Colombo (LNW): Today’s (14) exchange rates of a number of commercial banks in Sri Lanka reveal further depreciation of the Sri Lanka Rupee against the US Dollar.
Accordingly, Sampath Bank today records Rs. 320 as the buy price of the US Dollar and Rs. 335 as the sell price. These were orderly Rs. 310 and Rs. 325 yesterday (13).
People’s Bank records buy price Rs. 320.41 and sell price Rs. 339.17 today. These were orderly Rs. 305.05 and Rs. 331.47 yesterday.
Several other commercial banks reveal the depreciation of the Sri Lanka Rupee as follows;
Colombo (LNW): During a discussion with the representatives of the Sinopec Group held at the Presidential Secretariat yesterday morning (13), President Ranil Wickremesinghe said that the government has taken a principled decision to expand the distribution of fuel which is expected to commence shortly.
The representatives from the Sinopec Group confirmed their readiness to invest in the import, storage, distribution, and marketing of fuel to cater to Sri Lanka’s energy requirements.
The representatives informed the Sri Lankan Government that their organisation has adhered to the existing system and has applied accordingly. They further conveyed their readiness to fully finance the construction of a refinery in Hambantota, which has been identified as a central energy hub by the government.
Moreover, the representatives stated that their company is prepared to respond to future solicitations that align with the aspirations of the country.
They also presented their proposal to the President who spoke about the import, storage and distribution of petroleum products.
Expressing his views, President Wickremesinghe further stated that Sri Lanka expects rapid development following the program with the International Monetary Fund.
The President also expressed his desire to promote and attract foreign businesses to operate within the country in the future.
Minister of Power and Energy Kanchana Wijesekera, Senior Advisor to the President on National Security and Chief of Presidential Staff Sagala Ratnayake, Secretary to the President Saman Ekanayake, Secretary of the Treasury Mahinda Siriwardena, Secretary of the Ministry of Power and Energy Mapa Pathirana and government officials and representatives of the Sinopec Group participated in the discussion.
Forbes Marshall Lanka Pvt Ltd, a leading provider of process efficiency and energy conservation solutions for the process industry, recently celebrated their 30th anniversary with an event reflecting the company’s journey over the past three decades, and the growing partnership with some of Sri Lanka’s renowned institutions and organizations. Held on 17th February at the Waters Edge, Battaramulla, the event saw participation of over 500 eminent personalities from various industry segments across Sri Lanka and Maldives. A seminar titled ‘Partnering for Process and Energy Efficiency’ took participants through three technical sessions discussing innovative solutions for process and energy efficiency through process uptime, and monitoring and evaluation of key performance indicators, as well as the novel concept of a Steam System Scorecard.
Forbes Marshall Lanka is a Forbes Marshall Group company. Backed by Forbes Marshall’s experience of over 75 years, Forbes Marshall Lanka today is the market leader for steam boilers, steam accessories, control instrumentation as well as effluent and emission monitoring systems in the country. In 2018, Forbes Marshall Lanka won the Gold Flame Award in the Energy Efficiency Improvement category of the Best Energy Services Company in Sri Lanka. Loshan Palayangoda, the Country Manager for Sri Lanka and Maldives, in his welcome speech thanked everyone for making this journey of 30 years in Sri Lanka a success, highlighting that Forbes Marshall has been energising the businesses and communities worldwide for the past 75 years. He also stressed how Forbes Marshall is playing a part in shaping the future workforce through three steam laboratories established within the engineering faculties of University of Peradeniya, University of Moratuwa and University of Ruhuna, to train and impart knowledge sharing among undergraduates and engineers.
The General Manager of the Steam System Division of Forbes Marshall, Sachin Mahajan, explained the value of uptime, mainline trapping, process trapping and condensate recovery. He highlighted the importance of focussing on the percentage of condensate recovery, also known as condensate recovery factor (CRF), which ultimately gives an understanding of the energy recovery percentage in a steam system. He went on to show how Forbes Marshall engineers align with the target of 1-5 percent fuel bill saving of each customer by improving such aspects through detailed surveys conducted at each premises.
Atul Singh, a Senior Manager at Krohne Marshall, a JV between Forbes Marshall and KROHNE Messtechnik GmbH, Germany stressed on the value of smart measurement. He emphasized that Industry is significantly investing in monitoring and quantifying the consumption and savings achieved, and how the KROHNE products range enables them to monitor each and every area of a facility with higher accuracy.
Concluding the sessions was P.C. Prakash, a Senior Manager of the Energy Services Division of Forbes Marshall. He presented the novel concept of the Steam System Scorecard, illustrating that Forbes Marshall’s experience of over 75 years in the process industry has helped develop this concept, and explained how evaluation can assist industries to address operation and maintenance concerns to improve safety and efficiency, and reduce impact on environment. He also said that the industry average currently stands at 70pct, but plants can achieve a 100pct score with proper implementation. He invited the audience to join Forbes Marshall in this journey towards excellence.
President Ranil Wickremesinghe congratulates Chinese President Xi Jinping on his confirmation for a 3rd term: praises China’s progress under his leadership: expresses appreciation for China’s support in Sri Lanka’s economic challenges, especially in the IMF process.
President Ranil Wickremesinghe says the Govt has taken a decision in principle to expand the distribution of fuel: also says Hambantota has been identified as a primary energy hub: further says Chinese giant Sinopec has pledged to invest in a refinery in Hambantota.
SJB MP S.M. Marikkar says Treasury Secretary Mahinda Siriwardana must prepare himself for a jail term for his actions under a future SJB Govt: asks Govt officials not to get deceived by President Ranil Wickremesinghe: insists public officials must have the interests of the people at heart.
State Minister of Tourism Diana Gamage comes up with a proposal to allow selling of liquor to foreigners on Poya days.
Entire Rubber stock remains unsold at last week’s Rubber auction: 26% of Tea stocks also unsold at the Tea auction: prices drastically crash and plantation companies opt to withdraw their offers.
Govt declares the Postal Service as an Essential Service through a special gazette notification.
Former JVP MP and NPP’s Economic Guru Sunil Handunnetti says the appreciation of the LKR against the USD is done artificially: also says the situation has been created with a political agenda: asserts it is done to manage the people’s uproar in the future and to hoodwink the people: CB Governor Nandalal Weerasinghe has said the Rupee’s rise is due to the CB following the correct policies
Several Opposition Parties challenge the new Central Bank law before the Supreme Court: MP Wimal Weerawansa and Dr Gunapala Amerasekera among the petitioners: leading entrepreneur and active stalwart of the ruling SLPP Jehan Hameed also challenges the legality of the Bill.
Govt raises only Rs.110.44 bn through its Treasury Bond sale: amount falls far short of its Rs.180 bn target: almost all bids for the 2-year T-Bonds rejected by the Central Bank with only a measly Rs.0.4 bn being accepted out of the target of Rs.70 bn.
New Zealand win the 1st Cricket Test by 2 wickets: score the winning run in the last ball of the final day: Sri Lanka 355 & 302: New Zealand 373 & 285/8: consequently, SL will not qualify for the World Test Championships Final.
Board of Investment (BOI) new Chairman Dinesh Weerakkody says Sri Lanka’s value proposition is key to attract investors that can foster job creation and expansion of the economy. “The National Single Window System is a must and finding the right mix of techniques and organisation to do the promotion is key,” emphasises Weerakkody in this interview. Here are excerpts.
BOI Chairman Dinesh Weerakkody
Q: What are the measures taken by the BOI to increase FDIs in the country in light of the current economic crisis? What are the bottlenecks stifling foreign investments and how are you addressing them?
If you look at most surveys, the top three factors influencing investment decisions are political stability, macroeconomic stability, and a country’s regulatory and business environment. So as a country we need to focus on: Effective economic structures, shorter lead times for approvals, consistent trade policies, ease of doing business indicators and online markets. The BOI value proposition needs to get transformed in order to compete with other FDI destinations. Our digitalisation efforts must offer multiple opportunities for industries to pivot and embrace e-commerce, allowing companies to reach out to new markets but at a lower cost. Essentially, creating new business models to thrive.
We are looking at targeted Initiatives to get from $ 1 billion in 2022 to $ 2 billion in 2023. Specifically, we are looking at: Attracting 100 technology services companies with a new product, a targeted program to get 50 existing BOI companies to reinvest, setting up industry advisory councils for the four thrust sectors for leads, policy tweaking and promotion, digitalisation of key investor services, aggressive promotion of the destination, key account management and modernisation of existing zones to meet with international green standards.
Also there is a large number of new sectors which are emerging, associated with digitalisation and with the new economy. Also the traditional sectors have new elements coming out as sub-sectors. Whilst the larger sectors like petroleum, power, infrastructure, healthcare, manufacturing which bring you the big FDIs. However the sectors of the future will be the new sectors which are now emerging.
Q: President Wickremesinghe recently stated that he is looking at setting up a new institution replacing the BOI and the EDB. What is your opinion? Would that mean new laws and disbanding institutions?
: Certainly we need serious reform. If not we will continue to do more of the same and get the same results. For a start we need an initiative to bring all key agencies involved in country investment promotion to work together to showcase SL talent, products, quality of life, legal framework and location advantages and act as a single window for all investments. And for better use of our limited resources. We are focusing on an Invest Sri Lanka initiative to brand Sri Lanka as an investment destination, improve investor care, access new markets for our products and services, communicate better with the world and grow our market via new trade arrangements.
Q: How is the BOI dealing with market size disadvantages?
Even though Sri Lanka’s internal market size is small, with a population of around 22 million, Sri Lanka has signed three free trade agreements with India, Pakistan and Singapore: Sri Lanka-India FTA, Sri Lanka-Pakistan FTA, and Singapore-Sri Lanka FTA, giving 1.5 billion consumer market access on a duty-free basis. Sri Lanka is also a member of South Asian Free Trade Agreement (SAFTA), Asia Pacific Free Trade Agreement (APTA) and the country is eligible for duty free access to 27 EU countries under EU GSP+ and also is eligible for duty free access to UK under UK DCTS.
Q: Sri Lanka needs to offer attractive tax incentives to increase FDI; what is the way forward?
Tax incentives have traditionally been used by governments as tools to promote investments to targeted sectors. They are preferential tax treatments that are offered to selected sectors/locations and take the form of exemptions, tax holidays, credits, investment allowances, preferential tax rates and exemptions from import tariffs (or customs duties), and deferral of tax liability. The generalised use of tax incentives has been justified by the need to correct market inefficiencies associated with the externalities of certain economic activities, target new industries that are subject to tax competition and to subsidise companies during their downturn.
Most developed countries use tax incentives to promote research activities, export activities, and support the competitiveness of their enterprises in the global market; while developing countries use them to attract foreign investment and develop key industries. Tax incentives are still an essential component of the policy mix employed by nations to attract more foreign investment, despite the lack of hard evidence supporting its total effectiveness.
Q: How crucial are tax incentives for a country like Sri Lanka?
Tax incentives have been widely used by the competing countries to promote investment and Sri Lanka is no exception to this. Incentives, especially fiscal incentives have been associated with higher investment in several countries in the region where incentives are granted for selected target sectors. With the new amendments to the Inland Revenue Act in 2022, Sri Lanka has moved away from granting tax holidays, concessionary CIT or Reduced CIT and retained only the Enhanced Capital Allowance that will be available for investments of more than $ 3 million on depreciable fixed assets (ECA for investments less than $ 3 million will be applicable only up to 2024).
Further, a reduced CIT rate of 14% applicable for most of the sectors including exports of manufacturing goods have been increased up to 30% for those who have signed agreement after the enactment of new Inland Revenue Act in 2018. However, most of the peer countries grant tax holidays ranging from 2-20 years in addition to granting concessionary CIT or Reduced CIT. So getting the right mix is crucial for our future success.
Q: Given our forex crisis, what are Sri Lanka’s options if overall incentives become uncompetitive?
Some experts are encouraging governments to move away from incentives-based means of competing to attract FDI in favour and focus more on rules-based means of competing. Generally tax incentives appear to entail a revenue loss to the Government, to ascertain the real benefit of granting incentives for investments to attract FDI, all the contributable factors such as export growth, direct and indirect employment generation, infrastructure development and technology needs to be taken into consideration. Enhanced capital allowances will add to the national infrastructure stock and accelerate technology transfer. In order to attract investment. Sri Lanka must use every tool at its disposal.
The competing destinations are still providing a considerable amount of tax incentives; thus, Sri Lanka cannot entirely eliminate tax incentives for investments. However, moving away from broad tax holidays in favour of more focused incentives makes business sense, such as reduced/concessionary CIT rates, accelerated depreciation, reinvestment allowances, allowance for increased exports, incentives for skills development, technology upgrade. However top tier FDI investors want stable, predictable and transparent rules. ESG focused investors is another clear possibility.
Many of the governments that are most successful in attracting FDI are also among those that best meet the requirements for good governance and credibility to incentives programs in the eyes of investors, by making them likely to be seen as sustainable. However, aftercare service, professionally responsive to inquiries and competitive staff possessing the best knowledge of new-age industries and language diversity are key competencies to attract and retain FDI. There are lots of lessons from the banking industry that can be adapted to attract and retain investments.
Mahiyanganaya (LNW): Thirty (30) pairs of school shoes were donated to children of low-income families from selected schools in Mahiyanganaya and Ridimaliyadda educational divisions today (13) as part of the corporate social responsibility (CSR) project ‘Suwethi Daruwan’ undertaken by Nelum Yaya Foundation (Mahiyangana).
Funded by Duminda Mayadunna, Chairman of of ‘Dumee International’ Group, in celebration of his birthday, 30 pairs of schools shoes were donated to children from Haddattawa Secondary School, Haddattawa Primary School, Aluttarama College, Batalayaya College and Galporuyaya College, in a joint effort by ‘Dumee International’ and Nelum Yaya Foundation (Mahiyanganaya).
If you are interested in contributing to ‘Suwethi Daruwan’ CSR project by Nelum Yaya Foundation, contact:
Priyantha S. Bandara (Founder) Suwethi Daruwan 0779878637
Colombo (LNW): Sri Lanka is to be forcibly dragged backwards this week towards economic downturn again by severe strike actions in many crucial sectors nationwide which will bring the country to a standstill, as the public buckles under the financial strain of multiple price hikes and heavy taxation.
Such unwarranted strikes have devastating effects on the economy, cause injury to members of the community and non-striking workers, and more particularly poverty as the government would retrench workers if the institutions do not provide essential public services.
As a result of these protest campaigns, the country has incurred a massive economic loss of billions of rupees and it has lost over 8 million man hours in two days of strike and protest demonstrations recently.
In the wake of Sri Lankans about to see a light at the end of the dark tunnel following first sign of economic recovery as a result of the unlocking of US $2.9 billion International Monetary Fund (IMF) bailout loan by March 20, the country’s progress is to be disrupted by ongoing strikes and protest campaigns.
The Professionals Trade Union Collective and several other trade unions representing government and semi-government sectors have planned to launch trade union actions from today March 13.
More than 40 trade unions including health, education, water, electricity, nurses, teachers, government and semi-government sectors have expressed their support.
Trade unions said one of the main reasons for the trade union action is the failure to provide solutions to the burdens caused by the unfair tax policy, while salaries have not been increased and the economic crisis continues.
Through the protests, the trade unions will also highlight several other matters including skyrocketing interest rates and issues related to salaries and increments.
They were demanding the reversal of the government revenue enhancing measures, cost of living and unavoidable price hike.
Half a million workers from across Sri Lanka’s public and private sectors joined strikes and protests recently in opposition to the International Monetary Fund measures being imposed by the government.
The measures include a pay as you earn (PAYE) tax on workers’ salaries, increased interest rates on bank loans, cuts in overtime payments, privatisations and tens of thousands of state-sector job cuts.
According to a government survey, 44,540 public servants out of 148,451 in Sri Lanka’s six provinces walked out on strike on last Wednesday.
This included 36 percent in the northwest, 40 percent in north central, 49 percent in the south, 25 percent in central, 21 percent in the east, and 19 percent in Uva.
The survey also revealed widespread participation by government doctors across all provinces.
This included 914 out of 1,322 in the northwest, 434 out of 690 in north central, 1,547 out of 2,472 in the central province, 942 out of 1,339 in the south, 454 out of 1,338 in the east, and 730 out of 918 in Uva.
Those participating included workers from the petroleum, electricity, water supply, port, banking, health care, postal, railway, and school and university sectors.
The industrial action, in defiance of President Ranil Wickremesinghe’s strike-breaking Essential Public Services Act, included full- and half-day strikes, sick-leave campaigns, “go slows,” lunch-time pickets and other protests.
Colombo (LNW): The Sri Lankan Rupee (LKR) has been appreciating against the US Dollar (USD) and other major currencies since last week bringing positive and negative results.
The Colombo Tea Auction last week saw a mini storm brewing as substantial quantities went unsold amid the sharp appreciation of the rupee against the US dollar.
Tea brokers said the first sale in March began on a very hesitant note due to the Sri Lankan rupee strengthening in an “unexpected manner”.
“At the commencement of the sale, large volumes of tea were unsold with bids realised being significantly below the percentage appreciation of the Sri Lankan rupee,” said Forbes and Walker Tea Brokers in its weekly tea auction report.
The gold price has come down further this week, as a result of the rupee’s appreciation against the dollar, the Jewellery traders in Sea Street Colombo said.
As per the traders, a 24-karat gold sovereign which was at Rs. 185,000 last week has reduced by Rs. 40,000 whilst a 22-karat sovereign which was at Rs. 172,000 last week has come down by Rs. 38,000. “Currently 24-karat sovereign is now at Rs. 145,000and 22-karat sovereign is at Rs. 134,000,” jewellers claimed.
The reduced prices have boosted sales in Sea Street jewellery shops after a hiatus of almost three years, they noted.
The Colombo stock market remained positive yesterday reinforcing its latest status as the world’s second best performing with improved investor sentiment and activity. Both indices closed with 0.5% gain after dipping in early trading.
Turnover was Rs. 2.5 billion involving 97.4 million shares. Net foreign inflow persisted as well. Year to date the ASPI has gained by 14.3% and the S&P SL20 by 8.7%.
Public Expenditure/Revenue Gap continued to grow steadily over the last two decades and widening of the gap accelerated since 2016. In 2020, COVID-19 made the situation worse.
Public revenues declined much faster against sharply rising expenditure, making it nearly impossible to bridge the gap without radical and painful measures to cut down the cost and increase revenues. We rely heavily on borrowed funds, both foreign and domestic, to fill the ever-increasing deficit.
A third US bank has toppled in as many days as shockwaves have been sent around the world as the financial disaster deepens.
A third US bank has toppled in as many days as shockwaves have been sent around the world.
On Monday morning Australian time, New York-based Signature Bank collapsed, after a massive stock plunge.
US regulators said state authorities had to intervene and shut down the bank.
Signature Bank was a traditional banking institution and was federally insured but it was well known for being a primary lender for digital assets, including cryptocurrency exchanges.
The US Treasury, Federal Reserve, and Federal Deposit Insurance Corporation said in a joint statement that the bank had officially closed for good.
“Signature Bank, New York, New York, … was closed today by its state chartering authority,” they wrote.
However, customers will not lose any money poured into the bank.
“All depositors of this institution will be made whole,” the regulators added.
“This step will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the statement added.
They also said that “no losses will be borne by the taxpayer” arising from Signature Bank’s collapse.
NEW:
*Signature Bank has been closed
*All depositors of Silicon Valley Bank and Signature Bank will be fully protected
*Shareholders and certain unsecured debtholders will not be protected
*New Fed 13(3) facility announced with $25 billion from ESF to backstop bank deposits pic.twitter.com/LKipIRMg1T
According to filings with the corporate regulator, as reported by CNBC, Signature Bank had US$110.4 (A$165b) billion in assets and US$88.6 (A$132b) billion in deposits.
In the past 12 hours, Signature Bank’s share price on NASDAQ dropped by an eye-watering 22.87 per cent.
The move came several months after Signature tried to reduce its exposure to the crypto sector, especially in the wake of the implosion of FTX.
Signature Bank had 38 banking branches across several US states, including its head office in New York, and also offices in Connecticut, California and North Carolina.
It’s unclear how many staff the bank had that will be impacted by its closure.
The US banking system has had a tumultuous few days.
The bank was the 18th largest in the country and had a market capitalisation of around $40 billion as well as assets of more than $300 billion.
It was the second-biggest bank failure in US history.
SVB’s collapse is expected to have far-reaching consequences for tech and start-ups, with many of them using debt facilities at the bank.
US building managers at Silicon Valley Bank’s Manhattan branch reportedly called the police after a group of tech founders showed up and attempted to pull out their cash.
In a rambling, 649-word, one-paragraph tweet on Saturday, the billionaire predicted that uninsured bank customers would rush to withdraw cash unless the government stepped in to guarantee their funds.
“The [government] has about 48 hours to fix a-soon-to-be-irreversible mistake. By allowing [SVB Financial Group] to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank.
“Absent [J.P. Morgan, Citigroup or Bank of America] acquiring SVB before the open on Monday, a prospect I believe to be unlikely, or the [government] guaranteeing all of SVB’s deposits, the giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’,” he wrote on Twitter.
