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Saturday March 2nd, 2024

Sri Lanka to bar foreigners from construction, IT deals to boost locals in Covid-19 crisis: Minister

ECONOMYNEXT – Sri Lanka plans to stop foreign firms from competing state construction projects and supplies to government agencies including information technology in a bid to save foreign exchange and give income to local businessmen and create jobs, Information Minister Bandula Gunewardene said.

“For the first time in the history of Sri Lanka, there will be procurement process with 100 percent local reliance and without importing,” Minister Gunewardene said.

“In the past, floodgates were opened (wathkada kaduwa wagay), the door was opened for imports. Even for furniture it was done.

“After the Covid-19 pandemic, many small businesses have fallen. Software is imported. Now software and hardware companies will supply.”

“A decision was taken to give all contracts to local companies if they can supply.”

He said it will apply to government departments, statutory bodies and provincial councils.

Gunewardene said existing import controls had helped create a trade surplus in Sri Lanka for the first time since 1977.

The cabinet of ministers approved a proposal by Finance Minister, Mahinda Rajapaksa, to limit contract for software, hardware, furniture supply, and construction would be given to companies with a domestic ownership of over 51 percent.

Office furniture and equipment should have a 51 percent domestic value addition.

All software should be procured from local firms, and if it is not possible, approval has to be received from the Information Communications Technology Agency and Treasury.

Hardware supplies, for which specifications have to be developed by the ICTA, will get a 30 percent preference if domestic value addition in 25 percent or more.

All contracts for housing, roads, irrigation, water supply and drainage should be given to local contractors. Foreign subcontracting should be less than 10 percent.

It is not clear whether the rules would apply to foreign-funded projects.

Some foreign-funded projects require competitive bidding among contractors of the funding country while others require open competitive tenders to keep the price low and stop rent seeking. (Colombo/July15/2020-sb)

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Sri Lanka eyes SOE law by May 2024 for better governance

ECONOMYNEXT – Sri Lanka is planning to pass a Public Commercial Business (PCB) Act improve governance of state-owned enterprise by May 2024 as part of an anti-corruption efforts following an International Monetary Fund assessment.

Sri Lanka’s state enterprises have been used by politicians to give ‘jobs of the boys’, appropriate vehicles for personal use, fill board of directors and key positions with henchmen and relatives, according to critics.

Meanwhile macro-economists working for the state also used them to give off-budget subsides or made energy utilities in particular borrow through supplier’s credits and state banks after forex shortages are triggered through inflationary rate cuts.

The government has taken billons of dollars of loans given to Ceylon Petroleum Corporation from state banks.

There have also been high profile procurement scandals connected to SOEs.

An SOE Reform Policy was approved by Sri Lanka’s cabinet of ministers in May 2023.

The Public Commercial Business (PCB) Act has now been drafted.

A holding company to own the SOEs will be incorporated and an Advisory Committee and Board of Directors will be appointed after the PCB law is approved, the statement said. (Colombo/Mar01/2024)

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Sri Lanka rupee closes at 308.80/90 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 308.80/90 to the US dollar Friday, from 309.50/70 on Thursday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.02.2026 closed at 10.65/75 percent up from 10.50/70 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent from 11.90/12.10 percent.

A bond maturing on 01.07.2028 closed at 12.15/35 percent down from 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent up from 12.30/45 percent.

A bond maturing on 15.05.2030 closed at 12.30/45 percent down from 12.35/50 percent.

A bond maturing on 01.07.2032 closed at 12.50/13.00 percent from 12.55/13.00 percent. (Colombo/Mar1/2024)

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Sri Lanka stocks close up 0.37-pct, Expo to de-list

ECONOMYNEXT – The Colombo Stock Exchange closed up 0.37 percent on Friday, and SG Holdings, the parent company of Expolanka Holdings Plc, said it was taking the company private.

Expolanka is the largest listed company on the Colombo Stock Exchange.

“Expolanka Holdings PLC has, at the Board Meeting held on 1st March 2024, considered a request from its principal shareholder and resolved to initiate the de-listing of the Company’s shares from the Official List of the Colombo Stock Exchange subject to obtaining necessary shareholder approval and regulatory approvals,” the company said in a stock exchange filing.

As per arrangements with SG Holdings Global Pte Ltd, the Company’s majority shareholder, it will purchase its shares from shareholders who may wish to divest their shareholding in the Company at a purchase price of Rs 185.00 per share. The share closed up at 150.50.

The broader All Share Index closed up 0.37 percent, or 39.47 points, at 10,691; while the S&P SL20 Index closed down 0.64 percent, or 19.59 points, at 3,037.

Turnover stayed above the 1 billion mark for the sixth consecutive day, registering 1.4 billion.

Crossings in Melstarcorp Plc (135mn) up at 89.50, Hatton National Bank Plc (64mn) up at 158.00, Hemas Holdings Plc (53mn) up at 75.00 and Central Finance Company Plc (26mn) up at 103.50, added significantly to the day’s turnover.

“The upward trend is continuing, with more retail buying also coming in, the number of trades was more than 10,000 today,” a market participant said. “Investors are looking for undervalued stocks and buying in quantities.” (Colombo/Mar1/2024).

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