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By: Staff Writer

May 15, Colombo (LNW): Sri Lanka’s small and medium enterprise sector, once hailed as the country’s economic lifeline, is demanding urgent action from the JVP-led National People’s Power (NPP) Government amid growing frustration that relief promises have produced little meaningful recovery on the ground.

The Government this week launched its long-awaited National SME Strategy Framework, branded “SME NEXUS,” presenting it as the cornerstone of a bold plan to triple the national economy to $300 billion. But for many entrepreneurs still struggling to survive after years of economic devastation, the announcement has triggered cautious hope mixed with deep distrust.

The SME sector has suffered relentless shocks since 2020. The COVID-19 pandemic devastated tourism, retail, manufacturing, and supply chains, forcing thousands of businesses to shut down permanently. Those that survived were later battered by Sri Lanka’s economic collapse, spiralling inflation, tax increases, and severe shortages of fuel and raw materials.

Now, natural disasters including floods and cyclone damage in vulnerable regions have pushed many already indebted SMEs closer to bankruptcy.

Against this backdrop, ministers insist the new strategy represents a comprehensive reset.

Industry and Entrepreneurship Development Minister Sunil Handunneththi argued that Sri Lanka has long failed to maximise SME potential because Government institutions operated in isolation with fragmented and overlapping policies. According to him, the new framework seeks to bring all stakeholders under one coordinated national platform.

The strategy outlines five broad priorities, including transformational growth, market orientation, and building an entrepreneurial society. It also promises technology upgrades, improved business incubation, stronger market access, value-chain integration, and easier financing opportunities.

Deputy Minister Chathuranga Abeysinghe called the framework a “dream come true” after nearly 15 months of consultations with industry stakeholders and policymakers.

However, many SME operators argue that consultation alone cannot solve immediate survival challenges.

Across the country, entrepreneurs continue to complain about unaffordable borrowing costs, delayed loan approvals, mounting utility bills, shrinking consumer demand, and limited disaster compensation.

Several business associations have also questioned whether smaller rural enterprises will genuinely benefit from Government-backed financing schemes or whether assistance will once again favour politically connected firms.

The Government’s own statistics highlight the stakes involved. SMEs make up roughly 75 percent of registered businesses and employ nearly half the workforce. Their collapse would carry severe social and political consequences, especially as unemployment and economic hardship continue to fuel public dissatisfaction.

A World Bank survey referenced during the launch identified taxation, bureaucracy, weak access to finance, poor infrastructure, and labour shortages as major obstacles facing SMEs. Entrepreneurs argue these structural issues cannot be solved merely through policy declarations without rapid administrative reform and transparent implementation.

International organisations including the World Bank and Asian Development Bank have expressed support for the initiative, but analysts warn that public trust will depend entirely on results.

For Sri Lanka’s struggling SMEs, the real test is no longer whether the Government can produce another strategy document but whether it can finally deliver tangible relief, rebuild confidence, and help businesses recover from years of crisis-driven devastation

By: Staff Writer

May 15, Colombo (LNW): Sri Lanka is intensifying efforts to secure deeper economic ties with the United Arab Emirates as the Government seeks new foreign investments and export markets to stabilise the country’s fragile post-crisis economy. High-level discussions held this week between Sri Lankan and UAE officials have revealed ambitious plans involving ports, aviation, maritime connectivity and a proposed bilateral economic agreement that could redefine trade relations between the two nations.

Trade Minister Wasantha Samarasinghe and UAE Ambassador Khaled Nasser Al Ameri discussed expanding cooperation at a time when Sri Lanka is under pressure to accelerate economic reforms, attract foreign direct investment and improve foreign currency earnings following years of financial instability.

Current bilateral trade between Sri Lanka and the UAE is estimated at approximately US$ 1.5 billion annually, making the UAE one of Colombo’s most important trading partners in the Middle East. The UAE remains Sri Lanka’s seventh-largest export destination while also ranking as the country’s third-largest import source.

Economic analysts say the relationship has evolved rapidly over the past decade, with the UAE increasingly emerging as a gateway for Sri Lankan exports entering Gulf and African markets. Sri Lankan tea, apparel, spices and precious stones continue to dominate exports to the region, while fuel, machinery and consumer goods form the bulk of imports from the UAE.

A major focus of the latest discussions was the proposed Comprehensive Economic Partnership Agreement (CEPA), which both countries hope will strengthen long-term commercial cooperation. If finalised, the agreement could lower tariffs, simplify customs procedures and create improved opportunities for cross-border investments.

Trade experts argue that Sri Lanka urgently needs expanded trade partnerships to revive industrial production and improve export competitiveness. The Government is particularly interested in leveraging the UAE’s position as a major global logistics and financial centre to attract new investors into Sri Lanka’s infrastructure and services sectors.

The UAE delegation also expressed strong interest in investment opportunities linked to the Port of Colombo and the Port of Trincomalee. Officials believe both ports could play a central role in transforming Sri Lanka into a regional maritime and logistics hub connecting Asia, the Middle East and Africa.

The Port of Colombo remains strategically important because of its location along key East-West shipping routes. Meanwhile, Trincomalee’s natural deep-water harbour has increasingly attracted attention from foreign investors seeking energy storage, industrial and shipping-related opportunities.

Another important area discussed was aviation cooperation. UAE officials reportedly explored possibilities for expanding technical partnerships with SriLankan Airlines, especially in aircraft maintenance and engineering services. Aviation industry specialists say partnerships with Gulf aviation operators could modernise Sri Lanka’s aviation infrastructure and improve regional competitiveness.

Observers note that Gulf countries, particularly the UAE, have become increasingly influential investors across South Asia, focusing heavily on ports, logistics, tourism and energy infrastructure.

While the Government views stronger UAE relations as a pathway toward economic recovery, policy analysts stress the importance of ensuring investment agreements remain transparent and financially sustainable.

With Sri Lanka continuing negotiations with international lenders and pursuing economic restructuring, closer trade and investment ties with the UAE could become a critical pillar in the country’s broader recovery strategy.

By: Staff Writer

May 15, Colombo (LNW): Sri Lanka and Nepal have taken a decisive step toward regional financial integration by launching a cross-border QR payment system that allows Nepali travellers to make instant digital payments at more than 400,000 LankaQR merchants across Sri Lanka using domestic banking apps and Nepal’s connectIPS platform. The initiative, officially unveiled in Colombo on May 12, is being hailed as one of South Asia’s most ambitious attempts at interoperable digital finance.

The partnership between Nepal Clearing House Ltd. (NCHL) and LankaPay arrives at a time when both economies are attempting to deepen regional trade, tourism, and investment connectivity after years of economic instability and post-pandemic restructuring. Officials from the Nepal Rastra Bank and the Central Bank of Sri Lanka described the arrangement as a breakthrough in real-time regional payments, enabling travellers to bypass cumbersome currency exchanges and costly international card fees.

The development comes amid renewed momentum in bilateral economic relations. The newly established Sri Lanka–Nepal Business Council has intensified efforts to promote trade and investment corridors between Colombo and Kathmandu. Diplomatic engagement has also increased significantly, with both countries actively encouraging private-sector partnerships and SME collaboration.

Although bilateral trade volumes remain relatively modest, economic analysts believe digital payment integration could unlock faster growth in tourism-linked commerce. Sri Lankan exports to Nepal stood at approximately US$3.86 million in 2024, dominated by processed foods, glassware, electronics, and tea-related products. Tourism flows between the two Buddhist-majority nations have also expanded steadily, particularly through pilgrimage travel linked to Buddhist heritage sites such as Anuradhapura, Kandy, Lumbini, and Kapilavastu.

For Sri Lanka, which is aggressively pursuing tourism-led foreign exchange recovery after its 2022 financial collapse, seamless digital payments could encourage greater visitor spending. The country is targeting three million tourist arrivals in 2026 after earning roughly US$3.2 billion from tourism in 2025. The QR initiative may particularly benefit small and medium-sized businesses, street vendors, transport providers, and retail merchants that traditionally lacked access to international payment systems.

However, the development is not without risks and limitations. Financial cybersecurity experts warn that expanding cross-border digital infrastructure increases exposure to fraud, phishing attacks, and compliance vulnerabilities. Differences in banking regulations, data protection laws, and foreign exchange monitoring mechanisms between Nepal and Sri Lanka could also complicate future scaling efforts.

Critics further argue that digital connectivity alone will not resolve deeper structural weaknesses in bilateral trade. Trade volumes remain heavily imbalanced and comparatively insignificant when measured against each country’s commerce with India or China. Nepal’s economy continues to face a substantial trade deficit despite broader export growth in 2025. Meanwhile, Sri Lanka’s external sector remains under pressure from widening import bills and debt obligations despite signs of economic recovery.

There are also concerns about whether tourism growth genuinely translates into stronger economic gains. Online discussions among Sri Lankan economists and citizens increasingly question whether rising tourist arrivals are generating proportional revenue growth or sustainable local benefits.

However despite these concerns, the QR payment launch represents a symbolic and practical shift toward South Asian financial interoperability. If successfully expanded to trade settlements, remittances, and SME financing, the Sri Lanka-Nepal initiative could become a blueprint for broader regional digital commerce integration across SAARC economies.