The US Assistant Secretary of State for South and Central Asian Affairs Nisha Biswal said a lot of work remains to be done in Sri Lanka, in a statement released at the conclusion of her visit to the island.

Ms Biswal said she heard the TNA leadership's perspective for "meaningful progress on reconciliation and political inclusion", during her meeting with the party in Jaffna.

The assistant secretary also had "productive conversations" with President Maithripala Sirisena, Prime Minister Ranil Wickremasinghe and Foreign Minister Mangala Samaraweera, expressing US willingness to work with the new government.

"Clearly, there is a lot of work to be done. The United States looks forward to partnering with the Sri Lankan people to address the challenges and help Sri Lanka realize its true potential," she said.

The surprise result of the presidential election, which saw Mahinda Rajapaksa defeated by his challenger Maithripala Sirisena, is proving to be a step back for investors, reports Bloomberg.

Sri Lanka's stock index is the world's fifth worst performer since the election last month, while the new government last week cancelled casino licenses, reduced public investment and introduced a one-off 25% tax on companies or individuals who reported more than $15mn in profits.

Australian mogul James Packer has already withdrawn from a $350mn hotel resort, with several Chinese projects also now in danger of being cancelled.

“The new government has gone beyond condemning what it sees as overpriced or immoral projects and targeted big domestic business as a whole,” Sasha Riser-Kositsky, Asia Associate at Eurasia Group, said in a Jan 30 note. The moves increase uncertainty for foreign and local companies and “will depress private investment,” he said.

"We already raised our objection against his decision to attend the Independence Day celebrations. It is unbecoming for the TNA leader to go against the traditional party position that reflects the common will of the affected Tamil people."

"It is their individual decision and the TNA has nothing to do with it."

The Sri Lankan military says Omanthai checkpoint would continue to operate as usual, denying Monday's reports the checkpoint was opened to all vehicles and people.

Vehicles carrying fresh food products were given priority as of yesterday, but everyone else will be inspected as usual, according to army spokesperson Brigardier Jayanth Jayaweera.

The leader of the National Freedom Front (NFF), a former key ally of the Rajapaksa-regime, warned against the new president Maithripala Sirisena's 100-day programme for reform.

Wimal Weerawansa, whose NFF expressed support for the programme earlier this month, said it is an "undeniable risk" to Sri Lanka's "hard-earned freedom".

The MP said the programme will pave the way for a federal Sri Lanka and called for national unity to oppose it.

Sri Lanka's government is prepared to implement capital punishment to put a halt to the increase in crime according to Justice Minister Wijeyadasa Rajapakshe.