External Sector Performance – March 2021 Overview
Sri Lanka’s external sector showed a mixed performance in March 2021 with a widened trade deficit on the one hand, and a healthy growth in workers’ remittances and a slight pickup in the tourism sector on the other. The deficit in the trade account widened in March 2021, for the first time since April 2020. Both exports and imports were significantly higher in March 2021, compared to March 2020 as well as February 2021. However, workers’ remittances grew steadily, and the tourism sector continued the recovery process, albeit at a very slow pace. In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) continued to record marginal net outflows in March 2021 as well.
The Sri Lankan rupee depreciated against the US dollar during the month, partly reflecting the seasonal demand for imports. However, mainly supported by the regulatory measures that were in place till mid-March, the Central Bank absorbed foreign exchange on a net basis during the month, to strengthen the gross official reserve position. Meanwhile, in March 2021, the Central Bank entered into a bilateral currency swap arrangement with the People’s Bank of China (PBoC) for Chinese yuan 10 billion (approximately US dollars 1.5 billion) 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.
Trade Balance: The deficit in the trade account widened on a year-on-year basis in March 2021, for the first time since April 2020, to US dollars 832 million compared to the deficit of US dollars 549 million recorded in March 2020 and US dollars 572 million in February 2021. Both exports and imports were significantly higher in March 2021, compared to March 2020 and February 2021. Meanwhile, the cumulative deficit in the trade account during January – March 2021 widened to US dollars 2,059 million from US dollars 1,853 million recorded over the same period in 2020. The major contributory factors for the increase in the trade deficit as at end March 2021 are shown in Figure 1.
Terms of Trade: Terms of trade, i.e., the ratio of the price of exports to the price of imports, deteriorated by 6.3 per cent in March 2021 as the increase in import prices were higher than the increase of export prices, compared to March 2020.
Overall exports: Earnings from merchandise exports in March 2021 increased by 66.7 per cent to US dollars 1,094 million, from low earnings from merchandise export in March 2020 (US dollars 656 million) during the first wave of the COVID-19. Earnings from exports improved considerably in March 2021 compared to February 2021 also raising export earnings towards pre-pandemic export levels.
Industrial exports: Earnings from all subsectors of industrial goods exports, excluding petroleum products and leather, travel goods and footwear, improved in March 2021, year-on-year. On a month-on-month basis, earnings from Industrial exports increased, except for the subsector of leather, travel goods, and footwear. Earnings from textiles and garments, rubber products (mainly gloves and tyres), food, beverages and tobacco (mainly value added coconut products), base metals and articles, chemical products, and machinery and mechanical appliances exports recorded considerable growth rates compared to February 2021. Meanwhile, earnings from the export of petroleum products declined on a year-on-year basis due to the significant reduction in volumes of aviation fuel and bunkering fuel supplied to aircraft and ship arrivals, despite the increase in the average prices of these export products. Earnings from leather, travel goods and footwear export declined in March 2021 both on year-on-year and month-on-month bases.
Agricultural exports: Export earnings from all subsectors related to agricultural goods increased in March 2021, compared to a year ago, as well as compared with February 2021. Export earnings from tea, seafood, coconut (both kernel and non-kernel products), spices (mainly pepper), and minor agricultural products (mainly arecanuts) recorded considerable increases over February 2021.
Mineral exports: Mineral exports in March 2021 were also higher than the exports observed in March 2020 and February 2021, due to increased earnings in subsectors of earths and stone (mainly quartz) and ores, slag and ash (mainly titanium ores).
Export indices: The export volume index and the unit value index increased by 56.5 per cent and 6.5 per cent, respectively, on a year-on-year basis, in March 2021. This indicates that the increase in export earnings were due to the combined impact of higher export volumes and prices.
CSE planning new product lines to attract investors in greater numbers
By Lynn Ockersz
The CSE is planning to attract a greater number of investors to the stock market this year through the introduction of some new product lines. In order to increase the choice of instruments available to equity investors, the CSE intends to focus in the immediate term on instruments, such as, stock borrowing and lending and regulated short-selling, CSE CEO Rajeeva Bandaranaike said.
The latter instruments would help in generating more liquidity and trading among equity investors, not only in instances when the market is on its way up but also in a declining market as well, CEO Bandaranaike told The Island Financial Review in an exclusive interview recently.
The CEO also said that the CSE is aiming at leveraging the corporate debt market through the initiation of some new products. For example, Green Bonds, Perpetual Bonds and the facilitation of secondary trading of corporate bonds via repo trading.
Asked to indicate as to how these instruments would help the bourse going forward, Mr. Bandaranaike said that stock borrowing and lending, for instance, would facilitate and enable regulated short selling which will have the effect of increasing liquidity and trading among all categories of equity investors.
This will create opportunities for traders to make use of market volatility. Besides, investors holding long term portfolios could lend their stock and earn an interest with least effort on their part.
Asked to elaborate on the importance of Green Bonds, the CEO said that institutional investors in particular are currently focusing on ESG projects; that is, investors that are sensitive to environmental, social and governance concerns. Accordingly, the CSE would be catering to some important investor needs through the latter projects.
Meanwhile, in response to the question on how the digitization initiatives of the CSE have helped in ushering a more robust share market in Sri Lanka, CSE’s Chief Information Officer Chandrakanth Jayasinghe said it is the aim of the CSE to give progressive digital exposure to investors. There are two dimensions to be considered here the CIO said. First, more and more important features have been added to the CSE’s digital mobile App over the last two years.
The CIO added: ‘A revamped mobile App is now at hand to enable quicker and informed investment decisions. All the information required by the investor is now available via this App to enable him to enter the market. For example, we are linked to the Department of Registration of Persons. Digital on-boarding and digital signing etc have been enabled via the app. On a full digital basis investors can now interact with the CSE.
‘The investor is now connected to the CDS E-Connect via the CSE and the investor could access his/her stock portfolio, for instance, and access his/her monthly statements. They could also make changes to their profiles such their address changes via the mobile App. Research reports of brokers could be accessed by the same means, nominations could be effected through the same mechanism. It’s a total change: a 360-degree info hub has been created through the App.
‘Secondly, the CSE is a more agile digital organization. For instance, most of our back-end functions are fully robotized. AI is used in many operations. We use AI for compliance operations.
‘We are saddled with very much less paperwork. Over 90% of all account openings are effected through our mobile App. Most paper-based formalities have been done away with.’
SriLankan Airlines unveils new and improved mobile App
SriLankan Airlines has unveiled a new and improved mobile app that is designed for optimum user-friendliness. The enhanced app will afford customers greater ease and flexibility in managing their flight bookings, purchasing value-added services, enrolling for a FlySmiLes account and performing a variety of other tasks.
The new app provides greater autonomy for Customers through added features that are exclusive to the app. Customers will be able to choose their in-flight meal; reserve seats; change travel dates and sectors; buy value added services such as excess baggage, travel insurance and duty-free items; and check-in for flights well in advance.
The ability to manage flight bookings, even while on the move, remains entirely with passengers who will be empowered to exercise greater control in shaping their journey independently and dynamically. Customers’ in-app experience is inclined to be further enhanced with the new ‘My Trips’ feature. My Trips will organize and present important information that a customer requires for an upcoming flight in a timely fashion on the app’s homepage.
The homepage includes other up-to-minute information on the flight schedule and allows users to search and stay on top of the departure and arrival times of flights. Customers can also stay updated and not miss out on the latest deals and promotional fares.
Brandix Manusathkara Thilina 2022
Brandix Apparel Ltd., gave hope to 16,824 children of the Brandix family by gifting them school essentials including stationery and schoolbags necessary for the new school year, under its ‘Manusathkara Thilina’ 2022 initiative recently.
Understanding the current need to support our team members, especially during the current crisis of rising stationery costs, the children of 10,933 Brandix Associates were recipients of Brandix’s unstinting efforts to inspire and support education for all. The 2022 programme is being held for the 7th consecutive year where children from pre-school to Grade 13 received stationery packs.
Malika Samaraweera, Group Head of Corporate Social Responsibility at Brandix Apparel noted, “The beginning of the new school year is eagerly anticipated and exciting for all students. However, we realise that our employees, who are the backbone of our enterprise, are facing a daunting challenge to provide their children these essential items. We firmly believe in taking care of our communities and this year’s Manusathkara Thilina programme ensures these children have the tools and opportunity to learn and grow.”
Begun in 2016, the Manusathkara School Essentials initiative seeks to drive home the importance of education among the children of Brandix employees. To-date, over 37,000 children have benefitted from the programme. The educational hampers gifted to the children comprise of stationery and other school necessities, enabling their success for the foreseeable future.
With the aim of driving social sustainability, the inspired team at Brandix continues their work towards Equal Opportunity and the Right to Education for All. Recognising that today’s challenges are wide-ranging and incredibly tough for many families, the school essential packs will enrich the lives of the beneficiary children and sustain their school education.
Supporting Sri Lanka’s aspiring youth towards continuity in their education, Brandix has also initiated an annual scholarship scheme under its ‘Manusathkara University Scholarship’ programme. Children who are high performers in the Advanced Level Examinations within the Brandix Model Villages are awarded scholarships to pursue their higher education and contribute towards Sri Lanka’s future workforce. The ‘Model Village’ concept was developed by Brandix to support the wellbeing of communities within a 10km radius of the company’s facilities.
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