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Authorized mobile importers urge SL govt. to reconsider VAT hike

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A group of authorized mobile phone importers in Sri Lanka express deep concern over the Sri Lankan government’s decision to remove mobile phones from the Value Added Tax (VAT) exemptions list, coupled with a simultaneous increase in VAT from 15% to 18%, effective January 1st, 2024. This dual impact, wherein devices now not only face a sudden VAT imposition, but also at a significant rate of 18%, pose substantial challenges for the industry and the country. The importers urgently call for a critical reassessment by the authorities in light of these compounded challenges.

A press release said in this regard: ‘The timing of the VAT hike is particularly challenging for authorized mobile phone importers in the country. These companies have collaborated with the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) to find viable solutions to the challenges of parallel imports. Parallel imports, or grey market goods, involve the import and sale of branded products in a market without the trademark owner’s consent. This issue has already caused a tax revenue loss of LKR 3.1 billion (USD 9.4 million) and a Forex outflow of LKR 31.6 billion (USD 96 million) via illegal channels in Sri Lanka.

‘With the sudden VAT increase, this loss is estimated to rise to 11.9 billion LKR, marking a substantial increase in tax revenue loss from illegal imports. Additionally, there is a projected further tax revenue loss to the government, amounting to a LKR 2.5 billion decline from legitimate imports. This decline is anticipated due to increased parallel import products driven by the rising prices of genuine products.

‘Moreover, the ramifications extend beyond the economic landscape. Over 10,000 direct job opportunities are now at risk, leaving families dependent on the industry—more than 15,000, including those involved in logistics, printing, branding, advertising, etc.—facing uncertainty. The policy change also jeopardizes direct Forex investment for market development by principals (ATL/BTL), putting this crucial financial support at risk. Furthermore, the spectre of a national security threat looms as parallel imports introduces unknown devices to the country, creating challenges in tracking these products.

‘Authorized mobile importers emphasize the unfortunate timing of removing cellular and electronic devices from the VAT-exempted list and the hike in VAT given the ongoing efforts by legal importers to find solutions for the persistent Parallel Imports (PI) issue.

‘Accordingly, the industry had put forward practical suggestions and is actively engaged in collaboration with the TRCSL to explore viable solutions which include proposing an option for registering already in-use PI devices at a nominal fee, introducing a Tourist SIM for the duration of the incoming visitor’s VISA period, and implementing whitelisting of non-registered IMEI from mobile networks. These initiatives aim to holistically address the challenges posed by parallel imports, foster regulatory compliance, and contribute to the development of effective policies that strike a balance between industry interests and regulatory requirements. However, the sudden imposition of VAT, and at an alarmingly high percentage while the industry was working with the TRCSL, is deeply concerning. Similar situations have been observed in countries like Pakistan and Nepal.

‘The absence of effective measures to restrict parallel imports before imposing taxes impacts legitimate imports and results in a substantial loss in government revenue. Authorized mobile importers stress the critical necessity for the government of Sri Lanka to prioritize and implement a viable solution for the parallel import problem before imposing additional taxes on the industry. This approach is urgent and essential to safeguard the industry’s interests and the government’s fiscal well-being.

‘On December 1st 2023, a meeting was convened involving the TRCSL, leading mobile brands and authorized importers. The assembly of mobile importers present included, Thushara Ratnaweera and Chaminda Silva representing Samsung, alongside Rajeev Gooneratne and Charles Wijesuriya from Gnext, Prasanna Weerakoon of JKOA, Chathura Jayawardena and Sha Bulathsinhala from Abans, and Gurubaran and Sanketh Gihan representing Vivo.’



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USD 57.4m power investment opens new route for SME energy savings

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A rooftop solar panel in Sri Lanka

By Ifham Nizam

A USD 57.4 million investment package is set to reshape the economics of electricity for small and medium-sized businesses, while creating a stronger platform for private investment in rooftop solar and other distributed renewable-energy projects.

The financing package—comprising a USD 35 million concessional loan from the Asian Development Bank (ADB), a EUR 15.4 million grant from the European Union (EU), equivalent to USD 16.94 million, and a USD 5.5 million grant from the Japan Fund for the Joint Crediting Mechanism (JFJCM)—will finance a five-year programme to modernise the electricity distribution system from 2026 to 2030.

For the business community, one of the most significant elements is the planned introduction of Virtual Net Metering (VNM), which will be implemented in the country for the first time.

The EU-funded component will support 25 MW of aggregated rooftop solar PV capacity, specifically aimed at helping reduce the electricity-bill burden of small and medium-scale entrepreneurs.

The move could open a new investment channel for SMEs that have traditionally faced difficulties in absorbing high energy costs and making the upfront investment required for renewable-energy systems.

Rather than viewing rooftop solar simply as a household energy solution, the programme positions distributed solar as an important business-cost management tool.

For SMEs, which operate with considerably tighter margins than many large corporates, electricity expenditure can have a direct impact on competitiveness, cash flow and the ability to expand operations.

By allowing electricity generated from qualifying rooftop solar installations to be applied through a virtual net-metering arrangement, the programme is expected to broaden the economic benefits of solar power beyond individual premises.

The financial significance of the scheme extends beyond the initial 25 MW.

By establishing the infrastructure and regulatory framework required to manage aggregated distributed generation, the project could help create greater investor confidence in the development of decentralised renewable-energy assets.

The investment therefore has the potential to leverage additional private capital into the renewable-energy sector rather than functioning solely as a government-funded infrastructure programme.

The financing package is particularly notable because a substantial portion comes in the form of grants and concessional funding, reducing the cost of financing technologies that would otherwise require significant upfront capital.

The ADB loan will support the wider modernisation programme, while the EU and Japanese grant components will help finance renewable-energy integration and technologies designed to strengthen the grid.

At EDL, the investment will upgrade the existing CEBAssist platform with Advanced Metering Infrastructure (AMI), a Distributed Energy Resource Management (DERM) system and distribution control centres supported by an Advanced Distribution Management System (ADMS).

These systems will give the utility real-time visibility of electricity consumption and distributed generation, allowing it to manage an increasingly decentralised power system more efficiently.

That digital infrastructure is critical to the business case for expanding rooftop solar.

As more SMEs and other consumers generate their own electricity, the distribution network needs to know where generation is taking place, how much electricity is entering the grid and how those flows are affecting local network conditions.

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Renault Experience Centre opens at Majestic City

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Renault has taken another significant step in its return to the Sri Lankan market with the opening of the Renault Experience Centre at Majestic City, Colombo, offering customers an opportunity to discover the brand and experience its latest models.

The Centre was officially declared open by Jawahar Ganesh, Group Managing Director of Associated Motorways (Private) Limited, accompanied by Prasanna de Silva, Director – Sales, AMW. The occasion was attended by AMW management and staff, members of the media, customers, well-wishers and other invited guests.

Located at the lobby of Majestic City, the Centre features three Renault models being introduced to the Sri Lankan market – the Renault Kwid, Renault Kiger and Renault Triber. Visitors can explore the vehicles, learn about their features and specifications, and take advantage of test drives available at the location.

Adding to the convenience for customers, AMW has ample stocks of Renault vehicles available in Sri Lanka, allowing customers to take delivery of their chosen vehicle without having to wait for months for it to arrive. Subject to completion of the necessary documentation and registration, customers can look forward to driving away in their new Renault within as little as one day, making the purchase experience faster and more convenient.

Customers can also enjoy greater peace of mind with a three-year manufacturer warranty, supported by dedicated Renault aftersales facilities to provide professional service and support throughout their ownership journey.

Commenting on the opening, Jawahar Ganesh, Group Managing Director of AMW, said, “We are delighted to welcome Renault back to Sri Lanka and to open the Renault Experience Centre at Majestic City. Renault is a brand with an exceptional heritage, a strong global presence and a reputation for innovation and distinctive automotive design. Through AMW, we are bringing that heritage and experience closer to Sri Lankan customers”.

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Dialog and Indira Cancer Trust continue breast cancer awareness initiative through Yeheli.lk

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From left to right: Dr. Sanjeeva Gunasekera, President of the Sri Lanka College of Oncologists (SLCO), and Supun Weerasinghe, Director / Group Chief Executive of Dialog Axiata PLC, illuminate the Dialog Corporate Head Office in pink, joined by Dr. Lanka Jayasuriya Dissanayake, Chairperson of the Indira Cancer Trust, alongside representatives of the Indira Cancer Trust and the leadership of Dialog Axiata PLC, in support of Breast Cancer Awareness Month.

Dialog Axiata PLC, Sri Lanka’s #1 connectivity provider, marked the beginning of Breast Cancer Awareness Month by illuminating its Corporate Head Office in pink, in partnership with the Indira Cancer Trust, to stand in solidarity with individuals and families affected by breast cancer and encourage greater awareness, regular screening and early detection.

 Building on previous breast cancer awareness campaigns conducted through Dialog’s Yeheli.lk platform in collaboration with the Indira Cancer Trust, this year’s initiative will continue throughout October under the theme, ‘A Pledge from the Heart’. As part of the campaign, members of the public can visit yeheli.lk to register for a free monthly SMS reminder and take their pledge for early detection throughout Breast Cancer Awareness Month.

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