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2018 - ISSUE ONE

08 Straight Talk on Sri Lanka –

Singapore FTA: What it Means for
Trade and Investment Flows

18 Building a More English-

LiterateSri Lanka: The Need to
Combat Inequities

Regulating Inbound Migration:

Creating a
24 ‘In’s and ‘Out’s of Sri Lanka’s Policy

30 Malnutrition in Sri Lanka:

A Persistent Problem Knowledge-based
04 14
Economic Reforms in Sri Lanka: Improving Education in Sri Lanka
Salvation or a Recipe for Inaction? Priority Areas for Action

06 16
Trouble Brewing? How Sri Lanka’s Towards a Knowledge Based 26
Tea Industry Can Prepare for Future Economy Start with Quality STEM
Challenges Teachers for Every Child! Economically Empowering
Sri Lankan Women One Strategy
Does Not Fit All

‘Lead like a Girl’: Empowering
Sri Lanka’s Female Leadership

Straight Talk on Sri Lanka –
Singapore FTA What it Means for Building a More English-Literate
Trade and Investment Flows Sri Lanka The Need to Combat
10 30
FTA with Malaysia Will it Lead to Malnutrition in Sri Lanka:
an Expansion in Flow of Trade and Where have all the Workers Gone? A Persistent Problem
Investment with Sri Lanka? ‘Sectoral Mismatch’ between Labour
Demand and Supply in Sri Lanka
Inside IPS

IPS News

22 Latest Publications
Sub Agents and Migrants Dissecting
their Relationship to Guide Regulation
24 38
Walk Before You Run: Defining the
Scope of the ‘Single Window’ for Regulating Inbound Migration: ‘In’s Fast Facts
Trade in Sri Lanka and ‘Out’s of Sri Lanka’s Policy
In a Nutshell
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EDITORIAL Previous Issues
As Sri Lanka attempts to establish a highly- Meanwhile, Harini Weerasekera draws
competitive, knowledge-based economy, it attention to another dynamic in the Sri Lankan
is important to pay attention to the education labour market – the sectoral mismatch
sector of the country. One of the biggest between the demand and supply of labour.
challenges in this regard is reforming the Analysing the data from Sri Lanka’s first Labour
outdated education system in Sri Lanka. The Demand Survey, she points out that a large
current system that emphasises success at portion of existing vacancies in the country are
examinations over any other achievement, found to be in routine and non-routine manual
coupled together with the overloaded jobs. However, most of Sri Lanka’s job-seekers
curricula, is a cause for concern. Inequities in are educated youth, who instead, search for
physical and human resources at the school white-collar jobs. This has led to a mismatch
level only serve to exacerbate this problem. between sectors which have job openings and
Allocating more funds is not the only answer the kinds of jobs that are sought by youth. She
to these issues; the education system as a deliberates the option of attracting foreign
whole needs to be scrutinised and suitable workers to fill these shortages as a solution to
policy reforms need to take place to address the problem. An expert on this subject, Bilesha
these structural weaknesses. Weeraratne discusses the importance of having
a proper policy to regulate in-bound migration,
It is in such a context that the theme of this noting that such impending changes hasten
edition of the Talking Economics Digest the need for stronger policies to increase Sri
focuses on ‘Creating a Knowledge-based Lanka’s preparedness to receive incoming 2017 - ISSUE TWO

Economy’, through ameliorating the education migrant workers. This is especially important
sector. with the signing of the Sri Lanka – Singapore 10 Sri Lanka Reaping the
Benefits from
Preferential Trade

Free Trade Agreement (SLSFTA), she says. 24 Is Sri Lanka’s

Grade Five Scholarship
Exam Akin to a
Fool’s Errand?

30 Did the

Fittingly, this edition of the Talking Economics

Blue-Green Budget
Forget Migrants and
their “Greenbacks”?

Digest features an interview with IPS’ Janaka Wijayasiri and Kithmina Hewage takes 46 Measuring Sri Lanka’s
Sustainable Tourism:
Missing Piece of

a look at the SLSFTA in detail, noting its key

the Puzzle

Director of Research and the Head of the

Labour, Employment, and Human Resource features and the benefits Sri Lanka stands to
Development unit, Nisha Arunatilake. Here, gain from it. Apart from this, the Digest also Integrating
she highlights the importance of education includes a special interview with one of IPS’ Sri Lanka into the
research in ensuring that Sri Lanka has a pool Distinguished Fellows, H. N. Thenuwara, on the Global Economy

of trained and skilled workers, who can help challenges facing the tea industry of Sri Lanka
create a knowledge-based economy in the and its future course. A wide range of other
country. She also identifies two challenges issues are discussed, ranging from the National
in this regard – improving, modernising, Single Window process in the pipeline, the Executive Director
and expanding the tertiary education sector persisting problem of malnutrition facing the
and facilitating the creation of sophisticated country, and the viability of economic reforms Dushni Weerakoon
professional jobs. that are proposed for the short and medium
term. In addition, it also contains news from
IPS, its latest and forthcoming publications, Director of Research
As such, in one of the articles included in this including the annual flagship report, ‘Sri Lanka:
edition, the importance of science, technology, State of the Economy 2018’, as well as a Nisha Arunatilake
engineering, and math (STEM) education quick snapshot of local and global highlights
is stressed. Here, the authors note that, affecting Sri Lanka’s economy.
unless qualified teachers are available in all Talking Economics Team
classrooms, Sri Lankan students will find it
difficult to pursue higher studies in the science While wishing you a pleasant read, I hope that Janaka Wijayasiri
and technology fields. Another skill that is the Talking Economics Digest serves as an Bilesha Weeraratne
vital to improve the employability of graduates informative, engaging, and thought-provoking
piece of work. As always, I welcome your Kithmina Hewage
is English literacy. In this regard, Ashani
Abayasekara highlights the necessity to cater thoughts, insights, and feedback to make this Shihara Maduwage
to students of different levels of competencies exercise even better. Charmaine Wijesinghe
and to improve teacher allocations to ensure
that disadvantaged schools are staffed with
good English teachers. Shihara Maduwage IPS Photo Credit
Editor – Talking Economics Roshan Kaluarachchi
Nalaka Liyanapathirana
October 2018

Institute of
Policy Studies of Sri Lanka
100/20, Independence Avenue
Colombo 07, Sri Lanka
Tel: +94 11 2143100, +94 11 2665068
Blog: ‘Talking Economics’

Suresh Fernando

Salvation or a Recipe
for Inaction?
By Kithmina Hewage and Harini Weerasekera

Economic reforms have become an urgent need three changes in its overlooking ministry in the enrolment in STEM (Science, Technology,
for Sri Lanka, with successive governments space of three years. Engineering, Mathematics) subjects has a
since independence, resorting to short-term, knock on effect on the economy, with only 3.1%
politically expedient economic strategies that Another crucial area in need of reforms, of the population above the age of 15 engaged
have placed considerable macroeconomic hampered by institutional complexity, is the in science and technology related education
pressures whilst reducing Sri Lanka’s global State-owned Enterprises (SOE) sector. Multiple and employment. Given the current challenges
competitiveness. Vision 2025, the current stakeholder contestations take place on SOE regarding broad economic reforms, the
government’s short and medium-term policy reforms due to the decentralization of SOE government should concentrate on prioritizing
direction, is aimed at steering the economy oversight, which slows and complicates the policies that have wide public and bipartisan
towards more sustainable means of growth, reform process. support, such as accommodating flexible office
led by foreign and domestic private investment. hours and less rigid working conditions.
The successful implementation of economic Given that unstable and bloated public
reforms, however, depends heavily on a institutions are often a reality that developing
Deficient Data Accessibility
combination of political, institutional, and economies must contend with, a more practical
Successful reform identification, proposal, and
socio-economic factors. In fact, institutional approach suggested would be to adopt
implementation depend heavily on evidence-
misalignment, misidentified reforms, and data ‘clusters’ of core subjects areas that group
based policymaking. Therefore, deficiencies in
deficiencies were identified as key structural together multiple ministerial portfolios belonging
data accessibility are a leading obstacle to good
and institutional bottlenecks hampering the to the same core subject area. Under such a
policy research in Sri Lanka, and ultimately to
successful implementation of Vision 2025 at the framework, clusters should coordinate closely to
its capacity to influence policy reform. This is a
New Thinkers’ Symposium – a unique platform avoid duplicating mandates. The current ad-hoc
composite problem due to obscure governance
launched by IPS for those under the age of 35 division of ministerial portfolios creates conflicts
structures and poor access to official data and
from the public sector, private sector, academia, of interest whilst also hindering the scope of
information. The problem affects the research
think-tanks, and other fields of interest involved policy consistency and continuity.
community and university students alike.
in economic affairs.
Using facilities like the Right to Information
Misidentified Reforms (RTI) Act has led to some improvements –
Institutional Misalignment Economic reforms are often spread over however, Verite Research finds that nearly
The most severe impediment to national a significant amount of time and require 90% of 55 public authorities are ‘moderately
economic policy implementation is the complex considerable sequencing. In this regard, it is unsatisfactory’ in their proactive disclosure
institutional framework within Sri Lanka’s public vital that the government undertakes reforms of information and only 2% moderately
sector, which lacks coordination and capacity, that are most impactful on the economy, while satisfactory’ with regards to the same.
and is worryingly bloated. The sector is made taking into account “low hanging fruit”. For This issue links back to poor public service
up of too many workers who are engaged in instance, when considering the impact of delivery, under a highly complex institutional
duplicative work while being subject to constant Information Communication Technology (ICT) on setup, making the accessing of datasets time
shifts in ministerial portfolios; a recipe for the economy, policies to enable flexible working consuming or impossible.
inaction of any national economic action plan. conditions facilitated by ICT and improved
online payment mechanisms can have a much
‘Institutional excess’ in Sri Lanka’s public sector larger marginal benefit to the economy than
Unfortunately, Sri Lanka’s history of economic
is giving rise to ‘institutional fragmentation’ the significant investment cost of providing free
policy reforms has often been defined by its
and instability, which is ultimately the primary wifi to the public. For instance, internet usage
short-term nature, despite the necessity for
hindrance to implementation of any reform is low in Sri Lanka, amidst relatively affordable
long-lasting economic reforms heightening
agenda. Policy ‘roadmaps’ such as Vision 2025 and higher internet speeds, compared to
in recent years. Regardless of political
– which have undergone a consultative process other countries in the region. Similarly, on
affiliation, the country’s economic future will be
to include inputs of relevant stakeholders – are education reforms, low
determined by responsible policymaking over
likely to be futile in the absence of a stable levels of tertiary
the next few years that address structural and
institutional setup to implement the mapped out
institutional weaknesses. While political will is
reforms. A snapshot view of ‘institutional
important to successfully implement these
excess’ can be seen in Figure 1. Too
reforms and the appetite for reforms has
many ministries, agencies, and
waned recently, there is
departments, result in overlapping
significant scope for
functions and mandates, which
reforms with little to
leads to institutional fragmentation.
no political costs.
Furthermore, the level of
Even these reforms,
institutional instability
however, are likely
in Sri Lanka can
to be undermined
be illustrated
by bottlenecks
with the case of
discussed above, unless the
the ‘Department
government takes decisive steps to
of Project
mitigate them.
and Monitoring
Department’ (for Vision
Source: Persentation made at the New thinkers’ Symposium
2025), which experienced 2018, based on information from the Department of Management
services, Ministry of Finance(2017)

Trouble brewing?
and was only second to India. However, over
the years, Sri Lanka’s growth was slow, and
it fell back to the fourth position in global tea

How Sri Lanka’s Tea Q: What are the challenges tea

Industry Can Prepare for

producers in Sri Lanka face,
when attempting to
increase the supply of tea?
Future Challenges The world of tea supply is controlled by two
factors; the increase in area harvested and the
increase in yield. The increase in harvested
By H.N. Thenuwara and Nisha Arunatilake
area is seen in countries with large amounts
of arable land. Those countries also have
large populations that can facilitate the labour
requirement in the tea industry. Sri Lanka, on
the other hand, has the smallest land mass and
the smallest population. These factors limit Sri
Lanka’s future production and supply of tea. The
increase in production in Sri Lanka is purely due
to the increase in the yield because the area
harvested has not increased over the years.

Sri Lanka’s exports are also facing a similar fate

in terms of production. Sri Lanka beat India to
become the world’s largest tea exporter in the
1990s. Since then, Sri Lanka has fallen behind
Kenya and China. Sri Lanka is now at the third
position, competing with India and Vietnam.

Q: Apart from the ones

mentioned above, what are
the main challenges facing
Sri Lanka’s tea industry?
Last year Sri Lanka celebrated the 150th over time? How have we Sri Lanka has the ability to maintain a healthy
anniversary of its tea industry. Will the tea
performed compared to our production level, though it may not be able
industry survive another 150 years? The
prospects for the growth of the industry are
competitor countries? to compete in terms of production quantity
with other players, who are better endowed
promising. Helped by the health benefits of Sri Lanka’s production has been increasing,
to increase production levels. Thus, major
tea and the growth of an increasingly health but at a low rate of 0.8 per cent, over the last
challenges facing Sri Lanka are keeping up a
conscious population and per capita incomes, 50 years. Meanwhile, Sri Lanka’s share in the
healthy production level, maintaining the high
the global demand for tea has risen over time. global supply has dropped from 21 per cent to 6
quality, and raising unit price while cutting costs
However, Sri Lanka’s supply of tea has not kept per cent during this period.
of production.
up with the growth in global demand for tea. H.
N. Thenuwara — currently an Adjunct Assistant Tea grows only in some parts of the world.
The above challenges can be met by taking
Professor attached to the University of Iowa, Only about 50 countries grow tea, according to
a series of critical measures, which include
USA who served as the Director of Economic statistics published by the Food and Agriculture
developing natural resources and human
Research and Assistant Governor of the Central Organization of the United Nations (FAO) in
capital needed for the industry, developing
Bank of Sri Lanka — in his chapter on “The 2017. However, 10 countries produce over 90
physical infrastructure, maintaining sound
Future of Tea Industry,” in the forthcoming per cent of world tea output, namely, China,
macroeconomic policies, adopting appropriate
Sri Lanka Tea Industry in Transition – 150 India, Kenya, Sri Lanka, Vietnam, Turkey, Iran,
trade policies, enhancing competitiveness,
years and Beyond, examines the challenges Indonesia, Argentina, and Japan. Of these
fostering a unique brand, integrating deeper
and opportunities facing the tea industry of countries, China was the largest producer with a
in the global value chain, and benefitting from
Sri Lanka and provides recommendations on production of over 35 per cent of world tea. This
external economies while overcoming external
different strategies the tea sector can adopt to was a result of an impressive annual average
take advantage of global prospects. Following growth of 6.5 per cent from 1961 production
is an expert interview on the main findings from of 79,000 metric tons, compared with the
his chapter. growth of 0.8 per cent recorded by Sri Lanka.
Q: What are the strategies
In 1961, Sri Lanka produced a substantially for developing human and
Q: Has the Sri Lankan tea larger amount of tea (206,000 metric tons) than natural resources need-
industry increased supply China, which produced only 79,000 metric tons, ed for the tea industry?
The tea industry in Sri Lanka is more intensive solution is mechanization. Another is harvesting Q: How can the global
in land and labour, and less in capital. While tea under different models, rather than the
competitiveness of the in-
the industry uses the land for its growth, it also traditional employer-employee model. Sri
gradually degrades the land with pollutants Lanka’s plantations have already experimented
dustry be increased?
associated with fertilizer, and engendering soil with out-grower systems, where workers The critical pillar of the sustainability in the tea
erosion. Thus, the long term sustainability of receive plots of land from plantations to sector is enhancing global competitiveness.
the industry depends on how well the land is independently cultivate, and supply green leaf Competitiveness increases with the quality of
conserved. In a growing economy, it is difficult to factories. This could solve various incentive the product and the profitability of suppliers.
to retain manual labour over long periods of problems associated with hired labour. The higher unit price indicates the existing high
time, as younger generations do not wish quality of Sri Lankan tea.
to render manual work in plantations. One
Sri Lanka’s best opportunity in sustaining the
tea sector is strengthening the unique brand
Sri Lanka’s Tea industry

of ‘Pure Ceylon Tea’. Sri Lankan tea already
commands a premium price. Improving quality
and brand uniqueness are essential to continue
years the command in high price.

Sri Lanka can also raise earnings from tea by

integrating deeper into the global value chain.
This can be achieved by increasing the share
of value added tea production and exports. Sri
Lanka has a great potential to engage deeply
in the global value chain with entrepreneurial
strength of private firms and institutional
support from the government.

Q: How can the sector benefit

the economy in other ways?
The tea sector provides an economically
significant positive externality (or external
economies) mostly to the tourism sector.

The colonial heritage of tea and the unique

taste of ‘Ceylon Tea’ provide additional
Tea is a Sri lanka’s Tea is a valuable
Sri Lanka is the4th incentives for tourists to choose Sri Lanka
3 rd
foreign exchange.
largest tea producer in the as a prime destination. The tea sector in turn
industry world and contributed to can introduce pure Ceylon Tea to tourists to
6.5% of global initiate and develop a lasting desire for its tea.
production of tea. Tea lands can also be used for various other
economic activities with external economies,
such as dairy farming to supplement the
income of the plantation and its workers. The
tea sector also provides forward and backward
linkages to a large number of other economic

So to summarize …
The tea industry
provides employment
In 2016 Sri Lanka exported
approximately 2nd largest exporter of The future of the tea industry in Sri Lanka
tea to the world market
directly and indirectly to
288,771 MT of contributing to
depends largely on the quality of tea, and not
1 million people black tea, with a value of
17.3% of world on the quantity. Thus, the growth of the industry
USD 1,269 mn.
will depend on maintaining the high quality of
tea exports.
tea, and producing value added tea, developing
Sri Lanka’s own brands, and stamping a
Tea growing reputation as an environmentally friendly and
areas in Sri Lanka ethical tea producing country in order to draw
buyer interest and a higher price.
Nuwara Eliya Uva *Nisha Arunatilake is Director of Research
at the IPS.
Dimbulla Uda Pussellawa This interview is based on a chapter by H. N.
Thenuwara in the IPS publication ‘Tea Industry
Ruhuna in Transition – 150 years and Beyond.’
Straight Talk on
Sri Lanka – Singapore FTA
What it Means for Trade and Investment Flows
By Janaka Wijayasiri and Kithmina Hewage

The freshly-signed Sri Lankan-Singapore Singapore was Sri Lanka’s seventh largest
FTA (SLSFTA) marks a new milestone in the trading partner, with total trade in goods
relations between the two island economies. amounting to USD 1.14 billion, accounting for 4
The agreement, signed on 23 January 2018, % of Sri Lanka’s total trade. Sri Lanka imported
after almost 18 months of negotiations, is from Singapore goods amounting to USD 1.03
a modern, comprehensive, and high quality billion, comprising of mostly petroleum, gold,
agreement. It covers a wide range of areas machinery and equipment, chemicals, plastics,
including goods and services, investment, iron, malt, and paper. Sri Lanka’s exports to
e-commerce, government procurement, Singapore during the same period totaled
intellectual property rights, telecommunication, USD 115 million, comprising of boats, fuel oil,
etc. While FTAs aim to reduce or eliminate trade tea, quartz, gems and jewellery, wheat, crabs,
barriers and increase trade, more importantly, electrical capacitors, nuts, and rubber tyres.
in the case of SLSFTA, it demonstrates to
the rest of the world that Sri Lanka is open Singapore has also been an important foreign
for business, including investments, while investor in Sri Lanka for the past two decades;
complementing each other as hubs – Sri Lanka it has consecutively been among the top 10
as a hub for South Asia and Singapore for South investors in recent times. Singapore firms
East Asia. This is in line with Sri Lanka’s Vision have been active in areas such as property
2025, which aims to position the nation as an development (Overseas Reality Ceylon
export-oriented economic hub at the centre of Ltd), tourism (Shangri -La Hotels), food and
the Indian Ocean. beverage processing (Prima Ceylon, Asia Pacific
Breweries), and telecommunications (Lanka
Trade between Singapore and Sri Lanka has Bell). Some of the areas in which investors from
steadily grown, with bilateral trade crossing Singapore have expressed interest in Sri Lanka
the USD 1 billion mark since 2006.In 2016, include warehousing facilities and logistics,
service apartments, furniture manufacturing,
training centres, fire safety engineering, solar
Sri Lanka-Singapore FTA solutions, and retail. Likewise, Sri Lanka
has identified infrastructure, BPO/IT and IT
SG investments in LKA Bilateral trade(US$ Bn) enabled services and educational institutes,
Singapore has been an important fereign 2 tourism, gems and jewellery, and hospital and
investor in Sri Lanka healthcare as targeted sectors for attracting
Singaporean companies have invested in 1 FDI from Singapore.
property development,tourism,food and
beverage processing, telecom 0
2007 2011 2016 Reasons to Sign the
Singapore Market Snapshot
There are two compelling arguments
supporting the agreement; at the bilateral
level, it provides reciprocal benefits for both
countries. It will enhance bilateral trade,
5.62 mn $ 295 mn $ 52,479 $ 1.8 improve the economic and investment
Population GDP GDP per capita GDP growth relationship, and provide more secure
rate and open access for goods, services, and
investments in Sri Lanka and Singapore.
SLSFTA was signed in Colombo on 23 January 2018 by Singapore’s Minister
for Trade & Industry, S. Iswaran and Sri Lanka’s Minister for development But more importantly, it will help Sri Lanka
Strategies & International trade, M. Samarawickrama. advance the government’s policy of trade
liberalisation, and signal its commitment to
Sri Lanka and Singapore announced the launch of negotiations for a bilateral economic reforms, by signing a deal with one
FTA on 18 July 2016.
of the most liberal economies in the world.
Source: Compiled from data from UNCTAD and ITC

Key Features of SLSFTA Future Outlook
Sri Lanka’s overdependence on European
„„ Custom duties on 50% of tariff lines will „„ Better access to service sector markets and American export markets increases the
be eliminated immediately by Sri Lanka in Singapore and Sri Lanka, with economy’s vulnerability to external shocks,
(approximately 3600 tariff lines). This liberalization across different modes such as the economic recession in 2008
will be gradually increased to 80 % over of trade in services, in sectors such as and the loss of GSP+ concessions in 2010.
a period of 12 years. Singapore already professional and trade related services, Diversification of both export markets and the
grants Sri Lanka tariff free access on environmental services, construction, basket of exports are thus vital to position the
99% of goods. and tourism. Movement of natural Sri Lankan economy on a more sustainable
persons will be linked to commercial
„„ All goods under the agreement have presence (e.g., intra-corporate
footing. Therefore, the SLSFTA could act as a
to fulfill general rules of origin of 35% catalyst towards more proactive engagement
transferees). Only Singaporean and Sri
domestic value addition (DVA) and a with fast growing economies in East Asia,
Lankan nationals are recognized under
change of tariff headings (CTH at 4 digit through exports and investments.
the Agreement.
HS level). For some export products,
specific process rules will apply. No „„ The FTA includes a chapter on The success of such an agreement, however,
ASEAN cumulation is allowed under the investment which provides a
would also depend on sustained political will
FTA. binding commitment and framework
along with domestic institutional and economic
guaranteeing predictability and
„„ Sri Lanka’s Negative List accounts for transparency for investors. policy reforms to facilitate better export sector
20% of the country’s tariff lines and growth and investment. For instance, Sri
contains sensitive items based on „„ Government procurement (GP) is Lanka’s complex para-tariff structures and
revenue and domestic considerations included in the agreement, ensuring Sri the existence of other non-tariff barriers could
(i.e., petroleum products, alcohol Lankan businesses can compete with
severely undermine the success of the SLSFTA.
and tobacco).Under the agreement, Singapore businesses for government
international standards and practices contracts. This is the first time Sri Lanka
have been adopted to reduce non-tariff has included GP in its trade agreements. Economic liberalisation efforts often create
measures impeding trade. pockets of sub-industries that lose out.
„„ Reduced business costs and red tape Therefore, the government should also create
around customs processing, and adequate safeguards through trade adjustment
technical and quarantine standards.
assistance schemes and ensure that the
„„ A clear process to settle disputes. broader economy does not lose out on potential
benefits due to resistance by special interests.
In fact, Sri Lanka could learn from Singapore’s
The FTA is also expected to encourage greater Stronger relations with Singapore can help previous experiences in complementing a
investment flows between the two countries. Sri Lanka’s standing in South-East Asia and network of strategically placed FTAs with
Singapore sees potential in Sri Lanka as a participation in global value chains. SLSFTA is domestic economic reforms.
destination for Singaporean investments Sri Lanka’s first FTA with a South East Asian
and a gateway to rest of South Asia, given country – Sri Lanka has expressed an interest Therefore, the SLSFTA should be considered,
the proximity to and trade agreements with in pursuing trade deals with Malaysia, Thailand, not just in isolation, but as part of a broader
countries in the South Asian region. and Indonesia in the near future with a view to strategy to create an economy led by private
improving economic linkages with ASEAN and sector growth and well integrated into regional
At the regional level, the agreement serves Sri joining the mega trade agreement, Regional and global value chains.
Lanka’s broader engagement with one of the Comprehensive Economic Partnership (RCEP).
fastest growing regions in the world – ASEAN.
but these have been shelved since 2009 over
a number of issues (government procurement,
Bumiputra policy, etc). Malaysia’s approach in
negotiating FTAs has been progressive; while
its initial FTAs reduced tariffs and non-tariff
barriers, those signed recently have been more
comprehensive, with deeper commitments,
indicating that Malaysia has stepped up its

A FTA with Malaysia opens avenues for Sri

Lanka to enter into the dynamic Malaysian
market and plug into value chains in the
region. Sri Lankan exporters, importers, and
consumers can stand to gain by opening its
market and freeing trade and investment
between the two countries.

Two-way Trade

FTA with Malaysia:

Trade between Sri Lanka and Malaysia has
grown moderately over the past decade.
Aggregate bilateral trade (exports plus imports)
increased from US$ 384 million in 2007 to US$

Will it Lead to an Expansion in 684 million by 2016, representing a 75% rise.

However, such figures belie the actual state
of affairs. An examination of disaggregated

Flow of Trade and Investment statistics indicates fluctuations in bilateral

trade. Furthermore, trade flows have been
persistently asymmetric; Sri Lanka has been

with Sri Lanka? running a trade deficit with Malaysia, given that
exports have remained somewhat stagnant,
while imports display an upward trend. In
By Janaka Wijayasiri 2016, the trade deficit stood at approximately
US$ 599 million, almost double the figure
Prime Minister of Malaysia, Najib Razak, recorded in 2007. However, one should not be
who was on an official visit to Sri Lanka in too concerned about the growing trade deficit,
December 2017 to mark the 60th anniversary given that over 60% of total imports (excluding
of diplomatic relations between the two consumer goods) from Malaysia consist of
countries, has agreed with his counterparts, to intermediate goods, capital goods, and raw
expand cooperation in fields such as trade and materials, which are in turn used as inputs into
investment. He said a Free Trade Agreement production and exports from Sri Lanka.
(FTA) would be useful to expand bilateral
trade and steps would be taken to explore its As a trading partner, Malaysia is the 6th largest
feasibility during his meetings with President source of imports to Sri Lanka; Sri Lanka
Maithripala Sirisena and Prime Minister Ranil imported goods worth US$ 642 million from
Wickremesinghe. Malaysia in 2016, accounting for 3.3% of
inflows into the country. Conversely, Malaysia
Compared to its neighbors in Southeast Asia, ranked at the 36th place in terms of Sri Lanka’s
Malaysia was a latecomer to FTAs. But now export markets, with Sri Lanka exporting US$
it does not want to be left out of major deals. 42 million or 0.4% of total exports to Malaysia.
Malaysia has signed 13 FTAs with ASEAN Main exports from Sri Lanka are, vegetable
and other partner countries: 7 bilateral FTAs products, rubber articles, textiles and clothing,
and 6 regional FTAs. Malaysia signed its first food products, while imports from Malaysia
bilateral FTA with Japan in 2005. Since then, it included fuel, vegetables, machinery and
has signed deals with South Korea, Pakistan, electronics, and wood products (Figure 1).
Chile, India, New Zealand, Australia, and more
recently with Turkey. It is in negotiations with To truly maximize the benefits of the bilateral
Hong Kong, the European Union (EU), and trade relationship, Sri Lanka needs to
the European Free Trade Association (EFTA), significantly increase the quantity and the
while also being involved in the Regional value of exports to Malaysia. Opportunities
Comprehensive Economic Partnership (RCEP) for this still exist in a selected number of
and the Trans Pacific Partnership (TPP). export products, given the supply and demand
Malaysia has been in FTA talks with the USA, situation between the two countries; for
example, rubber, tea, etc. International trade statistics indicate the Malaysian FDI
market potential for “Black Fermented Tea” to be around US$ 27 million In addition to being a popular destination for Foreign Direct Investment
in Malaysia. However, Sri Lankan producers face stiff competition when (FDI), Malaysia has successfully become a significant outward investor
catering to the Malaysian market. Such competition is intra-regional in as well. Malaysian firms are increasingly investing in Asia and in the
nature, with nations like China, Vietnam, and Cambodia offering relatively services sector. Outward investment by Malaysian firms has steadily
similar products at a significantly lower cost. Furthermore, Sri Lankan increased and has consistently topped more than US$ 7 billion a year
exports lose competitiveness when slapped with high import tariffs. For since 2009.
instance, Sri Lankan exporters struggle to compete with regional traders
who have duty free access given their countries’ membership in ASEAN. Malaysia is one of the main sources of FDI into Sri Lanka, accounting for
14% of total FDI inflows between 2005 and 2015 (at US$ 1.36 billion).
If Sri Lanka liberalizes trade with Malaysia under a FTA, exports are These investments are mainly in the telecommunications, construction,
likely to increase by US$ 2.34 million, according to preliminary estimates and education-related services. Malaysian investments have gradually
by IPS. This would amount to a 6% increment from the current export declined over the past few years, but this is in keeping with the general
levels. Significant gains can accrue to rubber products and tea, which trend of FDI flows into Sri Lanka (Figure 1).
together encompass more than 60% of potential trade gains under a
FTA. Particularly, Sri Lanka is projected to make strides in the export of The largest Malaysian investor in Sri Lanka is Dialog Axiata, a cellular
pneumatic tyres, solid/cushion tyres, and black tea, if Malaysian tariffs mobile telephone network provider with a reported investment close
on such produce are eliminated under a trade deal; currently Malaysia to US$ 2 billion. In addition, Maxis Berhad has also invested in the
imposes custom duties of 23%, 25%, and 5%, respectively on these telecommunications sector through Sri Lanka Telecom. Recently
items. It is important to note that these projections do not take into Khazanah Nasional Bhd bought an 8.9% stake in Sri Lanka’s largest
account the effect of liberalization on the rest economy. listed company, John Keells Holdings PLC for US$ 120 million. Major
investments have also taken place in the educational sector (e.g. APIIT),
However, it is worrying to note that commonly used trade indicators agriculture (e.g. Naratha Agro Industries), and construction (e.g. Wincon
do not suggest a huge potential for bilateral trade expansion. Growth Development Ceylon Ltd). It has been reported that Malaysian businesses
in exports has been negative during the past five years. Trade Intensity are also interested in investing in other areas such as health, the energy
Index has been falling over the last ten years, suggesting that Sri Lanka sector and agriculture. A FTA with Malaysia can further facilitate cross-
has been trading less intensively with the Malaysia vis-a-vis the world, border investments by easing the entry for Malaysian investors in the
while Trade Complementarity Indicator also remains low. The latter context of an improved business environment in Sri Lanka. Figure 2
suggests that Sri Lanka’s export/import structures do not align well with
those of Malaysia. This premise is further supported by a cursory look
at the Revealed Comparative Advantage indicators of Sri Lanka and Figure 2: FDI inflows from Malaysia to Sri Lanka, US$ Mn.
Malaysia, which show both countries are competitors in some exports, 350

reducing the potential for bilateral trade expansion. Given the importance 300
of the services sector in both countries, accounting for more than a half 250
of economic activity and expansion of export and import of services, 200
there might be greater benefits from liberalization in trade in services; 150
opportunities are already increasing due to Malaysia’s liberalization 100
policies since 2009.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 1 Source: Board of Investment of Sri Lanka

Market Snapshot
Need for a Feasibility Study
Top 5 Imports to LKA
Mineral Fuels - $116m
A FTA will make it easier for Sri Lankan goods to gain a foothold in
Vegetable oils - $103m the Malaysian market by lowering tariffs that Malaysia imposes on
Appliances - $73m imports from Sri Lanka. This will help make Sri Lankan businesses more
Wood - 63m
Electricals - $ 37m
competitive in Malaysia. A FTA will also lower the cost of Malaysian
products for Sri Lankan consumers and businesses. A comprehensive
FTA will give service providers better access to both markets and reduce
a number of other barriers to trade in services and investment flows. In
this context, Sri Lanka and Malaysia have decided to undertake a joint
Top 5 Export to LKA feasibility study to explore the potential for FTA. Preliminary estimates
Rubber articles - $ 8m suggest that likely gains from bilateral trade liberalization in goods will
Textile & clothing - $ 3.7m
Ships/boats - $ 3.6m
be limited to few products but there might be gains from other areas
Tea - $ 3.1m of cooperation, namely in investment flows to Sri Lanka. Moreover, a
Edible prep - $ 2.9 m FTA with Malaysia in addition to a FTA with Singapore, which is under
negotiation, will help to step up Sri Lanka’s relationship with ASEAN and
to explore opportunities for greater economic engagement with South-
east Asia.
31.0 mn $ 309.3 bn $810.8 $ 4.4
Population GDP GDP per capita GDP growth rate *This blog is based on a report on the ‘Benefits and Costs of a Bilateral
2015 2016 2016 2016
Trading Arrangement between Sri Lanka and Malaysia’, by Kithmina
Source: Compiled by IPS
Hewage, Vishvanathan Subramaniam, and Janaka Wijayasiri.
WALK BEFORE In an increasingly globalised world, ease
of trading across borders is essential for
businesses. Many governments around

the world have recognised this and
are undertaking measures to increase
countries’ participation and competitiveness
in trade by simplifying trade and transport

Defining the Scope of the

procedures and document requirements.

Along these lines, the government of Sri

‘Single Window’ for

Lanka has identified the implementation of
a Single Window (SW) for trade as a national
priority. Its implementation is expected to
reduce the time and costs of cross-border

Trade in Sri Lanka trade, and enhance the country’s trade and
competitiveness. Also, the establishment
of SW will be an important step towards
By Janaka Wijayasiri, Kithmina Hewage and Nuwanthi Senaratne meeting the World Trade Organisation’s
(WTO) Trade Facilitation Agreement, which
Sri Lanka has ratified. Sri Lanka has
indicated its intention of establishing a
SW by 31 December 2022,while calling
for technical assistance towards its
implementation. However, it is yet to decide
on its SW ambitions by defining the scope,
which is currently under consideration. This
article suggests that a little bit of walking
before running would ensure a successful
phase-wise implementation of SW.

What is a SW?
A SW allows traders to submit trade
information in a virtual location that
communicates with the relevant
government agencies (GAs) and obtain
certificates, permits, licenses (CPLs), and
approvals electronically. With a SW facility,
traders no longer need to visit different
physical locations to obtain them.

Many countries have already undertaken

steps to switch from paper-based customs
processes towards a paperless system.
Electronic systems for exchanging
regulatory information have become an
important means of managing cross-border
trade. Some economies have gone a step
further by linking not only traders and
customs but also other GAs involved in
trade, through the SW. The most advanced
systems in South Korea and Singapore
connect banks, customs brokers, insurance
companies, and freight forwarders.

If implemented effectively, a SW can

significantly reduce the time, money,
and documents required for trading. It
can benefit not only the traders but the
government and the economy. Several
economies have reported positive gains

from SW implementation; for example, the Table 1: Status of Paperless Trade in Sri Lanka
introduction of a SW in South Korea in 2010 Status
generated some US$18 million benefits to Internet Connection Available to Customs and Other Trade Control Agencies
the economy. Similarly, the SW in Singapore
Electronic Single Window System
brought together more than 35 GAs since
Electronic Submission of Customs Declarations
1989, resulting in huge productivity gains
Electronic Application and Issuance of Import and Export Permit
for the government. However, there are
Electronic Submission of Sea Cargo Manifests
many challenges to its establishment, which
Electronic Submission of Air Cargo Manifests
go beyond technical issues. Creating a SW
Electronic Application and Issuance of Preferential Certificate of Origin
requires tremendous effort, costs, changes in
mindset, and most importantly, strong political E-Payment of Customs Duties and Fees

will. For example, the initial budget of SW in Electronic Application for Customs Refunds
Singapore was US$ 14.3 million in 1988; since Source: UN Global Survey on Trade Facilitation and Paperless Trade Implementation 2017

then it has evolved over almost three decades, Fully implemented Partially implemented Not implemented

with the latest upgrade expected to cost US$75

million in 2017. stakeholders and intermediaries at major and make online payments of duties/fees to
airports and seaports. A Port SW (Level 3) SLC through selected banks. However, they
connects the port community to the electronic still have to visit SLC to submit physical paper
Evolutionary Map of SW customs declaration system and other GAs. documents because of signature, and to obtain
SWs are implemented in an incremental
The system manages and automates port approvals/clearance. Last year an online
manner rather than in a big-bang approach.
and logistics procedures through a single payment platform was launched while digital
They gradually evolve over a long period of
submission of data by connecting transport signatures were accepted this year, but the
time, given that SW is an extremely complex
and logistics chains. Fully Integrated SW (Level uptake has been low by the trading community.
and costly undertaking. As a result, there
4) connects not only traders, customs, and Currently, SLC is ready to move to a completely
are different SWs with different scopes and
other GAs, but also private-sector participants paperless system with an accompanying digital
functionalities across the world, reflecting the
such as banks, customs brokers, insurance signature. Of the 30 plus GAs that are involved
readiness and priorities of individual countries.
companies, freight forwarders, and other in issuing CPLs, only a few are electronically
logistics service providers. Cross-border SW and partially linked to SLC; the required
Broadly speaking, a SW can be divided into
(Level 5) connects and integrates national documents still need to be submitted by
five incremental development levels, involving
SWs at bilateral/regional levels, allowing traders/agents to these agencies for relaying of
migration from paper to electronic-documents
cross-border electronic-information exchange approvals to SLC. In addition to SLC, Sri Lanka
whilst integrating customs, other GAs and
between economies within a regional grouping. Ports Authority and Sri Lanka Cargo have their
private stakeholders (Figure 1).
own automated management systems which

Most countries first start with electronic Current Status of Paperless are connected to Customs through ASYCUDA.

customs declaration systems because every Trade in Sri Lanka

import-export must be declared to customs. At present, Sri Lanka does not have a national
SW Blueprint
This usually evolves from a paper-based Sri Lanka is at an early stage of SW
SW (Table 1). The system in place is a customs
customs or from the use of traditional development and currently, a blueprint is
centric facility, fulfilling traditional customs
Electronic Data Interchange (EDI) systems, being prepared for its implementation which
clearance functions. Sri Lanka Customs (SLC) is
to which traders submit both electronic and will spell out amongst others, the scope of the
partially automated and connected to other GAs
paper declarations. In a paperless customs functions to be included. Given Sri Lanka’s
and ports electronically through ASYCUDAWorld,
environment (Level 1), documents are sent current situation – a paperless customs but
a computerised customs management system.
electronically through secure Value Added not interconnected with other GAs with a lot of
While the system implemented covers both
Networks (VANs), without requiring physical cumbersome procedures related to CPLs – a
imports and exports, it has not eliminated the
visits and paper submissions. regulatory SW (Level 2) should be the country’s
need for paper handling; traders/agents can
target with regard to SW development.
only electronically submit documents, data
After linking traders and customs electronically,
countries can develop a regulatory Or, perhaps the extension of the SW
SW (Level 2) by linking several or 5 Cross-border NSW to serve the entire trade and logistics
Potential Benefits

community at the ports (Level 3)

all GAs regulating trade. The system
at this level allows for application
4 Integrated NSW
could be within the scope of SW
and issuance of electronic CPLs by development. Cross-border information
GAs. With such a system, traders do exchange can also be included after
not need to make physical visits to the implementation of paperless
different GAs. The most challenging customs. However, it is important to
feature of a regulatory SW is single 3 Port SW - Interconnecting
with Port Community bear in mind that, higher levels of SW
submission, where traders submit development take time, money, and
their export or import data only once to
2 Intergration with Other
Government Agencies
effort (Figure 1); thus it requires a
obtain all necessary CPLs and customs 1 Paperless Customs
Declaration System
careful cost-benefit analysis, as well
as managing the expectations of all
stakeholders given the time frame
The next stage in developing a SW Time & Cost for implementation, capabilities and
Source: Tsen, J. K. (2011). Ten Years Of Single Window Implementation: Lessons
is integrating the private-sector Learned For The Future. Discussion Paper: resources available in Sri Lanka.

Improving Education
in Sri Lanka
Priority Areas for Action
By Ashani Abayasekara and Harini Weerasekera

IPS hosted its first Policy Engagement Forum on Education and Skills Education Outcomes
for Prosperity: Building Networks for Bridging Knowledge Gaps recently, An overarching concern voiced by many stakeholders was Sri Lanka’s
which was attended by a range of stakeholders in the education sector, current education environment; the examination based system and
including officials from the Ministry of Education (MOE), National overloaded curricula cause undue pressure on students, starting as
Education Commission (NEC), National Institute of Education (NIE), early as primary school. It was noted that relying on paper qualifications
universities, think tanks, and donors. The objectives of this forum were alone has resulted in children not being evaluated in a holistic
twofold: (1) to identify knowledge gaps regarding the constraints for manner. Dr. Sujata Gamage, Team Leader, Human Capital Research
improving the relevance and quality of education in Sri Lanka; (2) to build Program, LIRNEasia, said that exams should be just one component
networks among different stakeholders to conduct collaborative research of student assessments, among others, such as common general
in bridging such knowledge gaps. tests, school-based assessments, and student portfolios. She stated
that such demonstrative portfolios can provide students with alternate
The Forum focused on four themes: education outcomes, equity in qualifications, even if they drop out of school at an early stage, to pursue
education, tertiary education, and education planning. Participants a non-academic vocation.
identified key constraints under each of these thematic areas and
underlying causes, using a ‘Fishbone’ diagram that helps in identifying Career guidance for students was also seen as lacking in our education
possible causes for a problem in a structured way. The discussions at system. Ms. Dileepa Wedage, from the University of Sri Jayewardenepura,
the forum were facilitated by IPS researchers, Ashani Abayasekara, Nisha opined that students need advice when selectingA-Level streams,
Arunatilake, Priyanka Jayawardena, and Sunimalee Madurawala. particularly in rural areas, where parents are not aware of the
opportunities available to children.

In addition, it was noted that career guidance counselors need training
and that psychological problems faced by students require more
attention by educators.Lack of properly qualified and trained teachers
was identified as another key concern. Validating recent research by
IPS, Prof. Prasad Sethunga, from the University of Peradeniya, pointed
out that there is a need to increase the number of teachers with both
subject and pedagogical training, offered via Bachelor of Education (BEd)
programs. Currently only two out of our 17 state universities offer a BEd,
producing a negligible 135 graduates annually. Overcrowded class sizes
were highlighted as another constraint to improving education outcomes,
given the limited attention teachers could provide to students in large
classes. Officials from the MOE noted that the Ministry has embarked on
an initiative to reduce class sizes to 35 in all schools.

Equity in Education
Inequities among schools, in terms of physical and human resources,
access, and administration were identified as issues of concern.
Confirming recent IPS research findings, it was noted that large
disparities exist in school-level resources among national and provincial
schools, as well as among different school types, based on functioning
grades. The problem of an unequal distribution of teachers in terms of
their qualifications and experience, with good quality teachers being
concentrated in privileged schools, was also highlighted. Adequate
incentives and support programs to attract good quality teachers to
disadvantaged schools in rural areas were identified as crucial in
addressing equity issues.

While more funding for education was deemed necessary to improve

both education outcomes and equity, it was noted that substantial The MOE is tasked with implementation, monitoring and supervision.
amounts of funds have already been allocated for the education sectorby But, he pointed out that lack of a national plan and proper coordination
the likes of the World Bank and the Asian Development Bank. The need between these stakeholders acts as constraints in the system.
to look at how effectively such funds have been utilized, before calling on Politicized systems and poor capacity of current bureaucrats were also
more funds, was highlighted. identified as issues.

Critical to addressing any policy suggestions for improvement,

Tertiary Education however, is the need to confront implementation hurdles, noted Dr. G.B.
With respect to tertiary education, limited enrollments in the Technical Gunewardena, Vice Chairman of the NEC. He lamented that despite
and Vocational Education and Training (TVET) sectorwas identified as a a range of good practical recommendations that have emerged from
cause for concern. According to Dr. Sujata Gamage, who served as the numerous research studies conducted over the years, lack of a stable
Director General of the Tertiary and Vocational Education Commission of system of implementation has hindered progress.
Sri Lanka, a key factor contributing towards low enrollments is the rigid
segregation of the academic and TVET sectors. “The Education Ordinance (No. 31 of 1939) still remains the basic
law of education in Sri Lanka, despite several attempts to push the
“Students are drilled from the O-Levels itself to think that only A-Levels implementation of new policies over the past decades”, said Dr.
and academics matter”, she said, leading to a lack of social recognition Gunewardena. While the NEC is mandated to submit recommendations
of TVET. She further stated that the shortage of qualifications of TVET to the president, it is up to the president to accept such
teachers in comparison to teachers in academics exacerbates this recommendations and declare them as policy.
mindset, particularly in a status-conscious society as ours. Insufficient
funding of the TVET sector is another constraint. Although equipment and Despite policy recommendations being presented to several presidents
programs for training students cost significantly more than for producing on 18 occasions, only the most recent proposals submitted in January
a graduate, fewer funds are allocated to the TVET sector, given that last year have been accepted. He further stated that there is a ‘legal
academics are prioritized. vacuum’ for education in Sri Lanka, “a situation we need to overcome.”

Education Planning and Implementation Research Collaborations

of Reforms Priority areas identified by the participants for research collaborations
Dr. Upali Sedere, Rector of the Sri Lanka International Buddhist Academy with IPS included measuringthe effectiveness of utilization of education
and education sector specialist, stressed the importance of efficient funding, reassessing the current education evaluation systems
planning and coordination between different stakeholders in developing andeducation outcomes being measured, analyzing the psychological
effective policy frameworks. According to the current structure in Sri problems faced by students and the adequacy of counselling and
Lanka, the NEC is in charge of formulating education policy, while the NIE career guidance programs in schools, and studying the policy impact
is responsible for the preparation of such policies. of research to determine what works and what does not in policy

Start with Quality STEM Teachers for Every Child!
Deepani is a grade 10 student who loves mathematics and science. Her speech correctly identified the need for “improving the ratio of STEM to
parents are delighted and encourage her to continue in these fields, non-STEM graduates in the country”. The foundation for STEM education
assuring her that she will have a bright future. But Deepani is worried at the graduate level needs to be laid at the school level. Only those with
that she is not learning all that she should – her teachers in both a good foundation in general education will move on to tertiary level
subjects are not the best, and at times Deepani has been unable to clarify education, especially in STEM subjects.
doubts in certain areas. Deepani wonders whether she can continue
in the field of sciences, if her teachers lack the competency to instruct A recent IPS research study highlights the need for good quality teachers
and guide her. Without doing well in mathematics and sciences at the for improving education outcomes of children at the O-Levels. A
Ordinary Level Examination (O-Levels) next year, her dream to continue complimentary recent study examines the adequacy of quality teachers
her studies in the science stream will be futile. to teach science, mathematics and English at the secondary level in the
country. This article summarizes the main findings of the study.
Deepani is a not alone in her concerns. IPS research finds that at present,
close to half the students who sit for O-Levels fail the exam. In fact, being
Surplus of Teachers, but Not Enough
unable to meet the minimum requirement of a credit pass (C grade) in
mathematics or science at the O-Levels is the main reason for the low Subject-qualified Teachers
number of students in science streams in the Advanced Level (A-Level) According to the 2016 School Census data, Sri Lanka has an overall
classes. According to the 2016 School Census Preliminary Report, surplus of teacherswho usually teach mathematics and science subjects;
even of those who continue on to sit for A-Levels, less than a quarter that is, the number of teachers who mostly teach mathematics and
(23 per cent) is in the science stream, while only a further 10 per cent science are more than the number recommended by the Ministry
is in the technology stream. The majority (66 per cent) are in the arts of Education (MOE) in the first circular of 2016 on determining staff
and commerce streams. Similarly, the distribution of students in public numbers in a school.
universities is highly skewed towards the arts and social sciences, while
enrollments in the natural sciences are much lower. However, this does not mean that all these teachers are subject-qualified.
A teacher with either a degree or a specialized training in a particular
Generating a high share of university graduates, especially in science, subject is considered as a subject-qualified teacher. Even though in many
technology, engineering and math (STEM) subjects, is a policy priority countries teachers need to be especially certified to teach a subject, Sri
for Sri Lanka, given the country’s goal of becoming a knowledge based Lanka’s teacher service does not have such a requirement.
economy, driving competition through innovation. The 2018 budget
As Figure 1 indicates, the shares of available teachers are more than Diploma in Teaching (NDT). Untrained graduates have a degree, but do
the recommended number of teachers (over 100%), indicative of overall not have pedagogical training. Those with NDT are trained teachers
teacher surpluses. Nevertheless, the shares of subject-qualified teachers without degrees. This is in contrast to the best practices in other
are much lower than the recommended number of teachers. countries. In most countries, a degree and a certificate in specialized
teacher training is necessary to become a teacher. In Sri Lanka, only
those who join the teacher service with a Bachelor of Education (BEd)
Issues with the Allocation of Teachers
have both a degree and specialized teacher training. But, School Census
The MOE clearly provides guidelines on the number of teachers
2016 data show that only a very small share of those joining the teacher
recommended for each school, based on the number of classes,
service hold a BEd.
availability of subjects, and the languages of instruction offered by the
schools. However, our analysis shows that some schools have an excess
of science and mathematics teachers, while others are sorely lacking in Policy Recommendations
this regard. Our findings also show that more affluent schools, attended There is an urgent need to improve pre-service teacher training, currently
by wealthier students, have better teachers than less-advantaged offered at the National Colleges of Education and at universities, to match
schools. the demand for STEM teachers in schools. Improving and expanding the
pre-service training of teachers and giving priority to recruiting teachers
with proper pre-service training can help improve the availability
Unsystematic Recruitment of Teachers
of qualified teachers. Such training programmes should especially
Unsystematic teacher recruitment is one reason for the inadequacy of
cater to the demand for teachers in different subject areas. Teacher
teachers. If teacher recruitments are properly planned, the number of
training should also be well planned to meet the requirements of the
teachers recruited should roughly match the number of teachers leaving
teacher service. Further, teachers should be certified to teach different
the teacher service. But, an analysis of School Census data shows that
subjects and the subject knowledge of teachers should be taken into
teacher recruitments are done haphazardly and arbitrarily. In some years
consideration when filling vacancies.
more than 20,000 teachers are recruited, while during other years less
than 5,000 teachers are recruited.
Lastly, teachers should be allocated to schools according to need, so that
no school has an excess of teachers, and teachers are evenly distributed
Also, teachers are often not matched to their subject-related education
across all schools. Allocating teacher cadres for schools according to
and training at recruitment. As Figure 2 shows, of the total number of
the available classes, subjects, and mediums of instructions can prevent
science and mathematics teachers joining teacher service in 2016, only a
schools from recruiting teachers in excess.
fraction was subject-qualified.

Unless qualified teachers are available in all classrooms, many students

Limited Pre-service Teacher Training like Deepani will not be able to realize their dream of pursuing higher
Opportunities studies in the science and technology field. Unless students interested
The numbers of teachers trained by pre-service teacher training in science and mathematics are encouraged from a young age, and
programmes are not adequate to meet the demand arising for teachers are given proper guidance, expanding science education at the tertiary
each year. The majority of teachers recruited to the teacher service in level will remain a pipedream. Authors, Nisha Arunatilake is Director of
Sri Lanka are untrained graduates, followed by those with a National Research and Ashani Abayasekara is a Research Officer at IPS.

Teachers as a share of recommended, 2016

Total: 109%
Science: Subject-qualified: 80%
Math: Subject-qualified: 61%

Source: Authors’ calculations based on 2016 school census data.

Note: Data is for all secondary schools

Building a More
Lack of English proficiency is a key constraint affecting the
employability of Sri Lankan graduates in the private sector, according
to a recent Labour Demand Survey conducted by the Department of

Census and Statistics. Although teaching English as a second language
to all school children has been a key social policy of successive
governments of Sri Lanka since the early 1950s, Census of Population
and Housing data indicate that English literacy is just 22% among Sri

Sri Lanka: Lanka’s population above 15 years of age.

Recognising the critical need for strong English language skills in

The Need to
today’s context of increasing globalisation, technological advancement,
and a modernized labour market, recent government policy has devoted
attention to addressing persistent gaps in English education; the 2018

Combat Inequities
budget allocated Rs. 50 million for the establishment of a center for
training English teachers, while the previous government announced
targets to double the number of English teachers over the 2011—2020
By Ashani Abayasekara period. Yet, are such policies the need of the hour? Based on an analysis
of available data, this blog argues that what is more important is to
address disparities in access to quality English education, rather than
solely focusing on improving overall quality.

Unequal Student Outcomes

Since 2003, the National Educational Research Centre (NEREC),
based at the University of Colombo, has administered tests in the first
language (Sinhala and Tamil), mathematics, science, and English to
grade four and grade eight students in a representative sample of
schools across the country. The latest assessments from 2015 and
2016 reveal low national English mean scores of 54% and 36% among
grade four and eight students, respectively. Even more concerning is
that these national averages mask considerable variation in scores both
between and within schools. As Figure 1 shows, both fourth and eighth
graders in urban schools outperform their rural school counterparts by
significant margins. Further, there are wide disparities in scores within
schools, particularly in urban schools. For instance, while 21% of eighth
graders in urban schools scored within the 20—29 mark range, another
Figure1: National English Mean scores of Fourth and English Graders
by School Location, 2016

Grade 8 Grade 4
Urban Rural Urban Rural
45% 33% 61% 49%

Above 70
Above 80
20-29 Below 40

21% 20% 23% 32%

Source:NEREC ( 2016, 2017), “ National Assessment of Achievement of Students Completing Grade 4 (8) in Year 2015
(2016) in Sri Lanka” , Ministry of Education of Sri Lanka.

20% scored above 70. Among fourth graders, 23% scored below the pass schools; privileged schools have more than enough competent English
mark of 40%, while 32% scored above 80%.In fact, student heterogeneity teachers. It is thus not surprising that, students from rural primary schools
in English has been identified as an issue in urban schools, primarily who enter urban schools lack basic English skills.
due to national schools that admit students from rural disadvantaged
schools—for instance via the grade five scholarship exam—who have
Policy Implications
had limited exposure to quality English education both at home and at
Children from rural and less privileged backgrounds are doubly
school. This means that a typical classroom consists of students on both
disadvantaged as they lack access to good English education both at
extremes of language proficiency, presenting English teachers with the
home and at school. As a National Education Commission Report puts it, in
challenging task of catering to different competency levels.
Sri Lanka English “continues to be an agent of social differentiation”, with
good quality education and jobs being limited to a select English literate
Unequal Teacher Allocation population. The fact that many students miss out on being taught by
Contributing to the problem of unequal student outcomes is an inequitable qualified English teachers despite Sri Lanka having an oversupply of them
allocation of English teachers across schools. Contrary to what one would is a deep injustice.
expect, recent IPS researchreveals that Sri Lanka not only has more than
adequate overall English teacher numbers, but also an excess of subject- A potential measure to deal with student heterogeneity in classrooms is
qualified ones—i.e. those with either a university degree in English or who to cater to students of different levels of competencies. A study among a
have been specially trained to teach English. This is in contrast to sizeable sample of grade seven and 10 students in Sri Lanka grouped students in
shortages of subject-qualified mathematics and science teachers in the a given classroom into three levels based on marks obtained for English
country. The problem appears to be that most of these qualified English at the second term test. Students in these three different levels were
teachers are concentrated in more privileged schools, leaving students in taught using different activities, in line with competencies identified in the
remote schools at the hands of unqualified teachers. As Figure 2 indicates, Teacher Instructional Manual. Student performance showed improvements
while qualified mathematics and science teachers are lacking in all school as early as the third term test, and were also evident in end of year tests,
types, qualified English teachers are deficient only in underprivileged especially among less able students. Teaching at different levels within
a given classroom is however a challenging task, and it is important that
Figure2: Difference between Available subject-Qualified and teacher training programs include modules on related teaching techniques
Recommended Teacher Numbers, by school status and preparation of learning material.
1000 Science Math English
To tackle inequities across schools, efforts need to be directed at
improving teacher allocations to ensure that disadvantaged schools
0 are staffed with good English teachers. A study on teacher education
notes that many existing policies on teacher deployment and transfers
in Sri Lanka are limited to paper, with some teachers using political and
Highly underprivileged

-1000 other influences to get transfers to schools of their preference. This is

Highly privileged

Not privileged


-1500 in part possible owing to the current practice of recruiting teachers by

the Ministry of Education at the central level, which affords flexibility in
moving between schools. Giving schools powers to recruit teachers at the

-2500 school-level could restrict teacher mobility. While less privileged schools
may not necessarily succeed in attracting qualified teachers, with more
restrictions on teacher movement, recruited teachers in these schools
Source: Arunatilake, N. and Abayasekara, A.”Are there good Quality Teachers
for all classrooms in Sri Lanka?” will gain experience over time, which, along with in-service training,
Colombo: Institute of Policy Studies. would improve teacher quality. School-level recruitment has already been
Note: Sri Lanka public schools are categorized into five status groups based implemented in Estate sector schools among Tamil medium teachers who
on school resources, amenities, and ease of access to a school are in short supply.

‘Sectoral Mismatch’ between Labour
Demand and Supply in Sri Lanka
By Harini Weerasekera

The first “Labour Demand Survey”(LDS) in Sri Lanka, conducted by the operators, security guards, shop sale assistants, advertising and
Department of Census and Statistics (DCS), recorded nearly half a million marketing professionals, and commercial and sales representatives,
vacancies in the private sector. A large portion of these vacancies are topped the list. The survey also quantifies vacancies that are ‘hard-to-fill’
found to be in routine and non-routine manual jobs. However, most of and ‘recruitments’. The same occupations mentioned above fall into the
Sri Lanka’s job-seekers are educated youth, who instead, search for top 5, with the exception of advertising and marketing professionals and
white-collar jobs. This situation has given rise to a “sectoral mismatch” the inclusion of ‘cleaners and helpers’ (Table 1).
between the demand and supply of labour in Sri Lanka. That is, a
mismatch between sectors where job openings lie and sectors where As such, overall labour demand is largely concentrated in middle and
job-seekers search for work. The blog discusses this mismatch using low-skill jobs involving manual tasks, rather than in high-skill jobs. IPS
LDS data, and looks at ways in which it can be resolved. research has found similar evidence of there being a low number of
vacancies for “good” jobs. When it comes to these “good” jobs, or jobs
in professional occupations, advertising and marketing professionals,
Labour Demand Profile: High Demand for
nursing professionals, and mechanical engineering technicians top
Manual Jobs the list, as per the LDS. Of these, only advertising and marketing
The LDS revealed that of 497,302 vacancies in the (formal and informal) professionals fall into the top ranked high demand jobs (Table 1).
private sector in the first half of 2017, vacancies for sewing machine

Table: Top Occupations with Vacancies and Recruitments on labour-intensive manufacturing. Experts
in the apparel sector, for instance, have long
Occupation No.of % of total Rank No.of Hard-to-fill Rank No.of Rank
Vacancies Vacancies Vacancies Recuritments acknowledged the need to automate tasks in
order to overcome labour shortages. Sri Lanka
Sewing Machine 77,189 15.5 1 61,243 1 188,117 1
Operators was once able to compete as a low labour-cost
Security Guards 57,008 11.5 2 45,316 2 114,237 2 destination, but this is no longer the case; rising
Shop sales labour costs in Sri Lanka have made countries
assistants 28,180 5.7 3 8,403 5 30,205 4 like Bangladesh and Vietnam relatively more
Advertising and 21,067 4.2 4 - - - - competitive. Hence, Sri Lanka has reached a
Marketing Professionals juncture where it seems timely for the sector
Commercialand Sales 19,775 4 5 32,153 3 51,975 3 to transition away from labour-intensiveness
towards automation in manufacturing, in the
Cleaners and Helpers 18,614 3.7 6 8,852 4 28,024 5
absence of a labour supply pool to fill jobs.
Source: LDS,DCS2017

What is Giving Rise to to suffer from slow job creation, which has Second, attracting foreign workers to fill
partly contributed to this. IPS researchers have shortages in other types of manual jobs
‘Sectoral Mismatch’? also argued that the limitation in vacancies (cleaners, helpers, security guards, etc.) should
could be stemming from job-seekers lacking also be considered. Although the general
The LDS clearly signals the overwhelming competence in general skills required to public tends to oppose this idea, (ETCA being
shortage of manual workers. These numbers secure a “good” job; English and ICT skills are the famous example) the motivation behind
reinforce findings from a recent study on labour lacking, but are highly demanded by private this is based on the concept of labour market
shortages in the manufacturing sector, which sector employers. A World Bank study found segmentation, under which labour demands
notes that manufacturing jobs – particularly in that 80% of employers expect English literacy in certain sectors are met with the help of
the apparel sector – are becoming increasingly from high-skilled workers although only 20% migrant workers when the labour force in the
undesirable. Competing sectors such as of Sri Lankans are fluent in English. In addition, host country is unavailable or unwilling to take
tourism and retail offer more competitive 30% of employers surveyed in the LDS cited on those jobs. Since locals are unwilling to
wages, better working conditions, and higher communication skills as one of their top needs. fill certain positions, tapping the global talent
social recognition. In addition, youth have pool serves as a practical solution in meeting
shifted career aspirations from routine-manual Resolving the Mismatch:
jobs (such as factory workers) and non-routine
manual jobs (such as security guards) towards Policy Implications While addressing shortages in high demand
non-routine-cognitive jobs (such as computer- sectors is one priority in resolving sectoral
based jobs) that require higher skill and mismatch, ensuring that people searching
interaction. Over the next year, top hires are expected to be for jobs in high-skill sectors, can in fact
in jobs for tailors and dressmakers (74,079), secure those jobs, is another priority. Although
With the general increase in average wages of commercial and sales representatives (69,865), Sri Lanka’s education system has tried to
Sri Lankans, toiling in factories for poor wages and sewing-machine operators (63,341). To incorporate soft-skills training into curricular,
and engaging in manual tasks that provide little what extent can the demand for these middle- there is still a lack of desire on the part of the
scope for career progression, are no longer skill manual jobs be met in the presence of students to learn English and ICT up to the
desirable. This is reflected in the LDS data on sectoral mismatch? Policies need to focus on required private sector standards, as degree
employer perceptions on reasons for vacancies re-adjusting demand towards more high-skill holders have been routinely provided with
being ‘hard-to-fill’ – a quarter of employers sectors. public sector jobs.
surveyed believe that lack of interest in the
given job contributes to this (Figure 1). First, policies should look at automation as a One solution is making internships part of
means of moving away from the dependency course curricular from secondary school
Moreover, job openings remain onwards, akin to ‘summer
Figure 1: Reasons for ‘Hard - to - Fill’ Vacancies (% Response)
in sectors where job-seekers are internship’ programmes that are
Seasonal or timely
no longer searching for jobs. The limited work Other commonplace for students in
3.4 3.7 other countries. Although these
supply of labour is young, educated,
Remote location/poor
and have aspirations for high-skill no. of transport Not enough programmes are already conducted
people interested
jobs, in sectors outside those that 5.1 in doing this type
in some universities, being exposed
are in demand. This gives rise to a Job entails shift of job to on-the-job training from an
work/unsociable 25.4 earlier age will give students more
sectoral mismatch between labour hours
demand and supply. Apart from high 5.2 time to master these skills. This
Too much
demand manual jobs going unfilled, competition may help bridge the gap between
Poor terms and
from other employee expectations and
another concern with sectoral conditions
( offered
mismatch is that sectors in which for post 21.3 what workers bring to the table,
job-seekers wish to supply labour 9.5 which might in turn, create more
have limited vacancies. Only 7.2% demanded for this openings in high-skill jobs desired
Low number of applicants occupation are too high by the labour pool.
of private sector vacancies are in
qualified for the job 13.5
high-skill occupations, according 13.5
to LDS data. Sri Lanka is known Source: LDS, DCS2017

Sub Agents and Migrants
Geetha is an unskilled and uneducated female
from rural Sri Lanka. As she was saddled
with financial issues and could not find a

Dissecting their Relationship

suitable job in Sri Lanka, she decided to seek
employment in Saudi Arabia as a Female
Domestic Worker (FDW). However, Geetha was
clueless about how to proceed, and thankfully
Somadasa – a Sub Agent from her village,
helped her through the entire process. Now
to Guide Regulation
Geetha has a job (for which she did not have By Bilesha Weeraratne
to pay any recruitment fees) that pays her a
constraints, licensed recruitment agents have illegally withholding the passports of potential
steady monthly income of LKR 35,000; she
evolved to rely on Sub Agents, who informally migrants) in the recruitment process for foreign
also received over LKR 200,000 as an upfront
operate at the grass root level in areas where employment. The informal nature of their role
incentive for taking up the job.
potential migrants originate from, to work as and the absence of a regulatory framework
a conduit between a licensed agent and a to control their conduct contribute to low
Sub Agents like Somadasa play a significant
potential migrant. accountability and high levels of misconduct by
role in the recruitment of migrant workers
Sub Agents.
from Sri Lanka. However, to-date Sub
This working arrangement between licensed
Agents are informal stakeholders in the
agents and Sub Agents also fits perfectly with As such, the government of Sri Lanka is
recruitment process. As such, currently, there
the needs of low-skilled potential migrant attempting to regulate Sub Agents. However,
is increasing interest in Sri Lanka to regulate
workers like Geetha, who come from less regulating these informal stakeholders is a
Sub Agents and hold them accountable for
educated backgrounds and belong to the complicated exercise.
their conduct. In this context, IPS carried out
lowest socio-economic stratum of society.
a study to better understand the relationship
For them, the recruitment process for foreign
between migrants and Sub Agents and Efforts to Regulate Sub Agents
employment is often strange, intimidating, and
provide empirical evidence for policy Similar to the rest of South Asian sending
complicated. As such, these potential migrants
recommendations to regulate Sub Agents in countries, Sri Lanka has previously tried and
are often reluctant to directly approach a
Sri Lanka. This blog is based on the findings failed to regulate Sub Agents. In 2012, the
licensed recruitment agent, but are more
of the study. Sri Lanka Bureau of Foreign Employment
willing to go to a Sub Agent, who is usually
(SLBFE) issued identification cards to Sub
a known person from their village. Moreover,
Agents through the respective licensed
Role of Sub Agents despite the absence of a formal recognition for
agents. However, there were more Sub Agents
Sub Agents play a critical role in recruitment Sub Agents, migrants have the misconception
operating in the field than registered, and as
for foreign employment from Sri Lanka, that Sub Agents are formal stakeholders in
a result unethical and unregulated activities
by linking potential migrants with licensed the recruitment process. As such, the services
of Sub Agents continued. As such, in 2016
recruitment agents. Licensed recruitment of Sub Agents are common in recruitment of
the SLBFE issued a circular requesting all
agents often operate in the city centers, Female Domestic Workers (FDW) to the Gulf
licensed agents to return the identification
considerably far off from the rural villages Cooperation Council (GCC) countries.
cards issued to their respective sub-agents.
where potential migrants reside. This
This circular implies the government position
geographical distance limits licensed
recruitment agents from adequately reaching
Misconduct of not recognising the operation of Sub Agents.
However, not all Sub Agents in Sri Lanka are However, the SLBFE did not take action
out to their clientele. At the same time, the
genuine like Somadasa and not all migrants are against the non-return of identity cards or the
regulatory framework in Sri Lanka restricts
as lucky as Geetha. As informal stakeholders continued operation of Sub Agents.
licensed recruitment agents from establishing
in the recruitment process, Sub Agents are
branch offices.
often criticised for their contribution to debt Now there is renewed interest to regulate Sub
bondage and trafficking, over charging, Agents. Specifically, in March 2017, a Cabinet
As a remedy to these legislative and capacity
forging documents, and misuse of power (i.e. Paper with recommendations to regularize

Sub Agents was submitted by then Ministry for alternative licensed recruitment agents, lower probability to migrate. If this information
of Foreign Employment, while the SLBFE is until an attractive commission is offered to the can be provided earlier on in the recruitment
actively engaged in attempts to revise its Act to Sub Agent. Simultaneously, this submission process, potential migrants could be saved
incorporate regulation of Sub Agents. of passport deprives the potential migrant of from adverse experiences in the recruitment
alternative offers, as she is unable to approach process, and possibly ensured better outcomes
One common element across all these failed other licensed agents or Sub Agents. This in terms of wages, incentives and probability
attempts is the lack of empirical evidence to leads to lower bargaining power and related to migrate.
guide regulatory efforts. The following are some lower promised wages and incentives for
interesting empirical findings on the unique and potential migrants. However, lower financial
Sub Agent Requested Fees
dynamic relationship between migrants and outcomes are in the context of higher chance
Sub Agents, that are valuable for regulating Sub of migrating, because a passport is needed
Agents. to process the final steps of the migration
process, and often these final steps are carried 22% to 38%
out by the Sub Agent on behalf of the licensed
Based on rigorous analysis, the IPS study
finds that: Sub Agent Collected Passport A 8%

Migrant’s misconception that the Sub Agent is

a formal stakeholder leads to lower probability
to migrate, lower promised wages, and lower 0.46% Probability of
promised incentives. When potential migrants Migration
Promised Promised
are unaware of a Sub Agents’ actual formal Wages Incentives
Promised Promised
status and have a misconception that they Wages Incentives
are formal, potential migrants are more likely Probability of
to be intimidated, leading to accepting lower Sub Agent Collected Passport
wage and incentive offers. Similarly, with such
intimidation, potential migrants are less likely -5% to -6% Recommendations
to follow up and pressurise Sub Agents about The findings of the study provide valuable
migration. information to shape proposed revisions
0.46% to
the SLBFE Act to regulate Sub Agents.
Migrants’ Misconception about
Sub Agent’s Formal Status „„ SLBFE
Promised Promised
to develop a mechanism to inform
Wages Incentives
-22% to -74%
potential migrants about Sub Agents’
Probability of
current informal status, role and capacity. It
Sub Agent requesting money for his services is crucial that such information is provided
Promised Promised Probability of leads to higher promised wages and higher to migrants earlier on in the recruitment
-5% to -6%
Wages Incentives Migration promised incentives, but a lower probability process. If Sub Agents are formalized in
to migrate. The status quo for recruitment future, such updated information should be
of a FDW to the GCC countries involves zero clearly disseminated in a timely manner.
-0.09% to -0.16% recruitment cost to migrants. Yet, this finding Often migration is a family decision,
reveals that recruitment fees are collected influenced by friends and community. As
by Sub Agents, resulting in contradictory such, in addition to potential migrants,
-22% to -74%
-7% to -14% wide dissemination of above information
implications to potential migrants.
to the general public, beyond potential
migrants, isMisconception
Migrants’ important. about
Higher promised wages and incentives,
coupled with lower chance of migration reflect „„ SLBFE
Sub Agent’s
to develop Formal Statusto
a clear procedure
the misleading nature of Sub Agents with facilitate collection and return of passports
‘over promise and under delivery’. Fraudulent by Sub Agents, and handing over same
-19% to -60%
to licensed recruitment agents. This
Sub Agents often offer unrealistically good
procedure could specify the stage in the
recruitment packages, with slim chance of Promised Promised Probability of
Collection of the migrants’ passports by Sub recruitment process where a Sub
Wages Incentives
actual migration, and attempt to earn an can collect a potential migrant’s passport,
Agents leads to lower promised wages and
income by misleading potential migrants. specify maximum duration for a Sub Agent
promised incentives, but a higher probability
to migrate. As per the existing regulations, to hold a migrant’s passport, and impose
Transition from potential to current migrant the requirement to provide-0.09% to -0.16%
receipt of
as informal stakeholders, Sub Agents have
enables migrants to realize the actual status of collection/return of passport.
no authority to collect passports. However,
Sub Agents. Given that Sub Agents are informal
in practice, it is the Sub Agent who initially „ Andto -14%
„-7% finally, a clear structure for fee
stakeholders, migrants start to realise the collection for Sub Agents ought to be
collects the passport from the potential migrant
former’s actual status through own experience. developed. This Fee structure could
and hands it over to a licensed recruitment
But this self-realisation requires one to draw from the one currently adopted for
go through the entire recruitment process licensed recruitment agents.
and perhaps endure exploitation, abuse,
As such, there are instances where Sub Agents
vulnerability, lower incentives and wages, and -19% to -60%
hold on to passports while they `shop around’

receive incoming migrant workers. The ability to retain skilled foreign
workers, and continue to attract high-skilled migrant workers is
contingent upon the development of policies that will cater to the needs

of inbound migrant workers while leveraging the potential they hold
to foster economic growth and development in the country. Managing
the multi-dimensional challenges associated with migration, however,
requires a set of comprehensive policies that are designed to maximize

the benefits of migration, while minimizing the potential harmful costs
associated with the movement of people across international borders.

Current migration policy in Sri Lanka – the National Labour Migration

Policy (NLMP) of 2008 – focuses on three main areas, namely: 1)

‘In’s and ‘Out’s of governance of the migration process; 2) protection and empowerment
of migrant workers and their families; and 3) linking migration and
development processes. The policy identifies that return migration
Sri Lanka’s Policy and circulation are key opportunities for skills transfer and productive
employment. Similarly, the NLMP of 2008 also notes that it would work to

Framework engage ‘transnational communities to harness the resources, skills and

expertise of Sri Lankans working in skilled and professional capacities
overseas by providing incentives to return, contributing to home country
By Bilesha Weeraratne development’. However, these aspects on transnational communities
have not yet gathered momentum in policy implementation.
With the recent signing of the Sri Lanka – Singapore Free Trade
Agreement (SLSFTA), as well as the Economic and Technological At present, the NLMP explicitly excludes incoming migrants from its
Cooperation Agreement (ETCA) with India that is being negotiated, there general purpose and scope. Hence Sri Lanka has no formal, regulatory
has been wide public debate on the issue of allowing free movement of framework to govern immigration of workers. As a result, Sri Lanka lacks
people across borders. domestic regulation to determine and recognize the foreign training,
skills and education of incoming workers. The absence of an established
Historically, migration policy in Sri Lanka has focused exclusively on protocol for training, skills and education recognition of incoming workers
regulating the outflow of migrants. This is due in part to Sri Lanka’s has been one of the central themes in the criticism levelled against the
status as a labour sending country. However, shifting dynamics hasten ETCA. Professional bodies related mainly to the IT sector and medical
the need for stronger policies to increase Sri Lanka’s preparedness to field such as the Government Medical Officers Association (GMOA)

have expressed fear that in an environment where qualifications of the profession in Sri Lanka. For instance, a Sri Lankan with a British Barrister
professionals cannot be guaranteed, less qualified/skilled workers who qualification or an L.L.B. qualification can sit for the final examination
fail to secure employment in India would seek employment opportunities of the Law College of Sri Lanka and enter the legal profession after
in Sri Lanka. completing the practical training and taking oaths. Perhaps these existing
mechanisms targeting Sri Lankan nationals with foreign qualification
Similarly, NLMP also leaves out any mention of students, be it incoming can serve as a foundation in developing a framework for qualification
or outgoing. This reflects a significant loophole which must be addressed and credential recognition of incoming foreign workers with foreign
in order to ensure the protection of migrant students. Another area that qualifications.
the revised NLMP ought to focus is integration of immigrant workers,
as integration policies are important to attract foreign workers into As indicated in the above two examples, the existing mechanisms
host-countries. While immigration policies differ widely according to require foreign qualified professionals to sit local examinations prior
country-specific policy aims, there are several key lessons to be gleaned. to professional activities in Sri Lanka. By contrast, Mutual Recognition
Foremost, immigration policies designed to attract foreign workers must Agreements (MRAs), a key element of FTAs like ETCA, enable the
go hand-in-hand with national policy instruments designed to effectively qualifications of migrant workers recognized by a professional body in
integrate immigrants into host countries. Integration is considered to be the sending country to be mutually recognized by its counterpart in the
the most effective way to realize the potential of migration. receiving country.

The introduction of such policies recognizes the responsibility of the This could eliminate the requirement to sit for local examinations and
host society to ensure the right of immigrants and newcomers to replace the case-by-case credential evaluation. For instance, under
fully participate in the economic, social, cultural and political life of ASEANs regional integration in services negotiation process, MRAs are
the country. For non-nationals, the existence of such policies also signed for many occupations such as nursing services, engineering
demonstrates the commitment of host-countries to protect and foster the services, architectural services, and medical and dental practitioners.
wellbeing and development of migrant workers and their families. As per the MRA of Nursing Services, foreign nurses from other ASEAN
countries could apply for registration/licencing to practice nursing in
In contrast to the NLMP, the National Migration Health Policy (2012) takes the host country if they fulfil certain requirements including having a
into account the needs of incoming migrants. However, it is severely nursing qualification, professional registration/licencing from the country
limited in scope. Indeed, the policy sets out an imperative strategy of origin, and practical experience of over three years, to name a few.
to increase access to vital health services for all incoming migrants Most importantly, the MRA identifies 10 nursing regulatory authorities in
as well as to respond to potential health challenges arising from the the 10 member countries as bodies vested with the authority to control
movement of persons across borders, which marks an important step in and regulate nurses and their practice in these countries, which will be
the recognition of the rights of migrants workers and their families who mutually recognized by the other member countries.
live and work in Sri Lanka. However, the policy itself is inadequate as
a stand-alone regulator as it only addresses a single, albeit important, If Sri Lanka is to pursue ETCA and other such agreements, MRAs are to
aspect of immigration policy. guide the recognition of qualifications of Indian personnel, some critical
conditions to be considered are:
A Protocol for Evaluating Credentials of „„ The minimum level of education required (entry requirements, length
Incoming Workers of study, subjects studied)
An important component of regulating incoming migrant workers is to
„„ The minimum level of experience required (location, length and
adopt a framework to determine their qualifications. If Sri Lanka is to conditions of practical training or supervised professional practice
open its labour market to foreign workers, it is crucial to develop an prior to licensing, framework of ethical and disciplinary standards)
authoritative framework that captures foreign credential evaluation
beyond individual professional bodies. Such a framework would on „„ Examinations passed for professional competencies
the one hand ensure that foreign workers competing with Sri Lankan „„ Extent to which Indian country qualifications would be recognized in
nationals are equally qualified. At the same time, employers in Sri Lanka Sri Lanka
will be able evaluate a pool of equally qualified talent – consisting of both
- listing particular diplomas or certificates issued by pre-identified Indian
local and foreign labour – to hire a worker who is best suited for the job.
Most importantly, such a macro level authoritative competent authority
would ensure an impartial evaluation of credentials, from a broader
- by reference to particular minimum requirements to be certified by
perspective which goes beyond the objectives of respective professional
authorities in India,
- including whether the possession of a certain level of qualification
Currently, in selected professions such as medical doctors and lawyers,
would allow recognition for some activities but not others.
there are regulatory mechanisms to recognize foreign qualifications
of Sri Lankan nationals. For instance, the Examination for Registration
Similarly, the MRAs ought to outline the rules and procedures to be used
to Practice Medicine in Sri Lanka (ERPM) – formerly known as Act 16
to monitor and enforce the provisions of any agreement, the mechanisms
– is an overseas qualification recognition process carried out by the
for dialogue and administrative co-operation between the parties, and the
Sri Lanka Medical Council (SLMC) in conjunction with the University
means of arbitration for disputes under the MRA.
Grants Commission (UGC) of Sri Lanka. Sri Lankans with foreign medical
qualifications who wish to practice medicine in Sri Lanka are required
*This article is excerpt from the chapter ‘Retaining, Reintegrating, and
to pass the ERPM. Similarly, the Law College of Sri Lanka conducts
Attracting Talent for Global Competitiveness’ in Sri Lanka:
examinations to accept Sri Lankans with British qualifications to the legal
State of the Economy 2017.

This year, Sri Lanka celebrated the ‘contributing family members’ (involved in a family business or farming
without payment), as they have no other choice. Men from the rural
International Women’s Day nationally with the communities overcome this problem relatively easily by migrating to urban
areas, where jobs are available.
theme ‘Strong Woman Reveals,
the Path for Progress’. However, limitations in mobility, familial responsibilities, and safety
concerns prevent women, particularly married women and those with
By Sunimalee Madurawala young children, from leaving their villages to search for jobs. On the
contrary, when it comes to urban women, finding a job is not a difficult
More than half the working population in Sri Lanka consists of women. task, especially for young and unmarried women. But, married women
But out of the total working age population, the share of employed women with children from urban areas are concerned about the lack of flexibility
is only 18%. At the same time, around 80% of the economically active in available job opportunities and their difficulties in balancing the job
women of Sri Lanka are from the rural sector. The rural sector also records requirements and familial responsibilities.
the highest unemployment rate for women compared to other sectors.
The unemployment rate among rural women is 7.3%, which is higher than Rural women lack physical access to markets; all women need better
the unemployment rates for both urban women (6.2%) and estate women negotiating skills: community consultations carried out by IPS during
(4.1%). the study revealed that, regardless of gender, those in rural areas have
difficulty accessing markets. They find it challenging to sell their products
When empowering women economically, it is important to look at the at a fair price due to the heavy dependency on intermediaries, and failure
differences in women’s needs and priorities from different settings in order to establish reliable channels in accessing markets. That being said,
to introduce more effective development efforts. For example, most of the women in these communities are even more disadvantaged than their male
rural women tend to engage in agricultural activities whereas the urban counterparts. Women find it more difficult to transport their produce to the
women are employed in the non-agricultural sector. Thus, rural and urban urban areas (including loading and unloading, finding a suitable vehicle)
women need to be considered separately. As part of an IPS recent study*, and are pushed around more when it comes to negotiating. Comparatively,
women from both rural and urban communities were consulted to identify women from urban communities do not face such difficulties in accessing
the factors that hinder them from being economically empowered. markets, but they also lack negotiation skills which is essential for effective
market access.
Barriers to Economic Empowerment Both rural and urban women lack financial literacy: there are many
Limited job opportunities for rural women; no flexibility for urban
loan schemes operated by various parties (state banks, private banks,
women: even though there are scores of unemployed women who are
financial institutes, and micro-finance organizations), in all parts of Sri
willing to work in rural areas, there are only a few job opportunities for
Lanka. However, due to tight procedural requirements of banks and other
them at their villages. Many of them engage in agricultural activities as

“ There are so many micro-finance companies
operating within villages and so many loan
schemes are available for villagers. One loan
is take to settle another loan and another
loan is taken to settle the second one. People
have to work hard just to pay the interst. with

this,women of these villages are more in devt
ECONOMICALLY than ever before.
Nusra, from Eravur

WOMEN “ Even though there are many woman who are
looking for jobs at our villages, there are no
opportunities for them; not even a garment

One Strategy factory is nearby. Earlier, there were few garment
factories, but now they are not functioning.

Does Not Fit All Padmini, from Padaviya

financial organizations (e.g., providing collaterals, finding state employees
as guarantors), micro-finance organizations are preferred; most of them
target women with special loan schemes. However, most of the community Relevent authorities should be
members from rural as well as urban sectors are of the opinion that these
loan schemes are not helping women improve their economic status, but
are a ‘trap’ that weakens women’s economic advancement. This situation

infrmed about the disaster done by
the micro credit companies in our
has arisen due to the lack of financial literacy and financial management communites.
skills of women.
Shanthi, from Kaduwela
Rural women lack access to training opportunities, urban women lack
knowledge on training opportunities: acquiring a recognized vocational to facilitate market access. Attention should be given in developing
training qualification is an important starting point in obtaining a good job negotiation skills of both rural and urban women as it has been shown that
or in starting a business. However, rural women find it difficult to attend men tend to achieve better economic results in negotiation than women.
such programmes, owing to lengthy travel times and transport costs as Better management and understanding of finances: though micro-finance
most of the vocational training programmes are conducted in urban areas; institutes and loan schemes offered by various institutions have widened
on the other hand, urban women lack knowledge and information about credit access opportunities for women, women’s naivety about financial
such programmes. and credit management has prevented the effective use of these schemes.
Awareness creation, tight regulation, and more scrutiny can ensure the
effective usage of such loan schemes.
Breaking Down the Barriers
It is important to use different strategies when addressing the issues faced Better reach for vocational training: if the authorities can make
by women from different settings. A blanket approach will not be effective arrangements to offer vocational training programmes at the village level
in this regard. More opportunities, more flexibility: for women in rural areas, or at close proximity, it would increase rural women’s participation in such
the availability of job opportunities is the priority. Women who participated programmes. For urban women, effective communication and information
at the community consultations from rural areas suggested setting up sharing is more important. Use of modern technology (mobile phones) and
industries in close proximity, using resources available in the villages, to social media would give more effective results in sharing information with
create more job opportunities especially for women. Work options such urban women.
as flexible working hours and working from home can be introduced for
women from urban areas. Better access, smarter negotiation: ruralwomen *This article is based on the research findings of the ‘A Desk Review to
are mostly engaged in agriculture and self-employment, and therefore, Assess the Sri Lankan Girls’ and Young Women’s Economic and Social
effective market access is crucial to selling their products at a reasonable Empowerment for Leadership’ done by IPS, with the guidance of the
price. The community members proposed establishing collecting centers Ministry of Women and Child Affairs, and funding from Plan International
at village levels and directly involving the government to buy the produce Sri Lanka.

leadership in decision making bodies at all
levels, especially at the community level – the
most critical entry point leading to national
level leadership positions.

GIRL’ In this backdrop, the Ministry of Women and

Child Affairs, and Plan International Sri Lanka,
together with the Institute of Policy Studies

of Sri Lanka (IPS) recently carried out a
research study to identify the main obstacles
faced by women when emerging as leaders
at different levels. This article, based on the

Sri Lanka’s Female study, focuses on female leadership at the

community level.

Benefits of Female
Leadership Leadership
At the national level, female leadership
promotes policy agendas focused on
inclusivity and empowerment, especially with
By Sunimalee Madurawala only 2 women representatives accounting
regard to increased access to education,
for just 3.4% of total representation; more
employment, and economic participation of
Sri Lanka is widely acclaimed for its than 80 years later, the eighth Parliament
women. At the business level, studies have
success in achieving many crucial human of Sri Lanka (2015-present) still has only
demonstrated little gender difference in key
development indicators. However, surprisingly 13 female representatives. However, in a
leadership qualities, such as innovativeness,
the country lags behind when it comes landmark achievement, it has been made
entrepreneurship, and intelligence.
to achieving gender related targets set mandatory for all political parties to have 25%
by global development agendas. Despite female representation in candidate lists at
It is also evident that women are better than
boasting of having the world’s first female the upcoming Local Government Elections.
men when it comes to being compassionate
prime minister, historically, Sri Lanka’s But violence against female candidates
and organized – companies that have
performance has been disappointing with and discrimination against women within
female board members show significantly
regard to women’s participation in decision political parties are tainting this historical
better financial performance than those with
making at the national level. In the first milestone. This indicates the need for a more
low female representation. There are also
Ceylon State Council (1931-1936), there were comprehensive approach to enhance women’s

many benefits of having women leaders it does not provide adequate support to build positions is mostly due to external barriers,
at the community level; higher status in leadership qualities and to overcome the as mentioned above. Hence, to increase the
the community, more women approaching negative self-attitudes among children. visibility of women at leadership positions,
the community leaders, and increased a holistic approach is needed; enhancing
numbers in civic associations, such as school Restrictions on mobility: mobility restrictions women’s leadership qualities should start
management committees, development are mainly imposed by cultural beliefs and at early stages of life and at every level of
committees, village development committees, social norms (e.g., “it is not suitable for society. With such backing, women will be
and political parties, and more unity to take woman to go out during the night”). At the able to perform much better as leaders,
action on local problems, such as corruption, community level, leaders are expected to especially at the community level. Women
child marriage, and dowry to name a few. interact with others and act quickly in case of should be encouraged to take part in decision
an emergency. But women may not have the making process by making them aware of
flexibility to be available and at all times of the the importance of such involvement and by
Barriers to Female Leadership
day, especially at night. providing them required assistance both in
at the Community Level monetary and non-monetary forms.
Community discussions and consultations Lack of interest: even though community
with stakeholders conducted under the above- leadership paves the way for political Most of the barriers facing women are tied
mentioned IPS study confirmed that women’s leadershipin most communities, women to social norms and practices on gender.
participation is prominent in Community deemed involvement in politics as a ‘non- Changing such gender norms and stereotypes
Based Organizations (CBOs). In fact, women’s productive activity’ and a ‘waste of time’. is challenging and sluggish. Yet, Sri Lanka’s
visibility in community activities is remarkably Most of them preferred to spend their time on education system can contribute immensely
higher than that of men. Indeed, it is evident economic activities or with their families, over in speeding up this process by providing more
that in many contexts leadership experience participating in political meetings and election gender-balanced education and by opening
and social capital gained at the CBOs play campaigns. It was evident that a fear of up more avenues to develop girls’ leadership
a critical role in formulating women political supporting a particular political party openly, qualities from an early stage. Women also
leaders.However, even the most active female low presence of female leaders in politics, need to recognize and value their own selves
members were reluctant to take up leadership prevalence of violence, lack of resources, and as powerful, and important. For this, they
positions at these CBOs. The study revealed a lack of support from other women constrained need strong support networks and inspiration.
number of reasons behind this hesitancy. women’s active political participation.
*This article is based on the research findings
Lack of recognition: the community of the ‘Assessing the Sri Lankan Girls’
consultations revealed that most of the
Encouraging Women Leaders
and Young Women’s Economic and Social
Community consultations revealed that
female CBO leaders are not satisfied with Empowerment for Leadership’ done by IPS
women’s low enthusiasm in taking leadership
the recognition they get from society. In with funding from Plan International Sri Lanka.
some cases, they are disappointed by the
support and appreciation from spouses and
family members. Cultural and religious Barriers for Woman Leadership
restrictions: in some communities, cultural
at Community Level
and religious practices and beliefs impose
limitations on female leadership.

This could be observed mostly in the

Muslim communities and among the estate
communities. Uneven distribution of family
responsibilities: this is another factor
that limits women taking leadership at the Lack of Interest Lack of Recognition
community level. In most families, the time
and support given by males in carrying out
day-to-day household chores are limited,
and women are expected to tackle household
duties and care work by themselves. As
such, women are reluctant to take leadership
positions in CBOs due to the difficulty
Cultural and Religious
in balancing family responsibilities with Family Responsibilities
community work.

Negative self-attitudes: false social

perceptions about women leaders (e.g.,
“women are not ‘strong’ enough to lead”) and
traditional stereotypes discourage women
from realizing their leadership potential.
Community members stressed that the
Negative Self-Attitudes Restrictions on Mobility
current education system, which is more
exam-centric, is also responsible for this, as
Figure 1: Percentage of Underweight
Children and Underweight Births


21.1 20.5 2016
16.6 15.7

A Persistent

Under-weight children Under-weight births
Source: Constructed based on DHS 2016/17
Note: Anthropometric measure weight-for-age is considered as a
measure of underweight children. This index is based on the WHO Child
Growth Standards adopted in 2006. Low birth weight is defined as a
By Priyanka Jaywardena birth weight of less than 2500g.

Although Sri Lanka performs well in most nutritional levels have not improved considerably Socio-Economically poor are more likely to
health indicators, child nutrition is still a major over the years (Figure 1). be malnourished. Recent DHS-2016/17 data
challenge. Sri Lanka Human Development Report reveals,a child of the “socio-economically
2012 revealed that poor nutrition is the chief Also, these numbers worsen when it comes to poorest” quintile is twice as likely to be
cause of multidimensional poverty, accounting certain population groups, such as the estate underweight than a child in the socio-
for 30% of the multidimensionally poor (based sector, where prevalence of malnutrition is economically richest quintile; among the poorest,
on 10 indicators representing health, education, more severe irrespective of how malnutrition is 27.6% of under 5 year olds are underweight,
and living conditions). Well-nourished people are measured. For example, 30% of children under while among the richest, only 12.5% of the under
healthier, better learners, and more productive in 5 years of age (U5) are underweight while 25% 5 year olds are underweight. This means that
life. Recognising the importance of improving the babies have low birth weight (Figure 2). those who are socio-economically better off, are
nutritional levels, National Nutritional Policy (NNP) less likely to be underweight or malnourished.
was initiated in 2010. However, recent nutritional In such deprived regions, there are deep rooted Further, IPS research on the “Causes of
estimates of Demographic and Health Survey socio-economic factors which affect health Malnutrition in the Estate Sector”revealed
(DHS) 2016/17 do not paint a positive picture and wellbeing of communities. As revealed thatthe main reasons for child and maternal
about the current status of Sri Lanka. Despite in the “Socio-Economic Determinants and malnutrition in the estate sector were imbalanced
countless initiatives to alleviate malnutrition, child Inequalities in Child Malnutrition in Sri Lanka”, diets – consisting of more starchy and fatty food
Figure 2: Prevalence of Malnutrition by Sector Poor dietary habits is a signifi- sanitation facilities, another contributory factor
for higher prevalence of malnourishment in the
29.7 cant reason for malnourishment estate sector
in the estate sector
20 Those in the estate sector continue their cultural DHS 2016/17 reveals that 57% of the estate
16.4 15.7
12.7 dietary practices and consume more wheat sector households do not have access to a safe
10 9.1 drinking water facility, while 21% do not have
flour. Estate sector households’ average wheat
5 flour consumption is steep, at around 10kgs per access to sanitary toilet facility, which negatively
0 month, whereas average household wheat flour affect the health, wellbeing, and nutrition of this
Underweight child Low weight births Maternal malnutrition
Urban Rural Estate consumption is around 1.9kg (Figure 3a). On the group.
Source: Constructed based on DHS 2016/17 other hand, those in the estate sector consume
Note: Body Mass Index (BMI) classification is employed for identifying
maternal malnutrition less animal protein; their expenditure for animal How to Tackle the
protein is much less when compared to the
and not enough high-protein food, – and high expenditure patterns of the other regions (Figure Malnutrition Problem
alcohol and tobacco consumption. Further, it 3b). These poor dietary habits negatively affect National Nutrition Policy has recognized
says these factors, coupled with the households’ their nutritional status. theimportance of targeting of nutritional
poor socio-economic conditions and lack of interventions to underserved areas, the plantation
education among women, perpetuate a vicious Figure 4: Household Average Monthly community, urban poor, and conflict affected
cycle of malnutrition in the estate sector. Expenditure for Liquor and Tobacco areas. Further it has identified the necessity
Following the previous research findings and to promote behavioural change among the
given the higher prevalence of malnutrition in the Estate 1,915 population, enabling them to make right food
estate sector, this blog revisits current status of choices and care practices. To be more affective
income security, dietary practices, and financial Rural 1,004
policies must recognize and remove individual
management of those belonging to the estate causes of malnutrition within the community.
sector. For better targeting, it is important to identify
Urban 1,090 food shortages, and diversities in diets that
exist among community. Also, educational
Socio-economically poor are 0 500 1,000 1,500 2,000 2,500
programmes on nutrition should be strengthened
more likely to be Source: Constructed based on HIES 2016/17 to focus on the importance of nutritious food
– what foods to select, how to prepare and
A main reason for malnourishment in the estate Poor financial management feed children in relation to frequency, density,
utilization, and the hygienic and nutrition value
sector is because they are socio-economically escalates food insecurity in the of food. Such awareness programmes on health
poorer. Although in the recent years poverty levels
in the estate sector have reduced nearly fourfold, estate sector and nutrition should also cover complementary
Although estate sector lags behind economically, feeding and health promotion among children
from 32% in 2006/07 to 8.8% in 2016/17,
the expenditure on alcohol and tobacco in and adolescents. Further NNP has recognised the
this sector is still lagging behind compared to
this sector is roughly double, when compared role of community organisations in programme
the other parts of Sri Lanka. As reported in the
to the average Sri Lankan (Figure 4). Estate planning, implementation, and monitoring
Household Income and Expenditure Survey (HIES)
sector people are addicted to alcohol due of nutrition intervention programmes. For
2016/17, 64.6% of the estate sector households
to many reasons such as, being engaged in better targeting, community must answer root
are among the poorest 40% households of the
labour intensive work, habit, and cooler climate. causes of malnutrition, with the help of trained
country. Also, the HIES 2016/17 reveals that
Also, there are many liquor shops available in individuals, and develop long-term solutions to
the mean monthly per capita income for estate
close proximity, which also acts as a motivator the nutrition problem. Formation of women’s
sector is remarkably low at around Rs. 8,566,
for people to consume alcohol. Estate sector groups, with backing of referral facilities, is
when compared to the national average of Rs.
households’ average monthly expenditure for important to empower women to make the
16,377. It shows that, while the estate sector is
liquor and tobacco, as a percentage of their right nutritional choices. Especially, community
just pushing out of poverty, low income may still
monthly food expenditure,is over 11%, negatively driven programmeshave a major role to play in
hinder their food security.
impacting the households’ food security. Poor improving the food security of the deprived estate
sector. In addition, NNP proposes to implement
Figure 3a: Monthly Wheat Flour Figure 3b: Average Monthly Household an evidence based community nutrition package
Consumption Expenditure on Meat and Fish through community workers.

12 3000
Interventions to increase household food security
9.8 through with better financial management
and campaigns against behaviours and
8 2000
practices such as alcoholism should be
6 1500

carried out amongst the youth in estates. Also,

4 1000 living conditions in the estate areas should
1.7 1.6
2 500 be enhanced by providing better housing
0 0 and increasing access to ding safe drinking
Urban Rural Estate Meat Fish Dried fish water, sanitary facilities, drainage and waste
Rural Urban Estate management.
Source: Constructed based on HIES 2016/17

Q:Can you briefly describe
your journey at IPS? How long
have you been with IPS and
what are the different roles you
have played at the Institute?
I first joined IPS in 1995 as a Research
Assistant. After one year at IPS, I left to pursue

my PhD studies. I rejoined IPS in 1998 as a
Research Economist. I was later promoted to
a Research Fellow in 1999 and the Director of
Research in 2018.

Nisha Arunatilake Q: What inspired you to

choose labour and educa-
tion related research as an
area of specialisation?
In this edition of the Talking Economics Digest, we feature Ni-
I was always interested in doing micro applied
sha Arunatilake, Director of Research at IPS. She has extensive economics. For my PhD, I specialized in health
post-doctoral experience in conducting policy related economic and labour economics. When I joined IPS,
there was already an established research unit
research in labour market analysis, education, public finance and conducting health research. So I decided to
health, and heads the Labour, Employment and Human Resource concentrate on conducting labour economics.
Later I also conducted studies in education and
Development unit at the IPS. She has collaborated with, and has health.
been a consultant to different organisations, including the World
Bank, United Nations Development Programme (UNDP), Asian De- Q: As Sri Lanka strives to create
a knowledge-based economy
velopment Bank (ADB), United Nations Educational, Scientific and in Sri Lanka, how helpful will
Cultural Organization (UNESCO), United Nations Children’s’ Fund education research be when
(UNICEF), and International Labour Organization (ILO) in numerous moving towards this goal?
research studies. Dr. Arunatilake holds a BSc in Computer Science Talented human resources are a key component
of a knowledge-based economy. Globally there
and Mathematics from the University of the South, USA and an is a competition for talented people. Many
MA and PhD in Economics from Duke University, USA. developed countries changed their migration
policies to attract highly skilled workers at the
turn of the millennium. Sri Lanka has also lost
many talented individuals due to these policies.
“ Many developed countries changed their migration policies
to attract highly skilled workers at the turn of the millennium.
Sri Lanka has also lost many talented individuals due to
these policies. Highly skilled workers are usually educated at
the tertiary level and they are employed as professionals or
semi-professionals. Highly skilled workers take long to train.
Many developed countries changed their migration policies
to attract highly skilled workers at the turn of the millennium.

Highly skilled workers are usually educated we will lose them to other countries. In the long term, I would like IPS to be a highly
at the tertiary level and they are employed as sought after dynamic research center, that
professionals or semi-professionals. I see two main challenges for Sri Lanka in improves the lives of Sri Lankans and the
achieving this goal. The first is in improving, South Asian region, through policy research.
Highly skilled workers take long to train. For modernizing, and expanding the tertiary
In the short term, I would like IPS to initiate
example, it takes at least 6 years after finishing education sector. The second is in facilitating
high school for a person to get a Masters and contribute to different policy debates in Sri
the creation of sophisticated professional jobs.
degree. It takes even longer to get a PhD. So Lanka, and in the region, based on evidence.
countries who want to be knowledge-based
economies need to plan ahead to ensure that
Q: What are some of the pre-
they train enough highly skilled workers to vailing gaps in education and Q: What are your proudest
supply the future demands for skilled workers. labour research in Sri Lanka? moments during your career?
A few decades ago, it was possible to assess This is a difficult question. Maybe it was when
Education research is very important in
the labour market and train workers to supply I got my first Partnership for Economic Policy
this regard. Unless education at all levels is
the future demands. But, the nature of work is
improved, the country will not have a sufficient (PEP) research grant in 2005. The grantees
constantly changing today, due to technological
cohort of individuals able to obtain tertiary were selected through a global competition.
change. The labour and education markets of
level education and become productive
the country also need to cater to this changing
professionals. Without a high share of highly
skilled workers, it is difficult for countries to
demand. However, the information collected Q: What advice do you have
on the education and labour markets in the
develop and adopt new technologies and use
country do not allow assessing these new
for young researchers who
them to improve productivity and growth.
developments. are starting out their ca-
Q: In your opinion, is this a reers in this line of work?
The education sector in the country needs to be
realistic goal for the Sri modernised and revived from primary grades In order to be a good policy researcher, you need
Lankan economy? onwards. to develop your analytical, writing, presentation,
and networking skills. Young researchers who
It is a difficult dream, but not unachievable.
join are usually very skilled in some areas, but
Most advance countries are aiming to have at To do this, teacher recruitments, curriculum
need development in others. I think it is im-
least 40% of their employed in professional developments, the management of schools,
portant that young researchers develop all their
and semi-professional categories. Only about and the mechanisms in place for assessing
key skills at an early stage. Those who do that
13% of workers in Sri Lanka are professionals students achievements need to change. Little
become really good researchers. Others take
or semi-professionals. So we need to plan is known about these aspects of education in
longer to progress in their careers due to skills
well to increase the supply of tertiary educated the country. gaps.
(who usually take on professional and semi-
professional jobs). Q: As the Director of Research Also, I think it is important for all young
researchers to develop an expertise early on in
The country also needs to pay attention to
at IPS, how do you envision the their careers. Initially it is important to try out
facilitating the creation of professional and future of the Institute? What are different research areas. But, in order to make
semi-professional jobs. For, if the tertiary your plans for IPS during the a name, it is important to become an expert in
educated do not get good jobs in the country, short-term and the long-term? one or two research areas.
January – June


IPS Research Fellow, Athula Senaratne, recently
noted that gaps in information, technology, IPS NEW THINKERS’ SYMPOSIUM
and policy are some of the main challenges in HIGHLIGHTS MACROECONOMIC
tackling climate change and pointed out that STABILITY AS TOP POLICY GLOBAL VALUE CHAINS AND
farmers in Sri Lanka are especially vulnerable PRIORITY FOR SRI LANKA STANDARDS FOR TRADE IN ASIA
to climate information gaps.
Commenting on the government’s economic IPS Research Fellow, Janaka Wijayasiri,
Dr. Senaratne made these observations reform plans in view of the local government remarked that the tea industry in Sri Lanka,
at a stakeholder workshop for the project poll results, State Minister of National Policies which is predominately export oriented, is
titled ‘Bridging the Climate Information and and Economic Affairs, Harsha De Silva, said increasingly governed by strict and complex
Communication Gaps for Effective Adaptation the reforms will need to continue but the standards.
government may need to go for the “third best
Decisions: An Integrated Climate Information
Management System (ICMIS)’ on 04 January He made these remarks at a ‘Seminar on Global
2018 at the Department of Meteorology, Speaking at the New Thinkers’ Symposium, Value Chains and Standards for Trade in Asia’,
Colombo. organized by IPS on 27 February 2018, he organized by Institute of Developing Economies,
said “operation successful, patient dead,” Japan External Trade Organization (IDE-JETRO)
referring to the setback in the election, despite and the Ministry of Development Strategies
current improvement in macroeconomic and International Trade (MODSIT). The Seminar
measurements, and trade and investment was held on 29 March 2018 at the Dr. Saman
flows. Kelegama Auditorium, IPS.


recently argued for a fresh rethinking of the PRESENT PUBLICATION ON FOREIGN FINANCES FROM LOANS
(FTA), given that the initial conditions under FOREIGN AFFAIRS SAMAN KELEGAMA MEMORIAL
which trade and investment integration was CONFERENCE
conceived under the Framework Agreement IPS Research Fellows, Bilesha Weeraratne and
of 2004 is much different to current national, Janaka Wijayasiri, met Secretary of Foreign Delivering the Keynote Address at the Saman
regional, and global economic interests of the Affairs, Prasad Kariyawasam, to present a copy Kelegama Memorial Conference, Prime
member states. of the IPS study ‘Cost of Low-Skilled Migration Minister, Ranil Wickremesinghe, noted that Sri
to Saudi Arabia, South Korea and Malaysia: Value Lanka has to address weaknesses in trade
Dr. Weerakoon made these remarks while Chain Analysis.’ competitiveness, eliminate trade barriers, tackle
serving as a panelist at the session on anti-dumping legislation, and help domestic
‘Trade and Economic Integration’ at a Dr. Wijayasiri also presented the Secretary with industries become competitive.
Regional Conference on Advancing BIMSTEC the latest copy of the Talking Economics Digest,
Cooperation, organised by the Delhi Policy and discussed means of better dissemination of The policy aim of the government is to create a
Group (DPG) and The Asia Foundation, New the articles and publication to Sri Lankan missions dynamic private sector, which will drive growth,
Delhi on 26 – 27 April 2018. abroad to strengthen policy engagement. he further highlighted.

Cost of Low-Skilled Migration to Saudi Arabia, South Korea Sri Lanka Tea Industry in Transition: 150 Years and Beyond
and Malaysia: Value Chain Analysis – Sri Lanka
By Bilesha Weeraratne, Janaka Wijayasiri, Edited by Janaka Wijayasiri, Nisha Arunatilake
and Suwendrani Jayaratne with Saman Kelegama

January 2018 The tea industry in Sri Lanka has played an

important role in terms of its contribution to the
national output, employment and net foreign
Labour Economics Series No. 20
exchange earnings from its inception in 1867. The
industry has undergone a number of changes over
Migration cost is distributed among many the last 150 years. During this period, the ownership
stakeholders in the migration value chain of tea lands has changed from privately-owned large
(VC). This paper utilises VC framework to scale tea plantations to nationalized tea plantations
conceptualise the migration process and the managed by the state, and to the present day regional
cost for low-skilled workers from Sri Lanka (LKA) to plantation companies owned by private companies.
Saudi Arabia (SAU), South Korea (KOR), and Malaysia (MAS).
In recent times, the smallholder sector of the tea industry has also grown
The study adopts a qualitative methodology and collects data through eclipsing the tea plantations as the main source of tea production
Key Informant Interviews and Focus Group Discussions in Sri Lanka. in the country. The industry is changing rapidly in many other ways
The study identifies employers, recruitment agents in SAU and LKA, as well, due to the increased international competition, expansion of
Sri Lanka Bureau of Foreign Employment (SLBFE), sub-agents, and the small holder tea sector, labour issues, automation, changes in
migrants as the key players in the VC for SAU. demand for tea, climate change and multiplication of quality standards.

Sri Lanka: State of the Economy 2018

Climate Change, Food Security and Disaster Risk Management
The IPS’ annual flagship report Sri Lanka: in the Global Climate Risk Index for 2018. Against this backdrop, the Sri
State of the Economy provides a critical Lanka: State of the Economy 2018 report draws attention to ‘Climate
assessment of the country’s economic Change, Food Security and Disaster Risk Management’ as its main
performance and near term outlook for thematic focus to examine the many interrelated socio-economic impacts
growth and macroeconomic stability. Each that need policy consideration.
year, the report also examines crucial medium
term policy priorities to achieve sustained Climate change impacts exacerbate prevailing conditions of inequality.
growth and strengthen socio-economic Disasters have a disproportionate impact on those with low incomes; they
development outcomes for the country. face higher risks from poorer living conditions, and are more reliant on
vulnerable sectors like agriculture for livelihoods.
Sri Lanka’s most significant economic
milestone in 2017 was the gradual reclaiming of
The report addresses key topics on:
macroeconomic stability with prudent fiscal, monetary and exchange rate
policy management. Stronger economic fundamentals, and the expected „„ Transitioning Sri Lanka towards a Climate Resilient Low Carbon
boost to investor sentiment, offer a transformative promise of sustained Economy
and lasting growth. The question is whether despite the positive progress
on the macroeconomic front, private investors will hold-off, uneasy at
„„ Climate Change, Food Security and Rural Livelihoods in Sri Lanka
the prospect of what promises to be testing electoral times ahead for the „„ Climate Change and Disasters: Managing the Risks in Sri Lanka
„„ China’s Belt and Road Initiative (BRI): A Sustainable Partnership for Sri
Within a narrow growth corridor, the Sri Lankan economy remains exposed
to both domestic and external shocks as never before. The immediate „„ Linkages in Climate Change, Migration and Remittances in Sri Lanka
worries on the external front are the threat of rising oil prices and a shift to „„ Building Resilience: Public Investments to Improve Sri Lanka’s Rural
a more decisive phase of interest rate tightening in advanced economies. Economy
On the domestic front, Sri Lanka’s economic vulnerability to climatic-related
„„ Managing Risks through Sri Lanka’s Microinsurance System
shocks is on the rise. Massive losses due to disasters within a relatively
short time period have seen the country climb up the ranks to fourth place „„ Addressing Nutritional Risks: A Persistent Problem in Sri Lanka

Visit our YouTube Channel ‘IPS Sri Lanka’ for Interviews with the Authors.
For Details on IPS Publications Contact:
Amesh Thennakoon, Publication Officer, 011 214 3107 or 011 214 3100 | or
Ashani Abayasekara Nisha Arunatilake Kithmina Hewage Priyanka Jayawardena
Ashani Abayasekara is a Nisha Arunatilake is the Director Kithmina Hewage is a Research Priyanka Jayawardena is a
Research Officer with research of Research at the IPS. She Officer with research interests in Research Economist at the
interests in labour economics, heads the Labour, Employment international political economy Labour, Employment and Human
economics of education, and Human Resource including WTO issues, trade Resource Development research
development economics, and Development research unit. Her and development, export unit at IPS. Her research
microeconometrics. research interests include labour competitiveness, and Foreign interests include education
market analysis, education and Direct Investment. Kithmina is and skills development, labour
skill development, migration also a member of the Talking economics, inequality analysis,
and development and health Economics Team. health economics and child
economics. nutrition.

Sunimalee Madurawala Shihara Maduwage Nuwanthi Senaratne H. N. Thenuwara

Sunimalee Madurawala is a Shihara Maduwage is Manager Nuwanthi Senaratne is a Research H. N. Thenuwara is a
Research Economist at the - Communications & Strategic Assistant whose research interests Distinguished Fellow of IPS and
Health Economic Policy Unit. Outreach at the IPS and the include trade and international an Adjunct Assistant Professor at
Her research interests include political economics including the the University of Iowa, USA.
Editor of Talking Economics.
health economics, gender and role of trade negotiations, sanctions
and international relations as
population studies.
well as topics in development

Harini Weerasekera Bilesha Weeraratne Janaka Wijayasiri Charmaine Wijesinghea

Harini Weerasekera is a Research Bilesha Weeraratne is a Research Janaka Wijayasiri is a Research Charmaine Wijesinghe is Manager –
Assistant at IPS, working in Fellow at IPS focusing on internal Fellow at IPS. He has over 12 years Publications & Events at IPS and is
the areas of macroeconomic and international migration and of experience on trade policy issues a member of the Talking Economics
policy and planning, labour and urbanization. She is also interested and heads the International Economic Team.
migration, and econometrics and in labour economics, economic Policy Unit. He is a member of the
economic modeling. development, and economics of Talking Economics Editorial team.
sports. She is a member of the
Talking Economics Editorial Team.

The Cabinet, in February, granted
approval to reduce lease
payments for leasing state land
for commercial agriculture
The much-touted Sri Lanka –
Singapore Free Trade Agreement
was signed on 23 January 2018
and was expected to deepen
economic ties and facilitates
greater trade flows between the
two countries.

After a 17-year-long pursuit, Sri Lanka’s new Inland The Asian Development Bank
Sri Lanka’s Parliament passed Revenue Act took effect from (ADB) approved a US$ 100
the Anti-Dumping and Counter- 01 April 2018. million results-based loan for
vailing Duties and Safeguard the government’s efforts to
Measures in March 2018 to develop skills to meet labour
advance the country’s standing demands, economic diversifica-
in global trade. tion, and enhance productivity.

China imposed tariffs worth

US$ 34 billion on US goods,
including agricultural
products, in retaliation to the
The Port of Colombo recorded a escalation of tariffs on
16.2% growth in container Chinese steel and aluminium
handling for the 1st quarter of imports by the Trump admin-
2018, relative to the preceding istration in June 2018.
year. Among global ports, Sri
Lanka’s growth rate was only
second to the Port of Singapore.
The World Bank approved a
US$ 100 million credit line to
support Sri Lanka’s efforts to
strengthen and modernize its
education system.

In May, the New Development Bank (NDB) set Asian stocks slumped to a
up by the BRICS economies approved six new nine-month low at the end of
projects, which brought its up to over $5.1 June 2018 in response to the
billion across 21 projects. Two of these were increasing threat of a trade
non-sovereign loans, which are issued to war between the US and
companies without a government guarantee. China escalating further.

04 Vision 2025 is aimed at
steering the economy 06 Sri Lanka’s tea industry
has survived for over 150 08 An analysis of the key
features in the much touted
towards more sustainable years. What are challenges Sri Lanka – Singapore FTA,
means of growth, led and opportunities facing a milestone moment in the
by foreign and domestic the tea industry of Sri trade and economic relations
private investment. Is Sri Lanka and how should the between the two islands.
Lanka on the right track in country move forwards?
this regard?

12 Given the necessity to

14 What are the gaps in

10 How will a FTA with
Malaysia impact Sri
simplify trade procedures,
Sri Lanka has identified
the implementation of a
policymaking and priority
areas for educational reforms
Lanka? Likely gains from
in Sri Lanka?
bilateral trade liberalisation Single Window (SW) for
in goods will be limited trade as a national priority
to few products, but and currently a blueprint is
there might be gains in being developed.
investment flows to Sri

18 In today’s globalised
environment, English 20 The first ever “Labour
Demand Survey” in Sri

16 Generating a high share of proficiency is a must-have Lanka recorded nearly

tertiary educated university skill, especially when it comes half a million vacancies in
graduates, especially in to the highly-competitive the private sector. A large
STEM subjects, is a policy job market. What are the portion of these vacancies
priority for Sri Lanka, reasons for the lack of English are found to be in routine
given the country’s goal language skills in Sri Lanka? and non-routine manual
of becoming a knowledge Are the government policies jobs.
based economy, driving directed towards addressing
competition through these issues?

When it comes to
24 With the signing of the Sri
Lanka – Singapore Free
26 empowering Sri Lankan
women in economic
terms, there are no one-
Trade Agreement (SLSFTA),
22 Sub Agents play a
significant role in the
recruitment process of
as well as the Economic
and Technological
size-fits-all solutions. It is
important to look at the
differences in women’s
migrant workers from Sri Cooperation Agreement
needs and priorities from
Lanka. There is increasing (ETCA) with India that is
different settings, in
interest in Sri Lanka to being negotiated, there has
order to introduce more
formalise Sub Agents and been wide public debate
effective development
hold them accountable for on the issue of allowing
their conduct. free movement of people
across borders.


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