FAST TRACK DIALOGUE

FAST TRACK DIALOGUE

To assist German investors in Sri Lanka

The Sri Lanka – Germany Fast Track Dialogue, with the objective of addressing central issues faced by German Enterprises operating in Sri Lanka under the BOI as well as to facilitate new investments; took place recently at the premises of the Ministry of Development Strategies and International Trade.

Development Strategies and International Trade Minister Malik Samarawickrama led the Sri Lankan delegation, assisted by Board of Investment of Sri Lanka Chair Mangala Yapa, and Ministry of Development Strategies and International Trade Additional Secretary W A D S Gunasinghe.

Also present were members of key Sri Lankan institutions whose inputs were essential to ensure a rapid resolution of the matters discussed.
German Ambassador in Sri Lanka Jörn Rohde led the German delegation, assisted by Delegation of German Industry and Commerce in Sri Lanka (AHK) Chief Delegate Andreas Hergenröther. Companies B Braun Lanka Pvt Ltd., DHL, Keells Pvt Ltd, Eskimo Fashion Knitwear (Private) Ltd., Go Vacation Sri Lanka (Pvt) Ltd., (Den Touristk), Hellmann MAS Supply Chain (Private) Limited, Kramsli Lanka (Pvt) Limited, Ceylon Oxygen Limited and Würth Lanka participated in the dialogue.

Minister Malik Samarawickrama welcomed the German delegation. He stated that Germany was a very important trading partner for Sri Lanka, with a volume of trade totalling EUR 1.2 billion. The Minister added that there had been an important trade and investment delegation to Germany in 2018, but that recent events had impacted on the progress made in taking economic relations even further.

High standards

Minister Samarawickrama commended Germany for establishing a culture of punctuality, precision and high standards of integrity. He added that, on the Sri Lankan side, institutions such as BOI and EDB were making a strong effort to facilitate business and eliminate bottle-necks faced by investors and exporters.

Ambassador Jörn Rohde stated that economic relations should ideally resemble the German autobahns, providing speedy solutions to all issues. Germany welcomed any effort aimed at improving Sri Lankan’s business climate and also the resolution of any issues faced by German SMEs.

He wanted to see a return to the level of tourist arrivals to Sri Lanka, which had declined since the Easter Sunday events.

Minister Samarawickrama reassured the German side, adding that security had been strengthened at the airport and hotels. Furthermore, a tourism promotion campaign will be held in Berlin to address tourists and travel agents and educate them about Sri Lanka. A total of eight leading tourism-generating countries were targeted for a recovery plan. Four tourism road shows will be held in Berlin, Stuttgart and other German cities.

The issues specific to German investors to which solutions were being sought include the registration of disinfectant products under the National Medicine Regulatory Authority (NMRA), VAT refunds for several German Companies, issues relating to the recovery of the tourism industry, issues relating to Cargo handling, monies owed to German Companies, tender procedures and payment of demurrages.
Many of these outstanding matters were resolved, or studied with a view to solution, within a specified timeframe.

Dilip S Samarasingha
Director(Media & Publicity)
Board of Investment of sri lanka

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Sri Lanka  must  industrialise

Sri Lanka must industrialise

Leading economist tells
Sri Lanka’s business leaders

A larger-than-expected crowd turned up at Colombo’s Lakshman Kadirgamar Institute to listen to Sri Lanka’s star economist Dr Howard Nicholas deliver a lecture on “The Current State and Future Directions of the Global and Sri Lankan Economies”. The event, organised by ETIS Lanka, together with George Stuart Capital, Daily FT, and Hardtalk, on 11 July.

An Associate Professor at the Institute of Social Studies (ISS) of Rotterdam’s Erasmus University, Dr Nicholas has wide-ranging teaching experience in business economics and financial markets in a number of countries, especially in Asia. He won the best-teacher award at ISS in every one of the 18 years since its inception.

Born in Colombo’s Slave Island, brought up on an estate in Kalutara district, and educated at St Anthony’s, in Kandy, he moved to the West with his parents at eight years of age. Dr Nicholas followed his parents’ admonition to be Sri Lankan despite his British passport, and returned to the land of his birth in 1987, helping to set up the Institute of Policy Studies, and then moving to the University of Colombo to help set up a post-graduate faculty of economics and to develop post-graduate training in economics.

He has had substantial policy experience in Sri Lanka, having worked closely with the Ministry of Finance and Planning on a number of different projects and being lead author in the 2005 UNDP study Pro-poor macroeconomic policies in Sri Lanka. He returns from time to time to speak on economic trends, this country usually being the first place at which he reveals a new trend.

The following is a report on the part of his talk which focussed on Sri Lanka.

Optimistic

In 1990, optimistic about Sri Lanka’s future under the pro-manufacture economic programme of the then president, Ranasinghe Premadasa, he invested his money in equity in the country, advising everybody else to do the same.
“President Premadasa started this aggressive export-orientated development strategy,” he says, although “A lot of us didn’t like Premadasa, because he was brutal in some ways… We knew that if this continued Sri Lanka would reach developed country status in 10 to 15 years.”

The demise of Premadasa saw an end to the export-led industrialisation strategy, and since then government after government has ignored it, so Dr Nicholas has had no interest in investing in Sri Lanka.

He pooh-pooh’s the theory of comparative advantage, saying it was taught by rich countries to poor countries to get the latter to do what the former wanted them to. The theory posits that if everyone does what they are good at, and exchange goods, then all the parties would benefit and can thus grow. However, he rubbishes it, describing it as riddled with theoretical and empirical flaws. He lambasts the hypocrisy inherent in the theory of free trade, since whenever it suits the advanced countries, they refuse to liberalise trade in areas they consider vital, protecting their market.

Under-performed

He notes that Sri Lanka’s economy has underperformed in comparison to its peers. It has not grossly under-performed, but the system lacks dynamism. This is primarily due to a structural shift in the economy, away from agriculture and industry towards services. Manufacture has been losing its share of industry, as construction has surged ahead. Although there has been a construction boom and financial services growth, the manufacturing sector has been neglected.

However, the construction boom is losing steam. Meanwhile, Sri Lanka’s share of world trade has stagnated, and its share of the global export markets has stagnated. Sri Lanka is losing the global garments and textile export market share. its export engine is losing steam and the government is not granting any concessional facilities to propel growth. Industrial goods have declined in their share of merchandise exports, in comparison to agricultural goods. More importantly, exports’ contribution to the current account balance has declined, and together with the decline in overseas workers’ remittances, the tourism sector has increased in importance. These two sectors are now the two major avenues of foreign exchange earnings.

Tourism is far more dependent on the vagaries of climate and terrorism than the others, and especially on the economic health of the advanced nations whence the tourists come, so the economy is now dependent on an unstable component. The events of Easter Sunday and the disruption caused to the tourism sector, especially brought home the absurdity of a strategy based on a precarious foreign exchange-earning industry, and the lack of diversity in the economy.

Sri Lanka must diversify. The country needs to see a shift towards manufacturing to enhance export dynamism. Manufacturing is at the core of any sustainable growth of an economy. All the global superpowers in history became powerful due to the growth of their manufacturing dominance.

“China has taken over as the world’s largest manufacturer,” Dr Nicholas points out. “It also has the largest retail market. China is driven by massive technological change. We are in the middle of a gigantic technological change. We know Huawei and 5G are between 3 and 5 years of ahead of anyone else in the world. Huawei has 94 % of all the patents on 5G. They can say they don’t want Huawei but they are holding the patents.”

Prospects

No country has ever developed without export-oriented manufacturing and as there is a massive market in the developing world, Sri Lanka should focus on export manufacture-driven economic growth. He also says that, although Singapore is often cited as an example for Sri Lanka to follow, that country has not prospered so much because of trade, but that its economy is driven by manufacturing.

In the short-term, Nicholas predicts weakness in economic growth along with the rest of the world, pressure on reserves and the exchange rate as tourist arrivals fall sharply and world import growth slows, and increasing domestic price level, depending on exchange rate. The extent to which expansionary fiscal policies may be pursued, will be limited by balance of payments constraints.

“Sri Lanka could become one of the beneficiaries of the continuing relocation of production from advanced to developing countries (also away from China),”in the long-term, he says. “The extent to which Sri Lanka can benefit from the relocation away from advanced countries will depend on how successful it is in developing its own manufacturing base and shifting production to higher value-added products in the long run.”

Sri Lanka‘s equity market has performed weakly, and in order to draw in foreign direct investment, the country should be able to point to a thriving manufacturing sector. He cites the example of Vietnam (where he has served as an adviser), which has diversified exports heavily into manufacture. Both Vietnam’s exports and imports have increased rapidly to about 1.2% of global trade. It is able, unlike Sri Lanka, to benefit from the China-US trade dispute, especially in the crucial electrical machinery and mechanical appliances sectors. This is due to the government’s whole-hearted commitment to a strategy of export-based manufacturing.

Savithri Guruge

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Sri Lanka at 16th CIMEF China International Small and Medium Enterprises Fair

Sri Lanka at 16th CIMEF China International Small and Medium Enterprises Fair

China’s retail market is likely to overtake that of the USA by 2021, when it is expected to be worth USD 5.8 trillion, the biggest in the world. Sri Lanka’s participation in Chinese trade fairs is vital to capturing a larger foothold on this fast-growing market.

The Sri Lanka Export Development Board, in co-ordination with the Consulate General of Sri Lanka in Guangzhou, participated in the 16th China International Small and Medium Enterprises Fair (CISMEF) from 24-27 June 2019.

Sri Lanka has participated at every annual CISMEF, since 2014, showcasing and promoting its products in China.
Inaugurated in 2004, CISMEF provides a platform to display, trade, exchange and co-operate with small and medium enterprises at home and abroad to increase understanding, and strengthen co-operation for the common development of trade between China and other countries.

 

Representing prominent economic sectors, including gem and jewellery, tea, spices, handicrafts and coconut products, thirty companies from Sri Lanka participated in the fair.

At the “Promotional Session for Products of Sri Lanka” organised by the CISMEF for Sri Lankan exhibitors to introduce their products to local enterprises, Sri Lankan Consul General Priyangika Dharmasena, in her speech, thanked the organisers for facilitating this segment, giving an opportunity for Sri Lankan companies to have face-to-face interactions with their Chinese counterparts, and bringing in avenues for trade partnerships.

Guangdong Small and Medium Enterprises Bureau Deputy Director General Wang Fuxiu, in her address, gave an explanation of the fair to the participants, also describing Sino-Sri Lanka trade relations.

Deputy Director of the Sri Lanka Export Development Board, D.M.P. Dissanayake and Assistant
Director of the Coconut Development Authority, V. U. Egodawattage conducted two presentations on Sri Lanka’s trade products, trade potential and coconut items.

Several Sri Lankan exhibitors explained to the local buyers the different export sectors in Sri Lanka, as well as describing their own companies. The Matchmaking session assisted the Sri Lankan companies to interact with local companies, also enabling the exhibitors to secure several buyers for their products.

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Transport  history  in the making       LRT project launched in Colombo

Transport history in the making LRT project launched in Colombo

History was in the making just a few days ago at the Cinnamon Grand Hotel, when the Colombo Light Rail project was ceremonially launched. The Light Rail Transit – widely known as LRT – is a project funded by Japan, to the tune of USD 2.2 billion. The project is a collaborative effort between the Megapolis and Western Development Ministry and the Japan International Co-operation Agency (JICA).

The transit will connect Malabe and Colombo Fort with a modern light train service. It links strategically and commercially important locations such as Borella and Battaramulla. The proposed transit follows the centrelines of the present road network through 16 train stations and one depot area. The depot, which will be erected in West Malabe, serves the purpose of maintenance as being well as the train yard.

The LRT will be Sri Lanka’s long-sought strategic and structural solution to shift the country from its current middle-income status to an upper-middle income level. This is a basic initiative launched by the Megapolis and Western Development Ministry to develop the major aspects of transportation.

The Megapolis and Western Development Ministry was introduced to the country’s ruling machinery, as the incumbent government came to power in 2015. The Ministry is tasked with the responsibility of providing a master plan to solve the problem of traffic congestion in the Colombo Metropolitan area by introducing an alternative transport system.

Sri Lanka, a country in which more than 90 % of the population rely on the road network, badly needs an alternative transport system. The past few years witnessed the rapid growth of numbers of motor cars, buses and motorcycles on the road. At least one million people enter Colombo on a daily basis. The usual travel speed remains at 20 km/h during the peak hours. At times, the figure shrinks down to the 10 km/h level.

For instance, a commuter who wishes to reach Battaramulla from Colombo Fort will be able to do so within 20 minutes during the off-peak hours. Yet, this is beyond imagination during peak hours, when the duration of the trip will be at least 40 minutes. As both Colombo Fort and Battaramulla are equally important, owing to the administratively and commercially important buildings located in between, such a delay will have a hazardous effect on the country’s overall economic structure.

This ultimately leads to grave concern about the country’s transportation. The Light Rail Transit, therefore, will be a welcome move.
A railway solution comes in even handier, owing to its congestion-free movement.
The intention of introducing the Light Rail Transit is clear. The transit provides the commuters with a comfortable, safe and reliable mode of public transportation. The proposed LRT route connects crucial stops, such as Colombo Fort, Town Hall, National Hospital, Borella, Rajagiriya, Battaramulla and Malabe. This route provides access to business centres, schools, hospitals and important government offices such as the Department for Registration of Persons and Department of Immigration and Emigration, as well as to transport nodes connected to other important places.

And the best news is yet to be heard. The travel time between Malabe and Fort will be around half an hour. This duration may be relied upon, owing to the traffic-free corridor. The ease of the commute is another facility that the urban citizens can now look forward to. Concurrently, the traffic situation along the LRT route will also change. Private vehicle users will be encouraged to take up this mode of transportation – which will ultimately reduce the congestion. A smaller quantum of private vehicle users means the Western Megapolis will have a city with less air pollution and traffic congestion.

LRT Benefits
1. Eases traffic congestion in Colombo and its surrounding areas
2. Reduces travel time of passengers and commuters.
3. Improves connectivity of strategic locations and transport hubs.
4. Increases accessibility of places along the route
5. Provides a comfortable, reliable and safe alternative mode of public transportation.
6. Enhances air quality by reducing greenhouse gas emissions from the transport sector.

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Energy And Enterprise   Ravi Karunanayake

Energy And Enterprise Ravi Karunanayake

Sri Lanka has an installed electrical power capacity of 4,100 MW, whereas its real requirement, to provide security and continuity of supply should be about 5,500 MW, since consumption grows at the rate of 7-8% per year.

The challenge that the country faces is increasing power supply to match demand, while giving more prominence to renewable energy sources, and at the same time keeping costs to a minimum. The person tasked with solving this problem is the Minister of Power, Energy and Business Development.

“After I took office, roughly five months ago,” says Minister Ravi Karunanayake, “my intention was that I would deal with the professionals, as this is a field that is alien to me – of course business, I knew, but certainly the electricity industry is a different world.”

Least-cost

The policy guiding the installation of new electricity generation plant in Sri Lanka is that of “least-cost generation”, that is that the primary consideration should be low cost of electricity. However, the last installation under this policy was in 2011. Subsequent additions have been supplementary, and generally of higher cost.

“The professionals who guided us,” says the minister, “ensured that one of the first concepts to which we should adhere was the least-cost generation. If you look at it on that basis, the lowest cost that exists in Sri Lanka is hydro. The hydro plant … generate at the rate of about LKR 1.34 upto about LKR 3 [per kWh]. The next available is mini-hydro. Then going on to coal, which has been established as one of the cheapest-cost … roughly, it generates from about LKR 11 to 13. The next available choice is LNG [liquid natural gas]. And then you have the renewables that come in-between. And of course, the most expensive is the thermal diesel and furnace oil, which starts from LKR 21 and goes up to almost LKR 50 or 60.”

He says that, given that he cannot increase household rates, he intends to reduce the difference between the selling price and the generating price to a bare minimum. With the advice of the professionals of the Ceylon Electricity Board [CEB], and guided by the Public Utilities Commission of Sri Lanka [PUCSL], the cabinet decided that the best mix for electricity generation entailed one third each of coal, LNG [liquid natural gas] and renewables.

“Our intention is that we go for renewables, to increase them by 500% in the short run. Of course, it should be economical for the CEB. At the moment, what is happening is that we are buying it at a fairly high rate – in the range of LKR 22-25 – for renewables and we sell it at LKR 16. So this disparity is what we are trying to reduce. At the moment, owing to world prices of renewables, for solar and wind, reducing 20-25%, we are also making it that the CEB cannot say “no” to renewables. So we are dealing with a feed-in tariff so that you don’t have to go through a one or two year, laborious process; you basically bring an environmentally-friendly project and, within two weeks, you will get your licence to produce power. This is the way we are heading: renewables to be brought in a mix, of one third at the moment and, certainly, by 2050 we want to have 50-60% of our total generation on renewables.”

In the last four years, Sri Lanka did not get more than half a dozen renewable projects, which Karunanayake attributes to “the bureaucratic process, ably assisted by a dysfunctional political system.” However, he says, the new government, now in place. means to ensure that 400-500 MW of power is installed this year and next year, making certain the fulfilment of the sustainable goals for 2020, and that at least 40% of generation is renewable by 2030.

Local enterprise

Karunanayake explains his position on rooftop solar generation, pointing out that owners of rooftops generating excess power, sold it to the CEB at up to LKR 24 per kWh. The CEB sold this to consumers at LKR 16 per kWh, making a loss on the transaction of up to LKR 8. Taking into account the reduction in the cost of installations of up to 30%, he decided to pitch the power buying tariff at an affordable rate for the CEB.

“There was a huge outcry about this,” he says, “…this went to a hell of a fury… There has been no agreement which we stopped or which we varied, which has been signed. They are valid for 20 years. But new ones that come in the future, proactively, we will basically look at a firm rate which is levellised for 20 years, because when you sign an agreement, you can’t say tomorrow ‘I’m sorry the solar rates have come down.’”

He advocates an optimal rate, affordable to the CEB, which also encourages renewables, as well as helping the cause of the local entrepreneur. He believes firmly in a “Sri Lankan approach” to business, which he extends to the field of electricity generation by renewables. Previously, the policy on renewables centred the issuance of saleable permits. There had been a lucrative trade in permits, but very little in the way of construction.

“A lot of foreigners come and say ‘I want to put up solar’ or ‘put up wind’, but my polite response to them, after discussing with the professionals in the CEB, the secretary and all concerned, is ‘bring your finances and tie up with a Sri Lankan.’ I want to ensure that the renewables are, if possible, 100% Sri Lankan. The reason is the sun, the wind and the water, which provide a god-given opportunity.”
He invites entrepreneurs to come forward with proposals for 5 MW or less, promising that every possible application would be be pursued. For wind-power or dendro-power (which he describes as “another wonderful concept”) he promises to pursue proposals of up to 10MW as soon as possible. He does admit that grid connectivity is an issue, but that he would certainly encourage a 100% grid capacity connection, since firm generation is only about 30% of the renewables.

“I think we are going through a sea-change in the power and energy industry, and I call upon every businessman, please come in without cursing the dark, ensure that you come and light that candle, which will help us to come out of this problem. When I say ‘light the candle’, it is to come and search for new opportunities. There are a lot of problems. It is an industry which is dictated to by a few, for the benefit of the few, at the expense of the many, and this is what I want to change. The best transparency process is to ensure that generation is brought as close as possible to the selling price, as well as to ensure that there is a competitive process.”

Looking forward

The minister is optimistic about the future. “I really think you should have a power economy. When I say ‘power economy’, that is you should have a surplus of power which will help people to come in. Now, my vision has been to ensure zero power cuts. To ensure that a household will be connected in 24 hours, and a commercial establishment to be connected in two weeks. When you have a power economy, your security level should today it is 10%, we have increased it to 25%. And a more merchants plant is there, not CEB generated, but the IPP model.”
However, he has reservations about the bureaucracy entrusted with governance of the power sector.

Karunanayake acknowledges that the SAARC region is growing rapidly, and that India plays a pivotal role within it – which he welcomes. He points out that India has been invited to invest in the Sampur coal-fuelled power plant, the LNG-fuelled power plant, and up-coming solar projects, “just to show that they are not only a close neighbour, not only a friendly neighbour, but also a neighbour that can have economic ties” and that during his tenure as trade minister that Sri Lanka developed the free trade agreement with India.

“And we are looking at a SAARC grid connection, which means that we can sell and buy from a SAARC grid, routed through the Indian thing under the sea, which will help us to ensure that we can exchange power generation from here and also to get power generation from SAARC, especially India, and balance the grid.”

Going overseas

He also posits that, while the CEB has a lot of professionalism, it is a massive operation – possibly the largest company in Sri Lanka – “layers of complacency” have set in. He thinks it should become a proactive entity, thinking of the future as yet unborn and set to carve out a niche in meeting a hitherto unserved market need.

“We need to take our professionalism overseas. I must compliment, while being in the industry, a company that is under CEB – 63% under CEB, which is LTL [Lanka Transformers Ltd] which has gone overseas. Now if a subsidiary under CEB can go overseas why has the CEB not gone overseas? They have not been encouraged, they have not been led, nor have they been shown the way. My intention is that they go, take the advantage of Maldives, Bangladesh, Myanmar and seize the foreign opportunities that are there. Within the next 2-3 months I want to see the first export order out of Sri Lanka into the region, and also to have encouragement of CEB investing overseas, which will help us to reduce the generating costs and improve the overall balance sheet. I think as a trademark, CEB has one of the best product services.”

He looks forward to engineers, no longer operating alone in their own compartment, co-operating with accountants, intertwining financial ability and engineering skills, to ensure that the CEB is on the move.
“This is why I say we have a lot of lost opportunities,” he concludes. “It is lack of vision, lack of drive, lack of sense of urgency, and this is where the problem is.”

                                                                                                                                               Vinod Moonesinghe

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Islamic State  in Sri Lanka

Islamic State in Sri Lanka

Following the Easter Sunday bombings in Colombo, the Government of Sri Lanka banned three Islamist organisations, the National Thowheed Jama’ath (NTJ) the Jamma’athe Milla’athe Ibrahim (JMI) and the Willayath As Seylani (WAS).  The bombings targeted Christian churches and top-end tourist hotels, killing at least 253 people.

The authorities believe the JMI and NTJ are separate organisations which came together to carry out the attacks. The name of the JMI means something like “The organisation of the creed of Ibrahim”, while the Arabic name of the NTJ – Jamā‘at al-Tawhīd al-Watanīyah (meaning “National Monotheism Organisation”), is similar to Jamā‘at al-Tawhīd wa-al-Jihād (“Organisation of Monotheism and Holy War”), the name of the militant group known today as Daesh (al-Dawlah al-Islamīyah, the Islamic State). “Willayath As Seylani” refers to the “Province of Ceylon”, as a a constituent part of the Daesh “Caliphate”; similarly, the terrorist organisation better known as Boko Haram, when part of Daesh called itself Wilayat Garb Ifriqiya, meaning “West African Province.

The government said it was investigating foreign involvement in the outrage. Two days after the bombings, Daesh claimed responsibility through its Amaq news agency, showing a video-recording of members of their Sri Lankan faction swearing allegiance to Daesh leader Abu Bakr al-Baghdadi. The venue of the video-recording turned out to be hideout of the group in the Bolivarian Village neighbourhood of Sainthamaruthu, a town in Sri Lanka’s Eastern Province.

Noms de guerre

The video identified eight suicide bombers by noms de guerre, giving those of the attackers of the three city-centre luxury hotels as Abu Obeidah, Abu Baraa and Abu Mukhtar. Police identified the only person in the Daesh video with face uncovered, Mohammed Hashim Mohammed Zahran (Abu Obeidah) as dying at the Shangri La Hotel, but doubts surfaced later – until DNA tests confirmed the identification. Initially, the authorities considered Zahran the leader of the organisation, but now consider he was just leader of the NTJ. Another Maulavi (religious leader) at present in hiding overseas, may possibly be the true leader of the consolidated organisation – the WAS.

Another attacker, Mohammed Ibrahim Infaaz Ahmed also blew himself up at the Shangri La, while his brother, Mohammed Ibrahim Mohammed Ilham Ahmed, perpetrated the attack on the Cinnamon Grand. One of the brothers probably led the JMI, “Ibrahim” being their family name.

Yet another attacker, Abdul Lathief Jameel Mohammed, failed to detonate a suicide bomb at the luxury Taj Samudra hotel, but later succeeded in so doing at a low-end motel in the Dehiwela suburb. Ilham’s widow blew herself up when police searched the family home in the Dematagoda suburb.

A Kattankudy resident, Mohammed Nazar Mohammed Azad, blew himself up at the Zion Church, a charismatic Christian place of worship.

The two Ibrahim brothers and Lathief Jameel came from wealthy backgrounds, the former being sons of millionaire, Mohammed Ibrahim; the latter the scion of a tea exporting family. The Police arrested Mohammed Ibrahim, who runs leading spice trading company Ishana Exports, and three of his sons – one of whom, Mohammed Ibrahim Mohammed Ifran Ahmad, had a German-made air rifle and two swords in his possession.

How did people from such privileged backgrounds get involved in an extremist suicide-oriented militant group? Reports from Britain said the war in Iraq radicalised Jameel, while studying aeronautical engineering, in the UK and Australia, where he seems to have made contact with Daesh-linked militants, such as British Islamist preacher Anjem Choudary. He had attempted to go to Syria to join Daesh in 2014, but only got as far as Turkey. In 2015, the death in Raqqa of a school principal, Mohammed Muhsin Nilam, the first Sri Lankan to join Daesh influenced many of the would-be suicide bombers.

The authorities think Jameel had provided the link between Daesh and the Sri Lankan militants. He may have motivated the Ibrahim brothers.  However, the NTJ had a far longer history, which is part of the narrative of Sri Lanka’s Islamic revival.

Muslim transformation

Muslim traders and healers began arriving in Sri Lanka within centuries of the Prophet Mohammed’s demise. Oppression by the Portuguese caused them to flee into the hinterland. By the mid-19th century, the Muslim community had evolved into an ethno-religious grouping with forms of worship congruent with those of the Buddhists and Hindus communities with which it co-existed.

At this point, religious teachers from Yemen began to re-introduce knowledge of Arabic, which the community had lost. The exile by the British of the Egyptian revolutionary Orabi Pasha and his entourage to Sri Lanka accelerated the revival.

However, Muslims retained their traditional, Sufist forms of worship, including through music and dance, and venerated the Prophet and the graves of saints. Their tolerant belief system included faith in talismans, magic spells and astrology, and the acceptance of Buddhist and Hindu folk religion. They lacked a dress code, their garments resembling those of their compatriots – except that a man might wear a skull cap on Friday and women might cover their heads with the end of their sarees.

The rise the prosperity of the Middle Eastern Muslim states following the mid-1970s petroleum boom caused millions of Sri Lankans, including several hundred thousand Muslims, to migrate thence for employment. They found themselves looked down upon as “bad Muslims” by many of their co-religionists in these countries, who followed far stricter rules. This coincided with increasing numbers of Muslims attending school, and finding a lack of teachers of Islam.

Wahhabi institutions from the Middle East filled this hiatus, providing education and social services, especially in the Muslim-majority regions of the Eastern Province. Non-governmental organisations such as the Saudi-funded Centre for Islamic Guidance, came up; while young men began receiving scholarships to religious universities in Saudi Arabia and Egypt, returning fired up with Wahhabi zeal.

The town of Kattankudy, 10 km south of Batticaloa, in the Eastern Province lay at the epicentre of the transformation of the Muslims. With a population of 50,000 within its square mile (2.56 km2), it has the highest density of population in Sri Lanka. It has also the highest density of mosques: over 60. Quite apart from its Muslim identity, the town has a deliberately designed Middle Eastern ambience. An imposing Arabian-style gate, with welcoming inscriptions in Sinhala, Tamil, English and Arabic, greets the visitor; beyond which a line of date palms (not native to the island) adorns the centre of the main thoroughfare. It stands witness to the Arabisation of the Muslims who, 150 years ago, could not read Arabic.

The authorities think Jameel had provided the link between Daesh and the Sri Lankan militants. He may have motivated the Ibrahim brothers.  However, the NTJ had a far longer history, which is part of the narrative of Sri Lanka’s Islamic revival.

Muslim transformation

Muslim traders and healers began arriving in Sri Lanka within centuries of the Prophet Mohammed’s demise. Oppression by the Portuguese caused them to flee into the hinterland. By the mid-19th century, the Muslim community had evolved into an ethno-religious grouping with forms of worship congruent with those of the Buddhists and Hindus communities with which it co-existed.

At this point, religious teachers from Yemen began to re-introduce knowledge of Arabic, which the community had lost. The exile by the British of the Egyptian revolutionary Orabi Pasha and his entourage to Sri Lanka accelerated the revival.

However, Muslims retained their traditional, Sufist forms of worship, including through music and dance, and venerated the Prophet and the graves of saints. Their tolerant belief system included faith in talismans, magic spells and astrology, and the acceptance of Buddhist and Hindu folk religion. They lacked a dress code, their garments resembling those of their compatriots – except that a man might wear a skull cap on Friday and women might cover their heads with the end of their sarees.

The rise the prosperity of the Middle Eastern Muslim states following the mid-1970s petroleum boom caused millions of Sri Lankans, including several hundred thousand Muslims, to migrate thence for employment. They found themselves looked down upon as “bad Muslims” by many of their co-religionists in these countries, who followed far stricter rules. This coincided with increasing numbers of Muslims attending school, and finding a lack of teachers of Islam.

Wahhabi institutions from the Middle East filled this hiatus, providing education and social services, especially in the Muslim-majority regions of the Eastern Province. Non-governmental organisations such as the Saudi-funded Centre for Islamic Guidance, came up; while young men began receiving scholarships to religious universities in Saudi Arabia and Egypt, returning fired up with Wahhabi zeal.

The town of Kattankudy, 10 km south of Batticaloa, in the Eastern Province lay at the epicentre of the transformation of the Muslims. With a population of 50,000 within its square mile (2.56 km2), it has the highest density of population in Sri Lanka. It has also the highest density of mosques: over 60. Quite apart from its Muslim identity, the town has a deliberately designed Middle Eastern ambience. An imposing Arabian-style gate, with welcoming inscriptions in Sinhala, Tamil, English and Arabic, greets the visitor; beyond which a line of date palms (not native to the island) adorns the centre of the main thoroughfare. It stands witness to the Arabisation of the Muslims who, 150 years ago, could not read Arabic.

 

The authorities think Jameel had provided the link between Daesh and the Sri Lankan militants. He may have motivated the Ibrahim brothers.  However, the NTJ had a far longer history, which is part of the narrative of Sri Lanka’s Islamic revival.

Wahhabism

Aid to these areas, especially after the Boxing Day Tsunami of 2004, also came from secular states, such as Iraq and Libya, or even from non-Muslim states such as Venezuela – evidenced by rebuilt townships such as Saddam Hussein Village and Bolivarian Village – but Wahhabi funds swamped this.

Arising between 1200 and 1800, Wahhabism seeks to “purify” Islam through its own interpretation of the Quran and the Hadith, the Muslim scriptures. It rejects the display of human or animal images, celebrating Milad ud Nabi (the Prophet’s Birthday), praying at graves, giving alms in the name of dead relatives, music and dance, people of different gender mixing socially, and non-religious cultural practices and beliefs adopted from other communities. It also opposes as heresy traditional Sufism, which denies the duality of men and women, or self and god.

The Wahhabi organisations which entered Sri Lanka brought with them not only funds, but also the religious and political ideology of its donors. The Sri Lankan Muslim way of life changed as religious fundamentalism took hold. This manifested itself in the adoption of Arab attire, including the Hijab, Niqab and Burka, which began to spread in the 1980s.

Wahhabis began to attack art, science, music, cinema, drama and even sports. The country’s history and culture, of which the Muslim community had been integral, came to be viewed as somehow “alien”.  Wahhabis opposed the annual festivals commemorating saints, at so-called Auliya mosques (which contain tombs of saints) such as the Dawatagaha mosque in Colombo, Kechchimalai mosque in Beruwela and Alupotha mosque in Passara. They accused other Muslims, particular Sufis, of apostasy against Thawheed, leading to clashes.

A political change also occurred, with the emergence of specifically Islamic political parties, identifying themselves with Islamic fundamentalism. Although Muslims had, traditionally, followed the concept of Thowheed (Monotheism) they had not hitherto felt the need to name their organisations thus. However, now such organisations proliferated. They received an impetus from the attacks on Muslims by the Liberation Tigers of Tamil Eelam.

Militancy rises

In August 1990, militants belonging to the Liberation Tigers of Tamil Eelam (LTTE) massacred worshippers at prayer in four mosques in Kattankudy, killing 147. A week later, the LTTE killed over a hundred Muslim villagers in their sleep in Eravur, 10 km north of Batticaloa. The government responded by providing weapons to Muslim volunteers for self-defence against future attacks. In the early 2000s, a clash broke out between the mainstream LTTE and its “Karuna faction”, the latter abandoning their weapons in the hands of Muslim groups.

Following the end of Sri Lanka’s three decades of separatist conflict, newspapers reported the desertion of Muslim Home Guards, with their weapons to Thawheed “Jihadi” groups. The Saudi Arabian embassy in Colombo denied that their government had granted support to an influx of Wahhabi preachers and activists from overseas, but conceded that some wealthy people had been giving financial support to Sri Lankan religious groups.

The combination of weapons with extreme radicalisation made for a toxic environment. In May 1996, suspected Wahhabi extremists set fire to a Sufi meditation centre in Kattankudy, and attacked Sufi leaders with firearms and grenades. In October 2004, a mob of 500 Wahhabi extremists, declaring a Jihad (holy war) once again set fire to the Sufi meditation centre, shooting one Sufi dead and wounding another.

In 2006, the death of reformist Sufi cleric led to a hartal (work stoppage) by Thowheed organisations, opposing his burial with Islamic rites, closing schools, offices, banks and businesses. A Thowheed mob looted and burnt some shops and banks. Later that year, a Thowheed mob destroyed the minaret of the meditation centre, disinterred the cleric’s body and razed over a hundred Sufi houses to the ground.

In 2009 Thawheed activists destroyed a 150-year old shrine in Ukuwela, some 25 km from Kandy, the hill capital. In July that year, a clash between Sufis from a traditional mosque and Wahhabis from a new mosque in Beruwela, on the south-west coast, caused two deaths and injured 40.

Thowheed Jama’ath

Thowheed activists belonged to several organisations. The Sri Lanka Thowheed Jama’ath (SLTJ) had connections with the Tamil Nadu Thowheed Jama’ath. Members of the SLTJ, dissatisfied at the organisation’s Tamil Nadu links, split off to form the Ceylon Thowheed Jama’ath.

The NTJ sprang out of this milieu, in which rival preachers debated one another, the disputes sometimes breaking out into violence. According to Muheed Jeeran, who claims to have been a close friend of Zahran, the latter hailed from Kattankudy, and had been known to the Criminal Investigations Department (CID) as a mischief-maker. He studied at various Madrasas (Islamic schools) in Kattankudy, becoming a moulavi (Islamic teacher), along with his brother, Zainee Hashim.

In the last stages of his madrasa education, Zahran began finding fault with his teachers, arguing with them and turning the students away from them. He was expelled, but started his own Madrasa, and his fluency in Arabic and his debating ability made him popular among young men, so he drew large crowds. According to local Sufis, he preached that Islam should be the only religion and that Muslims should not pledge allegiance to Sri Lanka.

He became a popular preacher at Thowheed congregations around the country, and met his wife Fathima Haadiya in Kurunegala during one of these peregrinations. He married her in 2010, and she bore him a son and a daughter.

Zahran initially worked with the SLTJ but, although he preached Thowheed, his views went beyond its vision. He split from it about 2011 or 2012, and started the NTJ, building a new mosque, apparently with overseas funding. He began extolling the virtues of Daesh.

In 2017, Zahran staged a public meeting in front of a Sufi mosque, his followers having brought clubs and swords to the venue, and hidden them. A clash began and Zahran inflicted considerable damage. The populace, enraged at his behaviour, demonstrated against him. The police hunted him, but he fled.

The villagers thought he had fled to Maldives, but he apparently sought refuge with his wife’s family in Kurunegala. Later, he travelled extensively among the Thowheed congregations of Tamil Nadu.

In June that year, he began posting videos in Tamil, mainly covering the actions of Daesh.

About 2018, he established a new organisation, distinct from the NTJ, specifically to carry out terrorist attacks in the manner of Daesh, which appears to have done the military planning and provided monetary and technical support. The government has estimated the value of the organisation’s assets at LKR 7 bn (USD 40 m) plus LKR 140 m (USD 800,000) in cash. A further 41 people suspected of links with the terrorists have a total of LKR 134 m (USD 760,000)  in bank accounts, which the government has frozen.

In November 2018, the group attacked and killed two policemen in the Batticaloa suburb of Vavunathivu, taking their weapons and hiding them in a secret base on a 30 ha coconut plantation in Vanathavillu, some 20 km from the Western town of Puttalam. The authorities suspected former members of the LTTE, several of whom they took into custody.

Last December, the group defaced several Buddha statues in Mawanella, 26 km west of Kandy. Investigations led to the discovery of the secret base in Vanathavillu, with a cache of over 100 kgs of explosives and detonators. However, investigations did not proceed further.

Sainthamaruthu

Zahran’s sister Hashim Madaniya told the Colombo Daily Mirror that his wife and children, his father Hayath Mohammed Hashim and his mother, his brothers Rilwan Hashim and Zainee Hashim, and his other sister, Yasira, went missing shortly before the Easter Sunday attacks. The police arrested her later, in possession of LKR 2 m given her by Zahran.

Following the attacks, on 26 April, a tip-off led police to to a hideout in Sainthamaruthu, 37 km south of Kattankudy. A three-hour gun battle ensued, between men of Zahran’s organisation and the military, ending with an explosion – the result of a suicide bomb. The soldiers found 15 dead bodies inside, which the authorities say are those of Mohammed Hashim and his sons Rilwana and Zainee, their respective wives, six offspring of Zahran and his two brothers, and three other young men. A woman and her child survived, injured, and turned out to be Zahran’s spouse Fathima Haadiya and their daughter.

Before they died, Mohammed Hashim and his two sons made a video, which they released on the internet. Mohammed Hashim calls the video “the final call”. Rilwan, seated on the floor between the others, and wearing an explosive belt around his stomach, calls their struggle a jihad (holy war) saying “the infidel dogs have closed in on us. We vow to teach a lesson to those who would destroy us. The right lesson. Very soon.” Zainee, holding a T-56 assault rifle, with his small son seated on his lap, says “the killings will not stop here, even if we are destroyed… you can be sure you will face more of these attacks in future.” The video ends with the three shouting “Allahu Akbar” (“God is great”), against the background of the crying of their children.

Through its Amaq news agency, Daesh claimed responsibility for the gun battle and explosions, saying that “Abu Hammad, Abu Sufyan and Abu al-Qa’qa” had “opened fire with automatic weapons” and “after exhausting their ammunition, detonated their explosive belts.”   The release carried a photograph of Rilwan and Zainee with a T-56 assault rifle. It also claimed, falsely, that 17 security forces personnel had died in the confrontation.

The authorities suspect that Zahran’s sister Yasira, her husband and son, with some others, escaped in a car just before the confrontation.  Although some 90 suspects have been taken into custody, the authorities suspect that the terrorist organisations had up to 150 members, so at least 50 more terrorists may remain at large.

Breakthrough?

On 27 April, the authorities arrested Aadhil Ameez, a software engineer for Massachusetts-based IT company Virtusa, on suspicion of providing logistical and technical support to the suicide bombers. According to reports, Aadhil, who holds a Masters’ degree in Computer Science from Kingston University, had been under surveillance by Indian intelligence agencies since 2016, having been in communication with suspected Daesh terrorists.

Sri Lankan authorities reportedly suspect Aadhil of being the link between the NTJ and the JMI. The groups had communicated via the “dark net”, the encrypted part of the internet not open to public view, and by the WhatsApp messaging and voice-over internet service provider.

The authorities have not revealed how far this arrest helped them. However, the security forces have uncovered seven training camps, spread out over Puttalam, Hambantota, Nuwara Eliya, Kandy and Batticaloa districts. More importantly, they discovered 17 safe houses, concentrated in the Western Province, North-Western Province, and Eastern Province.

They appear recently to have made a breakthrough: on 20 May the State Intelligence Service (SIS) arrested five suspected senior NTJ members, in Amparai, among them a man identified as “Kalmunai Siham” whom, they say, acted as a trusted lieutenant to Zahran. Five more were arrested in Horowpathana, in the Anuradhapura District four days later. More arrests can now be expected.

According to Defence and Media State (i.e. assistant) Minister Ruwan Wijewardena, the majority of the members of the Thowheed terrorist organisation had been arrested, and the rest would be rounded up soon.

Indeed, since the Sainthamaruthu confrontation, no further military activity has been observed from Thowheed groups, which may be a sign that they have retreated, having carried out their essentially disruptive mission on behalf of Daesh. The heightened level of security following the Easter Sunday attacks makes it unlikely that the groups have the ability to mount effective attacks for some time to come.

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Rebuilding  after  the  attacks

Rebuilding after the attacks

Government wheels out proposals to jump-start growth

In an effort to boost economic growth, the Governor of the Central Bank of Sri Lanka, Dr Indrajit Coomaraswamy says monetary policy is to be relaxed, while Finance Minister Mangala Samaraweera has announced new loan schemes to benefit small and medium enterprises (SMEs). The impact on the economy of the Easter Sunday Attacks proved as devastating as the bombs had been against church-goers and overseas visitors.

The economy had been mired in low growth for some time. Dr Coomaraswamy says that he expected the economy to have grown faster during the first quarter of 2019, following the modest growth of 2018, because of better-performing agriculture and industry sectors. Inflation had picked up to 4.5 % in April after falling to 2.8 % in December, partly due to currency depreciation.

External debt at the end of 2018 is an estimated 59% of gross domestic product (GDP), the ratio of external debt to exports, at 258%, is high. According to the International Monetary Fund (IMF) public debt as a whole had risen by end 2018 to an estimated 90% of GDP at the end-2018, and rather higher than the median average for emerging economies

Strained economy

The pillars that have supported the Sri Lankan economy have been worker remittances from overseas, tourism, the small and medium enterprise (SME) sector, catering mainly to the internal market, foreign direct investment, and loans from overseas – long-term loans and short-term government bonds.

The country’s biggest single foreign exchange earner, worker remittances from overseas, peaked at USD 7.2 bn in 2017, and dropped thereafter because of lower petroleum prices, which have affected the West Asian job market. In the first four months of 2019, they dropped 13.8% to USD 2.17 bn from USD 2.51 bn last year.

The consequent lack of liquidity hit the SME sector as well as retail trade. This showed in low sales turnover during the Sinhala and Tamil New Year season in March-April. Credit card holders faced a veritable barrage of offers of extended credit, interest free instalment plans of up to 5 years, and discounts of up to 50% on purchases. Retail outlets sent out text messages to consumers at a similar frenetic rate.

Meanwhile, the collapse of the Rupee in mid-2018 led to the Central Bank selling off its foreign exchange reserves to shore up the currency, putting the Central Bank’s plan for recovery in tatters. The strain in the economy found reflection in the Colombo Stock Exchange (CSE) All Share Price Index (ASPI), which started the year at the 6060 mark, but dropped steadily to the 5500 level by the end of March. It recovered slightly over the New Year season, and hovered about the 5600 mark.

Precipitate

The effect of the 21 May bomb attacks on the already-distressed economy proved shattering. The tourism sector, which is vital to the economy, accounting for 5% of the GDP, suffered first, as foreigner visitors left in droves, and travellers cancelled flight and hotel bookings in fear of attacks. Some hotels slashed their rates, whilst some of the smaller outfits closed down completely.

However, other sectors also felt the impact severely. People did not go to work for a fortnight, for fear of further bomb attacks, which affected the economy further. Financial institutions began investing heavily in government securities, consolidating against future setbacks.

The share market’s reaction proved precipitate. The market opened after the Easter break on 23 May, the Tuesday following the attacks and the ASPI lost over 200 points during the course of the day’s trading, bottoming out below 5200 by 15 May.

Unexpectedly, a few overseas buyers became active as the market plunged, apparently in hope of picking up bargains. This found reflection in a recovery in the ASPI to above the 5300 level by end May, although on very low turnover.

However, this did not prove sufficient to balance the huge outflow of foreign funds. The total net outflow to date this year rose to LKR 5.8 bn worth of equities. Government securities were worse, with net outflow rising to LKR 21.2 bn.

Borrowing

The Governor of the Central Bank hopes to improve the foreign exchange shortage by extensive borrowing. He said that the Cabinet approved borrowing USD 1.5 bn from international markets to cover cash flow requirements, plus a further USD 2 bn to meet debt obligations.

He expects to raise up to USD 1 bn through a World Bank-guaranteed dollar bond and the remainder through a Samurai bond issue guaranteed by the Japan Bank for International Cooperation (JBIC) and a Panda bond issue guaranteed by the Bank of China, and possibly on a term loan. In his opinion, the LKR will remain stable if the global environment is favourable and if the US Federal Reserve continues to pause ire rate-hiking cycle.

Meanwhile the IMF has agreed to release a further US$ 164 m tranche of its Extended Fund Facility (EFF). In March, it had already extended the USD 1.5 bn facility by a further month. According to a review report it released in mid-May, fiscal consolidation envisaged under the EFF-supported programme is predicted to reduce the public debt/GDP ratio from 90% in 2018 to 75.4% by 2024.

“The external debt dynamics are very challenging,” Dr Coomaraswamy told a business forum at the end of May. “The question is, do we have adequate foreign reserves? Currently, reserves are at USD 7.5 bn, and pre-Easter Sunday attacks projections for the year being at USD 8.2 billion predicated us to borrow USD 2 bn from foreign markets.”

Monetary relaxation

The Governor says that the attacks affected the confidence and sentiments of economic agents, in particular in tourism-related activities. “Although normality is gradually returning to economic activity, a lower than initially projected growth could be anticipated during 2019.”

In order to boost the economy, the Monetary Board of the Central Bank decided to relax monetary policy.

“The Central Bank has decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 50 basis points to 7.5 % and 8.5 % respectively. Statutory Reserve Ratio (SRR) remains unchanged at 5.0 %,” Dr Coomaraswamy says. The SDFR is the rate at which the Central Bank pays for deposits from commercial banks, while the SLFR is the rate of interest at which it lends to them.

He anticipates that the reduction in policy interest rates will bring about a rapid, substantial reduction in market lending rates in order to boost economic growth and stabilise inflation at mid-single digit levels. However, inflation will remain in the 4-6% region and growth rates are not expected to increase.

Growth has deserted the heady heights it reached in the early 2010s. In 2017 it stood at 3.4%, dropping to 3.2% the following year – the lowest level since 2001, when separatist terrorists attacked Colombo Airport. This year, the Central Bank estimated initially that growth would reach 4.2%. However, this had to be revised sharply downwards after the attacks.

“Growth will be lower this year,” says the Governor. “It will certainly be below 3 % with tourism, a key sector of the economy having taken a hit from the recent attacks and its chain effects on sectors linked to the tourism industry.”

Opinion surveys of business analysts have found negative sentiment about the country’s economic prospects, with most anticipating a growth rate of only 2.5%. They found projections of second-quarter growth negative.

Loan schemes

In the meantime, the Cabinet approved a proposal submitted by Finance Minister Samaraweera to broaden the subsidised-interest“Enterprise Sri Lanka” loan scheme.

Enterprise Sri Lanka aims to create 100,000 entrepreneurs within a year, using 17 relief interest and three reimbursable loans schemes, as well as two non-monetary programmes. So far, the government says that nearly LKR 81 m have been approved as relief interest and LKR 55 granted as loans.

Samaraweera proposed eight new loan schemes. The “Ran Aswenna” agricultural loan scheme has been extended to include tourism, enabling loans up to LKR 250 m to be obtained for purchasing equipment such as motor boats for water-based tourism. The “Riya Shakthi” scheme for purchasing buses has been extended to cover school van operators at district-level.

The Medium Income Housing Loan Scheme has been replaced with a loan scheme entitled “Home Sweet Home”, which raises the maximum loan figure from LKR 5 m to LKR 10 m, at 6% interest over 25 years, with 15 years’ interest relief. The “Sihina Maliga” loan scheme, which provides Sri Lankan workers abroad to build houses in Sri Lanka, has been modified to provide loans in stages, to adapt to the short-term employment contracts into which they enter.

Borrowers under the “City Ride” loan scheme for buying buses, have been granted a 5-year grace period. The maximum loan amount for purchasing mini-taxis and electric trishaws has been increased by LKR 250,000 to LKR 2.25 m.

The “Mage Anagathaya” loan scheme has been introduced, to provide students who fail to get into state universities, a loan of LKR 1.1 at a concessionary interest rate, in order to attend private universities.

The main loan scheme under Enterprise Sri Lanka is the “Jaya Isura” scheme, intended to create entrepreneurs, which provides loans for businesses related agriculture, fisheries, ornamental fisheries, livestock, floriculture, horticulture, light engineering, printing, tourism, handicrafts, apparel, information technology, manufacturing industry and renewable energy sectors, for innovation and expansion.

 

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Rebuilding the tourism sector

Rebuilding the tourism sector

President says Sri Lanka is safe for visitors

The Easter Sunday Bomb Attacks, which left 42 overseas visitors dead and a further 37 injured, impacted Sri Lanka’s tourism sector immensely. Apart from early departures by visitors already in Sri Lanka and cancellations by those expecting to come, some 37 travel advisories discouraging visitors are likely to impact the sector’s short-term prospects.

“Though the travel agents are keen to send tourists to Sri Lanka,” says Sri Lanka Tourism Promotion Bureau (SLTPB) chair Kishu Gomes, “these advisories are holding them back and we would soon contact local missions on this subject.”

Only 1,700 tourists visit Sri Lanka per day now, compared to 4,600 per day before the Easter Sunday attacks.  Gomes expects the year to finish with 30% fewer tourist arrivals than last year (when 2.3 million visited the island) and only USD 3 billion in revenue, compared to USD 4.5 bn in 2018.

According to Finance Minister Mangala Samaraweera, cancellations could cost the sector USD 1.5 bn this year. The Governor of the Central Bank of Sri Lanka, Dr Indrajith Coomaraswamy, expects earnings from the tourism industry to decrease considerably from the projected USD 5 bn this year.

“The low earnings will be triggered by the sharp drop in the number of tourist arrivals in the coming months,” he says. “The tourism sector is clearly to take a hit… We need to be confident the security forces are doing a good job.”

Gomes explains that whenever a terrorist attack takes place, the tourism market in the country concerned takes an average of 13 months to recover. However, he hopes it will be sooner in Sri Lanka. He admits that a considerable sum of money will need to be invested in global public relations.

“We will be spending around LKR  464 million on the PR campaign that will go on for around one and half months. The campaign will be run by a reputable global PR company,” he says.

Meanwhile, tourism industry sources point out that the 500,000 jobs in the sector depend on swift government action. Additionally, they say, the chronic labour shortage the industry faces will intensify as more employees seek work overseas because of lower service charge receipts due to fewer tourists. Hotel occupancy rates have fallen by over 70% since Easter. They urge the government to ensure security by investing more in defence infrastructure, state-of-the-art technology and superior intelligence systems.

President Maithripala Sirisena says that terrorist violence is not a purely Sri Lankan issue, but part of the problem of “global terrorism”. He points out that other countries who are fighting against terrorists have sent intelligence experts voluntarily to Sri Lanka, who now act in co-operation with the indigenous intelligence services.

The President seems assured that terrorist attacks can be prevented. He expresses confidence in the country’s security forces and says they are tackling the terrorist threat island-wide, and carrying out missions to eradicate it. He emphasises that normal activities are going on and that nobody should have any unnecessary fears.

“The country is in a safe position right now,” he said in an interview with the Associated Press. “Our intelligence divisions have identified how many terrorists are there and 99 % of them have been arrested. One or two may have been left and they too will be arrested.”

The President says the government is prepared to provide a security programme for businesses, if the need should arise. He pledges the fullest assistance for business recovery.  He has appointed a cabinet sub-committee to inquire into the issue and recommend steps to further the recovery of the sector. He says that the government is taking action to provide relief and monetary aid more flexibly.

Meanwhile, the Cabinet approved a “relief package” to strengthen the tourism sector.

State Minister for Finance Eran Wickramaratne revealed that the package consists of:

(a)   A moratorium until 31 March 2020 on both capital and interest payments granted to the tourism sector as of 18 April 2019; dues in the period being convertible into concessionary interest term loans, recoverable after July 2020.

(b)   Tax concessions, including slashing Value Added Tax (VAT)  on hotels and tour operators, from 15 % to 5 % from 1 April 2019 to 31 March 2020; and duty free imports of security equipment such as handled metal detectors, walk-through metal detectors, baggage x-ray inspection equipment and vehicle scanners.

(c)    Working capital loans under the “Enterprise Sri Lanka” programme, with two-year repayment and a 3.4% interest rate, subsidised 75% by the government until 31 March 2020.

Wickramaratne revealed that the Enterprise Sri Lanka loan scheme had released LKR 1,514 m (USD 8.6 m) for the tourism sector. He said loans would be considered on a case-by-case basis for the moratorium.

On 30 May, Finance Minister Samaraweera announced a new loan scheme under Enterprise Sri Lanka, to assist the recovery of informal tourism sector stakeholders. Small hotels and homestays would receive LKR 500,000 interest-free, “Sancharaka Podda” loans.

 

  Upekkha Gunasekera

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EASTER BOMBINGS PART OF GLOBAL MENACE

EASTER BOMBINGS PART OF GLOBAL MENACE

Daesh claims responsibility for brutal attacks in Sri Lanka which killed 310 people

A series of vicious bomb attacks in Sri Lanka, on 21 April, Easter Sunday, severely damaged three churches, as well inflicting damage on three top-grade tourist hotels. The attacks left over 253 dead and 500 wounded, and damaging Sri Lanka’s most promising product, with the greatest investment potential, tourism. What will be the effect of these attacks on the industry? Undoubtedly, there will be a hiatus, as alarmed tourists cancel their travel plans. However, this hiatus also provides an opportunity for investors.

Daesh

The organisation calling itself ad-Dawlah al-Islāmiyah (“Islamic State”) has claimed responsibility for the series of terrorist suicide-bomb attacks on churches and hotels in Sri Lanka. The organisation, commonly abbreviated as “Daesh”, also known widely as ISIS (Islamic State in Iraq and Syria) or ISIL (Islamic State in Iraq and the the Levant), has reportedly claimed the island as one of its “territories”.

“Those who carried out the attack that targeted members of the US-led coalition and Christians in Sri Lanka the day before yesterday are Islamic State group fighters,” the terror group said in a statement through its “Amaq” news agency, two days after the attack.

In a statement released on 23 April, Daesh gave the noms de guerre of seven people who it said were behind the “blessed attack” that targeted Christians during their “blasphemous holiday”, referring to Easter. It also released a photo of eight men it said were behind the blasts. Seven of them had their faces covered and three of them held knives. The one man who displayed his bearded face also appeared to carry an assault rifle.

It later released a video showing the eight fighters swearing allegiance to Daesh supremo Abu Bakr al-Baghdadi. It gave the noms-de guerre Abu Hamza, Abu Khalil and Abu Mohammad as the three attackers respectively of the three churches in Colombo, Katana and Batticaloa. The cover story of the 179th edition of Daesh’s Al Naba bulletin, praising the Easter bombings, contained an infographic, in several languages describing the attack.

After its massive defeat in conventional battles in Iraq and Syria in 2017, Daesh has shifted its global strategy gradually towards guerrilla warfare, attacking soft civilian targets rather than hard military ones and refusing to defend its territory.

It has counselled its supporters on the virtue of Sabr (as Arabic term meaning patience, endurance, perseverance, steadfastness and resilience). Sabr is a strategy used by Islamist militant groups such as Al Qaeda, to merge into the population and emerge from time to time to carry out terrorist attacks.

In order to strengthen further the fortitude of its cadres and their commitment to the Sabr strategy, analysts say that Daesh will probably depend very much on propaganda regarding attacks on soft targets outside its traditional spheres of operation – especially in Africa, South and South East Asia, and Europe.

Church attacks

Therefore, the incidents in Sri Lanka, cannot be taken in isolation as only concerning Sri Lanka. It is part of a global problem. In the last few years, there have been attacks on Christians or their places of worship every Easter. There have also been attacks on the other most holy day for Christians, Christmas.

A series bomb of blasts and shootings took place during Christmas Day church services in MadallaJosGadaka, and Damaturu in northern Nigeria on 25 December 2011, killing 41people. The Islamic State in Western Africa, better known as Boko Haram, claimed responsibility. Since then many attacks have taken place on Christians and their places of worship in Asia and Africa.

In 2012, an Easter Sunday attack on a church in Kaduna, about 230 km north of Kano, Nigeria, killed 25 people and wounded 13. On Maundy Thursday, 2015, Islamist gunmen executed 148 Christians at the Garissa University, 370 kms from Nairobi, Kenya.

At least 72 people died in a suicide bombing in the crowded Gulshan-e-Iqbal Park in Lahore, Pakistan, directed at Pakistani Christians who were celebrating Easter Sunday, 2016.

On Palm Sunday, 9 April 2017, twin suicide bombings took place northern Egypt: the first at St. George’s Church in Tanta on the Nile Delta; and the second at the seat of the Coptic papacy, St Mark’s Coptic Orthodox Cathedral, the principal church in Alexandria, where Coptic Patriarch Tawadros II led a Palm Sunday service. At least 45 people were reported killed and 126 injured.

On Easter Monday last year, gunmen attacked Christians in Quetta in Pakistan’s Balochistan province and the next day an armed group attacked a village church in the Punjab.

In January this year a Muslim Imam foiled a potentially devastating attempted bombing of a church in Cairo on the eve of the Coptic Christmas. At least 18 people were killed when a Catholic cathedral was hit by a double bomb attack in Jolo in the southern Philippines on Sunday, 27 January this year.

Then, a week after the Sri Lanka Easter attack, on 28 April, came an attack on a rural church in Burkino Faso, which killed at least five people. Thus a pattern of attacks on Christian churches appears to have been established worldwide.

Watch out

Since Sri Lanka has not been harmful to Daesh, and neither, hitherto, has the Islamic State been harmful to Sri Lanka, the least amount of attention has been paid to its activities in Sri Lanka. Therefore, Daesh may have selected Sri Lanka as the best place to do a pilot project. This project is probably a trial to see how they can carry out serial attacks in a significant way, to have that devastating effect to make the world start paying attention to Daesh so that their bargaining power goes up, and their fund-raising and recruiting potential also increase. This is the reason why they have selected Sri Lanka and carried this out.

Now the world has to watch out for the next country. They are going to repeat this. The world has to come forward and do a thorough study of the operation here to see how they have planned it, and be prepared for the next attack in any country. There is a potential risk of a bigger and more devastating attack in another country for the next Easter.

Daesh provided preview of what might be in store in 2016, when two young men with knives burst into a church in St-Étienne-Du-Rouvray, France, took the worshippers hostage and slit the throat of an 85-year old priest. Daesh claimed its “soldiers” had attacked the church “in response to the call to target Crusader coalition states.”

These attacks can be considered part of a Daesh offensive against what it refers to as mushrikin – polytheists; considering Christians in that category. The 174th issue of Al Naba contained an editorial arguing that it was “ignorant” to think that the “Islamic State waits for an attack like this on Muslim’s mosques to incite its soldiers to kill mushrikin.”

“The Islamic State’s jihad and fight against mushrikin is a duty even if they were weak and can’t harm Muslims, as long as they lack faith and covenant,” the editorial reads. Al Naba’s editors added that the “war waged by Crusader nations against Muslims did not start when one of their citizens attacked the mosques” in New Zealand. Instead, this religious war “is ongoing, hasn’t stopped and will not stop.”

Life goes on

Daesh does not limit itself to attacking Christians. It has been engaged in targeting tourists and tourist destinations. Last December, in separate attacks in Morocco and Egypt, Daesh killed two Scandinavian women hikers and three Vietnamese tourists.

Intelligence sources informed Britain’s Sunday Telegraph that the Daesh collapse in Syria and Iraq has paved the way for more attacks on tourists, such as those in Sri Lanka, globally, but particularly in South Asia and East Africa.

Does this mean that people will not attend Easter or Christmas Mass, or that tourists will not visit countries? It does not. This should be the case for Sri Lanka too. Similar to other countries, Sri Lanka will take necessary measures for security, and people will be able to visit Sri Lanka in reasonable safety. We have come to that point today where life will go on. People will travel all over the world, including to Sri Lanka.

The world should not take Sri Lanka in isolation, as a “dangerous place”. We face a global menace. There are dangers in various parts of the world. Sri Lanka is the victim for this year.

The question posed here is, can the government of Sri Lanka give assurances that the country is SAFE again? Can the government make Sri Lanka safe again?

The answer to that question is YES. In the context of Sri Lanka, safety and normality can be brought back again. Because we are an island and because we have a very good team of intelligence experts, we shall be able to curb this threat.

Advantages

Unlike many other countries in the world Sri Lanka has the following advantages:

  • A highly experienced Military with hands-on experience of combatting one of the deadliest terrorist outfits in the world, in a 30-year civil war.
  • Household visits paid by nearly 10 state officials to individual households for matters pertaining to health, agriculture, delivery of utility bills such as water and electricity and also regular visits paid by the Grama Niladhari, the neighbourhood government administrative official.
  • Sri Lanka also has a society that would rapidly respond to reward-based tip-offs.

 

Using the above mentioned officials and armed forces the government can carry out search operations immediately. Said officials could form a committee headed by the Grama Niladhari and submit a formal report, under their signature, to the head of the state regarding each individual household and their probability of having involvements / links to terrorist outfits of this kind. This search could be ideally carried out in a single day under a 24-hour curfew.

Suspects and those attempting to flee may be apprehended by security personnel. Therefore when the blanket search has been completed and the report produced the President should issue an assurance of the level of safety linked to a percentage as found in the combined report on average.

In terms of tourism, this is an opportunity for investors. The tourism industry will experience a short-term decrease in price when it comes to acquiring leisure-related properties. The buyer or investor has a better bargaining point, because there is a threat of the tourism industry being affected.  This is thus a good buyer’s market for investors who have the holding power to wait out the short-term until the upturn.

If other countries want to impose a travel ban on Sri Lanka, they should be imposing a travel ban on any outward-bound tourism!

 

Lolitha Abeysinghe

Director

SL-THE Investment Magazine

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First multi-modal  transit hub Opens in Makumbura

First multi-modal transit hub Opens in Makumbura

Sri Lanka’s first multi-modal passenger transit hub is now open to the public. President Maithripala Sirisena, together with Megapolis and Western Region Development Minister Patali Champika Ranawaka and officials of the Japan International Co-operation Agency (JICA) declared open the Kottawa-Makumbura Multi-Modal Transport Centre (MTC) on 31 March.

The new transit hub is intended to deliver seamless, safe and comfortable connections to passengers using the railways, city buses, and taxis as well as coaches operating on the expressway (motorway) network, and reduce overall travel time. Expressway bus services, which started from Maharagama, will now use the MTC instead.

Its location in close proximity to the Kottawa expressway interchange, where the E01 Southern Expressway meets the E02 Outer Circular Highway (OCH), also enables users of private vehicles on the expressway system to park and use public transport into Colombo.

On completion of the third phase of the OCH between Kadawatha and Kerawalapitiya (scheduled for June this year), the Kottawa-Makumbura MTC will provide connectivity to the E03 Katunayake Expressway and the Bandaranaike International Airport as well. Connectivity to the Mattala International Airport and to the Hambantota Port will also be offered, when the final stretch of the E01 is completed in August.

Technology

At the opening ceremony, President Sirisena said that the MTC marked an important step towards strengthening the public transport service. He also stressed that Sri Lanka must strengthen the public transport service with new technology. Accordingly, the new hub is equipped with the paraphernalia of modern passenger transit.

Passengers may book their seats in advance using the e-ticketing system, either online or using the self-ticketing facilities, and may travel in trains and buses on a single ticket. LED screens inform commuters of the locations of buses and trains at any time, using GPS technology. The MTC’s energy requirements are supplied using roof-mounted solar photovoltaic panels.

The centre also provides facilities for banking and bill payment, as well as restaurants and toilets. Furniture for the MTC was made by the inmates of the Welikada Prisons, and cost LKR 12 m (USD 69,000) instead of the estimated LKR 27 m (USD 150,000).

JICA provided funds to cover part of the construction and equipment costs for the Kottawa-Makumbura MTC, through its Official Development Assistance loans for OCH construction. Government of Sri Lanka treasury funds financed the remainder of the LKR 845 m (USD 4.83 m) project cost. The original estimate when the project was set in motion in 2014 was for LKR 400 m (USD 2.86 m).

Larger solution

The Ministry of Megapolis and Western Development implemented the project as part of its Township Development Component, and will be responsible for managing and maintaining the facility. Similar multimodal transport centres will be constructed in other key cities in future as well, including Anuradhapura, Moratuwa, Negombo and Ragama.

From its inception, the project was intended to be part of a larger solution to the transportation problems of the western conurbation centred on Colombo. Every day, more than 600,000 commuters would converge on the Fort railway station and the nine discrete bus terminals serving the Pettah commercial centre – including the venerable (and uncompleted for 44 years) Central Bus Station, for state-owned buses; the Bastian Road Bus Stand for inter provincial private buses; and the Gunasinghepura Bus Stand for provincial private buses – all at some distance from one another. This caused the commuters difficulty getting buses or trains on time, spending much time and walking several kilometres to catch a train or bus.

As a solution, the Urban Development Authority (UDA), after studying the systems available in several other countries, initiated an ambitious country-wide programme for constructing modern, efficient and comfortable integrated transport terminals connecting railways, bus services, taxis and trishaws, as well as envisaged future bus rapid transit (BRT) and light rail transit (LRT) or monorail services.

For the first, the UDA acquired eight hectares of abandoned paddy land, for a mixed development called the Makumbura Township Development Project, involving the construction of, apart from the MTC, hotels, shopping centres, cinemas, commercial premises, residential units and other public facilities, as well as internal roads. The UDA selected a 1.2-hectare site for developing the MTC, and made plans to shift the existing Maalapalla railway station to land belonging to the Sri Lanka Railway, adjoining this site. The dream has finally come true, after over five years.

 

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