Sri Lanka has slipped to 85th place in the World Economic Forum Global Competitiveness Index (GCI) released last week, down from 71st place in the previous assessment.
The latest ranking is the lowest for Sri Lanka in recent years. In 2005 the country was placed 68th. Other South Asia nations, including Bhutan (up 15 places), Nepal (up 10 places), Pakistan (up seven places) and Bangladesh (up seven places), have improved in competitiveness. The WEF said Sri Lanka dipped mainly due to a deteriorating institutional environment, lower goods markets efficiency and infrastructure that is assessed as less well developed.
“Macroeconomic stability needs to remain a priority for the government, as the country continues to cope with high levels of debt and tries to restore a sound macroeconomic environment,” it added.
WEF acknowledged the Government managed to decrease the deficit and stabilize debt after the country entered assistance program by the IMF in 2016. Yet, the burden of interest on debt remains high and currently amounts to most of the revenue collected by government. Inflation also increased and forced the authorities to tighten monetary policy, with negative effects on credit. “Business confidence has been declining over the past two years,” it added.
Inefficient bureaucracy tops as key concerns on doing business whilst policy instability, restrictive labour regulations and Government instability/coups figure among the top five most problematic factors.
Most problematic factors for doing business
In order of seriousness
- Inefficient government bureaucracy
- Poor work ethic in national labor force
- Policy instability
- Restrictive labor regulations
- Government instability/coups
- Tax rates
- Access to financing
- Inadequate supply of infrastructure
- Inadequately educated workforce
- Tax regulations
- Insufficient capacity to innovate
- Foreign currency regulations
- Poor public health
- Crime and theft
Global Competitiveness Index Rank/137
Subindex A: Basic requirements 78
1st pillar: Institutions 77
2nd pillar: Infrastructure 85
3rd pillar: Macroeconomic environment 94
4th pillar: Health and primary education 43
Subindex B: Efficiency enhancers 90
5th pillar: Higher education and training 78
6th pillar: Goods market efficiency 83
7th pillar: Labor market efficiency 131
8th pillar: Financial market development 83
9th pillar: Technological readiness 106
10th pillar: Market size 59
Subindex C: Innovation and sophistication factors 58
11th pillar: Business sophistication 59
12th pillar: Innovation 54