Individual Assignment

Diagnose Key Issues and Formulate Strategies for Stable

Economic Policy in Sri Lanka

MBA/21/5756 G.N Alahakoon

Sub Group No.: A–3

Course : MBA 502: Economic Analysis for Business

Instructor : Dr. Trevor Mendis
Term : January - March 2021

Postgraduate Institute of Management

University of Sri Jayewardenepura

i
Declaration

I am fully aware of the content of the section on plagiarism stated in the PIM Student
Handbook, and I hereby declare and confirm that I have strictly observed the law relating
to intellectual property, copyright and plagiarism in this exercise (Student Handbook).

………………………………

G.N Alahakoon

MBA / 21/ 5756

24th Feb 2021

ii
 Contents
1. Introduction .............................................................................................................. 1

2. Key Issues of Economic Policy in Sri Lanka ............................................................ 3

3. Overview of Present Economy in Sri Lanka............................................................. 5

3.1 Analysis of Monetary Policy ................................................................................. 5

3.2 Analysis of Fiscal Policy Instruments ................................................................... 8

3.3 Analysis of Impact on Non-Economic Elements to Overall Economy ............... 10

4. Recommendations to Revitalize Sri Lankan Economy .......................................... 12

4.1 Value Addition manufacturing and service policy .............................................. 12

4.2 Re-engineering Tax structure .............................................................................. 12

4.3 Brand Creating .................................................................................................... 13

4.4 Reformation of Labour Laws, and Skilled Labour Development ....................... 13

4.5 Assigning KPI’s to State Enterprises .................................................................. 13

4.6 Minimizing Geopolitical influences .................................................................... 14

4.7 Reformation of the legal System ........................................................................ 14

4.8 Development In Tourism .................................................................................... 14

4.9 Integrative Information Center for Foreign Investors ......................................... 15

4.10 Sustainable and Reliable Energy Policy.............................................................. 15

5. Conclusion .............................................................................................................. 16

List of References........................................................................................................... 17

6. Appendices .............................................................................................................. 19

iii
1. Introduction

The prime aim of this report is to identify issues in strategic planning of economic policy
in Sri Lanka and statistical analysis in term of revenue generation, taxation, integration of
other non-economic aspects, proper forecasting, proactive measures for possible force
majeure situations, and ways of expanding foreign reserves and exchanges. In the modern
era, the context of world economic policies are transformed in the direction of innovative
and technological macro-economic strategies, to suit the evolving valued-added exports,
and virtual international investments rather than focusing only on matured objectives such
as poverty reduction and employment rates, etc. Though Monetary and Fiscal policies play
major roles in economy, other inter-reliant policies have to be properly harmonized for
holistic economic expansion (Dr.Mendis, 2020). Plus according to Bazdan (2008),
“economic growth and other social developments shall be harmonized with less poverty
and more democracy”.

Figure 1: Interdependent Policies with Overall Economic Policy

Monetary
Defence policy Fiscal
Policy Policy

Energy Tourism
policy Policy

Health Trade
Policy Policy

Economic Policy
Agricultur ICT
al policy Policy

Geo
Education
political
System
influnces

Multi
Labour
Cultural
Policy
policy Environm
Legal
ental
Structure
Policy

Source: https://www.economicshelp.org/blog. (2018).

According to Figure 1 above, the economic policy can be segmented into two main
components.

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 1. Direct economic elements (Monetary, Fiscal, Trade, etc)
2. In-direct elements (Legal, ICT, Education, Labour, Environmental, Cultural, etc)

As an example, the necessity of information across different industries, value addition into
manufacturing, political stability, strengthening the legal structure and human rights,
sectored tourism, skilled labour development, and multi-cultural equality, balance
geopolitical relationships are some of the elements in the contemporary economy. The
present direction of the Sri Lankan economy and political strategies are backward, and
primary decisions were ad-hoc. The remarkable opportunities just after the 30-year war
were not properly grasped by any government, to enhance foreign investments or tourism.
Eventually, the autocratic short-sighted cyclic decision-making over impermanent
economic policies and strategies has depleted the economy since 1978, lead to the
Economic Freedom of the World Index (EFWI) to 83 in 2020 (Economynext, 2020). Most
of the main policies are unstable and not meticulously planned. The economic policy shall
be broad and longstanding but also consistent despite the changes in governance.

The present budget deficit further disturbs sovereign credit rating, stress on taxation, the
margin of public debts, financial inflow, foreign investments, etc. Subsequently, the report
will discuss economic theories into real-time fiscal and monetary policies, and the
concealed potential developments of the overall economy in terms of,

a) Tax reformations,
b) ICT integrations and networked system
c) Trustworthy legitimates for investments
d) Value addition manufacturing and diversifying from matured industries,
e) Branding goods and services,
f) Identified sectors of Tourism
g) Segmented and focused Education policies
h) Long-term energy generation Plan
i) Skilled workforce and migration policies
j) State enterprise management,
k) Balance and favorable geopolitical relationships,
l) Reduction of topmost imports (crude oil, vehicles, electronics, raw material, etc)
m) Overall apolitical decision-making and visionary leadership.

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2. Key Issues of Economic Policy in Sri Lanka

The government intervention into national economic policy with strategic and rational
planning has not been seen in the last four decades. Not only the consequences of
shortsighted visionaries of Politian’s but also unethical and unproductive attitudes of the
public have to lead the economy to downfall. Some of the most significant chronic issues
of the Sri Lankan economy are as follows.

Table 1: Key issues chronic issues in Sri Lankan Economic policy

Index. Chronic Economic Issues Examples

No

a) Unstable platform for foreign Easter Attack, political instability,

investments. corruption, and racism.

b) Unsystematic tax structure to
capture widespread of
income, high tax-free
threshold levels, and tax
frauding.
Only 674,000 active tax files, tax frauds,
and loss of revenue in 2020. No common
linked platform for Central Bank of Sri
Lanka (CBSL), Inland Revenue
Department (IRD), Customs, RMV, Land
Registry, etc. such as PAN system in
India.

c) Incongruent legal structure Youth into drugs, presidential mercy,

intolerable road ethics, lawbreakers as
lawmakers.

d) Geopolitical influences Chinese high-interest rate loans,

Trincomalee oil tanks, and ECT to India,
MCC by USA.

e) Disregarded social menaces Garbage management, Dengue,

Deforestation.

f) Unproductive state enterprise Provincial Councils, loss-making state

management organizations. CEB, CPC.

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g) Unfeasible foreign loans for Magam Ruhunupura International
infrastructure developments Convention Centre (MRICC), Lotus
Tower.

h) Reliable international e- No global platform for trading for unique

commerce platforms Sri Lankan Products.

Daraz was purchased by Aliexpress.

i) Unfocused Tourist sectors Eco-tourism, adventure tourism, leisure

tourism.

j) Education system is not Unstandardized private universities:

connected to long-term SAITM. Skilled labour development.
economic policy Example: Indian ICT hubs.

k) Value-added manufacturing, Skin production using tea leaves,

and diverse from matured Vitamins by Sea cucumber in Jaffna,
industries. Canned fishery products, etc

l) Low focus in Research and R&D into education, energy, agriculture.

Developments in all sectors

m) Nontechnical and Toxic agriculture, conventional

chemicalized cultivations cultivation methods.

n) Migration of professionals Migration of free educated professional,

and social income disparity wage inequality:

o) Educational sector cash Foreign exchange outflow for education,

outflow

p) Uncontrolled imports Crude oil, phones, laptops, raw material

for garments.

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3. Overview of Present Economy in Sri Lanka

The main focus here is to analysis instruments and present achievements of main objectives
of monetary and fiscal policies. As discussed above, both policies are shortsighted,
politically favored, and revised virtually after every election.

Figure 2: Approximated Government Budget Sri Lanka

Govt. Budget
Expenditure Revenue
Recurrent Capital
1750BLKR 964BLKR Panelties/
Loans - Liabilities Taxes State Capital Grants
Defence, Helath, Fines/
964BLKR 90% profits Transfers Donations
Torism, Education, Other
etc etc

Loan Interest IRD Customs Exercise

Repayments Payments 18% 48% 24%

Source: Ministry of Finance. (2020).

3.1 Analysis of Monetary Policy

The definition of the monetary policy in Sri Lanka is “the process by which a Central Bank
manages the supply and the cost of money in an economy mainly with a view to achieve
the macroeconomic objective of price stability” (CBSL, n.d.). This further demonstrates in
terms of employment rate, economic growth, and Government Debts, etc. The expected
price stability would be anchored via low persistent inflation rates: FIT Framework. CBSL
not only controls Flexible Inflation Targeting (FIT), but also use monetary policy
instruments such as Cash Reverse Ratio (CRR), Interest Rates, Statutory Liquidity Ratio
(SLR), Statutory Reserve Requirement (SRR), Repo Rates (RR), Open Market Operations
(OMO) and adjusted as required. At the moment CBSL is monitoring, 24 Licensed Banks,
06 specialized banks, 04 Licensed Microfinance Companies, and 41 Financial Institutes.
The CBSL is responsible not only for financial monitoring but also to support and advice
at tough situations to downstream banks such as “Ring-fencing” in Europe.

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Figure 3: CCPI -FIT Variation from 1985 to 2020 and Forecast up to 2025

Forecasted

Source: www.statista.com. (2020).

According to Figure 3, the inflation of Sri Lanka was 4.6% in 2020 and it was further
declined to 4.3% in January 2021 (MoF, 2021), which is around the creeping range and
satisfactory.

Table 2: Monthly Changes by Main Groups of Market Basket 2020 July-August

Source: Web Release-The National Consumer Price Index August. (2020).

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However, as shown in Table 2, the reflective price stability vs. low inflation is problematic
due to visible price escalation of some essential items in the consumer basket such as
coconut, rice, and beverages. In the meantime, the priorities of the listed items (407 Nos.)
in the consumer basket, have been intensely changed with the pandemic in 2020. The
expenditure values of non-essential household items, restaurants, and hotels, miscellaneous
goods and services have been drastically declined with the reduction of individual income
levels and own priorities.

Figure 4: SDFR, SLFR, Bank Rates, SRR behavior from 2010 to 2020

Monetary Instruments in Sri Lanka from 2010-2020

16
14
12
10 2020, 8.5 SDFR
%

8 SLFR
2020, 5.5
6 2020, 4.5 Bank Rates
4 SRR
2 2020, 2 CRR
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Years

Source: CBSL Statistics. (2020).

Further, rates of the monetary instruments have been intentionaly reduced by the CBSL in
2020 to encourage investments and money supply, while opposing savings as shown in
Figure 4.

Figure 5: Public Debt Variation from 2010 to 2020

Public Debts % to GDP

105% 90
% comapred to GDP

2020, 99%
95%
85
85%
80
75%

65% 75
2015 2016 2017 2018 2019 2020
GDP Bn USD Public Debts Years

Source: CBSL Statistics. (2020).

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It is notable that, the government debts percentages have been histrionically escalated from
86% to 99% from 2019 to 2020 as presented in figure 5. This is a clear indication of loss
of revenue and increment of government expenses, particularly due to Covid-19 outbreak.

3.2 Analysis of Fiscal Policy Instruments

The prime medium-term objectives in Fiscal Policy for 2021 to 2025 have been defined by
the Ministry of Finance, and forecasted to achieve,

a) Increase revenue by 14% in 2025,

b) Cut down unproductive expenditure,
c) Keep budget deficit < 4% of GDP,
d) Achieve primary surplus in 2025 or above,
e) Reduce Government Debts to 75.5% in 2025,
f) Maintain a low exchange rate over Sri Lankan Rupee (Ministry of Finance Sri
Lanka, 2021).

At the moment, revenue collection is the only source to meet government expenses. The
revenue generation in Sri Lanka mainly splits into taxes, custom duties, excise duties,
penalties and fines, donations and grants, natural resources, and the profit of state
corporations. However, most of the public sector corporations are loss-making.

Figure 6: Average Revenue Collection Composition in Sri Lanka

Revenue
Tax Other
90% 10%

IRD Custom Dept. Excise Dept.

Natural Capital
18% 48% 24% Grants State Profits Panelties/Fines
Resources Transfers
Direct Indirect Indirect

Source: CBSL. (2019).

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According to Figure 6: ninety percent of the revenue is Tax. Meanwhile, it is also
questionable that, the present tax structure is able to bring equality of income, reduction of
tax manipulations, and promote tax generation to the desired threshold. Though the
population is around twenty one million (21M) with 50% workforce, only six hundred and
ninety four thousand (694,000) active taxpayers in Sri Lanka. These figures confirm the
ineffectiveness of the current tax system. The objective of tax collection is to utilize funds
for public welfare, while relieving the lowest income share from further stressing. The tax
system should be able to capture widespread income levels: middle and rich income share,
minimize tax-free threshold, and close loopholes of tax frauds. In the Sri Lankan tax
system, 80% is regressive (In-direct) and 20% is progressive (direct), which is also
debatable. Hence, it is noticeable that the present tax structure is incapable of collecting
the required stretch of forecasted revenue, unless otherwise reformed.

Figure 7: Tax Contribution for Total Revenue in Sri Lanka from 1990-2020

Revenue Collection in Sri Lanka 1990-2020

2,500,000

2,000,000

1,500,000
MLKR

1,000,000

500,000

0 201
199 199 199 199 199 199 199 199 199 199 200 200 200 200 200 200 200 200 200 200 201 201 201 201 201 201 201 201 201 202
9
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 0*
(a)
Direct Tax 7,33 9,72 10,9 12,5 15,2 17,1 20,7 21,5 20,4 28,2 27,4 34,6 37,4 39,3 41,3 52,5 79,6 107, 126, 139, 135, 157, 172, 205, 198, 262, 258, 274, 310, 427,
Indirect Tax 53,8 58,4 65,3 73,3 84,1 101, 109, 120, 126, 137, 154, 171, 184, 192, 240, 284, 348, 401, 459, 479, 589, 688, 736, 800, 852, 1,09 1,20 1,39 1,4 1,3
Total Tax 61,2 68,1 76,3 85,8 99,4 118, 130, 142, 147, 166, 182, 205, 221, 231, 281, 336, 428, 508, 585, 618, 724 845 908 1,0 1,0 1,3 1,4 1,6 1,7 1,7 1,1
Total Revenue 67,9 76,1 85,7 98,3 110, 136, 146, 165, 175, 195, 211, 234, 261, 276, 311, 379, 477, 565, 655, 699, 817, 967, 1,05 1,13 1,19 1,45 1,68 1,83 1,91 1,89 1,20

Source: CBSL. (2020).

The above figure 7, further illustrates the downturn of the revenue collection of 700BLKR
in 2020 as a result of reverse economic growth of (-1.8%) during the pandemic. In fact, the
loss in taxation, widen the budget deficit from 850BLKR to 1564BLKR (9.0% of GDP)
from 2019-2020 respectively. These facts and figures express the significance of the
establishment of a proper taxation system in Sri Lanka in terms of minimizing the
forecasted deficits at least by 2025.

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 3.3 Analysis of Impact on Non-Economic Elements to Overall Economy

The surplus in exports, foreign investments, labour remittances, and tourism are the main
elements of foreign exchange, which has been severely affected by imprudent political
decisions and the recent Covid-19 outbreak. Hence, a strategic approach for economic
sustainability shall be forecasted for different contingencies including possible recessions,
epidemics, wars by embracing successful strategies followed by similar nations. Example:
New Zeland, Singapore, public doles in USA. With the pandemic, most of the labours were
idled, and organizations were unprofitable. Even in that circumstances, salary curtailment
was not possible, unless a consent of the employee as per Sri Lankan Labour law, which
was one of the significant considerable factors of foreign investments (Factory Ordinance
Act, 1950). The unforeseen financial collapse in 2020 reflects in tourism, international
investments, and supply chain management, etc. As discussed above, the economic policy
shall be rationally tied-up with major national policies.

Examples:

a) For instant, the extension of Sustainable Renewable Energy generation will reduce
the long-term operational cost of energy, and reduce import expenses of crude oil,
which will support industries and competitive pricing.
b) A standard private education system shall be implemented to avoid foreign cash
outflow as well as to upturn cash inflows.
c) On the other hand, Artificial Intelligence (AI) and skilled labour oriented education
system, can target vacuums in the global job market.
d) From social perspective, Sri Lanka is now ranked as number 08 out of 142 countries
in the list of most stressful countries in Gallup Global Emotions Report (2019),
which is symptomatic element of social productive disability, and to be addressed
at the earliest.

In brief, the integration of non-economic elements, into a holistic economic map shall be
visionary. For that, market researching and analysing successful similar economic models
will be supportive. For example, strategies followed by four Asian tigers: Singapore, South
Korea, Taiwan, and Hong Kong, from 1960 onwards were remarkable.

Skill development to accommodate foreign market has not been researched by any
government in Sri Lanka. Most of the art graduates are not relevant to modern employment.

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The weight of the foreign labor remittances could have been turn the economy up-side
down from where Sri Lanka is now. This has been well-established in India, and now one
of the main ICT hubs in the world, and providing millions of IT professionals to the global
market. Further, due to economic instability sovereign credit rating was fallen to class
CCC+ from B in Sri Lanka in 2020, which will be affected heavy in investments in next
few years. That advantage will be taken by neighboring competitors such as Bangladesh,
etc.

Figure 8: GDP Growth Rate in South Asia (Sri Lanka, India, and Bangladesh)

GDP Growth Rate in South Asia

Sri Lanka India Bangaladesh

8 8.26 7.86 8.15

6.55 7.11 7.047.28
6.12
5 4.5 4.18
3.6 3.3 3.8
2.3

2015 2016 2017 2018 2019 2020

-1.6

-10.29

Source: Statista.com. (2021)

Sri Lanka has the least growth compared to India and Bangladesh (Refer Figure 8). Some
of the investment opportunities, grants, and viable loan schemes have been disregarded, by
myopic leadership. For an instant, the recent Light Rail Train (LRT) project under Japan
International Cooperation Agency (JICA) funds was rejected, which was offered with an
annual interest rate of 0.01% (JICA, 2019). On the other hand in 2018, Sri Lanka decided
to obtain One Billion USD syndicated loan from China for USD LIBER rate plus 2.56%
annual interest rate, which elaborates the degree of geopolitical influences, corruption and
autocracy (Diplomat, 2020).

Further to above, certain bilateral trade agreements are not straightforward, the true agenda
may be unseen. Case in point, the loss-making leased oil storage tanks at Trincomalee are
still worth for India in terms of geographical domination. Hence, loans, grants, and trade
agreements do not only mean its’ economic traits, but also geopolitical ulterior motives.

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4. Recommendations to Revitalize Sri Lankan Economy

4.1 Value Addition manufacturing and service policy

Value addition is one of the most discussed but unexecuted trade topics in Sri Lanka. There
are six main ways of value-addition to a conventional product or service, viz, fast, quality,
uniqueness, convenience, emotiveness, and simplicity. For example, the variance between
Vessel Turnaround Time (VTT) in Singapore port and Colombo port is 7.7hours, where
Singapore VTT is 12hours and Colombo VTT is 19.7hours (Wajira, 2018). Therefore the
time difference in operations created extra value for Singapore over Sri Lanka. In Japan,
the Automobile industry is also considered a value-added industry. The R&D has raised
Japan’s Automobile business into one step ahead of competitors. Not only the Automobile
sector but also japan is one of the leading suppliers in the pharmaceutical industry,
processed food, electric machinery, and equipment as shown in Appendix 1. The long-term
plan in USA is even to be diversified from their matured industries to value-added services
in the future.

Though Sri Lanka has the potentials, the present focus is to export goods as generic
products. For example, the most expensive skin products manufactured in Japan are by Sri
Lankan Tea leaves. The opportunity of exporting fisheries as canned products may be
another option. Not only that, Jaffna sea cucumber into lavish health products, and salt into
PVC, soap, plastics. Even ilmenite quarry at Puttalam can be used for the production of
paint or as a fabric link for the garment sector to reduce import cost. The potential is also
with spices, flora, fruits, etc. Hence, value-addition shall be one of the key economic
strategies to enhance foreign exchange under trade policy.

4.2 Re-engineering Tax structure

Other than the “Credit Information Bureau” –CRIB system, CBSL or IRD do not have a
proper IT base network to monitor the cash flow of individual and corporate sector. This
was also a major dispute in the last “Easter Attack”. The cash inflow of terrorists has not
been monitored by CBSL or Banking system. Though we are in the twenty-first century,
with all the systems have become automated and integrated, Sri Lanka is motionless in term
of launching systems into governance. The “PAN” in India and National Insurance Card
in UK are models of modern networked taxation systems. In Sri Lanka, IRD shall certainly
linked with RMV, health, land registry, customs, education, legal systems.

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 4.3 Brand Creating

Brand building is challenging and not an overnight miracle. The Apple, Google, Microsoft,
Amazon, Nike, and Lacoste are some of the top international brands. Branding can make
exponential profits compared to identical products. Recently, MAS holdings have done
R&D on Tennis wear and planned to target ATP world league at climatically diverse
locations. Since MAS does not have an international brand value, they had to have
agreements with Lacoste. Ultimately, irrespective of the R&D carried out by MAS, Lacoste
had the major profit share and promoted under their brand name. Hence, long-term
strategies shall be set up on branding in the economic policy.

4.4 Reformation of Labour Laws, and Skilled Labour Development

As discussed in 3.3 above, present laws are in favour of labours and demoting factors for
investors. The main concern of the Russian investor, who offered to assist in manufacturing
“Sputnik V” Covid-19 vaccine here in Sri Lanka, was Sri Lankan labour law (Manjula,
2021). The foreign investments have been further influenced by high labor rates, barriers
in wage curtailments, high unionization, and politics. Hence, reformation of labor laws,
apolitical unionization, and task-oriented labour rates shall be established in terms of
investors' perspective. Moreover, the productive labour force :age between 20-40 of more
than two million (6% of national labour) has been involved in the three-wheel industry,
which has become a social and labour menace. Not only that, this has indirectly affected
the collapse of the education system and skill development. Most of the tuk-tuk drivers
have not passed O/Ls, and it has become an attractive and irresponsible field for youth.
Hence, regulations on tuk-tuk drivers such as age limits, and amalgamation of youth into
vocational training are compulsory to reduce labours rates and to improve the quality of
works. Vocational training shall also be linked to school education as in Japan by doing
market researches and finding labour vacuums.

4.5 Assigning KPI’s to State Enterprises

Presently, most of the state organizations are loss-making: CEB, CPC. Annual salary
revisions and increments are non-meritocratic. Most of the government servants are
irresponsible in what they are doing and expired appraisal methods are the only method of
performance evaluation. Hence, Key Performance Monitoring (KPI) system shall be
introduced for all state enterprises based on organizational outcomes. Incentives and Bonus
schemes shall be proportional to final annual profits.

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 4.6 Minimizing Geopolitical influences

The recent experiences of MCC agreement by USA, Port City by China, East Colombo
Terminal (ECT) by India have shown the interventions of geopolitics on the national
economy. The rejection of LRT project by JICA has been created a negative relationship
between Japan and Sri Lanka, and JICA has canceled all the prospective low-interest rate
loans and grants subsequently. Further, Japan may vote against Sri Lanka at UN for war
crimes, which may lead to imposing trade embargos.

Whether desired or not, having minor economic strength, Sri Lanka will not be able
completely free from geopolitical influences, but the best solution would be to have a
balanced stance among global dominants. However, the holistic national economic policy
shall not be revised as influenced and feasible bilateral agreements shall be executed to
keep positive intercontinental relationships.

4.7 Reformation of the legal System

At present Corruption Perception Index (CPI) is 38 for Sri Lanka, even comparatively
higher than India as shown in Appendix 2 (CPI, 2020). Though the legal system was
amended many times, it’s unable to deliver the expectations of modern society. For
instance, loopholes in cybercrimes, taxation. The lengthy lethargic judgments have dragged
some cases for years, unequal sentences, and the prison has turned into operational hubs
for criminals, and lawbreakers have become lawmakers. For instance, a politician
sentenced to death for murdering has been escorted out of prison and sworn in as a member
of parliament- Mr. Premalal Jayasekara (Parliament, 2020). The confidence in foreign and
local investments has been heavily obstructed by the corrupted system. A proper
reformation of legal structure with a modern biometric identity system shall be
implemented as done in SSN Card-USA and Europe, which will be able linked to all sectors
such as health, crime, banking, taxing, immigration, etc.

4.8 Development In Tourism

Since, there are numerous sectors in tourism, Sri Lanka shall understand true potentials of
Sri Lankan tourism. Example: Thailand tourism policy may not suit for Sri Lanka.
Simultaneously, bankers shall support cottage industries, Air B&B, and hotel sector, which
has been deteriorating with the pandemic.

14
Figure 9: Tourism Revenue in Sri Lanka from 2009-2020

Source: ceicdata.com. (2020)

Figure 9, illustrates the drastic decline in tourism in 2020, which was approximately 2600
million USD (CEIC, 2020). For improvements in tourism, the value-added services shall
be provided for tourists from the point of arrival to the very last departure including all the
local services by incorporating health regulations, mixed markets, information centers, fast
transport links, trustworthy services, on arrival visa services, standard hotel rates, safeness,
and hospitality management. The recommended sectors may be contracted to cultural,
adventurous, leisure, and eco-tourism. A common App for tourists for taxi services, route
mapping, trains, buses, ticketing, and hotels shall be launched with the intervention of the
Tourist Board. eg: Grab App Singapore, DBahn Germany, Tripscout Europe.

4.9 Integrative Information Center for Foreign Investors

The information required for market research analysis for foreign investments shall be
bridged by establishing information providing trade institute and to be integrated with all
the embassies. This has been established in India and it is called as “INFO-BRIDGE”. The
organization is managed by Japanese with local staff and providing all the necessary
information and market research for Japanese investors as required.

4.10 Sustainable and Reliable Energy Policy

Sri Lanka has the highest unit cost of energy in South Asia, which is a worrying factor for
investments, especially in the manufacturing sector. Hence, future government policies
shall be focused on renewable energy and reliability in our transmission network in the
means of reducing unit cost and stable network. For example, the grid code for establishing
ICT hubs reliability factor is (N-2), which means one hub should have at least three
incoming supplies from three different grid substations. In terms of reliability

15
improvements networking with the Indian transmission grid, may be cost-effective, and for
unit cost reduction, adoption of potential wind farms, and mini-hydro plant with private
investments would be beneficial.

5. Conclusion

In conclusion, a national economic policy shall not be standalone, and to be networked with
every other influential sectors. It can be either considered in economic or non-economic
terms. Eventually, Sri Lankan economy will motionless, unless otherwise implementation
of revolutionary transformation of national policies including reformation of legal and
taxation systems, revising educations targets, value-added tourism and manufacturing with
branding, forming KPI’s for state enterprises, launching stable platforms for investors, etc.
The positive geopolitics, corruption free culture, and meritocratic systems will be flavors
of the long mission.

16
 List of References

Bazdan, Z. (2014). Democracy and Human Rights- Heart of International Economy and
Politics. University of Dubrovnik, ISBN 978-953-7153-17-5
CEIC. (2020). Sri Lanka Tourism Revenue. https://www.ceicdata.com/en/indicator/sri-
lanka/tourism-revenue
Central Bank of Sri Lanka. (2019). Statistics. https://www.cbsl.gov.lk/en/statistics

Central Bank of Sri Lanka. (2020). Sri Lanka Socio Economic Data 2020.

Central Bank Sri Lanka. (n.d.). Vision, Mission & Values.

https://www.cbsl.gov.lk/en/about/about-the-bank/vision-mission-values
Department of Labour Sri Lanka. (1950). Factory Ordinance Act.
Diplomat Risk Intelligence. (2020). Sri Lanka’s Changing Relationship to Chinese Loans.
https://thediplomat.com/2020/10/sri-lankas-changing-relationship-to-chinese-
loans/
ECONOMYNEXT, (2020). Sri Lanka Ranks 83 on Economic Freedom of the World
Index. https://economynext.com/sri-lanka-ranks-83-on-economic-freedom-of-the-
world-index-73992/
Gallup Global Emotions Report, (2019). List of Most Stressed Countries.
https://www.atlassandboots.com/travel-blog/most-stressed-countries-in-the-world
Japan International Cooperation Agency. (2019). Press Releases: Signing of Japanese
ODA Loan Agreement with Sri Lanka.
https://www.jica.go.jp/english/news/press/2018/20190311_01.html
Manjula, F. (2021 Jan 31). Russia permits Lanka to produce Sputnik V Vaccine. Sunday
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produce-sputnik-v-vaccine
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ons

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 6. Appendices

Appendix 1: Value Added in the Manufacturing Sector in Japan as of 2018, by

Industry

Source: https://www.statista.com/statistics/949813/japan-manufacturing-products-value-
added-by-industry/

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Appendix 2: Corruption Perceptions Index 2020

Source: Transparency International (2020)

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