By: Isuru Parakrama
January 30, Colombo (LNW): Mavai Senathirajah, a former Member of Parliament for the Illankai Tamil Arasu Kachchi (ITAK), has died following a short illness.
He had been receiving treatment at the Emergency Treatment Unit of Jaffna Teaching Hospital after sustaining injuries in an accident at his home several days ago.
As Sri Lanka reopens passenger vehicle imports on February 1, experts are urging the government to implement a revised tax system to manage the anticipated surge in demand and reduce revenue loss from under-invoicing.
Murtaza Jafferjee, Chair of the Advocata Institute, has proposed a temporary surcharge tax on vehicle imports to address the initial demand spike. Speaking at the HNB Leasing forum titled “Sri Lanka Motor Industry: Outlook for 2025”, Jafferjee criticized the country’s rigid economic policies, which he believes encourage imports at the expense of domestic production.
He called for a more balanced monetary and fiscal policy framework that prioritizes sustainable growth.
“The current system incentivizes imports but hinders the development of local goods,” Jafferjee stated, emphasizing the need for progressive taxation and strategic reforms to support local industries and create a sustainable economic model.
Jafferjee also highlighted inequities in the vehicle taxation structure, which taxes vehicles based on categories.
He argued that this system disproportionately affects certain population segments, making vehicle ownership inaccessible for many. To address these disparities, he proposed a flat tax system that would promote equitable access to vehicles while stimulating broader demand.
He further stressed the importance of announcing tax policies in advance and maintaining consistency to ensure market stability. This view was supported by Charaka Perera, a past president of the Ceylon Motor Traders’ Association (CMTA).
Senior Economic Advisor to the President, Duminda Hulangamuwa, explained that the primary aim of reopening vehicle imports is to generate Rs. 300 billion in government revenue. While property taxes could be a more equitable revenue source, Jafferjee acknowledged that vehicle taxation offers an easier avenue due to the strong cultural attachment Sri Lankans have to cars.
However, Jafferjee criticized the current unit-based duty system, which taxes vehicles based on engine size and capacity. He argued that this system is flawed, leading to market distortions and encouraging under-invoicing. “The current system creates inefficiencies, particularly with the differential treatment of electric and internal combustion engine vehicles,” he said.
To address these issues, Jafferjee suggested using gross vehicle weight as the basis for taxation. Unlike engine size, gross vehicle weight is less prone to manipulation and avoids interference in engineering decisions. He also advocated for a Value-Added Tax (VAT) system, calling it the most efficient and equitable way to generate revenue from vehicle imports.
Despite the policy changes set to take effect, Hulangamuwa noted that the arrival of vehicles would take time. Used vehicles are expected to take 1–1.5 months to reach the market, while brand-new vehicles could take up to six months.
The government faces the dual challenge of managing initial demand surges while ensuring fair and sustainable revenue generation. Experts like Jafferjee emphasize the importance of aligning taxation policies with long-term economic goals to create a more balanced and equitable automotive market.
Despite recent efforts by Sri Lanka Customs, the Colombo Port faces severe congestion, causing delays and financial strain on stakeholders. As of January 16, 1,615 containers were released from terminals, but only 1,337 exited the port, illustrating the bottleneck. The government’s 24-hour customs operation initiative has yet to deliver tangible improvements.
Key Challenges
Persistent Inefficiencies
While container handling at terminals has improved, delays in customs clearance and insufficient staffing persist. In 2024, the port handled 7.7 million containers (a 12.3% increase) with growing transshipments to the Middle East. However, inefficiencies are forcing shipping lines to bypass Colombo, harming its reputation as a regional hub.
Stakeholder Struggles
Importers face demurrage charges, customs fees, and transportation delays, while truck drivers endure poor working conditions and long wait times. The backlog also disrupts the supply chain for export processing, exacerbating financial losses.
Inadequate Infrastructure and Resources
The port operates with only two scanners, and customs typically closes by 3 a.m., far from the promised 24/7 schedule. Some shipments take up to eight days to clear, despite originating from nearby locations like India. Internal disputes among stakeholders and political factors further worsen the situation.
Export-Import Imbalance
Export containers face significant delays due to priority given to imports by a private terminal operator. Exporters, who pay standard fees for port access, see their rights violated, causing disruptions in foreign exchange earnings and national output.
Short-Term Solutions
24/7 Customs Operations
Customs, along with inspection authorities like the Food Control Department and Quarantine Services, must operate round-the-clock until the backlog clears.
Emergency Resource Allocation
Deploy additional resources for inter-terminal trucking and container storage, including establishing secure off-site depots.
Incentives for Transporters
Short-term incentives will have to be encouraged transporters to move released containers out of the port promptly.
Improved Coordination
It has to facilitate better communication between customs and inspection agencies to streamline clearance processes.
Long-Term Solutions
Capacity Expansion and Modernization
Increase inspection points, upgrade technology, and adopt best practices from other Asian ports. Enhanced use of intelligence tools and blacklisting non-compliant traders can boost efficiency.
Systematic Improvements
Establish a mechanism for real-time communication between customs, industry stakeholders, and government organizations to prevent recurring issues.
Strategic Policy Review
Analyze recurring and seasonal port challenges, as well as regional policy impacts, to proactively mitigate congestion.
Cultural and Operational Shift
Encourage a paradigm shift in business practices within customs and port operations, fostering a more business-friendly environment.
Consequences of Inaction
Failing to address the congestion threatens Colombo’s status as a key logistics hub. Delays could drive foreign investors away, while inefficiencies risk long-term economic damage. Industry experts argue that these systemic issues could have been resolved without involving President Anura Kumara Dissanayake, who recently convened a top-level meeting to tackle the crisis.
Lessons from the Past
Port congestion is not new to Colombo. Previous crises were mitigated through coordinated efforts between customs, the Shippers Council, and industry leaders. Revisiting these solutions and adopting international best practices are crucial to restoring Colombo Port’s position as a vital regional and global trading center.
Successive Sri Lanka governments have implemented 179 projects during the past 33 years with Asian Development Bank funding and Public Sector Participation in key sectors of the economy, ADB Country Partnership report revealed.
However, the potentials of PPPs are not utilized to their fullest because of many obstacles.
These include the absence of an updated and robust PPP framework, full-fledged laws, policies, and institutional mechanisms, and a total lack of public sector expertise to manage such projects.
To address some of these gaps, the previous government set up the National Agency for PPP (NAPPP) and proposed plans for new PPP legislation. The ADB stressed the current government should ensure that there will be transparency in managing contingent liabilities arising from PPPs.
From 1990 to 2023, Sri Lanka implemented 179 PPP projects valued at over USD 5.3 billion, according to the “Public-Private Partnership Monitor Sri Lanka Report” from ADB.
Of this, 162 involved the power sector and five concerned port development. This is evidenced by how much better PPPs have run the ports-the terminals developed under PPP arrangements currently handle about 70 percent of the country’s port traffic.
Besides, 25 percent of Sri Lanka’s electricity is provided by different PPP projects. This report enumerates that most such projects in the country are operational while only three were cancelled.
But all is not well. Some projects within the Provincial Councils were abandoned at midway thus causing massive losses on financial account.
For instance, the National Audit Office recently reported that 32 ADB-supported water supply and allied projects initiated in 2020 had been abandoned by August 2022 due to various reasons such as poor infrastructure, inaccessible roads, non-compliance with approved plans, and improper feasibility studies.
This abandonment of projects midway has resulted in losses amounting to Rs. 3.81 billion .Besides, those projects on water tanks and water purification systems were also unsuccessful due to inappropriate ground conditions or potential lack of capacity.
The report further reveals that infrastructure such as marketplaces, veterinary centers, buildings for Samurdhi projects, and community centers were initiated without any public demand.
Some of these projects were started without conducting feasibility studies. Additionally, the audit uncovered that a significant number of water tanks initiated with the approval of Provincial Councils were constructed without considering ground-level conditions.
It was also found that approximately 25 water projects out of 32 were abandoned midway due to the inadequacy of capacity in water purification systems.
A common characteristic observed in every abandoned project is the lack of proper planning, as highlighted in the audit report.
.The Sri Lankan government has formed a committee to comprehensively review all non-commercial State statutory institutions in the country, with a view to strengthening public service delivery and addressing inherent inefficiencies.
The committee, headed by the Secretary to the Prime Minister, would study institutions regulating sectors such as finance, trade, and the environment, for better efficiency and to facilitate an enabling environment for private sector growth.
This review forms part of the broader efforts of government in modernising and streamlining all public institutions as a way of lessening fiscal burden on the taxpayer.
Inefficient institutions have turned to be one of the major drain to the public resources, thus leading to fiscal deficit which increase pressure on the national budget, a finance ministry report revealed.
Some of the strategies put forward by the government include eliminating inefficiencies, restructuring overlapping agencies, and generating revenue through user fees where appropriate-for example, licensing or service charges.
Other measures have included the carrying out of performance audits, consolidating institutions to reduce redundancy, and transforming loss-making entities into viable operating models, particularly under PPP arrangements.
Cabinet has granted approval to the Review of SOEs with Non-Commercial Interests and has elaborated that it is essential to implement reforms in these institutions.
The Committee will provide proposals aimed at enhancing the effectiveness and adequacy of these institutions in improvement methods that are practical in nature.
Minister Nalinda Jayatissa, Spokesman for Cabinet stated that the Public Service infrastructure currently consists of 86 Departments, 25 District Secretariats, 339 Divisional Secretariats, 340 SOEs, and 115 non-commercial State statutory institutions.
These are organizations of high importance in national security, market regulation, social welfare, and disaster management.
For the year 2024, the National Budget has allocated an amount of Rs. 140 billion to these non-commercial institutions that fall under the Department of National Budget and the Department of Public Enterprises.
The review came about because of concerns on the outdated institutional structures, confusing mandates, and inefficiencies that the private sector entities perform with greater efficiency.
Certain institutions also lack adequate authority or fail to meet modern needs, adding to the strain on resources.
Presently, it contains 527 state-owned enterprises, of which 55 are grouped as “strategically important,” employing the largest number in the public sector. This inefficiency shows that it should go for serious review, and this public sector becomes more efficient, and the taxpayers’ money is utilised in a better way.
It was revealed that Sri Lanka Customs has imposed a tax of Rs. 33 million on a stock of dates donated by Saudi Arabia as a gift for the Ramadan fasting season.
The issue came to light during a media inquiry at the Cabinet press conference. Cabinet Spokesman, Minister Nalinda Jayatissa, stated that the government has decided to relax taxes on dates during Ramadan. However, he clarified that since the donated stock arrived before the tax relief decision was made, customs duties were imposed.
Minister Jayatissa assured that steps are being taken to provide the necessary relief following the Cabinet decision. The 50 metric tons of dates were part of Saudi Arabia’s annual donation to Sri Lanka’s Muslim community during the holy month.
President Anura Kumara Dissanayake announced that the government is prepared to implement structural changes in state-owned enterprises (SOEs) that are operating at a loss. Speaking at the Sri Lanka Economic Summit 2025 in Colombo today (28), he revealed that a study is underway to explore the possibility of listing these enterprises on the Colombo Stock Exchange (CSE) through a holdings company.
“We are not viewing these enterprises from the old perspective. We are ready to make structural changes,” the President stated. He explained that the government is assessing whether merging certain enterprises and issuing shares on the stock market could be a viable solution. Additionally, the administration is considering restructuring corporations and boards to enhance efficiency.
The President acknowledged that some state enterprises perform overlapping functions, making consolidation necessary. “I will be frank—some enterprises are redundant. We may have to close some, merge others, and redefine the scope of certain institutions. We are currently working on identifying these,” he said.
The proposed reforms signal a significant shift in the government’s approach to public sector management, aiming to improve efficiency, reduce financial burdens, and attract investment through strategic restructuring.
Labour Party MP and Under-Secretary of State at the Foreign, Commonwealth and Development Office, Catherine West, was seen examining a Sri Lankan spice product during the launch of two UK-funded export handbooks. These handbooks, produced by the International Trade Centre, aim to assist Sri Lankan businesses in meeting export requirements for apparel, textiles, and agri-food products destined for the UK market.
The event was attended by Industry and Entrepreneurship Development Deputy Minister Chaturanga Abeysinghe and British High Commissioner Andrew Patrick. The initiative is expected to strengthen trade ties between Sri Lanka and the UK, providing local businesses with valuable guidance to access global markets.
Lady Ridgeway Hospital’s Consultant Paediatrician, Dr. Deepal Perera, has raised concerns over a rise in Chikungunya cases among children in recent days. He stated that the disease is transmitted by Aedes aegypti and Aedes albopictusmosquitoes and can be managed with adequate rest and prescribed doses of paracetamol.
Dr. Perera outlined key symptoms of Chikungunya, including high fever, severe joint pain, muscle pain, and darkened skin around the nose. While the disease primarily affects adults, children are also at risk of transmission.
In addition to Chikungunya, Dr. Perera highlighted the prevalence of other diseases among children, such as dengue and childhood asthma. He emphasized the need for maintaining a clean environment to prevent mosquito breeding and reduce the spread of these illnesses.
The public is urged to take proactive measures to control mosquito populations and safeguard children from these potentially serious diseases.
Cabinet Spokesman and Mass Media Minister Dr. Nalinda Jayatissa announced yesterday that the Cabinet has approved the implementation of “Sarusara,” a revamped Rural Credit Scheme aimed at supporting minor and small-scale farmers engaged in short-term crop cultivation and gardening.
Addressing the media at the Government Information Department, Minister Jayatissa explained that the programme, originally introduced in 2020 by the Rural Development Department under the Central Bank of Sri Lanka, provided essential working capital assistance to farmers.
However, due to the enactment of the new Central Bank Act, which prohibits the Central Bank from operating concessionary loan schemes, the government has decided to relaunch “Sarusara” under the Development Finance Department of the Treasury starting in 2025.
The scheme is set to be an annual programme, ensuring consistent support for small-scale farmers. Its objectives include empowering rural farmers, fostering rural development, and strengthening the agricultural sector as a whole.
By reviving “Sarusara,” the government aims to provide crucial financial assistance to farmers, contributing to the overall growth of Sri Lanka’s agricultural economy and enhancing livelihoods in rural areas.
