13

Major Industries in Sri-Lanka:

Meaning of Industry: - Industry means a group of same group of companies. In which

companies are producing same type of products.

In Sri-Lanka there are different types of major industries are working. Those are:

Rubber Shipping

Tea Apparel & Textiles

Coconut Tourism

Tobacco Cement

Telecommunication Petroleum refining

Insurance Information Technology

Banking Construction

Tourism - Tourism is one of the main industries in Sri Lanka. Most of the tourists are attracted by

the islands famous beaches located in the southern and the eastern parts of the country and ancient

heritage sites located in the interior of the country and resorts located in the mountainous regions of

the country. Because of precious stones such as rubies and sapphires being frequently found and

mined in Ratnapura and its surrounding areas, this affect the major tourist for tourism.

The 2004 Indian Ocean Tsunami and the past civil war have reduced the tourist arrivals, from

years the ratio of tourist visitors are increase. In March 2008 the ratio is increased by 8.6%.1

Tea industry - The tea industry is one of the main industry in Sri-Lanka. Tea business is

operating under the Ministry of public estate Management and development. It became world

largest exporter in 1995 with a 23% share of global tea export, higher than the Kenya. The

central highlands of the country have a low temperature climate throughout the year and

annual rain fall and the huminidity levels that are suitable for growing tea. In present Sri-

Lanka has become one of the biggest country for exporting fair trade tea to the UK and other

countries also.

Apparel and textile industry: - Apparel Industry is exports mainly to United states and

Europe. In Europe labor cost is as compare to Sri-Lanka that’s why they are importing from

1http://en.wikipedia.org/wiki/Southern

14

Sri-Lanka. Around 900 factories of country serving Victoria’s Secret, Liz Claibone and

Tommy Hilfiger.

Rubber Industry: As the world's 6th biggest exporter and 8th largest natural rubber

producing country.

Coconut industry: - Sri-lanka was one of the leading coconut industry in the world and

exports its products in many region like European and Asian country but now a days its

market is down because of manifold reasons. Currently, there are more than one million acres

under coconut plantation and most of the lands have been underutilized throughout the

country. The reason being that an average number of trees for an acre is around 35 - 40 trees,

which is below the required level. Sri-lanka’s annual production 2.6 billion nuts and they

want to achieve target 3.5 billion with the promotion in cultivation of coconut by providing

subsidies to the North and Eastern region.

Tobacco industry: Tobacco has become a highly profitable commercial crop in Sri

Lanka.During the past decade, many incentives, such as technical advice to rural farmers,

provision of fertilizer and seeds etc., were given by CTC to promote tobacco cultivations.

CTC claims that they have generated nearly 300 000 jobs nearly 8% of the total in

Sri Lankabut official figures estimate that in there were only 8437 tobacco farmers in Sri

Lanka.Tobacco advertisements are not permitted in the electronic media, but indirect

smoking promotional scenes can be seen in telegrams on television.

Banking: The banking sector is monitored by the Bank Supervision Department of the under

the Banking Act, central bank of Sri-lanka permitted three types of financial institutions

Registered Finance Companies and Licensed Specialized Banks.

15

Shipping industry: The country’s shipping industry will continue its growth momentum as

several mega port development projects were launched during the last five years.

Government encourages growth in the shipping sector by giving them the polices and one of

the key policy initiatives introduced by the 2012 budget is to open free areas in the Colombo,

Hambantota and Trincomalee ports. This will help or boost for logistics related value added

services and could attract major FDIs. Investment in shipping industry raise to US$ 440

million in two years from 2011 while investment is expected to reach US$ 2.8 billion during

the period from 2017 to 2020.

Telecommunication industry: Sri-lanka Telecom (SLT) is a public profit seeking company

with 51% shares by providing services like Cellular mobile telephone , Paging service

,Stired& forward fax services.

Petroleum Refinery: Lanka IOC, Indian Oil’s subsidiary is the major supplier of lubricants

and greases to the three arms of the Defence of Sri Lanka. Lanka IOC is making phased to

provide world-class quality products and services to the Sri Lankan customers.23

Ratio to Private to Public Sector:

Industry No. of Private

Companies

No. of Public

Companies

Ratio to Private to

Public company

Tea 33 10 77:33

Apparel 9 5 65:35

Rubber 34 24 59:41

Telecommunication 2 4 67:33

To find out ratio to private to public sector is important to know the economy condition of

particular industry. Mainly in the Tea industry there are private players are more in number

with compare to the public. And ratio of private to public is 33:10. Means there are 77%

private players and 33% public. And in the Apparel industry the ratio is 9:5. That means

private players are 65% and public 35%. This percentage reflects that major portion of this

industry is covered by private companies. In Rubber industry private to public ratio is

2http://www.srilankabusiness.com 3http://www.srilankabusiness

16

17:12. From this we can interpret that 59% is covered by private and rest means 41% covered

by public company.In Telecommunication sector the ratio is 1:2. From these we can

conclude that in telecommunication major players are public and it is 67% and private players

are 33%. It shows that telecommunication sector is restricted for the private company with

compare to the public company.

Major Players & their operations in each Industry:

1. Tourism: Major players in tourism industry are Acme Lanka (Pvt.) Ltd,Andrews Travel

Service Ltd.,AntonJayakodi Travels (Pvt) Ltd.,Columbus Tours (Pvt) Ltd.,Globe Jeter Travel

Services, Ncar Travel and Tours Ltd. Rus - Lanka Travels &Tours,Sunway Holidays etc.

2. Tea industry: There are mainly two players who produce tea in Sri Lanka. They are 4

4Dilmah and Bogawantalawa.

Bogawantalawa: Dilmah is a family tea company founded by Merrill J. Fernando. Situated

about 150 km east of Colombo, famous for its Tea estates.t offers its products in the form of

string and tea bags, as well as in tins and wooden boxes.

3. Rubber Industry: The players of rubber industry Ansell Lanka (Pvt) Ltd, Associated

Motorways Ltd, Ceat-KelaniIntern.Tyres (Pvt) Ltd, Ceytra Ltd, Dipped Products Limited, D

Samson Industries Ltd, Elastomeric Enginering Co. Ltd, Hanwella Rubber Products Ltd,

Jafferjee Brothers Exports Ltd, Lalan Rubbers (Pvt) Ltd, Lancor Rubber Industries, Loadstar

(Pvt) Ltd, Microcells Ltd, Richard P. Exports Ltd, Samson International Ltd, Sinwa Holdings

Ltd, Textrip Ltd, Trelleborg Lanka (Pvt) Ltd etc…

4. Tobacco industry: The players of tobacco industry are Orient Lanka Limited, Agio

Tobacco Processing Co (Pvt) Ltd, Sslanka, Arvegie (Pvt) Ltd, Ceylon Tobacco Company

Ltd, Thansher And Company, Vistart (Pvt) Ltd, Wins Management Pvt Ltd etc.

5. Telecommunication industry: There are many Tele communication companies in Sri-

Lanka that Mobitel (Pvt) Ltd, SLT Visioncom (Pvt) Ltd, SLT Publications (Pvt) Ltd, SLT

Hong Kong Limited, Sri Lanka Telecom Services (SLTS), SLT Manpower.

4 http://www.bplteas.com/news.htm

17

6. Petroleum Refinary: Lanka IOC PLC,IndianOil (Mauritius) Ltd., IOC Middle East

FZEChennai Petroleum Corporation Ltd., (CPCL)IndianOil - CREDA Biofuels Limited. etc

are the petroleum refinery in Sri-Lanka.

7. Banking Industry: There are many players in banking industry.

Savings Banks - National Saving Bank, MBSL saving Bank Sri-Lanka Saving Bank,

Merchant Bank

Local Banks: - People’s Bank, Commercial Bank of Ceylon, Hatton National Bank,

Sampath BankNDb Bank, National Trust Bank Pan Asia Bank

Foreign Banks- HSBC, Standard Chartered Bank, Citibank, IOB, MCB, ICICI Bank

Commercial Banks

Savings Banks -National Savings Bank, MBSL Savings Bank, Sri Lanka Saving Bank

Merchant Banks -Sterling Merchant Investment, Merchant Bank of Sri Lanka, Seylan

Merchant Bank People's Merchant Bank.

8. Apparal Industry: There are many companies working under apparel industry those are

MAS Holdings, Jay Jay Mills Lanka (Pvt) Ltd, Brandix Lanka Limited , Hayleys PLC, ,

Hirdarmani Group, Jinadasa Holdings, , BAM , Shiran Garments,Sumithra Garments (Pvt)

Ltd etc.

Penetration in Rural & Urban Area:

There are approximately 16,405 manufacturing enterprises in urban area and 6,20,000

manufacturing enterprises in rural areas. Under Rural enterprises, it gives employment to 1.5

million workers i.e. 20% of labor force of country. However the data does not consider

informal firms operating in urban area but considers both formal and informal firms working

in rural areas. Thus, contrary to the opinion 59% of the businesses in case of rural area have a

place to carry out the businesses other than their home.

Incase of urban area 50% of the manufacturing activities are from textiles, Ready-made

garments, Food and Beverages, Industrial equipment and Rubber. Urban manufacturing firms

18

are export oriented where 93.5% of the firms are exporting 10% of sales in case of garment

industry, 75.4% incase of Rubber, 62.2% incase of food and beverages. More of the

Manufacturing activity is carried out in Colombo Metropolitan area, even though the

geographic distribution varies in different sector. Though Garment and industrial equipment

firms are limited to Colombo area, threequarters of food and beverages are carried outside

Colombo, so that they can be closer to supplier. However textile enterprises are found in both

colombo and in other urban centers.

Many of the Rural nonfarm enterprises are involved in either production with 41% , trading

with 38% and minimum share in service with 21%. Moreover approx. 10% of them are into

manufacturing and sale of processed agricultural goods. Non agricultural production includes

garments, nonmetallic mineral products, furniture and wood products. Many of the rural

trading establishments are involved in selling processed i.e. 65% and unprocessed

agricultural products i.e. 57%. However in case of service industry largest share is in reparing

service with 24% followed by personal service 17% and hotels with 14%.

However Nonfarm enterprises of rural area are found throughout the country. The highest

concentration is found in Western Province with more than 20%, and then in North Eastern

and South Eastern Province. Urban manufacturing enterprises employ roughly a median of

105 workers including 15 temporary workers. However 2.4 workers on average covering

family members are employed by rural enterprises. Half of the family members of rural

nonfarm enterprises employed the highest in trading enterprises with 60% and smallest in

production with 42%. With an average of three workers, production enterprises is considered

to be larger. As per survey there are 181 workers in the largest rural enterprise. There are

more than 5 workers in 6% of rural enterprises. Amongst different sectors the participation of

women is highest in textile sector. Almost a quarter of all enterprises are runned by women in

rural non farm sector.

In terms of employment growth in urban area, export oriented firms are the most dynamic

one. However under rural area small firms that have employees less than five are most stable

compared to larger firms that are shrinking or growing with market demand or fluctuations in

seasons. Thus since 90% of rural enterprises are not making any change in the number of

employees, there is little flux in employment in rural enterprises.

Compared to rural enterprises, urban enterprises are more older and stable because the

average age of urban manufacturing firms are 30 years whereas rural enterprises are upto 9

19

years or a bit more than that. Rubber, food and beverage sector are the oldest while garment

sector are the youngest, among various urban enterprises. Trading enterprises are expected to

be younger in rural areas since the start up capital requirement is less. Moreover more than

85% of rural enterprises have conducted their operation in same location, Majority of them

have stayed in the gramaniladharii.e. a community.

Compared to rural firms, urban firms are more capital intensive and productive. Under urban

manufacturing the per worker value added annually is almost 8 times than in ruarl

manufacturing. The labor costs is low in rural enterprises productivity is low and short lived

among nonfarm rural enterprises to earn agriculture income and supplement the family.

Industrial equipment and Rubber products are considered to be the most productive in urban

sector. Since textile and garment industries are labor intensive they lag far behind. Rural

firms productivity differs according to regions and sectors.Wesern and central province are

more productive, compared to North Eastern province. Service firms have the highest

productivity among various rural enterprises.

Inspite of difference in productivity in urban and rural areas, contribution of rural nonfarm

enterprises is significant to GDP. Rural enterprises to be registered and pay taxes are larger

and are there in stand alone establishment. Compared to production enterprises, trade and

service enterprises are more likely to be registered, because it operates as stand alone

business. Most of the firms has not registered because the process was expensive, time

consuming, or it was in order to avoid high tax. Further the cost of registering a business in

srilanka has been declining. The links between rural nonfarms enterprises and urban firms are

weak. From survey it was found that rural enterprises sell their products to multinationals,

parent companies or larger urban firms. Larger rural nonfarm enterprises having larger

production and trading are likely to have links with larger firms

Both urban manufacturing and the rural nonfarm sector are linked with each other for

agriculture. Export of processing of tea and coconut are big earners for srilanka. The rubber

industry was also prominent, but with the fall in world rubber prices, its value has been

declined. There is backward and forward links for production, agriculture provides inputs and

thereby demands chemicals and equipment produced by industry. Agriculture, urban

manufacturing and rural nonfarm activities are related with each other through labor and

capital markets and sales in all three rural nonfarm sectors increase during april and decrease

20

when house old income reduces when there is low agicultural labor required i.e. in the middle

of the slack season.

Distribution channel of different Industries:

1. Tea:

Sri-lanka has a largest business of a tea. They uses different type of distribution. They also

doing international business.

For tea sri-lanka generally uses one level and two level distribution channel.

This two types of distribution channel used by tea industry.

Dilmah is the largest tea business of Sri-Lanka. It has been entered into distribution tie up

with Dabur Foods. Dilmah target to make 15000 retail outlets this year.

Company Wholesaler Retailer

Company Wholesaler Retailer Customer

21

Rubber

Company

Customer

( company)

2. Rubber:

Rubeer industry is one of the largest distributors in the country for Hardware, Fishing Gear

Outlets, and Furniture Outlets, covering over 6,000 dealers. Products include plastic water

tanks, PVC pipes fittings, rubber & plastic hoses, rubber mats, cushions, furniture, agri

pumps, CFL bulbs.

They use zero level distribution channel.

The company further secured the largest tyre distribution network with 1300 dealers who

have spread throughout Sri Lanka. Recently the company introduced the “Altima Battery

“range to the market.

22

Company Agent Customer

Company Customer

3. Tourism Industry:

Tourism industry is service based industry. They directly services provided to the customers.

They also have a agents in different countries.

They use zero level and one level distribution channel.

23

Company Agent Customer Wholesaler Retailer Customer

4. Apparel Industry:

Apparel industry uses three level distribution channels. They have a agent. Agent is generally

who arrange executions.

24

Overview of Different

Economic Sector

25

Contribution to GDP

· The Gross Domestic Product (GDP) in Sri Lanka has expanded recently it has reached to

6.4 percent in the second quarter of year 2012 as compared to the same quarter of the

previous year.

· The annual growth rate in Gross Domestic Product comprises of the increase in value of

the goods and services that are produced by an economy during the period of a one year.

The following data are available for the last four years contribution of GDP in different

sectors:

Year Agriculture Service Industry

2008 32.7% 41.0% 26.3%

2009 12.8% 58.0% 29.2%

2010 12.0% 59.3% 28.6%

2011 13.0% 57.4% 29.6%

From the above table of contribution of different sector in GDP of Sri Lanka conclusion is

arrived which are listed below:

In all the year listed above it can be easily said that the contribution of service sector are more

compare to other sector of Agriculture and Industry. In the year 2008 it was 32.7%, in 2009

58%, in 2010 59.3% while in 2011 it was 57.4% so the growing and development of service

sector are good compare to other sector.

Sources

http://www.gfmag.com/gdp-data-country-reports/174-sri-lanka-gdp-country-

report.html#ixzz287PFotrkAttributionShareAlike

http://www.gfmag.com/subscribe.html

26

Growth Rate

Sri Lanka Central Bank’s expects that Sri Lanka’s GDP is likely to grow with the record

growth rate of 7.2 per cent in 2012, as compared to the earlier estimation of 8 per cent.

Besides this, recent policy measures expects in leading to a moderate aggregate demand

which will have a dampening effect on prices, thereby offsetting to some extent, and the

supply side pressures on prices as a result of the recent upward adjustments to administered

prices.

In the Monetary Policy Review released that Central Bank of Sri Lanka said its Repurchase

rate and the Reverse Repurchase rate would remain at 7.50 percent and 9.00 percent

respectively.

The central Bank has lowered the estimation for 2012 to 7.2 percent from an earlier

projection of 8 percent growth rate. The policy measures that are implemented by both the

government as well as by the Central Bank will impact the constant growth of the economy,

because of the higher energy costs, declining credit flows, and lower import.

The imports have increased considerably during the last year because of the expansion in the

domestic investment. However, the continuous performance of domestic supply has lowered

the adverse impact of rising commodity prices in the international markets which has helped

to keep the inflation rate constant over the past three years.

The Central Bank hopes that the new measures which are taken by the government will

encourage the industries as well as to the public for finding new avenues to reduce energy

consumption and reduce the expenditure on fuel imports to certain level.

27

Favorable & Unfavorable Factors

Agriculture Sector

Favorable factors

· In Sri Lanka Agriculture mainly depends on rice production. So for that they

improved agriculture technology.

· For the Improvement Sri Lanka Govt. Introduce Department of Agriculture Sri Lanka

(DOASL).

· The Functions of the departments are research, extension or expansion, production of

seed and planting material, regulatory services, conservation of soil, registration of

pesticides and plant quarantine.

· There are certain Agriculture Parks stated as A. Parks which are established by the

department for improving the production.

· From the very beginning Sri Lanka has been an active partner in international or

global trade. So they are able to make international trade and from that they are able

to create wealth.

Unfavorable Factors

· Weaknesses in strategy and policy for the improvement of agriculture sector.

· Interventions in Heavy public sector regulatory in commodity.

· Weakness in the delivery of services in rural areas.

· Negative impact of civil conflict and tsunami.

Service Sector

Favorable factors

· Sri Lanka increasingly becomes a service oriented economy that’s why they

aggressively develop them by investing huge amount of investment.

· Due to see area, Tourism services are very good in Sri Lanka.

· From the past few years the measure portion almost 60% of GDP is covered by

service sector only.

28

· The Commonwealth Secretariat is providing technical assistance to the Government

of Sri Lanka to help the country build up its capacity in the services sector.

· They have also identified the potential competitive export capability in Sri Lanka for

service sector.

· Sri Lanka’s IT industry has shown constant progress in the past decade this has led

the IT sector in becoming a vibrant sector in the country.

Unfavorable Factors

· Every factor which relates the service sector, all are positive or we can say all are

favourable for the country.

Industry (Manufacturing) Sector

Favorable factors

· The government's industrial policy includes encouraging investment in the industries

where srilanka is having advantage.

· The Board of Investment (BOI) of srilanka is offering various incentives for

investment in five industry segments that comprises of, industrial and machinery

tools, rubber-based industries, light and heavy engineering sector, ceramics and

glassware, and electronics and components for electronic assembling.

· This will increase the efficiency level of industrial sector in Sri Lanka.

· Another key policy element or we can say favorable element is deregulation, in the

year 2001 a committee on deregulation was formed to study regulatory obstructions to

Sri Lanka's industrial development.

· A positive development was the restoration of a reliable power supply in May the year

2002 with the end of drought.

29

Unfavorable Factors

· Government of Sri Lanka make import liberalization policy; because of that policy the

small scale industries are affected.

· It increases unsatisfied level of small sectors industries.

· Liberalizations policy has removed the regulatory barriers. So that in Sri Lanka the

large scale industry have not much barriers but for small industries are affected.

Strongest and Weakest Segments

The industry sector plays prominent role for Srilankan economy. In the year 2007, industry

sector has contributed Rs. 635,199 Million that is 28.5% of the total production of the country

(GDP), while agriculture sector contributed 11.9% and service sector contributed 59.6%

respectively to the total production of the country.

According to the data of 2011 the estimated gross domestic product of Srilanka would be

about $ 115.1 billion. Out of the total production agriculture sector comprises about 13% of

the GDP while service sector contributed 57.4% of the total GDP of the country and industry

sector contributed 29.6% of the total gross domestic product of the country. As far as

agriculture sector is concerned products such as, vegetables, fruit, tea, rubber, coconuts, rice,

sugarcane, grains, pulses, oilseed, spices milk, eggs, fish etc. are included while industry

sector constitute of processing of rubber, tea, banking, tourism, shipping, clothing, textiles,

cement, petroleum refining, information technology services, construction coconuts, tobacco

and other agricultural commodities, telecommunications, insurance, etc.

Considering the data given we can say that the service sector plays an important role in the Sri

Lankan economy so it can be considered as the strongest segment of the economy besides this

agriculture sector is the least contributing sector in the total gross domestic product of srilanka

because of the constantly reducing share of its contribution.

Sources

http://www.theodora.com/wfbcurrent/sri_lanka/sri_lanka_economy.html

30

Contrast and Comparisons

From the above given information it can be analyzed that the strongest segment of srilanka is

SERVICE SECTOR. This sector contributes almost 60% of GDP in past few years. They

have identified various competitive potential capabilities to strengthen the economy. The

weakest segment of srilanka is AGRICULTURE SECTOR. In past three years this sector has

contributed only 12% in the GDP of srilanka. There are so many regulations which are the

main barriers for this sector. There is no proper strategy formulation and execution for the

improvement of this sector. Due to weak delivery services and possible tsunami destructions

this sector becomes the weakest segment.

31

Overview of business & trade at

international level

32

Prohibition Imports and exports

(1) There are many strict laws for the import and export in the Sri Lanka. And according to

the provision and of the sub section are strictly been followed in the constitution and no

person is allowed to import or export except the authorized good and if the prohibited goods

are to be imported licence is issued by the government and then only they are allowed to

import or export the goods and government is strict to the rules of the controller

(2) Importation or exportation from the country is not at all possible without the licence and

if the licence is been there with the person than it will be allowed act

shallbedeemednottobeacontravention of the provisions of subsection, ifsuch importation

orexportationwas authorizedbylicenceissuedanderanylawforthetimein force.

(3) Only Sri Lankan government is authorized and responsible for the changes in the law and

no other authority is able to challenge the authority and is only way to do import or export in

Sri Lanka.

Prohibition of export of goods to a defaulter defined in the defaulter’s list:

Once any person name is has been listed in the list of defaulters he is not been allowed to

export from Sri Lanka.

Prohibition of export to be defaulters to be condition of the licence:

Any person is not allowed to export the goods to the person who is been listed in the

defaulter list and it is been prohibited by the law.

Prohibition or regulation of certain imports and exports:

a) Import from the specific countries listed in the law is not been allowed.

b) Only government can import goods from this country which is been registered in the

list of the government other than that no person or the corporate person or company

is allowed to do so. And if it has been done than it may be registered in the law.

33

Imports Procedure

Sri Lanka had been firstly an agricultural and self-dependent in the ancient past. Due to past,

political and economic changes it has ceased to be a self-dependent nation. Recently it is

mainly dependent on trade. Imports Division of Sri Lanka Customs Department plays a

unique role in this regard in the economy.

Imports division consists of 3 separate units 1. Long Room 2. "D" branch 3. Postal

Appraising unit according to the functions.

Import tariff- Sri Lanka

In Srilanka import tariffs are on the cost, insurance and freight value. Some items like

footwear are per unit duty if the resulting rate is greater than the ad valorem

rate. Imported inputs for the export industries are not for the import duty, for example all

imports of textile, yarn, and capital goods required in srilanka for the garment export

industry are release import duty.

Tariffs for Textiles, Apparel, Footwear and Travel Goods

Chapter Traffic Range rate in %

Yarn

Wool 5105-5110ch 0

Cotton 5204-5207ch 0

Silk 5003-5006ch 0

Man-made fiber 5401-5406ch 0

Other vegetable fiber 5306-5308ch 0

Woven Fabric

wool 5111-5113ch 0

Silk 5007ch 0

cotton 5208-5212ch 0

Man-mad fiber 5407-5408ch 0-15

Other vegetable fiber 5309-5311ch 0

34

Non-woven fabrics 5603ch 0

Industry Fabric 59ch 0-15

Apparel fabrics 61-62ch 0-15

Home Furnishings 63ch 15-30

carpet 57ch 15

Footwear 64ch 0-30

Travel Goods 4202ch 30

Additional srilanka Import Taxes and Fees--

· Value added tax (VAT) of 12 % import price plus profit margin of 10 %. A VAT

of 20 % is charged on luxury goods in srilanka.

· Export Development Board (EDB) Levy, ranging from 1 to 35 % is applied

customs values consider in rupees plus a 10% margins put on a range of imports

find as nonessential, like shoes, bags, textile products. Apparel is subject to a levy

of 30% or Rs 75per unit whichever levy is more. A charge of 50 Rs. per kilogram

is assessed imported textiles not use in apparel export industry.

· Ports and Airports Development Levy (PAL) of 5% is applied on all dutiable

imports. Manufactured products are not subject to Ports and Airports

Development Levy.

· Nation Building Levy of 2 % in Srilanka.

35

Export Procedure

To facilitate the Customs Export Process has been a great extent in past. Rules and

regulations are relaxed; schemes are implemented with collaboration with other state

agencies as a part of state endeavor for development of Sri Lanka as a country with an export

oriented economy. Sri Lanka Customs pays a good saw in all export related things to safe

Srilanka wealth such as archeological treasure, fauna and flora by implementing related laws.

Export Subsidies

95% of the world’s costumer live outside the United State – by 2030, so many people

considered as a middle class people will triple to 1.2 billion. Global economy also growing to

$72 trillion. Exporting is to reach the international market and these consumers to:

It grow your bottom line

It level your business cycle

It use production capabilities fully

It strengthen your domestic market

It increase competitiveness across all markets

By entering into the new markets, opportunity to learn how to compete successfully, in

making money. In srilanka, 60% of small scale companies that engage in exporting.

Challenging exporting provides firms with new opportunities for growth.

36

Sri Lanka - Foreign Direct Investment

Foreign direct investment, net outflows (% of GDP)

Sri Lanka Foreign investment, net outflows (GDP in %) was 0.08 in 2010. Its highest value

over the past 20 years and it was 0.15 in 2007; however its lowest value was 0.01 in 1986.

Definition: FDI is net inflows investment to acquire the last management interest (10%) in

the enterprise operating as in an economy other than the investors. These are the sum of the

equity capital, short-term funds, reinvested of earnings and other long-term capital shown in

the balance of payments. Here series show that net outflows of investments from reporting

economy for the rest of world and as divided by GDP.

Source: International monetary fund, Global development finance, World Bank, International

financial statistics and balance of payment database, OECD GDP estimates.

Year

199

1

199

2

199

3

199

4

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

Valu

e 0.05 0.02 0.07 0.07 0.07 0.14 0.03 0.15 0.1 0.16 0.14 0.04 0.08

Foreign direct investment, net (current US$)

The recent value of foreign direct investments (current US$) in Srilanka was $

435,510,000.00 as in 2010. Over the past years, the value has fluctuated between $

690,489,000.00 in 2008 and $ 1,217,566.00 in 1977.

Here table shows total net FDI in reporting economies from foreign sourced less than net FDI

bye the economy to rest of the world. Data are in U.S. dollars.

year

200

0

200

1 2002 2003 2004 2005 2006 2007 2008 2009 2010

Value(cr

) 1.72 1.71

18.5

0

20.1

4

22.7

0

23.4

0

45.0

4

54.8

0

69.0

4

38.4

0

43.5

5

Source: Balance of Payment statistics year book, data files and International Monetary funds.

37

Foreign direct investment, net inflows (current US$)

The recent value of foreign direct investment is net inflows (current US$) in Sri Lanka was $

478,211,000.00 as in 2010. The past years, the value has been fluctuated between $

752,100.000.00 in 2008 & $ 1,217,566.00 in 1977.

Definition: FDI is net inflows of investment that acquire last interest in or management

control over the enterprise operating in an economy other than the investor. It is the sum of

reinvestment earnings, equity capital, other long-term funds, and short-term funds, as shows

in the balance of payment. Data are in U.S. dollars.

Source: balance of payments database, Supplement of data from United Nations Conference

on trade & development, International Monetary fund and official national sources.

year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Value(cr.

)

17.2

9

17.1

7

19.6

5

22.8

7

23.2

8

27.2

4

47.9

7

60.3

0

75.2

1

40.4

0

47.8

2

Foreign direct investment, net inflows (GDP in %)

Foreign direct investment, net inflows (GDP in %) in Sri Lanka was 0.97 in 2010. Its higher

value of over past years was 2.85 in 1997, however its lower value was –0.03 in 1977

Definition: FDI are the net inflows of investments to acquire a lasting management interest in

the enterprise operating as in an economy other than the investor. It is the sum of

reinvestment of earnings equity fund, long-term as well as short- term fund as shown in the

balance of payment.

Source: World Bank, Global development finance, International financial statistics and

balance payment database, International Monetary fund and OECD GDP estimates.

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Value 1.09 1.14 1.20 1.13 1.11 1.69 1.85 1.85 0.96 0.97

38

Telecommunication Systems

Sri Lanka telecom is one of valuable business of country which has yearly revenue of 50

million. Govt. of Sri Lanka and global telecommunication holding of Netherland was main

stockholder with share of 49.5% and 44.98% respectively in 2011. It was public firm which

has 51% share to state, but later 1995 private firms are also there. TASL (telecommunication

authority of Sri Lanka) made it liberalized by permitting a private operator.

The STL Public Switched Packet Data Network (PSPDN) creates custom for ISO standard

X.25 Packet Switching technology, which cares worldwide standardized communication

protocols, permits computers and to other data devices for connect with each other. Data PAC

PSPDN was related to gateway packet switch service of India to give worldwide connection.

Thirty nations and hundred public networks were available by GPSS India.

Sri Lanka’s mobile handset facility has stared with growth. Due to active and competent

option of problematic fixe line services, mobile handsets develop well known and important

facility. Country’ mobile market was increasing at yearly proportion of 40% in 2009. But in

2010 progress was only 20% to 30%. There were four players like axiata, mobitel, etisalat

and Hutchison, but in 2009 Bharati Airtel enters strongly and it was at 4th.

Internet service was stared in February 1996 by SLT but private firm are receive license

recently. Offered of online internet access for commercial was lanka internet service in 1995.

Infolab was stared to give internet facility which is internet club user can play on hourly

based. In country of 20 million populations only 220000 broadband users was there in 2011.

Sri Lanka’s internet service was underdeveloped and broadband facility was low but it’s

changing. The National Broadband Consultative Committee (NBCC) was working for

development.

In 2011 country’s market for mobile comes to 18 million with 87% penetration. Country’s

market for fixed line was only 18%. Development of fixe line was improved with help of

wide use of CDMA base WLL expertise which include three stations for user in 2011. In

2010 fixed line users ware 3.58 means 4% in 2010 and in 2011 it was 3.7 means 3% which

means that it declined by 1%.

Total users for internet facility were 3 lakhs in 2010 and 4 lakhs in 2011. Total internet user

was 1.4% in 2010, yearly developments were 20% and in 2011 users were 1.9%, and yearly

development was 33%.

39

Total users of mobile facility were17.3 million in 2010 with growth rate of 23% and 19.8

million in 2011 with 14%. Growth, so we can say that it was a very large decline. Total

mobile population was 82% in 2010 and in 2011 it was 92%.

For growth of Hatton national bank, they done contract with SLT. For launching people’s

SMS banking many banks like bank of Ceylon, Commercial Bank of Ceylon PLC, HSBC

Bank,

Nation Trust Bank, Seylan bank, Standard Chartered Bank, Sampath Bank, Citibank N.A.,

Deutsch Bank and NDB Bank join with SLT.

40

Major imports and export of Srilankan with other country (till India)

Major Import of srilanka with other country -The data given below is provides the total

imports in srilanka on Free on board or on Cost, insurance and freight basis in US dollar.

These figures are not calculated on Purchasing power parity but it’s calculated on an

Exchange rate basis.

- This data are taken from CIA World Fact book (January 1, 2012)

- The following graph shows the total share of various import partners of srilanka in US

dollar.

Rank Country Imports (Billion $)

1 United States 2,236

2 China 1,743

3 Germany 1,198

4 Japan 808.4

5 France 688.5

6 U.K 639.5

7 Italy 556.4

8 Korea, South 524.4

9 Netherlands 493.1

10 Hong Kong 482.6

11 India 461.4

12 Canada 461

13 Singapore 366.3

14 Spain 363.1

15 Belgium 355.1

16 Mexico 350.8

17 Russia 322.5

18 Switzerland 294.1

19 Taiwan 279.4

20 Australia 243.4

41

Major export of srilanka with other country - The data given below is provides the total

exports in srilanka on Free on board basis. These figures are not calculated on Purchasing

power parity but it’s calculated on an Exchange rate basis.

- This data are taken from CIA World Fact book (January 1, 2012)

- The following graph shows the total share of various export partners of srilanka in US

dollar.

Rank Country Exports(Billion$)

1 China 1,904

2 United states 1,497

3 Germany 1,408

4 Japan 788

5 France 587.1

6 Korea 556.5

7 Netherlands 551.8

8 Italy 523.9

9 Russia 520.9

10 U.K 479.7

0

500

1,000

1,500

2,000

2,500

42

Present Trade Relations & Business Volume of

Different Products With India/Gujarat

43

Relationship between India and Sri Lanka

v Sri Lanka is India’s nearby neighbor. The connection within two countries is greater than

2,500 years old.

v The relationships between two countries have developed and diversify with the route of

time till the today’s date. The common culture of both the country and civilization

heritage of the both countries have extensive communication of their citizen provide the

establishment to build a multi faced partnership. In recent years, with the help of political

issues the relationship between both the country, co-operation in the field of development,

education culture, etc. as well as a wide understanding on most important issues of

worldwide interest.

v The Government of India put make a healthy programmed of help to help out these IDPs

comes again to normal life as quickly as possible. In June 2009, the Prime minister Dr.

Manmohan Singh announced that a grant of INR 5 billion for therapy in Sri Lanka. Then

after India provides 2, 50,000 reliefs pack for IDP. After that also establish emergency

medical unit in the IDP. Which was treated over 50,000 IDP’s and carried over the 3000

surgeries from the March to September 2009.

v India also again and again advocated they require for IDPs to be resettled to their original

habitations as early as promising. For that giving help India provides protection help by

supplying 10,400 tones of galvanized sheets between August 2009 and May 2011 for

constructing short-term housing for IDPs. The Government of India also supplied

400,000 bags of cement to help IDPs. Since the need of de-mining was a major limit on

the speed of movement, the Government of India fully financed seven Indian de-mining

teams, engaged in various sectors in northern Sri Lanka to help accelerate movement.

v From last few years witness are increased trend of Sri Lankan savings into India. major

examples include Ceylon Biscuits (Munchee brand), Car sons Cumber batch (Carlsberg),

Brandix, MAS holdings, John Keels, Hayley’s, and Aitkin Spence (Hotels), relating from

other investments in the freight services and logistics department.

44

v In today’s scenario are the India and the Sri Lankan relationship is strong and balanced

for a quantum jump by construction on the rich contribution of historical linkages and

strong economic and growth partnerships that have been bogus in recent years.

45

Bilateral Relations with India and Sri Lanka

v India is Sri Lanka’s closest neighbor and the relationship between them is of greater than

2500 years. In past years, the relationship defines that there should be close contacts at

the high political level, investment, education, culture or a broad understanding on the

issues of international interest.

v The past three-decade defines there should be clash between Sri Lankan forces & the

LTTE came an ends in May 2009. Throughout the clash, India supported to the Sri Lanka

to take action beside the terrorists. Just then, it conveyed at the highest point its profound

fear at the troubles of the mostly Tamil civilians, emphasizing that their rights & welfare

should not get trapped in fighting against the LTTE.

v Sri Lanka is single of the main recipients of growth credit given by the Government of

India. India involved in projects for renovation of Kankesanthurai Harbour,

construction of Cultural centre at Jaffna, Palaly Airport, interconnection of electricity

grids among India and Sri Lanka.

v A core area of cooperation between India & Sri Lanka is education. Both countries

decided to set up an India Sri Lanka knowledge Initiative through the making of small

visit by the President Rajapaksa to India in June 2010.

v India is one of the huge source markets for Sri Lankan tourism and Tourism also makes a

very vital link between India & Sri Lanka. In 2010, out of the total 6,54,976 tourists,

1,26,882 were from India constituting as regards 20%. In the time of January to

November in 2011, the tourist sector improved to 7,58,458 from 5,70,349 in the

corresponding period of 2010 showing boost of about 33%.

v The India-Sri Lanka Foundation set up in December 1998 as an intergovernmental

initiative also promotes unbreakable understanding among the peoples of the two

countries, including throughout improvement of technical, educational, scientific, and

cultural cooperation. The Foundation focuses particularly on the sponsorship of civil

society cooperation & enhancing contact among the younger generations of the two

countries.