Sri Lanka Overhauls Customs and Labour Laws While Exporters Protest New Forex Conversion Rule

Sri Lanka is preparing sweeping reforms of its customs procedures and labour regulations to avoid a potential 12.5% tariff on apparel exports to the United States. The government aims to modernise customs, improve transparency and align labour standards with benchmarks favoured by Washington, and has announced fast‑track consultations with industry, trade unions and ministries.

At the same time, the country’s exporters have raised objections to a new foreign‑exchange regulation issued by the central bank that requires export earnings held in designated accounts to be converted into rupees by the tenth day of the following month. Exporters say the rule was introduced without sufficient consultation, could disrupt production planning, increase transaction costs and force firms to repurchase foreign currency later at higher rates. The export sector, which generated about $5.8 billion in the first four months of 2026, sees the measure as a risk to its competitiveness and cash‑flow management.