An Echelon Media Company
Monday February 6th, 2023

Sri Lanka President needles opposition for dumping R Premadasa for Rajapaksa

ANTI-PRIVATIZATION: Here is a follower for you, President Wickremesinghe says

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has called out the main opposition Samagi Jana Balawegaya for rejecting the privatization strategy of R Premadasa in favour of Rajapaksa policies.

He said the leader of the opposition Sajith Premadasa and Lakshman Kiriella had said to privatize loss making state enterprises but not to sell profitable ones.

“Privatization or peopleisation was started under President Ranasinghe Premadasa,” Wickremesinghe said.

Under ‘peopli-sation’ up to 10 percent of the company shares were given free to workers of the organization, on a formula based including on their service.

“I also started it as industries minister,” Wickremesinghe said. “The first company that was privatized was United Motors. That was profitable. Second Ceylon Oxygen. A profitable company. Leather Corporation – profitable. Tyre Corporation – profitable. Lanka Milk Foods – profitable.

“Lanka Distilleries – profitable. Then we did plantations. Some were loss making.

“In 77 J R Jayewardene opened the economy. President Premadasa took the next step in 1989.

“That was to remove some of these from government control. Some areas were given to the private sector.

“We took China as an example. The program started by Deng Xiaoping. We took it forward. So we thought of doing the profitable ones.

Usually a 60 percent stake was sold to a strategic investors and 30 percent, after giving 10 percent to workers was sold to the public in an initial public offer.

The secondary market prices soared above net asset value if investors judged the strategic buyer to be able to add value, giving large profits to workers. Ceylon Oxygen’s 15 rupee share hit 125 rupees.

The strategic stake of Distilleries was sold on the stock market an an all or nothing stake allowing investors to bid. Harry Jayewardene’s Stassen group bought a 10 rupee share for 110 rupees. In the IPO shares were split for 1 rupee to make it accessible for small investors.

The stock market boomed and foreign investors and investment banks set up broking houses while market capitlization went up. Similar strategies have been followed in Vietnam where state banks and other listed firm drove the Ho Chi Minh City stock market.

“Yesterday, Mahinda Rajapaksa, our ex-President said only the loss-making ones should be sold,” President Wickremesinghe said.

“Today the opposition leader is also saying to his support that only loss-making ones should be sold.”

Looking at Rajapaksa and smiling. “Here is a good follower for you.”

Sri Lanka’s elected ruling class use state enterprises are used to get extra vehicles, flout financial regulations, put henchmen as chairman and directors and for procurement fraud, critics say. (Colombo/Nov23/2022)

Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Sri Lanka to address SME tax problems at first opportunity: State Minister

ECONOMYNEXT – Problems faced by Sri Lanka’s small and medium enterprises from recent tax changes will be addressed at the first opportunity, State Minister for Finance Ranjith Siyambalapitiya said.

Business chambers had raised questions about hikes in Value Added Tax, Corporate Income Tax and the Social Security Contribution Levy (SSCL) that’s been imposed.

It should be explored on how to amend the Inland Revenue Act, Siyamabalapitiya said, adding that the future months should be considered as a period where the country is being stabilized.

Both the VAT and SSCL are effectively paid by customers, but the SSCL is a cascading tax that makes running businesses difficult.

In Sri Lanka SMEs make up a large part of the economy, accounting for 80 per cent of all businesses according to according to the island’s National Human Resources and Employment Policy.

(Colombo/ Feb 05/2023)

Continue Reading

Sri Lanka revenues Rs158.7bn in Jan 2023 up 51-pct

ECONOMYNEXT – Sri Lanka’s government revenues were 158.7 billion rupees in January 2023 but expenditure and debt service remained high, Cabinet spokesman Minister Bandula Gunawardana said.

In January 2022 total revenues were Rs104.5 billion according to central bank data.

Sri Lanka’s tax revenues have risen sharply amid an inflationary blow off which had boosted nominal GDP while President Ranil Wickremesinghe has also raised taxes.

Departing from a previous strategy advocated by the IMF expanding the state and not cutting expenses, called revenue based fiscal consolidation, he is attempting to do classical fiscal consolidation with spending restraint.

President Ranil Wickremesinghe has presented a note to cabinet requesting state expenditure to be controlled, Gunawardana told reporters.

State Salaries cost 87.4 billion rupees.

Pensions and income supplements (Samurdhi program) were29.5 billion rupees.

Other expenses were 10.8 billion rupees.

Capital spending was   21 billion rupees.

Debt service was 377.6 billion rupees for January which has to be done with borrowings from Treasury bills, bonds and a central bank provisional advance of 100 billion rupees, Gunawardana said.

Interest costs were not separately given. (Colombo/Feb05/2023)

Continue Reading

Sri Lanka’s Ceylon Tea prices down for second week

ECONOMYNEXT – Sri Lanka’s Ceylon Tea prices fell for the second week at an auction on January 31, with teas from all elevations seeing a decline, data showed.

“In retrospect, the decline in prices would be a price correction owing to the overall product quality and less interest from some key importers due to the arrival of cargo at destinations ahead of schedule,” Forbes and Walker tea brokers said.

The weekly sale average fell from 1475.79 rupees to 1465.40 rupees from a week ago, according to data from Ceylon Tea Brokers.

The tea prices are down for two weeks in a row.

High Growns

The High Grown sale average was down by 20.90 rupees to 1380.23 rupees, Ceylon Tea Brokers said.

High grown BOP and BOPF was down about 100 rupees.

“Ex-Estate offerings which totalled 0.75 M/Kg saw a slight decline in quality over the previous week” Forbes and Walker said.

OP/OPA’s in general were steady to marginally down.

Low Growns

In Low Grown Teas, FBOP 1 was down by 100 rupees and FBOP was down by 50 rupees while PEK was up by 150 rupees.

The Low Growns sale average was down by 8.55 rupees to 1547.93 rupees.

A few select Best BOP1s along with Below Best varieties maintained.

OP1                     Select Best OP1’s were steady, whilst improved/clean Below Best varieties maintained.   Others and poorer sorts were easier.

PEKOE                 Well- made PEK/PEK1s in general were steady, whilst others and poorer sorts were down.

Leafy and Semi Leafy catalogues met with fair demand,” Forbes and Walker brokers said.

“However, the Small Leaf and Premium catalogues continued to decline.

“Shippers to Iran were very selective, whilst shippers to Türkiye and Russia were fairly active.”

This week  2.2 million Kilograms of Low Growns were sold.

Medium Growns

Medium Grown BOP and BOPF fell by around 100 rupees

The Medium Growns sale average was down by 33.40 rupees to 1199.4 rupees.

“Medium CTC teas in the higher price bracket witnessed a similar trend, whilst teas at the lower end were somewhat maintained subject to quality,” Forbes and Walker brokers said.

“Improved activity from the local trade and perhaps South Africa helped to stabilize prices to some extent.”

OP/OPA grades were steady while PEKOE/PEKOE1 were firm, while some gained 50-100 rupees at times.

Well-made FBOP/FBOPF1’s were down by 50-100 rupees per kg and more at times.

(Colombo/Feb 5/2023)

Continue Reading