2016年-世界发展银行全球_Enhancing_Competitiveness_in_Sri_Lanka_53页_1mb

Summary of Enhancing Competitiveness in Sri Lanka

Core Content

This document outlines the key challenges and opportunities for enhancing the competitiveness of Sri Lanka's private sector, with a focus on the investment climate, trade policies, trade facilitation, FDI attraction, and innovation and entrepreneurship. The World Bank Group has conducted diagnostics and technical assistance to identify reform priorities and provide actionable options for improvement.

Main Views

• Current Economic Challenges: Sri Lanka's growth has been driven by non-tradable sectors and domestic demand, leading to low productivity and an unbalanced export basket. The country has not effectively capitalized on trade and FDI opportunities, resulting in limited export diversification and low value addition.

• Investment Climate: The investment climate in Sri Lanka is not conducive to private sector growth. High transaction costs, complex regulations, and lack of strategic direction have discouraged formal business operations and promoted informality, which undermines productivity and growth.

• Trade Policies: Trade policies have been restrictive, with an anti-export bias due to high para-tariffs and protectionist measures. These have limited the ability of firms to access global markets and participate in value chains. The country's trade openness has declined, affecting its global market share.

• Trade Facilitation: The trade facilitation process is inefficient, increasing the cost and time of exporting. Improvements are needed to streamline procedures and reduce bureaucratic hurdles.

• FDI Attraction: Sri Lanka attracts a lower volume of FDI compared to peer economies, due to legal and procedural barriers, lack of predictability, and weak investor confidence. Enhancing FDI requires a clear investment policy, improved promotion efforts, and better integration of foreign investment.

• Innovation and Entrepreneurship: Despite the challenges, Sri Lanka has a vibrant but underdeveloped startup and SME sector with potential for export-oriented growth. Enhancing innovation and entrepreneurship requires better alignment of the R&D system with private sector needs, improved access to finance, and support for technology adoption.

Key Information

1. Enhancing the Investment Climate

• Problem: High transaction costs, complex regulations, and lack of a clear strategic vision have created an unfavorable investment environment.
• Impact: These factors have discouraged new firm creation, limited growth of existing firms, and increased informality.
• Recommendations:
  • Implement a well-defined reform agenda with clear objectives, timelines, and accountability.
  • Establish a steering committee for investment climate reform with direct reporting to the Prime Minister or President.
  • Create a secretariat/delivery unit to coordinate reform efforts and escalate issues.
  • Form technical working groups involving both public and private sector experts to develop and implement detailed action plans.
  • Engage in public-private dialogue to prioritize reform areas based on entrepreneur feedback.

2. Establishing Trade-Enabling Policies

• Problem: Trade policies have been restrictive, with an anti-export bias due to high para-tariffs and protectionist measures.
• Impact: This has limited export diversification, stunted private sector creativity, and reduced Sri Lanka's competitiveness in global markets.
• Recommendations:
  • Reduce anti-export bias by implementing more neutral trade policies.
  • Focus on product diversification and structural transformation.
  • Promote regional integration and Preferential Trade Agreements (PTAs) to access new markets.
  • Enhance logistics and infrastructure to support trade activities.

3. Improving Trade Facilitation

• Problem: Trade facilitation processes are inefficient, increasing the cost and time of exporting.
• Impact: This has reduced the competitiveness of Sri Lankan exports and discouraged firms from participating in global value chains.
• Recommendations:
  • Streamline regulatory processes and reduce non-tariff barriers.
  • Improve port clearance times and logistics services.
  • Develop a long-term reform agenda to enhance trade efficiency.

4. Attracting and Retaining FDI

• Problem: Sri Lanka attracts a low volume of FDI, hindered by legal and procedural barriers, lack of predictability, and weak investor confidence.
• Impact: Low FDI has limited the ability to improve production processes and enhance trade.
• Recommendations:
  • Articulate a clear investment policy to guide FDI attraction.
  • Strengthen investment promotion efforts.
  • Streamline investment entry processes.
  • Improve investor confidence through transparent and predictable regulations.
  • Enhance the efficacy of investment incentives.

5. Enhancing Innovation and Entrepreneurship

• Problem: The R&D system is not well-aligned with private sector needs, limiting innovation and entrepreneurship.
• Impact: This has constrained the ability of SMEs and startups to scale and compete globally.
• Recommendations:
  • Enable export-oriented SMEs through supportive policies.
  • Scale growth-oriented startups by improving access to finance and technology.
  • Upgrade and rationalize the R&D sector to better respond to private sector demands.
  • Implement a comprehensive reform agenda for innovation and entrepreneurship.

Conclusion

To become a higher middle-income economy, Sri Lanka needs to address the shortcomings in its investment climate, trade policies, and FDI attraction. Enhancing competitiveness will require a multi-faceted approach that includes regulatory reforms, trade facilitation improvements, and support for innovation and entrepreneurship. The World Bank Group has provided a framework for reform and recommendations for implementation, emphasizing the need for strategic planning, institutional coordination, and stakeholder engagement.