INTRODUCTION:

There’s more to Sri Lanka than Buddhist temples and palm-fringed golden beaches. Dotted with
UNESCO World Heritage Sites, the island has verdant jungle, an average of eight hours sunshine
a day and superb tea, ideally sipped in a colonial-style guesthouse overlooking a hillside plantation.
In the west, five-star resorts have sprung up alongside chic shacks on beaches where stilt fishermen
make their daily catch and surfers catch a wave. On the south coast sleepy Galle Fort’s chic
boutiques and annual literary festival is a blueprint for the future.

SITUATION ANALYSIS:

Sri Lanka is recognized as a fast growing middle income country. According to the International
Monetary Fund, Sri Lanka has a yearly gross domestic output of US $64 billion as of 2012. It has
a GDP of US$158 billion in terms of purchasing power parity. Sri Lanka is in terms of per capita
income, with a nominal value of US$2,435 and PPP value of US$5,220.It recorded a GDP growth
of 8.3%in2011. Overseas employment contributes highly in foreign exchange, most of them from
the Middle East ( Ministry of Finance,2011)As of 2010, service sector makes up60% Of GDP,
industrial sector 28% and agriculture sector 12%. Private sector accounts for 85% of the
economy. India is the largest trading partner of Sri Lanka. The per capita income of Sri Lanka has
doubled since 2005. During the same period, poverty has dropped from15.2% to 7.6%,
unemployment has dropped from 7.2% to 4.9% market capitalization of CSE has quadrupled and
budget deficit has doubled. 90% of the households in Sri Lanka are electrified. (Ministry of
Finance, 2011). Income inequality has also dropped in recent years, indicated by a Gini coefficient
of 0.36 In 2010. The Global Competitiveness Report published by the World Economic Forum has
listed Sri Lanka as a transitive economy, from factor-driven stage to efficiency-driven stage,
ranking 52 and in the global competitiveness and 41st in goods market efficiency out of the 142
countries surveyed. Dow Jones classified Sri Lanka as an emerging market in 2010 , and Citigroup
classified it as a G country in February 2011.Sri Lanka ranks well above other South Asian
countries in Human Development Index (HDI) with 0.658 points. Since the end of the country’s
civil war in May 2009, the country has rushed to make up for more than two and a half decades of
intermittent building activity across most segments, from high-end residential housing to
commercial and office space to a variety of key infrastructure segments. According to NDB
Securities (NDBS), a brokerage based in Colombo, in 2014 Sri Lanka’s construction sector
expanded by more than 20%. According to NDBS data, in 2014 the construction industry
accounted for 9.6% of Sri Lanka’s GDP, which represented a significantly greater proportion of
the economy than most other countries in Asia.

Sri Lanka particularly focuses on the development of infrastructure in the northern and eastern
parts of the country on a major scale. Accordingly, India and other countries have contributed in
every possible manner to uplift infrastructure in these areas. A lot of investments are being made.
Financial commitments are being made by the government as well as foreign investors to upgrade
particular infrastructure in that area. The development is in terms of real estate there are a lot of
housing projects where Indian private-sector firms like the Tata’s have a big presence road, ports,
railways, airports and coal-based power plants. Sri Lanka is to build industrial cities over north
and eastern parts and relocate industries from the centre to the north and east of the country. There
are projects being carried out with certain credit lines.
Right now the foreign investment policy in Sri Lanka is very flexible and the environment is
business-friendly. The government encourage more and more Indian companies to come and set
up business in Sri Lanka, not only in construction but in the manufacturing sector as well. The
government´s main focus is to develop infrastructure in Sri Lanka and to facilitate better economic
growth for the country. For that they require the support of foreign investors. They need more
Indian companies to look at Sri Lanka because they are geographically closer to India than other
countries.

KEY FACTS TO BE NOTED:

 India is Sri Lanka´s largest trading partner globally and Accounts for 21 per cent of the
country´s imports.
 India is amongst the top five foreign investors in Sri Lanka.
 Trade has grown rapidly after the Indo-Sri Lanka Free Trade Agreement in March 2000.
 The value of bilateral trade increased from $658 million in 2000 to $4.08 billion in 2012.

GENERAL ENVIRONMENT:

Sri Lanka’s economy has expanded at an average rate of about 6 percent over the past five years.
The country has made a notable economic transition from fragility to relative stability. Political
reconciliation and economic transformation have been strengthened by measures that support long-
term development and competitiveness.

Economic reforms undertaken to improve Sri Lanka’s macroeconomic stability and potential for
growth include strengthening the management of public finance and structural reforms to foster a
more dynamic private sector. However, a weak judiciary continues to undermine property rights,
and the perceived level of corruption is debilitating.

Secured interests in property are generally recognized, and there is a fairly reliable registration
system for recording private property, but many investors claim that protection can be flimsy.
Judicial independence has improved under the new administration. Although corruption remains
a concern, steps were taken in 2015 to strengthen enforcement of existing safeguards and uphold
the current legal and administrative framework.

The business start-up process has been streamlined, and the number of licensing requirements has
been reduced. Because the labor market lacks efficiency, there is an imbalance between labor
supply and demand. In 2016, the IMF recommended that the government phase out some of its
extensive system of price controls and subsidies that distort most sectors of the economy. The
government’s plan to privatize some industries faces public opposition.

Trade is moderately important to Sri Lanka’s economy; the value of exports and imports taken
together equals 48 percent of GDP. The average applied tariff rate is 5.3 percent. Investment in
some sectors of the economy is restricted, and state-owned enterprises distort the economy. The
financial sector remains underdeveloped. Nonperforming loans remain a problem in the banking
system, and the allocation of credit is subject to state influence
PESTEL ANALYSIS:

RATING WEIGHT SCORE

POLITICAL FACTORS: 0.3
 Stability in the political environment 1 0.06 0.06
 Corruption level 2 0.05 0.10
 Trade control 3 0.04 0.12
 Discrimination law 2 0.02 0.04
 Tax policy (tax rates and incentives) 2 0.05 0.10
 Government involvement in trade unions and 2 0.03 0.06
agreements
 Import restrictions on quality and quantity of 4 0.05 0.20
product
ECONOMIC FACTORS: 0.2
Transitive economy 3 0.06 0.18
Private final consumption expenditure 4 0.06 0.24
General government consumption expenditure 2 0.04 0.08
Imports of goods and non-factor services 3 0.04 0.12

SOCIO CULTURAL FACTORS: 0.1

Skilled Labour Market 2 0.04 0.08
Diverse Cultural Patterns 2 0.02 0.04
Mortality Rates 1 0.02 0.02
Impact Of Religion On Businesses 3 0.02 0.06
TECHNICAL FACTORS 0.1
Transport 3 0.03 0.09
Growing Technology 3 0.02 0.06
Cost Of Labor 3 0.03 0.09
Logistics 5 0.02 0.10
 ENVIRONMENTAL FACTORS:
Varying Temperatures According To Location

LEGAL FACTORS: 0.3

Labour Laws &strong labour policies 4 0.10 0.40
Increasing complexity of environmental regulations 3 0.05 0.15
Strengthening international patent laws 1 0.05 0.05
Strengthening consumer rights laws 3 0.10 0.30

POLITICAL ANALYSIS

 Stability on Political System

Sri Lanka's political system stands at a critical juncture. Over the coming months the coalition will
work on finalising the draft for a new constitution, which we expect to be adopted in a national
referendum in 2018. The new charter will strengthen democratic institutions and the outlook for
political stability. Successive governments will attempt to balance Sri Lanka's foreign relations
with India and China, seeking to establish the country as a trade and maritime hub.

SriLanka is a democratic, socialist republic and a unitary state which is governed by a semi-
presidential system, with a mixture of a presidential system and a parliamentary system.
It constitutes a parliamentary system governed under the Constitution of SriLanka. Most
provisions of the Constitution of SriLanka can be amended by a two-thirds majority.
SriLanka has gone through a changing political scenario over the years and specially after the end
of the civil war in 2009 and have gained a considerable political stability as the present government
has a majority in the parliament.However there is a concern that too much power is centered among
few individuals in the present governing regime and had been instances where politicians having
interference with the businesses and policy changes either to assist or restrict company operations.

 Corruption Level
There is a moderately high risk of corruption for businesses in Sri Lanka. The most common forms
of corruption include facilitation payments paid to avoid bureaucratic red tape, bribe solicitation
by government officials, nepotism and cronyism. There is a high-level of corruption in the public
procurement sector. The main anti-corruption laws are the Penal Code and Bribery Act, which
criminalize corruption and attempted corruption in the form of extortion,
and active and passive bribery. No clear distinction between bribery and facilitation payments is
made, but gifts given with a corrupt intent are prohibited under the Prevention of Corruption Act.
While Sri Lanka's government has started to enforce the anti-corruption laws, enforcement remains
constrained by a lack of resources and technical expertise, and powerful political elites often go
unpunished for committing corruption crimes.

 Trade Control

The Department of Import and Export Control was established in 1969 by the Imports and Exports
Control Act No. 1 of 1969 with the objective of control of the Importation and Exportation of the
country. This Department plays a major role in the economy of the country as the Department is
responsible for almost all the imports and exports were being subjected to the license requirement.
There were lot of restrictions for imports and exports and therefore, the volume of work performed
by the Department was very heavy before 1977.

In terms of open Economic Policy commenced in the year 1977, most of restrictions for imports
and exports were liberalized. Since then, license requirement for import / export goods was
removed in respect of items other than Drugs, Chemicals, Telecommunication Equipment’s,
firearms etc. These restrictions were imposed with a view to avoid undesirable imports and exports
that can be caused bad impacts on public health, Environment, Economy and Security of the
country.

The present role of the Department has shifted from the view of controlling mechanism to a
regulatory approach and with a future perspective of guardian of the country with respect to
international trade, while promoting and facilitating of country's international trade integration.
The Government’s development policy spells out its intention that the need of expanding and
improving International Trade in line with safeguarding public and the environment of the country.
Accordingly, the Department of Import and Export Control has been working in more dynamic
manner to play its role as the regulator, facilitator and the standards setter in the external trade of
Sri Lanka. Therefore the department focuses mainly on the formulation and implementation of
regulatory policies on external trade for the benefit of Sri Lankan economy and the people.

 Discrimination Law

Sri Lankan officials have revealed that its laws against discrimination include sexual orientation
and gender identity as protected classes—but still claims its colonial-era ban on sodomy is not in
violation of that law.

Sri Lankan government officials said in response, “Article 12 of the Constitution [of Sri Lanka]
recognizes non-discrimination based on the grounds of race, religion, language, caste, sex, political
opinion, place of birth or any one of such grounds as a Fundamental Right. “This measure protects
persons from stigmatization and discrimination on the basis of sexual orientation and gender
identities.”

Amnesty International’s Deputy Asia-Pacific Director, David Griffiths, quoted that “More than
a decade since the last Committee review of Sri Lanka’s record in 2002, it’s disturbing to see how
many rights issues raised then still persist in the country—and how the government has ignored
promises to address them. Sri Lanka still relies on draconian laws to silence dissent. Torture and
enforced disappearances continue unchecked, as do violations of freedom of expression and
association.”

 Tax Policy

To increase the direct tax component to 40 percent from around 20 percent at present and gradually
reduce the indirect taxes to 60 percent from around 80 percent in the medium term,”. The
government will gradually phase out para-tariffs that are applicable in the tax system with the view
of making Sri Lanka a haven for investments going forward. “The Government has also taken
steps to introduce anti-dumping and countervailing measures, which will facilitate a level playing
field for domestic companies.”

 Government Involvement in trade unions and agreements

The independent unions in Sri Lanka are relatively small and often work in isolation. It is also
difficult for them to get on with traditional trade union organisations due to ideological differences.
Independent trade unions are also visible in some areas of the private sector, export industries and
EPZs, banking sector, teaching and in some areas of the public service. Some of these independent
trade unions have also managed to establish affiliations with GUFs.

 Import restrictions in quality and quantity of product

Tariffs are based on the Harmonised System (HS). Most duties are ad valorem, assessed on the
CIF value (Incoterms 1990). Sri Lanka has a three-band import tariff schedule based on the
harmonized system of classification; five, 10 and 25 per cent and an additional surcharge of 20 per
cent on import duty. Exporters need to be aware that there are other add-ons and surcharges
applicable for imported goods, such as Import Cess, Port and Aviation Levy (PAL), VAT and
Nation Building Tax (NBT). Passenger motor vehicles, alcoholic beverages, tobacco, carpets,
perfume and other luxury items are subject to rates as high as 200 per cent. Import tariffs are
waived for export-oriented companies, IT related projects and special infrastructure projects
approved by the Board of Investment. The Sri Lanka Government has liberalised import and export
procedures. Import licenses are required for only a few specified items due to health and security
reasons.

ECONOMIC FACTORS:

 TRANSITIVE ECONOMY:

The end of the long civil war in Sri Lanka in 2009 generated wide spread expectations of a peace
dividend that would enable the country to embark on a period of sustained economic growth.
Recent developments have dampened that optimism, however, rekindling fears that Sri Lanka’s
tale of missed opportunities may continue. After showing remarkable resilience during decades of
war and conflict, the Sri Lankan economy has failed to capitalize on the window of opportunity
presented at the end of the military conflict. In the aftermath of the military victory, there has been
a sharp reversal of trade liberalization and a marked shift back towards nationalist-populist state-
centred economic policies, reflecting the pressures of resurgent nationalism, an unprecedented
concentration of political power in a small ruling group, and influence of some powerful vested
interests. Unfortunately, a return to the failed past policies of inward-oriented development
strategies, offers no viable solutions for the problems confronting small, capital- and resource-
poor countries in today’s globalized world. Sri Lanka must change both its political practices and
economic policies drastically and urgently to cope with the huge development challenges facing it
in an environment of global economic turbulence.

 GENERAL GOVERNMENT CONSUMPTION EXPENDITURE:

Fiscal deficit is a chronic problem for Sri Lanka. Though increasing share of tax revenue in GDP
is an instrumental objective of economic development policy, Sri Lanka has not been successful
in raising adequate tax revenue to meet its public expenditure on general public services, social
services, economic services, etc. The country faces several issues such as declining of low level
tax ratio, slow structural change of tax composition, dismal outcome even after changing of tax
system and low level of efficiency and productivity of Value Added Tax (VAT).

 IMPORTS OF GOODS AND NON FACTOR SERVICES:

In the 19th and 20th centuries, Sri Lanka became a plantation economy. The development of
modern ports under British rule raised the strategic importance of the island as a center of trade.
From 1948 to 1977 socialism strongly influenced the government’s economic policies. Colonial
plantations were dismantled, industries were nationalized and a welfare state established. In 1977
the Free market economy was introduced to the country, incorporating privatization, deregulation
and the promotion of private enterprise.

While the production and export of tea, rubber, coffee, sugar and other commodities remain
important, industrialization has increased the importance of food processing, textiles,
telecommunications, construction and finance. As of 2015, the service sector makes up 60% of
GDP, the industrial sector 28% and the agriculture sector 12%. The private sector accounts for
85% of the economy. Economic dispraise exist between the provinces, with Western province
contributing to 45.1% of the GDP, Southern province and Central province, 10.7% and 10%
respectively. After the end of the war, Northern province reported a record 22.9% GDP growth in
2015.

SOCIO CULTURAL FACTORS:

 Skilled Labour Market

The most common lament in the construction sector always is the continued impact of the skilled
worker shortage. Construction managers are constantly looking for skilled labour professionals
but that for them is the most challenging, they say. These workers, namely masons, tillers, painters,
carpenters, bar-benders, welders, plumbers, riggers, etc are hard to come by in the industry. Many
jobs remain vacant for weeks resulting in construction project delays and what’s significant is that
despite today’s high unemployment rate, skilled workers are in high demand in the construction
staffing market where construction companies are struggling to find workers at all levels to
properly staff their teams.

How all this started was when the end of the 3 decades-long civil war in 2009 gave way to a record
boom in infrastructure development, resulting in the construction industry growing by 39.3 per
cent in 2012 against 12 per cent growth in 2009. This rise in construction activities in the country
has led to demands for a larger, more skilled and more productive labour workforce to deliver
projects of increasing scale and complexity, within the expected standards of quality and timelines.
“The overwhelming, number one issue is access to skilled labour,” an engineer said.

The construction industry is not only in buildings. It involves many other types of work aside from
the building process, such as painting, landscaping, electrical supply, telecommunications,
plastering and paving, etc.

All these types of work make up one industry, but each of them involves distinctive exposure and
also is exposed to health hazards that deter those aspiring to enter this sector, an industry analyst
said. “Poor industry image, tough working conditions, and the industry’s perceived poor safety
record also have contributed to the decline in the number of people willing to enter and remain in
the industry,” the analyst added.

“Construction workers are exposed to a wide variety of health hazards at work. The exposure
differs from job to job,” agrees a CEO of a construction firm. The total value of work undertaken
by the local contractors has increased from about Rs. 15 billion in 1995 to over Rs. 200 billion in
2015. According the ‘Economic and Social Statistics of Sri Lanka 2015’ published by the Central
Bank of Sri Lanka the percentage of the labour force in construction has risen from 7.2 per cent to
8.4 per cent. “The scarcity of skilled labour and the increasing construction demand is driving up
build-out costs and prolonging project schedules,” he said. Some builders are guaranteeing 10 or
12 hours of overtime a week for electricians, dry wall installers, carpenters, sheet metal workers
and others for the duration of a project. Some are even putting skilled workers on the permanent
payroll as high-paid staff members in order to keep busy construction crews fully manned. Mega
Kularatne, Director Maga Engineering Ltd agrees that in his company this is done.

In Sri Lanka the training of construction industry craftsmen is mostly carried out by several
training institutions, which belong to the public and private sector. The public sector training
institutions are the Vocational Training Authority (VTA), National Apprentice and Industrial
Training Authority (NAITA), Department of Technical Education and Training (DTET), and the
Institute of Construction Training and Development (ICTAD). These training institutions have
claimed that the problem is not the capacity of the institutions to provide training (which is able
to accommodate up to 10,000 craftsmen and technicians) but their inability to attract youth for the
training programs available.

 Diverse Cultural Patterns

The culture of Sri Lanka mixes modern elements with traditional aspects and is known for its
regional diversity. Sri Lankan culture has long been influenced by the heritage of Theravada
Buddhism passed on from India, and the religion's legacy is particularly strong in Sri Lanka's
southern and central regions. South Indian cultural influences are especially pronounced in the
northernmost reaches of the country. The history of colonial occupation has also left a mark on Sri
Lanka's identity, with Portuguese, Dutch, and British elements having intermingled with various
traditional facets of Sri Lankan culture. Culturally, Sri Lanka, particularly the Sinhalese people,
possesses strong links to both India and Southeast Asia

 Mortality Rate

Sri Lanka has a population of little over 20 million people and is far ahead of her South Asian
neighbours in the accomplishment of human development goals. Life expectancy at birth is
currently 75yrs, and is close to the estimated lifespan in the developed countries. A high literacy
rate of 92.5% has helped the nation to build a skilled labour market. Low mortality rates of 14 in
2010 and the steadily declining population growth of below 1%; reflect the country’s progress in
the sphere of social development. More than 67% of the population is in between 15 to 64 years
old and as a result the country has a big skilled labour force. In addition a large workforce means
that they are ones who would be spending money and it is another indication that this tropical
labour market would reach the herbal products from Britain even though the cost is high.

 Impact of Religion on Business

Sri Lanka being a multi-religious, multi-ethnic country with a population of 22 million plus's
Lankan culture is a rich blend of the interaction of diverse cultural patterns both indigenous and
derived from, trade, religions which are Buddhism - 69%, Islam - 15%, hinduism - 8%, Christianity
- 8%. The cultural patterns of Sri Lanka today show the lasting impact of a diverse range of
cultures.The overall culture is largely the result of the impact of the introduction of Buddhism,
more than 2,300 years ago and Hinduism the second most prevalent religion in Sri Lanka. This
does not erase the heavy influence of Hinduism, together with the lesser impact of Islam, and
Christianity.

TECHNICAL FACTORS

TRANSPORT

Sri Lanka has an A and B class road network exceeding 12,000kilometres (7,460mi). The railway network,
operated by the state-run national railway operator, Sri Lanka Railways, spans1, 447kilometres (900mi).
The receltly opened Southern Motorway has link Colombo and the down southto bloster the
economu of the southern province. In addition the government hastaken many initiatives to
repair and develop the countries road network afterway, which itself has paved the way for a
staggering growth rate of 8.3%in2011.

Growing technology

The rapid development of technology is affecting the businesses in Sri Lanka and all over the
world. Changes in the technology have changed the way businesses operate i.e. Internet booking
for tickets and holidays.Faster changing development in technology creates a need to react
quickly for different businesses in order they want to maintain the competitive environment by
providing the same innovative services, which their competitors are offering. Distribution of
products by the use of technologies.

 Cost of labor
When it comes to labor costs, Sri Lanka is a bargain, considering the size of its economy, according
to statistics from the Japanese trade promotion organization known as JETRO.Since the island's
civil war ended in 2009, Sri Lanka's economy has been expanding. Its per-capita gross domestic
product for 2015, as reported by the Central Bank of Sri Lanka, was $3,924 -- higher than the
$3,377 in Indonesia, as released by Statistics Indonesia.In contrast, a JETRO survey indicates that
average salaries in Sri Lanka have not grown much. According to the 2016 survey among Japanese
companies operating in Asia and Oceania, the As factory wages are surging in the 10-member
Association of Southeast Asian Nations, Sri Lanka's wage competitiveness could end up attracting
Japanese companies.

Environmental Factors

Sri Lanka enjoys a tropical climate with varying temperatures according to location. Coastal or
upland areas benefit from Cool Mountain or sea breezes all year round. Monsoon season is between
May to September in the South & West and October to April in the North & East of the country.
These monsoons give SriLanka its only seasons as it is located so near to the Equator.
Temperatures average 27°C (80°F) in Colombo and 16°C (61°F) in Nuwara Eliya, which is on
higher ground, all year round. However with the increased number of development projects, there
are many issues that have taken the attention. Deforestation, pollution, filling the marshlands and
in fact the unauthorized buildings have caused numerous environmental problems in Sri Lanka.
Sri Lanka being close to the equator and having a tropical rainy climate have influenced the life
pattern of Sri Lankans tremendously. The hot weather and having enough water in the country
give chance to have body wash regularly and this could be why the cosmetic industry has
developed in Sri Lanka continously..

LEGAL FACTORS:

 Labour Laws

Strengthening consumer rights laws The Legal system of SriLanka is a highly complex mixture of
several laws. In fact, it exemplifies the absolute possibility for the coexistence of diverse elements
of several legal systems for it gather together with a common framework, laws as diverse in their
origin as those of Rome and England,Holland and South Africa, Arabia, South India and old
Ceylon .The ethnic and religious diversity of the nation and the colonial history, which traced back
to 1505–1948 are the major factors which had contributed to this complexity. SriLankan Legal
system is influenced by English common law and Roman-Dutch owing to its colonial history. In
addition, same is influenced by the ancient local system of laws of SriLanka – customary and
personal laws such Kandyan, Thesawalamai law and Muslim law due to the varied character of
the nation.

The the fundamental legal framework is also most similar to that of England.However the legal
proceedings take a long time and at present 650,000 cases pending before the courts. ( Ministry of
Justice of SriLanka,2011)

In recent years in SriLanka, there have been many significant legal changes that have affected
firms’ behavior. The introduction of age discrimination and disability discrimination legislation,
an increase in the minimum wage and greater requirements for firms to recycle are examples of
relatively recent laws that affect an organisation’s actions. In addition there are instances where
the executive powers of the president have interfered with the local and international businesses
which have created a negative outlook in general country ratings.

 Environmental Laws

SriLanka has many government authorities to regulate and protect the environment and many
amendments were made to the constitution over the years. The Central Environmental Authority
(CEA) was established in August 1981 under the provision of the National Environmental Act
No:47 of 1980. The Ministry of Environment and Natural Resources (ME&NR) which was
established in December 2001 has the overall responsibility in the affairs of the CEA with the
objective of integrating environmental considerations in the development process of the country.
The CEA was given wider regulatory powers under the National Environment (Amendment) Acts
No:56 of 1988 and No:53 of 2000. (Central Environmental Authority, 2012)

The Central Environmental Authority (CEA) was established in August1981 under the provision
of the National Environmental Act No 47 of 1980. The Ministry of Environment and Natural
Resources (ME&NR) which was established in December 2001 has the overall responsibility in
the affairs of the CEA with the objective of integrating environmental considerations in the
development process of the country. The CEA was given wider regulatory powers under the
National Environment (Amendment) Acts No:56 of 1988 and No:53 of 2000 ( Central
Environmental Authority, 2012)

 Strengthening International Patent Laws

The administration of the patent system in Sri Lanka and its importance to the national economic
strategy is a novel topic in the country. The national patent law in Sri Lanka has been subject to
international agreements such as the WTO TRIPS Agreement and the WIPO Patent Cooperation
Treaty. Nevertheless, Sri Lanka is notable for the undeveloped state of its patent system, mainly
because the patent examination system is not designed or based on national or economic priorities.
With this background, the purpose of this paper is to examine and critically evaluate the different
mechanisms adopted in the patent administration system and whether the present patent system in
Sri Lanka remains aligned with Sri Lanka's national economic strategy and how the present system
could be developed to strengthen the patent system, both in provision and in administration. The
paper recommends that Sri Lanka is better off having a utility model system along with a high
standard of patent examination system. By employing this dual system both domestic innovation
and foreign investment would increase in the future.

 Strengthening Consumer Rights

Consumer Rights Day 2017 theme declared by the Consumers International is “Consumer
Rights in Digital Age”. Considering the vital importance of addressing the consumer
issues, a national conference has been planned collectively by the Ministry of Industry &
Commerce and Ministry of Telecommunication and Digital Infrastructure with the active
involvement of Consumer Affairs Authority (CAA) and the Information Communication
Technology Agency (ICTA). The objective of this seminar is to establish a dialog among
key stakeholders on “Consumer Rights in Digital Age” in order to facilitate policy
recommendations to strengthen consumer rights in digital era.
This National Conference will be held on 15th March 2017 3.00 p.m. at “Nelum Pokuna”
auditorium with the participation of all stakeholder groups.
This will be followed by a workshop to be held on 16th March 2017 8.30 a.m. at Sri Lanka
Foundation Institute Auditorium.
 CAA will be working continuously with the other stakeholders in order to promote and
strengthen Consumer Rights in Digital Age.

CONCLUSION

In future, construction demand will require the packaging of services that provide a single source
solution to client requirements thus requiring co-operation in the project delivery process based on
partnering relationships. In this context, firms will seek integration to provide entire project
services with horizontal integration, strategic alliances, joint ventures or consortia to combine
strengths to become a single source problem solver for the client, such as on BOO/BOT project
developments. As a result, foreign contractors will be increasingly involved in Sri Lanka’s
construction industry. All in all, the PESTL analysis resulted in a total score of 2.67, indicating
that expansion appears slightly unfavorable at this point in time. - Although the past and expected
growth rates for the construction sector are remarkably favorable, the absolute growth potential is
less favorable due to the small market size, especially when compared with the size and expected
growth of the Indian home market. - The Sri Lankan construction market is dominated by
governmental construction and infrastructure projects. Although these projects are attractive,
several issues remain, for example the comparatively high corruption in Sri Lanka’s construction
sectorHowever, local contractors' financial capacity and absence of previous experience will be
constraints to their formation of joint ventures with their foreign counterparts. The increasing
demand for development financing will change the industry from being a service provider into the
client. The firms will have to utilize their financial capacity and project financing skills to identify
opportunities to develop projects and then transfer its ownership. The newly established funding
arm PSIDFC provides subordinate loans to strengthen the financial position of such developers to
enable them to participate in private-sector infrastructure development in Sri Lanka. While the
construction industries in most countries are being transformed from labor-intensive industries to
knowledge intensive ones, the Sri Lankan construction industry will still seek appropriate
technology with maximum labor absorption depending on the government’s policies for the
industry. However, with the government’s interest in the development of high-tech applications,
the construction industry should be poised to receive special incentives to encourage contractors
to substitute labour-intensive technologies with capital intensive ones. Furthermore, new
technological applications will be tested by expatriate contractors particularly on donor-assisted
and private sector financed projects in the absence of medium-sized projects within the capacity
of local firms. Trends for construction automation, mechanization and optimum plant utilization
will be generated from the demand for high quality and cost effective construction. The
introduction of local and international standards together with standard conditions of contract to
meet the quality and time targets will also generate the demand for mechanization in the industry.
Trends in prefabrication and standardization will reduce the traditional construction component
thus seeking low-cost and time saving construction even in the housing sector. Favourable
economic conditions will result in high import content of materials and heavy use of construction
equipment, necessitating technological changes in the construction process particularly in the
industrial and commercial sectors. There will be a shift of demand from buying fragmented
engineering and construction services to packaged services that provide a single-source solution.
This will be enhanced by the BOI concession available for duty-free imports of plant, machinery,
raw materials and other project-related goods and these will be the driving forces for such
technological changes. With respect to the other production characteristics, it can be observed that
there will a growing concern about pollution and global environmental issues. At the project level
this is being implemented with Environmental Impact Assessment (EIA) and sustainability
concepts adapted by designers. This will continue to be built into future urban and human
settlement development programmes. The production of construction materials such as sand, lime
and aggregate will increasingly be of concern due to possible environmental degradation during
their production. As a result, the low-cost pre-fabricated housing industry will be badly affected
due to the reduction in the quantum of raw materials generally generated by the cottage industries.