Driving Global Production Sharing In Sri Lanka

Australian High Commissioner to Sri Lanka Bryce Hutchesson and Prof. Prema-Chandra Athukorala

In the light of Ministry of Development Strategies and International Trade promising to present the Agency for Development (AfD) Bill to parliament, think tanks and economists lament that Sri Lanka has a long way to go in removal of para-tariffs (taxes over and above normal tariffs) and trade liberalisation to make Sri Lanka a haven for investments.

To attract Foreign Direct Investments (FDIs) for Sri Lanka, its burgeoning Indian Ocean Island economy, should cut barriers to trade and investment, top trade economist Prof. Prema-Chandra Athukorala recently said at a forum organised by Advocata Institute, a Colombo-based free market think tank.

“This would form a natural progression from garment manufacture, on which the country is now heavily reliant. Sri Lanka’s protectionist trade policy and erosion of confidence in the legal system are key factors that have discouraged investors resulting in a decline in Sri Lanka’s share in world manufacturing exports from around 2000,” he said.

Athukorala is a Professor of Economics at Australian National University and a top consultant on international trade to a host of international organisations.

The liberalisation undertaken in the late 1970’s resulted in a notable increase in manufacturing exports and a steady increase in Sri Lanka’s share in world manufacturing exports. The reforms suffered a significant setback from about the early 2000: with the imposition of para-tariffs, and a proliferation of ad-hoc duty exemptions and case-by-case duty adjustments.

Sri Lanka has a bewildering number of para-tariffs including: Ports and Airports Development Levy (PAL), the Customs Surcharge (SUR), the Commodity Export Subsidy Scheme (Cess), and the Regional Infrastructure Development Levy (RIDL).

Sri Lanka needs to continue with reforms if it is to reap the benefits of export led growth. “That is why South Asian countries have not been able to join global production sharing like East Asia. Just having cheap labour alone is not enough.”

The global economic environment is changing with production sharing (Global Production Networks- GPN’s) becoming the prime mover of cross border production and trade. GPN’s are of two types, buyer driven and producer driven.

To date, most of the Sri Lanka’s FDI is in Buyer driven GPNs where a buyer (usually a retailer) buys finished goods. Although common in industries such as garments and footwear, globally buyer driven GPN’s formed only 12 per cent of world manufacturing trade (in 2012-13), and its share is declining.

Producer driven GPNs are where an end producer assembles the final product from components made in several locations. This takes place in vertically integrated industries such as electronics, medical devices and cars. Producer driven GPN’s accounted for 51.1 per cent of world manufacturing trade in 2012-3 and its share is growing; this is the trend Sri Lanka needs to tap into, according to Prof. Athukorala.

Successful integration of the manufacturing sector into producer driven GPN’s has played a key role in employment generation and poverty reduction in China and other high-performing East Asian countries.

The determinants of a country’s success in joining global production networks are the availability of trainable labour, proactive investment promotion and service link costs, according to the economist. He emphasised that while the importance of infrastructure and political stability to reduce link costs are often spoken about, Sri Lanka needs to focus on property rights protection, ease of enforcing contracts and a liberal trade and investment policy to attract FDI.

Read the entire article on The Sunday Leader

Joining producer-driven GPNs key to revive exports: Top Economist

Sri Lanka lags far behind the East-Asian countries in reaping gains in exports as it has failed to join producer-driven Global Production Networks (GPNs) despite the country being either equally or better placed than countries like Thailand and Malaysia, a top academic lamented last week.

Delivering a public lecture on FDI and Manufacturing for Export: Emerging Patterns and Opportunities for Sri Lanka, renowned-Economist Professor Premachandra Athukorala said that in the past, although the country did well in joining buyer-driven GPNs with heavy concentration in apparel exports, it fell short of potential in gaining momentum in joining the producer-driven GPNs, where FDI played a key role.

“There is strong evidence that Sri Lanka missed the opportunity of becoming an assembly centre within producer driven GPN because of political instability and uncertainty,” Athukorala said.

Producer-driven GPNs are common in vertically-integrated global industries such as electronics, electrical goods, automobiles, scientific and medical devices with the ‘Lead firm’ being the manufacturing Multinational Enterprise. The bulk of global production sharing takes place through intra-firm linkages within MNE network rather than in an arms-length manner.

“Successful integration of the manufacturing sector into production networks, in particular producer-driven GPNs, have played a key role in employment generation and poverty reduction in China and other high-performing East Asian countries,” Prof. Athukorale said.
He pointed out that based on 2013 statistics on the total share of GPN products in manufacturing exports, Sri Lanka’s producer-driven GPN stood at a low of 8.5% while buyer-driven GPNs formed a majority of 67.2%.

Meanwhile, Prof. Athukorale said Sri Lanka’s immediate policy priority should be to restore policy emphasis on export-oriented industrialisation, set up institutional safeguards to avert further backsliding from reforms, and continue with implementing the incomplete reform agenda.

“The Sri Lankan experience highlights the complementary role of investment liberalization for exploiting the potential gains from trade liberalization. Trade liberalization increased the potential returns to investment by capitalizing on a country’s comparative advantage, while liberalization of foreign investments permitted international firms to take advantage of such profit opportunities,” he highlighted.

He further emphasized that the island now needs to formulate proactive well-targetted policies to attract foreign investors and not solely rely on roadshows as attracting a big international player has ‘demonstration’ effect on others –the so-called herd-mentality in global industries.

FTAs: Good, bad and ugly

This newspaper, in an article titled 'FDI lowest in 10 years' which appeared in its columns on Saturday, quoting an economist said that free trade zones (FTZs) and not free trade agreements (FTAs) were the road to boost exports.

Professor Prema-Chandra Athukorala, Professor of Economics, Australian National University, speaking at a function in Colombo on Thursday organized by Advocata Institute, a local think tank, said global studies had shown that vis-à-vis enhancing exports, only 10% of the concessions offered by FTAs have been utilized in this regard.
With Sri Lanka planning to broaden its current FTA with India to an Economic and Technology Cooperation Agreement (ETCA), due to space constraints, this editorial will only focus on FTAs.

Meanwhile, as per Athukorala's lecture, the balance 90% offered as concessions under FTAs has proved to be only theoretical, with no practical value to enhance exports. He said that the stumbling block was the rules of origin (ROO) under FTAs.
In Sri Lanka's case, the island currently has two FTAs, one with India as aforesaid and the other with Pakistan. Both these agreements are over a decade old.

Athukorala, citing an example of the ROO and its impediment to boost exports vis-à-vis the Sri Lanka context said that he spoke to a joss sticks manufacturer at Mawanella the other day. This manufacturer said that he cannot export joss sticks to India by trying to avail himself of the concessions to which exporters are reportedly entitled to under the Indo-Lanka Free Trade Agreement (ILFTA) because of India's stringent ROO. As a key component in the manufacture of joss sticks is imported from India it disqualifies this manufacturer from exporting to India under the ILFTA duty concessionary umbrella because of this ROO law.

Read the entire article on Ceylon Today 

Art TV coverage of Advocata Lecture by Professor Premachandra Athukorala

Art TV news covered the public lecture by Professor Premachandra Athukorala  organized by Advocata Institute.

Rationalise tariff system to liberalise trade: renowned economist

Sri Lanka’s immediate policy priority should be to restore policy emphasis on export-oriented industrialisation, set up institutional safeguards to avoid further backsliding from reforms and continue with implementing the incomplete reform agenda, senior economist Prof. Premachandra Athukorala said.

Delivering a lecture titled ‘FDI and Manufacturing for Export: Emerging Global Patterns and Opportunities for Sri Lanka’, organised by the think tank Advocta Institute, Prof. Athukorala said Sri Lanka failed to capture the full benefits of trade and investment liberalisation due to the protracted war that undermined the investment climate and macroeconomic stability and that instead of formulating a new model from scratch the Government must learn from the past.

“We have achieved a lot under a lot of constraints - particularly political instability and policy uncertainty. Now that peace is here, the Government has to try and learn from our past instead of thinking about a new model. I think we have a model that has been tested very well. It can generate more benefits to the country if the Government has a very focused plan to continue with this strategy,” he said.

Trade and investment policy reforms initiated in the late 1970s, said Prof. Athukorala, set the stage for globally integrating the Sri Lankan manufacturing sector with Foreign Direct Investments (FDIs) playing a pivotal role.

The Sri Lankan experience highlights the complementary role of investment liberalisation for exploiting the potential gains from trade liberalisation, said Prof. Athukorala, adding that trade liberalisation increased the potential returns to investment by capitalising on a country’s comparative advantage, while liberalisation of foreign investments permitted international firms to take advantage of such profit opportunities.

Responding to a question on Free Trade Agreements (FTAs) at the Q&A session that followed the lecture, moderated by Chief Economist at the Ceylon Chamber of Commerce Anushka Wijesinha, Prof. Athukorala said that though they are called FTAs they are actually not free trade.

“The term FTA is a misnomer,” he said, adding that FTAs have very low utilisation.

“I consider it a political gimmick. The admin compliance costs are too much,” he said.

He suggested that what Sri Lanka needed to focus on instead was the rationalisation of the trade tariff system in order to liberalise trade.

“What is needed is to rationalise the tariff system. People think that higher tariff means more revenue for the Government, which is not the case. There is evidence to suggest that a more uniform, lower tariff system can generate more government revenue simply because the system becomes much more transparent,” said Prof. Athukorala.

Cascading tariffs can be a breeding ground for corruption, warned Prof. Athukorala, adding that if the tariff regime was low and uniform, it competed against smuggling and could improve Government revenue.

Policy inconsistency can also be a killer, said Prof. Athukorala, pointing out that last year saw the lowest FDI levels in history.

The Board of Investment (BOI) was relegated under the last regime and investments were done on a political basis, he charged.

Prof. Athukorala suggested that Sri Lanka market itself internationally to potential FDIs by sharing its success stories and using successful entrepreneurs in proactive investment promotion campaigns.

Read the article on Daily FT

Exploding myth of ‘Ceylon Tea’

Primary Industries Minister Daya Gamage exploded the myth surrounding the "Ceylon Tea" brand name.
Speaking at the Spices and Allied Products Producers' and Traders' Association (SAPPTA) Annual General Meeting in Colombo on Friday, he said that the term was coined by British planters.

But statistics showed that only 1% of the British consumer currently opted for ' Ceylon Tea'. The rest go for other brands. Nonetheless, Professor Prema-Chandra Athukorala, Professor of Economics, Australian National University, addressing a seminar in Colombo said that he was domiciled in Canberra where his neighbours consume a very popular tea marketed by a major private firm in Colombo".
"They were unaware that this was in fact what's known as 'Ceylon Tea', said Athukorala. The secret of this company's success was its packaging, he said. Gamage pooh-poohed the island's packaging standards saying that Vietnam's, Thailand's and China's packaging were far superior to that of Sri Lanka.

Read the article on Ceylon Today

Sri Lanka needs stable liberal policies, property rights, to get export oriented FDI: economist

ECONOMYNEXT - Sri Lanka should have a stable liberal policy framework with free trade and strong property rights to draw foreign direct investors who will build East Asian-style global production networks, a top trade economist has said.

To attract foreign investors into merchandise exports, concurrent trade and investment liberalisation is needed, Prema-Chandra Athukorala, professor of economics at Australia National University's Crawford School of Public Policy, said in Colombo.

Read the entire article on Economy Next 

FDI lowest in 10 years

Political stability and policy consistency were imperative to attract foreign investments, an economist said.
Professor Prema-Chandra Athukorala, Professor of Economics, Australian National University, speaking at a function in Colombo Thursday said Sri Lanka foreign direct investments (FDI)inflows to Sri Lanka were the lowest on record last year .
Total FDI receipts last year, excluding foreign loans, amounted to US$ 681 million, down from the previous year's (2014) figure of $ 894 million (excluding foreign loans). Last year Sri Lanka held two major elections, the Presidential Election on 8 January, 2015 and the Parliamentary Election of 17 August, 2015.

Central Bank of Sri Lanka (CBSL) Governor Dr. Indrajit Coomaraswamy said earlier that FDI in the first half (1H) of the year was poor, but was looking up in the 2H of the year. According to CBSL, FDI in the first five months of the year, including foreign loans, amounted to a mere $ 164.5 million, down 52.5% year-on-year compared to last year's commensurate figure of $ 346.4 million.
The Sri Lanka's Board of Investment signed agreements for foreign direct investments worth an estimated 1.6 billion US dollars in 2015, up slightly from last year, according to the island's investment promotion agency.
When this reporter asked Athukorala whether it's possible to have policy consistency in a democracy like Sri Lanka, where the island has to go to the polls once in five years, Athukorala said that it was possible, and gave as examples the island's free trade zones (FTZs) established after 1977, as an example of bipartisanship, where no steps have been taken to dismantle FTZs despite 40 years after their establishment, by successive governments.

FTZs, with the concessions offered to investors, are conduits to attract foreign investments.
Athukorala further said that studies have shown that FTZs, and not free trade agreements (FTAs), boost exports. The 'Achilles' Heel' in FTAs is their subtle rules of origin (ROO), he said. Athukorala said that he spoke to a joss sticks manufacturer at Mawanella the other day.
This manufacturer said that he cannot export joss sticks to India by trying to avail himself of the concessions to which exporters are reportedly entitled to exporters under the existing Indo-Lanka Free Trade Agreement (ILFTA) because of India's stringent ROO. A key component in the manufacture of joss sticks disqualifies this manufacturer from exporting to India under the ILFTA duty concessionary umbrella.

Read the entire article on Ceylon Today 

All it takes is Barber’s skills – Expert

The story that highly honed skills are required for manufacture of high value exports such as computers is a myth, an economist said.

Professor Prema-Chandra Athukorala, Professor of Economics, Australian National University, speaking at a function in Colombo on Thursday (18 August) said that in 1968, when Singapore, with an unemployment rate of 15%, opened up its economy for electronics investments, the country's Finance Minister had said... ...that the skills required for a woman engaging in computer manufacture, should be akin to that of a barber, to do the job.

And Singapore has proved it by being a computer hub today. "In a labour abundant country, Singapore has become one of the richest countries," said Athukorala. Singapore has proved that this so called deficiency of a "skills barrier" is a myth, he said.
He said that similarly, what Sri Lanka needs to grow its economy is not services such as tourism, but manufacturing. Only manufacturing can absorb unskilled workers and the island has a large pool of unskilled labour, said Athukorala.
The BoI is not going in the hinterland to tap them for employment potential and as a result many companies are paying incentives to their workers to recruit labour, he said. Though they talk of the lack of human capital in the island, manufacturers don't believe that lie, said Athukorala.

Nonetheless, there is a company in the outskirts servicing the global automotive industry, which has an annual turnover of US$ 45 million, whilst employing a thousand, he said. There is another company at Badalgama in the Wayamba Province which manufactures electronic sensors, while providing employment to 600, said Athukorala.
Industrialization is the pivot for employment generation and thereby poverty reduction, he said. An example is China which has reduced poverty from 40% to 9% through industrialization, he said. Sixty eight per cent of the world production comes from developing countries, he said.

Athukorale said that while China is involved in labour intensive electronic assembly industries, Sri Lanka's labour was better than that in Thailand, but because the latter has ventured in to high tech manufacture, their labour grade per capita annual income is US$ 500 per capita per mensem, whereas the island's lowly garment sector worker earns a mere $ 100.
He said that though Sri Lanka lost large electronic giants such as Harris Corporation and Microsoft due to the July 1983 disturbances, it's still home to middle level electronics firms which employ an average of 400 employees each in their workplaces, providing a total employment of 20,000. Sri Lanka's trade regime is comparable to that of Malaysia but what is needed is the rationalization of tariffs, said Athukorala. The seminar was organized by Advocata Institute, a local think tank. 

Read The article on Ceylon Today 

Deshal de Mel delivers lecture on What's wrong with the Sri Lankan economy

Deshal de Mel delivering the lecture organized by Advocata Institute

Senior economist at Hayleys Group, Deshal de Mel gave the inaugural lecture on a public lecture series organized by Advocata Institute last month.

A crowd of more than 200 people attended the lecture which concluded with an engaging Q&A session moderated by  Shiran Fernando,  an economist attached to Frontier Research. 

Delivering the lecture, Deshal said that the biggest risk to the Sri Lankan economy is the ability to meet the external debt repayments. Until about 2005, Sri Lanka had very easy access to long term finance said Deshal, who went on to explain that with the elevation of the country to a middle income status country, Sri Lanka lost access to this low-interest rate loans that allowed the government to maintain a very large government in terms of employees, and activities in the economy as well as accumulate a huge amount of debt.

Continuous deficits that the government keep running and the accumulated debt is one of the key reasons for macroeconomic instability explained Deshal.  High government borrowing crowds out the private investment and vulnerable to episodes of monetary expansion leading to inflation the economist said.   

"Big Government" policies including the maintaining of loss-making state enterprises, large public sector and targeted subsidies and transfers have all resulted in the deficit that the government tries to bridge by borrowing and indirect taxation, which creates further distortions according to Deshal de Mel.

The large government is not just fiscally not affordable, but also is a consumer of scarce resources explained the economist.  "The state owns large quantum of land, and employs about 17% of the entire labour force" all consuming economic resources whilst the 245 odd State owned enterprises employs a further 220,000 people. 

Deshal believes that there is a role for the government in addressing wealth inequalities resulting from unequal opportunities and for state intervention when markets fail through smart unobtrusive regulation. However, he says that the big government policies have not helped in sectors where state intervention is generally accepted, for example in Education where outcomes indicate that only around 50% of students pass science related subjects.

Resources tied up in unproductive sectors such as Agriculture  represents another problem Deshal explained. The Agricultural sector accounts for a massive 30% of labour force, but only accounts for 9% of GDP.  The protectionist policies with the stated aim of 'protect' farmers has resulted in resources being tied up in lower value domestic agriculture instead of utilizing the full resource pool of agricultural land, farmers and other resources into global value chains and higher value agriculture.

Sri Lanka has also failed to attract export oriented Foreign Direct Investment (FDIs) making use of it's strategic location Deshal said and emphasized on a proactive approach to attracting FDIs such as targeting multinationals with operations in southern India to set up Shop in Sri Lanka.

In order to fix the Sri Lankan economy, Deshal recommends that the first thing to do is to rationalize government expenditure. Cutting back on size, and particularly state owned enterprises. Enhancing government revenue through simplification of taxes and relying on direct taxes.  He also emphasize the need to focus on education, ensuring an environment of more private participation in the supply of education and gradually decreasing trade and domestic protectionism as possible ways of remedying the problems in the Sri Lankan economy.

While acknowledging the political realities and difficulties in bringing about economic reform, Deshal said that a possible starting point is reforming State Owned Enterprises, where there is increasing awareness of it's ill-effects. 

Advocata's research report on SOEs are found on our research section.  Advocata Institute organizes monthly lectures focused on the broad theme of 'fixing the Sri Lankan economy'. 

full slide deck from the lecture is available below.   See more articles on the event .  Deshal was speaking in his private capacity as an economist. 

What is wrong with the sri lankan economy from Advocata Institute

Sunday Leader on Deshal's lecture : High govt borrowing crowding out private investment

From the Sunday Leader

Continuous high deficits and cumulative public debt has been one of the driving factors behind the Indian Ocean Island economy’s macroeconomic volatility is adversely affecting the investment climate, one of Sri Lanka’s budding economist said recently.

“High government borrowing levels influence higher interest rates, crowding out private investment. Recent BoP (Balance of payment) weakness has been largely influenced by external debt repayments with implications for the depreciation of the Sri Lankan Rupee. At other times fiscal expansion drives imports, contributing to BoP stress and depreciation of the Rupee. Episodes of inflation in the past were influenced by then Central Bank’s accommodative monetary policy to ease stress on government debt servicing,” said Senior Economist Deshal De Mel at a public forum.

Read article in full.

Advocata Report on SOEs makes an impact at Chamber event

Photo Courtesy Kithmina Hewage 

From Dailymirror.lk:

According to the minister, a top corporate sector CEO has also been appointed to lead the Public Enterprise Board but fell short of disclosing who the official was. The minister said he was in the audience leaving the participants to guess.

According to Advocata, an independent policy think tank, 55 strategically important SoEs in Sri Lanka have made a cumulative loss of Rs.636 billion during 2006 and 2015.  The cumulative profit of the profitable SoEs during the same period has been Rs.530 billion, excluding the Employees’ Trust Fund.  The statement by the minister suggests that the government is ready to go the whole hog in privatizing both the strategic as well as non-strategic SoEs despite the immense political risk forthcoming.  Speaking at the final session under the theme titled, ‘The Future of Public Enterprises’ Samarawickrama said the government had reached the final leg of entering into a public-private partnership (PPP) to restructure the loss-making national carrier, SriLankan Airlines but did not disclose the party involved.

Meanwhile, Chief Opposition Whip and Janatha Vimukthi Peramuna Leader Anura Kumara Dissanayake said if the government could take over the liabilities of SriLankan Airlines prior to the sale of the carrier to a private party, they should also be able to take over the assets and run the airline. 

From EconomyNext.com

SOEs were used to give off-budget subsidies and they borrowed from banks, pushing up interest rates and depriving funds and raising the borrowing costs of small enterprises.

Although some SOEs made profits, they do not reflect the returns for the investments made. Anushka Wijesinghe, Chief Economist at the Ceylon Chamber of Commerce, said that a report by Advocata, an independent think tank, found that from 2006 to 2015 it cost taxpayers Rs640 billion.  

A part of the losses made by SOEs were financed by the budget. 

"That means the government has to find tax revenues. Or else, the government has to borrow the money domestically or from abroad. 

"These debts also have to be repaid by the people through future taxes. One way or the other the people have to bear the financial cost of these losses."

Advocata Institute's Report on SOEs is available in our research section.

@advocatalk: loss making #srilanka SOEs cost tax payers 620 billion. employees doubled. #sles2016 @CeylonChamber

— Helani Galpaya (@helanigalpaya) August 3, 2016

On LBO : Deshal explains what's wrong with Sri Lanka's economy

Aug 01, 2016 (LBO) – Sri Lanka’s most urgent economic risk is external debt sustainability and it has been one driving factor behind macroeconomic volatility in the country, a young economist said.

Deshal de Mel delivering a public lecture hosted by the think tank Advocata Institute said the legacy of access to long term concessional debt and easy repayment schemes eventually enabled the country to build up a large public sector and debt burden.

“Post 2007 requirement to tap into global capital markets due to less access to concessional borrowings is one major reason,” de Mel said.

“Shorter repayment tenors and higher rates of interest – makes it essential to channel borrowings into remunerative investments.”

De Mel said high government borrowing levels influenced higher interest rates and crowded out private investment.

He said recent balance of payments weakness has been largely influenced by external debt repayments with implications for rupee depreciation.

“At other times fiscal expansion drives imports, contributing to Balance of Payments stress and rupee depreciation,” Mel said.

“Episodes of inflation in the past influenced by Central Bank’s accommodative monetary policy to ease government debt servicing.”

Financing the current deficit requires high levels of indirect taxation and it also affects consumer freedom and high import taxes restrict domestic competition.

As per statistics, government revenue has improved in first half of 2016 but sustained improvement needs a shift to direct taxes from regressive indirect taxes, he said

More on Lanka Business Online

Prof Rohan Samarajiva on Reforming SOEs in Sri Lanka

Prof Rohan Samarajiva, the chair at Lirneasia as well as an Advisor to Advocata Institute, delivered the keynote addressed at the inauguration event of Advocata Institute in Colombo.  Prof Samarajiva explained the difficulty in reforming the state enterprises and ideas around how to go about it. 

Prof Razeen Sally on the importance of a Free Market think tank in Sri Lanka

Prof Razeen Sally spoke about the importance of a free Market think tank in Sri Lanka at the Inauguration of the Advocata Institute in Colombo.   Prof Sally is currently the chairman of Institute of Policy Studies in Sri Lanka and an associate professor at the National University of Singapore. Prof Sally.  

Privatization & Public Private Partnerships Of SOEs In Sri Lanka

Arundathie Abeysinghe writes on Colombo Telegraph on SOEs In Sri Lanka,

In many Asian countries including Sri Lanka State-owned Enterprises (SOE) continue to control vast swaths of national Gross Domestic Product (GDP) with the state as their biggest share holder. As such, they control about 1/3 of total enterprise assets and SOEs are larger than their non-SOE peers. There is a great variety among Sri Lankan SOEs. Meanwhile, SOEs in the sectors that are monopolized by the state yield good income and profitability, while those that are not supported by the state record poor performance. To better understand the profitability of Sri Lankan SOEs, a deeper analysis should be done by looking into individual sectors.

Shares of SOEs in different sectors are diverse. The majority of SOE profits are contributed by sectors that are monopolized by them, whereas, sectors which are dominated by non-SOEs are major sources of non-SOE profits. The majority of the SOE profits are contributed by state-monopolized sectors and such SOEs record a respectable rate of return.  At the same time, profitability of SOEs in sectors with less state domination is much poorer.

According to the Treasury Annual Report 2014, at present Sri Lanka possesses 245 State Owned Enterprises (SOEs), of which 55 have been identified by the General Treasury as strategically important SOBEs under the clusters of Banking and Finance, Insurance, Energy, Ports, Water, Aviation, Commuter Transport, Construction, Livestock, Plantation, Non Renewable Resources, Lotteries, Marketing & Distribution, Health and Media.

Read The entire article on Colombo Telegraph

Privatisation popular according to an online Poll

An online poll conducted by roar.lk amongst it’s readers indicates, that privatisation remains a popular option with an overwhelming majority saying that Sri Lanka cannot move forward without at least some form of privatisation.

Readers of the website however tend to be from the more urbane, english-speaking part of the population and unlikely to be representative of the country in general.  

During the panel discussion at our event on State Enterprise reform in Sri Lanka,  panelists discussed the reasons for why the general public seems somewhat against privatisation.