Business
Rupee pressure squeezes industries as import costs surge
…exporters gain little as deeper structural weaknesses persist
Sri Lanka’s weakening rupee is placing severe pressure on industries heavily dependent on imported raw materials, fuel, machinery, and spare parts, with small and medium enterprises (SMEs) facing the gravest threat to survival, according to Indhra Kaushal Rajapaksa.
Speaking to The Island Financial Review, Rajapaksa warned that while a depreciating currency may offer exporters temporary exchange gains, the broader economic impact is proving damaging across multiple sectors of the economy.
“Most businesses are struggling because Sri Lanka imports a significant portion of its industrial requirements. As the rupee weakens, costs rise sharply across the board,” he said.
Industries are responding through a combination of price increases, aggressive cost-cutting, delayed investments, and efforts to source cheaper alternatives. However, Rajapaksa stressed that many firms are operating under shrinking profit margins and mounting uncertainty.
“Companies are trying to survive by passing some costs to consumers, reducing operational expenses, and postponing expansion plans. But SMEs are under extreme pressure because they have limited reserves and weaker access to foreign currency,” he noted.
Rajapaksa observed that large corporates are better positioned to withstand currency shocks due to stronger balance sheets, export earnings, and greater financial flexibility. In contrast, smaller enterprises remain highly vulnerable to fluctuations in import costs and financing conditions.
He identified construction, vehicle imports, pharmaceuticals, electronics, logistics, and manufacturing industries reliant on imported inputs among the sectors worst affected by the rupee depreciation.
“These sectors depend heavily on foreign supplies. Every decline in the rupee immediately increases production and operating costs,” he said.
While export-oriented industries may appear to benefit from currency depreciation, Rajapaksa cautioned that the gains are often overstated.
“There is only a short-term conversion advantage when export earnings are brought back into rupees. But many exporters also depend on imported raw materials and machinery, so their own costs increase simultaneously,” he explained.
He added that the burden of currency depreciation ultimately falls on ordinary consumers through rising food prices, higher fuel and transport costs, more expensive imported goods, and accelerating inflationary pressures.
“Consumers are paying the price indirectly every day,” he said.
Rajapaksa acknowledged that some companies are attempting to localise supply chains and increase the use of domestic raw materials. However, he pointed out that Sri Lanka currently lacks the industrial scale and production capacity to fully replace imports competitively.
“There is growing interest in local sourcing, but Sri Lanka cannot produce everything locally at the required scale or cost efficiency,” he said.
The continued volatility of the currency is also affecting investor confidence, with businesses finding it increasingly difficult to plan ahead.
“Investors value stability. Frequent currency fluctuations create uncertainty and discourage both local and foreign investment,” Rajapaksa warned.
He called on the government to focus on stabilising the economy, strengthening foreign reserves, supporting SMEs and export industries, reducing unnecessary imports, encouraging local production, and ensuring consistent economic policies.
“Policy consistency is critical. Businesses need confidence to invest, expand, and create jobs,” he said.
Rajapaksa also cautioned that employment could suffer if economic pressures continue, particularly in import-dependent sectors and smaller businesses struggling to remain operational.
“Some export sectors may create opportunities, but it may not be enough to offset job losses elsewhere,” he observed.
Describing the current crisis as both cyclical and structural, Rajapaksa said Sri Lanka’s economic vulnerabilities extend beyond short-term currency movements.
“There are immediate pressures from both global and domestic financial conditions, but there are also deeper structural issues such as high import dependence, a narrow export base, and low productivity,” he said.
“Unless meaningful structural reforms are implemented, these problems will continue to recur.”
By Ifham Nizam
Business
Cost-effective clearance of goods across borders to determine worth of Customs Paperless Declaration
By Ifham Nizam
The introduction of the Customs Paperless Declaration from October 1 could mark an important step in Sri Lanka’s efforts to modernise trade, but its real value will depend on whether it reduces the time and cost of moving goods through the country’s borders, Customs House Agents & Traders Association President Mohamed Niyas said.
Niyas warned that digitising Customs declarations alone would not necessarily translate into faster cargo clearance or lower costs for businesses.
‘Expecting a dramatic improvement in clearance speed under the present conditions is like expecting Ferrari performance from a Morris Minor configuration, he said.
For importers and exporters, the issue extends well beyond paperwork. Every additional hour or day that cargo remains in the clearance chain can have wider consequences for businesses, including increased port and storage-related costs, additional working-capital requirements, uncertainty over delivery schedules and disruptions to production and distribution.
Niyas said the competitiveness of Sri Lanka’s trading sector ultimately depended on how efficiently goods could move through the country’s border-clearance system.
‘The real bottleneck is not merely the absence of paper. It is the entire clearance ecosystem—the limitations of the existing ASYCUDA World system, excessive regulatory interventions by Other
Government Agencies, multiple approvals, physical examinations, manual interventions, fragmented processes and institutional constraints, he said.
He cautioned that unless these bottlenecks were addressed, there was a risk that the paperless initiative would merely digitise existing bureaucracy.
‘If these underlying constraints remain unchanged, there is a real risk that the new paperless system could become another “copy-and-paste road show”—where an old, complex clearance process is simply transferred onto a digital screen without fundamentally changing the process itself, Niyas said.
For businesses dependent on imported raw materials, machinery, components and other inputs, clearance efficiency can directly affect the wider supply chain.
Delays at the border can create uncertainty for manufacturers, distributors and retailers, while exporters can face difficulties meeting delivery schedules when imported inputs or export consignments are held up.
Niyas therefore argued that the success of the October 1 initiative should be judged by its impact on trade flows rather than by the number of declarations processed electronically.
‘Paperless does not automatically mean faster, he said. ‘Digitising a slow process does not make the process fast. It only makes the slow process digital.’
He said Sri Lanka needed to move towards what he described as “process-less Customs”—a system in which unnecessary procedures are eliminated rather than simply converted into electronic procedures.
Among the reforms he called for are simplification of Customs declarations and approval workflows, improvements to the functionality of ASYCUDA World, greater use of risk-based inspections and better integration of Other Government Agency approvals.
Niyas also called for the elimination of repetitive document submissions and physical endorsements, greater use of pre-arrival processing, sufficient capacity for digital document uploads and clearly defined service-level timelines for Customs and OGAs.
Business
China backs Sri Lanka’s Non-aligned stance to counter regional pressures
By Sanath Nanayakkare
As global attention has fixed on the high-level diplomatic choreography at the United Nations General Assembly in New York, a subtler, yet profound geopolitical signal was sent from Colombo, yesterday.
In a major address marking the founding anniversary of the People’s Republic of China, newly appointed Chinese Ambassador Wei Huaxiang chose to anchor bilateral relations not just in modern trade or infrastructure, but in a shared respect for Sri Lanka’s legacy of non-aligned independence.
By explicitly invoking Sri Lanka’s foundational role in the 1976 Non-Aligned Summit, Beijing was doing something unexpected in an era defined by fierce great-power rivalry: it was officially validating a small island nation’s right to maintain an independent foreign policy stance.
The Strategic Value of Independence
For decades, nations caught in the crosshairs of major-power competition have faced intense pressure to pick sides. Yet, Ambassador Wei’s embrace of Colombo’s non-aligned tradition signaled a different diplomatic playbook. Instead of demanding alignment, Beijing was framing its partnership as a reliable counterbalance to regional pressures. By honouring Sri Lanka’s diplomatic autonomy, China was effectively reassuring smaller economies that sovereign independence and robust economic cooperation can coexist.
Beyond Ports and Industrial Zones
This diplomatic framing reframed the narrative surrounding major collaborative ventures like the Colombo Port City and Hambantota Port. While foreign analysts often view these projects exclusively through the lens of strategic rivalry, Beijing’s diplomatic messaging tied them back to a historical ethos of solidarity—evoking memories of the 1952 Rubber-Rice Pact.
By marrying economic projects with a stated respect for non-alignment, China is positioning itself as a steadfast stakeholder that respects Sri Lanka’s internal agency during difficult economic and political seasons.
As both nations look toward major milestones in 2027—including the 70th anniversary of diplomatic ties—this nuanced diplomatic move revealed how historic traditions are being leveraged to navigate modern multipolar realities.
For global observers, the takeaway was clear: in the shifting architecture of Asian geopolitics, respecting a nation’s historical neutrality may just be the most effective way to secure a lasting partnership, a diplomatic masterclass that Ambassador Wei Huaxiang executed in style.
Business
Sri Lanka Insurance Life appoints Dr. Sameera Dharmasena Chief Executive Officer
Sri Lanka Insurance Life (SLIC Life), the nation’s largest and strongest Life Insurer, is pleased to announce the appointment of Dr. Sameera Dharmasena as its new Chief Executive Officer, effective 22nd September 2026.
Dr. Dharmasena is a distinguished insurance professional with over 21 years of experience in the Sri Lankan insurance industry, having held senior leadership positions across several leading insurance companies affiliated with some of Sri Lanka’s largest business conglomerates. His extensive career spans both local and multinational insurance environments, bringing together broad industry expertise, strategic leadership and a strong commitment to the advancement of the insurance profession.
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