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Business Nutshell

30 Jan 2022

 
  • Keheliya and pharma firms contradict on pharma buyback agreement
  There is no buyback guarantee between the Ministry of Health and the local drug manufacturers and it was merely an understanding which the Ministry continues to honour, Minister of Health Keheliya Rambukwella claimed.  However, this statement by the Ministry of Health to The Morning Business was dismissed by a source within the local drug manufacturing industry, who claimed: “All 12 local drug manufacturers are in possession of a written buyback agreement and under the said buyback agreement, certain quantities of drugs were assured to local drug manufacturers.”  He further claimed that contrary to what the Minister said, this agreement had not been honoured as of yet. However, he did admit that the national demand for certain drugs had dropped due to certain external factors and that a reduction in the allocation of such drugs was acceptable provided that the reduction was absorbed by all manufacturers. It was further alleged that there was also a decrease in the allocation of drugs that had not experienced a drop in demand.   
  • JKH refinances ‘Cinnamon Life’ syndicated loan facility 
  John Keells Holdings PLC (JKH) in a Colombo Stock Exchange (CSE) corporate disclosure dated 24 January 2022 announced that it had successfully refinanced the $ 395 million syndicated loan facility obtained in 2015 to fund the construction of its Cinnamon Life project, through a $ 225 million long-term loan facility and a six-month bridging facility of $ 100 million.  Explaining further, it was stated that the $ 225 million long-term loan facility was concluded at a rate similar to the previous facility taking into account step-down pricing mechanisms based on pre-agreed triggers. It was further stated that the loan facility was for five years with a grace period of two years.  Similarly, the $ 100 million bridging facility was structured in order to align with the July 2022 maturity date of the original loan facility.   
  • Electronic, electrical exports achieve $ 422 m in 2021 
  The electronic and electrical sector has recorded a 30% increase in its export earnings compared to $ 328 million recorded last year, despite pandemic-related challenges.  With a reputation as a ‘Design to Delivery Destination’ in the electronic and electrical sector, Sri Lanka is a centre of excellence for electronics design and development, whilst the industry with vigour has embraced all emerging technologies including IoT, robotics, biomedical, analytics, and advanced research and development. Sri Lanka is progressively stepping into the global value-added supply chain with a range of cutting-edge products and services, keeping pace, and aligned with emerging global trends of ‘digitisation,’ ‘automation,’ ‘miniaturisation,’ and ‘development of sustainable green energy’. With a reputation for world-class quality and unparalleled delivery records, the Sri Lankan electrical and electronic industry conforms to all required industry standards and global accreditations, observe Restriction of Hazardous Substances (RoHS) and Waste Electrical and Electronic Equipment (WEEE) regulations, and strictly adhere to the International Labour Organisation (ILO) requirements.  The industry consists of more than 100 engaged in design manufacturing and exporting of electronic and electrical products and services with approximately 37,000 employees that include high-profile researchers and design engineers.   
  • Forex spent on palm oil imports to be reduced
  With the expectation of reducing foreign exchange (forex) spending on importing edible palm oil, Sri Lanka seeks the expertise of Indonesia in targeting rural communities of the country. Accordingly, a special meeting was held between the Palm Oil Association of Sri Lanka (POIASL) and Indonesia’s recently appointed High Commissioner to Sri Lanka Dewi Gustina Tobing. The present role of, and challenges faced by, the palm oil industry in Sri Lanka were discussed at the meeting, with the intention of obtaining support, expertise, and assistance from Indonesia, the world’s biggest producer of palm oil.   
  • Sri Lanka discusses economic ties with Pakistan
  Pakistani Foreign Minister Shah Mahmood Qureshi last Monday (24) met with visiting Sri Lankan Minister of Trade Bandula Gunawardana to discuss bilateral and economic relations, the Foreign Ministry of Pakistan said.  During the meeting, the Pakistani Foreign Minister highlighted the importance of strengthening the existing fraternal relations between the two countries through high-level exchanges, it said in a statement.   
  • Racecourse hits roadblock in attracting operators
  The Urban Development Authority (UDA) is yet to receive a proposal from an interested party for the operation of the Colombo Racecourse Mall, more than six months after the commencement of the process of evaluating potential investors to lease out the property back in July 2021. Speaking to The Morning Business, UDA Director General N.P.K. Ranaweera stated: “We called for proposals from potential operators for the management of the Colombo Racecourse last year and we are yet to receive a proposal.”  
  •  CAA raids overpriced cement shops
  Amidst the chaos of price increase and market scarcity during the prevailing pandemic, the Consumer Affairs Authority (CAA) has already commenced raiding traders’ shops islandwide, namely those who sell cement at an exorbitant price.  Issuing a statement last Monday (24), the CAA stated: “The raiding has been taking place in the Colombo, Kalutara, Gampaha, Kandy, Kurunegala, Ratnapura, Badulla, Monaragala, Anuradhapura, Galle, and Hambantota Districts.”   Accordingly, the 56 raided locations were selling cement at a price above the maximum retail price (MRP).   
  • 2015-2019 debt stock increase was due to accumulated debt interest: Dr. Harsha 
  Responding to an allegation by Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal that the previous Yahapalanaya regime had mismanaged the reserves, Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva, pointing to recent research by Verité Research, claimed that 89.8% of the debt stock increase during the period from 2015 to 2019 was due to the interest cost on accumulated past debt.  Dr. de Silva further claimed that out of the $ 8 billion foreign reserves left by the Rajapaksa Government in 2014, $ 2.2 billion was made out of short-term swaps of less than 12 months and of the rest, $ 3.5 billion consisted of hot money invested in government securities by foreigners.  
  •  Central Bank okays LOFC, CLC merger
  The Central Bank of Sri Lanka (CBSL) has approved the amalgamation of Commercial Leasing and Finance PLC (CLC) with LOLC Finance Company (LOFC).   The Department of Supervision of non-bank financial institutions (NBFIs) had on 21 January granted in principle approval for the amalgamation of LOFC and CLC. The CBSL will be holding a press conference this week to provide an update to the public regarding the current status and the targets under the ‘Master Plan for Consolidation of Non-Bank Financial Institutions Sector,’ a highly placed source within the CBSL told The Morning Business.   
  • Global chip shortage: The US says firms’ stocks have plunged
  Manufacturers have seen their stocks of semiconductors plunge amid the global chip shortage, the US Department of Commerce has warned. A survey of more than 150 firms found supplies had fallen from an average of 40 days’ worth in 2019 to just five days in late 2021. Sales of devices soared during the pandemic, leaving semiconductor makers struggling to keep up with demand.  
  •  IMF urges El Salvador to remove Bitcoin as legal tender
  The International Monetary Fund (IMF) has urged El Salvador to reverse its decision to make Bitcoin legal tender. In September, El Salvador became the first country to allow consumers to use the cryptocurrency in all transactions, alongside the US Dollar. The decision led to large-scale protests over fears it would bring instability and inflation to the impoverished Latin American country.  
  •  Marmite maker Unilever to cut 1,500 jobs worldwide
  Consumer goods giant Unilever has confirmed it will cut about 1,500 jobs globally as part of an overhaul of its management and structure. The Marmite-to-Domestos maker said the 5% cut in the workforce would not affect shopfloor jobs in factories. Unilever is under pressure after a failed £ 50 billion bid for a division of GlaxoSmithKline, and some shareholders have demanded changes. The firm employs more than 6,000 people in its UK and Ireland operations. Bentley pledges £ 2.5 b for Crewe plant in electric cars move     Luxury car manufacturer Bentley will invest £ 2.5 billion as it moves towards making electric vehicles. It aims to produce its first electric car within the next three years, with exclusively electric models by 2030. The new models will be developed at the company’s plant in Crewe, Cheshire, which will also see investment to become carbon neutral, the firm said.
  1. Bank of America is giving workers $ 1 billion of stock
Bank of America is handing out $ 1 billion worth of restricted stock to virtually its entire workforce as the bank seeks to gain an upper hand in the war for talent. In a memo shared exclusively with CNN, Bank of America CEO Brian Moynihan said last Tuesday (25) that the company is for the first time opening up its stock awards programme to lower-level employees who make up to $ 100,000 a year. In the past, those employees received a one-time cash bonus.
  1. Thailand’s poor feel sting of inflation ahead of Lunar New Year 
Instead of raising the cost of a dish, noodle seller Yajai is putting less pork in her bowls – a cutback forced by the surging price of Thai pigs following an outbreak of African swine flu. In a nearby alley, a fruit seller cuts smaller pieces of papaya, guava, and pineapple to avoid passing on rising prices to her regulars. The cost of eggs, cooking oil, gas, and chicken have also shot up, baffling small business owners across Pratunam, a working class, Thai-Chinese neighbourhood in downtown Bangkok. “My costs are up by 20% since the start of the year,” Yajai told Al Jazeera. “Coconut milk, cooking oil, even the wonton wrappers…I’ve never seen anything like this where everything goes up at once,” she said. “It doesn’t make any sense.”
  1. Recovery disrupted: IMF cuts global economic growth forecast
The global economy is entering 2022 “in a weaker position than previously expected,” the International Monetary Fund (IMF) warned last Tuesday (25), as it downgraded its global growth outlook largely due to clouds gathering over the recoveries in the US and China. The IMF’s latest World Economic Outlook calls for the global growth to downshift from 5.9% in 2021 to 4.4% this year. The 2022 forecast is half a percentage point lower than the Fund’s October outlook and largely reflects forecast markdowns for the world’s two largest economies.
  1. Ras al-Khaimah inks deal with casino giant Wynn Resorts
Hotel and casino operator Wynn Resorts has said it would build a luxury resort in Ras al-Khaimah, the UAE, with a “gaming area”. Last Tuesday (25), the Nevada-based casino giant announced a multibillion-dollar deal with the emirate that would see it open a 1,000-room luxury hotel with 10 restaurants and lounges, a spa, a convention facility, shopping venues and a gaming area. Wynn did not specify if gaming included gambling. (Sources: CNN, BBC, Aljazeera)  


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