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Sir Lanka Examination Report

Kien Lai | IBM 499 | 4/22/02 | California State Polytechnic University, Pomona

INTRODUCTION

Sir Lanka Flag

Located just 40 miles off the coast of southeast India, the odd pear-shaped island, know as Sri Lanka, has its rich cultural diversity span across a multitude of religious backgrounds. This is the result of the declaration of independence from the United Kingdom on February 4, 1948. deeply rooted in their values, the people of Sir Lanka has

BRIEF DISCUSSION | COUNTRY'S RELEVANT HISTORY

Portuguese Rule (1500-1630s): Lorenzo de Almeyda, a viceroy from Portugal, was blown off course while fighting Moorish ships in the southern part of the island in 1505, thus making the discovery of the island accidental.

Dutch Rule (1630s-1796): Raging hostilities between the Kandyan and the Portuguese drew the Dutch to Ceylon. With the primary interest focused on the cinnamon trade, the Dutch began to aid Ceylon with war expenses to fight the Portuguese. When the Portuguese were ousted in power by the king of Kandy, the Dutch started seeking revenue from the Sinhalese and slowly took control of the island themselves.

However, the king of Kandy refused to give in to the Dutch and therefore, the Dutch were forced to cultivate their own cinnamon plantations in the lowlands.

British Rule (1796-1938): In order to protect their assets situated in India, the British took over Trincomalee, a Dutch occupied state in Ceylon, after the Dutch joined the French to fight with the Americans during their war for independence. The Kandyans and the British signed a treaty enabling the British to seek control over the cinnamon monopoly and the coastal area surrounding India in exchange for aid fighting the Dutch.

Plantations were developed and were crops were usually exported or bartered to other nations.[3]

Independence (1931-1948): Buddhist revivals were occurring all over the island, and the desire for freedom dominated among the people. The upper middle class Ceylonese, who was more educated, began campaigning for reform. In 1917 Ceylon Reform League and Ceylon National Association were formed. Soon to follow was the Ceylon National Congress. Their platform was for self-independence and self-rule from the British. After several riots and the failure of the reforms, the British returned power to several states in Ceylon after an election in 1945.

Geographic setting (population as of 2001 Unless stated otherwise)

Identifying major cities and their populations (Source)

Capital: Colombo (2,234,289) Sri Jayewardenepura Kotte (official); Colombo (commercial).

Climate (Source): Tropical monsoon; northeast monsoon (December to March); southwest monsoon (June to October)

Topography (Source): Annual inland temperatures average 90 degrees Fahrenheit, Lowlands and mountain regions at 70 degrees Fahrenheit. The irregular surfaces can be found in the central and southern regions of the country encompassing numerous slopes, hills, and mountain ranges.

Surface Transportation / Infrastructure


Communication Systems

Even though there is encouragement to own private investments to start telephone companies, there is still a very inadequate source of domestic service, most especially in the domestic areas. After 1999 estimate, there is 2.6 main lines per 100 persons.

Radio broadcast stations (AM and FM)
Radios: about 4 million radios owned by Sri Lankans, 1997 estimate

Time Zone: Observing standard time, Greenwich Mean Time (GMT) +0600 hrs.[7]

SOCIAL INSTITUTIONS

Sri Lanka Family

The nuclear family: The family is the central social unit in both Sinhalese and Tamils and gives the individual the most security. Even if a nuclear family has its own household, it will often live very close to relatives. Among all ethnic and caste groups, the most important social unit is the nuclear family--husband, wife, and unmarried children. Among all sections of the population, however, relatives of both the wife and the husband form an important social network that supports the nuclear family and encompasses the majority of its important social relations.

The extended family: The extended family is important in society. Most rural people and many other Sri Lankans live in extended families, in which more than two generations of the same family live together.

The kin group: The kindred (pavula, in Sinhala) of an individual often constitute the people with whom it is possible to eat or marry. Because of these customs, local Sinhalese society is highly fragmented, not only at the level of ethnic group or caste, but also at the level of the kindred. The concern of the Sinhalese is with one's responsibility to self and to interpersonal relationships, while the Tamils' concern is with one's responsibility to the collective family, group, and religion. Sri Lankans value loyalty to one's group, respect for others, and their ethnic and religious identity. Ethnic divisions run deep, and few people socialize outside of their respective groups.

Dynamics of the family: Family members help one another and are close-knit. The elderly receive deep respect and younger family members often yield to their advice and counsel. Children expect to care for their elderly parents if necessary.

Parental roles: Parents will sacrifice or work all their lives to provide their children with as much education as possible. Parents expect to provide their children with all basic needs, even into adulthood.

Marriage: The vast majority of marriages in Sri Lanka are monogamous, that is, they involve one woman and one man. Unions between one man and more than one woman (polygyny) are neither illegal nor unknown, however, and wealthy men can take several wives if they can afford to support the families. Unions involving one woman and more than one man (polyandry) are also legal and possible. More and more people are choosing their own mates, especially in urban areas, but arranged marriages are still common. Marriage between members of different ethnic groups is socially unacceptable.

Female / male roles: (are they changing or static?) All ethnic groups in Sri Lanka preserve clear distinctions in the roles of the sexes. Women are responsible for cooking, raising children, and taking care of housework. In families relying on agriculture, women are in charge of weeding and help with the harvest, and among poor families women also perform full-time work for the more well to do. The man's job is to protect women and children and provide them with material support, and in this role men dominate all aspects of business and public life. Men dominate all aspects of business and public life and are the heads of their family units. Women have economic and political opportunities outside the home but are expected to maintain all household responsibilities as well. Women in high business positions are still rarities. The war has changed the situation of many women. There are a large number of widows and a considerable increase in the numbers of families where a woman is the principal breadwinner or heads the family. However her position in society remains subordinate to male political leadership with no participation in high-level decision making. In spite of the great contribution of women to the political victory of Chandrike Kumuratunge, she has not involved women in policy, peace-making initiatives or advisory roles.

EDUCATION

Nalanda College Colombo

Before colonialism, the education system of Sri Lanka was primarily dedicated to small elite in a society with low technology. A majority of the population was illiterate. Buddhist monks assumed the responsibility of educating the Sinhalese. Literate monks would teach privileged children in the pansal (temple school). The curriculum in the pansal included the Sinhala alphabet and elementary aspects of Buddhist literature. These literatures included the Nam Potha (Book of Names) of Buddhist shrines, the Magul lakuna (Book of Auspicious Symbols on the Buddha's body), and classic stories of the Buddha's life. The pursuit of higher education typically was reserved for men who became monks and took place at universities (pirivena) dedicated almost exclusively to memorization and commentary on the Pali scriptures. Among the Tamil population, village schools, which were located near temples, were run by literate Brahmans or educated Vellalas, or highest Tamil (cultivator) caste.

Colonialism brought with it the European-style education to Sri Lanka. Along with the European-style, colonialism brought with it a number of Christian schools. Because they were educated in English, the graduates of the European-style schools went on to fill lower and middle-level positions in the colonial administration. Apart from the European-style schools, education continued through the traditional system in Tamil and Sinhala. By the 1870's, the government began to increase the number of state-run schools and instituted a grant program for private schools. The education of women lagged behind; by 1921 the female literacy rate among the Christians was 50 percent, among the Buddhists 17 percent, among the Hindus 10 percent, and among the Muslims only 6 percent (Library of Congress, Oct. 1988).

Since independence in 1948, the government has made education one of its highest priorities. Within 40 years, the number of schools in Sri Lanka has grown by 50%, the number of students increased by 300%, and the number of teachers increased by 400%. Education within Sri Lanka goes through the process of 5 years of primary school, 3 years of secondary school, 3 years of upper secondary schools, and 2 years of pre-university education. Children from age five to ten attend primary school; from age eleven to fifteen they attend junior secondary school (terminating in Ordinary Level Examination); and from age sixteen to seventeen they attend senior secondary school (terminating in the Advanced Level Examination). Those who qualify can go on to the university system, which is totally state-run. However, there is a high dropout rate due to the fact that Sri Lanka is primarily an agricultural society with few secondary schools in rural areas.

Schools and Other Education Institutions, Selected Years, 1975-86
Institution 1975 1980 1984 1986
General, all-purpose schools 9,386 9,117 9,556 9,656
Elementary schools (1) 7,656 4,156 4,000 3,938
Intermediate and upper level schools (2) 1,730 4,961 5,556 5,718
Other schools 1,058 677 358 421
Buddhist temple schools (pirivena) 289 282 307 372
Trade schools (3) n.a. 36 31 36
Universities 74 8 9 9

n.a. - not available.
(1) Grades 1-5.
(2) Grades 6-12.
(3) Including technical and farm schools.
(4) Until the late 1970s, there was one university with seven parts; each became independent in 1979.

Source: Based on information from Federal Republic of Germany, Federal Statistical Office, Länderbericht: Sri Lanka, 1988, iesbaden, 1988, 29.

Primary education is overseen by the National Institute of Education and focused on nine educational objectives. They are literacy, healthy living, orientation to vocational skills and work experience, awareness of heritage, attachment to religion and respect for virtue, knowledge of the environment, nourishment of children's needs and aspirations, national unity, and development of values (www.dfid.gov.uk).

Secondary education includes junior secondary, senior secondary and collegiate education. Junior secondary is compulsory up to the school leaving age of 14. At the end of senior secondary education, students must pass a government exam to move on to the next level. They must pass the exam in 6 subjects including mathematics and a native language. At the end of collegiate years, students are given an exam gain admission to higher education schools. "The minimum admission requirement is a pass in all three approved subjects with an aggregate not less than 135 points and a mark of not less than 30% for the Common General Paper. However, there are no special admission criteria for enrolment in courses conducted by the Open University of Sri Lanka." (Sri Lanka- Education System)

Structure of Education System / Pre-higher education

Structure of school system:

Higher Education in Sri Lanka is similar to other countries of the world. There are technical/vocational schools. Courses last between one to four years and can lead to a diploma or certificate. The university levels are the same as in the United States. They offer certificates, diplomas, and Bachelor's Degrees. The next stage of university education offers Post-graduate degrees such as the Master's Degree. The last stage of University education offers a doctorate.

Given the Sri Lankan government's priority towards education, the country has a national literacy rate of 90.2%. This rate is determined by the amount of people age 15 and over who can read and write. However, the demographics between the sexes differ. Males have a literacy rate of 93.4% and females have a literacy rate of 87.2% (The CIA World Factbook)

POLITICAL SYSTEM

Political structure: (source) The top of the structure is the president. Sri Lanka has a woman president; her name is Chandrika Kumaratunga. She is the head of the executive board, head of government and commander and chief of armed forces. She is also entitled to all the privileges, immunities and power of a member in parliament. She has been in office since 1994. She is allowed to hold two terms, and each term is six years.

The next section in the structure is the prime minister, Rahil Wickrenesinghe. He is the leader of the United National Party Front. He is the twelfth prime minister to be sworn into Sri Lanka. He is the leader of parliament and is appointed by the president.

Directly under the prime minister there are thirty three ministries that thieve in parliament; such as minister of energy, minister of finance, minister of women affairs to human resources.

A little further down the political structure is parliament, which has the equivalence of the U.S Congress. (source) The Sri Lankan legislature is unicameral, which means it has one legislative branch. The United States has two, the Congress and Senate. The parliament is the legislature. The speaker of the house is Hon. Anura Bandaranaike. The parliament consists of 225 representatives. (source)

Lastly are the judiciary courts. The judges of the supreme courts are appointed by the judicial service commission.

Political Parties: There are many political parties in Sri Lanka but the major ones are United National Party Front (UNP), the People's Alliance (PA), and the Sri Lankan Freedom Party (SLFP). The ruling People's Alliance is dominated by the Sri Lanka Freedom Party (SLFP); the main opposition party is the United National Party. The People's Alliance is a leftist party; they are liberal. The UNP is more conservative. These parties came to be in 1956- 1970. (source)

The government is working on its stability. The Sri- Lankans are looking for peace and stability. They are in a twenty year war with the Tamils. The war is affecting the government.

Special Taxes: There are six types of taxes. The first one is income tax. It was introduced in 1932. The tax charges people each a certain percentage based on their profits and income. The second one is the turnover tax. It was introduced in 1963. Turnover Tax is charged to any business in or outside Sri Lanka each quarter. The business outside must be delivering services to the citizens in Sri Lanka. Exporting manufactured goods are exempt from the turn over tax. The exemption is available to the manufacturer who exports the goods manufactured by him and also to the exporter who purchases the goods from another person who manufactured them. And lastly, the goods and services tax, it is applicable on most goods and services imported, produced or sold locally. It has two rates, a standard 12.5% for most goods and services and a zero rate for a limited number of goods and services. All exports from Sri Lanka, and passenger and cargo airline services and shipping services are zero-rated. A range of essential goods such as certain food items and petroleum products, public transport services and health care are completely exempt from the good and services tax. (source)

Role of local government: Sri Lanka's local government is divided up into eight provinces: Central, North Central, North Eastern, North Western, Saborgamuwa, Southern, Uva and Western. (www.polisc.com/world/nation/CE.htm) There are twenty five administrative districts divided among the eight provinces. There are also twelve municipal councils and thirty nine councils. (Source)

Legal System

Organization of the judiciary system: The Judicial power of the people is exercised by an independent judiciary. The Judiciary is headed by the Chief Justice who is appointed by the President.

Code or Common law country: The legal system is based on a complex mixture of English common law and Roman-Dutch, Sinhalese, Muslim and customary law. The other major piece of legislation relating to Islamic family law is the Muslim Intestate Succession Ordinance 1931 still in force in Sri Lanka today. (Source) This is mainly due to two factors. The political history of the country is the first factor, as the country was in the last five centuries been ruled successively, by the Portuguese, the Dutch and the British, until it became independent. The second factor is the heterogeneous character of its population.

Participation in patents, trademarks and other conventions: All trademarks, designs, patents and copyrights need to be registered with the Registry of Patents & Trade Marks. Patents are valid for fifteen years. Trademarks are valid for ten years and can be renewed each period for a consecutive of ten years. Sri Lanka is part of a few international convention and treaties that patents are covered under. The Patent Cooperation Treaty and The Paris Convention for the Protection of industrial property; they protect industrial property has as its object patents, utility models, industrial designs, trademarks, service marks, trade names, indications of source of origin, and the repression of unfair competition.

Special laws affecting business & international business: Intellectual property law, established in 1979. It covers legislation relating to copyright, industrial design, patents, trademarks, trade names and unfair competition. Sri Lanka's Intellectual Property Law, which is based on the WIPO model law for developing countries, has incorporated internationally accepted principles & concepts of intellectual property.

SOCIAL ORGANIZATION

people in the streets of Sri Lanka

Sri Lanka's society is based on a caste system. The caste system separates people into a number of groups who do not intermarry, who are ranked in relation to each other, and whose interactions are governed by a multitude of ritualized behaviors. The caste system is based mainly on religious differences.

The separation of caste applies mostly to the rural areas, where traditional values are still in effect. Castes in these areas are distinguished by their personal name, but most often, it is the manner of speaking. "Persons of lower rank behave politely by addressing their superiors with honorable formulas and by removing their headgear. A standard furnishing in upper caste rural houses is a low stool (kolamba), provided so that members of lower castes may take a lower seat while visiting" (Library). Rural areas are separated into separate streets and areas designated for separate castes.

The urban culture of the city makes the caste system obsolete. Due to the cramp areas and limited space, people cram together in buses, work together, and walk around in tight spaces. "Despite the near invisibility of caste in public life, caste based factions exist in all modern institutions, including political parties, and when it comes to marriage--the true test of adherence to ritual purity--the overwhelming majority of unions occur between members of the same caste" (Library).

The caste system often refers to the two larger ethnicities of Sri Lanka: the Sinhalese and the Tamils. The largest caste among the Sinhalese is the Goyigama and they comprise at least half the Sinhalese population. This caste is associated with agriculture. The other castes are: the Karava (fishermen), the Durava (toddy tappers), the Salagama (cinnamon peelers), Vahumpura (traditional jaggery makers), Batgam (or Padu, a low caste of agricultural laborers), the Kinnara (menial laborers), Hena (or Rada, traditional washer men), Berava (traditional temple drummers), and Navandanna (or Acari, traditional artisans).

The Tamils have a caste system similar to the Sinhalese; however, it is based more upon religion. The Vellala (cultivators) comprise over half of the Tamil population. Brahmans (the priestly caste) still dominate the thinking and enforcing of the caste system. Then come Kariya (fishermen), Chetti (a group merchant castes), several artisan castes, and the laboring castes including the Palla.

The caste system is still used as a prime directive for people's actions. These social decisions have a direct and weighty impact upon politics and wealth. The power of the government and wealth of the people are distributed among the elite of the nation. The members of the political elite tend to be of the cultivator castes.

There are also certain procedures to behave for people of different castes. "There is thus a series of prohibitions on the sharing of food between members of different castes. Members of higher castes may avoid taking food from members of lower castes, although lower-caste persons may not mind taking food from members of the higher orders. The most intimate contact is sexual because it involves the joining of two bodies and the transmission of the very substances that determine caste for life. Sexual contact between persons of different castes is discouraged, and intercaste marriage is rare" (Library). For these things are perceived to be polluting the purity of the castes.

HUMANS AND THE UNIVERSITY: PHILOSOPHY & RELIGION

Belief Systems

Caste system: most basic belief system in Ceylonese society. There are two requirements involving 1) endogamy and 2) concept of pollution. According to Nyrop, et al "Each caste group is seen as occupying and representing a certain level of ritual or spiritual purity." People from a lower caste can pollute those of a higher level, and those of a higher caste should protect themselves from defilement.

1. Having sexual intercourse with someone of lower caste would cause pollution.

2. Eating food prepared by someone of lower caste would cause pollution.

a. Men could take concubines but since they are considered from a lower caste, they would not eat food prepared by them.

2. Sons are more desirable than daughters.

a. Having a daughter for a first child is usually welcome, but daughters following her are of less importance. Having more daughters than sons are viewed as bad karma.

b. Sons are expected to perform funeral ceremonies for a parent's death. They are to light the funeral pyre and carry out the tivasham, which is performed during the death anniversary of the parent.

Both the family and the community perform elaborate rites such as secluding the girl for up to a month for purification they are usually married a short while after. A girl's chastity and good reputation is a matter of family honor.[8]

B. The Church

C. Aesthetics ( references from an enctclopdedia)

Visual Arts: The ancient Sinhalese art came from the origins of Buddhist Indian art. They borrowed themes and styles to make their own distinctive art. Most of the paintings and sculptures were done by Buddhist for religious reasons. The people of Sri Lanka like bright colors, such as red and gold. Many of the pictures have elephants in them. Many of the buildings are also built with red brick. One of the most remarkable sculptures is the Moonstones, semicircular stones are place at bottom of the animals to be honored, the elephant and horse.

Music and Dance: The Tamil musical traditions have been stronger the Sinhalese and its influence on Sri Lankan music has been greater. There is a dance called the Kandyan, it originated from classical ancient times. The dance has been called "one of the purest forms of national expression in Sri Lanka" It is performed by singing and dancing men, who wear brightly colored costumes. The Sinhalese have ceremonial dance to rid the land of evil spirits. Devil Dancing is one form of ceremonial dancing; it produced the Kolam dance. The Kolam dance is a drama that is performed in wooden masks. The classical Indian dances very popular among the young women.

Drama and folklore: The Sinhalese people have ancient poetry, philosophy and theology. Many of the poems were told by word of mouth. Not until recently were satirical book about the British were written. Folk dramas are called nondagam. The dramatic places are usually specific incidents in history.

LIVING CONDITIONS

Sri Lanka Colombo Diet and Nutrition

Typical Meals: rice, course grains, green leafy vegetables, potatoes, some beef, fish

Malnutrition Rates (Source): Chronic Malnutrition at 20% and underweight at 33% for children under the age of 5 (1995). Chronic energy deficiency is more than 33% in women, nearly 37% in men, and underweight at 39% for both genders. About 45% of pre-school children, 58% of children 5 to 11, 36% of adolescents and 45% of non-pregnant women suffer from anemia. 19% of the population is diagnosed as iodine deficient

Housing

Types of housing available: Most houses in rural areas have mud walls and thatched roofs. They often have a small veranda and are fenced. Village houses are square or rectangular with walls of dried mud or clay blocks, floors of beaten earth or concrete, and roofs of coconut thatch or tile. The middle class and wealthy have more substantial housing. In both rural and urban areas, many middle-class and upper-class houses are surrounded by a walled compound.

Do most people own or rent? 58% of all housing units in Sri Lanka are not planned or permanent. In the Greater Colombo area alone 150,000 families live in shanties and temporary structures. These occupy half of the city of Colombo. In order to adequately address the housing shortage in the country 73,000 houses would have to be constructed every year for the next five years.

Do most people live in one-family dwellings or with other families? Four out of five Sri Lankans live in rural areas and farms as their ancestors did before them. Most rural people and many other Sri Lankans live in extended families, in which more than two generations of the same family live together. The caste system is strong among both Sinhalese and Tamils.

Working Conditions

Employer / employee relations: At the micro level, the relationship between the employees and the trade unions has been adversarial. The history of numerous conflicts between the employers and employees during the colonial rule and the post independence era has greatly contributed to the development of this situation. Amongst other reasons:

However, the experiences have made employers realize that such antagonistic approach would lead to unsatisfactory relationship, loss of work hours resulting in from industrial disputes thus affecting the productivity. With the emergence of market economy, this would adversely affect the ability of the enterprise to be competitive. In this context, many employers have begun to adopt an approach of understanding towards Trade Unions and also making concerted efforts to establish cordial relationship with the work force by adopting sound human resource practices.

Employee participation: Interpersonal relationships are more important than abstract rules in the conduct of business. Generally, Sri Lankans tend to behave in ways that are dictated by tradition and situation of the moment. Both the Sinhalese and the Tamils are open to new methods and innovations, except when those methods or innovations come from the opposite ethnic group. They seldom resort to objective facts to find the truth. Sri Lankans take a "tea break" both in the morning and in the afternoon. Don't expect help from any employees during their tea break, even if they are sitting at their desks.

Salaries and benefits: Wages were low compared with those paid in developed countries, even in the unionized sectors, and incomes were unevenly distributed. Some indication of wage movements can be gained from the indices of minimum wage rates. Low wages in the formal sector were partially offset by overtime payments, increments, bonuses, and other incentive programs, which often added considerable supplements to salaries. The People's Alliance government was successful in increasing the salaries of state workers by over 80%. The salaries of teachers have been increased by over 100%. In addition to the interim monthly allowance of 10% granted to public sector employees in 2000, steps have been taken to grant a monthly interim allowance of Rs. 1,200 to enable them to cope with the rising cost of living. The salaries are expected to increase further when the Salaries Commission Report is implemented from January 2002 onwards. The 'Agrahara' Insurance Scheme under which benefits up to Rs. 50,000 are available annually has been implemented.

The interest rate of 7.2% on loans taken by public servants was reduced to 4.2%. Thus a public sector employee who has availed himself of a loan of Rs. 100,000 would save a sum of Rs. 250 monthly. Salaries have also been increased in respect of all employees of the Armed forces and the Police. They have also been granted several concessions and incentives in addition. Employees in lower grades in the public sector that had been recruited on a temporary, casual or contract basis have been made permanent. More than 175 scholarships have been granted annually to public sector employees and their children to pursue post-graduate studies both locally and overseas. The rights and privileges of private sector employees have also been ensured. The People's Alliance has at the same time taken steps to ensure that cordial relations are maintained between employer and employee.

Clothing

National dress: For men, this consists of a sarong a long piece of cloth, usually white, which is wrapped around the body and secured at the waist worn with a loose shirt or jacket. The women wear a redda, which is similar to a sarong, with a blouse or jacket, or a saree a straight piece of cloth draped around the body as a long dress.

Types of clothing worn at work: Business dress are usually conservative, but cool, in considerations of the climate. Men should wear a light shirt and pants. Jackets and ties are rarely worn. Women should wear a modest, light blouse and skirt. Nice, yet cool clothing is appropriate for casual wear. Shorts, low-cut, revealing, or sleeveless clothing and bathing suits are inappropriate for women except in resort areas or on the beach.

Recreation and Other Leisure Activities

Types available and in demand: Cricket / modified baseball (Source)

Percentage of income spent on such activities: 19 % based on price index of major groups with an average family size of 5.79 (1999 / Source)

LANGUAGE

Official language: The official language are Sinhala and Tamil and English is spoken by many. Sinhala is spoken by 74 percent of the population. Tamil, a Dravidian language of southern India, is spoken by people living in the northern and eastern provinces. English, the official language of the country until 1957, is still widely used. (source)

Dialects or uniqueness in language: Language is the primary distinction for ethnic communities, followed origin as well as other factors. Even though smaller ethnic groups put racial origin and religion higher importance in terms of classification, these terms are also distinguished by language. Certain areas in the cities of Negombo and Chilaw speak a dialect that is a mixture of Sinhalese and Tamil.

The Muslims, who constitute a small 7 percent of the population of Sri Lanka, mostly speak Tamil (the home language) but have not particularly blended in with the community due to a significant difference in religions and customs.

EXECUTIVE SUMMARY

Introduction: Sri Lanka has progressed diligently over the years in providing its people a higher standard of living through the restructuring of their government. Breaking away from traditional norms, the president of the country is female, which has greatly influenced the change in business practices and relations with other countries. However, ethnic conflicts have plagued the steady growth of the country and has prevented many foreign markets from entering.

POPULATION

Total: Population of 19,408,635, after a July 2001 estimate

* During the mid-1980s, riots and hostilities caused by tensions brewing between the government and Tamil separists prompted several hundred thousand Tamil civilians to flee to the island. An approximate 40,000 sought refuge in the south, 200,000 in the west, and 66,000 stayed in refugee camps (Nyrop, et al)


Geographic Areas
District Area sq.km Population (thousands)
1981 1994
Colombo 676 1,699 2,057
Gampaha 1,341 1,391 1,708
Kalutara 1,576 830 938
Kandy 1,917 1,048 1,221
Matale 1,952 357 423
Nuwara Eliya 1,706 604 671
Galle 1,617 815 955
Matara 1,270 644 754
Hambantota 2,496 424 516

Capital: Sri Jayewardenepura Kotte (official); Colombo (commercial).

Population: 2,026,000 (1993). Sri Jayawardenepura Kotte is only six miles from Colombo.

THE URBAN / RURAL POPULATION SPLIT
population split

Immigration Rates and Patterns: Since the outbreak of hostilities between the government and armed Tamil separatists in the mid-1980s, several hundred thousand Tamil civilians have fled the island; as of mid-1999, approximately 66,000 were housed in 133 refugee camps in south India, another 40,000 lived outside the Indian camps, and more than 200,000 Tamils have sought refuge in the West.

Economic Statistics and Activity

Distribution of Wealth

Income classes
low-income, middle-income, high-income (source)

Principle Industries


Estimated total foreign investment by sector Total Inflow Total
(in $ millions) end 1996 1997 end 1997
Food & beverage 73 41 32
Text / apparel, leather 262 223 39
Chemicals, rubber, plastic 104 - 104
Non-metal Mineral products 18 - 18
Fabricated metal, machinery 11 9 20
Other manufactured 82 77 5
Services 146 774 628
Total 231 1,333 1,102

Source: Board of Investment of Sri Lanka

Ratio of private to public-owned industries: 3 out of ever 4 industries are private (1994-1998) (source)

Industries: Machinery and equipment, textiles, petroleum, foodstuffs (Source)

U. International Trade Statistics

V. Major exports

Dollar value: $5.2 billion (2000) (Source)

Trends: food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking (Source)

International Trade Statistics

Major imports: machinery and equipment, textiles, petroleum, foodstuffs

a. Dollar value - $6.1 billion (f.o.b., 2000)

b. Trends – Sri Lanka imports are increasing

INTERNATIONAL COMMODITY PRICES 2001*
June

2000
June

 % Change
Exports (Colombo Auction Price)      
Tea (Rs./Kg) 131.5 119.7 9.9
Imports (C & F)      
Rice (Rs./MT) 38404.6 20878.6 83.9
White Sugar (Rs./MT) 24228.2 18300.7 32.4
Crude Oil (Rs./Barrel) 2579.8 2130.0 21.1
Wheat (Rs./MT) 12688.1 9057.8 40.1
Exports (Colombo Auction Price)      
Tea (US$/Kg) 1.45 1.58 -8.2
Imports (C & F)      
Rice (US$/MT) 424.65 275.63 54.1
White Sugar (US$/MT) 267.89 241.60 10.9
Crude Oil US$/Barrel) 28.53 28.12 1.5
Wheat (US$/MT) 140.29 119.58 17.3

*Provisional (a) High price of rice imports in June 2001 was due to importation of high quality varieties. (source)

Balance of payments situation: A balance of payments crisis in 2001 necessitated an IMF stand-by facility (US$253 million) with an accompanying stabilization program. An initial installment of US$131 million was released in August 2001, but the release of further installments was put on hold by the IMF due to government expenditure blow-outs and non-implementation of structural and economic reforms.

Surplus or deficit? Debt - $9.9 billion (2000)

Recent trends: The overall balance of BOP is on a negative trend.

Monetary System

Currency name: Sri Lankan Rupee (LKR)

Can currency leave the country? Yes, the currency can leave the country.

Legal restrictions on currency: The import and export of local currency is limited to SLRs1000. The import of notes from India and Pakistan is not allowed, otherwise the import of foreign currency is not restricted but all amounts over US$5,000 are subject to declaration. Export of foreign currency is limited to the amount declared on import.


Major banks / financial institutions: Central Bank of Sri Lanka, National Development Bank of Sri Lanka and Monetary Policy Committee. The four private Sri Lankan banks are Hatton National Bank, the Commercial Bank of Ceylon, the Investment and Credit Bank, and the Agro-Commercial Bank. Foreign banks include: Grindlays Bank, Chartered Bank, and the Bank of Hong Kong and Shanghai, State Bank of India, Indian Bank, Indian Overseas Bank, and Habib Bank. The Colombo Stock Exchange (CSE) and Sri Lankan Securities and Exchange Commission.

Trade Restrictions: Sri Lanka maintains a nonaligned foreign policy. Sri Lanka's economy continues to be heavily dependent on foreign trade. Historically, the island has exported cash crops in order to import food to feed its population. Although the production of rice, the staple food crop, increased rapidly in the late 1970s and 1980s, in early 1988 the island remained short of self-sufficiency in food. Trade policy since independence has been dominated by the deteriorating terms of trade. Between the 1950s and the 1980s, the amount of imports that could be bought with a given amount of the traditional exports has declined. Governments responded in the 1960s and 1970s with strict controls over imports, foreign exchange, and some aspects of internal trade. When the economy was liberalized in 1977, many of these regulations were swept away. One result has been a large increase in the foreign trade deficit and the external debt.

Embargoes: The civil war that has torn Sri Lanka apart since 1983 may finally find resolution, thanks to bipartisan support for peace talks by the island's main political players: President Kumaratunga's People's Alliance and Prime Minister Wickramasinghe's rival United National party. The Liberation Tigers of Tamil Eelam (LTTE) agreed to renew a ceasefire agreement in January 2002, while the Sri Lankan government lifted the seven-year-old embargo on LTTE-controlled areas of the island. The Sri Lankan Government has eased its seven-year embargo on goods, food and medicines entering the northern rebel-controlled area of the country, known as the Vanni.

Rubber-Rice Pact signed in 1953 is the most important pact in the annals of bilateral relations, and is also the first pact signed by China with a country of a different social system. The pact was of great significance to breaking the blockade and embargo imposed by the US at that time and to promoting the development of friendly relations between China and Sri Lanka.

As late as 1991 the Sri Lankan Government expelled the UK High Commissioner for making unfavorable comments about its behavior, and the UK responded with a total arms embargo, among other measures. But the row was quickly patched up and the embargo was lifted in October 1992. By 1995 Sri Lanka was once again a valued customer for British military equipment. Military equipment exported to Sri Lanka in recent years includes a military use hovercraft armed with a 20mm cannon which can be fitted with missiles; 2 C-130 Hercules military transport aircraft; small arms ammunition, riot shields, body armor, machine guns, heavy machine guns, submachine guns, night vision equipment, stun grenades, and rifles. During the recent election (October 2000) the Sri Lankan government repeatedly declared on television that there would be no talks with the LTTE and that the war to crush them would continue"

Quotas: The "Quota system" is one, which imposes quantitative trade restrictions. About 80% of the world's textile and garment industries today are controlled by 100 bilateral multi fiber agreements. Huge markets especially the United States (US) and the European Union countries (EU) impose restrictions through a quota system. Sri Lanka's share of the world apparel market is just 1%. The country exports 60% of its products to the USA. Sri Lanka's market share in the US is 1.2%. Ninety percent of the garment exports to the US is based on quotas. Another 33% of its total products are sent to EU countries of which only 25% is based on quotas. From its inception the quota system was a boon to Sri Lanka's apparel industry. The availability of a stable market eliminated the danger of competition from established industrialists in the international field, and attracted direct foreign investment and helped Sri Lanka prosper in this industry.

At the 1995 Uruguay Round of talks of GATT [The General Agreement on Tariffs and Trade] now WTO [World Trade Organization], agreements were reached with regard to eliminating trade restrictions or the quota system. There was strong pressure from the third world countries to remove the protectionist policies of the developed countries. It was agreed in Uruguay in 1995 to eliminate all restrictions applicable to textile and garment products within the next 10 years. Implementation of the decision has begun and all restrictions are to be removed by 2005, ending the quota system. The abolition of the quota system and its implications. The abolition of the quota system will have an impact on the stability of the current market. However an expanded free market will open up for Sri Lanka's apparel industry. As such the future of the garment industry in Sri Lanka will depend on our ability to face competition.

Import taxes: taxes include a 6.5 percent national security levy (0.5 percent for machinery and equipment), a 12.5 percent Goods and Services Tax (GST) which is a value-added tax and an excise tax on cigarettes, liquor, petrol and motor vehicles. All taxes are also charged on locally manufactured goods. A value-added tax called the "Goods and Services Tax" (GST) with an input tax credit mechanism was implemented in Sri Lanka on April 1, 1998. The GST is applicable on most goods and services imported, produced or sold locally. The GST has two rates: a standard 12.5% for most goods and services and a zero rate for a limited number of goods and services. A range of essential goods such as certain food items and petroleum products, public transport services and health care are completely exempt from GST. Goods and services supplied to diplomatic missions have been granted GST exemptions only on a case-by-case, negotiated basis. Importers and distributors, manufacturers and service centers are liable for GST.

All exports from Sri Lanka, and passenger and cargo airline services and shipping services are zero-rated. No GST is payable on zero-rated goods and services but suppliers of zero-rated products may be able to recover GST paid on inputs used. Suppliers of GST-exempted goods cannot recover any of the GST applied on their own expenses. Suppliers of standard rate goods and services have to charge GST on sales to customers, who in turn will be able to deduct the amount of tax from the amount they collect and owe to the Government, if such supplies are used in their businesses. Customers who consume goods and services for non-business purposes cannot claim the deduction. GST is not due on raw material imports to businesses located within free trade zones. The GST is the biggest revenue earner for the government. However, the current 12.5 percent GST rate is well below the revenue neutral tax rate of around 17 percent, which is a major cause for concern. GST collections fell below targets in 1998 and 1999.

Tariffs: Sri Lanka has a largely two-band import tariff schedule based on the Harmonized System of Classification. The two bands are 10 and 25 percent. Most agricultural and food products, consumer goods, chemicals and other intermediate goods manufactured locally are subject to a 25-percent tariff. Parts and components used in local industry and raw materials are subject to a 10-percent tariff. Ready-made garments are also subjected to a 10-percent tariff. There are a few exceptions to the two-band tariff structure: Some raw materials and machinery and equipment are subject to a 5-percent tariff. A few selected agricultural products such as rice, chilies, onions and potatoes are at 35 percent. All imports of textile materials, yarn, and all related intermediate and capital goods required for the garment export industry are free of import duty. Motorcars are subject to a 25 percent import tariff. There is an additional excise duty, which is currently set at 15 percent for petrol cars and 65 percent for diesel cars. Sri Lanka has bound most agricultural tariffs and a few other non-agricultural tariffs at 50 percent under the World Trade Organization. Sri Lanka has moreover agreed to refrain from introducing any non-tariff barriers to imports of textiles and clothing.

Licensing: in 1991, the Bush Administration signed an agreement with the Democratic Socialist Republic of Sri Lanka that requires the US and Sri Lanka governments to limit the grounds for compulsory licensing of patents to three items: antitrust, declared emergencies and for national air pollutant standards. Sri Lanka maintained an open trade policy regime with only a few exceptions as in the past. Four categories of exports remained under license (coral chuk and shells, wood and articles of wood, ivory and ivory products and passenger motor vehicles registered in Sri Lanka prior to 1945) on the grounds of protection of environment and preservation of antiques. The remaining import licensing requirements were due mostly to public health, public morals, environmental protection and national security reasons. The import licensing requirement of four items, namely, wheat, meslin, wheat and meslin flour was maintained in terms of a past contract entered into by the Government with a private flour milling company. Certain agricultural items, namely potatoes, big onions, chilies and maize, remain under license with the objective of providing protection to domestic producers.

Custom's duties: Customs Valuations most import duty rates are ad valorem, calculated on the CIF value. GST on imports is also calculated on the CIF value plus import duty. The national security levy on imports is determined after the CIF value, plus import duties, have been marked up by an additional 25 percent to reflect the approximate market price. Given the high effective level of taxation on many imported goods, smuggling is, not surprisingly, a serious problem for products such as cigarettes. If an item is sent abroad for repair, at the time it is "exported" the shipper should submit a re-importation form to the Customs Department to enable the repaired item to be re-imported free of duty. However, if the cost of repair exceeds 50 percent of the item's value, an import duty will be charged. The following items may be imported into Sri Lanka by visitors aged 18 years and over without incurring customs duty: 200 cigarettes or 50 cigars or 340g of tobacco; 2 bottles of wine and 1.5 liters of spirits; a small quantity of perfume and 250ml of eau de toilette. (a) Only two members of a family are entitled to free import allowances. (b) Valuable personal effects (including jewelry) must be declared on arrival in Sri Lanka. (c) There is no gift allowance.

I. Extent of Economic Activity (not Included in Cash Income Activities)
J. Labor Force
K. Inflation Rates

Development in Science and Technology: Sri Lanka has access to all the technologies that are available to other regions and nations of the world. Sri Lanka is in the process of industrializing itself to be involved in the world market. The country has a national Information Technology system and a ministry that oversees its implementation. The country also has a number of satellite communications systems. Sri Lanka also has 5 internet service providers and roughly 65,000 internet users (CIA website).

A total of 17.1% of the employed population finished with a G.C.E. (O.L.) level, also known as high school, of education. A total of 14.3% of the population have been educated at the G.C.E. (A/L), also known as University level. Out of this statistic, 18 percent of employed females have attained a level of education G.C.E. (A/L) & above, while corresponding proportion for employed males is only 12 percent.

Under a presidential directive, a new scheme to supply 100 postgraduate scholarships will be initiated by the Presidential Secretariat from November 1999. This will pave the way for 100 selected candidates to study in a local or international university in the fields of Biological Science, Computer Science, Development Economics, Agricultural Marketing and Post Harvesting Technology, Development Management, Electronics and Industrial Mathematics (The President's Fund).

The government of Sri Lanka has allocated a total sum of Rs. 954 million to research and development functions in 2001. The Science and Technology Development has been allocated Rs. 276 million, and transfers to scientific institutions to carry out said research is Rs. 600 million (Public Investments Highlights, Ministry if Finance).

V. Channels of Distribution

Middleman (source)

Availbility: Middleman are used as go betweeners for trading. They are used for anything from food to textiles to livestock.

In their bid to keep the middleman out, some Government top rungers wanted a middleman left out of military procurement deals with manufacturers in West Asia.It is known that one or two suppliers only to be told that there would be no deal if that middleman was not there.It has now been revealed that the man, one who served in uniform in the early part of his career, is a powerful man. No wonder he had powerful connections in Sri Lanka.During his stint in the military, he had served as an aide to a strongman who is now the country's leadership.

Customary markups for various classes of goods

Wholesale: there are a lot of markups in retail items but in pharmaceutical it is s high as 80% (source)

Retail: are categorized by food, goods and services, each category has a different percentage of markups

Retailers

Number of retailers: The first retail outlet of Singer Sri lanka had its origins in 1877 in a store in Main Street, Pettah.Today 124years later, a rapidly expanding network of outlets all over the country, supported by equally comprehensive service linkage, provides total customer care in a whole range of products and services.

The exceptionally thorough distribution network is the key to Singer's retailing strength.
A 107 Retail Outlets, 101 Singer exclusive dealers and close to 300 independent dealers ensure that all customers, whether they live in cities, suburbs or remote villages, have access to our diverse range of household requisites

b. typical size of reail outlet

The Sathosa super mall is 8000 square feet (source)

It is the largest mall in Sri lanka

Methods of operation: Many of the wholesale retailers do business with cash, one company is Singer wholesaler.

Scale of operation: Many operations are small, because there are a lot companies to choose from.

E. role of chain stores. Departments stores…

The departments stores are there to provide for the consumers. The super mall in Sri Lanka is opened twenty four hours a day.

MEDIA

Media un, stastical year book

a. availiblity of media (the eupoa world year book, 2001)

There are news papers, telephones, televisions, and the internet.

All media within Sri Lanka is controlled by the Ministry of Posts, Telecommunications and Media. The Ministry oversees the Department of Information. There are 2 state-owned television companies and 1 state-owned radio services. Press censorship was imposed in 1995 to control war reporting by local news agencies. Since 1998 foreign journalists have faced similar restrictions.

Daily newspaper circulation is 29 newspapers for every 100 people. Over two million radio sets were used in the mid-1980s. In 1986, there were 350,000 television receivers in place.

VII. Executive Summary

VIII. Sources of Information

IX. Appendixes