The Socialist Democratic Republic of Sri Lanka is located in the Indian ocean bearing a land mass of 65,610 km². The country boasts an income status of middle income and is home to approximately 21.44 million citizens. The economy consists of largely the agricultural sector and the service sector.
Sri Lanka has been a world renowned destination for tourism purposes and over the years laid claim to some of the biggest shipping routes of the region. Sri Lankan is also home to a diverse culture and boasts a rich and ancient heritage. The ethnicities of the country include Sinhala, Tamil and Muslim and religions being Buddhism, Hinduism and Islam.
Sri Lanka’s biggest exports are garments and apparels which form 57% of all exports and a large brand identity built up around by the iconic Ceylon Tea brand across the world. Sri Lanka is also rich in many natural resources such as Limestone, Graphite, Mineral Sands, Phosphate, Clay and the discovery of natural gas deposits off shore has added to the already extensive list of natural resources available in the country.
Sri Lanka also has a very vibrant and active private sector which is rapidly expanding the country’s economy and is becoming a sought out venture by foreign investors and businesses.
Sri Lanka is an island just off the coast of the Indian Subcontinent placed in a strategic location which has access to the world’s major shipping lines. It also formed a key location in the ancient Silk route and is rapidly becoming a valuable component in the new silk road. Sri Lanka has a land mass of 65,610 km² as of current date with ocean reclamation projects that are underway guaranteed to boost this number in the coming years.
- Population : 21.44 Million (2017)
- GDP: 15 Billion LKR (2018)
- Main Languages Spoken: Sinhala, Tamil, English
- Literacy Rate: 96.3% (2017)
- Currency: Sri Lankan Rupee (See conversion rates)
The Sri Lankan economy has grown rapidly in the post war years graduating recently to the “Middle Income” country category with projections that it will in the future graduate even more. It has also become renowned as the most liberalized economy in South Asia. Furthermore, Sri Lanka is one of the countries with the world’s lowest tax to GDP ratio.
Sri Lanka’s main economic aspects consist of tourism, tea export, rubber exports, agriculture and apparel mainly. This is also substantially supported by the foreign currency brought in by employees who are employed abroad mainly in Middle Eastern countries. Under the purview of the Prime Minister, Mahinda Rajapaksa, Sri Lanka is aspiring to become a knowledge based social market economy.
Sri Lankan economy is bound to undergo a rapid change in focus with upcoming western megapolis and financial city projects with a focus towards foreign investment driven programmes.
Sri Lanka is a democratic country with the current government structure which retains the executive presidency with a parliament. Currently, H.E Gotabaya Rajapaksa is the President of Sri Lanka and forms the head of a unity government with the Sri Lanka People’s Front, headed up by the Prime Minister Mahinda Rajapaksa. The present government holds a majority providing a stable platform for economic growth and investment.
The government has put in a place a number of attractive propositions for Investors as it seeks to continue economic growth with a global emphasis. The government has in its portfolio several large-scale development projects which includes the upcoming UDA development project and Financial City project.
The government has demonstrated a foreign investor friendly approach in their policies. Some of the policies which include generous tax concessions and granting resident visas based on investment levels have attracted many foreign investors to the island nation. Few policies such as total foreign ownership is also being addressed in an effort to attract more investors to the country.
As of currently Sri Lankan government imposes no restriction of repatriation of earnings, fees and other such monetary functions. Also, Sri Lanka is a founder member of the Multilateral Investment Guarantee Agency (MIGA), an agency of the World Bank which guarantees investment and guards against expropriation and non-commercial risks.
Sri Lanka has invested significant resources towards upgrading and modernizing the infrastructure of the country. Some of the more ambitious projects include expansion of the Colombo South Port, expansion of Bandaranaike International Airport, a number of expressways throughout the country and establishing of a Financial City through a sea reclamation project and establishing a Megapolis project to upgrade infrastructure in Western Province. Additional projects include upgrading of the telecommunication infrastructure as well.
As a result of these projects, the outlook of the country has changed rapidly even from a few years ago to a country with development continuing at every place and sector. Efforts are underway to smoothen traffic in the urban areas and set up urban housing which is supported by vertical living initiatives.
The current infrastructure that is already available also forms some of the best infrastructure systems in the region due to industrial and economic zones already in operation for several decades. This includes over 13 Export Processing Zones and Industrial Parks. In addition to this there are also several privately owned Industrial Parks as well.
Further infrastructure development is expected in the near future with several zones being demarcated for specific purposes which include industrial zones and knowledge cities. These will be developed massively in line with the Western Megapolis plan implementation creating a complete economic eco- system that is interconnected to reap the full potential of these investments.
Also, what must be noted is that the infrastructure systems are not just aimed at fulfilling a need but also at creating needs and projects that are developed in anticipation of future demands or as contingencies. Especially in the Energy sector many power plants are being developed such as Upper Kotmale Hydro Power, Norochcholai Phase II & III and many others which also include plans for an Indo-Sri Lanka Interconnection Line between Madurai & Anuradhapura (ADB). Also, SEA-ME-WE IV will bring massive growth potential to the telecommunication sector which will be the driving force of the economies of the future.
Sri Lanka boasts a high literacy rate of 92.63% which is above average than most countries and ranks above regional nations. Sri Lanka provides free education through state schools to all students upto university level based on a merit level selection process in the case of university students. This has largely come as a result of the policy of free education that has been continued in Sri Lanka by successive governments.
There has been considerable backing by successive governments which has established and continued to fund universities and as a result Sri Lanka is home to many professionals with high levels of knowledge. The sector of education has also risen to new standards in the recent past due to some of the more established universities of the world entering the Sri Lankan education eco system via various affiliations and which has contributes to producing of highly able graduates in all sectors.
Sri Lanka has always been a country which had a strong relationship with many other countries. Sri Lanka has been a pioneer in the Non-Aligned Movement. From an investment perspective for a potential investor, Sri Lanka’s pristine International Relationships will have a large appeal. Any potential investor can benefit from a number of free trade agreements that already exist with some of the larger economies of the region as well as agreements that will be formulated in the future.
Such agreements include but not limited to ETCA (Economic and Technology Co-operation agreement), Free trade agreement with Pakistan, FTA with India, agreements with Europe, China and USA are also the pipeline. Sri Lanka has double taxation avoidance agreements with 49 countries which help entrepreneurs massively. These agreements will serve to provide a market place to Sri Lankan interests of over half the world’s population.