Sri Lanka's Openness to Future Business and Investments Research Paper
- Length: 5 pages
- Sources: 7
- Subject: History - Asian
- Type: Research Paper
- Paper: #67340754
Excerpt from Research Paper :
Sri Lanka's Openness To Future Business And Investments
Give an overview of Sri-Lanka and then make a recommendation about it and conclusion.
The official name of the country is Democratic Socialist Republic of Sri Lanka. The capital is Colombo and the size of the island is about sixty five thousand three hundred and thirty two square kilometers. The country has a population of: 21.3 million. The ethnic groups consist of Sinhalese, Tamils, Muslims, and others. The major religions are Buddhism, Hinduism, Islam, and Christianity. The democracy which attained independence on February 4, 1948 was a former colony of Britain. The country has a large tract of costal plains with mountain ranges in the southern end and its centre. With a tropical rainy climate with average rain fall of 50 in., to a maximum of 200 in., the country was found suitable by the colonial planters to grow cash crops like spices, tea, rice, rubber, coconut, and other crops which still are the basic agriculture. Agriculture contributes to eleven percent of the GDP. The polity consists of twenty five districts in nine provinces. The economy is recovering from internal strife and the GDP in 2010 rose to $49.55 billion. The current annual growth rate is about eight percent. (U.S. Department of State)
The economy of Sri Lanka depends on the mining of graphite, limestone, minerals, gems, and phosphate. Agriculture contributes less in the economic output. The major sector is the service sector especially tourism. Services contribute to fifty percent of the country's GDP. On account of the twenty or so years of civil conflict, the country continues to be impoverished and many plans for its development is underway and these are headed by the UN. The intervention seems to be working because in 2010, Sri Lanka had the GDP growth at 8% and the major industry -- tourism seem to have become streamlined. Exports grew at 17% in the year 2010 and the Colombo Stock Exchange has become the most stable market for the second year in a row. In the 2005 and later 2010 manifesto "President Rajapaksa's economic strategy called 'Mahinda Chintana' (Mahinda's Thoughts)" is the basis for economic programs. It has a major focus on poverty and creating new enterprises. (U.S. Department of State)
However the privatization of state enterprises, like banks, airports, and electrical utilities has been disallowed. The major sectors that have grown recently are shipping, tourism, aviation, exports and financial services. These are the important industries that contribute to the revenue and growth. (U.S. Department of State) After the 'Millennium Declaration', and world leaders have agreed to create and achieve development Goals by 2015, there has been a renewed interest in Sri Lanka's progress and the development goals of the country seem to be progressing especially in reducing poverty, mortality rates and gender equality. (UNDP, Sri Lanka launches its second Millennium Development Goals Progress Report) The country thus is growing fast and taking rapid strides in becoming a small economic power in the region.
2. After the overview concentrate on investments in gemstones, would be most beneficial, and therefore could represent an opportunity
Sri Lanka has great export potential and is already a leading exporter of many commodities that include tea, rubber, textile, gems, jeweler and other items. The country's earnings are $8.3 billion. Against this it imports textiles, oil, food, and machinery and the net import stood at $13.5 billion for 2010. The trade deficit was covered by the remittances from Srilankans abroad. There was also assistance from countries, and borrowed from funds. It is therefore very clear that the country must begin to see exporting precious stones which it must take up in earnest and also develop the infrastructure and the technology. The export market of Sri Lanka is vast. There is export to the United States, which is at present the biggest single-country market, with transactions to the value of $1.77 billion for 2010, and the United States is the big market for the country's garments the second being the European Union. Sri Lanka imports from India followed by the United States and the import is of machinery and mechanical appliances, "medical and scientific equipment, wheat, plastics, lentils, and paper." (U.S. Department of State)
The aspect of using the vast natural resources in the form of precious stones that is abundantly found all over Sri Lanka is still to be accomplished. While mining and coal are major industries the most prolific industry with the whole Island being a potential mine is the collection and mining of precious stones. The world's greater part of such semi-precious and precious stones are found in Sri Lanka. (Caldwell, 75) There are all types of precious stones except diamonds that are found all over the Island. The major stone is sapphire for which Sri Lanka has become famous. The rare stone is Ruby. Of the many gemstones, the stones of the corundum family can be made into the blue or yellow sapphire. The gem traders have been perfecting the art of making polished stones from the 1970s. There was a time initially when this corundum was sent to Thailand for processing and being made to precious stones and now the facilities and technology and qualified personnel are available in Sri Lanka which has since set up functional laboratories and units. (Gunawardena, 158)
This infrastructure should help in creating the gem stone industry which can be the major export industry in the modern economy. The demand for gemstones and jewellery for which the county is famous is traditional and has a historic root that dates back to previous centuries. Thus the market for the stones already exists and it is also possible to create interest in these stones in future for countries that have not had the market hitherto. Therefore to develop the country, the gem industry must be developed more. This calls for more investment in this sector. The old markets for the gemstones exist in Germany and the European Union. From a long period past Germany has a link to Sri Lanka and there was a cultural contact back in the previous centuries when Wilhelm Grieger translated Sinhalese works and Arthur Schopenhauer, Hermann Hesse were noted writers who spread the knowledge of the Island to the orient, and then on the products of Sri Lanka have found a good market especially the precious stones. (Gunawardena, 161) Hence more investment is warranted in this sector and this can create a global market that can boost the growth of the country.
3. Consider, without getting into the civil conflict, what differences there may be between north and south in terms of economic needs, and potential contributions
Sri Lanka's economic progress after 1977 shows that the reforms have affected the Sri Lankan economy. The analysis by Alia Ahmad, for SIDA in Stockholm shows that Sri Lanka has not managed to utilize the available human resources efficiently and the country to create even development must promote human development and the war has drained much of the resources. The regional disparities and the poor development of the regions where the ethnic minorities are more, with poor investment and economic development in the North and East was primarily the cause of conflict and the resulting unemployment, and less opportunities for residents of the North and East still continues. Though there were criticisms that the introduction of the market economy has so far shown poor results in these regions. (Ahmad, Sri Lanka: Institutions, Economic Policies and Economic Growth)
About a decade later it can be observed that there is a tremendous boost to development activity. The present government and the on going twelve-year program for the "Community Development called 'Gemi Diriya' Project" are aimed at creating opportunities of livelihood and economic progress for the "communities of Uva and Southern provinces to build accountable and…