PRIME MINISTER’S ECONOMIC STATEMENT

HON. PRIME MINISTER’S ECONOMIC STATEMENT

IN PARLIAMENT ON 27^TH OCTOBER 2016

Mr Speaker,

With regard to the current state of the economy and the Way Ahead, I would like to recall the speech I made in the House on the 05^th of November 2015.

We can once again become the resplendent nation we were under Manawamma and Parakramabahu. But it is a path that must be pursued with determination, commitment and patience. Only then can we create the country that we can confidently pass on to the future generations.

At the time I made the statement last year, I affirmed that our collective economic journey requires revolutionary thinking, bold policies and initiatives that would transform Sri Lanka into a vibrant and prosperous nation. The National Government started work on a sound footing - by increasing the actual wages of the public sector including those of general workers. This process stimulated domestic demand and addressed the imbalance in income levels, the economic legacy inherited from the previous regime. 

Dialog to commission submarine cable by end 2014

Dr. Hans Wijayasuriya warns capability of telecommunication sector to deliver economic returns in the medium term is at risk unless structural corrections in industry pricing and cost structures are implemented - See more at: http://www.nation.lk/edition/biz-news/item/29757-dialog-to-commission-submarine-cable-by-end-2014.html#sthash.iV6Wt84x.zcyf75q4.dpuf

Dr. Hans Wijayasuriya

 Sri Lanka’s Dialog Axiata PLC, which entered into an agreement with the Bay of Bengal Gateway (BBG) Consortium to land a high capacity submarine cable through a Cable Landing Station to be located in Colombo last year, will commission the submarine cable and cable landing station in the fourth Quarter of 2014, a top official has announced.

Addressing shareholders at the release of the firm’s Annual Report 2013, Director/Group Chief Executive of Dialog Axiata Plc, Dr. Hans Wijayasuriya said that the investment is being made focusing ahead on the imperative of establishing a robust pipe to the Global Internet with capacity and speed commensurate with the burgeoning demand for Broadband services projected going forward.


“Dialog’s investment in the new high speed submarine cable and cable landing station will trigger the single largest infusion of International Bandwidth to Sri Lanka to date. The BBG cable will link Sri Lanka to high capacity Internet hubs in Singapore and India and to onward submarine cable pipes to Europe and the USA,” Dr. Wijayasuriya pointed out.

He noted that Dialog’s investments in Terrestrial (National) and Submarine (International) Fibre Optic infrastructure will combine with its fourth generation LTE customer access networks to deliver affordable and widely available High Speed Broadband services to businesses and consumers across Sri Lanka.

AllWorld Network to help Sri Lanka boost global trade

Sri Lanka President Mahinda Rajapaksa (centre) who is also the country's Finance Minister is seen having a light banter with his Ministry Secretary Dr P B Jayasundera at the launch of Sri Lanka 25 whilst his Deputy on (left) Dr. Sarath Amunugama looks on

Anne Habiby

(Pix by Chandana Wijesinghe)

Sri Lanka’s 25 fastest growing firms joining US-based AllWorld Network will gain wider visibility which will win more business and financial backing

Sri Lanka will be able to multiply trade volumes with the rest of the world following its recent entry into the AllWorld Network, which gives visibility to all the growth entrepreneurs of the emerging world, a high-profile event attended by President Mahinda Rajapaksa was told. The AllWorld Network, co-founded by Professor Michael Porter of Harvard Business School, and The Joint Apparel Association Forum (JAAF) last week announced the launch of AllWorld’s Sri Lanka Fast Growth 25 (SriLanka25). The event was also graced by Ministers, Basil Rajapaksa, Dr. Sarath Amunugama, Faiszer Mustapha, Treasury Secretary, Dr. PB Jayasundera, US Ambassador to Sri Lanka Michele J. Sison together with leading private sector business magnates and entrepreneurs.
“This a pioneering effort to showcase and rank the most innovative and dynamic fast-growth private companies in Sri Lanka through a rigorous international credentialing process that discovers entrepreneurs with a track record of success in growth markets,” said Anne Habiby and Deirdre Coyle, co-CEOs of AllWorld Network at the launch held at the Kingsbury Hotel in Colombo.

Potential DFCC-NDB merger will ‘not be forced’ assures Theagarajah

Rajendra Theagarajah

The Chief Executive Officer of National Development Bank Plc (NDB), Rajendra Theagarajah last week denied claims by a former head of the bank that the two private development banks, NDB and DFCC have been ‘forced’ by the banking regulator, the Central Bank of Sri Lanka to go for a merger. In a recent interview with The Nation, opposition parliamentarian Eran Wickramaratne had said the Central Bank had compelled the merger by hinting in their Master Plan that their expected outcome in consolidation is where “there will be a large development bank that will provide substantial impetus to development banking activities in the country”.

“Nobody needs to force us into this. I think the comment is coming from an outsider’s point of view and we from inside the Banks can assure that if this happens it wouldn’t be forced on us,” Theagarajah said in response.

Central Bank appoints audit panel to submit report on 38 NBFIs

Sri Lanka’s financial sector regulator, the Central Bank of Sri Lanka (CBSL) has appointed its nine-member accredited panel of auditors with the responsibility of performing a valuation, information memorandum and vendor due diligence on the 38 Non-Bank Financial Institutions (NBFI), an Assistant Governor of CBSL said last week. According to C. J. P Siriwardene, the panel of auditors have been tasked to submit a report to the CBSL by mid- March 2014 so that it could help determine pricing for potential buyers from Category A (Banks and the larger NBFIs).

“Since we will be paying for the services of the auditors, we will keep the report with us but will share the information with potential buyers on request,” Siriwardena said.
The CBSL has given a time period of until March 31, 2014 for local banks and category A NBFIs to identify partners of their choice from within the category B NBFI for such mergers/absorptions.

Financial sector consolidation faces numerous challenges

Financial sector confronted with HR, IT and Tax issues amongst others, say experts

With the island’s monetary watchdog recently setting the master plan towards the consolidation of the country’s financial sector, experts at a panel discussion last week suggested that the sector will be faced with numerous practical issues with some needing further clarity from the regulator. Outlining the challenges, Shiluka Goonewardene, Principal for Transactions and Restructuring at KPMG in Sri Lanka said that some of the key issues in the diligence process of amalgamation would be in relation to analyzing the quality of credit portfolio, completeness of deposits, valuation of plant, property and equipment, valuation of investment in real estate portfolio, valuation of investment in private companies, robustness of systems and procedures and tax compliance.

“One of the grey areas in the amalgamation process is in the calculation of taxes. Amalgamation should be tax neutral at least for the financial institutions. If there is no tax neutrality but additional taxes, the whole process of consolidation will not work,” KPMG Principal for Tax and Regulatory, Suresh Perera cautioned at a packed conference on consolidation held at the Galadari Hotel in Colombo last week.

Hidden motives behind forced consolidation?asks Eran

Eran Wickramaratne

Opposition Member of Parliament, Eran Wickramaratne last week accused the Central Bank (CB) of forcing the banking and financial institutions in the country to go for mergers and absorptions through the process that the regulator had spelt out. Whilst pointing out that although the consolidation of the financial sector in principle is a good move and a long felt need, he however condemned that the guidelines that has been issued in facilitating the process were very illogical and that which raised suspicions whether the regulator had ‘ulterior motives’ in forcing the consolidation.

“When consolidating, the decision to merge and who to merge with should be left to the parties by shareholders, its directors and senior managers. They will make the decision based on a certain business and commercial rationality and not driven by any political objective. But from the Master Plan that had been published by the Central Bank it mentions, for example, that the expected outcome of the Central Bank is to have a ‘large development bank’ which means though not mentioned explicitly, was obvious that the Central Bank is forcing NDB and DFCC Bank to merge,” Wickramaratne, who was the former CEO of NDB Bank said.

TRC scraps Mobile Number Portability plans

Sri Lanka’s telecommunication watchdog, the Telecommunications Regulatory Commission of Sri Lanka (TRC) has temporarily scrapped an earlier proposal to implement Mobile Number Portability (MNP), a facility which allows a mobile subscriber to change the operator without changing his/her number. According to TRC, Director-General Anusha Palpita, the proposal has been halted as the island did not proportionately have a positive balance in the number of post-paid mobile subscribers in comparison to the number of pre-paid subscribers.

“If the MNP is implemented, the main beneficiary of it and those demanding for it is the population of post-paid mobile subscribers. However, in Sri Lanka’s case, we have less than 10% of the total mobile subscriber population owning a post-paid mobile connection. Therefore, in my opinion implementation of MNP will not be cost-effective at the moment,” the Director-General explained.

Weliweriya: Dipped Products board fumes over prolonged plant closure

Dr Mahesha Ranasoma

The management of Dipped Products Plc (DPL), which owns the Venigros glove factory in Weliweriya today fumed at authorities for not taking relevant steps to reopen their plant despite test results of investigations conducted by three key independent government bodies confirming the plant exonerated for drinking water contamination.

Expressing grave concerns over the prolonged closure, DPL Managing Director, Dr. Mahesha Ranasoma said test results into pH of a well water sample measured in the area and released by the Water Board on 30th August, Government Analyst’s Department on 13th August and the Central Environment Authority on 29th August have collectively proved the factory was not responsible for low pH in the wells or is responsible for any other form of contamination of the wells.

James Packer plays his cards right at Commonwealth Business Forum

James Packer

Pitches  need for luxury gaming resorts such as his planned 
'Crown Sri Lanka' project  to woo high spending tourists

Australian businessman, James Douglas Packer last week indicated that catering to the needs of the rising middle class travelers from Asia, especially those from China and India will be vital to realize the true potential of the island’s tourism sector.

Hailing Sri Lanka a modern economy, growing strongly with a very professional approach to business and foreign investment, Packer, the son of the late media mogul, Kerry Packer, said the wealthy Chinese middle-class were no doubt attracted to luxury integrated resorts consisting of signature restaurants, quality entertainment, gaming, casinos and high-end retail meeting their travel needs under one roof.

Chairman of Crown Ltd James Packer (second from left) seems to be weighing on his prospects during a panel discussion which included Ministers Prof GL Peiris (third from left) and Nimal Siripala de Silva (extreme right). The session at the Commonwealth Business Forum was titled ‘Sri Lanka: 21st Century Business Destination’ chaired by BOI Chairman, Dr Lakshman Jayaweera (extreme left)

Ranil warns govt on remittance dependency

Ranil Wickremasinghe

Leader of the House and Minister of Irrigation and Water Resource Management, Nimal Siripala de Silva says that although Sri Lanka’s private sector has done very well in certain areas in the past, they lagged behind in areas such as social responsibility where they could play a wider role in helping the government reduce income inequality and human resource development.

Addressing corporate leaders at the Business Today Top 25 Awards ceremony held at the Colombo Hilton last week, the Minister noted that with the war being over, the island now faces a bigger challenge on how it could push the poor people, who are below the poverty line, to the middle income group.

Sri Lanka's big corporates lack export hunger - Hilmy

The head of international management consultancy firm, MTI Consulting, Hilmy Cader claims that one of the reasons why Sri Lanka does not perform well in its export industry is because the island’s big corporates lack hunger for exports. Addressing a forum  organized by the Exporters’ Association of Sri Lanka, Cader analyzing the top 40 CSE capitalized companies said that out of the top 40, only three companies have a significant dependence on International income whilst the others are not entirely dependent except for Carsons, Hayleys and Colombo Dockyard.

Tussle shifts to Deputy as Kalmunai Mayor bows down

Newly appointed KMC Mayor Nizam Kariyapper (extreme right) shakes hands with a little dejected former Mayor Siraz Meerasahib in the presence of SLMC Leader Rauff Hakeem and SLMC General Secretary Hasan Ali

The dispute for the Mayoral position in the Kalmunai Municipal Council (KMC) came to a grinding halt on Friday morning with the incumbent Siraz Meerasahib finally tendering his resignation letter to the Party Leader Minister Rauff Hakeem. Hours after Sri Lanka Muslim Congress (SLMC) Leader received the letter at his residence in Colombo, Minister Hakeem convened a press conference at 'Darussalam', the SLMC headquarters in Colombo elevating the Mayoral position to Attorney-at-Law and senior party member Nizam Kariyapper who had been functioning as the Deputy Mayor at the Council.

The SLMC was earlier planning to oust Meerasahib by defeating him at the forthcoming Budget to be presented at the Council as he was first biding time and then refusing to step down as requested by the SLMC Leader who then issued him an October 31 ultimatum.

Colombo Inflation at drastic high at 13.4%

TKS Research says high urban inflation is presently curtailing GDP growth

Relationship b/w Inflation & GDP Growth explained

© colourfultimes.com

Local equity and securities research firm, TKS Securities last week said that its primary research on consumer prices had revealed that the urban middle income consumer is weathering inflation of over 13% in comparison to the national average of 7.8% based on the Colombo Consumer Price Index (CCPI). According to an Inflation report published by the firm, they note that Colombo district which accounts for 22% of total country’s GDP having around 25% of its population as middle income earners are faced with a relatively higher inflation than the number indicated by CCPI and hence affecting the potential GDP growth of the economy.

Sri Lanka Tea exporters want Tea Hub in Hambantota

Rohan Fernando

In the wake of the ‘Tea Hub’ concept not gaining much acceptance by the government authorities, the Tea Exporters Association (TEA) is to present a fresh set of proposals soon, this time for the formation of a Strategic Business Unit (SBU) in Hambantota, a top official told The Nation Gain last week.

According to the TEA Chairman Rohan Fernando, the new proposals would entail the setting up of a total value addition center for tea in the Southern region which would provide the required space for exporters to compete with any other top brands in the market by not having too many restrictions placed on the SBU.

Colombo lacks A Grade quality office space

Sri Lanka’s commercial capital, Colombo city is currently facing a dearth in supply of globally competitive corporate space as the demand for quality commercial space is rising, creating a huge opportunity for both existing and future office space developers, a recent study on the property sector by a local brokerage firm has pointed out. According to report titled ‘Colombo, a Modern City in the Making’ published by TKS Research currently the only sizeable designated office space in Colombo is just over two million square feet with occupancy at A grade office space averaging at 98% or almost fully occupied.

“With the receipt of peace dividend in 2009, a huge demand was created for office space in Colombo which, in turn, doubled the rental yield. Although four years have passed since then, still no major office space is added to the capacity,” the Volume II of the report released last week stated.It noted that with the development in the country into a services hub and increasing presence of international/multinational companies, a rapid augmentation of the corporate sector standards is evident in Sri Lanka and therefore, the country is currently in much need of globally competitive corporate space.

Gal Oya to boost sugar output

Murali Prakash

Gal-Oya Holdings (Pvt) Ltd, which had last year produced sugar at its plant for the first time after an absence of almost 15 years, has plans to cultivate a further 1,300 hectares in the coming year with over 2,200 hectares of land already cultivated, a top official from the firm said. During the year ended March 31, 2013, the company’s total marketable sugar production stood at 3,315.7  metric tons with 53,806.51 metric tons of cane crushed following the production of the commodity in the refurbished factory commencing on July 16, 2012.

Sweet November for JKH

Construction of massive US$820m mixed development project  groundbreaks next month

The construction of the proposed Waterfront Integrated Resort (IR) project of Sri Lanka’s largest listed conglomerate in the Colombo Bourse, John Keells Holdings (JKH), is due to begin in November 2013 where the land is presently in the process of being cleared up, a recent equity research report said. 

GREG plans 32-storey complex in Bambalapitiya

Group suffers Rs.225.3m loss in FY 2013

ERI Chairman Lalith Heengama

Chairman of Environmental Resources Investment Plc (GREG) Lalith Heengama has recently said that a blue
print for the construction of 32-storey complex at Colombo City Holdings Plc (formerly known as Colombo Pharmacy Company Plc), remains under consideration with analysis continuing on the best uses for the Bambalapitiya IC Drugs premises.

Addressing shareholders at the release of the GREG Annual Report 2012/13, Heengama noted that Colombo Pharmacy Company had underwent an extensive refurbishment program and was able to achieve its objective of obtaining a higher total income from the renting of space at the Union Place.

Harry J laments liquor tax policy

Don Harold Stassen Jayawardena

Despite the many social and economic evils of the illegal alcohol industry, the country’s taxation policy has encouraged its growth, while causing the legal, regulated and responsible sector to shrink, a top industry player has charged. According to business tycoon and Chairman/Managing Director of Distilleries Company of Sri Lanka (DIST) D. H. S. Jayawardena, the sharp rise in tax on alcoholic beverages is disproportionate to the increase in income level of daily wage earners, fishermen and plantation workers, thereby compelling them to shift their demand towards illicit liquor.