AGP Executive Report

Tobacco Control: Sri Lanka’s Centre for Combating Tobacco says prohibited vapes and e-cigarettes are being marketed to youth via social media, with 213 online sellers found in a January 2026 study—Facebook led (108 sites), followed by Instagram and TikTok, while influencers and “vape/puff/shisha” style branding were used to normalise use. Energy & Industry Infrastructure: Sri Lanka is advancing new petroleum pipeline plans linking Colombo Port to Kolonnawa, Muthurajawela to Katunayake Airport and future Trincomalee storage, aiming to cut road tanker dependence and strengthen energy logistics. Climate Commitments: Sri Lanka set a 13% industrial emissions cut as part of its climate strategy toward 70% renewables by 2030 and carbon neutrality by 2050, with calls to turn targets into bankable investments. Labour Mobility: Cyprus is set to expand job opportunities for Sri Lankan workers in nursing, tourism/hospitality, agriculture, construction and maritime, with social security issues to be resolved urgently. Financial Pressure: Foreign investors kept selling Sri Lankan government securities even after a May rate hike, signalling continued market stress amid rupee weakness and inflation concerns. Trade & Imports: Vehicle import reopening and a temporary 50% customs surcharge are testing Sri Lanka’s foreign exchange recovery, with early rushes for Letters of Credit. Maritime Security: The US interception of sanctioned MT Davina south of Sri Lanka highlights intensifying enforcement and Iran-linked oil network competition in the Indian Ocean. Human Capital & HR: Employers’ Federation of Ceylon’s EFC Solutions Unit expands one-stop HR services, from audits and restructuring to compensation, performance systems and workplace compliance. Business & Logistics: Sri Lanka joined a US-led forum on Indian Ocean ports and supply chains, focusing on resilient infrastructure, digital transformation and cybersecurity.

Trade & Tariffs: The US USTR has proposed new Section 301 forced-labour tariffs on imports from 60 economies, with rates of 10% or 12.5% (and product exceptions), and invited public comments ahead of a July 7 hearing—an issue that could spill over into Sri Lanka’s export competitiveness. Environment & Waste: Sri Lanka banned single-use plastic water bottles at government institutions from May 31 and introduced a mandatory fee for polyethylene shopping bags, but observers warn enforcement and recycling capacity remain the real test. Energy & Shipping Risk: With the Strait of Hormuz disruption still driving higher fuel and food costs, the UN’s WFP says millions more—including in Sri Lanka—are struggling to meet basic needs. Finance & Stability: The Central Bank of Sri Lanka reported resilience in 1Q 2026 financial-sector performance, while flagging rising risks from inflation, exchange-rate volatility and external pressures. Maritime & Industry Links: An Indian firm, Agastya Green Fuels, signed an offtake deal with SAR Maritime to export e-methanol for bunkering in Sri Lanka, alongside plans for storage and bunkering infrastructure at Colombo, Hambantota and Trincomalee. Local Business & Growth: LB Finance crossed Rs. 25b pre-tax profit in FY26, citing strong portfolio expansion and diversified income. Policy & Governance: Sri Lanka’s bill to amend the National Environment Act aims to strengthen Environmental Impact Assessments, as ESG demands keep rising. Regional Trade & Ports: Sri Lanka participated in a US forum on Indian Ocean ports and supply chains, focusing on resilient infrastructure, digital transformation and trade financing.

Maritime & Trade: Adani Ports’ APSEZ signed a $70M South America deal, sending specialized tug and LNG carrier marine services via Meridian Transportes Maritimos for Argentina’s first FLNG project, boosting energy logistics links that also touch Sri Lanka’s port footprint. Agri Tech: Sri Lanka is rolling out locally developed agricultural drones for Maha season farming, targeting seed and fertiliser distribution, labour savings and better crop monitoring. Energy Cooperation: India’s High Commissioner visited a hybrid solar-wind-diesel project on Delft, Analaitivu and Nainativu islands (grant: $11m; ~4.3MW) to improve off-grid power reliability. ESG & Reporting: Sri Lanka launched EU-backed revised national green reporting guidelines, aligning sustainability disclosures with rising investor expectations. Poverty & Inclusion: New data shows 2.8m people (15.2%) below the poverty line, with poverty concentrated in rural and estate sectors. Finance Markets: APAC credit conditions stay supported, but Sri Lanka’s FX reserves fell and investors remain selective amid Iran-war oil shock. Anti-Fraud Cooperation: China and Sri Lanka stepped up cooperation against cross-border online gambling and telecom fraud networks.

SOE Watch: Sri Lanka’s State-owned enterprises posted weaker overall results in 2025, with combined profits down 17.6% to Rs. 444.4b as CEB swung from profit to a Rs. 38.7b loss, while the rest of the SOEs improved earnings. Green Reporting Push: Sri Lanka launched revised National Green Reporting System guidelines to raise corporate transparency and align sustainability reporting with global standards, backed by EU and UNIDO support. Trade Pressure: The US proposed a 12.5% forced-labour tariff on Sri Lankan imports, putting extra strain on export-heavy sectors like apparel ahead of consultations. Transport Cost Shock: Private bus operators in Sri Lanka plan to cut services from 8 June, citing higher operating costs and lack of a revised fare structure, potentially reducing fleet availability by about a quarter. Water for Yala: Irrigation data shows major reservoirs are generally well stocked for Yala, with several districts near or above 80–90% capacity, though some areas remain lower. Marina Address: Prime and Melwa unveiled the Prime Marina Sales Suite at Port City Colombo, positioning it as a globally benchmarked real estate showcase. Regional Energy Risk: WFP warned the Middle East conflict is pushing millions, including Sri Lanka’s most vulnerable, closer to acute food insecurity as energy and food prices stay high.

Public Transport Disruption: Sri Lanka’s private bus operators plan to cut services from 8 June, citing rising fuel costs and the lack of a revised fare structure; the Lanka Private Bus Owners’ Association says about a quarter of the fleet is already inactive and could rise further if the fare dispute drags on. Agriculture & Water Security: Sri Lanka’s reservoirs look supportive for Yala, with nearly two-thirds of major reservoir capacity in use; Kandy and Puttalam are at 93%, while Ampara (41%) and Matale (49%) lag, though officials say supplies should meet near-term irrigation needs. Food & Energy Shock: The UN World Food Programme warns the Iran conflict and high energy prices are worsening hunger, estimating an additional 1.3 million people in Sri Lanka are now food insecure, alongside millions in Somalia and Afghanistan, as funding shortages force aid cuts. Regional Energy Pressure (Context): India’s domestic LPG price rose by Rs 29, but the government says households are still paying far below market-linked costs due to subsidies—an example of how West Asia disruptions keep spilling into household energy bills.

Corporate Earnings: Aitken Spence closed FY26 with a strong Profit Before Tax of Rs. 12.8 bn, up 18%, with overseas operations driving 61% of profits and Tourism emerging as the biggest contributor (PBT Rs. 7.9 bn). Agriculture & Food Security: Sri Lanka’s rice policy is under fire after a rice-import decision was blamed for a paddy price crash, while experts warn that declining bee populations could cut yields and raise cultivation costs. Trade & Investment: Sri Lanka is pressing ahead with steps to join RCEP, and the BOI launched a “Ready to Invest” digital platform to speed up foreign investment by offering pre-structured projects. Ports & Aviation: A high-stakes contest is forming around the Mattala airport BOT plan, with regional powers watching closely as it links to wider logistics ambitions. Climate & Industry Reporting: EU-backed revised National Green Reporting System Guidelines were launched to modernize ESG reporting across public and private sectors. Energy/Geopolitics Impact: The UN WFP warns the Iran conflict is pushing millions, including about 1.3 million in Sri Lanka, toward hunger as fuel and food prices rise. Digital Economy: Uber debuted in Nepal, signaling continued expansion of app-based mobility across South Asia.

B2B Investment Push: FNCCI and the Ceylon Chamber of Commerce held a B2B meeting where Sri Lankan firms signalled interest in investing “hundreds of billions” in Nepal, especially hydropower, tourism and herbal processing—urging value-add manufacturing locally rather than exporting raw herbs. Green Reporting Upgrade: President Anura Kumara Dissanayake launched revised National Green Reporting System guidelines, EU-backed via UNIDO, aligning Sri Lanka’s ESG reporting with Global Reporting Initiative standards to improve transparency and market access. Bee Decline Threatens Food: Experts warned that falling bee populations—driven by habitat loss and pesticide-heavy farming—could cut harvests and raise costs, pushing growers toward more bee-friendly practices. Food Security Under Strain: The UN World Food Programme said the Iran war is pushing an extra 1.3 million people in Sri Lanka toward acute hunger, as energy and food prices rise and trade is disrupted. Investment Promotion Goes Digital: BOI launched “Ready to Invest,” a platform offering 30 structured projects with feasibility support and pre-allocated land to speed approvals and attract foreign capital. Media Professional Body: A Gazette notice moves to establish a Chartered Institute of Media Professionals as a statutory corporate body to raise standards and ethics in Sri Lanka’s media sector. Regional Trade Bloc Move: Government is pressing ahead with steps to join RCEP, setting up policy and working committees and responding to follow-up questionnaires.

Green Reporting Push: Sri Lanka has launched revised EU-backed green reporting guidelines, updating the National Green Reporting System to help public and private firms track ESG using Global Reporting Initiative standards and improve access to international markets. Agriculture Mechanisation: HNB and Hayleys Agriculture Holdings partnered to expand leasing for modern farm machinery, including Kubota and Agrotech tractors, combine harvesters and rice milling equipment. Insurance for Export Zones: Ceylinco Life signed an MoU with FTZMA to act as insurance service provider for BOI-linked manufacturers, offering customised employee health and retirement-linked coverage. Marine Science Warning: A new call says Sri Lanka can’t protect what it can’t measure, urging stronger marine science and ocean monitoring to support fisheries, shipping and the blue economy. Climate Readiness: CEJ warned Sri Lanka risks becoming “climate orphans” as El Niño conditions are expected to intensify, threatening watersheds, wetlands and recovery from recent disasters. Energy & Costs: LAUGFS Gas kept June LPG cylinder prices unchanged despite higher global costs, while Sri Lanka’s rupee and bond yields moved as markets digested regional pressures. Regional Trade & Mobility: Uber officially launched in Nepal, adding another Asia-Pacific market where Sri Lanka’s ride-hailing experience is cited as a competitive advantage.

Food Security Shock: The UN World Food Programme says the Middle East conflict is already pushing millions toward hunger, with higher fuel and transport costs lifting food prices and aid funding shortfalls forcing cutbacks; households in Afghanistan, Somalia and Sri Lanka are among the hardest hit as crude stays above $100 a barrel. Construction Stress: Sri Lanka’s construction sector is under strain as about 40% of firms have become inactive, blamed on shifting tax rules, higher VAT and rupee depreciation, with the Sri Lanka Construction Association warning costs are squeezing businesses. Apparel Export Support: The Sri Lanka Chamber of Garment Exporters (SLCGE) proposes an industry-wide Design Hub to help SME manufacturers showcase products and link directly with international buyers, while SLITA’s diploma awards highlight workforce development for the export sector. Green Industry Push: An EU-backed programme is building capacity for eco-industrial parks, bringing together policymakers, park operators, tenant industries and nearby communities to drive greener, more resource-efficient industrial growth. Power Grid Upgrade: Sri Lanka’s biggest battery storage push is set to install BESS at 16 transmission substations to improve grid stability and better manage solar and wind fluctuations. Labour Dispute: ELPHIS LANKA locked out over 500 workers after a go-slow protest tied to job security concerns, underscoring ongoing tensions in the apparel supply chain.

Climate Resilience: Sri Lanka launched its “National Anticipatory Action Roadmap 2026–2030”, pushing “Early Warning, Early Action” to turn climate plans into real disaster preparedness and faster community response. Electric Mobility & Auto Retail: SAIGE opened Sri Lanka’s first showroom for electric motorcycles in Kadawatha, while Continental Cars and Commercials launched Volkswagen Taigun and Virtus and Evolution Auto unveiled the Xpeng G6—signals of accelerating EV and premium vehicle competition. Energy & Water Infrastructure: The government is weighing ways to cut diesel use by 500 tonnes a day amid fuel-import pressure, and Colombo is set to complete South Asia’s longest irrigation tunnel under the Mahaweli Water Security Investment Programme. SME Finance: Alliance Finance (Sri Lanka–Bangladesh JV) signed refinancing deals with Bangladesh Bank to fund cottage to MSME clusters at 7% interest. Trade & Compliance Risk: The US listed Sri Lanka among 60 economies facing forced-labour import tax proposals, raising fresh concerns for garment exports to the US. Digital & Cyber Skills: A national AI and Data Analytics Summit backed by the Ministry of Digital Economy highlighted skills for the intelligent future, alongside a focus on cyber security training as a practical investment. Business & Industry: DIMO’s chairman urged sustainability as a profitability driver, and HNB Investment Bank renewed its CFA Society sponsorship for professional standards in finance.

Fuel & FX Pressure: The government is weighing options to cut daily diesel use by about 500 tonnes to ease foreign exchange strain, after monthly fuel import spending topped US$ 500m and the rupee slide continues to bite. Capital Markets: T-bill rates kept climbing at the latest auction, with yields at multi-month highs and the issue undersubscribed. Pharma Cost Pass-Through: NMRA is reviewing medicine price controls for roughly 60 capped categories as rupee depreciation raises import and local production costs. Forced-Labour Trade Risk: Sri Lanka has been named by the US as one of 60 economies flagged under a Section 301 forced-labour import probe, raising the prospect of new US import taxes that could hit key garment exports. Renewables & Logistics: HayWind’s Mannar wind farm received the first 25 MW turbines at Trincomalee Port, with heavy-haul transport to the site expected over the next three months. Business Climate: Japan–Sri Lanka’s Business Environment committee met at the BOI to discuss hurdles for Japanese firms and push FDI toward US$2bn. Industry Finance: HNB Investment Bank renewed its CFA Society Sri Lanka partnership for a 10th straight year, backing investment professionalism and ethics.

US Forced-Labour Tariffs: The U.S. Trade Representative has named Sri Lanka among 60 economies in a Section 301 forced-labour probe, proposing an extra 12.5% duty on Sri Lanka-bound imports, with a July 7 public hearing. Fuel Price Pressure: Sri Lanka’s pump prices are rising amid global oil shocks and rupee weakness; the government says a Rs. 57bn subsidy cushion is in place, while critics blame coal import and power-generation mismanagement. Weather Risk for Industry: Sri Lanka’s Meteorology Department warns El Niño could cut rainfall in July–August, raising risks for agriculture, water, power and public health. Energy Infrastructure: Sri Lanka is set to commission its biggest battery energy storage rollout yet—40MWh systems at multiple substations to stabilise the grid and support renewables. ICT Exports: The Computer Society of Sri Lanka says ICT exports have become the country’s third-largest export earner, driven by software, digital services and cybersecurity. Fisheries Skills Link: Sri Lanka and Japan agreed to create technical employment pathways in Japan for Sri Lankan fisheries graduates and deepen fisheries value-chain cooperation. Tourism Investment: BOI and Vella Group signed a USD 5.1m deal to expand Ella’s 98 Acres Resort & Spa, adding villas, rooms and about 150 jobs.

Fuel & Power Policy: Cabinet says the latest fuel price hike is unavoidable to keep supplies uninterrupted, with the Treasury and importers absorbing losses via subsidies; it also insists the public won’t pay for substandard coal imports, with recovery steps and possible legal action against responsible firms. Electricity Billing Clarity: Consumers are warned about scam messages using CEB/LECO names after the CEB was legally dissolved and responsibilities moved to EDL, raising questions on the authenticity of “bill settlement” requests. Energy Storage & Renewables: Sri Lanka plans its largest battery energy storage rollout, with grid-forming BESS units (40MWh each) to support stability and help reach 70% renewable generation by 2030. Industrial Competitiveness: EU-backed work is pushing Eco-Industrial Parks to help manufacturers meet sustainability demands and cut costs; separate commentary calls for a national sustainable industries framework for SME apparel to stay export-competitive. Tourism & Investment: Tourism arrivals topped one million in 2026 (1,022,022 by end-May); BOI signed a USD 5.1m deal to expand 98 Acres Resort & Spa in Ella, targeting new villas, rooms and jobs. Trade & Supply Chains: FLAG’s new Chennai–Singapore subsea cable route entered commercial service, boosting resilience for cloud and data-heavy business traffic. Governance & Finance: CBSL launches a “Be Scam Proof” campaign as fraud schemes evolve; OECD–ADBI insurance and retirement savings roundtable begins in Colombo. Agriculture Pressure: Farmers’ union warns agriculture faces collapse under IMF-influenced policies and rising imports.

IMF & Fuel Pricing: Sri Lanka’s IMF reviews cleared, releasing US$695m, but fuel price revisions are already feeding fresh cost-of-living pressure as inflation risks rise toward 7% on fuel-driven demand. Transport Costs: Private bus operators are weighing whether to seek fare relief after diesel hikes, with industry warning services may become unsustainable. Agriculture & Food Security: The CWE has allocated Rs. 1 billion to improve paddy drying and storage, plus extra machinery support for cooperatives, while officials also discuss rice import needs. Energy & Environment: Cabinet approved a national plan and digital platform to respond to oil and hazardous chemical spills, as shipping and port activity grow. Ports & Logistics: SLPA cautions that Trincomalee port expansion plans must be backed by real commercial demand and feasibility, not just master-plan ambition. Investment Push: Western Province Governor Hanif Yusoof met US officials to attract investment in ports, logistics, energy and data centres, urging openness to unlock FDI. Trade & Standards: IBCSL will lead a delegation to China-South Asia standards talks in Chengdu to help exporters cut non-tariff barriers. Workplace & Industry: HNB added three directors, while LOLC and CIC reported strong FY26 operating performance amid sector resilience.

Marine & Hazard Response: Cabinet approved a new National Plan and a digital platform to respond to oil and hazardous chemical spills, expanding MEPA’s updated response plan as ship traffic and port activity grow. Inflation Watch: CBSL Governor Nandalal Weerasinghe said inflation could edge toward 7% if fuel-price pressure persists, prompting vigilance after the policy rate was raised to 8.75%. IMF Update: IMF completed the Fifth and Sixth Reviews under the EFF, releasing US$695m and keeping Sri Lanka’s recovery on track, though risks remain. Boardroom Moves: HNB appointed three directors, including a representative linked to Ceylon Steel, as the bank strengthens governance. Conglomerate Performance: LOLC Holdings reported strong FY26 operating growth, while CIC Holdings posted steady revenue and profit gains despite cyclone-linked disruptions. Construction & Industry Events: INFRACON 2026 (3-5 July) will spotlight HVAC-R, power/energy, green grid, safe water and build materials. Standards for Exports: IBCSL will lead a delegation to a China–South Asia standards conference in Chengdu to cut non-tariff barriers for Sri Lankan exporters. Transport Cost Pressure: Private bus operators plan talks over diesel-driven cost stress after fare revisions were not approved. Energy Pricing Reform: IMF-linked confirmation says Sri Lanka achieved cost-reflective pricing for electricity and fuel, supporting programme benchmarks. Sustainable Finance: CSE partnered with the EU Green Recovery Facility to build momentum for GSS+ bond issuance. Agri & Animal Health: Mannar Island ran a rabies control drive with hundreds of sterilizations and vaccinations.

Tourism Investment: Uva Greenlands Estate (Pvt) Ltd signed a USD 5.1m BOI deal to expand Ella’s 98 Acres Resort & Spa in two phases over 36 months, targeting about 150 direct jobs and a stronger ultra-luxury positioning. Energy Pricing Reform: The IMF confirmed Sri Lanka has met cost-recovery pricing for both electricity and fuel under the EFF, a key step for the next Executive Board review. Fuel Cost Pressure: CPC said a Rs 57bn fuel subsidy allocation ends by June, while retail fuel prices were raised again amid West Asia conflict; the government is also tightening QR fuel distribution to cut consumption and protect foreign exchange. Environment & Land Use: Sri Lanka will gazette five forest reserves in Anuradhapura on June 5 under the “Wanaspathi” programme, including protection for the Ellanga wewa cascade system and new elephant corridors. Trade & Exports: Export Development Board data show April export earnings at US$ 1.38bn and US$ 5.784bn for the first four months, with tea a major contributor. Market Watch: Sri Lankan shares slipped as health care, industrials and energy dragged sentiment, with foreign investors net selling. Corporate Moves: Hayleys agreed to sell Maldives resort assets linked to NH Maldives Kuda Rah for USD 17.25m, after recognising an impairment tied to the disposal.