JANUARY TO JUNE 2015

DIGEST

Sustainability &
Environment Management

Overcoming
Challenges of
Marine Pollution
for Healthy Oceans

Adopting a
Blue Economy
Approach
in Sri Lanka

page 09

page 11

Integrated
Water Management and
Sustainable Urbanization
in Sri Lanka
page 15

Millennium Development
Goals Sri Lankas
Achievements and
Challenges Ahead
page 35

TA LKING ECONOM ICS

03 Charting a Course for Sri Lankas Economy:

Politics Triumph Economics for Now

05

11

05 Trade Facilitation: Breaking Down Barriers to

International Trade in Sri Lanka
07 Reaching Greater Heights in Innovations: A Sri Lankan Perspective
09 Overcoming Challenges of Marine Pollution for Healthy Oceans
11 Adopting a Blue Economy Approach in Sri Lanka
13 Does Restructuring Property Rights Hold the Key to
Natural Resource Management in Sri Lanka?
15 Integrated Water Management and Sustainable Urbanization in Sri Lanka

15

17 Good Environmental Management Practices in the Hotel Industry

in Sri Lanka: Determinants and Barriers
19 Climatenet
20 Inside IPS
21 National Medicinal Drug Regulatory Authority Bill and the
Medicinal Drug Policy of Sri Lanka: Some Challenges
23 Patient Waiting Times in Private Hospitals: A Growing Concern in Sri Lanka
25 Food Additives Are They Safe?
27 Let Food be Thy Medicine
29 Towards Healthier Diets in Sri Lanka: The Role of Nutrition Labeling
31 Emerging Food Standards: A Cause of Concern for the Sri Lankan
Tea Industry
33 World No Tobacco Day: Tobacco Smoking - An Issue of Un-awareness

21

27

35 Millennium Development Goals Sri Lankas Achievements

and Challenges Ahead
38 IPS Careers / IPS Internship Programme
39 Addressing Issues of Social Protection to Enhance Equity in Sri Lanka
41 Child Labour and Education in Sri Lanka: Combating Child Labour
through the Provision of Quality Education

43

43 Networking and Information: Crucial Ingredients in Empowering Women

Owned and Led Micro, Small and Medium Enterprises in Sri Lanka
45 Inspirational Women
46 Text-bombs of Unsolicited Promotional Messages:
Do Consumers have Control Over their Personal Information?
47 IPS News

31

Editorial
Sustainability &
Environment Management
Welcome to the 10th edition of the Talking Economic Digest!
The Talking Economics Digest is a bi-annual compilation of articles by IPS researchers brought out
during the year in our Talking Economics Blog. The articles in this Edition reflect the broad thematic
areas of research we focus at the Institute as well as highlight some key developments in the
country and the world in the first half of 2015.
The efforts of successive governments during the last several decades have led to growth in per
capita incomes, resulting in a increase in standard of living of the people and a decrease in overall
poverty levels. However, Sri Lanka faces a host of environmental problems such as land degradation,
de-forestation, pollution and poor management of water resources, loss of biological diversity,
coastal erosion, increasing scarcity of water, etc. As an emerging economy, the challenge for Sri
Lanka is to achieve sustainable high economic growth without causing irreversible damage to the
environment.
More than ever before, Sri Lanka needs to strike a balance between rapid economic growth and the
demands of a growing population on a limited natural resource base. The Digest focuses on this
issue, featuring articles relating to sustainable environment management of water, ocean, forest and
its resources, and tourism in the country. In the article, Adopting a Blue Economy Approach in Sri
Lanka, Kanchana talks about the use of ocean and its resources sustainably while Athula highlights
the need for coordination amongst various agencies concerned with marine and land based pollution
in the country as well as regional/international cooperation in Overcoming Challenges of Marine
Pollution. Forests in Sri Lanka are depleting at an alarming rate, requiring a restructuring of property
rights to better manage forests, argues Chatura in his article to mark the World Environment Day
2015. He also discusses the increasing demand for water in urban areas and the need to adopt an
Integrated Urban Water Management (IUWM) approach to achieve sustainable economic, social and
environmental goals. In the article Good Environmental Management Practices in the Hotel
Industry in Sri Lanka, which is based on an IPS study, Kanchana looks at the adoption of good
energy, water and waste management practices in the Sri Lankan hotel industry, which has been
seen a remarkable growth in the recent past with the ending of the war.
The Digest also has a number of other interesting articles looking at issues relating to health, labour,
education, social security, trade, etc., which would appeal to our wide and growing readership
beyond policy-makers of the country. Articles like, Let Food be Thy Medicine, The Role of
Nutrition Labelling, and Food Additives Are They Safe?, aim to inform the general public of the
importance of healthy diets and nutrition labeling in maintaining and promoting a healthy lifestyle
while being aware of chemicals contained in the food we consume every day.
We hope you will enjoy the Digest and look forward to your continuous support and feedback.
You can always access these articles and the previous editions of the Digest from our website.
http://www.ips.lk/talkingeconomics/

50 Latest Publications
51 Too Much Time Holidaying. Not Enough Time Working?
53 Talking Economics Crossword Puzzle
54 Fast Facts

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 lanaka. Its mission is to contribute to the socio-economic development of the country through informed, independent and high quality research that seeks to inuence the
policy process. With over two decades of substantial research expertise, IPS has emerged as a regional centre of excellence and the most inuential think tank in Sri Lanka.

Happy reading!

EXECUTIVE DIRECTOR
Saman Kelegama, DPhil (Oxon)
DEPUTY DIRECTOR
Dushni Weerakoon, PhD (Manchester)
TALKING ECONOMICS TEAM
Janaka Wijayasiri
Dishnika Perera
Bilesha Weeraratne
Raveen Ekanayake
Charmaine Wijesinghe
Shanika Samarakoon
CONTRIBUTING AUTHORS
Athula Senaratne
Bilesha Weeraratne
Chatura Rodrigo
Chayanka Wikremesinghe
Dilani Hirimuthugodage
Dushni Weerakoon
Ganga Thilakaratna
G D Dayaratne
Janaka Wijayasiri
Kanchana Wickremasinghe
Raveen Ekanayake
Sahan Jayawardena
Samanthi Bandara
Shanika Samarakoon
Sunimalee Madurawala
Suwendrani Jayaratne
Wimal Nanayakkara
INSTITUTE OF POLICY STUDIES OF SRI LANKA
100/20, Independence Avenue
Colombo 07, Sri Lanka
Tel: +94 11 2143100, +94 11 2665068
URL: www.ips.lk
Blog: Talking Economics
Web: www.ips.lk/talkingeconomics
Twitter: www.twitter.com/TalkEconomicsSL
DESIGN/LAYOUT
Shiran Sabar

Copyright and Disclaimer

All material published in the Talking Economics Digest
are copyright of the Institute of Policy Studies of
Sri Lanka (IPS), unless otherwise specified. It cannot be
quoted without due acknowledgement to the IPS
and the author. It cannot be reproduced in whole or
in part, without the written permission of the IPS.
The content, comments and posts of the Talking

Janaka Wijayasiri
Research Fellow, IPS
janaka@ips.lk
September 2015

Economic Digest and the IPS blog represent the views

of individual authors and do not necessarily represent
the views of the IPS.

02

TA LKING ECONOM ICS

CHARTING A COURSE FOR

SRI LANKAS ECONOMY:

relies massively on such investment for growth, the impact will be all the more immediate as
evident in first quarter 2015 GDP figures.
For now, tapping the domestic market for funds is possible in a climate of subdued private
investment, low inflation and interest rates, but it is not a long term option. To ease pressure, Sri

Politics Triumph Economics for Now

Lanka issued a 10 year US$ 650 million sovereign bond in May 2015, and announced plans to
raise a further US$ 1 billion. The funds are partly to shore up the countrys
Figure 2: Fiscal Developments

By Dushni Weerakoon

2015
Revised
Revenue
12.2
14.6
14.1
Current expenditure
13.5
13.5
14.2
Public investment
5.0
6.2
4.6
Overall decit
6.0
4.6
4.4
Notes: a: Estimates presented in Oct. 2014; b: Revised estimates
presented in Jan. 2015.
As % of GDP

ri Lankans might be forgiven for thinking that the countrys economy must be sufficiently

strong to be put on auto-pilot indefinitely while policy makers focus their energies almost
entirely on political reforms for the better part of six months. Indeed, it appears to fall back on
the belief that the economy is inherently resilient, based largely on its relatively reasonable
performance during a long-drawn conflict. This, however, can be an erroneous assumption that
may prove costly. Global economic conditions are very different today from what prevailed

2014

2015a

in East and Southeast Asia are struggling to keep economic growth above 6 per cent
post-crisis. It would be peculiar indeed if Sri Lanka is to buck this trend without substantive
government policy direction that charts a course for growth.
Rs. mn.

Image Courtesy: ancientworldtours.net

For the second consecutive quarter, GDP growth moderated to 6.4 per
Governments may opt to do this, faced with an

cent in the first quarter of 2015, registering a decline from 7.6 per cent

600000

500000

400000

300000

in the first quarter of 2014. In the fourth quarter of 2014, a contraction

that high growth; it relied almost entirely on infrastructure development that

unsustainable growth process that is in danger of

200000

of 3.3 per cent in agriculture pulled growth down. By contrast, growth

skewed growth heavily towards non-tradables, with a deferred cost of an

generating macroeconomic instability in the long run.

100000

moderated in the first quarter of 2015 largely as a result of a slowdown

external debt overhang. However, investors could afford to overlook these

When growth begins to slow in the context of a

in the industry sector (Figure 1). The sharp contraction in construction

weaknesses for a time as long as GDP continued to expand. High growth

perceived policy vacuum, business confidence starts

activity was to be expected; what appears to be a more general

allows headline ratios that spell out the health of an economy especially

to wane and the private sector will be in no mood to

slowdown in productive economic sectors such as manufacturing, and

on the fiscal front to look more convincing than otherwise.

invest. Despite a government that is perceived to be

more market friendly, credit uptake by the private

transport and communications is, however, of concern.

Figure 1: Contribution to Quarterly GDP Growth

% of GDP

before the financial and economic meltdown of 2008. Even the most competitive of economies

0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Treasury guarantees (Rs. mn.)

% of GDP

Source: Ministry
of Finance
Figure 1: Contribution
to Quarterly
GDP Growth

Clearly, the countrys growth drivers and the quality of economic expansion

sector has been a low 0.9 per cent in the first quarter

reserves as well as to ease pressure on the exchange rate; but they are also earmarked for

While GDP growth is an imperfect measure of economic progress, it is

must change. However, in the interim, Sri Lanka cannot afford to allow GDP

of 2015; by contrast, the government has been a

development purposes. If Sri Lanka is to continue to tap foreign commercial borrowing for

an important comparative indicator. Global financial investors have

growth to moderate too far as a consequence of economic policy inertia. A

heavy borrower, with 8.5 per cent growth in credit.

budgetary support, the growth outlook must remain attractive more so than even before.

continued to show interest in Sri Lanka largely on account of its growth

moderation in growth that results from a deliberated economic policy

prospects. This is despite inherent structural weaknesses underpinning

framework is something else entirely.

International capital flows to emerging economies are tightening with markets affected by

9
8
7

recent years will begin to change, as they must. The infrastructure boost to growth will begin to
exhaust, and needs to be replaced with productivity growth. For this to occur, Sri Lanka has to

Banking & insurance

profits. The fiscal targets also look increasingly

confront difficult and delayed reforms to make the economy more efficient and competitive. A

suspect with proposed tax measures caught up in the

policy framework to guide this process is vital. It appears increasingly that the countrys best

countrys current political maelstrom. There is very

hope of focusing attention on the economy lies with a viable government emerging from

limited fiscal space despite a reduction in the overall

parliamentary elections, with the fortitude and electoral mandate to not only set an economic

deficit in recent times; contingent liabilities of the

agenda, but persuade entrenched interests to accept it.

Wholesale & ret. trade

Construction
Manufacturing

Treasury are rising sharply and pose systemic risks to

fiscal policy management (Figure 2).

Agriculture

0
Q3

Q4

Q1
2015

2014
Agriculture

Industry

Services

GDP

Sri Lanka is still aiming for over 7% growth in 2015. Some of the sources of faster growth of

mix of populist measures and taxes on business

4
2

some early signals on economic policy direction.

However, it confused more than it clarified, with a

Transp. & comm.

Q2

economies. The days of easy money may be coming to a close.

Government services

Q1

shifting expectations of US monetary policy as well as weaker growth prospects in emerging

market to meet expenses. The budget put forward in

January 2015 presented an opportunity to set out

Figure 1: Contribution to Quarterly GDP Growth

-1

The government has been dipping into the domestic

-0.5

0.5

1.5
%

q1 2015

q1 2014

2.5

With revenue targets under threat to meet higher

current expenditures, fiscal adjustments will most
likely take the form of cuts to government
investment, already forecast to be cut sharply to

Source: Estimated from DCS, Quarterly GDP Data.

03

4.4% of GDP in 2015; in an economy that

Dushni Weerakoon, PhD (Manchester)

Deputy Director / Head of Macroeconomic Policy Research, IPS
dushni@ips.lk

04

TA LKING ECONOM ICS

Trade
Facilitation:
Breaking Down Barriers
to International Trade
in Sri Lanka
By Suwendrani Jayaratne
This article was written to mark the
International Customs Day,
26 January 2015

S ri Lanka has undertaken key initiatives to

facilitate trade and transport over the years.

Vital agencies in the trading process such as
the Sri Lanka Customs and the Sri Lanka Ports
Authority have taken measures to facilitate
trade through the automation, infrastructure
expansions and others. While acknowledging
the initiatives by relevant agencies, Sri Lanka
still has a lot to achieve if it is to reach the
facilitation levels of Singapore which is often
cited by policy makers and the private sector
to be the countrys benchmark.

Trade Facilitation
Priorities for Sri Lanka
The Institute of Policy Studies of Sri Lanka
(IPS) recently concluded a Trade and
Transport Facilitation Audit in Sri Lanka. As
part of the study, a survey was carried out
among 121 stakeholders in the country
including key government agencies and the
private sector to find out the current status of
trade facilitation (TF) in the country and related
priorities. This included exporters, importers,
shipping lines, freight forwarders, chambers
and relevant agencies. Following are some of
the TF issues and priorities highlighted in the
survey and a stakeholder consultation meeting
held recently.

05

Publication and Administration of Policies:

There is a need for prompt and comprehensive
publication of international trade related
information. Many stated the availability of
information for example in the Customs website
to be inadequate to get a comprehensive
understanding of the total import/export and
clearance processes in Sri Lanka. Information
provided in the Sri Lanka Customs website was
rated as average by a majority of the respondents, with the effectiveness of information on
changes in regulation, applicable customs
duties, and applicable fees and charges
identified to be low.

without resorting to irregular payments as a relatively easier means of clearing goods

was also highlighted.

Figure 1: High Priority Areas related to Rules/Procedures for Imports/ Exports

Reduce clearning times

79%

Reduce irregular payments/bribes

78%

Improve coordination btwn border management agencies

While there are enquiry points in different

agencies such as the Customs, these are
generally perceived to be inefficient and difficult
to access. While the existing enquiry points at
different institutions could be strengthened, a
national enquiry point can function as a
coordinating body between the trading
community and the relevant regulatory bodies. It
can collect requests, direct them to relevant
regulatory bodies, compile their responses and
inform the requesting party of the responses.
Currently, enquiries are often directed at the
wrong agency as traders are unaware of the
relevant agency to address a specific issue.
Having an Institutional Mechanism for the
Implementation of TF Measures:
There is no agency in the country which takes
responsibility to implement TF measures.
However, the recently appointed National Trade
Facilitation Committee is expected to remove
this vacuum and actively take up TF recommendations that have been highlighted by stakeholders over a long period of time in many forums.
Some of the high priority areas related
to/procedures for imports/exports, identified in
the survey are given in Figure 1.
Change of Mindset and Culture at both
Government Agencies and the Private Sector:
While recognizing the recent TF initiatives
undertaken by the relevant authorities such as
Sri Lanka Customs, some traders are of the view
that they do not function well in practice mainly
due to the lack of change in mindset to accept
and adapt to new ways of conducting business,
etc. Likewise, the need for the private sector to
produce correct and required documentation

Improving Inadequate Warehouse Facilities:

72%

Reduce no./time required of exp/imp documents

More than the inadequacy of warehouse in terms

of numbers, traders highlighted the lack of
adequate facilities available at warehouses. Lack
of proper storage racking systems, poor
conditions within them, poor handling and
inadequate security are some of the pertaining
issues of traders.

69%

Pre-arrival processing of import documents

59%

Issue & validity of advance ruling

57%

Reduce physical inspection by customs

48%

Post clearance audit

31%
0%

Setting up/Strengthening Enquiry Points:

purview Customs functions. Nonetheless, having

an ombudsman that is specialized in customs and
tariff regulatory matters that could assist the
trading community to review/appeal a particular
decision taken by a regulatory authority can
enhance the transparency of the system.

10% 20% 30% 40% 50% 60% 70% 80% 90%

Source: IPS Survey (2014)

Use of ICT for Exports and Imports:

A majority of 107 of the 121 respondents
highlighted the need for a single window in the.
Such a system is required to minimize human
intervention in the trading process. The need for
electronic/online submission of customs
documents were also identified to be high. While
the export process is almost entirely automated in
the country, the import process is yet to be
completely automated.

Legal Amendments to the Customs Ordinance:

Sri Lankas Customs Ordinance is over 200 years old and certain provisions need to be
amended to facilitate the implementation of identified TF measures such as the extension of the
pre-arrival processing facility to all goods whereas, currently the facility is only available for
perishable goods.
Trade Related Infrastructure:
The need to improve quality and efficiency of ports, roads, the quality of warehouses and the
need to reduce loss and damage of cargo are some the main trade related infrastructure and
infrastructure requirements in the country (Figure 2). For example, while acknowledging the
improvements in infrastructure in the recent past, the need to give a face-lift to the Colombo
Port with modern equipment was highlighted by traders. Furthermore, problems such as
congestion at the Colombo Port can be reduced if more gates at the Port can be opened;
currently only 2-3 gates are open for container traffic at any given time.
Figure 2: High Priority Areas of Trade Related Infrastructure and Services
85%

Quality/efficiency of ports
69%

Quality/efficiency of roads
Quality of warehouses

69%

Reducing cargo loss/damage

68%

Reducinng logistics services cost

65%

In conclusion, the importance of trade facilitation

has been recognized at the multilateral level with
the wrapping up of the WTO Trade Facilitation
Agreement in December 2013. This Agreement
will come into force once two-thirds of the WTOs
160 members (107 members) complete their
ratification process. Countries such as Hong Kong
and China have already ratified the Agreement.
Many of the TF measures highlighted above can
be implemented at a relatively low cost and are
not contentious in nature. Therefore, it is
important that Sri Lanka pursues pertinent TF
issues without further delay and enjoy early mover
advantages that these reforms offer.

64%

Quality of telecommunication/ IT services

Quality/efficiency of railways

63%

Efficiency of quality/standard inspection agencies

60%

Quality/efficiency of airports

59%

Effociency of health/SPS/quarantine agencies

58%
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Source: IPS Survey (2014)

Having a Non-Judiciary Review/Appeal Procedure:

72 of 121 respondents of the survey mentioned that there is no non-judiciary review or appeal
procedure available in the country if traders are not satisfied with a decision taken by the Customs
or any other border management agency. However, according to the Customs, traders can appeal
to the Director General of Customs if they are not in agreement with decisions taken at the
operational level, and then to the Minister of the Ministry of Finance and Planning under whose

Suwendrani Jayaratne, MA (ANU)

Research Officer, IPS
suwendrani@ips.lk.

06

TA LKING ECONOM ICS

The public sector contributes the most towards Research and

Development (R&D) in Sri Lanka (nearly 56%). In most developing
countries, the public sector provides a higher percentage of a
countrys total investments in R&D. Public investment is essential in
R&D as markets fail due to difficulty in assuring profits for investors.
However, most developed countries have overcome the issue of
private investments in R&D by providing effective protection via strong
Intellectual Property Rights (IPRs) systems.
In Sri Lanka, GERD is high in agriculture sciences (33.1 %) followed by

100
90
80
70
60
50
40
30
20
10
0

The link between the ministry, institutes and universities on research,

74.07

Reaching
Greater Heights
in Innovations:
A Sri Lankan
Perspective

A majority of the R&D expenditure in the agricultural sector is spent on

science and technology is weak. This was highlighted in a recent report on

67.19

Integrating Intellectual Property into Innovation Policy Formulation in Sri

Lanka by the National Intellectual Property Office Sri Lanka. The
31.21

23.28

Patents

R&D expenditure on engineering & technologies (20.2%), natural

sciences (12.1%), social sciences & humanities (6.6%) etc., (Figure 1).

Coordination

Figure 2: Methodologies Used in Protecting IPRs -2010

introduced policies and programmes are implemented in isolation by

20.63

Trademarks

Copyrights

different institutes and organizations. Therefore, it is of utmost importance to

Secrecy

Formal

Complexity of
design

1.05

improve coordination between research, science and technology institutions.

Other

A separate institute may help to better formulate, monitor, manage and

coordinate innovation policies and programmes in the country.

Strategic Methods

Incentives

Source: Sri Lanka Science, Technology and Innovation Handbook: 2010,

National Science Foundation

Simultaneously, it is vital to motivate private sector investments in R&D by

crop production, soil science, variety improvement, etc. In terms of

commodities, a greater share of R&D was allocated to rice, plantation
crops, fruits and vegetables in 2010.

way of introducing tax deductions/low tax rates, better investment climate,

Sri Lanka in the Global Context

strong IPRs system, etc. Further, an innovation voucher system can be

The Global Innovation Index 2014 (GII) has ranked Sri Lanka at 105th
place out of 143 countries in the world. According to the GII rankings,
Figure 1: Indicators on Technology & Innovation

when compared to other South Asian countries, Sri Lanka is placed third,
after India (76th), and Bhutan (86th). Bangladesh (129th) and Pakistan
(134th) are ranked much lower. Switzerland, United Kingdom and

introduced to enhance collaboration between research institutes and the

industry. Introducing a reward system to inventors will be another effective
means to encourage innovations.

Improve IP Protection Mechanism

Sweden are ranked on top while Singapore and China are ranked 7th and

Intellectual Property Act No.36 of 2003 is the legal framework under which

10th, respectively.

IPRs are currently protected in Sri Lanka. It provides protection via patents,
copyrights, industrial designs, trademarks, etc. Apart from that, Sri Lanka is a

By Dilani Hirimuthugodage

party to a number of international IPR treaties and agreements. However, Sri

Table 1: Gross Expenditure on R&D as a % of GDP in Selected Countries

T his year the world celebrates its 15th Intellectual Property (IP) Day on

Lanka to-date has been unable to implement a proper mechanism to protect

India

0.76

new plant varieties and rights of plant breeders, which is very important in

April 26th. Since 2001, the World IP day has focused on how IP

Singapore

2.43

enhancing innovations in the agricultural sector. Moreover, the country is still

contributes to innovations and creations, which ultimately help shape the

China

1.7

world. Moreover, the day provides an opportunity to encourage people to

Japan

3.36

Sri Lanka

0.16

think about the role played by IP in their day-to-day lives and its
importance in stimulating a countrys economic growth and wellbeing.

Source: Sri Lanka Science, Technology and Innovation Handbook: 2010,

National Science Foundation

In the process of development, the human mind and innovations play a

significant role. Thus, every country recognizes the importance of

R&D expenditure in Sri Lanka is low compared to some selected countries

encouraging innovations and creations and simultaneously protects the

in Asia (Table 1). Developed countries spend more than 2% of their GDP

intellects of its people. Sri Lanka too has introduced a number of policies

on R&D activities. The GERD benchmark figure for developing countries is

and programmes to drive innovations and foster creations while offering

1 % and Sri Lanka significantly falls short of this figure.

protection. However, Sri Lanka is still far behind in the number of

innovative outputs and in creating a strong protection mechanism for

What Needs to be Done?

inventions.

simple and faster registration process than patents.

Firstly, it is important to ensure an effective implementation of the existing IP
Act. Secondly, it is imperative to implement the proposed Act of 2011 on New
Plant varieties (Breeders Rights). Thirdly, it is a timely need to prepare a
strong and a proper protection mechanism for animals and microorganism.
Further, it is imperative to introduce a national policy for innovations in Sri
Lanka.

Awareness
It is essential to increase awareness among the public on the importance of
creativity and innovations towards a countrys economic growth while
protecting third party inventions. Public awareness could be improved

Sri Lanka has seen an increase in R&D expenditure since 2008. This has

through the Ministry of Science and Technology, Intellectual Property Office,

resulted in a significant increase in the countrys innovation indicators.

and other related institutions. Furthermore, increasing awareness on the

However, when compared to other developing countries such as China,

importance of protecting inventions remains essential amongst researchers,

The most common and formal methods in protecting innovations and

Malaysia, Thailand, and India Sri Lanka is lagging behind in the number of

universities, and scientists.

There are several indicators to measure the level of innovation and

intellectual property rights in Sri Lanka are trademarks followed by

innovations and protection of innovations.

creativity within a country. The expenditure on research and

patents and copyrights (Figure 2). It is noted that a high number of

development is one of the main indicators to identify a countrys

patents is issued for food and beverage process technology,

There are several policies and programmes introduced by several

support for innovations and creations. In Sri Lanka, Gross Expenditure

innovations in IT and telecommunications, and agricultural system and

ministries to improve innovations in Sri Lanka. The National Biotechnology

on Research and Development (GERD) as a percentage of the GDP

developments. Trademarks are popular in Sri Lanka as several

Policy, Science, Technology and Innovation Strategy for Sri Lanka

was 0.16 % in 2010. This was a 30% increase from 0.11% recorded

enterprises and products enter the market daily and these trademarks

2011-2015 are among such policies/programmes. However, the effective

in 2008.

differentiate the goods and services sold by them.

implementation of these remains questionable.

Sri Lanka at a Glance

07

unable to introduce utility model patents, which are cheaper, and have a

Dilani Hirimuthugodage, MEcon (Colombo)

Research Officer, IPS
dilani@ips.lk

08

TA LKING ECONOM ICS

Overcoming
Challenges of
Marine Pollution
for
Healthy Oceans
By Athula Senaratne

The World Ocean Day is celebrated on 8th June

every year. This years theme to mark the day is
Healthy Oceans, Healthy Planet. The selection
of this theme highlights the growing threat of
marine pollution that needs effective and
sustainable solutions.

Marine Pollution:
A growing Menace

arine pollution involves dumping waste substances into the sea

thereby reducing the quality of ocean environment that leads to
unhealthy conditions for all organisms including humans. Being an
island nation, the ocean plays a vital role in many aspects of the
everyday lives of people living in Sri Lanka. The most important among
these are food security, trade and cargo transportation, coastal
livelihoods, tourism, coastal protection and bio-diversity as well as
national security.
Besides serving as a source of many economically
useful products and services, oceans are the ultimate
sink of much of the waste created by humans not only
in their sea-based activities but also land-based
activities. Activities of a growing population have given
rise to increased loads of waste, of which a significant
portion eventually finds its way to oceans making them
unhealthier each passing day. Nevertheless, little is
known about sink functions of oceans and the ever
increasing problem of marine pollution is fast reaching
tolerable limits. Waste generated in both landbased
activities and sea-based activities are responsible for
marine pollution (Figure 1). Among the land-based
sources of marine pollution are municipal waste and
sewage disposal, pesticides and fertilizers from
agriculture, industrial waste from production facilities in
coastal areas, debris generated from numerous human
activities including tourism and waste from inland areas
washed off finally into the sea through

09

JUNE 8th
water courses. Major marine-based pollution sources include oil/chemical
spills from transportation of oil and accidents in the sea, off shore oil
exploration facilities, disposal of non-degradable litter substances by vessels
such as plastics, periodic dry docking and servicing of vessels, ballast water
discharges, deep sea mining activities and volcanic eruptions. It is not
difficult to see that a majority of both land- and sea-based sources are of
anthropogenic origin.

Marine Pollution in Sri Lanka

Sri Lanka experiences marine pollution originating from a variety of sources.
Heavy metal pollution can be seen in certain areas, which could be due to
land-based activities. Some studies also have reported heavy metal
accumulation in edible species in coastal water bodies. This has been
reported from Negombo lagoon, Bolgoda Lake and in sediments of Galle
harbour. Among the types of heavy metal reported were Ferrous (Fe), Zinc
(Zn), Cadmium (Cd), Copper (Cu) and Lead (Pb). These pollutants have been
reported in concentrations higher than permissible levels of coastal waters.
Apparently, industrial (e.g. Katunayake and Ekala industrial zones) and
municipal sources in surrounding areas are responsible for this situation.
A number of incidents on oil and chemical spills and marine accidents have
been reported from different locations of sea around the country (Table 1).

Table 1: Oil and Chemical Spills in Sri Lankan Waters

Source: Azmy (2013), BOBLME Country Report on Pollution

All these events have resulted in local pollution affecting the marine environment and associated organisms. The Marine Environmental Protection
Authority (MEPA) with the support of other agencies such as Coast

Conservation Department (CCD), Sri Lanka Ports Authority (SLPA) and the
armed forces has taken positive steps to minimize the damage from
certain events. Another problem is the invasive alien species (IAS)
brought in with ballast water. Studies have reported 26 previously
unrecorded species from the inner harbour area of Colombo, some of
which are found in the ballast water of ships. Some of these species are
potentially harmful and they have been reported in sea areas near major
ports. Above are some anecdotal evidence about the nature and scale of
marine pollution currently taking place in Sri Lankan waters. Scientific
studies on marine pollution are rare in Sri Lanka and more research and
monitoring activities are necessary to make a realistic assessment of the
situation. Despite the lack of scientific evidence, some trends are easily
identifiable and should be addressed before the situation worsens. The
country is making an effort to promote economic growth through trade
and that would invariably increase ship arrivals to Sri Lankan ports and
marine traffic in sea lanes around the island. With the rising number of
ships entering the country, problems of oil spills, marine accidents and
ballast water disposal are bound to increase. Even for someone casually
observing the countrys coastal areas, the accumulation of debris and
litter is evident. Not only ships, but coastal dumping and a growing
fishing fleet also are responsible for this. The country has just begun oil
explorations in off-shore areas that can also create marine pollution,
especially in the Mannar basin. Moreover, large scale poaching in Sri
Lankan waters by Indian fishermen has become a daily occurrence,
where the fishermen use harmful bottom trawling methods banned in Sri
Lanka, causing severe damages to the marine environment. So far, the
environmental outcomes of these actions have not been assessed.

Overcoming the Challenge

The ways to overcome the growing menace of marine pollution is not as
visible as the problem. The MEPA is the mandated agency in Sri Lanka
to address issues concerning marine pollution. Sri Lanka introduced the
Marine Pollution Prevention Act (MPPA) as early as 1981, around the
same time that the National Environmental Act (NEA) of 1980 was
introduced. However, like many environmental problems, marine
pollution also cannot be solved by efforts taken by a single line, single
agency or a ministry. As explained in this article, marine pollution has its
land-based sources as well as sea-based sources. Land-based sources
are handled by a variety of agencies that include the CEA, CCD and
municipal authorities. Sri Lankas efforts to manage land-based
pollution can hardly be considered as a success story and hence the
landward side of the problem is not under control. Despite failures,
however, this is entirely a source that is within the control of the
national jurisdiction, and as a result there is room for improvement
through our own efforts. The more contentious issue is the sea-based
sources, which are trans-boundary and international. We have limited
control of these sources and international cooperation is mandatory for
solving them. There are several international agreements and arrangements that deal with different aspects of marine pollution and Sri Lanka
is a party to many of them. Besides, there are regional arrangements
too. In spite of all these efforts, marine pollution continues to grow at a
rapid rate. It is a global threat that needs global solutions. We as a
nation should look after what is under our control while cooperating with
the world community to overcome this global menace.

Athula Senaratne, PhD (Deakin)

Research Fellow /
Head of Environmental
Economic Policy, IPS
athula@ips.lk

10

TA LKING ECONOM ICS

Adopting a

Blue Economy

Greater regional collaboration is

required to make the best use of ocean
resources

Approach in Sri Lanka

Meanwhile, from the policy perspective it is important to

ensure that proper information is available on different
types of ocean resources. This requires a stock taking
task. In line with that, it is important to identify the
possible use of such resources, environmental sustainability aspects and resource requirement in terms of financial,
human resources, and technological know-how.

By Kanchana Wickramasinghe

he development process known as 'Greening has been the

foremost topic of discussion for years, while Blue seems to be
the new colour entering the ongoing dialogue. Blue talks about
the use of ocean and its resources sustainably. The blue economy
approach will not replace but mutually support the green
economy, for the use of ocean resources.
The concept of blue economy stresses on the conservation and
sustainable management of oceans. It is related to the blue or
ocean capital and complements the green economy. Accordingly,
the blue economy approach recognizes the productivity of healthy
ocean ecosystems as a way to safeguard sustainable oceanbased economies, as well as to ensure that coastal countries
benefit from their marine resources

INTERNATIONAL MILESTONES
The oceans were on the multilateral negotiations agenda at the
Rio+20 Conference in 2012. The outcome document titled the
Future We Want highlights the oceans contribution to growth,
stating; We stress the importance of the conservation and
sustainable use of the oceans and seas and of their resources for
sustainable development.
The Abu Dhabi Declaration, adopted in January 2014 highlights a
blue economys contribution towards alleviation of hunger,
poverty eradication, creation of sustainable livelihoods, and
mitigation of climate change. Accordingly, the aspects which
were particularly highlighted are:
(a) Fisheries and their vital role in providing food security
and sustainable livelihoods,
(b) Tourism as a source of decent employment and a
contributor to poverty alleviation,
(c) Ocean as a source of renewable energy from wind,
wave, tidal, thermal and biomass sources,
(d) Ocean as a source of hydrocarbon and mineral
resources and,
(e) Ocean as the primary medium of global trade through
shipping and port facilities.
11

The commitment to strengthen the blue economy was made at

the 14th Meeting of the Council of Ministers of the Member
States of the Indian Ocean Rim Association (IORA) in Perth in
October, 2014. The maritime related economic activities were
identified as a common source of growth, innovation and job
creation. It further highlighted the need for expansion of trade
and investment within the region, including fisheries activities,
minerals exploration, development of renewable energy, and
coastal tourism, in order to stimulate growth and improve
regions food and energy security.
Countries which are blessed with ocean resources have already
begun to take policy level initiatives to increase the economic
gains of the oceans. Mauritius has already prepared the Ocean
Economy - A Roadmap for Mauritius in 2013. The roadmap
takes into account six principals; economic efficiency, equity,
ecological, social partnerships, safety and compliance with
international instruments.

OCEANS ROLE
Being an island in the Indian Ocean, Sri Lanka is endowed
enormously with ocean resources. Even now, the Indian Ocean
is making a notable contribution to various economic sectors of
the country, thus to the overall national output. Fisheries, trade,
agriculture, and tourism have been key sectors, which are
reliant on the ocean resources in Sri Lanka.

From the policy perspective it is

important to ensure that proper
information is available on different
types of ocean resources
Fishery and mineral resources in the Indian Ocean are of direct
commercial importance. However, there is much more to be
gained,

as highlighted in a previous article. For instance, fishery

resources are abundant in the deep sea, and Sri Lanka has not
tapped the existing potential. Deep-water fish stocks represent a
potential new frontier for commercial fisheries. There is also an
untapped potential for minerals such as polymetallic nodules and
polymetallic massive sulphides.
The coastal sediments contain titanium and zirconium tin. In
addition, the Indian Ocean possesses a number of energy
sources, including gas and oil reserves. The strategic location of
the country in the Indian Ocean has brought numerous economic
benefits to the country. Sri Lanka should be tactical in making
use of its geo-strategic position. It is time that the country
seriously adopts the blue economy concept and attempt to
increase the benefits of the ocean for its development, in a
sustainable manner.

THINGS TO NOTE
There has been no clear definition on the concept of the blue
economy, though various countries take different approaches to
adopt the concept. Good practices on the blue economy
approach are available rarely, or not at all. Therefore, it is
important that the country takes its own initiatives and
approaches to establish a strong blue economic component in the
overall economic framework.
It is imperative that the country identify ways in which the
contribution of the ocean can be enhanced towards national
development. Still, there can be many unknown factors regarding
certain aspects of ocean resources, due to technological and
research gaps. However, the country should prioritize areas it
can develop for creating a blue economy facet, in the overall
economic development framework.

We should not forget that the environmental and resource

degradation is already taking place in the ocean due to
human interventions. Ensuring the sustainability of the
resources makes the blue economy viable in the long
term. Land-based pollution, over-exploitation of certain
fish types, unsustainable harvesting practices are some of
the activities that threaten the sustainable utilization of
ocean resources. The Indian Ocean region as a whole
should particularly focus on four areas, namely, ocean
resources, energy resources, biosecurity and climate
change as highlighted earlier.
Apart from sectoral and national level responses, greater
regional collaboration is required to make the best use of
the ocean resources. Meaningful regional collaboration
can help technology transfer, multidisciplinary research,
fair utilization of resources, etc.
Sri Lanka plans to establish the Centre of Excellence on
Ocean Sciences and Environment, via the Indian Ocean
Rim Association (IORA), with the objective of promoting
such collaborations among Indian Ocean rim countries.
The initiative aims to enhance the sustainable utilization of
Indian Ocean resources and increase its role in the
economies of its member countries, including Sri Lanka.

Kanchana Wickramasinghe, MEcon (Colombo)

Research Economist, IPS
kanchana@ips.lk

12

TA LKING ECONOM ICS

DOES RESTRUCTURING
PROPERTY RIGHTS HOLD
THE KEY TO NATURAL
RESOURCE MANAGEMENT
IN SRI LANKA? By Chatura Rodrigo
generational equity. The total forest cover of Sri Lanka has declined
gradually from 31.23 per cent in 1992 to 28.74 per cent in 2010.
Figure 1 below shows different forest covers and their depletion over
time.

orld Environment Day 2015 is marked today (5th June),

under the theme "Seven Billion Dreams. One Planet,
Consume with Care." In this article to mark the day
Chatura Rodrigo highlights the importance of governing
forest resources in a sustainable manner by restructuring
the property rights systems.

Sri Lanka is rich in natural resources; filled with features including forest cover,
coastal ecosystems, inland water bodies, fauna and flora and geological
resources such as minerals and gems. While all these are equally significant in
defining Sri Lanka, forestry resources attract particular attention since it is
depleting at an alarming rate.
Forests produce many Ecosystem Goods and Services (EGSs) and provide an
income for communities. The rising populations demand for infrastructure and
awakening of local economies have resulted in an increase in the deforestation
for development and the extraction of forest resources for the increasing demand
of forest products. However, it is important to manage forests in a sustainable
manner, allowing sufficient consumption while ensuring inter and intra

Forests produce timber and Non-Timber Forest Products (NTFPs).

Commercial extraction of timber from protected forests in Sri Lanka is
prohibited. Protected forests are governed by the Forests Conservation
Ordinance of 1885 and land clearing and timber extraction is an
offence. However, timber extraction can be done through plantation
forests, especially grown to harvest timber. Furthermore, a significant
amount of forest products derive from home gardens. The most
important NTFPs are medicinal plants, rattan, bamboo, products of
hunting, products of kithul palm (Caryota urens), edible plants,
mushrooms, honey and pine resin. These products are extracted form
forests in a sustainable
manner and are directly linked to the livelihoods of people who reside
close to the forests. However, despite the rigid legal framework and
alternative forms of managing the timber demand, protected forests are
still being cleared for timber and colonization.

MANAGEMENT OF FORESTRY
RESOURCES IN SRI LANKA: THE
CURRENT PROPERTY RIGHTS REGIMES
Forestry is classified as a renewable resource. Given enough time,
forests have the ability grow back. However, the complexity of

Figure 1: Proportion of Forest Cover

Sparse forest
Mangroves
Riverine dry forest
Forest Types

Dry monsoon forest

2010

Moist monsoon forest

Lowland rain forest

1999

Sub Montne forest

1992

Montne forest
0.00
Source: UN MDG Sri Lanka Country Report, 2015

13

5.00

10.00

15.00

Percentage of Forest Cover

20.00

bio-diversity in forests needs a long period to restore. Therefore, if the extraction rate
of the timber and NTFPs are higher than the restoration rate, the forest resources can
deplete faster. In order to prevent this, like in all the other countries blessed with forest
resources, Sri Lankas forests are protected by law, which prevents over extraction of
forest resources by providing ample time for regeneration.

The colonized lands can be easily converted in to successful

home gardens. It can also be encouraged to grow timber
products that have a significant demand in such land lots,
which will help restore the loss of bio-diversity to a certain
extent.

In theory, property right regimes that govern natural resources such as forestry always
aim to keep the extraction rate of resources below the regeneration rate, allowing a
buffer stock to be developed. However, misallocation of property rights can either result
in over extraction, which leads to the Tragedy of Commons or under extraction,
which leads to the Tragedy of Anticommons. When forests are managed as an open
access resource where no one holds the rights to manage and utilize forests, everyone
has an equal chance of consumption and the probability for people to consume forest
products without preserving for the future is high. This will result in over extraction and
leads to the Tragedy of Commons. On the other hand, if the forest is managed by
more than one entity with equal rights of exclusion, theres a higher probability for
under extraction leading the Tragedy of Anticommons.

Community forestry is another significant initiative to manage

forest resources in a sustainable manner. Community forestry
management systems promote; alternative livelihoods,
collaborative management of specific forest areas to
control illegal extraction of timber or the unsustainable
harvesting of NTFPs, collaborative management of specific
forest areas with community participation, along with
awareness and fire control measures. It also promotes
improving home gardens to provide a source of timber,
materials for stakes and trellises, and fire wood that are easier
to collect and helps avoid forest degradation and the development of woodlots. In this initiative, the forest land is owned by
the state and its representative the department of forestry
while the management rights are given to the people.
Therefore, compared to an open access regime, this will help
monitor the use of forests resources by the regulating
authority.

Property rights that manage forests of Sri Lanka hold characteristics that, if misallocated, can drive towards either one of these situations. For example, NTFPs are
managed as an open access resource or a common property. The extraction of these
resources from forests does not have a set limit. Such a property right regime does not
have the capacity to prevent the extraction of indigenous medicinal plants. Sri Lanka
has a red list; fauna and flora are identified and categorized in order to take proper
measures to prevent the extinction of endangered species. However, allowing open
access can easily increase the probability of harvesting resources towards their
extinction limit. Extraction of medicinal plants as a NTFP is a better example of this.
On the other hand, forest clearance for colonization and development is highly
regulated. Several government institutions have the mandate to manage resources in a
forest and institutions such as department of forestry, department of wildlife divisional
secretariat office and ministry of resettlement are some of those. Such a property rights
regime holds the characteristics of an Anticommons property. When forest lands are to
be cleared for timber extraction and colonization, it is required to obtain the necessary
permission from all these institutions. Such a property right system can discourage
development and open the probability for forceful clearance of forests under political
influence and bribes. Therefore, managing forests under an Anticommons property
regime would drive the underutilization of forests and result in the Tragedy of
Anticommons in the eyes of development.

THE WAY FORWARD

Striking a balance between development and natural resource management is
important. An increasing population, urbanization and development of infrastructure
will demand more forests lands to be cleared. If theres a lack of clear allocation of
ownership, clearance of forests lands for development will be driven by political
influence and bribes. If management rights are clearly defined without lapping
jurisdictions, clear and transparent decisions can be taken on whether or not to use a
particular forest land for development. Therefore, it is important that management of
forest lands for development is vested with a minimum number of government
institutions that are less likely to be influenced by political pressure or bribes.
Despite drawbacks in terms of forest cover decrease and bio-diversity loss, deforestation for colonization and development present opportunities. Rather than clearing
forests just to build houses and buildings, forest clearance for development can be
done through a more sustainable and coordinated manner. In a colonization process,
private land titles are mostly given to people. However, these land titles do not reflect
clear characteristics of private property rights. Instead they are permits issued by local
government authorities. Clear ownership of private land can significantly motivate the
implementation of satiable land use management practices.

Plantation forestry is also a major source of timber in Sri Lanka,

which is in operation since 1870S. While there are government
owner plantation forestry establishments, there is an increasing
emergence of private ventures. The main property right regime
that drives these private ventures is the private property. One
approach is that, the people can invest in the land and then
purchase plants from the private company and sell the trees
back once they reach maturity. This provides the land owners
the responsibility of managing the timber lot. The other
approach is to invest in the land lot owned by the private
company where people can only own the timber trees.
Finally, forest based eco-tourism initiatives have also proven to
be useful in sustainable forest resource management in Sri
Lanka. In this approach the forest land is privately owned by
the operator of the eco-tourism venture and managed in such a
way that it preserves the bio-diversity of the environment.
Interested tourists can visit these lands and pay a fee in
enjoying the environment. Tourists are not allowed to consume
forest products. The approach has now been successfully
expanded in to tea and rubber sector also. This system of
eco-tourism has proven to be more sustainable in managing
forests than the usual way of managing forests by government
institutions. Since the forests are privately owned, they are
managed well and kept at its best to attract more tourists and
support many local livelihoods.

Chatura Rodrigo, MSc (Guelph)

Research Economist, IPS
chatura@ips.lk

14

TA LKING ECONOM ICS

Integrated

Water Management and

Sustainable Urbanization
in Sri Lanka

By Chatura Rodrigo and Athula Senaratne

ri Lanka is fast becoming urbanized with low

S
density urban sprawl and ribbon development

Meeting the demand for water of a growing

along the main roads of the countrys coastal

for policy planners of urban development. The

areas. During 2005 2010, the country had an

countrys vision on urbanization involves

average urban population growth rate of 0.3 per

development of many physical infrastructures

cent, which was amongst the lowest in Asia.

such as buildings, roads, railways and

However, this has gradually started to change

industries, which will attract many people to

with rural to urban migration, with the end of the

urban areas. They will demand more domestic

conflict in the countys North and East. An

and industrial water, creating pressure on

increasing trend in urbanization can be observed

natural water bodies. Water availability for both

in many areas, and statistics do not capture this

industrial and domestic consumption will also be

correctly. The projected increase in urbanization

affected by climate change. Low lying urban

will create challenges, and ensuring the

areas will be prone to inundation with heavy

countrys sustainable development will rest

rainfalls and floods while dry spells will create a

upon how effectively these challenges are

high demand for industrial and domestic water.

addressed.

In this context, it is imperative to look at

15

urban population is one of the major challenges

World Water Day 2015 is celebrated

on March 22 under the theme
Water and Sustainable Development.
In this article to mark the day,
Chatura Rodrigo and Athula Senaratne
highlight the importance of Integrated
Urban Water Management in meeting
the demand for water in a fast
urbanizing Sri Lanka.

Sri Lankas vision on urbanization and potential

drawbacks connected to the increased demand
for water.

Sri Lankas Urbanization Vision and

Potential Water Demand
Under the National Physical Plan of Sri Lanka
(2011-2030), Sri Lanka aims to focus on five
metro regions Colombo, North-Central,
Southern, Eastern, and Northern and nine
metro cities Ampara, Anuradhapura,
Batticaloa, Colombo, Dambulla, Hambantota,
Jaffna, Polonnaruwa, and Trincomalee. These
regions are to be connected and integrated into
a country-wide system of urban areas. At
present, there are more than 15 mega projects

Water is a basic necessity, a

human right of urban as well
as rural population. At the
same time, water is a limited
resource.
associated with development of town centers in
Sri Lanka. Urban regeneration efforts include the
construction of 70,000 low cost housing units in
the next six years. These are intended for
relocation of residents presently living in
under-served settlements in the city of Colombo.
All of these developments will create demand for
more water. Water is a basic necessity, a human
right of urban as well as rural population. At the
same time, water is a limited resource.

What are the Challenges?

Demand for safe water has been increasing by
8-10% each year. Most urban water supply
schemes do not have the capability for providing
a 24-hour service. When it comes to addressing
water related matters, the urban sector faces a
number of challenges.

Current State of Affairs

While the urban water supply is mainly

dependent on surface water, the degree of
dependency on ground water appears to be
rising. Storage reservoirs have limited capacity,
and no expansions have been done in the recent
past. In addition, in the dry season, salt water
intrusion occurs. . Being an island, urban flood
management is vital for Sri Lanka. In order to
account for flood issues, hydrological assessments are needed. However, these assessments
are done with models with limited verifications.

While the usage of freshwater for the countrys

agriculture has decreased, the usage of water in
both domestic and industry has increased.
Currently, 87.37% of freshwater is used for
agriculture, 6.22% and 6.42% for domestic and
industry usage, respectively.

Monitoring of the quality of water bodies that

supply pipe borne water is poor. From time to
time cases of water pollution are reported, and
activities by individuals as well as industries
create negative environmental externalities,
which costs private as well as public resources .

The increase in domestic and industrial water

usage is prominent in the urban sector compared
to rural and estate sectors. Achieving the demand
created by urban settlements is reflected in the
statistics on access to safe drinking water.
Compared to the rural and estate sectors, access
to safe drinking water of households is high in
the urban sector. The coverage figures have
increased from 96.8% in 2009 to 98.7% by 2012.
Among the safe drinking water sources, pipe
borne water is the safest. Approximately 75%
and 14% of urban and rural population respectively are served by pipe borne water. Domestic
demand for billed water is around 66% of the
total demand. Industries as a whole demand 9%
of the water sold. Furthermore, Sri Lanka has
been successful in providing exclusive sanitation
facilities to a higher share of the urban households when compared to the households in the
rural and estate sectors. The urban sector will
require more pipe borne water as population
density increases and industries expand.

In managing urban water, different agencies

have different areas of jurisdiction which often
overlaps. . In the Colombo metro region, most of
the water and sanitation infrastructure dates
back to the colonial era, and a majority of the
pipes that carry water and sewage are old and
malfunctions from time to time, sometimes
resulting in leaks. A proper financial mechanism
is needed to fund the expansion and the repair
of the water supply infrastructure in urban
areas.

In addition, waste water disposal is also a major

concern in the urban sector. The share of water
used by the urban population in Sri Lanka is
projected to increase to 45% by 2015 and to 65%
by 2030, which is bound to increase the pressure
to meet the national targets for drinking water.

people without proper access to water and

sanitation. By providing water services of
appropriate quantity and quality would
invariably lead to improve the health and
productivity of urban residents.

The Way Forward

Managing urban water demand calls for
innovative actions. In this regard the Integrated
Urban Water Management (IUWM) is considered
an innovative and optimistic way of managing
water demand linked to urbanization.
IUWM calls for the alignment of urban development and basin management to achieve
sustainable economic, social, and environmental
goals. Planning for the water sector has to be
integrated with other sectors, such as land use,
housing, energy, and transportation. Adopting
IUWM and its adaptive, iterative processes will
help cities to significantly reduce the number of

16

TA LKING ECONOM ICS

Good Environmental
Management Practices
in the Hotel Industry
in Sri Lanka:

Determinants
and Barriers

are most common water management practices among the

hotels that participated in the survey. Some of the water
management practices need the participation of the
customers to save the amount of water consumption. For
instance, correct handling of dual flush toilets, linen and
towel re-use, etc., require customers involvement.
However, other water management practices, such as low
flow showers and taps, re-use of treated waste water and
sensors in toilets directly lead to water savings, irrespective
of customer involvement.

Figure 2: Commonly Adopted Energy Management Practices

In terms of solid waste management, over 65 percent of the

hotels waste is collected by the municipal council. Good
solid waste management practices include composting
(22%), recycling (22%), and solid waste segregation (18%).
In addition, the study looked at waste water management,
and found that 42 percent of the hotels have sewerage
treatment plants.

By Kanchana Wickramasinghe

ith the tourism sector in Sri Lanka recording remarkable growth in the recent
past, it is imperative to ensure such growth is environmentally sustainable. In this
regard, the accommodation should receive foremost attention given its expansions
both in terms of investments in new hotels and refurbishments of existing hotels in
the country. Around 37 registered hotels have been added during the period
between 2009 and 2013, according to the statistics of Sri Lanka Tourism Development Authority. Currently, adoption of good environmental management practices is
taking place in the hotel industry but on a voluntary basis. It is important to
understand what motivates hotels to adopt good environmental management
practices, and identify barriers to their adoption so that such activities could be
encouraged.
A recent IPS study looked at the adoption of good energy, water and waste management practices in hotels in Sri Lanka. The findings of the study were based on
econometric analysis using data gathered through a comprehensive survey of
registered hotels in the Western Province, which has the highest number of hotels at
provincial level. On average, the study found that 7.81 good environment practices
are currently in place. Of the different good environmental management practices,
those relating to energy were the most commonly adopted followed by water, solid
waste and waste water practices. It was interesting yet not surprising to note that,
comparatively large hotels (with more than 50 rooms) perform better than their
smaller counterparts. For example, the total number of good environmental
management practices (energy + water + waste) is around 9.3 in large hotels
compared to the figure of 5.6 in small hotels.

Energy, Water, Waste Water and

Solid Management Practices
Most commonly adopted energy management practices include; the use of energy
efficient lighting methods (88%), use of solar power (69%) and key switches (60%).
However, the contribution of each practice towards energy savings depends on the
intensity of adoption. For instance, possible savings due to energy efficient lighting
is dependent on the proportion of energy efficient bulbs used in a hotel.
The study also found that dual flush toilets (79%) and linen and towel reuse (56%)

17

Determinants in the Adoption

of Good Environmental
Management Practices
The study assessed factors which determine the number of
good practices in energy, water, and waste management
adopted in hotels. Accordingly, the size of the hotel, percentage of guests for leisure purposes, number of employees per
room, and the location of the hotels determine the adoption of
good environmental management practices. Also, hotels that
have undergone capacity building, training and were provided
awareness support, demonstrated better environment
management practices.

Barriers to Adoption
An important finding of the study is that the barriers to adopting
good environmental management practices are not the same
among small and large hotels. The most commonly observed
barrier for the large hotel category is the perception that cost of
adopting good practices exceeds the benefits. Under the small
hotel category, the most observed barrier was that environmental management is not a top priority. Lack of financial
resources and constraints due to the structure of hotels and
limitations in space were also significant barriers.

Policy Attention for an

Environmentally Sustainable
Hotel Industry
Policy-wise it is important that more attention is given to small
hotels to improve their environmental management activities,
as they are lagging behind. Space and structural constraints

are common barriers for adopting good environmental management practices. This
indicates that environmental management should be considered at the initial stage of
designing hotels or when considering refurbishments.
These findings call for greater awareness, training and capacity building support to
improve environmental management practices in the hotel industry and thereby
promote sustainable tourism in Sri Lanka.

This article is based on the study undertaken with financial

and technical support of the South Asian Network for Development and
Environmental Economics - SANDEE.

18

TA LKING ECONOM ICS

INSIDE IPS
IPS CLIMATEnet is a website dedicated to

processes. The CLIMATEnet is thus aimed

Visit IPS CLIMATEnet at

sharing ideas, information, insights, news

at creating a dialogue on different aspects

http://www.ips.lk/climatenet/index.html

and resources on how to face the

of climate change policy. The ultimate

challenge of climate change. While its

goals of this exercise are to inform policy

main focus is on South Asian region with

makers on better strategies and to create

particular attention on Sri Lanka, it is open

awareness among stakeholders on

to views and ideas on climate change

different aspects of the challenges faced.

policies from anywhere in the world that

CLIMATEnet aims to build up a fruitful

can make a useful contribution to the

collaboration with professionals from all

dialogue .

relevant disciplines on the basis of mutual

benefit and cooperation. It also hopes to

Climate change is a global problem that all

improve outreach to various stakeholders

nations are destined to face together. It is a

and build linkages necessary for a fruitful

complex problem demanding complex

policy dialogue. In this connection,

policy interventions to address multiple

CLIMATEnet welcomes and appreciates

issues. This calls for combined action of all

contributions by all who wish to participate

countries throughout the policy making

in this important dialogue.

You can also visit the CLIMATEnet

Blog at http://climatenet.blogspot.com/

How long have you been with

IPS and what is your role at
the Institute?

research has not touched upon or referred to as

an afterthought. Good environmental research
is required to help better make decisions on
sustainable development.

This is my 10th year at the IPS. I have been

working on many areas related to environment,
such as natural resource management, climate
change, tourism, disaster management, green
economy etc.

What is your agenda for

environmental research at IPS?

What inspired you to choose

Environment as an area of
specialization and what
aspect of environment are you
most passionate about?
Kanchana Wickramasinghe
Research Economist
Kanchana holds a Masters
Degree in Economics from the
University of Colombo and a
BSc specialized in Agricultural
Economics and Business
Management from the University
of Peradeniya. She has also
completed a post-graduate
diploma in Universalizing
Socio-Economic Security for the
Poor at the International Institute
of Social Studies (ISS),
The Hague, Netherlands.

I followed science subjects during my

secondary education, and as a part of the
university education where I chose to specialize
in economics. I believe that blend of two
backgrounds science and economics - is
ideal for a researcher working on environmental
economics. Naturally I choose environment as
my area of specialization. I am passionate
about researching on environmental sustainability issues in tourism, maybe because
travelling is something I enjoy a lot in my life.

What are your career

related achievements?
As a researcher, I am proud of winning the First
prize for the Japanese Award for Outstanding
Research on Development (ORD) at the Global
Development Awards and Medals Competition
of the Global Development Network (GDN) in
2014. I also received the Top Outstanding
Young Persons (TOYP) in Sri Lanka Award 2014
for Personal Accomplishment, and was the only
female to receive the award in 2014. I have
also received the Presidents Award for the
work published in the WHO Health Bulletin,
which I am proud of.

Why do you think Environmental

research is important to Sri Lanka?
Environmental issues have been largely
neglected in policy decision making in Sri Lanka.
There are a lot of areas where environmental

19

I hope to expand the research work on

sustainable tourism in Sri Lanka. Also, I would
be working on climate change, particularly
climate related risk management in the coming
years.

What advice can you give career

starters who are keen to explore
this line of work?
A good understanding and background on
environment and economics is required at the
first step. One should be skilled at formulating
good research questions which are policy
relevant and feasible. Technical skills and
proper communication skills are also needed. I
also feel you should be passionate about
environment related affairs and be keen on
researching on those. I would also think that an
interest in conducting field research as an
added qualification.

What aspects of your personal

life help you do your job well?
Enormous support I receive from my family - it
helps me achieve a good work-life balance.

What do you feel is the biggest

environmental issue the world
is facing today, and how can that
be tackled?
Climate change has become the mostly
discussed global issue today. International
cooperation is a must to mitigate climate
change. Meanwhile countries should focus on
adaptation measures to minimize the impacts
of climate change.

20

TA LKING ECONOM ICS

The National Medicinal Drugs

Pricing

Regulatory Authority Bill which

The price of medicines is another concern as it is likely

to affect access to affordable medicines.
According to the Act, there is no clear indication of
pricing policies related to medicines. The Authority is
to appoint a pricing committee to formulate a
mechanism which will determine medicine prices,
after considering the prevailing international and
regional market prices of similar products. According
to media reports, the Committee that drafted the Act
assured the public about the quality of medicine, and
prices are expected to come down in the short-term
and decrease further in time to come.

provides provision for the formation of a Medicinal Drugs Regulatory Authority was passed in
Parliament with amendments on
6th March 2015. In this article,
G D Dayaratne takes a look at
the challenges in effectively
implementing the Policy.

National Medicinal
Drug Regulatory
Authority Bill and the
Medicinal Drug Policy
of Sri Lanka:

Some Challenges
By G D Dayaratne

History and
Emergence of National
Drug Policy
The concept of essential medicine was initiated
in 1962 with the establishment of National
Formulary Committee to reform the selection of
drugs for the government drug supply.
Subsequently, as per the recommendation of the
1971 Bibile-Wickramasinghe Report, the Ceylon
Hospital Formulary was prepared and the total
number of drugs were reduced from 2,100 to
630 under their generic names and the usage of
brand name drugs was greatly reduced. These
were pioneering initial steps in Sri Lankas drug
policy.
Although attempts to develop a National Drug
Policy by the Ministry of Health were made in
1991 and 1996, they never reached the level of
the Cabinet for approval. The Report of the
Presidential Task Force on Formulation of a

21

National Health Policy for Sri Lanka, which

wasestablished in 1992, recognized the
need for a National Drug Policy but it was neither
comprehensive nor well defined. In 2005, the
Ministry of Health worked out a comprehensive
draft for a National Medicinal Drug Policy for Sri
Lanka which was approved by the Cabinet in
October 2005. However, it was stopped at Cabinet
level due to well-known reasons. After the new
government came into power in 2015, it was
submitted to the Parliament and ratified.

Salient Features of
the New Medicinal
Drug Act
The new Act provides for the establishment of a
National Medicines Regulatory Authority responsible for the regulation and control of registration,
licensing, manufacturing, and importation, and
conducting of clinical trials. Making available of
efficacious, safe and good quality medicine is one
objective of the Authority.

Brand-name
vs. Generic
According to the Act, doctors shall write the
generic name of the medicine with the option
of writing the brand name on request.
Successful implementation of this passage
depends on the behaviour of over 10,000
pharmacies spread across the country. Most of
these pharmacies are well looked after by the
players in the pharmaceutical industry. The
general perception is that the pharmacists will
try to exploit the new law as the pharmaceutical industry has been highly unregulated,
despite Clause 56 (4-6) specifying pharmacist to dispense any other brand of drugs with
the consent of the customer. Countrywide
pharmacies are operating, in an unregulated
environment, and proper implementation
would be difficult as drug inspectors have
cultivated friendly relations with pharmacies.

The arrangement on pricing shows a clear departure

from the Bibile concept on which Sri Lankas first
National Drug Policy was established in 1971.
According to that, an essential drug list was introduced
by a new formulary and the number of essential drug
reduced to 630.
According to various reports, the country presently
imports over 10,000 varieties of drugs. However, there
is no mention of introducing a hospital formulary in the
newly enacted Act which is an essential element of
pragmatic drug policy to provide safe and quality
medicine at affordable prices.

Present Status of
Drug Regulatory
Regime

Challenges
The National Medicinal Drug Authority Regulatory Bill, which was
recently passed in Parliament, is one of the healthiest gifts to the
people, after a delay of almost ten years with several attempts to derail
or dilute the move. The Bill has two major lapses as mentioned below.
The Act had laid down three conditions for the registration of medicinal
drugs. They are quality, safety, efficacy, while omitting the cost factor,
which is the most important factor related to access to affordable
drugs.
According to the Act, the doctors are required to write the generic
names of drugs along with any brand names prescribed. However, it
does not mention if the doctors will be held liable and any action will
be taken against them in case they fail to adhere to this requirement.
In the case of pharmacists, the Act clearly states that a pharmacist
who fails to disclose the brand of a medicine available at the pharmacy
together with a generic medicine and their prices to the customer at
the time of sale, commits an offence.
It has been reported in various quarters that the new Bill ratified in the
Parliament is a National Medicinal Drug Authority sans a National Drug
Policy. Also, there has been a serious lapse by not providing enough
time and space for the civil society groups to review the contents of
the Bill before it was submitted for the approval of the legislature.
Introducing a pricing mechanism for essential drugs is going to be an
extremely difficult task given that over ten thousand varieties of drugs
are imported today. Without the introduction of a National Hospital
Formulary, which includes an essential drug list, the task of pricing
drugs will remain a challenge.

Sri Lankas drug procurement process follows various

stages, including registration, selection, procurement,
distribution, and service delivery, which were designed
to be transparent. The registration process guarantees
the drugs safety and efficacy, but various news
reports highlight that the credibility of this system has
eroded due to the pharmaceutical industry lobby. The
registration of new drugs takes almost one year and
involves tedious bureaucratic procedures. This has led
to an increase in circulation of unregistered drugs that
undermines the objective of regulation to ensure the
supply of safe drugs.
Moreover, the countrys National Drug Quality
Assurance Laboratory (NDQAL) does not have the
capacity to test all drugs imported into the country.
There are also weaknesses in post-marketing
surveillance due to restrictions in capacity as a result
of shortages in necessary manpower to inspect
pharmacies.

G D Dayaratne, BA (Peradeniya)
Manager - Health Policy Programme, IPS
dayaratne@ips.lk

22

TA LKING ECONOM ICS

Patient
Waiting
Times in
Private
Hospitals:
A Growing
Concern in
Sri Lanka
By Shanika Samarakoon

Figure 1: Individual responses on actual and expected waiting times

Expected waiting time (EWT) (minutes)

aspect of the patient experience,

influences patient satisfaction to a

the patient encounter. In Sri Lanka,

long waiting times at private
healthcare providers is commonplace.
A fundamental reason behind this is

23

10 to 20

5 to 10

about 5

<5

AWT<EWT

AWT>EWT

0
1

<5

about 5

5 to 10

4
10 to 20

> 20

Actual waiting time (AWT) (minutes)

Patients sometimes travel great distances to consult a

cancellations. Furthermore, patients are not briefed on who is

REDUCING WAIT TIMES

IMPACTS THE PATIENT
EXPERIENCE

responsible for their care, the hospital or the visiting specialist

Shorter waiting times can make an important positive difference in the

particular specialist and they are not fully compensated when

DOCTORS CONSULT AT MULTIPLE

HOSPITALS IN A SINGLE DAY

doctors are late. They are also inconvenienced by unannounced

At present, a permanent cadre of doctors is not available at private hospitals

doctors. In this regard, both the monetary and time costs to

(except in Lanka hospitals which was introduced recently). Doctors, therefore,

the patient are high.

consult at multiple hospitals, sometimes, as many as six to seven hospitals

and there is often only a narrow time gap (sometimes as low as 15 minutes
or half an hour) between scheduled appointments at different hospitals.
As a result, doctors who consult at multiple hospitals inevitably arrive late to
most of their scheduled appointments because they are either held up in their
previous consultation commitments or held up in traffic (Dayaratne, 2013).[ii]

significant extent. It is, however,

an often overlooked component of

in a single day. Private hospitals in Colombo are scattered across the city

Patient waiting times, an important

> 20

times can be avoided or at least kept a minimum to improve the

patient experience. Given that Sri Lankas households are continually

NEED FOR A PERMANENT CADRE OF

SPECIALISTS AND AN OPTIMUM
REFERRAL SYSTEM

spending large portions of their income on private healthcare, it is

Having a permanent cadre of specialists consulting in one

[i] RAM ratings (2013). Private Pills for Public Pains.

hospital at a given time would considerably minimize

the issues pertaining to long waiting times.

PATIENT EXPERIENCE ON EXPECTED AND

ACTUAL WAITING TIMES

patient experience. It is, therefore, necessary to look into how waiting

When a hospital has a permanent cadre, if one specialist

is unavailable, another will be available to consult patients.
Lanka hospitals is one key player in the industry

necessary to ensure that they receive proper value for the

money they spend.

The Private Healthcare Sector of Sri Lanka. Standpoint Commentary.

[ii] March 2013. Colombo, Sri Lanka.
Dayaratne, G.D. (2013). Private Hospital Healthcare Delivery in
[iii] Sri Lanka: Some Issues on Equity, Fairness, and Regulation.
Research Studies. Working Paper Series No. 18.

who now has doctors consulting throughout the day at

Institute of Policy Studies of Sri Lanka. Colombo.

A pilot survey on patient satisfaction conducted by the IPS was used to obtain

the hospital. Furthermore, Sri Lanka needs an optimal

The survey is based on a forthcoming IPS report on Value for money

information on expected and actual waiting times.[iii] Figure 1 shows the link

referral system. A referral system is where

in healthcare services in Sri Lanka.

between actual and expected (what the patient thinks is an acceptable

a general practitioner (GP) refers a patient to a specialist.

the doctor-centric approach of the

waiting time) waiting times as reported by respondents.Area AWT>EWT

The absence of such a mandatory system has

healthcare delivery model; where

below the reference line is the area where the reported actual waiting time

resulted in patients going directly to specialists,

hospitals in the private sector facilitate

is greater than the reported expected waiting time. Area AWT<EWT

in turn creating long queues and waiting times in private

above the reference line is the area where the reported actual waiting time

hospitals. If a mandatory referral system exists

doctors rather than patients

is less than the reported expected waiting time. The size of the bubble

in the country it can not only reduce waiting times but

(RAM, 2013).[i]

indicates a proportion of respondents; the bigger the bubble, the bigger the

also allow specialist doctors to spend more time with

proportion of respondents.

their patients during a consultation.

Shanika Samarakoon, PhD (Nottingham)

was a Research Economist at IPS.

24

TA LKING ECONOM ICS

Food
Additives
Are
They
Safe?
By Samanthi Bandara

ave you ever stopped to consider that your

day-to-day meals, particularly the
packaged/processed food, contain varieties of
added substances, which are made of synthetic
chemicals? When you read the list of ingredients in
the food labeling/packages, you can see different
substances named with INS or E numbers, some
of them you may have never heard of or some
names are very hard to read. These substances
are called Food Additives. In this article, Samanthi
Bandara takes a look at how the use of food
additives is threatening the safety of the food we
consume.
More than any other time in history, people are
conscious about food they consume where they
come from and how they are produced. Unlike in
the past, when ancestors harvested their own food
for consumption, most food consumed today
comes from unknown sources and the food value
chain is increasingly becoming modernized along
with developments in science and technology.
Together with structural changes -- population
growth, urbanization, and globalization peoples
lifestyles and food habits have changed, accelerating demand for processed and convenient food. In
this regard, food additives play a key role in the
food processing industry, making a variety of food
available from every corner of the world.
Since prehistoric times, people have used spices
and salt as ingredients for food preservation. In Sri
Lanka, traditional techniques such as soaking in
honey, salting, pickling, and smoking were

found to be used to preserve and prepare

vegetables, fruits and meat by Veddas, aborigines
or indigenous people.. The first patent for food
additives was taken by the US in 1886 for a
mixture of salt and calcium phosphate as a food
condiment.

Are
food additives
essential?
Over the last 50 years, food additives have
revolutionized the food industry, moving with
advanced technology to cater to the increasing
demand for convenient, tasty and nutritious foods
as well as increasing overall demand for food with
population increase.
Thousands of food additives made of synthetic
chemicals introduced by the US Food and Drug
Administration (FDA) are now used by food
industries all over the world. According to the
book, Staying Healthy Shoppers Guide: Feed Your
Family Safely by Elsom M. Haas, food industry
commonly uses these substances to:
improve shelf life or storage time,
make food convenient and easy to prepare,
increase the nutritional value,
improve the flavour of foods,
enhance the attractiveness of food products
and improve consumer acceptance.

Food additives can be categorized based on the purpose of

each additive. Generally speaking, there are 6 types of food
additives; they are preservatives, nutritional additives,
flavoring agents, coloring agents, texturizing agents, and
miscellaneous additives.

What needs
to be done?

Growing
concerns in
Sri Lanka

It is important for countries to carry out regular dietary exposure assessments

Despite the multiple purposes of additives, there are emerging

hard facts with regard to the use of food additives, which raise
concerns.
One of the main concerns is the adverse reactions to food
additives by individuals. To run a safety analysis for a range of
dosages, each additive is fed to an animal. Thereafter, the FDA
recommends the safe dosage of each chemical substance for
human use. Many studies have found harmful effects of over
dosage of certain chemicals on animals. For instance, Monosodium Glutamate (MSG - INS 621 or E 621) popularly known as
Ajinomoto, discovered by the Chinese and Japanese about 1,500
years ago, is used universally as a flavour enhancer.

to examine the harmful effects of food additives on human health. The results of
such assessments can be used to spread awareness amongst people. It is well
known that over-consumption of any food item can have an adverse effect.
Likewise, eating food containing additives often and in large quantities may
have health implications later in life. Therefore, it is advisable to avoid food that
contains synthetic chemicals, as much as possible. Moreover, it is difficult to
point out whether the reactions to additives are mild or severe. Therefore, those
who suffer from allergies or food intolerances should carefully check the
ingredients listed on labels.
As per the Food Act of 1980, proper labeling in food products is a must.
However, listing the ingredients on labels is not adequate. It is important to list
the quantity of each ingredient used, along with nutrition information. This will
provide the necessary information for consumers about each ingredient, to help
balance their daily food intake.
Another major issue is that packed/unpacked food items such as rice, kottu,
hoppers, thosai, etc., prepared by food venders do not contain labels to state the
type of ingredients (e.g., salt, sugar, and other additives) and quantities used. .

MSG is made up of two chemicals -- sodium (salt) and glutamate.

Glutamate or amino acid can also be found in natural food stuff
such as mushrooms and tomatoes. It is said that MSG does not
bring any nutritional value to the food, but stimulates taste buds by
exciting the brain cells. A study found that a large part of neurons
in brains of infant mice can be destroyed by feeding large amounts
of MSG. Research has also found other adverse effects of MSG on
human health, including headache, facial pressure, chest pains,
burning sensation, wheezing, and difficulty of breathing a
collection of symptoms often called Chinese Restaurant
Syndrome.

As a result, consumers are not able to gauge the safety of such food. In Sri
Lanka, there are frequent media reports of unsafe/unhygienic food items being
sold by vendors for human consumption. This highlights that the availability of
policies or regulations is not adequate.
While it is important to identify and take necessary action against those who
violate such regulations, a number of measures are required to facilitate this
process. These include recruiting adequate staff by relevant authorities (e.g.,
Public Health Staff), imposing high penalties within short periods in line with the
law, providing adequate laboratory facilities for testing, etc., which are essential
for the proper implementation of regulations to ensure safety of food we

However, the use of this substance in food products in Sri Lanka is

permitted under the regulation No. 1795/51 in the Food Act, No.
26 of 1980. Importation of MSG into the country has seen an
increase over the years. According to Custom data, Sri Lanka
imported 1,772 tons of MSG worth Rs. 316 million in 2009 these
figures have increased to 2,740 tons of MSG and Rs. 499 million
by 2013. Like in many other countries, Sri Lankan consumer
movements have also raised their voices demanding the
authorities ban MSG, particularly in food preparations at school
canteens. However, no policy decision has been taken yet.
Another area of concern is that food additives in general accelerate
attention-deficit disorder (ADA), and attention-deficit hyperactivity
disorder (ADHD). A study found that hyperactivity increased in
3-year-old and 8-9 year old children who consumed juices
containing artificial food colours and preservatives. In addition,
additives are likely to lead to increase asthma among children.

25

consume.

This article was written to coincide with the World Health Day 2015.

Samanthi Bandara, MSc(Chulalongkorn)

Research Officer, IPS
samanthi@ips.lk

26

TA LKING ECONOM ICS

cancer, respiratory diseases (e.g., asthma) and diabetes account for 82% of all NCD
deaths globally. NCDs are the leading cause of deaths globally and three quarters of the

Figure: 1. Prevalence of selected metabolic/physiological risk

factors for NCDs (Population aged 18+ years, 2010)*

market that are considered to be not as healthy as expected. In particular, many

food products have additives such as artificial colours and preservatives that
exceed permitted levels. There are also regular media reports of expired food items

deaths (8 million deaths) now occur in low and middle income countries.

being sold in the market, which raises the question of the extent to which the
prevailing laws are enforced.

Unhealthy Diets and NCDs

Unregulated advertisements can also have adverse impacts on food choices of

Unhealthy food can be defined as food high in saturated fats, trans-fats, free sugar or

consumers. In fact, some studies have found advertisements to be a determinant

salt. According to the WHO, an unhealthy diet is one of the four modifiable behavioural

of an obesogenic environment that is, an environment that promotes weight gain

risk factors that increase NCDs. Other risk factors include: tobacco use, physical

and is not conducive to losing weight. Many developed and developing countries,

inactivity, and harmful use of alcohol.

such as the US and Taiwan have established effective initiatives to prohibit

unethical food advertisements to combat obesity and other chronic diseases.

Frequent unhealthy diets increases obesity/weight gain, which is a risk factor of chronic

Taiwan, which has the highest obesity rates in Asia, has recently drafted a Bill to

NCDs such as cardiovascular disease, diabetes and cancer. Globally, more than 1.9

prohibit advertising of five kinds of junk food on children's television channels. In

billion people are overweight while more than 600 million are obese. According to the

Sri Lanka too, enforcing strict rules and regulations on unethical advertisements,

WHO, annually, 3.4 million adult deaths occur worldwide due to overweight/obesity.
While, this problem is prevalent in higher socio-economic settings, it is also on the rise
in low and middle income countries. In Sri Lanka, prevalence of obesity in persons aged
18+ years was 3.5% and 10% amongst males and females, respectively (Figure 1).

Let Food be
Thy
Medicine
By Samanthi Bandara

which promote unhealthy food is an area that needs policy attention, especially to
Source: WHO (2014), Global Status Report an Non-Communicable
Diseases 2014, Geneva

Statisticson overweight were much higher. Obesity and overweight have become an

NCD status in Sri Lanka

acute problem among children due to overindulgence in high calorie food and indoor

In Sri Lanka, 75% of the deaths are estimated to be caused by

leisure activities (e.g., television, internet, computer games, etc.). Moreover, children are

cardiovascular diseases, cancer, chronic respiratory diseases,

increasingly subjected to advertisements that promote fast/processed food, which have

diabetes and other NCDs. The number of NCD related deaths in

a detrimental impact on their diets and health.

2014 was 60,300 and 43,500 among males and females

respectively. Although it is said that NCDs are often associated

People from Sri Lanka as well as many countries across Asia are displaying unhealthy

with older age groups, almost half of the male deaths and more

diets and consumption patterns reflected by a low intake of fruits and vegetables, high

than one-third of female deaths were under the age group of 70

consumption of salt and sugar, and extensive use of trans-fats in the food industry. Half

years.

Figure: 2. Percentage of Mortality by Cause, 2014

Cardiovascular diseases
14%

vegetables. While this is common among both males and females in Sri Lanka, among

Figure 2, provides a break down profile of deaths by diseases in

Let food be thy medicine and medicine be thy food, said

women 100 out of 83 do not consume an adequate amount of fruits and vegetables a

Sri Lanka. 40 % of the deaths can be attributed to cardiovascular

Hippocrates, who is considered the Father of Modern

day (less than five servings).

disease, followed by cancer and other NCDs such as

obesity/overweight, respiratory diseases and diabetes.

Cancer
Respiratory diseases

11%

40%

10%

Diabetes
Other NCDs

7%

a million deaths in the Southeast Asian region are attributed to low intake of fruits and

Medicine, over 2000 years ago. He recognized the impact

safeguard the health of the countrys young population.

8%

10%

Communicable diseases
and other conditions
Injuries

Source: WHO (2014), Non-Communicable Diseases Country Profiles 2014

http://www.who.int/nmh/countries/en/(last access 9th March 2015)

good food has on good health, as the food we consume not

In addition, the consumption of salt and sugar in todays diets are high. Current

only sustain our lives, it also prolongs the quality of life.

estimates suggest that the global mean daily intake of salt is around 10g (4g of sodium

Not only are NCDs the main cause of deaths in Sri Lanka but the

a day). This is substantially higher than the recommended limit of the WHO (5g of salt or

number of hospitalization due to NCDs appears to be increasing. In

Consumers also need to be made aware of the quality of food products they

With globalization and rapid urbanization over the years,

2g of sodium a day). A Sri Lankan adult is estimated to consume over 12.5g of salt per

fact, NCD prevalence in Sri Lanka is substantially higher compared

consume. This calls for programmes to raise health literacy amongst consumers,

peoples food habits have substantially changed along with

day. The high consumption of salt is associated with hypertension (high blood pressure)

to some Asian countries. In terms of NCD mortality, Sri Lanka is

which can be provided through various channels including electronic and print

their lifestyles. This has shifted the traditional healthy meal

and cardiovascular problems. Hypertension is found to be more prevalent among people

placed third (66%) in the ranking, behind Maldives (79%), and

media, community health workers, and school curricular. In addition, the Ministry of

that consists of whole grains, fruits, and vegetables (high

with an average salt intake of 13.8 g per day, compared to salt intake of 4.9 g per day.

Thailand (71%).

Health, and the private sector can target school children/teenagers, housewives, as

fibre, low fat, and low calorie food), towards calorie-dense

According to WHO, excess salt intake is the key contributor of 1.7 million annual deaths

foods that are high in saturated fats, trans-fats, sugar and

from cardiovascular causes in 2010. In Sri Lanka, the prevalence of high blood pressure

salt.

was around 21.9% and 21.5% for males and females, respectively in 2014 (Figure 1).

well as white-collar workers when to implement programmes on healthy lifestyles

Towards a Healthy
Food Culture

including diets - through Corporate Social Responsibility programmes.

Towards promoting a healthy lifestyle and prevent cardiovascular diseases, the
College of Community Physicians of Sri Lanka in 2012 launched the Super 8

This is causing significant health problems around the

The high consumption of sugar is directly associated with obesity/weight gain and

Chronic diseases create financial burdens not only on individuals,

initiative in partnership with the National Nutrition Secretariat, the Ministry of Health

world, particularly giving rise to Non Communicable

dental caries. Similar to salt consumption recommendation, the WHO recently

and the health system, but also adversely affect the countrys

and the Department of Agriculture. The Super Eight includes: 1) developing a

Diseases (NCDs), also known as chronic diseases. While

introduced a new guideline to reduce sugar intake. As per the recommendation, adults

productivity and national income.

healthy Body Mass Index (BMI) of 18.5 - 24.9; 2) avoiding excessive consumption of

NCDs cannot be transmitted from person to person, the

and children, particularly non-diabetic people, are strongly advised to reduce the daily

diseases last over a long period and progress slowly.

intake of sugar to 5-10 % of their total energy intake. This is roughly about 25 grams or

Towards combating NCDs, there is a need to strengthen the

fruit and vegetables every day; 6) avoiding food that contains trans-fat; 7) giving up

According to the World Health Organization (WHO) 38

6 teaspoons of sugar per day. At present, individual sugar consumption in Sri Lanka is

existing policy/legal enforcement governing food value chain from

smoking and alcohol consumption; and 8) maintaining blood pressure below

million people (68%) die due to NCDs each year. Of which,

about three times higher than the recommended amount. Prevalence of raised blood

production to advertisement in the country. According to Liyanage

140/90. Evidently, being conscious about the food we consume is vital; as a healthy

the main types of NCDs including cardiovascular diseases

glucose/diabetes in Sri Lanka among persons aged 18+ years was 7.7 % and 9.1 % for

(2009 & 2010), 60 % of Sri Lankan consumers are not satisfied

diet is an integral part of a healthy lifestyle. Therefore, as the father of medicine

(e.g., heart attacks and strokes),

males and females, respectively.

with the quality of food, and the types of food available in the

once said Let food be thy medicine.

27

salt and 3) sugar; 4) engaging in moderate exercise; 5) eating five servings of fresh

28

TA LKING ECONOM ICS

Towards
Healthier
Diets in
Sri Lanka:
The Role of Nutrition
Labeling
By Raveen Ekanayake &
Chayanka Wickremesinghe

World
Consumer
Rights Day
March 15
In this article to mark World Consumer

Unhealthy diets are linked to four of the ten

biggest causes of deaths worldwide:
overweight and obesity, high blood pressure,
high blood glucose and high cholesterol. In
2010, it is estimated that over 11 million
deaths globally resulted from
Non-Communicable Diseases (NCDs) linked to
unhealthy diets. The impact of poor diets on
health now exceeds that of smoking. The effect
of obesity (US$ 2 trillion per year) on global
GDP is now equivalent to the cost of war, gun
violence and terrorism. Increased productions
of processed food, rapid urbanization, and
changing lifestyles have led to a shift in dietary
patterns. Increasingly, people around the world
are preparing less food from raw ingredients
and buying more processed, pre-packaged
food. Over the last decade or so, global sales of
pre-packaged foods have increased by 92 per
cent, reaching 2.2 trillion US dollars by 2012.
This increase in production, promotion, and
consumption of processed foods that are
unhealthy - energy dense, nutrient poor and
high in fat, salt or sugar - has become a global
driver of unhealthy diets in high, middle, and
low-income countries.
The growing incidence of NCDs linked to
unhealthy diets has gradually led to more
consumers becoming conscious of the inputs
that go into the production of the food items
they consume. Labeling, nutrition labeling in
particular, has been widely recognized as a
powerful tool in allowing consumers to quickly
and easily interpret the nutritional value of
packaged foods and inform and help them
decide on their diet. This article takes a cursory
look at the importance of nutrition labeling, the
regulatory environment concerning labeling,
and issues pertaining to the effective
implementation of such regulations.

at the forefront on the minds of the consumers.

In some cases, consumer behavioural patterns
can be observed as a result of such labeling.
For instance, the inclusion of unhealthy
ingredients on the labels would encourage or
motivate consumers to switch to alternative
product which they deem to be healthier.
However, if the nutrition content of the
products is not labeled, the consumer cannot
make an informed decision. As a result,
labeling offers a certain degree of minimal
protection for consumers.

Ensuring Coherence
in Information
In addition, regulatory agencies must seek to
ensure coherence in the information provided
in these labels. The flavour enhancer
mono-sodium glutamate commonly referred to
as MSG is one such example. The consumption
of MSG is commonly linked to symptoms such
as diarrhea, headaches, and insomnia.
However, when it comes to labeling, there is
no mention of MSG. Rather it is substituted by

The current set of regulations governing food

labeling in Sri Lanka, mandates that in addition
to the date of manufacture and expiry, product
labeling must clearly disclose all ingredients
and permitted additives used in the product.
However, there is no mandatory requirement
on the disclosure of nutrition related information. With growing health concerns due to the
consumption of unhealthy foods, from a
consumers view point, it is important that
regulatory authorities implement mandatory
nutrition label requirements on processed and
prepackaged foods for sale.

Need for Mandatory

Nutrition Labeling

a range of associated terms such as yeast

extract, glutamate, glutamic acid, etc. Hence
there is a tendency for consumers to be misled
by the information provided. Due to the
absence of specific mandatory guidelines
governing the type of nutrition related
information included on a label, firms have the
opportunity to pick and choose nutrition related
information that best suits the marketing needs
of their product, and leave out essential
information that are key for consumers in
making an informed decision.
Regulatory authorities must develop a set of

labels. Understanding nutrition labeling is

closely linked to nutrition knowledge of a
consumer. For nutrition labeling to be effective,
it is first and foremost important for consumers
to have a basic understanding of nutrition,
which will aid them in choosing prepackaged
foods. Studies suggest that the level of
knowledge and use of food labeling information
increases with age, level of education and
family income. It is therefore pivotal that
targeted consumer awareness programmes be
implemented to boost the general publics
knowledge on nutrition. In India, a number of
initiatives have been organized at the
grassroots level with the involvement of the
regulatory agencies, business, both local and
multinationals and the NGO sector in improving
consumer knowledge on basic nutrition facts.
In Sri Lanka too a leading apparels manufacturer and a leading public school has teamed
up with a local NGO to raise awareness on
nutrition knowledge amongst its constituents.
Encouraging such initiatives in the country will
help improve consumer knowledge on
nutritional values of the food they consume.

guidelines and make it mandatory to include

key nutrition facts on the labels of food
products in order to ensure uniformity of

What Can be Done?

For instance, the inclusion of unhealthy

information. This will also guarantee that the

ingredients on the labels would encourage or

consumers are not misled by the provided

The growing incidence of NCDs associated with

motivate consumers to switch to alternative

information. Likewise an ingredient naming

unhealthy diets poses a serious public health

product which they deem to be healthier.

convention must be established. For instance,

challenge for governments across the world

However, if the nutrition content of the

the US Food and Drug Administration (FDA)

including Sri Lanka. Nutrition labeling has been

products is not labeled, the consumer cannot

stipulates that firms must always list the

recognized as a key tool in the governments

make an informed decision. As a result,

commonly used names of ingredients unless

arsenal in tackling this problem.

labeling offers a certain degree of minimal

there is a regulation that provides a different

protection for consumers.

term,for example, using the term sugar

Many governments in the developed world

instead of its scientific name sucrose.

have recognized this and mandated compulsory nutrition labeling requirements on

The current set of regulations governing food

Need for Mandatory

Nutrition Labeling

well consumers take notice of these nutrition

labeling in Sri Lanka, mandates that in addition

to the date of manufacture and expiry, product
labeling must clearly disclose all ingredients
and permitted additives used in the product.

Raising Consumer
Awareness
by Improving
Nutrition Knowledge

prepackaged products. For effective implementation of such regulations, it is key to establish

a specific set of labeling guidelines to ensure
consistency and transparency so that the
consumers are not misinformed or misled by

Rights Day (WCRD) 2015 under the theme

Consumers around the world are increasingly

However, there is no mandatory requirement

becoming conscious of what goes into the food

on the disclosure of nutrition related informa-

Healthy Diets, Raveen Ekanayake and

they eat. Moreover, a large number of health

tion. With growing health concerns due to the

conscious consumers look for key information

consumption of unhealthy foods, from a

Whilst nutritional labeling is a useful tool to

In this regard, the regulatory authorities must

presented on the Nutritional Facts given on

consumers view point, it is important that

highlight essential information about the

work together with the private sector and

take a look at the importance of nutrition

product labels. For example, the amount of

regulatory authorities implement mandatory

nutritional value and composition of products,

relevant NGOs to raise nutrition knowledge and

carbohydrates, calories, vitamins, minerals,

nutrition label requirements on processed and

the effectiveness of such regulations in

awareness to promote healthy diets in the

labeling to promote healthy diets.

cholesterol, sodium are some nutritional facts

prepackaged foods for sale.

promoting healthy diets, rests largely on how

society.

Chayanka Wickremesinghe

29

Raveen Ekanayake, MPP (ANU)

Research Officer, IPS
raveen@ips.lk

the information given in the labels.

Chayanka Wickremesinghe
Project Intern, IPS

30

TA LKING ECONOM ICS

EMERGING FOOD
STANDARDS:
A CAUSE OF CONCERN
FOR THE SRI LANKAN
TEA INDUSTRY
By Janaka Wijayasiri

STANDARDS GOVERNING TEA

EXPORTS FROM SRI LANKA

Compliance costs: The most common challenge faced by the exporters was
the compliance cost which involved upgrading factories, audit/certification fees,

In order to export tea, companies have to comply with local and foreign standards
and regulations pertaining to food quality and safety. These are usually mandatory,
product standards. In this regard, tea has to comply with ISO3720 product
Table 1: Food Safety and Other Standards Governing Tea Exports from Sri Lanka
Standards

Public/private Mandatory/voluntary Product/process

ISO3720; Foreign matter, Public

micro-biological, heavy
metal & pesticide residue
limits

Mandatory

ISO9001,
ISO22000

Voluntary

Process

Voluntary

Process

HACCP, Public

Fair Trade, Organic, BRC, Private

Private Codes of Conduct

Product

Tea exporters from Sri Lanka have

been able to meet various standards,
and ship tea to some of the most
stringent markets in the world. However, they still face a number of
difficulties in complying with such
standards, which needs to be
addressed in order to ensure that Sri
Lanka remains a one of the leading tea
producing and exporting countries

consultant fees, training costs, etc. All of these add up to a substantial amount
and contribute towards increasing the total cost of production. They are unable
to pass this cost to the buyers as it makes them uncompetitive in the market.
Whilst exporters were willing to bear various costs associated with standards,
they were frustrated about the lack of monetary return for compliance.

Changing the mindset of workers: Apart from implementation costs,

many companies faced internal resistance to their adoption. Initially, exporters
found it difficult to change the mindset of workers to fall in line with the
standards, although they are now more or less compliant. Training has to be
continuous as workers tend to revert back to their old ways.

of issues including social and environmental concerns. Commonly

stated private standards by tea exporters include: BRC (British Retail
Consortium) Global Standard, Organic, Fair Trade (FT), Ethical Tea
Partnership (ETP), and Rainforest Alliance (RA), which have been
collectively set and monitored by third party agencies. There are also

Proliferation of standards: This is also becoming increasingly challenging

for exporters, as there is multiplication of costs (certification and audit fees,
etc.) and effort (in maintaining various documents). Exporters are also
disillusioned that different versions of the same standard are brought out
regularly, requiring them to continuously upgrade in order to comply with the

private standards or private codes of conduct, specific to individual

latest version of the standard. While there have been some efforts towards

buyers; for example, supermarkets (i.e., Japanese supermarkets)

harmonization between various private standards, proliferation of private

and fast-food chains (i.e., McDonalds) have their own set of

standards is likely to continue in the foreseeable future.

standards and requirements. The emergence of private standards

reflects a growing interest by buyers, and ultimately consumers,
about the conditions under which tea is produced.

ASSISTANCE FOR COMPLIANCE

While tea exporters have managed to comply with standards and regulations,

COMPLIANCE CHALLENGES
So far, tea exporters from Sri Lanka have been able to meet various

O ver the last two decades, there has been a tightening of

public standards, a shift from product standards to process

standards, an increase in the importance of private standards
and a widening scope of standards. These developments have
raised concerns amongst developing countries, as standards
can become non-tariff measures with falling tariffs. Failure to
comply with standards could potentially result in loss of
international market, a decrease in employment and a decline
of an industry. However, compliance offers the possibility of
enhancing international competitiveness and encourages the
advancement of an industry.
Sri Lankas tea industry, which is predominately export
oriented, is increasingly governed by strict and complex
standards. This reflects the evolving trends in the standards
environment globally. The main standards that affect the tea
exports from Sri Lanka are listed in Table 1. They can be
classified according to public/private, product/process, and
mandatory/voluntary.

31

standards, and ship tea to some of the most stringent markets in

they still have to overcome a number of challenges in order to stay competitive

in international markets. In this regard, exporters require assistance to comply
with the changing standards environment.

standard for black tea. In addition to ISO3720, the Sri Lanka Tea Board requires

the world. However, they still face a number of difficulties in

Forms of assistance required include financial assistance (loans with low

tea exports to comply with other product standards, including foreign matter,

complying with such standards, which needs to be addressed in

interest rates, and longer pay back periods), and technical assistance to comply

micro-biological contamination, heavy metal and pesticide residue limits, which

order to ensure that Sri Lanka remains one of the leading tea

(training). There is also the need to harmonize standards as there is duplication

are specified and monitored by the Tea Board.

producing and exporting countries.

of costs and an effort to comply with different requirements of various countries

and buyers, and obtain accreditation for laboratories operating in the country.

International food assurance standards such as Hazard Analysis and Critical

Lack of testing infrastructure and human resources:

Control Point (HACCP) and ISO22000 (Food Safety Management System) are also

Although there are a number of laboratories operating in country

Given that standards are likely to multiply and become further complicated in

increasingly becoming important in the tea trade. While these standards are

both government and privately run they are not accredited to

the future, the government and the industry should provide exporters the

voluntary at the moment, compliance with either HACCP or ISO22000 is becoming

undertake tests for certain chemicals. For example, the Tea Board

necessary support to comply with such standards and ensure continued access

necessary and considered as de facto mandatory standards. Initially, companies

has set up a state of the art laboratory, but it is not accredited while

selected ISO9001, which is a quality management system (QMS) but with the

the government-run Industrial Technology Institutes (ITI) laboratory

introduction of HACCP and subsequently ISO22000, which are more relevant to the

can analyze only certain chemicals. Similarly, private laboratories

food industry, tea exporters are switching to HACCP and/or ISO22000 certifica-

are not accredited for certain chemicals. As a result, it is

tions. The drive towards obtaining these standards in the tea industry gathered

sometimes necessary to send tea samples abroad to either to

momentum when the EU stipulated in 2006 that food imports including tea into

Singapore or to India for testing. The absence of fully-accredited

Europe must meet the HACCP standard.

laboratories is compounded by lack of qualified scientific personnel

to the global tea value chain.

to conduct tests. In the case of Tea Board, not only is the laboratory
In addition to the mandatory and voluntary public standards, there are a number of

not accredited but the Analytical Laboratory Division does not have

private standards which have been voluntarily adopted by tea exporters. These go

qualified staff to do testing despite the huge demand to get tea

beyond the realm of public standards in food quality and safety, and cover a gamut

samples screened.

Janaka Wijayasiri, PhD (Monash)

Research Fellow / Head of International Economics Policy, IPS
janaka@ips.lk

32

TA LKING ECONOM ICS

THE WORLD NO TOBACCO DAY

IS MARKED ON 31 MAY 2015.
IN THIS ARTICLE TO MARK
THE DAY, G.D. DAYARATNE
TAKES A LOOK AT THE STEPS
TAKEN BY SRI LANKA TO
JOIN THE GLOBAL FIGHT
AGAINST TOBACCO SMOKING.

TOBACCO
SMOKING

AN ISSUE OF
UN-AWARENESS
By G D Dayaratne

TOBACCO
USE HAS
BOTH IMMEDIATE
AND
LONG-TERM

killing nearly 6 million people worldwide. According to the World Health

LARGER PICTURE, HEALTH WARNING

Organization (WHO), tobacco use has killed 100 million people in the

Hard-hitting anti-tobacco advertisements and graphic pack warnings

20th century and could increase to one billion in the 21st century. One

especially those that include pictures reduce the number of children who

person dies every six seconds due to tobacco use, which accounts for

begin smoking and increase the number of smokers who quit, says the WHO.

one in 10 adult deaths. The WHO says up to half of current users will

In January this year, the Government of Sri Lanka approved a proposal to

eventually die of a tobacco-related disease.

revise Clause 34 of the National Authority on Tobacco and Alcohol Act. The

obacco kills half of its users, with smoking and smokeless tobacco

QUITTING

BENEFITS

With increasing evidence that tobacco is harmful and is the leading

cause of various diseases and deaths, many countries are now
taking action. Amidst these developments the tobacco giant Philip
Morris, an American company, which offers seven of the largest
selling brands of cigarettes in the world, is suing Uruguay arguing
that the warning labels (80 per cent) leave no space for its
trademarks. The company has already filed an expensive lawsuit
on Australia and if it wins against Uruguay, it could run cases
against more than a hundred other countries. Uruguay is known for
having some of the best anti-smoking laws in the world.
In a media report, the CEO of the Ceylon Tobacco Company (CTC)
Felicio Ferraz, pointed out that whilst regulations are important, the
move to bring in graphic health warnings will open the doors for
inferior illicit products to cloud the market. According to media
reports, in 2012 authorities detected 56 million illicit sticks
attempted to be smuggled into Sri Lanka valued at over LKR 1.35

amendment, presented as an urgent Bill in Parliament, made it compulsory for

Smoking prevalence is a key indicator for smoking-related diseases as

CHALLENGES FOR
PICTURE WARNINGS

billion and within the first five months of 2013, authorities

tobacco companies to carry a pictorial warning covering 80 per cent

confiscated over 40 million illicit sticks.

well as health inequalities. Smoking has been identified as the single

biggest cause of inequality in death rates between rich and poor in

Meanwhile, CTC makes a significant contribution to the govern-

most countries. Death rates from tobacco are two to three times higher

ment revenue every year. According to the Central Bank of Sri

among disadvantaged social groups than among the better off.

Lanka (CBSL), the amount rose to LKR 61.3 billion in 2014 from

Long-term smokers bear the heaviest burden of death and disease

58.5 billion in 2013, 53.5 billion in 2012 and LKR 49.6 billion in

related to their smoking.

2011 , under the trade of nine brands of cigarettes. The CTC says
while its industry is a controversial one, its share value spiked from

Tobacco consumption also gives rise to a number of

LKR 800 to LKR 1,400, within a year registering a 5% increase

Non-Communicable Diseases such as cancer. According to reports,

amidst challenges.

cigarette smoke contains over 4,800 chemicals, 69 of which are

known to cause cancer. In Sri Lanka, around 25,000 cancer patients
are registered at cancer units in state hospitals countrywide. The

of the pack with information on serious health hazards that could arise from

Government has allocated LKR 40,806 million for the 2013 - 2016

smoking. The Cabinet also decided that the penalty for companies that do not

period to provide radiology treatment for cancer patients. The amount

conform to these regulations will be increased to a fine of LKR 50,000/= and

of funds allocated for this purpose this year is LKR 1,500 million.

one year in jail. The health warnings should be changed once in six months.

According to a WHO survey conducted in 2013, in Sri Lanka, smoked

As recognized by the guidelines to implement Article 11 (packaging and

tobacco prevalence was 15.7 per cent among youth and 22.8 per cent

labelling) adopted under the WHO Framework Convention on Tobacco Control,

among adults. Sri Lankas Household Income and Expenditure Survey

well-designed package warnings are a highly cost effective means to increase

of 2012/2013 indicate that the average household spent 2.7 per cent

awareness of the health effects and reduce tobacco use. Accordingly, there

of their monthly income on tobacco and liquor.

has been tremendous progress internationally in implementing package

warnings, with many countries increasing the warning size. Progress since

ASHES TO ASHES, DUST TO DUST !

WHAT CAN SRI LANKA DO?

Statistics by various authorities clearly indicate that smoking and
tobacco consumption in Sri Lanka is on an unprecedented rise.
Such a trend has long-term health consequences costing governments extraordinary amounts of money for the care of those
afflicted with smoking-related diseases.

Like any other addiction, quitting tobacco use has both immediate and

2012 includes Thailand increasing the size of picture warnings from 55 per

Over the years, Sri Lanka has taken many steps to address this

long-term benefits.

cent to 85 per cent, Nepal implementing 75 per cent picture warnings,

issue for the well-being of its population. Increasing the size of the

Amidst measures taken by Sri Lanka to curtail the consumption of

Jamaica from 33 per cent text to 60 per cent pictures, Uruguay implementing

pictorial warning in cigarette packets is one step taken by many

tobaccos use among its citizens is the approval of a 2014 Cabinet

its 7th round of picture warnings at 80 per cent, and Sri Lanka going from 60

countries that are alarmed at the rise of smokers in their population,

Paper to appoint a Presidential Task Force to control tobacco and

per cent in 2014 to 80 per cent in 2015. In addition, a new EU Directive will

which Sri Lanka has also implemented. In addition, in joining the

alcohol consumption, with the aim of building a society free of tobacco

require picture warnings to cover the top 65 per cent of the package front and

global fight against tobacco, it is time for Sri Lanka to take some

and alcohol.

back, effective 20th May, 2016.

pragmatic steps with the aim of building a society free of tobacco.

33

34

TA LKING ECONOM ICS

MILLENNIUM DEVELOPMENT
GOALS SRI LANKAS ACHIEVEMENTS
& CHALLENGES AHEAD
By Wimal Nanayakkara

The Millennium
Development Goals (MDG)
Country Report 2014,
compiled by the Institute
of Policy Studies of
Sri Lanka (IPS) was
recently launched in
Colombo in partnership
with the United Nations
(UN) and the Government
of Sri Lanka (GoSL).
In this article,
Wimal Nanayakkara, Senior
Visiting Fellow of IPS
takes a look at how far
Sri Lanka has come in
achieving these goals.

2
Achieve universal
primary
education

followed by a set of Millennium Develop-

Poverty
Gap Ratio:

26.1
6.7%

5.6 1.2

Net enrolment
rate in primary
school:
88.0 99.7%

Promote gender
equality &
empower women

94.2 99.4%

Secondary Education 102.6%

4

Reduce child
mortality
5
Improve
maternal health

Under ve
Mortality Rate: 22.2
11.3 (per 1000
LBs)

2015. There are 44 MDG indicators in

Combat
HIV/AIDS, malaria
and other
diseases

total, of which 27 have clear targets.

Table 1 gives a snapshot of the status of
MDGs at national level for Sri Lanka. The

HIV
Prevalen
ce:
less than
0.01%

HIV
Access to
antiretrov
iral drugs:

of these indicators by 2012/13 (based on

TB
Deat
h
Rate
: 7.5
1.
1

Prop.
of TB
cases
detecte
d: 58
73%

7
Ensure
environmental
sustainability

Prop. of land covered

by forest:
33.8 29.6%

the available data) and 11 were on

track to be achieved by 2015. Only two

Already
achieved

Almost
Achieved

Prop. population
using an improved
drinking water
source: 68.0
89.7%

Prop. of
TB cases
cured
under
DOT short
course:
86.3
(2005)
84.9%
(2008)

(per 100,000
population)

indicators in the base year (1990 or

Sri Lanka has achieved the targets for 13

118
109

34.0%

table also compares the status of the

closest).

Prevale
nce of
TB:

75.4113.
8%

Antenatal care
coverage (at least
one visit): 95.8
(in 2006/07)

Prop. of births
attended by skilled
Birth Attendants:
94.1 99.8

Malar
ia
death
rate:
0.8
0.0

Tertiary
Education

Prop. of 1 year old

children immunized
against measles: 95.5
95.0%

Infant Mortality
Rate: 17.7 9.4
(per 1000 LBs)

Maternal Mortality Ratio

(per 100,000 live births):
92.033.3

ment Goals (MDGs), to be achieved by

closest) with the current status (2013 or

Upper Sec.
Education
107.7%

91.2%

which needs urgent attention is targeting of social protection programmes,

achieve some targets well ahead of schedule.

which will help the most vulnerable groups in the country.

While Sri Lanka has made considerable progress pertaining to

most of the indicators at national level, there are still

gaps and regional variations are highlighted below, which may

help in taking suitable action to make an effective final push
towards achieving MDGs in all the regions of the country. The
details on Sri Lankas MDG achievements, gaps and regional

Prop. of population
using an improved
sanitation facility:
69.0 87.2%

SRI LANKA HAS BEEN SUCCESSFUL IN ACHIEVING ALL 3

TARGETS RELATED TO UNIVERSAL PRIMARY EDUCATION:
More than 97.8 % of the children aged 6 to 10 years and more than 95 % of
the children aged 11 to 14 years, are attending school in all the districts by
2012/13, showing the effectiveness of making education compulsory for
children aged 5 to 14 years in 1998.

variations, as well as some suggestions to minimize those, are

given in the Millennium Development Goals Country
Report 2014.

92.7 97.8%

Lower Sec.
Education

related to MDGs have helped to accelerate the progress and

Literacy rate
in the age
group 15 24 years:

64.1 100.0%

Primary
Education

Prop. of
population
below minimum
energy
consumption:
51.3 47.8%

Prevalence of
underweight children
(under 5 years): 29.7
21.1%

Prop. of pupils starting

grade 1 who reach grade
5:

In 2000, world leaders signed the

Millennium Declaration, which was

Poverty:

ties across all the regions, especially for women. Another important factor

regional planners and policy makers. Few of the identified

Status (gures are for Base Year Latest) for 27 indicators

Eradicate extreme
poverty and
hunger

regional economic development, which will create more employment opportuni-

and living conditions. More recent policies and programmes

considerable regional variations, which need the attention of

Table 1: Snapshot of the Status of MDGs at National Level, by 2012/13

Goal

have contributed to the impressive results in education, health

HOWEVER, AFTER 14 YEARS OF AGE, A DECLINE IN THE

PERCENTAGE OF CHILDREN IS OBSERVED IN ALL DISTRICTS:
Only 86 % of those aged 15 to 16 years are in school and only around 60

SRI LANKA HAS ACHIEVED THE TARGET

OF HALVING POVERTY AT THE NATIONAL
LEVEL SEVEN YEARS BEFORE 2015
DEADLINE:

%continue their education after 16 years, at national. Regional variations are

high. It is important therefore to increase the compulsory age for schooling to 16
years, as early as possible. It is also critical for Sri Lanka to improve the quality
of education, as well as the education outcomes at secondary and tertiary levels.
Sri Lanka has already reached gender parity in primary education. In secondary

National poverty incidence declined from 26.1 % in 1990-91

to 6.7 % in 2012-13. All districts, except those in the Northern
and Eastern Provinces and Monaragala District in Uva
Province, have already achieved the target of halving poverty.

and tertiary education, the proportion of girls to boys exceeds 100 %, indicating
that more boys leave school earlier than girls, which may need the attention of
education planners. Another factor which needs attention is the very low
representation of women (5.8 %) in the Parliament.

In Monaragala District, poverty increased to 20.8 % in

2012/13, even though it had achieved the MDG target in
2009/10 with a poverty rate of 14.5 %. The Jaffna and
Ampara Districts, which were earlier affected by the separatist
war have progressed well since 2009/10.

FREE HEALTH CARE SERVICES FOR ALL, INCLUDING

PREVENTIVE HEALTH SERVICES, FOR MORE THAN SIX
DECADES, HAVE HELPED SRI LANKA, IN REDUCING INFANT,
CHILD AND MATERNAL MORTALITY TO A VERY LOW LEVEL
COMPARED TO MOST OTHER COUNTRIES IN THE REGION:

Poverty in Jaffna declined from 16.1 % in 2009/10 to 8.3 % in

2012/13, while in Ampara District poverty fell from 11.8 % to

Sri Lanka is on track to achieve the target of reducing both the under-five and

5.4 % during the same period. The regional disparities clearly

infant mortality rates by two-thirds the level of the base year (1990) by the

indicate the need for continuous monitoring and focused

end of 2015. The

attention of planners and policy makers.

proportion of one-year-old children immunized against measles increased

from 95.5 % in 1993 to 99.0 % in 2011. However, proportion declined to 95 %

POVERTY GAP RATIO (PGR), WHICH

MEASURES THE DEPTH OF POVERTY,
HAS ALSO DECLINED SHARPLY SINCE 1995:

in 2012, which needs the attention of health authorities. Maternal Mortality

Ratio (MMR) declined from 92 deaths per 100,000 live births in 1990 to 33.3
in 2010 and is On track to achieve the target. The proportion of births
attended by skilled attendants, has almost reached the target of 99.8 % by
2010. The Family Health Bureau (FHB) of Sri Lanka has taken many initiatives

On track

O track

The PGR fell from 6.6 % in 1995/95 to 1.2 % in 2012/13,

in recent years to enhance the quality of maternal and child care. Although Sri

universal health care, and a number of

indicating an overall reduction in the level of poverty even for

Lanka has done well in improving maternal and child health, nutrition status of

welfare programmes which were

those below the poverty line. However, income inequality gap

children under five years, is still a major concern, as more than one fifth of the

persists. As such, the focus of policy may need to be on

children under five years, are under weight.

indicators were off track. Free education,

implemented for more than six decades

35

Key

Note: Refer - unstats.un.org/unsd/mdg/Resources/Attach/Indicators/OfficialList2008.pdf, for official list of MDG indicators;

Base year 1990 or closest and Latest, 2013 or closest (based on the availability of data)

36

TA LKING ECONOM ICS

IPS
CAREERS
The primary strength of the IPS is its talented, dedicated and
hardworking staff. The Institute provides an exciting opportunity to
contribute to leading issues facing the nation as the IPS works closely
with government, the private sector, donor agencies, and academia.
We provide an environment conducive to highly effective independent
research and the professional growth of our staff.
Recruitment of new staff is based on need, and occurs periodically
throughout the year. For current job openings, please visit our

ALTHOUGH SRI LANKA REMAINS A LOW HIV/AIDS

PREVALENCE COUNTRY, THE NUMBER OF CASES IS
GRADUALLY INCREASING:

website: h t t p : / / w w w . i p s . l k / i n d e x . p h p / c a r e e r s - a t - i p s

LAUNCH OF THE MDG COUNTRY

REPORT 2014

Through 2012, a total of 1,649 HIV cases and a total of 432 AIDS cases have

controlled. Sri Lanka has managed to bring malaria cases down from around

Internship Programme

400,000 in the early 1990s to 124 cases by 2011 and has no malaria related

The IPS internship programme offers short-term attachments to currently enrolled students

provided me with insight into policy making and the

deaths since 2007: Country should be vigilant to prevent a reoccurrence, as

or recent graduates in economics or closely related fields. They provide an opportunity to

extent to which research in economics could contribute

the disease has re-emerged whenever mechanism for preventions has

work with a senior researcher on a specific research project, or to obtain a wider experience

to improving the standards of living in Sri Lanka,

weakened,.

across research areas. The positions are open to applicants with an interest in development

cultivating my career path.The skills I developed

issues, and are typically for 2-6 months. If you wish to join our internship programme send

interviewing migrants and government authorities,

us your CV to careers@ips.lk

identifying their significant challenges, developing

been reported. As such, continuous monitoring, proper detection and

improvement of the facilities for treatment are needed, if the disease is to be

TUBERCULOSIS (TB) STILL REMAINS A PUBLIC HEALTH

PROBLEM IN SRI LANKA:
Around 8,000 new cases are reported every year. TB prevalence rate shows a
slight decline from 118 per 100,000 people in 1990 to 115 in 2004, and since
then rate has stabilized. Overall treatment success rate has increased from
78.6 % in 2000 to around 85 % since 2004. Among the main challenges in
controlling the disease are: maintaining adequate staff, reaching population
groups with limited access to services, scaling up TB control services among
returning migrants and the resettled population in the Northern and Eastern
Provinces, overcoming TB-related stigma and financial sustainability.

The Millennium Development Goals (MDG) Country

Report 2014 was launched in Colombo, under the
patronage of Deputy Minister of Policy Planning and

strategies to address them in the labour market, and

Economic Affairs, Dr. Harsha De Silva. The report

Interning at the Institute of Policy Studies has been and is to this day, an inspiring experience.

communicating this to policymakers and concerned

was compiled by IPS together with the Government

The internship was a special learning curve. It enabled me to apply my strictly academic

stakeholders via the Migration Conference, blog and

of Sri Lanka and the United Nations. IPS Research

knowledge to practical economic situations, analyze real world problems of migration and

news articles were unique. This experience assisted

Team who contributed towards the compilation of

employment in fragile situations, and above all conduct research at the grass root levels. These

me in my undertaking of the undergraduate thesis at

the report include Wimal Nanayakkara, Ganga

internships I conducted both last year and this year upon completion of my degree,

the University of Nottingham, and I am certain will

Tilakaratne, Sunimalee Madurawala, Chatura

continue to equip and inspire me at my masters at the

Rodrigo, Swendrani Jayayartne, Ashani Abeysekara,

University of Warwick.

Ayodya Galapattige and Yolanthika Ellepola.

Apart from the research, at IPS, Friday newspaper

Keshni Sritharan, Intern

WAY FORWARD

Summer 2014 - 2015

Although Sri Lanka has made significant progress towards achieving the
the regional disparities. It is also important to sustain and further improve the

2015.

37

ers are some of incredible events I was fortunate

Both internships at IPS were an incredible opportunity I

progress beyond 2015. In addition, Sri Lanka will also have to gear itself to
targets, proposed by the UN, which are expected to be adopted, in September,

sessions or even playing cricket with fellow researchenough to experience.

majority of the MDGs, at national level, further efforts are required to minimize

handle the 17 Sustainable Development Goals (SGDs) and accompanying

discussions, regular in-house seminars, networking

Wimal Nanayakkara, BSc (Peradeniya)

Senior Visiting Fellow, IPS
wimal@ips.lk

am grateful for, thank you for welcoming me into your

family, and granting me many friends through both my
peers and nurturing supervisors.

38

TA LKING ECONOM ICS

By Ganga Tilakaratna

Social protection

vary from cash and in-kind transfers to

Social insurance

Social assistance

Labour Market
Programs

broadly categorized as: (i) social insurance,

(ii) social assistance, and (iii) labour market
programmes as shown in Figure 1.
Despite the multitude of programmes, there
are several gaps and weaknesses in the
current social protection system.

LOW COVERAGE AND

POOR TARGETING

such as Samurdhi, and make better use of the

monthly allowances provided under the

limited resources available for social protection for

elderly assistance programme and Public

the benefit of the neediest groups. This would help

Assistance Monthly Allowance (Rs. 250 - Rs.

improve the coverage of the programmes as well as

500) are also far inadequate to cover the

the amounts of benefit.

national poverty line, a person requires

Moreover, strengthening the coordination among the

around Rs. 3,800 per month to cover his/her

programmes implemented by various institutions in

consumption expenditure at a minimum

order to minimize duplications is important to

level.

enhance efficiency and thereby improve coverage

also required for the pension scheme in order to

reduce the burden on the government budget and
reforms would also help release funds to extend

from budgetary constraints, which restrict

social protection to elders who do not receive

them from expanding their coverage and

retirement benefits or any other assistance.

Old-age
retirement
schemes (e.g.
pensions,
EPF/ETF)
Insurance/ microinsurnace

Cash or in-kind
transfers to poor,
elderly and
disabled persons
Education and
health assitance

recent IPS study reveals considerable

inequity with regard to allocation of funds

Livelihood and
skills
development
programs

Disaster relief

within the current social protection system.

expenditure goes to retirement benefits of
formal sector workers (e.g., pensions and
EPF/ETF) while the expenditure on social
assistance programmes such as Samurdhi,
disability assistance and elderly assistance
as well as expenditure on labour market

disabled and other vulnerable groups often cover only a

programmes lack clearly defined eligibility

fragment of the eligible population. The programmes for

programmes for vulnerable groups remain

criteria and an entry and exit mechanism,

school children such as the free textbook and free uniform

low. In particular, the study finds that

which too has contributed to the targeting

programmes that are almost universal in coverage are

pensions for the public sector workers

problems in social protection programmes.

account for about 55% of the total social

perhaps the only exception. Limited coverage is largely a

result of budgetary constraints. Many programmes also
suffer from targeting problems. A recent IPS study reveals

INADEQUACY OF BENEFITS

Figure 2: Share of Households receiving Samurdhi Cash Transfer by Decile -2009/10

Over 80% of the total social protection

protection expenditure. However, pensions

benefit only a smaller share of the countrys
elderly population.

that only less than a half of the households in the poorest

The value of monthly cash transfers received

decile (47.4%) receive benefits under the Samurdhi cash

under most social assistance programmes

transfer programme (see Figure 2). However, there are

remains low. Under the Samurdhi income

3-15% households in the top four deciles who receive

transfer programme, the maximum amount

Samurdhi benefits. These figures indicate the severity of the

received by a family was Rs. 1,500 per

Currently, there are several ministries,

50
45
40
35
30
25
20
15
10
5
0

47.4
41.5
32.4

29.7
22.0

20.6
14.8
9.9
5.8

4
Decile

3.1

10

Note: Based on the HIES 2009/10 of the DCS. 1= Poorest and 10=Richest

LACK OF COORDINATION

targeting problem of the Samurdhi programme both

month until the end of 2014 (while the

departments, and provincial councils

inclusion and exclusion errors. The extent of targeting errors

minimum was Rs 210), which is far below

carrying out different social protection

social protection programmes in Sri Lanka.

of the other social protection programmes is difficult to

the minimum requirement to meet their basic

programmes for various vulnerable groups.

Programmes designed for the poor, elderly,

measure owing to the lack of data. In addition, many

needs. The net cash value received by a

Lack of coordination among these

39

Given the rapid ageing of population, reforms are

Many social assistance programmes suffer

most common problems in the majority of

Low coverage and poor targeting are two

Low coverage
and poor targeting
are two
most common
problems in
the majority of
social protection
programmes
in Sri Lanka.

improving the benefit amounts. Moreover, a

pensions, insurance, and livelihood

development programmes. They can be

It is important to improve targeting in programmes

maximum of Rs. 3000 per month. The

make the programme more sustainable. Such

of the population: the poor, elderly, disabled,

children and women. These programmes

2015, with a minimum of Rs. 420 and a

BUDGETARY CONSTRAINTS
AND INEQUITABLE
RESOURCE ALLOCATION

Figure 1: Social Protection System

such as the free education and health care

programmes targeting vulnerable segments

WAY FORWARD

and benefit levels.

Social protection policies and programmes

there are many social protection

beneficiaries served under these programmes.

basic expenses like food. According to the

exclusion. Sri Lanka has a long history of

governments since the 1940s. At present,

compulsory savings, social security and the

amounts have been increased since January

poverty, vulnerability, inequality, and social

have been implemented by the successive

social protection provision and leads to overlaps in

Department of Samurdhi, these subsidy

addressed in
order to reduce
vulnerability
and enhance
equity.

viewed as an important tool for addressing

provision and food subsidy programmes

institutions and programmes increases the cost of

amounts since there are deductions for

housing fund. However, as per the

the blog
highlights four
key issues of
Sri Lankas
social
protection
system that
need to be

Social protection has been increasingly

providing social protection to its population.

family was much lower than the above

% of Samurdhi beneficiary
HHs

Addressing
Issues of
Social
Protection
to Enhance
Equity in
Sri Lanka

Marking the
World Day of
Social Justice
2015 (20th February),

Ganga Tilakaratna, PhD (Manchester)

Research Fellow / Head of Poverty and Welfare Policy, IPS
ganga@ips.lk

40

Child Labour and Education in Sri Lanka:

Combating Child Labour through the Provision of Quality Education

Today marks the World Day against Child Labour, an awareness
campaign launched by the International Labour Organisation (ILO) to
draw attention to the 168 million children aged 5-17 engaged in
child labour worldwide. First launched in 2002, the 12th of June of
each year is used to highlight the plight of child labourers and to act
as a catalyst for the worldwide movement to eradicate child labour.
This years theme is NO to child labour YES to quality education!
drawing attention to the importance of providing quality education to
children as a means to eliminating child labour.

By Sahan Jayawardena

by 2030, all girls and boys have access to free quality primary and secondary
education that lead to effective learning outcomes. Eradicating child labour is
essential to achieving this
Figure. 1 School Attendance Status of Children Involved in Child Labour

AGE GROUP (YEARS)

STATUS OF SCHOOLING (PERCENTAGE)

ATTENDING

NOT ATTENDING

Drivers of Child Labour

Child labour is defined as work that deprives children of their

childhood, dignity and potential. The work involved is hazardous to
their health, physical and mental development and deprives them of
the opportunity to attend school without interference. There are
numerous factors that lead to child labour such as poverty,
entrenched social attitudes, lack of access to quality education,
social and economic exclusion, lack of decent work for adults, lack
of an adequate legal framework and migration. These factors are
often interlinked (with poverty often being the underlying factor)
requiring a multipronged approach involving multiple stakeholders to
take effective action against child labour. In recognition of this years
theme for the World Day against Child Labour, this article will look at
the importance of providing quality education for all to improve
school attendance and reduce child labour in Sri Lanka.

Child Labour and Education

Education is a theme that is particularly relevant this year since the
international community is set to adopt the post-2015 Sustainable
Development Goals, which proposes inclusive and equitable quality
education for all. The UN member states would pledge to ensure that

41

TOTAL (5-17)

53.4

46.6

5-11
12-14
15-17

98.3
71.5
22

1.7
28.5
78

Source: Child Activity Survey 2008/09, Department of Census and Statics

Child Labour in Sri Lanka

The Employment of Women, Young Persons, and Children Act of 1956 states the
minimum age of employment as 14 with the minimum age for employment in
hazardous conditions set at 18 in line with the ILO Convention 138 on the
Minimum Age for Employment. According to the last Child Activity Survey
conducted by the Department of Census and Statistics in 2008/09, approximately
2.5 per cent of children from a total child population of 4.3 million were engaged
in child labour, out of which 63,916 children were engaged in hazardous forms
of child labour. A majority of child labourers are employed as unpaid family
workers engaged in the manufacturing industry with the exception of children
from the estate sector, where a majority work in agriculture.

Image Courtesy: sevalanka.org

Child Labour and

Education in Sri Lanka
Sri Lanka has made commendable progress in achieving near
universal access to primary education for both genders with a net
enrolment rate of 99.7 per cent. Further, the findings from the
Child Activity Survey revealed that 97 per cent of the compulsory
school attendance age group (5-14) attended school continuously.
However, older children involved in child labour show lower school
attendance rates. 28.5 per cent of children in the 12-14 years age
category do not attend school and as much as 78 per cent do not
attend school in the 15-17 years age group (Figure 1).

Impediments to School Attendance

Sri Lanka has high school attendance rates for the age categories
of 6-10 years and 11-14 years as a result of enforcement of
compulsory education. However, children involved in child labour in
the 11-14 years age group are at a high risk of dropping out. The
drop-out rate for 13-year-olds is 5.1 per cent. According to the
MDG Sri Lanka Country Report 2014, school attendance starts to
further decline after the age of 14 years, with around 14 per cent
of children not completing the GCE Ordinary Level. There are
numerous reasons for children not attending school, with poverty
being a central impediment, which is closely linked to child labour.
Out of these school children, most are more likely to be from
poorer families. Parents attitudes and perceptions regarding the
benefits derived from education against the advantages of
engaging in other activities also act as a barrier to school
attendance. If the opportunity cost of education is perceived to be
too high, children are more likely to drop out of school and get
pushed into child labour.

On the supply-side, regional disparities in access to schools, inadequate facilities

and shortage of teachers that affect the quality of schools also contribute to
school non-attendance. This is a particularly important issue for the higher
school cycles, where the equity in access is lower compared to the primary level.
Rural and remote schools are particularly affected by the shortage of science
and mathematics teachers, reducing the quality of learning outcomes that could
be achieved from attending these schools

No to Child Labour Yes To Quality Education

Child labour is a multifaceted issue. It is largely driven by poverty forcing
children to drop out of school, preventing them from acquiring the skills
necessary to exit poverty. Therefore, eliminating child labour is in part an
educational objective, where improving school attendance, particularly among
higher age groups, should be a key component in the policy framework to
reduce child labour. The key to improve school attendance and to capture
children excluded from education is to provide accessible, affordable and quality
education. In spite of welfare measures such as free textbooks, uniforms, school
meal programmes, and subsidised bus fares, poverty is still a barrier to
education due to direct and indirect costs. For poor households, the opportunity
cost of education is often viewed as too high, making the likelihood of children
getting involved in child labour high. Therefore, in addition to reducing this
opportunity cost through social assistance programmes, its important to
improve the quality of education that is accessible to the poorer segments of the
population, particularly in rural and remote areas by addressing the shortages in
resources. In addition, attention should be paid to making education more
relevant to the labour market by improving teaching and learning methods that
result in better learning outcomes and more returns to education.

Sahan Jayawardena, BSc (Liverpool)

was a Research Assistant at IPS

42

TA LKING ECONOM ICS

A group of women entrepreneurs gathers at the Ukuwela Divisional

Figure 1: SMEs ontribution to the Sri Lankan Economy

Secretariat (DS) Office in the Kegalle District on a rainy day in November to

participate in a group discussion on challenges they face in operating and
expanding their businesses. 54-year-old Kamalawathi, a pepper producer
from the area, eagerly waits for the discussion to start. She has many things
to discuss in her mind. One burning issue she faces in running her business
is the lack of technological know-how to produce white pepper. Getting
information on technical support is the main purpose for her to participate in
the discussion.

Networking and Information:

Crucial Ingredients in
Empowering Women
Owned and Led Micro,
Small and Medium
Enterprises in Sri Lanka
By Sunimalee Madurawala

The International Womens Day is globally

celebrated on March 8 every year. This years
celebrations under the theme Empowering
Women - Empowering Humanity: Picture It!
highlights the Beijing Declaration and Platform for
Action - a visionary agenda for empowerment of
women signed by 189 governments 20 years ago.
The Declaration identifies Women entrepreneurship as one of its strategic objectives, and
proposes institutional and financial arrangements
for its promotion and support.
43

Kamalawathi claims that: White pepper is of higher value than black

pepper. I have been trying to produce white pepper but I have not been able
to meet the required quality standards. Despite many attempts we have not
been able to get the pepper to turn out as white as the white pepper
produced by larger scale pepper growers, who use various other methods or
machines. We dont know or have the proper technical knowledge to
produce quality white pepper at home. However, the fact is Kamalawathi is
unaware of the Vidatha centre at the Ukuwela DS office, which offers more
than thirty different technology trainings and technology skill building
programmes including the training that she requires. Kamalawathi also
admits that she has few contacts with fellow women entrepreneurs and has
not obtained the membership at any of the trade associations operating in
the area.
Like Kamalawathi, many women owned and led micro, small and medium
enterprises (WMSMEs) in the country face the same problem. Lack of
information and poor networking, are two major barriers that hinder the
development of their businesses. This is also highlighted in an ongoing IPS
study on constraints faced by WMSMEs, which found that women entrepreneurs have limited knowledge and lack awareness of market information
(price, buyers, new markets, suppliers) and services (financial and
non-financial) available.

MSMEs
The contribution of MSMEs to the countrys Gross Domestic Production (GDP)
and employment generation is quite significant. It has been estimated that
Small and Medium Enterprises (SMEs) accounts for more than 90 per cent of
the total number of enterprises in Sri Lanka. The contribution of SMEs to the
total GDP of the country has increased up to 52 per cent in 2011 from 40 per
cent in 2010. Furthermore, it accounts for 32-41 per cent of the employment
in agricultural, industrial and services sectors of the economy (Figure 1). The
contribution of MSMEs would be higher if one takes into account of micro
enterprises for which data is not available. Despite the important role of
MSMEs in the economy, female participation in the sector is significantly low,
and gender bias against women is commonly observed in the MSME sector.

Why is Women Entrepreneurship Important to

Sri Lanka?
Promoting and fostering women entrepreneurs is of utmost importance,
especially to a country like Sri Lanka, where female participation in the
labour force is considerably low (34 per cent) compared to the countrys
success in achieving many other socioeconomic targets. Sri Lanka has been
able to meet most of the Millennium Development Goals (MDG) such as
poverty reduction, increasing literacy rate, decreasing Infant Mortality Rate
(IMR), decreasing Maternal Mortality Rate (MMR) and access to safe drinking
water and sanitation.

capture opportunities, establish connections, increase confidence and become visible

and get noticed by various stakeholders (such as potential buyers, government
officers, chambers, and trade associations).
According to the Global Entrepreneurship Monitor, women who start businesses tend
to know fewer entrepreneurs than men. Men have more social connections enabling
them to access business opportunities, information, and contacts than women. As a
result of poor networking, women are disadvantaged by having fewer professional
connections, role models, and mentorship opportunities, which can adversely affect
their businesses in the long run. A recent survey of women entrepreneurs in Sri Lanka
found that 41 per cent of them do not belong to any business association.

Accessing Information and Building Networks:

What Can be Done?
Promoting and fostering women entrepreneurs is of utmost
importance, especially to a country like Sri Lanka, where female
participation in the labour force is considerably low (34 per cent)
compared to the countrys success in achieving many other
socioeconomic targets. Sri Lanka has been able to meet most of
the Millennium Development Goals (MDG) such as poverty
reduction, increasing literacy rate, decreasing Infant Mortality
Rate (IMR), decreasing Maternal Mortality Rate (MMR) and
access to safe drinking water and sanitation.
Promotion of women entrepreneurs is important mainly because
it enhances the economic growth of the country and provides
employment opportunities for women, improves social,
educational, and health status of women and wellbeing of their
families. Further, it is an ideal avenue for women to start up their
careers as it provides them the flexibility and independency.

Information and Networking for

Women Entrepreneurs
In addition to accessing credit, training and legal policy
constraints, lack of access to proper information and poor
networking have been identified as major obstacles faced by
women entrepreneurs. Information is important to entrepreneurs
for many reasons. It helps entrepreneurs take prudent business
decisions, inspires new business ideas, and alerts them on
trends and potential new markets. Information is also a major
source in planning for the future.
Information relevant to business organizations takes different
forms such as information on customer, employee, and supplier
relationships; market knowledge; knowledge of the business
environment; professional associations and trade bodies; trade
exhibitions and conferences; research and development. The
way a business gathers, shares and exploits available information is crucial to its success.
Networking (both formal and informal) is also much needed for
operation and growth of enterprises, especially MSMEs as it
gives them the means to share information and knowledge,

Although female literacy rate in Sri Lanka is more than 90 per cent and there are
various information channels (newspapers, tv, radio, etc.) and forms of networks
(business, social, formal, informal) available throughout the country, lack of information and poor networking are among the major barriers facing WMSMEs in the
country.
Accessing information and building networks are inter-related: the more you can
access information, the more you can build your networks and vice versa. Likewise,
weakness in one affects the other. Poor networking is the main reason WMSMEs lack
information. In addition, low mobility of women and social and cultural practices can
obstruct building networks. WMSMEs may also find it difficult to access information
due to institutional weaknesses. For example, at present, there is a mechanism to
disseminate market prices for spices through the relevant government offices.
However, sometimes this information does not trickle down to the bottom as intended
mainly due to the lack of resources and commitment on the part of institutions.
There are a number of measures that can be taken to enhance networking and access
to information among WMSMEs. Among these are:
Strengthening existing information channels,
Effective use of available information channels (i.e., using primetime slots to
telecast informative and educational TV programmes targeting women
entrepreneurs),
The use of innovative methods to disseminate information, as well as using
Information and Communication Technology (i.e., use of mobile phones as an
effective medium to communicate with women entrepreneurs in remote areas
as opposed to traditional methods like posters and banners),
Setting up collective groups for women entrepreneurs at village level.
These simple steps would go a long way in empowering thousands of women
entrepreneurs like Kamalawathi to develop their businesses and effectively contribute
to the countrys development.
This article is based on an ongoing research study by IPS on: Products with Regional
Trade Potential and Associated Non-Tariff Barriers, with special focus on Women
Owned and/or Led Micro, Small, and Medium Enterprises (WMSMEs) - A Case of Sri
Lanka. The study is led by UNDP Asia-Pacific Regional Centre (APRC) with funding
from AusAID.

Sunimalee Madurawala, MEcon (Colombo)

Research Officer, IPS
sunimalee@ips.lk

44

TA LKING ECONOM ICS

INSPIRATIONAL
WOMEN
W.K. Indrani

Cinnamon Oil Producer

Forty one year old W.K Indrani is a cinnamon oil
producer living in Meetiyagoda, Ambalangoda, in the
Galle district. She owns a cinnamon oil distillery
unit. Indranis story is an inspiration to all women as she is engaged in a
business, which is male dominated. I got involved in this work because of
my father, says Indrani. At the beginning of her career she worked as a
day worker at distillery units close to her home.
In 2003 Indrani lost her husband, who died in a tragic accident, leaving her
behind with two little children. With the hope of saving enough money to
build her own distillery unit, she went abroad for work. Upon her return in
2008, Indrani started her own cinnamon distillery unit, with the savings she
had made while abroad coupled with some money she borrowed from a
personal money lender. Setting up a distillery unit is very costly. My
savings from employment abroad was insufficient. So, I borrowed a
percentage of the equipment cost from a private money lender in my
village.
Generally, cinnamon oil producers need to travel from place to place to
gather cinnamon leaves. They usually visit cinnamon land and offer to rent
the entire land. Since Indrani owns and runs her business alone, it is
sometimes difficult for her to travel from place to place in searching of
cinnamon lands. Sometimes its very difficult for me to find cinnamon
lands. On such days I hire my hut to others. I get half of the final output.
Normally, we produce five cinnamon oil bottles from one bundle of
cinnamon leaves. I have to manage all my operational expenses (electricity
bill, water bill) from the money I receive.
She sells her produce to a nearby cinnamon oil collector. I have selected
one person to sell my products. I normally get LKR 1200/= per bottle (750
ml).Another buyer may buy a bottle for LKR 1300/= - Rs.1400/=. However,
I deal with one person as there are perks such as the ability to borrow
money from the person any time when I want to rent cinnamon land, and I
can pay them back by selling my products.

While women entrepreneurship is important to the

Sri Lankan economy, women engaged in Micro, Small,
and Medium Enterprises in the country are facing
many challenges. Despite the hardships, there are
thousands of women who strive to develop their
businesses through courage, determination and
hard-work.

In other countries, there are strict laws against

As part of the study on Women owned and Led Micro,

Small and Medium Entreprises (WMSMEs) in Sri Lanka,
IPS spoke to a number of women entrepreneurs in the
spice and coir industries. The two case studies of two
inspirational women were prepared by
Dilani Hirimuthogodage and Sunimalee Madurawala.

some cases, they must opt in. Similarly,

For instance, in the UK individuals need to be

informed that their personal data will be used
for marketing and given the option to opt out. In
customers should be provided with an easy way
to opt out.
As per the US Fair Communications Commission
(FCC) text messages sent to a mobile phone
using an auto-dialer is banned unless the user

Sepalika Anjalee

has previously consented to receive the

Managing Directress, EarthScape (Pvt.) Ltd

Forty one year old W.K Indrani is a cinnamon oil
producer living in Meetiyagoda, Ambalangoda, in the
Galle district. She owns a cinnamon oil distillery
Motivation to start something of your own and courage do it right is
important. If you want everything to be perfect you cant get anything
done. Taking the first step is hard but its rewarding. Make that step and
move forward says Sepalika Anjalee, Managing Directress of the
EarthScape (Pvt) Ltd. Sepalika is from Negombo. She began her business
in 1999 as a sole proprietorship; with 500 US$. Two years later she was
able to build a small factory of her own. The business was gradually
expanded and the venture was converted to a private limited company. In
2006, she purchased land and built a factory.
Today, Earthscape (Pvt) Ltd is one of Sri Lankas largest exporters of coir
based horticultural products and the company has seen a steady growth
in business over the last 10 years. It is a long story. A story about
dedication and hard-work, says Sepalika looking back with pride.
Earthscape exports coir based products such as bags, 5-25 kg blocks,
husk chips, briquettes, disks, and coir geo textiles, to a host of European,
American and Asian countries.
Currently, there are 110 employees, out of which 75 are permanent
employees. The companys workforce is a mix of young and old people.
The company has also recruited many women, according to Sepalika: We
have many female workers too not because I am a woman. Women in Sri
Lanka are hard-working.

Operating a cinnamon oil distillery unit is not easy. Owners need to get
permission and approvals from the Central Environment Authority,
Divisional Secretariat etc. Further, they need to pay annual taxes as well.
We have to pay income tax every year and LKR 750/= to the Divisional
Secretariat as environment levy per annum. According to Indrani,
cinnamon oil producers receive a satisfactory income only during six
months a year, as cinnamon trees are chopped during a certain times of the
year. The other six months of the year they have to look for other work.

Finding additional capital for further expansion, managing cash flow, and
adhering to certain environment laws are some of the main challenges
faced by the company in expanding the business. Sepalika points out
that certain ad hock decisions by the government and negative attitudes
of certain government officers discourage exporters. As an exporter who
brings a lot of money to the country, Sepalika calls for more recognition
and assistance to develop the industry especially to micro, small and
medium scale enterprises. She also emphasizes that the importance of
information dissemination.

Indrani is happy as she is able manage her housework while working at her
own distillery. I can look after my family while working in my hut.
Sometimes, I keep the boiler on and go to school to pick-up my child. My
aim is to upgrade and expand my business and be a good mother to my
children and a caring daughter to my parents.

Reflecting on her journey, Sepalika says it was not an easy one. It

requires a lot of dedication and hard-work. She also stated that her
husband and family have been supportive. She does not think that being a
woman is a disadvantage and that she has not experienced any kind
discrimination because of her gender.

45

such violations in the use of contact information.

message or the message is sent for emergency

purposes. Additionally, in the US there is a Do

Text-bombs of
Unsolicited
Promotional
Messages:
Do Consumers have
Control Over their
Personal
Information?
By Bilesha Weeraratne

scores of such unsolicited messages makes one

wonder if the restaurants are on a mission to
punish patrons for deviating from home cooked
meals!
At the time of placing a food order and the related
exchange of information, no explicit consent is
sought from consumers to use their contact
information for future communication of promotional information. Similarly, many of the loyalty
cards provided by restaurants and other retail
establishments in Sri Lanka often do not explicitly
seek the consumers consent to contact them with
promotional material. Nonetheless, most of them
do contact consumers for direct marketing. The
absence of explicit consent does not mean implicit
consent. Additionally, consumers of such food and
retail establishments also receive promotional

Recently the consumer rights day was celebrated

material from unrelated commercial establish-

around the world and in Sri Lanka under the theme

ments, such as realtor, housing developers and

healthy diets, where consumer rights in terms of

financial institutions. The receipt of promotional

dietary information in food was the central focus.

material from third parties raises the question

An unrelated, yet growing concern in terms of

whether the personal information provided by

consumer rights is the privacy of consumers.

consumers are being shared or sold to third

Many of the fast food restaurants and other

parties.

restaurants in Sri Lanka that accept online and/or

not call list in which consumers who do not

want such messages can place their numbers,
to stop being further disturbed.
Along with direct marketing laws, most
developed countries also have data protection
laws to prohibit sharing/disclosure of contact
information. For example, the state of California
(in the US) has the SB 27 commonly known as
the "Shine the Light Law", which allows any
Californian to make a request to almost any
business for a disclosure of how individuals'
information is used for secondary marketing
purposes. The Sri Lankan institutional
framework seems to lack such protection to
consumers. The Consumer Affairs Authority
(CAA) established under the Consumer Affair
Authority Act of 2003 focuses mainly on the
promotion of effective competition and the
protection of consumers and for the regulation
of internal trade. In essence, the CAA mainly
protects consumers in terms of price and quality
of products, and does not specify about the
rights of consumers in protecting their personal
information. As such, it is high time that Sri
Lanka gears up in this area and develops rules
and regulations to protect consumer rights in

phone orders are now in the habit of saving contact

The compilation and sale of individuals' personal

details for speedy processing of future orders. This

information is termed "list brokerage". Information

can be considered a benefit to the consumer.

sourced from list brokering is often used to contact

However, it is becoming common practice that

individuals for marketing and promotional

these restaurants are using such contact

activities. Common sources where personal

information for their promotional activities. For

information is gathered for list brokerage includes

instance, the leading international fast food chains

business transactions and information provided in

operating in Sri Lanka specializing in pizza and

warranty cards and loyalty cards. Often, companies Bilesha Weeraratne, PhD (CUNY)
Research Fellow, IPS
that are involved in list brokerage do not inform
bilesha@ips.lk
individuals of their information sales activities.

burgers bombard their patrons with promotional

material via mobile text messages. The receipt of

terms of their privacy and information.

46

TA LKING ECONOM ICS

Conference on South Asia

Economics & Politics and Policy
Round Table

Seminar on South Asian Regional

Economic Cooperation

A seminar on South Asian Regional Economic

During a visit to Australia in June 2015, IPS
Executive Director Dr. Saman Kelegama made a
presentation on the Contemporary Sri Lankan
Economics and Politics at a conference on
Economics and Politics in South Asia: Recent
Changes, Prospects, and Challenges. The event
was organized by the South Asia Research Network,
Centre for Global Business, Faculty of Business and
Economics, Monash University, Australia. Dr.
Kelegama also made a presentation at the two-day
Roundtable on New Development Challenges in
Asia-Pacific: Issues and Prospects at the 11th
Australasian Development Economics Workshop
(ADEW) organized by the Caulfield Campus, Monash
University, Australia.

Cooperation was held at the IPS Premises in

March 2015, where Dr. Sanjaya Kathuria,
Lead Economist on Regional Integration at the
World Banks South Asia Regional Cooperation
and Integration Unit, Washington, D.C.,
conducted a presentation on Regional
Integration in South Asia: The World Banks
Approach. The event was chaired by IPS
Executive Director, Dr. Saman Kelegama.
Among those present at the discussion were

Workshop on Understanding
Financial Inclusion in Asia

IPS Research Fellow, Dr. Ganga Tilakaratna,

in Sri Lanka: Current Status and Issues

A Workshop on Post-Bali Issues and Prepara-

at a workshop on Understanding Financial

tion for the 10th WTO Ministerial Conference: A

Inclusion in Asia held in Hong Kong from

South Asia Perspective, organized by the

20-21 May 2015. The workshop was

organized by the Institute for Emerging
Market Studies (IEMS).

Asia-Pacific High-Level
Consultation on Financing for
Development

IPS Deputy Director Dr. Dushni Weerakoon,

Commonwealth Secretariat, Consumer Unity &

Trust Society (CUTS) International and the IPS

Authority of Sri Lanka and Consumer

International, organized a forum in Colombo in
March 2015, to mark the Wold Consumer
Rights Day 2015 under the theme Healthy
Diets. Delivering the welcome speech IPS

was held in Colombo in May 2015. Many issues

Executive Director Dr. Saman Kelegama

relating to South Asia and developing and least

stressed that communication and information

developed countries (LDCs) in the run-up to the

go hand in hand when it comes to building a

10thWTO Ministerial Conference, scheduled to

successful consumer policy. He added that

take place in December 2015 in Nairobi, Kenya,

the citizens must be aware of their rights.

were discussed in detail to agree on a common

Minister of Industry and Commerce Hon.

agenda.

Rishard Bathiudeen was the chief guest at the

Department of Commerce, Director General,

International Conference on India

& the Indian Ocean: Renewing the
Maritime Trade and Civilizational
Linkages

Colombo.

Kelegama was a speaker at the session on

Partnerships at the Asia-Pacific High-Level
organized by the UN-ESCAP, ADB, ADBI and
the Government of Indonesia. The event,

IPS Research Economist, Kanchana Wickramasinghe made a presentation on Energy

Management in Hotel Sector in Sri Lanka:

The 2015 edition of the Economic and Social Survey

of Asia and the Pacific (ESCAP) was launched at the
IPS Auditorium in Colombo, under the patronage of
the State Minister of Finance Mahinda Samarasinghe. The event held in May 2015, was organized
by the IPS together with the United Nations
Information Centre, (UNIC) Colombo.

47

which took place in Jakarta, Indonesia in

April 2015, provided an opportunity for
member and associate members of the

An International Conference on India and the

India Ocean: Renewing the Maritime Trade and
Civilizational Linkages, was held in
Bhubaneswar, Odisha in March 2015. The
three-day event was jointly organized by the

IPS Research Fellows, Dr. Ganga Tilakaratna

and Dr. Bilesha Weeraratne, were speakers at
the international conference on South Asian
Economic Development: The Way Forward

Adoption of Good Practices, at the Interna-

United Nations Economic and Social

Research and Information System for the

tional Symposium on Energy Challenges in the

Commission for Asia and the Pacific

Developing Counties (RIS), New Delhi and the

organized by the Faculty of Economics at the

Knowledge Economy held from 26th to 27th

(ESCAP) and other stakeholders such as

Institute of Social and Cultural Studies (ISCS),

South Asian University, held in New Delhi, India

June in Colombo. The Symposium aimed to

private sector, academia and civil society

Kolkata. IPS Executive Director, Dr. Saman

in April 2015. Dr Ganga Tilakaratna presented

Kelegama addressed the plenary session themed

a paper titled Social Protection and Labour

provide a forum for local and invited foreign

experts in the field to discuss, debate and
share futuristic knowledge relevant to the
energy related challenges that the nation is

Products with Regional Trade Potential and

Associated Non-tariff Barriers, with special
focus on WMSMEs. This consultation was held
as part of a Sri Lanka study carried out for a
South Asian regional project, initiated by the
United Nations Development Programme Asia
Pacific Regional Centre (UNDP-APRC) with
funding from AusAid.

Sharing Perspectives with Indian

Diplomats on India
Sri Lanka Economic Relations

IPS Executive Director, Dr. Saman

Consultation on Financing for Development

Launch of the Economic and Social

Survey of the Asia and the Pacific 2015

IPS held a national consultation meeting on

International Conference on
South Asian Economic
Development: The Way Forward

Regional Development Cooperation and

Jan June 2015

National Consultation
on Women Owned and Led Micro,
Small and Medium Enterprises

event.

and lecturers and students from University of

International Symposium on
Energy Challenges in the
Knowledge Economy

World Consumer Rights Day

Forum 2015

The IPS, together with the Consumer Affair

presented a paper on Financial Inclusion

Mr. R.D.S. Kumararatne, IPS research staff

IPS
NEWS

Workshop on Post-Bali Issues and

Preparation for the 10th WTO
Ministerial Conference: A South Asia
Perspective

organizations to both re-evaluate the role of

traditional sources of finance and explore
innovative instruments and tools to fund

Regional Economic Cooperation in Trade and

Investment in IORA, and chaired a session
themed Business to Business Interactions in the

Market Outcomes: Evidence from Sri Lanka

while Dr Bilesha Weeraratne presented a paper
titled Female Domestic Workers in the Middle

facing in the evolving economy. It was

investments in the economic, social and

IORA. IPS Research Officer Raveen Ekanayake

inaugurated by Dr. Abdul Kalam, Former

environmental dimensions of sustainable

was a panellist at a parallel session titled

East: Does Recruitment through an Agent

President of India.

development.

Sectoral Cooperation in the IORA.

Minimize Vulnerability?.

The Indian External Affairs Ministry Junior

Diplomats visited the IPS in March 2015 to
obtain a Sri Lankan perspective of the India
Sri Lanka Economic Relations. The delegation
was coordinated by Kartik Pande, First
Secretary Economic & Commercial Wing,
High Commission of India Colombo. IPS
Executive Director, Dr. Saman Kelegama,
provided a briefing on the topic which was
followed by a lively question and answer
session.

IPS
NEWS
Jan June 2015

48

TA LKING ECONOM ICS

Dialogue on Cooperation between

China and Sri Lanka under the
framework of 21st Century
Maritime Silk Road

UNNExT Workshop on Paperless

Trade Facilitation for SMEs

IPS Research Officer, Suwendrani Jayaratne,

participated at the UNNExT Workshop on
A Dialogue was held on Chinas efforts to
revive the Maritime Silk Road (MSR), which
is expected to enhance connectivity and
promote mutual development among the
countries from the Far East to the Indian
Ocean to Africa. A six member Chinese
Delegation headed by H.E. Zha Peixin,
Member of the Foreign Policy Advisory
Group of the Ministry of Foreign Affairs of
China and the Former Ambassador to the
U.K. and Canada participated in the
Dialogue. From IPS, Dr. Saman Kelegama,
Executive Director, Dr. Dushni Weerakoon,
Deputy Director, and Dr. Janaka Wijayasiri,
Research Fellow participated in the
discussion. They were joined by former
Ambassadors N.Rodrigo and K. Godage, and
Suranga Algewatte, Assistant Director/ East
Asia and Pacific Division Ministry of Foreign
Affairs.

Paperless Trade Facilitation for Small and

Stakeholder Consultation Meeting

on Trade and Transport Facilitation
in Sri Lanka

IPS conducted a Stakeholder Consultation

Meeting to discuss preliminary findings of a
study carried out together with South Asia

Medium-sized Enterprises, held in Bangkok,

Watch on Trade, Economics and Environment

Thailand in February 2015. Organized by the

(SAWTEE) on Trade and Transport Facilitation

United Nations Economic and Social Commis-

in Sri Lanka. The study was a part of a

sion for Asia (ESCAP) together with the

Regional Study in South Asia, involving various

International Trade Centre (ITC) and the World

stakeholders in the trading process. Its aim

Bank, the two-day workshop aimed at building

was to assess the current status of trade

the capacity of countries in the region to better

facilitation measures in Sri Lanka and identify

understand, identify and address trade

obstacles in the movement of routine

facilitation and paperless trade measures that

consignments, particularly to South Asia.

have a proportionally larger impact for SMEs.

Money, Inflation, and Output

Book Launch

An Assessment of the
Implementation of Guidelines
in School Canteens:
A Case Study from the
Western Province of Sri Lanka

Banking on SME Growth:

Concepts, Challenges and
Policy Options to Improve
Access to Finance in
Sri Lanka

By Manuj C Weerasinghe,
Samanthi Bandara, and
Munsif Sanoon

By Anushka Wijesinha
and Nipuni Perera
Working Paper Series No. 20

The study assesses the implementation of the guidelines in school

canteen introduced over seven years
ago; and identifies barriers that hinder its effective implantation. The
assessment was carried out in two districts, and finds that all the
canteens are experiencing difficulties in adhering to the stipulated
guidelines. The study identifies; external food outlets, lack of support
from parents, absence of alternative healthy food items, lack of
resources in schools, inappropriateness of the present system in
selecting canteen operators and the prevailing trade and fiscal
policies in the country as negatively affecting the implementation of
canteen guidelines.

The Sinhala and Tamil translations of the book
titled Money, Inflation and Output by Dr. H N
Thenuwara was launched at the IPS auditorium in January 2015. Delivering the welcome
speech, IPS Executive Director, Dr. Saman

The publication puts forward a new

way of looking at the access to
finance challenge for SMEs.
This Twin-Pillar Approach to Access to Finance argues that
improving access to finance for SMEs is a case of improving
availability on the one hand and improving bankability on the
other. The publication largely focuses on the second pillar
bankability. This stems from the understanding that a flush of SME
credit alone is not enough. Bankability is about improving banks
approach to SME lending as well as improving SMEs ability to
approach banks.

For more details on IPS Publications contact Amesh Thennakooon, Publication Officer, amesh@ips.lk or 0112143107

20th Annual General Meeting of

National Chamber of Exporters
of Sri Lanka

Think Tank Initiative

Exchange 2015

Sri Lankas fiscal constraints, the demographics of a contracting labour force,
and skill deficiencies suggest that a rise in infrastructure investment will spur
growth only temporarily. Sustaining higher growth in the long run must come
via a competitive export sector through improvements in productivity, notably
due to innovation and to investments in human capital.

governance in a country. As such, this years Sri Lanka: State of the

Economy 2015 report is built around the theme of Economic Reforms
in Sri Lanka: Political Economy and Institutional Challenges. The
report examines in some detail the many inter-related reforms that touch
on important economic policy areas trade and investment, labour
market, foreign employment, education, health, social protection,
agriculture and the environment. Given the array of issues, the report
argues for coherence and prioritization in the design of reforms on several
fronts, so that they add up to a plausible overall economic strategy that will
help Sri Lanka to achieve sustained high growth in the long run.

Kelegama stressed the importance and the

IPS Executive Director Dr. Saman Kelegama,

and Deputy Director Dr. Dushni Weerakoon,
participated at the Think Tank Initiative (TTI)
Exchange 2015 on the theme Research
Quality: Approaches, Outreach, and Impact
held in Istanbul, in February 2015. The TTI
Exchange 2015 brought together 43 think tank
grantees from East Africa, West Africa, Latin
America and South Asia under the TTI
Initiative, managed by Canadas International
Development Research Centre (IDRC).

49

The 20th Annual General Meeting of the

need for more economic literature in Sinhala

National Chamber of Exporters of Sri Lanka

and Tamil, in order to enrich the debate on

(NCESL) was held in Colombo in January

economic issues in Sri Lanka. Deputy Minister

2015. IPS Executive Director Dr. Saman

of Policy Planning and Economic Development,

Kelegama was the Guest of Honour at the

Dr. Harsha De Silva was the Chief Guest at the

event and delivered the keynote address titled

event.

Towards the 2020 Vision of US$ 20 bn

Exports and Beyond - Pressing Concerns and
Emerging Opportunities. More than 150
members of the NCESL and other invitees
participated in the event which was graced by
the Deputy Minister of Policy Planning and
Economic Affairs, Dr. Harsha De Silva.

IPS
NEWS
Jan June 2015

Overhauling Sri Lankas tax system, tackling loss making state-ownedenterprises (SOEs), improving labour market efficiency, filling skill gaps in the
work force, improving productivity of agriculture, delivering a better safety net
to the poor and vulnerable to name a few, are amongst a raft of reforms that
need attention. Such reforms are politically difficult to deliver through the
legislative phase, and are often even more difficult to implement. Reforms
generate distributional impacts that create losers and winners, entailing
short term adjustment costs and the potential for long term benefits. Thus,
while reforms need to be ambitious in scope, it is typically the case that
ambition may have to be tempered by political economy realities.
An agenda setting for reforms must begin with attempts to strengthen
interactions between institutions, policy processes, and policy outcomes. The
environment in which many of these sorts of transitions take place is strongly
influenced by broader factors such as the quality of institutions and

IPSs flagship publication Sri Lanka: State of Economy Report 2015

will be launched in October 2015.
To find out more details about our previous State of the Economy Reports visit
http://www.ips.lk/index.php/resources/state-of-the-economy-report

50

TA LKING ECONOM ICS

Too
Much Time
Holidaying,
Not Enough
Time
Working?
By Janaka Wijayasiri

Public Holidays in
Sri Lanka
Mercer's study was based on a survey of 64 "major economies". Not all countries including Sri Lanka are represented in
the survey. If one calculates the number of public holidays Sri
Lankans were entitled to in 2013 the year of the Mercer
survey Sri Lanka appears to be ahead of India or Columbia
with 25 public holidays, of which 17 fell on a week day. This
number does not include the one-off holidays, which are

to quantify the soft benefit of public holidays. Overall, what can be said is that
there are likely to be winners and losers when it comes to the impact of public
holidays on businesses and the economy.
In the context of Sri Lanka, what we need to ask is: do we really need all these
public holidays, which seem too generous or decadent by regional/world standards?
Some days are due for a rethink, especially when there are too many close together
and people take annual leave to bridge over some of the holidays, which can lead to
loss of momentum and contribute to weakening of economic performance.

announced on an ad-hoc basis in a year. In 2015, we have

altogether 26 public holidays celebrating various
religious/cultural events, with at least 1 day off in a month
while the average number of public holidays in a month is 2
days (rounded off to the nearest decimal). Given that there are

2015 Public and Bank Holiday Calendar Sri Lanka

January 04 Sunday

Duruthu Full Moon Poya Day *

weekday in 2015, 7% of the weekdays are taken as time off

January 04 Sunday

Milad-Un-Nabi (Holy Prophets Birthday) *

In Europe, Finland offers the most number of public holidays (15), followed by Spain

by many workers, putting downward pressure on productivity

January 15 Thursday

Tamil Thai Pongal Day *

260 weekdays, and 20 of the 26 public holidays fall in the

(14) whereas Hungary, UK and the Netherlands, are not so holiday minded with only

and GDP. Comparatively speaking, Sri Lanka appears to have

February 03 Tuesday

Navam Full Moon Poya Day *

Arent public holidays great? For most of us, it

eight. Austria has 12 days public holidays while Sweden, Italy, France and Denmark

too many public holidays; much more than several other

means a lovely long weekend or a break in the

February 04 Wednesday

National Day *

all provide employees with 11 public holidays. Belgium, Luxembourg, Norway and

emerging and developed countries with stronger economies.

middle of the week to spend a bit more time with

Portugal all have 10. Germany typically celebrates 9 public holidays but this varies

This calls into question the economic implications of public

February 17 Tuesday

Mahasivarathri Day *

family and friends, doing things we enjoy without

between states, as in India.

holidays in the country and the need to strike a better balance

March 05 Thursday

Madin Full Moon Poya Day *

April 03 Friday

Bak Full Moon Poya Day *

eating into our annual leave. Today (Wednesday, July

between the needs of workers and businesses.

1st 2015) is our 16th public holiday for the year and

In North America, Canada provides the greatest number of public holidays (11), and

April 03 Friday

Good Friday *

there are two more due in the middle and at the end

the United States government provides 10 federal public holidays although private

April 13 Monday

Day prior to Sinhala and Tamil New Year Day *

of July. So many holidays and most of them close

employers are not obligated to allow their employees to take these days off.

April 14 Tuesday

Sinhala & Tamil New Year Day *

together can have a knock-on effect on productivity

Latin America is home to the highest and lowest public holidays. Colombia has the

and output of the countrys economy. This raises the

May 01 Friday

May Day *

most generous number of public holidays (18) while Mexico has the lowest in the

question: do we holiday too much and not work

world (7).

May 03 Sunday

Vesak Full Moon Poya Day *

May 04 Monday

Day following Vesak Full Moon Poya Day *

June 02 Tuesday

Poson Full Moon Poya Day *

July 01 Wednesday

AdhiEsala Full Moon Poya Day *

Business Research (CEBR) suggested that each holiday costs

July 18 Saturday

Id-Ul-Fitr (Ramazan Festival Day) *

the UK economy 2.3bn and scrapping the lot of them would

July 31 Friday

Esala Full Moon Poya Day *

boost annual output by 19bn. Similarly, an impact assess-

August 29 Saturday

Nikini Full Moon Poya Day *

ment of an extra break by the Department for Culture, Media

September 24 Thursday

Id-Ul-Alha (Hadji Festival Day) *

September 27 Sunday

Binara Full Moon Poya Day *

October 27 Tuesday

Vap Full Moon Poya Day *

November 10 Tuesday

Deepavali Festival Day *

see public holidays purely as a financial cost, they can boost

November 25 Wednesday

Full Moon Poya Day *

practices, statutory regulations and employment conditions

certain industries. Some businesses in the leisure, hospitality,

December 24 Thursday

Unduvap Full Moon Poya Day *

across 64 major economies.

and retail sectors stand to benefit as workers spend their

December 24 Thursday

MiladUnNabi (Holy Prophets Birthday) *

holiday shopping, eating out or visiting tourist destinations.

December 25 Friday

Christmas Day *

Moreover, public holidays can have important individual,

* Public Holidays Bank Holidays

enough in Sri Lanka?

Costs and Benefits of

Public Holidays
Assessing the cost of a public holiday on the economy is

Public Holidays Around the World

Countries with the

Most Public Holidays
in the World

20

18

18

16

16

16

10

A ccording to data from Mercers Worldwide Benefit and

Employment Guidelines, India and Columbia top off as the
countries with the highest number of holidays (18). The report
provides an overview of mandatory and private benefit

public holidays followed by Japan (15), Indonesia, Malaysia

and Philippines (14). Pakistan (13) is followed by Hong Kong
and Taiwan (12). Vietnam (10) has the lowest number of public
holidays in the region below China and Singapore (11).

tricky; there is no easy relationship between having a holiday

and the rate of GDP. A report by the Centre for Economics and

and Sport in the UK puts the "best estimate" at a 1.2bn loss

to the economy. However, the error of margin in the study was

Days
Colombia

India

Lebanon

South Korea

quite substantial. In fact, it can boost the economy by as

Thailand

much as 1.1bn - or record a loss of 3.6bn. While some may

TOP 5

CLOSE

In the Asia-Pacific region, Thailand and South Korea offer 16

51

rate important national days; for example, the Independence Day. Thus, it is difficult

Mexico provides
the least generous
number of public
holidays (7)

Workers in India
and Colombia
enjoy the greatest
number of public
holidays (18)

Employees in the UK,

Hungary and
Netherlands receive
the second lowest
puplic holiday
allowance (8)

community and cultural benefits, which are hard to measure. If

workers are overworked and stressed they produce less, they
are more likely to quit their jobs and have health issues,

Australia and New Zealand both lag behind with just 9 and 11

whereas people may be more productive after a long weekend.

national holidays, respectively.

Holidays may also bring communities together and commemo

Source: Mercers 2013 Worldwide Benefit and Employment Guidelines

Source: Estimated from DCS, Quarterly GDP Data.

52

TA LKING ECONOM ICS

Talking Economics Puzzle

FAST
FACTS

5
6

US$ 100 bn

Sri Lankas economic freedom

score is 58.6, making its
economy the 101st freest in the
2015 Index.

Sri Lanka expects a US$ 100 billion market

capitalization by 2020, according to the
Chairman of Securities and Exchange
Commission. The island had US$ 24 billion
market cap end 2014 which accounted for
36% of the GDP.

7
8
10
12

11
13

51.3%

14

15
07

16

Sri Lankas election commission declared

that the Opposition candidate Maithripala
Sirisena won 51.3% of the vote, securing a
victory against incumbent President
Mahinda Rajapaksa who gained 47.6%
votes, in a snap presidential election that
the latter called two years ahead of
schedule.

400,000
There are about 400,000 people in the North
Central Province with varying degrees of kidney
failure. In 2014, 13 people died of the condition
every day. The toll is expected to increase in the
coming years.

18
19

Migrants pay a heavy price to

the Government and corrupt
agents who illegally charge
Rs. 300,000 for placement
in Hong Kong.

20

300,000
ACROSS

Important factor in Empowering Women Owned and

Led Micro, Small and Medium Enterprises in Sri
Lanka

development along the main roads of the countrys

is often cited by policy makers and the private sector

coastal areas, Sri Lanka is fast experiencing this

to be the countrys benchmark.

promotion of effective competition and the protection

of consumers and the regulation of internal trade.

8 The most common and formal methods in protecting

substance, which accounts for one in 10 adult

innovations and intellectual property rights in Sri

diseases and diabetes are collective referred by this

deaths.

Lanka.

20

Sri Lanka has achieved the target of halving this

10 In May 2015 Sri Lanka issued a 10 year US$ 650

Having a permanent cadre of specialists consulting

indicator at the national level seven years before

million sovereign bond to shore up the countrys

in one hospital at a given time would considerably

2015 deadline.

reserves as well as to ease pressure on this rate

Misallocation of property rights governing natural

DOWN

1 This has been widely recognized as a powerful tool

Sri Lanka appears to have too many of these days;

in allowing consumers to quickly and easily interpret

much more than several other emerging and

the nutritional value of packaged.

developed countries with stronger economies.

15

This Authority in Sri Lanka focuses mainly on the

19 One person dies every six seconds due to use of this

resources can result in this.

14

available from every corner of the world.

Cardiovascular diseases, cancer, respiratory

minimize this issue.

11

processing industry, making a variety of food

18 Sri Lanka still has a lot to achieve if it is to reach the

facilitation levels of this country in East Asia, which

acronym

4 These ingredients play a key role in the food

from a variety of sources.

Despite low density urban sprawl and ribbon

phenomenon

16 Sri Lanka experiences marine pollution originating

2 One of the weaknesses in the current social

International food assurance standards which is

protection programmes in Sri Lanka targeting

increasingly becoming important in the tea trade.

vulnerable segments of the population.

14%

$1.5mn

78,000

heroin addicts

40%

The number of heroin

addicts in Sri Lanka is
around 78,000. It is
reported that more than
3.5 tons of Heroin is
smuggled in to Sri
Lanka annually.

The Indian Ocean Region contains

40% of the world's oil and gas
reserves, a third of the world's
population and plays host to key Sea
Lines of Communication.

3.6
mn

The earthquake of
7.8 M (Richter scale)
of Nepal occurred at
Lampung 77 km east
of Kathmandu on April
25, 2015.

Experts estimate that Sri Lanka would have elderly

population of about 3.6 million by 2021, which is 16.7% of
the total population and by 2041; one in every four Sri
Lankans would be elderly.

12 This type of economy talks about the use of ocean

and its resources sustainably

13 The most commonly observed barrier for the

Out of over 5,000 pharmacies

established in the country only a
little over 2,500 are licensed
pharmacies.

adoption of good environmental practices by large

hotels in Sri Lanka.

17

Provision of this social service is an important means

to eliminating child labour.

Answers:

Across: 1. Information, 5. Urbanization, 6. NCD, 9. Waiting, 11. Tragedy of Common, 14. Public Holidays, 15. HACCP, 16. Heavy Metal, 18. Singapore, 19. Tobacco, 20. Poverty.
Down: 1. Labeling, 2. Targeting, 4. Additives, 7. Consumer Affairs, 8. Trademarks, 10. Exchange, 12. Blue, 13. Cost, 17. Education.

53

75%

Approximately 75% and

14% of urban and rural
population respectively
in SL are served by pipe
borne water.

Of the 1.5 million visitors

that have come to Sri
Lanka in 2014, 77%
commented that they
were delighted with the
experience in Sri Lanka,
whilst 22% commented
that they were satisfied.
Only 0.8% said they were
dissatisfied.

Sri Lanka exceeded its target of 1.5 mn

tourist arrivals in 2014 and earned 2.2
bn US dollars from tourism.

2500

132
In World Happiness Report published in
2015, Sri Lanka is ranked lower than most
countries in the world (132 out of 158
countries). All Asian countries except
Cambodia and Afghanistan have done
better than Sri Lanka.

54

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A PUBLICATION BY THE INSTITUTE OF POLICY STUDIES OF SRI LANKA