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July to December 2014



Migrant Voices:
Returning Home

Finally Some Good

News about the
Ozone Layer?

Quality of Teachers
Does Matter in
Sri Lanka

What Sri Lanka Should

Know about Chinas New
Economic Dynamism






Poverty and MDGs in Sri Lanka: What More

Needs to be Done?


Quality of Teachers Does Matter in Sri Lanka:

Lessons from the Best Education Systems


Better Business Development Services Can

Help Sri Lankas Women Entrepreneurs


Open Online Courses Can Help More Sri

Lankans Access Higher Education



Asias Rise: Undoubted but not Unimpeded

Welcome to 9th edition of the Talking Economics Digest!


Laying the BRICS for a New Global Financial



What Sri Lanka Should Know about Chinas

New Economic Dynamism


Key Determinants of Sri Lankas Fertilizer

Subsidy: Some Research Findings for Policy


Standards Can Help Sri Lankan SMEs

Access New Markets


Sri Lankas Balancing Act of Promoting

International Migration while Protecting the
Well-being of Migrants and their Families


Aid and Trade Between Sri Lanka and China

A Snapshot of IPS Insights


Where Do Migrant Workers Fit in Sri Lankas



Looking at Sri Lankas Existing Trade

Agreements and Lessons for the FTA with


Are Restrictions Imposed on Female Migrant

Workers Discriminatory or Improving Family


Chinas Approach to FTAs with Other

Countries: What Can Sri Lanka Expect?


IPS News


Accessing Labour Markets Abroad: 6 Key

Challenges for Sri Lanka


Does Foreign Employment through an

Agency Minimize Vulnerability of Sri Lankan
Female Domestic Workers?


Sri Lanka Can Gain More from Migration by

Helping Returnees Reintegrate Better


Migrant Voices


Finally Some Good News about the Ozone



5 Things to Know About Building Resilience

from Droughts in Sri Lanka


Tackling Environmental Challenges in

the Indian Ocean Will Require Closer
Collaboration in the Region


Getting Communities Involved in Sri Lankas

Nature Tourism


The Dilemma of Dengue and the Health

Economics of It


A Closer Look at Youth Mental Health in Sri

Lanka and Some Consequences


Sri Lankas Ageing Population and its Health

Policy Challenges

Latest IPS Publications

Talking Economics Crossword Puzzle
Fast Facts

Migration Expert Views

MED_MIG Search Engine
Inside IPS

Research. Inform. Impact

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 influence the policy process. With over
two decades of substantial research expertise, IPS has emerged as a regional centre of excellence and
the most influential think tank in sri lanka.

Saman Kelegama
Deputy Director
Dushni Weerakoon
Talking Economics Team
Janaka Wijayasiri Editor

n this Edition, the Digest focuses on Migration and Development, one of cross
cutting and emerging thematic research areas at the Institute.

Anushka Wijesinha Former Editor

Bilesha Weeraratne
Shanika Samarakoon
Dishnika Perera

Over the past decade, the number of people leaving for foreign employment has
surged and there are over 1.5 million Sri Lankans working overseas, according
to the Sri Lanka Bureau of Foreign Employment. Nearly 250,000 Sri Lankans
annually leave for employment abroad and their remittances account for the
largest source of foreign exchange to the country, roughly 9.5 per cent of Gross
Domestic Product (GDP). Remittances also have been a vital source of income
for migrant households, enabling them to improve the socio-economic situation
of their families and their own position. However, migration has social and
physiological costs in terms of family breakdown, physical abuse of workers at
destinations (p.20) etc. Thus, Sri Lanka is struggling to strike a balance between
promoting migration while protecting migrant workers and their families (p.14).
Towards addressing this challenge, the government is interested in promoting
more skilled migration and accessing non-traditional markets (p.18). It is also
paying attention to facilitating the return and reintegration of migrants with
opportunities for skills transfer, productive employment and social integration

Charmaine Wijesinghe

Given that migration will continue to play a key role in the development of Sri
Lanka, the IPS has been strengthening its research capacity, policy engagement and
outreach activities on migration in 2014 through training, research, recruitment
(p.29), setting up of Labour Migration Resource Centre (p.28) and hosting an
international conference (p.60). This Digest also features insightful interviews
with international migration experts from India, Pakistan, the Philippines and the
UK (p.26), and two compelling stories of migrants who have returned home and
the challenges they face in reintegrating (p.24).

Suwendrani Jayaratne

As usual the Digest features articles by IPS researchers who are working on a
diverse range of policy issues including poverty, agriculture, environment, health
and education, international trade, etc. Some contributions to the Digest are
based on recent publications (p.63), which are now available for purchase.
I would like to acknowledge the contribution of Anushka Wijesinhe to the Talking
Economics Blog and Digest. His initiative, effort, and hard work as the Editor have
enabled us to share our insights with a wider audience beyond policy makers of
the country.
I hope that you find the Digest interesting and look forward to your continuous
support and feedback.
Janaka Wijayasiri, Research Fellow
May 2015

Savani Jayasooriya
Contributing Authors
Athula Senaratne
Anushka Wijesinha
Bilesha Weeraratne
Chatura Rodrigo
Dharshani Premaratne
Janaka Wijayasiri
Kanchana Wickremasinghe
Keshini Sritharan
Neluka Gunasekera
Nipuni Perera
Nisal Herath
Nisha Arunatilake
Priyanka Jayawardena
Raveen Ekanayake
Sunimalee Madurawala
Yolanthika Ellepola

talking economics

Executive Director

Institute of Policy Studies of Sri Lanka

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Colombo 07, Sri Lanka
Tel: +94 11 2143100, +94 11 2665068
URL: http://www.ips.lk
Blog: www.ips.lk/talkingeconomics
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Karunaratne and Sons (Pvt) Ltd.
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Sri Lanka.
Copyright and Disclaimer

All material published in the Talking Economics

Digest are the 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 Economics Digest and the IPS blog
represent the views of individual authors and do not
necessarily represent the views of the IPS.

Poverty and

MDGs in Sri Lanka:

What More Needs to be Done?

By Nisal Herath

important to look at the Millennium

Development Goals (MDGs). In Sri
Lanka, many of the MDGs are within
sight. The national poverty head count
ratio the percentage of population
who live below the national poverty
line has decreased from 8.9% in
2009/2010 to 6.7% in 2012/2013 in
Sri Lanka. Compared to the same in
neighbouring South Asian Countries,
Sri Lankas progress in poverty
reduction is remarkable. However, it is
time to look beyond the MDGs.
Sri Lankas success in achieving the
MDGs is partly due to the social
protection policies that the country
has implemented since Independence.
Also programmes such as free
universal health care and education
that is provide by the government
has contributed towards the goals
of universal primary education,
promoting gender equality and
empowering women, reducing child
mortality, improving maternal health
and combating HIV, malaria and other
diseases. However, sustaining these
achievements has become a challenge.

Image courtesy Anushka Wijesinha

Special article marking

International Day of
Eradicating Poverty

overty a condition where

wellbeing are not being met is
a multidimensional issue that affects
most, if not all, nations. Despite huge
success in reducing poverty in many
parts of the world, poverty remains
a major development challenge and
a multidimensional issue that affects
many nations, In fact, in South Asia
alone, 31% of the population is still
living in poverty.
Poverty is one dimension of
development and is interlinked with
many other dimensions. As such, it is

Continued poverty reduction depends

on maintaining and updating free
healthcare and education in Sri Lanka.
The challenge is that on one hand,
there is a need to maintain the growing
demands for free health and education
in a market-oriented economy while
on the other hand, expectations of
these services are evolving. Literacy
should not only be about the ability
to read and write any more, it should
also include a component of computer
literacy which is what matters now.
Similarly, improvement of health care
standards is required to match that of
modern Sri Lankan Society. The public
sectors alone cannot expand services
while maintaining required quality
is evident. It is important to involve
the private sector in the provision
of healthcare. At the same time,
equitable services that have reach
to ensure inclusiveness is needed.
Availability of healthcare services
is not enough, ensuring inclusive
accessibility of health services for
everyone is important.
Sri Lanka has been a success story in
poverty reduction, but the challenges

are not over yet. Although the number

of people living below the national
poverty line has declined, extreme
hunger is still an issue. The prevalence
of undernourishment in Sri Lanka
was approximately 24% in 2012[i].
Poverty and hunger are interlinked,
but it appears that decreased
poverty does not necessarily ensure
decreased hunger. Why does such a
high level of undernourishment exist
in a country where income poverty
has been reduced significantly?
Is it a food affordability issues or
misallocation of household incomes?
As such it is important to understand
food insecurity. Food security can
be enhanced by reduction of food
price volatility. Food price increases
have reduced calorie intake by 8.5%
and protein intake by 6% for poor
households[ii]. Also, increased use of
health care and improved sanitation
and water facilities as of 2010,
91% of the population had access
to sanitation facilities would help
towards decreasing undernourishment
and help solve this specific poverty
issue in Sri Lanka [iii].
There are other issues that still need
to be addressed, however. Foremost
among these issues is environmental
sustainability. Poverty issues are
interlinked with environmental issues
as sustainability cannot be achieved
without ensuring that natural
resources management underpins the
development process. In Sri Lanka, the
forest cover has decreased from 36.4%
in 1990 to 28.8% in 2010[iv]. The forests
need to sustainably managed as a part
of poverty reduction effort because
poor are the first to adversely affected
by environmental degradation.
As people are vulnerable to external
shocks, natural disaster can push
people who were out of poverty
back into poverty. Climate related
natural disasters such as droughts and
floods affect agriculture and fisheries
sectors[v]. Livelihoods that depend
on these sectors face a major risk
factor that could bring back the nonpoor people to poverty. Thus, a sound
climate adaptation policy should be
an integral part of poverty reduction
strategy of any country. In the case
of Sri Lanka, the Climate Change

Secretariat has been established to

address the issues of adaptations to
climate change.
Poverty is linked to many other
aspects of development. Although
the MDGs look at various aspects of
development, it is not exhaustive. The
MDGs have not looked at inclusive
growth and inequality. It is also
important to identify a new set of
goals after 2015 as the MDGs are due
to expire. There is dialogue underway
to develop post-2015 agenda with new
goals. Significant progress has been
made regarding poverty reduction,
but continuing work needs to be done
to ensure further development. In
the case of Sri Lanka, the issues are
not necessarily with facilities with
regards to MDGs, but the accessibility
and inclusiveness of facilities. As such,
it is also important to look beyond
the MDGs and incorporate missing
dimensions in the poverty reduction
[i] Asia Pacific Aspirations: Perspectives
for a Post-2015Development Agenda
Asia-Pacific Regional MDGs Report
2012/13 http://www.adb.org/sites/
[ii] Food price spikes, increasing
volatility and global economic shocks:
coping with challenges to food
security in Asia http://www.fao.org/
[iii] FAO Country Programming
Framework 2013 2017 Sri Lanka.
AsiaPacific Regional MDGs Report 2012/13
[v]Climate Change Vulnerability Data

potential of women in the development

process of Sri Lanka.

Better Business Development Services

Can Help Sri Lankas
Women Entrepreneurs Prosper
By Sunimalee Madurawala

Despite these obvious gains, gender

biases against women are common. As the
National Policy on Human Resource and
Employment observes there is a gender
bias in small-and-medium enterprises
(SME) employment. Workers employed
in SMEs are predominantly men. Good
equal employment practices are needed
to correct the above bias. According to
the World Bank Enterprise Surveys for
Sri Lanka, regardless of the sizes of the
business, fewer women are employed in
top managerial positions and less women
participate in ownership compared with

Business Development

Image courtesy Rose Charities Sri Lanka

omen should not restrict

chores. We have plenty of time
to do much more, and this is a time when
women have to contribute more to their
familys income, says Kumari, a 53 year old
entrepreneur, wife and mother of two, living
in Matale. Kumari once worked as a typist
at the Ceylo n Cement Corporation, but,
quit her job due to family commitments.
Kumaris story, which is captured in a new
study by the IPS and Oxfam on female
entrepreneurship in Sri Lanka, is just one
of many across the country. Although Sri
Lanka has achieved most of the MDGs
related human development goals, the
active female participation in the economy
is relatively low. Females account for as
much as 70% of the population that is
classified as economically inactive. Even
of those who are economically active,
the number of women in the workforce
(33%) remains far below that of men
(67%). Kumari, however, wanted to buck
this trend. She felt that she could do more
than being a stay at home mother. She
started manufacturing detergent products
at a very small scale, and despite facing
many difficulties and resistance, today she
proclaims her success as an entrepreneur
with great pride.
Inoka, a successful traditional food
producer from Kurunegala, faced similar
struggles, but like Kumari, she took up
the entrepreneurship challenge. Being

a woman I have several roles to play. I

have to be a good mother to my kids, a
wife to my husband, a daughter-in-law to
my in-laws, and now especially, a good
business woman to the society. Im happy
with where I am today. I gained all this
recognition because I started this business
and I am carrying it out successfully.


Like Kumari and Inoka, there are many
micro-level women entrepreneurs in Sri
Lanka who yearn for a successful career,
and help their families, and the country,
prosper. Women entrepreneurship can
contribute to a countrys development
process in number of ways. At an individual
level, it creates employment opportunities
for women. Women seek entrepreneurship
for many reasons. While some women start
a business based on an idea or innovation,
or due to an unsatisfactory experience as

an employee, others are compelled to

start their own business due to forced
unemployment either from a layoff or
due to lack of marketable skills. Regardless
of the reason for women to start up a
new business, entrepreneurship not only
empowers women economically, but also
builds up their dignity and earns social
recognition for them as well.
The impact of womens economic
empowerment goes beyond the individual
level. Research has shown that women
are more likely than men to invest a large
proportion of their household income in
education, nutrition and well-being of
their children. It has been estimated that
in emerging markets, women reinvest
90% of their earnings in their families and
With the accumulated assets and enhanced
economic security, women improve
industrial capacity and spur economic
growth by creating new jobs, as well as by
expanding the pool of human resources
and talents available in a country. Its also
acknowledged that, female-operated Small
and Medium Enterprises (SMEs) could well
cater to the demands of the rising middle
class important to Sri Lanka now given
the countrys move towards an upper
middle-income economy. Given the low
female labour force participation in the
country, fostering women entrepreneurs
can be an effective way of capturing the

A good way of helping women

entrepreneurs start up and grow is
through Business Development Services
(BDS). According to a recent IPS-Oxfam
study, there is enough evidence to argue
that BDS providers have to play a much
more dynamic role in assisting women
entrepreneurs to grow from micro level
to the SME level. BDS are non-financial
services that provide a variety of services
including training, counselling, advice,
information provision, facilitating access
to markets, etc. These services assist SMEs
overcome various internal and external
obstacles to their businesses. Financial
services alone will not result in business
growth in the SME sector.
In fact, in some cases, womens businesses
grow slower than that of men even within
the same financial support programmes,
indicating that women entrepreneurs
in particular require more non-financial
support. The role of effective and well
planned BDS becomes increasingly
important in such instances.
There are a number of BDS available in
the market catering to the needs of SME
strategic level development, such as
business development training, technology
transfer, creating markets and market
linkages, sharing of business information,
facilitating access to credit for the business,
etc. Generally, three major actors in the BDS
sector can be identified BDS providers,
BDS facilitators and aid donors supporting
BDS. In Sri Lanka, BDS are provided
through a range of programmes initiated
by both government and non-government
institutions. These include training by
the Ministry of Traditional Industries and
Small Enterprise Development, training
and technology services by Industrial
Development Board (IDB), Small and
Medium Enterprise Developers (SMED)

project, business incubator services by
United Nations Industrial Development
Organization (UNIDO), services offered
by the Sri Lanka Business Development
Centre, and assistance with marketing by
Laksala and the Sri Lanka Handicraft Board.

Recommendations for
Reaping the Benefits
Both the public sector and the private
sector will have to make a significant effort
to increase awareness who the providers
are, what services they provide, where the
providers are located at, etc., on BDS among
the small and medium entrepreneurs.
BDS providers can learn from financial
institutions that often visit villages and
meet with entrepreneurs personally to sell
loan schemes to them. A similar technique
can be adopted by BDS providers, where
they personally visit entrepreneurs and
inform them about the services available.
Government institutions and Chambers of
Commerce also need to fulfill their role as
BDS facilitators, especially in disseminating
information related to available BDS.

There is an unmet demand for BDS such
as marketing services, direct marketing
information on banking services, efficient
machineries and market opportunities,
taxation, and market information. These
are areas for BDS providers and facilitators
to focus on, in order to improve existing
enterprises and to make them more
profitable. However, to do so, there should
be better information channels regarding
these services and how they can be
accessed, all of which should be readily
available to the entrepreneur.

Aside from improving information on BDS,

the issue of appropriateness of available
BDS also needs to be addressed. The
study revealed that, rather than offering
generic BDS that tend to be available
everywhere, BDS providers should offer
more focused services catering to the
needs of entrepreneurs. For instance,
they can use mobile phones as effective
mediums of communicating with women
entrepreneurs in remote areas, as opposed
to traditional methods like posters and
An important aspect for consideration is
to encourage micro credit-plus BDS. In
this, the credit provider organizes and/or
provides BDS suitable for entrepreneurs
as a way to ensure credit recovery.
The entrepreneur herself benefits
tremendously through this system as it
focuses on individual needs. Such a method
would include technological support, input
linkages, business counselling, market
links, and individual mentoring, that will
build up a successful enterprise.
A key observation in the study is that BDS
providers need to expand their services
and to look for more innovative approaches
in providing their services. Overall, the
study asserted that fostering female
entrepreneurship and encouraging women
to act as employers is an important
way of unlocking womens potential in
contributing to Sri Lankas economy. In
the course of the study, the research
team met many women entrepreneurs
who grew their small enterprises in
difficult circumstances. As Karunawathi,
an entrepreneur from Anuradhapura
asserted that: When it comes to business,
it does not matter whether you are a man
or a woman; but all you need is talent,
determination and dedication. In the
interviews with them, entrepreneurs like
Kumari and Inoka acknowledged that
the BDS help they received from various
institutions benefitted them greatly. A good
system of support for entrepreneurs like
them, which eases the obstacles they face,
and helps build on their determination and
inherent potential, will surely help women
play a stronger role in the SME sector and
in the Sri Lankan economy as a whole.
(This article is based on a recently
publication Female Entrepreneurship and
the Role of Business Development Services
in Promoting Small and Medium Women
Entrepreneurship in Sri Lanka by IPS and
Oxfam GB Sri Lanka. The IPS Research
Team included: Kaushalya Attygalle,
Madurawala, Athula Senaratne, Anushka
Wijesinha, and Chopadithya Edirisinghe).

Key Determinants of Sri Lankas Fertilizer Subsidy:

Some Research Findings

for Policy Makers
By Chatura Rodrigo

s in many developing countries,

fertilizer subsidies represent
agricultural policy in Sri Lanka. This is
particularly true of the paddy sector.
With rice being the staple food in Sri
Lanka, successive governments have
provided significant fertilizer subsidies
for paddy with the primary aim of
increasing the paddy production[1].
Since 2005, the fertilizer subsidy
has accounted for 2-2.5% of total
government expenditure[ii] and the
subsidy is given for all three major
fertilizers (Urea, Murate of Potash
MoP, and Triple Super Phosphate
Over the years, the subsidy has
significantly contributed to increasing
paddy production, stabilizing the
milled rice price[iii], and helped the
country attain self-sufficiency in
rice[iv]. However, there are questions
on the effectiveness and sustainability
of the programme because of concerns
around the overuse of subsidized
fertilizer and its use for crops other
than paddy. The excessive use of
fertilizer has also raised concerns
over soil and water pollution, food
safety and the burden on the national
budget[v] and[vi].
In response to these concerns,
especially the burden on the budget,
the government of Sri Lanka reduced
the fertilizer subsidy by 25% in the 2013
Budget. It further aimed to encourage
farmers to adopt organic fertilizer.
However, paddy farmers complained
to the government that they are not in
a position to shift to organic fertilizer

within a short time and announced a

possible price hike for rice. After the
reduction in the fertilizer subsidy and
the consequent price hike, paddy
production declined as farmers did
not cultivate the full extent[vii]. In
response, the government revised
their decision in 2014 by reducing
the subsidy by only 10% instead of
the original 25%[viii]. This shows the
inconsistency in recent agricultural
policies, and calls for better evidencebased policymaking.

Paddy A Mainstay
Paddy cultivation is a major source
of livelihood in Sri Lanka, providing
more than 1.8 million people with
employment opportunities. So, in
terms of food security and rural
employment, the government is under
constant pressure to continue with
the subsidy scheme. Furthermore,
the subsidy has become a politically
sensitive issue, since paddy farmers
are a high share of the voter base[ix]
and[x]. This is very common in most
developing countries. However, a
sufficient and effective decision on the
reduction of the subsidy is not possible
without a clear understanding of the
factors that determine the demand for

A New Study
There are several studies in Sri Lanka
that have examined the factors that
determine the demand for fertilizer
in paddy cultivation. However, these
have failed to consider recent data
that capture the fertilizer subsidy

implemented since 2005; they

only take into account a handful of
variables that determine the demand
for fertilizer. Moreover, data on
fertilizer use in Sri Lanka needs to
be studies considering the two main
paddy-harvesting seasons. In order to
address these limitations, a new study
by IPS uses panel data regressions in
fixed and random effects scenarios
to investigate the factors that affect
fertilizer demand in the major paddy
producing areas of Sri Lanka between
1990 and 2011. This study uses
fertilizer consumption, prices, and cost
of cultivation data published by the
Department of Agriculture.

Significant Findings
Estimation results suggest that the
price of fertilizer, price of seed paddy,
price of labour, quantity of paddy
output, cost of materials, cost of pest
management, provision of fertilizer
subsidy and the whether the paddy
cultivation is commercial or not, all
have significant implications on the
demand for fertilizer. However, the
use of machinery which represents
the degree of mechanization in paddy
farming does not have a significant
impact of the demand for fertilizer.
The demand for fertilizer decreased
as the price of fertilizer and the price
of seed paddy increases. However,
the increases are relatively inelastic.
Both fertilizer and seed paddy do not
have close substitutes. Even though
organic fertilizer can be used in place
of chemical fertilizer, it is not widely
practiced in Sri Lanka and commercial

paddy farming is predominantly based

on chemical fertilizers. Therefore,
simply reducing the fertilizer subsidy
would not encourage farmers to
adopt organic fertilizer. Adoption of
organic fertilizer in the short run may
hinder production unless farmers
are compensated for possible yield
The demand for fertilizer increases as
the price of labour increases which
could possibly be explained by the
labour scarcity. An increase in the cost
of materials (mainly the cost for weed
management) pushes farmers to use
more fertilizer while an increase in
the cost of pest management reduced
the demand for fertilizer. On average,
farmers use more fertilizer when
the fertilizer subsidy is provided. But
the increase in demand, under the
subsidy, is significantly smaller. Finally,
the study finds that more fertilizer
is demanded by commercial paddy
cultivating areas.

Policy Recommendations
This study proposes several major
policy recommendations based on
three major outcomes: self-sufficiency
in the production of rice; prevention of
the overuse of chemical fertilizer; and
the gradual removal of the fertilizer
subsidy. The relatively inelastic
relationship between the price of
and demand for fertilizer, the limited
availability of organic fertilizer, and
the possible yield drops with organic
fertilizer use, all create issues in
adoption of organic fertilizer among
Sri Lankan paddy farmers. Therefore,
the objective of promoting organic
fertilizer requires farmer support
programs to ensure supply of fertilizer
as well as possible production cuts.
The price of seed paddy has a significant
impact in sustaining paddy production
in Sri Lanka. While increasing the
seed price would reduce the farmers
incentive to over use fertilizer, this
might actually limit farmers full
measures are needed to stabilize prices
of seed paddy. This study recommends
that in order to reduce the overuse
of the fertilizer, the price of labour
needs to be stabilized and there
should be measures to reduce the cost
of weedicides. Labour is becoming
scarcer in paddy farming. There is

an out-migration of labour and the

farm workforce is ageing. Therefore,
farmers who depend on hired labour
would want to make the best out of
what they spend and thus apply more
fertilizer when the labour is employed.
This could potentially lead to an
overuse of fertilizer. Mechanization
has the potential to reduce this over
use while simultaneously tackling the
labour constraint. Mechanization was
significant in reducing the demand for
fertilizer until 2005, however, since
then the price of labour has become a
more significant factor in determining
fertilizer demand.

Way Forward
Undoubtedly, the fertilizer subsidy
has greatly influenced the increase in
paddy production, and contributed
to achieving rice self-sufficiency in
Sri Lanka[xii]. However this study
recommends the gradual removal of
the fertilizer subsidy in the long-run,
in a phased manner. The short-run
reduction of the fertilizer subsidy can
be done for non-commercial paddy
producing areas since their fertilizer
usage is low. Organic paddy farming
is ideal for these areas. While the
fertilizer subsidy is more important to
commercial paddy producing areas,
the amount of subsidy given to them
can be reduced in several stages, by
gradually introducing organic fertilizer.
Yet, for that to happen, farmer
awareness and willingness needs to
be heightened, while the necessary
supply chain is developed as well. The
removal of the fertilizer subsidy in the
long run will give room for establishing
local fertilizer markets, reduce negative
environmental externalities, and
reduce the burden on public finances.
Additionally, it will encourage the
growth of cultivation and consumption
of organic foods.
[1] Rajapaksa, R. D. D. P., & Karunagoda,
K. S. (2009). Factor demand for paddy
cultivation in Sri Lanka with special
reference to fertilizer subsidy program.
Sri Lanka Journal of Agrarian Services,
13 (2), 25-38

[iii] Semasinghe., W., M. 2012.

Economics and Social Cost of Fertilizer
Subsidy on Paddy Framing in Sri Lanka.
International Journal of Science and
Research, 3(10), 1261-1267
Wickramasinghe, Y. M. & Dissanayake,
C. A. K. (2011). Income of rural farmers
in Anuradhapura District. The Journal
of Agricultural Science, 6(2), 92-99
[v] Weerahewa, J., Kodithuwakku S.
S., & Ariyawardana, A. (2010). The
fertilizer subsidy programme in Sri
Lanka, Case Study No 7-11 of the
Program: Food policy for developing
countries, The role of government
in the global food systems. Cornell
University, Ithaca, NY.
[vi] Ministry of Finance and Planning.
(2014). Annual Report 2014: Economic
perspectives of Sri Lanka. Government
of Sri Lanka. Colombo.
[vii] Jayakody., R. 2014. Farmers to
Hike Prices Sans Fertilizer Subsidy.
Published Article on the Sunday
Leader News Paper, Visited Online,
10th September 2014.
[viii] Ministry of Finance and Planning.
(2014). Annual Report 2014: Economic
perspectives of Sri Lanka. Government
of Sri Lanka. Colombo.
[ix] Thenuwara, H. N. (2003). A Policy
Rule for the liberalization of agriculture
in Sri Lanka. Staff Studies, 33(1), 1-13.
[x] Weerahewa, J., Kodithuwakku S.
S., & Ariyawardana, A. (2010). The
fertilizer subsidy programme in Sri
Lanka, Case Study No 7-11 of the
Program: Food policy for developing
countries, The role of government
in the global food systems. Cornell
University, Ithaca, NY.
[xi] Jayne, T. S., & Rashid, S. (2013).
Input subsidy programs in Sub-Saharan
Africa: A synthesis of recent evidence.
Agricultural Economics, 44, 547-562
Wickramasinghe, Y. M. & Dissanayake,
C. A. K. (2011). Income of rural farmers
in Anuradhapura District. The Journal
of Agricultural Science, 6(2), 92-99

[ii] Ministry of Finance and Planning.

(2014). Annual Report 2014: Economic
perspectives of Sri Lanka. Government
of Sri Lanka. Colombo.

What are Standards?

In simple terms, standards are
documents that help to bring order
to the world. Most people know what
shoe size they wear, because shoe
sizes are standardised. Likewise when
purchasing an electrical appliance
such as a television it could be
reasonably assumed that it would
be compatible with the electricity
system at home, as the plugs that are
fitted to electrical products and the
sockets that are installed in our homes
have both been designed to meet
commonly agreed and widely accepted
standards. Standards can be broadly
categorized into product, process
and management system standards.
They work to support industry
competitiveness by assisting with the
codification and dissemination of new
knowledge and innovations, helping
to improve products and services,
ensuring interoperability and enabling
trade. They also help businesses
to demonstrate to regulators and
customers that their products and
services meet defined safety, quality
and environmental standards.

Standards Can Help Sri Lankan

SMEs Access New Markets
By Raveen Ekanayake

tandards are a critical element of todays society;

they provide a common and repeatable basis for
doing things and help bring order to the world
we live in.They also play a vital role in the economy, by
facilitating business interaction and access to markets.
The products we consume today are no longer made in
one country; rather they are made in the world. Before
ending up with the end consumer, they pass through
many countries where people or parts add value to the
final product.Adhering to globally relevant standards
make it easier for many companies particularly small
and medium enterprises (SMEs) to get their products
certified and on the shelves in countries around the
world, allow them to take part in global value chains,
benefit from technology transfer, and compete on a
more equal footing. Against this backdrop, this article
takes a cursory look at how standards stimulate trade
by helping overcome artificial trade barriers, and assist
SMEs become more competitive.

In this special article marking

World Standards Day 2014,
Raveen Ekanayake calls for
government institutions and
regional chambers to take a lead
role in creating more awareness
on standards among SMEs and
help them in implementation.

How SMEs Benefit from

It is often the case that SMEs view
standards as a burden, made by large
enterprises, for large enterprises and
believe that they have no bearing upon
them. In reality however, adhering to
standards, provides a number of clear,
tangible benefits for SMEs which far
exceeds the costs of implementing
them. By meeting standards, SMEs
can clearly demonstrate their
commitment towards quality, leading
to enhanced customer satisfaction
and repeat business. Standards
provide reassurance and inspire trust;
consumers view businesses that apply
standards more favourably than those
that dont, and thereby help to build
the companys image.
In the arena of international trade,
the use of international standards
aids access and entry to international
markets, and assists with the
marketing and acceptance of a
companys products and services in
these markets. This is especially vital
when seeking access to developed

country markets. Using standards as

part of an export strategy can create
new business opportunities and
increasing sales, while reducing trading
costs. More importantly, standards
help to open-up markets by allowing
customers to compare offers from
different suppliers, thereby making
it easier for smaller and younger
enterprises to compete with larger and
much more established enterprises,
creating a level playing field with
bigger enterprises internationally and
to enter new or established markets.

Barriers to Realizing Benefits of

Whilst the benefits of adhering to
standards are clear-cut and outweigh
costs, especially in the long run, it
is most often the case that SMEs are
unaware of such benefits. The lack
of awareness of standards (either
generally, or of specific relevance
to their business) prevents SMEs
from realizing the full benefits that
standards can bring to them. Once
SMEs are made aware of existing
standards and their usefulness for
business expansion and growth they
may still face difficulty in identifying the
ones most relevant to them. Tracing
relevant standards require knowledge
of where to look, how to look, and
what to look for[2]. In addition, SMEs
require the skills to interpret the

information found and to determine
whether the standards identified are
relevant to them, complete, and the
latest versions available.
Once a relevant standard is traced,
SMEs face the issue of understanding
standards. Standards are written by
experts using a lot of technical jargon
and SMEs find these difficult to
comprehend. To make matters worse,
most international standards are
either in English, French or German,

thus making it difficult for a non-native

English speaker to comprehend. Owing
to their complex nature, SMEs also
find it difficult to implement standards
due to their lack of knowledge, skills
and resources to do so.

Helping SMEs Realize the

Benefits of Standards
Governments must play a critical
supporting role to help SMEs realize
the benefits from standards. At the
outset, creating awareness amongst
SMEs on the costs and benefits of
adhering to standards is fundamental.
The provision of ongoing training and
support is critical to introduce SMEs
to standards and to engage these
businesses in enhancing their uptake.
Another pertinent area of intervention
is the provision of information on
standards, in an accessible and
understandable form, about the
content or relevance of standards.
Assistance should be provided on
how to interpret standards to ensure
effective implementation. Acquiring
standards entails significant upfront
capital outlay, and financial support in
the form of subsidized credit to access
standards should be considered.

Way Forward for Sri Lanka

Sri Lanka has a gamut of national and
regional-level government agencies,
development banks and business
chambers, with wide geographical
coverage geared to service SMEs.
However, very little effort on their
part has been made in assisting
SMEs embrace standards. It is
therefore vital that national-level
SME institutions such as the Industrial
Development Board and the National
Enterprise Development Authority, in
collaboration with business chambers,
take the lead in creating awareness on
the benefits of standards and creating
an institutional mechanism through
which SMEs could be provided
continuous information, training and
advice on the importance of standards
and how to implement them.


Sri Lankas Balancing Act of Promoting

International Migration while Protecting the

Image courtesy www.lankastandard.com

Well-being of Migrants
and their Families
By Bilesha Weeraratne and Janaka Wijayasiri

very year about 250,000 Sri

Lankans migrate for foreign
employment. The departure
of migrant workers helps the
domestic economy by easing the
pressure for jobs while pumping
in valuable foreign exchange. As
such, labour migration is a growing
priority amongst policy makers in
the country. However, they are often
challenged by the trade-off between
promoting migration and protecting
the welfare of migrants and their

Trends in Migration
International migration is a cross
cutting phenomenon in Sri Lanka.
The stock of migrant workers of Sri
Lankan origin stood at around 1.9
million in 2010 [1] and they remitted
US$ 6.4 billion in 2013 (over 9.5%

of GDP [2]). International labour

migration became popular in Sri
Lanka in the late 1970s and since
then the predominant destinations
have been the Middle Eastern
countries and most migrants have
been unskilled. Over the years, Sri
Lankan migrants have gained access
to other markets and other skills
levels, but unskilled labour into the
Middle East continues to account for
the bulk of migrants (94% in 2013).
Unskilled labour and housemaids
together account for nearly 60% of
total departures[3].

The Three Phases

Migration involves three consecutive
phases pre-migration, migration
and post-migration. Characteristics
and decisions such as destination,
occupation and skills level, which

are relevant in the pre-migration

stage, affect outcomes in the
subsequent two phases. Specifically,
the departure of females leaving
their families behind to pursue
overseas employment is associated
with significant social costs during
the migration and post-migration
phases. To reduce the number
of females pursuing foreign
employment, the Government of
Sri Lanka is interested in diversifying
migration in terms of skills as well as
destinations. But this requires a clear
understanding of the labour market
for temporary migrant workers in
potential destinations the market
structure there, the skills sets that
are in demand and their existing
supply of foreign labour, as well as of
Sri Lankas supply of migrant labour.

In the migration phase migrants are
immersed in a new country and a new
culture, which often leads to various
adversities like harassment. Among
all migrant occupations, it is female
domestic workers who are most
vulnerable to such hardship because
their living quarters overlap with
their working environment. In 2012,
nearly 80% (10,220) of complaints
made by Sri Lankan migrant workers
were by female domestic workers.
Their vulnerability to many forms of
harassment is an ongoing concern
among the migration stakeholders.

Post-Migration Needs Greater

While there is a lot of emphasis on the
first two phases of migration, there is
limited focus on the post-migration
phase in Sri Lanka. This phase is
important to consider because the
majority of Sri Lankan migrants plan
to return after working for a few
years to accumulate savings (known
in migration studies parlance as part
of an optimal life-cycle residential
location sequence). This temporary
nature of departure promotes
remittances and eventual return of the
migrant, which marks the beginning of
the post-migration phase. Attention
to the post-migration phase is critical
for migrants to achieve the socioeconomic objectives of migration,
as many return not only with new
skills and accumulated savings, but
also strained relationships with those
they left behind. As much as potential
migrants need pre-migration training,
returnees need guidance on socioeconomic reintegration after their

The Balancing Act

Policy makers are often grappling with
the trade-off between promoting
international migration and protecting
the well-being of migrants and their
families. Policies on migration would be
successful if related policy packages are
drawn in consultation with all relevant
stakeholders; such as migrants, their
families, foreign employment agents,
relevant ministries and institutions,
and researchers. Dialogue and
interaction among stakeholders are
important precursors for successful
migration policy formation.
[1]Central Bank of Sri Lanka (2013),
Economic and Social Statistics of Sri
Lanka 2013.
[2]Central Bank of Sri Lanka (2013),
Annual Report 2013.
[3]Central Bank of Sri Lanka (2013),
Annual Report 2013.

Where Do Migrant Workers Fit in

Sri Lankas Population?

Sri Lanka are positively correlated

with oil prices. In the context that
fuel imports account for nearly a
quarter of Sri Lankas total imports,
the capacity of remittances to hedge
the domestic population against oil
shocks is as valuable as remittances.

neither counted in censuses nor can

they vote at elections in Sri Lanka
[6]. Depending on the definition
of foreign born persons adopted
in destination countries, some Sri
Lankan migrants may be counted
in censuses at destination, but are

[3] Migrants are not in

denominator of this estimate.


[4] However, it should be noted that

some migrants especially females,
were not prior participants in the
labour force in Sri Lanka.

By Bilesha Weeraratne
Figure 1: Major Sources of Foreign Exchange Earnings in Sri Lanka 2009-2013


USD Billion





n Sri Lanka, the projected

population growth rate is slowing
down and is expected to turn
negative around 2031, at which time,
the population is expected to peak
to approximately 21.883 million.
These population estimates reflects
the usual resident population in
the country those living or intend
living in Sri Lanka continuously for
more than six months. As such, the
number of Sri Lankan migrants is
not considered in this population
estimate, and there is no updated
estimate for the number of Sri
Lankans living in the rest of the
world. The only available estimates
is for migrant workers of Sri Lankan
origin (over 1.5 million), which is
neither current nor precise. Despite
the absence of a clear understanding
of the number of migrant worker of
Sri Lankan origin, there is a strong
nexus between them and the
resident population of Sri Lanka.

Temporary Migrant Workers

As per Department of Census and
Statistics definition, temporary

migrant workers are those who have

migrated for employment, have been
living aboard for 6 months or more,
and intend returning to Sri Lanka.
Presently, there are approximately
497,544 temporary migrant workers
in the rest of the world.[1] These
temporary migrants are the type of
migrants who are most connected
to the population in Sri Lanka. They
live outside Sri Lanka as part of
optimizing their lifecycle residential
location sequence and maintain
regular connections, and continue
to contribute to the domestic
population in many ways. Most
temporary migrants return to Sri
Lanka with improved human capital/
skills and accumulated savings, which
contribute to the productivity of the
local economy upon their return and

Social Costs of Migration

Among temporary migrant workers,
nearly half are females. The
departure of females has significant
impact on the population left behind
as most female migrant workers are

married and have children. The longterm absence of a maternal figure

has emotional, psychological, and
social impact on families of migrants.
[2] Additionally, spouse and other
family members such as elderly
parents also find it difficult to cope
with the domestic upheaval due to

How vital are Migrant

Workers to the Country?
migration has tremendous benefits
as well. In 2013, migrant workers
contributed US$ 6.4 billion in
remittances, which accounted for
over a third of Sri Lankas foreign
earnings, 9.5 % of Gross Domestic
Production (GDP), and over 3.5
months worth of goods and services
imports. This is clearly highlighted in
Figure 1, which shows the increasing
importance of remittances toward
foreign exchange earnings in Sri
Lanka, relative to other contributors
such as export of garment, tea,
rubber and tourism. Moreover,
literature shows that remittances to





Source: Compiled from Central Bank of Sri Lanka (2013)

by migrant workers to the local
economy is through the domestic
labour market. In 2013, migrant
workers accounted for nearly a
quarter of the labour force [3] and
have contributed towards keeping
unemployment at current low levels
in Sri Lanka [4].

Where do Migrant Workers

Fit in?
Amidst such prominent socioeconomic implications of labour
migration on the resident population
in Sri Lanka, there is a question of
belonging for migrant workers.
They are neither here nor there,
as the temporary nature of their
migration prevents them from
fully assimilating to the destination
country. Upon returning to Sri Lanka,
they often experience difficulties in
reintegrating back into the society
[5]. During the period they are
away from the country, they are

likely to get minimum protection due

to their second class citizen status.
As such, Sri Lankan migrant workers
are an invisible population of the
country. They are so connected to
Sri Lanka that their absence is dearly
felt while their support is highly
appreciated. The mutual support
between migrant workers and the
resident population of Sri Lanka is so
important that both need the other
for socio-economic success.
[1] This estimate should not be
confused with estimated over 1
million Sri Lankan migrant workers,
which includes both permanent and
temporary migrant workers.
[2] Ukwatte, Swarna. 2010. Sri Lankan
female domestic workers overseas:
mothering their children from a
distance. Journal of Population

[5] Athukorala, Premachandra. 1990.

International contract migration and
the reintegration of return migrants:
The experience of Sri Lanka.
International Migration Review,
Gunasinghe, M. 2011. `Abandoned
and Forgotten: Returnee Migrant
Women Workers in Sri Lanka.
Pages 93{152 of: Skanthakumar,
B. (ed), Rights, Remittances and
Reintegration: Women Migrant
Workers and Returnees in Sri Lanka.
Colombo: Law & Society Trust.
[6] Even though Sri Lanka ratified
the International Convention on
the Protection of the Rights of All
Migrant Workers and Members of
Their Families, which holds that
Migrant workers shall have the
right to vote and to be elected at
elections, absentee voting is not yet
materialized in Sri Lanka(IOM, 2006).


Are restrictions imposed

on female migrant workers
discriminatory or improving
family well-being

This decline can be attributed to the

efforts by the Ministry of Foreign
Employment Promotion and Welfare
(MFEPW) and the Sri Lanka Bureau of
Foreign Employment (SLBFE). Circular
13/2013 of June 2013 and its update
of December 2013 have been at the
heart of this change.
One of the aims of this directive is to
minimize the psycho-social cost on
children of female migrants, through
the Family Background Report (FBR).
The FBR, prepared by the Development
Officers (DOs) of the MFEPW is a
mandatory requirement for female
labour migrants from Sri Lanka.
According to the FBR, females with
children under the age of 5 years
are not recommended for foreign
employment, while females with
children above 5 years will only
be recommended for migration
if satisfactory alternative care
arrangements are in place to ensure
the protection of children.

Discrimination vs. Well-being

emale migrant workers make

a vital contribution to the Sri
Lankan economy, mainly through
remittances. However, this economic
gain often comes at a heavy social cost
on the children they leave behind. This
article, written to coincide with the
International Migrants Day, is aimed at
highlighting the discriminatory nature
of the recent restriction on labour
migration of mothers.
Females dominated migration for
employment from Sri Lanka over the
last two decades. But since 2010,
the number of women departing for
foreign employment has been lower
than men, declining to 40% in 2013
(CBSL, 2013).


The restrictions imposed through

the FBR are often perceived as
`discrimination against Sri Lankan
women in relation to the right to
migrate (UN Special Rapporteur on
the human rights of migrants).
discriminates migrant mothers of
younger children against mothers of
older children, and female parents
against male parents of young
children who can migrate for foreign
employment without restrictions.

Marking International Migrants

Day 2014, Bilesha Weeraratne
highlights the discriminatory nature
of the recent restriction on labour
migration of mothers.

For many mothers from low income

families, migration is the only viable
livelihood option. For some it is
a strategy to overcome domestic
problems, including abusive spouses.
In such cases, the FBR requirement
perpetuates their difficult situation
at home. This system also promotes
corruption, a market for forged
FBRs and female migration through
clandestine channels, as the FBR only
applies when migrating through lawful
It is an
during a
A survey

established fact that the

of a mother is critical
childs key growth years.
by the Ministry of Health

and International Organization for

Migration (IOM) in 2011 found that
23% of female migrants in Sri Lanka
had children between the ages of
1-3 years, while 33% of females had
children between the ages of 4-6
years. The well documented negative
association between a mothers
migration for employment and
childrens socio-economic outcomes
supports the rationale behind the FBR
However, as highlighted earlier, if the
presence of a mother leads to a tradeoff in funds needed to access vital
inputs for a childs well-being such as
food, shelter, clothing, education and
health care, such situations may also
lead to a mother being stressed and
helpless, which might also negatively
contribute towards the childs wellbeing.

In this case, what is more important
a mothers right to choose her job
or a childs need to be raised by her
In this conundrum there is no
clear cut answer. As mentioned
the Ambassador/Permanent
Representative of the Permanent
Mission of Sri Lanka to the United
Nations, this is neither an act of
discrimination against women, nor
a restriction of their freedom of
movement and the right to work,
but a reasonable classification to
promote a more balanced view of
all rights involved in the decision to
migrate, taking into account the need
to safeguard the family unit as the
fundamental unit of society. Hence,
the FBR should be promoted for its
merits while minimizing negative
The blanket nature of this directive
could be relaxed, where compelling
cases with children under 5 years
have an avenue to pursue foreign
arrangements are made for alternative
care arrangements. This can be done
under strict and continuous supervision
and guidance provided by the MFEPW
and other applicable agencies such as
National Child Protection Authority.

In addition, its discriminatory nature

could be addressed. At inception, the
FBR was expected to be a requirement
for all migrant workers. However,
limitations in manpower and logistics
led to the FBR initially being made
mandatory only for females. Therefore,
if the FBR is made a requirement for
all labour migrants, it would not only
minimize its discriminatory aspects but
would also contribute more towards
the well-being of the children who are
left behind. The FBR could recommend
that male migrant workers with
dependent children provide adequate
support to their wives in order to
assume the dual roles of parenting.
However, such an expansion would
revert back to the logistical issue that
resulted in the FBR being implemented
only for females.


Currently, there are three DOs of
the MFEPW for each of the 330
administrative divisions in Sri Lanka,
which translates to a little over one
FBR per day per officer. If such a
workload is unmanageable for these
officers amidst their other duties,
perhaps they can seek the services of
DOs appointed by other ministries.
Additionally, family evaluation for
FBR could be further streamlined and
aligned with duties of the DOs of all
ministries, to eliminate duplicate visits
to a given neighbourhood by officers
appointed by several ministries.
As this article highlights, there is a
need to review the way in which the
restrictions on female migrant workers
are implemented. If the gaps are
addressed, it would help minimize the
discriminatory nature against female
migration workers, while providing
balanced opportunities for the wellbeing of migrant mothers and their


Accessing Labour Markets Abroad:

6 Sri Lanka
Key Challenges for

fundamental human rights at work is

upheld to the highest standards.

study called for assistance from the

relevant authorities in this regard.

Six Challenges in Accessing

New Labour Markets

4. Salaries abroad

1. Language proficiency

This article was co-authored by Janaka Wijayasiri, Dharshani

Premaratne and Keshini Sritharan as part of the MED_MIG project
and is based on a forthcoming IPS publication on the topic.

The forthcoming IPS study based on

stakeholder interviews with recruitment
agents and government officials reveals
that a large proportion of unskilled or
semi-skilled Sri Lankan migrants possess
language skills, which is the primary
medium of communication for foreign
migrants. As an agent observed, even
labourers, they need English. If he has
a stomach ache he has to [be able to]
tell properly; otherwise they might be
treated for something else. So basic
English is a must. A half of all the agencies
that were interviewed claimed that this
creates a host of barriers and restricts
foreign employment opportunities.

2. Rules and regulations governing

recruitment of migrants in Sri Lanka

Image courtesy http://www.asergeev.com/

ri Lanka has set itself a target of

increasing migrant remittances to
US$10 billion by the end of 2016
from US$6.4billion in 2013, and a key
element in achieving this figure will be
altering the profile of migrant workers
and labour markets abroad. This article
highlights the key challenges facing
Sri Lanka in accessing labour markets

Diversification of Markets and

The Middle East is currently the largest
foreign employment market for Sri
Lankan migrants, with over 94% of Sri
Lankan workers employed in the region.
According to data from the Sri Lanka
Bureau of Foreign Employment (SLBFE),


many migrant workers from the country

occupy low-skilled positions. In 2012,
housemaids and unskilled workers made
up 64% of migrants from the country,
while skilled and semi-skilled workers
constituted only 25% of all foreign

employment. In the context of Sri
Lankas concentration of labour markets
(i.e., Middle East) and skill categories
(housemaids and unskilled), the National
Labor Migration Policy stated that, new

overseas markets and opportunities

must be explored and promoted. This will
ensure the promotion and development
of employment opportunities outside Sri
Lanka for Sri Lankans.
As of late, the government has also
been encouraging the migration of
more skilled migrants as opposed to
housemaids and unskilled workers.
Evidence shows that, low-skilled workers
are more vulnerable compared to skilled
workers and professionals and subject
to human rights violations, including
breach of labour rights, harassment and
abuse at the work place. Consequently,
the government has been promoting
and supporting the migration of
skilled men and women to secure work
environments where the protection of

Though the rules and regulations that are

in place are intended for the protection
and welfare of the migrants and their
families, it appears that this has made
the recruitment process a barrier to
the growth of the foreign employment
industry. Interviews revealed that some
of the rules and regulations governing
the recruitment of migrant workers in Sri
Lanka appear unnecessary for example,
irrelevant documentation requirements
must be reviewed and streamlined.
For example, females who want to go
abroad as housemaids are required
to get the permission of their spouse
while professionals/skilled workers
have to undergo generic training which
is not specific to their jobs. So, rules
and regulations need to be reviewed to
simplify and streamline the recruitment

3. Job orders outside traditional

Licensed foreign employment agents play
a significant role in the labour migration
process, but most of them have little
or no contacts outside the traditional
market the Middle East. Thus, they
have difficulty in ensuring that the job
orders that they receive and potential
employers from other regions are
genuine and legitimate, which prevent
them from pursuing new opportunities.
Almost all agencies interviewed for the

Increasingly, salaries offered for unskilled

and skilled workers by some labour
receiving countries are not attractive
compared to salaries they would receive
in Sri Lanka. Moreover, considering other
matters such as opportunity cost of
sacrificing family life in Sri Lanka, there
is little or no incentive in some cases for
Sri Lankans to seek foreign employment.
According to an agent interviewed,
the salary offered must be thrice the
wage in Sri Lanka, for there to be an
incentive to go abroad for employment.
Both traditional markets such as the
Middle East and some of the emerging
Asian Markets such as Malaysia offer
inadequate wages to Sri Lankan migrants,
particularly for unskilled and semi-skilled
workers and this has made it harder for
recruitment agencies from fulfilling the
available vacancies.

5. Preferences
Findings reveal that certain preferences
of some Sri Lankan migrants act as a
barrier to recruitment and fulfilment of
job orders. Sri Lankans are reluctant to go
to some markets despite the availability
of job vacancies due to negative publicity
regarding these countries in the media,
and also due to restrictions on life
styles in countries such as Saudi Arabia.
Instead, they prefer to go to developed
markets like the EU where obtaining
visas are difficult. The study also found
that preferences of recruitment agencies
and employers abroad can affect the
vacancies on offer to Sri Lankans as
well. As a result of poor performance
or misbehaviour at the place of work,
recruiters and employers in destination
countries can sometimes hold a negative
image of the suitability of Sri Lankan
workers for employment. This serves to
decrease the recruitment opportunities
available for Sri Lankan migrants.

6. Lack of capacity to supply required

Recruitment agencies revealed that there
is a lack of manpower in the country,
and that the present skill mismatch
adversely affects the competitiveness of
Sri Lankan migrants. This prevents them
from reaching non- traditional markets,
creating more constraints to recruitment
opportunities. Sri Lanka has not been
able to supply the numbers of workers
in mid-professional, skilled and semi-

skilled job categories, for whom there

was demand from various countries. For
instance, in 2009, there was demand for
784,212 positions from all job categories,
but Sri Lanka could only supply persons
for 247,119 positions.
Lack of unity within the industry, Sri
Lanka being uncompetitive compared
to other labour sending countries in the
region, lack of marketing/promotion to
penetrate new markets, bureaucracy,
high cost of recruitment, difficulties
in obtaining working visas, rules and
regulations in labour receiving countries
restricting recruitment were also
identified as other challenges affecting
the country from accessing labour
markets abroad.

Way Forward
The scope for addressing some external
challenges is limited, as Sri Lanka has
little or no power to affect changes in
labour receiving countries with regard
to rules and regulations, salaries, visas,
etc. In this context, more focus should
be given to deal with issues within Sri
Lanka by improving the relevancy and
quality of training programmes, using
better marketing strategies, streamlining
recruitment processes and enhancing
cooperation within the industry. In
terms of training, much more attention
needs to be given in improving spoken
English amongst migrants, which could
be done through establishing training
institutes in rural areas, upgrading the
training course of SLBFE, and conducting
courses to develop skills that meet the
requirements of destination countries
and the job. Further, marketing needs
to be done to alter the negative image
and attitude surrounding migrant
workers and the Middle East, with due
consideration given to the important
role they play in the economy. This can
be done through conducting exhibitions,
attending job fairs abroad to promote a
more positive image of manpower from
Sri Lanka while more support needs
to be extended to the SLBFE for it to
carry out marketing and promotional
activities Also, recruitment for foreign
employment could be facilitated through
simplification of rules and regulations,
removing unnecessary requirements,
wider application and usage of IT in
the recruitment process to reduce the
etc. There is also a dire need for the
stakeholders to come together for the
betterment of the industry, which is
lacking at the moment.


Vulnerability and the channel of


Does Foreign Employment

In Sri Lanka, recruitment of female

domestic workers to foreign employment
involves various channels, such as
through agents, sub-agents, combination
of agents and sub-agents, and direct
contacts. These various types of
recruitment channels protect female
domestic workers from specific types of
vulnerabilities at destination. A recent
study by the IPS investigated the link
between the recruitment channel and
vulnerability at destination. The study
was based on a sample of 1,409 females
who were employed as domestic workers
in Middle Eastern countries. The findings
showed that vulnerability is multifaceted,
involving various types of issues. Different
aspects of vulnerability can be minimized
through different recruitment channels
and no recruitment channel will protect
a migrant from all types of vulnerabilities.
For instance, if a female domestic worker
secured employment through a formal
recruitment agent, she has lower chance
of being forced to work longer hours
with no overtime payment, while having
a higher chance of being forced to work
for a different employer. When a female
domestic worker is employed through a
combination of an agent and a sub-agent
she has a higher chance of being forced
to do activities that she had not initially
agreed to. As such, the study finds that the
effect of recruitment channel is specific to
the type of vulnerability faced.

through an Agency Minimize Vulnerability of

Sri Lankan Female

Domestic Workers?

emale domestic workers are highly

vulnerable to adverse situations
at the destinations to which they
migrate, ranging from issues such as nonpayment of agreed wages, to physical
and sexual harassment, to confiscation
of passports by employers, and denying
of communication with family in Sri
Lanka. It leads to physical and emotional
trauma among female domestic workers.
Is there a way to minimize these female
domestic workers vulnerability? It
is often perceived that recruitment
through formal channels minimize
vulnerability. Is this true?

they are females, workers and foreigners,

with no party with any interest in
them. In some destination countries
they are not considered as employees,
while households where they work
are not considered workplaces, and
private persons who hire them are not
considered employers. Moreover, their
working environment and living quarters
overlap blurs the lines that separate the
two. Together, all these characteristics of
this occupation make female domestic
workers highly vulnerable to various
forms of difficulties at their work places.

Why are female domestic

workers so vulnerable?

As depicted in Table 1, the most

common complaints among Sri Lankan
female migrant workers in 2012 were
non-payment of agreed wages, sickness,
and physical and sexual harassment.
Together, these three issues accounted
for over a third of complaints. The
nature of complaints varies from
issues emanating from specifics of the
employment contract, to health issues

Domestic work is identified as one

of the most vulnerable occupations
among female migrants, due to multiple
reasons. At the country of origin, those
who seek female domestic work are
often drawn from a vulnerable group
in society the poor. In Middle Eastern
countries they are vulnerable because


Types of vulnerabilities

to, controlling and abusive nature of the


Protection from employment

Certain aspects of vulnerabilities are
supposed to be covered by employment
contracts. For instance, an employment
contract entered through a foreign
employment agent normally has a
written agreement specifying terms and
conditions of employment. Similarly,
ILO Convention No.189 requires that
migrant domestic workers should
receive a written job offer or contract,
which is enforceable in the country of
destination, prior to their arrival and
stipulates that living-in workers have
a right to keep their travel and identity
documents with them. Employment
through other informal channels often
does not involve such clear specifications
about employment. As such, does
recruitment through formal agents
minimize vulnerability at destination?

Table 1: Nature of Complaints by Females Received by SLBFE, 2012

In this context, potential migrants should

be well informed about the various types
of vulnerabilities associated with domestic
employment and how to strike a balance
between these conflicting implications,
through their choice of recruitment
channel. An ideal way to provide such
information is through a public awareness
campaign, such as the one adopted by the
Australian High Commission to discourage
illegal immigration to Australia by boat.
The benefits of such a public awareness
campaign that will highlight the benefits
and challenges associated with different
recruitment channels and vulnerabilities
common to female domestic work, is
that it will reach a broad cross section
of viewer not limiting to potential
female migrants. Then potential female
migrants friends, relatives, neighbours,
community/religious leaders, etc., will be
more knowledgeable and will be able to
passively contribute in evaluating each
recruitment channel in the context of
potential vulnerabilities and in supporting
the better informed potential female
migrant to make an informed decision
about her choice of recruitment channel.


Sri Lanka Can Gain More from Migration by Helping

Returnees Reintegrate Better

This article was written by IPS researchers Nisha Arunatilake, Suwendrani Jayaratne,
Nipuni Perera and Neluka Gunasekera , based on the findings from an IPS study
Returning Home: Experiences & Challenges.

of funds for self-employment, and a

lack of information and documentation
required to access loans and other
business opportunities.
The National Labour Migration Policy
(2008) considers reintegration of
returnee migrant workers a priority


area, and since then several specific
programmes on reintegration have
come into operation by several state
and non-state entities. Most stateassisted
programmes concentrate on providing
loans for self-employment ventures
or for housing. Meanwhile, non-state
actors play an active role in providing
vocational training and business

Figure 1 :Reintegration Experience

I have been migrating to Italy since 1993my last job was as a caretaker in a castleI
returned to Sri Lanka in 2003 with the intention of becoming a tourist guide. I am fluent in
speaking foreign languages and thought this would be an ideal job for me but I was unable to
work out this dream since I received a negative response from the relevant institutions, says
Nihal, a 58 year old father of one, who returned to Sri Lanka once again earlier this year.

ihal is just one of the many

migrants who find the process
of economic reintegration a
challenge. Many return with minimal
savings, and also face difficulties in
resuming employment after their
return. Migrant workers generally
return with accumulated savings
and new skills. But the economic
implications of migration for the
home country depend on how these
savings and new skills are utilized.
Some studies find that returnees can
contribute to the economy more than
migrant workers, if the returnees are


successfully reintegrated. However

if reintegration is not successful, it
can cause destabilizing effects on the
country and can result in migrants
going back abroad again and again.
The ability of returnees to impact a
countrys development depends on
both the conditions of return as well
as their reintegration experiences.

Re-integration Challenges
A recent study by the IPS (based on a
survey done by ILO and the SPAARC
on returnee migrants), shows that

a majority of the returnee migrants

have not successfully reintegrated
upon their return. Of the sample of
1,981 respondents in the survey, only
21% improved their familys economic
situation, only 6.3% improved the
possession of productive assets (Figure
1), only 47% are currently employed,
only 26% successfully reintegrated
with their immediate families, and only
5% successfully reintegrated with their
extended families. Interviews with
returnees indicated that some of the
key challenges faced by them included
difficulties in finding employment, lack

development training for returnee

migrants. However, vocational training
offered to returnee migrants by
government institutions in Sri Lanka is
limited to just pre-departure training,
and that too mainly for young people.
Yet, despite these programmes, the
IPS study reveals that that less than
10% of the returnees received any
institutional support.

Learning from the Philippines

Compared to the Sri Lankan
experience, the Philippines has a
more comprehensive reintegration
programme from pre-departure, to
on-site, and return. This programme
addresses both psychological as well
as economic aspects of reintegration.
To provide psychological support,
the programme organizes gatherings
for migrants and returnee families,
provides counselling services, and
assists in managing stress. To provide
support for economic reintegration,
the programmes provide livelihood
projects, community-based incomegenerating projects, skills training,
and credit schemes. Some of these
training programmes are conducted
at the overseas work places itself, and
migrants are provided with information

on investment opportunities available

back home, while still working abroad.
As part of the employment facilitation
services, returnees can get referral
assistance for local or foreign
employment through the Overseas
(OWWA). Trainings and scholarships
are also awarded for both returnee
migrants and their dependents to
engage in short-term vocational and
technical courses. Further, awards
such as the Model Overseas Filipino
Workers Family of the Year recognize
the achievements of workers as well as
their families in managing the impact
of overseas employment in family life.
This is used as a strategy to exemplify
the best practices adopted by families
to enhance the benefits of migration.
The Philippines also has a National
Reintegration Centre, which acts as a
one-stop centre for all reintegration
services, and coordinates and
facilitates the delivery of services by
all relevant service providers.

What Can Sri Lanka Do?

Like in the Philippines, reintegration
programmes in Sri Lanka should cater
to all aspects of reintegration, and
recognize the importance of working
with migrant families, rather than
individuals. Reintegration programmes
must start working with migrants
before they depart and continue to
work with them during their time
abroad as well as on their return.
Access to reintegration assistance can
be facilitated through a one-stop shop.
Reintegration programmes should also
extend to psychological counselling
and support for family members. The
key is to improve coordination between
different reintegration programmes
that are available and to improve the
awareness among migrants of the
programmes that are on offer.
Nihal, after many failed attempts at
starting a business in Sri Lanka, is
considering migrating for work yet
again. A better business environment
would have allowed him to use the
skills he has gained and the money
he has saved in starting and running
a business in Sri Lanka. It would have
not only benefitted him, but also the


Migrant Voices: Returning Home

Every year thousands of migrants leave the
shores of Sri Lanka with dreams and aspirations
of a better future for themselves and their
families. Upon return they hope to reunite with
their families and restart their lives in Sri Lanka.
However, they face a number of challenges
which make their reintegration difficult. These
are some of their stories.

Deepthi*, Mother from Gampaha

Hoping to collect enough money to
build a house of her own and uplift
her family, Deepthi left Sri Lanka in
2012 to Jordan to be employed as
a housemaid. However, the 33 year
old mother failed to save anything
as her employer refused to pay her
due wages. She could not fulfill her
dreams of building house back in her
hometown of Gampaha. Needless to
say her stay overseas was nothing
short of unpleasant.

care of her newborn baby, she is

unable to look for employment
outside her home. Therefore, she is
looking for suitable self-employment
opportunities she could engage in.
Deepthi claims to have gone to many
institutions seeking assistance to
start up her own sewing business
venture at home, but so far has not
been successful in obtaining any
assistance due to the inability to
show proof of a steady income in the

I went abroad with the

hopes of building a
house, but fortunately
I was unsuccessful in
fulfilling this I could not
save anything. In the end
my family had to send
money from home for me
even for the ticket.

I like to stay at home with the

baby. I know how to sew a
bit and Id like to get some
help to start a business.
Peoples Bank was saying
that they were giving loans,
and I went to check. They
said to be eligible for the
loan I have to be working
in a garment factory. They
asked for a pay slip and
because we cannot show this
sort of document we cannot
get the loan.

Since returning home, Deepthi has

been unemployed for nearly one
and a half years. With the added
responsibilities of having to take

Even though Deepthi is happy to

be back, she is still challenged by
the inability to raise initial funds
for a suitable self-employment
opportunity making reintegration

Although I am happy
to back at home, we
would really appreciate
it if someone or some
institution could assist us
to be self-employed and
self-sustained so it would
become an effective
alternative for overseas
Name has been changed in order to
protect the privacy and identity of
the individual.

Mahinda, Entrepreneur
from Anuradhapura
Interested in finding capital to
start his own business enterprise,
Mahinda left to the Gulf to work as a
driver for a company in Saudi Arabia
during 2002-2003. Utilizing the
remittances earned abroad Mahinda
is now a successful entrepreneur and
owner of vehicle service and filling
stations in Anuradhapura, Eppawela
and Thabuththegama. Mahinda
who had returned to Sri Lanka with
savings of only about Rs. 90,000/, had invested it in its entirety on
starting up his own business in his

I started my business on
my own. I didnt bring
back a lot of money.
I brought about Rs.
90,000/= and I spent all
of it on the business. I
put up a small building
to start the business, and
bought two machines. I
only had a chair and an
old table I brought from
home to sit and do all my
transactions. That is
how I started; those were
my humble beginnings.

Mahinda began his journey by

opening up a small Service Center
to wash and repair machines that
were used in paddy fields around his

hometown. Working hard towards

expanding his business, Mahinda
had been successful in introducing
several new field equipment and
machines to the local market.
In 2012, he won the Gold award
for Best Young Entrepreneur in
Anuradhapura for his exceptional
Commenting about his successful
reintegration experience in Sri Lanka,
Mahinda claims that the experience
he had gained while working
abroad is what helped in shaping
him into a more hardworking and
determined individual. Working in
a highly regulated and regimented
environment made him realize his

I realized how lazy we

were and how much of
opportunities and freedom
we had back at home
that we take for granted.
The strict training on
working according to a
timetable, following rules
shaped me into who I
am. I feel that I am strong
and more determined
than I had ever been.
The experience I gained
abroad was more
valuable than money.
Going abroad changed
my life. It made me

potential in both a physical and

mental capacity in starting up his
own business back at home.

When a person migrates

they have to have a clear
target as to why they are
going abroad
Drawing lessons from his own
experience abroad, Mahinda claims
that successful reintegration should
start at the pre-migration stage. He
states that migrants need to have
a clear objective to achieve while
working abroad.
Mahinda also states that upon
his return he did not receive any
type of institutional support for
reintegration. However, he feels
that although he did not receive
such support it is important for
government officers to assist
migrants in setting objectives prior
to migration as well as supporting
them through the settling in process
upon return.
Mahindas is one of the more
successful stories of Sri Lankan
migrants who come back home. He
is now married and has two children
and even owns his own home
and vehicle. He also has several
employees working under him at his
service stations and hopes to further
expand his business.


Talking Economics caught up with 4 migration experts from India, Pakistan, the Philippines
and the UK at the sideline of the International Conference on Policies for Mainstreaming
Migration into Development in Sri Lanka, held on 14 August 2014 in Colombo. We were able
to obtain their views with regard to accessing new markets, reducing vulnerability of workers
at destinations and reintegrating returnees successfully at home.

Dr. S. Irudaya Rajan, Chair Professor, Ministry of Overseas Indian Affairs (MOIA) Research Unit on International Migration at the
Centre for Development Studies, Thiruvananthapuram, Kerala shares his insights on how Sri Lanka can use its diaspora communities
in developed countries to access emerging labour markets in the world. Dr Rajan has three decades of migration research experience
and has coordinated several major migration surveys in Kerala.

In your opinion what do you think Sri

Lanka should do to improve access to new
markets and job categories?
I think the Sri Lankan governments
mindset has to change. They still think that
their market is only in the Gulf. I think they

have to move away from oil rich economies

to new emerging economies where with
small modification of skills, Sri Lanka can
reap a lot of benefits. This way Sri Lankas
trend of sending women workers can bring
more remittances and more development
to the Sri Lankan economy.

Indian Day). They should organize it every

year and discuss with the diaspora so that
they can be a part of the new development
manthra of the Sri Lankan economy. This
way the diaspora, migrants and the local
people can take the Sri Lankan economy to
the next level of development.

In your opinion how can Sri Lanka use the

diaspora to improve access to new labour
markets and job categories?

I think what is missing in Sri Lankan

migration research is a good database. I
think it is time IPS with the IDRC, launch
a Sri Lankan migration survey modeled
like the surveys done in Kerala for the
last 15 years, so that they can document
the impact of migration on individuals,
economy and society in Sri Lanka and how
best to integrate returnee migrants.

I think Sri Lanka has diaspora in many

countries. I know in Canada and the UK
they have a large diaspora community.
I think it is time for Sri Lanka to organize
diaspora meet ups like we do in India,
Pravasi Bharatiya Divas (Non-resident

Lucia Villamayor currently holds office in the Philippine Overseas Employment Administration (POEA) that manages the licensure and
regulation of more than 1,200 participating agencies in the field of recruitment for job placements of Filipino workers overseas. She
shared some of the more successful practices in the Philippines that could be adopted by Sri Lanka.
programme includes components of
The recruitment of Filipino workers as
well as the manpower requests of the
counseling, mentoring, and provision of
foreign employers are duly verified by
free training on financial literacy, skills
and livelihood training. We also provide
our Philippine labour offices at the jobsite
to ensure that they are truly foreign
financial and livelihood assistance which
employers in need of such skills. Also they
returnees can access to start their micro
ensure that there are actual jobs available
businesses, immediately upon return.
for our overseas Filipino workers before
This way they can also contribute to the
national economy upon their return.
being deployed.

What are the best practices Sri Lanka can

learn from the Philippines to protect and
promote worker welfare for migrants at
We have a licensing system in the
Philippines to ensure that only qualified
private recruitment agencies could recruit
and deploy Filipino workers overseas.

What do you think that Sri Lanka should

do to improve access to the European
I think one possible solution could be, as
in the Middle East, is to have a dedicated
person in every embassy and consulate,
explicitly focused on the labour market.
This person can send back information
on the latest schemes, shortages, and
different opportunities across the EU.
Sending the collected information
back to the relevant ministries like the
Labour Ministry, Imigration Department
and the Sri Lankan Bureau of Foreign
Employment is important because I think
the communication channels need to
be improved. There needs to be more
information because as we heard this
morning there is a lack of systematic
information. It [information] is not flowing.
The Sri Lankan government is not aware
of all the opportunities available, where


Secondly, publicizing and sharing that

information. There should be a dedicated
person focused on the labour market.
Once that information is collected getting
it out to both the official agencies as well
as newspapers is important. Otherwise
people would continue to just think about
the Middle East. So, Sri Lankans on the
ground should be encouraged to think
about other destinations in Europe that
can ensure them stronger labour rights.
Also how can Sri Lanka use the diaspora in
the EU to improve access to the EU labour
In my opinion and from my experience we
are dealing with Sri Lankans already. In
Italy for example there is already a proper
network. All my friends from Sri Lanka
have already sponsored their relatives.
So it is already happening, at least among
family members but also to a lesser extent
among friends. What could be instituted is
stronger links with the diaspora, especially
with the diaspora that is not going to come
back. So I think the assumption is that a
lot of these migrants go temporarily and
they come back to Sri Lanka. But in the
EU, I dont think we can assume that,
because from what I have seen in Southern
Europe once Sri Lankans migrate, they

stay, and build a life there. The Sri Lankans

I know in Italy have purchased homes
and their children go to Italian schools. It
is a permanent settlement. I think the Sri
Lankan government also has to think about
how to cultivate relationships over the long
term and ensure that these permanently
settled Sri Lankans will continue to send
their remittances back home. I dont think
the Sri Lankan government has to do
anything pro-actively; the networks will
take care of themselves. It is more about
cultivating relationships with long term
permanently settled Sri Lankans who take
on EU nationalities.
Do you have other comments with
regarding to expanding the market for
migrant workers?
I think we spoke this morning about
skill upgrading and I think what is really
important is focusing especially on women.
There are so many women who are going
to the Middle East as housemaids that
are vulnerable. I think a key part of the
policy for Sri Lanka in terms of skills
upgrading is to look at how the skills could
be upgraded for women within a gender
aware and gender sensitive policy and not
just talk about skills up grading in general.
Otherwise it is really only the male citizens
who benefits. Making sure that female
citizens also benefit I feel is very important.

We have a national reintegration center

for our returnees. This center was
created by the Department of Labour
and Employment to monitor and support
the existing integration programmes
available for the returnees. Our integration

Do you have any other additional

comments with regard to worker welfare
of migrant workers?
Yes, the recruitment agencies should
deploy people only to accredited foreign
employers with approved manpower
requests. Also the jobseekers should
only deal with duly licensed recruitment
agencies so that the welfare would be
protected even at the site.

Dr. G.M. Arif, the Joint Director at Pakistan Institute of Development Economics (PIDE) shares his views on worker welfare at different
stages of migration and what needs to be done in order to optimize migrant worker welfare.
high and the migration experience might
not be good for them. These two things,
recruitment system and good briefing of
migrants and their families will be key at
the pre-departure phase of migration.

Dr. Kathryn Lum, a Research Fellow based at the Migration Policy Centre at the Robert Schuman Centre for Advanced Studies, European
University Institute, Italy shares her views, based on her research interest and expertise in migration policy in Europe, diaspora policy
in Asia and the South Asian diaspora.
these opportunities lie and how they could
be exploited. So that could be one area.

What are the best practices Sri Lanka

can learn from the Philippines to protect
and promote welfare for migrants upon

Based on todays deliberations what do

you think Sri Lanka should do to improve
workers welfare at different stages of
migration? That is, at pre-departure, at
destination and on return?
I think, for pre-departure, from todays
deliberations, the experiences of other
countries and migration literature suggest
there are two things that are quite
important. First thing I would like to
mention is briefing of migrating workers
and their families [prior to departure].
Briefing is a way of telling them how they
can manage the migration phase. When we
talk about managing the migration phase
basically we are talking about managing
remittances. If the family does not have
a plan on how they are going to use the
remitted money during the working period
of the migrant, usually all the money is
spent on consumption and nothing will be
left for investment when that person comes
back. Money may not be there for his or
her [migrant] reintegration. So the first
thing is briefing workers and their families
on how to manage remittances. The
second is the recruitment system. It needs
to be an exploitation free recruitment
system, particularly to reduce the cost.
If the system is exploitive, costs will be

Regarding [welfare of migrants] at the

destination I have a couple of points as
well. The first thing is the protection of
workers. The employers have some clause
in their terms and conditions. So I think the
Sri Lankan Embassy over there should be
active and have close contact with workers
and employers, so that the migrants rights
are protected. If they are exploited at the
destination then the migration experience
may not be good for them to improve
their wellbeing when they come back.
Similarly many workers at the destination
have problems in sending remittances
back. They end up sending through an
informal channel and sometimes there is
exploitation there as well. I think there is a
need to guide the migrant workers on how
they can send remittances through the
formal banking system. While the banking
system should be easy, I think there is a
need to give them guidance during the
migration phase when they are at the
destination. So protecting workers and
strengthening linkages between workers
particularly and the Sri Lankan government
representatives can make this phase of
migration better for the workers.
Regarding reintegration upon return there
are several things that require attention.
But I think the most important thing is
that, if workers have money when they
come back they may not have enough
information on how to invest, particularly if
they are going to open up a new business.

There is a need to have a good information

system to reach these returnees and guide
them on how to invest. Otherwise the
possibility is there that they may spend
their money on nonproductive uses and
their condition or situation may not be
better or even worse off even after years
working overseas. The first thing they need
is information. The second thing is what
we have learnt from todays deliberations.
If there is no special scheme for returnee
migrants, at least they should know and
have access to the existing credit system
and get loans to start their businesses. This
is quite important for migrants to settle
and become secure. Thirdly, Pakistan has
recently started to give some skill training
to returnee migrants for them to become
self-employed or start their own business.
That is how you can make this third phase
or returning phase of migration better for
Do you have any other comments with
regard to worker welfare of migrant
As I have discussed in todays session,
basically migration welfare is connected
with all three phases of migration. Their
pre-migration background, how they work
and earn while they are abroad and how
this money is used during their period of
migration, and how they plan to become
self-employed and resettle in Sri Lanka are
important. Also, this cannot be managed
only by the government. Nor cannot it be
managed only by the migrant workers.
Therefore, close corporation between the
stakeholders is required and this can bring
a better outcome for all parties concerned.


Labour Migration


Resource Centre at


of New York (CUNY). The title of

my PhD dissertation was `Essays
in Unauthorized Immigration and
Migration. My Postdoctoral training
also focused on migration.

What inspired you to

pick Migration as an area
In this Edition, we feature of specialization?
Dr. Bilesha Weeraratne,
Research Fellow, attached
to the Labour, Employment
and Human Resources
Development Unit at the

abour Migration Resource

Centre (LMRC) is a special
collection on migration related
articles and documents located
within the IPS library. In order
to provide quick and convenient
access to the resources, as a part
of LMRC, the IPS Library developed
an online database called MEDMIG Search.
MED-MIG Search (http://med-mig.
ips.lk/) provides a platform for the
collection, organization, access
and preservation of scholarly
information on labour migration in
electronic formats. The database
targets an audience of researchers
and policy makers, seeking
information on labour migration in
South and Southeast Asia.
The types of documents in MEDMIG Search database include

books, book chapters, conference

papers, journal articles, technical
information is categorised under
eight key thematic areas; Domestic
migration control, Employment,
Remittances and economic impact,
Recruitment, Reintegration, Social
cost of labour migration, Social
protection, and Welfare and
Information can be searched by
Author, Title, Subject, and Key
themes. Subject to copyrights
and licensing of documents, when
available electronically, full-texts
are made accessible on-line, either
through the web-link provided in
the item to the original source or
through the IPS Library. Copyrighted

items are available at the IPS library

for reference, and photocopies
of relevant publications could be
obtained upon request.
The most significant aspect of
the MED-MIG Search database
is its interactive feature. Any
researcher, author, state official or
organization can submit relevant
documents to the MED-MIG search
from their desktops. We, at IPS
welcome your scholarly research
on labour migration on South and
Southeast Asia to the MED-MIG
Search database and are happy
to guide and work with you in the
process of submission.

Bilesha also serves as an International

Consultant to the Asian Development
Bank, Philippines. Bilesha holds a
BA in Economics from the University
of Colombo, Sri Lanka, an MA in
Economics from Rutgers University,
USA and an MPhil and PhD in
Economics from the City University of
New York, USA.

How long have you been

with IPS?
I re-joined IPS in March of 2014. Before
re-joining IPS, I was a Post-doctoral
Research Associate at the Princeton
University, USA. My first stint at IPS
was from 2003-2005 before I left for
my higher studies.

What is your area of

specialization and what
is your background on
the subject?
Migration - both international and
I specialized on migration for my
PhD in Economics at City University

While I was doing my higher studies

overseas, realized that being a migrant
is not easy. Migrants are neither here
nor there, and the experience of
having lived in another country stays
with one forever. These things make
migrants different from natives at
the destination as well as from nonmigrants at the origin. The issues
of migrants have to be analyzed in
this context. Being able to relate to
migrants made me passionate about

What is your migration

related highlight?
Within days of graduating from my
PhD Programme, I was chosen by
Princeton University to serve as a
Postdoctoral Research Associate of
the New Immigrant Survey. There I
was mentored by one of the greatest
migration scholars in the world
Douglas Massey.

Why do you think

international migration
is important to Sri
International migration is important
to the Sri Lankan economy on many
levels. On the one hand remittances
provide valuable foreign exchange to
us. At the end of 2013, remittances
stood at USD 6.4 billion, which
accounted for 9.5 percent of the GDP.

As a foreign exchange earner, foreign

employment has surpassed other
leading categories such as apparel,
tea, rubber and tourism. On the other
hand, international migration helps the
labour market in Sri Lanka by keeping
unemployment down. Moreover,
migration and related remittances
have the capacity to reach the grass
root level, and its benefits go beyond
the migrant and his household to the
entire community.

What is your agenda for

migration research at
During the next 2-3 years I plan to
research some of the key themes
of migration such as remittances,
poverty, labour market, brain drain and
unauthorized migration to name a few.
One of my ongoing research focuses
on financial behavior of migrant
households. Migration research at
IPS also covers internal migration and
urbanization. Under this aspect I am
working on developing an alternative
definition for urbanization in Sri Lanka
to study rural to urban migration in Sri

What aspects of your

personal life help you do
your job well?
My experience of having been a
migrant for nearly 10 years.

What are the five most

important things in your
Rather than things, I have five very
important people in my life. They are
my husband, our three kids and my
mom (not in any particular order!).

Finally Some Good News

about the Ozone Layer?

By Athula Senaratne

Marking the International Day for Preserving the Ozone Layer Athula Senaratne takes a look
at the latest positive news about the recovery of the ozone layer and what this means for
environmental and climate change challenges.

here are several days in the

global event calendar that are
dedicated to matters concerning
the environment. News that we
used to hear on these special days
often carries negative or alarming
facts. The usual message is that the
respective matter of concern is getting
deteriorated and the world is finding
it difficult to come to terms with the
problem. Quite often, criticisms are
exchanged among parties and both
the state authorities and public are at
the receiving end either for ignoring
their responsibilities or irresponsible
behaviour. This years ozone day


makes a difference. It comes with the

good news that at the end, the ozone
layer in the atmosphere is recovering
and the global community can be
credited for their collective effort.

This article attempts to highlight a few

of the salient messages contained in
the report.

Montreal Protocol is delivering

The joint report published by the

World Meteorological Organization
Environment Programme (UNEP)
brings this good news on the eve
of the global ozone day. The report
titled Scientific Assessment of Ozone
Depletion 2014 released a few days
ago, presents some important facts
that is worth wider public attention.

The Montreal Protocol is the global

arrangement for negotiating the
international actions against the
problem of depletion of the ozone
layer. Ozone layer is the special zone
of atmosphere that contains a higher
concentration of ozone molecules
which helps to protect the biosphere
from exposure to harmful levels of
cosmic ultra violet rays (UV). In the

absence of ozone layer, exposure to

excessive amounts of UV rays could
harm humanity by increasing the
chances of skin cancer and causing
damages to eyes and immune system.
Not only are humans but, other
living beings in the world are also
vulnerable. During the final quarter
of the last century, scientists observed
that the ozone layer is getting depleted
rapidly and the so-called group of
chemicals known as CFC (Chlorofluoro-carbons) are among the most
damaging ozone-depleting substances
(ODCs). These are some widely used
substances in industrial products such
as refrigerators, air conditioners, etc.
Scientists have further observed that
the ozone layer over certain parts of
the Southern hemisphere has become
particularly thin compared to other
areas of the atmosphere that popularly
came to be known as the Antarctic
ozone hole. This has become alarming
to inhabitants in those parts of the
world including Australia.
The Montreal Protocol helped to form
a global alliance against this menace
by orchestrating a collective effort
of all countries in the world to phase
out the ODCs from the world. The
new assessment report suggests that
actions taken under the Montreal
Protocol on ODCs are making the way
for the ozone layer to recover towards
the benchmark 1980 levels. So the
Montreal Protocol is delivering and
this sets an example to follow at a time
when the world is struggling to come
to terms with the potentially more
harmful problem of global warming
related to climate change.

Ozone-depleting substances
(ODSs) are in decline
The report brings out the following
major facts.
The ODSs controlled under the
Montreal Protocol continues to
decrease. The report finds that major
controlled ODSs are decreasing
largely as projected and stratospheric
abundances of chlorine- and brominecontaining substances originating
from the degradation of ODSs are
decreasing. It observes that by 2012,
combined chlorine and bromine levels
had declined by about 1015% from
the peak values of ten to fifteen years
ago. However, it also observes that

the group of substances known as

hydrochlorofluorocarbons (HCFCs) and
halon-1301 are still increasing, which
needs unknown or unreported sources
of carbon tetrachloride to explain its
abundance. It further reports that
there is an increase in ozone levels in
the upper stratosphere. According to
climate models, this can be explained
by contributions from declining ODSs
and upper stratospheric cooling
caused by increasing carbon dioxide
It looks possible that ozone will
recover toward the 1980 benchmark
levels in many parts of the globe if
the full compliance with the Montreal
Protocol is maintained. This recovery
can be expected to occur before the
mid-century in mid-latitudes and the
Arctic and may be followed somewhat
later by the Antarctic ozone hole. This
implies that the Antarctic ozone hole is
likely to continue to occur each spring,
as can be expected for the current
ODSs abundances until sometime
into the future. It has been observed
that the Antarctic ozone hole has
caused significant changes in Southern
Hemisphere surface climate in the
summer. The lower stratospheric
cooling due to ozone depletion is
considered the dominant cause for
observed changes. In contrast, no
robust link has been found between
stratospheric ozone depletion and
tropospheric climate in the Northern
The report also points out that changes
in carbon dioxide (CO2), nitrous oxide
(N2O), and methane (CH4) will have
an increasing influence on the ozone
layer as ODSs decline. As a result, the
evolution of the ozone layer in the
second half of the 21st century will
largely depend on the atmospheric
abundances of those substances.
These have a mixed effect over
global ozone, with high CO2 and CH4
elevating global ozone while increasing
N2O is responsible for depleting global
However, the world cannot be fully
complacent about the situation which
is seemingly improving. The substances
known as hydrofluorocarbons (HFCs)
currently used as a replacement for
ODSs is growing at a rate of about
7% per year and are projected to
continue to grow. If this continues,

it could result in HFC emissions of up

to 8.8 gigatonnes CO2-equivalent per
year by 2050. The HFCs have highGlobal Warming Potential (GWP)
and need to be replaced with lowGWP compounds.
Otherwise, the
climate benefits of the Montreal
Protocol could be significantly offset
by projected emissions of HFCs used
to replace ODSs. Hence, more future
efforts are still necessary.
The report highlights several other
technical aspects that need the
attention of the global community
and calls for continuation of collective
action to consolidate the gains so far
achieved for further gains. In spite of
those concerns, overall, it seems the
world action is heading towards the
right direction and correct initiatives
have been taken at the right time.
This conveys one important message
to the same global community which
is currently passing a treacherous
episode of negotiating mitigation of
greenhouse gasses (GHG) for avoiding
potentially harmful climate change
impacts. It suggests that alarming
signals from Mother Nature cannot
be left unheeded perpetually and
that humanity cannot ignore her calls
for ever. She is benevolent and duly
reciprocates when we respond to her
warnings. All we need to do is to help
her to help us.
Finally, Sri Lankans can be especially
happy about the news as we did our
best to contribute to this achievement.
Even though Sri Lanka is not a major
emitter of ODSs, the National Ozone
Unit coming under the Ministry of
Environment and Renewable Energy
successfully carried out a Phase-out
Management Plan of ODSs in the
region to fulfil its Montreal Protocol
compliance targets in advance to the
levels specified under the Protocol.
As a result, Sri Lanka managed to
(CFCs), Halons, Carbon Tetrachloride
(CTC), Methyl Chloroform and Methyl
Bromide consumed in the country. So
we can be proud of us as a nation that
fulfilled its responsibility as a member
of the global community.
In this
regard, we should be thankful to the
National Ozone Unit and the Ministry
of Environment and Renewable Energy
for providing the leadership towards
the right direction.

Things to Know About

Building Resilience from
Droughts in

Sri Lanka

By Editorial Team

any parts of Sri Lanka faced

a severe drought in the past
few months, with some
regions (especially the North and
East) not having received significant
rains since November 2013. Estimates
suggest that across six provinces, over
1.2 million families were impacted
and nearly 200,000 hectares of rice
fields (approximately 20% of the
cultivable area) have been affected by
the drought. The devastating impacts
on lives and livelihoods will be felt for
some time, and beyond the immediate
relief measures taken by the
government, donors and civil society, it
is important to think of ensuring better
drought resilience for the future. The
Talking Economics Editorial Team met
with IPS Research Economist Chatura
Rodrigo, who specializes in agriculture
and environmental issues, to find out
more about the underlying issues and
what can be done about them

1. Could this drought

have been prevented
or was it all the fault of
In general, droughts are a part
of climatic variability and longterm climate change can increase
the frequency and severity of their
occurrence. So, droughts are not
preventable. However, socio-economic
impacts of droughts are determined
not only by the physical hazard alone
but exposure, vulnerability and coping
capacity of communities also. Situation
of these factors can be improved.
For instance, meteorological data
and analysis have the capacity to
warn people about the likelihood
of droughts in the short run as well
as long run. What can be done is to
better prepare for them. The effort
needs to be better coordinated in
terms of physical, human and financial

The frequency and severity of droughts in Sri Lanka appear

to be increasing. How can irrigation and agriculture improve to
tackle future droughts, or are climate change effects catching up
too quickly? Here are 5 things you ought to know

2. Are the irrigation

systems keeping pace
with these changes?
Sri Lanka has a well-established
irrigation system. However, due to
poor management of watersheds
these systems are not functioning

fully efficiently. Even though there

are tanks that could store water and
release them in drought situations,
siltation and poor maintenance have
limited the water holding capacities
of most of them. There are a couple
of programmes already in place
to address these issues. One such
programme will deploy one member
from each family to the reconstruction
of irrigation canal ways and rural
access roads on a payment basis.
According to official sources, they will
be given 8 to 12 days work per month
for a maximum payment of 6,000
rupees. Excess silt and mud sediment
in reservoirs and tanks will be removed
and distributed among the rural bricks
and tile earthen manufacturers, free of

3. Are we seeing an
increase of extreme
droughts like this?
Droughts are not uncommon for
countries like Sri Lanka. However,
with the impacts of climate change
the frequencies and the intensities of
these events have increased. In the
future there will probably be more
droughts and so it is important to be
ready and learn lessons from previous
events. The places where droughts
might occur may change over time,
along with the changing rainfall
patterns and shifting of agro-ecological


4. What are the longer

term solutions to help
these areas be resilient
for droughts like this?

is the primary responsibility of the

department of meteorology. While
there are enough data to do so,
capacities of analysis needs to be
improved. From an agricultural point
of view, drought resistant plant
varieties need to be developed. While
there are some varieties already in
place they might not be adequate
for severe droughts that could come
in the future. In addition agricultural
methods must look for less water
intensive approaches. Rain water
harvesting is also important. This has
to come from the attitudinal of the
people. Sri Lanka does not have a good
reputation of saving water when we
have plenty. Harvesting rainfall water
will allow minimizing the impacts of
droughts. Finally, there should be
a better way of learning from past
experiences. This is not the only time
that Sri Lanka has faced a drought but
still the efforts show that we are not
yet ready for a similar situation in the
future. Coordinating and information
sharing becomes ever more important.

5. What changes can

we make in agricultural
practices to help prepare
for changes in weather
Agriculture practices that conserve
water better are a key determinant in
drought impact management. Rather
than cultivating as usual, it is important
to identify changing weather patterns.
To do that, information from the
Meteorology Department is crucial
but farmers own knowledge is also
important. Farmers have, over time,
developed many methods to cope
with situation like these and that
indigenous knowledge needs to
be disseminated. More research
and development is also the key to
identifying new drought-resistant
plant varieties. Finally information
communication technology can play
a major role in better information
dissemination, especially in disaster
relief efforts and sharing of climate
change and cultivation information.

There are couples of things that need

to be done. First of all, the ability to
identify and predict future drought
events needs to be increased. This

Tackling Environmental Challenges in the

Indian Ocean Will Require Closer

A regional workshop
of the Indian Ocean
Rim Association (IORA)
highlighted the critical

Collaboration in the Region

Ocean environment

By Kanchana Wickremasinghe

and the implications for

issues facing the Indian

the countries that are

around it, and benefit
from it. Kanchana
Wickramasinghe points
out that a strong
regional collaboration
agenda is needed to
tackle many of these.

he Indian Ocean presents unique

characteristics when compared
to other oceanic regions. It
covers around 30% of the global
ocean area and is home to nearly
30% of the worlds population[1].
The region is also important because
of its geophysical and environmental
characteristics. The Indian Ocean
has the unique characteristic of
seasonally-reversing wind and sea
surface circulation patterns because
the Indian Ocean is landlocked
in its northern part. Meanwhile,
around 30% of the worlds coral reef
cover, 40,000 square Kilometres of
mangrove cover, and nine large marine
ecosystems and important estuaries
are found in this Ocean. With such
rich natural resources, the region has a
huge potential to provide a number of
ecosystem goods and services (food,
fuel, hydrological cycles, nutrient
flows, etc.), useful to the countries
located in the rim of the ocean as well
as in its interior. Of course, these are in
addition to the regions geo-strategic


significance and its role in international

It is estimated that the total economic
value of the entire biosphere is US$33
trillion per year and for the marine
environments US$ 20.9 trillion per
year. This means that more than
63% of ecosystem services and
natural capital originate from ocean
environments, globally. During the
same year (in 1994), the global gross
national product total amounted to
US$18 trillion, which is less than the
total economic value of the marine
environments in the world. However,
these are considered as minimum
estimates due to the nature of
uncertainties. Though total economic
value estimates for the Indian Ocean
region are rarely available, given
its geographical and environmental
significance, a considerable share
of the total global marine economic
value may be originating from the
Indian Ocean.

The utilization of the regions resources
is determined by a number of other
factors for example, governance.
Governance in the ocean environments
is particularly difficult due to its fluid
nature. The Indian Oceans resources


are shared by a number of countries
with diverse interests and capabilities.
Not all of them have the same level of
technology or expertise when it comes
to extraction and utilization of the

contributing to this pressure. The

resulting uncontrolled development
and unsustainable use of resources
around the ocean is rapidly becoming
a challenge to be addressed. Mangrove
and coral reef habitats are being lost
due to aggressive economic activities,
and unregulated utilization is leading
to an over-extraction of resources.
Pollution is also affecting the ocean
resources and its ecosystems.
Additionally, the emerging impacts
of global climate change are likely to
have negative consequences on the
ocean resources, peoples livelihoods
that are based on them, and in turn,
the economic contribution that the
oceans resource base can make.

Regional Collaboration
Utilization of ocean resources by
the rim countries involves multiple
actors, multiple uses, and multiple
demands in varying scales. So, it is clear
that efforts by individual countries are
not enough to address the issues faced
by the region. There is a clear need
for regional collaboration in ensuring
better utilization of the Indian Oceans
resources, as we highlighted in a
previous article.

Most of the Indian Ocean rim countries

are developing economies. Moreover,
the extraction of certain resources
such as minerals can have impacts on
the natural oceanic environment and
therefore, environmental factors are
intrinsically linked to the economic
potential of the oceans resources.
Fisheries and minerals are identified
as the most commercially viable
industries in the Indian Ocean region.

have been put forward in relation to
marine environments have progressed
very slowly due to a number of
impediments.[3] Some of them
include developing country constraints
such as human and financial resources,
capacity building, technology transfer,
limited data and information in some
areas, insufficient governance and
management capacity, etc. Regional
collaboration can be viewed as a must
to address these types of issues.

The economic contribution that the

Indian Oceans resources make to the
countries around, it is immense; for
example, fisheries (for commercial
purposes as well as a source of protein),
ocean-related industries, and tourism.
However, recent socio-economic
changes in the region have been
putting pressure on these resource
base. The growing populations in the
Indian Ocean region, particularly the
increasing densities in the coastal
regions, the expansion of cities and
the rising middle class, are key factors

Experts at a recent regional workshop

organized by the IPS in collaboration
with the Ministry of External Affairson
Establishing a Centre of Excellence
on Ocean Sciences and Environment
for the Indian Ocean Rim Countries
(30 June 1 July, 2014), strongly
emphasized the need for regional
collaboration. The issues faced by
the region were discussed under four
themes ocean resources, energy
resources, biosecurity and climate
change. As highlighted by the experts of
each area, regional collaboration was

identified as a must to find solutions for

the ongoing environmental challenges
and make best use of the ocean for the
economies in the region.
A key area for regional collaboration
was scientific and policy research
vital for formulating effective regional
and national, and sectoral policies. The
research should focus on critical areas
of interest and continuously update
in line with the changing conditions.
Capacity building at regional level and
financing becomes a key requirement
for this. The absence of a centralized
data source on the Indian Ocean
also need to be addressed through
meaningful regional cooperation.
Gathering and sharing of data, which
is necessary for effective policy
formulation, can be facilitated through
regional partnerships. Also, technology
transfer could be one of the benefits
that regional collaboration can bring
in. This is particularly important for
the regions developing countries that
lack the technologies to make use of
the ocean resources. Finally, in order
for collaboration to be meaningful and
sustainable, it is important to have an
effective regional centre which can
initiate and maintain close links with
all the parties involved in the process.
The proposed Centre of Excellence, to
be located in Sri Lanka, under the aegis
of the Indian Ocean Rim Association
(IORA) is envisioned to take the
leadership in regional collaboration
in relation to ocean sciences and the
[1] Wafar M, K. Venkataraman, B.
Ingole, S. Ajmal Khan, P. LokaBharathi
(2011), State of Knowledge of
Coastal and Marine Biodiversity of
Indian Ocean Countries. PLoS ONE
6(1): e14613. doi:10.1371/journal.
[2] Michel, D., H. Fuller, L.Dolan (2012),
Natural Resources in the Indian Ocean:
Fisheries and Minerals. In D. Michel,
& R. Sticklor (Eds.), Indian Ocean
Rising: Maritime Security and Policy
Challenges, New York: Stimson.
(2011), A Blueprint for Ocean and
Coastal Sustainability. Paris: IOC/

Getting Communities
Involved in

Sri Lankas
Nature Tourism
By Kanchana Wickremasinghe

In this article marking World

Tourism Day 2014' on
the theme Tourism and
Community Development,
Kanchana Wickramasinghe
argues that tourism-related
community development
in nature tourism should
not be just about getting
a few villagers to guide
tourists, but must take a
more meaningful and holistic

A lot of tourists are coming to

see Yala. Only a few villagers are
having small boutiques closer to
the entrance. There are a few who
are working as guides in the safari
jeeps. Other than that we do not get
any income through Yala tourism,
remarked a villager who lives in
the periphery of Yala National
Park, when he was asked about the
benefits to his community of the
increasing tourism in the area.

Helping local communities gain more

from tourism remains an elusive goal
in many tourism areas across Sri Lanka,
not just in Yala. It is increasingly being
recognized that local communities
should be a stronger part of a
countrys tourism industry. Not only
does it directly result in community
empowerment, but it also ensures the
sustainability of tourism businesses
especially in natural environments and
rural contexts.
Nature tourism can take various
forms; ecotourism, agro tourism,
etc. Meaningful participation of local

communities in nature tourism is vital

because they have been the guardians
of the natural resources in the country,
including forests, over the years.
The local communities possess the
knowledge and understanding about
the natural environment and sociocultural context, much better than
an outsider which is an important
asset for nature tourism. However,
in the case of Sri Lanka, meaningful
involvement of communities in
nature tourism activities has not been
satisfactory so far, as highlighted in
previous IPS publications. The same
mistake should not be repeated in the
emerging areas of nature tourism.
A villager in Ranpathwala, Kurunegala
who was optimistic of tourism said,
Our village is blessed with natural
beauty. We would like to gain
some income through tourism. Our
involvement can make sure that there
will be no impacts on the forest or
villagers. But the whole issue is that
it is difficult to find English speaking
young people to guide the tourists.
Tourism is an entirely new business
for some rural villages in Sri Lanka.
These communities do not have any
experience in carrying out, or being
a part of, tourism in their respective
areas. Though they can be used as an
important asset in the businesses, the
lack of skills and knowledge holds back
their effective involvement.

People tend to be pessimistic of
the role of tourism in their own
communitys context. The common
belief that tourism can cause negative
social implications in the rural villages
is a barrier that hinders the active
involvement of communities in
tourism. Villagers in Illukkumbura, a
village bordering the Knuckles forest
range, assert that the behaviour of

some of the tourists was a threat to

their traditional socio-cultural set-up.
These aspects should receive enough
attention in tourism promotion, when
targeting and marketing policies
at higher levels. Efforts to sensitize
tourists to local culture would also
help address this, and should focus not
only on foreign tourists, but domestic
tourists as well.
The absence or lack of community
involvement in the planning stages of
tourism is also a major gap that needs
attention. Most of the problems which
can arise in the operational stages can
be minimized by getting community
inputs in the initial stages of the
businesses. This also helps create a
better sense of ownership.
Sri Lanka can learn lessons from
success stories in regard to meaningful
community involvement in small scale
tourism in different parts of the world.
Ecotourism in the Monteverde Cloud
Forest Preserve in Costa Rica and in
the Periyar Tiger Reserve, Kerala, India,
are two examples where lessons can
be drawn for Sri Lanka. In these two
cases, establishing meaningful and
strong links with the communities in
decision making and implementation
and also better sharing of benefits,
were the reasons for their success.
Tourism-related community development in nature tourism should not
be limited to getting a few villagers
to guide the tourists, as in the case of
Yala. Of course, the pathways for community involvement may be different,
depending on the location, socio-economic conditions of the households,
target customers, etc., so a one-sizefits-all approach would not bring the
desired outcomes. But more capacity
building of communities and better
community involvement at an early
stage must become priorities in this
process. New forms of tourism which
are emerging in Sri Lanka can create
more opportunities for communities
to get involved and gain greater benefits. Innovative and careful planning
will be a must in order to make sure
that community benefits are meaningful and long-lasting.


n the first half of 2014 alone, this

deadly disease of the tropics infected
20,610 people, in comparison to
32,063 in 2013. According to the
Epidemiology Unit of the Ministry of
Health, approximately 60% of dengue
cases in the country are from the
Western Province home to some of
the main commercial hubs in Sri Lanka.
Despite there appearing to be strong
political will and continued government
commitment to eradicate this epidemic,
the surge in dengue continues, affecting
many individuals and the country as a

Additionally, once an income-earner in a

family is infected, their lost labour time
due to the illness poses an economic
burden on the household. This then
also impacts the households financial
capacity to support treatment.
At a macroeconomic level, the overall
economic burden of dengue affects
not only through the opportunity cost
of lost productive time, but also the
burden on public health expenditure.
Moreover, a continuation of the current
outbreak could pose a threat to the
countrys tourism prospects. Some
foreign governments such as United
Kingdom, Australia and the United States
have issued health advisories warning
travellers about it.

The Rise and Rise of


Government Action

Dengue shares a fatal bond with rain.

In Sri Lanka, two peaks of the disease
occur annually alongside the monsoon
season, leading to growth in densities
of mosquito vectors. The influx of
population to capital cities, coupled
with problems for waste disposal and
management by local governments,
have been identified as primary causes
of the high incidence of dengue in the
According to the Epidemiology Unit,
incidences of dengue escalated rapidly
to 28,473 cases and 167 deaths in 2011.
This trend continued to rise in 2012,
with 44,456 cases (and 180 deaths),
but declined to 32,063 cases in 2013.
However, in the first six months of 2014,
the Colombo, Gampaha and Kalutara
districts of the Western Province have
reported notably higher numbers of
dengue cases compared to the rest of Sri

Why is Dengue More

Prevalent in the Western
The Western Province has experienced an
11% increase in population density from
2002 to 2012. Rapid commercialization
accompanied with new development
projects, and the favourable growth
outcomes in the Western Province
have encouraged migration from rural
areas to the more urban areas in the
province. More importantly, out of the
total population in the country, 28% are
clustered within the Western Province.
In 2012, urbanization has accounted
for population growth in Gampaha and
Kalutara districts. With the two Free
Trade Zones Katunayake and Biyagama


At the outset, it should be stated that

ministries alone cannot eradicate dengue.
Community participation is paramount.
In the absence of an antiviral drug or
vaccine, effective mosquito control
underpins dengue prevention. Although
it is the responsibility of households
to keep their premises free from the
spread of dengue, local authorities are
responsible for community cleanliness,
and the continued efforts of the central
and local government should be rightly
acknowledged. Wide-scale campaigns
include improved communal awareness
of the epidemic through mobile
technology; continuous education of
medical and nursing staff in the handling
of patients; education campaigns
in schools and universities to raise
awareness of environment health and
sanitation; an inter-ministerial dengue
fighting task force; and imposing fines
for improper waste disposals are some
of the initiatives that are in place.

The Dilemma of
Dengue and the
Health Economics of It


By Yolanthika Ellepola
the Gampaha district showed a 1%
population increase, and Kalutara 1.2%,
With population growth, attention
should be given to basic needs such as
household and sanitary facilities of the
communities. However, in the Western
Province, 10% of households dwell in
unsatisfactory sanitary facilities, while
0.1% of households have no access to

sanitary facilities at all. Appallingly, 52%

of households in the province consume
unsafe drinking water. The deteriorating
public health infrastructure in the
province is largely to blame for this. High
population densities coupled with access
to unsafe drinking water and unhygienic
sanitary facilities are providing a
favourable environment for the spread
of dengue in the Western Province.


Economic Burden of
Those at lower ends of the income strata
could be more susceptible to dengue,
and could also face a greater economic
burden from it. Due to poorer housing
and other facilities, they may be less able
to maintain ideal hygienic and sanitary
conditions that help prevent dengue.

In addition, the Public Health
Department in coordination with the
local authorities have controlled the
outbreak through inspection of land
parcels and spraying BTI in high-risk
dengue areas. Even though BTI could
be used to control dengue, the natural
bacterium could merely be used in
limited areas, as it could lead to adverse

consequences for human consumption.

However, regrettably, residents have
also complained that local government
workers have demanded financial
incentives in return for spraying mosquito
repellent. In a further attempt to contain
costs local governments have decided
to charge Rs. 1,000 from households in
return for spraying mosquito repellent.
Despite the progress made, limited
infrastructure for surveillance and
control, quality diagnostics, lack of
active laboratory based surveillance are
many of the challenges that continue
to prevail. Apart from that, lack of
financial resources and active public
participation are also issues in effectively
addressing this deadly epidemic. Since
the development of the dengue vaccine
is at its infancy, vector control is the only
means by which the spread of dengue
could be curtailed. However, it cannot
be denied that vector control is essential
to limit the spread of dengue although
the development of the vaccine is vital
to eradicate the disease.

Way Forward: Lessons

for Sri Lanka
Dengue has been a major public
health issue in Sri Lanka for many
decades. The impact of the disease on
the countrys economy and society is
serious, and can only become worse
if not addressed effectively. While
commending government efforts to
prevent and control the spread of the
epidemic, more needs to be done to
completely eradicate this deadly disease
from the island. A combination of good
environment management, effective
solid waste management, and a flood
retention programme are key elements
of mosquito control.
The multifaceted nature of the disease
requires efforts among multiple actors
laboratory personnel of multi-disciplines,
public health inspectors, and the wider
community. Sustaining the gains made
in reducing fatalities and continued
encouragement and support of doctors,
nurses and health practitioners on the
clinical management of dengue patients
is central. Furthermore, the referral
system needs strengthening ensuring
timely referral of patients to appropriate
levels of health care. Apart from these
measures, Sri Lanka can also learn
from countries like Singapore where
architects have successfully designed
buildings without gutters and have thus
successfully tackled the epidemic by
using simple, yet, effective mechanisms
of mosquito control. More pragmatic
and efficient preventive measures are
essential in first minimising the risk, and
then, eradicating this epidemic, before
many more Sri Lankans lose their lives to
this deadly disease.


and given peer pressure and stress, the

probability of them being victims of
substance abuse is high.

Closer Look at Youth

Mental Health in Sri Lanka

and Some

Stigma is a considerable barrier

to mental-health service delivery,
particularly among young people. Helpseeking behaviour comes less readily to
young people who may be evenmore
impacted by stigma, embarrassment
and the lack of basic knowledge about
mentalhealth. The issue of stigma is
further challenged by the lack of quality
mental-health services in countries such
as Sri Lanka.


Image courtesy University of Wollongong, Australia.

This is a special article to

mark International Youth Day
2014 (#IYD2014) by Chatura
Youth encounter two main landmarks in
their lives: the entry into the youth life
and entry into the adult life. Both these
transitions bring about many challenges
and tension. These two transitions will
decide whether the youth is a catalyst of
good or bad. Understanding what youth
go through during these transitions and
in between is very important. This year,
the International Youth Day is focused
on discussing Youth and Mental
Health. Many factors impact the mental
health of youth and they lead to many
consequences. From a Sri Lankan point
of view, usage of alcohol and drugs,
suicides, and teenage pregnancies are
some of the significant consequences
related to the mental health status of

A Closer Look at Youth of Sri

In Sri Lanka, high incidence of homicides,
self-inflicted injuries, and suicides are
major causes of death among youth.
High rates of suicide and self-harm
indicate high levels of psychosocial stress
amongst individuals in the community.
According to the Sri Lanka police records,
3770 deaths were recorded in 2011 were
due to suicides. Further, suicides were
highest among females in the 21-30
year age group followed by those in the
below 20 years age group. The highest
male suicides were among elders, but
more than 500 suicides were by young
Smoking and alcohol use among youth is
significant and needs careful attention.


Usually the first use of a cigarette,

or use of alcohol, takes place during
adolescence. Some youth continue
smoking and alcohol use from then
onwards. According to the spot survey
carried out by the Alcohol and Drug
Information Centre (ADIC) in 2012,33%
of respondents were current users of
tobacco, while 35.6% were users of
alcohol. According to the responses,
the highest prevalence of tobacco and
alcohol use was from the age category
of 25-39 years. Out of those aged 15-24
years, a majority current smokers and
alcohol users reported that the main
reasons for use of substances were to
be social with friends. These substances
greatly impair mental abilities and the
physical skills of youth, and enhance
the long run risk of developing cancers,
lung diseases, ulcers, heart disease, and
liver diseases. Further, the use of these
substances is a contributing factor to
accidents, suicides, violence, and sexual
abuse, among young people.
While the substance abuse issue is
directly linked to peer pressure, it also
highly depends on the ability of person
to cope with frustration and stress. For
example, substance abuse is high among
youth who live in war affected areas,
compared to other parts of the country.
This is mainly due to fact that youth in
the reconciliation process are most of
the time in highly stressful situations due
to the uncertain nature of their future.
Sometimes the lack of availability of
guidance, employment, and educational
opportunities, push them towards
coping mechanisms that include smoking
and substance abuse[2].

Mental health of youth in Sri Lanka

has also direct impact on their sexual
and reproductive health. Marginalized
youth and war affected youth are
more prone to have damaged mental

conditions, thus are poor in planning

their families and adopting accepted
family planning measures and being
aware of sexual and reproductive
health. Youth in the estate sector
of Sri Lanka are more unemployed,
and they are the poorest among all.
Province wise, Northern and Eastern
provinces have been exposed to 30
years war, thus youth of these areas
are more likely to face Post-Traumatic
Stress Disorder (PTSD) and are
mentally unstable to follow sexual and
reproductive health advise. Proving
this, teenage pregnancies in Sri Lanka
are highest among estate sector
girls and girls of Eastern province.
On a national scale, according to
the Demographic and Health Survey
(DHS) 2006-2007, 6.4% of adolescent
women (age 15-19 years) have begun
child bearing are already mothers or
are pregnant with their first child[3].

Global Scenario
Sri Lanka does not stand alone in any
of these aspects when compared to
the worlds statistics. Mental health
disorders were the most prevalent source
of disability for young people worldwide,
accounting for 45% of total morbidity.
Disorders included major depression,
substance abuse, schizophrenia, and
bipolar disorder. The next most prevalent
causes of disability were injuries (12%)
and infectious and parasitic diseases
(10%). Further, the prevalence of mental
health disorders varies across gender,
ethnic, and socioeconomic lines[4].
Suicide rates among young people have
risen to such an alarming extent that 15
to 19 year olds are now at highest risk
of suicide in a third of all countries, with
suicide being the second leading cause
of mortality for this age group globally.
Young people can be expected to be the

Increased education and awareness

of mental-health conditions is likely to
reduce the perceived stigma associated
with seeking treatment and disclosing
symptoms to professionals and other
adults in positions to help. Socialmarketing campaigns and national
programmatic efforts aimed at raising
social awareness of the issues of mental
health are a critical next step in the
effort to reduce the stigma among young
people with mental-health conditions.

Source: Institute of Policy Studies of Sri Lanka and Ministry of Youth Affairs
and Skills Development, 2014.
group at highest risk of suicide in the
future. In most countries, suicide rates
are higher in males than in females.
This also applies to the 15 to 19 year
old age group, with about 10.5 suicides
per 100,000 people for males and about
4.1 per 100,000 people for females[5].
Gender ratios vary between countries
(about 3-4:1 in European countries and
1-2:1 in Asian countries) with a high
rate of suicides among young males in
the West and a relatively lower rate in
Asia[6]. The causes of suicide worldwide
are also diverse; with different risk factors
in different cultures. Mental disorders
(particularly depression) and abuse of
alcohol or drugs are the major risk factors
for suicide in Europe and North America.
In Asian countries, impulsiveness and
adjustment disorders play an important
role. A risk factor that is evident across
the East and West is unemployment,
especially when coupled by stressful
events such as financial problems and an

inability to compete[7].

What is the way forward for

Sri Lanka?
Substance abuse is a significant issue
that relates the health of youth.
While peer pressure and stress are
two significant factors that drive
youth towards substance abuse, it
is a personal decision. With proper
knowledge and enforcement, these
things can be prevented. Therefore, life
skills education for both, school-going,
and out-of school adolescents could
be the most appropriate channel to
create awareness among adolescents.
Smoking, alcohol, and other substance
abuse prevention, should be integrated
with life skills education. Further, in
most developed countries, retail outlets
are prohibited from selling tobacco and
alcohol to minors, however this is not
the case in developing countries. Access
to these substances is easy for youth,

Finally, a public-health approach to the

prevention of behavioural and mentalhealth conditions is instrumental in
addressing this issue at a national
level. This approach includes a range
of preventive interventions spanning
mental-health promotion, universal
prevention, selective interventions and
indicated interventions, each of which
map onto different levels of risk. A
number of school-based programmes
focused on promoting competencies
such as emotion regulation, social
skills, behavioural inhibition and
conflict resolution also hold promise for
implementation in low resource settings
Workplace-based programmes have
been also shown to reduce stress and
mental health problems of youth.
[1] Jayawardana, P. (2014), Healthy Youth for
Development, in Youth and Development:
Realizing the Millennium Development Goals
for Sri Lankan Youth, IPS & Ministry of Youth
Affairs and Skills Development, Sri Lanka.
[2] & [3] ibid.
[4] Gibson, J. (2013), Mental Health Disorders
Prevalent among Youth Worldwide, http://
[5]Wasserman, D., Cheng, Q., & Jiang, G. X.
(2005), Global suicide rates among young
people aged 15-19. World Psychiatry, 42,
[6]Yip, P. S. F. (2005), A public health approach
to suicide prevention. Hong Kong Journal of
Psychiatry, 15, 29-31.
[7]World Health Organization (2010), World
Suicide Prevention Day. Many faces, many
places: Suicide prevention across the world.


while diseases such as Diabetes,

Cancer and Cardiovascular Diseases
(CVDs) are on the rise. Government
hospital statistics indicate that 71%
of all annual deaths are attributed to
chronic Non-Communicable Diseases
(NCDs). In particular, CVDs, Diabetes,

Sri Lankas Ageing Population and its

Health Policy



By Yolanthika Ellepola


Cancers and Chronic Respiratory
Diseases account for 29.6 %, 9.4%,
3.9% and 8.5%, respectively.
An 82.4% probability of developing
Chronic NCDs is explained by
unhealthy diet when compared
with smoking, alcohol consumption,
physical inactivity and over-weight, as
reported by the Ministry of Health. A
study by the National Bureau of Asia
Research estimated that by 2025 diet
related factors primarily saturated
fat intake will account for almost
40% of CVDs. Diabetes will contribute
to approximately 29% of CVDs and
18% of strokes. Similarly, obesity and
excess weight will account for 24% of
Diabetes and 27% of Hypertension.

Expenditure on NCDs

nited Nations (UN) celebrates

the International Day of Older
Persons 2014 under the theme
Leaving No One Behind: Promoting
a Society for All. This necessitates
of demography and sustainable
development, while acknowledging
that population dynamics will shape
key developmental challenges in the
21st century. Given that 20% of the
global population would be classified
as elderly dependence by 2030, this
article reiterates the importance of
considering the health needs of the
elderly, and developing strategic policy
options so that no one is left behind.

The Demographics of Ageing

Population ageing is a universal
phenomenon, and the number of
people aged 65 years and above is
expected to grow dramatically across
Asia. Although the ageing process
in the West occurred over a 50 year
period, in Asia, this process is likely to
occur in a shorter span of 20-30 years.
For the region as a whole, people in
the 65 years and above age group will
increase by 314% from 207 million
in 2007 to 857 million in 2050. While
countries like Republic of Korea and
Singapore are expected to have a
more rapid ageing population by 2025,

elsewhere in Asia, the share of the

population 65 years and older will not
reach 10% until after 2025.
In Sri Lanka, sustained decline in
fertility coupled with out-migration
has significantly changed the countrys
dependent population. The child
population of 4.7 million in 2011 is
projected to stabilize at 3.5 million
during 2031-2041. Similarly, the
working age population that comprised
of 65% of the total population in 2006
will gradually decline to 63.2% and
52% in 2031 and 2071, respectively,
with a demographic dividend lasting in
Sri Lanka only until 2017. On the other

hand, the elderly population of 1.7

million in 2001, is expected to rise to
3.6 million by 2021, and will comprise
16.7% of the total population. By 2041,
1 in every 4 Sri Lankan is expected to
be elderly.

Health Issues of an Elderly

Sri Lankas demographic transition is
apparent not only in the age pyramid
but also in the disease profile of the
country. Communicable diseases
such as Malaria, Tuberculosis and
Japanese Encephalitis have shown
less morbidity and mortality patterns,

An increase in Sri Lankas ageing

population calls for continuous
specialist care and geriatric treatment
all of which involves a substantial
proportion of investment. In Sri Lanka,
one of the main difficulties faced by
the countrys healthcare provision
is to separate health expenditure
for the elderly from general health
proportion of elderly in the country
require long term intensive care
for both preventive and curative
purposes. Although treatment for
emergency inpatient care such as
Cancer, Myocardial Infraction, are
predominantly publicly financed, a
substantial proportion of care for
NCDs such as Diabetes, Hypertension
and Asthma are financed through
out-of-pocket spending delivered by
the private sector. Despite spending

in hospitals being dominated by the

public sector, ambulatory care and
retail sales of medical goods are
predominantly spent in the private
Although the government has
supported a policy of providing
universal health services through
tax-based financing, the actual
government expenditure fails to meet
the financial requirements of health
needs. Despite the allocation of Rs.
2 billion for investments in NCDs in
2014, shortcomings of healthcare
delivery continue to prevail.

Way Forward
Projected data on Sri Lankas future
population trends, although alarming,
is an unavoidable demographic
issue. Today, population ageing is
at its inception and the temptation
might be to dismiss this issue for the
distant future. However, to do so
would be a mistake. Although ageing
in Sri Lanka is not as advanced as in
developed nations, a silver economy
is not far off. With rising longevity
and low fertility rates, Sri Lanka is
confronted with social and economic
repercussions that are mostly negative
for the society at large. It is even
anticipated that Sri Lanka will follow a
similar trajectory to developed South
East Asian nations and run the risk of
growing older before growing richer.
Unlike in South Korea where
healthcare spending rose from 2% to
6% of GDP between 1970 and 1997,
most Asian countries including Sri
Lanka face a predicament of expanding
elderly population with associated
healthcare needs and lower levels
of health spending. Given the high
costs entailed, adequate healthcare
is simply beyond reach for many
Asian countries. Lessons could be
drawn from Japan for instance, where
universal health insurance is funded
by both the employers and individuals
assisted by significant government
subsidies. Therefore, complying with
this years UN theme, the Sri Lankan
health sector should include chronic
disease prevention through enhanced
care for the elderly population, and
invest in a formal system of old age
support on a priority basis.

Quality of Teachers Does Matter in Sri Lanka:

Lessons from the

Best Education Systems

By Nisha Arunatillake

critical determinant in students

overall schooling experience in
general, and improving students
education outcomes in particular, is
the quality of teachers in schools. The
recent budget speech presented in
Parliament proposed to recruit 50,000
teacher assistants to rural schools next
year in English, Mathematics, Science,
Information Technology, Aesthetic
Studies and Sports. Once they complete
their specialized subject training
and leadership training, they will be
absorbed to the respective schools.
They will be required to complete

In this article marking

International Students Day
2014 Nisha Arunatilake
takes a look at the vital
ingredients for improving
teacher quality in Sri Lankas

the Degree in Education within 5

years before absorption into Sri Lanka
Education Service, after which they will
be required to serve in the same school
for a further five years. This proposal
has many merits. The recruitments are
especially targeted at filling the gaps
in identified subjects. Also, as they are
school-based, they will fill the gaps
in teacher shortages in rural schools.
But why the recruitments made at the
teacher assistant level is not clear. Even
if appointment of teacher assistants are
necessary at the short term, long term
strategies are necessary for improving

teacher quality and alleviating teacher

shortages at different locations and for
different subjects in the country.
Nowhere does the quality of a school
system exceed the quality of its
teachers, states PISA (2012), a tool
designed to assess 15-year-old students
across the globe for their competencies
in reading, mathematics, science and
problem solving. PISA is different from
normal exams, in that, it is not meant to
examine how well students know what
they have learnt, but it tries to assess
how well they can use that knowledge
to solve problems situated in unfamiliar
This article compares the policies and
practices of the education system in Sri
Lanka with that of the best education
systems, as measured by PISA, focusing
mainly on teacher quality.

Stringent Teacher Recruitment

In the best-performing schools, ensuring
teacher quality starts with recruitment.
The best performers in the post-senior
secondary level exams are chosen
for a career in teaching. For example,
in Singapore, candidates for teacher
training are in the top three percentiles
of their graduating classes. Only one
in eight applicants are accepted for
teacher training. The selection process
is rigorous and includes interviews
to assess the personal qualities of
the candidates, and review of school
records to assess contributions to school
and community. School leaders are
also of good quality as they are chosen
primarily from amongst schoolteachers.
The best schools systems use a variety
of methods to attract the best to the
profession. Teachers are relatively highly
paid. For example, teacher salaries in
Singapore are comparable with salaries
of other professionals. High teacher
salaries are an incentive for the best


students to choose a career in teaching.

Teachers are also highly respected,
and teaching is a highly sought after

Teacher Promotions as a Means

to Improving Performance
In many of the better-performing Asian
countries, having well defined career
paths, compensations and promotions
based on performance, and special
incentives to encourage teachers to
teach in difficult areas and challenging
schools have resulted in encouraging the
best candidates to enter the teaching
profession, and allocating them across
the system in a way that achieves the
best results.
In Singapore, teachers can get promoted
along three different career tracks
teaching track, leadership track,
and specialist track. Teachers in the
teaching track can be promoted along
their chosen career paths to become
principals or master teachers, while
teachers in the leadership track can
work their way up to becoming the
Director General of Education. In the
specialist track, teachers are focused
on research and teaching policy and
can move up the ladder to become a
chief-specialist. As teachers move along
the career path, they receive salary
increases and opportunities to train and
develop themselves.

Teacher Training and

Quality improvement does not
stop with the recruitment of the
best candidates. Those chosen are
continuously trained and developed to
do their best. Throughout the teaching
career, teachers are provided guidance
and support for their development.
Successful teachers can move up the
career ladder and expect better salaries
and promotions.
In Shanghai, China, teachers are
expected to undergo continuous
development and given the space to do
so. For instance, they are encouraged
to allocate a significant proportion of
their time for lesson planning. Teachers
are provided with multiple avenues for
development. Peer support is one of
them. Teachers regularly meet in small
groups, according to their subject area
and grade, to discuss teaching methods,
conduct mock teaching sessions, and to
comment and learn from each other.

Professional Teacher Service

In China, since the 1980s, teachers are
required to get certified in order to
become a teacher. A general education
certificate at the secondary or tertiary
level is not sufficient to become a
teacher; they must also pass the
National Mandarin Language Test, and
qualify in four exams covering pedagogy,
psychology, teaching methods, and

teaching ability.
In Japan, since 2009, teachers are
expected to renew their certification
every 10 years, after undergoing
professional development. This policy
change has encouraged teachers to
participate in professional development.
Also, schools are able to not renew
appointments of teachers who fail to
upgrade or renew their certificates.
The nexus of interaction between all the
areas highlighted, are shown in Figure 1

Lessons for Sri Lanka

Sri Lanka has already established
some of the key features of the best
performing school systems. Teacher
recruitments through National Colleges
of Education and Departments of
Education in universities are similar to
the way teachers are recruited in the
best performing countries. However,
the ad hoc recruitment of individuals to
the profession through other means has
reduced the quality of teachers available
in the system.
The education system in Sri Lanka can
learn from some of the best practices of
the best performing school systems. The
system for developing, appraising and
promoting teachers in Sri Lanka is not
developed well. Maintaining the quality
of teachers cannot be achieved only
by recruiting the best. Once recruited,
the system needs to support and
encourage the continuous development
of the recruits so that they improve their
performance and keep up with changes
taking place globally. Although Sri Lanka
has a system of teacher appraisal, it does
not functioning effectively. This is partly
due to financial and time constraints,
and partly due to the limited emphasis
given for teacher appraisal.
Last September, as usual, when the
grade five scholarship exam results
were released, the top performers
of the exam and their teachers and
schools were commended for a job well
done. Next year, when the next public
examination results come out, lets
celebrate the teachers who improve the
results of all their students, and not just
the most talented.


Online Courses Can Help

More Sri

Lankans Access

Higher Education
By Nisha Arunatillake

be exposed to the best lecturers in

the country, or indeed the world,
language permitting. Under a system
like MOOCs, students can learn from
home, or at computer centers at their
convenience. This could also be a
solution to the problem of shortages
of lecturers in universities. Students
from all locations can benefit from
recorded lectures conducted by the
best lecturers around the world.


Tertiary education is no longer a
privilege. It is a necessity. Better quality
jobs are open to those with university
degrees. But, getting a good quality
university degree is increasingly
becoming hard around the world.
The rising cost of university degrees
is one main reason behind this. In the
United States, the cost of a university
degree has increased by 1.6 percentage
points more than inflation over the last
two decades. Also, with improvements
made to general education and more
students qualifying, the competition
to enter university is getting harder.
For those from developing countries,
the challenge of getting to a good
university, let alone graduating
from one in an advanced country, is
more demanding. Countries in the
developing world, including Sri Lanka,
are struggling to expand access to
university education and improve
the quality of education. Progress,
however, has been slow on both
fronts. Universities are underfunded
and understaffed, and as such, they
have little space for investing in
development. Further, transportation
and accommodation costs also raise
the cost of education.

But new, technology-based, options

are becoming available. Massive Open
Online Courses (MOOCs), introduced
in 2008, challenged the traditional
model of getting a university degree
of physically residing near a university
and attending classes in person.
MOOCs allow students to listen to
lectures, conducted by the best
university lecturers from across the
world, online. Most importantly, these
lectures are provided free of charge.
However, a problem with MOOCs
is that it has not yet come up with a
reliable way of accrediting courses and
assessing learning. This is gradually
changing. Traditional universities are
teaming up with other companies to
offer online degrees for a fraction of
the cost of traditional degree courses.

In Sri Lanka too, MOOCs could be a
solution to many of the issues facing
the countrys tertiary education
system and those aspiring to get
higher qualifications. Students can

Through this method, universities
would be needed primarily for providing
courses, and for assessing learning
outcomes. As a result, the universities
will be able to accommodate more
students, as students will need to
spend less time inside the university.
Presently in Sri Lanka, universities are
open mostly to those completing their
general education. A system similar
to MOOCs can open university doors
even for older students those who
wish to upgrade their skills or wish to
change their career paths.
Problems of cost, space, and quality
are crippling the chances of more
young Sri Lankans gaining higher
education. New technology provides
new options like MOOCs that can help
address this, especially as the country
aspires to be a knowledge-based
economy. MOOCs could be a win-win
solution to students and the state, and
Sri Lanka needs to take a close look at
it for introducing them here.

Asias Rise:

Undoubted but not

By Anushka Wijesinha

f there is one defining feature of

the tectonic shifts in economics,
geopolitics and society taking place
today, it is the rise of Asia. Asian
economies particularly those in East
and South East Asia as well as India
are at the heart of the changes that
are underway in the global economy.
Asia is now home to about 60% of the
worlds population, generates around
one-fourth of global output (set to rise
to half by 2050), and produces 47% of
the worlds manufacturing. With this
has come a rise in prosperity around
one-third of global middle-class
spending is by Asians. The spectre of
the Asian Financial Crisis that badly
hit the regions key Eastern economies
(primarily, Korea, Malaysia, Indonesia,
Hong Kong, Thailand and Philippines),
has, seventeen years since, faded
into distant memory. In the six or so
years following the onset of the global
recession, projected and actual growth
rates in emerging and developing Asia
were often as much as 6 percentage
points higher on average than that
of advanced economies. In 2014 and
2015, while advanced economies
are set to grow at 2.2% and 2.3%,
emerging and developing Asia is set to
grow at 6.7% and 6.8%, respectively.
This is higher also than the 4.9% and
5.3% forecast for the wider group of
emerging markets and developing

Asian Vitality
China, one of two regional anchors
along with India, has long surpassed
Germany as the worlds leading
exporter. Asian firms are among
the worlds most valuable brands,
Japanese and Korean cars are
ubiquitous on European roads,

American technology giants like Apple

source billions of dollars worth of
advanced components from Korean
and Taiwanese suppliers, and Chinese
firms are buying into German, British
and American companies across a slew
of sectors. Western multinationals and
consumer brands have flocked to Asian
cities to gain a foothold in the growing
markets, as Asians aspire to a Western
standard of living, and increasingly,
can well afford it. Industry estimates
suggest that Asian consumers account
for half of the US$ 80 billion global
luxury brands market. Technology
diffusion is not only enabling Asian
firms to compete better on a global
scale but also giving rise to disruptions
in consumption patterns through

Chinas Alibaba online marketplace,
for instance, now boasts 180 million
users, handled around US$ 250 billion
worth of transactions in 2013 (more
than eBay and Amazon combined),
and has filed for what is arguably the
worlds largest technology IPO valued
at close to US$ 20 billion (higher than
that of Facebooks). Meanwhile, intraAsian trade is proving to be a most vital
element of Asias economic vibrancy,
post-crisis. Exports to China by the
top-10 exporting ASEAN countries
now exceed their exports to either the
NAFTA region or the EU.

Newer emerging Asian economies are

also showing promise. The Philippines,
for example, is making great strides
away from being the sick man of
Asia, following sweeping reforms by
the current President, Benigno Aquino
III. GDP grew by 7.2% in 2013, the
fastest in ASEAN, and this too despite
the devastation wreaked by Typhoon
Haiyan. Philippines sovereign debt was
upgraded to investment grade and the
country rose up 26 places in the Global
Competitiveness Index (since 2010)
and 30 places in the Doing Business
But the rise of Asia is by no means a
foregone conclusion many factors
will influence the future trajectory of
this rise. Aside from country-specific
challenges too numerous to be
reviewed here, some wider challenges
merit discussion.

Inclusive Growth
The rise in wealth and affluence in Asia
is startling, but not surprising given
the rapid growth seen there. Industry
estimates suggest that Chinese
consumers lap up 10% of worldwide
luxury sales and East Asian shoppers
account for between one-fourth
and half of all purchases at designer
stores in Europe. Just sixty years ago,
the picture in Asia was very different.
It was the worlds poorest region.
Strong growth has lifted millions of
out poverty, but much remains to be
done. The ADB estimates that around
1.7 billion people in Asia still live on
less than US$ 2 a day, and roughly
700 million on less than US$ 1 a day.
Disparities exist among sub-regions of
Asia as well poverty remains highest
in South Asia and is lowest in East Asia

Regional Tensions

(driven mainly by Chinas slashing of

poverty from 85% in 1990 to 30% by
Inequality in Asia is rising. While
Asians now take a greater share of
global luxury sales, 1.7 bn people in
Asia still live on less than US$2 a day
Income inequality, too, is a challenge
for the region. According to further
ADB estimates, in the 12 countries
that account for more than fourfifths of Asias population, income
disparities worsened over the last two
decades. During this period, the Ginicoefficient (measuring inequality) in
Asia has deteriorated sharply from 38
to 47. While the glitzy Chinese city of
Shanghai has achieved living standards
similar to Portugal, the number of poor
in just eight Indian states is more than
in twenty six of the poorest African
countries combined.

Ageing Population
Ageing population, income inequality
and rapid urbanisation are three of the
critical challenges to Asias rise. Image
(c) Anushka Wijesinha, Seoul, South

Another characteristic of the rise

of Asia is the seismic shifts in its
demographic structure. Asia is ageing
at an unprecedented pace. Emerging
evidence suggests that this increase in
the ageing population will occur more
rapidly than in the West, giving rise
to numerous public policy challenges
including financing of healthcare and
social welfare (pensions, etc.). Some
countries like Japan and South Korea
will experience this more rapidly than
others like India and Indonesia. China
will be particularly challenged, as its
one-child policy will cause a sharp rise
in old-age dependency. Slowly, the
demographic dividend which helped
many of these Asian countries attain
rapid growth will wane.

Rapid Urbanization
Another prominent feature of
the Asian growth has been the
rapid urbanization of Asian cities,
characterized by extensive rural-urban
migration, heightened pressure on
urban infrastructure like transport,
water, housing and sanitation, and the
concomitant rise in pollution. While the
more newly industrialized countries in
Asia such as China and India still do

not have a majority urban population

yet, the number of urban inhabitants
is growing fast. It is estimated that by
2025, over half of the population in
Asia will be urban.

Environmental Pressures
Linked to this is the growing concern
around the environmental outcomes
of rapid growth. It is now widely
accepted that Asia cannot grow under
the same pollute now clean later
pattern as the West. Certain parts of
Asia, especially countries located in
the tropical region and in islands, are
among the most vulnerable to impacts
of global climate change.Asia is facing
serious environmental degradation
issues linked to poor land use
management, unsustainable energy
consumption, and overuse of natural
resources. All of these appear to be
influencing changing weather patterns,
including freak events. The frequency
and the intensity of natural disasters in
Asia are showing an increasing trend.
During the period 1980 to 2009, over
38% of global economic losses due to
natural disasters were reported from

Across Asia, the geopolitical landscape

is littered with hostilities. Some of the
most critical ones are the maritime
tussles in the South and East China
seas, particularly between Japan
and China, linked to the territorial
claim of the Senkaku/Diaoyu islands;
between China and the Philippines,
linked to demarcations of the
Exclusive Economic Zone in the sea;
and among China, Vietnam, Brunei
and Malaysia linked to the Spratly
Islands. Heightened hostility around
the former in 2012 caused China to
impose a boycott on Japanese goods,
resulting in a 20% year-on-year decline
of Japanese exports to China. In the
aftermath, Japanese firms sharply
cut their foreign investments in
China (from 13% of total FDI to 7% in
2013). Meanwhile, South and North
Korea continue to be at loggerheads,
oscillating between good relations
and dangerous escalations. Farther
West in Asia, the hostilities are
dominated by India and China as well
as India and Pakistan. In the former
case, the two countries have longstanding tensions around the control
of South Tibet (currently in Indias
Arunachal Pradesh) along the disputed
McMahon Line. In the latter case, the
conflict around Jammu and Kashmir
has been the overwhelming narrative
shaping the two countries relations,
and by extension, the regions.


While India continues to be an
influential anchor in South Asia,
it is China that has emerged as
influential across the region through
strategic investments and assistance.
Some argue that Chinas rising preeminence in Asia could be countered
by a growing US engagement in the
region rekindled by the Obama
administrations pivot to Asia
strategy. The much-touted Trans-

Pacific Partnership (TPP) appears to be

the key tool in this.
It is not a typical trade deal it
straddles trade, investment, and
strategic economic cooperation. Asian
countries that are wary of the security
implications of Chinas rise may warmly
welcome a heightened US presence in
the region. The TPP could prove to be a
key factor in the US-China rivalry over
economic leverage in the region, and
a tool for Asias other economies to
hedge against the rise of China.

Asian Integration
All of these developments have
unravelled how far Asia has to go in
terms of a common vision around its
ascendance. The closest effort towards
bridging this is of course the moves
by ASEAN to establish a fully-fledged
diplomatic and economic community
by 2015. But one cannot forget that
this is limited to just a sub-set of Asian
nations. Asia would need an ambitious
regional effort of the type seen in
Europe. But unlike the European
project, few political leaders have
come out as willing to stake their
careers to further an Asian project.
Groups of countries swing between
fear/suspicion of, and mutual gain
from, the two regional giants China
and India. Little regional cooperation
on security and military affairs prevail.
There is also a notable absence of panAsian institutional arrangements and
agreements (similar to the European
Commission) to further all these
agendas in a manner that is strong,
consistent, and widely accepted.
Nevertheless, cooperation on trade
and investment appears to be growing
ever stronger.
While much of the attention is on the
TPP, another pan-Asian trade deal
is taking shape more quietly the
Regional Comprehensive Economic
Partnership (RCEP). As Ganeshan
Wignaraja, Director of Research at the
ADB Institute remarked at a recent
IPS seminar, the RCEP could create
the worlds largest trading bloc and
have significant implications for the
world economy. The RCEP bloc
that includes three of the largest
economies in the world, China, India
and Japan would represent half of

the worlds population, nearly onethird of global GDP and global trade,
and one-fourth of global FDI inflows.
The RCEP, an example of megaregionalism, has the potential to not
only bring large gains to Asia, but also
carve even stronger position for Asia in
the world economy.

Sri Lanka Must Take a

Strategic View of Asia and
Sri Lanka has much to learn from what
has and continues to take place in Asia.
This is what the IPS flagship annual
report, Sri Lanka: State of the Economy
2014 takes a look at. It argues that,
while the Sri Lankan context is no
doubt different, and following the
Asian trajectory identically may not be
feasible or desirable, there are salutary
lessons to draw from Asias rise, both
for Sri Lankas own development
journey but also in understanding
how to best latch on to it. Amidst
this, however, Sri Lanka cannot forget
that it lies in an enviable geographical
location that connects this rising Asia
with the rest of the world.

While looking at latching on to rising
Asia, Sri Lanka cannot ignore countries
to its West whether it is in Africa, the
Middle East, or traditional partners
in the industrialized West. Although
many are quick to assume it, the
countries in Europe and North America
are not in systemic decline. They will
continue to be poles of innovation,
creativity, consumption, and global
leadership, and failing to recognize
that and navigate accordingly, will only
be to Sri Lankas peril.
(This article is based on the Policy
Perspectives chapter of the Sri Lanka:
State of the Economy 2014, the IPS
flagship annual publication.)


Laying the

BRICS for a

Global Financial Architecture?

By Anushka Wijesinha

IMF. But the IMF is no longer approaching

emergency lending in the way it used
to. This was clear especially in the
aftermath of the global recession, when
IMFs usually-rigid conditionalities were
ditched in favour of more pragmatic
and palatable reform frameworks in the
interest of expediency. This was true even
in Sri Lankas own Stand-by Arrangement
with the IMF in 2009. Yet, there were
still politics at play as the governments
request in February 2009 was dragged until
July 2009, supposedly due to opposition
from the IMFs key shareholder, the US,
on issues surrounding the end of the war.
It is unclear to what extent the CRA would
be different, in offering easier and quicker
responses. Some experts have suggested
that the CRA would be modelled along the
Chiang Mai initiative of ASEAN, established
in May 2000. But the Chiang Mai Initiative
is very closely linked to the IMF only 40%
of a members borrowing quota can be
accessed without the member agreeing to
an IMF policy program.

Reforming Global Economic


hile very little is still known about

the modus operandi of the New
Development Bank formed by
the BRICS nations, Anushka Wijesinha
and Raveen Ekanayake argue that the
new initiative marks a significant step for
emerging economies in moving beyond the
Bretton Woods institutions.
As the FIFA World Cup in Brazil came to a
close in Rio De Janeiro, the spotlight shifted
to another Brazilian city, Fortaleza, in July
2014 as leaders of five nations gathered
to make a new breakthrough in global
economic governance. Two and a half
decades since a Goldman Sachs investment
banker coined the first acronym for an
emerging markets basket BRICs (Brazil,
Russia, India, China), and 3.5 years since it
added its newest member South Africa,
this grouping of emerging economic giants
have just inked a deal to create the worlds
newest development bank, the BRICS
Bank. The bank (and a reserve fund), which
is to be based in Shanghai and headed
in its first term by a nominee of India, is
being seen as a counterweight to financial
institutions headquartered politically and
physically in the West, like the World Bank
and IMF. The agreement could see a new
relationship emerging between the BRICS
and other developing countries in financing
infrastructure projects, away from the
dependence on traditional Bretton Woods
lenders. Whilst a lot has been covered on
the deal to set up the bank, this article
aims to go beyond and explore some of the
other compulsions and trends that might
shape the banks form and function.


A 5 Year Journey
It has been 5 years since the inaugural
BRIC summit took place in Yekaterinburg,
Russia in June 2009, when the leaders of
the first four nations decided to moved
beyond a catchy acronym and become
an international economic platform. At
subsequent summits, some progress
was made on new avenues of economic
cooperation, but the idea for a BRICS
Bank was first conceived in Delhi in 2012
and further mooted in 2013. In fact, the
2013 summit was supposed to clinch the
deal but that did not materialize. Back in
March 2012, in New Delhi, BRICS leaders
inked a deal to provide credit to each other
in local currencies, to facilitate economic
growth during times of crisis. The aim of
the currency swap deal is to promote trade
and investment in local currencies as well
as to cut transaction costs. It is also viewed
as a step towards replacing the dollar
as a reserve currency in trade between
BRICS. In March 2013, the central banks
of both Brazil and China took a bold step
entering into a US$30 billion currency swap
agreement. The new bank is, then, a strong
next step in this ongoing process.

BRICS Bank Structure

Little is known about the structure of the
new Bank. What is known, however, is
what the funding for it will look like. The
BRICS bank will compose of US$ 10 billion
of paid up capital with US$ 2 billion from
each member over seven years, and an
additional US$ 40 billion to be paid upon

request. Even that had been contentious.

While it was agreed that the bank will
initially have a capital of US$ 50 billion,
India was keen that each country would
contribute an equal US$ 10 billion share
and thus have equal shareholding.
China, however, was reportedly vying
to offer the majority of funds, and that
raised a concern among the rest of the
group who felt it would give China greater
power. The new Indian Prime Minister,
Narendra Modi, had been particularly keen
to ensure that unlike the Bretton Woods
IFIs where economic might determines
voting power the new bank should have
equal shareholding and give equal voice
to all members. The overall agreement is
considered an early victory for Modi a
successful multilateral engagement early
on in his tenure.

Emergency Lending sans-IMF

In addition to the BRICS Bank, the five
nations also agreed to set up a US$ 100
billion dollar currency reserve pool called
the Contingent Reserve Arrangement
(CRA), which will act as an alternative to the
IMF in providing emergency cash during
times of economic stress, short-term
currency crises, or balance of payments
problems. To this, China is set to contribute
US$ 41 billion, Brazil, Russia and India will
each contribute US$18 billion, and South
Africa $5 billion.
The CRA might certainly be more flexible
and attach fewer conditions than the

The tussle by the BRICS for a greater voice

in global economic governance is not new
and it is no secret that many emerging
nations are keen to move beyond the
era of WB and IMF pre-eminence in the
international financial architecture. As an
article on our blog highlighted in 2010,
emerging economies have been agitating
for some time to secure more voting
power and greater participation in decision
making, relative to their weight in the
global economy.
Despite their ever-growing dominance in
the world economy, the BRIC countries
together enjoy less than 10% of the IMFs
total votes, while the USA alone enjoys
around 15%. The G8, on the other hand,
which consists of the worlds 8 mostdeveloped economies plus Russia, enjoys
nearly 50% of the total votes. A draft
deal was reached several years ago to
restructure the governing boards and
related voting power called share of
voice in the World Bank and IMF to
increase the influence of China and other
emerging nations. However, the deal
requires approval by US lawmakers, and
the US Congress has stalled on passing the
required enabling legislation.
At the annual meeting of the IMFs
International Monetary and Financial
Committee (IMFC) in Washington in April
2014, developing countries frustration
around this reached a tipping point. They
released a communiqu stating we are
deeply disappointed with the continued
delay in progressing the IMF quota and
governance reforms. Following Summit,

the Brazilian President reiterated this view,

remarking that The IMF urgently needs to
review its distribution of voting power in
order to reflect the unquestionable weight
of emerging countries.

Modus Operandi of Lending

Very little is still known about how the
new bank will conduct its lending. Will it
immediately be open for loan requests
from developing countries, or will it initially
only be for the BRIC countries? Will there
be specific types of projects that the bank
focuses on, or will it accommodate any
type of infrastructure financing needs? To
what extent will the terms, durations, and
conditions of the loans be more favourable
than what is on offer from traditional
On the latter, it seems intuitive that the
BRICS Bank will make a decisive break from
the practices of established institutions.
The bank is likely to make it easier and
quicker for developing countries to
access to large-scale financing for their
infrastructure projects. But in the desire
to be more flexible and expedient, will
environmental, social, and governance
considerations suffer? Moreover, how will
the new bank build up the institutional
capacity to fund and manage large-scale
projects? Institutions like the World Bank
and ADB come with years of experience
in development projects how to
structure them, how to account for
social and environmental concerns, how
to ensure sustainability, how to ensure
good governance and transparency in
They have access to in-house and
international experts with specific skills
across technical and financial aspects
of projects, and it will take years for the
BRICS Bank to build up similar capability.
Generous funding, alone, will not ensure
successful projects. Or, it may be that
the bank simply provides the financing
in an arms-length manner, in the form of
budgetary support to the countries, letting
the respective country governments take it
from there. There would be very different
implications in each case.
China may be the biggest winner. It could
use the BRICS Bank to lend to countries,
instead of direct lending, in order to veil
its predominance in a country (considering
recent backlashes to its presence in Africa),
give more legitimacy to its investments,
and burnish Chinas image as a responsible
yet pro-reform global player.

BRICS Showing Growth Cracks?

When Jim ONeill first coined the acronym
BRIC back in 2001, the world economy was

in much better shape than it is now. At

the time, in current US$ terms, these four
emerging economies accounted for 8% of
global output (23.1% in PPP terms), and
were growing rapidly. Given each countrys
growth trajectory, it was envisaged that
they would surpass the six largest western
economies in terms of economic might by
2041, to become the pillars of the 21stcentury economy. But many of them are
projected to grow much more slowly than
their 2000-2009 average growth rates (see
Fig. 1), mainly brought on by the lingering
effects of the global recession.
China is in the midst of a growth tempering,
brought on by a tricky re-balancing of
the economy. India is perilously close to
being trapped in stagflation, and the new
government is under pressure to kickstart growth. The once high-flying Brazil
is expected to grow no faster than the US
in 2014. Russia too seems to be slowing
down. According to a survey of economists
by Bloomberg, growth in the five countries
is projected to be half the pace seen seven
years ago. With economic vitality waning in
Brazil and India, focus is likely to be mainly
on generating domestic growth.

A New Player, but a Strategic

With a reported US$ 2.5 trillion a year
funding shortfall facing developing
countries, the BRICS Bank can only go so
far in bridging this, and it will take decades
to build up. According to a UNCTAD study,
the new bank could lend US$ 3.4 billion per
year in a decade less than 6% of what the
World Bank expects to disburse in 2014. It
is also significantly less than the lending
by BRICS own development banks 4% of
what the BNDES of Brazil, and less than 2%
of CDB of China, doled out in 2013.
But to cite these challenges to foretell that
the BRICS Bank, and indeed the grouping
itself, have poor prospects is to miss the
larger, more strategic point.
The BRICS Bank has emerged not
simply to share finances, but rather to
counterbalance the hegemony of the
traditional forces that have shaped the
global economic governance arena for
decades. They want to move beyond
symbolism to real economic and political
clout. To what extent this will happen is
still uncertain. But the BRICS Bank and the
CRA are certainly laying the foundations
for a gradual change in the global financial
architecture. It will have interesting
ramifications for countries like Sri Lanka,
which have large infrastructure financing
needs, need to rely more on affordable
commercial borrowing given the transition
to middle-income status, and appear keen
to explore newer and different sources of
development finance.


What Sri Lanka Should Know about Chinas

New Economic Dynamism

By Anushka Wijesinha

Ruthless Focus on Reform

The ruthless focus of the government on
structural reform of the Chinese economy
is impressive and bodes well for Chinas
future prospects. Since coming into power,
the Xi Jinping-Li Keqiang government has
embarked on the most comprehensive
economic reform programme since the
1980s. Many Chinese experts who I spoke
with acknowledged that the structure of
institutions need fundamental reform.
Already a lot of top-down reforms
are happening. The government is
greatly reducing ex-ante interference
and increasing ex-post regulation and
strengthening the legal system. The
administrative and approvals process
has already gone through impressive
streamlining, with over 600 items of
regulations being either removed or
delegated to lower levels of authority to
be closer and more responsive to local
business needs.

Chinas ongoing reform programme is a

focused and strategic effort that has the
potential to transform the business climate
and also competitiveness of Chinese exports.
Sri Lanka should take a cue from it.

China is still a developing country. We must

give top priority to economic development.
Only development will deliver progress.
Ultimately, only development will resolve
all the problems in China. These were
Premier Li Keqiangs words at the start
of the World Economic Forums Annual
Meeting of New Champions (AMNC) 2014
held in Tianjin, China, , and would no
doubt resonate well with the current policy
orientation of the Sri Lankan government
as well. Listening to his speech and
interacting with delegates on the sidelines
of the meeting gave a fantastic insight into
the ongoing policy shifts in the Chinese
economy and the underlying dynamics
driving growth there. Given Sri Lankas
closer links with China, it is a good to look
at some key aspects of this shift, as it will
become increasingly important for Sri
Lankan businesses and policy makers to


e-commerce is bringing in new efficiency

in product markets. A third new engine
that China is focusing on the upgrading
and greening of production capacity in
old industries like petrochemicals and
steel, etc. has the potential to be a fresh
source of growth.

be better attuned to what goes on in the

Chinese economy.

Economy in Transition
As widely acknowledged by any Chinese
official or business leader I spoke to,
the Chinese economy is in the middle of
massive transformation pivoting to new
source of growth, tackling tough reforms,
and managing new aspirations of the
Chinese people. When I asked Daokui
Li, Professor of Economics at Tsinghua
University, about this shift, he remarked
that the economy is in a difficult and
challenging transition. New engines of
growth must take over the old. He was
referring to the re-balancing from growth
led by exports and property development
to consumption-based growth and greater
infrastructure investment that improves

competitiveness. Of course there are

lingering doubts on how Chinas ongoing
economic re-balancing will pan out, and
whether a hard landing of the Chinese
economy will cause systemic risks to
the global economy. But several experts
whom I interacted with asserted that
the current slowdown is temporary, a
U-shaped adjustment. The government is
keen to fend off such fears, and Premier Li
asserted in his speech that, We have the
confidence, ability and resources to tackle
the problems facing China.
Already private consumption is increasing,
and the share of consumption in GDP
could be as high as 50% by the end of the
decade. Unemployment has remained at
around 5% in 31 large and medium-sized
cities surveyed. The services economy
particularly logistics, express delivery and

The ongoing business registration reforms

are making it easier for businesses to start
up, and this is already showing results.
Between March and August this year, new
business registrations grew by 61% yearon-year. On the financial side, the financial
liberalization programme continues apace,
with controls on interest rates being
removed and becoming market-determined
and borrowing rates set to follow suit. Of
course, many officials are facing challenges
in shifting to this new ethos of governance
regulating based on transparent rules, in
dealing with businesses. But if the reforms
are successful, this has tremendous
implications for doing business in China.
As Zhu Min of the IMF noted during one
of the AMNC sessions, If you want to
run a healthy economy you need good
institutional structures and transparency,
and China is taking this very seriously.
Meanwhile, some bottom-up reforms are
also happening, evidenced particularly
by various experiments of reforming the
State-Owned Enterprises (SOEs).

Tackling State-owned Enterprises

Chinas SOEs are large beasts, with many
of them featuring in the Fortune 500 list
of top global firms, mainly because of their
revenue. When market-oriented reforms
in China started in the early 1980s, all
enterprises were fully government owned.
Since then, there has been a gradual

move towards mixed ownership, but state

ownership has continued to dominate.
They play a key role in the Chinese
economy, but with changes in the local
and international context, many are under
severe competitive and cost pressures. The
ongoing focus of the Chinese government
appears to be a multi-pronged approach
in tackling this. Chinese SOEs are being
geared to become more competitive and
adopt an international perspective in their
operations. Since the 1980s, SOEs have
gone through a painful period of market
oriented reforms. Many are much stronger
than before and several of them perform
well even in the international business
context, winning lucrative contracts in
overseas markets.
As the Chairman of China Petrochemical
Corporation (SINOPEC) Fu Chengyu argued
during a session on the evolving business
context in China, Chinese SOEs are
keen to enhance their core competence,
restructure their corporate governance,
and improve the quality of their assets.
This was made clear in the Third Plenum
statements of the Chinese leadership.
It appears that regardless of the evolving
ownership structure of Chinese SOEs
whether mixed or still fully state-owned,
building modern governance structures
will be the key focus of the Chinese
authorities. Fu added that, the reform of
SOEs is not to get rid of them, but to build
them bigger and healthier.

New Dynamism through

For an economy that, just at the start of this
decade, was largely dependent on a lowwage low-cost model of export-led growth,
the new focus on innovation-driven growth
is truly impressive. China is moving rather
rapidly to an economy driven by innovation
and entrepreneurship. In his opening
remarks at the WEF meeting, Premier
Li put forward a vision of this growth
Just imagine how big a force it could be
when the 800 or 900 million labourers
among the 1.3 billion population are
engaged in entrepreneurship, innovation
and creation. And this doesnt seem to
be just rhetoric. With massive schemes
like Broadband China and Smart Cities,
the government is harnessing technology
and urbanization to drive a new wave of
competitiveness. This is taking place not
just in the traditional growth cities like
Guangzhou, Shenzhen, Shanghai, and
Tianjin, but in newer cities like Wuxi. The
city of Wuxi in the Jiangsu Province is
now home to 2,000 foreign companies
(most of them are hi-tech), and among
the 120-plus factories set up by 80 of the
Global Top 500 firms, half of them are
from Europe and the US. The Wuxi city

government alone spends up to 2.8% of

GDP on R&D investment. All this has been
achieved while transforming the area from
a polluted unlivable city in to a garden city
with extensive wetlands and lakes. The
trend is seen around the country, where
over 100 universities have innovation
incubators to help young Chinese students
commercialize their ideas, and in the
past 3 years alone 100 universities in
the country have started departments
to research on the Internet of Things.
Innovation is a source of dynamism to
boost development, remarked Li, in his
speech, and China certainly appears to
have placed this agenda front and centre
of its policy focus.

Sri Lanka Must Learn

While acknowledging that Chinas political
and administrative system, its large
workforce, huge untapped human resource
potential, vast natural resources, etc., offer
the country distinct inherent advantages in
infusing new dynamism into the Chinese
economy, one cannot ignore the impressive
way in which the Chinese leadership is
steering this transitioning economy. It
has important lessons for Sri Lankas own
transformation. Hopefully the closer ties
with China will benefit us beyond just the
access to easy infrastructure investments.
If I was to characterize the reform effort,
it would be a sheer focus and a strategic
approach whether it is the impressive
innovation drive or the ruthless focus
on structural and institutional reform
(including rooting out corruption).
Recapping the ongoing policy focus,
Premier Li announced, We will continue
to press ahead with revolutionizing
government itself and further intensify
efforts to streamline administration and
delegate powers. We will deepen fiscal
and taxation reform, promote reform of
the budgetary management system so as
to use public funds in an equitable and
effective way, and continue to expand the
pilot programmes for business tax to VAT
reform which is conducive to development
of the service sector, particularly the R&D
companies. Now, one may feel skeptical
that this sounds like just a shopping list
of good policies. But, as highlighted in this
article, the gap between reform rhetoric
and reality is rapidly closing in China. Sri
Lanka can certainly take a cue from it.
(Anushka Wijesinha attended the World
Economic Forum Annual Meeting of New
Champions 2014 in China. He is a WEF
New Champions Awardee as a member of
the Global Shapers Community Colombo


subsequently shifted to financing

infrastructure development. Given the
large infrastructure deficit following
the end of the war, Chinese assistance
was pivotal, according to Kelegama.
This gap China filled very effectively,
he observed. He added that, Of course
questions are being asked in regard
to the repay period, interest rates,
etc. Now they are not that important
specially given the fact that most of
this financial assistance are for long
periods with long repayment periods.
Assuming that the returns from these
projects are rapid, we should be in a
position to repay the debt we owe to



Between Sri Lanka and China

A Snapshot of IPS Insights

hinese President Xi Jinpings two

day visit to Sri Lanka, the first
by a Chinese leader in nearly
30 years, marked a new milestone in
bilateral economic relations between
the two countries.
Coinciding with this, we present a
snapshot of IPS researchers insights
(including audio interviews) on this
growing relationship, and what the
future holds in store particularly in
the context of the launching of a Free
Trade Agreement.
Chinas growing presence in Sri Lanka
is part of a broader trend of Chinas
growing influence in the South Asia
region. As Dr. Kelegama, IPS Executive
Director, argued in an op-ed to the East


Asia Forum in June on Chinas growing

influence in South Asia, since the late
1990s Chinas trade and aid links with
this region has been growing faster than
Indias, In 2012, Indias trade with its
South Asian neighbours those in the
South Asian Association for Regional
Cooperation (SAARC) amounted
to US$17 billion, compared to Chinas
trade with the same countries which
amounted to US$25 billion. China is
currently the largest trading partner
of India, Pakistan and Bangladesh, and
the second largest trading partner of
Sri Lanka and Nepal. He added that,
Chinese trade and investment links
have led to growing Chinese financial
flows in the form of loans and aid to
the region since the mid-2000s. Most

of these loans are associated with large

infrastructure projects such as ports,
highways, bridges and power plants.
This is evidenced in Sri Lanka too, with
the majority of the agreements being
signed during President Xis visit being
on various infrastructure development
In an interview with Talking Economics,
Kelegama reviewed the recent trends
in China-Sri Lanka economic relations,
particularly relating to the soaring
Chinese development assistance for
Sri Lankas infrastructure thrust. He
described how since the mid-2000s,
China gave a very significant helping
hand to Sri Lanka in financing defence
expenditure during the war, and

One of the key recent Chinese-funded

projects has been the Colombo South
Port. In an interview with Bloomberg
last year, IPS Deputy Director Dr. Dushni
Weerakoon observed Sri Lanka has
been looking toward China because of
the availability of funding [...] With Sri
Lankas plans to create a hub concept,
expansion of the Colombo port makes
good economic sense. Many are of
course pointing to the geo-strategic
implications of Chinas close and
growing ties with Sri Lanka. In an
interview with Bloomberg, Weerakoon
noted that Chinas growing influence
must surely be a cause of some concern
to both Japan and India, evident from
renewed Japanese interest in Sri Lanka
and a more supportive approach by
the new Indian government, and
Sri Lanka stands to benefit from its
growing economic links with each of
these countries, but it will also require
a careful balancing act on the political
While Chinese financial assistance
has soared, private Foreign Direct
Investment (FDI) has been slow to
come. Dr. Kelegama shed some light
on this aspect in an interview with the
editor of Talking Economics. He noted
that, the bulk of Chinas investment is
made by state-owned enterprises [...]
if we use the strict definition of FDI,
private FDI, China is not an important
player in the Sri Lankan market, but
since of late Chinese FDI has been
increasing in the Sri Lankan economy,
that is what the data shows. But if we
also take into account the investment
from Hong Kong [...] then that entire
investment is very significant, in fact
it comes very close to the Indian

investment in Sri Lanka. All these new

projects for instance the Shangri La
hotel they are all from Hong Kong, not
from mainland China.


He added, however, that if the yuan

appreciates and Chinese firms look to
set up in foreign locations, countries
like Sri Lanka could stand to benefit.
To hear his full comments on Chinese
FDI prospects in Sri Lanka, listen to the
audio clip embedded below.
One of the key outcomes of Xi Jinpings
visit to Colombo was launching of the
China-Sri Lanka Free Trade Agreement,
which will set the stage for serious
negotiations to begin. As this op-ed by
Dr. Kelegama in the East Asia Forum
highlighted, the growing economic
relations (based on development
financing) influenced changes in the
trade between the two countries as
well. IPS released the first ever analysis
on the trade potential between China
and Sri Lanka under a possible FTA, in
April 2014, where authors asserted
that, Based on a preliminary analysis
of RCAs (revealed comparative
analyses), it appears that Sri Lanka and
China have comparative advantage in
quite dissimilar sectors which suggests
that there are complementarities
between the two countries to
stimulate bilateral trade. Moreover,
some of these sectors face high tariff
rates in China and as such they are
likely to benefit from tariff concessions
negotiated under a FTA.
Sri Lanka is likely to benefit from a
flexible and cooperative approach
in crafting an FTA with China, if
Chinas existing trade agreements
are anything to go by. As IPS research
showed, China has adopted a fairly
collaborative approach in devising the
terms of FTAs with other countries,
and Sri Lanka could expect the same.
But they pointed to five key areas that
must be tackled in the negotiation, in

order to have a mutually beneficial

agreement. IPS researchers Janaka
Wijayasiri and Dharshani Premaratne
argued that Sri Lanka must also draw
from its, albeit limited, experiences
with trade agreements in the past
like the Indo-Sri Lanka and PakistanSri Lanka FTAs. Whether it be tackling
Rules of Origin (ROO) issues or Not
Tariff Measures (NTMs), they hold
valuable lessons for crafting the ChinaSri Lanka agreement. In this article, IPS
researchers also emphasised the need
for greater consultation with domestic
stakeholders Consultations should
not be reserved exclusively to the level
of governments finance, commerce,
or and trade departments, but rather
with stakeholders at large. This can
ease exporter-importer concerns,
demonstrate that challenges in the
agreements can be addressed in a
participatory manner, and help create
broader public awareness of, and
confidence in, the opportunities and
benefits of the agreements.



This was emphasised by Dr. Kelegama

as well, in an article on the challenges
posed by the proposed FTA - An
FTA between a large and a small
country always poses challenges as
stakeholders in the smaller country
fear that the larger country will be the
overall beneficiary at the expense of
the smaller country. Thus a few lessons
from the India-Sri Lanka FTA may be
useful in the design of the FTA between
China and Sri Lanka. As Kelegama
concluded in a presentation to the
National Chamber of Exporters, All
in all, the China-Sri Lanka FTA should
be welcomed but there needs to be
caution in designing the framework
governing it


Sri Lankas Existing

Looking at
Agreements and Lessons for the FTA with China
By Janaka Wijayasiri and Dharshani Premaratne
As Sri Lanka gears up to sign a trade
agreement with China, Janaka
Wijayasiri and Dharshani Premaratne
highlights some key takeaways from
Sri Lankas experience with previous
While Sri Lanka has been actively
engaged in all multilateral trade
negotiations and has been undertaking
trade reforms in keeping with the
WTOs GATT principles, Sri Lanka also
has been involved in a number of
regional trade liberalization initiatives.
Sri Lanka participates in two regional
agreements, the South Asian Free
Trade Agreement (SAFTA) and the
Asia-Pacific Trade Agreement (APTA),
and two bilateral agreements, the
Indo-Sri Lanka Free Trade Agreement
(ISFTA), and the Pakistan-Sri Lanka
Free Trade Agreement (PSFTA). This
article highlights some of the key
lessons from Sri Lankas experience
with these existing FTAs that must
be borne in mind when negotiating a
trade agreement with China.

Special and Differential Treatment

Given the asymmetry of economic
size, Sri Lanka received special and
differential treatment under each of
the existing FTAs. For instance, Sri
Lanka as a small economy was allowed
a longer tariff phase-out period, a
longer negative list, immediate duty
free access for several products at

the start of the agreement, and more

favourable rules of origin under SAFTA,
ISFTA and PSFTA. For example, India
had a three-year tariff phase-out
period, while Sri Lanka liberalized
its tariff schedule over an eight-year
period. Similarly, Pakistan liberalized
products over a three-year period,
while Sri Lanka liberalized its products
over a five-year period. Under SAFTA,
Sri Lanka was given eight years to
phase-out its tariffs compared to seven
years for non-LDC members.

exports from Sri Lanka have received

duty-free treatment to access the
Pakistani market. Additionally, all three
agreements have adopted the same
domestic value addition criteria 35%
of the FOB value of the product[ii].
In negotiating a trade agreement, it
is therefore important to relax and
simplify the rules of origin so that they
are easy for traders to understand
and to comply with, while ensuring
the necessary controls are in place to
prevent fraud.

Rules of Origin

Negative List

Rules of origin criteria, which are

used to determine country of origin
under a FTA, have varied among
the FTAs in South Asia. SAFTA and
ISFTA require a change of tariff
classification at the 4-digit level.[i]
This rule has been difficult to meet
given the substantial transformation
required of the product; for example,
Sri Lankan tea exporters found they
could not adhere to this rule even
if they blended Sri Lankan tea with
Indian tea. Having the experience with
ISFTA, PSFTA negotiations adopted less
restrictive rules of origin criteria. The
major difference between the rules
of origin of the ILFTA and PSFTA is the
change of tariff classification criteria
the PSFTA adopts a change of tariff
heading at the HS 6-digit level, which
is more favourable to Sri Lanka. As
a consequence, more value-added

This list contains sensitive products

which are exempted from tariff
concessions under the agreement.
The negative list should be prepared
in consultation with local stakeholders
by weighing revenue considerations as
well as implications for local industries
and livelihoods which may be adversely
affected by trade liberalisation.
However, it is important to keep the
negative lists to a minimum to ensure
that a substantial proportion of tariff
lines and products are covered under
the agreement.
The negative list should be prepared
in consultation with local stakeholders
by weighing revenue considerations as
well as implications for local industries
and livelihoods
For example, Sri Lankas negative list
under PSFTA consists of 697 products,

mostly in agriculture, rubber products,

paper products, footwear, ceramic
products, motor vehicles and parts,
and metal products.[iii] Pakistans
negative list, which consists of 540
tariff lines, contained many of Sri
Lankas main exports to Pakistan
including tea, rubber products, certain
ceramics, paper products and several
textile and garment products.[iv]
Under the ILFTA, India has maintained
a smaller negative list with 429 tariff
lines compared to Sri Lankas long
negative list of 1,220 tariff lines.

Non-tariff Measures
When tariffs are brought down through
negotiations, non-tariff measures
(NTMs) or behind the border barriers
can reduce the use of the agreements
if they are not effectively dealt with.
NTMs should be identified at the
onset and addressed along with tariff
reductions/eliminations. In this regard,
there should be binding commitments.
Many Sri Lankan exporters have faced
difficulties in entering the Indian
market due to the prevalence of
NTMs such as state taxes, standards,
and administrative procedures[v],
which are outside the scope of tariff
reductions under the ILFTA.

Tariff-rate Quotas

Supply-side Constraints
There is little point in getting
concessions under a trade agreement
if the country does not have the
capacity to supply the goods in
demand this can be a constraint in
the case of a small country like Sri
Lanka. This was demonstrated in the
case of strawberry exports from Sri
Lanka to India[vii].

The lack of knowledge and awareness
among traders of the concessions
offered by the FTAs has been a key
impediment to Sri Lanka garnering
maximum benefits of existing FTAs.
Although a majority of exporters/
importers were aware of the FTAs,
many SMEs lack awareness of specific
information on the duty concessions
offered and the processes in acquiring
the preference (ROO, tariff rate quotas,

Although tariff schedules have been

liberalized to a certain extent under
ILFTA and PSFTA, Sri Lankas trade
expansion with India and Pakistan has
been impeded by tariff-rate quotas
agreed under the Agreements[vi].
India has maintained tariff-rate quotas
for tea, garments, and textiles while
Pakistan maintained tariff-rate quotas
for tea, garments, and betel. Hence,
a bulk of the tea exports from Sri
Lanka to India and Pakistan have been
outside the FTAs.


Mutual Recognition of Standards

The absence of a fixed body to address

problems arising when trading under
the agreement is an impediment to
using the FTAs better. When problems
arise regarding a shipment with
documentation, for instance there is
no formal body of authority that takes
up the complaints and addresses them
quickly. Quick response is essential
due to high costs of delays, and if the
cost benefit under the FTA is negated
then traders will not be encouraged to
export/import further.

Lack of mutual recognition of standards

between two countries in an FTA is
another obstacle exporters encounter,
especially exporters of perishable
goods. Lack of a Mutual Recognition
Agreement (MRA) for standards
between Sri Lanka and its FTA partners
has resulted in various additional
checks/certifications on the goods at
the importing country, even though
they have been previously tested and
certified by the relevant authorities

in Sri Lanka. Some of the issues faced

by traders include intergovernmental
non-acceptance of testing methods
and standards; packaging, labeling and
markings; and duplication of health
and safety checks in India and Sri
Lanka. This has resulted in delays and
additional costs.

Traders have highlighted the need to

facilitate the visa processes between
two countries if trade relationships
between them are to be enhanced. Sri
Lankan exporters to India for instance
have stated that getting business visas
to India is extremely difficult and have
highlighted the need to promote
businessmen visiting India and to
obtain multiple entry visas.

Institutional Support

Experience with the ILFTA, and
attempts to extend the agreement
into a Comprehensive Economic
highlights the need for greater
private-public dialogue in Sri Lanka
on trade agreements, on an on-going
and regular basis[viii]. Consultations
should not be reserved exclusively to
the level of governments finance,
commerce, or and trade departments,
but rather with stakeholders at large.
This can ease exporter-importer
concerns, demonstrate that challenges
in the agreements can be addressed
in a participatory manner, and help
create broader public awareness of,
and confidence in, the opportunities
and benefits of the agreements.
[i] de Mel, D., undated, India Sri
Lanka, Pakistan Sri Lanka Bilateral
Free Trade Agreements, Institute of
Policy Studies of Sri Lanka, Colombo,
Sri Lanka.
[ii]Weerakoon, D. (2010), SAFTA:
Current Status and Prospects in
Promoting Economic Cooperation in
South Asia: Beyond SAFTA ed. Sadiq
Ahmed, Saman Kelegama and Ejaz
Ghani, Sage Publications, New Delhi,
[iii]IPS (2007), International Economic
Environment in Sri Lanka: State of
the Economy 2007, Institute of Policy
Studies of Sri Lanka, Colombo, Sri
[v]Kelegama, S and C. Karunaratne
(2013), Experiences of Sri Lanka in the
Sri Lanka-India FTA and the Sri LankaPakistan FTA, Background Paper
on Regional Value Chains, UINCTAD,
available at: [http://unctad.org/en/
[vi] Ibid
[vii] Kelegama, S. (2014), Challenges
remain for ChinaSri Lanka FTA, East
Asia Forum, available at: http://www.
eastasiaforum.org /2014/03/28/

Chinas Approach to FTAs with Other Countries:

What Can Sri Lanka Expect?

Janaka Wijayasiri and Dharshani

Premaratne argue that if Chinas FTAs
with other countries are any indication,
Sri Lanka can expect a flexible and
collaborative free trade agreement,
but there are five key areas that need
tackling in the FTA negotiation.
In a previous article on the proposed
Sri Lanka- China Free Trade Agreement
(FTA), we looked at the potential to
expand bilateral trade. Since then, the
two countries have finalized a Joint
Feasibility Study on 11 March 2014. As
expected, the study reported that the FTA
would bring substantial economic and
trade benefits to the two countries, with
both governments expressing hope that
the deal will be implemented at an early
date. Given that series of negotiations
are likely to begin to hammer out an
agreement in the near future, it is worth
looking at the main features of Chinas
existing FTAs with other countries to
get a sense of what a possible FTA with
China would look like.

Chinas FTA Negotiations

Though China was a latecomer to
regional trade agreements, it has been
actively pursuing FTAs with various
countries over the past two decades.
China has concluded FTAs, or entered
into negotiations, with almost every
major region in the world, including
Europe, America, Middle East, Africa,
East Asia, Southeast Asia, South Asia,


and Australasia. By June 2014,China

had become a party to eleven bilateral
trade agreements and one regional
trade agreement ASEAN (2004), Hong
Kong (2004), Macao (2004), Chile (2006),
Pakistan (2007), New Zealand (2008),
Singapore (2008), Peru (2009), Costa
Rica (2010), Taiwan (2010), Switzerland
(2014) and Iceland (2014).


As stated in its 12th Five-Year Plan,
China intends to accelerate the
implementation of its Free Trade Area
Strategy, strengthen economic linkages
with major trading partners, and deepen
cooperation with emerging markets and
developing countries. Currently, it is in
the process of negotiating eight more
FTAs; with the Gulf Cooperation Council
(GCC), Australia, Norway, Southern
African Customs Union (SACU), Korea,
India and of course, Sri Lanka.

A Gradual Approach to Trade

China has adopted a gradual approach in

negotiating with trading partners first,

striking an agreement in trade in goods,
then services and investment, followed
by a comprehensive FTA package. The
ASEAN-China FTA, China-Chile FTA, and
China-Pakistan FTA followed such an
approach. Both the China-ASEAN FTA
and China-Pakistan FTA were preceded
by an Early Harvest Programme,
which was based on tariff reductions,
followed by further negotiations on
goods, services and investment[1]. For
example, the liberalization of trade in
goods with Pakistan was started with
the signing of the Agreement on Early
Harvest Programme in April 2005, with
the Agreement on Trade in Services
signed four years later (February 2009).
Similarly, the agreement on trade
in goods with ASEAN was signed in
November 2004 while the agreement
on services was signed in January 2007.
In contrast, China-New Zealand, ChinaSingapore, and China-Peru FTAs were
more comprehensive in scope at the
time of signing.

Coverage of Goods

protecting its domestic industries. A

number of vegetable products, animal
and vegetable fats and oils, prepared
food, chemicals, wood products, pulp
and paper, and textile categories are
protected by China. In almost all of the
agreements, China has placed pulp and
paper in its negative list. Nevertheless,
almost all of the agreements cover
a substantial number of tariff lines
and trade, with the exception of FTA
with Pakistan. There are no products
exclusions in the FTA with ASEAN
members. However, ASEAN and China
maintain a Sensitive List for which
tariffs are being lowered incrementally
between 2012 and 2018.

Preferential Rules of Origin

Rules of origin, which are used to
determine the country of origin of a
product in preferential trade agreements,
tend to vary from agreement to
agreement in the case of China.
Sometimes they are across product
groups, which add to the complexity of
Chinas import regime[3]. Rules of origin
criteria for Chinas FTAs with ASEAN,
Chile, Pakistan, and Singapore are Local
Value Addition (40% of total content)
and Regional Value Content (60% of the
value of the product). The criteria for
Peru, New Zealand and Costa-Rica are
Change of Tariff Classification (HS 2-4
digit level) and Regional Value Content
(40-60% of the value of the product).

For most of Chinas FTAs partners, the

agreements have eliminated tariffs and
allowed preferential market access to
China, to a great extent. For example,
in its agreements with Chile, Peru and
New Zealand, China committed to
eliminate duties on 94.6% to 97.2% of
the tariff lines, which corresponded to
88 99.1% of its bilateral imports from
these trading partners[2]. The only
exception to this is the China-Pakistan
FTA. Tariffs and trade under it have not
been liberalized to a substantial level
even after its full implementation in
2012; duties on 35.4% tariff lines were
eliminated, corresponding to 44.4% of
Chinas imports from Pakistan. Pakistan
too has committed relatively low levels
of tariff elimination in the agreement.

Services Liberalisation

Chinas Negative Lists

Due to their focus on liberalizing markets

and facilitating trade, agreements
between China and other developing
countries aimed at reducing tariffs and
non-tariff barriers to trade. Moreover,
China was reluctant to includeissues such
as environment protection, competition
policy, and labour standards as part of
the FTA package. However, China has

Chinas FTAs take into account the

sensitiveness of both countries and
contain Negative Lists, which exclude
a number of products from tariff
liberalisation. Except with Singapore,
China maintains a negative list with
all the other FTA members, aimed at

While the Agreements on Trade in Goods

have taken a Negative List approach,
Chinas Trade in Services Agreements
have taken a Positive List approach, in
line with WTOs General Agreement on
Trade in Services (GATS). Interestingly,
in China FTAs with ASEAN, Chile, and
Pakistan, the Agreement on Services is
a separate document and follows the
Agreement on Goods, while in the case
of other partner countries (New Zealand,
Peru, Singapore, Costa Rica), the FTA
agreement was more comprehensive in
coverage and included not only trade in
goods but also services.

Cooperation Beyond Tariffs

shown some willingness to broaden

its focus and include these issues over
time. For example, Chinas agreements
with developed countries such as
New Zealand and Singapore in 2008
incorporate issues such as intellectual
property rights, trade facilitation, labour
standards, and competition policy.
[4] Nonetheless, China has taken a
cautionary approach and chosen not to
include them in the main agreement of
the FTA but as stand-alone agreements
or MOUs.[5] China has recently taken a
more comprehensive approach to FTAs
in the agreements with Iceland and
Switzerland signed in 2013. China is now
demonstrating a greater willingness to
engage in deeper level of liberalization
of trade, shifting from the previous
narrow strategy of focusing on trade in
goods to a broader focus on other issues.
Nevertheless, Chinas FTAs are not as
comprehensive in terms of coverage and
depth compared to FTAs among other
countries/groups like the US, Japan and

Five Focus Areas in the

Firstly, considering the asymmetries in
size of the economy and production
capacity between Sri Lanka and China,
Sri Lanka needs to negotiate receiving
similar (or higher) concessions that
were granted to other countries that
hold preferential treatment in accessing
China. The negotiations on preferential
market access to China must enable Sri
Lankan exports to be as competitive as
those from Chinas other FTA partners.
Secondly, rather than agreeing on a
general rules of origin criterion, the
negotiations should focus on achievable
requirements, as the requirements differ
from product to product. Thirdly, the
sensitivities of domestic industries to


imports from China also need attention
when formulating and negotiating Sri
Lankas negative list.

Fourth, Sri Lanka must remember that

since provisions made under Chinas
FTAs are based on the principle of
reciprocity, the potential benefits of
allowing preferential market access to
Sri Lanka must be assessed carefully,
and domestic interests and sensitivities
must be accommodated in the roadmap
towards finalizing the FTA. This would
require a closer consultation between
the government, and other stakeholders
in the economy including the private
sector, and civil society of the country.
Finally, to achieve a more comprehensive
bilateral cooperation between the two
countries, the FTA should gradually move
beyond trade in goods to cooperation in
other areas such as investment, services
and trade facilitation at a later date to
build on a negotiated trade agreement.

Flexibility Will Be a Bonus

A cursory look at Chinas existing FTAs
indicates that the country does not follow
one template or model in its agreements,
but tailors them to the preferences
of the partner country. Unlike the US,
which has a standard model (together
with enhancements) that it more or less
adheres to in negotiating FTAs, Chinas
FTAs differ widely from one agreement
to another[7]. China appears to be
less stringent and more flexible; each
agreement is made in collaboration
between China and partner countries.
As Zhao and Webster (2011) assert, the
greatest defining feature of Chinese
FTAs is their malleability. This no doubt
serves Chinas interest as well those of
Sri Lanka.
[1] Zhang, Y. Economic and Social Impact
of Liberalization: A Study on Early
Harvest Program under China-ASEAN
FTA, Beijing: Social Sciences Academic
[2] WTO (2012) Trade Policy Review:
China Report by Secretariat.
[3] Ibid.
[4] Zhan, Yunling (2011), Peoples
Republic of China, in Asias Free
Trade Agreements: How is Business
Responding? (ed.) M. Kawai & G.
Wignaraja, Edward Elgar Publishing,
[5] Gao, H. (2011), Chinas Strategy for
Free Trade Agreements: Political Battle
in the Name of Trade.
[6] Ibid
[7] Zhao, J. & Webster, T. (2011), Taking
Stock: Chinas First Decade of Free Trade,
https://www.law.upenn.edu/ live/files/




July 2014 - December 2014

IPS supports Digital Dynamism

14th Ministerial of the Indian
Ocean Rim Association (IORA)
Dr. Saman Kelegama, Executive Director, IPS, was
a delegate of the government of Sri Lanka team
at the 14th Ministerial of the Indian Ocean Rim
Association (IORA) held in Perth, Australia in
October 2014. Dr. Kelegama led the Indian Ocean
Rim Academic Group (IORAG) from Sri Lanka
and outlined the measures taken to establish the
Centre for Excellence on Ocean Sciences and
Environment in Indian Ocean Rim (COE) at the
IPS with GoSL funding.

IPS in partnership with Google, conducted a

Round Table discussion titled Digital Dynamism,
with the aim of shaping a new narrative around
innovation and entrepreneurship in the country.
Digital Dynamism, held at IPS premises in
December 2014, was a platform to share insights
on initiatives that are taking advantage of digital
tools to disrupt traditional models.

SASEC Trade Facilitation Week:

Sanitary/ Phytosanitary and
Technical Barriers to Trade
IPS Research Officer Kanchana Wickramasinghe
won an award for Personal Accomplishment at
the Top Outstanding Young Persons (TOYP)
in Sri Lanka Award 2014 held in November.
Organized by the Junior Chamber International
(JCI) Sri Lanka, recognizes outstanding individuals,
whose personal and professional achievements
in a chosen field are exemplary, outstanding
and nationally beneficial. In August, Kanchana
Wickramasinghe, also won the First Prize for the
Japanese Award for Outstanding Research on
Development (ORD) in the Global Development
Awards and Medals Competition of the Global
Development Network (GDN).

The 7th South Asia Economic Summit (SAES)

was held in New Delhi, India, from the 5th to 7th
of November 2014, under the theme Towards
a South Asia Economic Union. IPS Executive
Director Dr. Saman Kelegama, Executive Director,
Deputy Director Dr. Dushni Weerakoon,
Research Economist Anushka Wijesinha, and
Research Officers Dilani Hirimuthugoda,
Dharshani Premaratne, and Raveen Ekanayake
were resource persons at the summit. It was
organized by the Research and Information
Systems for Developing Countries (RIS), India.
IPS organized the 6th SAES in Colombo last year
and was a co-organizer of the 7th South Asia
Economic Summit along with CPD (Bangladesh),
SAWTEE (Nepal), SPDI (Pakistan), and SACEPS

IPS Research Officer Raveen Ekanayake was

invited as a resource person to assist and advise
the Sri Lankan delegation at the SASEC Trade
Facilitation Week: Sanitary/Phytosanitary (SPS)
and Technical Barriers to Trade (TBT) held in
Thailand. The meeting, co-organized by the
Asian Development Bank (ADB) and the United
Nations Economic and Social Commission for
Asia and the Pacific (ESCAP) was held on 1-3
December 2014 in Bangkok,Thailand.The meeting
discussed current and potential contributions
of international organizations in harmonization
of standards, setting of regional standards, and
facilitation of mutual recognition arrangements/
conformity assessments.

Workshop on Trade Analysis and Economic

Integration in Pakistan-India Relations:The
Regional Dimension
IPS and InterAnalysis Ltd. jointly organized a five day workshop on
Trade Analysis and Economic Integration in Pakistan-India Relations:
The Regional Dimension in November 2014.The workshop discussed
regional trade issues within SAARC drawing on work completed by
participants who have attended previous workshops in Delhi, Islamabad, and Kathmandu.The key objective of the
workshop was to introduce the Tradesift software, developed by the InterAnalysis Ltd. in Sussex University, and
introduce the use of it in trade policy analysis in the region.

The 7th South Asia Economic

Summit (SAES)

Regional Conference on MultiStakeholder Inputs for the 18th

SAARC Summit
1PS Research Fellow Dr. Ganga Tilakaratna,
participated and contributed to the Regional
Conference on Multi-Stakeholder Inputs for
the 18th SAARC Summit Declaration on
Strengthening Social Protection in South Asia
organized by the South Asia Centre for Policy
Studies (SACEPS) and Friedrich Ebert Stiftung
(FES) held during 21-22 August, Kathmandu,
Nepal. IPS Executive Director Dr. Saman
Kelegama also participated and Chaired a session
on redrafting the Declaration on Strengthening
Social Protection with stakeholder inputs.
Executive Director also participated in the Board
Meeting of the SACEPS which was held back-toback with the conference.

Regional Dialogue: Paths to

Womens Economic Empowerment
in IORA Countries
The Inaugural Gamani Corea
Memorial Lecture
Dr. Saman Kelegama, Executive Director, IPS,
delivered the Inaugural Gamani Corea Memorial
Lecture organized by the Gamani Corea
Foundation on 3rd November 2014 at the
Lakshman Kadirgamar Institute of International
Relations and Strategic Studies (LKIIRSS). Dr.
Kelegama delivering the lecture on Recent
Trends in International Trade: Implications for Sri
Lanka, honoured late Dr. Corea for his immense
contribution to economic policymaking.

Research Officer Sunimalee Madurawala

participated at the Indian Ocean Rim Association
(IORA) Dialogue Event - Paths to Womens
Economic Empowerment, with a Focus on
Tourism and Textiles in IORA Countries, held
in Malaysia in August 2014. The Dialogue aimed
to promote womens economic empowerment
as a key element of broader economic growth,
through a close examination of the tourism and
textiles sectors. It brought together more than
100 women and men from business, government,
academia and civil society from all twenty IORA
countries-across Africa, South and East Asia and
the Middle East.


International Conference on Policies
for Mainstreaming Migration into
Development in Sri Lanka

Presentation on the 3rd MDG Sri

Lanka Draft Report
IPS Executive Director Dr. Saman Kelegama
made a presentation on the 3rd Millennium
Development Goals Sri Lanka draft report
prepared by the IPS team, on UN Day at the UN
Mission in Colombo on 24th October 2014. The
event organized by the UN Mission in Colombo
was graced by the Minister of External Affairs,
Prof. G.L. Peiris (Chief Guest), parliamentarians,
members of the diplomatic community,
government officials, civil society activists, NGO
representatives, and selected students.

IPS organized a conference on Policies for

Mainstreaming Migration into Development in
Sri Lanka. The conference took place on 14th of
August as a component of the IPS project Meeting
the Development Challenges of Migration
(MED_MIG), which is funded by the Think Tank
Initiative (TTI) - a multi-donor program managed
by Canadas International Development Research
Center (IDRC).

Repositioning in the Global Apparel Value

Chain in the Post-MFA Era: Strategic Issues
and Evidence from Sri Lanka
By Prema-Chandra Athukorala and Raveen
International Economic Series No. 10
November 2014
The post-MFA world apparel trade has brought
in many surprises: a number of 'predicted
losers' have maintained or increased their
market shares, while some 'predicted
gainers' have performed poorly. This paper
aims to broaden the understanding of the
determinants of inter-country differences
through a case study of the export-oriented
apparel industry in Sri Lanka.
Can People in Sri Lankas Estate SectorBreak
Away from Poor Nutrition: What Causes
Malnutrition and How It Can Be Tackled

Workshop on Establishing a Centre

of Excellence on Ocean Sciences
and Environment for the Indian
Ocean Rim Countries

Seminar on China-Sri Lanka Free

Trade Agreement
IPS Executive Director Dr Saman Kelegama
delivered the Keynote Address at the China-Sri
Lanka Free Trade Agreement seminar organized
by the National Chamber of Exporters of Sri
Lanka in July 2014. The address was on the
topic China-Sri Lanka Free Trade Agreement:
Opportunities and Challenges. There were
more than 150 participants from the government,
private sector and the civil society at the seminar.

The IPS, in collaboration with the Ministry of

External Affairs organized a regional workshop
on Establishing a Centre of Excellence (CoE)
on Ocean Sciences and Environment for the
Indian Ocean Rim Countries. The workshop,
held in Colombo in July 2014, intended to
identify specific priority areas of focus of the
proposed CoE, and discussed its preliminary
structure and implementation arrangements,
with representatives from Member States and
obtained their comments and suggestions.
Another objective was to establish a network
among relevant institutions based in member
countries to exchange and share ideas in relation
to ocean sciences and environment. Delivering the
welcome address Dr. Saman Kelegama highlighted
that high growth in IORA countries has also
translated into negative impacts on the Indian
Ocean, and stressed the importance of regional
cooperative action for sustainable solutions.

By Priyanka Jayawardena
Health Economic Series No.1
September 2014
Improved healthcare alone cannot improve
all health outcomes, as there are deep rooted
socio-economic factors affecting health.
Thus, this study looks beyond health and
explores the socio-economic determinants of
child and maternal malnutrition in the Estate
Sri Lankan Female Domestic Workers in the
Middle East: Does Recruitment through an
Agent Minimize Vulnerability?
By Bilesha Weeraratne
Labour Economic Series No.18
September 2014
The vulnerability of female domestic workers
at destination is an important concern of Sri
Lanka. This study attempts to discern if there
is a nexus between vulnerability of female
domestic workers at destination and the
recruitment channel.
Returning Home: Experiences & Challenges

Project Advisory Committee Meeting and the

Researchers Meeting of the South Asian Trade and
Transport Facilitation Audit Project

Executive Director Dr. Saman Kelegama and Research Officer Suwendrani

Jayaratne, Research Officer participated in the Project Advisory Committee
Meeting and the Researchers Meeting of the South Asian Trade and
Transport Facilitation Audit Project.The meetings were organized by South
Asia Watch on Trade, Economics and Environment (SAWTEE) with support
of Department of Foreign Affairs and Trade, Australian Government. Country background reports of the South
Asian countries were presented at the meeting with the session being chaired by Dr. Kelegama.

By Suwendrani Jayaratne, Nipuni Perera,

Neluka Gunasekera and Nisha Arunatilake
Labour Economic Series No.17
September 2014
The study analyses the economic and social
reintegration experience of returnee migrants
in Sri Lanka. It also examines effectiveness
of existing programmes and institutions in
assisting returnee migrants upon return.

Female Employment for Inclusive Growth:

Trends, Issues and Concerns of Female
Labour Force Participation in Sri Lanka
By Sunimalee Madurawala
Labour Economic Series No. 16
September 2014
This study focuses on trends, issues
and concerns of female labour force
participation in Sri Lanka in order for the
countrys growth to be inclusive. It also
assesses whether the growth has improved
the opportunities to access the labour
force for females across different income
groups over time.
Towards a Stronger, Dynamic Inclusive
South Asia
Edited by: Saman Kelegama and Anushka
This book examines four key issues
concerning growth in South Asian states,
namely, making maximum use of the
regions human capital resources by
creating productive employment for a
growing labour force, adapting to the
vagaries of climate change and its socioeconomic consequences; addressing intracountry growth disparities; and ensuring
the continued competitiveness of private
enterprise in both domestic and external
Labour Migration in Sri Lanka: Select
Annotated Bibiliography
Compiled by: Dilmani Warnasuriya and
Premila Gamage
Labour Economic Series No.15
August 2014
This annotated bibliography was prepared
as a guide and an easy reference to
available scholarly literature on migration
in the country which is scarce, scattered
and not easily accessible. It covers the ten
year period between 2004 and 2014.
The State of the Economy 2014
Theme: Rising Asia - Opportunities and
Challenges for
Sri Lanka
October 2014
The Sri Lanka: State of the Economy 2014
argues that, while the Sri Lankan context is
no doubt different, and following the Asian
trajectory identically may not be feasible
or desirable, there are salutary lessons to
draw from Asia's rise, both for Sri Lanka's
own development journey but also in
understanding how to best latch on to it.

For further information on publications contact

Amesh Thennakoon, Publication Officer
amesh@ips.lk or 0112143107




In November it
that at least
3,000 Sri Lankans were among
50,000 illegal immigrants the
British Immigration authorities
lost track of. The figure of 3,000
has been suggested to Sri Lankan
consular officers as a minimum
they think are evading arrest and










Regional organisation in South Asia
This ocean covers 30% of global ocean
People aged 65 years and above are expected to grow dramatically in this region
In best-performing, ensuring teach quality starts with ...
11. A major source of livelihood in SL which successive governments have supported through fertilizer subsidies
13. A migrant who turns to his country
17. Frequency and intensities of these events have increased
18. Sri Lanka aspires to be such an economy
19. Acronym for 4 emerging markets
20. Major source of foreign exchange to Sri Lanka
Largest foreign employment market
China's biggest online commerce company
This list contains sensitive products which are exempted from tariff concessions
A major development challenge and a multidimensional issue
Chinese President
10. Ozone depleting substance
12. A forest range in Sri Lanka
14. Women are more likely than men to invest a large portion of income in ...
15. Province with the highest number of teenage pregnancies in the country
16. Deadly disease of the tropics
Across: 2. SAARC; 4. Indian; 8. Asia; 9. Recruitment; 11. Paddy; 13. Returnee; 17. Drought; 18. knowledge based; 19. BRIC; 10. Remittances.
Down: 1. Middle East; 3. Alibaba; 5. Negative; 6. Poverty; 7. Xijin Ping; 10. CFC; 12. Knuckles; 14. Education; 15. Eastern; 16. Dengue


Sri Lankas surging IT and BPO exports is expected

to hit the one billion dollar mark in 2015, surpassing
previous expectations. The country earned $719 mn
from ICT exports, and the projection for 2014 was
$820 mn. It also has seen a 123% growth in IT sector
over the last five years. London Stock Exchange and
HSBC also praised the Lankan IT sector with joy, said
Saman Maldeni (Director, Export Services of SLEDB).



Sri Lanka saw a rapid

received US$ 1.4 billion in
Foreign Direct Investments
up to December. Sri Lanka is
looking at high technology
investments which would
further increase this and
end the year setting up a
record revenue figure.




1.4 bn

According to social
Socialbakers almost
70% of Facebook users in Sri Lanka
are males. However, if you consider
the age rather than gender, 41%
of Sri Lankan Facebook users are
between the ages of 18 and 24 and
about 34% are between the ages of
25 and 34.

139 bn t4 ,h0a0 n0

private companies and

individuals have failed
to pay taxes to Inland
Revenue Department
(IRD). The unpaid taxes
in 2011 amounted to as
much as Rs. 139 billion.


22 bn
In October 2014, Facebook purchased the
mobile messaging service WhatsApp for up
to $22 billion (13.7 billion) in cash and stock
in the firms biggest ever acquisition. This is
an increase on the $19 billion (11.8 billion)
initially announced as Facebook's share price
has risen since the deal was first announced.
Facebook will pay $4.59 billion (2.86 billion)
in cash and 177,760,669 shares in the
company, which have risen to $77 (48) since
February 2014.

A marginal increase of at least two kilos in the daily plucking

average of each tea plucker can significantly boost Sri Lanka's
entire plantation industry and benefit all stakeholders by
bringing down the skyrocketing
unit cost of production of tea,
by nearly seven percent, a
Planters' Association of Ceylon
spokesman said.


The overall poverty rate

in Sri Lanka is 6.7%, while
in Monaragala District the
poverty level has increased
to 20.8% in 2012/13 from
the 14.5% registered in


Over 3,000 qualified Principals are without

proper placements, as several schools
including 98 National schools in Sri Lanka
are currently head-less, an Education Trade
Union claimed. Ceylon Teachers Union
President, Joseph Stalin said Principals are
chosen by a competitive examination. These
exams were last conducted in 2009, when about 1,980 candidates were selected to the Class II
category and 2,200 candidates selected to the Class III category.


Nearly 12,000 females went

to the UAE in 2013 to work
as domestic workers with
an estimated 40,000-50,000
Sri Lankan domestic workers
presently employed in the
seven emirates of the UAE
(Abu Dhabi, Dubai, Sharjah,
Ajman, Umm Al Quwain, Ras
Al Khaimah and Fujairah).

Sri Lanka has received $57 million

from the Global Fund to Fight AIDS,
Tuberculosis and Malaria. For 20142016 Sri Lanka will be receiving $16
million for HIV/AIDS, $ 12.2 million for
tuberculosis and 17.3 for malaria. Of
this $ 45.5 million, France contributes
to over 12%,
to over $ 5.5
million in total
just for Sri


as 15, 000
vacancies in
the countrys
E x p o r t
Zones (EPZs),
high dearth
of labour is
of factories
l o c a t e d
Promotion Minister Lakshman
Yapa Abeywardena said.




Chasing a moderate Foreign

Direct Investment (FDI)
target of US$ 2 billion this
year as an outcome from
the Commonwealth Heads
of Government Meeting (CHOGM), Sri Lanka has been
able to attract US$640 million Chinese investments
through four projects, a Board of Investment (BOI)
official said. The BOI had submitted 50 project
proposals to the Commonwealth Business Forum of
the CHOGM, in November 2013, out of which only 16
projects attracted foreign investor interest.