By: Staff Writer

May 30, Colombo (LNW): The Monetary Policy Board of the Central Bank of Sri Lanka (CBSL) has decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) at their current levels of 8.50 per cent and 9.50 per cent, respectively.

The Board arrived at this decision, at its meeting held on 27 May 2024, after carefully assessing the current and expected macroeconomic developments and possible risks on the domestic and global fronts with a view to maintaining inflation at the targeted level of 5 per cent over the medium term while supporting the economy to reach its potential, the statement said.

While the medium term inflation outlook remains compatible with the current level of policy interest rates and inflation expectations are well anchored, the Board said it observed the need for a further reduction in market lending interest rates.

This was in line with policy interest rates and other benchmark interest rates, which is imperative for the easing of domestic monetary conditions and domestic economic recovery.

The aim is to provide the previous rate cuts to do their work in bringing down the rest of the market lending rates further as inflation expectations remain well anchored.

After staying the rates, Central Bank Governor Dr. Nandalal Weerasinghe said the Board would like to give more time for market lending rates to adjust to its previous policy actions.

There are long and variable lags between the monetary policy action and their impact on the financial markets and the real economy.

Therefore, he said it is natural for the lending rates, which have already come down substantially, to further respond to more recent policy rate cuts.

The Central Bank in March cut its key policy rate by 50 basis points as inflation remained well below expectations and also to spur economic activities which were crushed by their own follies.

It is increasingly becoming evident that the inflationary spiral back in 2022 and part of 2023 was misread, and reacted by making the monetary policy bone crushingly tight.

That pushed swaths of businesses and people out of business and jobs, tipped scores of people into dire poverty and hunger.

What exacerbated economic hardships were the standard International Monetary Fund prescription which raised taxes to sky high levels, slapped new taxes and tied energy and utilities prices to market prices. And all these policies crushed demand and prolonged an otherwise short term economic dip. Perhaps understanding the folly, the Central Bank changed track and pivoted to cut policy rates from June last year.

By: Staff Writer

May 30, Colombo (LNW): The much awaited Duty Free Zone within the Colombo Port City project is nearing completion, the Department of Government Information announced.

State Minister for Investment Promotion, Dilum Amunugama, recently engaged in an observation tour of the site to assess progress and address any existing challenges.

The terminal, which will house the Duty Free zone, is currently in its final stages of construction.Unlike traditional airport duty-free shops, this facility will cater to a broader audience.

Individuals who do not purchase goods at the airport will now have the opportunity to shop within the Colombo Port City, directly related to their passports.

However the Colombo Port City duty-free shopping complex set to be opened in April this year has come under extensive scrutiny of the Committee on Public Finance (COPF) at its meeting held recently

The Committee has assessed operational procedures of the duty free shopping complex, its feasibility and potential consequences and directed to conduct a comprehensive study to evaluate the potential effects on local businesses and the taxation framework within Sri Lanka.

Singapore-owned omnichannel retailer, One World Duty Free (ODF), and Port City Colombo have signed two agreements to operate the duty-free shopping complex.

The partnership was underscored with the formalisation of two critical agreements: an Authorised Person Agreement between ODF and the Commission and a lease agreement between ODF and CHEC Port City Colombo Ltd (CPCC).

However the Department of Fiscal Policy (DoFP) has to evaluate and guide the design of all tax incentives, including those based on the Strategic Development Project Act and the Port City Act, Finance Ministry sources said.

Preparing the necessary structures, including data sharing protocols and legal documents that assign authority to the DoFP will take time, it was stated.

There was to be a US$5,000 allowance for returning Sri Lankans and any amount for foreigners, according to concessions gazetted on May 29, 2023.

COPF chaired by Dr. Harsha De Silva MP, summoned officials on the opening of a duty-free shopping mall soon in Colombo’s Port City.

The committee stressed the need for the Investment Promotion Ministry Secretary’s intervention to resolve the issues promptly.

The Attorney General and the Port City Economic Commission have submitted different viewpoints regarding the legal framework governing the proposed duty-free shopping mall.

Acting Secretary of the Ministry of Investment Promotion Anoja Herath told the committee that draft regulations relating to duty-free shopping malls had been submitted to the cabinet for review and approval.

By: Staff Writer

May 30, Colombo (LNW): The overall land prices in the Western Province increased by 7.8% compared to the previous year, according to the 2024 Western Province Land Price Index (LPI), developed by LankaPropertyWeb (LPW).

The Land Price Index (LPI), updated annually, monitors the trends in asking price values of lands for sale across all three districts of the Western Province – Gampaha, Kalutara, and Colombo.

Based on the Index findings, land prices in Gampaha District surged by 13% from the preceding year, while Kalutara witnessed an 8% rise. In the Colombo district (excluding Colombo 1-15), a growth of 8% was observed, with Colombo 1-15 explicitly marking a 2.3% increase.

The increase in the land prices in all three districts of the Western Province reverses last year’s decline in the Gampaha and Kalutara districts. In contrast, the Colombo district (including Colombo city) has shown a consecutive price increase.

In Gampaha District, land prices have experienced an average increase of 13% in 2024 compared to the previous year.

Variations in land prices have been observed across various cities. Leading the surge in prices are Negombo, Ragama, and Kadawatha, which have emerged as frontrunners with substantial escalations.

 Negombo, in particular, boasts an impressive 34% increase, underscoring its growing prominence as a desirable living and investment destination.

 Similarly, Ragama showcased a commendable 27% increase, attracting savvy real estate investors with its promising prospects, thus contributing to the overall growth and appeal of the Gampaha region.

In Kalutara, land prices have experienced an average increase of 8% in 2024. Land price changes have been observed in critical areas, showcasing the region’s vibrant real estate landscape. Ingiriya stands out with an exceptional 27% surge, accompanied by a growth of 500% from Q1 2019 to Q1 2024, underscoring its potential as a promising investment destination and a testament to the region’s growth trajectory.

Similarly, Panadura reflects buoyant market sentiment with a noteworthy 27% rise, reaffirming its status as a thriving locale and further bolstering the attractiveness of the Kalutara district to investors and developers alike.

 Colombo 1-15 in the most recent period analysed (2023-2024), land prices rose by 2.30%, highlighting sustained growth. Having demonstrated continuous price growth from 2018 to 2021, Colombo’s 1-15 prices experienced a -2.33% dip in 2022; however, they rebounded in the following two years.

These fluctuations reflect the dynamic nature of Colombo 1-15’s real estate market, shaped by economic, social, and regulatory factors while maintaining appeal for long-term investors.

In other areas of Colombo in Colombo District (apart from Colombo 1-15), land prices have experienced an average 8% increase in 2024. Specific areas have witnessed significant movements in land prices, reflecting the varied nature of the district’s real estate market. 

By: Staff Writer

May 30, Colombo (LNW): Dairy giant Fonterra’s “full or partial divestment” of its consumer business in Sri Lanka received strong buyer interest in the move towards a “step-change in strategic direction” for the company to prioritize its dairy s production. Miles Hurrell, CEO of Fonterra disclosed.

Fonterra will now appoint advisors to assist with analyzing divestment options, for which it seeks shareholder support.

“We recognize a divestment of this scale would be significant for Fonterra. Throughout this process we will be considering how best to maximize overall returns to our farmer shareholders and unit holders,” says Hurrell.

“The choices we make when considering divestment options will be driven by a clear-eyed view of the best value-creating pathway for the co-op, both in terms of the potential proceeds from a sale and the ability for Fonterra to generate consistent economic returns over the long-term.”

Fonterra, which is selling its Sri Lanka business, says it has received “a high volume of interest” from potential buyers for its consumer and associated businesses.

“It’s still early days in this process, and we commit to providing farmer shareholders, unit holders, our people and the market updated on new developments as they occur,’ says Fonterra chief executive Miles Hurrell.

“We are also progressing work on our updated strategy and expect to share further detail over the coming months,” says Mr Hurrell.

Earlier this month, the co-op announced plans to divest, either fully or partially, its consumer business that includes iconic brands like Anchor, Mainland, Kapiti and Perfect Italiano.

The consumer and associated businesses that are being put on the block – which include Fonterra Oceania and Fonterra Sri Lanka – collectively utilised approximately 15% of the co-op’s total milk solids and represented approximately 19% of Fonterra’s group operating earnings in the first half of the 2024 financial year.

Hurrell provided an update on the divestment plan during its third quarter result announcement this morning.

“Following our announcement earlier this month of a step-change in our strategic direction, we have received a high volume of interest from parties looking to be involved in the potential divestment of our Consumer and associated businesses,” he says.

Meanwhile Fonterra announced profit after tax from continuing operations of $1 billion, up $20 million from last year or equivalent to 61c per share.

This result is driven by continued strong earnings across all three of the co-op’s product channels.Hurrell says the co-op’s Food service and Consumer channels had a strong third quarter with a lift in earnings compared to the same time last year.