supporting accelerated investment in sri lanka (sail) project

This publication was produced by International Development Group LLC, for review by the United States Agency for International

Development.

SUPPORTING ACCELERATED

INVESTMENT IN SRI LANKA (SAIL)

PROJECT

Final Report

April 16, 2021

SECRETARY OF MODSIT, MINISTER OF MODSIT, USAID/SRI LANKA MISSION DIRECTOR, AND SAIL COP AT THE KANDY PUBLIC-PRIVATE DIALOGUE/ INTERNATIONAL DEVELOPMENT GROUP LLC

ACRONYMS

AfD Agency for Development

BEE Business Enabling Environment

BOI Board of Investment

CBEU Ceylon Bank Employees Union

CC&CRMD Coast Conservation Department & Coastal Resource Management Department

CEA Central Environmental Authority

CESU Ceylon Estates Staff Union

CGL Commissioner General of Labor

CLA Collaboration, Learning and Adaption

CMC Colombo Municipal Council

CMU Ceylon Mercantile, Industry and General Workers Union

COP Chief of Party

DOL Department of Labor

EDB Export Development Board

EFC Employers’ Federation of Ceylon

EIA Environmental Impact Assessment

EPF Employees’ Provident Fund

ERD External Resources Department

ETF Employees’ Trust Fund

FDI Foreign Direct Investment

FTA Free Trade Agreement

GoSL Government of Sri Lanka

GSP+ Generalized Scheme of Preferences Plus

IDA Industrial Disputes Act

IEE Initial Environmental Examination

IFC International Finance Corporation

ILO International Labor Organization

IRU Investor Relations Unit

ITA Information Technology Agreement

LJEWU Lanka Jathika Estate Workers Union

MDA Ministry, Department, and Agency

MIEIP Ministry of Industrial Exports and Investment Promotions

MODSIT Ministry of Development Strategies and International Trade

MOLTUR Ministry of Labor and Trade Union Relations

NBRO National Building Research Organization

NDC Nationally Determined Contributions

NLAC National Labor Advisory Council

NTUF National Trade Union Federation

PARTNER Partnership for Accelerating Results in Trade, National Expenditure and Revenue

PPDs Public-Private Dialogues

PTA Preferential Trade Agreement

SCM Scoping Committee Meeting

SLTDA Sri Lanka Tourism Development Authority

SME Small and Medium Enterprise

SSLRA Sri Lanka’s Support for the Sri Lankan Reform Agenda

SLSFTA Sri-Lanka Singapore Free Trade Agreement

SLTA Sri Lanka Tourism Alliance

TEWA Termination of Employment of Workmen Act

TPD Tourism Planning and Development

UDA Urban Development Authority

USAID United States Agency for International Development

USG United States Government

WB World Bank

WBO Wages Board Ordinance

WTO World Trade Organization

TABLE OF CONTENTS

EXECUTIVE SUMMARY 1

SUMMARY OF PROGRAM IMPLEMENTATION AND ACCOMPLISHMENTS, AND

SHORTCOMINGS 5

INVESTMENT FACILITATION 5

TRADE FACILITATION/POLICY 22

LABOR LAW REFORM 25

CROSS-CUTTING ACTIVITIES - COMMUNICATIONS AND OUTREACH 33

RECOMMENDATIONS FOR FUTURE USAID ASSISTANCE 36

ANNEX I: INDICATOR SUMMARY TABLE 37

ANNEX II: TECHNICAL REPORTS 39

ANNEX III: LIST OF ALL HOST COUNTRY, INTERNATIONAL DONOR, AND

FINANCIAL INSTITUTION CONTACTS 40

ANNEX IV: SRI LANKA LABOR CODE 42

ANNEX V: FINANCIAL REPORT 43

1 | SUPPORTING ACCELERATED INVESTMENT IN SRI LANKA (SAIL) PROJECT FINAL REPORT USAID.GOV

EXECUTIVE SUMMARY

In consultation with the Government of Sri Lanka

(GoSL), a Government with reform high on their

agenda, USAID launched the Supporting Accelerated

Investment in Sri Lanka (SAIL) project in November

2016. The goal of the project was to assist with the

GoSL’s economic reforms, targeting improvements in

the business enabling environment (BEE) and factors

affecting FDI. While Sri Lanka had experienced strong

economic growth in the past ten years, including a

growth rate of 7 percent in both 2013 and 2014,

Foreign Direct Investment (FDI) had remained static

in relation to domestic economic growth. SAIL was a

part of the larger and more broad-based USAID

support for the ‘Support to the Sri Lankan Reform

Agenda’ (SSLRA), to realize democratic and economic

reforms and other related initiatives such as the

GoSL’s Vision 2025.

SAIL was designed around two main objectives and

provided: 1) expert advice on legislative and

regulatory reform to attract and retain FDI, and 2)

analysis and recommendations to improve institutions,

laws, and the regulatory environment, as these related

to attracting and retaining FDI in Sri Lanka. Project

activities focused primarily on providing technical

assistance to improve the BEE, promoting FDI, and

developing institutional and individual capacity.

The Ministry of Development Strategies and

International Trade (MODSIT) was assigned by the

GoSL as the counterpart ministry for the SAIL

project. MODSIT proved to be a dynamic partner

with a cadre of result-oriented government officers,

enthusiastic to learn and to cooperate. In consultation

with the Minister and his senior personnel, the focus

for SAIL was quickly established. SAIL immediately

assisted MODSIT in the formulation of a

communications strategy and began work on an

assessment of the current labor law and legislation

surrounding contract enforcement.

INVESTMENT FACILITATION

One of the main goals of the SAIL project was to increase the amount of investment inflow to Sri Lanka

with the aim to build on the World Bank’s previous assistance in this sector. SAIL quickly recognized

that 30 percent of FDI is focused in the tourism sector and identified the Sri Lanka Tourism

Development Agency (SLTDA) under the Ministry of Tourism as a major entity for attracting FDI to Sri

Lanka. With an agreement between USAID and MODSIT, SAIL engaged with SLTDA to form a strong

working relationship.

SAIL PROJECT RESULTS

• 42 percent reduction in time required

for an investment approval from 54.5

working days in 2016 to 31.5 in 2020.

• 16 percent reduction in time required to

obtain a development permit from 49

working days in 2017 to 42 in 2020.

• 10 business environment laws,

regulations, or administrative procedures

were passed or approved.

• 43 business environment laws,

regulations, or administrative procedures

were drafted or submitted for

public/stakeholder consultation or

legislative consideration.

• 12 public-private dialogues were

conducted to facilitate the discussion on

improving legislative and regulatory

environment addressing FDI attraction.

• 2,147 person hours of training

completed in business enabling

environment.

• 15 new public and private institutions

received capacity development support

from SAIL.

USAID.GOV SUPPORTING ACCELERATED INVESTMENT IN SRI LANKA (SAIL) PROJECT FINAL REPORT | 2

SAIL’s achievements in the investment facilitation sphere include:

• A preliminary clearance common application form now encompasses 13 agencies and can be

expanded to cover more as required. The information gathered in this single application, meets the

application needs of all agencies and reduces time and cost for investors. The design of the

application form allows the process to easily become fully automated.

• Key agency processes are mapped out for preliminary clearance, development permit, and

certificate of conformity to understand the approval process of other agencies responsible for

approving tourism investment and to strengthen the communication and cooperation between them.

• With SAIL support, SLTDA signed three Memorandum of Understandings (MoUs) and

developed nine MoUs with key agencies.

• A consolidated Site Inspection Checklist developed for SLTDA and key line agencies avoid

duplication of efforts in site inspections and better prepare the officers to conduct the inspection.

• SLTDA and other key approval agencies use training materials and templates developed by SAIL joint

Scoping Committee Meetings (SCMs) bringing together SLTDA and key agencies to view

investor presentations and discuss different aspects of the investment proposals.

• Investor Relations Unit (IRU) operations manual, compiled in collaboration with SLTDA, directing

the IRU staff step-by-step through the actions they are required to take upon the receipt of a new

investment application. This document will now become a guide for staff to follow and will further

become a part of the agency’s key results matrix including the introduction of minimum service

standards.

• A comprehensive investor handbook is now available and reduces time and cost required for

investment approvals thus instilling confidence in investors.

• The draft Tourist Accommodation Design Guidelines define and describe tourism

accommodation spaces, informing designers and investors on minimum requirements for designing

and building a tourist accommodation facility in Sri Lanka.

• SLTDA has initiated reviewing Sri Lanka’s hotel classification system with the goal of making it

more responsive to the industry and customer needs.

• 846 person hours of training were completed for the SLTDA staff and key ministry/department

staffs on streamlined tourism investment approval process.

• Sri Lanka Tourism Alliance, a private sector industry organization, is well established and

resilient, responding to crisis such as the Easter Sunday Bombings in Sri Lanka and COVID-19

pandemic.

SAIL assisted SLTDA to untangle investment processes that involve multiple agencies and duplicated

efforts. No one investor received the same information on the process, and applications with large

investment potential would be delayed for months, even years, with many investors choosing to

withdraw and to invest elsewhere in the region. The Ministry of Tourism confirmed that this


complicated process has been a significant barrier to attracting FDI. The ministry sought to streamline

their processes for attracting FDI and improve them to be user-friendly and transparent.

SAIL, working closely with officers from SLTDA, developed a new Common Application Form for

investors (which covers multiple agencies) and authored an Investors handbook, leading investors

through the entire investment process. More importantly, SAIL developed and delivered an Operations

Manual for the staff of SLTDA. Extensive training was carried out for the officers of SLTDA, and they

were able to meaningfully contribute to all products that SAIL produced, ensuring ownership.

The work carried out and the success achieved throughout the life of the project has laid the

cornerstone for further growth. SLTDA is currently working on automating their systems which will

lead to further time saving, accountability, and importantly ensuring that the investment process is

transparent.

TRADE FACILITATION/POLICY

Toward the end of 2018, MODSIT approached USAID for assistance in addressing several trade issues

within Sri Lanka. Once USAID determined that this request was directly related to FDI, SAIL began

providing technical advice to MODSIT on trade issues. SAIL worked with MODSIT on the adoption of

the World Trade Organization Information Technology Agreement (WTO ITA), Revision of the Import-

Export Control Act, Competition Law, and the monitoring and adoption of free trade agreements. SAIL

also successfully organized a series of public-private dialogues (PPDs) on trade, both centrally and

regionally, allowing MODSIT to interact with the private sector and highlight the benefits of trade. The

feedback on the PPDs was significant and the press coverage for the Ministry and for USAID was

extensive and positive. In November 2019, USAID launched the Partnership for Accelerating Results in

Trade, National Expenditure and Revenue (PARTNER) Activity, and in March 2020, SAIL, after finishing

all work in progress on trade, handed the trade related work to the PARTNER Activity.

SAIL’s major achievements under trade facilitation/policy include:

• Assessments and trainings on the monitoring of free trade agreements allowed the GoSL to

understand and to track their benefits and has built confidence in the responsible Ministries to

enable them to make informed decisions on future trade agreements.

• Discussion on the adoption of the WTO ITA is reinvigorated and the agreement is expected to be

ratified in the near future by the GoSL. Adoption of the WTO ITA is expected to increase FDI and

outweigh any short-term import revenue loss.

• A series of public-private dialogues allowed the Ministries and agencies to understand various

stakeholders concerns and fears on topics including how to maximize benefits while minimizing risk

in the global trading economy. In 2019 alone, three PPD’s were held attracting over 300 guests.

During the four years over which SAIL was implemented, Sri Lanka went through a Constitutional

Crisis, a major terrorist attack, a Presidential election, a full Government election, and like the rest of

the world struggled with a Pandemic. Through all these challenges, SAIL continued to make progress.

In large part due to our approach of creating strong bonds and forming collaborative working

relationships with our counterpart colleagues at mid-management level, in the Ministries and Agencies

we worked with. These individuals were largely unaffected by changes in government and held the


institutional reform history allowing SAIL to carry on with business whilst leadership at the top shifted.

Sri Lanka elected a new government (August 2020) committed to boosting investment and enhancing

the role of the private sector as Sri Lanka continues its transition to become an upper-middle income

country. We are confident of further reform successes.

LABOR LAW REFORM

One of the main goals of the SAIL program was to address legislative and regulatory issues regarding

FDI. There was an emphasis on enhancing contract enforcement in labor laws to entice future

investment. To confront labor law challenges SAIL worked through the Ministry of Labor and Trade

Union Relations (MOLTUR).

SAIL’s work on labor law reform led to the following accomplishments;

• MOLTUR has the fourth draft of the unified labor law (translated into all three official languages)

and a framework of required implementing regulations. The draft labor law not only addresses

women’s rights in the workplace but also allows flexibility for both employers and employees.

• The PPDs on labor, carried out in multiple regions in Sri Lanka, opened the dialogue on the need for

reform and specifically highlighted gender inclusion concerns.

• The GoSL and MOLTUR are fully incorporating outreach and communication strategy into

their operations to obtain feedback from stakeholders.

SAIL and MOLTUR worked in tandem to modernize labor laws to confront the demands of the modern

digital economy through a variety of initiatives and focuses. SAIL carried out several PPDs on Labor Law

and the need for change. The SAIL team also worked closely with the Commissioner General of Labor

(CGL) and the legal drafting team from MOLTUR. In this capacity women’s rights were of particular

importance and were a driver when drafting the new law. The draft labor law went through many

iterations and improvements until MOLTUR was confident that it was time to share the second full draft

with Union representatives. MOLTUR and SAIL proceeded with a third and then a fourth amended draft

of the Labor Law.


SUMMARY OF PROGRAM IMPLEMENTATION AND

ACCOMPLISHMENTS, AND SHORTCOMINGS


SUMMARY OF ACTIVITIES

SAIL and Tourism

The SAIL project was initiated in response to a request from the BOI to simplify investment into Sri

Lanka. One of the industries with the largest percentage of foreign investment in Sri Lanka is tourism

which receives approximately 30 percent of the nation’s FDI. Because tourism has such a large portion

of FDI, SAIL sought to partner with the Ministry of Tourism to improve the investment facilitation in Sri

Lanka.

Streamlining Investment Approval Process

While focusing on tourism SAIL began working directly with the SLTDA to evaluate and streamline the

investment approvals process for tourism. In early 2017, the SAIL team began gathering feedback from

SLTDA on the existing process and identify where bottlenecks existed, as well as the challenges faced by

the staff. The team then began to map all key processes to develop a deeper understanding of all the

steps involved in the process and identify the stakeholders involved in the approval process.

Despite its importance to the country’s economy, the investment approval process was fraught with

excessive delays due to both a lack of coordination among the many agencies involved, as well as SLTDA

INVESTMENT FACILITATION OUTCOMES

• With SAIL’s support, the time to complete the approval process has dropped by 42 percent to

31.5 working days in 2020 from 54.5 working days in 2016, suggesting increased efficiency in

processing applications.

• The time required to obtain a development permit was reduced by 16 percent from 49 working

days in 2017 to 42 in 2020, leading to cost savings for investors.

• Mapping of its processes, facilitating interagency coordination and scoping committee meetings,

and introducing the site inspection checklist and the operations manual improved IRU’s ability to

process the approvals. The IRU processed 54 applications totaling $879.94 million in proposed

tourism investments in 2020 alone.

• The preliminary clearance common application form, investor handbook, and tourist

accommodation design guidelines reduces confusion on the approval process and leads to time

and cost savings for the investors.

• 226 GoSL staff were trained on the streamlined tourism investment approval process.

• The Sri Lanka Tourism Alliance has grown rapidly into a fully functioning, all-inclusive organization

able to represent the industry at all levels.


IRU’s internal processes. The BEE Team set out to streamline these processes and provide navigational

guides to help investors successfully make it through the investment process. To achieve its streamlining

goals, the BEE Team focused on two primary targets: 1) making the investments approval process easier

and more transparent for investors; and 2) ensuring that the SLTDA IRU team is prepared and has the

resources it needs to effectively support the process. Main activities included expanding on and finalizing

previous streamlining and investor communication activities, designing and implementing an ambitious

training program, providing industry tools for improving the quality of tourist accommodation facilities,

and supporting SLTDA in its effort to update and redesign the country’s hotel classification system.

Automated Investment Approval Process

When SLTDA began working with SAIL, it believed that it was on the verge of instituting a fully

automated approval process. Since the move to full automation was likely to take some time, it was

agreed that both an interim investment approval process and a final re-engineered automated process

should be developed. Over the next several years of the project, it became apparent that automation

was taking longer than originally envisioned. Therefore, the project redoubled its efforts to improve the

existing process to ensure successful navigation of tourism investment projects independent of

automation progress. As expected, SAIL’s efforts in streamlining the existing manual processes will serve

as a solid base for automation, which may finally begin in 2021.

COVID-19 and SAIL Investment Facilitation Activities

SAIL and SLTDA maintained their relationship through various challenges. The relationship did not cease

even after the devastating consequences of the bomb blast in April 2019 or during the restrictions of the

COVID-19 pandemic in 2020. The third and fourth years of the project saw an increased intensity of the

activity, despite delays relating to COVID-19. The addition of key technical specialists and the presence

of the team in-country together for a significant amount of time, even during COVID-19 restrictions,

enabled SAIL to maintain and increase momentum on current initiatives, as well as expand the support

provided to SLTDA for these reforms.

MOU CEREMONY / INTERNATIONAL DEVELOPMENT GROUP


DEVELOPING PRELIMINARY CLEARANCE COMMON APPLICATION FORM

SAIL’s work with the SLTDA IRU began by collecting feedback from the IRU staff on its role in the

approval process and gaining its agreement on a streamlining strategy. SAIL then presented SLTDA with

a Reform Strategy/Change Management Strategy and obtained SLTDA Chairman and Board approval of

the streamlined investments approval processes, timeframes, and documentation requirements for both

the interim and final approval processes.

The Project then studied the investment approval process in key institutions with a view to streamline

the process and to establish clear mechanisms to ensure coordination and information flow across all

parties. One problem that immediately became apparent was that the many different approving agencies

all used different application forms and required different accompanying documents. Potential investors

had to go from agency to agency, filling out multiple forms, providing a variety of documents, and

inevitably getting a multitude of agency-specific requests for additional information. All of this resulted in

delays and discouraged some investors from continuing with the process.

In order to address this lack of coordination, SAIL supported the IRU to develop and adopt a Common

Application form to be used by all agencies involved in providing preliminary clearance for tourism

investment projects. Importantly, the other agencies agreed not just to the application form, but also the

required supporting documents. SAIL provided an editable PDF version of the Common Application

form which is now available on SLTDA’s website:

https://sltda.gov.lk/storage/common_media/Common%20Application%20Form_20200416_Fillable105270

2601.pdf.

PRELIMINARY CLEARANCE COMMON APPLICATION FORM / INTERNATIONAL DEVELOPMENT GROUP LLC

MAPPING KEY AGENCY PROCESSES

The BEE Team fully understood the importance of understanding the processes of other approval

agencies to discover potential sources of incongruencies and inefficiencies that could be improved. The

team embarked on a labor-intensive program from October 2018 to July 2019 to map the business

processes of the main agencies whose approvals are relevant to obtaining a Preliminary Clearance,

Development Permit and/or Certificate of Conformity. This involved multiple meetings and

communications with the relevant agencies to both understand and validate the processes. The agencies

involved included the Central Environmental Authority (CEA), Coast Conservation & Coastal Resource

Management Department (CC&CRMD), Colombo Municipal Council (CMC), and the National Building

Research Organization (NBRO). This task also had the effect of strengthening the communication, trust,

https://sltda.gov.lk/storage/common_media/Common%20Application%20Form_20200416_Fillable1052702601.pdf.

https://sltda.gov.lk/storage/common_media/Common%20Application%20Form_20200416_Fillable1052702601.pdf.


and cooperation between the agencies responsible for approving tourism investments. . The CEA

process especially was a high priority for SAIL and SLTDA, so it was a notable achievement to see that

CEA and SLTDA agreed to work together and to allow SAIL to map their core processes.

Key business processes mapped out by SAIL include the following:

• NBRO

o Process for obtaining an environmental recommendation & approval; Environmental

protection license (EPL); Appellate procedure

• CEA

o Process for Coastal Development Permit (Type A, Type B)

• CC&CCMD

o Process for solid waste clearance certificate

o Process for Street Line/ Building Line Certificate

o Process for Sewerage and Storm Water Clearance

o Process for Fire Safety Clearance

o Process for Obtaining Fire Recommendations for the Certificate of Conformity

• CMC

o Process for obtaining a Landslide Risk Assessment Report for construction in landslide prone

areas

o Process for Building Construction Clearance Letter

SUPPORTING DEVELOPMENT OF MEMORANDA OF UNDERSTANDING WITH KEY

AGENCIES

Highlights of the Memorandum of Understandings

• Developed framework for MoUs in tourism

• Verbal commitments from 85 high level representatives from 21 key agencies to adhere to MoUs

• Media coverage in four national newspapers

To address the delay in obtaining approvals from the various agencies involved, the team agreed to

develop multiple MoUs to formalize the roles and levels of service between SLTDA and the other

approving agencies. This was important as SLTDA does not technically have the legal authority to

demand control over tourism investment projects. Thus, gaining the other agencies’ consent to SLTDA’s

exercise of jurisdiction was critical.

The SAIL team developed a MoU Framework for SLTDA to use for its agreements with other agencies

and supported the preparation of draft MoUs with the Urban Development Authority (UDA), BOI,

CEA, CC&CRMD, CMC, NBRO, Department of Agrarian Services, Forestry Department, Department

of Fisheries and Aquatic Resources, Department of Wildlife Conservation, Department of Irrigation, and

the Department of Archaeology.

SLTDA signed a MoU with UDA on August 15, 2018. This event was attended by USAID, government

agencies, and representatives from SLTDA and UDA. The event was covered by the local press

extensively, with articles being published in both local languages.


Additionally, on September 21, 2018, the project convened the first

consultation of priority line agencies involved in the tourism

investments approvals process, where a presentation of the

streamlining activities, proposed changes, and details of the

proposed MoUs were discussed.

SLTDA signed a MoU with CC&CRMD on November 8, 2019. This

was a direct result of the well-attended Networking Evening,

organized by SAIL/SLTDA on November 5, 2019 that brought

together the key GoSL approving authorities to unite them in the

common purpose of fostering tourism investments. The SAIL team

facilitated this event which was well received by the audience. Key

agencies made verbal commitments to move forward on the MoUs.

A total of 85 high-level representatives from 21 key departments,

line agencies and ministries involved in the tourism investment

approval processes and the SAIL team participated in the event.

SLTDA signed its MoU with BOI on Monday, February 10, 2020. As

part of the MoU implementation, BOI sent keynote speakers to one

of the SLTDA internal trainings on investment incentives for

tourism projects.

A media release developed by SLTDA on the MoU signing between

SLTDA and CC&CRMD, as well as the MoU signing between

SLTDA and BOI were featured in four national newspapers,

generating wide coverage. The role played by the SAIL project in

facilitating the MoU signing and in the streamlining of the tourism

investment approval process was also noted in the release.

Signing of the MoUs with NBRO and CEA was delayed due to

COVID-19, but both NBRO and CEA are ready to sign their MoUs

with SLTDA. The MoU with CMC is currently under revision. All

other agencies have received draft MoUs, and SLTDA is following

up with these agencies. To facilitate these efforts, SLTDA intends

to hold another networking event during 2021.

DEVELOPING SITE INSPECTION CHECKLISTS

In addition to fostering better coordination at the application stage,

SAIL supported SLTDA to advance other interactions with the

approval agencies. For example, prior to SAIL assistance, multiple

agencies conducted their own site inspections, forcing the investor

to arrange multiple site visits with different agencies which resulted

in increased investor frustration and higher opportunities for rent-

seeking behavior. To avoid the duplication of efforts and assist in

shepherding the site inspection process, SLTDA began coordinating

joint site inspections. SAIL worked with SLTDA to improve the

quality and effectiveness of these interactions, both through capacity

building and providing site inspection checklists for each agency.

Secretary of Tourism opening the

Networking Evening 2019, with

presentations by IRU and USAID SAIL

SAIL COP with officials of SLTDA and

CC&CRMD at the MOU signing

MoU signing ceremony of SLTDA

with BOI

INTERNATIONAL DEVELOPMENT GROUP LLC


To improve the quality of reporting from SLTDA-led site inspections, the SAIL team developed Site

Inspection Checklists for the IRU as well as for twelve other participating key line agencies and the

divisional secretariats and local authorities. The checklists enabled officers to come better prepared to

the site inspection and allowed them to provide specific comments to the investor and to SLTDA that

are relevant for obtaining the Preliminary Clearance. SLTDA will now translate the checklist into Sinhala

and Tamil, and field test them during future regional trainings for their usefulness and clarity.

The site inspection checklists have been sent out to the IRU’s focal points in other agencies, selected

divisional secretariats, and local authorities and are now awaiting feedback and approval. CEA,

CC&CRMD, the Department of Fisheries, and the Department of Archaeology have already responded

with their comments, which will be incorporated into the revision of their site inspection checklists.

PRIORITY LINE AGENCY CONSULTATION OF TOURISM INVESTMENT APPROVAL PROCESS / INTERNATIONAL DEVELOPMENT GROUP LLC

SUPPORTING SCOPING COMMITTEE MEETING (SCM)

SAIL provided trainings and templates for joint SCMs, in which SLTDA brings together the key approval

agencies to view presentations from investors and discuss different aspects of the investment proposals.

SAIL partnered with SLTDA to redesign and introduce new templates and tools for their SCMs. This

included revised investor presentations and templates for the approval agencies. These tools allowed

them to communicate with SLTDA prior to the SCM with specific comments, and internal templates for

IRU staff use. SAIL also provided training on best practices and etiquette for the SCMs.

The SCMs have been going so well that one investor took to Twitter to offer praise for the process:

“Amazed by the professionalism and the efficiency @sltda_srilanka.

Submitted a project proposal about 2 weeks ago, had the presentation

today. They were fully supportive and encouraging. So far, I’ve only been

pleasantly surprised. #kudos.”

Twitter post from an investor after a SCM, September 8, 2020

DEVELOPING SLTDA IRU OPERATIONS MANUAL

Prior to working with the SAIL team, since the IRU’s inception in October 2010, there was no written

set of guidelines to instruct staff on how to process applications. There were also no timeframes for


these tasks and no tools to track their progress. There was potential for delays because the approval

process and investors had no clear visibility into the process. The IRU did not systematically follow up

with other agencies to obtain the required clearances/approvals. Overall, the IRU did not offer a

standardized quality of service delivery for the investors.

To ensure that the IRU can implement and maintain consistent standards in handling tourism investment

applications while adhering to the streamlined approved process, the Project developed a

comprehensive SLTDA IRU Operations Manual (with templates, forms, checklists, and other supporting

documents) that provided all the resources staff members need for every step of the approval process.

It was developed for IRU to make it easier for tourism investors to receive a standardized and

consistent quality of service and to further enhance the experience of foreign and domestic investors in

Sri Lanka. The Operations Manual was prepared in December 2018 and completed on January 12, 2021.

It is a living document and will be updated over time as needed. The Operations Manual codifies much of

the tacit knowledge that individual staff members of IRU have. Now, with the support of the SAIL team,

the IRU staff have a daily desk reference for the work that they do, and it will be easier to train new IRU

staff. The Operations Manual will also be the corner stone of the upcoming automation of the case

management system of the IRU.

IRU OPERATIONS MANUAL / INTERNATIONAL DEVELOPMENT GROUP LLC

The Operations Manual provides step-by-step guidance on the approval process Road Map which is the

guiding process map provided to SLTDA by the SAIL Project and shows the entire approval process (see

figure below).

The Operations Manual formed the basis for trainings. Feedback obtained during these trainings was

then incorporated into the Manual in an iterative process that has resulted in user-friendly document

fully owned by the IRU staff.

The Manual includes 88 templates/forms/checklists and supporting documents that IRU staff can use

through every step of their facilitation activities. It also includes an Excel Processing Fee Calculator that

helps IRU staff calculate all fees payable to the varying agencies.

It is mandatory for the IRU staff to follow the steps and track the progress of each application, including

identifying delays, determining what caused the delay, and spotting potential for further streamlining.

Keeping within the set timeframes will become a key performance indicator for IRU staff once the

Director General has released an internal memo indicating this.


Fifteen binders of the printed Operations Manual and Appendices were delivered to the IRU in the last

week of January 2021. The Manual and all its Appendices have been uploaded to an IRU Google folder

“Operations Manual - IRU” to which only the Subject Officers and Assistant Directors have access. A

separate folder “Templates for IRU common use” has been created for the Office Assistants and

Trainees with selected templates for the specific tasks for which they are responsible.

TOURISM INVESTMENT APPROVAL PROCESS MAP / INTERNATIONAL DEVELOPMENT GROUP LLC

PROVIDING INSTITUTIONAL SUPPORT TO MODSIT AND GOSL STAFF

Overall, the SAIL Project in collaboration with the SLTDA IRU, delivered fifteen trainings to 226

participants, of which 47 percent were male and 53 percent female. A total of 846 training person hours

(106 person days) were provided to strengthen the capacities of GoSL staff in the streamlined tourism

investment approval process (see Table 1).

(1) Internal trainings for staff of IRU and the Tourism Planning & Development Division (TPD) on

the streamlined tourism investment approval process

The main training objective was to empower the SLTDA IRU to fulfil its mission of being a facilitator for

tourism investors: (a) to enable them to implement the new streamlined tourism investment approval

process, (b) to make it easy for investors to get a standardized quality of service delivery, and (c) to

enhance the experience for tourism investors, foreign and domestic alike. There were general

introductory workshops followed by a targeted training program.

(1.1) General introductory workshops for staff of IRU and TPD: From May 2017 to July 2018, the

project conducted an initial set of five general introductory workshops for the SLTDA staff. The first

focused on familiarizing the existing staff with international best practices, roles, and responsibilities of

their unit. While this may seem basic, it was an exercise to gauge the level at which further training

should be formulated. It also informed the BEE Expert to make an assessment as to the level of


competence at the IRU when developing the organizational structure. The second and third workshops

focused on building the competencies of client-facing staff and customer services excellence at the IRU.

The fourth workshop covered the streamlined Preliminary Clearance process where the team was

familiarized with new templates and tools that had been developed. The fifth workshop focused on

building communications skills and presentations when meeting new investors. There was a total of 45

training participants in five workshops, of which 31 percent were male and 69 percent were female. 157

training person hours were provided (19.6 training person days) to develop the capacities of SLTDA.

(1.2) Targeted training series for staff of IRU and TPD: Towards the end of 2019, along with the

development of the Operations Manual, a training program of 19 trainings was co-developed by the IRU

and the SAIL team to specifically target the twelve steps of the streamlined approval process for

SLTDA’s Preliminary Clearance and Final Approval with the Pre-Development Permit and Development

Permit, and to build knowledge of the requirements of key ministries, departments and agencies (MDAs)

from which the IRU facilitates clearances on behalf of the investor. Out of the 19 trainings, eight were

implemented from December 2019 to December 2020. The training program was interrupted due to

COVID-19 restrictions (between April to July and October to November 2020).

The trainings were implemented in parallel to the drafting of the IRU Operations Manual that

systematically codifies IRU staffs’ tacit knowledge. During the trainings, the streamlined approval process

and the new templates/forms/checklists and other supporting documents were introduced and tested

for their practicality. This co-development during trainings was also designed to increase ownership by

the IRU team of the streamlined process.

Due to COVID-19 related meeting restrictions, the first seven steps of the tourism investment approval

process, up to the Preliminary Clearance, were completed, while the trainings covering the five steps of

the Final Approval process, including the Pre-Development and Development Permit, could not be

delivered. SLTDA IRU and TPD staff, however, have gained an overview of the entire approval process

through two trainings that addressed the entire process (training #1 and #8). In training #8, the new

tracking sheet with timeframes for IRU customer service delivery was introduced and reviewed. The

SAIL team revised the tracking sheet after the training to incorporate the comments of IRU staff on the

adequacy of the timing for some tasks. Apart from training #8 that was specifically for the IRU team, all

other trainings included staff from the TPD and selected technical officers from other divisions.

TABLE 1: AGGREGATED TRAINING DATA ON TOURISM INVESTMENT APPROVAL

TRAINING

PERIOD OF

IMPL. TRAININGS

PARTIC

IPANTS MALE FEMALE

TRAINING

EFFORT

FROM TO PLAN IMPL. TOTAL

NO. No. % No. %

Pers.

Hour

Pers.

Day

(1) Internal trainings for staff of IRU and TPD on streamlined tourism investment approval process

(1.1) General introductory

workshops

May

2017

Jul

2018 5 5 45 14 31.1 31 68.9 156.5 19.6

(1.2) Targeted training series Dec

2019

Dec

2020 19 8 143 72 50.3 71 49.7 533.5 66.7

Sub-total 24 13 188 86 45.7 102 54.3 690.0 86.3

(2) External trainings for key MDAs on selected steps of the streamlined tourism investment approval process

(2.1) Ext. trainings for staff of

head offices of key MDAs

Oct

2018

Mar

2019 2 2 38 20 52.6 18.0 47.4 156.0 19.5

(2.2) Ext. trainings for regional

officers of key MDAs, DS, LAs

Not

implemented 4 0

Sub-total 6 2

TOTAL May

2017

Dec

2020 30 15 226 106 46.9 120 53.1 846.0 105.8


The trainings were a combination of presentation and interactive

sessions, including group work and role plays. The last training had

to be done virtually. After some trainings, participants received

homework on which they received feedback. The trainings were

supported by SLTDA management, and the IRU has demonstrated

a strong ownership in the coordination and organization of the

internal trainings. The training feedback was consistently positive.

Participants also gave constructive feedback on what to improve

and made suggestions on what they would like to know more

about.

Six out of eight trainings were video recorded for SLTDA’s use in

the future. The Internal Training Reports and all training materials

were shared with the IRU on its Google drive. There was a total of

143 training participants in eight trainings, of which 51 percent

were male and 49 percent were female. 534 training person hours

were provided (67 training person days) to further strengthen the

capacities of SLTDA.

(2) External Trainings for key MDAs on selected steps of the

streamlined tourism investment approval process

The IRU works with 43 main MDAs. Approximately ten to fifteen

MDAs are involved in the approval process of every tourism

investment project. These MDAs were brought on board the

tourism investment approval process while co-developing the

Common Application and re-engineering the Preliminary Clearance

process. The main training objective was to bring all MDAs

together to work collaboratively on streamlining the tourism

investment approval process by: (a) introducing the work

undertaken by SLTDA IRU and facilitated by the Project since

2016, (b) understanding the streamlining that was done, and (c)

learning the new Preliminary Clearance process and templates. The

roll-out of the streamlined process was supposed to begin in the

head offices of MDAs and then rolled out to the regional offices.

The roll-out at the regional level had not taken place by the close

of the project due to COVID-19 restrictions, which prevented

regional meetings.

(2.1) External trainings for head office staff of key MDAs: Two

trainings were held by SAIL and SLTDA in October 2018 and

March 2019. SAIL and SLTDA had updated the training modules of

the first external trainings to make them more focused on group

training/activities and included case studies and exercises to

promote group participation. The involvement of SLTDA staff in

leading the group activities as part of the training was a great

success and gave clear ownership of the reforms and workshop to

SLTDA. Input from responding participants agreed that it was

useful for them to interact with colleagues from other departments

and agencies involved in the tourism investment approval process.

They testified that the training helped them gain an understanding

External training with key MDAs,

March 2019



of the work undertaken by SLTDA and facilitated by SAIL. All

respondents agreed that they better understood the new

Preliminary Clearance processes and templates, and they gained

confidence in how to fill in the new templates, especially from the

group activities.

The Training Report and all training materials were shared with the

IRU on its Google drive. There was a total of 38 training

participants in the two external trainings, of which 53 percent were

male and 47 percent were female. 157 training person hours were

provided (19.6 training person days) to strengthen the capacities of

the main MDAs that the IRU works with in the tourism investment

approval process (BOI, UDA, CEA, CC&CRMD, NBRO,

Department of Irrigation, Department for Wildlife Conservation,

CMC/Solid Waste Management Division, and Fire Services

Department).

(2.2) External trainings for regional officers of key line agencies,

divisional secretariats and local authorities: In 2020, when the

streamlining of the process was further advanced and templates

reviewed and fine-tuned, it was planned to roll out the process to

the regions. The training objective was to bring regional officers of

key line agencies, divisional secretariats, and local authorities to

work together with SLTDA IRU in the streamlined tourism

investment approval process. IRU’s plan was to hold trainings for

these regional officers similar to the one held in March 2019 for

officers from the head offices of various agencies. The IRU with the

support of the SAIL team began to prepare for these trainings.

Initially, the trainings were to take place in Colombo, but due to

the restrictions of COVID-19, the plan was changed to conduct the

trainings in the regions themselves (Southern, Central, Western,

and Northern locations). It was planned to familiarize the regional

officers with: (a) the new Common Application, (b) the streamlined

processes for the Joint Site Inspection and the SCMs, and (c) the

relevant checklists and templates for the MDAs and the investor.

For each event, region-specific case studies were prepared. The

case studies were taken from existing project applications that met

two criteria:

1. Located in environmentally sensitive areas; and

2. Requiring the involvement of a larger number of MDAs (8-10).

This was to ensure that regional officers could be actively involved

in the group activities foreseen during the Regional Trainings. The

regional trainings for officers of key MDAs could not be

implemented as planned due to COVID-19 meeting restrictions.

The IRU has plans to start them in February 2021.

A virtual internal training, December

2020



DEVELOPING TOOLS FOR INVESTORS

Investor Handbook and Investor Presentations

For investors, SAIL created an Investor Handbook, which is a comprehensive guide for tourism

investors on the entire approval process and the resources available to them. The Handbook covers

each stage of the approval process – from the initial preliminary clearance to final approval. The

Handbook also contains other valuable resources and information for investors, such as investment

incentives, immigration, and an overview of the regulatory environment affecting tourism investments.

SLTDA INVESTOR HANDBOOK / INTERNATIONAL DEVELOPMENT GROUP LLC

To address SLTDA concerns about the quality of tourist products proposed, the Handbook includes a

section that discusses Sri Lanka’s notable architectural heritage and design inspirations/elements and

provides suggestions for basic design considerations. The Handbook contains multiple templates to

make it easier for investors to describe and present project proposals and calculate infrastructure needs.

As an additional tool, SAIL prepared a generic investor presentation that SLTDA can use and easily

adjust for targeted presentations to investors.

Tourist Accommodation Design Guidelines

The project also drafted Design Guidelines for tourist accommodation projects. Design guidelines are a

set of recommendations and good practices in design; they do not instruct designers on what to design,

but how to use recognized best practice principles and minimum design standards. The Design

Guidelines are intended to be a reference for those designing tourist accommodation facilities. They

define and describe the tourist accommodation spaces needed by type, size, and specifications according

to the existing regulations and international best practices.

The Guidelines will facilitate an understanding not only of the physical tourist accommodation spaces

required, but also of the factors affecting their design and the quality of the environment to be achieved

within and around the buildings. The Guidelines include development conditions, room-specific data for

all types of tourist accommodation facilities, guest spaces such as ordinary guestroom and dining

facilities, support spaces such as service and administrative areas, and external activity spaces such as

playgrounds, sport areas, access, and parking. The Guidelines can be used for new facilities, as well as for

extensions and renovations of existing facilities.


SLTDA TOURISM ACCOMMODATION DESIGN GUIDELINES / INTERNATIONAL DEVELOPMENT GROUP LLC

A promotional flyer was also drafted with an overview of information contained in the Design

Guidelines. The flyer can be shared with designers and investors to inform them about the existence and

usefulness of the Guidelines, and to provide some of the minimum requirements for designing and

building a tourist accommodation facility. Furthermore, investors can download the full Guideline

through the QR code which is found on the back of the flyer.

Assessment of Hotel Classification System

In response to a direct request from the SLTDA Chairperson to USAID, SAIL began supporting the

country’s evaluation of its hotel classification system with the goal of making it more responsive to

industry and customer needs. The project conducted and presented an analysis of the present system in

comparison to international best practice standards and recommended a plan of action to create an

improved framework.

A well drafted hotel classification system provides clarity to all tourism stakeholders, not just guests,

across markets and accommodation types. As tourism markets develop in Sri Lanka and the diversity of

stakeholders increases, it is important that accommodation providers present a unified front to simplify

choices and harmonize the industry.

The Project also developed and rolled out an online survey to gather input from a broad range of

tourism stakeholders in Sri Lanka, insights on how the current system works, and which components of

the existing systems should be incorporated into a new consolidated system. The SAIL team tallied


survey results and provided a report to SLTDA. SLTDA can now

use this information as it moves forward to redevelop its system

and delve deeper into stakeholder input for reforms.

Protecting Tourism Investments in the Pandemic

To help SLTDA formulate a response to the current crisis, SAIL

drafted a White Paper “Proposal for a SLTDA response to protect

and promote tourism investments during the COVID-19 crisis.” As

a result, the IRU implemented steps to maintain communication

with investors during the lockdown, resulting in an influx of

applications from investors who have enough confidence in the Sri

Lankan government to understand that the current crisis is an

investment opportunity.

Due to COVID-19 restrictions, the GoSL closed all government

agencies and the airport and suspended the issuance of tourist

visas. In the short term, this had a negative effect on the number of

working days required for an investment approval and, of course,

the number of applications that SLTDA IRU received. As normalcy

returns and the work of SAIL becomes embedded in more

agencies, it is expected that the downward trend in processing time

will continue and accelerate.

On the positive side, IRU continued to receive applications during

the pandemic which shows that there are investors who consider

the current crisis as an investment opportunity. Some investors

believe if they invest now their projects will be ready to operate

when tourism recovers.

The Secretary of the Ministry of Tourism, Mr. Hettiarachchi, in a

letter from September 29, 2020 to the SLTDA Chairperson, has

commended the work accomplished by the IRU. The letter also

makes a special mention of the SAIL Project:

“We are exceedingly satisfied with several significant

improvements made to the private sector tourism

investment facilitation mechanism with the technical

support of the USAID SAIL Project. This will meet a

long-standing need to encourage investors. We

appreciate this collaborative effort and look forward

to making the project approval process a success.”

And, in a recent letter dated January 12, 2021 to the USAID

Mission Director, the SLTDA Chairperson said:

“We are pleased to convey our sincere appreciation

for the remarkable contribution made by the USAID

Project Supporting Accelerated Investment in Sri

Online survey for Sri Lankan

Accommodoation

Categories/Classification



Lanka (USAID-SAIL) for the business re-engineering process of the Investor

Relations Unit of Sri Lanka Tourism Development Authority (SLTDA).

With the above support, SLTDA could reduce the time taken for the

approval process by 20% and despite the global pandemic, the total number

of investment projects processed in 2020 was 54 with a total value of UD

$879.94 Mn.”

SUPPORTING THE SRI LANKA TOURISM ALLIANCE

The Sri Lanka Tourism Alliance is a private sector industry organization that was formed in the wake of

the Easter Sunday Bombings in Sri Lanka. Like previous incidents in Paris, London, New York, Egypt,

Christchurch, and Bali, the Easter attacks had an immediate and devastating impact on the tourism

industry. International visitor arrivals to Sri Lanka initially dropped by 71 percent and the ongoing effect

on the entire tourism industry supply chain was evident. Out of this tragedy, however, has emerged

something positive. A group of like-minded Sri Lankan tourism business leaders joined together to form

the Sri Lanka Tourism Alliance.

From its inception, the Alliance’s common goal was to communicate that Sri Lanka is open for business

with timely, relevant, and useful information. #lovesrilanka was launched with an online campaign,

website, and related social feeds. The campaign provided up-to-date information for both the industry

and potential visitors, and more critically filled a huge gap in information about the safety and security of

tourists travelling to Sri Lanka, or in Sri Lanka at the time. The #lovesrilanka campaign was later

recognized by Skift, a travel and tourism global expert company, for its service to the industry and

lauded as an international best practice.

Since its launch, the Tourism Alliance has transformed itself into the second largest tourism industry

association in Sri Lanka. The Alliance formed a high-level Advisory Group, and an Expert Group of

Practitioners and Tourism Specialists to work together in a combined Crisis Management, Recovery, and

Communications Trifecta. Harnessing support from the international donor community and private

sector, locally and internationally, the Alliance was quick to organize and began to develop and distribute

key messages in priority markets, pivot negative media coverage, and lobby for the relaxation of travel

advisories.

In September 2019, the Alliance launched its Resilience Action Plan, bringing together the private sector

towards a united and sustainable tourism development goal. Its vision is to build a resilient and strong

private sector that embraces international sustainable tourism best practices, and where tourism

benefits are driven to communities and people across Sri Lanka at every level.

Technical Assistance

At the request of the Sri Lanka Tourism Alliance and after discussion with USAID, SAIL has been

providing technical assistance to the Tourism Alliance since May 2019. Specific assistance to the Alliance

includes:

• Initial support to organize and support the inception stages of industry organization, formalization,

and administrative support;

• Technical support to obtain funding;


• Leading the national consultation process with the assistance of an international tourism expert, and

the formulation of the Resilience Action Plan; and

• Leading the launch of the plan, design, and conceptualization of Alliance initiatives based on the

Resilience Action Plan.

SRI LANKA TOURISM ALLIANCE GRAPHICS / INTERNATIONAL DEVELOPMENT GROUP LLC

In June 2020, the Alliance formalized its commitment to the industry and was incorporated as a

company limited by guarantee under Sri Lankan Law. According to Statutory requirements, the Alliance

also secured the services of a Company Secretary and Auditor. The Co-Chairs of the Alliance also led

the ratification of the Articles of Association, and two Co-Chairs, and Treasurer of the Board were

elected in 2020. The leadership group meets on a quarterly basis and provides Strategic Advice and

guidance from an industry perspective to the operational team. With the support of USAID and the

Market Development Facility, the Alliance was able to resource their operational team with an

Operations Director, an Industry Engagement Manager, and an international Strategic Tourism Advisor.

The Alliance membership has grown exponentially in 2020 driven by industry engagement and targeted

initiatives aimed at increasing membership. The Alliance now has more than 1,460 members in total with

a wide cross section of industry stakeholders/segments represented within the membership.

A total of six projects and 17 actions were formulated through design thinking workshops conducted

with the industry in May 2019. The Resilience Action Plan is the blueprint for all activities undertaken by

the Alliance.

After the initial safety messaging campaigns concluded, the Alliance developed lovesrilanka.org into a

destination promotion website. The updates on safety and security of travelers continue to be the most

engaging pages on the website and account for majority of the traffic. When the COVID-19 crisis

emerged, the site and its ‘reopening updates’ section became the most visited pages on the site.

The lovesrilanka.org website has been supported by the Market Development Facility and has since also

been the host to a microsite Love Sri Lanka Locals – an initiative launched by the Alliance once the first

lockdown in Sri Lanka ended, to encourage the local market to travel. The microsite has performed


extremely well since its launch and housed hundreds of offers targeted at domestic tourists based on

destinations and experiences.

LOVESRILANKA.ORG WEBSITE / SRI LANKA TOURISM ALLIANCE

Trade Focused Website (srilankatourismalliance.com) and Social Media

In April 2020, the Alliance accelerated the launch of Sri Lanka’s first tourism trade focused website.

Supported by USAID, this website is the premier online resource that is run for the tourism industry, by

the industry. Custom-built for the Alliance, the website features a back end that enables the Alliance to

manage its membership database electronically.

The News and Updates section of the website, which provides a curated feed of tourism news locally,

and where relevant regionally and internationally are the most engaged pages on the site. It is inferred

from the level of engagement that the Alliance has become a trusted voice for credible, accurate, and

timely information. The site also features rich content news of the tourism industry, thought leadership

pieces, and information about the Alliance’s ongoing projects.

Launched softly in the latter half of 2020, the Jobs Portal the first of its kind in Sri Lanka, lists tourism

and hospitality jobs in Sri Lanka. Prior to the Easter attacks, skilled workforce was the largest pain point

within the industry and this portal was conceptualized to fill this gap in the market.

As part of strategic engagement with the industry, the Alliance also ramped up industry engagement in

2020 by developing trilingual newsletters. The newsletters feature content that was curated for the

industry by the industry, COVID-19 resources, Tools, Toolkits, and links to the Alliance site. In 2020,

there was a growth of 300 percent in newspapers distributed compared to 2019. Engagement statistics

show that 34 percent of the Newsletter recipients are highly engaged by the content.

COVID-19 Response

In response to the COVID-19 crisis, the Tourism Alliance was quick to develop a response which was

quickly embraced by the industry. The focus was to provide timely, credible, and relevant information to

the industry and bring international and local best practices and discussion to all tourism stakeholders.

However, the Alliance was cognizant of its longer-term goals of sustainability, and the threats that the

pandemic exacerbated. To this end, the Alliance launched a Grants Program to support the small and


medium enterprise (SME) sector and began to design a larger Sustainability in Tourism Project which will

commit to the verticals of Conservation, Culture, Community and Commerce on every level particularly

by engaging women and the tourism SME sector more inclusively. The Alliance is seeking funds to

mobilize this project now and plans to roll it out in mid-2021.

SRILANKATOURISMALLIANCE.COM SWEBSITE / SRI LANKA TOURISM ALLIANCE

Resilience Webinar Series

The Alliance launched the hugely successful Resilience Webinar Series in May 2020 during lockdown,

featuring global and local industry experts including Google, TripAdvisor, and Twenty31. A total of six

webinars have been watched for a total of 103,000 minutes and have been simulcast with local media

and research partners such as Pulse, Advocata, Daily FT, and Economy Next.

Grants for Tourism Resilience

In partnership with Good Life X and the Noah Foundation, the Alliance launched a competitive grants

program focused on SMEs in Sri Lanka. Inviting them to submit applications committing to pivot their

businesses to stay sustainable. A total of 328 applications were received, of which 31 were shortlisted

for interviews. Applicants were judged on their commitments to sustainability through innovation, and

their ability to bounce back. Ten finalists were chosen and received grants.

TRADE FACILITATION/POLICY


During Year 3, the project began implementing new activities aimed at supporting international trade

liberalization. These new activities were agreed with both USAID and with the MODSIT during the last

quarter of Year 2.

At the request of MODSIT, SAIL developed the implementation of monitoring mechanisms for trade

agreements with a special emphasis on the Sri Lanka-Singapore Free Trade Agreement (SLSFTA) and

other existing bilateral agreements. A key aspect of this was the capacity building of selected MODSIT

staff to enable them to conduct the monitoring of these agreements. Other deliverables included the


Review and Reform of Import-Export Control Law, Building compliance with the WTO Information

Technology Agreement (ITA), and a review of current competition law.

MONITORING MECHANISMS ON TRADE AGREEMENTS

The SAIL project developed three papers on “Salient Features of the Sri Lanka Singapore Free Trade

Agreement”, “Monitoring of the Sri Lanka Singapore Free Trade Agreement”, and “Monitoring of Sri

Lanka’s Regional and Bi-lateral Trading Arrangements.”

Based on these papers, a monitoring and compliance mechanism was developed within the Ministry to

monitor the agreements already signed and their level of compliance. SAIL conducted training sessions

for MODSIT staff on a wide range of topics involving trade agreements, monitoring mechanisms for

FTAs, and monitoring of the Sri Lanka’s Regional and Bi-lateral Trading Arrangements.

Primary training was conducted on understanding trade agreements, the computation of border taxes

including para-tariffs, and total tax incidences. Analyses were also conducted on export data in key

markets under preferential terms or otherwise. Simulations on the revenue implications due to border

tax reductions were also conducted by the project.

At the request of MODSIT, training was conducted for new officers from their newly established Trade

and Productivity Commission on trade taxes, incentive structures, para-tariff reductions, and FTAs. SAIL

also reviewed documents related to the Trade Adjustment Program (TAP), where the Secretariat of the

Trade Productivity Commission within MODSIT was tasked to conduct an analysis and submit findings

related to negative impacts to the industry due to reductions of Customs Import Duties and para-tariffs

when implementing FTAs.

REVIEWINGTHE IMPORT-EXPORT CONTROL LAW

The project worked on the review and reform of the import-export control laws as requested by

MODSIT. SAIL developed a paper on “Next Steps Related to the Imports and Exports (Control) Act.”

The project presented the findings to the Controller and her team and agreed on a training program on

import/export control aspects with respect to trading arrangements of Sri Lanka. Training sessions were

conducted including a special Saturday retreat program for the whole department which was well

received.

TRADE FACILITATION/POLICY OUTCOMES

• SAIL promoted the adoption of the WTO ITA and the Ministry of Finance is currently

undertaking a revenue impact study, after which the government can take the important next step

of full implementation.

• Extensive training carried out with the staff of MODSIT on the monitoring of free trade

agreements increased their ability to enter into further trade agreements and open up the

economy to future investment.

• More than 300 participants attended the public-private dialogues held in three districts (Colombo,

Kandy, and Kurunegala) discussing trade and the impact on businesses in their districts.


BUILDING COMPLIANCE WITH THE WTO ITA

The project also worked on building compliance with the WTO

ITA and was engaged with the Department of Commerce on the

subject. After consultations with the private sector, relevant

government stakeholders including the Ministry of Finance, the

request of the private sector was to proceed with the WTO ITA

agreement which is beneficial to the IT industry and the country.

At this meeting, the Ministry of Finance was requested to conduct

an analysis of the revenue implications of the duty reduction on IT

imports.

SUPPORTING PUBLIC-PRIVATE DIALOGUES ON TRADE

PPDs on trade were organized by SAIL, and they were very well

received by stakeholders and generated a new level of awareness

on the subject of trade. The success of the events prompted a

request from MODSIT for PPDs to be held in every district of the

country.

The first PPD on “Integrating into Global Trade – How can Sri

Lanka Maximize Benefits and Minimize Risks” was held in Colombo

(in June 2019) with over 70 participants, including government

officials from key ministries/agencies, chambers, the private sector,

and the civil society.

The PPDs then moved out of Colombo and the second event was

held in Kandy, a district who is a key player in the country’s trading

economy. The event in Kandy (in August 2019) was themed

“Kandy in the Global economy - How can the District Maximize

Benefits and minimize Risks” and was held with the support of the

Export Development Board (EDB) office in Kandy and MODSIT.

There were over 120 participants at this event.

The third PPD was held in Kurunegala (September 2019) under the

same theme “Kurunegala in the Global Economy – How can the

District Maximize Benefits and minimize Risks” once again in

collaboration with the EDB office in Kurunegala and MODSIT. This

event attracted 110 participants.

The dialogues were well received by stakeholders in all three

Districts (Colombo, Kandy, and Kurunegala) who welcomed the

initiative and the opportunity to interact first-hand with key officials

and seek clarifications on some of the pressing issues impacting

their businesses in their region.

In total, more than 300 participants from Ministries, government

agencies, the business community, trade chambers, the private

sector, and representatives of other key stakeholders spent a

whole day engaged in discussions, sharing experiences, and gaining

new knowledge at these three events. The resource persons at the

Kandy PPD

The PPD events generated vibrant

discussions

Newspaper coverage of modsit and sail

PPD Event



events included staff from the Ministries and allied departments and agencies including Department of

Commerce, Inland Revenue Department, Customs, Registrar-General’s office, BOI, EDB, Import and

Export Control Department.

LABOR LAW REFORM


Reforming labor law reform has been a priority and challenge in Sri Lanka for several decades. Both

employer and employee representatives have repeatedly expressed the need to revise and update the

existing labor regulation. At MODSIT’s direction, SAIL began working directly with MOLTUR on issues

relating to labor reform. With the Government agreeing that reform is necessary, the SAIL team was

able to facilitate the preparation of a draft law.

Two areas of importance were highlighted in revising labor. Firstly, the draft seeks to replace a

fragmented legal regime of many laws with a single law on employment. This emphasized revising the

entire labor law structure as opposed to only a fraction of labor laws. Secondly, the current reform

prioritizes issues of gender, including seeking an increase in labor force participation by women.

ASSESSING EXISTING LABOR LAWS AND STAKEHOLDER INTERESTS

From initial project discussions, labor issues were identified by stakeholders as a major impediment to

FDI. In the first year of the project, the SAIL team assessed existing labor laws and found a number of

tangible issues to concentrate reform efforts on: 1) fragmentation of laws and requirements (44 Wage

and Hour Boards); 2) inflexible rules; 3) disputes about third party contracting (manpower agencies); 4)

high termination costs and procedures; 5) other costs such as gratuity; 6) no prohibition against any

form of discrimination, especially as to gender; and 7) high enforcement costs and delays.

After the assessment was presented to the Ministers of MODSIT and MOLTUR, the two Ministers

agreed that the reform process must move forward. It was decided that the SAIL project would work

LABOR LAW REFORM OUTCOMES

• SAIL produced four drafts of the labor law, now titled ‘Unified Terms and Conditions of

Employment Act’, incorporating feedback from various stakeholders through PPDs and

workshops.

• The draft labor law meets the immediate needs of the GoSL and replaces a fragmented legal

regime of many laws with a single law on employment, prioritizing issues of gender and protecting

rights of workers while allowing employers flexibility appropriate in the modern workplace.

• 7 public-private dialogues were conducted and opened the doors for public discussions and laid

out the outreach and communication strategy for MOLTUR to ensure acceptance of the new law.

• A framework for implementing rules and regulations was presented to the GoSL to initiate the

preparatory works for enacting the new law once the draft labor law is finalized.


directly with the lead Ministry, MOLTUR, to support a Working Group comprised of MOLTUR

representatives and stakeholders.

In addition to meeting with the Ministers, the SAIL team also reached out to other stakeholders to

gauge support for labor reform. As an example, members of the team attended the Sri Lanka Economic

Summit 2017, organized by the Ceylon Chamber of Commerce. Throughout the Summit, significant

presentations by the Head of the Central Bank, Ministers, and private sector leaders included many

references to the need for comprehensive labor reform.

The SAIL team simultaneously laid the groundwork for public discussions of labor law reform by

recruiting a Sri Lankan multi-disciplinary think tank, Verité Research, to assist with the public-private

dialogues that would be used to present the proposed reforms. The SAIL team and experts from Verité

Research discussed appropriate steps for public communications, such as social media articles, on

specific elements of labor reform. There were eventually several public meetings held around the

reform, but the social media campaign was put on hold due to the impending elections and on

instruction from the CGL.

FACILITATING PUBLIC-PRIVATE DIALOGUES

To help stakeholders identify issues of concern and to help them become more familiar with the

proposed labor reform, SAIL hosted PPDs. SAIL and subcontractor, Verité Research, provided support

facilitating and organizing the events covering a wide range of thematic issues including women and

employment, informal sector workers, and ethical outsourcing. The PPDs built on the Cabinet decision

of June 2018 to unify four laws and SAIL supported eight PPDs as summarized in Table 2 below.

At the final PPD, SAIL presented an approach to unifying labor laws and provided an outline of a unified

law that had been prepared by SAIL. There was a panel discussion of the presentation made to 71

participants, from trade unions, employers, and the Ministry, concluding that labor laws needed to be

unified and modernized ensuring consistent treatment of employees in all sectors. A number of policy

proposals were made in the course of the PPDs, including:

• All labor law issues should be addressed in a single comprehensive law instead of maintaining

separate laws for industrial, office, female, and agricultural workers; combine and amend existing

laws.

• The Law should clearly define the rights and obligations of employers/employees.

TABLE 2: PPDS ON LABOUR

DATE LOCATION THEMATIC AREA

March 26, 2018 Galle Women and employment – discrimination, harassment in the workplace,

restrictions, part time work

April 26, 2018 Batticaloa The needs of informal sector workers – precarious employment and low

wages without benefits

April 27, 2018 Trincomalee How to make outsourcing (manpower agencies) fair to workers

May 10, 2018 Jaffna Women and employment - discrimination, harassment in the workplace,

restrictions, part time work.

May 11, 2018 Anuradhapura The needs of the informal sector, and how should the minimum wage be

determined

July 30. 2018 Kandy Plantation sector workers

August 13, 2018 Colombo Problems in collective bargaining

October 12, 2018 Colombo Approach to unifying labor laws and outline of a unified law


• Employment law must protect rights of workers and include anti-discrimination provisions, while

allowing employers flexibility appropriate in the modern workplace.

• Laws should not discriminate in service conditions based on place of work and occupation; all

workers are entitled to the same conditions; leave, overtime, and working hours to be uniform.

• Labor law should be based on setting rules, rather than on seeking approvals from the Labor

Commissioner.

• Resources of the Department of Labor (DOL) are limited and the inspection of large numbers of

manpower agencies, use of casual labor, and other vulnerable conditions is not possible due to the

sheer numbers.

• The complexity of existing laws makes it more likely that employers will evade regulations where

possible, so anything that results in a less complex law is to be welcomed.

JAFFNA PPD PARTCIPANTS / INTERNATIONAL DEVELOPMENT GROUP LLC

PREPARING LABOR LAW DRAFTS

First Labor Law Draft

In 2018, MOLTUR received Cabinet approval to move forward with a unified labor law. The Cabinet

determined that four laws (Shop and Office Act, Wages Boards Ordinance, Employment of Women,

Children and Young Persons Act, and Maternity Ordinance) should be unified in addition to reviewing

other laws. The Cabinet paper highlighted the need to address the low labor force participation of

women and the need for flexible service conditions in the new technology-based economy.

Furthermore, the Cabinet paper noted: “It must also be stressed that the drafting of a new act

incorporating flexible service conditions should be without prejudice to the rights currently enjoyed by

workers.”

At the request of the CGL, the SAIL project drafted a unified Employment Act under the direction of

Justice R.K.S. Suresh Chandra, a consultant for SAIL who is a retired Supreme Court judge and an

experienced labor law practitioner.

Working with the legal department of MOLTUR, SAIL conducted drafting workshops and provided

technical revisions to the Act. The SAIL team presented the first draft of the Employment and Service

Contracting Rights Act to the Ministry of Labor. The draft was accompanied by a presentation on the

draft Act led by Lena Zezulin and on the implications for the DOL led by Shyamali Ranaraja. There were

over 20 people in attendance. The draft contained the following general points:


• Statement of general principles including the prohibition of discrimination;

• Definitions of different forms of employment contracts, including defining fixed term contracts and

casual labor;

• Flexibility in overtime provisions and in the scheduling of work, applicable to all places of work,

replacing the onerous and fragmented Wage Board regime;

• Recordkeeping obligations of employers;

• Annual leave and holidays (which is also currently fragmented under different Wage Boards);

• Maternity leave;

• Procedures for termination of employment;

• Reduction in Termination of Employment of Workmen Act (TEWA) benefits;

• Reduction in Gratuity Act Benefits;

• Service contract hiring (Manpower agencies);

• Employment Agencies (who place workers with employers);

• Employment of children and young persons; and

• Administration, grievances and enforcement through Labor Courts.

JAFFNA PPD PARTCIPANTS / INTERNATIONAL DEVELOPMENT GROUP LLC

At the beginning of 2019 second quarter, further discussions were arranged with MOLTUR. All of the

reports on the discussions, the comments, and the proposed revisions were compiled into a revised

draft and submitted to MOLTUR. The principal policy changes in the revised version of the first draft

were:

• Enforcement provisions creating Labor Courts were to be removed and Labor Tribunals will be

referred to instead as this was not part of the Cabinet Resolution on unifying the labor law; and

• Reduction in the cost of TEWA and Gratuity would be contentious and is not in the Cabinet

Resolution and was also removed.

The draft retained the principal architecture: unifying labor provisions and introducing some flexibility,

such as permitting and defining part-time hours, flexible hours, and overtime, consistent with the needs

of a modern knowledge economy. The draft also streamlined compliance mechanisms for employers.

The draft would also eliminate outdated restrictions on women working and prohibit gender

discrimination, including sexual harassment as a form of discrimination.


The Easter Sunday bombings in 2019 resulted in postponements in many areas of work including labor

reform. Despite these challenges, the SAIL team further revised the draft with MOLTUR. At the request

of the CGL, SAIL prepared a presentation for the CGL to provide to the Employers’ Federation of

Ceylon (EFC). On June 27, 2019, approximately 300 people attended the EFC Forum on the topic “A

Unified Employment Law.” The CGL was the keynote speaker. Discussions centered on contracts,

overtime, compressed time, holidays, outsourcing, maternity benefits, executive pay, retirement age, and

even pensions.

Second Labor Law Draft

After the extensive discussions within the working group, a second draft was presented on July 6, 2019.

The draft aimed to retain important protections for employees in the current law and to provide

flexibility consistent with the needs of a modern economy to support business growth, increased formal

employment, and the needs of women.

Taking inspiration from Canada and South Africa, where average work-day lengths and compressed

work schedules have been introduced, employers have been seeking more flexibility to deviate from the

rigid 8-hour day and 45-hour work week. The revised draft builds on the Cabinet’s decision to unify four

laws and includes the following components among others:

• Fundamental rights of workers and anti-discrimination provisions, including defining sexual

harassment as a form of gender discrimination;

• Elimination of night work restrictions for women;

• Requirements for employment contracts, allowing flexibility to have a variety of contracts, such as

part-time, fixed-term, and casual contracts appropriate in the modern workplace;

• Service contract hiring;

• Recordkeeping, wage payment rules, and workplace rules;

• Elimination of Wages Boards with fragmented workplace rules;

• Unifying conditions of leave, overtime, and holidays across occupations;

• Possibility of flexibility in overtime, allowing for averaging and compressed work weeks; and

• Regulation of “manpower agencies” and employment agencies.

An important milestone was reached July 9, 2019, when the draft Employment Act was presented to the

NLAC. The NLAC is a tripartite body composed of employers, unions, and government representatives,

following International Labor Organization (ILO) Convention No. 144 on Tripartite Consultation. In

response to the Ministry’s request, SAIL prepared unofficial translations into Sinhala and Tamil.

The project received feedback from unions and gender-focused civil society organizations. Solidarity

Center’s attorney in Washington, D.C. and the Ceylon Mercantile, Industry and General Workers

Union (CMU) provided comments to the draft law. Jathika Sevaka Sangamaya submitted separate

comments, primarily with respect to manpower agencies and trade unions provided comments on the

draft, the unification of four laws, and the involvement of USAID.

Third Labor Law Draft

The second draft delivered was significantly revised to reflect feedback and annotated extensively to

show how each comment was addressed. A third draft was provided on February 25, 2020. SAIL

continued to meet with the MOLTUR legal team and received important comments on many provisions,

especially relating to enforcement. Some of the differences between the second and the third draft

were:


• The title of the draft was changed to ‘Terms and Conditions of Employment Act’;

• Addressing concerns about employment through Manpower Supply Agencies, the draft clarifies the

definition, responsibilities, and protections of Manpower Supply Agencies;

• Further elaborated the Employer’s responsibility for preventing sexual harassment through the

adoption and implementation of Workplace Standards;

• Added definition of equal pay for equal work, and a prohibition against discrimination in recruitment

and termination;

• To prevent confusion, the term ‘Workplace Rules’ was changed to ‘Workplace Standards’;

• Text revised for many provisions including: 1) clarification that Casual Work is not an Employment

Contract; 2) clarification that no probation should be imposed if an Employee is hired for the same

job or work by the same Employer; 3) explanation added clarifying that performance-based

remuneration is not obligatory but a choice for Employers and Employees; and 4) clarification that no

Employee may be required to work more than 12 hours a day, “around the clock”.

• Addressing comments that overtime payments should be calculated at two or three times the Basic

Wage for certain days, the Act was revised to calculate overtime payments at one and a half times of

the Basic Wage to maintain parity for all sectors and ease of administration for the Labour

Department;

• Edited to remove doubt that the Employee can be compelled to work a Compressed Work week or

Averaging unless these alternatives are agreed upon by Employers and Employees and to reduce the

amount of overtime for Employees working a Compressed Work Week;

• Employees in trades such as hospitality may be required to be traveling for a number of weeks;

• Revised to indicate all weekly leaves as unpaid in order not to disadvantage the hiring of part-time

Employees;

• Removed the alternate day of leave for the Public Holiday provision;

• Addressed recommendations from the ILO by: 1) requiring individual recordkeeping for each

Employee, and 2) removing 45 hour per week work requirement for maternity leave to assure that

part-time Employees likewise receive maternity leave and instead clarifying the need for pro-rata

payment of maternity leave for part-time Employees;

• Revised the requirement of creches based on the number of all Employees, not just female

Employees, for children under the age six; and

• Clarified the text to prohibit employment of children “except in accordance with this Act”.

MEETING HOSTED BY MINISTER OF LABOUR WITH SAIL, MODSIT, AND USAID TEAMS / INTERNATIONAL DEVELOPMENT GROUP LLC


Fourth Labor Law Draft

SAIL delivered a Fourth Draft of the unified Terms and Conditions of Employment Act to MOLTUR on

May 27, 2020. The principal changes made to the fourth draft were on enforcement and with several

provisions allowing for cessation of work due to emergencies.

In 2020, SAIL also closely followed the challenges faced by the labor sector in Sri Lanka due to COVID-

19. Many provisions requested by employers as COVID -19 relief, are contained in the unified Terms

and Conditions of Employment Act. MOLTUR asked SAIL to review the report "COVID-19 & Beyond:

The Impact on the Labor Market of Sri Lanka" to identify legal reform initiatives that can be pursued to

further the report's findings after the 2020 General election. Their report was based on a survey of

employers and contained a number of far-reaching requests including the following short-term

recommendations:

1. Retaining employment, with reductions in salary to address periods of non-work, while maintaining

Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) contributions;

2. Making pro-rata payments to workers according to the number of hours worked;

3. Granting loans to businesses at lower rates; and

4. Allowing employers to recover lost paid hours without work through agreement with Trade

Unions or other relevant parties.

Long-term recommendations included:

1. Comprehensive social security scheme, including unemployment insurance, including re-skilling, re-

employment and up-skilling;

2. Creation of health and education hubs in Sri Lanka;

3. Strengthening social dialogue at sector and enterprise level; and

4. Modernizing and diversifying agriculture, fisheries, apparel, textile, and tourism sectors.

SAIL provided its assessment to MOLTUR noting that these recommendations are far-reaching and

broad, requiring not only the adoption of a unified Terms and Conditions of Employment Act, but

review of other significant labor laws to modernize laws in response to the changes in the economy.

INCORPORATING GENDER IN TO LABOR LAW REFORM

One issue the government aimed to address was low female labor force participation. Female

unemployment is higher than that of males at all levels of education. In 2016, female labor force

participation was approximately 36 percent compared to 75 percent for males. Women accounted for

approximately 75 percent of the country’s economically inactive population in 2017. Unemployment

stood at 4.1 percent in 2017: at 2.7 percent for males compared to 6.5 percent for females.

Overt gender discrimination in employment is common in Sri Lanka. Some collective bargaining

agreements in the agricultural sector have explicitly different compensation rates for women and men.

This is not prohibited by the Sri Lankan Constitution, which only prohibits gender discrimination in the

public sector, leaving private sector discrimination is legal. This is a major variance from Sri Lanka’s

commitments to the ILO and the Generalized Scheme of Preferences Plus (GSP+) and Sri Lanka has


promised to rectify the matter1. Addressing this discrimination

will take a long time but prohibiting it by law is a necessary first

step.

Solutions to these issues were presented through the draft via

the introduction of flexible workplace arrangements, such as

providing for part-time work and varying work schedules.

Another significant aspect of the draft law is the introduction,

for the first time, of an express prohibition against sex

discrimination in private sector employment.

The draft law also included prohibitions against discrimination

(gender and other characteristics) which remain absent in the

current employment law. Sexual harassment is also covered as

a form of discrimination. The draft law also abolishes the

restrictions on night work for women. It is noteworthy that

these restrictions are currently contained is the Employment of

Women, Young Persons and Children Act. This represents an

antiquated and paternalistic approach toward women,

exemplified by the inclusion of protective features for night

work by women along with rules on child labor, without,

however, prohibiting discrimination. The Act is also outdated

as to the appropriate age designations of children and young

persons.

A stakeholder consultation on the gender implications of the

draft act on employment was held on July 18, 2019. The event

was attended by 41 participants representing a range of civil

society organizations, Human Rights Council, academia,

research centers, think tanks and women’s action groups.

MOLTUR and International Labor Law Expert, Shyamali

Ranaraja, made presentations and generated a vibrant

debate. Attendees welcomed the proposed changes to the

labor law and highly appreciated the fact that gender issues had

been incorporated.

DEVELOPING A LABOR REFORM COMMUNICATION

STRATEGY

To promote the labor reform policies, a strategic

communication effort was initiated. The CGL communicated

reform to the press, with the goals of simplification,

clarification, and increased female employment. At an ILO

Future of Work event, the CGL mentioned the single new

labor law during the event. In addition, there have also been

articles on the needs of women workers, such as the Moms do

1 GSP+ was withdrawn from Sri Lanka over several issues, including union activity and gender. It was restored in

2017 and conditions are subject to monitoring. See the EU Commission staff working document, January 11, 2017.

https://trade.ec.europa.eu/doclib/docs/2017/january/tradoc_155236.pdf.

Panel discussion at the forum on gender


https://trade.ec.europa.eu/doclib/docs/2017/january/tradoc_155236.pdf


Digital article. It is currently very difficult to have an active champion for reform until there is a draft

that is available for public review. Once the draft is available for public review, MOLTUR and the EFC

could further lead the process as champions for reform.

CROSS-CUTTING ACTIVITIES - COMMUNICATIONS AND OUTREACH

Recognizing the value of communications and outreach, SAIL was careful to place a special emphasis on

this aspect of the work, showcasing the work of the project and increasing the knowledge and

awareness of our diverse stakeholders to further the project’s goals. Having a specialized

communications unit within the project benefited all components which had the constant support of the

communications team to showcase their efforts and add value to them through a range of

communication tools.

Accordingly, the communications team developed, adapted, and refined content and messaging that was

used for project communications to serve the needs of diverse audiences including USAID, project

partners, the GoSL, ministries and state agencies, the private sector, investors, and associations.

The team developed a strategic outreach agenda to support PPDs and advocacy using a range of

communications methods including print, advertising, social media, and community engagement, as

appropriate. The team also supported government counterparts and other stakeholders to develop and

implement program outreach and awareness raising activities. The SAIL project was the only USAID

project which regularly published a quarterly newsletter featuring the work accomplished during the

period and including a success story with every edition.

SUPPORTING A MODSIT COMMUNICATIONS STRATEGY

In one of the project’s early interactions with MODSIT, the Minister had requested SAIL to develop a

communications strategy to increase both internal and external communications, build public awareness

and wider appreciation of its work in improving the investment climate, and gain vital public support for

reforms. The SAIL team developed a comprehensive communications strategy in close collaboration

with key stakeholders from various departments and agencies including the BOI and EDB to and

ensured that the Communication Strategy was aligned with the priorities across different departments

and agencies.

The Communications Strategy was used as the blueprint for MODSIT to determine how to effectively

communicate with all internal and external stakeholders impacted by its programs. It also provided

important communications tools that can support the implementation of the Ministry’s Vision, Mission

and Strategic Objectives.

COMMUNICATION AND OUTREACH OUTCOMES

• With SAIL’s support, the MODSIT quarterly newsletter was launched, a milestone for the

Ministry and shared overseas to all Sri Lankan missions, becoming an integral part of their

messaging.

• SAIL successfully used large scale public-private dialogues to promote both labor reform and

trade and utilized print media to reach millions of Sri Lankan households highlighting not only

MOLTUR and MODSIT but also USAID and its commitment to supporting Sri Lanka on its path

to self-reliance.


CAPACITY BUILDING FOR COMMUNICATION

Following the development of the communications strategy, the

SAIL team launched a number of communication capacity building

programs including trainings on effective communications. These

pilot initial training programs were very well received, and SAIL

was requested to expand the training to all MODSIT staff including

the senior management. Building on this success, SAIL was then

requested to conduct capacity building programs for other soft

skills including communication and business etiquette, conducting

meetings, the art of minute taking, and presentation skills.

The Ministry also made it mandatory for all its new recruits to

follow the training programs to enhance their knowledge and skill

sets. Based on this initiative, SAIL developed a training curriculum

of six modules to be completed by all recruits and awarded

certificates to those candidates who completed the course.

The SAIL project was also requested to assist the ministry in

conducting an outbound team-building training program for its

entire staff. The two-day event was hailed as one of the best-ever

training programs at the ministry and in a letter from the Secretary

MODSIT, SAIL was commended for its lead role organizing the

event.

“I would sincerely extend my heart-felt gratitude

for the support you have provided to our

Capacity Building Program held on 12th to 13th

July 2019 at Laya Leisure – Kukuleganga…

This event would not have been a success without

the generous support you have provided to us

throughout. On behalf of the Hon. Minister and

the staff of the MODSIT, I highly appreciate your

commitment in making this event a success. I

sincerely hope that this collaboration will be

maintained and that you will continue to support

us in our future endeavours.”

Secretary of MODSIT

ASSISTING IN THE DEVELOPMENT OF A MODSIT

QUARTERLY NEWSLETTER

One of the direct outcomes of the communications strategy and

the training programs was the development and publishing of the

first ever MODSIT Newsletter which was a ground-breaking event

SAIL presents the Communications

Strategy to MODSIT

Communications training session in

progress

Communications training participants

Communications training launch



and helped showcase the work of the ministry both locally and

overseas.

The newsletter consisted of eight full color pages of news and

pictures of the work of the ministry and was available in all three

languages – English, Sinhala, and Tamil. The electronic versions of

the newsletters were featured on the MODSIT website and

distributed via email to all Sri Lankan embassies and trade

commission offices overseas. Additionally, several thousand hard

copies were printed for distribution locally and at all events and

trade fairs. In one instance, over 50,000 copies of the newsletters

were printed for distribution at two regional trade fairs in the

country. The newsletter continued to be published regularly and

was well received until the closure of the MODSIT ministry in

November 2019.

“Welcome to the first issue of MODSIT NEWS - the

newsletter of the Ministry of Development

Strategies and International Trade. The newsletter

serves a long-felt need of the Ministry to increase

awareness of its work among all its stakeholders and

the general public.

I wish to congratulate all those involved in this

publication and I extend a special word of thanks to

the SAIL team for their support and guidance”

Minister Malik Samarawickrema in a special message to mark the first

publication

DEVELOPING COMMUNICATIONS TOOLS FOR MODSIT

As the capacity building programs continued, the SAIL project

developed a range of communication tools for the use of MODSIT

including factsheets, brochures, news articles, and press releases.

The communications team also helped compile articles which were

translated into Sinhala and Tamil and published in the local

newspapers. A special feature article on the SLSFTA, developed

jointly by MODSIT and SAIL teams, received wide publicity in all

the local newspapers reaching over one million households and

four million readers across the country.

SUPPORTING MEDIA OUTREACH – NEW INDUSTRY

BENCHMARKS FOR PRINT COVERAGE

The PPDs on trade enabled the SAIL project to utilize its outreach

capabilities to the fullest extent. The Communications team

developed media releases which were translated into Sinhala and

MODSIT Quarterly Newsletter

Featured article on SLSFTA

Newspaper coerage of SAIL actvities



Tamil and disseminated to all print media and published prominently in full color in all the mainstream

newspapers setting a new benchmark for media coverage and showcasing the work of SAIL in Sri Lanka.

In total, the outreach encompassed over one million households with an overall readership of three

million individuals.

RECOMMENDATIONS FOR FUTURE USAID ASSISTANCE

Much was achieved during the SAIL project; labor is now at the front and center of the government’s

reform efforts. The tourism investment process has been vastly improved and more importantly the

message that Sri Lanka needs to improve in order to compete regionally is widely accepted.


The SLTDA IRU is a different organization now than the one SAIL engaged with four years ago; they are

on a steady reform path. Full automation, as well as addressing different staffing issues will be key

milestones for SLTDA, and they will need help to achieve these goals. Expanding the streamlining of

processes to other agencies will be an uphill battle, but the example of SLTDA will inspire the

government to take the next steps.

The Sri Lanka Tourism Alliance requires further assistance with the day-to-day operations of their

programming including implementation of their Resilience Action Plan. The work entails capacity building

and core institutional strengthening activities aimed at growing the membership, strategic

communications, building platforms, partnerships and initiatives aimed at including all stakeholders in the

industry. Future USAID projects could support the Alliance on its ‘sustainability project’, which is aimed

at increasing female participation in tourism and supporting SMEs in the tourism sector to recover their

businesses.

LABOR LAW REFORM

The fourth draft of the Unified Terms and Conditions of Employment Act needs to be reviewed by the

drafting team at MOLTUR. After review by the new Ministry leadership, the next steps for the draft

would be presentation to the NLAC. The draft will then need to be communicated to the public,

followed by the initiation of preparatory work on implementing regulations. SAIL has taken steps to

support the preliminary development of regulations, but this will need to be addressed comprehensively

once the draft is finalized.


ANNEX I: INDICATOR SUMMARY TABLE

TABLE 1: INDICATOR SUMMARY TABLE

Outcome Indicator Type FY17

Target

FY 17

Actual

FY18

Target

FY18

Actual

FY19

Target

FY19

Actual

FY20

Target

FY20

Actual

FY 21

Target

FY 21

Actual

LOP

Target

LOP

Actual Notes

Sub-purpose 1: Improved/reformed legislative and regulatory environment that will address current constraints to FDI attraction and retention

Outcome 1.1

Reformed, modified,

or developed

laws, regulations, or

administrative

procedures are

implemented

Indicator 1.1 Number of

business environment

laws, regulations, or

administrative

procedures drafted (D),

submitted for

public/stakeholder

consultation (S),

submitted for legislative

consideration (L), or

passed/approved (A) as

a result of USG

assistance

Drafted 3 2 3 6 3 6 2 6 0 0 11 20

Stakeholder

Review 2 0 2 6 3 6 3 5 1 1 11 18

Legislative 0 2 3 3 2 0 3 0 1 0 9 5

Approved 0 0 1 3 2 4 2 2 1 1 6 10

Total 5 4 9 18 10 16 10 13 3 2 37 53


public-private dialogues

conducted

N/A N/A 7 7 10 5 4 0 2 0 23 12

Indicator

added in

year 3. Year

2 targets are

actuals for

the year.


legal instruments

drafted, proposed or

adopted with USG

assistance designed to

promote gender equality

or non-discrimination

against women or girls

at the national or sub-

national level

Drafted N/A N/A N/A 1 0 0 0 0 0 0 1 1 Indicator

added in FY

19. The

labor law

was drafted

but not

adopted due

to frequent

changes in

government

and the

Proposed N/A N/A N/A 0 1 0 1 0 1 0 1 0

Adopted N/A N/A N/A 0 1 0 1 0 1 0 1 0


TABLE 1: INDICATOR SUMMARY TABLE

Outcome Indicator Type FY17

Target

FY 17

Actual

FY18

Target

FY18

Actual

FY19

Target

FY19

Actual

FY20

Target

FY20

Actual

FY 21

Target

FY 21

Actual

LOP

Target

LOP

Actual Notes

COVID-19

pandemic.

Outcome 1.2:

Procedures

impacting investment

related processes

are streamlined

Number of days

required for investment

approval processes (PC-

Preliminary Clearance)

N/A 54.5 54.5 39.5 30 38 25 31.5 25 31.5 25 31.5

Final result is

based on

data from 52

processed

applications

in 2020.

Number of days

required for investment

approval processes (DP-

Development Permit)

N/A 49 N/A 50 40 41 30 42 30 42 30 42

The sample

size was

small

(complete

data only

avail. for 5

applications)

Sub-purpose 2: Strengthened institutional capacity of BOI or AfD or other GSL to function effectively as investment promotion agency and a one stop shop for

FDI entry into Sri Lanka

Outcome 2.1: GSL

staff’s capacity to

implement reforms

that improve the

investment

promotion functions

is strengthened

Indicator 2.1 Person

hours of training

completed in business

enabling environment

supported by USG

assistance

Female 100

59 300

219.5 400

699 350

294.5 150

10 1300

1282

Male 85 92.5 383.75 301 2.5 864.75

Total 100 144 300 312 400 1082.75 350 595.5 150 12.5 1300 2146.75

Outcome 2.2:

Institutions are

equipped to

implement reforms


institutions/organizations

(public and private)

receiving capacity

development support

through USG assistance

New 2 2 2 1 2 6 1 0 0 6

7 15

The total

reflects only

new

organizations

supported in

total across

the LOP

Continue 0 0 2 2 3 3 4 10 2 8


ANNEX II: TECHNICAL REPORTS

TABLE 2: TECHNICAL REPORTS

TITLE REPORT

DATE DEC LINK

Roadmap and Action Plan for

Streaming of Investment Approvals 4/4/2017 https://pdf.usaid.gov/pdf_docs/PA00XDQS.pdf

Review of Select Provisions of the

Labor Code of Sri Lanka 8/1/2017 https://pdf.usaid.gov/pdf_docs/PA00XDQT.pdf

Proposal for Streamlined Tourism Pre-

Approval Process under SLTDA OSU 8/9/2017 https://pdf.usaid.gov/pdf_docs/PA00XDQW.pdf

Assessment of the Caseflow Process

in the Commercial High Court of

Colombo

3/29/2018 https://pdf.usaid.gov/pdf_docs/PA00XDQX.pdf

Monitoring of the Sri Lanka-Singapore

Free Trade Agreement (SLSFTA) 2/28/2019 https://pdf.usaid.gov/pdf_docs/PA00XDR1.pdf

Next Steps Related to Revision of

the Imports and Exports (Control)

Act - A Summary

2/28/2019 https://pdf.usaid.gov/pdf_docs/PA00XDR3.pdf

Salient Features of the Singapore Free

Trade Agreement(SLSFTA) 2/28/2019 https://pdf.usaid.gov/pdf_docs/PA00XDR6.pdf

Labor Law Reform Communication

Strategy 6/23/2019 https://pdf.usaid.gov/pdf_docs/PA00XDR8.pdf

Marketing Tourism and Post-Recovery 6/28/2019 https://pdf.usaid.gov/pdf_docs/PA00XDR9.pdf

Suggestions to Improve MODSIT’s

Website 6/28/2019 https://pdf.usaid.gov/pdf_docs/PA00XDRC.pdf

USAID MODSIT Communication

Strategy 7/1/2019 https://pdf.usaid.gov/pdf_docs/PA00XDRD.pdf

Hotel Classification - Initial Research 5/1/2020 https://pdf.usaid.gov/pdf_docs/PA00XDRF.pdf

WTO Information Technology

Agreement and Sri Lanka 5/1/2020 https://pdf.usaid.gov/pdf_docs/PA00XDRH.pdf

Issues with the current

implementation of FTA's, possible

solutions and next steps

5/20/2020 https://pdf.usaid.gov/pdf_docs/PA00XDRJ.pdf

Design Guidelines for investors 1/23/2021 https://pdf.usaid.gov/pdf_docs/PA00XCHD.pdf

White Paper, Tourism investment and

the pandemic 4/14/2020 https://pdf.usaid.gov/pdf_docs/PA00XCHF.pdf

Competition Law Review and

Recommendations 10/10/2019 https://pdf.usaid.gov/pdf_docs/PA00XCH2.pdf

Investor presentation 1/15/2021 https://pdf.usaid.gov/pdf_docs/PA00XCH8.pdf

Investor Handbook 1/23/2021 https://pdf.usaid.gov/pdf_docs/PA00XCH5.pdf

Common Application Form for

Investment 11/1/2020 https://pdf.usaid.gov/pdf_docs/PA00XCH7.pdf

SLTDA Overall Process Roadmaps 1/23/2021 https://pdf.usaid.gov/pdf_docs/PA00XCHC.pdf


ANNEX III: LIST OF ALL HOST COUNTRY, INTERNATIONAL

DONOR, AND FINANCIAL INSTITUTION CONTACTS

TABLE 3: LIST OF ALL HOST COUNTRY, INTERNATIONAL DONOR, AND FINANCIAL INSTITUTION

CONTACTS

TYPE ORGANIZATION POSITION: NAME

Ministries

Ministry of Development

Strategies and International

Trade (Line Ministry for SAIL

2016-2019)

Minister: Malik Samarawickrama (2016-2019)

Secretary: Chandanie Wijayawardhana (2016-2018)

Secretary: Sisira Kodikara (2019-2020)

Addtnl Secretary: W.A.D. S. Gunasinghe (2016-2020)

Director: Anuradha Tillakarathna (2016-2020)

Ministry of Labour and Trade

Union Relations (Collaborating

Ministry 2017-2020)

Minister: John Seneviratne (2016-2018)

Minister: Ravindra Samaraweera (2018-2019)

Minister: Nimal Siripala de Silva (2020-2021)

Secretary: S. A. Saranatissa (2016-2019)

Secretary: M.U.K. Mapa Pathirana (2020-2021)

Senior Asst Secretary: B. Vasanthan (2017-2021)

Commissioner General of Labour: Ananda Wimalaweera (2017-2020)

Ministry of Tourism

(Collaborating Ministry 2017-

2019, Line Ministry for SAIL

2020-2021)

Minister: John Amaratunga (2016-2019)

Minister: Prasanna Ranatunga (2019-2021)

Secretary: S Hettiarachchi (2016-2021)

Sri Lanka Tourism Development

Authority (SLTDA)

SLTDA Chair: Kavan Ratnayake (2017-2018)

SLTDA Chair: Johann Jayaratne (2018-2019)

SLTDA Chair: Kishu Gomes (2019)

SLTDA Chair: Kimarli Fernando (2020-2021)

Directors: Upali Ratnayake (2017-2020)

Directors: Bhagya Mahavithanage (2017-2021)

Ministry of Justice

(Collaborating Ministry –

Enforcing Contracts 2018-2019)

Minister: Thalatha Atukorale (2017-2019)

Secretary: Mangalika Adikari (2018-2019)

Ministry of Finance

(coordination, admin)

Minister: Ravi Karunanayake (2017-18)

Minister: Mahinda Rajapakse (2019-2021)

Deputy Secretary to the Treasury: S.R. Attygalle (2016-2021)

Advisor - Finance Ministry: Mano Tittawella (2017-2019)

External Resources Department

(ERD)

Director: D.A. P. Abeysinghe (2017-2021)

Asst Director: Ranga Nishantha (2017-2021)

Government

department/

agencies

Board of Investment (BOI)

Chairman: Upul Jayasuriya (2017)

Chairman: Dumindra Ratnayake (2017-2018)

Chairman: Mangala Yapa (2018-2019)

Chairman: Susantha Ratnayake (2020)

Director-General: Duminda Ariyasinghe (2016-2018)

Director-General: Champika Malalgoda (2019-2020)

Export Development Board

(EDB) (Trade facilitation)

Chairperson: Indira Malwatte (2017-2019)

Chairperson: Prabash Subasinghe (2020-2021)

Director-General: Jeevanee Seneviratne (2017-2020)

Department of Import and

Export Control (Trade

facilitation)

Controller-General: Damayanthi Karunaratne (2019-2021)

Department of Commerce

(Trade facilitation)

Director-General: Sonali Wijeratne (2016-2019)

Director-General: Nimal Karunatilleka (2019-2021)

Registrar-General’s Department

(Trade facilitation)

Registrar-General: D. N. Siriwardena (2016-2019)

Registrar-General: K.G. Dharmatilleka (2019-2021)

Department of Customs (Trade

facilitation) Director-General: Sunil Jayarathne (2018-2020)


TABLE 3: LIST OF ALL HOST COUNTRY, INTERNATIONAL DONOR, AND FINANCIAL INSTITUTION

CONTACTS

TYPE ORGANIZATION POSITION: NAME

Consumer Affairs Authority

(Trade facilitation, competition

law)

Chairman: Dr Lalith Senaweera (2019-2020)

Auditor-General’s Department Auditor-General: Gamini Wijesinghe (2016-2019)

Central Environmental

Authority (streamlining

investment approval process)

Chairman: Siripala Amerasinghe (2019-2021)

Director-General: Hemantha Jayasinghe (2019-2021)

Urban Development Authority

(streamlining investment

approval process)

Chairman: Harshan de Silva (2019-2021)

Director-General: S.S.P. Ratnayake (2017-2019)

Director-General: N.P.K. Ranaweera (2019-2021)

National Building Research

Organization (NBRO)

(streamlining investment

approval process)

Director-General: Asiri Karunawardena (2018-2021)

Colombo Municipal Council

(CMC) (streamlining investment

approval process)

Municipal Commissioner: Roshanie Dissanayake (2017-2021)

Coast Conservation and Coastal

Resource Management

Department (streamlining

investment approval process)

Director-General: B.K.Prabath Chandrakeerthi (2018-2020)

Sri Lanka Tourism Alliance

(Tourism industry)

Co-Chairs: Malik Fernando (2019-2021)

Co-Chairs: Shiromal Cooray (2019-2021)

Independent

think tanks/

research

institutions/

local

chambers/

federations

Verite Research Executive Director: Nishan de Mel (2016-2021)

Research Director: Gehan Gunatilleka (2016-2021)

Advocata institute Executive Director: Dhananath Fernando (2016-2021)

Ceylon Chamber of Commerce CEO/Secretary General: Dhara Wijayatilake

Economist: Shiran Fernando

American Chamber of

Commerce General Manager: Vrai Raymond

Employers’ Federation of

Ceylon CEO/Director General: Kanishka Weerasinghe (2016-2020)

International

donors/

institutions/

INGOs

World Bank

Country Manager: Faris Hadad-Zervos (2018-2020)

Country Manager: Chiyo Kanda (2020-2021)

Country Manager: Emmanuel Salinas (2016-2017)

Country Manager: Tatiana Nenova (2018-2019)

International Monetary Fund

(IMF) Resident Representative: Eteri Kvintradze

International Finance

Corporation (IFC)

Country Manager: Amena Ariff (2016-2020)

Consultant: Michael Giorgadze

International Labour

Organisation (ILO) Country Director: Simrin Singh

GIZ Country Director: Randa Kourieh-Ranarivelo

Japan International Cooperation

Agency (JICA) Chief Representative: Kiyoshi Amada (2016-2019)


ANNEX IV: SRI LANKA LABOR CODE

TABLE 4: CHAPTERS OF THE LABOR CODE

CHAPTER LAWS SUBSTANTIVE ISSUES COVERED

1. Labor Relations Industrial Disputes Act

Industrial Disputes Hearing and Determination of

Proceedings (Special Provisions) Act

Trade Unions Ordinance

Termination of Employment of Workmen (Special

Provisions) Act

Employees’ Councils Act

Disputes between labor and management,

collective agreements, Industrial courts,

Labor tribunals

Trade Union rights and liabilities

Termination provisions

2. Terms and

Conditions of

Employment

Wage Boards Ordinance

Shop and Office Employees (Regulation of

Employment and Remuneration) Act

Employment of Trainees (Private Sector) Act

Budgetary Relief Allowance of Workers (No. 1)

Budgetary Relief Allowance of Workers (No. 2)

Budgetary Relief Allowance of Workers Act

Authorization for the Minister to appoint

labor and employer industrial wage boards

to set terms and conditions of

employment, such as minimum wages and

hours of work, for workers in “scheduled

employment” – 43 boards

Terms and conditions of employment for

shop and office employees

3. Employment of

Women, Young

Persons and Children

Employment of Females in Mines Ordinance

Maternity Benefits Ordinance

Employment of Women, Young Persons and

Children Act

Provisions for the protection of women in

employment

Maternity benefits

Restrictions on the working hours of

women

4. Occupational Safety

and Health and

Workmen’s

Compensation

Factories Ordinance

Workmen’s Compensation Ordinance

Safety in Factories

Payment of Workers’ Compensation

5. Social Security Employees’ Provident Fund Act

Employees’ Provident Fund (Special Provisions) Law

Employees’ Trust Fund Act

Employees’ Trust Fund (Special Provisions) Act

Payment of Gratuity Act

Retirement and Deferred Compensation

Benefits. Creation of the Employees’

Provident Fund and Employees’ Trust

Fund

6. Foreign Employment Fee-Charging Employment Agencies

Sri Lanka Bureau of Foreign Employment Act

Employment agencies

Employment of foreigners

7.Miscellaneous Estate Labor (Indian) Ordinance (ELO)

Medical Wants Ordinance

Indian Immigrant Labor Ordinance

Minimum Wages (Indian Labor) Ordinance

Trade Union Representatives (Entry into Estates) Act

Estate Quarters (Special Provisions) Act

Allowances in Plantation Workers Act

Service Contracts Ordinance

Employment of Indian workers, and then

employment on estates and plantations

(agricultural)


ANNEX V: FINANCIAL REPORT

supporting accelerated investment in sri lanka (sail) project

Documents