International Business_Sri Lanka_country Assignment_

Country Assignment

Sri Lanka

DINESH SHAMNANI International Business Assignment

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INDEX

Sr. No. Topic Page No.

1 Introduction Overview of Sri Lanka 2 3

2 Key Rankings Indexes 4 15

3 Cultural Environment of Sri Lanka 16 27

4 Political Environment of Sri Lanka 28 34

5 Legal Environment of Sri Lanka 35

6 Economic Environment of Sri Lanka 36 - 61

7 Trading Environment 62 66

8 Free Trade Agreement 67

9 Other Aspects of Environment 68 75

10 International HRM 76 85

11 International Logistics 86

12 Membership 87

13 Multinational companies in Sri Lanka 88

14 Trading Relations with India 89 96

15 Bibliography 97

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Overview of Sri Lanka

Sri Lanka is focusing on long-term strategic and structural development challenges as it strives to

transition to an upper middle-income country. Key challenges include boosting investment,

including in human capital, realigning public spending and policy with the needs of a middle-

income country, enhancing the role of the private sector, including the provision of an appropriate

environment for increasing productivity and exports, and ensuring that growth is inclusive.

Economic growth in Sri Lanka has been among the fastest in South Asia in recent years. Growth

averaged 6.3 percent between 2002 and 2013, with Gross Domestic Product (GDP) per capita

rising from US$859 in 2000 to US$3,256 in 2013. Preliminary indications are that GDP further

increased by 7.8 percent in 2014.

For most of the past decade, growth has been pro-poor, with consumption per capita of the bottom

40 percent growing at 3.3 percent a year, compared to 2.8 percent for the total population. Other

human development indicators are also impressive by regional and lower middle income

standards. Sri Lanka has surpassed most of the Millennium Development Goal (MDG) targets set

for 2015, outperforming nearby country comparators on most MDGs.

Notwithstanding declining poverty, 13 districts comprising 36 percent of the total population

remain below the national poverty headcount. In four conflict-affected border districts, poverty

rates are at or above 20 percent. While the national unemployment level is low at 4.4 percent, 14

districts report unemployment rates higher than the national average. According to Department of

Census and Statistics survey data of 2011, 76 percent of total unemployed are below 29 years of

age.

Growth during the past five years has been in form of a peace dividend resulting from

reconstruction efforts and increased consumption. Sustaining broad-based economic growth into

the future will require determined structural reforms that stimulate productivity growth and

economic diversification across sectors, driven by technology and innovation, and new market

development domestically and internationally. As part of Sri Lankas structural economic

transformation, employment in primary agriculture will likely continue to decline from its present

share of 30 percent of the labor force as other sectors of higher productivity absorb rural surplus

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labor. At the same, along with productivity increases, agriculture is likely to become more capital

intensive and technology-driven as labor shortages emerge.

Improving the quality of human capital through effective education and skills development is

central to Sri Lankas economic growth and competitiveness. Continued growth will also depend

largely on fostering private sector development and private investment, especially increased

foreign direct investment (FDI). Sri Lankas economy depends on FDI to bring in innovation. The

import of FDI is further underscored by the countrys limited domestic savings rate, brought

about largely by its demographic trends. Contrary to most economies in South Asia, Sri Lanka

does not have a demographic dividend: by 2036, more than 22 percent of the population will be

over 60, and there will be 61 dependents per 100 adults. Increases in the labor force, employment

rates and productivity will be central to growth. Against the background of an aging society,

efficient and well-targeted social assistance will also become more important.

Against this backdrop, Sri Lanka is in the midst of fundamental political change, following the

election of Maithripala Sirisena as President of the country in January 2015. President Sirisena

and his Government have committed to a rapid 100 day program focused largely on restructuring

government after which Parliament is to be dissolved and general elections held. The winning

coalition in these elections would be expected to form a long-term government with a

corresponding economic policy direction.

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Key Ranking

1) Global Innovation Index of Central and South Asia Countries

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2) Competitiveness Index

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3) Ease of Ranking doing business

ECONOMY OVERVIEW

REGION South Asia

INCOME CATEGORY Lower middle income

POPULATION 20,483,000

GNI PER CAPITA (US$) 3,170

CITY COVERED Colombo

DOING BUSINESS

2015 RANK

DOING BUSINESS 2014

RANK***

CHANGE IN

RANK

99 105 6

DOING BUSINESS 2015 DTF**

(% POINTS)

DOING BUSINESS 2014 DTF**

(% POINTS)

CHANGE IN DTF** (%

POINTS)

61.36 60.01 1.35

Rankings

TOPICS DB 2015 Rank DB 2014 Rank Change in Rank

Starting a Business 104 101 -3

Dealing with Construction Permits 60 60 No change

Getting Electricity 100 100 No change

Registering Property 131 124 -7

Getting Credit 89 86 -3

Protecting Minority Investors 51 50 -1

Paying Taxes 158 167 9

Trading Across Borders 69 85 16

Enforcing Contracts 165 165 No change

Resolving Insolvency 72 68 -4

=Doing Business reform making it easier to do business. =Change making it more difficult to do business

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Comparison with some economies

Economy Starting a

Business

Rank

Starting a

Business

DTF

Procedures

(numbers)

Time

(Days)

Cost (%

income per

capita)

Pain-in min

capital (% of

income per

capita)

Sri Lanka 104 83.01 9.0 11.0 20.7 0.0 India 158 68.42 11.9 28.4 12.2 111.2

Pakistan 116 80.92 10.0 19.0 9.6 0.0 Bangladesh 115 81.36 9.0 19.5 16.8 0.0 Nepal 104 83.01 7.0 17.0 32.2 0.0

Bhutan 92 85.01 8.0 17.0 4.4 0.0 Russia 34 92.17 4.4 11.2 1.2 0.0

USA 46 91.22 6.0 5.6 1.2 0.0 China 128 77.43 11.0 31.4 0.9 0.0 Zinbabwe 180 51.42 9.0 90.0 114.6 0.0

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4) Freedom house index

Freedom house index is U.S. based and funded non-governmental organization (NGO) that

conducts research and advocacy on democracy, political freedom and human rights.

Freedom House was founded in October 1941. Wendell Willkie and Eleanor Roosevelt served as

its first honorary chairpersons.

Freedom in the World 2014 & 2015

RATINGS CHANGE:

Sri Lankas civil liberties rating declined from 4 to 5 due to increased pressure on freedom of

expression and association, including curbs on traditional media and internet-based news and

opinion, and surveillance and harassment of civil society activists.

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Freedom on the Net 2014

2014 Scores

Status Partly Free

Freedom on the net total (0 = Best, 100 = Worst) 58

Obstacle to access (0 = Best, 100 = Worst) 15

Limits on Content (0 = Best, 100 = Worst) 20

Violations of user rights (0 = Best, 100 = Worst) 23

Population 20.5 Million

Internet penetration 22%

Social Media/ ICT Apps Blocked: NO

Political/Social Content Blocked: YES

Bloggers/ICT Users arrested: NO

Press freedom status: Not Free

2014 on the net total 58

KEY DEVELOPMENTS:

May 2013 - May 2014

In March 2014, the information ministry formed a committee to regulate social media, shortly after

President Rajapaksa dubbed them a disease; the scope of its activities remains unclear.

The Colombo Telegraph website was repeatedly inaccessible, continuing a trend of pressure on online

news outlets.

Incidents of violence and harassment against internet users declined, though traditional journalists met

with increased intimidation.

Freedom of the Press 2015

Status Not Free

Press Freedom Score (0 = Best, 100 = Worst) 76

Legal Environment (0 = Best, 100 = Worst) 23

Political Environment (0 = Best, 100 = Worst) 33

Economic Environment (0 = Best, 100 = Worst) 20

Media freedom remained restricted in Sri Lanka in 2014. The regime of President Mahinda Rajapaksa continued to intimidate journalists through a variety of legal and extralegal means. As the presidential

election approached at the end of the year, pressure on the media increased.

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5) Mercer Index

Cost of Living Reports Key Features

Based on an international basket of goods and services reflecting realistic spending habits

established through years of extensive expatriate research.

Accurate, current, frequently updated data.

Distinct cost of living (COL) indices and price information for different types of expatriate

shoppers.

Full list of stores and sources where prices are collected ensures transparency.

Accommodation and Education costs included in the reports.

Business Travel Expenses are included to provide guidance for per diems.

Estimate allowances instantly using our Cost of Living Allowance Calculators.

Additional calculators that allow you to use data for your specific needs.

Special cities surveyed upon request.

Methodology that lets you determine competitive purchasing power for all your assignees,

wherever they come from.

Mercer Cost of Living Survey Worldwide Rankings 2015

(Mercer international basket, including rental accommodation costs)

Rank as of March City Country

2014 2015

1 1 Luanda Angola

3 2 Hong Kong Hong Kong

5 3 Zurich Switzerland

4 4 Singapore Singapore

6 5 Geneva Switzerland

10 6 Shanghai China

16 16 New York City United States

92 50 Washington, D.C. United States

140 74 Mumbai India

164 129 Colombo Sri Lanka

157 132 New Delhi India

211 205 Karachi Pakistan

Source: Mercers 2015 Cost of Living Survey

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6) IPRI

Sri Lankas IPRI score remained unchanged with a score of 5.0. Sri Lankas IPRI score has not

changed since 2012 and in 2014 Sri Lanka ranks 59th worldwide and 11th in Asia and Oceania.

The Compounded Annual Growth Rates from 2010 through 2014 for the various components are

as follows: Legal and Political Environment (+1.1 percent), Physical Property Rights (-0.8

percent), Intellectual Property Rights (+2.4 percent), and the IPRI score (+0.5 percent).

While Sri Lankas Intellectual Property Rights score has remained steady at 4.5 since 2012, the

countrys Legal and Political Environment declined marginally from 2013 to 2014 as a result of a

decline in the countrys Judicial Independence by 0.3 points and Rule of Law by 0.1 points.

However, it is worth noting that Sri Lankas Control of Corruption improved by 0.2 points.

Though Sri Lankas Legal and Political Environment weakened from 2013 to 2014, the countrys

Physical Property Rights score improved by 0.1 points due an equal improvement in the countrys

Access to Loans.

IPRI Overall

Year Score Score Globally Regionally

2007 5 Overall 5.0 59 of 97 11 of 16

2008 4.5 Legal and Political 4.6 51 of 96 8 of 16

2009 4.7 Physical 5.9 56 of 97 12 of 16

2010 4.6 Intellectual 4.5 71 of 97 11 of 16

2011 5

2012 5

2013 5

2014 5

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Legal and Political Environmental


2007 4 Overall 4.6 51 of 96 8 of 16

2008 3.9 Judicial Independence 5.6 44 of 97 11 of 16

2009 4 Rule of Law 4.8 47 of 97 8 of 15

2010 4 Political Stability 3.6 73 of 96 11 of 15

2011 4.5 Control of Corruption 4.5 46 of 97 8 of 16

2012 4.6

2013 4.7

2014 4.6

Physical Property Rights


2007 5.9 Overall 5.9 56 of 97 12 of 16

2008 5.9 Protection of Physical Property 6.2 44 of 97 10 of 15

2009 6 Registering Property 7.7 77 of 96 14 of 15

2010 6

2011 6.1

2012 6

2013 5.8

2014 5.9

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Intellectual Property Rights


2007 5.1 Overall 4.5 71 of 97 11 of 16

2008 3.7 Protection of Individual Property Rights 5.4 44 of 97 10 of 16

2009 4 Patent Protection 6.5 59 of 97 11 of 16

2010 3.9 Copyright Protection 1.6 73 of 80 12 of 15

2011 4.4

2012 4.5

2013 4.4

2014 4.5

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7) Index of economic freedom, Overall Score (score (100 represents

the maximum freedom)) Economic freedom is the fundamental right of every human to control his or her own labor and

property. In an economically free society, individuals are free to work, produce, consume, and

invest in any way they please, with that freedom both protected by the state and unconstrained by

the state. In economically free societies, governments allow labor, capital and goods to move

freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect

and maintain liberty itself.

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Comparison with India

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PEST ANALYSIS OF SRI LANKA

Cultural environment of Sri Lanka

Demographic Profile of the Country

Population (source: countrymeters.info/en/Sri Lanka)

21 045 383 Current population

10 383 447 Current male population (49.3%)

10 661 937 Current female population (50.7%)

265 693 Births this year

835 Births today

90 293 Deaths this year

284 Deaths today

-32 945 Net migration this year

-104 Net migration today

142 455 Population growth this year

448 Population growth today

During 2015 Sri Lanka population is estimated to be increased by 195 233 people and reach 21

098 161 in the beginning of 2016. The natural increase is expected to be positive, as the number

of births will exceed the number of deaths by 240 384. If external migration will remain on the

previous year level, the population will be declined by 45 150 due to the migration reasons. It

means that amount of people who leaves Sri Lanka to settle permanently in another country

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(emigrants) will prevail over the amount of people who moves into the country (to which they are

not native) in order to settle there as permanent residents (immigrants).

According to estimations, daily change rates of Sri Lanka population in 2015 will be the

following:

998 live births average per day (41.57 in a hour)

339 deaths average per day (14.13 in a hour)

-124 emigrants average per day (-5.15 in a hour)

The population of Sri Lanka will be increased by 535 persons daily in 2015.

Sri Lanka population density

Sri Lanka population density is 318.6 people per square kilometer as of October 2015. Density of

population is calculated as permanently settled population of Sri Lanka divided by total area of

the country. Total area is the sum of land and water areas within international boundaries and

coastlines of Sri Lanka. The total area of Sri Lanka is 65 610 km2 according to the United Nations

Statistics Division

Sri Lanka age structure

As of the beginning of 2015 according to our estimations Sri Lanka had the following population

age distribution:

24.9 67.2 7.9

- percentage of population under 15 years old

- percentage of population between 15 and 64 years old

- percentage of population above 64 years old

In absolute figures (estimation):

5 210 682 young people under 15 years old ( 2 657 598 males / 2 553 084 females)

14 050 948 persons between 15 and 64 years old ( 6 868 493 males / 7 182 455 females)

1 641 298 persons above 64 years old ( 707 355 males / 933 943 females)

We prepared a simplified model of the population distribution pyramid which is broken down

into 3 main age groups. The groups are the same as we used above: population under 15,

between 15 and 64 and population which is over 65 year old.

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65+

15-64

0-14

male female

As we can see the Sri Lanka population pyramid has an expanding type. This type of pyramid is

common for developing countries with high birth and death rates. Relatively short life

expectancy, as well as low level of education and poor health care are also describe such kind of

population age distribution model.

Sri Lanka age dependency ratio

Dependency ratio of population is a ratio of people who are generally not in the labor force (the

dependents) to workforce of a country (the productive part of population). The dependent part

includes the population under 15 years old and people aged 65 and over. The productive part of

population accordingly consists of population between 15 and 64 years.

This ratio shows the pressure on productive population produced by the dependent part of

population.

The total dependency ratio of population in Sri Lanka is 48.8 %.

The value of 48.8 % is relatively low. It shows that the dependent part of population is less than a

half of the working part. In other words the working population (labor force) in Sri Lanka must

provide goods for itself and cover expenditure on children and aged persons. And this part of

population is less than 50% of working population.

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Culture, Hofstedes Cultural Dimensions

Hofstede's cultural dimensions theory is a framework for cross-cultural communication,

developed by Geert Hofstede. It describes the effects of a society's culture on the values of its

members, and how these values relate to behavior, using a structure derived from factor analysis.

If we explore Sri Lankas culture through the lens of the 6-D Model, we can get a good

overview of the deep drivers of Sri Lankas culture relative to other world cultures.

Power Distance

This dimension deals with the fact that all individuals in societies are not equal it expresses the

attitude of the culture towards these inequalities amongst us. Power Distance is defined as the

extent to which the less powerful members of institutions and organisations within a country

expect and accept that power is distributed unequally.

With a slightly high score of 80, Sri Lanka is a relatively hierarchical society. This means that

people accept a hierarchical order in which everybody has a place and which needs no further

justification. Hierarchy in an organisation is seen as reflecting inherent inequalities, centralisation

is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat.

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Individualism

The fundamental issue addressed by this dimension is the degree of interdependence a society

maintains among its members. It has to do with whether peoples self-image is defined in terms

of I or We. In Individualist societies people are supposed to look after themselves and their

direct family only. In Collectivist societies people belong to in groups that take care of them in

exchange for loyalty.

A low score of 35 in this dimension means that Sri Lanka is considered a collectivistic society.

This is evident in a close, long-term commitment to the member 'group', be that a family,

extended family, or extended relationships. Loyalty in a collectivist culture is paramount and

overrides most other societal rules and regulations. The society fosters strong relationships where

everyone takes responsibility for fellow members of their group. In collectivist societies: offence

leads to shame and the loss of face, employer/employee relationships are perceived in moral terms

(like a family link), hiring and promotion decisions take account of the employees in-group and

management is the management of groups.

Masculinity

A high score (Masculine) on this dimension indicates that the society will be driven by competition,

achievement and success, with success being defined by the winner / best in field a value system

that starts in school and continues throughout organisational life.

A low score (Feminine) on the dimension means that the dominant values in society are caring for

others and quality of life. A Feminine society is one where quality of life is the sign of success and

standing out from the crowd is not admirable. The fundamental issue here is what motivates

people, wanting to be the best (Masculine) or liking what you do (Feminine).

Sri Lanka, with a very low score of 10, is thus considered a Feminine society. In Feminine countries

the focus is on working in order to live, managers strive for consensus, people value equality,

solidarity and quality in their working lives. Conflicts are resolved by compromise and negotiation.

Incentives such as free time and flexibility are favoured. Focus is on well-being and status is not

shown or emphasized.

Uncertainty Avoidance

This dimension, Uncertainty Avoidance, has to do with the way that a society deals with the fact

that the future can never be known: should we try to control the future or just let it happen? This

ambiguity brings anxiety with it, and different cultures have learnt to deal with this anxiety in

different ways. The extent to which the members of a culture feel threatened by ambiguous

or unknown situations and have created beliefs and institutions that try to avoid these is

reflected in the score on Uncertainty Avoidance.

The relatively intermediate score of 45 indicates that Sri Lanka does not indicate a strong

preference.

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Long Term Orientation

This dimension describes how every society has to maintain some links with its own past while

dealing with the challenges of the present and future, and societies prioritise these two existential

goals differently. Normative societies. which score low on this dimension, for example, prefer to

maintain time-honoured traditions and norms while viewing societal change with suspicion. Those

with a culture which scores high, on the other hand, take a more pragmatic approach: they encourage

thrift and efforts in modern education as a way to prepare for the future.

With an intermediate score of 45, Sri Lanka does not indicate a strong preference in this dimension.

Indulgence

One challenge that confronts humanity, now and in the past, is the degree to which small children

are socialised. Without socialisation we do not become human. This dimension is defined as the

extent to which people try to control their desires and impulses, based on the way they were raised.

A tendency toward a relatively weak control over their impulses is called Indulgence, whereas a

relatively strong control over their urges is called Restraint. Cultures can be described as

Indulgent or Restrained.

There is currently no score for Sri Lanka in this dimension.

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Sri Lankan Cuisine

Foods in Sri Lanka can be hot or very

mild or can be combination being very

much a question of individual

preference. Sri Lankan food is unique for

their Culture. Many Sinhala food items are

derived from Chena cultivation.Sri Lankan

cuisine plays a vital role in the islanders

life from the most auspicious Sinhala/

Hindu New Year to normal day-to-day

practices. They make milk rice and special sweets with coconut milk, floor and Honey at cultural

festivals. It is recognized as one of the sixty- four types of art, Siu Seta kalawa. The curries

come in many verities of colors and flavors blended in Sri Lankan Hot Spices has a great

ayurvedic value when used in curries.

Most of the Sri Lankans eat vegetables. With a large community of farmers the Rice and curry is

the main food in Sri Lanka. Sri Lanka curries are known for their fiery hot spicy flavors and

coconut milk is very distinct feature of Sri Lankan cuisine that different regions of country

specialize in different types of dishes. The specialty in Sri Lankan food is that same food is

differently made in different regions. Dishes from the North region of Sri Lanka have distinct

south Indian flavors.

Dishes from the South region of Sri Lanka can be Spicy, Hot or Mild. The meals of the southern

region of Sri Lanka are known for their variety and fishing village though the coastal strip.

Ambulthiyal a unique spicy fish preparation with thick gamboges Goraka paste.

Certain types of fish Balaya , Kelawalla are native to Southern seas. Lunu dehi (lime pickle)

and jaadi (Pikled fish) are food items made from methods of preserving since they could dry them

in sun during rainless days. Western region of Sri Lanka has foreign influence much more than

other regions. Many items made using wheat flour always had made Sri Lankan dishes foreign.

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Since upper western coastal region is dry, fish is dried with salt as a preservative. This is called

Karawala (dry fish).

Spices such as Cloves, Cardamoms, nutmeg and pepper are found in abundance throughout

Kandy and Matale District in Central region of Sri Lanka. Eastern province constitutes three

major ethnic groups. Sinhala, Muslim and Tamil, Chena cultivation, Game meat from nearby

forests and dry Weather have influenced many food items. Staple diet of Sri Lanka is Rice and

curry the word curry convering a multitude of dishes which are made according to different

methods of cooking from Soups, meat, Sea food, Lentils, Vegetables, Sambols, Mallums, Phies to

Achcharus. Curd and Treacle and Sweetmeats made from Rice flour and palm treacle, jiggery

along with various types of fruits are additions to the meal as the dessert. The Palm, Coconut,

Kithul, Palmyra from which the treacle is made will vary accordingly. Sri Lankans also like

several juicy sweetmeats like Kavum, kokis, Halape, Thalaguli and Wattalapam etc. Sri Lankans

also like to have drinks like tea and coffee.

Foods Highlights

Milk Rice (Kiri Bath)

Milk rice or Kiribath is a traditional Sri Lankan dish

made from rice. It is a popular festive dish or any

auspicious moment.The dish is prepared by cooking rice

with coconut milk, hence this name. The recipe for

Kiribath is fairly simple.

Rice and Curry in Sri Lanka

Rice is the staple food of the Sri Lankans. Almost

every household in Sri Lanka takes rice and curry as

its main meal. Meat, fish and vegetables are prepared

as curries. Sliced onions, green chilies, black pepper,

cinnamon, cardamom, cloves, nutmeg and saffron are

used to add flavors. A basic rice and curry requires one

fish (or beef or chicken) curry, two different

vegetables, one portion of fried crispy stuff.

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Sour fish curry (Malu Ambul thiyal)

Malu Ambulthiyal a unique spicy fish preparation with thick

gamboges Goraka paste. This is a very popular dish of a

fish steak (usually an oily fish like kingfish) in a sour curry

sauce. Sri Lanka has a great selection of delicious fish. Best

accompaniment if you want to bring down a few blocks of

milk rice or a few hoppers and pittu as well.

Potato Curry (Ala Hodi)

Boiled potatoes well cooked on thick coconut milk is the

basic recipe of this particular food item. Selected as one of

the favorite curries among the local citizens, Potato curry

can be accompanied with almost any main course and

nutritious wise the curry itself stands on a stable stage.

Achcharu

Made with green chili, onions and mustered cream.

Hoppers (Appa)

There are various types of Hoppers in Sri Lanka.

Plain hoppers, egg hoppers, milk hoppers, honey

hoppers and string hoppers.

* Plain hoppers are bowl-shaped thin pancakes made

from fermented rice flour.

* Egg hoppers are the same as plain hoppers, but an

egg is broken into the pancake as it cooks.

* Milk hoppers have a spoonful of thick coconut milk/coconut cream added to the doughy center.

When cooked, the center is firm to the touch but remains soft inside and is sweeter as a result of

the coconut milk.

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Dos & Donts

The DO's

1) Show courtesy and respect to the clergy. From which ever religion. For example, if you're

travelling in the front seat of a bus and at the next stop a Bhuddist monk gets onboard, your

fellow passengers may relinquish their seats to him before you, but if they dont it's best you do

adn set a good example. Goes a long way.

2) Take a walk through the old streets of the Pettah and Fort. Sensible walking shoes and a bottle

of water in your backpack will be called for. It's great to see commerce at work and the aromas of

the spices and whatnot really do give you a sense of the vibrancy around you.

3) Take a ride in a tuk tuk if you've never done it before. It's a blast. just ensure the driver doesnt

get overzealous in showing you his skills.

4) Visit the museum in Colombo, the Dutch museum in Pettah and have a sundowner on the

verandah of the Galle Face Hotel.

5) Walk around the Galle Fort.

6) If you have the patience for it, go watch a 50 over cricket match. Preferably from the bar of the

SSC which overlooks the pitch.

7) When in doubt seek assistance from a police officer or soldier and they will help if it seems

like no one else will.

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DONT's

1) Dont encourage beggars.

2) Dont encourage touts.

3) Dont walk about Pettah in the night.

4) Dont get into tuk tuks at night (unless you know them well). Instead use the cabs that are

prevalent in the city and suburbs.They are relatively cheap, comfortable and safe.

5) Dont fall for cons or hard luck stories. Remember the old adage...'No good deed goes

unpunished'. If it sounds too good then be wary.

6) Dont forget the mosquito repellant if you decide on shorts for a night out.

7) Dont wear clothing that can be deemed disrespectful when visiting places of worship. i.e

shorts, tops that are revealing way too much cleavage etc.

8) Dont overtip. It sets unnecessary precedents for those hapless others who patronize the place

after you.lol

9) Dont light up your cigarettes in certain open spaces as the laws concerning smokers and

smoking are rather draconian and you could end up being fined.

10) Dont drink and drive. It's not only stupid but the authorities dont take it easy when folks get

caught DUI.

11) Dont rent a car that hasnt got a comprehensive insurance plan that is current and make certain

that the passengers are covered in the plan. Takes only a few minutes to do.

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12) Dont use brokers when hunting for real estate. Deal directly with the owner. The papers

advertise enough and plenty properties which the owners can be directly reached.

13) Dont overstay your visa. If you've decided to stay on for longer go directly to the Immigration

office and they will assist you.

14) Dont pay any government officials any bribes. It is demeaning to you and though they may

not know it, to them as well.

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Political Environment of the Country

Prime Minister President

Ranil Wickremesinghe Maithripala Sirisena

since 9 January 2015 since 9 January 2015

Finance Minister

Ravi Karunanayake

Since 12 January 2015

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Political System of Sri Lanka

The Democratic Socialist Republic of Sri Lanka provides for a presidential system of

government. Under the political system of Sri Lanka the president is the head of state, head of

government, head of cabinet and the commander in- chief of the armed forces.

The president is elected by the people for a term of six years and is entitled for re-elections for

two consecutive terms. An outstanding feature of the political system of Sri Lanka is the

enormous size of its cabinets whereby the constitution assigns 28 ministerial level portfolios

which includes two held by the president.

Functions of the President

The president of Sri Lanka holds the most important national office and is accountable to the

parliament. Major functions of the president include:

Appoints the prime minister with the approval of the parliament

Select members of cabinet in consultation with the prime minister and also presides over

their deliberations

The president can dissolve parliament at any point of time and call for fresh elections.

Declarations of war and peace in Sri Lanka

During a public emergency the president can enact measures without parliamentary

approval.

Judiciary

Headed by a Chief Justice, the Supreme Court of Sri Lanka consists between six to eight associate

justices. The president appoints the justices of the Supreme Court and High Court. The grounds

under which superior court justices can be removed are incompetence or misconduct. Justice of the

High Court can only be removed by a Judicial Service Commission comprising of Supreme Court

Justices. The Supreme Court has the authority of judicial review and can also order a referendum

on special issues concerning national significance.

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Major Political parties

Party Symbol/ Logo/ Flag Alliance

Sri Lanka Freedom Party (Sinhalese: Sri

Lanka Nidahas Pakshaya)

Hand UPFA

Sri Lanka Muslim Congress Tree UPFA

Tamil Eelam Liberation Organization Light House TNA

United National Party Elephant UNF

Political Stability

Definition: The Corruption Perceptions Index is an indicator of perceptions of public sector

corruption, i.e. administrative and political corruption. The indicator values are determined by

using information from surveys and assessments of corruption, collected by a variety of reputable

institutions.

World Corruption perceptions - Transparency International: The average for 2011 was 41.13

points. The highest value was in New Zealand: 95 points and the lowest value was in Somalia: 10

points. Below is a chart for all countries where data are available for: Corruption perceptions -

Transparency International.

World Ranking: Sri Lanka 92nd 38 points

World Ranking: India 90th 38 points

Asia Corruption perceptions - Transparency International: The average for 2014 was 38.75

points. The highest value was in Singapore: 84 points and the lowest value was in North Korea: 8

points. Below is a chart for all countries where data are available for: Corruption perceptions -

Transparency International.

Asia Ranking: Sri Lanka 20th 38 points

Asia Ranking: India 18th 38 points

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Sri Lanka Is A Corrupt Nation Source: (October 03 2015 The Sunday leader)

By Easwaran Rutnam

Public sector corruption is still high in Sri

Lanka, and by the looks of it we have a long

way to go to clear our name.

According to Transparency International, Sri

Lanka is ranked 79 from among 174

countries in the corruption index for last year

as compared to 86 the previous year.

The least corrupt nation is at number one while the worst is at number 174 and based on that Sri

Lanka is on the margin between the good and bad.

Sri Lanka is only one rank better than China, who just so happens to be Sri Lankas biggest

development assistance partner.

What the government cannot be proud of however is that countries like Tunisia and Rwanda are

better than Sri Lanka when it comes to corruption in the public sector.

The police are among the corrupt public sector workers in Sri Lanka as they accept bribes when

carrying out investigations or are on traffic duty.

Even the State owned Ceylon Electricity Board (CEB) is corrupt and this, in part, caused the

increase in electricity tariffs recently.

Giving evidence before a Transparency International peoples tribunal last Thursday on whether

electricity bills were justified, the Peoples Movement Against Increasing Electricity Tariffs

representative Saman Rathnapriya said the CEB losses, corruption and wastage were the reason

for the recent exponential tariff increase.

Rathnapriya said he had documents that he would place before the tribunal, which indicated that

the Sampur power plant currently under construction would be an inefficient one that would place

further burdens on the electricity consumers once the plant was commissioned.

Rathnapriya charged that the Power Minister at the time John Seneviratne had not been aware of

the Sampur Agreement and that Sri Lanka had entered into the agreement with an Indian

company without the approval of the CEB board of directors. He said that while the agreement

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claimed the Sampur plant would run at 40% efficiency the actual efficiency of the plant was 35%

resulting in losses of between 2.6 and 4.9 billion rupees.

One of the most notable cases in public sector corruption came to light when the North Central

Province Road Development Authority (NCP RDA) interdicted two of its highest ranking officers

and started investigating allegations of massive corruption prior to the Deyata Kirula exhibition in

2012.

The Transparency International Sri Lanka led Coalition Against Corruption (CAC) had revealed

that over 3,000 million rupees had been swindled during the construction and development of

roads by the NCP RDA prior to the exhibition.

The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) had launched an

investigation following a written complaint by the NCP RDA officials along with the provincial

administration.

NCP RDA also suspended payment of Rs 14, 000 million to the contractors who were allegedly

authorized to repair the roads affected by floods during year 2011.

These acts of fraud had taken place when roads were extended to cover about 410km. More than

30 roads were developed before the Deyata Kirula exhibition. An allocation of Rs 7,500 million

had been made for the development of roads during the period 2008 2012. It included Rs 2,500

million from the North Central Province Fund, Rs 1,500 million from JICA and Rs 3,500 million

from the Asian Development Bank.

Inspector General of Police, N. K. Ilangakoon had also directed the police to conduct an

investigation into this massive corruption after officials of the NCP RDA made the complaint.

In order to eliminate corruption in the public sector, Transparency International says the CIABOC

needs to be given greater independence and empowerment, and have adequate human and

infrastructure resources.

It also said that there are areas of essential legal reforms in enhancing the operational efficiency

and effectiveness of Anti-Bribery and Corruption based law enforcements.

Right to information, whistle blower protection and witness protection are some of the key areas

Transparency International feels need to be in place as a step to fight corruption.

Transparency International says all stakeholders must have access to information from State

agencies on time and in required detail. Sri Lanka still lacks a robust Right to Information law. Its

enactment will be a great inducement to our common vision.

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Transparency International also says corruption is a main factor that prevents investment. A safe

equal playing field for investment requires the absence of corruption. Elimination of corruption is

possible through effective anti-corruption measures. A primary need is to have an effective

whistle blower protection system.

It also says an equally important aspect of a conducive environment is effective witness

protection. In the absence of whistle blower and witness protection, eliminating corruption will

not be possible.

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Macro and Micro Risks

Macro Risks

A type of political risk in which political actions in a host country can adversely affect all foreign

operations. Macro risk can come about from events that may or may not be in the reigning

government's control.

Micro Risks

Specific type of political risk category. Corporations doing business in other nations may face

internal turmoil or anti-foreign sentiment. Vandalism, civil unrest, rioting, and nationalization of

corporate assets by foreign governments are all factors in Micro country risks.

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Legal Environment of the Country

Sri Lankan Legal System Hierarchy of courts.

Sri Lankan law is based on English common law system. As a result, the English law

principles such as judicial precedent (lower courts follow the reasoning of the higher

courts in similar, subsequent cases) and ratio decidendi (reasons for judgment) govern the

interpretation of the case law. Civil cases are heard by the District Courts, and the

Criminal cases by Magistrates Courts and High Courts. From decisions of these trial courts, an appeal lies to the Court of Appeals and then to the Supreme Court.

Parliament makes law in Sri Lanka . Laws are published in Acts of Parliament. The term

Ordinance refers mostly to legislation passed during the British rule, the term Law or Act refers to more recent legislation. In most laws, the Parliament delegates the rule making authority to administrative (executive) agencies. The rules or regulations made by

such agencies are published in the Government gazette.

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Economic Environment of the Country

Type of Economy

The country's economy has traditionally been based on agriculture, which now contributes less

than 20% to the gross domestic product and employs about a third of the work force. The

emphasis is on export crops such as tea, rubber, and coconuts (all plantation-grown). Cinnamon,

cardamom, pepper, cloves, nutmeg, citronella, tobacco, cocoa, and coffee are also exported. Rice,

sugarcane, grains, pulses, oilseed, fruit, and vegetables are grown for local use and consumption.

Petroleum refining is important, and amorphous graphite, precious and semiprecious gems,

mineral sands, clay, and limestone are mined. Port construction, telecommunications, and

offshore insurance and banking are also important industries. Remittances from Sri Lankans

working abroad, mainly in the Middle East, contribute significantly to the economy. The island's

swift rivers have considerable hydroelectric potential.

Historically, industry centered chiefly around the processing of agricultural products, but textiles

and garments are now Sri Lanka's biggest export. Sri Lanka has a persistent balance of trade

problem, however, and the country is dependent on large amounts of foreign aid. Although

coastal lagoons provide many sheltered harbors, only S Sri Lanka lies on the main world shipping

routes. The port of Colombo, on which most of the country's railroads converge, handles most of

the foreign trade. Exports include textiles and apparel, tea and spices, diamonds, emeralds, rubies,

coconut products, rubber goods, and fish. Textile fabrics, mineral products, petroleum, foodstuffs,

machinery, and transportation equipment are imported. The United States, India, and Great

Britain are the largest trading partners.

The country's economy has traditionally been based on agriculture, which now contributes less

than 20% to the gross domestic product and employs about a third of the work force. The

emphasis is on export crops such as tea, rubber, and coconuts (all plantation-grown). Cinnamon,

cardamom, pepper, cloves, nutmeg, citronella, tobacco, cocoa, and coffee are also exported. Rice,

sugarcane, grains, pulses, oilseed, fruit, and vegetables are grown for local use and consumption.

Petroleum refining is important, and amorphous graphite, precious and semiprecious gems,

mineral sands, clay, and limestone are mined. Port construction, telecommunications, and

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offshore insurance and banking are also important industries. Remittances from Sri Lankans

working abroad, mainly in the Middle East, contribute significantly to the economy. The island's

swift rivers have considerable hydroelectric potential.

Historically, industry centered chiefly around the processing of agricultural products, but textiles

and garments are now Sri Lanka's biggest export. Sri Lanka has a persistent balance of trade

problem, however, and the country is dependent on large amounts of foreign aid. Although

coastal lagoons provide many sheltered harbors, only S Sri Lanka lies on the main world shipping

routes. The port of Colombo, on which most of the country's railroads converge, handles most of

the foreign trade. Exports include textiles and apparel, tea and spices, diamonds, emeralds, rubies,

coconut products, rubber goods, and fish. Textile fabrics, mineral products, petroleum, foodstuffs,

machinery, and transportation equipment are imported. The United States, India, and Great

Britain are the largest trading partners.

Sri Lanka Economic Structure: Division by Sector

The economic structure of Sri Lanka can be divided into the following sectors:

Primary Sector: Sri Lankan primary agriculture sector can be divided into three major categories

.i.e. farming, fishing and aquaculture. As of 2008, 32.7% of the labor force was employed in the

sector. Some major crops are rice and the staple cereal. Coconut, tea and rubber plantation is done

extensively. Tea is one of the countrys biggest foreign exchange earners. To promote Sri Lankan

Ayurveda, ganja or cannabis is also grown. The fishing sector of Sri Lanka is still recovering

from the throes of 2004 tsunami that damaged 90% of the countrys fishing boats.

Secondary Sector: The industrial sector provides employment to 26.3% of the workforce (as of

2008). Around 18% of the GDP comes from manufacturing which is also the countrys largest

industrial subsector. The construction sector contributes 7% to the GDP followed by mining and

quarrying that account for 1.5%. Measured by value addition food, beverage, and tobacco

contribute 44% followed by textiles, garment, and leather that contribute 20%. Some other major

manufacturing industries include petroleum, chemical, plastic rubber and non-metallic mineral-

based products products.

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Tertiary Sector: Sri Lankan services sector is the major employer as 41% of the countrys labor

force is engaged in it (as of 2008). The growth rate in 2006-07 was 7% and dropped to 5.6% in

2008 due to recession. The major contributory sectors to growth were the financial services,

telecom, trading and transport. The information technology sector is growing steadily in Sri

Lanka. Tourism, which has been one of the major foreign exchange earners for decades, is also

taking off post civil war. The target of the countrys tourism development board is to attract 2.5

million tourists and earn $2 billion by 2016.

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GDP

The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a

country's economy. It represents the total dollar value of all goods and services produced over a

specific time period; you can think of it as the size of the economy.

Actual Previous Highest Lowest Dates Unit Frequency

74.94 67.21 74.94 1.42 1960 2014 USD Billion Yearly

The gross domestic product (GDP) measures of national income and output for a given country's

economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods

and services produced within the country in a stipulated period of time.

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GDP Growth rate


6.40 6.40 8.60 1.50 2003 2015 Percent Quarterly

Sri Lanka is a developing economy off the southern coast of India. In spite of years of civil war,

the country has recorded strong growth rates in recent years. The main sectors of the Sri Lanka's

economy are tourism, tea export, apparel, textile and rice production. Remittances also constitute

an important part of country's revenue.

The Gross Domestic Product (GDP) in Sri Lanka expanded 6.40 percent in the first quarter of

2015 over the previous quarter. GDP Growth Rate in Sri Lanka averaged 6.58 percent from 2003

until 2015, reaching an all-time high of 8.60 percent in the fourth quarter of 2010 and a record

low of 1.50 percent in the first quarter of 2009. GDP Growth Rate in Sri Lanka is reported by the

Department of Census and Statistics - Sri Lanka

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Major industry contributors to the GDP

GDP of Sri Lanka has contribution of major industries as follows

1. Agricultural 2. Constructions 3. Manufacturing sector, 4. Mining, 5. Services, 6. Transport, 7. Utility

1. Sri Lanka GDP from Agriculture


91274.00 99623.00 99623.00 48988.00 2002 2015 LKR Million Quarterly

GDP from Agriculture in Sri Lanka decreased to 91274 LKR Million in the second quarter of 2015

from 99623 LKR Million in the first quarter of 2015. GDP from Agriculture in Sri Lanka averaged

72674.17 LKR Million from 2002 until 2015, reaching an all-time high of 99623 LKR Million in

the first quarter of 2015 and a record low of 48988 LKR Million in the fourth quarter of 2002. GDP

from Agriculture in Sri Lanka is reported by the Department of Census and Statistics - Sri Lanka.

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2. Sri Lanka GDP from Construction


84445.00 86934.00 92687.00 23794.00 2002 2015 LKR Million Quarterly

GDP from Construction in Sri Lanka decreased to 84445 LKR Million in the second quarter of

2015 from 86934 LKR Million in the first quarter of 2015. GDP From Construction in Sri Lanka

averaged 45341.50 LKR Million from 2002 until 2015, reaching an all-time high of 92687 LKR

Million in the fourth quarter of 2014 and a record low of 23794 LKR Million in the second

quarter of 2002. GDP from Construction in Sri Lanka is reported by the Department of Census

and Statistics - Sri Lanka

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3. Sri Lanka GDP from Manufacturing


146150.00 162141.00 162141.00 71515.00 2002 - 2015 LKR Million Quarterly

GDP from Manufacturing in Sri Lanka decreased to 146150 LKR Million in the second quarter of

2015 from 162141 LKR Million in the first quarter of 2015. GDP from Manufacturing in Sri Lanka


Million in the first quarter of 2015 and a record low of 71515 LKR Million in the second quarter of

2002

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4. Sri Lanka GDP from Mining



GDP from Mining in Sri Lanka decreased to 20169 LKR Million in the second quarter of 2015

from 30611 LKR Million in the first quarter of 2015. GDP from Mining in Sri Lanka averaged


the first quarter of 2015 and a record low of 4602 LKR Million in the fourth quarter of 2002.

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5. Sri Lanka GDP from Services



GDP from Services in Sri Lanka increased to 522986 LKR Million in the second quarter of 2015

from 514141 LKR Million in the first quarter of 2015. GDP From Services in Sri Lanka averaged

363781.50 LKR Million from 2002 until 2015, reaching an all-time high of 534350 LKR Million

in the third quarter of 2014 and a record low of 228947 LKR Million in the first quarter of 2002.

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6. Sri Lanka GDP from Transport



GDP from Transport in Sri Lanka decreased to 105821 LKR Million in the second quarter of

2015 from 108108 LKR Million in the first quarter of 2015. GDP from Transport in Sri Lanka


Million in the third quarter of 2014 and a record low of 34984 LKR Million in the second quarter

of 2002.

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7. Sri Lanka GDP from Utility



GDP from Utilities in Sri Lanka increased to 24748 LKR Million in the second quarter of 2015

from 19083 LKR Million in the first quarter of 2015. GDP From Utilities in Sri Lanka averaged


the second quarter of 2015 and a record low of 7695 LKR Million in the first quarter of 2002.

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GNP Per capita


9544608.00 8448144.00 9544608.00 4115.00 1950 - 2014 LKR Million Yearly

Gross National Product in Sri Lanka increased to 9544608 LKR Million in 2014 from 8448144

LKR Million in 2013. Gross National Product in Sri Lanka averaged 1106498.99 LKR Million

from 1950 until 2014, reaching an all-time high of 9544608 LKR Million in 2014 and a record

low of 4115 LKR Million in 1950. Gross National Product in Sri Lanka is reported by the Central

Bank of Sri Lanka.

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Inflation Trend

Inflation Rate


-0.30 -0.20 28.31 -0.89 1986 - 2015 percent Monthly 2007=100

The inflation rate in Sri Lanka was recorded at -0.30 percent in September of 2015. Inflation Rate

in Sri Lanka averaged 9.95 percent from 1986 until 2015, reaching an all-time high of 28.31

percent in June of 2008 and a record low of -0.89 percent in March of 1995. Inflation Rate in Sri

Lanka is reported by the Central Bank of Sri Lanka.

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Food Inflation


1.99 2.20 14.33 -4.08 2009 - 2015 percent Monthly

Cost of food in Sri Lanka increased 1.99 percent in September of 2015 over the same month in

the previous year. Food Inflation in Sri Lanka averaged 5.85 percent from 2009 until 2015,

reaching an all-time high of 14.33 percent in April of 2011 and a record low of -4.08 percent in

February of 2012

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Inflation Rate mom


-0.30 -0.50 5.19 -3.51 1985 - 2015 percent Monthly 2007=100

The Consumer Price Index in Sri Lanka decreased 0.30 percent in September of 2015 over the

previous month. Inflation Rate Mom in Sri Lanka averaged 0.77 percent from 1985 until 2015,

reaching an all-time high of 5.19 percent in May of 1995 and a record low of -3.51 percent in

September of 1994. Inflation Rate Mom in Sri Lanka is reported by the Central Bank of Sri

Lanka.

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Core Inflation Rate


4.40 2.80 12.76 0.82 2004 - 2015 percent Monthly 2007=100

Core Inflation Rate in Sri Lanka increased 3.50 percent in July of 2015 over the same month in

the previous year. Core Inflation Rate in Sri Lanka averaged 7.12 percent from 2004 until 2015,

reaching an all-time high of 12.76 percent in September of 2008 and a record low of 0.82 percent

in February of 2015. Core Inflation Rate in Sri Lanka is reported by the Central Bank of Sri

Lanka.

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Balance of Trade


-601.80 -689.20 -50.10 -1100.70 2003 - 2015 USD Million Monthly

Sri Lanka exports mostly textiles and garments (40% of total exports) and tea (17%). Others

include: spices, gems, coconut products, rubber and fish. Main export partners are United States,

United Kingdom, Germany, Belgium and Italy. Sri Lanka imports petroleum, textile fabrics,

foodstuffs and machinery and transportation equipment. Main import partners are India, China, Iran

and Singapore. This page provides the latest reported value for - Sri Lanka Balance of Trade - plus

previous releases, historical high and low, short-term forecast and long-term prediction, economic

calendar, survey consensus and news. Content for - Sri Lanka Balance of Trade - was last refreshed

on Sunday, October 4, 2015.

Sri Lanka recorded a trade deficit of 601.80 USD Million in July of 2015. Balance of Trade in Sri

Lanka averaged -446.72 USD Million from 2003 until 2015, reaching an all-time high of -50.10

USD Million in May of 2003 and a record low of -1100.70 USD Million in November of 2011.

Balance of Trade in Sri Lanka is reported by the Central Bank of Sri Lanka.

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Current Account


-54242.00 -88525.00 30854.90 -189897.00 1997 - 2015 LKR Million Quarterly

Current Account is the sum of the balance of trade (exports minus imports of goods and services),

net factor income (such as interest and dividends) and net transfer payments (such as foreign aid).

This page provides the latest reported value for - Sri Lanka Current Account - plus previous

releases, historical high and low, short-term forecast and long-term prediction, economic

calendar, survey consensus and news. Content for - Sri Lanka Current Account - was last

refreshed on Sunday, October 4, 2015.

Sri Lanka recorded a Current Account deficit of 54242 LKR Million in the first quarter of 2015.

Current Account in Sri Lanka averaged -40031.61 LKR Million from 1997 until 2015, reaching

an all-time high of 30854.90 LKR Million in the third quarter of 2010 and a record low of -

189897 LKR Million in the fourth quarter of 2011. Current Account in Sri Lanka is reported by

the Central Bank of Sri Lanka

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Government Debt to GDP


75.50 78.30 103.20 75.50 1990 - 2014 percent Yearly

Generally, Government debt as a percent of GDP is used by investors to measure a country ability

to make future payments on its debt, thus affecting the country borrowing costs and government

bond yields. This page provides - Sri Lanka Government Debt To GDP - actual values, historical

data, forecast, chart, statistics, economic calendar and news. Content for - Sri Lanka Government

Debt to GDP - was last refreshed on Sunday, October 4, 2015.

Sri Lanka recorded a Government Debt to GDP of 75.50 percent of the country's Gross Domestic

Product in 2014. Government Debt to GDP in Sri Lanka averaged 90.83 percent from 1990 until

2014, reaching an all-time high of 103.20 percent in 2001 and a record low of 75.50 percent in

2014. Government Debt to GDP in Sri Lanka is reported by the Central Bank of Sri Lanka.

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Wages


8839.35 7556.25 8839.35 3121.95 1997 - 2008 LKR/Month Yearly

Wages in Sri Lanka increased to 8839.35 LKR/Month in 2008 from 7556.25 LKR/Month in 2007.

Wages in Sri Lanka averaged 5345.44 LKR/Month from 1997 until 2008, reaching an all-time

high of 8839.35 LKR/Month in 2008 and a record low of 3121.95 LKR/Month in 1997. Wages in

Sri Lanka is reported by the Central Bank of Sri Lanka.

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Unemployment rate


4.50 4.70 11.30 3.90 1996 - 2015 percent Quarterly

Unemployment Rate in Sri Lanka decreased to 4.50 percent in the second quarter of 2015 from

4.70 percent in the first quarter of 2015. Unemployment Rate in Sri Lanka averaged 5.61 percent

from 1996 until 2015, reaching an all-time high of 11.30 percent in the fourth quarter of 1996 and

a record low of 3.90 percent in the third quarter of 2011. Unemployment Rate in Sri Lanka is

reported by the Department of Census and Statistics - Sri Lanka

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Unemployed person


381.00 384.00 964.00 308.00 1990 - 2014 Thousand Yearly

The number of unemployed persons in Sri Lanka decreased to 381 Thousand in 2014 from 384

Thousand in 2013. Unemployed Persons in Sri Lanka averaged 584.36 Thousand from 1990 until

2014, reaching an all-time high of 964 Thousand in 1990 and a record low of 308 Thousand in

2011. Unemployed Persons in Sri Lanka is reported by the Asian Development Bank.

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Exchange Rate

Daily Exchange Rates 02.10.2015

Currency Buying Rate (Rs.) Selling Rate (Rs.)

Dollar (USA) 138.9400 143.4400

Pound (UK) 209.6000 217.9000

Euro (EU) 154.5400 161.3500

Franc (Switzerland) 141.2100 147.7500

Dollar (Canada) 104.2600 109.0200

Dollar (Australia) 96.8900 101.9100

Dollar (Singapore) 96.4900 100.6200

Yen (Japan) 1.1523 1.2025

Last 10 years (LKR-USD)

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Exchange Rate - Last 10 year (LKR INR)

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FDI Flow in the country


128.00 351.00 386.00 20.00 2001 - 2015 USD Million Quarterly

Foreign Direct Investment in Sri Lanka decreased to 128 USD Million in the first quarter of 2015

from 351 USD Million in the fourth quarter of 2014. Foreign Direct Investment in Sri Lanka

averaged 126.98 USD Million from 2001 until 2015, reaching an all-time high of 386 USD

Million in the fourth quarter of 2013 and a record low of 20 USD Million in the second quarter of

2001. Foreign Direct Investment in Sri Lanka is reported by the Central Bank of Sri Lanka.

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Trading Environment

Imports


1533.90 1633.30 1986.40 408.00 2001 - 2015 USD Million Monthly

Sri Lanka imports petroleum, textile fabrics, foodstuffs and machinery and transportation

equipment. Main import partners are India, China, Iran and Singapore. This page provides the

latest reported value for - Sri Lanka Imports - plus previous releases, historical high and low,

short-term forecast and long-term prediction, economic calendar, survey consensus and news.

Content for - Sri Lanka Imports - was last refreshed on Sunday, October 4, 2015.

Imports in Sri Lanka decreased to 1533.90 USD Million in July from 1633.30 USD Million in

June of 2015. Imports in Sri Lanka averaged 1076.80 USD Million from 2001 until 2015,

reaching an all-time high of 1986.40 USD Million in November of 2011 and a record low of 408

USD Million in February of 2002. Imports in Sri Lanka is reported by the Central Bank of Sri

Lanka.

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Exports


932.10 944.10 1069.90 304.80 2003 - 2015 USD Million Monthly

Sri Lanka exports mostly textiles and garments (40% of total exports) and tea (17%). Others

include: spices, gems, coconut products, rubber and fish. Main export partners are United States,

United Kingdom, Germany, Belgium and Italy. This page provides the latest reported value for -

Sri Lanka Exports - plus previous releases, historical high and low, short-term forecast and long-

term prediction, economic calendar, survey consensus and news. Content for - Sri Lanka Exports

- was last refreshed on Sunday, October 4, 2015.

Exports in Sri Lanka decreased to 932.10 USD Million in July from 944.10 USD Million in June

of 2015. Exports in Sri Lanka averaged 687.47 USD Million from 2003 until 2015, reaching an

all-time high of 1069.90 USD Million in March of 2014 and a record low of 304.80 USD Million

in April of 2003. Exports in Sri Lanka is reported by the Central Bank of Sri Lanka.

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Exports commodities

Textiles and garments

Tea

Spices

Gems

Coconut products

Rubber

Fish

Imports commodities

Petroleum

Textile fabrics

Foodstuff

Machinery

Transportation equipment

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Tariff and Non-Tariff Barriers

Tariff Barriers

The most widely utilized barrier to market access for goods is customs duties; also this is

referred to as tariffs.

An import tariff is a tax that is levied on goods when they imported to a country for domestic

consumption and this has been the most common method used by governments to protect

domestic industry from foreign competitors and also as a means of raising government revenue.

In the current world countries are shifting from high tariffs to value-added for revenue purposes

and such taxes are also based on the value of the goods

In general there are three types of tariffs:

An ad valorem tariff that is based on a fixed percentage of the value of the good that is being

imported; for example, 7% of the value of computer equipment;

A specific tariff that prescribes an amount of money and doesn't vary with the value of the

imported good but may based on the quantity or weight of the good;

A mixed tariff, which is a combination of the two types of tariff previously mentioned.

Although there are three categories of tariffs most commonly used tariff type is Ad valorem

customs duties. These custom duties remain an important barrier to trade because of below

reasons,

Most developing countries still maintain high customs duties.

Developed countries still have high, to very high, duties on specific groups of 'sensitive'

industrial and agricultural products.

In competitive markets and in trade between neighboring countries, a very low duty may still

constitute a barrier

In simple terms when application of tariffs it will raise the price of the importing good which

most of the time it's well above the local production as shown in the below table and figure.

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Current tariffs in Sri Lanka are under following categories.

Tariff barriers

1. Customs Duty

2. Surcharge

3. Port and Aviation Levy ( PAL)

4. Cess Levy

5. Value Added Tax (VAT)

6. Exercise Duty

7. RIDL

8. SRL

9. Nation Building Tax (NBT)

Non-Tariff barriers

Non-tariff barriers are barriers that restrict imports in some way other than the imposition of a

tariff. Normally they are many in numbers and may impact on trade direct or indirect means to

limit or restrict free trade. These barriers can be listed as follows,

1. Quantitative restrictions:

2. Quota

3. Voluntary Export Restraints

4. Automatic and non-automatic Licensing

5. Other Non-Tariff Barriers:

6. Exchange controls

7. Embargoes

8. Production subsidies.

9. Technical Regulations, Standards and conformity assessment procedures

10. Sanitary and Phytosanitary Measures

11. Lack of Transparency in government requirements

12. Unfair and arbitrary application of the government regulations

13. Customs formality and procedures

14. Pre shipment inspection

15. Origin Requirements

16. Government Procurement Requirements

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Free Trade Agreement

List of countries with Sri Lanka has cooperative agreements and the

performance of the agreement.

1. India

2. Pakistan

3. China

4. Bangladesh

Free Trade Agreements with India

INDO-SRI LANKA FREE TRADE AGREEMENT (ISFTA)

The Indo-Sri Lanka Free Trade Agreement (ISFTA), which was signed on 28th December 1998

and entered into force with effect from 1st March 2000, provides duty free concessions to a wide

range of products traded between the two countries. Sri Lankas final tariff liberalization

commitment under ISFTA came into effect since November 2008 and with this completion of

the commitment, the ISFTA which came into effect from March 2000 has been fully

implemented. However, Sri Lanka has already got a fully duty free access to the vast Indian

market under the ISFTA since the end of March 2003. Thus, the entrepreneurs based in Sri

Lanka can now export more than 4000 product lines to the Indian market on duty free basis.

The objectives of this Agreement are:

(i) To promote through the expansion of trade the harmonious development of the economic

relations between India and Sri Lanka.

(ii) To provide fair conditions of competition for trade between India and Sri Lanka

(iii) In the implementation of this Agreement the Contracting Parties shall pay due regard to the

principle of reciprocity

(iv) To contribute in this way, by the removal of barriers to trade, to the harmonious

development and expansion of world trade.

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Other Aspects of Environment

Infrastructure

The Sri Lankan government has launched an ambitious program of physical infrastructure

development to completely upgrade the sea, air, road, and power and telecom backbone of the

country. The following are the main features of this program:

1. Sea Port and Airport Development

The Sri Lankan government has declared its intention to develop the country as a leading regional

aviation, navigation and trading hub in South Asia. Therefore, the development of maritime &

aviation transportation is at the forefront of the government's infrastructure development agenda.

The focus of these developments is to expand the capacity and improve the efficiency of existing

ports through modernization and construction of new ports and airports in strategic locations.

Major Sea Port and Airport development:

Colombo South Port Expansion

The Colombo South Port expansion project with three terminals,

each terminal having capacity of 2.4 million TEUs per annum, will

increase the capacity of the Colombo Port by 160% upon

completion. Construction work of the breakwater has been

completed. The first terminal, a join venture between the Sri Lanka

Ports Authority and China Merchant Holdings Ltd, was built under

a 35 year build operate and transfer agreement with SLPA. The terminal was opened for

commercial operation on 5th August 2013.

Hambantota Port Development

Phase I of the project, the Mahinda Rajapaksa Magampura Port, was inaugurated in November

2010. The port is expected initially to function as a service and

industrial port and later be developed to handle transshipment cargo.

Phase II of the port is underway at an estimated cost of US$ 800

Mn. The port is ideally located to serve the main East-West shipping

lane connecting Europe and the Middle-east with South East Asia.

The bunkering facilities at the Port of Hambantota, set up at a cost

of US$ 76.5 million, and the tank farm has commenced commercial operations. Out of the 14 tanks

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it has, eight tanks will be used to store marine fuel, three will store aviation fuel and three

remaining tanks will be used to store liquid petroleum.

The aviation fuel stored in the Hambantota Port is to be used for the Mattala Airport, the second

international airport currently being built in Hambantota.

Expansion of Bandaranaike International Airport

A project is under way to expand the island's first international airport

at Katunayake, 35 km north of Colombo. The project includes the

expansion of the transit area, construction of new baggage-reclaim

area, multi storied car park and widening of the existing runway. A

feasibility study is being carried out for a second runway.

Development of a second International airport at Mattala

The construction of the new international airport at Mattala in the

southern Hambantota district is carried in two phases. The first phase

was completed and opened on 18th March 2013. That includes one

runway and a taxi way that will be expanded in the second stage to

allow for larger planes, including the latest airbus A380, to land.

This airport will open up the vast southern and eastern areas of Sri

Lanka for development including tourism projects. The airport will be in close proximity to the

Hambantota port.

2. Development of High Mobility Road Network

Road development in the country, which was left behind last few

decades due to the war, has been given prominence by the

government. The national Road Master Plan has already been

prepared, which focuses on the construction of highways,

widening of highways, reduction of traffic congestion, road

maintenance & rehabilitation and bridge rehabilitation &

reconstruction.

It has become an urgent necessity for further investment in road network, thus the development of

road network has become a major determinant factor in attracting new investments to the country.

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Major road development:

Colombo - Katunayake Expressway - CKE (25km)

The Colombo Katunayake Expressway connects the Colombo

City and the International Airport at Katunayake. It consists of four

Interchanges at New Kelani Bridge, Peliyagoda, Ja-Ela and

Katunayake. The Contract value of the project is US$ 292 Mn.

Construction was completed and opened for the public on 27th of

October 2013 by his Excellency the president Hon. Mahinda

Rajapakse. The CKE will reduce the travel time between Peliyagoda

and Katunayake to 20 minutes from the earlier time of 1.5 hours using Peliyagoda-Puttalam road

(A003). The quick travel between the Bandaranaike International Airport and the capital of the

country with enhanced safety will surely help to boost the country's economy in addition to

providing pleasant travel to the road users.

Southern Highway (126km)

The Southern Expressway is the longest expressway being

built in Sri Lanka. The construction of a four-lane highway

from Colombo to Matara will be a catalyst for the economic

and social development of the Southern region and promotion

of and inter-regional transport network. The highway was

opened for public on 27th November 2011.

The section of Southern Expressway from Pinnaduwa (Galle)

to Godagama (Matara) has been opened to public on 15th March 2014. This section also consists

of 4-lane capacity similar to the earlier section from Kottawa to Pinnaduwa. The maximum

operating speed for this section is also 100 kmph. Now the Southern Expressway from Kottawa to

Godagama (Matara) is in operation. It is expected to extend the Southern Expressway from Matara

to Hambantota with the intention of linking Mattala Airport and Hambantota Harbour to the

Commercial Capital, Colombo in future.

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Outer Circular Highway - OCH (29.2km)

The outer Circular Highway (OCH) is located in the Colombo Metropolitan Region and passes

through two administrative districts, namely Colombo and Gampaha. This highway runs around

20 km away from the City centre of Colombo, connecting radial routes and has a total length of

29.2 km. The northern end of the highway is located at Kerawalapitiya on Colombo-Katunayake

Expressway and the southern end is located at Kottawa on Colombo-Ratnapura-Wellawaya-

Batticaloa (A004) road where Southern Expressway meets OCH. Outer Circular highway from

Kottwawa to Kerawalapitiya will link seven trunk roads and the Colombo Katunayake and the

Southern Expressways.

Colombo - Kandy Highway (99km)

The proposed North East Expressway (Colombo Kandy Expressway) begins at Kadawatha of

the present Colombo Kandy (A1) Road (at the access point of the Outer Circular Highway) and

links with Katugastota Kurunegala Puttalam (A10) road at Hedeniya and Kandy Jaffna road

(A9) at Katugastota. The length of this road is 99 km. Construction of the North - East Expressway

is mainly divided into two construction phases viz. Phase I (KadawathaAmbepussa) 48.2 km

and Phase II (Ambepussa Katugastota) -50.7 km.

The expressway is expected to be built as a privately financed toll road and will be later expanded

to Jaffna and Trincomalee.

The cost for the first phase of the road project is estimated to be one billion US dollars..

3. Power & Energy

Development of power & energy sector is a key aspect of the

government's infrastructure development agenda and long term

strategies have been introduced with active participation of the

private sector, as a key component.

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Major power projects in progress

Ambitions planes are under way to increase the national grid from 2817 MW to 4732 MW (by

2016) and to reduce the cost of generation by harnessing the latest clean coal technology.

Norochcholai Coal Power Project

The construction of first phase of the Norochcholai Coal Power

Plant (300 MW) was completed by end of 2010 and was added to

the national grid by end of March 2011. The second phase will add

another 600 MW to the national grid.

Upper Kothmale Hydro Power Project (UKHP)

The upper Kothmale project will have an installed capacity of 150MW (consisting of two 75MW

units). Construction of the project was completed and connected to the national grid on14th July

2011.

Trincomalee Coal Power Project

Sri Lanka's second coal fired thermal power plant is implemented as a joint venture of Ceylon

Electricity Board and National Thermal Power Corporation (NTPC) of India. The Joint Venture

Company has been incorporated as Trincomalee Power Company Limited on 6th September 2011.

Trincomalee Power Company Limited is responsible for implementation and operation of the 2 X

250MW coal power plant in Sampur. The total estimated cost of the project would be USD 512

Million.

The Sampoor Coal Power Plant will comprise two 250 MW power generators. The power

generated will be transmitted to the national grid through high voltage transmission lines from

Sampoor through Habarana to the Veyangoda Grid Substations.

Power Purchase Agreement, Implementation Agreement, BOI Agreement, Land Lease Agreement

and Coal Supply Agreement were signed on 07 October 2013 by relevant parties including GOSL,

CEB and JV Company. Project is expected to be commissioned before end of 2017.

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4. Telecommunication Infrastructure Development

SEA-ME-WE IV

Sri Lanka is connected to the South East Asia-Middle East-

West Europe 4 (SEA-ME-WE IV) project, the submarine

cable system linking South East Asia to Europe via the Indian

Sub-Continent and Middle East. The project aims to take these

regions to the forefront of global communication by

significantly increasing the bandwidth and global connectivity

of users along its route between Singapore and France.

SEA-ME-WE 4 fiber optics cables provide a bandwidth capacity of 1.28 terabits per second, with

a 25 year guaranteed lifespan for the technology. This revolutionary submarine cable system offers

Sri Lanka an immense bandwidth advantage, and paves the way to make Sri Lanka a globally

competitive business hub.

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Airports in Sri Lanka

International Airport

Location Airport

Colombo Bandaranayake International Airport (CMB)

Domestic Airports

Location Airport

Ampara Ampara Airport (ADP)

Ampara Kondavattavan Tank Airport (AFK)

Anuradhapura Anuradhapura Airport (ACJ)

Batticaloa Batticaloa Airport (BTC)

Bentota River Bentota River Airport (BJT)

Colombo Ratmalana Airport (RML)

Dambula Dambulu Oya Tank Airport (DBU)

Dickwella Mawella Lagoon Airport (DIW)

Gal Oya Amparai Airport (GOY)

Hatton Castlereigh Reservoir Airport (NUF)

Hingurakgoda Hingurakgoda Airport (HIM)

Jaffna Kankesanturai Airport (JAF)

Kandy Vic. Resevour Kandy Airport (KDW)

Katugastota Polgolla Reservoir Airport (KDZ)

Katukurunda Katukurunda Slaf Base Airport (KTY)

Kelaniya Kelaniya River Airport (KEZ)

Koggala Koggala Airport (KCT)

Mahaweli Mahaweli Airport (KDY)

Minneriya Minneriya Airport (MNH)

Sigiriya Sigiriya Slaf Base Airport (GIU)

Trincomalee China Bay Airport (TRR)

Weerawila Weerawila Airport (WRZ)

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Sea Ports in Sri Lanka

Name City Location Description

Port of Colombo Colombo

065710N 795041E

Largest port in the country

Port of

Hambantota

Hambantota

060710N 810629E

New port in the south

Trincomalee

Harbour

Trincomalee

083401N 811352E

Fifth largest natural

harbour in the world

Port of Galle Galle Regional Port

Port of Point

Pedro

Point Pedro

095009N 801241E

Minor harbour, the

northern-most in the

country

Kankesanthurai

Harbour

Kankesanthurai 094908N 800157E Minor harbour, currently

used by the navy

Oluvil Harbour Oluvil 071630N 815200E Newly developed harbour

opened 2013

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International HRM

Terms and Conditions of Employment in Sri Lanka

Law is the supreme power of a state commanding what is right and wrong. According to that

Labour law is Law for labours relat ing to their employment. The labour Law of Sri Lanka

could broadly be said to originate from the following;

Statutes- their objective is the regulation of minimum terms and conditions of employment

The awards, orders and judgments

Collective agreements entered in to between trade unions & employer

Labour Law in Sri Lanka commenced from about 1830 with the growth of plantation

industry. At present there are 45 labour status in operation of which some are more or less

obsolete and have any academic interest.

Terms is any undertaking in a contract being either a collection, a warranty or an in

nominate term (Osborns Concise Law Dictionary)

A condition is providing which makes the existence of a right dependant on the happening

of an event implied.

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Classification of Labour Laws

1. Statutes on regulation of wages and conditions

Employee holiday Act No 06 of 1959

Holiday Act No 29 of 1971

Privilege Leave (private) Law Act No 14 of 1976

Budgetary Relief Allowance Act No 18 of 1978

Fuel Configuration five Day Week Act

Special Allowance of Workers Law

Supplementary Allowance of Workers Act

Wages Boards Ordinance No 43 of 1941

Shop and office Employees Act No 43 of 1950

2. Statutes on employee welfare

Workmens Compensation Ordinance No 19 of 1934

Factories Ordinance No 45 of 1942

Employee provident fund Act No 46 of 1980

Payment Gratuity Act No 12 of 1983

3. Statutes on industrial relations

Trade Union Ordinance No 14 of 1935

Industrial Dispute Act No 43 of 1950

Termination of Employment of workmen Act No 45 of 1971

Employee Council Act No 12 of 1979

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4. Statutes on obtaining jobs & training

Service contract Ordinance no 11 of 1865

Registration of Domestic Services Ordinance No 28 of 1871

Chauffeurs Regulation Ordinance No 23 of 1912

National Apprenticeship Act No 49 of 1971

Employment of Trainees Act No 08 of 1978

Foreign Employment Agency Act No 32

Documents

International Business_Sri Lanka_country Assignment_