SRI LANKA NEWS IN BRIEF (OCTOBER 2017)

Compiled by Victor Melder

The national carrier SriLankan Airlines recently held its 39th Annual General Meeting (AGM) of the Shareholders last Monday at the Auditorium of The Institute of Chartered Accountants of Sri Lanka at Malalasekera Mawatha in Colombo 7. It was well attended by many former and current employee shareholders, anxious to ascertain the future of the airline. A Group Net Loss of LKR 28,339,51 was reported in 2016/17, up 135% from Group Net Loss of LKR 12,083.62 in 2015/16. Latest Group Net Loss includes LKR 14,362.81 Mn. paid as compensation for the cancellation of lease agreements for four Airbus 350-900 aircraft. Significant increases in Operating Expenses compared to previous year were; Aircraft Maintenance & Overhaul (22%), Rental on Leased Aircraft (13%) Employee Costs (12%) and Marketing & Advertising (11%). In his message to shareholders, Chairman Ajith Dias stated, “Although our financial performance for the year is, on the face of it, less satisfactory than the year before, it has been seen in the context of numerous challenges which we faced”. He need be applauded for highlighting in his message, the airline’s operations being hampered by the “method of interacting, reporting, decision-making through bureaucratic and political channels”, an obvious reference to political interference. It contradicts what was stated during his recent interview with Ada Derana of having submitted a restructuring plan to the government and awaiting approval. Or else, the airline has implemented at least parts of the restructuring plan, whilst awaiting approval. He also claimed during the interview, the carrier required less wide bodied A330 aircraft and more A320/321 narrow bodied aircraft in order to make the airline profitable. However, only six out of 24 routes operated with A320/321 narrow bodied aircraft during 2016/17 achieved breakeven load factor. The CEO has elaborated on the reduction in the single biggest cost component i.e. fuel. It is not known what percentage of the saving is due to reduction in fuel consumption resulting from discontinuation of long haul flights to Paris, Frankfurt and Rome. He made no mention of the 12% increase in manpower costs from previous year. No meaningful response was forthcoming on the issue of high employee costs. The airline employed 7,021 staff to service 24 aircraft, a staff to plane ratio of 292 for each aircraft. Carriers known with staff to plane ratios worse than that of the national carrier are Syrian Arab Airlines 400:1 and Pakistan International Airlines with 391:1. Air India has managed to reduce staff to plane ration from 300:1 in 2012 to 108:1 by 2015. In 2016/17, Group Employee Costs including Crew Salaries amounted to LKR 20,015.81. Crew Expenses consisting of allowances amounted to an additional LKR 5,435.70 making the total Salaries and Allowances bill a massive LKR 25,451.51 Mn. Aircraft Maintenance & Overhaul Costs amounted to LKR 17,644.09 Mn. in March 2016/17, a 48% increase from LKR 11,932.41 Mn. in 2014/15, despite the induction of several new aircraft which generally results in reduced maintenance & overhaul costs. (Sunday Island 1.10.2017)

President Maithripala Sirisena has ordered the destruction of nearly 1,000 kilograms of narcotics which have a street value of a staggering Rs 38 billion. The Special Task Force (STF) has been told to destroy the drugs in consultation with the Attorney General’s Department. The narcotics included heroin, cocaine, cannabis, among other drugs. (Sunday Times 1.10.2017)

John Keells Holdings PLC, through a subsidiary Vauxhall Land Developments (Private) Ltd., has acquired two acres of prime city property on Vauxhall Street, Colombo, at a price of Rs. 4.2 billion. Cargills (Ceylon) PLC announced the sale on Sept. 29 of its investment properties at Dawson Street and Vauxhall Street for a total consideration of Rs. 4.2 billion naming the buyer. JKH already owns three acres of Vauxhall Street land which came into its possession along with the acquisition of the Whittalls group many years ago. The latest purchase would increase its holding in the area to five acres. Although the land is not contiguous, analysts expect that it will be eventually used for a property development project. JKH is already engaged in its mega Cinnamon Life project target (Sunday Island 8.10.2016)

The Asian Development Bank’s (ADB) Board of Directors has approved financing of up to 900 million dollars for a program that will upgrade Sri Lanka’s road network, a statement said. The new program targets three lagging provinces—Eastern, Northern, and Uva, as well as a part of Western Province—to complete coverage of all the country’s priority development centers. About 3,400 kilometers (km) of rural access roads will be upgraded to all-weather standard, while about 340 km of national roads in the four provinces will be improved. Many of the roads are in areas that were affected by the country’s 26-year civil conflict. The program will also improve the capacity of the country’s road agencies for road safety, maintenance, research, design, and construction. It is due for completion in 2027 and will deliver finance in five tranches to 2021, starting with a regular loan of 90 million dollars and concessional loan of 60 million dollars this year. The government will meet 184.6 million dollars of the total program cost of 1.08 billion dollars. “ADB’s Second Integrated Road Investment Program aligns with the government strategy to fully connect rural development centers with upgraded rural access roads in an area that is home to about 10 million people.” Sri Lanka’s economy has grown at an annual average of 6% since 2003, helping to slash poverty from 22.7 percent in 2002 to 6.7 percent in 2012-2013. Much of this progress has taken place in rural areas, where 82 percent of the population lives. Most rural roads cannot provide all-weather access, and parts of the trunk road network are in dilapidated condition. Providing access to markets and business opportunities will be key to boosting prosperity in rural areas. Under a first ADB program, an $800 million multitranche financing facility was approved in 2014 to upgrade the road network in Central, North Central, North Western, Sabaragamuwa, and Southern Provinces, as well as a part of Western Province. (Sunday Island 8.10.2017)

The coconut yield in the coming two months will be unimaginably low due to the lean seasons from October to February and the effects of this year’s and last year’s drought in the coconut growing areas. The coconut triangle comprising Gampaha, Kurunegala and Puttalam districts account for the major shares of the yield in the country. The yield this year is expected to drop by around twenty percent to around 2,400 million nuts from the average 3,700 to 3,900 million nuts per annum. The yield last year was around 3,000 million nuts. (Sunday Observer 8.10.2017)

As at August 31, 2017, there were 728 refugees in Sri Lanka, among them were 1 from Tunisia, 10 from Palestine, 14 from Syria, 6 from Yemen, 1 from Somalia, 7 from Iran, 113 from Afghanistan, 533 from Pakistan, 35 from Mynmar and 8 from the Maldives. There were also 605 asylum seekers, among whom were 504 from Pakistan and 77 from Afghanistan. The asylum seekers are pending their refugee status of the UNHCR. (Sunday Times 8.10.2017)

In an unprecedented turn of events, the rice harvest has failed for three consecutive seasons, creating a need for rice imports. From the Yala season of 2016 up to this year, the harvest has failed and rice production has hit a 10-year low. The government plans to import more than 500,000 metric tonnes of rice within the next few months. A metric tonne is 2,204.6 pounds. Since May this year, private importers have brought in more than 400,000 metric tonnes of rice. (Sunday Times 8.10.2017)
The budget deficit for 2018 will be Rs 1.8 trillion, the government says. The appropriation bill is scheduled to be presented to Parliament this afternoon. The Ministry of Finance has said, in a media statement, that the government expects its revenue to be about Rs. 2,175 billion and its expenditure to reach Rs. 3,982 billion. Today’s presentation is considred the first reading of the budget 2018. The second reading is scheduled for Nov 09, when Minister Samaraweera is scheduled to inform the House how the government plans to bridge a deficit of over one trillion rupee. The statement says the Ministry of Finance and Mass Media will accept public views on the budget. (Daily Island 9.10.2017)

One in five Sri Lankans annually meets with accidents, says Dr Nilanka Navaratne, head of the Non-communicable Diseases Unit at the Auradhapura Genera Hospital. Dr Navaratne said that Health Ministry data indicated that around four million persons annually became victims of accidents. The number of victims equalled one fifth of the total population of the country, she said. Of those who became victims around one million received treatment at countrywide hospitals, she said. Dr Navarante said the highest number of accidents occurred at home and its surroundings and some of those accidents were preventable. Among those present were public sector officials and Anuradhapura Additional District Secretary GD Keerthi. (Daily Island 9.10.2017.)

Health, Nutrition and Indigenous Medicine Minister Dr Rajitha Senaratne says that one fifth of all public servants in the country are suffering from acute stress. Addressing a ceremony at Moragalla in Alutgama to open a child guidance center for children with special needs yesterday, the Minister said: We mark the world Mental Health Day today (10). We have been commemorating this day for the last 25 years. But it is sad to say that one out of five public servants is suffering from acute stress. The figures have been found by a recent survey conducted by the ministry on mental health of state sector workers. The study has also found two main reasons for the high prevalence of stress among public sector workers – problems related to their workplaces and issues linked to their family lives. We have noticed a trend of increasing numbers seeking treatment for mental problems. Busy lifestyles and competition too have contributed significantly for the increase of stress. “Many public sector workers directly deal face to face with people coming to their respective offices to obtain various services. When one fifth of service providers are suffering from stress it is a serious social problem. We need to think of solutions to remedy this situation.” (Daily Island 11.10.2017)

Commissioner General of Motor Traffic A.H.K. Jagath Chandrasiri says the country has 7,137,000 registered vehicles as at last Monday. Motorcycles and three wheelers accounted for the majority of them, he said. There are 3,986,000 motorcycles and 1,153,000 three wheelers. Addressing the media at the Department of Motor Traffic headquarters in Colombo, the Commissioner General said that during the first nine months, ending on Sept. 30 this year, 342,215 new vehicles had been registered. Of those new vehicles more than half were motorcycles numbering 262,012, he added. (Daily Island 12.10.2017)

Tourist arrivals to Sri Lanka were down 2.3 percent to 145,077 in September 2017, the second dip in three months, data showed. The biggest dips were seen in the European and Chinese markets with German arrivals falling 15.1 percent to 8,574 and China down 14.3 percent to 18,939. France dropped 7.4 percent to 4,637 while visitors from the UK 2.5 percent to 12,593 and Netherlands was up 31 percent to 3,818 respectively. Tourists from China during the period of January to September fell 2.1 percent to 208,635 compared to 213,103 during the same period last year. Arrivals from India grew 26.6 percent in September to 34,481 from a year ago and were up 6.1 percent to 267,601 so far this year.Overall tourist arrivals saw a dip as in the first four months of the year due to the Bandaranaike International Airport’s partial closer. Later it was the floods and the Dengue epidemic that kept the visitors away. In February and March arrivals were down 0.1 percent and 2.5 percent over the previous year whilst April recorded a welcome growth of 17.5 percent. May and July figures were also down. However, overall tourist arrivals in the first nine months were up 3 percent to 1.55 million visitors. (Daily Island 15.10.2017)

Sri Lankan workers in the Middle East sent back fewer dollars in the first eight months of this year, the sharpest drop yet owing to adverse economic and geopolitical conditions in the region, its central bank said Wednesday. Remittances in the first eight months of the year also fell by 6.3 percent to $4.5 billion, the bank said, the biggest drop ever seen and significantly more than 2015’s dip of 0.53 percent. In the month of August, remittances declined by 10 percent to $556.6 million, compared with $618.3 million in August last year, the bank said in a report. About two million Sri Lankans or 10 percent of the population work overseas, mostly in the Middle East and in construction and hospitality or as household maids. Money they send back to families is the main source of the country’s foreign exchange and is used to finance nearly 80 percent of its trade deficit. Sri Lanka has been an exporter of skilled and unskilled labour for decades. The fall in remittances is a double blow for the country, which is simultaneously having to shell out more for foreign workers. That demand comes from a labour shortage at home in sectors such as construction and manufacturing, which have picked up since the decades-long Tamil separatist war ended in May 2009. (Daily Island 19.10.2017)

The Poverty Headcount Index has dropped from 6.7 percent in 2012/2013 to 4.1 percent in 2016, the results of latest Household Income and Expenditure Survey conducted by the Census and Statistics Department indicated. The survey, carried out every three years, is the main data source used to calculate poverty indices for Sri Lanka. The survey results show that there has been a significant reduction in poverty during the last 14 years at the national level, but disparities in the level of poverty continue widely across provinces, districts and sectors. According to the Survey report released to the media yesterday, 843,913 individuals were in poverty in 2016. This is a 500,000 decline compared to 1.3 million in the previous survey year 2012/2013. The Official Poverty Line (poverty threshold) for 2016 is Rs.4,166. The total poor households were 3.1 percent of the total households and it was approximately 169,392 households in 2016. According to the Department bulletin, highest poverty headcount index reported from Kilinochchi district and the lowest from Colombo district. The highest number of poor people who were below the poverty line was reported in Kandy district and the lowest reported in Mannar district. The estate and rural poverty are high as 8.8 percent and 4.3 percent respectively, where as the urban poverty stands at 1.9 percent. In another bulletin on the survey results the Department observed that the mean monthly income of a household in Sri Lanka has increased to Rs.62,237 in 2016. Sector wise, the estimated mean household incomes for Urban, Rural and Estate sectors have been estimated as Rs.88, 692, Rs.58,137 and Rs.34, 804 respectively. According to the survey, the average monthly household expenditure in Sri Lanka during 2016 has been Rs.54,999 of which Rs.19,114 (34.8 percent) has been spent on food consumption while Rs.35,885 (65.2 percent) has been spent on non-food products and services. “The household expenditure of 2016 has recorded an increase of 33 percent as against the household expenditure of 2012/13 (Rs.41, 444). Similarly, the monthly household food and non-food expenditures have increased by 22 percent (Rs.15, 651 in 2012/13 to Rs.19,114 in 2016) and 39 percent (Rs.25,793 in 2012/13 to Rs.35,885 in 2016) respectively,” the Department said. (Daily News 23.10.2017)

It’s a widely-held belief that Sri Lanka has one of the highest rates of suicide in the world: the World Health Organization (WHO) actually ranks Sri Lanka’s suicide rate as the highest. But researchers who study suicide say there’s a big catch: the data is wrong. “It’s disregarding that there’s actually been a drop in Sri Lanka’s suicide rates and that’s a problem,” said Dr. Dee Knipe, a professor at the University of Bristol, speaking in Colombo last week. More local data tells a different story. Numbers compiled annually by the Sri Lanka Police’s Division of Statistics show that the suicide rate has actually fallen by 70 percent since the mid-1990s. That would put Sri Lanka’s suicide rate closer to the 22nd highest in the world, rather than the first. Sri Lanka’s suicide deaths stood at an all-time high in 1995, according to police records, with a rate of 57 per 100,000 people. They started rising in the 1960s and 1970s and academics and health advocates at the time pointed to the introduction of highly hazardous pesticides as the culprit. That’s because attempting suicide by pesticide poisoning, which was very available in largely agricultural Sri Lanka, was more likely to result in fatality. (Daily News 23.10.2017)

Latest figures from the Department of Census and Statistics (DC&S) indicate that the country’s inflation is climbing. The DC&S says the National Consumer Price Index for the last month was at 8.6 per cent. It was 7.9 percent in the previous month. The increase of prices of rice, coconuts, red onions, big onions, sugar, lime, banana and papaw has resulted in an increase in the expenditure value of food items, the DC&S notes. The contribution to the inflation from food group was 6.1 per cent while that from the non-food group was 2.6 per cent in September, this year. In September 2016 the corresponding figures were at 2.1 per cent and 2.7 per cent respectively. Compared to month-on-month changes, NCPI in September has increased to 123.3 from 122.3 in August. The price increases in groups of alcoholic beverages, tobacco and narcotics, education, clothing and footwear, miscellaneous goods and services and furnishing and household equipment and routine household maintenance have resulted in the increase in expenditure values of non-food items. (Daily Island 25.10.2017)

Tourism was flourishing and tourist arrivals had risen to 2.2 million last year and the revenue there from was USD 3.5 billion, Special Assignment Minister Dr. Amunugama said, adding that more than four million tourists were expected within the next couple of years. The target was based on the annual increase in the number of tourist arrivals in the country, Dr. Amunugama said in a brief interview with The Island. Tourism industry was the second highest foreign exchange earner which had made available employment opportunities to a large number of youth, especially to the youth who were unable to pursue higher education, Dr. Amunugama said. Hospitality was the principal attraction to foreign visitors as Sri Lanka was known the world over as a friendly nation, Dr. Amunugama said, stressing the need for training the youth to face the challenges in the ever expanding tourism industry. (Daily Island 31.10.2017)