By: Staff Writer

July 06, Colombo (LNW): Sri Lanka’s efforts to avoid being caught in the crosshairs of U.S. trade tensions remain uncertain after former U.S. President Donald Trump revealed he had signed 12 tariff-related letters, with their contents set to be dispatched Monday. This announcement came after initial expectations that these letters would be issued on Friday, leaving countries like Sri Lanka anxiously awaiting their fate.

“I signed some letters and they’ll go out on Monday, probably twelve,” Trump told reporters on Saturday, adding that they involved “different amounts of money, different amounts of tariffs.” The ambiguity in his statement has only deepened concerns among smaller exporting nations.

Sri Lanka is currently facing a steep 44% tariff on certain exports to the U.S. under Trump’s revived trade policy, a duty that had been temporarily reduced to 10% and suspended until July 9. Colombo had pinned its hopes on securing a revision before this deadline, following weeks of behind-the-scenes lobbying efforts through diplomatic channels and trade envoys—without any direct high-level state involvement.

Cabinet spokesperson Nalinda Jayatissa confirmed last week that Sri Lanka expected to receive official communication from the U.S. ahead of the deadline. “We have an expectation from our side that we can get some amendment of the tariff to minimise the effect on the economy and our exporters as a result of interventions the government has made,” he said.

However, signs point to the revised tariffs potentially taking effect from August 1, further escalating concerns within Sri Lanka’s export sector, particularly the garment industry. The lack of clarity over Trump’s reference to “different amounts of money” has raised speculation that certain nations may have negotiated more favorable terms through increased U.S. imports or strategic concessions.

Smaller economies like Sri Lanka are particularly vulnerable to being sidelined in Trump’s transactional trade calculus. While larger countries like India—whose trade surplus with the U.S. is proportionately smaller—were hit with a relatively modest 26% tariff, others like Pakistan and Bangladesh were assigned 29% and 37% tariffs, respectively.

Sri Lanka, which relies heavily on U.S. markets for apparel exports, fears that the 44% tariff—if reinstated—could make its goods uncompetitive compared to regional rivals, shifting orders to Bangladesh or Vietnam. Trump recently claimed he had reached a deal with Vietnam’s President To Lam to lower its tariff from 46% to 20%, although details remain vague, characteristic of Trump’s often broad-stroke trade remarks.

Without high-level state-to-state engagement, Sri Lanka’s ability to secure meaningful relief appears limited. With just weeks left before potential reimposition, Colombo now faces a race against time to prevent a serious blow to its struggling export economy.

By: Staff Writer

July 06, Colombo (LNW): Sri Lanka has agreed to halt the approval of new tax concessions under the Port City Act and the Strategic Development Projects (SDP) Act, as part of a broader reform agenda under the International Monetary Fund (IMF) program aimed at improving fiscal discipline and transparency.

 The government will amend both laws to establish rule-based, transparent criteria for granting tax incentives and reduce the duration of tax holidays.

The SDP Act has been especially controversial, facing allegations of corruption and offering unusually long tax exemptions, including tax-free salaries to executives—raising concerns about fairness when other individuals earning over Rs. 100,000 are taxed.

 As per the IMF agreement, the SDP Act is scheduled to be amended by August 2025. Revisions to the Port City Act will follow by October 2025, in consultation with IMF staff, to align with international best practices.

According to the IMF, unchecked and overly generous tax exemptions have severely reduced government revenue, contributing to Sri Lanka’s financial crisis. The Fund emphasized that while targeted tax incentives can support foreign investment, they cannot replace essential structural reforms in governance, legal frameworks, labor markets, and land use.

Sri Lanka’s current corporate tax rate of 30% is significantly higher than many East and Southeast Asian economies. For instance, Cambodia, Vietnam, and Thailand levy corporate taxes between 15–20%, while currency-stable regions like Singapore, Hong Kong, and Brunei boast rates under 17%, with some not levying personal income taxes at all. The high tax burden in Sri Lanka, compounded by periodic currency crises, has undermined investor confidence.

The IMF and local analysts have criticized Sri Lanka’s repeated monetary policy missteps, especially the central bank’s reliance on aggressive money printing and interest rate targeting, which has destabilized the currency. Since 2012, the rupee has depreciated from 113 to over 300 per US dollar, triggering economic instability, public unrest, and the eventual default on external debt.

Although the government had earlier pledged to freeze new exemptions, Sri Lanka admitted that it had recently granted tax benefits to 24 companies designated as “Businesses of Strategic Importance” without consulting the IMF. These include four primary businesses, three duty-free enterprises, and 17 secondary businesses. Despite the breach, authorities said these approvals would stand due to legal and reputational concerns.

The government has committed to sharing monthly updates on tax exemptions with the IMF to ensure greater oversight. The IMF stressed that maintaining these commitments is vital for restoring credibility and preventing further revenue losses.

Meanwhile, concerns persist that the dollarized Port City, designed to offer monetary stability, may attract mainland firms seeking tax advantages, resulting in further leakage of tax revenue. Similar trends are already observed, with Sri Lankan businesses reportedly relocating operations to tax-friendly jurisdictions like Dubai.

By: Staff Writer

July 06, Colombo (LNW): In a major step toward preserving and rediscovering Sri Lanka’s colonial intellectual heritage, the Cabinet of Ministers has greenlit a groundbreaking research project focusing on Dutch-era palm leaf manuscripts of Sri Lankan origin.

The initiative, spearheaded by the Department of National Archives, comes after successfully securing a competitive research grant of €384,248 (approximately Rs. 140 million) from the Netherlands Research Council.

This project—titled “Whose Knowledge, Whose Values? Palm Leaf Manuscripts and the Question of Colonial Collections in Dutch Heritage Institutions”—will span from 2025 to 2029 and is part of a wider thematic academic inquiry into the provenance, ownership, and cultural significance of colonial-era knowledge artifacts.

The project brings together six partner institutions, including Sri Lanka’s Department of National Archives and leading academic entities such as the Free Universities of the Netherlands.

It has already received clearance from the Attorney General’s Department, with endorsements from the Ministry of Foreign Affairs, the Ministry of Foreign Employment and Tourism, and the External Resources Department.

The proposal was submitted by Prof. Hiniduma Sunil Senevi, Minister of Buddhism, Religious Affairs, and Cultural Affairs, and approved by the Cabinet this week.

The focus of this initiative lies in the rediscovery, documentation, and academic study of palm leaf and ola leaf manuscripts that were created or collected during the Dutch colonial regime in Sri Lanka, which lasted from 1658 to 1796.

These manuscripts—often written in Sinhala, Tamil, or Pali—covered a wide range of subjects, including local laws, Buddhist teachings, Ayurveda, astrology, and regional administrative practices.

During their 138-year rule in Sri Lanka, the Dutch East India Company (VOC) established a complex administrative and legal structure in the coastal areas they controlled. Local scholars and scribes recorded traditional and administrative knowledge on palm leaves, some of which were later collected by Dutch officials and shipped to the Netherlands.

These documents today remain stored in libraries and museums such as the Leiden University Library and the National Archives of the Netherlands, often with minimal contextualization or academic examination.

The current project aims to bridge that gap, facilitating joint research, digital archiving, and contextual interpretation of these manuscripts to better understand their origins and historical significance. It also addresses broader ethical questions regarding colonial-era collections and their rightful ownership or stewardship.By bringing these ancient texts into modern scholarly discourse, Sri Lanka hopes to not only reclaim a part of its lost intellectual legacy but also to contribute to global debates on cultural restitution and historical justice.

By: Staff Writer

July 06, Colombo (LNW): Japan has pledged continued support for Sri Lanka’s economic recovery and development agenda through a multi-pronged approach that emphasizes fiscal reform, social resilience, and peace-building.

The commitment was reiterated during the Japan-Sri Lanka Economic Cooperation Policy Dialogue held in Colombo on Friday, July 4, 2025.

The meeting marked a crucial step in strengthening bilateral ties as Sri Lanka actively seeks international support to navigate its ongoing economic stabilization program, aligned with the International Monetary Fund (IMF)’s Extended Fund Facility.

The Sri Lankan delegation, led by newly appointed Treasury Secretary Harshana Suriyapperuma, formally requested Japan’s sustained cooperation in backing existing yen-loan funded projects and bridging financing gaps to attract further foreign investment.

Japan was represented by Ishizuki Hideo, Assistant Minister and Director General of the International Cooperation Bureau at the Ministry of Foreign Affairs.

He highlighted Japan’s commitment to supporting Sri Lanka’s efforts to recover from the 2022 economic collapse, rebuild its financial systems, and reduce poverty and inequalities—all under the broader umbrella of achieving the Sustainable Development Goals (SDGs) and promoting human security.

Ishizuki outlined three strategic pillars guiding Japan’s assistance: implementing fiscal and structural reforms for long-term stability, strengthening social resilience, and ensuring peace and good governance.

“Japan will continue to provide support to the people of Sri Lanka to help the country fully recover from the economic crisis and return to a path of progressive development,” he said.

Sri Lanka has been a major beneficiary of Japan’s Official Development Assistance (ODA) over the decades. Currently, Japan’s active yen loan portfolio in Sri Lanka exceeds ¥350 billion (approximately US$ 2.3 billion or Rs. 710 billion), funding key infrastructure and development projects.

These include the New Kelani Bridge, the Bandaranaike International Airport Expansion Project, the Anuradhapura Integrated Water Supply Project, and the Greater Colombo Transmission and Distribution Loss Reduction Project.

While many of these projects are ongoing, some have faced delays due to Sri Lanka’s economic and foreign exchange crisis in recent years. The Japanese delegation’s visit signals a renewed interest in resuming and accelerating stalled initiatives, provided that governance, transparency, and reform assurances are met.

Treasury Secretary Suriyapperuma emphasized the urgent need for both technical expertise and financial aid to support reforms, including those aimed at strengthening debt sustainability, public sector efficiency, and climate resilience.

The Finance Ministry said the dialogue fostered positive discussions on future economic cooperation, with both sides acknowledging the importance of deepening development ties amid evolving global and regional challenges.

By: Staff Writer

July 06, Colombo (LNW): In a major boost to Sri Lanka’s aviation infrastructure and border health preparedness, the Government of Japan has extended critical support to Bandaranaike International Airport (BIA) through the donation of state-of-the-art screening and sanitation equipment. This initiative not only strengthens national resilience against future health crises but also underscores Japan’s continued commitment to improving the island nation’s aviation sector.

The equipment, officially handed over at a ceremony held at BIA’s Silk Route Lounge, is part of a broader USD 8.4 million regional grant from the Japanese government, implemented in collaboration with the International Organization for Migration (IOM). The donation falls under the regional project titled “Strengthening Capacity of Border Control for Responding to Infectious Diseases in Southwest Asia.”

This is the third phase of Japan’s contributions under the program and includes several high-tech installations designed to enhance both passenger safety and airport operations. These include 13 advanced baggage and cargo scanners—introducing C2-level screening technology in Sri Lanka for the first time—alongside a fully equipped isolation room for emergency medical responses.

Also included in the package is a compact refuse collection truck and 50 modern Euro carts to significantly upgrade BIA’s waste management system. These additions aim to facilitate faster, contactless passenger processing and boost the airport’s sanitation capabilities, making it more resilient to potential future pandemics.

Senior officials from the Government of Sri Lanka, the Japanese Embassy, Airport and Aviation Services (Sri Lanka) Ltd. (AASL), and IOM leadership participated in the handover event. The gathering was accompanied by a walkthrough showcasing the new installations, featuring live technical demonstrations by IOM and airport staff.

The event also coincided with the visit of IOM’s Regional Director for Asia and the Pacific, highlighting the agency’s ongoing collaboration with Sri Lankan authorities to align national mobility systems with global health and security benchmarks.

Japan has long supported Sri Lanka’s airport development. Past assistance includes modernization projects at BIA and Mattala Rajapaksa International Airport, as well as feasibility studies and funding for the expansion of the airport’s terminals and runways.

Further equipment handovers under this initiative are scheduled throughout 2025, with deliveries planned for BIA, Colombo Port, and the Ministry of Foreign Affairs. A formal closing event for the project will be held later this year, cementing Japan’s role as a key partner in Sri Lanka’s aviation and public health resilience strategy.