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CB evaluates existing capital account restrictions on foreign exchange

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By: Staff Writer

January 14, Colombo (LNW): The Central Bank will review the remaining restrictions on the outflows from the capital account and gradually start lifting them by taking into account the domestic market foreign exchange liquidity condition improvement.

“With the observed improvements in the liquidity position of the domestic foreign exchange market, the Central Bank would review the existing restrictions on certain capital foreign exchange outflows on a priority basis, with a view to gradually unwinding these restrictions,” Central Bank Governor Dr. Nandalal Weerasinghe said while delivering Annual Policy Statement 2024, this week.

The Exports Proceeds Monitoring System implemented in 2022 would be further optimised, ensuring improved efficiency and effectiveness of the monitoring mechanisms of export proceeds repatriation.

There were concerns that the exporters weren’t repatriating their earnings and instead parking them at the foreign countries, expecting the rupee to further fall in value, exacerbating the foreign currency shortage in the country.

At the height of the foreign exchange crisis in 2022, the Central Bank imposed broad-based limitations on outflows of foreign currency while the government suspended the restrictions on imports of thousands of items, unless they were essential or urgent.

As the foreign exchange liquidity started gradually improving in the banking system, restrictions were lifted, mostly in the imports, except for a remaining few, including the personal vehicles. The latter will see the restrictions lifted in the coming months.

Most of the outflows from the capital account restrictions stayed, due to the severity and outsize nature, which could cause pressure on the balance of payment, given the still fragile nature of the external sector last year.

However, as the Central Bank rebuilt its gross official reserves to US $ 4.4 billion by end-2023, with the largest ever annual net purchases of foreign currency from the market in a single year, it is revisiting the controls imposed at the thick of the crisis.

Furthermore, the Central Bank said it expects the required amendments to be finalised to the current Foreign Exchange Act No. 12 of 2017 and brought in place during early this year.

The changes to the Foreign Exchange Act is expected to provide the necessary framework to regulate the functioning of the formal foreign exchange market more efficiently, while empowering the regulatory authorities to take prompt actions against violations of and/or non-compliance with foreign exchange transactions.

James Packer’s Colombo Casino land in Fort still remains vacant

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By: Staff Writer

January 14, Colombo (LNW): In the wake of the Government’s plans to issue licences for ten casinos, the previously-abandoned casino project by James Packer’s Crown Group, now a hotel development project under a new Japanese company is still a non entity, Urban Development Authority (UDA) sources divulged.

UDA top official said that there had been no progress on the abandoned casino project of James Packer’s Crown Group, although it had not been cancelled.

Australian billionaire Casino mogul James Packer’s Sri Lankan integrated resort Crown Colombo Casino has suffered a setback with the government’s firm stance of not allowing new casinos in the island, informed sources said.

The government is very unlikely to give consent for new casinos to operate at present in the eve of an election amidst growing protests both from constituent parties and the opposition, a top government official disclosed.

Even it will not allow an existing casino operator to shift his business to Packer’s Sri Lankan integrated resort as the matter has become a highly sensitive political issue with criticism emerging from some prominent government ministers as well, he added.

The Australian billionaire has agreed in 2014 to invest US$350 million to build a 36-story skyscraper which will be known as ‘Crown Colombo’ to set up an integrated resort which includes a 400-room hotel with gaming facilities in a land on D.R. Wijewardena Mawatha, Colombo.

But the then ruling party passed the order of the gazette notification in parliament recently granting tax concessions under the strategic investment project act to Packer’s project replacing the word ‘gaming’ with ‘associated ’ facilities.

However James Packer or his Sri Lankan partner Ravi Wijeratne, Chairman of Rank Holdings Private Limited has not made any public statement about their decision on the project.

“The ownership of the project has changed hands to a Japanese company. Their proposal was for a hotel development project.

The development on this project isn’t progressing, likely because the country’s economy is still unstable. However, the investment has not been cancelled.”

A Japanese firm will be taking over a prime block of land at D.R. Wijeyawardene Mawatha in Fort for their Lake House mixed development project previously ear marked for Australian gaming tycoon James Packer’s US$ 400 Crown Colombo project, officials said.

Sri Lanka ’s Asia Capital joined hands with Japanese firm Belluna to invest around US$350-450 million to launch a mixed development project at the 500 perch land opposite Lake House Colombo several years ago.

Recently, State Minister of Finance Ranjith Siyambalapitiya said that Sri Lanka had received 10 applications to set up casinos under new regulations issued, which were at various stages of evaluation.

According to the official, D.R. Wijewardena Mawatha has been earmarked for hotel-based projects within the city.

PHI Union accuses GOSL of considering dangerous amendment to Aflatoxin limits in children’s food supplements

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January 14, Colombo (LNW): The Public Health Inspectors’ Union has accused the Sri Lankan government of seeking to amend the permissible limit of ‘Aflatoxin’ in food supplements intended for small children.

Such a decision, if implemented, poses a significant threat to the health of children in Sri Lanka, Union Treasurer Roshan Kumara asserted addressing a briefing recently held in Colombo.

In a related development, on November 21, 2023, the Cabinet of Ministers made a decision to adjust the permissible Aflatoxin levels for local food supplement programmes to align with globally recognised standards for food supplements.

This adjustment in the permissible levels of Aflatoxin primarily pertained to the Thriposha programme, which is part of the Maternal and Child Health Programme administered by the Ministry.

The proposal arose from the challenges faced by the Ministry of Health in sourcing maize for Thriposha production, attributed to the stringent Aflatoxin limits specified in the existing regulations under the Food Act No. 26 of 1980.

To address this issue, it was suggested that the Aflatoxin limits imposed on internationally accredited food supplements (5ppb for type B1 and 10ppb for total Aflatoxin) be applied to local food supplement programmes.

Diana foresees 02 mn tourists and $6 bn revenue in 2024, citing positive trajectory and robust growth in Tourism Sector

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January 14, Colombo (LNW): Tourism State Minister Diana Gamage anticipated the revitalisation efforts to attract two million tourists in 2024, pumping an estimated revenue of US$ 6 billion, the President’s Media Centre (PMC) said citing her comments during a briefing held at the Centre recently.

Addressing the briefing, Gamage shared optimistic predictions for Sri Lanka’s tourism industry.

She highlighted the current positive trajectory, emphasising a significant 106 per cent increase in tourist arrivals in 2023 compared to the preceding year.

The Minister noted the success to effective measures implemented to promote tourism after a three-year downturn.

Gamage further expressed satisfaction with the tourism industry’s revival, with over 700,000 tourists visiting the country this year and more than 1.4 million in 2023, marking a noteworthy growth of 106 per cent compared to 2022.

Looking ahead, the Ministry of Tourism is actively working on further tourism development initiatives to attract more visitors. The ambitious target for 2024 is set at 2 million tourists, with an expected revenue projection of US $6 billion.

Notwithstanding this positive outlook, the Ministry is addressing challenges such as reported ticket price increases at popular tourist attractions.

The Ministry is investigating these price hikes at the ministry level and denies responsibility for alleged arbitrary actions by some government agencies.

Minister Harin Fernando, actively engaged in promoting the tourism industry, is in discussions with President Ranil Wickremesinghe to promptly address issues affecting tourists. Efforts are underway to develop a relief programme for tourists facing challenges.

The Ministry is also planning special projects to enhance tourist convenience in cultural sites, waterfalls, Ella, Bandarawela, and other tourist areas across the country.

This phase signals a resurgence in the tourism industry, underscoring the commitment to its development and contributing to foreign exchange earnings for the country, the President’s Media Centre (PMC) further said.

Minister reveals 15-month delay in revenue-boosting proposal approval by DMT

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January 14, Colombo (LNW): The Department of Motor Traffic (DMT) encountered a 15-month delay in obtaining approval for a proposal aimed at enhancing the department’s revenue, Labour and Foreign Employment Minister Manusha Nanayakkara disclosed.

In a statement, the Minister noted that the approval delay did not deter the subsequent achievement of a remarkable 300 per cent increase in the revenue of the DMT.

It is noteworthy that no blame is assigned to the officials responsible for the prolonged approval process, as this strategic measure contributed to the reduction of the Value-Added Tax (VAT) percentage, he asserted.

Nanayakkara further highlighted another proposal put forth, allowing individuals to obtain custom vehicle number plates by paying a designated fee.

Under this proposal, individuals could invest up to Rs. 1.5 million to personalise their number plates, incorporating their names if desired.

Despite the passage of several months, the treasury is yet to grant approval for this proposal.

Expressing his concern, the Minister remarked that such delays in obtaining approvals indicate a deliberate attempt by certain officials to place the government under duress.

He emphasised that there is a need for legations against these officials to recoup the income lost due to the prolonged approval processes of these proposals.

Rising milk powder prices heighten economic concerns for SL consumers

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January 14, Colombo (LNW): Commencing the following week, consumers in Sri Lanka will bear the brunt of increased prices in imported milk powder, with a notable surge of Rs. 30 for the 400g packet and a substantial hike of Rs. 75 for the 1kg packet, the Milk Powder Importers Association disclosed.

This development has sparked concerns among citizens who are already grappling with economic challenges, and the significant price increments are expected to have a direct impact on household budgets, particularly affecting those on fixed incomes.

Critics argue that such escalations in essential commodity prices reflect poorly on the government’s ability to manage economic stability and mitigate the financial burdens faced by its citizens.

The move comes at a time when the public is already contending with various economic challenges, including rising living costs.

The decision by the Milk Powder Importers Association to impose these substantial price hikes is likely to fuel discontent among the populace and raise questions about the government’s effectiveness in safeguarding the economic well-being of its citizens.

Navy seizes three Indian trawlers in anti-poaching operation near Kovilan Lighthouse: 12 fishermen apprehended

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January 14, Colombo (LNW): The Sri Lanka Navy recently intercepted three Indian trawlers engaged in illegal fishing within Sri Lankan waters near the Kovilan Lighthouse in Karainagar, Jaffna.

The operation resulted in the apprehension of 12 Indian fishermen.

The Navy emphasising their commitment to enforcing maritime regulations conducts regular patrols and operations to counteract unauthorised fishing practices by foreign trawlers.

This proactive approach considers the potential adverse impact of such activities on the livelihoods of local fishermen and the marine resources of the nation.

In response to the observed violation, the Northern Naval Command promptly deployed its Fast Attack Craft to deter and expel the group of Indian poaching trawlers.

Subsequently, three Indian trawlers with 12 fishermen were seized during this operation off the Kovilan Lighthouse.

The apprehended Indian fishermen, along with the confiscated trawlers, were transported to the Kankesanthurai harbour.

Further legal actions will be pursued, as they are handed over to the Mailadi Fisheries Inspector for due process.

Pramitha Bandara Tennakoon assumes Acting Defence Minister role during President’s temporary absence

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January 14, Colombo (LNW): During President Ranil Wickremesinghe’s temporary absence, the responsibilities of the Defence Ministry have been entrusted to Pramitha Bandara Tennakoon.

Appointed as the Acting Defence Minister, Tennakoon will assume the duties of the position until President Wickremesinghe’s return to Sri Lanka.

SL intensifies Operation “Yukthiya” amidst international backlash

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January 14, Colombo (LNW): Acting Inspector General of Police (IGP) Deshbandu Tennakoon has issued a directive instructing all police divisional OICs, district OICs, station OICs, and crime OICs to actively engage in Operation “Yukthiya” (Justice), commencing today (14).

This instruction was conveyed during an awareness programme organised for the officers.

The Ministry of Public Security has provided essential information for the operation, encompassing details on 35,505 warrants issued, identification of 4,258 suspects through fingerprints, and the pursuit of 2,485 known suspects wanted for prior offenses.

The Acting IGP underscored the need for an intensive deployment of all crime branch officers, ensuring 24/7 coverage for the next month across all police divisions involved in Yukthiya.

Simultaneously, the National Police Commission has released a statement outlining corrective measures for the Acting IGP in connection with Operation Yukthiya.

These measures are said to have detailed instructions on the imperative for all officers to adhere strictly to the existing legal framework, upholding the principles enshrined in the constitution, particularly those pertaining to the protection of basic human rights.

The Acting IGP has been instructed to clearly communicate these requirements to all participating officers and promptly report back to the Commission on the implementation of these directives.

These directives appear in the backdrop where international human rights watchers and local activists critise the Sri Lankan government’s approach to Operation Yukthiya, raising concerns about potential human rights violations targeting civilians in the pursuit of narcotics and underworld operations.

Japan demands repayment as SL seeks project resumption

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January 14, Colombo (LNW): Japan announced that for the resumption of stalled projects, Sri Lanka is required to settle the outstanding amount related to the cancellation of the Colombo Light Rail Transit Project (LRT).

During a two-day official visit to the island-nation, Japanese Finance Minister Suzuki Shunichi underscored this point in discussions with President Ranil Wickremesinghe and Opposition Leader Sajith Premadasa.

In March 2019, the Japanese government had approved a loan assistance package of US$ 1,800 million for the LRT system project, initially scheduled for implementation that same year with completion targeted for 2026.

The project aimed to address traffic congestion in Colombo and its suburbs.

The Japan International Cooperation Agency (JICA) had committed to providing financial facilities under concessionary credit conditions.

Concurrently, the Oriental Consultants Global Company of Japan, in collaboration with several other firms, was engaged to offer consultancy services.

On March 11, 2019, a loan agreement was signed between Japan and Sri Lanka, accompanied by exchanged notes outlining the project details. The initiative envisioned the construction of a 17km-long elevated rail track featuring 16 stations, connecting vital intersections from Malabe to Colombo Fort.

The proposed service entailed the deployment of 25 trains, each comprising four air-conditioned passenger compartments capable of accommodating 800 passengers.

The total estimated cost for the project was Japanese Yen 246,641 million, with JICA committed to providing JPY 200,415 million (approximately USD 1,800 million) as a concessionary loan.

The repayment terms allowed for a 40-year period, including a grace period of 12 years, with an annual interest rate of 0.1 percent.

However, in September 2020, the Cabinet of Ministers at the time approved the termination of the project, citing substantial operating costs and environmental concerns, among other reasons.

A December 2022 report from the National Audit Office revealed a financial loss of Rs. 5,978 million incurred by Sri Lanka following the unilateral termination of the LRT project by the former President Gotabaya Rajapaksa-led government.

In May 2023, the current Cabinet of Ministers decided to revive the project, coinciding with President Wickremesinghe’s official visit to Japan.

The revival decision was motivated by the aim to restore Sri Lanka’s credibility with the international community.