By: Staff Writer

April 28, Colombo (LNW): Sri Lankans are facing growing confusion after contradictory explanations emerged from top government officials regarding the alleged US$2.5 million Treasury fund loss, with shifting narratives raising serious questions about transparency, internal controls, and possible information suppression.

Treasury Secretary Harshana Suriyapperuma confirmed that a cyber intrusion targeting the External Resources Department was detected in January 2026. He stated that hackers manipulated internal email communications and diverted funds to an external account, describing it as a coordinated cyber operation. According to him, the breach was only disclosed later due to security concerns and ongoing investigations.

However, this explanation was quickly complicated by Deputy Minister of Digital Economy Eranga Weeraratne, who rejected the framing of a direct system hack. He stated that the incident appears to be a sophisticated phishing and impersonation scam. Fraudsters allegedly created fake email domains and identities resembling legitimate international officials, deceiving authorities into authorising the payment.

Adding further complexity, Deputy Finance Minister Anil Jayantha Fernando said hackers gained access through compromised email systems, extracted sensitive data, and altered bank account details to redirect funds. He also confirmed that an internal Treasury inquiry involving senior officials had already led to disciplinary actions against some staff.

The fraud was reportedly detected when a similar attempt was made to divert funds intended for India, prompting closer scrutiny of transactions. Authorities have since engaged multiple agencies, including the Sri Lanka Computer Emergency Readiness Team, the Central Bank of Sri Lanka, and the Criminal Investigation Department, while also seeking assistance from Interpol to trace the stolen money through international banking channels.

Despite these efforts, the government’s shifting descriptions—ranging from “system breach” to “phishing impersonation”—have raised public doubts about whether officials are fully aligned on what actually happened. Critics argue that the inconsistency itself reflects deeper governance weaknesses.

Opposition MP Harsha de Silva has gone further, questioning the credibility of the cyber-attack narrative. He said the incident appears more like administrative negligence than an advanced cyber operation. According to him, standard financial safeguards were not followed, including verification of bank details and basic test transactions before releasing large payments.

Dr. de Silva stressed that payment instructions should have been cross-checked against original contracts and that such controls are routine in public finance systems. He warned that the issue cannot be reduced to money simply “going missing,” emphasizing that public funds were lost and responsibility must be clearly established.

He also called for parliamentary scrutiny, noting that oversight of public finances is a constitutional duty. The matter, he said, should be examined by the Committee on Public Finance to determine how such a lapse occurred within the Treasury system.

As investigations continue, the central question remains unresolved: was this a highly coordinated cybercrime, or a preventable breakdown of basic financial controls? The answer may determine not only accountability but also public trust in the government’s handling of sensitive financial systems.

By: Staff Writer

April 28, Colombo (LNW): Sri Lanka’s automotive sector is experiencing a sharp resurgence, but beneath the surface of rising vehicle registrations lies a complex economic trade-off. The latest data shows total registrations climbing to 59,734 units in March 2026, a 15.6 percent increase from the previous month—an expansion that signals renewed consumer confidence, yet simultaneously intensifies pressure on the country’s fragile external finances.

At the center of this surge is a strong shift toward electric mobility. Registrations of electric vehicles (EVs) have skyrocketed by over 165 percent within a single month, driven largely by brands such as BYD. This rapid adoption reflects a behavioral pivot among consumers seeking to shield themselves from volatile fuel prices. However, while EVs may reduce long-term fuel import costs, their upfront import burden still weighs heavily on Sri Lanka’s foreign exchange reserves.

The broader vehicle market tells a story of widespread demand across segments. Two-wheelers dominate the landscape, exceeding 41,000 units, with strong performances from manufacturers like Bajaj, Honda, and TVS. Passenger vehicles, particularly SUVs and crossovers, also posted moderate gains, led by Toyota and Honda, while compact cars saw increased traction from Suzuki alongside EV entrants.

However this growth comes at a cost. According to the Central Bank of Sri Lanka, the country spent over US$ 441 million on vehicle imports in just the first two months of 2026. Although February showed a slight dip in monthly expenditure, the surge in March registrations suggests that import demand remains robust. This creates a structural tension: rising vehicle ownership supports economic activity and mobility, but also accelerates the outflow of scarce foreign currency.

The composition of imports further complicates the picture. While EVs promise lower fuel dependency, they require significant initial capital outlays in foreign currency. Meanwhile, conventional and hybrid vehicles continue to contribute to fuel import bills, albeit at varying levels. The net effect is a dual burden short-term pressure from imports and ongoing energy costs.

Economic analysts, including Murtaza Jafferjee, argue that energy pricing is a key driver of these shifts. As fuel prices rise, consumers naturally gravitate toward electric alternatives. However, even this transition is not without challenges, as electricity tariffs are also expected to increase. Jafferjee points out that the growing adoption of rooftop solar systems could offset these costs, making EV ownership more sustainable over time.

Policy inconsistencies add another layer of complexity. The current tax regime, which ties excise duties to engine capacity for traditional vehicles and motor power for EVs, creates uneven incentives across technologies. This distortion risks skewing market behavior rather than guiding it efficiently.

Sri Lanka’s vehicle import boom thus presents a paradox. It reflects economic recovery and evolving consumer preferences, yet also exposes underlying vulnerabilities in external stability. Managing this balance will be critical. Without calibrated policy intervention, the road to modernization could come at the expense of macroeconomic resilience.

By: Staff Writer

April 28, Colombo (LNW): Sri Lanka is quietly reshaping the investment landscape of Colombo Port City, combining labour market reforms with commercial policy adjustments in an effort to revive foreign direct investment (FDI) interest. The dual-track strategy reflects both urgency and realism, as the flagship development grapples with subdued activity in early 2026.

At the heart of this shift is a recalibration of labour laws affecting strategically important businesses. Amendments to regulations linked to the Termination of Employment of Workmen Act mark a significant departure from earlier protections. By exempting key sections—particularly those requiring prior approval for terminations—the government has reduced procedural barriers that investors have long cited as constraints.

This move is not merely technical; it signals a broader ideological shift. Sri Lanka appears to be edging toward a more flexible labour regime, at least within designated economic zones and strategic sectors. For foreign investors, especially those in capital-intensive or rapidly evolving industries, such flexibility can be narrative. The ability to adjust workforce levels without lengthy bureaucratic processes enhances operational agility and cost management.

However, the reforms also raise questions about the balance between investor facilitation and worker protection. While other legal safeguards remain in place, the narrowing of TEWA’s scope could be perceived as a trade-off. For the Port City, which aims to position itself as a modern, globally competitive hub, maintaining credibility on governance and social standards will be crucial.

Complementing these labour changes is the easing of duty-free retail restrictions within the Port City. Faced with low foreign tourist engagement, authorities are broadening access to local consumers to stimulate economic activity. This adjustment highlights a key tension: the project’s original international focus versus the realities of current demand.

Together, these measures form a coordinated attempt to enhance the Port City’s attractiveness. Increased retail activity can create a more dynamic environment, while labour flexibility addresses structural concerns that may deter long-term investment. However, the effectiveness of this approach depends on execution.

One persistent challenge is regulatory oversight. Monitoring potential leakages of duty-free goods into the domestic market remains a priority, as lapses could erode investor confidence. Transparency and enforcement will be critical in reassuring stakeholders that the regulatory framework is robust.

Despite its current low ebb, Colombo Port City retains significant potential. Its strategic location, modern infrastructure, and special regulatory status offer a foundation that few regional competitors can match. What it lacks, at present, is momentum.

The recent policy changes suggest that Sri Lanka is willing to adapt an encouraging sign for investors watching from the sidelines. Whether these reforms can translate into tangible FDI inflows will depend on consistency, credibility, and the ability to rebuild the Port City’s global narrative.

For now, the message is clear: Sri Lanka is open for business, and increasingly willing to adjust the rules to prove it.

By: Staff Writer

April 28, Colombo (LNW): Sri Lanka’s JVP-led NPP administration has launched a fresh attempt to revive the underperforming Mattala Rajapaksa International Airport by inviting both local and international investors to take on its development and operational management. The initiative reflects a broader policy shift toward public-private partnerships aimed at reducing the fiscal burden of state-owned enterprises.

The airport’s current condition underscores the urgency of this move. Despite its modern infrastructure and capacity to handle wide-body aircraft, Mattala remains drastically underutilised. Passenger throughput is minimal, cargo operations are sporadic, and several facilities lie idle. The airport has occasionally been repurposed for unconventional uses including aircraft parking and storage—highlighting the absence of sustained aviation demand.

From a financial standpoint, the picture remains bleak. As of April 2026, the airport continues to operate at a loss, contributing to AASL’s overall financial strain. Revenue streams—largely limited to landing fees, occasional charter services, and minor commercial activities are insufficient to offset fixed costs such as maintenance, security, and staffing. The opportunity cost of capital tied up in the airport further amplifies concerns about its long-term viability.

The government’s EOI framework seeks partners capable of leveraging both operational and commercial opportunities. Airside responsibilities would include managing flight operations and aviation services, while landside development could open avenues in logistics, warehousing, hospitality, and retail. Authorities hope that integrating these elements could create a more diversified and resilient business model.

Yet attracting credible investors will not be straightforward. The core challenge lies in demand generation. Without a strong passenger base or strategic airline partnerships, even the most efficient operator may struggle to achieve profitability. Competing with the well-established Bandaranaike International Airport adds another layer of difficulty, as airlines and passengers naturally gravitate toward the primary gateway.

Investors must also weigh financial risks, including high initial capital requirements and uncertain return timelines. Infrastructure upgrades, marketing efforts, and potential incentives to attract airlines could require substantial upfront investment. In a volatile economic environment, these risks are magnified.

On the other hand, proponents argue that Mattala’s location near emerging industrial zones and the Hambantota Port presents untapped potential, particularly in air cargo and multimodal logistics. If effectively integrated into regional trade networks, the airport could evolve into a niche hub.

Ultimately, the success of this initiative will hinge on whether the government can structure a deal that balances risk and reward while providing investors with sufficient confidence to commit to a long-term turnaround.

By: Staff Writer

April 28, Colombo (LNW): The relaunch of Bake House Kandy has sparked both excitement and scrutiny, as one of Sri Lanka’s most recognizable dining establishments’ attempts to redefine itself for a new generation. Known for decades as a nostalgic gathering place, the bakery’s shift toward a modern, sustainability-driven concept highlights the pressures facing legacy brands in an increasingly competitive and values-driven market.

Central to the relaunch is a strong emphasis on responsible dining. The adoption of a clean-label approach, which excludes artificial additives, reflects growing consumer demand for healthier food options. At the same time, the integration of eco-friendly practices such as solar energy, water filtration systems, and reduced plastic use positions the brand as a socially responsible business. These initiatives align with global sustainability trends but also require careful implementation to ensure they are more than just marketing tools.

The redesign of the physical space marks a significant departure from the traditional look and feel that defined Bake House for generations. Contemporary interiors, curated dining elements, and the addition of smart tables aim to create a lifestyle-oriented environment. While this modernization may appeal to younger audiences, it raises concerns about whether the brand risks losing its original charm and identity.

Another notable aspect of the relaunch is the diversification of dining experiences within a single location. The introduction of multiple concepts including a family restaurant, tea-focused space, café, takeaway outlet, pub, and private event venue reflects an ambitious attempt to cater to varied customer preferences. However, such expansion can stretch resources and challenge consistency, particularly in maintaining service standards across different formats.

From an industry perspective, the move highlights a broader trend in Sri Lanka’s hospitality sector, where businesses are increasingly blending tradition with innovation to remain competitive. Yet, this approach is not without risks. Investments in technology, sustainability, and design can significantly increase operational costs, potentially leading to higher prices that may deter long-time customers.

There is also the question of inclusivity. As the brand shifts toward a more premium, experience-driven model, it may inadvertently exclude segments of its traditional customer base. Balancing affordability with modernization will be crucial in ensuring that the relaunch does not alienate loyal patrons.

In essence, Bake House Kandy’s transformation reflects the evolving expectations of today’s consumers, who seek not just food but meaningful, ethical, and engaging experiences. The success of this ambitious overhaul will depend on whether the brand can maintain its legacy while embracing change without compromise.

By: Staff Writer

April 28, Colombo (LNW): The unfolding fraud scandal at Sri Lanka’s National Development Bank is no longer just a financial crime it is a complex story of systemic breakdown, digital exploitation, and regulatory hesitation. As investigators peel back layers of the Rs. 13.2 billion fraud, new details suggest a highly coordinated operation that exploited both technological vulnerabilities and institutional blind spots.

Regulators, led by the Central Bank of Sri Lanka, have so far resisted installing a Competent Authority to take control of the bank. This cautious approach appears tied to the pending forensic audit and fears that aggressive intervention could trigger depositor anxiety. Nevertheless, pressure is mounting for decisive action as confidence in NDB’s governance erodes.

The mechanics of the fraud reveal a disturbing level of sophistication. Transactions were deliberately structured to evade automated detection systems, with amounts kept just under internal alert thresholds. These transactions were frequently processed over weekends—periods typically associated with reduced oversight—allowing fraudulent flows to accumulate undetected over time.

Central to the breach was unauthorized system access. Investigators believe primary suspects used stolen credentials from high-ranking bank officials, raising serious concerns about internal controls, password management, and multi-factor authentication practices. The breach highlights how even established financial institutions remain vulnerable to insider-assisted cyber exploitation.

To independently assess the damage, NDB enlisted Deloitte Touche Tohmatsu India LLP, bypassing internal reporting lines entirely. This move reflects not only the scale of the fraud but also a lack of confidence in internal audit mechanisms, which failed to detect glaring anomalies—including a dramatic surge in receivables that should have triggered immediate scrutiny.

The criminal dimension continues to expand. The Criminal Investigation Department is now pursuing a network of approximately 60 individuals, indicating the fraud may extend well beyond a handful of insiders. One notable arrest involves a suspect tied to a cryptocurrency laundering operation worth Rs. 390 million, suggesting that digital assets played a key role in obscuring financial trails.

The broader financial implications are significant. Although the Central Bank insists NDB remains stable, citing adequate capitalization, the projected Rs. 4 billion quarterly loss signals real strain. The downgrade by Fitch Ratings further reflects diminishing external confidence, with analysts pointing to “serious deficiencies” in risk governance frameworks.

Regulatory countermeasures have been swift but restrictive. Dividend payouts have been frozen, expansion plans halted, and operational spending curtailed. These steps aim to stabilize the bank but also underscore the severity of the crisis.

Ultimately, the NDB fraud exposes deeper structural issues within Sri Lanka’s banking sector particularly around digital security, internal audit effectiveness, and executive accountability. As forensic findings near completion, the focus will shift from discovery to consequences: who failed, who benefited, and whether meaningful reform will follow.

The answers may define not just NDB’s future, but the credibility of the country’s entire financial system.

By: Staff Writer

April 28, Colombo (LNW): Sri Lanka’s plan to establish the Industrial Transformation and Innovation Authority marks a major shift in managing the country’s industrial sector. By consolidating key institutions into a single body, the government aims to address long-standing inefficiencies. However, the move comes against a backdrop of mixed industrial performance and ongoing structural challenges.

The country’s industrial sector in 2026 reflects both potential and strain. Large-scale industries, numbering around 1,200, continue to dominate exports in sectors such as apparel, food processing, and construction materials. Meanwhile, approximately 75,000 SMEs form the backbone of domestic production, contributing significantly to employment and regional economic activity. Despite their importance, SMEs account for less than half of industrial output, highlighting productivity gaps.

The proposed authority is expected to enhance policy coherence and reduce overlapping mandates that have historically slowed decision-making. By bringing multiple agencies under one umbrella, the government hopes to create a unified strategy for industrial transformation and innovation. Support from international partners such as the Asian Development Bank adds further credibility to the initiative.

However, structural weaknesses within the sector may limit the effectiveness of such reforms. Industrial growth has been constrained by high borrowing costs, inconsistent policy implementation, and limited access to global markets. Additionally, technological adoption remains low, particularly among SMEs, reducing competitiveness in an increasingly digital global economy.

Under the NPP government’s policy framework, there is a strong emphasis on inclusive growth and state-driven development. While this approach aims to ensure equitable distribution of resources, it also raises concerns about excessive central control and reduced private sector flexibility. Businesses may face delays if decision-making becomes overly centralized without adequate decentralization mechanisms.

Another concern is whether the merger of institutions will lead to job redundancies or transitional disruptions. Employees within the existing agencies may face uncertainty, potentially affecting morale and productivity during the transition phase. Moreover, aligning the operational cultures of three different institutions could prove complex.

Despite these challenges, the creation of the ITIA offers an opportunity to address long-standing issues such as fragmented support systems and weak innovation ecosystems. If implemented effectively, it could improve access to funding, enhance research and development, and strengthen export-oriented industries.

Ultimately, the success of this industrial overhaul will depend on balancing central coordination with operational flexibility. Sri Lanka’s industrial sector stands at a critical juncture, and while the proposed authority could provide a pathway to modernization, its impact will hinge on execution, stakeholder engagement, and the ability to adapt to rapidly changing economic conditions.

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By: Staff Writer

April 28, Colombo (LNW): A series of cyber incidents targeting Sri Lanka’s financial system has exposed serious weaknesses in banking security and institutional oversight. The recent rise in phishing attacks, combined with internal fraud cases and the reported hacking of treasury loan installment systems, points to a wider crisis that goes beyond isolated breaches and reflects systemic vulnerability.

Cybercriminals are becoming increasingly sophisticated, exploiting both technical gaps and human behavior. By creating fake websites that closely resemble legitimate banking platforms, attackers trick customers into revealing sensitive information. Once access is gained, funds can be transferred quickly, often before any action can be taken. This efficiency highlights major shortcomings in current detection and response systems.

However, external cyber threats are only part of the problem. Internal fraud cases, such as those linked to NDB Bank, have raised serious concerns about governance, internal controls, and accountability within financial institutions. These incidents suggest weaknesses in employee monitoring, auditing processes, and risk management frameworks. When combined with cyberattacks, they create a dangerous environment for both banks and customers.

The reported breach involving treasury loan installment systems further deepens the crisis. If confirmed, it would indicate that vulnerabilities extend beyond commercial banks to government-related financial operations. This underscores the urgent need for a coordinated national cybersecurity strategy that covers both public and private sectors.

Increased scrutiny of bank management is now inevitable. Regulators may need to enforce stricter oversight, including real-time monitoring systems and mandatory cybersecurity audits. Bank leadership must also recognize that cybersecurity is no longer optional but a critical component of daily operations.

The economic consequences could be severe. Public trust in digital banking essential for modern financial systems may decline rapidly if security concerns persist. This could lead to reduced use of online banking services, greater reliance on cash transactions, and setbacks in financial modernization.

Addressing these challenges requires a comprehensive approach. Technological upgrades must be supported by staff training, public awareness initiatives, and stronger legal action against cybercrime. International cooperation may also be necessary, as many cyber threats originate beyond national borders.

In conclusion, the combination of phishing attacks, internal fraud, and system breaches signals a critical turning point for Sri Lanka’s financial sector. Without immediate and decisive reforms, the stability and credibility of the entire system could be at risk.