Professional Documents
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DIGEST
Financing for
Development
Deputy Director
06 Fiscal Policy for Growth: Sustainable Financing for Development
Dushni Weerakoon, PhD (Manchester)
08 ICT for Development: Why Sri Lanka Needs to Address the The annual IPS flagship Publication - Sri Lanka: State of the Economy 2016 - was recently launched
Gender Digital Divide under the theme of Fiscal Policy for Growth: Sustainable Financing for Development. Talking Economics Team
The widely distributed publication calls for fiscal consolidation efforts aimed at broadening Janaka Wijayasiri
10 Trade is Not Just for Big Businesses: Role of Sri Lankan SMEs in
Dishnika Perera
Trade Sri Lankas tax base while minimizing distortions, with expenditure measures aimed at rationalizing
spending and improving efficiency. Drawing from the Report and its theme, Raveen Ekayanake and Bilesha Weeraratne
Kithmina Hewage
12 The Red Dragons Leap: Chinas 13th Five Year Plan and its Kithmina Hewage in their article to TE Digest on Fiscal Policy for Growth: Sustainable Financing
Charmaine Wijesinghe
Implications on Sri Lanka for Development, highlights the perilous state of Sri Lankas public finances, and the urgency
36 08
for fiscal policy reforms to avert an economic crisis. Sri Lankas fiscal position in comparison to
14 Barriers Beyond Tariffs: Sri Lankas Exports to China
other developing countries is poor; government revenue generation is well below the desired level Contributing Authors
Abhinav Pandey
16 Regulating Financial Services for the Poor in Sri Lanka: A Closer while governments debt burden is much higher when compared to countries at a similar level of
Anarkalee Perera
Look at the Long-Awaited Micro-finance Act development. In this context, public expenditure needs to be rationalised by diverting resources away
Bilesha Weeraratne
from loss making, state owned enterprises towards investment with high economic returns. But this Chantal Sirisena
18 Benefits of a Potential Singapore-Sri Lanka Free Trade Agreement an uphill task, requiring political will to reform. Simultaneously, governments revenue base needs Chinthani Sooriyamudali
to be broadened given that revenue collection efforts have been unsatisfactory. In the article, they D. D. M. Waidyasekera
20 Sri Lankas Tourism Industry and the Foreign Ownership Debate
argue difficult reforms need to be undertaken to ensure macroeconomic stability and to improve the Dilani Hirimuthugodage
14 22 Green Shine in New Star Ratings of Sri Lankan Hotels countrys economic outlook. Dushni Weerakoon
Ganga Tilakaratna
24 Intellectual Property Rights as a Tool for Enhancing Ecotourism in On the trade and investment front, Sri Lanka has seen a steady decline in exports while foreign direct Janaka Wijayasiri
Sri Lanka investment (FDI) flows to the country remain unsatisfactory despite the end of the war. Towards Kanchana Wickramasinghe
increasing exports and improving FDI to the country and driving economic growth, Sri Lanka is Kithmina Hewage
26 Making Sri Lankan Tourism Accessible for All currently negotiating trade deals with India, China and Singapore, which are expected to be finalised Manoj Thibbotuwawa
during the course of this year. Sri Lankas forthcoming free trade agreement (FTA) with China is of Nipuni Perera
27 IPS Publications
importance given that it has the potential to be the biggest bilateral trade deal, in view of Chinas Priyanka Jayawardena
Raveen Ekanayake
28 Policy Instability : The Achilles Heel of Sri Lankas Productivity population and status as the worlds second largest economy after the USA. However, the article,
Samanthi Bandara
Barriers Beyond Tariffs: Sri Lankas Exports to China, argues that the ability to capitalize on a FTA
30 South-South Cooperation A New Lease of Life for Developing depends on Sri Lankas capacity to simultaneously address both tariff and non-tariff measures
Suwendrani Jayaratne
Countries Vishvanathan Subramaniam
(NTMs) in China. Concurrently, Sri Lanka is negotiating a FTA with Singapore, which was launched in Yolanthika Ellepola
32 Crop Insurance: Is it Workable in Sri Lanka? 2016, with the aim of improving trade relations between the two countries. The article Benefits of a
Potential Singapore-Sri Lanka Free Trade Agreement examines what Sri Lanka can gain from
IPS Photo Credit
34 Can Sri Lanka do more to help agricultural exporters meet such an agreement. Roshan Kaluarachchi
Sanitary and Phytosanitary Standards? Nalaka Liyanapathirana
Despite the poor macroeconomic and trade performance, Sri Lanka is witnessing a rise in tourism
36 Burning Health Costs for Poor in Sri Lanka since the end of the war. An important aspect that needs consideration in the countrys post-war
Institute of Policy Studies of Sri Lanka
12 18 38 Achieving Inclusive Health in Sri Lanka through SDGs
tourism development is Making Sri Lankan Tourism Accessible for All, while the right enabling
100/20, Independence Avenue
environment could benefit the industry, which is explored in the article Sri Lankas Tourism Industry
Colombo 07, Sri Lanka
40 Why Sri Lanka Need Comprehensive and Integrated Responses and the Foreign Ownership Debate by Chantal Sirisena. With the increase of tourist arrivals to the
Tel: +94 11 2143100, +94 11 2665068
to Mental Health Issues country, the demand for ecotourism also has seen a considerable rise. However, much needs to be
URL: www.ips.lk
done in order for the industry to reach its full potential. In the article, Intellectual Property Rights Blog: Talking Economics
42 Economics of the Olympics (IPRS) as a Tool for Enhancing Ecotourism in Sri Lanka, Dilani Hirimuthugodage highlights how IPRs Web: www.ips.lk/talkingeconomics
can be used as a tool to support the development of the sector while in the article Green Shine in
44 Decrease in Remittances in 2015: Glitch or Beginning of the End?
New Star Ratings of Sri Lankan Hotels, Kanchana Wickramasinghe explores the environmental,
Twitter: www.twitter.com/TalkEconomicsSL
46 Taxation in Sri Lanka: The Need for Radical Change? community and sustainability aspects in a new star rating system in the hotel sector and how hotels
DESIGN/LAYOUT
in Sri Lanka reap the benefits of the system to promote sustainable tourism in the country.
44 48 Inside IPS Shiran Sabar
In addition, the TE Digest contains articles on a broad range of economic issues, from ICT for
49 IPS News Development to Health Costs for Poor in Sri Lanka, which would be of interest to policy makers, Copyright and Disclaimer
economists, universities, development partners, the private sector and the general public.
50 Authors & TE Team All material published in the Talking Economics Digest
are copyright of the Institute of Policy Studies of
We hope you will enjoy the 11th edition of the Talking Economics Digest and look forward to your
52 Fast Facts Sri Lanka (IPS), unless otherwise specified. It cannot be
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53 In a Nutshell and the author. It cannot be reproduced in whole or
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28 Economic Digest and the IPS blog represent the views
Janaka Wijayasiri of individual authors and do not necessarily represent
the views of the IPS.
Research Fellow
janaka@ips.lk
February 2017
The Institute of Policy Studies of Sri Lanka (IPS) is an autonomous institution that aims to promote policy-oriented economic research and to strengthen the capacity for medium-term policy
analysis in sri lanka. Its mission is to contribute to the socio-economic development of the country through informed, independent and high quality research that seeks to influence the
policy process. With over two decades of substantial research expertise, IPS has emerged as a regional centre of excellence and the most influential think tank in Sri Lanka.
2 3
Table 1: Selected Economic Indicators, 2015-2020 will take a cut in real
rupee terms in 2016-17;
2015 2016 2017 2018 2019 2020 household disposable
Real GDP growth % charge 4.8 5.0 5.0 5.0 5.2 5.4 incomes will drop as
Average inflation % charge 0.9 4.1 5.3 5.1 5.0 5.0 fiscal expenditures on
public sector salaries and
Export value growth % charge -5.6 -0.5 4.6 8.2 7.0 11.3 wages, expenditures on
Fiscal balance % of GDP -6.9 -5.4 -4.7 -4.0 -3.7 -3.5 other civilian goods and
Public debt % of GDP 76.0 77.2 75.5 73.1 70.7 65.2 services and transfers
and subsidies (of which
Private savings % of GDP 28.0 27.8 25.9 24.8 24.2 23.6
nearly 80 per cent go to
Private investment % of GDP 21.9 21.9 21.9 21.9 21.9 21.9 households) are squeezed
(Figure 1). On the revenue
Source: IMF, Staff Report for the 2016 Article IV Consultation side too, households
disposal incomes and
cost increases at bay, and ensure that a real depreciation of the currency firms profits will be
takes place. impacted with projected increases in collection from VAT and income
taxes (Table 2). Not surprisingly, the overall macroeconomic framework
Sri Lankas IMF programme signed in June 2016 has built all these points to declining private savings as a share of GDP, while private
elements into its framework fiscal tightening, a soft inflation target, investment stagnates at 21.9 % of GDP in the coming years (see Table 1).
and a flexible exchange rate regime. Within this framework, GDP growth
is expected to remain at a modest 5 % in the medium term, while export
earnings are forecast to grow steadily (Table 1). Clearly, imbalances While focusing on fiscal policy, the response of monetary authorities
are to be addressed in the short term by switching resources (flexible will also be critical to the question of who bears the cost of adjustment.
exchange rate) rather than attempting to boost national income. If the rupee is not allowed to float freely, interest rates will rise,
increasing the cost of credit
Figure 1: Current Expenditures to firms and households, and
thereby reducing domestic
250 expenditures. The prudent
Sri Lankas
The often repeated pun on the IMFs acronym satirically suggests that it prescribes a 100 growth, discouraging savings
tighter fiscal policy, whatever an economys problem might be. Indeed, lower budget and encouraging borrowing
deficits and higher government revenues are central to Sri Lankas latest US$ 1.5 50 (as the predicted savings-
Extended
billion loan from the IMF. But, the economys booms and busts of recent years investment figures seem to
including the current economic distress go beyond merely the fiscal; much of it has suggest).
0
manifested in the monetary and exchange rate policy spheres. It is hard, however,
2014 2015 2016 2017
Fund Facility
to get away from the argument that all roads lead back to the fiscal quandary; the
frequent devaluation of the rupee for example, is a reflection in the monetary sphere Overall though, there is little
of fundamental imbalances in the real economy production, consumption, and
civil service wages other civilian g&s subsidies & transfers room to provide a fiscal and/
Arrangement
investment. And fiscal policy is where the adjustments begin. or monetary policy stimulus
Source: IMF, Staff Report for the 2016 Article IV Consultation
to accelerate growth in the
near term, evident by the
Its Mostly
expenditure exceeds national income; and b) production of tradable goods and services is being done by cuts in both current public spending as well as tax there is no realistic alternative to fiscal tightening; Sri Lanka has pushed
is inadequate. So long as foreigners are willing to finance the external current account increases. itself to a corner, dragging public finances down with low tax receipts
deficit, the economy can muddle along. But, if there is a reversal of such flows, as and unaffordable spending sprees.
Fiscal
happened in 2015 (that coincided with a sharp increase in fiscal imbalances), painful The governments current expenditure is to reduce from 15.2 % of GDP
adjustments have to be made. in 2015 to 13.9 % in 2016. Generous relief measures offered in 2015
What the economy needs most today is a credible fiscal consolidation
Table 2: Tax Revenue (% of GDP) plan that will restore macroeconomic stability and investor confidence
By Dushni Weerakoon
A current account deficit can be addressed by either cutting national expenditure or in the country. If the only means of getting there is inking an agreement
raising income. The latter cannot be increased sufficiently in the short term as GDP 2014 2015 2016 2017 with the IMF, then it is incumbent on the government to deliver on the
growth typically increases expenditures, and productivity improvements take time. terms swiftly. The loan amount, spread over three years, is relatively
Alternatively, governments can attempt to switch resources to produce more tradable Income tax 1.9 2.3 1.9 2.6 small. In the circumstances, Sri Lanka needs to act early and decisively
goods and services. This calls for a depreciation of the currency. But, a nominal to fully leverage the IMF deal as a confidence-restoring measure in its
depreciation alone is insufficient; expenditures must also be reduced to keep domestic
VAT 2.6 2 2.6 2.9 efforts to attract investment flows, both local and foreign.
4 5
Fiscal Policy
Sri Lankas public finances are at a perilous state. Already weakened by years of taxes has remained more or less unchanged over the years, revenue from Contrastingly, funding for critical areas such as education and health
low revenue growth and high external debt to fund a public investment-led growth indirect taxation and non-tax sources have declined significantly from as a percentage of GDP has declined. Adequate investments in health
process, systemic weaknesses coalesced in 2015 to put the country on the cusp a high of 5.9 per cent of GDP in 2004 to a historic low of 2.6 per cent and education are important not only to ensure a skilled and productive
for Growth:
of falling into a public debt triggered economic crisis. A ballooning fiscal deficit and of GDP in 2015. Consequently, revenue as a share of GDP has declined work force, but also to meet broader objectives of socio-economic
excessive public debt accumulation has resulted in a rising debt service burden; the persistently from around 17 per cent in 2000 to a historic low of 11.5 per development and equity. Furthermore, evidence suggests that although,
conduct of monetary policy and exchange rate management has been compromised cent in 2014. Alarmingly, this is despite a steady rise in per capita income education and health services are provided free of user fees, households
in attempts to deal with the fallout of funding the fiscal deficit gap. in the country over the same period. In response, governments have on average spend 6.2 per cent of their monthly expenditure on health and
Sustainable
resorted to offset the decline in indirect tax revenue through an increase education, leading to widening inequality.
Therefore, fiscal policy reforms are urgently required to avert an impending in trade taxes. These policies have thus negatively affected the trade and
economic crisis. At the outset, public expenditure needs to be rationalized by investment productivity of the country. These unsustainable practices Public Investment
diverting resources away from loss-making public entities and towards investments continue despite a slew of recommendations made by a Presidential Tax
Financing for
with high economic returns. Simultaneously, the governments revenue mobilizing Commission made in 2010. Sri Lankas public investment lagged behind for years due to other
framework should be re-evaluated in view of broadening the revenue base and expenditure priorities, especially defence spending during the conflict.
maximizing revenue potential. Only fundamental reforms to public finances will The post-conflict growth agenda saw a renewed focus on public
guarantee a measure of macroeconomic stability and improved growth outlook. Figure 3 : Comparative Trends in Government Revenue and Debt
Development
investment, albeit financed mostly through external borrowings.
The negative impacts of debt-financed investments are somewhat
Fiscal Trends ameliorated with pertinent investments in projects that produce high
Government Revenue returns in dollars (or other exchange) through direct or indirect means.
Successive Sri Lankan governments since independence have accumulated Such returns would better facilitate the repayment of debts. However,
By Kithmina Hewage and Raveen Ekayanake unsustainable fiscal deficits due to a combination of populist expenditure projects politically motivated investments with low returns have resulted in the
and low revenue streams. Despite some improvements, deficits have continued necessity for debt rollovers and an increasingly expanding debt service
to average 7-8 per cent of GDP with knock-on effects on other critical areas of burden.
macroeconomic policy management, most notably fuelling high and volatile rates
Figure 1 : Fiscal Deficits and Public Debt Figure 2 : Revenue and Expenditure Areas for Reform
The legacy of Sri Lankas welfare-state, history of populist public
spending programmes, poorly managed SOEs, and a bloated public
sector bureaucracy have made rationalization of expenditures an uphill
task. If performance of public finance management on the expenditure
Government Gross Debt front has been mixed, fiscal performance on the revenue front has clearly
been very poor since the early 1990s.
In the near term, the solution lies squarely in reversing the progressive
of inflation. With rising fiscal imbalances, the countrys indebtedness also rose
decline in Sri Lankas revenue collection efforts. The widespread and
peaking most recently at 105 per cent of GDP in 2002 narrowing the options for
ad hoc use of tax incentives as a tool to entice investments has led to a
policy maneuverability and limiting the ability to respond appropriately to domestic Expenditure severe erosion of the tax base. This has also contributed to increasing
and external shocks.
the complexity of the tax structure, leading to issues of monitoring and
The composition of current expenditures primarily made up of compliance. Sri Lanka must urgently reevaluate this policy stance in
Since 2009, Sri Lanka appears at first glance to have made some headway in
salaries and wages, interest payments on public debt, and transfers and view of broadening the tax base and rationalizing the tax structure with
reversing the countrys fiscal fortunes. The fiscal deficit fell progressively to 5.4 per
subsidies has hardly changed either, underlying the lack of meaningful the broad aim of simplifying revenue administration and increasing
cent of GDP in 2013, while the public debt-to-GDP ratio too climbed down steadily
reform efforts in public finance management. Sri Lanka has a large and compliance.
to around 70 per cent of GDP. However, the explanation for this lies in more robust
nominal GDP growth over the same period than any underlying efforts at addressing growing cadre of public sector employees, estimated to account for
structural weaknesses in fiscal policy management. As could be observed from approximately 15 per cent of the total employed in 2015. Aside from Another critical area of intervention that needs attention is to address
Figure 3, Sri Lankas fiscal position in comparison with other developing and the heavy fiscal recurrent expenditure burden of salaries and a non- distributional weaknesses of the current tax system. Historically, Sri
emerging market economies is extremely poor. Government Revenue generation is funded public sector pension scheme, the Treasury must also grapple Lankas tax structure has been a regressive one, with the bulk of revenue
well below the desired level, while the government debt burden is much higher than with transfers to loss making SOEs. The government has identified 55 generated through production taxes. Whilst the government expressed its
countries at similar levels of development. SOEs as strategically important. However, eleven SOEs among these intention to arrest this trend and make the structure more progressive,
have incurred heavy losses especially in the commercial operations a number of recent tax policy changes introduced in 2016 work counter
Government Revenue of the energy, aviation, commuter transport, and plantations sectors. to this stated objective. With limited fiscal resources constraining
This unsustainable financing strategy has been worsened through the investments in social sectors such as health and education and gaps in
The bulk of Sri Lankas tax revenue is sourced through indirect taxes, followed by extension of government Treasury guarantees, which has effectively fiscal support for social protection, especially of the more vulnerable such
direct taxes and non-tax revenue. A Value Added Tax (VAT) and a Nation Building Tax increased government liabilities, and thereby creates knock-on effects on as the elderly, regressive tax structures will further undermine efforts
(NBT) are the main contributors of indirect tax revenue. Whilst the share of direct the profitability of other state institutions and enterprises. towards equitable growth and development in the country.
6 7
ICT for Development: Why Sri Lanka
and increasing access to ICT is key to leverage this potential. ICTs are coding camps to girls in the United States - reveal the extent to which
particularly well poised to help overcome barriers that are specific to access to IT literacy can boost the female technical workforce: over
female entrepreneurs such as lack of access to equity, information and 90% of the girls who participate in their programme went on to major in
Digital Divide
efforts need to be strongly supported at an institutional level
by local and national governments.
8 9
Trade is Not Just for Big Businesses:
informational problems, and the inability to provide collateral/ guarantees
and credit history means that SMEs incur higher interest rates and fees
SMEs Contribution to Sri Lankan economy compared to larger firms. This problem is compounded by the difficulty to
10 11
Thus, this condition especially in regard to China has been identified Opportunities for Sri Lanka
as a sandwich trap, where the country is trapped between cheap labor
competition from below, and exclusion from higher value-added markets Chinas efforts to limit its excess production capacity under the new plan
from above. will create a window of opportunity for developing nations to obtain vital
Foreign Direct Investment (FDI). The close ties between Sri Lanka and
It is in this conjuncture that China has unveiled its 13th Five Year Plan. China, coupled with the island nations proximity to international trade
This broad, ambitious proposal aims to double Chinas income per capita routes, make it an ideal destination for investments being reallocated.
by 2020, compared to 2010 levels. In other words, the plan envisions The close diplomatic ties provide scope for bilateral ventures that
a development trajectory not hindered by slowdowns vis--vis Middle accelerate the transfer of capacity to Sri Lanka. Sino-Lankan cooperation
Income Trap. is already evident in this field high level negotiations are already under
way to a construct a Special Investment Zone in Hambantota. China
The 13th Five Year: Future Scope for Development
has shown interest in partnering with the government in developing
Chinas development policies are closely aligned to its socialist roots; special economic zones in other regions of the island as well. In a recent
reforms are orchestrated as per the five year plans proposed by the trade discussion, the Chinese Ambassador to Sri Lanka, H.E Yi Xianliang,
Central Committee (CC) of the Communist Party of China (CPC). The five has stated that his nation is prepared to commit over $5 billion in FDI
year plans are thus important precursors for growth as they delineate the over the medium to long term for special economic zones.
policy reforms and development endeavors that would be implemented in
Such investments will help improve the labour force by creating
the medium to long term. In such a scenario, the recently ratified (by the
The Red
employment opportunities and will provide an impetus to maximize
National Peoples Congress) 13th Five Year Plan becomes even more
productivity potential. Furthermore, the creation of similar manufacturing
important.
enclaves will set an ideal foundation for Sri Lanka to integrate into global
Dragons
Chinas rapid development has been well documented. Since the initiation of market The 13th Five Year Plan is molded upon Secretary General Xi Jinpings supply chains in the future.
reforms in 1978, Chinas GDP growth has averaged 10% per annum; an unparalleled call for China to adapt to a New Normal. Under this concept, Chinas
feat amongst developing nations. Such brisk growth rates have been instrumental development objectives will shift from expanding product volume and The regional focus of the 13th Five Year Plan is inextricably linked with
Leap: Chinas
in developing large swathes of the nation and in lifting a significant portion of the capacity to upgrading product quality and production innovation. Chinas One Belt One Road (OBOR) initiative. Sri Lanka, being a strategic
population from poverty. Furthermore, the new plan calls for a shift from high speed to medium- partner of the Maritime Silk Road, has the potential to position itself
to-high speed growth. Growth will therefore be maintained at around the as an Asian growth hub in the heart of the Indian Ocean. For instance,
Implications on
would find itself facing the middle-income trap. This concern has been echoed by public capital flow and reevaluate the existence of certain monopoly However, it is pertinent to note that foreign investment is no panacea
Finance Minister Lou Jiwei who noted in 2015 that there was a 50% chance of industries. Furthermore, tax reforms will be initiated and incentives for development. Authorities have to ensure that the inward foreign
China sliding into the Middle Income Trap in the next five to ten years. for private entrepreneurship will be strengthened. Chinas primary investment is favorable to Sri Lankas future aspirations, and is not
Sri Lanka
goal in undertaking such large scale endeavors is to absorb undertaken with the intention of inflaming regional power politics.
The Middle Income Trap: Implications for China excessive production and phase out excessive
Figure 2: A comparison of Chinas outward FDI and inward FDI between 2003-2015
production capacity. Such reform is essential to
The Middle-Income Trap is often generalized as a developmental trap, a predicament fulfill Chinas ambition of realigning its economy as a 140
By Vishvanathan Subramaniam associated with diminishing rates of productivity in economies that have been quality-oriented and innovation hub. 120
experiencing rapid growth.
2. Innovative Development: This is a prerequisite for 100
Chinas rapid growth was spurred by the manufacturing sector, as firms utilized any potential foray into the high value market. While 80
the low wage structure to produce goods that were price competitive in the China is the second largest contributor to global 60
Figure 1: A Twenty Year Breakdown of Chinas GDP Growth global market. The strategy has borne sizeable R&D investment, the per capita breakdown is far
dividends China has been successful in 40
from ideal. The 13th Five Year Plan aims to create
alleviating more than 800 million citizens above a domestic field more conducive for investments 20
16
the poverty threshold. However, such successes in innovation. The state will provide incentives for 0
14 now act as an impediment to the continuous indigenous innovation and in addition, will procure
201*
5
200
200
200
200
200
200
200
201
201
201
201
201
use of a similar strategy. Chinas burgeoning international patents where necessary to ensure that
12 Outward FDI Foreign investment in China
middle class has now caused a wage spiral innovative practices are not hindered.
that has reduced the comparative advantage of
PERCENT OF GDP
9
0
1
2
3
4
5
continue to invest in Special Economic Zones as a means to for the future have ramifications for all Asian nations, Sri Lanka included.
199
199
199
199
200
200
200
200
200
200
200
200
200
200
201
201
201
201
201
201
YEAR
resources to integrate into the higher end of the promote international production capacity, global trade and Only time will tell if such plans and policies usher in a shift in the global
value added market. investment. paradigm.
Source: The World Bank
12 13
China. Of the 541 potential exports to China, Sri Lanka already exports content is present or not in tea, but the levels of rare-earth cannot be
244 products. The remaining 297 products with trade potential to China determined as per se Chinese requirements. Moreover, China does not
are currently not exported by Sri Lanka to China but are imported by recognize testing and certificates provided by Sri Lanka, while testing in
China from elsewhere in the world, presenting new market opportunities China is considered to be time-consuming and complex.
for Sri Lankan exporters. However, the ability of the proposed FTA to be
a game changer for Sri Lankas trade front depends on the countrys Issues relating to quarantine and testing/certification are reported
capacity to simultaneously address both tariff and NTMs amongst other across other agricultural export categories as major impediments, as
issues to capitalize on the untapped trade potential in China. well as lack of transparency with regard to the food safety regulations.
The frequency of test reports and the levels/limits required in China
Challenges: Tariff and Non-tariff Measures (NTMs)
Barriers Beyond Tariffs: Sri Lankas
are considered to be greater than in any other markets. The lack of
necessary testing facilities in Sri Lanka to meet testing and certification
NTMs are policy measures other than tariffs that can impact trade requirements applicable to China is also highlighted as a major concern.
flows and include technical and non-technical measures (Table 1).
Exports to China
For example, fisheries exporters state that other markets require
If NTMs are imposed by countries excessively beyond the specified exporters of shrimp to obtain an antibiotic test report for one pond in
measures to restrict imports from other countries, then they can be a shrimp farm, while for China, antibiotic reports have to be provided
considered a Non-Tariff Barrier (NTB). The impact of NTMs on overall for each and every pond in a farm. Meanwhile, obtaining quarantine
By Janaka Wijayasiri and Nipuni Perera
trade restrictiveness has been found to be significant and often more requirements for fruits and vegetables are stated to be extremely
trade restrictive than tariffs. cumbersome and time-consuming, involving a lengthy approval process.
Sri Lanka Stepping Up Its Game USA. So far, there have been three rounds of FTA negotiations with China;
The prevalence of NTMs has been a major concern for Chinas trading
For example, it takes Sri Lanka nearly three years to obtain quarantine
the last one was recently concluded in Colombo after a space of 1.5 certification to export bananas to a few ports in China.
partners. The WTO in its fourth Review of Chinas Trade Policy called on
Sri Lanka is stepping up its game in trade by going full steam ahead years.
China to address NTMs as countries have voiced concerns regarding their Industrial Exports
on negotiating free trade agreements (FTAs) with three of its major Figure 2
prevalence; these include anti-dumping duties, technical trade barriers,
trading partners - India, China and Singapore. The -government hopes In comparison, tariffs are reported to be more challenging for industrial
sanitary and phytosanitary issues, operations of state-owned enterprises,
to conclude discussions and strike comprehensive trade deals with India Impact of exports covered in the study (textile and apparel products, rubber and
According Joint Feasibility Study, Chinas customs process, export restrictions, and the protection of intellectual
and Singapore by December 2016, and with China by the first quarter bilateral trade imports from Sri Lanka will increase due to
China-Sri Lanka Free Trade Agreement by: property rights. rubber products and gems and jewellery). Currently, China provides duty
liberalisation
of 2017. Sri Lankas recent enthusiasm for FTAs with major trading free access under several FTAs to a number of countries with which
partners, dubbed in the media as FTA Mania, is not without good Table 1: Non-tariff measures (NTMs) Classification Sri Lanka directly competes. For example, textiles and apparels are
reason. Deeper trade integration and investment cooperation, access subject to an MFN rate of 16% when entering the Chinese market,
Imports
to markets/cheaper inputs and enhanced competitiveness etc., are while under the China-ASEAN FTA, imports from Indonesia, Malaysia,
Technical Measures Sanitary and Phytosanitary Measures
among some of the potential benefits that FTAs offer partner countries. Tea (56% or $12.4mn) Fish & Fisheries Technical Barriers to Trade Philippines, Cambodia, Myanmar, Vietnam and Thailand have duty
(47% or $2.1mn)
However, when tariffs are brought down through FTA negotiations, non- Pre-shipment Inspection and Other Formalities
free access to China. Although Sri Lanka has preferential access to
Non-Technical Measure Contingment Trade-Protective measures
Fruits & vegerables
tariff measures (NTMs) can reduce the utilization of FTAs if they are not Non-automatic Licensing, Quotas, Prohibitions and Quantity Control the Chinese market under the Asia Pacific Trade Agreement (APTA),
(unspecied)
Measures other than for SPS or TBT Reasons
effectively dealt with. As experienced under the Indo-Lanka Free Trade Price-control Measures, Including Additional Taxes and Charges the margin of preference offered does not provide a competitive
Machinery & electronics
Agreement (ILFTA), many Sri Lankan exporters have faced a multitude of (29% or $4.5mn) Finance Measures
advantage to Sri Lankan exporters. Rubber and rubber products
Measures Affecting Competition
difficulties in entering the Indian market due to the prevalence of NTMs Trade-Related Investment Measures are subjected to duties ranging from 15-30%, similar to gems and
such as state taxes, standards, and administrative procedures, quotas, Gems & Jewellery Distribution Restrictions
jewellery (0-5% on gems, 10.75% on base metals, and 17.5-30%
(42% or $0.9 mn) Restrictions on Post-Sales Services
etc. which were outside the scope of the Agreement. Hence, NTMs Coconuts Subsidies (excluding export subsidies Under p7) on jewellery) compared to duty-free access for ASEAN members.
Rubber products
should be identified at the onset in the trade negotiations and addressed Government Procurement Restrictions
(120% or $22.1 mn) (30% or $10.1mn)
Intellectual Property However, exporters report stringent testing and specific requirements
along with tariff reductions/eliminations for FTAs to deliver the desired Rules of Origin in China such as GB (Guobiao in Chinese) testing in the case of
benefits. Exports
Source: Compiled from Joint Feasibility Study on a China-Sri Lanka Free Trade
Export-Related Measures textiles and apparels. The latter requires more detailed test reports
Agreement (2014)
compared to other export destinations and Sri Lanka lacks the
Sri Lanka-China FTA: Game Changer? Source: UNCTAD (2012)
necessary facilities to undertake such testing.
China is currently Sri Lankas second largest trading partner, while also
being Sri Lankas second most significant source of imports, accounting
Sri Lankas forthcoming FTA with China is of importance given that it has
A study conducted by IPS, based on interviews with several major Recommendations for Negotiations
the potential of being the biggest bilateral trade deal in view of Chinas for 20% of Sri Lankas total imports in 2015 (Figure 1). China is less
important as an export market, accounting for just around 2.9% of Sri exporters to China and related trade associations, finds that both tariff
population and status as the worlds second largest economy after the Sri Lankan exporters face both tariff barriers and non-tariff barriers
Lankas exports. But, China holds promise as an emerging export market and non-tariff measures are encountered by Sri Lankan companies
when entering the Chinese market. An FTA, which does not address
Figure 1 as Sri Lankan exports to China have been growing at a faster rate than exporting to the Chinese market. Generally speaking, non-tariff measures
NTMs, may not be sufficient in delivering the expected trade gains for Sri
with the rest of the world; it is thus likely to emerge as an important seem to be more challenging than tariff barriers for agricultural exports,
Lanka. Therefore, it is imperative for China-Sri Lanka trade negotiations
Bilateral Sri Lankas trade with China has been growing export market with the signing of a FTA. while the opposite is true for industrial exports.
faster than its trade with the rest of the world over to simultaneously address both tariff barriers and NTMs. Given that
trade with the last 5 years and China has emerged as:
China Agricultural Exports the agreement with China is going to be a comprehensive one, SPS/
A joint feasibility study on the China-Sri Lanka FTA identified that the TBT issues will be taken into account during the negotiations. Some of
proposed FTA would facilitate an increase of bilateral trade, particularly in Agricultural exports covered in the study (tea, fish and fisheries and fruits the key issues to figure in negotiations, include but are not limited to,
Sri Lankas 2nd certain product sectors of interest to Sri Lanka including, but not limited and vegetables) are mostly burdened by NTMs, compared to tariffs. With (a) addressing NTMs in addition to tariff concessions as a priority, (b)
largest trading to, tea, rubber products, fish and fisheries products, textile and clothing,
partner regard to NTMs, the commonly cited problems faced by agricultural setting up Chinese accredited testing laboratories in Sri Lanka whilst
coconut products, gems and jewellery, fruits and vegetables, machinery exporters to China revolves around high sanitary and phytosanitary (SPS) (c) enhancing capacities and efficiencies of testing laboratories in the
2nd largest source and electronics. The study highlights that trade liberalization will
of imports after requirements compared to other export markets, and the lack of mutual country which China may consider assisting under the umbrella of
India increase in Chinas imports from Sri Lanka between 29% (machinery and recognition of standards and certificates. For example, tea exports to economic and technical cooperation, (d) striking Mutual Recognition
6th largest export electronic product)and 120% (rubber), depending on the export product China are subject to rare-earth content testing, which is unique to China Agreements (MRAs) on standards, (d) translating all trade-related
US$ 305 mn
market after USA, in question (Figure 2).
UK, India, and not a requirement in other markets. Moreover, the exact particulars documents/ regulations/ information into English, (e) appointing nodal
Germany, Italy
of this standard are not clear. It is also revealed that testing for rare- points in both countries to handle issues at the point of clearance;
US$ 3,727 mn An independent study by IPS identified a total of 541 products in which earth content is problematic as the available testing facilities in Sri Lanka and (f) establishing better relationships/coordination between relevant
Sri Lanka has a comparative advantage vis--vis the world, including are insufficient the current facilities can only specify if rare-earth respective competent authorities to facilitate trade.
Source: Compiled from WITS Database
14 15
Regulating Financial Services for the
2. Finance companies established under the Finance Business Act, more savings among them. Microfinance providers are more accessible
No.42 of 2011 for the low-income groups (compared to more formal financial service
3. Co-operative societies registered under the Co-operative Societies providers). As such, this step was taken to enable microfinance providers
Benefits Singapore and Sri Lanka officially launched negotiations for a FTA by the respective
trade ministers on 18th July 2016; the event was witnessed by Prime Ministers Lee
Hsien Loon and Ranil Wickremesinghe, who was in Singapore on a two day visit. This
telecommunications. To date, Singapore has invested altogether US$ 530
million in Sri Lanka, and Singaporean companies have expressed interest
in urban infrastructure projects, construction of Export Processing Zones,
of a Potential
follows the visit to Sri Lanka of S. Iswaran, Trade and Industry Minister of Singapore, in projects in and around Colombo, and manufacturing. Interestingly,
June, who stated that The potential for a good quality bilateral free trade agreement Sri Lankan companies have invested US$ 120 million in Singapore,
between Singapore and Sri Lanka is there. Our officials have done the studies, and and Sri Lanka companies may also benefit from an Agreement due to
Singapore
they feel both sides stand to benefit significantly, and it will smoothen the way for our greater ease in which they can do business in Singapore. Together with
business commitments to work together. In turn, Minister for Development Strategies commitments to protect bilateral investments, a FTA can be expected
and International Trade, Malik Samarawickrama agreed that there would be mutual to encourage greater cross-border trade and investment flows between
Sri Lanka
benefits for both countries under a comprehensive FTA. Subsequently, the first meeting Singapore and Sri Lanka.
of the trade negotiating officials from both sides met and the foundation was laid for
the next rounds of negotiations. In addition, an Agreement with Singapore will include liberalization of
Free Trade In recent years, Sri Lanka has lagged behind in pursuing FTAs compared to its
neighbours in South and South East Asia. At the moment, Sri Lanka has only four trade
the services sector through the provision of national treatment and
removal of market access restrictions on service suppliers in sectors
committed. Singapore has pursued both a positive and a negative list
Agreement
agreements two bilateral agreements with India and Pakistan and two regionals with approaches to services liberalisation with its FTA partners and has
South Asia and some Asia Pacific countries and one in the pipeline with China. In liberalized areas of interest to both parties. Service sectors currently
comparison, Singapore has a network of 21 bilateral and regional FTAs in force with liberalized in Singapore include telecommunications, banking, financial,
By Janaka Wijayasiri and Abhinav Pandey 32 trading partners. In 1992, Singapore signed its first FTA, the Common Effective education, and environmental services. However, liberalization of labour
Preferential Tariff Scheme with its ASEAN neighbours and its first bilateral agreement mobility has been restricted under Singapores FTAs. Even the most
Source: UNESAP Asia-Pacific Trade and Investment Agreement Database
spirited free traders like Singapore have been restrained about opening
immediately after the FTA comes into force. This will rise to more than 95
its borders to admit labour from abroad. Singapores vision of a Global
Sailent Features of Singapore (SIN) - Sri Lanka (SL) per cent over 10 year period. Singapore in turn has granted immediate
duty-free access for all imports from Turkey. However, it should be noted
City has resulted in a high influx of both high and low skilled foreign
Economic Relations that Singapore has on average a duty rate of 0% on all imported goods,
and excises duty on few items (liquors, tobacco, motor vehicles, and
wage workers. Due to public backlash for the high presence of foreign
workers in the country (foreigners now make up around two out of five
residents), Singapore has tightened its employment of foreign workers
petroleum products).
more recently.
In addition to trade in goods, Singapores FTAs generally cover trade-
in-services and investments and some include intellectual property In conclusion, the signing of a bilateral FTA between Sri Lanka and
protection, government procurement, and other cooperation measures, Singapore has the potential to improve trade relations between the
reflecting Singapores economic strategy which is shifting from a two countries. An Agreement will most likely remove customs duty on
manufacturing-centric economy towards service and investment-based almost all goods; however Sri Lanka has little to gain in the context of
one. A summary of the key characteristics of some of Singapores trading goods due to the minimum amount of exports and Singapores
21 85 923 4 existing bilateral FTAs is given in Table 1. existing duty free access. Mobility of labour to Singapore should not be
anticipated based on its existing FTAs. However, a bilateral FTA has the
# of FTAs Value of exports Value of Rank of SIN In terms of trade in goods, Singapore is not a significant export market of potential to facilitate an increase in Singapores FDI to Sri Lanka while
Singapore has to SIN from SL imports from as source of
signed ($ mn) SIN ($ mn) FDI to SL Sri Lanka. In 2015, exports to Singapore amounted to US$ 85 mn or less Sri Lankan service providers can gain by having more market access in
than 1 per cent of Sri Lankas total exports while growth in exports during Singapore.
18 19
tracking that has left investors perplexed. Sri Lankas need for FDI-led can be particularly disruptive in developing countries. The practise of
growth is undisputed, yet the position of current policy damages Sri buying up undeveloped land and banking for capital appreciation can
Lankas attractiveness. exaggerate the appreciation of land values and sometimes prevent
development in the area.
Figure 2: Sri Lankas Ranking vs. Regional Peers
On the other hand, some liberalization of land
Travel & Tourisms Total 2014 Travel & Tourisms Total 2014 ownership can be viewed as a positive step to
Contribution to GDP (% share) Contribution to Employment (% share) enhance Sri Lankas push for FDI. Such a move
Maldives 78.1 Maldives 62.0 could signal a renewed commitment to a recovery
Cambodia 29.9 Cambodia 26.4 in FDI inflows, which have suffered in the past 18
Thailand 19.3 Thailand 14.1 months. The ability to acquire property, with secure
Malaysia 14.9 Malaysia 13.0 rights of ownership or lease, at transparent prices
Philippines 11.2 Philippines 11.1 and with limited restrictions, is often considered
Sri Lanka 11.1 Sri Lanka an essential ingredient in investment decisions.
10.0
World World Deregulation does not only encourage investment
9.8 9.4
in land, but may more importantly also provide an
Indonesia 9.3 Indonesia 8.7
ancillary to investment in business. For example,
Vietnam 9.3 Vietnam 8.5
land owned by an investor can be used as security
Asia Pacific 9.2 Asia Pacific 8.4 for a capital raising.
India 6.7 India 7.7
Sri Lankas Tourism Industry and the Source: World Travel and Toursim Council, Country Rankings The approach to land ownership of the majority
of countries globally is that of an intermediate
20 21
Green Shine in
New Star Ratings of
Sri Lankan Hotels By Kanchana Wickramasinghe
A system shall be in place for recycling of waste. Food waste When asked about the constraints in adopting good environmental
shall be composted or used as animal fodder. Solid waste shall be management practices, lack of will and commitment was mentioned
separated for re-cycling. A very clear arrangement shall be in place around 28 per cent of the unclassified hotels in the sample. Also,
for disposing of separated solid waste for re-cycling. around one fourth of unclassified hotels are facing space constraints for
implementation certain practices may be owing to relatively smaller
The use of plastic, polythene and PVC shall be discouraged. A policy scale of their operations.
to minimize the use of the above items shall be in place. The use of
All registered hotels in Sri Lanka should now have a star rating re-cyclable containers such as glass bottles, glass jars, etc., shall Reflections
according to a new regulation, which came into effect recently. be encouraged.
Star classifications are primarily aimed at improving the quality of Inclusion of environmental aspects into the countrys official star rating
services offered by hotels. The star ratings can also be used as a A system shall be in place to pass on benefits to the neighborhood system should be viewed as a plus point for Sri Lanka as a destination
marketing tool. Official star ratings are one source of information and the area. Policy on recruitment and procurement shall have which is ambitious about promoting sustainable tourism. Though
on quality for customers among others such as customer ratings in built in mechanisms to make the above process meaningful. the environment related requirements are not mandatory, the hotels,
booking and review websites, information obtained through travel which follow the requirements, are to obtain more marks against their
agents, publications, etc. In addition to, imposing a mandatory Source: Extraordinary Gazette No. 1963/28, 20th April 2016 competitors. Sri Lanka should include this aspect in their marketing
requirement for a star rating for all registered hotels, it is noteworthy activities to gain attention of environmental conscious tourists.
that the requirements or criteria for classifying hotels have also been
revised. This has been a long-felt requirement in the industry as the Accordingly, energy management aspects are highlighted in the form However, inclusion of environmental aspects to day-to-day activities of
previous criteria were much outdated. Most interestingly, a new set of of improving energy use efficiency, energy conservation, and use of hotels involves investments. Particularly, small registered hotels will
requirements/criteria are now being introduced in the new list to cover alternative environmental friendly energy sources. This would help to have to be assisted with capacity building and training support, as well
environment and community aspects. reduce operational costs as energy costs consists of around 18 per as financial terms.
cent of total operational costs on average (Miththapala, 2011). It will
Environmental Aspects in New System have positive impacts certainly on the natural environment. Waste, both Periodical reviews of the set requirements for star rating are also
solid and waste water, has also been incorporated to new requirements. required given the set targets of tourism industry. Changing aspects of
Accordingly, eight non-mandatory requirements under the title of Environmental pollution is minimized by discouraging the use of polluting consumer demand, competition with other destinations and feedback of
Environment, Community and Sustainability have been included. materials. The last criterion aims to offer benefits to local communities, stakeholders including the hoteliers should be necessarily considered in
They are applicable for any star category of tourist hotels. and it relates to social dimension of sustainable tourism. reviews.
22 23
Intellectual Property Rights as a Tool for
Sri Lanka, a majority of villagers use traditional knowledge for health and (TRIPs) Agreement of the WTO and provide protection via geographical
agriculture purposes. Ecotourism includes tours of local farms to take indication, sui generis system, and folklore to enhance the tourism
a first-hand look at the growing, traditional methods of crop protection, sector; by prioritizing ecotourism, which has proved to be a booming
24 25
Making Sri Lankan Tourism Latest Publications
Accessible for All PUBLIC OR PRIVATE: DETERMINANTS OF
CHOICE OF HEALTHCARE PROVIDERS IN
SRI LANKA
TRADE AND TRANSPORTATION AUDIT:
SRI LANKA
2013
2008
2009
2007
2011
2012
2014
2006
Policy
6
A high level of productivity is essential in realising the governments vision, a more
Nepal
open economy with an emphasis towards attracting foreign direct investment (FDI) and
improving the countrys trade capacity. In this regard, the recent release of the Global 5
Bhutan Sri Lanka Bhutan
Instability:
Competitiveness Index for 2016/17 by the World Economic Forum and Sri Lankas
drop in rankings should be a major cause of concern for policy makers. Notably, this 4 India
India India India
India Best performer South Asia Way Forward
comes almost simultaneously as the Asian Development Bank (ADB) revising its growth Median South Asia
Pakistan
projections for the country from 5.3% to 5% in 2016 due to weak industrial performance Bhutan
Sri Lanka
Worst performer South Asia
China Although Sri Lanka has
The Achilles
3 Pakistan Pakistan
and fiscal consolidation. Undoubtedly recent floods and droughts have had some impact Bangladesh Nepal
Pakistan experienced political
on economic performance; however, the release of the Global Competitiveness Report
Nepal Nepal stability in its recent past
sheds light on a more structural weakness in the economy that inhibits the countrys 2
Nepal since the conclusion of
progress. The following article elaborates on some key aspects highlighted through the
Heel of
Bhutan
the conflict, the country
report. 1 has failed to translate
Institutions Infrastructure Marco- Health and Higher Goods Labor Financial Technological Market Business Innovation that stability into stable
Policy Instability and Investor Confidence economic primary education market market market readiness size sophistication
policies. The absence of
Sri Lankas
environment education and training efficiency efficiency development
28 29
Is it an Alternate Means of Finance? How does South-South Cooperation Facilitate
Soft Power?
In addition to increasing levels of aid flowing between developing
countries, the dynamics of international aid flows are also changing, Amidst these limitations, however, emerging economy donors are
especially due to the considerable overlap between the recipients of increasingly influential in the realm of capacity development initiatives.
foreign aid from developed countries, and those from other developing Through an increased emphasis on infrastructure and human capacity
countries. This particularly holds true to the African region, especially development initiatives, cooperation among developing nations appears
Least Developed Countries (LDCs). Additionally, South-South Cooperation to strengthen when negotiating at multilateral platforms such as the
is also identifiably focussed on regional cooperation. Sri Lanka is a key UN and WTO. As noted previously, developing nations, especially those
beneficiary of this extension with a large component of its external dependent on foreign aid lack the necessary resources to dedicate
development finance flowing from China and India. towards capacity improvements. For example, These limitations are
particularly acute in training negotiators and gaining technical expertise.
While influencing traditional aid flow dynamics, research suggests that Consequently, aid recipients suffer from weak trade policy creation
South-South Cooperation is not significant enough to act as an alternate and depend on consultants associated with aid donors from developed
means of finance. This is due to both the quantity of aid provided and the nations.
economic characteristics of the donor nations. LDCs, due to their poor
economic conditions require large amounts of external financing to carry
Emerging donors, appear to be paying special attention to this deficit
out their policies while also attempting to improve growth. However,
and dedicate a significant portion of their aid towards developing
compared to the aid needed, the amount provided by other developing
trade and economic policy related human capacity in other developing
countries account for a significantly small proportion.
countries. Given that emerging donors are unable to compete against
their developed counterparts on the scale of aid, they are more focussed
For example, estimates suggest that emerging donors contribute only on addressing issues of soft-power. Among the emerging donors, India
7-10% of global official aid. Consequently, aid recipients continue to is seen to be especially keen on such efforts along with considerable
depend heavily on traditional donors as a means of finance. Stakeholder support from China.
interviews also suggest that the significance of traditional donors
Table 1: Main recipients of aid from selected developing donors For example, India hosts and trains trade
negotiators and ministerial officials from other
South-South
The adoption of the Sustainable Development Goals (SDGs) along with the Country Main Recipients developing countries, especially from LDCs
recent ratification of the Paris Agreement on climate change has heralded and newly acceding countries to the WTO.
Brazil Haiti, Cape Verde, East Timor, Lusophone and Southern American countries
a new era of development policy discourse. Rather than concentrate on a Moreover, China set up the China Programme
Cooperation
purely economic measurement of growth and development, the international China Africa (46%), Asia (33%), Latin America (13%) in 2011 to finance internships at the WTO
community has now embraced a more holistic approach that better represents Secretariat and other training facilities along
the economic, social, and environmental challenges faced by countries. In India Bhutan (36%), Afghanistan (25%), Nepal (13%), Approximately 85% to Asia, 15% to Africa with round table meetings for LDCs and newly
A New Lease of doing so, countries have also taken up a new gamut of policy objectives,
which will require significant financial, technical, and political support from
South Africa Southern African Development Community (70%), and other African countries. acceding nations. These efforts from emerging
donors are aimed at better integrating other
Life for
all stakeholders. A key lesson from the previous development era, led by the Source : Walz and Ramachandran (2011) developing nations into the multilateral treaty
Millennium Development Goals (MDGs), is that developing countries cannot mechanism. In doing so, the institutional
depend on developed countries to fulfill their obligations of development capacities of LDCs in particular are improved and the coordinating
Developing
is further increased by the long-established structures of global
finance. With only a handful of developed countries fulfilling their obligation to mechanisms used during multilateral negotiations are strengthened.
economic governance, namely the Bretton Woods Institutions. The
direct 0.7% of GNI for Overseas Development Assistance (ODA), domestic and Consequently, such efforts are seen as strengthening cooperation
policy prescriptions advocated by the World Bank and other multilateral
Countries
alternate forms of financing development have become increasingly important. between developing nations and conversely reducing the influence of
donor agencies are closely associated with aid disbursement policies
It is under these conditions that the United Nations celebrates its Day for South- developed nations.
of traditional donors. Notably, however, LDCs and low-middle income
South Cooperation.
By Kithmina Hewage developing countries believe that the establishment of the BRICS Bank
would offer a reasonable alternative to existing financial structures in
What is South-South Cooperation? the long-term. This is likely to occur due to better coordination between The Future of South-South Cooperation
emerging donors as well as the availability of a larger pool of resources
South-South Cooperation is a broad framework for collaboration between
for assistance. Thirty-eight years since the adoption of the Buenos Aires Plan of Action,
developing countries in the political, economic, cultural, environmental, and
South-South cooperation has evolved significantly and is becoming
technical domains. This effort was officially adopted on the 12th of September
The ability for aid from other developing nations to act as an alternate an important instrument of international political economy. The role
in 1978 at the Buenos Aires Plan of Action for Promoting and Implementing
means of finance is further constricted by their respective market of emerging economies in this regard, therefore, is indubitable. The
Technical Cooperation among Developing Countries. The rapid emergence
orientations as well. Similar to aid dependent nations, emerging emergence of outward FDI from these developing countries is even
of developing countries such as Brazil, India, and China as economic
donors economies have a considerably large primary sector. Therefore, more significant and provides countries like Sri Lanka an opportunity
heavyweights, however, has significantly altered the landscape of South-South
developing countries find it difficult to penetrate the markets of emerging to attract a more diverse group of investment. Moreover, this could also
Cooperation. Rather than act as purely a means of goodwill, South-South
donors with their respective exports. Universal tariff preferences provided facilitate the process of diversifying the countrys export markets and
Cooperation has become a tool for emerging economies to demonstrate their
by industrial markets through the Generalized System of Preferences tap into faster growing markets rather than traditional markets in the US
economic and diplomatic strength, commonly referred to as soft-power. In
(GSP), the Lom Convention and other similar arrangements, therefore, and Europe, which are becoming increasingly crisis prone and slow in
effect, these emerging economies are directing more resources in the form of
afford developing countries a better opportunity to integrate into the recovery. South-South Cooperation is unlikely to replace existing routes
foreign aid and foreign direct investment to finance the development processes
world market and accrue benefits of the global trading system. However, of North-South economic and political cooperation. However, there is a
of fellow developing countries. It is important to note, however, that increasing
such trading agreements are often tied to aid negotiations and therefore vital role for South-South Cooperation to play as a complement to the
levels of South-South aid flows do not reduce the levels of commitment by
lead to engrained dependency cycles for aid recipients. development processes of each other.
developed countries.
30 31
Crop Insurance:
Farmers have been severely affected by various natural calamities - floods, other financial services. Both insurance programmes are voluntary and transaction costs, as it does not require crop damage assessments in the
droughts and excessive rainfalls during the recent years. At macro level, indemnity-based where insurance payout is based on the crop damage. field. In addition, it lacks moral hazard and adverse selection problems,
the decrease in paddy production due to unfavourable weather conditions which are associated with traditional indemnity-based insurance
Is it Workable in
including droughts was 27% in 2014, when compared to production According to the Central Bank Annual Report 2015, when just these two products.
statistics of the previous year. Whilst important, weather related risks are voluntary insurance programmes are taken together, only less than 4% of
merely one component when it comes to overall risks and uncertainties the paddy-cultivated area (on average) is insured during 2003-2015. In Sri Lanka has a very short history in this regard. It is vital to implement
Sri Lanka?
faced by farmers which include price risks, market risks, etc. Recent most of the cases, crop insurance is obtained as a requirement in getting an effective awareness creation programme to educate farmers on the
unexpected changes in climate patterns have worsened the situation. agricultural loans. benefits of index-based crop insurance. However, the discussions with
key stakeholders reveal that there are several technical challenges
By Kanchana Wickramasinghe When affected by a natural calamity, farmers face numerous additional A survey of 750 farmers, conducted as a part of a research study by in implementing index-based insurance in Sri Lanka. The absence of
issues in farming as well as in their household economy. A farmer the Institute of Policy Studies of Sri Lanka (IPS) last year, in selected required rainfall and yield data are significant in this regard. Lack of
from Nachchaduwa who was severely affected by floods in 2014 said: sites in the Anuradhapura district revealed that the demand for existing weather stations and delays in getting data on a frequent basis are
Everything was washed away, Not only rice, our maize cultivations were insurance schemes is considerably low. Over 31% of the farmers attributed to the unavailability of rainfall data in most cases.
also destroyed. Floods and droughts are widespread disasters, which interviewed during the survey mentioned that they are not aware of how
have area-wide implications. We did not have any other income. We, crop insurance work. Another 23% of farmers have doubts regarding
farmers tend to work as agricultural labourers in others fields when we
face difficulties. But when everyones cultivations are destroyed, where
the process of crop insurance. Most farmers during the discussions
highlighted that they do not understand the real benefits that crop
What Works for Sri Lanka?
can we go? he added, highlighting their struggle in coping with such insurance bring in for small-scale farmers like them.
events. As of now, crop insurance is not a popular tool for climate risk
Farmer unawareness seems to be a major barrier for taking up insurance management, although both public and private crop insurance schemes
To this end, promoting effective risk management among farmers is in the rural areas. There has been a compulsory crop insurance have been in place in Sri Lanka for several decades. Given the recent
important. In facing the impacts of a natural disaster, there are several programme introduced in 2013 by the government, which was bundled variations in climate patterns, it is important to identify gaps with
ways of risk management, namely: avoiding risks, reducing risks and with the existing fertilizer subsidy programme. A mark-up was added to regard to crop insurance take-up as a risk management strategy. In
sharing risks. Risk sharing has been gaining a lot of consideration which cover the insurance premium when obtaining fertilizer at a subsidized particular, the aspects of crop insurance demanded by farmers have to
comes in the form of insurance. price. Due to the compulsory nature of the programme, the area be researched in the case of Sri Lanka.
percentage insured recorded 72 and 90 during 2014/15 Maha and 2015
Yala, respectively. However, lack of awareness of its intended benefits is IPS is currently conducting a comprehensive research to study risk
Insurance also an issue with regard to this scheme. management strategies of farmers and demand for climate insurance
amidst a changing weather pattern. The study aims to bring in suitable
Crop insurance was introduced to Sri Lanka several decades ago. It was policy recommendations to help farmers better manage climate risks and
first introduced as a pilot project; later, the Crop Insurance Act (No 13 of Innovations in Crop Insurance improve adaptation.
1961) was passed in 1961 to provide the required legal framework for the
operation of regular crop insurance. The Agricultural Insurance Law No. This article is based on an IPS research study titled Risk Management
27 of 1973 came into operation in 1974 to make provisions for a more Index-based crop or weather insurance has been receiving much Strategies and Demand for Climate Insurance by Dry Zone Farmers
comprehensive scheme. The Agriculture and Agrarian Insurance Board popularity particularly in developing countries (such as in India, Kenya in Sri Lanka, funded by the Global Development Network (GDN).
(AAIB) was established in 1999, which is the responsible government Ethiopia), as a way out for certain inefficiencies of indemnity-based The research proposal submitted by Kanchana Wickramasinghe
agency for undertaking the government crop insurance programme now. crop insurance. In index-based weather insurance, the payout is based won First Prize for the Japanese Award for Outstanding Research
A private insurance company entered the crop insurance business in 1993, on a certain weather index, for instance, rainfall. The weather index is on Development in the Global Development Awards and Medals
and it is primarily being conducted as a welfare programme along with its correlated with the crop yield. Index insurance is characterized by low Competition of the GDN in 2014.
32 33
Organization for Standardization. Exporters, however generally reach out the residue levels were not in breach of the international standard and
to their respective industry regulatory bodies such as the Sri Lanka Tea reported soon after that the issue had been satisfactorily resolved.
Board (SLTB) to keep up-to-date with new standards. When problems
arise in relation to new standards implemented by specific countries, Information Asymmetries and Institutional Capacity
the result can be a dramatic decrease in market share for Sri Lankan Constraints
companies in those markets.
However, these instances of successful resolution are in the minority.
There are some countries that opt to implement their own standards Problems still arise in two forms - (1) the presence of information
and testing/certification schemes despite the existence of equivalent asymmetries and resulting uncertainty over what compliance requires
international ones. This often requires respective country officials to and (2) limited capacity in Sri Lankas regulatory bodies/testing facilities/
undertake factory visits and issue certification following inspection. This inspection procedures that limit the ability of local exporters to compete
is a cumbersome process and requires renewal, which is prone to delays abroad.
and further issues. This was experienced by Sri Lankan tea companies
exporting to some African and Middle Eastern countries. Some exporters The lack of standards harmonization between countries and the sheer
complain that the difficulty in meeting individual country standards breadth of coverage of the standards makes staying current with
resulted in a diminished market share. developments a challenge for exporters. Furthermore, confusion often
arises where standards are unclear on their product coverage resulting in
Another instance of this was in Iraq where new standards set the buyers purchasing conservatively and avoiding otherwise good suppliers.
yeast and mould count for tea at 100ppm compared to 1000ppm
recommended in the ISO guidelines. These stricter rules are prohibitive Where standards are known, exporters are often hindered by inefficient
for tropical countries such as Sri Lanka where moisture levels are domestic processes or lack of facilities in the country. Companies
complained of lack of coordination between the relevant government
Burning Health
practitioners, as they anyway have to bear the medicine cost. increase in OOP expenditure in the future.
in Sri Lanka
70% Purchase of medical/ debated National Medicinal Drugs
pharmacy products
60% Regulatory Authority Bill was ratified in
50% Payments to private March 2015. Recently the Government
40% hospitals/ nursing homes
By Priyanka Jayawardena introduced a controlled price for 48
30%
Payments to medical laboratories essential pharmaceutical drugs based
20%
Sri Lanka provides free health care for all citizens, which has been a on the new pricing mechanism --
What are the Driving Costs of Health OOP? 10% Consultation fees to specialists
national priority for decades. With a wide network of health care services, Maximum Retail Price (MRP) formula.
0%
the countrys public sector health care delivery system accounts for Fees to Ayurvedic practioners However, there are many challenges
Most of the health OOP expenditures are on private doctors fees. The t 2 3 4 5 6 7 8 9
es st
almost all preventive care and most in-patient care. While the public or ich
e
in its implementation such as the cost
countrys health system allows anyone to directly go to a government or Po R Fees to private medical practitioners
health care delivery system is remarkably successful in providing a of imported dugs, availability of good
a private dispensary/hospital, or consult a specialist in a private hospital. Source: Constructed using Household Income and Expenditure Survey (HIES) 2012/13 Data
universal service, there are certain limitations in the system, especially quality drugs etc.
in the provision of curative care such as drug
Figure 1: Out-of-Pocket Expenditure on Health The third highest health OOP expenditure is on hospital charges, which
shortages, limited out-patient care services
1% 1% accounts for 21% of health OOP expenditure. However, this cost mostly
(obtaining appointments before 12.00 noon, longer
Fees to private medical practitioners involves the richest decile people (see Figure 2).
waiting times, etc.), and limited access to specialist Addressing Critical Concerns
care. These reasons have created a demand for Fees to Ayurvedic practioners Burden of Health OOP on Poor
private sector health care services. The private The burden of health OOP expenditure definitely affects household
23% Consultation fees to specialists
sector also plays an important role to fill this gap, It is clear that the private doctor fees and the medicine costs are the welfare. With the rising ageing population and the increasing demand for
but it results in out-of-pocket (OOP) expenditure for 38% main drivers of health costs for lower income groups (see Figure 2).
Payments to medical laboratories long-term care, the household welfare can be further burdened. There
health care. For example, 57% of the health OOP expenses, of the lowest decile should be certain price regulations on most essential health care services
Payments to private hospitals/ nursing homes households are for doctors fees followed by 30% of OOP health such as private medical practitioner fees, prices of essential drugs, etc.
Despite the free health care services in the public 21% Purchase of medical/ pharmacy products expenses for medicines. The households that report non-zero private It is also important that the Government should take urgent action to
sector, which include doctors fees, medicine costs, doctor fees spend around Rs.1,500 per month for doctors while smoothen the implementation of the controlled price on essential drugs.
5% Spectacles/hearing aids households who reported non-zero medicine cost, spend around
laboratory tests, and hospital charges, households 9% With the aim of increasing accountability of private doctor consultations,
still spend a considerable amount of money on 2% Other
Rs.1,196 per month for medicine. Are these costs affordable to the poor? the government could also consider introducing a government authorized
health. For example, according to the Household More importantly, how have these costs changed over time? receipt system.
Source: Constructed using Household Income and Expenditure Survey (HIES) 2012/13 Data
Income and Expenditure Survey (HIES) 2012/13,
Figure 3 depicts that the inflation-adjusted prices of main health OOP
on average, a household spends around Rs. 1,564 per month on health, Despite free health care services, households spend around 38% of
expenditure items medical and pharmaceutical products and hospital In addition, it is a necessity to improve access to free health care
which accounts for 4% of the household budget. This health OOP the health OOP expenditure on doctors fees (see Figure 1). However,
fees have increased over the period while private doctor fees remain high services. The Government should consider expanding out-patient services
expenditure may be too much for some people and raises concern on the specialists care accounts for only 5% of the households health spending,
but have not varied much during the period. The high private doctor fees especially in rural areas giving flexibility for income earners of the family.
factors that drive these costs in the context of the countrys free health which implies that in most cases people need the doctors basic service,
and increasing medicine prices may pose a threat to household welfare, In addition, it is necessary to take measures to solve the drug shortages
care policy. Given this backdrop, the article explores some policy options that is available free of charge in all government hospitals. On the
especially for families with patients who need long-term care for Non- in government hospitals.
of the countrys health sector. other hand, a majority of the private practitioners serve at public sector
36 37
NCDs and mental health issues are on the rise, and are the leading a situation then impels people to seek alternative health care services,
causes of deaths in Sri Lanka, accounting for 75% of all deaths, while particularly by moving towards the private health sector. A majority
14% of deaths occur due to injuries. Meanwhile, Ischaemic heart disease of people does not have health insurance, and pay for the services
has become the leading cause of hospital deaths in the country. Further, out of their pocket. Meanwhile, a majority of the people is financially
premature mortality deaths between the ages of 30 and 70 stands insecure and that is further underlined by the high rate of out of pocket
Achieving
at 18 people out of 100 in the country. Moreover, mortality due to NCD is expenditure on health (OOP). Besides, inequity in health outcomes is also
projected to increase in the coming years with high exposure to NCD risk persistent. Accordingly, ensuring equity in health outcomes is pivotal for
factors (i.e., exposure to agricultural and industrial chemicals, unhealthy Sri Lanka and which can be addressed by the SDG on UHC.
Inclusive
food habits, use of alcohol and tobacco) despite demonstrating a relative
Lanka
Technically, there is no doubt
End precentable
that SDG Goal 3 is relevant to Sri
Reduce the global MMR newborn and
to less than 70 per under- Lanka. However, Sri Lanka has the
responsibility of making adjustments
through SDGs
100,000 live births 5 child deaths
to SDGs to suit the country, but
Reduce the number of 3.1 3.2
deaths and illnesses within the given framework. It is
End the
from hazardous 3.9 epidemics of important to form an institutional
By Samanthi Bandara chemicals and air, water 3.3 AIDS, TB, mechanism (apex-body) with a
and soil pollution and malaria and strong political commitment, which
contamination NTD
3
can ensure effective planning,
The global development framework has evolved to be more different from other development agendas. One can argue that the first three SDG GOOD HEALTH
implementation and monitoring
inclusive beyond 2015, with the integration of Sustainable health sub-goals (Figure 1) are to continue MDG targets further. This is correct, as AND WELL-BEING
of SDGs. The SDGs should also
Development Goals (SDGs) in economic, social, and the said three sub-goals still exist to point out crucial areas of a countrys health be prioritized to be aligned with
environmental aspects. Health with regard to achieving outcomes. national health policy initiatives
Universal Health Coverage (UHC), takes notable recognition in through proper financing estimates,
linking to the goals in the sustainable development agenda. The focus of SDGs is not limited to diseases. It also sets insistent targets towards Achieve UHC 3.8 Reduce premature and monitoring and evaluation
3.4
reducing inequity in health within and between societies, with an emphasis on mortality from NCDs systems at regional and national
It is well-known that Sri Lanka is placed much ahead in terms UHC, which identifies the determinants of health within and beyond the health levels. Importantly, setting up a
of health outcomes compared to neighbouring countries. sector. As such, SDG 3.8 on achieving universal health coverage is a platform, coordination mechanism between
However, regional disparities remain. This is further aggravated which incorporates all other sectors, reinforcing the existing approach on health health and beyond the health sector
by the demographical (health of ageing population) and in all policies. Making commitments towards UHC via SDG is commendable, but Ensure universal access to Strengthen is vital to ensure that overlaps and
epidemiological transitions, as well as the countrys move it can only be successful if the following two factors can be accomplished. Firstly, sexual and reproductive 3.7 prevention and duplications do not occur.
health-care services 3.5 treatment of
towards a high-income level. Conversely, financial insecurity UHC can be achieved once the dimensions of health service coverage, financial
when it comes to seeking care has arisen because of public protection, and population coverage are cumulatively addressed. Secondly, 3.6 substance abuse
health services that are inadequate in quality and quantity. This intersectoral collaborations/actions with other SDG goals, namely, poverty Reduce Next, the biggest bottleneck is
in turn has created an increase in out of pocket expenditure. reduction (Goal 1), provision of water and sanitation (Goal 6), urbanization and deaths and finding financial, physical, and
injuries due to human resources and employing
In this context, the emergence of the sustainable development service delivery in human settlement (Goal 11), provide a perfect complement
road traffic
agenda, subsequent to the Millennium Development Goals towards achieving UHC. Besides, the SDG agenda has explicitly stated the need to accidents
them in an effective and efficient
(MDGs), with a comprehensive and exclusive goal for health take steps towards ensuring equity by phrasing that no one will be left behind. manner. The estimated cost for
opens another window to set the newest targets and respective The SDGs have also envisioned addressing health system issues in terms of achieving SDGs, particularly in
actions towards UHC. supporting health research and development, increasing health financing, developing countries is in the
strengthening human resources, and increasing capacities for risk reduction and range of US $ 3-7 billion per year,
SDGs on Health is Antecedent, but risk management through implementation targets. and every year a gap of US$ 2.5
Divergent reduction in the previous years. To combat the said epidemic, the country
billion remains. However, a clear
Relevance of SDG 3 to Sri Lanka has already taken measures by implementing a NCD National Policy,
funding source has not been identified. Even for Sri Lanka, increasing
Subsequent to the MDG agenda, the 17th anniversary of the UN fiscal space is tricky when looking at the current spending on health.
and National Multisectoral Action Plan for the Prevention and Control of
Assembly embarked on a new vision, which is the 2030 Agenda Within the South Asia region, Sri Lankas health system has been well ahead Even achieving UHC requires 5% of GDP on health, and reducing OOP
NCDs 2016-2020. Therefore, SDG 3.4 3.6 and 3.9 can complement the
for SDGs. This introduced 17 goals and 169 targets, of which, to sustain basic health outcomes. This is also highlighted in the the 3rd MDG to below 40% of the total health spending. Therefore, Sri Lanka has to
national initiatives on NCDs, which can then accelerate NCD prevention
Goal 3 comprising 9 sub-goals and 4 implementation goals are report. However, the country still needs advanced interventions to smoothen the make a significant effort to be financially secure before starting the SDG
and control.
assigned for health with an aim to ensure healthy lives and drive towards basic health outcomes. For instance, Sri Lanka has already met agenda. Prior to seeking funds from outside, the country can peruse
promote well-being for all at all ages (Figure 1). So far, more the universally agreed upon SDG targets in terms of maternal mortality, neonatal SDG 3.7 on ensuring universal access to sexual and reproductive health- opportunities through the private sector as done by other neighbouring
than 15 indicators are identified to measure the outcomes of mortality, and under 5 mortality. However, these targets are only being achieved care services is already consistent with Sri Lankas national targets. To economies (e.g., Singapore, Malaysia, and Thailand). This can be done
the set goals. at national level and regional disparities persist. As such, the continuation of this end, it is crucial to give priority to reducing teenage pregnancies, through public-private partnerships. In addition, reorienting the existing
MDG health targets through SDG 3.1 and 3.2 are still pertinent. Even though Sri unsafe and illegal abortions, and increasing contraceptive prevalence resource allocation mechanisms to align with SDG targets would also
While the MDGs were exclusively framed to strengthen Lanka is free from a few infectious diseases (e.g., Malaria, Filariasis), some of the rate. open avenues to fill the required additional resources. Implementing the
human development, SDGs go beyond this, capturing a wider diseases, particularly HIV, Dengue, and TB are on the rise. Accordingly, SDG 3.3 on agreed SDG agenda may not be straightforward. However, the country
spectrum on economic, social, and environmental dimensions. infectious diseases can still contribute to Sri Lankas health sector improvements, An inadequate and inequitable public health service is one of the crucial can start the implementation of SDG 3 by making suitable amendments
This integration is the key to making health in SDGs critically towards implementing target-oriented interventions to combat such diseases. factors, which create inequity in health outcomes in the country. Such within the present system.
38 39
44.6 per 100,000 population, while for females its 16.8 per 100,000 barrier to seek mental health services. Patients often seek traditional
population. Suicidal rates have increased in the last two decades with medicine first prior to attending community-based mental health services
approximately 10 suicides reported island-wide daily, with half the thereby delaying early diagnosis and treatment. Given that community-
victims having suffered from depression. The high incidence of suicide based mental health services are not readily available throughout the
stems from impulsiveness and the inability to cope, which has resulted in country, traditional medicine is the primary choice. However, patients
the major causes of death among youth. often prefer if both traditional healers and western methods of treatment
such as community mental health caregivers co-exist and work together.
Hurdles in Mental Healthcare
Poor Funding and Scarcity of Human Resources
Stigma, Isolation, Discrimination Mental health care in Sri Lanka is plagued by poor funding and a scarcity
Stigma is an overarching barrier associated with mental disorders of trained human resources.67 consultant Psychiatrists200 patients
worldwide but more prominent in Asian countries where communities visiting the Colombo National Hospital on a daily basis, the inequality
are family-orientated. Many Asian families including Sri Lankan families in the provision of care is a serious
cause for concern. The deficit of trained
Figure 1: Distribution of OPD Reported Patients at NIMH-2014
mental health workers is worsened
by geographical inequity, with the
Patients
majority of psychiatrists located in the
Western Province. A large proportion of
Admissions 8,618 postgraduates trained in psychiatry in the
last few decades, have not returned to
Sri Lanka upon their completion of their
Clinical Referrals 1,360 overseas training. Others have worked
in Sri Lanka for a few years and migrated
Why Sri Lanka Need Psychiatric Intensive Care Admissions 2,591 overseas for better prospects. Also, the
absence of a proper referral system and
40 41
hotel rooms for spectators and an Olympic Village Large-scale projects such as that of the Olympics also lead to an General Infrastructure
which can house 15,000 athletes and officials. increase in economic activity in the short-run. Countries with high
This in itself can be a challenge for host cities. For unemployment may gain from the additional economic activity. However, Unlike specific sporting infrastructure, general infrastructure investments
instance, Rio de Jeneiro despite being a popular studies find that the numbers do not meet the expectations. Some cities during the Games have the potential to reap benefits in the long term.
destination had to build 15,000 new hotel rooms also show a crowding-out effect with a drop in the regular visitors to For example, the Olympic villages in Atlanta and Los Angeles were
to meet this requirement. Although this can have the city during the games -- Beijing experienced a 30 per cent drop in successfully converted into new dormitories for local universities.
long-term dividends, it may also result in severe international visitors and a 30 per cent decline in hotel occupancy during Similarly, the city also benefits through heavy investment in improving
over capacity once the games are over. In Norway the month of the Olympics in 2008 compared to the year before. transport infrastructure within the city as well as access points to and
for instance, following the 1994 Winter Olympics from host venues. Some studies find that investment for the Games do
in Lillehammer, 40 per cent of the citys hotels Long Run Impact not necessarily provide higher returns than what could be expected if the
have gone bankrupt. Other general infrastructure same investments were made alternatively. However, it is likely that the
Much emphasis has been given to the Olympic Legacy created in the political will required for urban redevelopment at the scale needed for the
costs include the cost of getting the visitors to the
host nation. This legacy is seen to include improvements in infrastructure, Olympics is seldom generated in a vacuum.
sporting venues Rio embarked on a mass transit
from the developed world. However, developing countries are In recent years, Olympics hosts have attempted to build stadiums and The overall benefits reaped by Los Angeles and the economic recovery
encouraged to bid with countries like China and Brazil given the opportunity to host the games. facilities in order to repurpose after the Games. However, such efforts that took place in Barcelona during their respective hosting periods has
The largest source of revenue in recent times have rendered limited successes due to the specialized nature of some intensified the attraction of hosting the Olympics. However, the significant
has been from television broadcasting rights. facilities needed for particular sports, their irrelevance to the sporting difference is that at the time, Los Angeles was the sole bidder and was
Infrastructure for Athletes and Visitors
However, only less than 30 per cent of the revenue culture of the host nation, and the expense of conversion. For example, in a unique position to bargain a beneficial deal for the city. In contrast,
was shared with the local organizing committee. the aquatic centre in Beijing, dubbed the Water Cube was repurposed with the deluge of bidding cities, the IOC has greater power in deciding
There are 3 major cost components of the Games. One is the cost of building and developing
Further, earnings from international sponsors are as an indoor water park at a cost exceeding $50 million. Similarly, a host city and tends to select one that promises a more expensive and
the required sporting infrastructure of the host city. Given the number of sporting events and
split while the host city gets to keep ticket revenue, the Queen Elizabeth Olympic Stadium in London has been converted flamboyant event, irrespective of the potential costs. These costs in fact
their nature, it is unlikely that a particular city would have the entire sporting infrastructure
domestic sponsorships, and licensing fees. Table to a football stadium for West Ham United. However, while the final notoriously inflate between the bidding stage and final implementation
and is most likely that there might be a need to build or expand for instance, a velodrome or a
2 gives a breakdown of the revenue earnings construction cost was 429 million and the conversion cost exceeded stage, which exacerbates the issue further. Therefore, countries should
natatorium or a ski-jumping complex.
and shows that hosting costs of for example in 272 million, the football club contributed only 15 million towards those be more cognizant of the economic realities and the long-term burdens
Another key cost component is the cost of building general infrastructure such as buildings to the London games was almost 4 times the total costs and will be paying just 2.5 million per year as rent on a 99 year associated with hosting the Olympics. Thus, the priority should be on a
house the athletes and guests. The IOC requires the host city to have a minimum of 40,000 revenue. lease. purpose-built Olympics rather than purpose-built stadiums.
42 43
measure to maximize remittances. To that effect, the remainder of this migration would also lead to weaker links with the home country and a
blog identifies five mechanisms that affect remittances and makes corresponding decrease in remittances.
related policy recommendations to ensure a continued steady flow of
inward remittances to Sri Lanka. Mechanism 5: Growing Possibilities for Long Term Migration
Mechanism 1: Shrinking Share of Reliable Remitters Despite being recognized as temporary migrants, high skilled migrants
tend to continue foreign employment for multiple contract periods.
Literature identifies that compared to males, females are more reliable Such residence and employment in destination for extended periods
remitters. This reliability stems from the greater involvement of females resemble more permanent characteristics of migration. As a result, such
with the operation of the left behind household, and their tendency to extended stays also leads to weaker links with the home country and a
sacrifice more than males for family back at home. Additionally, females corresponding decrease in remittances.
also tend to remit more as a self-insurance mechanism against possible
How to Maximize Remittances?
Figure 2: The Decline in Remittances from 2014 2015
In the context of gender reversal and up-skilling of labour migrants, as
summarized in Figure 3, the receipt of higher remittances are challenged
2014 2015 by two sets of competing forces.
On one hand, the rising share of males among migrant workers would
Glitch or Beginning of the End? more. The reason behind such higher remittances from males is due to
their capacity to earn higher wages than women in similar jobs. This has
the case of rising share of better skilled workers among migrant workers,
greater remittances would only occur if higher wages and related
By Bilesha Weeraratne the potential to offset the less reliability of male remittances with larger remittances can offset their weaker links with Sri Lanka.
amount of remittances when they do remit.
In order to make these competing forces work towards maintaining a
Labour migration and related remittances play an important role in the Figure 1: Snapshot of Labour Migration in 2015 Similarly, the progressive up-skilling of migrant worker from Sri Lanka high inflow of remittances, some policy approaches are a dire need.
Sri Lankan economy. Until recently, labour migration from Sri Lanka was also contributes towards a rising share of higher wage earners among all Aptly the National Labour Migration Policy of 2008 identifies that the
dominated by females departing as housemaids. Subsequent to many
concerted policy efforts, such as the Family Background Report (FBR)
Total Migration Female Migration migrant worker departures and their corresponding higher remittances. diversity of Sri Lankan transnational communities requires differentiated
approaches between skilled and professional workers, and low-skilled
requirement, pre-departure training and upgrading existing skill training Mechanism 3: Increasing Departure of Tied-Migrants workers and ethnic communities, permanent and long-term migrants and
to internationally recognized levels, this female and low skilled oriented temporary migrant worker. The same policy identifies action plans for:
migrant worker flow is now transformed into a more skilled and male There is evidence that migration of skilled workers is often associated
centric flow. with tied migration where spouse accompany migrant workers. In a Reviewing existing incentives for migrant savings and
patriarchal society like in Sri Lanka, when male migrant worker shares investments, and access to credit,
As a result, in 2015 the sphere of labour migration experienced many
263,307 34%
are rising there is a higher tendency for tied migration of wives to take
changes. In 2015, total departures declined to 263,307 from 300,703 place. Similarly, regardless of gender, better skilled migrants also tend Developing and implementing a framework to provide
in 2014, the share of females among migrant worker departures to induce tied migration from Sri Lanka. Extending this tied-migration incentives for skilled and professionals to contribute to home country
further declined in 2015 to 34% from 37% in 2014, and the share of
housemaids also continued to shrink to reach 28% in 2015 from 30% in
Housemaids Skilled Workers beyond spouses, better skilled migrants from Sri Lanka are also enticed
to take their children especially to enjoy higher education options
development from abroad through; investment opportunities, tax benefits
etc. and schemes for giving back to the countrys development.
2014. In fact, 2015 marked the first year since 1994, where the share overseas. All this amounts to the absence of immediate family members
of housemaids dipped below that of skilled workers (31%). Other skills to receive regular remittances. With the experience of a decline in inward remittances to Sri Lanka in
groups, such as professionals and semi-skilled groups also experienced 2015, now is the ideal time to transform the above policy plans into
growth to reach shares of 2.4 % and 2%, respectively. Mechanism 4: Shrinking Importance of Circular Migration actions. Additionally, Sri Lanka should also deploy differentiated
approaches between male and female segments of Sri Lankan
This gender reversal and up-skilling of migrant workers, coincided with 28% 31% Another aspect of skilled migration is that the better skilled migrant transnational communities, and highlight the importance of regular and
the first ever decline in inward remittances in 14 years. In 2015, inward workers often have opportunities to pursue other destinations to migrate reliable remittances from male migrant workers.
remittances to Sri Lanka declined to USD 6,980 million from USD 7,018 subsequently. This may alter the circular nature of labour migration
million received in 2014. Does this 0.54 % decline in remittances mark guarantee a steady flow of remittances, it is only prudent for Sri Lanka from Sri Lanka towards a pattern of step migration where migrants If such appropriate interventions take place in a timely manner, Sri Lanka
the beginning of the downward trend in remittances to Sri Lanka? Lets to proactively understand the possible underlying mechanisms that may leave the first destination not to return to Sri Lanka, but to head to a would be able to revert to its growing trend and relegate the decline in
hopes not! Nonetheless, since such wishful thinking alone will not contribute to positive and negative changes in remittances and introduce second destination. The decline of circular migration and rise in step remittances in 2015 to a mere glitch.
44 45
Taxation in Sri Lanka: Composition of Revenue Direct and Indirect need for complex manipulation to prevent revenue erosion in the form
of input credits and refunds. The problems of VAT in Sri Lanka relate to
Another aspect in the current tax system, which needs change, is the constant changes in the threshold, a large number of exemptions, zero
One of the important elements in securing a satisfactory level of tax Apart from national taxes, provincial and local taxation is also a
A countrys fiscal and taxation system is a major determinant of macro- Reasons for the Decline
economic policy and sustainable growth, particularly in areas such revenue is the base and coverage of the taxes. While certain steps to significant part of the Sri Lankan tax system. From a revenue point of
as government revenue, public debt, fiscal deficit, inflation as well as broaden the tax base and coverage have been taken (for example, the view, however, Provincial taxation is unsatisfactory, bringing in only 4%
The main reasons for this decline include;
resource allocation, income distribution and economic stability. inclusion of public servants hitherto exempt from income tax, widening of Central government revenue or 0.6% of GDP. Provincial expenditure is
the base of the VAT and NBT by adding the wholesale and retail sectors around 11% of government revenue and the deficit is met by grants from
1. Unplanned ad hoc tax incentives in the form of various tax holidays,
Currently, Sri Lankas fiscal and taxation system is at a critical juncture. among others), the base and coverage still need to be enlarged. This the Centre.
reliefs and concessions, duty waivers, etc., which have eroded
While overall GDP as well as per capita income have been steadily and narrowed the tax base. The tax loss is estimated to be around includes a re-examination of the tax free allowances, the enhanced
increasing, the total government revenue and tax revenue have been allowable expenses under Section 25 of the Inland Revenue Act and other The problem has been complicated by the abolition of BTT in 2011,
1.35% of annual GDP.
decreasing over time (Table 1). sections. its main source of revenue and its replacement by 100% Stamp Duty,
70% of motor vehicle fees and 33 1/3 % of NBT from the Centre. Local
2. Narrow tax base and coverage; the total number of taxpayers being
Further, the constant changes in the rate structure, the multiplicity of government revenue may also undergo change with the proposed Grama
Table 1: GDP, Per Capita and Revenue Ratio - Selected Years about 3% of the population.
rates, the recent rate concessions for professionals, and the recent Rajjaya Concept involving the creation of 2500 new units at grassroots
proposals to change the basis of the corporate rate structure have tended level.
3. Increase in allowable expenses in computing statutory income and
profit. to further complicate the system.
Revenue Administration
4. Periodic increases in tax free allowances and ad hoc reductions in Capital Gains
rates of tax both corporate and non-corporate sectors. It is the level of efficiency of the revenue administration, which
Capital gains were introduced in Sri Lanka in 1959. It underwent several
determines the effectiveness of the revenue system. In the current
changes and was abolished in 2002. However, realized, capital gains are:
5. Ad hoc changes to the tax system to meet short-term cash flow context, with the declining tax ratio and the urgent need to increase
equivalent to income; minimize opportunities for tax avoidance; accrue
requirements of the government consequent to lack of consistency government revenue, the effectiveness of the tax administration, its
generally to the property owning class; and concentrated in higher
in fiscal policy leading to uncertainty among tax payers. structures, systems and processes need thorough examination, its
income brackets. Hence, the government in its 2017 Budget announced
weaknesses identified and measures to rectify them and make the
Source: Central Bank Annual Report 2015 and various years. its re-introduction from 1 April 2017 at the rate of 10%.
6. Lack of elasticity and buoyancy in the tax system both being less administrative system an efficient and effective instrument of tax
than unity. collection.
As indicated in the table, the total government revenue, tax revenue and VAT Debate
even non-tax revenue have declined. The increase seen in 2015 was
7. Existence of a large informal economy resulting in large-scale tax The VAT introduced under VAT Act No. 14 of 2002 has drawn much Several measures have periodically been taken to remedy these
due to the one-off taxes such as the Super Gain Tax and other levies
evasion and avoidance as well as black money. attention and debate recently, particularly its recent amendments. In weaknesses and improve the efficiency of the tax administrative system
implemented during that year.
principle, a VAT system is superior to other forms of sales taxation due to at Customs, Finance Ministry, and Inland Revenue. The 2017 Budget
8. The grant of periodic tax amnesties (11 since 1964) which have its non-cascading character; about 160 countries have a VAT system in contains further proposals such as establishing a National Tax Council
Respective governments have recognized the critical nature of the been largely failures, not producing the expected results. some form or other. However it has also several weaknesses. and Tax Ombudsman office, smart E-invoice devices for VAT and Excise,
situation and the necessity to reverse this trend. The Presidential Taxation streamlining Customs procedures among others. However, there is still
Commission Report of 2010 as well as the successive recent Budget 9. A complicated tax system and weaknesses in tax administration In terms of revenue performance, the VAT in Sri Lanka has not shown a long way to go; further measures are needed to improve revenue
Speeches have stressed this issue. and its mechanism. regularity and reliability. It has been characterized by volatility and the administration and co-ordination.
46 47
INSIDE IPS
Pros and Cons of Bilateral SAEA 10th Annual Research The 9th South Asian Economic
International Investment Treaties Forum: Agriculture for Sustainable Summit
for Developing Countries and Inclusive Development
IPS
service at IPS is little over 8 years as I was on study leave from cant rule out the importance of investing more on agricultural
2011-2015 for my higher studies abroad. My role at IPS is primarily research for the betterment of the country. Sector: Strategy for Sustainable World Export Development Forum
Economic Growth in South Asia
NEWS
to engage in agricultural economics research. Since 2004, I 2016
have been working on many areas related to agriculture such as What is your agenda for agricultural research at IPS?
food security, agricultural trade, natural resource management,
July - Dec 2016
marketing and value chain analysis, etc. I have already planned to engage in more research related to food
and nutrition security, food safety and quality management and
What inspired you to choose Agriculture as an area of agricultural value chain development.
specialization and what aspect of agriculture are you
most passionate about? The Think Tank Initiatives (TTI)
What advice can you give career starters who are Regional Meeting and Data
keen to explore this line of work? Visualization Workshop
I had a background in sciences in my secondary education and IPS Executive Director, Dr. Saman Kelegama
most of my tertiary education in which I followed Agricultural IPS Executive Director, Dr. Saman Kelegama and was a panelist at the World Export
My advice for the career starters, who are keen in this area, is to
Science. Choosing agriculture for my higher education was an Research Assistant, Vishvanathan Subramaniam Development Forum (WEDF), a unique
have a sound knowledge on agriculture and good understanding of
important turning point in my life and it was greatly inspired by my participated in a workshop on Job Creation in global conference and business-to-business
economics. Also, developing good analytical skills is very important.
love for field cultivation or more precisely ager cultra which Manufacturing Sector: Strategy for Sustainable (B2B) matchmaking platform dedicated to
Having a passion to travel and interact with people would be an
is the Latin origination of the word agriculture. Also, I liked the Economic Growth in South Asia held in New supporting trade-led development.
added advantage as you would need to engage in extensive field
multidisciplinary nature of modern agriculture which encompasses Delhi on the 5th of December. The workshop
work.
a blend of natural environment, economy and society. I am was co-organized by the South Asia Center Speaking at the event Dr. Kelegama noted The Data Visualization Workshop was held
passionate about working closely with the food security aspect of for Policy Studies (SACEPS), Research, and that implementation of the trade facilitation during 13th December, while the TTI 6th
What aspects of your personal life help you do your Information System for Developing Countries agreement under WTO is the next step of the Regional Meeting was held during 14 15th
agriculture because of its dynamism and importance to the people.
job well? (RIS) with funding provided by the Asia Government, adding that technical assistance December. IPS Deputy Director, Dr. Dushni
Foundation (India). would likely be requested from the WTO. Weerakoon, Research Fellows, Dr. Ganga
What are your career related achievements? Dedication and hard work would probably be the major assets Tilakaratna, Dr. Janaka Wijayasiri and
in my personal life which have helped me greatly in my career. Sri Lanka Economic Summit 2016 Seminar on Recent Trends Charmaine Wijesinghe, Manager Publications
Looking back in my career, there are many achievements and Sometimes, my wife and son see me as a workaholic. However, I in International Trade Policy: and Events, participated at both events.
milestones. I started my career at IPS as a Research Assistant back always try to have the correct balance between my personal life and Perspective from the US
in 2004. Growing gradually for the past 13 years, to become a career. Seminar on China-South Asia
senior researcher at IPS, with many important research related to Relations
agriculture in itself is a great achievement for me. Added to that, I
If you had to pick the 5 most important things in your
have received the Endeavour Award from the Australian Government
life, what would they be?
to pursue my doctoral studies. Also, I have received NUFFIC Award
from the Netherlands Government for higher education.
Relationships (Having a group of people that you can call family or
friends around is a great blessing); Health (Without taking care of Prof. Robert Z. Lawrence, Albert L.
Why do you think Agriculture research is important to your body and mind, you wont be able to live the life you want); IPS Executive Director, Dr. Saman Kelegama Williams Professor of International Trade
Sri Lanka? Food (Food is not only a basic need but trying different food is a fun made a presentation on The Role of and Investment at the Kennedy School A delegation consisting of academics from
activity); Achievements (Professional and personal achievements International Trade in Facilitating Sri Lanka to of Government, Harvard University, USA, the Peking University, and officials attached
Sri Lankas agricultural sector employs and sustains a majority are a motivational factor) and Peace (Freedom from disturbances/ Emerge as a Regional Hub, at the Sri Lanka conducted a seminar on Recent Trends in to the Department of Asian Affairs, Ministry
of the population, and impinges on critical areas of poverty, food balancing emotions will give you self-confidence and a positive Economic Summit (SLES) 2016, held in Colombo International Trade Policy: Perspective from of Foreign Affairs of China visited the IPS in
security and related social issues. However, with the declining attitude to life) in August. the US at the IPS. November.
48 49
Authors & TE Team
Dilani Hirimuthugodage Vishvanathan Subramaniam
Dilani Hirimuthugodage is a Research Officer Vishvanathan Subramanian is a Research
working in the Agriculture Economic Policy Assistant at IPS, with research interests
unit at the IPS. Her research interests include in Private Sector Development, Foreign
agriculture economics, intellectual property Direct Investment, Regional Integration,
Dushni Weerakoon Ganga Tilakaratna rights, food security and innovations in the Econometrics and Economic Modeling. He
Dr. Dushni Weerakoon is currently the Deputy agriculture sector. She holds a Masters holds a BSc (Phi Beta Kappa) in Mathematics
Ganga Tilakaratna is a Research Fellow
Director of the IPS and Head of Macroeconomic in Economics (Distinction Pass) from the and Economics from Birmingham-Southern
and is currently the Head of the Poverty
Policy research at the Institute. Since joining the University of Colombo. College, USA.
Unit at IPS, with research interests in
IPS in 1994, her research and publications have the fields of poverty, microfinance, and
covered areas related to regional trade integration, social protection. She holds a BA (Hons.) Chantal Sirisena
macroeconomic policy and international economics. in Economics from the University of Chantal is an economist and finance Anarkalee Perera
She has extensive experience working in policy Manchester, an M.Phil in Economics professional. Her research interests are in Anarakalee is a Research Assistant attached
development committees and official delegations from the University of Cambridge, international trade, foreign direct investment, to the Poverty and Social Welfare unit. Her
of the Government of Sri Lanka. She holds a PhD in and a PhD in Development Policy and migration, development finance and private research interests include Poverty and
Economics from the University of Manchester, U.K. Management from the University of sector development. Chantal graduated Development Policy, with a focus on Public-
Manchester. Private Partnerships (PPP), Information
Janaka Wijayasiri with First Class Honours in Economics from
University College London. and Communications Technology (ICT) and
Janaka has over 12 years of experience on trade
Gender Policy. She holds a BA (cum laude)
policy issues and heads the International Economic Manoj Thibbotuwawa in International Affairs and Economics with a
Policy Unit. He has produced, individually as well as
Manoj Thibbotuwawa is a Research Suwendrani Jayaratne certificate in Development Studies from Mount
jointly, many in-depth analytical reports and papers
Fellow at the IPS, with research interests Suwendrani Jayaratne was a Research Holyoke College, USA.
for the Sri Lankan government, international, and
on agricultural economics, agricultural Officer working in the International Economic
regional institutions. His also focuses on regional
trade, food security and environmental Policy Unit at the IPS. Her research areas
and multilateral trade agreements and their
and natural resource economics. He include international trade and migration
implications for the country. He holds a PhD from
holds a PhD from the University of and macroeconomic policy. She obtained Chinthani Sooriyamudali
Monash University. He is currently the Editor of
Western Australia and has also obtained her Masters from the Australian National Chinthani is a Research Assistant with
Talking Economics.
a Post-graduate Diploma in Modeling University (ANU) in International and research interests on Poverty and
Kanchana Wickramasinghe and Accounting for Sustainable Development Economics, and holds a BA Development Policy, Econometrics and
Development from the International (Hons) in Economics from the University of Economic Modelling, Macroeconomic Policy
Kanchana Wickramasinghe is a Research Economist
Institute of Social Studies in The Hague Peradeniya. and Planning, and International Economics
at the IPS, with a focus on environment and
(ISS). and Trade. She holds BA (Hons) in Economics
natural resource management policy research. Her
from the University of Colombo.
research areas include sustainable tourism, disaster Nipuni Perera
management, natural resource management, green Samanthi Bandara Nipuni Perera was a Research Officer at
jobs and climate change. She holds a Masters in the IPS. Her research interests include
Samanthi Bandara is a Research
Economics from the University of Colombo and a International Economics, Macroeconomic Dishnika Perera
Officer in the Health Economics Policy
BSc in Agriculture from the University of Peradeniya. policy and Industrial Policy, covering areas
Unit at the IPS. Her research interests Dishnika Perera was Manager -
She also completed a post-graduate diploma at the such as International Trade, Regional
are health care financing, healthcare Communications & Strategic Outreach at
Institute of Social Studies, The Hague, Netherlands. Economic Cooperation, SME Development and
evaluation, and impact assessment of the IPS and was a member of the Talking
Migration. She holds a BA in Economics from
Bilesha Weeraratne health policies/interventions. She holds Economics Editorial Team.
the University of Colombo.
a BA (Hons.) in Economics with a special
Bilesha Weeraratne is a Research Fellow at IPS
module of Health Economics from the
focusing on internal and international migration
University of Colombo and MSc in Health Raveen Ekanayake
and urbanization. She is also interested in labour
Economics from the Centre for Health Raveen Ekanayake was as a Research
economics, economic development, and economics
of sports. Prior to re-joining IPS in 2014 Bilesha
Economics, University of Chulalongkorn Officer in the Industry, Competitiveness and Charmaine Wijesinghea
in Thailand. Regulatory Policy research unit at IPS. He Charmaine is Manager Publications &
was a Postdoctoral Research Associate at Princeton
University, USA. Bilesha holds a MPhil and a PhD holds a BSC in Accounting and Finance from Events at IPS and is a member of the Talking
University of London, and a Masters in Public
in Economics from the City University of New York, Kithmina Hewage Economics Team.
USA. She is a member of the Talking Economics Policy from the Australian National University.
Kithmina Hewage is a Research His research interests include Development
Editorial Team. Officer with research interests in Economics and International Economics.
International Political Economy include
Priyanka Jayawardena WTO issues, Trade and Development,
Priyanka Jayawardena is a Research Economist Export competitiveness, and Foreign Yolanthika Ellepola
at the Labour, Employment and Human Resource Direct Investment. He holds an MSc in Yolanthika is a Research Assistant at IPS D. D. M. Waidyasekera
Development research unit at IPS. Her research International Public Policy from University working on health economics issues. She D. D. M. Waidyasekera is a former
interests include education and skills development, College London (UCL) and a BA with holds a MSc in Public Management and Commissioner of Inland Revenue, Secretary of
labour economics, inequality analysis, health university and Departmental Honours Governance from the London School of the 1990 Presidential Taxation Commission,
economics and child nutrition. She holds a BSc from the Johns Hopkins University, USA. Economics, UK, and a BSc (Hons) in Applied Past President of the Sri Lanka Institute of
(Hon) in Statistics and an MA in Economics from the Kithmina is also a member of the Talking Economics from the University of St. Andrews, Taxation and presently Editor/Consultant of the
University of Colombo. Economics Team. Scotland, UK. Institute of Policy Studies of Sri Lanka.
50 51
The Power and Energy Ministers initiative
to introduce spot tenders for the procurement
li lio
n In a Nutshell snippets from the
Talking Economics Digest
FAST of coal has resulted in a saving of nearly
US$ 7.6 million (Rs. 1.1 billion)
$ 7 . 6 m A credible fiscal consolidation plan under
US
compared with coal IMFs watchful eye is the only remaining option
4.8%
requirements/regulations, burdensome customs the possible economic potentials of this keen on such efforts along with considerable
this year and improve to 5.0% in The Governments estimated emerging market.
procedures and lack of trade finance are major support from China.
2017. These growth rates are, expenditure for 2017 will be hurdles to international trade for SMEs. Page 26 Page 30
however, among the slowest in the region. over Rs. 1,819 billion, according
Page 10
to the Appropriation Bill 2017
The International Monetary Fund (IMF) approved the while the limit on borrowings
$162m
release of $ 162 m more to for 2017 has been set
Sri Lanka under its $ 1.45b at Rs. 1,489 billion.
three year Extended Fund Facility (EFF) program
in November 2016.
Sri Lanka loses over
Rs. 9 billion annually due to
Sri Lanka ranked 31st in the The SME sector in Sri Lanka
the illegal
Global Youth Development accounts for 52% of GDP and
fishing
Index (YDI) 2016 which was 45% of total employment,
by Indian
compiled by the Commonwealth whilst making up more than 75% Sri Lanka had exceeded a fishermen with around 5000 Indian
Secretariat based on a countrys of the total number of enterprises tourist arrival target of fishing boats entering Sri Lankan
condition for the youth in terms in the country. two million for 2016 and waters at least three times a week,
of employment, education, health,
civic and political spheres. 52% of GDP expected the years revenue
to surpass $3.5 billion.
according to Minister of Fisheries
and Aquatic Resource Development.
52 53
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