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Sri Lanka planters demand justice after Minister storms estate, drunken gang takes staff hostage

ECONOMYNEXT – Managers of Sri Lanka’s private plantations have called for justice after a cabinet minister stormed an estate demanding the re-instatement of suspended workers who had assaulted people involved in crop diversification.

Plantations Infrastructure Minister Jeevan Thondaman’s entry to an estate and threats against Kelani Valley Plantations staff were broadcast over national TV and social media.

Minister Thondaman and a drunken gang had stormed Pedro Estate of Kelani Valley Plantations where the firm’s Chief Executive had gone after a meeting at the Nuwara Eliya Assistant Comissioner of Labour, the Planters’ Association said in a statement.

Sri Lanka’s Television stations had also broadcast visuals of Minister Thondaman shouting and making staff at a factory stop work and leave.

Previously, a gang had surrounded the Labour Office where a meeting was taking place regarding the suspended workers, the PA said.

The workers had been suspended after they assaulted the driver of a backhoe machine which was clearing low yielding tea for a test planting of coffee to check whether higher yields would be available after crop diversification. Sri Lanka’s plantations are also facing labour shortages with young people leaving the sector in droves.

The firm had ledged a police complaint as assault was a criminal action. The Ceylon Workers Congress had then called a strike, leading to the discussion at the Labour Office.

The planters said a “large, intoxicated and unruly gang” was sent obstruct KVPL management from leaving the area after the meeting.

They had then left to Pedro estate to eat lunch packets as one the management staff had high blood pressure and gastritis according to company officials.

“Subsequently, the Minister and his associates who had learned that the CEO and his team were stopping by Pedro Estate, forcibly trespassed into the estate, blockaded it, and illegally detained them against their will for a harrowing four hours within the factory premises,” the Planter’s Association said in the statement.

After being held hostage for four hours the management had agreed to the Minister’s demands to re-instate the workers and took the CEO to hospital.

“They took the decision to re-instate the workers because the CEO could have died while being held hostage,” a company official said.

The manager was then hospitalized and released after three days.

“In the face of imminent danger and the arrival of a team from the Police Special Task Force (STF), KVPL management reluctantly agreed to Minister Thondaman’s demands to reinstate suspended workers to avoid potential violence, loss of life and irreparable damage to property,” the PA said.

“Such actions, taken under duress, underscore the severe challenges faced by the plantation sector and urge decisive action to uphold the rule of law,” the PA said.

“This incident underscores the paramount importance of upholding law and order within the plantation industry. The PA firmly condemns any actions that undermine the rule of law or jeopardize the safety of individuals.

“The PA urges the Sri Lankan Government and the Sri Lankan Police to conduct a comprehensive investigation into this incident. It is imperative that those responsible for such flagrant breaches of law and order are brought to justice swiftly and decisively.

“Additionally, immediate measures must be implemented to ensure the safety and security of all industry stakeholders.

“Confidence in the plantation sector cannot be restored without demonstrable actions to safeguard the well-being of workers, management, and all associated personnel.”

Sri Lanka’s Ministers and private plantations are also locked in a battle after a 70 percent pay hike was ordered by a gazette. The Plantations have gone to court over the order.

Several Ministers have threatened to re-expropriated the plantations, which were originally expropriated from British planters and domestic companies by the elected ruling class, in one of a series of actions that led to the Sri Lanka being a lagging nation in Asia.

Minister Thondaman could not be reached for a comment despite repeated attempts at the time of publication.

He has since responded to our story and key comments are reproduced below. He denied that anyone was held hostage and said the strike was unplanned event.

“The strike was unplanned and organic with 298 people striking,” he said.

“It was an unplanned strike and as per video evidence there were no drunk people. The video shows most of the protestors were women.”

The company had suspended the workers involved in blocking coffee cultivation but had delayed giving a hearing, he said.

“There were three people suspended and it is the right of the companies to suspend workers. However, they should give a hearing at the earliest possible time. Out of the three people, only one was from my trade union, the other two were not.

“We had a meeting with the Labor Commissioner and it proved that they acted unfairly according to Labor Law and ILO conventions.

He explained the original incident regarding blocking of coffee cultivation as follows:

The backhoe machine was clearing tea land to plant coffee.

“However, we cannot allow that. People are sentimentally attached to tea and they plant coffee to avoid giving the 1700 wage.”

Minister Thondaman denied intimidation or taking anyone hostage and strongly denied putting anyone in danger and said an offer was even made to bring medicine.

He explained the situation as follows:

“When the 300 workers – who have 300 families – were standing outside the police station, the CEO brought all the managers and they were brought into the police station room.

“We know that the tea plantation owners are some of the richest people in the country, but we can’t have one law for them and another for the workers.

“The managers ask the workers to work removing their pottus and earrings but they should be allowed to keep the pottus.

“With regards to the incident with the CEO, I did not hold anyone hostage. I told them you are free to leave at any time and purchase medication. I even asked if I can get medication from his driver. He said, no I’m fine.

“I also didn’t storm the place as was said. I went and even asked people if they want tea.
You will see video evidence of me talking very politely to the CEO.

“Now they have gone behind our back and filed a complaint to the police. I can afford to take this matter to court but the workers can’t.” (Colombo/June11/2024 – Update II – this story has been revised to include Minister Thondman’s response)

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Sri Lanka central bank appoints two Deputy Governors

ECONOMYNEXT – Sri Lanka’s central bank said Assistant Governors A A M Thassim and J P R Karunaratne were promoted to the post of Deputy Governor.

The full statement is reproduced below:


In terms of the provisions in the Central Bank of Sri Lanka Act, No. 16 of 2023, Hon. Minister of Finance, as recommended by the Governing Board, has appointed Mr. A A M Thassim, Assistant Governor and Secretary to the Governing Board, and Mr. J P R Karunaratne, Assistant Governor, as Deputy Governors of the Central Bank of Sri Lanka with effect from 20.06.2024 and 24.06.2024, respectively.

Mr. A A M Thassim

Mr. A.A.M. Thassim has over 31 years of service at Central Bank of Sri Lanka (CBSL) in different capacities in the areas of Supervision and Regulation of Banking Institutions, International Operations, Communication, Payments and Settlements, Employees Provident Fund, Finance, Risk Management, Deposit Insurance, Security Services and Information Technology.

He has served as the Director of Bank Supervision (DBS), Director of International Operation (DIO) and Director of Communications (DCM) and has contributed towards strengthening the legal framework, governance, implementation the Basel 3 international guidelines for capital and liquidity and adoption of International Financial Reporting Standards (IFRS) 9 to the banking sector, thereby strengthening the resilience of the Financial Sector.

Further, as the DIO, Mr. Thassim was responsible for the investments and management of foreign reserves of the country and exchange rate management. Mr. Thassim has also gained experience and knowledge in the field of payment systems and was involved in the implementation of the Cheque Imaging and Truncation System. In addition, he has also served on several high-level internal committees including in the areas of monetary policy, financial system stability and international reserves.

Prior to the appointment as the Deputy Governor, Mr. Thassim held the position of Assistant Governor and was in charge of several key departments including the Bank Supervision Department. He also served as the Secretary to the Governing Board, Monetary Policy Board, Audit Committee, Board Risk Oversight Committee, Ethics Committee and Financial Sector Crisis Management Committee.

At present, Mr. Thassim is a board member of the Sri Lanka Export Credit Insurance Corporation and the Vice Chairman of the Institute of Bankers of Sri Lanka (IBSL). Further, he has also served as a board member of the Credit Information Bureau of Sri Lanka and LankaClear (Pvt) Ltd.,

Mr. Thassim is an Associate member of the Chartered Institute of Management Accountants (ACMA) United Kingdom and possesses a Masters in Business Administration (MBA) from the Postgraduate Institute of Management (PIM), University of Sri Jayewardenepura (USJ). He has also completed a programme on Gold Reserves Management from Hass School of Business, University of California, Berkeley, USA.

He is also an Alumni of Harvard University, USA having successfully completed the executive programme on Leaders in Development conducted by the John F. Kennedy School of Government.

Mr. J P R Karunaratne

Mr. J P R Karunaratne has over 33 years of service at the Central Bank of Sri Lanka in different capacities in the areas of supervision and regulation of Banks and Non-Bank financial institutions, Currency management, public debt, Secretariat, Finance, policy review and monitoring. He has served as the Director of Supervision of Non-Bank Financial Institutions (DSNBFI) and the Superintendent of Currency (SC) and has contributed towards strengthening the legal and regulatory framework in the Non-Bank Financial Institutions sector and has played a prominent role in the consolidation of the Non-Bank Financial Institutions sector. Prior to the appointment as a Deputy Governor, Mr. J P R Karunaratne held the position of Assistant Governor and was in-charge of the Department of Supervision of Non-Bank Financial Institutions, Finance Department and the Facilities Management Department.

As an Assistant Governor Mr. Karunaratne has previously overseen several other departments namely, Macroprudential Surveillance, Resolution and Enforcement, Foreign Exchange, Currency, Regional Development, Legal and Compliance, Risk Management, Center for Banking Studies, Security Services and Staff Services Management.

He has also served as the Secretary to the Monetary Board, Secretary to the Board Risk Oversight Committee, Monetary Board Advisory Audit Committee and the Ethics Committee. Further, He was on release to the Ministry of Defence, where he served as a Financial Advisor. He was also appointed as the Chief Operating Officer for the Secretariat of Committee of Chartered Accountants appointed by the Supreme Court in 2009.

He has served as the Chairman of the Sri Lanka Accounting and Auditing Standards Monitoring Board and has been a Council Member of the Certified Management Accountants (CMA) of Sri Lanka. Mr. Karunaratne was awarded the CMA Sri Lanka Business Excellence Award at the CMA Sri Lanka National Management Accounting Conference 2023 in recognition of his service to the profession. He has also received “Long Service Award” of the IBSL in 2019 in recognition of his long career and contribution as a resource person at IBSL.

He was the Project Team Leader of the South East Asian Central Banks (SEACEN) Malaysia, research project on “Implementation of Basel III Challenges and Opportunities in SEACEN Countries” and SEACEN published the research in 2013. He serves as a member of several internal and external committees at present.

Mr. Karunaratne holds a Master of Commerce Degree in Finance from the University of New South Wales, Australia and a Postgraduate Diploma in Applied Statistics and a Bachelor of Science (Physical Science) Degree with a First class from the University of Colombo. He is a Fellow Member of the Chartered Institute of Management Accountants (CIMA), UK and a Chartered Global Management Accountant (CGMA). Further, he is an Associate Member of the CMA Sri Lanka.

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Sri Lanka opposition questions claims that IMF housing tax is only for kulaks

ECONOMYNEXT – Sri Lanka’s opposition has questioned claims made by government spokesmen that a tax on housing proposed in an International Monetary Fund deal is only limited to rich people but if as promised by President one house is exempt, it is welcome, legislator Harsha de Silva said.

Sri Lanka President Ranil Wickremesinghe made a promise in parliament that the first house of a citizen will be excluded from the property tax.

Related Sri Lanka to exempt one house from imputed rent wealth tax: President

But opposition legislator Harsha de Silva pointed out that the IMF program documents clearly says taxes will be levied on owner occupied houses on ‘imputed taxes’, not second houses.

Under current inland revenue laws, actual rent income from a second house is already captured as part of taxable income.

The IMF document mentions a threshold value from which taxes will be exempt but not that a whole owner-occupied primary residence will be exempt.

“The tax is imposed on the income of individuals (rather than real property itself) and thus raises central government revenue in accordance with the constitution,” IMF staff said in their report.

“A similar tax was previously included in the Inland Revenue Act. No. 10 of 2006.

“Under this regime, primary residences were exempt and the assessed values for rating purposes were used to determine the base.

“Given the broad exemption and the use of outdated and downward biased annual values, the tax generated hardly any revenue.”

Meanwhile Sri Lanka has promised to impose the housing tax from April 01, 2025.

“…[W]e will introduce an imputed rental income tax on owner-occupied and vacant residential properties before the beginning of the tax year on April 1st, 2025,” the memorandum of economic policies agreed with the IMF said.

“An exemption threshold and a graduated tax rate schedule would make this tax highly progressive.

“The full revenue yield from this tax is estimated at 0.4 percent and would materialize in 2026 (with a partial yield of 0.15 percent in 2025).

“This yield would still fall short by 1 percent of GDP relative to the expected yield of 1.2 percent of GDP from the property tax envisaged for 2025 onwards.”

Presidential Undertaking

“Whatever the President said the IMF agreement says owner occupied house,” De Silva told in parliament.

“It is not the second house that is mentioned in the agreement.

“But there is one thing. I am happy as Samagi Jana Balawegaya, that we have been able to save the middle class in society from a massive tax that was to be imposed.”

In Sri Lanka there is a belief that the most productive citizens are fair game for excessive or expropriationary taxation, just like kulaks were targeted in the Soviet Union for actual expropriation, critics say.

Wealth taxes have had disastrous effects on some US cities like Baltimore, leading to falling populations and dilapidated houses.

Sri Lanka is currently facing a brain drain due to high income tax after on top of depreciation from severe monetary debasement from a flexible exchange rate, which is neither a hard peg nor a clean float.

Sri Lanka has imposed a wide range of taxes on the people to maintain a bloated state, after inflationists engaged in extreme macro-economic policy (tax and rate cuts) glorified in Saltwater-Cambridge doctrine to boost growth, throwing classical economic principles and monetary stability to the winds and driving the country into external default.

The IMF itself gave technical assistance the central bank to calculate potential output inviting the agency to cut rates to close the perceived econometric ‘output gap’.

In the run up to the default, rate cuts triggered multiple external crises, leading to output shocks as stabilization programs were implemented.

Macro-economic Policy

Macro-economic policy as known now was devised by Cambridge academic J M Keynes in the wake of the Great Depression triggered by the Federal Reserve after it invented open market operations and policy rates in the 1920s and also popularized by Harvard academic Alvin Hansen among others.

Macro-economic policy started to de-stabilize countries in peacetime in the interwar years and after World War II it led to the collapse of the Bretton Woods system.

The Great Depression was also a peacetime collapse of what was later known as the roaring 20s’ monetary bubble.

“They have blithely ignored the warnings of economists,” classical economist Ludwig von Mises wrote of European nations which got into trouble from rate cuts and Keynesian stimulus, which brought currency depreciation and protectionism in its wake from the 1930s.

“They have erected trade barriers, they have fostered credit expansion and an easy money policy, they have taken recourse to price control, to minimum wage rates, and to subsidies.

“They have transformed taxation into confiscation and expropriation; they have proclaimed heedless spending as the best method to increase wealth and welfare.

“But when the inevitable consequences of such policies, long before predicted by the economists, became more and more obvious, public opinion did not place the blame on these cherished policies…”


In Sri Lanka however there is some understanding of the role played by macro-economists in the most recent crisis.

There are rumblings of unhappiness about ‘central bank independence’ given to an agency to create 5 to 7 percent inflation and currency debasement under a flexible exchange rate and its constitutional status relating to parliamentary control of public finances.

Sri Lanka’s central bank’s current flexible inflation targeting (inflation targeting without a floating rate) regime as well as its 1980s money supply targeting without floating rate has busted the national currency for decades and made it impossible to run budgets, made it difficult for people build houses which are now to be taxed, and also for millions to live and work in the country of their birth.

Fiscal metrics deteriorate each time rate cuts drive the country into currency crises and new taxes are brought in stabilization programs, ousting reformist governments and leading to policy reversals.

Sri Lanka’s citizens have suffered for decades from the privilege given to a few macroeconomists to print money to cut rates with inflationary open market operations and trigger forex shortages.

Related How Sri Lanka’s elections are decided by macro-economists and the IMF: Bellwether

Critics have pointed out that since 1954 in particular, central bank rates cuts which drive the country into external crises and the stabilization programs that follow, have been the main determinant of elections in the country and election of fringe political parties. (Colombo/June13/2024)

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India supports Sri Lanka Coast Guard to boost maritime security

ECONOMYNEXT – India has given 1.2 million US dollars’ worth spare parts to Sri Lanka’s Coast Guard to be used in a vessel also gifted to the Indian Ocean Island on an earlier occasion, the Indian High Commission in Colombo said.

“Handing over of the large consignment of spares symbolizes India’s commitment to support capability building towards addressing the shared challenges of Maritime Security in the region,” the Indian High Commission said

The spare parts were brought to Sri Lanka on the Indian Coast Guard Ship Sachet, an offshore patrol vessel that was on a two-day visit to the island.

The spares were formally handed over to the Sri Lanka Coast Guard Ship Suraksha which was gifted to Sri Lanka in October 2017 by India.

India has gifted spare parts for the ship in June 2021 and April 2022 and also provided assistance in refilling of Halon cylinders in January 2024. (Colombo/June23/2024)

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