Business
Advocata Institute releases comprehensive report on the tea industry of Sri Lanka
Advocata Institute released its latest report titled “Market Competitiveness of the Tea Industry of Sri Lanka” on Thursday, December 28, 2023. The report is authored by Sudaraka Ariyaratne, Research Consultant at Advocata Institute.
The report begins with an introductory chapter that details the historical evolution of the island’s tea industry. The report finds that the present standing of the industry in the context of the international market is not too grim, but argues that issues related to the labour market, capital investment, value addition, and quality control limit the industry’s competitiveness in the global stage. The rest of the report takes the form of four discussion papers, each on the four areas of concern listed above, that present an economic theory-based lens to approach these issues, and discuss potential solutions.
The attendance-based minimum wage model is partly responsible for the high costs of production of Sri Lanka’s RPCs, and their low productivity, helping make Ceylon tea uncompetitive in the international market. In contrast, the smallholder sector, with its market-based wage model, stands out as a more efficient counterpart. Despite being billed as a guarantor of a living wage, the minimum wage model imposes a ceiling on the earnings of estate workers, and also helps preserve the traditional power structures of tea plantations, in which estate workers sit at the bottom. Discussion Paper 1 establishes an economic framework to analyse the minimum wage model, and explores the strategies that RPCs could pursue, with the help of policymakers and other stakeholders of interest, to enhance the industry’s competitiveness under the minimum wage model. The paper also evaluates alternative wage models proposed by stakeholders, that take a more market-based approach to employment within the industry.
Long-term capital investments, such as replanting and infilling, are an essential element of sustained land productivity in the tea industry of Sri Lanka; however, neither RPCs, nor smallholders, seem incentivised to undertake investments of this form. Discussion Paper 2 establishes an economic framework, based on the Growth Diagnostic Framework by Hausmann, Rodrik, and Velasco (2005), to discern the causes of low levels of long-term capital investments in Sri Lanka’s tea estates. The paper finds that to varying degrees, the low rate of returns, uncertainties about the appropriability of returns, and low savings prevent RPCs and smallholders from embarking on long-term capital investments into tea lands. The paper explores the different routes the industry may take, with the help of policymakers and other relevant parties, to overcome these binding constraints to long-term investments, to facilitate the long-term sustenance of the industry.
Sri Lanka has the highest level of domestic value addition among black tea producing countries, but little is known about the economics of value addition. Discussion Paper 3 explores what it means to add value to made tea, what explains the present levels of value addition in the Sri Lankan tea industry, and how profits from value addition are distributed along the value chain. Additionally, the paper establishes an economic framework, based on Porter’s competitive advantage theory, to approach value addition from a strategic point of view, with the aim of optimising returns to the local industry. Based on this framework, the paper explores different strategies the industry may pursue, either in the mass market or in the specialty market, to increase the international competitiveness of Ceylon tea, and enhance the returns to the domestic stakeholders.
Quality is an important determinant of the premium that Ceylon tea fetches in the international market. In the absence of symmetric information between the buyers and sellers of Ceylon tea, high quality sellers receive lower prices than they deserve, which both drives them out of the market, and lowers the overall price and quality of Ceylon tea. Discussion Paper 4 establishes an economic framework, based on George Akerlof’s theory of adverse selection and the theoretical foundations of economics of trust, to understand how asymmetric information on quality negatively impacts the market for Ceylon tea. The paper also explores several strategies, both regulatory and incentive-based, that policymakers and industry stakeholders may pursue to eliminate asymmetric information from the market for Ceylon tea, in order to enhance the premiums that the industry receives.
The report is set to be presented to President Ranil Wickremesinghe, Ministers Mahinda Amaraweera and Jivan Thondaman, and relevant stakeholders of the tea industry in the coming days.
The report on Market Competitiveness of the Tea Industry of Sri Lanka can be accessed on www.advocata.org
Advocata is an independent policy think tank based in Colombo, Sri Lanka. We conduct research, provide commentary and hold events to promote sound policy ideas compatible with a free society in Sri Lanka. Visit advocata.org for more information.
Advocata spokespersons are available for live and pre-recorded broadcast interviews via 0740289818
Business
Ceylon Chamber urges govt to convert fiscal gains into productive investment
The Ceylon Chamber of Commerce has acknowledged the government’s recent fiscal gains but is urging a strategic shift of these surpluses into productive public investment to secure long-term growth.
In its review of the National Budget 2026, the Chamber endorsed the government’s “clear trajectory” of fiscal consolidation and disciplined debt management, noting this consistency is crucial for Sri Lanka’s ongoing economic recovery.
However, with the initial post-crisis consumption boom now moderating, the Chamber stressed that the government must pivot from consolidation to investment. It identified targeted capital expenditure in infrastructure, energy, tourism, and digital services as the potential new engines needed to drive the economy forward.
Significantly, the Chamber revealed that 18 of its policy proposals were incorporated into the budget, which include:
Trade: Developing a Trade National Single Window and a new Tariff Policy to phase out para-tariffs.
Investment: Implementing a Public-Private Partnership (PPP) framework, a digital single window for approvals, and a new residence visa scheme for investors.
Digital Economy: Plans to issue the first Digital ID in 2026, roll out 5G licensing, and eliminate service fees for online government payments.
Land & Tourism: Advancing a National Land Use Plan and resuming the Bandaranaike International Airport (BIA) expansion project.
Despite these welcomed inclusions, the Chamber highlighted three critical areas requiring greater focus:
Bridging the Implementation Gap: The Chamber warned that execution with clear timelines is the ultimate test, emphasizing that promises on the Trade Single Window and PPP laws must be delivered on time.
Strengthening Tax Administration: Improving compliance and widening the tax net through better enforcement was deemed more critical than further rate increases.
Improving Public Sector Efficiency: The Chamber argued that the reform agenda is at risk without “substantial improvements” in institutional capacity and inter-agency coordination.
The Chamber also noted a missed opportunity, stating the budget lacked a “targeted investment incentive package” essential for attracting the large-scale, export-oriented investments needed to achieve the government’s 7% growth target.
Furthermore, the Chamber called for clarity on the proposed Economic Transformation Act and urged the government to fast-track legislation for State-Owned Enterprise (SOE) and PPP reforms.
Concluding its comments on the Budget, the Chamber reaffirmed its commitment to collaborate with the government, underscoring that “sustained delivery” on these reforms is the only way to convert current economic stability into durable, broad-based growth.
By Sanath Nanayakkare ✍️
Business
DIMO Healthcare partners with RAB to strengthen Radiology Education in Sri Lanka
In a landmark initiative aimed at empowering Sri Lanka’s healthcare professionals with advanced radiology knowledge, DIMO Healthcare, the healthcare arm of DIMO, recently collaborated with the non-governmental organization Radiology Across Borders (RAB) to host a series of educational sessions on RAB VITAL Ultrasound Scanning. This marks the first time such specialized RAB-led training sessions have been conducted in Sri Lanka.
The programme, which attracted over 80 local medical professionals, took place across four leading medical institutions — the Army Hospital, Hemas Hospital (Wattala), Durdans Hospital, and Lanka Hospitals. The sessions covered a range of vital topics including gynecological and obstetric basic scanning techniques, FAST scans in ICU or point-of-care environments, and deep vein thrombosis scanning.
Speaking on the initiative, Priyantha Dissanayake, Chief Operating Officer of DIMO Healthcare, said:”As a pioneer in the local radiology sphere and the approved partner of Siemens Healthineers, we believe it is our responsibility to bridge the knowledge gap between global medical advancements and local practice. By facilitating such training programmes, we aim to uplift healthcare standards across Sri Lanka and empower our medical professionals with the tools and expertise needed to ensure earlier disease detection and better patient care.”
Business
Levi & Dili: Styling Sri Lanka’s new generation of fearless women
In a fashion landscape often crowded with ‘me too’ products, a new Sri Lankan label is making a statement that is as much about identity as it is about aesthetics. Levi & Dili, the creation of Founder and CEO Ganga Wijayawardane, is emerging as a powerful platform for the modern woman, championing a philosophy where style meets substance.
With a formidable background in International Marketing, Wijayawardane is now channeling her corporate expertise into her lifelong passion for design. The result is a fashion line with an international-contemporary feel, characterised by clean silhouettes, unusual fabric combinations, and curated, hand-picked accessories. But what truly sets Levi & Dili apart is its soul.
“The Levi & Dili woman stands for all women who long to be more, do more, to move beyond traditional roles,” Wijayawardane states. The brand’s designs are intentionally bold and eye-catching, crafted to reflect the multifaceted personality of its wearer. She is envisioned as an entrepreneur, a boss lady, a creative force, a resilient mother – a real woman who is “fearless, focused, and free.” This triad is not just a tagline but the brand’s core design brief, reflected in visuals that showcase capability and agency.
This ambition is matched by a steadfast commitment to quality. The label adheres to rigorous standards through small, controlled production batches, vetting suppliers, and conducting thorough fabric and wear tests. This promise of “affordable luxury” is a key pillar, offering fewer, better pieces with durable materials and considered details that flatter multiple body types. “We spend where it matters – fit, finishing and materials – and edit out anything that adds cost without value,” she explains.
Customer experience remains deeply personal, a non-negotiable for the brand. Online, real stylists are available for consultations, ensuring a high-touch service that continues post-purchase. While currently operating through e-commerce and pop-ups across Colombo, strategic plans are underway for a dedicated design studio, a stepping stone to a future flagship store.
Looking ahead, Wijayawardane’s vision is expansive. Within five years, she sees Levi & Dili as a leading Fashion House, setting the tone for Sri Lankan fashion and moving internationally. The goal is to be a Maison renowned not just for its designs and quality finishes, but for its key message: empowering a new generation of financially independent women who live fully and contribute significantly to the economy.
Levi & Dili is more than clothing; it is a wearable testament to the ambitious, modern Sri Lankan woman.
For new customers: Shop online and at announced pop-ups. For styling help, contact the team at support@leviandili.com or 077 555 2941.
By Sanath Nanayakkare ✍️
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