September 14, Colombo (LNW):Sri Lanka’s government is preparing to significantly boost the competitiveness of over 21,000 small and medium-sized enterprises (SMEs) nationwide. Minister of Industries and Health, Ramesh Pathirana, stressed the need for aligning with Indian industrial advancements and partnering with global entities to achieve these goals. 

This effort is part of Sri Lanka’s broader strategy to shift towards an export-focused economy, with a key emphasis on the manufacturing sector.

Pathirana highlighted the necessity for the manufacturing sector to evolve into a competitive and digital-driven industry. This transition is in line with the country’s aim to achieve zero carbon emissions and develop a green economy.

To support this shift, the government plans to provide essential resources and infrastructure to ensure local industries can compete globally.

A major component of this initiative is the creation of a new development bank, which will offer low-interest loans to industrialists, facilitating business investment and increased competitiveness. An Economic Commission will also be established to oversee these efforts.

According to a recent Department of Census and Statistics survey, Sri Lanka has 21,260 industrial establishments, with the majority being small and medium enterprises. The sector employs about 1.48 million people, underscoring its vital role in the economy.

Brahman Balaratnarajah, the newly re-elected chairman of the Industrial Association of Sri Lanka (IASL) and Deputy Managing Director of Haycarb PLC, praised the resilience of Sri Lanka’s industrial sector amid economic difficulties. 

Speaking at the IASL’s AGM, Balaratnarajah reaffirmed the association’s commitment to the government’s strategic objectives, particularly in innovation and sustainability. He encouraged the industry to adapt to global trends, focusing on technological advancements and the development of a skilled workforce, particularly targeting Generation Z.

Sri Lanka’s manufacturing sector has shown positive trends, with the Purchasing Managers’ Index (PMI) for manufacturing reaching 59.5 in July. The Central Bank noted that this growth was driven by robust performance in the textiles and apparel sectors. 

Both food and beverage production, and textiles and apparel, saw substantial improvements.

In the first quarter of 2024, Sri Lanka’s apparel industry achieved a milestone, with revenue exceeding US$1 billion. Export growth was notable, with a 7.7 percent increase in March, particularly strong in European and UK markets.

September 14, Colombo (LNW): The procurement process for Sri Lanka’s Multi Lane Free Flow Electronic Toll Collection (MLFFETC) system has been marred by corruption allegations. 

The Road Development Authority (RDA), under the Ministry of Transport and Highways, called for bids on April 10 for the installation of an electronic toll system on a Build, Own, and Operate (BOO) basis. 

The selected bidder was expected to first deploy the system on the Port Access Elevated Highway and later extend it to other expressways. The bid documents provided conceptual designs and specifications.

The electronic toll collection (ETC) system is designed to enhance toll payment efficiency by allowing vehicles to pass through without stopping, thus minimizing delays.

 It functions by electronically debiting users’ accounts and automatically opening gates as vehicles approach. The initiative was fast-tracked by the Ministry of Highways after reports that up to 20% of toll revenues were being misappropriated by cashiers on expressways, according to a senior RDA official.

The tender process included a public notice in local newspapers and a pre-bid meeting attended by over 15 companies. However, the Request for Proposals (RFP) drew criticism for insufficient information, leading to numerous questions. 

The RFP also mandated the installation of CCTV cameras—three per pole at one-kilometer intervals—with a storage capacity of 24 hours of footage for 45-50 days. Experts observed that the emphasis on CCTV requirements seemed disproportionate to the primary focus of the tolling system.

Many bidders were dissatisfied with the RFP specifications, citing hidden or inadequately detailed requirements. Consequently, several interested foreign and local firms chose not to submit proposals for the eight-year project intended to replace manual toll collection with a Multi-Lane Free Flow Toll Collection System.

The RFP specified the use of Radio Frequency Identification (RFID) technology, which includes tags and readers. These RFID tags, introduced to the public since 2019 for vehicle registration, have experienced connectivity issues with readers. 

Some bidders alleged that the RFP’s technical details appeared to favor the current supplier of number plates to the Department of Motor Vehicles (RMV).

Ultimately, only three companies submitted bids—two with foreign partnerships and one with a locally developed solution. 

Two of these bids were rejected, leaving just one bid under consideration. This remaining bid is from a well-known company with a vested interest in the contract, raising further concerns about the tender process’s fairness.

September 14, Colombo (LNW): The renovation of the Anuradhapura–Mahawa railway line, undertaken at a cost of US$ 92 million to enhance the efficiency and regularity of Sri Lanka’s transport services, has been completed and officially handed over to the Sri Lanka Railway Department.

Project Director Chinthaka Jayasekara stated that the renovation, financed under a loan scheme from the Government of India, was carried out in three stages: Anuradhapura–Omanthai, Anuradhapura–Mihintale, and Anuradhapura–Mahawa. The work on the Anuradhapura–Mahawa section began in January this year under the patronage of Indian High Commissioner to Sri Lanka, Santosh Jha.

The Railway Department is optimistic that train services between Mahawa and Anuradhapura will resume tomorrow (14).

September 14, Colombo (LNW): Sri Lanka’s private creditors and the country’s government officials are holding a third round of talks this week to agree on the restructuring of $12.6 billion in defaulted bonds, according to people familiar with the matter, Blomberg news agency reported. . 

This new round of negotiations — the first since creditors and the government reached a preliminary agreement on a debt rework in early-July — also marks the third time bondholders have gone “restricted,” or prevented from trading the securities while talks are ongoing, the people said, asking not to be named because talks are private. 

Representatives for the bondholders and the government didn’t reply to a request for comment. The creditor group holds about 50% of the outstanding overseas bonds and includes Amundi SA, BlackRock Inc. and T Rowe Price.

The committee is represented by its legal adviser White & Case LLP and its financial adviser Rothschild & Co. 

The government is seeking to reach a final agreement on the debt before the country’s presidential election set for Sept. 21, one of the people said, adding that a statement with details on the ongoing negotiations may be released next week.

The July deal with private bondholders envisaged a 28% nominal reduction in the bonds’ principal, and the issuance of so-called macro-linked bonds, whose payouts are linked to economic growth. The agreement needs the backing of the International Monetary Fund and the country’s bilateral creditors, such as China and France.

Sri Lanka bonds due in 2030 traded at around 51 cents on the dollar on Friday at 10:19 a.m. London time, according to indicative pricing compiled by Bloomberg. 

The talks are “likely to address the information vacuum market participants have faced since the last notification regarding bond restructuring in late-July,” said Avanti Save, head of Asia credit research and strategy at Barclays Bank Plc. “If an agreement is reached then it also reduces the risk of a long-drawn out renegotiation process post elections.” 

The election will be the first for the country since an economic crisis in 2022 caused living standards to plunge and the government to default on its debt for the first time ever. It is shaping up to be a close race between three candidates, including the incumbent who negotiated the IMF bailout and opposition leader Sajith Premadasa, who plans to reopen negotiations with the multilateral lender, if elected.

Sri Lanka’s main opposition leader said he’ll reopen negotiations with the International Monetary Fund on its $3 billion loan if he wins next week’s presidential election to ease the financial burden on working class people.

Sajith Premadasa, 57, wants rich individuals to bear more of the cost of the economic adjustment that came with the bailout program. The austerity measures that were imposed, such as tax and electricity-price hikes, and the debt restructuring, have made the incumbent leader Ranil Wickremesinghe deeply unpopular, creating a tight race for the Sept. 21 vote.

“We will make sure there is justice and fairness,” Premadasa said in an interview in his Colombo office. “The burden should be shared by the super rich, not the working class poor.”

The election will be the first for the country since an economic crisis in 2022 caused living standards to plunge and the government to default on its debt for the first time ever. Widespread unrest that followed forced the populist Gotabaya Rajapaksa to flee the country and resign. His successor Wickremesinghe went on to negotiate the IMF bailout the following year.

Premadasa, who runs a breakaway group that splintered from Wickremesinghe’s party in 2020, has emerged as one of the three leading candidates contesting an election that analysts say is too close to call. He’ll face Wickremesinghe and Anura Kumara Dissanayake, a candidate with roots in Marxist socialist policy. 

Both Premadasa and Dissanayake have said they’ll reopen negotiations with the IMF, adding to policy uncertainty. The IMF needs to conduct a third review of the loan program before it disburses the next tranche of funding, estimated at about $350 million.  

Sri Lanka’s government still hasn’t finalized debt restructuring deals with some of its creditors two years after defaulting. Investors have in recent weeks started to cut their exposure to the nation’s dollar bonds amid concerns over further delays in the debt overhaul.

The nation’s private creditors and government officials are holding a third round of talks this week to agree on the restructuring of $12.6 billion in defaulted bonds, Bloomberg News reported earlier, citing people familiar with the matter. The government is seeking to reach a final agreement on the debt before the election, one of the people said, adding that a statement with details on the ongoing negotiations may be released next week.

Premadasa declined to give details of what he’ll seek to change in the IMF loan conditions, although he was critical of a domestic debt restructuring agreed to by the current administration, which he called “dastardly” unfair in its treatment of local pension funds.

In an Aug. 2 statement, the IMF said that the timing of the program’s third review will be discussed with the government after the polls. Julie Kozack, the IMF’s chief spokesperson, reiterated that view on Thursday in Washington, saying “we will move forward with program discussions after the presidential elections take place.”

Dhananath Fernando, chief executive officer of Advocata Institute, a Colombo-based think tank, said rising costs, including food price hikes, can’t be fully attributed to the IMF program, and energy prices were raised to partly make up for the currency’s depreciation.  

He noted that most food prices and energy costs have eased in the past two years, although lower-income consumers are still “worse off compared to before the crisis.”

Boosting Exports

Premadasa leads the Samagi Jana Sandhanaya and has previously held ministerial portfolios in government, including housing and health. His manifesto, titled ‘Towards an Advanced Social Market Economy,’ champions boosting exports, reducing taxes, setting up an independent public prosecutor to tackle corruption and strengthening the rule of law.

“Export-driven economic development is one of our main mantras,” Premadasa said in the interview on Wednesday. “We would also have a purposeful effort to promote manufacturing industry, as it is of great importance to ensure that we have quality economic growth.”

Premadasa said he champions good governance and will strive to improve Sri Lanka’s business environment to help lure foreign direct investment. In a reference to popular leftist candidate Dissanayake, Premadasa said “Marxist ideologies, and extreme hardline leftist tendencies will certainly not be the kind of situation which would attract FDI.”

Dissanayake is gaining momentum in the race on a campaign platform of eliminating corruption. His coalition of leftist parties and groups, backed by protesters who ousted the Rajapaksa government in 2022, opposes the debt restructuring framework agreed with the multilateral lender. 

Premadasa said the IMF program needs to be reworked to ensure a better outcome for citizens.

“We need to be very professional in our negotiations with the IMF and we will have a good deal, a strong deal,” he said. “Nothing will be derailed but everything would be humanized.”

Source: Bloomberg

1. President Ranil Wickremesinghe emphasized that no vacuum should be allowed to occur in state power, as such a situation could lead to a serious disaster. He further stated that state power must always be smoothly transferred from one party to another. Referring to Bangladesh’s current situation, the President pointed out that the inability to fill a power vacuum has led to a national crisis. He recalled that in 2022, Sri Lanka too faced a similar threat, but he intervened to prevent it.
2. Sri Lanka’s main opposition leader said he’ll reopen negotiations with the International Monetary Fund on its $3 billion loan if he wins next week’s presidential election to ease the financial burden on working class people.
3. National People’s power presidential candidate Anura Kumara Dissanayake issued a strong challenge to independent presidential candidate Ranil Wickremesinghe during a business meeting held in Matara. Dissanayake dismissed Wickremesinghe’s political tactics as mere drama, emphasizing the need for responsible leadership to address the country’s crises.
4. President’s Counsel Kaushalya Nawaratne has resigned from his position as the President of the Bar Association of Sri Lanka (BASL) with immediate effect. The Bar Council of the Bar Association of Sri Lanka (BASL) on August 31 had unanimously decided to call for the resignation of BASL President Kaushalya Nawaratne.
5. The Cabinet of Ministers approved the IMF proposal, based on the Sri Lankan Government’s proposal, to reduce the pay-as-you-earn (PAYE) tax from next year, says Cabinet Spokesman Minister Bandula Gunawardena. He stated that the proposal will be presented with the next budget proposal in November this year.
6. A luxury house worth Rs. 100 million, located in Bambalapitiya, was forcibly seized by Galaboda Aththe Gnanasara Thero. The Colombo Additional Magistrate Pasan Amarasinghe, ordered Gnanasara Thero and two other respondents to immediately vacate the property, which had been unlawfully seized.
7. Sri Lanka’s State Minister of Finance Shehan Semasinghe says that the Cabinet of Minister has decided to allow the import of vehicles under several stages starting from October 01. He stated that restrictions on importing public transport vehicles will be removed from October 01, 2024 while the restrictions on importing commercial and goods transport vehicles will be lifted from December 01, 2024.
8. Major General Dinesh Nanayakkara of the Sri Lanka Sinha Regiment has been appointed as the new Chief of Staff of the Sri Lanka Army (SLA). He has been appointed to the position by the Commander of the Army, effective from September 16, 2024
9. The Supreme Court has directed the Controller General of Immigration and Emigration to appear before the court in person with regard to his failure to implement the order issued by the court over the electronic visa matter. The directive was issued by the Supreme Court after considering motions filed over the non-implementation of the interim order issued by the court regarding the issue.
10. Sri Lanka’s Hasitha Disssanayaka has won the Gold medal while Senura Hansaka won Silver in the Men’s Triple Jump event at the South Asian Junior Athletics Championships 2024 held in Chennai, India. Meanwhile, Sri Lanka has also secured the Gold medal in the Men’s 4x400m relay event.

September 14, Colombo (LNW): Showers or thundershowers are expected at times in the Western, Sabaragamuwa, and North-western provinces, as well as in the districts of Kandy, Nuwara-Eliya, Galle, and Matara. Fairly heavy showers, around 50 mm, are likely in certain areas of the Western and Sabaragamuwa provinces.

Additionally, showers or thundershowers may occur in Uva province and the districts of Ampara and Batticaloa during the evening or night.

Strong winds, ranging between 40-45 kmph, are forecasted over the Western slopes of the central hills, Northern, North-central, and North-western provinces, as well as in the districts of Hambantota, Monaragala, and Trincomalee.

The general public is advised to take precautions against temporary strong winds and lightning during thundershowers to minimize potential damages.

September 13, Colombo (LNW): Independent presidential candidate Ranil Wickremesinghe reflected on the significant changes Sri Lanka has experienced since the ‘aragalaya’ movement two years ago. He noted the collapse of political and economic structures during that period and the challenges the country faced in its aftermath.

Wickremesinghe acknowledged the inconvenience caused to the public following the ‘aragalaya’ and stressed the importance of safeguarding the country’s stability. He admitted to taking several measures, some of which were criticized for allegedly curtailing civic freedoms, but emphasized that his actions were within constitutional principles and aimed at preserving stability.

“Today, we enjoy freedom and elections,” Wickremesinghe stated, warning that without the steps he took, Sri Lanka could have faced a crisis similar to that of Bangladesh. He highlighted the necessity of maintaining a government, a framework, law and order, and stability to protect freedoms and fundamental rights.

Concluding his remarks, Wickremesinghe asserted that these elements have been successfully established, ensuring the country’s stability and safeguarding citizens’ rights.

September 13, Colombo (LNW):As Sri Lanka progresses towards economic recovery, revitalizing its tea industry is critical for growth, stated Gevorg Sargsyan, World Bank’s Country Manager for Sri Lanka and the Maldives, during the 25th Annual General Meeting (AGM) of the Tea Exporters Association (TEA) in Colombo.

“To ensure the long-term success and sustainability of this iconic sector, it’s vital for public and private stakeholders to work together to foster growth across the entire ecosystem. 

This will enable the tea industry to make meaningful contributions to the nation’s sustainable and prosperous future,” Sargsyan noted. 

Despite its status as a key economic pillar and symbol of national pride, Sri Lanka’s tea industry has faced considerable challenges in recent years. From climate change to policy inconsistencies and intense global market competition, the industry has been under mounting pressure.

Research shows that by 2070, Sri Lanka’s prime tea-growing regions could reduce by 30%, posing serious sustainability challenges. 

However, Sargsyan expressed optimism, noting, “The sustainability of Sri Lanka’s tea industry is complex, but we have the ability to address these challenges. As someone who grew up drinking Ceylon tea, I have a strong connection to this industry.”

Outgoing TEA Chairman, Ganesh Deivanayagam, highlighted that while Sri Lanka exported 263 million kilos of tea 25 years ago, generating $598 million in revenue, today, despite exporting 20 million kilos less, the industry’s earnings have doubled to $1.3 billion.

 “This reflects the global demand and value of Ceylon tea, yet it also underscores the untapped potential. Maintaining volumes could turn this into a $3 billion industry.

 Nevertheless, exporters face significant challenges, including tax burdens and outdated perceptions of the sector. But the numbers show we’ve achieved extraordinary results, and with the right support, we will overcome these challenges,” he added.

Sri Lanka’s tea production totaled 256,039 metric tonnes in 2023 but has been in decline since 2019 due to various factors like climate change, fertilizer bans, and inadequate replanting.

This downturn has also affected exports, which dropped to 241,912 metric tonnes in 2023 from 292,000 metric tonnes in 2019. However, despite declining volumes, tea exports consistently generate around $1.3 billion annually, proving its continued importance to the national economy.

The AGM also saw the election of Huzefa Akbarally as the new Chairman of the Tea Exporters Association, with over 500 participants in attendance.

September 13, Colombo (LNW):

September 13, Colombo (LNW):The Asian Development Bank (ADB) has sanctioned a $100 million policy-based loan to support reforms in Sri Lanka’s water supply and sanitation sector. The initiative aims to bolster the country’s climate resilience and ensure the long-term sustainability of water services.

The Water Supply and Sanitation Reform Program is divided into two subprograms, each valued at $100 million. Subprogram 1 focuses on establishing national policies and strategies for the sector, while Subprogram 2 will support the implementation of these reforms through specific guidelines and actions.

Pedro Almeida, Senior Urban Development Specialist at ADB, highlighted the pressing challenges in the sector, citing fragmented water management and the growing impacts of climate change.

He emphasized that many Sri Lankans still lack access to piped water, and the program aims to rectify this by improving governance and creating opportunities for private sector participation.

Sri Lanka’s water resources management faces several long-standing issues, including imbalanced water allocation between agriculture and drinking water, inadequate climate change considerations, and disorganized planning due to the involvement of multiple agencies.

 The program aims to address these challenges through policy interventions that promote equitable water distribution, gender-sensitive services, and a climate change roadmap.

Subprogram 1 will also enhance the sector’s financial sustainability and operational efficiency. This will be achieved through frameworks like the climate-resilient project appraisal for investments and strategic plans for the National Water Supply and Drainage Board (NWSDB).

It is also helping to enhance the efficiency and performance of the sector through the Ministry of Water Supply and Estate Infrastructure Development’s (MWS) approval of a climate-resilient project appraisal framework for investments in the drinking water sector, and NWSDB’s financial sustainability, efficiency, and performance through financial sustainability and public-private sector roadmaps, and a business efficiency action plan.  

Additionally, a technical assistance grant of $800,000 will support the Ministry of Water Supply (MWS) and NWSDB in deploying and monitoring reform initiatives. This includes $500,000 from ADB’s Technical Assistance Special Fund and $300,000 from the Water Innovation Trust Fund.

These efforts will pave the way for improved access to safe water and a more sustainable future for Sri Lanka’s water supply and sanitation sector.

September 13, Colombo (LNW):