The Central Bank has taken measures to create awareness on carrying out businesses in Sri Lanka by releasing the eighth edition of the “A Step by Step Guide to Doing Business in Sri Lanka”.
This has been categorized under three main chapters; ‘Starting a Business’, ‘During the Business’ and ‘Other Activities’ and contains useful information for the business community, potential entrepreneurs, foreign investors and investment promotion agencies.
Under each topic, comprehensive information is provided on relevant institutions, documentary requirements, regulatory clearances and associated costs.
Furthermore, the necessary amendments up to mid-2018 gathered from relevant institutions are incorporated into this edition.guidelines recently with the aim of promoting local business.
The current political situation has pulled back the progress made through various economic reforms and has drastically affected the business environment, analysts said, adding that it is essential to restore political stability in the country soon.
New Business activities came had come to a grinding halt during the past ten days following President Sirisena's unconstitutional removal of a Prime Minister and by proroguing Parliament, they claimed.
Sri Lanka’s first ever nation-wide study on the country’s SMEs recommend an apex SME Advisory Commission integrating the three top national SME institutions under one roof.
It has also suggested Sri Lanka’s first ever SME Industrial Zone, a national SME portal ‘e-platform’, and an SME-only licensing agency on the lines of BoI.
This study focuses on three aspects-they are the current business environment relating to Small and Medium Enterprises in Sri Lanka the prevailing Institutional Framework supporting the sector and the Regulatory Framework that relates to the SMEs” Minister of Industry and Commerce Rishad Bathiudeen said.
He was addressing the special presentation of the second draft report of ‘Legal and Institutional Study for Creating Enabling Environment for SMEs’ –a study commissioned by the Ministry of Industry and Commerce at a cost of Rs 3.2 Million.
It was conducted by Ernst & Young (E&Y) also focusing on the creation of a more conducive environment for SMEs while transforming them to large-scale sustainable business enterprises and linking them to export markets.
The pioneering national Survey covered 20 Ministries that serve the business sector with over 90 of their Departments, authorities and councils established under them. The legal review of the study includes laws and regulations applicable to SMEs in no less than 15 aspects.
Minister Bathiudeen stressed: “There are more than one million registered SMEs in Sri Lanka providing employment to three million. When we take the unregistered SMEs the numbers will be much more.
Among the key recommendations of the study are an apex SME Advisory Commission for the country bringing the three top institutions active in entrepreneurship (NEDA, IDB and SED-Small Enterprise Development) under one umbrella'
IT would transform to Sri Lanka SME Authority –the apex SME body for national-level coordination of the critical sector in economy-the SMEs.
Many of Sri Lanka’s exports are colourful, tasty or fragrant and must arrive at their destinations on time and in pristine condition, a service Emirates SkyCargo continues to provide with distinction.
According to figures released by the Colombo office of the award-winning airline, its freight division transported 27,000 tonnes of cargo from Colombo in 2017-18, a significant 23 per cent of the 118,000 tonnes of goods the island exported by air in the year.
With 28 flights from and into Colombo weekly, and the capacity to carry approximately 20 tons of cargo in the belly hold of each Boeing 777 aircraft, Emirates SkyCargo is one of the main carriers of Sri Lanka’s trade commodities and thus makes a noteworthy contribution to the national economy.
Edible fish, fruit and vegetables, flowers and other cut foliage and readymade garments are among the principal exports that SkyCargo transports from Sri Lanka to markets around the world.
An important volume of Sri Lankan exports are perishables and Emirates SkyCargo offers specialised air transport solutions under the ‘Emirates Fresh’ umbrella that help maintain the freshness of the goods being transported.
Emirates Fresh is backed by Emirates’ modern fleet of over 270 aircraft, robust processes, experienced staff as well as state of the art cool chain facilities at its hub in Dubai.
Sri Lanka government has given permission for the private sector to maintain Inland Clearance Depots for cargo classified as Less Than Container Loads or LCL, Finance Ministry announced.
Finance and Media Minister Mangala Samaraweera has signed the relevant gazette notification promulgating necessary regulations allowing private firms to maintain such bonded where houses with retrospective effect from the 01st of October 2018.
Accordingly, the Inland Clearance Depots will handle the import, export, and transshipment or LCL Cargo with effect from the 1st of October. The aim is to facilitate increasing international trade flow and reduce congestion at ports and air ports.
The relevant licenses could be obtained for Sri Lanka Customs with the approval from the Minister of Finance to set up Inland Clearance Depots to handle the import, export and transshipments including the Multi Country Consolidation.
A LKR 500,000 annual license fee for the maintenance of Inland Clearance Depots will also be levied, the Finance Ministry said.
Permission has also been granted to private firms in maintaining LCL Inland Clearance Depots on capital imports of capital goods to manufacture medicinal drugs, dairy industry, and disposal of garbage.
The media release also noted that taxes will not be imposed on capital goods.
Epic Technology Group cemented its position as the country’s premier Fintech solution provider by securing the coveted ‘Overall Gold Award’, ‘Overall Bronze’ and eight other accolades at the recently concluded 20th National Best Quality ICT Awards 2018 (NBQSA), conducted by the Sri Lankan chapter of the BCS and the Chartered Institute for IT.
Epic demonstrated its dominance in the industry by becoming the most awarded organization of the night by bagging three Golds, one Silver, two Bronzes and three merit awards. Further recognizing the technological prowess of the organization, Epic Lanka’s Executive Chairman Dr. Nayana Dehigama said.
Epic was honoured with the BCS Sri Lanka Chairman’s Award in recognition of its outstanding contribution to Sri Lanka’s ICT sector over the last two decades.
Displaying its drive for innovation and disruption as Sri Lanka’s trend-setting FinTech powerhouse, the group clinched the National Overall Gold Award as well as the Financial Category Gold award for their Epic Card Management System (CMS).
This system can issue the smart cards, maintain the smart cards while in use and finally take the smart cards out of use.
Chip/smart cards provide the foundation for secure electronic identity, and can be used to control access to facilities, networks or computers.
As the smart cards are security credentials for authenticating the smart card holder the security requirements for a smart card management system are often high and therefore the vendors of these systems are found in the computer security industry.
The Terminal Line Encryption (TLE) Version 05, a secured channel-encryption solutionamong local and global financial institutions, won the Overall Bronze Award and the Gold Award in the Security Category.
While the Omni-Channel Synchronizer received the Silver Award in the Financial Category, Epic’s digital priority banking solution—Epic Premier Plus—clinched the Research and Development Category Bronze Award.
The three merit awards received by Epic were the Financial Category Merit for EPIC Automatic Reconciliation and Dispute Management Solution and Government and Public Sector Category Merits for DoxPro- SEA (Seafarer's Electronic Application System) and DoxPro-Single Window Platform solutions.
“There can be no better acknowledgement of the emphasis we place on service excellence than to be adjudged the best overall in the ICT sector in Sri Lanka,” Dr. Dehigama said.
The insurance industry was able to achieve a growth of 12.60% in terms of overall Gross Written Premium (GWP), during the 1st half of 2018 recording an increase of Rs. 9,593 million when compared to the same period in the year 2017, a release from the Insurance Regulatory Commission of Sri Lanka said.
The GWP for Long Term Insurance and General Insurance Businesses for the 1st half of 2018was Rs. 85,755 million compared to the 1st half of 2017 amounting to Rs. 76,162 million posting a growth of 12.60% (1st half 2017: 13.87%). The GWP of Long Term Insurance Business amounted to Rs. 37,902 million (1st half 2017:Rs. 33,657 million) recording a growth of 12.61% (1st half 2017: 11.06%).
The GWP of General Insurance Business amounted to Rs. 47,853 million (1st half 2017: Rs. 42,505million) recording a growth of 12.58% (1st half 2017: 16.20%).
The value of total assets of insurance companies has increased to Rs. 581,770million as at end of 1st half of2018, when compared to Rs. 533,075millionrecorded as at end of 1st half of 2017, reflecting a growth of 9.13% (1st half 2017: 11.42%).The assets of Long Term Insurance Business amounted to Rs. 407,708 million (1st half 2017: Rs. 375,159 million) indicating a growth rate of 8.68% year-on-year.However, the growth of assets of long term insurance business has significantly dropped compared to 15.93% growth recorded during 1st half of 2017.
The assets of General Insurance Business amounted to Rs. 174,062 million (1st half 2017: Rs. 157,915 million) depicting a growth rate of 10.23% (1st Half 2017: 2%) at the end of 1st half of 2018. Accordingly, the growth of assets of general insurance business has shown a significant increase compared to the same period of 2017.
At the end of 1st half of 2018, investment in Government Debt Securities amounted to Rs. 176,471 million representing 47.48% (1st half 2017: Rs. 175,627;51.32%) of the total investments of Long Term Insurance Business, while such investment of the total investment of General Insurance Business amounted to Rs. 42,486 million representing 37.98%.
Accordingly, the total investment of both Long Term Insurance Business andGeneral Insurance Business in Government Securities amounted to Rs. 218,957million (1st half 2017: Rs. 211,599million).
Thus, the investment in Government Securities of Long Term Insurance Business and General Insurance Business has increased by 0.48% and 18.11% respectively.
The claims incurred by insurance companies during the 1st half of 2018 in both Long Term Insurance Business and General Insurance Business was Rs. 38,422 million (1st half 2017:Rs. 32,249 million) showing an increase in total claims amount by 19.14% year-on-year. The Long Term Insurance claims, including maturity and death benefits, amounted to Rs. 16,104 million. The claims incurred in General Insurance Business, including Motor, Fire, Marine and other categories, amounted to Rs. 22,318 million.
The profit (before tax) of insurance companies as at end of 1st half of 2018in both Long Term Insurance Business and General Insurance Business amounted to Rs. 21,656million (1st half, 2017: Rs. 4,660 million) showing an increase in total profit amount by 364.71%.The profit (before tax) of Long Term Insurance Business amounted to Rs. 17,319 million (1st half 2017: Rs. 738 million) while the profit (before tax) of General Insurance Business amounted to Rs. 4,337 million. Thus, profit (before tax) of Long Term Insurance Business and General Insurance Business has increased by 2,246.57% and 10.57% respectively.
Out of twenty-six (26) insurance companies in operation as at 30th June2018, twelve are engaged in Long Term (Life) Insurance Business, twelve companies are carrying out only General Insurance Business and two are composite companies.
Fifty-nine insurance brokering companies, registered with the Commission as at 30th June2018, mainly concentrate in General Insurance Business. The premium income generated through insurance brokering companies in the 1st half of 2018 with respect to General Insurance Business amounted to Rs. 11,560 million, 13.48% of total GWP (1st half 2017: Rs. 9,915 million; 13.01% of total GWP) while the premium income generated with respect to Long Term Insurance Business amounted to Rs. 353 million, 0.41% of total GWP.
The total premium income generated through insurance brokering companies with respect to both General Insurance and Long Term Insurance Businesses amounted to Rs. 11,913 million, 13.89% of total GWP, during 1st half of 2018, compared to Rs. 10,055 million, 13.20% of total GWP during the 1st half of previous year.
Venora Lanka Power Panels (Pvt) Ltd launched its manufacturing products in the Horn of Africa, with Ethiopia being the targeted market.
The Sri Lankan firm continued to attest the faith in Africa’s fastest growing economy that continues to lure foreign investments to aid in economic growth and development.
The new investor joins Isebella Socks Manufacturing Plc and Hirdaramani Garments Plc, already existing Sri Lankan firms in Africa’s oldest independent country.
Foreign companies not only seek to expand their market in Africa with greener pastures but look to tap in the industrial potential available in the country. Foreign investors have ventured into the industrial sector, that offers a variety of business investment opportunities. The construction of industrial parks has opened new doors of opportunities for companies with a view of creating jobs.
Ethiopia is looking to increase its GDP by 11 percent annually in the next ten years with the manufacturing sector growth projected to increase by about 25 percent every year.
Ethiopia’s target by 2025 is to be the leading manufacturing hub in Africa. The country counts on inflows of foreign investments to catapult the ambitious goal while creating a conducive business environment for businesses.
Export-oriented manufacturer Venora Lanka Power Panels which works with world-renowned brands such as Schneider Electric, ABB, and Rexton has partnered with Ethiopian firms, namely Eulogia Electromechanical PLC and Horra Trading PLC.
Ambassador of Sri Lanka to Ethiopia Sumith Dassanayake has encouraged Sri Lankan and Ethiopian business people to work together to strengthen the bilateral ties between their respective countries through trade and investment.
Venora Lanka was recognized by the National Chamber of Exporters (NCE) at the 25th Export Awards held at Colombo Hilton for its excellent performance clinching the Bronze category Award in the industrial sector last year.
Other accolades the firm has scooped include the award for Quality and Business Prestige in November 2005 in Geneva Switzerland, Arch of Europe for Quality and Technology- Frankfurt in 2012.
Cinnamon Life, Colombo’s most anticipated integrated development is adding new dimensions to the city’s arts and entertainment offering with a line-up of events and international performances slated as a major boost during the forthcoming tourist season. With a continued agenda of bringing famed international artists, celebrities, performers, culinary experts and global travel influencers, the latter half of the year promises to be one of the highest forms of entertainment for both locals and tourists alike.
Cinnamon Life, initiated by Sri Lanka’s premier listed conglomerate, the John Keells Group, is the realisation of a vision to elevate Colombo into a regional hub with multifaceted entertainment, performing arts, commercial and business experiences that would expand the visiting tourist profile to Sri Lanka. With 10-acres of integrated spaces, Cinnamon Life designed by globally acclaimed master architect Cecil Balmond will consist of a luxury 800-room 5-star hotel, 427 premium residential apartments, a 30-storey office complex, five storeys of retail and unlimited entertainment.
Along with the development of Cinnamon Life, Colombo is fast transforming into a metropolis that is set to increase the current 3-5 star room capacity from 5367 to an additional 3585 rooms by 2021. Identifying the massive potential for tourist attractions, Cinnamon Life is spearheading the transformation of accessible entertainment and cultural experiences of the highest calibre in Colombo.
Many diverse events were organised this year starting from the much acclaimed theatrical play, The Sound of Music by Andrew Lloyd Webber & David Ian’s Really Useful Group Production. Cinnamon Life proudly presented one of the most famous musicals of all time enabling guests to relive a world-class musical that has made its mark on some of the world’s most revered stages like West End and Broadway.
The world famous culinary celebrity of home cooking, Nigella Lawson became the talk of the town this June, in a series of events hosted with Cinnamon Life in Sri Lanka. During her visit, Nigella toured the island and experienced Sri Lanka through the vibrantly inspired Cinnamon properties including a tour at the Yala Safari Park, before she made her formal public appearances at a cocktail and an in-conversation brunch, followed by high tea and a book signing session.
Recently Cinnamon concluded the inaugural Colombo Music Festival, that was held on August 18, 2018, a Caribbean themed showcase of the most iconic global reggae-fusion artists such as Maxi Priest, Shaggy, Big Mountain and Diana King. The Colombo Music Festival created a vibrant and inclusive atmosphere in par with international musical events at the Havelock Sports Club Grounds Colombo, offering non-stop entertainment from 3 p.m. till midnight.
For the December holiday season, Cinnamon Life is set to present Benny Anderson and Bjorn Ulvaeus’ world famous smash-hit musical Mamma Mia! for the first time in South Asia, a classic theatre performance that has been showcased around 440 cities across the globe. Over 75 internationally acclaimed performers will be in Sri Lanka, from the stages of London’s West End, to deliver a total of 10 shows from December 22 to 30.
Roshanie Jayasundera-Moraes, chief marketing officer, Cinnamon Life stated, “The largest private sector investment of US$ 850 million consisting of an 800- room five-star Cinnamon Hotel, 427 premium residential apartments, a 30-storey office complex, 5 storeys of retail and unlimited entertainment will provide an excellent investment opportunity for anyone looking for a prime real estate investment. This culinary and entertainment hub will continue to bring to you a series of world class events giving you a glimpse of what to expect at Colombo’s life capital which will be the ultimate lifestyle hub locally as well as globally. We encourage everyone to stay tuned as we bring to you many more exciting initiatives.
“Cinnamon Life, following its opening it will be the hub of world-class entertainment. stated, “It is set to bring to reality the lifestyle, culinary and entertainment aspects to Colombo’s social life that was previously beyond our reach. Thus, the globally reputed initiations such as The Sound of Music, the Colombo Music Festival and Mamma Mia! is a step towards realising one of our most aspiring dreams as a star-class Sri Lankan hospitality chain,” said Dileep Mudadeniya, vice president John Keells Group, head of brand marketing Cinnamon Hotels & Resorts and CEO Cinnamon Life Mall.
With this new benchmark for world-class entertainment and cultural experiences available not only in Sri Lanka but across the region, Cinnamon Life will continue to collaborate across a global platform to further fortify Sri Lanka’s emergence among the region’s leading entertainment travel destinations, while contributing to the transformation of Colombo’s own vibrant social lifestyle.
Sri Lankan importers have temporarily stopped importing sugar after the government hiked import duty and imposed a maximum domestic retail price, which made imports uneconomical, market sources said. The Consumer Affairs Authority (CAA) of Sri Lanka fixed the maximum retail price for white sugar at Rupee 100/kg on October 12, which is equivalent to $578.54/mt, for non-packaged and Rupee 105/kg for packaged. The maximum retail price for wholesale sugar was fixed at Rupee 92/kg.
"Before the hike in duty, the landed cost of Sugar in Sri Lanka was between Rupee 85-90/kg [after tax] so there was still margin to be made with the maximum retail price in place," a trader said.
The Sri Lankan government scrapped the special commodity levy of Sri Lankan Rupee 31/kg on sugar imports and brought it under the normal tax purview, increasing the import duty on sugar to Rupee 44.5/kg effective from October 18.
"The import tax was hiked to reduce imports and improve the balance of payments issue to support the [Sri Lankan] Rupee," a Sri Lankan trader said.
The Sri Lankan Rupee is down 12.66 % year to date at Rupee 172.6849 against the dollar on Wednesday.
The rally in sugar prices since the maximum domestic retail price was announced and the duty hike has increased the import cost to Rupee 103-107/kg, making it unfeasible to continue imports, market sources said.
Offers for Indian low quality white sugar since October 12 have increased from $315-$320/mt CFR Colombo to $345-350/mt CFR Colombo on Thursday, S&P Global Platts data showed.
Since the maximum domestic retail price was set, the prompt-month London No.5 white sugar futures has firmed by 6.65% to $387.7/mt on Wednesday.
However, some importers of white sugar into Sri Lanka are optimistic that the budget announcement on November 8 will help them by either reducing the duty or lifting the maximum retail price for sugar.
"The stop in [sugar] imports has to be short term since Sri Lanka relies almost entirely on imports and does not have a huge stock domestically," a North Asian trader said.
Sri Lanka has an estimated demand of 790,000 mt of white sugar for the 2018-19 (October-September) season, with a domestic production of 55,000 mt and expected imports of 565,000 mt, S&P Global Platts Analytics data showed.
The Sri Lankan government plans to put two state-owned hotel companies up for sale within the next six months in a sale that could raise $500 million for the island nation as it seeks to bolster its finances, the State Finance Minister has announced.
Sri Lanka faces repayments on expensive infrastructure foreign loans starting this year and already has a hefty debt burden, while its rupee currency has plummeted to record lows.
"We're going through the legal hoops of preparing (the sales)," State Minister Eran Wickramaratne said in an interview. "It will maybe take six months to get over that."
The government began a search for investors in January for the Grand Hyatt Colombo and for a 51% stake in a five-star hotel in the capital Colombo that Hilton International runs under a management contract.
Bids For National CarrierSri Lanka would also reopen bidding for national carrier Sri Lankan Airlines, probably in a few months, Wickramaratne said.
Talks with private equity firm TPG Capital, the sole bidder in a previous push to sell the carrier, collapsed last year during due diligence.
"We are going through an internal restructuring again, and we may have to make a different offering in a different structure," Wickramaratne said. "I'm expecting in the next few months that it will be open for people to express interest".
Fiscal And Monetary Policy MeasuresSince 2015, the government of the USD 87 billion economy has introduced fiscal and monetary policy measures including tax reforms and a flexible currency exchange rate.
But Sri Lanka has struggled to overhaul major state-owned enterprises including its airline due to a lack of funds and protests by trade unions.
The International Monetary Fund urged the country in June to strengthen governance and transparency at state firms.
Lanka Tiles, Sri Lanka’s largest manufacturer of floor and wall tiles, has ventured overseas and diversified its business becoming the only local export brand to bear the country’s image, Managing Director of Lanka Tiles, Mahendra Jayasekera said.
The company currently exports around 20 percent of its production capacity to overseas high quality markets such as Japan, Canada, Australia as well as to certain countries in the European Union.
It has many business interests under the Lanka Wall Tiles and Lanka Tiles PLC group now, encompassing investments in aluminium, tile adhesive, plantations and packaging, Jayasekera said..
In its most recent expansion, Lanka Tiles added 6,000 square meters of production to its capacity, at a cost of LKR 2.5 billion, at the factory complex in Ranala.
New manufacturing plant in Ranala
Jayasekera said that the company expects to remain a dominant player in the local market, and to give a better product to local and overseas buyers.
At present, Lanka Tiles is producing 13,000 square meters of floor tiles and 7,500 square meters of wall tiles a day while bringing the best of the world to Sri Lanka, and beyond.
Lanka Tiles is quickly becoming a brand that is globally recognised for quality.
The 40th sale of the year concluded this week had on offer a small volume of 4.88 M/kgs, which is the lowest quantity on offer at a given auction since March 2017.
Tea prices continue to appreciate for the second consecutive week in the backdrop of a sharp decline in availability combined with a significant depreciation of the Sri Lankan Rupee against the US Dollar, approximately 5% depreciation during the last one month and almost 10% for the year, according to Forbes & Walker tea market report.Ex-Estate offerings were similar to last and totalled 0.73 M/kgs.
There was good demand particularly for the better teas, which often appreciates Rs. 20 per kg and more following special inquiry. Plainer and thin liquoring teas were often discounted, whilst teas from the Nuwara Eliya region were neglected, with very little interest for the corresponding BOP/BOPF grades.
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