SRI LANKA NEWS IN BRIEF (FEBRUARY 2018) Compiled by Victor Melder

Lanka’s 2017 apparel performance has matched the recent forecast made by the Minister of Industry and Commerce-even exceeding a little. “We expect that the final total apparel exports for entire 2017 would clearly exceed the exports of 2016, and expect it to be in the range of $ 4.7 billion” forecast the Minister of industry and Commerce Rishad Bathiudeen on January 16. Minister Bathiudeen was addressing the launch event of an Apparel Industry Suppliers Exhibition in Colombo. Apparel export revenue data issue by both Joint Apparel Association Forum (JAAF) and Sri Lanka Apparel Exporters Association (SLAEA) confirmed Minister Bathiudeen’s forecast. According to these latest data, the total Sri Lankan apparel exports for Y2017 was US $ 4.818 Bn (an increase of 3.06% from 2016’s $4.67 Bn). This is the highest annual export revenue to be recorded for Lankan apparels. Only for the month of December 2017, the exports were at $ 452 Mn –a 21% increase in comparison to 2016 December’s $374 Mn. Interestingly, December 2017 monthly exports too were the highest ever exports for any December. 45% of apparel exports in 2017 (at $ 2.163 Bn) went to US while 42% (at $ 2.025 Bn) headed to the EU. Year on Year exports to US showed a 2% increase in 2017 from 2016’s $2.121 Bn. Still, YoY exports to EU surged by a larger 4.13% to $ 2.02 Bn in 2017, from 2016’s $1.944 Bn. It is estimated that two-thirds of Lankan apparel workers are women and therefore this sector is a major industry supporting the development of the country’s female labour force. (Daily Island 6.2.2018)

Sri Lanka’s tourism has taken off to a healthy start in 2018 with January bringing in record arrivals. According to data released by the Sri Lanka Tourism Development Authority (SLTDA) yesterday, tourist arrivals in January amounted to a record 246,972, up by 12.6% from 219,306 in the corresponding month of 2017. In 2016, arrivals in January amounted to 194,208.

India continues to lead arrival figures with 43,643 up 40%. Arrivals from China stand second at 24,819 but were down 22%, whilst arrivals from UK were up 15% to 22,410. German tourists rose by 20% to 14,985 and those from France rose by 14.5% to 12,209.
Tourists from Western Europe increased by 14.9% to 83,324 in January. Travellers from East Asia were down 15% to 41,462.
Eastern Europe tourist arrivals rose 15.1% to 30,550 in January where Russia continues to lead arrival figures with 11,634 up by 12.5%.
Arrivals from the Middle East rose by 25% to 11,200 and South Asia by 32% to 54,815 and Australasia by 23% to 11,011.
The Government is sticking to the 2.5 million tourist arrivals target which was set for last year, as the industry fell short of the arrival target in 2017. 
Tourist arrivals in 2017 hit a record high with the number of foreign visitors rising 3.2% to 2.1 million while revenue also rose by a similar percentage to an all-time peak of $3.63 billion.“With first four months being the season for us, I am pretty confident that we will do well this year. We will comfortably surpass the 2.5 million arrival target set for 2018,” Tourism Development Minister John Amaratunga said. (Daily Financial Times 8.2.2018)

Highlighting the fact that there was a stark difference between the debt calculations by the Central Bank and the Ministry of Finance, Auditor General Gamini Wijesinghe said  that the total debt, foreign and domestic, of Sri Lanka had been Rs. 10.3 trillion by November 30, 2017. The Auditor General made this statement yesterday briefing the media on the current status of the country’s debt. Wijesinghe said the above figure had been furnished by the Central Bank of Sri Lanka and that the amount had been Rs. 8.8 trillion by December 31, 2016, according to the Ministry of Finance. He added that though the Finance Ministry stated the total debt was Rs 8.8 trillion by December 31, 2016, the auditors found that debt to the tune of Rs. 826 billion was not shown in accounts. Wijesinghe said: “The Central Bank, which has all details about debt, has placed the figure at Rs. 10.3 trillion. On the other hand, according to the Finance Ministry, the total government assets were worth Rs 1.559 trillion at the end of 2017. However this is a provisional figure. The total assets were Rs. 1.08 trillion at the end of 2016.” The Auditor General said the gap between assets and debt had widened since 2004 and that it was the result of the borrowings being used for the most part as recurrent expenditure. In 2004, the total accounted government debt was Rs 2.142 trillion and total assets were Rs. 293 billion. Developing countries such as Sri Lanka needed debt and usually they used a substantial chunk of the debt for recurrent expenditure. However, the Sri Lankan governments had since 2004 done little to make necessary investments that would allow the country to repay the debt. “Debt can be justified in three ways. Debt must be either used to increase the standard of living of the people or increase the total amount of state assets or make necessary investments that generate revenue. But, we have nothing to show, for the most part, at the end of the day and this means we will have big problems in the future. The Secretary to the Finance Ministry is to be blamed because during the last decade there has been a breakdown in fiscal discipline.” Wijesinghe said the Fiscal Management (Responsibility) Act had placed a limit on the budget deficit from the end of 2006 and the budget deficit was expected not to exceed 5% of the GDP. The Auditor General added that it had been exceeded and the Finance Ministry had hidden those debts in dummy accounts. “It’s a complete mess and even I don’t know where all the Rs 10.3 trillion debt has been recorded,” he said. (Daily Island, 8.2.2018)

According to an estimate made by the Auditor General’s Department, the elephant population of Sri Lanka will die out by around 2045, Auditor General Gamini Wijesinghe said yesterday addressing a media briefing. “Around 250 elephants die a year on average and after we compared that number with birth rates, its quite likely that our elephant will be extinct in another few decades. However our Wildlife Department does not seem to care.” (Daily Island 8.2.2018)

Ceylon tea had a good year in 2017 with production up and average prices hitting an all time high, Ceylon Tea Brokers PLC said in an industry overview published last week. “Though export volumes were static compared to the previous year, export revenues established an all time record high in rupee terms,” the report said. Total tea production at 307.08 mn. kg. last year, was up 14.5 mn. kg. from the previous year. Despite the production gain, exports were up only a marginal 0.21 million kg. from a year earlier, the report said. It noted that last year’s tea sale average at Rs. 618.14 (USD 4.04 a kilo) was up from Rs. 468.61 (USD 3.14) the previous year with low growns having the largest market share (64%) of the total. Price-wise, low growns averaged Rs. 637.40, mid-growns Rs. 563.54 and high-growns Rs. 600.93, the report said. Last year’s Jan. – Dec. auction average Rs. 618.14 was the highest ever yearly auction average achieved, topping 2016’s Rs. 468.61, the report noted. It said that Turkey remained the largest importer of Sri Lanka tea last year followed by Iraq and Russia. “More importantly, cumulative tea exports to Vietnam (+207%), Taiwan (+40%), Turkey (+40%), China (+30%) and UK (+23%) have increased significantly whilst Syria (-39%), Kuwait (-31%), Iran (-19%), Ukraine (-17%) and UAE (-14%) have shown a noticeable decline against the corresponding period in 2016,” Ceylon Tea Brokers said. “The sharp increase in imports by Vietnam probably points out to a tea hub being operated there.” (Sunday Island, 11.2.2018)

Sri Lanka Podujana Peramuna (SLPP) cruised to a resounding victory at Saturday’s local government elections (LG) by winning 2,901 seats and bagging 222 local government bodies out of 304, according to official results the Election Commission (EC) had released at the time of going to press last night. The SLPP had secured the majority of votes in 15 districts obtaining 4,202,348 votes, which is 45.27% of the total number of valid votes. The Ceylon Workers Congress (CWC) has already expressed interest in forming an alliance with the SLPP to gain control of at least two local councils. The CWC is to coalesce with the SLPP to establish the majority in Hatton Dickoya and Nuwara eliya Pradesheeya sabha. The UNP obtained the dubious distinction of being the first political party to lose a local council election while being in power. It obtained 2,005 and secured control of 41 local government bodies. It obtained the majority of votes in four districts and polled 2,898,484 votes, which is 32.16% of the total number of valid votes. The Sri Lanka Freedom Party (SLFP) and the United Peoples’ Freedom Alliance (UPFA), performed dismally at the elections. The SLFP managed to secure only 306 seats and bag one local government body. The SLFP failed to secure the majority of votes in any district obtaining only 441,693 votes, which is 4.70% of the total number of valid votes. Meanwhile, the UPFA obtained 568 seats grabbing the power of four local government bodies. The UPFA obtained 822,212 votes, which is 8.81% of the total number of valid votes. The Illankai Tamil Arasu Kachchi (ITAK) secured the majority of the local government bodies in the Northern Province securing power of 34 local government bodies. The ITAK also secured the majority of votes in five districts obtaining 262,151 votes, which is 2.88% of the total number of valid votes. They won 309 seats. The JVP won 355 seats securing 560,083 votes, which is 6.13% of the total number of valid votes. (Daily Island 12.2.2018)

Love Cake –  Love is the theme of a crowd-sourced effort, initiated by Sri Lanka Tourism, to create hype for love cake, a uniquely Sri Lankan dish, around Valentine’s Day 2018. Gastro – or culinary tourism is a growing trend and Sri Lankan flavours and dishes are now on the global gastronomy map. The Tourism Strategic Plan 2017-2020 identifies culinary tourism as a target market segment. One strategic thread is to promote signature Sri Lankan dishes and traditional eats, such as the Sri Lankan hopper, kottu and love cake,” Sri Lanka Tourism Development Authority chairman Kavan Ratnayaka said, at an event to introduce the Love Cake initiative, at the Galle Face Hotel, Colombo, last week. “A tactical and practical approach is being taken this year with a love cake promotion for Valentine’s Day – #Love Cake Love. Based on the interest this year, a larger-scale love cake festival is on the cards from 2019 onwards, which can put Sri Lanka on the international culinary calendar. Such events can help promote 365-day tourism in Sri Lanka,” Ratnayaka added. As part of this initiative, during the period between February 12th and 15th, Galle Face Hotel in Colombo will serve Love Cake served as part of its High Tea menu. Anyone ordering tea or coffee in the hotel and says the words “I love cake”, will receive complimentary a piece of love cake. In addition, the Galle Face Hotel will also offer a complimentary gift of Love Cake for anyone booking Valentine’s Dinner. The origins of the Sri Lankan love cake can be traced back to the era of the Portuguese who dominated Sri Lanka’s coastal areas during the 16th and 17th centuries (1505-1658). Legend has it that the Portuguese, in the 1500s, brought with them a cake called ‘Bolo di Amor’ which translates to ‘coarse cakes of love’ and the cake was an instant hit. (Daily Island, 13.2.2018).

The official poverty line at the national level for January 2018 is Rs. 4580, according to the Department of Statistics. The poverty line is the minimum expenditure per person per month to fulfill the basic needs and the Colombo District has the highest poverty line of Rs 4972 while Moneragala has the lowest poverty line of Rs 4313. The figure for Gampaha is Rs 4821 and Rs 4477 for Jaffna. Excluding the Northern and Eastern provinces, headcount poverty fell from 22.7 percent to 6.1 percent between 2002 and 2012/13. In that same period, extreme poverty in Sri Lanka decreased from 13 percent to less than 3 percent in 2012/13— lower than many of Sri Lanka’s neighbours, other post-conflict countries, and other comparable countries. According to the World bank ‘the poor and near-poor in the Estate sector are mainly young, Hindu Tamils, working in tea estates in the agriculture sector, and living in free housing units provided by estate owners. Monetary poverty rates in the Estate sector saw a steep decline, from 28 percent in 2006 to around 10 percent in 2009/10 and 2012/13.’ The poverty line for Nuwara Eliya and Badulla where a substantial number of estate sector workers live is Rs 4872 and Rs 4488 respectively. (Daily Island, 13.2.2018)

The national Carrier, Srilankan Airlines’ Colombo-Melbourne direct flight has reversed the trend of declining passenger traffic into Sri Lanka. Despite Australia being home to a  large Sri Lankan diaspora and student community, passenger arrivals into Sri Lanka have been on the decline in 2017, one of the prime reasons being the lack of direct flights from Colombo to Australia. This status quo was improved by SriLankan Airlines’ strategic launch of its direct daily flights from Colombo to Melbourne last last year. The route has already registered a profit within a short period of less six months, demonstrating its potential as one of the fastest break-even and profit-making routes in the airline’s network. There has been a tangible upward surge in tourists arrivals from Australia since the month of October ‘17, when the direct flight was launched. Arrivals rose by as much as 26% during the launch month and progressively since. A month prior to the launch, tourists arrivals from Australia were recording negative growth. Commenting on the performance, Suren Ratwatte – Chief Executive Officer, SriLankan Airlines said, “We are delighted to fulfill a long-felt need for a direct flight from Colombo to Melbourne. The tireless efforts of the airline’s marketing and commercial teams have made a significant contribution to this success. The daily nonstop flights between Colombo and Melbourne are witnessing high traffic with customers reporting satisfaction at being able to undertake the flight without long layovers which not only reduces flying time but also enables travelers to arrive at their destinations refreshed. Following the success of this strategic decision, we will explore opportunities, for example, between Colombo and Sydney and other destinations in Australia”. (Daily Island 14.2.2018)

Workers’ remittances declined by 1.9% to $671 million in December 2017 but on a cumulative basis inflows on account of workers’ remittances declined by 1.1% year-on-year to $7,164 million in 2017.The Central Bank said this reflected the geopolitical uncertainties and the continuation of subdued economic performance in the major remittance-generating destination, which is the Middle East.  DFT, 23/.2 For 2017, earnings from tourism are provisionally estimated to have increased by 3.2% to $ 3,631 million, the Central Bank said yesterday in its latest External Performance report. December, recording the highest number of tourists in a given month for 2017, saw earnings from tourism increase to $ 419.5 million. Accounting for 51.2% of total tourist arrivals for 2017, India, China, the UK, Germany and France continued to be the top five sources of tourist arrivals. (Daily Financial Times, 23.2.2018)

The Galle Maritime Archeology Unit has uncovered details about 20 shipwrecks in the seas around Colombo, the Ministry of Education said yesterday issuing a press release. Some of these wrecks are over 100 years and the seas off the coast from Colombo towards Galle are also an important ecologically. “There are a number of reefs and strong currents in this area and a Royal mail ship named RMS Rangoon, which sank off the coast of Galle, in 1871 is buried 30 metres from the surface,” Kalpa Gunaratne the Media Secretary of the Ministry said. Most of the wrecks are buried in at least 25 metres depth. In recent years new technology was infused into maritime archeology, which is a special area of interest of the Minister of Education, Akila Viraj Kariyawasam. In the coming months the Maritime Archeology Unit will explore the sea floor near the Unawatuna tourist zone, the small sunken vessels in the area and test the sunken ship Iron Wreck 2. (Daily Island, 16.2.2018).

About 25% of the foreigners now working here on large construction projects are Chinese, Mr. Christopher Joshua of Access Engineering PLC, the largest construction company listed on the Colombo Stock Exchange said last week. Joshua, a Director of Access and Ms. Champika Dodanwela. Chief Financial Officer of Seylan Bank were the main speakers at an event organized by the Colombo Stock Exchange and the Colombo Brokers Association to make presentations on Access and Seylan. Joshua said that Chinese workers were over twice as productive as their Lankan counterparts and were cheaper given their output. Asked at the end of his presentation whether there were any barriers to getting badly needed foreign workers for large construction projects, he said that permission was given on a case by case basis. (Sunday Island, 18.2.2018)

Issuing National Consumer Price Index (NCPI), for the month of January 2018, Dr. Amara Satharasinghe, Director General of Census and Statistics said that the Year on Year inflation based on NCPI has declined to 5.4% from 7.3% in December 2017.Inflation of 5.4% reported for January 2018 is the lowest inflation reported since January 2017.Contributions to the inflation in January 2018from food group and non-food group are4.0% and1.4% respectively, whilst contributions of these two groups to the inflation in January 2017 were 2.9% and 3.6% respectively, resulting headline inflation of 6.5%. However, when compared to month on month changes, NCPI in January2018 has decreased to 125.8 from 126.6 reported in December 2017. This shows a decrease of 0.8 index points or 0.6percentage points in January2018 as compared to December 2017. This month on month change was due to the decrease of expenditure value of food items by 0.78% and increase of non-food items by 0.11%. The decrease in expenditure value of food items was due to the price decreases of vegetables, green chilies, coconuts, red onions, rice, limes, big onions, mysore dhal, potatoes, garlic and eggs. However, increases in expenditure value in index were reported for fresh fish, banana, mangoes, papaw, chicken, chilly powder and dried fish. The increase in expenditure value of non food items in January 2018 compared to the previous month was due to the expenditure value increases in groups of ‘Restaurant and Hotels’, ‘Transport’, ‘Miscellaneous Goods and Services’, ‘Education’, ‘Health’ and ‘Clothing and Footwear’. Further, the groups of ‘Furnishing, Household equipment and Routine household maintenance’ and ‘Alcoholic beverages, Tobacco and Narcotics’ recorded very slight expenditure value increases compared to the preceding month. The expenditure value of ‘Housing, Water, Electricity, Gas and Other fuels’, ‘Communication’ and‘ Recreation and Culture’ groups remained unchanged during this month. (Daily Island, 22.2.2018)

The deficit in the trade account expanded in December 2017 exceeding the US dollar 1 billion mark for the first time since November 2012, a press release issued by the Central Bank said yesterday. Several key points of the report are reproduced below. The cumulative trade deficit also increased during 2017 reflecting higher import expenditure caused by weather related factors, offsetting the notable increase in export earnings. Earnings from exports surpassed US dollars 1 billion mark in December 2017 for the fifth time during the year and recorded a double-digit growth (year-on-year) for the sixth consecutive month. Increased performance in industrial exports supported by textiles and garments largely contributed to this growth. Surpassing the US dollars 2 billion mark for the first time, expenditure on imports increased in December 2017. The significant expansion in import expenditure was largely driven by the expenditure on fuel, owing to increased prices and import volumes of refined petroleum products and coal. On a cumulative basis, import expenditure recorded the historically highest value of US dollars 21 billion in 2017. This was largely led by higher imports of fuel and rice. (Daily Island, 23.2.2018)