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Why Sri Lanka’s new environmental penalties could redraw the Economics of Growth

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Kapila Mahesh Rajapaksha: Environmental protection, part of national productivity

For decades, environmental crime in Sri Lanka has been cheap.

Polluters paid fines that barely registered on balance sheets, violations dragged through courts and the real costs — poisoned waterways, degraded land, public health damage — were quietly transferred to the public. That arithmetic, long tolerated, is now being challenged by a proposed overhaul of the country’s environmental penalty regime.

At the centre of this shift is the Central Environmental Authority (CEA), which is seeking to modernise the National Environmental Act, raising penalties, tightening enforcement and reframing environmental compliance as an economic — not merely regulatory — issue.

“Environmental protection can no longer be treated as a peripheral concern. It is directly linked to national productivity, public health expenditure and investor confidence, CEA Director General Kapila Mahesh Rajapaksha told The Island Financial Review. “The revised penalty framework is intended to ensure that the cost of non-compliance is no longer cheaper than compliance itself.”

Under the existing law, many pollution-related offences attract fines so modest that they have functioned less as deterrents than as operating expenses. In economic terms, they created a perverse incentive: pollute first, litigate later, pay little — if at all.

The proposed amendments aim to reverse this logic. Draft provisions increase fines for air, water and noise pollution to levels running into hundreds of thousands — and potentially up to Rs. 1 million — per offence, with additional daily penalties for continuing violations. Some offences are also set to become cognisable, enabling faster enforcement action.

“This is about correcting a market failure, Rajapaksha said. “When environmental damage is not properly priced, the economy absorbs hidden losses — through healthcare costs, disaster mitigation, water treatment and loss of livelihoods.”

Those losses are not theoretical. Pollution-linked illnesses increase public healthcare spending. Industrial contamination damages agricultural output. Environmental degradation weakens tourism and raises disaster-response costs — all while eroding Sri Lanka’s natural capital.

Economists increasingly argue that weak environmental enforcement has acted as an implicit subsidy to polluting industries, distorting competition and discouraging investment in cleaner technologies.

The new penalty regime, by contrast, signals a shift towards cost internalisation — forcing businesses to account for environmental risk as part of their operating model.

The reforms arrive at a time when global capital is becoming more selective. Environmental, Social and Governance (ESG) benchmarks are now embedded in lending, insurance and trade access. Countries perceived as weak on enforcement face higher financing costs and shrinking market access.

“A transparent and credible environmental regulatory system actually reduces investment risk, Rajapaksha noted. “Serious investors want predictability — not regulatory arbitrage that collapses under public pressure or litigation.”

For Sri Lanka, the implications are significant. Stronger enforcement could help align the country with international supply-chain standards, particularly in manufacturing, agribusiness and tourism — sectors where environmental compliance increasingly determines competitiveness.

Business groups are expected to raise concerns about compliance costs, particularly for small and medium-scale enterprises. The CEA insists the objective is not to shut down industry but to shift behaviour.

“This is not an anti-growth agenda, Rajapaksha said. “It is about ensuring growth does not cannibalise the very resources it depends on.”

In the longer term, stricter penalties may stimulate demand for environmental services — monitoring, waste management, clean technology, compliance auditing — creating new economic activity and skilled employment.

Yet legislation alone will not suffice. Sri Lanka’s environmental laws have historically suffered from weak enforcement, delayed prosecutions and institutional bottlenecks. Without consistent application, higher penalties risk remaining symbolic.

The CEA says reforms will be accompanied by improved monitoring, digitalised approval systems and closer coordination with enforcement agencies.

By Ifham Nizam



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APHNH aims to make Sri Lanka more competitive for healthcare investment

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Deputy Minister of Health and Mass Media, Dr. Hansaka Wijemuni addresses the audience

Sri Lanka private healthcare leaders recently pledged an action plan with timelines to address the practical priorities of Sri Lanka’s healthcare sector while making it more viable for local and foreign investments.

The Association of Private Hospitals and Nursing Homes (APHNH) has committed to converting recommendations from its first Healthcare Leadership Summit into a trackable outcome document with defined actions, responsibilities, and timelines, marking a shift from discussion to implementation in sector reform efforts.

The summit held on March 9 at Waters Edge, Colombo, brought together hospital leaders, policymakers, regulators, insurers, and international experts to address practical priorities for Sri Lanka’s healthcare sector.

A key outcome of the summit was APHNH’s plan to consolidate recommendations into a single, trackable charter that will outline specific actions, assign responsibilities, establish timelines, and provide periodic progress updates.

“Our objective is to bring the right decision-makers into one room and focus on what can be implemented, not only what can be discussed, ” said Raveen Wickremesinghe, President of APHNH. “We are committed to taking the inputs from today and converting them into a clear, trackable set of actions that strengthens quality, transparency and public confidence, while supporting national health priorities. “

The summit featured insights from Dr. Hafeez Rahman Padiyath, Dr. Hamdani Anver, and Chandana L. Aluthgama on scaling quality and operational discipline. A keynote and fireside discussion with Dr. Paiboon Eksangsri, President of the Private Hospital Association of Thailand, explored lessons from Thailand’s private healthcare development and conditions for making Sri Lanka more competitive for healthcare investment.

By Sanath Nanayakkare

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Atlas SipSavi Naththal Poronduwa records positive public participation, benefiting 10,000 students

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Atlas, Sri Lanka’s No. 1 learning brand, successfully concluded Atlas SipSavi Naththal Poronduwa, a national initiative that saw strong public participation in supporting children at risk of dropping out of school due to financial hardship. At a time when more than 22,000 Sri Lankan children leave school each year due to rising economic challenges, the initiative reinforced Atlas Sipsavi’s long-standing ‘No Child Left Behind’ promise by turning seasonal generosity into meaningful educational support.

The initiative reached 10,000 students, with beneficiary schools carefully selected to ensure support reached those most in need. The collected books were distributed to children at risk of dropping out, including those whose education had been disrupted by recent adverse weather, ensuring students had essential learning resources at the start of the new school term. Through its flagship Atlas SipSavi programme, the brand focused on improving access to education by providing essential learning tools, scholarships, and infrastructure to create better learning environments, bringing its purpose of ‘making learning fun’ to life in a meaningful way. As part of the initiative, the public was invited to donate schoolbooks, with each contribution matched one-for-one by Atlas. Donation boxes were placed at all Keells outlets island-wide and at Sarvodaya District Offices, making it easy for communities to take part.

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John Keells Logistics expands strategic engagement with CWIT through inter-terminal transport operations

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Representing JKLL: Lasitha Manchanayake: CEO, Dilum Liyanage: Snr. Manager - Transport Operations, Kavinda Jayasinghe: Manager - Operations and Randi Peiris: Asst. Manager - Commercial. Representing the John Keells Group: Zafir Hashim: President - Transportation, Plantations and IT Sectors and Asha Perera: CFO. Representing CWIT: Munish Kanwar: CEO, Iresh Siriwardena: COO, Devanshu Bhatia: Head of Techno Commercial, Madhuranga Wijesekara: In Charge - GATE Process, Sandun Niroshan: Duty Manager.

John Keells Logistics (Pvt) Ltd (JKLL), one of Sri Lanka’s leading third-party logistics solutions providers, has successfully expanded its operational engagement with Colombo West International Terminal (Private) Limited (CWIT), through inter-terminal transport services within the Port of Colombo. This enhanced engagement further strengthens CWIT’s efforts to improve operational efficiency, reliability, and scalability across terminal activities.

Inter-terminal transport plays a critical role in modern port operations, requiring high levels of coordination, precision, and operational discipline. JKLL’s appointment for ITT operations reflects CWIT’s confidence in the company’s demonstrated capabilities in managing complex transport operations within a high-throughput port environment.

The ITT operations are underpinned by JKLL’s technology-enabled logistics framework, incorporating real-time fleet tracking, performance monitoring systems, and data-driven operational planning. These capabilities provide enhanced visibility and control over transport movements, while ensuring compliance with established safety, productivity, and service quality standards.

The awarding of this engagement to JKLL is a testament to the successful implementation of the Inter-Terminal Vehicle (ITV) operations undertaken by John Keells Logistics at CWIT during the previous year. The ITV assignment was executed through structured operating procedures and disciplined service delivery, contributing to improved cargo movement, operational coordination, and service continuity within the terminal. The performance outcomes of the ITV operations provided the basis for the subsequent expansion of the partnership into ITT services.

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