Sri Lanka performs poorly on economic freedom: Focus on open trade crucial: Advocata


Sri Lanka currently ranks 104 out of 162 countries for Economic Freedom (Economic Freedom of the World Index, 2019). This is a 7 step drop from last year’s ranking, 97.

The President, in his Independence day address to the nation promised “I not only respect your freedom, but I will work towards improving it and guarantee the political and economic freedom in a truly democratic country”. Advocata commends this  line of thinking and believes his vision can be achieved through the recommendations below.

Economic Freedom is the degree to which the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property. 

Comparatively, Hong Kong and Singapore, occupy the top two positions in the Index. The Index also concludes that nations that are economically free out-perform non-free nations in indicators of well-being. For example, nations in the top quartile of economic freedom (like Hong Kong, Singapore and New Zealand) had an average per-capita GDP of $36,770 in 2017, compared to $6,140 for bottom quartile nations (like Sudan, Libya and Venezuela).

Sri Lanka’s rank in the indicator “Freedom to trade internationally” is alarmingly poor, ranking 113 out of 162 countries. When governments impose restrictions that reduce the ability of their residents to engage in voluntary exchange with people in other countries, economic freedom is diminished. Not only does Sri Lanka enforce exorbitant taxes on imports, trade facilitation in the country is poor.


  • Replace Sri Lanka’s complex tariff system with a low and uniform tariff rate.
  • Implementation and improvement of the National Single Window for trade, which will allow all parties involved in trade and transport to lodge standardized information and documents at a single-entry point to fulfil all import, export and transit-related regulatory requirements. 
  • Reforming the Customs Ordinance. The National Export Strategy mentions that a new Customs Act, which is in line with international standards for trade facilitation, has been drafted but this hasn’t progressed beyond this stage.

 “Imagine a world where there is economic freedom, anyone can enter the market place, anyone can start a business, the only way a business can get customers is by producing goods and services that are better than the other producers. This gives consumers a whole range of choice.” –  Fred MacMahon, Fraser Institute.

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