AHKSL/2022 AHK Sri Lanka November 2022 Monthly Newsletter
Current Developments.....................................01 Economic Data of Sri Lanka...............03 Upcoming Events................................05 Past Events...........................................07 News from AHK Sri Lanka Partners..09 Allianz Aitken Spence DIMO Häfele Hayleys Travels Senok SRH University Top German Brands in Sri Lanka.......20 About AHK Sri Lanka..........................21 Our Premier Platinum Partners
Current Development COVID-19 Update As at 30 November 2022, active cases of COVID-19 amounted for 9. Fully Vaccinated travelers do not need to take pre-boarding and on-arrival ( day 01) Covid-19 tests (PCR or Rapid Antigen test) before travelling to Sri Lanka. Relaxation of Import Restriction According to Imports and Exports Control Regulation No. 21 of 2022 published on 23 November 2022, the government relaxed the restrictions imposed on over 70 imported items, including apparel, clothing accessories, tiles, air conditioning machines, refrigerators, freezers, household washing machines, electric instantaneous, lamps and light fittings. Fifteen of the items that have been removed from import restrictions have been permitted to be imported with the approval of the Import and Export Controller based on the recommendations of the authorities in those fields. These include cosmetics, perfumes, and dental hygiene products. Due to the ongoing foreign exchange crisis, the government proceeded to suspend the import of goods belonging to 1468 HS codes. Subsequently, as per gazette 2296/30, the government lifted the restriction on 708 items on 09 September. CBSL maintains policy interest rates at their current levels The Monetary Board of the Central Bank of Sri Lanka (CBSL), at its meeting held on 23 November 2022, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 14.50$ and 15.50%, respectively, after considering the recent and expected developments in the domestic and global macroeconomic projections. economy and S&P downgrades Sri Lanka’s bonds by two notches to ‘D’ Global ratings agency S&P Global downgraded Sri Lanka’s bonds to ‘D’ from ‘CC’, following missed interest payments due on 14 September 2022, and 28 September 2022. S&P foreign currency rating on Sri Lanka is ‘SD’ (selective default). The negative outlook on the local currency rating reflects a high risk to commercial debt repayments over the next 12 months in the context of Sri Lanka’s economic, external, and fiscal pressures. Condé Nast includes Sri Lanka among top 20 destinations The popular travel magazine Condé Nast Traveller has included Sri Lanka among the 20 Best Countries in the World as per 2022 Readers’ Choice Awards conducted by the magazine. Italy tops the list, while Sri Lanka was ranked at number 17 ahead of Israel, Turkey and South Africa respectively. Hapag Lloyd Lanka and Aitken Spence Travels boost tourism through luxury cruise ‘Mein Schiff 5’ Boosting the revival of the tourism industry in Sri Lanka, Hapag Lloyd Lanka ushered in super luxury cruise ‘Mein Schiff 5’ on 29 November at the Port of Colombo and the Port of Hambantota on 30 November 2022. More than 2,000 passengers (mostly European) and 900 crew members are on the cruise ship. Hapag Lloyd Lanka a subsidiary of the Aitken Spence Group are the agents for TUI cruises. Mein Schiff 5 is owned by the German operator TUI cruises.
The economy of Germany and the road ahead The Federation of German Industries (BDI) expects a weaker development of the economy globally, in the EU and Germany. “The growth of the global economy will amount to 2.25% in the coming year, after 3% in the current year,” the report says. This enormously poor value threatens to be the third worst result for the world in the past 32 years. It is particularly challenging for Germany as an exporting country because its most important export markets are struggling. The BDI experts expect Germany's exports to increase by 2.5% this year. In 2021, the increase, after inflation adjustments of exports of goods and services, was still 9.75%. The BDI expects economic growth of just under 1% in 2022. In addition, price pressure will remain high. "In our view, producer price developments suggest that the inflation rate in the Euro area will remain very high in the first half of 2023 and that inflationary pressures will only gradually ease by the end of 2024." The BDI cites the sharp price increases as the reason. "The global economy is currently being hit by an inflationary shock". The reason for this is the strong cost increase for food and energy. Therefore, more than 90 percent of the companies state that the current situation is challenging them strongly (58 percent) or existentially (34 percent). According to the German Federal Statistical Office, the current inflation rate is 10.4%. The energy prices in Germany are 51% higher for consumers in September 2022 than in the same month of the previous year. But compared to other European countries the increase is still low, for example, the energy prices increased by 118% in Lithuania and by 200% in the Netherlands. According to a recent survey, by the Association of German Chambers of Commerce and Industry (DIHK), switching to climatefriendly products and services to respond to changes in the energy industry and policy is particularly important for companies. 44% of the companies and 56% of the industrial companies are planning or implementing a purchase switch to climate-friendly products. Another current interest is the development of new business areas, which a good third of the companies are implementing or planning and the use of new foreign sales markets is twice as important: just under 40% of industrial companies use this option. Many companies have already reacted to the energy situation by scaling back production or at least partially stopping business activities. According to their information, 15% of companies and 32% of energy-intensive companies have either already done so, are in the process of doing so or are still planning to take such steps. These are alarming figures that show how much of a burden permanently high energy prices are for the German location and an opportunity for locations outside of the EU. This article was written by: Lara Buche Intern AHK Sri Lanka
Economic Data of Sri Lanka Economic Growth in Sri Lanka In the second quarter of 2022, the economy of Sri Lanka shrank by -8.4% compared to the previous year. The overall Agriculture, Industry and Services activities declined by 8.4 percent, 10.0 percent and 2.2 percent respectively, in the second quarter of 2022. The decline is attributed to the fertilizer, fuel shortages and the global economic volatility. Forecast by World Bank According to the World Bank, Sri Lanka's economy is expected to contract by -9.2% this year and -4.2% in 2023. Inflation Inflation based on the National Consumer Price Index (NCPI) in October 2022 declined to 70.6% from 73.7% in September 2022. The rate of price increases slowed after the central bank raised rates and curbed private credit which is also helping maintain an exchange rate peg around LKR 363 to USD. Trade Statistics According to the statistics published by the Export Development Board, Sri Lanka’s merchandise exports decreased by 8.18 % (Y-oY) to USD 1,094.8 Mn in October 2022. Cumulative export earnings from Jan-Oct 2022 amounted to USD 11,076, indicating a growth of 9.33% Y-o-Y. Import expenditure in Jan-Sep 2022 decreased by -5.7% to USD 14,085 Mn. A decline in import expenditure was observed in investment goods and non food consumer goods, mainly resulted from the measures to compress imports. However, an increase was recorded in imports of intermediate goods and food and beverages German Exports to Sri Lanka Exports from Germany to Sri Lanka amounted to EUR 166,881,000 in Jan-Sep 2022, indicating a decrease of -1608% compared to the same period of the previous year. German Imports from Sri Lanka Germany imported from Sri Lanka goods amounting to EURO 772,515,000 in Jan-Sep 2022, compared to EURO 641,130,000 in the same period of the previous year, indicating an increase of + 20.5%. Sri Lankan Global Exports Apparel and Textile Exports Apparel and Textile exports increased by 14.04 % to USD 5,004.58 Mn during the period of Jan-Oct 2022 compared to the same period of 2021. Rubber-based Exports Export earnings from Rubber-based finished products decreased by 2.53% to USD 874.18 Mn Mn in Jan-Oct 2022 compared with the same period of 2021. Earnings from exports of Pneumatic & Retreated Rubber Tyres & Tubes increased by 6.21%. Tea Exports Export earnings from Tea decreased by 4.59% to USD 1,045.84 Mn during the period of JanOct 2022 compared with the corresponding period of 2021. Sub categories of tea sector exports such as Tea packets (-4.99 %), Bulk Tea (-4.53 %,), Instant Tea (-12.34 %) and Green Tea (-31.63 %) decreased. Coconut-based Exports Coconut-based export earnings increased by 3.53% to USD 710.97 Mn during the period of Jan-Oct 2022 .
Export Performance of Sri Lanka 2022 Import Performance of Sri Lanka 2022 Foreign Exchange During the year up to 25th November 2022, the Sri Lankan rupee depreciated against the USD by 44.8% and the Euro by 40%. Services PMI dropped below the neutral threshold to an index value of 47.9 in October 2022 due to the declines observed in New Businesses, Employment and Backlogs of Work. As at 31 October 2022, Official Reserve Assets (USD Mn) amounted to USD 1,704 Mn. This includes proceeds from the People's Bank of China (PBOC) swap equivalent to around USD 1.4 bn, which is subject to conditionalities on usability. Tourism Sector The total number of international tourist arrivals to Sri Lanka during October 2022 was 42,026 indicating an increase of 84.5% (Y-o-Y). Manufacturing Purchasing Managers’ Index Manufacturing PMI recorded an index value of 38.4 in October 2022, with a decline of 4.2 index points from the previous month, driven by decreases recorded in all the sub-indices. Services Purchasing Managers’ Index Europe became the largest source of tourist traffic to Sri Lanka with 50.8% of the total traffic received in October 2022. German tourists amounted to 8% of total tourist arrivals in the same duration. The India, Russia, the United Kingdom, Germany, and Australia were Sri Lanka’s top five international tourist generating markets for the month of October this year. An analysis of tourist arrivals by purpose of visit reveals that a majority of 46% of tourists had visited Sri Lanka for pleasure/vacation, while for 25% of tourists the main purpose was visiting friends and relatives. Top primary markets for tourists to Sri Lanka - Jan-Oct 2022
Upcoming Events Sustainability Awards 2022 Date: 02 December 2022 The Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka) and Friedrich Naumann Foundation for Freedom in Sri Lanka is organizing 'Sustainability Awards 2022' to recognize the sustainability initiatives and award companies across the Agriculture, Textile and Tourism Sectors. Companies from the Agriculture, Textile and Tourism sectors with significant progress in business due diligence processes were encouraged to apply and were shortlisted according to a predetermined criteria. The award winners will be announced at the 'Sustainability Awards 2022' ceremony, where jury members from certifications bodies and agency representatives will be present along with the shortlisted companies. Mentioned below are the finalists (top 3) from the selection process for the Sustainability Awards 2022. Agriculture – Large Enterprise Category Elpitiya Plantations PLC DIMO (Diesel & Motor Engineering PLC) Horana Plantations PLC Agriculture – SME Category Gralgo From Ceylon (Pvt) Ltd Starch Fruits & Beverages (Pvt) Ltd Hint Nuwara Eliya (Pvt) Ltd Tourism – Hotels/Accommodation Providers Category Teardrop Hotels Uga Escapes Management (Pvt) Ltd Saraii (Pvt) Limited Tourism – Tour Operators and DMCs Category Summer Explorers Pvt Ltd Aitken Spence Travels Pvt Ltd Walkers Tours Limited Breakfast Dialogue Date: 06 December 2022 The Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka) is organizing a Breakfast Dialogue, on Tuesday, 06 December from 8.00am – 9.30am at the Hilton Colombo Residencies. At the event, tax experts will breakdown the expected legislative tax changes that will affect corporates and reveal what's still to come in 2023. Textile – Large Enterprise Category Trischel Fabric (Pvt) Ltd MAS FABRICS (Pvt) LTD - MATRIX Stretchline (Pvt) Limited The event will be moderated by Ms. Marie Antonia von Schönburg, Chief Delegate - AHK Sri Lanka and the panelists will include Mr. Jivan Goonetilleke, Partner at D. L. & F De Saram and Mr. K. Sivanesan, Partner at Amarasekara & Co. Textile - SME Category Sensa Solutions Lanka Pvt Ltd Onivja Global Research (Pvt) Ltd Selyn Exporters (Pvt) Ltd Interested individuals are allowed to participated. For more information, please contact Ms. Shashi Jayakodi via shashi@srilanka.ahk.de
Exhibitor Delegation to International Green Week 2023 Date: 20 - 29 January 2023 IGW is the origin of the Global Forum for Food and Agriculture (GFFA). This is where over 70 international ministries and food producers meet – their displays reveal the fascinating world of the food and beverage industries. 400,000 visitors and 1,880 exhibitors across 72 countries participate in the International Green Week. Every year more than 300 forums, seminars, conferences, and committee meetings take place. The importance of the exhibition is clearly demonstrated by the presence of 200 international ministers and secretaries of state. Plans are underway at AHK Sri Lanka for a Sri Lankan exhibitor delegation to International Green Week 2023 - world’s leading trade fair for food, agriculture, and gardening. The delegation trip to the trade-fair will be the ideal for exporters of culinary delicacies, including fruit & vegetables, fish & meat, and wine & beer. Visitor Delegation to INHORGENTA MUNICH 2023 Date: 24–27 February 2023 INHORGENTA MUNICH, Europe’s leading platform for jewelry, timepieces and gemstones is the order and communications platform for the industry and reflects the market in all its diversity. Spread over six halls at Messe München, exhibitors from across the globe will present their latest creations. Through its extensive supporting program, comprising the INHORGENTA AWARD and the TRENDFACTORY MUNICH, the trade fair offers an in-depth overview of international trends and developments. The last the trade fair brought 1,055 exhibitors from 44 countries and around 26,000 visitors from 85 countries to Munich. Exhibitor Delegation to transport logistic Munich Date: 09 - 12 May 2023 The transport logistic Munich gives visitors a complete look at the entire process chain of the transport and logistics sector. At the trade fair, more and more exhibitors from Germany and all around the world present their innovative products and services. Transport logistic Munich also features an extensive program of related events and conferences. Furthermore the trade fair serves as an ideal platform for knowledge transfer and networking. About 2162 exhibitors from 62 countries and 60726 visitors from 123 countries attend the the transport logistic trade fair in Munich. Visitor Delegation to spoga+gafa Date: 18 –20 June 2023 Spoga+gafa is the world’s leading international trade fair for the garden and leisure industry and open to trade visitors only. The fair is characterized by the high internationality of exhibitors and visitors, making it the most important platform in the industry to conquer new markets, to find new contacts and to learn about the latest trends and innovations. Visitor Delegation to A+A 2023 Date: 24 - 27 October 2023 The A+A provides the world's leading international trade fair as a leading platform for business, communication and information. It covers the entire spectrum of exhibits for Safety and Security. The exhibitors - from small businesses to global players - will present a remarkable portfolio of products, solutions and innovative concepts and themes. About 1,942 exhibitors and 67,248 visitors attend the A + A in Düsseldorf. For more information on trade fairs, please contact: Mr. Malintha Gajanayake, Head of Corporate Affairs & Export Promotions via malintha@srilanka.ahk.de
Past Events FNF Sri Lanka together with AHK Sri Lanka coorganizes the certification awarding for EDB officials trained on new Act on Corporate Due Diligence in Supply Chains in Germany The Delegation of German Industry and Commerce (AHK Sri Lanka) and the Friedrich Naumann Foundation for Freedom (FNF) coorganized a capacity building program for officials of Sri Lanka Export Development Board (EDB) in preparation for the forthcoming German Act on Corporate Due Diligence in Supply Chains that will come into force in Germany from 1st January 2023. The initiative aimed to increase the awareness of regarding the new law in Germany, whereby officials at the Sri Lanka Export Development Board (EDB Sri Lanka) will function as multipliers to share the necessary information on sustainable supply chains with Sri Lankan SMEs looking to export to the German export market. 26 EDB officials who successfully completed the capacity building program on Germany’s new Act on Corporate Due Diligence in Supply Chains were awarded the certificates at a ceremony followed by a press conference organized on 22nd November 2022 at the Cinnamon Grand Hotel. The German supply chain Act (titled Act on Corporate Due Diligence Obligations in Supply Chains) is an effort on the part of the German federal government to protect and bolster human rights and the environment through the supply chains of companies operating in Germany. The act obliges all companies operating in Germany in 2023 with 3,000 or more employees to implement a supplier risk management system. In 2024, the act will apply to companies operating with 1,000 or more employees. The risk management system will help assess, mitigate, and monitor human rights and environmental risks in the company’s supply chain. As a result, the due diligence obligations will be applicable for Sri Lankan exporters from 01 January 2023, since suppliers from Sri Lanka to Germany will soon need to comply with the requirements requested by the importers in Germany by way of sustainability-related certifications and standards to assure supply chain due diligence, through traceability, site level audits and company reporting mechanisms. Read more here
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