Singapore, Sri Lanka affirms diplomatic relations with the Agri-Business and Digitalisation Webinar

A webinar on Monday (27 July) declared that the COVID-19 pandemic would build opportunities for Singapore and Sri Lanka to strengthen trade ties. Highlighted for particular emphasis were the trade ties with agri-business and digitalisation. Speaking at the webinar, the High Commissioner of Singapore for Sri Lanka, S. Chandra Das, spoke of new prospects given the fact that COVID-19 was "a very tiring time both (for) diplomatic and business cooperation."

"And as we begin to rebuild our economies and cultures, new ideas will start to multiply. COVID-19 (will) inspire us to re-envision possibilities and explore new opportunities, "he said. Chandra Das tallied: "Singapore and Sri Lanka have a long-standing commercial relationship, particularly (in) the food sector."

"Our import of Sri Lankan produce has evolved from cayenne spices to crabs, both in terms of quantity and variety," he said. The High Commissioner of Sri Lanka to Singapore, Sashikala Premawardhane, said food security was one of the regions in which the two nations could enhance cooperation.

"On the investment side we did very well between 2015 and 2019," she said, pointing out that Singapore was the fifth biggest investor in Sri Lanka. He added that about 100 Singaporean companies were working in Sri Lanka. "We see tremendous possibilities for the two nations to increase relations particularly in the fields of economics, commerce and investment, "she said.

COVID-19 emphasised the importance of keeping countries in contact at a time when borders were closed, and supply chains disrupted to ensure food security problems did not obstruct economic activity, she said. Locally, Singapore produces less than 10 per cent of its food needs.

The webinar on business opportunities took place on the 50th anniversary of diplomatic relations between Singapore and Sri Lanka. It touched particularly on areas such as digitalisation and agri-business. Chandra Das said: "The friendly relationships that we have enjoyed today between our two countries focused on historical events, including family bonds, long before our independence."

A declaration from the High Commission of Sri Lanka in Singapore noted that relations between the two countries date back to at least the 1800s, as both share the same ancient maritime trading routes. During the webinar, the topics discussed included company digitisation, food supply resilience in Singapore and food security.

According to the Sri Lankan High Commission, total bilateral trade last year was estimated at $883 million (S$ 1.21 billion) with Sri Lankan exports estimated at $115 million.

OSL Take: The Sri Lanka Investor Forum in Singapore and the many B2B meetings held are indicative of the potential for business/investments of local companies. The government of Sri Lanka is engaged in an investment drive along with the aggressive development programme that covers all critical economic sectors islandwide. Foreign businesses/investors could explore business/investment opportunities in Sri Lanka.

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Opportunities in the e-commerce sector as the base in Sri Lanka is increasing by 245 percent

"The COVID-19 lockdown has changed Sri Lankan customer habits as has the rest of the world," said Dr Rohantha Athukorala, Clootrack Sri Lanka, Maldives and Pakistan Country Leader, addressing the Metropolitan Rotary Club at The Hilton. Citing Kantar Sri Lanka's post-lockdown research study, the insight is that the e-consumer basket in Sri Lanka has increased from an $11 to $38. This lead was driven by e-payment, e-banking, online medical consultation and e-sports, which we see in Sri Lanka as the new lifestyle.

The underlying reason means the e-commerce eco-systems will have a significant post-COVID-19 change, and according to him, the private sector will have to change its business model.

"We also hear of a second wave of the deadly COVID-19 virus in China and Chennai, and clusters are also appearing in Sri Lanka, which means we have to prepare for a second wave," said Dr Athukorala.

Dr Athukorala also directs the COVID-19 Spread Rotary Stop for Sri Lanka.

"The decent news is that over two hundred firms are in the procedure of being approved by the Sri Lankan Standards Institute for a 'COVID-19 Control Environment' qualification, which means that the companies are putting up protections for a possible second wave that is cautious decision-making.

"Businesses like Akbar Brothers have gone on to place the company as the primary tea company globally certified as a 'COVID-19 Control Environment, which means that we in Sri Lanka are taking the high ground internationally, in a wise manner," opined Athukorala.

As the previous Chairman of Sri Lanka Export's Development Board and Sri Lanka Tourism, Dr Athukorala possesses the domain knowledge to back up that statement.

Recently, Anantaya Resorts and Spa announced to the world, that it is the first global hotel property to receive the 'COVID-19 Control Environment' certification that puts Sri Lanka on the global media.

The speaker went on to disclose the findings of the analysis of LMRB/Kantar. The results revealed that 13 per cent tried online education in Sri Lanka, 12 per cent tried live broadcasting via mobile media, 9 per cent tried online shopping, 8 per cent tried online shopping, 7 per cent paid their bills using smartphones. It also revealed a dramatic shift where 7 per cent conducted online religious activities.

"This is the current reality, and we in Sri Lanka need to improve based on this hard data so that we remain engaged with the Sri Lankan household," he said. Under the leadership of eminent business personality, Ruwan Jinasena, Metropolitan's Rotary Club is driving a critical project under the COVID-19 plan ‘Stop the Spread’, to certify the 'Tuk-tuk' community in Sri Lanka's urban markets, which is another first for Sri Lanka.

OSL Take: Sri Lanka showcases tremendous growth potential in the e-commerce arena, adding to an already diverse eco-system. There is growing interest in investment coming from many sources to Sri Lanka, and with a sustained support system, the Sri Lankan e-commerce will be able to compete internationally. Sri Lanka is currently engaged in a programme to transform the country into an e-economy. The government of Sri Lanka has introduced many programmes and provided many incentives to businesses involved in ICT to help develop the country's ICT and digital infrastructure sectors. All this has resulted in the expansion of business/investment opportunities in Sri Lanka's ICT and digital infrastructure sectors.

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India agrees with Sri Lanka on $400 million in currency swap

India's Reserve Bank has agreed to a $400 million currency swap facility for Sri Lanka until November 2022, tweeted on Friday by the Indian high commission. The development comes amid COVID-19 as a relief to Sri Lanka and will help in its post-pandemic economic recovery. A currency swap is a trade where two parties exchange interest and principal in separate currencies.

Currency swaps used to get foreign currency loans at a higher interest rate than can be provided by borrowing directly from an international market. The intervention of the RBI follows a recent bilateral 'technical dialogue' on rescheduling the outstanding debt repayment to India from Colombo.  A currency swap is a trade where two parties exchange interest and principal in separate currencies. Companies doing business overseas often use currency swaps to get loan rates in the local currency that are more attractive than if they borrow money from a local bank.

The Federation of Indian Chambers of Commerce and Industry (FICCI) in association with the Laxman Kadigamar Institute of Diplomatic Relations and Strategic Studies recently organised a webinar on 'Deepening Economic Collaboration between India and Sri Lanka.' Addressing the webinar, Sri Lankan Foreign Secretary Ravinatha Aryasinha said the neighbours could explore potential textile, IT and agribusiness collaborations, sectors in which India was 'powerful.'

Assuring that Sri Lanka will "facilitate, secure and foster a free environment for Indian investors," he invited Indian businesses in the production of industrial zones, automotive parts, pharmaceutical, textile and engineering activities. Ravinatha Aryasinha also speaking on Sri Lanka's exports, commented on market access difficulties, difficulties that were often created by non-tariff barriers in receiving countries. He said they were an impediment and urged FICCI to work with the Sri Lankan Mission in New Delhi to help improve Sri Lankan spice exports and concentrate on the Indian market.

Both countries are currently involved in rescheduling negotiations on debt repayments. The last round of the debate on Sri Lanka's rescheduling of bilateral debt repayment took place on July 22. The Indian mission, involving senior representatives from the Ministry of External Activities, Ministry of Finance, and EXIM Bank, interacted via a video conference with representatives from the Sri Lankan Department of External Resources.

A statement from the Sri Lankan Indian mission said, "The next round of technical discussions between the two sides on the debt repayment rescheduling is expected to take place soon”. On May 23, Sri Lankan President Gotabaya Rajapaksa spoke to Prime Minister Narendra Modi asking the former Indian government to provide USD 1.1 billion of individual swap facilities under the SAARC project amid the COVID pandemic to supplement USD 400 million.

OSL Take: Sri Lanka and India boast of strong bilateral and trade ties that have been further bolstered by the free trade agreement (FTA). Sri Lankan businesses are, therefore given preferential treatment when engaging in business ventures in India. Local companies could use this benefit to form joint ventures/partnerships with Indian companies. Foreign businesses/investors looking at doing business with India could explore the possibility of setting up base in Sri Lanka to reach out to the Indian market.

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Colombo Dockyard launches Buoy Tender Vessel constructed via Toyota Tsusho Corporation, Japan, for Iraq

On Wednesday, the Colombo Dockyard P.L.C. (CDPLC) launched its Yard Number NC 0244. It is a 60-meter Buoy Tender Vessel for the General Company for Ports of Iraq (GCPI) under an agreement signed with Japanese Toyota Tsusho Corporation (T.T.C.) Japanese ODA Loans from the Japan International Cooperation Agency (JICA) will be funding the project.

The ceremonial launch is the method by which the vessel is first floated or transferred to the water. Symbolically this is done by breaking a 'milk pot' according to Sri Lankan tradition, over the bow area of the ship inviting good luck to the vessel, the crew and the owners and then filling the dock with seawater that allows the ship to float.

Hayder Khaldoon Mohammedsami Alahmed, Rayed Kareem Mashhoot Al-Saeedi, GCPI Site Engineers, Nippon Koei and Co-Project Manager Ali Alakus all graced the ceremony. This event represented the Classification Society Class attended by Madhawa Fonseka, Manager - Colombo Office and Vishal Chowdary, Project Manager and Roshan Sanjeewa, Colombo Office Surveyor.

As part of its design, the Buoy Tender Vessel is useful for the recovery and launch of marine navigation buoys, the repair and maintenance of marine navigation buoys, the transport of nautical navigation buoys and spare parts, and the carriage of general cargo. It is a vessel 60 m in length, 12 m in width and 4.6 m in depth.

The vessel, powered by twin diesel engines, can reach a speed of 12 knots. A 22-tonne lifting crane is to be fitted with the ship. This vessel also provides fully air-conditioned comfortable living quarters for its 28-person complement. In addition to this B.T.V., CDPLC is also constructing another GCPI vessel which is a Pilot Station Vessel (P.S.V.) of 50 m. The P.S.V. is a Catamaran-type twin-hull vessel that will be used to transport pilots and supplies, provide accommodation facilities to pilots, and provide station and required support for pilot boats.

These projects, which are vital to Iraq's socio-economic growth, will strengthen relations with the Republic of Iraq. Iraq has been one of Sri Lanka's closest allies for decades. OSL is confident that with these shipbuilding projects produced from T.T.C. Japan supported by JICA, the relationship between Sri Lanka and Japan will dawn in a new era in the bilateral economic sphere. This ceremony was organised and performed at a modest scale and in a simple way, paying particular attention to the Health and Safety Guidelines of the Government which was released as a result of the outbreak of COVID-19, illustrating the corporate social obligation of CDPLC to prevent any potential transmission of COVID-19 at work.

Colombo Dockyard P.L.C. is a Japanese flagship project and co-operates with Onomichi Dockyard Company Ltd. of Japan. The agencies of the Sri Lankan government also hold more than 35 per cent interest in CDPLC.

OSL Take: Sri Lanka's Dockyard company is an excellent example of a successful collaboration between a Sri Lankan and foreign company. The company's business scope has expanded across time from ship maintenance to shipbuilding, which is indicative of the growing business potential in the country. Sri Lanka's shipping and maritime sectors are currently undergoing a development programme, which is also part of the overall development programme launched by the government of Sri Lanka.

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Opportunity - Unilever explores global buyers for its tea business

In the face of declining group sales growth, Unilever will conduct a review of its global tea business, including the PG Tips and Lipton brands, in an apparent strategy that Chief Executive Alan Jope is rethinking.  Jope said the group had previously invested in turning around the tea sector over the longer term, but the change of plan could ease the fears of investors who criticised the lack of urgency in transforming Unilever's struggling business of food and refreshment.

Pitkethly said tea is an excellent performer in emerging markets and the premium segment, but it would consider for review for all regions and all parts of the business. The company said the analysis caused by traditional black tea sales slowing down in developed markets as customers turn to herbal tea. Black tea, Pitkethly said, is the dominant part of Unilever's tea market, distributed in 60 countries and producing annual sales of 3 billion euros ($3.3 billion).

Unilever also struggled elsewhere with stuttering growth in India and China, two of its main emerging markets, while intense competition in North America and Europe also hindered attempts to meet growth targets for the full year. The food and refreshment company which produces teas from Lipton and mayonnaise from Hellmann among others and contributes 40% to group sales-has been hit particularly hard in North America and Europe as customers look for healthier options.

Joe announced that he is concentrating on sustainability instead of topline growth. Nonetheless, Joe's focus is on growth, and he said on Thursday after the results from his first full year in charge showed a 2 per cent increase in annual turnover and 2.9 per cent improvement in underlying sales.

OSL Take: Sri Lanka’s tea sector has been recording continuous growth with increased recorded in the export sector as well. The proposed merger and acquisition opportunity avails the range of business opportunities towards the astute investor.

The government of Sri Lanka has also offered many incentives to promote the country’s tea industry. Foreign businesses/investors could explore business/investment opportunities in Sri Lanka’s tea industry.

The latest report by the Central Bank of Sri Lanka highlighting the decrease in the trade deficit, increase in the tea export revenues, and the easing of pressure on the rupee is all indicative of an economy on a buoyant growth path. International lending agencies have recognised Sri Lanka's economic policies like the IMF, World Bank, and ADB, which have expressed confidence in Sri Lanka and expressed willingness to assist the country.

The country’s economic policies have also helped the growth of several key industrial sectors in the country. Hence, this has resulted in the opening of many business/investment opportunities along with the aggressive development program undertaken by the GoSL. The country is, therefore, a hotbed for foreign investments, and interested businesses/investors could explore opportunities in Sri Lanka.

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India’s Cabinet approves agreement with Sri Lanka to avoid double taxation

Sri Lanka and India will sign a double tax avoidance agreement that aims to improve tax transparency and help curb tax evasion and avoidance. An official release said India-Sri Lanka signed the new DTAA on 22 January 2013, which came into force on 22 October that year. India and Sri Lanka are members of the Inclusive Framework and are required to implement the minimum standards for their DTAAs with Inclusive Framework Countries under the G-20 OECD BEPS (Base Erosion and Profit Shifting) Action reports.

Minimum BEPS Action Six requirements may be met through the Multilateral Convention for the Implementation of Tax-Treaty-Related Measures to Prevent Base Erosion and Profit Shifting (MLI) or through bilateral agreement.

India is an MLI signatory. But as of now, Sri Lanka is not a signatory to the MLI. Therefore, amendment of the India-Sri Lanka DTAA bilaterally is required to update the preamble and also to insert Principal Purpose Test (PPT) provisions to meet the minimum standards on treaty abuse under Action 6 of-20 OECD BEPS project

OSL Take: The commitment towards setting up an agreement to avoid double taxation by India to Sri Lanka indicates the close bilateral ties enjoyed by the two nations. Sri Lanka and India have an existing free trade agreement as well. India has played an active role as Sri Lanka’s development partner. Therefore, business opportunities between the two countries are very high.

Foreign businesses/investors interested in doing business with India could look at setting up bases in Sri Lanka to get the trade benefits enjoyed by Sri Lankan businesses in India. The ancient ties between the two nations have further strengthened through trade ties that have been benefited by a free trade agreement (FTA) between the two countries. While many Indian companies have formed joint ventures with local businesses, the Indian government has continuously assisted Sri Lanka in its program.

The trade relationship between Sri Lanka and India could be beneficial to foreign businesses/investors interested in doing business in the South Asian region as well as India. On the other hand, given Sri Lanka’s continuous efforts to develop its railway sector, foreign companies engaged in rail transport could explore business opportunities in Sri Lanka’s railway sector as well as help build additional facilities.

Sri Lanka already has a free trade agreement (FTA) with over ten countries, and the continued assistance would help build investment opportunities in various sectors. The move to further strengthen bilateral relations between Sri Lanka and India as well as the redoubling of trade promotions to invigorate efforts to reach the target of US$ 1 billion trade by 2020 are indications of the island nation becoming a hot spot for those looking at entering the Turkish market using the facilities available in the Pakistan–Sri Lanka Free Trade Agreement.

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Govt. to expand available infrastructure at free trade zones for business expansion

The Ministry of Industrial Export and Investment Promotion said the rapid construction of infrastructure at the FTZs and EPZs was also a key promise outlined in the manifesto 'Visions of Prosperity and Splendor' by President Gotabaya Rajapaksa.

The GoSL has recognised the need to develop drinking water facilities within FTZs and EPZs and has instructed the competent authorities to submit a proposal for project implementation Ranatunga reported that Rs. Five hundred forty million had already earmarked for the construction of drinking water facilities in the Seethawakapura FTZ, where 24 factories with 22,534 employees are working.

The Investment Board (BOI) has built 15 FTZs across the country, the oldest being Katunayake FTZ, founded in 1978. Katunayake FTZ currently employs 137,478 employees at 81 factories while Biyagama FTZ, which opened in 1985, has 55 factories and employs 28,588 workers. Koggala FTZ has 19 factories, using 14,689 people.

The government has already established a 200-acre stretch of land to develop a new FTZ in Eravur, in the Eastern Province's Batticaloa District. They will provide essential infrastructure, and the environmental impact assessment (EIA) reports have taken. However, he said the ministry is now finding potential investors for the new FTZ in Eravur. Special attention has also been given to resolving issues in industrial zones Bingiriya and Wagawatta, the minister said.

While the growth routes of these high-growth Asian economies may not replicate, their growth experiences involve lessons and plans from which Sri Lanka can learn. Economic reforms are vital if Sri Lanka is to unleash its true potential for development.

The key to enormous economic growth is export-oriented industrial development funded by private capital, especially foreign direct investment. Hence, Sri Lanka requires a solid export development policy and a regionally competitive incentive framework to attract large-scale foreign direct investment in this context.

OSL Take: The latest report by the Central Bank of Sri Lanka highlighting the decrease in the trade deficit, increase in the tea export revenues, and the easing of pressure on the rupee is all indicative of an economy on a buoyant growth path. International lending agencies have recognised Sri Lanka's economic policies like the IMF, World Bank, and ADB, which have expressed confidence in Sri Lanka and expressed willingness to assist the country.

The country’s economic policies have also helped the growth of several key industrial sectors in the country. Hence, this has resulted in the opening of many business/investment opportunities along with the aggressive development program undertaken by the GoSL. The country is, therefore, a hotbed for foreigninvestments, and interested businesses/investors could explore opportunities inSri Lanka.

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