MCC: Sri Lanka Constraints Analysis

by US Millenium Challenge Corporation, Washington, DC, 2017

Date unknown

We argue in this report that Sri Lanka faces the following three binding constraints to private sector investment and economic growth: (1) policy uncertainty (especially tax and tariff policy); (2) inadequate access to land; and (3) poor transportation and logistics…

The state reportedly owns approximately 80 percent of the land in the country and it is held by multiple ministries.12 Government coordination is poor and the process of acquiring rights to develop land is slow and unclear, resulting in an inability of the government to meet the demand for land needed for new private sector investment, including for export-oriented FDI. This constraint is most problematic in the urbanized and increasingly congested Western Province. However, problems with land use and titling are prevalent throughout the country and affect manufacturing, agriculture, construction, residential and commercial development, and tourism. Restrictions on land parcel size, the absence of land titles, and longstanding laws affecting rural land use all reduce agricultural productivity and rural well-being.  Moreover, existing laws disadvantage the property rights of women, further restricting the scope of
women’s participation in domestic investment.

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