Category: Daily Financial Times

Sri Lanka’s celebrated management guru, Prof. Gunapala Nanayakkara, a practical educational reformer in his own right, has released his latest publication, Transforming Education: The Way Forward in Sri Lanka [1].

The book is the result of his active engagement in university-level education for more than six decades and his service as Director General of the National Institute of Education after his retirement from academia.

Nanayakkara created Sri Lanka’s premier management school, the Postgraduate Institute of Management (PIM), as an affiliated institute of the University of Sri Jayewardenepura (USJ) in the early 1980s from scratch, nurtured it into what it is today, and linked it with industry both in Sri Lanka and abroad.

As I explained in a previous article in this series, Nanayakkara, a student of the first Dean of Management Studies and Commerce at USJ, Prof. Dharma de Silva, realised Dharma’s dream of creating a separate business school affiliated with the main university but located in Colombo, many years after the latter had left Sri Lanka’s university system [2]. Nanayakkara is, therefore, an academic who can speak authoritatively on the transformation of the country’s education system.

The fairways of Royal Colombo Golf Club (RCGC) will come alive on 26 and 27 June when the inaugural Cinnamon Colombo Golf Classic takes centre stage in Colombo’s sporting calendar.

Jointly organised by Cinnamon Colombo Hotels and the RCGC, the tournament marks a significant milestone as four leading hospitality properties, Cinnamon Grand Colombo, Cinnamon Life at City of Dreams Sri Lanka, Cinnamon Lakeside Colombo, and Cinnamon Red Colombo, unite for the first time to host a premier golfing tournament.

RCGC Captain Mahela Jayawardene welcomed the partnership, stating that the event blends the rich heritage of the club with the hospitality excellence of Cinnamon Colombo Hotels. He noted that the tournament will provide an ideal platform for golfers to celebrate the sport, build friendships, and create lasting memories.

With strong participation expected, the Cinnamon Colombo Golf Classic is poised to become a flagship annual event, culminating in a gala awards ceremony to honour the tournament’s outstanding performers.

Vidyartha College completed the Schools Rugby Season 1B campaign on a high note when they defeated Dharmaraja College 34-32 in their final game played at the Trinity College Rugby Stadium in Pallekele last weekend.

Both Vidyartha and Dharmaraja will be promoted to Division 1A, while the bottom two teams in the 1A Bowl segment will be relegated to Division 1B for the 2027 rugby season. (SJ)

Gulf Air, the national carrier of the Kingdom of Bahrain, has welcomed a new addition to its fleet with the arrival of its latest Airbus A321neo aircraft at Bahrain International Airport.

With the introduction of this aircraft, Gulf Air’s fleet will expand to 46 aircraft, reflecting the national carrier’s ongoing commitment to enhancing its operational capabilities and supporting its future growth plans, in line with its long-term fleet modernisation strategy.

The Airbus A321neo combines operational efficiency with enhanced passenger comfort, featuring one of the most spacious cabin designs in the single isle aircraft category. The aircraft is configured with 16 Falcon Gold seats and 150 Economy Class seats, offering elevated travel experience for passengers.

In addition, the aircraft incorporates advanced technologies designed to optimise performance, improving fuel efficiency and reducing both fuel consumption and carbon emissions by up to 20% compared with previous generations aircraft of the same type.

Gulf Air is expected to receive additional Airbus A321neo aircraft throughout the year, further supporting the airline’s plans to expand its network and strengthen its future operations.

Sri Lanka’s apparel exporters face increased compliance demands from US buyers following new guidance issued by the United States Customs and Border Protection (CBP), which sets out stricter documentation and traceability requirements for goods entering the US market.

The guidance, issued under the US’s Uyghur Forced Labour Prevention Act (UFLPA), requires importers to maintain records tracing products back to the raw material stage and to demonstrate that goods do not contain prohibited inputs linked to forced labour.

While the UFLPA primarily targets products connected to China’s Xinjiang Uyghur Autonomous Region (XUAR), the latest guidance places greater emphasis on documentary evidence and supply chain traceability across the production process.

CBP states that importers should be able to provide records covering raw material sourcing, yarn production, fabric manufacturing, garment assembly, transportation and customs clearance.

The agency also notes that affidavits and supplier declarations alone are insufficient to establish compliance. Importers may instead be required to furnish purchase orders, invoices, production records, bills of lading, payment records and other commercial documentation generated during the normal course of business.

The guidance is expected to increase information requests from US brands and retailers to overseas suppliers, including apparel manufacturers in Sri Lanka.

Industry sources said buyers are likely to seek more detailed information on cotton origin, yarn suppliers, fabric mills, subcontractors and production records as part of supplier compliance programmes.

CBP also encourages the use of origin-verification techniques, including isotopic testing, where questions arise regarding the provenance of raw materials.

The apparel sector remains one of the industries most exposed to enhanced scrutiny due to the complexity of global textile supply chains and the extensive use of multi-country sourcing arrangements.

The latest guidance comes at a time when Sri Lanka is also facing increased scrutiny from US trade authorities.

Earlier this month, the Office of the United States Trade Representative (USTR) proposed placing Sri Lanka in the higher 12.5% tier of a new duty regime targeting economies deemed to have failed to impose or effectively enforce prohibitions on imports produced using forced labour.

The proposal followed a Section 301 investigation, with the USTR concluding that Sri Lanka’s policies and practices relating to forced labour imports burdened or restricted US commerce.

The US remains Sri Lanka’s largest single export market, accounting for around 22% of merchandise exports. Exports to the market declined 3.15% year-on-year to $ 196.37 million in April, while cumulative exports during the first four months of 2026 fell 2.09% to $ 945.76 million.

Apparel remains Sri Lanka’s largest export industry, accounting for close to 40% of merchandise export earnings and generating more than $ 4 billion annually.

The latest CBP guidance indicates that access to the US market will increasingly depend on the ability of exporters and their suppliers to provide detailed evidence on sourcing and production practices throughout the supply chain.

Mahindra Ideal Finance PLC (MIFL) inaugurated its 38th branch in Kohuwela at a ceremony attended by India’s High Commissioner Santosh Jha, Mahindra Ideal Finance Chairman Thilan Wijesinghe, and Managing Director/CEO Mufaddal Choonia.

The Kohuwela branch has been established as a flagship outlet, offering the full range of MIFL’s core financial services including leasing, vehicle loans, draft loans, revolving loans, business loans and fixed deposits. Its location in a commercially active area of Colombo positions it to serve a broad base of vehicle dealers, importers, individuals and business customers.

MIFL now operates a network of 38 branches across Sri Lanka, with a presence built to bring regulated financial services within reach of customers nationwide.

Addressing the gathering at the inauguration, High Commissioner Jha emphasized that MIFL’s expansion reflects the strength and continued growth of the investment relationship between India and Sri Lanka.

‘The growth of institutions like Mahindra Ideal Finance is a concrete expression of the India-Sri Lanka partnership. It is financial access being built into communities across Sri Lanka, and that is something both countries can take pride in.’

Managing Director/CEO Choonia said: ‘The opening of our Kohuwela branch is part of a deliberate direction MIFL is taking as a business. We want to be present where our customers are, and we want to offer them the full range of services they need, whether that is leasing, vehicle financing, draft facilities, business loans, fixed deposits or our revolving loan facilities. Accessibility and reliability are at the core of what we do, and Kohuwela brings us closer to the communities and businesses we are here to serve.’

With its 38th branch now operational, MIFL continues to build toward greater scale and deeper customer reach across Sri Lanka. The company holds a Fitch rating of AA-(lka) with a Stable Outlook and is debt listed on the Colombo Stock Exchange.

Sumathi Information Technologies Ltd. (SIT), the technology arm and a subsidiary of Sumathi Holdings, has been named Sri Lanka’s only Gold Partner for networking by Hewlett Packard Enterprise (HPE) for 2026, as enterprises face increasing pressure to modernise networks while maintaining uptime, security, and cost discipline. The recognition reinforces SIT’s position as a leading enterprise IT system integrator in Sri Lanka, supporting organisations navigating complex infrastructure decisions in a constrained operating environment.

This comes as reliable and secure network infrastructure is increasingly critical to business continuity across key sectors, including banking, telecommunications, and government. HPE’s Gold Partner status is awarded based on stringent criteria, including certified engineering capability, delivery standards, and commercial performance, offering enterprises greater assurance in vendor selection and execution.

For organisations where downtime, security exposure, and integration complexity carry direct financial implications, the presence of a locally established Gold-tier partner provides practical advantages. These include stronger access to global expertise, more structured implementation, and closer alignment between technology deployment and business outcomes.

The partnership is further strengthened by the breadth of HPE’s networking portfolio, spanning Aruba, HP Networking, and Juniper Networks. This enables SIT to support enterprises in designing integrated network architectures across campus, data centre, and high-performance environments, addressing the growing need for scalable and future-ready infrastructure.

Commenting on the milestone, Sumathi IT Chief Technology Officer S. Sivasankar said, ‘This recognition reflects the depth of capability we have built over time and our continued focus on delivering consistent outcomes for our customers. As organisations place greater emphasis on reliability and long-term value, our role is to support them with solutions that are both robust and adaptable.’

With over two decades of experience and a client base spanning more than 500 organisations across banking, government, and telecommunications, SIT continues to support Sri Lanka’s enterprise sector in strengthening its digital backbone, combining global partnerships with local expertise.

Industry and Entrepreneurship Development Deputy Minister Chathuranga Abeysinghe has defended the Government’s tax and economic reform agenda, pushing back against criticism from Opposition MP Dr. Harsha de Silva and arguing that efforts to formalise the economy are critical to improving Sri Lanka’s fiscal position.

In a statement, Abeysinghe accused Dr. de Silva of taking a political stance against measures introduced by the Finance Ministry to expand the tax base and reduce the economy’s dependence on informal activity.

‘It is very sad and unprofessional for him to take a political stance against the progress made by the Finance Ministry to expand the tax base and move away from an informal economy,’ Abeysinghe said.

The Deputy Minister said Sri Lanka had operated with a largely informal economy for decades, limiting the Government’s ability to collect revenue and contributing to a fiscal environment where a substantial share of tax income was directed towards servicing debt obligations.

Highlighting recent revenue performance, Abeysinghe claimed that Government revenue reached 16.7% of Gross Domestic Product (GDP) in 2025, while revenue collection during the first quarter of 2026 had exceeded official targets by a significant margin.

He argued that improving compliance and broadening the tax net would eventually allow authorities to lower tax rates while maintaining revenue levels.

‘When we have a systematic method of collecting taxes, we can gradually bring down tax rates. For example, Value Added Tax (VAT) could eventually be reduced to around 10% to 12%, in line with global norms,’ he said.

Abeysinghe said the Government remained committed to strengthening the formal economy as part of a broader effort to create fiscal resilience and improve the country’s ability to withstand economic shocks.

‘There is no turning back. We will create a strong fiscal space that can withstand both internal and external shocks,’ he said.

The remarks come amid an ongoing public debate over tax policy, revenue mobilisation, and fiscal reforms under Sri Lanka’s economic recovery program.

Abeysinghe also urged Dr. de Silva to focus on economic analysis rather than political criticism.

‘I invite Harsha to be the economist he used to be and not another version of Sajith Premadasa,’ he said.

In a series of posts on ‘X,’ Dr. de Silva outlined several concerns regarding recent tax and trade policy measures, arguing that some of the Government’s revenue initiatives could have unintended consequences for consumers, businesses, and exporters.

He contended that while the VAT rate stands at 18%, the effective tax burden borne by consumers is higher due to the cascading impact of the Social Security Contribution Levy (SSCL) across multiple stages of the supply chain.

Dr. de Silva also questioned the pace of efforts to bring online casinos and betting platforms into the tax net, noting that the deadline set for the sector’s inclusion was 30 June and stating that he would closely monitor progress on implementation.

On the export front, he warned that a proposed duty on coconut oil imports could undermine Sri Lanka’s coconut-based export industry. Citing concerns raised by industry stakeholders, he said higher import costs could divert local coconuts from value-added export production towards domestic oil manufacturing, potentially affecting export contracts, reducing foreign exchange earnings, and ultimately yielding little or no additional duty revenue if imports cease.

Dr. de Silva said he had raised the matter at the Committee on Public Finance (CoPF), cautioning that poorly designed tax measures could adversely affect both exporters and agricultural producers.

He also criticised policies affecting the agriculture sector, arguing that higher taxes on maize imports could increase chicken and egg prices, placing additional pressure on household food costs. At the same time, he questioned the rationale behind plans to import 150,000 metric tons of rice, warning that such imports could weaken farm-gate prices and affect paddy farmers’ incomes.

According to Dr. de Silva, officials from the Agriculture Ministry acknowledged some of these concerns during CoPF deliberations. He further noted that the Paddy Marketing Board’s market intervention capacity remained limited and called for the revival of the Shakthi Rice Cooperative, which he said had previously helped support small-scale millers and paddy farmers.

The exchange reflects broader debate over the Government’s efforts to expand the tax base and strengthen revenue collection while balancing the impact of policy measures on consumers, businesses, and key export sectors.

Sri Lanka Customs has been directed to accelerate modernisation efforts and strengthen export facilitation measures as part of the implementation of the National Export Development Plan (NEDP) 2026-2030, with a view to supporting the country’s target of generating $ 36 billion in export earnings by 2030.

The directives were issued during a discussion chaired by Secretary to the President Dr. Nandika Sanath Kumanayake last week, according to the President’s Media Division (PMD).

The meeting, organised by the Revenue Administration Reform and Modernisation Bureau, focused on reforms required within Sri Lanka Customs to facilitate export growth and improve the ease of doing business for exporters.

Dr. Kumanayake instructed Customs to enhance the capacity, infrastructure and modernisation of the Export Facilitation Centre, where export containers are inspected, in order to create a more efficient and exporter-friendly operating environment.

Discussions also centred on measures to broaden Sri Lanka’s exporter base, including initiatives to encourage new entrants into export markets. Particular attention was given to reviewing the Temporary Import for Export Processing (TIEP) scheme administered by the Customs Industrial Facilitation Division and developing targeted support programs for small and medium-sized enterprises (SMEs) that are yet to engage in export activities.

Officials also explored the possibility of decentralising customs operations to support export expansion, including the establishment of a Customs Export Centre in Jaffna.

The meeting further examined challenges faced by exporters using e-commerce platforms. It was agreed that further discussions would be held with the Department of Posts to identify measures to streamline export-related processes in the sector.

Among the other proposals discussed were the introduction of digital systems to expedite document processing and reduce compliance costs, as well as the implementation of a risk-based assessment framework to provide greater facilitation for low-risk exporters.

It was also decided that Sri Lanka Customs, the Sri Lanka Export Development Board (EDB) and other relevant agencies would meet monthly under the leadership of the Revenue Administration Reform and Modernisation Bureau to monitor implementation progress, identify exporter concerns and develop solutions.

The NEDP 2026-2030 has been formulated in line with the Government’s national vision, ‘A Thriving Nation – A Beautiful Life’, with the objective of improving Sri Lanka’s export competitiveness and increasing export earnings to $ 36 billion by 2030.

Among those present were Director General of Customs Wimal Liyanagama, Sri Lanka Export Development Board Chairman Mangala Wijesinghe, Additional Directors General of Customs T. Loganathan and L.K.S.D.K. Arewatta, EDB Director Dr. Sanjeewa Rathnasekara, Revenue Administration Reform and Modernisation Bureau Director W.L.C. Thilakasiri, and senior officials from Customs and the EDB.

The Central Bank of Sri Lanka (CBSL) has invited the public to submit views on the country’s inflation target and related monetary policy parameters as part of a review process scheduled to conclude in October 2026.

‘The CBSL is currently undertaking a review of the inflation target and related parameters to assess their continued appropriateness in the context of Sri Lanka’s evolving economic environment,’ the CBSL said in a statement. ‘As part of this review, the CBSL invites views from the general public through this survey.’

The CBSL said information gathered through the consultation process would support the review and help ensure that the monetary policy framework remains effective in maintaining price stability.

Public submissions will be accepted until 15 July through an online survey made available by the CBSL.

The outcome of the review is expected to inform the next Monetary Policy Framework Agreement (MPFA), which will set the inflation target and related parameters for the coming period.

The review is being conducted in line with the provisions of the new Central Bank Act, which requires the inflation target and related parameters to be reassessed at least once every three years, or earlier under exceptional circumstances.

Sri Lanka’s current inflation target was set at 5% under the MPFA signed between the Finance Minister and CBSL in October 2023. The agreement, which established a target range of 5% with a tolerance margin of ±2 percentage points, will complete its initial three-year term later this year.

Under the Central Bank Act, the primary objective of the CBSL is to achieve and maintain domestic price stability. Monetary policy is implemented through a Flexible Inflation Targeting (FIT) framework, under which inflation is guided towards the target agreed between the Government and the CBSL.

The CBSL said the ongoing review is intended to assess whether the current inflation target and associated parameters remain appropriate in the context of Sri Lanka’s evolving economic environment.