is not a standalone initiative. It sits under the National Quality Infrastructure program with budget allocation and clear institutional responsibility.

Importantly, the whole country is being involved in understanding RIA and its integrated approach, demonstrating that it can be practically applied across sectors without much difficulty. We set tangible milestones that can be easily observed, such as presenting the RIA policy brief in public and at important events like the National Science Week closing ceremony. Our goal is not just training. It is building a sustainable system for evidence-based regulation.

Q: The workshop received strong response across Government. What does that mean in practical terms?

A: We brought together 22 ministries and regulatory agencies and asked them to propose solutions to issues that could benefit from RIA, revealing and applying the regulatory knowledge they gained through the process. We received 31 proposals and selected eight pilot agencies:

Insurance Regulatory Commission of Sri Lanka (IRCSL)
Consumer Affairs Authority (CAA)
Central Environmental Authority (CEA)
National Aquaculture Development Authority (NAQDA)
National Dangerous Drugs Control Board (NDDCB)
Sri Lanka Tea Board (SLTB)
Coconut Development Authority (CDA)

Each pilot agency is now preparing a full RIA report with technical assistance from UNIDO. These studies are helping regulatory teams analyse costs, benefits, stakeholder impacts, risks and possible alternatives, rather than jumping straight to rules or bans. The MoST continues to support these agencies by monitoring their progress and providing ongoing guidance and knowledge mentoring. The findings will be shared publicly once complete.

Q: What are the economic stakes here? Why should businesses and investors care?

A: Unclear or inconsistent regulation creates direct economic costs. It slows approvals, increases operational risk, and affects both investor and public confidence. Sri Lanka has already paid a price for this. Independent assessments have shown that regulatory uncertainty contributed to reduced investment appetite in recent years. Even a modest improvement in certainty can translate into higher investment flows, faster project execution, and lower compliance costs for firms.

RIA helps reduce that uncertainty by making decisions more transparent and predictable. When investors understand how rules are made and why, they can plan long-term, while the public gains trust and confidence in the system. That combined confidence supports sustainable growth.

Unclear or inconsistent regulation creates direct economic costs. It slows approvals, increases operational risk, and affects both investor and public confidence. Sri Lanka has already paid a price for this

Q: What are the common challenges countries face when introducing RIA?

A: Data gaps, limited analytical capacity, inconsistent consultation processes and weak coordination across ministries are common. Some officials may feel the process adds extra steps or slows decisions. The real challenge is not technical. It is cultural. We need to shift from issuing rules quickly to issuing rules that work.

Addressing these gaps requires collaboration across agencies, knowledge sharing, and mutual learning, as well as societal acceptance of RIA. When people see that rules are thoughtfully designed and fair, it builds trust, encourages compliance, and reinforces the value of the system. We are tackling these challenges through training, shared templates, cross-agency learning, and plans for an oversight mechanism under the National Quality Council (NQC), which we hope will be implemented soon with support from the respective Ministry.

Q: How does Sri Lanka compare internationally on regulatory reform?

A: Countries that have embedded RIA into their regulatory systems, including Vietnam, Rwanda, and Georgia, have seen meaningful reductions in compliance costs for firms within a few years. Those lessons are useful to us. They show that even small improvements in regulatory quality can have a measurable economic impact.

Sri Lanka is building its system at a time when global expectations are higher. That gives us a chance to design a modern approach from the start.

Q: What is the long-term vision?

A: The pilots are the beginning, not the end. Our goal is to integrate RIA into the national quality infrastructure so that it becomes standard practice when new regulations are drafted. We want these pilot examples to be clear, practical, and beneficial, so that other agencies can easily understand and follow them. While we are receiving technical support from UNIDO at this stage, sustainability depends on building capacity inside the Government, establishing guidance, and creating oversight through a National Quality Council (NQC). Over time, RIA should become a normal part of how regulations are designed across all ministries.

Q: If you had to explain the value of RIA to a citizen in one line, how would you describe it?

A: RIA helps us make rules that solve problems, protect the public, and support growth at the lowest cost while ensuring they are fair, acceptable, and bearable for society.