Asianet Pakistan Private Limited

As someone who has spent more than two decades in the communications field, I have observed the evolution of information from the editorially mediated systems of the pre-digital era to the algorithm-driven dynamics that define today’s media landscape. This experience has provided a rare, long-view perspective on how content is created, how content is used and virally amplified across global platforms. Having witnessed the digital promise of transparency and connection transform into a crisis of credibility, this series seeks to examine the accelerating erosion of trust that now defines the modern digital public square.

The ‘Infodemic’ and the crisis of trust

The digital age began with a bold promise, that instantaneous, borderless communication would deepen understanding and empower democracy. Social media was envisioned as the new public square, an open agora for ideas. But instead of enlightenment, it has produced an era of distortion.

Today’s social platforms have become the battlegrounds of an invisible war: the ‘Infodemic’ a relentless flood of falsehoods that undermines truth, institutions, and trust. What began as a technological revolution has evolved into an existential crisis.

Algorithms once celebrated for personalising content now prioritise provocation over truth. The result is a systemic bias toward outrage, emotional manipulation, and misinformation, a distortion so profound that it now challenges the foundations of democracy, business credibility, and societal cohesion.

Social media’s perverse incentives

The economics of attention have become the economics of deception. Social media thrives on engagement and not accuracy. Algorithms reward virality, not veracity. Content that provokes anger or tribal affirmation travels farther and faster than fact-based discourse.

This feedback loop has blurred the line between misinformation (unintentional error) and disinformation (intentional deceit). Both spread with equal efficiency – and equal damage.

Enter Generative AI, which compounds the crisis. Deepfakes and AI-generated narratives make the origins of content nearly impossible for the average user to authenticate. The World Economic Forum’s Global Risks Report has repeatedly ranked misinformation and disinformation among the world’s top threats, not as a communications issue, but as a systemic risk to public health, democracy, and stability.

Reputation management in the breach

For communicators and reputation strategists, the disinformation age has rewritten the rules.

Reputation, once built through transparency, consistency, and credibility, can now be destroyed in moments by algorithmically amplified lies. The inherent design of social media platforms creates a critical imbalance where ‘Speed vs. Truth’ is perpetually skewed toward falsehoods: by the time a meticulous fact-check is produced, the original disinformation has already achieved viral velocity and inflicted significant reputational damage. This effect is amplified by the ‘Superspreader Effect’, where a concentrated minority of highly motivated, often anonymous, actors generate a disproportionate share of false narratives, rendering them largely immune to traditional media accountability mechanisms. Compounding this challenge is ‘The Deepfake Dilemma’, which introduces instantaneous, hyper-realistic deception; imagine a global food brand’s market value collapsing overnight due to a fabricated, AI-generated contamination video, a crisis where the speed of digital deception completely outpaces even the most agile corporate response teams.

Communicators have been forced into a permanent crisis posture, relying on digital forensics, real-time monitoring, and AI-assisted rebuttals. The art of reputation management is now inseparable from the science of verification.

The global regulatory pendulum

After a decade of laissez-faire optimism, governments are taking decisive steps to restore accountability. The era of ‘digital exceptionalism’ when platforms operated with minimal oversight, is over.

The European Model

The European Union’s Digital Services Act (DSA) represents the world’s most comprehensive regulatory framework for online platforms. It shifts responsibility squarely onto tech giants, classifying ‘Very Large Online Platforms’ (VLOPs), those reaching over 45 million EU users, as systemic actors.

These platforms must assess, mitigate, and report the risks their algorithms pose to society, including disinformation and manipulative content. They must open their data to researchers and disclose how their recommendation systems function. Failure to comply can result in severe financial penalties, marking a paradigm shift from self-regulation to systemic transparency.

The Asian Model

In Asia, digital regulation often aligns with national security priorities.

Sri Lanka, with its hyperconnected population, has witnessed the dual-edged nature of social media during periods of unrest, from hate speech amplification to politically motivated misinformation. While temporary bans and new legislation have sought to control falsehoods, the ongoing debate centres on balance: how to curb harmful content without enabling censorship or political misuse.

Singapore’s Protection from Online Falsehoods and Manipulation Act (POFMA) reflects a more interventionist approach. It grants ministers the power to order content removals or corrections deemed false and contrary to the public interest. Critics warn of overreach, but supporters highlight its efficiency in preserving social cohesion within a multi-ethnic, digitally volatile society.

These differing approaches, the EU’s systemic risk model versus Asia’s sovereignty-based model, illuminate a global divergence in how societies define the balance between freedom and safety, expression and order.

The truth imperative

The digital public square is fractured. What was once a platform for empowerment has become an amplifier of distortion. Yet, within this disruption lies a profound opportunity, to rebuild trust through verifiable truth.

Regulation alone will not solve the Infodemic. It must be accompanied by cultural and institutional change, where truth is once again seen as a shared public good.

For the communications industry, this means moving beyond reactive crisis control toward proactive truth stewardship, embedding verification, transparency, and ethical AI use at the core of reputation management.

The coming years may well mark a renaissance of credible media, where audiences, fatigued by algorithmic deceit, re-anchor their trust in verified information. Ironically, the future of digital communication may lie in rediscovering the values of the past: integrity, accountability, and the relentless pursuit of truth.

This article is part of a continuing series examining the evolving intersection of technology, regulation, and reputation in the post-truth era. The next feature will explore how global

President Anura Kumara Disanayake’s recent warning to Police officers allegedly entangled in drug trafficking networks marks a significant, and long overdue, moment in the fight against corruption. ‘Leave immediately! Otherwise, we will remove you,’ the President declared last week at the launch of the Government’s new anti-narcotics initiative. His words were sharp, unequivocal, and resonant. But words alone, however strong, must now translate into consistent, transparent action.

For too long, Sri Lanka’s Police department, an institution meant to uphold justice and safeguard the rule of law, has been tarnished by allegations of corruption, brutality, and complicity in organised crime. The illicit drug trade, in particular, has evolved into a parallel state, feeding politicians, public officials, and elements within the very agencies tasked with dismantling it. It is an ecosystem of impunity that has eroded public confidence in law enforcement and weakened the moral foundations of governance.

President Disanayake’s stance, therefore, deserves recognition. In an environment where political will is often in short supply, his decision to confront this entrenched rot should be commended. Yet this is only the first step on a long and treacherous road. The challenge lies not merely in issuing warnings, but in executing a genuine, far-reaching clean-up, one that goes beyond the police ranks to address the full architecture of corruption that sustains and protects criminal enterprises.

The Police are, quite literally, the front line of justice. If that line is compromised, every subsequent process from investigation to prosecution to sentencing becomes tainted. When officers are themselves participants in criminal networks, the law becomes a tool of oppression rather than protection.

The Government must also recognise that corruption within the Police does not exist in isolation. It is sustained by weaknesses elsewhere, in the judiciary, in the Attorney General’s Department, and in the broader mechanisms of oversight. A clean police force is only meaningful if investigations lead to fair trials and credible convictions. The judiciary must be independent, impartial, and efficient, free from political pressure and corruption. Likewise, the Attorney General’s Department must be empowered and depoliticised to ensure that no case is buried or manipulated for expedience.

There are precedents that the Government can learn from. Other nations have succeeded in reforming their police forces through strong oversight commissions, transparent recruitment and promotion systems, and stringent anti-corruption protocols. Of course, reform will not come without resistance. Corruption has deep roots and powerful beneficiaries. Every attempt to disrupt these networks threatens the interests of individuals who have long thrived under impunity. But this is where true leadership is tested. President Disanayake must demonstrate that his commitment to cleansing the Police is not a passing political slogan but a sustained moral and administrative crusade.

If the Government succeeds in this endeavour, it will not only restore faith in law enforcement but also strike a blow against the broader culture of corruption that has corroded Sri Lankan society. The rule of law cannot coexist with a compromised Police service. To rebuild the nation’s integrity, the rot must be cut out, decisively, transparently, and without fear or favour. Therefore, cleaning up the Police must be a national priority, whatever the political cost. If done right, it could mark the beginning of a true moral renewal for the country.

Every morning, as Sri Lankans pour milk into their tea, we participate in a quiet paradox: more than half of that milk is not Sri Lankan at all. In 2023, our nation spent over Rs. 105 billion on dairy imports and much of it in powdered form. Yet local farmers produced only 504 million litres, less than half of what our people consumed.

This imbalance is not merely an agricultural shortfall. It represents a strategic vulnerability. Every litre we import depletes foreign exchange, weakens rural economies, and deepens our dependence on global supply chains that are increasingly volatile. If left unaddressed, today’s dairy deficit will become tomorrow’s crisis.

The missed opportunity beneath our feet

Few sectors embody as much untapped potential as dairy. More than 250,000 rural households, many led by women depend on livestock for supplemental income. The sector already provides a critical bridge between agriculture and nutrition, between subsistence and opportunity. Yet it remains held back by low productivity, poor animal health, and fragmented policy execution.

The average Sri Lankan cow produces just 2.66 litres of milk per day. In India, that figure is closer to 5 litres; in Thailand, 8 or more. Our most efficient farms, like Ambewela, consistently achieve 22-24 litres, proving that high yields are possible when genetics, feed, and veterinary care align. The challenge, however, is scale.

The importance of dairy extends far beyond the farm. It is a foundation for food security, a buffer for inflation, and a tool for inclusive growth. The success of India’s White Revolution showed how empowering smallholders through cooperatives, veterinary networks, and reliable market linkages can transform an entire economy.

Sri Lanka stands at a similar threshold. But transformation will require moving from policy intent to operational delivery. The National Dairy Policy offers vision, but lacks costed implementation plans and institutional accountability. Without clarity on who drives what, progress will remain aspirational.

What transformation looks like

Connect to Care’s recent research identifies seven interlinked levers for reform and each reinforce the others. Farmers need access to well-equipped dairy hubs offering chilling tanks, artificial insemination, and veterinary support. Feed security must be enhanced through silage expansion and local production of nutrient-rich feed. A nationwide vaccination and animal health programme is vital to prevent recurrent disease outbreaks that erode livelihoods.

Equally crucial is the digital layer: a National Animal Identification and Traceability System (AITS) to monitor herds, deliver subsidies, and provide investors with credible data. When combined with financial inclusion through credit, insurance, and risk-sharing products, the results can be transformative. These measures, when aligned, form the scaffolding for a modern, resilient dairy economy.

We do not need to reinvent the wheel. India’s National Digital Livestock Mission has created unique IDs for every cow and buffalo, allowing for targeted veterinary care and traceable subsidies. Agritech innovators like Stellapps are already demonstrating how IoT, data analytics, and cashless payments can modernise milk supply chains and uplift smallholders. Closer to home, Sri Lanka’s Udunuwara Cooperative shows the power of local organisation. By pooling milk and investing in shared infrastructure, smallholders have secured better prices and stable incomes. These are signposts for national policy

We do not need to reinvent the wheel. India’s National Digital Livestock Mission has created unique IDs for every cow and buffalo, allowing for targeted veterinary care and traceable subsidies. Agritech innovators like Stellapps are already demonstrating how IoT, data analytics, and cashless payments can modernise milk supply chains and uplift smallholders.

Closer to home, Sri Lanka’s Udunuwara Cooperative shows the power of local organisation. By pooling milk and investing in shared infrastructure, smallholders have secured better prices and stable incomes. These are signposts for national policy.

A call to reclaim dairy sovereignty

The 2025-26 national Budget has earmarked Rs. 2.5 billion for dairy sector development, alongside VAT exemptions for locally produced milk. Donor priorities from the Gates Foundation to multilateral partners are increasingly aligned with Sri Lanka’s livestock agenda. This convergence creates a rare opportunity for coordinated action between government, private sector, and civil society.

But this window will not stay open forever. The global cost of milk powder continues to fluctuate with climate impacts and geopolitical tension. Each year of inaction deepens our vulnerability and widens the import gap.

The Government must provide policy coherence, land access, and institutional reform. Processors and private investors must expand procurement and value-added production. Development partners must bring financing and technical support. Consumers, too, have a role-to choose fresh, local milk over imported powder, and in doing so, invest in national resilience.

If Sri Lanka can raise its per-cow yield from 2.6 litres to even 5, we can close the import gap by 2035. That means billions saved in foreign exchange, stronger rural incomes, and a future where our children drink milk produced in their own villages.

This is no longer just about dairy. It is about sovereignty on a plate, prosperity in the village, and resilience for the nation. The question is not whether we can transform our dairy sector, but whether we will choose to, while the opportunity still exists.

In today’s rapidly transforming world, Muslims everywhere face the delicate task of knowing when, where, why, who, and how to draw the line – a line that defines both our moral boundaries and our openness to engage the world. It is not a line of exclusion or rigidity, but one of wisdom and balance – guided by Qur’anic insight, prophetic example, and human understanding.

Drawing the line means recognising our responsibilities before Allah while navigating the complexities of life in a globalised, pluralistic environment. It requires not emotional reaction, but reflective wisdom – to protect our faith without isolating ourselves, and to engage with dignity without compromising identity.

Faith and modern realities

The modern Muslim is constantly negotiating spaces – between tradition and progress, modesty and professionalism, faith and visibility. These are not contradictions unless we make them so. A profound example recently came from the sporting world – a young Muslim woman who became the fastest runner in South Asia, winning three sprint events and bringing pride to her nation and community.

Yet, rather than celebrating her historic victory, much of the discussion turned to her running attire – the shorts she wore as part of her athletic uniform. For some, this became a debate about modesty and faithfulness to Islamic dress codes. But before judgment, we must pause and reflect:

It is Allah, the Almighty, who created her, nurtured her, and made it possible for her to come this far – to achieve this champion status.

To see her triumph through this lens is to recognise divine will and purpose. Her success, like all human excellence, is not apart from Islam but part of Allah’s creative power and design. It should inspire us to rethink how we draw the line – not through condemnation, but through compassion, guidance, and context.

Faith, jurisprudence, and necessity

Islamic jurisprudence (fiqh) teaches adaptability through the principle that ‘necessity permits the prohibited’ (al-darurat tubih al-mahzurat). This maxim does not abolish divine law but recognises contextual flexibility when higher objectives (maqasid al-shariah) – like preservation of life, dignity, or public benefit – are at stake.

In a global Muslim community facing competing pressures – from modern lifestyles to global media exposure – we must apply shariah not only as law but as living guidance. The Qur’an, Sunnah, Hadith, and tradition provide moral direction, but they also demand understanding of time, place, and circumstance. This is where the art of drawing the line truly lies: to distinguish between principles that are divine and customs that are cultural.

The institutional crisis: Many organisations, little impact

However, while individuals struggle to balance faith and modern life, the collective Muslim community faces an even more pressing challenge – organisational stagnation. Across nations, including Sri Lanka, we have witnessed the emergence of countless Muslim organisations, each claiming to be a ‘strategic’ or ‘think tank’ body representing the community’s interests. Yet, despite decades of effort, fragmentation persists, and real transformation remains elusive.

Why?

Why do we continue to create new institutions every few years, each declaring that the previous ones were ineffective?

Why do so few of these organisations produce lasting change or measurable results?

And why do our initiatives fade as quickly as they emerge?

The answer lies not merely in Islamophobia or external hostility, but within ourselves – in ego-driven leadership, lack of strategic vision, and an absence of institutional discipline.

The culture of reaction and rhetoric

Many Muslim organisations are reactive rather than proactive. They are born in response to crises – hate speech, discrimination, or political tension – instead of being built upon research, planning, and long-term strategy. True think tanks, by contrast, are knowledge institutions that rely on analysis, data, and continuity – not just emotion or activism.

Furthermore, leadership often becomes personality-based rather than purpose-based. When individuals place themselves above the mission, organisations lose their continuity. Successive generations of young Muslims are seldom empowered, and institutions stagnate when founders step aside.

This creates what may be called a ‘conference culture’ – where we discuss, declare, and debate, but rarely follow through.

Committees replace execution, and rhetoric replaces results.

The role of Islamophobia

Islamophobia does play a role – it distorts public perception, marginalises Muslim voices, and discourages active engagement. But it cannot be the sole explanation for our failures. Islamophobia often exposes our lack of unity and preparedness. If we were organised, trained, and strategically coherent, external prejudice would have less power to divide or silence us.

Our focus, therefore, must shift from blaming Islamophobia to building resilience. The Prophet (peace be upon him) himself faced hostility far greater than ours – yet he responded with wisdom, structure, and faith. His was not a reactive community, but a strategic movement of ideas and values.

In a global Muslim community facing competing pressures – from modern lifestyles to global media exposure – we must apply shariah not only as law but as living guidance. The Qur’an, Sunnah, Hadith, and tradition provide moral direction, but they also demand understanding of time, place, and circumstance. This is where the art of drawing the line truly lies: to distinguish between principles that are divine and customs that are cultural

Restoring purpose: From talk to transformation

To rebuild strength and credibility, the Muslim community must move from talk to tangible transformation:

1. Consolidate, not multiply:

Unite organisations under shared goals – policy research, education, or social harmony – instead of creating new bodies for prestige or control.

2. Build knowledge-based leadership:

Encourage professionals, academics, and youth trained in governance, communication, and Islamic thought to take the lead.

3. Measure success:

Evaluate outcomes annually – in community programs, policy influence, or interfaith engagement – to ensure accountability.

4. Bridge generations:

Pass on experience and empower the next generation to lead with innovation, not imitation.

5. Combine strategy with spirituality:

The Prophet (peace be upon him) reminded us that sincerity (ikhlas) and excellence (ihsan) are the foundations of success. Without barakah (divine blessing), even the best strategies fail.

The spiritual dimension

Throughout Islamic history, success was not measured by the number of organisations but by the sincerity of purpose. Whether it was Medina’s early community, Andalusian scholarship, or Ottoman administration – all thrived when faith and intellect worked together.

The Qur’an teaches us:

‘Indeed, Allah does not change the condition of a people until they change what is in themselves.’ (13:11)

Before we reform institutions, we must reform hearts – by replacing ego with humility, speech with service, and reaction with reflection.

Conclusion: The line we must draw

To draw the line today is not to isolate ourselves, but to define ourselves – clearly, wisely, and faithfully. It means refusing to be trapped between blind modernism and rigid traditionalism. It means acknowledging that excellence in sport, science, or leadership is not un-Islamic – it is part of Allah’s creation and a reflection of human potential.

Our challenge as a global Muslim community is to transform fragmentation into unity, noise into direction, and emotion into vision.

When we learn to draw the line between ego and service, rhetoric and responsibility, and tradition and truth, we will once again stand as a community that not only speaks of Islam – but lives its wisdom.

‘And those who strive for Our cause – We will surely guide them to Our paths.’ (29:69)

Central Bank of Sri Lanka and the Credit Information Bureau (CRIB) yesterday launched the Secured Transactions Register (STR), introducing a new legal and digital framework that allows movable assets to be used as collateral for loans, especially for micro, small and medium enterprises (MSMEs).

The event, held at the Shangri-La Hotel in Colombo, also marked the official commencement of operations of the Secured Transactions Registration Authority (STRA), established under the Secured Transactions Act No. 17 of 2024.

The International Finance Corporation (IFC), a member of the World Bank Group, provided technical assistance and the European Union’s regional initiative ‘Accelerating Climate Smart and Inclusive Infrastructure in South Asia’ (ACSIIS) provided the funding.

CBSL Governor Dr. Nandalal Weerasinghe, the Chief Guest at the event, said the initiative is a vital step in improving access to finance for MSMEs, which often lack traditional collateral such as land or buildings.

‘Movable assets such as machinery, equipment, vehicles, and receivables represent almost 78% of business capital in developing economies, yet remain underutilised in Sri Lanka,’ he said. ‘This register creates a transparent market for lenders to recognise the value of these assets and provides confidence for banks to lend to smaller businesses,’ he added.

Dr. Weerasinghe described the reform as part of the broader effort to modernise Sri Lanka’s financial system and strengthen inclusion.

He credited the Finance Ministry and the World Bank’s International Finance Corporation (IFC) for their role in shaping the reform and establishing the STRA. ‘This is not just a technical change,’ he said. ‘It is a structural reform that supports financial inclusion, innovation, and the growth of productive enterprises.’

STRA Chairman and Central Bank Assistant Governor Chaamindra Bandara said the register addresses a long-standing weakness in the country’s credit infrastructure.

‘MSMEs make up nearly 80% of all enterprises and contribute around half of GDP, but their access to finance has been limited by their inability to pledge fixed assets,’ he said.

‘The new system closes that gap by allowing banks to accept movable property, including machinery, crops, livestock, receivables, and even intellectual property, as valid collateral.’

He explained that the Credit Information Bureau (CRIB) will operate the electronic register, enabling lenders to check existing encumbrances and register their own interests.

‘This reform will eliminate double collateralisation, improve transparency, and significantly reduce transaction costs,’ Bandara said. He added that it will also open doors for knowledge-based industries to use intangible assets such as patents and copyrights to access finance.

IFC South Asia Financial Institutions Group Manager Mehdi Cherkaoui said the reform reflects global best practice and is aligned with Sri Lanka’s National Financial Inclusion Strategy, which IFC helped design.

‘Strengthening the legal framework for secured lending is a critical step to help small businesses grow,’ he said. ‘With an effective system, the financial sector can extend innovative financing to a wider range of borrowers, including women entrepreneurs.’

Cherkaoui said similar IFC-supported reforms in other countries have generated significant results. ‘In Ghana, a secured transactions framework facilitated about 14 billion dollars in financing for over 8,000 SMEs and 30,000 microenterprises,’ he said. ‘In China, between 2004 and 2020, IFC-supported reforms unlocked an estimated 28 trillion dollars in financing for more than 4 million SMEs.’

IFC will continue working with the Central Bank and STRA under the EU-supported Accelerating Climate-Smart and Inclusive Infrastructure in South Asia program to promote financial literacy and raise awareness about the new system.

CRIB General Manager Pushpike Jayasundara said the register represents a complete new dimension to credit in Sri Lanka. ‘When you say credit, it has always been associated with collateral, usually land and buildings,’ he said. ‘Now, banks can lend against movable assets like inventories or machinery within a legally valid framework.’

He said CRIB’s 30 years of experience in data management, including its 20 million-record database, positions it to manage the registry effectively. ‘It will serve as a public notice board where lenders and borrowers can verify security interests and ensure that collateral information is properly recorded,’ he said.

Legal Drafting Committee Member Thushantha Wijemanne said the Act was designed to ensure consistency and continuity. ‘We needed to harmonise multiple laws so that the system operates smoothly within Sri Lanka’s dual legal framework,’ he said.

The law also defines how security rights apply when the nature or ownership of movable assets changes. ‘We wanted to ensure that a security interest carries forward even if the asset itself evolves,’ he said. The Act introduces a clear priority system among creditors and mandates registration of all security interests with the STRA, closing gaps that once allowed the same asset to be pledged to multiple lenders.

Creditinfo Business Development Manager Joe Bowerbank said Sri Lanka’s new system mirrors the success of Kenya’s 2017 reform, which transformed movable-asset lending and boosted SME finance.

‘Kenya faced many of the same issues Sri Lanka has today, fragmented laws, manual systems, and repeated pledging of the same assets,’ he said. ‘After the reforms, transparency improved, fraud fell, and lending increased.’ Within four years, over 600,000 movable assets were registered, helping banks issue larger loans with greater confidence.

Bowerbank said similar benefits can accrue to Sri Lanka if adoption grows.

‘We need the data in the database to drive value,’ he said. ‘The more digital records we can centralise, mobile registries, company data, and credit histories, the more valuable this system will be.’

He noted that such systems also promote inclusion by enabling women and smaller enterprises, who may lack land titles, to use movable property to access finance. ‘Centralising collateral and business data empowers lenders and protects borrowers,’ he said. ‘It builds trust, expands opportunity, and drives inclusion.’

HNB CEO hails STR but cautions against expecting immediate shift

Hatton National Bank CEO Damith Pallewatte

Hatton National Bank CEO Damith Pallewatte said the launch of the Secured Transactions Register (STR) marks a long-overdue step toward improving risk visibility and credit access for small and medium enterprises (SMEs), but stressed that the adjustment in lending practices and risk premiums will take time.

Speaking at the Colombo event, Pallewatte said the absence of a unified mechanism to record movable-asset pledges had long undermined confidence in collateral-based lending.

‘We have seen instances where the same movable asset was mortgaged to three banks at the same time,’ he said. ‘Now we have visibility, legal clarity, and defined priority among lenders-something the sector has needed for years.’

He said the reform introduces a different perspective to risk assessment and will gradually shift banks from property-based lending toward models centred on cash flow, inventory turnover, and receivables.

‘The registry allows us to view movable property as a risk mitigator,’ Pallewatte explained. ‘We can now rely on these assets with more certainty when lending to higher-risk sectors, because we can recover in case of default.’

However, he warned that the evolution of risk pricing will be gradual.

‘Even though we spoke of premiums, in actual market operations, these premiums are not yet structured or consistent,’ he said. ‘So we can’t expect lending costs to adjust immediately. Both borrowers and lenders must build experience and confidence before premiums compress.’

Pallewatte said the registry provides a robust mechanism for banks to secure their interests, but confidence in movable collateral will develop over time.

‘People will have to see that movable assets, machinery, inventories, even intellectual property, can be relied upon,’ he said. ‘It will take time for these assets to become embedded in our risk-assessment systems.’

He cautioned that while the registry strengthens the lender’s ability to recover assets, it does not automatically ensure borrower discipline.

‘When you mortgage family property, that’s the last thing you want to let go,’ he said. ‘But when you pledge a movable asset, your willingness to pay can drop. The system must balance ability and willingness to pay.’

Pallewatte said maintaining this balance is the secret to success.

‘If we expect lending to surge and bad loans to fall just because we have a registry, that’s not realistic,’ he said. ‘We must navigate a transition period carefully, ensuring businesses understand why this mechanism exists, to enable, not to burden, their growth.’

He noted that HNB already lends heavily to higher-risk sectors, including cottage industries.

‘We have over Rs. 50 billion lent to grassroots businesses, and our default rate is below the industry average,’ he said. ‘That proves cash-flow-based lending works. With the registry, other institutions can now follow that model with greater confidence.’

Calling the reform ‘a fantastic and timely initiative,’ Pallewatte said it is a turning point for the banking sector but one that requires patience, prudence, and education.

‘This isn’t an overnight change,’ he said. ‘It’s a new way of thinking about credit, and it will take commitment from both sides to make it work.’

The upcoming Sri Lanka Budget for 2026 is set to be one of the most closely watched fiscal pronouncements in recent memory. Its significance is amplified by the backdrop of the Colombo Stock Exchange (CSE) reaching all-time highs – a clear barometer of surging domestic investor confidence and a strengthening recovery narrative. As the government steers the nation through the next phase of its economic reform journey, the Budget’s proposals will be scrutinised for their ability to sustain capital market momentum and cement long-term macroeconomic stability.

The all-time high momentum on the CSE

The remarkable ascent of the CSE’s All-Share Price Index (ASPI) reflects a confluence of factors: a downward trajectory in domestic interest rates making equities comparatively more attractive, an improving corporate earnings outlook, and a cautiously optimistic sentiment about post-crisis macroeconomic stability.

This rally is not merely speculative; it signals that domestic investors are pricing in the successful continuation of IMF-backed fiscal consolidation and structural reforms. In essence, the capital market is demanding policy certainty and a clear roadmap for growth.

Key expectations of domestic investors

For the market to maintain its upward trajectory and attract long-term foreign capital, the 2026 Budget must deliver clear, consistent, and supportive policies.

1. Policy consistency and fiscal consolidation

The foremost expectation is a steadfast commitment to the agreed fiscal consolidation path. Investors will look for a Budget that targets a sustainable deficit and demonstrates a clear strategy to meet ambitious revenue goals – ideally through improved tax administration and base broadening rather than sudden, disruptive levies. Continuity in fiscal policy remains key to lowering perceived risk.

2. Boost to corporate earnings

With much of the rally driven by earnings growth, investors expect measures that reduce the cost of doing business and enhance efficiency:

Rationalisation of taxes and levies: Greater clarity and predictability in the corporate tax structure, and avoidance of ad-hoc revisions.

Focus on private sector-led growth: Incentives for export-oriented industries, manufacturing, and technology sectors capable of driving listed companies’ profitability and job creation.

3. Capital market development initiatives

Despite recent gains, the CSE’s market capitalisation-to-GDP ratio remains low by regional standards. Investors anticipate initiatives that:

Encourage New Listings: Especially from State-Owned Enterprises (SOEs) as part of ongoing restructuring, injecting quality assets and expanding market depth.

Broaden investor participation: Possibly through tax incentives for equity investments or reforms allowing pension and provident funds to increase equity exposure.

Foreign investor sentiment: The crucial ‘shift’

While the domestic rally has been robust, the sustained return of Foreign Institutional Investors (FIIs) remains crucial to validate valuations. Their re-entry depends on factors extending beyond the CSE’s performance – the macro ‘shifts’ that underpin true investor confidence.

Clarity on debt restructuring: Finalising the remaining stages of external debt restructuring is paramount. FIIs will view the Budget as an affirmation of the government’s commitment to debt sustainability and post-restructuring stability.

Structural reforms and SOE divestitures: A clear timeline for restructuring key SOEs will signal commitment to market-oriented reforms and fiscal discipline.

Improved governance and transparency: Strengthened regulatory oversight, anti-corruption measures, and improvements to the ease of doing business will all be viewed favourably by global investors. The outlook: Sustaining the climb

The 2026 Budget arrives at a pivotal moment. The CSE’s euphoria sets a high bar – reflecting hopes for durable stability and growth. For policymakers, the challenge is to translate market confidence into policy credibility.

A Budget anchored in fiscal prudence, structural reforms, and stable taxation will convince both domestic and foreign investors that the foundation beneath the CSE’s record highs is sound. Falling short, however, risks triggering a correction – reminding markets that fiscal discipline is the bedrock of sustainable capital market performance.

Ultimately, the Budget must serve as the anchor that secures Sri Lanka’s journey from recovery to resilience, ensuring that the CSE’s historic rally is a stepping stone to enduring economic strength rather than a fleeting high.

Harsha Amarasekera

Lanka Tiles PLC and Lanka Walltiles PLC have appointed Harsha Amarasekera to their Boards as a Non-Executive Director.

A luminary in the legal profession, Amarasekera has expertise in commercial, business, securities, banking and intellectual law. He was admitted to the Bar in 1987 and appointed a President’s Counsel in 2012. His extensive experience in arbitration and cross-national disputes further strengthens his professional standing. He is an Attorney-at-Law by profession.

He brings invaluable expertise in law and commerce, particularly in governance, compliance and corporate Law.

He is the Chairman of Sampath Bank PLC, Sampath Centre Ltd, CIC Holdings PLC, Swisstek (Ceylon) PLC, Swisstek Aluminium Ltd, Vallibel Power Erathna PLC, CIC Agri Business Ltd., and Colombo Port City Economic Commission.

He is also a Co-Chairman of Royal Ceramics Lanka PLC, Director of Expolanka Holdings Ltd, Global Hotel Holdings Ltd., EFL Global Logistics Ltd., Galle Face Management Company Ltd., Link Natural Products Ltd., Millennium Airlines Ltd., Millennium Investment Lanka Ltd., Silver Isle Ltd., and Lanka Tiles PLC.

SolarIT Solutions, a Canada-based IT consulting and tech services firm, has completed its acquisition of Tetris Ltd., a Sri Lankan digital experience agency. The acquisition strengthens SolarIT’s presence in South Asia, expanding its ability to deliver digital transformation solutions through a globally distributed team.

Through this acquisition, SolarIT positions Tetris as its global digital experience arm, combining advanced IT consulting with creative technology execution. By connecting teams across Canada and Sri Lanka, the collaboration enables seamless, round-the-clock service coverage, enhancing project efficiency and client responsiveness. The integration also provides Tetris with expanded resources, expertise, and market exposure, strengthening its ability to drive innovation and make a meaningful impact within Sri Lanka’s digital ecosystem.

Tetris Chief Visionary Officer Srinikanth Pannerselvam said: ‘This acquisition marks an exciting new chapter for Tetris. Joining forces with SolarIT allows us to take our creative and technical expertise to a truly global scale while continuing to deliver innovative digital experiences for our clients. With operations now across North America, Europe, and South Asia, we combine regional insight with international exposure, offering our partners around-the-clock service and next-generation web solutions.’

Srinikanth, a Sri Lankan-born tech leader, noted: ‘This move is more than just a strategic business expansion, it’s a personal mission to give back to my country of origin. By building opportunities in Sri Lanka, we aim to create jobs, nurture local talent, and foster a work culture that invests in employee growth-both professionally and personally.’