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IPS’ proposals for Budget 2022 – Part II

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Food Security

Ensuring national food security

National food security is not only a question of availability, but includes the other factors like food prices, food usage, and food supply stability. Hence, all these aspects influencing food security should be considered in policy formulation. While the government’s policy framework, ‘Vistas of Prosperity and Splendour’ (VPS) recognises the importance of introducing an agricultural crop management system, there is no proper mechanism to monitor how this will affect food usage, prices, and supply. At present, the farming community is compelled to suffer massive losses during the harvesting season because of the seasonal glut in supply. Meanwhile, intermediaries and the other players in the high end of the value chain gain because they can control prices through controlling supply. This has implications on the food security of the country and the welfare of farmers.

Recommendation

Establish an electronic-based monitoring system for the food systems so that domestic food production, imports, market prices, input availability etc., could be continuously monitored to ensure national food availability and household access to food. A regular monitoring system can safeguard the local food supply from international trade restrictions and possible malpractices by local traders. Give priority to establish a holistic, coherent mechanism to ensure high-quality information is important. This information should be easily accessible across sectors for monitoring risks to food security. Such a system can provide valuable information for policy makers to take action to ensure food security. Big data tools such as satellites, telecommunication networks, sensors, drones, and smartphones have the potential to address the food system challenges by improving availability of information.

Developing e-commerce for food system resilience

As communities are increasingly dependent on markets for their food security and nutrition, properly functioning market chains and the uninterrupted flow of agricultural products are key elements within food systems. Shocks that disrupt market activities such as disasters and pandemics can cause considerable damage to households’ food availability, as well as their access to and utilisation of food.

VPS recognises the importance of introducing a new strategic plan for product marketing including systems of pre-contracts between producers and exporters. However, at present, the farming community is poorly connected with markets and intermediaries gain arbitrage opportunities while rural producers receive lower prices due to the lack of market information, poor infrastructure, weaker bargaining positions, and lengthy marketing channels.

Recommendations

IPS proposes to increase the capacity of e-commerce to minimise the problems in food supply chains and to ensure food system resilience. The increased demand for digital marketing platforms during the COVID-19 pandemic could be capitalised to promote the capacity of e-commerce at both ends of the food supply chain. For example: The Govipola Mobile App and the pilot project on Smart Agri Village were funded by EU. Such Information and Communication Technology (ICT) platforms, despite capacity concerns, have already proven useful to increase the resilience of the actors in the food system such as farmers, traders, and consumers.

Further, a mechanism needs to be developed to help connect smallholders to the e-commerce platform to prevent elite capture of the digital marketplace. In this regard, linking farmers’ cooperatives with the e-commerce platform or building Public-Private-Producer-Partnerships (4P) could be crucial. Public investments in developing an e-commerce-platform to create a digital marketplace to connect farmers and markets and to increase the availability of product and price information to buyers and sellers, to improve food availability, and food security while protecting farmer welfare is recommended.

Strengthening the Regulatory and Enforcement Mechanism for Organic Fertiliser Imports

The proposed ban on chemical fertiliser imports will be a significant shock to the agricultural systems of Sri Lanka and most likely will be untenable. Sri Lanka must revisit the import ban before it fails due to its implementation challenges creating massive disruption to the country’s agricultural sector. IPS research suggests that Sri Lanka can adopt a ‘sustainable intensification’ approach that anticipates a gradual reduction of the use of chemical inputs combined with good agroecological production practices, to increase organic fertiliser use overtime. Further to the ban, the government has decided to import organic fertilisers. Unlike inorganic fertilisers, which are inert materials, organic fertilisers are highly environment-specific live materials that could have irreversible environmental repercussions.

Therefore, the regulatory, implementation, and enforcement mechanism of the quality standards must be strengthened with immediate effect (with the coordination of relevant government institutions like National Plant Quarantine Service (NPQS); SLSI; Sri Lanka Atomic Energy Agency; ITI, etc) to ensure that food ecosystems in the country are not adversely affected by introducing organic fertiliser.

Recommendations

Prudent application of a combination of instruments in place of the import ban on chemicals is needed such as tariffs on chemical fertiliser imports, tax concessions/subsidies for local production of organic fertiliser to promote the production and use of organic fertiliser. Along with this, the quality of chemical fertiliser imports needs to be regulated to safeguard local agriculture. Programmes to build awareness on efficient use of organic fertiliser can also help farmers with the shift to organic fertiliser use.

Tobacco Taxes

Streamlining tobacco tax increases

IPS research shows that increasing tobacco taxes has the twin benefits of improving health as well as increasing government revenue. At a juncture when government finances are tight, policy solutions such as taxing tobacco can be leveraged to boost government revenue without threatening economic growth. Increasing tobacco taxes in the forthcoming Budget could raise substantial amounts of additional revenue for the government.

IPS estimates that the government could have earned nearly LKR 20 billion in additional excise tax revenue from cigarettes in 2020, if cigarette taxes had been raised by 10% in line with inflation and streamlined to a uniform tax. This amounts to nearly 1.5% of total government revenue in 2020. A similar revenue gain can be expected from a 10% increase in tobacco taxes this year.

Recommendation

Given that cigarette taxes have not been revised in nearly two years, since December 2019, the government should use this opportunity to raise taxes, to attain the twin benefits of improved health and fiscal outcomes.

SMEs

Developing the creative and cultural industries

Much of Sri Lanka’s creative economy – which comprises of traditional and modern cultural and creative industries – fall into the category of small and medium industries (SMIs). Lack of linkages to connect rural cultural and creative industry artisans with the relevant institutes and public services is an issue, despite programmes to support and encourage creative business activities conducted by different public institutions.

Lack of awareness, lack of coordination among various sectors of government, and limited attention given to emerging cultural sectors – such as fashion designing, software, graphic designing, digital media – are some identified issues in this sector.

Recommendation

Streamlining government programmes relating to creative and cultural programmes and build capacity in public institutions to provide efficient and effective services to artisans in creative industries. The outcomes of initiatives to develop the sector must be monitored and adjusted to improve effectiveness overtime. Special attention needs to be given by public institutions to fill the above-mentioned policy gaps. Proposed actions will attract rural youth into the sector, which will generate new employment opportunities and support the development of the rural sector.

Social Protection

Repositioning social protection

The International Labour Organization (ILO) Social Security (Minimum Standards) Convention, 1952 (No. 102) (ILO C.102) specifies nine key branches of benefits that social security programmes are expected to deliver. These are: medical care, sickness, unemployment, old age benefit, employment injury, family benefit, maternity benefit, invalidity benefit, and survivor’s benefit. Although different social security schemes are available in Sri Lanka to provide some types of benefits under all nine schemes of ILO’s Social Security Convention (ILO C.102), their coverage is very low. Sri Lanka is also yet to ratify the minimum standard in social security as specified in the Convention.

Recommendations

Social security contributions in many countries are channelled to diverse funds for providing various types of social security benefits (i.e., maternity benefits, sickness benefits). Use a similar system to expand life-cycle social security to workers contributing to Employees’ Trust Fund (ETF). IPS calculations show that about 1.5% of the wage bill (or half of the ETF contributions) is sufficient to cover maternity benefits, sickness benefits, and unemployment benefits to meet the minimum requirements specified in ILO C.102 for those contributing to ETF. A further 0.2% of the total wage bill could cover wage support to firms to retain the workers who contribute to ETF in times of disaster. Follow international best practices and optimise the use of ETF funds to provide wider benefits to its contributors. Such a scheme will enable workers to benefit from social security throughout their lifecycle and facilitate the ratification of the ILO C.102 of minimum social security standards. Greater life-cycle benefits will encourage more workers to contribute to ETF. This will have minimum impact on the budget as allocations for the most part will be from the ETF fund. Such a change in focus should be done in concurrence with different stakeholders to maintain transparency and trust.

-END OF PART II-

Read IPS’ Budget 2022 Proposals in Full HERE.



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Creating innovative spaces and world class construction projects

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The Access Group consists of some of the country’s pioneering and innovative companies that have contributed to Sri Lanka’s corporate landscape.

Access Projects is among them – they commenced their own unique journey into creating iconic buildings with their flagship Access Towers 25 years ago. At the time, it was a unique building with its own footprint.

Heading the Access Projects is Managing Director Dilshan Ferdinando who has been associated with creating architecturally exceptional innovative spaces that have gone on to be some of the finest buildings in Sri Lanka.

The company made their mark in the field of construction in the leisure industry – from the interior fit out of the Cinnamon Lakeside Hotel, to the lobby refurbishment and improvements of Chaya Blue in Trincomalee and Chaya Tranz in Hikkaduwa.

Another unique project was The Water’s Edge Golf Club, Club House and the banquet hall, undertaken personally by Dilshan himself to transform a marshy land into Colombo’s second Golf Course. This was a sustainable venture that was spread over 160 acres with an engineered set of water ways, lakes and canals. It involved removing perimeter urban waste and dredging 50 acres and using that material to create the golf playing fields. It still stands today with every tree retained and functional as a banquet facility.

” This was at the time when the war had ended and the hospitality industry was taking off. ” recalls Dilshan, ” We went on to do several banquet halls for city hotels as well as the renovations of the villas of Club Dolphin at Waikkal, yet another iconic hotel.”

The interiors of Waters Edge Golf & Country Club including the banquet hall was designed and built by Access Projects initially.

Yet another unique venture undertaken by Access Projects was the construction of Cape Weligama, a 50 key ultra-luxury resort for The Dilmah Group. “The project involved creating one of a kind, iconic villas with 13 swimming pools – the moon shaped pool was the largest infinity pool in Sri Lanka at the time, in 2014. The projects sought to use timber and locally sourced material for sustainability. It came with specific attention to detail, creating spaces that were all its own,” he adds.

When the iconic Galle Face Hotel sought restoration and renovation to meet the design elements of the Fifties, they chose Access Projects to handle the construction. Dilshan recalls carrying out extensive research with old photographs, paying attention to details and highlights that brought out the old world look and feel. A new ballroom was added to blend in with the existing architectural design of the old one, while all systems were renovated and updated.

Access Projects has also undertaken several iconic projects such as the Anantara Resort, a 250 key luxury hotel for the Hemas Group along with staff quarters and the banquet hall.

Access Projects was tasked with the construction of a modern 18 storeyed building for the Academy of Design – it came with specific design requirements – ‘ we made sure every one of those requirements were met – within budget and the time frame given.” he says.

Accredited with ISO 9001 – 2008 and ISO 14001 – 2004, and accredited to CIDA (Construction Industry Development Authority), Access Projects specializes in midscale specialist construction projects that call for attention to detail and meeting exacting architect and customer needs.

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ComBank wins Best Corporate Citizen Sustainability Award 2021

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Commercial Bank Managing Director/Group CEO S. Renganathan (second from left) receives the award from the Chief Guest, Norwegian Ambassado Trine Jøranli Eskedal. Also in the picture (from left) are Commercial Bank’s Group Chief Marketing Officer Hasrath Munasinghe, Ceylon Chamber of Commerce Chairman Vish Govindasamy, the Bank’s Chief Operating Officer Sanath Manatunge and Assistant General Manager Services Chinthaka Darmasena.

The Commercial Bank of Ceylon PLC was declared Sri Lanka’s ‘Best Corporate Citizen’ in 2021 by the Ceylon Chamber of Commerce (CCC) on Tuesday night, achieving the pinnacle of recognition for sustainability and good corporate citizenship in the country’s corporate sector.

The coveted ‘Best Corporate Citizen Sustainability Award 2021’ was presented to Sri Lanka’s benchmark bank at an awards gala attended by the cream of corporate Sri Lanka, in recognition of the Bank’s status as the sustainable champion of the local corporate world.

Commercial Bank also won the award for the Finance sector at the awards for ‘Sector Based Sustainability Champions,’ the ‘Governance’ certificate in the category awards for ‘Consistent Commitment and Continuous Improvement’ and was second runner-up for the newly-introduced award for ‘Demonstrated Resilient Practices for COVID-19 Context,’ in addition to receiving an award for being among the Top 10 Best Corporate Citizens in Sri Lanka.

“Sustainability is the cornerstone of our corporate ethos and influences everything we do,” Commercial Bank Managing Director and Group CEO S. Renganathan commented. “This is demonstrated by the fact that we are Sri Lanka’s first fully carbon neutral bank. Commercial Bank is therefore elated to win the Best Corporate Citizen Sustainability Award for 2021. This will be a stimulus for an even deeper commitment to best practices in sustainability at every employee level.”

The Finance sector award recognises Commercial Bank’s position as the most progressive banking institution in the country and its commitment to preserving the environment through responsible lending protocols. The Bank’s multifaceted Green initiatives include lending to support Sustainable and Green operations, migrating customers to paperless banking, improving efficiency in the use of energy, water and other resources in its own operations and supporting community initiatives that help conserve habitats and the environment.

The Bank pioneered a mandatory social and environmental screening process for its project lending activities and was the first bank in Sri Lanka to venture into Green Financing. It also revolutionised digital banking by introducing features in its ‘Flash’ mobile application to measure and offset customer impact on the environment. The Bank has also achieved the momentous feat of becoming the largest lender to the SME sector and is a leader in digital innovation in the country’s banking sector.

Commercial Bank finances projects that focus on renewable energy, energy and resource efficiency, waste management, emission reductions, smart agriculture and green buildings. The Bank’s Green Financing is geared towards the fight against climate change, meeting the United Nations Sustainable Development Goals 7 and 12: Affordable and Clean Energy, and Responsible Consumption and Production.

Additionally, the Bank has numerous commitments including a mangrove restoration project in Koggala, a marine turtle conservation initiative to protect the biodiversity of the ocean, and support to the ‘Thuru Mithuru’ initiative of the Sri Lanka Army to promote self-sufficiency in essential food.

The Best Corporate Citizen Sustainability Awards programme has been in operation for 18 consecutive years and received 63 applications in 2021, the highest number of applications received in the history of the programme.

Established in 1839, the Ceylon Chamber of Commerce is the oldest and one of the leading business chambers in Sri Lanka. A confederation of Trade Associations, Bilateral Business Councils, and Regional and Sectoral Chambers of Commerce and Industry, it is considered the leading voice of the private sector in Sri Lanka.

The first Sri Lankan bank to be listed among the Top 1000 Banks of the World and the only Sri Lankan bank to be so listed for 11 years consecutively, Commercial Bank operates a network of 268 branches and 931 automated machines in Sri Lanka. The Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Microfinance company in Nay Pyi Taw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.

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CEAT radials designated Original Equipment for locally–assembled Mahindra Bolero City Pik-ups

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CEAT Kelani Holdings has reached another milestone in radial tyre manufacture in Sri Lanka with the Company’s appointment as an Original Equipment Manufacturer (OEM) for Bolero City Pik-up vehicles assembled in Sri Lanka by Mahindra & Mahindra (M&M) India in collaboration with Ideal Motors.

All Mahindra Bolero City Pik-ups rolling off the assembly line at the Mahindra Ideal Lanka Automotive Assembly Plant at Welipenna, Matugama are fitted with CEAT Milaze HD radial tyres in the size of 215/75 R15, manufactured at the CEAT Kelani plant in Kelaniya, under an OEM agreement between the two companies.

CEAT has already supplied 180 of these high performance radial tyres for 36 vehicles that will be assembled in November and December this year and has committed to supply up to 720 tyres per month from January 2022 onwards for a targeted maximum of 144 vehicles to be produced monthly by the Mahindra Ideal Lanka joint venture, the Company said.

Commenting on the agreement, CEAT Kelani Managing Director Ravi Dadlani said: “We are delighted to contribute to the local value addition component of the Mahindra and Ideal Motors venture, while doing what we do best – producing high quality tyres designed and engineered for local conditions and supporting the government’s efforts to conserve foreign exchange. Over the past two decades, CEAT has built the equity of the ‘Made in Sri Lanka’ proposition in the tyre industry, and we are proud and appreciative of the opportunity, as exclusive tyre supplier, to support the aspirations of Mahindra and Ideal Motors to progress to vehicles made in Sri Lanka.”

The Managing Director of Mahindra Ideal Lanka Pvt Ltd. Nalin Welgama noted that “This new initiative is a step in the right direction and supports the government policy framework for Sri Lanka’s migration from a market economy to a production-based economy.”

The CEAT Milaze tyres manufactured by CEAT Kelani for the Mahindra Bolero City Pik-up feature profiled shoulder lateral grooves that provide better heat dissipation and wide-angle circumferential grooves that resist cuts and chips. Angular transversal notches and sipes provide enhanced grip and uniform wear, while the angular notched 4-rib high land area design provides longer tyre life and durability.

No stranger to the OEM segment, CEAT Kelani Holdings has been the exclusive original equipment tyre supplier for Mahindra KUV100 compact SUVs assembled in Sri Lanka since 2019. All locally-assembled Mahindra KUV100 vehicles are fitted with CEAT FUELSMARRT 185/60 R 15 tyres.

CEAT Kelani Holdings is considered one of the most successful India – Sri Lanka joint ventures. The joint venture’s cumulative investment in Sri Lanka to date totals Rs 8 billion, inclusive of Rs 3 billion invested since January 2018 for expansion of volumes, technology upgrades and new product development. The company’s manufacturing operations in Sri Lanka encompass pneumatic tyres in the radial (passenger cars, vans and SUVs), commercial (nylon and radial), motorcycle, three-wheeler and agricultural vehicle segments.

The CEAT brand accounts for market shares in Sri Lanka of 48 per cent in the Radial segment, 80 per cent in the Truck category, 84 per cent Light Truck tyre category, 51 per cent in the Three-Wheeler tyre segment, 36 per cent in the Motorcycle tyre segment and 72 per cent in the Agricultural vehicle tyre category. CEAT Kelani exports about 20 per cent of its production to 16 countries in South Asia, the Middle East, Africa and the Far East.

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