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Sunday February 25th, 2024

Sri Lanka hotels, software firms with German partners to face human rights law

CONSUMER CONCERNS: German consumers are increasingly concerned over human rights forcing retailers, brands and the government to take action.

ECONOMYNEXT – Sri Lanka’s exporters of including software and hotels who provide services to companies in Germany as well as food exporters and manufacturing companies will face human rights rules under a supply chain law which will come into effect in January 2023, officials said.

“The law does not distinguish between types of companies,” Torsten Safarik, President of the Federal Office for Economic Affairs and Export Control (BAFA) which will enforce the German Supply Chain Due Diligence Act (SCDDA) said.

“Tourism companies and all companies will have to comply.”

BAFA is now setting up a separate office which will be staffed with over 140 officers to enforce the law.

Related Link: Guidelines for Risk Analysis (In German)

Related Link: English BAFA website

German companies with over 3,000 employees will come under the law first. The threshold will be lowered later.

Companies in Germany will be required to ensure that their suppliers and partners in Sri Lanka comply with human rights, labour laws and environment or face penalties.

Some Sri Lanka manufactured exporters, which have links with global and German brands already comply with some of the principles enshrined in the law.

However many more are not aware of the potential impact of the law.

“We have many members who are exporting to Germany,” Shiham Marikar Chief Executive of Sri Lanka’s National Chamber of Exporters said.

“But they do not know anything about it. We have to get the exporters prepared. Our next step is to get the exporters do a survey and engage with the organization in Germany to get them prepared.

“As a Chamber we are also looking at giving a certificate to companies that comply with the law.”

Former Commissioner of Human Rights of the German government now Managing Director Löning Responsible Business and Human Rights said German companies will start conducting risk assessments on suppliers to check compliance.

Each company will have to audit and have knowledge of their supply chain.

Related

Sri Lanka to face human rights rules on exports to Germany from Jan 23

German importers and business partners may be forced to drop companies in Sri Lanka that do not treat workers well or do not take precautions to minimize their impact on the environment.

However it is also an opportunity for companies that comply to maintain or expand their business, Löning said.

One of the triggers for the law was the collapse of Rana Plaza in Bangladesh which left over 1,000 people dead and consumers started asking question from apparel brands in particular.

After the disaster many global brands started their own standard which required supplies to audit and show compliance.

“Each company that conforms to OECD guiding principles will be well prepared for the supply chain,” Safarik said.

Tim Richter from the Helpdesk on Business & Human Rights, Agency for Business & Economic Development (support service of the Federal Government) which is advising German companies said more than 2,000 companies have consulted them on the upcoming law.

In Sri Lanka apparel companies and also some food exporters, who already comply with their brand partners’ standards had already made progress, but companies that do not comply may face termination of their business relationships with German buyers.

An European Union wide law is also being drawn up, which will come into effect later. (Colombo/Aug25/2022)

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Sri Lanka could get US$500mn from ADB in 2024

ECONOMYNEXT – Sri Lanka could receive 500 million US dollars in support from the Asian Development Bank in 2024 based on the progress of policy reforms, Country Director of the Manila-based lender, Takafumi Kadono said.

The ADB expect to go to its Board around March or April with a 100 million US dollar power sector loan subject to the cabinet of ministers of approving a revised electricity reform bill.

A 100 million dollar loan to support SMEs could also be approved in the early part of the year. Sri Lanka is setting up a credit guarantee agency to support credit for small firms.

A 200 million dollar credit for financial sector was also slated for the year. The ADB gave the first tranche of the financial sector policy loan late last year.

A $100mn for the water sector could also be approved later in the year.

Sri Lanka could get around 200 to 300 million US dollars a year at the lowest rate, or concessional ordinary capital resources (COL) rate of 2 percent.

The balance of would come at the ordinary capital resource rate linked to SOFR.

The ADB has also started work on a ‘Country Partnership Strategy’ for Sri Lanka covering the 2024-2028 period, Kadodo said. (Colombo/Feb25/2024)

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Sri Lanka’s multi-aligned foreign policy based on friendship: Min

ECONOMYNEXT – Sri Lanka’s multi-aligned foreign policy is based on friendship to all and enmity to none, its Minister of Foreign Affairs has said.

“Non-alignment means not becoming a bystander. Non-alignment means you are not forced or coerced into a camp to take sovereign decisions… you make your own choices. Whether it is commercial, security, regional or otherwise,” M U M Ali Sabry said on X (twitter).

“I have repeatedly stressed that sovereignty is the right to have your own opinion on what’s right and wrong, and to stand by your principles. Our multi-aligned foreign policy is based on friendship to all and enmity to none,” Sabry was quoting from his speech at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI) Foreign Policy Forum, on the theme ‘Reassessing Non-Alignment in a Polarised World’.

Sri Lanka is one of the founding members of the Non-Aligned Movement.

The strategically located island has been increasingly walking a fine line between opposing global factions as it seeks to come out of a financial crisis. (Colombo/Feb24/2024)

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Sri Lanka’s Commercial Bank Dec net down on tax provisions

ECONOMYNEXT – Sri Lanka’s Commercial Bank of Ceylon reported profits of 6.9 billion rupees from the December 2023 quarter down 21 percent, despite an improvement in net interest income and lower provisions, amid a change in tax provisions.

Pre-tax profits were 8.89 billion rupees up from 2.4 billion rupees. There was a 6.4 billion tax reversal last year compared to a 1.7 billion rupee tax charge this year.

Commercial Bank reported earnings of 5.26 rupees for the quarter. For the year to December 2023 earnings were 16.07 rupees per share on total profits of 21.1 billion rupees, down 11.3 percent.

Net fee and commission income was down 1.2 percent to 6.1 billion rupees.

Net interest income went up 16.8 percent to 25.5 billion rupees, with interest income rising marginally by 1.3 percent to 73.0 billion rupees and interest expense falling 5.45 percent to 47.5 billion rupees.

Loans and advances to customers grew 4.06 percent to 1.17 billion rupees in the year to December. Debt and other financial instruments fell 10.5 percent to 649 billion rupees.

Financial assets measured and fair value through other comprehensive income was at 287 billion rupees, up from 117 billion rupees.

Impairment charges were 13.1 billion rupees, down from 19.6 billion rupees last year.

Gross assets were up 6.45 percent to 2.36 billion rupees. Net assets were up 5.51 percent to 214 billion rupees. (Colombo/Feb24/2024)

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