Papua New Guinea the total) that has also been affected by violence related to the LTTE. While conflict between the Buddhist/Sinhalese majority and the Muslim minority has so far been limited, there is no guarantee that this state of affairs will be maintained. ...While significant progress has been made in recent years, clearly much more has to be done. Indeed, Sri Lanka was ranked -- th in the ---- World Bank s Doing Business league table, while its position in the Transparency International s annual Corruption Perceptions Index fell -- places, from -- th in ---- to -- st among --- countries in the ---- report, as it has continued to suffer from serious corruption problem in the public sector. In addition, a lack of transparency in political finance and poor parliamentary oversight were quoted as key governance problems in Sri Lanka. ...We believe an increased reliance on China for aid and investment could stem increased political pluralism and freedom of speech in Sri Lanka. Moreover, neglecting relations with the US and EU countries could make Sri Lanka overly dependent on the continued expansion of Chinese economic and political power.
...A lack of progress on economic reform constitutes a threat to long-term growth beyond the capital investment-fuelled expansion currently experienced. ...Suicide bombings and other attacks continue to deter foreign investment, and economic activity remains sluggish in Tamil- dominated areas owing to the heavy presence of security forces. Poor relations with Western capitals sees Sri Lanka lose market share in key export markets and become increasingly economi- cally dependent on China, which sees Sri Lanka primarily as a strategic ally and potentially as a source of energy imports (if oil exploration in the Mannar Basin proves successful). We emphasise that the above scenarios are not the only paths available, and that political change could incorporate elements of all three outcomes. ...As a consequence, the focus of Sri Lanka politics will probably shift to how best to increase GDP per capita, which stood at an estimated USD-,--- in ----. -- Business Monitor International Ltd www political outlook
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