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How to save tourism industry

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Statement by Opposition Leader Sajith Premadasa on Tourism industry crisis

Leading up to 2019, Sri Lanka was recognized as one of the most exciting travel destinations in the world by numerous prestigious publications, including the ‘Lonely Planet’, The New York Times and Condé Nast. Improvements to the transportation system, the development of infrastructure, world class hotels and facilities and Sri Lanka’s natural beauty and hospitality were all factors. The Tourism Industry, a critical component of Sri Lanka’s economy and a key foreign exchange generator, was left devastated by the 2019 Easter Attacks as well as by the ongoing Global Pandemic.

The resulting lockdowns have impacted every facet of life and every industry, but especially Tourism; research shows that 36% of low-skilled workers and a further 36% of semi-skilled workers have been laid off; 28% of the junior and middle management segments have also been retrenched. 70% of tourism and hospitality specialists estimate that between 41% and 60% of the total industry workforce would be terminated.

Tourist arrivals have dwindled; only 507,704 between January and December 2020 with zero arrivals recorded between April and end December due to the closure of the airport and suspension of flights since the 18th of March 2020. This represents a decline of 73.5% over the previous corresponding period, when arrivals exceeded 1.9 Mn.

There are numerous service providers directly dependent on Tourism; over 500 travel agents, 250 recreational outlets, 300 tourist shops, 5,000 guides and the airlines as well, with employment opportunities within these service sectors severely restricted.

Over 90% of formal sector outlets and 75% of informal sector outlets remain temporarily closed. Over 75% of the informal sector outlets have closed down operations. Dependent industries have suffered due to sectoral linkages, leading to a multiplier effect, with millions of livelihoods left devastated.

Given the importance of Tourism to the economy, the GOSL must prioritise this industry.

In this regard, we consider certain budget proposals to be counterproductive to uplifting this vital sector. Pricing and margins will suffer due to the proposed 2.5% Social Security Contribution in addition to the 1% TDL on turnover. This impacts competitiveness of the Sri Lankan Tourism offering and these taxes are largely regressive in nature. The upcoming moratorium expiry deadlines will only lead to further cash flow constraints, plunging individuals and businesses into further debt. Disposable incomes will be virtually non-existent, fresh investments become unfeasible.

Based on the above critical issues we submit the following proposals

a) To restructure the debts obtained by the tourism sector from Licensed Commercial Banks for a period of ten (10) years with a grace period of two (2) years.

b) To waive-off the total interest portion of the term loans from April 2019 until 30th June 2022 during the moratorium period.

c) Implementation of the debt restructuring plan recommended by the Monetary Board of CBSL.

We further recommend abolishing the Local Government Levy up to 1% of the Turnover and replace it with a trade license fee similar to all other industries. In fact, this proposal was presented at the last budget by the Hon Finance Minister but has not been implemented to date.

Hotels are also subject to higher electricity tariffs. Tariffs applicable to hotels (i.e., H-1, H-2 & H-3) should be matched with Industrial tariffs (i.e., I-1, I-2 & I-3 which is currently a lower rate than “Hotel purposes”).

The restructure of the Tourism industry’s total debt portfolio of Rs. 350 billion as per recommendations of the Monetary Board of CBSL and the full implementation of concessions granted by the Cabinet of Ministers on the 10th of June 2020 are of vital urgency.

As a measure of immediate relief, the industry has requested authorities to intervene by mandating restructuring and rescheduling of loan facilities. The CBSL must provide clear guidelines to all Licensed Commercial Banks and Finance companies regarding the enforcement of contracts and recovery of facilities.

Effective mediation is necessary, unlike the previously ad hoc approach. Facilities need to be extended to new, approved projects in the tourism pipeline.

The main objective was to ensure worker retention, even on reduced salary terms, yet these have not been met, with a continued spike in terminations across all sectors. Many previously employed in the tourist sector also lack formal social security and are thus vulnerable to bankruptcy and destitution.

Revenue from Tourism was Sri Lanka’s second highest net foreign exchange generator in 2018/19 with earnings of USD 4.3 billion. As per the last budget speech presented by the former Finance Minister and present Prime Minister, the valuation of the hotel industry has exceeded over USD 10 billion.

Apart from the above, the following government institutions have benefited from the inflow of LKR 12.6 billion in 2018/19

It is estimated that the public sector will lose approx LKR 12 Bn in revenue from the Tourism sector in 2020 with similar losses expected by the end of 2021.

The loss of public sector revenue through tourism in 2020, based on 2019 earnings is estimated to be around Rs.12, 000.0 million. Even 2021 will see similar losses. Overall, the economy has lost around US$ 3.5 Bn during 2020 and this trend will continue in 2021. At a time when Sri Lanka has depleted foreign exchange reserves, protecting established and proven avenues for the generation of foreign exchange has to be a primary concern of the government.

Please also note that 90% of all tourism sector investments have been implemented by local entrepreneurs, of which 90% belong to the small and medium category.

It is notable that the 2009/10 registered hotel room capacity of 14,461 increased some 71% to 24,757 by 2018/19, a remarkable growth rate that has supported Sri Lanka’s investment portfolio.

Based on industry recommendations to the government, assurances have been given that steps to re-negotiate and re-structure the facilities extended through commercial banks will be favourably considered. However, in reality, this policy has not been equitably implemented and would not on its own be sufficient to support the industry at this crucial juncture. The following factors need urgent consideration to support the industry:

Repayment of accumulated interest on current borrowings once the moratorium has been granted comes to an end by mid-2022

Repayment of any outstanding capital on borrowings by end December, 2021

Repayment of outstanding statutory payments

Assistance to support a minimum of 6 months working capital

Assistance towards maintenance and product upgrading to ensure conformity with required quality and standards in keeping with classification requirements

Assistance for new, approved development projects that are on-hold as a result of increases in development costs, mainly due to depreciation of the Rupee and increase in construction cost – Bridging finance –

Financial assistance to industry stakeholders to be provided through local commercial banks.

Government on obtaining Cabinet approval, to set up a separate unit to plan, structure, evaluate, control and monitor the entire exercise. It could fall under the Ministry of Finance, Ministry of Planning and Implementation, Ministry of Tourism or at the Sri Lanka Tourism Development Authority (SLTDA) falling directly under the Ministry of Tourism.

The government to provide required guarantees to the fund through local banks. Perhaps a mechanism of the individual entities pledging shares to the value of borrowings or similar to be considered.

Though, the offshore funding made available will be in US$, the lending to industry stakeholders to be in Sri Lanka Rupees. (This will also assist the government to strengthen its depleted foreign reserves to some extent)

After careful evaluation of applications against an established criterion, assistance in the form of soft loans to be offered. – Minimum two year grace period on repayment of capital and interest. Preferential interest rates below 4% per annum. Payback period of 7 years. (In total, covering a period of 10 years)

Special Financial package purely meant for promotions for all local inbound tour operators as local inbound tour operator business volumes equal to 65% of the total arrivals to Sri Lanka during the pre-pandemic period.

We are aware of the forthcoming tourism policy document which has been submitted for public observations. It needs to articulate an action plan for all sectors namely: Development, Promotion and Regulations with clear time lines to prevent these policy documents from gathering dust.

We do not believe that this is the appropriate time to enact a rushed Tourism act, replacing the current Tourism Act 38 of 2005. The current act certainly does require changes but this must include adequate private sector participation in decision-making.

It is also an instrument that determines how the tourism fund has to be managed and disbursed. We note with consternation that the proposed Tourism Act leaves governance aspects to representatives

of state bodies with the private sector invited merely as ‘observers’.

It is also transparent that this proposed act has been orchestrated to suit the needs of certain individuals. This is not acceptable.

The Hon Minister of finance indicated the other day that the tourism fund was likely to be revoked and collections will go directly into the consolidated fund. This was the system that we did away with 15 years ago and brought the current act to enhance effective industry participation towards the development of tourism. We should not forget that the payoff was 2.3 million arrivals with tourism receipts hitting over USD 4 billion.

Sri Lanka is one destination out of over 250 competing destinations and hence it is vital that our country is positioned in source markets. We need to reach out to our primary, secondary and emerging markets aggressively to prevent ourselves from falling behind to other destinations.

We are aware of the massive shortage of foreign exchange in the country and tourism is one effective and sustainable remedy.

Indeed, given the above, it is clear that the economic destiny of Sri Lanka as a whole is closely intertwined with the performance of our Tourism Sector. Thus protection of this sector and related aspects, such as protection of the environment, wild life as well as reduction in pollution are vital to our Sri Lankan National project.



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Opinion

Can a punishment-free child become a threat to Sri Lankan society?

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Children are the future of every nation, and the values they learn during childhood shape the society they will eventually lead. In Sri Lanka, where family traditions, respect for elders, and social responsibility have long been important cultural values, the way children are raised remains a topic of great interest. In recent years, many parents and educators have moved away from traditional forms of punishment and embraced more child-friendly approaches to discipline. While protecting children from physical and emotional harm is essential, an important question arises: can a child who grows up without any form of punishment or consequences become a threat to Sri Lankan society?

To answer this question, it is necessary to understand the difference between punishment and discipline. Punishment is often associated with penalties imposed for wrongdoing, while discipline refers to teaching children self-control, responsibility, and respect for rules. Modern child psychology generally discourages harsh physical punishment because it can cause fear, anxiety, and resentment. However, completely removing consequences for inappropriate behavior may create a different set of problems.

Sri Lankan society has traditionally emphasized discipline within the family. Parents, grandparents, and teachers have often played active roles in guiding children’s behavior. Respect for elders, obedience, and good manners have been considered important virtues. While some traditional disciplinary methods may no longer be acceptable, the underlying principle of teaching accountability remains relevant.

A child who never faces consequences for wrongdoing may struggle to understand the boundaries that exist in society. For example, if a child is allowed to insult others, damage property, or ignore rules without correction, they may develop the belief that their actions have no consequences. Such attitudes can become problematic when the child enters school, the workplace, or the wider community.

Sri Lankan schools already face challenges related to student discipline. Teachers often report difficulties in managing classrooms where some students refuse to follow instructions or respect school regulations. When children are not taught accountability at home, educational institutions may find it harder to maintain a productive learning environment. This can affect not only the individual student but also classmates whose education is disrupted.

Another concern is the development of entitlement. A child who is never told “no” may come to believe that personal desires should always be fulfilled. In a society where cooperation and mutual respect are essential, such attitudes can lead to conflicts with peers, teachers, employers, and even family members. Sri Lanka’s social fabric depends heavily on community relationships, and individuals who fail to respect others can weaken these bonds.

The influence of social media and modern technology has added another dimension to this issue. Today’s children have access to information and entertainment on an unprecedented scale. Without proper guidance and consequences, some may misuse technology, engage in cyberbullying, spread misinformation, or develop unhealthy habits. Parents who avoid setting limits may unintentionally expose children to risks that affect both personal development and social well-being.

The workplace offers another example of why accountability is important. Sri Lanka’s economic development depends on a workforce that is disciplined, responsible, and capable of working with others. Employers value punctuality, respect, and professionalism. Individuals who grow up without learning responsibility may find it difficult to meet these expectations, affecting both their personal success and the productivity of organizations.

However, it is equally important not to interpret this argument as support for harsh punishment. Research has shown that excessive physical or emotional punishment can have serious negative effects on children. Fear-based parenting may produce obedience in the short term but can damage confidence, trust, and mental health in the long term. Therefore, the solution is not stricter punishment but more effective discipline.

Positive discipline provides a balanced alternative. It involves setting clear rules, explaining expectations, and applying fair consequences when those rules are broken. For instance, if a child neglects schoolwork, they may lose certain privileges until responsibilities are fulfilled. If they damage property, they can be required to help repair or replace it. Such consequences teach accountability while preserving the child’s dignity.

Sri Lankan parents, teachers, and community leaders all have a role to play in nurturing responsible citizens. Families should create environments where children feel loved and supported but also understand that actions have consequences. Schools should encourage character development alongside academic achievement. Religious and community organizations can reinforce values such as honesty, compassion, and respect for others.

A balanced approach is especially important in a rapidly changing society. As Sri Lanka continues to modernize and integrate with the global community, young people must learn not only their rights but also their responsibilities. Freedom without responsibility can lead to selfishness, while discipline without compassion can lead to fear. The challenge is to find the middle ground.

A punishment-free child can become a concern for Sri Lankan society if the absence of punishment also means the absence of discipline and accountability. Children who never learn consequences may struggle to respect rules, authority, and the rights of others. However, harsh punishment is not the answer. The most effective approach combines love, guidance, clear boundaries, and fair consequences. By raising children who understand both freedom and responsibility, Sri Lanka can build a future generation that strengthens society rather than threatens it.

Saumya Aloysius

(An essayist, children’s writer and freelance writer who holds a Master’s Degree in Sociology from the University of Kelaniya)

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Opinion

SriLankan Airbus struck by lightning

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A representational image

On Friday 12 June, 2026, a SriLankan Airlines Airbus 330 was en route from Colombo to Sydney, Australia was about 45 minutes into its flight when a loud bang was heard, accompanied by a blinding flash. In what was assumed to be a lightning strike, the airplane’s left (No. 1) engine was damaged, forcing the aircraft to return to BIA-Katunayake, where it landed safely.

Lightning travels from cloud to cloud or cloud to ground. Because the aircraft is not electrically ‘grounded’, or ‘earthed’, it must have been in the path of the thunder bolt purely by chance. There is also a phenomenon whereby the aircraft may travel through an electrically charged atmosphere (for example a cloud) where an electrical charge could build up and strike, or be emitted, as lightning. In such an instance, pilots hear electrical static in their headsets before the strike. Usually, when lightning strikes an aircraft in flight, the electrical charges remain on the outside, as on a ‘Faraday’s Cage’ apparatus, and the passengers and crew are perfectly safe.

To help the efficient and safe discharge of static electricity from the airplane’s structure, static wicks, or static dischargers, are fitted at the trailing (rearmost) edges of the wings and tail surfaces. When an airplane has landed after a lightning strike, ground engineers count the number of wicks that may have been burnt out to ensure that a minimum (recommended) number is available for a subsequent flight. Sometimes, there is minor damage, like pitting of the paintwork at the points where the charges left the aircraft.

The last instance in the USA of an airplane believed to have been lost due to a lightning strike was on December 8, 1963, when a Pan Am Boeing 707-121, en route from Baltimore, Maryland to Philadelphia, Pennsylvania, suffered a fuel tank explosion, later determined to have been the result of a lightning strike. Since then, aircraft have been rendered immune from lightning damage thanks to extensive research conducted by manufacturers using high-voltage currents.

Interestingly, modern airliners have electronic instrument displays which don’t even flicker when the aircraft is struck by lightning. By a process of connecting all the metallic parts, known as ‘bonding’, the entire fuselage effectively becomes a protective cocoon, so electrical charges caused by lightning will always reside on the outside of the aircraft.

What is unusual in the recent SriLankan Airlines incident is the extent of damage to the left engine. Did it encounter hail or ingest something?

Only a thorough, independent inquiry by aviation safety investigators will reveal the cause.

GUWAN SEEYA

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Opinion

Beyond diagnosis: A strategic design for 7% growth by 2029 (Part I)

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“Vision without execution is hallucination.” – Thomas Edison

Introduction: Stabilisation Is Not Transformation

Sri Lanka has come a long way since the economic collapse of 2022. Inflation has been brought under control. Foreign reserves have improved. Debt restructuring has advanced. Government revenue has increased significantly through taxation reforms. The exchange rate has stabilised, and confidence has gradually returned to financial markets.

These achievements deserve recognition.

However, stabilisation should not be confused with economic transformation. A patient discharged from intensive care is not necessarily healthy. Likewise, an economy that has escaped collapse has not necessarily achieved sustainable prosperity.

The central economic question facing Sri Lanka today is no longer how to avoid another crisis. Rather, it is how to achieve sustained economic growth of at least 7% per annum by 2029.

Unfortunately, much of the current policy debate remains trapped in economic diagnosis. Policymakers, economists, and commentators repeatedly identify familiar problems: (i) low productivity, (ii) weak exports, i(iii) Inadequate innovation, (iv) poor competitiveness, and (v) insufficient investment. While these diagnoses are correct, they are not new.

Sri Lanka now needs economic engineering.

The country requires a clear, measurable, and actionable National Growth Strategy for 2026-2029 that identifies (i) where growth will come from,(ii) what investments are required,(iii) which institutions will lead implementation, and (iv) how success will be measured.

The difference between diagnosis and engineering is the difference between describing a problem and solving it.

The Missing National Growth Target

One of the most striking weaknesses in Sri Lanka’s economic discourse is the absence of a publicly articulated growth target supported by a detailed implementation framework.

Successful economies establish measurable objectives.

Sri Lanka should adopt the following growth trajectory:

2026 – 4%

2027 – 5%

2028 – 6%

2029 – 7%

Such targets would provide direction to investors, public institutions, universities, exporters, and development partners. Without a destination, even the best policies risk becoming disconnected initiatives.

Today, many policy interventions appear fragmented—valuable in isolation but lacking integration into a broader national growth framework.

Growth Will Not Come From Consumption

For decades Sri Lanka relied heavily on consumption, imports, remittances, tourism, and external borrowing.

That model has reached its limits.

No country has achieved sustained prosperity through consumption-led growth alone.

The countries that transformed themselves—Singapore, South Korea, Ireland, Vietnam, and China—generated growth through productive investment, exports, industrialisation, and integration into global markets.

Sri Lanka’s future growth must therefore be driven by investment and exports rather than domestic consumption.

The challenge is not increasing spending but increasing productive capacity.

Export-Led Growth: The First Pillar of Transformation

Every successful Asian growth story has one characteristic in common: exports.

Exports generate foreign exchange, create jobs, attract investment, encourage innovation, and improve productivity.

Sri Lanka should establish an ambitious target of doubling export earnings within the next decade.

This requires moving beyond traditional exports and expanding into:

High-value agriculture

Food processing

Information technology services

Logistics services

Advanced manufacturing

Professional services

Export growth must become a national mission comparable to post-war reconstruction efforts seen elsewhere in Asia.

Without a major expansion of exports, sustained 7% growth will remain elusive.

Manufacturing: The Forgotten Growth Engine

Manufacturing remains the single most important source of rapid economic transformation worldwide. Vietnam provides perhaps the best recent example.

Through (i) industrial zones, (ii) trade agreements, (iii) infrastructure development, and (iv) targeted investment attraction, Vietnam became deeply integrated into Asian production networks.

Sri Lanka possesses strategic advantages:

A prime Indian Ocean location

Strong port infrastructure

Educated labour force

Proximity to India

The country should establish specialised manufacturing clusters focusing on:

Electronics assembly

Medical devices

Processed food products

Boat building

Rubber-based products

Engineering components

Rather than attempting to compete with every country, Sri Lanka should specialise in selected niches where competitive advantages can be developed.

RCEP: The Strategic Door to Asia

Sri Lanka’s future lies increasingly in Asia.

The Regional Comprehensive Economic Partnership (RCEP) represents the largest trading bloc in the world and includes many of the fastest-growing economies.

Membership or closer integration with RCEP supply chains could provide Sri Lankan exporters with access to markets, investment, technology, and production networks that are currently beyond reach.

Unfortunately, discussion on RCEP remains limited compared with its strategic significance.

A dedicated national roadmap for RCEP engagement should become a top economic priority.

The question is not whether Sri Lanka can afford to integrate more deeply into Asia.

The question is whether Sri Lanka can afford not to.

Knowledge Economy: Turning Universities Into Growth Institutions

Sri Lanka’s universities produce thousands of graduates annually, yet their contribution to commercial innovation remains limited.

Globally, universities have become engines of economic development.

Research institutions should not merely produce graduates; they should produce patents, technologies, startups, and commercial solutions.

A national innovation framework should:

Link universities with industry

Encourage commercialisation of research

Support technology transfer

Expand startup financing

Reward innovation and entrepreneurship

Knowledge must become an economic asset rather than an academic exercise.

Dairy, Agriculture, And Import Substitution

Export growth alone is insufficient.

Sri Lanka must also reduce unnecessary import dependence.

The dairy sector offers a compelling example.

For decades, billions of rupees have left the country through dairy imports despite favourable climatic conditions and substantial agricultural potential.

A comprehensive dairy development strategy should focus on:

Improved genetics

Feed production

Commercial farming

Processing investment

Farmer productivity

The objective should be import substitution combined with rural income growth.

The same principle can be applied selectively to other sectors where domestic production is economically viable.

Creating A National Investment Targeting Agency

Sri Lanka does not need another bureaucracy.

It needs a professional institution dedicated exclusively to investment targeting.

Instead of passively waiting for investors, this agency would actively identify and attract strategic investments aligned with national priorities.

Its mandate would include:

Identifying priority sectors

Marketing opportunities globally

Coordinating approvals

Monitoring outcomes

Facilitating technology transfer

Singapore’s Economic Development Board and Ireland’s Industrial Development Agency demonstrate how targeted investment institutions can transform national economies.

Sri Lanka requires a similar mechanism adapted to local realities.

From Economic Diagnosis To Economic Engineering

The next stage of Sri Lanka’s recovery requires a fundamental shift in thinking.

The policy debate must move beyond identifying problems. The country already knows its problems.The challenge is implementation.Every policy proposal should be evaluated against a simple question:

Will this contribute to achieving 7% growth by 2029?

If the answer is no, resources should be redirected.

Economic engineering requires focus, prioritisation, accountability, and measurable outcomes. The era of fragmented initiatives must give way to a coherent national growth strategy.

Summary

Sri Lanka has achieved significant macroeconomic stabilisation, but stabilisation is only the first step toward sustainable prosperity.

To move from recovery to transformation, Sri Lanka should adopt a National Growth Strategy for 2026-2029 built around five pillars:

Export-led growth

Investment-led growth

Manufacturing expansion

Knowledge-economy development

Regional integration through RCEP and Asian supply chains

Supporting sectors such as dairy, tourism, logistics, and information technology should be strategically developed within this framework.

Most importantly, investment must be targeted rather than scattered, supported by specialised institutions and measurable performance indicators.

Conclusion

History demonstrates that no nation has become prosperous by accident. Economic success is rarely the product of isolated policies or short-term political initiatives. It is the outcome of a deliberate strategy pursued consistently over many years.

Sri Lanka stands at a crossroads.

One path leads to modest growth, periodic crises, recurring debt challenges, and continued vulnerability. The other leads to transformation through investment, exports, innovation, manufacturing, and regional integration.

The choice is ultimately strategic.

The time has come for Sri Lanka to move from economic diagnosis to economic engineering.

The future will not be determined by how successfully the country stabilised after the crisis. It will be determined by how effectively it builds the foundations for sustained growth thereafter. If Sri Lanka can articulate and execute a coherent investment-led growth strategy today, achieving 7% growth by 2029 need not be an aspiration.

It can become a national objective—and a national achievement, economic Engineering

The writer, among many, served as the Special Advisor to the Office of the President of Namibia from 2006 to 2012 and was a Senior Consultant with the UNDP for 20 years. He was a Senior Economist with the Central Bank of Sri Lanka (1972-1993). He can be reached via asoka.seneviratne@gmail.com

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