Business

‘Sri Lankan tea’s current crisis only reinforces the value of productivity-linked wages’

Published

4 years ago

2021/11/9

Sahan Weerasooriya

By Dr. Roshan Rajadurai

“An incentive is a bullet, a key: an often tiny object with astonishing power to change a situation”

– Economist, Steven Levitt

Almost 7 months from the Government’s initial decision to ban the import and use of synthetic fertilizers and as at the date of this publication, Sri Lanka’s entire agriculture and plantation economy is still frantically in search of any viable option to mitigate the threat of declining yields.

Without any prior planning or notice, our entire sector has been coerced into blindly participating in the most unscientific experiment ever attempted in Sri Lanka’s history. We are all left to now anticipate what the implications of an immediate, nation-wide halt to all established and essential best practices relating to plant nutrition, pest, fungus and weeds will be.

We are told that arrangements are being made to import organic fertilizer from various, untested sources, and agreements are minted to produce organic fertilizer locally, much akin to attempting to rebuild an airplane while it is still in flight. Nevertheless, the inconvenient truth remains. At present, all supplies of “organic” and inorganic fertilizer are in short supply.

Stocks which are available, have increased in price owing to both supply-demand dynamics, disrupted supply chains and unprecedented increases in landed costs. These escalating payments are making Sri Lankan tea’s already high cost of production (COP) even higher, which is placing Sri Lankan plantations under even further stress. This a few short months after an increase in worker wages was thrust through the Wages Board.

Sri Lankan tea’s strange new normal needs to be re-evaluated immediately

With the end of the year approaching, and the window for fertilizing crops closing, it appears that the industry will be locked into at least one – if not more – growth cycles absent basic nutrients of Nitrogen, Potassium, and Phosphorus, and with no ability to control pests and weeds. Without immediate solutions, the broad consensus among those with expertise is that we can start to see exponentially worse crop losses starting from the end of 2021, hitting approximately 40% by next year.

If RPCs were to have disregarded basic agronomic practices and norms in such a manner of their own volition, it would have been called criminal mismanagement. With agricultural best practices now being roundly ignored in favour of a largely undefined and unplanned strategy for transforming Sri Lanka into a nation with “100% organic agriculture”, this historic, and intentionally misinformed self-sabotage is being repackaged as visionary and progressive.

Meanwhile, the nation’s best agricultural experts are being ignored or in the case of Prof. Buddhi Marambe, sidelined and silenced, on the grounds that he simply stated scientific facts regarding the current agro-chemical ban and had been consistent in doing so, because he had previously spoken up against the previous Government’s disastrous decision to suspend glyphosate imports.

This was a policy which resulted in the rejection of Sri Lankan tea exports as a result of issues with Maximum Residue Limits (MRLs), and caused the permanent loss of extremely high value markets in Japan, and a similar escalation in costs; all without a single shred of scientific evidence being provided to justify the lasting damage caused. As a result, the Government of the time was compelled to backpedal on its decision, but not without irreversible damage being done for no apparent reason.

This “justification” highlights a dangerous trend of politicization of science. If the science does not agree with politics, then it now appears acceptable to simply dismiss the scientists, rather than engage with facts and ground realities.

A simple extrapolation shows a grim future for workers

Regardless of short-term political expediency, reality has a way of asserting itself. Spread across 14 districts, the tea industry alone provides direct employment to over 600,000 people engaged in cultivation and processing and indirect employment to a further 200,000 involved in the supply chain. The sector provides complete livelihood support for a resident population of one million in Regional Plantation Companies (RPCs) and 450,000 Tea Smallholders with one million dependents, hence supporting a total population of nearly 2.5 million.

When considering both employment and livelihood generation, it is estimated that the industry sustains more than 10% of our national population and its net foreign exchange earnings are only second to the garment industry.

Even if “organic” fertilliser is made available, there are still serious concerns as to whether it can provide sufficient nutrients. Hence, it appears that the writing is on the wall. With insufficient nutrients as a result of the unplanned push for organic, we anticipate a series of cascading failures stemming from a collapse in productivity. No amount of rhetoric will be able to turn back the tide of negative sentiment against such developments.

If not land productivity, at least labour

Unlike the garment industry, where progressive incentive structures were allowed to flourish, in our industry, workers remain bound to an outdated colonial era daily wage model. As a result, unlike the dynamism of the apparel sector, Sri Lanka’s plantation sector is also weighed down with one of the lowest labour productivity rates in the world. The combination of low land and labour productivity will create a series of cascading failures.

The only measure that could at least temporarily mitigate this dynamic is the implementation of productivity linked wages. This is a model which has the support of all RPCs, and which was has been widely practiced with tremendous success by tea smallholders. While they have been implemented with ease in low-mid grown estates, it is only in the high-grown regions, where resistance to these models has been encountered.

Crucially, this resistance is not from workers who have experience with productivity linked wages, but rather with Trade Unions who would likely lose relevance if such models were implemented. The benefits for workers are immense. In addition to creating a potential monthly earnings per worker of between Rs. 37,000-Rs 62,000, under previous proposals advanced by RPCs.

This will also give workers flexi-hours, empowering them to choose when and how they work. Given the labour shortages prevalent across the entire tea industry, such a move would at long last incentivize workers effectively, and reward them for achieving their full individual potential, thereby significantly optimizing labour productivity.

However, without a scientific resolution to the fertilizer crisis, wage reforms can only serve as a stop gap measure. As land productivity drops, RPCs, state plantations and smallholders alike will be forced to reduce the amount of work offered, leading to a continuous diminution of worker earnings.

The few remaining workers in the plantation industry will have no choice but to try their luck in other lines of work, accelerating the ongoing migration of labour from the estate sector. It is unclear whether other economic sectors have the capacity to absorb such a large group of workers at once.

Already, we have seen multiple outbreaks of mob violence on estates, with the majority of such incidents being triggered by disputes over wages. Without proper solutions to these burning issues, worker wages will eventually be disrupted. Will the authorities take responsibility for what will follow?

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Business

Customs posts record Rs. 2.26 tn revenue, accelerates digital overhaul

Published

18 hours ago

2026/01/28

Sahan Weerasooriya

Sri Lanka Customs delivered its strongest performance in institutional history in 2025, exceeding national revenue targets while fast-tracking deep structural reforms to protect revenue, secure borders and lower trade friction, Customs Director General Seevali Arukgoda said at the International Customs Day celebrations 2026 in Colombo.

Addressing officials, diplomats and private-sector stakeholders under the global theme “Customs Protecting Society through Vigilance and Commitment,” Arukgoda said Customs collected Rs. 2,257 billion, surpassing the Rs. 2,231 billion target, and demonstrating the Department’s expanding role as both a revenue authority and trade facilitator.

“This is not a one-off outcome. It is the result of sustained reforms, disciplined enforcement and a clear strategic focus on protecting revenue while facilitating legitimate trade,” Arukgoda said.

While motor vehicles remained the single largest contributor, general cargo revenue rose 18 percent, signalling improved compliance and higher trade throughput. Enforcement-driven revenue reached Rs. 32 billion, up 10 percent year-on-year, underscoring the growing impact of intelligence-led controls.

“Every rupee secured through enforcement represents revenue protected for the State and confidence restored in the system,” the Director General said.

Beyond revenue, Arukgoda stressed Customs’ frontline role in protecting society, citing interdictions of narcotics, gold, foreign currency, substandard imports and illegal wildlife movements, coupled with firm penalties on non-compliant traders.

A major institutional breakthrough was the data-sharing MoU signed this month with the Inland Revenue Department, enabling parallel audits and coordinated investigations.

“Undervaluation and overvaluation will no longer be low-risk options. This integration closes a long-standing gap in revenue protection,” Arukgoda said.

On trade facilitation, he said Customs has moved decisively toward digital, rules-based clearance, expanding the Authorized Economic Operator (AEO) programme to MSMEs and rolling out platforms such as ‘Track My CusDec’ and Motor Vehicle Verification.

Advance Rulings have also been expanded to cover classification, valuation and rules of origin, fully aligning Sri Lanka with WTO Trade Facilitation Agreement obligations.

Looking ahead, Arukgoda said Sri Lanka Customs has been assigned a Rs. 2,207 billion revenue target for 2026, which the Department is confident of delivering amid continued reform momentum.

He added:”Our priority for 2026 is total digitalisation of remaining manual processes. This is about speed, transparency and eliminating discretion where it does not belong.”

Among the flagship projects is a state-of-the-art cargo examination yard at Kerawalapitiya, scheduled for completion by 2027, expected to reduce physical examinations from 40 percent to 10 percent, easing congestion and supporting higher trade volumes.

Other 2026 initiatives include Pre-Arrival Clearance, fully paperless cargo processing, an Automated Risk Management System, an Electronic Cargo Tracking System, and an electronic auction platform for goods disposal.

Customs will also expand AEO status to SMEs, freight forwarders and Customs House Agents, reducing compliance costs for trusted operators.

Arukgoda also announced the release of Time Release Study 2025, conducted in line with World Customs Organization guidelines, providing data-driven insights to remove bottlenecks across the clearance chain.

In a major governance reform, Sri Lanka Customs will issue a Code of Ethics and Conduct this week, developed with technical assistance from the IMF, WCO, World Bank, UNDP, Presidential Secretariat and CIABOC, and cleared by the Attorney General.

“Integrity is not optional. This Code institutionalises accountability and sets clear standards for every officer,” Arukgoda said.

The event was attended by Minister of Labour and Deputy Minister of Finance Dr. Anil Jayantha Fernando, Deputy Minister of Economic Development Nishantha Jayaweera, senior government officials, diplomats, development partners and retired senior Customs officers.

By Ifham Nizam

Business

Port City Colombo’s first residential project breaks ground

Published

18 hours ago

2026/01/28

Sahan Weerasooriya

Dignitaries at the launch of the landmark project.

Sri Lanka’s most ambitious urban development project reached a critical execution milestone, as construction officially commenced on the first residential development within Port City Colombo. The milestone marks the transition of the country’s flagship Special Economic Zone (SEZ) from regulatory readiness to active private-sector delivery.

The project, Bay One Residences Colombo, is being developed by ICC Port City (Private) Limited, an entity established by International Construction Consortium (Private) Ltd. (ICC), one of Sri Lanka’s most established and experienced construction companies with a long track record of delivering complex, large-scale developments to international standards. The development represents one of the earliest major Sri Lankan private-sector residential investments within Port City Colombo and plays a foundational role in activating the city’s mixed-use urban ecosystem.

“Developed on 269 hectares of reclaimed land, Port City Colombo is now transitioning into a modern urban destination, with its first phase of infrastructure successfully completed. At the forefront of this evolution, Bay One Residences presents a rare first-mover opportunity, thoughtfully designed to enable residents to live, work, and unwind in a truly integrated environment, and backed by ICC’s 45 years of trusted expertise in delivering landmark, large-scale developments,” said Namal Peiris, Managing Director/Chief Executive Officer, International Construction Consortium (Pvt) Ltd.

Situated on a 13,945 square metre prime waterfront plot, Bay One Residences Colombo represents a total investment of approximately US$112 million, inclusive of land and development costs. The development will comprise 231 luxury apartment units, designed to international standards and targeted at both local and international buyers seeking premium urban living within a globally benchmarked city environment.

The commencement of the first residential development also marks an important step in the broader evolution of Port City Colombo, which has been purpose-built as a multi-services SEZ with a transparent, rules-based regulatory framework, world-class infrastructure, and a long-term vision to position Sri Lanka as a competitive destination for global capital, talent, and services. (Port City Colombo)

Business

Vibrant public participation in Jaffna International Trade Fair 2026

Published

18 hours ago

2026/01/28

Sahan Weerasooriya

The Jaffna International Trade Fair (JITF) concluded successfully on January 25, marking its 16th consecutive year at the Muttraweli Grounds, Jaffna. Organised by Lanka Exhibition and Conference Services (LECS) in association with the Chamber of Commerce and Industries of Yarlpanam (CCIY), JITF once again reinforced its position as Northern Sri Lanka’s most influential multi-trade exhibition.

The three-day event attracted over 75,000 visitors, including business leaders, importers, exporters, SMEs, investors, financial institutions, technical professionals, and development agencies. With strong national visibility and extensive promotional outreach, JITF continues to serve as a vital platform for trade, investment, and economic integration in the Northern Province.

This year’s exhibition featured a diverse range of sectors, showcasing innovative products, services, and business opportunities, while facilitating meaningful networking and B2B engagement. Exhibitors reported strong visitor engagement and positive business prospects, reflecting growing confidence in the region’s economic potential.

JITF 2026 once again demonstrated its role as a catalyst for long-term development, fostering partnerships and opening new pathways for sustainable growth in Northern Sri Lanka.