ips talking economics digest_january - june 2015
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JANUARY TO JUNE 2015
DIGEST
Adopting a Blue Economy Approach in Sri Lanka
page 11
Overcoming Challenges of Marine Pollution for Healthy Oceans
page 09
Millennium Development Goals – Sri Lanka’s Achievements and Challenges Ahead
page 35
Integrated Water Management and Sustainable Urbanization in Sri Lanka
page 15
Environment ManagementSustainability &
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.
Charting a Course for Sri Lanka’s Economy: Politics Triumph Economics for Now
Trade Facilitation: Breaking Down Barriers to International Trade in Sri Lanka
Reaching Greater Heights in Innovations: A Sri Lankan Perspective
Overcoming Challenges of Marine Pollution for Healthy Oceans
Adopting a Blue Economy Approach in Sri Lanka
Does Restructuring Property Rights Hold the Key to Natural Resource Management in Sri Lanka?
Integrated Water Management and Sustainable Urbanization in Sri Lanka
Good Environmental Management Practices in the Hotel Industry in Sri Lanka: Determinants and Barriers
Climatenet
Inside IPS
National Medicinal Drug Regulatory Authority Bill and the Medicinal Drug Policy of Sri Lanka: Some Challenges
Patient Waiting Times in Private Hospitals: A Growing Concern in Sri Lanka
Food Additives – Are They Safe?
“Let Food be Thy Medicine”
Towards Healthier Diets in Sri Lanka: The Role of Nutrition Labeling
Emerging Food Standards: A Cause of Concern for the Sri Lankan Tea Industry
World No Tobacco Day: Tobacco Smoking - An Issue of Un-awareness
Millennium Development Goals – Sri Lanka’s Achievements and Challenges Ahead
IPS Careers / IPS Internship Programme
Addressing Issues of Social Protection to Enhance Equity in Sri Lanka
Child Labour and Education in Sri Lanka: Combating Child Labour through the Provision of Quality Education
Networking and Information: Crucial Ingredients in Empowering Women Owned and Led Micro, Small and Medium Enterprises in Sri Lanka
Inspirational Women
Text-bombs of Unsolicited Promotional Messages: Do Consumers have Control Over their Personal Information?
IPS News
Latest Publications
Too Much Time Holidaying. Not Enough Time Working?
Talking Economics Crossword Puzzle
Fast Facts
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TALKING ECONOMICS
Welcome to the 10th edition of the Talking Economic Digest!
The Talking Economics Digest is a bi-annual compilation of articles by IPS researchers brought out
during the year in our Talking Economics Blog. The articles in this Edition reflect the broad thematic
areas of research we focus at the Institute as well as highlight some key developments in the
country and the world in the first half of 2015.
The efforts of successive governments during the last several decades have led to growth in per
capita incomes, resulting in a increase in standard of living of the people and a decrease in overall
poverty levels. However, Sri Lanka faces a host of environmental problems such as land degradation,
de-forestation, pollution and poor management of water resources, loss of biological diversity,
coastal erosion, increasing scarcity of water, etc. As an emerging economy, the challenge for Sri
Lanka is to achieve sustainable high economic growth without causing irreversible damage to the
environment.
More than ever before, Sri Lanka needs to strike a balance between rapid economic growth and the
demands of a growing population on a limited natural resource base. The Digest focuses on this
issue, featuring articles relating to sustainable environment management of water, ocean, forest and
its resources, and tourism in the country. In the article, Adopting a Blue Economy Approach in Sri Lanka, Kanchana talks about the use of ocean and its resources sustainably while Athula highlights
the need for coordination amongst various agencies concerned with marine and land based pollution
in the country as well as regional/international cooperation in Overcoming Challenges of Marine Pollution. Forests in Sri Lanka are depleting at an alarming rate, requiring a restructuring of property
rights to better manage forests, argues Chatura in his article to mark the World Environment Day
2015. He also discusses the increasing demand for water in urban areas and the need to adopt an
Integrated Urban Water Management (IUWM) approach to achieve sustainable economic, social and
environmental goals. In the article Good Environmental Management Practices in the Hotel Industry in Sri Lanka, which is based on an IPS study, Kanchana looks at the adoption of good
energy, water and waste management practices in the Sri Lankan hotel industry, which has been
seen a remarkable growth in the recent past with the ending of the war.
The Digest also has a number of other interesting articles looking at issues relating to health, labour,
education, social security, trade, etc., which would appeal to our wide and growing readership
beyond policy-makers of the country. Articles like, “Let Food be Thy Medicine”, The Role of Nutrition Labelling, and Food Additives – Are They Safe?, aim to inform the general public of the
importance of healthy diets and nutrition labeling in maintaining and promoting a healthy lifestyle
while being aware of chemicals contained in the food we consume every day.
We hope you will enjoy the Digest and look forward to your continuous support and feedback.
You can always access these articles and the previous editions of the Digest from our website.
Editorial
Janaka WijayasiriResearch Fellow, IPS
janaka@ips.lk
September 2015
EXECUTIVE DIRECTOR
Saman Kelegama, DPhil (Oxon)
DEPUTY DIRECTOR
Dushni Weerakoon, PhD (Manchester)
TALKING ECONOMICS TEAM
Janaka Wijayasiri Dishnika Perera Bilesha Weeraratne Raveen Ekanayake Charmaine WijesingheShanika Samarakoon
CONTRIBUTING AUTHORS Athula SenaratneBilesha WeeraratneChatura RodrigoChayanka Wikremesinghe Dilani Hirimuthugodage Dushni WeerakoonGanga ThilakaratnaG D DayaratneJanaka WijayasiriKanchana WickremasingheRaveen EkanayakeSahan Jayawardena Samanthi BandaraShanika SamarakoonSunimalee MadurawalaSuwendrani JayaratneWimal Nanayakkara
INSTITUTE OF POLICY STUDIES OF SRI LANKA
100/20, Independence Avenue Colombo 07, Sri Lanka Tel: +94 11 2143100, +94 11 2665068 URL: www.ips.lk Blog: ‘Talking Economics’ Web: www.ips.lk/talkingeconomics
Twitter: www.twitter.com/TalkEconomicsSL
DESIGN/LAYOUT
Shiran Sabar
Copyright and Disclaimer
All material published in the Talking Economics Digest
are copyright of the Institute of Policy Studies of
Sri Lanka (IPS), unless otherwise speci�ed. 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
Economic Digest and the IPS blog represent the views
of individual authors and do not necessarily represent
the views of the IPS.
02
Environment ManagementSustainability &
http://www.ips.lk/talkingeconomics/
Happy reading!
03
ri Lankans might be forgiven for thinking that the country’s economy must be sufficiently
strong to be put on auto-pilot indefinitely while policy makers focus their energies almost
entirely on political reforms for the better part of six months. Indeed, it appears to fall back on
the belief that the economy is inherently resilient, based largely on its relatively reasonable
performance during a long-drawn conflict. This, however, can be an erroneous assumption that
may prove costly. Global economic conditions are very different today from what prevailed
before the financial and economic meltdown of 2008. Even the most competitive of economies
in East and Southeast Asia are struggling to keep economic growth above 6 per cent
post-crisis. It would be peculiar indeed if Sri Lanka is to buck this trend without substantive
government policy direction that charts a course for growth.
CHARTING A COURSE FOR SRI LANKA’S ECONOMY: Politics Triumph Economics for NowBy Dushni Weerakoon
Figure 1: Contribution to Quarterly GDP Growth
that high growth; it relied almost entirely on infrastructure development that
skewed growth heavily towards non-tradables, with a deferred cost of an
external debt overhang. However, investors could afford to overlook these
weaknesses for a time as long as GDP continued to expand. High growth
allows headline ratios that spell out the health of an economy – especially
on the fiscal front – to look more convincing than otherwise.
Clearly, the country’s growth drivers and the quality of economic expansion
must change. However, in the interim, Sri Lanka cannot afford to allow GDP
growth to moderate too far as a consequence of economic policy inertia. A
moderation in growth that results from a deliberated economic policy
framework is something else entirely.
For the second consecutive quarter, GDP growth moderated to 6.4 per
cent in the first quarter of 2015, registering a decline from 7.6 per cent
in the first quarter of 2014. In the fourth quarter of 2014, a contraction
of 3.3 per cent in agriculture pulled growth down. By contrast, growth
moderated in the first quarter of 2015 largely as a result of a slowdown
in the industry sector (Figure 1). The sharp contraction in construction
activity was to be expected; what appears to be a more general
slowdown in productive economic sectors such as manufacturing, and
transport and communications is, however, of concern.
While GDP growth is an imperfect measure of economic progress, it is
an important comparative indicator. Global financial investors have
continued to show interest in Sri Lanka largely on account of its growth
prospects. This is despite inherent structural weaknesses underpinning
-1
0
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8
9
Q1 Q2 Q3 Q4 Q12014 2015
%
Agriculture Industry Services GDP
-0.5 0 0.5 1 1.5 2 2.5 3
Agriculture
Manufacturing
Construction
Wholesale & ret. trade
Transp. & comm.
Banking & insurance
Government services
%
q1 2015 q1 2014
Figure 1: Contribution to Quarterly GDP Growth
Source: Estimated from DCS, Quarterly GDP Data.
Image Courtesy: ancientworldtours.net
S
Dushni Weerakoon, PhD (Manchester)
Deputy Director / Head of Macroeconomic Policy Research, IPS
dushni@ips.lk
Governments may opt to do this, faced with an
unsustainable growth process that is in danger of
generating macroeconomic instability in the long run.
When growth begins to slow in the context of a
perceived policy vacuum, business confidence starts
to wane and the private sector will be in no mood to
invest. Despite a government that is perceived to be
more market friendly, credit uptake by the private
sector has been a low 0.9 per cent in the first quarter
of 2015; by contrast, the government has been a
heavy borrower, with 8.5 per cent growth in credit.
The government has been dipping into the domestic
market to meet expenses. The budget put forward in
January 2015 presented an opportunity to set out
some early signals on economic policy direction.
However, it confused more than it clarified, with a
mix of populist measures and taxes on business
profits. The fiscal targets also look increasingly
suspect with proposed tax measures caught up in the
country’s current political maelstrom. There is very
limited fiscal space despite a reduction in the overall
deficit in recent times; contingent liabilities of the
Treasury are rising sharply and pose systemic risks to
fiscal policy management (Figure 2).
With revenue targets under threat to meet higher
current expenditures, fiscal adjustments will most
likely take the form of cuts to government
investment, already forecast to be cut sharply to
4.4% of GDP in 2015; in an economy that
Figure 1: Contribution to Quarterly GDP Growth
reserves as well as to ease pressure on the exchange rate; but they are also earmarked for
development purposes. If Sri Lanka is to continue to tap foreign commercial borrowing for
budgetary support, the growth outlook must remain attractive more so than even before.
International capital flows to emerging economies are tightening – with markets affected by
shifting expectations of US monetary policy as well as weaker growth prospects in emerging
economies. The days of easy money may be coming to a close.
Sri Lanka is still aiming for over 7% growth in 2015. Some of the sources of faster growth of
recent years will begin to change, as they must. The infrastructure boost to growth will begin to
exhaust, and needs to be replaced with productivity growth. For this to occur, Sri Lanka has to
confront difficult and delayed reforms to make the economy more efficient and competitive. A
policy framework to guide this process is vital. It appears increasingly that the country’s best
hope of focusing attention on the economy lies with a viable government emerging from
parliamentary elections, with the fortitude and electoral mandate to not only set an economic
agenda, but persuade entrenched interests to accept it.
0
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6
0
100000
200000
300000
400000
500000
600000
2006 2007 2008 2009 2010 2011 2012 2013 2014
% o
f GD
P
Rs.
mn.
Treasury guarantees (Rs. mn.) % of GDP
Figure 2: Fiscal Developments
Source: Ministry of Finance
As % of GDP 2014 2015a2015 Revised
Revenue 12.2 14.6 14.1
Current expenditure 13.5 13.5 14.2
Public investment 5.0 6.2 4.6
Overall deficit 6.0 4.6 4.4
Notes: a: Estimates presented in Oct. 2014; b: Revised estimates presented in Jan. 2015.
relies massively on such investment for growth, the impact will be all the more immediate as
evident in first quarter 2015 GDP figures.
For now, tapping the domestic market for funds is possible in a climate of subdued private
investment, low inflation and interest rates, but it is not a long term option. To ease pressure, Sri
Lanka issued a 10 year US$ 650 million sovereign bond in May 2015, and announced plans to
raise a further US$ 1 billion. The funds are partly to shore up the country’s
04
TALKING ECONOMICS
Breaking Down Barriersto International Tradein Sri Lanka
Trade FacilitationPriorities for Sri Lanka
Trade Facilitation:
By Suwendrani JayaratneThis article was written to mark the International Customs Day, 26 January 2015
The Institute of Policy Studies of Sri Lanka
(IPS) recently concluded a ‘Trade and
Transport Facilitation Audit’ in Sri Lanka. As
part of the study, a survey was carried out
among 121 stakeholders in the country
including key government agencies and the
private sector to find out the current status of
trade facilitation (TF) in the country and related
priorities. This included exporters, importers,
shipping lines, freight forwarders, chambers
and relevant agencies. Following are some of
the TF issues and priorities highlighted in the
survey and a stakeholder consultation meeting
held recently.
Publication and Administration of Policies:
There is a need for prompt and comprehensive
publication of international trade related
information. Many stated the availability of
information for example in the Customs website
to be inadequate to get a comprehensive
understanding of the total import/export and
clearance processes in Sri Lanka. Information
provided in the Sri Lanka Customs website was
rated as ‘average’ by a majority of the respon-
dents, with the effectiveness of information on
changes in regulation, applicable customs
duties, and applicable fees and charges
identified to be ‘low’.
Setting up/Strengthening Enquiry Points:
While there are enquiry points in different
agencies such as the Customs, these are
generally perceived to be inefficient and difficult
to access. While the existing enquiry points at
different institutions could be strengthened, a
national enquiry point can function as a
coordinating body between the trading
community and the relevant regulatory bodies. It
can collect requests, direct them to relevant
regulatory bodies, compile their responses and
inform the requesting party of the responses.
Currently, enquiries are often directed at the
wrong agency as traders are unaware of the
relevant agency to address a specific issue.
Having an Institutional Mechanism for the Implementation of TF Measures:
There is no agency in the country which takes
responsibility to implement TF measures.
However, the recently appointed National Trade
Facilitation Committee is expected to remove
this vacuum and actively take up TF recommen-
dations that have been highlighted by stakehold-
ers over a long period of time in many forums.
Some of the high priority areas related
to/procedures for imports/exports, identified in
the survey are given in Figure 1.
Change of Mindset and Culture at both Government Agencies and the Private Sector:
While recognizing the recent TF initiatives
undertaken by the relevant authorities such as
Sri Lanka Customs, some traders are of the view
that they do not function well in practice mainly
due to the lack of change in mindset to accept
and adapt to new ways of conducting business,
etc. Likewise, the need for the private sector to
produce correct and required documentation
ri Lanka has undertaken key initiatives to
facilitate trade and transport over the years.
Vital agencies in the trading process such as
the Sri Lanka Customs and the Sri Lanka Ports
Authority have taken measures to facilitate
trade through the automation, infrastructure
expansions and others. While acknowledging
the initiatives by relevant agencies, Sri Lanka
still has a lot to achieve if it is to reach the
facilitation levels of Singapore which is often
cited by policy makers and the private sector
to be the country’s benchmark.
S
05
Suwendrani Jayaratne, MA (ANU)
Research Officer, IPS
suwendrani@ips.lk.
Legal Amendments to the Customs Ordinance:
Sri Lanka’s Customs Ordinance is over 200 years old and certain provisions need to be
amended to facilitate the implementation of identified TF measures such as the extension of the
pre-arrival processing facility to all goods whereas, currently the facility is only available for
perishable goods.
purview Customs functions. Nonetheless, having
an ombudsman that is specialized in customs and
tariff regulatory matters that could assist the
trading community to review/appeal a particular
decision taken by a regulatory authority can
enhance the transparency of the system.
Improving Inadequate Warehouse Facilities:
More than the inadequacy of warehouse in terms
of numbers, traders highlighted the lack of
adequate facilities available at warehouses. Lack
of proper storage racking systems, poor
conditions within them, poor handling and
inadequate security are some of the pertaining
issues of traders.
Use of ICT for Exports and Imports:
A majority of 107 of the 121 respondents
highlighted the need for a single window in the.
Such a system is required to minimize human
intervention in the trading process. The need for
electronic/online submission of customs
documents were also identified to be high. While
the export process is almost entirely automated in
the country, the import process is yet to be
completely automated.
In conclusion, the importance of trade facilitation
has been recognized at the multilateral level with
the wrapping up of the WTO Trade Facilitation
Agreement in December 2013. This Agreement
will come into force once two-thirds of the WTO’s
160 members (107 members) complete their
ratification process. Countries such as Hong Kong
and China have already ratified the Agreement.
Many of the TF measures highlighted above can
be implemented at a relatively low cost and are
not contentious in nature. Therefore, it is
important that Sri Lanka pursues pertinent TF
issues without further delay and enjoy early mover
advantages that these reforms offer.
Having a Non-Judiciary Review/Appeal Procedure: 72 of 121 respondents of the survey mentioned that there is no non-judiciary review or appeal
procedure available in the country if traders are not satisfied with a decision taken by the Customs
or any other border management agency. However, according to the Customs, traders can appeal
to the Director General of Customs if they are not in agreement with decisions taken at the
operational level, and then to the Minister of the Ministry of Finance and Planning under whose
Trade Related Infrastructure:
The need to improve quality and efficiency of ports, roads, the quality of warehouses and the
need to reduce loss and damage of cargo are some the main trade related infrastructure and
infrastructure requirements in the country (Figure 2). For example, while acknowledging the
improvements in infrastructure in the recent past, the need to give a face-lift to the Colombo
Port with modern equipment was highlighted by traders. Furthermore, problems such as
congestion at the Colombo Port can be reduced if more gates at the Port can be opened;
currently only 2-3 gates are open for container traffic at any given time.
Figure 1: High Priority Areas related to Rules/Procedures for Imports/ Exports
Source: IPS Survey (2014)
Reduce clearning times
Issue & validity of advance ruling
Reduce irregular payments/bribes
Improve coordination btwn border management agencies
Reduce no./time required of exp/imp documents
Post clearance audit
Reduce physical inspection by customs
79%
31%
78%
72%
69%
59%
57%
48%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Pre-arrival processing of import documents
Figure 2: High Priority Areas of Trade Related Infrastructure and Services
Source: IPS Survey (2014)
Quality of warehouses
Efficiency of quality/standard inspection agencies
Reducing cargo loss/damage
Reducinng logistics services cost
Quality of telecommunication/ IT services
Effociency of health/SPS/quarantine agencies
Quality/efficiency of airports
69%
58%
68%
65%
64%
63%
60%
59%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Quality/efficiency of railways
Quality/efficiency of roads
Quality/efficiency of ports
69%
85%
06
TALKING ECONOMICS
without resorting to irregular payments as a relatively easier means of clearing goods
was also highlighted.
Reaching Greater Heights in Innovations: A Sri Lankan Perspective
Sri Lanka at a GlanceThere are several indicators to measure the level of innovation and
creativity within a country. The expenditure on research and
development is one of the main indicators to identify a country’s
support for innovations and creations. In Sri Lanka, Gross Expenditure
on Research and Development (GERD) as a percentage of the GDP
was 0.16 % in 2010. This was a 30% increase from 0.11% recorded
in 2008.
his year the world celebrates its 15th Intellectual Property (IP) Day on
April 26th. Since 2001, the World IP day has focused on how IP
contributes to innovations and creations, which ultimately help shape the
world. Moreover, the day provides an opportunity to encourage people to
think about the role played by IP in their day-to-day lives and its
importance in stimulating a country’s economic growth and wellbeing.
In the process of development, the human mind and innovations play a
significant role. Thus, every country recognizes the importance of
encouraging innovations and creations and simultaneously protects the
intellects of its people. Sri Lanka too has introduced a number of policies
and programmes to drive innovations and foster creations while offering
protection. However, Sri Lanka is still far behind in the number of
innovative outputs and in creating a strong protection mechanism for
inventions.
By Dilani Hirimuthugodage
The most common and formal methods in protecting innovations and
intellectual property rights in Sri Lanka are trademarks followed by
patents and copyrights (Figure 2). It is noted that a high number of
patents is issued for food and beverage process technology,
innovations in IT and telecommunications, and agricultural system and
developments. Trademarks are popular in Sri Lanka as several
enterprises and products enter the market daily and these trademarks
differentiate the goods and services sold by them.
The public sector contributes the most towards Research and
Development (R&D) in Sri Lanka (nearly 56%). In most developing
countries, the public sector provides a higher percentage of a
country’s total investments in R&D. Public investment is essential in
R&D as markets fail due to difficulty in assuring profits for investors.
However, most developed countries have overcome the issue of
private investments in R&D by providing effective protection via strong
Intellectual Property Rights (IPRs) systems.
In Sri Lanka, GERD is high in agriculture sciences (33.1 %) followed by
R&D expenditure on engineering & technologies (20.2%), natural
sciences (12.1%), social sciences & humanities (6.6%) etc., (Figure 1).
A majority of the R&D expenditure in the agricultural sector is spent on
crop production, soil science, variety improvement, etc. In terms of
commodities, a greater share of R&D was allocated to rice, plantation
crops, fruits and vegetables in 2010.
T
07
Figure 1: Indicators on Technology & Innovation
Dilani Hirimuthugodage, MEcon (Colombo)
Research Officer, IPS
dilani@ips.lk
Sri Lanka in the Global Context
Sri Lanka has seen an increase in R&D expenditure since 2008. This has
resulted in a significant increase in the country’s innovation indicators.
However, when compared to other developing countries such as China,
Malaysia, Thailand, and India Sri Lanka is lagging behind in the number of
innovations and protection of innovations.
There are several policies and programmes introduced by several
ministries to improve innovations in Sri Lanka. The National Biotechnology
Policy, Science, Technology and Innovation Strategy for Sri Lanka
2011-2015 are among such policies/programmes. However, the effective
implementation of these remains questionable.
The Global Innovation Index 2014 (GII) has ranked Sri Lanka at 105th
place out of 143 countries in the world. According to the GII rankings,
when compared to other South Asian countries, Sri Lanka is placed third,
after India (76th), and Bhutan (86th). Bangladesh (129th) and Pakistan
(134th) are ranked much lower. Switzerland, United Kingdom and
Sweden are ranked on top while Singapore and China are ranked 7th and
10th, respectively.
R&D expenditure in Sri Lanka is low compared to some selected countries
in Asia (Table 1). Developed countries spend more than 2% of their GDP
on R&D activities. The GERD benchmark figure for developing countries is
1 % and Sri Lanka significantly falls short of this figure.
What Needs to be Done?
CoordinationThe link between the ministry, institutes and universities on research,
science and technology is weak. This was highlighted in a recent report on
‘Integrating Intellectual Property into Innovation Policy Formulation in Sri
Lanka” by the National Intellectual Property Office – Sri Lanka. The
introduced policies and programmes are implemented in isolation by
different institutes and organizations. Therefore, it is of utmost importance to
improve coordination between research, science and technology institutions.
A separate institute may help to better formulate, monitor, manage and
coordinate innovation policies and programmes in the country.
IncentivesSimultaneously, it is vital to motivate private sector investments in R&D by
way of introducing tax deductions/low tax rates, better investment climate,
strong IPRs system, etc. Further, an innovation voucher system can be
introduced to enhance collaboration between research institutes and the
industry. Introducing a reward system to inventors will be another effective
means to encourage innovations.
Improve IP Protection MechanismIntellectual Property Act No.36 of 2003 is the legal framework under which
IPRs are currently protected in Sri Lanka. It provides protection via patents,
copyrights, industrial designs, trademarks, etc. Apart from that, Sri Lanka is a
party to a number of international IPR treaties and agreements. However, Sri
Lanka to-date has been unable to implement a proper mechanism to protect
new plant varieties and rights of plant breeders, which is very important in
enhancing innovations in the agricultural sector. Moreover, the country is still
unable to introduce utility model patents, which are cheaper, and have a
simple and faster registration process than patents.
Firstly, it is important to ensure an effective implementation of the existing IP
Act. Secondly, it is imperative to implement the proposed Act of 2011 on New
Plant varieties (Breeder’s Rights). Thirdly, it is a timely need to prepare a
strong and a proper protection mechanism for animals and microorganism.
Further, it is imperative to introduce a national policy for innovations in Sri
Lanka.
AwarenessIt is essential to increase awareness among the public on the importance of
creativity and innovations towards a country’s economic growth while
protecting third party inventions. Public awareness could be improved
through the Ministry of Science and Technology, Intellectual Property Office,
and other related institutions. Furthermore, increasing awareness on the
importance of protecting inventions remains essential amongst researchers,
universities, and scientists.
Figure 2: Methodologies Used in Protecting IPRs -2010
Source: Sri Lanka Science, Technology and Innovation Handbook: 2010, National Science Foundation
India 0.76
Singapore 2.43
China 1.7
Japan 3.36
Sri Lanka 0.16
Table 1: Gross Expenditure on R&D as a % of GDP in Selected Countries
Source: Sri Lanka Science, Technology and Innovation Handbook: 2010, National Science Foundation
23.28
74.07
20.63
67.19
31.21
1.050
102030405060708090
100
Patents Trademarks Copyrights Secrecy Complexity ofdesign
Other
Formal Strategic Methods
08
TALKING ECONOMICS
The World Ocean Day is celebrated on 8th June every year. This year’s theme to mark the day is “Healthy Oceans, Healthy Planet”. The selection of this theme highlights the growing threat of marine pollution that needs effective and sustainable solutions.
JUNE 8th
arine pollution involves dumping waste substances into the sea
thereby reducing the quality of ocean environment that leads to
unhealthy conditions for all organisms including humans. Being an
island nation, the ocean plays a vital role in many aspects of the
everyday lives of people living in Sri Lanka. The most important among
these are food security, trade and cargo transportation, coastal
livelihoods, tourism, coastal protection and bio-diversity as well as
national security.
Marine Pollution: A growing Menace
Marine Pollution in Sri Lanka Sri Lanka experiences marine pollution originating from a variety of sources.
Heavy metal pollution can be seen in certain areas, which could be due to
land-based activities. Some studies also have reported heavy metal
accumulation in edible species in coastal water bodies. This has been
reported from Negombo lagoon, Bolgoda Lake and in sediments of Galle
harbour. Among the types of heavy metal reported were Ferrous (Fe), Zinc
(Zn), Cadmium (Cd), Copper (Cu) and Lead (Pb). These pollutants have been
reported in concentrations higher than permissible levels of coastal waters.
Apparently, industrial (e.g. Katunayake and Ekala industrial zones) and
municipal sources in surrounding areas are responsible for this situation.
A number of incidents on oil and chemical spills and marine accidents have
been reported from different locations of sea around the country (Table 1).
All these events have resulted in local pollution affecting the marine environ-
ment and associated organisms. The Marine Environmental Protection
Authority (MEPA) with the support of other agencies such as Coast
By Athula Senaratne
Overcoming Challenges of Marine Pollution for Healthy Oceans
M
Besides serving as a source of many economically
useful products and services, oceans are the ultimate
sink of much of the waste created by humans not only
in their sea-based activities but also land-based
activities. Activities of a growing population have given
rise to increased loads of waste, of which a significant
portion eventually finds its way to oceans making them
unhealthier each passing day. Nevertheless, little is
known about sink functions of oceans and the ever
increasing problem of marine pollution is fast reaching
tolerable limits. Waste generated in both land–based
activities and sea-based activities are responsible for
marine pollution (Figure 1). Among the land-based
sources of marine pollution are municipal waste and
sewage disposal, pesticides and fertilizers from
agriculture, industrial waste from production facilities in
coastal areas, debris generated from numerous human
activities including tourism and waste from inland areas
washed off finally into the sea through
water courses. Major marine-based pollution sources include oil/chemical
spills from transportation of oil and accidents in the sea, off shore oil
exploration facilities, disposal of non-degradable litter substances by vessels
such as plastics, periodic dry docking and servicing of vessels, ballast water
discharges, deep sea mining activities and volcanic eruptions. It is not
difficult to see that a majority of both land- and sea-based sources are of
anthropogenic origin.
Table 1: Oil and Chemical Spills in Sri Lankan Waters
Source: Azmy (2013), BOBLME Country Report on Pollution
09
Athula Senaratne, PhD (Deakin)
Research Fellow /
Head of Environmental
Economic Policy, IPS
athula@ips.lk
Conservation Department (CCD), Sri Lanka Ports Authority (SLPA) and the
armed forces has taken positive steps to minimize the damage from
certain events. Another problem is the invasive alien species (IAS)
brought in with ballast water. Studies have reported 26 previously
unrecorded species from the inner harbour area of Colombo, some of
which are found in the ballast water of ships. Some of these species are
potentially harmful and they have been reported in sea areas near major
ports. Above are some anecdotal evidence about the nature and scale of
marine pollution currently taking place in Sri Lankan waters. Scientific
studies on marine pollution are rare in Sri Lanka and more research and
monitoring activities are necessary to make a realistic assessment of the
situation. Despite the lack of scientific evidence, some trends are easily
identifiable and should be addressed before the situation worsens. The
country is making an effort to promote economic growth through trade
and that would invariably increase ship arrivals to Sri Lankan ports and
marine traffic in sea lanes around the island. With the rising number of
ships entering the country, problems of oil spills, marine accidents and
ballast water disposal are bound to increase. Even for someone casually
observing the country’s coastal areas, the accumulation of debris and
litter is evident. Not only ships, but coastal dumping and a growing
fishing fleet also are responsible for this. The country has just begun oil
explorations in off-shore areas that can also create marine pollution,
especially in the Mannar basin. Moreover, large scale poaching in Sri
Lankan waters by Indian fishermen has become a daily occurrence,
where the fishermen use harmful bottom trawling methods banned in Sri
Lanka, causing severe damages to the marine environment. So far, the
environmental outcomes of these actions have not been assessed.
Overcoming the ChallengeThe ways to overcome the growing menace of marine pollution is not as
visible as the problem. The MEPA is the mandated agency in Sri Lanka
to address issues concerning marine pollution. Sri Lanka introduced the
Marine Pollution Prevention Act (MPPA) as early as 1981, around the
same time that the National Environmental Act (NEA) of 1980 was
introduced. However, like many environmental problems, marine
pollution also cannot be solved by efforts taken by a single line, single
agency or a ministry. As explained in this article, marine pollution has its
land-based sources as well as sea-based sources. Land-based sources
are handled by a variety of agencies that include the CEA, CCD and
municipal authorities. Sri Lanka’s efforts to manage land-based
pollution can hardly be considered as a success story and hence the
landward side of the problem is not under control. Despite failures,
however, this is entirely a source that is within the control of the
national jurisdiction, and as a result there is room for improvement
through our own efforts. The more contentious issue is the sea-based
sources, which are trans-boundary and international. We have limited
control of these sources and international cooperation is mandatory for
solving them. There are several international agreements and arrange-
ments that deal with different aspects of marine pollution and Sri Lanka
is a party to many of them. Besides, there are regional arrangements
too. In spite of all these efforts, marine pollution continues to grow at a
rapid rate. It is a global threat that needs global solutions. We as a
nation should look after what is under our control while cooperating with
the world community to overcome this global menace.
10
TALKING ECONOMICS
Blue EconomyAdopting a
Approach in Sri Lanka
he development process known as 'Greening’ has been the foremost topic of discussion for years, while ‘Blue’ seems to be the new ‘colour’ entering the ongoing dialogue. ‘Blue’ talks about the use of ocean and its resources sustainably. The blue economy approach will not replace but mutually support the green economy, for the use of ocean resources.
The concept of blue economy stresses on the conservation and sustainable management of oceans. It is related to the ‘blue’ or ocean capital and complements the green economy. Accordingly, the blue economy approach recognizes the productivity of healthy ocean ecosystems as a way to safeguard sustainable ocean-based economies, as well as to ensure that coastal countries benefit from their marine resources
INTERNATIONAL MILESTONES
The oceans were on the multilateral negotiations agenda at the Rio+20 Conference in 2012. The outcome document titled the “Future We Want” highlights the ocean’s contribution to growth, stating; “We stress the importance of the conservation and sustainable use of the oceans and seas and of their resources for sustainable development.”
The Abu Dhabi Declaration, adopted in January 2014 highlights a blue economy’s contribution towards alleviation of hunger, poverty eradication, creation of sustainable livelihoods, and mitigation of climate change. Accordingly, the aspects which were particularly highlighted are:
(a) Fisheries and their vital role in providing food security and sustainable livelihoods, (b) Tourism as a source of decent employment and a contributor to poverty alleviation, (c) Ocean as a source of renewable energy from wind, wave, tidal, thermal and biomass sources, (d) Ocean as a source of hydrocarbon and mineral resources and, (e) Ocean as the primary medium of global trade through shipping and port facilities.
The commitment to strengthen the blue economy was made at the 14th Meeting of the Council of Ministers of the Member States of the Indian Ocean Rim Association (IORA) in Perth in October, 2014. The maritime related economic activities were identified as a common source of growth, innovation and job creation. It further highlighted the need for expansion of trade and investment within the region, including fisheries activities, minerals exploration, development of renewable energy, and coastal tourism, in order to stimulate growth and improve region’s food and energy security.
Countries which are blessed with ocean resources have already begun to take policy level initiatives to increase the economic gains of the oceans. Mauritius has already prepared the Ocean Economy - A Roadmap for Mauritius in 2013. The roadmap takes into account six principals; economic efficiency, equity, ecological, social partnerships, safety and compliance with international instruments.
OCEAN’S ROLEBeing an island in the Indian Ocean, Sri Lanka is endowed enormously with ocean resources. Even now, the Indian Ocean is making a notable contribution to various economic sectors of the country, thus to the overall national output. Fisheries, trade, agriculture, and tourism have been key sectors, which are reliant on the ocean resources in Sri Lanka.
By Kanchana Wickramasinghe
From the policy perspective it is important to ensure that proper information is available on different types of ocean resources
T
11
Fishery and mineral resources in the Indian Ocean are of directcommercial importance. However, there is much more to be gained,
There has been no clear definition on the concept of the blue economy, though various countries take different approaches to adopt the concept. Good practices on the blue economy approach are available rarely, or not at all. Therefore, it is important that the country takes its own initiatives and approaches to establish a strong blue economic component in the overall economic framework.
It is imperative that the country identify ways in which the contribution of the ocean can be enhanced towards national development. Still, there can be many unknown factors regarding certain aspects of ocean resources, due to technological and research gaps. However, the country should prioritize areas it can develop for creating a blue economy facet, in the overall economic development framework.
THINGS TO NOTE
Greater regional collaboration is required to make the best use of ocean resources
Meanwhile, from the policy perspective it is important to
ensure that proper information is available on different
types of ocean resources. This requires a stock taking
task. In line with that, it is important to identify the
possible use of such resources, environmental sustainabil-
ity aspects and resource requirement in terms of financial,
human resources, and technological know-how.
We should not forget that the environmental and resource
degradation is already taking place in the ocean due to
human interventions. Ensuring the sustainability of the
resources makes the blue economy viable in the long
term. Land-based pollution, over-exploitation of certain
fish types, unsustainable harvesting practices are some of
the activities that threaten the sustainable utilization of
ocean resources. The Indian Ocean region as a whole
should particularly focus on four areas, namely, ocean
resources, energy resources, biosecurity and climate
change as highlighted earlier.
Apart from sectoral and national level responses, greater
regional collaboration is required to make the best use of
the ocean resources. Meaningful regional collaboration
can help technology transfer, multidisciplinary research,
fair utilization of resources, etc.
Sri Lanka plans to establish the Centre of Excellence on
Ocean Sciences and Environment, via the Indian Ocean
Rim Association (IORA), with the objective of promoting
such collaborations among Indian Ocean rim countries.
The initiative aims to enhance the sustainable utilization of
Indian Ocean resources and increase its role in the
economies of its member countries, including Sri Lanka.
as highlighted in a previous article. For instance, fishery
resources are abundant in the deep sea, and Sri Lanka has not
tapped the existing potential. Deep-water fish stocks represent a
potential new frontier for commercial fisheries. There is also an
untapped potential for minerals such as polymetallic nodules and
polymetallic massive sulphides.
The coastal sediments contain titanium and zirconium tin. In
addition, the Indian Ocean possesses a number of energy
sources, including gas and oil reserves. The strategic location of
the country in the Indian Ocean has brought numerous economic
benefits to the country. Sri Lanka should be tactical in making
use of its geo-strategic position. It is time that the country
seriously adopts the blue economy concept and attempt to
increase the benefits of the ocean for its development, in a
sustainable manner.
Kanchana Wickramasinghe, MEcon (Colombo)
Research Economist, IPS
kanchana@ips.lk
12
TALKING ECONOMICS
Source: UN MDG Sri Lanka Country Report, 2015
MANAGEMENT OF FORESTRY RESOURCES IN SRI LANKA: THE CURRENT PROPERTY RIGHTS REGIMES
orld Environment Day 2015 is marked today (5th June), under the theme "Seven Billion Dreams. One Planet, Consume with Care." In this article to mark the day Chatura Rodrigo highlights the importance of governing forest resources in a sustainable manner by restructuring the property rights systems.
DOES RESTRUCTURING PROPERTY RIGHTS HOLD THE KEY TO NATURAL RESOURCE MANAGEMENT IN SRI LANKA?
Sri Lanka is rich in natural resources; filled with features including forest cover,
coastal ecosystems, inland water bodies, fauna and flora and geological
resources such as minerals and gems. While all these are equally significant in
defining Sri Lanka, forestry resources attract particular attention since it is
depleting at an alarming rate.
Forests produce many Ecosystem Goods and Services (EGSs) and provide an
income for communities. The rising population’s demand for infrastructure and
awakening of local economies have resulted in an increase in the deforestation
for development and the extraction of forest resources for the increasing demand
of forest products. However, it is important to manage forests in a sustainable
manner, allowing sufficient consumption while ensuring inter and intra
generational equity. The total forest cover of Sri Lanka has declined
gradually from 31.23 per cent in 1992 to 28.74 per cent in 2010.
Figure 1 below shows different forest covers and their depletion over
time.
Forests produce timber and Non-Timber Forest Products (NTFPs).
Commercial extraction of timber from protected forests in Sri Lanka is
prohibited. Protected forests are governed by the Forests Conservation
Ordinance of 1885 and land clearing and timber extraction is an
offence. However, timber extraction can be done through plantation
forests, especially grown to harvest timber. Furthermore, a significant
amount of forest products derive from home gardens. The most
important NTFPs are medicinal plants, rattan, bamboo, products of
hunting, products of kithul palm (Caryota urens), edible plants,
mushrooms, honey and pine resin. These products are extracted form
forests in a sustainable
manner and are directly linked to the livelihoods of people who reside
close to the forests. However, despite the rigid legal framework and
alternative forms of managing the timber demand, protected forests are
still being cleared for timber and colonization.
Forestry is classified as a renewable resource. Given enough time,
forests have the ability grow back. However, the complexity of
By Chatura Rodrigo
Figure 1: Proportion of Forest Cover
W
0.00 5.00 10.00 15.00
Percentage of Forest Cover
Sparse forest
Dry monsoon forest
Mangroves
Riverine dry forest
Sub Montne forest
Moist monsoon forest
Lowland rain forest
Montne forest
Forest Types
20.00
2010
1999
1992
13
THE WAY FORWARD
bio-diversity in forests needs a long period to restore. Therefore, if the extraction rate of the timber and NTFPs are higher than the restoration rate, the forest resources can deplete faster. In order to prevent this, like in all the other countries blessed with forest resources, Sri Lanka’s forests are protected by law, which prevents over extraction of forest resources by providing ample time for regeneration.
In theory, property right regimes that govern natural resources such as forestry always aim to keep the extraction rate of resources below the regeneration rate, allowing a buffer stock to be developed. However, misallocation of property rights can either result in over extraction, which leads to the “Tragedy of Commons” or under extraction, which leads to the “Tragedy of Anticommons”. When forests are managed as an open access resource where no one holds the rights to manage and utilize forests, everyone has an equal chance of consumption and the probability for people to consume forest products without preserving for the future is high. This will result in over extraction and leads to the “Tragedy of Commons”. On the other hand, if the forest is managed by more than one entity with equal rights of exclusion, there’s a higher probability for under extraction leading the “Tragedy of Anticommons”.
Property rights that manage forests of Sri Lanka hold characteristics that, if misallo-cated, can drive towards either one of these situations. For example, NTFPs are managed as an open access resource or a common property. The extraction of these resources from forests does not have a set limit. Such a property right regime does not have the capacity to prevent the extraction of indigenous medicinal plants. Sri Lanka has a “red list”; fauna and flora are identified and categorized in order to take proper measures to prevent the extinction of endangered species. However, allowing open access can easily increase the probability of harvesting resources towards their extinction limit. Extraction of medicinal plants as a NTFP is a better example of this.
On the other hand, forest clearance for colonization and development is highly regulated. Several government institutions have the mandate to manage resources in a forest and institutions such as department of forestry, department of wildlife divisional secretariat office and ministry of resettlement are some of those. Such a property rights regime holds the characteristics of an Anticommons property. When forest lands are to be cleared for timber extraction and colonization, it is required to obtain the necessary permission from all these institutions. Such a property right system can discourage development and open the probability for forceful clearance of forests under political influence and bribes. Therefore, managing forests under an Anticommons property regime would drive the underutilization of forests and result in the “Tragedy of Anticommons” in the eyes of development.
Striking a balance between development and natural resource management is important. An increasing population, urbanization and development of infrastructure will demand more forests lands to be cleared. If there’s a lack of clear allocation of ownership, clearance of forests lands for development will be driven by political influence and bribes. If management rights are clearly defined without lapping jurisdictions, clear and transparent decisions can be taken on whether or not to use a particular forest land for development. Therefore, it is important that management of forest lands for development is vested with a minimum number of government institutions that are less likely to be influenced by political pressure or bribes.
Despite drawbacks in terms of forest cover decrease and bio-diversity loss, deforesta-tion for colonization and development present opportunities. Rather than clearing forests just to build houses and buildings, forest clearance for development can be done through a more sustainable and coordinated manner. In a colonization process, private land titles are mostly given to people. However, these land titles do not reflect clear characteristics of private property rights. Instead they are permits issued by local government authorities. Clear ownership of private land can significantly motivate the implementation of satiable land use management practices.
Plantation forestry is also a major source of timber in Sri Lanka, which is in operation since 1870’S. While there are government owner plantation forestry establishments, there is an increasing emergence of private ventures. The main property right regime that drives these private ventures is the private property. One approach is that, the people can invest in the land and then purchase plants from the private company and sell the trees back once they reach maturity. This provides the land owners the responsibility of managing the timber lot. The other approach is to invest in the land lot owned by the private company where people can only own the timber trees.
Finally, forest based eco-tourism initiatives have also proven to be useful in sustainable forest resource management in Sri Lanka. In this approach the forest land is privately owned by the operator of the eco-tourism venture and managed in such a way that it preserves the bio-diversity of the environment. Interested tourists can visit these lands and pay a fee in enjoying the environment. Tourists are not allowed to consume forest products. The approach has now been successfully expanded in to tea and rubber sector also. This system of eco-tourism has proven to be more sustainable in managing forests than the usual way of managing forests by government institutions. Since the forests are privately owned, they are managed well and kept at its best to attract more tourists and support many local livelihoods.
Chatura Rodrigo, MSc (Guelph)
Research Economist, IPS
chatura@ips.lk
The colonized lands can be easily converted in to successful home gardens. It can also be encouraged to grow timber products that have a significant demand in such land lots, which will help restore the loss of bio-diversity to a certain extent.
Community forestry is another significant initiative to manage forest resources in a sustainable manner. Community forestry management systems promote; alternative livelihoods, collaborative management of specific forest areas to control illegal extraction of timber or the unsustainable harvesting of NTFPs, collaborative management of specific forest areas with community participation, along with awareness and fire control measures. It also promotes improving home gardens to provide a source of timber, materials for stakes and trellises, and fire wood that are easier to collect and helps avoid forest degradation and the develop-ment of woodlots. In this initiative, the forest land is owned by the state and its representative the department of forestry while the management rights are given to the people. Therefore, compared to an open access regime, this will help monitor the use of forests resources by the regulating authority.
14
TALKING ECONOMICS
ri Lanka is fast becoming urbanized with low
density urban sprawl and ribbon development
along the main roads of the country’s coastal
areas. During 2005 – 2010, the country had an
average urban population growth rate of 0.3 per
cent, which was amongst the lowest in Asia.
However, this has gradually started to change
with rural to urban migration, with the end of the
conflict in the county’s North and East. An
increasing trend in urbanization can be observed
in many areas, and statistics do not capture this
correctly. The projected increase in urbanization
will create challenges, and ensuring the
country’s sustainable development will rest
upon how effectively these challenges are
addressed.
World Water Day 2015 is celebratedon March 22 under the theme
“Water and Sustainable Development”. In this article to mark the day,
Chatura Rodrigo and Athula Senaratnehighlight the importance of Integrated
Urban Water Management in meetingthe demand for water in a fast
urbanizing Sri Lanka.
in Sri Lanka
Integrated
Water Management and
Sustainable Urbanization
Meeting the demand for water of a growing
urban population is one of the major challenges
for policy planners of urban development. The
country’s vision on urbanization involves
development of many physical infrastructures
such as buildings, roads, railways and
industries, which will attract many people to
urban areas. They will demand more domestic
and industrial water, creating pressure on
natural water bodies. Water availability for both
industrial and domestic consumption will also be
affected by climate change. Low lying urban
areas will be prone to inundation with heavy
rainfalls and floods while dry spells will create a
high demand for industrial and domestic water.
In this context, it is imperative to look at
Sri Lanka’s vision on urbanization and potential
drawbacks connected to the increased demand
for water.
Sri Lanka’s Urbanization Vision and Potential Water DemandUnder the National Physical Plan of Sri Lanka
(2011-2030), Sri Lanka aims to focus on five
metro regions – Colombo, North-Central,
Southern, Eastern, and Northern – and nine
metro cities – Ampara, Anuradhapura,
Batticaloa, Colombo, Dambulla, Hambantota,
Jaffna, Polonnaruwa, and Trincomalee. These
regions are to be connected and integrated into
a country-wide system of urban areas. At
present, there are more than 15 mega projects
By Chatura Rodrigo and Athula Senaratne
S
15
associated with development of town centers in
Sri Lanka. Urban regeneration efforts include the
construction of 70,000 low cost housing units in
the next six years. These are intended for
relocation of residents presently living in
under-served settlements in the city of Colombo.
All of these developments will create demand for
more water. Water is a basic necessity, a human
right of urban as well as rural population. At the
same time, water is a limited resource.
Demand for safe water has been increasing by
8-10% each year. Most urban water supply
schemes do not have the capability for providing
a 24-hour service. When it comes to addressing
water related matters, the urban sector faces a
number of challenges.
While the urban water supply is mainly
dependent on surface water, the degree of
dependency on ground water appears to be
rising. Storage reservoirs have limited capacity,
and no expansions have been done in the recent
past. In addition, in the dry season, salt water
intrusion occurs. . Being an island, urban flood
management is vital for Sri Lanka. In order to
account for flood issues, hydrological assess-
ments are needed. However, these assessments
are done with models with limited verifications.
Monitoring of the quality of water bodies that
supply pipe borne water is poor. From time to
time cases of water pollution are reported, and
activities by individuals as well as industries
create negative environmental externalities,
which costs private as well as public resources .
In managing urban water, different agencies
have different areas of jurisdiction which often
overlaps. . In the Colombo metro region, most of
the water and sanitation infrastructure dates
back to the colonial era, and a majority of the
pipes that carry water and sewage are old and
malfunctions from time to time, sometimes
resulting in leaks. A proper financial mechanism
is needed to fund the expansion and the repair
of the water supply infrastructure in urban
areas.
people without proper access to water and
sanitation. By providing water services of
appropriate quantity and quality would
invariably lead to improve the health and
productivity of urban residents.
Current State of Affairs
Water is a basic necessity, a human right of urban as well as rural population. At the same time, water is a limited resource.”
While the usage of freshwater for the country’s
agriculture has decreased, the usage of water in
both domestic and industry has increased.
Currently, 87.37% of freshwater is used for
agriculture, 6.22% and 6.42% for domestic and
industry usage, respectively.
The increase in domestic and industrial water
usage is prominent in the urban sector compared
to rural and estate sectors. Achieving the demand
created by urban settlements is reflected in the
statistics on access to safe drinking water.
Compared to the rural and estate sectors, access
to safe drinking water of households is high in
the urban sector. The coverage figures have
increased from 96.8% in 2009 to 98.7% by 2012.
Among the safe drinking water sources, pipe
borne water is the safest. Approximately 75%
and 14% of urban and rural population respec-
tively are served by pipe borne water. Domestic
demand for billed water is around 66% of the
total demand. Industries as a whole demand 9%
of the water sold. Furthermore, Sri Lanka has
been successful in providing exclusive sanitation
facilities to a higher share of the urban house-
holds when compared to the households in the
rural and estate sectors. The urban sector will
require more pipe borne water as population
density increases and industries expand.
In addition, waste water disposal is also a major
concern in the urban sector. The share of water
used by the urban population in Sri Lanka is
projected to increase to 45% by 2015 and to 65%
by 2030, which is bound to increase the pressure
to meet the national targets for drinking water.
What are the Challenges?
The Way Forward
Managing urban water demand calls for
innovative actions. In this regard the Integrated
Urban Water Management (IUWM) is considered
an innovative and optimistic way of managing
water demand linked to urbanization.
IUWM calls for the alignment of urban develop-
ment and basin management to achieve
sustainable economic, social, and environmental
goals. Planning for the water sector has to be
integrated with other sectors, such as land use,
housing, energy, and transportation. Adopting
IUWM and its adaptive, iterative processes will
help cities to significantly reduce the number of
16
TALKING ECONOMICS
Good Environmental Management Practices in the Hotel Industry in Sri Lanka: Determinants and Barriers
Most commonly adopted energy management practices include; the use of energy
efficient lighting methods (88%), use of solar power (69%) and key switches (60%).
However, the contribution of each practice towards energy savings depends on the
intensity of adoption. For instance, possible savings due to energy efficient lighting
is dependent on the proportion of energy efficient bulbs used in a hotel.
The study also found that dual flush toilets (79%) and linen and towel reuse (56%)
Energy, Water, Waste Water and Solid Management Practices
ith the tourism sector in Sri Lanka recording remarkable growth in the recent
past, it is imperative to ensure such growth is environmentally sustainable. In this
regard, the accommodation should receive foremost attention given its expansions
both in terms of investments in new hotels and refurbishments of existing hotels in
the country. Around 37 registered hotels have been added during the period
between 2009 and 2013, according to the statistics of Sri Lanka Tourism Develop-
ment Authority. Currently, adoption of good environmental management practices is
taking place in the hotel industry but on a voluntary basis. It is important to
understand what motivates hotels to adopt good environmental management
practices, and identify barriers to their adoption so that such activities could be
encouraged.
A recent IPS study looked at the adoption of good energy, water and waste manage-
ment practices in hotels in Sri Lanka. The findings of the study were based on
econometric analysis using data gathered through a comprehensive survey of
registered hotels in the Western Province, which has the highest number of hotels at
provincial level. On average, the study found that 7.81 good environment practices
are currently in place. Of the different good environmental management practices,
those relating to energy were the most commonly adopted followed by water, solid
waste and waste water practices. It was interesting yet not surprising to note that,
comparatively large hotels (with more than 50 rooms) perform better than their
smaller counterparts. For example, the total number of good environmental
management practices (energy + water + waste) is around 9.3 in large hotels
compared to the figure of 5.6 in small hotels.
By Kanchana Wickramasinghe
W
17
Determinants in the Adoption of Good Environmental Management PracticesThe study assessed factors which determine the number of
good practices in energy, water, and waste management
adopted in hotels. Accordingly, the size of the hotel, percent-
age of guests for leisure purposes, number of employees per
room, and the location of the hotels determine the adoption of
good environmental management practices. Also, hotels that
have undergone capacity building, training and were provided
awareness support, demonstrated better environment
management practices.
Barriers to AdoptionAn important finding of the study is that the barriers to adopting
good environmental management practices are not the same
among small and large hotels. The most commonly observed
barrier for the large hotel category is the perception that cost of
adopting good practices exceeds the benefits. Under the small
hotel category, the most observed barrier was that environmen-
tal management is not a top priority. Lack of financial
resources and constraints due to the structure of hotels and
limitations in space were also significant barriers.
Policy Attention for an Environmentally Sustainable Hotel Industry
are common barriers for adopting good environmental management practices. This
indicates that environmental management should be considered at the initial stage of
designing hotels or when considering refurbishments.
These findings call for greater awareness, training and capacity building support to
improve environmental management practices in the hotel industry and thereby
promote sustainable tourism in Sri Lanka.
This article is based on the study undertaken with financial and technical support of the South Asian Network for Development and Environmental Economics - SANDEE.
are most common water management practices among the
hotels that participated in the survey. Some of the water
management practices need the participation of the
customers to save the amount of water consumption. For
instance, correct handling of dual flush toilets, linen and
towel re-use, etc., require customer’s involvement.
However, other water management practices, such as low
flow showers and taps, re-use of treated waste water and
sensors in toilets directly lead to water savings, irrespective
of customer involvement.
In terms of solid waste management, over 65 percent of the
hotels’ waste is collected by the municipal council. Good
solid waste management practices include composting
(22%), recycling (22%), and solid waste segregation (18%).
In addition, the study looked at waste water management,
and found that 42 percent of the hotels have sewerage
treatment plants.
Policy-wise it is important that more attention is given to small
hotels to improve their environmental management activities,
as they are lagging behind. Space and structural constraints
18
TALKING ECONOMICS
Figure 2: Commonly Adopted Energy Management Practices
IPS CLIMATEnet is a website dedicated to
sharing ideas, information, insights, news
and resources on how to face the
challenge of climate change. While its
main focus is on South Asian region with
particular attention on Sri Lanka, it is open
to views and ideas on climate change
policies from anywhere in the world that
can make a useful contribution to the
dialogue .
Climate change is a global problem that all
nations are destined to face together. It is a
complex problem demanding complex
policy interventions to address multiple
issues. This calls for combined action of all
countries throughout the policy making
processes. The CLIMATEnet is thus aimed
at creating a dialogue on different aspects
of climate change policy. The ultimate
goals of this exercise are to inform policy
makers on better strategies and to create
awareness among stakeholders on
different aspects of the challenges faced.
CLIMATEnet aims to build up a fruitful
collaboration with professionals from all
relevant disciplines on the basis of mutual
benefit and cooperation. It also hopes to
improve outreach to various stakeholders
and build linkages necessary for a fruitful
policy dialogue. In this connection,
CLIMATEnet welcomes and appreciates
contributions by all who wish to participate
in this important dialogue.
Visit IPS CLIMATEnet at
http://www.ips.lk/climatenet/index.html
You can also visit the CLIMATEnet
Blog at http://climatenet.blogspot.com/
19
This is my 10th year at the IPS. I have been
working on many areas related to environment,
such as natural resource management, climate
change, tourism, disaster management, green
economy etc.
Kanchana WickramasingheResearch Economist
Kanchana holds a Masters Degree in Economics from the
University of Colombo and a BSc – specialized in Agricultural
Economics and Business Management from the University
of Peradeniya. She has also completed a post-graduate
diploma in Universalizing Socio-Economic Security for the Poor at the International Institute
of Social Studies (ISS), The Hague, Netherlands.
How long have you been with IPS and what is your role at the Institute?
I followed science subjects during my
secondary education, and as a part of the
university education where I chose to specialize
in economics. I believe that blend of two
backgrounds – science and economics - is
ideal for a researcher working on environmental
economics. Naturally I choose environment as
my area of specialization. I am passionate
about researching on environmental sustain-
ability issues in tourism, maybe because
travelling is something I enjoy a lot in my life.
What inspired you to choose Environment as an area of specialization and what aspect of environment are you most passionate about?
As a researcher, I am proud of winning the First
prize for the Japanese Award for Outstanding
Research on Development (ORD) at the Global
Development Awards and Medals Competition
of the Global Development Network (GDN) in
2014. I also received the Top Outstanding
Young Persons (TOYP) in Sri Lanka Award 2014
for Personal Accomplishment, and was the only
female to receive the award in 2014. I have
also received the President’s Award for the
work published in the WHO Health Bulletin,
which I am proud of.
What are your career related achievements?
Environmental issues have been largely
neglected in policy decision making in Sri Lanka.
There are a lot of areas where environmental
Why do you think Environmental research is important to Sri Lanka?
I hope to expand the research work on
sustainable tourism in Sri Lanka. Also, I would
be working on climate change, particularly
climate related risk management in the coming
years.
What is your agenda for environmental research at IPS?
A good understanding and background on
environment and economics is required at the
first step. One should be skilled at formulating
good research questions which are policy
relevant and feasible. Technical skills and
proper communication skills are also needed. I
also feel you should be passionate about
environment related affairs and be keen on
researching on those. I would also think that an
interest in conducting field research as an
added qualification.
What advice can you give career starters who are keen to explore this line of work?
Enormous support I receive from my family - it
helps me achieve a good work-life balance.
What aspects of your personal life help you do your job well?
Climate change has become the mostly
discussed global issue today. International
cooperation is a must to mitigate climate
change. Meanwhile countries should focus on
adaptation measures to minimize the impacts
of climate change.
What do you feel is the biggest environmental issue the world is facing today, and how can that be tackled?
IPS INSIDE
20
TALKING ECONOMICS
research has not touched upon or referred to as
an afterthought. Good environmental research
is required to help better make decisions on
sustainable development.
Some Challenges
National Medicinal Drug Regulatory
Authority Bill and the Medicinal Drug Policy
of Sri Lanka:
By G D Dayaratne
The concept of essential medicine was initiated
in 1962 with the establishment of National
Formulary Committee to reform the selection of
drugs for the government drug supply.
Subsequently, as per the recommendation of the
1971 Bibile-Wickramasinghe Report, the Ceylon
Hospital Formulary was prepared and the total
number of drugs were reduced from 2,100 to
630 under their generic names and the usage of
brand name drugs was greatly reduced. These
were pioneering initial steps in Sri Lanka’s drug
policy.
Although attempts to develop a National Drug
Policy by the Ministry of Health were made in
1991 and 1996, they never reached the level of
the Cabinet for approval. The Report of the
Presidential Task Force on Formulation of a
History and Emergence of National Drug Policy
The National Medicinal Drugs
Regulatory Authority Bill which
provides provision for the forma-
tion of a Medicinal Drugs Regu-
latory Authority was passed in
Parliament with amendments on
6th March 2015. In this article,
G D Dayaratne takes a look at
the challenges in effectively
implementing the Policy.
National Health Policy for Sri Lanka, which
wasestablished in 1992, recognized the
need for a National Drug Policy but it was neither
comprehensive nor well defined. In 2005, the
Ministry of Health worked out a comprehensive
draft for a National Medicinal Drug Policy for Sri
Lanka which was approved by the Cabinet in
October 2005. However, it was stopped at Cabinet
level due to well-known reasons. After the new
government came into power in 2015, it was
submitted to the Parliament and ratified.
Salient Features ofthe New MedicinalDrug Act The new Act provides for the establishment of a
National Medicines Regulatory Authority respon-
sible for the regulation and control of registration,
licensing, manufacturing, and importation, and
conducting of clinical trials. Making available of
efficacious, safe and good quality medicine is one
objective of the Authority.
According to the Act, doctors shall write the
generic name of the medicine with the option
of writing the brand name on request.
Successful implementation of this passage
depends on the behaviour of over 10,000
pharmacies spread across the country. Most of
these pharmacies are well looked after by the
players in the pharmaceutical industry. The
general perception is that the pharmacists will
try to exploit the new law as the pharmaceuti-
cal industry has been highly unregulated,
despite Clause 56 (4-6) specifying pharma-
cist to dispense any other brand of drugs with
the consent of the customer. Countrywide
pharmacies are operating, in an unregulated
environment, and proper implementation
would be difficult as drug inspectors have
cultivated friendly relations with pharmacies.
Brand-namevs. Generic
21
G D Dayaratne, BA (Peradeniya)
Manager - Health Policy Programme, IPS
dayaratne@ips.lk
The price of medicines is another concern as it is likely
to affect access to affordable medicines.
According to the Act, there is no clear indication of
pricing policies related to medicines. The Authority is
to appoint a pricing committee to formulate a
mechanism which will determine medicine prices,
after considering the prevailing international and
regional market prices of similar products. According
to media reports, the Committee that drafted the Act
assured the public about the quality of medicine, and
prices are expected to come down in the short-term
and decrease further in time to come.
The arrangement on pricing shows a clear departure
from the Bibile concept on which Sri Lanka’s first
National Drug Policy was established in 1971.
According to that, an essential drug list was introduced
by a new formulary and the number of essential drug
reduced to 630.
According to various reports, the country presently
imports over 10,000 varieties of drugs. However, there
is no mention of introducing a hospital formulary in the
newly enacted Act which is an essential element of
pragmatic drug policy to provide safe and quality
medicine at affordable prices.
Pricing
Sri Lanka’s drug procurement process follows various
stages, including registration, selection, procurement,
distribution, and service delivery, which were designed
to be transparent. The registration process guarantees
the drug’s safety and efficacy, but various news
reports highlight that the credibility of this system has
eroded due to the pharmaceutical industry lobby. The
registration of new drugs takes almost one year and
involves tedious bureaucratic procedures. This has led
to an increase in circulation of unregistered drugs that
undermines the objective of regulation to ensure the
supply of safe drugs.
Moreover, the country’s National Drug Quality
Assurance Laboratory (NDQAL) does not have the
capacity to test all drugs imported into the country.
There are also weaknesses in post-marketing
surveillance due to restrictions in capacity as a result
of shortages in necessary manpower to inspect
pharmacies.
Present Status of Drug Regulatory Regime
Challenges The National Medicinal Drug Authority Regulatory Bill, which was
recently passed in Parliament, is one of the healthiest gifts to the
people, after a delay of almost ten years with several attempts to derail
or dilute the move. The Bill has two major lapses as mentioned below.
The Act had laid down three conditions for the registration of medicinal
drugs. They are quality, safety, efficacy, while omitting the cost factor,
which is the most important factor related to access to affordable
drugs.
According to the Act, the doctors are required to write the generic
names of drugs along with any brand names prescribed. However, it
does not mention if the doctors will be held liable and any action will
be taken against them in case they fail to adhere to this requirement.
In the case of pharmacists, the Act clearly states that a pharmacist
who fails to disclose the brand of a medicine available at the pharmacy
together with a generic medicine and their prices to the customer at
the time of sale, commits an offence.
It has been reported in various quarters that the new Bill ratified in the
Parliament is a National Medicinal Drug Authority sans a National Drug
Policy. Also, there has been a serious lapse by not providing enough
time and space for the civil society groups to review the contents of
the Bill before it was submitted for the approval of the legislature.
Introducing a pricing mechanism for essential drugs is going to be an
extremely difficult task given that over ten thousand varieties of drugs
are imported today. Without the introduction of a National Hospital
Formulary, which includes an essential drug list, the task of pricing
drugs will remain a challenge.
22
TALKING ECONOMICS
Patient Waiting Times in Private Hospitals: A GrowingConcern in Sri Lanka
Patient waiting times, an important
aspect of the patient experience,
influences patient satisfaction to a
significant extent. It is, however,
an often overlooked component of
the patient encounter. In Sri Lanka,
long waiting times at private
healthcare providers is commonplace.
A fundamental reason behind this is
the doctor-centric approach of the
healthcare delivery model; where
hospitals in the private sector facilitate
doctors rather than patients
(RAM, 2013).[i]
DOCTORS CONSULT AT MULTIPLEHOSPITALS IN A SINGLE DAY
PATIENT EXPERIENCE ON EXPECTED AND ACTUAL WAITING TIMES
A pilot survey on patient satisfaction conducted by the IPS was used to obtain
information on expected and actual waiting times.[iii] Figure 1 shows the link
between actual and expected (what the patient thinks is an acceptable
waiting time) waiting times as reported by respondents.Area ‘AWT>EWT’
below the reference line is the area where the reported actual waiting time
is greater than the reported expected waiting time. Area ‘AWT<EWT’
above the reference line is the area where the reported actual waiting time
is less than the reported expected waiting time. The size of the bubble
indicates a proportion of respondents; the bigger the bubble, the bigger the
proportion of respondents.
At present, a permanent cadre of doctors is not available at private hospitals
(except in Lanka hospitals which was introduced recently). Doctors, therefore,
consult at multiple hospitals, sometimes, as many as six to seven hospitals
in a single day. Private hospitals in Colombo are scattered across the city
and there is often only a narrow time gap (sometimes as low as 15 minutes
or half an hour) between scheduled appointments at different hospitals.
As a result, doctors who consult at multiple hospitals inevitably arrive late to
most of their scheduled appointments because they are either held up in their
previous consultation commitments or held up in traffic (Dayaratne, 2013).[ii]
By Shanika Samarakoon
23
Patients sometimes travel great distances to consult a
particular specialist and they are not fully compensated when
doctors are late. They are also inconvenienced by unannounced
cancellations. Furthermore, patients are not briefed on who is
responsible for their care, the hospital or the visiting specialist
doctors. In this regard, both the monetary and time costs to
the patient are high.
NEED FOR A PERMANENT CADRE OF SPECIALISTS AND AN OPTIMUM REFERRAL SYSTEM
Having a permanent cadre of specialists consulting in one
hospital at a given time would considerably minimize
the issues pertaining to long waiting times.
When a hospital has a permanent cadre, if one specialist
is unavailable, another will be available to consult patients.
Lanka hospitals is one key player in the industry
who now has doctors consulting throughout the day at
the hospital. Furthermore, Sri Lanka needs an optimal
referral system. A referral system is where
a general practitioner (GP) refers a patient to a specialist.
The absence of such a mandatory system has
resulted in patients going directly to specialists,
in turn creating long queues and waiting times in private
hospitals. If a mandatory referral system exists
in the country it can not only reduce waiting times but
also allow specialist doctors to spend more time with
their patients during a consultation.
REDUCING WAIT TIMES IMPACTS THE PATIENT EXPERIENCEShorter waiting times can make an important positive difference in the
patient experience. It is, therefore, necessary to look into how waiting
times can be avoided or at least kept a minimum to improve the
patient experience. Given that Sri Lanka’s households are continually
spending large portions of their income on private healthcare, it is
necessary to ensure that they receive proper value for the
money they spend.
[i]
[ii]
[iii]
RAM ratings (2013). Private Pills for Public Pains.
The Private Healthcare Sector of Sri Lanka. Standpoint Commentary.
March 2013. Colombo, Sri Lanka.
Dayaratne, G.D. (2013). Private Hospital Healthcare Delivery in
Sri Lanka: Some Issues on Equity, Fairness, and Regulation.
Research Studies. Working Paper Series No. 18.
Institute of Policy Studies of Sri Lanka. Colombo.
The survey is based on a forthcoming IPS report on ‘Value for money
in healthcare services in Sri Lanka’.
Shanika Samarakoon, PhD (Nottingham)
was a Research Economist at IPS.
Actual waiting time (AWT) (minutes)
Figure 1: Individual responses on actual and expected waiting times
0
1
2
3
4
5
6
0 1 2 3 4 5 6
Expe
cted
waiti
ng ti
me
(EW
T) (m
inut
es)
< 5 about 5 5 to 10 10 to 20 > 20
< 5
about 5
5 to 10
10 to 20
> 20
AWT>EWT
AWT<EWT
24
TALKING ECONOMICS
ave you ever stopped to consider that your
day-to-day meals, particularly the
packaged/processed food, contain varieties of
added substances, which are made of synthetic
chemicals? When you read the list of ingredients in
the food labeling/packages, you can see different
substances named with ‘INS’ or ‘E’ numbers, some
of them you may have never heard of or some
names are very hard to read. These substances
are called ‘Food Additives’. In this article, Samanthi
Bandara takes a look at how the use of food
additives is threatening the safety of the food we
consume.
More than any other time in history, people are
conscious about ‘food’ they consume – where they
come from and how they are produced. Unlike in
the past, when ancestors harvested their own food
for consumption, most food consumed today
comes from unknown sources and the food value
chain is increasingly becoming modernized along
with developments in science and technology.
Together with structural changes -- population
growth, urbanization, and globalization –people’s
lifestyles and food habits have changed, accelerat-
ing demand for processed and convenient food. In
this regard, ‘food additives’ play a key role in the
food processing industry, making a variety of food
available from every corner of the world.
Since prehistoric times, people have used spices
and salt as ingredients for food preservation. In Sri
Lanka, traditional techniques such as soaking in
honey, salting, pickling, and smoking were
FoodAdditives
AreThey
Safe?
found to be used to preserve and prepare
vegetables, fruits and meat by Veddas, aborigines
or indigenous people.. The first patent for food
additives was taken by the US in 1886 for a
mixture of salt and calcium phosphate as a food
condiment.
Are food additives essential?Over the last 50 years, food additives have
revolutionized the food industry, moving with
advanced technology to cater to the increasing
demand for convenient, tasty and nutritious foods
as well as increasing overall demand for food with
population increase.
Thousands of food additives made of synthetic
chemicals introduced by the US Food and Drug
Administration (FDA) are now used by food
industries all over the world. According to the
book, Staying Healthy Shopper’s Guide: Feed Your
Family Safely by Elsom M. Haas, food industry
commonly uses these substances to:
• improve shelf life or storage time,
• make food convenient and easy to prepare,
• increase the nutritional value,
• improve the flavour of foods,
• enhance the attractiveness of food products
and improve consumer acceptance.
By Samanthi Bandara
H
25
Samanthi Bandara, MSc(Chulalongkorn)
Research Officer, IPS
samanthi@ips.lk
Food additives can be categorized based on the purpose of
each additive. Generally speaking, there are 6 types of food
additives; they are preservatives, nutritional additives,
flavoring agents, coloring agents, texturizing agents, and
miscellaneous additives.
Growing concerns in Sri Lanka
It is important for countries to carry out regular ‘dietary exposure assessments’
to examine the harmful effects of food additives on human health. The results of
such assessments can be used to spread awareness amongst people. It is well
known that over-consumption of any food item can have an adverse effect.
Likewise, eating food containing additives often and in large quantities may
have health implications later in life. Therefore, it is advisable to avoid food that
contains synthetic chemicals, as much as possible. Moreover, it is difficult to
point out whether the reactions to additives are mild or severe. Therefore, those
who suffer from allergies or food intolerances should carefully check the
ingredients listed on labels.
As per the Food Act of 1980, proper labeling in food products is a must.
However, listing the ingredients on labels is not adequate. It is important to list
the quantity of each ingredient used, along with nutrition information. This will
provide the necessary information for consumers about each ingredient, to help
balance their daily food intake.
Another major issue is that packed/unpacked food items such as rice, kottu,
hoppers, thosai, etc., prepared by food venders do not contain labels to state the
type of ingredients (e.g., salt, sugar, and other additives) and quantities used. .
As a result, consumers are not able to gauge the safety of such food. In Sri
Lanka, there are frequent media reports of unsafe/unhygienic food items being
sold by vendors for human consumption. This highlights that the availability of
policies or regulations is not adequate.
While it is important to identify and take necessary action against those who
violate such regulations, a number of measures are required to facilitate this
process. These include recruiting adequate staff by relevant authorities (e.g.,
Public Health Staff), imposing high penalties within short periods in line with the
law, providing adequate laboratory facilities for testing, etc., which are essential
for the proper implementation of regulations to ensure safety of food we
consume.
Despite the multiple purposes of additives, there are emerging
‘hard facts’ with regard to the use of food additives, which raise
concerns.
One of the main concerns is the adverse reactions to food
additives by individuals. To run a safety analysis for a range of
dosages, each additive is fed to an animal. Thereafter, the FDA
recommends the ‘safe dosage’ of each chemical substance for
human use. Many studies have found harmful effects of over
dosage of certain chemicals on animals. For instance, Monoso-
dium Glutamate (MSG - INS 621 or E 621) popularly known as
Ajinomoto, discovered by the Chinese and Japanese about 1,500
years ago, is used universally as a flavour enhancer.
MSG is made up of two chemicals -- sodium (salt) and glutamate.
Glutamate or amino acid can also be found in natural food stuff
such as mushrooms and tomatoes. It is said that ‘MSG does not
bring any nutritional value to the food, but stimulates taste buds by
exciting the brain cells’. A study found that a large part of neurons
in brains of infant mice can be destroyed by feeding large amounts
of MSG. Research has also found other adverse effects of MSG on
human health, including headache, facial pressure, chest pains,
burning sensation, wheezing, and difficulty of breathing – a
collection of symptoms often called “Chinese Restaurant
Syndrome”.
However, the use of this substance in food products in Sri Lanka is
permitted under the regulation No. 1795/51 in the Food Act, No.
26 of 1980. Importation of MSG into the country has seen an
increase over the years. According to Custom data, Sri Lanka
imported 1,772 tons of MSG worth Rs. 316 million in 2009 – these
figures have increased to 2,740 tons of MSG and Rs. 499 million
by 2013. Like in many other countries, Sri Lankan consumer
movements have also raised their voices demanding the
authorities ban MSG, particularly in food preparations at school
canteens. However, no policy decision has been taken yet.
Another area of concern is that food additives in general accelerate
attention-deficit disorder (ADA), and attention-deficit hyperactivity
disorder (ADHD). A study found that hyperactivity increased in
3-year-old and 8-9 year old children who consumed juices
containing artificial food colours and preservatives. In addition,
additives are likely to lead to increase asthma among children.
What needsto be done?
26
TALKING ECONOMICS
This article was written to coincide with the World Health Day 2015.
“Let food be thy medicine and medicine be thy food”, said
Hippocrates, who is considered the ‘Father of Modern
Medicine’, over 2000 years ago. He recognized the impact
good food has on good health, as the food we consume not
only sustain our lives, it also prolongs the quality of life.
With globalization and rapid urbanization over the years,
people’s food habits have substantially changed along with
their lifestyles. This has shifted the traditional healthy meal
that consists of whole grains, fruits, and vegetables (high
fibre, low fat, and low calorie food), towards calorie-dense
foods that are high in saturated fats, trans-fats, sugar and
salt.
This is causing significant health problems around the
world, particularly giving rise to Non Communicable
Diseases (NCDs), also known as chronic diseases. While
NCDs cannot be transmitted from person to person, the
diseases last over a long period and progress slowly.
According to the World Health Organization (WHO) 38
million people (68%) die due to NCDs each year. Of which,
the main types of NCDs including cardiovascular diseases
(e.g., heart attacks and strokes),
By Samanthi Bandara
Unhealthy Diets and NCDs
Unhealthy food can be defined as food high in saturated fats, trans-fats, free sugar or
salt. According to the WHO, an unhealthy diet is one of the four modifiable behavioural
risk factors that increase NCDs. Other risk factors include: tobacco use, physical
inactivity, and harmful use of alcohol.
Frequent unhealthy diets increases obesity/weight gain, which is a risk factor of chronic
NCDs such as cardiovascular disease, diabetes and cancer. Globally, more than 1.9
billion people are overweight while more than 600 million are obese. According to the
WHO, annually, 3.4 million adult deaths occur worldwide due to overweight/obesity.
While, this problem is prevalent in higher socio-economic settings, it is also on the rise
in low and middle income countries. In Sri Lanka, prevalence of obesity in persons aged
18+ years was 3.5% and 10% amongst males and females, respectively (Figure 1).
Statisticson overweight were much higher. Obesity and overweight have become an
acute problem among children due to overindulgence in high calorie food and indoor
leisure activities (e.g., television, internet, computer games, etc.). Moreover, children are
increasingly subjected to advertisements that promote fast/processed food, which have
a detrimental impact on their diets and health.
People from Sri Lanka as well as many countries across Asia are displaying unhealthy
diets and consumption patterns reflected by a low intake of fruits and vegetables, high
consumption of salt and sugar, and extensive use of trans-fats in the food industry. Half
a million deaths in the Southeast Asian region are attributed to low intake of fruits and
vegetables. While this is common among both males and females in Sri Lanka, among
women 100 out of 83 do not consume an adequate amount of fruits and vegetables a
day (less than five servings).
In addition, the consumption of salt and sugar in today’s diets are high. Current
estimates suggest that the global mean daily intake of salt is around 10g (4g of sodium
a day). This is substantially higher than the recommended limit of the WHO (5g of salt or
2g of sodium a day). A Sri Lankan adult is estimated to consume over 12.5g of salt per
day. The high consumption of salt is associated with hypertension (high blood pressure)
and cardiovascular problems. Hypertension is found to be more prevalent among people
with an average salt intake of 13.8 g per day, compared to salt intake of 4.9 g per day.
According to WHO, excess salt intake is the key contributor of 1.7 million annual deaths
from cardiovascular causes in 2010. In Sri Lanka, the prevalence of high blood pressure
was around 21.9% and 21.5% for males and females, respectively in 2014 (Figure 1).
The high consumption of sugar is directly associated with obesity/weight gain and
dental caries. Similar to salt consumption recommendation, the WHO recently
introduced a new guideline to reduce sugar intake. As per the recommendation, adults
and children, particularly non-diabetic people, are strongly advised to reduce the daily
intake of sugar to 5-10 % of their total energy intake. This is roughly about 25 grams or
6 teaspoons of sugar per day. At present, individual sugar consumption in Sri Lanka is
about three times higher than the recommended amount. Prevalence of raised blood
glucose/diabetes in Sri Lanka among persons aged 18+ years was 7.7 % and 9.1 % for
males and females, respectively.
Let Food be Thy Medicine
cancer, respiratory diseases (e.g., asthma) and diabetes account for 82% of all NCD
deaths globally. NCDs are the leading cause of deaths globally and three quarters of the
deaths (8 million deaths) now occur in low and middle income countries.
27
NCD status in Sri LankaIn Sri Lanka, 75% of the deaths are estimated to be caused by
cardiovascular diseases, cancer, chronic respiratory diseases,
diabetes and other NCDs. The number of NCD related deaths in
2014 was 60,300 and 43,500 among males and females
respectively. Although it is said that NCDs are often associated
with older age groups, almost half of the male deaths and more
than one-third of female deaths were under the age group of 70
years.
Figure 2, provides a break down profile of deaths by diseases in
Sri Lanka. 40 % of the deaths can be attributed to cardiovascular
disease, followed by cancer and other NCDs such as
obesity/overweight, respiratory diseases and diabetes.
Not only are NCDs the main cause of deaths in Sri Lanka but the
number of hospitalization due to NCDs appears to be increasing. In
fact, NCD prevalence in Sri Lanka is substantially higher compared
to some Asian countries. In terms of NCD mortality, Sri Lanka is
placed third (66%) in the ranking, behind Maldives (79%), and
Thailand (71%).
Towards a Healthy Food CultureChronic diseases create financial burdens not only on individuals,
and the health system, but also adversely affect the country’s
productivity and national income.
Towards combating NCDs, there is a need to strengthen the
existing policy/legal enforcement governing food value chain from
production to advertisement in the country. According to Liyanage
(2009 & 2010), 60 % of Sri Lankan consumers are not satisfied
with the quality of food, and the types of food available in the
market that are considered to be ‘not as healthy as expected’. In particular, many
food products have additives such as artificial colours and preservatives that
exceed permitted levels. There are also regular media reports of expired food items
being sold in the market, which raises the question of the extent to which the
prevailing laws are enforced.
Unregulated advertisements can also have adverse impacts on food choices of
consumers. In fact, some studies have found advertisements to be a determinant
of an obesogenic environment – that is, an environment that promotes weight gain
and is not conducive to losing weight. Many developed and developing countries,
such as the US and Taiwan have established effective initiatives to prohibit
unethical food advertisements to combat obesity and other chronic diseases.
Taiwan, which has the highest obesity rates in Asia, has recently drafted a Bill to
prohibit advertising of five kinds of junk food on children's television channels. In
Sri Lanka too, enforcing strict rules and regulations on unethical advertisements,
which promote unhealthy food is an area that needs policy attention, especially to
safeguard the health of the country’s young population.
Consumers also need to be made aware of the quality of food products they
consume. This calls for programmes to raise ‘health literacy’ amongst consumers,
which can be provided through various channels including electronic and print
media, community health workers, and school curricular. In addition, the Ministry of
Health, and the private sector can target school children/teenagers, housewives, as
well as white-collar workers when to implement programmes on healthy lifestyles
including diets - through Corporate Social Responsibility programmes.
Towards promoting a healthy lifestyle and prevent cardiovascular diseases, the
College of Community Physicians of Sri Lanka in 2012 launched the ‘Super 8’
initiative in partnership with the National Nutrition Secretariat, the Ministry of Health
and the Department of Agriculture. The Super Eight includes: 1) developing a
healthy Body Mass Index (BMI) of 18.5 - 24.9; 2) avoiding excessive consumption of
salt and 3) sugar; 4) engaging in moderate exercise; 5) eating five servings of fresh
fruit and vegetables every day; 6) avoiding food that contains trans-fat; 7) giving up
smoking and alcohol consumption; and 8) maintaining blood pressure below
140/90. Evidently, being conscious about the food we consume is vital; as a healthy
diet is an integral part of a healthy lifestyle. Therefore, as the father of medicine
once said “Let food be thy medicine”.
Figure: 2. Percentage of Mortality by Cause, 2014
Source: WHO (2014), ‘Non-Communicable Diseases Country Profiles 2014’
http://www.who.int/nmh/countries/en/(last access 9th March 2015)
Cardiovascular diseases
Cancer
Respiratory diseases
Diabetes
Other NCDs
Communicable diseasesand other conditions
Injuries
14%
11%
10%
7%8% 10%
40%
Figure: 1. Prevalence of selected metabolic/physiological riskfactors for NCDs (Population aged 18+ years, 2010)*
Source: WHO (2014), ‘Global Status Report an Non-Communicable Diseases 2014’, Geneva
28
TALKING ECONOMICS
Towards Healthier Diets in Sri Lanka: The Role of Nutrition Labeling
In this article to mark World Consumer
Rights Day (WCRD) 2015 under the theme
‘Healthy Diets’, Raveen Ekanayake and
Chayanka Wickremesinghe
take a look at the importance of nutrition
labeling to promote healthy diets.
Rights Day
Unhealthy diets are linked to four of the ten
biggest causes of deaths worldwide:
overweight and obesity, high blood pressure,
high blood glucose and high cholesterol. In
2010, it is estimated that over 11 million
deaths globally resulted from
Non-Communicable Diseases (NCDs) linked to
unhealthy diets. The impact of poor diets on
health now exceeds that of smoking. The effect
of obesity (US$ 2 trillion per year) on global
GDP is now equivalent to the cost of war, gun
violence and terrorism. Increased productions
of processed food, rapid urbanization, and
changing lifestyles have led to a shift in dietary
patterns. Increasingly, people around the world
are preparing less food from raw ingredients
and buying more processed, pre-packaged
food. Over the last decade or so, global sales of
pre-packaged foods have increased by 92 per
cent, reaching 2.2 trillion US dollars by 2012.
This increase in production, promotion, and
consumption of processed foods that are
unhealthy - energy dense, nutrient poor and
high in fat, salt or sugar - has become a global
driver of unhealthy diets in high, middle, and
low-income countries.
The growing incidence of NCDs linked to
unhealthy diets has gradually led to more
consumers becoming conscious of the inputs
that go into the production of the food items
they consume. Labeling, nutrition labeling in
particular, has been widely recognized as a
powerful tool in allowing consumers to quickly
and easily interpret the nutritional value of
packaged foods and inform and help them
decide on their diet. This article takes a cursory
look at the importance of nutrition labeling, the
regulatory environment concerning labeling,
and issues pertaining to the effective
implementation of such regulations.
Need for MandatoryNutrition LabelingConsumers around the world are increasingly
becoming conscious of what goes into the food
they eat. Moreover, a large number of health
conscious consumers look for key information
presented on the ‘Nutritional Facts’ given on
product labels. For example, the amount of
carbohydrates, calories, vitamins, minerals,
cholesterol, sodium are some nutritional facts
at the forefront on the minds of the consumers.
In some cases, consumer behavioural patterns
can be observed as a result of such labeling.
For instance, the inclusion of unhealthy
ingredients on the labels would encourage or
motivate consumers to switch to alternative
product which they deem to be healthier.
However, if the nutrition content of the
products is not labeled, the consumer cannot
make an informed decision. As a result,
labeling offers a certain degree of minimal
protection for consumers.
The current set of regulations governing food
labeling in Sri Lanka, mandates that in addition
to the date of manufacture and expiry, product
labeling must clearly disclose all ingredients
and permitted additives used in the product.
However, there is no mandatory requirement
on the disclosure of nutrition related informa-
tion. With growing health concerns due to the
consumption of unhealthy foods, from a
consumers view point, it is important that
regulatory authorities implement mandatory
nutrition label requirements on processed and
prepackaged foods for sale.
Need for MandatoryNutrition LabelingFor instance, the inclusion of unhealthy
ingredients on the labels would encourage or
motivate consumers to switch to alternative
product which they deem to be healthier.
However, if the nutrition content of the
products is not labeled, the consumer cannot
make an informed decision. As a result,
labeling offers a certain degree of minimal
protection for consumers.
The current set of regulations governing food
labeling in Sri Lanka, mandates that in addition
to the date of manufacture and expiry, product
labeling must clearly disclose all ingredients
and permitted additives used in the product.
However, there is no mandatory requirement
on the disclosure of nutrition related informa-
tion. With growing health concerns due to the
consumption of unhealthy foods, from a
consumers view point, it is important that
regulatory authorities implement mandatory
nutrition label requirements on processed and
prepackaged foods for sale.
March 15
WorldConsumer
By Raveen Ekanayake & Chayanka Wickremesinghe
29
Raveen Ekanayake, MPP (ANU)
Research Officer, IPS
raveen@ips.lk
Chayanka Wickremesinghe
Project Intern, IPS
In addition, regulatory agencies must seek to
ensure coherence in the information provided
in these labels. The flavour enhancer
mono-sodium glutamate commonly referred to
as MSG is one such example. The consumption
of MSG is commonly linked to symptoms such
as diarrhea, headaches, and insomnia.
However, when it comes to labeling, there is
no mention of MSG. Rather it is substituted by
a range of associated terms such as yeast
extract, glutamate, glutamic acid, etc. Hence
there is a tendency for consumers to be misled
by the information provided. Due to the
absence of specific mandatory guidelines
governing the type of nutrition related
information included on a label, firms have the
opportunity to pick and choose nutrition related
information that best suits the marketing needs
of their product, and leave out essential
information that are key for consumers in
making an informed decision.
Regulatory authorities must develop a set of
guidelines and make it mandatory to include
key nutrition facts on the labels of food
products in order to ensure uniformity of
information. This will also guarantee that the
consumers are not misled by the provided
information. Likewise an ingredient naming
convention must be established. For instance,
the US Food and Drug Administration (FDA)
stipulates that firms must always list the
commonly used names of ingredients unless
there is a regulation that provides a different
term,for example, using the term ‘sugar’
instead of its scientific name ‘sucrose’.
Ensuring Coherencein Information
Whilst nutritional labeling is a useful tool to
highlight essential information about the
nutritional value and composition of products,
the effectiveness of such regulations in
promoting healthy diets, rests largely on how
well consumers take notice of these nutrition
labels. Understanding nutrition labeling is
closely linked to nutrition knowledge of a
consumer. For nutrition labeling to be effective,
it is first and foremost important for consumers
to have a basic understanding of nutrition,
which will aid them in choosing prepackaged
foods. Studies suggest that the level of
knowledge and use of food labeling information
increases with age, level of education and
family income. It is therefore pivotal that
targeted consumer awareness programmes be
implemented to boost the general public’s
knowledge on nutrition. In India, a number of
initiatives have been organized at the
grassroots level with the involvement of the
regulatory agencies, business, both local and
multinationals and the NGO sector in improving
consumer knowledge on basic nutrition facts.
In Sri Lanka too a leading apparels manufac-
turer and a leading public school has teamed
up with a local NGO to raise awareness on
nutrition knowledge amongst its constituents.
Encouraging such initiatives in the country will
help improve consumer knowledge on
nutritional values of the food they consume.
What Can be Done? The growing incidence of NCDs associated with
unhealthy diets poses a serious public health
challenge for governments across the world
including Sri Lanka. Nutrition labeling has been
recognized as a key tool in the government’s
arsenal in tackling this problem.
Many governments in the developed world
have recognized this and mandated compul-
sory nutrition labeling requirements on
prepackaged products. For effective implemen-
tation of such regulations, it is key to establish
a specific set of labeling guidelines to ensure
consistency and transparency so that the
consumers are not misinformed or misled by
the information given in the labels.
In this regard, the regulatory authorities must
work together with the private sector and
relevant NGOs to raise nutrition knowledge and
awareness to promote healthy diets in the
society.
Raising ConsumerAwarenessby ImprovingNutrition Knowledge
30
TALKING ECONOMICS
ver the last two decades, there has been a tightening of
public standards, a shift from product standards to process
standards, an increase in the importance of private standards
and a widening scope of standards. These developments have
raised concerns amongst developing countries, as standards
can become non-tariff measures with falling tariffs. Failure to
comply with standards could potentially result in loss of
international market, a decrease in employment and a decline
of an industry. However, compliance offers the possibility of
enhancing international competitiveness and encourages the
advancement of an industry.
Sri Lanka’s tea industry, which is predominately export
oriented, is increasingly governed by strict and complex
standards. This reflects the evolving trends in the standards
environment globally. The main standards that affect the tea
exports from Sri Lanka are listed in Table 1. They can be
classified according to public/private, product/process, and
mandatory/voluntary.
By Janaka Wijayasiri
EMERGING FOOD STANDARDS: A CAUSE OF CONCERNFOR THE SRI LANKAN TEA INDUSTRY
STANDARDS GOVERNING TEA EXPORTS FROM SRI LANKAIn order to export tea, companies have to comply with local and foreign standards
and regulations pertaining to food quality and safety. These are usually mandatory,
product standards. In this regard, tea has to comply with ISO3720 product
standard for black tea. In addition to ISO3720, the Sri Lanka Tea Board requires
tea exports to comply with other product standards, including foreign matter,
micro-biological contamination, heavy metal and pesticide residue limits, which
are specified and monitored by the Tea Board.
International food assurance standards such as Hazard Analysis and Critical
Control Point (HACCP) and ISO22000 (Food Safety Management System) are also
increasingly becoming important in the tea trade. While these standards are
voluntary at the moment, compliance with either HACCP or ISO22000 is becoming
necessary and considered as de facto mandatory standards. Initially, companies
selected ISO9001, which is a quality management system (QMS) but with the
introduction of HACCP and subsequently ISO22000, which are more relevant to the
food industry, tea exporters are switching to HACCP and/or ISO22000 certifica-
tions. The drive towards obtaining these standards in the tea industry gathered
momentum when the EU stipulated in 2006 that food imports including tea into
Europe must meet the HACCP standard.
In addition to the mandatory and voluntary public standards, there are a number of
private standards which have been voluntarily adopted by tea exporters. These go
beyond the realm of public standards in food quality and safety, and cover a gamut
O
Table 1: Food Safety and Other Standards Governing Tea Exports from Sri Lanka
Standards Public/private Mandatory/voluntary Product/process
-
ISO3720; Foreign matter, micro biological, heavy metal & pesticide residue limits
Public Mandatory Product
ISO9001, HACCP, ISO22000
Public Voluntary Process
Fair Trade, Organic, BRC, Private Codes of Conduct
Private Voluntary Process
31
of issues including social and environmental concerns. Commonly
stated private standards by tea exporters include: BRC (British Retail
Consortium) Global Standard, Organic, Fair Trade (FT), Ethical Tea
Partnership (ETP), and Rainforest Alliance (RA), which have been
collectively set and monitored by third party agencies. There are also
private standards or private codes of conduct, specific to individual
buyers; for example, supermarkets (i.e., Japanese supermarkets)
and fast-food chains (i.e., McDonalds) have their own set of
standards and requirements. The emergence of private standards
reflects a growing interest by buyers, and ultimately consumers,
about the conditions under which tea is produced.
COMPLIANCE CHALLENGES
Tea exporters from Sri Lanka have been able to meet various standards,
and ship tea to some of the most stringent markets in the world. How-
ever, they still face a number of difficulties in complying with such
standards, which needs to be addressed in order to ensure that Sri
Lanka remains a one of the leading tea producing and exporting countries
So far, tea exporters from Sri Lanka have been able to meet various
standards, and ship tea to some of the most stringent markets in
the world. However, they still face a number of difficulties in
complying with such standards, which needs to be addressed in
order to ensure that Sri Lanka remains one of the leading tea
producing and exporting countries.
Lack of testing infrastructure and human resources: Although there are a number of laboratories operating in country –
both government and privately run – they are not accredited to
undertake tests for certain chemicals. For example, the Tea Board
has set up a state of the art laboratory, but it is not accredited while
the government-run Industrial Technology Institute’s (ITI) laboratory
can analyze only certain chemicals. Similarly, private laboratories
are not accredited for certain chemicals. As a result, it is
sometimes necessary to send tea samples abroad – to either to
Singapore or to India – for testing. The absence of fully-accredited
laboratories is compounded by lack of qualified scientific personnel
to conduct tests. In the case of Tea Board, not only is the laboratory
not accredited but the Analytical Laboratory Division does not have
qualified staff to do testing despite the huge demand to get tea
samples screened.
Compliance costs: The most common challenge faced by the exporters was
the compliance cost which involved upgrading factories, audit/certification fees,
consultant fees, training costs, etc. All of these add up to a substantial amount
and contribute towards increasing the total cost of production. They are unable
to pass this cost to the buyers as it makes them uncompetitive in the market.
Whilst exporters were willing to bear various costs associated with standards,
they were frustrated about the lack of monetary return for compliance.
Changing the mindset of workers: Apart from implementation costs,
many companies faced internal resistance to their adoption. Initially, exporters
found it difficult to change the mindset of workers to fall in line with the
standards, although they are now more or less compliant. Training has to be
continuous as workers tend to revert back to their old ways.
Proliferation of standards: This is also becoming increasingly challenging
for exporters, as there is multiplication of costs (certification and audit fees,
etc.) and effort (in maintaining various documents). Exporters are also
disillusioned that different versions of the same standard are brought out
regularly, requiring them to continuously upgrade in order to comply with the
latest version of the standard. While there have been some efforts towards
harmonization between various private standards, proliferation of private
standards is likely to continue in the foreseeable future.
ASSISTANCE FOR COMPLIANCEWhile tea exporters have managed to comply with standards and regulations,
they still have to overcome a number of challenges in order to stay competitive
in international markets. In this regard, exporters require assistance to comply
with the changing standards environment.
Forms of assistance required include financial assistance (loans with low
interest rates, and longer pay back periods), and technical assistance to comply
(training). There is also the need to harmonize standards as there is duplication
of costs and an effort to comply with different requirements of various countries
and buyers, and obtain accreditation for laboratories operating in the country.
Given that standards are likely to multiply and become further complicated in
the future, the government and the industry should provide exporters the
necessary support to comply with such standards and ensure continued access
to the global tea value chain.
Janaka Wijayasiri, PhD (Monash)
Research Fellow / Head of International Economics Policy, IPS
janaka@ips.lk
32
TALKING ECONOMICS
obacco kills half of its users, with smoking and smokeless tobacco
killing nearly 6 million people worldwide. According to the World Health
Organization (WHO), tobacco use has killed 100 million people in the
20th century and could increase to one billion in the 21st century. One
person dies every six seconds due to tobacco use, which accounts for
one in 10 adult deaths. The WHO says up to half of current users will
eventually die of a tobacco-related disease.
Smoking prevalence is a key indicator for smoking-related diseases as
well as health inequalities. Smoking has been identified as the single
biggest cause of inequality in death rates between rich and poor in
most countries. Death rates from tobacco are two to three times higher
among disadvantaged social groups than among the better off.
Long-term smokers bear the heaviest burden of death and disease
related to their smoking.
Tobacco consumption also gives rise to a number of
Non-Communicable Diseases such as cancer. According to reports,
cigarette smoke contains over 4,800 chemicals, 69 of which are
known to cause cancer. In Sri Lanka, around 25,000 cancer patients
are registered at cancer units in state hospitals countrywide. The
Government has allocated LKR 40,806 million for the 2013 - 2016
period to provide radiology treatment for cancer patients. The amount
of funds allocated for this purpose this year is LKR 1,500 million.
According to a WHO survey conducted in 2013, in Sri Lanka, smoked
tobacco prevalence was 15.7 per cent among youth and 22.8 per cent
among adults. Sri Lanka’s Household Income and Expenditure Survey
of 2012/2013 indicate that the average household spent 2.7 per cent
of their monthly income on tobacco and liquor.
Like any other addiction, quitting tobacco use has both immediate and
long-term benefits.
Amidst measures taken by Sri Lanka to curtail the consumption of
tobaccos use among its citizens is the approval of a 2014 Cabinet
Paper to appoint a Presidential Task Force to control tobacco and
alcohol consumption, with the aim of building a society free of tobacco
and alcohol.
THE ‘WORLD NO TOBACCO DAY’
IS MARKED ON 31 MAY 2015.
IN THIS ARTICLE TO MARK
THE DAY, G.D. DAYARATNE
TAKES A LOOK AT THE STEPS
TAKEN BY SRI LANKA TO
JOIN THE GLOBAL FIGHT
AGAINST TOBACCO SMOKING.
LARGER PICTURE, HEALTH WARNINGHard-hitting anti-tobacco advertisements and graphic pack warnings –
especially those that include pictures – reduce the number of children who
begin smoking and increase the number of smokers who quit, says the WHO.
In January this year, the Government of Sri Lanka approved a proposal to
revise Clause 34 of the National Authority on Tobacco and Alcohol Act. The
amendment, presented as an urgent Bill in Parliament, made it compulsory for
tobacco companies to carry a pictorial warning covering 80 per cent
of the pack with information on serious health hazards that could arise from
smoking. The Cabinet also decided that the penalty for companies that do not
conform to these regulations will be increased to a fine of LKR 50,000/= and
one year in jail. The health warnings should be changed once in six months.
As recognized by the guidelines to implement Article 11 (packaging and
labelling) adopted under the WHO Framework Convention on Tobacco Control,
well-designed package warnings are a highly cost effective means to increase
awareness of the health effects and reduce tobacco use. Accordingly, there
has been tremendous progress internationally in implementing package
warnings, with many countries increasing the warning size. Progress since
2012 includes Thailand increasing the size of picture warnings from 55 per
cent to 85 per cent, Nepal implementing 75 per cent picture warnings,
Jamaica from 33 per cent text to 60 per cent pictures, Uruguay implementing
its 7th round of picture warnings at 80 per cent, and Sri Lanka going from 60
per cent in 2014 to 80 per cent in 2015. In addition, a new EU Directive will
require picture warnings to cover the top 65 per cent of the package front and
back, effective 20th May, 2016.
TOBACCO SMOKING AN ISSUE OF UN-AWARENESSBy G D Dayaratne
T
33
With increasing evidence that tobacco is harmful and is the leading
cause of various diseases and deaths, many countries are now
taking action. Amidst these developments the tobacco giant Philip
Morris, an American company, which offers seven of the largest
selling brands of cigarettes in the world, is suing Uruguay arguing
that the warning labels (80 per cent) leave no space for its
trademarks. The company has already filed an expensive lawsuit
on Australia – and if it wins against Uruguay, it could run cases
against more than a hundred other countries. Uruguay is known for
having some of the best anti-smoking laws in the world.
In a media report, the CEO of the Ceylon Tobacco Company (CTC)
Felicio Ferraz, pointed out that whilst regulations are important, the
move to bring in graphic health warnings will open the doors for
inferior illicit products to cloud the market. According to media
reports, in 2012 authorities detected 56 million illicit sticks
attempted to be smuggled into Sri Lanka valued at over LKR 1.35
billion and within the first five months of 2013, authorities
confiscated over 40 million illicit sticks.
Meanwhile, CTC makes a significant contribution to the govern-
ment revenue every year. According to the Central Bank of Sri
Lanka (CBSL), the amount rose to LKR 61.3 billion in 2014 from
58.5 billion in 2013, 53.5 billion in 2012 and LKR 49.6 billion in
2011 , under the trade of nine brands of cigarettes. The CTC says
while its industry is a controversial one, its share value spiked from
LKR 800 to LKR 1,400, within a year registering a 5% increase
amidst challenges.
CHALLENGES FOR PICTURE WARNINGS
WHAT CAN SRI LANKA DO?
Statistics by various authorities clearly indicate that smoking and
tobacco consumption in Sri Lanka is on an unprecedented rise.
Such a trend has long-term health consequences costing govern-
ments extraordinary amounts of money for the care of those
afflicted with smoking-related diseases.
Over the years, Sri Lanka has taken many steps to address this
issue for the well-being of its population. Increasing the size of the
pictorial warning in cigarette packets is one step taken by many
countries that are alarmed at the rise of smokers in their population,
which Sri Lanka has also implemented. In addition, in joining the
global fight against tobacco, it is time for Sri Lanka to take some
pragmatic steps with the aim of building a society free of tobacco.
QUITTING
TOBACCO
USE HAS
BOTH IMMEDIATE
AND
LONG-TERM
BENEFITS
ASHES TO ASHES, DUST TO DUST !
34
TALKING ECONOMICS
In 2000, world leaders signed the
Millennium Declaration, which was
followed by a set of Millennium Develop-
ment Goals (MDGs), to be achieved by
2015. There are 44 MDG indicators in
total, of which 27 have clear targets.
Table 1 gives a snapshot of the status of
MDGs at national level for Sri Lanka. The
table also compares the status of the
indicators in the base year (1990 or
closest) with the current status (2013 or
closest).
MILLENNIUM DEVELOPMENTGOALS SRI LANKA’S ACHIEVEMENTS
Sri Lanka has achieved the targets for 13
of these indicators by 2012/13 (based on
the available data) and 11 were “on
track” to be achieved by 2015. Only two
indicators were off track. Free education,
universal health care, and a number of
welfare programmes which were
implemented for more than six decades
By Wimal Nanayakkara & CHALLENGES AHEADThe Millennium Development Goals (MDG) Country Report 2014, compiled by the Institute of Policy Studies of Sri Lanka (IPS) was recently launched in Colombo in partnership with the United Nations (UN) and the Government of Sri Lanka (GoSL). In this article, Wimal Nanayakkara, Senior Visiting Fellow of IPS takes a look at how far Sri Lanka has come in achieving these goals.
Goal Status (figures are for “Base Year” ”Latest”) for 27 indicators
1
Eradicate extreme poverty and hunger
Poverty:
26.1
6.7%
Poverty Gap Ratio:
5.6
1.2
Prevalence of underweight children (under 5 years): 29.7
21.1%
Prop. of population below minimum energy consumption: 51.3 47.8%
2 Achieve universal primary education
Net enrolment rate in primary school: 88.0
99.7%
Prop. of pupils starting grade 1 who reach grade 5:
64.1
100.0%
Literacy rate in the age group 15
-24 years:
92.7
97.8%
3 Promote gender equality & empower women
Primary Education
94.2 99.4%
Lower Sec. Education
91.2%
Upper Sec. Education 107.7%
Tertiary Education
75.4113.8%
Secondary Education 102.6%
4
Reduce child mortality
Under-five Mortality Rate: 22.2 11.3 (per 1000 LBs)
Infant Mortality Rate: 17.7
9.4
(per 1000 LBs)
Prop. of 1 year old children immunized against measles: 95.5 95.0%
5
Improve maternal health
Maternal Mortality Ratio (per 100,000 live births):
92.033.3
Prop. of births attended by skilled Birth Attendants: 94.1 99.8
Antenatal care coverage (at least one visit): 95.8 (in 2006/07)
6
Combat HIV/AIDS, malaria and other diseases
HIV Prevalence:
less than 0.01%
HIV
Access to antiretroviral drugs:
34.0%
Malaria death rate: 0.8 0.0
Prevalence of TB:
118 109
TB Death Rate: 7.5 1.1
Prop. of TB cases detected: 58 73%
Prop. of TB cases cured under DOT short course:
86.3 (2005) 84.9% (2008)
(per 100,000 population)
7
Ensure environmental sustainability
Prop. of land covered by forest:
33.8 29.6%
Prop. population using an improved drinking water source: 68.0
89.7%
Prop. of population using an improved sanitation facility:
69.0 87.2%
KeyAlready achieved
Almost Achieved On track Off track
Table 1: Snapshot of the Status of MDGs at National Level, by 2012/13
Note: Refer - unstats.un.org/unsd/mdg/Resources/Attach/Indicators/OfficialList2008.pdf, for official list of MDG indicators; “Base year” – 1990 or closest and “Latest”, 2013 or closest (based on the availability of data)
35
have contributed to the impressive results in education, health
and living conditions. More recent policies and programmes
related to MDGs have helped to accelerate the progress and
achieve some targets well ahead of schedule.
While Sri Lanka has made considerable progress pertaining to
most of the indicators at national level, there are still
considerable regional variations, which need the attention of
regional planners and policy makers. Few of the identified
gaps and regional variations are highlighted below, which may
help in taking suitable action to make an effective final push
towards achieving MDGs in all the regions of the country. The
details on Sri Lanka’s MDG achievements, gaps and regional
variations, as well as some suggestions to minimize those, are
given in the “Millennium Development Goals Country
Report – 2014”.
Sri Lanka is on track to achieve the target of reducing both the under-five and
infant mortality rates by two-thirds the level of the base year (1990) by the
end of 2015. The
SRI LANKA HAS ACHIEVED THE TARGET OF HALVING POVERTY AT THE NATIONAL LEVEL SEVEN YEARS BEFORE 2015 DEADLINE:
National poverty incidence declined from 26.1 % in 1990-91
to 6.7 % in 2012-13. All districts, except those in the Northern
and Eastern Provinces and Monaragala District in Uva
Province, have already achieved the target of halving poverty.
In Monaragala District, poverty increased to 20.8 % in
2012/13, even though it had achieved the MDG target in
2009/10 with a poverty rate of 14.5 %. The Jaffna and
Ampara Districts, which were earlier affected by the separatist
war have progressed well since 2009/10.
Poverty in Jaffna declined from 16.1 % in 2009/10 to 8.3 % in
2012/13, while in Ampara District poverty fell from 11.8 % to
5.4 % during the same period. The regional disparities clearly
indicate the need for continuous monitoring and focused
attention of planners and policy makers.
POVERTY GAP RATIO (PGR), WHICH MEASURES THE DEPTH OF POVERTY, HAS ALSO DECLINED SHARPLY SINCE 1995:
The PGR fell from 6.6 % in 1995/95 to 1.2 % in 2012/13,
indicating an overall reduction in the level of poverty even for
those below the poverty line. However, income inequality gap
persists. As such, the focus of policy may need to be on
SRI LANKA HAS BEEN SUCCESSFUL IN ACHIEVING ALL 3 TARGETS RELATED TO UNIVERSAL PRIMARY EDUCATION:
More than 97.8 % of the children aged 6 to 10 years and more than 95 % of
the children aged 11 to 14 years, are attending school in all the districts by
2012/13, showing the effectiveness of making education compulsory for
children aged 5 to 14 years in 1998.
HOWEVER, AFTER 14 YEARS OF AGE, A DECLINE IN THE PERCENTAGE OF CHILDREN IS OBSERVED IN ALL DISTRICTS:
Only 86 % of those aged 15 to 16 years are in school and only around 60
%continue their education after 16 years, at national. Regional variations are
high. It is important therefore to increase the compulsory age for schooling to 16
years, as early as possible. It is also critical for Sri Lanka to improve the quality
of education, as well as the education outcomes at secondary and tertiary levels.
Sri Lanka has already reached gender parity in primary education. In secondary
and tertiary education, the proportion of girls to boys exceeds 100 %, indicating
that more boys leave school earlier than girls, which may need the attention of
education planners. Another factor which needs attention is the very low
representation of women (5.8 %) in the Parliament.
FREE HEALTH CARE SERVICES FOR ALL, INCLUDING PREVENTIVE HEALTH SERVICES, FOR MORE THAN SIX DECADES, HAVE HELPED SRI LANKA, IN REDUCING INFANT, CHILD AND MATERNAL MORTALITY TO A VERY LOW LEVEL COMPARED TO MOST OTHER COUNTRIES IN THE REGION:
proportion of one-year-old children immunized against measles increased
from 95.5 % in 1993 to 99.0 % in 2011. However, proportion declined to 95 %
in 2012, which needs the attention of health authorities. Maternal Mortality
Ratio (MMR) declined from 92 deaths per 100,000 live births in 1990 to 33.3
in 2010 and is “On track” to achieve the target. The proportion of births
attended by skilled attendants, has almost reached the target of 99.8 % by
2010. The Family Health Bureau (FHB) of Sri Lanka has taken many initiatives
in recent years to enhance the quality of maternal and child care. Although Sri
Lanka has done well in improving maternal and child health, nutrition status of
children under five years, is still a major concern, as more than one fifth of the
children under five years, are under weight.
36
TALKING ECONOMICS
regional economic development, which will create more employment opportuni-
ties across all the regions, especially for women. Another important factor
which needs urgent attention is targeting of social protection programmes,
which will help the most vulnerable groups in the country.
Wimal Nanayakkara, BSc (Peradeniya)
Senior Visiting Fellow, IPS
wimal@ips.lk
Although Sri Lanka has made significant progress towards achieving the
majority of the MDGs, at national level, further efforts are required to minimize
the regional disparities. It is also important to sustain and further improve the
progress beyond 2015. In addition, Sri Lanka will also have to gear itself to
handle the 17 Sustainable Development Goals (SGDs) and accompanying
targets, proposed by the UN, which are expected to be adopted, in September,
2015.
WAY FORWARD
Through 2012, a total of 1,649 HIV cases and a total of 432 AIDS cases have
been reported. As such, continuous monitoring, proper detection and
improvement of the facilities for treatment are needed, if the disease is to be
controlled. Sri Lanka has managed to bring malaria cases down from around
400,000 in the early 1990’s to 124 cases by 2011 and has no malaria related
deaths since 2007: Country should be vigilant to prevent a reoccurrence, as
the disease has re-emerged whenever mechanism for preventions has
weakened,.
ALTHOUGH SRI LANKA REMAINS A LOW HIV/AIDS PREVALENCE COUNTRY, THE NUMBER OF CASES IS GRADUALLY INCREASING:
Around 8,000 new cases are reported every year. TB prevalence rate shows a
slight decline from 118 per 100,000 people in 1990 to 115 in 2004, and since
then rate has stabilized. Overall treatment success rate has increased from
78.6 % in 2000 to around 85 % since 2004. Among the main challenges in
controlling the disease are: maintaining adequate staff, reaching population
groups with limited access to services, scaling up TB control services among
returning migrants and the resettled population in the Northern and Eastern
Provinces, overcoming TB-related stigma and financial sustainability.
TUBERCULOSIS (TB) STILL REMAINS A PUBLIC HEALTH PROBLEM IN SRI LANKA:
The Millennium Development Goals (MDG) Country
Report 2014 was launched in Colombo, under the
patronage of Deputy Minister of Policy Planning and
Economic Affairs, Dr. Harsha De Silva. The report
was compiled by IPS together with the Government
of Sri Lanka and the United Nations. IPS Research
Team who contributed towards the compilation of
the report include Wimal Nanayakkara, Ganga
Tilakaratne, Sunimalee Madurawala, Chatura
Rodrigo, Swendrani Jayayartne, Ashani Abeysekara,
Ayodya Galapattige and Yolanthika Ellepola.
LAUNCH OF THE MDG COUNTRY REPORT 2014
37
IPS CAREERSThe primary strength of the IPS is its talented, dedicated and
hardworking staff. The Institute provides an exciting opportunity to
contribute to leading issues facing the nation as the IPS works closely
with government, the private sector, donor agencies, and academia.
We provide an environment conducive to highly effective independent
research and the professional growth of our staff.
Recruitment of new staff is based on need, and occurs periodically
throughout the year. For current job openings, please visit our
website: h t t p : / / w w w . i p s . l k / i n d e x . p h p / c a r e e r s - a t - i p s
The IPS internship programme offers short-term attachments to currently enrolled students
or recent graduates in economics or closely related fields. They provide an opportunity to
work with a senior researcher on a specific research project, or to obtain a wider experience
across research areas. The positions are open to applicants with an interest in development
issues, and are typically for 2-6 months. If you wish to join our internship programme send
us your CV to careers@ips.lk
“Interning at the Institute of Policy Studies has been and is to this day, an inspiring experience.
The internship was a special learning curve. It enabled me to apply my strictly academic
knowledge to practical economic situations, analyze real world problems of migration and
employment in fragile situations, and above all conduct research at the grass root levels. These
internships I conducted both last year and this year upon completion of my degree,
Internship Programmeprovided me with insight into policy making and the
extent to which research in economics could contribute
to improving the standards of living in Sri Lanka,
cultivating my career path.The skills I developed
interviewing migrants and government authorities,
identifying their significant challenges, developing
strategies to address them in the labour market, and
communicating this to policymakers and concerned
stakeholders via the Migration Conference, blog and
news articles were unique. This experience assisted
me in my undertaking of the undergraduate thesis at
the University of Nottingham, and I am certain will
continue to equip and inspire me at my masters at the
University of Warwick.
Apart from the research, at IPS, Friday newspaper
discussions, regular in-house seminars, networking
sessions or even playing cricket with fellow research-
ers are some of incredible events I was fortunate
enough to experience.
Both internships at IPS were an incredible opportunity I
am grateful for, thank you for welcoming me into your
family, and granting me many friends through both my
peers and nurturing supervisors.”
38
TALKING ECONOMICS
Keshni Sritharan, Intern
Summer 2014 - 2015
Social protection has been increasingly
viewed as an important tool for addressing
poverty, vulnerability, inequality, and social
exclusion. Sri Lanka has a long history of
providing social protection to its population.
Social protection policies and programmes
such as the free education and health care
provision and food subsidy programmes
have been implemented by the successive
governments since the 1940s. At present,
there are many social protection
programmes targeting vulnerable segments
of the population: the poor, elderly, disabled,
children and women. These programmes
vary from cash and in-kind transfers to
pensions, insurance, and livelihood
development programmes. They can be
broadly categorized as: (i) social insurance,
(ii) social assistance, and (iii) labour market
programmes as shown in Figure 1.
Despite the multitude of programmes, there
are several gaps and weaknesses in the
current social protection system.
AddressingIssues ofSocialProtectionto EnhanceEquity inSri Lanka
Marking the World Day of Social Justice2015 (20th February), the blog highlights four key issues of Sri Lanka’s social protection system that need to be addressed in order to reduce vulnerability and enhance equity.
LOW COVERAGE AND POOR TARGETING
Low coverage and poor targeting are two
most common problems in the majority of
social protection programmes in Sri Lanka.
Programmes designed for the poor, elderly,
disabled and other vulnerable groups often cover only a
fragment of the eligible population. The programmes for
school children such as the free textbook and free uniform
programmes that are almost universal in coverage are
perhaps the only exception. Limited coverage is largely a
result of budgetary constraints. Many programmes also
suffer from targeting problems. A recent IPS study reveals
that only less than a half of the households in the poorest
decile (47.4%) receive benefits under the Samurdhi cash
transfer programme (see Figure 2). However, there are
3-15% households in the top four deciles who receive
Samurdhi benefits. These figures indicate the severity of the
targeting problem of the Samurdhi programme – both
inclusion and exclusion errors. The extent of targeting errors
of the other social protection programmes is difficult to
measure owing to the lack of data. In addition, many
INADEQUACY OF BENEFITS
The value of monthly cash transfers received
under most social assistance programmes
remains low. Under the Samurdhi income
transfer programme, the maximum amount
received by a family was Rs. 1,500 per
month until the end of 2014 (while the
minimum was Rs 210), which is far below
the minimum requirement to meet their basic
needs. The net cash value received by a
By Ganga Tilakaratna Figure 1: Social Protection System
Social protection
Social insurance
Old-age retirement
schemes (e.g. pensions, EPF/ETF)
Insurance/ micro-insurnace
Social assistance
Cash or in-kind transfers to poor,
elderly and disabled persons
Education and health assitance
Disaster relief
Labour Market Programs
Livelihood and skills
development programs
39
programmes lack clearly defined eligibility
criteria and an entry and exit mechanism,
which too has contributed to the targeting
problems in social protection programmes.
Ganga Tilakaratna, PhD (Manchester)
Research Fellow / Head of Poverty and Welfare Policy, IPS
ganga@ips.lk
Low coverage and poor targeting are two most common problems in the majority of social protection programmes in Sri Lanka.
Many social assistance programmes suffer
from budgetary constraints, which restrict
them from expanding their coverage and
improving the benefit amounts. Moreover, a
recent IPS study reveals considerable
inequity with regard to allocation of funds
within the current social protection system.
Over 80% of the total social protection
expenditure goes to retirement benefits of
formal sector workers (e.g., pensions and
EPF/ETF) while the expenditure on social
assistance programmes such as Samurdhi,
disability assistance and elderly assistance
as well as expenditure on labour market
programmes for vulnerable groups remain
low. In particular, the study finds that
pensions for the public sector workers
account for about 55% of the total social
protection expenditure. However, pensions
benefit only a smaller share of the country’s
elderly population.
BUDGETARY CONSTRAINTS AND INEQUITABLE RESOURCE ALLOCATION
Currently, there are several ministries,
departments, and provincial councils
carrying out different social protection
programmes for various vulnerable groups.
Lack of coordination among these
LACK OF COORDINATION
It is important to improve ‘targeting’ in programmes
such as Samurdhi, and make better use of the
limited resources available for social protection for
the benefit of the ‘neediest’ groups. This would help
improve the coverage of the programmes as well as
the amounts of benefit.
Moreover, strengthening the coordination among the
programmes implemented by various institutions in
order to minimize duplications is important to
enhance efficiency and thereby improve coverage
and benefit levels.
Given the rapid ageing of population, reforms are
also required for the pension scheme in order to
reduce the burden on the government budget and
make the programme more sustainable. Such
reforms would also help release funds to extend
social protection to elders who do not receive
retirement benefits or any other assistance.
WAY FORWARD
family was much lower than the above
amounts since there are deductions for
compulsory savings, social security and the
housing fund. However, as per the
Department of Samurdhi, these subsidy
amounts have been increased since January
2015, with a minimum of Rs. 420 and a
maximum of Rs. 3000 per month. The
monthly allowances provided under the
elderly assistance programme and Public
Assistance Monthly Allowance (Rs. 250 - Rs.
500) are also far inadequate to cover the
basic expenses like food. According to the
national poverty line, a person requires
around Rs. 3,800 per month to cover his/her
consumption expenditure at a minimum
level.
Figure 2: Share of Households receiving Samurdhi Cash Transfer by Decile -2009/10
Note: Based on the HIES 2009/10 of the DCS. 1= Poorest and 10=Richest
47.4
41.5
32.429.7
22.0 20.6
14.8
9.95.8
3.1
05
101520253035404550
1 2 3 4 5 6 7 8 9 10
% o
f Sam
urdh
i ben
efic
iary
H
Hs
Decile
40
TALKING ECONOMICS
institutions and programmes increases the cost of
social protection provision and leads to overlaps in
beneficiaries served under these programmes.
oday marks the World Day against Child Labour, an awareness
campaign launched by the International Labour Organisation (ILO) to
draw attention to the 168 million children aged 5-17 engaged in
child labour worldwide. First launched in 2002, the 12th of June of
each year is used to highlight the plight of child labourers and to act
as a catalyst for the worldwide movement to eradicate child labour.
This year’s theme is “NO to child labour – YES to quality education!”
drawing attention to the importance of providing quality education to
children as a means to eliminating child labour.
Child Labour and Education in Sri Lanka:
Drivers of Child LabourChild labour is defined as work that deprives children of their
childhood, dignity and potential. The work involved is hazardous to
their health, physical and mental development and deprives them of
the opportunity to attend school without interference. There are
numerous factors that lead to child labour such as poverty,
entrenched social attitudes, lack of access to quality education,
social and economic exclusion, lack of decent work for adults, lack
of an adequate legal framework and migration. These factors are
often interlinked (with poverty often being the underlying factor)
requiring a multipronged approach involving multiple stakeholders to
take effective action against child labour. In recognition of this year’s
theme for the World Day against Child Labour, this article will look at
the importance of providing quality education for all to improve
school attendance and reduce child labour in Sri Lanka.
Child Labour and EducationEducation is a theme that is particularly relevant this year since the
international community is set to adopt the post-2015 Sustainable
Development Goals, which proposes inclusive and equitable quality
education for all. The UN member states would pledge to ensure that
By Sahan Jayawardena
Child Labour in Sri LankaThe Employment of Women, Young Persons, and Children Act of 1956 states the
minimum age of employment as 14 with the minimum age for employment in
hazardous conditions set at 18 in line with the ILO Convention 138 on the
Minimum Age for Employment. According to the last Child Activity Survey
conducted by the Department of Census and Statistics in 2008/09, approximately
2.5 per cent of children from a total child population of 4.3 million were engaged
in child labour, out of which 63,916 children were engaged in hazardous forms
of child labour. A majority of child labourers are employed as unpaid family
workers engaged in the manufacturing industry with the exception of children
from the estate sector, where a majority work in agriculture.
Combating Child Labour through the Provision of Quality Education by 2030, all girls and boys have access to free quality primary and secondary
education that lead to effective learning outcomes. Eradicating child labour is
essential to achieving this
T
Figure. 1 School Attendance Status of Children Involved in Child Labour
AGE GROUP (YEARS) STATUS OF SCHOOLING (PERCENTAGE)
TOTAL (5-17) 53.4 46.6
5-11
12-14
15-17
98.3
71.5
22
1.7
28.5
78
Source: Child Activity Survey 2008/09, Department of Census and Statics
ATTENDING NOT ATTENDING
41
Child Labour and Education in Sri Lanka Sri Lanka has made commendable progress in achieving near
universal access to primary education for both genders with a net
enrolment rate of 99.7 per cent. Further, the findings from the
Child Activity Survey revealed that 97 per cent of the compulsory
school attendance age group (5-14) attended school continuously.
However, older children involved in child labour show lower school
attendance rates. 28.5 per cent of children in the 12-14 years age
category do not attend school and as much as 78 per cent do not
attend school in the 15-17 years age group (Figure 1).
Impediments to School AttendanceSri Lanka has high school attendance rates for the age categories
of 6-10 years and 11-14 years as a result of enforcement of
compulsory education. However, children involved in child labour in
the 11-14 years age group are at a high risk of dropping out. The
drop-out rate for 13-year-olds is 5.1 per cent. According to the
MDG Sri Lanka Country Report 2014, school attendance starts to
further decline after the age of 14 years, with around 14 per cent
of children not completing the GCE Ordinary Level. There are
numerous reasons for children not attending school, with poverty
being a central impediment, which is closely linked to child labour.
Out of these school children, most are more likely to be from
poorer families. Parents’ attitudes and perceptions regarding the
benefits derived from education against the advantages of
engaging in other activities also act as a barrier to school
attendance. If the opportunity cost of education is perceived to be
too high, children are more likely to drop out of school and get
pushed into child labour.
On the supply-side, regional disparities in access to schools, inadequate facilities
and shortage of teachers that affect the quality of schools also contribute to
school non-attendance. This is a particularly important issue for the higher
school cycles, where the equity in access is lower compared to the primary level.
Rural and remote schools are particularly affected by the shortage of science
and mathematics teachers, reducing the quality of learning outcomes that could
be achieved from attending these schools
No to Child Labour – Yes To Quality Education Child labour is a multifaceted issue. It is largely driven by poverty forcing
children to drop out of school, preventing them from acquiring the skills
necessary to exit poverty. Therefore, eliminating child labour is in part an
educational objective, where improving school attendance, particularly among
higher age groups, should be a key component in the policy framework to
reduce child labour. The key to improve school attendance and to capture
children excluded from education is to provide accessible, affordable and quality
education. In spite of welfare measures such as free textbooks, uniforms, school
meal programmes, and subsidised bus fares, poverty is still a barrier to
education due to direct and indirect costs. For poor households, the opportunity
cost of education is often viewed as too high, making the likelihood of children
getting involved in child labour high. Therefore, in addition to reducing this
opportunity cost through social assistance programmes, it’s important to
improve the quality of education that is accessible to the poorer segments of the
population, particularly in rural and remote areas by addressing the shortages in
resources. In addition, attention should be paid to making education more
relevant to the labour market by improving teaching and learning methods that
result in better learning outcomes and more returns to education.
Sahan Jayawardena, BSc (Liverpool)
was a Research Assistant at IPS
Image Courtesy: sevalanka.org
42
A group of women entrepreneurs gathers at the Ukuwela Divisional
Secretariat (DS) Office in the Kegalle District on a rainy day in November to
participate in a group discussion on challenges they face in operating and
expanding their businesses. 54-year-old Kamalawathi, a pepper producer
from the area, eagerly waits for the discussion to start. She has many things
to discuss in her mind. One burning issue she faces in running her business
is the lack of technological know-how to produce white pepper. Getting
information on technical support is the main purpose for her to participate in
the discussion.
Kamalawathi claims that: “White pepper is of higher value than black
pepper. I have been trying to produce white pepper but I have not been able
to meet the required quality standards. Despite many attempts we have not
been able to get the pepper to turn out as white as the white pepper
produced by larger scale pepper growers, who use various other methods or
machines. We don’t know or have the proper technical knowledge to
produce quality white pepper at home.” However, the fact is Kamalawathi is
unaware of the ‘Vidatha’ centre at the Ukuwela DS office, which offers more
than thirty different technology trainings and technology skill building
programmes including the training that she requires. Kamalawathi also
admits that she has few contacts with fellow women entrepreneurs and has
not obtained the membership at any of the trade associations operating in
the area.
Like Kamalawathi, many women owned and led micro, small and medium
enterprises (WMSMEs) in the country face the same problem. ‘Lack of
information’ and ‘poor networking’, are two major barriers that hinder the
development of their businesses. This is also highlighted in an ongoing IPS
study on constraints faced by WMSMEs, which found that women entrepre-
neurs have limited knowledge and lack awareness of market information
(price, buyers, new markets, suppliers) and services (financial and
non-financial) available.
Networking and Information:Crucial Ingredients inEmpowering WomenOwned and Led Micro,Small and MediumEnterprises in Sri Lanka
The International Women’s Day is globally celebrated on March 8 every year. This year’s celebrations under the theme ’Empowering Women - Empowering Humanity: Picture It!’ highlights the Beijing Declaration and Platform for Action - a visionary agenda for empowerment of women signed by 189 governments 20 years ago. The Declaration identifies ‘Women entrepreneur-ship’ as one of its strategic objectives, and proposes institutional and financial arrangements for its promotion and support.
By Sunimalee Madurawala
MSMEs The contribution of MSMEs to the country’s Gross Domestic Production (GDP)
and employment generation is quite significant. It has been estimated that
Small and Medium Enterprises (SMEs) accounts for more than 90 per cent of
the total number of enterprises in Sri Lanka. The contribution of SMEs’ to the
total GDP of the country has increased up to 52 per cent in 2011 from 40 per
cent in 2010. Furthermore, it accounts for 32-41 per cent of the employment
in agricultural, industrial and services sectors of the economy (Figure 1). The
contribution of MSMEs would be higher if one takes into account of micro
enterprises for which data is not available. Despite the important role of
MSMEs in the economy, female participation in the sector is significantly low,
and gender bias against women is commonly observed in the MSME sector.
Why is Women Entrepreneurship Important to Sri Lanka?Promoting and fostering women entrepreneurs is of utmost importance,
especially to a country like Sri Lanka, where female participation in the
labour force is considerably low (34 per cent) compared to the country’s
success in achieving many other socioeconomic targets. Sri Lanka has been
able to meet most of the Millennium Development Goals (MDG) such as
poverty reduction, increasing literacy rate, decreasing Infant Mortality Rate
(IMR), decreasing Maternal Mortality Rate (MMR) and access to safe drinking
water and sanitation.
43
Sunimalee Madurawala, MEcon (Colombo)
Research Officer, IPS
sunimalee@ips.lk
Information and Networking for Women EntrepreneursIn addition to accessing credit, training and legal policy
constraints, lack of access to proper information and poor
networking have been identified as major obstacles faced by
women entrepreneurs. Information is important to entrepreneurs
for many reasons. It helps entrepreneurs take prudent business
decisions, inspires new business ideas, and alerts them on
trends and potential new markets. Information is also a major
source in planning for the future.
Information relevant to business organizations takes different
forms such as information on customer, employee, and supplier
relationships; market knowledge; knowledge of the business
environment; professional associations and trade bodies; trade
exhibitions and conferences; research and development. The
way a business gathers, shares and exploits available informa-
tion is crucial to its success.
Networking (both formal and informal) is also much needed for
operation and growth of enterprises, especially MSMEs as it
gives them the means to share information and knowledge,
Accessing Information and Building Networks: What Can be Done? Although female literacy rate in Sri Lanka is more than 90 per cent and there are
various information channels (newspapers, tv, radio, etc.) and forms of networks
(business, social, formal, informal) available throughout the country, ‘lack of informa-
tion’ and ‘poor networking’ are among the major barriers facing WMSMEs in the
country.
capture opportunities, establish connections, increase confidence and become visible
and get noticed by various stakeholders (such as potential buyers, government
officers, chambers, and trade associations).
These simple steps would go a long way in empowering thousands of women
entrepreneurs like Kamalawathi to develop their businesses and effectively contribute
to the country’s development.
Promoting and fostering women entrepreneurs is of utmost
importance, especially to a country like Sri Lanka, where female
participation in the labour force is considerably low (34 per cent)
compared to the country’s success in achieving many other
socioeconomic targets. Sri Lanka has been able to meet most of
the Millennium Development Goals (MDG) such as poverty
reduction, increasing literacy rate, decreasing Infant Mortality
Rate (IMR), decreasing Maternal Mortality Rate (MMR) and
access to safe drinking water and sanitation.
Promotion of women entrepreneurs is important mainly because
it enhances the economic growth of the country and provides
employment opportunities for women, improves social,
educational, and health status of women and wellbeing of their
families. Further, it is an ideal avenue for women to start up their
careers as it provides them the flexibility and independency.
Setting up collective groups for women entrepreneurs at village level.
Strengthening existing information channels,
Effective use of available information channels (i.e., using primetime slots to
telecast informative and educational TV programmes targeting women
entrepreneurs),
The use of innovative methods to disseminate information, as well as using
Information and Communication Technology (i.e., use of mobile phones as an
effective medium to communicate with women entrepreneurs in remote areas
as opposed to traditional methods like posters and banners),
According to the Global Entrepreneurship Monitor, women who start businesses tend
to know fewer entrepreneurs than men. Men have more social connections enabling
them to access business opportunities, information, and contacts than women. As a
result of poor networking, women are disadvantaged by having fewer professional
connections, role models, and mentorship opportunities, which can adversely affect
their businesses in the long run. A recent survey of women entrepreneurs in Sri Lanka
found that 41 per cent of them do not belong to any business association.
Accessing information and building networks are inter-related: the more you can
access information, the more you can build your networks and vice versa. Likewise,
weakness in one affects the other. Poor networking is the main reason WMSMEs ‘lack
information’. In addition, low mobility of women and social and cultural practices can
obstruct building networks. WMSMEs may also find it difficult to access information
due to institutional weaknesses. For example, at present, there is a mechanism to
disseminate market prices for spices through the relevant government offices.
However, sometimes this information does not trickle down to the bottom as intended
mainly due to the lack of resources and commitment on the part of institutions.
There are a number of measures that can be taken to enhance networking and access
to information among WMSMEs. Among these are:
This article is based on an ongoing research study by IPS on: ‘Products with Regional Trade Potential and Associated Non-Tariff Barriers, with special focus on Women Owned and/or Led Micro, Small, and Medium Enterprises (WMSMEs) - A Case of Sri Lanka’. The study is led by UNDP Asia-Pacific Regional Centre (APRC) with funding from AusAID.
44
TALKING ECONOMICS
Figure 1: SMEs ontribution to the Sri Lankan Economy
Forty one year old W.K Indrani is a cinnamon oil producer living in Meetiyagoda, Ambalangoda, in the Galle district. She owns a cinnamon oil distillery
INSPIRATIONALWOMEN
While women entrepreneurship is important to the Sri Lankan economy, women engaged in Micro, Small, and Medium Enterprises in the country are facing many challenges. Despite the hardships, there are thousands of women who strive to develop their businesses through courage, determination and hard-work.
unit. Indrani’s story is an inspiration to all women as she is engaged in a business, which is male dominated. “I got involved in this work because of my father”, says Indrani. At the beginning of her career she worked as a day worker at distillery units close to her home.
In 2003 Indrani lost her husband, who died in a tragic accident, leaving her behind with two little children. With the hope of saving enough money to “build her own distillery unit”, she went abroad for work. Upon her return in 2008, Indrani started her own cinnamon distillery unit, with the savings she had made while abroad coupled with some money she borrowed from a personal money lender. “Setting up a distillery unit is very costly. My savings from employment abroad was insufficient. So, I borrowed a percentage of the equipment cost from a private money lender in my village.”
Generally, cinnamon oil producers need to travel from place to place to gather cinnamon leaves. They usually visit cinnamon land and offer to rent the entire land. Since Indrani owns and runs her business alone, it is sometimes difficult for her to travel from place to place in searching of cinnamon lands. “Sometimes it’s very difficult for me to find cinnamon lands. On such days I hire my hut to others. I get half of the final output. Normally, we produce five cinnamon oil bottles from one bundle of cinnamon leaves. I have to manage all my operational expenses (electricity bill, water bill) from the money I receive”.
She sells her produce to a nearby cinnamon oil collector. “I have selected one person to sell my products. I normally get LKR 1200/= per bottle (750 ml).Another buyer may buy a bottle for LKR 1300/= - Rs.1400/=. However, I deal with one person as there are perks such as the ability to borrow money from the person any time when I want to rent cinnamon land, and I can pay them back by selling my products.
Operating a cinnamon oil distillery unit is not easy. Owners need to get permission and approvals from the Central Environment Authority, Divisional Secretariat etc. Further, they need to pay annual taxes as well. “We have to pay income tax every year and LKR 750/= to the Divisional Secretariat as environment levy per annum”. According to Indrani, cinnamon oil producers receive a satisfactory income only during six months a year, as cinnamon trees are chopped during a certain times of the year. The other six months of the year they have to look for other work.
Indrani is happy as she is able manage her housework while working at her own distillery. “I can look after my family while working in my hut”. Sometimes, I keep the boiler on and go to school to pick-up my child”. My aim is to upgrade and expand my business and be a good mother to my children and a caring daughter to my parents.
W.K. IndraniCinnamon Oil Producer
Sepalika AnjaleeManaging Directress, EarthScape (Pvt.) Ltd
Forty one year old W.K Indrani is a cinnamon oil producer living in Meetiyagoda, Ambalangoda, in the Galle district. She owns a cinnamon oil distillery
“Motivation to start something of your own and courage do it right is important. If you want everything to be perfect you can’t get anything done. Taking the first step is hard but it’s rewarding. Make that step and move forward” says Sepalika Anjalee, Managing Directress of the EarthScape (Pvt) Ltd. Sepalika is from Negombo. She began her business in 1999 as a sole proprietorship; with 500 US$. Two years later she was able to build a small factory of her own. The business was gradually expanded and the venture was converted to a private limited company. In 2006, she purchased land and built a factory.
Today, Earthscape (Pvt) Ltd is one of Sri Lanka’s largest exporters of coir based horticultural products and the company has seen a steady growth in business over the last 10 years. “It is a long story. A story about dedication and hard-work”, says Sepalika looking back with pride. Earthscape exports coir based products such as bags, 5-25 kg blocks, husk chips, briquettes, disks, and coir geo textiles, to a host of European, American and Asian countries.
Currently, there are 110 employees, out of which 75 are permanent employees. The company’s workforce is a mix of young and old people. The company has also recruited many women, according to Sepalika: “We have many female workers too not because I am a woman. Women in Sri Lanka are hard-working”.
Finding additional capital for further expansion, managing cash flow, and adhering to certain environment laws are some of the main challenges faced by the company in expanding the business. Sepalika points out that certain ad hock decisions by the government and negative attitudes of certain government officers discourage exporters. As an exporter who brings a lot of money to the country, Sepalika calls for more recognition and assistance to develop the industry especially to micro, small and medium scale enterprises. She also emphasizes that the importance of information dissemination.
Reflecting on her journey, Sepalika says “it was not an easy one”. It requires a lot of dedication and hard-work. She also stated that her husband and family have been supportive. She does not think that being a woman is a disadvantage and that she has not experienced any kind discrimination because of her gender.
As part of the study on Women owned and Led Micro, Small and Medium Entreprises (WMSMEs) in Sri Lanka, IPS spoke to a number of women entrepreneurs in thespice and coir industries. The two case studies of two inspirational women were prepared by Dilani Hirimuthogodage and Sunimalee Madurawala.
45
Bilesha Weeraratne, PhD (CUNY)
Research Fellow, IPS
bilesha@ips.lk
Recently the consumer rights day was celebrated
around the world and in Sri Lanka under the theme
healthy diets, where consumer rights in terms of
dietary information in food was the central focus.
An unrelated, yet growing concern in terms of
consumer rights is the privacy of consumers.
Many of the fast food restaurants and other
restaurants in Sri Lanka that accept online and/or
phone orders are now in the habit of saving contact
details for speedy processing of future orders. This
can be considered a benefit to the consumer.
However, it is becoming common practice that
these restaurants are using such contact
information for their promotional activities. For
instance, the leading international fast food chains
operating in Sri Lanka specializing in pizza and
burgers bombard their patrons with promotional
material via mobile text messages. The receipt of
Text-bombs of Unsolicited Promotional Messages: Do Consumers have Control Over their Personal Information?
scores of such unsolicited messages makes one
wonder if the restaurants are on a mission to
punish patrons for deviating from home cooked
meals!
At the time of placing a food order and the related
exchange of information, no explicit consent is
sought from consumers to use their contact
information for future communication of promo-
tional information. Similarly, many of the loyalty
cards provided by restaurants and other retail
establishments in Sri Lanka often do not explicitly
seek the consumer’s consent to contact them with
promotional material. Nonetheless, most of them
do contact consumers for direct marketing. The
absence of explicit consent does not mean implicit
consent. Additionally, consumers of such food and
retail establishments also receive promotional
material from unrelated commercial establish-
ments, such as realtor, housing developers and
financial institutions. The receipt of promotional
material from third parties raises the question
whether the personal information provided by
consumers are being shared or sold to third
parties.
The compilation and sale of individuals' personal
information is termed "list brokerage". Information
sourced from list brokering is often used to contact
individuals for marketing and promotional
activities. Common sources where personal
information is gathered for list brokerage includes
business transactions and information provided in
warranty cards and loyalty cards. Often, companies
that are involved in list brokerage do not inform
individuals of their information sales activities.
In other countries, there are strict laws against
such violations in the use of contact information.
For instance, in the UK individuals need to be
informed that their personal data will be used
for marketing and given the option to opt out. In
some cases, they must opt in. Similarly,
customers should be provided with an easy way
to opt out.
As per the US Fair Communications Commission
(FCC) text messages sent to a mobile phone
using an auto-dialer is banned unless the user
has previously consented to receive the
message or the message is sent for emergency
purposes. Additionally, in the US there is a “Do
not call list” in which consumers who do not
want such messages can place their numbers,
to stop being further disturbed.
Along with direct marketing laws, most
developed countries also have data protection
laws to prohibit sharing/disclosure of contact
information. For example, the state of California
(in the US) has the SB 27 – commonly known as
the "Shine the Light Law", which allows any
Californian to make a request to almost any
business for a disclosure of how individuals'
information is used for secondary marketing
purposes. The Sri Lankan institutional
framework seems to lack such protection to
consumers. The Consumer Affairs Authority
(CAA) established under the Consumer Affair
Authority Act of 2003 focuses mainly on the
promotion of effective competition and the
protection of consumers and for the regulation
of internal trade. In essence, the CAA mainly
protects consumers in terms of price and quality
of products, and does not specify about the
rights of consumers in protecting their personal
information. As such, it is high time that Sri
Lanka gears up in this area and develops rules
and regulations to protect consumer rights in
terms of their privacy and information.
By Bilesha Weeraratne
46
TALKING ECONOMICS
During a visit to Australia in June 2015, IPS
Executive Director Dr. Saman Kelegama made a
presentation on the “Contemporary Sri Lankan
Economics and Politics” at a conference on
“Economics and Politics in South Asia: Recent
Changes, Prospects, and Challenges”. The event
was organized by the South Asia Research Network,
Centre for Global Business, Faculty of Business and
Economics, Monash University, Australia. Dr.
Kelegama also made a presentation at the two-day
Roundtable on “New Development Challenges in
Asia-Pacific: Issues and Prospects” at the 11th
Australasian Development Economics Workshop
(ADEW) organized by the Caulfield Campus, Monash
University, Australia.
NEWSJan – June 2015
IPS
Conference on South AsiaEconomics & Politics and Policy Round Table
IPS Research Economist, Kanchana Wickra-
masinghe made a presentation on “Energy
Management in Hotel Sector in Sri Lanka:
Adoption of Good Practices”, at the Interna-
tional Symposium on Energy Challenges in the
Knowledge Economy held from 26th to 27th
June in Colombo. The Symposium aimed to
provide a forum for local and invited foreign
experts in the field to discuss, debate and
share futuristic knowledge relevant to the
energy related challenges that the nation is
facing in the evolving economy. It was
inaugurated by Dr. Abdul Kalam, Former
President of India.
International Symposium on Energy Challenges in the Knowledge Economy
IPS Research Fellow, Dr. Ganga Tilakaratna,
presented a paper on ‘Financial Inclusion
in Sri Lanka: Current Status and Issues’
at a workshop on ‘Understanding Financial
Inclusion in Asia’ held in Hong Kong from
20-21 May 2015. The workshop was
organized by the Institute for Emerging
Market Studies (IEMS).
Workshop on ‘Understanding Financial Inclusion in Asia’
The 2015 edition of the Economic and Social Survey
of Asia and the Pacific (ESCAP) was launched at the
IPS Auditorium in Colombo, under the patronage of
the State Minister of Finance Mahinda Samaras-
inghe. The event held in May 2015, was organized
by the IPS together with the United Nations
Information Centre, (UNIC) Colombo.
Launch of the Economic and Social Survey of the Asia and the Pacific 2015
A seminar on South Asian Regional Economic
Cooperation was held at the IPS Premises in
March 2015, where Dr. Sanjaya Kathuria,
Lead Economist on Regional Integration at the
World Bank’s South Asia Regional Cooperation
and Integration Unit, Washington, D.C.,
conducted a presentation on “Regional
Integration in South Asia: The World Bank’s
Approach”. The event was chaired by IPS
Executive Director, Dr. Saman Kelegama.
Among those present at the discussion were
IPS Deputy Director Dr. Dushni Weerakoon,
Department of Commerce, Director General,
Mr. R.D.S. Kumararatne, IPS research staff
and lecturers and students from University of
Colombo.
Seminar on South Asian Regional Economic Cooperation
47
Asia-Pacific High-Level Consultation on Financing for Development
IPS Executive Director, Dr. Saman
Kelegama was a speaker at the session on
“Regional Development Cooperation and
Partnerships” at the Asia-Pacific High-Level
Consultation on Financing for Development
organized by the UN-ESCAP, ADB, ADBI and
the Government of Indonesia. The event,
which took place in Jakarta, Indonesia in
April 2015, provided an opportunity for
member and associate members of the
United Nations Economic and Social
Commission for Asia and the Pacific
(ESCAP) and other stakeholders such as
private sector, academia and civil society
organizations to both re-evaluate the role of
traditional sources of finance and explore
innovative instruments and tools to fund
investments in the economic, social and
environmental dimensions of sustainable
development.
A Workshop on “Post-Bali Issues and Prepara-
tion for the 10th WTO Ministerial Conference: A
South Asia Perspective”, organized by the
Commonwealth Secretariat, Consumer Unity &
Trust Society (CUTS) International and the IPS
was held in Colombo in May 2015. Many issues
relating to South Asia and developing and least
developed countries (LDCs) in the run-up to the
10thWTO Ministerial Conference, scheduled to
take place in December 2015 in Nairobi, Kenya,
were discussed in detail to agree on a common
agenda.
Workshop on “Post-Bali Issues and Preparation for the 10th WTO Ministerial Conference: A South Asia Perspective”
NEWSJan – June 2015
IPS
National Consultation on Women Owned and Led Micro, Small and Medium Enterprises
IPS held a national consultation meeting on
’Products with Regional Trade Potential and
Associated Non-tariff Barriers, with special
focus on WMSMEs. This consultation was held
as part of a Sri Lanka study carried out for a
South Asian regional project, initiated by the
United Nations Development Programme Asia
Pacific Regional Centre (UNDP-APRC) with
funding from AusAid.
The Indian External Affairs Ministry Junior
Diplomats visited the IPS in March 2015 to
obtain a Sri Lankan perspective of the India –
Sri Lanka Economic Relations. The delegation
was coordinated by Kartik Pande, First
Secretary – Economic & Commercial Wing,
High Commission of India Colombo. IPS
Executive Director, Dr. Saman Kelegama,
provided a briefing on the topic which was
followed by a lively question and answer
session.
Sharing Perspectives with Indian Diplomats on ‘India – Sri Lanka Economic Relations’
An International Conference on “India and the
India Ocean: Renewing the Maritime Trade and
Civilizational Linkages,” was held in
Bhubaneswar, Odisha in March 2015. The
three-day event was jointly organized by the
Research and Information System for the
Developing Counties (RIS), New Delhi and the
Institute of Social and Cultural Studies (ISCS),
Kolkata. IPS Executive Director, Dr. Saman
Kelegama addressed the plenary session themed
‘Regional Economic Cooperation in Trade and
Investment in IORA’, and chaired a session
themed ‘Business to Business Interactions in the
IORA’. IPS Research Officer Raveen Ekanayake
was a panellist at a parallel session titled
‘Sectoral Cooperation in the IORA’.
International Conference on India & the Indian Ocean: Renewing the Maritime Trade and Civilizational Linkages
World Consumer Rights Day Forum 2015
The IPS, together with the Consumer Affair
Authority of Sri Lanka and Consumer
International, organized a forum in Colombo in
March 2015, to mark the Wold Consumer
Rights Day 2015 under the theme “Healthy
Diets”. Delivering the welcome speech IPS
Executive Director Dr. Saman Kelegama
stressed that “communication and information
go hand in hand when it comes to building a
successful consumer policy”. He added that
the “citizens must be aware of their rights.”
Minister of Industry and Commerce Hon.
Rishard Bathiudeen was the chief guest at the
event.
48
TALKING ECONOMICS
International Conference on ‘South Asian Economic Development: The Way Forward’
IPS Research Fellows, Dr. Ganga Tilakaratna
and Dr. Bilesha Weeraratne, were speakers at
the international conference on ‘South Asian
Economic Development: The Way Forward ’
organized by the Faculty of Economics at the
South Asian University, held in New Delhi, India
in April 2015. Dr Ganga Tilakaratna presented
a paper titled ‘Social Protection and Labour
Market Outcomes: Evidence from Sri Lanka’
while Dr Bilesha Weeraratne presented a paper
titled ‘Female Domestic Workers in the Middle
East: Does Recruitment through an Agent
Minimize Vulnerability?’.
IPS Executive Director Dr. Saman Kelegama,
and Deputy Director Dr. Dushni Weerakoon,
participated at the Think Tank Initiative (TTI)
Exchange 2015 on the theme “Research
Quality: Approaches, Outreach, and Impact”
held in Istanbul, in February 2015. The TTI
Exchange 2015 brought together 43 think tank
grantees from East Africa, West Africa, Latin
America and South Asia under the TTI
Initiative, managed by Canada’s International
Development Research Centre (IDRC).
Think Tank InitiativeExchange 2015
IPS conducted a Stakeholder Consultation
Meeting to discuss preliminary findings of a
study carried out together with South Asia
Watch on Trade, Economics and Environment
(SAWTEE) on ‘Trade and Transport Facilitation
in Sri Lanka’. The study was a part of a
Regional Study in South Asia, involving various
stakeholders in the trading process. Its aim
was to assess the current status of trade
facilitation measures in Sri Lanka and identify
obstacles in the movement of routine
consignments, particularly to South Asia.
Stakeholder Consultation Meeting on Trade and Transport Facilitation in Sri Lanka
The 20th Annual General Meeting of the
National Chamber of Exporters of Sri Lanka
(NCESL) was held in Colombo in January
2015. IPS Executive Director Dr. Saman
Kelegama was the Guest of Honour at the
event and delivered the keynote address titled
“Towards the 2020 Vision of US$ 20 bn
Exports and Beyond - Pressing Concerns and
Emerging Opportunities”. More than 150
members of the NCESL and other invitees
participated in the event which was graced by
the Deputy Minister of Policy Planning and
Economic Affairs, Dr. Harsha De Silva.
20th Annual General Meeting of National Chamber of Exporters of Sri Lanka
The Sinhala and Tamil translations of the book
titled ‘Money, Inflation and Output’ by Dr. H N
Thenuwara was launched at the IPS audito-
rium in January 2015. Delivering the welcome
speech, IPS Executive Director, Dr. Saman
Kelegama stressed the importance and the
need for more economic literature in Sinhala
and Tamil, in order to enrich the debate on
economic issues in Sri Lanka. Deputy Minister
of Policy Planning and Economic Development,
Dr. Harsha De Silva was the Chief Guest at the
event.
‘Money, Inflation, and Output’ – Book Launch
IPS Research Officer, Suwendrani Jayaratne,
participated at the ‘UNNExT Workshop on
Paperless Trade Facilitation for Small and
Medium-sized Enterprises’, held in Bangkok,
Thailand in February 2015. Organized by the
United Nations Economic and Social Commis-
sion for Asia (ESCAP) together with the
International Trade Centre (ITC) and the World
Bank, the two-day workshop aimed at building
the capacity of countries in the region to better
understand, identify and address trade
facilitation and paperless trade measures that
have a proportionally larger impact for SMEs.
UNNExT Workshop on Paperless Trade Facilitation for SMEs
Dialogue on Cooperation between China and Sri Lanka under the framework of 21st Century Maritime Silk Road
A Dialogue was held on China’s efforts to
revive the Maritime Silk Road (MSR), which
is expected to enhance connectivity and
promote mutual development among the
countries from the Far East to the Indian
Ocean to Africa. A six member Chinese
Delegation headed by H.E. Zha Peixin,
Member of the Foreign Policy Advisory
Group of the Ministry of Foreign Affairs of
China and the Former Ambassador to the
U.K. and Canada participated in the
Dialogue. From IPS, Dr. Saman Kelegama,
Executive Director, Dr. Dushni Weerakoon,
Deputy Director, and Dr. Janaka Wijayasiri,
Research Fellow participated in the
discussion. They were joined by former
Ambassadors N.Rodrigo and K. Godage, and
Suranga Algewatte, Assistant Director/ East
Asia and Pacific Division Ministry of Foreign
Affairs.
NEWSJan – June 2015
IPS
49
The study assesses the implementa-
tion of the guidelines in school
canteen introduced over seven years
By Manuj C Weerasinghe, Samanthi Bandara, and Munsif Sanoon
For more details on IPS Publications contact Amesh Thennakooon, Publication Officer, amesh@ips.lk or 0112143107
Sri Lanka’s fiscal constraints, the demographics of a contracting labour force,
and skill deficiencies suggest that a rise in infrastructure investment will spur
growth only temporarily. Sustaining higher growth in the long run must come
via a competitive export sector through improvements in productivity, notably
due to innovation and to investments in human capital.
Overhauling Sri Lanka’s tax system, tackling loss making state-owned-
enterprises (SOEs), improving labour market efficiency, filling skill gaps in the
work force, improving productivity of agriculture, delivering a better safety net
to the poor and vulnerable to name a few, are amongst a raft of reforms that
need attention. Such reforms are politically difficult to deliver through the
legislative phase, and are often even more difficult to implement. Reforms
generate distributional impacts that create ‘losers’ and ‘winners’, entailing
short term adjustment costs and the potential for long term benefits. Thus,
while reforms need to be ambitious in scope, it is typically the case that
ambition may have to be tempered by political economy realities.
An agenda setting for reforms must begin with attempts to strengthen
interactions between institutions, policy processes, and policy outcomes. The
environment in which many of these sorts of transitions take place is strongly
influenced by broader factors such as the quality of institutions and
IPS’s flagship publication ‘Sri Lanka: State of Economy Report 2015’
will be launched in October 2015.
To find out more details about our previous State of the Economy Reports visit
http://www.ips.lk/index.php/resources/state-of-the-economy-report
governance in a country. As such, this year’s Sri Lanka: State of the
Economy 2015 report is built around the theme of “Economic Reforms in Sri Lanka: Political Economy and Institutional Challenges”. The
report examines in some detail the many inter-related reforms that touch
on important economic policy areas – trade and investment, labour
market, foreign employment, education, health, social protection,
agriculture and the environment. Given the array of issues, the report
argues for coherence and prioritization in the design of reforms on several
fronts, so that they add up to a plausible overall economic strategy that will
help Sri Lanka to achieve sustained high growth in the long run.
50
TALKING ECONOMICS
An Assessment of the Implementation of Guidelines in School Canteens: A Case Study from the Western Province of Sri Lanka
ago; and identifies barriers that hinder its effective implantation. The
assessment was carried out in two districts, and finds that all the
canteens are experiencing difficulties in adhering to the stipulated
guidelines. The study identifies; external food outlets, lack of support
from parents, absence of alternative healthy food items, lack of
resources in schools, inappropriateness of the present system in
selecting canteen operators and the prevailing trade and fiscal
policies in the country as negatively affecting the implementation of
canteen guidelines.
The publication puts forward a new
way of looking at the access to
finance challenge for SMEs.
By Anushka Wijesinha and Nipuni Perera Working Paper Series No. 20
This ‘Twin-Pillar Approach to Access to Finance’ argues that
improving access to finance for SMEs is a case of improving
‘availability’ on the one hand and improving ‘bankability’ on the
other. The publication largely focuses on the second pillar –
‘bankability’. This stems from the understanding that a flush of SME
credit alone is not enough. ‘Bankability’ is about improving banks’
approach to SME lending as well as improving SMEs’ ability to
approach banks.
Banking on SME Growth: Concepts, Challenges and Policy Options to Improve Access to Finance in Sri Lanka
Aren’t public holidays great? For most of us, it
means a lovely long weekend or a break in the
middle of the week to spend a bit more time with
family and friends, doing things we enjoy without
eating into our annual leave. Today (Wednesday, July
1st 2015) is our 16th public holiday for the year and
there are two more due in the middle and at the end
of July. So many holidays and most of them close
together can have a knock-on effect on productivity
and output of the country’s economy. This raises the
question: do we holiday too much and not work
enough in Sri Lanka?
Source: Estimated from DCS, Quarterly GDP Data.
By Janaka Wijayasiri
Too Much Time Holidaying, Not Enough Time Working?
Countries with the Most Public Holidays in the WorldA ccording to data from Mercer’s Worldwide Benefit and
Employment Guidelines, India and Columbia top off as the
countries with the highest number of holidays (18). The report
provides an overview of mandatory and private benefit
practices, statutory regulations and employment conditions
across 64 major economies.
In the Asia-Pacific region, Thailand and South Korea offer 16
public holidays followed by Japan (15), Indonesia, Malaysia
and Philippines (14). Pakistan (13) is followed by Hong Kong
and Taiwan (12). Vietnam (10) has the lowest number of public
holidays in the region below China and Singapore (11).
Australia and New Zealand both lag behind with just 9 and 11
national holidays, respectively.
In Europe, Finland offers the most number of public holidays (15), followed by Spain
(14) whereas Hungary, UK and the Netherlands, are not so holiday minded with only
eight. Austria has 12 days public holidays while Sweden, Italy, France and Denmark
all provide employees with 11 public holidays. Belgium, Luxembourg, Norway and
Portugal all have 10. Germany typically celebrates 9 public holidays but this varies
between states, as in India.
In North America, Canada provides the greatest number of public holidays (11), and
the United States government provides 10 federal public holidays although private
employers are not obligated to allow their employees to take these days off.
Latin America is home to the highest and lowest public holidays. Colombia has the
most generous number of public holidays (18) while Mexico has the lowest in the
world (7).
Source: Mercer’s 2013 Worldwide Benefit and Employment Guidelines
Public Holidays Around the World20
10
Colombia India Lebanon South Korea Thailand
Days0
TOP 5
CLOSE
Mexico providesthe least generousnumber of publicholidays (7)
Workers in Indiaand Colombiaenjoy the greatestnumber of publicholidays (18)
Employees in the UK,Hungary andNetherlands receivethe second lowestpuplic holidayallowance (8)
18 1816 16 16
51
Mercer's study was based on a survey of 64 "major econo-
mies". Not all countries including Sri Lanka are represented in
the survey. If one calculates the number of public holidays Sri
Lankans were entitled to in 2013 – the year of the Mercer
survey – Sri Lanka appears to be ahead of India or Columbia
with 25 public holidays, of which 17 fell on a week day. This
number does not include the one-off holidays, which are
announced on an ad-hoc basis in a year. In 2015, we have
altogether 26 public holidays celebrating various
religious/cultural events, with at least 1 day off in a month
while the average number of public holidays in a month is 2
days (rounded off to the nearest decimal). Given that there are
260 weekdays, and 20 of the 26 public holidays fall in the
weekday in 2015, 7% of the weekdays are taken as time off
by many workers, putting downward pressure on productivity
and GDP. Comparatively speaking, Sri Lanka appears to have
too many public holidays; much more than several other
emerging and developed countries with stronger economies.
This calls into question the economic implications of public
holidays in the country and the need to strike a better balance
between the needs of workers and businesses.
Public Holidays in Sri Lanka
Assessing the cost of a public holiday on the economy is
tricky; there is no easy relationship between having a holiday
and the rate of GDP. A report by the Centre for Economics and
Business Research (CEBR) suggested that each holiday costs
the UK economy £2.3bn and scrapping the lot of them would
boost annual output by £19bn. Similarly, an impact assess-
ment of an extra break by the Department for Culture, Media
and Sport in the UK puts the "best estimate" at a £1.2bn loss
to the economy. However, the error of margin in the study was
quite substantial. In fact, it can boost the economy by as
much as £1.1bn - or record a loss of £3.6bn. While some may
see public holidays purely as a financial cost, they can boost
certain industries. Some businesses in the leisure, hospitality,
and retail sectors stand to benefit as workers spend their
holiday shopping, eating out or visiting tourist destinations.
Moreover, public holidays can have important individual,
community and cultural benefits, which are hard to measure. If
workers are overworked and stressed they produce less, they
are more likely to quit their jobs and have health issues,
whereas people may be more productive after a long weekend.
Holidays may also bring communities together and commemo
Costs and Benefits ofPublic Holidays
rate important national days; for example, the Independence Day. Thus, it is difficult
to quantify the “soft” benefit of public holidays. Overall, what can be said is that
there are likely to be winners and losers when it comes to the impact of public
holidays on businesses and the economy.
In the context of Sri Lanka, what we need to ask is: do we really need all these
public holidays, which seem too generous or decadent by regional/world standards?
Some days are due for a rethink, especially when there are too many close together
and people take annual leave to bridge over some of the holidays, which can lead to
loss of momentum and contribute to weakening of economic performance.
2015 Public and Bank Holiday Calendar Sri Lanka
52
TALKING ECONOMICS
January 04 Sunday
January 04 Sunday
January 15 Thursday
February 03 Tuesday
February 04 Wednesday
February 17 Tuesday
March 05 Thursday
April 03 Friday
April 03 Friday
April 13 Monday
April 14 Tuesday
May 01 Friday
May 03 Sunday
May 04 Monday
June 02 Tuesday
July 01 Wednesday
July 18 Saturday
July 31 Friday
August 29 Saturday
September 24 Thursday
September 27 Sunday
October 27 Tuesday
November 10 Tuesday
November 25 Wednesday
December 24 Thursday
December 24 Thursday
December 25 Friday
Duruthu Full Moon Poya Day * †
Milad-Un-Nabi (Holy Prophet’s Birthday) * †
Tamil Thai Pongal Day * †
Navam Full Moon Poya Day * †
National Day * †
Mahasivarathri Day * †
Madin Full Moon Poya Day * †
Bak Full Moon Poya Day * †
Good Friday * †
Day prior to Sinhala and Tamil New Year Day * †
Sinhala & Tamil New Year Day * †
May Day * †
Vesak Full Moon Poya Day * †
Day following Vesak Full Moon Poya Day * †
Poson Full Moon Poya Day * †
Adhi–Esala Full Moon Poya Day * †
Id-Ul-Fitr (Ramazan Festival Day) * †
Esala Full Moon Poya Day * †
Nikini Full Moon Poya Day * †
Id-Ul-Alha (Hadji Festival Day) * †
Binara Full Moon Poya Day * †
Vap Full Moon Poya Day * †
Deepavali Festival Day * †
Full Moon Poya Day * †
Unduvap Full Moon Poya Day * †
Milad–Un–Nabi (Holy Prophet’s Birthday) * †
Christmas Day * †
* Public Holidays † Bank Holidays
Important factor in Empowering Women Owned and
Led Micro, Small and Medium Enterprises in Sri
Lanka
Despite low density urban sprawl and ribbon
development along the main roads of the country’s
coastal areas, Sri Lanka is fast experiencing this
phenomenon
Cardiovascular diseases, cancer, respiratory
diseases and diabetes are collective referred by this
acronym
Having a permanent cadre of specialists consulting
in one hospital at a given time would considerably
minimize this issue.
Misallocation of property rights governing natural
resources can result in this.
Sri Lanka appears to have too many of these days;
much more than several other emerging and
developed countries with stronger economies.
International food assurance standards which is
increasingly becoming important in the tea trade.
16 07
20
19
14
12
9 10
13
15
11
8
5
3 4
1
2
6 7
18
Sri Lanka experiences marine pollution originating
from a variety of sources.
Sri Lanka still has a lot to achieve if it is to reach the
facilitation levels of this country in East Asia, which
is often cited by policy makers and the private sector
to be the country’s benchmark.
One person dies every six seconds due to use of this
substance, which accounts for one in 10 adult
deaths.
Sri Lanka has achieved the target of halving this
indicator at the national level seven years before
2015 deadline.
This has been widely recognized as a powerful tool
in allowing consumers to quickly and easily interpret
the nutritional value of packaged.
One of the weaknesses in the current social
protection programmes in Sri Lanka targeting
vulnerable segments of the population.
3
5
6
9
11
14
15
16
18
19
20
ACROSS
DOWN1
2
These ingredients play a key role in the food
processing industry, making a variety of food
available from every corner of the world.
This Authority in Sri Lanka focuses mainly on the
promotion of effective competition and the protection
of consumers and the regulation of internal trade.
The most common and formal methods in protecting
innovations and intellectual property rights in Sri
Lanka.
In May 2015 Sri Lanka issued a 10 year US$ 650
million sovereign bond to shore up the country’s
reserves as well as to ease pressure on this rate
This type of economy talks about the use of ocean
and its resources sustainably
The most commonly observed barrier for the
adoption of good environmental practices by large
hotels in Sri Lanka.
Provision of this social service is an important means
to eliminating child labour.
4
7
8
10
12
13
17
Talking Economics Puzzle
53
Answers:
Across: 1. Information, 5. Urbanization, 6. NCD, 9. Waiting, 11. Tragedy of Common, 14. Public Holidays, 15. HACCP, 16. Heavy Metal, 18. Singapore, 19. Tobacco, 20. Poverty.Down: 1. Labeling, 2. Targeting, 4. Additives, 7. Consumer Affairs, 8. Trademarks, 10. Exchange, 12. Blue, 13. Cost, 17. Education.
Sri Lanka expects a US$ 100 billion market
capitalization by 2020, according to the
Chairman of Securities and Exchange
Commission. The island had US$ 24 billion
market cap end 2014 which accounted for
36% of the GDP.
FASTFACTS
US$ 100 bn
Sri Lanka’s election commission declared
that the Opposition candidate Maithripala
Sirisena won 51.3% of the vote, securing a
victory against incumbent President
Mahinda Rajapaksa who gained 47.6%
votes, in a snap presidential election that
the latter called two years ahead of
schedule.
51.3%
Sri Lanka’s economic freedom
score is 58.6, making its
economy the 101st freest in the
2015 Index.
There are about 400,000 people in the North
Central Province with varying degrees of kidney
failure. In 2014, 13 people died of the condition
every day. The toll is expected to increase in the
coming years.
400,000Of the 1.5 million visitors
that have come to Sri
Lanka in 2014, 77%
commented that they
were ‘delighted’ with the
experience in Sri Lanka,
whilst 22% commented
that they were satisfied.
Only 0.8% said they were
dissatisfied.
$1.5mnMigrants pay a heavy price to
the Government and corrupt
agents who illegally charge
Rs. 300,000 for placement
in Hong Kong.
300,000The number of heroin
addicts in Sri Lanka is
around 78,000. It is
reported that more than
3.5 tons of Heroin is
smuggled in to Sri
Lanka annually.
78,000heroin addicts
The Indian Ocean Region contains
40% of the world's oil and gas
reserves, a third of the world's
population and plays host to key Sea
Lines of Communication.
40%
The earthquake of
7.8 M (Richter scale)
of Nepal occurred at
Lampung 77 km east
of Kathmandu on April
25, 2015.
Approximately 75% and
14% of urban and rural
population respectively
in SL are served by pipe
borne water.
75%
14%
Experts estimate that Sri Lanka would have elderly
population of about 3.6 million by 2021, which is 16.7% of
the total population and by 2041; one in every four Sri
Lankans would be elderly.
3.6mn
Sri Lanka exceeded its target of 1.5 mn
tourist arrivals in 2014 and earned 2.2
bn US dollars from tourism.
Out of over 5,000 pharmacies
established in the country only a
little over 2,500 are licensed
pharmacies. In World Happiness Report published in
2015, Sri Lanka is ranked lower than most
countries in the world (132 out of 158
countries). All Asian countries except
Cambodia and Afghanistan have done
better than Sri Lanka. 2500
132
54
TALKING ECONOMICS
A PUBLICATION BY THE INSTITUTE OF POLICY STUDIES OF SRI LANKA
SUPPORTED BY
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