SRI LANKA NEWS IN BRIEF – JUNE 2018 – Compiled by Victor Melder

Consultant, Medical Nutritionist, Medical Research Institute Dr. Renuka Jayatissa addressing a forum recently said the serious repercussions of low local milk consumption, compounded by low production resulting in insufficient quantum to meet demand, resulted in alarming health issues. Malnutrition, in pregnant women, as a result of not consuming sufficient milk during pregnancy was the primary cause of stunting. Although breast feeding infants was recommended, because of low milk consumption they depended on milk substitutes, which, she said, was not the alternative to breast feeding. ‘Fresh milk consumption was essential to build energy and sustain healthy growth. Milk consumption per person should be at least one glass per day. Additionally, yoghurt, cheese, butter, were all essential dietary ingredients that were in short supply, she explained. President, All Island Dairy Association Nishantha Jayasooriya said at this seminar titled ‘Challenges in Meeting Emerging Trends in the Dairy Industry’ that milk production and its related value added products faced serious challenges, restricting growth. Dairy farmers throughout the country, apart from being paid Rs. 70 per litre when they supply milk to either the private sector or the Milk Board, continue to live at subsistence levels with no hope of improvement. Cost of production per litre was currently Rs.136 . 60. He said through the Market Oriented Dairy program (MOD), funded by the US government, the dairy industry was expected to improve production. The US government’s Grant Aid package, he said, was 14 .1 million dollars, to implement the project, and 6.1 million dollars to ship the monetized commodity. But he also said such assistance was in the long term. Realization of the end result to meet demand was yet a long way off. To boost growth some 7000 high yielding animals have been imported over the past two years. Management Consultant, Maliban Milk Products ( Pvt ) Ltd., Asoka Bandara, in his presentation, said although milk production improved, whatever quantity that was produced was still insufficient to meet demand. He said 2010 production was recorded at 196 million litres. Comparatively, 2017 results were that production showed improved quantities. Year end results were that recorded production was 326 million litres. Additionally, some 600 million was imported to augment the short fall. Irrespective of production improvement, demand was assessed at one billion litres annually which was far from being produced. ‘The import bill for milk powder was approximately Rs. 50. million. These funds, if released for improvement could undoubtedly be channeled for increased production. The industry would grow exponentially, he added. Per capita milk consumption, Bandara confirmed, was merely 36 litres. On the other hand Finland, for example consumed, per capita 361.19 liters per day Clearly, he said, although demand was high, production was nowhere near its optimum. (Daily Island 2.6.2018)

The Bank of Ceylon rewards all new born babies born from January 1, 2018 to December 31, 2018 by opening a Ran Kekulu children’s savings account with the initial deposit of Rs.250/- as a compliment from the bank. This offer is also made available to BOC Athfal children’s savings account during this time period. A parent or a guardian can respond to this offer by opening the account within three months from the date of birth by visiting any BOC branch to obtain this reward. This initiative is one of the many the Bank conducts to build a financially savvy nation in the long run. With the trust and stability that was built over the years BOC’s children savings account- Ran Kekulu lays the best foundation for your child’s future financial stability. BOC Ran Kekulu offers a wide range of benefits covering many important events of a child’s life till becoming a young adult. The Bank offers an additional 1% interest rate than the normal savings account of the Bank and encourages young savers with seasonal gifts as compliments. One of the most significant events celebrated by Ran Kekulu account holders is the Grade 5 scholarship program that celebrates their success in facing grade 5 scholarship examination. This account is also linked with free life insurance cover for the parent or guardian to a maximum of Rs.500,000/- (minimum balance of Rs.5000/- to be maintained for a period of six months prior to the incident). Any parent or guardian who opens BOC Ran Kekulu accounts for more than one child will be covered up to a maximum of Rs. 1.0 million. The child will also get a free medical insurance cover up to Rs.100,000/- per-annum in case of an accident or specified 10 critical illnesses requiring hospitalization in a Private Hospital for more than one night or 3 nights in a Government hospital, will receive Rs.600/- per day up to a maximum of 30 days only (conditions apply). (Daily Island 3.6.2018)

The International Monetary Fund announced the release of the latest installment of Sri Lanka’s $1.5 billion bailout, but warned that restructuring the loss-making national airline was essential to sustain economic recovery. The IMF welcomed the island nation’s increase in fuel prices last month — a precondition for it to receive $252 million of the three-year loan approved in June 2016. Sri Lanka’s economy has been on the mend since the IMF bailout, but growth in 2017 was more sluggish than expected and at 3.1 percent was the slowest in 16 years. The release of the latest tranche of the loan had been held up pending the government agreeing to raise fuel prices to recover production costs and do away with subsidies. The IMF said the price hike by state-run Ceylon Petroleum Corporation, in some cases by as much as 130 percent, was a “major achievement” that would reduce fiscal risk. The price of kerosene oil, widely used in rural Sri Lanka for cooking and in lamps, was also more than doubled last month, while gasoline prices increased by just under 15 percent. The IMF said Sri Lanka should also implement a pricing policy for electricity, which is currently subsidised for households and small businesses. “It is essential for the authorities to implement an automatic pricing formula for electricity and a restructuring plan for Sri Lankan Airlines,” IMF’s Deputy Managing Director Mitsuhiro Furusawa said in a statement. One of the biggest drags on the country’s balance sheet is national carrier Sri Lankan, which has accumulated losses and debts of over $2 billion and is a huge burden on taxpayers. The government has failed to privatise the airline due to a lukewarm response from investors while an attempt to find an international partner to revive it has also failed. Meanwhile, Sri Lanka’s real estate sector has been expanding rapidly — raising concerns of a bubble — and the Central Bank of Sri Lanka has said the sector is under close watch to prevent fallout for banks. “While financial soundness indicators remain stable, continued credit growth in the real estate sector warrants close monitoring,” said Furusawa. (Daily Island, 3.6.2018)

Sri Lanka’s overall exports were up by 6.3 percent to US 1.1 billion dollars with an increase in industrial exports, data from the Central Bank showed. Performance of merchandise exports in March 2018, merchandise export earnings at US 1,108 million dollars, recorded the historically highest monthly value. The year-on-year growth of export earnings in March 2018 moderated as the highest monthly export value for 2017 was recorded in March. Earnings from industrial exports mainly contributed towards the growth in export earnings. Under industrial exports, earnings from garment exports recorded the highest value for a month since November 2013 mainly due to the increase in garment exports to the USA, despite a marginal reduction of exports to the EU. Export earnings from gems, diamonds and jewellery increased significantly in March 2018 mainly owing to higher performance registered in gem exports with. Apparel exports were up 7.4 percent to US 486 million dollars with rubber products up 11.8 percent to 85.8 million dollars. Increase in export of vegetable, fruit and nut preparations resulted in an increase in export earnings from food, beverages and tobacco. However, agricultural exports fell 5.6 percent to US 138.5 million dollars with rubber, coconut and spice shipments also falling. Meanwhile, machinery and mechanical appliances increased during the month led by electronic equipment. However, earnings from transport equipment declined in March 2018 reflecting the base effect as several yachts were exported during March 2017. All sub categories under agricultural exports, except for tea and unmanufactured tobacco, declined in March 2018. Tea export earnings increased due to the combined effect of high prices and volumes exported. Lower volumes of cloves and cinnamon exported resulted in a decline in earnings from spices. Earnings from coconut exports also declined during the month due to the drop in exported volumes of desiccated coconut and coconut oil categorised under kernel products. This decline came from the lower production of coconut due to the lag effect of adverse weather conditions. Leading markets for merchandise exports of Sri Lanka, in March 2018, were the USA, the UK, India, Germany and Italy accounting for about 52 per cent of total exports. “The external sector displayed a mixed performance in March 2018. Even though expenditure on imports continued to increase, exports which peaked to historic high levels in March 2018, contributed to a lower trade deficit vis-a-vis the previous two months of the year,” the CB statement said. Earnings from tourism increased notably in March 2018 continuing the positive trend observed since January 2018. Workers’ remittances rose during the month reversing the decline recorded in February 2018. Meanwhile, the financial account of the Balance of Payments (BOP) experienced some outflows in March, particularly with the withdrawal of foreign investments from the government securities market and the Colombo Stock Exchange (CSE). (Daily Island 3.6.2018)

Heart disease is the leading cause of death in Sri Lanka and tobacco use is the most preventable cause of heart disease. Overall, tobacco is a lethal substance that kills around 20,000 Sri Lankans each year and causes serious and debilitating illnesses in many more. The result is a massive social and economic cost, which manifests as loss of breadwinners, orphaned children, malnutrition and poverty at family level. It also causes a major strain on the health system, as many diseases caused by tobacco such as cancer are very expensive to treat. Sri Lanka has taken many steps to control tobacco use and currently has many evidence-based laws for tobacco control. Though tobacco use has declined over the years, still there is a sizable number of users who are in imminent danger of being harmed by tobacco. Therefore, measures to reduce demand for this substance and to make users quit, needs further strengthening. This year, the Ministry of Health and the National Authority on Tobacco and Alcohol aimed to ensure that May 31 became a day free of tobacco in Sri Lanka. This was supported by many organizations such as the Sri Lanka Medical Association, Presidential Task Force on Drug Prevention, Sri Lanka Heart Association, the Government Medical Officers’ Association many specialist professional groups and non-government agencies such as Alcohol and Drug Information Centre. The objective of this initiative was to encourage both smoked and smokeless tobacco users to refrain from using tobacco on May 31 and encourage and support retailers not sell this lethal product, which kills its customers, on that day. (Daily Island, 3.6.2018)

Tourist arrivals during the first five months exceeded one million, reflecting a 14.7% growth, while May saw a 6.2% growth to 129,466 from the comparable period of last year. According to data released by the Sri Lanka Tourism Development Authority (SLTDA), tourist arrivals in May amounted to 129,466, up 6.2% from 121,891 in the corresponding month of 2017.  The cumulative arrivals of tourists in the five months rose 14.7% to 1,017,819 compared to 887,093 in the same period last year, continuing the growth momentum kick-started this year. India continued to be the largest source market in May with 42,073 arrivals, up by 23.1%. 
China came in second with 17,103, but the figure is down 7.5% compared to a year earlier. Arrivals from the UK were the third largest at 9,337, up 9.6%. Other major markets included Germany (up 8.7% to 6,906), Australia (up 28.1% to 4,873), Japan (up 48.5% to 4,229 and the US (up 24% to 4,123). France was down 0.4% to 3,721.Asia-Pacific was the largest source of tourist traffic to Sri Lanka with 65% of the total received in May 2018. Europe accounted for 27%, America 6%, the Middle East 2 % and Africa 0.5%. Earnings from tourism in March were estimated at $ 433 million, with cumulative earnings amounting to $ 1,313 million during the first quarter of 2018, according to data released by the Central Bank last week. Tourist arrivals increased by 24.1% in March as a result of higher numbers of tourists arriving from India, the United Kingdom and Germany in comparison to March 2017. Total tourist arrivals during the first quarter of 2018 at 707,924 were a 17% increase over the first quarter of 2017. (Daily Financial Times, 6.6.2018)

The Sri Lankan rupee hit a fresh record low of 158.90 per dollar yesterday, as importer dollar demand offset the lack of greenback sales by exporters who expect the currency to drop further, dealers said. The spot rupee hit an all-time low of 158.90 per dollar, surpassing its previous low of 158.80 hit in the previous session. The currency ended at 158.85/10 per dollar, weaker from Wednesday’s close of 158.75/90. The currency declined 3.5% so far this year. “Nobody is selling dollars. Importer dollar demand was there. The rupee is trading weaker due to low liquidity,” a currency dealer said. Dealers said the rupee will be under pressure, with exporters staying on the sidelines in anticipation of a fall in the unit, in line with other emerging market currencies. Dealers expect the rupee to trade between the 162-163 level by the end of the year. Foreign investors sold government securities worth a net Rs. 787.24 million ($4.96 million) in the week ended 30 May, bringing the outflow so far this year to Rs. 17 billion, Central Bank data showed. (Daily Financial Times 8.6.2018

Australia has announced fresh funding for de-mining operations in the Vanni region over the next two years. Australian High Commission spokesperson said that Australian 700,000 would be given to two orgnizations, Mine Action Group (MAG) and Sri Lankan organisation Devlon Assistance for Social Harmony (DASH) engaged in mine clearing operations. The following is the text of statement issued by the Australia HC yesterday: “This new funding will provide vital additional mine clearance capacity in Mannar, Vavuniya and Kilinochchi Districts of the Northern Province. It will allow many families to return to their land, re-establish lives and reconstruct critical assets. “Australia has been one of the largest contributors to demining in Sri Lanka over the years, contributing $A20 million (around LKR 2 billion) since 2009. “Sri Lanka acceded to the international Mine Ban Treaty in December 2017, with the treaty entering into force for Sri Lanka on 1 June this year. Australia welcomes this important step, which builds on the commitment in Sri Lanka’s National Mine Action Strategy for the country to be ‘mine impact free’ by 2020. Australia’s renewed support for demining in Sri Lanka was announced in Geneva on 8 June during the Intersessional Meeting of States Parties to the Mine Ban Treaty – the first such meeting attended by Sri Lanka as a State Party.” (Daily Island, 9.6.2018)

About 73.4% per cent of children aged one to fourteen experience corporal punishment at home by parents in Sri Lanka, the UNICEF Sri Lanka said. In a statement, it said only 48.7% of three to five-year old’s in Sri Lanka attend pre-school, which when of good quality helps to foster cognitive and language development, social competency and emotional development. It said an estimate 17% of children under five are at risk of poor development due to stunted growth, resulting from poor nutrition and 15.1% of children under five are suffering from wasting (low weight for height) which if untreated can lead to chronic malnutrition. “Children in Sri Lanka are at risk of entering adulthood at a disadvantage to their peers, because they have not benefited from the good nutrition, stimulation and protection – known as ‘eat, play and love’ – that enable a brain to grow to its full capacity by the age of 5 years,” warned UNICEF. The statement said advances in neuroscience have proved that during the early years of life a child’s brain grows at an astounding rate which is never again repeated. “A child’s brain grows and develops to 85 per cent of its full capacity by the age of 5. In these early years’ brain development depends on good nutrition, play and stimulation in the home environment and in preschools and love and protection from harm including violence, abuse and neglect. These can be provided by parents through simple actions, and can make a lasting, positive difference to a child’s development,” UNICEF said. “This means that if we don’t enable every child to reach their full brain capacity by age five, we are robbing them, and Sri Lanka of its most valuable resource – the brains of its next generation. At present, too many children are at risk of entering adulthood at a disadvantage. Thankfully, parents can make all the difference. Through ‘eat, play and love’ they have the power transform their child’s future,” he said. (Sunday Island 17.6.2018) To ensure that every child under 5, irrespective of their wealth or location can benefit from at least one year of quality pre-school, giving them the best possible chance to succeed in school and life, UNICEF has launched an online petition at www.unicef.lk/eatplaylove, open to all that will be presented to decision makers in the future. We urge all to sign. (Sunday Island 17.6.2018)

Inflation for May rose to 2.1%, up from 1.6% in April, the Census and Statics Department revealed. Inflation reported three consecutive months of decline below 3.0%, starting from March 2018. Contributions to inflation in May 2018 from the food group and non-food group are -0.02% and 2.05% respectively, while the contributions of these two groups to the inflation in May 2017 were 4.6% and 2.5% respectively, resulting in headline inflation of 7.1%. When compared to month-on-month changes, NCPI in May 2018 has increased to 124.3 from the 122.9 reported in April 2018. This shows an increase of 1.4 index points that is 1.1% points in May 2018 as compared to April 2018. This month-on-month change was contributed to by increases of the expenditure value of food items by 0.55% and non-food items by 0.61% respectively. The increases in the expenditure value of food items were reported for vegetables, fresh fish, big onions, limes, potatoes, chicken, eggs, dried fish, green chilies, ginger, infant milk powder and milk powder. However, decreases in the expenditure value of food items were reported for coconuts, banana, papaw, mangoes, garlic, rice and gram. The increases in the expenditure value of non-food items in May 2018 compared to the previous month was due to the expenditure value increases in the groups of ‘Transport’, ‘Housing, Water, Electricity, Gas and Other Fuels’, ‘Health’, ‘Miscellaneous Goods and Services’, ‘Recreation and Culture’, ‘Furnishings, Household Equipment and Routing Household Maintenance’ and ‘Clothing and Footwear’. In the ‘Transport’ group expenditure value increase was mainly due to an increase in the prices of fuel (petrol and diesel) with effect from 11 May 2018 and in the ‘Housing, Water, Electricity, Gas and Other Fuels’ group expenditure value increase was mainly due to an increase in the prices of kerosene oil and LP Gas with effect from 11 May 2018 and 28 April 2018 respectively. However, a decrease in expenditure value was reported for the group of ‘Alcoholic beverages, Tobacco and Narcotics’ compared to the preceding month. Meanwhile, the expenditure value of the ‘Communication’, ‘Education’ and ‘Restaurants and Hotels’ groups remained unchanged during the month. (Daily Financial Times, 22.6.2018)

The Government spent about Rs 450 billion annually to maintain public institutions, Leader of the House and Minister Lakshman Kiriella told Parliament .He said Janawasama and Elkaduwa Plantations were being operated by the Government incurring heavy losses. He said the Government had come up with 250 project proposals to be carried out in non-utilized state estate lands which were poorly maintained for many years with the aim to turn them around. He stressed that no land coming under the Knuckles forest reserve would be given to the private sector.   Kiriella observed that those project proposals were made by five consultants on the guidance of Minister Kabir Hashim. He vehemently denied charges that those lands were given to Minister Hashim and his close associates.  He pointed out that the EPF of estate workers had not been paid for 20 years and when the Government assumed work in 2015, Rs 1,800 million in EFP arrears needed to be settled. He said the Government spent about Rs 1,500 million annually to maintain the state-owned plantations.     Minister Kiriella also observed that it was during former President Chandrika Kumaratunga’s period (in 1996) that 500,000 acres from state owned estate lands were given to nine private companies.  He made the observation as a reply to Joint Opposition MP Bandula Gunawardena who pointed out that the residents in the area and environmentalists had been objecting to the moves to give lands adjacent to Knuckles Mountain Range to the private sector.  (Daily Island, 22.6.2018)

Fictional characters originally ‘described’ by famous English children’s writer Enid Blyton have given their names to six new species of minute  goblin spiders discovered in the diminishing forests of Sri Lanka. According to the website phys.org, the goblins Bom, Snooky and Tumpy and the brownies Chippy, Snippy and Tiggy made their way from the pages of: “The Goblins Looking-Glass” (1947), “Billy’s Little Boats” (1971) and “The Firework Goblins” (1971) to the scientific literature in a quest to shed light on the remarkable biodiversity of the island country of Sri Lanka, Indian Ocean. As a result of their own adventure, which included sifting through the leaf litter of the local forests, scientists Prof. Suresh P. Benjamin and Sasanka Ranasinghe of the National Institute of Fundamental Studies, Sri Lanka, described a total of nine goblin spider species in six genera as new to science. Two of these genera are reported for the very first time from outside Australia. Their paper is published in the open access journal Evolutionary Systematics. With a total of 45 species in 13 genera, the goblin spider fauna in Sri Lanka—a country taking up merely 65,610 km2—is already remarkably abundant. Moreover, apart from their diversity, these spiders amaze with their extreme endemism. While some of the six-eyed goblins can only be found at a few sites, other species can be seen nowhere outside a single forest patch.  “Being short-range endemics with very restricted distributions, these species may prove to be very important when it comes to monitoring the effects of climate change and other threats for the forest habitats in Sri Lanka,” explain the researchers. In European folklore, goblins and brownies are known as closely related small and often mischievous fairy-like creatures, which live in human homes and even do chores while the family is asleep, since they avoid being seen. In exchange, they expect from their ‘hosts’ to leave food for them. The newly discovered goblin spider species Xestaspis kandy in its natural habitat. Credit: Suresh P. Benjamin (Times online, 26.6.2018)

Sri Lanka’s tea output rose 11.04% in May from a year earlier, aided by good agro-climatic conditions and lower production in the previous month, the State-run Tea Board said. Production in the first five months of the year rose 4.76% from the same period last year. Tea output fell 15.3% in April from a year earlier, with industry officials attributing the decline to a high base effect and more public holidays this year. “The May production is high due to several reasons, one is that the production in May is generally high and also this year we had good agro-climatic conditions and also the April production was very low,” Sri Lanka Tea Board Director-General S.A. Siriwardena told Reuters.Tea is Sri Lanka’s top agricultural export and one of the main foreign currency earners for the $87 billion economy. Earnings from tea for the first four months totalled $ 478 million, up from $ 458.2 million 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 in 2018 if the weather holds, but a ban on cost-effective weed killers, disruption to 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, the poor application of fertilisers, a Government ban on pesticides and restricted labour.(Daily Financial Times, 26.6.2018)

Megapolis and Western Development Minister Patali Champika Ranawaka yesterday said that the Japanese International Cooperation Agency (JICA) will be loaning out $ 1.7 billion to fund the proposed light rail transport (LRT) project from Malabe IT Park to Pettah. The Minister was speaking at his Ministry after officially being presented with the feasibility study report of the project by JICA Sri Lanka Chief Representative Fusato Tanaka.“We are grateful to the Japanese Government for giving us a loan of $ 1.7 billion to initiate this project. This will be the next best experience in the transport sector since the introduction of the railway service to the country in 1860,” said Ranawaka. He revealed that plans are being made to establish three more similar LRT systems parallel to this project in the form of a public-private partnership (PPP), and that it would commence within the first half of next year.
The Minister further clarified that this project would not worsen the country’s debt situation. “For a project to be successful, a proper feasibility analysis, environmental analysis, societal analysis and, especially, a financial analysis are crucial. Due to improper financial comprehension and analysis of projects we did in the past, the country got caught in a debt trap,” Ranawaka asserted.
He further said that the feasibility study clarifies that this project is not one that will add to the debt of the country, but one that will uplift the local economy. On a different note, the Minister and JICA Chief also launched the official website of the project.
Acquiring of land related to the commencement of the project has already begun. The strategy is to conclude the comprehensive plan within 2019, begin construction during 2020, and enable public access by 2024. The project will cover a distance of 21 km with a total travel time from Malabe to Pettah of around 40 minutes. (Daily Financial Times, 30.6.2018)