BSI - Business Strategies International

Sri Lanka

A Recovering Gem

By David James and Rajeev Merchant

It is hard to believe that the big, beautiful island known as Sri Lanka (meaning “resplendent island” in Sanskrit, pronounced “sree-LAHNG-kuh”), lying off the southeastern tip of India, is a country all in itself, and not just a tourist destination in a larger national entity.  Its beautiful beaches, dramatic landscapes, rich cultural heritage, and fascinating wildlife – including herds of elephants – do indeed attract large numbers of tourists, but its strong economy in recent years is attracting commensurate attention of international economists and businesspeople.  It is estimated that tourist arrivals, many being wealthy Europeans, topped 950,000 in 2012, bringing revenues in excess of US$1 billion.

Sri Lanka’s economy grew by 8 percent during 2010 and 2011, and its growth is expected to average at least 6 percent in the period 2012-2017.  It is no surprise that one of the major economic sectors of this tropical country is tourism, but Sri Lanka is also the largest exporter of tea in the world (Kenya is the second largest and China is the third) and is a major exporter of garments, textiles, rice, rubber, spice (cinnamon originated in Sri Lanka), and other agricultural products.  In addition, to the pleasure of visiting tourists and others, Sri Lanka is one of the world’s major producers of gemstones.  Its gem industry has a long and colorful history.  Persian and other Middle Eastern traders crossed the Indian Ocean for trade in Sri Lankan gemstones in the 4th and 5th Centuries, and this trade in gemstones grew.  In 1293, Marco Polo visited Sri Lanka and wrote that the island had the best sapphires, topazes, amethysts, and other gems in the world.  The blue sapphire from Sri Lanka, known as the Ceylon Sapphire (Ceylon is the former name of Sri Lanka) is considered the best in the world, being unique in color, clarity and luster compared to blue sapphires from other countries.

The first known inhabitants of Sri Lanka were the Sinhalese people, an ethnic group that came to the country from northern India in the 6th Century.  Other ethnic groups followed, but the Sinhalese remain the largest group, comprising about 74 percent of the population.  Others include Sri Lankan Moors (7 percent), Indian Tamil (5 percent) and Sri Lankan Tamil (4 percent).  Buddhism is the primary religion of the country with its followers comprising 69 percent of the population.  Other prominent religions are Muslim and Hindu, each for about 7 percent of the population.

The country’s early history involved a succession of ruling kingdoms, each taking power following periods of bloody conflict.  Sri Lanka’s strategic location between western Asia and Southeast Asia made it an important stop on the water route of the ancient Silk Road, the historical network of interlinking trade routes that connected Asia with the Mediterranean and European worlds commencing around 220 BC.  Sri Lanka’s trade increased during this time, with the Portuguese controlling coastal areas during the 16th Century and the Dutch during the 17th Century.  Later, the British took control of the country during their Napoleonic Wars with France (1803-1815) owing to their concerns that French control of the Netherlands at the time might deliver the country to France.  Sri Lanka then became a crown colony of Britain and was placed under British rule in 1815.  Over time, the British introduced democratic and self-governing procedures to the country, and an independence movement emerged which ultimately resulted, after World War II, in treaties that established the independent nation of Ceylon in 1948.  In 1972, the new nation changed its name from Ceylon (an English name) to Sri Lanka.

Despite long periods of reasonably effective governmental control by the colonial powers, Portugal, the Netherlands and Britain, Sri Lanka has been a country of continual ethnic, caste and political clashes, often provoked by ethnic clashes or, in the 20th Century, by Marxist movements.  For example, a Tamil organization seeking independent national identity for the Tamils led to a Sinhala-Tamil riot in 1939.  And after independence, in the 1960s, a Tamil Marxist by the name of Rohana Wijeweera led a Communist insurrection movement that went by the name Janatha Vimukthi Peramuna (JVP) and attacked military outposts in 1971, resulting in the deaths of an estimated 10,000 insurgents.

Later, a group called the Liberation Tigers of Tamil Eelam, or Tamil Tigers, emerged in 1976 with the objective of taking over the government of Sri Lanka.  It became one of the world’s most organized and brutal terrorist groups, and it partially but significantly paralyzed the country’s economy for a period of 26 years.  In 1983, the Tamil Tigers, with the ambush and killing of 13 Sri Lankan Army soldiers, initiated the Sri Lankan Civil War (1983-2009).  They reportedly invented the suicide vest, and carried out suicide bombings, civilian massacres and ethnic cleansing throughout the country and overseas.  They assassinated several high-ranking Sri Lankan and Indian politicians and two world leaders, former Indian Prime Minister Rajiv Gandhi in 1991 and Sri Lankan President Ranasinghe Premadasa in 1993.  At their peak in 2000, the Tamil Tigers controlled most of the northern and eastern provinces of the country.  Ultimately, the Sri Lankan military launched a major offensive against them that brought the country under Sri Lankan control in 2009.

After the conclusion of this lengthy conflict, the Sri Lankan government has initiated a number of ambitious economic development projects.  In addition, it has resettled more than 95 percent of those civilians who were displaced during the final phase of the conflict, and it has released the vast majority of former Tamil Tiger combatants captured by the military.  However, there has been little progress made on various contentious and politically difficult issues resulting from the civil war, such as reaching a political settlement with Tamil elected representatives and holding accountable persons allegedly involved in human rights violations at the end of the war.

Currently, on the economic front, prospects for Sri Lanka’s growth are good.  The government is pursuing a number of government-directed programs, and promoting foreign and domestic private investment projects, to spur growth in disadvantaged areas, develop small and medium enterprises, and increase agricultural productivity.  Additionally, large reconstruction and development projects are helping to drive growth, and the country’s many industries – including tea, rice, gems, garments and tourism – are doing very well.

One hopes that the memories of the leaders of Sri Lankan’s government are as good as those of the country’s elephants – and that they will not forget the need to maintain a well-motivated, economically successful, politically stable and peaceful society.  It helps that a majority of these government leaders are Buddhists, because one of Buddhism’s fundamental beliefs is that of reincarnation.  Despite having experienced such a disastrous and tumultuous recent history, Sri Lanka can start again.

© Copyright 2013 ABC-CLIO