Business

LONDON — Britain unleashed more austerity this week in its latest annual budget and cut its growth outlook, blaming the impact of global markets turbulence rooted in China. 

Finance Minister George Osborne also warned that a potential “Brexit”, or departure from the European Union (EU), would risk damaging the nation's economic recovery, ahead of a key referendum in June.

Chancellor of the Exchequer Osborne said the government would seek additional spending cuts totalling £3.5 billion ($5 billion, 4.5 billion euros) by 2020, when it expects to reach a budget surplus despite higher borrowing.

The chancellor pointed to a "dangerous cocktail of risks" including "turbulence in financial markets, slower growth in economies like China, and weak growth in the developed world" for the growth downgrades.

Analysts were meanwhile quick to point out that it was not clear which areas would bear the brunt of the latest cuts. 

"How these cuts will be made has not been outlined other than described rather vaguely as savings," said ING economist James Knightley. "With [government] department budgets already having been cut aggressively it will be interesting to see where new efficiency savings can be made."

In a speech lasting around one hour, Osborne forecast that the British economy was set to grow by 2 per cent this year, down from a November estimate of 2.4 per cent.

Growth was expected to stand at 2.2 per cent next year, down from 2.5 per cent.

Fiscal watchdog the Office for Budget Responsibility (OBR), which compiles official government forecasts, said the latest predictions were based on the assumption that Britain remained in the EU.

Osborne, a top figure in Prime Minister David Cameron's Conservative Party and government, also revealed plans to cut several taxes levied on businesses amid strongly divergent views from companies on whether Britain should quit the EU.

"This is a budget for small businesses," Osborne told lawmakers.

There were also significant tax cuts for the oil and gas industry, which has been hit by tumbling energy prices.

All eyes on Brexit vote 

Turning to Britain's June 23 referendum on EU membership, Osborne repeated the government's strong desire for the UK to stay within the 28-nation trading bloc.

"Britain will be stronger, safer and better off inside a reformed EU — and I believe we should not put at risk all the hard work the British people have done to make our economy strong again," Osborne told parliament.

Cameron is leading the battle to keep Britain in the EU, but several key members of his Conservative party, notably Mayor of London Boris Johnson, want to leave.

"There appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty while the precise details of the UK's new relationship with the EU were negotiated," the OBR said Wednesday, citing various external reports.

The government will meanwhile plough more cash into education and infrastructure projects. 

Osborne approved major railway developments in northern England and in London, and also unveiled a package of extra funding for education, which could see students being made to learn maths until the age of 18, up from 16.

In addition, Britain will impose a tax on excessive sugar levels in soft drinks starting in two years' time to cut down on spiralling childhood obesity levels.

With one eye on the referendum outcome, Osborne avoided traditionally unpopular vote-losing measures, like tax hikes on petrol and beer, and delivered only a very slight increase for tobacco.

"The chancellor had to tread carefully to avoid attracting the wrong kind of attention and undermining the government's popularity in the build up to the EU referendum," noted Scotiabank economist Alan Clarke.

Osborne on Thursday defended his plans to introduce a new sugar tax to tackle obesity, criticised as "absurd" by the soft drinks industry.

"There are always going to be people who will oppose these kinds of things — but I think this is going to be one of those landmark public health decisions that we take as a generation," Osborne told ITV News.

"It's disappointing that the government has chosen to single out soft drinks," said Jon Woods, general manager of Coca-Cola in Britain.

"If the aim is to reduce obesity, this levy flies in the face of evidence from around the world which shows taxes do very little, if anything, to reduce sugar and calorie intake or obesity levels but do add to people's cost of living," he added.

The levy on drinks with more than five grammes of sugar per 100 millilitres will be introduced in two years as Britain battles some of the worst obesity rates in Europe.

Only a handful of countries such as France, South Africa and Mexico have attempted such a tax. 

Osborne said Britain's childhood obesity problem was "really bad news", and that it was "clearer and clearer that the biggest source of sugar intake has been sugary drinks".

However, the drinks industry said it was already taking action to combat obesity and that other food-and-drink sectors needed to help shoulder the burden.

"In 2015 we agreed a calorie reduction goal of 20 per cent by 2020," said British Soft Drinks Association Director General Gavin Partington.

"By contrast, sugar and calorie intake from all other major take-home food categories is increasing — which makes the targeting of soft drinks simply absurd," he added.

According to 2015 figures, Britain is one of the worst countries in Europe for childhood obesity with 28 per cent of children aged between two and 15 overweight or obese. 

During his budget announcement, Osborne said that an average five-year-old child consumes his own body weight in sugar each year.

"We are going to use the money to double the amount we spend on sports in schools... so that kids are getting physical activity as well," he said Thursday.

Media reports suggest the tax could add 8p (0.10 euros, $0.11) to a can of cola. 

The government hopes the tax will raise £520 million a year (661 million euros, $732 million).

Osborne also unveiled new measures to raise taxes paid in the country by multinational companies, following a public outcry over methods used to avoid tax.

While corporation tax will drop from 20 per cent to 17 per cent in 2020, the finance minister set out a series of measures he said would increase British tax revenues by 9 billion pounds ($12.8 billion, 11.5 billion euro).

He added that the plan would "make Britain's business tax system fit for the future".

"It will deliver a low tax regime that will attract the multinational businesses we want to see in Britain, but ensure that they pay taxes here too," Osborne told the lower house of parliament.

"All of these reforms to corporation tax will help create a modern tax code that better reflects the reality of the global economy," he elaborated.

From April 2017, there will be a cap for the amount that major multinationals can deduct from their taxes by borrowing in Britain to invest elsewhere.

The treasury will also set new "rules to stop the complex structures that allow some multinationals to avoid paying any tax anywhere, or to deduct the same expenses in more than one country," Osborne said.

He added that the treasury would strengthen a withholding tax on royalty payments that allow some firms to shift money elsewhere.

There has been public outrage in Britain and other countries around the world over the tax arrangements of multinationals, particularly in the tech industry.

Earlier this year, US internet giant Google agreed to pay £130 million ($185.4 million, 172 million euros) to Britain following a government inquiry into its tax arrangement.

In early March, Facebook announced that it would declare advertising revenue from its top British clients in Britain instead of Ireland, where it has its European headquarters, meaning it should pay more tax.

There had been a backlash against the social network after it emerged that it paid only £4,327 (5,572 euros, $6,119) in corporate tax in 2014.

Osborne said the measures followed guidelines set out by the Organisation for Economic Cooperation and Development (OECD) economic grouping last year.

The OECD has estimated that national governments lose $100-240 billion (90-210 billion euros), or four to 10 per cent of global tax revenues, every year due to the tax-minimising schemes of multinationals.

AMMAN —  Preliminary results announced in a Hikma Pharmaceuticals press statement  this week showed group revenue for the year ended December 31, 2015, increased by 2 per cent in constant currency to  $1.44 billion in 2015.

"Injectables revenue climbed by 3 per cent in constant currency, driven primarily by growth in Europe and the Middle East and North Africa [MENA] region," the statment said. 

"Meanwhile, core operating profit rose  4 per cent in constant currency, with strong profitability in injectables and branded offsetting expected declines in Generics," it added, noting that the results followed an exceptionally strong year in 2014.

In 2015, Hikma successfully implemented an organic growth strategy across all three of its core business segments: injectables, branded and generics. Hikma launched 92 new products and received 220 product approvals across all countries and markets, expanding and enhancing Hikma’s global product portfolio. 

"Its acquisition of Roxane, a well-established US specialty generics company, has brought transformational scale and growth opportunities, adding a broad portfolio and a large, differentiated pipeline of niche products," the company continued in the statement.

"In addition, Hikma’s swift integration of its acquired US company, Bedford Laboratories, has delivered new high-value products and is expected to drive Injectables’ growth in 2017," it elaborated.

The statement indicated that in Europe significant investments were made in the injectables manufacturing capabilities and that  Hikma’s businesses in MENA performed well. 

The company credited its acquisition of EIMC United Pharmaceuticals (EUP) for boosting its capabilities in oncology and injectables in Egypt. 

"The outlook for 2016, is that group revenue is expected to be in the range of $2.0 - 2.1 billion in constant currency, reflecting strong growth across all three business segments and the consolidation of 10 months of revenue from the Roxane acquisition," it said.

The strong operational growth in various locations was coupled with responsible initiatives in surrounding communities. 

Contributing to the health and wellness of its employees and local community members, Hikma organised a breast cancer awareness campaign, in several of its companies worldwide, in addition to a “Walk Against Hypertension.” It also held its annual global “You are Hikma” campaign to improve the medical health and safety awareness of its employees. 

The company encouraged community service through its Global Volunteering Day. It partnered with Tkiyet Um Ali, Charity Clothing Bank and SOS Children’s Villages in Jordan to provide for the vulnerable during Ramadan, and food and clothes drives were held in Algeria and Tunisia as well. 

Hikma continued supporting communities through medicinal donations, donating critical treatments to Syrian and Palestinian refugees, and to the people of Guinea in Morocco, aiding in the fight against Ebola.

Said Darwazah, chief executive officer of Hikma, said:  "Following an exceptional 2014, our branded and injectables businesses performed strongly in 2015 and we made excellent strategic progress in US generics, transforming the future prospects of the group." 

"Our businesses in MENA are performing very well.  We achieved excellent growth in our key markets in 2015 whilst continuing to invest in our pipeline to support future growth," he added. 

"This goes hand in hand with our corporate responsibility strategy, which is an integral part of Hikma. As we expand into global markets, we are committed to continue playing a positive role in the communities we touch, not only through our high-quality pharmaceuticals, but also by promoting philanthropy, medical awareness and community engagement,” Darwazah concluded.

LONDON — Oil producers including Gulf members of the Organisation of Petroleum Exporting Countries (OPEC) support holding talks next month on a deal to freeze output even if Iran declines to participate, OPEC sources said, increasing the likelihood of the first global supply deal in 15 years.

That a meeting could go ahead with or without Iran indicates a shift in the stance of Gulf oil exporters including Saudi Arabia, who had previously maintained that all major producers should participate in any agreement.

OPEC and non-OPEC producers will meet in Doha on April 17, Qatari Energy Minister Mohammed Bin Saleh Al Sada said, following a February agreement between Saudi Arabia, Qatar, Venezuela and non-OPEC Russia to stabilise output.

"To date, around 15 OPEC and non-OPEC producers, accounting for about 73 per cent of global oil output, are supporting this initiative," Sada indicated in a statement. Qatar holds the OPEC presidency in 2016 and has been organising the effort.

Oil prices rose on Wednesday, supported by the announcement and on growing signs of a decline in US crude production. Brent crude was trading above $40 a barrel, up from a 12-year low of $27.10 reached in January.

The reluctance of Iran to join an accord while it seeks to boost its oil exports to recover market share after the lifting of Western sanctions has been cited by OPEC sources as a potential roadblock to an agreement.

Sources familiar with the matter said the issue was among the factors, which caused an earlier plan to hold the producer meeting on March 20 to be dropped.

But on Monday, Russian Energy Minister Alexander Novak said after talks in Tehran that a deal could be signed in April and exclude Iran. An exemption for Iran is not a deal breaker, OPEC sources said.

"It's a setback but it will not necessarily change the positive atmosphere that has already started," said one OPEC source from a major producer, referring to Iran saying it will not join any freeze accord.

Novak said he talked to Sada and Saudi Oil Minister Ali Al Naimi on Wednesday. With the freeze deal, the oil market would rebalance as early as late 2016, Novak added, but without it the rebalancing would not happen until late next year.

A freeze in output would at least stop adding to the excess supply that has caused prices to collapse from levels above $100 a barrel seen in June 2014.

OPEC delegates have said that further action including a supply cut could follow by the end of the year, depending on Russia's commitment to the freeze and how much oil Iran adds to the market.

Hard to backtrack

A second delegate from OPEC said a pact that failed to include Iran was not the worst possible outcome.

However, "if the others freeze and the Iranians are outside the agreement, it will not help the market unless the demand is very large", this delegate added. "January output is already at high levels."

Backtracking on the deal would risk jeopardising the recent rally in oil prices, other OPEC sources said.

"You can't ignore all other oil producers. The meeting is likely to go ahead," a third source said, adding that the April meeting was likely to discuss and finalise details of the deal. "We will not just meet for the sake of meeting."

It was unclear whether all 13 OPEC members and which outside producers would attend. Kuwait and the United Arab Emirates have said they would commit to the freeze if other major producers also participated.

Novak said Qatar was sending invitations to all OPEC members as well as to some producers outside the organisation.

"After it receives confirmations it will be possible to talk about the exact number of participants," Novak said. "Iran said it was ready to take part in this meeting." 

The willingness of Iraq, the biggest source of OPEC supply growth in 2015, to join the deal is also important. Baghdad on Monday said the freeze initiative was acceptable. 

AMMAN — The General Union of Arab Chambers of Commerce, Industry and Agriculture, during its council's 120th session held on Wednesday in Muscat, decided to appoint Jordan Chamber of Commerce (JCC) President Nael Kabariti as head of the council for two years, according to a JCC statement.

AMMAN — The  Amman Chamber of Industry (ACI) and the European Bank for Reconstruction and Development (EBRD) agreed on Wednesday to cooperate in helping small- and medium-sized enterprises develop through providing support in the administrative, technical and financial fields.

ACI President Ziad Homsi and Heike Harmgart, EBRD head of office in Amman, signed a memorandum of understanding to this effect on the sidelines of a workshop the chamber organised to highlight programmes and services EBRD presents to the industrial sector.

Homsi called on industrialists to benefit from the bank's services such as consultation, loans and grants, noting that the sector faces financing challenges.

He indicated that banks' financing  to the sector do not exceed 11 per cent of total loans, with only 3.3 per cent of the credit facilities benefiting the small and medium-sized industries  .

Harmgart said EBRD will present comprehensive pack of programmes aimed at helping small and medium projects to succeed, pointing out that funding to schemes in Jordan has reached 500 million euros.

EBRD presents non-refundable grants to cover a basic percentage of a  consultation project, with up to 10,000 euros ceiling to local consultations and 50,000 euros to international ones, Harmgart said.

Also on Wednesday, Jordanian Businessmen Association's (JBA) board of directors met with the World Bank's delegates currently visiting the Kingdom, and discussed ways to enhance business environment in Jordan to attract more investments to development zones.

The meeting also discussed the outcomes of the London donor conference, as the bank will provide Jordan with a soft loan to enhance the business environment and develop several areas witnessing the implementation of development and investment projects with additional incentives to help employ Syrian refugees and Jordanian young people.

JBA President Hamdi Tabbaa said the association presented a study on the tax situation in the Kingdom to the government, recommending the gradual change of the entire country into a development zone according to economic circumstances.

He also spoke about the high electricity charges and their negative impact on the competitiveness of the national economy, and the industrial sector in particular.

AMMAN — Industry, Trade and Supply Minister Maha Ali on Wednesday commended the Cabinet's decision granting merger insurance companies exemptions and incentives.

These incentives include a three-year exemption from income tax, a three-year exemption from annual fees imposed under the law regulating the work of insurance companies, in addition to exemptions from ownership transfer and capital raise fees for the new merged company, Ali said in a ministry statement.

She expressed hope that these government procedures would contribute to encouraging insurance companies to merge to develop the insurance companies through having strong companies with big capitals. Merging could also contribute to boosting Jordanian insurance companies to penetrate regional markets, Ali noted.

BEIJING — China's economy will not suffer a "hard landing", Premier Li Keqiang said on Wednesday, stepping up Beijing's charm offensive to reassure investors that the government can manage slowing growth.

"We have long-term confidence in the Chinese economy and this confidence isn't without a foundation," Li told his once-a-year press conference at the end of the National People's Congress (NPC), the communist-controlled legislature.

Beijing has been looking to send positive messages in recent weeks after expansion in the world's second-largest economy fell to a 25-year low of 6.9 per cent in 2015, raising concerns on global markets and sending commodity prices plunging.

Li has reduced the target for this year to a range of 6.5-7 per cent, while ratings agency Moody's has lowered its outlook on Chinese bonds.

Authorities have spent hundreds of billions of dollars to defend share prices and the yuan currency in recent months, raising questions over their commitment to market reforms.

Li acknowledged that the government had "controlled some things that should not be controlled, hindering productivity", and said leaders had failed to ensure a fair playing field in the economy.

But he added: "As long as we persist with reform and opening up, China's economy won't have a hard landing."

Questions have to be submitted in advance for the set-piece event. Li spoke for two hours in a cold room under glittering chandeliers in the Great Hall of the People.

"China's economy has both hopes and difficulties," Li said, adding: "If we look at it in light of the fundamentals and the overall trend, the hopes are greater than the difficulties."  

Coal and steel       

Li spoke after the rubber-stamp parliament approved an economic roadmap for the next five years and a charity law.

Votes at the NPC are normally overwhelming approvals of measures decided long in advance by the ruling Communist Party.

As the balloting started, a voice boomed over a loudspeaker asking delegates to press the voting buttons. Thousands of arms in suit jackets reached across the desks simultaneously.

There were 2,778 “Yes” votes for the 13th Five Year Plan, or 97.27 per cent of the total, the official Xinhua news agency reported, and 2,636 in favour of the charity law — 92.49 per cent.

The five-year plan for economic and social development pledged average growth of at least 6.5 per cent a year over the 2016-2020 period, implying that at times it could be lower.

Such plans are a legacy of China's command economy era but still guide policymakers at all levels.

Cracks in the economy are already showing as growth slows. Thousands of miners went on strike in northeastern China to protest at unpaid wages, amid fears of mass layoffs as the government seeks to restructure lumbering state-owned industries.

Premier Li worked to dispel fears on the issue. 

"We have chosen the two sectors of coal and steel to make breakthroughs, and at the same time avoid a massive wave of lay-offs," he said.

The finance minister last week said China's labour regulations harm workers by reducing job opportunities.

The labour contract law passed in 2007 restricts companies' ability to fire workers. Minister Lou Jiwei said it was discriminatory towards people entering the workforce, and so ultimately counterproductive.

His comments on the sidelines of the National People's Congress (NPC) echo debates around the world on the conflict between job creation and protection of existing employees.

Communist China was once a command economy where many workers could rely on their work unit, or "danwei", for everything from housing to medical care. 

Three decades ago it embraced market principles, dubbed "socialism with Chinese characteristics", triggering a huge economic boom. But some sectors remain bloated and inefficient, particularly state-owned enterprises.

Lou said the labour law's "original purpose was to protect workers, but in the end it harms the interests of some workers, and may lead to a rapid rise in wages", increasing firms' costs and leading them to move operations overseas.

"Ultimately who is harmed? It's workers who are harmed," he added. "The job opportunities are reduced."

He did not propose specific reforms but said the finance ministry "must point out problems it sees, because it has an effect on the entire economy".

Reducing overcapacity in industrial sectors such as steel and coal has become an urgent priority for the world's second-largest economy as it seeks to transition away from investment-led economic growth towards a consumer-driven model.

But such cuts have raised worries of vast lay-offs akin to the wave of 30 million job losses experienced in the 1990s when Beijing shuttered thousands of state-run companies, and the ruling party is always keen to prevent social unrest. 

At the opening of the NPC, Premier Li pledged to kill "zombie enterprises" and cut excess capacity through mergers or liquidations.

Earlier this month, the country's top economic planner reiterated a goal of reducing steel capacity, an industry suffering a global glut, by 100-150 million tonnes within five years, but added that such cuts would "definitely not" cause mass unemployment. 

In February, the minister of human resources and social security estimated there would be 1.8 million lay-offs due to restructuring in the coal and steel industries, without giving a timescale.

To cushion such blows, Li said the central government would allocate 100 billion yuan ($15 billion) over the next two years for a labour resettlement fund.

Tough reforms decreed by central authorities have often suffered from a lack of implementation in China.

Lou said that pushing through change would require determination from top authorities and a willingness to "gnaw the hard bone", an expression roughly meaning to "bite the bullet".  

According to the plan, the gross domestic product (GDP) is set to rise from 67.7 trillion yuan ($10.4 trillion) last year to more than 92.7 trillion yuan in 2020.

'Good Samaritans' 

It also seeks to significantly reduce poverty by 2020. Officials have declared charitable organisations essential to achieving the goal and hope to encourage more giving with the charity law. 

As the economy has grown to the world's second-largest, charitable giving has lagged, with China ranking 144th out of 145 countries for giving, according to a study last year by the Charities Aid Foundation.

Chinese citizens donated just $16 billion in 2014, according to the most recent data from the China Charity Information Centre, less than 0.2 per cent of annual GDP.

Xinhua said the new law was intended to "recruit help from good Samaritans in realising the 2020 poverty alleviation target".

Separately, China's labour protections are coming under fire from high places as economic restructuring pits officials concerned about social stability against a lobby arguing inflexible policies are stifling job creation and suppressing wages.

Company executives, especially at foreign or private firms, have long been critical of labour contract legislation and minimum wage laws that make it difficult for owners of an ailing business to turn it around or find willing buyers.

Now policymakers anxious to modernise China's slowing economy and slash overcapacity in heavy industry are making similar noises.

The export powerhouse province of Guangdong, a trillion-dollar economy that often leads the way on market reforms, said this month it would scrap scheduled rises to the local minimum wage in 2016, and keep it at 2015 levels, slightly over 1,500 yuan ($230) per month, through 2018.

The law fixed a 40-hour working week for most employees, regulated maternity leave, and required businesses to be able to prove their case for sacking employees for incompetence or criminality or face heavy penalties.

Its standards aspire to those of developed economies, rather than emerging markets, though enforcement is weak. 

The European Union, for example, limits the working week to 48 hours, while China's maximum is about the same, after allowing up to 36 hours a month overtime.

Regulations say minimum wages should be between 40 and 60 per cent of the local average, though in practice 30-40 per cent is typical, compared with about 30 per cent in the United States and 50 per cent in Britain.

Protections against dismissal are comparable to Japan's.

"The Chinese government wanted the best, the most polished labour legislation they could find, and simply imposed it on an economy that couldn't cope with it," said Geoffrey Crothall, communications director at China Labour Bulletin.

Chinese wages have risen at double-digit rates since the 2008 act, so factory workers now earn significantly higher than competitors in Bangladesh, Vietnam and Cambodia, and some think labour protections are hampering an economic transformation that will benefit workers in the long run.

"For enterprises and employees, the extent of protection afforded by the Labour Contract Law is unbalanced," Lou said, adding it encouraged companies to moves jobs from China to other countries.

Labour activists say the protections are still needed, and businesses often break labour law with impunity, especially if they have local government connections.

Danny Lau, who owns a factory in Dongguan city in Guangdong, said he expected the government would soon "consolidate and streamline" the contract law to lower costs for manufacturers.

That would be welcome news to businesses exasperated by official interference in their operations.

"We have these government bureaucrats who show up at our facility arbitrarily, and they say, 'let's look at your payroll'," said Ravin Gandhi, chief  executive officer of GMM Nonstick Coatings, which runs an office in Dongguan.

"And they say, 'Thirty per cent of your facility workforce is going to get a pay raise. These people here are going to get 15 per cent.' They don't look at your profitability, nothing."

As a result, GMM opened its next facility in India, which Gandhi said was 40 per cent cheaper than China, even allowing for inferior infrastructure.

"Of course, I'm going to take my foot off the gas pedal [in China]," he added. "I'll put those dollars in India."

When Reuters visited a printing factory in Chongqing in January, the boss was interrupted mid-interview by local officials, who had come to make sure he had paid salaries before the Lunar New Year holidays.

"[Last year] they called us into a meeting and said, 'You can't lay off employees'," he added.

Many economists say China has posted lacklustre business activity and investment figures, while official unemployment stays below 5 per cent, precisely because companies saddled with high wage bills and low profit margins can't cut debt or invest.

"It's better to support workers than supporting loss-making firms," Li Yining, an economist at Peking University, said on the sidelines of the annual parliament meeting.

Local officials have reason to be cautious about diluting protections, however, as a rise in worker protests in their patch can be both physically dangerous and career limiting.

Cui Ernan, labour analyst at Gavekal Dragonomics, said the government might even increase labour benefits to calm agitated workforces, particularly in regions with heavy lay-offs from coal and steel.

"Recent labour strikes at the end of 2015 and the beginning of 2016 are at historical highs," she noted.

COLOMBO — Sri Lanka's economic growth slowed slightly to 4.8 per cent last year due to a fall in exports of its main commodity, tea, official figures showed on Tuesday.

The figure marked only a marginal decline on 2014, but will add to concerns after international lenders and ratings agencies warned the country is heading for a debt crisis.

Tea production dropped 2.6 per cent during 2015 to about $545 million, the Department of Census and Statistics indicated in a statement, while exports fell by nearly 7 per cent to 306 million kilogrammes.

The declines were offset by services, which grew 56.6 per cent, and industrial output, which expanded by 26.2 per cent.

Last week, the government announced a series of emergency tax increases to combat a debt crisis that has forced it to seek a bailout from the International Monetary Fund (IMF).

Prime Minister Ranil Wickremesinghe has put on hold for one year plans to lower corporate taxes, and has revived a capital gains tax abolished in 1987. 

The moves are aimed at repairing the economy, battered by mounting debt repayments that led ratings agency Fitch to downgrade Sri Lanka's credit rating last month. 

In a special statement to parliament, Wickremesinghe blamed the previous government for allowing debt to spiral, saying his ministers had uncovered $7 billion in loans unaccounted for in the national budget. 

However, the current administration embarked on a spending spree after taking power in January 2015 to deliver on election promises of higher wages and lower prices, increasing the deficit and sparking concern over the balance of payments. 

Last month, Sri Lanka received pledges of over $2 billion in loans and equity from the Asian Development Bank over three years.

It is in bailout talks with the IMF, although the sum it is seeking has not been disclosed.

Separately, Sri Lanka announced lengthy daily power cuts nationwide as the staterun electricity monopoly struggled to restore supply after the island's worst blackout in 20 years.

The Ceylon Electricity Board said its main Chinese-built coal-fired power plant that supplied more than half the country's electricity was still offline following a massive system breakdown on Sunday.

"We will need a few days more to get this power station online and this means we need to ration electricity across the country on a staggered basis," a board official told AFP.

Several small plants are now supplying power to the whole of the country until the 900-megawatt plant is restarted, but cannot produce enough electricity to go around.

The cuts will occur for seven and a half hours, five and a half hours during the day and two hours at night, the official said, without saying how long the rationing would last.

Authorities are probing the cause of an explosion and fire at a main distribution centre outside the capital Colombo on Sunday that caused the entire electricity grid to switch off automatically.

Power and Energy Minister Ranjith Siyambalapitiya has said authorities have not ruled out sabotage.

The country, which suffers sporadic power cuts, was plunged into darkness for at least seven hours on Sunday before electricity was restored. 

The former government's power minister criticised the Chinese-built plant in 2014, saying it had broken down more than 35 times in the first three years of operation.

Sunday's was the second major power failure in less than a month, following a three-hour disruption in late February, and the worst since May 1996 when the entire country was without electricity for four days.

The latest outage came as an investigation was under way into last month's embarrassing disruption during a visit by New Zealand Prime Minister John Key, who had described Sri Lanka as a shining light in Asia.

In an another development, a Chinese company said Tuesday it will resume construction of a $1.5 billion port city project in Sri Lanka, about a year after it was suspended because of questions about its environmental impact.

CHEC Port City Colombo said it welcomed the Sri Lankan government's decision to allow the project to continue. It said a supplementary environmental impact study has been completed to "understand and fully assess the project's impacts and mitigation measures in developing a comprehensive plan to maximise the benefits".

The city is to be built on reclaimed land off Sri Lanka's west coast and include a golf course, marinas, apartments, hotels and malls.

The project created disquiet in neighbouring India over the possibility China might be allowed outright land ownership. China's influence in Sri Lanka makes India anxious because it considers the Indian Ocean region to be its strategic backyard.

Chinese President Xi Jinping inaugurated the project during a visit in September 2014 during the tenure of former president Mahinda Rajapakse. At the time, Xiwon Colombo's support for a proposed maritime "Silk Road" link between China and Europe.

The leading company in the consortium building the port city is a major Chinese contractor, China Communications Construction Co.

Rajapakse relied heavily on China for infrastructure projects. During his administration, China provided loans for an airport, seaport, highways and power plants, and became the largest investor in Sri Lanka.

The port city project was suspended after Rajapakse lost an election in January 2015. The government of his successor, Maithripala Sirisena, said it wanted to review all projects to ensure they were environmentally viable and corruption-free.

Sirisena's government has also moved to mend relations with the United States and India which were strained during Rajapakse's pro-Beijing administration.

The decision to continue the port project is seen as an effort to reassure China.

AMMAN — Deputising for His Majesty King Abdullah, Prime Minister Abdullah Ensour on Tuesday inaugurated the INTERCEM international conference for the Middle East and North Africa for cement industries.

Ensour highlighted the significance of benefiting from economic opportunities available in the Middle East and enhancing the performance of industrial sectors to face social and industrial challenges.

The cement sector has always been a main driver in the economic development since the establishment of the first cement factory in Jordan in 1951, until the cement industry became a "successful" sector in Jordan, where five companies produce and market cement, the premier said. 

He added that cement companies have acquired a special characteristic in the economy and the development of local communities through their corporate social responsibility initiatives .

The government cooperated with investors, local communities and non-government organisations to develop regulations that protect the environment and preserve it, until reaching environment-friendly cement factories that use the most modern technologies, Ensour continued.

Amman Chamber of Industry (ACI) President Ziad Homsi said the industrial sector contributes to around 25 per cent of the national economy, and the total capitals of the sector's institutions exceed $6.2 billion. 

The industrial sector's exports constitute some 90 per cent of the total national exports, and reach more than 120 countries, Homsi added, noting that the sector is the second highest employer after the public sector.

There are five factories working in the Kingdom's cement sector with a total capital exceeding JD236 million and an annual production of more than 12 million tonnes, the ACI president noted.

INTERCEM Chief Executive Malcolm Shelbourne said the conference is held with the participation of more 250 representatives of international cement companies and investors from the MENA region.

The event provides a good opportunity for industry experts to meet and discuss the latest challenges facing the sector to cope up with new ideas that can contribute to the growth and prosperity of the sector, Shelbourne added.

Amman hosts the conference for the first time since its inception in 1985, after it spanned more than 50 countries across the five continents.

Ensour toured an exhibition, held on the sidelines of the event, which showcased new technologies in the cement industry and relevant logistics services.