Financial Times - Trade, investment in Jaffna hit by fighting

Trade and investment in northern Sri Lanka, particularly banking, has been adversely affected by the current fighting while mobiles have been compulsory switched off in the region.

"The Ministry of Defense requested that mobile phone services be shut down in Jaffna,” Supun Weerasinghe, Head of Corporate Planning and Quality Management at Dialog said adding that they would resume services only after the Defense Ministry gives the okay.

He said there are about 300,000 mobile phones in the northeast region. Banks in Jaffna are facing severe cash flow shortages and cash transactions are highly restricted, Upali De Silva, Secretary General of the Bankers' Association told The Sunday Times FT on Wednesday. He said banks open for approximately an hour when the curfew is lifted. Over the counter transactions are limited to Rs.1000 a day and ATM cash withdrawals are restricted to Rs.900 a day. De Silva added that cheque clearing is at a virtual standstill. "Until such time that the curfew is lifted and transport routes are opened, we feel this situation will prevail," he said.

Chamber officials in Jaffna were not contactable due to phone difficulties caused by the war. Journalists at the Udayan newspaper in Jaffna said trade had come to a standstill and even if supply lorries reached the northern town, the goods would only last a week to 10 days the most. Traders had attempted to bring goods through a merchant ship but it has not materialized due to several difficulties. "If ships are allowed to bring in goods, there will be a little bit of an improvement," one journalist said. The curfew was relaxed on Thursday for about six hours, easing the situation a bit with government departments and most shops opening but conditions are far from normal.

"Sales have generally dropped and deliveries have been difficult since the current situation erupted about a month ago," said a trader in Colombo who deals with the north. "Due to the curfews and violence in those areas, stocks are not moving and we are having issues because we cannot deliver goods across to that area." A supply ship has reached the town on Thursday from Colombo.

The problem is made worse by suppliers in the south showing reluctance to make deliveries to the affected area due to the ongoing hostilities. Although individuals from the North have been coming to Colombo for collections, those routes have also experienced disruptions.