July 11, Colombo (LNW): The government of Sri Lanka is set to enact a new law to identify active companies, aiming to enhance policy-making and economic planning. 

As of March 2024, the country had 199,484 registered companies, with 1,995 new companies established in January 2024 and 4,500 in 2023. This follows a period of economic resurgence after a crisis, with company registrations increasing from 17,819 in 2022 to 22,376 in 2023.

To streamline the re-registration of companies under the Companies Act No. 07 of 2007, the Cabinet of Ministers approved the introduction of a new law. 

This will involve instructing the Legal Draftsman to prepare a Bill based on a developed concept paper. The new law aims to keep data on active companies’ current, aiding in accurate policy-making and economic planning.

Currently, while there are nearly 200,000 registered companies, the existing Companies Act lacks provisions to determine which of these are actively operating. 

The proposed legislative update aims to close this gap, ensuring better regulatory oversight and governance. The proposal, presented by the Industries Minister, underscores the need for this legislative change to improve the system.

In addition to identifying active companies, Sri Lanka is also enhancing transparency regarding beneficial ownership of companies.

 The Fiscal Policy Department of the Ministry of Finance has made it compulsory for companies to disclose beneficial ownership details. This includes information on shareholders with more than a 25% stake or beneficiaries who actively control the company.

New amendments to the Companies Act will be enacted by June 2024 to align with the Financial Action Task Force (FATF) standards. 

These amendments will require the Registrar General of Companies (RoC) to maintain a separate register on beneficial ownership. This register will provide information for investigative purposes and ensure timely access for competent authorities.

The current system lacks a mechanism to identify beneficial ownership, with law enforcement agencies accessing this information through financial institutions.

 Although the Companies Registrar maintains basic legal information on companies, the beneficial ownership data is not widely available. Given the legal gaps, the information provided to financial institutions may not be comprehensive or accurate.

To address these issues, the RoC, in collaboration with the Financial Intelligence Unit (FIU) and other authorities, has drafted amendments to fully align the legal framework with FATF standards. These amendments are pending final review and will be submitted to Parliament for approval and adoption next year.

 Sri Lanka’s new legislative measures aim to improve the identification of active companies and ensure transparency in beneficial ownership. This will support better economic planning, policy-making, and regulatory oversight, aligning with international standards

July 11, Colombo (LNW): Sri Lanka has established a Department for Cinnamon Development to boost the cultivation, production, and export of cinnamon.

 The Government Information Department announced that this new department aims to assist cinnamon producers, suppliers, and exporters while enhancing the quality and variety of cinnamon products through value addition.

In 2022, Sri Lanka’s spice exports, including cinnamon, generated $368.7 million, a decrease from $454.8 million in 2021. In the first half of 2023, spice exports brought in $176 million. Ceylon cinnamon, exclusive to Sri Lanka, received a Geographic Indicator (GI) designation in February last year.

President Ranil Wickremesinghe highlighted the importance of improving high-quality cinnamon cultivation, emphasizing Sri Lanka’s leading position as a major cinnamon producer and exporter.

 Speaking at the inauguration of the Department of Cinnamon Development’s main office and the launch of its official website in Karandeniya, Galle, he noted that this initiative follows a proposal in the 2023 Budget to revitalize the Ceylon cinnamon industry.

During the event, Wickremesinghe received a 10-year roadmap for promoting the industry and a technical publication titled “Cinnamon Handbook.” 

He also awarded Good Agricultural Practices (GAP) and Geographical Indication (GI) certificates to select cinnamon entrepreneurs.

 The President emphasized the need to maximize each acre of land for cultivating high-quality cinnamon varieties and increasing productivity.

He underscored the necessity of expanding cinnamon cultivation areas and integrating cinnamon with other crops to potentially triple or quadruple production.

 He also stressed the importance of boosting sales along with increased production, suggesting the use of both local and international expertise to improve market reach. 

The government is ready to support companies willing to take on this responsibility.

“We are re-establishing this department after 200 years to revive cinnamon cultivation in the country.

 The primary responsibility of this department is to enhance cinnamon production, starting with increasing output. We need to focus on cultivating high-quality cinnamon varieties and expanding the area under cultivation,” Wickremesinghe stated.

The President also emphasized the importance of transitioning from an import-based economy to an export-driven one for the country’s economic stability. 

He called for a strategic plan to restart cinnamon cultivation from Puttalam to Hambantota and attract new investments in various industries, including information technology. He reiterated the need to maintain the current development path to secure the nation’s future.Although Ceylon Cinnamon has been GI-certified, value addition has decreased as exporters believe bulk exportation provides justifiable revenue.

 However, re-exported cinnamon can be transformed into value-added products and sold for higher revenue. Approximately 80-90% of cinnamon exportation occurs in bulk, making value addition challenging due to existing mindsets, similar to other agricultural exports

July 11, Colombo (LNW): The Samagi Jana Balawega and the National People’s Power are preparing to propose an adjournment debate in Parliament tomorrow, stressing the significance of holding the presidential election on schedule.

Chief Opposition Whip Lakshman Kiriella announced that the proposal was presented during today’s party leaders’ meeting. Kiriella and the leader of the National People’s Power, Anura Kumara Dissanayake, are determined to hold the debate to ensure the timely conduct of the presidential election.

July 11, Colombo (LNW): Sri Lanka’s mango production is experiencing significant growth, projected to reach 102,410 metric tons by 2026. Since 1966, production has increased by 2% annually. In 2021, Sri Lanka ranked 34th globally with 97,890 metric tons, just behind Venezuela. Indonesia, China, and Mexico followed as the 2nd, 3rd, and 4th largest producers, respectively.

As per Volza’s Sri Lanka Export data, Mangoes export shipments from Sri Lanka stood at 7.1K, exported by 716 Sri Lanka Exporters to1, 498 Buyers.Sri Lanka exports most of it’s Mangoes to United States, United Arab Emirates and Saudi Arabia.

The top 3 exporters of Mangoes are India with 2,012,199 shipments followed by China with 468,021 and Peru at the 3rd spot with 166,938 shipments.

Over the past twenty years, the geographical distribution of mango cultivation in Sri Lanka has shifted considerably. Currently, 65.36% of mango cultivation is concentrated in nine districts. Although Kurunegala was historically the top producer, it has been surpassed by Anuradhapura due to significant growth in cultivation areas there and in Monaragala.

Sri Lanka’s fresh mango exports have grown notably since 2017, reaching 374 metric tons by 2022. Dried mango exports also increased, hitting 63 metric tons in 2022. However, seasonality remains a challenge for production. A coordinated approach involving all stakeholders can stabilize prices, reduce financial strain on growers, and ensure year-round availability of mangoes.

Promoting value-added products like mango pulp, jams, dried slices, and chutneys can help meet year-round demand while balancing the demand for fresh mangoes during off-seasons. Enhancing logistics and distribution networks, including cold chain facilities, can mitigate price disparities and ensure nationwide availability of mangoes. Establishing efficient market linkages, improving infrastructure, and buffer stocking are also crucial.

Successful farmer clusters, such as those under the ‘Nucleus Estates’ initiative by the Agriculture Sector Modernization Project (ASMP) and the Lanka Fruit and Vegetable Producers, Processors and Exporters Association (LFVPPEA), foster knowledge sharing, resource pooling, and economies of scale. These clusters ensure a consistent supply and amplify growers’ collective voice.

Sri Lankan mangoes have significant export potential in markets like the EU, USA, Middle East, and Australia. Meeting these markets’ quality standards requires improved orchard management, Good Agricultural Practices (GAP), Integrated Pest Management (IPM), and training on post-harvest handling and international regulations compliance. The IPS and LFVPPEA, with support from the Australian Centre for International Agricultural Research (ACIAR), have been aiding commercial mango growers in tapping into export markets.

Mango production in Sri Lanka shows two distinct peaks annually due to varying climatic conditions and rainfall patterns. This seasonality leads to price fluctuations, with notable disparities across regions. For example, prices peaked at 252.1 Rs/kg in September 2023 due to limited availability, then dropped to 71.2 Rs/kg in December as the market became saturated.

 Price volatility creates financial challenges for growers and affects consumer purchasing behavior, particularly for low-income households. Despite investments in high-yielding cultivars, growers face unpredictable incomes due to market price fluctuations.

July 11, Colombo (LNW): Sri Lanka is launching a 20 billion rupee loan scheme to be disbursed via banks for small and medium enterprises (SMEs) impacted by the economic crisis, with assistance from the Asian Development Bank.

The scheme will allocate 15 billion rupees to new and existing businesses, while SMEs with non-performing loans will receive the remaining 5 billion rupees. These loans will be provided through licensed credit institutions, which will release detailed statements soon.

The Economic Census revealed that Micro, Small, and Medium Enterprises (MSMEs) significantly contribute to Sri Lanka’s economy, with 1,017,267 MSMEs identified. Of these, 28.7% were industries, 40% engaged in trade, and 31.3% in services. 

The legal status of MSMEs shows that 54% of micro enterprises, 89% of small enterprises, and all medium-scale enterprises are registered.

NDB Bank has introduced the ‘SME Re-Energizer’ loan in collaboration with the Sri Lankan Government, offering financial support to SMEs and MSMEs. 

This initiative aims to empower these businesses and promote economic growth by providing essential financial assistance. The loan scheme features a competitive interest rate of 7% per annum and offers investment loans up to LKR 15 million per SME client with valid business registration. 

The loan targets critical sectors, including manufacturing, construction, exports, tourism, apparel, agriculture, and agro-based industries. It offers flexible repayment terms and aims to provide long-term financial solutions tailored to each business’s specific needs.

There is an urgent need for support for MSMEs, warning of severe consequences if their financial burdens are not addressed. 

MSMEs are struggling with Rs. 1.6 trillion in third-stage loans, including Rs. 250 billion attributed to non-wilful defaulters. De Silva highlighted the importance of restructuring MSMEs to prevent severe difficulties when parate executions resume after December 15.

SMEs comprise a significant part of Sri Lanka’s economy, with over one million SMEs accounting for approximately 75% of all businesses. These enterprises span all economic sectors and contribute about 45% of total employment in the country.

The ‘SME Re-Energizer’ loan supports business expansion and cost reduction initiatives, including purchasing machinery, equipment, or furniture, installing solar panels, and improving productivity. 

It also covers vehicle purchases for the tourism sector and supports new constructions, expansions, or refurbishments of factories, buildings, or warehouses.

NDB Bank aims to empower SMEs and MSMEs, recognizing their crucial role in driving economic growth and innovation in Sri Lanka. By providing affordable financing options, the bank seeks to help these businesses invest in their growth, enhance operational efficiency, and achieve their strategic objectives. This initiative reflects NDB’s commitment to fostering entrepreneurial spirit and supporting sustainable development in Sri Lanka.

For more information on the ‘SME Re-Energizer’ loan and its benefits, visit the nearest NDB branch or contact their customer service hotline. NDB Bank is dedicated to investing in the future of Sri Lankan enterprises, creating jobs, and fostering a resilient and diversified economic landscape

1. President Ranil Wickremesinghe has expressed his gratitude to all non-executive government employees who reported for duty on July 8 and 9, despite the trade union actions. Furthermore, the Head of the State highlighted that the special salary increment for these government employees, approved by the Cabinet of Ministers, comes as a mark of the government’s gratitude towards them.
2. The operational office of the United National Party (UNP) in Dambulla has been attacked by an unidentified group, Minister Harin Fernando said, hinting at pre-election violence. Minister Fernando said the UNP office is located at the residence of former Dambulla Municipality councillor Maya Padeniya.
3. The Cabinet of Ministers has green-lighted the second multi-sectoral national action plan (2024-2028) for the elimination of sexual and gender-based harassments in Sri Lanka. Joining the Cabinet press conference, Cabinet Spokesman Bandula Gunawardane said that since policy involvement is necessary to ensure the rights of women, men, children and all diverse groups to live in a fair and social environment without any violence, the first national action plan to address the harassments based on sexual and gender sociality was implemented with an integrated approach during the period 2012-2020.
4. Cabinet approval has been granted for the amendment of the Constitution of Sri Lanka to substitute the clause related to the President’s tenure from “exceeding six years” to “exceeding five years”. According to the government, it is observed that there is an irrelevancy regarding the term of the President and the period of the Parliament in articles 30 (2), 62 (2) and 83 (b) of the Constitution.
5. USAID Mission Director for Sri Lanka and Maldives, Gabriel Grau highlighted that being a long-term partner and Sri Lanka’s largest export market, the United States supports efforts to boost exports and improve efficiency for businesses and government agencies.
6. Actress Piyumi Hansamali has filed a petition with the Court of Appeal seeking a writ order to suspend the investigations being carried out against her by the Illegal Assets Investigations Division of the Criminal Investigation Department (CID).
7. Sri Lanka’s envoy in Riyadh has launched a new initiative to celebrate the country’s expatriates building their professional careers in the Kingdom. Saudi Arabia is one of the top destinations for Sri Lankan expats, with tens of thousands of them living and working in the Kingdom.
8. The Cabinet of Ministers has granted approval to take necessary steps to provide ambulances to the ‘1990 Suwa Seriya’ Foundation, free of charge as a grant. Issuing a statement, the Department of Government Information (DGI) stated that ‘1990 Suwa Seriya’ Foundation had been initiated by the utilization of 297 ambulances which were obtained from India’s TATA Sons Pvt. Ltd, under a grant of the Indian Government in 2016, with the objective of providing the pre-hospital treatments and emergency treatment services.
9. State Minister of Finance Ranjith Siyambalapitiya stated that the final decision regarding the lifting of the restrictions on vehicle imports will be taken in the second week of August. The State Minister pointed out that the committee appointed to look into the matter met recently and agreed to submit the final report to the Cabinet within the second week of August.
10. Sri Lankan Kumar Sangakkara cricket legend believes investment partnering national cricket boards could help smaller nations compete at the highest level. Sangakkara was speaking at World Cricket Connects, an event at Lord’s hosted by the Marylebone Cricket Club (MCC) designed for the leading voices in the game to discuss the health of cricket and consider the path required for its future success.

July 11, Colombo (LNW): The United States, as Sri Lanka’s largest export market, continues to support efforts to enhance exports and improve the efficiency of businesses and government agencies. Gabriel Grau, USAID Mission Director for Sri Lanka and Maldives, highlighted the commitment to initiatives like the Trade National Single Window System (TNSWS) which aims to make trade more transparent and predictable, thus easing business challenges.

Through the United States Agency for International Development (USAID), the U.S. is assisting the Sri Lankan Ministry of Finance in modernizing the country’s trade facilitation infrastructure with the implementation of TNSWS. This system, once operational, will streamline the collection of trade-related information, increasing transparency, efficiency, reducing costs, and potentially boosting revenue.

As part of this ongoing collaboration, the Department of Trade and Investment Policy of the Ministry of Finance, Economic Stabilization, and National Policies, with support from USAID, recently conducted a workshop for 94 key TNSWS project stakeholders. This interactive workshop enhanced participants’ understanding of the single window system and its benefits, while fostering collaboration and sustainability in its implementation.

K. M. Mahinda Siriwardana, Secretary to the Ministry of Finance, emphasized the importance of the TNSWS in boosting trade competitiveness and supporting export growth, which are crucial for Sri Lanka’s economic recovery.

The implementation of TNSWS is a requirement under the World Trade Organization Trade Facilitation Agreement, which Sri Lanka signed in 2017. The project received cabinet approval in 2022, and over the past year, the United States has provided technical assistance to help establish a Project Implementation Unit to lead the TNSWS project.

July 11, Colombo (LNW):Sri Lanka is likely to achieve real GDP growth between 3.5% to 5% in 2024 if the current reform process continues, according to Standard Chartered Bank Global Research in their Credit Alert titled “Sri Lanka – Light at the End of the Tunnel.”

The report forecasts real GDP growth at 3% in 2024 and between 3.5% to 4% from 2025 to 2027, resulting in cumulative real GDP growth of 14% over the period from 2024 to 2027. The bank assigns an 80% probability that cumulative GDP growth will exceed the baseline of 11.1%.

Achieving an average nominal GDP of USD 100 billion over 2025-27 and 11.1% cumulative real growth from 2024-27 is likely highly correlated. The report adjusts the probability of the ‘Upside #1’ scenario to 8.75%, leaving a 1.25% probability that the nominal GDP target of USD 100 billion is met but real GDP growth is less than 11.1%.

The exchange rate, specifically USD-LKR, remains a key variable for nominal GDP in USD terms. The report expects gradual and modest LKR depreciation versus the USD, projecting USD-LKR at 390 by the end of 2027. This projection places 2024 GDP in the USD 89-91 billion range and nominal GDP above USD 96 billion by the end of 2027. The report assigns a 75% probability of average 2025-27 nominal GDP exceeding USD 92 billion.

On July 3, Sri Lankan authorities and the ‘steering committee’ comprising 10 major bondholders reached an agreement on the core financial terms of restructuring the International Sovereign Bonds (ISBs). The agreed terms, which broadly follow the bondholders’ April proposal, include key differences such as downward adjustments to the coupon and changes in principal reinstatement, narrowing the range of recovery values across the six restructuring scenarios.

July 11, Colombo (LNW): Urban Development and Housing Minister Prasanna Ranatunga informed Parliament yesterday (10 July) that housing loans were distributed haphazardly during the tenure of Opposition Leader Sajith Premadasa as Housing Minister. He stated that officials are struggling to locate the correct addresses of some loan recipients.

Minister Ranatunga highlighted that from 2015 to 2019, when Premadasa was Housing Minister, over 100,000 houses were initiated without proper funding and were subsequently abandoned. He attributed this crisis to contracts for more houses than allocated funds, intended to showcase an inflated housing construction record.

In response to allegations from Premadasa, Ranatunga noted that the loans of 53,709 beneficiaries granted during Premadasa’s tenure had to be restricted. He detailed that seven housing projects were initiated during Premadasa’s period as Housing Minister. In 2019 alone, 62,994 houses were started despite funding being allocated for only 40,500 houses.

From 2015 to 2019, Premadasa initiated the construction of 341,510 houses, but only 233,578 houses received the necessary provisions. An inspection revealed that 53,709 housing loan recipients during Premadasa’s tenure were ineligible for the loans they received.

July 11, Colombo (LNW): Transport, Highways and Mass Media Minister Dr. Bandula Gunawardhana informed Parliament yesterday that the government can no longer provide a salary increase for public servants from state tax revenue, as there is no projected revenue growth allocated for this purpose in 2024.

He highlighted that between 50 percent and 86 percent of the total revenue obtained from taxes levied on ordinary citizens is allocated to the salaries and pensions of public servants. In 2020, despite low state revenue, 86.7 percent of the total revenue was used for these expenses.

Dr. Gunawardhana presented detailed statistics on the salary payments of public servants from 2014, emphasizing that any government must maintain sufficient income for daily expenses, including paying pensions and salaries to public servants. Welfare benefits like “Aswesuma” also need to be provided, and without adequate funds, the government is forced into debt. Last year, Rs. 4.7 trillion was spent on government employee salaries and other expenses, while only Rs. 3 trillion was received from all revenue channels, including taxes and non-tax revenues.

He criticized opposition members for making false promises on political platforms, knowing they cannot fulfill them if they come into power. Dr. Gunawardhana stressed the importance of transparency, noting that more than half of the tax revenue is spent on paying government employee salaries and pensions. He also mentioned that while governments have previously increased wages by printing money, this option is no longer viable due to restrictions from the International Monetary Fund, which has advised the Sri Lankan government against money printing.