By: Staff Writer

Colombo (LNW): Sri Lanka is expecting foreign direct investment inflows to rise by a fifth to $1.3 billion this year, a government official said on Wednesday, with India likely to play a lead role despite the Sri Lankan economy facing its worst crisis in decades.

Although it was pushed to the brink last year by power cuts, chronic shortages of fuel and food and soaring inflation, Sri Lanka managed to raise its FDI by 38% to $1.08 billion, data from the Board of Investment (BoI) showed.

Part of the bump came from India, which wants to keep China’s expansion in its neighbour in check. India’s Adani group signed up for two wind power plants worth $442 million last year.

In the first quarter, Sri Lanka has already received proposals worth $600 million, said BoI Director General Renuka Weerakone, with 22 new projects and six expansions.

“The acid test is really what comes in, that is what really helps the economy,” she said, adding that Sri Lanka is banking on information technology, solar and wind, bunkering and mineral processing to attract investments.

India’s MCS Group has signed a $20 million deal for mineral processing, the largest Sri Lanka has received so far in 2023, Weerakone said.

Other countries are also keen.”Japan is very interested in minerals, so is China,” she said. “The raw material we have is something we can really pitch to get new investments.”

Sri Lanka has untapped deposits of graphite, phosphate and other minerals to attract investors but policy frameworks are yet to be updated, creating a bottleneck for FDI, Weerakone added.

Over the last decade, China has invested about $3 billion in Sri Lanka, accounting for nearly a quarter of its FDI, while India made up about $1.3 billion. In the last two years, India took the lead, followed by the United Kingdom in 2022 and Netherlands in 2021.

Sri Lanka is also drawing up plans to identify new islands for investors to help resuscitate its $4 billion tourism industry.

By: Staff Writer

Colombo (LNW): The International Labour Organization (ILO) extends, its support to boost economic recovery in collaboration with the Central Bank of Sri Lanka, the Office of the Governor of the Northern Province, and the Ceylon Chamber of Commerce.

It has successfully organized a national policy symposium focused on promoting youth entrepreneurship and generating greater private sector investments in Sri Lanka.

With a regional and sectoral focus, the symposium brought to the forefront challenges, insights, and interventions towards creating a favorable ecosystem for enterprise development and investment promotion in Sri Lanka.

The symposium is a joint initiative between two ILO flagship projects: Local Empowerment through Economic Development and Reconciliation (LEED+), and South Asia Leadership in Entrepreneurship (SALE).

One of the significant processes leading up to the symposium was sectoral discussions to identify opportunities and challenges for investments in the Northern Province.

This initiative of the ILO LEED+ project provided valuable insights into the specific requirements of the region, helping shape the policy discussions and recommendations.

The ILO SALE project, as part of its efforts to foster collaboration and knowledge-sharing among key stakeholders to create an entrepreneurship-friendly ecosystem, conducted joint policy forums with the Central Bank of Sri Lanka and the Ceylon Chamber of Commerce. The symposium saw discussions on the findings of this initiative.

In his introductory remarks, Mr. S. M. Saman Bandulasena, Chief Secretary of the Northern Province highlighted that, “The way forward lies in the hands of the relevant line ministries that have a mandate to create a conducive environment for entrepreneurship and investment promotion.

By doing so, they aim to generate decent and productive employment opportunities for all, he said dding that It was underscored that both the government and other ecosystem players, including development sector entities, and private sector, have a crucial role to play in supporting emerging startups and promoting business resilience.

By providing the necessary support and guidance, they can help these startups thrive and contribute to the overall economic recovery of Sri Lanka, he claimed.

This symposium is a platform to share valuable insights gained through extensive engagement with diverse stakeholders, as well as practical and promising on the ground solutions, to influence favourable policy outcomes,” said Simrin, Singh, Director, ILO Country Office for Sri Lanka and the Maldives.

Shiran Fernanado, Chief Economist of Ceylon Chamber of Commerce said “This timely national policy symposium comes as a much-needed intervention within the context of Sri Lanka’s economic recovery.

By promoting investments and entrepreneurship, it aims to revitalize the economy and create sustainable growth opportunities.

The credibility of the symposium’s findings and recommendations is backed by the compilation of extensive research and insights obtained from diverse stakeholder consultations. The collaboration with numerous established and recognized partners further enhances the validity and reliability of the proposed solutions.

By: Staff Writer

Colombo (LNW): Having the highest annual revenue target in 2023 of Rs.217 billion in history, the Department of Excise has experienced a tax revenue drop of 12.2%, to Rs. 25.1 billion in the first two months this year from Rs. 28.6 billion in revenue during the same period last year.

This was recorded despite a 20% increase in liquor tax. Compared to the income received during the first two months of the previous year.

In accordance with the annual revenue target of Rs.217 billion for the year 2023, which is the highest in the department’s history, the Excise tax revenue has dropped by 35% during January and February.

Department’s spokesperson, Excise Commissioner Kapila Kumarasinghe said several reasons would have affected this figure, including three recent price hikes of alcoholic beverages, owing to the excessive expenses on raw materials and also increasing of the Excise tax imposed by the government.

The decrease in the excise revenue, he said, was not due to a drop in the liquor consumption. Instead, the sale of illicit liquor had increased, he said

Finance State Minister Ranjith Siyambalapitiya had recently told Parliament that the consumption of illicit liquor had increased by 300 percent in Sri Lanka quoting WHO survey reports.

He noted that despite projections the Government would fall short of its excise revenue target by 30% there will be revision to the tax on alcohol products.

Siyambalapitiya told the house that following the price increase in January with new excise tax by over 20%, excise revenue from alcohol sales had dropped 7.4%. in March, which is usually a high volume month, had seen a dip in production this year of almost 40%.

He also noted that whilst it is good to reduce alcohol consumption, it has been observed that consumers have turned to cheaper illegal alternatives, and therefore a discussion has begun on finding ways to tackle this problem, without reducing prices.

He noted that in the current situation the Government has lost revenue, but consumers continue to drink unregulated products that can pose further burdens to the economy.

The Minister said prices of all goods have increased according to inflation and the Government has no intention to provide any exceptions to the alcohol industry.

Sri Lanka will hike taxes on alcohol and tobacco taxes again in June 2023, and will slap drinkers and smokers with taxes linked to inflation from January 2024, according to intentions declared in an International Monetary Fund program.

“The first increase was implemented on January 1 for tobacco and on January 3 for alcohol; the second increase to be implemented before the end of June 2023,” the IMF program said.

Sri Lanka will then move to “automatic indexation of exercises to inflation” from January 01, 2024. Sri Lanka plans to raise tax revenues to 15 percent of GDP by 2025.