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Urban Development

Six reasons why Sri Lanka needs to boost its ailing private sector

Tatiana Nenova's picture
 Joe Qian / World Bank
A view of the business district in Colombo. Credit: Joe Qian / World Bank

Sri Lanka experienced strong growth at the end of its 26-year conflict. This was to be expected as post-war reconstruction tends to bring new hope and energy to a country.
 
And Sri Lanka has done well—5 percent growth is nothing to scoff at.  
 
However, Sri Lanka needs to create an environment that fosters private-sector growth and creates more and better jobs. To that end, the country should address these 6 pressing challenges:

1. The easy economic wins are almost exhausted

For a long time, the public-sector has been pouring funds into everything from infrastructure to healthcare. Unfortunately, Sri Lanka’s public sector is facing serious budget constraints. The island’s tax to growth domestic product (GDP) ratio is one of the lowest in the world, falling from 24.2% in 1978 to 10.1% in 2014. Sri Lanka should look for more sustainable sources of growth. As in many other countries, the answer lies with the private sector.
 
2. Sri Lanka has isolated itself from global and regional value chains 

Over the past decades, Sri Lanka has lost its trade competitiveness. As illustrated in the graph below, Sri Lanka outperformed Vietnam in the early 1990s on how much of its trade contributed to its growth domestic product. Vietnam has now overtaken Sri Lanka where trade has been harmed by high tariffs and para-tariffs and trade interventions on agriculture.


Sri Lanka dropped down by 14 notches to the 85th position out of 137 in the recent  Global Competitiveness Index.
           
3. The system inhibits private sector growth

Sri Lanka’s private sector is ailing. Sri Lankan companies are entrepreneurial and the country’s young people are smart, inquisitive, and dynamic. Yet, this does not translate into a vibrant private sector. Instead, public enterprises are the ones carrying the whole weight of development in this country.
 
The question is, why is the private sector not shouldering its burden of growth?


From the chart above, you can see how difficult it is to set up and operate a business in Sri Lanka. From paying taxes to enforcing contracts to registering property, entrepreneurs have the deck stacked against them.
 
Trading across borders is particularly challenging for Sri Lankan businesses. Trade facilitation is inadequate to the point of stunting growth and linkages to regional value chains. The chart explains just why Sri Lanka is considered one of the hardest countries in the world to run a trading business. Compare it to Singapore–you could even import a live tiger there without a problem.

VGGT: The global guidelines to secure land rights for all

Jorge Muñoz's picture
A man holds his family's "red book," the land use rights certificate in Vietnam, which includes both his and his wife's names. (Photo by Chau Doan / World Bank)
A man holds his family's "red book," the land use rights certificate in Vietnam, which includes both his and his wife's names. (Photo by Chau Doan / World Bank)

Ground-breaking, far-reaching global guidelines for governments to help them safeguard the rights of people to own or access land, forests, and fisheries were endorsed five years ago by the Committee on World Food Security (CFS), based at the Food and Agriculture Organization of the United Nations (FAO) in Rome.

Today, the Voluntary Guidelines on the Responsible Governance of Tenure (VGGT) are a true global norm of reference in the governance of (land) tenure. The guidelines are pioneering – outlining principles and practices that governments can refer to when making laws and administering land, fisheries, and forests rights. Ultimately, they aim to promote food security and sustainable development by improving secure access to land, fisheries, and forests, as well as protecting the rights of millions of often very poor people.

Sounds simple, maybe even jargony, but no – they are concrete, with real impacts. All of a sudden, we had an internationally negotiated soft law or a set of guidelines on (land) tenure navigating successfully through the global web of interests on land, reaching a common ground. The consensus at the CFS was further strengthened by the endorsement of the VGGT by the G20, Rio+ 20, the United Nations General Assembly, and the Francophone Assembly of Parliamentarians.

[Read: Land Tenure: What have we learned four years after approving a set of international land tenure guidelines?]

This journey started with an inclusive consultation process started by the FAO in 2009, and finalized through intergovernmental negotiations. Importantly, no interest group – governments, CSOs, academia, private sector – felt left behind, and the States were engaged in word-by-word review of the guidelines.

This can be seen in the result. The VGGT’s power stems from the consensus on its principles that States were to:
  • Recognize and respect all legitimate tenure right holders and their rights;
  • Protect tenure right holders against the arbitrary loss of their tenure rights; and that
  • Women and girls [were to] have equal tenure rights and access to land.

And the list goes on.

Voices of non-violence

Chloe Fevre's picture

Today, October 2nd, is the International Day of Non-Violence, a day that reminds us of the serious development challenge of interpersonal violence.
 
Violence is a multi-causal phenomenon. Therefore, preventing violence requires a multi-sectoral approach. What does this concretely mean? It means that to prevent violence in a sustainable way, we need to address its multiple causes at the same time. It also means to move away from a punitive perspective solely focused on the criminal justice system and acknowledge the shared responsibility for violence prevention and the need for different sectors and government agencies to contribute to solving the issue.

The power of data in driving sustainable development… Is solid waste the low hanging fruit?

John Morton's picture
Photo by Lisa Yao / World Bank


The data revolution is upon us and the benefits, including improving the efficiency of corporations, spurring entrepreneurship, improving public services, improving coordination, and building profitable partnerships, are becoming more evident.

For public services, the potential gains are impressive. Globally in the electricity sector, an estimated $340 – 580 billion of economic value can be captured by providing more and better data to consumers to improve energy efficiency, and to operators for streamlining project management and the operation of their facilities. Even larger gains ($720 – 920 billion) could be captured in the transport sector.

Exploring the benefits of open data in the solid waste sector has been slower than for other services, however, if you take a closer look, the benefits may be substantial. Solid waste services have a lot to gain – with low service coverage and a lack of modernization in most parts of the world; solid waste services can be costly, representing 10 – 50% of municipal budgets in many developing countries; and it is directly dependent on many actors. To be effective, citizens, institutions, and private companies need to be informed and involved.

[Download: What a Waste: A Global Review of Solid Waste Management]

Some examples of what making better quality data available on solid waste services could do include: 

The best laid plans… have data. With average waste collection rates of 41% and 68% for low- and lower middle-income countries, respectively, and less than 10% of the corresponding waste disposed in a sanitary manner, many municipalities in the world lack solid waste services. The introduction of modern solid waste systems in these areas represents a monumental organizational change and logistical challenge. It necessitates the introduction of collection services for, among others, each household, and every commercial building and supermarket; the coordination with, informing, and incentivizing all the actors in recycling; the operation of transport services; and the operation of effective disposal or treatment options for the daily, relentless influx of waste. Systematically collecting quality data will help municipalities to undertake strategic planning, integrate service planning into urban planning, and make the necessary decisions that allow them to establish a solid waste system that is properly dimensioned and cost-effective. 

The Neighborhood Battery System: Conserving Energy and Reducing Emissions in the Netherlands

Qiyang Xu's picture
Electric cars are so popular in the Netherlands that it would not be uncommon, say, for a Tesla to roll up as a taxi outside Amsterdam’s Schiphol Airport. And it is not tough to find charging stations for these cars in neighborhoods, parking lots, or even along the streets.

To reduce carbon emissions, national and local governments are taking various approaches—and, thus, electric cars, solar home systems, and energy-efficient solutions for buildings are booming in Europe. Cities like Amsterdam are front and center of this transformation. Netherlands, for instance,  has an ambitious goal of reducing CO2 emissions by 80–95 percent by 2050 compared with 1990, making it an ideal venue for a Smart Cities Tour earlier this year, where  a group of 26 representatives, including national and municipal officials and World Bank project teams, to learn from the Netherlands’ successful experience in energy sector transformation.

For instance, during a site visit to energy network company Alliander, we saw the pilot of a neighborhood battery system (NBS) in Rijsenhout, a town in the Western Netherlands near Amsterdam. The NBS is a local, community-level energy storage system that employs one large battery to stabilize neighborhood power distribution grids, particularly during peak hours. With a significant and increasing number of electric vehicle charging stations and solar panels installed in communities, electric networks are under increasing pressure to handle the variation between solar power during the day and concentrated peak electricity demand in the evenings and nights. Maintaining stable power supply and enhancing the resilience of the electricity grid to spikes in demand are fast becoming real challenges for these communities. While overhauling the power grids to prepare for these challenges could be costly and time-consuming, these small-scale NBS provide a low-cost, smart alternative solution.
 
Housing of the pilot neighborhood battery system in Rijsenhout, Netherlands.  Credit: Alliander

Resilience in urban transport: what have we learned from Super Storm Sandy and the New York City Subway?

Ramiro Alberto Ríos's picture
Photo: Stefan Georgi/Flickr
Back in 2012, a storm surge triggered by Super Storm Sandy caused extensive damage across the New York City (NYC)-New Jersey (NJ) Metropolitan Area, and wreaked havoc on the city’s urban rail system.

As reported by the Metropolitan Transportation Authority (MTA), the subway suffered at least $5 billion worth of damage to stations, tunnels and electrical/signaling systems. The Port Authority Trans-Hudson network (PATH) connecting NYC to NJ was also severely affected, with losses valued at approximately $871 million, including 85 rail cars damaged.

In the face of adversity, various public institutions in charge of urban rail operations are leading the way to repair damaged infrastructure (“fix”), protect assets from future similar disasters (“fortify”), restore services to millions of commuters and rethink the standards for future investments.

NYC and NJ believe that disasters will only become more frequent and intense. Their experience provides some valuable lessons for cities around the world on how to respond to disasters and prepare urban rail systems to cope with a changing climate.

E-commerce is booming. What’s in it for urban transport?

Bianca Bianchi Alves's picture
Também disponível em: Português
 

Worldwide, e-commerce has experienced explosive growth over the past decade, including in developing countries. The 2015 Global Retail E-Commerce Index ranks several of the World Bank’s client countries among the 30 most important markets for e-commerce (China ranks 2nd, Mexico 17th, Chile 19th, Brazil 21st, and Argentina 29th). As shown in a 2017 report from Ipsos, China, India, and Indonesia are among the 10 countries with the highest frequency of online shopping in the world, among online shoppers. Although growth in e-commerce in these countries is sometimes hindered by structural deficiencies, such as limitations of banking systems, digital payment systems, secure IT networks, or transport infrastructure, the upcoming technological advances in mobile phones and payment and location systems will trigger another wave of growth. This growth will likely lead to more deliveries and an increase in freight volume in urban areas.

In this context, the Bank has been working with the cities of Sao Paulo and Bangalore to develop a new tool that helps evaluate how different transport policies and interventions can impact e-commerce logistics in urban areas (GiULia). Financed by the Multidonor Sustainable Logistics Trust Fund, the tool serves as a platform to promote discussion with our counterparts on a subject that is often neglected by city planners: urban logistics. Decision-making on policies and regulations for urban logistics has traditionally been undertaken without sufficient consideration for economic and environmental impacts. For instance, restrictions on the size and use of trucks in cities can cause a number of side effects, including the suburbanization of cargo, with warehouses and trucks located on the periphery of cities, far from consumers, or the fragmentation of services between multiple carriers, which may lead to more miles traveled, idle truck loads, and inefficiencies.

Punjab, Pakistan has just transformed its land record management system. What can we learn?

Ede Ijjasz-Vasquez's picture
Land is an essential resource for sustainable development. From large cities to remote villages, land remains one of the most important assets for many people, especially the poor.

Worldwide, only 3 out of 10 people have a legally registered title to their land. Difficulties associated with land administration and registration systems, together with inequalities of land distribution and tenure insecurity, often hinder social and economic development.

In Pakistan, the province of Punjab faced such a challenge. For many rural landowners in the province, land titles weren’t easily accessible, nor were they properly managed and protected. To tackle the land administration challenge, the government of Punjab turned to an innovative solution: they used digital technology to modernize its old, inefficient paper-based land administration system.

Supported by the World Bank, the Punjab Land Records Management and Information Systems (LRMIS) project turned out to be one of the success stories for the province of Punjab. Within just five years, Punjab scanned 10 million pages of old records, digitized over 55 million landowners’ records—98% of all records—across the province, and made all rural land title information available online 24/7 for landowners.


Prior to the project, it would take up to two months to complete a land transaction in Punjab. Today, it takes a rural Punjab resident only 50 minutes to receive a digitally recorded, legally registered land title from one of the 144 newly created land record offices across all 36 districts of the province. This has helped the province of Punjab enhance the transparency of land administration while securing land rights for its people, including women farmers who were denied their land rights in the old system.

In this video, World Bank Senior Director Ede Ijjasz-Vasquez (@Ede_WBG) and Muhammad Zafar Iqbal, Director General of Punjab Land Records Authority, discuss in detail the past, present, and future of the Punjab LRMIS project.



Going forward, the government of Punjab plans to expand digital land record management to its urban areas. Cities and villages alike in other countries can also learn from this successful project and innovative approach to land administration. 

Reforms Sri Lanka needs to boost its economy

Idah Z. Pswarayi-Riddihough's picture
 Joe Qian/World Bank
The Colombo Stock Exchange. Credit: Joe Qian/World Bank

Many Sri Lankans understand the potential benefits of lowering trade costs and making their country more competitive in the global economy. The majority, however, fear increased competition, the unfair advantage of the private sector from abroad and limited skills and innovation to compete.

Yet, Sri Lanka’s aspirations cannot be realized in the current status quo.  

While changes in trade policies and regulations will undeniably improve the lives of most citizens, I’m mindful that some are likely to lose. However, many potential gainers of the reforms who are currently opposed to them are unaware of their benefits.

Implementing smart reforms means that government funds will be used more effectively for the people, improve access to better healthcare, education, basic infrastructure and provide Sri Lankans with opportunities to get more and better jobs. Let me focus on a few reforms that I believe are critical for the country.  First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.    

First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services.

Boosting access to market-based debt financing for sub-national entities

Kirti Devi's picture



Many countries are experiencing urbanization within the context of increased decentralization and fiscal adjustment. This puts sub-national entities (local governments, utilities and state-owned enterprises) in the position of being increasingly responsible for developing and financing infrastructure and providing services to meet the needs of growing populations.
 
However, decentralization in many situations is still a work in progress. And often there is a mismatch between the ability of sub-nationals to provide services, and the autonomy or authority necessary to make decisions and access financing—often leaving them dependent on national governments. Additionally, they may also contend with inadequate regulatory and policy frameworks and weak domestic financial and capital markets. 


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