By: Staff Writer

April 08, Colombo (LNW): Indonesia is seeking to sign its trade pact with Sri Lanka by next March while hoping that one year of negotiations is enough to close the deal.

It has only been a few weeks since Indonesia and Sri Lanka agreed to formally discuss the preferential trade agreement (PTA).

The first round of negotiations already took place virtually earlier this week, which zeroed in on the work plan and draft agreement text. The negotiators are set to enter more substantial chapters in the coming rounds.

“Indonesia and Sri Lanka are … aiming to substantially conclude the negotiations by end-2024. We have also set a target to sign the agreement in March 2025,” a press statement by the Trade Ministry reads.

The second round of talks is scheduled to take place in Colombo on June 19-20. Both countries will discuss the text concept, as well as market access.

During the negotiations launching ceremony last month, Deputy Trade Minister Jerry Sambuaga said the PTA would become a building block to a free trade agreement (FTA).

Unlike the PTA whose scope is still limited, an FTA is more ambitious in nature and usually aims to remove the tariffs across all or most goods.

Jakarta also said at the time that the upcoming PTA could help Indonesian goods such as palm oil, paper, and fatty acid to gain better access to the Sri Lankan market.

Indonesia and Sri Lanka have launched the negotiations for a preferential trade agreement (PTA) after waiting since 2017.

A PTA typically reduces or eliminates tariffs on selected goods, making it the first step in economic integration. During the launch, both countries found the PTA to become a key building block towards a free trade agreement (FTA) — a more comprehensive deal that usually aims to lift the tariffs across all goods.

“With this PTA, Indonesia has the potential to boost exports to Sri Lanka for its leading products such as palm oil, paper, and fatty acid,” Djatmiko Bris Witjaksono, the director general for international trade agreements, was quoted as saying in a press statement recently .

Last year, Sri Lankan President Ranil Wickremesinghe and Jokowi agreed to begin the trade pact negotiations soon during their meeting in China.

The Indonesian government data shows that the bilateral trade with Sri Lanka was valued at $369.7 million in 2023, up by 17.61 percent from $314.4 million recorded in the previous year.

Indonesia has managed to maintain its surplus with the island country in the past five years. Last year, Indonesia’s surplus amounted to $283.5 million.In January 2024 alone, the bilateral trade amounted to $23.5 million.

Indonesia mainly exports copra, petroleum, paper, cartons, tobacco, as well as coal to Sri Lanka. Knitted fabrics and tobacco processing machines were among Indonesia’s top imports from the South Asian country, according to the Trade Ministry.

By: Staff Writer

April 08, Colombo (LNW): The Commercial Bank of Ceylon has opened up a world of new opportunities for Sri Lankan businesses, by becoming the first bank in Sri Lanka to enable Alipay QR Code payments under unified Lanka QR.

Alipay e-wallet holders, currently numbering over 1 billion, can now scan the Commercial Bank LankaPay unified QR code issued to Sri Lankan merchants to make payments from anywhere in the world, as a result of this latest development.

The Bank said more than 50,000 of the Bank’s merchants will be enabled to accept the Alipay QR when the Bank completes the deployment of the new QR across its network, facilitating access to a vast new customer segment. Around 28,000 merchants who have POS devices can already accept Alipay QR payments via POS devices after enabling the service by calling the bank.

“This is a huge breakthrough for Sri Lankan businesses, and we are proud to be the Bank that unlocks the potential of the Alipay portal for them,” Commercial Bank’s Deputy General Manager – Retail Banking & Marketing Mr Hasrath Munasinghe said.

“This will also enable thousands of tourists visiting Sri Lanka to scan and pay using their Alipay e-wallets, and enhances the versatility of the LankaPay platform, he added..”

As a leading digital payment and lifestyle service platform, Alipay helps partners and more than 80 million merchants in China to effortlessly serve over 1 billion Chinese consumers.

The company’s proprietary technology and 20 years of quality services support mobile-savvy Chinese consumers to instantly and safely scan to pay when making online and offline purchases in China or travelling overseas.

Commercial Bank has the distinction of launching the first QR-based payment application on LankaPay’s LankaQR platform, a Central Bank of Sri Lanka initiative to ensure all QR codes and QR based transactions in Sri Lanka are standardised and interoperable.

The application, ComBank Q+, recently won the Gold award for ‘Best Mobile Application for Retail Payments via LankaQR’ at the LankaPay Technnovation Awards 2024.

The largest private sector bank in Sri Lanka, the first Sri Lankan bank to be listed among the Top 1000 Banks of the World and the country’s first 100% carbon neutral bank,

Commercial Bank operates a strategically-located network of branches and 964 automated machines island-wide, and is the largest lender to Sri Lanka’s SME sector.

Commercial Bank has the widest international footprint among Sri Lankan Banks, with 20 outlets in Bangladesh, a Microfinance company in Nay Pyi Taw, Myanmar, and a fully-fledged Tier I Bank with a majority stake in the Maldives.

By: Staff Writer

April 08, Colombo (LNW): Almost two years after defaulting on its external debt payments, Sri Lanka’s macroeconomic position and foreign reserves have improved, but remains very fragile although the World Bank’s projection of moderate growth of 2.2% in 2024, World Bank report revealed.

The continued external debt service suspension, inflows from development partners, large purchases of foreign exchange, and postponed repayments on existing credit lines have helped build usable official reserves to about 3 months of imports (US$4.9 billion by end-March  2024, compared to US$500 million in December 2022).

But this improvement is fragile. First, excluding currency swaps, “usable” reserves cover only 2.3 months of imports according to the IMF.

Sri Lanka’s gross official reserves grew 431 million dollars to 4,951 million US dollars in March 2024 from 4,520 million dollars in February, data from the central bank shows.

Gross official reserves include both monetary and fiscal reserves of the government that usually come from loans and grants.

Though gross official reserves are listed as 4.9 billion dollars by March, data shows that by February, the central bank’s net foreign exchange position was a negative 2.2 billion US dollars due to its borrowing.

The central bank bought over 400 million dollars in January and February and also allowed the exchange rate to appreciate amid deflationary policy.

The central bank had loans to India, the IMF and it had 3.2 billion dollars in swaps by February 2024, and they are being progressively being settled with reserves collected from deflationary policy or mopping up dollars bought outright from current transactions.

By engaging in swaps with domestic counterparties, the central bank can effectively print money, mis-target rates if the generated rupees are not mopped up, and leave the monetary accounts saddled with a debt in case the money is used for ‘reserves for imports’

Secondly, the recovery in external accounts results mainly from international financial aid, the suspension of payments of debt principal on the government’s external debts, the reduction in imports (a consequence of the economic crisis) and restrictions the central bank has imposed on imports, capital outflows and foreign exchange.

 These restrictions remain in force, even though they have been significantly relaxed since the summer. With the return to growth, the country would expect an increase in the current account deficit.

In addition, the restructuring of the government’s external debt has still not been finalised. The government must rapidly reach an agreement with private creditors to respond to the IMF’s requirements and cover its financing needs.

So far, however, although it reached an agreement in principle with public creditors in November 2023, discussions with private creditors (who hold 61% of the government’s external debt) are on-going. The IMF’s programme is extremely ambitious and the risks that the government will not meet the objectives set are thus very high.

 Any such failure would result in the release of the IMF loan being suspended and the government losing access to the foreign currency financing on which it is totally dependent, Finance Ministry sources said.

April 08, Colombo (LNW): The Sri Lankan Rupee (LKR) indicates further appreciation against the US Dollar today (08) in comparison to last week’s Friday, as per leading commercial banks in the country.

At Peoples Bank, the buying price of the US Dollar has dropped to Rs. 293.46 from Rs. 293.95, and the selling price to Rs. 303.39 from Rs. 304.26.

At Commercial Bank, the buying price of the US Dollar has dropped to Rs. 292.98 from Rs. 293.47, and the selling price to Rs. 302.25 from Rs. 302.75.

At Sampath Bank, the buying price of the US Dollar has dropped to Rs. 294.25 from Rs. 295, and the selling price to Rs. 303.25 from Rs. 304.