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Sri Lanka big business reaps huge profits during pandemic

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By Saman Gunadasa

Sri Lanka’s nine top companies amassed 364 billion rupees ($US1.8 billion) in earnings between April and June, collectively pocketing 21 billion rupees profit in the first quarter of their financial year.

This amount is only a fraction of the wealth secured by the super-rich and also seen in rising profits for the banks and other big companies so far this year.

In the first three months of 2021, listed companies on the Colombo Stock Market recorded 189 percent growth increase compared to the same period last year, with the largest earnings made by companies involved in finance, exports, logistics, liquor, health and stock trading.

Companies allowed to keep operating during the COVID-19 pandemic were some of the highest profit makers, in stark contrast to the devastating economic impact on workers, small entrepreneurs, self-employed and the poor who suffered sharp losses of income and jobs. As of yesterday, COVID-19 has taken the lives of more than 9,000 people in Sri Lanka with total infections climbing to over 425,000.

Among the top nine earners was Expolanka, a major logistics company with branches in 20 countries. It had a turnover of 95 billion rupees and 6.3 billion rupees net profit in the quarter.

In second place was LOLC, a leader in leasing, hire purchase, insurance and other financial activities. It earned 55 billion rupees with a 4 billion rupees net profit. Last year, LOLC pocketed 53 billion rupees after tax profit, the highest ever recorded by a Sri Lankan company. Its owner, Ishara Nanayakkara is one of the country’s top billionaires.

Hayleys and Vallibel One, a finance house owned by Dammika Perera, Sri Lanka’s richest individual, earned almost 90 billion rupees with combined net profit of 6.4 billion rupees in the April to June quarter.

The Hayleys conglomerate is involved in import-export industries related to rubber production and plantations with over 30,000 employees. Last year it generated 242 billion rupees in revenue and 14 billion rupees net profit, the highest ever during the company’s 143 years of existence.

John Keells, another top business firm, earned 38 billion rupees with 1.2 billion rupees net profit in the quarter. Tourism was the only component of the company impacted by the pandemic.

In addition to the top nine conglomerates, NDB, the country’s fourth largest private commercial bank, reported a net interest income of 5 billion rupees—a 15 percent increase from April to June compared to the same time last year. Sampath Bank reported a 34 percent rise in net interest income to 10.8 billion rupees in the same quarter.

Billionaire Dammika Perera was featured in the media last week, arrogantly declaring that Sri Lanka should not be locked down under any circumstances.

 “A government cannot run the country in a complete lockdown, can it?” he said, adding that without “dollar income via exports,” it could not import petrol, medicine, milk powder and other necessities. Perera said nothing about the massive export profits being amassed by his companies and other businesses.

Over the past month Sri Lankan President Gotabhaya Rajapakse, speaking on behalf of big business, opposed any lockdown amid rising COVID-19 infections and deaths and urgent calls of independent health experts for stringent health measures.

Limited lockdown restrictions reluctantly imposed on August 20 by Rajapakse, still allow big business to keep operating as essential services. Health experts have voiced their concerns about effectiveness of the government’s restrictions.

Last year President Rajapakse ordered the Central Bank to provide massive concessionary funds—a total of 230 billion rupees—to big businesses. Other financial facilities and more tax concessions were also handed out. Most corporate taxes, for example, were reduced to 14 and 18 percent, the lowest rates in South Asia.

Last December, Rajapakse told a Ceylon Chamber of Commerce conference that investors should “take up the opportunities” provided by the coronavirus pandemic.

Early last year the government, backed by the trade unions, gave businesses the right to retrench workers arbitrarily, ignoring the country’s existing, but limited, labour laws. Under the banner of dealing with the pandemic, employers were also allowed to impose wage cuts, increase workloads and slash working conditions.

Announcing his limited lockdown measures on August 20, Rajapakse called on the population to be prepared to make “more sacrifices.” Government ministers are already campaigning for the salaries of about 1.4 million of state sector workers to be cut by 50 percent.

Last week, the cabinet of ministers announced that they would donate a month’s salary to the COVID-19 Health Care and Security Fund. The “donation,” which has been embraced by government and opposition Samagi Jana Balavegaya MPs, is a media stunt by the ministers who receive more in perks than their monthly salaries. It is a public relations exercise in preparation for the slashing of state employees’ salaries.

The government has said it would provide 2,000 rupees for low-income families to cover the two-week lockdown. This is not even enough for one meal a day during the lockdown.

While big business is thriving, working people are being impacted by increasing prices for essential items. Inflation rates have been climbing since January and, on a year-on-year basis, were 6.1 percent in June and 6.8 percent in July. Food inflation was 11 percent in July, with non-food items 3.2 percent.

The Rajapakse government, which confronts falling foreign reserves—it only has enough for two months of imports—has banned the import of many essential food items and other goods.

Sri Lanka, according to a recent global survey by the Institute of Development Studies , is fourth in a list of countries—after Syria, Nigeria and Ethiopia—where basic food is the least affordable.

Last week, Health minister, Keheliya Rambukwella issued a gazette announcing a maximum price for 60 essential medical drugs. Ceylon Private Pharmacy Owners ’ Association president Chandika Gankanda, however, told the media that the gazette was used to increase the price of many drugs by 9 percent. The drugs listed in the gazette include painkillers given for those infected with COVID-19 or suffering with diabetes and high blood pressure.

Mired in huge foreign debts and falling export income, the Rajapakse regime has turned to the International Monetary Fund (IMF) and received a loan of about $800 million under the bank’s $650 billion program for member states.

Ajit Nivard Cabraal, the state minister for money and capital markets, jubilantly declared last week, that “the inflows we predicted are coming one by one,” adding that a $300 million loan was also being provided by China.

The IMF has insisted that any country receiving its loans must implement “restructuring programs” to overcome its economic difficulties. In other words, these loans will be paid for by even more ruthless austerity attacks on the working class and the poor by the Rajapakse government.



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Central Bank urged to save collapsing local industries

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The National Freedom Front (NFF) has requested the immediate intervention of the Governor of the Central Bank Ajith Nivard Cabraal to save micro, small and medium scale industries badly affected by the current economic downturn caused by the Covid-19.

The NFF parliamentary group comprises six members, including one National List.

Industries Minister Wimal Weerawansa, on behalf of the SLPP constituent parties, has warned of steep increase in unemployment, drop in the contribution made by small and medium scale industries to the national economy and the further widening of the gap between the rich and poor.

Party sources told The Island that the NFF had decided to take up the urgent matter because, in spite of repeated promises, those who had been severely affected were yet to receive assistance. Minister Weerawansa has urged the Central Bank to restructure loans obtained by affected industries and also extend the moratorium.

Weerawansa has in a letter dated Oct.18, told Cabraal that according to a survey conducted by the Industrial Development Board, micro, small and medium enterprises suffered serious setbacks. However, of the loans made available through the banking sector, a substantial segment had been disbursed among major players, the Minister said, while pointing out that in other countries in the region more than 50 percent of total loans were made available to micro, small and medium industries.

Unfortunately, here in Sri Lanka they received approximately 15 percent of the total given as loans, the minister said.

Minister Weerawansa said that though industries suffered, almost all state and private banks had recorded much improved performances with significant profits.

The Minister said that following his intervention with the cabinet of ministers, the government agreed on a plan of action to deal with the situation. It would be the responsibility of the Central Bank to implement the agreed proposals, he said.

(SF)

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So far no side effects among Pfizer vaccinated 15,000 A/L students

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By Rathindra Kuruwita

Over 15,000 GCE AL students had been vaccinated with Pfizer and there had not been any side effects, Colombo District Director of Health Dr. Dilip Liyanage told the media yesterday.

He said that the Ministry of Education had given them a list of 20,688 that needed to be vaccinated.

“We would like to assure parents that there is no need to worry. Over 15,000 children have been vaccinated and there have been no problems so far. Trust the health professionals and vaccinate your child at the first opportunity you get,” he said.

Dr. Liyanage added that children who missed their chance to get vaccinated on weekdays, can get vaccinated at the MOH office near their home.

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Govt. approves prohibition of cattle slaughter

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The government has approved the prohibition of cattle slaughter. The decision was announced at the weekly Cabinet meeting at the Information Department yesterday (19). The government said the relevant laws and regulations, including those passed by Local Government authorities would be amended for that purpse.

The Legal Draftsman has drafted Bills to amend the following acts and ordinances.

• Authority 272 of the Cattle Slaughter Ordinance No. 9 of 1893

• Act No. 29 of 1958 Concerning Animals

• Municipal Councils Ordinance – Section 252

• Section 255 of the Municipal Councils Ordinance

• Ordinance No. 15 of the Urban Council Act of 1987

The Attorney General has certified that the said Bills do not clash with the provisions of the Constitution.

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