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SLTDA issues clarification around securing US $ 417.5mn FDI to develop Uchchamunai island

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Sri Lanka Tourism Development Authority (SLTDA) has issued a clarification following certain news reports consisting ‘misinformation and disinformation’ that Uchchamunai Island has been sold to foreign investors without following the due process.The Uchchamunai Island in question has NOT BEEN SOLD and a lease agreement was signed for a period of 30 years to a foreign investor in an attempt to drive much needed Foreign Direct Investments (FDIs), SLTDA report said.

It further said:

For SLTDA the income is by way of lease rental. The lease rental is based on the value provided by Department of Government Valuation done in October 2020 on which the agreement was finalised. The stated 417.5 million USD is the project cost estimated by the investor for a tourism project that will be implemented in stages.  The project can only commence when all necessary approvals from the line agencies including Coast Conservation, Environmental Authority etc. are in place.

As per the Tourism Act No 38 2005 SLTDA is mandated to lease out (not sell) SLTDA owned lands to potential investors to develop and operate tourism hotels and resorts in a planned and sustainable manner. The SLTDA as in the past has continued to do so, attracting both foreign and local investments, and has been held answerable to the Committee on Public Enterprises (COPE) of the Sri Lanka Parliament for any delays in signing of lease agreements for already approved projects.Regarding the Uchchamunai island in Kalpitiya, SLTDA in July 2019 called for potential investors via newspaper adverts in all three languages. Post evaluation and approval of the Project Proposal Evaluation Committee, it was approved by the Board of SLTDA in February 2020, which includes industry stakeholders and government representatives.  In August 2020 the minister of tourism via the secretary ministry of tourism approved the signing of a lease agreement.   The draft agreement for the lease in terms of the technicalities was finalized in October 2020 and the draft agreement finalised in December 2020.  It was ready to be signed in March 2021.

However, due to the pandemic situation and internal affairs of the investor the agreement signing was delayed. In April 2022, the Board of Investments (BOI) provided the investor with an ultimatum to sign the lease agreement on or before 11th of May 2022, failing which would result in the withdrawal of the application. As a result, the investor requested to sign the lease agreement with SLTDA on the 9th or 10th of May 2022. However, owing to the unfortunate incidents that occurred on the 9th and 10th of May 2022 in Sri Lanka and given BOI’s original request, the SLTDA management arranged signing of the lease agreement for 30-year lease as per land alienation policy on 11th of May 2022.

SLTDA also wishes to clarify that despite popular opinion, the SLTDA nor the government of Sri Lanka or any related stakeholder obtains 417.5 USD Million as a result of this transaction.  The agreement was purely to lease out land for 30 years with ultimate ownership remaining with SLTDA.For SLTDA, as reiterated before, the mode of income is by lease rental where monthly the investor will pay a fixed fee of a rental for the period of 30 years which is based on the valuation done by the Department of Government valuation in the year 2020.  The total cost of USD 417.5 million simply represents the total commercial value of the investment made by the said investor.



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Salon owners contemplating pulling the plug, putting more than 300,000 jobs at risk

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  • = Ban on imported cosmetic products hampers industry
  • = Marked decrease in consumers patronising salons
  • = Developing Sri Lanka as a wedding-hub ‘fading away’
  • = Urges President to help protect the self-reliant industry

By Sanath Nanayakkare

Ninety percent of salons across Sri Lanka are at the risk of closure unless the temporary ban on imported cosmetic products is lifted soon, Jackie Aponso, president, Hair and Beauty Cluster (HBC) said last week addressing a press conference in Colombo.

She claimed that such an eventuality could lead to 75%-80% job losses of industry personnel. “That’s a large number as HBC is a unification of many associations in the beauty and personal care sector with 450,000 members,” she said.According to the figures given by her if the situation persists, 337,500 – 360,000 jobs would be lost for employees in the industry.

‘Yes, there is a sound fiscal argument for the government’s temporary ban on imported cosmetic products in the tight foreign exchange reserves backdrop. But if the ban is not lifted by the end of this month to facilitate the availability of international cosmetic brands in the market for upcoming Christmas and New Year, its impact will take a devastating toll on the 450,000 self-employed individuals engaged in the industry and 1.5 million of their dependents”, Jackie said.

‘Most foreign and local customers prefer international brands for their hair and skin treatments. Although a number of home-grown cosmetic brands have emerged, customers prefer their hair and facials done with brands that have been frontrunners in the market which they have relied on for years. Being a highly customer-centric business, we have to work with formulas that customers are comfortable with, because they are concerned about what we put on their face and hair.”

“It’s a relief to hear that the import ban is temporary. But it needs to be lifted quickly to allow sufficient lead time for cosmetics importers to place orders and bring the products to Sri Lanka. It was no secret that our industry was heavily battered by the Covid-19 pandemic and somehow we braved up to this point safeguarding our businesses. And we all have been looking forward to this season to offset the losses we suffered in the past two and a half years. If the ban is lifted by end of this month, imported brands will be available in the market by mid or end of November, and salons will be well-positioned to start work diligently as the season kicks off. But if the imported products reach here as late as mid-December, then this year also will be marked as another unfortunate business year for the salon industry, “she said.

“When we don’t have wedding makeup essentials, a number of other industries also will get affected; such as hotels, wedding and event planners, wedding florists, bridal photographers, Poruwa suppliers, hall decorators and so on. As a result of the import ban, a black market has emerged where the prices of cosmetics have gone up by 6-7 folds. This has put 90% of our beauty and personal care parlours in great difficulty. A hair spray which was about Rs. 2,000, now costs Rs. 12,000. Can we pass that cost burden to the customer? No, we can’t. It is the same with all other products. There are a few salons that can afford such high costs and charge high prices, but the majority of our members are not so, and they are at the risk of closing their businesses. As there has been a marked decrease in customers patronizing salons, some members even called us and asked for help to sell their equipment and exit the industry. Such a situation may create an unemployment problem as they are all self-employed individuals.”

According to HBC, the industry’s cosmetics import bill accounts for 0.08% of the total national import bill. They also highlighted the fact that all registered cosmetics importers and HBC members pay their due taxes to the government.

Salon entrepreneur Bernie Balasuriya said: “Our industry brings in foreign exchange to the country. When foreigners and expatriates come to Sri Lanka for weddings, their families stay in hotels for about a week. Sometimes we set up salon space inside the hotel to cater to beauty and personal care needs of these visitors. They want us to use international cosmetic brands. This is an industry which earns foreign exchange and which therefore demands best industry practices.”

Theekshani Kariyawasam, Gold medal winner at OMC Hairworld in France in the category of bridal makeup, who successfully competed against contestants from more than 60 countries, said that the situation is so sad especially because Sri Lankan beauty artistes and entrepreneurs have never been a burden on the economy. We have always relied on our own talent and commitment. We need international cosmetic products to work with and be recognized for highest standards on par with other destinations.”

Asoka Thilakaratna who boasts 35-years of experience in the industry said,”Skilled Sri Lankan hairdressers and beauticians get overseas jobs because they have a lot of knowledge and experience in working with international cosmetic brands and techniques. That serves as a plus point for them at job interviews with prospective foreign employers. Further, I heard the good news that there would be some Indian weddings taking place here in Sri Lanka in November, December and January. I know from my experience that they come as groups about a week before the wedding and get all their beauty treatments done in Sri Lanka. If we don’t have cosmetic brands they love and trust, we could miss out on these business opportunities because they make it a point to stay away from lesser known products and fake products.”

Concluding the comments, Jackie Aponso said,” We have made an appeal to President Ranil Wickremasinghe to consider the lifting of the ban with the objective of protecting this self-reliant industry and its self-employments. We look forward to a favourable solution in time to get back to business.”

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Sri Lanka eyes $2.9 billion IMF loan finalised in December 2022

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Sri Lanka expects the International Monetary Fund (IMF) Board to approve a $2.9 billion loan by year-end, according to a news report by Reuters.The IMF Board approval of the loan is expected by mid-December. From now until mid-November, the country aims to get financing assurances from public- and private-sector creditors.

The country earlier this month reached a staff-level agreement with the IMF for the loan of about $2.9 billion, contingent on it receiving financing assurances from official creditors and negotiations with private creditors.

“It’s going be very tough, but so much of it depends on China, basically one creditor, so maybe it can be done,” a bondholder told Reuters on condition of anonymity.

The virtual presentation to investors on Friday marks the first time the Sri Lankan government has formally engaged with private bondholders after deciding earlier this year that it would restructure $13 billion in international sovereign bonds, held by private creditors such as asset managers BlackRock and Ashmore.Central Bank Governor Nandalal Weerasinghe and Treasury Secretary Mahinda Siriwardena participated in the virtual presentation on Friday, along with representatives of financial and legal advisers Lazard and Clifford Chance.

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SLIM launches SLIM DIGIS for 4th consecutive year

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Sri Lanka Institute of Marketing (SLIM), the apex body for Sri Lankan Marketers, has opened entries for the 2022 edition of SLIM DIGIS from the 23rd of September until the 25th of October 2022. SLIM DIGIS celebrates and rewards outstanding work and talent within the digital sphere. This year’s competition, SLIM DIGIS 2.2, features two awards categories; the special awards category and the main awards category, under which multiple awards are poised to recognize the Best Digital Marketing campaigns from a range of categories chosen specifically to reflect the development and growth of Sri Lanka’s digital marketing sector.

Nuwan Gamage, President of SLIM, stated, “During the last 3 years, as a nation, we have faced numerous challenges than we have ever faced in our history. Consumer behavior changed dramatically, and companies that acted quickly were able to thrive despite the changing economic backdrop. In those agile approaches, we have seen digital marketing play a vital role and I firmly believe that it will continue to play a very prominent role in the nation’s branding national initiative that we are running currently to position Sri Lanka globally to travel, invest and live. I would like to invite all the digital marketers and brand owners to showcase great digital execution that they have done in this challenging environment.”

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