Sri Lanka spice producers press for removal of export cess

CONOMYNEXT – Sri Lankan spice producers are pressing the government to implement a proposal in the 2016 budget to remove a cess on spice exports, saying the charge was unfair and hurt farmers.

The Spices and Allied Products Producers' and Traders' Association (SAPPTA) had lobbied for the removal of the export cess and was happy the government had included it in its budget proposals, said Vernon Abeyratne, chairman of SAPPTA.

But since the budget was announced on November 20 there appeared to be interests who want to try to get the cess continued, he told a news conference.

Finance Minister Ravi Karunanayake in his budget speech said that to encourage export of spices, cesses imposed on, pepper, cloves and nutmeg will be removed.

Ghulam Chatoor, former chairman of SAPPTA, said that if the cess was removed as proposed, cultivators would get more money and would be encouraged to increase production.

“The requirement is for the government to help farmers to boost production,” he said. “One way to do that is to not tax them in any way. That’s why SAPPTA proposed that the cess be removed.”

SAPPTA was also pleased the government had also accepted another proposal to give state land for cultivation, Chatoor said.

“Contract cultivation should be encourage. In our view give land to people and let them produce – that’ll increase production.”

M.C.M Zarook, another former chairman of SAPPTA, said they were also seeking clarification on the fertilizer subsidy which the government said would be given as a cash grant and not in kind.

“Use of fertilizer is important to raise productivity,” Zarook said.

Sri Lanka company earnings fall in September 2015 quarter

ECONOMYNEXT – Sri Lanka’s listed company earnings contracted in the September 2015 from a year ago after growing almost 11 percent in the previous quarter, according to an analysis done by Capital Alliance Securities Ltd.

Overall earnings fell 6.2 percent in the September 2015 quarter to 47.7 billion rupees from the year before.

Plantations and oil palm firms were the worst hit, suffering heavy losses owing to the commodities slump, the brokerage said in an earnings update.

But overall corporate earnings in the 12 months to September 2015 grew 2.1 percent to 203.2 billion rupees from the previous year.

This was supported by “low interest rates and improving disposable incomes driving consumption,” the report said.

The biggest contributors to earnings in the September 2015 quarter came from banks, finance and insurance companies, which contributed 43 percent.

They were followed by beverage, food and tobacco firms which contributed 19 percent and diversified holdings which contributed 13 percent.

The motor sector had the fastest growth in earnings, up 54 percent in the September 2015 quarter from a year ago, owing to continuing strong growth in vehicle imports.

Earnings of healthcare and services sector firms grew by 50 percent during the quarter while that of the beverage, food and tobacco sector grew by 35 percent.

The CSE was trading on a price-to-earnings ratio of 13.8 times in the previous 12-months and a price-to-book value of 1.3 times

Manufacturing company earnings grew 20 percent during the September 2015 quarter from a year ago supported by lower energy tariffs and higher consumption.

The two listed oil palm, Carson Cumberbatch and The Bukit Darah firms suffered a collective loss of 1.5 b billion rupees during the September 2015 quarter.


Plantations sector companies suffered an overall net loss of 924 million rupees with most firms in the red mainly because of the slump in tea and rubber prices and higher wage costs.

The two telcos, Sri Lanka Telecom and Dialog Axiata saw net profits slump 65 percent to 1.3 billion rupees in the September 2015 quarter from the year before largely owing to higher foreign exchange losses.