Two leading Ministers Dr. Ramesh Pathirana and Dr. Wijeyadasa Rajapakshe on Sunday lambasted the banking sector for half-hearted support to the struggling Micro, Small and Medium Entrepreneurs (MSMEs) thereby endangering a quicker recovery in the economy following multiple crises. Industries and Health Minister Dr. Ramesh Pathirana on Sunday urged enterprises to take a stand against unfair banking practices and to continue lobbying for their interests regardless of political affiliations.Speaking at an awareness conference organised by the Ceylon Federation of MSMEs on ’Business debt and finance management’ on the side-lines of the Industry Expo 2024, Pathirana insisted the need for businesses to create conversations and pressure policymakers to address their concerns. Dr. Pathirana warned that banks might channel most of the funds from international credit lines to their wealthy clients, calling for vigilance and protest against such practices.

“We learn that banks are trying to push most of the funding facilities to their already rich clients from the loans extended by the international agencies like the World Bank and the Asian Deve-lopment Bank,” the Industries Minister alleged. He also pointed out that promoting fair banking practices are essential to drive economic development in Sri Lanka. Separately at the same conference, in a scathing critique of the banking system, Justice Minister Dr. Wijeyadasa Rajapakshe criticised the policymakers for their failure to establish a credible economic policy to support enterprises and entrepreneurs. In practice no bank can survive if it alienates its customers. As with all business, it’s a balancing act. In general Government policies have been designed to limit bank failures and the panic they can ignite. Therefore the safety and soundness of banks is paramount, growing all banks to such levels of safety and soundness should be the deliverable, not just a handful of systemically important banks. The recent pronouncements on a development bank in Sri Lanka limited to serving the needs of the MSMEs, should be pursued with vigour.

True role of banks

Banks play a pivotal role serving as the backbone that the entire financial system rests on. Its primary role is to safeguard depositors and to disburse loans. Banks however as the primary supplier of credit as the Minister highlighted have a crucial role in stabilising the economy and supporting their customers. Banks in general accept deposits and provide loans, and derive a profit from the difference in the interest rates paid and charged to depositors and borrowers respectively. This process performed by banks of taking in funds from a depositor and then lending them out to a borrower is known as financial intermediation. 

Through financial intermediation, certain assets are transformed into different assets or liabilities. As such, financial intermediaries channel funds from people who have extra money or surplus savings (savers), and then lend to those who do not have enough money to carry out a desired activity (borrowers). Banking thrives on the financial intermediation abilities of financial institutions that allow them to lend money and receive money on deposit. The bank is the most important financial intermediary in the economy as it connects surplus and deficit economic agents. 

 Way forward

Banks are vital institutions in any society as they significantly contribute to the development of an economy through facilitation of business. Banks also create money and facilitate the growth of savings in the economy, and are instruments of the Government’s monetary strategy, among many others. The most important service provided by a bank is the provision of credit. Credit fuels economic activity by allowing businesses to invest beyond their cash on hand, households to purchase homes without saving the entire investment in advance, and enables governments to smooth out their spending by mitigating the cyclical pattern of tax revenues, and to invest in huge public infrastructure projects. Therefore, the key role for a financial institution is to facilitate investment and employment to sustain the long-term economic growth of the country. 

What Sri Lanka needs is four strong banks with an asset base exceeding Rs. 2 trillion each by 2025, to get us to an over-$ 100 billion GDP economy. Therefore, the Government should push for bank consolidation keeping in view synergies and the benefits of mergers, with the Government role purely as that of a facilitator. However in certain institutions there is certainly a need to get rid of board toxicity and the management capacity deterioration, and investigate the vested lending. 

Therefore, in the final analysis, the President, as the Minister of Finance (which supervises the Central Bank and the Securities and Exchange Commission [SEC]), has a great opportunity to drive the financial sector reforms agenda, thereby giving a very strong signal to the financial markets that the Government is ready to support genuine investor appetite and provide competitive businesses the freedom to create wealth and growth. Whilst the banks need to ensure that they demonstrate to their clients that they have their best interests at heart.

Reference:

https://www.ft.lk/top-story/Ministerial-duo-deal-heavy-blow-to-banks/26-763434

https://www.fitchratings.com/research/banks/fitch-places-13-sri-lankan-banks-on-rating-watch-negative-12-04-2022

(The writer was Chairman of the largest two private sector commercial banks and a director of a development bank.) 

DAILY FT

June 28, Colombo (LNW): Former Colombo district Parliamentarian Hirunika Premachandra was found guilty of her involvement in the abduction of a youth using a Defender and was given a three-year prison sentence by the Colombo High Court today.

Colombo High Court Judge Amal Ranaraja sentenced Hirunika Premachandra to three years imprisonment after taking into consideration the seriousness of the offences.

June 28, Colombo (LNW): U.S. Ambassador Julie Chung emphasized the balance necessary for robust trade, stating, “The challenge lies in achieving an equilibrium between enabling smooth trade and ensuring robust security measures. 

The United States works together with our partners to cultivate trading environments that support legitimate operations and restrict illegal activities, so that countries can not only foster economic growth but also develop that competitive edge within the global marketplace.”. she added 

She was speaking at the launching ceremony of the first Sri Lanka Strategic Trade Forum which was organized US Embassy in Colombo, in partnership with the Sri Lanka Department of Import and Export Control. 

This event brought together a diverse audience from government and the private sector to address critical aspects of trade security and explore the development of competitive practices for global trade hubs.

Following a welcome from Department of Import-Export Controller General T.T. Upulmalee Premathilaka, trade regulators from Malaysia, the Philippines and Singapore showcased their national strategies for overseeing the trade and transshipment of strategic items. 

These items are any ‘dual use’ goods or technologies that can be used for both commercial and military applications and play a vital role in advancing innovation across various sectors, including software development, aviation, medicine, and sanitation.

The forum also featured insights from Singapore’s Centre for Trade Excellence and the U.S. Department of Commerce as well as Sri Lankan experts from CRDF Global, McLarens Maritime Academy, the Trade Finance Association of Bankers, and the Hub Operators Association. 

These specialists provided valuable tips and strategies for establishing robust compliance practices to effectively navigate the complexities of a dynamic regulatory landscape. 

The United States also emphasized the importance of both consulting with all relevant stakeholders in drafting labor legislation and providing adequate opportunities and time for public review and comment.  In this regard, Sri Lanka elaborated on the procedures adopted in labor law reforms. The United States expressed its readiness to extend support in developing and implementing ongoing labor reforms.

The United States encouraged the reduction of agricultural trade barriers to bolster food security in Sri Lanka. The United States also advocated for greater market access for U.S. exports of various agricultural products, including input products such as animal feed to support demand in Sri Lanka’s domestic sector. 

June 28, Colombo (LNW): Sri Lanka seeks a suitable investment partner, explore option of relocating Sapugaskanda Oil Refinery to be operated as government joint venture 

The Government has called for expressions of interest to operate the Sapugaskanda Oil Refinery as a public enterprise independent of the Ceylon Petroleum Corporation (CPC).

“The rationale behind the move stems from the necessity of a ‘critical investment’ to modernise and upgrade the ageing infrastructure of the refinery. The aim is to ensure its operational efficiency and viability for at least another 25 years,”  the Government Information Department noted.

Minister of Power and Energy Kanchana Wijesekera said that under the Ceylon Petroleum Corporation (CPC) restructuring plan, the CPC-owned refinery will be set up as a separate Government-owned and operated entity to attract and raise investments with the aim of improving fuel quality, efficiency, capacity, and reducing costs.

In a post on social media, he said that the restructuring plan includes revising the currently approved cadre and salary structure of the CPC while digital platforms will be introduced for multiple functions and service

The government’s aim is to get rid of the country’s only oil refinery with a capacity to supply 100percent  of the country’s kerosene requirement, 50 percent of the aviation fuel requirement, and100 percent  of the naphtha requirement.,

It was used to produce 30 percent of the diesel requirement, 14percent of the petrol requirement, 7-8percent of the gas requirement, and 75-100percent of the furnace oil requirement.

Initially designed to process 38,000 barrels of crude oil, the refinery currently has a capacity of refining about 50,000 barrels per day.

Sapugaskanda Refinery was built by Iran under the guidance of the Ceylon Petroleum Corporation (CPC) in August, 1969.

A senior engineer of the CPC said that the closure of the Sapugaskanda Oil Refinery would cost the country an additional sum of US$ 1.1 million a day to meet its crude oil requirement.He further claimed “The refinery has been shut down on several occasions and it has cost a lot of money to resume its operations. This was  a national crime, he added

June 28, Colombo (LNW): Enterprise Analytics (EA), a leading Sri Lankan IFS and Acumatica partner with offices across the globe, has been chosen by Anunine Holdings to empower their digital transformation journey.

Anunine Holdings has selected Acumatica’s cloud ERP platform to enable them to streamline operations across the group and ensure one source of truth to enable stronger decision making. They will kickstart their digital journey by implementing Acumatica at their KSPA Embilipitiya Paper Mills and Recy Traders UK Limited operations first, setting the stage for future success. EA will carry out the implementation of the platform which will include planning, change management, user enablement and the rollout of the ERP.

Embilipitiya Paper Mills, which was set up in 1978, is the second oldest paper mill in Sri Lanka. However, operations at the mill ceased in 2003 and in 2022 KSPA Packaging, a subsidiary of Anunine Holdings, signed an agreement with the Board of Investment (BOI) to take over the mill and resurrect production. The project, which is a USD 16 million investment in its first phase, aims at manufacturing industrial grade papers for the direct and indirect export market by upgrading machinery and infrastructure.

“Our decision to partner with Enterprise Analytics for the implementation of Acumatica is a strategic move that will secure our future in a highly competitive marketplace. We are confident that their expertise, combined with Acumatica’s powerful capabilities, will significantly enhance our operational efficiency and enable us to make data-driven decisions. We are excited about this partnership and confident that it will be a key factor in driving our continued success,” said Nalin Anthony, CEO – KSPA Packaging.

EA has a proven track record of delivering successful ERP implementations and upgrades across the globe. The company has a deep understanding of the challenges businesses face in today’s fast-paced world and their people-first approach to providing solutions underlines their commitment to providing a world-class service to their customers.

Lalindu Samaraweera, Director of Enterprise Analytics, said, “We are excited to embark on this transformative journey with Anunine Holdings. As experts in providing advanced ERP solutions, we are eager to help them leverage the capabilities of the Acumatica Cloud ERP to drive operational excellence. Furthermore, this partnership underscores our commitment to empowering businesses with cutting-edge solutions thus ensuring that they are equipped with the tools they need to thrive in today’s dynamic business landscape.”

With a thirty-year history in entrepreneurship, Anunine Holdings is a privately held, family-owned, group of companies with over two thousand employees across nine industries. A vastly diversified organization, it is active in the fields of packaging, tyre manufacturing, sugar manufacturing, renewable energy, trading, plastic waste recycling, paper manufacturing, garment accessory manufacturing, agriculture, nanotechnology, and blockchain technology. Enterprise Analytics is an ERP and software development company that delivers strategic change to businesses globally. The company’s team of Acumatica certified consultants have the deep domain knowledge and extensive experience needed to accommodate the unique needs of organizations across a myriad of industries. With offices in Asia, the Middle East, Australia, the UK and America, EA’s specialist teams can deliver exceptional service across geographies. This broad reach has also allowed the company to offer 24/7 global support, thus guaranteeing their promise of Transformation Driven by People

June 28, Colombo (LNW): The new Sri Lanka Electricity Bill, passed in Parliament three weeks ago, received endorsement from the Speaker of Parliament yesterday (27), coming into effect immediately.

This landmark legislation aims to implement comprehensive reforms in Sri Lanka’s electricity industry. Key provisions include the establishment of the National Electricity Advisory Council and the designation of the Public Utilities Commission of Sri Lanka (PUCSL) as the industry regulator.

The bill mandates the creation of corporate entities under the Companies Act No. 07 of 2007 to manage the generation, transmission, distribution, trade, supply, and procurement of electricity. Additionally, it repeals the Ceylon Electricity Board Act No. 17 of 1969 and the Sri Lanka Electricity Act No. 20 of 2009, marking a significant shift in the legislative framework governing the sector.

June 28, Colombo (LNW): The second round of evaluation for answer sheets from the GCE Advanced Level examination will commence on Friday (28).

The Department of Examinations reported that approximately 80% of the initial marking process has already been completed.

The evaluation process will continue at the same location for the next 10 days, according to the Department of Examinations.

1. President Ranil Wickremesinghe emphasized the importance of teachers being present in schools during school hours for the education of the nation’s children. He warned that if this commitment is not upheld in the future and school children are deprived of their education as a result, necessary measures will be taken to designate the teaching profession as an essential service.
2. Former Sri Lankan President Mahinda Rajapaksa has left for China on a four-day official visit, during which he is expected to engage in discussions with several Chinese State officials, it was reported. According to media reports, Mahinda Rajapaksa embarked on the journey this morning on an invitation extended by Foreign Minister Wang Yi and is set to return on July 01.
3. The strike started by university non-academic employees continues on Friday (28) for the 58th day. Co-Chairman of the University Trade Union Joint Committee Dhammika S. Priyantha said the government is yet to respond to the strike which was launched in protest against the 15% salary cut and the non-increase of the monthly allowance.
4. The Supreme Court has decided to expedite and take up on 25 July the case on which it previously issued an interim stay order on the President and the Constitutional Council preventing them from nominating judges to the Supreme Court of Sri Lanka. On April 30, the Supreme Court had issued an interim stay order on the President and the Constitutional Council, preventing them from nominating judges to the Supreme Court, except for the position of Chief Justice.
5. Sri Lanka’s agreements with China and other creditor nations to restructure about $10 billion in bilateral debt brought it a step closer towards restoring debt sustainability, the International Monetary Fund (IMF) said on Thursday. The island nation signed deals with China and other creditor nations to restructure about $10 billion in bilateral debt on Wednesday, helping it approach the end of a restructuring process that began in September 2022 after its reserves hit record lows and forced it to default on foreign debt for the first time.
6. The Official Creditor Committee (OCC) of Sri Lanka’s bilateral lenders has commended island nation’s efforts in implementing necessary reforms to ensure a sustainable economic path. The Official Creditor Committee says it now looks forward to receiving from Sri Lanka all information necessary for the OCC to ensure comparability of treatment.
7. Sri Lanka has proposed to establish a joint working committee comprising Sri Lankan and Russian officials to address issues concerning Sri Lankans deployed in the Russian war. The proposal was tabled when State Minister of Foreign Affairs Tharaka Balasuriya met with his Russian counterpart Deputy Minister Andrey Rudenko and Deputy Defence Minister Colonel General A. V. Fomin in Russia
8. Minister of Agriculture and Plantation Industries Mahinda Amaraweera, announced that a national week for the implementation of the Youth Agri-Entrepreneurship Village Program will be held from July 01st to 07th. He also stated that the government has decided to provide free MOP fertilizer for paddy cultivation to farmers for the next two seasons.
9. Sanjay Rajaratnam announced that he has now retired from the position of Attorney General. The President’s recommendation to extend his service by six months was not approved by the Constitutional Council on two occasions.
10. The 2024 Lanka Premier League (LPL) will introduce an exciting new feature with the addition of a special power play towards the latter part of each innings. According to tournament organizers, this new innovation, named ‘Power Blast Overs,’ will provide each team with a two-over power play during the 16th and 17th overs of their innings.

June 28, Colombo (LNW): Health Minister Dr. Ramesh Pathirana has invited all staff of Jayewardenepura General Hospital and trade unions to collaborate in making the hospital the leading tertiary healthcare provider in South Asia by 2030.

A special discussion on the future development of Sri Jayewardenepura General Hospital was held yesterday (27) at the Health Ministry under the Minister’s patronage. The meeting focused on the needs of all staff, including specialists, doctors, and nurses, the treatment services provided by the hospital, the introduction of new treatment services, the efficiency of specialist medical services, and the transportation needs of patients.

The Minister advised officials to implement services promptly and efficiently, prioritizing these needs. He also emphasized making correct decisions and maintaining the hospital as a quality and efficient institution.

The Health Minister was informed that the hospital staff, under the leadership of the current Chairman, Dr. Saranga Alahapperuma, aim to provide effective health services to the country.

Sri Jayewardenepura Hospital, which opened on September 17, 1984, with a 1,001-bed capacity, is a donation from the Japanese government. Built according to Japanese architecture, it was the largest fully equipped hospital in Asia at the time, valued at US$ 850 million. Currently, the hospital has a staff strength of 1,800.

State Minister of Health Seetha Arambepola, Health Secretary Dr. Palitha Mahipala, Director General of Health Services Dr. Asela Gunawardena, Additional Secretaries Sunil De Alwis and Sunil Galagama, Chairman Dr. Saranga Alahapperuma, Director Dr. Ratnasiri Hewage, and other staff members attended the meeting.

June 28, Colombo (LNW): The Food and Agriculture Organisation (FAO) of the United Nations has modernized farms and introduced Good Agricultural Practices (GAP) to over 600 smallholder vegetable farmers in Badulla, Monaragala, and Mullaitivu districts.

This initiative equipped targeted farmers with tools and knowledge to adopt modern, climate-resilient agricultural methods. Emphasizing GAP, participants received agriculture kits designed for 0.25 acres, including drip irrigation systems, plastic mulch, insect-proof nets, and Galvanized Iron (GI) pipes. These tools enable efficient resource use and cost reduction.

The FAO also facilitated capacity building through Farmer Field Schools (FFS), empowering farmers with the expertise to achieve GAP certification. Using extension approaches and organizing exposure visits to successful GAP farms, participants gained a comprehensive understanding of modern agricultural methodologies. Smallholder farmers received cash assistance through the World Food Programme (WFP) to meet their food and nutrition needs during the transition phase.

The initiative has yielded tangible results, with over 71 percent of participating farmers reporting significant improvements in crop quality and reduced pesticide and agrochemical usage. Insect-proof nets decreased pest infestations and diseases while reducing damage from wild animals like monkeys, peacocks, and wild boar, enhancing crop resilience and sustainability.

Additionally, over 70 percent of farmers reported increased total income, with over 24 farmers achieving profits exceeding Rs. 1,000,000 in a single cultivation season and more than 150 farmers surpassing the Rs. 500,000 mark. These figures highlight the significant economic impact of the program. The initiative also resulted in a 48 percent reduction in the average usage of chemical fertilizers per 0.25 acres of land, yielding substantial environmental benefits.

This intervention is part of a joint food security initiative funded by the UN Sri Lanka SDG Fund. The Fund promotes innovative, catalytic, and transformative initiatives that align with national priorities and the United Nations Sustainable Development Cooperation Framework (2023-2027). It is supported by Australia, Canada, the United Kingdom, the United States, the Peace Building Fund, and the Joint SDG Fund.

Celebrating the farmers’ achievements across all three districts, an awards ceremony was held in Thanamalvila under the patronage of Australian Deputy Head of Mission Lalita Kapur, Agriculture Provincial Secretary Upali Jayasekara, and FAO Assistant Representative (Programme) Nalin Munasinghe. The event recognized exemplary achievements and underscored the pivotal role of GAP certification in enhancing market demand and fostering sustainable agricultural practices.