Annual Report 2007 - Institute of Policy Studies of Sri Lanka
Annual Report 2007 - Institute of Policy Studies of Sri Lanka
Annual Report 2007 - Institute of Policy Studies of Sri Lanka
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Our Mission<br />
The <strong>Institute</strong>’s mission is to contribute to the economic development <strong>of</strong> a democratic <strong>Sri</strong> <strong>Lanka</strong> and enhance the<br />
quality <strong>of</strong> life <strong>of</strong> its people by informing policy makers and contributing to the public debate through timely,<br />
independent, and high quality research-based analysis <strong>of</strong> medium and long-term national policy issues.<br />
Contents<br />
Chairman’s Message …………………………………………………………………...2<br />
Executive Director’s <strong>Report</strong>…………………………………………………………...3<br />
Funding and New IPS Headquarters……………………………………………….....5<br />
IPS Research …………………………………………………………………………...6<br />
Research Programme<br />
IPS Research Themes<br />
Macroeconomic <strong>Policy</strong> …………………………………………………………............7<br />
International Economic <strong>Policy</strong>…………………………………………………......... 11<br />
Labour, Employment and Human Resources Development………………......…….15<br />
Industry, Public Enterprise Reform and Regulatory <strong>Policy</strong> ………………......……18<br />
Poverty and Social Welfare…………………………………………………......…….21<br />
Agricultural Economic <strong>Policy</strong>……………………………………………….......……24<br />
Environmental Economic <strong>Policy</strong> …………………………………………......………26<br />
Health Economic <strong>Policy</strong> …………………………………………………............…… 28<br />
Links ..................................................................................................................................... 30<br />
IPS Support Services………………………………………………………………… 31<br />
Administration and Finance Unit……………………… ..............................................31<br />
Library………………………………………………… .................................................31<br />
Publications and Communications Unit………………................................................. 33<br />
Information Systems Unit ………………………………...............................................34<br />
Human Resources Training and Development ……………………………………. 36<br />
IPS Events……………………………………………………….. ………………… 39<br />
Conferences, Workshops and Book Launches……......................................................... 39<br />
Monthly In-House Seminars………………………….................................................. .42<br />
Monthly In-House Book Reviews……………………….............................................. 43<br />
IPS Publications ……………………………………………………………………. 44<br />
Publications <strong>of</strong> <strong>2007</strong>………………………………....................................................…44<br />
Forthcoming Publications………………………............................................................ 46<br />
IPS Staff……………………………………………………………………………… 47<br />
Research Staff.......................................................................................................................47<br />
Administrative and Support Staff......................................................................................48<br />
Financial...............................................................................................................................50<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 1
Chairman’s Message<br />
It gives me immense pleasure to make some comments on the activities <strong>of</strong> the IPS in<br />
<strong>2007</strong>, the year under review being the first full year <strong>of</strong> my tenure as Chairman. My<br />
message in the <strong>Annual</strong> <strong>Report</strong> 2006 harboured a wish that the transition from university<br />
academia to the environment <strong>of</strong> the IPS should prove to be intellectually rewarding.<br />
This has indeed proved to be so.<br />
As the <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> details, the IPS has further focused the orientation <strong>of</strong> its<br />
research programme to build on its mandate and strengths. It has worked closely<br />
with the Government <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>, not only in addressing the research and<br />
development issues identified in the country’s long-term development plans but<br />
also through direct participation in key sectoral initiatives, particularly by providing<br />
technical inputs to ongoing bilateral trade negotiations. The <strong>Institute</strong> has also<br />
strengthened its partnerships with other organizations to promote capacity<br />
development at the provincial level, for instance, through a series <strong>of</strong> workshops in collaboration with the World Bank<br />
<strong>Institute</strong>. IPS research activities in <strong>2007</strong> have further contributed to strengthening the <strong>Institute</strong>’s reputation. New<br />
networks have been developed and existing ones supported through collaborative research with both local and international<br />
agencies, participation in international conferences, training programmes, etc. The publications brought out by the <strong>Institute</strong><br />
and its research staff in <strong>2007</strong> stand testament to such activity.<br />
The <strong>Institute</strong> is looking forward to moving to its own premises in 2009. It has responded to the many challenges <strong>of</strong> not<br />
only securing the land and funding for the building, but also <strong>of</strong> overcoming bureaucratic hurdles in getting the project<br />
under way. With the enhanced facilities that the new complex will <strong>of</strong>fer, the IPS will look forward to contributing further<br />
to the debate and discussion on strategies <strong>of</strong> economic and social development in <strong>Sri</strong> <strong>Lanka</strong>.<br />
Buddhadasa Hewavitharana<br />
Chairman<br />
June 2008<br />
2 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Executive Director’s <strong>Report</strong><br />
The IPS had its first year under its new Chairman and the new Board in <strong>2007</strong>. The<br />
<strong>Institute</strong> did not embark on major changes and continued with the status quo as it had<br />
to make preparatory work to shift to the new premises in 2009. The focus during the<br />
year was mainly on the new building project, upgrading the IT system, expanding<br />
the dissemination <strong>of</strong> IPS activities through the web, in addition to the usual research<br />
activities.<br />
As stated in my report last year, the building project was put on an accelerated<br />
schedule in <strong>2007</strong> with the laying <strong>of</strong> the foundation in March, preparation <strong>of</strong> the bid<br />
document in August, and closing the bids in October. A Technical Evaluation<br />
Committee and a Procurement Committee were formed with the concurrence <strong>of</strong> the<br />
Presidential Secretariat and the bid evaluation process was completed by November<br />
and the contract was awarded to the successful bidder in mid-December. The building<br />
project is now 50 per cent completed. It will be fitted with the most up-to-date equipment/facilities to be in line with the<br />
best social science research institutions in the world and we hope to move into the premises in early 2009.<br />
The IPS completed 20 projects and attracted 14 new projects during the year. Several projects were done for the government<br />
<strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> and the following are noteworthy: (1) bringing out a publication highlighting the policy options under<br />
Mahinda Chintana (Presidential Secretariat); (2) presenting guidelines for creating a new institutional structure for debt<br />
management (National Economic Council); (3) finalizing the text and preparing the schedules for liberalization <strong>of</strong> trade<br />
in services under the India-<strong>Sri</strong> <strong>Lanka</strong> Comprehensive Partnership Agreement (Department <strong>of</strong> Commerce); (4) preparing<br />
the <strong>Sri</strong> <strong>Lanka</strong>n study on Liberalization <strong>of</strong> Trade in Services in South Asia ( Ministry <strong>of</strong> Foreign Affairs, for the SAARC<br />
Secretariat); (5) Arranging 4 sensitization workshops for Provincial Councillors and relevant personnel on Effective<br />
Service Delivery (Finance Commission and Ministry <strong>of</strong> Public Administration and Home Affairs); (6) serving in the trade<br />
and tariff cluster <strong>of</strong> the National Council for Economic Development (Ministry <strong>of</strong> Finance); (7) recommend policies to<br />
improve the effectiveness and coverage <strong>of</strong> the Catch-up Education (CUE) programmes (Ministry <strong>of</strong> Education); and (8)<br />
compilation <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> National Health Accounts (Ministry <strong>of</strong> Health).<br />
For the private sector, several studies/support work were undertaken during the course <strong>of</strong> the year. Among others, the<br />
following may be highlighted: (1) Industrial <strong>Policy</strong> Guidelines for the Industry Association <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>; (2) presentation<br />
to the Industrial Forum (Federation <strong>of</strong> Chambers <strong>of</strong> Commerce and Industry), <strong>Sri</strong> <strong>Lanka</strong> Economic Summit (Ceylon<br />
Chamber <strong>of</strong> Commerce), and Tea Symposium (Ceylon Tea Traders Association); (3) serving the panel <strong>of</strong> judges for the<br />
Exporters Award (National Chamber <strong>of</strong> Exporters <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>) and Best Corporate Citizen Award (Ceylon Chamber <strong>of</strong><br />
Commerce).<br />
The collaboration with overseas donor organization and research institutions continued as in previous years. These are<br />
documented elsewhere in this report. I may highlight the following: (1) for the third successive year, IPS collaborated with<br />
the FES and organized a regional symposium on Trade in Services; (2) for the first time, a seminar was organized on<br />
BIMSTEC with the collaboration <strong>of</strong> the Centre for <strong>Studies</strong> in International Relations and Development (CSIRD), Delhi<br />
and Sasakawa Foundation, Japan. Collaborative studies were completed or initiated with the OECD, ADB, World Bank,<br />
ARTNeT, CUTS, RIS, NSI, SANDEE and many other research organizations. The <strong>Institute</strong> also engaged in activities with<br />
local institutions such as the BCIS, Lakshman Kadirgamar <strong>Institute</strong> <strong>of</strong> International Relations, Department <strong>of</strong> Economics,<br />
University <strong>of</strong> Colombo, PIM, Marga <strong>Institute</strong>, <strong>Sri</strong> <strong>Lanka</strong> Economic Association, and others.<br />
IPS brought out 09 publications, including two issues <strong>of</strong> the South Asia Economic Journal. Our flagship publication, State<br />
<strong>of</strong> the Economy report, received two excellent reviews in the media. A book on South Asia in the WTO was launched in the<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 3
presence <strong>of</strong> the Minister <strong>of</strong> International Trade. Seven essays on contemporary economic issues were published in the<br />
Financial Times <strong>of</strong> the Daily Mirror with the collaboration <strong>of</strong> HSBC.<br />
Seminars and Book Reviews took place at the in-house level as during the previous years and are documented in this<br />
report. The IPS encourages new researchers to actively participate in these discussions so that they could get the necessary<br />
training to participate in public debates and equip them for post-graduate research if required. The IPS also invested on<br />
training <strong>of</strong> its staff as during the previous years. This is an integral part <strong>of</strong> efforts to create a culture where the staff are<br />
encouraged and motivated to work with us.<br />
Chairman and the Executive Director <strong>of</strong> the IPS are members <strong>of</strong> the National Economic<br />
Council (NEC) under the leadership <strong>of</strong> His Excellency the President. They participated<br />
and made contributions at the NCE meetings during <strong>2007</strong>.<br />
On the financial side, the <strong>Institute</strong><br />
made a pr<strong>of</strong>it <strong>of</strong> Rs. 38 million<br />
compared to the <strong>2007</strong> budget. This was<br />
an achievement that we could be proud<br />
<strong>of</strong> when operating with our own funds.<br />
A Board Survey was put into operation.<br />
Despite several submissions to the<br />
Auditor General that the IPS does not<br />
come under the Administration and<br />
Financial Regulations (ARs & FRs) <strong>of</strong><br />
the government <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>, it is<br />
disappointing to see the IPS accounts<br />
being audited under such a framework.<br />
The Manual <strong>of</strong> Operations that the IPS<br />
painstakingly prepared over the years<br />
with the concurrence <strong>of</strong> the Governing<br />
Board (where the Secretary to the<br />
Treasury sits as an ex-<strong>of</strong>ficio member)<br />
clearly states that the IPS operates<br />
outside the ambit <strong>of</strong> the ARs and FRs <strong>of</strong> the government. We earnestly hope that due cognizance <strong>of</strong> this fact is taken into<br />
account in the future.<br />
The research staff is now fully geared to attract more projects and make their Research Units financially self-sustaining.<br />
Meanwhile, the support services <strong>of</strong> the <strong>Institute</strong> have grown in <strong>2007</strong> and the support staff is gearing themselves to face<br />
the challenges <strong>of</strong> the new building in 2009. These are positive signs for the growth and sustenance <strong>of</strong> the <strong>Institute</strong>. I look<br />
forward to more financial support from the <strong>Sri</strong> <strong>Lanka</strong>n private sector in the coming years, so that the <strong>Institute</strong> can assert<br />
more vocally independent views on policy matters.<br />
The support I have been receiving from the Chairman and the Board <strong>of</strong> Governors is very encouraging. The IPS staff is<br />
fully geared to meet the new challenges. We will continue to move forward, overcoming all obstacles to ensure that the IPS<br />
lives up to the promise <strong>of</strong> being the “apex body <strong>of</strong> economic policy research in <strong>Sri</strong> <strong>Lanka</strong>”.<br />
Saman Kelegama<br />
Executive DirectorThe Chairman and the Executive Director <strong>of</strong> the IPS are members <strong>of</strong> the National Economic Council (NEC) under the<br />
leadership <strong>of</strong> His Excellency the President. They participated and made contributions at the NCE meetings during <strong>2007</strong>.<br />
June 2008<br />
4 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Funding and New IPS Headquarters<br />
The IPS has been supported through a collaborated project between the Royal Netherlands Government and the<br />
Government <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> up to end 2005.<br />
Financial autonomy has always been considered essential for the long-term sustainability <strong>of</strong> the IPS. High priority was<br />
therefore given to the establishment <strong>of</strong> an Endowment Fund, to finance its ongoing activities. A first contribution was<br />
made to the Fund by the Government <strong>of</strong> Canada. The IPS Endowment Fund has gradually increased in size due to the<br />
prudent investment strategies adopted. The capabilities and resources that the <strong>Institute</strong> has developed have equipped the<br />
IPS for the challenges it now faces in operating in a new financial environment.<br />
The current operational funding <strong>of</strong> the <strong>Institute</strong> is primarily from the income derived from research projects, the IPS<br />
reserves invested in government securities, and the contribution made by the Government <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> to meet the rent<br />
and maintenance <strong>of</strong> the <strong>Institute</strong>. In addition to the above, income generated by the sale <strong>of</strong> IPS publications and<br />
miscellaneous income, make up the total funding <strong>of</strong> the <strong>Institute</strong>.<br />
Recognizing the importance and contribution <strong>of</strong> the IPS to economic policy research in the country, the Government <strong>of</strong><br />
<strong>Sri</strong> <strong>Lanka</strong> (GOSL) vested a prime half-acre plot <strong>of</strong> land in the city <strong>of</strong> Colombo to the IPS in order to construct the IPS<br />
Headquarters. The Netherlands funding for the construction <strong>of</strong> the IPS Headquarters was finalized with the signing <strong>of</strong><br />
the agreement in May 2006, which is considered the ultimate gift and, a flagship project that symbolizes the generous<br />
support and contribution <strong>of</strong> the government <strong>of</strong> The Netherlands to the IPS, and the GOSL at large.<br />
Hon. Dinesh Gunawardena, Minister <strong>of</strong> Urban Development and Sacred Area Development<br />
(left), and Reynout Van Dijk, Ambassador <strong>of</strong> the Netherlands (right), laid the foundation<br />
stone for the proposed IPS Headquarters in the scientific and cultural zone in Colombo on<br />
12 March.<br />
Proposed IPS Headquarters in Colombo 07.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 5
IPS Research<br />
Research Programme<br />
The core aim <strong>of</strong> IPS research programme is to contribute constructively to the discussions and debates on<br />
medium-term economic policy priorities for <strong>Sri</strong> <strong>Lanka</strong>. The <strong>Institute</strong>’s research output over time has addressed<br />
many <strong>of</strong> the development issues that are relevant to the country such as unemployment, regional disparities, and<br />
rural poverty. The aim <strong>of</strong> the current programme <strong>of</strong> research is to build on the substantive work that has already<br />
been carried out, identify gaps in the existing body <strong>of</strong> research, and formulate an integrated medium-term work<br />
programme. This programme addresses strategies to achieve more durable and equitable growth to meet the<br />
country’s development priorities.<br />
The IPS research programme is carried out by research units, each headed by a senior staff member. Each unit<br />
works within the medium-term research agenda developed to ensure coherence to the overall direction <strong>of</strong> the<br />
<strong>Institute</strong>’s work. Currently, the IPS research programme carries out key topics <strong>of</strong> study under thematically<br />
selected areas <strong>of</strong> research as follows:<br />
• Macroeconomic <strong>Policy</strong><br />
• International Economic <strong>Policy</strong><br />
• Labour, Employment and Human Resource Development <strong>Policy</strong><br />
• Industry, Public Enterprise Reform and Regulatory <strong>Policy</strong><br />
• Poverty and Social Welfare <strong>Policy</strong><br />
• Agricultural Economic <strong>Policy</strong><br />
• Environmental Economic <strong>Policy</strong><br />
• Health Economic <strong>Policy</strong><br />
In addition to the above research areas, other specialized areas <strong>of</strong> research such as governance, gender, political<br />
economy, etc., are mainstreamed into the overall work programme <strong>of</strong> the <strong>Institute</strong>. IPS research programme is<br />
financially supported by the <strong>Institute</strong>’s funds as well as externally funded collaborative projects with both<br />
domestic and international partners.<br />
6 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Macroeconomic <strong>Policy</strong><br />
Inteional Economic <strong>Policy</strong><br />
The macroeconomic policy environment has an important<br />
impact on the development objectives <strong>of</strong> a country.<br />
Increasingly, the intersection <strong>of</strong> macroeconomic and poverty<br />
issues is generating both scholarly and policy debate. While<br />
it has come to be accepted that economic growth is a necessary<br />
condition to alleviate poverty, a stable macroeconomic<br />
environment is a pre-condition to achieve and sustain higher<br />
levels <strong>of</strong> growth. Fiscal and monetary policy management<br />
and coordination, sustainable debt policy management,<br />
ensuring efficient allocation <strong>of</strong> resources for equitable<br />
growth across sectors and regions, generating the correct<br />
incentives, etc., are critical functions <strong>of</strong> a medium to longterm<br />
macroeconomic framework. Keeping such policy<br />
concerns in mind, the macroeconomic policy research<br />
programme <strong>of</strong> the IPS is focused on addressing key areas relevant to generating and sustaining macroeconomic stability<br />
<strong>of</strong> the <strong>Sri</strong> <strong>Lanka</strong>n economy with a view to contributing to topical policy discussions and debates.<br />
Highlights<br />
The IPS <strong>of</strong>fers a continuous review and analysis <strong>of</strong> <strong>Sri</strong><br />
<strong>Lanka</strong>’s efforts to generate a conducive macroeconomic<br />
environment through prudent fiscal and monetary policy<br />
management through its publications, participation <strong>of</strong> staff<br />
at seminars and, media events. A notable publication in<br />
this respect is the <strong>Institute</strong>’s flagship annual report <strong>Sri</strong><br />
<strong>Lanka</strong>: State <strong>of</strong> the Economy.<br />
<strong>Sri</strong> <strong>Lanka</strong>: State <strong>of</strong> the Economy <strong>2007</strong><br />
The State <strong>of</strong> the Economy report provides a rigorous<br />
assessment <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>’s economic performance in the<br />
light <strong>of</strong> policy developments in both the domestic and<br />
external environment. The report notes that the most<br />
promising feature <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>’s economic performance<br />
in 2006-07 was maintaining a relatively healthy rate <strong>of</strong><br />
GDP growth. Nonetheless, the predominant policy concern<br />
was the high rates <strong>of</strong> inflation which showed no signs <strong>of</strong><br />
moderation. The report analyses the risks in the interim,<br />
particularly those risks arising from a tightly constrained<br />
and volatile macroeconomic environment that would limit<br />
policy options in the face <strong>of</strong> any domestic or external shock.<br />
The report emphasizes the need to restructure fiscal policy<br />
to allow priority expenditures on growth enhancing areas.<br />
The report also highlights emerging socio-economic issues<br />
in key areas <strong>of</strong> medium-term policy relevance for the<br />
country. The central theme <strong>of</strong> the <strong>2007</strong> report is that better<br />
infrastructure and improved public services are needed not<br />
only to increase growth, but also to ensure that the benefits<br />
<strong>of</strong> that growth are spread more widely. The report highlights<br />
related issues <strong>of</strong> enhancing access to land and micr<strong>of</strong>inance,<br />
improving access to better quality education and health,<br />
the need to ensure sustainable and equitable utilization <strong>of</strong><br />
the natural environment, etc. The report shows that the<br />
supply-side constraints in infrastructure, skilled labour, and<br />
public services in <strong>Sri</strong> <strong>Lanka</strong> are formidable. However, what<br />
needs to be done comes back to the core issue: improve the<br />
capacity <strong>of</strong> the public sector to deliver basic services. All<br />
these require a commitment to major policy reforms.<br />
Reform <strong>of</strong> the International Development<br />
Architecture<br />
The IPS collaborated with the North-South <strong>Institute</strong> (NSI),<br />
Canada on a cross-country research programme on “Reform<br />
<strong>of</strong> the International Development Architecture” to examine<br />
the challenges related to the donor-recipient aid nexus, in<br />
which IPS undertook the <strong>Sri</strong> <strong>Lanka</strong>n case study.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 7
Dushni Weerakoon made a presentation on “Outlook and<br />
Prospects for the <strong>Sri</strong> <strong>Lanka</strong>n Economy” at the“CFA Day” organized<br />
by the Chartered Financial Analysts, Colombo, <strong>Sri</strong> <strong>Lanka</strong>,<br />
11 June.<br />
In <strong>Sri</strong> <strong>Lanka</strong>, the government is pressing for increased policy<br />
space from donor imposed conditions in the backdrop <strong>of</strong><br />
the country’s present circumstances as a conflict-affected<br />
country with substantial aid reliance given the urgent<br />
requirement for investment in public infrastructure. These<br />
conflicting needs <strong>of</strong> increased funding and greater policy<br />
space have pushed the government to explore alternative<br />
sources <strong>of</strong> finance, moving beyond the concessional lending<br />
<strong>of</strong> international financial institutions, towards commercial<br />
borrowing and emerging bilateral donors. The study<br />
explores thematic issues on the relationship between <strong>Sri</strong><br />
<strong>Lanka</strong> and the international aid architecture in the context<br />
<strong>of</strong> the opportunities and challenges posed by <strong>Sri</strong> <strong>Lanka</strong>’s<br />
recent relationship with international donors including the<br />
roles played by the Bretton Woods institutions, the UN<br />
system, bilateral donors, and NGOs.<br />
<strong>Sri</strong> <strong>Lanka</strong>: Post Tsunami Rehabilitation and<br />
Reconstruction<br />
The <strong>Institute</strong> continued to work closely with donors in<br />
exploring the wider economic implications <strong>of</strong> the posttsunami<br />
reconstruction efforts. A collaborative research<br />
project on “Post Tsunami Rehabilitation and Reconstruction”<br />
which included an assessment <strong>of</strong> the macroeconomic<br />
implications <strong>of</strong> tsunami related aid inflows was carried out<br />
with donor funding from the Asian Development Bank<br />
<strong>Institute</strong> (ADBI), Japan.<br />
<strong>Sri</strong> <strong>Lanka</strong> has progressed to the more difficult and<br />
challenging phase <strong>of</strong> reconstruction and recovery following<br />
the devastating impact <strong>of</strong> the December 2004 Asian<br />
tsunami. The challenges <strong>of</strong> reconstruction and<br />
rehabilitation were new to <strong>Sri</strong> <strong>Lanka</strong>, and perhaps more<br />
complex than providing immediate relief. Information on<br />
the processes involved in delivering aid to the tsunami<br />
affected and the perceptions <strong>of</strong> individuals on the aid<br />
received and the aid delivery mechanisms remain limited.<br />
Building on the work carried out by the IPS on post-tsunami<br />
economic recovery in <strong>Sri</strong> <strong>Lanka</strong>, a survey <strong>of</strong> 600 households<br />
in 14 Grama Niladhari Divisions (GNDs) in six affected<br />
districts across the Southern and Eastern Provinces was<br />
carried out in July 2006 in an attempt to obtain views on a<br />
broad range <strong>of</strong> issues including housing, livelihoods<br />
recovery, aid distribution, community cohesiveness, and<br />
disaster management. The survey findings were<br />
supplemented by an overall assessment <strong>of</strong> the<br />
macroeconomic challenges facing the government in<br />
meeting the reconstruction costs, including issues <strong>of</strong> cost<br />
escalation, aid absorption, and its implications.<br />
Nisha Arunatilake, Research Fellow, IPS presented the<br />
findings <strong>of</strong> the report on “Economic Challenges <strong>of</strong> Post-<br />
Tsunami Reconstruction in <strong>Sri</strong> <strong>Lanka</strong>” at a video conference<br />
on “Asian Tsunami - Lessons learned” organized by the<br />
Economics Department, Australian National University,<br />
Colombo venue - GDLN centre, Colombo on 6 September.<br />
<strong>Sri</strong> <strong>Lanka</strong>’s Foreign Investment Regime<br />
The IPS collaborated with the Asia-Pacific Research and<br />
Training Network on Trade (ARTNeT) to conduct a study<br />
on “Trade and Investment Linkages and Need for <strong>Policy</strong><br />
Coordination in LDCs: A Case Study <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>” and<br />
initiated a collaborative project with the Asian Development<br />
Bank (ADB), Manila, to examine “<strong>Sri</strong> <strong>Lanka</strong>’s Foreign<br />
Investment Regime” as part <strong>of</strong> a wider study examining<br />
ways and means <strong>of</strong> strengthening trade and investment<br />
links across the South Asian region.<br />
A key component <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>’s efforts to encourage an exportoriented<br />
growth strategy was to create a climate conducive to<br />
attracting foreign direct investment (FDI). Institutional reforms<br />
in this regard have included the establishment <strong>of</strong> the Board<br />
<strong>of</strong> Investment <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> (BOI) to administer an attractive<br />
incentive package for foreign investors, including access to<br />
Export Processing Zones (EPZs). FDI was seen as a key element<br />
in promoting export growth, supplementing scarce domestic<br />
capital, technology, and managerial skills, as well as a means<br />
<strong>of</strong> penetrating foreign export markets. Given increasing<br />
evidence <strong>of</strong> intra-industry and services investment linkages<br />
between <strong>Sri</strong> <strong>Lanka</strong> and its South Asian economic partners -<br />
most obviously that <strong>of</strong> India - this thematic area <strong>of</strong> study aims<br />
to analyse issues related to the investment climate for FDI.<br />
8 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
The areas <strong>of</strong> study include examining the linkages between<br />
trade and investment at the national level as well as<br />
assessing the potential for increasing intra-South Asian<br />
trade and investment flows, focusing in particular on<br />
important sectors such as textile and clothing (T and C) and<br />
automobile industries.<br />
As part <strong>of</strong> this initiative, IPS responded to the GDN-IPPR<br />
(Global Development Network and the <strong>Institute</strong> for Public<br />
<strong>Policy</strong> Research) call for proposals to participate in a global<br />
research project on “Development on the Move: Measuring<br />
and Optimizing the Economic and Social Impacts <strong>of</strong><br />
Migration”. The IPS proposal was one <strong>of</strong> the twelve shortlisted<br />
research teams for the initiative, among nearly 250<br />
proposals submitted from all regions in the developing and<br />
transition world. More information on the GDN-IPPR<br />
research project is available at www.gdnet.org/<br />
middle.phpoid=1214<br />
Other Activities<br />
As an integral part <strong>of</strong> influencing the policy discussions on<br />
macroeconomic related issues, the IPS has worked closely with<br />
the government, private sector, and donors, including the<br />
following during the year.<br />
Deshal de Mel presented the <strong>Sri</strong> <strong>Lanka</strong> country study on “Trade and<br />
Investment <strong>Policy</strong> Coordination in LDCs” at the ARTNeT<br />
Consultative Meeting on “Trade and Investment <strong>Policy</strong> Coordination”<br />
in Bangkok, Thailand during 16-17 July.<br />
Migration, Development, and Economic Welfare<br />
<strong>Sri</strong> <strong>Lanka</strong> has experienced varying forms and intensity <strong>of</strong><br />
migration in post-independence decades. The number <strong>of</strong><br />
people leaving the country, both for political and economic<br />
reasons, increased significantly in the 1980s. At present,<br />
over one million <strong>Sri</strong> <strong>Lanka</strong>n citizens are estimated to have<br />
migrated for foreign employment. The estimated outflow<br />
<strong>of</strong> migrants exceeds the number entering the labour force<br />
annually. Migrant remittance flows into <strong>Sri</strong> <strong>Lanka</strong> are<br />
significant and rising. Remittance inflows have come to<br />
account for nearly 8.5 per cent <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>’s GDP in 2006<br />
(US$ 2.3 billion), second only to export earnings from goods<br />
(US$ 6.8 billion) and far above that <strong>of</strong> average FDI inflows<br />
<strong>of</strong> 1.0-1.5 per cent <strong>of</strong> GDP. Lack <strong>of</strong> adequate livelihood<br />
and employment opportunities at home is the prime driver<br />
for most such out-migration. Skilled migrants – estimated<br />
to make up about 20 per cent – on the other hand mostly<br />
seek better employment/financial opportunities abroad. <strong>Sri</strong><br />
<strong>Lanka</strong> continues to produce relatively large numbers <strong>of</strong><br />
asylum seekers and currently ranked at 15 th place in terms<br />
<strong>of</strong> top asylum sending countries by the UNCHR. In this<br />
backdrop, it is important to better understand the<br />
development issues associated with migration and maximize<br />
the benefits <strong>of</strong> migration.<br />
The IPS was requested by the Government <strong>of</strong> <strong>Sri</strong><br />
<strong>Lanka</strong> to review the long-term development framework<br />
plan Mahinda Chinthana: Ten Year Horizon Development<br />
Framework, 2006-16 with the objective <strong>of</strong> shedding some<br />
light on the policy options available. Even though the<br />
overall policy framework to achieve the broad based<br />
development goals for the country – <strong>of</strong> sustainable<br />
growth, equity and poverty alleviation – has not varied<br />
substantially in the last two decades, successive<br />
governments have been less than successful in<br />
effectively articulating and implementing a consistent<br />
policy paradigm. For instance, there have been three<br />
separate development frameworks in the last four years<br />
alone i.e., Regaining <strong>Sri</strong> <strong>Lanka</strong>, Rata Perata and Mahinda<br />
Chinthanaya.<br />
The Ten Year Horizon Development Framework 2006-16<br />
has signalled that the approach to achieving <strong>Sri</strong> <strong>Lanka</strong>’s<br />
fundamental development objectives would differ in<br />
tone and focus with a stronger emphasis on the rural<br />
economy, agriculture, and small and medium<br />
enterprises (SMEs) as vehicles for generating a vision<br />
<strong>of</strong> ‘growth with equity’. The IPS in its review <strong>of</strong> the<br />
document <strong>of</strong>fers a detailed examination <strong>of</strong> some<br />
relevant sectors with the objective <strong>of</strong> examining some<br />
<strong>of</strong> the policy gaps and implementation challenges,<br />
while suggesting possible policy alternatives where<br />
necessary. The assessment was published as a Working<br />
Paper by the IPS.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 9
The IPS research staff participated at the following key<br />
forums in <strong>2007</strong>, as part <strong>of</strong> the <strong>Institute</strong>’s effort to strengthen<br />
links and engage with the private sector and donor<br />
community.<br />
Dushni Weerakoon made a presentation on “Outlook<br />
and Prospects for the <strong>Sri</strong> <strong>Lanka</strong>n Economy” at the CFA<br />
Day organized by the Chartered Financial Analysts,<br />
Cinnamon Grand Hotel, Colombo, 11 June.<br />
Executive Director made a presentation on the <strong>Sri</strong><br />
<strong>Lanka</strong>n Economy at the launch <strong>of</strong> the UN-ESCAP<br />
“Economic and Social Survey <strong>of</strong> Asia and the Pacific<br />
<strong>2007</strong>” report to the media, UN <strong>of</strong>fice, Colombo, 19 April.<br />
(for more information visit: www.ips.lk/staff/ed/<br />
index.html)<br />
Publications<br />
• IPS (<strong>2007</strong>), State <strong>of</strong> the Economy <strong>Report</strong> <strong>2007</strong>.<br />
• IPS (<strong>2007</strong>), “Mahinda Chinthana: A Commentary on<br />
<strong>Policy</strong> Options”, IPS Working Paper Series No. 11.<br />
• Weerakoon, D., S. Jayasuriya, P. Steele and N.<br />
Arunatilake (<strong>2007</strong>), “Economic Challenges <strong>of</strong> Post<br />
Tsunami Reconstruction in <strong>Sri</strong> <strong>Lanka</strong>”, Discussion<br />
Paper No. 75, Asian Development Bank <strong>Institute</strong><br />
(ADBI), Japan. www.adbi.org/discussion-paper/<strong>2007</strong>/<br />
08/31/2354.sri.lanka.post.tsunami.reconstruction/<br />
• Kelegama,S. (<strong>2007</strong>), “Why is the Rupee Depreciating<br />
so Rapidly” MONTAGE, Vol. 1, No.10.<br />
• Kelegama, S. (<strong>2007</strong>), <strong>Sri</strong> <strong>Lanka</strong>n Export Performance<br />
in 2006: A Closer Look”, <strong>Sri</strong> <strong>Lanka</strong>n Exporter, Vol.<br />
58, July-September.<br />
• Kelegama, S. (<strong>2007</strong>), “Global Integration and<br />
National Interests: Managing Change in <strong>Sri</strong> <strong>Lanka</strong>”,<br />
OPA Journal, Vol. 22, May.<br />
Research Personnel<br />
Executive Director at the launch <strong>of</strong> UN-ESCAP <strong>Report</strong> on<br />
“Economic and Social Survey <strong>of</strong> Asia and Pacific <strong>2007</strong>”,<br />
Colombo, 19 April.<br />
Dushni Weerakoon, Jayanthi Thennakoon, and<br />
Tilani Jayawardhana.<br />
Executive Director and Deshal De Mel presented the “<strong>Sri</strong> <strong>Lanka</strong>n Country Study” prepared by the IPS at a conference on<br />
“Southern Perspectives on Reform <strong>of</strong> the International Aid Architecture” organized by the North South <strong>Institute</strong>, Canada,<br />
Wilton Park, West Sussex, U.K. during 19-22 May.<br />
10 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
International Economic <strong>Policy</strong><br />
In an increasingly globalized world, <strong>Sri</strong> <strong>Lanka</strong> as a<br />
small and vulnerable economy highly dependent on<br />
trade faces considerable challenges. In order to better<br />
address them <strong>Sri</strong> <strong>Lanka</strong> has strived to secure its interests<br />
through regional agreements whilst being committed<br />
to the multilateral process. With the slow progress seen<br />
under the Doha Round, there has been a further<br />
intensification <strong>of</strong> regionalism across the world. In this<br />
context, it is important that <strong>Sri</strong> <strong>Lanka</strong> undertakes<br />
measures to further strengthen the existing trade<br />
arrangements to ensure greater market access abroad.<br />
There is also the need to not only strengthen but also<br />
deepen these regional trade arrangements to include<br />
trade in services and investment. While these regional<br />
initiatives would help diversify <strong>Sri</strong> <strong>Lanka</strong>’s markets<br />
and export baskets away from developed countries and the garment industry in the long run, it is imperative that in the<br />
short-medium term <strong>Sri</strong> <strong>Lanka</strong> continues to concentrate on these markets and export sector. During the year, the International<br />
Economic <strong>Policy</strong> Unit continued to undertake research on these issues relating to <strong>Sri</strong> <strong>Lanka</strong>’s participation in the<br />
multilateral negotiations, bilateral and regional trade arrangements, and the garment industry which continues to<br />
occupy a significant place in the economy.<br />
Highlights<br />
Domestic Preparedness <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> to<br />
Services Trade Liberalization<br />
<strong>Sri</strong> <strong>Lanka</strong> has not been active in services negotiations under<br />
the Doha Round <strong>of</strong> trade talks given that it does not have<br />
<strong>of</strong>fensive interests in the exports <strong>of</strong> services at least at the<br />
multilateral level. Nevertheless, it has engaged in<br />
negotiations on a bilateral basis largely on account <strong>of</strong><br />
interests <strong>of</strong> other countries which are seeking market access<br />
to <strong>Sri</strong> <strong>Lanka</strong>’s services sector. While there has not been any<br />
overt pressure to open up the domestic service sector in the<br />
country, it is important that <strong>Sri</strong> <strong>Lanka</strong> is prepared to<br />
undertake new commitments under GATS as a part <strong>of</strong> a<br />
larger negotiation process to secure <strong>Sri</strong> <strong>Lanka</strong>’s interests in<br />
agriculture and Non-Agricultural Market Access (NAMA)<br />
under the current Round. Moreover, making commitments<br />
unilaterally in the services sector independent <strong>of</strong> requests<br />
received could bode well for the sector in question and the<br />
overall economy. In this context, this study examines the<br />
extent to which the country is prepared to undertake further<br />
commitments under GATS. Given that there have been a<br />
number <strong>of</strong> requests received by <strong>Sri</strong> <strong>Lanka</strong> to further open<br />
up this sector, the study focuses on the telecom sector and<br />
examines the current state <strong>of</strong> regulatory framework and<br />
readiness <strong>of</strong> the sector to undertake further commitments<br />
at the multilateral level. This study was carried out as part<br />
<strong>of</strong> the ongoing collaborative project ‘WTO Doha Round<br />
and South Asia: Linking Civil Society with Trade<br />
Negotiations’ <strong>of</strong> CUTS Centre for International Trade,<br />
Economics and Environment, India. The overall objective<br />
<strong>of</strong> this project is to generate negotiation inputs for trade<br />
negotiators and policy makers in the South Asian region<br />
whilst taking into account the positions <strong>of</strong> civil society on<br />
these issues. The <strong>Sri</strong> <strong>Lanka</strong>n paper was presented at the<br />
10th Sustainable Development Conference, organized by<br />
Sustainable Development <strong>Policy</strong> Initiative (SDPI),<br />
Islamabad, Pakistan during 10-12 December.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 11
India-<strong>Sri</strong> <strong>Lanka</strong> FTA: Lessons for SAFTA<br />
Much before SAFTA came into existence in 2006, the India-<br />
Inteional <strong>Sri</strong> <strong>Lanka</strong> Free Trade Agreement Economic (ISLFTA) was already in <strong>Policy</strong><br />
operation by 2000. One salient feature <strong>of</strong> this bilateral<br />
arrangement is that <strong>Sri</strong> <strong>Lanka</strong>, being a smaller developing<br />
country, has been <strong>of</strong>fered less than full reciprocal preferences<br />
to India. While many consider the FTA a success, others<br />
argue that the most important items <strong>of</strong> export interest to<br />
both countries are placed under the negative list, the<br />
resultant impact on trade and welfare being minimal. While<br />
the agreement has generated benefits, particularly by way<br />
<strong>of</strong> a significant expansion in <strong>Sri</strong> <strong>Lanka</strong>’s exports to India,<br />
the lessons <strong>of</strong> the ISLFTA appear not to have been fully<br />
taken on board in the South Asia Free Trade Agreement<br />
(SAFTA) negotiations. In order to assess the lessons <strong>of</strong> the<br />
bilateral FTA for the regional process, the study<br />
commissioned by CUTS, India, aims to assess the depth <strong>of</strong><br />
preferences granted and the resultant trends in trade and<br />
investment between the two countries before and after the<br />
formation <strong>of</strong> the ISLFTA. The study also aims to draw broad<br />
policy implications relevant to the implementation <strong>of</strong><br />
SAFTA and its likely impact on generating increased trade<br />
across South Asia.<br />
Executive Director made a presentation on “Potential for Trade and<br />
Investment through FTAs” at the “<strong>Sri</strong> <strong>Lanka</strong> Economic Summit <strong>2007</strong>”<br />
jointly organized by the Ceylon Chamber <strong>of</strong> Commerce and the Board<br />
<strong>of</strong> Investment <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>, Cinnamon Grand, Colombo, 6-8 June.<br />
During the year, presentations on prospects and challenges<br />
facing SAFTA in the light <strong>of</strong> other regional trade<br />
agreements were made by IPS researchers at various forums<br />
held in the capitals <strong>of</strong> the region. IPS researchers also<br />
continued to actively contribute articles on the subject to<br />
several notable magazines and economic journals.<br />
Potential for Trade in Services under SAFTA<br />
Agreement<br />
The services sector has grown in importance in South Asian<br />
economies over the last decade. However other than India,<br />
most South Asian countries have not made much progress<br />
in tapping the growing market for trade in services.<br />
Recognizing this opportunity, during the 13 th SAARC<br />
Summit in November 2005, the Heads <strong>of</strong> State <strong>of</strong> SAARC<br />
nations called for a study to examine the potential for<br />
including the liberalization <strong>of</strong> trade in services in the<br />
SAFTA framework. Accordingly, the SAARC Secretariat<br />
commissioned the study which was to incorporate<br />
perspectives from national studies <strong>of</strong> all eight SAARC<br />
countries into a final study to be prepared by RIS, New<br />
Delhi. The IPS compiled the <strong>Sri</strong> <strong>Lanka</strong> study and<br />
participated in the two workshops to discuss and finalize<br />
the study. The final study is at present undergoing its final<br />
revisions and will be presented to the Council <strong>of</strong> Ministers<br />
<strong>of</strong> the SAARC prior to the July 2008 Summit in Colombo.<br />
Economic Cooperation between East Asia and<br />
South Asia<br />
Against a background <strong>of</strong> intensifying efforts at regional<br />
economic cooperation and integration between East and<br />
South Asian economies in recent years, the Asian<br />
Development Bank (ADB), embarked on a major policy<br />
research project on the subject in <strong>2007</strong>. The project seeks<br />
to identify gains from closer economic cooperation<br />
between East and South Asian economies and inform<br />
public and private sector stakeholders <strong>of</strong> the policy steps<br />
required for effective economic cooperation and<br />
integration between the two sub-regions. The project<br />
would thus help developing member countries devise<br />
strategies for effective regional economic cooperation and<br />
integration. The <strong>Sri</strong> <strong>Lanka</strong> country study aims to provide<br />
details on three sectoral areas <strong>of</strong> cooperation – in the areas<br />
<strong>of</strong> merchandise trade and investment, trade in services,<br />
and infrastructure and trade facilitation – and identify<br />
possible constraints to further cooperation and policy<br />
remedies.<br />
Trade and Innovation in the Textile and Clothing<br />
Industry in <strong>Sri</strong> <strong>Lanka</strong><br />
The abolition <strong>of</strong> the quota system which governed much<br />
<strong>of</strong> the international trade in apparel till 2005 was the<br />
12 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
iggest challenge confronting the industry. Despite stiff<br />
competition from low cost producers from other countries,<br />
<strong>Sri</strong> <strong>Lanka</strong> has managed to survive due to a number <strong>of</strong><br />
innovative initiatives undertaken by the industry with<br />
support from the <strong>Sri</strong> <strong>Lanka</strong>n government. Whilst the<br />
industry led by some <strong>of</strong> the large scale manufacturers have<br />
established themselves as credible suppliers to some <strong>of</strong><br />
the big brand names in the apparel trade, they are<br />
constantly striving to remain competitive by <strong>of</strong>fering<br />
innovative solutions to their customers. This study looks<br />
at how trade has affected innovation in the textile and<br />
clothing sector in <strong>Sri</strong> <strong>Lanka</strong>. More specifically, it looks at<br />
how intensified competition in light <strong>of</strong> the Multi-Fibre<br />
Arrangement (MFA) phase-out has led to a number <strong>of</strong><br />
innovative measures being undertaken in the textile and<br />
clothing industry in <strong>Sri</strong> <strong>Lanka</strong> to face the challenges <strong>of</strong> a<br />
quota free environment. This study was commissioned by<br />
the Trade and Agriculture Directorate <strong>of</strong> the OECD as<br />
one <strong>of</strong> a number <strong>of</strong> case studies. In this regard, a<br />
presentation on “The Ending <strong>of</strong> the Multi-Fibre<br />
Arrangement and Innovation in the Textile and Clothing<br />
Industry in <strong>Sri</strong> <strong>Lanka</strong>” was made at the “OECD Global<br />
Forum on Trade <strong>2007</strong>” which was held at the OECD<br />
Secretariat, Paris in 15-16 October.<br />
Other Activities<br />
IPS research staff continued to assist the Government and<br />
its various Ministries and Departments on trade policy<br />
formulation and served in various capacities, by:<br />
participating in the preparatory meetings at the<br />
Department <strong>of</strong> Commerce and leading the technical<br />
level negotiations on Trade in Services under the Indo-<br />
<strong>Lanka</strong> Comprehensive Economic Partnership<br />
Agreement (CEPA)<br />
The <strong>Institute</strong> has also worked closely with the private sector,<br />
donor community and research partners by:<br />
heading the Panel <strong>of</strong> Judges at the 15 th NCE Export<br />
Awards<br />
addressing various gatherings <strong>of</strong> private sector bodies<br />
such as the Ceylon Chambers <strong>of</strong> Commerce (CCC),<br />
National Chambers <strong>of</strong> Exporters (NCE), the Ceylon Tea<br />
Traders Association, etc.<br />
Publications<br />
• IPS (<strong>2007</strong>), “Market Access through Regional Trade<br />
Arrangements”, Daily Mirror, 13 July.<br />
www.dailymirror.lk/<strong>2007</strong>/07/13/ft/03.asp<br />
• Kelegama, S., and R. Adhikari (<strong>2007</strong>), “Repositioning<br />
SAFTA in the Regionalism Debate”, in A. Siddiqui<br />
(ed.), India and South Asia – Economic Development in the<br />
Age <strong>of</strong> Globalization, M.E. Sharp Publication, New York.<br />
• Kelegama, S. and I.N. Mukherji (<strong>2007</strong>), “India- <strong>Sri</strong><br />
<strong>Lanka</strong> Bilateral Free Trade Agreement: Six Years<br />
Performance and Beyond”, RIS Discussion Paper, No. 119,<br />
RIS, New Delhi.<br />
• Kelegama, S. (<strong>2007</strong>), “Working Towards a Common<br />
Position for South Asia in the WTO”, <strong>Sri</strong> <strong>Lanka</strong> Exporter,<br />
Vol. 55.<br />
• Kelegama, S. (<strong>2007</strong>), “<strong>Sri</strong> <strong>Lanka</strong>” in South Asian<br />
Perspectives 2006: Regionalism and Trade, ISAS, National<br />
University <strong>of</strong> Singapore.<br />
attending meetings <strong>of</strong> the Trade and Tariff Cluster<br />
<strong>of</strong> the National Council <strong>of</strong> Economic Development<br />
(NCED) <strong>of</strong> the Ministry <strong>of</strong> Finance<br />
delivering lectures on “<strong>Sri</strong> <strong>Lanka</strong> and SAARC:<br />
Responsibility under SAFTA” and the “India-<strong>Sri</strong><br />
<strong>Lanka</strong> Bilateral FTA” to new recruits <strong>of</strong> the <strong>Sri</strong> <strong>Lanka</strong><br />
Ministry <strong>of</strong> Foreign Affairs conducted at the Lakshman<br />
Kadirgamar <strong>Institute</strong> <strong>of</strong> International Relations<br />
(LKIIRSS)<br />
Janaka Wijayasiri, Research Economist, IPS participated at the 3rd<br />
International Conference on “Building a New BIMSTEC: Towards<br />
BIMSTEC – Japan Cooperation” at the Nippon Foundation, Tokyo,<br />
Japan, 3 December.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 13
• Kelegama, S. (<strong>2007</strong>), “The Bilateral Trade: The Case <strong>of</strong><br />
India-<strong>Sri</strong> <strong>Lanka</strong> Free Trade Agreement”, South Asia<br />
Survey, Vol.13, No.2.<br />
• De Mel, D. and J. Wijayasiri, “Domestic Preparedness<br />
<strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> with respect to Services Trade<br />
Liberalization: Case Study <strong>of</strong> the Telecom Sector”.<br />
• Kelegama, S. (<strong>2007</strong>), “Towards Greater Economic<br />
Connectivity in South Asia”, Economic and Political Weekly,<br />
29 September.<br />
• Kelegama, S. (<strong>2007</strong>), “South Asia in the WTO”, Sage<br />
Publications, New Delhi.<br />
• Thennakoon, J. and A. Rajapakse (<strong>2007</strong>), “<strong>Sri</strong> <strong>Lanka</strong> in<br />
the WTO” in S. Kelegama (ed.), “South Asia in the<br />
WTO”, Sage, New Delhi.<br />
• Weerakoon, D., and J. Thennakoon (<strong>2007</strong>), “Trade<br />
Facilitation: Priorities for South Asia” in South Asia<br />
Yearbook <strong>of</strong> Trade and Development <strong>2007</strong>: Harnessing Gains<br />
from Trade-The Domestic Reform Agenda, Centre for Trade<br />
and Development (CENTAD), India.<br />
Deshal de Mel made a presentation on “Trends in <strong>Sri</strong> <strong>Lanka</strong>’s<br />
Trade Flows with South Asia” at the “3rd CENTAD <strong>Annual</strong><br />
Sessions” held in New Delhi, India, 19 December.<br />
• Weerakoon, D. (<strong>2007</strong>), “Economic Cooperation in South<br />
Asia: Challenges and Constraints” in A.S. Raju (ed.),<br />
Reconstructing South Asia: An Agenda, Gyan Publishing<br />
House, New Delhi.<br />
• Wijayasiri, J. and S. Samad (<strong>2007</strong>), “Preference Erosion<br />
and Aid for Trade” in CUTS-CITEE (ed.), South Asian<br />
Positions in the WTO Doha Round: In Search <strong>of</strong> A Trade<br />
Development Agenda, Vol 2, Jaipur Printers, Jaipur.<br />
• Wijayasiri, J. and S. Samad (<strong>2007</strong>), Preference Erosion and<br />
Aid for Trade: A South Asian Perspective, Briefing Paper,<br />
www.cuts-citee.org/pdf/BP07-WTO-10.pdf<br />
• Wijayasiri, J. (<strong>2007</strong>), “Utilization <strong>of</strong> Preferential Trade<br />
Arrangements: <strong>Sri</strong> <strong>Lanka</strong>’s Experience with the EU and<br />
US GSP Schemes”, International Economic Series No. 8,<br />
IPS, Colombo.<br />
• Wijayasiri, J. (<strong>2007</strong>), “The Maldives and the WTO” in<br />
S. Kelegama (ed.), “South Asia in the WTO”, Sage, New<br />
Delhi.<br />
Executive Director delivered the Keynote Address at the Economic<br />
Forum on “Exploring Potential for Economic and Trade<br />
Cooperation for Mutual Benefit” at the conference on “China<br />
<strong>Sri</strong> <strong>Lanka</strong> Relations” to mark the 50 th Anniversary <strong>of</strong> Diplomatic<br />
Relations, Bandaranaike Centre for International <strong>Studies</strong> (BCIS),<br />
Colombo, 21-22 October.<br />
Research Personnel<br />
Saman Kelegama, Dushni Weerakoon, Janaka Wijayasiri,<br />
Tilani Jayawardhana, Jayanthi Thennakoon, Deshal De<br />
Mel, and Jagath Dissanayake.<br />
Forthcoming Publications<br />
• De Mel, D., “SAFTA: Towards a Viable FTA”, Trade<br />
Insight.<br />
• Weerakoon, D., and J. Thennakoon, “SAFTA: Which Way<br />
Forward”, Journal <strong>of</strong> South Asian Development, Vol. 3,<br />
No. 1.<br />
14 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Labour, Employment and Human Resources<br />
Inteional Development Economic <strong>Policy</strong><br />
In 2006, IPS research in the Labour Employment and<br />
Human Resources Development area focused on labour<br />
market issues faced by different marginalized groups -<br />
such as the elderly, the youth and workers in the informal<br />
sector-in <strong>Sri</strong> <strong>Lanka</strong>. While continuing on this research<br />
agenda, in recognition <strong>of</strong> the need for basic education<br />
and health care in childhood for a more productive adult<br />
life, a new focus was added to the research programme to<br />
exclusively examine the effectiveness <strong>of</strong> the delivery<br />
<strong>of</strong> health and education services to the poor. Education<br />
services in <strong>Sri</strong> <strong>Lanka</strong> have increasingly been challenged<br />
by disparities across schools and problems <strong>of</strong> low<br />
achievement rates. Enrolment and achievement rates,<br />
especially for post primary grades, are worse for children<br />
from poorer households and less developed provinces. At the same time, high unemployment rates among the more<br />
educated youth, among other reasons, point to the problems with relevance to education. The “New Educational Reforms”<br />
proposed in 1997 and implemented since 1998, planned several amendments to the education policy in the country to<br />
improve access to better quality education for all, to improve relevance <strong>of</strong> education, teacher training and management <strong>of</strong><br />
education and resource provision. These reforms are currently being implemented through various donor-funded projects.<br />
Are these policies successful in reaching the poor and delivering better quality education to the poor The answer to this<br />
question was explored by several IPS research as highlighted below.<br />
Highlights<br />
Elderly and the Labour Market<br />
This study, part <strong>of</strong> a greater World Bank study on ageing<br />
in <strong>Sri</strong> <strong>Lanka</strong>, aims to describe how and why individuals<br />
reach full-time retirement from full-time work in <strong>Sri</strong> <strong>Lanka</strong>.<br />
The study identifies both the incentives available for the<br />
elderly to work, in terms <strong>of</strong> retirement incomes, family<br />
support and assets as well as constraints faced by the elderly<br />
– such as poor health and lack <strong>of</strong> suitable employment<br />
opportunities. The study finds that the majority <strong>of</strong> elderly<br />
workers are engaged in the informal sector, work long hours<br />
and are paid less than younger workers, and that the formal/<br />
informal sector duality in the labour market are carried<br />
over to old age. Previous employment is a key factor<br />
influencing retirement decisions. Formal sector workers<br />
retire around age 60 mainly due to mandatory retirement<br />
regulations, while informal sector workers work until very<br />
old age due to economic reasons and lack <strong>of</strong> social security.<br />
Part-time work is not widely prevalent. The few who engage<br />
in part-time work are mainly workers who held regular jobs<br />
in their prime-age employment. The study hopes to guide<br />
policies aiming to influence work activity <strong>of</strong> the elderly.<br />
One outcome <strong>of</strong> this study was a paper on “Labour Market<br />
and Ageing - the Case <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>” (by Milan Vodopivec,<br />
World Bank and Nisha Arunatilake), which was presented<br />
(by Milan Vodopivec) at the World Bank Economists’ Forum<br />
at the World Bank headquarters in Washington DC, USA.<br />
on 19 th April. An article based on this study on the<br />
“Economic implications <strong>of</strong> demographic changes in <strong>Sri</strong><br />
<strong>Lanka</strong>” was published in the Daily Mirror on 26 th July, <strong>2007</strong>.<br />
The study has also contributed to a forthcoming World Bank<br />
report on the subject.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 15
Improving Education Services to the Poor<br />
IPS conducts ongoing research on issues concerning<br />
delivering effective education services to the poor. One<br />
study on the theme was to examine the current status <strong>of</strong> the<br />
Catch-up Education (CUE) programmes in the country and<br />
recommend policies to improve their effectiveness and<br />
coverage. The study was conducted for the Ministry <strong>of</strong><br />
Education and UNICEF (with funding from UNICEF).<br />
Catch-Up Education (CUE) is a mechanism for providing<br />
additional support and/or accelerated learning for children<br />
who have lost out on education for a period <strong>of</strong> time, and for<br />
children whose attendance has been poor, due to the<br />
prevailing political and security situation in the country in<br />
recent years. About 17 per cent <strong>of</strong> children do not complete<br />
the compulsory education cycle in <strong>Sri</strong> <strong>Lanka</strong>. Low school<br />
participation is particularly an issue in the conflict affected<br />
Northern and Eastern provinces, where violence and related<br />
displacements are disrupting education. Some other areas<br />
<strong>of</strong> the country also experience high drop-out rates,<br />
particularly due to poverty, lack <strong>of</strong> infrastructure and<br />
facilities among other reasons. The study intends to examine<br />
whether the CUE programmes in the country address the<br />
goal <strong>of</strong> providing education for all by effectively catering<br />
to those who have dropped out <strong>of</strong> the regular school system<br />
or are finding it difficult to keep up with the regular school<br />
work due to various reasons. Another study under the same<br />
theme was on how health affects education. This study was<br />
conducted in collaboration with a research team from the<br />
Kelaniya University Medical School. The study was a<br />
follow-up to the “Inter Sectoral Study on Education and<br />
Health” that was completed by the National Education<br />
Commission (NEC) in September 2005. IPS closely worked<br />
with the Ministry <strong>of</strong> Education and UNICEF and<br />
participated in workshops related to the above studies.<br />
Will School Level Decision Making Improve Access<br />
to Better Education for the Poor in <strong>Sri</strong> <strong>Lanka</strong><br />
Formula based funding and decentralized management <strong>of</strong><br />
schools as a means <strong>of</strong> improving school quality and<br />
performance has received renewed interest in the late 1990s,<br />
especially amongst developed countries. International<br />
experience suggests that needs-based resource allocation<br />
through formula funding and decentralized management<br />
<strong>of</strong> these funds has great potential for improving resource<br />
availability and management <strong>of</strong> schools. However, the<br />
success <strong>of</strong> these schemes depend on the level and depth <strong>of</strong><br />
decentralization, availability <strong>of</strong> information for<br />
An archived photo <strong>of</strong> the project on “Improving Education<br />
Services to the Poor”.<br />
implementation and monitoring these schemes, availability<br />
<strong>of</strong> basic resources, strength <strong>of</strong> school-support systems, and<br />
the ability <strong>of</strong> the central government to motivate local level<br />
players to achieve identified education goals. IPS using<br />
school census and other primary and secondary data<br />
examined the success <strong>of</strong> the Educational Quality Inputs<br />
(EQI) Scheme in <strong>Sri</strong> <strong>Lanka</strong> that envisage improving school<br />
performance through formula based funding and<br />
decentralized management <strong>of</strong> schools. The findings <strong>of</strong> the<br />
study show that the EQI fund distribution is largely propoor,<br />
with the exception <strong>of</strong> expenditure at the collegiate<br />
level. The study concludes that allocating more funds to<br />
more disadvantaged schools alone is insufficient to reduce<br />
disparities as the inability <strong>of</strong> schools to fully utilize the<br />
funds hold back progress. The findings <strong>of</strong> the study support<br />
the hypothesis that qualified principals, adequate levels <strong>of</strong><br />
human and physical resources and state level monitoring<br />
and support is needed for the success <strong>of</strong> education<br />
management at the school level. The study highlights the<br />
need to better use information collected from the schools on<br />
the EQI scheme to simplify and improve the implementation<br />
<strong>of</strong> the scheme and improve its effectiveness.<br />
Nisha Arunatilake participated and presented the findings<br />
<strong>of</strong> this study at the 6 th Poverty and Economic <strong>Policy</strong> Network<br />
(PEP) General Meeting, Sheraton Hotel, Lima, Peru, 11-<br />
16 June. She was also a visiting scholar at the UNESCO<br />
International <strong>Institute</strong> for Educational Planning (IIEP)<br />
from 2 February to 2 March, where she worked on the study,<br />
funded by the PEP Network.<br />
16 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Publications<br />
• Arunatilake, Nisha and Roshani de Silva (<strong>2007</strong>) “Issues<br />
Relating to Prevention <strong>of</strong> Child Labour in <strong>Sri</strong> <strong>Lanka</strong>”<br />
in Gamini Herath and Kishor Sharma (eds.), Child<br />
Labour in <strong>Sri</strong> <strong>Lanka</strong>, Ashgate Publishing Limited,<br />
Hampshire, England.<br />
Other Activities<br />
IPS research staff served in the following advisory capacities<br />
in the government sector, during the year.<br />
Nisha Arunatilake is a member <strong>of</strong> the National Advisory<br />
Committee on Manpower Planning, Ministry <strong>of</strong> Labour<br />
Relations and Manpower (from April <strong>2007</strong>).<br />
Executive Director delivered the keynote address at the First<br />
Meeting <strong>of</strong> the General Body <strong>of</strong> the Industrial Relations Forum<br />
<strong>of</strong> the Federation <strong>of</strong> Chambers <strong>of</strong> Commerce and Industry <strong>of</strong><br />
<strong>Sri</strong> <strong>Lanka</strong> (FCCISL), JAIC Hilton, Colombo, 23 February.<br />
Nisha Arunatilake participated at the 6 th Poverty and Economic <strong>Policy</strong> Network (PEP) General Meeting, Sheraton Hotel,<br />
Lima, Peru, 11-16 June.<br />
Research Personnel<br />
Nisha Arunatilake and Priyanka Jayawardena.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 17
Industry, Public Enterprise Reform and<br />
Inteional Regulatory Economic <strong>Policy</strong> <strong>Policy</strong><br />
Following from the three-year research programme<br />
identified in the IPS <strong>Annual</strong> <strong>Report</strong> <strong>of</strong> 2006, policy analysis<br />
in the areas <strong>of</strong> industry, public enterprise reform, and<br />
regulation continued to focus largely on the role <strong>of</strong> the state<br />
and <strong>of</strong> the market in generating sustainable and equitable<br />
growth. Whilst issues relating to the interdependence and<br />
to the dichotomy <strong>of</strong> state and market institutions have been<br />
the subject <strong>of</strong> much debate in academic and policy literature<br />
for decades, the topic is <strong>of</strong> particular significance for <strong>Sri</strong><br />
<strong>Lanka</strong> at the current juncture given the decisive stance<br />
assumed by the incumbent government to facilitate private<br />
participation without resorting to privatization per se.<br />
As such, research activities in the current year centred on<br />
key topical issues such as strengthening public-private linkages for industrial development; options for financing<br />
infrastructure development; and, regulatory governance and the institutional framework for economic reform.<br />
Highlights<br />
Impact <strong>of</strong> Corruption on Investment in <strong>Sri</strong> <strong>Lanka</strong><br />
This study was carried out for the USAID-ARD as part <strong>of</strong><br />
a larger project on the linkages between governance and<br />
economic performance. The specific objective <strong>of</strong> the research<br />
was to get to a perceptions-based understanding <strong>of</strong> the<br />
impact <strong>of</strong> corruption on investment in <strong>Sri</strong> <strong>Lanka</strong>. Given<br />
the qualitative nature <strong>of</strong> the study, the research<br />
methodology consisted <strong>of</strong> a Corruption Environment<br />
Assessment questionnaire distributed amongst key<br />
stakeholders at the national and local government levels,<br />
face to face interviews, and focus group discussions. Findings<br />
<strong>of</strong> the research were also presented at an informal workshop<br />
organized by the IPS and USAID-ARD in an effort to further<br />
verify our conclusions. Research findings indicated that<br />
corruption has less <strong>of</strong> an impact on investment than<br />
inadequate infrastructure facilities and inconsistent<br />
government policies.<br />
Understanding the Conditions for Change in State<br />
Owned Enterprises<br />
The over-arching objectives <strong>of</strong> this research study are to<br />
look at a menu <strong>of</strong> options to facilitate better performance in<br />
18 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong><br />
key public enterprises and to stimulate a dialogue amongst<br />
the public, based on informed analysis, on the costs and<br />
benefits <strong>of</strong> reforms. The methodology consists <strong>of</strong> a<br />
comprehensive literature survey, in-depth one-on-one<br />
interviews with major stakeholders, focus groups discussions<br />
and expert consultations. The study explores both the<br />
economic and social costs <strong>of</strong> the status quo and the political<br />
forces at play determining the prospects for change. The<br />
primary research questions underpinning this study are;<br />
what are the drivers for change in State Owned Enterprises<br />
(SOEs); is there sufficient at stake for change (will change<br />
make a difference); will identified policy options be<br />
politically beneficial – or at least, politically benign; what<br />
strategies are required to manage the transition from the<br />
status quo (for instance, compensating the “losers”).<br />
The study focuses on four selected SOEs namely; Ceylon<br />
Electricity Board (CEB); Ceylon Petroleum Corporation<br />
(CPC); <strong>Sri</strong> <strong>Lanka</strong> Railways (SLR); and <strong>Sri</strong> <strong>Lanka</strong> Central<br />
Transport Board (SLCTB) (public passenger bus transport).<br />
These entities have been selected as representative case<br />
studies <strong>of</strong> the SOE sector given the crucial role they play in<br />
the country’s economic activities.
Draft National <strong>Policy</strong> on Enterprise Development<br />
and Investment Promotion<br />
The IPS, in collaboration with the Ministry <strong>of</strong> Enterprise<br />
Development and Investment Promotion (MEDIP), Marga<br />
<strong>Institute</strong>, and the Ceylon Chamber <strong>of</strong> Commerce, under the<br />
coordination <strong>of</strong> Asia Foundation, initiated a study on<br />
drafting a national policy on enterprise development and<br />
investment promotion. Initial draft tendered for a wide<br />
consultation organized in the provinces with the participation<br />
<strong>of</strong> entrepreneurs spanning a wide range <strong>of</strong> competences<br />
and capacities. The national policy was drafted with the<br />
objective <strong>of</strong> bringing together support infrastructure for<br />
enterprise development within a cohesive and comprehensive<br />
framework. Moreover, the policy recommendations<br />
set out in the<br />
report focused<br />
on effective<br />
networking<br />
between the<br />
public and<br />
private sectors<br />
to improve<br />
quality and to<br />
facilitate the<br />
growth and<br />
distribution<br />
<strong>of</strong> enterprises<br />
in the services<br />
sector.<br />
Participants at the workshop on “Participatory<br />
Concept Paper for the Design <strong>of</strong> an Effective<br />
Industrial <strong>Policy</strong> Framework for <strong>Sri</strong> <strong>Lanka</strong>”,<br />
Hotel Taj Samudra, Colombo, 9 February.<br />
Alternative Methods <strong>of</strong> Financing for<br />
Infrastructure Development in <strong>Sri</strong> <strong>Lanka</strong><br />
The budget <strong>of</strong> the <strong>Sri</strong> <strong>Lanka</strong>n Government is over-stretched<br />
by competing needs on limited resources with major<br />
implications for the infrastructure and service delivery<br />
sectors in terms <strong>of</strong> cost and quality. In this context, the aim<br />
<strong>of</strong> the IPS study is to highlight the importance <strong>of</strong> attracting<br />
private investment for the development <strong>of</strong> domestic<br />
infrastructure. A paper on “Alternative Methods <strong>of</strong><br />
Financing for Infrastructure Development” was submitted<br />
to the National Economic Council on 5 June. Subsequently,<br />
a presentation was also delivered on the same topic at the<br />
National Economic Council chaired by His Excellency the<br />
President on 3 July.<br />
Formulating Guidelines for a Consensus on a<br />
National Industrial <strong>Policy</strong> Framework for <strong>Sri</strong><br />
<strong>Lanka</strong><br />
The aim <strong>of</strong> the study is to formulate guidelines reaching<br />
consensus on issues relating to a national industrial policy,<br />
which will create consistent and appropriate policies to<br />
ensure the industrial development <strong>of</strong> the country. A<br />
workshop in this regard was organized by the IPS jointly<br />
with the Industrial Association <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> (IASL) at the<br />
Hotel Taj Samudra, Colombo on 9 February. The main<br />
objective <strong>of</strong> the workshop was to elicit the views <strong>of</strong> key<br />
stakeholders on industrial policy based on a document<br />
prepared by the IPS for the IASL, titled, “A Participatory<br />
Concept Paper for the Design <strong>of</strong> an Effective Industrial<br />
<strong>Policy</strong> Framework for <strong>Sri</strong> <strong>Lanka</strong>”.<br />
The outcome <strong>of</strong> the research study as a policy brief was<br />
submitted to the National Economic Council by the IASL.<br />
Malathy Knight-John made a presentation at the workshop on<br />
“A Participatory Concept Paper for the Design <strong>of</strong> an Effective<br />
Industrial <strong>Policy</strong> Framework for <strong>Sri</strong> <strong>Lanka</strong>”, Hotel Taj Samudra,<br />
Colombo, 9 February.<br />
Publications<br />
• Indraratna, A.D.V. de S. and Hirimuthugodage, Dilani<br />
(eds.), (<strong>2007</strong>), Inequity, Poverty and Development,<br />
<strong>Sri</strong> <strong>Lanka</strong> Economic Association, Colombo.<br />
Other Activities<br />
IPS research staff participated at the following key forums<br />
during the year, as a part <strong>of</strong> strengthening links with the<br />
<strong>Institute</strong>’s various stakeholders.<br />
Malathy Knight-John, Research Fellow, made a<br />
presentation on “Improving Telecom Performance in<br />
<strong>Sri</strong> <strong>Lanka</strong>: <strong>Policy</strong> Actions” and was discussant at the<br />
session on “Regulating in an Imperfect World” at the<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 19
“CPRsouth <strong>2007</strong>: Research for Improving ICT<br />
Governance in the Asia-Pacific Conference” organized<br />
by LIRNEasia and the National College <strong>of</strong> Public<br />
Administration and Governance, University <strong>of</strong> the<br />
Philippines, Diliman, 19-21 January. She also made a<br />
presentation on “Telecoms Service Delivery and Pro-<br />
Poor Growth in <strong>Sri</strong> <strong>Lanka</strong>: Opportunities and<br />
Challenges” and chaired the session on “The Role <strong>of</strong><br />
the Private Sector in Service Delivery at the Provincial<br />
Level” at the workshop on “Service Delivery for Pro-<br />
Poor Growth in <strong>Sri</strong> <strong>Lanka</strong>” organized by IPS and<br />
theWorld Bank, Hotel Chaaya Village, Habarana on<br />
11-13 January.<br />
In addition, she was a lead discussant at an open forum<br />
on a study “Assessing the Impacts <strong>of</strong> Privatization on<br />
Workers” organized by the Centre for <strong>Policy</strong> Analysis<br />
(CEPA), CEPA, 28 June; discussant at a workshop on<br />
the “Economic Impacts <strong>of</strong> Corruption” organized by<br />
the <strong>Sri</strong> <strong>Lanka</strong> Economic Association, OPA Auditorium,<br />
4 June, and moderated a live televised session organized<br />
by <strong>Lanka</strong> Business Online (LBO), and <strong>Lanka</strong> Business<br />
<strong>Report</strong> (LBR) on “Women in Enterprise” at the Trans<br />
Asia Hotel on 12 March.<br />
Dilani Hirimuthugodage presenting a copy <strong>of</strong> the book edited<br />
with Pr<strong>of</strong>. A.D.V. de S. Indraratne on “Inequity, Poverty and<br />
Development” to Robert Blake, US Ambassador in <strong>Sri</strong> <strong>Lanka</strong>,<br />
OPA Auditorium, Colombo, 18 December.<br />
Research Personnel<br />
Malathy Knight-John, Shantha Jayasinghe, Dilani<br />
Hirimuthugodage, Yatila Wijemanne, and Praveeni<br />
Munasinghe.<br />
Executive Director participated as a panelist at a seminar on<br />
“How Competitive is <strong>Sri</strong> <strong>Lanka</strong> for Business” organized by the<br />
Ceylon Chamber <strong>of</strong> Commerce (CCC) on 1 November.<br />
Malathy Knight-John participatd as a discussant at the workshop<br />
on “Service Delivery for Pro-Poor Growth in <strong>Sri</strong> <strong>Lanka</strong>”, Hotel<br />
Chayaa Village, Habarana, 11-13 January.<br />
20 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Poverty and Social Welfare<br />
Inteional<br />
Economic <strong>Policy</strong><br />
The IPS work in the areas <strong>of</strong> Poverty and Social Welfare<br />
seeks to improve knowledge on poverty dynamics <strong>of</strong><br />
vulnerable groups in order to emphasize the need to balance<br />
economic and social issues in policy making and<br />
implementation, which would eventually lead to improved<br />
status <strong>of</strong> the poor. Despite continued efforts by the<br />
government to reduce poverty through a dual approach <strong>of</strong><br />
growth generating policy reforms and continued assistance<br />
to the deprived via social welfare programmes and poverty<br />
alleviating initiatives, poverty level in <strong>Sri</strong> <strong>Lanka</strong> has<br />
continued to remain high over the past decades. While<br />
around 23 per cent <strong>of</strong> the population falls below the poverty<br />
line, considerable disparities exist across regions. Given<br />
the continued dominance <strong>of</strong> the macro-adjustment based<br />
development strategy in <strong>Sri</strong> <strong>Lanka</strong>, there is a strong need<br />
to understand the mechanisms and processes that translate macroeconomic policy reform to increased welfare, and also the<br />
reasons why certain population segments remain deprived. The IPS recognizes the need to furnish policy makers with upto-date<br />
evaluations on poverty alleviation efforts and provide medium-term analysis <strong>of</strong> the relevant issues. The research<br />
in the area <strong>of</strong> poverty and social welfare at IPS, focuses on understanding the causes and dynamics <strong>of</strong> poverty and<br />
evaluating the effectiveness <strong>of</strong> various poverty alleviation initiatives by the government, co-operatives and the nongovernmental<br />
organizations.<br />
Highlights<br />
Poverty Alleviation through Micr<strong>of</strong>inance<br />
Programmes<br />
The important role played by micr<strong>of</strong>inance in combating<br />
poverty and creating employment among the poor has<br />
increasingly been recognized. Especially in <strong>Sri</strong> <strong>Lanka</strong>,<br />
there have been a wide range <strong>of</strong> financial institutions<br />
(varying from banks to community based organizations)<br />
involved in the provision <strong>of</strong> various financial services to<br />
lower income households. Moreover, in the aftermath <strong>of</strong><br />
the tsunami, the micr<strong>of</strong>inance sector in <strong>Sri</strong> <strong>Lanka</strong><br />
experienced an influx <strong>of</strong> donor funds leading to a number<br />
<strong>of</strong> developments in this sector. Nevertheless, limited<br />
research has been carried out in this area to explore the<br />
outreach and the effectiveness <strong>of</strong> these programs in<br />
alleviating poverty in <strong>Sri</strong> <strong>Lanka</strong>. In this context, IPS<br />
continued its focus on micr<strong>of</strong>inance and was involved in a<br />
number <strong>of</strong> research projects in this area.<br />
a) Outreach <strong>of</strong> Financial Services in <strong>Sri</strong> <strong>Lanka</strong>: A<br />
Look at the Demand side from a Micr<strong>of</strong>inance<br />
Perspective<br />
IPS completed a study on the outreach <strong>of</strong> financial services<br />
in <strong>Sri</strong> <strong>Lanka</strong> with special reference to the micr<strong>of</strong>inance sector<br />
<strong>of</strong> the country. This study was carried out under the<br />
Promotion <strong>of</strong> Micro Finance Sector (ProMis) programme<br />
implemented by the Ministry <strong>of</strong> Finance in collaboration<br />
with the German Technical Cooperation (GTZ). The findings<br />
are based on an island-wide survey <strong>of</strong> almost 3,000<br />
households. The study analyses the extent to which<br />
households have utilized financial services, specifically loans,<br />
savings and insurance and explores disparities across sectors,<br />
geographical regions, and income groups. In addition, the<br />
study explores the volume <strong>of</strong> loans and savings at household<br />
level, expectations from, and preferences among, financial<br />
institutions, barriers to access and the extent to which<br />
households use informal sources <strong>of</strong> finance. The final report<br />
will be published by GTZ -ProMis in early 2008.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 21
) Post Tsunami Micr<strong>of</strong>inance in <strong>Sri</strong> <strong>Lanka</strong><br />
In the aftermath <strong>of</strong> the 2004 tsunami, the micr<strong>of</strong>inance<br />
sector in <strong>Sri</strong> <strong>Lanka</strong> experienced an influx <strong>of</strong> donor funds -<br />
in the form <strong>of</strong> grants, s<strong>of</strong>t loans and subsidies. This<br />
encouraged many micr<strong>of</strong>inance institutions (MFIs) to<br />
expand their outreach to areas/households affected by the<br />
tsunami. Many MFIs implemented special credit schemes<br />
aimed at rebuilding the lives <strong>of</strong> the tsunami affected<br />
households particularly to assist them to revive various<br />
income generation activities. The Central Bank <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong><br />
and the National Development Trust Fund (NDTF) also<br />
implemented special credit schemes to serve those affected<br />
by the tsunami. Moreover, a number <strong>of</strong> NGOs that have<br />
traditionally been involved in other welfare and<br />
development activities entered into micr<strong>of</strong>inance. In<br />
addition, in the aftermath <strong>of</strong> the tsunami, many MFIs<br />
started lending at zero or subsidized rates <strong>of</strong> interest and<br />
mixed loans and grants which led to various adverse<br />
implications in the micr<strong>of</strong>inance sector in <strong>Sri</strong> <strong>Lanka</strong>.<br />
In this background, IPS engaged in a study to explore the<br />
“Post Tsunami Micr<strong>of</strong>inance in <strong>Sri</strong> <strong>Lanka</strong>” funded by the<br />
German Technical Cooperation (GTZ) and the Ministry <strong>of</strong><br />
Finance (under the Promotion <strong>of</strong> the Micr<strong>of</strong>inance Sector-<br />
ProMis Project). A survey covering 18 key MFIs in four<br />
districts in the South and East <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> was carried out<br />
to assess the effectiveness <strong>of</strong> post tsunami micr<strong>of</strong>inance<br />
programmes on clients, MFIs and the micr<strong>of</strong>inance sector<br />
as a whole. The study expects to identify lessons learnt on<br />
post tsunami funding for micr<strong>of</strong>inance and to provide<br />
recommendations to donors to improve their policies and<br />
practices for development <strong>of</strong> the sector. The final report is<br />
expected to be completed early 2008.<br />
c) Other Activities Related to Micr<strong>of</strong>inance<br />
IPS Researchers have also worked closely with the<br />
government, donors and various international and local<br />
networks and have provided policy advice and technical<br />
support in a number <strong>of</strong> occasions. Ganga Tilakaratna,<br />
Research Economist, has been serving as a Social<br />
Intermediation Specialist to the National Development<br />
Trust Fund (NDTF) under the Rural Financial Sector<br />
Development Programme (RFSDP), implemented by the<br />
Ministry <strong>of</strong> Finance and Planning and funded by the Asian<br />
Development Bank. She also made a presentation on<br />
“Micr<strong>of</strong>inance Programmes in <strong>Sri</strong> <strong>Lanka</strong>” at a seminar<br />
organized by the <strong>Sri</strong> <strong>Lanka</strong> Economic Association (SLEA)<br />
on “Poverty in <strong>Sri</strong> <strong>Lanka</strong>: Evaluation <strong>of</strong> Programmes and<br />
Improving their Effectiveness” in March <strong>2007</strong>.<br />
Micro-Insurance for the Poor<br />
Micro-insurance has been recognized as an important<br />
mechanism to help the poor to cope with various risks and<br />
vulnerabilities they are faced with. In recent years, many<br />
MFIs in <strong>Sri</strong> <strong>Lanka</strong> have expanded their services to provide<br />
micro-insurance along with other credit and savings<br />
facilities. Moreover, there are a number <strong>of</strong> government and<br />
private organizations involved in the provision <strong>of</strong> microinsurance<br />
facilities to the poor. Nevertheless, the type <strong>of</strong><br />
services/insurance facilities provided by these players<br />
varies to a great extent. Moreover, the extent to which these<br />
services match the needs <strong>of</strong> the poor and help them to<br />
mitigate their risks is not clear. The study initiated by IPS<br />
attempts to evaluate the current status <strong>of</strong> the microinsurance<br />
sector particularly looking at the supply <strong>of</strong> and<br />
demand for these services to identify the gaps/constraints<br />
in the sector. The study is expected to bring out important<br />
policy implications for the micro-insurance sector as a whole<br />
particularly in identifying demand-driven insurance<br />
products to serve the needs <strong>of</strong> the low-income groups.<br />
Development Strategies, Welfare Regime and<br />
Poverty Reduction in <strong>Sri</strong> <strong>Lanka</strong><br />
IPS completed a country study on Development Strategies,<br />
Welfare Regime and Poverty Reduction in <strong>Sri</strong> <strong>Lanka</strong> for<br />
the United Nations Research <strong>Institute</strong> for Social<br />
Development (UNRISD). The study explores development<br />
experience, social policy regime and poverty reduction<br />
strategy <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>. It discusses the development strategy<br />
that has produced limited structural transformation in the<br />
economy, a moderate level <strong>of</strong> per capita income, and good<br />
social outcomes, structured under two policy regimes: the<br />
state-led period <strong>of</strong> structural change; and the regime <strong>of</strong><br />
neo-liberal reforms. The study discusses the configuration<br />
<strong>of</strong> institutions and policies in different spheres <strong>of</strong> the<br />
political economy that has resulted in such outcomes, the<br />
political forces that drive the development and social policy<br />
regime, and how the country has coped with pressures for<br />
economic and social policy reforms.<br />
SAARC Regional Poverty Pr<strong>of</strong>ile<br />
Although there is a growing body <strong>of</strong> literature on the role<br />
<strong>of</strong> infrastructure on poverty alleviation, such information<br />
available for the SAARC member states is limited. The<br />
22 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Ministerial Meeting on Poverty Alleviation held in<br />
Colombo in August, 2006 decided to explore the nexus<br />
between rural infrastructure, including socio-economic<br />
infrastructure, and poverty in the next SAARC Regional<br />
Poverty Pr<strong>of</strong>ile (RPP). IPS in collaboration with the<br />
Samurdhi Division <strong>of</strong> the Ministry <strong>of</strong> Nation Building<br />
and Estate Infrastructure Development and the<br />
Department <strong>of</strong> Census and Statistics <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> (DCS)<br />
has been involved in the preparation <strong>of</strong> the <strong>Sri</strong> <strong>Lanka</strong><br />
country report which will be used as input to the RPP. The<br />
country report is expected to be completed by early 2008<br />
and launched along with the RPP.<br />
Other Activities<br />
Roshini Jayaweera on a field visit on the study on “Combating<br />
Multiple and Overlapping Vulnerabilities: Microinsurance for the<br />
Poor”, Gampaha, Batuwatta during 3-4 May.<br />
Poverty and Social Welfare Unit provided technical<br />
input in organizing the workshop on “Taking SAARC<br />
Development Goals (SDGs) Forward” in collaboration<br />
with the Samurdhi Division <strong>of</strong> the Ministry <strong>of</strong> Nation<br />
Building and Estate Infrastructure Development held<br />
at the <strong>Sri</strong> <strong>Lanka</strong> Foundation <strong>Institute</strong> on 17 December.<br />
The workshop was a starting point to create awareness<br />
<strong>of</strong> the SDGs and to ensure that tasks and<br />
responsibilities are effectively undertaken by the<br />
relevant institutions.<br />
Ganga Tilakaratna and Ramali Perera contributed<br />
towards preparing a report on “Outreach <strong>of</strong> Financial<br />
Services in <strong>Sri</strong> <strong>Lanka</strong>: A Look at the Demand-side<br />
from a Micr<strong>of</strong>inance Perspective” for the Promotion<br />
<strong>of</strong> the Micr<strong>of</strong>inance Sector (ProMis) and GTZ.<br />
Ganga Tilakaratne was a member <strong>of</strong> the Committee<br />
to “Prepare Work Plan <strong>of</strong> Action in Implementing,<br />
Monitoring and Evaluating the National Action Plan<br />
for Poverty Alleviation for <strong>Sri</strong> <strong>Lanka</strong> under the<br />
SAARC Social Charter”, for Samurdhi Division,<br />
Ministry <strong>of</strong> Nation Building and Estate Infrastructure<br />
Development.<br />
Publications<br />
• Book Review: Perera R. (<strong>2007</strong>) , “We Are Poor but So<br />
Many: The Story <strong>of</strong> Self-Employed Women in India”<br />
(by Ela Bhatt), South Asia Economic Journal, Vol.8,<br />
No. 1, January-June.<br />
IPS staff participated at the workshop on “Taking SAARC<br />
Development Goals (SDGs) Forward” in collaboration with the<br />
Samurdhi Division <strong>of</strong> the Ministry <strong>of</strong> Nation Building and Estate<br />
Infrastructure Development held at the <strong>Sri</strong> <strong>Lanka</strong> Foundation<br />
<strong>Institute</strong> on 17 December.<br />
Research Personnel<br />
Ganga Tilakaratna, Ayodya Galappattige, Ramali Perera,<br />
and Roshini Jayaweera.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 23
Agricultural Economic <strong>Policy</strong><br />
Inteional<br />
Economic <strong>Policy</strong><br />
In <strong>2007</strong>, <strong>Sri</strong> <strong>Lanka</strong>’s agriculture continued to advance for<br />
another year on the rough terrain <strong>of</strong> increasing food prices,<br />
increasing costs <strong>of</strong> production, and multiple institutional<br />
constraints. Under this setting, the challenges to the<br />
agricultural economic pr<strong>of</strong>ession are, obviously, numerous<br />
in this year. The programme <strong>of</strong> the Agricultural Economic<br />
<strong>Policy</strong> Unit <strong>of</strong> the IPS for <strong>2007</strong>, therefore, had to be drawn<br />
up with care to address as many <strong>of</strong> them as possible. The<br />
impact <strong>of</strong> the ongoing armed conflict and the long standing<br />
poor governance in the state services on the small holder<br />
sector was therefore considered a timely subject for<br />
investigation in <strong>Sri</strong> <strong>Lanka</strong> and the fisheries sector was<br />
chosen as the case for the study. Further, value chain<br />
analysis, a new analytical tool currently gaining popularity<br />
was employed in this study so that its applicability to conflict studies could also be ascertained. The other persistent<br />
problem in the agricultural sector involving productivity and efficiency under changing policy scenarios was also focused<br />
on during this year and an analysis on the food crop sector, based on the <strong>Policy</strong> Analysis Matrix, was initiated. In addition<br />
to these, a study <strong>of</strong> the recreational value <strong>of</strong> Diyawanna Oya wetland was included in this year’s research programme as<br />
the environmental impact <strong>of</strong> rapid urbanization is a growing concern in <strong>Sri</strong> <strong>Lanka</strong>.<br />
Highlights<br />
Value Chain Development in Conflict-Affected<br />
Environments: Analysis <strong>of</strong> the Fisheries Sector<br />
in <strong>Sri</strong> <strong>Lanka</strong><br />
<strong>Sri</strong> <strong>Lanka</strong> has been facing an armed conflict for nearly<br />
three decades. Further, it is saddled with a state sector that<br />
is pervaded with chronic inefficiency and pilferage which<br />
can also be treated as a conflict in the sense that it has the<br />
potential to cause extreme unrest and violence. These two<br />
forces are considered to be largely responsible for the<br />
country’s prevailing underdevelopment and evaluating<br />
their impact on the performance <strong>of</strong> a productive sector<br />
remains a timely exercise and value chain analysis (VCA)<br />
<strong>of</strong>fers a potential methodology to address these problems.<br />
Out <strong>of</strong> the set <strong>of</strong> conflicts that are affecting various<br />
components <strong>of</strong> the fish value chain creating a host <strong>of</strong><br />
constraints to its effective functioning and thereby its<br />
competitiveness, the ongoing armed conflict and failure in<br />
governance affecting the value chain within the sector were<br />
selected in this study to be analysed for their impacts on<br />
the fisheries value chain.<br />
Impact <strong>of</strong> Post Doha Agricultural Liberalization<br />
on Efficiency and Comparative Advantage <strong>of</strong> Rice<br />
and Potato Sectors in <strong>Sri</strong> <strong>Lanka</strong>: A <strong>Policy</strong> Analysis<br />
Matrix (PAM) Approach<br />
Specific policies on agriculture in <strong>Sri</strong> <strong>Lanka</strong> include provision<br />
<strong>of</strong> input subsidies, guaranteed product prices and state owned<br />
marketing services. With the implementation <strong>of</strong> open<br />
economic policies which started from 1977, <strong>Sri</strong> <strong>Lanka</strong><br />
liberalized some <strong>of</strong> the activities relating to agriculture and<br />
on a “second wave <strong>of</strong> liberalization” in 1990, the trade policy<br />
was further relaxed. However, some <strong>of</strong> these inward looking<br />
policies extend even into the post-liberalization period and<br />
imports <strong>of</strong> major sensitive agricultural commodities<br />
including rice, potato, chilli and onions are still controlled<br />
through tariffs, non-tariff measures and quantitative<br />
restrictions. Thus, the present policy is neither liberal nor<br />
protective. To complicate matters further, Doha Development<br />
Agenda demands a substantial improvement in market access,<br />
reduction and ultimate phasing out <strong>of</strong> export subsidies and<br />
domestic support. Consequently, a lack <strong>of</strong> clarity exists about<br />
the real effects <strong>of</strong> present day policy and the ways to continue<br />
24 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
with further policy reforms and the fragmented research<br />
conducted so far does not shed enough light on the impacts<br />
<strong>of</strong> the existing agricultural policies. On this backdrop, this<br />
study employs PAM approach that <strong>of</strong>fers a repeatedly usable<br />
model which is capable <strong>of</strong> producing coherent sets <strong>of</strong><br />
multiple efficiency indicators.<br />
An Estimation <strong>of</strong> the Recreational Use Value <strong>of</strong><br />
Diyawanna Oya Wet Land Eco-System: An<br />
Application <strong>of</strong> Travel Cost Method<br />
In spite <strong>of</strong> the wide spectrum <strong>of</strong> eco-system services<br />
generated, the urban wet lands in <strong>Sri</strong> <strong>Lanka</strong> have been<br />
decreasing rapidly in acerage and quality over the past few<br />
decades. Importance <strong>of</strong> these valuable eco-systems was not<br />
adequately identified until recently and ad-hoc conversion<br />
<strong>of</strong> the wetlands for development purposes has become a<br />
serious problem. Diyawanna Oya wet land is one <strong>of</strong> few<br />
remaining wet lands in the Western Province, which has<br />
already proven to be an important recreational site in the<br />
greater Colombo area and nearby suburbs. This study<br />
attempts to estimate the economic value <strong>of</strong> this natural<br />
resource based on the perceptions <strong>of</strong> the regular visitors <strong>of</strong><br />
the site on the recreational value and their preference to<br />
conserve this endangered and under-appreciated resource<br />
using the Travel Cost Method (TCM). In particular, the<br />
study estimates the change in annual recreational value<br />
and the distributional impacts due to the implementation<br />
<strong>of</strong> new development projects in the area. It also assesses<br />
the welfare loss due to the acreage loss from the natural site<br />
for development and the benefits <strong>of</strong> preserving it as a<br />
natural site. The findings may give directions for policy<br />
formulation on allocation and sustainable utilization <strong>of</strong> this<br />
natural ecological system.<br />
Parakrama Samaratunga served as a discussant at the <strong>Policy</strong> Forum<br />
on “Agricultural and Rural Development for Reducing Poverty<br />
and Hunger in Asia” organized by the International Food <strong>Policy</strong><br />
Research <strong>Institute</strong> <strong>of</strong> Washington DC., U.S.A. at the Asian<br />
Development Bank in Manila, Philippines, 9-10 August.<br />
Publications<br />
• Samaratunga, P. A. (<strong>2007</strong>), “<strong>Sri</strong> <strong>Lanka</strong>: Innovative<br />
Practice in Integrating Small Farmers into Dynamic<br />
Supply Chains: A Case Study <strong>of</strong> Ma’s Tropical Food<br />
Company”, Regoverning Markets Innovative Practice<br />
Series, IIED, London.<br />
• Samaratunga, P. A., K. Karunagoda, and M.<br />
Thibbotuwawa (<strong>2007</strong>), “Mapping and Analysis <strong>of</strong> the<br />
South Asian Agricultural Trade Liberalization Efforts”<br />
in ESCAP (eds.), Agricultural Trade: Planting the Seeds <strong>of</strong><br />
Regional Liberalization in Asia, ARTNeT <strong>Studies</strong> in Trade<br />
and Investment 60, (pp. 33-74), UNESCAP, Bangkok,<br />
Thailand.<br />
Executive Director made a presentation on “Contribution <strong>of</strong> the<br />
Tea Sector to the National Economy” at the Tea Convention<br />
Workshop organized by the Ceylon Tea Traders’ Association,<br />
BMICH during 6-8 September.<br />
Asha Gunawardena, Dilhani Marawila, and Manoj Thibbotuwawa<br />
at a focus group discussion conducted for the ‘’Fishery Value Chain<br />
Study”, Tangalle, 27-28 September.<br />
Research Personnel<br />
Parakrama Samaratunga, Dilhani Marawila, and Manoj<br />
Thibbotuwawa.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 25
Environmental Economic <strong>Policy</strong><br />
Inteional Economic <strong>Policy</strong><br />
Natural environment plays a crucial role in sustainable<br />
development <strong>of</strong> the economy. <strong>Sri</strong> <strong>Lanka</strong> is endowed with<br />
a rich base <strong>of</strong> environmental and natural resources, which<br />
has an immense potential to contribute to the nation’s longterm<br />
development aspirations. However, unplanned<br />
utilization <strong>of</strong> natural resources and growing population<br />
have resulted in numerous environmental problems. In<br />
addition, the island nation is vulnerable to various impacts<br />
<strong>of</strong> global climate change with uncertain outcomes. The<br />
Environmental Economic <strong>Policy</strong> Unit <strong>of</strong> IPS undertakes<br />
research studies on environmental and natural resource<br />
management issues <strong>of</strong> the country, which need special policy<br />
attention. It aims at providing policy suggestions to<br />
improve the overall environmental management, thereby<br />
contributing to achieve the goals <strong>of</strong> sustainable<br />
development <strong>of</strong> the country.<br />
Highlights<br />
Post Tsunami Coastal Fishery Issues in <strong>Sri</strong><br />
<strong>Lanka</strong><br />
The Coastal fishery was one <strong>of</strong> the most adversely affected<br />
sectors by the 2004 Indian Ocean tsunami, resulting in a<br />
greater attention from donors in the rehabilitation effort.<br />
However, delivery <strong>of</strong> post-tsunami livelihood related<br />
benefits to the affected fishers did not take place in a<br />
planned and systematic manner and ended up with poortargeting<br />
and various distributional issues. Absence <strong>of</strong><br />
accurate, reliable pre-tsunami data on the composition <strong>of</strong><br />
the fishing fleet and genuine fishers, especially the small<br />
scale fishers, was a main problem. This study funded by<br />
the South Asian Network for Development and<br />
Environmental Economics (SANDEE), aims at identifying<br />
the issues relating to the targeting <strong>of</strong> beneficiaries for<br />
delivery <strong>of</strong> post-tsunami livelihood interventions in the<br />
fishery sector and to evaluate the distributional impact <strong>of</strong><br />
post-tsunami livelihood interventions. The study would<br />
help to understand the current problems <strong>of</strong> fishers with<br />
special reference to income, pr<strong>of</strong>itability, accessibility to<br />
fishing, input availability, and input and output prices in<br />
the post-tsunami context. The objective is to recommend<br />
relevant policy options to address important fishery<br />
management issues.<br />
Economy and Environment Pr<strong>of</strong>ile in <strong>Sri</strong> <strong>Lanka</strong>:<br />
An Overview <strong>of</strong> Physical Resource Situation,<br />
<strong>Policy</strong>, and Institutions<br />
The objective <strong>of</strong> this study is to assess the two-way links<br />
between environment and the economy <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> at the<br />
macro level. The ‘overview’ would cover the broad linkages<br />
and overall relationships from a holistic perspective, followed<br />
by relatively in-depth presentations <strong>of</strong> specific resource<br />
sectors such as land, forestry, water, fisheries, etc. The<br />
outcome <strong>of</strong> the study would provide a useful guide to<br />
formulate sustainable development policies at the macro<br />
level.<br />
There is no systematic macro-level data gathering system<br />
for environment and natural resources in <strong>Sri</strong> <strong>Lanka</strong> and most<br />
<strong>of</strong> the available data are by-products <strong>of</strong> sources such as<br />
administrative reports, sector performance reports, project<br />
feasibility studies, etc. Therefore, any attempt at macro level<br />
analysis <strong>of</strong> environment/natural resource issues has to<br />
undergo the painstaking process <strong>of</strong> gathering secondary data<br />
from various scattered sources. Considering these difficulties,<br />
the study attempts to build on the basis <strong>of</strong> district level data<br />
compiled from various secondary sources. Data will be<br />
presented on different natural resource types and<br />
26 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
environmental problems, that would indicate the stocks,<br />
flows degradation and pollution aspects <strong>of</strong> environmental<br />
management <strong>of</strong> the country. An important by-product <strong>of</strong><br />
the study would be a comprehensive dataset on<br />
environment/natural resources <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>. It is expected<br />
that the database would serve as a useful baseline in<br />
analyzing ‘environment and economy’ issues <strong>of</strong> the country.<br />
Integrating Sustainable Agriculture and<br />
Renewable Energy: Gliricidia for Stabilization <strong>of</strong><br />
Farming Systems and Production <strong>of</strong> Biomass<br />
Energy<br />
This study examined the potential for integrating systems<br />
<strong>of</strong> dendro energy and sustainable agriculture systems using<br />
Gliricidia. It was based on a desk study <strong>of</strong> information<br />
gathered from various secondary sources on renewable<br />
energy and sustainable agriculture. The study identifies<br />
that there is a potential for generating dendro thermal power<br />
using Gliricidia that would provide alternative solution for<br />
the existing energy problems, at least in the scale <strong>of</strong> smallto-medium<br />
enterprises. At the same time, integrating this<br />
approach to agricultural systems has a potential to create<br />
stable agricultural production systems that can positively<br />
contribute to increase the food security <strong>of</strong> the country.<br />
However, the wide uncoordinated gap in demand and<br />
supply <strong>of</strong> Glicidia wood, stands out as the major bottleneck<br />
for promoting this integrated approach. The<br />
recommendations made by the study includes promotion<br />
<strong>of</strong> cultivation <strong>of</strong> Gliricidia in large scale plantations with<br />
connected dendro-power generation facilities, combining<br />
sustainable agriculture projects with rural energy<br />
programmes, promotion <strong>of</strong> bio-mass energy for thermal/<br />
electrical applications in rural industries, promotion <strong>of</strong> green<br />
manure as a nitrogen substitute, facilitation <strong>of</strong> market for<br />
fuelwood and enhancement <strong>of</strong> logistics and infrastructure,<br />
incentives for attracting foreign exchange for bio-mass<br />
cultivation and energy projects, strengthening the Clean<br />
Development Mechanism (CDM) capacity in <strong>Sri</strong> <strong>Lanka</strong>, and<br />
enhancing research and dissemination on Short Rotation<br />
Coppice (SRC), farming systems and bio-mass energy.<br />
Conjunctive Management <strong>of</strong> Small Tank Systems<br />
and Groundwater Resources in Dry Zone<br />
Physical water scarcity has been a major obstacle in<br />
expanding dry zone agriculture in <strong>Sri</strong> <strong>Lanka</strong>. Among others,<br />
institutional issues related to utilization <strong>of</strong> groundwater as<br />
a common pool natural resource has important implications<br />
over sustainable management <strong>of</strong> the resource. This issue<br />
has been receiving an increased attention with the rapid<br />
growth <strong>of</strong> agro-wells to tap the limited groundwater<br />
potential in village tank areas in the dry zone. Pending<br />
threat <strong>of</strong> global climate change is another matter for<br />
concern. Therefore, conjunctive use <strong>of</strong> surface and<br />
groundwater resources has become an important policy<br />
issue.<br />
The study plans to gather information from several rainfed<br />
village irrigation tank areas in the dry zone through<br />
participatory rural appraisal methods. The study would<br />
provide policy guidelines to strengthen the conjunctive<br />
management <strong>of</strong> surface and groundwater resources and to<br />
discourage the over-use <strong>of</strong> groundwater for private benefit<br />
at the expense <strong>of</strong> community welfare. This study is<br />
supported by the Economy and Environment Programme<br />
for Southeast Asia (EEPSEA).<br />
Publications<br />
• Steele P., Malathy Knight-John, Amrit Rajapakse, and<br />
Kanchana Wickremasinghe (<strong>2007</strong>), “Disaster<br />
Management <strong>Policy</strong> and Practice in <strong>Sri</strong> <strong>Lanka</strong>: Lessons<br />
for Government, Civil Society and the Private Sector”,<br />
IPS, Environmental Economic <strong>Policy</strong> Series, No. 7<br />
(published in collaboration with Oxfam, America).<br />
• Also, published as a web publication by Oxfam<br />
America, September <strong>2007</strong>. Online at:<br />
www.oxfamamerica.org/newsandpublications/publications/<br />
research_reports/disaster-management-policy-and -practicelessons-for-government-civil-society-and-the-private-sectorin-sri-lanka<br />
• Book Review: Wickramasinghe, K. (<strong>2007</strong>), Mohan<br />
Munasinghe and Peter Meier (eds.), “Sustainable<br />
Energy in Developing Countries: <strong>Policy</strong> Analysis and<br />
Case <strong>Studies</strong>”, South Asia Economic Journal 8.1,<br />
139 - 163.<br />
• Wickramasinghe, K., P. Steele, and A. Senaratne<br />
(<strong>2007</strong>), “Impact <strong>of</strong> Forest Conservation on Household<br />
Economy and Poverty: Case <strong>of</strong> Knuckles National<br />
Wilderness Heritage <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>”, electronically<br />
published in, (http://rec<strong>of</strong>tc.org/site/fileadmin/docs/<br />
Events/RRI_Conference/Session_3/)<br />
Research Personnel<br />
Athula Senaratne, Asha Gunawardena, and Kanchana<br />
Wickramasinghe.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 27
Health Economic <strong>Policy</strong><br />
Inteional Economic <strong>Policy</strong><br />
<strong>Sri</strong> <strong>Lanka</strong>’s Health performance has reached an exceptional<br />
level in the developing world, with low mortality and<br />
fertility, compared to the countries in the region. This is<br />
an achievement considering the fact that <strong>Sri</strong> <strong>Lanka</strong> spends<br />
less on the health sector as a percentage <strong>of</strong> the GDP. Besides<br />
the many factors that have directly and indirectly<br />
influenced this achievement, social development<br />
programmes including free health care services<br />
implemented by successive governments <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong><br />
during the last six decades are seen as the main reason for<br />
this achievement. Main features <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>’s health<br />
system are access to free health services in public hospitals<br />
under the Central Ministry <strong>of</strong> Healthcare and Nutrition,<br />
and the Provincial Ministries <strong>of</strong> Health, and the growing<br />
fee levying hospital care fully funded by the private sector.<br />
The research agenda <strong>of</strong> the Health Economic <strong>Policy</strong> Unit at IPS focuses on organization and performance <strong>of</strong> public sector<br />
health care delivery, private health care provision, health care financing, economic and health sector implications <strong>of</strong><br />
demographic ageing, and other social issues related to health. During the year, the research programme concentrated on<br />
national level health financing, provincial health financing, private health care delivery, future option for financing <strong>Sri</strong><br />
<strong>Lanka</strong> health services, and health related social issues such as marketing <strong>of</strong> alcoholic beverages.<br />
<strong>Sri</strong> <strong>Lanka</strong> National Health Accounts 2003-2004<br />
The IPS Health Economic <strong>Policy</strong> Unit is continuing its<br />
programme to assess the national health expenditure<br />
through the preparation <strong>of</strong> National Health Accounts. The<br />
third series <strong>of</strong> National Health Accounts covers the period<br />
from 2003-2004. The first <strong>of</strong>ficial estimate for the period<br />
1990-1999 was released in 2002, and the second series for<br />
the period 2000-2002 was released in 2005.<br />
National Health Accounts describes the financing <strong>of</strong> the<br />
national health system and its direction <strong>of</strong> spending.<br />
National health expenditure covers a spectrum <strong>of</strong> total<br />
health expenditure, and expenditure <strong>of</strong> different providers<br />
while identifying sources <strong>of</strong> spending and also by function.<br />
The report indicates that Total Expenditure on Health<br />
(TEH) reached Rs. 83.2 billion in 2004 from Rs. 59.5 billion<br />
in 2002. This is 4.1 per cent <strong>of</strong> GDP in 2004 rising from<br />
3.8 per cent <strong>of</strong> GDP in 2002.<br />
Provincial Public Health Expenditure<br />
Public expenditure plays a major role in the health system<br />
in <strong>Sri</strong> <strong>Lanka</strong>. Financial resources for provincial councils are<br />
provided by the central government by way <strong>of</strong> grants as the<br />
provincial councils are not generating adequate revenues to<br />
meet such expenditures.<br />
The Provincial Council health System which is administered<br />
by the Provincial Director <strong>of</strong> Health Services provides<br />
details <strong>of</strong> recurrent and capital expenditure incurred under<br />
several programmes such as health administration, patient<br />
care, and community health services.<br />
During the period between 2000 to 2004, provincial health<br />
expenditure was increased by 63 per cent from Rs. 7,006<br />
million to Rs. 11,432 million in 2004. Provincial health<br />
expenditure was 17 per cent <strong>of</strong> the TEH in 2000 which<br />
declined to 15 per cent in 2004. In 2000, provincial<br />
expenditure on health stood at 5 per cent <strong>of</strong> total public<br />
expenditure on health and increased to 31 per cent in 2004.<br />
28 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Census <strong>of</strong> Private, Co-operative, and Estate<br />
Hospitals 2006<br />
For the third consecutive year, IPS carried out the Census<br />
<strong>of</strong> Private, Co-operative and Estate Hospitals for 2003-<br />
2004 as a supplement to <strong>Sri</strong> <strong>Lanka</strong> National Health<br />
Accounts. The survey finds that the number <strong>of</strong> private<br />
hospital admissions have almost doubled over the last<br />
decades, whilst simultaneously recording a six fold increase<br />
in the provision <strong>of</strong> outpatient care.<br />
As part <strong>of</strong> the effort to develop a national alcohol policy for<br />
<strong>Sri</strong> <strong>Lanka</strong>, the IPS study attempts to equip decision-makers<br />
to make informed policy choices in the light <strong>of</strong> the current<br />
situation on alcohol production, sales, and consumption in<br />
the country.<br />
Research Personnel<br />
G. D. Dayaratne, and Sunimalee Madurawala.<br />
The study also reveals that the Western Province and<br />
Colombo district have been the largest recipient <strong>of</strong> private<br />
investment in health-related infrastructure, thus<br />
highlighting the preference <strong>of</strong> the private sector to operate<br />
in urban locales. Demand side pressures for private hospital<br />
in-patient services <strong>of</strong>fers opportunities for the future<br />
expansion <strong>of</strong> private hospital services in certain areas.<br />
The study assumed that the scale <strong>of</strong> the estate hospital<br />
sector had remained unchanged from 2001-2004. In the<br />
case <strong>of</strong> co-operative hospitals, no statistically significant<br />
difference was observed between the 2004 survey results<br />
and those obtained in previous years.<br />
A Framework for Formulating a National<br />
Alcohol <strong>Policy</strong><br />
Alcohol policies are those regulations, laws, and rules that<br />
govern the manufacture, promotion, distribution, sale, and<br />
use <strong>of</strong> alcohol. Alcohol legislations applied and effected in<br />
the country in the past could be viewed from the<br />
perspective <strong>of</strong> prohibition and denial. However, a greater<br />
part <strong>of</strong> policy formation world over during the past century<br />
has been incremental, deliberate, and accepting <strong>of</strong> adults<br />
drinking in moderation.<br />
Alcohol policy need to be formulated taking into account<br />
the social, religious, cultural, economic, political, and public<br />
health dimensions <strong>of</strong> alcohol use and abuse. A more holistic<br />
approach, based on objective and long-term prospective<br />
would be ideal, rather than ad hoc policy making. Like<br />
many Asian countries, <strong>Sri</strong> <strong>Lanka</strong> is seen approaching alcohol<br />
use and abuse from a narrow and short term perspective,<br />
without adequate consultation from different disciplines.<br />
On the other hand, the government continues to show a<br />
strong interest in alcohol tax revenues, while its ambivalent<br />
position regarding alcohol creates a disjointed national<br />
approach to alcohol policies.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 29
Links<br />
The IPS has placed considerable value in developing research linkages both locally and internationally. In this respect,<br />
the <strong>Institute</strong> has established formal links with a number <strong>of</strong> research organizations from around the world and developed<br />
working relationships with researchers, and research organizations through its collaborative work.<br />
• Asia-Pacific School <strong>of</strong> Management, Charles Sturt University in Wagga, NSW, Australia (www.csu.edu.au)<br />
• Asia-Pacific Research and Training Network on Trade (www.artnetontrade.org)<br />
• Asian Development Bank <strong>Institute</strong> (www.adbi.org)<br />
• Brazilian <strong>Institute</strong> <strong>of</strong> <strong>Studies</strong> on Competition, Consumer Relations and International Trade – IBRAC<br />
(www.ibrac.org.br)<br />
• Centre on Regulation and Competition (CRC) based at the University <strong>of</strong> Manchester,<br />
U.K. (www.competition-regulation.org.uk)<br />
• Centre for <strong>Policy</strong> Dialogue (CPD), Dhaka, Bangladesh (www. cpd-bangladesh.org)<br />
• Centre for Trade and Development, India (www.centad.org)<br />
• Coalition for Action on South Asian Cooperation (CASAC)<br />
• Consumer Unity and Trust Society (CUTS), Jaipur, India (www.cuts-india.org)<br />
• Equity in Asia-Pacific Health Systems (Equitap) (www.equitap.org)<br />
• Global Development Network (GDN) (www.gdnet.org)<br />
• Indian Council for Research in International Economic Relations (ICRIER), New Delhi,<br />
India (www.icrier.com)<br />
• Indian Council for South Asian Cooperation (ICSAC), New Delhi, India<br />
• Indian Ocean Rim Association for Regional Cooperation, IOR-ARC and IORAG (www.iornet.com)<br />
• International Development Research Centre (IDRC), Ottawa, Canada (www.idrc.ca)<br />
• International Labour Organization (ILO) (www.ilo.org)<br />
• International Network <strong>of</strong> Civil Society Organization on Competition – INCSOC (www.incsoc.net)<br />
• <strong>Institute</strong> <strong>of</strong> Social <strong>Studies</strong>, The Hague, Netherlands (www.iss.nl)<br />
• La Trobe University, Edith Cowan University, and the Australian South Asian Research Centre<br />
<strong>of</strong> the Australian National University in Canberra.<br />
• North South <strong>Institute</strong>, Ottawa, Canada (www.nsi-ins.ca)<br />
• Research and Information System for Developing Countries (RIS),<br />
New Delhi, India (www.ris.org.in)<br />
• South Asia Centre for <strong>Policy</strong> <strong>Studies</strong> (SACEPS), Kathmandu, Nepal (www.saceps.org)<br />
• South Asia Watch on Trade, Economics, and Environment (SAWTEE), Kathmandu,<br />
Nepal (www.sawtee.org)<br />
• South Asian Network on Economic Modeling, Bangladesh (www.sanemnet.org)<br />
• South Asian Network for Development and Environmental Economics (www.sandeeonline.org)<br />
• Sustainable Development <strong>Policy</strong> <strong>Institute</strong>, Pakistan (www.sdpi.org)<br />
• UN-ESCAP, Bangkok, Thailand (www.unescap.org)<br />
• World Bank (www.worldbank.org), and many more<br />
• Youth Employment Network (YEN) (www.ilo.org/yen)<br />
30 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
IPS Support Services<br />
Inteional Economic <strong>Policy</strong><br />
Administration and Finance Unit<br />
Library<br />
The Department <strong>of</strong> Administration and Finance comprises<br />
<strong>of</strong> five units, Administration, Financial Operations, Human<br />
Resources, Maintenance Operations, and Procurement<br />
Services. These provide essential internal services to each<br />
<strong>of</strong> the Research Units in IPS.<br />
The primary goals <strong>of</strong> the units within the Department <strong>of</strong><br />
Administration and Finance are to:<br />
• Provide pr<strong>of</strong>essional expertise in all business areas<br />
• Provide management services to ensure compliance<br />
by all Units within IPS<br />
• Create appropriate policies and procedures to ensure<br />
"best practices"<br />
• Act as the central point for contact with the donors,<br />
public, private sector, and the community at large.<br />
The year has been very challenging for IPS, with the<br />
Government <strong>of</strong> Netherlands funding coming to an end in<br />
2005. The <strong>Institute</strong> performed well to achieve an income<br />
over expenditure which exceeded the budget. On staff<br />
development side, an Employee Performance Development<br />
Review (PDR) process was introduced to certain levels <strong>of</strong><br />
the support staff, which enabled the employees to meet<br />
their objectives and contributed to the efficiency <strong>of</strong> their<br />
respective Units and the institute as a whole.<br />
The Library's mission is to identify, investigate, define,<br />
and meet information needs <strong>of</strong> the <strong>Institute</strong>'s research staff<br />
in support <strong>of</strong> the research and administrative functions <strong>of</strong><br />
the <strong>Institute</strong> and efficiently provide access to quality<br />
information resources, irrespective <strong>of</strong> format and location,<br />
and facilitate information transfer using the best <strong>of</strong><br />
traditional and innovative technologies.<br />
Collection Development<br />
The IPS Library continued to increase its acquisitions and<br />
a considerable number <strong>of</strong> items were added to the library's<br />
collection. Currently, the collection consists <strong>of</strong> about 10,500<br />
volumes <strong>of</strong> books, 5,000 pamphlets, 77 titles <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>n<br />
and international print journals which are relevant to the<br />
institute's research programmes. A substantial amount <strong>of</strong><br />
publications and documents were also added to the<br />
repository, which the library maintains on <strong>Sri</strong> <strong>Lanka</strong>n<br />
economic and sectoral policy. Apart from direct purchasing,<br />
the library obtained publications through exchange<br />
programmes and gifts from various local, regional and<br />
international organizations.<br />
There is a slight decline in the total acquisitions due to deselection<br />
process carried out in 2006. However, the annual<br />
acquisitions remain the same as in the previous years.<br />
Staff<br />
Iloka Wickremasinghe, G.L.B. Pooliyadda, Dhanuja David,<br />
K. A.R.T. Wijekoon, Malini Fernando, Nirmala Meegama,<br />
and Urmila Jayasekera.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 31
Library Collection up to <strong>2007</strong><br />
Books 10500<br />
Journals-Local (printed) 22<br />
Journals-International (printed) 59<br />
Pamphlets 5083<br />
CD-ROMS 84<br />
On-line full text databases 3<br />
Electronic Databases<br />
Library continued to provide access to (EBSCO) and<br />
Blackwell-Synergy Databases with the generous support<br />
<strong>of</strong> International Network for the Availability <strong>of</strong> Scientific<br />
Publications (INASP) and Programme for the Enhancement<br />
<strong>of</strong> Research Information (PERI), a programme funded by<br />
(SAREC). In addition, the library continued its subscription<br />
to JSTOR database.<br />
Enhancing Services<br />
With the advice <strong>of</strong> the library committee, library carefully<br />
reviewed its existing circulation policy, in order to provide<br />
an effective and efficient circulation service. A revised<br />
circulation policy was introduced in July <strong>2007</strong>. The Library<br />
Intranet is functioning smoothly with continuous updates.<br />
A Library guide book was prepared during the year and<br />
will be released by early 2008.<br />
The demand from outsiders to use the library is increasing<br />
annually. During the year, more than 100 researchers and<br />
university students personally visited the library. Besides,<br />
the library handled a great number <strong>of</strong> document delivery<br />
and inter-library loan services and responded to an<br />
enormous number <strong>of</strong> queries via telephone, fax, and e-<br />
mail.<br />
to channel requests for acquisition <strong>of</strong> new material, informs<br />
the Librarian <strong>of</strong> the priority needs <strong>of</strong> the researchers, and<br />
sets the direction for the IPS library within the context <strong>of</strong><br />
the <strong>Institute</strong>'s overall goals.<br />
Achievements<br />
Premila Gamage, IPS Librarian, was elected as the<br />
Chairperson to the Regional Standing Committee <strong>of</strong> Asia<br />
and Oceania (RSCAO) and to the Division VIII <strong>of</strong> Regional<br />
Activities (which covers Africa, Asia and Oceania, Latin<br />
America, and the Caribbean) and also was elected to the<br />
Governing Board at the 73rd Word Library and<br />
Information Congress and International Federation <strong>of</strong><br />
Library Associations and Institutions (IFLA), General<br />
Council, held in Durban, South Africa during 19-23 August.<br />
This is the first time a <strong>Sri</strong> <strong>Lanka</strong>n Librarian has been elected<br />
to serve in such bodies.<br />
The Librarian was also awarded a scholarship by the Leeds<br />
Metropolitan University, UK to follow a PhD programme.<br />
Priorities for the Coming Year<br />
Priorities would include planning the library at the IPS<br />
headquarters.<br />
Personnel<br />
Premila Gamage, Dilrukshi Ariyaratna, Chamari Yapa, and<br />
Gayani Bentotage.<br />
Library Committee<br />
The Library Committee which plays an advisory role assists<br />
the Librarian in setting overall library policy and in<br />
defining broad guidelines for further development <strong>of</strong> the<br />
IPS library. The Committee provides an efficient avenue<br />
32 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Publications and Communications Unit<br />
The IPS Publications and Communications Unit (PCU)<br />
coordinates and provides opportunities to manage and share<br />
information and knowledge <strong>of</strong> IPS research for the<br />
<strong>Institute</strong>'s key audiences. This is primarily carried out by<br />
the Unit through IPS research publications, IPS public web,<br />
networking and organizing <strong>of</strong> local and international<br />
conferences, seminars and workshops.<br />
IPS Publications<br />
This is one <strong>of</strong> the main methods through which IPS research<br />
is disseminated to its target audience. In <strong>2007</strong>, the PCU<br />
brought out the following publications:<br />
• four IPS publications under its research series<br />
• <strong>Sri</strong> <strong>Lanka</strong>: State <strong>of</strong> the Economy <strong>Report</strong>, the <strong>Institute</strong>'s<br />
flagship publication<br />
• South Asia in the WTO, a book published by Sage<br />
publication, India<br />
• South Asia Economic Journal, the bi-annual journal<br />
managed by the IPS and RIS, India and published by<br />
Sage, India. (For more details on the above publications<br />
refer "IPS Publications <strong>of</strong> <strong>2007</strong>")<br />
In the effort to increase the access and circulation <strong>of</strong> IPS<br />
research, the Unit in 2005, started translating the main<br />
findings <strong>of</strong> IPS publications into the two <strong>of</strong>ficial languages,<br />
Sinhala and Tamil. Given the positive response <strong>of</strong> this<br />
undertaking, IPS will continue translating executive<br />
summaries <strong>of</strong> all IPS publications into both Sinhala and<br />
Tamil languages for the benefit <strong>of</strong> the non-English<br />
speaking audience.<br />
Conferences, Workshops and Book Launches<br />
The PCU organized two international conferences, three<br />
local workshops and a book launch during the year <strong>2007</strong><br />
as highlighted in the section on 'Conferences, Workshops<br />
and Book Launches' in collaboration with the <strong>Institute</strong>'s<br />
local and international partners.<br />
Future<br />
Networking will become a priority <strong>of</strong> the Unit in 2008,<br />
and it will seek to strengthen inter-action with resource<br />
centres, and partner networks both locally and<br />
internationally, towards creating greater awareness <strong>of</strong><br />
IPS research, while effectively marketing IPS<br />
publications through its existing channels. Priority has<br />
also been placed by PCU to increase the number <strong>of</strong> sales<br />
and display points for IPS publications and in this regard,<br />
the Unit has drawn up a new marketing strategy which<br />
will be implemented in 2008 and beyond.<br />
Staff<br />
Manu Tissera Gunasekara, K. Sothinathan, Asuntha Paul,<br />
Sharmini De Silva, Ayoni Rangala, and Amesh<br />
Thennakoon.<br />
Web<br />
The importance <strong>of</strong> the web as an effective tool for<br />
disseminating IPS research was recognized early on and<br />
the PCU has made a selection <strong>of</strong> the <strong>Institute</strong>'s publications,<br />
and reports freely downloadable over the IPS website. This<br />
initiative was launched in <strong>2007</strong> in conjunction with the<br />
revamping <strong>of</strong> the <strong>Institute</strong>'s website and more research<br />
work would be disseminated over the web in the future.<br />
IPS Publications Website<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 33
Information Systems Unit<br />
The Information Systems Unit (ISU) concentrates its<br />
activities on the core areas <strong>of</strong>: a) S<strong>of</strong>tware, hardware,<br />
networking, and IT infrastructure management; b) Web<br />
Development, maintenance, and information dissemination,<br />
and; c) Database development, maintenance, and<br />
management.<br />
Computing Facilities and Resources<br />
All the IPS staff members are provided with personal<br />
computers operating on a Windows environment along with<br />
relevant s<strong>of</strong>tware. The two buildings occupied by the IPS<br />
are networked and interlinked via an underground optic<br />
fibre cable.<br />
All centralized IT services are facilitated through an array<br />
<strong>of</strong> servers located in a dedicated server room. These servers<br />
run all centralized applications and services such as the<br />
IPS e-mail system, file sharing and Micros<strong>of</strong>t Active<br />
Directory Services, IPS databases, finNGO; the IPS<br />
accounting system, IPS corporate web, the back end facilities<br />
for the IPS public web: www.ips.lk and a host <strong>of</strong> other<br />
applications, and are available round the clock. Data Backup<br />
facilities are made available to the IPS.<br />
IPS Public Web<br />
IPS public web (www.ips.lk) now consisting about 550 web<br />
pages and many other downloadable files, is the focal point<br />
for the latest details <strong>of</strong> IPS research and findings, its latest<br />
(and archived) publications as well as IPS news and other<br />
related information. The web site is designed, developed,<br />
and maintained by the IPS ISU.<br />
IPS web site has seen a significant improvement in its access<br />
rate since its inception in 2003, where the IPS commenced<br />
developing its web site in-house. During <strong>2007</strong> the IPS web<br />
attracted around 123,000 hits per month and also<br />
disseminates around 2.5 Gigabytes <strong>of</strong> data/information<br />
every month.<br />
The ISU commenced development <strong>of</strong> a new version <strong>of</strong> the<br />
home page <strong>of</strong> the IPS web site in order to highlight the<br />
latest outcomes and developments regarding the research<br />
activities carried out by the <strong>Institute</strong>. Development <strong>of</strong> an<br />
entire new section for the IPS publications on the web site<br />
was also commenced during this period, in order to provide<br />
a comprehensive collection <strong>of</strong> IPS publications in a user<br />
friendly manner. These are planned to be deployed during<br />
the first half <strong>of</strong> 2008.<br />
The ISU also possess the ability to provide web<br />
development/information dissemination services and<br />
solutions customized to the requirements <strong>of</strong> various<br />
research projects undertaken and other related activities.<br />
IPS Corporate Web<br />
The IPS corporate web, accessible only within the IPS<br />
LAN, is the <strong>Institute</strong>'s key knowledge management<br />
platform, integrating existing online facilities such as the<br />
Library Catalog and the newly developed Economic<br />
Research Data and Databases section and providing a<br />
platform to host research information, etc., online and<br />
updated.<br />
There were a number <strong>of</strong> developments undertaken on the<br />
corporate web during the year. An event scheduler was<br />
introduced, where all IPS events could be tracked and<br />
scheduled. Other sections which can contain information<br />
such as Administration, Information Systems, Publications<br />
and Maintenance were also introduced during the year. A<br />
data mining solution was introduced in order for users to<br />
search and locate data and information accumulated and<br />
stored on the corporate web in an efficient manner.<br />
The Data section <strong>of</strong> this corporate web which has a vast<br />
collection <strong>of</strong> economic research data and databases<br />
accessible to staff members round the clock in a<br />
comprehensive, user friendly and a secure manner<br />
introduced in 2006, made significant improvements and<br />
additions during the year.<br />
Data and Databases<br />
The vast range <strong>of</strong> economic research data bases and data<br />
sets maintained by the ISU (such as Macroeconomic data,<br />
Trade data, and Agriculture data, obtained from various<br />
Government Departments, NGO's, and other relevant<br />
Organizations as well as primary data collected by the<br />
IPS) that are necessary for the <strong>Institute</strong>'s research activities,<br />
is continuously updated.<br />
During <strong>2007</strong>, the IPS Macroeconomic database was<br />
updated and the Telecom indicators database has been<br />
developed. The database division also was involved in<br />
34 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
preparing databases for the Global Competitiveness <strong>Report</strong><br />
<strong>2007</strong>-2008 and supported projects on Micro Finance study<br />
and the Telecom study on data and data related services.<br />
Data base analysis and development, data entry and<br />
processing as well as questionnaire/survey designing based<br />
on the needs <strong>of</strong> research projects are also handled by the<br />
ISU.<br />
ISU plays an active role in hosting and facilitating<br />
maintenance <strong>of</strong> databases and functionality <strong>of</strong> the finNGO<br />
accounting package and supporting the Library in<br />
maintenance <strong>of</strong> the library online catalogs hosted on the<br />
intranet and the Internet (IPS Public Web).<br />
S<strong>of</strong>tware<br />
A range <strong>of</strong> econometric, statistical, mathematical, and<br />
related s<strong>of</strong>tware packages are made available to the<br />
researchers along with installation, usage, and maintenance<br />
support by the ISU. Several training sessions were<br />
conducted by the ISU to various staff members in this<br />
regard. A collection <strong>of</strong> operating systems, desktop<br />
publication applications as well as financial accounting<br />
packages are also a part <strong>of</strong> the IPS s<strong>of</strong>tware collection.<br />
The newly developed IPS corporate website and<br />
the centralized event scheduler.<br />
Conferencing Facilities<br />
ISU maintains audio visual equipment including<br />
multimedia projectors, teleconferencing facilities, and other<br />
related equipment to provide facilities in organizing<br />
workshops, conferences, seminars, and similar events.<br />
Way Forward<br />
ISU prepared a new set <strong>of</strong> proposals under the guidance<br />
<strong>of</strong> the Executive Director regarding the IT strategy <strong>of</strong> the<br />
IPS for the coming years ahead, in view <strong>of</strong> providing its<br />
research staff the necessary facilities and technologies to<br />
support the core activities and for the <strong>Institute</strong> to remain<br />
competitive as a regional centre <strong>of</strong> excellence.<br />
ISU team members at work<br />
in the IPS server room.<br />
Staff<br />
Haren Kodagoda, Nandaka Pothuwewa, Indika<br />
Siriwardena, Lasitha Fernando, and Nuwan Kahandawala<br />
Arachchi.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 35
Human Resources Training and Development<br />
Inteional Economic <strong>Policy</strong><br />
The <strong>Institute</strong> encourages rigorous on-the-job training <strong>of</strong><br />
its research staff to develop their research and analytical<br />
skills, as well as presentation and communication skills.<br />
With these objectives in mind, the IPS initiated several inhouse<br />
training programmes for its research staff in <strong>2007</strong>.<br />
Research Staff<br />
IPS Small Grants Competition<br />
Course on Survey Methodology<br />
In order to improve survey related skills <strong>of</strong> the research<br />
staff, a Master's level course on "Survey Methodology" was<br />
initiated at the IPS and was conducted by Wimal<br />
Nannayakkara, Consultant/ Visiting Fellow, IPS. The<br />
course, conducted over a period <strong>of</strong> five months from<br />
September 2006 to January <strong>2007</strong>, included training related<br />
to estimation procedures as well as sampling theory.<br />
The IPS introduced a Small Grants Competition intended<br />
to sharpen the research capabilities <strong>of</strong> junior researchers<br />
by providing them with an opportunity to conduct<br />
independent research. Junior research staff was invited to<br />
submit proposals to conduct a short-term research study on<br />
a key policy research issue <strong>of</strong> interest. The 14 proposals<br />
received were evaluated by the Research Committee and<br />
four short listed candidates were invited to present their<br />
proposals at an IPS in-house seminar. The evaluation<br />
criteria were based on the importance <strong>of</strong> the research<br />
question and its policy relevance, the appropriateness <strong>of</strong><br />
the proposed methodology, and feasibility <strong>of</strong> conducting<br />
the study within the given time frame. The short listed<br />
candidates were Asha Gunawardena, Manoj<br />
Thibbotuwawa, Priyanka Jayawardena and Kanchana<br />
Wickremasinghe.<br />
Training on Effective Presentation<br />
Recognizing the importance <strong>of</strong> effective communication<br />
<strong>of</strong> research output to diverse audiences, the <strong>Institute</strong> invited<br />
Dr. Uditha Liyanage, Director, Post Graduate <strong>Institute</strong> <strong>of</strong><br />
Management (PIM) to conduct an interactive workshop for<br />
IPS research staff on "Effective Presentation Skills",<br />
30 October.<br />
Training on Value Chain Analysis<br />
This training programme was organized by International<br />
Alert and USAID and was held at the IPS during 11-12<br />
September.<br />
The <strong>Institute</strong> at the same time encourages research staff to<br />
participation at important external training programmes<br />
and seminars to strengthen their knowledge and skills.<br />
Research staff attended the following programmes in <strong>2007</strong>.<br />
• “Global and Regional Developments in the Banking<br />
and Financial Services Industry and Challenges and<br />
Opportunities" by Dr. K. Ramakrishnan, organized by<br />
the Central Bank <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>, Centre for Banking<br />
<strong>Studies</strong>, 04 October.<br />
The four short listed candidates from left, Priyanka Jayawardena,<br />
Kanchana Wickremasinghe, Asha Gunawardena and Manoj<br />
Thibbotuwawa.<br />
Kanchana Wickremasinghe's proposal on "Ecotourism for<br />
Sustainable Forest Management in <strong>Sri</strong> <strong>Lanka</strong>: <strong>Policy</strong><br />
Analysis" was judged the winner.<br />
• “ITC Market Tools" conducted by International Trade<br />
Centre (ITC), Geneva and organized by Ceylon<br />
Chamber <strong>of</strong> Commerce and German Technical<br />
Cooperation, SLIDA, 8-11 October.<br />
• “12th <strong>Annual</strong> Tax Oration", organized by the Faculty<br />
<strong>of</strong> Taxation, the <strong>Institute</strong> <strong>of</strong> Chartered Accountants<br />
<strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>, <strong>Institute</strong> <strong>of</strong> Chartered Accountants <strong>of</strong><br />
<strong>Sri</strong> <strong>Lanka</strong>, 26 October.<br />
36 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
• National Workshop on Capacity Building for<br />
Development <strong>of</strong> Bond Market in <strong>Sri</strong> <strong>Lanka</strong>", conducted<br />
by the Public Debt Department <strong>of</strong> the Central Bank<br />
<strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> jointly with the United Nations Economic<br />
and Social Commission for Asia and the Pacific<br />
(UNESCAP), Galadari Hotel, 22-23 November.<br />
• Attended the 14th Biannual Research and Training<br />
Workshop organized by the South Asian Network for<br />
Development and Environmental Economics<br />
(SANDEE), Nepal, 8 -12 July.<br />
In addition, the following staff members participated at<br />
various academic programmes at both local and<br />
international institutions.<br />
Manoj Thibbotuwawa<br />
• Attended the “Third ARTNeT Capacity Building<br />
Workshop on Trade Research” organized by<br />
UNESCAP and WTO, Bangkok, Thailand, 26-30<br />
March.<br />
• Participated in the Post Graduate Diploma programme<br />
on “Modelling and Accounting for Sustainable<br />
Development” at the <strong>Institute</strong> <strong>of</strong> Social <strong>Studies</strong> (ISS),<br />
The Netherlands, 16 April-30 June.<br />
Asha Gunawardena and Dilhani Marawila attended a training course<br />
on “Advanced Econometrics: Dummy Dependent Variables, Survey<br />
Design and Evaluation Methods”, Kathmandu, Nepal 3 -7 July.<br />
Athula Senaratne<br />
• Participated at the workshop on "Regional Voices:<br />
Transnational Challenges" organized by the Henry L.<br />
Stimson Center, Singapore, 9-11 July.<br />
• Attended a training workshop on "Resource<br />
Mobilization for Environmental Economics Research"<br />
organized by the Economy and Environment<br />
Programme for Southeast Asia (EEPSEA) <strong>of</strong> IDRC,<br />
Bangkok, Thailnad, 2-5 October .<br />
Manoj Thibbotuwawa participated in the Post Graduate Diploma<br />
on “Modelling and Accounting for Sustainable Development” at<br />
the <strong>Institute</strong> <strong>of</strong> Social <strong>Studies</strong> (ISS), The Hague, The Netherlands,<br />
16 April-30 June.<br />
Dilhani Marawila<br />
• Attended an introductory training course on<br />
"Environmental and Natural Resource Economics for<br />
Economists", Bangkok, Thailand, 30 April -17 May.<br />
• Attended the advanced course on "Econometrics:<br />
Dummy Dependent Variables, Survey Design and<br />
Evaluation Methods", Organized by South Asian<br />
Network for Development and Environmental<br />
Economics (SANDEE), Kathmandu, Nepal, 3 -7 July<br />
(with Asha Gunawardena).<br />
• Attended a workshop on "IPCC Working Group III's<br />
Dissemination <strong>of</strong> Fourth Assessment <strong>Report</strong>"<br />
organized by the Jadhavpur University, Kolkata, India,<br />
11-12 October.<br />
• Participated at the training workshop on "Water and<br />
Sanitation Planning in Developing Countries"<br />
organized by the Economy and Environment Program<br />
for Southeast Asia (EEPSEA) <strong>of</strong> IDRC, Kuala Lumpur,<br />
Malaysia, 16-19 November.<br />
• Participated in the training Course on "Assessment <strong>of</strong><br />
the Doha Outcome: A Development Perspective on the<br />
Global Agricultural Trade Regime in <strong>Sri</strong> <strong>Lanka</strong>"<br />
organized by the International Food <strong>Policy</strong> Research<br />
<strong>Institute</strong> in collaboration with the Agribusiness Center,<br />
Faculty <strong>of</strong> Agriculture and the Board <strong>of</strong> Study in<br />
Agricultural Economics, Postgraduate <strong>Institute</strong> <strong>of</strong><br />
Agriculture (PGIA), University <strong>of</strong> Peradeniya, 3- 14<br />
November, and 10- 20 December.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 37
Kanchana Wickramasinghe<br />
• Completed a Post Graduate Diploma in<br />
"Universalizing Socio-Economic Security for the Poor",<br />
conducted by the ISS , The Hague, Netherlands, in<br />
collaboration with Self Employed Women's'<br />
Association (SEWA), Ahmedabad, and Center for<br />
Development <strong>Studies</strong> (CDS), Trivendrum, India,<br />
10 January - 23 March.<br />
• Completed Master in Economics, Department <strong>of</strong><br />
Economics, University <strong>of</strong> Colombo.<br />
Support Staff<br />
Manoj Thibbotuwawa attended the “Third ARTNeT Capacity<br />
Building Workshop on Trade Research” organized by UNESCAP<br />
and WTO, Bangkok, Thailand, 26-30 March.<br />
• Chamari Yapa passed the BA Degree and commenced<br />
MA in Library and Information Science programme at<br />
the University <strong>of</strong> Kelaniya.<br />
• Gayani Bentotage commenced a Diploma in Library<br />
and Information Science Final examination at the <strong>Sri</strong><br />
<strong>Lanka</strong> Library Association (SLLA).<br />
Dilhani Marawila at the “14 th Biannual Research and Training<br />
Workshop” organized by the South Asian Network for Development<br />
and Environmental Economics (SANDEE), Nepal, 8 -12 July.<br />
Kanchana Wickramasinghe completed a Post Graduate Diploma<br />
in "Universalizing Socio-economic Security for the Poor". The<br />
ISS, The Hague, The Netherlands, 10 January - 23 March.<br />
• Dilrukshi Ariyaratne participated at the conference on<br />
"Information Management in the Digital Environment<br />
(NACLIS <strong>2007</strong>)", <strong>Sri</strong> <strong>Lanka</strong> Library<br />
Association (SLLA), Colombo, 8-9 March, and at a<br />
workshop on Research Methodology, SLLA, Colombo,<br />
10 March.<br />
• Chamari Yapa participated at the 47th <strong>Annual</strong> General<br />
Meeting, <strong>Sri</strong> <strong>Lanka</strong> Library Association, Colombo,<br />
29 June.<br />
38 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
IPS Events<br />
Inteional Economic <strong>Policy</strong><br />
Conferences, Workshops and Book Launches<br />
The IPS in collaboration with the World Bank <strong>Institute</strong> (WBI) organized four residential workshops in <strong>2007</strong>.<br />
Workshops on "Service Delivery for Pro-Poor Growth in <strong>Sri</strong> <strong>Lanka</strong>"<br />
Hotel Chaaya Village, Habarana, 11-13 January, and Light House Hotel, Galle, 16-18 January<br />
The first <strong>of</strong> the two workshops on "Service Delivery for<br />
Pro-Poor Growth in <strong>Sri</strong> <strong>Lanka</strong>" was held Hotel Chaaya<br />
Village, Habarana during 11-13 January and the second<br />
at Light House Hotel, Galle during 16-18 January.<br />
Nimal Bandara, Director-General, <strong>Sri</strong> <strong>Lanka</strong> <strong>Institute</strong><br />
<strong>of</strong> Local Government, and Pr<strong>of</strong>. Buddhadasa<br />
Hewavitharana, Chairman, IPS inaugurated the two<br />
workshops.<br />
Chairman IPS addressing the workshop on “Service Delivery for<br />
Pro-Poor Growth in <strong>Sri</strong> <strong>Lanka</strong>”, Hotel Chaaya Village, Habarana,<br />
11 January.<br />
Workshops on "Service Delivery and Provincial Budgeting for Promoting Pro-Poor Growth and Development in<br />
<strong>Sri</strong> <strong>Lanka</strong>"<br />
Hotel Amaya Lake, Dambulla, 16-18 November, and The Blue Water, Wadduwa, 23-25 November<br />
The next two workshops on<br />
“Service Delivery and Provincial<br />
Budgeting for Promoting Pro-Poor<br />
Growth and Development in <strong>Sri</strong><br />
<strong>Lanka</strong>” were held during<br />
November. The first workshop was<br />
at Hotel Amaya Lake, Dambulla<br />
during 16-18 November and the<br />
second at The Blue Water,<br />
Wadduwa during 23-25<br />
November. Prasanna Gunawardena, former Mayor <strong>of</strong><br />
Colombo inaugurated the first workshop in Dambulla<br />
while H.P.C. Herath, Secretary, Ministry <strong>of</strong> Provincial<br />
Councils and Local Government inaugurated the<br />
second workshop in Wadduwa.<br />
Participants <strong>of</strong> the workshop on "Service Delivery and Provincial<br />
Budgeting for Promoting Pro-Poor Growth and Development in <strong>Sri</strong><br />
<strong>Lanka</strong>", Hotel Amaya Lake, Dambulla, 16-18 November.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 39
Workshop on "A Participatory Concept Paper for the Design <strong>of</strong> an Effective Industrial <strong>Policy</strong> Framework for<br />
<strong>Sri</strong> <strong>Lanka</strong>"<br />
Taj Samudra Hotel, Colombo, 9 February<br />
The IPS jointly with the Industrial Association <strong>of</strong> <strong>Sri</strong><br />
<strong>Lanka</strong> (IASL) organized an interactive workshop on<br />
"Participatory Concept Paper for the Design <strong>of</strong> an<br />
Effective Industrial <strong>Policy</strong> Framework for <strong>Sri</strong> <strong>Lanka</strong>"<br />
at the Taj Samudra Hotel in Colombo on 9 February.<br />
The objective <strong>of</strong> this workshop was to elicit the views<br />
<strong>of</strong> key stakeholders on industrial policy based on a<br />
document prepared by the IPS for the IASL, titled, "A<br />
Participatory Concept Paper for the Design <strong>of</strong> an<br />
Effective Industrial <strong>Policy</strong> Framework for <strong>Sri</strong> <strong>Lanka</strong>".<br />
Technocrats and government <strong>of</strong>ficials, private sector<br />
industrialists and experts from the academic institutions<br />
were among the participants. The extensive debate and<br />
discussion that emerged during the sessions provided<br />
valuable inputs for the final policy brief being drafted<br />
by the IPS to be included in the Government's<br />
Industrialization Strategy.<br />
Inaugural session <strong>of</strong> the workshop on “A Participatory Concept<br />
Paper for the Design <strong>of</strong> an Effective Industrial <strong>Policy</strong> Framework<br />
for <strong>Sri</strong> <strong>Lanka</strong>”, Taj Samudra Hotel, Colombo, 9 February.<br />
International Conference on "Trade in Services in South Asia: Opportunities and Risks in Liberalization"<br />
Cinnamon Grand Hotel, Colombo, 4-5 April<br />
The IPS and the Friedrich-Ebert-Stiftung (FES) Colombo,<br />
jointly organized an international conference on "Trade in<br />
Services in South Asia: Opportunities and Risks in<br />
Liberalization" at the Hotel Cinnamon Grand Hotel,<br />
Colombo during 4-5 April. The conference was inaugurated<br />
by Hon. G. L. Peiris, Minister <strong>of</strong> Export Development and<br />
International Trade.<br />
Ms. Astrid Becker, Resident Director, FES, Colombo made<br />
the welcome address, while Dr. Saman Kelegama, Executive<br />
Director, IPS made the introduction to the conference. The<br />
keynote address was made by the Chief Guest.<br />
Janaka Wijayasiri making the introduction to the IPS publication<br />
“Utilization <strong>of</strong> Preferential Trade Arrangements: <strong>Sri</strong> <strong>Lanka</strong>’s<br />
Experience with the EU and US GSP Schemes” at the international<br />
conference on “Trade in Services in South Asia: Opportunities and<br />
Risks in Liberalization”, Cinnamon Grand Hotel, Colombo, 4-5 April.<br />
The conference analyzed service sector liberalization<br />
undertaken up to date in the region and highlighted the<br />
opportunities and risks present from further liberalization.<br />
The potential areas <strong>of</strong> cooperation in the services sector in<br />
the SAFTA framework was also one <strong>of</strong> the areas discussed<br />
during the conference.<br />
40 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
International Conference on "Towards BIMSTEC-Japan Comprehensive Economic Cooperation: <strong>Sri</strong> <strong>Lanka</strong>n Perspective"<br />
Taj Samudra Hotel, Colombo, 17 August<br />
The IPS organized an international conference on<br />
"Towards BIMSTEC-Japan Comprehensive Economic<br />
Cooperation: <strong>Sri</strong> <strong>Lanka</strong>n Perspective" at the Taj<br />
Samudra Hotel, Colombo on 17 August. The event was<br />
jointly organized with the Centre for <strong>Studies</strong> in<br />
International Relations and Development (CSIRD),<br />
India, and sponsored by the Sasakawa Peace Foundation<br />
(SPF) <strong>of</strong> Japan.<br />
Hon. Milinda Moragoda, Minister <strong>of</strong> Tourism making the inaugural<br />
speech at the international conference on “Towards BIMSTEC-Japan<br />
Comprehensive Economic Cooperation: <strong>Sri</strong> <strong>Lanka</strong>n Perspective”,<br />
Taj Samudra Hotel, Colombo, 17 August.<br />
The conference was inaugurated by Hon. Milinda<br />
Moragoda, Minister <strong>of</strong> Tourism, while His Excellency<br />
Kiyoshi Araki, Ambassador <strong>of</strong> Japan in <strong>Sri</strong> <strong>Lanka</strong>,<br />
attended as the Guest <strong>of</strong> Honour, and Dr. Akinori Seki,<br />
President, Sasakawa Peace Foundation, as the Special<br />
Guest.<br />
Book Launch: "South Asia in the WTO”<br />
Trans Asia Hotel, Colombo, 7 December<br />
The book "South Asia in the WTO" edited by the Executive<br />
Director, and published by Sage Publications, India, was<br />
launched in the presence <strong>of</strong> Hon. G.L. Peiris, Minister <strong>of</strong><br />
Export Development and International Trade at the Trans<br />
Asia Hotel on 7 December.<br />
The book was reviewed by Janak de Silva, Senior State<br />
Counsel, Attorney General's Department and Visiting<br />
Lecturer in International Trade Law, <strong>Sri</strong> <strong>Lanka</strong> Law<br />
College, and Dr. Biplov Choudhary, Trade Specialist,<br />
UNDP Regional Centre in Colombo.<br />
Executive Director handing over the first copy <strong>of</strong> the book “South<br />
Asia in the WTO” to Hon. G.L. Peiris, Minister <strong>of</strong> Export<br />
Development and International Trade at the book launch:”, Trans<br />
Asia Hotel, Colombo, 7 December.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 41
Monthly In-House Seminars<br />
Topic Presenter Date<br />
An Economic Estimation <strong>of</strong> the Dilhani Marawila and Manoj 06 February<br />
Recreational Value <strong>of</strong> Diyawanna<br />
Tibbotuwawa, Research Officers, IPS<br />
Oya Wet Land<br />
Solid Waste Management Asha Gunawardena, 05 March<br />
Research Officer, IPS<br />
International Aid Architecture Deshal de Mel, 08 March<br />
Research Officer, IPS<br />
Conflict in Governance: Central Shelton Wanasinghe, 27 March<br />
Government vs Provincial<br />
Senior Visiting Fellow, IPS<br />
Governments<br />
Public Administration Reforms Yatila Wijemanne, 30 March<br />
Research Assistant, IPS<br />
Climatic Changes and its Athula Senaratne, 19 April<br />
Economic Aspects<br />
Research Fellow, IPS<br />
Poverty and Social Security Kanchana Wickramasinghe, 26 April<br />
Research Assistant, IPS<br />
Human Resources for Development Priyanka Jayawardena and Sunimalee 16 May<br />
Madurawala, Research Assistants, IPS<br />
<strong>Sri</strong> <strong>Lanka</strong>'s Economic Performance Tilani Jayawardhana, 29 May<br />
in 2006 and Prospects<br />
Research Economist, IPS<br />
Micr<strong>of</strong>inance Sector in <strong>Sri</strong> <strong>Lanka</strong> Ramali Perera, 21 June<br />
Research Officer, IPS<br />
Globalization and Technological Lalith Munasinghe, 27 June<br />
Progress: What Track and Field<br />
Assistant Pr<strong>of</strong>essor <strong>of</strong> Economics,<br />
Records Show<br />
University <strong>of</strong> Columbia<br />
Impact <strong>of</strong> Forest Conservation on Kanchana Wickramasinghe, 20 July<br />
Household Economy and Poverty:<br />
Research Assistant, IPS<br />
Case <strong>of</strong> Knuckles National Wilderness<br />
Heritage (NWH) <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong><br />
Population and Ageing and the Nisha Arunatilake, Research Fellow, IPS 27 August<br />
Labour Market<br />
and Priyanka Jayawardena,<br />
Research Officer, IPS<br />
The Private Health Care Sector <strong>of</strong> Sunimalee Madurawala and 12 September<br />
<strong>Sri</strong> <strong>Lanka</strong>: Is it a Case <strong>of</strong> Great<br />
Praveeni Munasinghe,<br />
Expectations<br />
Research Assistants, IPS<br />
Will Education Decentralization Nisha Arunatilake, Research Fellow 13 September<br />
Improve Access to Better Schooling and Priyanka Jayawardena,<br />
Research Officer, IPS<br />
42 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Monthly In-House Seminars<br />
Topic Presenter Date<br />
Corporate Finance Missaka Warusawitharana, Economist, 03 October<br />
Federal Reserves Board, USA<br />
Poverty in <strong>Sri</strong> <strong>Lanka</strong>: Issues Wimal Nanayakkara, 09 October<br />
and Options<br />
Visiting Fellow, IPS<br />
Budget 2008: Macroeconomic Jayanthi Thennakoon, Research 14 November<br />
Implications<br />
Officer, IPS and Jagath Dissanayake,<br />
Research Assistant, IPS<br />
The Proposed Railway Reforms T. L. Gunaruwan, General Manager 21 November<br />
<strong>of</strong> Railways, Department <strong>of</strong> Railways<br />
<strong>Sri</strong> <strong>Lanka</strong>'s Domestic Preparedness Janaka Wijayasiri, Research Economist, 30 November<br />
with respect to Trade in Services in and Deshal de Mel, Research Officer, IPS<br />
GATS: A Case Study <strong>of</strong> the<br />
Telecommunications Sector<br />
Introduction to Social Accounting Manoj Thibbotuwawa, 19 December<br />
Matrix (SAM) and Applications<br />
Research Officer, IPS<br />
Monthly Book Reviews<br />
Topic Author/Publisher Reviewed By Date<br />
How to Make Trade Work Joseph Stiglitz, Daniel Handel, 12 February<br />
MIT Press, Cambridge, Research Assistant, IPS<br />
MA, 2005<br />
and<br />
Growth and Empowerment: Nicholas Stern, Jean-<br />
Making Development<br />
Iacques Dethier, and<br />
Happen<br />
F. Halsey Rigers,<br />
MIT Press, Cambridge,<br />
MA, 2005<br />
Labour Market Regulation Caroline Brassard and Nisha Arunatilake, 27 April<br />
and Deregulation in Asia: Sarthi Acharya, Research Fellow, IPS<br />
Experiences in Recent<br />
Academic Foundation,<br />
Decades New Delhi, 2006<br />
DFCC Bank: One Among the Ranjit Fernando, Praveeni Munasinghe, 16 November<br />
Successful Few World Bank, <strong>2007</strong> Research Assistant, IPS,<br />
Fresh Perspectives: Exploring Azra Cader and Fiona Ayodya Galappattige, 18 December<br />
Alternative Dimensions <strong>of</strong> Remnant, CEPA, <strong>2007</strong> Research Officer, IPS<br />
Poverty in <strong>Sri</strong> <strong>Lanka</strong><br />
Re Inventing Public Service Vikram K. Chand, Sage Ramali Perera, 18 December<br />
Delivery in India: Selected Publications, India, 2006 Research Officer, IPS<br />
Case <strong>Studies</strong><br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 43
IPS Publications<br />
IPS Publications <strong>of</strong> <strong>2007</strong><br />
Utilization <strong>of</strong> Preferential Trade Agreements: <strong>Sri</strong> <strong>Lanka</strong>’s Experience with the EU<br />
and US GSP Schemes by Janaka Wijayasiri, International Economics Series<br />
No. 08, January.<br />
ISBN: 977-955-8708-48-4<br />
This publication using three indicators (coverage, utilization, and utility rates) assesses the<br />
usefulness <strong>of</strong> the EU and US GSP schemes for <strong>Sri</strong> <strong>Lanka</strong> and discusses <strong>Sri</strong> <strong>Lanka</strong>’s performance<br />
under both schemes while suggesting possible measures that can be taken to improve them. <strong>Sri</strong><br />
<strong>Lanka</strong> has been a beneficiary <strong>of</strong> the GSP scheme since its inception in 1968. However, meeting<br />
the scheme’s objective <strong>of</strong> export expansion seems to have fallen short and <strong>Sri</strong> <strong>Lanka</strong> has not<br />
been able to export effectively under the EU and US GSP schemes, which are the most important<br />
non-reciprocal preference arrangements providing access to <strong>Sri</strong> <strong>Lanka</strong>’s main export markets.<br />
The analysis <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>’s experience under both schemes highlights several reasons for their limited use. These include<br />
low product coverage (in the case <strong>of</strong> the US scheme), strict rules <strong>of</strong> origin criteria (in the case <strong>of</strong> the EU scheme), and weak<br />
supply capacity <strong>of</strong> the country. Lack <strong>of</strong> awareness <strong>of</strong> the schemes on the part <strong>of</strong> exporters and understanding the<br />
conditions attached to the schemes do not seem to have caused problems in their usage.<br />
Beyond Twenty Million: Projecting the Population <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> 2001-2081<br />
by Indralal De Silva, Demographic Transition and Pension Series No .06, March.<br />
ISBN: 978-955-8708-49-1<br />
The publication updates the IPS previous population projections in 1995, and is based on the<br />
more recent population statistics available. The publication reveals that according to the standard<br />
projection, the population would reach 20.1 million by 2011, and could attain its peak by 2031<br />
with a size <strong>of</strong> 21.1 million. A near-zero population growth rate would be attained during 2021<br />
to 2036 where the total size <strong>of</strong> the population could be around 21 million. However, the<br />
publication concludes that beyond 2040s, primarily due to significantly low level <strong>of</strong> fertility,<br />
the total size <strong>of</strong> the <strong>Sri</strong> <strong>Lanka</strong>n population would decline.<br />
Disaster Management <strong>Policy</strong> and Practice in <strong>Sri</strong> <strong>Lanka</strong>: Sharing Lessons among<br />
Government, Civil Society and Private Sector, Environmental Economic <strong>Policy</strong> Series<br />
No. 11, April.<br />
ISBN: 978-955-8708-50-7<br />
The publication was prepared by the IPS as an outcome <strong>of</strong> a study that the <strong>Institute</strong> undertook<br />
in collaboration with Oxfam America, providing recommendations to the government, NGOs<br />
and other stakeholders in formulating best practices and improving policy on disaster<br />
management in <strong>Sri</strong> <strong>Lanka</strong>.<br />
This publication contains a comprehensive analysis based on the recommendations presented<br />
by the Parliamentary Select Committee on Natural Disasters in April 2006 together with legal and policy documents, and<br />
interviews with all stakeholders. The publication highlights the need to take a multi-hazard approach with greater<br />
emphasis on mitigation and prevention. Further, it recommends the adoption <strong>of</strong> location specific approaches, focusing on<br />
coping strategies, vulnerable groups, and on effective implementation.<br />
44 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Population Ageing, <strong>Policy</strong> Responses and Options to Extend Retirement<br />
Coverage: Case Study <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> by Nirosha Gaminiratna, Demographic Transition<br />
and Pension Series No. 07, May.<br />
ISBN: 978-955-8708-57-4<br />
The publication examines the ageing patterns in <strong>Sri</strong> <strong>Lanka</strong> to have a better understanding<br />
<strong>of</strong> the status <strong>of</strong> the elderly and the adequacy and coverage <strong>of</strong> the present system <strong>of</strong><br />
retirement benefits in the country, at a time when the country is experiencing rapid<br />
demographic changes with an ageing <strong>of</strong> its population. The publication reveals that old age<br />
dependency is increasing in <strong>Sri</strong> <strong>Lanka</strong>, despite the fact that economic dependency has remained<br />
stable, and also that only a quarter <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>’s working age population is found to be<br />
covered by retirement benefits, indicating a need to redistribute income from workers to<br />
non-workers in order to achieve comprehensive retirement coverage.<br />
<strong>Sri</strong> <strong>Lanka</strong>: State <strong>of</strong> the Economy <strong>2007</strong>, September <strong>2007</strong><br />
ISBN: 955-8708-46-1<br />
The State <strong>of</strong> the Economy report is an annual publication <strong>of</strong> the IPS providing a rigorous<br />
assessment <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong>’s economic performance in the context <strong>of</strong> policy developments in<br />
both the domestic and external environment. The central theme <strong>of</strong> the State <strong>of</strong> the Economy<br />
<strong>2007</strong> report is that better infrastructure and improved public services are needed not only to<br />
increase growth, but also to ensure that the benefits <strong>of</strong> that growth are spread more widely.<br />
The report highlights related issues <strong>of</strong> enhancing access to land and micr<strong>of</strong>inance, improving<br />
access to better quality education and health, the need to ensure sustainable and equitable<br />
utilization <strong>of</strong> the natural environment, etc.<br />
Mahinda Chinthana: A Commentary on <strong>Policy</strong> Options, IPS Working Paper Series<br />
No.11, October.<br />
ISBN: 978-955-8708-538<br />
The IPS examined the ‘Mahinda Chintana: Vision for a New <strong>Sri</strong> <strong>Lanka</strong>’ (MCVSL) taking<br />
into account the current overall policy framework and attempted to shed some light on<br />
possible policy options where necessary. In this exercise, 10 chapters out <strong>of</strong> the 16 chapters<br />
<strong>of</strong> the MCVSL were selected for commentary, viz., Chapters 1& 2 on Agriculture and Irrigation,<br />
respectively; Chapter 3 on Industrial Development; Chapter 4 on Economic Infrastructure,<br />
Chapter 7 on Livelihood Development and Social Protection; Chapter 8 on Education; Chapter<br />
9 on Health, Chapter 11 on Flexibility and Globally Employable Workforce; Chapter 13 on<br />
Environment; and Chapter 16 on Macroeconomic Framework.<br />
South Asia in the WTO, edited by Saman Kelegama, Sage Publications, India,<br />
November.<br />
ISBN:978-0-7619-3614-5<br />
The book examines the position <strong>of</strong> each South Asian country in the multilateral trading<br />
system and highlights various concerns South Asian countries have on key WTO issues in<br />
agriculture, industry, services, and development dimensions. The possibility <strong>of</strong> South Asian<br />
countries formulating a common position in the WTO negotiations is also explored in detail.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 45
“South Asia Economic Journal”, Vol.8, No.1 and 2, January – June and<br />
July – December.<br />
ISSN: 1391-5614<br />
The South Asia Economic Journal is designed as a forum for informed debate on issues<br />
which are <strong>of</strong> vital importance to the people <strong>of</strong> South Asia who comprise more than onesixth<br />
<strong>of</strong> the world’s population. The journal is devoted to the economic analysis and<br />
policy options aimed at promoting cooperation amongst the countries comprising South<br />
Asia. It discusses South Asia’s position on global economic issues, its relations with other<br />
regional groupings and its response to global developments. A refereed journal, it carries<br />
articles by scholars, economic commentators, policy- makers and <strong>of</strong>ficials, from both the<br />
private and public sectors.<br />
Besides the regular publications, the IPS contributed monthly columns on contemporary economic issues to the Financial<br />
Times <strong>of</strong> the Daily Mirror. The topics covered were:<br />
• Driving Productivity at the Bottom <strong>of</strong> the Pyramid: How ICT can Help<br />
• Greening Your Business: Designing a Business Project in Environmentally Sustainable Manner<br />
• Economic Implications <strong>of</strong> Demographic Ageing in <strong>Sri</strong> <strong>Lanka</strong><br />
• Market Access through Regional Trade Arrangements (RTAs)<br />
• Untapped Potential for Trade, Investment Regionally via FTAs<br />
These can be viewed in the IPS website.<br />
Forthcoming Publications<br />
• <strong>Sri</strong> <strong>Lanka</strong> National Health Accounts 2003-2004<br />
• Health Statistics: Census <strong>of</strong> Private, Co-operative and Estate Hospitals 2006<br />
46 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
IPS STAFF<br />
Research Staff<br />
Dushni Weerakoon, BSc (QUB), MA, PhD (Manchester)<br />
Deputy Director and Fellow/Head, Macroeconomic<br />
<strong>Policy</strong> Unit<br />
Nisha Arunatilake, BSc (Univ. <strong>of</strong> South USA),<br />
MA, PhD (Duke)<br />
Research Fellow/Head, Labour, Employment and Human<br />
Resources Development Unit<br />
Malathy Knight-John, BA (Swarthmore), MA (Colombo)<br />
PhD Candidate (Manchester)<br />
Research Fellow/Head, Industry, Public Enterprise<br />
Reform, and Regulatory <strong>Policy</strong> Unit<br />
Parakrama Samaratunga, BSc (Peradeniya), MSc (Univ. <strong>of</strong><br />
Philippines), PhD (La Trobe)<br />
Research Fellow/Head, Agricultural Economic <strong>Policy</strong><br />
Unit<br />
Athula Senaratne, BSc (Peradeniya), MPhil (Peradeniya)<br />
Research Fellow/ Head, Environmental Economic <strong>Policy</strong><br />
Unit<br />
Janaka Wijayasiri, BA (Sussex), MA (The Hague)<br />
Research Economist/Head, International Economics<br />
<strong>Policy</strong> Unit<br />
Ganga Tilakaratna, BA (Manchester), MPhil (Cantab),<br />
PhD Candidate (Manchester)<br />
Research Economist/Head, Poverty and Social Welfare<br />
Unit<br />
G.D. Dayaratne, BA (Peradeniya)<br />
Manager, Health <strong>Policy</strong> Programme<br />
Tilani Jayawardhana, BA (Peradeniya), MA (Colombo),<br />
CIM (UK), PhD Candidate (Colombo)<br />
Research Economist<br />
Shantha Jayasinghe, BSc (<strong>Sri</strong> J’pura), MBA (Moratuwa)<br />
Research Officer<br />
Asha Gunawardena, BSc (Peradeniya), MBA (Moratuwa)<br />
Research Officer<br />
Ruwan Jayathilaka, BA, MEcon (Colombo), MSc (NUS)<br />
Research Officer<br />
Priyanka Jayawardena, BSc (Colombo)<br />
Research Officer<br />
Deshal De Mel, BA (Oxon), MSc (LSE)<br />
Research Officer<br />
Jayanthi Thennakoon, BA (Peradeniya), MSc (NUS)<br />
Research Officer<br />
Ayodya Galappattige, BSc (Peradeniya),<br />
Msc (Peradeniya)<br />
Research Officer<br />
Manoj Thibbotuwawa, BSc (Peradeniya)<br />
Research Officer<br />
Ramali Perera, BSc (UCL)<br />
Research Officer<br />
Jagath Dissanayake, BSc (Colombo)<br />
Research Assistant<br />
Kanchana Wickremasinghe, BSc (Peradeniya),<br />
MEcon (Colombo)<br />
Research Assistant<br />
Daniel Handel, MA (Sussex)<br />
Research Assistant<br />
Roshini Jayaweera, BA (Peradeniya), MSc (NUS)<br />
Research Assistant<br />
Yatila Wijemanne, LLB, LLM (Hull)<br />
Research Assistant<br />
Dilani Hirimuthugodage, BA (Colombo)<br />
Research Assistant<br />
Sunimalee Madurawela, BA (Colombo)<br />
Research Assistant<br />
Praveeni Munasinghe BEc (Syd)<br />
Research Assistant<br />
Indika Wijethunga, BA (Colombo)<br />
Project Assistant<br />
Dilhani Marawila, BSc (Peradeniya), Msc (Peradeniya)<br />
Research Officer<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 47
Visiting Research Staff<br />
Shelton Wanasinghe, BA (Cey.), Hon. D. Litt (J’pura)<br />
Senior Visiting Fellow<br />
Wimal Hettiarachchi, BA (Cey.), DPhil (Oxon)<br />
Senior Visiting Fellow<br />
S.A. Karunaratne, BA (Cey.), MA (Boston), MA (Warwick)<br />
Senior Visiting Fellow<br />
Wimal Nanayakkara, BA (Cey.), PG.Dip (Reading, UK)<br />
Visiting Fellow<br />
Project Interns<br />
Neethra Samarawickrama, T. Pothuhare, Sawati Rawat, Shezny Kabir, Mihiri Seneviratne, Maneka Jayasinghe, Nethmini<br />
Perera, and Ruwangi Welikala.<br />
Administrative and Support Staff<br />
Iloka Wickremasinghe, FCMA<br />
Director Finance and Administration<br />
Premila Gamage, BA (Peradeniya), MLS (Colombo),<br />
Dip. Lib. & Doc. Sci. (Kelaniya), Dip. Writership and<br />
Comm. (<strong>Sri</strong> J’pura), PhD Candidate (Leeds Metropolitan)<br />
Librarian<br />
Manu Tissera-Gunasekara, BA (Kelaniya), MA<br />
(Colombo)<br />
Head <strong>of</strong> Publications and Communications<br />
Haren H. Kodagoda, BSc (Colombo), MBA (Moratuwa)<br />
Head <strong>of</strong> Information Systems<br />
Dhanuja David, ACMA<br />
Accountant<br />
Indika Siriwardena, BSc (Colombo)<br />
Database Manager<br />
Nandaka Pothuwewa, BSc (Kelaniya), Dip. Comp. Sys.<br />
Design (NIBM), CCNA<br />
Manager Information Technology<br />
G.L.B. Pooliyadda<br />
Administrative Officer<br />
K.A.R.T. Wijekoon<br />
Maintenance Officer<br />
D.D.M. Waidyasekera, BA (Ceylon)<br />
Editor<br />
K. Sothinathan<br />
Documentation Officer<br />
Deepika Nawavickrama<br />
Administrative Assistant<br />
Gayani Bentotage<br />
Library Assistant<br />
Amesh Thennakoon<br />
Publication Officer<br />
Nirmala Meegama<br />
Secretary<br />
Asuntha Paul<br />
Secretary<br />
Sharmini De Silva<br />
Secretary<br />
Lasitha Fernando<br />
Web Developer<br />
Ayoni Rangala<br />
Secretary<br />
Urmila Jayasekera<br />
Receptionist<br />
Dumidu Karunaratne<br />
Web Developer/Network Assistant<br />
Nuwan Kahadawala Arachchi<br />
Web Developer/ Network Assistant<br />
Dilrukshi Ariyaratne, BA (Kelaniya)<br />
Assistant Librarian<br />
Chamari Yapa, BA (Kelaniya)<br />
Assistant Librarian<br />
48 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Sunil Dharmadasa: An Appreciation<br />
It is with pr<strong>of</strong>ound regret that the IPS records the demise <strong>of</strong> Sunil Dharmadasa,<br />
former Administrative Officer, who passed away on 2 nd March 2008 at his residence<br />
at Ratmalana.<br />
Sunil Dharmadasa, fondly called ‘Sunil’ by both friends and associates, was born<br />
on 29 th January 1930 and joined the <strong>Institute</strong> from the very inception in 1990 and<br />
retired as its Administrative Officer in March 2001. Sunil was a senior Public<br />
Servant who started his career as a draughtsman in the Survey Department in<br />
1951 and retired in 1985. He subsequently served in the National Planning<br />
Department and worked on the IPS project during 1985-1989.<br />
Sunil Dharmadasa was instrumental in establishing the new IPS Administration<br />
Office at DFCC building and later shifting to its present premises at St. Michael’s<br />
Road, Colombo 3. He assisted the Executive Director in preparing the <strong>Institute</strong>’s<br />
Code <strong>of</strong> Conduct: IPS Manual <strong>of</strong> Operations in 1995. He was not only a devoted <strong>of</strong>ficer in carrying out his functions<br />
effectively, but he did this in his usual affable style and was very popular both with the staff and with all those who<br />
associated with him. He also coordinated administrative and financial tasks with the Netherlands Embassy from the<br />
inception. He was largely responsible for bringing up the <strong>Institute</strong> in its administrative capacity to its present level.<br />
Sunil Dharmadasa is survived by his wife Sumana and two daughters. We wish to record our deepest sympathies to the<br />
family and our great appreciation <strong>of</strong> the services rendered by him to the <strong>Institute</strong>.<br />
Retirement <strong>of</strong> K. Sothinathan<br />
K. Sothinathan who served as the IPS Documentation Officer since 1994 retired from<br />
service in September <strong>2007</strong>.<br />
He was a colleague <strong>of</strong> late Sunil Dharmadasa at the Survey Department before joining<br />
the IPS. He established a wide network <strong>of</strong> sales outlets for IPS publications and made a<br />
valuable effort to disseminate the publications to a wider audience. The <strong>Institute</strong> records<br />
its deep appreciation to K. Sothinathan and wish him a happy and peaceful retirement.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 49
Financial<br />
<strong>Report</strong> <strong>of</strong> the Auditor General<br />
50 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 51
52 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 53
54 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Management Response to: Comments on Financial Statements<br />
2.2.1 Non – Compliance with Laws, Rules and Regulations and Management Decisions<br />
The <strong>Institute</strong> <strong>of</strong> <strong>Policy</strong> <strong>Studies</strong> (IPS) was created as an autonomous research institute, by an Act <strong>of</strong> Parliament. The IPS was<br />
envisaged as a policy “think tank” that would have the operational freedom and resources to engage in socio-economic<br />
research requiring long-term commitment. Although closely linked to the policy making process, its financial and<br />
administrative independence enables it to be both constructive and critical.<br />
a) An Audit Committee will be established shortly.<br />
b) The bonuses paid to staff have been approved by the Governing Board <strong>of</strong> IPS. As stated above the<br />
IPS by its very nature is not required to conform to the Government <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> Administrative<br />
Regulations (ARS) and Financial Regulations (FRS).<br />
c) Financial regulations<br />
i. Appointments and payments to staff do not require the approval <strong>of</strong> the Ministry as the Government does not fund the<br />
emoluments made to IPS staff. The staff payments are made using project funding and recruitments are as per the project<br />
requirements. The <strong>Institute</strong> <strong>of</strong> <strong>Policy</strong> <strong>Studies</strong> does not come under the Government <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> Administrative<br />
Regulations and Financial Regulations. Section 20 <strong>of</strong> the <strong>Institute</strong> <strong>of</strong> <strong>Policy</strong> <strong>Studies</strong> <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> Act No 53 <strong>of</strong> 1988<br />
clearly states that the appointment <strong>of</strong> <strong>of</strong>ficers and their salaries and emoluments is at Board discretion.<br />
ii. Most <strong>of</strong> the Bank Accounts have been opened due to donor requests and have been in operation for many years.<br />
iii. The staff strength <strong>of</strong> the Finance & Administration Unit is limited. The Department comprises <strong>of</strong> Director-Finance &<br />
Administration (DFA), Accountant, Administrative Officer and Administrative Assistant. Of these 4 members, only<br />
DFA and Accountant are qualified in finance and have knowledge to do bank reconciliations and other specialized<br />
accounting tasks. With the current resources, segregation <strong>of</strong> duties is not possible.<br />
iv. Consumable stocks are issued on an authorized document, by the Maintenance Officer. No formal warehouse is maintained<br />
due to lack <strong>of</strong> space. Further, non-consumable items are not stocked, therefore the need for a warehouse does not arise.<br />
v. Board <strong>of</strong> Survey was carried out as per the fixed Asset Register. Copy <strong>of</strong> Board <strong>of</strong> Survey <strong>Report</strong> <strong>2007</strong>, was sent to the<br />
Auditor General’s Department. Copy was also given to the audit team during the audit.<br />
d) Establishment Code<br />
i. The loan scheme is as per the Manual <strong>of</strong> Operations (MOO). Employees <strong>of</strong> IPS are on a contract basis;<br />
therefore they are unable to obtain loans from commercial banks, financial institutions and are not on par with<br />
permanent employees <strong>of</strong> the government sector. The MOO has specified limits for each grade <strong>of</strong> staff, and the<br />
amounts are hardly sufficient to meet the cost <strong>of</strong> the reason for obtaining the loan (the wedding, funeral <strong>of</strong> a<br />
family member, purchase or renovation <strong>of</strong> a house, purchase <strong>of</strong> a vehicle etc.). However, taking into consideration<br />
that staff <strong>of</strong> IPS cannot obtain loans unlike employees <strong>of</strong> government institutions who can obtain loans from<br />
private banks and institutions, the Governing Board <strong>of</strong> the IPS approved the 2% interest charge. On a special<br />
needs basis, taking into consideration the difficulties faced, an employee maybe granted a loan even though he/she<br />
has not completed the stipulated 2 years at the <strong>Institute</strong>. This is as stated in the MOO strictly on the approval <strong>of</strong><br />
the Executive Director. The loans are granted from savings made from Project Income and <strong>Institute</strong>’s Reserves.<br />
ii. The subsistence is as per the Manual <strong>of</strong> Operations (MOO). Subsistence payments are made to researchers<br />
who travel out <strong>of</strong> Colombo for research, survey and for data collection. The amounts are budgeted in the project<br />
budgets and approved by the donors.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 55
Income and Expenditure Account for the Year Ended 31st December <strong>2007</strong><br />
Notes <strong>2007</strong> 2006<br />
Rs. Rs.<br />
Income<br />
Grant from Royal<br />
Netherlands Embassy - 5,651,440<br />
Contribution from the Ministry<br />
<strong>of</strong> Finance and Planning 10,930,000 11,000,000<br />
Income on Research Projects 50,276,193 41,313,866<br />
Investment Income (12) 31,115,975 19,095,551<br />
Sales <strong>of</strong> Publications 524,946 747,837<br />
Miscellaneous Income 465,118 235,809<br />
Net Pr<strong>of</strong>it on Disposal <strong>of</strong> Assets 34,800 15,000<br />
Net Gain on Fluctuation <strong>of</strong> Exchange Rates (13) 10,334,079 -<br />
103,681,111 78,059,502<br />
Less: Expenditure<br />
Local Staff Salaries (14) 36,379,719 31,700,550<br />
Research Costs (15) 9,062,977 15,769,024<br />
Operational Costs (16) 20,255,152 22,255,597<br />
65,697,848 69,725,170<br />
Income/(Loss) before Tax 37,983,263 8,334,333<br />
Taxation - -<br />
Income/(Loss) after Tax 37,983,263 8,334,333<br />
Surplus / (Deficit) Brought Forward 187,955,137 178,157,443<br />
Prior year adjustment - 1,463,361<br />
Surplus / (Deficit) Carried Out 225,938,400 187,955,137<br />
56 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Balance Sheet as at 31st December <strong>2007</strong><br />
Represented By :<br />
Notes 31.12.<strong>2007</strong> 31.12.2006<br />
Rs.<br />
Rs.<br />
Non-Current Assets<br />
Fixed Assets (2) 32,441,092 28,209,262<br />
Fixed Deposits (3) 200,419,512 228,246,071<br />
Building Construction in Progress 49,256,526 621,080<br />
Current Assets<br />
Stock <strong>of</strong> Publications 2,254,864 2,026,731<br />
Staff Debtors 2,631,675 1,699,050<br />
Other Receivable (4) 11,759,621 6,506,262<br />
Deposits (5) 546,000 551,000<br />
Interest Receivable 417,735 494,204<br />
Pre-Payments (6) 4,540,336 4,305,734<br />
Cash/Bank (7) 79,438,494 15,048,984<br />
150,845,250 31,253,044<br />
Current Liabilities<br />
Accruals (8) 2,450,763 1,090,492<br />
Other Creditors (9) 4,227,126 1,251,445<br />
Deferred Income<br />
- IPS 9,021,275 17,583,477<br />
- IPS - HPP Unit - 4,044,180<br />
15,699,165 23,969,594<br />
Net Current Assets 135,146,086 7,283,450<br />
Long-term Liabilities<br />
Retirement Benefits 5,913,515 4,239,496<br />
Long-term Lease (Land) (10) 21,060,000 21,840,000<br />
Deferred Income - Building Fund (11) 112,950,634 47,560,010<br />
Financed By :<br />
228,082,542 190,099,279<br />
Assets Transferred 2,144,144 2,144,144<br />
Revenue Reserves 187,955,136 179,620,803<br />
Surplus / (Deficit) for the year 37,983,263 8,334,333<br />
228,082,543 190,099,280<br />
The notes to these accounts are annexed,<br />
signed for and on behalf <strong>of</strong> the Board<br />
22nd June 2008<br />
Executive Director<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 57
Statment <strong>of</strong> Changes in Equity for the Year Ended 31st December <strong>2007</strong><br />
Assets Revenue Total<br />
Transferred Reserved<br />
Rs. Rs. Rs.<br />
Balance as at 31st December 2006 2,144,144 187,955,136 190,099,280<br />
Changes in Equity for <strong>2007</strong><br />
Income for the period - 37,983,263 37,983,263<br />
Balance as at 31st December <strong>2007</strong> 2,144,144 225,938,399 228,082,543<br />
58 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
Cashflow Statment for the Year Ended 31st December <strong>2007</strong><br />
31.12.<strong>2007</strong> 31.12.2006<br />
Rs. Rs.<br />
Income /(Expenditure) before tax 37,983,263 8,334,333<br />
Adjustments for<br />
Depreciation 2,980,954 5,066,172<br />
Provision for Gratuity 1,674,020 923,483<br />
Pr<strong>of</strong>it on Disposal <strong>of</strong> Plant, Equipment & Motor Vehicles (40,300) (15,000)<br />
Operating Pr<strong>of</strong>it before Working Capital Charges 42,597,936 14,308,988<br />
Changes in Working Capital<br />
(Increase)/Decrease in Publication Stocks (228,133) (563,369)<br />
(Increase)/Decrease in Staff Receivables (932,625) (567,995)<br />
(Increase)/Decrease in Other Receivables (5,171,889) 5,034,984<br />
(Increase)/Decrease in Pre Payments (234,602) (389,748)<br />
Increase/(Decrease) in Other Payables (9,630,701) (1,786,352)<br />
Increase/(Decrease) in Accruals 1,360,272 (70,395)<br />
Cash Flow from Operations (14,837,679) 1,657,125<br />
Income Tax Paid - -<br />
Net Cash Flow after Operating Activities 27,760,257 15,966,113<br />
Long-term Land Lease Payable (780,000) 21,840,000<br />
Building Fund 65,390,624 47,560,010<br />
Purchase <strong>of</strong> Property, Plant & Equipment (7,212,784) (24,570,376)<br />
Building Construction in Progress (48,635,446) (621,080)<br />
Sales proceeds from Disposal <strong>of</strong><br />
Property, Plant & Equipment 40,300 15,000<br />
Net Cash Flow from Investing Activities 9,582,694 22,383,553<br />
Net Increase/(Decrease) in Cash & Cash Equivalents (Note) 36,562,951 60,189,666<br />
Cash & Cash Equivalents at the beginning <strong>of</strong> the Period 243,295,055 183,105,391<br />
Cash & Cash Equivalents at the end <strong>of</strong> the Period 279,858,006 243,295,057<br />
(1)<br />
NOTE 31.12.<strong>2007</strong> 31.12.2006 Changes in<br />
the period<br />
Rs. Rs. Rs.<br />
Cash at Bank and in Hand 79,438,494 15,048,984 64,389,510<br />
Fixed Deposits 200,419,512 228,246,071 (27,826,559)<br />
279,858,007 243,295,055 36,562,951<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 59
Notes to the Accounts as at 31st December <strong>2007</strong><br />
1. Accounting Policies<br />
1.1 The financial statements have been prepared in accordance with generally accepted accounting principles and no<br />
adjustments have been made for the inflationary factors affecting the accounts.<br />
1.2 Fixed Assets<br />
Fixed assets are stated at cost less accumulated depreciation.<br />
Assets are depreciated on the Straight-line method using the following rates per annum:<br />
They are not depreciated in the year <strong>of</strong> purchase.<br />
1.3 Debtors are stated at the amount estimated to be realised.<br />
Computer Equipment - 33%<br />
Web Page Design - 33%<br />
Motor Cycle - 20%<br />
Furniture - 20%<br />
Office Equipment/Generator - 20%<br />
Motor Vehicles - 20%<br />
Lease-hold Improvements - 50%<br />
Library Books - 25%<br />
1.4 Taxation<br />
The pr<strong>of</strong>its and the income <strong>of</strong> the <strong>Institute</strong> <strong>of</strong> <strong>Policy</strong> <strong>Studies</strong> are exempt from tax as per<br />
section 19 (4) <strong>of</strong> the <strong>Institute</strong> <strong>of</strong> policy <strong>Studies</strong> <strong>of</strong> <strong>Sri</strong> <strong>Lanka</strong> Act No.53 <strong>of</strong> 1988 and section 2 (3)<br />
(LIX) <strong>of</strong> the Inland Revenue (Amendment) Act No. 42 <strong>of</strong> 1990.<br />
1.5 Recognition <strong>of</strong> Revenue<br />
Income is recognised only when realised. Therefore revenue is recorded at the end <strong>of</strong> a particular phase and/or<br />
at the end <strong>of</strong> the project when research work is fully completed.<br />
2. Fixed Assets<br />
Land & Computer Motor Furniture Office Library Lease-hold Total<br />
Building Equipment Vehicles & Fittings Equipment Books Improvements<br />
60 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong><br />
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.<br />
Cost<br />
Opening Balance as at<br />
01st January <strong>2007</strong> 23,400,000 19,530,593 5,048,625 3,544,613 7,005,139 1,210,774 820,091 60,559,835<br />
Add: Additions - 612,784 6,600,000 - - - 7,212,784<br />
Less: Disposals (81,000) - - - - - (81,000)<br />
Closing Balance as at<br />
31st December <strong>2007</strong> 23,400,000 20,062,378 11,648,625 3,544,613 7,005,139 1,210,774 820,091 67,691,620<br />
Accumulated Depreciation<br />
Opening Balance as at<br />
01st January <strong>2007</strong> 18,169,559 3,999,626 2,995,025 6,038,714 382,253 765,396 32,350,573<br />
Add: Depreciation charge<br />
as at December <strong>2007</strong> 922,800 744,998 324,597 696,483 237,370 54,706 2,980,954<br />
Less: Depreciation on<br />
Disposal (81,000) - - - - - (81,000)<br />
Closing Balance as at<br />
31st December <strong>2007</strong> 19,011,359 4,744,624 3,319,622 6,735,197 619,623 820,102 35,250,527<br />
Written down value<br />
31st December <strong>2007</strong> 23,400,000 1,051,019 6,904,001 224,991 269,941 591,152 (11) 32,441,092<br />
Written down value<br />
31st December 2006 23,400,000 1,361,034 1,048,999 549,588 966,424 828,522 54,695 28,209,262
3. Fixed Deposits <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Fixed deposits 300,000 39,780,417<br />
Treasury bond 11,210,295 14,605,463<br />
Treasury Bills -<br />
Gratuity Fund Investment 5,913,515 3,968,626<br />
Repurchase Agreements 182,995,702 169,891,565<br />
200,419,512 228,246,071<br />
Note: Decrease in fixed deposit is due to the advance payment made to the contractor for the IPS head <strong>of</strong>fice<br />
building construction.<br />
4. Other Debtors <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Debtors 3,842,179 6,065,103<br />
VAT Receivable 7,475,060 -<br />
Interest Suspense - 33,632<br />
Other Advances 31,500 2,500<br />
Other Receivables 410,881 405,028<br />
11,759,621 6,506,262<br />
5. Deposits <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Deposit on IPS Annex 200,000 200,000<br />
Deposit on IPS HO 200,000 200,000<br />
Deposit for Fuel 80,000 80,000<br />
Mobile phone - Roaming facility 60,000 60,000<br />
Deposit - American Premium Water 6,000 6,000<br />
SSC - refundable deposit for<br />
year end dinner - 5,000<br />
546,000 551,000<br />
6. Pre-Payments <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Rent 3,370,375 3,306,625<br />
Vehicle Insurance 101,641 37,666<br />
Medical Insurance 705,519 505,992<br />
IT maintenance & Insurance 288,551 354,350<br />
Other Pre-Payments 74,250 101,102<br />
4,540,336 4,305,734<br />
7. Cash/Bank <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
HSBC 3,955,731 502,693<br />
Commercial Bank 107,379 101,704<br />
People’s Bank 555,005 27,182<br />
Citibank - 130,483<br />
Citibank Euro - 770,100<br />
Commercial Euro - 1,266,974<br />
People’s Bank USD - 471,067<br />
Citibank USD 1,116,110 433,313<br />
Citibank GBP 2,643,831 2,880,364<br />
Commercial Debit Tax 123,631 101,996<br />
Petty cash IPS 26,623 36,999<br />
HSBC Building Construction Account 70,910,184 8,326,108<br />
79,438,494 15,048,984<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 61
8. Accruals <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Audit fees 310,000 225,000<br />
Electricity 189,369 240,206<br />
Fuel 92,240 55,894<br />
Foliage - 750<br />
Telephone/Internet Charges 560,939 270,284<br />
Training and Development 93,475 200,961<br />
PAYE Tax (Oct - Dec ’06) 52,256 45,272<br />
Postage/Courier 3,117 8,541<br />
Research project expenses 1,038,721 -<br />
Other Office Costs 110,646 43,584<br />
2,450,763 1,090,492<br />
9. Other Creditors <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Creditors 416,513 802,846<br />
EPF/ETF Payable 483,491 447,323<br />
Stamp Duty Payable - 1,275<br />
Withholding Tax Payable 3,327,121 -<br />
4,227,126 1,251,445<br />
10. Long-term Lease on Land<br />
An extent <strong>of</strong> land was given to the IPS by the Land Commissioner in year 2006, on a 30 year long-term lease agreement to costruct<br />
the IPS Head Office building. The <strong>Institute</strong> pays the Divisional Secretariat in Thimbirigasyaya, Rs. 780,000 per annum towards the<br />
lease payment. Three lease payments have been made amounting to Rs. 2,340,000 as at 31.12.<strong>2007</strong>.<br />
11. Commitments<br />
The <strong>Institute</strong> has commited to construct its own Head Office building valuing Rs. 268 M, over a period <strong>of</strong> 2 1/2 years. (June 2006 to<br />
December 2008). A substantial part <strong>of</strong> the funds, Rs. 226.8M (Euros 1.8M) required for this project is provided by the State <strong>of</strong><br />
Netherlands. The balance Rs. 41 M (Euros 325,000) is to be met by IPS reserves. The first instalment <strong>of</strong> Rs. 47.5M (Eur. 360,000)<br />
was received in June 2006. The second payment <strong>of</strong> Rs. 65.4M (Eur. 416,000) was received in December <strong>2007</strong>.<br />
In the event that this project is not carried out as per contract specifications between the State <strong>of</strong> Netherlands & the IPS, the IPS would<br />
be required to pay back the grant in full or part there<strong>of</strong>.<br />
12. Investment Income <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Savings account interest 204,752 266,178<br />
Savings account interest -<br />
Dutch Building Fund 1,594,718 324,435<br />
Investment Income 29,316,505 18,504,939<br />
31,115,975 19,095,551<br />
13. Net Gain on Fluctuation <strong>of</strong> Exchange rates<br />
Net gain on fluctuation <strong>of</strong> exchange rates include Rs. 8,921,735 exchange gain from the Dutch building fund which is maintained<br />
in Euros.<br />
Therefore the Rupee value <strong>of</strong> Euro Dutch building fund <strong>of</strong> Euro 446,251 as at 31.12.07 is Rs. 70,864,182 at the exchange rate <strong>of</strong><br />
Rs. 158.50. per Euro<br />
14. Local Staff Salaries <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Salary 33,919,305 30,016,761<br />
Medical 534,732 579,829<br />
Retirement Benefits 1,674,020 971,808<br />
Other 251,662 132,151<br />
36,379,719 31,700,550<br />
62 IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong>
15. Research Costs <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Research Papers 2,440 38,000<br />
Printing & Publication Cost 472,096 926,337<br />
Consultancy fees 4,398,197 8,996,489<br />
Data Entry Operators 5,625 65,798<br />
Doc: data retr & Libr: 354,200 217,415<br />
Seminars/Workshops 495,640 312,110<br />
Networking 122,534 142,028<br />
Travelling, Field Visits & Accomm. -<br />
Foreign 152,300 392,728<br />
Travelling, Field Visits & Accomm. -<br />
Local 311,030 307,208<br />
Data and Survey Cost 1,576,100 1,874,043<br />
Internet Costs/Website costs 1,172,815 2,496,867<br />
9,062,977 15,769,024<br />
16. Operational Cost <strong>2007</strong> 2006<br />
Rs.<br />
Rs.<br />
Depreciation 2,955,954 5,066,172<br />
IT expenses - Consumables & Other 417,834 1,190,836<br />
Office Costs 4,009,979 3,512,981<br />
Rent & Office Maintenance 12,871,385 12,485,608<br />
20,255,152 22,255,597<br />
Glossary <strong>of</strong> Financial Terms<br />
Accounting Policies<br />
Specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing<br />
and presenting Financial Statements.<br />
Deferred Income<br />
The income on incomplete projects deferred in the Balance Sheet to be recognized as income<br />
over the period <strong>of</strong> projects.<br />
Revenue Reserves<br />
Reserves considered as being available for distribution and investments.<br />
IPS <strong>Annual</strong> <strong>Report</strong> <strong>2007</strong> 63