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SJB MP Dr Harsha Proposes SME Export Push, Credit Lifeline Using EPF/ETF Funds

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By:Staff Writer

August 14, Colombo (LNW): Sri Lanka’s small and medium enterprises (SMEs) need urgent structural support through coordinated policy action, according to opposition MP Dr. Harsha de Silva, who last week unveiled two proposals aimed at boosting exports and unlocking long-term credit.

Speaking at the launch of Ceylon United Business Alliance (CUBA) International—a platform to connect SMEs with global markets—Dr. de Silva urged a policy shift away from ad hoc measures toward systemic reforms that address the sector’s structural constraints.

His first proposal was the revival of an economic diplomacy initiative piloted in 2017 with the Harvard Kennedy School, which trained 49 Sri Lankan ambassadors, commercial officers, and mission staff to actively promote the country’s goods and services overseas. The program was prompted by a survey revealing that no Sri Lankan mission had made a single business presentation to a foreign corporate board in the preceding year.

“If our missions are not promoting us, the baton is dropped,” de Silva warned, calling for export promotion expertise to be embedded in foreign missions and linked with domestic agencies like the Central Bank, BOI, and Treasury. “We are working in silos, and it’s costing us competitiveness,” he said.

The second proposal targets the chronic lack of long-term finance for SMEs, a gap worsened since Sri Lanka’s graduation to middle-income status cut off concessional multilateral lending. Many development banks have since shifted to commercial operations, unable to sustain long-term credit offerings.

De Silva suggested tapping domestic provident funds—the Employees Provident Fund (EPF) and Employees Trust Fund (ETF)—which together hold over Rs. 5 trillion, most of it invested in government securities. He proposed allocating a small portion to create a dedicated SME credit facility, enabling banks to extend loans beyond the current two- to three-year limit.

“Development banking is not about one bank—it’s about the banking system having access to long-term capital,” he stressed.

SME leaders demand single-window, stronger market links

CUBA President Tania Abeysundara echoed the call for structural reform, warning that SMEs—responsible for over 50% of GDP and employing more than 4.5 million Sri Lankans—remain sidelined in policy planning despite being “the strength behind the country’s economic survival.”

She cited excessive bureaucracy, limited market access, and preferential treatment for foreign direct investors as persistent barriers. In 2022, amid Sri Lanka’s sovereign default, SMEs still generated $38 billion in economic output, she noted.

Abeysundara proposed a centralised “one-stop shop” for all SME-related approvals and services to replace the current fragmented system that forces businesses “from pillar to post.”

Her second recommendation was the creation of direct business-to-business (B2B) export linkages with foreign buyers, facilitated through diplomatic missions. CUBA International, she said, aims to partner with embassies and trade representatives to establish such platforms, while also pushing for SME-sensitive free trade agreements.

“FTAs are necessary, but they must reflect national priorities and protect local manufacturing,” she said, highlighting India’s approach as an example.

Abeysundara urged policymakers to embed SME-specific frameworks in national policy and budgets, with targeted support for women-led enterprises. “We do not seek fame—we seek progress and growth through our unwavering dedication to the economy,” she concluded.

CID Bypasses Navy Act in Ulugetenne Case, Sparking Security Concerns: Analyst

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By:Staff Writer

August 14, Colombo (LNW): A constitutional and national security storm has erupted over the arrest of former Navy Commander Admiral Nishantha Ulugetenne, with the Defence Ministry’s public assurance that “the law applies equally to all” accused of masking a deeper jurisdictional breach.

At the heart of the dispute lies one legal question: did the alleged offence occur during naval service and in connection with operational duties? If so, Sections 34 and 131 of the Navy Act No. 34 of 1950 mandate trial by court martial—not in a civilian court. If unrelated to service, civilian jurisdiction applies, Jihan Hameed Guest Columist of the Daily FT new paper stated ina lengthy article

The decisive trigger is the CID’s B Report to the Magistrate’s Court, which classified the alleged offence as a “personal matter” unrelated to naval duties—removing the Navy Act from the equation and placing the case under civilian courts. Critics warn this is not a matter of preference but statutory obligation, and if the CID’s classification is wrong, it amounts to a procedural bypass with grave security implications, she pointed out.

Legal experts note that the CID, as a branch of the Sri Lanka Police under the Inspector General of Police (IGP), is tasked with investigating facts, not deciding law. By determining the Navy Act does not apply, the CID has allegedly stepped beyond its mandate—encroaching on the legal sovereignty of the armed forces.

The Defence Ministry’s justification that the Navy Act is irrelevant because Admiral Ulugetenne is retired collapses under binding Supreme Court precedent. In SC FR 556/2009 (Capt. A.D. Senaratne de Silva v. Military Police and others), the Court ruled that jurisdiction is based on when the alleged offence occurred, not the officer’s retirement status. This means service-related offences remain under military jurisdiction even post-retirement.

Allowing the CID’s approach to stand could set a dangerous precedent—routing any sensitive case involving senior military officers through civilian police to bypass court martial procedures. It would also hand effective control of military law to the IGP via administrative classification, undermining the armed forces’ disciplinary autonomy.

Critics stress that the Navy Act’s purpose is not ceremonial—it safeguards the chain of command, classified information, and operational sovereignty. Trying a former Director of Naval Intelligence in an open civilian court risks exposing wartime secrets, as civilian proceedings lack the strict security protocols of courts martial.

Under law, the chain of responsibility is clear:

Commander of the Navy – assesses service connection of offence.

Navy Legal Division – reviews jurisdictional applicability.

Defence Ministry – enforces military jurisdiction where applicable.

Attorney General – provides final legal oversight.

Failure by all four to act is not just a procedural lapse—it is institutional inaction. The President, as Commander-in-Chief, is the only constitutional authority bridging military and civilian spheres and must ensure jurisdictional accuracy before cases reach court.

If the B Report’s classification is right, the Navy’s exclusion stands. If wrong, the CID’s move is a direct bypass of military law. Observers warn that in a “war on jurisdiction,” silence is not neutrality—it is surrender.

Cashew Industry in a Crunch amid Rising Demand and Bureaucratic Hurdles

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By:Staff Writer

August 14, Colombo (LNW): Sri Lanka’s strategic plan of developing its cashew industry into a cash crop—both for local consumption and for export—have been hit with a serious hitch, with players blaming bureaucratic delays and policy ambiguity for disrupting supply.

With rising tourist visits, there is greater demand for cashew, which is well-loved by locals and tourists. In a bid to stem this demand and offset erratic local cashew harvests, the previous government introduced a system of regulated importation of cashew, which may be imported between December and April—the off-season for local cashew.

This import window was closely watched by a multi-ministerial committee to ensure that imports were not inhibiting local harvests. Industry insiders now assert that this deal has broken down.

A senior official from the Plantation Industries Ministry confirmed that local output is currently just 12,500 tonnes—far below what is needed to meet the country’s requirement. And to compound the problem, this year’s production fell below expectations, leaving imports to make up the shortfall even further.

It has been made more complex by the introduction of the National Imports Tariff Guide 2025 (NITG-2025), which introduced fresh amendments to harmonised system (HS) codes and tax frameworks. The amendments, introduced by Sri Lanka Customs, have made the import process complex and sluggish, stakeholders say.

Traders claim that scrapping the previous committee-based approval system and making it more cumbersome under NITG-2025 caused delays in shipments, cancellation of orders, and general uncertainty. Each permit is valid only for three months—delays inevitably render them useless, forcing traders to apply anew or risk forgoing shipments altogether.

Exporters also cited other bottlenecks such as the need for foreign laboratory certification and protracted document verification activities by customs, putting extra strain on an already crippled system.

At the same time, Sri Lanka Cashew Corporation is tasked with tightrope walking—equating domestic production to import needs. The task has the tendency to slow the process since officials determine domestic supply and import quotas.

Unforeseen weather swings can hit crop yields,” the official of the Plantation Ministry explained, “and without early imports, shortages and price hikes are unavoidable.”

Beyond licensing problems, the cashew industry also suffers from old facilities and excessive red tape at import and export checkpoints—ailments that plagued Sri Lanka’s entire trade sector for many years.

Unless swift measures are taken to mechanise import approvals and iron out logistical bottlenecks, the country’s fledgling cashew sector could find itself in a sour crunch.

Kerawalapitiya Power Deal Faces Misleading Data Claims

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By:Staff Writer

August 14, Colombo (LNW): Major power purchase agreement with the Ceylon Electricity Board (CEB) and Sahasdhanavi Limited for a 350MW dual-fuel power plant has been facing serious allegations of using outdated economic data to mislead the Cabinet of Ministers into approving the agreement.

Sahasdhanavi Limited, a fully owned subsidiary of LTL Holdings Ltd., signed a 25-year Power Purchase Agreement (PPA) with the CEB to construct and operate a combined cycle power plant at Kerawalapitiya. The project, to be based on Regasified Liquefied Natural Gas (R-LNG), was promoted as an economic means of strengthening the national grid.

However, energy sector analysts and the Electricity Consumers’ Association (ECA) claim that the revised Cabinet Memorandum submitted in January 2025 used outdated pricing data—including diesel, LNG, and the dollar exchange rate—to justify the project.

The company has informed the Cabinet that while the Sahas Danavi power plant is intended to operate as an LNG-powered facility, it would take at least three years to build the necessary LNG terminal. 

Until then, the plant will have to run on diesel. Cabinet documents note that the cost per unit using LNG is Rs. 20, but current diesel-based generation costs Rs. 72.11 per unit, as per the Public Utilities Commission. With a capacity of 350 MW, operating the plant on diesel for a year would cost Rs. 111.3 billion, incurring a Rs. 73 billion annual loss to the government

“This is a deliberate attempt to hoodwink the Cabinet and the public,” said former energy minister Udaya Gammanpila. It’s clear the country is being pushed into a high-cost energy trap under the guise of cleaner fuel,”he added 

The Public Utilities Commission of Sri Lanka (PUCSL) has also reportedly raised concerns over the outdated assumptions, warning of significant financial risk to the government and consumers. 

.Under the BOOT (Build-Own-Operate-Transfer) model, Sahasdhanavi will operate the plant for 25 years, after which it will be transferred to the CEB. The project is scheduled to begin open-cycle operation within 30 months, and full combined-cycle mode by 42 months.

Civil society groups are calling for the Cabinet to review the agreement, reassess cost assumptions, and investigate potential conflicts. As LNG infrastructure is years away, there are fears the project will use costly diesel, weighing down the Treasury and increasing consumer tariffs.

As Sri Lanka navigates its way towards economic recovery, this deal is fast becoming a litmus test for good governance, accountability, and transparency in the energy sector.

Why Trump’s Tariff Isn’t Really 20%, closer to 28% — and the Risks of Reciprocity for Sri Lanka

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By Adolf

The recent US tariff announcement, according to IPS research, has reignited debate on the real burden of trade barriers. While headlines reference a “20% tariff” on key imports, the effective rate faced by Sri Lanka is significantly higher — closer to 28–30% when weighted across products, sectors, and tariff structures. Understanding this gap is critical for policymakers and exporters.

Why 20% Isnt Really 20%

Tariffs are rarely applied as a single flat rate. The “headline” 20% applies to a narrow set of goods, but sector-specific surcharges, product classifications, and exemptions for certain trading partners push the trade-weighted effective rate much higher.

For Sri Lanka, the US effective tariff rate will rise to 29.9% from 7 August 2025, compared to just 10.2% in April 2025 under the MFN regime. Apparel exports — our largest category to the US — will face 36.8%, while rubber products will face 20.2%. Competitor countries such as Canada, Mexico, the EU, and Japan enjoy preferential access through trade deals, leaving Sri Lanka at a distinct disadvantage.

Impact on Sri Lankas Economy

Economic modelling shows that under a 30% tariff scenario, Sri Lanka’s real GDP could shrink by 0.082% (with full employment) or by 0.222% if unemployment rises. Apparel exports to the US could fall by over 44%, and rubber exports by 63%, as buyers shift to lower-cost suppliers.

Even under the so-called “20%” tariff, the impact remains severe: apparel exports could drop 12.1% (USD 220.8 million loss) and rubber exports by 42%. These shocks would ripple through the economy, hitting employment — especially unskilled women in apparel — and reducing household incomes.

The Reciprocity Risk

The danger is not only in the tariffs Washington imposes, but in the reciprocal tariffs Colombo may feel compelled to apply on US goods. Reciprocity is standard in trade, but it can backfire on smaller economies.

If Sri Lanka applies a 20% reciprocal tariff while retaining para-tariffs like CESS and PAL, US exporters will face barriers — but so will our own industries that rely on imported inputs. For example, removing para-tariffs on US soymeal as part of a concession could boost imports by 40%, lowering poultry feed costs but potentially flooding our market with cheap US meat and dairy, hurting local producers.

Modelling suggests a 15% reciprocal tariff — combined with selective para-tariff removal — could actually expand Sri Lanka’s GDP by 0.038%. But beyond that threshold, the risks outweigh the benefits.

Policy Takeaway

Headline tariffs understate the real burden. Sri Lanka’s effective tariff exposure is well above 20%, and reciprocity without careful targeting could damage key domestic sectors. Negotiating a lower reciprocal rate — ideally 10–15% — while safeguarding sensitive industries is essential.

India may have ended up with rates above 40%, but with President Trump, anything is possible. He is quick to forgive and forget — and we could even see India’s rate drop below the “20%” mark. In trade, as in politics, nothing is ever truly final.

High Posts Committee Endorses Key Leadership Roles Across State Sector

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August 14, Colombo (LNW): A series of senior-level appointments to prominent public institutions has been formally endorsed by the Committee on High Posts.

Amongst the most significant appointments is the selection of Kavinda de Zoysa as the new Chairman of the Bank of Ceylon (BOC), a cornerstone of the country’s financial system and one of its most influential state-owned banks.

In the media sphere, Priyantha Wedamulla has been approved to take the helm at Independent Television Network (ITN) Ltd, a key state broadcaster with a national footprint.

Also amongst those confirmed is Pravir D. Samarasinghe, who will lead Hotel Developers (Lanka) Limited, a government-owned entity tasked with key responsibilities in the hospitality and property development sectors.

Meanwhile, Jayathissa Anaththa Pathiranage has been appointed Chairman of the Central Engineering Consultancy Bureau (CECB), a leading government-affiliated consultancy involved in infrastructure and engineering services.

On the diplomatic front, Wijesinghe Arachchige Kapila Sanjeewa De Alwis received the committee’s backing to serve as Sri Lanka’s new Ambassador to the Sultanate of Oman.

In the administrative domain, two secretarial appointments have also received formal approval. M.A.L.S.N.K. Manthrinayake has been named Secretary to the Ministry of Rural Development, Social Security and Community Empowerment—a portfolio increasingly critical amid efforts to improve social welfare and decentralised development.

Simultaneously, J.M. Thilaka Jayasundara was endorsed as Secretary to the Ministry of Industry and Entrepreneurship Development.

IGP Vows Crackdown on Political Backing of Criminal Networks and Urges Legal Reform

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August 14, Colombo (LNW): Sri Lanka’s newly appointed Inspector General of Police (IGP), Priyantha Weerasuriya, has issued a stark warning to those in political circles who are allegedly shielding criminal elements, declaring that individuals offering protection to underworld figures and narcotics traffickers have already been identified and will soon be held accountable under the law.

Addressing the media after formally taking office, IGP Weerasuriya called for an overhaul of the country’s legal framework, stating that the current laws are inadequate to meet the scale and complexity of the criminal landscape now facing Sri Lanka. He noted that while raids and enforcement operations are regularly conducted, the legal limitations often prevent these actions from having lasting impact.

According to the IGP, discussions have already taken place with President Anura Kumara Dissanayake, the Minister of Justice, and the Minister of Public Security. All parties have been informed that without urgent legal reform, sustained operations against drug syndicates and organised crime will continue to falter.

Work is now underway to draft new legislation that will empower law enforcement agencies to dismantle entrenched criminal networks more effectively. These laws, he said, will specifically target those who repeatedly engage in criminality and corruption, regardless of their social or political standing.

Weerasuriya also noted that Sri Lanka has received strong backing from the international community in this regard, with ongoing efforts to deepen collaboration and intelligence-sharing across borders. He highlighted that much of the recent surge in violent crime, including contract-style shootings, is being coordinated from abroad by criminals using local proxies.

Disturbingly, the IGP disclosed that members of these syndicates include not just civilians but also former military personnel and even individuals from within the police service itself. A sweeping internal inquiry has already been launched to identify and root out corrupt elements within the police ranks.

“We are initiating a phased strategy—first to restore discipline within the police force, and then to drive a broader societal clean-up,” he said, signalling a zero-tolerance stance toward law enforcement officers found to be aiding criminal enterprises.

On the matter of illegal arms circulation, the IGP acknowledged that a worrying number of firearms remain in civilian hands. These include weapons believed to have originated from former LTTE caches, the armed forces, thefts from police armouries, and other undisclosed sources. Investigations into the provenance and distribution of these weapons are actively ongoing.

He added that any police officer found complicit in drug or criminal activities will face both disciplinary proceedings and criminal prosecution. “There will be no room for compromise—those who are found guilty will be removed from service and charged accordingly,” he said.

President Halts Mannar Wind Power Projects Amid Environmental and Community Concerns

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August 14, Colombo (LNW): President Anura Kumara Dissanayake has directed a temporary halt to two planned wind power developments in the Mannar region—a 20 MW and a 50 MW facility—despite both projects having progressed to the contract stage following the tender process.

The decision, taken during a high-level meeting held yesterday at the Presidential Secretariat, comes in response to mounting opposition from local communities and religious leaders. Concerns raised included environmental degradation, threats to traditional livelihoods, and a lack of implementation of previously recommended environmental safeguards, including those connected to a separate ilmenite mining project in the same region.

President Dissanayake emphasised that while renewable energy is a cornerstone of Sri Lanka’s long-term economic and environmental goals, development initiatives must proceed with the consent of the people they affect. He highlighted the need for balanced progress, stating that energy generation is not merely a technical matter but one intrinsically linked to broader issues such as household electricity costs, industrial competitiveness, foreign investment, and national development.

As a result, both wind power projects will be suspended for a period of one month to allow for a comprehensive review of the issues raised. The review will focus on delivering practical solutions to community concerns, particularly in relation to environmental impact and land use.

The projects, which promise to generate electricity at a cost of 4.65 US cents per unit (approximately Rs. 13), present a cost-effective alternative to other proposed agreements—such as the deal with Adani Company, which would have seen electricity purchased at 8.26 US cents (around Rs. 25) per unit. The government remains committed to keeping average generation costs at or below Rs. 13 per unit, a key factor in its long-term energy affordability strategy.

Also discussed during the meeting were related infrastructure matters, including confirmed budget allocations for the reconstruction of the Kokilai Bridge and the implementation of the Mannar New Water Project—both of which are expected to bolster regional development.

Energy Minister Kumara Jayakody stated that the Land Reclamation Department has been tasked with assessing potential flood risks posed by the wind power installations. Meanwhile, other state bodies including the Department of Wildlife and the Ministry of Lands will contribute to a joint report addressing broader land and environmental concerns in the Northern Province.

The meeting brought together a wide cross-section of stakeholders, including religious representatives from the Northern Province, members of Parliament from both government and opposition benches, Deputy Minister of Cooperative Development Upali Samarasinghe, Ministry of Energy Secretary Professor Udayanga Hemapala, senior government officials, and delegates from the Mannar Citizens’ Committee.

Water Supply Disruption in Gampaha District Scheduled for Today

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August 14, Colombo (LNW): A scheduled 10-hour interruption to the water supply will affect several areas across the Gampaha District today (14), according to a statement issued by the National Water Supply and Drainage Board (NWSDB).

The supply cut, which will be in effect from 10:00 a.m. to 8:00 p.m., will impact the following locations: Nittambuwa, Kandahena, Mapagolla, Kongasdeniya, Pinnagollawatta, Kolawatta, Gorakadeniya, Ranpokunagama, Ranpokunagama Housing Scheme, Urapola, Dikkanda, Meevitigammana, Maimbula, Mathalana, Haggalla, Alawala, Kalalpitiya, and Ellamulla.

The NWSDB cited essential maintenance work as the reason for the temporary suspension and extended its apologies to residents for any inconvenience caused. 

Consumers in the affected areas are advised to store an adequate supply of water in advance and to use available resources sparingly during the disruption.

Priyantha Weerasooriya assumes duties as Sri Lanka’s new IGP

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August 14, Colombo (LNW)): Sri Lanka has appointed Priyantha Weerasooriya, a seasoned legal and law enforcement professional, as its 37th Inspector General of Police (IGP), marking a significant milestone in the history of the country’s police service.

The official assumption of duties took place at Police Headquarters in Colombo 02, where he addressed senior officers and dignitaries shortly after taking charge.

In his inaugural remarks, IGP Weerasooriya underscored his commitment to restoring the dignity, credibility, and professionalism of the police institution. Drawing inspiration from philosophical principles, including the concept of the “Eight Worldly Winds”—a Buddhist teaching on impermanence and balance—he signalled a leadership style guided by composure, fairness, and ethical clarity.

Weerasooriya expressed his intention to transform the police service into a disciplined and trusted force, noting that he expects unwavering commitment and high standards from every officer under his command.

He described his new role not as a position of privilege, but one of deep responsibility, and conveyed gratitude to all those involved in entrusting him with the nation’s highest policing post.

His appointment was officially confirmed on August 13 by President Anura Kumara Dissanayake, following the Constitutional Council’s approval a day earlier. The formal letter of appointment was presented by Presidential Secretary Dr. Nandika Sanath Kumanayake.

The vacancy arose after the parliamentary removal of former IGP Deshabandu Tennakoon, paving the way for a new chapter in police leadership.