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Labor and Social Protection

Six reasons why Sri Lanka needs to boost its ailing private sector

Tatiana Nenova's picture
 Joe Qian / World Bank
A view of the business district in Colombo. Credit: Joe Qian / World Bank

Sri Lanka experienced strong growth at the end of its 26-year conflict. This was to be expected as post-war reconstruction tends to bring new hope and energy to a country.
And Sri Lanka has done well—5 percent growth is nothing to scoff at.  
However, Sri Lanka needs to create an environment that fosters private-sector growth and creates more and better jobs. To that end, the country should address these 6 pressing challenges:

1. The easy economic wins are almost exhausted

For a long time, the public-sector has been pouring funds into everything from infrastructure to healthcare. Unfortunately, Sri Lanka’s public sector is facing serious budget constraints. The island’s tax to growth domestic product (GDP) ratio is one of the lowest in the world, falling from 24.2% in 1978 to 10.1% in 2014. Sri Lanka should look for more sustainable sources of growth. As in many other countries, the answer lies with the private sector.
2. Sri Lanka has isolated itself from global and regional value chains 

Over the past decades, Sri Lanka has lost its trade competitiveness. As illustrated in the graph below, Sri Lanka outperformed Vietnam in the early 1990s on how much of its trade contributed to its growth domestic product. Vietnam has now overtaken Sri Lanka where trade has been harmed by high tariffs and para-tariffs and trade interventions on agriculture.

Sri Lanka dropped down by 14 notches to the 85th position out of 137 in the recent  Global Competitiveness Index.
3. The system inhibits private sector growth

Sri Lanka’s private sector is ailing. Sri Lankan companies are entrepreneurial and the country’s young people are smart, inquisitive, and dynamic. Yet, this does not translate into a vibrant private sector. Instead, public enterprises are the ones carrying the whole weight of development in this country.
The question is, why is the private sector not shouldering its burden of growth?

From the chart above, you can see how difficult it is to set up and operate a business in Sri Lanka. From paying taxes to enforcing contracts to registering property, entrepreneurs have the deck stacked against them.
Trading across borders is particularly challenging for Sri Lankan businesses. Trade facilitation is inadequate to the point of stunting growth and linkages to regional value chains. The chart explains just why Sri Lanka is considered one of the hardest countries in the world to run a trading business. Compare it to Singapore–you could even import a live tiger there without a problem.

Reforms Sri Lanka needs to boost its economy

Idah Z. Pswarayi-Riddihough's picture
 Joe Qian/World Bank
The Colombo Stock Exchange. Credit: Joe Qian/World Bank

Many Sri Lankans understand the potential benefits of lowering trade costs and making their country more competitive in the global economy. The majority, however, fear increased competition, the unfair advantage of the private sector from abroad and limited skills and innovation to compete.

Yet, Sri Lanka’s aspirations cannot be realized in the current status quo.  

While changes in trade policies and regulations will undeniably improve the lives of most citizens, I’m mindful that some are likely to lose. However, many potential gainers of the reforms who are currently opposed to them are unaware of their benefits.

Implementing smart reforms means that government funds will be used more effectively for the people, improve access to better healthcare, education, basic infrastructure and provide Sri Lankans with opportunities to get more and better jobs. Let me focus on a few reforms that I believe are critical for the country.  First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.    

First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services.

Fresh thinking on economic cooperation in South Asia

Nikita Singla's picture
 Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir & Surendar Singh/ Bangladesh) Photo By: Marcio De La Cruz/ World Bank
Young Economists sharing the stage with Sanjay Kathuria, Lead Economist and Coordinator, Regional Integration (Left to Right: Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir/Bangladesh & Surendar Singh/ India). Photo by: Marcio De La Cruz/ World Bank

That regional cooperation in South Asia is lower than optimal levels is well accepted. It is usually ascribed to – the asymmetry in size between India and the rest, conflicts and historical political tensions, a trust deficit, limited transport connectivity, and onerous logistics, among many other factors.

Deepening regional integration requires sufficient policy-relevant analytical work on the costs and benefits of both intra-regional trade and investment. An effective cross-border network of young professionals can contribute to fresh thinking on emerging economic cooperation issues in South Asia.

Against this background, the World Bank Group sponsored a competitive request for proposals.  Awardees from Bangladesh, India, and Pakistan, after being actively mentored by seasoned World Bank staff over a period of two years, convened in Washington DC to present their new and exciting research. Research areas included regional value chains, production sharing and the impact assessment of alternative preferential trade agreements in the region.

Young Economists offer fresh thoughts on economic cooperation in South Asia

Mahfuz Kabir, Acting Research Director, Bangladesh Institute of International and Strategic Studies and Surendar Singh, Policy Analyst, Consumer Unity Trust Society (CUTS International) presented their research: Of Streams and Tides, India-Bangladesh Value Chains in Textiles and Clothing (T&C). They focus on how to tackle three main trade barriers for T&C: a) high tariffs for selected, but important goods for the industries of both countries; b) inefficient customs procedures and c) divergent criteria for rules of origin classification.

Sreerupa Sengupta, Ph.D. Scholar at Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi discussed Trade Cooperation and Production Sharing in South Asia – An Indian Perspective. Reviewing the pattern of Indian exports and imports in the last twenty years, her research focuses on comparing the Global Value Chain (GVC) participation rate of India with East Asian and ASEAN economies. Barriers to higher participation include a) lack of openness in the FDI sector; b) lack of adequate port infrastructure, and long port dwell times; and c) lack of Mutual Recognition Agreements (MRAs).

Aamir Khan, Assistant Professor, Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad presented his work on Economy Wide Impact of Regional Integration in South Asia - Options for Pakistan. His research analyzes the reasons for Pakistan not being able to take full advantage of its Free Trade Agreement (FTA) with China, and finds that the granting of ASEAN-type concessions to Pakistan in its FTA with China would be more beneficial than the current FTA arrangement. The work also draws lessons for FTAs that are currently being negotiated by South Asian countries.

Twitter chat: Economic benefits of environment management in Sri Lanka

Ralph van Doorn's picture

Join us for #SLDU2017: Economic Benefits of Environment Management. This Twitter chat will be hosted by World Bank South Asia

What’s happening?

Join us for #SLDU2017: Economic Benefits of Environment Management. This Twitter chat will be hosted by World Bank South Asia (@WorldBankSAsia) in collaboration with the Institute for Policy Studies IPS (@TalkEconomicsSL).
When is it?
August 21, 2017 from 5.30 – 7.30 pm
Unpacking #SLDU2017
The chat will explore the findings of the Sri Lanka Development Update (SLDU), published this June.
I look forward to engaging with you together with a panel from different areas of expertise.
We’ll be discussing priority reforms with a focus on how Sri Lanka can better manage both its business and natural environment to bolster economic growth and sustain development.
In recent years, natural disasters have left parts of this island nation devastated, exacting a significant economic, fiscal and social toll. The SLDU identifies other challenges as well, pressing the case for fiscal consolidation, a new growth model, improved governance and programs to buffer against risk.
The latest update cautions against adopting piecemeal solutions, noting that the challenges facing the island nation are inter-linked and require a comprehensive and coordinated reform approach.
In the end, we also hope this Twitter chat will allow us to learn from you as we begin our preparations for the next SLDU.
How can you participate?
Never taken part in a Twitter chat before? It’s simple. Just think of this as an online Q&A. @WorldBankSAsia will moderate the discussion, posing questions to panellists. You are encouraged to join in too! Follow along, retweet and engage. If you have a question, simply tweet it out using the hashtag #SLDU2017. We’ll see it and try to get you some answers.

Afghanistan’s energy sector leads the way for gender equality

World Bank Afghanistan's picture
Also available in: دری | پښتو
 Rumi Consultancy/ World Bank
Afghanistan's power utility (DABS) has recently taken steps necessary to ensure that women are involved in all business operations within the organization. Photo: Rumi Consultancy/ World Bank

In Afghanistan, decades of violence, common discriminatory practices, and cultural barriers, including restrictions on mobility, have denied women job opportunities and left them severely underrepresented in all sectors of society.
Despite considerable achievements in the last decade, such as the national Constitution guaranteeing equal rights as well as increased enrollment in public schools and universities, achieving gender equality will require widespread social changes.
Yet, change is happening and Da Afghanistan Breshna Sherkat (DABS), Afghanistan’s national power utility, is showing the way.
With a workforce of about 7,000, the company employs only 218 women, most of whom at a junior support level. However, under the leadership of its new CEO, DABS management has committed to promoting gender equality.
The Planning and Capacity Support Project of the Afghanistan Reconstruction Trust Fund (ARTF), managed by the World Bank, is helping DABS deliver on that commitment. The project organized awareness sessions for DABS staff on gender-related issues and provided specialized training to female employees. DABS has committed to providing internships to female university graduates to ensure women can find job opportunities and fully participate in the energy sector.
Realizing that the majority of its female staff lacked the confidence to compete with men, DABS is facilitating access to new job opportunities for women employees and has taken steps to ensure that women are involved in all business operations within the organization.

د افغان کډوالو او بې ځايه شوو د بېرته يو ځاى کولو کاري پلان

Shubham Chaudhuri's picture
Also available in: English | دری
 یوه بې ځایه شوې کورنۍ د کابل د یوې ناحیې په یو کندواله ودانۍ کې. انځور: رومي شرکت/ نړیوال بانک

څرنګه چې د جون ٢٠مه د کډوالو نړيواله ورځ نومول شوې، بايد په ياد ولرو، چې د کډوالو ناورين  يوازې په يوه هېواد کې د پرمختګ مخنيوى نه کوي، بلکې يو بل داسې بحران، چې د ودې په حال کې دى، په خپل هېواد کې د ګڼو نورو خلکو کورنۍ بې ځايه کېدنه ده، دغه خلک د کورنيو بې ځايه شوو په نامه يادېږي. د دغې ستونزې د حل په موخه د سترو سياسي او ټولنيزو فشارونو تر څنګ، دا موضوع د نړۍ په څو هېوادونو کې د ودې په حال کې ده.

په افغانستان کې نږدې ۱،۲ميليونه بې ځايه شوي وګړي شته، چې د امنيتي او طبيعي پېښو په سبب د کورونو پرېښودو ته اړ شوي دي. شپږ ميليونه نور کډوال له ٢٠٠٢ زېږدیز کال راهيسې بېرته خپل هېواد ته راغلي، چې په پورتنۍ ياده شوې شمېره ور زيات شوي، کولى شو  ووايو، چې په هرو پنځو افغانانو کې يې يو راستنېدونکى دى. په ٢٠١٦ زېږدیز کال کې څه باندې ۶۲٠،٠٠٠ افغانان يوازې له پاکستان څخه افغانستان ته را ستانه شوي دي.  د بې ځايه شوو او راستنېدونکو دغه ستر هجوم د افغانستان پر ټولنه او اقتصاد ستر فشار راوړى او تر څنګ يې د هېواد سيمه ييز ثبات ته ستر خطر ګڼل کېږي.

کله چې په افغانستان کې د نړيوال بانک د مسوول په توګه وټاکل شوم، د بې ځايه شوو او بېرته را ستنو شوو ستونزو او د  دغوستونزو د افغان حکومت هڅو ستومانه او خپه کړم. د خپلو لومړيو کاري ورځو په ترڅ کې مې د ٢٠١٦ زېږدیز کال په نومبر کې د کډوالو لپاره د ملګرو ملتونو عالي کمېشنري مرکز څخه ليدنه درلوده. دې مرکز د افغان بېرته راستنېدونکو لپاره د لومړي مرکز په توګه دنده اجرا کوله. په همدې مرکز کې د بېرته راستنو شوو لپاره نغدي، غير نغدي مرستې، د عامه پوهاوي او ساتونکي پروګرامونه تر سره کېدل. 

A roadmap to reintegrate displaced and refugee Afghans

Shubham Chaudhuri's picture
Also available in: دری | پښتو
A displaced family has taken shelter in a ruined house on the outskirts of Kabul. Photo: Rumi Consultancy/ World Bank

As the world marks World Refugee Day on June 20, we must remember that it is not only the refugee crisis that is hampering development efforts in many countries. There is also a silent emerging crisis of people driven from their homes to another part of their own country, people known as internally displaced persons (IDPs). It is a growing issue that several countries are facing, with enormous social and political pressures to address.

In Afghanistan, there are an estimated 1.2 million people who are internally displaced because of insecurity or are being forced to leave their homes due to natural disasters. This is in addition to the nearly 6 million people who have returned to Afghanistan since 2002, making one in five Afghans a returnee. In 2016, more than 620,000 Afghans returned from Pakistan alone.

The massive influx of returnees and IDPs is placing tremendous pressure on Afghanistan’s already fragile social and economic infrastructure and is a threat to regional stability.

When I first took up my position as Country Director of the World Bank for Afghanistan, I was struck by the plight of returnees and IDPs and by how hard-pressed the Afghan government was in dealing with them. During my first days in office, back in November 2016, I visited a United Nations High Commissioner for Refugees (UNHCR) center on the outskirts of Kabul. The center serves as the first entry point for returnees where they can receive assistance—including cash—and attend awareness and safety sessions to help them better integrate in their new communities.  

پلان کاری برای اسکان مجدد بیجاشدگان و مهاجرین افغان

Shubham Chaudhuri's picture
Also available in: English | پښتو
یک فامیل بیجاشده در یکی ازنواحی کابل در یک ساختمان مخروبه. عکس: شرکت رومی/بانک جهانی 

ازآنجایکه ٢٠ جون روز بین المللی مهاجرین نامیده شده است؛ باید به یاد داشت که بحران مهاجرین، تنها مانع پیشرفت در یک کشور نیست. بحران دیگری که آهسته در حال رشد است، همانا بیجا شدگان داخلی است بیجا شدگان داخلی به کسانی گفته میشود که از خانه های خودشان به مناطق دیگر همان کشور بیجا میشوند. با وجود فشارهای زیاد سیاسی و اجتماعی برای رسیدگی به آن، این موضوع در چندین کشور جهان در حال رشد است.

در افغانستان، تقریباً ۱،۲ میلیون نفوس بیجاشده وجود دارد، که یا بخاطر مشکلات امنیتی و یا هم بخاطر حوادث طبیعی، مجبور به ترک خانه های شان شده اند. شش میلیون افغان دیگری که از سال ٢٠٠٢ میلادی بدینسو، دوباره به کشور شان برگشته اند را نیز میتوان به آمار فوق علاوه کرد و میتوان گفت که در هر پنج افغان، یک تن آنها از بازگشت کنندگان میباشد. در سال ٢٠١٦میلادی، بیش از ٦٢٠،٠٠٠ افغان، تنها از پاکستان به افغانستان بازگشت نموده اند. این هجوم بزرگ بیجاشدگان و عودت کنندگان، فشار سنگین را بالای جامعه و اقتصاد ضعیف افغانستان وارد کرده، خطر بزرگی به ثبات منطقوی این کشور محسوب میشود.

زمانیکه به حیث ریس دفتر بانک جهانی برای افغانستان تعیین شدم، گرفتاری های دولت در رسیدگی به مشکلات عودت کنندگان و بیجاشدگان در این کشور، مرا سخت نگران ساخت. در جریان روزهای اول کاری ام در نومبر ٢٠١٦ میلادی، براى بازديد از یکی از مراکز کمیشنری عالی سازمان ملل برای پناهندگان  در کابل رفتم. این مرکز به عنوان اولین محل ورود برای عودت کنندگان افغان ایفای وظیفه میکند. کمک های نقدی و غیرنقدی، آگاهی دهی و جلسات ایمنی برای بازگشت کنندگان، در همین مرکز صورت میگیرد.

What can Bangladesh do to deliver more and better jobs for everyone?

Qimiao Fan's picture
Bangladesh woman working in flourescent lamp section
Bangladeshi woman works in the flourescent lamp section of SEED Bangla Limited. Photo Credit: World Bank

Bangladesh has made remarkable progress toward ending poverty and sharing prosperity with more of its people. As recently as 2000, about one in three Bangladeshis lived in extreme poverty based on the national poverty line; today, this has fallen to 13 percent. The poorest 40 percent of the population also saw positive per person consumption growth. Like in most countries, a key reason was broad-based growth in earnings. With more than 20 million people still living in extreme poverty and many workers with insecure jobs, Bangladesh cannot be complacent. It needs faster economic growth that can deliver more and better jobs for everyone.

New Zealand has much to offer the world

Annette Dixon's picture
New zealand - World maps on line
New Zealand Map.  Photo Credit: Academia maps GeoAtlas

When people think about New Zealand’s most famous son, Sir Edmund Hillary, they mostly think about the quiet Auckland bee-keeper who conquered Everest in 1953.

Of course, there’s much more to the man. He raised money for the Sherpa communities in Nepal that built schools, hospitals and much more. His commitment to the people of South Asia was also reflected in his successful term in the 1980s as New Zealand’s High Commissioner to India.

As the most senior New Zealander in the management of the World Bank, I have come to appreciate Sir Edmund’s commitment to the people of South Asia and believe it shows how much New Zealand can offer the world.  This will not only make the world a better place but can also help New Zealand too.