Support for Development of the Colombo-Trincomalee Economic Corridor in Sri Lanka Corridor Economic of the Colombo-Trincomalee Development Support for : Project Joint Consulting 2016/17 KSP-ADB 2016/17 KSP-ADB Joint Consulting Project : Support for Development of the Colombo-Trincomalee Economic Corridor in Sri Lanka Ministry of Strategy and Finance, Republic of KoreaⅠGovernment Complex, Sejong, 30109, Republic of Korea www.mosf.go.kr The Export-Import Bank of KoreaⅠ38 Eunhaeng-ro, Yeongdeungpo-gu, Seoul, 07242, Republic of Korea www.koreaexim.go.kr 2016/17 KSP-ADB Joint Consulting Project Project Title Support for Development of the Colombo-Trincomalee Economic Corridor in Sri Lanka Prepared by Korea University, Ajou University, Dongguk University Financed by Ministry of Strategy and Finance, Republic of Korea Supported by The Export-Import Bank of Korea (Korea Eximbank) - Seung Ho Sohn, Director General - Jae Jeong Moon, Director of KSP Team - Yu Shin Kim, Senior KSP Specialist of KSP Team - Sun Young Lim, Researcher of KSP Team Asian Development Bank (ADB) Prepared for Ministry of Land, Sri Lanka State Ministry of Industry & Western Development, Sri Lanka Ministry of Development Strategies and International Trade, Sri Lanka Project Manager Hong Shik Lee, Korea University Researchers Moon Sung Kang, Korea University Sei yong Kim, Korea University Han Sung Kim, Ajou University Back Hoon Song, Dongguk University Jong Wha Lee, Korea University Keun Hee Park, Korea University Jun Yun Kim, Korea University Kyeong Eun Lim, Korea University i Contents 2016/17 KSP-ADB Joint Consulting Project Summary Ⅰ. Project Overview ·········································································································· 1 1 . P r o j e c t B a c k g r o u n d a n d O b j e c t i v e ······························································································ 1 2 . P r o j e c t A c t i v i t i e s a n d E x p e c t e d R e s u l t s ·····················································································2 3 . P r o j e c t I m p l e m e n t a t i o n P l a n ·········································································································· 3 Ⅱ. Urbanization Strategy ································································································· 5 1. Current Status and the Future of the Urbanization of Sri Lank a ···································· 5 2 . T h e D e v e l o p m e n t o f K o r e a ' s N a t i o n a l R e g i o n a l P l a n ························································· 1 0 3. Emergence and Growth of Industries and Industrial Comples ········································ 2 1 4. Policies for Industrial Complex Planning System ·································································· 4 0 5 . F r a m e w o r k s f o r U r b a n i z a t i o n a n d R e g i o n a l P l a n n i n g ························································· 5 7 6. Future Policy Recommendation for Enhancing Sri Lanka Urbaniza t i o n ························ 6 1 Ⅲ. Improving Trade Facilitation: Implementation of Single Window System: ··· 72 1 . C u s t o m s P r o c e d u r e i n S r i L a n k a ······························································································· 7 2 2 . D e v e l o p m e n t o f K o r e a n C u s t o m s A d m i n i s t r a t i o n ································································· 8 3 3 . I m p l e m e n t a t i o n o f S i n g l e W i n d o w S y s t e m ············································································· 9 0 4 . P o l i c y R e c o m m e n d a t i o n ·············································································································· 1 0 6 Ⅳ. Strategies to Attract Foreign Investors ···························································· 113 1 . C u r r e n t S t a t e o f S r i L a n k a ········································································································ 1 1 5 2 . K o r e a ' s F D I P o l i c ·························································································································· 1 1 6 3. Determinants of FDI Location from Perspectives of Korean MNCs ····························· 1 2 5 4. Korea’s Policies to Utilize Trade Agreements to Make Korea Investor-Friendly ·····138 5 . P o l i c y R e c o m m e n d a t i o n ·············································································································· 1 4 6 Ⅴ. Strengthening the Competitiveness of Sri Lanka SMEs through Participation in GVC ······························································································ 155 1 . I n t r o d u c t i o n ····································································································································· 1 5 5 2 . S M E S t a t u s a n d G V C P a r t i c i p a t i o n i n S r i L a n k a ································································ 1 5 6 3. Competitiveness Enhancement through Korean SME's Participatio n i n G V C ··········· 1 6 1 4 . P o l i c y S u g g e s t i o n s ························································································································ 1 7 0 Ⅵ. Conclusions and Suggestions ·············································································· 172 References ························································································································ 174 ii List of Tables Table 1 Global Competitiveness Index, Infrastructure Rankings ········································· 6 Table 2 Population Statistics and Population by Major Cities ············································ 8 Table 3 Table of Summary Outlining the Transition of CNTP ········································· 2 0 T a b l e 4 I n c r e a s e i n U r b a n P o p u l a t i o n ······················································································ 2 1 T a b l e 5 T y p e s o f I n d u s t r i a l S i t e s ······························································································· 2 4 Table 6 Specialized Industrial Complexes for Each Business Cate g o r y ························· 2 7 Table 7 Operation Status of Ulsan National Industrial Complex ····································· 3 0 Table 8 Operation Status of Changwon National Industrial Comple x ···························· 3 2 Table 9 Five New Towns in Capital Region for Housing Provision ································ 3 6 Table 10 Changes in Industrial Location Policy and Related Insti t u t i o n s ························ 4 1 Table 11 Site Selection and Validation Procedure for Industrial Complex D e v e l o p m e n t ····················································································································· 4 2 Table 12 Osong BioHealth Science Technopolis Support Center­facilities a n d a r e a s ··························································································································· 4 5 Table 13 Stages of Development of Industrial Complexes ·················································· 4 7 T a b l e 1 4 L a n d u s e p l a n n i n g p r o c e d u r e s ··················································································· 4 8 T a b l e 1 5 E s t i m a t i n g d e m a n d f o r c o m m e r c i a l a r e a ································································ 4 8 T a b l e 1 6 E s t i m a t i n g d e m a n d f o r i n d u s t r i a l a r e a ···································································· 4 9 T a b l e 1 7 S t a n d a r d s f o r g r e e n s p a c e ·························································································· 5 0 T a b l e 1 8 L a n d P o o l i n g / R e a d j u s t m e n t I n d e x ············································································· 5 2 T a b l e 1 9 C o n s i d e r a t i o n s f o r S u p p l y P l a n n i n g ··········································································· 5 4 Table 20 Spatial Use Assessment Criteria by Items/Functions ·········································· 6 0 T a b l e 2 1 T h e B a s i c G u i d e l i n e ········································································································ 6 4 T a b l e 2 2 L P I C o u n t r y C o m p a r i s o n ······························································································· 73 Table 23 Documents and Agencies Needed for Imports and Exports against J a p a n i n S r i L a n k a : C a s e S t u d y ················································································· 7 5 T a b l e 2 4 K o r e a C u s t o m s S e r v i c e U N I - P A S S E x p o r t i n g L o g ·············································· 1 0 2 T a b l e 2 5 E c o n o m i c I m p a c t o f I m p l e m e n t a t i o n o f U N I - P A S S ············································ 1 0 5 T a b l e 2 6 S h a r e o f t h e T o t a l F D I I n f l o w s o v e r S e c t o r s ······················································ 1 1 8 T a b l e 2 7 S h a r e o f t h e T o t a l F D I I n f l o w s o v e r T e y p s e ······················································· 1 1 9 Table 28 FDI Tax Support: Reductions of National and Local Taxes ···························· 1 2 2 T a b l e 2 9 F r e e E c o n o m i c Z o n e s i n K o r e a ················································································