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Sri Lanka Tourism resurgence hit by skilled worker shortage

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Sri Lanka Tourism resurgence hit by skilled worker shortage

By: Staff Writer

Colombo (LNW): At a time where Sri Lanka Tourism is making every effort to attract 1.55 million tourists and generate $ 2.7 billion in revenue by the end of the year, the island nation faces a shortage of skilled workers in the hospitality industry.

Sri Lanka Tourism Development Authority (SLTDA) Chairman Priantha Fernando claims that Sri Lanka will be attracting another 450,000 tourists by the end of this year, with over 1.1 million tourists have already visited the country.

In the wake of high optimism on tourism resurgence, Sri Lanka Tourism capacity building arm, Sri Lanka Institute of Tourism and Hotel Management (SLITHM) yesterday said the hospitality industry is grappling with a massive shortage of skilled workers amid the talent exodus post-economic crisis.

Many skilled workers from the tourism industry migrate overseas in search of better opportunities.

Correspondingly, Sri Lanka’s tourism industry has been beset by labour shortages even as it has been singled out as a key growth sector and contributor to the national economy.

According to Foreign Employment Ministry statistics, a total of 242,865 workers have migrated as of 24 October and 69,797 are skilled, 3,310 are semi-skilled, 73,908 are low-skilled and 12,409 are professionals.

“The hospitality industry today has below 40% of its workforce deemed adequately qualified,” SLITHM Chairman Shirantha Peiris disclosed.

Describing the delicate, yet complex implications of the situation he equalized it to a double-edged sword.

“The workforce in the industry acts as a source of skilled talent contributing to the workers’ remittances as well as a crucial contributor of foreign exchange earnings via tourism. This is a delicate equilibrium that we are trying to achieve by working together with collective policy and stakeholder participation,” he said.

He emphasised the need of a collective effort to implement measures to supplement the skilled labour pool.

”The training course budget was beyond our means and ADB’s assistance helped us to offer free-of-charge. A certificate will be conferred after a compulsory one-year of service in the industry, “ he disclosed.

This requirement is put in place to ensure a reciprocal commitment from beneficiaries to contribute to the country by dedicating a full year to the industry,” he added.

The industry’s predicament stems from the necessity to employ untrained personnel and provide on-the-job training due to the substantial number of workers seeking opportunities abroad for higher remuneration.

However, the SLITHM Chairman said as the statutory body, they will team up with the Vocational Training Authority (VTA) to invest in workforce development and skill-building initiatives in 43 VTA centres and four hotels for capacity building in the hotel industry for sustained growth.

Currently, 4,996 students are studying in SLITHM branches countrywide.

SL’s trade deficit widens in September after lifting import ban

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SL’s trade deficit widens in September after lifting import ban

By: Staff Writer

Colombo (LNW): Sri Lanka’s trade deficit began widening in September following the relaxation of import barriers and this trend will continue for four years including 2023, the Central Bank claims.

Many of Sri Lanka’s trading partners including the European Union have raised concerns over import bans while the International Monetary Fund (IMF) also has urged the authorities to relax such barriers.

The Central Bank anticipated the widening of the trade deficit will start once they relax the compressed import ban.

True to their prediction the deficit in the merchandise trade account widened to US $ 378 million in September 2023, compared to the deficit of $ 205 million recorded in September 2022, Central Bank announced.

Meanwhile, the cumulative deficit in the trade account during January to September 2023 narrowed to $3,342 million from $ 4,093 million recorded over the same period in 2022.

Earnings from merchandise exports declined by 10 per cent to $ 972 million in September 2023, over the corresponding month in 2022 as well as compared to $ 1,119 million recorded in August 2023.

Despite the increase in agricultural exports, the decline in earnings from industrial exports associated with slowing external demand, including garments, mainly contributed to this contraction in export earnings in September 2023, compared to a year earlier, CB disclosed.

Cumulative export earnings also declined by 10.1 per cent during January to September 2023 to $ 8,982 million, over the same period in the last year.

Expenditure on merchandise imports increased by 5.1 per cent (year-on-year) to $ 1,349 million in September 2023, compared to a significantly low base of $ 1,284 million in September 2022, though it declined from$,426 million recorded in August 2023.

The increase in import expenditure was broad-based and mainly contributed by investment goods.

Meanwhile, cumulative import expenditure during January to September 2023 declined by 12.5 percent $12,323 million over the corresponding period in the last year.

Expenditure on the importation of consumer goods increased in September 2023, compared to a year ago, due to the increase in expenditure on non-food consumer goods although food and beverages imports recorded a decline.

The increase in expenditure on non-food consumer goods was broad-based, with a notable increase in imports of household and furniture items (primarily, textile articles, and tableware and kitchenware), telecommunication devices (primarily, mobile telephones), and clothing and accessories.

In contrast, expenditure on food and beverages declined due to the lower import volumes of cereals and milling industry products (mainly, rice) in September 2023.

Expenditure on the importation of intermediate goods increased marginally in September 2023, compared to a year ago, mainly driven by the higher import volumes of wheat, fuel, fertiliser (mainly, urea), and base metals (mainly, Iron and steel). Despite non-importation of crude oil in September 2023.

Expenditure on fuel increased compared to September 2022, with higher imports of refined petroleum and the resumption of coal imports.

However, the importation of textiles and textile articles (primarily, fabrics); plastics and articles thereof; rubber and articles recorded notable declines, among others, in September 2023, compared to September 2022.

DMT Initiates Smart Driving License Project with QR Codes

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DMT Initiates Smart Driving License Project with QR Codes

The Department of Motor Traffic (DMT) in Sri Lanka has initiated a project to introduce digital or smart driving licenses, which will replace the existing semiconductor chips with QR codes, according to media reports. Nishantha Anuruddha Weerasinghe, the Commissioner General of DMT, announced that the project received Cabinet approval in October.

The printing of these new smart driving licenses began on October 16, after the printing and issuing of licenses was transferred from the Sri Lanka Army back to the DMT.

The decision to replace semiconductor chips with QR codes was made due to challenges in importing chip reading units, caused by economic constraints. To support the QR codes, a separate mobile application has been introduced, which will be operated exclusively by the DMT office and the Police Department.

Weerasinghe also noted that the smart driving licenses will incorporate a demerit points system for tracking traffic offenses, enhancing the management of road safety and driver behavior.

Two housing blocks for low income earners embroils in land dispute

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Two housing blocks for low income earners embroils in land dispute

By: Staff Writer

Colombo (LNW): The Chinese funded two Colombo housing schemes for low income earners. have faced a stumbling block due to land ownership dispute between the Colombo Municipality and the Urban Development Authority (UDA), Minister Prasanna Ranatunge disclosed.

He directed the officials of the two institutions to enter into an agreement on this matter and sign an MOU to commence the construction work of the two housing projects as soon as possible.

The relevant two blocks of lands in Colombo have been taken over by the UDA in 2019 in accordance with Clause 30 of the urban development authority act.

The acquisition of the two lands is now embroiled in a legal tussle between the CMC and UDA following a court case filed by the Colombo Municipality challenging the land ownership.

The Court has ordered to settle the land dispute amicably by the two state entities vai consultations compromise and consensus. The Chinese government has also informed the Sri Lankan authorities to settle the matter without any internal disagreement.

The Ministry of Urban Development and Housing, says the construction work of 1996 housing units with the assistance of the Chinese government for low-income earners, creative artists and journalists will be signed after the settling of the land dispute.

Minister of Urban Development and Housing Prasanna Ranatunga says that 108 housing units of those 1996 units will be allocated to the creative artists and journalists of Sri Lanka.

Those housing schemes will be built in the Palathuru Watta area of Kottawa. According to the Minister, 1888 housing units will be allocated for low income earners in Colombo.

The housing schemes for low income earners will be delayed due to the tug of war between the CMC and the UDA, he said.

The Chinese government will provide financial assistance of 552 million yuan (US$ 76 million) to Sri Lanka for this housing project.

The government of Sri Lanka bears the tax money spent for this project, the cost of land acquisition, the cost of land development, the cost of design work and preparing the basic price list, the cost of tender work and the cost of sewage facilities.

Urban Development and Housing Minister Mr. Prasanna Ranatunga says that through this project, a permanent solution will be found for the settlement problem of the residents of settlements with less facilities.

Failed T bond auction – A failure of bond issuance system? Let us investigate

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Failed T bond auction – A failure of bond issuance system? Let us investigate

According to media reports, the central bank (CB) has rejected all bids received at the T bond auction held on 30 October. Therefore, this short article is to raise concerns whether the rejection of all bids is a new sign of the failure of present T bond issuance system.

Present T bond issuance system

Present system was introduced in the middle of 2017 by discontinuing the full auction system followed since the beginning of March 2015. Accordingly, the new the system is a so-called hybrid system containing the auction window and post-auction placement window as follows.

  • Auction window – competitive bids received in the electronic auction system where accepted bids carry multi-prices/yields on each fixed coupon bond offered to the auction.
  • Post-auction non-competitive placement window – Bids are received through e-mail from primary dealers whereas the auction weighted average yield is offered for all accepted bids on each bond announced for placements immediately after the release of auction results.

The system was launched as a strategy to ensure that total funding requirement at each auction is raised with the support of contingency funding from the placement window while reducing the pressure on yields. However, funds have been raised in excess of the auctioned amount from some auctions.

The system prior to March 2015 was a non-transparent, 80%-90% private placement-dominant-system used by the CB to drive its monetary policy on market interest rates through debt management instruments without any regard to market-based debt management principles. The Monetary Board in its Annual Report 2016 attributed to the rise in interest rates due to the pure auction system as highlighted below, despite the fact that the Monetary Board raised policy interest rates by 1% in 2016 and by 0.25% in March 2017 and SRR by 1.5% in January 2016 and underlying market forces. 

  • The impact of replacing the mixed system of auctions and direct placements to raise funds for the government with a purely auction based system where direct placements of Treasury bills were made only with the Central Bank, also contributed to the increase in interest rates on government securities.
  • Speculative increases in yield rates within the purely auction based system in issuing government securities may also have impacted the monetary policy transmission to some extent.

Further, no action is reported to have been taken in respect of significant irregularities found in the system as recommended by public investigations.

Results of last T bond auction held on 30 October 2023

Auction results published by the CB for the last auction are as follows.

The CB does not reveal reasons for rejection of all bids received at the auction or bid details. However, the general understanding for the rejection is all bid yields being higher than the market yields believed by the CB as being fair in its opinion. As stated in the Tender Board mandates, this opinion is largely influenced by the monetary policy requirements on controlling market interest rates. Therefore, only the God knows the CB’s view of fair market yield rates.

Why all bids would have been rejected?

  • Two bonds offered were reissuances of existing bonds to raise new funds as there were no bonds maturing on the settlement date 01 November 2023. If this had been an auction for rollover of maturing bonds, bid yields would not have risen so high because investors would roll over of maturing proceeds without involving in additional costs. 
  • For example, T bond auction held on 25 September was successful as it was a rollover in respect of bonds matured with a face value around Rs. 223.2 bn plus coupon on 01 October. Therefore, the CB could raise Rs. 220 bn from the auction and Rs. 16.7 bn from the placement window at the weighted average yield around 15%.
  • The two bonds offered at the last auction are medium-term bonds that are subject concern over debt unsustainability as proclaimed by the CB. Further, bond restructuring policy itself raises concerns over a possible default, given the current fiscal outlook. The CB also conducted a similar auction for new funds on 12 October and raised Rs. 25.5 bn (25 bn auction and Rs. 2.5 bn placements) at yield rates around 15.2% and 13.6% as shown in the Table below. Therefore, investors may not have been willing to provide new funds at further lowering interest yield rates as expected by the CB at the last auction.
  • Another T bond maturity of face value Rs. 180.6 bn is due on 15 this month. The bid yields, if accepted at the last auctions, would have a significant influence in the next auction yields due in two weeks for the above bond repayment. The average yield quotes of primary dealers for the purchase of same two bonds offered at the last auction were 14.10% and 13.46%, respectively, in the secondary market 27 October (business day prior to the auction date) as reported by the CB. However, bid yields at the last auction would have been much higher than the secondary market yields. Therefore, the CB would have rejected all bids at the auction with the intension to prevent the yield rate pressures on the next T bond auction for rollover of a huge sum as the Treasury does not have funds to repay the maturing bond.
  • The CB is now following a lower interest rate policy as seen from policy interest rates and T bill weekly auctions conducted by the CB (see the Chart below). Therefore, the CB may have had a highly arbitrary/bureaucratic bias towards lower yields through auctions of government securities, instead of the standard conduct of its open market operations through printing of money to control market interest rates. Therefore, this total bid rejection is tantamount to the conventional attempt of the CB to conduct the monetary policy through fiscal instruments.

Concluding Remarks

  • As highlighted above, it is clear that the CB has rejected all bids at the last auction to prevent the rise in market yields and interest rates in the foreseeable future.
  • However, what ever reasons are behind the auction decision, the rejection of all bids is evidence for the failure of the present hybrid fund raising system (i.e. auction window plus contingency funding/placement window).
  • Despite the hybrid system implemented by the CB as a major instrument of the public debt management since the middle of 2017, the government now confronts unsustainability in both T bonds and public debt stocks. As a result, debt restructuring is in a painful process to prevent a major default.
  • However, such bureaucratic modes of auction bid rejection show chronic liquidity conditions in the government securities and credit markets in the near future that might even trigger systemic risks given the inter-connectedness between the fiscal front and the rest of the economy through the monetary and financial system.
  • Therefore, it is the public responsibility of the government to ensure that the government securities market operate through transparent and fair forces independently from the monetary policy priorities, given the present bankruptcy of the fiscal front and its adverse impact on the general public as witnessed by the present economic crisis as well as the monetary policy autonomy assured by the brand new CB legislation certified on 14 September 2023. Otherwise, debt restructuring and IMF debt targets without the support of debt market principles will only be another bureaucratic actions. 

(This article is released in the interest of participating in the professional dialogue to find out solutions to present economic crisis confronted by the general public consequent to the global Corona pandemic, subsequent economic disruptions and shocks both local and global and policy failures.)

P Samarasiri

Former Deputy Governor, Central Bank of Sri Lanka

(Former Director of Bank Supervision, Assistant Governor, Secretary to the Monetary Board and Compliance Officer of the Central Bank, Former Chairman of the Sri Lanka Accounting and Auditing Standards Board and Credit Information Bureau, Former Chairman and Vice Chairman of the Institute of Bankers of Sri Lanka, Former Member of the Securities and Exchange Commission and Insurance Regulatory Commission and the Author of 12 Economics and Banking Books and a large number of articles published. 

The author holds BA Hons in Economics from University of Colombo, MA in Economics from University of Kansas, USA, and international training exposures in economic management and financial system regulation)

Source: Economy Forward

LKR Holds Steady Against USD in Local Banks

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LKR Holds Steady Against USD in Local Banks

On November 1, the Sri Lankan Rupee maintained its stability against the US Dollar at commercial banks in Sri Lanka, compared to the rates observed on the previous day.

Here are the exchange rates at some of the prominent banks:

  1. Peoples Bank: The buying rate for the US Dollar increased from Rs. 320.91 to Rs. 321.15, while the selling rate rose from Rs. 332.67 to Rs. 332.92.
  2. Commercial Bank: The buying and selling rates of the US Dollar remained unchanged at Rs. 321.15 and Rs. 331.50, respectively.
  3. Sampath Bank: The buying and selling rates of the US Dollar remained steady at Rs. 322 and Rs. 332, respectively.

2023-11-01

Police to Reinstate Bus Priority Lanes in Colombo

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Police to Reinstate Bus Priority Lanes in Colombo

Sri Lanka Police are set to reintroduce bus priority lanes in Colombo starting from November 1. This pilot project will be implemented on various roads in the city and will run until November 14.

The bus priority lane will be in operation during the hours of 6 am to 9 am. It will span from the Savoy Cinema in Wellawatte to Fort along the Galle Road, as well as along Maradana Road from the Borella junction to Olcott Mawatha in Pettah.

Police have clarified that only CTB (Ceylon Transport Board), private buses, staff buses, and school transport buses will be allowed to utilize these designated bus lanes.

Indian Finance Minister Commences Three-Day Official Visit to Sri Lanka

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Indian Finance Minister Commences Three-Day Official Visit to Sri Lanka

Indian Finance Minister Nirmala Sitharaman has arrived in Sri Lanka for a three-day official visit. During her visit, Minister Sitharaman is scheduled to partake in significant events and engage in bilateral discussions with Sri Lankan officials.

One of the highlights of her visit is the keynote address she will deliver as the Guest of Honour at the ‘NAAM 200’ event, organized by the Sri Lankan government to commemorate the 200th anniversary of the arrival of India-origin Tamils (IOTs) to Sri Lanka. The event will take place at the Sugathadasa Indoor Stadium in Colombo on November 2.

She will also provide the keynote address at the India Sri Lanka Business Summit, with the theme ‘Enhancing Connectivity: Partnering for Prosperity,’ jointly organized by the Confederation of Indian Industries (CII), the Indo-Lanka Chamber of Commerce & Industry, and the Ceylon Chamber of Commerce, to be held in Colombo on the same day.

As part of her visit, Minister Sitharaman will hold bilateral discussions with Sri Lankan President Ranil Wickremesinghe and Prime Minister Dinesh Gunawardena. She is set to witness the signing of a Memorandum of Understanding (MoU) for Solar Electrification of Religious Places in Sri Lanka, with India allocating INR 82.40 crores out of the Indian government’s grant assistance of INR 107.47 crores earmarked for the promotion of Buddhist ties.

The Finance Minister will also inaugurate State Bank of India (SBI) branches in Trincomalee and Jaffna on November 2 and 3, respectively.

During her visit to Sri Lanka, Minister Sitharaman will visit several cultural and religious sites, including the Sri Dalada Maligawa (The Temple of the Sacred Tooth Relic) in Kandy, Jaya Sri Maha Bodhi in Anuradhapura, Thirukoneswaram Temple in Trincomalee, and Nallur Kandaswamy Temple in Jaffna. She will also explore the Lanka IOC Oil Tank Farms, Jaffna Cultural Centre, and Jaffna Public Library.

Government Initiates Bidding Process for Debt-Ridden SriLankan Airlines Divestiture

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Government Initiates Bidding Process for Debt-Ridden SriLankan Airlines Divestiture

The government of Sri Lanka has officially launched the bidding process for the divestiture of the debt-ridden national carrier, SriLankan Airlines. Minister of Ports, Shipping & Aviation, Nimal Siripala De Silva, announced that Invitations to Tenders (ITTs) have been published through local and foreign media as well as websites.

This divestiture is expected to follow a two-stage competitive bidding process, involving the Request for Qualification (RFQ) and the Request for Proposals for the Proposed Transaction (RFP). Minister De Silva clarified the government’s intent to retain a 51% stake in SriLankan Airlines while divesting the remaining 49%.

Addressing previous reports suggesting a complete sale of the national carrier by the end of 2024, Minister De Silva denied such claims during an appearance on Ada Derana’s “State of the Nation” program. He emphasized that establishing a joint venture is the strategy to address SriLankan Airlines’ debt, which currently amounts to USD 1.2 billion.

Founded in 1979, SriLankan Airlines operated with a fleet of 24 Airbus A320 and A330 aircraft, serving a route network spanning 126 destinations in 61 countries.

Sri Lanka Original Narrative Summary: 01/11

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Sri Lanka Original Narrative Summary: 01/11
  1. CPC says Fuel prices have been revised from today: Petrol 92 down by Rs.9 per litre to Rs.356: Petrol 95 up by Rs.3 to Rs.423: Auto Diesel up by Rs.5 to Rs.356: Super Diesel up by Rs.10 to Rs.431: Kerosene up by Rs.7 to Rs.249: LIOC to also match the revised prices of the CPC.
  2. Cabinet Spokesman Minister Bandula Gunawardana says the Cabinet has approved the increase of the Value Added Tax to 18% from 1st January’24 onwards
  3. Former IMF staffer and President’s Debt Advisor Dr Sharmini Coorey says the IMF should be “a lot tougher” on SL’s structural reforms: also says the IMF must protect debtor countries “more strongly”: laments the IMF took 6 months after finalizing the Programme with SL to disburse the funds, and that such delay was “very painful for SL”.
  4. A US-backed Think-tank alleges the Govt’s transparency & accountability have taken a turn for the worse over the past year: says the country will be setting itself up for failure if it doesn’t address these issues.
  5. Court of Appeal in a split decision of a 3-Judge Bench dismisses the Writ petition that was filed seeking an order abolishing the Parliamentary seat of State Minister Diana Gamage.
  6. The 5-member Experts’ Committee of Judicial Medical Officers submits its report on the post-mortems of Dinesh Schafter to Colombo Additional Magistrate’s Court: Court to announce its decision today.
  7. Dept of Census & Statistics says the rate of Inflation measured by CCPI on a YoY basis increased to 1.5% in October’23 from 1.3% in September’23; Food inflation unchanged at -5.2% in October’23 as in September’23; Non food inflation increased to 4.9% in October’23 from 4.7% in September’23.
  8. Representatives from WB, ADB, IMF, AIIB, IFCA, MIGA, JICA, USAID, EU, & UN meet with President, PM & Govt Officials to discuss the Govt’s reform programmes: discussion aimed at moving from crisis to recovery & sustainable growth.
  9. Cabinet grants approval for the proposal to revise the Electricity Tariff every 3 months: Minister of Power and Energy Kanchana Wijesekera says the next electricity tariff revision will be done on 1st April’24.
  10. Govt invites bids for the sale of state-run carrier SriLankan Airlines in keeping with its commitments to obtain the USD 2.9 bn loan facility from the IMF over 4 years.
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