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Work commences on project to establish a Central Counter Party system for the stock market

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Sunil Lankathilake,Chairman of the joint Committee

The project to launch a CCP system for equities was formally launched at a Joint Securities and Exchange Commission of Sri Lanka (SEC) – Colombo Stock Exchange (CSE) meeting held at the SEC recently.

The Chairman of the SEC Viraj Dayaratne PC who chaired the meeting said that he was happy that steady progress was being made on the continuous development of the market infrastructure. He emphasized that this project should also be completed on time in the same way the Delivery vs Payment (DvP) project was completed since this will significantly enhance the post trade risk management of the equity market. He further stated that the new SEC Act has all the enabling provisions to facilitate the implementation of a CCP mechanism.

The meeting was attended by SEC Commissioner Sunil Lankathilake who is the Chairman of the joint Committee, the Director General of the SEC Chinthaka Mendis, the Director Surveillance and Acting Director Capital Market Development SEC Prabash Wanigatunge and senior SEC officials. The CSE was represented by Chairman Dumith Fernando, CSE Directors Dilshan Wirasekera and Suren De Silva, Chief Executive Officer of the CSE Rajeeva Bandaranaike, the Chief Regulatory Officer Renuke Wijayawardhane and senior CSE officials.

The Chairman of the Joint committee Lankathilaka emphasised on the importance of studying the practices adopted in other jurisdictions in facilitating a CCP mechanism in order to identify the most suited model for the Sri Lankan market. Further, he stated that as the next step business model for a CCP system will be finalised based on which a project plan will be developed to ensure the successful implementation of the initiative within a specified time frame.

Chinthaka Mendis Director General SEC stated that the CCP business model should be developed in a cost effective manner which would benefit all stakeholders in the market.

Dumith Fernando Chairman CSE commenting on the initiative said that this was part of the plan agreed upon with the SEC to first introduce DvP and then establish a CCP and said that he was satisfied that both phases of the project are getting implemented as scheduled. He further stated that the business model has to be agreed upon and the inception report that was already prepared by the CCP consultants could be utilized for this purpose.

Rajeeva Bandaranaike Chief Executive Officer CSE made a presentation to the committee covering the overall scope of the CCP implementation.

A CCP can offer significant benefits to the Financial Market in Sri Lanka and can be considered as part of the critical Financial Market Infrastructure that is needed and is of national interest.



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Salon owners contemplating pulling the plug, putting more than 300,000 jobs at risk

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  • = Ban on imported cosmetic products hampers industry
  • = Marked decrease in consumers patronising salons
  • = Developing Sri Lanka as a wedding-hub ‘fading away’
  • = Urges President to help protect the self-reliant industry

By Sanath Nanayakkare

Ninety percent of salons across Sri Lanka are at the risk of closure unless the temporary ban on imported cosmetic products is lifted soon, Jackie Aponso, president, Hair and Beauty Cluster (HBC) said last week addressing a press conference in Colombo.

She claimed that such an eventuality could lead to 75%-80% job losses of industry personnel. “That’s a large number as HBC is a unification of many associations in the beauty and personal care sector with 450,000 members,” she said.According to the figures given by her if the situation persists, 337,500 – 360,000 jobs would be lost for employees in the industry.

‘Yes, there is a sound fiscal argument for the government’s temporary ban on imported cosmetic products in the tight foreign exchange reserves backdrop. But if the ban is not lifted by the end of this month to facilitate the availability of international cosmetic brands in the market for upcoming Christmas and New Year, its impact will take a devastating toll on the 450,000 self-employed individuals engaged in the industry and 1.5 million of their dependents”, Jackie said.

‘Most foreign and local customers prefer international brands for their hair and skin treatments. Although a number of home-grown cosmetic brands have emerged, customers prefer their hair and facials done with brands that have been frontrunners in the market which they have relied on for years. Being a highly customer-centric business, we have to work with formulas that customers are comfortable with, because they are concerned about what we put on their face and hair.”

“It’s a relief to hear that the import ban is temporary. But it needs to be lifted quickly to allow sufficient lead time for cosmetics importers to place orders and bring the products to Sri Lanka. It was no secret that our industry was heavily battered by the Covid-19 pandemic and somehow we braved up to this point safeguarding our businesses. And we all have been looking forward to this season to offset the losses we suffered in the past two and a half years. If the ban is lifted by end of this month, imported brands will be available in the market by mid or end of November, and salons will be well-positioned to start work diligently as the season kicks off. But if the imported products reach here as late as mid-December, then this year also will be marked as another unfortunate business year for the salon industry, “she said.

“When we don’t have wedding makeup essentials, a number of other industries also will get affected; such as hotels, wedding and event planners, wedding florists, bridal photographers, Poruwa suppliers, hall decorators and so on. As a result of the import ban, a black market has emerged where the prices of cosmetics have gone up by 6-7 folds. This has put 90% of our beauty and personal care parlours in great difficulty. A hair spray which was about Rs. 2,000, now costs Rs. 12,000. Can we pass that cost burden to the customer? No, we can’t. It is the same with all other products. There are a few salons that can afford such high costs and charge high prices, but the majority of our members are not so, and they are at the risk of closing their businesses. As there has been a marked decrease in customers patronizing salons, some members even called us and asked for help to sell their equipment and exit the industry. Such a situation may create an unemployment problem as they are all self-employed individuals.”

According to HBC, the industry’s cosmetics import bill accounts for 0.08% of the total national import bill. They also highlighted the fact that all registered cosmetics importers and HBC members pay their due taxes to the government.

Salon entrepreneur Bernie Balasuriya said: “Our industry brings in foreign exchange to the country. When foreigners and expatriates come to Sri Lanka for weddings, their families stay in hotels for about a week. Sometimes we set up salon space inside the hotel to cater to beauty and personal care needs of these visitors. They want us to use international cosmetic brands. This is an industry which earns foreign exchange and which therefore demands best industry practices.”

Theekshani Kariyawasam, Gold medal winner at OMC Hairworld in France in the category of bridal makeup, who successfully competed against contestants from more than 60 countries, said that the situation is so sad especially because Sri Lankan beauty artistes and entrepreneurs have never been a burden on the economy. We have always relied on our own talent and commitment. We need international cosmetic products to work with and be recognized for highest standards on par with other destinations.”

Asoka Thilakaratna who boasts 35-years of experience in the industry said,”Skilled Sri Lankan hairdressers and beauticians get overseas jobs because they have a lot of knowledge and experience in working with international cosmetic brands and techniques. That serves as a plus point for them at job interviews with prospective foreign employers. Further, I heard the good news that there would be some Indian weddings taking place here in Sri Lanka in November, December and January. I know from my experience that they come as groups about a week before the wedding and get all their beauty treatments done in Sri Lanka. If we don’t have cosmetic brands they love and trust, we could miss out on these business opportunities because they make it a point to stay away from lesser known products and fake products.”

Concluding the comments, Jackie Aponso said,” We have made an appeal to President Ranil Wickremasinghe to consider the lifting of the ban with the objective of protecting this self-reliant industry and its self-employments. We look forward to a favourable solution in time to get back to business.”

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Sri Lanka eyes $2.9 billion IMF loan finalised in December 2022

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Sri Lanka expects the International Monetary Fund (IMF) Board to approve a $2.9 billion loan by year-end, according to a news report by Reuters.The IMF Board approval of the loan is expected by mid-December. From now until mid-November, the country aims to get financing assurances from public- and private-sector creditors.

The country earlier this month reached a staff-level agreement with the IMF for the loan of about $2.9 billion, contingent on it receiving financing assurances from official creditors and negotiations with private creditors.

“It’s going be very tough, but so much of it depends on China, basically one creditor, so maybe it can be done,” a bondholder told Reuters on condition of anonymity.

The virtual presentation to investors on Friday marks the first time the Sri Lankan government has formally engaged with private bondholders after deciding earlier this year that it would restructure $13 billion in international sovereign bonds, held by private creditors such as asset managers BlackRock and Ashmore.Central Bank Governor Nandalal Weerasinghe and Treasury Secretary Mahinda Siriwardena participated in the virtual presentation on Friday, along with representatives of financial and legal advisers Lazard and Clifford Chance.

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SLIM launches SLIM DIGIS for 4th consecutive year

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Sri Lanka Institute of Marketing (SLIM), the apex body for Sri Lankan Marketers, has opened entries for the 2022 edition of SLIM DIGIS from the 23rd of September until the 25th of October 2022. SLIM DIGIS celebrates and rewards outstanding work and talent within the digital sphere. This year’s competition, SLIM DIGIS 2.2, features two awards categories; the special awards category and the main awards category, under which multiple awards are poised to recognize the Best Digital Marketing campaigns from a range of categories chosen specifically to reflect the development and growth of Sri Lanka’s digital marketing sector.

Nuwan Gamage, President of SLIM, stated, “During the last 3 years, as a nation, we have faced numerous challenges than we have ever faced in our history. Consumer behavior changed dramatically, and companies that acted quickly were able to thrive despite the changing economic backdrop. In those agile approaches, we have seen digital marketing play a vital role and I firmly believe that it will continue to play a very prominent role in the nation’s branding national initiative that we are running currently to position Sri Lanka globally to travel, invest and live. I would like to invite all the digital marketers and brand owners to showcase great digital execution that they have done in this challenging environment.”

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