SRI LANKA NEWS IN BRIEF (AUGUST 2018) – Compiled by Victor Melder : Melbourne

In 2017 Sri Lanka’s motor vehicle population grew by 7% to 7.2 million. This is one of the many facts and analyses  in the latest edition of the annual report on the country’s motor vehicle market published by the Ceylon Chamber of Commerce. 2017 saw a rise in import expenditure (5%) despite a fall in import volume (11%) with yearly new registrations declining by 9%. This report prepared by the Economic Intelligence Unit of the Ceylon Chamber of Commerce, provides a detailed statistical analysis and industry overview of Sri Lanka’s Motor Vehicle Market, featuring the latest information on registration; vehicle population; imports of vehicles by vehicle category, top brands imported under each vehicle category and overview on the global motor vehicle market and global electric vehicle market.  (Daily Island 1.8.2018)

Prime Minister Ranil Wickremesinghe is spearheading a task force that is considering granting visa-free entry to certain countries that patronise the destination as tourists. “There is some thinking to make it (Sri Lanka) visa-free entry to certain countries,” Tourism Development Minister John Amaratunga told the Business Times. Some of the countries under consideration are India, China, Europe and West Asia, the minister said. The task force also comprises some of the officials involved in the digital advertising campaign committee. He noted that this is aimed at encouraging more people to visit Sri Lanka as immigration is “creating chaos” for visitors to the country. Plans are underway to consider providing visa-free travel to certain countries during the lean period of October-November and March-April, the minister said. He pointed out that the Sri Lanka Tourism Promotion Bureau (SLTPB) is currently working on this plan. In addition, in another effort to boost travel to the destination, the minister said the government has been in discussion with airlines, tour operators and hotels to provide low cost packages during the lean period. These efforts are underway in a bid to ensure Sri Lanka becomes a destination that would be a visited location throughout the year. (Sunday Times, 5.8.2018)

The central bank has announced it had secured a $1 billion Chinese loan as the island, a key link in Beijing’s ambitious Belt and Road initiative, develops closer relations with Asia’s largest economy. Central bank Governor Indrajit Coomaraswamy said that first half of the loan will be released later this month and the balance will be received in October.  “During consultations (with the Chinese over the loan) it was clear that they see us as a key strategic partner as far as the (Belt and Road) initiative is concerned, given our location,” Coomaraswamy told reporters in Colombo. The eight-year loan by China Development Bank carries a 5.25 percent interest rate with a three year grace period. Coomaraswamy said that the terms of Chinese loan were better than other international lenders and the country hopes to secure additional $200 to $250 million from China’s domestic financial market by issuing “Panda bonds”. Last month, China vowed to keep providing financial help, including loans, to Sri Lanka despite warnings about the island nation’s mounting debt. Sri Lanka last year granted a 99-year lease on a strategic port to Beijing over its inability to repay Chinese loans for the $1.4 billion project.   The port in Colombo straddles the world’s busiest east-west shipping route and also gives a strategic foothold to China in a region long dominated by India. China had said its loan portfolio in Sri Lanka was $5.5 billion as of last month, just over a tenth of Colombo’s total $51.82 billion external debt. The International Monetary Fund, which bailed out Sri Lanka in June 2016 with a $1.5 billion staggered loan, has warned that Colombo over its heavy debt. Sri Lanka’s economy has been on the mend since the IMF bailout, but growth in 2017 at 3.1 percent was the slowest in 16 years. The central bank had forecast 2018 growth at between 4.0 to 4.5 percent, but Coomaraswamy on Friday revised his estimate for the  calendar year to below 4.0 percent. (Daily Island, 6.8.2018)

A story of courage overcoming obstacles is reported from Mahiyangana, where a ten-year old girl attacked by a wild elephant sat the Grade Five scholarship examination yesterday. Grade five student Sayuri Sathsarani (10) of the Haddaththawa Primary School in Mahiyangana was on her way to the examination centre on her mother’s bicycle, when they came under a wild jumbo attack around 6.15 am. The wild elephant kicked the bicycle and both victims were thrown off. The animal went into the jungle after the attack. The residents took the mother and the child to Mahiyangana Base Hospital with injuries around 7.15 am. The child after some treatment insisted that she be allowed to sit the examination and left the hospital for the test centre with permission from doctors while her mother continued to receive treatment. She sat the examination which started at 9. 30 am and returned to hospital. (Daily Island, 6.8.2018)

The government has decided to send a team of 50 military personnel to India to undergo training as locomotive drivers following the disruption of train services by Sri Lanka Railway drivers making various demands from time to time. The focus is on drawing 50 drivers from the Army’s Armoured Corps to be sent to a specialized institution in New Delhi for training on operating passenger trains, authoritative sources said. After the initial exposure on simulators, the drivers will undergo a hands-on, practical training on Indian rail tracks. After the three-month training program, they will be granted a locomotive driving license, the sources said. The trained army personnel are to be deployed in the event of a strike by railway drivers. With stand-by replacements, a total breakdown of train services can be averted, coupled with minimizing the inconvenience caused to passengers. (Sunday Island, 12.8.2018)

The rupee touched a record low as importer dollar demand, foreign outflows and government securities weighed on the currency, dealers said. The rupee touched an all-time low of 160.60 per dollar in early trade on Monday before closing at 160.50/70, compared with Friday’s close of 160.45/55, and has declined 4.6% so far this year. Absence of dollar conversions by exporters and remittances also pushed the rupee down. Dealers said there were fears it could depreciate further, tracking weakness in emerging market currencies. “It was a dull day though there were importer demand. We did not see much exporter conversions and remittances,” a currency dealer said. Sri Lanka’s stock market has suffered a Rs. 840.7 million outflow in the last four sessions through Monday Dealers said exporters are holding on to dollars as they expect the local currency to decline further.

The Sri Lankan currency is also hit by the fall in the Indian rupee, as India is Sri Lanka’s biggest trading partner. The Indian rupee is the region’s worst performing currency this year and hit a record low on Thursday.
Foreign investors sold government securities worth a net Rs. 818 million ($ 5.10 million) in the week ended 15 August, bringing the outflow so far this year to Rs. 3.99 billion, Central Bank data showed. (Daily Financial Times, 21.8.2018)

Sri Lanka’s tea output fell 7.3% in July from a year earlier, the State-run Tea Board said, and brokers attributed the fall to adverse weather conditions.“There was excessive rain and overcast conditions, especially at higher elevations, resulting in lower high-grown crop due to excess rain. Other areas were also hit by adverse weather,” Anil Cooke of brokers Forbes & Walker said.  “But now excess rain conditions are easing, and we expect a better crop in the rest of the year.” Production in the first seven months has risen 0.2% from the same period last year. Tea is Sri Lanka’s top agricultural export and one of the main foreign currency earners for the $87 billion economy. Earnings from tea exports for the first five months rose 1.6% to $599.3 million, compared with the same period last year. Sri Lanka’s tea output rose 5% to 307.1 million kg last year, recovering from a seven-year low of 292.6 million kg hit in 2016. Industry officials expect production to reach 320 million kg this year if the weather holds, but a ban on cost-effective weed-killers, disruption of regular agricultural practices and the high cost of fertilisers could affect the outlook for production.
Tea production in 2017 was affected by severe drought followed by flooding and poor application of fertilisers, while a Government ban on pesticides and restricted labour added to the sector’s woes.(Daily Financial Times, 21.8.2018)

Tea exports in July have declined volume and value wise compared to a year earlier, Asia Siyaka Commodities said yesterday. It said exports amounted to 25.2 million kg in July, down 6% from the corresponding month of last year. However, July 2018’s performance is better than that of June, which was 24.7 million kg. The first seven months’ cumulative tea exports amounted to 162.7 million kg, lower in comparison to 165.3 million kg a year earlier.  In value terms, January to July exports were $854 million, down from $871 million last year. In July, exports were worth Rs. 19.95 billion, down by 9% from a year earlier.

A key destination for Sri Lankan tea exports was Russia/CIS, though down to 29 million kg from 31 million kg last year. Exports to Iran declined from 15.6 million kg to 13.3 million kg.  Japan’s purchases were down 15% to 4 million kg. Turkey’s purchases were nominally higher at 20.2 million kg, but Asia Siyaka Commodities said its purchases were likely to dip in August, following the currency crisis. China continues its positive trend and is up 17% from 5.3 million kg to 6.3 million kg this year, whilst exports to Iraq has grown to 22.6 million (Daily Financial Times, 21.8.2018)

Headline Inflation, as measured by the change in the National Consumer Price Index, increased to 3.4% in July 2018 from 2.5% in June 2018, on a year-on-year basis, the Census and Statistics Department said. This was mainly driven by a low base that prevailed in the previous year as well as the monthly increase in the prices of items in the Non-food category. The change in the NCPI measured on an annual average basis decreased from 5.3% in June 2018 to 5.1% in July 2018. When monthly change is considered, the NCPI increased marginally from 126.5 index points in June 2018 to 126.6 index points in July 2018 largely due to the increase in the prices of the items in the Non-food category, particularly those of petrol and diesel in the Transport sub-category as well as of some items in the Miscellaneous Goods and Services subcategory. Meanwhile, the prices of the items in the Food category declined during the month where prominent price declines were observed with coconuts, rice and limes. The NCPI Core inflation, which reflects the underlying inflation in the economy, increased to 2.3% in July 2018 from 1.8% in June 2018 on a year-on-year basis. Meanwhile, annual average NCPI Core inflation declined to 2.7% in July 2018 from 2.9% in June 2018.(Daily Financial Times, 22.8.2018)

The Public Health Inspectors (PHIs) Union of Sri Lanka has informed Health Minister Dr. Rajitha Senaratne that there are 107 towns in Sri Lanka which do not sell cigarettes, a Health Ministry spokesman said. According to the spokesman, the Union launched several programmes to educate the public on the ill effects of smoking and as a result shop owners and businessmen from many towns stopped selling cigarettes. There are 22 towns in the Jaffna district, 17 towns in the Matara district, 16 towns in the Kurunegala district which do not sell cigarettes. The total number of towns which do not sell cigarettes is 107.Minister Senaratne admired the contribution made by PHIs to minimise smoking in the country and expressed hope on increasing the number of towns which do not sell cigarettes up to 200 by by 2019 (next year), he said. Several steps were taken under the direction of Minister Senaratne during past three years to discourage smoking in the country. “Increasing the tax on tobacco up to 90 percent, increasing the pictorial warning covering 80 percent of the cigarette packet, banning the sale of cigarettes around a radius of 100 metres from a school and banning smoking in public places are some of those steps,” the Minister added. (Daily News, 22.8.2018).