1 Environment for Doing Business in Sri Lanka D. Wasantha Director of Statistics 23 July 2011
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1
Environment for
Doing Businessin Sri Lanka
D. Wasantha
Director of Statistics
23 July 2011
2
Outline
Macro Indicators of Doing Business
Southern Province Indicators
WB/IFC Doing Business Ranking
3
Macro Indicators of Doing Business
Macroeconomic Stability
Political Stability
Infrastructure
Level of Labour Skills
Market Size
Access to Finance
Taxation
4
Macro-economic Stability Key Indicators
2005 2010
– Inflation Rate 11.0 5.9
– Unemployment Rate 7.2 4.9
– Economic Growth 6.2 8.0
– Poverty Ratio Southern province 13.8 9.8
– Poverty Ratio 15.2 8.9
– Official Reserves (USD bn.) 2.7 7.2
– Debt/GDP 90.6 81.9
Low Inflation, low unemployment, high growth & high
creditworthy country
5
Contd…
2005 2010
Remittances (USD bn.) 1.9 4.1
• Stock Market capitalization (Rs.bn) 584 2211
• Country situation Presence of Peace
Terrorist activities Condition
Sri Lanka has never defaulted its debt obligations.
Sri Lanka is deeply committed to an economy with greater
private sector participation.
Presidential, Parliamentary and local government elections
have resulted in a clear mandate to the incumbent
Government to maintain the policy consistency.
6
Taxation
Tax Structure was
• Broad based
• Simplified
• Rationalized
In 2011
• PAYE Tax was introduced to Government Sector employees
• Maximum income tax rate applicable to individuals reduced to 24%
from 35%
• NBT rate reduced from 3% to 2%
• Personal tax relief for individuals increased from Rs. 300,000 to Rs.
500,000
• Small industry tax rate reduced from 15 to 12
7
Infrastructure
Accelerated development in transport, electricity,
seaports and airports, highways, irrigation are key
infrastructure development strategy of the
government.
They are basic core investments. Such investments
are prerequisites for the private investments in any
country.
8
Contd…
Power projects
• Norochcholai Coal Power Plant
• Upper Kotmale Hydropower Plant
• Uma Oya Hydro Power Plant
• Moragahakanda and Kaluganga Reservoir Projects
• Kerawalapitiya LNG Plant
Road Development Projects
• The Southern Expressway Project
• The Colombo-Katunayake Express Way
• The Colombo under circular Highway Project
• Colombo-Kandy Expressway
• Northern Expressway
9
Contd…
Port Development Projects
• New Colombo – South Harbour Project
• The Hambantota Port Development Project
• The Oluvil Port Development Project
• Galle Port Development Project
Aviation Projects
• Maththala International Airport Project
• BIA expansion Project
10
Market Size
In terms of GNP Sri Lanka has relatively a small market of USD
50 bn. When compared to :
• India - USD 1250 billion
• Bangladesh - USD 92 billion
• Malaysia - USD 207 billion
• Singapore - USD 163 billion
• Thailand - USD 264 billion
• Nepal - USD 13 billion
The reduction in poverty would expand the market. From 2006
to 2009 nearly 1.2 million people have crossed the poverty line.
The provincial breakdown is as follows.
11
Contd…
2006/07 2009/10
Western 8.2 4.2 220
Central 22.3 9.7 317
Southern 13.8 9.8 89
Northern - 12.8 …
Eastern 10.8 14.8 …
North Western 14.6 11.3 67
North Central 14.2 5.7 98
Uva 27.0 13.7 161
Sabaragamuwa 24.2 10.6 250
Total 15.2 8.9 1,203
Province / District
Poverty HCRNo. Cross over the
Poverty line '000
12
Contd…
Per capita income more than doubled from US$ 1,062 in 2004 to US $ 2,399 in 2010
The Northern and Eastern Provinces would represent a new segment of the market
Population - 13%
land - 29%
Provincial GDP - 10%
13
0
50,000
100,000
150,000
200,000
250,000
2006 2007 2008 2009 2010
Rs
.
Percapita income - Southern Province
14
9.0
8.58.1
9.4
7.8
6.5
6.0
5.2
5.8
4.9
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2006 2007 2008 2009 2010
(%)
Southern Province Sri Lanka
Unemployment Rate (%)
15
4
6
8
10
12
14
16
2005 2006 2007 2008 2009 2010
Ba
nk
Bra
nc
he
s
Southern Province Sri Lanka
(a) No. of Bank Branches per 100,000 population
Banking Density(a)
16
40
60
80
100
120
140
160
180
2005 2006 2007 2008 2009 2010
No
. o
f Tele
ph
on
e C
on
necti
on
s
Southern Province
Sri Lanka
(a) Telephone connections per 1,000 population
Telephone Density(a)
17
Item/Province Year
Wes
tern
Cen
tral
So
uth
ern
No
rth
ern
Eas
tern
No
rth
W
este
rn
No
rth
C
entr
al
Uv
a
S'g
amu
wa
Isla
nd
GDP (Rs.Bn)
2009 2,216 473 509 156 279 466 221 219 295 4,835
2010 2,525 558 600 192 332 528 266 252 351 5,602
GDP Growth (%)
2009 10.6 9.9 9.5 12.1 13.4 6.3 7.0 9.6 4.7 9.6
2010 13.9 17.9 17.9 22.9 18.7 13.2 20.3 14.8 19.1 15.9
GDP Share (%)
2009 45.8 9.8 10.5 3.2 5.8 9.6 4.6 4.5 6.1 100.0
2010 45.1 10.0 10.7 3.4 5.9 9.4 4.8 4.5 6.3 100.0
Per capita income (Rs '000)
2009 381 178 206 131 182 201 181 168 153 236
2010 430 208 241 161 212 225 215 190 181 271
Per capita income ratio3
(%)
2009 1.6 0.8 0.9 0.6 0.8 0.8 0.8 0.7 0.6 1.0
2010 1.6 0.8 0.9 0.6 0.8 0.8 0.8 0.7 0.7 1.0
GDP by Provinces – 20091 and 20102
18
What is the Doing Business Ranking ? A ranking based on quantitative indicators on business
regulations relevant to the life cycle of a small to medium
size domestic business operating in the formal sector in
the relevant country.
It is built on standardized case scenarios and measured
in the most populous city in each country.
It measures the ease of doing business in a country.
Prepared by the World Bank Group based on
information provided by local partners
2011 ranking makes a comparison across 183 countries
19
The following 9 stages of a life of a
business are considered
Starting a business
Dealing with construction permits
Registering a property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
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The Indicators Considered
Number of Procedures involved
in a given stage
Time taken to complete the stage
The Cost Involved
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How do these factors affect the ranking ?
Larger the number of procedures the lower the ranking.
Greater the time taken lower the ranking.
Cost involved: Greater the cost, greater the deterrent to investors and lower the ranking.
Legislative provisions considered in their light of their promoting the ease of doing business or posing obstructions to doing business.
22
Why is this ranking important ? International Investors sometimes consult this ranking
before making investment decisions
As the relative position of the other countries are given
in details together with background information, such
information is a helpful guide to the nature of reforms
needed.
Improving the factors considered in the ranking will
improve the climate for local business to operate and
thereby facilitate growth and employment generation.
23
Ease of Doing Business – Rank (102)Sri Lanka compared with the Best and the Worst performers
Rank Singapore Sri Lanka Chad
Ease of Doing Business 1 102 183
Starting a Business 4 34 182
Dealing with Construction Permits 2 169 101
Registering Property 15 155 137
Getting Credit 6 72 152
Protecting Investors 2 74 154
Paying Taxes 4 166 179
Trading Across Borders 1 72 171
Enforcing Contracts 13 137 164
Closing a Business 2 43 183
24
Ease of Doing Business Global Ranking SAARC -2011
83 85
102107
116
134
142
167
60
80
100
120
140
160
180
Pakistan Maldives Sri Lanka Bangldesh Nepal India Bhutan Afghnistan
25
Ease of Doing Business Global Ranking–Selected Asian Countries - 2011
1
16 18 19 21
78 79
102
121
148
0
20
40
60
80
100
120
140
160
Singapore Korea,Rep. Japan Thailand Malaysia Vietnam China Sri Lanka Indonesia Philippines
26
Guide to Doing Business
Implicit assumption of the DB Ranking is that the business has information on what is required and does not waste time when completing procedure.
In practice this is not so and a considerable time is spent by the business in searching for information.
In order to overcome this the Central Bank has published a booklet named A Step by Step Guide to Doing Business in Sri Lanka
CBSL Contribution
27
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