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Sri Lanka improves investment climate promoting exports: Ravi K

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By: Staff Writer

February 18, Colombo (LNW): The government has made major strides towards transforming the economy while making growth more inclusive during the past 19 months as it cannot afford another economic crisis of magnitude in 2022.

But much remains to be done to create a better future for all Sri Lankans, former finance minister Ravi Karunanayake stated adding that a unique opportunity is now opened to implement permanent structural reforms that may be difficult under normal circumstances.

Sri Lanka is a highly indebted nation, with public debt far exceeding the size of the economy. It is essential to finalise external debt restructuring soon to restore debt sustainability and boost confidence.

This needs to be supplemented by fiscal consolidation, including enhancing revenue and investment, pruning unnecessary public expenditure and improving the governance of public finances, he added.  

President Ranil Wickremasinghe’s administration is determined to enact necessary acts and introduce statutory laws including the Economic Transformation Act, foreign investment law, and SOE Legislation etc creating conditions for investment and trade, incentivising exports, and integrating into global value chains.

Mr Karunanayake  said that the government has to promulgate public services delivery act in addition to all proposed legations on the pipe line  which guarantee time bound delivery of services for various public services rendered by officials to citizen,

It should provide and provides provisions for punishing the corrupt public servants who are deficient in providing the service stipulated under the statute while protecting honest officials for their decision making speedily for the benefit of the people and the country.  

Right to Service legislation are meant to reduce corruption among the government officials and to increase transparency and public accountability, he pointed out.

Lack of access to information and long bureaucratic processes created opportunities for errant public officials to demand bribes and intermediaries to take advantage of citizens.

Some high officials are sitting on public or private investment projects without taking a decision thereby depriving the country of much needed foreign investment, he claimed.

There is no retraction of investment incentives if they are adhered to transparent rules, he opined

However Mr Karunanayake noted that sweeping tax holidays running up to 20 to 25 years given under a Strategic Development Project (SDP) Act has been suspended until the structures and processes are in place in place to evaluate the effectiveness of offered incentives.

Explicit criteria are to be established to evaluate the investment, and in the long term replace it with a new investment law, he revealed.

Sri Lanka has corporate tax at 30 percent after aggressive macro-economic policy involving rate and tax cuts made the country bankrupt, compared to lower rates in East Asian nations which have full or greater monetary stability than provided by Sri Lanka’s central bank

Moreover Former finance minister Ravi Karunanayake emphasised that  it is essential to bring down bank lending rates now running up to new high 15-16 percent as many companies depend on credit financing     

More than corporate income tax at 30 percent, the higher cost of setting up a business venture in Sri Lanka due import duties and para tariffs is a deterrent to investors, he pointed out.

To encourage investors, the government will be liberalising trade, eliminating import restrictions, and pursuing stronger regional and bilateral trade agreements, he said.

Sri Lanka imports more than it exports, so there is a net outflow of money but the debt associated with the creation of that lost money remains he said pointing out that country’s entire economy is threatened.

But if the country exports more than it imports, there is a net gain of additional debt-free money within the national economy, he explained.

Prison Hospital faces unprecedented overcrowding, authorities alarmed

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February 18, Colombo (LNW): An alarming revelation has come to light regarding the burgeoning overcrowding crisis at the prison hospital, prompting serious apprehensions among supervisory authorities.

The current inmate population at the facility has surged to 350 individuals, significantly surpassing its intended capacity of 185, Prisons Department Spokesperson Gamini Dissanayake told Daily Mirror.

This surge in occupancy has raised significant concerns among the authorities tasked with overseeing the well-being and healthcare provisions within the prison system.

Measures are currently being implemented to address the escalating congestion, as the situation demands urgent attention and intervention.

Despite the pressing need to alleviate overcrowding, Dissanayake clarified that expanding the hospital’s capacity is not a feasible solution at present. However, efforts are being directed towards easing congestion through the timely discharge of patients, thereby creating space for incoming individuals in need of medical attention.

Reports indicate that the severity of the situation has compelled authorities to resort to accommodating two patients in a single bed, underscoring the acute shortage of available space within the facility.

Such measures, despite being temporary, highlight the dire circumstances confronting the prison healthcare system and the imperative need for swift and effective resolutions.

The overcrowding crisis at the prison hospital not only poses significant challenges in terms of patient care and hygiene but also raises broader concerns regarding the overall management and resource allocation within the penal system.

As authorities navigate this critical juncture, concerted efforts are required to address the underlying issues contributing to overcrowding and ensure the provision of adequate healthcare services to incarcerated individuals in adherence to fundamental principles of human rights and dignity.

Buddhist Chief Prelates voice concerns over social insecurity amid state asset privatisation

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February 18, Colombo (LNW): In a notable development, the Chief Prelates representing the three Buddhist Chapters have articulated profound apprehensions regarding the possible emergence of social instability in light of ongoing discussions surrounding the privatisation of state assets.

Expressing their concerns, the Buddhist leaders conveyed a formal letter outlining their apprehensions to President Ranil Wickremesinghe.

With their letter addressed to the highest office, the Chief Prelates aimed at drawing attention to what they perceive as a critical issue deserving of comprehensive consideration and deliberation.

Sri Lanka manufacturing, services inflate in Jan 2024 despite VAT hike

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By: Staff Writer

February 18, Colombo (LNW): Sri Lanka’s manufacturing and services continued to inflate in January 2024 with a pick-up in apparels while services also moved forward despite concerns over a hike in value added tax, according to a Purchasing Managers’ Index compiled by the central bank.

Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 55.6 in January 2024, indicating an expansion in manufacturing activities. This improvement was attributable to the increases observed in all sub-indices.

The expansion in New Orders and Production was largely driven by the manufacture of textiles & apparel sector. However, New Orders and Production in the manufacture of food & beverages sector decreased on a month-on-month basis due to the decline in demand with the end of December festival season.

Meanwhile, Employment and Stock of Purchases expanded during the month in line with the New Orders and Production. Further, Suppliers’ Delivery Time lengthened at a higher rate in January, mainly due to shipping disruptions in the Red Sea. Expectations for the manufacturing activities for the next three months remain positive, mainly due to the improved macroeconomic environment.

The continued expansion in Business Activities was driven by the significant improvements observed in other personal service activities, and accommodation, food and beverage sub-sectors amid tourist arrivals surpassing 200,000 for the second consecutive month.

Meanwhile, financial services also improved further in line with the reductions in market interest rates. Nevertheless, amendments to VAT and the end of the festive season adversely affected the wholesale and retail trade sub-sector during the month.

New Businesses increased in January, particularly with the increases observed in financial services, other personal service activities and professional services sub-sectors.Employment fell despite new recruitments made by several companies.

Meanwhile, Backlogs of Work continued to decline during January.Expectations for Business Activities for the next three months continued to rise in January. However, due to VAT amendments,there are concerns regarding a drop of sales in line with the decline in purchasing power of consumers and increase in input costs.

Sri Lanka Electricity tariff revision navigates in troubled waters

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By: Staff Writer

February 18, Colombo (LNW): Sri Lanka will be introducing another electricity tariff revision following the Public Utilities Commission of Sri Lanka (PUCSL) announcement of the date considering stakeholder consultations held on 15 in a chaotic situation.

The Electricity Consumers’ Association (ECA) has demanded the PUCSL not to consider the alleged arbitrary expenses incurred by the Ceylon Electricity Board (CEB) in approving the proposed electricity tariff revision.

In a letter addressed to the Commission, the ECA has claimed that the CEB has paid high prices for emergency power purchases in violation of the approved prices.

“They have paid a high price of Rs. 120 per electricity unit after obtaining the relevant approval, indicating that they will pay only Rs. 56 per unit. More than Rs. 3 billion has been misused through this. It is not possible to consider such expenses as expenses of the CEB,” the letter read.

The letter further revealed that the CEB has allocated more than Rs. 5 billion for unlicensed power plants this year (2024), which the ECA stated is also not an expense that can be considered in determining electricity tariffs.

“In addition, more than Rs. 14 billion has been allocated for the construction of power plants and Rs. 53 billion for interest payments for this year. These expenses have been included with the aim of misleading the relevant institutions.”

Further noting that a Parliamentarian representing the Government has said that an additional tax of Rs. 9 billion has been imposed on fuel every month, the ECA stated that the PUCSL should take into account the matter when approving the electricity tariff revision.

Meanwhile Electricity demand fell by 22 percent to 4,516 Gwh during the first four months of the year 2023 from 4,935 Gwh in the corresponding period of the year 2022.

Nonetheless, the revenue generated from electricity sales for the respective period was more than doubled primarily due to the second upward price revision that took place with effect from February 15, 2023, with an average increase of 66 percent reflecting cost recovery adjustments.

Accordingly, the revenue generated from electricity sales was recorded as Rs.180,117 million for the first four months period of the year 2023.

In the future, CEB will implement a regular, bi-annual end-user tariff modification based on a forward-looking cost recovery basis in order to make CEB financially viable and minimize the budgetary burden on the government.

However, as a result of higher fuel and coal prices in the rupee terms, the direct generation cost was increased by 55 percent to Rs. 177,468 million in the first four months of 2023 compared to Rs. 114,460 million in the same period in 2022.

Further, due to the increase in interest rates on the bank borrowings for the working capital requirements, the finance cost has increased to Rs. 23,264 million in the first four months of 2023 compared to Rs. 5,876 million in the same period of 2022. 

Ceylon Teachers’ Union to launch trade union action demanding salary increment fulfillment

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February 18, Colombo (LNW): The Ceylon Teachers’ Union (CTU) is gearing up to initiate a trade union action, commencing from Kandy on Tuesday (20).

The move comes in in an attempt to press the government to honour its commitment of providing the outstanding salary increment.

While the government had disbursed one-third of the agreed-upon instalment, they have failed to provide a clear timeline for the release of the remaining amount, Union Secretary General Joseph Stalin told media.

“Despite enduring 120 days of Aragalaya, we have only received a fraction of the promised increment. The escalating cost of living has exacerbated the financial strain on educators, making it increasingly challenging to sustain livelihoods. With no tangible progress in sight, we are compelled to resume our protest,” he told the reporters.

The forthcoming demonstration, set to kick off from Kandy, is anticipated to witness active participation from teachers, principals, and teacher trainers alike, as they advocate for their rightful entitlements.

President leads tour to bolster SL’s Tourism Sector

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February 18, Colombo (LNW): In a concerted effort to bolster Sri Lanka’s tourism industry, President Ranil Wickremesinghe conducted an observational tour of the Tangalle and Galle areas on the 17th of this month.

During the tour, President Wickremesinghe meticulously inspected several tourist hotels, actively engaging with proprietors to gain firsthand insights into their challenges.

Swift and decisive actions were taken as the President promptly addressed concerns raised by the business community. He liaised with relevant officials over the phone, orchestrating solutions and soliciting input on strategies for industry development.

The tourism sector in Sri Lanka encountered significant setbacks due to the COVID-19 pandemic and economic hurdles. However, with the implementation of new government initiatives, there has been a remarkable resurgence in tourist arrivals.

Notably, in 2023 alone, Sri Lanka welcomed 1,489,000 tourists, marking a twofold increase from the previous year.

Capitalising on this momentum, the government aims to surpass the peak of 2.5 million tourists in 2017 by 2024, with comprehensive plans already underway.

In a strategic move to attract high-end tourists, characterised by a daily expenditure of $500, the government has initiated ambitious infrastructure projects and innovative tourism promotion programmes.

President Wickremesinghe actively exchanged ideas with the business community regarding these initiatives, receiving positive feedback on the transformative impact of government programs on their operations.

The President’s itinerary encompassed visits to renowned tourist hotspots along the south coast, including Seenimodara, Dikwella, Nilwella, Hiriketiya, Weligama, and Habaraduwa.

Additionally, he evaluated the activities of the Weligama Surf School firsthand, underscoring his commitment to understanding the intricacies of the tourism landscape.

At the Unawatuna Tourism Zone, President Wickremesinghe engaged in insightful discussions with foreign tourists, seeking their perspectives on measures to further promote the tourism industry.

Furthermore, he interacted with local tourists at Tangalle and Galle beaches during the weekend holidays, attentively addressing their concerns and soliciting feedback.

Accompanying the President on this pivotal visit was Mr. Jeffry Dobbs, an esteemed individual dedicated to enhancing tourist experiences for both local and international visitors.

President Ranil Wickremesinghe’s proactive tour exemplifies the government’s steadfast commitment to revitalising Sri Lanka’s tourism sector.

Through collaboration with stakeholders and a focus on sustainable growth, the administration endeavours to ensure the enduring prosperity of the industry.

Today’s (Feb 18) weather: Afternoon showers in Western & Sabaragamuwa, fair elsewhere

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By: Isuru Parakrama

February 18. Colombo (LNW): Showers or thundershowers may occur at a few places in Western and Sabaragamuwa provinces after 4.00 p.m., and mainly fair weather will prevail elsewhere, the Department of Meteorology said in its daily weather forecast today (18).

Fairly strong winds about (30-40) kmph can be expected at times in eastern slopes of the central hills and in Northern, North-central, North-western, Uva and Easternprovinces and in Hambantota and Kandy districts, the statement added.

The public is kindly requested to take adequate precautions to minimise damages caused by temporary localised strong winds and lightning during thundershowers.

Marine Weather:

Condition of Rain:
Mainly fair weather will prevail over the sea areas around the island.
Winds:
Winds will be north-easterly and wind speed will be (25-35) kmph. Wind speed may increase up to (50-55) kmph at times in the sea areas off the coasts extending from Galle to Pottuvil via Hambantota and from Colombo to Kankasanthurai via Puttalam.
State of Sea:
The sea areas off the coasts extending from Galle to Pottuvil via Hambantota and from Colombo to Kankasanthurai via Puttalam can be rough at times.

Airport and Aviation Services Ltd facilitates Sri Lanka Airport services

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By: Staff Writer

February 18, Colombo (LNW): Airport and Aviation Services (Sri Lanka) Ltd has led the the facilitation of an improved capacity for passenger air cargo operations at Bandaranaike International Airport .Jaffna International Airport (JIA) and Mattala Rajapaksa International Airport (MRIA), officials of the AASL said.

The sixth air cargo terminal is to be added to BIA as a new import air cargo building. By strategically switching the current import terminal facility to export operations, customers will benefit from an increase in the overall capacity of up to 400,000 MT from 250,000 MT.

AASL ground handling service at Mattala Rajapaksa International Airport (MRIA) was launched by providing its ground handling services to domestic airlines with incoming passengers.

With the intention of providing ground handling services for international flight operations, AASL launched its own Ground Handling Services Training Wing at MRIA, marking another significant historical momentum a high official of the AASL claimed.  

The profitability of the AASL increased to Rs. 11,624 million in the first four months of 2023 compared to the loss of Rs. 6,407 million recorded in the same period of 2022.

Sri Lanka’s airports managed to accommodate a total of 846,173 passengers in 2024, with 207,182 being tourists, the Airport and Aviation Services (Sri Lanka) (Private) Limited (AASL) said.

The Bandaranaike International Airport (BIA), Jaffna International Airport (JIA) and Mattala Rajapaksa International Airport (MRIA) have facilted considerable number of passengers last year.  

BIA facilitated 846,173 international passenger movements in January 2024, with an average of 27,295 passengers a day.

MRIA had welcomed 11,801 international tourist arrivals with 102 flight operations, for a total of 23,739 passenger movements recorded at MRIA in 2024.

The JIA had facilitated 3,413 international passenger movements and 271 domestic passenger movements in January 2024.

Considering the latest statistics, the BIA is set to achieve the average daily passenger number handled, approximately 29,800, in the most successful year, handling 10.8 million passengers in 2018.

Moreover the BIA handled 9.9 million passengers in 2019, with an average daily passenger movement of approximately 27,280 passengers.

In response to the growing number of passengers, AASL is in the process of expanding and upgrading the infrastructural capacity at the BIA as a short and medium term solution.

KPMG Forensic Audit Exposes Major Irregularities in Petroleum Product Sales

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February 17, Colombo (LNW): In a significant revelation, Power and Energy Minister Kanchana Wijesekara announced that a forensic audit conducted by KPMG has unveiled several major irregularities in the sales and distribution of petroleum products from Ceylon Petroleum Storage Terminals Ltd (CPSTL).

The forensic audit, initiated following a complaint filed by the minister with the CID in August 2022 regarding irregularities at Ceylon Petroleum Corporation (CPC) and CPSTL, has brought to light numerous concerning findings. The CID, after preliminary investigations, recommended a comprehensive forensic audit to delve deeper into the matter.

The KPMG investigation officials conducting the forensic audit discovered over 1.3 million entries changed or deleted from the main database since 2010. Notably, a significant portion of these alterations occurred in 2022 during the peak of the fuel crisis. However, following the minister’s complaint to the CID in August 2022, the number of changes significantly decreased in 2023.

The irregularities identified have resulted in massive losses amounting to Rs. 28 billion in stock handling procedures in 2022. Minister Wijesekara stated that after filing the complaint, the losses reduced to Rs. 4 billion in 2023.

Furthermore, the audit revealed a lack of adequate data within CPSTL for smooth operations and the identification of irregularities. Outdated circulars and procedures were also identified as being in use. The comprehensive forensic audit report is expected to be submitted to the ministry by KPMG next week, after which it will be handed over to the CID for further investigations and appropriate legal actions. The report will also be shared with the Cabinet of Ministers, Parliament, Auditor General, and the Attorney General’s Department to determine the necessary steps moving forward.