名城論叢

20 0 3年3月

1 33

SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Revie w
Aruna S. Gamage

A BSTRA CT
Small and M e dium Enterprise ( Es) play an important role in any e s SM conomy through ge ration of employ ne ments,contributing to the growth of GDP,e mbarking on innovations and stimulating of other e conomic activitie s.This sector is said to be the backbone of all de velope d and de loping nations. So, the de lopment of this sector is paramount important f any ve ve or c ountry irrespec tive of their level of deve lopment. This is e n more important to de loping ve ve c ountries where pove rty and unemploy ment are the pe rsisting problems in those economie s. Having unde rstood this f t, suc ssive gove ac ce rnments in Sri Lanka have take various ste n ps, f rom time to time to promote this vital sector sinc independenc But, when analy , e e. zing the prese contribution of this sector in the national ec nt onomy it is clear that the sec , tor has not ac ve desired level of contribution whe compare with other deve hie d n d loped and de loping ve c ountries in the region. So, the see re ms to be a vast opportunity f Sri Lanka to harness the or opportunity by de veloping this vital sector. So, the obj ective of this paper is to provide a brief overview of SME sec tor in Sri Lanka, and to make suggestion f e or nhanc ing the capacities of SM Es f a sustainable developme in Sri Lanka. or nt

Ke words:Small and Me y dium Ente rprise in Sri Lanka,SME Polic s in Sri Lanka,Ec s ie onomic De lopme Entre ve nt, prene urship, Small Sc ale Industry .

1.I NTRODUCTI ON
Sri Lanka is an Island republic with a total land area of 65 61 square kilomete It is , 0 rs. locate on the southe d ast side of India whic is its c h losest ne ighbor.It is a multiracial c ountry which has a total population of 19. million at prese 4 nt.The lif expe e ctanc at birth is 73 y y ears and lite y rate whic is 91. is the se rac h 4 cond highe in Asia. Ac st cording to the World Bank c lassif ation Sri Lanka is a loweric middle inc ome c ountry with one of the highest pe c r apita income in the South Asian re gion of Rs. 63 7 . 0 ( , 52 0 US$ 8 ) in the y ar 2 00 De 41 e 0 . spite the we doc ll- umente e d thnic c risis which re sulte in a culturally base c d d ivil war,with high def nse e e xpenditure and inc ase le l of f ign de s re d ve ore bts, Sri Lanka has bee able to maintain an n average growth rate of 5 perce over the last 5 de ade The Human De lopme Index nt c s. ve nt which is 7 0 in 1 3. 999 highlight the signif icant positive c hanges in the re living standard of Sri al Lanka where the has bee high level of satisf tion of basic ne re n ac eds although GDP per c apita

In Sri Lanka. poverty allevias. tion. the study atte mpts to pre nt se polic implications f de y or veloping the se tor. Finally by c . the Sri Lankan village live rs lihood. It will start by e xamining the de initions and re f viewing the f tors inf ac luenc ing the de lopme of SM Es in Sri Lanka. re f re rms use in dif e nt doc d f re uments to ide y ntif this se ctor. are some of the te . The small industries in the rural areas are the maj sourc of e or e mploy ment and produc tion of f ood and. ale Industry e . re gional de lopme training of worke and entre ve nt.the size f re rite y se rite r e of f d investment.amount of c apital inve d. the is no c ar de inition f SM Es.Rural Ente rprise s. has a maj if .2 0 . and the nature of the busine and the sec ixe ss tor. ority portion of population living in rural are whic is e as h stimated to be 7 pe e of the c 8 rc nt ountrys total population.Among the c ria are the numbe of employ es. f re f re ing de initions in f this regard. 00 ) But when analy zing the pre nt c se ontribution of this se tor to the national e c conomy it se . Scale Industrie ( s CSSI) se tor play an important role in e onomic developme through c s c nt c ation of e re mploy ment opportunitie the mobilization of domestic savings. tc. cre ating an e conomic e nvironme in whic large f nt h irms f lourish and c ontribute to e xport earnings.134 第3巻 第4号 is relative low. e xamining the proble ms assoc iate with de loping this sec d ve tor.have take various steps to develop this vital sec ( nts n tor Gamage. ly As in most Asia and pac ic Sri Lanka too. c 1. DEFI TI 1 NI ONS OF SMEs I SRI LA A N NK : SM Es are de ine in a varie of way by various c f d ty s ountrie using suc paramete such as s h rs numbe of pe r rsons employ ed. ems that it has not y produc de d results whe c et ed sire n ompare with the other de loped and d ve de loping c ve ountrie in the region. rms .the aim of this pape r is to give a brie ove f rvie of the c w urre state of SM Es in Sri Lanka and to e nt xamine the measure take to de lop this se tor the by making re omme s n ve c re c ndations f f or urthe developr ment.amount of turnover or nature of the ste busine e Not only dif e ss. So. Having understood the positive impac of SMEs development and ec t onomic growth. Ac ording to the Ce c c ntral Bank of Sri Lanka ( 1998) the cottage and Small . income distribution.Having ove ve nt rviewe the curre state of SME se tor in the d nt c e onomy c .therebyharne ssing the be f deriving f ne its rom it. it see that the is a vast opportunity f Sri Lanka s ms re or to de velop this se ctor. the f re ore.suc ssive ce governme in Sri Lanka. ormal or inf ormal. Small and M e dium activitie Cottage and Small Sc s. almost all the gove rnments that came to power sinc inde e pende nce in 1 .Small and Medium Industries or Ente rprise s. in which the industry operate The are de e nt te s. i.So.the study atte mpts to ide y SME policie f ntif s ollowed since inde nde e and institupe nc tional support me asures take by suc ssive governme n ce nts to develop this se tor. f rent c ountries apply dif ere de initions on the conce of SMEs.Mic Ente ro rprise s. f nt f pt e n within c ve ountrie dif e nt regions and dif e nt institutions adopt vary s. So. tc . f e. rs prene urs. Dif e nt gove re le f or f re rnme age ie use nt nc s dif e nt c ria to identif SMEs.se m to have be unde 948 e en rstood the gre ne d f developing at e or this vital se tor.

For example by using the numbe of e ry le f or .inc lusive of the c ost of land and building should not exce d Rs. e 0 99 e size and those with more than 1 0 e 0 mploy e are large. 0 2 0 0)and the total numbe r of re gular e mploy e doe not e e 5 pe es s xc ed 0 rsons ( Central Bank of Sri Lanka. rd. 1998) The .8 million ( US$ 84 0 )or with . 1. FA 2 CTORS I NFLUENCI NG THE DEV ELOPMENT OF SMEs I SRI LA A N NK The j ustif ation f the development of the SMEs in de loping c ic or ve ountrie like Sri Lanka is s large due to its multi-ace ly f ted merits. 00 ) For the purpose of a World Bank f inanc d Inve e stme Assistant Sche nt me. do not e ee Rs. 0 1) The World Bank de ine ente f s rprise size in Sri Lanka base on the numbe of e d r mploy e e s: those with f ewe than 4 e r 9 mploy es are small. te sting e quipme nts. 6 0 0) For the purpose of assistant programs imple nte by the Sri Lanka Export De lopme me d ve nt Board ( SLEDB)f export orie d e or nte nterprises. it is impe s.it is clear that the are se ral de initions f SMEs adopte by various institutions in re ve f or d Sri Lanka and this has led to c usion in ide y onf ntif ing SMEs f various supportive measure or s. 0 . Departme of Small Industrie ( nt s DSI)c lassif s ente ie rprise with c s apital inve stme of le than nt ss Rs.those with 5 . antipollution me asure etc So. f inancial institutions def ines SM Es as those e nterprise whose investment in f d asse at original book value s ixe ts .amount of turnove e r and balance she t total. Using the size of c apital and the numbe of e r mploy es as the criteria. c arly de ine what SMEs c le f s onstitute .1 million ( e 6 US$ 1 8.the total inve stme nt in f ixed asse ts. the European Union ( e EU)has c arly de ine SMEs in the membe le f d ir r c ountries. stme must be revise f que nt d re ntly due to inf lation ( Ponnampe ruma. 2 0 . e luding land and building. The Ne Small and M e w dium Ente rprise Basic law in Japan ( ame d Dec 3 1999) nde . SM Es are def ined as those e nterprise with a s c apital inve stme exc nt luding lands and buildings of less than Rs. . India de ine Small Sc f s ale Industry ( SSI) in te rms of limits on inve stme in plant and mac nt hinery exc . 0 Hewaliy 5 00 )( anage 2 0 .By using the numbe of e r mploy es.d. 2 00 . 4 million ( s ee US$ 4 . the Industrial e Developme Board ( nt IDB) def ines a small industry as an e stablishme whose capital inve nt stment in plant and mac hinery doe not exc d Rs. . . r mploy e and size of es c apital. 8 million ( xc xc d US$ 8 .35 SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Review(Aruna) 1 f que re ntly use d. The numbe of employ s as the c rion es r ee rite f size appears re or asonable be cause it distinguishes betwe e rprise re en nte s gardless the line of busine and the amount of capital inve ss. luding inve stme in land and nt buildings. rative to have a clear de inition f SMEs in the attempt of de loping the se tor f various purpose f or ve c or s. 0 ) In the c 40 0 . 0 ) So.employ es are medium. In othe developing as well as de lope c r ve d ountries whe there are strong SME se tors have re c ve c ar de initions f SMEs. ase of proj ts ec whe the main inve re stme is land and buildings ( or e nt f xample ware houses) . As a developing c ountry in the re gion. 00 annual e xport turnove of less than Rs. 5 million ( r 0 US$ 52 . 5 million ( US$ 52 00 5 )and f we than 50 employ s as SM Es ( e r ee Ponnamperuma.

SM Es have veryhigh e me mploy ntme ge rating potential nation wide ne .66 7 in large industrie and Rs.3 0 in me d .In most developing c ountrie the shortage s of capital is the maj barrie f promoting an industrial c or r or ulture. Thirdly the SMEs have gre pote . rom the personal savings or inf ir ormal borrowings.The SM E industryre quire s less c apital pe unit and re r lativelyle inf ss rastructure . the SM E se tor provide high value addition in view of its gre r utilization of c s ate indigenous mac hinery e . an s contrac ting. 00 dium industrie s ( Central Bank of Sri Lanka.as small industryre quire s re lative le c ly ss apital per unit and relative less inf ly rastruc ture j .So.the cre ation of employ nt in village are to disc me as ourage migration f rom rural to urban are and to as increase the sc ope f f or oste ring a spirit of se re lf liance has re ived close atte ce ntion. stme cost of Small Sc nt ale units is f inanc by dome ed stic source mainly f s. So.it ustif s the promotion of this ie vital se ctor.whic would othe h rwise have be n use f consumption purpose to usef inve e d or s ul stme nt purpose in rural are A substantial portion of the inve s as. 00 s 4. Se condly absorbs re . Finally SM Es c play a complementary role to large industrie through sub. 9. a we organize c lld SME se ctor provides the f oundation f the growth of e or ntire industrial sec tor. The maj ority of e mploy e rec es ruite bySM Es are entryle e d vel mploy s who are lac ee king skills.The re e lative labor ly inte nsive nature of the se tor.136 第3巻 第4号 First of all.enable the to c ate substantial e s m re mploy nt opportunitie particularly me s in the inf ormal sec tor. So. the nature of short ge station pe riod maysupple nt it. Fourthly the de lopme of SM Es can be an aid to promote balance re . at ntial to mobilize and divert f inanc re ial source in the s e onomy c .And also. it is ac pte that the SME se tor has gre pote ce d c at ntial to generate maximum socio ec onomic be its to the c nef ountrywith low level of investment. SME sec can play a signif ant role in e onomic de lopme tor ic c ve nt.Although the quality of employ nt create by large sc me d ale industries may be higher than that of SM Es. c c oupled with regional dispe rsions of c ottage and small sc ale industrial e rprise nte s. and the ac commodation and transportation proble ms in urban industrial c nte the e rs. rials. SME se ctor has a vital role to play in c ating employ nt opportunities at a re me re lative low c ly ost in the inf ormal sec tor.Apart f rom that. the sec tor c ontribute to broads base c d apital f ormation throughout the c ountry . Fif thly it nurture e . 0 in nt r ee 90 small industrie c s ompare to Rs. And also. s ntre ne pre urial tale nts and f orms good ground f training e or mploy e e s.The promotion of SM E sec f tor orms an integral part of pove alle rty viation and regional de lopme programs imple ve nt mente by the Governme and nond nt governme ntal organizations. thus f ilitating the linkage be ac twee the f n ormal and the inf ormal se tor.So.1998) .it latively more labor pe unit of c r apital e mploy d. SMEs provide good ground f the f training on the j or m or ob. As the agric ulture se tor alone c c annot create suf ic nt employ nt f ie me opportunities. quipme and raw mate nt. .give the high level of une n mploy nt in the rural me areas. ve nt d gional development. Ac ording to a re ent survey c c c onduc d by the te Departme of Ce nt nsus and Statistic obse s rved that inve stme pe employ was Rs.

and the c c y mostly supply goods and se rvice to large direc e s tly xporting ve nture and the by contribute s re towards alleviating balanc of pay nts dif ic e me f ultie ( waliy s He anage 2 01 .The surveyf indings indic ate that industrial e d stablishme be nts low 5 e mploy es ac ounte f 84 of total establishme e c d or % nts and 2 8% of total e mploy ment.the most rec ntlyc e r ee 8 % 98 ) e e onducte d industrial surve dates bac to 1997 The data provide by this survey provide a good f y k . 1. SI FI NCE OF SME SECTOR I SRI LA A ECONOMY 3 GNI CA N NK N SM Es have be n ide ie to play a c ial role in the e onomic developme proc ss by e ntif d ruc c nt e de loped as we as de loping countrie It is said to be the bac ve ll ve s.16 million or le ac ountss c e f 90 of all e rprises.but ac counted f 92 5 of the output and 7 .Subj ct to that limitation.SMEs promote e onomic growth by import substitution as well as through dire t exports. and 5 5% of gross value adde in the d private sec tor ( Ponnamperuma. .but ac counted f only 7 5% of the total output and 7 0 of the or . 00 ) Howe r. port was submitte to the De lopment and Re w Committe on Small and d ve vie e Medium Sc ale Industries of the Industrialization c ommission stating that there we 5 . 0 re 0 00 re gistere and 12 .it se ve ems that the is no any re ntly c re ce onduc ted c omprehe nsive industrial surve y in Sri Lanka to identif strengths and weakne s. or .% value added in the industrial sec tor.2 giste d and inf re ormal industrial units in the c ountry produc ing various ty s of produc and e pe ts mploy 6 56 pe ing 392 rsons. Another survey conduc ted by the Unite Nations d Developme Program e nt stimate that SMEs with f d ixed assets of Rs. kbone of the e onomie in c s de loping as well as de loped nations. It is e n more important to de loping c ve ve ve ve ountries as the pove rty and une mploy ment are burning proble ms in those e onomie c s. d rame f analy or zing the contribution of industrial e rprises to the national e nte conomy in Sri Lanka. 997 . 2 0 . the we a total of 1 2 7 1 re 983 re re 0. 0 unregiste d 5 00 red SM Es.it is c ar that. In 1 7 a re 97 . Although the De partment of Ce nsus and Statistic of the Ministry of Financ and Planning has s e be ing c onducting annual industrial surve s. thre y sse ats and opportunitie in this sec s tor. . due to the f inancial limitations and non availability of a prope f r rame . 1998) Ce . Howe ver it was c ar that the maj le ority of small busine s are ope sse rating unde the cate r gory of f we than 5 employ s ( 4 in 1 3 .37 SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Review(Aruna) 1 Whe analy n zing the inf nc lue ing f tors.the is an urge ne d f developac le re nt e or ing this se ctor and the by harne re ssing the inhe d pote rite ntials of this vital se ctor. SM Es perf orm a strate gic role in Sri Lanka. It acc ounts f a very high pe entage of the or rc total numbe of industrial and busine e r ss stablishments as in other de veloping c ountries. The table 1 shows the principle indicators of industrial ac tivity c lassif d by the maj industry ie or division & pe rsons engage size c d lass in 1 .it has not covered the e y stablishme with less than nts 5 pe rsons e ngaged. 0 ) Ac ording to the industrial c nsus conduc c e ted by the De partme of Ce nt nsus and Statistic in s 1 . % 1 6% of total e mploy ment ( ntral Bank of Sri Lanka. 7 % of total e d or % nte 0 mploy ment.Ente rprise having ove 5 employ s re se d le than s r ee pre nte ss 1 . % of all e 57 stablishme nts.

almost similar conclusion can be drown. M ining & Quarry ing Group Total 0 Le than 1 ss 1-9 01 2-9 03 4-9 09 1049 0-9 5 0 & above 0 M anuf acturing Group Total 0 Le than 1 ss 1-9 01 2-9 03 4-9 09 1049 0-9 5 0 & above 0 Group Total 5 0 & above 0 13 63 14 34 21 2 5 3 1 0 3 2 192 12 67 97 24 51 91 6 70 6 43 9 19 8 2 2 157 35 % 10 0 8 2 1 3 0 3 06 . of establshments i No. p nt ns tis s The maj ority of e stablishme in the manuf turing sec nt ac tor are c oming under the cate gory of Small Busine s ( sse about 90 .2.Manuf turing and Ge ration and Distribuac ne tion of Elec ity tric .Mining and Quarry ly ing.4 94894 18782 4686 1377 9897 1377 9897 25040 9894 % 10 0 1 6 2 0 1 0 1 0 1 4 3 1 10 0 0 1 0 2 0 3 1 1 2 9 5 4 10 0 10 0 Elec ity gas & tric .138 第3巻 第4号 The sc ope of this Annual Industrial Surve AIS)is all ac y( tivities c gorize unde the thre ate d r e industry divisions name .0 888 328 56 289 61 491 68 1604 0. But the c %) ir ontribution to the output is ve low ( ry about 6%) . 10 0 5 9 2 1 0 8 0 6 0 4 0 2 10 0 10 0 I ndustry& Persons engaged si cl ze ass Persons engaged No.Whe analy c or 0 n zing the c gory of Mining and ate Quarry ing. . 01 . e y Ac ording to the table 1 it is clear that the are only two e c .4 3549 0929 7.4 241 012 269 15 269 15 453 935 % 10 0 6 0 1 7 0 8 0 3 0 5 0 8 10 0 0 8 0 8 0 6 1 0 2 3 4 5 10 0 10 0 V ue of output al 0 Rs.3 3.but it ac ounts f more than 5 % of output.These two are c onside d as large e re nterprise and the s re is no any SME in this c ategory .0 0 1067 051 101 692 216 084 986 59 925 74 197 394 392 075 25186 7454 3510 330 6764 269 70397 . re stablishments unde the r c ategoryof Ele ctricity .8. All private se tor e d c stablishments with f ive or more persons engage d. Tabl 1 e Princ iple indic ators of industrial ac tivity c lassif d by maj industry division & pe ie or rsons engage size c d lass1997 ( Establishme nts with 5 or more pe rsons e ngaged) No. 165 56 91 47 28 55 18 26 40 7 73 2 18 14 4802 5.Gas and Water of the Inte rnational Standard Industrial Classif ation ( ic ISIC) of the Unite Nations. state own industrie and industrie c s s oming within the purvie of Board of Investment have w be n covered in this surve . On the othe hand the are only2% of large sc establishme in the cate r re ale nt goryof Manuf turac ing. 02 . De artme of Ce us and Sta tic of Sri Lanka urc : e trie .Gas and Wate r. wate r Total So e Annual Surv y of indus s 1998.

% rall output. c ontributed 1 8 to the ove 5.But only 5 0 large ente 0 rprise are in e s xistence . p. c ompare with 2 5 million f SMEs.spec busine with f ial ss ewe than r 1 employ es prove capable of additional e 0 e d mploy ment c ation. It has 3 ee c ontributed to the 42 5 of total sale and 5 6 of the value of shipme in manuf turing . their c ontribution to the total value adde e d mploy ment we only re about 2 1 and 2 9%. 2 0 . SMEs ( nonin primaryindustrial se ctor)whic ac h counts f 99. although SMEs re se the maj ve pre nt ority of manuf turing establishme ac nts.39 SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Review(Aruna) 1 There ore it is c ar that.In re ent day e c s mploy ment in this ty of ente pe rprise s is more wide spre ac ly ad ross the maj e onomic se tors. 4 rprise which re se 0 3 of total e s pre nt . .rprise s re gistere the strongest growth in e d mploy nt in the last several y me ears.value of shipments.Howe r.it than 7 50 produc acc . Malay sia. e only 1 3 0 large ente 4. % of total workf ee h c or 5 orce ( nonin primary industrial se tor) while large ente c rprise has contribute only to e s d mploy 1 million employ s. 0 ts ounting f almost 40 of the total production of the manuf turing or % ac se tor and 35 of the total exports. % 9.whethe in terms of numbe r r of c ompanies.It has e mploy 3 ed 1 million employ s whic ac ount f 69. spe . ctor. le icant numbe of SMEs in Sri Lanka.or total number of employ s. obs.It has alway play a maj role in e ry area of the national e s ed or ve conomy Their importance is .In 1999 the we 4 8 million ee re re .which was re lative le e f c ly ss f e tive c ompare with their d large counterparts in terms of contribution to the deve r lopme in manuf nt acturing se tor. indic d by the ve large share of the e onomy that the oc ate ry c y cupy . rs the c ir ontribution to the national e conomyin te rms of output and share in employ nt has be n me e ve low. 0 e c or 1 0 0 nterprises.in Japan the SM E se ctor is c onside d to be the backbone of its e re conomy .it can be obse d in othe developing as we as de loped c ry ve rve r ll ve ountries in the re gion that the SM E se ctor has c ontribute signif d icantlyto the e onomie in terms of both the ir c s e mploy ment share and share in GDP. re ctively In terms of contribution to the total output. % stablishments. or pre nting 80 of the total % e mploy ment in the se condary se ctor in Kore a. It also ac as a nurse f promoting e c % ts ry or ntre ne pre urial tale and as a c nts ataly f industrial growth a wide ne ze or twork of more than three million units . the Small Scale Industry ( SSI) se ctor in India has play d a e signif icant part in building a strong and stable national e conomy . % of all e rprise It has be n or 7 nte s.Taiwan. 00 ) Ac ording to Sahatop ( 0 .In 1 996 the late c r ategory provide d only 0 7 millions j .Today is producing more . The are 5 0 0 Small e rprise and 3. although there are signif f . 0 M e re 0. % nt ac ( www.SMEs ac ounte f about 91 of the total manuf c 20 1) 998 c d or % ac turing establishme nts in M alay sia.in 1 . 0 . etc have attributed an important role to the SME se . c Ove the last f r ive de cades. In Korea.Only the SME. The ne wly industrializing countrie in the Asian Re s gion such as Republic of Korea.d size e nterprises. re se d . SMEs 0. For example .j apital areas ( Park. These Mic ente re ro. Howe r. Mic roEnte rprise re se a gre maj s pre nt at ority of loc business like in many othe c al r ountrie whic s h ac ount f 2 3. c ontrary to a trend toward j c ob utting se in big c en ompanie s.e c or c c spe ially oint venture c . 0 nte s 50 dium. sme ne j 20 2) .% s 2.

So.during the pe e riod of Se cond World War.The aim of the f ollowing sec tion is to brie ly ove f rvie the promotional e f w f orts made by Sri Lankan Gove rnme nts towards the de lopme of SME se ve nt ctor sinc its inde ne pe de e 1 .whe c n ompare with othe de loping as we as deve d r ve ll lope c d ountries in the re gion. 948 2. SME POLI 1 CY I SRI LA A N NK Any atte mpt to asse the prospe ss cts f the de lopme of SM Es in Sri Lanka in the or ve nt prese c nt onte must nec ssarily be in the historic pe xt e al rspe tive of the e onomic polic s c c ie pursue in post independe y ars. and also f the support of the arme f e sse or d orc s stationed in the island.the governme e nt stablishe a f tory to make ac d ac etic acid f the c or oagulation of rubbe using c onut she c r oc ll harcoal as the raw material. Prior to Inde d nt e pende nce in 1 8.For example . the dif usion of this engine ring tec ve f e hnology and the e stablishme of a wide nt spread network of e ngine ring workshops and motor ve le re e hic pair garage provided a sound basis f dive ic or rsif ation of the industrial production of the c ountry .tec hnology was imparted to a loc private Company through the good of ic of British Army to al f es . This is ref c d in the prolif ration of various polic s. c or large employ rs in the c st e ountry .With the passage of time howe r. rubbe and c onut proc ssing mac r oc e hine in large e ry ngine ering work shops.succ sve nt c e sive governme nts in Sri Lanka have take various ste n ps. It is one of the . under British Colonial rule 94 .Again.The she r inability to import e re quire nts of manuf ture products c me ac d ompe lled the British c olonial authority to initiate move to assist in the transf r of tec s e hnology f local produc or tion of some manuf actured goods e ntial to sustain the production of plantation. de lopme of this vital sec ve nt tor.some dive ic rsif ation took place pe f e r orc . ac ly t ulturebased on the proc essing of te rubbe and c onut in large f tories and f a. sinc indepe e ndence towards the . r oc ac abric ation of te a. nc .it is c ar that the SME sec le tor in Sri Lanka has not y ac ve its anticipate re et hie d d sults.In de d. ore xc Je 0) So.140 第3巻 第4号 in the c ountry ac ounting f about 95% of the total industrial units in India. the re is a great ne d to f e urthe improve the inherent c r apac s and c itie apabilities of the industrie se s and the by harne re ssing the f pote ull ntials of the sec tor.the SSI se ore ctor is mee ting ke obj tive of providing e y ec s mploy ment. 2.PROMOTI ON OF SMEs I SRI LA A N NK Having unde rstood the positive impact of SM E de lopme and e onomic growth. 20 1 .providing dire e ct mploy ment to an e stimate ove 1 million d r 7 pe rsons. the deve lopme of the plantation agricultural industries of te rubbe and c onut was the nt a. r oc polic priority Manuf turing industry was large a by produc of plantation agric y . le te e ie provision of institutional support by e stablishing of a c onside rable numbe of supportive r institutions and organizing various e ntre ne pre urship de lopme and small busine developve nt ss ment programs.f acilitating re gional dispersal of industrial units and e arning f ign e hange ( thra.Theref .

. anned f ood produc construc ts. ultural imple ments. tion ste l. bric and e ks tile c s. Drastic import and exc hange controls we introduce to re d c onse rve f oreign e xchange Imports of most manuf ture goods we banne or greatly . d d rie e Comple mentary produc tion by small sc industries in support of large scale produc ale tion is widely prac e in de tic d velope c d ountrie suc as Japan and the ne s h wly industrialize c d ountrie s such as Korea and Taiwan. d ac s re t manuf ture ce nt. ntre ne pre urial c lass sprang up to supply the re quire nts me of the British Arme Se d rvice e s ncampe in the Island.it is not surprising that the e onomic polic s se c ie pursue f a period of 18 y ars f d or e rom 1 0 did little to c 96 hange the industrial structure of the c ountry not with standing the establishme of the large state owned industrial ente . e r ts.it was not n t s possible f private e or ntre ne pre urs to re spond to the ince se ntives in the abse e of the whe nc re withal of mac hinery and e quipme raw mate nt.Unf me c ortunate . when the c d ountry gaine its d Inde nde e in 194 . Thus.While sc ity pric s gave an induc me arc e e nt to e xpand loc produc al tion and eve se up new industrie in substitution of imports. tion c be compe an titive with large sc ale production be ause of the lowe inve c r stme pe worker and the use of a le sophistic d te nt r ss ate chnology adapted to the skills of available supplies of educate but untraine and inexpe nc d labor.The shortage of e ntial importe sse d produc gave a boost to a host of small dome ts stic produc rs who re e sponde to the inc d entive of sc ity pric In addition. 993) . s. In ke eping with this policy large state owne f torie we se up in Sri Lanka to . w entives we re give to induc private se n e ctor inve stme whic had to f e se re compe nt h ac ve tition f rom imports in the c onte of re xt latively low rates of tarif prote tion inhe d f f c rite rom British rule which we re not re vised upwards.a or polic de isions was made by Gove y c rnments to re more on dire investment by the Gove ly ct rnment itse in se lf tting up industrial ve nture s.41 SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Review(Aruna) 1 e mbark on the re tre . rials and knowhow.Thus. the was a re rsal of polic motivated by the ne to balanc f ign 96 . In 1 0 however. pe trole um produc f rtilize and a host of other produc Fe inc ts. whic c h ould be importe d onlyon lice s issue bythe governme nse d nt. This may e volve the manuf ture of components and/ the sub ac or assembly of c ompone nts to be inc orporate in the f d inal produc manuf tured by the large ts ac sc ale e nterprise s. . cotton y arn and f abric c .with independence maj ly .rathe than on private se tor initiative through the r c s provisions of inc ntive and subsidie ( e s s Wic kramasinghe 1993) . ac d re d re e while raw mate duc d rial imports were restricte d. In a market ec onomy small . industries de lop alongside medium and large industries in c ve ompe tition with or c omple nme tary to the f orme Small scale produc r. f pe nc 8 avorable conditions prevaile f the industrialization of the c d or ountry through encourage nt of private se tor initiatives. The f ailure to de lop small industryin post Independent Sri Lanka mayhence be attribute ve d in the main to this f ailure in e conomic policie of Gove s rnment. a new e arc es.ading of worn out motor vehicle tire s. re ve y ed e ore e hange outf xc lows to inf lows. c ac me hlorine and c austic soda. paper. nt rprise s ( Wickramasinghe 1 . eramic ware boots and shoe agric .

c ate a de re d mand f a wide range of produc whic could be me by rapid e or ts h t xpansion of small industrie in c s ompetition with imports and the produc of large local ente t rprise s. both of the Gove rnme and the private sec nt tor.partic e nc ularly be cause of the c ontinued magnif ication of the rupe pric of importe manuf ture e e d ac s at the pre vailing rate of tarif prote s f ction whic though re h lative law as c ly ompare with d the rates prevailing prior to 1 8 we still signif ant.the rapid e xpansion in the demand f building mate or rials f the c or onstruc tion industry wood produc and f . .tec hnic al. e e in small f actorie and workshops. cre nt xc ating a rapid increase in demand f wide range of handicraf made mostly f or ts rom local raw materials.the main f ature of the strate se e s gies f SM E Development under the industrializaor tion polic are y : 1.De loping a base f ec ve or onomic and industrial growth f SM Es unde the broad polic s or r ie and programs of the governme nt. 3.Adj ustme of the exc nt hange rate create new marke f more traditional e d ts or xports suc h as j wele . of the ne or e 978 wly e cte gove le d rnment is a land mark in the e onomic deve c lopme in Sri Lanka.and manage rial inf rastruc ture to f ill e xisting gaps and/or to provide additional support ne ssaryf ef ic nt and produc ce or f ie tive growth of small e rprise nte s. nabling Sri Lanka to re inte grate itse not only with the world trading sy lf stem. 97 re ic At pre nt. laxation of c ontrols has be progre en ssive e . 97 ontrols we abolishe while e re d xchange c ontrols we greatly re re laxe d. ts urniture. re ds and c ramic made r. s 4.The continue de d prec iation of the rupe also e ouraged import substitution. and f pre or pare f d oods. with the surge in e mploy nt and wages.Thus the stage was set f the progre or ssive libe ralization of the e onomy The re c .gave muc sc me h ope to small sc ale produc ers to me the de et mand. pre packed spic s leather produc as well as traditional e e ry e ts xports of te a package in a wide range of c d ontainers made of pape wood. It began a reversal of e onomic polic s pursue by the nt c ie d governme nts of Sri Lanka sinc 1 8 In 1 8 import c e 94 . 2.Adj ustme of the e hange rate gave rise to rapid increase in tourist arrival.142 第3巻 第4号 The budget f the y ar 1 .but also into the world f inanc sy m. The change in ec s onomic polic s of Governme af r 197 he ie nt te 7 lped the developme of small nt industries in the f ollowing signif ant way ic s: 1.The massive inc rease in investment.It is no ial ste e xagge ration to say that the reintegration of the Sri Lankan e onomy with the global e onomy c c has c ated highly f re avorable c onditions f the succ ssf industrialization of the c or e ul ountry through investment in large medium and small ente . rprise s. In partic ular. 2.Creating and stre ngthe ning the f inanc ial.

f the up. Bank of Ce lon branc s and its sub y he of ic s at Agrarian Se f e rvic Ce es nters provided c dit f ilitie unde spe re ac s r cial programs to SMEs. Some dome stic private banks have also introduce spe ial f ilities to the industrie with the d c ac se s e xpansion of the branc network. nte 982 Sri Lanka Handic t Board was established in plac of this Departme raf e nt. The De partment was re name as the De d partme of Rural De lopme and Small Industrie in 196 and its sc nt ve nt s 8 ope of ac tivitie was e s xpande to inc d lude industrie suc as powe looms. 2. I 2 NSTI TUTI ONA SUPPORT FOR DEV L ELOPMENT OF SMEs The governme nts who c ame to powe since inde r pende nce have initiate various measure d s. r ts. f rom time to time.and 5.Le nding support to gove rnme ntal.43 SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Review(Aruna) 1 3.Inc asing market ef ic nc by e ouraging inf re f ie y nc ormation exc hange and improving the provision of inf ormation on new me thods and opportunitie s. 4.Promoting the re gional de lopme of industry ve nt . c mical e se r he produc and pape and paper produc ts. the De partme of Handicraf Marketing and Export Promotion was nt t e stablishe in 1 0 by amalgamating Laksala and othe handic t marke d 98 r raf ting ce rs.the CISIR has cate d to the r e re te chnology require ments of cottage and small sc ale industrie e cially in the are of agro s spe as and f ood proc ssing and pre rving. . ntation of the Small Busine se ss ctor. hand looms. carpe s h r ntry .se -mploy nt.and e re .tme of the SM E se or lif nt ctor. The Department of Rural Dev opment and Cottage I el ndustri es The De partme of Rural De lopme and Cottage Industrie was e nt ve nt s stablishe in 1 d 957 as the main institution re sponsible f promoting the cottage industrial se or ctor. raf Laksala was e stablishe in 1 4 With a view to promoting the export orie d 96 . By e stablishing the f ollowing institutions. Sri Lanka has trie to boost the SME se d ctor.In 1 . leathe products. wood and wood products. c omme rcial potte and c f r. ir h Laksal a With the obj ctive of he e lping to solve marke ting proble ms of handic t industrialist. In 1 ry oir ibe 993.ne lf e me ntre ne pre urial ve nture s in rural and urban are as. Ceyon I l nsti tute of Sci enti i and I fc ndustri Research ( SI al CI R) The e stablishme of the Cey nt lon Institute of Sc ntif and Industrial Re arc ( ie ic se h CISIR) in 1 955 has contribute to the deve d lopme and disse nt mination of appropriate te chnology to e nhance the e f f icienc and produc y tivity of SMEs.This is ref ted in the establishme lec nt of various institutions and launching of various programs aim at supporting the se ctor.Ove the y ars.the De partment of Small Industrie was wounds up and its dutie and f tions we alloc d to the provinc c s unc re ate ial ounc ils. and inde nde initiatives f pe nt or c ating income ge rating opportunities. The Peopl s Bank and The Bank of Ceyon e l The establishme of Pe nt ople s Bank and the nationalization of Bank of Cey in 1 1 we lon 96 re land marks in providing institutional cre dit to SM Es. nongove rnmental.

Smal Enterpri Dev opment Di i on ( l se el v si SEDD)of Mi stry of Y ni outh A f rs & Sports f ai The se lf employ nt programs assiste by the M inistry of Youth Af airs and Sports me d f ( YUAS) as well as se ral nonM .the e nc Industrial Developme Board ( nt IDB)was established in 1 9. the de lopme of ne ve nt w produc tion me thods.to e nsure that small industrialist are give acc ss to proj ct f n e e inanc on the same te and c e rm onditions as af orde to large borrowe f d rs. The Small Scale Industrie Credit Sc me ( s he SSI)was introduc in 1 4 in orde to e ed 97 r nlarge the small industry se tor c dit base The Ce c re . the Samurdhi De lopme Loan Sc me or SAHANA f a ve nt he or . ac ase f inanc f ilitie and conduc ial ac s ting e ntre ne pre urship training and Small Busine training f the ss or small scale industrial se ctor. ntral Bank of e d c dit guarantee f f re re s rom July 1 979 on SMI loans provided with f inancial assistanc f e rom the Inte rnational De lopme ve nt Assoc iation ( IDA) . The Nati onal Dev opment Bank ( el NDB) In 197 the Governme e 9 nt stablishe the National De lopment Bank with the primary d ve obj ctive of providing proj c f e e t inanc f large industry e or .assistanc in marke re arc e t se h and the organization of training programs in the f ld of design. the IDB has c e f e r e onc ntrated mainly on the development and disse mination of appropriate te hnologie marketing f ilities and in some c s. The IDB is c 96 onside d to be the re c f industrial e hie xtension institution in the c ountry and was arme with re d gional of ic s and f e industrial e xtension of ic s.the Te 6 xtile De partme was c ate in view of the importance of te nt re d xtile production as a small industry In 198 . Department of Textie l In 197 . d The Janasaviy Trust Fund.the improvement of loc de al sign c apability . c s.In this respec t. Ac ordingly the Small and Medium Industrie Loan Sc me was initiate in 197 c . ve it was also re quire as an important se d condary obj c e tive .agric ulture and comme e rc .promoting and developing SM Es in Sri Lanka.Seve mic c dit t ss c ral ro redit sc me we imple nthe s re me e by these banks. better utilization of raw mate rials. the Sri Lanka National De . ve gove rnment organizations ( NGOs) and private institutions have also he d the promotion of SM E se tor in the country lpe c . produc de lopme and ie t ve nt market promotion. Ove the y ars.144 第3巻 第4号 I ndustri Dev opment Board (DB) al el I With the main obj ctives of e ouraging. 4 sign Ce r ( nte NDC) was establishe in d order to assist the c ottage industrial se ctor through improve nt of c t de me raf sign and the de lopme of ne de ve nt w signs. s he d 9.Howe r.a separate Small Ente rprise De lopme Division ( ve nt SEDD)was e stablishe under the Ministry of Youth Af airs d f and Sports in 1 4 with the obj ctives of f 98 e ormulating strate gies and policies f stimulating or se -mploy nt and small sc lf e me ale ente rprise s. Regi onal Rural Dev opment Bank ( el RRDB) The e stablishme of Regional Rural Deve nt lopme Bank ( nt RRDB)in 1 985 made available an additional cre outle to small busine se tor.

re ve r institutions namely the Ministry of Rural De . Formal training inte ntions aimed at developing n he rve e ntre ne pre urship in Sri Lanka has c omme ed in 1 7 with the launc nc 98 hing of a 1 2 day program spread ove six we ks by the Chamber of Comme e and Industry with the f r e rc inanc support ial f rom the Asia f oundation ( Ranasingha. Ministry of Te xtile industrie s. c Re ntly e ce stablishe Vocational Training Authority and the proposed Ente d rprise Promotion Bank are maj steps taken towards the developme of SME sec or nt tor in Sri Lanka in re nt ce y ars. in addition to the Ministry of Industrial De lopme the are se ral othe se ve nt.45 SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Review(Aruna) 1 Samurdhi be iciarie and Surathura Diriy also provide f nef s a inancial assistance to this sec tor. In a study of institutional support f e or ntrepreneurship de lopme Samarasinghe ( ve nt.it appe ars that the are a large numbe of institutions e re r stablishe aiming at supporting d SME se tor.Howe r. not more than 35 pe e have obtaine institutional support af training. 1 ) The program titled How to begin an Industry 996 . and ⅳ.Inte grate Rural De lopme Proj ts ( d ve nt ec IRDPs) of the Re gional De lopme De ve nt partment of the M inistry of Financ and Planning e ⅰ.Sri Lanka Business De lopment Ce ve ntre ( SLBDC) ⅱ.Sarvoday Manage nt Training Institute ( TI) of the Sarvoday Shramadana a me SM a . At pre nt. has f ocused on providing knowle dge of business and deve loping linkages with institutions and individuals. ss re rc nt d ter This implies that e ithe the trainee have limite ac ess to institutional support suc as c dit r s d c h re and e nsion se xte rvice or the traine do not se muc use f such se s es e h or rvic es. Acc ording to Ranasingha ( 996 . Ministry of Rural Industrial Deve lopme e nt stablishe to assist the de lopme of the SME d ve nt se tor. velopment. e So. 1994) observe that among a sample of 3 individuals who have be n traine by the EDPs in small s 0 e d busine c ation. nongove rnme ntal and private se ctor agencies. The inc y lude : ⅰ.Industrial De lopment Board ( ve IDB) ⅱ.Small Enterprise De lopme Division ( SEDD) of the Ministry of Youth Af airs and ve nt f Sports ⅲ.Employ nt Investment and Ente me rprise De lopment Division ( ve EIED)of the Mahawe li Authority of Sri Lanka. 2. ENTREPRENEURSHI DEV 3 P ELOPMENT I SRI LA A N NK In orde to boost the SME se r ctor in Sri Lanka.studie have conclude that obj ctives of establishing these institutions c ve s d e have not be n achie d due to a number of re e ve asons.at present e 1 ) ntre ne pre urship training is c onducte d by se ral gove ve rnmental.a numbe of Entrepreneurship De lopme r ve nt Programs ( EDPs) have bee launc d.

It was f ound that some e xisting EDPs do not adopt sy matic f ste ollow. So.146 第3巻 第4号 Move nt me ⅰ.Busine Consultanc Se ss y rvice Ltd. ( s BCS) ⅱ.Busine Manage nt Bure ( B) ss me au BM ⅲ.TEAM S Ltd. f .SLBDC.f f dge EDPs ranging f ull le d rom one we k to f e our we ks are available e with the IDB. On c omple tion of training the traine are advised to obtaine institutional support suc as c dit es d h re and marke ting f ilities on their own. e e prototy products whic have not be n suc essf in marke pe h e c ul ting se . ars that the EDPs of longer duration have a high the tic c ore al onte whic re le ts a bias towards We rn M ode nt h f c ste ls. Howeve only a f w have the entrepreneurial qualitie ac r. Owing to this we nte akne in many instanc s. In a comparative study of the ef ec f tive ss of EDPs c ne onduc d by SEDD of Ministry of te Youth Af airs and Sports and Industrial De lopme Board.ac up tion. e s appear to take the initiative and suc e in busine ce d ss.those who did not have the e ntre ne pre urial qualitie have shown a tendency to give up s the busine ir ss.and BMB. Having expe nc d nse rie e f ailure . although atte mpts have bee made during past two dec n ades to give an impe tus to entre ne pre urship through training. e ve nt Of the above agencies. the pe ormanc are not statistic ir rf es ally signif ant. ic Some c ritic are of the view that most EDPs have be n more produc oriente and less s e td market orie d. In a study of e ntre ne pre urship de lopme among the rural poor.M ohotti ( 993 ve nt 1 )obse s rve that lac of a proper proce k dure f se ction of partic or le ipant is the main we akne of the existing ss programs. Ac ording to Ranasingha ( 996) it appe c 1 . it is clear that.BCS Ltd. . Gamage ( 00 ) has c lude f ve nt 2 0 onc d that. A d ste we akne in the content of EDPs is that they have not be able to integrate the indige ss en nous e ntre ne pre urship expe nc s and value in the c rie e s urricular.It could be probably due to the f t that the maj ac ority of the EDP traine in Sri Lanka have be n traine abroad in the rs e d application of We rn models and most of EDPs have bee f ste n unde by We rn donors. although traine entrepreneurs have pe ormed be r than that of the nond rf tte ir traine d c ounte rparts. the traine s have come up with ss.SEDD of the M inistry of Youth Af airs and Sports. and ⅳ.Re sourc De lopme Consultants Ltd. it has not ac ve the desire leve of develophie d d l ment.

lac of knowle k dge of bank proc edure long de s and s. ince ie ntive and institutional support will re e the survival rate and progre of s duc d ss ve nture in this sec s tor. The use of obsole or inappropriate tec te hnology results in low produc tivity .and a high rate of re ec j tion of products. sse rable to the c hange s in the environme nt. For e sse xample with the introduc .and doe not allow the f s irm to go f ne and sophistic d tec or w ate hnology and spe nding on training and de lopme of its work ve nt f e to incre orc ase the productivity . Small busine does not me that the are sc ss an y aled down version of big business. the lac of clear nte s d k polic s.Due to the inhe nt nature of smallne it will not be able to compe with re ss te big busine s.In some c s.So. Again.the high rate of inte rest make the venture unattrac s tive Ac . The se ctor has a we institutional base due to lack of management skills. this is also due to the weak f ne inancial base and lack of manage rial skills. Spe ially small busine s are vulne rs ss c c . 4.POLI CY I MPLI TI CA ONS At pre nt the governme of Sri Lanka is giving high priority in promoting SMEs.In developing suc a y h olic it is im ortant to rec nize the im ortance of the f o ollowin are as.Although the are some loan sc me available e re he s . . M anage nt ak me skills are the c ritical succ ss f tors in all of busine e ac sses thus Small Business has no exc eption.produc ity tion e f ie y f ic nc .47 SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Review(Aruna) 1 3.PROBLEMS A SSOCI TED WI A TH THE DEV ELOPMENT OF SME SECTOR I SRI N LA A NK A maj proble in the SME se tor is the shortage of c or m c apital due to number of re asons suc h as lack of acc ss to bank f e acilities. cording to the e valuation study of EIED/ EDP ( Exo & Shan. cit) ove 8 % of the trainee have ide ie proc ment of c r 5 s ntif d ure apital as the area in whic they ne de most support to suc ee in busine h e d c d ss.although f ase und are available . a large 977 numbe of handloom te r xtile e rprise had to be abandone by owners. So. t ss c The lac of SM E polic and institutional support to protec and e ourage SMEs are also k ies t nc hampe the progre of this se tor. op. It is se nt sugge sted that to ove ome those constraints and proble rc ms.low quality of produc ts.e tion c apac .re sulting in highe costs to the produc r and r e a re tion in marke c duc t ompe titive ss.The we f ak inanc position may hampe the upgrading of tec ial rs hnology xpansion of produc . lay inability to provide guarante s.the manage nt me does not utilize them in are such as training and de lopme as the manage nt do not as ve nt me understand the positive impac of training on busine suc ess.It has to deal with all most all the f tions that large busine unc sses have to de al. Sri Lanka has to have a national polic on SM Es as an inte y gral part of the ove rall industrialization polic .lac of manage k rial skills of owne / r manage may hampe the progre of the busine r r ss ss. tion of ope ec n onomic policies in 1 .

Small. To gi e i v ncenti ves.NGOs and private se ctor institutions that support f the promotion of SMEs.inc entive s.Me dium and large e rprise nte s. In well de lope c s ry ve d ountrie suc as Japan. arranging c dit f ilitie re ac s.A complete pac s kage of se rvice s.In Japan about half of small sc manuf turing e rprises appe as ale ac nte ar sub-ontrac c tors to large busine ss.conduc ting entrepreneurship and small business training programs and c ounse ling servic s. the governme y or ref nt should re cognize the urge ne d to develop a le d nt e gislative de inition f Mic f or ro. small. The se or rvic s extended by the institutions inc e se lude.So. s. The ore.The c hanges in value have to be initiate f s d rom the level of primary e ation as the ne d f duc e or .The inf ormation on such organizations is not available to the most of rural small busine s. So.assistanc and tax c essions to SMEs on e onc a regular.thre and opportunitie of this se ats s ctor the reby understanding the position and c ontribution of SMEs to the national Economy . me rs dium and large sc ale industrie is ve important.we akness. assi stances and tax concessi ons The governme must c nt onside giving ince r ntives.whic is unde propose stage is a verygood step put f h r d orward f the de lopme of SM Es in providing cre f ilitie or ve nt dit ac s. This situation has le to c usion in ide y or d onf ntif ing SMEs f providing various conce or ssions and programs. have ve strong linkage s h ry s among these industrie s. To create entrepreneuri path wthi the sy al i n stem of general and v ocati onal educati on Finally .and tax c e onc ssions on the line of those of ered in othe de lope and de loping c f r ve d ve ountrie should be de lop.148 第3巻 第4号 To hav a cl e ear l sl v def ni on egi ati e i ti At pre nt there is no clear le se gislative de inition f SMEs. this c ates various proble in re ms the imple ntation of gove me rnment polic f promoting SMEs.disse e mination of appropriate tec hnologyc onducting research and de velopment e . ve To strengthen i nter-i ndustri lnkages al i Strengthening inte industrial linkage among micro. Also. To conduct a comprehensi i ve ndustri surv al ey It was c ar that the is no any re ently conduc le re c ted c ompre nsive industrial surve he y c ring SMEs in Sri Lanka.it is impe ove rative to conduc a c t ompre nsive industrial surve he y in order to unde rstand the strengths.the institutions do not have a well spread ne se twork whic would provide e nsion h xte and assistanc to the SMEs on continue and re e s gular basis.continue basis. tc Howe ver.although the e conomic c onte in Sri Lanka has change in f xt d avor of e ntre ne pre urship. strengthening of institutional sse c apac with a nationity wide c e is a part and partial of the de lopment strategy of SMEs. To ex pand i nsti tuti onal support At present there are various gove rnme nt.It should f avor the small industrialists who do not have ac ess to the institutional f c inancial marke and c t annot af ord the f c ollateral and ongoing marke rate of intere t st.the soc c io-ultural c onte ne ds f xt e urthe change to give impe to e r s tus ntrepreneurship. onc rn ve The Enterprise Promotion Bank. Dif e nt institutions adopt f or f re dif e nt def f re inition f their own programs.

6. Ref erences: Ce ntral Bank of Sri Lanka.it rative to c hange the c urric ular to give impe tus to e ntre ne pre urship through ge neral. Ef ec 2 0) f tive ss of Entreprene ne rship De velopment Programs in the Cre ation and Growth of SMEs in Sri Lanka . Colombo. Country Pape Asian Productivity organization. An Evaluation of the Entrepre ur De 1 ) ne velopment Programs Mahawelli Ente rprise Developme nt. c ating an inte industry linkage and e re rstablishing f unding institution such as Ente rprise Developme Bank who provide see capital to SMEs at lowe inte st rate and whic has nt s d r re h e asy acc ss are ve important. rspe tive is impe c .contributne me ing to the GDP. The imporir tanc is re le te by the she r numbe of e e f c d e r stablishments. S.International Science and Te e chnology Institute. Ac al voc duc cordingly the curric . ( 001 .49 SMALL AND M EDIUM ENTERPRISE DEVELOPM ENT IN SRI LANKA:A Review(Aruna) 1 ac hievement.many c ountrie are s putting a lot of e f f orts to develop this vital sec tor. Exo. Programs.Having understood the positive impact of SMEs deve lopme on e nt conomic growth.assistanc and tax conce e ssions are impe rative. University of Sri Jay d) ewardenepura.R. 11 Ce ntral Bank of Sri Lanka. pp. Jethra. M Sc. rseve rance has to be c ate among the y re d outh f rom a very e arlystage is also impe . Gamage.Export Orientation f Small and M edium Enterprise 2 ) or s:Polic s.M . 1.Ce 2 ) ial ntral Bank of Sri Lanka. tec hnical and vocation e aduc tion in Sri Lanka. In Sri Lanka too.Policies. independence and pe .Export Orientation f Small and M e or dium Enterprise s.D.giving inc entives.it should y re ognize the importanc of f ts suc as having a clear de inition f SMEs. ( 991 .Furthe r. But the c e ontribution of SMEs to the national ec onomy in Sri Lanka is still low whe c n ompare with the othe develope and d r d de loping c ve ountries in the re gion. Hewaliy anage. Toky pp. CONCLUSI ON SM Es play very important role in both develope and developing c d ountries.M ED/EIED Proj ct. suc essive governme c nts have taken various ste to de lop SM Es since indepe ps ve ndenc .embarking on innovations.P. . 233 24 r.Strategies.24.and Programs. re nt e urthe improve the r inhe nt c re apac s and c itie apabilitie of the industries to be e f ie suppliers. ( 00 .( 001 .In order to bring s se f ic nt this se ctor to that position. pendent Sri Lanka. and Shah. S.It rative to c ate e re ntre ne pre urial path within the sy m of ge ral and ste ne te chnic / ational e ation. Economic and Soc Statistics of Sri Lanka.( 1998) Economic Progress of Inde .First of ry all it should have a national policy on SM Es. ula must be re vise in orde to lay the d r f oundation f c or reativity and innovation. p. Finally in a broad pe e ry . There ore the is an urge ne d to f f . 12 . Re search Paper ( unpublishe . o.the role that the gove rnment has to play is ve important. Colombo. e c e ac h f or xpanding institutional support.Strategies and ie .( 1) 200 .B.ge ration of employ nts.Dec ember.In orde to f r ormulate a national polic .stimulating of othe ec r onomic ac tivitie etc s . H. A.Central Bank of Sri Lanka.Inc . Colombo.

22. Entreprene 1 ) urship De lopment among Rural Poor in Gautam RajJain and Debmuni ve Gupta ( ,Ne Initiative in Entrepreneurship Educ ed) w s ation and Training.S. 141 14 o.L. sized e nterprises:Discussion and case studie f s rom across the EU Cede op Panorama se f ries. 95 313 Pukkine T. Colombo. Park. & Elsson-Rogers. ( 00 . n. Colombo.Z. M anagement.A. 90 197 Snook.Asian Produc tivity Organization. Sep.Policies. 3. 13 July 200 s.SM Es in Competitive M arkets. io onomic and Psy chological Factors Af ec f ting Small Ente rprise Growth in , Sri Lanka .and Programs. S. r. 30 135 Mohotti. 1993 ve . K.( 0) A Comparison of Small and M e 200 . 2 . Ranasinghe.17 .150 第3巻 第4号 Country Pape Asian Productivity Organization. 200 . Toky pp.S. Samarasinghe.8. M PA Rese h Paper ( arc unpublished) Postgraduate Institute of M anage nt. 1 . Produc tivity Organization. 1 .Ahmedabad. Colombo..Export Orientation f Small and Medium Ente or rprises. . Ponnampe ruma.( 01) 20 . r. ( 1) Funding Continuing Training in Small and M ediumn. K.Luxembourg. 2 . Toky pp.. www. Vol. U. p. velopment of Small Scale industries in Sri Lanka: Experience and Prospe cts . 002 sba. C.( 1994) Soc Ec . July me .Entre ne pre urship De lopment Institute of India. 993 . Promotion of Rural Based Small Industries in Asia and Pacif Country Pape Asian 2 0) ic.A. me Shatop. Postgraduate Institute of M anage nt. Sri Lanka Economic Assoc iation. Country Pape Asian Productivity Organization. o. Small Busine M onograph.( 993 . ( 1996) Entrepreneurship Education and Training in Sri Lanka Sri Lankan Journal of . Romij C. -Sep. o. S. o. . 0. S. ( 993) The De . Institute of Small Business Re ss search and Busine Administration.( 00) 20 .C.Strategies. 1 . Toky pp. dium Enterprises ( E)Policies in the Unite States and SM d Japan .N. r. 1 .Country Paper.E.J. Toky pp. / gov aboutsba Wic kramasinghe V. 1 No.D.. Small Business Administration. . ss Osaka University of Economic No.