Business
A new bill will be introduced to address bankrupt businesses -President
President Ranil Wickremesinghe stated that it is not feasible to indefinitely maintain the temporarily suspended Parate law and consequently, a new bill will be introduced to address bankrupt businesses.
The President also mentioned that the proposed bill includes provisions for restructuring loans taken by Micro, Small and Medium Enterprises (MSME).
Additionally, a new institution named “Enterprise Sri Lanka” will be established to provide necessary support and assistance to Micro, Small and Medium-Scale Entrepreneurs. The President emphasized that the government is committed to encouraging and empowering these entrepreneurs in Sri Lanka.
President Ranil Wickremesinghe made these remarks at the “Critical initiative to revitalize Sri Lanka’s micro, small and medium scale economy” event, organized by the Ceylon Federation of MSME, on Friday (19) at the Bandaranaike Memorial International Conference Hall (BMICH) in Colombo.
The President stated that a copy of the new bill, which has already been drafted, can be provided to the Ceylon Federation of Micro, Small, and Medium Enterprises. He requested that micro, small, and medium enterprises submit their views and suggestions on the bill.
Additionally, the President mentioned that an opportunity could be arranged to discuss the issues faced by micro, small, and medium enterprises with the International Monetary Fund delegation scheduled to visit Sri Lanka at the end of this month.
President of the Sri Lanka Micro, Small, and Medium Enterprises Federation Mrs. Sashika De Silva, presented a special commemorative gift to the President.
President Wickremesinghe further stated,
“There have been many questions from you, the Micro, Small and Medium-scale Entrepreneurs, about the recent challenges. Before addressing your specific concerns, I want to explain the background that led to these issues. We need to find solutions based on this context.
During the recent past, the country’s economy faced a severe collapse, impacting all businesses, particularly small enterprises and causing widespread losses among micro-enterprises. The banking system was also at risk. Our immediate priority upon taking office was to stabilize the situation, negotiate with the International Monetary Fund (IMF), and work towards economic recovery.
They indicated that reaching an agreement with the IMF would allow us to move forward. Private creditors also agreed to address the framework once we had an agreement with the official creditors. Without financial support, making progress was impossible.
During that period, we had to agree on several key issues. We decided not to print more money or borrow from banks, as banks themselves were struggling. These practices had become our main sources of income, but we were advised to abandon these flawed approaches and adopt a new strategy.
As part of this shift, we had to remove subsidies from some corporations. Previously, we were providing between LKR 700 and 800 million in subsidies annually, funded by the people of this country. To correct this, we stopped the subsidies, which led to an increase in prices for goods, including fuel.
Additionally, we had to increase VAT because the revenue from it was insufficient. Currently, the country’s economy is being managed with our own resources. This has placed a significant burden on us, but we had to bear it. The international community observed our efforts to manage our own challenges before seeking external support, and this is where we began our recovery process.
“Ultimately, we successfully managed all public corporations using our own resources. This has led to fuel prices fluctuating in line with global trends. There is potential to further reduce fuel prices by cutting certain costs, and the same applies to energy prices.
Next year, we aim to address all inefficiencies. Once the economy is stabilized, we will be able to make further progress. However, it is crucial to protect the banking system. We had to inject capital into government banks, such as the Bank of Ceylon and the People’s Bank, as well as private banks. This required using a portion of our funds. Safeguarding the banking system is essential for our continued advancement.
The International Monetary Fund and the World Bank have pointed out that our subsidies were insufficient and needed to be better targeted. As a result, we initiated the ‘Aswesuma’ program. Under this program, we are providing three times the amount previously given through the Samurdhi movement. While Samurdhi benefited 1.8 million people, our new Aswasuma program extends benefits to 2.4 million low-income earners. This program is a key initiative for supporting those in need.
In addition to safeguarding our banking system and supporting micro, small, and medium enterprises, we are also advancing large scale businesses.
We are focusing on granting land rights to 02 million people through the ‘Urumaya’ program by providing freehold land deeds. This process may take three to four years to complete, resulting in 02 million new landowners. We are also working on providing household ownership to approximately 200,000 people and establishing villages in the plantation sector with associated land and housing rights. In total, this initiative will benefit between 2 and 2.5 million people. Our goal is to continually work towards providing rights and support to the people.
Preliminary, we are focusing on providing rights at the grassroots level. This includes land used for agriculture, as poverty remains prevalent in villages. We are advancing agricultural modernization in rural areas to boost economic activity. This initiative will increase local money circulation, raise entitlement levels, and expand bank accounts, ultimately enhancing individual wealth. By supporting these efforts, we aim to help small and medium-scale businesses thrive alongside these communities.
Currently, we have suspended the Parate law, but it cannot remain suspended indefinitely. Therefore, we are working on a new Insolvency Bill, which we have now presented. A copy will be made available for discussion. Please review it, as it includes provisions for restructuring.
We should also focus on boosting exports. To support this, we are establishing a new organization called ‘Enterprise Sri Lanka,’ which will provide the necessary assistance. Additionally, we are setting up a National Bank for Development. While these changes cannot happen all at once, we are implementing them systematically as the economy develops.
In this context, your issues can be discussed. If you are interested, I can arrange consultations with representatives from the International Monetary Fund, who will visit Sri Lanka at the end of this month.
First, review and discuss these points among yourselves – What legal remedies are needed? – Are additional concessions required beyond those outlined in the draft? Discuss these matters and share your concerns. You can later discuss the law with the government. However, before doing so, let’s consult with the International Monetary Fund. I will also assign several officers from the Ministry to assist you. We are ready to help.
Former Finance Minister Ravi Karunanayake, President’s Senior Advisor Neranjan Dev Adhitya, Secretary of the Ministry of Industries Shantha Weerasinghe, Industrial Development Board Chairman Dr. Saranga Alahapperuma, President Counsel Ronald C. Perera, along with Chairmen and representatives of public and private banks, and officials from the Ceylon Micro, Small, and Medium Enterprises Federation, were present at the event.
Business
Industry and Entrepreneurship Development Minister Handunneththi’s visit to Lumala highlights key industrial concerns
With the aim of assesing the current challenges faced by local industrialists and explore avenues for government support, Minister of Industry and Entrepreneurship Development Hon. Sunil Handunneththi visited City Cycle Industries Manufacturing (Pvt.) Ltd., widely known as Lumala, on March 24 at its factory in Panadura.
During the visit, Minister Handunneththi engaged with senior officials and employees to understand their concerns and operational difficulties. In a statement shared on social media, the Minister acknowledged the pressing challenges affecting Sri Lanka’s manufacturing sector and emphasized the government’s commitment to providing swift and effective solutions.
Minister Handunneththi further reiterated the government’s intent to position local manufacturers as key stakeholders in Sri Lanka’s economy by addressing regulatory hurdles, market imbalances, and supply chain constraints.
The visit comes amid growing concerns from Lumala employees and management regarding the state of Sri Lanka’s bicycle manufacturing industry, in the backdrop of facing significant challenges, including an influx of imported bicycles and components that circumvent regulatory checks. In addition, the high taxes on raw materials used in local manufacturing has further exacerbated production costs, making it difficult for domestic manufacturers to remain competitive.
Earlier this year, Lumala employees called for urgent government intervention to address these challenges, warning that ongoing financial strain could lead to further shutdowns of critical production units, job losses, and setbacks to the broader industrial ecosystem. With a local value addition of 50-70 percent verified by the Ministry, its workforce remains hopeful that government action will help achieve an ethical manufacturing industry.
Lumala, a household name in Sri Lanka’s bicycle industry, has been a key player in sustainable mobility solutions for over 35 years. The company was recently honored with the Best National Industry Brand award under the Large-Scale Other Industry Sector category at the National Industry Brand Excellence Awards 2024.
With a production capacity of 2,000 bicycles per day and a workforce of 200, Lumala continues to cater to both domestic and international markets, producing a diverse range of bicycles, electric bikes and light electric vehicles. In line with Sri Lanka’s goal to expand forest cover to 32 percent by 2030 and cut GHG emissions by 14.5%, Lumala is actively contributing to this mission—both as a company and through its diverse range of products.
As Sri Lanka works towards strengthening its local manufacturing sector, Minister Handunneththi’s visit signals a crucial step toward addressing industrial concerns and reinforcing government support for sustainable and competitive domestic production.
Sri Lanka’s country rating was upgraded from ‘Restricted Default’ to ‘CCC’ following the successful exchange for the new International Sovreign Bonds (SL ISBs) during December 2024. The three types (03) of exciting new sovereign bonds have restored foreign investor confidence.
The Central Bank of Sri Lanka (CBSL) has performed a remarkable role in guiding the economy out of default status and restored economic stability, and gained Sri Lanka a non-default Country Rating of ‘CCC’. Among the key achievements of CBSL, have been to reduce treasury interest rates under 9% and stabilize the currency while rebuilding foreign reserves to $ 6Bn.
SL offers four Macro Linked Bonds (MLBs) linked to GDP growth, a Governance Linked Bond (GLB) and a short term, Fixed Coupon Bond for unpaid Past Due Interest (PDI). The MLBs offer variable returns depending on SL’s GDP growth from 2024 to 2027, (e.g. haircuts can vary between 16% to 39%). The GLB interest can vary depending on meeting 15.3% and 15.4% of Total Revenue/ GDP thresholds in 2026 and 2027 respectively. The PDI bond offers a fixed coupon of 4% until 2028 and trades at around $94.
This combination of unique, variable returns offers global investors an exciting opportunity to capitalize on SL’s economic revival and US interest rate movements. Sri Lanka’s economic resurgence in 2024 was promising, with a 5% GDP growth rate. With improving investor confidence, SL ISB daily turnover now exceeds $10mn.
The Ceylon Dollar Bond Fund (CDBF) is the only USD Sovereign Bond Fund that is exclusively invested in SL ISBs with Deutsche Bank acting as the Trustee and Custodian Bank. The Fund reported returns of 53% in 2023 and 39% in 2024.
We invite foreign investors to enter CDBF while Sri Lanka is rated at ‘CCC’ and consider realizing their investment upon SL reaching a Country Rating of ‘B- ‘. Other advantages of CDBF are, the ability to withdraw anytime and being tax exempted.
Ceylon Asset Management (CAM), the Fund Manager, has commenced an advertising campaign to promote the CDBF to the Sri Lankan Diaspora, South Asian, Middle Eastern and Australian Investors. CAM is an Associate Company of Sri Lanka Insurance Corporation (SLIC) and licensed under the Securities and Exchange Commission of Sri Lanka Act, No. 19 of 2021.
Meanwhile, the Ceylon Financial Sector Fund managed by CAM emerged as the top performing rupee fund in Sri Lanka during 2024, with a return of 64%. Investors can find out more on www.ceylonassetmanagement.com or write to us on info@ceylonam.com.
Past performance is not an indicator of the future performance. Investors are advised to read and understand the contents of the KIID on www.ceylonam.com before investing. Among others investors shall consider the fees and charges involved.(CAM)
CSE plunged at open, falling for the second consecutive day yesterday, down over 300 points in mid- morning trade.US President Donald Trump has imposed a 44 percent tax on Sri Lanka’s exports in an executive order which he claimed, spelt out discounted reciprocal rates for about half the taxes and barriers imposed by the island on America.
As a result both indices showed a downward trend. The All Share Price Index dropped 300 points, or 2.32 percent, to 15,294.94, while the S&P SL20 dropped 101 points, or 2.71 percent, to 4,517.37.
Turnover stood at Rs 3.1 billion with six crossings. Those crossings were reported in Sampath Bank which crossed 1.6 million shares to the tune of Rs 181 million and its shares traded at 109, JKH 4.1 million shares crossed to the tune of 80.5 million and its shares sold at Rs 19.5.
Hemas Holdings 400,000 shares crossed for Rs 45.6 million; its shares traded at Rs 114, CTC 25000 shares crossed to the tune of Rs 32.2 million; its shares traded at Rs 1330, Commercial Bank 200,000 shares crossed for 27 million; its shares traded at Rs 135 and TJ Lanka 157,000 shares crossed for Rs 20 million; its shares traded at Rs 46.
In the retail market top six companies that have mainly contributed to the turnover were; Sampath Bank Rs 296 million (2.9 million shares traded), JKH Rs 220 million (11.2 million shares traded), Haylays Rs 195 million (142,000 shares traded), HNB Rs 151 million (519,000 shares traded), Commercial Bank Rs 138 million (1 million shares traded) and Central Finance Rs 129 million (735,000 shares traded). During the day 218 million shares volumes changed hands in 22000 transactions.
It is said the banking sector was the main contributor to the turnover, especially Sampath Bank, while manufacturing sector, especially JKH, was the second largest contributor.
Yesterday, the rupee opened at Rs 296.75/90 to the US dollar in the spot market, stronger from Rs 296.90/297.20 on the previous day, dealers said, while bond yields were up.
A bond maturing on 15.10.2028 was quoted at 10.35/40 percent, up from 10.25/30 percent.
A bond maturing on 15.09.2029 was quoted at 10.50/60 percent, up from 10.45/55 percent.
A bond maturing on 15.10.2030 was quoted at 10.60/70 percent, up from 10.30/65 percent.
By Hiran H Senewiratne
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