Features
Budget 2025 Industrial Zone Proposals: Challenges and Solutions
The 2025 Budget proposes significant investments in industrial zones to boost domestic chemical production and export-oriented automobile and rubber manufacturing. While the initiative is commendable, several structural and logistical challenges threaten its success.
The 2025 Budget, presented to Parliament by President Anura Kumara Dissanayake as Finance Minister, allocates funds for industrial zones targeting chemical production for domestic use and automobile and rubber manufacturing for exports.
The Budget allocated Rs 500 million for five industrial parks, planned in Kankesanthurai (KKS), Mankulam, Iranawila, Galle, and Trincomalee, plus a proposed chemical manufacturing zone in Paranthan. The last named—home to the state-owned Paranthan chemical plant since 1954—is expected to boost mineral resource value addition and supply key industrial inputs, including acids and alkalis.
Another Rs. 1,500 million is set aside for an automotive assembly and rubber products zone to enhance export competitiveness in component manufacturing. The Budget document emphasises that investing in these sectors will strengthen Sri Lanka’s position in global export markets.
The Ministry of Industry and Entrepreneurship Development stated in March that the necessary lands for these zones had already been identified, and the acquisition process was underway. However, it would take another two–three years to fully establish the new industrial zones. Despite this, they aimed to complete the required infrastructure by the end of the year.
While one should laud this plan, which at least nods a head towards industrialisation, unfortunately, several challenges stand in the way of it achieving success.
Lack of outstation industrial ecosystems
The first is that industries need to be attracted to these areas. Each zone could be expected to hold about 250 factories. At present, industrialists prefer to invest in the Western Province, the only area with a semblance of an industrial ecosystem. The other areas lack facilities, infrastructure, and supply chain elements.
Past data shows industrial estates outside Colombo take 7-11 years to reach 50% occupancy, whereas Western Province-based zones reach 100% occupancy within eight years. President Premadasa forced companies to establish garment factories in the outstations by threatening to cancel their quotas. So, it appears that strong incentives and enforcement mechanisms may be necessary.
Transport and logistics bottlenecks
Transport poses another issue, in that the distance from a harbour remains an important factor. For example, the production of sulphuric acid at Paranthan, advanced by the government. Sulphuric acid is the largest-volume industrial chemical, finding uses as the electrolyte in lead-acid batteries, in petrochemical processes – such as refining petroleum – and several other industrial and other applications. However, it is utilised primarily in the production of phosphate fertilisers like superphosphate and ammonium sulphate.
In order to produce a tonne of single super phosphate (SSP) from the rock phosphate found in the Eppawela deposit, 390 kg of sulphuric acid are required. Transporting this to Eppawela would prove very expensive. Therefore, the Government-owned Lanka Phosphate Ltd. planned to make SSP in Trincomalee, using imported sulphur. The cost of transporting sulphur from Trincomalee to Paranthan and sulphuric acid from Paranthan to Eppawela would make it uneconomical.
The advantage of Paranthan is its proximity to the Elephant Pass salt-pans, providing it with the brine the factory requires for making Chlor-alkali chemicals – crucial for Sri Lanka’s textile, rubber, and food industries, and having significant export demands. The site has no advantage for making sulphuric acid.
Transport difficulties discourage investment in rural industries. Using railways more would ease these challenges. However, the railway network in Colombo Harbour has been dismantled, increasing costs through use of intermediary container lorries. Transportation of containers by rail reduces the cost by 66-75%. In the 1980s, plans were made for containerising railway freight transport, but these plans were scrapped – to the satisfaction of container lorry mudalalis.
Mismatched Planning
The lack of holistic thinking behind these proposals presents yet another issue. For example, the case of the industrial zone proposal for Mankulam, which requires an area of 240 hectares. Going by past experience, this will house about 200 factories, giving employment to about 35,000 people.
The population in the area is insufficient to provide a labour force, so workers would have to come from outside. Where would these people be housed? A clear gap exists between the required housing and infrastructure and provision for the same. No clear plan has been made for worker housing, leading to potential slums or migration strains.
Furthermore, the land use plan for Mankulam, done by the Land Use Policy Planning Department identifies only 10 ha for industrial use, plus a further 10 ha in Panikkanulam, 5km to the North. This would be suitable for only about 16-20 factories and about 3,000 jobs.
The Budget’s plan for the Mankulam industrial zone may have been drawn up on the basis of the Urban Development Authority’s unsuitable plan for Mankulam as a regional capital, with lakhs of residents. At the time this mega-plan was drawn up, an adviser to the Ministry called it too ambitious and suggested a scaled-down plan for a 10,000-resident Mankulam new town. This would easily match 10-20 ha for industrial use.
The example of Mankulam gives an idea of the ad-hoc nature of economic planning in Sri Lanka, and the lack of theoretical knowledge regarding the process of industrialisation.
Industry does not just spring up, it develops organically with society. Industrialisation is no standalone, but a holistic process, depending on other developments in society, for example, the provision of cheap food and adequate housing and transport, for the required cheap labour. It can only develop in an industrial ecosystem, which the government must provide.
The current strategy lacks coherence, with zones being planned in isolation from local resources, labour, and logistics. For instance, while Paranthan’s strength lies in brine-based chemicals, the Budget prioritises generic chemical production, such as sulphuric acid, disregarding regional advantages.
Paranthan
The government should focus on targeted industrial zones based on local advantages. For example, Paranthan’s proximity to both the Elephant Pass salt pans and to potential renewable solar and wind energy sources (electrolysis requiring stable power) makes it ideally positioned to develop a specialised industry around brine-based chemicals. These include:
Chlorine:
A critical component in PVC production (used in plastics, pipes, and cables), water treatment (disinfection), and pharmaceuticals.
Caustic soda:
Essential for textile processing (mercerisation), soap and detergent manufacturing, paper production, and aluminium refining via the Bayer process.
Hydrogen:
Used in ammonia production for fertilisers, petroleum refining, and as a potential clean fuel source.
Hydrochloric Acid:
Vital for steel pickling (rust removal), food processing (pH regulation, gelatine production), and chemical synthesis (e.g. vinyl chloride for PVC).
Sodium Carbonate and Bicarbonate:
Key inputs for glass manufacturing, detergents, and food preservation (baking soda).
Bleach (Sodium Hypochlorite):
Widely used in water purification, textile bleaching, and household disinfectants.
Additionally, there are some high-value derivatives such as Chlorinated Paraffin (lubricants and plasticisers), Chlorinated Solvents (dry cleaning and industrial degreasing), Zinc Chloride (essential for battery electrolytes, metal soldering fluxes, and wood preservation), and Calcium Chloride (food preservation and as a concrete accelerator).
Solutions
By focusing on these brine-derived chemicals, Paranthan can put to use its natural resource advantage to establish a competitive, high-value industrial cluster, avoiding the inefficiencies of generic chemical production.
In the same way, Trincomalee could exploit its natural harbour and its proximity to Eppawela to avoid costly inland transport and develop industries based on sulphuric acid and rock phosphate processing.
The government should also look to revive rail freight, for example to reduce logistics costs for bulk chemicals. It needs to rebuild port-rail links for container transport, and to offer subsidised rail rates for industries in the new zones.
Additionally, the success of these zones depends on strong incentives for outstation investment, such as tax holidays, utility subsidies and export rebates. Incentives should be linked to employment generation.
Furthermore, these zones require integrated urban-industrial planning for sustainability. A phased approach should be adopted: starting with pilot projects in smaller areas, say 10-20 ha, and expanding as demand grows. Before expanding the zones, the government should ensure adequate, affordable housing for workers (preferably within walking distance), public transport links (especially by bus and rail) to nearby towns. For a constant supply of skilled labour, vocational training facilities should be provided. In essence, this would be the basis for a series of industry-based new towns, which could absorb expanding urban population without leading to crowding.
To summarise, the 2025 Budget’s industrial zone plans have potential but suffer from disjointed planning, transport inefficiencies, and unrealistic scaling. Success requires:
Localised, resource-based industrialisation (not one-size-fits-all).
Logistics reform (rail freight revival).
Stronger incentives to attract investors.
Phased expansion, starting at a small scale.
Integrated urban-industrial development.
Without these fixes, Sri Lanka risks underutilised zones, wasted funds, and missed export opportunities.
(Vinod Moonesinghe read mechanical engineering at the University of Westminster, and worked in Sri Lanka in the tea machinery, motor spares, and railway industries. He later turned to journalism and history. He served as chair of the Board of Governors of the Ceylon German Technical Training Institute. He is a convenor of the Asia Progress Forum, which can be contacted at asiaprogressforum@gmail.com.)
By Vinod Moonesinghe
Features
Sri Lanka’s new govt.: Early promise, growing concerns
President Anura Kumara Dissanayake’s demeanour, body language, and speaking style appear to have changed noticeably in recent weeks, a visible sign of embarrassment. The most likely reason is a stark contradiction between what he once publicly criticised and analysed so forcefully, and what his government is actually doing today. His own recent speeches seem to reflect that contradiction, sometimes coming across as confused and inconsistent. This is becoming widely known, not just through social media, YouTube, and television discussions, but also through speeches on the floor of Parliament itself.
Doing exactly what the previous government did
What is now becoming clear is that instead of doing things the way the President promised, his government is simply carrying on with what the previous administration, particularly Ranil Wickremesinghe’s government, was already doing. Critically, some of the most senior positions in the state, positions that demand the most experienced and capable officers, are being filled by people who are loyal to the JVP/NPP party but lack the relevant qualifications and track record.
Such politically motivated appointments have already taken place across various government ministries, some state corporations, the Central Bank, the Treasury, and at multiple levels of the public service. There have also been forced resignations, bans on resignations, and transfers of officials.
What makes this particularly serious is that President Dissanayake has had to come to Parliament repeatedly to defend and “clean up” the reputations of officials he himself appointed. This looks, at times, like a painful and almost theatrical exercise.
The coal procurement scandal, and a laughable inquiry
The controversy around the country’s coal power supply has now clearly exposed a massive disaster: shady tenders, damage to the Norochcholai power plant, rising electricity bills due to increased diesel use to compensate, a shortage of diesel, higher diesel prices, and serious environmental damage. This is a wide and well-documented catastrophe.
Yet, when a commission was appointed to investigate, the government announced it would look into events going back to 2009, which many have called an absurd joke, clearly designed to deflect blame rather than find answers.
The Treasury scandal, 10 suspicious transactions
At the Treasury, what was initially presented as a single transaction, is alleged to involve 10 transactions, and it is plainly a case of fraud. A genuine mistake might happen once or twice. As one commentator said sarcastically, “If a mistake can happen 10 times, it must be a very talented hand.” These explanations are being treated as pure comedy.
Attempts to justify all of this have sometimes turned threatening. A speech made on May 1st by Tilvin Silva is a case in point, crude and menacing in tone.
Is the government losing its grip?
Former Minister Patali Champika has said the government is now suffering from a phobia of loss of power, meaning it is struggling to govern effectively. Other commentators have noted that the NPP/JVP may have taken on a burden too heavy to carry. Political cartoons have depicted the NPP’s crown loaded with coal, financial irregularities, and political appointments, bending under the weight.
The problem with appointing loyalists over qualified professionals
Appointing own supporters to senior positions is not itself unusual in politics. But it becomes a betrayal of public trust when those appointed lack the basic qualifications or relevant experience for the roles they are given.
A clear example is the appointment of the Treasury Secretary, someone who was visible at virtually every NPP election campaign event, but whose qualifications and exposure/experiences may not match the demands of such a critical position. Even if someone has a doctorate or professorship, the key question is whether those qualifications are relevant to the role, and whether that person has the experience/exposure to lead a team of seasoned professionals.
By contrast, even someone without formal academic credentials can succeed if they have the right skills and surround themselves with advisors with relevant exposure. The real failure is when loyalty to a political party overrides all other considerations, that is a fundamental betrayal of responsibility.
The problem is not unique to this government. In 2015, the appointment of Arjuna Mahendran as Central Bank Governor was a similar blunder. His tenure ended in scandal involving insider dealing and bond market manipulation. However, in that case, the funds involved were frozen and later confiscated by the following government, however legally questionable that process was.
The current Treasury losses, by contrast, may be unrecoverable. Critics say getting that money back would be next to impossible.
The broader damage: Demoralisation of capable officials
When loyalists are placed above competent career officials in key positions, it demoralises the best public servants. Some begin to comply in fear; others lose motivation entirely. The professional hierarchy breaks down. Junior officials start looking over their shoulders instead of doing their jobs. This collective dysfunction is ultimately what destroys governments.
Sri Lanka’s pattern: every government falls
This pattern is deeply familiar in Sri Lankan history. The SWRD Bandaranaike government, which swept to power in 1956 on a wave of popular support, had declined badly by 1959. The coalition government, which came to power reducing the opposition to eight seats, lost in 1977, and, in turn, the UNP, which came in on a landslide, in 1977, crushing the SLFP to just eight seats, suffered a similar fate by 1994.
Mahinda Rajapaksa came to power in 2005 by the narrowest of margins, in part because the LTTE manipulated the Northern vote against Ranil Wickremesinghe. But he was re-elected in 2010 on the strength of ending the war against the LTTE. Still, by 2015, he was voted out, because the benefits of winning the war were never truly delivered to ordinary people, and because large-scale corruption had taken root in the meantime. Gotabaya Rajapaksa didn’t even last long enough to see his term end.
Now, this government, too, is showing early signs of the same decline.
The ideological contradiction at the heart of the NPP
There is another challenge: though the JVP presents itself as a left-wing, Marxist-socialist party, many of those who joined the broader NPP coalition, businesspeople, academics, professionals, do not hold such ideological views. Balancing a left-leaning party with a centre-right coalition is extremely difficult. The inevitable tension between the two pulls the government in opposite directions.
The silver lining, however, is that this has produced a growing class of “floating voters”, people not permanently tied to any party, and that is actually healthy for democracy. It keeps governments accountable. Independent election commissions and civil society organisations have a major role to play in informing these voters objectively.
In more developed democracies, voters receive detailed candidate profiles and well-researched information alongside their ballot papers, including, for example, independent expert analyses of referendum questions like drug legalisation. Sri Lanka is still far from that standard. Here, many people vote the same way as their parents. In other countries, five family members might each vote differently without it being a scandal.
Three key ministries, under the President himself, all in trouble
President Dissanayake currently holds three of the most powerful portfolios himself: Defence, Digital Technology, and Finance. All three are now widely seen as performing poorly. Many commentators say the President has “failed” visibly in all three areas. The justifications offered for these failures have themselves become confused, contradictory, and, at times, just plain pitiable.
The overall picture is one of a government that looks helpless, reduced to making excuses and whining from the podium.
A cautious hope for recovery
There are still nearly three years left in this government’s term. There is time to course-correct, if they act quickly. We sincerely hope the government manages to shed this sense of helplessness and confusion, and finds a way to truly serve the country.
(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT, Malabe. The views and opinions expressed in this article are personal.)
Features
Cricket and the National Interest
The appointment of former minister Eran Wickremaratne to chair the Sri Lanka Cricket Transformation Committee is significant for more than the future of cricket. It signals a possible shift in the culture of governance even as it offers Sri Lankan cricket a fighting possibility to get out of the doldrums of failure. There have been glorious patches for the national cricket team since the epochal 1996 World Cup triumph. But these patches of brightness have been few and far between and virtually non-existent over the past decade. At the centre of this disaster has been the failures of governance within Sri Lanka Cricket which are not unlike the larger failures of governance within the country itself. The appointment of a new reform oriented committee therefore carries significance beyond cricket. It reflects the wider challenge facing the country which is to restore trust in public institutions for better management.
The appointment of Eran Wickremaratne brings a professional administrator with a proven track record into the cricket arena. He has several strengths that many of his immediate predecessors lacked. Before the ascent of the present government leadership to positions of power, Eran Wickremaratne was among the handful of government ministers who did not have allegations of corruption attached to their names. His reputation for financial professionalism and integrity has remained intact over many years in public life. With him in the Cricket Transformation Committee are also respected former cricketers Kumar Sangakkara, Roshan Mahanama and Sidath Wettimuny together with professionals from legal and business backgrounds. They have been tasked with introducing structural reforms and improving transparency and accountability within cricket administration.
A second reason for this appointment to be significant is that this is possibly the first occasion on which the NPP government has reached out to someone associated with the opposition to obtain assistance in an area of national importance. The commitment to bipartisanship has been a constant demand from politically non-partisan civic groups and political analysts. They have voiced the opinion that the government needs to be more inclusive in its choice of appointments to decision making authorities. The NPP government’s practice so far has largely been to limit appointments to those within the ruling party or those considered loyalists even at the cost of proven expertise. The government’s decision in this case therefore marks a potentially important departure.
National Interest
There are areas of public life where national interest should transcend party divisions and cricket, beloved of the people, is one of them. Sri Lanka cannot afford to continue treating every institution as an arena for political competition when institutions themselves are in crisis and public confidence has become fragile. It is therefore unfortunate that when the government has moved positively in the direction of drawing on expertise from outside its own ranks there should be a negative response from sections of the opposition. This is indicative of the absence of a culture of bipartisanship even on issues that concern the national interest. The SJB, of which the newly appointed cricket committee chairman was a member objected on the grounds that politicians should not hold positions in sports administration and asked him to resign from the party. There is a need to recognise the distinction between partisan political control and the temporary use of experienced administrators to carry out reform and institutional restructuring. In other countries those in politics often join academia and civil society on a temporary basis and vice versa.
More disturbing has been the insidious campaign carried out against the new cricket committee and its chairman on the grounds of religious affiliation. This is an unacceptable denial of the reality that Sri Lanka is a plural, multi ethnic and multi religious society. The interim committee reflects this diversity to a reasonable extent. The country’s long history of ethnic conflict should have taught all political actors the dangers of mobilising communal prejudice for short term political gain. Sri Lanka paid a very heavy price for decades of mistrust and division. It would be tragic if even cricket administration became another arena for communal suspicion and hostility. The present government represents an important departure from the sectarian rhetoric that was employed by previous governments. They have repeatedly pledged to protect the equal rights of all citizens and not permit discrimination or extremism in any form.
The recent international peace march in Sri Lanka led by the Venerable Bhikkhu Thich Paññākāra from Vietnam with its message of loving kindness and mindfulness to all resonated strongly with the masses of people as seen by the crowds who thronged the roadsides to obtain blessings and show respect. This message stands in contrast to the sectarian resentment manifested by those who seek to use the cricket appointments as a weapon to attack the government at the present time. The challenges before the Sri Lanka Cricket Transformation Committee parallel the larger challenges before the government in developing the national economy and respecting ethnic and religious diversity. Plugging the leaks and restoring systems will take time and effort. It cannot be done overnight and it cannot succeed without public patience and support.
New Recognition
There is also a need for realism. The appointment of Eran Wickremaratne and the new committee does not guarantee success. Reforming deeply flawed institutions is always difficult. Besides, Sri Lanka is a small country with a relatively small population compared to many other cricket playing nations. It is also a country still recovering from the economic breakdown of 2022 which pushed the majority of people into hardship and severely weakened public institutions. The country continues to face unprecedented challenges including the damage caused by Cyclone Ditwah and the wider global economic uncertainties linked to conflict in the Middle East. Under these difficult circumstances Sri Lanka has fewer resources than many larger countries to devote to both cricket and economic development.
When resources are scarce they cannot be wasted through corruption or incompetence. Drawing upon the strengths of all those who are competent for the tasks at hand regardless of party affiliation or ethnic or religious identity is necessary if improvement is to come sooner rather than later. The burden of rebuilding the country cannot rest only on the government. The crisis facing the country is too deep for any single party or government to solve alone. National recovery requires capable individuals from across society and from different sectors such as business and civil society to work together in areas where the national interest transcends party politics. There is also a responsibility on opposition political parties to support initiatives that are politically neutral and genuinely in the national interest. Not every issue needs to become a partisan battle.
Sri Lanka cricket occupies a special place in the national consciousness. At its best it once united the country and gave Sri Lankans a sense of pride and international recognition. Restoring integrity and professionalism to cricket administration can therefore become part of the larger task of national renewal. The appointment of Eran Wickremaratne and the new committee, while it does not guarantee success, is a sign that the political leadership and people of the country may be beginning to mature in their approach to governance. In recognising the need for competence, integrity and bipartisan cooperation and extending it beyond cricket into other areas of national life, Sri Lanka may find the way towards more stable and successful governance..
by Jehan Perera
Features
From Dhaka to Sri Lanka, three wheels that drive our economies
Court vacation this year came with an unexpected lesson, not from a courtroom but from the streets of Dhaka — a city that moves, quite literally, on three wheels.
Above the traffic, a modern metro line glides past concrete pillars and crowded rooftops. It is efficient, clean and frequently cited as a symbol of progress in Bangladesh. For a visitor from Sri Lanka, it inevitably brings to mind our own abandoned light rail plans — a project debated, politicised and ultimately set aside.
But Dhaka’s real story is not in the air. It is on the ground.
Beneath the elevated tracks, the streets belong to three-wheelers. Known locally as CNGs, they cluster at junctions, line the edges of markets and pour into narrow roads that larger vehicles avoid. Even with a functioning rail system, these three-wheelers remain the city’s most dependable form of everyday transport.
Within hours of arriving, their importance becomes obvious. The train may take you across the city, but the journey does not end there. The last mile — often the most complicated part — belongs entirely to the three-wheeler. It is the vehicle that gets you home, to a meeting or simply through streets that no bus route properly serves.
There is a rhythm to using them. A destination is mentioned, a price is suggested and a brief negotiation follows. Then the ride begins, edging into traffic that feels permanently compressed. Drivers move with instinct, adjusting routes and squeezing through gaps with a confidence built over years.
It is not polished. But it works.
And that is where the comparison with Sri Lanka becomes less about what we lack and more about what we already have.
Back home, the three-wheeler has long been part of daily life — so familiar that it is often discussed only in terms of its problems. There are frequent complaints about fares, refusals or the absence of meters. More recently, the industry itself has become entangled in politics — from fuel subsidies to regulatory debates, from election-time promises to periodic crackdowns.
In that process, the conversation has shifted. The three-wheeler is often treated as a problem to be managed, rather than a service to be strengthened.
Yet, seen through the experience of Dhaka, Sri Lanka’s system begins to look far more settled — and, in many ways, ahead.
There is a growing structure in place. Meters, while not perfect, are widely recognised. Ride-hailing apps have added transparency and reduced uncertainty for passengers. There are clearer expectations on both sides — driver and commuter alike. Even small details, such as designated parking areas in parts of Colombo or the increasing standard of vehicles, point to an industry slowly moving towards professionalism.
Just as importantly, there is a human element that remains intact.
In Sri Lanka, a three-wheeler ride is rarely just a transaction. Drivers talk. They offer directions, comment on the day’s news, or share local knowledge. The ride becomes part of the social fabric, not just a means of getting from one point to another.
In Dhaka, the scale of the city leaves less room for that. The interaction is quicker, more direct, shaped by urgency. The service is essential, but it is under constant pressure.
What stands out, across both countries, is that the three-wheeler is not a temporary or outdated mode of transport. It is a necessity in dense, fast-growing Asian cities — one that fills gaps no rail or bus system can fully address.
Large infrastructure projects, like light rail, are important. They bring efficiency and long-term capacity. But they cannot replace the flexibility of a three-wheeler. They cannot reach into narrow streets, respond instantly to demand or provide that crucial last-mile connection.
That is why, even in a city that has invested heavily in modern rail, Dhaka still runs on three wheels.
For Sri Lanka, the lesson is not simply about what could have been built, but about what should be better managed and valued.
The three-wheeler industry does not need to be politicised at every turn. It needs steady regulation — clear fare systems, proper licensing, safety standards — alongside encouragement and recognition. It needs to be seen as part of the solution to urban transport, not as a side issue.
Because for thousands of drivers, it is a livelihood. And for millions of passengers, it is the most immediate and reliable form of mobility.
The tuk-tuk may not feature in grand policy speeches or infrastructure blueprints. It does not run on elevated tracks or attract international attention. But on the ground, where daily life unfolds, it continues to do what larger systems often struggle to do — show up, adapt and keep moving.
And after watching Dhaka’s streets — crowded, relentless, yet functioning — that small, three-wheeled vehicle feels less like something to argue over and more like something to get right.
(The writer is an Attorney-at-Law with over a decade of experience specialising in civil law, a former Board Member of the Office of Missing Persons and a former Legal Director of the Central Cultural Fund. He holds an LLM in International Business Law)
by Sampath Perera recently in Dhaka, Bangladesh
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