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The Friedrich Naumann Foundation to Host an Online Dialogue on Tea

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Representing Ceylon Tea, Dilmah CEO to address on ideas and actions for the tea industry

Bringing to light the challenges faced by tea producers in India and Sri Lanka, the South Asia office of the Friedrich Naumann Foundation (FNF) has organised an Online Business Dialogue under the topic: RESTART ASIAN ECONOMIES: Ideas and Actions for the Tea Industry on 15th March 2021.

Tea is the most consumed beverage in the world, second only to water. With such large-scale use, the production of tea is dominated by a few countries. South Asia as a region is fortunate to produce high quality tea. India, Sri Lanka are among the top 5 exporters of tea in the world. There are thousands of varieties of tea and scientists believe that drinking tea has health benefits attached to it. This perception has also been a factor giving rise to tea consumption in certain parts of the world. Clinical benefits that tea can enhance immunity which can help to fight diseases.

India has produced approx. 1.2 million tonnes of tea, Sri Lanka has produced approx. 300,000 tonnes of tea.

In the year 2020, India saw a decline of 18% in its tea exports. The primary reason behind India’s shortfall in the exports was the strict lockdown which led to skiffing off of overgrown leaves across tea estates. “It resulted in an average year-on-year crop loss of 10% which, in turn, affected exports of good quality tea by around 18%” according to Mr Atul Asthana, MD and CEO, Goodricke Group. This has resulted in India losing its market in countries like Iran, Russia and even Pakistan. Pakistan is the largest importer of tea, importing tea worth over 570 million US $. In 2020, Kenya has become the main exporter of tea to Pakistan.

In Sri Lanka, the tea exports showed a decline of approx. 16% in 2020 when comparing this with 2019 for the period Jan-Jun. However, exports to China increased in 2019, with the youth in China taking a liking for Sri Lankan black tea and this trend continued in 2020. Sri Lanka also introduced the online auctions to tea in 2020.

Distinguished resource persons from the tea industry will discuss solutions and ideas to RESTART their economies and their own personal experiences of how they addressed the challenges posed by COVID-19. This interaction will allow for exchange of ideas, challenges faced by the entrepreneurs and their solutions as well as the role of the government during these trying times.

Tea has become synonymous with South Asians and with abundant tea production, South Asia is both a producer and a consumer of tea. It produces high quality tea and exports its tea across the globe. Whereby countries like India, Sri Lanka and Bangladesh are among the top producers of tea in the world, tea production in Nepal has not been scaled up to realise its potential.

The programme will discuss the challenges and opportunities faced by entrepreneurs in the tea industry especially during COVID and solutions. What are the lessons learnt during COVID. The programme will also discuss future prospects of the tea industry in a changing global environment.

The panelists for the programme are eminent entrepreneurs, not just from the tea industy but also actively engaged in social enterprise. Rudra Chatterjee, from India, Rudra Chatterjee is the Managing Director of Luxmi Tea, founded in 1912, is one of the world’s finest producers of tea, making 30 million kg of tea from 25 estates in India and in Rwanda. Makaibari, acquired by Luxmi in 2013, produces some of the most famous teas in the world. Rudra is an adjunct faculty at IMI and is a guest faculty in IIM Calcutta. He writes op-ed columns for The Statesman and is a guest columnist for The Telegraph. He is a TEDx speaker and was awarded the young entrepreneur award by Chief Minister of West Bengal in 2018.

Rudra served as the President of Indian Chamber of Commerce (2018-19), and is currently serving as the Chairman-Eastern Region of FICCI.

Dilhan C. Fernando, the CEO of Dilmah Tea, is also the Director of the Dilmah School of Tea – the first international school of tea. Driving innovation in tea, Dilhan has taken tea beyond a cup with Dilmah in tea mixology and gastronomy; from pioneering tea inspired dining concepts to hosting global competitions such as, the “Tea Inspiration for the 21st Century” culinary competition, he has challenged Tea Aficionados from around the world to reimagine tea as an ingredient for morning, afternoon and evening. In addition, he also manages the humanitarian and environmental outcomes of Dilmah and is the Chairman of the United Nations Global Compact in Sri Lanka, a corporate sustainability initiative by the UN.

Dilhan currently chairs the Biodiversity Sri Lanka Platform which was pioneered by Dilmah Conservation together with the Ceylon Chamber of Commerce and IUCN (International Union for Conservation of Nature).

 

 



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CBSL adopting ‘as and when needed’ stance on foreign reserves

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by Sanath Nanayakkare

The country’s foreign reserves will be added to, and utilised as and when needed, Dhammika Nanayakkara, Deputy Governor of the Central Bank of Sri Lanka (CBSL) said at a virtual forum hosted by the Central Bank on Monday.

“The Central Bank has taken many steps to have some standby arrangements with some friendly countries and also some other avenues ‘as and when’ we need reserves in foreign currency, and to utilise them ‘as and when’ the need arises,” Central Bank DG said.

“Referring to the recent bilateral currency swap agreement with the People’s Bank of China (PboC) amounting to CNY 10 billion (approximately US$ 1.5 billion), he said,”This agreement was entered into with a view to promoting bilateral trade and direct investment for economic development of the two countries, and to be used for other purposes agreed upon by both parties. I think we first entered into this kind of an agreement with the PboC in 2014. And it served as a standby arrangement. We hadn’t used a cent of that facility. Similarly this swap also could serve as a standby arrangement. We will try to make use of this facility but only if the need arises. Otherwise it could serve as a standby arrangement without any money being utilised during the period the contract is valid for.”

Explaining further he said: “As for the terms of the swap with the PboC, it can’t be swapped into USD.. But it is not completely stopped though, because there are three purposes the money can be used for. 1. Enhancing bilateral investment between the two countries 2. financing the trade flows 3. Any other purpose agreed to by both the providing part and the requesting party.”

“That covers a broader range of utilisation provided that both parties agree to it. That’s where we are in terms of utilising the swap facility.”

“It’s publicly known that we have some standby arrangements with PboC and also we are discussing with friendly countries such as India, Bangladesh, Qatar, Oman; a number of countries in different ways as to how we can ensure some standby arrangements,”

“If you look at the government’s policies, especially export-oriented domestic economy, increasing FDIs through non-debt creating inflows. I think all these things will definitely provide the much needed cashflow to service the debt obligations. The government has clearly mentioned that it has no intention of increasing foreign currency debt obligations going forward. Gradually the government wants to bring it down so that it can rely more on domestic borrowings,” the Deputy Governor said.

Meanwhile, the government of Republic of Korea and the government of Sri Lanka signed a new framework arrangement recently for the period of 2020-2022 to obtain loans up to an aggregate commitment amount of USD 500 million to finance projects mutually agreed.

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Decline in labour force in 2020 first half- Part III

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Extracts from the Central Bank of Sri Lanka report, ‘Recent Economic Developments: Highlights of 2020 and Prospects for 2021’

 

Continued from yesterday

Meanwhile, several rounds of discussions were held in 2020 to determine the possibility of increasing the basic daily wage of workers in the plantation sector to Rs. 1,000.

= Nominal wages of the informal private sector employees, as measured by the informal private sector wage rate index (2012=100), increased by 3.5 per cent during the period from January to August 2020 compared to the same period of 2019. Nominal wages of employees in all sub-sectors, namely, agriculture, industry and services increased by 4.1 per cent, 2.9 per cent and 3.9 per cent, respectively, during the period from January to August 2020. However, real wages in the informal private sector declined by 2.8 per cent during the period from January to August 2020 compared to the corresponding period of the previous year.

The negative impacts of the COVID-19 pandemic amidst the persisting structural issues led the labour market indicators to deteriorate during the first half of 2020. As per the statistics reported by the Department of Census and Statistics, the working age population increased during the first half of 2020 compared to the corresponding period of the previous year, led by the significant increase in economically inactive population amidst a comparatively lesser decline in the economically active population.

Accordingly, the Labour Force Participation Rate (LFPR), which is the ratio of the labour force to the working age population, declined during the first half of 2020 compared to the same period of 2019. A considerable decline was observed in the employed population as well. The unemployment rate, which is the share of unemployed population to the labour force, increased notably during the first half of 2020 compared to the corresponding period of the previous year. Continuing the trend observed in the recent past, unemployment rates among females, youth and educationally qualified persons continued to remain at high levels during the first half of 2020.

The labour force, which is the economically active population,3 declined to 8.470 million in the first half of 2020 from 8.603 million in the corresponding period of the previous year, recording a decline of 1.5 per cent. This decline in labour force was solely driven by the significant decline of 6.0 per cent in the female labour force during the reference period. In contrast, the male labour force, which accounts for the highest share of the labour force, increased by 0.9 per cent during the first half of 2020 compared to the corresponding period of the previous year. In terms of sector wise labour force, declines were observed across all sectors namely urban, estate and rural sectors during the reference period mainly due to the considerable drops in the female labour force. Meanwhile, the male labour force in the urban and estate sectors also recorded marginal declines, though the male labour force in the rural sector recorded an increase.

In line with the decline of the labour force, LFPR declined to 50.6 per cent during the first half of 2020 from 52.6 per cent recorded in the first half of 2019. This considerable decline was mainly driven by the significant increase observed in economically inactive females during the reference period. Consequently, the female LFPR declined to 32.0 per cent in the first half of 2020 from 34.7 per cent in the corresponding period of 2019. The male LFPR also declined to 72.1 per cent in the first half of 2020 from 73.4 per cent in the first half of 2019 due to the higher increase in economically inactive males compared to the increase in economically active males. Accordingly, the gender gap in LFPRs soared to 40.1 percentage points in the first half of 2020 from 38.7 percentage points in the corresponding period of the previous year affirming the persisting issues related to low female labour force participation towards the economic growth in the country.

The employed population4 declined by 2.4 per cent to 7.998 million in the first half of 2020 compared to 8.193 million recorded in the corresponding period of 2019. This decline was led by both industry and services sectors, as an increase in employed population was observed in the agriculture sector. Within the industry sector, declines in employed population were observed across all sub-sectors namely, mining and quarrying, manufacturing and construction, electricity, gas, steam and air conditioning supply, water supply, sewerage, waste management and remediation activities, while within the services sector prominent declines in employed population were observed in wholesale and retail trade, repair of motor vehicles and motorcycles, administrative and support service activities, and public administration and defence, compulsory social security sub-sectors. These declines in employment in industry and services sectors were also reflected in the employment indices of manufacturing and services purchasing managers’ index surveys conducted by the Central Bank of Sri Lanka in the first half of 2020. Meanwhile, continuing the trend observed in the recent past, the services sector, which accounted for 46.2 per cent of the total employment, remained as the foremost employment generator followed by the industry and agriculture sectors contributing to 27.0 per cent and 26.8 per cent of the total employment, respectively, during the first half of 2020. yy In terms of the status of employment, the employed population in all categories declined during the first half of 2020 compared to the first half of 2019. With regard to employment status, the employed population is categorised into two major categories, namely, waged and salaried workers (employees) and the self-employed.

The employees category is further categorised into public sector and private sector, while the self-employed category is categorised into employers, own account workers and contributing family workers. Among these categories, a prominent decline was observed in private sector employees followed by public sector employees.

Nevertheless, with the government programme to provide jobs for 60,000 unemployed graduates and for 100,000 persons in the lowest strata of income earners in Sri Lanka with the objective of eradicating poverty, in line with the government policy declaration enunciated as “Saubagyaye Dakma”, public sector employment is expected to increase during the second half of the year.

In line with the decline in the employed population, the unemployed population increased significantly by 14.8 per cent to 0.471 million during the first half of 2020 compared to 0.410 million in the corresponding period of the previous year attributable to the negative impacts of the COVID-19 pandemic. This increase in the unemployed population was mainly driven by unemployed females who contributed to 58 per cent of the total increase 4 70

Accordingly, the increase in unemployed females was recorded at 16.0 per cent, while the increase in unemployed males was recorded at 13.4 per cent during the reference period. yy In line with the increase in the unemployed population,5 the unemployment rate increased to 5.6 per cent in the first half of 2020 compared to 4.8 per cent recorded in the first half of 2019. Accordingly, the unemployment rate of females increased significantly to 8.9 per cent in the first half of 2020 from 7.2 per cent in the corresponding period of the previous year.

The unemployment rate of males increased to 3.9 per cent in the first half of 2020 from 3.4 per cent in the corresponding period of the previous year. yy Unemployment rates among all age categories increased during the first half of 2020 compared to the same period of the previous year. It is noteworthy that among these age categories, youth (aged 15-24 years) unemployment, which continued to remain at a high level, increased substantially to 27.3 per cent during the first half of 2020 from 20.8 per cent in the corresponding period of the previous year. Moreover, unemployed youth contributed to 98 per cent of the total increase in the unemployed population. More than a quarter of the youth labour force being unemployed bring to the surface the issues related to underutilisation of the most productive human capital towards the economic growth of the country. 5 Persons available and/or looking for work, and who did not work and took steps to find a job during the last four weeks and are ready to accept a job given a work opportunity within next two weeks are said to be unemployed. yy In terms of education level, unemployment rates increased among all educational categories during the first half of 2020 compared to the corresponding period of the previous year.

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World Bank strengthens engagement in Sri Lanka

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The World Bank launched public consultations to update its Systematic Country Diagnostic (SCD) in Sri Lanka. This online platform will enable the Bank to engage with the Sri Lankan public and development partners and seek their views on the most pressing development opportunities and challenges for the country.

The SCD is a country-specific report compiled by the World Bank Group in close consultation with the respective national authorities, stakeholders and the public. This report forms the basis of the Country Partnership Framework, the strategy which outlines how the World Bank Group’s engagement with the country can best contribute towards achieving the goals of ending absolute poverty and boosting shared prosperity in a sustainable manner.

“We are keen to hear from a wide range of development stakeholders – the government, private sector, citizens from different provinces, think tanks and civil society groups,” said Faris. H. Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka. “Their inputs will help the SCD to focus on areas that will have the maximum impact in fostering greener, resilient and inclusive recovery and growth for Sri Lanka.”

The 2021 SCD will be an update on the previous SCD, taking into account the new and pressing issues stemming from the unprecedented health and economic impacts of the COVID-19 pandemic.

The online surveys are open from May 6, 2021 to May 20, 2021, and they are in Sinhala, Tamil and English. This process is complemented by focus group discussions with representation from public and private sectors, as well as civil society organizations. The findings of the consultations will be reflected in the next update of the SCD.

The current World Bank portfolio in Sri Lanka consists of 19 ongoing projects, with a total commitment value of US$2.33 billion in a variety of sectors including transport, urban, agriculture, water, education, and health.

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