Features
Proposed wage-increase for tea plantation workers:
How it affects the small holders
by Dr Janaka Ratnasiri
The Cabinet of Ministers, at its meeting held on 26.01.2021, has decided to amend the Wages Board Regulations (WBR) by making it mandatory for tea plantation workers be paid a minimum of Rs. 1,000.00 a day. This is a follow up to the proposal made by the Finance Minister in his Budget Speech that “I also propose to increase the daily wage of plantation workers to Rs. 1,000 from January 2021”.
DEMAND BY THE PLANTATION WORKERS FOR A WAGE INCREASE
Since about 2016, tea plantation trade unions have been demanding that a daily wage of Rs. 1,000 be paid to their workers. However, the regional plantation companies (RPC) were resisting their demands, despite intervention by ministers from time to time. In order to ensure votes from the plantation workers, prior to the election, a pledge was given by those who are in office now, that the plantation worker salaries will be increased. The proposal in the budget speech, as well as the recent amendment to the WBR, were outcomes of this pledge.
Tea is grown in Sri Lanka by two groups, the large plantations managed by the Regional Plantation Companies including other public sector institutes, and the small holders of extent below 10 Acres each. According to the 2015 Annual Report of the Tea Small Holdings Development Authority (TSHDA), the small holders produced about 240 million kg of made tea in 2015, while the large estates produced 87 million kg, which are 73% and 27% of the total production, respectively. According to the TSHDA Report, the number of small holdings below 0.5 ha extent comprise 88% which are mostly managed by family members. The rest up to 10 Acres or 4 ha employ paid workers and they are subject to WBR.
The demand for wage increase came from plantation company workers where salaries paid to workers are decided by the collective agreement between the RPCs and worker trade unions negotiated once in two years. During the last agreement, RPCs have offered an increase of the basic to Rs. 600 a day and increases in some allowances making the total daily wage to Rs. 940.00 subject to good attendance (Daily FT, 26.10.2018). But this was not acceptable to the worker unions.
The RPCs have called for a new wage structure focusing on a revenue share model that could have sweeping productivity-focused reforms in the entire industry. An option favoured by the trade unions is the out-grower model where the workers are allocated small plots of land to grow their own tea to sell to the factories (Daily FT of 19.02.2019). In view of this deadlock, the COM decided to incorporate the LKR 1000 as minimum daily wage payable to tea industry workers which is applicable to both estate and small holding workers.
Despite this Cabinet decision, tea plantation workers across the up-country have launched a token strike demanding immediate payment of the agreed pay hike to them, as some RPCs were hesitant to implement the Government decision. With an annual export earning of LKR 240 billion in 2019, a single day production outage means a loss of over LKR 600 million a day to the country.
PRESENT EARNINGS OF PLANTATION WORKERS
Currently, WBR specifies that the tea plantation workers should be paid a minimum of LKR 680.00 a day, subject to satisfactory attendance during the month. In addition, they are paid EPF at 12% of basic salary of Rs. 545.00 and 3% for ETF, making the total wages Rs. 761.75. It should be remembered that plantation workers generally work only for about 6 hours from 0730 h to 1330 h including 30 min for a tea break. They have to stop plucking early so that the day’s collection could be handed over after weighing to the lorry which comes around 1400 h. A plucker works for a maximum of 22 days a month because it takes about a week for a new shoot to develop to be plucked again.
But, on an average, a plucker may work only for about 16-18 days and after deducting his own EFP contribution, may have a take-home pay of about Rs. 12,200 – 13,700 a month. If they pluck above the minimum quota, they may be paid extra at rates varying from employer to employer from Rs./kg 25 to 30, they can earn extra, provided the bushes in the worker’s lot have shoots. Both during dry months (no moisture) and wet months (no radiation), the shoot growth declines and the average yield drops and much extra revenue cannot be expected during these months.
Being daily paid workers, they are not entitled for any paid casual or sick leave unlike monthly paid workers elsewhere. No work means no pay. Unlike other workers in the mercantile sector, tea workers are not entitled for mercantile holidays, neither they have any annual leave. Whereas, in the case of all public sector and mercantile sector workers, the EPF contribution is computed based on the total salary received, in the case of plantation workers, it is computed based on the basic salary only.
The writer believes that this is a violation of the EPF Act. Though workers employed by RPCs may get free housing and free medical facilities, such benefits are not available to the large number of workers employed in the small-holder sector. Hence, there is a need to increase the wages paid to these workers to compensate for the loss of all these benefits.
In announcing the proposed wage hike for plantation workers, both the Government and the RPCs are deceiving them by adding the employers’ contribution to EPF and ETF as a part of the daily wage of Rs. 1,000. This is not done anywhere else either in the public or in the mercantile sector. When they announce a salary scale, only the basic salary along with allowances are shown, but not the EPF and ETF contributions. The workers themselves may not have understood the difference, but their unions should have seen the unfairness of this computation.
IMPACT OF THE WAGE INCREASE ON THE SMALL HOLDER SECTOR
Small holders get paid for the green leaf supplied to factories at a rate determined by the auction price paid to factories the previous month. Currently, the rate is about Rs. 90 per kilo after deducting for transport and sack weight. In the writer’s experience, a small holding of four acres with an average yield of 1,500 kg of green leaf a month, brings a monthly revenue of Rs. 135,000. The salary bill for four pluckers and a Kankanama will come to an average of Rs. 80,000 a month. This comprises Rs. 30,000 paid to the Kankanama and LKR 12,500 paid to each plucker on an average, including their EPF and ETF contributions. This works out to Rs. 781 a month per plucker, a little over Rs. 762, the minimum specified in the WBR.
The cost of weeding which is done manually, maintenance of drains and retaining walls on an average comes to about Rs. 25,000 a month. The cost of fertilizers and dolomite and their application costs another Rs. 6,000 a month on an average. In addition, there are other costs of infilling, pruning and replanting of unproductive sections which works out to about Rs. 14,000 a month. This leaves only Rs. 10,000 a month as income from the small holding, which is even less than what a worker earnes a month.
Once the WBR is amended to increase the daily wages to Rs. 1000, the Labour Officers will spare no time in visiting the small holdings and insisting the new wages be implemented. If this is done, it will be an added financial burden of Rs. 15,360 a month. This exceeds the amount left in hand after attending to its management properly. Since the small holdings depend entirely on the money paid by the factories, the obvious solution is to increase this amount at least by Rs. 20 a kilo which leaves behind a decent balance in hand. It is obvious that the COM was not concerned about the small holdings when it decided to amend the WBR, but had only the concerns about the RPC workers in mind.
INCREASING THE PAYMENT TO SMALL HOLDINGS BY FACTORIES
Tea samples offered at the auctions are purchased mostly by exporters for supplying to overseas buyers. About 3% is purchased for sale locally. According to the Tea Board Directory, there are about 325 exporters. Originally, only the dedicated companies exported tea but lately the factories as well as RPCs have got involved in export of tea considering the high profit margin. According to the Central Bank 2019 Annual Report, the average auction price of tea was Rs./kg 546.67, while the average export price was LKR/kg 822.25, leaving a margin of Rs./kg 275.58. The total tea (made tea) production in 2019 was 300.13 Mkg, while the quantity exported was 292.65 Mkg. Thus, the exporters had made a gross profit of Rs. 80.65 Billion in 2019.
Export of tea is subject to a CESS levied at Rs./kg 10, which works out to LKR. 2.9 Billion. Further, Rs.one billion is collected as Tea Promotion Levy by SLTB from the exporters. Another 1% or Rs. 2.4 Billion has to be paid to Brokers for conducting the auctions and carrying out quality control checks and certifying on samples received. These brokers comprising 8 companies deserve it because they ensure that quality tea is exported. After paying these taxes, the exporters are still left with a profit margin of about Rs. 65 Billion annually after paying Rs. 10 billion as income tax (assumed).
The export companies presently enjoy the benefit of this revenue shared among its staff. Assuming each company has 50 staff members, the total staff strength is about 16,250, and each of them could earn a salary of about Rs. 400,000 monthly. This is while a plucker earns below 1/25 th of this amount after trudging up and down the hills carrying kilos of leaf on their back in sun and rain. It would be in the interest of the exporters to share their profits among the plantation workers also, because if the industry collapses, there is nothing for them to export.
SHARING OF EXPORT PROFITS AMONG WORKERS
The number of workers employed in tea plantations are estimated to be about 174,000 in 2017 (ILO Publication on Tea Small Holdings, 2018). If each of them is to be paid an additional Rs. 238 monthly for raising the daily rate from Rs. 762 to LKR 1,000, the annual burden will be Rs. 414 Million. The total production in the small holdings in 2019 was 240 Mkg of made tea according to TSHDA, which is equivalent to 960 Mkg of Greenleaf. If the small holder is to be paid Rs./kg 20 more for Greenleaf, the added burden will be Rs. 19.2 Billion.
Thus, for increasing the daily wage to workers in both the estates and small holdings, the total added financial burden will be about Rs. 20 Billion annually. If the tea exporters could part this amount from their profits of Rs. 65 billion, the problem could be solved. The Government may do away with the CESS levy on tea exports to assist this process. Concurrently, an effort should be made by the tea industry to increase the revenue from tea exports.
INCREASING THE REVENUE FROM
TEA EXPORTS
The writer published an article in The Island of 11th and 13th of November, 2015 describing the strategies to be adopted to increase the export revenue, and also to increase the wage increase. Though it was written more than five years ago and the data little outdated, the reasonings are still valid. The article which appeared in two parts may be accessed via the following links:
http://archive.island.lk/index.php?page_cat=article-details&page=article-details&code_title=135105
http://archive.island.lk/index.php?page_cat=article-details&page=article-details&code_title=135203
One strategy is to move away from the manufacture of traditional orthodox tea to CTC (Crush-Tear-Curl) tea which is in high demand in the western countries like the USA and the UK. Both Kenya and India have overtaken Sri Lanka as major exporters because they supply CTC tea while Sri Lanka sticks to orthodox tea. According to Tea Exporters Association data, Sri Lanka has produced in 2019, out of a total of 300 kt of tea, 274 kt (91.3%) of orthodox tea, 23.6 kt (7.9%) of CTC tea and 2.6 kt (0.8%) of green tea. According to World Exporters Site http://www.worldstopexports.com/tea-imports-by-country/, Sri Lanka in 2019 has occupied only 10% of the tea market in the USA while only 4.1% in the UK. The major importers were Kenya, India and China. Today, most Western countries consume tea in the form of tea bags for which CTC tea is necessary. But to cater to these markets, Sri Lanka will have to increase the CTC output.
World’s highest tea importer is Pakistan, but most of the teas consumed in Pakistan are imported from Kenya, India, Uganda, Rwanda and Tanzania. Currently Sri Lanka’s market share in Pakistan is only 2-3% of total tea imports. A publication by Sri Lanka’s Consulate General of Sri Lanka in Karachi released in December, 2016 has recommended that “While capitalizing on the taste factor, Sri Lankan tea companies should produce quality strong black CTC teas comparable to East African countries focusing on leaf and liquor in large quantities and offer straight lines such as Garden Originals. Pakistan consumers are very particular about the appearance of tea and prefer to drink thick gold color tea”, if Sri Lanka wishes to increase its market share in Pakistan.
The other strategy is to move into producing more high value tea such as green tea and instant tea. According to Central Bank 2019 Annual Report, Sri Lanka has exported 285 Mkg of black tea at an average price of Rs./kg 797.00, 4.75 kt of green tea at an average price of Rs./kg 1,987.00 and 3.07 kt of instant tea at a price of Rs./kg 1.357.00. Hence, the logical step to increase the export revenue from tea is to offer high value tea instead of traditional black tea. But, instead of doing that the Sri Lanka Tea Board was spending billions of rupees on promoting black tea in existing markets. In 2014, the COM approved a budget of LKR 2.3 billion for promotional activities but the Tea Board could not finalize the project for several years because of disputes it ran into in selecting a suitable advertising company.
IMPLICATIONS OF WAGE INCREASE IN THE SMALL HOLDING SECTOR
If the proposed wage increase applies to the small tea holdings without any corresponding increase in the payments made for green leaf supplied to factories, the only option available to the small holder is to give up the tea plantation and consider other options. Among these are shifting to another crop such as cinnamon or pepper along with gliricidea or partition the land into several segments and hand over them to existing workers or others to manage them on their own with no liability to pay any wages to the workers by the land owner.
Gliricidea stems are in demand as a biofuel for use as a source of thermal energy in industries. With the Government giving high priority for renewable energy, industries will have to turn to biofuels as a substitute for oil or gas to generate thermal energy. One barrier they face is the lack of a proper supply chain ensuring continuous supply of biofuels. Already a project supported by UNDP and FAO is assisting the Government to set up fuelwood collecting centres across the country as part of the supply chain improvement. Hence, converting the tea plantation into a gliricidea plantation will help in this venture and provide a source of revenue possibly higher than what the tea plantation provides without any WBR controls.
CONCLUSION
In order to meet the demand made by tea plantation workers, the Government has decided to incorporate the proposed increase to the WBR rather than limiting it to the Collective Agreement between RPCs and Trade Unions. This affects the small holders as well who depend on payments made by factories for green leaf supplied to them. Unless there is a corresponding increase in this payment rate, the small holders have no option other than to give up planting tea.
It is also proposed that the Government should intervene to get the enormous profits earned by exporters to share their profits with the workers enabling the RPCs and small holders to implement the proposed wage rise. Concurrently, the factories should endeavour to produce high-value tea products to increase the export revenue.
Features
Hemin Hemin superior to being badgered; retribution comes; obstinacy may cause WWIII
Warnings have been issued, even in editorials, that promises made in election manifestos by parties, even the more responsible minded NPP, have to be accepted as slightly exaggerated and not implementable immediately. Cass would like to use the phrase ‘taken with a pinch of salt’ regarding election promises, which to her is actually what she means but won’t say it in case she is accused of being frivolous in such a serious matter as country policy decision making and undertaking.
Go slow in Expectations
As is pointed out by the wiser and more knowledgeable all round, time must be given to any new government to implement promises made, and again not to believe all will be met. We, Sri Lankans, have some distinct national characteristics like lotus eating which produces indolence; being akin to soda bottles – sudden spurts of activity, mostly anger and then after damage is done subsiding, froth and bubble forgotten. Also, ever ready to point fingers of accusation outside at others, never at ourselves.
Warnings that the new government which may be solely NPP or a mixed one will necessarily need time to implement promises such as salary increases; life made easier to live; catch rogues, slam them in prison and bring looted billions back to the country where it all belongs. These will take time. Some cannot even be fulfilled like bringing looted money back since the looters would certainly have done their evil with no tracks and traces left. People’s policy should be to wait patiently for a while, go hemin hemin on expectations and demands and be thankful that at least the prevention of two national curses is in place resulting in much less corruption and public servants working as they should.
Cassandra laughed slyly when reading an editorial warning that the youth, not witnessing quick action and implementation of NPP or other parties’ promises, may take to protests and perchance violence as of 1971 against Mrs B’s government and in 1989 may erupt.
No fear dahling! Remember it was the then JVP that organised and set in motion the protests, extremely violent in the late 1980s. They are wiser, much more democratic and instilled by the actions of the mini Cabinet of three confidence. The JVP is now very different from what it was in 1971 and 1989, or so we believe.
Confidence that they, the new leaders, are sensible, wise and even accepted as thus apparently by the international community is a given. The American ambassador was instrumental in bringing a US manufacturing project to Sri Lanka from China. The absence of horas in the departments that deal with foreign investment makes rank corruption a vile practice of the past. Mr 10 percents descending on SL to peck a picking and returning to a life of luxury and locals following suit are also, mercifully, things of the past. Kaputas will be kaput, we expect
A virulent virus in remand prison?
It is a mystery but a fact that whenever a political VIP is remanded, he has to be immediately hospitalised – at the prison hospital or more generously in the National Hospital, Colombo, and for sure in the highest paying rooms with full liberty except to walk out, sorry, chauffeur driven in the most luxurious vehicle. These – unlicensed – are being discovered by the dozen. Keheliya Rambukwella, who Cassandra makes bold to accuse of directly or indirectly causing the death of many by allowing the import of dangerous drugs solely to make illicit money, is one such. He fell ill the moment he was remanded and so sick that he was even allowed food to be brought from home.
There are others, the latest being Lohan Ratwatte. Monday November 5 The Island reported he had been taken into custody for possessing a vehicle stolen overseas and brought into SL. We thought he was a sturdy strong man, quick on the draw even in peaceful hotels and invading prisons when the Minister with a mini-shorts clad girl to frighten poor prisoners, while other frustrated men drooled over the girlish spectacle. The moment he entered the remand prison he fell ill and so ill that he had to be transferred to the general hospital.
Hence my theory there is a virus, short of being deadly, which ghouls the Colombo remand prison. It is mercifully selective; attacks only the very rich, and powerful politicians. Proof again of Sri Lanka being a land like no other, harbouring such a virus.
One politician who was different was Hirunika Premachandra. Sentenced to three years imprisonment for a 2015 abduction of a youth, she spent four or five days in remand prison in an ordinary cell, probably sharing it with convicted female prisoners. She was released on bail on 22 July this year as she appealed against the judgment. No virus attacked her; brave woman that she is. She emerged from incarceration looking lovely as ever with nary a complaint; rather did she comment on the treatment she received and how it was good to spend days and nights in confinement with the hoi polio (not her words) law offenders. Unlike the other quick-to-sickness
male political detainees she had to be separated from her three young children, and she bravely bore it all. Her ‘crime,’ too, was far from abetting the killing of people and crass dishonesty.
No compromise, no heed to mass killing of innocents
Maybe Cass is chicken-hearted and dodges reality, but she just cannot watch or read about the horrendous situation involving Israel, Gaza, Palestine and now Lebanon with Iran in the immediate periphery. To her simple mind, she cannot understand how Israel particularly can kill so wantonly. Why cannot Hamas/Hezbollah declare they will not fight a war anymore? One cannot expect Netanyahu alone to do this. One party has to compromise. Lives have to be saved, especially those of children.
A video clip I watched had Prof Jeffrey Sachs in an interview categorically state that the US should move to stop the war by withdrawing all help – arms, money – to Israel. “Where is western civilisation when Israel is massacring hundreds of thousands and bombing indiscriminately, now threatening Iran? The pervasive view around the world is that there is no western move to stop genocide; not one attempt to reign in US operation carried out by Israel, with silence from Western Europe. A stark failure of American politics.
Netanyahu leads the US to commit disaster after disaster and the US Senate applauds him. Netanyahu will take the world to WWIII just to prevent Palestinians from having a state of their own. A strong US President is needed to stop the war and that is what the Presidents of the US have to do.”
Jeffrey David Sachs is an American economist and public policy analyst who is a professor at Columbia University and was director of the university’s The Earth Institute.
New US Prez
Shocking surprise to Cass that Trump won the US presidential election. She fully expected the American voter to be sane and sensible enough to vote in Kamala Harris, who was empathetic to the less privileged and had much better policy plans than Trump, who spoke almost solely of immigration. He is still running down women. Hearing his acceptance speech on Wednesday noon felt like an actual body blow to Cass. We, Sri Lankan voters, are so much more enlightened than the Americans who rooted for “Make America Great Again” which to the perpetrator means “Make me great again and save me from all the pending court cases.”
Features
‘Popular will’ and the democratic process in the US and outside
The just concluded presidential election in the US could very well have been the tightest ever such contest in the world’s ‘mightiest democracy’ in recent decades. With some reservations it could be said that the democratic system of government triumphed once again in the US and that the ‘popular will’ asserted itself.
It would have been preferable if the President of the US was elected only by the ‘popular vote’ or the majority of votes she or he directly polls countrywide but unfortunately this is not the case. The Electoral College (EC) system gets in the way of this happening effectively and it is gladdening to note that this issue is being addressed by the more reflective sections in the US. It is time for this question to receive the complete attention of the US’ voting public.
Hopefully, the ‘pluses’ and ‘minuses’ of the EC system would be fully examined by the US public in the days ahead. Right now, critics of the system could not be faulted for seeing it as distorting somewhat the ‘popular will’ or the overall preference of the US voting public in its choice of President.
The close contests between the contenders in what are termed the ‘Swing States’ helped highlight some notable limitations in the EC system. It ought to be plain to see that the requirement that the ‘winner takes all’ of the EC votes in these states needs urgent questioning and rectification.
However, the US and the world’s thriving democracies could take heart from the fact that there has been a legitimate transition of power in the US in the most democratic of ways possible at present for the US. Considering this it could be said that the US is continuing as a frontline, vibrant democratic state.
Not to be forgotten too is the fact that the elections to the US House of Representatives and the Senate have also been simultaneously completed on the basis of laid down legal procedures. That is, elections to all tiers of government have been concluded, testifying to the fact that the ‘democratic health’ of the US is unquestionable.
‘Democracies’ come in numerous forms and it is open to question whether a rigorous definition of the term could be given. Even some of the most authoritarian, autocratic and theocratic states prefer to call themselves ‘democracies’. At first glance, these considerations could lead to some bafflement but it could be stated that, generally, it is only those governing systems that lead to the total empowerment of people that could be considered democratic.
Defenders of and apologists for authoritarian and dictatorial regimes could shoot back on hearing the above observations that since their regimes satisfy the material needs of their populations, their states fully qualify for democratic status.
But the defenders of democracy, correctly understood, may beg to defer. The total empowerment of individuals and publics is realized only when the latter enjoy fundamental rights and freedoms, as enshrined in the UN Declaration of Human Rights, for example.
Accordingly, a regime that does not permit its people total Freedom of Speech and Thought, for instance, could in no way be seen as empowering its people. A regime that does not allow its citizenry the latter rights is repressive and undemocratic and is out of step with democratic development. In fact it is the latter process that even facilitates the material empowerment of publics.
Assessed on the basis of the above yardsticks, the US and other Western states, where fundamental freedoms are generally ‘alive and well’ could be considered democratic although absolute or perfect democracies could nowhere be found. Democracy is a process and it needs to be enriched and given greater depth, going forward. The process is long term and one which progressively evolves.
Besides the above considerations, advanced democracies are also characterized by multiple political parties that contest for power within the parameters of democratic principles. States that lack these essential attributes could not be considered democratic.
Going forward, states East and West need to be guided by the above principles because minus the multi-faceted empowerment of people, democratic development would not be possible. Seen from this viewpoint, it would be self-defeating for government leaders of the South in particular to consider opposition parties as inessential.
They need to also consider that there is no question of turning back the hands of time and reverting to strait-jacketed, one-party states of the Soviet era. These formations were thrown out by the relevant peoples themselves as incapable of ‘delivering the goods’ most needed by them.
The recent US presidential election campaign speeches were, for the most part, bereft of any substantive content. As a result, it’s difficult to predict as to the specific directions in which US foreign policy would evolve in the days ahead.
However, while a less pluralistic and ethnically accommodative US could be expected under Trump, a more inward looking foreign policy could very well be on the cards as well. A future Trump administration could see a lesser need to be committed to the Ukraine, for instance, and is likely to pursue more of an isolationist foreign policy which could see a gradual friction build-up between the US and its Western allies. Consequently, the cause of democratic development worldwide could suffer.
However, during one of her closing election addresses Presidential contender Kamala Harris left the world with a nugget of wisdom or two which would need to be treasured by policy planners and governments worldwide. She said, among other things, that one’s opponent should not necessarily be seen as one’s enemy. The latter should be spoken to in a most constructive fashion at the same table and be seen as having something essential to contribute towards nation-building.
The above is a stateswoman like pronouncement. If the international community is desirous of ushering a more peaceful world, Harris’ words would need to be dwelt on and consistently acted on. They come at a time when inhumanity internationally is more the norm rather than the exception.
Features
Amazing scene in Mexico…
All the contestants, vying for the title of Miss Universe 2024, are having an awesome time in the city of Mexico. Sri Lanka is represented by Melloney Dassanayaka and she is doing great in the scene over there, according to reports coming my way. Says Melloney: “I’m having an amazing time in Mexico City, and meeting up with these beautiful ladies is incredible.”
She went on to say that she is super grateful for her incredible roommate, Miss Universe Canada! “She’s kind, funny, caring, and a true sweetheart who made this long pageant month, away from family, so much brighter.
“With her talent as a TV host, and her amazing spirit, I couldn’t have asked for a better companion on this journey. “Huge thanks to Miss Universe @missuniverse for connecting me with all these beautiful souls!”
Melloney has also come in for a lot of praise on social media, with many wishing her ‘good luck’, as well as describing her as…
* Sooo beautiful
* Awww she is cute
* So pretty. Good luck
* Wow! She deserves the crown
The beautiful ladies, in the city of Mexico, are now busy rehearsing and getting themselves fine-tuned for the grand finale, scheduled for next Saturday, 16th November.
By the way, the four top beauty pageants in the world, for women, are (1) Miss Universe, (2) Miss World, (3) Miss Earth, and (4) Miss International.
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