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SL Insurance Sector Set for Growth amid Economic Recovery

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SL Insurance Sector Set for Growth amid Economic Recovery

By: Staff Writer

August 20, Colombo (LNW): Sri Lanka’s insurance sector is anticipated to benefit significantly from the ongoing recovery in economic activity, according to Central Bank Governor Nandalal Weerasinghe.

With improving business conditions, lower inflation, and reduced interest rates in traditional financial products, there is likely to be an overall increase in demand for insurance services.

The insurance market in Sri Lanka is expected to reach a gross written premium of approximately $1.66 billion by 2024, with the non-life insurance segment leading with an estimated market volume of $1.13 billion. The average insurance spending per capita is projected to be around $75.54 in the same year.

However, Weerasinghe cautioned that the sector’s substantial exposure to government securities might have resulted in lower returns due to the currently low yields compared to those during the crisis period.

The total Gross Written Premium (GWP) for the insurance industry, covering both Long-Term and General Insurance businesses, amounted to Rs. 78,589 million as of March 31, 2024, representing a 7.39% growth from the same period in 2023. This growth reflects an increase of Rs. 5,411 million year-on-year.

Speaking at the Sri Lanka International Insurance Summit 2024 in Colombo, the Central Bank Governor highlighted that although the Sri Lankan insurance industry is relatively smaller than those of some peer economies, it holds significant growth potential.

The total assets of insurance companies reached Rs. 1,098,988 million by the end of the first quarter of 2024, a 10.88% increase from Rs. 991,126 million at the end of the first quarter in 2023.

As of March 31, 2024, there were 29 insurance companies operating in Sri Lanka, with 15 engaged in Long-Term (Life) Insurance, 13 in General Insurance, and one operating as a composite company. Additionally, 78 insurance brokering companies were registered, with their total assets growing by 27.92% to Rs. 13,243 million by the end of the first quarter of 2024.

Despite the sector contributing 0.8% to the GDP in 2023, the penetration rate has remained below 2% over the past decade. Sri Lanka’s insurance industry has room for expansion, especially as the economy continues to recover.

Central Bank Governor stressed the insurance sector’s crucial role in fostering economic growth by managing risks associated with new ventures and technological advancements, supporting lenders, and providing protection in the wake of natural disasters.

Furthermore, he underscored the need for the insurance sector to enhance its role in social protection. With around 58% of Sri Lanka’s employed population working in the informal sector, there is an urgent need to develop insurance products tailored to this significant demographic

 The industry must also address challenges related to a rapidly aging population, rising health expenses, and increasing non-communicable diseases to ensure adequate coverage and reduce reliance on the limited fiscal sector.

Central Bank Chief Weerasinghe concluded by acknowledging that while Sri Lanka’s macroeconomic environment is expected to remain stable, uncertainties persist due to geopolitical risks, commodity price fluctuations, and slow recovery in key global markets.

SL Tourism Industry Urges President to settle Prior-Visa Processing Delays

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SL Tourism Industry Urges President to settle Prior-Visa Processing Delays

By: Staff Writer

August 20, Colombo (LNW): The travel and tourism industry in Sri Lanka has urgently called on President Ranil Wickremesinghe to address ongoing issues with the prior-visa processing system, which they believe are critical to the national interest and the economy.

In a joint letter, several key industry bodies—including the Sri Lanka Association of Inbound Tour Operators (SLAITO), The Hotels Association (THASL), and others—highlighted the adverse effects of the current visa-on-arrival system, which is the only option available for tourists.

These organizations stress that travelers, especially groups, prefer obtaining visas online before their trip to reduce uncertainty and liability.

Due to delays in activating the Mobitel online visa platform, as mandated by the Supreme Court, many tour groups and individual travelers have canceled their trips to Sri Lanka. With the peak season approaching, the industry fears significant booking losses to other destinations that offer more streamlined and cost-effective visa processes.

The letter emphasizes that Sri Lanka’s tourism industry, still recovering from years of downturns, cannot afford another setback, particularly with high-season bookings at risk. The industry is concerned that the projected arrival numbers and revenue targets for the rest of 2024 will be unachievable if the situation persists.

The letter further explains that there are no technical barriers to activating the Mobitel ETA system. This has been confirmed by Mobitel, which has been ready to implement the Supreme Court’s order since early August 2024.

However, the necessary backend links required to make the system operational have not yet been activated by the Department of Immigration and Emigration. The industry has urged the President to instruct the Controller General to immediately activate these links.

The urgency of this request is underscored by the fact that tourist arrivals in the first 11 days of August reached 73,373, with a year-to-date total of 1.27 million. The industry insists that resolving this issue promptly is essential for sustaining and growing these numbers, which are vital to Sri Lanka’s economic recovery.

With competing destinations offering streamlined processes and zero cost, many potential Sri Lanka bookings are likely to be diverted due to the immigration delay,” the industry emphasised.

The industry said it understands that there’s no technical impediment whatsoever for the Mobitel ETA system to be activated with immediate effect. This fact has been confirmed by Mobitel in a letter to the Department of Immigration and Emigration Controller General dated 7 August 2024 and 13 August 2024 stating its readiness to give effect to the interim order of the Supreme Court.

SEC reconstitutes entry requirements for Capital Market professionals

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SEC reconstitutes entry requirements for Capital Market professionals

By: Staff Writer

August 20, Colombo (LNW): In a move aimed at enhancing professional standards and increasing accessibility in the capital market industry, the Securities and Exchange Commission (SEC) has issued a Directive that provides new entry requirements and exemptions for its certification programs.

This Directive which came into effect from 1 August contains new entry requirements designed to better serve aspiring and current investment advisors by aligning educational and professional requirements with industry best practices and emerging market trends.

The SEC develops and administers professional education and Continuous Professional Development (CPD) programs as a part of Sri Lanka’s capital market licensing framework. The licensing processes is crucial to uphold high standards of professionalism and trust in the financial advisory sector, thereby protecting investors’ interests and enhancing the stability of financial markets.

The SEC administers the Certificate in Capital Markets (CCM) program, which is the only pathway to obtaining the Registered Investment Advisor (RIA) Qualification and is designed to provide comprehensive education and training for professionals in Sri Lanka’s capital market.

Relaxation of the entry requirements for CCM is expected to make it easier for a wider range of candidates to participate in this crucial program.

Previously, candidates seeking to register for the CCM were required to hold either 3 passes for Advanced Level (A/L), a completed degree or a completed professional qualification in any discipline.

 The new entry criteria now recognises a broader range of academic and professional qualifications allowing more individuals to pursue the certification program.

Additionally, to accommodate various professional backgrounds and prior learning experiences, the SEC has broadened the exemption policy for CCM.

Previously, the SEC only granted exemptions for candidates who had passed Level 2 of Chartered Financial Analyst. However presently, candidates who are passed finalists of Chartered Institute of Management Accountants (CIMA),

Association of Chartered Certified Accountants (ACCA), Institute of Chartered Accountants of Sri Lanka (CA) and candidates who have completed a Bachelor’s or a Master’s Degree in a finance related discipline can apply for exemptions as well.

Moreover, the eased minimum entry requirements and updated exemption policy apply to single asset class certification programs as well.

The first batch of the CCM program, featuring the revised entry requirements and exemptions, is set to begin on 31 August.

Comprehensive details are available on the SEC website www.sec.gov.lk. This launch represents a significant step forward in offering accessible, high-quality certification opportunities for capital markets professionals.

These revisions are designed to elevate the standards of the industry while making it more inclusive and supportive of ongoing professional growth.

Vijayakala Maheswaran Launches Campaign for President RW, Poised for Historic Victory in Northern and Eastern Provinces

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Vijayakala Maheswaran Launches Campaign for President RW, Poised for Historic Victory in Northern and Eastern Provinces

August 20, 2024 – Jaffna: In a powerful and strategic move, Hon. Vijayakala Maheswaran, Former Member of Parliament, Former State Minster for Education, Women and Child Affairs and Chief Organiser of the United National Party (UNP) for Jaffna and Killinochi Districts, has officially kicked off her campaign in support of His Excellency President Ranil Wickremesinghe across the Jaffna and Killinochi districts. With the Northern and Eastern Provinces set to play a decisive role in the upcoming presidential election, Maheswaran’s campaign is gathering unprecedented momentum, signaling an imminent and overwhelming victory for President Wickremesinghe.

Unwavering Support Across the North and East

Vijayakala Maheswaran has boldly declared that President Ranil Wickremesinghe will secure at least 90% of the votes cast in the Northern and Eastern Provinces on September 21st. This is not an idle claim but a reflection of the deep-rooted trust and confidence that the people of these regions have in President Wickremesinghe’s leadership.

It is essential to recognize that the strong support which Sajith Premadasa received in the 2019 presidential election in these provinces was largely due to the influence of Ranil Wickremesinghe, who, as the then leader of the UNP, laid the groundwork for a broad coalition of support. Now, with President Ranil Wickremesinghe himself leading the charge, there is no doubt that the people of the North and East will rally behind him, ensuring a decisive and historic victory.

A Turning Point for the Northern and Eastern Provinces

The upcoming presidential election is a defining moment for the Northern and Eastern Provinces. These regions, which have long sought stability, development, and genuine representation, see in President Wickremesinghe a leader who not only understands their unique challenges but has the proven capability to address them. His administration has consistently demonstrated a commitment to peace, reconciliation, and economic development, and the people are ready to reaffirm their trust in his leadership.

Vijayakala Maheswaran’s campaign is not just about securing votes; it is about galvanizing the people of the North and East around a shared vision for a prosperous and peaceful future under President Wickremesinghe. Her extensive grassroots outreach and deep connections within the community make her a formidable force in mobilizing support, ensuring that every vote cast in these regions contributes to a landslide victory.

The Critical Role of the Northern and Eastern Votes

The votes from the Northern and Eastern Provinces are set to be a critical factor in this election. These regions have historically played a pivotal role in shaping the outcome of national elections, and this time will be no different. The people of the North and East are fully aware of the stakes and are prepared to deliver a resounding mandate for President Wickremesinghe, whose leadership they trust to bring about lasting change and progress.

A Vision for a United and Prosperous Sri Lanka

President Ranil Wickremesinghe’s vision for Sri Lanka is one of unity, stability, and prosperity for all its citizens. His leadership has been a beacon of hope for the entire nation, and the people of the Northern and Eastern Provinces are ready to stand with him as he continues to lead Sri Lanka towards a brighter future.

Vijayakala Maheswaran’s campaign is a testament to the enduring strength of this vision and the unwavering support it commands across the country. As the campaign gains momentum, it is clear that the Northern and Eastern Provinces will play a crucial role in delivering a historic victory for President Wickremesinghe on September 21st.

Pioneering tobacco harm reduction

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Pioneering tobacco harm reduction
  • In conversation with BAT Group Head of Life Sciences Elaine Round
BAT Group Head of Life Sciences 

Elaine Round 

In an exclusive interview, British American Tobacco (BAT) Group Head of Life Sciences Elaine Round delves into the company’s ongoing efforts to innovate and drive tobacco harm reduction. With a strong emphasis on science and responsible manufacturing, BAT is transforming from a traditional cigarette business to a multicategory business of smokeless alternatives. Round is unequivocal about the substantial body of evidence supporting the reduced risk potential of smokeless alternatives.

“There’s a lot of evidence, not only from us but from other researchers as well, showing that smokeless alternatives present a reduced risk potential compared to cigarettes when consumers completely switch to them,” she states. The primary harm from smoking comes from the combustion of tobacco, which releases numerous toxicants. By eliminating combustion, smokeless products emit far fewer and lower levels of toxicants compared to cigarettes. 

BAT’s commitment to product innovation is reflected in its substantial investment in research and development (R&D). With an annual R&D budget exceeding £ 300 million, the company is focused on transforming its product portfolio. “Innovation is a driving force for us,” Round emphasises. “We aim to have 50 million consumers using our smokeless products by 2030 and to achieve 50% of our group revenue from these products by 2035. “These ambitious goals highlight the importance BAT places on developing reduced risk alternatives for smokers.”

BAT has three categories of smokeless alternatives in their product pipeline: vapour, heating products, and modern oral products. Vapour products, under the brand name Vuse, are battery-powered devices that heat a liquid containing nicotine. Heated products, known as Glo, is a battery-powered device designed to heat, rather than burn, tobacco stick. This creates an inhalable aerosol that contains nicotine with authentic tobacco taste. The modern oral product, Velo, is an oral nicotine product that is designed for use in the mouth with a placement between the gum and upper lip for nicotine to be absorbed through the tissue lines. 

Navigating communication and regulatory challenges

One of the significant challenges BAT faces is communicating the science behind smokeless products in markets with strict restrictions, often referred to as “dark markets.” Round acknowledges this challenge and stresses the importance of addressing public misperceptions about nicotine. “Many consumers wrongly believe that nicotine causes cancer and cardiovascular disease. It’s crucial to educate both groups that the primary harm comes from burning tobacco, not from nicotine itself,” referencing the widely accepted proposition by public health bodies, including the US FDA and Public Health England.

To ensure the efficacy and product safety of its smokeless products, BAT employs a rigorous nine-step framework for assessing risk profile of its smokeless alternatives. This comprehensive approach includes evaluating emissions, exposure, and risk. “We look at what comes out of the product (emissions), what consumers are exposed to when using it (exposure), and the biological impacts of usage (risk),” Round explains. For example, BAT’s studies show that products like our nicotine pouch brand Velo, although not risk-free, have more than 99% reduced toxicants compared to a scientific standard reference cigarette, when assessing the top 9 toxicants the WHO believes are mainly responsible for smoking-related diseases. Similarly, Vuse, our vaping device, showed 99% fewer toxicants based on a comparison of cigarette and Vuse emission for a number of key toxicants present in cigarette smoke, which have been identified as harmful.

Addressing the issue of counterfeit products

 The proliferation of counterfeit and low-quality nicotine products poses a significant risk to consumers. Round underscores the importance of responsible manufacturing and regulatory oversight to combat this issue. “Counterfeit products can be identified by lower pricing and poor quality, but it can be challenging for consumers to distinguish genuine products. Ensuring proper regulation, monitoring and enforcement is essential to protect consumers,” she states.

Since introducing its first smokeless alternative in 2013 with its vaping device, BAT has made significant strides in expanding its product offerings. “We launched our first vapor product, Vuse, in the UK and then expanded to the other markets globally,” Round recalls. BAT now follows a multi-category approach, offering heated, vapor, and oral nicotine products. “Different smokers have different preferences, so it’s important to provide a variety of choices to facilitate adult smokers to switch from smoking,” she explains. 

Given BAT’s origins as a traditional tobacco company, the transition to smokeless products involves balancing business objectives with public health priorities. Round emphasises the importance of offering less risky products to consumers who do not want to quit nicotine altogether. “It’s crucial to provide alternatives for the approximately 1.1 billion smokers worldwide, as it leaves millions of smokers who would otherwise continue to smoke without the option to switch to such alternatives.”

Overcoming challenges and misperceptions

 One of the major obstacles for Tobacco Harm Reductionar is the widespread misperception about nicotine among the general public. “The recent survey conducted by Foundation for a Smoke-Free World showed that nearly 80% of healthcare providers worldwide even mistakenly believe nicotine causes lung cancer,” Round points out. These misperceptions hinder the adoption of smokeless products. Correcting these beliefs through education and responsible communication is essential for promoting the benefits of smokeless alternatives.

BAT actively supports progressive regulation and risk-appropriate taxation for its smokeless alternatives containing nicotine. Round cites New Zealand as a prime example of successful regulatory support. “The government’s endorsement of smokeless products has led to a 43% decline in daily smoking rates in New Zealand,” she notes. Similarly, Sweden is on the verge of becoming the first smoke-free country in Europe, defined by the World Health Organization (WHO) as having less than 5% of the population smoking. These examples highlight the critical role of regulator buy-in who will then in turn endorse risk-proportionate regulation to achieve public health goals. 

Responsible manufacturing and sales practices are central to BAT’s strategy. “It’s vital to ensure that products are of high quality and responsibly marketed,” Round says. This includes not making it available to youth and ensuring that all products meet strict safety and quality standards. BAT’s commitment to transparency and publishing its research methodologies for peer review is part of its effort to maintain credibility and trust. 

Elaine Round’s insights offer a comprehensive view of the reduced risk potential of these smokeless alternatives, enabled by scientific innovation and responsible practices. There is a need for adequate education and regulation to ensure that the potential for transforming public health and reducing the global burden of smoking-related diseases becomes increasingly achievable. 

Source: DailyFT

Sri Lanka’s Planned Tax Relief costs offset by New Tax Measures

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Sri Lanka’s Planned Tax Relief costs offset by New Tax Measures

By: Staff Writer

August 20, Colombo (LNW): Sri Lanka’s plan to offer relief to personal income tax payers could result in a loss of Rs2.66 billion at constant price or (0.08% of the country’s GDP), according to Treasury Secretary Mahinda Siriwardana.

This shortfall in revenue would be offset by additional tax measures. President Ranil Wickremesinghe recently mentioned that discussions are ongoing with the International Monetary Fund (IMF) to provide income tax relief by expanding the tax brackets.

The government’s tax relief roposal involves increasing the threshold for personal income tax from 500,000 rupees to 720,000 rupees.

Currently, the maximum personal income tax rate has been raised to 36 percent from 24 percent, and the taxable monthly income threshold has been lowered to Rs. 100,000. From Rs. 250,000

The IMF, after reviewing the proposal, recommended providing more relief to lower tax brackets, maintaining similar relief for mid-level taxpayers, and slightly reducing relief for higher earners while keeping the essence of the proposal intact.

The Treasury’s proposal suggests maintaining a tax-free threshold of Rs. 1.2 million expanding the tax band to Rs. 720,000 from Rs 500,000, and keeping the top tax rate at 36 percent.

In contrast, the IMF’s counterproposal retains the Rs. 1.2 million tax-free threshold but extends the first tax band from Rs. 500,000 to Rs.  1 million with subsequent bands shifting up by Rs 500,000, while maintaining the top tax rate at 36percent, finance ministry sources said.

Siriwardana revealed that negotiations with the IMF on this amendment began as early as September 2023. Implementing such a proposal wasn’t feasible earlier due to revenue not meeting the targets.

However, with an improvement in revenue collection this year, it is now possible to negotiate adjustments to the Personal Income Tax (PIT) structure.

 These adjustments aim to provide relief to taxpayers in the middle-income brackets while ensuring that the highest earners do not receive disproportionate benefits.

The estimated cost of these adjustments is about 0.08% of GDP, and compensatory revenue measures have been discussed with the IMF to ensure that revenue targets remain on track.

Despite radical economic reforms post-1978, Sri Lanka’s currency suffered rapid depreciation due to attempts to target money supply without a floating exchange rate after abandoning an external anchor.

However, post-war, the return of peacetime monetary instability and inflationary policies led to crises following rate cuts, which reduced growth and tax revenues, resulting in ad hoc tax hikes.

Aggressive targeting of the call money rate led to dual stabilization crises within the same program, stifling growth while accelerating monetary debasement and debt accumulation. During the current stabilization crisis, income tax was increased, prompting several private companies to raise salaries to increase disposable income and prevent brain drain, thereby also boosting income tax collections. The central bank and some state-owned enterprises have also significantly increased salaries.

LKR sees minor setback against USD amidst currency fluctuations

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LKR sees minor setback against USD amidst currency fluctuations

August 20, Colombo (LNW): The Sri Lankan Rupee experienced a slight depreciation against the US Dollar today (20), reported the Central Bank of Sri Lanka (CBSL).

The buying price rose to Rs. 294.36 from Rs. 294.31, while the selling price to Rs. 303.57 from Rs. 303.52.

The currency also weakened against a basket of international currencies but showed an appreciation against several Gulf currencies.

CEB incurs significant profit growth in 1H’24

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CEB incurs significant profit growth in 1H’24

August 20, Colombo (LNW): The Ceylon Electricity Board (CEB) has reported a strong financial performance, achieving a net profit after taxes of Rs. 34.53 billion in the April-June quarter of 2024.

This marks a 67.2 per cent increase from the Rs. 20.65 billion profit recorded during the same period in 2023.

The recent profit comes despite the payment of Rs. 34.53 billion in taxes.

Earlier this year, the CEB reported an impressive net profit of Rs. 84.67 billion for the January-March quarter.

Consequently, the total profit for the first half of 2024 stands at Rs. 119.20 billion, reflecting the utility’s sustained financial growth amidst operational challenges.

This substantial improvement in profitability is attributed to enhanced efficiency measures, better management of resources, and strategic adjustments in the energy sector.

The CEB’s financial turnaround demonstrates resilience, especially following a period marked by revenue deficits and increased operational costs in recent years.

Industry analysts suggest that the growth trajectory is likely to continue if current policies are maintained, with potential benefits for both the organisation and its consumers.

Eleven suspects further remanded over Athurugiriya double murder

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Eleven suspects further remanded over Athurugiriya double murder

August 20, Colombo (LNW): The Kaduwela Magistrate’s Court has extended the remand of 11 suspects, including a female, until 2 September in connection with the fatal shooting of businessman Surendra Wasantha Perera, known as ‘Club Wasantha,’ and another individual in Athurugiriya.

The incident occurred on July 08, 2024 during the opening of a tattoo studio, where six people were injured, two fatally.

During the court proceedings, the Kaduwela Magistrate ordered the case investigation to be transferred to the Western Province (South) Crimes Division.

The decision followed concerns raised by defence attorneys regarding threats to their clients’ lives, prompting the Magistrate to order enhanced security for the accused.

The Athurugiriya Police revealed that significant leads have emerged regarding the gunmen involved in the attack.

Additionally, postmortem reports have been submitted, and further examination has been scheduled for 2 September.

Among those arrested is the tattoo studio owner, who reportedly received Rs. 1 million over time, suspected to be connected to the incident.

A 21-year-old woman is also in custody for allegedly aiding and abetting the crime.

The suspects were apprehended following the discovery of the getaway vehicles used in the attack, found abandoned in Bulathsinhala and Kaduwela.

The high-profile shooting also left four others injured, including popular singer K. Sujeewa and Wasantha’s wife.

Over 700k eligible for postal voting in 2024 Presidential Polls

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Over 700k eligible for postal voting in 2024 Presidential Polls

August 20, Colombo (LNW): The Commissioner General of Elections, Saman Sri Ratnayake, has revealed that 736,589 applications for postal voting have been received for the upcoming 2024 Presidential Election.

Of these, 24,268 applications were rejected, leaving 712,321 voters eligible for postal voting. The distribution of postal ballots is scheduled to begin on 26 August.

The Election Commission has allocated three days in early September—4, 5, and 6 September—for the marking of postal votes, with 4 September specifically designated for District Secretariats, Election Offices, and Police personnel.

Chairman of the Election Commission, R.M.A.L. Rathnayake, confirmed that the postal voting process has been finalised and the ballots are prepared for distribution.

For voters unable to cast their postal vote on the scheduled dates, additional opportunities have been arranged for 11 and 12 September.

These provisions aim to ensure maximum voter participation in the 2024 Presidential Election, which will see 39 candidates contesting on 21 September.

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