Sri Lankans have been allowed to hold US $10,000 worth of the Indian rupee (INR) in a physical form, though the INR would not be legal tender in Sri Lanka, after India approved a Sri Lankan request to designate the INR as the foreign currency.

This will provide the Sri Lanka much needed liquidity support to help it tide over its economic crisis amid inadequate dollar liquidity.

The decision is also in accordance with the Indian government’s efforts to popularize the Indian Rupee among Asian nations and reduce dollar dependence.

 Sri Lankan residents will now be able to convert the INR into another currency and to enable this, Sri Lankan banks must sign an agreement with an Indian bank to open “INR nostro accounts” which means the accounts that banks hold in a foreign currency in another bank.

Another important development is that offshore banking units (OBU) of Lankan banks have been permitted to accept savings, time and demand deposits from non-residents.

According to the media reports, all current account transactions including exports, imports, and remittances can be undertaken between Lankan residents and non-residents. 

Transactions between Sri Lankans can only be done through banking channels and only for permitted activities, bankers said. While this arrangement was approved by India a few months ago, the Central Bank of Sri Lanka was yet to notify the rupee as a designated foreign currency.

Speculations are rife that the Sri Lankan Rupee (LKR) will be substituted with the INR in certain segments of the economy, 

Nandalal Weerasinghe, the Governor of Sri Lanka’s Central Bank recently , said that the country’s economy is likely to contract by over six per cent this year —  worse than in the pandemic-affected 2020, when the economy shrank 3.5 per cent.

The currency swap has the potential to draw foreign investors who will be attracted by the stability of a substitute currency and show greater willingness to be paid in INR rather than the domestic currency LKR, which might be subject to losses on foreign exchange markets. 

Further, with a foreign currency, the economy is unlikely to face a balance of payments crisis when speculators take flight and sell domestic currency.

Bhutan and Nepal are using INR mainly because most of the goods in their respective countries come from India and therefore it makes sense to pay for these products in INR because they had already been priced in INR terms. 

A leading Economist said that the partial substitution may not change ‘anything much ‘but  if Sri Lanka were to substitute the LKR with the INR or any other foreign currency, it would probably mean that part of Sri Lanka’s national sovereignty would no longer be in its control.

The total revenue of CEB increased by 4.6 percent to Rs. 172.0 billion in the first eight months of 2022, compared to Rs. 164.5 billion in the same period of 2021. 

The direct generation cost has doubled from Rs. 104.7billion to Rs. 209.5 billion in the first eight months of 2022, compared to the same period of 2021 due to the large price fluctuations in coal and fuel in the global market coupled with the sharp rupee devaluation.

 Accordingly, the cost per unit at the selling point increased to Rs. 29.17 per KWh in the first eight months of 2022 from Rs. 17.33 per KWh in the same period of 2021. 

As such, CEB has incurred a large operating loss of Rs. 108.7 billion in the first eight months of 2022, compared to Rs.1.9 billion recorded in the same period of 2021. 

In the meantime, daily power cuts have been executed with the approval of the Public Utilities Commission of Sri Lanka (PUCSL) to manage the electricity demand due to the foreign exchange constraints for heavy fuel importation and non-operation of the refinery of CPC. 

The generation mix has changed as hydro: thermal (fuel): thermal (coal): Non Conventional Renewable Energy (NCRE) and wind 28:19:37:16 in the first eight months of2022, compared to the generation mix of 28:18:38:16 recorded in the same period of 2021.

Having considered the adverse liquidity positions of both CEB and CPC, the General Treasury has channeled Rs. 80.0 billion to CEB up to August 2022 as an equity infusion to settle its outstanding obligations to CPC.

Despite this, the total outstanding obligations of CEB to CPC and Independent Power Producers (IPP) have again reached to Rs.148.1 billion, at the end of August 2022 due to  a significant level of fuel price hike.

 Further, the outstanding obligations to the state banks have increased to Rs. 168.1 billion as at the end of August 2022 due to an increase in overdraft facility and increase in borrowings.

 Meanwhile, the total outstanding to the banks including project loans stood at Rs. 395.5 billion at the end of August 2022.

Considering the severe financial burden faced by CEB mainly due to the non-implementation of cost-reflective pricing formula, PUCSL as the regulator increased the electricity tariff by 75 percent on average for all customer categories with effect from August 2022

Hyderabad based Filatex Fashions Limited (FFL), one of the largest manufacturers of Premium Quality Socks intends to acquire 51% stake in Isabella (P) Limited, Sri Lanka, which is in the business of Manufacturing Apparels, f or a consideration of US$ 7.55 Million. 

The Company has initiated due-diligence process for acquiring/share subscription of Isabella (P) Limited, Sri Lanka. “The due diligence is on. We are hoping to be completing the whole process in the next two months,” Prabhat Sethia, Managing Director of FFL said. 

Isabella, Sri Lanka, for over 25 years has been manufacturing and supplying socks & tights to various clients in Germany, France, Canada and Czech Republic. 

It is the 2^nd largest manufacturer of socks & tights in South Asia, with an annual capacity of 48 million pairs. 

The company boasts of total backward integrated manufacturing process, with consistency, reliability, flexibility and high quality, complying to international standards. 

Isabella is enriched with foreign collaboration and technical expertise having a strength of over 2000 personnel. They produce wide variety of socks, such as business, casual, fashion, etc., using various yarns made from cotton, bamboo, viscose, acrylic, etc. 

Filatex Fashions Limited (FFL) is operational for over two decades. The plant is housed in Hyderabad, Telengana State, India. 

 This fully air-conditioned facility is an ultra-modern unit with production capacity of 7 million socks per annum. These machineries are fully computerized automatic machines, backed by state-of-art technology in knitting & embroidery, thereby enabling fastest production techniques. 

FFL’s secret behind impeccable delivery and customer satisfaction are its committed and dedicated work-force who are trained in Italy and Korea, and its experienced management personnel, enabling the company to achieve most competitive prices in the market. 

FFL shall achieve strong synergy through this strategic acquisition of Isabella (P) Limited, Sri Lanka.

“We are planning to raise our paid-up capital to ₹250 crore from ₹48 crore by way of preferential allotment of shares at various price bands. This will enable us to raise about ₹400 crore,” he said.

He said the company was in the process of expanding its capacity to produce 30 million socks a year from the present capacity of 7 million.

“We are investing about ₹350 crore for our expansion plans, which include foraying into track suits and t-shirts. We are importing 500 machines for our socks business,” he said.

It is planning to hire about 1,700 employees to support the expanded capacities, he said. About 80 per cent of the socks that the company’s produces is white-labeled for some global brands.

Sri Lanka has been ranked 10 as the country with the cheapest manufacturing costs, as per a list compiled by US News and World Report by global survey respondents.

According to the report, India has become the leader when it comes to cheap manufacturing costs.

The list published by the US News and World Report is as follows: 1. India, 2. China, 3. Vietnam, 4. Thailand, 5. Philippines, 6. Bangladesh, 7. Indonesia, 8. Cambodia, 9. Malaysia, 10. Sri Lanka.

The rankings report is based on how global perceptions define countries in terms of a number of qualitative characteristics—impressions that have the potential to drive trade, travel, and investment, and directly affect national economies. The report covers perceptions in 85 nations.

Attributes were grouped into 10 sub-rankings that rolled into the Best Countries rankings: adventure, agility, cultural influence, entrepreneurship, heritage, Movers, Open for Business, Power, Social Purpose and Quality of Life.

These thematic sub-rankings were formed by grouping countries attribute that had similar global trends in survey responses. Sub-ranking scores for each country were determined by averaging the scores that country received in each of the attributes comprising that sub-ranking.

Manufacturing activities in Sri Lanka contracted significantly in October 2022, the Central Bank’s report released recently showed.

New Orders and Production declined significantly, particularly in the manufacture of food & beverages and textiles & wearing apparel sectors, mainly due to demand-side impediments.

Many respondents representing the food & beverages sector mentioned they experienced a notable decline in demand amidst the deteriorating purchasing power of the consumers.

Further, export-oriented manufacturers, especially in the apparel sector catering to the North American and European markets, highlighted that the decline in demand observed was mainly attributable to the fear of an economic slowdown in respective destinations.

Moreover, manufacturers are still struggling to acquire the required raw materials amidst high input costs.

Furthermore, Employment recorded a decrease in October 2022 while Stock of Purchases also decreased in line with the decline in New Orders and Production.

Meanwhile, Suppliers’ Delivery Time was shortened in October 2022 compared to the previous month.

Expectations for manufacturing activities for the next three months remained in the negative territory anticipating demand side impediments to continue in the period ahead.

The General Secretary of the United National Party Palitha Range Bandara says that the interviews for the appointment of seat organizers of the United National Party will start from tomorrow (01).

Accordingly, these interviews will be held at the Sirikota party headquarters from tomorrow.

These interviews will be held for the appointment of seat organizers for the year 2023 and a panel headed by UNP Deputy Leader Ruwan Wijewardena and General Secretary Palitha Range Bandara will select the deserving candidates.

The General Secretary also mentioned that thousands of applications have been received for the posts of seat organizers.

Minister Mahinda Amaraweera has sent a letter regarding the Executive Council meeting of the United People’s Freedom Alliance called today (30) by former President Maithripala Sirisena.

In that letter, Amaraweera has pointed out that he is still working as the Secretary General of the Association and accordingly, Maithripala Sirisena has no authority to call the Executive Council meeting.

Accordingly, Amaraweera has informed the former president in his letter that he should immediately cancel the executive council meeting and if he does not do so, he will take legal action.

Sri Lanka Podujana Peramuna Secretary Sagara Kariyawasam has been appointed as a member of the Constitutional Council.

As the representative of the majority party in the government, he has been appointed to that assembly.

It is said that Prime Minister Dinesh Gunawardena has informed the ruling party MPs about this in Parliament yesterday (29).

The Embassy of Sri Lanka in Manila participated at the International Bazaar 2022 held on 20 November 2022 at the World Trade Center, Pasay City, Philippines.

Together with the local distributors of renowned Ceylon tea brands Dilmah, Basilur, and George Steuarts, the Embassy organized a “Sri Lanka Pavilion” designed to showcase the country’s best features: Ceylon tea, spices, coffee, and its renowned attractions as a tourism destination.

The pavilion was formally launched with the lighting of the oil lamp by the event’s Chief Guest, Senator Loren Legarda, and Mme. Pamela Louise Manalo, Spouse of Foreign Affairs Secretary Enrique Manalo and Chairperson of the International Bazaar Foundation (IBF).

Distinguished guests including Secretary Manalo and members of the diplomatic community as well as visitors were treated with freshly-brewed Ceylon tea and introduced to varieties of coffee and spices that Sri Lanka produces. Tourism brochures were also distributed and promotional videos were displayed at the pavilion’s tourism corner.

The International Bazaar, with this year’s theme “Where the World Comes to Shop” is an annual event organized by the IBF in cooperation with the Department of Foreign Affairs, Diplomatic and Consular Corps of the Philippines and the Spouses of the Heads of Mission. It is also a fund-raising event to support the livelihood and scholarship projects of the foundation for its beneficiaries all over the Philippines.

Embassy of Sri Lanka

Manila

29 November, 2022

         India’s ‘Constitution Day’ was observed through a series of events organized by High Commission of India, Colombo on 26 November 2022. The special day marked the adoption of the Indian Constitution on 26 November 1949.

2.      More than 200 school children from different parts of Sri Lanka enthusiastically participated in the Children’s Art Competition organized on 26 November 2022. Themes of the Competition such as ‘Incredible India’ and ‘Fundamental Duties’ were closely linked to India and her Constitution which help the young and creative students from Sri Lanka develop a closer understanding of their civilizational partner, India. High Commissioner Gopal Baglay, who was the Chief Guest at the Competition, complimented families and teachers of the children for nurturing the talents of the next generation by encouraging them to participate in such competitions.

3.       In order to instill a sense of environmental responsibility and care for future generations in the children, a unique workshop which gave training on creating beautiful environment-friendly art works from waste materials was also organized on the occasion. A tailor-made exhibition – ‘Making of Indian Constitution’ – gave the pictorial history and background of events and milestones that made the world’s largest written Constitution a reality. 

4.     High Commissioner and officials of the High Commission paid floral tributes to Dr. B. R. Ambedkar, main architect of the Indian Constitution on Constitution Day, 2022. Earlier, preamble of the Constitution which professes guiding principles of India was read out by the High Commissioner and Indian officials in Sri Lanka.

5.   Following the adoption of the Indian Constitution on 26 November 1949, it came into effect on 26 January 1950. Indians across the world celebrate ‘Republic Day’ every year with great fervor to mark this momentous occasion. The Indian Constitution, which has drawn from best practices and procedures of various countries, has been the main anchor and basis for decision making for policy makers of India.

***

Colombo

28 November 2022