Sri Lankan government is likely to bring in new legislation to regulate e-commerce businesses operating in the country, which have disrupted traditional business models.

The government is contemplating this move largely influenced by legacy businesses.

The Finance Minister wants e-commerce businesses to repatriate earnings from Sri Lanka back to locally-based bank accounts. This comes in the backdrop where Sri Lanka is trying to introduce more liberalized foreign exchange laws, repealing the current Exchange Control Act.

The move to regulate e-commerce could be a big blow, specially to budget tourism operators as well as budget tourists coming to Sri Lanka,

The Tourist Hotels Association of Sri Lanka (THASL)—which represents larger hotels—had been in touch with the government requesting such regulations.

THASL Chairman Hiran Cooray had said during a United Nations World Tourism Organization Conference held a couple of months back that the growth of the informal sector in the country was a positive development, despite objections to it by his members. Tourists are looking for authentic local experiences, as shown by the success of AirBnB, online booking engines and social media bookings.

Around 48 percent of the 1.8 million tourists coming to Sri Lanka are staying in the informal accommodation sector.

E-commerce sites such as Paypal in face of stringent exchange regulations in Sri Lanka chose not to enter the country, which had curtailed the country’s export potential.