Sri Lanka became a full member of SASEC in May 2014, together with the Maldives, following several years as an active Observer. Bangladesh, Bhutan, India, and Nepal formed the project-based partnership in 2001.
The Progress Report of the Ministry of National Policies and Economic Affairs for the Year 2015 and Development Program for the Year 2016 of the Government of Sri Lanka highlights the Government's aim to put into place strategies to implement its five-pillar development plan to build the economy, fight corruption, ensure freedom for all, develop infrastructure and investment, and improve education. To achieve the goal of improving and enhancing the living standards of the people, the Government is introducing key economic policies that will enhance competitiveness of the Sri Lankan market, and establish mega zones to boost technology and industrial development.
SASEC Technical Assistance in Sri Lanka
ADB-financed technical assistance has supported SASEC activities in Sri Lanka since 2002, to help advance the country’s engagement in regional cooperation activities, including under the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) frameworks. Since 2012, Sri Lanka has actively participated—first as Observer, and then as full member—in SASEC regional technical assistance projects worth more than $11 million that have supported regional cooperation forums, knowledge-sharing initiatives, and capacity building.
Direction of Intra-regional TradeThe value of Sri Lanka's merchandise exports and imports trade with other SASEC member countries, using International Monetary Fund data from 2015, is captured in the tables below.
India is Sri Lanka's top import source worldwide, with imported goods valued at nearly $4.3 billion.
India ranks 3rd as Sri Lanka's top export destination, with exported goods from Sri Lanka valued at around $645 million.
Sri Lanka Trade in SASEC Subregion, 2015
Sri Lanka Trade - Import
Sri Lanka Trade - Export
Ease of Doing Business
In 2016, Sri Lanka enacted two reforms that made it easier to do business:
- removing the requirement to notify the Registrar of Companies of the payment of stamp duty for the initial issuance of shares; and
- streamlining the internal review process for building permit applications for construction permits.
Source: Doing Business
Note: The World Bank/International Finance Corporation's annual flagship Doing Business Report measures the ease of doing business by ranking economies from 1 to 189, based on quantitative indicator sets that can be compared across economies and over time, with first place being the best and indicating a regulatory environment is conducive to business operation. Of immediate relevance to SASEC aims and goals are indicator sets on Starting a Business, and Trading across Borders.
Logistics Performance Index (LPI)
Sri Lanka’s 2014 overall LPI score slipped slightly to 2.70, after posting a high of 2.75 in 2012, yet stayed ahead of the South Asia 2014 average score of 2.61. This ranks the country at 89 out of 160 countries for 2014, compared to 81 for 2012. Sri Lanka’s areas of improvement in 2014 were logistics competence, tracking and tracing, and timeliness.
Sri Lanka LPI 2016
Source: World Bank LPI
Note: The LPI overall score reflects perceptions of a country's logistics based on six core dimensions: (i) efficiency of customs clearance process, (ii) quality of trade- and transport-related infrastructure, (iii) ease of arranging competitively priced shipments, (iv) quality of logistics services, (v) ability to track and trace consignments, and (vi) frequency with which shipments reach the consignee within the scheduled time. The scores for the six areas are averaged across all respondents and aggregated to a single score using principal components analysis. A higher score indicates better performance.
Sri Lanka LPI 2007-2014
Source: World Bank LPI
Asian Development Outlook
In June 2016, the International Monetary Fund approved a 36-month Extended Fund Facility arrangement to support Sri Lanka’s economic reform agenda. The main efforts are to boost the tax ratio, reduce the budget deficit, rebuild foreign exchange reserves, and improve public financial management, including management of state-owned enterprises. GDP grew by 5.2% in the first quarter and then slumped to 2.6% in the second quarter.
South Asia Regional Update
Sri Lanka’s real GDP rose 4.8% in 2015, on the basis of strong growth in services (particularly tourism), continued growth in agriculture, and positive contributions from construction and manufacturing. Headline inflation dropped marginally to 2.0% as of March 2016, while core inflation continued to rise—reaching 4.5%. A revised budget was implemented in January 2015 following national elections, bringing a significant increase in wages, salaries, transfers and other categories of recurrent spending.