Documente Academic
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Documente Cultură
TALKING
ECONOMICS
DIGEST
&
Development
Migration
Migrant Voices:
Returning Home
Quality of Teachers
Does Matter in
Sri Lanka
contents
Editorial
Migration
&
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06
46
Development
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14
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16
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63
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IPS News
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Migrant Voices
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The institute of policy studies of sri lanka (IPS) is an autonomous institution that aims to promote
policy-oriented economic research and to strengthen the capacity for medium-term policy analysis in
sri lanaka. Its mission is to contribute to the socio-economic development of the country through
informed, independent and high quality research that seeks to influence the policy process. With over
two decades of substantial research expertise, IPS has emerged as a regional centre of excellence and
the most influential think tank in sri lanka.
Saman Kelegama
Deputy Director
Dushni Weerakoon
Talking Economics Team
Janaka Wijayasiri Editor
n this Edition, the Digest focuses on Migration and Development, one of cross
cutting and emerging thematic research areas at the Institute.
Over the past decade, the number of people leaving for foreign employment has
surged and there are over 1.5 million Sri Lankans working overseas, according
to the Sri Lanka Bureau of Foreign Employment. Nearly 250,000 Sri Lankans
annually leave for employment abroad and their remittances account for the
largest source of foreign exchange to the country, roughly 9.5 per cent of Gross
Domestic Product (GDP). Remittances also have been a vital source of income
for migrant households, enabling them to improve the socio-economic situation
of their families and their own position. However, migration has social and
physiological costs in terms of family breakdown, physical abuse of workers at
destinations (p.20) etc. Thus, Sri Lanka is struggling to strike a balance between
promoting migration while protecting migrant workers and their families (p.14).
Towards addressing this challenge, the government is interested in promoting
more skilled migration and accessing non-traditional markets (p.18). It is also
paying attention to facilitating the return and reintegration of migrants with
opportunities for skills transfer, productive employment and social integration
(p.22).
Charmaine Wijesinghe
Given that migration will continue to play a key role in the development of Sri
Lanka, the IPS has been strengthening its research capacity, policy engagement and
outreach activities on migration in 2014 through training, research, recruitment
(p.29), setting up of Labour Migration Resource Centre (p.28) and hosting an
international conference (p.60). This Digest also features insightful interviews
with international migration experts from India, Pakistan, the Philippines and the
UK (p.26), and two compelling stories of migrants who have returned home and
the challenges they face in reintegrating (p.24).
Suwendrani Jayaratne
As usual the Digest features articles by IPS researchers who are working on a
diverse range of policy issues including poverty, agriculture, environment, health
and education, international trade, etc. Some contributions to the Digest are
based on recent publications (p.63), which are now available for purchase.
I would like to acknowledge the contribution of Anushka Wijesinhe to the Talking
Economics Blog and Digest. His initiative, effort, and hard work as the Editor have
enabled us to share our insights with a wider audience beyond policy makers of
the country.
I hope that you find the Digest interesting and look forward to your continuous
support and feedback.
Janaka Wijayasiri, Research Fellow
janaka@ips.lk
May 2015
Savani Jayasooriya
Contributing Authors
Athula Senaratne
Anushka Wijesinha
Bilesha Weeraratne
Chatura Rodrigo
Dharshani Premaratne
Janaka Wijayasiri
Kanchana Wickremasinghe
Keshini Sritharan
Neluka Gunasekera
Nipuni Perera
Nisal Herath
Nisha Arunatilake
Priyanka Jayawardena
Raveen Ekanayake
Sunimalee Madurawala
Yolanthika Ellepola
talking economics
Executive Director
Poverty and
Business Development
Services
FINANCIAL SERVICES
ALONE WILL NOT
RESULT IN BUSINESS
GROWTH IN THE SME
SECTOR
project, business incubator services by
United Nations Industrial Development
Organization (UNIDO), services offered
by the Sri Lanka Business Development
Centre, and assistance with marketing by
Laksala and the Sri Lanka Handicraft Board.
Recommendations for
Reaping the Benefits
Both the public sector and the private
sector will have to make a significant effort
to increase awareness who the providers
are, what services they provide, where the
providers are located at, etc., on BDS among
the small and medium entrepreneurs.
BDS providers can learn from financial
institutions that often visit villages and
meet with entrepreneurs personally to sell
loan schemes to them. A similar technique
can be adopted by BDS providers, where
they personally visit entrepreneurs and
inform them about the services available.
Government institutions and Chambers of
Commerce also need to fulfill their role as
BDS facilitators, especially in disseminating
information related to available BDS.
A KEY OBSERVATION IN
THE STUDY IS THAT BDS
PROVIDERS NEED TO
EXPAND THEIR SERVICES
AND TO LOOK FOR
MORE INNOVATIVE
APPROACHES IN
PROVIDING THEIR
SERVICES
There is an unmet demand for BDS such
as marketing services, direct marketing
methodologies,
new
technologies,
information on banking services, efficient
machineries and market opportunities,
taxation, and market information. These
are areas for BDS providers and facilitators
to focus on, in order to improve existing
enterprises and to make them more
profitable. However, to do so, there should
be better information channels regarding
these services and how they can be
accessed, all of which should be readily
available to the entrepreneur.
Paddy A Mainstay
Paddy cultivation is a major source
of livelihood in Sri Lanka, providing
more than 1.8 million people with
employment opportunities. So, in
terms of food security and rural
employment, the government is under
constant pressure to continue with
the subsidy scheme. Furthermore,
the subsidy has become a politically
sensitive issue, since paddy farmers
are a high share of the voter base[ix]
and[x]. This is very common in most
developing countries. However, a
sufficient and effective decision on the
reduction of the subsidy is not possible
without a clear understanding of the
factors that determine the demand for
fertilizer[xi].
A New Study
There are several studies in Sri Lanka
that have examined the factors that
determine the demand for fertilizer
in paddy cultivation. However, these
have failed to consider recent data
that capture the fertilizer subsidy
Significant Findings
Estimation results suggest that the
price of fertilizer, price of seed paddy,
price of labour, quantity of paddy
output, cost of materials, cost of pest
management, provision of fertilizer
subsidy and the whether the paddy
cultivation is commercial or not, all
have significant implications on the
demand for fertilizer. However, the
use of machinery which represents
the degree of mechanization in paddy
farming does not have a significant
impact of the demand for fertilizer.
The demand for fertilizer decreased
as the price of fertilizer and the price
of seed paddy increases. However,
the increases are relatively inelastic.
Both fertilizer and seed paddy do not
have close substitutes. Even though
organic fertilizer can be used in place
of chemical fertilizer, it is not widely
practiced in Sri Lanka and commercial
Policy Recommendations
This study proposes several major
policy recommendations based on
three major outcomes: self-sufficiency
in the production of rice; prevention of
the overuse of chemical fertilizer; and
the gradual removal of the fertilizer
subsidy. The relatively inelastic
relationship between the price of
and demand for fertilizer, the limited
availability of organic fertilizer, and
the possible yield drops with organic
fertilizer use, all create issues in
adoption of organic fertilizer among
Sri Lankan paddy farmers. Therefore,
the objective of promoting organic
fertilizer requires farmer support
programs to ensure supply of fertilizer
as well as possible production cuts.
The price of seed paddy has a significant
impact in sustaining paddy production
in Sri Lanka. While increasing the
seed price would reduce the farmers
incentive to over use fertilizer, this
might actually limit farmers full
production
potential.
Therefore
measures are needed to stabilize prices
of seed paddy. This study recommends
that in order to reduce the overuse
of the fertilizer, the price of labour
needs to be stabilized and there
should be measures to reduce the cost
of weedicides. Labour is becoming
scarcer in paddy farming. There is
Way Forward
Undoubtedly, the fertilizer subsidy
has greatly influenced the increase in
paddy production, and contributed
to achieving rice self-sufficiency in
Sri Lanka[xii]. However this study
recommends the gradual removal of
the fertilizer subsidy in the long-run,
in a phased manner. The short-run
reduction of the fertilizer subsidy can
be done for non-commercial paddy
producing areas since their fertilizer
usage is low. Organic paddy farming
is ideal for these areas. While the
fertilizer subsidy is more important to
commercial paddy producing areas,
the amount of subsidy given to them
can be reduced in several stages, by
gradually introducing organic fertilizer.
Yet, for that to happen, farmer
awareness and willingness needs to
be heightened, while the necessary
supply chain is developed as well. The
removal of the fertilizer subsidy in the
long run will give room for establishing
local fertilizer markets, reduce negative
environmental externalities, and
reduce the burden on public finances.
Additionally, it will encourage the
growth of cultivation and consumption
of organic foods.
References:
[1] Rajapaksa, R. D. D. P., & Karunagoda,
K. S. (2009). Factor demand for paddy
cultivation in Sri Lanka with special
reference to fertilizer subsidy program.
Sri Lanka Journal of Agrarian Services,
13 (2), 25-38
CREATING AWARENESS
AMONG SMEs ON
THE COSTS AND
BENEFITS OF ADHERING
TO STANDARDS IS
FUNDAMENTAL
information found and to determine
whether the standards identified are
relevant to them, complete, and the
latest versions available.
Once a relevant standard is traced,
SMEs face the issue of understanding
standards. Standards are written by
experts using a lot of technical jargon
and SMEs find these difficult to
comprehend. To make matters worse,
most international standards are
either in English, French or German,
11
Well-being of Migrants
and their Families
By Bilesha Weeraratne and Janaka Wijayasiri
Trends in Migration
International migration is a cross
cutting phenomenon in Sri Lanka.
The stock of migrant workers of Sri
Lankan origin stood at around 1.9
million in 2010 [1] and they remitted
US$ 6.4 billion in 2013 (over 9.5%
12
TO REDUCE THE
NUMBER OF FEMALES
PURSUING FOREIGN
EMPLOYMENT, THE
GOVERNMENT OF SRI
LANKA IS INTERESTED
IN DIVERSIFYING
MIGRATION IN TERMS
OF SKILLS AS WELL AS
DESTINATIONS
In the migration phase migrants are
immersed in a new country and a new
culture, which often leads to various
adversities like harassment. Among
all migrant occupations, it is female
domestic workers who are most
vulnerable to such hardship because
their living quarters overlap with
their working environment. In 2012,
nearly 80% (10,220) of complaints
made by Sri Lankan migrant workers
were by female domestic workers.
Their vulnerability to many forms of
harassment is an ongoing concern
among the migration stakeholders.
the
By Bilesha Weeraratne
Figure 1: Major Sources of Foreign Exchange Earnings in Sri Lanka 2009-2013
7
6
USD Billion
5
4
3
2
1
0
2009
2010
Remiances
Garments
2011
Tea
2012
Rubber
2013
Tourism
Another
notable
contribution
by migrant workers to the local
economy is through the domestic
labour market. In 2013, migrant
workers accounted for nearly a
quarter of the labour force [3] and
have contributed towards keeping
unemployment at current low levels
in Sri Lanka [4].
15
16
Solution
In this case, what is more important
a mothers right to choose her job
or a childs need to be raised by her
mother?
In this conundrum there is no
clear cut answer. As mentioned
by
the Ambassador/Permanent
Representative of the Permanent
Mission of Sri Lanka to the United
Nations, this is neither an act of
discrimination against women, nor
a restriction of their freedom of
movement and the right to work,
but a reasonable classification to
promote a more balanced view of
all rights involved in the decision to
migrate, taking into account the need
to safeguard the family unit as the
fundamental unit of society. Hence,
the FBR should be promoted for its
merits while minimizing negative
implications.
The blanket nature of this directive
could be relaxed, where compelling
cases with children under 5 years
have an avenue to pursue foreign
employment
when
adequate
arrangements are made for alternative
care arrangements. This can be done
under strict and continuous supervision
and guidance provided by the MFEPW
and other applicable agencies such as
National Child Protection Authority.
17
6 Sri Lanka
Key Challenges for
4. Salaries abroad
1. Language proficiency
18
LOW-SKILLED WORKERS
ARE MORE VULNERABLE
COMPARED TO SKILLED
WORKERS AND
PROFESSIONALS
employment. In the context of Sri
Lankas concentration of labour markets
(i.e., Middle East) and skill categories
(housemaids and unskilled), the National
Labor Migration Policy stated that, new
5. Preferences
Findings reveal that certain preferences
of some Sri Lankan migrants act as a
barrier to recruitment and fulfilment of
job orders. Sri Lankans are reluctant to go
to some markets despite the availability
of job vacancies due to negative publicity
regarding these countries in the media,
and also due to restrictions on life
styles in countries such as Saudi Arabia.
Instead, they prefer to go to developed
markets like the EU where obtaining
visas are difficult. The study also found
that preferences of recruitment agencies
and employers abroad can affect the
vacancies on offer to Sri Lankans as
well. As a result of poor performance
or misbehaviour at the place of work,
recruiters and employers in destination
countries can sometimes hold a negative
image of the suitability of Sri Lankan
workers for employment. This serves to
decrease the recruitment opportunities
available for Sri Lankan migrants.
Way Forward
The scope for addressing some external
challenges is limited, as Sri Lanka has
little or no power to affect changes in
labour receiving countries with regard
to rules and regulations, salaries, visas,
etc. In this context, more focus should
be given to deal with issues within Sri
Lanka by improving the relevancy and
quality of training programmes, using
better marketing strategies, streamlining
recruitment processes and enhancing
cooperation within the industry. In
terms of training, much more attention
needs to be given in improving spoken
English amongst migrants, which could
be done through establishing training
institutes in rural areas, upgrading the
training course of SLBFE, and conducting
courses to develop skills that meet the
requirements of destination countries
and the job. Further, marketing needs
to be done to alter the negative image
and attitude surrounding migrant
workers and the Middle East, with due
consideration given to the important
role they play in the economy. This can
be done through conducting exhibitions,
attending job fairs abroad to promote a
more positive image of manpower from
Sri Lanka while more support needs
to be extended to the SLBFE for it to
carry out marketing and promotional
activities Also, recruitment for foreign
employment could be facilitated through
simplification of rules and regulations,
removing unnecessary requirements,
wider application and usage of IT in
the recruitment process to reduce the
paperwork/documentation
involved,
etc. There is also a dire need for the
stakeholders to come together for the
betterment of the industry, which is
lacking at the moment.
19
20
Types of vulnerabilities
21
I have been migrating to Italy since 1993my last job was as a caretaker in a castleI
returned to Sri Lanka in 2003 with the intention of becoming a tourist guide. I am fluent in
speaking foreign languages and thought this would be an ideal job for me but I was unable to
work out this dream since I received a negative response from the relevant institutions, says
Nihal, a 58 year old father of one, who returned to Sri Lanka once again earlier this year.
22
Re-integration Challenges
A recent study by the IPS (based on a
survey done by ILO and the SPAARC
on returnee migrants), shows that
23
Although I am happy
to back at home, we
would really appreciate
it if someone or some
institution could assist us
to be self-employed and
self-sustained so it would
become an effective
alternative for overseas
employment.
Name has been changed in order to
protect the privacy and identity of
the individual.
Mahinda, Entrepreneur
from Anuradhapura
Interested in finding capital to
start his own business enterprise,
Mahinda left to the Gulf to work as a
driver for a company in Saudi Arabia
during 2002-2003. Utilizing the
remittances earned abroad Mahinda
is now a successful entrepreneur and
owner of vehicle service and filling
stations in Anuradhapura, Eppawela
and Thabuththegama. Mahinda
who had returned to Sri Lanka with
savings of only about Rs. 90,000/, had invested it in its entirety on
starting up his own business in his
hometown.
I started my business on
my own. I didnt bring
back a lot of money.
I brought about Rs.
90,000/= and I spent all
of it on the business. I
put up a small building
to start the business, and
bought two machines. I
only had a chair and an
old table I brought from
home to sit and do all my
transactions. That is
how I started; those were
my humble beginnings.
EXPERT
INTERVIEWS
Talking Economics caught up with 4 migration experts from India, Pakistan, the Philippines
and the UK at the sideline of the International Conference on Policies for Mainstreaming
Migration into Development in Sri Lanka, held on 14 August 2014 in Colombo. We were able
to obtain their views with regard to accessing new markets, reducing vulnerability of workers
at destinations and reintegrating returnees successfully at home.
Dr. S. Irudaya Rajan, Chair Professor, Ministry of Overseas Indian Affairs (MOIA) Research Unit on International Migration at the
Centre for Development Studies, Thiruvananthapuram, Kerala shares his insights on how Sri Lanka can use its diaspora communities
in developed countries to access emerging labour markets in the world. Dr Rajan has three decades of migration research experience
and has coordinated several major migration surveys in Kerala.
Lucia Villamayor currently holds office in the Philippine Overseas Employment Administration (POEA) that manages the licensure and
regulation of more than 1,200 participating agencies in the field of recruitment for job placements of Filipino workers overseas. She
shared some of the more successful practices in the Philippines that could be adopted by Sri Lanka.
programme includes components of
The recruitment of Filipino workers as
well as the manpower requests of the
counseling, mentoring, and provision of
foreign employers are duly verified by
free training on financial literacy, skills
and livelihood training. We also provide
our Philippine labour offices at the jobsite
to ensure that they are truly foreign
financial and livelihood assistance which
employers in need of such skills. Also they
returnees can access to start their micro
ensure that there are actual jobs available
businesses, immediately upon return.
for our overseas Filipino workers before
This way they can also contribute to the
national economy upon their return.
being deployed.
26
Dr. G.M. Arif, the Joint Director at Pakistan Institute of Development Economics (PIDE) shares his views on worker welfare at different
stages of migration and what needs to be done in order to optimize migrant worker welfare.
high and the migration experience might
not be good for them. These two things,
recruitment system and good briefing of
migrants and their families will be key at
the pre-departure phase of migration.
Dr. Kathryn Lum, a Research Fellow based at the Migration Policy Centre at the Robert Schuman Centre for Advanced Studies, European
University Institute, Italy shares her views, based on her research interest and expertise in migration policy in Europe, diaspora policy
in Asia and the South Asian diaspora.
these opportunities lie and how they could
be exploited. So that could be one area.
27
Labour Migration
INSIDE IPS
Resource Centre at
IPS
Marking the International Day for Preserving the Ozone Layer Athula Senaratne takes a look
at the latest positive news about the recovery of the ozone layer and what this means for
environmental and climate change challenges.
30
Ozone-depleting substances
(ODSs) are in decline
The report brings out the following
major facts.
The ODSs controlled under the
Montreal Protocol continues to
decrease. The report finds that major
controlled ODSs are decreasing
largely as projected and stratospheric
abundances of chlorine- and brominecontaining substances originating
from the degradation of ODSs are
decreasing. It observes that by 2012,
combined chlorine and bromine levels
had declined by about 1015% from
the peak values of ten to fifteen years
ago. However, it also observes that
Sri Lanka
By Editorial Team
3. Are we seeing an
increase of extreme
droughts like this?
Droughts are not uncommon for
countries like Sri Lanka. However,
with the impacts of climate change
the frequencies and the intensities of
these events have increased. In the
future there will probably be more
droughts and so it is important to be
ready and learn lessons from previous
events. The places where droughts
might occur may change over time,
along with the changing rainfall
patterns and shifting of agro-ecological
zones.
DROUGHTS ARE A
PART OF CLIMATIC
VARIABILITY AND LONG
TERM CLIMATE CHANGE
CAN INCREASE THE
FREQUENCY AND
SEVERITY OF THEIR
OCCURRENCE
A regional workshop
of the Indian Ocean
Rim Association (IORA)
highlighted the critical
Ocean environment
By Kanchana Wickremasinghe
34
Issues
The utilization of the regions resources
is determined by a number of other
factors for example, governance.
Governance in the ocean environments
is particularly difficult due to its fluid
nature. The Indian Oceans resources
Regional Collaboration
Utilization of ocean resources by
the rim countries involves multiple
actors, multiple uses, and multiple
demands in varying scales. So, it is clear
that efforts by individual countries are
not enough to address the issues faced
by the region. There is a clear need
for regional collaboration in ensuring
better utilization of the Indian Oceans
resources, as we highlighted in a
previous article.
The
evidence
indicates
that
international
agreements
which
have been put forward in relation to
marine environments have progressed
very slowly due to a number of
impediments.[3] Some of them
include developing country constraints
such as human and financial resources,
capacity building, technology transfer,
limited data and information in some
areas, insufficient governance and
management capacity, etc. Regional
collaboration can be viewed as a must
to address these types of issues.
Getting Communities
Involved in
Sri Lankas
Nature Tourism
By Kanchana Wickremasinghe
TOURISM IS AN ENTIRELY
NEW BUSINESS FOR SOME
RURAL VILLAGES IN SRI
LANKA. THEY DO NOT
HAVE ANY EXPERIENCE IN
CARRYING OUT, OR BEING
A PART OF, TOURISM
People tend to be pessimistic of
the role of tourism in their own
communitys context. The common
belief that tourism can cause negative
social implications in the rural villages
is a barrier that hinders the active
involvement of communities in
tourism. Villagers in Illukkumbura, a
village bordering the Knuckles forest
range, assert that the behaviour of
36
37
Government Action
38
The Dilemma of
Dengue and the
Health Economics of It
RESIDENTS HAVE
COMPLAINED THAT LOCAL
GOVERNMENT WORKERS
HAVE DEMANDED
By Yolanthika Ellepola
the Gampaha district showed a 1%
population increase, and Kalutara 1.2%,
respectively.
With population growth, attention
should be given to basic needs such as
household and sanitary facilities of the
communities. However, in the Western
Province, 10% of households dwell in
unsatisfactory sanitary facilities, while
0.1% of households have no access to
FINANCIAL INCENTIVES
IN RETURN FOR SPRAYING
Economic Burden of
Dengue
Those at lower ends of the income strata
could be more susceptible to dengue,
and could also face a greater economic
burden from it. Due to poorer housing
and other facilities, they may be less able
to maintain ideal hygienic and sanitary
conditions that help prevent dengue.
MOSQUITO REPELLENT
In addition, the Public Health
Department in coordination with the
local authorities have controlled the
outbreak through inspection of land
parcels and spraying BTI in high-risk
dengue areas. Even though BTI could
be used to control dengue, the natural
bacterium could merely be used in
limited areas, as it could lead to adverse
39
Consequences
40
Global Scenario
Sri Lanka does not stand alone in any
of these aspects when compared to
the worlds statistics. Mental health
disorders were the most prevalent source
of disability for young people worldwide,
accounting for 45% of total morbidity.
Disorders included major depression,
substance abuse, schizophrenia, and
bipolar disorder. The next most prevalent
causes of disability were injuries (12%)
and infectious and parasitic diseases
(10%). Further, the prevalence of mental
health disorders varies across gender,
ethnic, and socioeconomic lines[4].
Suicide rates among young people have
risen to such an alarming extent that 15
to 19 year olds are now at highest risk
of suicide in a third of all countries, with
suicide being the second leading cause
of mortality for this age group globally.
Young people can be expected to be the
Source: Institute of Policy Studies of Sri Lanka and Ministry of Youth Affairs
and Skills Development, 2014.
group at highest risk of suicide in the
future. In most countries, suicide rates
are higher in males than in females.
This also applies to the 15 to 19 year
old age group, with about 10.5 suicides
per 100,000 people for males and about
4.1 per 100,000 people for females[5].
Gender ratios vary between countries
(about 3-4:1 in European countries and
1-2:1 in Asian countries) with a high
rate of suicides among young males in
the West and a relatively lower rate in
Asia[6]. The causes of suicide worldwide
are also diverse; with different risk factors
in different cultures. Mental disorders
(particularly depression) and abuse of
alcohol or drugs are the major risk factors
for suicide in Europe and North America.
In Asian countries, impulsiveness and
adjustment disorders play an important
role. A risk factor that is evident across
the East and West is unemployment,
especially when coupled by stressful
events such as financial problems and an
inability to compete[7].
41
Health Policy
Challenges
By Yolanthika Ellepola
Expenditure on NCDs
Way Forward
Projected data on Sri Lankas future
population trends, although alarming,
is an unavoidable demographic
issue. Today, population ageing is
at its inception and the temptation
might be to dismiss this issue for the
distant future. However, to do so
would be a mistake. Although ageing
in Sri Lanka is not as advanced as in
developed nations, a silver economy
is not far off. With rising longevity
and low fertility rates, Sri Lanka is
confronted with social and economic
repercussions that are mostly negative
for the society at large. It is even
anticipated that Sri Lanka will follow a
similar trajectory to developed South
East Asian nations and run the risk of
growing older before growing richer.
Unlike in South Korea where
healthcare spending rose from 2% to
6% of GDP between 1970 and 1997,
most Asian countries including Sri
Lanka face a predicament of expanding
elderly population with associated
healthcare needs and lower levels
of health spending. Given the high
costs entailed, adequate healthcare
is simply beyond reach for many
Asian countries. Lessons could be
drawn from Japan for instance, where
universal health insurance is funded
by both the employers and individuals
assisted by significant government
subsidies. Therefore, complying with
this years UN theme, the Sri Lankan
health sector should include chronic
disease prevention through enhanced
care for the elderly population, and
invest in a formal system of old age
support on a priority basis.
43
44
teaching ability.
In Japan, since 2009, teachers are
expected to renew their certification
every 10 years, after undergoing
professional development. This policy
change has encouraged teachers to
participate in professional development.
Also, schools are able to not renew
appointments of teachers who fail to
upgrade or renew their certificates.
The nexus of interaction between all the
areas highlighted, are shown in Figure 1
above.
45
Open
More Sri
Lankans Access
Higher Education
By Nisha Arunatillake
PROBLEMS OF COST,
SPACE, AND QUALITY ARE
CRIPPLING THE CHANCES
OF MORE YOUNG SRI
LANKAN'S GAINING
HIGHER EDUCATION
In Sri Lanka too, MOOCs could be a
solution to many of the issues facing
the countrys tertiary education
system and those aspiring to get
higher qualifications. Students can
MOOCS COULD BE A
SOLUTION TO MANY OF
THE ISSUES FACING THE
COUNTRYS TERTIARY
EDUCATION SYSTEM
Through this method, universities
would be needed primarily for providing
practical
knowledge,
accrediting
courses, and for assessing learning
outcomes. As a result, the universities
will be able to accommodate more
students, as students will need to
spend less time inside the university.
Presently in Sri Lanka, universities are
open mostly to those completing their
general education. A system similar
to MOOCs can open university doors
even for older students those who
wish to upgrade their skills or wish to
change their career paths.
Problems of cost, space, and quality
are crippling the chances of more
young Sri Lankans gaining higher
education. New technology provides
new options like MOOCs that can help
address this, especially as the country
aspires to be a knowledge-based
economy. MOOCs could be a win-win
solution to students and the state, and
Sri Lanka needs to take a close look at
it for introducing them here.
Asias Rise:
Asian Vitality
China, one of two regional anchors
along with India, has long surpassed
Germany as the worlds leading
exporter. Asian firms are among
the worlds most valuable brands,
Japanese and Korean cars are
ubiquitous on European roads,
EXPORTS TO CHINA BY
THE TOP-10 EXPORTING
ASEAN COUNTRIES NOW
EXCEED THEIR EXPORTS
TO EITHER THE NAFTA
REGION OR THE EU
Chinas Alibaba online marketplace,
for instance, now boasts 180 million
users, handled around US$ 250 billion
worth of transactions in 2013 (more
than eBay and Amazon combined),
and has filed for what is arguably the
worlds largest technology IPO valued
at close to US$ 20 billion (higher than
that of Facebooks). Meanwhile, intraAsian trade is proving to be a most vital
element of Asias economic vibrancy,
post-crisis. Exports to China by the
top-10 exporting ASEAN countries
now exceed their exports to either the
NAFTA region or the EU.
Inclusive Growth
The rise in wealth and affluence in Asia
is startling, but not surprising given
the rapid growth seen there. Industry
estimates suggest that Chinese
consumers lap up 10% of worldwide
luxury sales and East Asian shoppers
account for between one-fourth
and half of all purchases at designer
stores in Europe. Just sixty years ago,
the picture in Asia was very different.
It was the worlds poorest region.
Strong growth has lifted millions of
out poverty, but much remains to be
done. The ADB estimates that around
1.7 billion people in Asia still live on
less than US$ 2 a day, and roughly
700 million on less than US$ 1 a day.
Disparities exist among sub-regions of
Asia as well poverty remains highest
in South Asia and is lowest in East Asia
47
Regional Tensions
Ageing Population
Ageing population, income inequality
and rapid urbanisation are three of the
critical challenges to Asias rise. Image
(c) Anushka Wijesinha, Seoul, South
Korea.
48
Rapid Urbanization
Another prominent feature of
the Asian growth has been the
rapid urbanization of Asian cities,
characterized by extensive rural-urban
migration, heightened pressure on
urban infrastructure like transport,
water, housing and sanitation, and the
concomitant rise in pollution. While the
more newly industrialized countries in
Asia such as China and India still do
Environmental Pressures
Linked to this is the growing concern
around the environmental outcomes
of rapid growth. It is now widely
accepted that Asia cannot grow under
the same pollute now clean later
pattern as the West. Certain parts of
Asia, especially countries located in
the tropical region and in islands, are
among the most vulnerable to impacts
of global climate change.Asia is facing
serious environmental degradation
issues linked to poor land use
management, unsustainable energy
consumption, and overuse of natural
resources. All of these appear to be
influencing changing weather patterns,
including freak events. The frequency
and the intensity of natural disasters in
Asia are showing an increasing trend.
During the period 1980 to 2009, over
38% of global economic losses due to
natural disasters were reported from
Asia.
Asian Integration
All of these developments have
unravelled how far Asia has to go in
terms of a common vision around its
ascendance. The closest effort towards
bridging this is of course the moves
by ASEAN to establish a fully-fledged
diplomatic and economic community
by 2015. But one cannot forget that
this is limited to just a sub-set of Asian
nations. Asia would need an ambitious
regional effort of the type seen in
Europe. But unlike the European
project, few political leaders have
come out as willing to stake their
careers to further an Asian project.
Groups of countries swing between
fear/suspicion of, and mutual gain
from, the two regional giants China
and India. Little regional cooperation
on security and military affairs prevail.
There is also a notable absence of panAsian institutional arrangements and
agreements (similar to the European
Commission) to further all these
agendas in a manner that is strong,
consistent, and widely accepted.
Nevertheless, cooperation on trade
and investment appears to be growing
ever stronger.
While much of the attention is on the
TPP, another pan-Asian trade deal
is taking shape more quietly the
Regional Comprehensive Economic
Partnership (RCEP). As Ganeshan
Wignaraja, Director of Research at the
ADB Institute remarked at a recent
IPS seminar, the RCEP could create
the worlds largest trading bloc and
have significant implications for the
world economy. The RCEP bloc
that includes three of the largest
economies in the world, China, India
and Japan would represent half of
the worlds population, nearly onethird of global GDP and global trade,
and one-fourth of global FDI inflows.
The RCEP, an example of megaregionalism, has the potential to not
only bring large gains to Asia, but also
carve even stronger position for Asia in
the world economy.
WHILE LOOKING AT
LATCHING ON TO
RISING ASIA,
SRI LANKA CANNOT
IGNORE COUNTRIES TO
ITS WEST
While looking at latching on to rising
Asia, Sri Lanka cannot ignore countries
to its West whether it is in Africa, the
Middle East, or traditional partners
in the industrialized West. Although
many are quick to assume it, the
countries in Europe and North America
are not in systemic decline. They will
continue to be poles of innovation,
creativity, consumption, and global
leadership, and failing to recognize
that and navigate accordingly, will only
be to Sri Lankas peril.
(This article is based on the Policy
Perspectives chapter of the Sri Lanka:
State of the Economy 2014, the IPS
flagship annual publication.)
49
Laying the
New
BRICS for a
50
A 5 Year Journey
It has been 5 years since the inaugural
BRIC summit took place in Yekaterinburg,
Russia in June 2009, when the leaders of
the first four nations decided to moved
beyond a catchy acronym and become
an international economic platform. At
subsequent summits, some progress
was made on new avenues of economic
cooperation, but the idea for a BRICS
Bank was first conceived in Delhi in 2012
and further mooted in 2013. In fact, the
2013 summit was supposed to clinch the
deal but that did not materialize. Back in
March 2012, in New Delhi, BRICS leaders
inked a deal to provide credit to each other
in local currencies, to facilitate economic
growth during times of crisis. The aim of
the currency swap deal is to promote trade
and investment in local currencies as well
as to cut transaction costs. It is also viewed
as a step towards replacing the dollar
as a reserve currency in trade between
BRICS. In March 2013, the central banks
of both Brazil and China took a bold step
entering into a US$30 billion currency swap
agreement. The new bank is, then, a strong
next step in this ongoing process.
51
52
Economy in Transition
As widely acknowledged by any Chinese
official or business leader I spoke to,
the Chinese economy is in the middle of
massive transformation pivoting to new
source of growth, tackling tough reforms,
and managing new aspirations of the
Chinese people. When I asked Daokui
Li, Professor of Economics at Tsinghua
University, about this shift, he remarked
that the economy is in a difficult and
challenging transition. New engines of
growth must take over the old. He was
referring to the re-balancing from growth
led by exports and property development
to consumption-based growth and greater
infrastructure investment that improves
53
&Trade
Aid
54
WHILE CHINESE
FINANCIAL ASSISTANCE
HAS SOARED, PRIVATE
FOREIGN DIRECT
INVESTMENT (FDI) HAS
BEEN SLOW TO COME
55
Looking at
Trade
Agreements and Lessons for the FTA with China
By Janaka Wijayasiri and Dharshani Premaratne
As Sri Lanka gears up to sign a trade
agreement with China, Janaka
Wijayasiri and Dharshani Premaratne
highlights some key takeaways from
Sri Lankas experience with previous
FTAs.
While Sri Lanka has been actively
engaged in all multilateral trade
negotiations and has been undertaking
trade reforms in keeping with the
WTOs GATT principles, Sri Lanka also
has been involved in a number of
regional trade liberalization initiatives.
Sri Lanka participates in two regional
agreements, the South Asian Free
Trade Agreement (SAFTA) and the
Asia-Pacific Trade Agreement (APTA),
and two bilateral agreements, the
Indo-Sri Lanka Free Trade Agreement
(ISFTA), and the Pakistan-Sri Lanka
Free Trade Agreement (PSFTA). This
article highlights some of the key
lessons from Sri Lankas experience
with these existing FTAs that must
be borne in mind when negotiating a
trade agreement with China.
Rules of Origin
Negative List
Non-tariff Measures
When tariffs are brought down through
negotiations, non-tariff measures
(NTMs) or behind the border barriers
can reduce the use of the agreements
if they are not effectively dealt with.
NTMs should be identified at the
onset and addressed along with tariff
reductions/eliminations. In this regard,
there should be binding commitments.
Many Sri Lankan exporters have faced
difficulties in entering the Indian
market due to the prevalence of
NTMs such as state taxes, standards,
and administrative procedures[v],
which are outside the scope of tariff
reductions under the ILFTA.
Tariff-rate Quotas
Supply-side Constraints
There is little point in getting
concessions under a trade agreement
if the country does not have the
capacity to supply the goods in
demand this can be a constraint in
the case of a small country like Sri
Lanka. This was demonstrated in the
case of strawberry exports from Sri
Lanka to India[vii].
Awareness
The lack of knowledge and awareness
among traders of the concessions
offered by the FTAs has been a key
impediment to Sri Lanka garnering
maximum benefits of existing FTAs.
Although a majority of exporters/
importers were aware of the FTAs,
many SMEs lack awareness of specific
information on the duty concessions
offered and the processes in acquiring
the preference (ROO, tariff rate quotas,
etc.).
Visas
Institutional Support
Consultation
Experience with the ILFTA, and
attempts to extend the agreement
into a Comprehensive Economic
Partnership
Agreement
(CEPA),
highlights the need for greater
private-public dialogue in Sri Lanka
on trade agreements, on an on-going
and regular basis[viii]. Consultations
should not be reserved exclusively to
the level of governments finance,
commerce, or and trade departments,
but rather with stakeholders at large.
This can ease exporter-importer
concerns, demonstrate that challenges
in the agreements can be addressed
in a participatory manner, and help
create broader public awareness of,
and confidence in, the opportunities
and benefits of the agreements.
References:
[i] de Mel, D., undated, India Sri
Lanka, Pakistan Sri Lanka Bilateral
Free Trade Agreements, Institute of
Policy Studies of Sri Lanka, Colombo,
Sri Lanka.
[ii]Weerakoon, D. (2010), SAFTA:
Current Status and Prospects in
Promoting Economic Cooperation in
South Asia: Beyond SAFTA ed. Sadiq
Ahmed, Saman Kelegama and Ejaz
Ghani, Sage Publications, New Delhi,
India.
[iii]IPS (2007), International Economic
Environment in Sri Lanka: State of
the Economy 2007, Institute of Policy
Studies of Sri Lanka, Colombo, Sri
Lanka.
[iv]ibid
[v]Kelegama, S and C. Karunaratne
(2013), Experiences of Sri Lanka in the
Sri Lanka-India FTA and the Sri LankaPakistan FTA, Background Paper
on Regional Value Chains, UINCTAD,
available at: [http://unctad.org/en/
PublicationsLibrary/ecidc2013misc1_
bp10.pdf]
[vi] Ibid
[vii] Kelegama, S. (2014), Challenges
remain for ChinaSri Lanka FTA, East
Asia Forum, available at: http://www.
eastasiaforum.org /2014/03/28/
challenges-remain-for-china-sri-lankafta/
[viii]Ibid
57
58
Coverage of Goods
Services Liberalisation
59
IPS
NEWS
61
LATEST IPS
PUBLICATIONS
International Conference on Policies
for Mainstreaming Migration into
Development in Sri Lanka
By Priyanka Jayawardena
Health Economic Series No.1
September 2014
Improved healthcare alone cannot improve
all health outcomes, as there are deep rooted
socio-economic factors affecting health.
Thus, this study looks beyond health and
explores the socio-economic determinants of
child and maternal malnutrition in the Estate
sector.
Sri Lankan Female Domestic Workers in the
Middle East: Does Recruitment through an
Agent Minimize Vulnerability?
By Bilesha Weeraratne
Labour Economic Series No.18
September 2014
The vulnerability of female domestic workers
at destination is an important concern of Sri
Lanka. This study attempts to discern if there
is a nexus between vulnerability of female
domestic workers at destination and the
recruitment channel.
Returning Home: Experiences & Challenges
PUZZLE
4
5
3,000
In November it
was
reported
that at least
3,000 Sri Lankans were among
50,000 illegal immigrants the
British Immigration authorities
lost track of. The figure of 3,000
has been suggested to Sri Lankan
consular officers as a minimum
they think are evading arrest and
deportation.
7
8
10
11
12
16
14
15
17
19
20
Across
2.
Regional organisation in South Asia
4.
This ocean covers 30% of global ocean
8.
People aged 65 years and above are expected to grow dramatically in this region
9.
In best-performing, ensuring teach quality starts with ...
11. A major source of livelihood in SL which successive governments have supported through fertilizer subsidies
13. A migrant who turns to his country
17. Frequency and intensities of these events have increased
18. Sri Lanka aspires to be such an economy
19. Acronym for 4 emerging markets
20. Major source of foreign exchange to Sri Lanka
Down
1.
Largest foreign employment market
3.
China's biggest online commerce company
5.
This list contains sensitive products which are exempted from tariff concessions
6.
A major development challenge and a multidimensional issue
7.
Chinese President
10. Ozone depleting substance
12. A forest range in Sri Lanka
14. Women are more likely than men to invest a large portion of income in ...
15. Province with the highest number of teenage pregnancies in the country
16. Deadly disease of the tropics
Answers
Across: 2. SAARC; 4. Indian; 8. Asia; 9. Recruitment; 11. Paddy; 13. Returnee; 17. Drought; 18. knowledge based; 19. BRIC; 10. Remittances.
Down: 1. Middle East; 3. Alibaba; 5. Negative; 6. Poverty; 7. Xijin Ping; 10. CFC; 12. Knuckles; 14. Education; 15. Eastern; 16. Dengue
64
70%
18
1bn
13
FAST FACTS
1.4 bn
According to social
media
analytics
Socialbakers almost
70% of Facebook users in Sri Lanka
are males. However, if you consider
the age rather than gender, 41%
of Sri Lankan Facebook users are
between the ages of 18 and 24 and
about 34% are between the ages of
25 and 34.
139 bn t4 ,h0a0 n0
More
3,000
22 bn
In October 2014, Facebook purchased the
mobile messaging service WhatsApp for up
to $22 billion (13.7 billion) in cash and stock
in the firms biggest ever acquisition. This is
an increase on the $19 billion (11.8 billion)
initially announced as Facebook's share price
has risen since the deal was first announced.
Facebook will pay $4.59 billion (2.86 billion)
in cash and 177,760,669 shares in the
company, which have risen to $77 (48) since
February 2014.
2KG
6.7%
12,000
16
There
are
as
much
as 15, 000
vacancies in
the countrys
E x p o r t
Processing
Zones (EPZs),
and
this
high dearth
of labour is
hampering
operations
of factories
l o c a t e d
in
them,
Investment
Promotion Minister Lakshman
Yapa Abeywardena said.
15,000
TALKING ECONOMICS
640
/instituteofpolicystudies
/TalkEconomicsSL
www.ips.lk/talkingeconomics
/IPSsrilankavideo
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A PUBLICATION BY
THE INSTITUTE OF POLICY STUDIES OF SRI LANKA