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Tomorrow’s International Order will be decided in Sri Lanka’s immediate neighborhood: German Ambassador



Affirms Brexit won’t change an iota of EU’s firm commitment to Sri Lanka

‘It may not be easy to attract German investors. However, it’s certainly worth the effort because once committed to a country, they stay. Besides, German investors not only bring capital, they also share know-how which adds sustainability to the partner country’s development’


At a time both India and Japan – members of the informal Quad grouping – which includes the U.S. and Australia is seen as a counter to Beijing’s influence in the Indo-Pacific region, the German Government decided on new ‘Policy Guidelines for the Indo-Pacific’, in September 2020, The Island recently interviewed senior diplomat Holger Seubert, the Ambassador of the Federal Republic of Germany to Sri Lanka; he threw more light on why Germany made this key decision as well as the long-standing relations between Sri Lanka and Germany. Excerpts of the interview:


How do you view the trade between Sri Lanka and Germany?

The balance of trade between our two countries has always favored Sri Lanka – in other words – there’s a significant export surplus for Sri Lanka. In recent months, Germany’s exports to Sri Lanka plummeted by an excruciating 50% year-on-year. Given the fact that overall German exports to the Asia Pacific region declined by only 11% in the same period of time, this is alarmingly above-average. It is obvious that Sri Lanka’s import restrictions played an important role here. On the other hand, Sri Lankan exports to Germany fell by only 10% which can be explained by the pandemic. The bilateral trade balance has thus further deteriorated from Germany’s point of view. Germany currently imports goods and services of more than double the value from Sri Lanka than it exports to it. Bilateral trade between our two countries is becoming more and more of a one-sided affair which of course is of concern to the disadvantaged German side.


How do you asses German assistance to Sri Lanka all these years?

Technical and financial cooperation between Germany and Sri Lanka has a long history, going back to the year of 1956. Currently there are bilateral programs in the fields of vocational training, promotion of small and medium enterprises (SME), biodiversity, renewable energies and national reconciliation.

Support in the vocational training sector has for long been the flagship of our bilateral cooperation. The Ceylon-German Technical Training Institute in Moratuwa, which was established in 1959, is a well-known example for successful cooperation in this area. Based on the experiences of vocational education in Germany, we support vocational schools in implementing demand-driven training programs in close cooperation with the private sector. In the wake of the Covid-19 pandemic, the project is working with private sector partners to develop an innovative e-learning platform that will improve accessibility to ICT-related training courses. By 2024, a total of 45 million Euros will have been invested by the German Government in this sector, including major projects like the Sri Lankan German Training Institute in Kilinochchi and the planned establishment of the Sri Lankan German Training Institute in Matara.

Regarding the development of the SME sector, we put strong emphasis on improving business development services for SMEs through digitalization. In the period 2020-2022, a total of 3.5 million Euros will be allocated to this program, plus an additional 1.7 million Euros for immediate COVID-19 response. Our joint efforts include facilitation of export processes and micro insurances for SMEs as well as the establishment of crisis resistant business plans leading to better market access for SMEs in the agricultural and tourism sectors.

We also cooperate with our Sri Lankan partners in promoting renewable energies and in increasing energy efficiency. The “Green Energy Champion” campaign has just concluded its third competition round. It is showcasing innovative ideas (government, private sector and civil society) and enabling the winners to realize their vision. Up to now, a total of 600,000 Euros has been invested and we are looking forward to continuing the initiative in close cooperation with the Sri Lankan government.


How have relations between the European Union (EU) and Sri Lanka evolved economically?

With 27 Member States and 450 million customers with high income, the EU is the largest market in the world. Over the last 25 years, the EU has become Sri Lanka’s second largest export market (behind the US). Trade with the EU significantly benefits Sri Lanka that has a trade surplus with the EU of over 1 billion Euros. Sri Lanka’s top export goods to the EU are, in this order, garments, rubber, vegetables, machinery, tea and fish.

Since the opening of the EU Delegation in the country in 1995, the EU taxpayers have provided roughly one billion Euros in development assistance, the environment, human rights and academic exchanges being main contents. Furthermore, the EU is assisting low-income communities in Sri Lanka, for instance by making sure that farmers get adequate prices for their products in the EU.

Through its preferential tariff system GSP+ (Generalized System of Preferences), the EU has granted duty free access to about 7,000 Sri Lankan products. In my view, GSP+ has worked very well for Sri Lanka although its full potential has not been used yet. Exports to the EU have increased by more than 25% under GSP+. Fish exports have even doubled; other notable growth sectors include clothing, tea, tyres, gems and motor vehicle parts. It is a fact that Sri Lanka, being a “lower middle-income country”, benefits significantly from the EU’s GSP+ scheme.


How do you view German Investment, doing business, regulatory framework?

German investors have a strong reputation of being faithful, albeit demanding partners. Faithful because a German investor’s decision is always based on long-term considerations, i.e. on plans to uphold and extend investment for a long period of time; rarely will you see a German investor to withdraw, once engaged in the country he is most likely to stay there for decades. On the other side, German investors tend to be quite demanding, before going ahead with an investment they undertake a thorough check of the business environment in the future partner country. They are doing so to make sure that their investment will not just be temporary but sustainable. To recap, it may not be easy to attract German investors. However, it’s certainly worth the effort because once committed they stay. Further to this, German investors not only bring capital, they also share know-how which adds sustainability to the partner country’s development.

Sri Lanka has a number of strengths making the country an attractive destination for German investment. The Island’s geographical position is perfect for doing business in the Asia Pacific region. Sri Lanka has the chance to further develop its position as a regional trading hub and major trans-shipment centre. Furthermore, education in Sri Lanka is generally good, the quality of locally produced goods is high, environmental standards are in place and observed.

However, not everything is perfect, of course. A look into the World Bank’s latest Doing Business Report shows Sri Lanka ranking number 99 (out of 190) with a pronounced weakness in the field of “enforcing contracts”. When I talk to German entrepreneurs, they tell me that reliability has to be considered key to any investment. Hence, if the World Bank’s assessment is accurate, Sri Lanka might wish to work on this weakness as it might then be able to attract more foreign investment.

From a German investor’s perspective, there is room for improvement in other areas as well. Over-protecting local industries does not add to an investment destination’s attractiveness. Closing borders to imports cannot be considered conducive to this objective, either. What German investors expect is the establishment and protection of a level playing field for foreigners (i.e. no discrimination against local companies), a consistent tax policy and reliable application of international rules and regulations.

To give you an example for the latter: German investors are currently concerned about the application of rules known as UCP 600. This Uniform Customs & Practice for Documentary Credits (UCP 600) is a set of rules that apply to finance institutions which issue letters of credit, i.e. financial instruments helping companies to finance trade. These rules and regulations aim at standardizing international trade, thus reducing risks of trading goods and services. German investors would like to see UCP 600 strictly applied in Sri Lanka.


How does Germany view Sri Lanka’s relationship with China as an Indian Ocean nation?

As a diplomat, I cannot comment on other countries’ relations.

However, I am in a position to inform you about Germany’s relations to the Indo-Pacific Region. In this regard, there is news to tell: Just recently (September 2020), the German Government decided on new German “Policy Guidelines for the Indo-Pacific“. The motivation for these guidelines lies in two indisputable facts: Asia’s growing importance – economically as well as politically – and an increasing strategic rivalry between the US and China. Germany is convinced that the shape of tomorrow’s international order will be decided in the Indo-Pacific, thus in Sri Lanka’s immediate neighborhood.

As an internationally active trading nation, Germany cannot content itself with remaining on the sidelines of these dynamic developments. Consequently, in its Policy Guidelines for the Indo-Pacific, Germany defines its main interests in the region as follows:

* Open shipping routes: A disruption to the maritime routes would have serious consequences for the prosperity for all countries in the world.

* Open markets and free trade: Germany firmly believes that rules-based free trade enhances freedom and prosperity on all sides.

* Protecting our planet: In the interest of future generations, the aim must be to ensure that growth in the Indo-Pacific region is environmentally friendly. Germany is ready to engage with partners to manage natural resources, to preserve biodiversity and to use energy efficiently.

* No hegemony: Germany firmly believes that no country should – as in the time of the Cold War – be forced to choose between sides. Every country should be free to choose membership in economic and security structures.

In its policy guidelines, the German Government underlines its commitment to intensify dialogue with BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation). By doing so, Germany will build on already existing projects such as the one on maritime governance with Sri Lanka. This project, implemented by the renowned German Max Planck Foundation, provides expert advice to Sri Lanka with regard to the implementation of UNCLOS (United Nationals Convention on the Law of the Sea) which Sri Lanka joined in 1994.


How will a potential Brexit deal affect Sri Lanka?

I am not in a position to comment on how relations between the United Kingdom and Sri Lanka may be influenced by Brexit. However, there is one thing I am absolutely sure about: Brexit will not change an iota of EU’s firm commitment to Sri Lanka. The EU will definitely continue to be a close partner and a friend – as will Germany as one of the EU’s major players. This is what I will be primarily working on during my tenure as German Ambassador to Sri Lanka.

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Why record export earnings may not be good news



By Gomi Senadhira

The press release by the Central Bank on the external sector performance ,in June 2022, perhaps was the first piece of good news we had received for a long time. According to the press release, “Earnings from merchandise exports, in June 2022, increased by 23.9 percent over the corresponding month, in 2021, recording US dollars 1,248 million, which is the highest ever monthly export earnings recorded. An increase in earnings of both industrial and agricultural exports contributed to this favourable outcome, …. Cumulative export earnings, from January to June 2022, also increased by 14.3 percent, over the same period in the last year, amounting to US dollars 6,514 million.” So, most of us would think we have enough dollars to cover our essential imports. But, apparently, that is not the case.

Earlier, the Central Bank Governor, Dr. Nandalal Weerasinghe, had said that exporters only converted about 20% of their export earnings into Sri Lankan Rupees and the rest was not brought back to Sri Lanka. That amounts to the US $800 million a month! The Governor had also said “… At least 40% of the total export earnings should be added to the formal financial system of the country. So exporters have a responsibility, at a very difficult time like this, to bring back their foreign exchange, through the banking system, and if that happens, then we can resolve the fuel crisis comfortably.”

(Diesel shipment that arrived in Colombo, on 16 July, still not paid for want of dollars – The Island July 30th) It appears as if the Governor is pleading with the exporters to bring back at least 40% of their export earnings. More notably, from Dr Weerasinghe’s statement, it is clear that the exporter had only converted 20% of their export earnings to rupees during the last five months. Did they convert their export earnings to rupees during the last year, or in the previous years? For how long has this been going on? When the Central Bank says “… exporters have a responsibility, at a very difficult time like this, to bring back their foreign exchange, through the banking system,” does that mean the foreign exchange earned, with the exports, is brought through the hawala network, or other similar arrangements?

Exporters deserve credit for the great service they provide and should be rewarded, appropriately. But not disproportionately. The export earnings are not earned by the exporters alone. These earnings are earned by all those who contribute to manufacturing the export products. All of them should be getting their fair share of the export proceeds. If not, there is something terribly wrong with the system. Is this normal in international trade?

During the last few years, some of the studies by Indian scholars, including Utsa Patnaik and Shashi Tharoor, have placed in the public domain some of the less known facts on the effects of the British colonial rule on India. They explain how the British seized India, “… one of the richest countries in the world – accounting for 27% of global GDP in 1700 – and, over 200 years of colonial rule, reduced it to one of the world’s poorest,” and how during the period British Raj siphoned out $45 trillion from India.

How was this done? Patnaik explains, “In the colonial era, most of India’s sizeable foreign exchange earnings went straight to London—severely hampering the country’s ability to import machinery and technology in order to embark on a modernisation path, similar to what Japan did in the 1870s. …, a third of India’s budgetary revenues was … set aside as ‘expenditure abroad’. The secretary of state (SoS) for India, based in London, invited foreign importers to deposit with him the payment (in gold and sterling) for their net imports from India, which disappeared into the SoS’s account in the Bank of England. Against these Indian earnings he issued bills… to an equivalent rupee value—which was paid out of the budget, from the part called ‘expenditure abroad’.” Patnaik underlines that this was “something you’d never find in any independent country,”

But it appears something very similar is happening in Sri Lanka, many years after the independence! If the exporters do not “bring back their foreign exchange ,through the banking system,” or only bring back 20% of it, then how do they pay for goods and services obtained locally? The local value addition for most of our exports is 70% to 80% or higher! The only major exception is cut and polished diamonds. Tea exporters buy tea with rupees. Some of the imported inputs, like fertiliser, or diesel, are sourced locally! The garment industry had moved up the value chain during the last 40 years and provide many value-added services, like designing, locally.

How do the exporters pay for all these goods and services, if they keep more than 60% of their export earnings outside the country? Do they get it through “hawala” or similar arrangements? During the British Raj, payments to local producers were done with the taxes collected by the Raj. In present-day Sri Lanka, how does one manage to raise a large amount of cash to operate such a system?

If a sizeable chunk of Sri Lanka’s foreign exchange earnings goes straight to banks in London, New York, Zurich, or elsewhere, severely hampering the country’s ability to import essential items, doesn’t that mean, Sri Lanka’s wealth is getting siphoned out through our exports? And there is not much of a difference between what happened during the colonial period and the post independent Sri Lanka!

So, June’s record export earnings also mean nearly US$ billion was siphoned off during the month! A new record for the month of June! And that means Patnaik was wrong when she said this was not “something you’d never find in any independent country”

That is not good news.

(The writer is a specialist on trade and development issues and can be contacted at

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Improving trend needs to be sustained on multiple fronts



by Jehan Perera

The government appears to have secured political stability in the short term.  So far President Ranil Wickremesinghe’s efforts to restore stability appear to be working. Political stability is necessary for decisions to be made and kept.  It is a necessary element for international support to come in.  One of the IMF’s conditions to provide the country with the multi-billion-dollar loan it seeks is political stability that would ensure that commitments that are made will be kept.  The protest movement has not mobilised public demonstrations on the very large scale of the past after the appearance of Ranil Wickremesinghe in leadership positions, initially as prime minister and subsequently as president. This would be seen as an achievement by the government.  The present governmental line that protests should be within the law is difficult, and also frightening, to challenge when a state of emergency is in force.

The government has shown its ability to wield the emergency law with deterrent effect. Under the state of emergency that President Wickremesinghe declared on July 18, the period that a person may be detained before being brought before a magistrate has been increased from 24 to 72 hours. The authorities have been granted additional powers of search and arrest, and the military has been empowered to detain people for up to a day without disclosing their detention. The state of emergency also gives the president and the police broad powers to ban public gatherings, allows the police or military to order anyone to leave any public place or face arrest, and makes it an offense to cause “disaffection” or to spread “rumours.” However, in a sign that Sri Lanka’s system of checks and balances is still working, the Colombo Chief Magistrate’s Court has rejected a request by the police to ban a public protest planned by political parties and multiple organisations on September 9.

Human Rights watch has pointed out that “these provisions are vague, overly broad, and disproportionate in violation of the rights to freedom of expression, peaceful assembly, association, and movement.”  The midnight strike on the protestors who had camped for over three months at the main protest site at Galle Face would make any reasonable person think twice before getting into physical confrontation with the government.  The social media coverage of events that night showed men in black uniform and wearing masks, attacking the unarmed protestors.  As these men did not wear identification badges, there is a question whether they were part of the official security forces or drawn from other groups that work with them.  This response brought discredit to the perpetrators and disturbed both Sri Lankan people and the international community that have the welfare of Sri Lanka at heart.

The government has also used the full power of the draconian law to ensure that the leadership of the protest movement is neutralised. Several of them have been arrested, some of them given bail, others remanded, which would send a chilling message to the others.  The government has also shown its willingness to offer high positions to those who are prepared to join it.  This has led to a situation where two trade union leaders active in the protest movement have been treated very differently.  One has been offered a high post while the other has been put into prison, although he has now been given bail.  In a signal that he is sensitive to public pressure and human rights concerns, President Wickremesinghe had spoken to leader of the Ceylon Teachers Union, Joseph Stalin, after he was remanded and reportedly said he admires the members of the protest movement who talk of a system change.


Apart from the appearance of political stability there is also the appearance of economic stabilisation.  The shortages of cooking gas, petrol and diesel, and the 13-hour power cuts were among the main catalysts of the protest movement.  It was during the period of long power cuts, when staying at home became unbearable, that neigbourhood groups began to converge in urban centres to hold candlelight protests.  However, at this time the supply of gas, petrol and diesel has improved significantly and the kilomere-long lines in front of fuel stations are much less common.  Credit has gone to the QR code system put in place that gives to each vehicle a weekly quota.

The challenge for the government is to ensure that the economic situation continues to be stable without experiencing the acute shortages of key items that causes distress to the general population.  The QR code system can only work if there is petrol and diesel to be distributed.  The current imports of cooking gas, petrol and diesel appear to have been made possible by a World Bank loan which was re-purposed to the purchase of essential items.  However, these funds will dry up soon.  The question is what will happen after that.  There is apprehension that the country will fall once again into a situation of severe shortage.  The government needs to take the people into its confidence regarding the future.  The government also needs to be trusted if it is to be believed.

The World Bank has given an indication that they are still to be convinced regarding the provision of further assistance to Sri Lanka.  Earlier this month, the World Bank issued a statement “expressing deep concern about the dire economic situation and its impact on the people of Sri Lanka yesterday said it does not plan to offer new financing to Sri Lanka until an adequate macroeconomic policy framework is in place.  Issuing a statement, the World Bank Group said it is repurposing resources under existing loans in its portfolio to help alleviate severe shortages of essential items such as medicines, cooking gas, fertiliser, meals for school children and cash transfers for poor and vulnerable households.  To date, the World Bank has disbursed about US$160 million of these funds to meet urgent needs.”  This is extremely concerning as the World Bank is closely connected to the IMF on which Sri Lanka is pinning its hopes for a big loan.


The issue of political stability is highlighted by the government as being necessary to obtain international assistance and also as a justification for quelling the protest movement through emergency laws.  There is explicit blame being apportioned to the protest movement for creating instability in the polity that is deterring the influx of foreign assistance and investments.  However, the fuller picture needs to be seen.  The IMF as much as the World Bank, and indeed other potential sources of donor support, want their resources to be used for the intended purpose and not be squandered or siphoned away corrupt practices and in sustaining loss-making state institutions.

The hoped-for IMF-supported programme to provide assistance to Sri Lanka is being developed to restore macroeconomic stability and debt sustainability, while protecting the poor and vulnerable, safeguarding financial stability, and stepping up structural reforms to address corruption vulnerabilities and unlock the country’s growth potential. IMF mission team to Sri Lanka last month specifically mentioned the need to reduce corruption stating that “Other challenges that need addressing include containing rising levels of inflation, addressing the severe balance of payments pressures, reducing corruption vulnerabilities and embarking on growth-enhancing reforms.”

Both the international funding agencies and the protest movement are on the same page when it comes to opposing corrupt practices.  The main slogans of the protest movement during their heyday was the ouster of the then president, prime minister and cabinet of ministers, and indeed the entire parliament, on account of the corruption that they believed was responsible for having denuded the country of its foreign exchange reserves. This was not simply the replacement of one set of corrupt leaders by another. There are disturbing signs that some of those accused of corruption are once again on the ascendant.

The underlying demand of the protest movement was and continues to be the very “systems change” that the president has said he admires in his reported discussion with remanded trade union leader Joseph Stalin. Civil disobedience to obtain a government that is transparent and law abiding, that does not steal the wealth of the country, is a noble goal, no less sacred than the civil disobedience struggles engaged in by Mahatma Gandhi in India and Martin Luther King in the United States.  The ingredients for a rebound of the protest movement continue to be in place and hopefully the evidence of a systems change will become more convincing.

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Brenda Mendis… ‘Gindara Kellek’



I first got to know Brenda Mendis when she was very much a part of the group Aquarius, before joining Mirage..

With Aquarius, her dynamism bloomed, on stage, when she partnered two other female vocalists – from the Philippines.

And…yes, they certainly did rock the scene; the three girls were the talk-of the-town and they were featured at some of the best venues in the city.

She was also, at one time, associated with the band 2Forty2.

Brenda now operates with an outfit called C Plus Band, and with whatever free time, that comes her way, the talented artiste is now working on originals.

The latest is the song ‘Gindara Kellek’ and this is what Brenda has to say:

“I have known this guy Chathurangana de Silva for a very time and he has been involved in composing certain songs for the C Plus Band.

“We then got down to discussing about putting together a song which could be classified as a fast genre in music, and Chathurangana, along with Sampath Fernandopulle, came up with the suggestion for the lyrics, and they did so, based upon a proper observation of my lifestyle and the personality portrayal of myself, and that’s how “Gindara Kellek’ came into the scene.”

Brenda went on to say that the composing was done during a tight schedule.

“As I am the female vocalist, on a full time basis, with the C Plus Band, it took us more time than what is usual spent at a recording session, because of our public performances.”

‘Gindara Kellek’ is not Brenda’s maiden effort. She has been involved in quite a few other originals, including ‘Tharu Peedena Seethale,’ ‘Obai Mage Thaththe,’ ‘Mage Raththaran,’ ‘Kaprinna (Chooty),’ ‘You Never Know,’ ‘Mea Nilwan Nimnaye, and ‘Sitha Igilee Gihin.’ And, they are all uniquely different to each other, she says.

With the country going through a tough period, Brenda, spends her free time working out and reading.

“I would take this opportunity, through your very popular music page, to thank all those who helped me throughout my journey in this wonderful field of music.

“I shall continue to keep music lovers happy, with my music, and I would also thank my followers for supporting me and for being with me throughout my career in showbiz.”

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