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Sunday June 16th, 2024

Sri Lanka president invites more Japanese investments as economy stabilises

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe who is on an official visit to Japan has called for bilateral collaboration highlighting emerging opportunities in Sri Lanka that Japanese businesses could leverage as the island nation restores stability.

In a roundtable discussion in Tokyo on Thursday May 26, Wickremesinghe had spoken of Sri Lanka’s commitment to stabilising and liberalising the economy while actively inviting new foreign ventures. At a separate event, he had also called for increased cooperation between Sri Lanka and Japan in the two countries’ respective digital transformation efforts.

The Sri Lankan president, since his appointment in July 2022, has indicated an eagerness to repair damaged relations with Tokyo after his predecessor’s administration unilaterally cancelled a 1.5 billion US dollar Japan-funded light rail transit (project) and a tripartite deal between Japan, Sri Lanka and India to develop the Colombo Port’s East Container Terminal (ECT).

In a meeting with Japanese Prime Minister Fumio Kishida in Tokyo on Thursday May 25, Wickremesinghe had extended an apology for the cancellation of the LRT project and discussed legislation to make sure that large-scale bilateral projects cannot be cancelled without mutual agreement.

Related:

Sri Lanka president apologises to Japan for cancellation of light rail project

 

According to a statement from the president’s office, Thursday’s business rountable on ‘Sri Lanka’s Economic Revival & Opportunities for Japanese Enterprise’  was organised jointly by the Japan External Trade Organisation (JETRO), Japan-Sri Lanka Business Co-Operation and the Embassy of Sri Lanka in Japan.

The statement said Wickremesinghe had outlined his administration’s ongoing efforts to restore stability and open the economy, fostering an inviting climate for foreign investment. He had also discussed various measures and reforms being implemented to create a conducive business environment for potential investors.

The president had emphasised the mutual benefits that can be derived from increased collaboration between the two countries. Sri Lanka’s strategic location and skilled workforce were highlighted as key advantages, providing a gateway for Japanese companies to expand their operations in the region and leverage the country’s emerging economic opportunities.

The president had also attended a separate meeting with the Japan-Sri Lanka Parliamentary Friendship Association, the statement said, as well as a meeting with Japan’s Minister of Digitisation Taro Kono where Wickremesinghe had presented a “comprehensive overview of Sri Lanka’s programme to advance towards a digital economy.” The importance of enhancing cooperation between Japan and Sri Lanka in their respective digital transformation endeavours was discussed, the president’s office said. (Colombo/May27/2023)

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Sri Lanka car import relaxing roadmap given to IMF: State Minister

ECONOMYNEXT – Sri Lanka has submitted a roadmap on relaxing vehicle imports to the International Monetary Fund, State Minister of Finance Ranjith Siymabalapitiya said as the country recovers from the worst currency crises in the history of its central bank.

The import relaxation will allow vehicles for public transport, goods transport, then motor cycles and cars use by private individuals and after that, luxury cars, Minister Siyambalapitiya said.

Luxury cars however attract the highest taxes for each dollar spent on imports.

Economic analysts have characterized vehicle import controls as a ‘cascading policy error’ that follows inflationary rate cuts, which then deprive taxes to the state and triggers more money printing and more forex shortages, requiring even higher corrective interest rates and a contraction of economic activities to save the rupee.

According to the latest IMF report car import controls may have led to revenue losses of 0.7 to 0.9 percent of GDP.

Sri Lanka started controlling imports few years after a central bank was set up in 1950 and also tightened exchange controls progressively, so that macroeconomists using post-1920 spurious monetary doctrines taught at Anglophone universities could print money through various mechanisms to suppress rates.

Sri Lanka is working with the IMF as a guide on many issues and the roadmap was submitted to the agency on June 14, Minister Siyambalapitiya said.

The IMF in an economic report released last week the plan was expected to be submitted by June 15.

Whatever the IMF’s faults, which some wags have called ‘progressive Saltwaterism’, the agency does not advocate import controls as solution to balance of payments problems, despite a Mercantilist fixation with the current account deficit in countries with reserve collecting central banks, analysts say.

Import controls have the same effect as import substation on the balance of payments, which is none, classical economists have pointed out and is now mainly a problem associated with macro economists and economic bureaucrats of so-called basket case countries.

Any pressure on the currency or missed reserves targets in the IMF program has come in the past only if the central bank printed money to suppress rates as credit growth picked up from car imports.

Sri Lanka had 3,000 items under import controls when rates were suppressed with printed money from 2020 to 2022 but eventually ended up with the worst currency crisis triggered by macro economists in the history of the country and eventual external default.

A committee made up of the Department of Trade and Fiscal Policy of the Finance Ministry, the Department of Registration of Motor Vehicles, the Central Bank and two associations representing vehicle imports were appointed to come up with the roadmap, he said. (Colombo/June15/2024)

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Chitrasiri Committee presents draft constitution for Sri Lanka Cricket

ECONOMYNEXT – A draft constitution for Sri Lanka Cricket, the governing body for cricket in the island, prepared by a committee headed by retired Supreme Court judge K T Chitrasiri, was presented to President Ranil Wickremesinghe today (15).

The Sri Lanka team were ignominiously knocked out of the Men’s T20 World Cup tournament this week, sparking renewed criticism of the team and the governing body.

Last November, a cabinet sub-committee was appointed to address challenges faced by Sri Lanka Cricket and provide recommendations after consecutive losses became a hot topic in parliament.

After parliament decided to remove the administrators of the sport, the International Cricket Council (ICC) Board suspended Sri Lanka Cricket’s membership.

Based on the sub-committee’s recommendations in its report, the Cabinet then appointed an expert committee to draft a new constitution for Sri Lanka Cricket.

The committee headed by judge K T Chitrasiri includes President’s Counsel Harsha Amarasekara, Attorney-at-Law Dr Aritha Wickramanayake and Chairman of the Sri Lanka Chamber of Commerce Duminda Hulangamuwa.

Deputy Solicitor General Manohara Jayasinghe, and Shamila Krishanthi, Assistant Draftsman representing the Legal Draftsman’s Department, and Loshini Peiris, Additional Secretary to the President were also on the committee. (Colombo/Jun14/2024)

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Sri Lanka’s Cable Solutions in Rs605mn IPO

ECONOMYNEXT – Sri Lanka’s Cable Solutions Limited will make an initial public offering of ordinary voting shares on the Diri Savi Board of the Colombo Stock Exchange (CSE).

The CSE had approved, in-principle, an application submitted by the company, for the listing of its ordinary voting shares by way of an offer for subscription and an offer for sale.

For subscription, 14,666,600 shares would be offered at 7.50 rupees a share.

For sale, 66,120,000 shares would be offered at 7.50 rupees a share.

The opening of subscription list is July 23. Copies of the prospectus would be made available to trading participants on July 9. (Colombo/Jun15/2024)

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