By: Staff Writer

February 07, Colombo (LNW): Sri Lanka’s credit card industry is becoming increasingly dynamic, as the number of new cards issued declines yet the purchase volume and transaction value have steeply increased..

Even though Sri Lanka’s credit card penetration is considered to be fairly sufficient, it is comparatively low to its Southeast Asian counterparts

The credit card activity, which remained lull for a prolonged period, appears to have broken its trend and set off to potentially a robust run of spending in the period ahead.

The cardholders were seen swiping more frequently for their festive spending and leisure and travelling needs in December last year.

In the current trend toward a cashless society, credit cards are the predominant form of “plastic” currency used to take over cash. Credit card usage in Sri Lanka has steadily increased over the past few years.

However, users’ inability to manage spending may lead to excessive outstanding balances, prolonged repayment periods, and increased interest payments.

The latest data available showed that in December 2023, the cardholders have ramped up their spending considerably, as the outstanding credit card balance of the licensed commercial banks has jumped by a robust Rs.6,176 million, the largest monthly increase from a very long time.

This was in comparison to the Rs.1,205 million increase in November and Rs.309 million contraction in the month before.

The trend points to a sharp acceleration in the spending by the card users for their spending, as they appear to have felt a bit more ease to stretch their budgets, with the cooling inflation and softening interest rates.

The consumer sentiments in December also saw picking up, although that could be tempered by the January tax hike and the sharp increase in the prices of consumer goods.

However, the Central Bank is confident that the current price pressures wouldn’t last long, as inflation would settle at its medium-term target of around 5 percent, after a few months of running above the midpoint.

Despite the December jump in card balances, the full-year gain came in only a bit higher at Rs.8,275 million, reflecting that almost all the increases in 2023 came during the last two months.

December is however a month with some heightened activity, due to the year-end festive demand, where the people usually loosen their purse strings than in any other period of the year, except during March and April, for the traditional new year celebrations.

While the ceiling interest rate in cards’ outstanding balance was cut to 28 percent in September, from a high of 35 percent, it is expected that the Central Bank would further slash the maximum rate chargeable on cards in the near future, as the lending rates in the economy are easing faster.

By: Staff Writer

February 07, Colombo (LNW): Still, a buoyant Sri Lankan tourism authority is targeting 2.3 million tourist arrivals and $4.6bn in revenue this year.

To achieve this, the country has launched its first global tourism marketing campaign in 16 years, under the tagline “You Will Come Back For More, Sri Lanka Tourism Development Authority Chairman Priyantha Fernnado said.

“We have identified nine tourist markets in which our digital marketing campaigns will be strengthened this year. We will also be getting vloggers and influencers to visit our country and produce promotional content,” Fernando added.

In late October, the government announced it will issue free tourist visas to visitors from seven countries, including China, India and Russia. This initiative, launched as a pilot project, will run until March 31, 2024.

Sri Lanka’s tourism industry marked a resounding start to the New Year by receiving more than 200,000 international visitors throughout the month of January.

In January, Sri Lanka received a total of 208,253 tourists, recording a staggering 103 percent year-on-year (YoY) growth. In January 2023, the island nation welcomed 102,545 visitors.

However, despite the industry having maintained a strong momentum of crossing the 200,000 milestone for two consecutive months, the tourist arrival rate is below the expected levels of the Sri Lanka Tourism Development Authority (SLTDA).

As per the projections of the SLTDA, in the lower case scenario, the tourist arrival expectation for January was 223,179, whereas in the upper scenario, the expectation was 241,962.

Based on the performance indicators set by the relevant authority, the island nation has missed the January target, the lower case scenario, by about 6.6 percent.

The January 2024 tourist arrival number is also lower than what was recorded in December 2023; it was 210,532.

Analysis shows that the weekly arrival average stood at about 47,000, whereas the daily arrival average was about 6,700.

India continues to remain as the largest tourist traffic generator for Sri Lanka tourism. The neighbouring giant contributed to 16 percent of the total arrivals, bringing in 34,399 visitors.

Ranking second is the Russian Federation, which accounted for 15 percent of the total arrivals, bringing in 31,159 tourists.

In the third position is the United Kingdom, which accounted for 8 percent of the arrivals, bringing in 16,665 international visitors.

While Germany and China rank as the fourth and fifth largest tourist traffic generators, the other key markets include France, Poland, Australia and the United States.

By: Staff Writer

February 07, Colombo (LNW): Continental has announced a significant expansion of its manufacturing capabilities in Sri Lanka. With a €13 million investment aimed at enhancing the pre-production capacities of its Kalutara plant.

It aims to make its material handling tyres production self-sufficient, signaling a robust step towards optimizing its global manufacturing footprint.

Continental is expanding the global manufacturing footprint of its specialty tires business area in Sri Lanka.

By further enhancing local pre-production capacities, its Kalatura plant in the future may produce material handling self-sufficiently. This ensures an optimised manufacturing process and limits cross-country dependencies in the logistic supply chain.

Continental will be investing around 13 million euros over the next three years, creating around 200 additional jobs. Customers will benefit from better product availability due to the optimised supply chain.

The investment in Sri Lanka is part of Continental’s ongoing efforts to advance innovative technologies and sustainable products and services throughout the tyre value chain.

This includes the procurement of sustainable materials and the recycling of end-of-life tyres, underscoring the company’s commitment to sustainability and innovation in its operations.

Business Field Material Handling Head Klaus Framenau said, “Our Kalutara plant is an integral part of our global production network. The most recent investment decision is a testament to that. At Kalutara we manufacture tailor-made specialty tyre products for our customers worldwide.”

“Continental’s material handling business field is looking to further expand its share of the growth markets worldwide. We continue to systematically grow our specialty tires business, as laid out in our Vision 2030 strategy program,” he added.

Since 2009, the Kalutara plant has produced industrial solid tires for forklifts and other material handling vehicles. The plant manufactures press-on-band tires and super elastic tires with a strong focus on serving American, Asian and selected European markets.

With its specialty tire brands Continental, General Tire and Barum that cover a wide range of applications, Continental serves the many different requirements of its customers worldwide.

Continental’s specialty tires business area develops, produces and markets a great variety of different tire applications. From agricultural, earth-moving and port vehicle tires to material handling, bicycle, motorcycle and racing tires.

It also offers tailor made digital tire solutions that enhance its customer’s efficiency, helping to sustainably reduce their operational costs.

Continental is continuously working to advance innovative technologies and sustainable products and services along the entire tire value chain, from the procurement of sustainable materials to the recycling of end-of-life tire.

By: Staff Writer

February 07, Colombo (LNW): The ongoing practice of not harvesting cashew crop in Sri Lanka has severely affected the lives of thousands of farmers and day workers.

While the farmers are unable to sell their produce even at reduced prices, let alone getting remunerative prices, the workers are struggling to make their ends meet as the processing units remain shut and business operations came to a halt.

Various reasons such as plummeting of rates, competition from imported cashew and an unexpected decline and uncollected yield have prompted the owners of cashew processing units and traders in the market to shut down their operations. .

The Cabinet of Ministers has granted approval to import 15,000 tonnes of cashew nuts in shell since the country’s annual requirement of cashew nuts in shell has not been met due to the fact that the crops have not been harvested as expected in the last season.

Joining the Cabinet press conference held in Colombo Cabinet Spokesperson Minister Bandula Gunawardena said that the country’s annual requirement of cashew nuts in shell is around 25,000 Metric Tonnes.

However, currently only 12,500 tonnes of cashew nuts can be procured locally and the cashew industry in the country is facing a very unfortunate situation as the crop has not been harvested as expected in the last season, according to the Minister.

Therefore, the Cabinet of Ministers has approved the proposal presented by the Minister of Agriculture and Plantation to import a maximum of 15,000 tonnes of cashew nuts in shell for this year.

Threafter it has to import a quantity of cashew nuts determined by a committee consisting of senior officials of the relevant ministries during the period from December to April when the local cashew harvest is not available in the next 4 years.

Cashew is imported in large quantities from India and is re-exported with value addition to address the inadequacy.

It is expedient; therefore, existing plantations have to be managed efficiently for increased productivity, and fresh plantations have to be established to increase production substantially.

Thus, new technology and management practices must be adopted to enhance the productivity of plantations. Cashew Corporation introduces new technology and management practices extensively.

In Sri Lanka, cashew is observed to thrive and flourish in significant ground stretches in the Dry and Intermediate Zones. Cashew cultivation is prominent in Puttalam, Kurunegala, Anuradhapura, Hambantota, and Batticaloa.

As far as Sri Lanka is concerned, removing the obstacles in increasing the productivity, enhancing the knowledge and skill of the farmers, and eliminating the hindrances in adopting technology in the industry, the quantity of cashew produced could be increased substantially.

By: Staff Writer

February 06, Colombo (LNW): Central Bank has deprived of over Rs. 700 billion in revenue due to interest rates reduction in domestic debt optimization process (DDO)

United Republican Front (URF) leader MP Patali Champika Ranawaka said the Central Bank had been denied over Rs. 700 billion due to Treasury bill interest rates reduction and it would be serious in case a financial crisis emerged.

Making remarks at the event to mark Independence Day celebrations by his party, he said the Central Bank reduced interest rates in the process of Domestic Debt Optimization last year.

He said the interest rates for Treasury Bills held by the government were reduced from 25-26 percent to 5-6 percent and the Central Bank lost as much as Rs. 700 billion as a result.

The Central Bank claims DDR is voluntary, where interest rates on existing Treasury Bonds are reduced to 12% until 2025 and further reduced to 9% from 2025 onwards,. eminent economic expert Ahilan Kadirgamar disclosed.

However, retirement funds not participating in a DDR will be subjected to an increased tax rate from 14% to 30% leading to an effective reduction of interest earnings on Treasury Bonds to 7.7% over the sixteen-year period. This strategy is in effect a threat to ensure compliance with DDR.

Sri Lanka’s domestic debt is held by various entities, including the central bank, commercial banks and pension funds. Given that the country’s banking system is already severely weakened, pension funds will almost certainly bear the brunt of the expected adjustment,

This will have a significant impact on the retirement savings of workers who have already been hit by massive price increases.

By reducing the interest rates on sovereign bonds held by Sri Lanka’s largest pension funds from more than 20 per cent to 12 per cent, and then to 9 per cent from 2025 until maturity, the government aims to reduce its interest burden by 0.5 percentage points of GDP annually, he added.

The EPF was established for private and semi-government sector employees and is the largest retirement fund in Sri Lanka, with 19.2 million accounts.

Sri Lanka’s retirement funds hold a total asset value of Rs 4,354 billion. Furthermore, 90% of retirement funds are invested in Treasury Bonds.

The Central Bank claimed that there would be no haircut on retirement funds. However, it plans to reduce the interest earnings of Treasury Bonds held by retirement funds, including the EPF. It intends to reduce the returns of retirement funds each year by 0.5% of GDP in order to reduce the GFN by an equal amount.