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EU calls for ‘time horizon’ on Sri Lanka import ban

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by Sanath Nanayakkare

Sri Lanka should give a ‘horizon’ to its businesses and potential investors as to until when the import ban will be in place, Denis Chaibi, ambassador/ Delegation of the European Union to Sri Lanka and Maldives said at the official launch of the Sri Lanka Trade Information Portal (SLTIP), held at Shangri La Colombo recently.

The 4-year EU funded project worth EUR 8 million supports local SMEs’ export competitiveness in regional and EU markets as well as value addition in sectors with high potential for economic growth and development.

Excerpts from ambassador Chaibi’s speech:

“This project is a good indication of our overall relationship which is characterised by engagement, respect and results. This project sends three powerful messages. The first one is about the importance of the EU market to Sri Lanka and vice versa. The EU is the second export market for Sri Lanka just after the US”.

“If you take the EU’s trade figures with Sri Lanka in 2019 and if you add services and the EU tourists who came to the island – hopefully who will return soon – you can see the importance of the EU”.

“Further the return of GSP in 2017 was a significant development that led to more than a quarter’s increase of exports from Sri Lanka to the EU. It’s not only the biggest market in terms of quantity. But it’s also an important market in terms of quality”.

“I have been in Sri Lanka a bit more than a year and the thing that strikes me every day is the quality of Sri Lankan products. If you compare the cinnamon, it’s the best in the world. Sri Lankan coconut is the best in the world. Jack fruit is the best in the world. Tea is the best in the world. Who appreciates the best in the world products more than Europeans? Who has the refinement that Sri Lanka has which is only found in civilizations. The Europeans are ready to pay a premium for all these products. Perhaps the South Americans will pay a bit more for Sri Lankan cinnamon, but at the end of the day those who buy the most refined Sri Lankan products are mostly Europeans. We are not only a quantitative market but a qualitative market with a huge potential for the future. The best way for Sri Lanka is to increase its product-quality, and quality is where Europe will be there as a very happy customer.”

“But we are a very demanding market. We have a lot of barriers and those have to do with qualitative standards. In the future, I can imagine that Sri Lankans will want to sell directly to Europeans through online websites. When Sri Lanka exports to Europe, it is ready to export to anywhere else in the world because the European standards are high. We are a demanding market but we are happy to be a good market for Sri Lanka because Sri Lankan products are the best.”

“My second message is that markets and trade is not a one-way street. We have full consideration for the public finances situation in Sri Lanka We fully understand the measures that have been introduced to safeguard public finances and especially the foreign exchange reserves of Sri Lanka.”

“But we need three things. We need recognition notification in the horizon. We need recognition that there is an import ban. And sometimes we are told that there is no import ban but just impediment for the banks to pay in foreign currencies, but these payments are linked to products, so we have to recognize that they are trade restrictions. And then on that recognition, we can quantify that to the WTO and work together in the international organisation that is precisely set up to deal with this kind of issues.”

“I think Sri Lanka would benefit tremendously from giving a horizon to its businesses and potential investors as to until when the measures will be in place so that people can prepare and also can invest in Sri Lanka.”

“That is important if we want to attract foreign direct investments to Sri Lanka. We need to have certainty and we need to be able to export [raw materials].Who would invest in Sri Lanka not knowing if he or she will be able to export because they know that the trade restrictions may attract some reaction. So, in order to attract foreign direct investments, we have to give a horizon on the trade restrictions. We say this in full respect of whatever the Sri Lankan government decides.”

“My third point is; if you look at this project of EU-Sri Lanka Trade Related Assistance, it is in full respect of the government’s priorities. We don’t have an agenda. We are not a military super power. We are a standards super power, and a lifestyle superpower. We live very well in Europe and we live very well for many reasons. But when it comes to aid and support what we do is follow the priorities of the government. Before we take policy decisions and priorities we always look at the manifesto. I was at the Sri Lanka National Day events and its manifesto specifically dealt with agriculture. Agriculture is the sector that we have favoured in our last budget cycle. So from 2014 to 2020, we have invested more than half of the EU aid in the development of rural Sri Lanka. We have spent almost EUR 100 million in that sector. This shows that we are following priorities of the government and that’s why we are supporting this project so that we in Europe can enjoy more of the best Sri Lankan products and Sri Lankan exporters can create more added value by collaborating with Europeans.”



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JKH records EBITDA growth of  9% to Rs.10.41 billion in Q3

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Summarised below are the key operational and financial highlights of our performance during the quarter under review:

Group EBITDA recorded an improvement to Rs.10.41 billion during the quarter under review, which is an increase of 9 per cent against the comparative period of last year [2021/22 Q3: Rs.9.53 billion]. Excluding the impact of a one-off deferred tax charge at South Asia Gateway Terminals on account of the significant change in income tax rates, Group EBITDA increased by 17 per cent to Rs.11.17 billion in the third quarter of the financial year 2022/23.

Apart from the Consumer Foods and Property industry groups, the Group’s businesses recorded growth in EBITDA compared to the third quarter of the previous year.

The Transportation industry group recorded an increase in profitability due to its USD denominated revenue streams and resultant translation gains due to the depreciation of the Rupee as compared against the previous year.

Krishan Balendra Chairperson JKH

The groundwork on the West Container Terminal (WCT-1) at the Port of Colombo is progressing well with the dredging works being rapidly completed. The contract for the quay wall construction, a significant component of the overall construction works, was awarded in October 2022. Overall timelines for the project remain as originally envisaged.

The Leisure industry group recorded a strong performance driven by the Maldivian Resorts and Colombo Hotels segments.

The Supermarket business recorded an EBITDA growth of 26 per cent to Rs.1.99 billion due to an increase in same store sales driven by a combination of higher customer footfall and basket values due to high inflation. The overall profitability in the Retail industry group was impacted by a substantial decline in the EBITDA of the Office Automation business compared to the third quarter of the previous year.

Profitability in the Consumer Foods businesses were impacted by volume declines reflective of dampened consumer sentiments, and lower margins, although margin pressure is expected to ease off from the fourth quarter of 2022/23 onwards.

The Property industry group recorded a decline in profitability as the third quarter of the previous year included revenue and profit recognition from the handover of the residential apartments and commercial office floors at ‘Cinnamon Life’. The recognition of revenue of all units sold at ‘Cinnamon Life’ up to 31 March 2022 was recorded across 2021/22.

The Insurance business recorded a growth in the life insurance surplus and gross written premiums whilst Nations Trust Bank recorded an increase in net interest margins and a reduction in costs.

The Group’s carbon footprint per million rupees of revenue decreased by 25 per cent to 0.38 MT while the water withdrawal per million rupees of revenue decreased by 17 per cent to 7.56 cubic meters.

Initiatives under ‘ONE JKH’, the Diversity, Equity, and Inclusion (DE&I) brand of the John Keells Group, included a perception survey to better understand employee awareness and sentiment towards increasing career opportunities for persons with disabilities.

Cognizant of the multiple economic hardships faced by the people of the country, and in recognition of the Group’s role as a leading responsible corporate citizen, the Group continued its multipronged crisis response programme with a particular focus in the areas of food security, education and nutrition among vulnerable segments such as school children.

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CSE positively impacted by US ambassador’s comments on bail-out

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By Hiran H. Senewiratne

CSE share trading kicked off on a positive note yesterday following US ambassador Julie Chung’s positive comments on the IMF bailout to foreign media and the US Under Secretary of State for Political Affairs Victoria Nuland arriving in Sri Lanka last morning, stock market analysts said.

The market gained in mid-day trade yesterday, mainly pushed up by banking and financial sectors, brokers said. As a result, both indices moved upwards. The All- Share Price Index went up by 84.96 points and S and P SL20 rose by 45.29 points.

Turnover amounted to Rs 1.5 billion without any crossings. The reason for investor sentiment to move up was because it was clear that the US seems to be pushing creditors to go for debt restructuring to obtain the IMF bailout for Sri Lanka, analysts said.

In the retail market seven companies that mainly contributed to the turnover were; JKH Rs 239 million (1.7 million shares traded), Softlogic Life Insurance Rs 175 million (1.4 million shares traded), Lanka IOC Rs 164 million (805,000 shares traded), Expolanka Holdings Rs 154 million (806,000 shares traded), Softlogic Capital Rs 125 million (7.8 million shares traded), Tokyo Cement (Non -Voting) Rs 46.5 million (1.5 million shares traded) and Lanka Tiles Rs 46.4 million (one million shares traded).

It said high net worth and institutional investor participation was noted in John Keells Holdings, Lanka IOC and Lanka Wall Tiles. Mixed interest was observed in Softlogic Life Insurance, Expolanka Holdings and Chevron Lubricants, while retail interest was noted in LOLC Finance, Softlogic Capital and Browns Investments.

The Capital Goods sector was the top contributor to the market turnover (due to JKH), while the sector index lost 1.06 per cent. The share price of JKH recorded a loss of 50 cents to settle at Rs. 139.50.

The Insurance sector was the second highest contributor to the market turnover (due to Softlogic Life Insurance) while the sector index increased by 1.31%. The share price of Softlogic Life Insurance increased by Rs. 2 to close at Rs. 120.50.

Lanka IOC, Softlogic Capital and LOLC Finance were also included among the top turnover contributors. The share price of Lanka IOC lost Rs. 2 to close at Rs. 206.25. The share price of Softlogic Capital moved up by 20 cents to close at Rs. 15.90. The share price of LOLC Finance closed flat at Rs. 6.90.

“We are seeing a lot of activity today, mostly retail interest led by the life insurance companies like Softlogic life and Softlogic Capital, a market analyst said. “Foreign buying was there in the last few days as well”. During the day 60.2 million share volumes changed hands in 14000 transactions.

It is said that Colombo City Hotel subdivided its shares by one share into 20 ordinary shares for its shareholders.

The stock market ended the first month of the New Year with a gain of over 4 per cent, largely influenced by strong momentum earlier on as investor sentiment of late has been bearish.

January saw the benchmark ASPI gain by 4.4 per cent and the active S&P SL20 Index by 5 per cent. Daily turnover averaged Rs. 1.86 billion, according sources said.

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St. Anthony’s Hardware celebrates the children at Lama Sewana Detention Home

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St. Anthony’s Hardware recently held a fun day for the children at Lama Sewana Detention Home, Baddegama, which included games, activities and food. St. Anthony’s Hardware aims to maintain a long-term relationship with the home by renovating and providing industry training and career guidance for the children at Lama Sewana Detention Home.

St Anthony’s Hardware will be renovating the buildings and roof of the detention home, creating a safe and secure environment for the children. Apart from the renovation, the team will be working with the children to provide career guidance workshops and seminars to ensure that the children have some employability skills when they become adults. The children were given sporting equipment to improve their sports facilities.

The Lama Sewana Detention Home, Baddegama is a government-run facility that currently houses over 50 young residents between the age of 04 to 17 years old. The children at the home come from financially disadvantaged backgrounds, or their parents have been incarcerated.

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