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New companies with foreign partnerships mushrooming in Sri Lanka

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By: Staff Writer

June 11, Colombo (LNW): Sri Lanka‘s new company registrations including the partnership business with foreigners  have been increased considerably since 2022 up to now  even after economic crisis left deep scars among prospective entrepreneurs struggling to find access to capital, official data shows.  

The trend of increasing foreign partnership companies even during the period of recession was due to the practice of selling land and property to foreigners by interested parties taking advantage of the 2018 amendment to the Restriction on Alienation of Land Act No. 38 of 2014, several   private enterprise associations alleged.   

The companies with foreign shareholders have been registered through the company registrar with Board of Directors appointed, a senior finance ministry official said adding that both local and foreign private sector would be able to buy shares.

Foreigners holding over 49 percent shares of companies can own the freehold of any property where the individual proprietors benefit from shared facilities – this includes, apartment blocks, resort developments and condominiums

For all other properties – lands, villas, hotels – foreigners can hold a 99 year lease in their own name, or buy through a minority owned company with a local majority shareholder, he added.

1,995 new companies have been set up in in January 2024, on top of 4,500 companies registered in 2023 despite the gravest economic crisis in the country’s history, according to statistics of the company registrar department.  

The number of registration of companies has risen to 22,376 in 2023 from 17.819 in 2022 at a time where 204,100 factories have been permanently closed and 59,100 factories have been temporarily closed, department of census and statistics revealed.

The Department of Registrar of Companies is strictly monitoring the companies registered with the department to prevent operating of shadow or dud companies, Registrar General of Companies Sanjeewa Dissanayake told the Business Times.

He noted that the department has posted a revenue of over Rs 1 billion last year from company registrations and the officials keep a close tab on the process of filing annual reports and financial statements of companies.

The company registrations are being done under Sole Proprietorship, Partnership, Private Limited Company,. Public Limited Company and Company Limited Guarantee.

However he noted that he cannot comment on the breakdown of a particular category and the intentions of entrepreneurs setting up of new companies.

Vice President, of Sri Lankan Micro Small and Medium Chamber of Commerce Mahendra Perera told the Business Times that starting a new genuine business under the present economic situation was impossible.

The sustenance of new ventures cannot be guaranteed as the prospective entrepreneurs are suffering from economic hard ships, high electricity bill coupled with production costs and unbearable taxes, he said.

However he noted that new companies are coming up with foreign partnership with local proprietors aiming to earn money by selling property at high prices to foreigners making use of the ease in regulations.

He claimed that no one will form a new company except persons with hidden agenda at a time where 204,100 factories have been permanently closed and 59,100 factories (have been temporarily closed.

Dollar value against LKR at SL banks today (June 11)

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June 11, Colombo (LNW): The Sri Lankan Rupee after a short hiatus continued its trend of depreciation against the US Dollar today (11) in comparison to yesterday at leading commercial banks in the country.

At Peoples Bank, the buying price of the US Dollar has increased to Rs. 297.63 from Rs. 297.14, and the selling price to Rs. 307.71 from Rs. 307.20.

At Commercial Bank, the buying and selling prices of the US Dollar remain unchanged at Rs 296.58 and Rs. 306.75, respectively.

At Sampath Bank, the buying price of the US Dollar has increased to Rs. 298.50 from Rs. 298, and the selling price to Rs. 307.50 from Rs. 307.

Sri Lanka optimistic in reaching agreement following debt-restructuring talks

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By: Staff Writer

June 11, Colombo (LNW): Given the current favorable macroeconomic headwinds and economic resurgence, Sri Lanka’ is optimistic in finalising debt-restructuring talks now ingoing with international creditors and entering into an agreement on the US$12 billion debt re-work proposal, finance ministry official said.

The Government’s macroeconomic policy reforms are starting to bear fruit. Commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth, while preserving stability of the financial system, he added.

Sri Lanka will be bringing its debt service levels below 30 percent of revenue. Public finances have strengthened following substantial fiscal reforms, and it is critical that this reform momentum be continued.

The debt deals being negotiated with a group of bondholders steering committee have not been provided real debt cancellation or actual write offs of debt stock,

The rescheduling agreement reached so far with bondholders by Sri Lankan authorities suggest a loan repayment moratorium for its US$ 12 billion bilateral debts until 2028.

A 30 percent haircut on dollar-denominated bonds, including international sovereign bonds among the major clauses included in the new debt restructure proposal. It was rejected during first round of talks in London.

Sri Lanka has submitted a new restructuring proposal to dollar bondholders through its adviser Lazard as the island nation seeks to complete revamping its defaulted debt, according to finance ministry official in London familiar with the negotiations with IMF.

The deals with bondholders may include contingency clauses to increase payments to them if/when the country reaches positive economic results

These contingency clauses ensure more benefits for the private creditors if the country does well, but they do not include reduced payments if there is a negative shock

The government plans to replace current US dollar denominated ISBs with new ones in the same currency.

The outstanding value of these ISBs amounts to $12.1 billion, a significant portion of the $22 billion external debt slated for restructuring.

Sri Lanka’s external debt stock stood at US$ 37.3 billion as of December 2023, bilateral debt at US$ 10.8 billion, multilateral debt at US$ 10.84 billion, and commercial loans at US$ 14.74 billion Banks have been invited to submit proposals to be considered for the role of Dealer Manager, collaborating with financial and legal advisors Lazard Frères SAS and Clifford Chance LLP.

Sri Lanka Original Narrative Summary: 11/06

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  1. President Ranil Wickremesinghe meets India’s External Affairs Minister S. Jaishankar in New Delhi: Discussions centred on resuming stalled projects and bilateral relations: Jaishankar pledges support for Sri Lanka’s economic reforms and announced plans for an industrial zone: Wickremesinghe outlines decentralisation measures and a forthcoming reconciliation bill: They also address agricultural modernisation and fishermen issues: Wickremesinghe extends an invitation to the Indian Prime Minister.
  2. The SJB lodges a complaint with the CID concerning a ‘fabricated letter’ claiming that party leader Sajith Premadasa agreed to participate in a debate hosted by ITN: The SJB’s legal counsel emphasises the need for a fair investigation, noting a similar complaint filed on April 26: The ‘fraudulent document’ circulated on social media purported Premadasa’s involvement in a debate with NPP leader Anura Kumara Dissanayake, despite only Dissanayake participating in the broadcast, as the SJB clarified that Premadasa never accepted an invitation for the programme.
  3. A group comprised of both local and foreign economic experts holds a meeting with the NPP at the JVP HQ in Pelawatta: Argentina’s former Finance Minister and Columbia University Professor Martin Guzman, Massachusetts University’s former Regional Director Professor Jayati Gosh, senior lecturer of the UN’s Millennium Project Charles Abugre, and senior lecturer of Jaffna University Dr. Ahilan Kadiragamar attended the meeting: The meeting involved a lengthy discussion about the current economic crisis in Sri Lanka, the barriers imposed by the IMF and the government’s economic policies.
  4. The Constitutional Council delays extending Attorney General Rajaratnam’s tenure, awaiting further discussion: The President proposed a six-month extension, but approval is pending: The Council plans to reconvene on the 18th to reach a decision.
  5. As floodwaters recede, a surge in fly numbers raises concerns for health authorities, posing risks of diarrhoea outbreaks and viral fevers: Dr. Deepal Perera warns flooded areas accelerate fly breeding, leading to contamination of food and water sources: Flies carry pathogens causing diseases like diarrhoea and fevers: Urgent measures include sealing garbage and ensuring clean water sources.
  6. The upcoming IMF Board meeting on June 12 will evaluate Sri Lanka’s economic policies and reform progress, focusing on the Article IV consultation and second review under the Extended Fund Facility (EFF): Following a recent second review by the IMF team, the Executive Board will discuss releasing the third tranche of the approximately US$ 3 bn facility for Sri Lanka: Finance State Minister Shehan Semasinghe emphasises Sri Lanka’s need for continued international support to unlock the third tranche, which is anticipated to enhance economic stability, growth, and reform efforts in the country.
  7. Census and Statistics Department reveals computer literacy in Sri Lanka surged to 39% in 2023, with digital literacy slightly higher at 63.5%: Urban areas show better proficiency: Household computer ownership is at 20.2%, with 34% in urban, 18.1% in rural, and 4.6% in estate areas: The Western Province has the highest computer availability at 33.5%: Computer literacy rose by 4.7 percentage points since 2021: Males (40.9%) show higher computer literacy than females (37.2%): Education and English proficiency positively correlate with computer literacy: Digital literacy is higher at 63.5%, with internet usage highest among 20-24-year-olds.
  8. The Urban Development and Housing Ministry takes immediate steps to dismantle unauthorised constructions aggravating flooding in Colombo: plans to issue directives to all government bodies within two weeks to address the issue: Preserving Colombo’s wetlands is crucial, as obstruction of water channels worsens floods: Collaborating with various agencies, including the UDA and Irrigation Department, initiatives for flood mitigation are underway: The strategy involves short, medium, and long-term projects like water supply enhancements, landscaping, pumping stations, and drainage improvements.
  9. The Sri Lanka Navy, with DFCC Bank, plants mangroves in Waikkala Lagoon, coinciding with World Environment Day, as part of its conservation efforts: These projects sustain biodiversity, prevent coastal erosion, and mitigate global warming: The initiative involves planting 400 mangrove saplings and included officials from various organisations.
  10. The Boxing Association of Sri Lanka chooses four senior and two junior boxers to compete in the Seychelles Constitution Day Boxing Tournament on June 21-22: Selected from the Sri Lanka Army, Air Force, and Police, the boxers earned their spots after a selection tournament on June 8: Among the senior team are HWGP Rathnasiri (Police), KG Pathmasiri (Army), DG Udayakumara (Air Force), and PSSP Fernando (Army): The junior team comprises JMT Deshan and Malith Bandara. Pathmasiri and Fernando secured their places with victories over Navy boxers, while Udayakumara reversed last year’s result against Chandrabandara.

India’s U-Solar Energy takes over SL hybrid power project displacing China

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By: Staff Writer

June 11, Colombo (LNW): India has agreed to build three Sri Lankan wind farms on islets shared by the two countries, marking a victory for New Delhi after the project was pulled away from a Chinese business.

New Delhi has long been concerned about the region’s expanding Chinese influence.This can be considered a success for India after the project was taken away from a Chinese corporation.

A Chinese company was given a $12 million project to erect wind turbines on three small islands in the Palk Strait between southern India and Sri Lanka, with money from the Asian Development Bank (ADB).

However, construction on the project on the islets of Nainativu, Analaitivu, and Delft was never started, and the project on the islets of Nainativu, Analaitivu, and Delft was ultimately cancelled.

Sri Lanka has awarded the contract to implement a solar –wind hybrid power project in three islands off the Jaffna peninsula 50 kms away from the Tamil Nadu’s coast to an Indian company U-Solar Clean Energy Solutions following its comeback to take over the task.

The relevant tender has been awarded to Indian Company although it has formally withdrawn their bid from the bidding process and later expressed willingness to take over the project, Chairman of the Sri Lanka Sustainable Energy Authority (SLSEA) Engineer Ranjith Sepala said

In a landmark collaboration, UK-based Ryse Energy, the global leader in distributed renewable energy systems with over 180,000 installations across all seven continents, and U-Solar, one of India’s fastest growing solar EPC and developers, have signed an agreement for the development of hybrid renewable energy systems, he disclosed.

He said that U-Solar Clean Energy was the only bidder for the tender and the Indian Company t was selected by the cabinet approved standing procurement committee.

Moreover India has offered to fund the US$ 12 million project with a grant and also execute it, he said adding that considering the benefits of the Indian proposal, the power and energy ministry has decided call for tender from prospective bidders of India in accordance with the $10 million grant agreement.

The selected Indian company U-solar has already provided $ 1million bid bond Chairman of SLSEA Eng Ranjith Sepala disclosed pointing out that there was no issue relating to the deal as there was only one bidder for the tender.

The cabinet meeting on December 11 last year decided to award the contract to U Solar Clean Energy Solutions (Pvt) Ltd to build hybrid recycled power plants in Delft, Nainathivu, and Analathivu suspending awarded to Sinosoar-Etechwin Joint Venture in China, to execute the same project.

Labour Minister’s talks in Geneva drive SL’s commitment to employment reforms

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June 11, Colombo (LNW): Labour and Foreign Employment Minister Manusha Nanayakkara engaged in a significant meeting with Mr. Gilbert F. Houngbo, the Director-General of the International Labour Organisation (ILO), during the Annual International Labour Conference (ILC) in Geneva.

Joined by key officials from Sri Lanka’s Ministry and the ILO, Minister Nanayakkara discussed various crucial initiatives aimed at improving labour standards and employment conditions in Sri Lanka.

The discussion covered several key points, including progress towards ratifying important ILO conventions such as the Work in Fishing Convention (C188), as well as provisions within the new Employment Act focused on combatting discrimination and workplace violence.

Plans to ratify additional conventions, including those addressing occupational safety and health and the protection of domestic workers, were also outlined.

Additionally, the meeting addressed Sri Lanka’s social security policy, focusing on unemployment benefits, maternity benefits, and employment injury insurance, with Nanayakkara highlighting the need for ILO support in strengthening this framework.

Updates were provided on the development of the National Labour Market Information System (NLMIS), aimed at addressing gaps in the labour market by providing comprehensive data.

Furthermore, Minister Nanayakkara discussed the Labour Market Recovery and Transformation Strategy (LMRTS), launched with ILO’s assistance, which focuses on job creation, skills enhancement, and institutional reforms.

Houngbo commended Sri Lanka’s efforts, particularly on the government’s recent move of increasing the daily wage of plantation sector workers and the adherence to social dialogue principles.

The meeting also touched upon an upcoming collaboration with the ILO and the International Organisation for Migration (IOM) to train care workers, aiming to enhance women workforce participation and ensure decent working conditions for women in Sri Lanka.

Overall, the discussions highlighted Sri Lanka’s commitment to labour reforms and international cooperation in improving workforce employment standards and social protection.

Mangrove planting initiative launched in Waikkala Lagoon to conserve coastal ecosystems

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June 11, Colombo (LNW): The Sri Lanka Navy, in collaboration with DFCC Bank, initiated a mangrove planting project in the Waikkala Lagoon of Negombo on June 07, coinciding with World Environment Day.

This endeavour forms a part of the Navy’s continual efforts towards coastal and marine ecosystem conservation.

With a dedicated focus on preserving mangrove ecosystems, the Sri Lanka Navy actively engages in environmental conservation initiatives.

These endeavours play a crucial role in sustaining biodiversity and safeguarding the coastal environment.

Mangroves offer various ecological advantages, such as coastal erosion prevention, efficient carbon dioxide absorption, air purification, and mitigation of global warming.

Additionally, they act as essential natural breeding grounds for fish. To ensure the long-term protection of mangrove ecosystems, the Sri Lanka Navy has initiated a mangrove conservation project, involving the plantation of mangroves along rivers, estuaries, and lagoons.

The latest phase of this project was carried out by SLNS Kelani of the Western Naval Command, in collaboration with DFCC Bank.

The initiative involved the planting of 400 mangrove saplings in the Waikkala Lagoon.

Present at the event were Captain Tharanga Jayasuriya, Commanding Officer of SLNS Kelani, staff members from DFCC Bank, lecturers from the University of Sri Jayewardenepura, university students, representatives from the Department of Coast Conservation, officers from Wennappuwa Police Station, as well as officers and sailors from SLNS Kelani.

SL congratulates Nirmala Sitharaman for being re-appointed as India’s Finance Minister

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By: Isuru Parakrama

June 11, Colombo (LNW): Sri Lanka applauded the reappointment of Nirmala Sitharaman for being re-appointed as the Minister of Finance in India.

Finance State Minister Shehan Semasinghe congratulated Sitharaman on being reappointed for a second term in Office, emphasising that this occasion provides an enhanced opportunity to strengthen the ties between the two nations.

India’s Premier Narendra Modi has maintained continuity in key ministerial positions within his cabinet, demonstrating a commitment to policy stability in India’s rapidly advancing economy.

On Monday (10), the Indian government announced the reappointment of Nirmala Sitharaman as India’s Finance Minister, a role she has held since 2019.

Additionally, Amit Shah remains the Minister of Home Affairs, Subrahmanyam Jaishankar continues as the Minister of External Affairs, Piyush Goyal retains his position as Commerce Minister, and Nitin Gadkari stays on as the Minister of Transport.

It is also noteworthy that Sitharaman maintains the acclamation as the first woman Finance Minister of India.

IMF Board meeting to evaluate SL’s economic policies and fund facility progress tomorrow (June 12)

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June 11, Colombo (LNW): The upcoming IMF Board meeting scheduled for June 12 will feature discussions on the Article IV consultation and second review under the Extended Fund Facility (EFF) for Sri Lanka.

The session aims to assess Sri Lanka’s economic policies and the progress of reforms.

Notably, a team from the IMF recently concluded the second review of the programme for Sri Lanka.

During the meeting, the IMF Executive Board will deliberate on the staff review to facilitate the disbursement of the third tranche of the approximately US$ 3 billion facility allocated to the island nation.

State Minister Shehan Semasinghe highlighted Sri Lanka’s anticipation for continued support from all countries to ensure a successful review and unlock the third tranche.

This disbursement is expected to further bolster economic stability, growth, and reform efforts in the country.

CAA warns public of flood-contaminated chicken, urges caution in purchases

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June 11, Colombo (LNW): The General Workers’ Association of the Consumer Affairs Authority (CAA) has cautioned the public regarding the purchase of chicken amidst recent floods, citing an increased risk of contamination, a report by Daily Mirror reveals.

Ajith Jayasundara, General Secretary of the Association, denoted the submergence of numerous poultry farms, leading to the deaths of many birds, according to report.

Floodwater may carry various viruses, such as rat fever, posing a threat to these birds. Moreover, the spread of bacteria in floodwaters could further compromise their health, he explained.

Jayasundara further told Daily Mirror that the CAA had conducted inspections on chicken-selling stalls post-floods, uncovering deceased birds.

“Typically, prepared chicken exhibits a white skin tone with removed heads and drained blood. However, a reddish hue in the skin may indicate exposure to floodwaters,” he emphasised.

The Association has observed such discoloured chicken in select supermarkets and retail outlets situated in flood-affected regions.

Additionally, concerns were raised regarding the processing of various animals into meat products like meatballs and sausages.

The Association urged the CAA to swiftly investigate meat stalls.