Business
IPS’ proposals for Budget 2022 – Part II
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.
Business
Launching of Curtin University Colombo, a landmark in Australia-SL educational ties
By Ifham Nizam
In a significant move for Sri Lanka’s educational landscape, the Australian High Commissioner to Sri Lanka, Paul Stephens, officially launched Curtin University Colombo, marking a milestone in the growing partnership between Australia and Sri Lanka in higher education.
The event was held on Monday at the Curtin University in Colombo, with dignitaries, educators, and students in attendance.
Curtin University Colombo, an extension of Curtin University’s global network, now becomes the fifth world-campus for the Australian institution, further strengthening the ties between the two nations, the Australian High Commissioner said.
The launch represents the culmination of years of collaboration and shared vision between Curtin University and the Sri Lankan Institute of Information Technology (SLIIT). This partnership, which began in 2001, has produced over 3,000 graduates and is seen as a crucial step in the further development of Sri Lanka’s educational infrastructure.
The Australian High Commissioner stressed the importance of the Curtin University Colombo campus as a testament to Australia’s ongoing commitment to Sri Lanka’s education sector.
He said that more than 30 Australian educational institutions currently operate in Sri Lanka, with Australia being the leading destination for Sri Lankan students. Some 18,000 Sri Lankan students are currently studying in Australia, a number expected to rise in the coming years.
Stephens added: “Curtin University Colombo’s establishment represents our belief in Sri Lanka’s future.
“Despite the challenges Sri Lanka has faced in recent years, the optimism surrounding this project reflects a shared vision for a peaceful, prosperous, and united future.
“There is strong support from the Sri Lankan government for the country’s education sector, particularly in enhancing employability and access to quality education. This initiative aligns with Sri Lanka’s goals for long-term sustainable growth, especially in sectors like engineering, business, and IT—areas in which Curtin University has established a global reputation for producing industry-ready graduates.
“The partnership between Curtin University and SLIIT was further solidified in 2020 with the establishment of a Curtin Colombo campus, offering fully-franchised undergraduate programs in engineering and business. With the new Curtin University Colombo campus, students will now have access to a world-class education right in their home country, with the added benefit of an internationally recognized Australian qualification.”
Stephens praised the collaborative efforts that led to this achievement, acknowledging the hard work and commitment of all involved in the creation of Curtin University Colombo.
He also encouraged students and prospective students to seize the opportunity to study at the new campus, which is poised to play a key role in Sri Lanka’s educational and economic development.
“By equipping the next generation with the necessary skills, we can help Sri Lanka achieve its goal of becoming a more agile, export-oriented economy,” said Stephens. “The graduates of Curtin University Colombo will possess the skills necessary to navigate the challenges of a rapidly changing global market.”
Curtin University, ranked among the top universities globally, has been recognized for its research, strong industry partnerships, and focus on producing graduates who are well-prepared for the workforce. With more than 50,000 students and partnerships with over 80 institutions worldwide, Curtin’s global network continues to grow.
In an engaging speech that chronicled the remarkable evolution of the Sri Lanka Institute of Information Technology (SLIIT), Professor Lalith Gamage, chairman of Curtin Colombo and Vice Chancellor and CEO of SLIIT, reflected on the institution’s growth from its humble beginnings in 1999 to becoming one of the top-ranking universities in Sri Lanka today.
The story began in the late 1990s when Sri Lanka’s burgeoning IT industry faced a significant shortage of skilled professionals. In response to this challenge, Professor Gamage, alongside a group of visionary educators, founded SLIIT with the aim of bridging this gap. At the time, the University of Moratuwa’s Computer Science Department could only accommodate a small number of students, enrolling just 16, later increasing to 25. However, he said the demand from the IT industry was far greater – calling for thousands of trained professionals to drive the sector’s growth.
He said that recognizing the need to create an educational institution that could cater to this demand, SLIIT was established as an independent entity, separate from the University of Moratuwa, without degree-awarding status. The response from prospective students was overwhelming, with over 3,150 applications flooding in for a diploma in Information Technology. Despite initially planning to enroll only 150 students, the institution expanded its capacity to accommodate 400.
By 2000, the institution’s ambitions grew. Professor Gamage sought international partnerships to offer degree programs, reaching out to his friend, a professor at Curtin University in Australia. What started as a hopeful collaboration eventually led to a franchising agreement between Curtin University and SLIIT, allowing the latter to offer degrees and expand its offerings in IT. This partnership not only bolstered SLIIT’s academic credentials but also contributed significantly to the rapid growth of Sri Lanka’s IT industry, which saw annual growth of 25% and became the fifth-largest export sector in the country.
The partnership with Curtin University became a cornerstone of SLIIT’s development, bringing world-class curricula and faculty to Sri Lanka. Curtin University staff helped improve SLIIT’s academic programs, and SLIIT faculty were given the opportunity to study at Curtin, bringing back invaluable knowledge and experience to enhance the institution’s teaching standards. Over time, more than 15 staff members completed their PhDs through this collaboration, further strengthening SLIIT’s position in the higher education landscape.
Professor Gamage is confident in generating an economic contribution of USD 1 billion to Sri Lanka’s economy within the next three years, positioning the country as a leader in higher education in the region. The long-term goal is to build upon the momentum of the IT industry’s growth, which began in the early 2000s, and expand the impact of higher education on Sri Lanka’s economy.
Business
National Savings Bank records Rs 25.5Bn PBT for 3Q2024
National Savings Bank showcased robust financial performance in the third quarter of 2024, propelled by the short-term advantages of liability repricing and a surge in fee-based income.
The nation’s premier savings bank reported a remarkable net interest income of Rs. 53.4 billion for the nine months ending 30th September 2024, reflecting a remarkable growth of 191% compared with Rs. 18.3 billion recorded during the same period last year. This outstanding achievement was realized despite a decline in both gross income and interest income of 8.7% and 9.1% respectively over the period under review. The decline in interest income was primarily attributed to the sustained reduction in interest rates on government securities as well as loans and advances when compared to the corresponding period of the previous year.
“The past nine months have presented significant challenges, as we have strived to maintain margins while growing our portfolios in an interest rate reducing scenario. Although we are witnessing signs of recovery, the lingering effects of the worst economic crisis continue to impact both our borrowers and depositors. Despite these obstacles, our resilience and strategic focus have allowed us to navigate these turbulent times, ensuring that the Bank remains on a path to sustained growth and stability” NSB Chairman Dr Harsha Cabral PC commented.
Fee and commission income surged by 44%, primarily driven by higher revenue from card operations, mobile app transactions, and internet banking activities compared to that of 3Q2023. Meanwhile, the net gain on derecognition of financial assets measured at fair value through other comprehensive income soared by an impressive growth, bolstered by realized gains from treasury bonds and treasury bills totalling Rs. 442 million. Operating expenses rose by 28%, largely attributed to increased personal and other operating expenses.
Business
Energy Efficiency Testing Laboratory, funded and established by the Republic of Korea, officially inaugurated in Ja-Ela
The Energy Efficiency Testing Laboratory, funded and established by the Republic of Korea, was officially inaugurated in Ja-Ela on November 28. The Korea-donated facility is poised to transform energy efficiency testing and certification in Sri Lanka, bringing substantial benefits to the nation’s industries, producers, and consumers.
Miyon Lee, the Korean Ambassador to Sri Lanka, attended the event and delivered a congratulatory address. Emphasizing the lab’s importance, Ambassador Lee underscored the scale of the 5-year, $13.8 billion project and its potential to improve the efficiency of air conditioning appliances, which account for a significant portion of global electricity consumption. She pointed out that the air conditioning is one of the largest contributors to electricity consumption globally, accounting for over 70% of usage. “Enhancing the energy efficiency of air conditioners is therefore critical to managing Sri Lanka’s overall energy consumption,” she added.
The establishment of the laboratory reflects a collaborative effort involving Korea’s key energy-focused institutions: the Korea Energy Agency (KEA), Korea Research Institute on Climate Change (KRICC), and Korea Testing Certification Institute (KTCI). These organizations played a critical role in designing, constructing, and equipping the facility with advanced technology. In addition to the construction of the laboratory, the Korean government has reinforced its commitment by offering policy consultation and technical assistance to Sri Lanka’s energy sector. This multifaceted approach highlights Korea’s dedication to helping Sri Lanka address energy challenges and transition toward a more sustainable future.
-
News6 days ago
Dialog Smart Home Celebrates Continued Partnership as Gold Sponsor for Kadella 2024
-
Editorial4 days ago
Greed for diplomatic appointments
-
Business7 days ago
Current deflation situation would not adversely impact economy – CBSL Governor
-
News7 days ago
First-ever floating solar photovoltaic power plants operational
-
News3 days ago
AKD gladdens Ranil’s heart
-
Business3 days ago
Central Bank aware of upside and downside risks to its inflation projections
-
News6 days ago
Ex-Northern Governor: Deployments prerogative of armed forces
-
Editorial7 days ago
Shadow education in spotlight