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📈 CBSL Urges Strict Power Sector Reforms to Ensure Economic Stability

The Central Bank of Sri Lanka (CBSL) has underscored the critical need for cost-reflective pricing and institutional restructuring of the Ceylon Electricity Board (CEB) to safeguard macroeconomic stability and reduce fiscal risks. • Financial Performance & Pricing: The CEB recorded a profit of Rs. 148.6 Bn in 2024. However, consecutive tariff cuts (21.9% in March '24, 22.5% in July '24, and 20% in Jan '25) led to losses in H1 2025. A 15% upward revision in June 2025 was required to restore monthly profitability. • Generation Mix (2024 Data): • Coal: 32.6% • Hydropower: 32.3% • Non-Conventional Renewable Energy: 21.2% • Fuel-based (Thermal): 13.9% • Strategic Reforms: • Unbundling: Under the Electricity (Amendment) Act of 2025, the CEB will be split into four state entities: generation, transmission, distribution, and system operations. • Efficiency: Transitioning to a forward-looking tariff framework is vital to reduce business uncertainty and enhance the competitiveness of the industrial sector. • Renewables: High tariffs and subsidy removals have successfully accelerated renewable energy adoption and self-generation by households and the private sector. • Key Risks: Heavy reliance on weather-dependent hydropower and expensive thermal power remains a vulnerability. CBSL advocates for grid modernization and direct income transfers to vulnerable groups instead of broad energy subsidies.

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📈 Sri Lanka’s $5 Bn Tourism Goal: Structural Reform vs. Record Volume

Sri Lanka concluded 2025 with a historic 2.36 million arrivals and approximately US$ 3.2-3.5 Bn in revenue. However, experts warn that reaching the 2026 target of 3 million visitors and US$ 5 Bn in revenue requires a shift from "counting heads" to "measuring value." • Revenue & Yield Challenges To hit the US$ 5 Bn mark, average revenue per tourist must rise by 15% (from ~$1,460 to ~$1,670). Daily spend needs to jump from US$ 170 to nearly US$ 200, trailing regional peers like Thailand (>US$ 220). • Infrastructure Bottlenecks Aviation: BIA processed 11 million passengers in 2024, nearly double its 6 million design capacity. Terminal 2 is not expected until 2029. Guide Shortage: A 25% shortfall exists in licensed guides, with only 4,800 available against a requirement of 6,400. Capacity: Peak season sell-outs in coastal and hill-country areas indicate the system is operating at its limit. • Governance & Policy Friction Visa Policy: Frequent "flip-flops" and a lack of 60-day ETA visas for low-risk markets (UK, USA, EU) act as a deterrent. Levy Transparency: The Tourism Development Levy lacks public reporting on how funds are utilized for international marketing. Marketing: The absence of a stable, long-term global brand and "destination marketing vacuum" remains a core weakness. • Strategic Recommendations Diversify into experiential products (e.g., Pekoe Trail, Buddhist circuits). Activate Mattala Airport (MRIA) for charters to ease BIA congestion. Implement "carrying capacity" caps at hotspots like Yala and Sigiriya to preserve asset quality.

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## Gem Sri Lanka 2026 Opens to Bolster Global Trade Hub Ambitions 📈

The third edition of the international gem and jewellery trade fair, Gem Sri Lanka 2026, commenced in Colombo, aimed at positioning the nation as a premier global hub for high-value exports. Organized by the CGJTA, the event features over 100 stalls under the theme ‘The Source. The Production. The Selection.’ • Strategic Objectives: The exhibition focuses on enhancing Sri Lanka’s role in the global supply chain by facilitating direct trade between local suppliers and international buyers. It highlights the country's dominance in sapphires, rubies, and colored gemstones. • Sector Highlights: Value-Added Exports: Emphasis on cutting, polishing, and bespoke jewellery design to maximize foreign exchange earnings. Policy Impact: Recent regulatory reforms on gemstone importation were described as a "gamechanger," expected to significantly increase trade volumes and regional competitiveness. Sustainability: National focus on transitioning toward ethical, responsible, and environmentally sustainable sourcing to meet global market standards. • Industry Significance: As one of the oldest export sectors, the gem and jewellery industry remains a critical pillar for employment and national branding. The event is now recognized as the largest presentation of fine-colored gemstones in South Asia. • Future Outlook: The transition of the event to Colombo reflects growing industrial ambitions. With government backing and a focus on youth-led innovation, the sector aims for expanded diversification into global branding and luxury tourism. Source: Based on reports from Gem Sri Lanka 2026 opening (January 8, 2026). ---

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### 📈 FACETS 2026 Concludes with Strong Global Confidence

The 33rd edition of FACETS Sri Lanka 2026, the nation’s flagship international gem and jewellery exhibition, concluded at Cinnamon Life – City of Dreams, signaling a robust recovery and expansion for the sector. • Attendance & Engagement The event drew over 4,500 registered visitors, including 450 foreign buyers, reaffirming Sri Lanka’s status as a premier global sourcing hub. The exhibition featured over 100 boothholders across two specialized floors. • Key Sector Highlights • Sapphires & Coloured Gemstones: Showcased a world-renowned collection, including royal blue, teal, and the rare Padparadscha sapphires. • SME Participation: Dedicated pavilions by the EDB and NGJA highlighted emerging lapidary talent and small-scale jewellery designers. • Trust & Certification: The debut of the Gübelin Gem Lab as the official partner bolstered international buyer confidence through on-site world-class certification. • Strategic Impact The industry is currently targeting export earnings of over US$ 400 Mn for the year, with long-term goals of reaching US$ 1 Bn. Leaders emphasized the need for regulatory reforms and digital traceability to further integrate the gem sector with tourism. • Future Outlook Following the successful 2026 edition, organizers have officially announced that FACETS 2027 will take place from January 5–7, 2027, aiming to build on this year's momentum in the global trade calendar.

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🚢 Sri Lanka Risks Being Left Behind in Global Paperless Shipping

Sri Lanka, an island economy reliant on maritime trade, faces significant challenges in adopting Electronic Bills of Lading (eBLs), risking higher import/export costs, delays, and reduced competitiveness. • Global Shift: International shipping is rapidly moving towards digital trade documentation, with major industry players aiming for full eBL standardisation by 2030. Countries like Singapore, UK, and UAE are modernising laws to recognise eBLs. • Sri Lanka's Situation: Despite early exposure and technical viability, eBL adoption in Sri Lanka remains limited, fragmented, and driven by external actors. • Current Benefits (limited use): Freight forwarders using eBLs report significant time savings (days to minutes), direct cost reductions (e.g., courier fees of US$ 25-80 per shipment), lower risk of lost documents, and improved traceability. • Key Barriers: Banking Integration: No Sri Lankan bank accepts eBLs for Letters of Credit (LCs), excluding a large share of higher-value shipments. Customs Procedures: eBLs are not legally recognised for clearance, often requiring parallel paper submissions. Network Effects: Limited participation (only 2 shipping lines, ~10 local freight forwarders) hinders mass adoption. Cost: Platform fees (US$ 15 per BL) and remittance charges can make eBLs more expensive than paper for smaller firms. • Way Forward: Coordinated action is crucial, including digitising simpler documents, integrating banks into eBL platforms, evolving Customs procedures, and addressing costs for SMEs. eBLs offer real benefits for Sri Lanka but require an ecosystem-wide transformation, treating it as a national trade facilitation priority alongside initiatives like the National Single Window.

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Protecting Sri Lanka's Tourism Investors: A National Imperative 📈

Sri Lanka's tourism sector, vital for rural economies, faces severe challenges from repeated crises (civil conflict, Easter attacks, pandemic, economic collapse, recent floods). Despite its resilience, many genuine investors are under immense pressure. • Investor Crisis: Hotels opened around 2017 are hardest hit, facing aggressive banking actions like parate execution due to loan defaults caused by unforeseen national shocks, not mismanagement. Their liquidation would severely damage Sri Lanka's tourism fabric and thousands of indirect livelihoods. • Urgent Call to Action: • Banks must create a special category for these investors, offering restructuring, grace periods, and revival-focused financial solutions. • Immediate steps include positive international communication, rapid restoration of tourist zones, and temporary concessions (electricity rebates, VAT deferrals, working capital) for affected hotels. • Future Development Vision: A comprehensive, long-term national strategy is proposed, focusing on: • Transforming into a high-value, experience-driven destination (wellness, eco-luxury, long-stay). • Strengthening infrastructure and regional connectivity (domestic airports, modern railways, flood-resilient highways). • Developing tourism clusters in rural areas. • Implementing a national policy for investor protection (legally guaranteed moratoriums, dedicated Tourism Revival Bank). • Embracing digital transformation and smart tourism. • Prioritizing nature conservation and climate-resilient tourism. • Upskilling the workforce for global competitiveness. • Strengthening global branding and year-round promotion. • National Duty: Protecting these investors is crucial for sustaining millions of livelihoods and ensuring the stability of regional economies. Collaboration between the Government, banks, and industry leaders is essential for a stronger, more resilient tourism future.

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Alpha Industries Partners with FACETS Sri Lanka 2026 for Enhanced Security 💎🔒

Alpha Industries has officially partnered with FACETS Sri Lanka 2026 as the Official Security Safe Partner, setting a new benchmark for integrity and protection in the global gem & jewellery trade. • FACETS Sri Lanka, South Asia’s premier gem & jewellery exhibition, marks its 32nd edition from January 3rd to 5th, 2026, at Cinnamon Life, City of Dreams. • The event is crucial for driving sales, creating networking opportunities, and showcasing Sri Lanka's legendary gemstone heritage to local and international exhibitors, buyers, and collectors. • Alpha Industries, established in 1963, brings over 60 years of expertise in physical security solutions, from high-security safes to bank vaults, ensuring unparalleled protection for the high-value items on display. • Mr. Safraz Careem, Director/CEO of Alpha Industries, emphasized this partnership as an affirmation of trust and Alpha’s commitment to engineering excellence and absolute security. • The Sri Lanka Gem and Jewellery Association (SLGJA), the official industry apex body, organizes FACETS. It represents over 250 members, contributing to more than 75% of the country’s gem & jewellery exports, making it vital to the national economy. • Mr. Akram Cassim, President of SLGJA, highlighted the event's role in uplifting the sector and attracting diverse global customers, expressing confidence in the synergistic partnership with Alpha Industries. • FACETS Sri Lanka 2026 is poised to be a landmark event, generating substantial foreign exchange and reinforcing Sri Lanka’s status as a world-renowned source of exceptional stones.

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Sri Lanka's Tea Industry: Resilient Amidst Recent Challenges 📈

Sri Lanka's tea industry continues to demonstrate strong resilience, navigating recent challenges from Cyclone Ditwah and localized flooding. • The industry has successfully overcome past adversities like the COVID-19 pandemic (digitalizing auctions) and severe economic crises, maintaining uninterrupted production and exports. • Cyclone Ditwah Impact: • Damage largely confined to specific roads in Uva and Central Province, causing temporary transport disruptions. • No loss of manufacturing capacity reported. • Harvesting operations are gradually returning to normal with reopened and temporary access roads. • Majority of southern plantations, smallholdings, and main road networks were spared. • Flood Impact: • Limited impact on exporters' offices and warehouses due to Kelani River floods. • Some machinery, like tea bagging machines, were damaged but restoration efforts are underway to ensure timely deliveries. • Production: • January-October 2025 tea production reached 220,972,295 Kgs. • This marks an increase of 3,318,755 Kgs compared to the same period in 2024 and also surpasses 2023 figures for the similar period. • Colombo Tea Auctions: • Trading activities continue with a revised calendar (December 1st week auction rescheduled to last week). • This adjustment aims to ensure uninterrupted financial flows to producers, including smallholders. The industry remains confident in its collective ability to navigate these times, assuring global supply of "Ceylon Tea."

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🚀 Blockchain for a Transparent Sri Lanka! 🇱🇰

Blockchain technology is poised to revolutionize Sri Lanka's administrative and business sectors, tackling deep-rooted corruption, mismanagement, and inefficiency, especially in logistics and government procurement. • Core Problem: Sri Lanka's administrative machinery is heavily impacted by corruption, with estimates suggesting 40% of government funds are defrauded in procurement and tender procedures. • Blockchain Solution: • Enhanced Security: Immutable, distributed ledgers prevent document alteration and fraud, making changes visible to all participants. • Transparency: Real-time data sharing ensures all stakeholders see the same information, reducing hiding or destroying records. • Automation via Smart Contracts: Can trigger automatic payments, enforce penalty clauses, and release customs documents, significantly reducing human intervention and potential for bribery and delays in customs clearing. • Key Applications: • Supply Chain Logistics: End-to-end visibility for tracking shipments, provenance, and anti-counterfeiting (e.g., verifying pharmaceuticals, vehicle spares). Walmart's use of blockchain traces food in seconds. • Government Processes: • Elections: Could remarkably reduce costs (Govt. spends ~Rs. 6 Bn per election) and build trust. • Real Estate: Ensures transparent and credible transactions by tracking ownership history. • Medical Procurements: Curbs corruption and protects professionals. • Benefits: Reduces fraud, improves visibility, automates contract execution, and establishes trust without intermediaries. Compatible with existing ERP systems like SAP and Oracle, easing implementation. This technology offers a powerful tool to secure public funds, guide projects on time, and foster greater efficiency and trust across the nation.

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Urgent Fixes Needed for Sri Lanka’s Seafood Cold Chain 🐟

• The fisheries sector faces substantial post-harvest losses and lost premium market access due to critical gaps in the cold-chain integrity, impacting coastal livelihoods and seafood export revenue. • Core Problems: High post-harvest losses at landing sites from lack of basic ice, insulated containers, and handling training. Uneven infrastructure: Cold stores and IQF (Individual Quick Freeze) facilities are concentrated, leaving many remote landing sites without pre-coolers or blast freezers. High electricity/diesel costs and unreliable power make cold-storage operations expensive and risky. Small-scale fishers and micro-processors struggle with finance for equipment and compliance with stringent export standards (HACCP, SPS). • High-Impact Solutions: Short-Term: Deploy portable icing/pre-cooling units at high-loss landing sites. Fund cooperative hubs to aggregate catch and manage refrigerated transport. Offer “HACCP starter” packages to boost compliance. Mid-Term: Invest in strategically placed regional cold-storage and IQF processing hubs. Create leasing schemes and blended finance for SMEs to obtain insulated trucks and freezers. Policy Nudges: Use targeted tax incentives on refrigeration equipment and employ Public-Private Partnerships (PPPs) to build and operate regional infrastructure, reducing risk and unlocking private capital. • Goal: Simple, coordinated investments in first-mile cooling and aggregation offer the fastest return, turning the current chain of losses into a reliable source of high-value export revenue.

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