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Prepared for
Prepared by
Saurabh Bhide
C. Pratap Narsaraju
Contents
I. Executive summary:........................................................................................2
II. Population.....................................................................................................3
A.Total............................................................................................................3
1. Growth rates:.......................................................................................3
2. Number of live births.............................................................................4
3. Birthrates............................................................................................4
B. Distribution of population............................................................................5
1. Age.....................................................................................................5
2. Sex.....................................................................................................5
3. Migration rates and patterns...................................................................5
4. Ethnic groups.......................................................................................6
III. Economic statistics and activity........................................................................6
A. Gross national product (GNP or GDP)............................................................7
1. Total...................................................................................................7
2. Rate of growth (real GNP or GDP)...........................................................7
B. Personal income per capita...........................................................................8
C. Average family income...............................................................................8
D. Distribution of wealth.................................................................................9
E. Minerals and resources................................................................................9
F. Surface transportation..................................................................................10
1. Modes...............................................................................................11
G. Communication systems............................................................................11
I. Principal industries........................................................................................12
J. Foreign investment writing guide....................................................................13
K. Trade statistics........................................................................................14
L. Trade restrictions.....................................................................................15
M. Labor force................................................................................................21
IV. Developments in science and technology..........................................................22
V. Channels of distribution..................................................................................23
VI. Media......................................................................................................25
References:....................................................................................................25
Error: Reference source not found
Economic Analysis
I. Executive summary:
Sri Lanka has been plagued by clash with LTTE as well as civil wars for many years. In spite of
this Sri Lanka has managed to maintain egalitarianism and protract a comparatively unwavering
echelon of economic development with its weapons like strapping market economy,
noninterventionist free trade and investment system. But like any other country corruption
remains a prime cause of worry for Sri Lanka and is estimated to cost Sri Lanka 2% of its annual
economy(School, 2009). Today Sri Lanka boosts of higher per capita income in South Asia as
compared to even India. It also has a literacy rate of 92% and has ample aid from World Bank
and private organizations to swell its entrepreneurship bustle. Sri Lanka is tipped to have an
average of 5.8% increase in GDP till 2012 with free trade markets and ease in global commodity
market(School, 2009). Opening a business in Sri Lanka is no more a nightmare if taxing and
With this overview the economic analysis is done taking into consideration the product are
taking to Sri Lanka. The report covers the Sri Lanka’s demographic and economic analysis.
Efforts are been made to understand the various trade laws and restrictions prevailing in Sri
Lanka to get a deeper view of doing business in Sri Lanka. The report gives us a clear idea of the
opportunities and threats that we may come across while starting our business in Sri Lanka and
A.Total
According to the latest reports the population of Sri Lanka is estimated to be 21, 324, 729
(Factbook, 2009). The fluctuating population on Sri Lanka can be accounted to the fact that since
1980s, several hundred thousand Tamil habitants have fled the island due to the warfare between
the governments and armed Tamil separationists. According to the July 2009 figures an estimate
of 200,000 Tamilian fled the islands because of the hostile situation prevailing in the island
country of Sri Lanka(Factbook, 2009). Population wise Sri Lanka ranks 54’Th in the world
(Factbook, 2009).
1. Growth rates:
rate, death rate, and number of migrants entering or leaving the country.
This growth rate can be positive or negative. The growth rate is the
like infrastructure, jobs, resources etc. The growth rate of Sri Lanka was
estimated to be 0.904% (Factbook, 2009). The growth rate has thus shown
a gradual increase in comparison with the 2008 growth rate figures which
(Refer appendix 1)
73.41 years. In terms of life expectancy age females have an upper hand as
rate in Sri Lanka is 13.97 deaths per 1000 births (Factbook, 2009).
3. Birthrates
Birth rate gives the annual number of births happening per 1000 persons.
The birth rate is overriding aspect for the calculation of the rate of
estimated to be 1.84 children born per women. In other words there are
country comparison taking into consideration the birth rate, Sri Lanka
(Refer appendix 2)
B. Distribution of population
1. Age
people aged between 0-14 years, 68% of people aged between 15-64 years
and 8.1% people aged between 65 years and more. Thus it is evident that
(refer appendix 4)
2. Sex
Out of the 23.9% population aged between 0-14 years, male population
sex ratio of 1: 0.96. In the range of people aged between 15-64 years
about of the 68% population there are about 7,089,307 males and
The migration rate of Sri Lanka is 1.09 migrants per 1000 population
(Factbook, 2009). This shows that the migration rate is very low in Sri
4. Ethnic groups
The ethnic groups found in Sri Lanka are Sinhalese, Sri Lanka moors,
Sinhalese: 73.8%
(refer appendix 5)
The republic of Sri Lanka saw a change its static economic policies in 1977 and it’s
economic as well as import trade policies became more market and export centric with a
huge boost for foreign investment. This move reaped huge benefits and the GDP of Sri
Lanka saw an upper trend. December 2004, tsunami had an unpleasant effect on Sri
Lankan economy with 31,000 deaths and an estimated loss of $1.5 billion worth of
economy(Factbook, 2009). The government spending of the total economy has a bend to
counter attack the 25 year old LTTE war. The dominant sectors of Sri Lanka economy
are food processing, textiles and apparels, food and beverages etc.
measure of the goods and services produced by the nation in a given fiscal year.
The purchasing power parity (PPP) exchange rates based on the country’s GDP is
the computation of the goods and services produced at prices compared to the
United States. GDP is the measure of the per-capita welfare subsisting in the
country likened to living conditions and the utilization of resources across the
country.
(refer Appendix 3)
1. Total
The total GDP of Sri Lanka was estimated to be $91.87 billion in 2008. In
69’Th. The GDP of Sri Lanka in financial year 2007 was $86.67 billion
and that in 2006 was $81.16(Factbook, 2009). This shows a steady but
The rate of growth (real GNP or GDP) gives the GDP growth for the
percentage. The estimated real GDP of Sri Lanka in the fiscal year 2008
was 6%. GDP wise Sri Lanka ranks 62’nd in the world (Factbook, 2009).
In comparison, the GDP rate of Sri Lanka in 2007 was 6.8% and that in
Per capita income is generally reliant on components like household size existent
consideration the income of all the prevalent households divided by the household
population(Statistics, 2006-07). The per capita income in Sri Lanka was estimated
The most underlying fact here is that Sri Lanka ranks higher than India in terms of
per capita income another good sign for starting a business in Sri Lanka(Recorder,
2008).
The average family income in Sri Lanka is Rs. 25414. The average family income
in urban areas of Sri Lanka is Rs. 42878 and that in the rural sector is Rs. 22979.
D. Distribution of wealth
The wealth distribution factor in Sri Lanka is highly distorted. The wealthy
employing in industries are largely found in urban areas of Sri Lanka while the
population relaying on agriculture for their living are concentrated mainly in the
rural areas. The well-off account for 20 percent of the population, 52 percent
account for middle income group while the poor account for 10 percent in terms
of wealth distribution. The distribution disparities in wealth have risen with richer
getting richer and poorer struggling for their way of living. Tsunami has had an
The island country of Sri Lanka is induced with a rich haul of industrial mineral
resources like apatite, calcite, clay, dolomite, feldspar, graphite, ilimenite, kaolin,
mica, silica sand and zircon (Minerals, 2003). The credit for Sri Lanka’s rich haul
of minerals can be given to the Geological and mines Bureau for keying out the
country’s mineral assets thereby increase the export dimensions in Sri Lanka. The
main exporters of Sri Lanka are Graphite and mineral sands (monazite). It is also
popular minerals based industry in Sri Lanka and gets a colossal boost from the
people(Stone, 2003). Sri Lanka has almost nil metal or mineral fuel wherewithal.
Of the total energy utilization in Sri Lanka, 70% account for firewood,
agricultural residues and animal waste for household purposes. Sri Lanka lacks in
coal and petroleum deposits and the only home-grown energy reserve in Sri
companies (both in-house and global) are starving to invest in Sri Lanka.
F. Surface transportation
Sri Lanka, the island at the junction of Asian trading routes has a well defined and
dependent on its road network. Sri Lanka also has an extensive railway network
covering most of Sri Lanka. Apart from this Sri Lanka have many picturesque and
1. Modes
waterways and airways. Roads are the backbone of the transport sector in
Sri Lanka, with the national highways accounting for 70% of the transport
in Sri Lanka (Group, 2009). Sri Lanka also boosts of several ports like
harbors. The capital city of Sri Lanka, Colombo is Sri Lanka’s prominent
and well versed port and is tipped as one of the better performing ports in
south Asia (Group, 2009). The port of Galle was also considered one of
the prime ports for trade and transport in Sri Lanka before being
colonial era and is still years away from modern facilities(Group, 2009).
Overall Sri Lanka has railway network of 1449 k.m, roadways of 92787
system.
G. Communication systems
The main communication systems available in Sri Lanka are telephone (landline
and mobile), Radio broadcast stations, Television broadcast stations and Internet.
The Telephone system in Sri Lanka is well developed and improved significantly
and is covers most part of Sri Lanka. The national network uses the digital
microwave radio relay for transmission and there is a boot increase in mobile
cellular industry of Sri Lanka. There are 2.742 million landline users and 7.983
mobile users in Sri Lanka (Factbook, 2009). Apart from this Sri Lanka has 12
estimated 76% of the population in Sri Lanka. The landline and television
broadcast communication system is dim when it comes to rural areas of Sri
Lanka. There were an estimated of 428000 internet users in Sri Lanka in year
from this there are about 4940 internet hosts in Sri Lanka. The usage rates of the
communication system are affordable and the government is taking special efforts
Thus Sri Lanka is well equipped with the minimal necessary communication
I. Principal industries
industries were responsible for 51% of the country’s GNP in 2008(Savada, 2007).
The prominent and money-spinning industries in Sri Lanka are tourism industry,
textiles industry, agricultural industry, tea industry and gems industry. The
considered to one of the prominent industries in Sri Lanka. The southern and
eastern regions of Sri Lanka are the areas that bring name, fame and ample
foreign tourists to the country(Tribune, 2008). The tourism industry accounts for
8.6% of the country’s GDP. Tea industry is also one of the money spinning
industry of Sri Lanka. Sri Lanka is the largest black tea exporter in the world and
it shares almost 23% of the world tea production. Textile industry is a $1.8 billion
industry for Sri Lanka. Its accounts for almost 5% of the country’s GDP. Apart
from this agriculture sector is a well developed and prominent industry in Sri
Lanka and a culture since 2500 years. It accounts for 17.3% of the Sri Lanka
GDP. Thus the GDP distribution of Sri Lanka can be broadly divided as
• Agriculture : 17.3%
• Industry : 27.3%
The foreign investment sector has started to move without restraint in the island
country of Sri Lanka since the change in the economic policies of the country in
1977. The inflow of foreign investment has increased severely since 2006 with
textiles, apparels and leather industry accounting for more than 60% (Samarajiva,
2007). There is also a stiff increase seen in the airline development within the
3991.6 billion in 2007 (Samarajiva, 2007). According to the AFP reports Sri
$350 was concentrated towards the telecom sector(Samarajiva, 2007). This shows
that the island country of Sri Lanka is free and open to foreign trade, providing
The trade dependency ratio i.e. the ratio of sum of exports revenue to imports
revenue was 66 in the year 2007. The major exports of Sri Lanka are tea, rubber
and coconuts which account for 74% of the total exports in the country. Industrial
exports have started to be a major contributor to export earnings with a stiff rise
from 14% - 76% in ten years. The industrial exports are powered by textiles and
Transitional products dictate the Sri Lanka imports story apart from investment
goods and consumer goods. Intermediate goods account for 51% of the total
imports, investment goods 27% and consumer goods 21%. The increase in the
infrastructural facilities, construction and transport sector and the use of advanced
and latest technology. Overall the export estimate of Sri Lanka was $7.899 billion
in 2008 and the import estimate was $12.26 billion. The exchange rate in Sri
L. Trade restrictions
For marketers Sri Lanka’s rural market offers a potential market, which is facing a
different from the urban environment. Rural market offers a great potential market
for the products and also for services because of two reasons
1. Huge number of consumers
2. In rural it is largely untapped market; in rural market they have very less
The wants of the rural consumers are not the same of the urban consumers, these
wants are regarding to their lifestyle, environment and values. (Perera, 2009)
✔ IMPORTS POLICIES
Sri Lanka is open for foreign investment; they have a policy of tariff horizontal
code, which deals with the import licensing. Sri Lanka requires import license for
over 400 items and at 6-digit level of THC, mostly for their security reasons like
health, environment. To receive import license importers must pay 0.1 percent of
the import price. The government of Sri Lanka has followed the transaction value
method to determine the CIF value and also in 2004 they have implemented WTO
The major imports are fuel, fabric and food. The amount of imports done was $14
They have some trade policies in import, products which are restricted it import
are
• Narcotic drugs
They have a restriction in importing textiles because they are one of the major
✔ EXPORTS POLICIES
In export Sri Lanka is quite good; the total export of the country in terms of
amount is $8.1billion, which had increased from last year 2007. (CIA, 2009).The
major exports from the country are tea, textile, rubber fish and diamond. As per
the report given by CIA the major export associates to Srilanka’s are India,
Belgium, Italy and Germany. They are also following the GSP (generalized
When it comes to the trade polices Sri Lanka is very strict there are some
• Animals/parts of animals
• Antiquities
• Cultural properties
• Dangerous drugs
• Explosives
• Fish-live ornamental
• Minerals
• Obscene publications
✔ TARIFF
• 0 percent
• 2.5 percent
• 6 percent
• 16 percent
• 28 percent(, 2009)
tariff for these are duty free. In past several years Sri Lanka has been increased in
its importing items, in addition to these tariff rates Sri Lanka has introduced new
taxes like 60 percent to 100 percent of the cost, insurance and cargo (CIF) for the
Sri Lankan exports were estimated to $8.1 billion and imports from $14 billion for
2008. Country is trying to diversify its exports from Tea and Garments. Sri
Lanka’s major export partners are EU and US. EU is the biggest garment export
market for Sri Lanka and when it comes to US, Sri Lanka’s most important single
market was estimated to $2 billion for 2008, it means 26% of the Sri Lanka’s
assistance. The providers are World Bank, Asian Development Bank, Japan and
other disbursing loans totally of $1.5 billion in 2007.Iran has became the major
lender of Sri Lanka for Oil imports and also Iran has promised for the
modernization of Oil refinery in Sri Lanka. China has become the major lender of
The Sri Lanka trade is good and the government is trying to improve the trading.
industry and territory sector is the service industry. Service industry plays the
Primary industry—13.2 %
have started their open economy policy. They have implemented a separate act for
the import and export called ”Import and Export department” under a Act No. 01
of 1969 in order to control the import of goods into country and to restrict the
export trade and to protect local products and national identity of export products.
This department will also give the insurance of license under import and export
requirements.
When it comes to private import and export agents we have so many agents who
After their war against LTTE Sri Lanka had gained its name in the world for
defeating LTTE.
Sri Lanka had a free trade agreement between the countries because of this the
trade volume has grown from $600 million to $3.2 billion. Sri Lanka and India
have planned to sign a new economic trade agreement of goods and services, said
by IANS report and the minister of investment promotion said that they have also
2009)
M. Labor force
The estimated labor force of Sri Lanka in the year 2008 was 7670000. Thus it
evident that there is a stiff increase in the labor force of Sri Lanka as compared to
year 2000 which stood at 6600000. In spite of the opportunities prevalent and the
labor force available, Sri Lanka faces an unemployment rate of about 6.3% (est.
2008). But efforts are been taken to bring the unemployment rate down through
O. Inflation rates
The inflation rate is the count of the annual change in the consumer prices as
compared to the previous year. The inflation rate in Sri Lanka was 15.6% in year
2008 as compared to 12.1% in year 2007 (Factbook, 2009). But as reports are to
be believed the inflation rate is expected to come down in Sri Lanka and the
Central bank is expected to cut down the interest rates to augment the country’s
economic growth. The inflation rate is tipped to come down to 8.6% in 2009
The country’s prevailing national innovation system is more or less responsible for the
nation’s profits from advances in science and technology. A country can provide high
standards of living and better products and services if it has good communication
systems, modern technology and technological advancements with the help of small as
The number of scientists and researchers available in Sri Lanka stand at 190 per million
populations as compared to India 157 per million populations. But still the innovation
system in Sri Lanka is weak with only 2.74% increase in GDP (Srilanka, 2007). The
telecommunication system in Sri Lanka has a stronger base with over 7 million telephone
users. The software industry of Sri Lanka suffers from lack of human resources. But with
low labor cost and good communication skills it is able to attract ample number of
Lanka with its research mainly stagnated in traditional biotechnology like beer and
cheese making(Srilanka, 2007). Thus the developments of science and technology in Sri
Lanka are limited and efforts are being made with the help of small enterprises to
V. Channels of distribution
In Srilanka’s we have around 66 retailers and the consumer product services. It has a services
growth of 60 % GDP—the major types are tourism, whole & retail trade, telecom and financial
services.(, 2009)
The size of the retail stores vary from the size of the store like -
area
• The size of the retail store varies from country to country.(, 2009)
✔ ROLE OF RETAIL STORES
The role of the store varies from store to store like in departmental store we will find more
In specialty stores we can find the particular product’s depth and width. But at last all these
Sri Lanka has an expertise companies in warehousing storage in Sri Lanka (Cold storage, Liquid,
Bulk and Tank Storage etc.). For receiving and loading shipments to/from Sri Lanka they have
best rates for customs bonded warehousing. They are some specialized companies in Sri Lanka
who organize our Shipments safely to warehouse and while moving the storage they maintain the
When it comes to the distribution channel in Sri Lanka it quite efficient as in India because the
road way is developing. They have the centralized warehousing for the companies. So, Sri Lanka
can be the strategic location for us to allow our goods to procure easily. After understanding the
efficiency of the warehouses and the retailers in Sri Lanka we had clear view of the distribution
VI. Media
The availability of media in Sri Lanka is based and concentrated along language and
ethnic lines. The services provided in Sri Lanka revolve around Sinhala, Tamil and
English Languages’. There are two major TV stations in Sri Lanka which are government
owned apart from radio networks operated by Sri Lanka Broadcasting Corporation. The
newspapers are available in Sinhala, Tamil and English. There are also many private
owned television networks as well as Radio networks in Sri Lanka apart from the regular
ones. The Internet usage is also increasing drastically in Sri Lanka and is considered to
References:
2006, U. H. (2008, July). Gender and Trade. Retrieved September 18, 2009, from
Commenwealth Secretariat: http://www.thecommonwealth.org
Bureau Of South and Central Asian Affairs. (2009, july). Retrieved 09 16, 2009, from U.S
Department Of State: http://www.state.gov
Factbook, T. W. (2009, September 3). Central Intelligence Agency-Publications. Retrieved
September 17, 2009, from Central Intelligence Agency: https://www.cia.gov
Goyal, K. (2009, February 22). Srilanka Inflation Rate Drops. Retrieved September 20, 2009,
from Bloomberg.com: http://www.bloomberg.com
Group, T. W. (2009, July). Sri lanka Transport Sector. Retrieved September 20, 2009, from
Transport in South Asia: http://web.worldbank.org
Import and Export Control Department. (2007). Retrieved 09 15, 2009, from
http://www.imexport.gov.lk
Minerals, I. (2003). Sri lanka - Ceramics boom boosts Mineral demand. 54-55.
News Line. (2009, september 15). Retrieved 09 16, 2009, from http://www.priu.gov.lk
Perera, P. (2009, January 15). rural marketing strategies. Retrieved 09 16, 2009, from daily
news: http://www.dailynews.lk
Recorder, B. (2008, July). Retrieved September 18, 2009, from Pakistan Defenence:
http://www.defence.pk
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consumer products services: http://www.allsrilanka.com
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http://countrystudies.us
School, T. E. (2009, April 4). Entrepreneurship in Sri Lanka. Retrieved September 20, 2009,
from International Entrepreneurship : http://www.internationalentrepreneurship.com
(2009). Srilanka Trade.
Srilanka, S. T. (2007). The Panel of United Nations. Kuala Lumpur.
Statistics, D. o. (2006-07). Household Income and Expenditure Survey. Department of Census
and Statistics .
Stone, C. (2003). Srilanka expands Sapphire digging . Coloured Stone: V 16, no. 1 , 74.
Storage and Warehouses In Srilanka. (2009). Retrieved 09 16, 2009, from Shipping
international: http://sri-lanka.shipping-international.com
Trade Policy. (2009). Retrieved 09 16, 2009, from srilanka export development board:
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http://www.usitc.gov
APPENDIX:
• Appendix 1:
•
Appendix 2:
• Appendix 3:
• Appendix 4:
Age
75+
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5 -9
0 -4
• Appendix 5:
Sinhalese: 73.8%
Sri Lanka moors : 7.2%
Indian Tamil : 4.6%