Wednesday, 18 November 2020 11:32

Weekly business and Finance analysis

One of the main topics concerning the local market last week was the price control on rice and the Government had to publish another Gazette for this purpose. However, the price of rice was not reduced even by the weekend.

However the price of rice was not reduced even by the weekend

Even though, the price of vegetables was slightly increased due to the reopening of Economic Centres and regional markets, the weekend newspapers had reported that most of the stocks have been destroyed in the respective areas, since the farmers were unable to sell them. Even though, one month has lapsed since the Government had reduced the import tax on sugar, dhal, inions and salmon from Rs. 50/- to 25 cents, the said goods were sold on the previous price at the wholesale market in Pettah.

“Even though, one month has lapsed since the Government had reduced the import tax on sugar, dhal, inions and salmon from Rs. 50/- to 25 cents, the said goods were sold on the previous price at the wholesale market in Pettah”.

It is clear from the above that the cost of living of the ordinary people, who is helpless in this Covid 19 pandemic, is at a very high level.

The reason for the slight increase in the price of crude oil at international level, the increase in the international share price indices is the intention of introducing the vaccine for Covid, which has been developed by the University of Oxford, England and PFIZER.

However, it might take another year’s time to produce this vaccine, store and distribute the same around the world with the approval of World Health Organization.

Covid 19 is spreading across Europe at alarming rates and countries such as England, Spain, Austria and France are completely locked down and economic activities are taken place at a minimum level.

According to the Scientists this situation will remain until next April.

Further, the decrease in the activities of our main harbour to a considerable extent during last week affects the international trade to a significant level and spread of Covid 19 among the employees of harbour has also impacted the same.

Around 39 ships are parked outside the harbour due to the delay in providing services of the harbour and a weekend newspaper reported that around 20 ships of MSC, which manages 30% of the operations in Colombo Harbour, were turned back. However, the Head Office of MSC located in Genewa, Switzerland has informed Colombo Harbour that they have temporarily directed 20 ships to other harbours due to the congestion in the Colombo Harbour. Even Mr. Daya Rathnayake, Chairman of Harbour has accepted that there is congestion in the harbour and he requested the employees to report for duty.

Even Mr. Daya Rathnayake, Chairman of Harbour has accepted that there is congestion in the harbor and he requested the employees to report for duty.

We are of the view that if the instructions given by the Ministry of Health were followed in the past at places of work such as the harbor, where there are around 10,000 employees and places where there is a large number of employees such as garment factories, a situation like this might not have arisen.

The sectors such as the Government, Army, Police and health should take immediate action to prevent the spread of Covid 19 to places, where there is a large number of employees.

Even though, many media institutions have published news stating that banks and finance institutions have granted Rs. 608 Billion as an advance for pawning of gold items during the previous 6 months, the State Minister of Finance stated that the relevant amount is only Rs. 208 Billion.

The Government declared that the development of East Pier of Colombo Harbour, which made agitation during the time of the election and led to a struggle by the Port Trade Unions, will be carried out in collaboration with India and Japan – The Cabinet Paper required for the development of the East Pier as 51% to the Sri Lankan Government and 49% to foreign companies has been submitted to the Cabinet of Ministers by Rohitha Abeygunawardena, Minister of Port Development and a Technical Committee has also been appointed for the evaluation of the said project.

The businessmen in the field state that the Government was forced to give the Eastern Terminal of the Colombo Harbour to India and Japan as a result of giving the CICT Pier to China in 2016. CICT Pier, which is operated by the company named China Harbour, has been able to receive an award for its operations in year 2020.

There has been a high demand for Sri Lankan tea last week and no increase in price has been observed. Forbes and Walker Tea Brokers (Pvt) Ltd stated that 5.9 Million Kg was sold last week.

John Keels Holdings, one of the main companies in the share market, is the leading group of companies. The operation of John Keels Holdings in the second quarter was successful to a certain extent and its growth was by 15% except for the sectors of tourism and leisure and it has depicted that businesses are getting back to normal at a considerable pace.

Krishan Balendra, Chairman of the company stated in his review that EBITDA was Rs. 4.50 Billion except for the leisure sector in the year under review and it is an increase by 15% compared to the previous year.

Hayleys PLC, which is one of the main export companies in Sri Lanka, has also recorded Rs. 5.52 Billion profit before tax in the first quarter of year 2020 and the decrease in the advance interest rate in the market has reduced the company’s interest expense and increased the profit.

The trade balance of Sri Lankan Government was indicated as $525 Million in September 2020. It is less than $757 Million recorded in September 2019. The reason for this is that the Government has banned the importation of vehicles, tyres, vehicle spare parts and 175 other goods from last May.

Further, importation of 19 crops including turmeric has been completely banned and the quantity of these local crops brought to the market at present and whether the prices of the same have been reduced are still a secret to people!!

Further, importation of 19 crops including turmeric has been completely banned and the quantity of these local crops brought to the market at present and whether the prices of the same have been reduced are still a secret to people!!

The Government will have to obtain loans amounting to 71 Billion for year 2020 according to the statistics of the Treasury.

The Government will have to obtain loans amounting to 71 Billion for year 2020 according to the statistics of the Treasury. The Government can obtain loans amounting to 613.45 Billion until the end of this year in terms of the Additional Appropriation Act passed by the Parliament.

However, an additional amount of Rs. 180 Billion for the additional expenses, which the Government has to bear due to the second wave of Covid 19, has been included in the Appropriation Act 2021 and it is a pleasure that it was passed by the Parliament without a vote.

Even though, the Government including the President, is interested in the development of export and tourism sectors, a decrease has been observed in the export income of commercial goods in the month of October. The export income in year 2019 was $977.3 Million ($977.3) and it was reduced to $831.72 Million in October 2020.

The intention of the Government is to maintain the monthly income of exporting commercial goods of Sri Lanka at 1000 Million USD.

Next week -

Let’s discuss on the stimulus packages granted by the Government for the Covid 19 crisis.

 

Sena SooriyapperumaSena Sooriyapperuma-

Economic Analyst-

(onetext)

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