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U.S. Department of State
Sri Lanka Country Commercial Guide
Office of the Coordinator for Business Affairs
Sri Lanka Commercial Guide - 1995
Chapter I Executive Summary
Chapter II Economic Trends and Outlook
Chapter III Political Environment
Chapter IV Marketing U.S. Products and Services
Chapter V Leading Sectors for U.S. Exports and Investment
Chapter VI Trade Regulations and Standards
Chapter VII Investment Climate
Chapter VIII Trade and Project Financing
Chapter IX Business Travel
Appendices
Appendix A Country Data
Appendix B Domestic Economy
Appendix C Trade
Appendix D Investment Statistics
Appendix E U.S. and Country Contacts
Appendix F Market Research
Appendix G Trade Event Schedule
Chapter I
Executive Summary
The Sri Lankan economy grew by a respectable 5.6 percent in 1994.
However, the prospects for 1995 are clouded by the ongoing conflict
between government forces and Tamil rebels, and by lingering doubts
about the government's management of the economy. Dilapidated and
inadequate infrastructure is another long-term constraint on growth.
The state-owned sector of the economy is large, although the government
has ambitious plans to privatize many parastatal companies in 1995 and
1996. The private manufacturing sector has been the engine of economic
growth for many years, registering growth of 11 percent in 1994.
Sri Lanka has made major strides since the early 1980s in creating a
favorable environment for the private sector. Private property
(including intellectual property) is protected, the banking system is
increasingly sophisticated, commercial and company law is codified, and
there are no restrictions on the expeditious remitting of profits. The
government actively encourages foreign investment by offering
preferential tariff and tax treatment to investors in key industries,
e.g., nontraditional export industries. The government also supports
private infrastructure, particularly through build-own-operate (BOO) and
build-own-transfer (BOT) schemes. However, lengthy and not-fully-
transparent tender procedures have delayed implementation of BOO/BOT
projects.
The U.S. is Sri Lanka's largest trading partner, with the trade balance
heavily in Sri Lanka's favor. Exports to the U.S. totaled $1,115
million in 1994, of which garments were more than 75 percent. Imports
were $197 million, almost half of which was wheat. More than 200 U.S.
companies are represented in Sri Lanka, and business links with the U.S.
continue to increase. Leading trade prospects for U.S. exporters and
investors include telecommunications, medical equipment, computers and
information technology, power generation, and agricultural and food
products.
While it is easier to trade and invest in Sri Lanka than in many other
developing countries, roadblocks to doing business do exist. These
include delays in government tendering, high import tariffs, poor
infrastructure, and concerns about the ethnic insurgency. Judicial
redress in trade disputes can also be slow.
Country commercial guides are available on the National Trade Data Bank
on CD-ROM or through the Internet. Please contact STAT-USA at 1-800-
STAT-USA for more information. To locate CCGS via Internet, please use
the following world wide wed address: WWW.STAT-USA.GOV. CCGS can be
ordered in hard copy or in diskette from the National Technical
Information Service (NTIS) at 1-800-553-NTIS.
Chapter II
Economic Trends And Outlook
Major Trends and Outlook
The Sri Lankan economy grew 5.6 percent in 1994, down from 6.9 percent
in 1993. Growth is being driven by the private sector, thanks largely
to reforms undertaken since 1987 and a burgeoning export industry.
However, the outlook for 1995 is not quite as good as the last two
years. Although the government is predicting growth of 6 percent, many
private economists are less optimistic and expect growth of around 4.5
to 5.5 percent.
Ethnic conflict has plagued Sri Lanka since 1983. Peace talks between
the government and Tamil insurgents broke down in April 1995, resulting
in renewed civil conflict. Military activity remains largely limited to
the north and east, although assassinations of political and military
leaders and terrorist bombings have brought the war to the south as
well. The impact of the war is muted in the major industrial and urban
areas, and the conflict has not prevented heavy inflows of foreign
investment in recent years.
The government's hesitancy in the face of violent strikes at the end of
1994, and its limited implementation of pro-business policy statements,
have clouded the future economic outlook. New foreign direct investment
in the first half of 1995 has been subdued. New domestic construction
contracts are drying up, and previously planned projects are being
scaled back.
To its credit, the government (which came to power in elections in the
last half of 1994) plans to continue the privatization of inefficient
public enterprises. It also has made strong statements against labor
violence, which has largely subsided, and has adopted a tighter budget
to contain an unexpectedly large deficit inherited from the previous
government. Foreign firms are being sought out to address the country's
industrial and infrastructure needs, and the underlying strength of the
private sector bodes well in the medium to longer term.
Major Sectors
The economy grew by 5.6 per cent in 1994, underpinned by 9.1 percent
manufacturing growth. The agricultural sector, which accounts for 20.4
percent of GDP, grew by 3.3 percent. The services sector, which
accounts for 50 percent of GDP, grew by 5.2 percent.
The following table presents percentage changes in real sectoral output
over the preceding year:
Sector 1993 1994
Agriculture, forestry
and fishing 4.9 3 .3
Mining and quarrying 11.9 6 .0
Manufacturing 10.5 9 .1
Construction 6.5 6 .0
Services 6.3 5 .2
GDP 6.9 5 .6
Agriculture: Rice, tea and coconut production reached record levels in
1994. Production of rice, Sri Lanka's staple cereal, increased by 4.7
percent to 2.68 million metric tons. Tea production at 242 million kgs
was also the highest on record and grew by 4.4 percent. Sri Lanka
maintained her position as the world's largest tea exporter. Favorable
weather, improved management under private management companies, and
lagged effects of increased fertilizer use in 1993 helped boost tea
production. However, the government-owned plantations are still largely
unprofitable. Coconut production increased by 21 percent, largely due
to favorable weather.
Industry: Industrial output, which grew by 14 percent in 1993, recorded
a slower growth of 9 percent in 1994. In line with the trend of the past
several years, all of this growth came from the private sector. Public
sector industry, which accounts for a ninth of total industrial
production, recorded a decline of 5 percent. The textiles and garments
sector, which grew by 31 percent in 1992 and 17 percent in 1993, grew by
only 6 percent in 1994. Expansion in industrial output was fairly
broad-based as shown by the following table:
Industrial sector Growth rate
Basic metal 33 percent
Wood 16 percent
Paper 14 percent
Fabricated metal 14 percent
Non metallic minerals 13 percent
Chemicals, petroleum, rubber,
and plastics 11 percent
Food, beverages and tobacco 8 percent
Services: The service sector, which accounts for one half of GDP,
recorded a 5.2 percent increase in 1994. The financial sector was
particularly robust, growing by 9.5 percent. Public utilities grew by
9.9 percent. Wholesale and retail trade was up 6.4 percent, primarily
due to the expansion in import and export trade. Tourist arrivals
increased by 3.9 percent to 407,500, the highest ever.
Government Role in the Economy
Sri Lanka has made major strides since the early 1980s in creating a
favorable environment for the private sector. The government has
deregulated most sectors, eliminated most price controls and quotas,
liberalized the issuance of import licenses, terminated export taxes,
and privatized many state-owned companies. It actively promotes inward
foreign investment in most fields. Sri Lanka attained full current
account convertibility in March 1994, when it accepted the obligations
under Article VIII of the IMF Articles of Agreement.
Although there is a thriving private sector, government still remains a
significant economic factor. All infrastructure (ports, roads, phones,
rail and electricity) is owned by the government, as are the two largest
commercial banks, a large insurance company, the national airline, the
shipping line, and many other companies. The government still controls
the price of bread, petroleum, and electricity. In addition, bread,
wheat flour, and fertilizer are heavily subsidized. Although the
government has stressed the importance of transparency and
accountability in government operations, government procedures,
especially with regard to tenders for major projects and supplies, are
still obscure, and lengthy delays are common.
The public sector employs almost a quarter of the total work force. In
1994 public sector employment, which includes government and semi-
government sectors, increased by 2 percent to 1.32 million workers.
Government sector employment increased by 3.5 percent due to the
recruitment of doctors, nurses and clerical workers. In the semi-
government sector, which includes public sector corporations and state
banks, employment rose a marginal 1 percent.
Budgetary performance: Unplanned spending increases and tax exemptions
granted by the former government on the eve of two major national
elections caused the budget deficit to explode to 10 percent of GDP in
1994, well over the 6.8 percent target.
The 1995 budget is designed to redress the significant policy slippages
which occurred in 1994. The centerpiece of the budget is the reduction
of the fiscal deficit to 7.5 percent of GDP. In nominal terms, revenue
is to be raised 26 percent while current expenditure growth is to be
contained at 5 percent. Most government-owned manufacturing and trading
enterprises are earmarked for privatization. Plantations are to be
privatized as well, and private infrastructure is to be promoted. Major
structural reforms in the 1995 budget include a tariff reform program
which lowers the highest nominal tariff band from 45 percent to 35
percent. The turnover tax system will be replaced with the less
distortionary value-added tax (VAT) system.
The following table presents government fiscal operations as a
percentage of GDP. 1994 figures are provisional and 1995 figures are
projections:
Government Accounts
1993 1994 1995
Revenue 19.7 19.0 20.8
Expenditure and net lending 28.1 29.0 28.3
Defense 4.2 4.4 4.4
Deficit before grants 8.4 10.0 7.5
Domestic Finance(net) 4.9 6.5 3.4
Foreign grants and loans 3.6 3.4 4.2
Balance of Payments
The current account deficit nearly doubled in 1994, growing to $767
million from the 1993 figure of $386 million. The trade deficit
expanded by 37 percent to $1,571 million. The services balance was
positive, but smaller than in 1993. Private remittances, mainly from
Sri Lankan workers in the middle east, rose, causing the transfer
account surplus to increase by 9 percent to $790 million. Net capital
account inflows were up 14.6 percent, thanks entirely to increased
private borrowings. Disturbingly, direct foreign investment declined by
16 percent to $158 million in 1994. Portfolio investment dropped
substantially by 60 percent to $27 million. Net private inflows of loan
funds, however, increased considerably from $330 million in 1993 to $578
million in 1994. Net credit to the government dropped by 20 percent to
$406 million. Gross external assets increased by 23 percent to $2,614
million at end of 1994. External assets were sufficient to finance 5.5
months of merchandise imports projected for 1995.
Merchandise exports increased by 12 percent in 1994, down from 16.4
percent in 1993. Growth in industrial exports slowed to 13.5 percent
from 18.0 percent in 1993. Industrial exports accounted for 73.6
percent of total exports. Garment exports at $1.5 billion accounted for
almost half of gross export earnings, and recorded a growth of 9.8
percent. Following last year's trend, other non-textile exports grew by
a strong 21 percent. Earnings from agricultural exports increased by 7
percent, due in large part to favorable weather.
Rising demand caused the import bill to rise by 19.1 percent in 1994,
compared with an increase of 14.5 percent in 1993. Eighty percent of
the increase in imports was for intermediate and capital goods, and only
20 percent for consumption goods. Investment goods recorded the
strongest growth (30 percent) to $1,366 million. Two airbus planes
costing $228 million were included in this category. Excluding this
extraordinary item investment goods reflect a more modest 19 percent
increase. Overall, intermediate goods grew by 14 percent. Textiles
remained the largest single import item, growing by 20 percent and
accounting for nearly 22 percent of total imports. Fertilizer & chemical
imports increased by 22 percent and 11 percent respectively. Consumer
goods increased by 16 percent. The food import bill rose 10 percent. In
the non-food consumer goods category, high growth rates were recorded
for motor cars and motor bikes, pharmaceuticals, and radio receivers and
televisions.
The following table presents major imports and exports for 1994, in
millions of dollars.
1994 Exports 1994 Imports
Textiles and apparel 1550 Textiles 1038
Tea 424 Machinery and equip. 559
Minor Agricul. prod. 129 Transport equipment 454
Petroleum 80 Petroleum 296
Gems 79 Building material 241
Coconut 76 Sugar 180
Rubber 72 Chemicals 121
Other 798 Other 1887
Total 3208 Total 4776
The United States and Japan are Sri Lanka's largest market and supplier
respectively. In 1994, the United States was the destination for 35
percent of Sri Lanka's exports, most of them garments. Imports from
Japan increased by 16 percent to $527 million. However, her share of
the Sri Lankan market eroded slightly from 11.3 percent to 11.0 percent.
India maintained her position as the second largest supplier accounting
for 8.5 percent of the Sri Lankan market. Other leading suppliers were
Hong Kong, South Korea, Taiwan, United Kingdom and Singapore.
Imports from the U.S. were $197 million. Wheat at $84 million accounted
for 44 percent of these imports. Exclusive of wheat, imports from the
U.S. were up a strong 18 percent. Machinery ($22 million), electrical
machinery and equipment ($27 million), textile products($23 million) and
aircraft parts ($10 million) constituted the bulk of these imports.
The year 1994 was a good year for tourism. Tourist arrivals increased 4
percent to 407,500, the highest ever, surpassing for the first time the
peak level achieved in 1982 before the onset of the ethnic conflict.
In 1994, Sri Lanka received over $500 million in foreign assistance,
equivalent to approximately 4.5 percent of GDP. Japan ($182 million),
the Asian Development Bank ($87 million), the World Bank ($71 million),
and the U.S. ($70 million) were the largest sources of assistance.
Donors have pledged about $850 million in 1995.
Debt service payments recorded a 7 percent increase from $500 million to
$533 million. Much of this increase was due to larger interest
payments. As exports and service receipts grew the debt service ratio
dropped further from 13.8 percent in 1993 to 13 percent in 1994. When
private transfers are factored in, the debt service ratio declined
further to 11 percent. Sri Lanka's national external debt (private and
public) at end of 1994 was estimated at $8,883 million.
The rupee depreciated marginally by 0.8 percent against the U.S. dollar
in 1994. The rupee depreciated at a higher rate against other major
currencies. The real exchange rate depreciated by 3.2 percent.
Infrastructure
There is a great need to improve infrastructure, particularly roads,
telecommunications and power. The government supports private
infrastructure, particularly through build-own-operate(BOO) and build-
own-transfer(BOT) schemes.
Sri Lanka is served by one international airport located near Colombo
and three commercial ports, the largest and most commonly used being the
port of Colombo. A new fully equipped container berth added to the
Colombo port early this year is expected to improve port facilities.
The government is seeking to develop the southern port of Galle as well.
Road transportation accounts for 80 percent of inland transportation.
The road network is old and poorly maintained.
Sri Lanka's total installed electricity capacity of 1386 megawatts(MW)
consists of 1136 MW of hydropower and 250 MW of thermal power.
Electricity demand is growing at around 10 percent a year. As no new
generation capacity has been added in the past five years, there are
concerns of power shortages as early as 1996, particularly in the event
of drought. Sri Lanka hopes to add 220 MW in hydro power and 560 MW in
thermal power between now and 2001.
Telecommunication services have been expanded and modernized recently by
replacing outdated equipment with digital switching systems and fibre
optic and microwave cable systems. Despite these improvements basic
telecommunication services are inadequate to meet the rising demand.
Presently, demand for new telephone lines is over 200,000, which is high
compared to the present capacity of 183,000 subscribers. Ongoing
projects will add 85,000 lines by end of 1995. Demand in the next five
years is estimated to be over 600,000.
Chapter III
Political Environment
Nature of the Bilateral Relationship with the United States
The U.S. and Sri Lanka enjoy a friendly relationship. The Government of
Sri Lanka is currently fighting Liberation Tigers of Tamil Eelam (LTTE)
insurgents, who seek to create a separate state in the North and East
provinces. The U.S. Government supports the territorial integrity of
Sri Lanka and has called for a peaceful resolution of the conflict which
protects the interests and dignity of all communities. In that vein,
the U.S. welcomed the considerable efforts of the Government of Sri
Lanka, beginning in October, 1994, to engage the LTTE in negotiation of
a political settlement to the conflict. Equally, the U.S. Government
has condemned the decision of the LTTE to break off talks in April,
1995, and resume its efforts to advance its political agenda through
force of arms and terrorist tactics.
Major Political Issues Affecting the Business Climate
The most serious issue affecting the investment climate is the
insurgency. This insurgency has its roots in long-standing ethnic
tensions between the majority Sinhalese (70 percent) and minority Tamil
(18 percent) communities, and has brought direct armed conflict to the
island's northern and eastern provinces and has led to terrorist attacks
in the south. The increased tempo of military activity means that non-
defense spending will be further constrained in 1995. Increases in the
government's defense levy may also have an impact on the overall
business climate.
Political System, Schedule for Elections and Orientation of Major
Political Parties
Sri Lanka has been a functioning democracy since gaining independence in
1948. It has a strong executive presidency and a unicameral parliament.
Legislative drafting is generally handled by the executive. However,
constitutional reform packages under active consideration could lead to
broader powers for parliament and the prime minister. Power in almost
all spheres of public life rests with the center, but proposals to
devolve considerable power to smaller units of regional or local
government are also under review.
Local government elections may be held late in 1995, but no firm date
has been set and the polls may be deferred.
The Sri Lanka Freedom Party (SLFP) is the dominant partner in the
governing People's Alliance (PA) coalition which came to power through
parliamentary and presidential elections in late 1994. The SLFP has
moved away from its socialist roots and now endorses free-market
policies and a strong private sector. It pursues a vigorous non-
aligned foreign policy, emphasizing Sri Lanka's relations with India and
southeast asian neighbors, while also maintaining strong trade relations
with the West.
The United National Party (UNP) is the leading opposition party. During
its seventeen years in office, the UNP was a strong advocate of an open
economy and was instrumental in building closer economic relations with
the West. Like the SLFP, the UNP remained non-aligned diplomatically.
Chapter IV
Marketing U.S. Products And Services
Distribution and Sales Channels
International trade is centered in Colombo, with more than 90 percent of
all imports and exports passing through the Port of Colombo. While
there are many medium to small importers, 20 to 30 relatively large
firms handle the bulk of the international traffic. Only a few
importers have branches or distribution networks elsewhere in the
country; most simply wholesale direct to regional distributors or to
retailers. The government's role in trade and distribution is minimal,
except in the case of the food sector. Inland transport is dominated by
independent truckers.
Use of Agents/Distributors; Finding a Partner
Most foreign firms select their local agents on the basis of financial
stability. Sales on a commission basis are common. As the largest
trading houses represent many foreign principals, medium and smaller
firms often make better representatives. If products require stocking
or servicing, however, large firms are better. Commissions paid to
agents range from 5 percent to 20 percent depending on sales volume and
the product price. Agency relationships can be terminated for
inefficiency, misappropriation, or incapacity to fulfill contractual
obligations.
Franchising
Franchising is not as common as agent/distributorships. The few U.S.
franchises include Coca-Cola, Pepsi, and Pizza Hut.
Direct Marketing
Direct marketing usually takes place when the product is sold on a one-
time or irregular basis. Recruiting an agent is crucial to winning
government tenders.
Joint Ventures/Licensing
Joint ventures have become popular in recent years, particularly in
export-oriented projects. Joint ventures are eligible for the same
preferences and tax benefits as domestic companies. There are no
restrictions on foreign ownership, except for certain specified sectors.
Steps to Establishing an Office
A foreign company may transact business in Sri Lanka through a branch or
a representative office. Before it can establish and transact business,
the branch must be registered as a foreign company under Sri Lanka's
Companies Act. The Registrar of Companies is the authority. The branch
must file the statutory company documents (annual accounts, returns to
be filed) as well as copies of accounting statements compiled under the
company's country of origin. There is also legal provision for a
company to be registered as an off-shore company, in order to carry on
business outside Sri Lanka.
Advertising and Trade Promotion
Advertising is becoming increasingly important as new TV channels and
radio stations are opened. Newspapers, radio and television all accept
commercial advertising. There are several English language newspapers,
as well as dailies in Sinhala and Tamil. Both the state and the private
sector run radio and TV stations. Trade exhibitions and fairs are
limited.
Major Newspapers
English: Daily News, The Island, Sunday Observer, Sunday Island, Sunday
Times, Sunday Leader
Sinhala: Dinamina, Silumina, Divayina, Lankadeepa
Tamil: Thinakaran, Virakesari
Selling to the Government
Most government purchases are made by public tenders, which are usually
advertised in the local media. Tender procedures are not-fully-
transparent and delays are common. Local agents are often the key to
winning these tenders.
Protecting Your Product from IPR Infringement
All trademarks, designs, and patents must be registered with the
Registry of Patents and Trademarks. Sri Lanka has signed a bilateral
agreement with the U.S. to protect intellectual property rights and is a
signatory to the Paris and Berne Conventions. Registered trademarks are
valid for 10 years, patents for 15 years, and industrial designs for 5
years.
Need for a Local Attorney
The Embassy's Consular section maintains a list of attorneys in Sri
Lanka, a copy of which may be obtained on request.
Chapter V
Leading Sectors For U.S. Exports And Investment
Best Prospects for Agricultural Products
Sri Lanka has been an excellent, consistent market for U.S wheat.
Exports were $84 million in 1994. With a combination of sizable PL-480
and EEP programs, the U.S. supplied 99 percent of Sri Lanka's wheat in
1994. Continuity of PL-480 and EEP programs are crucial to maintain the
U.S. market share. The fresh fruit and frozen food markets in Sri Lanka
have developed in recent years to around 2 million dollars, opening
avenues for U.S. suppliers. Australia is America's major competitor in
food products.
Best Prospects for Non Agricultural Products
(a) Telecommunications Equipment
Rank of sector: 1
Name of sector: Telecommunications equipment
ITA industry code: TEL
1994 1995 1996
(in $ millions)
Total market size 29 40 58
Local Production 0 0 0
Total Exports 0 0 0
Total Imports 29 40 58
Imports from the U.S. 2 NA NA
Note: The above statistics are unofficial estimates
The Government of Sri Lanka (GSL) is in the process of expanding its
telecommunications network. The country is expected to have at least
340,000 telephone lines by the end of 1996 (from the current 183,000).
In the last three years U.S. companies have sold major earth satellite
stations and international switches to Sri Lanka Telecom. As the
network expands, business and consumer interest in related
telecommunications equipment, including more sophisticated information
and data transfer technology, is increasing. Japan, U.K., Malaysia,
Germany, South Korea, Finland, and France are America's main competitors
in this market.
(b) Medical Equipment
Rank of sector: 2
Name of sector: Medical equipment
ITA industry code: MED
1994 1995 1996
(in $ millions)
Total market size 40 44 0
Local Production 0 0 0
Total Exports 0 0 0
Total Imports 40 44 48
Imports from the U.S. 2 NA NA
Note: The above statistics are unofficial estimates
Sri Lanka is dependent on imports for all of its requirements of medical
equipment. The medical equipment market in Sri Lanka is estimated to be
around $40 million a year. Private hospitals are doing well and
expanding. There are plans to build two large hospitals with foreign
collaboration. Diagnostic equipment, operating theater equipment,
intensive-care equipment, and clinical analyzers and hematology
equipment offer the best sales prospects for U.S. firms. U.S. share in
the market is limited to around 5 percent currently.
(c) Textile Fabrics
Rank of sector: 3
Name of sector: Textile Fabrics
ITA industry code: TXF
1994 1995 1996
(in $ millions)
Total market size 1,025 1,100 1,160
Local Production 150 165 180
Total Exports NA NA NA
Total Imports 873 935 980
Imports from the U.S. 20 23 25
Note: The above statistics are unofficial estimates
Apparel manufacturing is Sri Lanka's most important industry. In 1994
this market generated more than $1.5 billion in Sri Lankan export sales
(nearly 50 percent of total exports), of which the U.S. imported more
than half. Sri Lanka currently imports over $870 million worth of
fabric annually, of which only about $20 million is from the U.S.
Demand for high-quality fabric used for export apparel will remain high.
Hong Kong, South Korea, Taiwan, and India are the main suppliers of
textiles to Sri Lanka.
(d) Aircraft parts
Rank of sector: 4
Name of sector: Aircraft Parts
ITA industry code: AIR
1994 1995 1996
(in $ millions)
Total market size 74 78 82
Total Exports 0 0 0
Total Imports 74 78 82
Imports from the U.S. 42 NA NA
Note: The above statistics are unofficial estimates
This sector continues to be one of the largest for U.S. exports to Sri
Lanka. Air Lanka, Sri Lanka's national carrier, has several U.S.
aircraft (Lockheed Tri-Stars) and the Sri Lanka Air Force has several
helicopters which require spare parts.
(e) Cotton
Rank of sector: 5
Name of sector: Raw Cotton
ITA industry code: YRN
1994 1995 1996
(in $ millions)
Total market size 35 38 42
Local Production 1 1 1
Total Exports 0 0 0
Total Imports 34 37 41
Imports from the U.S. 5 NA NA
Note: The above statistics are unofficial estimates
Sri Lanka is currently expanding domestic textile production. Expansion
of the Sri Lankan textile industry is resulting in an increased demand
for cotton. U.S. sales of cotton increased from a little over $1
million in 1993 to nearly $5 million in 1994, about 15 percent of Sri
Lanka's total cotton imports.
(f) Textile Machinery
Rank of sector: 6
Name of sector: Textile Machinery
ITA industry code: TXM
1994 1995 1996
(in $ millions)
Total market size 36 39 41
Local Production 0 0 0
Total Exports 0 0 0
Total Imports 36 39 41
Imports from the U.S. 1 NA NA
Note: The above statistics are unofficial estimates
Sri Lanka is currently expanding domestic textile production, thereby
creating opportunities for U.S. equipment. Sri Lankan garment
manufacturers are increasingly using computer-assisted pattern design
and cutting and sewing technology, in which the U.S. has a competitive
advantage.
(g) Computers
Rank of sector: 7
Name of sector: Computers and Computer Peripherals
ITA industry code: CPT
1994 1995 1996
(in $ millions)
Total market size 19 20 21
Local Production 0 0 0
Total Exports 0 0 0
Total Imports 19 20 21
Imports from the U.S. 4 NA NA
Note: The above statistics are unofficial estimates
Information processing in Sri Lanka has become increasingly widespread
and sophisticated. In recent years computer hardware and software sales
have increased rapidly.
Several U.S. companies are already present in this market. The most
promising subsectors within this sector are personal computers and
printers.
(h) Power and Energy
Rank of sector: 8
Name of sector: Electrical Power Systems and Energy
Conservation Technology
ITA industry code: ELP
Electricity demand is growing at 10 percent per year and production is
hard-pressed to satisfy demand. The government hopes to add an
additional 780MW of generating capacity between now and 2001 at an
estimated cost of $1.8 billion. The sector is open for foreign
participation. Substantial opportunities exist for U.S. firms to supply
combined cycle, conventional oil, and coal-fired plants. Given excess
demand and rising energy prices, there are also opportunities for the
sale of conservation technology.
(i) Pollution Control Equipment
Rank of sector: 9
Name of Sector: Pollution Control Technology
ITA industry code: POL
Urbanization and industrialization present challenges to Sri Lanka's
environment. The U.S. is distinguished in pollution prevention and
control technology and should capitalize on these markets, focusing on
solid waste removal, recycling, treatment and disposal technology.
United States-Asia Environmental Partnership (US-AEP) will set up an
office in Sri Lanka soon to focus on this sector.
Investment Opportunities
The following sectors and products have the greatest potential for
expanded U.S. investment:
Infrastructure: The government has initiated plans for the construction
of infrastructure on a build-own-operate or a build-operate-transfer
(BOO/BOT) basis. Plans include power production ($1.8 billion), rail
and road development ($300 million), port expansion ($150 million), port
development ($750 million), water supply and sanitation ($40 million),
and waste management ($20 million).
Privatization: The Sri Lankan government has undertaken a major
privatization program. Current plans include divesting state-owned
plantations to private companies on fifty-year leases, and privatization
of several medium and small manufacturing and trading enterprises.
Restructuring of the national air line Air Lanka with private sector
participation is also planned.
The Government of the United States acknowledges the contribution that
outward foreign direct investment makes to the U.S. economy. U.S.
foreign direct investment is increasingly viewed as a complement or even
a necessary component of trade. For example, roughly 60 percent of U.S.
exports are sold by American firms that have operations abroad.
Recognizing the benefits that U.S. outward investment brings to the U.S.
economy, the Government of the United States undertakes initiatives,
such as Overseas Private Investment Corporation (OPIC) programs,
investment treaty negotiations and business facilitation programs, that
support investors.
Chapter VI
Trade Regulations and Standards
Tariff and Non-Tariff Barriers
Sri Lanka has a three-band import tariff schedule based on the
harmonized system of classification. The three bands are 10, 20, and 35
percent. Most consumer goods, agricultural products, chemicals and
other intermediate goods manufactured locally are subject to a 35-
percent tariff. With a few exceptions, raw materials and machinery and
equipment are subject to a 10-percent tariff. Parts and components used
in local industry are subject to a 20-percent tariff. Motor vehicles,
tobacco, cigarettes and liquor do not come under the three-band rate
structure. Motor vehicle duties vary between 50 and 100 percent.
Imports for most export-oriented industries are either entered duty free
or entitled to duty rebates.
Other taxes include a 4.5 percent defense levy, a three-tiered turnover
tax, and an excise tax on selected consumer and non-essential goods. A
10 percent export-development cess (surcharge) is applicable on the few
items with an import duty of 45 percent or more. All taxes except for
this cess are also charged on locally manufactured goods. The
government has announced that it will adopt a value-added tax (VAT)
system in October 1995, which is likely to replace most of these taxes.
Customs Valuations
Most of the import duty rates are ad valorem, calculated on the CIF
value. However, the turnover tax and the defense levy on imports are
determined after the CIF value plus import duties has been marked up by
an additional 25 percent to reflect the approximate retail price.
Import Licenses and Import Controls
Over the years the government has liberalized most license controls.
Wheat is still controlled. Only a few other items remain under license
control, mostly for health and national security reasons. The import of
drugs to the country is subject to the approval of the Drugs and
Cosmetic Devices Committee of the Ministry of Health. Similarly, the
import of firearms and ammunition except for use by the armed forces and
police is subject to the approval of the Ministry of Public
Administration. There are restrictions on the import of toxic and
hazardous chemicals and pesticides.
Import/Export Documentation
Most trade is conducted on the basis of letters of credit (LC). An LC is
required for imports over $7,500. Most LC's are valid for 180 days
under documents against payment terms. Documents against acceptance
terms (DA) may be used for the import of raw materials for export
processing. Under DA terms the supplier is expected to give credit for
a maximum of ninety days.
Labeling and Marking Requirements
All labeling of packages should be in large bold lettering in indelible
ink or paint. For container cargo, the weight, center of gravity, and
sling or grab points may be marked to help careful handling. Goods
shipped to Sri Lanka should be well packed in order to withstand heat,
humidity, rough handling and pilferage. Shipping marks should show
consignee order number and port of entry. Shipments by air cargo
require the same documentation as those arriving by sea.
Standards
The Sri Lanka Standards Institute sets product standards. There are
over 1200 standards relating to manufactured products, agricultural
commodities, industrial raw materials, and production processes. A few
of them are mandatory. Sri Lanka has already adopted ISO 9000 series
standards (ISO 9000 to ISO 9004) on quality management and assurance and
ISO 10011 standards on quality management audit. The rest of the
standards in the ISO 9000 family are being studied.
Chapter VII
Investment Climate
Openness to Foreign Investment
The Board of Investment (BOI) is the primary government authority
responsible for foreign investment. Foreign participation can be up to
100 percent of equity in Sri Lankan companies in most sectors. BOI, a
member of the World Export Processing Zones Association, is moving close
to providing 'one-stop' service for foreign investors, including
approval of projects, licenses, establishing tax incentives, and
assistance in procurement. The export sector, tourism and
infrastructure projects such as telecommunications, transport, housing
and hospital projects enjoy preferential treatment.
The BOI gives automatic approval for most foreign investments.
Investment in restricted sectors is subject to screening where foreign
equity is to exceed 40 percent. The restricted sectors include:
shipping and travel agencies; freight forwarding; professional services;
education; mass communication; telecommunications; supply of water;
mining; deep sea fishing; timber-based industries; tea, rubber, and
coconut industries.
Branch or liaison offices of companies in certain sectors also have
various restrictions on foreign equity that are determined by
appropriate regulatory authorities. The screening mechanism for the
most part is routine and non-discriminatory. These sectors are: banking;
finance; insurance; air transport; coastal shipping; military hardware
and munitions manufacturing; production of poisons, narcotics, drugs, or
hazardous or carcinogenic materials; production and distribution of
energy and power; large-scale mechanized mining; and lotteries.
Foreign investment is not permitted in the following businesses: non-
bank money lending; pawnbroking; retail trade with a capital investment
of less than $1 million; personal services other than for the export or
tourism sectors; and coastal fishing.
The BOI is empowered to offer special incentives for firms involved in:
(a) the manufacture and export of non traditional products
and services,
(b) the manufacture and supply of fabric and other
accessories for the garment industry, and
(c) the development and export of computer
software (minimum investment $250,000)
These incentives include:
- Preferential tax at 15 percent per annum for a period of twenty years.
- Duty free imports of plant, machinery, raw material and other project
related goods as approved by the BOI.
- Exemption from turnover tax and excise duty for imports of export
companies.
- 15 percent income tax on emoluments of expatriate employees during the
first three years.
- No restriction on repatriation of dividends, profits etc.
- Free transferability of shares.
BOI also offers other incentive programs including:
- A tax holiday of five years for the growing and processing of
agricultural products. For the export sector a preferential tax at
15 percent per annum for a period of fifteen years will follow the
tax holiday.
- A preferential tax at 15 percent per annum for large infrastructure
projects (minimum investment $25 million) for a period of fifteen
years.
- A preferential tax at 15 percent for a period of fifteen years for the
construction and operation of resort hotels (minimum investment
$250,000).
- A preferential tax at 15 percent for a period of seven years for
hospitals, warehouses etc., with a minimum investment of $2.5 million,
and for housing projects with a minimum investment of $1 million.
Conversion and Transfer Policies
Sri Lanka has no exchange controls on current account transactions.
There are no barriers, legal or otherwise, to the expeditious remitting
of corporate profits and dividends for foreign enterprises doing
business in Sri Lanka. Remittances of business fees (management fees,
royalties, and licensing fees) are also freely permitted as well as
funds for debt service, capital gains, etc. In addition, all stock
market investments can be remitted without prior approval of the Central
Bank. Investment returns can be remitted in any convertible currency at
the legal market rate. Some controls exist on capital account
(investment) transactions.
Approximately $7.5 million is used annually by the U. S. Embassy and
other U.S. government institutions in Sri Lanka which can be used to pay
an inconvertibility claim by OPIC. The Embassy purchases local currency
at the financial rate. The currency is expected to depreciate by no
more than 10 percent over the next year.
Expropriation and Compensation
Since economic liberalization policies began in 1978, the Sri Lankan
government has not expropriated a foreign investment. Investors in the
EPZs have the right to arbitration under the International Center for
the Settlement of Investment Disputes.
Dispute Settlement
Foreign investments are guaranteed protection by the constitution of Sri
Lanka. The government has entered into 18 investment protection
agreements with foreign governments (including the United States) and is
a founding member of the Multilateral Investment Guarantee Agency (MIGA)
of the World Bank. The government has ratified the provisions of the
Convention on Settlement of Investment Disputes, which provides the
mechanism and facilities for international arbitration through the
International Center for the Settlement of Investment Disputes of the
World Bank (ICSID). The U.S.-Sri Lanka Bilateral Investment Treaty
(BIT) was ratified by both governments in early 1993.
The U.S. government maintains that Sri Lanka's policy of not conferring
national treatment on U.S. companies in the freight-forwarding industry
is a violation of the BIT. The two governments are currently consulting
to resolve this issue. Another investment dispute, dating from the
early 1980s and relating to a joint venture between a U.S. company and a
Sri Lankan parastatal company, is also under bilateral discussion.
Sri Lankan commercial law is almost entirely statutory. The law was
codified before independence in 1948, and reflects the letter and spirit
of British law of that era. It has, by and large, been amended to keep
pace with subsequent legal changes in the U.K. The court system is free
from government interference. Procedures exist for enforcing foreign
judgments. Several important legislative enactments regulate commercial
matters: the Board of Investment Law, the Code of Intellectual Property
Law, the Companies Act, the Securities Council Act, the Banking Act and
the Industrial Promotion Act. The Companies Act provides for the winding
up of insolvent companies. Secured interests in property are recognized
and enforced. A reliable registration system exists for recording
property. Litigation can be very time consuming, but legislation passed
in 1995 provides for judicial enforcement of arbitral awards.
Political Violence
Sri Lanka has been plagued by ethnic conflict since 1983. The fighting
centers in northern and eastern Sri Lanka, but other parts of the
country have been the scene of sporadic terrorist attacks. Tourists and
businesses have not been terrorist targets.
Performance Requirements/Incentives
Foreign investment is encouraged in enterprises which involve extensive
use of foreign capital or sophisticated technology. With few
exceptions, foreign investors are not expected to reduce their equity
over time or to transfer technology within a specified period of time.
Firms enjoying preferential incentives in the manufacturing sector are
usually required to export 90 percent of production. Firms engaged in
the export of computer software should export at least 70 percent of
production. Such firms also are expected to perform according to a
mutually agreed program. Maintaining a certain level of employment is a
condition in some enterprises, especially in the garment industry.
Right to Private Ownership and Establishment
Private entities are free to establish, acquire and dispose of interests
in business enterprises. Foreign ownership is allowed in most of the
sectors. However, private land ownership is limited to twenty hectares
per person. About 80 percent of the land in Sri Lanka is owned by the
government, including most tea, rubber and coconut plantations.
Protection of Property Rights
Intellectual property is protected through the Intellectual Property Act
of 1979 which governs copyrights, industrial designs, patents,
trademarks, trade names and unfair competition. All trademarks,
designs, and patents must be registered with the government's Registry
of Patents and Trademarks.
Infringement of intellectual property is a punishable offense under the
law. Intellectual property rights come under both criminal and civil
jurisdiction. Relief available to owners includes injunctive relief,
seizure and destruction of infringing goods, and prohibition of
importation.
Sri Lanka is a party to major intellectual property agreements including
the Berne Convention for the protection of literary and artistic works,
the Paris Convention for the protection of industrial property, the
Madrid agreement for the repression of false or deceptive indication of
source on goods, the Nairobi treaty, the Patent Co-operation treaty, the
Universal Copyright convention and the convention establishing the World
Intellectual Property Organization (WIPO).
Sri Lanka's intellectual property law is based on the WIPO model law for
developing countries. Sri Lanka and the U.S. have signed a bilateral
agreement for the protection of intellectual property rights. Sri Lanka
is in the process of revising its intellectual property law to conform
to these agreements.
Patents are granted for inventions, with the following exceptions:
discoveries, scientific theories and mathematical methods, plant or
animal varieties or essentially biological processes for the production
of plants and animals, other than microbiological processes and the
products of such processes, business rules and methods, methods of
treatment by surgery or therapy, and diagnostic methods practiced on
human or animal body. A patent is valid for fifteen years from the date
of grant, but must be renewed annually.
Copyrights are not registered. A work is protected automatically by
operation of law. Original literary, artistic, and scientific works are
protected. At present, copyright protection is not extended to computer
programs, databases, and semi conductor lay out designs. However, under
the U.S.-Sri Lanka bilateral agreement, U.S. software producers receive
copyright protection in Sri Lanka.
Sri Lanka recognizes both trade marks and service marks. The exclusive
right to a mark is acquired by registration. A mark may consist of
words, slogans, designs etc. Protection also is available to well known
marks not registered in Sri Lanka. Registered trademarks are valid for
ten years.
Trade secrets are not protected under the current law. Provision for
trade secrets will be introduced in the proposed amendments to the law.
Efficient Capital Markets and Portfolio Investment
Commercial banks are the principal source of finance. Traditionally bank
loans were the most widely used credit instrument for the private
sector. However, leading private sector companies have recently started
to raise capital through other credit instruments like corporate bonds
and commercial paper. Rights issues are becoming popular among
companies listed in the stock exchange for raising capital.
There is an active and relatively competent accounting profession, based
on the British model. The source of accounting standards is the
Institute of Chartered Accountants of Sri Lanka (ICASL) and standards
are constantly updated to reflect current international accounting and
audit standards. Due to a lack of an adequate enforcement mechanism,
however, problems with the quality and reliability of financial
statements exist.
Accounting standards are not mandated by law, other than for publicly
quoted companies. Furthermore, auditors' opinions are not mandatory
even for statements of publicly quoted companies. The World Bank has
accordingly stressed the need for further improvements. USAID has
provided technical and institutional assistance in this area. Moves are
now underway to provide a mechanism for the enforcement of accounting
standards, which will include penalties for non-compliance.
The Securities and Exchange Commission regulates the securities market
in Sri Lanka. Foreign investors can freely purchase up to 100 percent
of equity in Sri Lankan companies in permitted sectors. In order to
facilitate portfolio investments, country funds and regional funds are
also allowed to invest in Sri Lanka's stock market; such funds must gain
approval to operate in Sri Lanka. These funds make transactions through
Share Investment External Rupee Accounts maintained in commercial banks.
The Colombo Stock Exchange (CSE), while small by big emerging market
standards, is one of the most efficient in the region. It has a fully
computerized clearing and settlement system. The CSE is now in the
process of automating trading, with the goal of moving to screen based
trading by September 1995. Fifteen local and foreign joint venture
brokers currently operate at the CSE.
Bilateral Investment Agreements
The Government of Sri Lanka has signed investment protection agreements
with the United States (signed in May 1993) and the following countries:
Belgium
Peoples Republic of China
Denmark
France
Germany
Italy
Japan
Korea
Luxembourg
Malaysia
The Netherlands
Norway
Romania
Singapore
Sweden
Switzerland
United Kingdom (Extended to Hong Kong)
OPIC and Other Investment Insurance Programs
The U.S. and Sri Lanka concluded an agreement in 1966 (and renewed in
1993) that allows the Overseas Private Investment Corporation (OPIC) to
provide investment insurance guarantees for U.S. investors. OPIC
currently insures banking, manufacturing and service investments in Sri
Lanka. Sri Lanka's membership in the Multilateral Investment Guarantee
Agency (MIGA) offers additional safeguards against non-commercial risks.
Labor
Sri Lanka's labor force is literate and well-educated, although weak in
technical skills. Two-thirds of the labor force is male and one-third
is female. The unemployment rate, according to the Department of Census
and Statistics, is around 13 percent with an estimated 840,000 people
out of work (excluding the north and east). There is a shortage of
technical and managerial personnel. Foreign personnel are permitted
when there is a demonstrated shortage of qualified local labor. Labor
is available at a relative low cost.
Most permanent full-time workers are covered by laws pertaining to
minimum hours of work, minimum wage, leave, the right of association,
and safety and health standards. Sri Lanka has ratified 29
international labor conventions.
Free Trade Zones
Sri Lanka has three free trade zones called export processing zones.
There are over 140 foreign export processing enterprises operating in
the zones. Present government policies now permit foreign investors to
establish factories in almost any part of the country and still enjoy
preferential treatment.
Capital Outflow Policy
Sri Lanka does not encourage investment in other countries. Exchange
controls on capital outflows exist and are enforced by the Central Bank.
Chapter VIII
Trade and Project Financing
Banking System
The banking system includes the Central Bank of Sri Lanka, two large
state-owned commercial banks, four private domestic commercial banks,
seventeen foreign banks, a national savings bank, twelve regional rural
development banks, two development finance institutions, a mortgage bank
and four merchant banks. There are two American banks among the foreign
commercial banks in Sri Lanka. The Central Bank has recently approved
three new Sri Lankan commercial banks. The domestic commercial banks
operate a wide network of branches throughout the island. All
commercial banks operate foreign currency banking units (FCBU), and
conduct off-shore business and finance projects approved by BOI. All
Sri Lankan commercial banks have correspondent relationships with U.S.
banks.
Foreign Exchange Controls Affecting Trading
There are no foreign exchange controls affecting active trading. Sri
Lanka removed all exchange control restrictions on current account
transactions effective March 15, 1994.
General Financing Availability
Commercial banks provide term loans and working capital loans for
importers. High interest costs (running over 18 percent) are a fact of
life faced by the local business community, but foreign investors and
BOI-approved local firms can raise finances through dollar interest
rates. Two local development banks provide development financing and
equity.
Most foreign owned firms must have foreign sources of financing for
fixed and working capital requirements. Foreign majority joint ventures
are not allowed automatic access to local credit markets. Such firms
must get approval from the Central Bank on a case-by-case basis.
Project Financing Available and Types of Projects Supported
Funds provided through multi-lateral agencies have been the major source
of term lending. The Asian Development Bank and the World Bank are the
major sources of project financing.
Existing World Bank IDA loans:
- $60 million available during 1994 -1998 for private sector enterprises
engaged in productive operations and services.
Proposed IDA loans:
- $15 million to promote alternative energy supplies
- $50 million for private infrastructure development
- $45 million for road development
- $85 million for environmental policy and investment
- $38 million for environmental improvement
Existing ADB loans:
- $75 million to finance foreign currency investments of private
enterprises in the manufacturing, services and tourism sectors.
- $50 million for road development
Proposed ADB loans:
- $60 million for the plantations
- $80 million for power system expansion
Chapter IX
Business Travel
Business Customs
The business language is English. Business cards are a necessity.
Courtesy is highly valued in Sri Lanka, and personal politeness plays a
major role in clinching deals. While punctuality is not as highly
prized as in the United States, most appointments and other commitments
are scrupulously observed.
Visas
U.S. tourists can enter Sri Lanka without a visa and will be entitled to
remain for a maximum period of ninety days without any payment. U.S.
nationals coming for business purposes are entitled to entry for a
maximum period of thirty days on arrival. Extensions can be obtained
from the Office of the Controller of Immigration and Emigration, Chaitya
Road, Colombo 1. Phone: 436353; Fax: 437040. Any period in excess of
three months incurs a temporary residence tax of Rs 2,500 (about $50).
Under no circumstance will a foreigner who enters Sri Lanka on a tourist
visa be permitted to change the status of the visa. Visitors may apply
for Sri Lankan visas at the Sri Lankan Embassy in Washington, D.C., Sri
Lanka's mission to the United Nations in New York, and Honorary
consulates in Chicago, Los Angeles and New Orleans.
The Sri Lankan Government has introduced a resident guest scheme under
which investors who remit a minimum of $150,000 and professionals whose
expertise is not readily available here are entitled to receive resident
visas for five years. The implementing agency for this scheme is the
BOI.
There is no restriction on the import of foreign currencies. Amounts
exceeding $10,000 must be declared on arrival and those which are not
used in Sri Lanka may be exported on departure. Currency conversion
must only be done at authorized banks, dealers and money changers. Most
leading hotels provide currency conversion facilities.
Holidays
Sri Lankan holidays are connected with the country's four religions:
Buddhism, Hinduism, Islam and Christianity. Dates change from year to
year. Holidays with fixed dates include independence day (February 4),
National Heroes Day (May 22), Christmas (December 25). Each full moon
is marked by a Poya Day holiday.
The following is a list of holidays for 1996.
January 05 Duruthu Poya
January 15 Thai Pongal
February 04 National Day
February 04 Navam Poya
February 17 Maha Sivarathri
February 21 Ramazan Festival
March 04 Medin Poya
April 03 Bak Poya
April 05 Good Friday
April 12 Day Prior to Sinhala and Tamil New Year
April 13 Sinhala and Tamil New Year
April 29 Hadji Festival
May 01 May Day
May 03 Vesak Poya
May 04 Day Following Vesak Poya
May 22 National Heros Day
June 01 Poson Poya
June 30 Special Bank Holiday
July 29 Holy Prophet's Birthday
July 30 Esala Poya
August 28 Nikini Poya
September 26 Binara Poya
September 26 Bandaranaike Commemoration Day
October 26 Vap Poya
November 10 Deepavali Festival
November 24 Il Poya
December 24 Unduvap Poya
December 25 Christmas
December 31 Special Bank Holiday
Business Infrastructure
With over 25,000 kilometers of paved road, all parts of the island are
accessible. Radio operated taxi cabs and motorized trishaws are freely
available. International direct dialing is available and cellular
telephones have become increasingly popular. International mail and
speedy courier services are also available. Several five-star hotels
provide accommodations for business travelers in Colombo. Housing
facilities for expatriates are satisfactory. Several luxury apartment
blocks now under construction will further improve housing facilities.
Health care facilities in the country are reasonable, and have been
earmarked by the government for further development. Several well-
stocked supermarkets are located in Colombo.
Appendices
Appendix A - Country Data
- Population: 17,865,000
- Population growth rate (percent): 1.4
- Religions: Buddhism, Hinduism, Christianity, Islam
- Government system: President and Parliament
- Languages: Sinhala, Tamil and English
- Work week: Monday to Friday
Appendix B - Domestic Economy
---------------------------------------------------------------
1994 1995 1996
Proj. Est.
---------------------------------------------------------------
Domestic Economy (in $ millions, except where noted)
- GDP(a) 11,711 13,200 14,900
- GDP growth rate 5.6 5.0 6.0
- GDP per capita($) 654 700 745
- Government spending(% of GDP) 29.0 28.3 28.0
- Inflation 8.4 8.0 10.0
- Unemployment 13.1 13.0 13.0
- Foreign exchange reserves 2,614 2,700 2,825
- Average exchange rate
(Rs. per $) 49.42 51.90 54.50
- Foreign debt 8,880 9,000 9,150
- Debt service ratio 11.0 11.0 11.0
- U.S. economic assistance(b) 70.5 22.2 28.0
(a) at current market prices
(b) includes PL480 assistance
Appendix C - Trade
(in $ millions, except where noted)
- Total exports 3,208 3,550 3,950
- Total imports 4,779 5,300 5,950
- U.S. imports from Sri Lanka 1,115 1,190 1,275
- U.S. exports to Sri Lanka 197 210 240
- U.S share of Sri Lanka's imports(%) 4 4 4
Imports of manufactured goods
- Total (from world) 3,178 3,525 3,950
- From U.S. 103 115 135
- U.S. share of manufactured imports(%) 3.2 3.3 3.4
Imports of agricultural goods
- Total (from world) 772 850 900
- From U.S. 90 95 105
- U.S. share of agricultural imports(%) 12 12 12
Trade balance with three leading partners in 1994
United States of America +917
Japan -362
India -380
Principal U.S. exports in 1994 (top 5 by 4 digit tariff item)
1. 1001 Wheat 84
2. 8411 Turbojets/engines for civil air craft 30
3. 8525 Communication equipment 12
4. 8803 Parts of air craft and helicopters 9
5. 5906 Rubberized textile fabrics 5
Principal U.S. imports in 1994 (top 5 by 4 digit tariff item)
1. 6204 Women's garments 31
2. 6206 Women's/girls blouses 15
3. 6205 Men's shirts 9
4. 6201 Men's anoraks 9
5. 6203 Men's trousers/shorts 8
Sources: Central Bank, U.S. Department of Commerce, Sri Lanka Customs
and Embassy estimates
Appendix D: Investment statistics
Estimated total foreign investment by sector
(in $ millions)
Total Annual Inflow Total
end 1992 1993 1994 end 1994
Food & beverage 9 2 4 15
Textiles/apparel,leather 156 28 20 204
Chemicals, rubber and plast. 114 13 7 134
Non met. mineral products 22 2 3 27
Fabricated metal, machinery 51 1 - 52
Other manufactured 73 38 - 111
Services 126 105 125 356
Unclassified 118 - - 118
Total 669 189 158 1,017
Sources: Board of Investment, Central Bank, Finance Ministry, and
Embassy estimates
Estimated total foreign investment by country
(in $ millions)
Total Annual Inflow Total
end 1992 1993 1994 end 1994
South Korea 121 27 NA NA
Australia 81 10 NA NA
Sri Lanka 69 76 NA NA
Hong Kong 49 11 NA NA
Singapore 75 8 NA NA
Japan NA 8 NA NA
USA NA 5 NA NA
United Kingdom NA 3 NA NA
India NA 3 NA NA
Other/
unclassified NA 38 NA NA
Total 661 189 158 1,017
NA: not available
Sources: Board of Investment, Central Bank, Finance Ministry, and
Embassy estimates
Major Foreign Investors:
Major U.S. investors include: Eveready Battery, Smart Shirts (a
subsidiary of Kellwood Industries), Citibank, American Express Bank, and
CPC International. More recent investments from the U.S. are Caltex,
Cargill Inc., and Intellical. The major non-U.S. investors include:
Unilevers, Nestle's, British American Tobacco Company, Mitsui, Pacific
Dunlop/Ansell, Prima, FDK and S.P. Tao. Leading foreign investors which
have acquired stakes in private companies include Norsk Hydro of Norway,
Kabool Spinning and Textile of Korea, Mitsubishi Corporation of Japan,
C. Itoh of Japan, Tongyang Nylon Co of Korea and Tawakkal Group of
Pakistan.
Appendix E - U.S. and Country Contacts
Government Agencies
Board of Investment of Sri Lanka (BOI)
A. de Vass Gunawardene, Director General
P.O.Box 1768, Colombo 1.
Phone: 94-1-422407
Fax: 94-1-447995
Department of Commerce
N.R. Meemaduma, Director
"Rakshana Mandiraya" Vauxhall Street, Colombo 2
Phone: 94-1- 430068 or 329733
Fax: 94-1-430233
Ministry of Finance
A.S. Jayawardena, Secretary
Galle Face Secretariat, Colombo 1
Phone: 94-1-431761
Fax: 94-1-433349
Central Bank of Sri Lanka
H.B. Disanayake, Governor
Janadhipathi Mawatha, Colombo 1
Phone: 94-1-421191
Fax: 94-1-440353
Ministry of Foreign Affairs
R.C.A. Vandergert, Secretary
Republic Building, Colombo 1
Phone: 94-1-325371
Fax: 94-1-446091
Department of Immigration & Emigration
J.A. Ariyasena, Controller of Immigration
Chaithiya Road, Colombo 1
Phone: 94-1-436354
Fax: 94-1-437040
Department of Inland Revenue
Mrs N.D. Ramachandran, Commissioner General
Sir Chittampalam A. Gardiner Mawatha, Colombo 2
Phone: 94-1-421241
Fax: 94-1-430816
Sri Lanka Customs
P. Weerasekera, Director General
Custom House, Times Building
Bristol Street, Colombo 1
Phone: 94-1-436354
Fax: 94-1-446364
Ministry of Post & Telecommunication
O.C. Jayawardene, Secretary
C.T.O. Building, Lotus Road, Colombo 1
Phone: 94-1-422591...422593
Fax: 94-1-541531
Ministry of Irrigation, Power and Energy
Jaliya Medagama, Secretary
500 T.B. Jayah Mawatha, Colombo 10
Phone: 94-1-687491/687492
Fax: 94-1-422066
Ministry of Industrial Development
W. Jayamaha, Addl Secretary (Textiles)
375 "Vilasitha Niwasa" Havelock Road, Colombo 6
Phone: 94-1-508032...508034
Fax: 94-1-503211
Securities and Exchange Commission of Sri Lanka
A. R. Wikramanayake, Director General
73 W A D Ramanayake Mawatha, Colombo 2
Phone: 94-1-438250
Secretariat for Infrastructure Development and Investment
Prathap Ramanujam, Director General
87 Horton Place, Colombo 7
Phone: 94-1-696947
Fax: 94-1-696952
Leading Trade Associations/Chambers of Commerce
American Chamber of Commerce of Sri Lanka
Steve Brittain, President
Colombo Hilton Hotel, Lotus Road, Colombo 1.
Phone: 94-1-544644
Fax:94-1-544657
Ceylon Chamber of Commerce
C. Jayasuriya, Secretary General
50 Nawam Mawatha, Colombo 2
Phone: 94-1- 421745...421747
Fax: 94-1-449352
National Chamber of Commerce,
A. Savanadasa, General Secretary
450 D.R. Wijewardene Mawatha, Colombo 10
Phone: 94-1-325271
Fax: 94-1-445409
Colombo Stock Exchange
Ajith Jayaratne, Chairman
2nd Floor Mackinnons Building, York Street, Colombo 1
Phone: 94-1-446581
Fax: 94-1-445279
Market Research Firms
Agro Skills Ltd
S. Kumaraswamy, Director
77/1 Isipathana Mawatha, Colombo 5
Phone: 94-1-584124
Fax: 94-1-584124
Resource Organization and Management Intl Ltd
Malwila Dissanayake, President & CEO
1 6th Lane, Galle Road, Colombo 3.
Phone: 94-1-575233
Fax: 94-1-575233
Teams (Pvt) Ltd
Wimal Gunawardhena, Chairman/Managing Director
P.O. Box 262, Colombo
Phone: 94-1-686429
Fax: 94-1-686947
Lanka Market Research Bureau Ltd
Shaheen Cader, Project Director
3rd Floor, 228 Galle Road, Colombo 4.
Phone: 94-1-500525
Fax: 94-1-500437
Lanka Asia Management Systems Co (Pvt) Ltd
C. Mahendran, Managing Director
Hotel Lanka Oberoi, Suite 340, 77 Steuart Place Col 3
Phone: 94-1-437437 or 421171
Fax: 94-1-437437 ext 341
Major Commercial Banks
American Express Bank Ltd
45 Janadhipathi Mawatha, Colombo 1
Phone: 94-1-431288/9, 323366
Fax: 94-1-448295
ANZ Grindlays Bank Ltd
37 York Street, Colombo 1
Phone:94-1-446150/7, 432286/8
Fax: 94-1-446158
Bank of Ceylon
4 Bank of Ceylon Mawatha, Colombo 1
Phone: 94-1-446790, 544333
Fax: 94-1-445798
Commercial Bank
21 Bristol Street, Colombo 1
Phone:94-1-447516, 430420
Fax: 94-1-449889
Citibank N.A.
67 Dharmapala Mawatha, Colombo 7
Phone:94-1-449061
Fax: 94-1-445487
Hatton National Bank
10 R.A. de Mel Mawatha, Colombo 3
Phone: 94-1-421885, 430908
Fax: 94-1-446312
Hongkong & Shanghai Banking Corporations Ltd
24 Sir Baron Jayatilaka Mawatha, Colombo 1
Phone: 94-1-325435/8, 446591/9
Fax:94-1-438585
Peoples Bank
75 Sir Chittampalam A. Gardiner Mawatha, Colombo 2
Phone: 94-1-324188, 326429
Fax:94-1-447671
Standard Chartered Bank
17 Janadhipathi Mawatha, Colombo 1
Phone: 94-1-326671/4, 433302
Fax: 94-1-432522
Seylan Bank Ltd.
33 Sir Baron Jayatilleke Mawatha, Colombo 1
Phone: 94-1-437901/7, 446517
Fax: 94-1-433072
Sampath Bank
55 D.R. Wijewardana Mawatha, Colombo 10
Phone: 94-1-448291, 434431
Fax: 94-1-434217
Multilateral Development Bank Offices
World Bank
Roberto Bentjerodt, Resident Representative
D.F.C.C. Building (1st Floor)
73/5 Galle Road, Colombo 3
Phone: 94-1-421840/448070
Fax: 94-1-440357
Multilateral Development Bank Office
Brenda Ebeling, Director
14th and Constitution Avenue, NW,
Washington D.C. 20007
Phone: 202-482-3399
Fax: 202-482-5179
U.S. Embassy Trade Personnel
Economic/Commercial Section
Nicholas H. Riegg, Economic/Commercial Counselor
U.S. Embassy, 210 Galle Road, Colombo 3
Phone: 94-1-448007
Fax: 94-1-437345
Economic/Commercial Section
Bruce Neuling, Commercial Attache
U.S. Embassy, 210 Galle Road, Colombo 3
Tel: 94-1-448007
Fax: 94-1-437345
U.S. Agency for International Development (USAID)
Jon Lindborg, Chief, Office of Private Sector Dev. & Housing
U.S.A.I.D. 356 Galle Road, Colombo 3
Phone: 94-1-574333
Fax: 94-1-574264
United States Asia Environment Partnership
M. Tiruchelvam, Office of Agriculture and Natural Resources
U.S.A.I.D. 356 Galle Road, Colombo 3
Phone: 94-1-574333
Fax: 94-1-574264
Washington Based USG Country Contacts
Department of State
Daniel Lawton, Sri Lanka Desk
Department of State, Washington D.C. 20520
Phone: 202-647-2351
Fax: 202-647-30001
Department of Commerce
John Simmons, Office of South Asia
Department of Commerce, Room 2029B HCHB, Washington D.C. 20230
Phone: 202-482-2954
Fax: 202-482-5330
Agency for International Development
James Van Den Bos, Sri Lanka Desk
Agency for International Development, Washington D.C. 20523
Phone: 202-647-9630
Fax: 202-647-7368
Appendix F - Market Research
List of Available Market Research
The following is a list of available and upcoming Industry Sector
Analysis (ISA) and International Market Insight (IMI) reports.
ISAs
Power sector analysis (upcoming)
Textile industry/market (1996)
IMIs
Medical equipment market (March 1995)
Food processing and packaging equipment (1996)
Hotel and restaurant equipment (1996)
List of USDA/FAS Commodity and Market reports
Grains report for 1995
Market for packaged consumer-ready foods (upcoming)
Market for fresh fruits and vegetables (upcoming)
The structure of the Sri Lankan food retailing industry (upcoming)
Appendix G - Trade Event Schedule
The Embassy and the American Chamber of Commerce of Sri Lanka (AMCHAM)
will jointly organize the second American Trade fair to be held on
October 31-November 3, 1995.
The Embassy will assist AMCHAM in organizing at least two seminars in
1996. The Embassy plans to hold one or two catalog shows in 1994,
depending on the availability and suitability of shows passing through
the region.
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