SRI LANKA NEWS IN BRIEF – NOVEMBER 2017 – Compiled by Victor Melder

Compiled by Victor Melder

Panic stricken motorists joined long queues outside filling stations in the country following fears of a shortage of fuel after a parcel of 30,000 metric tonnes of petrol imported by the Indian Oil Company (IOC) was rejected as the shipment failed to meet quality specifications. This development has led to a virtual ‘run’ on stocks maintained by the Ceylon Petroleum Corporation (CPC), officials said. With motorists desperate to tank up before CPC stocks also dried up, the demand has zoomed to a level that supplies cannot match, they noted. As a result not only IOC filling stations remained temporarily shut, but many CPC sheds were also hit and remained out of stocks due to the unprecedented clamor for fuel. CPC trade unionists were quoted as saying that some filling stations had not received fresh supplies of petrol since last Thursday and the overall picture appears grim as the next shipment was due on November 8, that’s in three days time. “All indications are that the dearth of fuel is bound to continue, with the situation worsening as existing stocks dwindle faster than anticipated due to the surge in demand”, they predicted. By October 31, the Kolonnawa refinery had in stock 7,000 metric tonnes of petrol and Muthurajawela 4,000 metric tonnes. The average consumption of petrol per day is around 3,000 metric tonnes. With motorists eager to tank up, the question is for how long existing supplies will last, they said. Meanwhile, the Office of Petroleum Resources Minister, Arjuna Ranatunga, in a special statement, urged motorists to economize on the use of petrol. “The CPC has maintained sufficient stocks of petrol to meet the requirements of motorists. However, a consignment of petrol imported by IOC failed to meet quality standards. As a result of halting the unloading of this stock of fuel, a shortfall in supplies has arisen”, the statement noted. It added: “The shortage has caused panic amongst motorists. However, we have been able to supply 80% of the requirements of petrol to the market. There is no disruption in the supply of diesel and kerosene. As this is a temporary development, motorists are advised to use petrol sparingly”. (Daily Island 5.11.2017)

The Colombo High Court yesterday convicted Suchit Ananda Sudaharan for killing 30 persons and injuring 40 others by exploding claymore mine explosion at Piliyandala, targeting a bus. The date of offence was April 25, 2008. The accused was convicted of 93 charges in the indictment. The penalty was a life imprisonment term. The bench comprised Colombo High Court Judge, Piyasena Ranasinghe. (Daily Island 9.11.2017)

The government has had to impose a Rs 20 Medamulana Tax on each Rs.1,000 transaction taken place in banks to create a fund to settle the loans obtained during the previous Mahinda Rajapaksa regime, National Policies and Economic Affairs Deputy Minister Dr. Harsha de Silva said. He made these observations in Parliament  in response to Joint Opposition member Udaya Prabath Gammanpila during the round of questions for oral answers who queried if the government had obtained loans at high interest rates while charging that the previous government had taken loans at high interest rates. Deputy Minister Silva further said the previous government had obtained loans at a very high interest rate of 9.9 in 2011 when the interest rates were comparatively low. He added that the loan rates had increased recently all over the world. “But, we have not taken loans at such high rates,” Deputy Minister Harsha de Silva said.  (Daily News 11.11.2017)

Finance and Mass Media Minister Magala Samaraweera yesterday presented what he described as a ‘clean, lean and green’ budget. Samaraweera proposed a reduction of taxes on the importation of electric vehicles including electric three wheelers, cars and buses while rationalising the import taxes on vehicles powered by fossil fuel. The new formula for import taxes would be based on the engine capacity which will minimize the revenue leakages, he said. The minister proposed a carbon tax on motor vehicles based on engine capacity. The import taxes on an electric car would be reduced by at least one million rupees while the import tax on the high end fossil fueled cars would be increased by almost Rs 2.5 million. “We will impose a special tax on super luxury vehicles with an engine capacity exceeding 2500 cc. At the same time the import taxes on a diesel three wheeler will be increased by around Rs. 50,000 to encourage the transfer into environmentally friendly electric three wheelers.” The government plans to introduce a project to transform the public transport system by introducing 50 electric buses to the SLTB fleet at a cost of Rs 500 million. “To discourage the use of polythene and plastic products, we will impose an excise duty of Rs 10 per kilo for plastic resins” Minister Samaraweera said. Customs duties would be removed on all machinery, equipment, raw materials and intermediary goods used in manufacturing bio degradable packaging material. It was proposed to allocate Rs 75 million to move away from the caged zoo concept to an ‘open cage’ concept at the Dehiwala Zoo. Pinnawala Elephant Orphanage would be reorgniazed to be ‘born free chain free’. “The proliferation of cellular towers is both and environmental and health hazard,” Minister Samaraweera said. “As such we will impose a cellular tower levy of Rs. 200,000 per tower per month to discourage the construction of such towers. The Minister proposed to allocate Rs. 3,000 million to introduce an insurance scheme for the farmers who are vulnerable to face natural disasters. The insurance cover would be minimum of Rs 40,000 per acre for six crops namely paddy, maize, soya, big onion, potato and chilli. The government would bear 50 percent of the cost of introducing technology such as refrigerated storage to mitigate post harvest losses in multiday craft. The government would also bear 50 percent of the cost of multi-day boats which were more than 55 feet long to encourage deep sea fishing, he said. Samaraweera proposed to allocate Rs. 300 million to promote IT and allied sectors with the potential to yield USD 5 billion in revenue within the next five years. A proposed duty of five rupees will be imposed per litre of toddy while Rs.10 will be imposed per kilo on Molasses/Maize/Rice/Fruits. The Excise (Special Provisions) duty applicable on canned beer will be removed. The minister said that out of the total liquor consumption, almost 49% was from illicit sources while 85% drinkers consumed hard liquor. Further, he added that NBT would be imposed on liquor with effect from April 01, 2018. The minister also announced a sugar tax on sweetened beverages. Excise duty based on the quantum of sugar contained will be introduced for the beverages with added sugar.  This duty is applicable for beverages classified under HS Code 22.02. The rate will be 50 cts per gram of sugar. Samaraweera proposed to allocate Rs. 440 million to upgrade the Police Information and Communication Systems to meet the modern day demands including facing the cyber crime threat. The total government expenditure has been estimated at Rs. 3, 001 billion for the next year. The budget deficit for 2018 is Rs 675 billion which is proposed to cover from foreign borrowing and domestic financing. Expected government revenue including grants is to be about Rs. 2,326 billion and its expenditure Rs. 3,982 billion. (Daily Island 11.11.2017)

The State Tax Revenue has doubled within three years from 2014, Megapolis and Western Development Minister Patali Champika Ranawaka said. The Minister, opening the Second Reading debate of Budget 2018 on the second allotted day in Parliament on Saturday, pointed out that reversing the years of downward trend in tax revenue was a significant achievement of the Government. “In 2014, the total State Tax Revenue stood at Rs.1,050 billion. The estimated state revenue for 2018 is Rs 2,034 billion. The gradual drop in state revenue had been a worrying factor of our economy for many years,  Minister Ranawaka said. He pointed out that Sri Lanka, after many decades, has been able to show a ‘positive primary budget balance’ indicating that the country can manage its expenditure from the income it earns when the debt repayment has been excluded. “Our economy has been balanced now. The loans we obtained are to repay the excessive debts obtained during the last regime. Out of the total estimated expenditure of Rs.4,079 billion for next year, Rs. 1,970 billion is for debt servicing,” he explained. As the peak of debt repayments comes in 2018-2020, the Minister observed, the Government will have a hard time balancing the economy and preparing for crucial national elections at the same time. “The debt burden will ease by 2022-2023. This Government is saddled with the most difficult period, the country has ever been in, on the fiscal front,” he noted. Minister Ranawaka also lauded the tax on polythene as a progressive move, while proposing to use the additional revenue of Rs. 2 billion expected from it for solid waste management projects. (Daily News 13.11.2017)

The 30-year war had cost the country more than USD 400 billion, Leader of the House, Higher Education and Highways Minister Lakshman Kiriella told Parliament. Participating in the Second Reading stage debate on budget proposals, the Minister said: “We failed to manage the ethnic problem, which led to a war. No one has calculated the actual cost of the war. I got the Parliament research unit to find documents to get some idea of the cost of war. It gave me a document which places the cost at USD 200 billion. It also says the LTTE, too, spent an equal amount. So, the total cost of the war is about USD 400 billion. We should sort out the ethnic problem. Now, we have initiated a process of seeking views of all parties represented in parliament to solve the national problem. “We had a surplus economy when we gained Independence. We did not have any debts at that time. More than 60 years have passed since then. Several parties have ruled this country.  We started projects such as Inginiyagala and Ampara with our own funds. However, some decades after Independence we have become a nation dependent on loans. All parties that ruled this country since Independence should be held responsible for this situation. “President Mahinda Rajapaksa ended the war but failed to develop the economy. He could not attract investment. We should address the economic problems of the youth. This year’s budget is geared to address the problems the youth are faced with. (Daily Island 14.11.2017)

Sri Lanka’s beer industry will regain market share from hard liquor following a more favourable tax regime for the segment announced in the Sri Lankan government’s budget on November 9, Fitch Ratings says. The Sri Lankan government’s 2018 budget reduced excise taxes on strong beer by 33% and raised that on hard liquor by 2%, effective immediately. The budget also introduced a Nation Building tax of 2% on all alcoholic beverage sales, which will take effect from April 2018. With the latest tax revisions and barring further changes, we expect beer’s market share of total reported alcohol consumption in Sri Lanka, as calculated by Fitch, to increase to around 24%-25% in the medium term, posting an average volume growth of 22% over 2017-2019. We expect hard liquor sales volumes to contract 2% over this period, reversing some of the market share gains it made in the last few years. Hard liquor’s share rose to 84% in 2016 from 71% in 2014, after a series of tax increases for beer. The market share for beer fell to 14% from 27% over the same period. Lion accounts for over 80% of Sri Lanka’s beer sales, and the lower excise tax has led to a 23% drop in the price of its main strong beer product. This will make it competitively priced per unit of alcohol against hard liquor. Beer makers will also be helped by the removal of a tax on beer cans in the government budget. Fitch expects beer to regain market share lost to hard liquor during the last two years, when frequent tax increases on beer eroded its price advantage. At the same time, we expect sales volumes of hard liquor market leader DIST to drop, as consumers substitute strong beer for arrack, the most popular hard liquor in the country. Effective immediately, spirit producers will also have to pay additional duty on raw materials used for ethanol production, which will increase input costs for hard liquor makers. However, we expect these taxes to have minimal impact on DIST’s profit margins because the company has increased the price of its key product, Extra Special Arrack, by around 6% per bottle to reflect both the higher input costs and taxes. Taxes on alcohol makers are hefty with top-line taxes accounting for around 70% and 60% of gross company revenues for DIST and Lion, respectively, in the financial year ended 31 March 2017. We believe the government is unlikely to impose further taxes on the industry to the extent that alcoholic beverages become prohibitively expensive to the average consumer, because the alcohol excise taxes contributed 8% to government tax revenue in 2016. As such, we expect further tax increases to be gradual, especially for hard liquor.The budget also proposes to simplify the issuance and rate structure of liquor retail licenses, which we believe will help sales, although further details are yet to be disclosed. Both Lion and DIST command leadership in their respective segments, given their entrenched brands which continue to benefit from a complete ban on advertising of alcoholic beverages. (Daily Island 16.11.2017)

The Supreme Court in a landmark judgment awarded a total of Rs. 600,000 as compensation to a British female tourist with a Buddha tattoo who was subjected to a traumatic experience at the airport. Justice Anil Goonarathne, with Justices Eva Wanasundera and Nalin Perera agreeing with his judgment, awarded petitioner Naomi Michelle Coleman Rs. 500,000 as compensation to  her payable by the State and Rs. 50,000 each from the respondent police officers namely Police Sergeant Upasena and Acting OIC Police Inspector Suraweera of the Katunayake Police Station. The Court also awarded Rs. 200,000 as cost payable by the State. Court held that the Petitioner’s fundamental rights to freedom from torture, the right to equality and freedom from arbitrary arrest had been infringed. Court observed that the police misrepresented facts and misled the magistrate into believing the submissions that a deportation order could be made by such a court. It ruled that the magistrate had no jurisdiction to make an order of deportation and the deportation of foreigners was governed by the Immigration and Emigration Act and that the power to order the removal or deportation of a person from Sri Lanka other than a citizen was vested in the Minister in charge of same. (Daily Financial Times 16.11.2017

Joint Opposition MP Wimal Weerawansa said the government had obtained Rs. 4.7 trillion as loans for three years whereas only Rs. 5.2 trillion was obtained as loans for nine years during the previous regime. Speaking during the budget debate, he said the debt burden had gone up by 64% since the government came to power. “The debt to GDP ratio was 77.6 per cent in 2014 when the present government came to power. But it was increased to 79.3 per cent in 2016 without the war and constructive development programmes,” he said. MP Weerawansa said the government was planning to obtain Rs. 1,895 billion in 2018 as new loans. He said the recurrent expenditure of the government had increased by 62 per cent when compared to the budget in 2014 where the recurrent expenditure was Rs. 868 billion. “If the government claim that the debt burden should be borne by everyone, recurrent expenditure of the President, Prime Minister and the government should have been reduced,” he said. Mr. Weerawansa said the government had no plans to implement the ‘Blue, Green’ budget which would be only a set of words. He said the budget included a set of proposals which would not be able to implement in practice adding that it had intended for the foreigners than the local entrepreneurs. (Daily Mirror 16.11.2017)

Lord Naseby of UK Parliament recently revealed how he accessed confidential reports compiled by the London’s Defence Attache in Sri Lanka during the war and gathered that the number of people who were killed during the last phase of war was 7,000. Lord Naseby has told WION’s Mandy Clark how he went about the onerous task of accessing confidential reports compiled by none other than London’s own Defence Attache in Sri Lanka during the last phase of war in 2009 and came up with startling discoveries. “I’ve tracked the war carefully because I just couldn’t believe these official figures – they didn’t stack up to the information I was getting. So I then invoked our freedom of information inquiry. I asked for the dispatches sent by our Defence Attache to our foreign office during the last days of the war. The application was refused twice by our foreign office. I then applied directly to the information commissioner – which is my right – and got 26 pages of redacted dispatches. Missing were the last six weeks of them. So I appealed again. And lo and behold, another 12 arrived. I went through them very carefully,” he said. He said there was more than enough evidence to say that no one in the Sri Lankan government had said anything about killing any civilians at all. “That was not the objective of the exercise. And from our Defence attache’s dispatches, I thus gleaned that about 7,000 were probably killed. And even (the Attache) says that about a quarter of those killed were possibly Tamil Tigers (LTTE) because they’d thrown away their uniforms,” he said. Without being limited to classified documents, Lord Naseby had asked university experts who are “traditionally left-wing” about the casualties. “They also said that 7,000 casualties was their estimate. There was other evidence too, like what US ambassador to Sri Lanka, Robert Blake, had named a tentative casualty figure: about 5000, a few days before the end of the war,” he said. He had appealed to the UK government to amend the casualty count from 40,000 to 7,000. (Daily Mirror 16.11.207)

Issuing the National Consumer Price Index (NCPI), for the month of October 2017, Dr. Amara Satharasinghe, Director General of Census and Statistics says the Year on Year inflation, based on NCPI, has been compiled as 8.8%. The inflation reported for the month of September 2017 was 8.6%. For the month of October 2017, the reported increase in inflation is mainly because of the comparatively lower price levels prevailed in October 2016 particularly prices of coconuts, rice and vegetables. Contributions to the inflation from food group and non-food group in October 2017 are 6.4% and 2.4% respectively, whilst contributions of these two groups to the inflation in October 2016 were 2.3% and 2.8% respectively reflecting prevailed comparatively lower food prices in October 2016. However, when compared to month on month changes, NCPI in October 2017 has increased to 124.8 from 123.3 reported in September 2017. This shows an increase of 1.5 index points or 1.2percentage points in October 2017 as compared to September 2017. This month on month change was due to the increases of expenditure value of food items by 1.12% and non-food items by 0.08% respectively. The increase in expenditure value of food items was due to the price increases in coconuts, vegetables, rice, green chilies, banana, red onions, limes and tea dust. However, decreases in expenditure value in index were reported for fresh fish, eggs, potatoes, mangoes, dried fish and chicken. The increase in expenditure value of non food items in October 2017 compared to the previous month was due to the expenditure value increases in groups of ‘Restaurant and Hotels’, ‘Housing, Water, Electricity, Gas and Other fuels’, ‘Alcoholic beverages, Tobacco and Narcotics’ and ‘Miscellaneous Goods and Services’. Further, the groups of ‘Clothing and Footwear’, and ‘Furnishing, Household equipment and Routine household maintenance’ recorded very slight expenditure value increases compared to the preceding month. The expenditure value of ‘Health’, ‘Transport’,‘ Communication’, ‘Education’ and ‘Recreation and Culture’ groups remained unchanged during the month. (Daily Island  22.11.2017)

The extended general amnesty period offered to Army personnel absent without leave (AWOL) to receive their legal discharge after reporting to their respective Regimental Headquarters ends today (22). A total of 10,112 Army deserters including 12 officers, nine officer cadets and 10,091 other rankers had applied for their legal discharge accordingly from respective Headquarters by Tuesday. Upon expiry of the final deadline (November 22) of the extended amnesty period, island-wide law enforcement agencies have been advised to launch operations to nab the remainder of those absentees in hiding. (Daily Island 22.11.2017)

Colombo (Reuters): Tea output jumped 36.2% due to good weather in October and a lower base last year, the state-run Tea Board said on Friday.  Production in the first ten months of the year rose 8.7% from the same period last year.
“It is mainly because of the good agro climatic conditions during the month,” Sri Lanka Tea Board Director-General S.A. Siriwardena said. Siriwardena said the country could achieve 305-310 million kilos by the end of the year, compared with last year’s 292.4 million kilos. He also said the sharp rise in October output was also due to a lower base in the same month last year.
Lower use of fertilisers, weak market prices, bad weather and a government ban on the use of pesticides resulted in a decline in production last year. Sri Lanka’s tea output hit a seven-year low in 2016, falling 11.1% in its third straight year of declining production. Tea export volume dropped to a 14-year low in 2016, broker data showed. Export earnings fell 5.3% to $ 1.26 billion in 2016 from $ 1.33 billion in 2015. Sri Lanka recorded its highest earnings of $ 1.63 billion in 2014. (Daily Financial Times 25.11.2017)

Twenty four youth died from January to October end this year due to careless behaviour on railway tracks.  National Council for Road Safety (NCRS) Media Coordinator Buddhika Prabath said the victims had been attempting to take selfies on the rail track when they were killed by moving trains. In the absence of last year’s data as regards selfie-related accidents, the National Council for Road Safety (NCRS) was however not in a position to compare the situation pertaining to deaths and injuries on railway tracks. NCRS Media Coordinator  Prabath told The Island that the NCRS lacked the required data for the previous year. Giving a breakdown of train related accidents within the same period this year, Buddhika said that there had been 61 accidents at level crossings involving trains and vehicles, 348 vehicles had been damaged due to crashing into rail gates at level crossings and 53 cases of people falling off fast moving trains, the official said 342 accidents had occurred due to walking on rail tracks and crossing them. Of them 151 had died, he added. Buddika said there had been 84 accidents at level crossings, 506 instances of damage caused due to vehicles crashing into rail gates and 76 falls off trains. (Daily Island 27.11.2017)

Transport and Civil Aviation Minister Nimal Siripala de Silva said his ministry hopes to buy 160 train carriages and 10 train engines to further improve the public transport system in the country, yesterday. The minister noted the above while explaining the details of the Colombo suburban railway project during a workshop at the Waters Edge Hotel. The project is to be funded by the Asian Development Bank. The Transport and Civil Aviation Ministry, together with the Sri Lanka Railways, plan to develop Sri Lankan railway stations, construct new parallel lines, and modernise associate railway stations. This project is to be implemented with a loan from the Asian Development Bank (ADB). The Kelani Valley line from Maradana to Padukka will be constructed as a double line and the existing single line from Padukka to Awissawella will be rehabilitated. The main line from Maradana to Ragama will be upgraded to a quadruple track, the Ragama – Veyangoda line will be constructed as a triple track, and the existing double line from Veyangoda to Rambukkana will be rehabilitated. The coastal line from Fort to Maradana will be developed to three sections and the existing double line from Pandura to Kalutara will be rehabilitated. It is also planned to develop the Puttalam double line from Ragama to Negombo and to connect the railway line with the Bandaranaike International Airport, Katunayaka. (Daily News 28.11.2017)

The amount of foreign currency that can be brought in to the country has been increased to US$15,000 while the amount that can be taken out of the country has been increased to US$10,000 with effect from January 1, 2018, Customs Media Spokesman and Deputy Director, Sunil Jayaratne said. He said this was announced in an extraordinary gazette notification issued by the government last week. “However, where a person arriving in Sri Lanka intends to take back foreign currency notes exceeding US$10,000 or its equivalent in other foreign currencies or departing from Sri Lanka carries foreign currency notes exceeding US$10,000 or its equivalent in other foreign currencies is required to make a declaration to the Customs Department. “Any person resident in Sri Lanka may take out or bring into country, up to Rs.20,000 in Sri Lankan currency notes. Any authorized dealer may export from or import to Sri Lanka, foreign currency which has been acquired in or for the normal course of their business and within the terms of his authorization, the gazette notification said.(Daily Mirror 29.11.2017)

Total government revenue increased by 15.7% to Rs. 1,172.4 billion in the first eight months of 2017, compared to Rs. 1,013.4 billion in the same period of 2016, a Finance Ministry report said. Tax revenue increased by 17.5% to Rs. 1,094.9 billion whereas non-tax revenue declined by 4.9% to Rs. 77.4 billion during the review period in 2017. Domestic consumption base tax revenue increased by 26.9% to Rs. 342.3 billion in the first eight months of 2017, compared to Rs. 269.7 billion recorded in the same period. This was mainly due to increased domestic Value Added Tax (VAT) revenue by 67.5% to Rs. 181.4 billion in the review period of 2017, compared to Rs. 108.3 billion in the same period of 2016, reflecting increased VAT rate to 15% from 11% with effect from November 2016. However, revenue generated from liquor decreased by 5.9% to Rs. 73.6 billion in the respective period of 2017, due to declined consumption resulting from increased excise duty rates on liquor products.  Meanwhile the revenue from cigarette products declined by 8.1% to Rs. 54.6 billion in the review period in 2017, due to declined production stemming from increased tax rates on cigarettes. As a result, revenue collected from excise duty imposed on liquor and cigarettes dropped by 6.9% to Rs 128.3 billion in the review period of 2017. (Daily News 29.11.2017)

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