Sector: Hotels and Travels

Jetwing unveils Rs. 200mn Hotel J: Five star rooms for budget travellers


One of the leading hotel chains in Sri Lanka, Jetwing, invested Rs. 200 million to develop its sixth hotel in Negombo, which is also the first of its kind in the country and the first under the second brand the company introduced and would expand to capture budget travellers.

With the government expecting the country to become a major tourism destination and targeting more than 2.5 million arrivals by 2016 to generate US$ 2.75 billion foreign exchange earnings, Jetwing plans to expand both its brands across the island.

The group plans to open several hotels within the next two years under its original brand ‘Jetwing’ in Yala with 80 rooms and 10 villas, Colombo 70 room and 28 apartments, Jaffna 70 rooms, Uppuveli 60 rooms and 28 apartments and Dambulla with 98 rooms.

Jetwing’s new brand and its first hotel under the brand, Hotel J, is the first of its kind in Sri Lanka which offers selected service facilities to customers.

Situated in Negombo, Hotel J with 35 well furnished rooms along with some facilities which are included in the package such as satellite TV and Wifi, introduced ‘Choose and pay for what u need’ method.

Jetwing Hotels is one Sri Lanka’s leading luxury hotel chains, and the new brand is the groups first budget limited service hotel which would mainly focus on both local and international budget travellers. The group hopes to expand the brand and the concept in other parts of the country, according to Jetwing Hotels Chairman Hiran Cooray.

The guests pay for the room, he said, prices ranging from US$35 to US$ 70, the hotel would provide a room with five star facilities, including Wifi, TV and traveller would have to pay, for anything extra including meals separately.

With the increasing number of tourists to the country shown as per data of the Sri Lanka Tourism Development Authority, Tourist arrivals in the first four months of this year increased 11.7 percent to 368.627 from 330,116 recorded in the same period last year. Arrivals in the month of April increased 14.7 percent to 79,829 from 69,591 registered in previous April, many hotels are building up to cater to various segments.
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...by i3gconsultants@ 21:06:48 on 2013-06-11

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Sector: Plantations

Mixed aroma over 2013 tea crop


Upturn in Sri Lanka’s, as well as global, tea crop has evoked mixed sentiments over the industry’s fortunes with some taking heart from a likely record output whilst others expressed that it could hurt prices.
With positive growth in tea crop witnessed in the first four months this year, top tea industry analysts predict that Sri Lanka would see a record year in tea production for 2013.

While the tea production for April 2013 exceeded the previous best of 32.2 million kilograms achieved in 2005, analysts hinted that 2013 will end with the highest ever tea yield of 335 million kilograms. Attributing the increase in tea production to the favourable weather conditions that was witnessed so far this year, Forbes and Walkers Tea Brokers Managing Director Yshan Fernando told the Daily FT that since cumulative production for January to April in 2013 was 9.5% higher than the corresponding period of last year, the chances of having a record high is possible.
“Witwwwh a production of 115 million kilograms for the first four months this year, we have noted that this is approximately 10 million kilograms higher than the production of 2011. Based on this, we predict the annual production for 2013 to be around 335 million kilograms,” Fernando said.
While the highest ever tea production to date was recorded in 2010, which had a crop of 331 million kilograms, Asia Siyaka Commodities President/CEO Anil Cooke expressed that on paper, based on the calculations and if the gain is maintained, 2013 being a record year is achievable, but cautioned that one should not be optimistic about it.
“We have seven months more to go and a lot can change. The conditions are drying up earlier than expected so a lot depends on the second half of the year,” said Cooke.
Cooke pointed out that plantation companies are stressed due to the limited access to fertilisers and this coupled with uncertain weather conditions for the year poses as a challenge for 2013 to be the highest ever tea production year.
Producer broker John Keells Ltd. said most major black tea producing countries have recorded substantial production gains up to end April compared to last year. Kenya has recorded the biggest gain with an unprecedented surplus of 44.3 million kilograms in just three months compared to the corresponding period of last year, followed by Sri Lanka with 10 million kilograms up to end April.
“These two countries are on track to come close to their highest production years, with reports from Kenya suggesting that the yearend crop could exceed the 410 million kilogram barrier, which would be an unprecedented gain compared to their highest ever crop of 398 million kilograms achieved in 2010,” John Keells said.
It has been predicted that with favourable weather reported in the two major plantation regions of India (North/South), India’s crop too is expected to record gains by the year end. Already, until end March, India’s crop has recorded a surplus of approximately four million kilograms. The few black tea producing countries that have recorded marginal loses in the first quarter of the year are Uganda, Malawi and Indonesia.
John Keells also said that global black tea production in 2013 has increased substantially which could result in surpass demand pushing prices downwards.
“We are already witnessing a dramatic drop in prices in Mombasa and Sri Lanka with each passing sale and latter current price levels are rapidly dropping below cost of production, incurring heavy financial loses to the plantations in the high and medium grown sectors which could erode all the gains that were made in the first four months of the year,” John Keells added.
John Keells recalled that the Mombasa Sale No. 21 concluded recently saw an average of $ 2.30 which was the lowest on record since sales in 2009/2010. Similarly, the Kenyan average of $ 2.41 at auctions a fortnight ago too was the lowest.
“The drop in prices is not entirely due to over production, as much of the woes appear to be self-inflicted due to a surplus of teas on offer being of a poor product quality,” John Keells said, adding that Sri Lankan prices at all elevations enjoyed a boom commencing in the second half of 2012 and into the first four months of 2013 with monthly sale averages regularly exceeding the Rs. 400 mark which should be hard to match in the immediate future with the exception of low grown averages.
Tea exporter Imperial Tea Group Managing Director Jayantha Karunaratne opined similar thoughts to the two tea brokering firms. “We in the private sector also feel that 2013 will be a record year for the tea industry. If the current conditions continue, Sri Lanka will easily reach, or even exceed, a production volume of 335 million kilograms,” predicted Karunaratne.
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...by i3gconsultants@ 21:06:43 on 2013-06-11

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Sector: Plantations

Tea industry: A new sustainability approach critical


'What do unions do?' In a landmark title by this name (1984), Harvard University economists Richard Freeman and James Medoff demonstrated that labour unions have two faces. One is confrontational and the other is cooperative.

The confrontation face emerges when unions negotiate to increase the wages of its members; the cooperation face emerges when the union feeds back worker level information to management and uses its influence on workers to foster improvements in performance and productivity. Freeman and Medoff call this second cooperative element 'voice'. The union can give 'voice' to insights accruing at the worker level and effectively 'voice' to workers the needs of management.

Conundrum for the tea industry
The tea industry in Sri Lanka is in a serious conundrum. The industry believes that the cost of wages is too high, and that they cannot be further increased without losing financial sustainability. But the wage received by workers is hardly able to get them up to the poverty line, even when both husband and wife of a household are employed. It's a poor sustainability strategy for Sri Lanka's prime export industry to depend on the necessity of having a permanent underclass of workers, who remain desperately poor, despite long and hard work under harsh conditions.

Economics of bargaining
Economists recognise that in atomised market conditions the normal approach to 'bargaining' is quite drastic. That is, to silently vote with your feet: individual blue collar workers exit industries that pay less and move to work that pay more. As economic opportunities increase this becomes more pronounced (the unemployment rate in Sri Lanka excluding the North and East is reported to be 3.9 percent in the third quarter of 2012).

One reason for such drastic action is that workers as individuals cannot negotiate their wages or properly explain their problems to management.

This is the case with the tea industry (and also, incidentally, with the apparel industry). If solutions are not found, capable workers will continue to exit these industries and problems will become more severe. If solutions are delayed there will come a tipping point from which it will be difficult for the industries to recover - workers who exit cannot be readily wooed back.

This is where the 'voice' of unions can play an important role. They can prevent the worker exit by providing 'voice' to workers, and negotiating win-win outcomes with management. Essentially, unions are able to overcome asymmetric power, information and prisoner's dilemma type issues involved in individual bargaining outcomes, presenting collective commitments and collective benefits to management and workers.

The benefits of cooperation
The previous VR Insight 'A win-win solution for estate workers and management' demonstrated that both workers and management would stand to gain if the incentive structure of wages were changed. The present incentive structure implies daily payments. For a household of five (a couple with one aged parent and two young children) to rise above the poverty line, both husband and wife must work at least 19 days of 26 work days offered a month. This is because the effective wage for each person for the 19th day is 2,405.

In short it is a perverse payment model that can easily foster discouragement to work, when for reasons of illness or emergencies, work days are missed early in the month, and the 19-day target seems unlikely to be achieved.

It is the cooperative function of unions to 'voice' this type of worker level insight to management and help build wage structures that can better incentivise work.

Having done so, the unions can also 'voice' to workers the importance of increasing their monthly work-days and take responsibility for delivering collective performance improvement results.

When unions take on the task of such collective education and encouragement of workers, they are not only likely to be more effective, but they also save significant costs to the organisation which otherwise must undertake these tasks through costly management interventions and structures.

Fair trade concerns for tea
Ceylon tea is a global brand. Increasingly, global consumers are more concerned with, and want to be better informed about, the working conditions of those who produce what they consume. It is well known that Sri Lankan estate workers are an extreme underclass.

Compared to the rest of the population they suffer severely diminished public services in terms of schools and hospitals. Their housing reflects slum conditions and their work involves constant exposure to the elements. All this is compounded by the problems in wage structures and income explained above.

Tea exporters should take serious note. Being too narrowly focused on labour costs can become counter-productive. After a brand is named and shamed by global watchdogs on labour rights, the respectability of that brand is not easily recovered. The point is to close the barn door before the horse has bolted. The plantation workers collective agreement is up for re-negotiation after March 31, 2013. It is an opportune time for both the unions and management to see beyond the confrontational face of trade unionism and to invoke their cooperative face. The costs of failing to do so are serious, not only for the workers but also for the industry and for Sri Lanka's economy.

Verité Research provides strategic analysis and advice to governments and the private sector in Asia.
-SundayObserver
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...by i3gconsultants@ 21:06:31 on 2013-06-10

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Sector: Hotels and Travels

Southern beaches sizzle on hotels’ price war


Hotels in the south are in the throes of a price war in the wake of a drop in summer arrivals this year.

“We are all the time looking at pricing to suit market conditions,” Aitken Spence Head of Hotels Malin Hapugoda said adding that “the price war is on the beach and to a lesser extent on the round-trips.”

He noted that some of their competitors were “really cutting” prices and this was expected to continue as most arrivals were moving into smaller guest houses and smaller hotels.

Among strategies adopted by southern resorts were offering attractive packages with discounts and other reductions. “Apart from the Ayurveda resort, others are facing a huge price war,” Mr. Hapugoda explained adding that price determines the market and in spite of providing quality and service, today the market was dependent on price alone.

Some competitors were providing half board double even at US$75 (compared to the average $100) during these months. Prices in the South have been slashed by around 50-30 per cent, in some cases.

Bookings were said to continue to take place on the short term and it was unpredictable as most would be made at the last minute, he said.

Other hoteliers say that while April was good in terms of bookings, May and June were not upto expectations and hoped to get a better season in July and August during the Kandy Perehera period
Tourist Hoteliers Association President J. Kehelpannala however dismissed reports of a ‘price war’ saying prices are based on the product offer.

He said each hotel has its own pricing and referred to the current situation as an occupancy drop during this period that has caused prices to be determined by the demand and supply for the products on offer.

However, recent credit card offers have also cashed in on the price war with reductions in the range of 20 – 40 per cent and also free stays for the cardholder.
-SundayTimes
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...by i3gconsultants@ 21:06:54 on 2013-06-10

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Sector: Hotels and Travels

Where did the million tourists stay? Not in star properties


Pegasus chairman outlines pluses and minuses in big picture

Although Sri Lanka had registered the arrival of one million tourists last year, the impact of this traffic had not been felt by the star class properties in the country, Mr. D.C.R. Gunawardena, Chairman of Pegasus Hotels of Ceylon PLC has said in the company’s recently published annual report.

"It is therefore prudent to surmise that this influx of tourists have patronized the bungalows, guest houses and residences of relatives as their preferred abode as opposed to regular hotels," he said

"Whilst this casts doubt on the classification of "tourist", it certainly displays the lower spending potential of tourists which doesn’t auger well for the industry as a whole."

He has drawn attention to what he called ongoing "mass scale credit card promotions" offering steep discounts for top class properties. This pointed to the hotels needing "local filler clientele" to utilize capacity with fewer foreign guests than expected.

"All this points out that Sri Lanka is yet to become more adept at packaging and directing its tourism offering attractively," he said

Gunawardena said that although the big picture indicated many positives, the reality was that the hotel industry continued to face challenges such as the dearth of trained staff, price wars, lack of rooms, inconsistent service standards and inadequate marketing efforts in foreign markets.

He identified the upside to include rapid development of road networks complementing the tourism product and encouraging other tourism supplementary byproducts.

Expressways, he said, will make long traveling time shorter and comfortable and even remote locations which hitherto would have been off the tourism menu now being offered making the options sweeter.

"Also, efforts taken by the authorities to develop Colombo city and suburban infrastructure, beautification and ensuring cleanliness are to be lauded as tourism friendly initiatives which will further complement the tourism product," he said.

The year under review had seen Pegasus which calls itself "a city resort" posting a group revenue of Rs.493.2 million, up from Rs.426 million a year earlier and a profit after-tax of Rs.142 million against the previous year’s Rs.120.7 million.

At company level revenue was up to Rs.397.3 million from Rs.335.6 million a year earlier and the profit after-tax to Rs.123.8 million from Rs.99.8 million.

Group profits translated to an earnings per share of Rs.4.68, up from Rs.4.39 a year earlier. The directors have recommended a dividend of 50 cents per share with the Chairman saying that although the bulk of capital expenditure was behind them, they needed to be ready to face the challenges ahead.

The company has invested heavily in ongoing refurbishment including a purpose built grand banquet hall to accommodate 700 plus guests. This is expected to "catapult the hotel into the big league for hosting large weddings and corporate events," Gunawardena said.

Pegasus has a stated capital of Rs.515.2 million, group capital reserves of Rs.675.1 million and revenue reserves of Rs.152.4 million in its books. Total assets are running at Rs.1.5 billion and liabilities at Rs.162.9 million.

Net assets per share had grown to Rs.44.18 from Rs.40.40 a year earlier with the share trading at a high of Rs.54.50 and a low of Rs.29 during the year under review against a trading range of Rs.83 to Rs.35 the previous year.

Carsons Cumberbatch & Company is the dominant shareholder with 93.09% of the company with all other investors individually owning less than one percent of the share capital.

The directors of the company are: Messrs. D.C.R. Gunawardena (Chairman), Mano Selvanathan, Hari Selvanathan, Sega Nagendra and P. M. Withana.
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...by i3gconsultants@ 22:06:09 on 2013-06-02

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Sector: Motor

Vehicle registrations pick up in April


Sri Lanka’s motor vehicle registrations have picked up slightly in April 2013 though still remaining far below levels seen after taxes were hiked last year, an analysis by an equities research house shows.

Automobile registrations picked up to 1,974 in April 2013, from 1,589 in March, the highest since taxes were raised in April 2012 in a mistaken belief that car imports rather than central bank credit was causing a balance of payments crisis.

Car registrations were driven by a spike in re-conditioned or used cars which rose to 1,154 in April from 583 in February and 778 in March, led by a pick up in Japanese made Toyota cars an analysis of data from Sri Lanka’s motor vehicle registry by JB Stockbrokers shows.

Re-conditioned Toyota registrations rose to 820 in April from 461 in March and 268 in January.

Registrations of used Toyota’s imported from Japan fell to below 300 a month in the second half of 2012.

Used Honda registrations rose to 288 in April from 281 in March, from around 100 units the last quarter of 2012.

Before the tax 3,500 to 4,000 new and pre-owned cars were being registered a month.

Three wheeler registrations rose to 8,280 in April from 6,864 in March, the highest since January 2013 when 8,178 were registered. Before the tax hike about 12,000 three -wheelers were being registered a month.

There was a slight pick-up in all vehicle registrations in January 2012 and which petered off in the next two months.

Motor cycles registrations rose to 14,363, also a four month high from January’s 14,002, but far below the 22,000 units seen before a tax hike.

The data may point to a slight recovery in economic activities.

Last year taxes were raised twice for ordinary citizens while elected rulers got tax free and state workers got tax slashed in a travesty of liberty and equal treatment of citizens.
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...by i3gconsultants@ 22:05:24 on 2013-05-21

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Sector: Telecommunication

Broadband charges: Sri Lanka ranks world’s lowest


Sri Lanka has been ranked No.1 in the world with the lowest entry level fixed broadband charges, according to a report published by the International Telecommunication Union report Measuring the Information Society 2012, the Telecommunication Regulatory Commission of Sri Lanka (TRC) said yesterday (13).

Sri Lanka is also one of the first countries in the world to narrow the gap between the bandwidth offered to subscribers and actual speed delivered.

High speed broadband (HSBB) access services such as ADSL, WiMAX and 4G LTE are three major fixed broadband technologies available in the country. Among them, ADSL has the biggest market share. 4G LTE rollout has now commenced in the country and its availability is still limited to a select number of people in urban areas, the TRC said.

Sri Lanka has achieved this global rating for broadband charges within a short period of time after the TRC took steps to ensure subscribers got value for money and entry prices were affordable to as many people.

"Until recently, 512kbps was the highest speed available for residential fixed broadband users. Apart from low capacity bandwidth of services, users have undergone many difficulties when the internet during busy hours, especially when accessing content hosted from overseas. Speed tests were conducted by the TRC Broadband Monitoring Unit in 2010 and it detected low speeds in the range of 10 percent of total capacity," the TRC said.

"Corrective measures were then taken by the TRC and consequently speed levels have improved up to a level of 80 percent. Services ion the range of 512kbps have become obsolete with speeds now ranging from 4Mbps and 8Mbps, a standard service in residential areas," it said.
reported on The Island
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...by i3gconsultants@ 21:05:15 on 2013-05-14

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Sector: Plantations

Rubber Jumps to 2-Month High as Thai Export Curb Bolsters Prices


Rubber futures jumped to the highest level in almost two months after shipment restrictions by Thailand, the world’s largest exporter, boosted cash prices above the benchmark contract on the Tokyo Commodity Exchange.
Rubber for delivery in October climbed as much as 3.3 percent to 285.2 yen a kilogram ($2,884 a metric ton) on the Tokyo bourse, the highest level for a most-active contract since March 13. Futures traded at 279.8 yen at 10:16 a.m., paring this year’s losses to 7.5 percent.
Thai rubber free-on-board rose 0.3 percent to 89.10 baht ($3) a kilogram yesterday, the highest level since March 12, according to the Rubber Research Institute of Thailand. It was a 13 percent rebound from this year’s low of 79 baht reached on April 19. The nation, the biggest rubber producer, extended curbs on exports by 60 days to the end of May to boost prices, Deputy Farm Minister Yuttapong Charasathien said April 1.
“Futures in Tokyo corrected higher as the market is undervalued compared with Thai cash prices,” Hideshi Matsunaga, an analyst at broker ACE Koeki Co. in Tokyo, said by phone today.
Thailand aims to lower shipments of rubber by 10 percent through May to help support prices, Yuttapong said on April 11. The government has no immediate plan to sell rubber from stockpiles, he said.
Rubber for delivery in September on the Shanghai Futures Exchange lost 0.6 percent to 20,380 yuan ($3,318) a ton.
Reported on Bloomberg
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...by i3gconsultants@ 20:05:00 on 2013-05-14

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Sector: Plantations

Sri Lanka plantation workers win 18-pct wage hike


Apr 05, 2013 (LBO) - Sri Lanka's tea and rubber estate workers have won an 18 percent hike in their basic daily wage from April 01 effective for two years, which may cost firms in excess of 250 million rupees a year, industry officials said.
The basic wage was increased from 380 to 450 rupees a day up 18.4 percent, while an attendance allowance (for 75 percent attendance on days offered work) was increased to 140 rupees a day from 105 rupees, a spokesman for the Employers Federation of Ceylon said.
A so-called price share supplement remained at 30 rupees a day, making the fixed daily wage 480 rupees, up 17 percent.
"I feel that there was a reasonable increase," Planters Association chief Lalith Obeysekera "Unions have given an undertaking on improving productivity."
The collective agreement was signed with Ceylon Worker's Congress, Lanka Jathika Estate Worker's Union and the Joint Plantations Trade Union Centre.
Unions and employers had reached an agreement after negotiating for one day.
Assuming a worker came to work 75 percent or more days the daily take home would go up 20.3 percent from 515 rupees to 620 rupees. An over-kilo incentive paid when a worker plucks more than the norm for a field had been raised to 20 rupees a kilo from 17 rupees.
Industry sources say the attendance allowance and the over-kilo allowance will mostly go to female workers who put in eight hour working days compared to male workers who go off at 1.30 pm and do not come to work.
Industry sources said the wage hike may add about 30 to 50 rupees to cost of production of a kilo in tea companies which were labour intensive. Cost of production now ranged about 360 to rupees 380 a kilo.
Companies had workforces of ranging from 7,000 to 12,000. Based on the workforce companies may have bear additional costs of 250 to 350 million rupees, industry analysts said.
Rubber and oil palm which were less labour intensive would have a smaller intake. Due to collective bargaining with trade unions there are no difference is wages between tea and other types crops or between different geographical regions.
Plantations firms close to the Colombo district in particular had been facing labour shortages due to migration to the cities.
Sri Lanka's rupee depreciated by around 15 percent against the US dollar last year pushing inflation and cost of living up and also driving up tea prices in rupee terms.
But commodity prices, including foods, gold and oil have eased over the past few weeks amid a strengthening dollar.
From this year and the state has also imposed a higher export tax on bulk tea which tends to penalize producers.
- reported on LBO
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...by i3gconsultants@ 20:05:58 on 2013-05-14

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Sector: Information Technology

SriLankan receives global certification in IT


SriLankan Airlines received yet another global certification in Information Technology, when it was awarded the ISO 9001:2008 accreditation for Quality Management Systems in Software Development. Nishantha Wickremasinghe, Chairman, SriLankan Airlines said, “SriLankan is always committed to improve its infrastructure in conformity to international standards.







SriLankan IT team involved in the ISO 9001:2008 Quality Management System implementation.


The receiving of the ISO quality endorsement would further strengthen our journey which would contribute immensely to the airline and the countrys aviation sector.” The airline’s IT Division last year received the ISO/IEC 27001:2005 accreditation for its Information Security Management System (ISMS), certifying that its business operations conform to global standards in information security. Kapila Chandrasena, CEO SriLankan said, “The achievement of this global certification is very important at a time the airline is going through multifaceted changes in terms of improving its quality in service, development and growth. The receiving of the ISO certification further endorse that our software development meet international quality standard.” The latest certification was obtained following stringent audits from Det Norske Veritas (DNV) of the Netherlands. Periodic audits would ensure that the standard is continuously maintained. Kamal Nanayakkara, SriLankan’s Head of Information Technology, said, “The ISO 9001:2008 accreditation provides solid evidence that in the fast-changing technological environment of the global air transport industry, SriLankan's technological advancement process is indeed world class. The methods our engineers use for in-house development of software for deployment throughout the airline are up to the standard of the global IT industry.” SriLankan has also won a number of significant awards for Information Technology. In November 2010 the UK’s Chartered Institute of Management Accountants (CIMA) awarded global second place for its groundbreaking efforts in business intelligence. It also won two Platinum Awards from the International Air Transport Association (IATA), and a merit award at the Sri Lankas National Best Quality Software Awards 2010. The ISO 9001:2008 certification affirms that SriLankans software development process follows a sound set of quality management principles, from start to finish in the development of any new system, and includes maintenance procedures.


Dailynews

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...by i3gconsultants@ 13:10:11 on 2012-10-15

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Sector: Telecommunication

'Sri Lanka's telecom industry competitive'


The overcrowded mobile phone industry in Sri Lanka should go for mergers and acquisitions with intensifying competition eroding profitability. Sri Lanka’s Telecom industry has been overcrowded during the last couple of years and this remains the key medium-term risk to telecom operators in the country.


Sri Lanka’s mobile industry is one of the most competitive markets in the region with five operators competing for a total addressable population of 21.7 million and the competition among the five operators, Dialog, Mobitel, Etisalat, Airtel and Hutch is expected to remain high in years ahead and Trevor Mendis ,Course Director, IIHE for University of Wales, UK BSc and MBA programmes said.


He made these views addressing a seminar on “Strategic Business Growth


Through Mergers Acquisitions and Restructuring” organized by the Charted Management Institute (CMI) UK along with KPMG.


Anilana Hotels Ltd MD Asanga Seniviratne said “In many cases, companies resort to mergers or acquisitions because they believe that it is the easiest and fastest way to growth. However, local business societies still fear to getting involved in mergers and acquisitions. In Sri Lanka, most of the mergers and acquisitions are led by the side broking industry. However, Sri Lanka does not seem to have specialized companies in the practical deal making area. If the level of competition is very high, only option is to go for acquisitions or mergers, otherwise, rivalry will take over. When you’re negotiating, you have to make sure that the team that you have is on your side in practical deal making area, sometimes you will find your members are working against you. Secrecy is very important in a country like Sri Lanka and it is key to have a trustworthy team when it comes to making a good deal. Today, family franchises are moving out and getting equity and world expertise in. One of the biggest issues we are facing in our industry is trying to break this family tradition.”


Dailynews

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...by i3gconsultants@ 13:10:06 on 2012-10-15

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Sector: Power and Energy

Sri Lanka has to pay more attention to pricing energy: officials


 Sri Lanka has to take actions to diversify the country's energy mix and pay more attention to pricing energy and cut losses in state energy enterprises to keep the economy stable, top officials said.Treasury Secretary P B Jayasundera told an academic forum of the alumni of Colombo University that a recent drought has highlighted the need to diversify the energy mix and fix prices. "So actions to promote renewable energy, actions to promote energy conservation steps, actions to price energy cannot be ignored," Jayasundera said. "[It] cannot be postponed either. We can stagger it, but the direction needs to be clearly recognized." Jayasundera himself has played a role in getting Chinese finance to fast track coal power which is the cheapest source of energy after large hydro power. Most renewable energy sources - in addition to being dependent on weather - are also more expensive than coal and have built in escalation clauses. Last year Sri Lanka tumbled into a balance of payments crisis due to large volumes of credit taken by state energy enterprises to manipulate energy prices amid a drought and rising global oil prices. Sri Lanka's key renewable energy source, hydro dried up requiring more thermal energy from expensive imported oil and cheaper coal. State-run Ceylon Petroleum Corporation ran up losses as it subsidized state-run Ceylon Petroleum Corporation. The CEB also delayed payments to independent power producers forcing them also to take credit. The CPC was also owed money by state-run SriLankan Airlines, which ran up losses of over 150 million US dollars in 2011. The Central Bank which did not allow interest rates to rise in the face of rising credit demand, instead injected newly created money into the banking system, putting pressure on a currency peg and losing foreign reserves. Sri Lanka's rulers also subsidize diesel in the weird belief that inflation is diesel related and not monetary. By the first quarter of 2012, CEB was unable to even pay the Treasury the taxes it collected from over-priced petrol. In February energy prices were jacked up, interest rates raised and the exchange rate was allowed to move in line with monetary policy. The rupee then fell from 110 to 134 and has since recovered to 128.50 to the US dollars. Though Sri Lanka was under an International Monetary Fund backed program to keep the deficit to 6.2 percent of gross domestic product, which would have allowed the exchange rate and inflation to remain low, off-budget spending de-railed the country. The two energy enterprises ran up losses of about 1.5 percent of GDP making nonsense of a central government deficit of 6.2 percent. IMF resident representative Koshy Mathai responding to an audience at a pre-budget seminar at the Ceylon Chamber of Commerce said while there could be inefficiencies, high generation costs were a key problem with power in particular which took time to rectify. "There was a benchmark - that is to say target not a binding commitment - that those enterprises would be brought to a break-even position," Mathai said. "Obviously that did not happen due to a combination of reasons. We can only hope that reforms are made to facilitate that." There are expectations that Sri Lanka's Public Utilities Commission will be regulating petroleum prices from next year. Though the PUC is supposed to adjust power prices every six months, it can be overruled by populist political action. If monthly fuel adjustments and quick power tariff adjustment are made, analysts say balance of payments pressure can be largely avoided in the future and inflation can be kept low as in developed countries where fuel prices change daily. Analysts say ruler energy price manipulations have played a part in all of Sri Lanka's balance of payments crises. Oil, metals, food and other globally traded commodity prices typically go up when monetary policy in reserve country central banks principally the Federal Reserve is loose and such currencies 'depreciate' against commodities. Sri Lanka came up with an automatic pricing formula after CPC and CEB ran up large losses triggering a balance of payments crisis in 1999/2000 but it was abandoned four years later under an economic strategy devised by a Marxist politician called 'removing the plug'. In 2008 the CPC lost money on oil derivatives as it tried to manipulate oil prices.


LBO

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...by i3gconsultants@ 13:10:59 on 2012-10-15

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Sector: Beverage Food and Tobacco

Hingurana Sugar opens









The machinery


The Hingurana Sugar Company which was closed for almost 15 years has now commenced operations under the management of LOLC and Browns Group. The factory,which was built as one of the largest sugar factories in the region with modern British machinery, was opened in 1959. The factory functioned smoothly until mid 1980’s when it was privatized and given to a single owner. During this time the Sevenaglala, Palwatte and Kantale factories too were functioning and Sri Lanka was heading towards being a self stuffiest nation in sugar.


At that time the factory in addition to sugar cane was also manufacturing spirits and had their own electricity since 1962.The Sugar factory that was originally commissioned by the Gal Oya Development Board was transferred to the Sri Lanka Sugar Corporation in 1966. However the entrepreneur who took over the factory could not manage the property despite the demand for sugar being high in the country. Mismanagement, labour and union issues were the order of the day and finally it folded up operations in 1993. In addition to the workers, the out growers who supplied sugarcane to the factory were left high and low and eventually the government took over the property in 1999.


Since then, a VRS scheme was offered to the workers and compensation too were paid to them. Two years ago, under the Mahinda Chintana re structuring of abandoned state entities programme, the Hingurana factory was given over to a consortium which comprised of LOLC and Browns Group. Government held the controlling share of 51 percent. CEO of the company, Gamini Ratnayake, said that they had invested over Rs.1.2 million to turn the company.








Sugarcane being brought to the factory


The new management will also re-activate the distillery but he emphasis that they would not manufacturing liquor. “We will give the spirits out so that manufactures can make perfumes and other related products.” He also disclosed plans to provide 2 MV of energy to the national grid using sugarcane waste. H. Waruna, Assitanant Human Resources Manager of the factory said the opening of the factory had provided livelihood hoods to over 800 people in the area.


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...by i3gconsultants@ 16:10:43 on 2012-10-14

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Sector: Beverage Food and Tobacco

Prima in $ 40 Mn expansion drive in Sri Lanka


Prima Ceylon Ltd., Sri Lanka's the dominant household multinational brand, has earned praise for its role in contributing to our export revenues. "We meet 80% of Sri Lanka's domestic demand for wheat flour and more importantly, we also do significant wheat flour exports, originating from our Trincomalee mills, thereby contributing to Sri Lanka's exports drive as well," said Tan Beng Chuan, Group General Manager of Prima Group Sri Lanka on 10 October.








Tan Beng Chuan, Group General Manager of Prima Group Sri Lanka ( L ) met Rishad Bathiudeen, Minister of Industry and Commerce recently


Rishad Bathiudeen, Minister of Industry and Commerce met Beng Chuan and discussed Prima's supply side role emphasizing on his Group's sister firm Prima Ceylon Ltd, which is a Lankan household brand name that supplies close to 80% of domestic wheat flour needs. Minister Bathiudeen said: "We acknowledge Prima for its role in Sri Lanka's domestic food security by maintaining strong buffer stocks. I am also given to understand that Prima wheat flour milled at the Trincomalee plant, consists of almost 90% of our annual exports to Indonesia, which stood at $ 118 Mn in 2011. We thank Prima for supporting our exports drive and also being a strong business link to Indonesia, an ASEAN member." "We also play a significant role in Sri Lanka's food security as we always keep about three month's flour stocks with us," revealed Prima officials accompanying Tan Beng Chuan. "Prima is also the main supplier to Sri Lanka's bakery and F&B sectors. We estimate Sri Lanka's annual wheat flour market to be between 550,000 - 600,000 tonnes annually," they said, adding: "We are currently on $ 40 Mn manufacturing and infrastructure expansion drive in Sri Lanka." Prima's multinational network operations in Asia are in Malaysia, Indonesia, Australia, Hong Kong and China.


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...by i3gconsultants@ 16:10:52 on 2012-10-14

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Sector: Land and Property

Imperial Builders to develop land in Slave Island


The Board of Investment of Sri Lanka signed an agreement with Imperial Builders (Pvt) Limited of Pakistan to develop a land in Slave Island, Colombo. Naveed Hussain Lakhani, Chairman, Imperial Builders (Pvt) Ltd said, "We are glad to sign the agreement with BOI under section 17 for a mixed used development project at Slave Island. The entire development will be US $ 60 million which will maximize the economic worth of the land and the surrounding area in the near future." Furthermore, the phase of private development will be launched at cash purchased UDA land facing Akbar Mawatha Road and will cover a land extent of 107 perches where a mixed retail and residential towers will be launched very soon. We believe that this development will also change lives of the masses.








Naveed Hussain Lakhani, Chairman of Imperial Builders
(Pvt) Ltd, receives the Certificate of Registration from Chairman / Director General of the BOI, M M C Ferdinando. Azeem Tanveer, Executive Director and Fysal Samana, General Manager of Imperial Builders were also present.


I hope for a successful implementation of our projects which will eventually lead our Group into further investments in Sri Lanka. This is just the beginning." Chairman Director General of the BOI, M.M.C Ferdinando stated at the signing.


"This project provides an insight into the important role that FDI can play in addressing social issues in addition to developing the economy. I must also add that this investment is from Pakistan, a country which is one of Sri Lanka's longstanding friends. As Asia experiences growth, investment to Sri Lanka will flow increasingly from our Asian neighbours such as Pakistan. Conditions for greater economic co-operation with Pakistan are ideal and offer many opportunities as both countries have entered into a free trade agreement, investor protection agreement and double taxation agreement."Imperial Builders (Pvt) Ltd. is a BOI (Sri Lanka) registered company since mid 2011, and established in 1979 in Karachi-Pakistan. In collaboration with senior officers of the government and UDA - Imperial Builders has initiated a comprehensive plan, "Slave Island Station Passage Redevelopment Programme". The mutual motive behind is to beautify the skyline of Colombo and introduce modern lifestyle to Sri Lanka Citizens. This project is expected to be a US $ 60 million investment and a 525 perch of land to be re-developed. Based on Slave Island, a prime commercial area of Colombo, the phase-I of the project is set to change lives and lifestyles of dwellers by developing them modified apartments with much better living features and secured future. For this purpose Imperial Builders (Pvt) Ltd through proposals has secured the bid of development and signed MOU with UDA (Urban Development Authority) to undertake the construction of high density modern apartments for railway families and community occupying the private land in form of shanties. Moreover the phase II of development will comprise of consolidated commercial potential, high rise residential condominiums with all luxury facility like swimming pool, gymnasium, clubs, restaurants, play grounds etc and also a 4 Star Hotel component in the private development of developer. The relocation will be laid on the demarcated Railway Land where 4 individual blocks of multiple stories will be constructed with limited facilities. Imperial Builders is a sister concern of Lakhani group which started its journey in 1979. With over 3 decades of experience in construction industry of Pakistan having developed multiple mega projects, residential units, condominiums, resorts, hotels, commercial office projects, shopping malls and until this stage they have delivered 65,000 houses and 4.5 Million Sq.Ft of Commercial Space across Pakistan. Other than Imperial Builders, Lakhani Group has 15 other Companies under its umbrella, serving in different fields such as education, textile manufacturing, hospitality, trading, IT, fashion, Health, Banking and NGO's to serve the society. This agreement was signed by Chairman/Director General of BOI Mr. M M C Fernando and Naveed Hussain Lakhani, Chairman of Imperial builders (Pvt) Ltd. Also present at the signing from Imperial Builders were Azeem Tanveer, Executive Director and Faysal Samana, General Manager.


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...by i3gconsultants@ 16:10:27 on 2012-10-14

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Sector: Healthcare

Lanka invites joint ventures in pharma industry


Rohita Thilakaratne, President Pak-Sri Lanka Business Council, on Wednesday said that Sri Lanka was planning to set up an industrial park for pharmaceutical industry and Pakistani pharma investors should explore possibilities of establishing joint ventures in that facility in Sri Lanka Thilakaratne along with Jayalath Weerakkody, High Commissioner of Sri Lanka, visited Islamabad Chamber of Commerce & Industry and exchanged views with business community on prospects of further improving trade and economic relations between the two countries. He said that textiles and tourism were also potential areas of cooperation between the two countries as tourism was one of the fastest growing sectors in Sri ALanka. Sri Lanka also offers cheap and well trained manpower, which could be an additional advantage for Pakistani investors.


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...by i3gconsultants@ 16:10:38 on 2012-10-14

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Sector: Hotels and Travels

Uga Bay, Pasikudah to open end October










Uga Bay, Pasikudah

Uga Bay, Pasikudah the Rs 850 million luxury boutique hotel is scheduled to be opened by President Mahinda Rajapaksa at the end of October, said Uga Escapes Managing Director Priyanjith Weerasooria at a press briefing in Colombo. Weerasooria said that guests could experience the culture of Eastern Sri Lanka by visiting ancient temples, historical forts, traditional villages and the incredibly warm hospitality of the local people. “This is an exciting time for Uga Escapes, as we make a firm commitment to invest in our marketing strategy to raise awareness of our hotels and develop a strong brand presence within the up market hotel industry in Sri Lanka and internationally. He said that in comparison to luxury boutiques in the region, Uga Escapes offers very competitive rates for the luxury they offer.” The land has been acquired on a 33 year lease from the government, he said. Weerasooria said that they intend increasing room capacity to 200 and were looking at new ventures down South and the hills. He said Uga Escapes had already committed an investment of over Rs 2.5 billion and plans to invest another Rs one billion in the future. Uga Bay in Pasikudah, mainly focuses East European countries, particularly CIS countries, as this population loves the sunny beaches, he said. He expressed hope that the unique luxury boutique concept would be a huge triumph among local guests and Uga Bay Pasikudah would be a hit among the leisure loving locals. The accommodation at Uga Bay has been unique in many ways. Spread across a 9 acre picturesque landscape along the beachfront and set just meters away from the pristine beaches of the stunning Pasikudah Bay, it comprises 46 spacious 500 square foot rooms, a Bay Suite and a Beach Chalet. The architecture was contemporary tropical, fused with a Mediterranean theme set amidst swaying palms. Each cluster features two Beach View Studios upstairs and two studios at ground level with direct access to the beach. All studios offer an enchanting view of the azure ocean and is complete with plush king sized beds, high-end entertainment systems and private decks. All units come with modern amenities, including a 42’’ LCD TV, Cable channels, IDD phones, complimentary Wi-Fi, tea/coffee making facilities, mini bar, in-room safe, individually controlled air conditioning and more. The chic Bay Suite, stands alone, boasting of over 1,000 square feet of indoor and outdoor space, exuding first-class elegance, offering a private haven, tastefully designed with luxury and comfort in mind. The living space overlooks the pool with outdoor decks on either side, accessible from both bedrooms with king sized twin beds. he Beach House, is a two storied chalet by the sea, with your own private plunge pool and terrace with unobstructed views of the bay.


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...by i3gconsultants@ 16:10:54 on 2012-10-14

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Sector: Banks Finance and Insurance

Cash deposit ATM network launched in Colombo


Sri Lankan consumers will enter the era of direct cash payments through ATMs on Octo 15 when five cash deposit taking ATMs will start operating in Colombo for the first time. Abdul Rahuman, Managing Director of One & Only, the owning firm of the ‘PayTM’ network, said the initiative is a joint venture with Japan Cash Machines Co Ltd (JCM), the well-known maker of money-handling machines, equipment, and electronic cash registers for the global financial industry with $ 217 milion revenue (2010) and also listed in Tokyo and Osaka exchanges.








Rishad Bathiudeen, Minister of Industry and Commerce launches South Asia’s first commercial scale deposit taking ATM network on October 11 at Level III- WTC


“Our initial investment in this venture is $ 500,000 for Phase one. From October 15, Lankan consumers can directly pay Sri Lankan currency notes of Rs 10 to 5,000 denominations to this machine to settle their Dialog, SLT-Mobitel, Etisalat, Hutch and Airtel payments, as a start.


The consumers need not have an account with us to make the payment. Before the end of this month, we are planning to introduce Water Board and Electricity Board payments once we complete the necessary procedures with them. By end of 2013, subject to amendments to the Motor Traffic Act and government approval, we are ready to accept Police traffic fines and charges and issue receipts which have legal vaildity. We have not integrated insurance instalment deposits yet but based on Insurance company applications, we are ready to extend our services to them in future as well,” revealed Rahuman. A demonstration showed the ‘PayTM’ machines, in their two models ‘Smart Fiony’ and ‘Elegant Fiony’, randomly accepting various Sri Lankan currency notes with denominations upto Rs 5,000, updating the mobile user accounts and issuing receipts within five to ten seconds, for two mobile phone numbers of two different mobile networks. “The system works in any language of choice in Sinhala, Tamil or English. The machines are equipped to authenticate the user identity with a pin number which is already active and alternatively, the fingerprint scanner which we have not activated yet. Once we activate the fingerprint scanner, local banks can join us to allow their depositors to withdraw from their savings accounts through our network. When that happens, these ATMs will become dual performers-both to accept and dispense cash. “We are in discussions with Dialog Axiata to enlist Dialog eZCash online and if successful, such transactions too will become a reality with us in the next six months. We already support eZCash partially since top ups are allowed through our network,” Rahuman said. Mobile money transaction platforms such as Dialog eZCash, Sri Lanka’s first such with Cenral Bank permission, allows users to conduct a wide variety of mobile money businesses using just a mobile phone but without a bank account. Dialog officials indicated to Ministry of Industry and Commerce that approximately 800,000 Dialog users as already having registered for this facility. Asked of ‘PayTM’’s revenue plan, Rahuman revealed: “We charge a commission but not from our ATM users but the service partners. For example, from mobile phone networks, we charge on average about 5.5% commission per transaction. ‘PayTM’ machines are also mounted with 20 inch wide electronic multimedia display for advertisements mounted on top of the transaction screen which in future to be expanded to 32 and 50 inches. Initially, we will advertise our mobile network partners free of charge.” “‘PayTM’’ machines are also equipped to accept credit card transactions but we need payment gateway authorisation from the credit card issuer (the Bank) to make this facility possible and therefore we have not activated it yet. We are planning for this facility and also Police traffic fines and banking transactions in Phase II after mid-2013, subject to authorisations” Rahuman revealed. “Sri Lanka is setting a new record in the SAARC region, with a commercial scale deposit taking ATM network going live in Colombo for the first time with just five machines. What is interesting is that these ATMs are not linked to any banks either unlike the traditional ATMs” said Rishad Bathiudeen, Minister of Industry and Commerce speaking at the soft-launching of the “PayTM” cash payment network at the world Trade Centre.


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...by i3gconsultants@ 16:10:51 on 2012-10-14

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Sector: Hotels and Travels

Sri Lanka 'Uga Bay' hotel expects to open this month: official


Sri Lanka's Uga Escapes leisure group will open a resort in the north eastern coast of Passikudah and the firm expects to sell a room at 250 to 300 US dollars a night, an official said.
The 'Uga Bay' resort built at a cost of 850 million rupees has 48 cabins, managing director of the Uga Escapes group Priyanjith Weerasooriya said.
In June the group has opened Uga Jungle Beach in Kuchchaveli also in Sri Lanka's Eastern coast.
Weerasooriya said he expected the hotels to break even in about 16 months with occupancy rates of around 40-45 percent.
Sri Lanka's Eastern coast is sunny and bright in the middle of the year, when the more developed western and southern coastal tourism belt sees rain from monsoon winds.
The group also operates 'Uga Ullugalla' in Anuradhapura, in north central Sri Lanka. The firm says it is charging about 1,000 US dollars a night on the resorts.
Sri Lanka is seeing a tourism boom after the end of a 30-year civil war in 2009 and the opening up of new areas in the former war zones in the Eastern coast opening for development.

LBO
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...by i3gconsultants@ 09:10:14 on 2012-10-13

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Sector: Land and Property

Sri Lanka US$60mn property project by Pakistan firm


Imperial Builders (Pvt) Ltd, a unit of Pakistan based Lakhani group is investing in a 60 million US dollar project to develop land in Sri Lanka's capital Colombo, the island's investment promotion agency said.

Imperial Builders and Sri Lanka's Urban Development Authority will build alternative accommodation for shanty dwellers in Colombo's Slave Island district and re-develop some of the land.
A BOI statement said the project involves 525 perches near the Slave Island railway station and a mixed residential and retail development on 107 perches of land purchased from the UDA facing Akbar Mawatha.

The statement quoted Naveed Hussain Lakhani, chairman, Imperial Builders (Pvt) Ltd as saying that residents will remain their present accommodation until the relocation towers are being built in 9-10 months.

"We can see how investment can bring about better housing to some citizens living in the Slave Island area of the city," BOI chairman MMC Ferdinando said.
"In addition, FDI (foreign direct investment) has also the potential of transforming Colombo into a modern and well planned city by the introduction of modern construction, as stipulated in the second phase of this project."

LBO
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...by i3gconsultants@ 09:10:34 on 2012-10-13

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Sector: Hotels and Travels

Sri Lanka Tourism to spice - up Spice Food Festival.


Following the success of the World Spice Food Festival since 2005, Sri Lanka Tourism Development Authority has once again made arrangements to conduct the World Spice Food Festival 2012, with the aim of showcasing culinary expertise from around the world with added Sri Lankan flavour.
The festival begins with the launch at Mt. Lavinia hotel on October 4, followed up by the Public Event- Hawker’s Street Food Promotion at “Board Walk, Battaramulla” from 05th to 7th October. Participating hotels and restaurants will be host to a culinary fiesta in dedicated outlet in their hotels and the stand along restaurants designated in Colombo.
This year’s event will showcase some of the unique culinary expertise of master chefs participating at the World Spice Food Festival2012, shouldering with their counterparts in the reputed hotels and restaurants in Colombo.
The festival will be an ideal opportunity for tourists who are in transit or holidaying in Sri Lanka to enjoy variety of delectable cuisine from Australia, Malaysia, Vietnam, Pakistan, China, Japan, Singapore, Middle eastern and Latin American not forgetting the Sri Lankan specialties.
Highlight of the World Spice Food Festival is the hawker’s street’ at “Board Walk”, Battaramulla from 05th to 07th October 2012 , allowing visitors and food lovers of browsing through international theme cuisines food stalls along with friends and families. The “Board Walk” venue will take on a festive air with live music and cookery demonstrations, cooking competitions such as Batticaloa Prawn curry (Colombo Culinary Challenge), Kottu Championship, Mocktail, Cocktail competitions and special cultural performances giving a truly unforgettable dining experience for the whole family.
Sri Lanka’s hospitality industry has risen to the occasion as always with a combination of 11 top city hotels and 05 speciality restaurants being enthusiastically involved in ensuring that the 12 master chefs flown in for the event will showcase the magical culinary delights, throughout the period.
Hotels and restaurants that will adorn the chef ’s hat at the World Spice Food Festival are, Hilton Colombo (China) , Cinnamon Lake Side (Vietnam), Cinnamon Grand (Pakistan), Grand Oriental Hotel (Singapore), Galadari Hotel (Egypt), Hilton Residencies ( Malaysia ), Mt. Lavinia Hotel (Latin America), Galle Face Hotel (Singapore), Ramada Colombo (North-India), Taj Samudra (Australia ), Waters Edge (Japan), The Mango Tree (North-India), Siam House (Thailand), Jack Tree (Thailand), The Sizzle with their unique sizzler’s concept and Raja Bojun (Sri Lanka).
HSBC, MA’S Tropical Food Products, Elephant House, Lion Breweries, and Global Brands are generously supporting the World Spice Food Festival in a bid to bring Sri Lankans, to witness global cuisine at its best – right here in Sri Lanka.
The World Spice Food Festival was initiated in 2005.


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...by i3gconsultants@ 14:10:19 on 2012-10-10

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Sector: Plantations

Severe drought slashes tea production; high grown output dips 11.6% during January - August.


The Planters’ Association of Ceylon highlighted the plight of the Regional Plantation Companies (RPCs), which are facing a drastic drop in crop intake due to the severe drought, with high grown output coming down by 11.6 percent during January to August this year.
According to the latest data released by the Sri Lanka Tea Board (SLTB), tea production in the high grown elevation during the eight-month period dropped to 48.3 million kilos from 54.7 million recorded during the corresponding period last year.
Officials say that the prevailing drought condition is the worst the country has faced since 1992, with large parts of the island’s tea plantations being devastated. Data showed that the total tea production from all three elevations during the period fell 3.1% to 214.4 million kilos from the 221.1 million recorded during the corresponding period in 2011.
Drupatha Rodrigo, Deputy General Manager of Demodara Group, coming under Hapugastenne Plantations PLC, one of the largest estates in the Uva region said, “We had the last rainfall on May 14, 2012 and subsequently a few showers in August but up to September it has been dry. We had to curtail work and as a result, production came down by 30-40% during the last three months, compared to the same period last year.”
According to Rodrigo, during the four months from May to August this year, only 10 days of rainfall amounting to 159.47 mm were recorded as against 18 days with 261.78 mm of rainfall recorded during the same time period in 2011, indicating a decline of 39%.
Rodrigo said that one of their factories in the Uva region, Oodoowerre, had to be temporarily closed due to low intake and the leaf was diverted to the Demodera factory, in order to minimize losses, but it has resulted in the Oodoowerre factory workers being deprived of work. The number of working days has declined from 22 to 15, while only 457,000 kilos of crop was harvested from the cluster of estates under the company, down from 565,000 kilos during the same four months last year.
Meanwhile, the General Manager of Madulsima Plantations PLC, the listed plantation arm of the DCSL group, Rohan Kobbekaduwa said, “During the months of March, April, May and June, the crop intakes are generally high in the Uva region, but this year it has been very low due to the drought from the month of May onwards. The loss of crop compared to the budgeted intake is around 810,940 kilos made tea and the approximate revenue loss is around Rs.272 million for the period January to August 2012.”
This negative aspect has also adversely affected the company's cash flow, Kobbekaduwa said, referring to the cluster of eight estates in the Madulsima area of the Uva region.
He added that out of the 2,305 ha of tea planted in the cluster, approximately 355 ha have been completely defoliated, while the balance extents have also been severely affected, resulting in a 34% decline in made tea output up to August. The rainfall received up to August 2012 was 962 mm compared to 2446 mm up to August 2011, which reflects a 64% decrease in the Madulsima region.
Botanically known as Camellia Sinenis, tea is Sri Lanka's single largest foreign exchange earner, after garments and foreign remittances and is a vital cash crop for around one million people in Sri Lanka. Being a rain fed crop grown in different agroecological regions, the productivity of tea lands is largely dependent on the weather. Most of the tea growing regions in Sri Lanka receive rain from both northeast and southwest monsoons. However, the erratic weather conditions that prevailed during the last couple of months have caused severe damage to both young and mature tea plants, particularly in the Uva region and the high grown elevation.


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...by i3gconsultants@ 14:10:49 on 2012-10-10

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Sector: Plantations

August tea output up marginally.


Tea production in the month of August increased by 0.1% year-on-year to 25.4 million kg in the midst of the most severe drought conditions in the country since 1992.
Low grown teas saw a dip in production from 17.4 million kg in 2011, down to 16 million kg this year. Tea from high grown elevations accounted for 5.1 million kg during the month, up from 4.6 million kg in the previous year, whilst medium grown tea accounted for 4.2 million kg, as compared with 3.4 million kg produced in the previous year.
The impact of adverse weather conditions on tea production was most clearly displayed in cumulative production figures for January to August, with total production dropping to 214.4 million kg, down from 221.2 million kg last year.
Production of high grown tea over the year stood at 48.4 million kg, down from 54.8 million kg, whilst medium grown tea dropped slightly from 35.5 million kg in 2011 to 35.3 million kg this year. Meanwhile, low grown tea accounted for 130.8 million kg of production, as compared with 130.9 million kg in the previous year.
Between drastic shifts in weather patterns and an urgent need for the implementation of a longdelayed replanting programme, industry experts have warned that production levels are likely to see further volatility going forward.
Whilst the need for a replanting programme currently looms large over the industry, climate change is forecasted to have serious impacts on patterns of tea production across the country, according to a study carried out by the Tea Research Institute.
Ambient temperatures tend to affect crop growth, with tea being particularly vulnerable to temperature increases due to its optimum temperature of 18-25 degree Celsius.
Consequently, as temperatures rise, tea production in low grown areas in particular is expected to decrease. However, initial increases in temperature and carbon dioxide concentrations in medium to high grown areas may cause production to increase, according to the institute’s forecast.


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...by i3gconsultants@ 14:10:55 on 2012-10-10

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Sector: Land and Property

Supreme Court issues landmark order on Intellectual Property law.


Making a landmark order in an Intellectual Property Law case, Supreme Court ruled that importing of genuine HP products through alternative sources on a prima facie basis sustain the specific provisions of the Intellectual Property Law of permitting parallel imports.
The Supreme Court made this order on considering the submissions made by the counsel for the parties thus suspending the injunctions granted by the Commercial High Court in favour of Hewlett Packard against Techzone restraining from importing of genuine HP products including laptops and notebooks of latest specifications and models through different channels which are not made available to the Sri Lankan consumer by Hewlett Packard. The three bench Supreme Court Judges Rahini Amarasinghe, Chandra Ekanayake and Satya Hettige while suspending the injunctions that prevented Tech Information Solutions (‘Techzone’) from importing of genuine HP products through alternative sources ruled that on prima-facie the specific provisions of Intellectual Property law permits parallel imports thus dismissed the injunctions granted by the Commercial High Court of Colombo in favour of Hewlett Packard AP (Pvt) Ltd.
Techzone, a leading importer and reseller of laptops, notebooks, desktops and other IT related peripherals of global brands including HP-branded products in Sri Lanka sought an injunction from Commercial High Court restraining Hewlett Packard Personal Systems Group against engaging in derogative and disparaging advertising campaign thwarting Techzone. However the High Court refused to grant the relief sought by Techzone and restrained Techzone by several interim injunctions preventing Techzone from importing/ distributing and/or selling through alterative sources the HP products that are not available with Hewlett Packard Sri Lanka.
The petitioner Techzone appealed against the High Court order and Counsel S.A Parathalingam P.C appearing with M.U.M Ali Sabry and Ruwantha Cooray instructed by Paul Rathnayake Associates appearing for Tech Information Solution (Techzone) submitted that parallel importation of genuine products should not be prevented other than through channel distributors in which the end result is the consumer who would be the ultimate beneficiary of the competition in relation to pricing, quality and variety of goods in offer.
The Supreme Court hearing the submissions made by the parties, suspended the injunctions granted in favour of Hewlett Packard thus permitting Techzone for parallel importing of genuine HP products including laptops and notebooks of latest specifications and models not made available to the Sri Lankan consumer by HP Sri Lanka through different channels.
Avindra Rodrigo instructed by F. J & G De Seram appeared for HP.


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...by i3gconsultants@ 14:10:58 on 2012-10-10

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Sector: Plantations

Tea prices likely to stay strong in Q4: John Keells


Leading produce broker John Keells Ltd. is forecasting Lankan tea prices to stay strong in the last quarter of this year owing to strong demand caused by crop failures in most major Black Tea producing countries.
“Although Sri Lankan tea prices have been high, it has come in the back drop of production shortfalls. As often seen in the past, increased prices, coinciding with increase production are not too common an experience,” John Keells said.



“Often when global tea prices increase, we have seen a decline in global production, negating the gains in prices. Thankfully the buoyant prices for Sri Lankan teas from all three elevations has somewhat compensated for the production drop on most plantations in 2012,” the produce broker added.
It said Sri Lankan tea met with strong demand at the sales in the month of September 2012, culminating in recording the second highest average of Rs. 419.78 for any given month, the previous best being Rs. 430.31 achieved in September 2009.
John Keells also said Sri Lanka’s tea sale average of Rs. 419.78 for September 2012 registers an increase of Rs. 73.96 (21.39%) over last year with total high grown average of Rs. 418.18 recording a significant gain of Rs. 114.42 (37.67%), followed by Rs. 79.29 (26.73%) for mediums and Rs. 60.66 (16.40%) for the low grown. The outstanding averages recorded during the month have pushed up the to-date average to Rs. 361.63, which is a gain of Rs. 24.03 (6.64%) over the corresponding period of 2011.
Commenting on last week’s auction, the produce broker said the one million kilo of ex estate teas met with fair demand. The best western high grown BOP/BOPFs were barely steady, whilst select best and plainer BOPs appreciated Rs. 10 to Rs. 15 on average. BOPFs were firm to somewhat lower at times.
Nuwara Eliya BOPs continued to sell well gaining Rs. 10 to Rs. 20 and more, whilst the BOPF, although lower to last week, continued to sell in the range of Rs. 600 to Rs. 660. Seasonal type Uva declined Rs. 20 to Rs. 30 on average, whilst others too were irregular except for a few coloury BOPs that gained by a similar margin. Low Grown CTC PF 1s were firm to Rs. 15 to Rs. 20 easier, whilst high and medium types gained by a similar margin.
The low grown average of Rs. 450.55 established at the sale of 26 September 2012 is the second highest on record for any particular sale. However with this week’s lower prices, particularly for the small leaf varieties following the devaluation of the Iranian currency, the low grown average is expected to be lower.
In the leafy category, prices for the best BOP1s on offer continued its bullish trend with prices ranging from Rs. 700 to Rs. 760, whilst the OP1s too sold above the Rs. 700 level. Some bold pekoes met with a slightly lower market but most other grades were fully firm if not dearer. There was excellent demand from Russia, Iraq and Libya, whilst Iran, Saudi Arabia, Jordon, Dubai and other Middle Eastern countries also lent useful support, John Keells said.


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...by i3gconsultants@ 13:10:25 on 2012-10-10

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Sector: Land and Property

Sri Lanka Krrish project gets sweeping tax breaks


A 450 million US dollar hotel and residential development in Sri Lanka's capital Colombo by India's Krrish group is getting sweeping tax benefits running up to 25 years.The project will get a 10 year income tax holiday and a concessionary 6 percent tax will be charged for the next 15 years. Dividends in the hands of shareholders will be tax free for 11 years, a gazette notification published under Sri Lanka's strategic investment law said. Twenty expatriate staff will be exempted from payroll taxes (Pay As You Earn) for give years, and the firm will be exempted from withholding tax on interest on foreign loans taken for capital expenditure and technical fees paid to consultants during the project period. Good imported for the project will be exempted from value added tax, port and airport development levy, customs duty and levies for a construction industry guarantee fund. Krrish group is building a tower block in Colombo's colonial quarter by the side of an historic British administration building 'Transworks House' which will be turned into a luxury hotel.

LBO

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...by i3gconsultants@ 13:10:55 on 2012-10-10

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Sector: Hotels and Travels

Sri Lanka says travel to Tamil Nadu safe for citizens


Sri Lanka has lifted a travel advisory to the Indian state of Tamil Nadu that was imposed in the wake of a series of attacks by Tamil political groups on visiting pilgrims from the island.Sri Lanka's foreign ministry said the travel advisory was "no longer required" following a statement by Tamil Nadu chief minister that Sri Lankan travellers would not be harmed. The attacks came after a several statements by chief minister J Jeyaram and the suspension of an official who had helped a sports team from Sri Lanka to come to the south Indian state. India's central government had said earlier that the safety of visitors would be assured in consultation with state governments. "People-to-people contact plays an important role in the multifaceted India-Sri Lanka relationship, especially in further promoting historical, cultural and political ties as well as economic and business relations," Sri Lanka's foreign ministry said. "The Government of Sri Lanka is of the view that this age-old natural process of interaction between our two peoples must flourish, unhindered." Some 200,000 Sri Lankans visit India each year.

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...by i3gconsultants@ 13:10:44 on 2012-10-10

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Sector: Beverage Food and Tobacco

Sri Lanka raises alcohol taxes


Sri Lanka has raised taxes on alcohol ahead of a budget to be presented in parliament next month, a day after excise taxes on tobacco was raised, the island's finance ministry has said.Taxes on wine has been raised to 898 rupees a proof litre from 838 rupees, molasses, palmyra, coconut and processed arrack to 1,043 rupee per litre from 983 and domestically made foreign liquor types to 1,183 rupees from 1,123 rupees. Excise tax on malt liquor of less than 5.0 percent absolute strength has been raised to 100 rupees per bulk litre from 90 and malt liquor of absolute strength above 5.0 percent to 116 rupees from 106 rupees. In Sri Lanka taxes are raised by midnight gazette literally while citizens are sleeping and informed to citizens the following day. The finance ministry said the taxes came to effect from October 06. Frequent taxes imposed on the people by the ruling class by gazette without discussion in parliament violates a basic principle of 'taxation by consent' that exists in free countries that backs to the 'Magna Carta' in Britain that led to the gradual restraint of the sovereign. Administrations led by all section of Sri Lanka's ruling political elite has also raised taxes on the people within budgets, undermining rule of law and predictability of economic landscape of the citizens, and breaking promises given to the people in the budget. The ruling class has had a habit of imposing fresh taxes on the citizens within budgets instead of changing their lifestyle and spending habits to a level that citizens can afford, at least until the next budget. However economic analysts say, raising taxes even within budgets is a better measure than printing money, which triggers currency depreciation and inflation, and acts as a hidden tax. Taxes are transparent and citizens can feel the burden of the state and rulers through taxes. Sri Lanka's budget went off track from the middle of 2011 as rulers sought to manipulate energy prices with credit. The rupee also fell from 110 to 134 due to large volumes of money printed in the period.


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...by i3gconsultants@ 13:10:51 on 2012-10-10

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Sector: Banks Finance and Insurance

Orient Finance PLC now in Kilinochchi


Orient Finance PLC strengthened its customer reach by opening a new Customer Service Centre in Killinochchi, on the 18th of September, 2012. This is the latest addition to the branch network of Orient Finance PLC, which has branches located in Matara, Kurunegala, Ampara, Kochchikade & Welisara and  customer service centers in Gampaha, Avissawella, Galle, Kandy, Vavuniya, Kalutara, Anuradhapura and  Kegalle.The Killinochchi customer service center is geared to serve customers with varying financing needs pertaining to leases, hire purchases and debt factoring. A special focus of this office would be servicing the SME sector in the area.Traditional rites being carried out by the senior management of Orient Finance PLC, at the opening ceremony – in the picture (from left) Nilantha Jayanetti, AGM – Marketing,  Susantha Caldera, AGM, Micro Financing, S. Anudeepan – Senior Marketing Executive and Rajeewa Bandaranaike, Chief Executive Officer.


The Island

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...by i3gconsultants@ 15:10:27 on 2012-10-02

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Sector: Hotels and Travels

Sri Lanka Tourism to spice - up Spice Food Festival .


Following the success of the World Spice Food Festival since 2005, Sri Lanka Tourism Development Authority has once again made arrangements to conduct the World Spice Food Festival 2012, with the aim of showcasing culinary expertise from around the world with added Sri Lankan flavour.
The festival begins with the launch at Mt. Lavinia hotel on October 4, followed up by the Public Event- Hawker’s Street Food Promotion at “Board Walk, Battaramulla” from 05th to 7th October. Participating hotels and restaurants will be host to a culinary fiesta in dedicated outlet in their hotels and the stand along restaurants designated in Colombo.
This year’s event will showcase some of the unique culinary expertise of master chefs participating at the World Spice Food Festival2012, shouldering with their counterparts in the reputed hotels and restaurants in Colombo.
The festival will be an ideal opportunity for tourists who are in transit or holidaying in Sri Lanka to enjoy variety of delectable cuisine from Australia, Malaysia, Vietnam, Pakistan, China, Japan, Singapore, Middle eastern and Latin American not forgetting the Sri Lankan specialties.
Highlight of the World Spice Food Festival is the hawker’s street’ at “Board Walk”, Battaramulla from 05th to 07th October 2012 , allowing visitors and food lovers of browsing through international theme cuisines food stalls along with friends and families. The “Board Walk” venue will take on a festive air with live music and cookery demonstrations, cooking competitions such as Batticaloa Prawn curry (Colombo Culinary Challenge), Kottu Championship, Mocktail, Cocktail competitions and special cultural performances giving a truly unforgettable dining experience for the whole family.
Sri Lanka’s hospitality industry has risen to the occasion as always with a combination of 11 top city hotels and 05 speciality restaurants being enthusiastically involved in ensuring that the 12 master chefs flown in for the event will showcase the magical culinary delights, throughout the period.
Hotels and restaurants that will adorn the chef ’s hat at the World Spice Food Festival are, Hilton Colombo (China) , Cinnamon Lake Side (Vietnam), Cinnamon Grand (Pakistan), Grand Oriental Hotel (Singapore), Galadari Hotel (Egypt), Hilton Residencies ( Malaysia ), Mt. Lavinia Hotel (Latin America), Galle Face Hotel (Singapore), Ramada Colombo (North-India), Taj Samudra (Australia ), Waters Edge (Japan), The Mango Tree (North-India), Siam House (Thailand), Jack Tree (Thailand), The Sizzle with their unique sizzler’s concept and Raja Bojun (Sri Lanka).

HSBC, MA’S Tropical Food Products, Elephant House, Lion Breweries, and Global Brands are generously supporting the World Spice Food Festival in a bid to bring Sri Lankans, to witness global cuisine at its best – right here in Sri Lanka.
The World Spice Food Festival was initiated in 2005.


Dailymirror

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...by i3gconsultants@ 15:10:52 on 2012-10-02

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Sector: Plantations

Severe drought slashes tea production; high grown output dips 11.6% during January - August .


The Planters’ Association of Ceylon highlighted the plight of the Regional Plantation Companies (RPCs), which are facing a drastic drop in crop intake due to the severe drought, with high grown output coming down by 11.6 percent during January to August this year.
According to the latest data released by the Sri Lanka Tea Board (SLTB), tea production in the high grown elevation during the eight-month period dropped to 48.3 million kilos from 54.7 million recorded during the corresponding period last year.
Officials say that the prevailing drought condition is the worst the country has faced since 1992, with large parts of the island’s tea plantations being devastated. Data showed that the total tea production from all three elevations during the period fell 3.1% to 214.4 million kilos from the 221.1 million recorded during the corresponding period in 2011.
Drupatha Rodrigo, Deputy General Manager of Demodara Group, coming under Hapugastenne Plantations PLC, one of the largest estates in the Uva region said, “We had the last rainfall on May 14, 2012 and subsequently a few showers in August but up to September it has been dry. We had to curtail work and as a result, production came down by 30-40% during the last three months, compared to the same period last year.”
According to Rodrigo, during the four months from May to August this year, only 10 days of rainfall amounting to 159.47 mm were recorded as against 18 days with 261.78 mm of rainfall recorded during the same time period in 2011, indicating a decline of 39%.
Rodrigo said that one of their factories in the Uva region, Oodoowerre, had to be temporarily closed due to low intake and the leaf was diverted to the Demodera factory, in order to minimize losses, but it has resulted in the Oodoowerre factory workers being deprived of work. The number of working days has declined from 22 to 15, while only 457,000 kilos of crop was harvested from the cluster of estates under the company, down from 565,000 kilos during the same four months last year.
Meanwhile, the General Manager of Madulsima Plantations PLC, the listed plantation arm of the DCSL group, Rohan Kobbekaduwa said, “During the months of March, April, May and June, the crop intakes are generally high in the Uva region, but this year it has been very low due to the drought from the month of May onwards. The loss of crop compared to the budgeted intake is around 810,940 kilos made tea and the approximate revenue loss is around Rs.272 million for the period January to August 2012.”
This negative aspect has also adversely affected the company's cash flow, Kobbekaduwa said, referring to the cluster of eight estates in the Madulsima area of the Uva region.
He added that out of the 2,305 ha of tea planted in the cluster, approximately 355 ha have been completely defoliated, while the balance extents have also been severely affected, resulting in a 34% decline in made tea output up to August. The rainfall received up to August 2012 was 962 mm compared to 2446 mm up to August 2011, which reflects a 64% decrease in the Madulsima region.
Botanically known as Camellia Sinenis, tea is Sri Lanka's single largest foreign exchange earner, after garments and foreign remittances and is a vital cash crop for around one million people in Sri Lanka. Being a rain fed crop grown in different agroecological regions, the productivity of tea lands is largely dependent on the weather. Most of the tea growing regions in Sri Lanka receive rain from both northeast and southwest monsoons. However, the erratic weather conditions that prevailed during the last couple of months have caused severe damage to both young and mature tea plants, particularly in the Uva region and the high grown elevation.


Dailymirror

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...by i3gconsultants@ 15:10:55 on 2012-10-02

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Sector: Banks Finance and Insurance

‘Zero tolerance policy to prevent illegal operations vital’


The collapsing of financial institutions cannot be totally eliminated but a ‘zero tolerance' policy to prevent illegal operations and mismanagement will go a long way. President Counsel Dr Dayanath Jayasuriya said at a seminar on “Implications of the new Finance Business Act” (FB) at the Cinnamon Lakeside Colombo recently. He said there is no fixed manner to deal with excessive greed or irrational exuberance but moderation even in risk taking can yield rich dividends. Referring to some of the achievements of the new FB Act he said it has a new framework and definitions for strictly regulating FB operations. It also has restricted the scope of unauthorized or illegal deposit taking operations while augmenting the regulatory powers.


It has also raised level of prudential accounting and auditing requirements. The new FBA also casts a wide net to capture illegal operators and those who have caused a wrongful gain or a wrongful loss in authorized or licensed businesses, he said.


However, markets must be permitted to evolve and product development must not be stifled in implementing the FBA , because markets tend to follow paths studded with pitfalls but damage control on a timely basis could be possible through prudent regulatory intervention. Harmonization with banking act, application of Companies Act-solvency margin, additional provisions such as whistle blowing, immunity, alert by auditors , need to prioritize interventions, capacity of monetary board will be the issues and challenges when implementing the new FBA he said.


Dailynews

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...by i3gconsultants@ 15:10:46 on 2012-10-02

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Sector: Banks Finance and Insurance

Net Interest Margin expected to decline


The banking industry which accounts for 75 % of GDP in Sri Lanka experiences increased pressure on Net Interest Margin (NIM) and industry authorities emphasize the need to arrest the situation by introducing flexible and novel banking solutions particularly leasing and venture capital, fee-based banking, merchant and investment banking. The stiff competition in the industry has resulted in declining NIM and according to Central Bank predictions; NIM is further expected to decline to around 3.3 % in 2016 from the current level of 4.2 %. Improving risk management abilities, asset quality, implementing changes in accounting standards in line with IFRS and managing the impact of global market instability are the other key issues faced by the banking industry. However, local banking industry has registered a substantial growth despite the declining of NIM and it is forecast that financial service industry will grow by 8.2 % in 2012 due to economic activities in the country. Banks need to expand services, delivery channels and products portfolio to meet the needs of the local customers while focusing more on cost efficiency and resource utilization, senior industry official said. According to Central Bank sources, assets of the industry have increased four-fold in the past decade. Lending segment is forecast to reach 5 trillion from the current level of around Rs. 2.5 trillion and assets of the banking sector will also double to Rs. 8 trillion by 2016. It is predicted that worker remittances will increase to Rs. 6.5 billion, domestic savings ratio to 22 % and 100 % financial inclusion by 2016.


Dailynews

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...by i3gconsultants@ 15:10:14 on 2012-10-02

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Sector: Manufacturing

Lankan garments to gain greater access to India


On a request made by Sri Lanka, India has agreed to provide greater market access for Sri Lanka’s garment sector, the High Commission of India in Colombo announced in a release. During a meeting with the Indian Minister of Commerce, Industry & Textiles Anand Sharma in August 2012, Sri Lanka had requested the Indian government to relax the TRQ condition for fabric sourcing of 5 million pieces of ready made garments (RMG) to India and for collaboration in textiles sector for the revival of textiles industry in Sri Lanka. The minister had promised to give favourable consideration to both the requests. Following up on the commitment made, a high-level delegation led by Kiran Dhingra, Secretary, Ministry of Textiles, Government of India, visited Sri Lanka recently. The delegation held further discussions to enhance bilateral cooperation between the two countries in the textiles sector at government, institutional and business-to-business levels. During the visit, Dhingra made two very significant announcements, which will provide greater market access to Sri Lanka in Indian domestic market in textile and apparel sector. The Indian government has accepted the Sri Lankan request for relaxation in the requirement of fabric sourcing for 5million pieces of RMG export to India and necessary approval processes are underway for providing exemption to this condition. In a few weeks time, the notification is expected to be issued. Once the notification is issued, Sri Lanka will be able to export 8 million pieces of RMGs to India at zero duty.


Dailynews

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...by i3gconsultants@ 14:10:59 on 2012-10-02

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Sector: Plantations

Tea industry grapples with lower crop


The tea industry is continuing to struggle with lower crop, estimated at a four year low during the first eight months of the year.Asia Siyaka said tea production for the period January to August 2012 is at a four year low of 214 million kilos and is down 3% on last year’s eight month total of 221 million kilos.
This was despite the crop in the month of August being nominally higher at 25.38 million kilos as opposed to 2011’s corresponding month’s revised figure of 25.36 million kilos. Asia said the occasional showers recorded in the higher elevations supported the national total with gains against the previous year. In August High Growns recorded a welcome increase in production after some months with production of 5.1 million kilos up 12% against 4.5 million kilos in August 201. Mediums fared better, up 25% to 4.2 million kilos from 3.3 million kilos last year. Low Grown crop had declined 8% to 16 million kilos over 2011 as well.
 “The dry warm conditions impacted on the sub districts of Galle and Matara the most whilst Sabaragamuwa fared better,” Asia said adding that Low Grown production of 16 million kilos in August 2012 was the lowest since February this year.
Commenting on cumulative crop, Asia said Low Grown production at 130.7 million kilos was equal to last year’s quantity. Similarly Mid Growns have also maintained last year’s figure of 35 million kilos thanks to the August recovery.
The national shortfall of 6.7 million kilos YoY 2011 has come almost exclusively from High Growns which have declined to 48.3 million kilos for the period January – August 2012 against 54.7 million kilos last year.
Sri Lanka’s tea production in whole of 2011 was 328.3 million kilos down by 3 million kilos over 2010. (CM)


Dailyft

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...by i3gconsultants@ 14:10:11 on 2012-10-02

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Sector: Banks Finance and Insurance

Mamaduwa quits Sanasa Development Bank


Top professional Nimal Mamaduwa has resigned as General Manager and CEO of Sanasa Development Bank Plc (SDBL).
The bank announced E.A.A.S. Ediriwickrama, the Assistant General Manager, Credit and Development Finance, has been made Acting General Manager.Mamaduwa joined SDBL in 2003 and has held the position of Chief Manager at Hatton National Bank PLC and possesses 36 years of experience in the banking sector.
He has a Diploma in Bank Management from IBSL and a Diploma in Credit Management from Association of Sri Lanka Institute of Credit Management. He is a Fellow Member of Chartered Management Institute (UK).
Ediriwickrema joined SDBL in 1999 and has served in the positions of Manager and Senior Manager prior to being appointed Assistant General Manager of Credit and Development. He has served as a Branch Manager and as an Officer at Ruhunu Development Bank.
Ediriwickrema has a B.Sc. in Business Administration from the University of Sri Jayewardenepura and is an Associate Member of the IBSL. He is a Licentiate of Part‐I and Part‐II of the ICASL.
Dailyft ......

...by i3gconsultants@ 14:10:45 on 2012-10-02

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Sector: Power and Energy

Small Hydro Power Association cries foul over PUCSL’s move


The Small Hydro Power Association (SHPA) yesterday cried foul over the sudden withdrawal of new tariff announced by the Public Utilities Commission (PUCSL) and warned the move by regulator had put 50 MW of renewable energy at stake.




It said that developers and the investors of the renewable energy sector are hit by what SHPA described as “rather surprising and unprofessional” move by PUCSL when it withdrew the announced tariff for year 2012-2103 through its official web site on 11 September 2012 in the afternoon.
Surprisingly, this web announcement came only few hours after the official announcement of tariff for renewable energy for years 2012 and 2013 was published in four national newspapers in all three languages on the morning of the same day.
SHPA President Anil Makalanda expressed the members’ deep dissatisfaction and condemned the act by PUCSL and urged the immediate reinstatement of a fair and transparent tariff.


He further stated that investor confidence to the sector had been affected by this irresponsible and unprofessional behaviour of PUCSL, which would have a long-term devastating impact on to the sector, especially during a time when the Government is promoting foreign investments into the country.
According to SHPA, the formal procedure set by the Ministry of Power and Energy and CEB is to announce the tariff payable for renewable energy for the specific year before the end of previous year. In this respect the tariff for year 2012 should have been finalised and published on or before 31 December 2011. The tariff announcement for 2012 has already been delayed by nine months.
The developers who had signed Standard Power Purchase Agreements with CEB this year have no option but to wait until the tariff is announced to commence construction of the plants as banks require the tariff to be announced before dispatching any loans.
The developers have complained to the Small Hydro Power Association that their licenses to operate renewable energy plants where Power Purchase Agreements have been signed are expiring while they have to wait indefinitely without commencing construction work due to non-announcement of the tariff.
As per the ‘Mahinda Chinthana – Future Vision’ statement on ‘New Sri Lanka,’ the clear targets had been set to achieve 20% of the total supply of energy through renewable forms of energy by 2020. The present level of supply is only at 7% and the industry took 17 full years from 1996 to 2102 to reach this level.
The developers have explored and found renewable energy generating plants with a combined capacity of 700 MW during the last 17 years since the inception of the industry in 1996. Power Purchase Agreements have been signed for a combined capacity of 525MW with a total number of 212 plants countrywide during the last 17 years. However the total of operating plants as at August 2012 is 275 MW of combined capacity with 116 individual plants. This means that another 96 plants with combined capacity 250MW are already to be developed but not progressing due to act or inaction of the above nature by Government institutions.
The delay of nine months in announcing the tariff will have very negative impacts on the development of the sector in the forthcoming years. The 20% set target by President Rajapaksa will not be achieved due to the unprofessional conduct of such institutions.
Small hydro, biomass and wind power are the three operating forms of nonconventional renewable energy available in Sri Lanka. According to the research done by USAID and the World Bank during the post 2000 period, the total potential of small hydro power generation (less than 10MW plants) is assessed at 350-400MW and harnessable wind potential of 800MW.
The leader of the sector being small hydro power presently has a combined capacity of 210MW in 87 individual plants. The Small Hydro Power Association is the official collective voice of the industry.
Wind power, though relatively new, has progressed rapidly during the last three years, with the main reason being an investor friendly tariff published in year 2009-2010. The sector presently has 50MW of operating plants in the Puttalam area. Another 40MW plant is being developed where Power Purchase Agreements have already been signed.
Sector analysis shows that the wind season, which falls during less rainfall months of July-August period, has fed in much-needed energy to the national grid at its fullest potential due to stronger winds prevailing during this period, thus replacing huge prices such as Rs. 40-50 per unit of electricity paid to the thermal energy producers.
The debut on tariff payable for nonconventional renewable energy had been decided by the CEB before 2007, based on its avoided cost per unit of thermal plants.
The above price does not reflect the real benefit to the country as a whole due to the positive contributions of renewable energy such as reducing the trade deficit by replacing oil imports, non-emission of green house gasses, income to the local community due to increased jobs, and through purchasing of raw material from village community for bio mass energy, etc.
The Ministry of Power and Energy in 2007, realising this fact, therefore introduced a more transparent and equitable tariff setting mechanism where the price paid for each unit of renewable energy produced to be based on the cost to the developer plus a reasonable return to the investor.
This new mechanism at the introduction created confusion due to misrepresentation for certain critical input parameters such as capital cost, plant factor, bank interest rates, etc. However, the continuous dialogue which prevailed during the last few years paved way to develop a more reliable model acceptable to both developers and officials of CEB and Ministry of Power and Energy and PUCSL.
The tariff announced by the Ministry of Power and Energy and CEB in 2010 had an impact on the positive growth of the industry. The total number of 37 hydro and wind projects with a combined capacity of 80MW was developed and power purchase agreements were signed during that year.
However, the downward trend to the tariff in 2011 made the investments disappear and only 21 hydro and wind projects with a combined capacity of 44 MW signed Power Purchase Agreements.
The impact of this negative trend could only be seen in few years time when no renewable plants are being added to the system, thus making the national plan of the President deviate drastically from the set target levels.
According to Small Hydro Power Association analysis and related industry statics, the set national target through the ‘Mahinda Chinthana’ for 20% contraction to national energy demand through renewable energy cannot be achieved by 2020 and the maximum target achieved will be 12-15% at maximum optimistic levels.
Last year’s generation statistics reveal that Renewable Energy Projects have managed to supply much-needed indigenous energy to the country when most CEB hydro reservoirs have reached rock-bottom water levels. The total power generated from renewable energy (mini hydro, wind, biomass, solar) amount to 706 million units in calendar year 2011.
The Small Hydro Power Development Association appreciates the role played by the CEB amidst its financial difficulties by helping the industry by absorbing renewable energy to the CEB system. During 2011, the contribution from Non Conventional Renewable Energy amounted to 7% of national demand. CEB honoured the payments and payment milestones as per the agreements and contributed to build up investor confidence – banks had no hesitation in providing loans to the industry, stated the President of the Small Hydro Power Association.  
During 2011, the average tariff paid by CEB for renewable energy amounted to Rs. 12 per unit of electricity. If this was not available, CEB would have been reluctantly compelled to purchase the said 706 million units of electricity from high cost thermal plants.
According to CEB and Power and Energy Ministry sources, the average cost of thermal energy to CEB stands at Rs. 22 per unit of electricity. This include the Government subsidy too, which is provided throughout in order to keep the electricity cost down
In a snapshot, the financial benefit to CEB by absorbing 706 million units of renewable energy amounts to Rs. 7,060 million, and if the Government subsidy for fuel prices too were considered, the saving to the nation is Rs. 140,000 million. The actual thermal energy cost to the country is around Rs. 32 per unit of electricity today.
On environmental aspects, renewable energy projects provide green and clean energy – they do not emit Co2 to the environment; the saving of carbon emissions last year equalled 500 tons of carbon.
Anil Makalanda, one of the pioneering hydropower developers in the country, stated that the need of the hour is that the Government and its officials foresee a broader spectrum and realise the need for rapid development of the sector and clear red tape and promote the industry, which can have a direct impact on the trade deficit.
All statistics and information obtained from www.ceb.lk.


Dailyft

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...by i3gconsultants@ 14:10:12 on 2012-10-02

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Sector: Hotels and Travels

Sri Lanka tourist authority gets new chief


Bhashwara Senanka Gunarathna, who was a member of the board of Sri Lanka Tourism Development Authority since 2010 has been appointed its chairman the agency said.He is also the chairman of the Sri Lanka Tourism Promotion Bureau (SLTPB). The Tourism Development Authority is a policy making and infrastructure development agency. SLTDA said in a statement that Gunarathna is director general of the Development Forum Office of Sri Lanka's economic development ministry, which is in charge of tourism. He was the former director of the National Zoological Gardens. Nalaka Godahewa who was recently appointed chairman of Sri Lanka's Securities and Exchange Commission resigned as chairman of the tourism authority last week. Questions have been raised about conflicts of interest over Godahewa's connections to a firm which was planning to build a hotel.

LBO

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...by i3gconsultants@ 14:10:23 on 2012-10-02

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Sector: Banks Finance and Insurance

High confidence on insurance among public – IASL Chief


In response to a news published in media recently on the insurance industry, Insurance Association of Sri Lanka (IASL) President Ramal Jasinghe representing the industry stated, “The growth figures of insurance premiums of all the Insurance Companies for the half year as at June 2012, is 22% for General Insurance (Non Life) and 25% in Life.These figures represent confidence of the public with regard to Insurance, and member companies have shown double and in some cases, triple digit growth rates in terms of premium growth, within this time period. This is a significant improvement from the year over year figures of 2011!
The industry has disbursed a total of over Rs. 15.6 billion in claims in the year 2010, and the figures in 2011, would show a significant growth keeping in line with the positive growth of the Industry.  Claims that have reached the stage of legal action, has proved that in over 99% of the decisions the Courts have held with the Insurance Company.
Claims reaching litigation are very small as most claims are amicably settled outside court. There is however an increasing trend in the detection of fraudulent claims being made on insurance companies. The Insurance Ombudsman scheme, and initiatives taken by the Ombudsman such as developing an alternative compensation scheme to settle 3rd party motor claims out of courts, to avoid the delays taking place presently at courts which is beyond our control is a positive step towards efficiently disbursing claims.
Furthermore the Insurance Board of Sri Lanka (IBSL) also will have a larger role to play after the amendments to the Act regarding claims settlement. (Their purview was extended to Non-life claims as well).  We as an Industry have welcomed those changes.
The efficiency of Claims disbursement is a very vital area of competition within the very competitive insurance industry. Therefore whilst each individual company may adopt their own claims management philosophy, the industry players are keenly aware of this factor of competition, within 22 companies, in a limited market space.  Our advisors and intermediaries (Insurance brokers) too, provide professional services to all stakeholders keeping these competitive forces in mind.
 Therefore with all the positive action being taken by the industry, and stakeholders, there cannot be an erosion of confidence within the public, but there could always be space for improvement with regard to service and most importantly educating the public on the terms and conditions of an insurance policy, to inform the conditions and circumstances upon which one could make a claim on such a policy. It must be stressed however that the industry is keen to maintain a clean and fraud free environment, and hence will maintain high standards of integrity to safeguard the interests of policyholders who make genuine claims, from fraudulent claims.” 


Dailymirror

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...by i3gconsultants@ 12:09:45 on 2012-09-30

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Sector: Banks Finance and Insurance

AAA/P1 ratings for People’s Bank


RAM Ratings Lanka has reaffirmed the respective long- and short-term financial institution ratings of the People’s Bank (PB or “the bank”) at AAA and P1; the long-term rating has a stable outlook. The ratings are premised on the bank’s position as the second largest licensed commercial bank (LCB) in Sri Lanka, its above-average asset quality, good performance and healthy funding position that is supported by its extensive geographical coverage, given its systemic importance, PB is likely to enjoy extraordinary support from the government. The bank was incorporated with the primary objective of developing the cooperative movement in the country through rural banking and agricultural credit and is currently the second-largest LCB in Sri Lanka, accounting for 18.55 % of the LCB industry’s assets as at end-December 2011. Underscored by the systemic importance derived from its dominant market position, state ownership of 92.27 %, significance as a state employer and facilitating role in the government’s long-term macroeconomic objectives, we opine that state support will be readily forthcoming in times of need, both operationally and financially; this is reflected by the track record of support historically. Within the PB umbrella, the bank operates several subsidiaries and associated companies. He said, PB continues to dominate the People’s Bank Group’s (“the Group”) asset base, accounting for 88 % as at end-December 2011. Its fully-owned subsidiary, People’s Leasing Co PLC (“PLC”), contributes 10.02 % of the group’s assets and is the largest specialized leasing company (SLC) in Sri Lanka in terms of assets. The group also has interests in licensed finance companies (LFCs), insurance, micro-financing, property development and travel. However, these businesses are relatively small. We deem the Group’s asset quality to be above average. Its loan portfolio is dominated by the bank which had a share of 88.47 % as at FYE December 31, 2011 (“FY Dec 2011”). Meanwhile, 39.09 % of PB’s loan assets comprise pawning loans that are fully-backed by gold, which is easily liquefiable. The Group’s financial performance is deemed good. Backed by both PB’s lucrative pawning portfolio and PLC’s higher-yielding leasing portfolio, the Group’s net interest margins (“NIM”) of 5.45% in FY Dec 2011 was higher than that of the Bank, surpassing peers.’ The Group’s efforts to cut down overheads had also borne fruit; its historically high cost-to income ratio had improved and was better than the Bank’s and peers’, as its subsidiaries operate through a relatively low-cost base due to group-wide synergies. The Group’s pretax profit almost doubled to LKR 20.97 billion in FY Dec 2011 (FY Dec 2010: LKR 11.39 billion); the Bank accounted for a lion’s share of 73.01%, while the leasing arm made up 28.53%. RAM Ratings Lanka, opines that the Group has a healthy funding profile owing to a strong franchise through state-ownership and an extensive branch reach. This has resulted in a deposit-dominated funding structure at both the Group and the Bank level. Elsewhere, as a SLC, PLC cannot accept public deposits, hence the Group had more exposure to debt compared to the Bank The Bank’s loan-to-deposit (“LD”) ratio had increased in fiscal 2011 as a result of stronger loan growth, but was still better than peers’. On a separate note, PB’s liquidity is viewed to be average; its statutory liquid-asset ratio stood at 21.48% as at end-FY Dec 2011, before moderating slightly at end-March 2012 amid loan growth. The ratio remains broadly in line with peers.’ The Group’s capitalisation is deemed adequate. Its tier-1 and overall risk-weighted capital adequacy ratios (“RWCAR”) clocked in at 11.88% and 16.19%, respectively as at end- March 2012. PB’s tier-1 and overall RWCAR improved during the same period amid strong internal capital-generation, despite loan growth; the ratios have surpassed the peers’.


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...by i3gconsultants@ 12:09:51 on 2012-09-30

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Sector: Hotels and Travels

Tourism research centre launched


Sri Lanka’s first ever professional body in tourism research “Centre for Research and Sustainability Studies in Tourism (CRST),” was launched on Thursday in a bid to fill the vacuum prevailing in the research and analytic arena in tourism related industries. CRST is a non profit organization and is spearheaded by a committee of advisors renowned both locally and internationally in their respective specializations. The CRST will supplement the work of government institutions by developing policy papers on key areas while assessing the current statistical and systems needs of the tourism industry in the country and disseminate information and analyses beneficial for both macro and macro level planning to stakeholders. CRST Founder Dileep Mudadeniya said that the research institution will cater to tourism industry related investments and advisory needs of the entire spectrum of stakeholders with special emphasis on SME sector.


Dailynews

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...by i3gconsultants@ 12:09:40 on 2012-09-30

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Sector: Hotels and Travels

Travel, tourism investments to rise


Travel and Tourism investments in Sri Lanka, according to a forecast is to increase by 5.5 % per annum over the next ten years to Rs 127.2 billion in 2022, the World Travel and Tourism Council sources said. Travel and Tourism investments in 2011 had been Rs 68.6 billion or 4.1 % of the total investments and it has been predicted that this too should rise by 8.5 % in 2012. The total contribution by Travel and Tourism to the GDP was 8.4% of the GDP or Rs 541.3 billion in 2011 and is is to rise by 6.2 % in 2012 , a rise of 5.9 % per annum to Rs 1,019.8 billion in 2022. In 2011, the total contribution from Travel and Tourist industry to employment, including jobs indirectly supported by the industry has been 7.5 % or 590,000 jobs. This was expected to increase by 0.7 % in 2012 to 594,000 jobs, rise of 1.7 % per annum to 700,000 jobs in 2022. However, Sri Lanka's competitors and benchmarks have been ahead of Sri Lanka in terms of tourism development. Sri Lanka has an opportunity to gain a strong market share by exploiting opportunities such as increased visa free travel, protection of natural and cultural resources and attractions, improvement in health and safety and security environments, expansion of the domestic air transport infrastructure, improvement of road network in the Northern and Eastern areas, installation of more ATMs and mobile phone network, improvement of the tertiary education in tourism ad hospitality sector, according to another research.


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...by i3gconsultants@ 12:09:44 on 2012-09-30

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Sector: Power and Energy

Sri Lanka gets ADB help to cut power system losses, start solar trials


Sri Lanka will get 130 million US dollars in Asian Development Bank financing to cut losses in the power grid, expand supply to former war zones and for pilot rooftop solar panel installations.The regional lender said the financing will help the government reach its target of cutting system losses to 12 percent by 2020 from 14 percent in 2009. The work will include new transmission and distribution lines, the construction and improvement of substations, and network upgrades to reduce system losses. The package includes a 1.5 million US dollar credit to finance rooftop solar panels by private developers and a 1.5 million US dollar grant. "Long-term, Sri Lanka’s challenge is to cut dependence on costly and polluting fossil fuels, and to make its power network more efficient," said Yongping Zhai, director of the energy division of ADB’s South Asia Department said in a statement. "This project will support those goals, aid poverty reduction, and provide new economic opportunities in post-conflict areas." The solar power rooftop panels and planned in areas ranging from the capital Colombo to the northern Jaffna peninsula targeting a total generating capacity of 1 MegaWatt by 2014. The four year project will also help reach Sri Lanka's targets of increasing electrification to 100 percent by 2015 and increasing the share of renewable energy in the national grid to 20 percent by 2020, the ADB said.


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...by i3gconsultants@ 12:09:51 on 2012-09-30

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Sector: Power and Energy

$ 24 m Lanka bamboo drive launched


More than 800,000 direct and indirect employment opportunities would be created and 311,000 mega-watt hours of electricity and heat per year capacity will be added through biomass energy by 2019 as a result of the national bamboo initiative launched with a $ 24 million investment. “The national bamboo initiative launched with a $ 24 million investment in its first stage aims at strengthening the bamboo supply chain. The project aims to increase current bamboo coverage from 5,000 Ha to 15,000 Ha with 10,000 Ha new bamboo canopy (coverage) and help stop deforestation.


“More than 800,000 direct and indirect employment opportunities are also to be newly created and 311,000 mega-watt hours of electricity and heat per year capacity will be added through biomass energy by 2019. This is equal to 2.7 percent of total electricity generated in the country last year,” said Rishad Bathiudeen, Minister of Industry and Commerce on September 19. Minister Bathiudeen announced this on September 19 having inaugurated the pioneering national Bamboo Project of UNIDO Focal Point at Galle Face Hotel, Colombo. The $ 24 million, seven year-long project aims at tripling Sri Lanka’s bamboo growth from current 5,000 Ha to 15,000 Ha by 2019 strengthening the bamboo supply chain to industrial levels with 150,000 tonnes of ready dry bamboo supply to the country annually (Estimates show that the requirement for biomass energy in Sri Lanka is expected to increase to 9.7 million tonnes by 2020). The session was also graced by Delhi based Antonios Levissianos, UNIDO Deputy Representative for South Asia, with such experts as Kentaro Aoki, UNIDO associate Expert in agricultural engineering, Sujit Das, UNDIO's Indian Technical Officer and many other distinguished invitees. The public sector co-financers of the Project are the Ministry of Industry and Commerce, the Mahaweli Authority of Sri Lanka, the Forest Department of Sri Lanka, UNIDO, and from private sector are Touchwood Investments PLC and Bamboo Resources Development (Pvt) Ltd. “Also soil quality in about 6,000 hectares of bamboo cultivation is expected improve considerably so that these lands are integrated back to the economy. Due to the high availability of bamboo in the country, our industries need not spend for bamboo imports. I am also given to understand that in stage two, the focus will shift to value chain development,”said Bathiudeen. Bathiudeen said. “We are pleased to partner with UNIDO under my ministry in the first ever large scale green industry initiative in Sri Lanka. In fact, we extend our support to this bamboo supply chain initiative by UNIDO which stands to uplift multiple sectors including rural livelihoods, environment development, energy efficiency, employment generation, and raw material supply for relevant industries.


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...by i3gconsultants@ 18:09:47 on 2012-09-22

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Sector: Manufacturing

India opens textile market to Sri Lanka


In a major bilateral trade move in which access to the huge Indian textile market is opened to our garment exporters, India has decided to open its textile sector to Sri Lanka in a considerable way. “Favourably considering your official request made to Minister Anand Sharma during his visit to Colombo recently, Minister Sharma has now decided to increase the current five million piece quota given to Sri Lanka to eight million without any sourcing requirements imposed by us,” said Kiran Dhingra, Secretary, Ministry of Textiles India on Wednesday at the Ministry of Industry and Commerce, Colombo. Visiting Secretary Dhingra, who is leading the biggest ever textile industry delegation from India to Sri Lanka, made these observances during a special courtesy call on Minister Bathiudeen on Wednesday in Colombo. According to independent international trade estimates, the current share of the highly promising Indian textile and apparel sector in world trade (4.5% in March 2012) is expected to boom to a huge $ 80 billion by 2020 (8%). Minister Bathiudeen, addressing the delegation said, “On behalf of President Mahinda Rajapaksa, we warmly welcome you here in the aftermath of Minister Anand Sharma’s visit to Colombo to boost bilateral cooperation. Your visit is an important event for mutual engagement in our textile and apparel sector.” Bathiudeen said, “We request you to further liberalise your textile market for Sri Lankan exporters and allow duty free access to our HS Code 61 and 62 apparel export items. These two are important exports originating from here to your markets and also further liberalise both garment and textile under the Indo - Sri Lanka Free Trade Agreement (ISFTA). HS Code 61 are articles of apparel and clothing accessories, knitted or crocheted and HS Code 62 are articles of apparel and clothing accessories,not knitted or crocheted). We also request you to finalise administrative procedures for implementation of these additional apparel quotas with no restrictions on fabric sourcing which would be of great assistance to our exporters. And we also welcome your support to revive some of the textile and garment mills in Sri Lanka with Indian private or public sector investment, even on the textile clustering investments model. We also look for support to strengthen textile supply chain such as raw material, yarn, for example. “Though our apparel sector technology is strong, our textile sector is weak in this regard and we believe that India know-how can support technology transfer in this regard. More importantly we invite Indian investors to Sri Lanka for Joint Ventures and Strategic alliances.” The delegation is scheduled to return to India on 21 September.


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...by i3gconsultants@ 18:09:44 on 2012-09-22

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Sector: Manufacturing

Leather product exports to reach $ 25 m mark by 2015


Sri Lanka is planning to increase direct and indirect leather product exports from $ 3.28 million in 2009 to $ 25 million by 2015 and is focusing on attracting nitch market buyers while developing local sales to the tourism industry. Demand for leather goods has seen a sharp increase as a result of rapid development in the local tourism industry, Sri Lanka Export Development Board said. Colombo District has around 14 tanneries that process rawhide and skins to semi finished leather and finished leather. The production of tanneries is about 28 tones of raw materials per day . The total production of local raw hides and skins is 8,400 tons per annum and finished leather is used for domestic as well as export purposes. Many very small informal units produce various leather goods for the local market including the tourist market. Some tanneries are extending their operations towards the travel goods and leather garment manufacturing. In recent years, the global demand for luggage and leather goods industry has grown so as competition in the market. It has become one of the fashion statements for women; they prefer designer handbags, laptop bags and travelling bags which have turned their focus towards high end brands such as LVMH and other competing brands on the same platform. On a global basis, demand for leather goods are increasing day by day since most of the countries are recovering from recent recession. Demand for travel bags depends on the growth of travel industry of particular region and bags, wallets, and purses dominate the demand of total luggage and leather goods industry.


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...by i3gconsultants@ 18:09:56 on 2012-09-22

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Sector: Banks Finance and Insurance

BOC goes for Rs. 6 b listed debentures; Fitch gives AA rating


Fitch Ratings Lanka has assigned Bank of Ceylon’s (BOC; ‘BB-’/Stable) proposed subordinated debentures of up to Rs. 6 billion a National Long-Term rating of ‘AA(lka)’.BOC’s ratings reflect Fitch’s expectation of support from the Government of Sri Lanka (‘BB-’/Stable), if required. This is based on its quasi sovereign status, high systemic importance and role as one of the main bankers to the Government.
BOC is the largest bank in Sri Lanka and fully owned by the Government. The Viability ‘b+’ Rating (VR) reflects BOC’s weak capitalisation, improving profitability, increasing loan/deposit ratio and concentration in the public sector. The VR also reflects its domestic franchise being underpinned by its sovereign linkages and extensive branch network.BOC…
Any change in Sri Lanka’s sovereign ratings would likely be reflected in the ratings of BOC. An upgrade of BOC’s National Long-Term rating may also result from demonstrated preferential support for BOC.  The VR may be upgraded if BOC enhances its capital buffer substantially (including a high loan loss reserve coverage); if the loan-deposit ratio is maintained at 80%-85%, supplemented by medium-term wholesale funding; and if its operating performance and asset quality remain stable.
The VR may be downgraded if capital buffer weakens from continued high asset growth, or if a large asset quality downturn from domestic/external macroeconomic shocks leads to capital impairment.
The proposed debentures are rated one notch below BOC’s National Long-Term rating to reflect their subordinated status. The proposed debentures will have a maturity of five years, with principal repayment as a bullet payment on maturity while coupon payments will be at fixed or floating rates, and do not contain any deferral clauses.
The debentures are to be listed on the Colombo Stock Exchange. The issue is aimed at strengthening BOC’s Tier 2 capital base.


Dailyft

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...by i3gconsultants@ 18:09:14 on 2012-09-22

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Sector: Power and Energy

Sri Lanka power generation up 5.6-pct in first half


- Sri Lanka's power generation rose 5.3 percent to 5,875 GigaWatt hours (millions of units) in the six month to June from a year earlier, while growth during the month was 2.0 percent, official data shows.
But growth slowed slight from last year when power generation grew 6.5 percent in the first six months and 4.4 percent in the month of June, Central Bank data showed.
In the year to December 2011 power generation grew 7.5 percent to 11,522 GWh.
Sri Lanka raised power tariffs in February 2011, after credit-financed thermal power generation using imported petroleum amid a drought helped drive the country into a balance of payments crisis. Higher tariffs encourage efficient usage.
Sri Lanka's balance of payments pressure began around June 2011, due to surge in credit by state energy enterprises to manipulate prices and lost taxes by which were ultimately accommodated with central bank credit (printed money).
The rupee fell to 132 rupees from 110 though energy tariffs were raised, and interest rates were also raised to prevent money printing.
Analysts point out that if energy prices were raised in the first place, along with some monetary tightening, the rupee would not have fallen.
Hydro power generation, by state-run Ceylon Electricity Board plunged 63 percent to 1,072 GWh up to June 2012 from a year earlier while its thermal generation rose 134 percent to 1,906 GWh.
Generation by private producers rose 55.5 percent to 2,893GWh. Non conventional renewable energy - mainly mini-hydro and some wind - rose 8.2 percent to 60GWh.
Private thermal and renewable energy totaling 2,894GWh was 49.7 percent of total generation.
During the month of June power generation rose 2.0 percent to 982GWh. CEB's hydro generation fell 57.1 percent to 164GWh and thermal rose 126 percent to 344GWh.Thermal generation by private producers rose 10.5 percent to 473GWh and non conventional renewable energy rose 25.7 percent to 21GWh.
In the third quarter of 2012 Sri Lanka imposed power cuts, the first in a decade after a Chinese built coal plant broke down.
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...by i3gconsultants@ 01:09:34 on 2012-09-18

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Sector: Banks Finance and Insurance

Sri Lanka HSBC branch rating confirmed at 'AAA(lka)'


Fitch Ratings has confirmed an 'AAA(lka)' rating of Sri Lanka's HSBC branch with a stable outlook, citing support from its parent, Hongkong and Shanghai Banking Corporation Limited.Fitch said its credit growth will remain close to a ceiling 23 percent annual ceiling set by the regulator, and non performing loans had fallen from 3.6 percent at end-2010 to 2.5 percent at end of the first half of 2012. The full statement is reproduced below

Fitch Affirms HSBC Sri Lanka Branch at 'AAA(lka)'; Outlook Stable Fitch Ratings-Colombo/Mumbai/Singapore-14 September 2012: Fitch Ratings Lanka has affirmed HSBC Sri Lanka Branch's (HSBCSL) National Long-Term Rating at 'AAA(lka)'.The Outlook is Stable. The rating reflects the financial strength of parent The Hongkong and Shanghai Banking Corporation Limited (HKSB; 'AA'/Negative), given that HSBCSL is a branch of HKSB and is part of the same legal entity as HKSB. Thus, Fitch believes that support from HKSB would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka. HKSB is rated above Sri Lanka's IDR of 'BB-'/Stable. HSBCSL's National Long-Term Rating is at the highest end of the National Rating scale. A downgrade of HSBCSL rating could result from HKSB's rating falling below Sri Lanka's IDR. Any changes to Fitch's expectation of support from HKSB could be negative for the rating. Management indicates that although Sri Lanka is not among HSBC's 22 priority markets, as an important network market, HSBC is committed to investing in Sri Lanka.Fitch expects the pace of lending at HSBCSL to remain close to the 23% credit ceiling imposed by the regulator. Lending remains largely to corporates (70% of loans at end-2011) reflecting the branch's traditional focus. The remainder comprises the non-corporate sector that includes credit cards (13%). The branch's gross non-performing loan (NPL) ratio decreased to 2.5% at end-H112 and end-2011 from 3.6% at end-2010, reflecting an improved operating environment alongside close credit monitoring. HSBCSL's provisioning policy is conservative, with specific provision coverage of NPLs of 78% at H112 and end-2011. HSBCSL's equity/assets ratio increased to 10.5% at end-H112 and 9.7% at end-2011 from 8.5% at end-2010 through the retention of profit. The last repatriation of profit to the head office took place in 2010; such repatriations depend on the bank's capital requirements each year. The branch's net interest margin (NIM) improved to 5.9% (annualised) in H112 after dropping to 5.1% in 2011, reflecting an increase in market interest rates and the lifting of the interest rate cap on credit card loans. In addition, as part of the HSBC group, the branch continues to benefit from low funding costs. Pre-tax return on assets increased to 5.6% (annualised) from 3.7% in 2011, reflecting a rebound in NIM and increased foreign exchange income as seen across the sector. Fitch notes that although deposits remain the primary source of funding for HSBCSL (54% of funding at end-H112), their share has been decreasing from a high of 71% at end-2007. Established in 1892, HSBCSL is Sri Lanka's largest foreign bank branch and the sixth-largest licensed commercial bank, accounting for 5.7% of banking sector assets at end-2011. It is the largest issuer of credit cards in Sri Lanka, accounting for 25% of cards in use and 42% of outstanding credit.

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...by i3gconsultants@ 19:09:15 on 2012-09-16

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Sector: Banks Finance and Insurance

Orient Finance Inaugurates FD Division


Continuing its growth momentum, Orient Finance PLC adds yet another milestone, with the opening of its doors to the acceptance of Fixed Deposits, subsequent to being licensed by the Monetary Board of the Central Bank of Sri Lanka under the Finance Business Act No 42 of 2011 as a Finance Company. The Fixed Deposit division, which was inaugurated on the 16th of August, is expected to complement Orient Finance’s core business of Leasing, Hire Purchase and Debt Factoring enhancing its product offering to its growing customer base.This initiative adds on to Orient Finance’s list of achievements for 2012, which include obtaining a listing on the Diri Savi Board of the Colombo Stock Exchange, recording the highest ever profits after tax since its inception, expansion of its branch network, enhancing its product portfolio and re-branding itself in accordance with its new strategic plan.


The Island

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...by i3gconsultants@ 13:09:09 on 2012-09-16

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Sector: Banks Finance and Insurance

Sri Lanka Citibank unit 'AAA(lka)' rating confirmed


Fitch Ratings has confirmed an 'AAA(lka)' rating of the Sri Lanka branch of Citibank with a stable outlook, saying it is strongly capitalized and had support would be available from the parent unit.The bank had no bad loans but had a 44 percent concentration on the appare sector. The full statement is reproduced below

Fitch Affirms Citibank N.A. - Colombo Branch at 'AAA(lka)'/Stable Fitch Ratings-Singapore/Colombo-14 September 2012: Fitch Ratings Lanka has affirmed Citibank N.A. - Colombo Branch's (CitiSL) National Long-Term rating at 'AAA(lka)'. The Outlook is Stable. CitiSL's rating reflects the financial strength of Citibank N.A.'s (Citibank) given that CitiSL is a branch and part of the same legal entity as Citibank.



Citibank is rated at 'A'/Stable, which is higher than the sovereign's Issuer Default Rating of 'BB-'/Stable Outlook. Fitch believes that support from the head office would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka. CitiSL's capitalisation has historically remained strong, with equity to assets and tier 1 capital ratios at 32% and 23.4% respectively at end-June 2012 (2011: 30%, 33.7%). Despite high repatriation in 2011 in lieu of not repatriating dividends from 2005 to 2007, CitiSL's capitalisation has remained higher than peers and well over regulatory requirements. CitiSL has maintained sound asset quality with no non-performing loans since 2009. This is mainly due to CitiSL's selective lending to large tier 1 corporates, multinationals and public sector entities, which are of high creditworthiness within Sri Lanka. CitiSL follows Citibank's global credit policy, with significant oversight by Citibank's regional offices in India and in Hong Kong. The bank has significant loan concentration with the apparel sector accounting for 44% of loans and the financial sector at 15% at end-2011. At end-H112 its five largest loans and deposits accounted for 44% and 36% respectively of the bank's total. Citibank established local operations in 1979, and operates through a single branch.

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...by i3gconsultants@ 13:09:04 on 2012-09-16

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Sector: Power and Energy

Sri Lanka evaluating floating LNG terminal: minister


Sri Lanka is evaluating a proposal to build a floating liquefied natural gas terminal to supply over 1,000MegaWatts of combined cycle power plants that are running on furnace oil and a planned new one, minister Champika Ranawaka said."We are now working to introduce LNG to the country," he said. "We think by 2014 we will be able to do it." He said the floating terminal to be located in Kerawalapitiya, north of Colombo has been proposed by Lanka Transformer Ltd, an associate company of state-run Ceylon Electricity Board, which is partly owned by private investors. Several feasibility studies have found that the cost of the terminal makes LNG uneconomical and the fuel is not included in the grid operator's long term generation plan. However a more recent feasibility study has found that LNG could be justified under certain conditions, industry analysts say. A floating storage and regassification unit (FSRU) costs less than a land based terminal. Minister Ranawaka declined to reveal the estimated cost of the terminal saying LTL's financial proposal was still being evaluated. LNG is also cleaner than heavy fuel or diesel. Minister Ranawaka said an existing 300MegaWatt heavy fuel plant built by the LTL group in Kerawalapitiya as well as 700 MWs of of furnace oil fired plants owned by the CEB, located it its Kelanitissa complex could be converted to run on LNG. Another 300MW power plant was also planned in Kerawalapitiya, he said.


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...by i3gconsultants@ 12:09:51 on 2012-09-15

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Sector: Banks Finance and Insurance

Sri Lanka Citibank unit 'AAA(lka)' rating confirmed


Fitch Ratings has confirmed an 'AAA(lka)' rating of the Sri Lanka branch of Citibank with a stable outlook, saying it is strongly capitalized and had support would be available from the parent unit.The bank had no bad loans but had a 44 percent concentration on the appare sector. The full statement is reproduced below

Fitch Affirms Citibank N.A. - Colombo Branch at 'AAA(lka)'/Stable

Fitch Ratings-Singapore/Colombo-14 September 2012: Fitch Ratings Lanka has affirmed Citibank N.A. - Colombo Branch's (CitiSL) National Long-Term rating at 'AAA(lka)'. The Outlook is Stable. CitiSL's rating reflects the financial strength of Citibank N.A.'s (Citibank) given that CitiSL is a branch and part of the same legal entity as Citibank.



Citibank is rated at 'A'/Stable, which is higher than the sovereign's Issuer Default Rating of 'BB-'/Stable Outlook. Fitch believes that support from the head office would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka. CitiSL's capitalisation has historically remained strong, with equity to assets and tier 1 capital ratios at 32% and 23.4% respectively at end-June 2012 (2011: 30%, 33.7%). Despite high repatriation in 2011 in lieu of not repatriating dividends from 2005 to 2007, CitiSL's capitalisation has remained higher than peers and well over regulatory requirements. CitiSL has maintained sound asset quality with no non-performing loans since 2009. This is mainly due to CitiSL's selective lending to large tier 1 corporates, multinationals and public sector entities, which are of high creditworthiness within Sri Lanka. CitiSL follows Citibank's global credit policy, with significant oversight by Citibank's regional offices in India and in Hong Kong. The bank has significant loan concentration with the apparel sector accounting for 44% of loans and the financial sector at 15% at end-2011. At end-H112 its five largest loans and deposits accounted for 44% and 36% respectively of the bank's total. Citibank established local operations in 1979, and operates through a single branch.

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...by i3gconsultants@ 12:09:19 on 2012-09-15

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Sector: Motor

Sri Lanka August vehicle sales plunge, luxury end steadier


Sri Lanka's vehicle registrations had fallen 39.5 percent to 27,185 in August 2012, from a year earlier, though there was marginal pick up from a low of around 24,000 hit in June, an analysis by an equities research house has showed.Preliminary data from Sri Lanka's motor registration office analyzed by J B Stockbrokers shows, that new registrations of brand new cars fell to 699 in August 2012 from 2,431 a year earlier. Reconditioned cars fell from 1,866 to 510. Car imports fell steeply after taxes were suddenly jacked up by the state along with interest rates while the currency also fell, amid a balance of payments crisis triggered mostly by credit taken by state energy enterprises to manipulate tariffs. The data shows that the smallest cars bought by the least affluent citizens fell most. Small Maruti/Suzuki models fell 90 percent to just 126 in August 2012 from 1,277 units a year earlier. Perodua, a Malaysian small car brand fell to 202 units from 313. Luxury Mercedes, BMW and Audi units fell just 11 percent to 65 units in August from 73 a year earlier. BMW vehicle registrations increased to 47 in August 2012 from 25 a month earlier. Industry analysts say imports of such cars are helped by tax slashed permits given to state workers. Sports utility vehicles which saw an unusual surge in August 2011 to 1,501 fell to 996 in August. In June SUV registrations rose to 1,107 from 1,078 a year earlier and in July SUV sales were 865 against 962 a year earlier. Motor cycles sales fell 38.8 percent to 12,704 in August from a year earlier. There was a slight pick-up from the 11,000 unit levels seen in June and July. Three wheeler taxi registrations fell 38.6 percent to 7,718 in August. Three wheeler registrations which fell to 3,577 in May improved to 4,134 in June and 8,017 in July.


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...by i3gconsultants@ 12:09:09 on 2012-09-15

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Sector: Plantations

Sri Lanka to upgrade rubber infrastructure, eyes 2022 US$ 4bn export target


As global rubber prices are set to soar, Sri Lanka is moving to upgrade its rubber sector to capitalise on the trend-and also to play the US$ 4 billion rubber exports target set for 2022, the Ministry of Industry and Commerce said yesterday."I am pleased to announce that we are launching the first ever national rubber industry survey next month. We are also now looking at creating high end rubber testing lab facilities that the industry needs. All of this will contribute to Rubber Masterplan which looks to generate US$ 4 billion rubber exports by 2022," announced Rishad Bathiudeen, Minister of Industry and Commerce of Sri Lanka on 23 August.Bathiudeen announced this in the aftermath of special meeting held with the representatives of Sri Lanka Association of Rubber Product Manufacturers and Exporters (SLARPME) on the same day at the Ministry of Industry and Commerce, Colombo 3. The rubber industry delegation was led by Justin Seneviratne, Vice Chairman of SLARPME. Seneviratne is also a Director of Lalan Rubber Private ltd."This will be the first trade focused national rubber survey in the country and I thank you, the SLARPME for collaboration. Once the survey is completed we will create a database. The findings will then be fed to the comprehensive Rubber Labour force development survey that follows," Bathiudeen said."Apart from the Rubber Masterplan, my Ministry itself had already identified rubber as one of the thrust areas for development. Therefore the survey findings also will be used in Asian Development Bank’s CCED model," he said.The City Cluster Economic Development model (CCED) of the Asian Development Bank has selected Sri Lanka’s rubber industry as a pilot and its Phase III is expected to end in December this year. In addition to the Ministry of Industry and Commerce, ADB also partners with Ministry of Plantation Industries and the private sector on the CCED initiative.The representatives praised Bathiudeen and his ministry for initiating the first ever comprehensive national Rubber Survey in collaboration with SLARPME. "This survey and the Rubber Labour force development survey that follows next are the essential next step for our rubber industry which is the third largest export earner. We most welcome this initiative and praise the Ministry for preparing a comprehensive evaluation," SLARPME Vice Chairman Seneviratne said.The first survey to start next month which will survey the industry’s production, factories, employee numbers, and labour issues will be completed at a minimal cost of US$ 22,700 (Rs. 3 million).Rubber reps also informed Bathiudeen of their need for accredited export rubber quality testing lab facilities. "The existing lab helps us to test for low and minor issues in export rubber but we need a test facility to certify in EN Standards for the EU market and anti-allergenic testing," Seneviratne said. "This will greatly upgrade the rubber industry to advance towards the Rubber Masterplan which looks to generate US$ 4 billion rubber exports by 2022" Seneviratne added. "This can also be achieved by upgrading existing test facilities," he added.Bathiudeen extended his Ministry’s fullest support towards high end accreditation testing lab facilities as requested by the rubber industry and during the meeting itself instructed his top officials to identify and start necessary activities.He also informed of his plans to support the industry by making arrangements to provide training and development that has become a dire need for the sector. "We will look into the possibility and feasibility to provide these facilities for the rubber sector through Sri Lanka Institute of Textile and Apparel (SLITA) under my Ministry. I believe the training infrastructure of SLITA can also be made available to rubber industry which we are happy to do," Bathiudeen responded.


The Island

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...by i3gconsultants@ 12:09:39 on 2012-09-15

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Sector: Land and Property

City Homes Phase II will cater to needs of up market clients


The Rs 350 million City Homes project Phase II would cater to the housing needs of the up market clients where the demand for housing is presently on the increase. “We are confident that this project would be a success and the entire 10 houses of Phase 1 had already been sold. The ten houses of the second phase would be completed within an year while the City Homes would be a landmark housing project in the country, City Housing and Real Estate Co Plc chairman Janaka Ratnayake told Daily News Business. The company will embark on two more projects in the near future with the expectation of a positive growth in the real estate sector. We will build around 40 new houses through the projects at hand within the next year, he said. “In creating our luxury housing projects, we have drawn expertise from the creative reservoir of our designers, architects and builders. Making sure our clients receive the best service is important to the company. Our professionally trained staff makes it their mission to ensure that the clients receive the highest level of service always,” he said. The foundation stone laying ceremony of the City Homes in Nugegoda, Delkanda Phase II, was held yesterday. City Homes Delkanda is ideally located in close proximity to Nugegoda and within easy reach of Maharagama and Dehiwela. “As the premier real estate developer in Sri Lanka, we have the experience and the professionalism to maintain high standards exceeding the set levels. Our high profile real estate projects have been acclaimed throughout Sri Lanka and our impressive portfolio includes, a number of luxury housing projects, aesthetically designed apartment complexes and exclusive plots of developed land,” CH and RE Deputy CEO S.A. Lalith said. With the distinction of being the developer of the largest, exclusive, super luxury condominium project in Sri Lanka, CH and RE was also the parent company for Trillium Residencies. As full time real estate professionals, offering residential and investment real estate property listings for sale throughout Sri Lanka, the company’s portfolio of projects include the Elite Rajagiriya, Liberty Park PittaKotte, Regent Mansions, Walauwatte, Westbury Gardens Thalawatugoda and the City Homes projects at Wijerama, Pita Kotte, Ja-Ela and Madinnagoda. Other completed projects also include The Bungalow Biyagama, Sterling Park Seeduwa, The Perfect Neighbourhood Mirihana and Unity Gardens Kadawatha. City Housing and Real Estate Plc was established in 1983, to promote property development and real estate in Sri Lanka, with a special emphasis on an eco-friendly environment. The Phase II of its Delkanda luxury ‘gated community’ development, would comprise of 10 housing units in a one and half acre property with a purchase price of Rs 18 million upwards.


Dailynews

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...by i3gconsultants@ 12:09:28 on 2012-09-15

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Sector: Land and Property

City Homes Phase II will cater to needs of up market clients


The Rs 350 million City Homes project Phase II would cater to the housing needs of the up market clients where the demand for housing is presently on the increase. “We are confident that this project would be a success and the entire 10 houses of Phase 1 had already been sold. The ten houses of the second phase would be completed within an year while the City Homes would be a landmark housing project in the country, City Housing and Real Estate Co Plc chairman Janaka Ratnayake told Daily News Business. The company will embark on two more projects in the near future with the expectation of a positive growth in the real estate sector. We will build around 40 new houses through the projects at hand within the next year, he said. “In creating our luxury housing projects, we have drawn expertise from the creative reservoir of our designers, architects and builders. Making sure our clients receive the best service is important to the company. Our professionally trained staff makes it their mission to ensure that the clients receive the highest level of service always,” he said. The foundation stone laying ceremony of the City Homes in Nugegoda, Delkanda Phase II, was held yesterday. City Homes Delkanda is ideally located in close proximity to Nugegoda and within easy reach of Maharagama and Dehiwela. “As the premier real estate developer in Sri Lanka, we have the experience and the professionalism to maintain high standards exceeding the set levels. Our high profile real estate projects have been acclaimed throughout Sri Lanka and our impressive portfolio includes, a number of luxury housing projects, aesthetically designed apartment complexes and exclusive plots of developed land,” CH and RE Deputy CEO S.A. Lalith said. With the distinction of being the developer of the largest, exclusive, super luxury condominium project in Sri Lanka, CH and RE was also the parent company for Trillium Residencies. As full time real estate professionals, offering residential and investment real estate property listings for sale throughout Sri Lanka, the company’s portfolio of projects include the Elite Rajagiriya, Liberty Park PittaKotte, Regent Mansions, Walauwatte, Westbury Gardens Thalawatugoda and the City Homes projects at Wijerama, Pita Kotte, Ja-Ela and Madinnagoda. Other completed projects also include The Bungalow Biyagama, Sterling Park Seeduwa, The Perfect Neighbourhood Mirihana and Unity Gardens Kadawatha. City Housing and Real Estate Plc was established in 1983, to promote property development and real estate in Sri Lanka, with a special emphasis on an eco-friendly environment. The Phase II of its Delkanda luxury ‘gated community’ development, would comprise of 10 housing units in a one and half acre property with a purchase price of Rs 18 million upwards.


Dailynews

......

...by i3gconsultants@ 12:09:28 on 2012-09-15

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Sector: Land and Property

City Homes Phase II will cater to needs of up market clients


The Rs 350 million City Homes project Phase II would cater to the housing needs of the up market clients where the demand for housing is presently on the increase. “We are confident that this project would be a success and the entire 10 houses of Phase 1 had already been sold. The ten houses of the second phase would be completed within an year while the City Homes would be a landmark housing project in the country, City Housing and Real Estate Co Plc chairman Janaka Ratnayake told Daily News Business. The company will embark on two more projects in the near future with the expectation of a positive growth in the real estate sector. We will build around 40 new houses through the projects at hand within the next year, he said. “In creating our luxury housing projects, we have drawn expertise from the creative reservoir of our designers, architects and builders. Making sure our clients receive the best service is important to the company. Our professionally trained staff makes it their mission to ensure that the clients receive the highest level of service always,” he said. The foundation stone laying ceremony of the City Homes in Nugegoda, Delkanda Phase II, was held yesterday. City Homes Delkanda is ideally located in close proximity to Nugegoda and within easy reach of Maharagama and Dehiwela. “As the premier real estate developer in Sri Lanka, we have the experience and the professionalism to maintain high standards exceeding the set levels. Our high profile real estate projects have been acclaimed throughout Sri Lanka and our impressive portfolio includes, a number of luxury housing projects, aesthetically designed apartment complexes and exclusive plots of developed land,” CH and RE Deputy CEO S.A. Lalith said. With the distinction of being the developer of the largest, exclusive, super luxury condominium project in Sri Lanka, CH and RE was also the parent company for Trillium Residencies. As full time real estate professionals, offering residential and investment real estate property listings for sale throughout Sri Lanka, the company’s portfolio of projects include the Elite Rajagiriya, Liberty Park PittaKotte, Regent Mansions, Walauwatte, Westbury Gardens Thalawatugoda and the City Homes projects at Wijerama, Pita Kotte, Ja-Ela and Madinnagoda. Other completed projects also include The Bungalow Biyagama, Sterling Park Seeduwa, The Perfect Neighbourhood Mirihana and Unity Gardens Kadawatha. City Housing and Real Estate Plc was established in 1983, to promote property development and real estate in Sri Lanka, with a special emphasis on an eco-friendly environment. The Phase II of its Delkanda luxury ‘gated community’ development, would comprise of 10 housing units in a one and half acre property with a purchase price of Rs 18 million upwards.


Dailynews

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...by i3gconsultants@ 12:09:28 on 2012-09-15

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Sector: Power and Energy

Sri Lanka working with China to clear coal plant hitches


Sri Lanka's state-run Ceylon Electricity Board and a Chinese contractor is working to rectify problems with the island's first coal power plant and changes will be made to two others that have not yet been finished, officials said.Sri Lanka's first coal plant built by China Machinery and Engineering Corporation has broken down several times since it was commissioned last year, with the most recent shut downs triggering the first power cuts in a decade, amid a drought which hit hydro generation. Power minister Champika Ranawaka told reporters Wednesday two out of six major shutdowns were due to the failure of a transmission line built to evacuate power, which fell along an arid coastal area. The build up of salt during a five month long dry spell had resulted in the failure of the transmission line. The 300MegaWatt coal plant's core machinery - generator and turbine - was of good quality and had no defects but shut downs were due to failing ancillary equipment, CEB's deputy chairman Anura Wijepala said. The plant had generated 6GigaWatts hours of energy yesterday after being re-started, allowing the CEB to stop power cuts, Minister Ranawaka said. He said Chinese and Sri Lankan engineers had come up with reports suggesting changes to the other two plants to incorporate lessons learnt with the first plants. No cost estimates for the changes were disclosed. "We are working with CEB engineers to bring the plant to normal operations," Wang Lu Dong, chief engineer of CMEC said. "We will work together on commercial or technical issues. If we work together we can solve these problems." The coal plant is still within a two year 'defect notification period' which ends in July 2013. "This plant is still not finished," minister Ranawaka said. The plant's designer Zhao Wenxue, from China's Northwest Electric Design Institute said in a statement last month said frequent shutdowns and lack of annual maintenance had contributed to the shutdowns. He said some repairs should be made while the plant was operating. CEB officials said and procedures were also developed to safely shut down the plant. The coal had operated without a break from February to August this year. In the past year the plant had generated To generate the same amount from a combined cycle plant at 15.79 rupees a unit would cost 29.6 billion rupees. During the past year the plant had generated 1,875 GigaWatt hours (millions of units of electricity) at a cost of 6.67 rupees a unit totaling 12.5 billion rupees. To generate the same amount of energy from a combined cycle plant at 15.79 rupees a unit would cost 29.6 billion rupees.


LBO

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...by i3gconsultants@ 17:09:02 on 2012-09-12

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Sector: Power and Energy

Sri Lanka fake lubricant market thriving


There was a thriving business in Sri Lanka involving the sale of unlicensed lubricants, adulterated and counterfeited brands and recycling used oil, which can damage vehicles engines, industry officials said.Lubricants import, production and distribution is a licensed industry in Sri Lanka where citizens do not yet have the full freedom to import and use the product. Chevron Lubricants Lanka chief Kishu Gomes told a forum organized by the Public Utilities Commission of Sri Lanka (PUCSL), that while there only 13 licensed distributors including, 17 operators were importing producing or selling lubricants. The PUCSL is Sri Lanka's multi-sector utilities regulator which is expected to regulate the petroleum sector from next year. Gomes said some players were adulterating products with cheap base oil and counterfeiting established brands, some were selling them bulk in barrels, while were importing and selling in unbranded packaging. At least one operator was importing lubricants and retail packaging in Sri Lanka without a license and distributing them, he said. Another group were filtering used engine oil taken from service stations and re-selling after mixing with solvents, Gomes said. Such products used by unwary consumers could damage vehicle engines, he warned. Sri Lanka's lubricant market was estimated at 60 million litres a year of which more than three million litres could be grey market or fake. Gamini Amarasekera, an industry expert said a lubricant typically had a series of chemicals to disperse and keep in suspension dirt and particles, prevent particles from coagulating and other additives to reduce friction and fuel efficiency. There were anti-oxidants to increase the life of the engine. Over the last several decades technology behind lubricants had become more complex, and periodically new, more advanced industry standards were being set. A vehicle could use a later standard oil, but the use of an older standard lubricant could damage the engine and reduce its lifetime, he said. Sri Lanka's petroleum industry became a state monopoly in the1960 as property rights were violated by the state and existing petroleum firms were expropriated. Lubricants became a private monopoly in the mid 1990s after Ceylon Petroleum Corporation privatized its Lubricants to Caltex, which is now part of the Chevron Petroleum Group. In the next decade further freedoms were given to citizens of Sri Lanka to import and use other brands, licensing a dozen other operators in the next decade. The petroleum ministry was also allowing some firms to directly import specialized lubricants. Some vehicles came with manufacturer's recommendations on specialized oils that were being allowed to be imported directly by the ministry of petroleum, in a further improvement of the freedom enjoyed by Sri Lankan citizens. Sri Lanka has made lubricants a licensed industry by using clauses in the Ceylon Petroleum Corporation law, which despite being a market player itself, has been given a regulatory role by the state over the industry, creating a clear conflict of interest. Setting up an independent regulator will end the problem. In 2004 imports were liberalized through the enactments of a petroleum products law and later a 'shadow regulator' role was given to the Public Utilities Commission, pending the enactment of legislation to give full legal authority. Gomes said his firm had taken several unlicensed lubricant distributors to court but there was no mechanism to prosecute license violators at the moment. But counterfeit producers could be taken to court under Sri Lanka's intellectual property law. Damitha Kumarasinghe, director general of the PUCSL said once his agency got the legal power to issue licenses, unlicensed operators would be prosecuted. A testing lab would also be established, perhaps in partnership with Sri Lanka Standards Institution to check the quality of lubricants, after standards were set in line with international best practices, he said. PUCSL said its policy was to tightly regulate areas, where there was less competition looking into costs and pricing and lightly regulate sectors where competition with a large number of players had been established. Top players in the industry also made call to restrict full freedoms enjoyed by citizens on some automotive products, based on the standard arguments employed to restrict free trade and consumer choice around the world. Gomes said transmission oil was now being freely imported by people and it should be included among the regulated items 'to protect' consumers who could damage their cars by using sub standard products. A representative of Lanka IOC said brake oil was being freely imported and it should be included among licensed products to improve 'safety'.


LBO

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...by i3gconsultants@ 17:09:51 on 2012-09-12

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Sector: Hotels and Travels

Sri Lanka tourist arrivals up 9.7-pct in August


Sri Lanka's tourist arrivals rose 9.7 percent in August 2012 to 79,456 from a year earlier with Western Europe and East Asian growing but the top market India falling in absolute terms, official data showed.During the eight months to August, arrivals rose 15.8 percent to 622,661. Sri Lanka is expecting a little over a million visitors this year. Arrivals from Western Europe rose 8.7 percent to 32,656 in August from a year earlier, despite an economic downturn in the region, data from Sri Lanka's tourist promotion office showed. French tourists rose 31.4 percent to 5,473, German visitors rising 27.5 percent to 6,162 but visitors from UK falling 7.4 percent to 11.558. Arrivals from Eastern Europe rose 58.4 percent to 3,953 with Russia rising 18.5 percent to 1,345 and Ukraine surging 146 percent to 1,131. Middle Eastern visitors fell 3.9 percent to 4,950. Arrivals from East Asia rose 16.9 percent to 11,648 with China up 120 percent to 2,360 and Japan up 12.4 percent to 3,302. But South Asia grew marginally by 1.3 percent to 16,345 with India, Sri Lanka's largest generating market falling 12.6 percent to 11,242. Maldives arrivals rose 83.2 percent to 3,533 and visitors from Pakistan rose 18.7 percent to 864. In the eight months to August Indian arrivals were up only 1.0 percent to 108,232. During the first eight months of 2011 Indian visitors were up 45 percent to 107,201. In August 2011 alone Indian visitors rose 38.9 to 12,857. India became Sri Lanka's top tourism generating market after visa restrictions were lifted by Sri Lanka about a decade ago, restoring freedoms that existed before Western practices aimed at reducing human freedoms were imported to the region. Sri Lanka re-introduced visas for Indian visitors at the beginning of this year, as visa on arrival facility for many countries were ended amid rising nationalism in the island despite the end of a 30-year war. The electronic travel authorization process has eased the entry for citizens of some countries by eliminating paper work and cutting processing time. India's rupee has also weakened, making overseas travel more expensive, though Sri Lanka's rupee has also fallen about 16 percent over the past several months. Unlike the Association of South Asian Nations which created a visa free region triggering a tourism and aviation boom, the South Asia Association of Regional Co-operation has not been able to provide significant freedoms to the region's citizens. Sri Lanka however unilaterally lifted visas for Indian visitors about decade ago, with officials also persuading India to allow private Indian carriers to fly to the island, in a ground breaking regional liberalization of aviation. Visas came into wide use after World War II ending centuries of travel and immigration freedoms enjoyed by human beings around the world. Ironically, countries which pioneered the imposition travel restrictions in Europe have now created a visa free region as part of restoring the four freedoms -good, capital, service, and people - that were lost due to rising nationalism, fascism and socialism in the region.


LBO

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...by i3gconsultants@ 17:09:52 on 2012-09-12

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Sector: Power and Energy

Sri Lanka petroleum product pricing, quality to be regulated


Petroleum products are expected to be brought under Sri Lanka's multi sector utilities regulator which is already overseeing the power sector, from the beginning of 2013, with enabling legislation now being drawn up, officials said.Changes to the governing act of Sri Lanka's state-run Ceylon Petroleum Corporation and another law dealing with petroleum products has been drafted and referred to the attorney general for final approval, petroleum ministry secretary R H S Samaratunga said. He said the Public Utilities Commission of Sri Lanka (PUCSL) will regulate pricing and quality aspects of the petroleum sector once the changes are done. Jayatissa de Costa, chairman of Sri Lanka's Public Utilities Commission said his agency may be able to start regulating the sector by the first quarter of 2013 if legal changes go through the parliament on schedule. The PUC is now the 'shadow regulator' for lubricants with the task being given to the agency through a cabinet decision, pending final legal changes. But the legal changes will empower it also to oversee other products such as petrol, diesel and kerosene. PUCSL director general Damitha Kumarasinghe said the regulator would allow reasonable costs to suppliers but will not allow 'inefficiencies' to be passed on to the customer. However if there is a government policy to keep prices low, subsidies will have to be provided to the suppliers, he said. Analysts have said credit funded subsidies to energy is one of the biggest threats to Sri Lanka's economic stability. In 2011, credit funded subsidies added to a credit bubble eventually triggering a balance of payments crisis.


LBO

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...by i3gconsultants@ 12:09:14 on 2012-09-11

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Sector: Motor

Sri Lanka vehicle registrations halve in June


Sri Lanka's new vehicle registrations have plunged 48 percent in June 2012 from a year earlier in the wake of higher taxes and currency depreciation with three wheelers falling the most, official data showed.Three wheeler registrations in the month of June fell 68.4 percent to 4,300 from 13,753, motor cars fell 56.4 percent to 2,208 from 5,069 and motor cycles fell motor cycles fell 46.3 percent to 12,181 from 22,690, a year earlier, central bank data showed. Sri Lanka jacked up vehicle taxes in the second quarter of 2011 after the island's rupee peg came under pressure when rulers manipulated energy prices with commercial bank credit and printed money to keep interest rates down as loan demand rocketed. Amusingly authorities blamed car imports for the fall in the rupee and not the credit funded energy subsidies. But in February 2012 energy prices and interest rates were jacked up and the rupee allowed to fall in line with the underlying monetary policy. Taxes were raised for ordinary citizens while the island's ruling class of elected politicians get tax free cars and state workers get tax slashed cars. In the past authorities have jacked up taxes on electronic goods claiming they were 'luxuries' for citizens. Analysts point out that raising interest rates (and energy prices) to go up would have curbed demand, allowing citizens to make the choices which give them the maximum benefits with their own hard earned money without the rulers or bureaucrats interfering in their decisions. The energy and interest rate manipulation eventually forced the rupee to fall from 110 to 132 to the US dollar. In the month of July bus imports fell 22.4 percent to 197, dual purpose vehicles fell 26.5 percent to 812, goods transport vehicles including lorries fell 12.9 percent to 944. In the six months to June total vehicle registrations were down 5.7 percent to 234,388. Motor car registrations were down 26.8 percent to 21,886, motor cycles were down 4.4 percent to 117,689, and three wheelers were down 26.8 percent to 50,811.


LBO

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...by i3gconsultants@ 12:09:33 on 2012-09-11

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Sector: Banks Finance and Insurance

Securities Market Regulation: Dual role as both a watchdog and a bloodhound



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By W.A Wijewardena


The newly appointed head of the Securities and Exchange Commission or SEC, Dr Nalaka Godahewa, is reported to have reiterated that SEC will continue to complete the investigations which had been started but could not be completed during the reigns of his two predecessors. This is a reassuring pledge.


Should SEC be only a watchdog?The recent media reports and views expressed by some investors and analysts had stressed the point that SEC should be a simple ‘watchdog’ and it should not go behind the miscreants in the market with a view to bringing them to book. What they had expressed is that SEC should be a mere ‘watchdog’ and not a ‘bloodhound’, a role which is attributed to auditors. This writer recalls that when he learned auditing at the university in early 1970s, an important lesson imparted to students was that the auditor should remain a watchdog and not a bloodhound. This is because the auditor does not have powers to take penal action against those who have been engaged in irregular financial dealings or frauds in organisations which are audited by him. Thus, the auditor is just a pointer and it is the responsibility of those who have a stake in an organisation to take suitable action against such misdeeds.But, the financial market regulation is different from auditing an organisation. That is because the instability of financial markets has far reaching repercussions on an economy, market participants and the future of health of markets.


Finance: Lifeline of commerce and industry Finance today is the lifeline of business, commerce and industry. It is the financial markets that provide this lifeline efficiently and effectively. Efficiently because financial markets mobilise scattered savings offering them the best return and make them available to fund users at the cheapest cost possible. Effectively because, while doing so, they pool risks and develop different market products to facilitate risk mitigation. If the markets do not function properly, this lifeline is severed and the economic life of a nation is brought to a sudden halt. That is a cost which no nation today can afford to bear. The failure of financial markets is thus akin to national catastrophes that would make everyone paupers and is marred by social, political and economic instability of unimaginable proportions.


Financial markets are regulated throughout the world Hence, nations throughout the world have regulated their financial markets strictly, not merely as watchdogs, but as policemen who would go behind the miscreants in the markets and bring them to book. To enable the financial market regulators to perform this job effectively, financial regulators have been given vast powers by their legislatures. Such powers include conducting investigations into improper, irregular and fraudulent market activities, asking the alleged parties to give explanations regarding such misdeeds and eventually, if there is substance to the allegations made, take the parties to courts and seek courts’ adjudication to impose penalties on them if they are found guilty of the charges. That was how the Sri Lankan born wizard investor Raj Rajaratnam was sentenced to 11 years of jail and a fine of $ 150 million by the US District Court for the Southern District of New York after he was found guilty of engaging in 14 different types of irregular and fraudulent market activities including ‘insider trading’. Since he was 54 years at the time of being sentenced, he would be effectively behind bars for the rest of his productive life. The severity of the sentence is a testimony of the seriousness which nations have given to the misdeeds in financial markets.


Financial market regulators should be bloodhounds too Hence, Securities and Exchange Commissions that regulate stock markets and central banks or financial services authorities that regulate financial institutions are not only watchdogs but also bloodhounds. A watchdog will simply bark when it sees a miscreant so that the other law enforcement agencies will have to take action him. But a bloodhound is supposed to chase after the miscreants and bring them to book by following the due processes of law. These are powers that have been given to them by Parliaments of the respective countries and they have to continue to perform this job until such time those powers are taken away from them by the very same Parliaments.


Sri Lanka’s SEC is not an exception and in terms of the SEC Act, it has to function both as a watchdog and a bloodhound.There are several reasons why SEC should do this job and not the market mechanism or other law enforcement authorities like the Police and Attorney General’s Department.


Market is the best discipliner Under normal circumstances, the market is the best discipliner because it does not harbor ill-will against or shower favours on alleged market manipulators. It is in fact a neutral adjudicator who will make judgments on the basis of information available in the market on anyone placed before its judgment. This happens through the collective conscience of the market which Adam Smith called ‘Impartial Spectator’ in his 1759 book, The Theory of Moral Sentiments. Nobel Laureate Amartya Sen, bringing Smith’s Impartial Spectator back to fore in his 2009 book, The Idea of Justice, has named it an important pillar of social justice. Thus, markets have no friends or enemies and would deliver judgments against miscreants in the markets objectively and impartially. The punishments delivered by markets are also very severe, starting from bankruptcy of ill-run businesses to suicides that end the lush life lived through market manipulations. Thus, markets are the best penal authorities one can think of.Yet, for markets to perform their job, two important prerequisites should be present. The first is the availability of true and accurate information to everyone in the market and the second is the rational behaviour on the part of market participants.


Correct information is a must Market manipulators always distort, cook and forge information to suit their illegal activities. They use all types of marketing strategies to keep the market participants filled with distorted information and gain through their ignorance. They buy advertising time to propagate their cooked information to market participants by using their enormous financial resources. For instance, Charles Ponzi, the market swindler of 1920s in the US, hired special advertising agents to carry out an orchestrated propaganda campaign to show that he was not what the market suspected him to be and managed to divert the market wrath that was building against him elsewhere. It will take time for markets to screen all the available information and give a true picture to the market participants to facilitate the completion of its market punishment system. But, by that time, there would be many market casualties who would have been duped, defrauded and finally bared of their valuable wealth by swindlers.To gain credibility, crafty marketers impersonate high officials One classic example of distorting information for personal gain is the marketing strategies used by the promoters of pyramid schemes, also known in respectable terms as multi-level marketing schemes. They project their schemes as entrepreneurial development schemes that would train the young generation of a country to stand on their own feet by being free-lance entrepreneurs. When the suspicion is made whether these schemes are legal, they seek to give credibility to their pyramid schemes by planting imposters to impersonate high public officials known only by name and tell the prospective participants that they approve of them and therefore there is no problem of their participating in such schemes. In 2004 to mid-2006 period when the Central Bank was very tough on pyramid schemes, this writer recalls that one of the pyramid scheme promoters used an imposter to impersonate this writer who was Deputy Governor of the Central Bank at that time to lure prospective participants assembled to a meeting held in a hotel in Anuradhapura. The participants did not know this writer personally and therefore the imposter could walk out safely after delivering his message. It was later reported that those in the audience had actually believed that it was this writer who had addressed them there. The market could not correct this distorted information quickly and therefore it was left to the regulator, led by this writer, to do so.


If people are irrational, they miss truth The second market prerequisite is the rational behaviour by the market participants. A rational person, not guided by emotions, will seek after all the relevant information and make choices after calculating all the costs and benefits involved in any transaction. In such a market, correct information is sought and paid for so that the market will be able to make its own judgment of the events taking place there. But if people are irrational because they have been cushioned by purposely orchestrated propaganda campaigns targeting illusive market conspirators or enemies of the nation, there is no reason for people to even listen to the counter point. There, the market fails to bring the miscreant to judgment; instead, the market participants will be behind those who try to bring them to book through legal means because they truly believe that there has been a conspiracy against the miscreants.


Emotions make people irrational It is easy to arouse people to their emotions, because, man is by nature an emotionally driven creature. Fear is the fundamental destructive emotion which they are inflicted with. With fear arises insecurity and insecurity leads to suspicion, jealousy, hatred and enmity. The crafty marketers always address these emotional weaknesses of people and thereby bring out a man disposed to irrationality. An irrational person is not ready to screen the information that is thrown at him even when such information is true. The result is that he becomes an easy target of the crafty marketers. They, therefore, do not look for correct information but the information that will confirm their own irrational view. Because of these two fundamental weaknesses, markets do not correct themselves sufficiently fast. Hence, it is necessary to create market regulators who will not only watch over market activities, but also chase after the miscreants and bring them to book. The latter work of the regulators will help markets to establish law and order in the markets and through that, a peaceful place for all market participants to engage in their market activities.That is why share market regulators have been provided with teeth to bite and it is their duty to use those teeth for biting as bloodhounds do, while constantly watching over market activities like watchdogs.So, SEC should function not only as a watchdog but also as a bloodhound.


(W.A. Wijewardena can be reached at waw1949@gmail.com)

The Island
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...by i3gconsultants@ 12:09:53 on 2012-09-11

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Sector: Power and Energy

Electricity and Petroleum Sector Reforms:


In the past two years, rarely has a week passed without a news item which highlighted the losses, poor quality of products and services, inefficiencies and possibly corruption in the electricity and petroleum sectors. This was not a new phenomenon. A decade ago, a current Senior Minister was moved to call four of the State – Owned Enterprises (SOEs) including the Ceylon Electricity Board (CEB) and the Ceylon Petroleum Corporation (CPC), "Monsters" that swallow up large amounts of scarce resources and yield very disappointing returns.In the recent past, allegations of corruption leading to the import of low quality petrol and diesel, interruption of power supply, references to the "Diesel Mafia" in the electricity industry have led to criticisms and charges being directed at politicians, bureaucrats and the entire management of the CEB and CPC.Huge financial losses of the CEB and the CPC have also affected the financial stability and integrity of the State Banks and have undermined public finances.Both CEB and CPC have common characteristics. They are solely owned by the State meaning public funds have been invested in them. Both enterprises are highly integrated. The CEB is a virtual monopoly in transmission and distribution with a near monopoly role in large-scale electricity generation. The CPC, which until 2002 was a highly integrated monopoly still remains so in the import, storage and refining fields, while retailing has been shared with the Indian Oil Corporation (IOC). One of Sri Lanka’s foremost advocates of competition in infrastructure provision has remarked that "the only thing worse than a monopoly is a duopoly"Sri Lanka must eliminate the huge financial losses and improve the efficiency of these two important sectors. This is essential for achieving the fiscal consolidation without which it is impossible to achieve the low inflation, low interest and competitive exchange rate environment necessary for accelerated growth on a sustained basis.Benefiting Consumer and Creating an "Energy Hub"Under these circumstances, it is inevitable that a government with a commitment to accelerated, sustained growth and envisioning to make Sri Lanka an ‘Energy Hub’ will be compelled to change the status quo of the two institutions in the years to come. Can the restructuring of these two institutions be delayed any longer?While the fiscal consolidation necessary to reduce the burden on the Treasury and the other macro economic implications are important factors to be taken into consideration. Even more significant is the impact on ordinary consumers, whether it is households or businesses. Occasional blackouts, voltage fluctuation, breakdown of vehicles and problems in the transport sector, in general, have affected the ordinary public in their day-to-day lives. Those who believe in maintaining SOEs without reform, despite inefficiency, corruption and the drain on the government finances need to be reminded of the suffering of the large population of consumers.


Evidence Based Policy Recommendations?


According to the sector experts, neither CEB nor CPC managements can clearly identify the specific functional areas where the losses and inefficiencies exist. For example, the CEB, is the largest generator. It also manages the island wide transmission and distribution network. Each and every consumer is compelled to bear the burden of losses, inefficiencies or malpractices at these different levels and stages. In order to identify and rectify these problems the minimum required is effective unbundling of the institution going beyond the current Strategic Business Unit concept.Similarly, the CPC too is entirely responsible for the import, storage, distribution and retailing. Each of these is a different business function. Restructuring should lead to opening up of each of these business activities for competition, while the existing government entity should be encouraged to enter into Private Public Partnerships (PPPs) for improving management, technology and more importantly infusion of fresh capital, as was done successfully in the case of Sri Lanka Telecom.Another reform area that the government has to consider is the removal of price controls, price fixing and other such inefficient interventions allowing the competition to stabilize the relevant markets. Government owned monopolies do not respond to incentive-based regulatory mechanisms in pricing. They don’t have any incentive to improve efficiency. Therefore, the objective of price setting fails under this structure. This has been proven over the years in the petroleum and electricity sectors. The major part of the large losses incurred by these institutions is hidden subsidies. Not only is there a question of transparency, but there is also a major affordability issue. As a lower-middle-income country with no access to aid, Sri Lanka can no longer afford untargeted subsidies. However, these reforms have the potential to provide greater relief to the needy through a combination of cross subsidies and well designed transfer payments.


Pragmatism: Not Just Theory or Dogma


The Pathfinder Foundation does not present the case for reform as mere theory, concept or an ideology.Reforms in Sri Lanka’s Telecom sector has clearly demonstrated the tremendous benefit of privatization, PPPs, foreign direct investment and competition to the consumers, industry and the economy in general.Those of us who paid Rs. 300 – Rs 400 per minute for overseas calls when Sri Lanka Telecom was a government monopoly today pay a fraction of that amount. A subscriber waiting list no longer exists. Improved communication has resulted in increased efficiency and a higher quality of life for ordinary citizens of Sri Lanka. Many such examples can be found in other Asian countries such as India, South Korea, Malaysia and Singapore.Unbundling, de-monopolising, creating competition or inviting private sector participation into Electricity and Petroleum sectors should and will not deprive the deserving disadvantaged and vulnerable segment of the population from being supported by the government. Similarly extension of services particularly the electricity supply to the remote areas in the country could be further improved with the introduction of Universal Service Obligation or a similar measure.Instead of reducing support for the disadvantaged and needy; the efficiency gains achieved through reforms can create the opportunity for increased assistance to them.In the final analysis the Pathfinder Foundation believes that bold decisions to restructure and create competition in the electricity and petroleum sectors will ultimately bring immediate benefits to the consumers, industry and the country. Of course, the markets too reward political leaders who take bold decisions to reform. This has been amply demonstrated in the telecom sector.(This is the Fifteenth Economic Flash published by the Pathfinder Foundation. Readers’ comments are welcome at www.pathfinderfoundation.org. Economic Alert, Economic Flash & Economic Dialogue articles can be viewed at www.pathfinderfoundation.org you can also find us on facebook and follow us on twitter.)


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...by i3gconsultants@ 12:09:08 on 2012-09-11

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Sector: Plantations

Plantation staff to strike:State-owned plantations, factories in disarray


The Ceylon Estate Staff’s Union has threatened to take severe trade union action over the failure of the authorities to grant long ever due demands of its members.Chairman of the union Dhammika Jayawardana told a media conference in Kandy that the union’s membership would even resort to an island-wide strike if the demands were not met in accordance with the assurance given to the unions six months ago."The six months period is ending within the next few weeks. We wish that the authorities will keep to the promise, if not,we would have to resort to severe trade union action," warned the union chairman."Estate sector employees are not only the superintendents and the labourers. Between those two sectors is a category of employees playing a vital role in the functioning of a plantation," he said.That category comprised of clerks, field officers, plant supervisory, welfare officers and doctors. There were about 6,000 of them in the three state run plantations namely Janatha Estate Development Board (JEDB), Sri Lanka Plantation Corporation (SLPC) and Elkaduwa Plantations, Jayawardana said."There are salary anomalies, E.P.F. and E.T.F. contributions are not deposited properly and gratuity is not paid to the leaving staff members. A large number of plantations of the three organisations are now closed down due to poor management. Valuable trees in the plantations are cut down and sold as timber instead. During the last ten years at least 80 factories were closed down and their buildings lay idling."Jayawardana said that his union was against any privatisation of the three public sector run plantations. His union was for the protection of these plantations.Jayawardana further said that the JEDB had spent at least Rs. 4,600 million as legal expenses during the past two years.


The Island

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...by i3gconsultants@ 12:09:51 on 2012-09-11

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Sector: Beverage Food and Tobacco

Pascussi coffee shop on Southern Highway


A subsidiary of the Universal Group “Pascussi” which is one of the modern Italian Cafés will open a coffee shop on the Southern Highway shortly for the first time. Director, CEO of the company Rasanga Weerasingha told Daily News Business. This expansion of the company is an investment of Rs 5 million and one of the first to invest in the catering field on the Southern Highway. This will be the only rest area available for tourists travelling on the highway and all tourist vehicles will be stopped for sometime once it is opened before the end of this year. She hoped it will be a fruitful investment as around 5,000 vehicles ply towards Galle from Colombo daily. Weerasingha said high quality oven fresh food will be served with their popular coffee Pascussi and unlimited wifi facilities will be made available free of charge for guests. Pascussi is one of the fastest growing brands in Europe and the company has been holding the franchise in the UK for the last nine years as such this will be an attractive place for tourists coming from UK too. “The Pascussi branch in Sri Lanka was opened last year having seen the potential after a survey carried out by the company and has progressed successfully over the short period achieving better results than we expected which is another milestone” she said. The company possess the Asian franchise as well and the next shop will be opened in Indonesia early next year as the next expansion. The Pascussi chain covers a number of countries in the world and it was the 200th branch opened in Wijerama Road Colombo last year.


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...by i3gconsultants@ 11:09:49 on 2012-09-11

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Sector: Plantations

Tea industry to reach $ 5 b mark by 2020


The year ahead will not be easy for the country’s tea industry as sanctions in Iran, unrest in the Middle East and the Euro crisis will have adverse effects. The way forward will be to find new markets. However, it is difficult to enhance production as there are issues in increasing volumes, Tea Exporters Association outgoing Chairman Niraj de Mel said. “We have contacts with troubled economies and need to re-think the strategies to generate foreign exchange,” he said at the 13th annual general meeting of the Tea Exporters Association held in Colombo last week. “Over 60 percent of the tea is exported in value added form and there is an increased demand for tea bags. The depreciation of rupee did not give the exporters the desires results. It is a positive sign to see markets in Egypt and Pakistan opening. There are concerns for tea industry development. Over 70 percent of the tea industry comprised of workers and it is important to take welfare measures for them. The tea drinking patterns are changing and demand for tea in tetra packs and ready to drink is on the rise. The consumers are looking for convenience and we need to cater to this market,” he said. The tea industry needs to have a cohesive plan supported by vision and strategies from the bush to the market. Cabinet approval is awaited for the Ceylon Tea Promotion campaign. There will be A Rs 2 billion fund to promote the industry to made Ceylon Tea the preferred beverage in the world. Sustainability should be endured in this growth oriented industry, he said. Middle East plays a pivotal role in tea exports of Sri Lanka as 55 percent of national tea exports go to the Middle East. Due to the political instability in the Middle East, Sri Lanka tea exports have been affected. Tea production from newer tea growing nations has also increased the competitiveness of the global market. However, with new developments taking place in the consumer patterns of the world beverage market, there is ample opportunity for Sri Lanka to make in the world arena as one of the strongest players, de Mel said. Tea Exporters Association (TEA) comprises of almost all the tea exporters in Sri Lanka where 75 percent are members at present. TEA is one of the youngest stake holder associations of the 146 year old tea industry of Sri Lanka which was incorporated in 1994.


Dailynews

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...by i3gconsultants@ 11:09:43 on 2012-09-11

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Sector: Beverage Food and Tobacco

IFCO to invest Rs 600 m for food processing plant


The International Foodstuff Group of Companies, would invest Rs. 600 million to build a food processing and freezing factory in Homagama and seven agricultural projects to cultivate 2,000 acres. Chairman, IFCO, Sarath de Silva, said that the food processing plant was already being constructed and would be ready by next April. The main aim of this project was to purchase vegetables from local farmers and Divi Naguma growers and process them, since there where many vegetables, especially in Dambulla and Matale, that were been sold at low prices. Through this project, our aim was to buy them at a higher price and process them.” He said that 50 % of the funding would be raised from borrowings from the Bank of Ceylon and the National Development Bank and the balance would be profits generated from the company,” He also said that Tomato pulp was imported and the proposed factory would be able to supply them to local processing companies, saving foreign exchange to the country. He said that with peace, the tourism industry was booming, while the local demand for quality fruits and vegetables had also increased. “Hence marketing these vegetables would not be an issue.” Immediate past Chairman of the National Agri Business Council and the National Chamber of Exporters, said that the Maldives was a strong market for Sri Lankan fruits and vegetables, accounting to nearly 30 % of the Maldivian market. In addition, the Gulf too was a strong market for Sri Lanka. De Silva who was well respected for his contribution to the agriculture sector of Sri Lanka and introducing hybrid fruit and vegetable varieties, also disclosed plans to open seven regional farms to grow vegetables in seven areas. Some of the main crops that would be grown, would be red chillies, so that it would help to reduce the dry chilies' import bill of over Rs. 400 million. He also said that the recent political victories by the government, have also given them more confidence to invest in rural areas, especially in agriculture. The focus of the government too have a home grown economy for the agriculture sector, which was now paying dividends, as more companies as well as farmers were getting to the industry. Divi Naguma also pays a key role in this regard and all these efforts would help Sri Lanka to reduce the annual food import bill of US $ 11 billion. He said that for the first time in Sri Lanka, he would open a Research Farm unit with the assistance of the agriculture universities as a public private partnership which would help the agriculture sector. “This was a gray area for the local agricultural industry,” he added.


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...by i3gconsultants@ 11:09:40 on 2012-09-11

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Sector: Hotels and Travels

Sri Lanka, Maldives to sign MoU on tourism


Sri Lanka and the Maldives would sign a joint MoU to market the two countries as one destination for tourism. Maldives Minister of Economic Development speaking to Daily News at the opening ceremony of the 8th Hotel Asia Exhibition here, said that the long proposed MoU was now very much on the table now. “Talks in this regard were followed up with Maldivian Minister of Tourism Ahamed Mohamed and Economic Development Minister Basil Rajapaksa recently in Colombo.”


He said that the idea was to promote beaches and diving in Maldives, while promoting culture and other activities in Sri Lanka. He said that the move would help increase arrivals to both countries and the ‘tourists’ would get more value for their money. He said that tourism played and important role for the Maldives economy contributing 30 % to the GDP, accounting to over 50 % of the government revenue and providing employment to over 25 % of the Maldivians. “We are looking at new strategies to market tourism and are looking at the one million arrival market this year.” He said that they would also look at putting forward a proposal to woo foreign investors for both countries. “This too would be a joint exercise.” He also disclosed that plans were underway to increase Maldivian Airline frequencies to Colombo, Mumbai and Decca and a new A 320 aircraft would be acquired this October. Commenting on the three day 8th edition of Hotel Asia 2012 Exhibition & International Culinary Challenge at the Dharubaaruge Exhibition Hall, he said that it had now become the largest gathering of the hospitality industry in the Maldives. “It is also one of the most looked forward to events of the Nation.” The event organized by the Maldives Exhibition & Conference Services (MECS), saw an influx of the hospitality sector service providers spanning 40 different countries across the globe with around 200 participants. Imran Hassan, Director LECS, believes that this year’s event would break new grounds in the Maldives hospitality industry. He said that when they started the event with just 16 stalls, it was the first international exhibition ever hosted by the Maldives and was the trend setter for 10 additional events to come up.“The culinary challenge had also drawn many of the top resorts and chefs making it on par with many world class events,” he said. The Culinary Challenge which is one of the main attractions of the event, would witness around 400 competitors vying for the coveted honours representing over 40 resorts. “We have new resorts participating, including many world renowned chains and this would provide the best opportunity to showcase their skills and competency,” said Project Director of the Culinary Challenge and world renowned chef Alan Palmer.


Dailynews

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...by i3gconsultants@ 11:09:27 on 2012-09-11

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Sector: Telecommunication

Sri Lanka fixed wireless telecom users drop sharply in 2Q


 Sri Lanka's wireless fixed access users fell 6.6 percent to 2.64 million by end June 2012, from a year earlier, with most of them dropping off in the second quarter, while wireline use expanded with broadband popularity, official data shows.Data released by the Central Bank shows that 180,796 wireless users had stopped using the service during the second quarter. By end December 2011, there were 2.66 million wireless access users. Wireline access which is provided by Sri Lanka Telecom, a state joint venture with Malayasia's UT group, grew 5.6 percent to 696,636 by end June. The firm has said its wireline use is growing with a push to market ADSL (asymmetric digital subscriber lines) services. Mobile subscribers grew 6 percent to 19.2 million by the end of the fourth quarter. Sri Lanka has a population of 20.27 million according to the latest census and growth is coming partly from the use of more than one network by a single customer. Mobile broadband is also a fast growing area. Internet and email subscribers grew 77 percent to 1.14 million by end June from a year earlier.


LBO

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...by i3gconsultants@ 14:09:29 on 2012-09-10

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Sector: Bank Finance and Insurance

Code of Ethics for registered finance companies


Just two years ago Sri Lanka experienced a calamity of Finance Company failures causing much damage to the level of public trust and confidence placed on Finance Companies as a whole. This can be attributed to the lapses and failures in governance, lack of transparency and unsustainable financial exposure in finance companies.







Ajith Nivaard Cabraal - Governor of the Central Bank reading
the report


The Central Bank of Sri Lanka is making a renewed effort to enhance the quality of governance, equity and transparency of business operations of Finance Companies by implementing a Deposit Insurance scheme and introducing regulatory frameworks with new rules and guidelines. Still the occasional emergence of financial crisis both locally and globally, leaves much room for anxiety and doubt regarding the adequacy of regulatory frameworks established by the Central Bank, particularly in relation to the financial security of the depositor and the general public at large. The scope of finance operations too has grown much more complex than what it was a few years ago. In an attempt to address these concerns and to support the Central Bank's effort to ensure the growth of the sector, The Finance Houses Association has introduced the New Code of Ethics which will be a guideline for business operations of member finance companies in terms of customer services, confidentiality of information, legal obligations, employee recruitment, competitive initiatives and projecting the finance industry image. The first copy of The Code of Ethics was presented to the Governor of CBSL by The Finance Houses Association at the Governor's Office, Central Bank of Sri Lanka. J.P.Mampitiya-Assistant Governor-CBSL, H.M. Ekanayaka - Director -Non-Bank Supervision -CBSL, Mrs. S.S.Wimalasena - former Senior Assistant Director, Regional Development Department of CBSL were present at this occasion along with K.J. Yatawara - Chairman of The Finance Houses Association (Director/CEO-The Finance Co. PLC and Council Members of FHA Sumith Adhihetty (Managing Director-LB Finance PLC), Hafeez Rajudin (Managing Director- Arpico Finance Co. PLC) & Shermal Jayasuriya (Finance Director- Mercantile Investments and Finance PLC) at the event. K.J. Yatawara - Chairman of The Finance Houses Association (Director/CEO-The Finance Co. PLC) is seen handing over The Code of Ethics to Ajith Nivaard Cabraal - Governor of the Central Bank of Sri Lanka (CBSL) in the presence of all attendees at the event. Ajith Nivaard Cabraal - Governor of the Central Bank of Sri Lanka (CBSL) and H.M. Ekanayaka - Director - Non-Bank Supervision-CBSL is seen accepting copies of The Code of Ethics whilst K.J. Yatawara - Chairman of The Finance Houses Association (Director/CEO-The Finance Co. PLC and Council Member of FHA Romani De Silva (Managing Director-Alliance Finance Co. PLC) look on.


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...by i3gconsultants@ 13:09:48 on 2012-09-08

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Sector: Land and Property

CKR Consulting to enter Sri Lanka


CKR Consulting Engineers, one of the worlds top consulting companies based in South Africa, is to set up an office in Sri Lanka soon.








IndoOcean Residential Tower Development in Colombo

A property developed with MEP in Dubai

Charl Burger, Senior Engineer, CKR Consulting Engineers, speaking to the Daily News Business, said that with permanent peace prevailing in the country, there was a construction boom, which was the reason they had decided to move in to Sri Lanka. In addition, MEP which looks after a total design and planning of a building, was some thing new to Sri Lanka.


MEP Consulting Engineers, through coordinated design of electrical, mechanical and plumbing services, were responsible for bringing the building to life, ensuring safe, conformable and sustainable buildings.







Charl Burger


The MEP Consultant is an important stakeholder when it comes to designing, coordination and implementing of any built environment project, be it hotel, hospital, residential, commercial or infrastructure project. They complement the services offered by Architects, Structural Engineers, Civil Engineers and other specialist Consultants.


MEP Consultants are essential on a project as they take the ownership and responsibility for the design of the MEP systems to be in compliance with the local regulatory standards, established good practice, prevalent international/local standards as well as ensuring the functional aspirations and expectations of the end users and the clients are met. CKR Consulting Engineers was established in Johannesburg in South Africa, 30 years ago and during the past 30 years, CKR has become a Global player in the MEPD, ELV and ICT fields, with offices in South Africa, Dubai, India and presently in Qatar. "Our recent appointment on the IndoOcean Residential Tower Development in Colombo, Sri Lanka, has induced us to expand into Sri Lanka's market, which we are currently servicing from India and Dubai." "We believe our approach of 'no project was too big or too small' is ideal for the Sri Lankan market and our flexible and proactive approach would ensure we are aligned with key stakeholders in Sri Lanka." "In UAE, we have recently completed iconic projects like the St Regis at Saadiyat Island, Madin at Jumeirah Resort, and The Palm and in India Lulu Marriot Courtyard Hotel and Malabar Gold and Diamond Showroom being some of the recent projects completed." "CKR has always been in the forefront of providing cost effective and cutting edge MEP designs and our understanding of all requirements through the value chain or Life Cycle of a built environment project, would provide the best Return on Investment (ROI) to the client." CKR does not have any commercial affiliation with manufacturers and suppliers which would allow them to offer an unbiased, vendor neutral system design, allowing the cllient to procure the best and most valued added options available in the market. "We at CKR Consulting Engineers, provide the highest quality of Engineering Consultancy through technology leadership, operational excellence and also by producing sound, robust, sophisticated, cost effective, innovative and sustainable designs with each individual representing the company being a true embodiment of the CKR culture."


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...by i3gconsultants@ 13:09:48 on 2012-09-08

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Sector: Bank Finance and Insurance

Islamic banking to attract foreign investments


The local Islamic banking industry which stands to benefit from increasing GDP growth, exceeding 8% in 2011, is poised to attract more investment flows from Middle East and Far Eastern countries. "The customer base of Islamic banking has gradually increased and the industry has managed to attract sufficient interest from the domestic market, both Muslim and non Muslim. The current non Muslim consumer market in Sri Lanka, comprises more than 20% of its total Islamic banking market shares, which figures are expected to increase due to education and awareness of Islamic banking products' increase in the country," Amana Bank CEO and Managing Director Faizal Salieh said. The government of Sri Lanka and the Central Bank of Sri Lanka had played an important role in the creation of Sri Lanka's Islamic banking and finance market and Islamic Funds. Takaful and Micro financing segments are gaining momentum. The recent US$ 175 million Islamic syndicated facility by the SriLankan Airlines, is expected to push forth further issuances in the country, at both domestic and international level. However, Islamic Finance industry in Sri Lanka is still at nascent level compared to global hubs and the products that are really available in the market place are some of the most essential, yet basic products. There is room for growth in the market by way of introduction of some of the largest instruments such as Sukuk and Shariah compliant real estate investment trusts. Salieh noted that there is a pressing need for a meaningful response from legislators, industry experts and academics to implement the necessary regulations to make Islamic banking business more investor and customer friendly.


Dailynews

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...by i3gconsultants@ 13:09:18 on 2012-09-08

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Sector: Manufacturing

Sri Lanka apparel exports buoyed by US demand


Brandix, a top Sri Lankan apparel exporter has seen strong demand from the US helping offset a slump in Europe demand helping keep revenue growth in positive territory, an official said.Sri Lanka's apparel exports fell 1.6 percent to 1.98 billion rupees in the first six months of 2012, with June shipments falling 6.3 percent to 310.6 million US dollars. Brandix director A J Johnpillai however said revenues at his firm are in positive territory with strong demand from the US helping offset a weakened European market. State overspending in several European countries had scared debt markets, leading to uncertainty default fears, which in turn had also affected bank balance sheets. Sri Lanka's central bank said the falling dollar amounts were partly due to a reduction in cotton prices. Johnpillai confirmed that prices had fallen. "We are shipping higher volumes," he said. Brandix runs 42 plants in Sri Lanka, India and Bangladesh, with revenues this year expected to reach 600 million dollars from 540 million dollars last year. The firm is on a drive to cut its environmental impact by becoming more energy efficient, using more renewable, cutting water use and recycling and reducing solid waste. European customers in particular who are more environmentally conscious appreciate the efforts, Johnpillai said.


LBO

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...by i3gconsultants@ 12:09:48 on 2012-09-08

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Sector: Power and Energy

Sri Lanka halts power cuts


Sri Lanka has halted daily power cuts that came into effect last month after a coal fired power plant that was crucial to the system broke down, until further notice, the ministry of power and energy said.Rain is some catchment areas had also improved. The power ministry said repairs to the 300 MegaWatt coal plant were at the last stages and it is now undergoing tests. Data from the Ceylon Electricity Board shows about 25 percent of the energy yesterday came from hydro plants.


LBO

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...by i3gconsultants@ 12:09:48 on 2012-09-08

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Sector: Land and Property

110 Parliament Road state-of-the-art apartment complex


110 Parliament Road one of the most state-of-the-art residential apartment complexes will be homes to 172 lucky families when "110 Parliament Road Apartments" completes construction in July 2014









110 Parliament Road apartment


Situated on the border of the Colombo City Limits, near McDonald's Rajagirya, "110 Parliament Road" is one of the most central locations one could hope for.


Though, addressed as Rajagirya, it takes less than fifteen to twenty minutes to travel anywhere in Colombo even during the busiest hours of the day.


In addition, the project is situated within easy reach of both the Galle Expressway and the Airport highway, making the location extremely convenient and one that the residents will appreciate. 'Rajagiriya has witnessed major transformation in recent times in the wake of new development taking place in and around the area. The entire location has undergone a facelift and as a result its land value is escalating rapidly' says Rohan Parikh, Director of Atlantis Developments, which is the marketing and constructing company of 110 Parliament Road 110 Parliament Road Apartments", situated in a serene area with views of the Colombo Golf Course and the National Bird Sanctuary is one of the most talked about projects in Rajagiriya. Residents of 110 Parliament Road can enjoy state-of-the-art facilities dedicated in two levels which will include a swimming pool, gym, tennis courts, squash courts, basketball courts, children's play area, day care center, restaurants, spa, laundry collection center, mini market, jogging track, barbecue areas party rooms etc. The Apartments offer a choice of two, three bedroom units as well as four bedroom duplex units (available only through invitation).


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...by i3gconsultants@ 12:09:14 on 2012-09-05

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Sector: Services

Lankan freight forwarder sets up base in India


Sri Lankan freight forwarding company CL Synergy recently opened an office in India with expectations of capturing a significant market share in the giant economy."We at CL Synergy do not let boundaries ties us down, we are pleased to announce the opening of our new office in India – CL Synergy India (Pvt) Ltd. CL Synergy India (Pvt) Ltd, was established as a step forward towards CL Synergy’s objective of being a strong regional player by 2015," the company said in a statement earlier this week.CL Synergy is a fully fledged Sri Lankan freight forwarding company established in 2004 and has since grown to be group of companies with vertical and horizontal diversifications. The group consists of three other freight forwarding arms, specializing in their own markets. They are namely Eagle Logistics Colombo (Pvt) Ltd, ASB Freight (Pvt) Ltd and CLS Consolidators (Pvt) Ltd.According to Managing Director, Roshan Silva, the objective of setting up in India is twofold, "Firstly, extend the locally available 3PL service standards to our existing and potential global customers and agents. At present it has been a common phenomenon that global customers and agents demand a regional logistics solution which is Sri Lankan specific. Thus, CL Synergy is already in control of a continuous, sustainable deal flow in and out of India."Secondly, India being in the top 10 economies of the world, having a GDP growth of more than 8%, has become a very strong and essential component in present global trade. India’s presence in the global trade in the next decade will certainly be phenomenal. We foresee many opportunities in the Indian market that could be exploited with careful and deliberate specific cautious business strategies. CL Synergy envisages in bringing a new dimension to the Indo-Lanka trade lane in the near future.""Our expansion into the Indian market was a deep thought decision; our goal is to establish the CL Synergy brand in India and in the region. Our local customers and network partners have pledged their support which is a great strength to this venture," Silva said.CL Synergy will bring the company’s well established expertise with a broad range of services, strengthening CL Synergy’s presence in the East Asian region with effect from 1st June 2012. The CL Synergy India, Director Oswald Anandappa said, "India is a very lucrative market place in the subcontinent, with much importance for the Sri Lankan freight industry and trade as a whole. Being a veteran in the Indian freight forwarding industry, I understand the Indian market movement and with the correct strategies CL Synergy will be able to capture a considerable market share in no time"."Headquartered in Chennai and with offices spanning Mumbai, New Delhi, Tuticorin, Kolkata and Cochin our plans are to gradually expand our operations covering the business demands of all other cities," he said.Since its inception, CL Synergy did not want to be the ‘follower’ but rather the ‘trend setter’. This vision has been supported by the very young and dynamic staff who are the torch bearers of this ethos. Having commenced operations with a mere 10 members of staff the operation has grown in leaps and bounds, with staff numbers surpassing two hundred. Cultivating a culture which is non-discriminatory of race, cast or creed, our payroll compromises of all ethnicities and inculcates values of unity at all levels.Being foresighted during the tougher times has definitely earned its dividend, with investments both on human capital and finances reaping in magnitude.


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...by i3gconsultants@ 12:09:48 on 2012-09-05

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Sector: Power and Energy

Sri Lanka refinery shut after off-shore pipeline damage


Sri Lanka's state-run Ceylon Petroleum Corporation said its refinery had been shut down after an off-shore pipeline was damaged, but promised continued supply of diesel and petrol.A statement by refinery manager Neil Jayasekera said emergency repairs were being made to the pipeline coming from a off-shore point buoy mooring system. A crude tanker was already in Colombo and will start discharging its cargo once the pipeline is fixed. The petro firm said it had 35,000 tonnes of petrol on hand unloaded on August 29, and another ship with 40,000 tonnes of diesel has reached Colombo, and said there will be no shortages of refined products. Separately CPC said the production of light distillates had fallen after it was forced to curtail Iranian Light Crude due to US sanctions. Instead it was using Arabian Light which was giving an unspecified lower yield of diesel and 10 to 15 percent less of other refined products. Arabian Light was being mixed with Miri Light (a Malaysian crude) to minimize the issue. Preparations were also being made to buy crude from Oman, the statement said.


LBO

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...by i3gconsultants@ 12:09:14 on 2012-09-05

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Sector: Power and Energy

Sri Lanka expects to commission 24MW power plant in Jaffna


Sri Lanka expects to connect a 24MegaWatt heavy fuel oil fired power plant to boost supply to the northern Jaffna peninsula by January 2013, the island's power ministry said.The 4.0 billion rupees plant is designed and built for the Ceylon Electricity Board by Lakdhanavi, an affiliated firm. Three 8.6MW generators was imported to Sri Lanka's Trincomalee port on Saturday and taken by barge to Jaffna, the power ministry said. The plant will allow uninterrupted power to the Jaffna peninsula which is now 72 percent electrified. After a high tension transmission link commissioned between Chunnakham and Kilinochhi is commissioned electricity will also taken to the rest of the northern province, the power ministry said.

LBO

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...by i3gconsultants@ 12:09:43 on 2012-09-05

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Sector: Manufacturing

Sri Lanka apparel exports buoyed by US demand


Brandix, a top Sri Lankan apparel exporter has seen strong demand from the US helping offset a slump in Europe demand helping keep revenue growth in positive territory, an official said.Sri Lanka's apparel exports fell 1.6 percent to 1.98 billion rupees in the first six months of 2012, with June shipments falling 6.3 percent to 310.6 million US dollars. Brandix director A J Johnpillai however said revenues at his firm are in positive territory with strong demand from the US helping offset a weakened European market. State overspending in several European countries had scared debt markets, leading to uncertainty default fears, which in turn had also affected bank balance sheets. Sri Lanka's central bank said the falling dollar amounts were partly due to a reduction in cotton prices. Johnpillai confirmed that prices had fallen. "We are shipping higher volumes," he said. Brandix runs 42 plants in Sri Lanka, India and Bangladesh, with revenues this year expected to reach 600 million dollars from 540 million dollars last year. The firm is on a drive to cut its environmental impact by becoming more energy efficient, using more renewable, cutting water use and recycling and reducing solid waste. European customers in particular who are more environmentally conscious appreciate the efforts, Johnpillai said.

LBO

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...by i3gconsultants@ 12:09:43 on 2012-09-05

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Sector: Plantations

ndian tea auction system snags prompt immediate review


Ceylon Tea Brokers in their weekly Tea market report last week, quoting ‘The Public Ledger’ of 24th August , said the Indian Tea auction system was flawed. India’s standing committee on commerce, urged the Commerce Ministry and the Tea Board to take a fresh look at the country’s Tea auction.
Prompted by the Indian switch to e-auction systems , (implemented about five years ago) there was strong lobbying for similar change to the auctions in Colombo as well. However, the Colombo Brokers Association, (CBA), at that time decided to examine its success in India. Consequently, a member on the committee of the CBA Brian Baptist visited auction centers in India, and reported back that the e-system was flawed and should not be followed. Thankfully, The Colombo Brokers’ Association, through further investigation, agreed with the Brian Baptist report and their decision was that the Colombo auction should not be changed or tampered. (The Indian change and its repercussions in Colombo were reported by the ‘Island Financial review’ about four years ago).
The report at hand from Ceylon Tea Brokers, further said the Indian system was not consistent with producers interests and at point of weekly auctions were flawed because free interplay of market forces were stifled. Buyers and producers were not consequential beneficiaries of intermittent market forces.
The Tea Trade here including the Plantations sector at that time, resisted aid agency loan options on offer and declined any change to the current auction system.
Brian Baptist was interviewed by us at that time, when he said rather than be lured by any aid package, it was best the prevailing auction system be continued. His foresight was essentially correct.
Meanwhile over the past few weeks, as reported by JKH Tea Brokers Report last week, Western Teas commanded better prices than Low growns.
At close of sale last week the high grown average was Rs.437.97 per kilo. Low grown average was Rs410.56, the indicator being high growns sold at least Rs 27. Per kilo better. Low grown price drop was attributed to reduced middle east buying. There was no sensational elevation to the market although Iran had said their Tea intake would be increased. It did not happen. Contributing to Western plusses, Uva had an extremely good season. Expected Plantations delivered.
Prices seen at the last auction were substantially at higher levels.
Uva Highlands on the road from Attampetiya to Bandarawela sold a BOP for Rs 1, 150. Aislaby in the same topographical area, was also a good seller fetching Rs.900. for BOP.
Additionally Shawlands and Adawatte, in the Lunugala lowlands were also good sellers.

The Island
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...by i3gconsultants@ 10:09:43 on 2012-09-04

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Sector: Hotels and Travels

Sri Lanka warns citizens against travel to Tamil Nadu


Sri Lanka has advised citizens not to travel to India's Tamil Nadu state following a series of incidents which culminated in a group of pilgrims being forced to take refuge in a Catholic Church after they were mobbed."The Government of Sri Lanka is constrained to request Sri Lankan nationals in the interest of their security to desist from undertaking visits to Tamil Nadu until further notice," Sri Lanka's foreign ministry said in a statement."Travel to all other states in India are safe for Sri Lanka nationals."
The foreign ministry said Sri Lanka "regrets the increasing number of instances of intimidation of Sri Lankan nationals visiting Tamil Nadu for the purposes of tourism, religious pilgrimages, sporting and cultural activities and professional training."
"These visits are a reflection of people to people contact between the polity of two countries which are bound by age old friendly ties and traditions," the foreign ministry said.
"Most recently today, 184 pilgrims visiting the Poornimatha Church in Thanjavur have been mobbed and become refuge in the church. The Government of Sri Lanka has taken all steps required through the Indian Government to seek the safety of these pilgrims."
The incident with Catholic pilgrims is the latest in a series of incidents that have raised tensions between Sri Lanka and Tamil Nadu state.
Earlier this week Tamil Nadu chief minister J Jayalalithaa ordered a Sri Lankan football team to be sent back and suspended a state official for allowing them to play a friendly match in Chennai.
Jayalalithaa has objected to members of Sri Lanka's military being trained in India.
Uneasy relations between Sri Lanka and the South Indian state has soured further the end of a 30-year war with Tamil Tiger separatists in 2009, with political groups in the state revving up calls for war crimes probes against Sri Lanka's military and fishing dispute also flaring up.

LBO
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...by i3gconsultants@ 10:09:06 on 2012-09-04

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Sector: Plantations

“Tea hub” debate heats up; India shows concern over cheap tea re-export .


An Indian Parliamentary Standing Committee on Commerce has expressed concern over the issue of re-exports of lower quality tea from India under the brand of Indian origin tea at a time where Sri Lanka’s own resurfaced debate on a ‘tea hub’.
A report from the committee stated that it was “gravely concerned” at the Indian Commerce Ministry’s “unpreparedness” to deal with exporters who imported cheaper quality tea into the country only to blend it and re-export it without any significant value addition under false certificates as tea of Indian origin.
The tea hub concept of lowering of import duties in order to facilitate the importation of teas of other origins to blend with Ceylon tea for sale in export markets, had been advocated more recently by organizations such as the Tea Exporters Association (TEA), who argued that such a process of blending was inevitable in many cases where Ceylon tea is bought wholesale and blended in export markets before being packaged as Pure Ceylon Tea, all at a lower price point. Tea hub advocates asserted that since such processes were going on, the local industry would be better served by taking control of the process in Sri Lanka itself.
Whilst no official policy direction from related Ministries has been forthcoming on the issue, Secretary to the Treasury, Dr PB Jayasundara, was outspoken in his criticism against idea of a tea hub, instead advocating the sale of Ceylon Tea at a premium through greater value addition and marketing efforts.
Speaking at the last Annual General Meeting of the Ceylon Tea Traders’ Association, Dr Jayasundara said “On average, we sell our tea at approximately US$ 4.50 per kilo but this is not right. We have to work towards increasing our prices into the range of US$ 15 per kilo and not on average but in absolute terms.” “A threefold price increase will mean that the industry will have to get more skilled labour, draft collective agreements or have no agreements at all or maybe the industry needs to develop on a different model all together. However, it cannot be done by importing tea,” he asserted.
However the consensus amongst analysts and local tea industry stakeholders appears to be that replanting of Sri Lanka’s aging tea bushes is the more pressing need of the day, with many plantations waiting on government assistance to carry out replanting programmes which would be prohibitively expensive for regional plantation companies to carry out by themselves.
The issue of replanting was also brought up by the Indian Parliamentary Standing Committee, which noted with some concern that approximately 63% of Indian tea bushes are less than 50 years old, as compared with 68% in Sri Lanka and 70% in Kenya.
The committee expressed further concern as to the impact on the Indian tea industry following the reduction or removal of tariffs as a result of allowing Sri Lanka most favored nation status and the signing of free trade agreements with countries in the Association of Southeast Asian Nations.
Dailymirror ......

...by i3gconsultants@ 19:09:09 on 2012-09-03

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Sector: Motor

Mahindra to open auto assembly plant in Sri Lanka


The US $ 15.4 billion Mahindra Group, one of India's leading business houses, is looking at investing in a vehicle assembly plant in Sri Lanka to cope with the growing demand. “Our sponsorship of the Sri Lanka Premier League signals our intent to both expand and deepen out relationship with the country as it moves steadily towards greater economic progress.
"Sri Lanka is an important market for us within the sub-continent. Over the past ten years, our vehicles and tractors have carved a distinct niche for themselves with their tough, rugged and fuel efficient nature,” said S P Shukla, President, Group Strategy and Member of the Group Executive Board, Mahindra & Mahindra Ltd. He said that they are also in the process of building an economical electric car for the mass market. In FY 2012, over 10,000 Mahindra vehicles were sold in the country which is a clear validationof the credibility it enjoys among the consumers in the country,” said Nalin Welgama, Chairman, Ideal Group the automobile distributor of the Mahindra Group in Sri Lanka. He said that both companies are looking at an investment of around US $ one million initially for this project. Mahindra & Mahindra Ltd has been present in the Sri Lankan auto market since 2002 with its product portfolio consisting of the Bolero and Scorpio SUVs and Pik Up range (Bolero Single Cab Flat Bed, Bolero Maxxi Truck, Scorpio Double Cab/Single Cab, Maxximo and Alfa 3 Wheelers. Sri Lanka is also the best overseas market for Mahindra Group. Mahindra has emerged as the market leader in the pick up category (1 tonne – 1.5 tonne) with over 50 % market share. Moreover, in less than a year since its launch, the Maxximo has achieved a market share of 40 % plus in the less than one tonne mini truck category. Mahindra has been selling its tractors in Sri Lanka for over a decade and currently has a market share of more than 16 %, placing it amongst the top two tractor brands in the country. The country recently also launched its Swaraj brand of tractors. DIMO (Disel & Motor Engineering Plc), a large business conglomerate, is the distributor for the Mahindra range of tractors, while the Swaraj brand is distributed by Regal Motors Pvt. Ltd. Asked by Daily News Business if the revised tax on motor vehicles did have any negative inpact on sales he said that light truck type vehicles (Maxxi truck) did not see and additional duty and sales were not affected. “However there is a ‘dip’ in two wheels and three wheel sales, which has helped the country to save foreign exchange.” A US $15.4 billion multinational group based in Mumbai, India, Mahindra employees more than 144,000 people in over 100 countries. The Ideal Group is a diversified group with interests in automobiles namely, Mahindra and Ssangyong, and with interests in automobile spare parts, finance, tyres and aviation.


Dailynews

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...by i3gconsultants@ 18:09:58 on 2012-09-03

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Sector: Plantations

CRTA wary on prices as major rubber producers curb exports


Attempts by the three major rubber producing countries – Thailand, Indonesia and Malaysia – to stabilise the market price of rubber by restricting exports and raising prices will propel local the rubber industry to follow suit with similar rises. Colombo Rubber Traders Association Chairman M.S. Rahim told the Daily FT that if the countries cut exports by a total of 300,000 tons to shore up prices, Sri Lanka will have to follow suit, increasing the prices of local rubber. However, the country will not be affected on a larger scale export wise as only 30% of the rubber produced here is available for export and the rest is consumed locally.
“Sri Lanka will have to follow, but the manufacturers will have to buy rubber at these prices because we cannot tax the producers. Lower grade rubber small holder producers stand to be benefited if the move is passed.”
Rahim noted that the question however is who would purchase rubber when the price has been increased. “Who will buy this?” he questioned. “Europe, USA and even the Chinese market will not be interested given their economic conditions. Presently China, which has been the biggest consumer of rubber, has stopped its exports, laid off staff, and is not manufacturing at the scale it previously used to. In this respect, who will buy rubber when the price is up further?”
He noted that the three countries lobbying to stabilise the market price were running behind the prices they saw in 2010 and 2011, when there was a boom in the market. “Santa Claus will not come every day. The problem is that overall the market for rubber is very poor.”
Rahim also acknowledged that similar measures had been taken in previous years in an attempt to raise prices, which did not deliver on the expectations. “This has happened before, but has not worked. Natural forces will always change it.”Acknowledging that the lower prices in Sri Lanka are due to low prices in the world, Rahim asserted that the prevailing rain during the last two weeks had pushed prices up during last week’s auction, commanding an approximate Rs. 400 for both crepe rubber and RSS1. The week before, prices of the said rubber were in the Rs. 370 range.
“However from end July prices we saw a slowdown in demand as the Dry Rubber Content (DRC) fell due to the droughts experienced before. The prices have just started picking up.”
The industry is now all ears, awaiting the decisions to be made at the Three-Nation Rubber Products International Conference in Bandung, Indonesia, next month.
According to the Malaysian Rubber Board Chairman as reported via rubbermarketnews.net, the three major natural rubber producing countries will establish a mechanism to ensure rubber prices remain stable and competitive following a downtrend projection due to the current economic crisis faced by the euro zone countries at the conference. The meeting is also likely to be attended by China and India.
Thailand is planning to spend an additional 15 billion baht on rubber in rubber intervention. So far, around 80,000 tons of rubber have been procured from the farmers under the program.
LBO
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...by i3gconsultants@ 18:09:18 on 2012-09-03

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Sector: Energy

Sri Lanka refinery shut after off-shore pipeline damage


Sri Lanka's state-run Ceylon Petroleum Corporation said its refinery had been shut down after an off-shore pipeline was damaged, but promised continued supply of diesel and petrol.A statement by refinery manager Neil Jayasekera said emergency repairs were being made to the pipeline coming from a off-shore point buoy mooring system. A crude tanker was already in Colombo and will start discharging its cargo once the pipeline is fixed. The petro firm said it had 35,000 tonnes of petrol on hand unloaded on August 29, and another ship with 40,000 tonnes of diesel has reached Colombo, and said there will be no shortages of refined products. Separately CPC said the production of light distillates had fallen after it was forced to curtail Iranian Light Crude due to US sanctions. Instead it was using Arabian Light which was giving an unspecified lower yield of diesel and 10 to 15 percent less of other refined products. Arabian Light was being mixed with Miri Light (a Malaysian crude) to minimize the issue. Preparations were also being made to buy crude from Oman, the statement said.

LBO

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...by i3gconsultants@ 18:09:39 on 2012-09-03

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Sector: Hotels and Travels

Sri Lanka Heritance bags green tourism awards


Sri Lanka's Heritance Hotels and Resorts, a brand of the island's Aitken Spence group has won top green awards at a competition organized by the state tourism promotion agency.Heritance Kandalama, which is built around a hillock near a man-made fresh water reservoir in central Sri Lanka has won awards for 'best practices in green architecture' and 'best practices in accommodation'. Heritance Kandalama was designed by Geoffrey Bawa, a celebrated Sri Lankan architect. "Our employees represent the Company’s most important asset and, as such, are vital to its success," Malin Hapugoda, managing director of Aitken Spence Hotels said in a statement. "It is only thorough the strength of our team that we have been able to win accolades such as the awards won at this year’s Sri Lanka Tourism Awards." In the individual category chef Lalith Gunasekara from Heritance Ahungalle, bagged the 'best chef of the year' award. The awards for best employee of the year, and best restaurant manager of the year went to Kumara Karunaratne and Tushara Gunaratne, also from the same hotel.


LBO

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...by i3gconsultants@ 18:09:39 on 2012-09-03

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Sector: Land and Property

Sri Lanka US$450mn tower block by India group to have 88-storeys


A real estate project by India's Krrish group in the heart Sri Lanka's capital Colombo will have four towers including an 80 storey one sitting on a 10-storey podium block, the island, investment promotion agency said.State land around 'Transworks House' a British colonial era administration building will be given to the developers on a 99-year lease, the Board of Investment said in a statement. The Transworks House, in Colombo's Fort area itself will be renovated and made into a 'classic hotel'. The Krrish group has interests in alcohol and real estate. "This is a very significant investment from India which will result in the revitalizing of the Fort area of Colombo..," BOI chairman M M C Ferdinando said in a statement. "This project will contribute to making Colombo an attractive destination for business and help attract trade and investment.." The BOI said three towers will sit on a 10-storey podium block with tallest having 80-storeys and the other two having 55 floors. The podium block will have two floors for shopping malls, two floors for offices and 8 floors including two basement ones for parking. The fourth tower will have a high end residential complex, commercial office space and a luxury hotel, the BOI said.

LBO

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...by i3gconsultants@ 18:09:21 on 2012-09-03

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Sector: Plantations

Worst tea crop in 19 years due to drought


This year’s drought has hit heavily production in higher elevations resulting in Sri Lanka’s worst (high grown) tea crop in 19 years.
High grown tea in July which reported a production of 3.7 million kgs is considered the lowest since 1992, Asia Siyaka Commodities Tea Brokers stated in its market comment for last month.Asia Siyaka Chairman Anil Cooke told the Business Times that this was the worst crop experienced for the month of July with high grown production down 37 per cent compared against last year’s figure (in the same month) of 5.9 million kgs. The exceptionally dry conditions in the higher elevations since mid April this year caused mediums to also drop by 22 per cent from 3.9 million kgs in 2011 to 3 million kgs in July 2012. Low Growns however improved to 17.3 million kgs from 15.2 in 2011 up by 13 per cent, the market report states.Tea production for January – July of 188.1 million kgs indicated a dip by approximately 7 million kgs as against 195.8 million kgs last year.The high grown for the January – July 2012 amounted to 42.9 million kgs compared to last year’s 50.2 million kgs.The mid grown for the same period produced 30.7 million kgs this year compared to 32.1 million kgs in 2011. Low growns however experienced a marginal increase of 114.5 million kgs in 2012 as against the previous year’s 113.4 million kgs, the Asia Siyaka report stated.


Sundaytimes

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...by i3gconsultants@ 14:09:51 on 2012-09-02

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Sector: Manufacturing

Gap Inc.'s PACE program for female garment workers


The Brandix Group will extend the Gap Inc. Personal and Career Enhancement (PACE) program for female garment workers to the Group's facilities in Sri Lanka.









Gap Inc.’s training program in progress.


The Gap Inc. PACE program is a life and work skills education program designed to positively impact female garment workers in factories that make Gap Inc. product. The program provides workers with foundational skills, technical training and support to help them advance in the workplace and in their personal lives. Female garment workers will participate in eight modules of life skills education including communication skills, problem-solving, time and stress management, health and nutrition, financial literacy and gender equality. Program participants also receive enhanced technical skills training. Research shows that Gap Inc. PACE graduates are more productive, have lower rates of absenteeism and are promoted faster than factory workers who do not participate in the program. "Brandix is happy to undertake the implementation of this valuable empowerment program," said Head of CSR for the Group, Anusha Alles. "Implementing the Gap Inc. PACE program and integrating it into our internal learning curriculum reinforces Brandix's commitment to bettering the lives of our associates." Gap Inc.'s Director of Social and Community Investment, Ira Puspadevi said, "We are very happy that Brandix has chosen to expand the Gap Inc. PACE program to their facilities in Sri Lanka. PACE is successful in part due to the commitment vendors such as Brandix have made to integrate the program into their ongoing factory training." As a first step, nine selected trainers from Brandix Casualwear are to be trained as trainers for the PACE program. They in turn will train 210 Brandix associates from Brandix Casualwear, Ratmalana till next month.


Sundayobserver

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...by i3gconsultants@ 14:09:30 on 2012-09-02

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Sector: Hotels and Travels

On-line carbon foot print calculator for hotels


The EU-funded Switch Asia Program - Greening Sri Lanka Hotels Project has taken the initiative for hotels to make a quick calculation based on a uniform methodology, of their carbon emissions. The carbon foot print calculator estimates the approximate carbon dioxide equivalent emissions, a hotel releases by its operations. The hotel has to only fill in its usage of electricity (kwh), diesel and petrol (litres) and LP Gas (kg) and furnace oil in the appropriate fields on the web, for a given period of time, together with the corresponding guest nights or room nights. The online web-based application, shows the equivalent carbon dioxide emissions per room night, or guest night. This application was launched recently, and is now available for all hotels at the Greening Sri Lanka Hotels website: www.greeningsrilankahotels.org The Project Director, Srilal Miththapala said that this will help hotels to evaluate their approximate carbon foot print, and use it for various management and marketing applications. This is a further initiative of Greening Sri Lanka Hotels Project, in helping hotels to work towards sustainability consumption practices. The Greening Sri Lanka Hotels Project has registered 239 hotels from all over the country of which, about 140 hotels are SMEs.


Sundayobserver

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...by i3gconsultants@ 13:09:17 on 2012-09-02

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Sector: Healthcare

Emergency services company to invest here


Emergency Services Company, Falck (Denmark) has acquired 50 percent of Sri Lankan Emergency Medical Services (EMS) company, Med1 (Pvt) Limited. Med1 plans to launch emergency medical response services in the Colombo area by the end of 2012. "The partnership between Med1 and Falck not only enables us to implement a high-class emergency ambulance service in Colombo; it will also ensure we have the future resources and capacity required to expand our coverage across Sri Lanka. Our goal is to implement a reliable, high quality service that is also affordable," said Med1 CEO Donnie Woodyard Jr. Falck's initial investment will be focused on operationalising EMS in Colombo. This will include further development of Med1's, 24-hour, trilingual despatching centre, putting a modern fleet of European standard ambulances and response vehicles on the road, and hiring and training hundreds of new medical care providers to offer international quality medical care in Sri Lanka. "The goal is to give Sri Lankans peace of mind, knowing that during a medical emergency, help is only a phone call away, "said Woodyard. "With the system we are setting up, that peace of mind can become a reality. By simply making a short phone call to our hotline, you can have highly trained professionals, prepared to begin immediate treatment, at your door within minutes. For many, this can mean the difference between life and death." "We are pleased to partner with the founders of Med1 in Sri Lanka and are looking forward to quickly provide high quality emergency medical services in case of sickness or injuries in Sri Lanka," said Falck Executive Vice President, EMS Europe and Asia Falck Executive Vice President, EMS Europe and Asia Anders Delcomyn Larsen. Med1 is a BOI-approved company established in 2011 to implement international standard Emergency Medical Services in Sri Lanka. Med1's current offerings include: medical and first aid training, a public access defibrillation program, and a 24-hour, trilingual first aid advice line. The Chairman and Director General of the BOI, M.M.C Ferdinando said this agreement is a very important one for Sri Lanka as it will introduce the country and her people to a standard of world class out of hospital health service." "As many will appreciate, Falck, which is the partner and shareholder of the investor Med 1, is one of the world leaders in emergency ambulance services. Hence this agreement with the BOI is very significant since it will contribute in bringing health services in the country up to international standards, in this vital area." Falck is one of the world leaders in their field, having a presence in 35 countries globally. It is already one of the main companies in Europe for emergency ambulance services. Falck own 50% of Med 1, which signed an agreement with the BOI and it is a very positive fact that recently they have publicly stated that Sri Lanka will be their entry point in Asia. I will also add that emergency ambulance services are a vital part of any modern medical systems and therefore expect that once this service begins, it will impact very positively on key economic sectors such as tourism, trade and investment.


Sundayobserver

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...by i3gconsultants@ 13:09:17 on 2012-09-02

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Sector: Manufacturing

Phoenix Industries invests Rs. 350 mn.in Horana packaging plant


Phoenix Industries, the largest plastic molding company in Sri Lanka with over 35 years of industry experience, laid the foundation stone on Friday for a new plant located at Horana to be fully dedicated to manufacturing packaging material for Unilever.To be built on seven acres opposite the Unilever factory premises, this model plant will be developed to meet all required quality compliances to manufacture personal care and food packaging products under stringent hygienic conditions, a spokesperson for Phoenix said.``With this new venture, Phoenix will be able to meet the requirements of Unilever even better as they will now be in close proximity to their client,’’ he said."Our business relationship with Unilever goes back over 25 years and today we have become one of the major packaging suppliers to Unilever. Our supplies include plastic packaging for major brands such as Pears, Ponds, Vaseline, Lux, Knorr, Domex, Signal, Astra and Flora. Phoenix will commence operation of this dedicated plant by the end of the year", said Managing Director, Phoenix Industries, Mr. Aslam Omar.Phoenix will expand Unilever’s current product portfolio and venture in to extended polymer based packaging solutions such as tubes and films, whilst introducing new technologies to create value addition for all Unilever’s packaging products."Our focus will be to understand customer needs and to provide cost effective polymer based packaging solutions to Unilever", explained Omar. ``This dedicated plant which involves an investment of Rs. 350 million will be fully geared to supply all Unilever’s packaging needs by integrating our current production lines to meet with Unilever packaging demands on a `just- in- time’ basis. Our aim is to grow along with the customer and to become the most preferred plastic packaging solutions provider in the coming years".At present Phoenix operates from a state of the art factory on a 25-acre site in the Makandura Industrial Zone, which includes one manufacturing facility at customer premises.The company’s current portfolio includes plastic furniture, consumer products, crates, sofas, pipes UPVC/ CPVC pipes, thermo form, PET, tooth brushes, thread cones , components for electric appliances and rigid plastic packaging for personal care, food and lubricant products.Phoenix was recently honored for their energy conservation initiatives at a ceremony organized by the Sri Lanka Sustainable Energy Authority which was presided over by , Economic Development Minister Basil Rajapaksa. Phoenix Industries Makandura received the Gold Flame and was the highest rated facility in the ‘Large Scale Manufacturing’ category. They were also the only facility to win a major award for two consecutive years."Our clientele includes the largest local and multinational companies in Sri Lanka such as Unilever, Elephant House, Chevron, Hemas, Cargills , Milco, Natures Secret, Reckits,, Smak, Abans, Nestle, Glaxo, Pepsi, Distilleries, Lion Brewery, Millers Brewery and Arpico. We have a proven track record of industrial best practices and will continue to operate with our customers best interests at the forefront of all our initiatives", said Omar.


The Island

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...by i3gconsultants@ 13:09:54 on 2012-09-02

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Sector: Motor

India’s Mahindra and Mahindra expanding footprint in SL


The Mahindra Group, one of India’s top companies with a turnover of USD 15.4 billion, last week announced plans to expand its already extensive footprint in Sri Lanka by offering motorcycles, small planes and vehicle finance in the local market.The company which already has a presence in automobiles – it sold over 10,000 units last year – and tractors (with a market share of 16%) sees great potential in the proximate Sri Lankan market.Outside India, Sri Lanka is one of Mahindra’s biggest markets, company officials noted.Mahindra and Mahindra are Title Sponsor of the Sri Lanka Premier League cricket tournament but senior company executives declined to say how long the relationship will continue with Mr. S.P. Shukla, President of Group Strategy and a member of the conglomerate’s Group Executive Board saying ``contractual details cannot be disclosed.’’Mr. Nalin Welgama, Chairman of the Ideal Group of Companies, the automobile distributor here of Mahindra, explained at a Colombo news conference that although vehicle imports into the country plunged following last year’s duty increases, their range of mainly light pick-ups were unaffected as they were untouched by the duty change.Mahindra is today market leader here in the pick-up category enjoying over 50% market share and within a year of its launch of the Maxximo mini-truck has achieved a 40 plus percent market share.Given its vehicle sales success, talks of the possibility of an assembly plant here have already begun, Welgama said.Mahindra recently acquired an aircraft manufacturer in Australia (Gipps Aero) and Deccan, a Lankan aircraft operator acquired one of its Airvans. Deccan run by the Favorites Group has teamed up with Ideal as Ideal Favourite Aviation and that company has been named as Mahindra Aerospace’s marketing, sales and service representative here.Welgama indicated positive prospects for aircraft sales and operations locally with domestic aviation picking up post-war. He made the point that as aircraft enter the country duty free, a small plane wouldn’t cost much more than a high-end Mercedes or BMW taxed at 300% on entry.DIMO has for many years been the distributor here for Mahindra tractors. Regal Motors distribute the second tractor brand, Swaraj.The Mahindra range of scooters, now breaking into the Lankan market, was displayed at the Sri Lanka Premier League. They will be marketed by an Idea subsidiary, Ideal 2 Wheelers Ltd.Mahindra and Mahindra Financial Services Ltd., a leading non-banking financial services company in India operating mainly in semi-urban and rural markets, is coming here on the perception of opportunities for vehicle financiers. It will initially provide financing for purchasers of its own range of vehicles with emphasis on smaller towns and rural areas but has plans to over time offer housing loans and insurance broking services.


The Island

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...by i3gconsultants@ 13:09:04 on 2012-09-02

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Sector: Hotels and Travels

Sri Lanka Taj unit expects strong demand


Taj Lanka Hotels, a unit of India's Taj Hotels and Resorts is expecting strong demand for hotel rooms in the next few years despite a number of new properties coming up as tourism arrivals continue to grow.Chairman Raymond Bickson, told shareholders that expert forecasts indicate the demand for hotel rooms to outpace supply. "Sri Lanka is set to change from a budget destination to a more exotic one offering a variety of experiences to a diverse segment of travelers," he said. Taj was also supportive of a state intervention to set minimum prices for a five star hotel, a move that has attracted criticism from some sections of the industry as it restricts their pricing freedoms. To escape the rule, hotels have to avoid being classified as a 'five star' property. The firm which operates a hotel in by the Galle Face beachfront in Sri Lanka's capital Colombo reported profits of 124 million rupees in the year to March 2012, up from 99 million a year earlier, giving earnings of 89 cents per share. The stock last traded at 27.60 rupees. The profits came despite finance expenses surging to 97 million rupees from 20 million a year earlier due to exchange losses on a foreign loan as the rupee fell from 110 to 132 to the US dollar in the past year. However its dollar revenues are helping offset the losses, Bickson said. Taj benefits especially from high end Indian traffic. Indian arrivals which have been growing strongly over the years, especially after Sri Lanka was made visa free has been seen some hiccups in 2012. Visas were re-imposed for India in 2012. Up to July 2012 Indian visitors grew 2.8 percent to 96,600, compared with a growth of 46 percent a year earlier. India's currency has also depreciated making foreign travel more expensive.


LBO

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...by i3gconsultants@ 14:09:30 on 2012-09-01

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Sector: Power and Energy

Sri Lanka renewable energy firms demand higher tariffs after depreciation


Sri Lanka's renewable energy firms have demanded higher tariffs after the rupee depreciated and interest rates rose following a balance of payments crisis, at a public consultation called by the power regulator.Renewable energy firms said the rupee had depreciated from 110 to over 130 (about 18 percent) over the past year pushing up their capital costs.

Power Depreciation Ironically a key trigger for Sri Lanka's most recent balance of payments crisis the large volumes of bank credit taken by state run Ceylon Electricity Board and Ceylon Petroleum Corporation to subsidize energy in a drought year. The Public Utilities Commission failed to raise power prices both in June and December due to a political decision, though it was expected to do under its governing law, due to political decision making. The Central Bank then sterilized foreign exchange sales with printed money worsening the problem. Energy prices were raised in February 2012 and sterilized foreign exchange sales were gradually reduced, but not before the rupee fell to 130 levels. Since the analysts have said that unsterilized purchases of large dollars inflows by the Central Bank has prevented the rupee from appreciating, despite overall credit in the banking system slowing. Sri Lanka's exchange rate which was fixed from mid 1880s until 1951 through a hard peg or currency board, started depreciate after a soft-pegged central bank, or a monetary authority with money printing power was created.



Higher Capital Costs The wind energy association, to the public hearing that said the capital cost of a plant is now estimated at 254 million rupees per MegaWatt. Power is bought by state-run Ceylon Electricity Board, which operates Sri Lanka's national grid. The CEB assumed a cost of 223 million rupees a MegaWatt for wind and a higher 229 million rupees for renewable energy firms with locally made components making them a bigger burden on the people and the country. The CEB had assumed an interest rate of 12.61 percent. The wind power association said the average prime lending rate has moved up to 13.75 percent and risk premium of around 2.0 percent would push their interest cost to around 16.75 percent. Sri Lanka interest rates are expected to fall next year if the state deficit is managed, energy enterprises reduce their losses and borrowings and private sector credit demand eases further. The Treasury overdraft at state banks, the CEB and CPC are among the largest borrowers from the banking system.

Buying Price The CEB, which is the so-called 'transmission licensee' proposed tariffs of 13.63 rupees a unit (kiloWatt hour) for mini hydro up from 13.04 rupees, and a higher 13.95 rupees for mini-hydro local to allow for nationalist profits.

For wind the CEB proposed 17.40 rupees down from and exiting 19.43 rupees a unit and a higher 17.86 rupee rate of wind-local. Waste heat recovery was proposed a rate of 7.77 rupees up from 6.64 rupees. Bio mass (agro-waste) was proposed a rate of 16.21 rupees a unit up from 14.53 percent. Biomass operators said the rate was too low for agricultural waste. Biomass operators also said that their plants were dispatcheable indicating that they could be run when the CEB's system control most required the power, and it should be recognized when determining the tariff. However the CEB had proposed 23.56 rupees for biomass dendro. However since the plants could be dispatched at peak times it was almost as reliable as diesel. For mini hydro there were additional costs to the CEB had to buy them whenever they were generated and CEB had to maintain standby capacity to replace them when during dry times. Output from mini hydro also falls when the country hits a drought and the CEB has to allow its run of the river plants to spill and pay money to mini hydros in wet years. At present the energy charge alone for combined cycles are above 20 rupees, but below 7.0 rupees for coal. Renewable energy operators usually ask for higher tariffs on the basis of being 'green' citing no pollution and other negative externalities.

Who Pays? But Jayantha Ranatunga, head of the consumer consultative committee said the power users had to ultimately bear the cost. Analysts point out that even if the 'government' or 'Treasury' gave a what is referred to as a 'subsidy', it will have to financed by taxes on potatoes or dhall or other goods and services consumed by the people. The second option is to borrow money, which drives interest rates up. The third option - like in 2011 - is to print money to keep interest rates down amid heavy borrowing, drive inflation up and depreciate the currency. The Public Utilities Commission is expected to give its renewable tariff decision by September 14.

Reported in LBO

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...by i3gconsultants@ 11:08:31 on 2012-08-29

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Sector: Healthcare

India ups health sector aid to Sri Lanka


India will build a 200-bed ward complex at Vavuniya hospital in Sri Lanka's north as a fully grant funded 200 million rupee project, the Indian high commission (embassy) in Colombo said."The Project envisages construction of a four-storey ward complex to improve the existing infrastructure of the Hospital to meet the growing demand for better treatment facilities," the high commission said in a statement. "The construction of the 200-bed ward complex at Vavuniya will cater to the medical care needs of in-patients admitted to the Hospital from Vavuniya and adjoining districts." Wahid Constructions was given the contract to build the wards by February 2014. India had given medical equipment costing 230 million rupees to hospitals in Jaffna, Kilinochchi and Mullaitivu. India is also building a 1.2 billion rupee 150 bed hospital in Dickoya in Central Sri Lanka which is expected to be complete by April 2012. The high commission said India will also gift a telecobalt radiotherapy machine to the Hambantota hospital.


Reported in LBO

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...by i3gconsultants@ 12:08:25 on 2012-08-28

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Sector: Healthcare

Sri Lanka emergency medical service with Denmark's Falck


Denmark's Falck, an emergency medical services company has taken a 50 percent stake in a Sri Lankan firm Med1 (Pvt) Ltd, and will invest in a 24-hour ambulance service, Sri Lanka's Board of Investment said.The BOI said Med1 was started in 2011 under its approval to provide medical and first aid trading, a public access defibrillation program, and a 24-hour, trilingual first aid advice line. Falck will provide emergency medical services in Colombo with a fleet of European standard ambulances, a 24 tri-lingual dispatching centre and will train medical care providers the BOI said, without giving any investment value. "The partnership between Med1 and Falck not only enables us to implement a high-class emergency ambulance service in Colombo; it will also ensure we have the future resources and capacity required to expand our coverage across Sri Lanka," the statement quoted Donnie Woodyard chief executive of Med1 as saying. "Our goal is to implement a reliable, high quality service that is also affordable." The BOI said Falck is one of the largest multinational ambulance services provider globally an d is in 30 countries operating over 1,800 ambulances responding to more than two million emergency calls each year. The BOI said visitors to the island "whether tourists, entrepreneurs or investors will be reassured that a world leader in emergency ambulance services now has a presence in the island."

Reported in LBO

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...by i3gconsultants@ 12:08:25 on 2012-08-28

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Sector: Bank Finance and Insurance

Nalaka steps down as Divasa Finance Chairman


Dr. Nalaka Godahewa has resigned as the Chairman of Divasa Finance Ltd. last week.Analysts widely believe the move as a precursor to the impending appointment of Dr. Godahewa as the new Chairman of the Securities and Exchange Commission (SEC), which the Daily FT exclusively reported on Saturday.Godahewa however remains as Chairman of Colombo Land and Development Plc, biggest shareholders of which are Singapore investors holding over 30%. Urban Development Authority (UDA) holds17.5% and listed entity Kalpitiya Beach Resort-linked to Diawasa Equity holds 20.2%.
Godahewa though on the Board representing the interests of UDA is the single largest Sri Lankan individual shareholder, though with a 1.15% stake.  He had a 1% stake in Waskaduwa Beach Resort as at 31 March 2012 but divested this stake recently as well.
The other listed company directorship he holds is on the Board of Lanka Hospitals, since August 2009.
Apart from being Chairman of the Sri Lanka Tourism Development Authority, Godahewa also serves on the Boards of the Urban Development Authority, Sri Lanka Handicrafts and Sri Lankan Catering Ltd. as an Independent Director.


Dailyft

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...by i3gconsultants@ 12:08:52 on 2012-08-27

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Sector: Hotels and Travels

Rs 2.5 m tourism facelift for Kandy


The Central Provincial Council has invested Rs. 2.5 million with the Sabaragamuma University to formulate a long term plan to develop and market Central Province as a tourist destination. Chief Minister and Minister of Tourism of Central Provincial Council Sarath Ekanayake said that though there are several world famous tourist attractions in Kandy it is still considered a transit destination where the average stay is around two days. "In exception to the Sacred Tooth Relic and Peradeniya Botanical Gardens other attractions are not properly marketed. "This is why we decided to invest Rs. 2. 5 million with the Sabaragamuwa Provincial Council to get their expertise to have a long term plan to highlight the lesser known attractions in Kandy and market them internationally," he said. Ekanayake said since there is a growing demand for Eco tourism they are also looking at the possibility of introducing a jungle trail along the Knuckles Mountain. "We will contact hotels in Kandy and also pool their ideas to make Kandy a 'longer stay' destination." Both Chief Minister Ekanayake and Governor Central Province, Tikiri Kobbekaduwa said that they are also looking at the possibility of holding a sound and light show in the Kandy lake after consultation with the Dalada Maligawa authorities. Kobbekaduwa said that they also want to give more publicity to other 'peraheras' conducted by smaller temples so that tourist would also come to witness them during off season.


Reported in Dailynews

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...by i3gconsultants@ 17:08:56 on 2012-08-26

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Sector: Bank Finance and Insurance

Sri Lanka to regulate micro financiers


Sri Lanka's micro finance institutions will be regulated through a three tier framework where large scale entities will be brought under the direct supervision of the Central Bank, minister Keheliya Rambukwelle said.The cabinet of ministers had approved a framework where small micro finance institutions will be supervised through approved audit firms which will help the Central bank enforce regulations. Micro financiers falling under Commissioner of Cooperatives, Registrar of Cooperative Societies and the Commissioner of Agrarian Development will be under their purview. Savings institutions coming under Sri Lanka's Samurdhi Authority, an income support and livelihood development agency will be supervised by a new agency to be set up under an upcoming 'Divineguma Act'. The Central Bank will set principles and standards to regulate the micro financiers.


Reported in LBO

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...by i3gconsultants@ 17:08:49 on 2012-08-26

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Sector: Land and Property

Sri Lanka urban agency takes over key state land in capital


Sri Lanka's urban development agency will take-over several state properties in two key locations in the island's capital Colombo for city development and leisure projects, a minister said.Minister Keheliya Rambukwella said Sri Lanka's Urban Development Authority (UDA) is to undertake a project to refurbish old colonial buildings in the Independence Square area and preserve their original architecture. An old colonial period Race Course ground including the grand stand and mini stand buildings, Colombo's Bloomfield playground, the building housing the auditor general's office and government analyst would be vested with the UDA. The development will also include the acquisition of a 56 perches block of land as part of the race course playground development project, the minister said. A proposal submitted by the President Mahinda Rajapaksa as minister of defence and urban development to take-over the properties had been approved by the cabinet, minister Rambukwella said. Gotabhaya Rajapaksa, President's brother is the secretary of the ministry. Surrounding areas near Independence square has been developed as open spaces with walkways for the public. Separately in Colombo's Fort area, the UDA plans to area along Colombo's DR Wijewardene Mawathat between Lake House publishing house junction up to the former Gamini hall premises, east of Beira Lake. It will be converted in to a leisure and tourism zone with hotels, restaurants and entertainment activities. The UDA is also set to acquire 7.5 acres of land along D.R. Wijewardena Mawatha earmarked for a 350 meter high 'Colombo Lotus Tower' which will function as a multifunctional TV and communication with revolving restaurants and banquet halls. State lands in the area owned by the railway, postal and marketing departments and ports authority are to be vested with the UDA for the tower project. The foundation stone for the104.3 million dollar tower, which is expected to be the tallest in South Asia when completed in 30 months, was laid in January this year.


Reported in LBO

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...by i3gconsultants@ 18:08:43 on 2012-08-25

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Sector: Services

Sri Lanka south railway financed by US$278mn China credit


China will give a 278 million credit to finance a railway track from Matara in Sri Lanka's South to Beliatta, cabinet spokesman minister Keheliya Rambukwelle said.The Exim Bank will provide 200 million US dollars under preferential buyers credit terms and the government of China will give a concessional loan of 508 million yuan. China Exim Bank's preferential buyers credit usually come with only 2.0 percent interest and 20 year payback with 5 or 7 year's grace period, a half percent management fee and commitment fee. The project involves building 26.75 kilometres of track, bridges, stations underpasses and overpasses. It is part of a plan to connect Matara with Kataragama. Sri Lanka will have to bear a slightly higher cost with repaying renminbi loans as the Chinese currency is set to appreciate against the US dollar. US Mercantilists have put pressure on China to appreciate the currency falsely claiming that the Renminibi is undervalued.


Reported in LBO

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...by i3gconsultants@ 18:08:01 on 2012-08-25

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Sector: Services

Sri Lanka to expand Hambantota port with China loans


China will finance the expansion of Hambantota Port in the island's south with two loans of 600 million US dollars and one billion yuan, cabinet spokesman Keheliya Rambukwelle said.

The dollar denominated loan will come from the Exim Bank of China and the yuan loan will come from the government of China. "The second phase of the port will provide a strong supplementary port to Colombo Port and support Sri Lanka to consolidate its status as a transshipment hub in the South Asian region," he said. The first phase of the Hambantota port, also financed by China has been positioned as an industrial port with facilities to transship vehicles and also provide bunkering services.

Reported in LBO

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...by i3gconsultants@ 18:08:06 on 2012-08-25

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Sector: Services

Sri Lanka container volumes down up to May


Containers handled at Sri Lanka's ports fell 1.8 percent to 1.718 million twenty foot equivalent units in the first five months of the year, though there was recovery in transshipment volumes in May, official data show.

In May transshipment container volumes rose 9.8 percent to 266,668 reversing a downward trend in earlier months, though total volumes in the first five months were still down 5.1 percent to 1.237 million TEUs. Domestic container volumes fell 3.8 percent to 81,866, a trend that has continued for the third month running, data published by the Central Bank shows. Sri Lanka's external trade has slowed in 2012 partly due to currency depreciation and higher interest rates. Last year imports were driven to unsustainable levels with more than 200 billion rupees of central bank credit (printed money). In May 2012, 342 ships had called at Sri Lanka's ports down from 361 a year earlier. Up to May 1715 ships had called, down from 1,794 a year earlier. Total cargo discharged rose 5.5 percent to 16.6 million metric tonnes up to May 2012, though total cargo loaded fell 3.5 percent to 10.25 million tonnes.

 

Reported in LBO
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...by i3gconsultants@ 18:08:02 on 2012-08-25

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Sector: Motor

Sri Lanka vehicle ownership slowdown continues, trishaws rebound


A slowdown in Sri Lanka's vehicle ownership continued with registrations for July 2012 dropping 55 percent to 26,799 from 41,481 a year earlier, JB Securities said.In the first seven months of 2012 registration of brand new and reconditioned cars slipped to 18,376 units from 31,462 compared to the same period last year. Earlier in the year Sri Lanka slapped new taxes of as much as 100 percent of import value on some imported cars, but raised taxes on hybrid cars at a lower rate in a move to ease congestion on roads, cut fuel costs and to reduce the import bill amid a deepening balance of payment crisis. According to data from Sri Lanka's Department of Motor Traffic, registration of smaller cars below 1000cc engine capacity has dropped to 7,343 in the first half of 2012, compared to 12,432 registrations in the same period last year. Industry officials estimate new vehicle registrations may drop up to 40 percent in 2012 and dreams of motor bike owners to move on to small cars will be shattered. Motor trade officials say a state import duty hike has sent prices of smaller cars (below 1000 cubic centimeter engine capacity) like the Indian-made Maruti Alto up putting them beyond reach of the people with modest incomes. Sales of Maruti Alto, Sri Lanka's best-selling car fell to 127 units in July 2012 from 858 units in July 2011, JB stockbrokers, an equities research house said. Cherry dropped to 4 units in July from 41 in the same period last year, Maruti/Suzuki to 236 from 1373, Nissan to 3 from 58 and Toyota to 27 from 66 units. Motor cycle sales in July 2012 dropped to 11,315 from 20,460 compared to the same period last year. Trishaws have rebounded 4000 units a month to 8009 in July 2012 with the peak reaching around 11,000 in January 2012. Approximately 85 percent of trishaws, 48 percent of motor bikes and 88 percent of lorries are bought on credit, JB securities said. Direct purchase of motor cars has gradually decreased to 694 units in July 2012 from 1,171 units in May this year.


Reported in LBO

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...by i3gconsultants@ 18:08:00 on 2012-08-25

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Sector: Hotels and Travels

Sri Lanka gives nod to USD1.59bn worth hotel projects


Sri Lanka has approved 129 projects involving the building of 9,364 hotel rooms up to July 2012, deputy economic development minister Lakshman Abeywardene said.A 'one stop shop' at the ministry of economic development which fast tracks investment clearances had received 217 applications worth 2.14bn US dollars up to July 2012, he said. Minister Abeywardene said this year Sri Lanka was on track to welcome 1,050,000 tourists in 2012 up 22.7 percent from a year earlier. Up to July 543,205 tourists had arrived up 16.7 percent from a year earlier. Earnings from tourism for 2012 was forecast at 980 million US dollars up from 838.9 million US dollars in 2011. In 2013, revenues of 1,360 million US dollars were expected; in 2014, 1,740 million US dollars; in 2015, 2,120 million US dollars and in 2016, 2,500 million US dollars.


Reported in LBO

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...by i3gconsultants@ 18:08:55 on 2012-08-25

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Sector: Hotels and Travels

Sri Lanka Vietnam travel has strong potential: officials


Tourism between Sri Lanka and Vietnam which is just beginning has a strong potential to grow in the future, officials said during a familiarization tour of the county by travel agents of the Indian Ocean Island.Senior representatives of 15 travel agents from Sri Lanka were on a familiazation tour of Vietnam's capital Hanoi, Halong Bay and Hue ancient city, Da Nang in the centre, My Tho in the Mekong delta and the bustling Ho Chi Minh City in the south. "You will be the bridge to link the peoples of our two countries," Nguyen T Phoung Mai, general director of Hanoi Toserco, a state run travel services firm started in 1988 to the Delegation.


She was addressing the delegation from Sri Lanka was headed by deputy head of the Vietnam embassy in Colombo Phung Trong Tuan and Roland Gunesekere head of Sri Lanka's Safeway Travels at Toserco's head office in Hanoi during the first leg of the tour. "I think when we get back we will be able to give a better picture about Vietnam to Sri Lanka," Gunesekera told the meeting. Mai said representatives of her company had already visited Sri Lanka to gain initial information promote travel from Vietnam to Sri Lanka. "But we need to do more research," she said. Gunasekera said Sri Lankans were already travelling to Vietnam but higher air fares compared to popular destinations like Thailand and Singapore put Vietnam out of the reach of some of their customers. Gunasekera said Sri Lankans were already travelling to Vietnam but higher air fares compared to popular destinations like Thailand and Singapore put Vietnam out of the reach of some of their customers. Tuan said a recent aviation bi-lateral signed between Sri Lanka and Vietnam could pave the way for lower fares. The familiarization tour was supported by Vietnam's Hanoi Toserco, FidiTour, the embassy and travel agencies. Mai said in addition to Hanoi and Halong Bay, a breathtaking group of hundreds of karst limestone islets dotting a calm sea-green bay, tourist could also consider visiting mountainous areas of Sapa which has cool weather. "We have a minority people there," she said. "In Vietnam we have 54 ethnic groups with 53 minority groups." "They have their own language and culture." The familiarization tour was supported by Vietnam's Hanoi Toserco, FidiTour, the embassy and travel agencies. Mai said in addition to Hanoi and Halong Bay, a breathtaking group of hundreds of karst limestone islets dotting a calm sea-green bay, tourist could also consider visiting mountainous areas of Sapa which has cool weather. "We have a minority people there," she said. "In Vietnam we have 54 ethnic groups with 53 minority groups." "They have their own language and culture." Vietnam welcomed 6.0 million tourists in 2011, and in the first seven months of 2012 Vietnam had received 3.8 million tourists up 10.8 percent from a year earlier. In 2011, China, Korea, Japan and the United States were the top four generating markets. While 1.4 million Chinese, 536,000 Koreans, 418,000 Japanese and 439,000, Americans also visited the country. Nine countries generated more than 200,000 tourists during 2011, including Cambodia, Taiwan, Australia, Malaysia and France.

Reported in LBO

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...by i3gconsultants@ 18:08:56 on 2012-08-25

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Sector: Hotels and Travels

Sri Lanka tourist arrivals up 8 pct in July


Tourist arrivals to Sri Lanka rose 7.8 percent to 90,338 in July 2012 from a year earlier, with arrivals up to July rising 16.7 percent to 543,205, data from the state tourism promotion office showed.Arrivals from South Asia dipped 9.7 percent to 16,837 with India, the top generating market slowing down 8.1 percent to 11,564. Visitors from the Maldives declined 7.8 percent to 3102. Visitors from Western Europe rose 22 percent to 41,584 with UK generating most tourists at 13,643 up 13.7 percent from a year earlier. German visitors rose 28 percent to 5,852 and French visitors rose 30.1 percent to 6,189. Eastern European visitors rose 42.5 percent to 3,246 with Ukrainian arrivals up 114.8 percent to 956 and Russia generating 978 visitors up 27.2 percent. Middle Eastern visitors dropped 45.2 percent to 5,491 owing to the holy month of Ramadan. East Asian visitors rose 27 percent to 10, 636 with Malaysia generating 1,640 visitors up 23.6 percent. Tourists from Japan rose 30.3 percent to 2,366. Visitors from Thailand rose 90.6 percent to 827. Chinese visitors rose 31.2 percent to 1,966. Visitors from North America including Canada rose 15.5 percent to 7,018 from a year earlier. Arrivals from Australia rose 27.3 percent to 5,063. In the first seven months of 2012, the top generating market was India, with 96,990 up 2.8 percent. UK was the second largest source of tourists at 61,618 up 5 percent, with Germany coming in third with 37,933 visitors up 26 percent. France was the fourth largest source of tourists with 33,893 up 16.4 percent followed by Maldives at 23,704 up 4.6 percent closely followed by Australia with 23,838 up 18 percent. Sri Lanka's tourist arrivals have growth steadily since a 30 year war ended in 2009.


Reported in LBO

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...by i3gconsultants@ 18:08:48 on 2012-08-25

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Sector: Hotels and Travels

Sri Lanka travel agents upgrade skills


Sri Lanka's Travel Agents Association has put their members through a four day training programme aimed at improving skills to better service the island's booming travel industry, officials said.The four day programme conducted by the International Aviation Academy of Sri Lankan airlines included coaching in team building, training on global distribution system or GDS, customer service, airport formalities, airline geography, baggage handling and code-sharing agreements. The Travel Agents Association of Sri Lanka (TAASL) affiliated to the Ceylon Chamber of Commerce said seventy eight students graduated from the training programme with Fazil Amith from Metro Travels (Pvt) clinching the best student award with highest marks. The association has a representation of over 160 inboud and outbound tour operators. Sri Lanka aims to attract 2.5 million visitors by 2016 and earn an annual income of 2 billion dollars by 2016.

Reported in LBO

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...by i3gconsultants@ 18:08:50 on 2012-08-25

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Sector: Hotels and Travels

Sri Lanka aims to attract more American travelers


Sri Lanka is on a drive to attract 100,000 American tourists by 2016 in a bid to woo part of tourist traffic to the Maldives and India and attract more up market travelers to the island, a diplomat said. "We are working on an aggressive campaign to attract 100,000 American tourists to the Island by 2016," Jaliya Wickramasuriya, Sri Lanka's Ambassador to the US and Mexico said. "I can see a huge interest in people wanting to visit the island," Sri Lanka has not been able to attract American visitors as much as Europeans mainly due to the geographical distance between the two countries and long hours of travel. "Accessibility has been a problem because Sri Lanka is a long haul market for the US," Vipula Wanigasekara, Acting Director General, Sri Lanka Tourism Development Authority said. "Lots of American tourists go to Vietnam because of links over the war. You have to have a very good reason to come on a long haul flight," he said. Sri Lanka tourism says with end of the conflict, Sri Lanka stands a chance to enter the North American and the Canadian outbound market but lack of direct flights, attractive multiple destination tour packages and budgets for promotions are hampering the potential. Tour operators say multiple country tour packages covering Sri Lanka and Maldives or Sri Lanka and India will help to better attract American travelers. The Sri Lankan embassy in Washington DC has initiated its own promotions to entice up market American travelers to visit Sri Lanka through a programme called the ambassador's 'signature tour ' where a group of American professional tours the island with the ambassador. "These visitors take thousands of photographs and once they go back they posts them on social media sites and talk about the island with their families and friends," ambassador Wickremasuriya said. "Word of mouth is one of the best ways to promote Sri Lanka as they experience it rather than somebody trying to convince them to come," he said. Wickremasuriya says the embassy promotes Sri Lanka at all its diplomatic, trade and cultural events. "We don’t number guest tables; we name them as Sigiriya, Trincomalee or Nuwara Eliya so that they get familiar with the different regions in the Island," "On every table we give a description about our festivals or traditional food on the menu," he said. Wickramasuriya said the tourism industry is expecting around 45,000 American travelers to visit the island this year. North American arrivals to the island in 2011 including Canada rose 22 percent to 49,057 from a year earlier, statistics from the tourism office showed. In the first six months of 2012, arrivals to Sri Lanka from North America rose to 27,355 from 22,753, up 20 percent compared to the same period a year earlier, the island's tourism development authority said. "Last year there was a huge increase in arrivals because there was no conflict and the country was safe," Ambassador Wickramasuriya said. Arrivals from the North American market also include Sri Lankan expatriates.


Reported in LBO

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...by i3gconsultants@ 18:08:58 on 2012-08-25

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Sector: Power and Energy

Sri Lanka coal plant: Chinese designer says accusations unfair


Sri Lanka's Chinese built coal plant which is breaking down repeatedly has been over-used without scheduled maintenance but had still saved billions of rupees to the power utility, its designer has said.Zhao Wenxue, from the Northwest Electric Design Institute which designed the plant said in a statement that most of the accusations leveled against the plant, built by China Machinery Engineering Corporation (CMEC) are unfair. The plant had been well designed but had been operated from March 2011 without annual maintenance he pointed out. "According to normal practice in China, a thermal plant should undergo a one month maintenance period annually," Wenzue was quoted as saying in a statement. "Only then can the unit be more reliable and efficient and expected to perform well. "The lack of rain at the hydro catchment areas in Sri Lanka over the past several months posed a threat to the power generation around the island. "The Norochcholai coal power plant was forced to work beyond its required limits and keep supplying electricity to the whole country. "With the lack of rain and in an attempt to avoid burdening the public with power cuts the Ceylon Electricity Board had meanwhile decided to postpone the annual maintenance of the Norochcholai coal power plant." Another source familiar with the matter said the plant is still within a 'defect notification period' which usually follow a large engineering project before being finally handed over to the client. A coal plant cannot be compared to a hydro or diesel plant as it is more complex and problems also crop up when a plant is shut down and re-started. Some problems have to be repaired while the plant is still in operation Wenzue said. Some of the technical aspects of such a plant also need to be maintained and repaired while the plant is in operation. Wenzue said CEB and CMEC engineers were working around the clock to fix the problems. "The Norochcholai coal power plant had past all the performance tests and it was in operation continuously from February 2012 till end of July 2012," he said. "Questioning the quality of the equipment used in the project and pointing fingers at CMEC is without basis. "The Norochcholai coal power plant is not as bad as one makes it look. It is just overused, tired and needs a break to rest like any other equipment does." Analysts says that a coal plant would in any case be expected to run about 80 percent of the time (plant factor) which would allow the 300MW plant to generate about 2,100 GigWatt hours of energy a year. During the past year the plant had generated 1,875 GigaWatt hours (millions of units of electricity) at a cost of 6.67 rupees a unit totaling 12.5 billion rupees. To generate the same amount from a combined cycle plant at 15.79 rupees a unit would cost 29.6 billion rupees. Assuming 80 percent of that energy came from a combined cycle and 20 percent from gas turbines (at 25.93 rupees a unit) it would have cost the CEB 33.4 billion rupees to generate the same amount of energy, Wenzue said. Following the ground breaking ceremony in July 2007, on a request by Sri Lanka, the Chinese government had asked the builders to complete the project one year ahead of schedule. "We agreed and mobilized our teams including a skilled workforce for early completion of the project ahead of the scheduled date," Wenzue said. The design build transfer project was financed with a Chinese loan. The coal plant was long overdue. However concerns have been raised about the way the deal was closed between the ruling classes of Sri Lanka and China through a so-called 'government to government deal' without open tendering.



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...by i3gconsultants@ 18:08:38 on 2012-08-25

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Sector: Power and Energy

Sri Lanka's Phoenix says cuts energy use 34-pct over two years


Sri Lanka's Phoneix Industries Ltd, the largest plastic manufacturer in the island, said it had won a top award two years running for efficient manufacture which had cut energy use 34 percent over two years.

Phoenix says energy saving technology installed at their factory in Makandura during 2011 - 2012 helped conserve energy by 13 percent in the first twelve months and 34 percent during the last 24 months. "[O]ur achievement in continuous energy saving has given us a competitive advantage in today’s environment of rapidly escalating energy costs," managing director Aslam Omar said in a statement. The company's Makandura factory received the Gold Flame award for large scale manufacturers in an award scheme run by Sri Lanka's sustainable energy authority which promotes energy conservation and the use of renewable energy. "These reductions have been made possible by the use of more energy efficient hybrid machines, rearranging of compressed air and chilled water lines for increased efficiency, use of variable speed drive chillers to prevent heat losses," C Chief executive Hasith Prematillake said energy efficient hybrid machines had been installed, compressed air and chilled water lines had been re-arranged for increased efficiency and variable speed drive chillers have been used to prevent heat losses. "A new capacitor bank has also been installed to correct power factors and the use of renewable energy sources such as skylights imported from USA," he said. The company said earlier this year it had installed Sri Lanka's first all-electric injection molding machine from Japan which can save energy up to 70 percent.

 

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...by i3gconsultants@ 18:08:30 on 2012-08-25

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Sector: Power and Energy

Sri Lanka says Chinese funded coal power plant to resume in fortnight


Sri Lanka said its 455 million dollar Chinese funded power plant will resume operation in two weeks, after its breakdown earlier in the week resulted in countrywide power cuts, a report said."There are some technical problems in the Lakvijaya power plant. The Chinese company, the Ceylon Electricity Board and the consultancy firm are now looking into these problems. I think within another two weeks' time we will be able to operate this plant again and restore 24-hour power supply," Power and Energy Minister Champika Ranawaka told Xinhua news agency. He added that the coal-fired power plant had become essential to meet daily power needs due to a severe drought in the country that has reduced hydro-power generation. The loss of the electricity generated by Lakvijaya power plant brought about two- hour power cuts that were extended to three hours from Thursday. The ministry has already announced that the daily power cuts will continue for 14 days. "The Lakvijaya power plant is still in a defect-liability period and there are tests to be done. So I think that as far as the main machine is concerned it is ok but there are problems in the auxiliaries and various technical details because of the unfamiliar nature of the coal power plant." However, he insisted that these issues would be overcome in time and commended the Chinese government for their funding to construct the power plant. "I think in time to come we will be able to overcome these technical and other difficulties and after commissioning the second phase of the plant I think the two- decade power deficit problem in Sri Lanka will be solved." Vice Chairman of the Ceylon Electricity Board Anura Wijepala told Xinhua that the Lakvijaya power plant is expected to meet 30 percent of the island's entire electricity demand by the year 2014. "We still have faith in the main equipment. The breakdowns are as a result of faults in the auxiliary equipment. Those can be easily corrected. The Chinese company CMEC has identified those issues and together with our engineers they are working on it," Wijeypala said. Sri Lanka had been forced to impose power cuts around the island over the past few days after the coal power plant broke down and the authorities were unable to meet the electricity demand through hydro power owing to lack of sufficient rain in the hydro catchment areas.


Reported in LBO

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...by i3gconsultants@ 18:08:05 on 2012-08-25

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Sector: Power and Energy

Sri Lanka should withdraw bank note with malfunctioning Chinese coal plant: legislator


Sri Lanka should withdraw a currency note bearing the picture of a Chinese built coal plant that was contracted out without open tendering and is now continually breaking down, a legislator has said.

Sri Lanka's central bank placed the picture of a 455 million US dollar coal power plant built by China Machinery and Engineering Corporation (CMEC) through a deal that was not openly tendered in a 1000 rupee noted issued in 2011. The plant has been constantly breaking down and amid a drought which reduced hydro generation is breakdowns had plunged the country into its first power cuts in more than a decade. Legislator Harsha de Silva, representing the main opposition said the plant in Norochcholai on the west coast of Sri Lanka was used to depict "development and prosperity" of Sri Lanka in a currency note. He said in a statement that it was amusing that authorities had "thought it fit to depict this symbol of corruption in the guise of development as our nation’s pride in ‘development and prosperity’." The deal for the coal plant was struck between the ruling classes of the two countries without open tendering through what is generally referred to in statist nations as 'government to government' procurement. De Silva quoted CMEC as saying in its website that the firm "felt an incomparable pride" in the coal fired project being placed in a currency note. He said there was "incomparable anger" at the "hitmen" involved in the coal plant deal. Sri Lanka went for a fast-track Chinese turnkey design build transfer (DBT) coal plant after plans by the state-run Ceylon Electricity Board for a Japanese financed coal plant were stumped for decades by religious and environmental lobbies. Administrations run by Sri Lanka two major parties have been responsible for the delays. De Silva said an investigation must be carried out on the deal. There have been concerns raised about Chinese projects where there is no open tendering. However after Sri Lanka destroyed the institution of permanent secretaries through constitutions in 1972 and 1978, rule of law and justice had deteriorated in Sri Lanka.

 

Reported in LBO
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...by i3gconsultants@ 18:08:28 on 2012-08-25

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Sector: Power and Energy

US natural lighting company enters Sri Lankan market


A US based company has introduced a daylight capturing device to the Sri Lankan market that can channel natural light inside buildings through an internal reflective system cutting energy costs and reducing the heat load on air-conditioning, an official said.California based day-lighting expert, Solatube International Inc is the developer of the device known as the Solatube Daylighting system. The company says their daylighting systems are increasingly installed in homes and commercial buildings as part of energy-saving and sustainability efforts around the world. "It's basically a dome on top of the roof that captures daylight and transfers it through a highly reflective beam and defuses it into any dark spaces you wish," said Patrick Dickey, Director, International sales of Solatube. "It can be used anywhere daylight is needed," he said. Solatube says it's domes can be fixed on any type of roof and can beam natural daylight through multiple storied buildings. The cost of installing one unit will be around 65.000 rupees, Solatube's local distributor, Sunpower Systems (Pvt) Ltd said. A primary segment of Solatube's international market includes factories, warehouses and industrial settings including supermarkets. Among some of the multinational companies using Solatube's daylighting systems are Toyota, Procter and Gamble, Unilever, Philip Moris and Pepsico. "We are heavily involved in India south East Asia and China and we see a tremendous potential in Sri Lanka because of the leads we get," Dickey said. Solatube says they are eyeing Sri Lanka's garment factories, manufacturing plants, industrial warehouses and supermarkets. "Garment factories and supermarkets are a growing market for us," Dickey said. "It’s a tremendous burden for these factories to take so much electricity from other places that actually could use it," "So we are capitalizing on turning off lights during the day. If this is correctly set you do not need artificial lights at all during 9 to 4 in the afternoon," he said. Sunpower systems estimates that solatube daylighting devices could cut electricity costs for lighting by over 80 percent and reduce the heat load on air-conditioning. Solatube says global energy saving trends are shifting more toward daylighting to cut energy costs on artificial lighting, achieve minimal loss of light and to reduce the heat that is usually associated with normal daylight devices like windows and skylights. The domes are made from high quality acrylic resin that is specifically formulated for increased impact strength, chemical and weather resistance and clarity, the company said. Solatube says the tubing is made from puncture proof aluminium material that has a UV protective covering which will allow the highest light output with minimal thermal impact.


Reported in LBO

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...by i3gconsultants@ 17:08:37 on 2012-08-25

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Sector: Power and Energy

Sri Lanka’s debt-ridden power utility seeks more loans


Sri Lanka’s power minister has sought cabinet approval to raise state-run Ceylon Electricity Board’s borrowing limit to 74.2 billion rupees to meet increasing fuel needs, settle debts and pay independent power producers, a report said.Minister Champika Ranawaka told his cabinet colleagues that the state power utility owed 16 billion rupees to independent power producers and another 15 billion rupees to state-run Ceylon Petroleum Corporation, the Colombo-based Sunday Times newspaper said.


The higher borrowing limit will be used to meet:
- Overdraft and term loans – 45 billion rupees
- Provision for letters of credit -- 10 million rupees
- New guarantees for independent power producers -- 19.2 million rupees The minister blamed the heavy costs on the prevailing drought that has limited hydro power generation. The CEB is now depending on expensive thermal power to provide uninterrupted electricity supply to the country. “As payables to independent power producers have reached peak level, purchasing of fuel from CPC for thermal generation has been limited. IPPs have utilised their credit limit to maximum level,” Ranawaka was quoted in the report. The CEB has secured a 20 billion rupee short-term loan facility from state-run People’s Bank PLC during past few months, to settle these liabilities to CPC, the independent power producers and to import coal.


The short-term loan was used to settle:
- Overdraft of 800 million rupees
- Term Loans of 5.410 billion rupees
- Short Term Loan Facility (Bill Discounting) of 20.454 billion rupees



Ranawaka said a 10 billion rupee Letter of Credit/Guarantee has been fully utilised. Only a standby letter of credit facility of 18 billion rupees has not been utilised. As a temporary measure, the CEB had approached People’s Bank for a term loan facility, to partly settle the CPC and the independent power producers. However, People’s Bank had rejected the request since it goes above the single borrower limit enforced by the Central Bank of Sri Lanka. “Hence Minister Ranawaka wants his ministerial colleagues to approve his request to ask the Governor of the Central Bank to increase the single borrower limit to the CEB to 74.2 billion rupees,” the report said. Ranawaka said the CEB was in “severe financial crisis” despite imposing a fuel surcharge between 15 percent to 40 percent in February to trim losses. The minister said there were broadly four reasons for the financial crunch:
1. Increase of cost of independent power producers and CEB fuel due to increase of fuel prices by CPC and increase of thermal generation due to prevailing drought situation in the country.
2. Additional revenue on Fuel Adjustment Charge is not sufficient to cover the increased fuel cost.
3. Non-receipt of subsidy from the Government for 2011.
4. Use of CEB funds for capital works for which Government funds were not received.

Ranawaka’s shocking disclosure comes as CEB trade unions are once again demanding a substantial pay hike.


Reported in LBO

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...by i3gconsultants@ 17:08:04 on 2012-08-25

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Sector: Power and Energy

Sri Lanka to ration power in key towns and villages


Sri Lanka will cut power for two hours and fifteen minutes during the daytime Thursday (August 09) owing to a breakdown in a Chinese build coal plant in the north western region in the Island, the power ministry releasing a statement said.Operations at Sri Lanka's newly build Lakvijaya coal power plant in north-western Puttalam district was temporarily halted this morning due to a problem in a transmission line, the ministry said. The national grid has lost 300 megawatts of power since Wednesday morning due to the breakdown, the ministry statement said. Power cuts will be imposed in 58 key towns and villages island-wide starting from 8.30 am in the morning on Thursday, the statement said. Power cuts will be imposed in four time blocks to different parts of the island including the North and the East. Kirillawela, Mahara, Kadawatha, Ganemulla, Gampaha, Biyagama, Galahitiyawa, Siyambalape, Paliyagoda, Maradana, Uswetakeiyawa, Kerawalapitiya, Katunayaka, Aandiambalama, Henatiyana, Kelaniya, Dalugama, Kosgama, Pugoda, Kirindiwela, Randawana, Malwana, Weyangoda, Nittambuwa, Pasyala, Athurugiriya, Kaduwela, Mulleriyawa, Angoda, Kosgama, Hanwella, Labugama, Pannipitiya, Siddamulla, Maththegoda and Kottawa areas in the western province will experience power cuts from 8.30 to 10.45 am, the power ministry said. Some areas in northern and southern zones in the western province will not have power from 10.45 to 1.00pm including Sapugaskanda, Ragama, Nawagamuwa, Bulathsinhala, Bandaragama, Pamunugama, Maharagama, Dehiwala, Mount Lavinia, Panadura, Wadduwa, Kalutara and Piliyandala. Power cuts will be imposed in Thalangama, Koswatta, Malabe, Athurugiriy, Arangala, Horana, Thalawathugoda, Depanama, Hokandara, Sri Jayawardenapura and Battaramulla during 1.00 to 3.15 pm. From 3.15 to 5.30pm areas belonging to the southern zone of the western province will experience power cuts including Athurugiriya, Homagama, Horana, Pannipitiya, Battaramulla and Koswatta, the ministry schedule showed. The power ministry didn’t specify whether the power cuts would continue beyond Thursday or whether it was only on Thursday.


Reported in LBO

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...by i3gconsultants@ 17:08:04 on 2012-08-25

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Sector: Power and Energy

Sri Lanka's Lakvijaya power plant down


Power generation in Sri Lanka's newly build Lakvijaya coal power plant in north-western Puttalam district has been temporarily suspended due to a problem in a transmission line,the ministry of power and energy releasing a statement said. The ministry said a sudden breakdown in the transmission line which takes power from the generator to the grid prompted engineers to temporarily suspend power generation as a safety measure. The breakdown in the transmission line has automatically halted the plant's generator. The breakdown has caused a loss of 300 megawatts of power to the national grid, the ministry statement said. The ministry said a proper assessment of the situation can only be known later in the day. Authorities have appealed to the public to reduce consumption during peak hours, saying hydro-power reservoirs were running dry and several thermal plants had broken down.


Reported in LBO

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...by i3gconsultants@ 17:08:53 on 2012-08-25

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Sector: Power and Energy

Sri Lanka to connect 30MW wind power this week


Sri Lanka's state-run Ceylon Electricity Board will connect 30MegaWatts of wind power from three privately owned wind power plants this week, pushing total capacity to 63MW, the islands, power ministry said.

The three plants will contribute about 90 Giga Watt hours (millions of units) of energy a year, or about one percent of total demand. Each plant had cost 2.4 billion rupees, the power ministry said. One plant was built in Daluwa, Nirmalapura coast by Nirmalapura Windpower (Pvt) Ltd. The second plant was near an existing coal plant in Kalpitiya built by Daily Life Renewable (Pvt) Ltd. It had eight wind turbines on 85 meter tall towers. The third 10MW plant bordering a lagoon in Sethapola was built by Powergen Lanka (Pvt) Ltd .It had seven towers 65 meters high.

 

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...by i3gconsultants@ 17:08:03 on 2012-08-25

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Sector: Manufacturing

India offers to modernise Sri Lanka’s closed textile mills


India has offered to modernise some of Sri Lanka’s closed textile mills, during bilateral talks with visiting Indian Commerce minister, a report said.

“Sri Lanka imports yarn and fabric from India. We feel that cooperation in the textiles sector is very important from the perspective of both the countries,” Commerce Minister Anand Sharma told Colombo-based Indian journalists, the Hindu newspaper reported on Saturday. Sharma, who arrived in Colombo on Thursday for the three-day India Show trade fair, said the suggestion of reviving textile mills came during discussion with Sri Lanka’s Economic Development Minister Basil Rajapakse. India had also pledge to set-up manufacturing plants for apparel and textile sectors, Sharma said. An Indian delegation of leading textile industrialists are due in Colombo early September, to engage with both officials and captains of industry here.


Sharma, is leading a delegation of over 200 Indian businessmen, who are scouting for business in Sri Lanka. Some 108 Indian firms are currently displaying their goods and services at the trade fair in Colombo. Sharma on Friday said a joint taskforce is being set-up to establish an export manufacturing zone in Trincomalee, Sri Lanka’s east. He said Indian Commerce Secretary S R Rao will visit Colombo to hold talks with the Treasury Secretary on modalities. A delegation of pharmaceutical industry, Pharmexcil, will visit Sri Lanka from August 14-16, to explore steps required to set up a pharmaceutical hub. The taskforce will have the mandate to set-up the special zone for auto-components and engineering goods, and the pharmaceutical hub.

 

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...by i3gconsultants@ 17:08:20 on 2012-08-25

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Sector: Beverage Food and Tobacco

Minute Maid Mixed Fruit launched


If your requirements include four fruits in one drink, Minute Maid Mixed Fruit is your reward!Coca Cola Sri Lanka has launched a refreshing new product of Minute Maid, the number one juice brand in the world, at the Galadari Hotel, on Wednesday (22) evening.







At the Coca-Cola Minute Maid Mixed Fruit launch from left Marketing Operations Manager, Sri Lanka and Maldives, Coca-Cola Far East Limited Shantha Fernando Country Manager, Sri Lanka and Maldives, Coca-Cola Far East Limited AbhishekJugran, Country Seles Manager, Coca-Cola Beverages Sri Lanka Limited Kapila Welmillage, Country Marketing  Manager, Coca-Cola Beverages Sri Lanka Limited Shamal Gunewardene and Public Affairs and Communication Manager, Coca-Cola Beverages Sri Lanka Limited Meelika Tillekeratne – Pic by Daminda Harsha perera

Minute Maid Mixed fruit, the fourth variant in the Minute Maid line, is a combination of goodness and taste that consists of mango, guava, papaya and banana. Coca-Cola Beverages Sri Lanka Limited Country Marketing Manager Shamal Gunewardene said, “The Minute Maid Mixed Fruit launched in Sri Lanka is a specially formulated product that differs from the rest.”
Does it contain preservatives? Coca-Cola Beverages Sri Lanka Limited Country Sales Manager Kapila Welmillage strongly emphasised that Minute Maid products contain no preservatives.     
Having being in the trade for over 65 years, Minute Maid was first established in Sri Lanka in 2007 with Minute Maid Orange, and thereafter with two other products; apple and mango. Ever since then, the Minute Maid brand has grown rapidly, and more and more consumers make an effort to purchase this product. It is the world’s leading juice drink brand with an extensive range of beverages worldwide including Minute Maid 100% Juice, Minute Maid Light, Minute Maid juices and blends, etc.
However as for Coca Cola, it needs no introduction. Coca Cola in Sri Lanka is famously known for their exciting beverages such as Coca Cola, Sprite, Fanta Orange, Lion Soda to name a few.
When asked Coca-Cola Far East Limited Country Manager of Sri Lanka and Maldives Abhishek Jugran, why Minute Maid Mixed Fruit was produced, he said, “Since Minute Maid Orange, Mango and Apple are No.1 in Sri Lanka, it’s an obvious fact that Sri Lankans love their fruits. Minute Maid Mixed Fruit was definitely the winning combination.”
Coca-Cola Far East Limited Marketing Operations Manager of Sri Lanka and Maldives Shantha Fernando furthermore also stated, “We looked into our consumer’s taste, what they really want to have, and we found out that they love their fruits. So with this new product, we hope to reach out to our consumers and for them to reach out to our products.” He also said, “To have four fruits in one drink, is nutritious.”
For the arrival of the new product, Minute Maid Mixed Fruit, Coca Cola Sri Lanka has planned out a campaign to promote their new product by various communication platforms such as TV, radio, outdoor hoardings to name a few. At the end of the launch, Jugran proudly said, “After the success of Minute Maid’s apple, mango and orange flavours, we are very happy that we have been able to launch the mixed fruit flavour in Sri-Lanka.  The choicest fruit, combined with delicious taste, makes this a great option for a beverage. We hope that consumers enjoy the taste of the new mixed fruit flavour.” Minute Maid Mixed fruit comes in a 200ml glass bottle at a reasonable price of Rs. 45 and is available throughout the country.


Reported in Dailyft

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...by i3gconsultants@ 17:08:14 on 2012-08-25

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Sector: Beverage Food and Tobacco

Elephant House re-imagines local favourite Orange Crush


Long time fans of Elephant House Orange Crush got a treat this month as the local favourite was re-introduced to consumers in a striking, new bottle. One of Sri Lanka’s most beloved soft drinks, Elephant House Orange Crush was re-imagined with a new look and feel to be more appealing to young people.Having most recently achieved a 20% year-on-year gain in sales volumes, primarily as a result of consumer love for the brand, Elephant House Orange Crush is the latest brand to benefit from the staggered, portfolio-wide re-positioning as envisioned by Elephant House – a subsidiary of top Sri Lankan blue chip John Keells Group.
Beyond a more striking bottle, Elephant House Orange Crush’s re-introduction in July also featured a renewed marketing push which was centred on more visually engaging point-of-sale materials, all of which had been created to tie into the flights of fancy associated with first love.
Elephant House Head of Beverages Chandima Perera said, “Following a slew of innovations, which were kicked off last year with a 400ml bottle re-design for Elephant House Cream Soda, the beverage voted Sri Lanka’s favourite for the sixth consecutive year at the SLIM-AC Nielsen People’s Award in 2012, as well as a taste re-formulation for Elephant House Lemonade, it was the right time for us to re-imagine customer favourite, Elephant House Orange Crush.”
“In addition to a striking, new bottle, we have also introduced new point of sale materials which will, thanks to comments by our loyal customers, tap into sentiments and moments that young people can relate to,” added Perera.  
He also commented that “Elephant House Orange Crush is most closely associated with the emotions of growing-up, while still being flexible enough to continue to be sought after by those with a sweet tooth or even those just craving the taste of orange.”
Rolled out this month, the new Elephant House Orange Crush 400ml is in stores now, while the already re-designed Elephant House Cream Soda and Elephant House Lemonade glass bottles, in similar 400ml sizes, are also presently available island-wide.


Reported in Dailyft

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...by i3gconsultants@ 17:08:32 on 2012-08-25

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Sector: Beverage Food and Tobacco

New two litre Fanta packs launched


Coca-Cola Beverages Sri Lanka has announced that global mega brand Fanta will be available in two litre bottles, across the nation.
Fanta Orange, Fanta Portello and Fanta Cream Soda will be available in the fun and funky new look two litre bottles, offering consumers more fun their rupee.Coca-Cola Beverages Sri Lanka Limited Country Manager Saumindra Bhattacharya had this to say, “Fanta is the number one orange soft drink in Sri Lanka and Fanta Portello and Fanta Cream Soda have also gained significant market share island-wide, thus our ability to offer these flavours in our new funky two litre bottle ensures that now more people will be able to share the fun that Fanta offers.”
The new bottle has 500m more product than the current 1.5 litre and the extra 500ml is free, since all the three Fanta flavours are still priced at the 1.5L bottle cost of just Rs. 190.“We want our consumers to enjoy our products through the right packages at the right price. The Fanta pricing is an effort in that direction that ensures our consumers get more value from their favourite soft drink,” explained Bhattacharya.
According to Coca-Cola Far East Limited Sri Lanka and Maldives Country Manager Abhishek Jugran, “We wanted to give consumers across Sri-Lanka more of their favourite orange flavour drinks, while offering two distinct advantages – no price increase and the fun and novelty of our funky new look two litre bottle, Fanta’s image has always been playful and bold, an image that matches the full bodied fruit taste and tingly carbonation for which the brand is renowned.”
The new pack offers value for money and is an economically smart choice for consumers. The new two litre bottle also features new packaging elements that make it more attractive to consumers. Added texture and grip elements make it more ergonomic, while eye catching visual features and colours ensure that the bottles stand out from competitors.
The move to a two litre bottle will further bear out the brands promise of Funky Fanta Fun as the brand now offers more value, quantity and enjoyment. Fanta and the design of the Coca-Cola Contour bottle are registered trademarks of The Coca-Cola Company. Fanta, a part of the Coca-Cola Company, has over 70 flavours worldwide and is available in over 180 countries.


Reported in Dailyft

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...by i3gconsultants@ 17:08:37 on 2012-08-25

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Sector: Secondary market

Secondary Market Treasury Yields Dip


Activity in the secondary bond market reflected a positive turn around yesterday as average volumes were seen changing hands. Yields dip marginally across the yield curve with the 19 month bond reflecting the most amount of activity as its yield dipped by 3 basis points (bp) to an intraday low of 13.77%. Moderate activity was witnessed on the 3 year and 5 year bonds as well as its yields dipped by 4 bp each to intraday lows of 13.88% & 14.28% respectively.Meanwhile in money markets, surplus liquidity remained mostly unchanged at Rs 6.6 Bn yesterday as call money and repo rates remained stagnant at levels of 10.55% and 9.56% respectively. Furthermore an amount of Rs 1.041 Bn was mopped up from the system on an overnight basis at a weighted average of 9.43%, by Central bank through its Open Market Operations (OMO).  The rupee edged down marginally to Rs 132.35 yesterday due to continued demand for contracts value cash (23/8/12) and tom (24/8/12) as volumes traded remained high.  Some of the forward dollar rates that prevailed in the market are 1 Month – 133.65; 3 Months- 136.25 and  6 Months- 139.80. (Source: Wealth Trust Securities)


Reported in Dailyft

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...by i3gconsultants@ 15:08:04 on 2012-08-25

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Sector: Bank Finance and Insurance

German cabinet pushes ahead with Basel III bank rules


BERLIN, (Reuters): Germany’s cabinet agreed on Wednesday to push ahead quickly with the introduction of stricter capital requirements for banks under international Basel III rules, despite the misgivings of German banks about how they will be implemented across Europe.Finance Minister Wolfgang Schaeuble said in a statement that the rules were aimed at “toughening banks’ capital requirements and providing German bank supervisors with tougher options for control and sanctions”.
“It is our firm conviction that the implementation of Basel III is a central part of bank regulation that we cannot subject to delay,” said Schaeuble, adding that the German cabinet’s action was “a sign of how seriously we take this issue”.“I hope our partners in Brussels share this sense of urgency,” he said.
The G20 leading economies agreed at s summit in late 2010 to introduce the Basel III rules from January next year, while EU leaders and the European Parliament are due in October to seek consensus on their implementation in the bloc.Germany’s financial sector is pressing for the introduction of the rules to be pushed back until 2014 because of the failure of EU authorities and member states so far to reach consensus on how to implement them.
The country’s biggest banks have warned that introducing the new requirements too quickly risks disruptions to the economy, pointing to examples like Commerzbank’s decision in June to withdraw from shipping finance because of the new rules.
Deutsche Bank Co-Chief Executive Juergen Fitschen said in June the impact on liquidity of Basel III would have “indirect consequences” and in areas such shipping and aircraft finance, Europe could lose business to Asia.


Reported in Dailyft

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...by i3gconsultants@ 15:08:12 on 2012-08-25

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Sector: Bank Finance and Insurance

Power in banking relationship shifts dramatically to consumer – Ernst & Young


Consumers are taking control of their banking relationships, are increasingly likely to change banks and expect to be able to choose between a range of service levels and costs according to Ernst & Young’s 2012 global consumer banking survey. The study, which questioned 28,560 banking customers across 35 countries, highlights how customers also expect to be financially rewarded for their loyalty.“Customers are sending banks a very clear message – ‘we are taking control,’” says Ernst & Young’s Financial Services Advisory Markets Leader for Europe, Middle East, India and Africa Pierre Pilorge. “In response, banks must re-evaluate customer trends region by region to prioritise products, enhance services, and ultimately give customers what they want.”
Globally only 44% of customers say their bank adapts products and services to meet their needs. 70% of customers would be happy to disclose personal information if it improved the level of service and products they were offered.
“Customers are looking to banks to help them shape their experience. Banks need to reassess their offer and consider more tiered products and services,” adds Pierre.Loyalty reward schemes are on the rise. 27% of customers are enrolled on a scheme, up 50% from 2011. However, customers expect more – the overwhelming majority agreed that if you have three products or more with a bank you should get better service (86%), and that you should be charged lower fees or given better rates on your savings accounts (91%).
“Across multiple business sectors, technology has empowered customers to seek tangible rewards and now banks are facing that reality,” says Pierre. “Customers expect to be rewarded for the value of their business not just the duration of their banking relationships.”
Consumers are becoming less loyal and increasing the number of banks they use. Consumers who use only one bank have fallen from 41% to 31%. The number of consumers planning to change banks has risen from 7% to 12% year on year and attrition rates have increased in several major markets. Poor branch experience (31%) and lack of personalised contact or service (26%) are rising up the list of reasons for changing provider, although dissatisfaction with high fees continues to be the most commonly cited driver of attrition, cited by 50% of respondents.
“Pricing remains critical to customer satisfaction, but most customers have no idea how much they pay each year, “says Pierre. “As they start to take control of their banking relationships, clearer communication about fees is customers’ most sought-after improvement. People are more willing than ever to shop around and want control over what they pay for the service they receive. Banks need to respond – pricing and service promises need to be transparent if banks are to deliver something customers value.”
Banks have made progress in improving their communication channels. Both call centre and mobile banking services have improved, with customer satisfaction up 8% and 16% respectively year on year, however the power of the consumer voice has overtaken banks communication channels. Personal recommendations from family and friends are the top source of information about banking products, with 71% of consumers relying on this information as their primary source. 55% of consumers refer to online communities or social networks for advice and a third of customers who use social networking use it to actively comment on the service they receive from their bank.“Customers prefer turning to other sources than their bank for financial advice and to find the best deals. Comparison websites, relatively unknown five years ago, are now the second major source of influence, ranking higher than banking advisors, and the use of social media as a source of banking information is amplifying customers’ voices, giving them greater power as advocates or critics,” concludes Pierre.  To read the full report and watch the accompanying video, please visit: http://www.ey.com/GL/en/Industries/Financial-Services/Banking—Capital-Markets/Global-consumer-banking-survey-2012–The-voice-of-todays-banking-customer.


Reported in Dailyft

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...by i3gconsultants@ 15:08:12 on 2012-08-25

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Sector: Bank Finance and Insurance

CA Sri Lanka and FinArch boost IFRS implementation for banks and financial institutions


In view of the current IFRS implementation which is in effect from 1st January 2012, CA Sri Lanka together with FinArch organised a seminar for banks and financial institutions aimed at addressing practical implications faced in the Standards convergence process. The event was facilitated by ‘Providence’, the local partner of FinArch.




The one-day program which covered  IAS 18, IAS 32, IAS 39 and the future in IFRS was held at the Galadari Hotel in Colombo, and also shared success stories and developments on recent implementations of the new Standard in Sri Lanka.
It program was conducted by Jeroen Van Doorsselaere, a senior IAS/IFRS expert from FinArch with vast experiences in such standards and themes in the international atmosphere, after being opened by Manil Jayesinghe, the lead engagement partner for IFRS impact assessment/implementation projects currently ongoing in many local banks and financial service organisations with an experience of over 27 years in banking and financial services, and later further addressed by CA Sri Lanka President Sujeewa Rajapakse. Chairman of Member and Student services committee of CA Sri Lanka Channa Manoharan was also present at this occasion.
CA Sri Lanka is the only accredited authority that formulates accounting and auditing standards in Sri Lanka, and is also one of the leading professional organisations in the island with  4200 members based in the country and abroad and over 37,000 students, making it one of the largest tertiary education providers in Sri Lanka outside the university system.


Reported in Dailyft

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...by i3gconsultants@ 15:08:44 on 2012-08-25

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Sector: Bank Finance and Insurance

NAMAL moves into new head office


National Asset Management Limited, Sri Lanka’s pioneering unit trust company, moved in to a new head office premises on 3 August 2012.The new NAMAL Head office is now located at the Union Bank building at 64, Galle Road, Colombo 3.The new state-of-the-art head office with a customer centre was ceremonially opened by Chairman of NAMAL Alexis Lovell MBE in the presence of the Board of Directors, management and staff.NAMAL operates eight unit trusts and offers private portfolio management for institutional investors. NAMAL has a highly experienced and professional management team with widespread experience in domestic and international capital markets. NAMAL is a subsidiary of Union Bank of Colombo PLC in association with DFCC Bank PLC.


Reported in Dailyft

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...by i3gconsultants@ 14:08:56 on 2012-08-25

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Sector: Bank Finance and Insurance

Global credit growth to slow further says Fitch


Fitch Ratings says in its latest ‘Macro-prudential Risk Monitor’ that global real lending growth slowed to 4% in 2011 and is forecast to fall further this year.“Fitch forecasts global bank credit to weaken to just 3% in real terms this year. Nonetheless, a handful of emerging markets have been experiencing a combination of rapid credit growth and asset price inflation that has been associated with bubbles in the past,” says Richard Fox, Senior Director in Fitch’s Sovereign group.
Last year’s 4% real credit growth and this year’s forecast 3% are well below a pace that would cause renewed concerns about overlending. Rapid lending growth is confined to a handful of emerging markets (EM), some of which move into Fitch’s higher Macro-prudential risk category (MPI 3) in this report. Credit growth in developed markets remains stagnant and is forecast to slow in all EM regions this year, notwithstanding continued rapid nominal lending growth in some of the larger countries.
The recovery of credit growth seen in 2010 to 5% has not been sustained. Amongst EM regions, growth is forecast to remain fastest in Asia at 9%, but this is down from 11% in 2011. Credit growth is forecast to slow particularly sharply in Latin America, where growth is expected to halve to 5% this year.
Only Brazil is likely to buck the trend amongst the major Latin American economies with forecast higher credit growth in 2012. Growth in the Middle East and Africa is forecast to slow to a similar 5%, though some GCC countries may see a pick up. Emerging Europe continues to experience the slowest EM credit growth with barely 3% real growth expected this year.
Fitch has extended its country coverage in this report to all rated sovereigns, including an additional 20 EMs for the first time. Two-thirds of the new countries are in Africa.
Three newly-added African countries – Lesotho, Mozambique and Uganda – attract the highest risk score of MPI 3 due to the combination of rapid credit growth, rises in real estate or equity prices or the real exchange rate. Peru also becomes MPI 3. In all these countries except Lesotho, lending growth has dropped sharply from its peak, however.
Colombia and Lebanon drop out of the MPI 3 category due to data revisions. Countries that remain MPI 3 based on past triggers are Argentina, China, Cyprus, Hong Kong, Indonesia, Sri Lanka and Turkey.
Because of data weaknesses in some of the new countries added, Fitch is introducing a new designation of MPI 2*. The asterisk indicates where an MPI score is based on real lending growth and just one other indicator (usually the real exchange rate). This is because where lending growth is fast enough to trigger an MPI 2 score, an MPI 3 score might be triggered if the additional indicators were available.
Despite continuing sluggish credit growth, credit/GDP on average in developed countries shows little sign of falling significantly. Over three-quarters of these countries still have scores of at least MPI 2, denoting above trend credit/GDP over the past three years.
Given historical rising trends, credit/GDP is nevertheless falling relative to trend and around half of developed markets had below trend credit/GDP in 2011. MPI scores in the developed world will gradually fall therefore. Only two developed countries remain MPI 3, Cyprus and Hong Kong.
The introduction of Viability Ratings (VR) last year has led to a change in the calculation of the BSI. The BSI aims to measure a banking system’s standalone financial quality or strength and is now a simple weighted average of bank VRs for a critical mass of a country’s banks.
As a result of the change, BSIs are now distributed more evenly across a larger number of BSI categories corresponding to VRs. The typical developed country banking system is BSI ‘a’ whereas the typical EM system is in the range ‘bbb/bb/b’. The report includes a comparison of new and old BSIs.This report updates the systemic risk indicators Fitch has published since 2005. Formerly the Bank Systemic Risk Report, the Macro-Prudential Risk Monitor identifies the build-up of potential stress in banking systems due to a specific set of circumstances: rapid credit growth associated with bubbles in housing or equity markets, or appreciated real exchange rates, the latter sometimes associated with asset market bubbles. The focus of the report is therefore on only one potential source of bank systemic stress.
The latest ‘Macro-prudential Risk Monitor’ is available at www.fitchratings.com.


Reported in Dailyft

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...by i3gconsultants@ 14:08:56 on 2012-08-25

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Sector: Bank Finance and Insurance

Innovest launches Shari’ah compliant Stock Market Investment Plan


Innovest Investments Ltd., an innovative investment management company which offers expert services to both institutional and individual clients looking to invest in the Stock Market as well as Fixed Income Securities, has introduced an Islamic Shari’ah Compliant Investment Plan that comprises of only Shari’ah compliant stocks traded on the Colombo Stock Exchange (CSE).With this scheme in operation, investors who prefer to avoid interest or Riba can now limit their investments to shares from a basket of Shari’ah compliant companies.
Former Colombo Stock Exchange (CSE) and Finance Commission Chairman Ajit de S. Jayaratne, Business Leader Dian Gomes and Oxford-educated Wealth Manager Arosha Gunasekera are the founders of Innovest Investment Management Ltd. The move keeps with the core principle of Innovest to serve all clients with equal respect. Innovest will manage client portfolios for a stipulated duration with all investment decisions taken in consultation with the Investment Committee.
The basic precept in this investment plan is that one can buy and sell shares subject to the condition that the company is undertaking a Halal business. If the major business of any company is not against Shari’ah, its shares can be purchased: provided the part of income representing interest is given to charity. Among other things, preference shares with a fixed percentage of dividends, do not fulfil the principles of Shari’ah.
The basic principle of distribution of profit is that no gain can be had without undertaking to bear the risk of loss. Secondary market trading in shares that represent the underlying assets is permissible only as long as real assets and services constitute the majority of the total assets. If the capital is in liquid form, the shares may be sold only at face value, otherwise it would mean that money is being exchanged for more money which amounts to Riba.  
With a corporate culture that revolves around ethical principles, Innovest will be employing an equitable service strategy even to this segment of investors with a strong emphasis on performance-based commission as opposed to a per transaction basis which generates commission regardless of the accuracy of the advice given.The company is a registered Market Intermediary with the Capital Markets Regulator, the Securities and Exchange Commission (SEC) of Sri Lanka.


Reported in Dailyft

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...by i3gconsultants@ 14:08:56 on 2012-08-25

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Sector: Bank Finance and Insurance

Orient Finance reports robust 89% growth in profits


Orient Finance PLC recorded the highest ever profit after tax since its inception in 2003. The company posted profit after tax of Rs. 136.5 million for the year ending 31 March 2012, as against the previous year’s profit after tax of Rs. 71 million.Commenting on the company’s financial performance, Chairman Dr. Dayanath Jayasuriya, PC, said; “Orient has had an exceptional year, characterised by robust growth in its leasing and hire purchase portfolio and recorded an impressive after tax profit of Rs. 136.5 million.”The total assets of the company recorded a remarkable growth of 97%. The main contributory factor to the expansion in the asset base is the growth in the leasing hire purchase and factoring portfolio which grew by 108.4% from the previous year.The stated capital of the company was increased to Rs. 500 million at the end of 31 March 2012 through a rights issue amounting to Rs. 222.5 million.  Both core capital and total capital were at 25% and 26% respectively, being well above the stipulated statutory requirements.During the year the company opened three window offices in Vavuniya, Galle and Kegalle further increasing the reach to its customers.
The conducive business environment which prevailed throughout the year, with the economy recording the highest post independence growth, complemented by the  opening of geographical boundaries of north and east, single digit inflation, and the increase in per capita income, had a positive impact on the outstanding performance of Orient Finance.
Gaining confidence with the exceptional financial performance, Orient Finance continues its growth momentum in the leasing industry with new found vigour, continuing achievement of milestones, which includes obtaining a listing on the Colombo Stock Exchange and a license to carry out finance business under the Finance Business Act No. 42 of 2011.
The company is to embark on a re-branding initiative shortly in keeping with the proposed business strategy.The Board of Directors of the company consists of Dr. Dayanath Jayasuriya, PC, as Chairman, and Prakash Schaffter, Ramesh Schaffter, Ananda Atukorala, Lakshmi Gunetilleke, Anil Tittawela, PC, and Sarath Wickramanayake as Directors. Rajeeva Bandaranaike functions as the Chief Executive Officer.
Orient Finance PLC is a subsidiary of Orient Capital Limited (OCL), which is a 100% equity financed company with diverse capital market services to individual and corporate clients with a highly experienced Board of Directors and senior management. Orient Wealth Limited and First Alliance Money Brokers Limited (FAMB) also come under the OCL umbrella.


Reported in Dailyft

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...by i3gconsultants@ 14:08:11 on 2012-08-25

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Sector: Bank Finance and Insurance

FIU Sri Lanka enters into MOUs with Mongolia, Russia, Saudi Arabia, US counterparts


The Financial Intelligence Unit of the Central Bank of Sri Lanka (FIU – Sri Lanka) recently entered into Memoranda of Understanding (MOUs) with Financial Information Units of the Bank of Mongolia, Federal Financial Monitoring Service of Russian Federation (FIU – Russia), Saudi Arabia Financial Investigation Unit and Financial Crimes Enforcement Network of USA (FIU – USA).Via MoU the parties will share financial information to facilitate investigation and prosecution of persons suspected of money laundering and terrorist financing.
These MOUs have been entered into in terms of the provisions of the Financial Transactions Reporting Act No. 6 of 2006. Money laundering and terrorist financing are generally considered to be internationally connected criminal activities.
Therefore, a greater coordination among financial intelligence authorities is needed to deal with these activities on a global basis. Accordingly, FIUs across the world adopt MOUs to cooperate with each other with the exchange of information. With the above MOUs, the total number of MOUs entered into by the FIU – Sri Lanka has increased to 20.
The other MOUs are with Australia, Belgium, Bangladesh, Canada, India, Malaysia, South Korea, Indonesia, Philippines, Afghanistan, Nepal, Cambodia, Fiji, Slovenia, South Africa, and Solomon Islands.


Reported in Dailyft

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...by i3gconsultants@ 14:08:14 on 2012-08-25

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Sector: Bank Finance and Insurance

Tilak’s resignation accepted, Nalaka to be new SEC Chief


The resignation of Tilak Karunaratne as the Chairman of the Securities and Exchange Commission (SEC) has been accepted whilst a successor will be named next week, Finance Ministry Secretary Dr. P.B. Jayasundera said.




The confirmation by the Treasury Secretary ends week-long uncertainty whether the SEC Chief’s quit notice would be accepted or not, even though Karunaratne himself said he was firm about his decision to resign.
Daily FT learns top professional Dr. Nalaka Godahewa is tipped to be appointed as the new SEC Chief. However official sources declined to comment.
Apart from Karunaratne, appointed member Sanjay S. Kulatunga has resigned as per the SEC’s website. Other members of the commission are Registrar of Companies D.K. Hettiarachchi (Ex-Officio), Lolitha Abeysinghe (appointed member from private sector), Mohamed Zuraish Hifaz Hashim (appointed member from private sector), B.D.W.A. Silva (appointed member from Central Bank), Chartered Accounts Sri Lanka President Sujeewa Rajapaksha (Ex-Officio), Dr. Prathiba Mahanamahewa (appointed member from private sector) and Deputy Secretary to the Treasury Sajith R. Attygalle (Ex-Officio).
Meanwhile, profit taking and foreign selling impacted the market yesterday. The benchmark ASI closed lower by 0.5% whilst turnover was only Rs. 265.7 million.


The market saw the first foreign outflow in 25 days with offshore investors selling a net Rs. 63.66 million. Foreigners have been net buyers of Rs. 28.3 billion so far this year.
“Market took a breather after a strong run with reduced activity across the board, dragging the indices to negative territory,” NDB Stockbrokers said.
Softlogic Stockbrokers said the heavy index, John Keells Holdings, which defined most of the foreign interest over the past few market days, saw its share price slip 2.01% to Rs. 195.20.
“The premier conglomerate having a dominant position in the CSE’s market capitalisation explained the dip in the indices as the ASPI dipped 25 points but retrieving above the 5,000 mark at 5,012.84 points,” the broker said. The S&P SL20 shed 18.96 points and the MPI dipped by 56 points.
Softlogic said Central Finance, one of the most recently watched counters, witnessed profit taking after climbing 7.7% WoW on Thursday. The counter shed 1.6% at its close of Rs. 136.90 adding onto the MPI decline.
Active participation was visible in Distilleries Company, trading at a trailing PER of 5.7X and at book value, making the counter gain 1.1% for the day at its end of Rs. 119.60. Interest in Commercial Bank was led by two on-board deals counting 175,000 shares at Rs. 103.20.
CIC Holdings went onto touch its 52-week low of Rs. 67.80 during trading, provoking many investors to ponder buying in. Colombo Dockyard saw some renewed play whilst Hatton National Bank (Voting and Non-Voting) and Sampath Bank highlighted the banking counter play. Finance companies; Vallibel One and Singer Finance saw some active play with Ceylinco Insurance racing up by a notable 5.4% for the day at Rs. 7.90.
Retail seeking counters Free Lanka Capital Holdings closed flat at Rs. 2.20 while Regnis Lanka slipped 0.9%. Hydro Power Free Lanka went on to book a gain of 6.45% at its close of Rs. 6.60.
The rupee ended slightly firmer at 132.25/30 against the dollar from 132.28/35 the previous day in dull trade, as banks sold dollars.


Reported in Dailyft

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...by i3gconsultants@ 14:08:30 on 2012-08-25

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Sector: Beverage Food and Tobacco

DC industry worried about losing foreign markets


Sri Lanka’s Desiccated Coconut (DC) industry which enjoys a niche position in the international market was now gradually losing it to other coconut producing countries like the Philippines and Indonesia, a coconut industry specialist said.
"One time Sri Lankan DC enjoyed a niche position as against produce of most of the other leading coconut producing countries in the world.  Now local exports have fallen and the Coconut Development Authority (CDA) has yet to find a solution for that," President Coconut Growers Association Lalith Godamunne told The Island.  
He said our main competitors for DC were the Philippines and Indonesia and their prices were higher than our prices. Since the whole coconut industry revolved around the DC industry, the coconut growers will find it difficult to maintain their lands in the future, he said.  
Godamunne said that "it is the need of the hour to have or work out a formula link to international prices for coconut producers like the tea industry, which will help the sustenance of the sector because the current price variation throughout a year will have a negative impact on the coconut industry".
Further, Vietnam, which is exporting DC at cheaper prices than Lankan exporters made it difficult for them to compete in international markets because our cost of production or the farm gate prices were increasing every year, he said.
Chairman CDA Sugath Hadunge however said that there was no reason for losing our niche markets as this was a global trend. Philippines and Indonesia exported to the European markets while Sri Lanka concentrated on West Asian markets, he said. "We have hit a snag as our main DC buyers are in West Asia. Since Iran had been imposed sanctions by the USA, we have an issue in that market. But the Philippines and Indonesia concentrate on European countries for their DC exports, they too will likely have problems due to the recession in Eurozone ," he added.  
Duty on edible oil imports was raised to protect coconut oil millers, who were otherwise unable to compete with cheap edible oil imports.  Higher demand from coconut oil pushes up the farm gate price of raw coconuts, ensuring better returns to cultivators. But it also pushes up the price of raw nuts bought by DC millers, industry sources said. 
Further, in 2012 the CDA is anticipating a coconut yield of 2.9 billion or more, due to the government’s fertiliser subsidy that estimated figure would likely move up further, he said.

Reported in The Island
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...by i3gconsultants@ 11:08:22 on 2012-08-02

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Sector: Bank Finance and Insurance

Sri Lanka’s Orient Wealth hopes to raise Rs. 1 bn through investment products


Sri Lanka’s newest mutual fund operator, Orient Wealth Limited plans to raise about a billion rupees by attracting customers to invest in pension, children’s education and general investment products, officials said.
Orient Wealth, will operate three funds: Orient gilt-edge; Orient Corporate debt and Orient equity fund tapping into people’s appetite for diverse investment schemes.The funds will come into operation from August 6, with Deutsche Bank AG Colombo acting as trustee and custodian.
Orient Wealth’s chief executive S Jeyavarman said they would use commercial lender Seylan Bank’s and their parent company the Janashakthi Group’s extensive branch network to market their products islandwide.
“Our products are aimed at long-term investments and also to remind people of the need to save for the future,” said Jeyavarman, a mutual fund industry veteran. The Orient Retirement Savings plan offers three options. Investors can choose to split their monies in 40 percent equity, and 30 percent each in debt and gilts. The next option could be invest in 20 percent equity and 40 percent each in debt and gilts. The third option is to invest 50 percent each in debt and gilts. 
The child education and the general investment plans gives customers a choice of going up to 100 percent in either equity, debt or gilt-edge funds. 
Sri Lanka’s stock market is down by almost 19 percent since January, largely due to lack of credit while interest rates also remain high.
But Jeyavarman thinks equity investments, though risky, can also give a bit of edge on investment plans. 
“We believe in buying when share prices go down, like in the current context and sell when it goes up. There are always stocks that give long-term value.” 
Orient Wealth is the 13th to join the local unit trust industry which manages around 21 billion rupees worth of funds. 
Orient Wealth is a fully-owned subsidiary of Orient Capital Limited, which comes under the Janashakthi group of companies. The Janashakthi group has investments ranging from insurance to money broking.

Reported in LBO

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...by i3gconsultants@ 11:08:48 on 2012-08-02

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Sector: Bank Finance and Insurance

Two money market accounts launched by NDB AVIVA Wealth Management


NDB Aviva Wealth Management has introduced two Money Market Funds, so savers can get the best out of the current high interest rates in the market.
The funds, which are branded ‘Eagle Money’ and ‘Eagle Money Plus’ are another addition to the series of mutual funds offered under the ‘Myeaglefunds’ umbrella of funds.
‘Eagle Money’ is a money market account which invests client deposits exclusively in short term Government of Sri Lanka treasuries.
“It is ideal for clients who want a very high level of safety for their capital, good returns and the ability to withdraw their money anytime,” NDB Aviva Wealth Management CEO Prabodha Samarasekera said discussing the advantages of the fund.
‘Eagle Money Plus’ is a money market account which will invest client deposits in short term Government of Sri Lanka treasuries and corporate debt such as commercial paper, bank fixed deposits, and structured paper.
“This is a great opportunity for clients to benefit from the high rates currently offered by corporate debt and bank deposits while having the flexibility to withdraw anytime,” Assistant Vice President Ruwan Perera said.
In Sri Lanka, investors in corporate debt and fixed deposits have to hold on to their investments until they mature to get their funds back. However, the money market funds offer a great solution to this problem by allowing client funds available to them when they need funds while paying high rates.
Further, the clients who make deposits in to the ‘Eagle Money Plus’ account achieves immediate diversification of the institutions where his or her money is invested in, thus adding to the safety.
“Usually most individuals will use a single bank or a finance company for their deposits as it is very tedious to open, maintain and track multiple accounts. But clients are taking an enormous risk when they limit themselves to a single institution when maintaining their deposits,” added Perera, explaining the automatic diversification the ‘Eagle Money Plus’ account achieves for clients.
He further stated that “like the ‘Eagle Money’ account, the ‘Eagle Money Plus’ account is well suited for clients who like safety of capital and great returns to go with it”.
Both ‘Eagle Money’ and ‘Eagle Money Plus’ accounts offer clients tax free income. “This makes it ideal for companies which have short term cash surpluses but have to pay high rates of tax,” said Assistant Vice President Vindhya Jayasekera, who manages the ‘Eagle Money’ and ‘Eagle Money Plus’ funds.
Money market accounts are like high interest paying savings accounts and are very common in countries such as the USA. Money market accounts in the USA have become so popular it has replaced bank savings accounts and has withstood the stresses of the financial markets collapse of 2008.
NDB AVIVA Wealth Management Limited is the largest private sector wealth management company in Sri Lanka with over 20 years of industry experience. The company manages around Rs. 50 billion of funds for institutional and individual investors. Its service offering includes discretionary portfolio management, private wealth management and mutual funds – which are branded as ‘MYeaglefunds’ – and is the asset management arm of the NDB Capital Holdings, the leader in investment banking and capital markets in Sri Lanka.

Reported in Dailyft
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...by i3gconsultants@ 11:08:55 on 2012-08-02

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Sector: Bank Finance and Insurance

Two money market accounts launched by NDB AVIVA Wealth Management


NDB Aviva Wealth Management has introduced two Money Market Funds, so savers can get the best out of the current high interest rates in the market.
The funds, which are branded ‘Eagle Money’ and ‘Eagle Money Plus’ are another addition to the series of mutual funds offered under the ‘Myeaglefunds’ umbrella of funds.
‘Eagle Money’ is a money market account which invests client deposits exclusively in short term Government of Sri Lanka treasuries.
“It is ideal for clients who want a very high level of safety for their capital, good returns and the ability to withdraw their money anytime,” NDB Aviva Wealth Management CEO Prabodha Samarasekera said discussing the advantages of the fund.
‘Eagle Money Plus’ is a money market account which will invest client deposits in short term Government of Sri Lanka treasuries and corporate debt such as commercial paper, bank fixed deposits, and structured paper.
“This is a great opportunity for clients to benefit from the high rates currently offered by corporate debt and bank deposits while having the flexibility to withdraw anytime,” Assistant Vice President Ruwan Perera said.
In Sri Lanka, investors in corporate debt and fixed deposits have to hold on to their investments until they mature to get their funds back. However, the money market funds offer a great solution to this problem by allowing client funds available to them when they need funds while paying high rates.
Further, the clients who make deposits in to the ‘Eagle Money Plus’ account achieves immediate diversification of the institutions where his or her money is invested in, thus adding to the safety.
“Usually most individuals will use a single bank or a finance company for their deposits as it is very tedious to open, maintain and track multiple accounts. But clients are taking an enormous risk when they limit themselves to a single institution when maintaining their deposits,” added Perera, explaining the automatic diversification the ‘Eagle Money Plus’ account achieves for clients.
He further stated that “like the ‘Eagle Money’ account, the ‘Eagle Money Plus’ account is well suited for clients who like safety of capital and great returns to go with it”.
Both ‘Eagle Money’ and ‘Eagle Money Plus’ accounts offer clients tax free income. “This makes it ideal for companies which have short term cash surpluses but have to pay high rates of tax,” said Assistant Vice President Vindhya Jayasekera, who manages the ‘Eagle Money’ and ‘Eagle Money Plus’ funds.
Money market accounts are like high interest paying savings accounts and are very common in countries such as the USA. Money market accounts in the USA have become so popular it has replaced bank savings accounts and has withstood the stresses of the financial markets collapse of 2008.
NDB AVIVA Wealth Management Limited is the largest private sector wealth management company in Sri Lanka with over 20 years of industry experience. The company manages around Rs. 50 billion of funds for institutional and individual investors. Its service offering includes discretionary portfolio management, private wealth management and mutual funds – which are branded as ‘MYeaglefunds’ – and is the asset management arm of the NDB Capital Holdings, the leader in investment banking and capital markets in Sri Lanka.

Reported in Dailyft
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...by i3gconsultants@ 11:08:55 on 2012-08-02

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Sector: Power and Energy

Sri Lanka state oil firm lose London derivative appeal: report


Sri Lanka's state-run Ceylon Petroleum Corporation has lost an appeal against a London ruling that forced it to pay up on a complex oil derivative it bought in 2008, a media report said."It has been reported that the order is against us," Sri Lanka's Attorney General Palitha Fernando was quoted as saying by Reuters. "First of all we have to see what the order was, then we are looking at (the) possibilities of appealing in the House of Lords." 
Court had ordered CPC to pay 162 million US dollars plus interest on an options based derivative on which the firm refused to pay. The so-called 'leveraged swap' deals were 'zero cost' in that the oil firm did not have to pay an upfront premium to purchase. 
The contract, which used premiums from multiple option sales to purchase an option giving upside protection, exposed the firm to severe losses if prices fell compared to small gains if prices rose. CPC bought oil hedges because the state manipulated energy prices. Energy price manipulation drove the country into a balance of payments crisis in 2011.
CPC won an arbitration case in Singapore against Citibank for a similar deal.

Reported in LBO
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...by i3gconsultants@ 11:08:41 on 2012-08-02

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Sector: Hotels and Travels

Sri Lanka starts construction of stalled high rise for Hyatt hotel


Sri Lanka has re-started the construction of a stalled 43-story high rise in the capital Colombo with a new company taking over assets, which will house a Hyatt branded hotel, a statement said.
Sri Lanka's economic development ministry said a vehicle called Sinolanka Hotels & Spa (Pvt) Ltd, where state-run Sri Lanka Insurance Corporation and unspecified private investors will have stakes, will complete the building.
The building was initiated by Sri Lanka's Ceylinco group which ran into difficulties from late 2008. The building was among several expropriated by the state through a controversial law last year.
The economic development ministry said Sri Lanka's Urban Development Authority has given a 99-year lease of the land to the firm and it will also get tax breaks under a strategic investment law. The building will have a 565 room 5-star hotel spread through 94,000 square metres. 
"The hotel complex is expected to be managed by Hyatt International under the Hyatt Regency brand and the terms of engagement are being currently concluded," the statement said. Guests arriving at the hotel will be taken to a lobby on level 13 through high speed lifts. A 2-storey high 750 square meter 'pillar-less' ballroom will be built on level 04. It could house 600 people seated, or 1,000 standing. The hotel will have 54 suites, 265 'King' rooms, 150 twin rooms, and 6 rooms for the disabled. Levels 31-41 will have 90 residential suites for long stay guests also managed by Hyatt International.
Construction was started on July 19 with at a ceremony attended by economic development minister Basil Rajapaksa, urban development ministry secretary Gotabhaya Rajapaksa and secretary finance P B Jayasundera, the statement said.

Reported in LBO
......

...by i3gconsultants@ 11:08:12 on 2012-08-02

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Sector: Land and Property

Sri Lanka to begin second stage of housing for shanty dwellers


Sri Lanka is set to begin work on the second stage of a housing project to relocate Colombo's shanty dwellers in a bid to improve living standards and transform the congested Slave Island area to a modern residential and commercial zone, officials said.
The project named 'Slave Island Station Passage Redevelopment Programme' spans across three acres of land and is set to kick start this September, the Urban Development Authority said.The project covers sub standard settlements along Justice Akbar Mawatha, Beira lake, Don Carolis compound and the Slave Island railway station. 
The UDA said dwellers in the Slave Island area will get better housing in the same area of residence without them being moved to a new location hampering their livelihoods and schooling for children.
The total project is estimated to cost six billion rupees, the UDA said.
Imperial builders (Pvt) Ltd, a Pakistani based construction company will initially invest twenty five million US dollars to kick start the project and in return will look at doing some mixed development on the remaining land.
"We plan to bring twenty five million dollars to this country from Pakistan. This is the first phase and if we are short of funds we will bring more," Naveed Hussain Lakhani, chairman of Imperial Builders said.
"Relocation will cost us approximately fourteen million dollars," he said.
Authorities have allocated 1.5 acres of land belonging to the UDA and Sri Lanka Railways formerly known as Ceylon Government Railway for the relocation project.Four towers comprising of hundred and seventy apartments including shops will come up at the location with two independent blocks for railway staff and residents with commercial establishments.
Housing units starting from a minimum five hundred to two thousand three hundred and sixty square feet will be built under the project.
The value of a housing unit of around 1800 square feet will be around six million rupees and ownership of properties will be under the condominium law, Imperial Builders said.The company said negotiations are underway with the UDA to lease the remaining 1.5 acres for commercial development which will also include a shopping and leisure area for tourists."For the private land we are planning to build a shopping mall, indoor games and budget apartments for people who find it difficult to buy an apartment in Colombo," Lakhani said. Land in the Slave Island area is valued at around four to five million a perch.The UDA said land for commercial development will be offered to the investor at market price on a fifty year lease term. "Still negotiations are going on and we haven't valued the land for private development yet," Prasad Ranaweera, Deputy Director of the UDA said.
The first stage of the housing project involving India's TATA group is going ahead, the UDA said.

Reported in LBO
......

...by i3gconsultants@ 11:08:10 on 2012-08-02

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Sector: Land and Property

Sri Lanka to begin second stage of housing for shanty dwellers


Sri Lanka is set to begin work on the second stage of a housing project to relocate Colombo's shanty dwellers in a bid to improve living standards and transform the congested Slave Island area to a modern residential and commercial zone, officials said.
The project named 'Slave Island Station Passage Redevelopment Programme' spans across three acres of land and is set to kick start this September, the Urban Development Authority said.The project covers sub standard settlements along Justice Akbar Mawatha, Beira lake, Don Carolis compound and the Slave Island railway station. 
The UDA said dwellers in the Slave Island area will get better housing in the same area of residence without them being moved to a new location hampering their livelihoods and schooling for children.
The total project is estimated to cost six billion rupees, the UDA said.
Imperial builders (Pvt) Ltd, a Pakistani based construction company will initially invest twenty five million US dollars to kick start the project and in return will look at doing some mixed development on the remaining land.
"We plan to bring twenty five million dollars to this country from Pakistan. This is the first phase and if we are short of funds we will bring more," Naveed Hussain Lakhani, chairman of Imperial Builders said.
"Relocation will cost us approximately fourteen million dollars," he said.
Authorities have allocated 1.5 acres of land belonging to the UDA and Sri Lanka Railways formerly known as Ceylon Government Railway for the relocation project.Four towers comprising of hundred and seventy apartments including shops will come up at the location with two independent blocks for railway staff and residents with commercial establishments.
Housing units starting from a minimum five hundred to two thousand three hundred and sixty square feet will be built under the project.
The value of a housing unit of around 1800 square feet will be around six million rupees and ownership of properties will be under the condominium law, Imperial Builders said.The company said negotiations are underway with the UDA to lease the remaining 1.5 acres for commercial development which will also include a shopping and leisure area for tourists."For the private land we are planning to build a shopping mall, indoor games and budget apartments for people who find it difficult to buy an apartment in Colombo," Lakhani said. Land in the Slave Island area is valued at around four to five million a perch.The UDA said land for commercial development will be offered to the investor at market price on a fifty year lease term. "Still negotiations are going on and we haven't valued the land for private development yet," Prasad Ranaweera, Deputy Director of the UDA said.
The first stage of the housing project involving India's TATA group is going ahead, the UDA said.

Reported in LBO
......

...by i3gconsultants@ 11:08:10 on 2012-08-02

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Sector: Bank Finance and Insurance

Sri Lanka regional bank 'BBB+(lka) rating confirmed


Fitch Ratings has confirmed a 'BBB+(lka)' rating of Sri Lanka's state-run Regional Rural Development Banks with a stable outlook."RDB's rating derives support from its 100 percent state ownership," the rating agency said.
"The Stable Outlook reflects Fitch's expectations of continued moderate state support in the event of stress. "The rating is, however, constrained by the bank's relatively small asset base by local standards and, therefore, relatively less systematic importance compared with other large state-owned banks." 
The full statement is reproduced below:

Fitch Affirms Regional Development Bank at 'BBB+(lka)'/Stable 
Fitch Ratings-Colombo/Mumbai/Singapore-23 July 2012: Fitch Ratings Lanka has affirmed Regional Development Bank's (RDB) National Long-Term rating at 'BBB+(lka)'. The Outlook is Stable. 
RDB's rating derives support from its 100% state ownership. The Stable Outlook reflects Fitch's expectations of continued moderate state support in the event of stress. The rating is, however, constrained by the bank's relatively small asset base by local standards and, therefore, relatively less systematic importance compared with other large state-owned banks.
The rating could be upgraded if the systemic importance of RDB were to increase, such as through a higher market share of rural lending or an enlarged franchise. Conversely, the rating would be downgraded if the state's ability or willingness to support to the bank were to weaken, or if a significant deterioration in liquidity or solvency were to occur. 
RDB's exposure remains predominantly to farmers and SMEs in rural areas. Credit concentrations remain low, reflecting the granular nature of RDB's micro finance loans (MFI loans). Sector concentration is mainly to agriculture/MFI loans (42% of loans at end-2010; 39% at end-2009) and pawning loans (43%; 37%). Many of the agricultural loans are backed by central bank poverty alleviation refinance schemes. The balance loan book comprises small loans for duration of three to four years, mainly towards house renovation mostly to government servants. 
Historically, delinquency trends have followed the Maha and Yala agricultural seasons, and worsened when floods/droughts affected agricultural zones. Non-performing loans (NPLs)/gross loans improved to 1.8% at end-March 2012 (end-Q112) from 2.2% at end-2011 (2.9% at end-2010) due to recoveries resulting from close monitoring of the loan book via its field officers RDB's loan loss coverage on NPLs was better than the sector average at 66% at FY11 (FY10: 68%) 
Although net interest margins (NIMs) declined to 7.4% in FY11 from 9.4% in FY10 due to lower interest yields, improvements in RDB's cost structure and lower effective tax rates in 2011 (FY11: 46%, FY10: 77%) enabled RDB to post improved return on assets (ROAs: 1.9% in FY11, FY10: 1.0%). Fitch expects NIMs to decline further in FY12 as interest yields continued to reduce and cost of funds increased in 1Q12. 
Fitch expects that RDB's ROA could fall below 1.9% in 2012 as the full effect of the collective agreement on staff pay and cost escalation for system integration and branch expansion is factored in the latter half of 2012. Reduced profits, combined with annual dividend obligations to the government, will likely weigh on internal capital generation. 
RDB's wide network in the rural sector and its state franchise have ensured highly granular strong deposit growth. Also, around 7% of RDB deposits were captive deposits connected to its MFI loan book in FY11. RDB's liquidity ratios were above the statutory liquidity requirements in 2011. 
RDB was formed in May 2010 after the merger of six regional development banks. RDB plans to fully implement a core banking system by end-2013. This will enable the bank to gain the benefits of the amalgamation as products; and shared administrative services will be fully rationalised. Greater centralisation of accounts and internal reporting systems should also enhance management oversight.

Reported in LBO
......

...by i3gconsultants@ 19:07:13 on 2012-07-28

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Sector: Power and Energy

Sri Lanka to end power rationing, coal plant fixed


Sri Lanka has repaired an breakdown-prone Chinese built 300 MegaWatt coal plant allowing the state-run Ceylon Electricity Board end to power cuts, the power ministry said.
The CEB has provided continuous power with no official power cut for more than 10 years until the Chinese plant went down.
The power ministry said a 100MW steam section of a 270 MW combined cycle would also be connected to the grid over the weekend.
CEB said the high pressure steam tube in the coal plant which had ruptured had now been repaired and the coal plant had been fired. The plant had been prone to breakdowns.

Reported in LBO
......

...by i3gconsultants@ 19:07:18 on 2012-07-28

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Sector: Footwear and Textiles

Sri Lanka apparel exports fall cause concern: legislator


 A contraction in Sri Lanka's apparel exports, especially to the European Union could have been compounded by tariff preferences to Europe withdrawn due to bad governance, an opposition legislator has said.
Sri Lanka's apparel exports fell 13.5 percent to 278.2 million US dollars in May with exports up to May down 4.9 percent to 1,601.2 million US dollars.
Harsha de Silva, an economist who is a legislator representing Sri Lanka's main opposition said the withdrawal of Generalized System of Preferences plus (GSP+) by the EU is now being felt amid economic troubles in the region.
Civil Rights
GSP+ is given to countries that give greater rights and freedoms to citizens in line with the International Covenant on Civil and Political Rights.
De Silva said monthly exports which were 367 million dollars in January had dropped to 278 million by May.
"The surge in demand early last year that led to an overbooked situation with formerly Chinese orders coming our way that overshadowed the GSP+ withdrawal have now completely disappeared," de Silva said in a statement.
"Industry sources reveal that this is much more than the slowdown in EU.
"The feeling is that the real impact of Sri Lanka losing GSP+ is now becoming clear with apparel orders moving out to countries that are able to compete using the duty concessions given for good governance in the face of falling European demand."Perhaps rethinking the position on GSP+ may also be wise."
Data Concerns
De Silva said there were problems with Sri Lanka's economic data. In 2011 the Central Bank has said that exports had topped one billion US dollars during march 2011 with apparel exports rising to 473 million US dollars.
But the data has later been revised to 362 million US dollars but no explanation has been given for the revision, without explanation, he said.
"As has been pointed out on numerous occasions in the past the authorities have a moral obligation to explain such large adjustments," de Silva said.
He said exports had fallen despite a steep fall in the currency triggered by a delayed adjustment in interest and exchange rate policies.Rising energy costs were also hurting exporters, he said.But in Sri Lanka large firms categorized as' industry' including exporters get subsidized energy at the expense of the general population of the country especially the poor, in a Mercantilist state intervention.
Wage Demands
De Silva said there would likely be wage demands due to increased inflation.
Any currency essentially depreciates due to loose monetary policy and particularly in the case of pegged exchange rates due to sterilized foreign exchange sales where money and exchange rate policy contradict each other.
Currency depreciation only reduces the real cost of labour, by impoverishing workers and not any other cost, if the underlying material is a traded good.
The Central Bank has said that a part of the fall in dollar values of exports had been caused by lower raw material prices such as cotton.
In modern supply chains concepts such as 'Made in Country' are meaningless, economists in the classical tradition have pointed out, because inputs come from various countries.
Mercantilism
In the US for example a Mercantilist controversy has erupted over the label 'Made in China' in uniform on the country's Olympic team.
US Senator Chuck Schumer for example has gone on an economic nationalist tirade against the efforts of free citizens in many countries - including his own - from collaborating peacefully to produce high quality uniforms at the best price.The fallacy of his argument was explained in a Wall Street Journal opinion. (The Imports of Patriots).
Donald J. Boudreaux professor of economics at George Mason University wrote in support of the WSJ position.
"As you suggest, the 2012 U.S. Olympic uniforms are labeled “Made in China” simply because workers in China supplied the relatively low-valued-added service of stitching together inputs from all over the globe – including from America – into their final form as Olympic sportswear," he said.
"The unfortunate convention of identifying the country of final assembly as the country in which a good is “Made in” masks the fact that nearly all goods today are “Made Everywhere on Earth.

Reported in LBO
......

...by i3gconsultants@ 19:07:07 on 2012-07-28

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Sector: Services

Port volumes sink


With the global economy sailing in troubled waters and India’s economy under stress, ship traffic to Sri Lanka declined 4.2 percent during the first four months of this year while transshipment volumes slumped 8.6 percent, latest data released by the Central Bank showed.
The number of container carriers calling on Sri Lanka declined 4.2 percent to 1,373 from 1,433 a year earlier. In April 2012, 326 vessels called on the country, down 13.8 percent from 378 in April 2011.
Total cargo handling fell 4.2 percent to 1,357,551 containers during the period January to April 2012 from 1,416,578 a year earlier.
The number of domestic containers (TEU – twenty foot equivalent units) handled during the first four months of this year grew 9.9 percent to 358,194 from 325,952 a year earlier while transshipment slumped 8.6 percent to 970,923 TEUs, from 1,061,992 TEUs a year ago.
Transshipment accounted for 71.5 percent of total cargo handled by Sri Lanka.The country depends heavily on global trade generated by India.
The giant South Asian economy is expected to see its slowest growth rate in ten years at 6.3 percent this fiscal year and 7 percent the next.
The Sri Lankan government is confident of raising US$ 5 billion from private investors by 2016 to develop the country’s ports with ambitions of being a major maritime hub for the region.
The Treasury’s annual report for 2011 said: "Towards accelerating port related infrastructure development, Sri Lanka Ports Authority (SLPA) embarked on the construction of a new port in Hambanthota at a cost of US$ 437million. The SLPA also undertook the expansion of the Colombo Port through the Colombo South Port Terminal8 with a private investment of US$ 500 million which will have a container handling capacity of 2.4 million TEU.
"The Galle port has been targeted as a tourist port. Continuing its support, the government in 2011 on lent Rs. 13 billion to SLPA for the development of sea ports. Boosted by the growth in both domestic and international trade, the SLPA enjoyed a significant growth in its operations with a 6.1 percent increase in container traffic volume and a 10.6 percent growth in vessel arrivals over 2010. Complementing these operational improvements, the revenue increased by 10.5 percent to Rs. 31,250 million in 2011 from Rs. 28,279 million in 2010. "As has been in the past, in 2011 Colombo port accounted for 97.6 percent of the total revenue, while both the Galle and Trincomalee ports accounted for the balance 2.4 percent. SLPA remained profitable in 2011 recording an operating profit of Rs. 8,292 million, an increase of 89 percent over Rs. 4,387 million in 2010. Although SLPA continued to incur exchange losses amounting to Rs. 3,543 million in 2011, a decline in the overall expenditure by 3 percent along with an increase in the total revenue by 10 percent, enabled SLPA to earn a net profit of Rs. 583 million. A significant turnaround in its performance against the net loss of Rs. 1,065 million in 2010.
"In a bid to restructure its operations the SLPA implemented a Voluntary Retirement Scheme at a cost of Rs. 2,595 million, for 1,842 employees. This enabled SLPA to reduce its total employees to 10,982 in 2011 from 12,824 in 2010. Further, the cost per tonnage has declined to Rs.714 in 2011 from Rs. 815 in 2010. However, since the TEU’s increased only by 6.1 percent in 2011, the improvement in the TEU’s per employee increased to 209 in 2011 from 169 in 2010. This was mainly due to the reduction of excess employees rather than to any significant improvements in productivity. At the same time the improvement in the average turnaround time of container ship to 22.78 hours/ship in 2011 from 23.90 hours/ship in 2010 is encouraging.
"However, these developments indicate a need for a considerable productivity drive as well as a business model to facilitate an increase in container traffic volume. The COPE report on SLPA highlighted inefficient use of Training Institutes and underutilization of assets and resources such as idling equipments. In this background SLPA will have to adopt stringent procedures to ensure optimal utilization of assets and proper governance. Such measures will facilitate the improvement in its productivity which in turn will allow it to successfully compete with the other upcoming ports in the region," the Treasury said.

Reported in The Island
......

...by i3gconsultants@ 18:07:57 on 2012-07-25

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Sector: Plantations

Tea production declines, strictly monitored imports continue


Tea production fell during the first six months of this year while certain grades not grown here are being imported from India and Indonesia, officials said.
The Sri Lanka Tea Board (SLTB) yesterday said tea production during the first six months of this year fell to 163.2 million kilos, down 7.4 million kilos from 170.6 million kilos a year earlier. The tea crop fell 3.9 million kilos from a year earlier to 25.8 million kilos in June alone.
High growns continued their sluggish progress indicating they were the biggest deficit producer. Crop loss at that elevation was about 6.9 million kilos. Low growns too were deficit producers but at that elevation crop loss was comparatively low at 1.5 million kilos, with total production being 96.8 million kilos. Mid growns too fared better than high growns. The crop deficit recorded at 500,000 kilos; was a tolerable deficit which could be recouped, SLTB data showed.
The Tea Board said irrespective of the import controversy, foreign teas have been imported, but such imports were strictly controlled. Exclusively, certain Teas not available here were identified and imported. Approximately 15 million kilos were imported last year. This year to end- June, imports were about 6 million kilos.
Concerning the controversy of importing teas to Sri Lanka SLTB Director Trade Hasitha de Alwis said the controversy existed was based on "unfounded assumptions".
"Teas that have been permitted to be imported were The Assams and Darjeelings, from India. Ceylons cannot quite give them matching alternatives. Additionally, Indonesian Oolongs also have been imported. These are all specific Tea categories not available here," he said.
"Under no circumstance have we imported cheap sub standard tea from any quarter. All imports are strictly checked. A panel of 15 experienced tasters from the private tea trade check such imports, and if any rules are contravened the importer will be in serious trouble," de Alwis warned. CTC, Green Tea, and Orthodox teas were produced this year. Orthodox quantity, was 150.7 million, CTC, 10. 9 million, and green tea production was 1.5 million kilos. All these categories too saw production decline.

Reported in The Island
......

...by i3gconsultants@ 18:07:57 on 2012-07-25

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Sector: Bank Finance and Insurance

Rural lender gets ‘BBB+’ rated, outlook stable


Fitch Ratings Lanka has affirmed Regional Development Bank’s (RDB) National Long-Term rating at ‘BBB+(lka)’, with a stable outlook.
"RDB’s rating derives support from its 100% state ownership. The Stable Outlook reflects Fitch’s expectations of continued moderate state support in the event of stress. The rating is, however, constrained by the bank’s relatively small asset base by local standards and, therefore, relatively less systematic importance compared with other large state-owned banks," the ratings agency said in a statement.
"The rating could be upgraded if the systemic importance of RDB were to increase, such as through a higher market share of rural lending or an enlarged franchise. Conversely, the rating would be downgraded if the state’s ability or willingness to support to the bank were to weaken, or if a significant deterioration in liquidity or solvency were to occur.
"RDB’s exposure remains predominantly to farmers and SMEs in rural areas. Credit concentrations remain low, reflecting the granular nature of RDB’s micro finance loans (MFI loans). Sector concentration is mainly to agriculture/MFI loans (42% of loans at end-2010; 39% at end-2009) and pawning loans (43%; 37%). Many of the agricultural loans are backed by central bank poverty alleviation refinance schemes. The balance loan book comprises small loans for duration of three to four years, mainly towards house renovation mostly to government servants.
"Historically, delinquency trends have followed the Maha and Yala agricultural seasons, and worsened when floods/droughts affected agricultural zones. Non-performing loans (NPLs)/gross loans improved to 1.8% at end-March 2012 (end-Q112) from 2.2% at end-2011 (2.9% at end-2010) due to recoveries resulting from close monitoring of the loan book via its field officers RDB’s loan loss coverage on NPLs was better than the sector average at 66% at FY11 (FY10: 68%)
"Although net interest margins (NIMs) declined to 7.4% in FY11 from 9.4% in FY10 due to lower interest yields, improvements in RDB’s cost structure and lower effective tax rates in 2011 (FY11: 46%, FY10: 77%) enabled RDB to post improved return on assets (ROAs: 1.9% in FY11, FY10: 1.0%). Fitch expects NIMs to decline further in FY12 as interest yields continued to reduce and cost of funds increased in 1Q12.
"Fitch expects that RDB’s ROA could fall below 1.9% in 2012 as the full effect of the collective agreement on staff pay and cost escalation for system integration and branch expansion is factored in the latter half of 2012. Reduced profits, combined with annual dividend obligations to the government, will likely weigh on internal capital generation.
"RDB’s wide network in the rural sector and its state franchise have ensured highly granular strong deposit growth. Also, around 7% of RDB deposits were captive deposits connected to its MFI loan book in FY11. RDB’s liquidity ratios were above the statutory liquidity requirements in 2011.
"RDB was formed in May 2010 after the merger of six regional development banks. RDB plans to fully implement a core banking system by end-2013. This will enable the bank to gain the benefits of the amalgamation as products; and shared administrative services will be fully rationalised. Greater centralisation of accounts and internal reporting systems should also enhance management oversight," Fitch said.

Reported in The Island
......

...by i3gconsultants@ 18:07:42 on 2012-07-25

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Sector: Power and Energy

Sri Lanka imposes daily power cut after Chinese plant fails again


* Imposes 3-hour daily power cut until July 28
* Drought reduces hydro power generation by 85 pct
* Sri Lanka loses 22 pct of peak power capacity
COLOMBO, July 24 (Reuters) - Sri Lanka will turn off electricity across the country for three hours daily until July 28, the state-run power firm said on Tuesday, after technical problems have knocked out almost a quarter of its generating capacity.
The nationwide power cut, which starts on Tuesday, was implemented after Sri Lanka's 300 megawatt (MW) Chinese-built coal power plant at Norocholai failed last week for a fifth time since it was commissioned in March last year.
Sri Lanka has lost another 100 MW from a combined diesel power plant, and an extended drought has decimated hydro power's contribution to the national grid. In all, Sri Lanka has lost 22 percent of its capacity to meet peak demand of 1.81 gigawatts (GW) as a result of the power station failures, state-run Ceylon Electricity Board's (CEB) website www.ceb.lk/ showed. 
"The only alternative to resolve the current situation is to go for power cuts," CEB said in a statement. Sri Lanka has total electricity generating capacity of 3.1 GW, but hydro power's normal output of 1.2 GW has been cut by more than 1 GW as a result of the drought which began in March officials at the Power and Energy Ministry told Reuters. In January, CEB's Technological Engineers Union blamed a Chinese firm for repeated technical failures at Norocholai, the country's only coal-fired power plant, say they were either caused by sabotage or negligence by the operator. Most international businesses have their own backup generators to use during the outages, and it was not immediately clear how disruptive the July power cuts would be. 
Sri Lanka has long maintained uninterrupted power supply, one of its main pledges to voters and investors, except in 1996 and 2001/2 when it endured power cuts due to severe droughts. The 1996 cuts were partially responsible for economic growth slowed to a seven-year low of 3.8 percent in that year, from 5.5 percent a year earlier.

Reported in Reuters
......

...by i3gconsultants@ 20:07:58 on 2012-07-24

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Sector: Plantations

Supermarket chains can play bigger role in coconut market: Lalit Godamunne


Supermarket chains can play a bigger role in the fresh coconut market, reduce costs in the value chain and help contain retail prices in the urban areas, noted a top coconut producer in a wide-ranging speech last week.These comments were made by Lalit Godamunne, new President of the Coconut Growers Association at its AGM held in Colombo on July 14. Addressing growers, members and guests that included Minister of Economic Development Basil Rajapaksa and Minister of Coconut Development and Janatha Estates Development Jagath Pushpakumara, he spoke on a range of issues including prices, export markets, coconut oil lobby and the health benefits of coconut, among other matters.
The industry provides direct and indirect livelihood to some 835,000 people and is essentially a poor man`s much needed protein supplement and, in many ways, his second staple diet.Complimenting the Government for the very attractive fertilizer subsidy scheme, he said he hoped this subsidy would be maintained for at least five years to ensure the full impact of fertilizer applications.
While there is an attractive loan scheme available to all coconut growers owning half to 50 acres and widespread distribution of coconut seedlings, the wildly-fluctuating farm gate prices is a source of concern that needs to be addressed urgently, he said.
The farm gate price, he noted, has fallen as low as Rs 17 or 18 which to some growers is less than their cost of production. “This wide fluctuation makes it impossible to commit to any serious development programme involving capital expenditures as we cannot in any way predict our cash flows,” he said, adding: “I would recommend that the Government adopts the principle of maintaining a minimum farm gate price for coconuts via tariff adjustments in a timely manner”.
He urged the appointment of a committee of competent or knowledgeable, independent persons representing all stakeholders, to recommend tariff adjustments in a timely manner and to prevent disruption to investments and development of the coconut industry.But, he pointed out, increasing productivity alone doesn’t increase incomes. In fact it runs the risk of reducing incomes if supply exceeds demand.
“This aspect of excess supply has already occurred with the paddy farmers, vegetable growers, banana growers and even milk producers. I am sure many of you have seen on our local TV news casts, farmers out in the streets demonstrating with not so friendly slogans demanding the purchase of their produce at reasonable prices which will give them incomes to repay their cultivation loans and maintain a reasonable standard of living,” he observed. Referring to changing (and more positive) attitudes towards coconut oil, he said marketing efforts must cash in on this to the country’s advantage.
“The medicinal properties are increasingly highlighted on Internet. Many of you would have seen the numerous videos on You-Tube extolling the medicinal virtues of coconut oil,” he noted, referring to recent reports where Dr Mary Newport MD of Spring Hill Regional Hospital Florida USA related her story of how she cured her husband of Alzheimer’s disease by giving him two teaspoons of pure coconut oil daily before breakfast. “The 1st edition of her book on the subject which came out in 2011 and was sold out within the week,” he said.
In other significant developments, the Pacific Ocean Island of Vanavatu has developed coconut oil as a bio fuel for 4-wheel SUVs. “These new developments in the use of coconut oil open out vast opportunities on which to build our marketing efforts,” Mr. Godamunne said.
“In other words production must go in tandem with markets. Production should be geared to market demands. We should not make the mistake of producing and then go looking for markets,” he asserted.
He spoke on the plight of Northern and Eastern coconut growers and also from the South.Many of the Northern and Eastern Growers who have regained possession of their properties are faced with a situation of having to rehabilitate their properties literally from scratch. This calls for considerable capital inputs which they are hard put to raise after the ravages of the war, he said, adding that the loan scheme should be adjusted to enable these people to fully participate in the programme.
Under the loan scheme at 10% interest and repayable over five years, there is provision for interest payments to be reimbursed in the first year if regular repayments are made. “The problem as I understand is that after the ravages of the war they have no basic incomes to repay loans until they start getting crops. This as every agriculturist knows is long drawn out. My suggestion is that this loan scheme takes cognizance of the particular problem and adjusts the scheme as a special project to enable these people to participate,” he observed.
A similar adjustment could be considered for the Southern coconut growers faced with loss of their trees due to a disease.

Reported in Sundaytimes
......

...by i3gconsultants@ 15:07:19 on 2012-07-22

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Sector: Bank Finance and Insurance

Banks eye commercial not consumer loans


A Central Bank (CB) policy decision to limit loans this year has had a direct impact on the people though the economy is expected to, overall, benefit from the move.Banks have prioritized their banking operations following this decision, which some believe has caused them to reduce their lending capacity.
“Our original intention was to go beyond the limit,” Sampath Bank Managing Director Aravinda Perera told the Business Times.
He said previously they were looking at achieving 27-30% (loan growth) however, with the restriction in place they had to bring it down to 23%.This has forced banks to prioritize among customers when lending with most eyeing SMEs, development based projects and import-export businesses while reducing consumer loans.
The CB in February directed commercial banks to “moderate” credit disbursements to not exceed 18% of their respective loan book outstanding at the end of 2011, while credit growth of up to 23% would be allowed for those banks, which finance the excess up to 5% of the credit growth, from funds mobilized from overseas. Mr. Perera said they believed that commercial projects would attract more lending than personal loans.
“We have a limit and we have to select the best lending opportunities both for the bank and the country,” he said.
In this regard, banks were saying no to non essential personal loans while indicating interest to provide loans for commercial projects.
The bank believes they would be going in for more dollar loans than rupee loans in order to increase their lending. However, even in this regard, they were limited, he pointed out adding that interest rates once stabilized would allow the CB to relax this policy at least in certain sectors.
On the other hand, the Commercial Bank had braced itself for a 23% loan growth even prior to the announcement, its CFO Nandika Buddhipala said. With the bank sitting on liquidity towards last year, it was believed that the credit expansion in the last quarter of 2011 would not hold well with the market to increase its lending.
Mr. Buddhipala opines that this policy was a “signal to the market by the Treasury that credit growth is high and that we need to watch the situation.” Prioritization in terms of granting loans at Commercial Bank are based on a risk-return basis as a result consumption loans and import oriented consumption loans are considered “vulnerable.” Here too the SMEs were looked at positively as “we feel there would be income generation” and it will have an impact on employment.
Reacting to concerns that people were finding it difficult to obtain loans, the CFO said, “We need to positively look at the production side of it” adding that any loan making a positive contribution to the growth of the economy should not be curtailed. In this regard, he said production needs to pick up in the country for savings to increase.
Another banker observed that while this was a policy decision it would impact on the bank in different ways but pointed out that they needed to adopt this for the “sake of the economy.”Almost all hoped this would not be continued and was likely to stay for only a year as stated by the CB whose Governor Ajith Nivard Cabraal told the Business Times this week that while this was “deliberately done,” it was necessary to curb the increasing inflation.
But pointed out that since 18% was a large amount, it was “good enough” for all to be provided loans noting that customer credit is allowed a sufficient amount.

Reported in Sundaytimes
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...by i3gconsultants@ 15:07:39 on 2012-07-22

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Sector: Bank Finance and Insurance

EPF investments must be closely monitored:Union


Equity investments by the Employees Provident Fund (EPF) in Galadari Hotel, Laugfs Gas, Ceylon Grain Elevators, TFC, etc have “shown that these investments have been made to help out business cronies at the expense of the hard earned savings of workers,” the Ceylon Federation of Labour (CFL) said.
“It is believed that the EPF has lost a staggering Rs.12 billion at the stock market. The scale of loss is a cause for concern. A full explanation is called for on each of the transactions,” the union said in a letter to Minister of Labour and Labour Relations, Gamini Lokuge
Referring to the administration, management and investment of EPF funds, the CFL said they were thankful to EPF Superintendent at the Central Bank, Kalyanee Gunathilake making a presentation to the National Labour Advisory Council (NLAC) on July 2 on the current state of affairs of the EPF. A copy of this letter has been sent to Ms Gunathilake “However, all matters connected with EPF investments in the stock market were not clarified by the official concerned to the satisfaction of the worker members in the NLAC and, at your request, the unions agreed to forward their queries to the head of EPF Department in the Central Bank through your Ministry,” the letter said.
“In our view, there are several serious matters”, it said. The union raised several concerns including the Auditor General raising several serious accounting deficiencies and management inefficiencies (over EPF management); the many speculative investments in the market bringing a low rate of return to the members of the fund; the rate of return declining to 12% in 2011 from 15% of the previous year; need for fund managers to explain the reason for the decline; interest paid to member’s balances declining to 11.5% in 2011 from 12.5% in 2010; increasing tendency by fund managers to come to the rescue of the stock market whenever it falters which is not the objective of the EPF, etc.
The CFL said the administration of the EPF by the Department of Labour and its financial management by the Monetary Board of the Central Bank needs a serious review so as to bring about more transparency and accountability to the affairs of the EPF.
The union proposed that:

1. Administration of the EPF
The Secretary to the Ministry should submit quarterly reports to the NLAC so that EPF administration can constantly be monitored and streamlined.

2. Management of the Fund
Need for tight control over such investments is emphasized. The CFL proposes a monitoring mechanism with trade union representatives drawn from the NLAC to monitor all matters relating to the appropriation and investment of EPF monies by the Central Bank /Monetary Board. “We wish to point out that such a mechanism was proposed earlier when a composite plan was drawn up by the Department of Labour to amend the EPF Act.”
The CFL said this is the only sure way to defeat the ‘subterranean plots of interested lobbies both local and foreign to get management of the Rs. 1 trillion worth EPF that belongs to the workers.”

Reported in Sundaytimes
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...by i3gconsultants@ 15:07:33 on 2012-07-22

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Sector: Bank Finance and Insurance

EPF gains – fact or mirage?


Over the past few months, the Central Bank (CB) has painstakingly defended investments made by the Employees Provident Fund (EPF) against growing criticism from several quarters. In recent months, the opposition United National Party (UNP), particularly its leader Ranil Wickremesinghe and MPs Harsha de Silva and Eran Wickremaratne have been vociferous on this issue while the JVP (Anura Kumara Dissanayake and Sunil Handunnetti) have been equally vocal on the losses (value) made by the EPF due to bad investments.
The criticism has been essentially on investments in small companies and ‘penny’ stocks (low-priced shares) and commercial banks, the latter allegedly because the government wanted control in these institutions. In the second argument, the finger was pointed at the Commercial Bank where CB Deputy Governor Dharma Dheerasinghe was appointed Deputy Chairman (soon after his recent retirement) and the Hatton National Bank (HNB) where former Deputy Governor Ranee Jayamaha took over the reins of chairman. In both cases these high positions were secured by virtue of the EPF having a major stake in both banks. Both the EPF and the CB have strenuously denied these insinuations and issued statements denying any conflict of interests in investment decisions, saying there was protocol, safeguards and firewalls within the Bank to ensure that the EPF department operated independently. It was also pointed out that the share of investments in the stock market was in line with the percentage permitted under the EPF Act, though there had been some changes made some years ago through an administrative decision to some of these provisions and investment sectors.
However, in a statement this week the Ceylon Federation of Labour (CFL) raises a moot point about the right to information on details of the investments made in the stock market. It said the EPF is said to have lost a staggering Rs.12 billion in the stock market and called for a full explanation on each transaction. “The scale of loss is a cause for concern. A full explanation is called for on each of the transactions,” the union said.
It raised many issues including a call for the fund managers of the EPF to explain the losses and investment decisions, urged more transparency and proposed a monitoring mechanism with trade union representatives and other stakeholders to ensure the one trillion-rupee-worth fund is properly managed.
The argument is sound and now figures of EPF investments (see Page 6 for a detailed list and our own analysis) released by Senior Minister Sarath Amunugama in parliament recently confirms the losses in value terms was Rs 11.04 billion as at 20th June 2012. For example of the 65 companies in which investments were made, only 17 companies have shown gains – ACL Cables, Ahungalle Hotels, Aitken Spence, Apollo, Amaya Leisure, Asiri Medical, Caltex, Cold Stores, Durdans, Hayleys, Hemas, Keells Hotels, Lanka Walltile, NDB, Nestle, SLT and Trans Asia.
The biggest gain of Rs 700 million came from shares of Ahungalla Hotels while the next best gain was Rs 276 million from NDB.
On the losing side the biggest loss was seen in Laugfs of Rs 1.4 billion and LOLC – a loss of Rs 1 billion. Other main losses were from Browns (Rs 934 million), Central Finance (Rs 933 million), Vallibel One (Rs 740 million), Grain Elevators (Rs 700 million) and DFCC (Rs 655 million).
Figures showed that EPF had 74 million shares in Commercial Bank which had a loss in value terms of Rs 256.7 million while EPF shares in Ceylon Glass (84.6 million at a low price of little over Rs 5) recorded a loss in value of Rs 57.5 million. EPF had 177 million shares in Dialog which had lost Rs 572 million in value.
EPF’s biggest stake (number of shares) is in Richard Peiris (123 million shares) which showed a loss in value terms of Rs 455 million. HNB, a bank that came under the radar of the opposition, had 30.4 million shares in the EPF portfolio which had lost Rs 420 million in value.
No doubt, taking risks is all part of investment. No investment will give the promised return just like for example interest in the banking sector which has been topsy-turvy in the past few years. Thus risk-taking in EPF investments is acceptable  to a point, however.
The statistics now speaks for itself and the huge loss in value reveals that the decisions by fund managers have been clearly flawed. It strengthens the case for an independent mechanism to ensure that investments made on behalf of millions of workers are made wisely and without a political, if any, agenda.

Reported in Sundaytimes
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...by i3gconsultants@ 14:07:50 on 2012-07-22

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Sector: Bank Finance and Insurance

State banks reduce gold pawning business


State banks are following a new directive to cut down gold pawning activities owing to gold price volatility in the world market, making it unattractive to those seeking to pawn their gold assets using a combination of high interest rates and lower loans.
The Central Bank (CB) has issued a directive to all commercial banks to curtail the expansion of their pawning loan port folio, a senior Finance Ministry official said. While state banks are following these guidelines, most commercial banks are sticking to earlier schemes.
The price of gold is fluctuating daily and it has come down to Rs.51,000 from Rs. 55,000 per one sovereign or 8 grams recently and is seen declining further, industry sources said.

With the Sri Lankan rupee depreciating, gold is likely to fall in the range of Rs 45,000 to Rs 42,000 per sovereign, they said,
“If the value of gold falls sharply, the debtor is more likely to default on his loan, leaving an asset which is far lower than the value of the loan granted. Therefore the Treasury has advised the CB to direct commercial banks to curtail their gold pawning loans,” the Finance Ministry official revealed.
The Bank of Ceylon (BOC) has increased the interest rate on gold jewelry pawning to 17.5 per cent at present from 14 per cent a couple of months back, while reducing the payment to Rs. 45,000 from Rs. 50,000 per one sovereign, a BOC official told the Business Times.
The People’s Bank’s interest rate has appreciated to 19 per cent from 14 per cent and it has reduced the payment to Rs.39, 000 from Rs. 44,000.
“The danger in giving high loans is that in the event of a default, it may cause a risk with regard to the bank’s stability,” the official said.
Sri Lankans spent a record US$600 million on gold in 2011, up more than seven-fold from US$82 million in 2010 as demand and prices for bullion sky rocketed.
The official said ‘gold pawning’ was increasing daily to due to financial difficulties faced by the people specially Sri Lankan women forced to pawn their jewellery to meet the household expenses.

Reported in Sundaytimes
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...by i3gconsultants@ 14:07:42 on 2012-07-22

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Sector: Plantations

Tea crop forecast cut


Reuters: Sri Lanka now expects 2012 tea production of around 325 million kg, below its target of 330 million kg, as output has fallen in the last five months due to drought, the State-run Tea Board said.
Tea production in the first half of the year fell 4.3 per cent year-on-year to 163.26 million kg from 170.66 million kg and June output fell 13.2 per cent to 25.8 million kg compared with 29.74 million kg in the same month a year ago.
The Tea Board had earlier expected output to be slightly higher than last year’s 328.37 million kg, and saw 2012 export revenue at a record high, surpassing last year’s $ 1.5 billion, due to higher prices.
“Severe drought is the basic reason for the fall,” Sri Lanka Tea Board Director General H.D. Hemarathna told Reuters. “With June having a severe drop in high grown areas, then 325 (million kg) is more rational than 330 (million kg).”
High grown tea output, which accounts for about a fourth of production, fell as much as 29.4 per cent in June, amounting to 60 per cent of the total fall.
Output hit a record 331.43 million kg in 2010.
Revenue from the country’s top agricultural export commodity fell 11.7 per cent to $ 421.1 million in the first four months of 2012 compared with the previous year, Central Bank data showed.
Analysts say the earnings outlook for 2012 is unclear due to a possible dip in exports to Iran, which buys a fifth of Sri Lanka’s tea directly.
Other countries in the Middle East are also major buyers, but political turmoil may limit their appetite for Sri Lankan tea, traders say.
Tea is one of the $ 59 billion economy’s main foreign currency earners, along with remittances, garment exports and tourism.

Reported in Dailyft
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...by i3gconsultants@ 12:07:50 on 2012-07-21

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Sector: Hotels and Travels

Hyatt ends hiatus


Delayed project for Rs. 20 b five-star hotel cum residencies kicks off, 20-year management deal to be finalised with Hyatt, global financiers included; set to be largest hotel and tallest building in town
The long-awaited Rs. 20 billion Hyatt management venture recommenced yesterday in what aims to be the Colombo’s biggest hotel and tallest building in Sri Lanka.The 43-storey venture, which will have 475 rooms and 90 luxury residential suites, will be built by Sinolanka Hotels and Spa, according to its Chairman Gamini Senarath, who delivered the welcome address at the ceremonial recommencing of work at what was previously a Ceylinco investment down the scenic Galle Road.
Senarath added that the hotel would be opened by October 2013 but the suites would only be ready by August 2014. Hyatt Resorts will be given management of the hotel on its completion for an initial period of 20 years.
“The agreement with Hyatt will be signed next month and we are very confident that this will be a profitable venture. Given the increase in the tourism industry, the establishment of a five-star hotel with international management will be a definite boost to Sri Lanka,” he said.
State-run Sri Lanka Insurance is the main funder of the hotel and the building site has been leased to Sinolanka by the Urban Development Authority for 99 years. Sinolanka officials also remarked that negotiations are almost complete with international funders, but refused to disclose names as the agreements are yet to be finalised.  
The Galle Road land was originally leased to the previous developer in 2003 for scheduled completion of the project in 2008. However, the project has remained abandoned since 2009. In November 2011, the asset was acquired by the Government under the Revival of Underperforming Enterprises and Underutilised Assets Act, No. 43 of 2011.
In March 2012, the Cabinet of Ministers approved a proposal to redevelop the property as a fully-fledged multi-faceted hotel complex to support the Government initiative in tourism infrastructure development and to meet the demand from the growing tourists to the country.
Cabinet approval required private and State entities including Sri Lanka Insurance Corporation Limited to form a company, inter alia to ensure the revival of this property. Cabinet also approved the vesting of the property with the Urban Development Authority, which was the original owner of the property and for the UDA to grant a 99-year fresh lease to the new developer.
Based on this Cabinet approval, the new developer, Sinolanka Hotels & Spa (Pvt) Ltd. initiated the revival of this project and a consortium of investors consisting private and State entities including Sri Lanka Insurance Corporation Ltd. is expected to provide the required capital of Rs. 20 billion.
“It will be named the Hyatt Regency Colombo Hotel. Under the new construction phase, 28 new storeys will be added to the present construction,” the Chairman said, adding that large convention centres, gourmet restaurants and even an infinity pool are part of the design.
The short ceremony was an all-Rajapaksa affair, with Economic Minister Basil Rajapaksa attending as Chief Guest, together with Defence Secretary Gotabaya Rajapaksa and MP Namal Rajapaksa, and President Mahinda Rajapaksa being roundly thanked several times by various speakers.
President’s Secretary Lalith Weeratunga and Finance Ministry Secretary Dr. P.B. Jayasundera as well as officials from Litro Gas, the Board of Investment (BOI) and Sri Lanka Insurance attended the event.
Once the initial speeches were delivered, the Sinolanka officials signed the agreement with BOI to the sound of pirith chanting followed by Economic Minister Basil Rajapaksa initiating the construction.

Reported in Dailyft

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...by i3gconsultants@ 13:07:21 on 2012-07-20

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Sector: Bank Finance and Insurance

Islamic finance: A panacea for our times?


By Shamil Samsul Mueen
1. Introduction

The global financial crisis has raised imperative issues concerning the stability and reliability of existing financial systems. This has driven an extensive global re-examination on the competence of the existing financial architecture and the search for a more enduring solution. As a result an increasing interest in Islamic finance is evident.
During the global financial crisis Islamic finance proved to be more resilient, relatively unscathed and experienced a double digit growth rate with worldwide assets close to US$ 1 trillion.1 The inherent features of Islamic finance have the potential to serve as a basis to address
several issues and challenges that have surfaced in the conventional financial system during the crisis.Thus, Islamic Finance is now emerging as one of the fastest growing segments in the international financial system.
2. Analysis of principles
According to Islamic jurisprudence there are two kinds of rulings, the worship ruling which governs the relationship between man and Allah, and mutual dealing rulings which govern the relationship among mankind. The general principle of mutual dealing rulings is that, everything is permitted unless clearly prohibited. This is referred to as the Doctrine of universal permissibility. In addition to the Doctrine of universal permissibility, Islam permits the contracting parties to agree on any conditions as long as they do not violate any Shariah ruling.
It is argued that the purposes of some prohibitions are to provide a level playing field to protect the interests of weaker parties, to ensure justice and fairness to ensure mutual benefit for the parties as well as society at large; and to promote social harmony.2
The principles of Islamic finance are based on three main factors which are mentioned in the Quran and are an important aspect of Shariah3 and Islamic jurisprudence. These factors are Interest (Riba), speculation (Gharar) and uncertainty (Maysir), which are explained in detail below.
2.1 Interest (Riba)
 Islam does not allow acceptance or payment of any interest on transactions involving money. This prohibition essentially implies that the fixing in advance of a positive return on a loan as a reward for waiting is not permitted by Shariah. This prohibition is not confined to Islam.4 In its basic meaning, Riba can be defined as anything (big or small), pecuniary or non-pecuniary, in excess of the principal in a loan that must be paid by the borrower to the lender along with the principal as a condition, (stipulated or by custom), of the loan or for an extension in its maturity.5 According to a consensus of Islamic jurists it has the same meaning and import as the contemporary concept of interest.6
2.2 Gharar
Translated directly from Arabic, it simply means uncertainty or risk. Gharar is as important as Riba in Islamic finance. Compared to Riba, Gharar is more difficult to be defined in relation to financial transactions.
To prevent Gharar in a transaction, the full implications of the transaction must be clearly known to the contracting parties. In other words, there must not be “asymmetric information” between parties because it breaches the principles of Islamic law. Elgamal7 states that, Gharar is conceptually translated as “trading in risk, which cannot be defined”. Naked options, financial futures, and derivatives that are not backed by tangible and verifiable assets are few examples provided by Elagmal in that regard.
2.3 Maysir
Maysir is closely related to Gharar. Even though these two principles have been used interchangeably in some papers on Islamic Finance, there is a notable difference between these two principles. The main focus in Gharar is on uncertainty. On the other hand, Maysir, translated as “gambling” from Arabic, focuses on and prohibits transactions that are based on one side’s gain at the cost of the other.8
2.4 Other rules/concepts
However, In addition to these three principles there are some general rules in Islamic finance under which financial transactions become void. These could be contracts which involve immorality, or illegality against public policy, or whose foundation or substance is unlawful or illegal, or any other contract or agreement which are, directly or indirectly, in contrary to the divine principles of Shariah. Further transactions should not only be based on pure economical interest in transactions but contribution to social harmony
3. Islamic finance products
A large number of products are available in Islamic finance, and the number is growing as demand for more Islamic compliant products are growing throughout the world. Islamic commercial law is rooted on three modes which serve as the building blocks for other complex financial products. The three modes are partnership based, trade based, and rental based modes of financing.9
3.1 Partnership based mode of financing
Partnership based mode suggests an equitable sharing of risks and profits between the parties involved in a financial transaction, and includes Mudarabah, Musharakah and other hybrid products.10
3.1.1Mudarabah
Mudarabah is an agreement between a lender (bank), who acts as an investor, and a borrower, whereby the borrower can mobilise the borrowed amount for his business activity. If profits are made they will be shared between the lender and borrower according to mutually agreed ratios. In the case of loss the lender shares the loss in proportion to his contribution.
3.1.2 Musharakah
Musharakah, in its basic, is a business partnership or joint venture between two parties where one party could be a bank and the other party its customer. It is effected for a particular period such as few months, a year or more than a year. Both parties agree on their share of the profit in advance. The profit of the bank must not exceed the percentage of its investment in the Musharakah. The losses, if incurred, will be divided based on strict proportion to the equity participation ratio.11 Musharakah is used by financial institutions for asset and/or real estate financing, working capital financing, etc.
Both Mudarabah and Musharakah are closely related products. Mudarabah differs from Musharakah in that the bank is the only investor in Mudarabah, which is not the case in Musharakah where all parties invest in the project.12
3.2 Trade based modes of financing
Trade based modes of financing became available in the market much later than partnership based modes, but its products gained dominance among other products very quickly. This is because it targeted a much larger group of investors, both private and business customers, and is safer for both parties in terms of the investment.
3.2.1 Murabaha Finance
Murabaha is an agreement between a bank and its customer. The customer requests the bank to purchase or import commodities on his/her behalf, with a promise to buy them from the bank at purchase price plus profit margin of the bank, where the payment will be made on instalments.
3.3 Rental based modes of financing
The main idea of this mode is that the financial institution purchases an asset for its customer and then hands it over to him/her on a rental basis.13 This can be an operational asset, where the Islamic financial institutions act as a warrantor of the asset, and the customer deals directly with the supplier. The ownership remains with the Islamic Financial Institution until it is transferred to the customer. The two mostly used products in rental based mode of financing are Ijarah and Diminishing Musharakah.
3.3.1 Ijarah finance
Ijarah is very much similar to a leasing agreement in the conventional financial system. The only difference is that Ijarah does not involve interest bearing contracts which should be Shariah-compliant. Translated from Arabic, Ijarah means to provide something on rent.14
Ijarah have generally been used by private customers for financing consumer goods such as houses and automobiles. But recently it has gained popularity among business customers in relation to project and transportation financing. Ijarah is used for almost everything that could be leased, but some certain items that are prohibited in Shariah and a few others like fuel, food etc. are not included in Ijarah.
3.3.2 Diminishing Musharakah finance
Diminishing Musharakah is a contract between a financier (the bank) and a beneficiary in which the two agree to enter into a partnership to own an asset, but on condition that the financier will gradually sell his share to the beneficiary at an agreed price, and in accordance with an agreed schedule.15
Diminishing Musharakah is increasingly used in sectors like housing and real estate, project finance, and construction. Diminishing Musharakah takes different shapes according to the shape of the transaction.
4. Global challenge
The prospects of Islamic finance remain high at the global finance system. The latest development in the international arena is that, several countries are accessing the Sharia Compliant financial bond (Sukuk) market to finance major investment projects. United Kingdom, Japan, Turkey and Russia are some countries who seek to tap into the massive liquidity that exists in Asia and the Gulf Cooperation Council via Sharia compliant investment products.
Most countries have left Islamic finance under the legislative umbrella of their current banking laws, but have required that the industry comply with standards and guidance coming from groups such as the International Islamic Academy of Fiqh of the Organisation of Islamic Conference (OIC) and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
The industry needs to improve transparency and foster credibility by harmonising standards and practices, not least, the variety of Shariah interpretation between regions and even institutions. Regulatory oversight needs to be sharpened as well. These measures could be critical in broadening the appeal of Islamic Finance.
Most importantly, there is a high shortage of suitable skilled employees working within the industry. Hence the demand for the Islamic finance professionals is increasing globally.
Thus, effort to enlarge the human capital pool is vital to keep pace with the rapid growth of Islamic finance. Investments in human capital development through specialised training and educational institutions are important to support the global development of Islamic financial services industry. Talent development and educational institutions specialising in Islamic finance that have been established in several jurisdictions should be encouraged to forge strategic alliances across borders.
5. Sri Lankan perspective
Islamic finance was first introduced to Sri Lanka as early as in 1997. However, the landmark development was the amendment made to the Banking Act No. 30 of 1988 in 200516 which permitted licensed commercial banks and licensed specialised banks to offer selected financial instruments such as Murabaha and Mushakraka. Islamic finance has garnered an increased interest in the last few years and has the potential to develop the capital markets of Sri Lanka and assist the development of infrastructure.
At present many licensed commercial banks operate Islamic finance windows with many other potential players on the verge of venturing into the market. Sri Lanka has witnessed an important milestone in that the Central Bank of Sri Lanka has permitted the operation of a fully-fledged Islamic Finance Bank and recently an Islamic Fund was launched facilitating investment in listed securities. It has to be noted that the competitive advantage of the country’s strategic geographic location provides the potential to become the Islamic banking hub for the South Asian region.
6. Conclusion
Islamic finance is becoming a pivotal part of the international financial system and it presents unique opportunities and challenges. Islamic finance needs to further strengthen its resilience to endure all possible challenges. It has to portray on its intrinsic strengths to set its position towards attaining greater robustness of the overall system.
In the context of Sri Lanka, most importantly, a strategic framework on Islamic finance needs to be developed. This should address the variety of concerns of diverse stakeholders. Hence, it is vital to include policy makers, regulators, and professional experts in Islamic finance on developing such a strategic framework for Islamic finance in Sri Lanka.


(The writer is a Passed Finalist – Chartered Institute of Management Accountants, United Kingdom, and final year undergraduate, Faculty of Law, University of Colombo. He can be reached via shamilsm@gmail.com)


Footnotes:
 1Andreas A. Jobst and Juan Sole, ‘Operative Principles of Islamic Derivatives –Towards a Coherent Theory’ International Monetary Fund Working Paper March 2012, available at: http://www.imf.org/external/pubs/cat/longres.aspx?sk=25752.0 accessed on 8th May 2012
2 M Iqbal and P. Molyneux ‘Thirty Years of Islamic Banking: History, Performance and Prospects’, [Palgrave Macmillan, New York. 2005] p.7.
3 Shariah- the Islamic code of law and behavior based on the Quran, the sunnah, which incorporates the sayings, practices, and teachings of the Prophet Mohammed, and jurisprudence, which extends the application of the sharia, through comparative analogy and the consensus view of the religious scholars, to issues that are not directly addressed in the primary sources.
4 H. Visser, ‘Islamic Finance: Principles and Practice’, [Edward Elgar Publishing, United Kingdom, 2009] p. 39. According to Visser, based on passages from the Bible, the Christian Church at various times took a strong stand against demanding and paying interest.
5 M Iqbal and P. Molyneux ‘Thirty Years of Islamic Banking: History, Performance and Prospects’, [Palgrave Macmillan, New York. 2005] p.9
6 Ibid
7 A. El-Gamal, Mahmoud ‘Islamic Finance: Law, Economics, and Practice’ [Cambridge University Press, New York.2006] p. 58
8 Conventional banking products such as life insurance are prohibited in Islamic finance as it comes under Maysir. When gambling, the player pays a certain amount of money in the hope that he will gain much larger amount, similarly the conventional life insurance policy where the assured hopes for a chance to make a gain.
9 Nearly all Islamic finance products come under these three modes. The use of each mode is dependent on the purpose and size of transactions, but all of them are based on principle of Riba prohibition.
10 Theoretically, Mudarabah and Musharakah are the most desirable forms of Islamic financing.
11 i.e. to the capital contributed by each party. All parties, including the bank, have the right to participate in the management of the project, but equally, all parties have the option to waive such right. All parties agree through negotiation on the ratio of distribution of the profits generated from the project, if any. This ratio need not coincide with the ratio of participation in the financing of the project.
12 Further, In Mudarabah management is the prerogative of the investor, whereas in Musharakah all partners can manage the project based on a pre-specified agreement. And finally, in Mudarabah the customer does not bear losses if incurred, whereas in Musharakah profits and losses are shared based on the percentage of the investment.
13 Rental based modes of financing have existed since the beginning of Islam. It was used mostly in relation with agricultural products. Ijarah have been the only type used in this mode, but with time and the development of new products financial institutions have added other more complicated products under this mode.
14 Venardos ‘Current issues in Islamic banking and finance : resilience and stability in the present system’, [World Scientific Publishing, Singapore 2006] p. 170
15 M Iqbal and P. Molyneux ‘Thirty Years of Islamic Banking: History, Performance and Prospects’, [Palgrave Macmillan, New York. 2005] p. 22.
16 The current legislation governing Banking in Sri Lanka is the Banking Act No.30 of 1988 with its subsequent amendments. The recent amendment (Act No. 02 of 2005) that was passed on the 10th December 2005 is the 4th amendment to the Banking Act that introduces some major changes to the law relating to Banks and their regulation. With this amendment, Islamic Banking has been included to their lists of permissible businesses under schedule II and IV. Hence both Licensed Commercial Banks (LCB) and Licensed Specialised Banks (LSB) are permitted to offer Islamic Banking products.


References
A. El-Gamal, Mahmoud ‘Islamic Finance: Law, Economics, and Practice’ [Cambridge University Press, New York.2006]
Bennett, Michael, ‘Islamic Finance as a Structured Products Business Line’ [Journal of Law and Financial Management, Vol. 10, No. 1, 2011]
H. Visser, ‘Islamic Finance: Principles and Practice’, [Edward Elgar Publishing, United Kingdom, 2009]
M Iqbal and P. Molyneux ‘Thirty Years of Islamic Banking: History, Performance and Prospects’, [Palgrave Macmillan, New York. 2005]
M K Hassan. and M Choudhury ’Islamic banking regulations in light of Basel II’ [paper presented at the Sixth Harvard University Forum in Islamic Finance, 2004]
Venardos ‘Current issues in Islamic banking and finance : resilience and stability in the present system’, [World Scientific Publishing, Singapore 2006]


Reported in Dailyft

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...by i3gconsultants@ 12:07:00 on 2012-07-18

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Sector: Plantations

Sri Lanka’s second global brand born



  • Pure Ceylon Cinnamon secured in Eurozone

  • Rishad commends EDB and pushes for coveted US market

Sri Lanka has successfully secured the coveted rights for the Pure Ceylon Cinnamon brand name in the EU market.
“Thanks to the efforts of the Export Development Board, I am pleased to announce that we have successfully secured the Pure Ceylon Cinnamon trade mark in the EU market. I am also happy to see that we now have two global brands after us, the first being the well-known Pure Ceylon Tea,” announced an upbeat Minister of Industry and Commerce Rishad Bathiudeen yesterday.Bathiudeen announced this in the aftermath of the Review Meeting he held with the EDB, which falls under his Ministry. During the in-depth review Minister of Industry and Commerce Rishad Bathiudeen in discussion with EDB Chairman/CEO Janaka Ratnayake (left) and officials at the Review Meeting yesterday


meeting, Bathiudeen explored national export performance and expected trends with the EDB team, led by EDB Chairman/CEO Janaka Ratnayake.
The meeting also witnessed Minister Bathiudeen’s new Secretary Anura Siriwardena taking part in his first official meeting with his Minister as well as his new Ministry.During the meeting, Ratnayake apprised Bathiudeen that the EDB had successfully secured the Pure Ceylon Cinnamon brand name in the EU market.Pure Ceylon Cinnamon was officially unveiled by President Mahinda Rajapaksa at the Presidential Export Awards in June 2011, while Minister Bathiudeen officially unveiled Pure Ceylon Cinnamon to the world at the Anuga Trade Fair in Cologne, Germany in October 2011, and announced that the Pure Ceylon Cinnamon trademark would be registered in the USA, which is the major market for cinnamon, and also in the European Union.The cinnamon industry in Sri Lanka brought $ 833 m in exports in 2010 (growing by 8.59% in comparison to 2010 exports) and is billed to play a key role in the country’s ambitious export target of $ 20 b by 2020. Sri Lanka is the largest producer of cinnamon in the world – claiming 70% of world production.Pure Ceylon Cinnamon’s main markets are the USA, Mexico, Peru and Ecuador. Around 31,000 hectares of cinnamon are grown in the country producing 16,000 tons annually, of which 13,000 are exported. The industry employs 16,000 peelers involving 260,000 families, but is in need of many more peelers to sustain it over the long term.
“While I commend the EDB for this achievement, I believe that we should also secure our trademark in the next coveted market, the US,” Bathiudeen added.


Reported in Dailyft

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...by i3gconsultants@ 12:07:00 on 2012-07-18

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Sector: Land and Property

Havelock City unveils penthouse duplex .


Havelock City, the largest condominium development in Sri Lanka has newly fitted out a luxury penthouse duplex. Located on the 21st level and extending two floors up to level 23, these penthouses are unmatchable in terms of the intriguing play of volume.
The luxurious upmarket penthouses are complete with spacious living and dining areas, plush bedrooms with timber flooring, bathrooms with European sanitaryware, fully fitted pantry and maid’s quarters with independent entrances. Designed to reflect a luxury suite in a star-class hotel, the master bedroom will boast of a private balcony with breathtaking views, a walk-in closet and its own master bathroom, where a view of sparkling city lights and the rippling sea is presented.

The penthouse terrace is the largest offered by any development. With sheltered and unsheltered space, the terrace sprawls around the first level of the penthouse. The vast amount of terrace space gives the resident the freedom of choice to have a private garden in the sky complete with water features and deck areas.
The units designed in consultation with East China Architectural Design Institute (ECADI), the most prestigious architectural and design firm in China, has maximum space utilization for large living areas and ample natural lighting. “The penthouses are in limited number and some of the designs will not be repeated to maintain exclusivity,” stated Architect, Dr. Senaka Dharamatilleke. The penthouses encompass a rooftop - an ideal entertaining area with a spectacular 360-degree view.
For more information on the development, log onto www.havelockcity.lk.


Reported in Dailymirror



 

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...by i3gconsultants@ 12:07:02 on 2012-07-17

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Sector: Motor

Sri Lanka new car registrations plunge in June


Sri Lanka's new vehicle registrations plunged 46 percent to 21,587 in June 2012 from a year earlier, with new three wheelers falling 64 percent an analysis by an equities research unit has shown.An analysis of new vehicle registrations by JB Stockbrokers new car registrations fell 66 percent to 1,454 in June 2012, from 4,397 a year earlier. Motor bicycle registrations fell 46 percent to 11,634 in June from 21,833 a year earlier and three wheelers fell 64 percent to 4,134 from 11.630. Sri Lanka raised taxes on vehicles in February 2012 to prohibitive levels to discourage imports. Analysts had warned that move will hit tax revenues widening a budget deficit and putting further pressure on interest rates, the credit system and dollar peg, and delay a recovery from a balance of payments crisis, which is a monetary phenomenon. To stop currency depreciation authorities have to stop printing money to monetize debt or sterilize foreign exchange sales by raising interest rates. Lorries (trucks), whose taxes were cut held up better growing 8.96 percent to 2,542 from a year earlier. Lorries were also down from a March peak of 3,425. Sales of Maruti/Suzuki, who make small cars and is Sri Lanka's most popular brand fell to 318 units in June from 1,334.

Reported in LBO

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...by i3gconsultants@ 12:07:02 on 2012-07-17

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Sector: Bank Finance and Insurance

TKS Finance ups capital to Rs. 500 m


To facilitate rapid business growth and further stabilise its position in the finance industry TKS Finance Ltd. has made a fresh infusion of Rs. 200 million to boost its capital to Rs. 500 million aimed at strengthening the company to facilitate rapid business growth.Initial success of the company and its products has prompted the TKS Finance’s high net-worth Malaysian investors to infuse yet another high amount of Rs. 200 million into its capital.This raises their total capital to a significant Rs. 500 million which is evident of its stability and the strength of the company.  
TKS Finance CEO Rasika Kaluarachchi said, “If I may recall, we opened our doors for business with Rs. 200 million as capital, which was raised within few months to Rs. 300 million to facilitate rapidly improving business. Accordingly it’s heartening to observe the immense confidence our Malaysian investors have shown in our quality portfolio and the overall progress, which prompted them to infuse another Rs. 200 million.”
“Our entire staff and management are happy that we are reaching our first anniversary with excellent results on record and a substantial Rs. 500 million in capital, which is far above the core capital requirement of the Central Bank. Naturally, we are looking forward to offer even greater service with more value-added products to our growing customer base,” Kaluarachchi said. According to him t with TKS Finance’s branch expansion program commencing this year and going forward, the Company will be able to serve people scattered all over the island with innovative financial solutions with greater efficiency. Flexi fixed deposits, VIP pawning/gold loans, Rajya Abhimana instant loans and their newest introduction ‘Express Share Credit’ are amongst the most talked about products in the finance sphere. The common factor in all these products is that they are all innovative products designed and introduced by TKS Finance, a member of TKS Group.
For a young finance company that commenced their foray into this highly competitive field just within a year, TKS finance has performed remarkably well. The significant capital at their disposal and the highly skilled professional management inspired efficient staff have ensured that they offer most timely and customer beneficial products, all of which has brought them encouraging results during this short but highly productive period. 


Reported in Dailyft         

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...by i3gconsultants@ 12:07:02 on 2012-07-17

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Sector: Services

Hambantota bunker fuel terminal to open in October


Reuters : Sri Lanka will start operations at the 82,000 ton capacity fuel bunkering terminal of its new Hambantota port in October, 16 months later than the original schedule, the ports authority said on Friday.
The state-run Sri Lanka Ports Authority had originally planned to open the facility for full operational bunkering in May 2011.The $130 million project contains eight tanks of bunkering oil and six tanks of aviation fuel and LPG in the initial stage.“We got the license on Wednesday. We are now in the process of buying test products. It might take three months to start, so it will be in October,” Priyath Wickrama, chairman of the authority told Reuters.
Last year Wickrama said the authority wanted to operate the facility fully rather than opening it partially.
Hambantota bunkering capacity could be exanded to 4 million metric tonnes if demand picks up. The bunkering operation is the only part of the port not open to external investment.
China Exim Bank has loaned $77 million toward the cost of the terminal, which the ports authority will operate. China has loaned Sri Lanka the bulk of the money to build the $1.5 billion port.
Hambantota, which opened in November 2010, is set to be Sri Lanka’s biggest port once the second phase is completed and to give the Indian Ocean country access to traffic on one of the world’s biggest East-West shipping lanes, located a few kilometres off its southern coast.


Reported in Dailyft

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...by i3gconsultants@ 12:07:02 on 2012-07-17

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Sector: Hotels and Travels

Fortress Resort and Spa marks successful year with Rs. 119 m profit


Luxury resort records Rs. 1.233b asset base.The Fortress Resort and Spa announced the successful completion of FY 2011/2012, with stellar financial results in all areas including profits, asset base and shareholder equity. Occupancy rates for the resort in Koggala were high throughout the season as the high-end,
colonial architecture-inspired Fortress continues to carve out a niche for itself in the Sri Lankan tourism scene while cementing its position on the global tourism map. Turnover rose by 11.53% from Rs. 416 million recorded as at 31 March 2011, to stand at Rs. 464 million as at 31 March 2012. Profits Before Tax (Pre Tax Profits) rose 38.6% from the Rs. 86 million recorded at the end of the previous financial year to Rs. 119.2 million at the conclusion of the year under review. With its prudent investment portfolio, the company’s asset base grew by 4% from the previous year’s figures of Rs. 1.186 billion to Rs. 1.233 billion at the end of the recently-concluded financial year.
“The Fortress has become an icon in the boutique hotel sphere,” stated Managing Director Sumith Adhihetty, “While its architectural singularity plays as important role in this, the true value-addition has come from the high service standards we have maintained in every area of operation.” He goes on to state that an average 66% occupancy rate was maintained throughout the financial year 2011/2012, further stating that the resort enjoyed a staggering average occupancy rate of 95% during the latter part of the financial year. “A 95% occupancy rate is no mean feat for a high-end resort of the calibre of The Fortress,” opines Adhihetty.
Since its inception, the resort has been a regular contender in international awards ceremonies, continuously emerging triumphant. Its most recent achievement at the Asia Pacific Hotel Awards 2012 held in Malaysia included awards for Best Resort Hotels in the Asia Pacific Region, Best Resort Hotel in Sri Lanka and the Best Resort in the Small Hotels in Sri Lanka category. Rooms recently rose from 49 to 53 and the five-star accommodation received another value addition with the introduction of the sumptuous ‘Beach Splash’ rooms, each fitted with its own plunge pool and decadent day bed. The dining experience too has been awarded a facelift with the resort’s fine dining restaurant Wine 3 being re-branded as Duo (Surf and Turf), a fine dining experience that has easily lured weekend pleasure-seekers to make the one hour drive down the Southern Expressway to The Fortress. Speaking on success and its external contributors, Chairman Dhammika Perera applauds the sound economic climate Sri Lankan currently enjoys stating, “As a boutique hotel, we are certainly enjoying a coveted position in the South Asia region.  The Sri Lankan economic landscape has played a vital role in this-the welcome upgrading of infrastructure in particular has played a crucial role in attracting high-end, exclusive clientele to the pearl of the Indian ocean.”
The Fortress is the luxury tourism arm of the powerful Vallibel Group of companies, headed by visionary entrepreneur Perera. A cluster of the most prominent names in the corporate sector including LB Finance, Vallibel Finance, Vallibel Power Erathna, Royal Ceramics and Delmege Forsyth and Co are part of the dominant holding company.


Reported in Dailyft

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...by i3gconsultants@ 12:07:02 on 2012-07-17

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Sector: Motor

Bajaj Auto cuts price to woo more Sri Lankan customers.


MUMBAI: Bajaj Auto has cut prices of its products in Sri Lanka to bring back the volumes lost post the excise duty hike in the country. Sri Lanka accounts for almost five to seven per cent of the total volumes of the company.The company indicated that there was a cut in retail prices of three-wheelers by 10 per cent while the two-wheeler segment saw price cuts to the tune of five to 14 per cent, depending on the model.
Sri Lanka is one of the biggest markets for the auto major in terms of export and accounts for 17-18 per cent of export sales. The island market accounts for five to seven per cent of total sales. Post the duty hike, exports to Sri Lanka have virtually been zero, with dealers just looking to clear the pending inventory of the products.
The hit due to the price cut will be shared between the company and the dealers. The ratio of sharing of the price cut was not disclosed by the company.
Rakesh Sharma, President of International Operations at Bajaj Auto, confirmed the price cut but refrained from indicating the deals reached between Bajaj Auto and dealers in Sri Lanka.
Bajaj Auto had in its earlier interactions with ET Now indicated that it was sending a team to Sri Lanka to assess the situation post the excise duty hike by the Sri Lankan Government.Sri Lanka hiked the duty on three-wheelers by 51-61 per cent and the duty on two-wheelers by 60-100 per cent to curtail its fiscal deficit in April 2012.Prices of Bajaj’s motorcycles were hiked by around 29 per cent and three-wheeler prices increased by around 32 per cent in Sri Lanka after the import duty hike.Bajaj Auto sells around 20,000 units of products to Sri Lanka every month.


Reported in Dailyft

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...by i3gconsultants@ 12:07:02 on 2012-07-17

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Sector: Bank Finance and Insurance

Rajeeva new CEO at Orient Finance


Rajeeva Bandaranaike, a well known professional in the financial services industry joined Orient Finance as CEO recently. He brings with him over 20 years of experience in the financial services sector in which he has held several senior managerial positions.Orient Finance is licensed by the Central Bank of Sri Lanka under the Finance Business Act No. 42 of 2011. At a time of transition where Orient is converting itself from being a specialised leasing company to a Finance company, Bandaranaike’s leadership will prove to be an asset to the company’s growth.
Bandaranaike was the CEO of Peoples Merchant prior to joining Orient Finance for a short course of time but his career expanded during the time he was a part of the Colombo Stock Exchange from which he resigned after a career spanning close to 18 years.
Bandaranaike holds a Masters in Business Administration from the University of Southern Queensland, Australia, a Bachelor of Laws (LLB) from the Open University of Sri Lanka and a Post Graduate Diploma in Marketing from the Chartered Institute of Marketing (UK). He is a Member of the CIM UK.
Orient Finance commenced its services in 2003 with the company’s main activities consisting of leasing and hire purchase as well as micro leasing and factoring. After establishing itself as a Finance Company, Orient is now poised to expand its services to offer fixed deposits to its existing and potential customer base. The company has a large and emerging base of customers and is serviced through fourteen customer reach points throughout Sri Lanka. Six fully fledged branches are located in Colombo, Kochchikade, Matara, Ampara, Kurunegala and Welisara while customer service centres function in Kandy, Avissawella, Galle, Kalutara, Vavuniya, Anuradhapura, Kegalle and Gampaha areas.
Orient Finance is a fully owned subsidiary of Orient Capital Limited (OCL) which is a 100% equity financed company with diverse capital market services to individual and corporate clients with a highly experienced board of directors and senior management. Orient wealth Limited and First Alliance Money Brokers Limited (FAMB) also come under the OLC umbrella.


Reported in Dailyft

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...by i3gconsultants@ 12:07:02 on 2012-07-17

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Sector: Motor

Over 130,000 new driving licences issued in five months


Transport Deputy Minister Rohana Kumura Dissanayake told the Daily News that a number of driving licences issued last year and during the first half of this year have seen a massive increase following the tax concession on the imports of vehicles. Accordingly, the Motor Traffic Department had issued 133,767 new driving licenses during the period from January 1 to May 31 this year. Therefore,it is reported that around, around 150 new drivers enter the roads every hour in Sri Lanka. Accordingly, an average of 26,754 new driving licences are issued monthly while 1,216 new driving licences are issued daily except Saturdays and Sundays. A total of 273,443 driving licences, including those seeking renewal and an extension of driving licences were issued in the past five months. “Meanwhile, 608 licences of errant drivers had been canceled due to various offences in the first five months of this year,” the Deputy Minister said.


Reported in Dailynews

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...by i3gconsultants@ 15:07:57 on 2012-07-16

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Sector: Plantations

Debate brewing over Sri Lanka tea blending plans


Sri Lanka’s tea industry is deeply divided over plans to boost earnings by importing cheaper leaves for blending and re-export, over fears the changes could water down the ‘Pure Ceylon’ brand.
Pure Ceylon -- using the country’s colonial-era name -- is to tea what single malt is to whisky, according to some aficionados, with single-origin Sri Lankan tea costing as much as twice that of a multi-origin tea.
The country has long been a leading exporter of the commodity, but now the Tea Exporters Association (TEA) wants to import leaves from countries like Kenya, Vietnam and Indonesia and blend them with higher quality local produce.
TEA members, who make up more than 80 percent of Sri Lanka’s tea exports, say the island should harness its local blending expertise and reclaim its role as a tea hub, a position being eroded by competition from Gulf nations.
They argue that the high quality and the correspondingly high prices have placed ‘Pure Ceylon Tea’ beyond the reach of the lucrative mass market, even if the industry enjoys an enviable brand reputation.
“We lose out because our tea is too expensive,” says Niraj de Mel, head of TEA. “We don’t have a (cheaper) tea that can compete in the mass market.”
De Mel argues that Sri Lanka could almost double its exports of 300 million kilos (660 million pounds) annually by taking a “realistic” view of the world market and blending its tea with cheaper imports.
Sri Lanka does not currently allow tea imports for blending, but in May, the official Sri Lanka Tea Board (SLTB) said a panel was investigating options.


The announcement sparked an intense debate with “purists” and “realists” fighting it out in the press and on social media.
SLTB chief Janaki Kuruppu told AFP that no final decision had been taken and that a balance needed to be struck.
“We are carefully studying the proposals and the objective is to increase overall revenue while protecting our brand image,” she said.
Purists, such as leading Sri Lanka tea maker Herman Gunaratne, fear blending with cheap teas will undermine the industry in the long term and say the island must focus on the luxury end of the market.
“We are known for our top quality tea,” says Gunaratne. “Why should we dilute our image?”At a tea plantation in the southern village of Ahangama, Gunaratne makes an exotic range of tea that can fetch up to $2,000 a kilogramme, some of which ends up on the shelves of the top-end Mariage Freres tea emporium in Paris.“The way forward is not blending, but manufacture. We must make more expensive tea,” he says.
Gunaratne worries that blending with East Asian teas could damage a reputation built up over 150 years.Tea is not indigenous to Sri Lanka, but after a Scotsman named James Taylor planted the first tea bush -- the Camellia Sinensis in 1849 -- tea became a primary export and the nation’s main foreign exchange earner.
Sri Lanka conducts the world’s largest weekly tea auction where five to six million kilos change hands, but turning the high-quality tea into humble and affordable tea bags is mostly done abroad by foreign companies.
Sri Lanka’s stance prompted Unilever to drop plans in the late 1990s for a factory in Sri Lanka and it instead set up its Lipton tea bagging plant in Dubai where they blend teas from East Africa and Asia -- including Sri Lanka.The factory currently produces 1.1 million bags of tea an hour and is set to be the world’s biggest plant by 2015.Sri Lanka’s export lobby argues that the country’s refusal to import leaves is only helping to further establish Dubai as a tea hub.Sri Lankan tea brand Dilmah, which competes head-on with Lipton and other multinationals, is one of those fiercely resisting any moves to relax the government policy.
“The quality of Ceylon tea and its image as the world’s finest tea will be irreparably tarnished if free importation of black tea (for blending) is permitted,” says Dilmah Director Malik Fernando.As things stand, millions of kilogrammes of Sri Lanka tea are blended abroad and many argue that the island could have better control over the product if the blending was done at home.
“We want to get the benefit of a large tea industry in Sri Lanka,” says Rohan Fernando, Chairman of HVA Lanka Exports.
“If we ban imports and don’t allow the industry to develop, then it will go somewhere else.”


Reported in Dailymirror

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...by i3gconsultants@ 15:07:28 on 2012-07-16

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Sector: Plantations

Transparent pyramid tea bags


olytec Marketing (Pvt) Ltd has introduced the Pyramid tea bag to Sri Lanka which is different from normal tea bags and sachets.
“Tea leaves in tea bags take time to brew. The tea leaves in it are also mostly wasted as the full effect of whole extract is not utilised. Therefore it was found that the sachet needed to be developed and this was done by the world’s best mesh company, Coreshtech Co. Ltd,” the local company said.
The PLA mesh-fabric tea bag has been developed to provide the flavour and unique taste of tea.Coreshtech is a leader in friendly environment companies markets with ultrasonic machine equipment (tea packing machines) and the PLA Pyramid tea bag creation.
The Pyramid tea bags has secured stringent certificates by from the US Food and Drug Administration.
The pyramid-shaped tea bag is made from transparent mesh material such as flowers, fruits, green tea and the high quality teas in a glass of water gives a luxurious feeling of floating. Because of the surge in demand for wellbeing, herbal and fruit tea production tea bags are available, the company said. It has a deeper and richer taste and scent than the existing tea bags, which are produced by forcing water fully through the tea bag.

Reported in Sundaytimes
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...by i3gconsultants@ 02:07:31 on 2012-07-16

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Sector: Bank Finance and Insurance

Accounting deficiencies, management inefficiencies at EPF


Controversy continues to haunt the Central Bank managed Employees’ Provident Fund (EPF) with the Auditor General’s Department highlighting "accounting deficiencies", "non compliance with laws, rules, and regulations", "management inefficiencies", "uneconomic activities" and "idle and underutilised assets" in the fund’s activities for 2010 fiscal year.
The Auditor General highlights these short comings in the management of the EPF in the fund’s latest annual report.Some of the issues highlighted were as follows:
"The ledger of the Employees’ Provident Fund in the Department of Labour had not been properly maintained and a journal to identify the entries in that ledger clearly and in detail had not been furnished to audit.
"Even though the receipts and payments made to / by the District offices on court orders had been shown as receipts and payments amounting to Rs. 219,871,362 and Rs. 178,195,942 respectively in the deposit account, they had not been disclosed in the final accounts.
"As a sum of Rs. 15,413,871 relating to the employees’ Provident Fund had been transferred from the Labour commissioner’s Imprest account to the Commissioner General of Labour accounts the correct right of the beneficiaries of the Fund had not been shown in the accounts.
"Contributions totalling Rs. 3,449,915,049 collected by the Commissioner General of Labour by filing court cases and collected as arrears of installments which should have been credited to each member’s account had not been credited to the relevant memberaccount even by 30 June 2011.
"The balances of the UP and OP Contribution account amounting to Rs. 856,668,078 which is being increased since the beginning of the Fund had not been settled even by 30 June 2011.
"At test carried out in audit in respect of surcharging for non-payment of Employees’ Provident Fund contributions on due dates with the data base system in the Central Bank of Sri Lanka, it was revealed that action had not been taken to recover surcharges of Rs. 101,547,938 due from 72 institutions registered with the Fund for the period from 2000 to 2009 even by 30 April 2010."Irrespective of the place of starting the official travel and the place of temporary residence during the official visit, travelling expenses of Rs. 16,767,657 had been paid including the combined allowances for official visit within the Urban Limits."The amount of Rs.62,571,667 recovered during the period 2005 to 2008 as contributions of the members of the Employees’ Provident Fund and surcharges recovered by courts had been credited to the government revenue during the year under review without being credited to their personal accounts due to non availability of information of the relevant members with the Fund. "Even though the refund of contributions of deceased members of the Fund should be paid to their nominees, refunds relating to the year 1986 had also not been made. It was revealed that a sum of Rs.16,572,359 relating to 79 applications from 2007 to 2009 which had been examined had not been paid yet."Applications of the beneficiaries now in dormant client institutions of the Employees’ Provident Fund are referred to a committee consisting of the members of the Central Bank of Sri Lanka and the Department of Labour to make the payment by considering the difference in names of the applicants. Due to inefficiency of that committee, benefits valued at Rs.49,635,261 in respect of applications of 430 members elapsed for one or more than one year had not been paid even by 30 June 2011.
"In the examination of the Register of public Evidence in the Colombo South District Labour Office it was observed that there were 27 instances for which legal action had not been taken to recover contributions and surcharges even though a long period had elapsed after sending the legal act 01 and 03. The outstanding contributions and surcharges recoverable therein amounted to Rs.22,880,445."The reply to the audit query reported in respect of the value of Rs.313,452,501 relating to the matters such as non-taking legal action by filing court cases to recover the contributions and surcharges from institutions attached to the area of authority of the Colombo Central District Labour Office, non-taking follow up action though cases were filed, evasion of payment of installments by institutions who had been given such facilities, no-recovery of Employees’ Provident Fund contributions before institutions were liquidated, non-settlement of money deposited in the Employees’ Provident Fund Suspense account by issuing "c" Forms, non-crediting the contributions and surcharges received during the period from 2003 to 2006 to the respective individual members accounts and non-recovery of surcharges had not been submitted even up to 30 June 2011. Even though it was stated that the reply would be submitted in respect of the paragraph 3.2.5 (d) of the Auditor General’s report for the year 2009 indicating the above matters within 2 weeks after being investigated, no reply had been sent even as at that date. "Legal process initiated in respect of 93 instances to recover the outstanding contributions and surcharges of Rs. 14,727,297 within the area of authority of the Colombo South District Labour Office had been suspended half way due to rescheduling of court cases, putting cases to a side, appealing and as such benefits receivable by the members of the Fund had been deprived. "Despite an offset printing machine valued at Rs.21,884,084 had been purchased in the year 2008 for the printing of forms of the Employees’ Provident fund purposed, a sum of Rs.4,086,322 had been paid to the Government Press in the year under review for printing specimen forms. 
"Capital items valued at Rs.5,399,660 purchased under the expenditure items of the Employees’ Provident fund had been given to the Department of Labour.
"Five Kiosk machines and related accessories valued at Rs.7,457,195 purchased under the Project of the Re-registration of members of the Employees’ Provident Fund had not been installed in the relevant location and utilized even as at 30 June 2011."15,000 memory chips valued at Rs.10,965,000 purchased for the issue of identity cards under the same project had been lying idle without being used. "Deficiencies in system and control observed during the course of audit were brought to the attention of the Commissioner General of Labour and the Superintendent, Central Bank of Sri Lanka from time to time. Special attention is needed in respect of the following areas of control: Department of Employees’ Provident 
Fund, Central Bank of the Sri Lanka- (a) Accounting (b) Internal Audit (c) Bank Accounts and (d) Dishonoured Cheques. Employees’ Provident Fund Division of the Department of Labour- (a) Accounting (b) Recovery of Surcharges (c) Replies to Audit queries (d) Fixed Assets (e) Advances and Pre-payments and (f) Inspection of client Institutions."

Reported in The Island
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...by i3gconsultants@ 02:07:20 on 2012-07-16

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Sector: Land and Property

Land scarcity in Colombo gives rise to apartments


According to a study on the semi luxury and luxury apartment market in Sri Lanka by Pricewaterhouse Coopers Private Limited, it is estimated that 100, 000 units would be needed to be built per year until 2020 to ensure housing for all. He said,"Our Group diversified into apartment construction following feasibility studies that were done. With the economy expected to grow in the coming years, we anticipate that the demand for luxury apartments will also continue to grow. Luxury condominium development in Sri Lanka has been found to be popular from the early part of the last decade. Luxury apartments were considered a reliable investment option by top-end investors as well as expats.


Research shows that 50 percent of the units of most luxury apartments were sold prior to the completion of construction. It also indicates that top- end projects appear to perform better than low-end apartments due to higher income levels in the Western province, mainly Colombo. One of the scarcest resources in Colombo is land. Most of the land that could be used for development has already been utilised. The dearth of developable land in the urban areas combined with the rising population density has led to the emergence of high rise condominiums in the Colombo district. Over the past few years, the Colombo district has witnessed rapid development of the suburbs , especially Rajagiriya, Battaramulla and Pellawatte area. Rajagiriya has witnessed a few high-rise apartment complexes, such as "110 Parliament Road" apartment complex, two kilometres from Colombo 7. Director of Apurva Natvar Parikh Group(ANPG Group), Rohan Parikh said according to the Ministry of Development and Planning increasing urbanisation and population have increased the need for expansion in housing development in Sri Lanka.The ANPG Group partnered with Sanken Lanka (Pvt) Ltd commenced construction in November 2011. Now construction work is underway and is due to be completed in July 2014. '110 Parliament Road' is a landmark apartment project with quiet neighborhood surroundings and views of the Colombo Golf Course and the National Bird Sanctuary with panoramic view of the Colombo City. This apartment complex remains ideal and competitive with a choice of two,three and duplex apartments, with floor areas of 1,600 sqft to 3,000sqft and state-of-the art amenities such as swimming pools, gym, tennis courts, basket ball courts children's play area, restaurants, spa just to name a few. These privileges will be exclusive to this apartment complex.


Reported in Sundayobserver

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...by i3gconsultants@ 11:07:47 on 2012-07-15

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Sector: Beverage Food and Tobacco

Milco property to be leased with BOI incentives


The Ministry of Economic Development together with the Board of Investment of Sri Lanka (BOI) is planning to lease a land belonging to Milco Private Limited in Colombo, to be developed as a mixed development project.The 13.5 acre land bordering Kirimandela Mawatha in Nawala will be available on a long-term lease base for the prospective investor who should submit a sound business proposal.
An official at the BOI confirmed to Mirror Business that the lease is available for the selected investor for a period of 30 to 99 years.
“The building on the land is still in place, and once the investor is selected and the deal has been finalized, we will be demolishing the building and making the land available for the said investor,” he said.
He added that tax relief and other incentives will be offered to the selected investor depending on the size of the investment.
“For instance, if the investment exceeds USD 25 million, the investor will be getting a tax relief of 12 years,” he noted adding that the minimuminvestmentwasUSD3million.
The tax relief will vary according to the size of the investment. For an example, a four year tax relief will be granted for a USD 3 million investment.
Meanwhile the official stated that the Cabinet of Ministers has already granted approval for the Milco land transfer to the BOI.
The advertisement published by the BOI further states that electricity, water, access roads and other infrastructure facilities will also be an attraction for the prospective investor.
Milco Private Limited was established in 1956 as The National Milk Board under the purview of the Ministry of Agriculture. It commenced operations with a single Factory in Colombo commissioned under the Colombo Plan.
In 1986, the National Milk Board was converted into Milk Industries of Lanka Company Limited as a government-owned company.
Thereafter in 1998, Kiriya Milk Industries of Lanka (Pvt) Ltd. took over the administration of Milk Industries of Lanka Company Limited. Later in year 2000, Kiriya was taken back by the government and in 2001 it was named Milco (Pvt) Ltd, which now stands as a 100 % government-owned company.

Reported in Dailymirror
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...by i3gconsultants@ 17:07:34 on 2012-07-13

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Sector: Bank Finance and Insurance

Sri Lanka bond investors can maintain portfolio: Standard Chartered


Sri Lankan bonds had a neutral position in a Standard Chartered credit model and investors looking to buy bonds should go for new issues, which were better priced, rather than buy in the secondary market, Standard Chartered Bank said.
Sri Lanka ran into balance of payments trouble last year as large volumes of central bank credit was used to prevent rates from tightening accelerating credit growth, widening the trade and current account gaps and triggering forex reserve losses.Standard Chartered had lowered the credit outlook for Sri Lanka to stable from positive but said a number of measures had been taken to stabilize foreign exchange reserves this year.
"However, they will need to stay the course in order to prevent stresses building up again on the fiscal and external fronts," Standard Chartered said in a comparison of Asian credit.
"While there have been some comparisons with the Vietnam situation, we are slightly more comfortable with Sri Lanka given the better availability and transparency of data and the IMF's involvement.
The International Monetary Fund is expected to approve a final 450 million US dollar tranche under a 2.5 billion US dollar bailout later this month and officials have said they will seek a new mechanism perhaps backed with more funding.At current valuations, Standard Chartered was neutral on Sri Lankan bonds, compared to being underweight on countries like Philippines.
Sri Lanka' balance of payments is expected to be in surplus by about a billion US dollar by end 2012, the report said.
Later this month Sri Lanka is expected to sell a billion US dollar bond, about half of which will go to repay a maturing bond.

Reported in LBO
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...by i3gconsultants@ 17:07:02 on 2012-07-13

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Sector: Bank Finance and Insurance

Sri Lanka's central bank kills liquidity in outright bill sales


Sri Lanka's central bank has sold 2.1 billion rupees of Treasury bills in its portfolio to yield 10.92 percent Friday, in the second such transaction for the week, dealers said.
On July 11, the Central Bank had sold 1.45 billion rupees of bills with 29 days remaining to maturity to yield 10.91 percent, according to data published on its website.On Friday the Central Bank bids to sell 5.0 billion rupees of bills with 25 days remaining to maturity.
Selling down the Central Bank's T-bill portfolio kills liquidity generated from forex purchases and creates an 'excess' of dollar in forex markets in the ensuing weeks, which can lead to a rapid strengthening of the exchange rate.
In forex markets the rupee was opened around 133.70/90 to the US dollars and weakened as much as 133.95 in intra-day trading dealers said.
The rupee strengthened to around 133.83/85 levels in late trading, dealers said.
Reported in LBO
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...by i3gconsultants@ 17:07:24 on 2012-07-13

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Sector: Hotels and Travels

Sri Lanka's June tourist arrivals up 21.6 pct y/y


(Reuters) - Sri Lanka's tourist arrivals in June jumped 21.6 percent from a year earlier, government data showed on Friday.
The number of visitors has risen year-on-year in the past 38 months since a 25-year civil war ended in May 2009. 

 The following table shows tourist arrivals in Sri Lanka:    
 
                          2012               2011           Change (%)   
   June               65,245           53,636            21.6       
   Jan-June      452,867          381,538              18.7       
   Jan-Dec                              855,975                     

The tourism board expects over one million tourists in 2012, yielding revenue of more than $1 billion, 20 percent higher than last year's record $830.3  million. Revenue from tourism rose 26 percent to $399.3 million in the first five months of 2012 from the same period last year. Tourism is one of the main foreign exchange earners for Sri Lanka's $59 billion economy, along with remittances from expatriate workers, garments and tea. 
($1 = 133.65 Sri Lanka rupees)

Reported in Reuters
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...by i3gconsultants@ 17:07:29 on 2012-07-13

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Sector: Beverage Food and Tobacco

EGB Indian exports to grow 100%


Sri Lanka's Elephant House Ginger Beer (EGB) is again being exported to India following a re-design of the beverage's label to meet that country's new 'green dot' vegetarian symbol governing food and drinks entering its markets. EGB has been available in India since 2000, while also being sold in over 26 other international markets including Europe and USA.
Based on order backlogs as well as heightened interest in EGB at local events such as the recently-concluded Pro Food Pro Pack 2012, where multiple import inquiries were received about it from Indian companies, company officials anticipate a 100% increase in EGB exports to India over the next few months.
Held for the 11th year, Pro Food Pro Pack is a domestic exhibition showcasing the Sri Lankan food chain. The event was held at Colombo's BMICH. In addition, as the Gold Sponsor of Pro Food Pro Pack 2012, with the largest and most visited booth, EGB soft drinks were sampled by almost all of the approximately 26,000 visitors to this event.
First formulated by Elephant House in 1896, EGB is a local beverage which has gained high local consumer awareness due to its distinctive natural ginger taste and its "No EGB, No Food" tagline.

Reported in Dailynews
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...by i3gconsultants@ 15:07:06 on 2012-07-13

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Sector: Power and Energy

Standardisation of electricity supply services mandated


Having identified the various issues faced by electricity consumers, the Public Utilities Commission of Sri Lanka (PUCSL) has mandated the need to standardise the service requirements of Ceylon Electricity Board (CEB) and Lanka Electricity Company (LECO).Accordingly, CEB and LECO have been mandated through the licenses granted to prepare a Supply Service Code. Further the commission expects to facilitate the information requirement of electricity consumers also through the implementation of Supply Service Code.
The Supply Service Code consists of following main area;
1. How to contact your service provider: the details including the contact numbers and contact persons of the services provider for breakdowns and inquiries.
2. Metering and billing information: This provides the details on how billing and assessment of consumption are done.
3. Procedure with respect to accessing consumer premises: This explains when a customer premise can be accessed and by whom.
4. Payments against the statement of accounts: details about how the bills can be paid and who is the contact officer for inquires on billing related matters in respective areas.
5. Consumers in default: the procedure related to dealing with defaulting consumers.
6. Connections and disconnection: the procedure to be followed in obtaining a new connection, temporary connections, disconnection and reconnection of electricity supplies.
7. Planned and unplanned power interruptions: details about how the consumers are informed of interruptions and how the consumers can inform about breakdowns.
8. Consumer complaints: the procedure of making complaints.
9. Meters: details of provision of meters, testing and reporting of meter related issues.
In addition, information about theft, damage and meter interference, efficient use of electricity and way leaves are also included in the Supply Service Code.The commission expects to approve the Supply Service Code during 2012 and implementation by utilities (CEB and LECO) thereafter. Once implemented the copies of supply service code will be available for all electricity consumers and general public at all area offices of CEB and LECO. In addition this document will be available in the websites of PUCSL, CEB and LECO.The commission expects that the supply service code will standardise the services of CEB and LECO as well as provide all necessary information regarding electricity supply to consumers once implemented.

Reported in Dailyft
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...by i3gconsultants@ 09:07:10 on 2012-07-13

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Sector: Hotels and Travels

SLTDA says no licence requirement for tourist three-wheelers


The Sri Lanka Tourism Development Authority (SLTDA) yesterday said there were no plans to introduce a licensing scheme for three-wheelers to transport tourists.
“There is no ban or a scheme planned as such,” SLTDA’s Acting Director General Vipula Wanigasekara said in response to media reports, which said it had banned the transportation of tourists by three-wheeler taxis that are not licensed for that purpose.
Whilst denying reports, Wanigasekara however said that going forward SLTDA expects three-wheelers to raise the standard of service and fair pricing for the growing number of tourists who use this value-for-money mode of transport for short distance travelling.

Reported in Dailyft
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...by i3gconsultants@ 09:07:44 on 2012-07-13

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Sector: Hotels and Travels

415 m tourists expected worldwide during May-August peak season


Asia and the Pacific and Africa show best results in first four months of 2012
As the summer season gets underway in the Northern Hemisphere, the short-term outlook for international tourism remains positive according to the UN WTO.
The UNWTO Confidence Index for May-August has improved compared to previous periods, particularly among experts in advanced economies.
UNWTO expects some 415 million tourists to travel internationally between May and August, the peak season in most of the world’s leading outbound markets and tourism destinations. In past years these four months represented 41% of the yearly total.
Prospects are confirmed by data on air transport booking from business intelligence tool ForwardKeys – featured for the first time in the UNWTO World Tourism Barometer – which shows that reservations for international air travel worldwide for the period May-August are 5% higher than in the same period last year. Reservations for air travel within the same region (+7%) are stronger than for air travel between regions (+4%).
In general terms, growth is somewhat more moderate than in the first four months of 2012 (+7% globally). Air transport is an important tourism indicator as it represents around half of all international travel worldwide according to UNWTO destinations data.
UNWTO forecasts international tourism to increase by 3% to 4% for the full year 2012. While the pace of growth is slowing down somewhat, international overnight visitors remain firmly on track to hit the milestone of one billion arrivals expected this year.
The continued strength of tourism is particularly important in the context of the current economic uncertainty, and reinforces the need for increased political commitment and support to the sector. “The capacity of tourism to drive growth and create jobs needs to be accompanied by strong supportive public policies,” UNWTO Secretary-General Taleb Rifai said.
The UNWTO Confidence Index confirms these positive results. The evaluation of tourism performance in the first four months of 2012 by the over 300 participants of the latest UNWTO Panel of Tourism Experts’ survey slightly exceeded their expectations expressed at the beginning of the year.
International tourist arrivals worldwide grew by 5% in the first four months of 2012, despite remaining economic uncertainties in some of the major outbound markets. According to the latest UNWTO World Tourism Barometer, prospects remain positive for the period May-August, the Northern Hemisphere’s summer peak season, with around 415 million tourists expected to travel abroad.
Between January and April 2012, international tourist arrivals (overnight visitors) worldwide totalled 285 million, 15 million more than in the same period of 2011 (+5%).
Asia and the Pacific and Africa (both +8%), show the best results. Both regions saw a clear rebound in some of the destinations experiencing declines in 2011. In Asia and the Pacific, Japan’s inbound and outbound travel is clearly on the mend, with arrivals to the country up by 40% in the first five months of 2012.
In Africa, North Africa (+11%) returned to positive growth thanks to the results of Tunisia (+48% between January and May). The Middle East also shows signs of recovery with arrivals up by 1% between January and April 2012, and particularly promising results for Egypt (+29% between January and May).
“It is very encouraging to see demand returning to countries such as Japan, Egypt and Tunisia. These are long standing tourism destinations ready to fully welcome back the millions of tourists that each year chose to visit them,” Rifai said.
The Americas (+6%) recorded growth slightly above the world average, with solid results across almost all destinations. Europe (+4%) consolidated its record growth of 2011, despite continuing economic volatility in the Eurozone.
For the first time, tourism has been identified by the G20 as one of the sectors that can spur the global economic recovery. Meeting last month in Mexico, the G20 underscored the role of tourism in the economy and committed to work on advancing travel facilitation as a means to stimulate demand and spending, and thus promote job creation. Sustainable tourism was further included in the Outcome Document of the Rio+20 UN Conference on Sustainable Development and identified as a sector that, if well-designed and managed, “can make a significant contribution to the three dimensions of sustainable development, create decent jobs, and generate trade opportunities”.
“UNWTO is confident that the growing political commitment in support of the sector will result in overall positive outcomes for tourism and contribute to global growth, employment and a sustainable economic transformation,” added Rifai.

Reported in Dailyft
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...by i3gconsultants@ 09:07:31 on 2012-07-13

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Sector: Services

Sri Lanka needs more trained personnel to become maritime hub


Sri Lanka's shipping industry will need more trained workers specializing in key areas of the shipping business as the island treads a path to become a regional logistics hub, an industry official said.
Many of those working in the logistics have had no formal training but had acquired the skills over time.
"We don’t have enough skilled staff and our people have a general understanding of what to do in shipping through experience but not through an academic background," Rohan Masakorala, head of Sri Lanka's Shipper's Academy, a training body operated by the industry said.
"While we are expanding infrastructure and getting into mega ports it's important that we build our human capital to suite that infrastructure and technology,"Masakorale say six thousand skilled personnel would be needed by the industry as the island's ports double capacity over the next few years.
He was speaking at a shipping forum in Colombo hosted by Sri Lanka Ports Authority and organized by Seatrade, an events company specializing in the maritime sector.Sri Lanka is on a drive to expand its maritime infrastructure and position the island as a transshipment logistic hub in the South Asian region.
Construction work of the island's new container port south of the Colombo harbour has nearly reached its halfway mark with the breakwater set to complete in two months and the first berth ready by 2013.
The new Colombo port is expected to increase annual capacity to 13 million containers from the current 4.5 million.
The industry says staff needs to be academically qualified and trained in port operations, logistics, and international trade to make ports efficient.
"Shipping lines will look at the most efficient port to get into and our staff will need to be trained in operational aspects, how international trade works, custom procedures, supply chain management and foreign exchange market" Masakorala said.Competency in human capital will give the island the competitive edge over India on top of its strategic location in the Indian Ocean."We need to start training people at different levels and get them academically qualified for us to be an efficient hub in the region" Masakorale said.

Reported in LBO
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...by i3gconsultants@ 04:07:54 on 2012-07-12

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Sector: Bank Finance and Insurance

Sri Lanka allows transaction between forex accounts


Sri Lankan bank customers holding foreign currency accounts would be able to transfer money among each others' account with greater freedom in the future the Central Bank said.
Holders of non-resident foreign currency (NRFC) accounts would be allowed to transfer money to other NRFC account holders and to resident foreign currency (RFC) accounts.Resident foreign currency account holders would also be allowed to transfer money to other RFC accounts.
Several types of accounts opened by exporters, foreign employment agencies, gem dealers and suppliers of inputs will be consolidated under a new foreign exchange earners account.
The full statement is reproduced below:
New Operational Measures in certain foreign exchange transactions
In keeping with the announcement made by the Central Bank of Sri Lanka in its “Road Map for 2012 and Beyond”, the following measures will be implemented with effect from 11.07.2012, in relation to foreign exchange transactions:
1) New operational measures for transfers between Non-Resident Foreign Currency (NRFC) and Resident Foreign Currency (RFC) Accounts:
a) The following transactions in relation to NRFC and RFC accounts held in the same bank or different banks irrespective of the holder of account or currency type in which accounts are maintained, will be permitted:
(i) Fund transfers between NRFC accounts.
(ii) Fund transfers between RFC accounts. 
(iii) Fund transfers from NRFC accounts to RFC accounts. 
However, funds/proceeds realized from the sale of properties in Sri Lanka should be credited to NRFC/RFC accounts, only in keeping with the existing regulations.
b) Opening of NRFC/RFC accounts by minors will be permitted through the credit of inward remittances received from their guardians/parents who are non-residents, or through the transfer of funds from existing NRFC accounts of such guardians/parents.
c) Any outward remittance out of NRFC accounts will be permitted irrespective of the underlying transaction, if the account holder is resident outside Sri Lanka.
2) New operational measures for “Foreign Exchange Earners’ Accounts” (FEEA):
A single foreign currency account, unifying several existing foreign currency accounts maintained in the banking system by foreign exchange earners will be introduced. Such new account, titled “Foreign Exchange Earners’ Account” (FEEA) will replace the following:
a) Exporters’ Foreign Currency (EFC) Account; 
b) Indirect Exporters’ Foreign Currency Account (IEFCA); 
c) Foreign Currency Account for Suppliers of Inputs (FCASI); 
d) Foreign Currency Account for Professional Services Providers (FCAPS); 
e) Non Resident Foreign Currency Accounts for Foreign Employment Agencies; 
f) Foreign Currency Account for Gem and Jewellery dealers, and temporary/ special foreign currency accounts authorized by the Controller of Exchange. 
Accordingly, exporters, indirect exporters, suppliers of inputs, professional services providers, entrepot traders, gem and jewellery dealers, insurers, insurance brokers, travel agents, hoteliers, bunker suppliers and other residents who undertake foreign projects would be permitted to execute their current international transactions through this new FEEA. The Central Bank is of the view that the introduction of the above measures would contribute to greater efficiency and convenience, improve investors’ confidence, strengthen foreign reserves in the long term, and stabilize the foreign exchange market.

Reported in LBO
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...by i3gconsultants@ 04:07:51 on 2012-07-12

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Sector: Bank Finance and Insurance

CB cools off inflation concerns


*  Policy rates unchanged
*  Credit growth easing, but spikes in May
* Reserves dip slightly 
* End-June IMF targets met
The Monetary Board of the Central Bank has decided to keep policy interest rates steady, cooling off concerns on rising inflation expectations. The bank said yesterday (11) that credit growth and the trade deficit were showing signs of easing, but export earnings remains a concern while reserves fell slightly in May.
"Inflation, as measured by the year-on-year change in the Colombo Consumers’ Price Index, increased to 9.3 per cent in June 2012 from 7.0 per cent in May 2012, while annual average inflation increased to 5.8 per cent in June from 5.6 per cent in the previous month. The increase in inflation in June 2012 was mainly due to the lower base in June 2011, the impact of the prevailing drought conditions on domestic fresh food prices and the recent revisions to administratively determined prices," the Central Bank said releasing its Monetary Policy Review for July 2012.
"At the same time, as a result of the several policy measures that are already in place to contain the emergence of demand side pressures arising from monetary expansion, broad money (M2b) growth decelerated to 20.9 per cent in May 2012 from 22.9 per cent in April 2012, while the growth of credit extended to the private sector by commercial banks also reduced from its peak of 35.2 per cent in March 2012 to 33.5 per cent in May 2012. Consequently, in the first 5 months of the year, credit extended to the private sector grew only by 10.5 per cent," the Central Bank said.
In absolute terms, private sector loans from the domestic banking sector increased in May to Rs. 31.7 billion, from Rs. 15 billion in April, while the government has also been a heavy borrower, with loans amounting to Rs. 15.6 billion in May, from 4.6 billion the previous month. However, government borrowings from the Central Bank fell by Rs. 22.2 billion in May.
However, comparing growth rates of outstanding debt, government borrowings from Central Bank rose 243.7 percent year-on-year in May, while borrowings from domestic banks rose 18.7 percent.
The International Monetary Fund (IMF) has forecast inflation to near 10 percent by the end of the year and has asked the Central Bank to maintain a tight monetary policy. Currency dealers over the past few months have been anticipating a rise in policy interest rates.
The IMF also said the government’s fiscal performance was under some strain as a result of the policy measures adopted to contain a balance of payment crisis; these policy measures came in for much praise by the IMF as previously reported in these pages.
The budget deficit reached 3.8 percent of GDP during the first four months of this year. The full year target is 6.2 percent.
"In the meantime, provisional data shows that the growth of import expenditure has been shrinking sharply in the first five months of the year, thereby narrowing the trade deficit, compared to the high levels recorded in 2011. With weaker global demand, most international commodity prices are also on a declining trend, which should, on a net basis, further ease pressure on the country’s imports this year, although the continuing sluggish global economic recovery may affect export earnings as well," the Central Bank said.According to data released by the Central Bank, the trade deficit for the first four months of this year expanded 32.3 percent from a year earlier to US$ 3,319.9 million, slowing down from 44.8 percent recorded during the first quarter of the year. The trade deficit had expanded by nearly 100 percent in 2011. The import bill grew 11.9 percent for the period January to April 2012 to US$ 6,633.6 million from a year earlier, slowing down from a 17 percent growth rate during the first quarter (January to March 2012). However, export earnings fell 3.1 percent to US$ 3,313.8 million. The drop is sharper compared with the 1.4 percent decline during the first quarter.
"On the external front, by end-June 2012, Sri Lanka achieved all targets set under the Stand-By Arrangement (SBA) facility with the International Monetary Fund, thereby qualifying to receive the final tranche under the SBA facility. Such disbursement, along with other expected significant foreign inflows are likely to strengthen the external position of the country in the coming months, and enhance the gross official reserves, which stood at US dollars 5,815 million as at 31st May 2012, which is equivalent to 3.4 months of imports," the bank said.
The reserves have dropped slightly from US$ 5,835 million as at end April. The bank sold down reserves amounting to almost US$ 3 billion from the second half of 2011 to keep the rupee artificially strong against the dollar in the face of an expanding trade deficit and higher than anticipated credit growth. Reserves peaked at US$ 8 billion as at end June 2011and by the end of the year had fallen to US$ 5,958 million. By end-January 2012, reserves stood at US$ 5,806 million and US$ 5,522 million by the end of February. It picked up to US$ 5,730 by the end of March.
"Taking into consideration the above factors, and after reviewing the progress of the developments under the monetary policy measures that have already been taken, the Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 10th July 2012, decided to maintain the Repurchase rate and the Reverse Repurchase rate of the Central Bank unchanged at 7.75 per cent and 9.75 per cent, respectively," the Central Bank said. "The date for the release of the next regular statement on monetary policy will be announced in due course."

Reported in The Island
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...by i3gconsultants@ 04:07:39 on 2012-07-12

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Sector: Power and Energy

Sri Lanka hydro power gets brief boost


 Sri Lanka's hydro storage rose 30.4 GigaWatt hours to 319.1 GWh after strong showers on July 09 brought inflows mostly into small ponds in the Kelani River complex.
According Sri Lanka's state-run Ceylon Electricity Board data total hyrdo storage slipped to 288.7 GWh (millions of units) on Sunday, after slipping below the 300GWh mark earlier in the week, amid an exceptional dry spell and failed monsoon.The CEB's website said on Monday 29.6GWh hours of energy was generated of which 25.6 percent of 7.6GWh were hydro. A strong shower causes most small ponds in the Laxapana hydro power complex to spill.A strong shower can usually bring inflows in to the reservoirs for two or three days as water held in the upper catchment seeps down. Sri Lanka's hydro catchment areas are under threat from human encroachment.
Peak power demand was 1,822MW on Monday down from 1900MW plus level seen in recent weeks amid somewhat cooler weather.
CEB's published data totals centrally dispatched plants and the contribution of mini-hydro power is effectively shown as a negative number from the total.
A strong shower tends to increase generation at run of the river mini hydros, which pushes peak power demand down. Sri Lanka has about 200MW of mini-hydros installed.The 29.5 GWh of energy generated was also much lower than a highest ever peak generation of 35.09 GWh reached on May 23.The CEB is estimated to be losing 200 million rupees a day due to under pricing power generated by liquid petroleum.

Reported in LBO
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...by i3gconsultants@ 08:07:39 on 2012-07-11

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Sector: Bank Finance and Insurance

Interest rates on the up; less hope for market recovery


Rising interest rates, rupee volatility and economic concerns led by a widening budget deficit is likely to cart off the possibility of a stock market recovery in the short term, though some investors and brokers try to blame it on the market regulator, which has become tough in the recent past under a new Chairman and a Director General.
According to the latest available Central Bank data, the Commercial Bank Average Weighted Prime Lending Rate (AWPR) has risen to 13.68 percent week ending July 6, 2012, against 9.41 percent recorded during the corresponding period, last year.
“Interest rates are the catalyst for financial markets. When the interest rates are down, markets become bullish and when the interest rates are up, they remain bearish. When the interest rates are high, the consumers spend less, causing reduced corporate profits. This is compounded by an exodus of money from stock markets as other interest-bearing investments become more attractive,” a market analyst on grounds of anonymity said.
He also said that most of the banks are currently offering very high rates for fixed deposits and noted that it is an indication where the money should flow.
However, according to him, the only silver lining for the Colombo bourse of late has been increased foreign buying. According to the CSE data, foreigners have been net buyers so far in the year 2012, with a net inflow of Rs.23.5 billion. Another stock market analyst, who too preferred anonymity, said that it is quite unlikely for a stock market to thrive when the economy of that country is facing fundamental economic issues such as a widening budget deficit and a currency crisis.
“Last year we were able to witness how the regulators were put under pressure for the market decline, which ultimately ended with the resignation of the Securities and Exchange Commission (SEC) Chairman. However, even after the resignation, the market didn’t go up. The reason was, though the regulator was chased away, the market and economic fundamentals that caused the market to come down remained unchanged, ”he noted.
According to market sources, what happened at the bourse during the latter part of last year seems to be unfolding yet again, as the market regulator is reportedly currently under immense pressure, followed by its decision to re-open some of the high profile investigation cases on market misconduct.
Analysts Mirror Business talked to pointed out that investigations, tightening of rules and closing of regulator loopholes tend to affect market sentiment, but admitted that markets should be well-regulated if they are to grow.“The sentiment should be backed by fundamentals. When the market or economic fundamentals are bad, you can't expect the market sentiment to be positive,” an analyst said.
According to recently released Finance Ministry report, Sri Lanka`s overall budget deficit doubled in the first four months of 2012, with spending growing twice the rate of tax revenues.

Reported in Dailymirror
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...by i3gconsultants@ 08:07:42 on 2012-07-11

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Sector: Bank Finance and Insurance

Investments through EPF need more transparency - Think tank


Authorities must address criticisms over the adequacy of safeguards when investing in the Colombo Stock Exchange through the Employees’ Provident Fund (EPF) and make the entire process more transparent, according to a statement by a local think tank.“Considerable controversy has arisen regarding Employees’ Provident Fund (EPF) investment in the Colombo Stock Exchange (CSE). There have even been calls to stop all such investments. There are positive arguments in favour of such investments.

However, it is necessary to create the appropriate enabling environment to avoid criticism based on conflicts of interest, a lack of transparency and an erosion of investor confidence.”

“It is important that we ‘do not throw the baby out with the bath water’. There is a case, instead, to improve the efficacy of the framework for the EPF investment in the stock market to addressing some of the issues that have been brought out by the recent public debate on the subject,” the Pathfinder Foundation said.

In particular, the statement urged authorities to make the current guidelines for the EPF investments in the stock market available to the public in order to promote a greater degree of transparency.

It also recommended the establishment of a separate unit, independent of the Central Bank of Sri Lanka, to manage the fund's investments.

“Consideration could also be given to using private fund managers on a performance-based fee scheme to run part of the portfolio as in China. This would address issues related to conflicts of interest that arise from the Central Bank not only administering the EPF but also regulating financial institutions which account for a large share of market capitalization,” it stated.

In order to promote local and foreign and local investor confidence with regards to government involvement in private companies, the report urged authorities to maintain a passive stance as investors.

“The EPF should be a passive investor that does not seek a presence in the boards of private companies. This would serve to address confidencerelated concerns that have arisen regarding government involvement in the running of private companies, among both domestic and foreign investors. This is at a time when Sri Lanka needs to maximize private investment to meet the government's growth and employment targets. The oversight related arguments that could be made for a Government Board presence are less persuasive in the case of listed companies which are subject to strict accounting and disclosure rules.”

“The EPF investments in the CSE play a useful role in increasing liquidity in a thin market. They can, therefore, have a positive impact in terms of capital market development. Such investments also create the opportunity to secure higher rates of return for EPF members, provided the investments are handled professionally,” the statement noted.The report cited China's massive investments into private equity funds through its National Social Security Fund, alongside the California Public Employees' Retirement System and South Korea's National Pension Service, which established a separate unit to handle investments in equities, as potential models for the EPF to emulate.

Reported in Dailymirror
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...by i3gconsultants@ 08:07:06 on 2012-07-11

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Sector: Hotels and Travels

“One of the prettiest beaches in the world”, "Passikudah" – Google Maps



“One













After over two decades, the untouched, charming beaches of Passikudah, in the eastern coast of Sri Lanka, are slowly being rediscovered for their scenic golden sands and calm waters, rich in biodiversity. The bay of Passikudah comprises of a flat, soft sandy bed extending approximately 100 meters into the sea with a shallow fringing coral reef on the outer bay. Within the bay lie scattered clusters of coral that connect to similar reef systems further south, towards Kalkudah. The serene waters, a fusion of Bondi-blue, turquoise and aqua hemmed by sandy shores, conceive a scenic portrait of soothing stillness.
Set on the backdrop of these magnificent surroundings rests a charming 10 acre coastal resort named Amethyst. True to its name the resort exudes an atmosphere of stillness, balance and inner peace. It lies unobtrusively over a vast area of beach front property lined with lush green mangroves and foliage. One of the nicest things about Amethyst Resort is its vast open spaces that allow you to soak in the natural beauty of its landscape. Its structures and designs are uncluttered and simple, right from entering the reception you are treated to glistening waters of a quiet stream, a particularly pleasing and unique addition to the property, bordered with clusters of trees and mangroves. Across the little foot bridge, lies a magnificently blue pool and beyond, on the horizon, clear blue skies over a wondrous still ocean.
The rooms of the resort are nestled between the stream and ocean, offering picturesque views from all sides. They are spacious chalets that house two units each with separate entrances and verandas for each room. Despite the understated design of the chalets, the rooms themselves are fully equipped with luxury amenities, including AC, iPod dock, LCD flat screen TV, cable TV, mini-bar, electronic safe, coffee/tea making facilities and hot water. The bathrooms are nice and spacious, a refreshing change from the norm…literally. For the first phase of its operation, the resort has a total of 40 rooms. The subsequent phase includes 60 more standard rooms, which will be built further inland on higher floors to capture the panoramic views of the resort’s idyllic setting.
The Barrel – a trendy Mediterranean style pub is the main hub of activity at Resort. The décor has a rustic charm, with barrel style furniture, brick walls and wooden flooring.  It serves a wide range of alcohol with delectable snacks and bites. The Barrel is well equipped for some great evening’s entertainment. It has a vast selection of karaoke and hi tech equipment that provide great vibes for a night of partying. But even more charming is the sunset deck outside the pub. It sits on the bank of the stream and is simply a delight in the evenings. The cool breeze wafts across the stream carrying a subtle spray from the fountain across the bridge, a welcome change from the high temperatures of the day. The deck is made of large wooden rafters in keeping with the rustic theme of the pub. At night, the lights from the fountain and distant fibre optic lighting of the pool create quiet the captivating sight and provide a delightful ambience for repose.
The Pool Bar operates from 7a.m. to 7p.m. and serves a nice array of seafood light bites and snacks. The swimming pool too is quite spectacular. It’s a great fun-for-the-whole-family location with the adjoining Jacuzzi and kiddies’ pool too.
The Taprobane Restaurant serves a wide range of delectable dishes with added seafood specialties that the region is famous for. The seafood is succulent and fresh and a good variety is available year-round.
For the adventurous traveller Passikudah as a region provides many interesting activities in and around the area. The reef system is considered one of the best in the East and much of it remains largely unexplored. It consists of large inverted coral domes and very healthy coral life can be clearly seen.
For more steadfast divers Batticaloa offers some of the best deep sea diving experiences in Sri Lanka including the remnants HMS Hermes (95) the world’s first ship to be designed and built as an aircraft carrier. In World War II, after the raid on Colombo on 5 April by the Japanese, Hermes was attacked it on 9 April around nine nautical miles (17 km) off Batticaloa. Also off the shores of Batticaloa is the Boiler wreck, ideal for less experienced but keen deep sea divers. The Marrakkala Gala, a beautiful surfacing rock formation is covered in hard corals, soft coral and sponges of all shapes, sizes and colours. It’s a great underwater landscape with spectacular balance of colour in corals and marine life. There are several islands within the Batticaloa Lagoon such as Puliayantheevu, Buffaloa Island, and Bone Island. Many bridges have been built across the lagoon connecting the landmasses and the islands. The biggest bridge of all is Lady Manning Bridge located at Kallady.
Also in the vicinity are the key towns of Trincomalee, Polonnaruwa, Minneriya, Habarana, Giritale and Dambulla. They too offer opportunities for many an interesting excursion including archaeological excursions in Polonnaruwa, Whale watching in Trincomalee, the Minneriya National Park, and the Sigiriya Rock Fortress etc.
Travelling to Passikudah takes approximately six hours by road. It is 292 km from Colombo and the roads have now been reconstructed and are in a very good condition for travel. One can also travel on the intercity train daily on first class and second class which is also a rather comfortable journey of approximately six hours.
Since the end of the war in 2009, the East is gearing up for development and growth as the Tourist Development Authority has earmarked 156 acres of land for development converting Passikudah into a Tourist Zone. It is expected that that there will be approximately 1000 star class rooms in Passikudah.Amethyst Resort’s rustic charm is complemented by the unique combination of three distinctive natural elements rolled into one. The clear blue waters of the stunning ocean framing golden sands, the lush, green mangroves providing cool shade, the delightful rippling of the gentle stream flowing by. Only Amethyst Resort has this beautiful blend of scenery to offer…it truly is the gem of the east coast.

Reported in Dailyft
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...by i3gconsultants@ 07:07:16 on 2012-07-11

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Sector: Bank Finance and Insurance

CB says policy rates appropriate


Reuters: Sri Lanka’s current monetary policy rates are appropriate despite a spike in inflation last month due to supply constraints, the Central Bank said on Tuesday, a day ahead of its July monetary policy review announcement.
The Central Bank has kept both repurchase and reverse repurchase rate at two-year highs of 7.75 percent and 9.75 per cent, respectively, since April, despite a pickup in annual inflation to a 41-month high in June.
“Those are appropriate,” Central Bank Governor Ajith Nivard Cabraal told Reuters in an interview.
“The only reason why we do not see a major need to make changes is that the spiking of inflation last month is entirely due to supply side factors. It has nothing to do with the demand side. The demand side is very much under control.”
The Central Bank will announce its July policy rates on Wednesday at 0200 GMT.
Annual inflation hit 9.3 per cent year-on-year in June, its highest since January 2009, as a sharp depreciation of the Sri Lankan Rupee amplified import costs, and as food prices were hit by supply constraints due to drought and government policies to discourage selected imports.
The International Monetary Fund (IMF) said on 15 June that annual inflation may accelerate to 9.5 per cent this year and stressed the need for Colombo to keep monetary policy focused on price pressures “for the time being”.
Cabraal said the Central Bank has discussed policies with relevant officials regarding food supply constraints.
“With the policies that could deal with the supply side, we are confident of inflation easing,” he said, without elaborating on the policies that are intended to reduce prices of vegetables and other locally produced farm products.
Sri Lanka has not seen double-digit annual inflation since January 2009.
It adopted a new consumer price index in June last year, angering opposition politicians who accused the government of manipulating the data to lower the inflation rate and to cool discontent over the rising cost of living.
Despite the spike in the annual inflation, Cabraal said the bank’s annual inflation target of 7-8 per cent is still achievable.
“We have seen no reason to change that (target),” he said. “If the policies are working, especially supply side, we will see those targets remaining where we have projected.”

Reported in Dailyft
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...by i3gconsultants@ 07:07:46 on 2012-07-11

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Sector: Plantations

Eco-friendly NR plantations can tap vast global funding


Climate change is considered one of the most serious threats to the global environment. Increasing concentrations in the atmosphere of greenhouse gases (GHGs) such as methane, nitrous oxide, hydro fluorocarbons, per-fluorocarbons, sulphur hexafluoride and most importantly, carbon dioxide have been implicated to be the primary reason for global climate change. International concern about this problem led to the establishment of the Inter-governmental Panel on Climate Change (IPCC) in 1988.
We have been talking about the eco-friendly credentials and carbon sequestration potential of natural rubber plantations, mostly in our own forums, for several years now. But little has been done until now to market the green image of natural rubber for tangible financial gains. With the adoption of afforestation and reforestation sinks for CDM funding under the Kyoto Protocol, there is an opportunity to bring international funding into the natural plantation sector. The magnitude of CDM funding that a natural rubber plantation is theoretically eligible for is far greater than the financial assistance that is available today through the Government of Sri Lanka (GOSL).
It will be in the best interest of both the rubber processors/manufacturers and the rubber planters to attract CDM funding for natural rubber plantations. Agencies interested in the rubber plantation sector need necessarily be represented in future COP negotiations to present the case of natural rubber plantation appropriately and to ensure that the natural rubber plantations come under the CDM of the Kyoto Protocol. The International Rubber Research and Development Board has already realized the importance of the issue and initiated action to seize the opportunity.

The following specific course of action is proposed for bringing natural rubber plantations under the CDM of the Kyoto Protocol:
Sensitize all the stakeholders, both governmental and non-governmental agencies on the importance and implications of natural rubber plantations coming under the CDM of the Kyoto Protocol.
Ensure that interests of natural rubber plantations are well represented in all future climate change negotiations under the UNFCCC.
Take up the issue of natural rubber plantations with international agencies such as IRRDB, IRSG and with the NGOs that are interested in carbon sequestration issues and make use of their help in future COP negotiations.
There are other parties inside Sri Lanka and in other countries (e.g. teak plantations in Brazil) that are equally interested in getting CDM credits for their plantations. We should have better coordination with them to achieve the common goal of bringing plantations under the CDM.
Explore for potential buyers for carbon credit from natural rubber plantations in the emerging Kyoto market on a bilateral basis.Develop suitable agro-management techniques that will increase in the carbon sequestration by natural rubber plantations, both in the biomass and in the soil.
Strengthen research efforts in estimating carbon sequestration by natural rubber plantations by refining the methodology by adopting world-class techniques, which will stand strict scrutiny during any future verification for certifiable emission credits.
Implication on NR plantations
The decision by COP 9 has profound implications for the natural rubber (NR) plantation sector. COP 9’s decision speaks about including afforestation and reforestation activities into the CDM of the Kyoto Protocol, but there has been no specific mention about plantations. Although plantation activities have not been directly mentioned in the decisions of COP 9, they are eligible for CDM funding if they meet the general requirements as applicable to afforestation and reforestation and other conditions stipulated for CDM.
Studies show that the carbon sequestration potential of natural rubber trees is much greater than most tree species commonly used in afforestation/reforestation programmes. Studies at the Rubber Research Institute and elsewhere have established the excellent carbon sequestration capacity of natural rubber plantations, which is roughly in the range of 7-9t C per ha per year or more. For example, in India alone, from a total area of about 0.5 m ha of natural rubber in India, we have about 3.5 to 4 mt C for sale in the Kyoto market every year which is 7 to 8 percent of the combined demand for carbon credit by Japan and the European Union (50 mt C per year).
It is generally considered that the cost of sequestering C in developing countries is about US$ 15 per tonne C (which will vary depending on the demand in the carbon market). At this rate, the global rubber plantations taken together have vast potential market value in the Kyoto carbon market. But this market can be tapped only if natural rubber plantation is explicitly included for carbon crediting under the Kyoto Protocol which is now theoretically possible with the decision of COP 9 to include carbon sink from afforestation and reforestation activities under the CDM. Given the fact that rubber plantations are very efficient in sequestering atmospheric carbon dioxide, there is no reason why rubber plantations should be left outside the purview of the CDM mechanism.
Activities related to NR processing also qualify for further funding under the CDM. The effluents produced during NR processing are now used to generate biogas which is used for domestic cooking purposes as well as for drying rubber. Use of biomass gasifiers and the possible use of solar thermal systems for drying rubber are examples of the use of non-conventional energy in the NR processing sector. The use of non-conventional energy in the NR processing sector helps in ‘displacing’ fossil-based fuels which amount to ‘indirect sequestration of carbon’ and  therefore qualify for CDM funding.
Rubber wood is increasingly used as a good quality non-forest timber in the construction and furniture industries. The left over rubber wood, which is of an inferior quality, is used for making particle boards etc. or as domestic or industrial firewood. Thus, rubber wood helps to reduce the pressure on forests for timber and firewood and thus leads to ‘indirect sequestration of carbon’ (see table 1).
There are over a million households that are directly dependent on natural rubber plantations for their livelihood. Much more is the number of people dependent on natural rubber processing and product making sectors in the country. Natural rubber cultivation has greatly helped to reclaim ecosystems that were severely degraded due to intensive shifting cultivation practiced by the native communities. Community-based natural rubber cultivation can help these people to improve their standard of living and integrate with the main stream society.

Projects implemented under the CDM of the Kyoto Protocol offer opportunity for investors (e.g. Annex B countries) seeking certified emission reduction (in order to offset their own GHG emissions) to invest in developing countries for the dual objects of reducing GHGs and contributing to sustainable development. Natural rubber sector is an ideal case for funding under the CDM of the Kyoto Protocol as part of the LULUCF activities. A future incentive-based carbon abatement project for natural rubber plantations under the CDM will be compatible with the socio-economic and ecological criteria set out under the CDM for sustainable development.
If the entire Global NR industry speaks in unison and wins at the conference of parties for inclusion of the eco-friendly rubber cultivation for aid under the Clean Development Mechanism of Kyoto Protocol, NR plantations can avail themselves of the benefit of vast global funding.
The United Nations Conference on Trade and Development (UNCTAD) had initiated action by a Project Proposal, ‘CDM Challenges and Opportunities in The Rubber Commodity Sector’, which was expected to be completed in eight months, the outcome of it is still unknown.

Reported in Dailymirror
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...by i3gconsultants@ 07:07:38 on 2012-07-10

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Sector: Plantations

Refuse tea exporters disgrace country, says minister


Plantation Minister Mahinda Samarasinghe yesterday said that extensive raids would be conducted to nab the unscrupulous exporters of refuse tea. The export of the refuse tea had tarnished the image of the country. He would submit a Cabinet paper to establish refuse tea auction centres in the country soon.
Tea auction centres were abolished a few years ago in Sri Lanka. But to save the country’s image he would seek direct government intervention to compel exporters to sell their low quality tea in the country, he told a Media Conference held at the Ministry’s auditorium on July 9.
Minister Samarsinghe said that the Plantation Ministry with assistance of the Sri Lanka Tea Board would intensify sudden raids on tea exporters who were nabbed on the verge of massive export racket of the refuse tea. "What happens is that some exporters extract more than 10 per cent of the low quality tea and try to sell them to other countries. What they are doing is a disgrace to the country. Sri Lanka is famous for pure Ceylon tea. I have decided to stop that practice by introducing tea auction centres,"Minister Samarasinghe stressed.
Plantation Ministry Ms. Sudhrama Karunaratne said that the National Plantation Awards ceremony would be held on July 12 at the Temple Trees. President Mahinda Rajapaksa would confer the awards. The Ministry had selected large, medium and small-scale tea growers and provincial plantation companies for the awards. Sri Lanka had been producing 150,000 metric tons of rubber requirements, but the production was not adequate to meet the demand. The award ceremony would encourage rubber cultivators to cultivate more rubber.

Reported in The Island
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...by i3gconsultants@ 07:07:33 on 2012-07-10

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Sector: Bank Finance and Insurance

Monetary Board faces dilemma over robust credit growth


The private sector borrowed more money in the first five months of this year as against the corresponding period of 2010, prompting analysts to claim that Government efforts to apply brakes to credit growth remain a challenge.
The robust credit growth despite monetary policy measures implemented in February and April this year, along with other fiscal moves, is likely to be a thorn when the Monetary Board meets today for the July review.
Between January and May of this year, credit to the private sector amounted to Rs. 211 billion, whereas in the same period of last year, the figure was around Rs. 166 billion.
During the one year period ending May 2012, credit to the private sector has grown by Rs. 556 billion.
As per the latest Central Bank data, credit growth to the private sector in May was 33.5%, low in comparison to 34% in April and 36.6% in December last year, yet banking industry experts opined that a much sharper deceleration was  envisaged by the Government following monetary and fiscal measures announced in February this year.
As at end May, cumulative credit to the private sector amounted to Rs. 2.215 trillion, up from Rs. 2.050 trillion in January 2012 and Rs. 2.005 trillion in December 2011. In May 2011 the figure was Rs. 1.659 trillion and in January 2011 it was Rs. 1.530 trillion and December 2010 it was Rs. 1.494 trillion.
Domestic Banking Units (DBUs) lending to the private sector crossed the Rs. 2 trillion mark as at end May, reflecting a 36% growth year on year, whilst lending by Foreign Currency Banking Units (FCBUs) grew by 12% to Rs. 197 billion.
Some viewed the overall credit growth of over 33% as high in comparison to what the Government expected. In that context, the upcoming July monetary policy review scheduled for today will be crucial, analysts said. The Monetary Policy Review statement for July 2012 will be released tomorrow (Wednesday, 11 July 2012) at 7:30 a.m. and not today as previously scheduled.
Following the June review, the Central Bank said the policy measures adopted during the period February to April 2012 to curtail the growth of credit, reduce import demand and thereby stabilise the external sector have begun to have an effect on the relevant variables. This and other reasons saw policy rates kept unchanged.
The increase in private sector credit in absolute terms in April 2012 was only Rs. 18.7 billion, significantly lower than the average monthly growth of Rs. 51.8 billion in the first quarter of 2012 and Rs. 27.4 billion in April 2011.
However, May data is likely to have foxed the Central Bank as the increase over April was Rs. 36.1 billion, which is also above the average month growth in the first quarter.
The Central Bank also said market interest rates, which had increased substantially so far in 2012 as a result of tight monetary conditions, have started to stabilise in recent weeks.
Following the May policy review, the Central Bank sounded optimistic as well. It said market interest rates have moved up gradually, reflecting the tightening of monetary conditions. Benchmark Treasury bill yield rates have increased and in turn, deposit and lending rates of commercial banks as well as other financial institutions have shown an increasing trend.
Meanwhile, banks have been directed to take measures to reduce the growth of loans and advances to a range of 18 to 23%. Hence, although broad money (M2b) growth was 22.8%, year-on-year, by March 2012, monetary aggregates are expected to decelerate significantly over the balance part of the year.
In May 2012, M2b was down to 20.9%, which is welcome.
Net credit to the Government was up 44.7% in May to Rs. 1.02 trillion, of which lending by monetary authorities was up 243.7% to Rs. 329.5 billion, year on year. Growth in DBUs lending to the Government remained at 18% both in April and May, with the cumulative figure at the latter month at Rs. 566 billion.
On the other hand, credit to corporations grew by 107% year-on-year to Rs. 267 billion, with the bulk of it coming via FCBUs (Rs. 193 billion, up by 268%).
The Central Bank last raised policy rates in April – a move largely linked to explosive growth in credit.
The bank admitted in April that notwithstanding the increase in the policy interest rates in February 2012 and the Direction issued to restrain the growth of credit extended by licensed banks, there are still some signs that credit growth is continuing at an undesired pace.
Therefore, the Monetary Board was of the view that a further adjustment of policy rates of the Central Bank is warranted to ensure a smooth deceleration of credit growth through the year in order to achieve the year-end target and to anchor inflation expectations.
In April the Repurchase rate and the Reverse Repurchase rate were increased by 25 basis points and 75 basis points respectively to 7.75% and 9.75%, which remain effective even as of today. The April revision came soon after the Central Bank in February raised the Repo and Reverse Repo rates by 50 basis points in addition to placing restrictions on bank lending.

Reported in Dailyft
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...by i3gconsultants@ 07:07:36 on 2012-07-10

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Sector: Hotels and Travels

Sri Lanka gives sweeping tax breaks to India's ITC hotel


A mixed property project including a hotel in Sri Lanka's capital Colombo by India's ITC has been given sweeping tax breaks under the island's strategic investment law, a government notice said.
Welcome Hotels Lanka (Pvt) Ltd, a newly incorporated ITC unit in Sri Lanka has already paid 73.5 million US dollars for a 99 lease of a 5 acre block state land near Colombo's main beachfront.
The firm is expected to invest 140 million US dollars over 60 months in a mixed development, a state gazette notification said.
The firm has been given a 10 year tax holiday starting from the first year of profits or three years after operations, and 6 percent of half the rate of tax for hotels (whichever is lower) for the next 15 years.
Up to 20 expatriate staff will be exempted from Pay As You Earn tax for five years .Interest on foreign loans taken for capital expenses, technical fees to consultants management fees up to 3 percent of revenues, royalty and marketing fees up to 1.5 percent of revenue will be exempt from withholding tax.Incentive management fees up to 10 percent of gross profit will also be exempted withholding tax. Charges for bookings made by ITC's central reservation system or 5-6 dollars per reservation will be also be exempt.
Imported and locally purchased project related goods and services, whether by the project company or contractors will be exempt from value added tax, port and airport development levy and customs duty.India's ITC tobacco, consumer goods and leisure group operates through a luxury ITC Hotel brand, 5-star Welcome Hotel brand, Fortune mid-market range and Welcome Heritage brands.It also has a franchise to the Starwood hotels brand.

Reported in LBO
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...by i3gconsultants@ 07:07:04 on 2012-07-09

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Sector: Hotels and Travels

US-Brit investors willing to pump US$ 90mn plus for 7- star Gaffoor bldg hotel project, but…


A consortium of American and British investors are willing to inject a total sum of in excess of US$ 90 million for a 300 room plus seven star hotel project in the now virtually- collapsing Gaffoor building in Fort, but what is preventing the project from proceeding is the snags related to the ownership of the building.
"There are investors who are more than keen to invest over US$ 90 million for the project which is inclusive of an estimated land value far in excess of the market prices for the 117 perches of land that the building is on, and an unprecedented amount for the 300 plus seven star plus rooms which will be over 40 storeys so far spent for a five star hotel of this nature hitherto spent in Sri Lanka," sources close to the project told The Island Financial Review yesterday.
The investors will also come in with a star class internationally acclaimed brand, through it was premature to declare it yet. They have taken into cognizance the view of the Colombo port and the sea which is adjacent to it, the sources said.
Another major drawback is the ownership of the building. Although on paper, the EAP Group and the Edirisinghe family owns it, there are a series of others who are claiming ownership of the building which also includes the descendants of the original owners- the Gaffoor family and who have got injunctions against the sale of the building. Attempts by the consortium to acquire it outright has been futile for so- called owners who already have taken injunctions against the sale of the building which has scared the investor, sources point out.
They also said that this process has scared the investors as litigation would take indefinite periods of time and would delay the process.
The only practical way out for the collapsing building was for the government or the Urban Development Authority, which has given it a classification of a Grade I listing, to acquire it and call in for fresh proposals or by the time the legal snags were over, the entire building would be in a state of ruination so that no one could use it, they said.
A structural engineer, talking to this newspaper on the basis of anonymity, said that the external skin of the building was a separate structure which will enable any developer to retain the façade of the building without causing damage and the main development could be within this structure.
In addition to this, by preserving the peripheral structure, will also make the collonade (the undercover path round it which have got columns along it) and the collenade is an attractive feature which has been added by the British into many buildings in Colombo Fort enabling the user to walk round the natural element and protected from the sun and the rain).
The UDA had the powers vested in it to issue a conservation order to the owners of the building as it is a building that the UDA deems it of national importance, they said.The sources also said that there were many buildings in Colombo which were of architectural and archaeological eminence which have been demolished d in the recent past by making use of loopholes in the legal systems in protecting such buildings and they appealed to the National Trust of Sri Lanka to probe in detail and intervene in protecting in the few such buildings which are yet standing which are yet a part of Sri Lanka’s national heritage.
Another drawback to the project being pursued is that there are squatters who have been at the premises who have been present and they too might also demand their squatters’ rights. So, the only way out to salvage the building is for the government and or the UDA to acquire it and call for fresh bids for investment taking into consideration its prime location and also to conserve the building while saving it from total collapse, they remarked.

Reported in The Island
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...by i3gconsultants@ 07:07:53 on 2012-07-09

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Sector: Bank Finance and Insurance

Will the exchange rate stabilise soon?


Dr. Sirimal Abeyratne, Professor in Economics, University of Colombo

Will the LKR value of the USD stabilise at LKR 125, or 135, or at some other rate? How long and how fast will the LKR depreciate as it did during the past couple of months? Should we import now, and not later? Should we bring about our export proceeds to the country or not? If not, how do we make our overhead payments – should we get an overdraft from the bank? Should we change our USD into LKR, or wait for a few more days or weeks? All these have become business questions related to uncertainty and risks these days, no matter whether the businesses are big or small.
The issue could be analysed well by focusing on the theories of exchange rate determination: looking at the issues such the over-shooting problems, short-term determinants, long-term determinants, purchasing power parities and interest rate parities. We attempt to answer the question in a simple way, without reflecting upon its theoretical underpinnings.
Gala time is over
I wrote in the People Bank’s Economic Review (Volume 35, Dec.2009/Jan.2010 Issue) an article titled "Gala Time in Rainy Days: Macroeconomic Implications of the Financial Inflows in 2009". The paper is about the future macroeconomic implications of the IMF Standby Arrangement amounting to USD 2.6 billion approved in July 2009 and, the subsequent financial inflows that it brought about through improved investor confidence (comprising largely, the government’s foreign borrowings). Let us look at the concluding section of this paper:
"The key issue is that, although the IMF assistance and the subsequent capital inflows helped the country to avert the possible balance of payments crisis, the respite seems to be temporary and could be dangerous. The conditions attached to the IMF Stand-By Agreement and the related economic performance could avoid this danger in achieving sustainable balance of payments position. In achieving a sustainable balance of payments position, Sri Lanka will have to depend more on trade performance in the current account and on foreign direct investment in the financial account than on borrowings and volatile capital inflows. This will also help the country to get the economy on right track ensuring a sustainable rapid growth.
The conditions attached to the IMF Stand-By Agreement have opened up an important opportunity to embark upon a bold reform process to ensure fiscal and monetary discipline. But the macroeconomic performance so far appears to be lagging far behind the expectations. It is not wise to think that the reserve position is comfortable now and that there will be more foreign exchange flows with the anticipated revival of tourism and some foreign direct investment flows. It is also not the issue whether the country is able to receive the remaining tranches of the IMF Stand-By Agreement. The more important issue is whether the country is prepared to exploit the opportunity that has been accompanied by the IMF assistance and to face the challenge of reforms."
We have almost exhausted the USD 2.6 billion and, we are now thinking of asking more loans from the IMF. Obviously we did not exploit the opportunity so that today the foreign exchange market is in uncertainty and risk. As the "gala time" has surely come to an end, the Central Bank was left with no other option than letting the market to determine the exchange rate. After an initial devaluation of the rupee by 3% as proposed last year in the Budget Speech 2012, the Central Bank withdrew its intervention in the foreign exchange market in February 2012. Since then, the market-determined daily exchange rate has been highly volatile with the rupee depreciating.

After Sri Lanka made a narrow escape from a balance of payments crisis in July 2009 thanks to the IMF Standby Arrangement, the rupee did not get depreciated. In fact, it has appreciated by about 10% during the period till October 2011. The short-term capital was flowing in; foreign investment in government securities was relaxed; the government also went on foreign borrowings from time to time. As there was no shortage of foreign exchange, no matter whether foreign exchange was earned or borrowed, and short-term or long-term, the Central Bank was also able to build up its foreign reserves again. The party did not last long; not surprisingly, the foreign exchange inflows turned out be outflows, resulting in massive losses of the foreign reserves. It was obvious that the Central Bank was not in a position to continue with its strategy for long. Since the time that the Central Bank left the exchange rate to be determined by market forces, it has depreciated significantly by about 15% by May 2012.
Exchange rate stability and flexibility: contradictory?
In fact, the exchange rate has to be stable and flexible, but anyone who looks at the past Sri Lankan experience would realise that the two requirements are contradictory. In order to keep the exchange rate stable, the Central Bank has to intervene as it did throughout the past few years (loss of flexibility). In order to keep its flexibility, the exchange rate should be left to the market as was the case during the past few months since February (loss of stability). However, we must acknowledge that the two are not necessarily contradictory, unless the country suffers from fundamental weaknesses in its balance of payments.
What is the fundamental weakness in the Sri Lankan balance of payments under which the country cannot achieve exchange rate stability and flexibility simultaneously? The most important issue is the weakening of the foreign exchange earning sectors that are more stable and sustainable and, that reflect the country’s productive capacity. More specifically, the country should depend among the current account transactions more on growing exports than on private remittance and, among the capital account transactions more on growing foreign investment than on government borrowings. Sri Lanka has nurtured exactly the opposite in both accounts so that it continues to suffer from a fundamental weakness in its balance of payments.
For Sri Lanka, the past decade was the decade of weakening exports and strengthening private remittancea. Private remittance has grown faster than any other foreign exchange earning sectors. As of 2011 private remittance accounts for USD 5 billion and, has become the largest foreign exchange earning sector surpassing even the textiles and garments sector. Private remittance alone account for more than half of the total exports which amounts to USD 10 billion. Fast growth of remittance does not reflect a country’s productive capacity or the prosperity, but its misery and poverty.

The export performance over the past decade is a matter of great concern for anyone who expects Sri Lanka to achieve its sustainable growth and stability. It has taken about 10 years for Sri Lanka to double its export earnings which is too long for a country that expects to grow fast. In fact, a small country like Sri Lanka cannot grow fast along with a weakening export performance, as the two have to go hand in hand. The simple truth is that the domestic market of Sri Lanka is too small to sustain higher growth momentum at 8-10 percent. Yet, as a percentage of GDP, exports have recorded a steady decline from 33% in 2000 to just 17% in 2010. Trade deficit has also increased, reporting over 16% of GDP, despite its decline in 2009/2010 due to a result of, not any domestic policy outcome, the sharp fall in import prices against the global financial crisis.
Sri Lanka is also one of the poorest countries in Asia in terms of FDI inflows, in spite of recorded USD 1 billion last year. The accumulated foreign capital stock of the country (for the past 3 decades) remains at around USD 6 billion only, whereas many countries in the East and Southeast Asian region receive more than that in a given single year. However, government’s annual foreign loans has increased over USD 1 billion since 2006 and, remained at USD 2.5 – 3.00 billion during the past 2 years.
The message is clear enough. As long as Sri Lanka does not improve its balance of payments with more stable foreign exchange inflows from productive sources, the exchange rate will move on a long-term downward path characterized by short-term volatility. What is needed is also clear enough. As long as the short-term and unproductive sources of foreign exchange receipts dominate the balance of payments, the exchange rate would continue to respond to their volatility. While old-style measures such as import controls and foreign exchange restrictions can provide a temporary cushion, their negative effects on long-term economic objectives are not simple. Growing foreign exchange earning sectors such as the tourism industry can also contribute, but the country needs to address the fundamental issues sooner or later. The question that needs to be addressed is why Sri Lanka cannot accelerate its overall export performance and, why the investors do not look at Sri Lanka as an attractive investment center of Asia? The answers to these two questions will enlighten us on what is to be done.

Reported in The Island
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...by i3gconsultants@ 07:07:08 on 2012-07-09

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Sector: Bank Finance and Insurance

Private sector credit up in May, total crosses Rs. 2 trillion mark


Bank loans to the private sector picked up in May 2012 from a month earlier with the outstanding private sector debt portfolio of the banking system topping two trillion rupees. Government borrowings from the Central Bank declined while loans from the banking sector picked up, latest data released from the Central Bank last Friday showed.
The Central Bank has raised policy interest rates twice this year to curb and balance of payments crisis and currency dealers told this newspaper last week that credit growth was falling as a result of high interest rates and an 18 percent cap on credit growth slapped by the Central Bank.
Standard Chartered Bank in a recent report said that banks are turning down loan applications from large corporate seeking to expand their businesses. It also said that the government was heavily borrowing from the domestic banking sector, already exceeding the target set for the year.
New loans from the domestic banking sector to the private sector amounted to Rs. 31.7 billion in May 2012, up from the Rs. 15 billion in new loans generated in April.
Total new loans to the private sector from the domestic banking sector reached Rs. 197.4 billion during the first five months of this year, which was 40.47 percent of the total new loans created in 2011.
Total outstanding credit to the private sector reached Rs. 2,018.9 billion as at end May 2012, up 36 percent from Rs. 1,484 billion a year earlier. Loans from foreign sources topped Rs. 197 billion, up 12.1 percent from a year earlier.Government borrowings from the Central Bank fell by Rs. 22.2 billion in May after picking up by Rs. 24.7 billion the previous month. However, borrowings from the domestic banking sector grew by Rs. 15.6 billion in May, as against Rs. 4.6 billion the previous month.
Outstanding loans to the government from the Central Bank reached Rs. 329.5 billion as at end May 2012, up 243.7 percent from Rs. 95.9 billion a year earlier. The outstanding debt stock from the domestic banking system amounted to Rs. 566 billion, up 18.7 percent from Rs. 476.9 billion a year ago.Loans to the government from off shore banking units declined 4.5 percent to Rs. 129.3 billion from Rs. 135.5 billion a year earlier.
Loans to public corporations declined 2.9 percent to Rs. 73.8 billion as at end May 2012. Loans from foreign banking sources rose 268.2 percent to Rs. 193.1 billion.

Reported in The Island
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...by i3gconsultants@ 07:07:56 on 2012-07-09

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Sector: Bank Finance and Insurance

$ 1.24 b profits via CB investments of reserves


The Central Bank has made $ 1.24 billion profit via investments of foreign reserves during the past six years, which it said was substantially higher than the figure achieved in the previous 10 years.
In 2011, the profit was $ 430 million and in 2010 it amounted to $ 341 million.
These figures were released following press reports to the effect that Central Bank had made a loss by investing in Greek bonds.

Reported in Dailyft
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...by i3gconsultants@ 07:07:02 on 2012-07-09

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Sector: Hotels and Travels

Marriott announces first hotel in Sri Lanka


Tie-up with East West Properties to see 200-room, 11-storey Weligama Marriott Resort and Space come up in mid 2014.
Marriott International has announced the signing of an agreement with Weligama Hotel Properties Ltd., a fully-owned subsidiary of East West Properties PLC, to open a hotel in Sri Lanka – the Weligama Marriott Resort & Spa in 2014, which will be Marriott’s first property in the country.
The 200-room, 11-storey Marriott Weligama Resort and Spa will be operated under Marriott’s flagship Marriott Hotels & Resorts brand.
“Marriott is delighted to be extending its portfolio and opening a world-class hotel in Sri Lanka” commented Simon Cooper, President and Managing Director Marriott, Asia Pacific.
“Sri Lanka is a destination that has great potential and opportunity and we hope to capitalise on that and establish a strong presence in the country. We are confident that the reputation of Marriott Hotels and Resorts and the power of Marriott Rewards, our loyalty programme, will create great interest from both local and international travellers and be successful in promoting the beautiful area of Weligama Bay, as well as the country itself as this is our first hotel here.”Commenting on the project Nahil Wijesuriya, Chairman, East West Properties PLC said: “We are among the first companies in Sri Lanka to sign up with an international branded hotel company and to open as early as 2014. The resort is being built according to Marriott International’s five star brand standards, with a beach frontage of 115 metres on the Galle-Matara road in the south east of the country. The construction is being carried out in-house by East West Engineering Services (Pvt) Ltd. so we have direct control of every aspect of the construction of the resort and are confident that it will be of the highest standards and quality.”
Marriott International is a world-renowned operator and franchiser of a broad portfolio of hotels and resorts which include Bulgari Hotels and Resorts and The Ritz Carlton. Marriott International currently operates over 3,700 hotels in over 73 countries and territories around the globe.

Marriott Hotels and Resorts are Marriott International’s signature and most widely-distributed brand and is also known for the world’s largest loyalty program, Marriott Rewards.
Weligama, located 144km from Colombo, is a popular tourist destination renowned for its sandy beaches. Famous for its stilt-fishermen perched on a cross bar of a single pole planted into the seabed, this attraction has been captured in every corner of the world depicting Sri Lanka as a preferred destination of choice for travellers from all over the world.
The hotel will be located in Weligama, a part of Matara which is one of the largest cities on the south western coast of Sri Lanka, where tourism and fishing are the two main businesses. Tourism is the mainstay of the south western coast of Sri Lanka.
The services sector is expected to be the primary engine of growth in coming years, which is expected to be led by tourism. Year 2011 was declared as the ‘Visit Sri Lanka’ year by the Government. The country witnessed record levels of tourist arrivals in the early months of the year; a trend that is expected to continue for the remainder of the year.
“We see great opportunity in Sri Lanka with ever-increasing visitor numbers to the country,” continued Cooper. “While India, UK and Germany are the largest source markets for hotels in Sri Lanka, the Middle East and Russia are the emerging source markets and with the Sri Lanka Tourism Development Authority aiming to achieve a target of 2.5 million tourist arrivals by 2016, we are confident of attracting great leisure and business guests to the property.”
With some 640sq metres of flexible ballroom space, the hotel should prove extremely popular in the Meetings, Incentives, Conferences and Exhibition (MICE) market, while those travelling to Weligama Marriott Resort & Spa on holiday will be able to take full advantage of the wide leisure offering at the hotel which includes three restaurants, a pool with a pool bar, spa, fitness centre and a beautiful stretch of beach.
Marriott International, Inc. is a leading lodging company based in Bethesda, Maryland, USA with more than 3,700 properties in 73 countries and territories and reported revenues of over $ 12 billion in fiscal year 2011.
The company operates and franchises hotels and licenses vacation ownership resorts under 17 brands, including Marriott Hotels & Resorts, The Ritz-Carlton, JW Marriott, Bulgari, EDITION, Renaissance, Autograph Collection, AC Hotels by Marriott, Courtyard, Fairfield Inn & Suites, SpringHill Suites, Residence Inn, TownePlace Suites, Marriott Executive Apartments, Marriott Vacation Club, Grand Residences by Marriott and The Ritz-Carlton Destination Club. There are approximately 300,000 employees at headquarters, managed and franchised properties.
Marriott is consistently recognised as a top employer and for its superior business operations, which it conducts based on five core values: put people first, pursue excellence, embrace change, act with integrity and serve our world.

Reported in Dailyft
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...by i3gconsultants@ 06:07:11 on 2012-07-09

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Sector: Bank Finance and Insurance

F&G Trustees fail over 4,000 hapless depositors, warned by Supreme Court


Member of Trustees of the two trusts appointed to find a redress for over 4,000 depositors of failed Ceylinco companies, F&G Real Estate Company Ltd, (F&GRE) and F&G Property Developers Pvt Co. Ltd (F&GPD) are facing tough legal action for breach of trust, if they fail to implement the objectives of the two trusts within two months.A 3-member Supreme Court bench headed by Justice Shirani Thilakawardane made this order recently considering a Fundamental Rights petition filed by six depositors claiming that the trustees have delayed to achieve objectives of the trust by failing to implement a proper procedure during the past 19 months.They alleged that the trustees have made payments amounting to a maximum of Rs. 125,000 per month to each of the trustees during the past 19 months without any effective work towards repayment of the monies of depositors.� It transpired in court that the trustees have also paid one trustee’s mother’s hospital bill amounting to Rs.500,000.Considering the submissions made by the counsel appearing for the depositors, the court ordered the trustees to furnish statements of accounts, containing all assets including properties and monies that have been disbursed by them and monies that have been received by them in terms of the trust within two months.They have been directed to submit a list of trust properties and another list of charges and payments made by the trust to all parties including all employees. Trustees will have to submit a repayment plan for depositors within four months in accordance with the court order, it was revealed.Stern legal action will follow if the trustees fail to follow these orders for non compliance of the terms of the trust and/or mismanagement and/or breach of trust.The trusts were set up via a court order in August 2010 after considering a Fundamental Rights petition filed by the F&G Depositors Association against the management of these companies. More than 1,700 people have deposited money in the F&GRE while 2,500 people have invested in F&GPD with total deposits exceeding Rs 7.8 billion.The board of trustees of the F&GPD are A. Sarath de Silva, former CEO – Bank of Ceylon, S.E. Mayadunne – former Auditor General, Upali Jayanetthi – former Tax Commissioner, S.N. Wijepala – former Government Chief Valuer, Ravi Algama – lawyer, Neelani Goonatilake – President, F&G Depositors Association and M.A.Chandra Nalini – committee member, F&G Depositors Association. The board of trustees of the F&GRE are five members of the F&GPD Trust along with Lionel Katuwawala, a former senior Central Bank officer and P.D. Nesakumar.


Reported in Sundaytimes

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...by i3gconsultants@ 15:07:22 on 2012-07-08

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Sector: Hotels and Travels

Tourism industry scrambles over rupee fluctuations


A lack of consensus looms over Sri Lanka’s tourism industry about new changes proposed to permit transactions in dollars between hotels and travel agents. Expecting to make a ‘fast buck’ out of the recent frequent rupee fluctuations, the tourism industry has come up with a new problem as to who should benefit from all of this.Some term it as a benefit to the industry while others opine it could be detrimental since all stakeholders would request for this to be extended to them as well.Business Times spoke to the industry heads to ascertain their views. Tourist Hotels Association of Sri Lanka (THASL) President Anura Lokuhetty said this proposal was very important as it was made at a time when the dollar was constantly fluctuating.He pointed out that since they were unable to obtain rupee loans dollar transactions this would allow them to obtain foreign dollar loans.Commenting on the gains made by the industry, he explained it could provide for massive investments for construction of hotels.
While charter operators currently pay in dollars, it was observed that this new proposal should help travel agents as they were paid in foreign currency and using the exchange rate change “becomes a mess.”If jewellery shops and the garment industry could be engaged in this type of transactions, he questioned why this could not be extended to the tourism industry as well.About three weeks back discussions were held with the Economic Development Ministry officials who are believed to be in favour of the proposal, Mr. Lokuhetty said.� The current practice however, is for both the Sri Lanka Association of Inbound Tour Operators (SLAITO) and THASL to gether with the Ceylon Chamber of Commerce (CCC) to meet twice a week to fix a rate that would be used within the industry.Although the client would pay in dollars the transactions would be carried out against the dollar rate and paid back in rupees, new SLAITO President Mahen Kariyawasam.Appointed just last week at its recent AGM, he said this move would create a demand for other stakeholders within the industry to make payments with tourists and travel agents in dollars.Mr. Kariyawasam explained that paying in dollars would undermine the Sri Lankan rupee noting that this could become an issue in the future.At present hoteliers were said to lose only a marginal amount of 0.5-1%, he said adding that if the new proposal should get underway it could result in the travel agents losing out.He observed that despite fuel price hikes or increases in entrance ticket they could not pass it onto bookings that were already made. In this respect, he said the fixed rate was the “cushioning effect” but agents would stand to lose this as well under the new proposal.


Reported in Sundaytimes

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...by i3gconsultants@ 15:07:22 on 2012-07-08

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Sector: Plantations

Tea industry needs assistance


The tea industry is a prime driver of the economy. It seeks state assistance to funding requirements in re-planting, Colombo Tea Traders Association chairman Jayantha Keragala said.
The country's tea industry has contributed significantly to the economy over the past 100 years.
The Ceylon Tea brand consolidated country's position on the world map. The industry contributed US $ 1.5 billion net export income last year, He was addressing the 118th Annual General Meeting last week in Colombo. The tea industry supports nearly 20 percent of the population. With outsourcing and other intermediaries, 4.3 million secure their livelihood through the industry, he said. The tea industry despite increases in the export earnings on yearly basis faces constraints including labour issues. Due to average output of a hectare remaining unchanged, it affects the production cost adversely, he said. 
Most plantations need re-planting and the cost involved is a problem for many SMEs in the industry. The sharp currency devaluation has also affected the industry, he said. “We need out of the box thinking as the way forward strategy for a broader outlook approach. Sri Lanka has fallen behind in the production capacity to fourth place from being the third in the previous years. The country is the third largest tea exporter in the world. 
We have to be conscious of our vulnerability in the global tea industry,” Keragala said. The Tea Research Institute needs to play a role in dealing with adulteration and it needs funding. The establishment of baseline data is necessary to address the issue and an integrated computer system could facilitate this effort, he said. "Sri Lanka's tea industry will be ICT oriented with the implementation of the computerization process. The industry while recognizing the role played by the tea brokers, emphases on the need for spot checks on sellers and broker ware houses to bring in the aspect of ethical behaviour," he said.

Reported in Dailynews
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...by i3gconsultants@ 09:07:19 on 2012-07-07

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Sector: Hotels and Travels

Lankan envoy upbeat on doubling US arrivals here


The Sri Lankan embassy in Washington is aggressively promoting the island nation as a tourist destination and Ambassador Jaliya Wickremasuriya is upbeat on doubling arrivals to 45,000 in the next three years and to 100,000 by 2017."We are actively promoting Sri Lanka as a destination for tourism and investment. Statistics for 2011 revealed a total arrival of 24300 US tourists to Sri Lanka. This is compared to 19,000 recorded in 2010. This shows an increase of 28 percent over 2010. Our short term objective is to increase this number to 45,000 within the next three years while expecting, in the long term, arrivals of around 100,000by 2017," Sri Lanka’s envoy to Washington Jaliya Wickremasuriya told The Island Financial Review yesterday He said that the Embassy plans to achieve above objectives by adopting the following measures:-
* Build awareness of Sri Lanka as a Leisure, Sports, Adventures, Eco Tourism and business travel destination to meet the government’s goal of 2.5 million tourists by 2016;
* Increase the number of tourists from the US to raise visitor numbers from 24,000 to 45,000 by 2014 to increase economic benefits.
* Generate and continue positive media coverage through electronic, print and social media positioning Sri Lanka as the world’s most treasured island;
* Combat negative perceptions and impediments to travel;
He said that the embassy was going in cash in on the US tourists to India. "The Embassy has undertaken a series of well coordinated events to promote Sri Lanka. It is imperative for us to inform US visitors what they could expect by visiting Sri Lanka. Nearly 300,000 US tourists visit India annually. More than half a million travel to Thailand. I always believe that distance is not the only reason that reflects a low turnout of US touriststo Sri Lanka. It is largely attributable to lack of sufficient flight connection to Colombo, the link from Sri Lanka to outside world. Of course in time to come there will be more flight connections to Sri Lanka," he said.
He said that young US tourists were very adventurous. They need to go to places which can offer special attractions. For example, with Arugam Bay emerging as one of the world’s premier surfing destinations more surfers consider Sri Lanka. Moreover, wildlife, our elephant orphanage, heritage sites and beautiful beaches, traditionally well-known Ayruvedic treatments are some of our other major attractions. In my view, disseminating information on these aspects could be the best in attracting US tourists to Sri Lanka.
Commenting on the promotions that the embassy has done, he said that under the image building programme the website – www.slembssyusa.org was fully restructured with a theme highlighting the beauty and tourist attractions of Sri Lanka. The flash movie opens with the homepage which shows a number of high quality images of Sri Lanka convincing the viewers to choose Sri Lanka as an attractive destination to travel. "We receive very encouraging responses from our viewers.The Search Engine Optimization was done applying key terms related to tourism and integrating the social media network, linking tourism related sites," he said.
In order to achieve the maximum dissemination of all positive news about Sri Lanka, the Embassy has established itself profoundly in all major social media platforms as follows.
* Facebook page – (http://www.facebook.com/slembassyusa) has over 1000 weekly reach for all its posts that has the potential to reach over 175,000 face book users connected to the network.
* All tourist promotional news/ videos/ pictures about Sri Lanka published in local and international media are posted to the page daily.
* The Facebook page has been designed as a hub to access other social media platforms of the embassy – You Tube, Twitter, flicker and Pinterest.
The Embassy has a dedicated You Tube channel for the travel and tourist promotion of Sri Lanka titled – "Wonder of Asia". (http://www.youtube.com/wonderofasia). This channel was launched in mid 2011 as an internet video resource for the promotion of Sri Lanka travel trade.
"Our Embassy utilises a list hosting service – Vertical Response to channel and distribute its messages to the targeted audiences. It also maintains a database of over 100,000 contacts categorized into number of lists such as International Media, Travel Writers, Sri Lanka Media, Sri Lanka Community, etc. on this list hosting account," he said.

Reported in The Island
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...by i3gconsultants@ 08:07:37 on 2012-07-07

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Sector: Bank Finance and Insurance

UNP in agreement with TUs to have EPF, ETF investments in the Colombo bourse audited


The Opposition United National Party also agreed with the clarion call of the JVP led trade unions- predominantly the Inter- Company Employees’ Union for the Employees’ Trust Fund (ETF) and the Employees’ Provident Fund (EPF) investments in the Colombo Stock Exchange be audited.
The proposal was to have the investments audited either by the Auditor General or by an independent auditor which will give a true and fair view of how the investments have faired.
"While we have unearthed the tip of the iceberg which has proved that the government is manipulating the EPF funds in the Colombo Stock Exchange through the aborted national Savings Bank/ The Finance Company share deal, the EPF, ETF, the Bank of Ceylon Fund, the Pension Fund, Insurance Reserve Fund which are the captive sources at the disposal of the government and they have been subject to insider dealing and exposed to the sycophants of the government to make vast amounts of money, Colombo District UNP MP Ravi Karunanayake told The Island Financial Review.
He said : " They have had vast amounts of money in stock exchange listed corporates such as Laugfs Gas, Nawalaoka, Galadari, Ceylon Grain Elevators, Browns, and others. It is also of paramount importance that the government, on behalf of all the stakeholders, forces itself to be subject itself to an audit either by the Auditor General himself or an independent auditor so that it could justify the reasons as to why it bought these shares at such high prices and also explain the drastic drop is the values of these shares as of today which has tantamounted to the losses of Rs. 15 billion to stakeholders"
This follows the trade unions, spearheaded by the JVP – led Inter Company Employees Union announcing that they shortly seek Supreme Court intervention to force the government to audit the investments of the Employees Provident Fund in the Colombo Stock Exchange.
"This is indeed very mandatory that this is done at the earliest possible time as EPF investments in the Colombo Stock Market amounting to Rs. 60 billion has resulted in a Rs. 12 billion capital loss and it is now worth only Rs. 48 billion," President of the Inter- Company Employees Union Wasantha Samarasinghe told The Island in an interview last week.
We are already talking to trade union leaders who represent the private sector and we will be going for litigation in the Supreme Court as there is no transparency in these transactions which is public property, Samarasinghe said.These unions also expressed solidarity and agreement to sink in their differences with other political parties in the common goal of safeguarding the interests of the nation’s largest pension fund.
One of the proposals that these trade unions will be seeking through the Supreme Court will be for the creation of legislation for the EPF to have two trade union leaders on its Board of Directors in the same manner as the Employees Trust Fund. "If the ETF could have two members of the trade unions on its Board of Directors, there is nothing to stop the EPF also having same, Samarasinghe stressed.One of the concerns expressed by the trade union leader was the arbitrary investments of the EPF in the Colombo Stock Exchange were permission was given only for the fund to invest in blue chips in accordance with EPF Act No 5(E). He also explained a judgment given by former Attorney General K.C. Kamalasabayson who said that even investments in Colombo Stock Exchange listed blue chips should only done with advise Some of the other concerns that were expressed in the EPF investments in selected shares was in Ceylon Grain Elevators where the share which was trading Rs. 250 was now trading at Rs. 48. 
"The EPF, however, as a mitigatory measure, had bought some shares while it was on a downward trend at Rs. 185, but the total capital loss was Rs. 700 million on an investment of Rs. 3 billion," he said. The investment into the shares of Laugfs Holdings where 57 million shares were bought at an investment of Rs. 3.3 billion had nosedived to Rs. 1.4 billion, he charged.

Reported in The Island
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...by i3gconsultants@ 08:07:09 on 2012-07-07

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Sector: Bank Finance and Insurance

Sri Lanka excess liquidity up, rates lower


 Excess liquidity in Sri Lanka's interbank markets have topped 20 billion rupee over the past three days easing tighter monetary conditions that prevailed a week earlier, official data show.
On Friday overnight gilt backed repos were quoted around 9.35/50 percent below the policy rate of 9.75 percent and un-backed call money was at 10.40/50 percent, dealers said.The weighted average repo rate has fallen from 9.68 percent on June 22 to 9.41 percent, which is over 30 basis points below the policy rate of 9.75 percent.The weighted average call rate has eased from a peak of 10.64 percent on June 22 to 10.40 percent Thursday.
Excess liquidity rose to 26 billion rupees on Wednesday and remained at 21.8 billion rupees on Thursday.Excess liquidity was withdrawn through a repo cash auction at 9.31 percent Thursday slightly higher than 9.26 percent a day earlier, but also 44 basis points below the policy reverse repo rate.
Analysts have urged the Central Bank to kill excess liquidity coming from foreign exchange purchases (to sterilized the purchase) by outright sales of its Treasury bill stock to prevent them being loaned out and creating fresh import demand.If 13.4 billion rupees of excess liquidity is killed, analysts say about 100 million dollars of what people call 'foreign exchange savings' can be achieved in the days and weeks ahead, allowing the monetary authority to strengthen the exchange rate.If not the Central Bank will have to sell the collected dollars to prevent the exchange from being depreciated by the excess liquidity that begins to flow out.In forex markets the rupee was quoted around 133.70/80 rupees against the spot US dollar in late morning trade after opening slightly wider at 133.70/90 levels dealers said.
In bond markets, 2-year bonds maturing on 01.04.2014 quoted wide around 13.35/50 percent levels, dealers said.Three maturing on 15.07.2015 were quoted around 13.85.93 levels. Trading was thin dealers said.

Reported in LBO
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...by i3gconsultants@ 08:07:43 on 2012-07-07

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Sector: Power and Energy

Sri Lanka in final talks over India coal joint venture: official


Sri Lanka's state-run Ceylon Electricity Board is in the final stage of discussions with India's National Thermal Power Corporation to build a 500 MegaWatt coal plant, an official said.
"We are in final stage of discussion," deputy chairman of Sri Lanka's Ceylon Electricity Board Anura Senaka Wijayapala said."We hope to sign the final agreements within a month or two. We hope to begin construction by the end of 2012 and issue tenders to buy equipment."

The coal plant will be a 50/50 joint venture with CEB and NTPC. Each partner will contribute75 million US dollars in equity for the 500 million dollar plant in Sampur, in Sri Lanka's north eastern port city of Trincomalee.

Related facilities of a jetty to unload coal and infrastructure to take off power are expected cost another 200 million US dollars, officials said in September 2011 when a shareholder agreement was signed.
At the time Indian officials said they planned reach financial closure in two months. India is giving a 200 million US dollar soft loan to Sri Lanka for the power project. CEB is cash-strapped and running heavy losses.
Initial cabinet approval for the joint venture was given as far back as in March 2006, when Sri Lanka's East coast was still a war zone in a 30-year war which ended in May 2009. Then there were delays over site selection.
There have been concerns that due to delays the plant will not be able to be up and running by 2017.Tilak Siyambalapitiya, a power sector analyst and former generation planner at CEB has been warning about the delay in the Trinco coal plant, which is expected supply 3,200 GigaWatt hours (millions of units) of energy or 19 percent of the projected annual demand then.
"To be ready by 2017, construction should begin in 2013, to allow the 48 month construction schedule," he said in an analysis in Sri Lanka's The Island newspaper on Thursday.In Trincomalee cannot be built he suggested that a plant be built in Hambantota. Hambantota was one of the original locations proposed for a coal plant.Wijayapala however said the plants will be ready by late 2016 or early 2017 with final agreements to be signed in the next two months.Sri Lanka's current high dependency on liquid fuel was due to delays in coal plants which were planned for the early 1990s. Politicians, religious leaders and environmental organizers helped delay the projects.
Sri Lanka's current President Mahinda Rajapaksa however singed up Chinese turnkey project in Puttalam which is now up and running.
The first 300 MegaWatt stage is now giving 6GWh or energy a day, which is about 19 percent of the current daily 32GWh hour demand.
Power minister Champika Ranawaka says the second stage of Puttalam project will be complete in August 2013 and the final 300MW stage by end 2013.He said if coal plants were completed as they were originally planned most of the troubles in the power sector would not exist."After August 2013, and by 2014 and 2015 the wounds that has been in the system from 1990s will be cured," he said.

Reported in LBO
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...by i3gconsultants@ 08:07:28 on 2012-07-07

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Sector: Motor

Sri Lanka price of two, three-wheelers cut by India's Bajaj


India's Bajaj Auto has cut prices for Sri Lanka between 5 to 14 percent after an excise duty hike in the island slashed sales, which was 17 percent of its total exports, a media report said.
India's Economic Times said Sri Lanka accounted for 5-7 percent of total sales and 17-18 percent of export sales, or 20,000 units a month.
"Post the duty hike, exports to Sri Lanka have virtually been zero with dealers just looking to clear the pending inventory of the products," the newspaper said.Prices of three wheelers were cut 10 percent and motorbikes between 5 to 14 percent, the report said.The newspaper said Rakesh Sharma, president of international operations at Bajaj Auto, confirmed that prices were cut, without elaborating.Prices of Bajaj's motorcycles went up by around 29 per cent and 3-wheeler prices increased by around 32 per cent in Sri Lanka after the import duty hike.Thought Sri Lanka's rupee fell, the Indian currency has also weakened.Sri Lanka put in trade controls after loose monetary policy and a steep hike in state credit put pressure on the country's currency peg.
Analysts had warned that the duty hike which disrupts trade will result in lost revenues for the state, expanding the budget gap, requiring interest to rise higher or high rates to persist for longer than necessary.

Reported in LBO
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...by i3gconsultants@ 08:07:24 on 2012-07-07

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Sector: Services

Sri Lanka moves up in logistics index


Sri Lanka has moved up 56 places to 81 in a World Bank logistics performance index for 2012, as a result of improvements in infrastructure and quality of logistics services, a business chamber has said.
To compile the index, nearly a thousand international freight forwarders have been surveyed on areas such as infrastructure, quality and competence of operators, customs and clearance processes.Yardsticks of the index included speed and efficiency of clearance processes, quality of infrastructure including information technology, ability to trace and track shipments, delivery times.
Harin Malwatte, chief executive of Sri Lanka's Ceylon Chamber of Commerce said the gains made over two rankings shows the potential to improve further.Singapore was ranked number one at 4.13 in the index, with Burundi the lowest at 1.61.Sri Lanka is aiming to make itself a shipping and transport hub in the region.

Reported in LBO
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...by i3gconsultants@ 08:07:26 on 2012-07-07

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Sector: Beverage Food and Tobacco

Food industry to the fore


Industry and Commerce Ministry continuously supported us during the last years, says industry 
  • Will continue support and infuse R&D too, says Rishad
  • 217 firms and multinationals from Sri Lanka, Argentina, India, Turkey, Thailand and Pakistan at the event
  • Lanka food exports surge by 41% in 2011 to $ 95 m, says Rishad
As Sri Lanka’s processed food exports rose by 41% topping $ 95 m in 2011, the food industry lavished praise on the Industry and Commerce Ministry for its continued support to sustain growth in this crucial sector.
“Both food and packaging sectors in Sri Lanka have seen rapid modernisation and expansion in recent times. As a result of development vision of President Mahinda Rajapaksa, many concessions have been offered to these sectors and thus, exports from the processed food industry last year stood at US$ 94.84 million, which was a considerable increase of 41 per cent in 2011 compared to 2010,” announced Minister of Industry and Commerce Rishad Bathiudeen addressing the inauguration of the three-day ‘Profood/Propack International Exhibition 2012’ yesterday at the BMICH.
The 11th in the series of exhibitions, ‘Profoods/Propack  & Agbiz 2012,’ the most comprehensive agriculture-based processed food/packaging exhibition is back with a new look with a complete one-stop-shop solution, this year’s theme being ‘From the Farm to the Kitchen’. Economic Development Minister Basil Rajapaksa was the Guest of Honour.
The organisers for the 2012 show have outlined numerous concurrent events to promote and market ‘Profoods/Propack & Agbiz,’ making it a must for all organisations involved in processed food, packaging and agriculture.
The exhibition, facilitated by the Ministry of Industry and Commerce, had only 46 companies taking part when it began in 2001, and today has 217 firms participating from Sri Lanka, India, Italy and Pakistan, as well as an SME pavilion for the growing importance of SMEs and a special pavilion by food and packaging industry of Kerala, India.
Among the 217 participating firms and organisations are the High Commission of Canada, Adamjee, Alli, CIC, Ceylon Biscuits, CMC Engineering Exports GmbH, EDNA Confectionaries, Elephant House, JAGRO Ltd., Maliban Biscuits, MAS Tropical Foods, Italy’s PIGO SRL, Brown & Co PLC, API Machinery, Harischandra Mills, Good Value Eswaran Ltd., Currymate, Nelna, Micro Cars, MA’s Tropical Food, MAI S.A. (from Argentina), Mahima Foliage, A. Baur Co, Hindustan Hing Supplying, Tinpak Pvt. Ltd., Unilever Lipton Ceylon Ltd., Patkol (from Thailand), Vezirkopru Orman (from Turkey), Institute of Agro Technology of University of Colombo, Gatronova Novatex (Pakistan) and Yamato Scale India Ltd.
Minister Bathiudeen, addressing the event, said: “I am pleased to inform you that Sri Lanka’s processed food and confectionery industry is reaching the upmarket segment in exports. To gain a high price at the export market and also to get a premium price from the health conscious customer, attractive and informative packaging is paramount. To this end, the food sector joining with the packaging sector is a welcome sign.  In view of this, I am glad to announce that we have decided to continue Government support to the ‘Profoods/Propack’ exhibition by assisting this series in future too.
“Food processing and packaging sectors are considered priority areas in today’s context. In 2011, food and grocery sales dominated global retail sales sector and the food sector was the key driver in global retail sales which stood at US$ 14,335 billion. More importantly, 2011 growth was also led by Asia and Pacific regions. Both food and packaging sectors in Sri Lanka have seen rapid modernisation and expansion in recent times.”
Sri Lanka’s growing food and beverage industry sector has now more than 4,400 establishments with close to 132,000 people engaged in it.
“We believe that this sector to be fast growing in our exports which shows high potential for further expansion. My Ministry is keen on giving maximum support to develop this industry. We are working closely with the private sector through the advisory committees to identify development needs and implement appropriate programmes. We believe more attention needed on research and development, certification and testing, staff training while certain changes also, needed in the area of fiscal policies. We also believe biotechnology and eco-farming can assist us to expand our processed food sector to the next level,” said Badiudeen.
“Realising the growing importance of SMEs in the value chain, this time also my Ministry is hosting a special pavilion to accommodate micro, small and medium industries so that our SME integration continues well. As a result of the awareness programmes we conducted in outside regions, we notice strong demand from SMEs for this pavilion. In addition special concessions have also been provided to the universities in order to encourage their participation.”   
Praising Economic Development Minister Basil Rajapaksa’s commitment and efforts to develop Sri Lanka exports, Minister Bathiudeen said: “I commend Minister Basil Rajapaksa for his committed efforts to develop our exports which he fulfils even at a personal level.  His attention is an example for us to follow. For example, yesterday (5 July) evening, Minister Basil personally telephoned me to alert me of a problem being faced by a Sri Lankan durian fruit exporter to Korea. I thereafter immediately summoned my officials and directed them to take immediate action and inquire as to what went wrong. We are now working on this issue.”
Mario De Alwis, Chairman of the Processed Food Development Initiative, the top independent food Industry facilitator, praised the Ministry of Industry and Commerce for its continued efforts to sustain the sector.
“Michael Porter, the competitiveness guru, once said that sustainable competitive advantage is not only in making the most from a country’s environment. Firms must work together and collaborate to create a competitive base to launch their products to the global economy. Though this statement was made during the height of globalisation, in today’s global downturn, this collaboration should not only extend among industry players but all key player in the supply chain-that is the state, industry and the political community. Thanks to the efforts of the Ministry of Industry and Commerce over the last 11 years, we managed to bring the farmers, industry and political community together here. Collaboration has become even more important in the current economic climate,” De Alwis explained.
Many international exhibitor participants were upbeat on the continued rise of the ‘Profood’ exhibition series.“I have heard of this exhibition and was planning for some time to come here and I am here at last,” said Asif Manzur Malik, Deputy Manager of Gatron Industries and Novatex Industries of Karachi, Pakistan. “The moment I walked in to the premises to set up my stall, I knew this was a promising effort. I believe that the next three days in Colombo would be successful for us.”

Reported in Dailyft
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...by i3gconsultants@ 08:07:02 on 2012-07-07

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Sector: Bank Finance and Insurance

Central Bank loses over Rs. 1.5 b by investing in junk Greek bonds!


The Central Bank has yesterday admitted that the country had lost around Euro 8.4 million (over Rs. 1.5 billion) by investing in Greek bonds.
This revelation was made to Committee of Public Enterprises (COPE) during a hearing yesterday in Parliament.
Central Bank Governor Nivard Cabraal who attended the meeting had admitted that the loss was following the monetary authority in 2011 investing in Bonds of Greece, the financially bankrupt Euopean nation which had to be bailed out recently.
In response to queries how much of funds had been invested in Greek Bonds, answers had been vague.
The Central Bank was summoned by COPE following a request made by UNP MP Ravi Karunanayake. to COPE Chief MP Dew Gunasekara.
The disclosure yesterday follows the main Opposition UNP questioning in Parliament several months back about the investments of Central Bank though originally the House was told that specific investments cannot be divulged.
Following the admission, the UNP expressed serious concern over the manner in which the monetary authority was managing the country’s reserves though among responses were “some you win, some you lose” akin to managing by luck or a play of roulette, UNP MPs alleged.

Reported in Dailyft
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...by i3gconsultants@ 08:07:31 on 2012-07-07

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Sector: Power and Energy

SL needs to double electricity capacity every 10 years


Sri Lanka needs to double electricity capacity every 10 years as the country's energy supply system faces major strategic challenges due to a high annual electricity demand growth rate, M.N.K. de Silva of the Moratuwa University said presenting a paper on Building Energy Consumption Factors and Future Research Agenda at the World Construction Symposium at Cinnamon Grand Hotel on Saturday.
He said energy statistics confirm that the building sector depends heavily on energy, exceeding the industrial and transportation sectors. This is due to initiation of large scale development projects after three decades of war.
Meanwhile, the Power and Energy Ministry has predicted power cuts due to lack of rainfall in the hydro-catchment areas. Oil price hikes will have a great impact on the operation of thermal power plants.
Sri Lanka has become the highest electricity bill spender in Asia and the status of energy poverty seems alarming. Occupant behaviour towards energy consumption has a significant impact on energy poverty. It is important to investigate the factors influencing the rise of energy consumption and their impact on power crisis to alleviate energy poverty, de Silva said.
Elaborating on five main factors for rising energy consumption namely climate, building related characteristics, building systems and services related characteristics and occupant, socio-economic, and legal related characteristics, he said another 40 sub factors causing energy consumption rise have been identified by the researchers.
De Silva said 80 percent of the effects come from 20 percent of the causes. It is essential to identify key factors causing energy usage rise to reduce energy consumption, he said.

Reported in Dailynews
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...by i3gconsultants@ 00:07:22 on 2012-07-06

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Sector: Hotels and Travels

Sri Lanka to build US$3bn tourism city with Singapore firm: BOI


Sri Lanka’s state investment promotion agency said it had inked a deal with a Singapore led consortium to build a 3 billion US dollar tourism city in Katana, north of the capital Colombo.
A consortium led by Asian Resorts & Casinos, a Singapore based firm, will invest in Katana City Developments Private Limited, the project company.
The BOI said a 200 acre site will see hotels with 2,500 rooms, shopping malls and other facilities that will eventually bring investments of over 3 billion US dollars, and create 10,000 jobs.
"Katana City will deliver an exciting tourism offering for high volume arrivals, and the result will be a major step up in job creation, tax revenue and tourist arrivals for this vitally important sector," BOI chairman MMC Ferdinando said .Under the development plan, Sri Lanka's main airport will be connected to the Katana City by a Monorail which will also be built by the developers, the agency said.
“This project has been planned to put Sri Lanka’s tourism offer on a par with Singapore and others in this region,” said Katana City’s director, Prashanth Koorapati was quoted as saying in a statement.
"We are planning to make sure that the concept adheres to a high standard of eco sensitivity and defines itself to show the best of Sri Lanka, not to just copy previous projects completed elsewhere."
Earlier reports had said that Sun City, a South Africa based firm will build an 800 million US dollar resort complex in Katana.
The BOI is targeting 1.7 billion dollars of investments this year, lower than 2.0 billion dollars projected by the central bank, due to weak economic conditions in the West, Ferdinando told a UK-based newspaper last month.
Since a 30-year war ended in 2009, Sri Lanka has forecast a five-fold increase of 2.5 million foreign visitors by 2016, who will generate some 2.75 billion dollars in revenues.

Reported in LBO
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...by i3gconsultants@ 00:07:55 on 2012-07-06

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Sector: Power and Energy

Sri Lanka power users asked to conserve energy


Sri Lanka's power users should cut energy use by 10 percent to help avoid power cuts until more rain comes in the inter monsoonal period, power minister Champika Ranawaka said."We will keep providing power. But if energy is conserved by another 5 percent, it will make it easier for us to manage," Ranawaka told reporters Thursday."We want state sector private sector and households to save energy."
A Sri Lanka power ministry handout estimates that about 1.6 GigaWatt hours of energy from a daily demand of 32 GWh had been saved so far.Minister Ranawaka said entities that had large generators would be asked to generate power and provide them to the national grid.Sri Lanka's state-run power utility Ceylon Electricity Board is running on thermal maximum mode at a huge cost, losing 200 million rupees as prices are manipulated by the state.
Hydro storage was falling and was now down to 301.6 GWh.
Minister Ranawaka said the May to July South-West monsoon this year, and both the South-West and North-East monsoons had failed.
Inflows into during the year to June 2012 were down to 2123GWh, the lowest recorded over the last decade. In the year to June 2011 Sri Lanka received record inflows of 5505 GWh amid unprecedented flooding.
Minister Ranawaka said in the 6 months to June hydro inflows were only 704GWh, down from 2,146 GWh last year and 1,767GWh the year before.
In a recent day where 32GWh of energy was generated only 4.7GWh were generated by hydro plants (14.6 percent) with 27.3GWh coming from thermal (85.4 percent).Sometimes hydro generation dipped as low as 12 percent officials said.Industry analysts say there is no serious capacity shortage at present to warrant official power cuts but the utility gets into a tight corner if one of the larger thermal plants go out of the system.
At the moment a 270MW plant in Kerawalapitiya plant is out.
Sri Lanka has 3,141MegaWatts of generation capacity and a daily peak of only 2,163MW but about 1,200MW of the capacity is hydro, which have enough water only to be run during nigh peak.
Minister Ranawaka said Sri Lanka's first 300MW coal plant has been operating with no trouble since February providing about 5GWh of energy every day.However some run of the river plants like Kukule, which have minimal storage run throughout the day.Hydro is used for the night peak, partly to control demand fluctuations and hydro plants can be rated up and down quickly unlike thermal plants to maintain frequency.

Reported in LBO
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...by i3gconsultants@ 23:07:26 on 2012-07-05

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Sector: Bank Finance and Insurance

SLI declares staggering Rs. 4 bn Life Insurance bonus to customers


Sri Lanka Insurance declared a Rs4 billion in Life Insurance Bonus  for its policy holders this year endorsing 50 years of trust placed on the Company by the Sri Lankan people. The declaration comes breaking the company’s own record of the highest bonus declared in the industry last year of 3.4 Billion.
Explaining how the company was able to achieve this success, Mohan de Alwis, Managing Director/CEO of Sri Lanka Insurance said: “It is yet another achievement of Sri Lanka Insurance to able to declare the highest life Insurance bonuses year-on-year  unbeaten to date. Sri Insurance claims  the largest Life Insurance Fund in the industry of Rs 56billion, and through prudent investments made from this fund with the aim of yielding the highest returns for our customers has made it possible for us to declare a bonus of Rs4billion to our participating life policy holders this year”.
Sri Lanka Insurance firmly believes that every individual should invest in life insurance as it provides a dependable fall back plan which safeguards families and equips them to deal with the results of unforeseen disasters, hence the company has an intricately woven policy system which enables customers to select from a wide range of options which can be adapted according to their individual requirements. Sri Lanka Insurance has also been in the fore front of taking the message of insurance to the masses of Sri Lanka, using the strengths of our 125 fully networked branches and through the recent strategic partnerships that the company entered in to with banking and telecommunication providers.
Sri Lanka Insurance, the largest government owned composite insurance provider in   Sri Lanka is the first insurance company to have been assigned a global rating for financial stability AA (lka) from Fitch Ratings, London which is an assurance of the company’s long term financial sustainability.  Sri Lanka Insurance is the only insurer who was awarded RAM Ratings AAA for its ‘long term claim paying ability’, which further affirms the corporation’s capacity to meet financial obligations to policyholders. The Company has also been awarded ISO 9001:2000 certification for correct governing and operational procedures in line with accepted global standards which is further endorsed by the recent international awards the company has claimed which includes World Quality Commitment Gold Award in 2011 in Paris, the Platinum Award 2012 in New York and a World Finance Award in London as the Best Insurer of the Year 2010 in Sri Lanka.  

Reported in Dailymirror
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...by i3gconsultants@ 01:07:32 on 2012-07-05

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Sector: Hotels and Travels

First 7-star hotel in 2 years


PJ Group’s super luxury hotel, Isle of Agnes, will be completed within the next two years, according to Chairman, PJ Group, Prasanna Jayewardene.
The hotel, which is targeted and becoming Sri Lanka’s first seven star hotel, will be offering rooms at a rate of between US$ 5,000 and US$ 10,000 per night; far exceeding the highest room rates currently seen in the country.
Jayewardene further stated that approvals are currently being sought for the construction of an under-sea restaurant to be attached to the hotel. “The restaurant will be attached to the hotel but will also be open to the public. We hope to have special menus created by consultant chefs in Sweden.
The rates will be very high but it will also be easily accessible thanks to the highway.” Jayewardene said.
The hotel will be located in Weligama and will be designed by architect, Anton Jacob.He added that over the long term, PJ Group would also be looking at developing three other properties in the North and East.

Reported in Dailymirror
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...by i3gconsultants@ 01:07:37 on 2012-07-05

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Sector: Services

SLFFA Cargo Services & Sri Lanka Customs sign MOU


SLFFA Cargo Services Ltd, a public unquoted Company operating under the auspecies of Sri Lanka Freight Forwarders’ Association(SLFFA) which provides import Air Cargo warehouse at BIA Katunayake  for the last 17 years, recently signed a  Memorandum  of Understanding (MOU) with Sri Lanka Customs, to facilitate the submission of the electronic Manifest and Customs Declaration(CUSDEC) with the setting-up of a Key-in Center which will be based at its facilities  in the Air Cargo Village premises of the Bandaranayake International Airport, the SLFFA said in a statement.
This ground-breaking initiative undertaken by Customs is part of the new online facilities being implemented by Customs using the ASYCUDA WORLD programme designed to make all Customs clearing processes online, in keeping with trends and practices in developed countries, it said.
This  facility which authorizes SLFFA Cargo Services Ltd to operate as a Key-in Centre Service Provider(KCSP), which at present is handled by Customs staff, will enable all importers and clearing agents to submit all documentation required  to clear both air and sea  import cargo, making this process very simple and fast. For this purpose, Customs will train all staff at the Key-in Centre in the utilization of a customized software module to assist importers in the use of this fully automated process.
Speaking on this special  occassion, Dr. Neville Goonawardena , the Director General of Customs, who signed the MOU on behalf of Customs, said that he was delighted to grant this facility to SLFFA Cargo Services Ltd, having worked very closely with Sri Lanka Freight Forwarders’ Association over the years and he was very confident that they will be able to perform this important role efficiently on behalf of Customs . This will also enable Customs to employ their own staff, who currently perform this role, on more important functions when they hope to fully automate all Customs processes by the end of this year, which will no doubt be a great leap forward for the country.
Diren Hallock, Chairman, who signed on behalf of SLFFA Cargo Services Ltd, said that SLFFA Cargo Services was very pleased to accept the invitation by Customs to facilitate the operation of the Key-in Centre, in the premises of the Bandaranaike International Airport in Katunayake, which will provide easy access to all importers and clearing agents based in the Airport and outside in the Free Trade Zones in Katunayake and Ekala.
Mohan. S. Mohanadas, Chairman of SLFFA reiterated the importance of this significant step taken in the right direction by Customs to simplify processes for the benefit of all importers and thanked the Director General of Customs for the trust placed in SLFFA by awarding this facility to be operated by a Company, where all the share-holders are members of SLFFA.
Both signatories to this MOU confirmed that this facility will be in operation shortly in Katunayake, the SLFFA statement said. 

Reported in The Island
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...by i3gconsultants@ 09:07:44 on 2012-07-04

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Sector: Power and Energy

Fuel Crisis


Like Sri Lanka, India is also facing fuel Crisis. However some Indian economic experts had analyzed the situation and expressed an opinion which is applicable to Sri Lanka as well.
In 1970 America Insisted that all petroleum (crude oil) dealings should be in US dollars. Several countries purchased excess US dollar to be kept in reserve. When ever US dollar is strong these countries which deal in US dollars faced price increases. and adverse economic conditions. Late Mr. Satham Hussain objected to this and wanted to deal in Euro dollars. However America had suppressed this action. Now Iran is breaking this US dollar linkage and is prepared to deal in Euro dollars. Further it is reported that Iran is prepared to sell fuel to India based on Indian rupee, and America had advised India not to deal with Iran. This is considered as an interference in the sovereignty of India who should be free to deal with any country.
It appears that Iran was prepared to sell natural petroleum gas to India. It could be transmitted via pipe lines and even other countries like Afghanistan, Pakistan and Sri Lanka could join in this deal. America did not approve of this contract also.
It is high time for India / Sri Lanka to revise economic policies without being influenced by America. Fuel crisis is a major problem to our country and we should take steps to resolve the same. The following steps are suggested.
a) Dealing in Euro dollars and if possible based on Sri Lankan Rupees.
b) Consider purchase of natural petrol gas from Arab Countries (Iran) by having joint venture deal with India.
c) Reduce the balance of payment deficit.
d) There are foreign investors who have credit trading, currency trading and share market participation with Sri Lanka. Regrettably some investors take away all their investments immediately on facing adverse economic problems which make matters worse. Several foreign countries had nearly collapsed by this attitude of foreign investors. This action should be controlled by the Central Bank of Sri Lanka like India which had taken constructive measures.
e) Explore the possibilities of crude oil excavation in our county. We should not sell this contract to foreign or local private organization.
Whilst admitting not to be an economic expert, I urge the economic intellectuals to express their opinion for constructive action to improve our economy.

S. R. Balachandran, B.Sc., FCA. FCMA. (Sri Lanka)

Reported in The Island
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...by i3gconsultants@ 09:07:16 on 2012-07-04

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Sector: Manufacturing

Post-war reconstruction, floods, ups cement demand


Sri Lanka‘s post-war reconstruction and floods helped boost demand for cement in the country, says a leading cement manufacturer.
Tokyo Cement, a Sri Lankan – Japanese joint venture says that much of the demand came from the government’s large scale infrastructure projects.
According to Tokyo Cement, the private sector has been mainly engaged in building housing and housing schemes as well as hotels. In its 2011/2012 annual report, Tokyo Cement also points out that the surge in private credit too contributed towards higher demand for cement.
Accordingly, the total cement consumed in Sri Lanka during 2011 has recorded a figure of 4.58 million metric tones, a 21.6 % year on year rise.The local cement production during the year has risen by 13.6 % to1.97 million metric tones.

Reported in Dailynews
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...by i3gconsultants@ 09:07:03 on 2012-07-04

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Sector: Beverage Food and Tobacco

Innovative packaging system for mangos


Scientists from the University of Guelph, led by Jayasankar Subramanian, have teamed up with researchers from the Tamil Nadu Agricultural University in India, and the Industrial Technology Institute in Sri Lanka, to develop an innovative packaging system that uses state-of-the-art nanotechnology to reduce post-harvest losses in mangoes, a vital fruit crop in South Asia.
The Canadian (CA) $ 2.3 million project, announced last week by Canada's International Development Research Centre (IDRC) and the Canadian International Development Agency (CIDA), in cooperation with the University of Guelph, will improve the livelihoods of nearly one-third of India's and Sri Lanka's population, most of whom are small-scale farmers.

Reported in Dailynews
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...by i3gconsultants@ 09:07:22 on 2012-07-04

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Sector: Plantations

Potential of Intermediate Zone for growing rubber


Rubber has been grown traditionally in the Low Country Wet Zone covering the Southwestern, Southern and Central parts of Sri Lanka, though the low and mid elevations in the Intermediate and Dry Zones are also being explored now with varying degrees of success. This tract is however, now reaching a level of saturation for rubber cultivation and the scope of further expansion is very much limited. Therefore, it has become necessary to look for new locations to plant rubber.
Land use planning
Allocation of land for tree crop agriculture in Sri Lanka has hitherto been based on ‘adhoc’ considerations. The over-riding approach has been to allocate the least productive soils to various forms of plantation agriculture. Furthermore, even the current allocation of land for tree crop plantations is made mainly on the basis of climate or geographic region with no recognition given to the occurrence of different kinds of soils within a particular region.
Some very striking and significant soil-vegetation relationships have been observed and described, especially in the dry and Intermediate Zones of this country by several field scientists and researchers engaged in the Soil Survey of Sri Lanka since the early 1960s. In several recorded instances it has been observed that the nature of soil exerts a profound influence on the growth and performance of plantation crops.
Soil related factors should, therefore, be considered as having a very important bearing on crop performance and crop productivity on different kinds of soils occurring within the same agro-ecological region. Meaningful land use planning for plantation agriculture, therefore, should be based on a proper understanding of the soil-vegetation relationships.
Also, as soil makes the major part of the environment, information on soils becomes an essential need in environmental conservation strategies. With this context, the Soil Science Society of Sri Lanka initiated a twinning project with the Canadian Society of Soil Science to characterize and document in detail information on soils of Sri Lanka, a process initiated when I was the President of the Soil Science Society of Sri Lanka.
As the Government of Sri Lanka (GOSL) and the rubber industry are very keen to extend rubber growing to new locations where land and labour are expected to be non-limiting factors, the objective of this article is to summarize the findings of this project specifically for the benefit of the rubber industry, which intends moving into new locations for their raw material.
Intermediate Zone
The Intermediate Zone of Sri Lanka is the area sandwiched between the Wet and Dry Zones receiving a mean annual rainfall of 1750 to 2500 mm. This covers an area of about 1.2 million ha of the country. As the climatic conditions change through a wide range, the Intermediate Zone consists of 20 Agro-Ecological Regions (AER) and sub regions.
This climatic variation is reflected in the soils, where 40 benchmark soils were characterized. Apart from its great diversity, it consists of highly productive Agro-Ecological Regions as up country and mid country Intermediate Zone.
The climate
The dynamics of the atmosphere is extremely variable over Sri Lanka due to its location near the equator and the influence of the monsoonal circulation over south Asia. Subsequently, the climate of Sri Lanka, particularly rainfall, varies strikingly both over different space and time scales. Moreover, the presence of a central mountainous region with a peak elevation of 2,524 m has a major effect on the climate of various regions and produces much sharper climatic contrast between southwestern quadrant and the rest of the island.
Regionality of the rainfall distribution in Sri Lanka has traditionally been generalized in terms of a ‘Wet Zone’ in the Southwestern region including the central hill country and as the ‘Dry Zone’ covering the rest of the country. However, it would be unrealistic to look for a sharp or linear boundary line between these two zones.
Hence, it should rather be regarded as being separated by an ‘Intermediate Zone’ of transition occurring in the central hill country except in the south and the west. The Intermediate Zone demarcates the area, which receives a mean annual rainfall over between 1,750 to 2,500 mm with a short and less prominent dry season. This climatic factor, therefore, appears to be acceptable for growing rubber in the absence of new land in the ‘Wet Zone’. Nevertheless, in some years, the rainfall regime of the ‘Intermediate Zone’ could represent either Wet Zone or Dry Zone characteristics depending on the state of the General Circulation of the atmosphere.
The genesis of soils from parent material greatly differs according to the climatic conditions and therefore, proper understanding of it is needed.
The selected distinguishing characteristics of the different Agro-Ecological Regions, which is presently used as the unit for land use planning in the country, should also be considered in planning the new locations for growing rubber.
The variation of the topography is another reason for the occurrence of many different soils in the Intermediate Zone of Sri Lanka, which is linked to the physiography and landform that decide on the main land systems in the area.
Land systems of the Low country, Mid country and Up country Intermediate Zone have been identified using topographic and remote sensing maps published by the Survey Department. A total of 36 land systems in the Intermediate Zone have been identified.
Characterization of soils
The Intermediate Zone soil database consists of the soils of the Low country (0-300 elevation), Mid country (300-900m) and Up country (900m) Intermediate Zone. A total of 40 benchmark soils have been identified from these areas. Soil units are normally identified by field reconnaissance using auger holes and observations from road cuts and construction sites.
From these, the soil series are identified according to the morphological characteristics and distribution. A soil series shows the same sequence of genetic horizons (layers) and is derived from similar parent material.
When the soil series are named, names already established by previous workers and in use are reconsidered first. Any new soil series is named according to the area these were first identified (e.g. Bibile series) or a special character in the soil as poor drainage (e.g. Wagura series).
Once the soil series are identified, a benchmark location from each series is selected for detail characterization. These locations are geo-referenced using a Geographical Positioning System (GPS).
This facilitates identifying the location accurately for any future planning and in characterizing the changes taken place after many years. Geo-referencing also makes the database useful for any professional using tools as Geographical Information Systems (GIS) for mapping soil or related features in the areas selected for planting rubber in this new location.
Each benchmark site characterizes in detail the landscape features, parent material, drainage conditions, erosion states etc. Soil pits are dug for identification of the major soil horizons. Soil physical and chemical parameters are characterized for all horizons using accepted standard methods. This information consists of the database and is used to classify the soils according to international methods as Soil Taxonomy and FAO/UNESCO method.
The data collected have been compiled as a digital database and can be used for many different applications as in land use planning for agriculture, and in our case for planting rubber. The distribution of soil series of the Intermediate Zone has been mapped at a scale of 1:400,000.
Risks and limitations
Nevertheless, there are some risks and limitations in using the soils of the Intermediate Zone for planting rubber. The soils of the Intermediate Zone exhibit a wide variation of topographies and are not intensively weathered as the Wet Zone soils.
Therefore, they are not excessively leached and comparatively richer in plant nutrients. Using the database available, each soil series can be evaluated for major physical limitations as shallow depth, low available water, poor aeration, susceptibility to erosion and flooding and chemical limitations as high acidity, iron toxicity and low nutrient availability.
Additionally, some areas consist of natural and plantation forests. The management practices that should be adopted to overcome the risk and limitations should be addressed in order to obtain higher yields from cultivated rubber.
As an example, for each series where rubber is grown, the amount of fertilizers that should be added, the mulching requirements and establishment of composting pits, maintenance of cover crops and feasibility of using drip irrigation etc. should be considered.
As rubber is normally grown at elevations less than 500 m, the up country Intermediate Zone covering the regions IU1,IU2 and IU3 are expected to be excluded from considering for rubber planting, except the Badulla region at an elevation of  about 670 m, as some un-economical tea lands have already gone into rubber in this region.
(The writer can be contacted via treecrops@gmail.com)

Reported in Dailymirror
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...by i3gconsultants@ 09:07:15 on 2012-07-04

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Sector: Manufacturing

Demand for ceramic products in North and East is very high


Ceylon FT today discussed with Professor Dr. Kennedy D. Gunawardana Professor of Accounting Information Systems and Chairman of the Board of Management, Studies Faculty of Graduate studies, University of Sri Jayawardenepura, Nugegoda, Sri Lanka the Financial Statement Analysis of Royal Ceramics Lanka PLC in perspective.


Q: To begin with how do you analyze a company’s cash position using liquidity and efficiency ratios?


A: Liquidity and efficiency ratios will help to get an idea about the company’s cash position. Working capital represents the cash availability for day to day operations of the company. It is the difference between short term obligations (current liabilities) and current assets (can be converted to cash soon).


Q: What does this analysis highlight significantly?


A: In the above table we can clearly identify increase in working capital from 2005 to 2007, but a reduction after 2008. That is mainly because of the increase in current liabilities. The reason for the increase in other liabilities is payables to subsidiaries. But in 2010 the main portion of high liabilities is payable dividends. A clear reduction of working capital in 2010 can be observed. But if we consider the industry rival Lanka Tiles its working capital is higher than Rocell. It also has high current assets and current liabilities but we can see Rs 141,854,000.00 working capital in year 2010.


Q: What is shown in the current ratio analysis?


A: Current ratio interprets the short term debt paying ability of the company and it indicates that higher the ratio higher the strength of the company.As observed in the working capital analysis, there is a reduction in current ratio after 2008. The reason for that is increase of current liabilities when comparing with current assets as explained earlier. This shows the reduction of ability to pay short term debts of the company. The Lanka tiles performance is similar but little better. For 2009 it is 0.97 and 2010 its 1.13. So it’s common to industry.


Q: Royal ceramics being a long standing company in the industry what does the acid test indicates?


A: Quick ratio or acid test will give an idea about the company’s quick cash strength.  Quick assets are cash, short term investments, accounts receivables and notes receivables. Following graph indicates the changes in above two ratios. Lanka tile’s quick ratio for FY 2009 is low as .33 but better in FY2010 (.63).


Q: What these two ratios indicate?


A: Both ratios indicate a similar pattern of variation. Above plot interpret a bad performing company. But when considering industry rival Lanka Tiles this could be a good performance.Account receivable turnover measure ability of company to convert its receivables in to cash. Following is the result for Rocell.There is continues reduction from 2006 to 2007 and somewhat stable after 2008. The reduction is due to increase in sales. Sales increase continuously and accounts receivable turnover stay above 21 times. This is better performance when comparing with industry rival.The merchandise turnover shows the number of times stock sold and replaced during the year. Following is the result for Rocell.


Q: What does the merchandise turnover indicates in Royal ceramics financial analysis?


A: In this analysis also the value increases till 2008 and then reduces. But sales have increased continuously from 2005 to 2010. The reason for the reduction of this ratio is increase in stock. If the merchandise turnover is high it will indicate that the company is running well and its stocks sold many times a year. But in the case of Rocell it is different. It is the nature of industry. The merchandise ratio of Rocell is 3 in FY 2010.


Q: Does the unallocated ratio indicate how are they placed with the day’s sales ratio?


A: Days’ sales unallocated ratio gives the days need to wait to receive cash from the customer after selling the goods. Smaller the number of days better the company performance.From 2005 the number of days needed to collect money from customers has increased. Highest value is in 2010 and it is a result of increase of debtors with increase in sales.  But value of trade debtors in 2009 decreased increasing the ability of the company in that year to collect money from customers.  The current situation is not good.Days’ sales inventory shows the number of days required to sell the stock. Following is the result of Rocell.Above details shows the condition of Rocell in selling its stock. 2005 and 2010 are bad years.


Q: What was the ability of the assets in generating revenue?


A: Total assets turnover ratio shows the ability of assets of the company to generate revenue. If a company can produce higher sales with small assets that company is a successful one.In Rocell this value is at an unsatisfactory level.


Q: What was the creditor’s portion of contribution in debt ratio of Royal ceramics financial performance indicate?


A: Debt ratio shows the portion of creditor’s contribution to the company’s assets.  Following is the result of Rocell.Throughout the period under consideration the ratio varies around 50%. That indicates the contribution of creditors for the assets is around 50%. Following is the equity ratio, which shows the contribution of owners to the assets. It should also vary around 50% because total assets are a combination of owners and creditors contribution.The above graph clearly shows the combination ratio of creditors and owners. From that we can decide the gearing of the company. It’s not high gearing or low gearing. It’s a balanced selection. So it is a good stable financial combination.


Q: What was the company’s interest paying ability during this period?


A: Times interest earned ratio shows the ability of company to paying interest of long term liabilities. Higher the values better the protection for creditors.We can see remarkable increase in this value in 2010. That is because of the increase in income and reduction of interest.


Q:  How was the company’s ability of earning income during this period?


A:  Profit margin ratio will give an idea about company’s ability to earn a net income from sales. We can identify a reduction in profit margin from 2007 to 2009 but rapid increase in 2010. That is because of profit increase. The corresponding value of Lanka tiles in FY2010 is around 13.9 %. So profit margin of Rocell is high.


Q:  How was the company’s ability to pay the operating expenses?


A: Gross margin shows the ability of the company to pay the operating expenses after one rupee sales.The gross margin is increasing from 2005 to 2010. The gross margin of Lanka tiles in FY2010 is 30.7. So the ability to cover the operating expenses of the company Rocell is ahead of Lanka tiles.


Q: What does your analysis indicate about the profitability of the company?


A: Return on total assets shows the ratio between income and total assets of the company. This ratio will help to have an idea about profitability of company. The return on total assets value of Lanka tiles in FY2010 is around 27%. It is better than Rocell. When considering the last five years, 2010 is the best financial year for Rocell.


Q: How successful has Royal ceramics been on managing shareholder’s investment management?


A: Return on common shareholders’ equity ratio gives an idea about successfulness of managing shareholders’ investments by company management to earn cash.There is a significant increase in return on common shareholders’ equity in FY2010. Corresponding value of Lanka tiles is 29.4%. So Rocell has managed owner’s investment better. The following graph shows the variation of above mentioned ratios.There is a significant increase in earnings per share in FY2010. That is because of the increase in income while keeping the number of shares constant. We can see an increase of earning in Lanka tiles shares also (Rs 8.93 per share)


Q: How has the PE ratio behaved during this period?


A: Price earnings ratio indicates the opportunity a company has for growth. If the value is higher the possibility of growth is also high. The reduction of market price in FY2009 is the result for reduction in PE and there is an increase of PE in FY2010. In FY2010 the market price increased in large amount but increase in earnings per share of that year reduce the PE ratio. When we compare it with the PE ratio of Lanka tiles 9.83 in FY2010 there is a small difference. But the share price of Rocell is high.


Q: What are the results arrived at when dividend ratios are compared with the cash return of the market price of the share?


A: Dividends yield ratio compare the cash return with the market price of the share.In the above graph we can see a reduction in dividend yield in FY2008. But increase in 2009 and again drop in FY 2010. In 2008 annual dividend per share has been reduced to Rs 1. In FY2010 increase of market price of share is huge and annual dividend per share increase by 0.5 only. That creates the reduction of dividend yield in FY2010. The value for Lanka tiles is over 4% in FY2010. That shows the difference.


Q: What are your conclusion and recommendations?


A: Above we have analyzed the financial statements of Royal Ceramics Lanka PLC using several criteria. From the horizontal and vertical analysis we found the change of financial figures with the time and we did a comparison of each value with common base. After that the following ratios for the company were computed.


Liquidity ratios, Solvency ratios , Profitability ratios, Market ratios


Mainly we have considered financial year 2010 and compared with the values of industry rival Lanka Tiles PLC. The investment on subsidiaries has increased and cash in bank also increased in considerable amount. This is mainly due to the reduction of loans and related interests in 2010. That makes the considerable increase in profit. In FY 2010 return on common shareholders’ equity has increased. That’s good news for investors. The company has managed the owner’s money well to earn income. Profit and basic earning per share has increased in FY2010. The increase in earning per share is also a good sign to investors. The share price has gone up rapidly in 2010. Considering all above factors, and future plans of Rocell and its strategies we can assume in future Royal Ceramics will perform well. The ceramic or tile industry is growing in Sri Lanka due to start of new projects. The export market for Rocell is also widening with their unique designs and high creativity. However the manufacturing costs of Royal Ceramics products are high when comparing with the other suppliers even though the quality is high.As a cost reduction method Rocell can introduce new automated systems and introduce waste minimizing methods. Based on Rocell’s financial performance, its manufacturing mechanisms, and markets following recommendation can be provided. After liberating the north and east of the country many hotel projects have started in those areas. With this the demand for ceramic products in those areas is very high. Royal Ceramics needs to consider capturing those markets and preparing products suitable for those areas culture and environmental conditions.There is a good opportunity for product diversification to a new area. Tile laying and bathroom fitting installations can be done by Royal Ceramics with quality finish. Consulting services for tile selection and bathroom fitting selection at early stages of building construction can be provided. This would increase the sales and provide additional income.  Current market condition of Royal Ceramic is becoming better. Need to invest more on bath-ware area and win that market too.


References-Royal Ceramics Lanka PLC. (n.d.). Annual reports 2005-2010.


Reported in Ceylontoday

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...by i3gconsultants@ 12:07:42 on 2012-07-03

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Sector: Services

SL needs to be efficient to become a successful aviation hub



Ceylon FT recently met with Cathay Pacific Airways Country Manager for Sri Lanka and the Maldives, Edward Coles-Gale. In this interview Coles-Gale elaborates on the present status of Cathay’s operation in Sri Lanka, the impact of the increase in the number of tourists visiting the island on the airline, Cathay’s strategy to overcome increasing competition and how realistic Sri Lanka’s prospects are of becoming a successful logistics and aviation hub.


Here are excerpts of the interview:


Q: Can you tell us about Cathay Pacific Airlines and what led Cathay to recommence flights to Colombo?


A: Cathay is an airline which is based out of Hong Kong. Its home hub is Hong Kong. It currently serves over 120 destinations worldwide with a fleet of over 170 aircraft. As part of the Cathay Pacific Group there is our sister airline - Dragon Air which is also a full service carrier and there is also another carrier, Air Hong Kong — a cargo joint venture with DHL, which also forms part of the group.Cathay has been operating now for about 65 years and is part of the Swire Group, which is an international group of companies. Again the public arm is based out of Hong Kong and there is a private arm based out of the UK (United Kingdom).In terms of a carrier, Cathay places itself as a full service carrier. Its primary aim, its vision and mission is to be the best airline in the world. Therefore we take our service proposition very seriously.  In terms of coming to Sri Lanka, we started flights to Sri Lanka in 1983 and we have been serving since then.I think Sri Lanka is an important market for us. At the moment there is very strong growth in the Sri Lankan economy. In current times that’s no mean feat. So it’s a market that we are very happy to serve. I can personally attest to the tourism potential as a visitor to Sri Lanka. I have been based here for eight to nine months and have been amazed at the number of things that you can see around the country.It’s a kind of country which has good skills set not only in terms of garment manufacturing but also other industries. So those kinds of things makes Sri Lanka a strong proposition to serve the country as part of the network. In terms of Cathay’s presence in Sri Lanka, at the moment, we fly into Colombo on a daily basis. We operate a 777 – 300 aircraft which has 398 seats and two class configuration — Business Class and Economy Class. I should add that it is the biggest capacity aircraft on our network at the moment, based on the number of seats.The aircraft also serves very well on this route because a core part of Cathay’s business model is the cargo component. More so than maybe to other legacy carriers, cargo is very important to Cathay Pacific. We are investing heavily on our freighter fleet which forms part of the 170 plus aircraft fleet which I mentioned earlier. Cargo is very important market out of Sri Lanka. We find ourselves carrying a lot of perishable goods, a lot of tuna, and a lot of fresh fish but also we carry a lot of garments as well.Of our flights coming out of Colombo, three flights per week go via Bangkok and four flights a week go via Singapore. All of the flights then get into Hong Kong around mid-day, which then provides excellent connections to North America.Cathay is very fortunate in terms of where Hong Kong is geographically situated. We have current generation aircraft that you can fly non-stop to a lot of the big cities, a lot of the major destinations in the United States (US). Hence we have for example San Francisco, Los Angeles (LA), New York and Chicago has recently come online. Then in Canada we have Vancouver and Toronto all served with non-stop services from Hong Kong. We are fortunate that we are far enough towards the east to be able to do that on a non-stop basis.Then in addition, we have Dragon Air which is very much a specialist into China. Being a natural gateway to China - Hong Kong and Cathay is very fortunate to be placed strategically, to feed off the growth that is happening in the Chinese market as well. What we are able to see is that there is a great emphasis put on tourism growing in Sri Lanka in terms of in-bound mainland Chinese tourists. Cathay and the Dragon Air network serve 18 destinations and are growing within mainland China. We will be able to help in that aspect as well, in addition to serving the outbound needs of Sri Lanka.


Q: What is your perception of the opportunities available in post-war Sri Lanka and how has the surge in the arrival of tourists into the country, affected the bottom line of the airline’s Colombo operations?


A: In terms of opportunities I would say that I thought I was very fortunate to be coming here at the time I arrived, because it should be a very exciting time for the country. In terms of opportunities to concentrate on building up infrastructure, we have seen that it is happening now, with the highway down to Galle and other projects coming up across the country. These are some things which I think are examples of the opportunities available here. You’re hearing a lot of investment coming in as well, the ‘Shangri La’ property for example. It’s great to see more hotels coming in as well to cater for the increase in tourists.   Essentially we are going to see more investment, given the potential that Sri Lanka has. It covers many areas. It covers a cultural aspect, a wildlife aspect and a nature aspect.On top of all that Sri Lankans are generally very friendly people as well. The country lends itself so naturally to tourism. With infrastructure and everything else coming into place I think it’s going to encourage more growth.In terms of impact to Cathay, I think it’s great to see that growth. In terms of hearing now for example the focus from the Ministry of Tourism on bringing in visitors from mainland China as well as other markets which are important to Sri Lanka, I think that provides a great opportunity to Cathay going forward in future, and cements the importance of having it (Sri Lanka) on the network.I think another example that is recognised by the international community, is SriLankan Airlines joining ‘One World,’ which again I think is great as it provides increased connectivity, to the alliance as a whole.


Q: Aviation industry the world over is in turmoil. How do you expect Sri Lanka’s aviation sector to perform in 2012 and beyond?


A:  I think that it is going to be a very tough year worldwide for aviation. We are hearing a lot of airlines trying to downsize their workforce and the financial results that came out at the end of last year came with a fairly hefty hit. Cathay was an exception; last year was down than the year before. We had a number of exceptional items as well as the year before, which made the difference. I think there are several critical parts to it.Fuel prices are obviously one area. When there is something on your profit and loss statement which is up to 30% or 40% of your cost and then when that increases 30% to 40% and sustains at that level, it is a different from what we saw in 2008 where we saw a spike but then prices dropped. The average over the year was lower than what we have seen last year and this year. That makes a huge difference. I think it puts pressure on airlines to modernize their fleets which has the option of being good for the environment as well. Commercially it makes sense for all airlines as well. It’s good for the environment because you have more efficient aircraft flying in the skies so I think that is one thing that you see.I think in terms of what it means to Sri Lanka it’s a very good question. I think what we have seen, from Cathay’s point of view locally is that we have been very cautious about our long-haul and we have even in fact reduced some frequencies where we had multiple frequencies per day for example on our ultra long hauls, so that we can free our more modern aircraft and fleet to accelerate the retirement of the older aircraft which still serve the network, keep the network together. That’s what we have been doing on the one hand.Regionally, we have been strengthening the regional network and we have been able to bring a number of airports online which were offline earlier, as well as add new ports in the region. I think what we are seeing is that regionally we are doing what we can to keep the network growing, but at the same time being conscious of the commitments.From the Cathay side as well this is a big year for us. We have 19 aircraft being delivered this year. Which I am sure is the largest number of aircraft which we have delivered in any year. Having that kind of new aircraft gives us the opportunity to keep things developing.


Q: Do you think that the Sri Lankan market is saturated and if so how do you hope to increase your share in this market?


A: I think, we have seen a lot of capacity come in certainly in the last few years. But I think one positive that we can take from this is that the inbound market is growing. As we see the tourism numbers, I know that it’s expected to peak over a million this year and we had a very strong first quarter as well.I think in terms of outbound we see that growth as well, certainly in terms of the figures. In the last few months we have seen that growing, which means that the market which is being measured through that channel is growing as well. I think the main focus is that we look to the growth to meet up to that capacity. It’s a good thing for the consumer to have capacity in the market. Hong Kong’s strength has been as a very free economy, with a free market; so you get competition. It’s good to have competition and Cathay welcomes competition in Sri Lanka as well.


Q: A number of other airlines have ventured into Colombo. How does your airline cope with this competition and how would the increase in competition among airlines flying into Colombo affect your bottom line?


A: I think there have been a number of new carriers as well as increases in frequency if you go back a couple of years to existing legacy carriers as well. We’ve seen low-cost carriers enter the market. I think one thing which we have seen elsewhere is that low cost carriers do tend to target a different market segment to legacy carriers. What you see when they enter the market is that in some ways the market evolves or kind of stratifies to those passengers who are looking for the cheapest fares, to those who are looking for a service proposition with more flexible fares. The business travellers again are looking for something else. In some ways you get more diverse products in the market and then you concentrate more on your segment. I think what we’ve seen in other markets around the world is often what happens when these carriers come in is that particularly they target different areas in the market. It results in growth in that area rather than diluting your own. So again hopefully the good news would be to the travelling public, which presents more options.It terms of impact it does make competition fiercer, which means that we need to work harder, to keep our game up but I think that’s part of the challenge of being in the industry. We are in the wrong industry if we don’t want that.


Q: Sri Lanka aims to become both a mega global logistics and aviation hub. Do you believe this goal to be over-ambitious?


A: No, I don’t think it’s over-ambitious. Hong Kong has done very well due to its geographical position. I think Sri Lanka benefits in its own way from being where it is geographically. In terms of a logistics hub it is on a major sea route as you go east-west. In addition it’s an area in which infrastructure is all coming up. Infrastructure I think is one of the key things to make logistics hubs work. It (Sri Lanka) has its own very strong manufacturing sector which generates a lot of volume so that’s another plus point in the argument for it working. So I think it’s got a lot going for it.In terms of trade from Southwest Pacific and certain areas of Southeast Asia through to Europe and certain areas of Africa; if that develops as well, it’s got potential again from a geographical point of view.I think the emphasis is for Sri Lanka to keep investing in infrastructure as its doing, to make sure it has that capacity as well and make it as an efficient a hub as possible so that it’s attractive relative to other big players in the area. Hong Kong is slightly further away, Singapore is the one that obviously springs to mind as being quite close by, which is already a very competitive place. I am sure that as the world market grows Sri Lanka is going to be able to tap into it and take that but again it needs to make sure that it keeps up the efficiency to compete with the other areas.


Q: What scope do you see in the Hambantota International Airport and do you have any idea of expanding into the South?


A: Cathay periodically reviews its capacity, on a regular basis. I think that at the moment we are happy with our daily service into Bandaranaike International Airport (BIA). But I think it’s very interesting to see Hambantota in the future, see how it develops as carriers go in there and how things around the port build up in terms of other infrastructure there and its connections to the rest of the country.


Q: What is Cathay Pacific’s plan for Asia in general and South Asia in particular?


A: Cathay is based in Hong Kong. It’s an Asian carrier. It aims to provide an international experience but at the end of the day its service is geared towards its Asian base. We are looking at the region, we are conscious of the high fuel price situation, even though it has moderated a little bit in the last few weeks and the economic situation elsewhere. Asia will continue to be the strong growth market. So I think that from that point of view we are right in expanding.In terms of South Asia in particular Cathay has recently announced that it is going to be adding flights to some of the existing airports in India, to increase them as well as bringing Calcutta online, hopefully before the end of the year. Again I think Hong Kong is very strategically placed and geographically very well placed. We are very fortunate it being a gateway between India, which is the second most populous country in the world, probably soon to be first with its growth rate and then China which is the current holder of the title. So by connecting those two I think there are a lot of possibilities as well.One thing I wish I could have mentioned earlier which Cathay is very proud of is our ‘Asia Miles’ ‘Marco Polo’ frequent flyer loyalty rewards programmes. Passengers can earn miles when they fly and these can be redeemed for flights and for a number of other reward items through website and also through contacting local offices. The other good aspect with the Marco Polo membership is that it’s a way of recognising our even more frequent flyers, such that they are recognised at the touch points with Cathay. That recognition, as passengers have communicated to us, is very important to them. It is things like giving excess baggage, priority boarding and priority access to seats at short notice when flights are filling up and lounge access. So we think that is a very important part of our service proposition. I mentioned that because we have a vested interest because we have a double miles promotion at the moment so it gives opportunity for passengers to accrue their mileage even quicker in the next month or so. 


Reported in Ceylontoday

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...by i3gconsultants@ 12:07:42 on 2012-07-03

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Sector: Beverage Food and Tobacco

Sri Lanka's legal hard liquor production down


Legal hard liquor production has fallen 2.6 percent in the first five months of 2012, from a year earlier, but soft liquor (mainly beer) had risen 12.5 percent the finance ministry said in a report.

But due to an increase in excise duty on March 2012, tax revenues had risen 11.8 percent to 35,404 million rupees up to May from a year earlier. There are no reliable estimates of tax unpaid liquor but the industry analysts have put estimates of anywhere around 30 to 50 percent of the legal market. High taxes encourage illicit production. In addition to cottage industry type 'moonshine' distillers, industry analysts say from time to time large scale organized illicit liquor outfits crop up. Sri Lanka had seen a surge in beer sales partly due to stronger tourism arrivals as well as opening of the North and Eastern markets.

 

Reported in LBO
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...by i3gconsultants@ 12:07:42 on 2012-07-03

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Sector: Motor

Sri Lanka new vehicles ownership may drop 40-pct: industry


New vehicle registrations in Sri Lanka may drop up to 40 percent in 2012 and dreams of motor bike owners to move on to small cars will be shattered, industry officials said. In 2011, 525,421 new vehicles including 253,331 motor bikes and 57,886 motor cars were registered, up 46 percent from a year earlier. Precipitous The Ceylon Motor Traders' Association, an industry body, says higher import duties, a weaker exchange rate and higher interest rates is slowing demand for motor vehicles in the island. "With all these negative factors we can expect a drop of around 30 to 40 percent in vehicle registrations to an estimated total of around 360,000 this year," Tilak Gunasekekera, chairman of the Ceylon Motor Traders Association said. Car registrations at the Department of Motor Traffic have dropped 26 percent to 21,884 in the first half of 2012 from 29,883 a year earlier. Motor trade officials say a state import duty hike has sent prices of smaller cars (below 1000 cubic centimeter engine capacity) like the Indian-made Maruti Alto up putting them beyond reach of the people with modest incomes.

Sri Lanka's finance ministry jacked up taxes on cars in particular after credit taken to manipulate oil prices and more than 250 billion rupees printed to manipulate interest rates and monetize the budget deficit sent the rupee down from 110 to 130 to the US dollar. Authorities have had a habit of imposing trade controls on citizens ever since a money printing central bank was created in 1951, which created high inflation and 'foreign exchange shortages'. Authorities singled out car owners and motor cycle owners to hit the hardest, while potential truck and bus owners were left relatively untouched, in line with the discriminatory state interventionism that has been generally practiced in the country in past half century. Analysts say a general rise in interest rates or a depreciation of the currency is neutral across citizens.

Shattered Dreams

Car industry officials say the hardest hit are citizens with modest means, who were planning to move to cars from motor bikes. "People like to shift from two wheels to four, now that dream is shattered," Gunasekera said. "They should have increased taxes on a fairer platform. This is far too high" he said. In May the sales of Maruti Alto, Sri Lanka's best-selling car fell to 288 units from 537 units in April 2011, an analysis by JB Stockbrokers, an equities research house showed. According to data from Sri Lanka's Department of Motor Traffic registration of smaller cars below 1000cc engine capacity has dropped to 7,343 in the first half of 2012, compared to 12,432 registrations in the same period last year. "The government should have encouraged smaller cars at a time when the world is looking for economical and smaller cars to fit into their cities," Gunasekera said. At the moment state workers however get 'permits' to import tax slashed cars, in another discriminatory practice. The agents for a top Japanese brand said they expected profits to drop 35 percent this year and their sales were now mostly confined to state orders or those coming from 'permits'. Analysts had also warned that imposing trade controls are in fact an economic sanction imposed on a country by itself and problems with the exchange rate - which come from monetary policy - should be addressed monetarily. Cars which were charged higher duty even after a tax cut give revenues to the state and prohibitive taxes that reduces imports will expand the budget deficit, driving interest rates higher or requiring fresh taxes on other goods. In the 1930s, the so-called 'Great Depression' was also worsened and a recovery delayed by trade controls. Motor trade officials say the industry contributed about 35 billion rupees by way of taxes to the state. In 2011 the Department of Motor Traffic had also earned 7.0 billion rupees in various registration fees.

Reported in LBO

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...by i3gconsultants@ 12:07:42 on 2012-07-03

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Sector: Land and Property

Huge growth potential for real estate investment in Sri Lanka


Luxury condominium development in Sri Lanka emerged in popularity in the early part of the last decade. Luxury apartments were considered the most reliable investment option by Sri Lankan top end investors as well as expats living in Australia, U.S.A, U.K and Canada, the developers of 110 Parliament Road, a luxury apartment complex, said in a special statement last weekend."Research shows that 50% of the units of most luxury apartments were sold prior to the completion of the construction. Further research also indicates that top end projects appear to perform better than low-end apartments due to higher income levels in the Western province, mainly Colombo."One of the scarcest resources in Colombo is land. Most of the land that could be used for development has already been utilized. The dearth of developable land in the urban areas combined with rising population density has led to the emergence of high rise condominiums in the Colombo district.Over the past few years the Colombo district has witnessed rapid development of its outer suburbs and growing popularity of populating migration to these suburbs; especially in Rajagiriya, Battaramulla and Pellawatte area."Rajagiriya has witnessed few high-rise apartment complexes, and the most talked about project in the area is the iconic ‘110 Parliament Road’ apartment complex located just 2 kilometers from Colombo 07."110 Parliament Road is a landmark apartment project with quiet neighborhood surroundings and views of the Colombo Golf Course and the National Bird Sanctuary with panoramic view of the Colombo City."110 Parliament Road remains ideal and competitive with a choice of two, three and duplex apartments, with floor areas of 1600 sqft to 3000sqft and state-of-the art amenities such as swimming pools, gym, tennis courts, basket ball courts children’s play area, restaurants, spa just to name a few which. These privileges will be exclusive to the elite owners of "110 Parliament Road " Apartments."Apurva Natvar Parikh Group (ANPG Group) partnered with Sanken Lanka (Pvt) Ltd and broke ground and commenced construction in Nov 2011. The construction is underway and is due for completion in July 2014." Rohan Parikh, Director of ANPG Group says according to the Ministry of Development and Planning increasing urbanization and population have increased the need for expansion in housing development in Sri Lanka."According to a study on the semi luxury/ luxury apartment market in Sri Lanka by Pricewaterhouse Coopers Private Limited it is estimated that 100, 000 units would be needed to be built per year until 2020 to ensure housing for all," the statement said."Our Group diversified in to Apartment construction in Sri Lanka following feasibility studies that were done in the country. With Sri Lanka’s economy expected to grow in coming years we anticipate that the demand for luxury apartmetments will also continue to grow," Parikh said.


Reported in The Island

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...by i3gconsultants@ 12:07:34 on 2012-07-03

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Sector: Plantations

Promote Ceylon Tea at premium - PB


Tea industry stakeholders must create a new development framework and promote Ceylon Tea at a premium, setting aside the idea of making the country a tea hub, if the current export target of US$ 5 billion in tea export earnings is to be achieved, according to Secretary to the Treasury, Dr P.B Jayasundara.

Secretary to the Treasury, Dr P.B Jayasundara (2nd from the left) flanked by tea blending hub advocates, Vice Chairman, CTTA, Niraj De Mel (far left) and Chairman CTTA, Jayantha Keragala, with Vice Chairman, CTTA, Lalith Obeyesekere (far right). Pic by: Indraratne Balasuriya
“On average, we sell our tea at approximately US$ 4.50 per kilo but this is not right. We have to work towards increasing our prices into the range of US$ 15 per kilo and not on average but in absolute terms,” he added.
He further stated that such a price increase would only be possible through a greater focus on value addition, with local participation along the value chain, instead of the more recently discussed concept of a blending hub.
“A threefold price increase will mean that the industry will have to get more skilled labor, draft collective agreements or have no agreements at all or maybe the industry needs to develop on a different model all together. However, it cannot be done by importing tea.”
Dr. Jayasundara made these comments addressing the 118th Annual General Meeting of the Colombo Tea Traders Association, an organization which had recently advocated the ‘tea blending hub’ concept.
Dr.Jayasundara stated that a focus on selling Ceylon tea at premium prices would be particularly important in the context of a shift in economic momentum towards emerging economies.
“Things are different to how they were 30 years ago. Many countries which were poor are now getting rich and as you know the rich and the poor can’t remain friendly for long so it is difficult for us to maintain these friendships now.”
“At a time like this, Sri Lanka needs to lead from somewhere, and the tea industry could be that industry. The country needs to brand itself in a time when the world is getting richer. Tea is a rich man’s drink so there is a tremendous opportunity to market tea to these emerging economies when conventionally rich countries are struggling to sustain their richness. So, we need to look at the rich while competing with the poor.” Dr Jayasundara explained.
In that context, he said that the industry would have to look at promoting products tailored specifically to Chinese and Russian markets in particular.
“It won’t be easy, trade unions might not accept productivity increases and there might be other problems. You might not get the required credit to carry out replanting but this country has successfully traveled this journey so far. So I’m quite optimistic that we can cross the US$ 5 billion export target like we crossed the 30-year war.”


Reported in Dailymirror

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...by i3gconsultants@ 12:07:47 on 2012-07-03

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Sector: Manufacturing

Ratmalana Industrial Zone tops $ 18 m turnover in 2011


The Ratmalana Industrial Zone (RIZ) where 2012 US BID Quality award winner Elcardo Industries is based, has reported $ 18 m (Rs 2,500 m) turnover in 2011. “We salute the international achievement of Elcardo Chairman Rohan Weeraratne which brought honour to RIZ and our manufactures.The $ 456,000 initial investment by the Industry Ministry in RIZ since 1998 has paid off and it also reaped revenue of 40 times of initial investment in 2011 showing that RIZ is another success in our industry zone scheme,” said Rishad Bathiudeen, Minister of Industry of Commerce.
“Our initial estimates of revenue for 2011 are $ 18 million but we believe it could be more, almost in the range of $20 million” he said.
Minister Bathiudeen made these observations in the aftermath of his sudden site tour to the Ratmalana Industrial Zone (RIZ) under his Ministry on June 22.
During the unannounced visit, the minister made a close inspection of the operations of the zone and also inquired of the wellbeing and issues faced by zonal industrialists.Rohan Weeraratne won the International Quality Summit Award in the Gold Category at the annual awards ceremony held in New York recently at the Mariott Marquis Convention Hall. Jose E. Prieto, President of the US based Business Initiative Directions (BID), which has members from 178 countries, handed over the award to Weeraratne.
RIZ was started by the Ministry of Industry and Commerce in 1998 and to-date, the ministry’s investments and upgrade outlay for RIZ totals Rs 61.03 million ($ 456,000).The zone, which has manufacturing sectors such as steel, toiletries, herbals, and stationery, has two phases spread across 16 acres (6.47 Ha).Among the manufacturers successfully operating are Elcardo Industries Ltd (steel/roller doors), Phoenix Tradeing (heavy earth moving machinery), Siddhalepa Ayurveda Exports (herbal products), Luck herbs Lanka (lquid soaps), Seamaice (napthaline), Dynamic Technologies (road tankers), Asian Chill Equipment (supermarket displays), Deto Surfacts (industry detergents), Tiljay Computer Forms, and Petropackaging (good processing).RIZ Industrialists, who greeted the minister informed him that they are making profits but complained of an odd taxation regime implemented by the Dehiwela Mount Lavinia Municipality, within which the RIZ is located. “As industrialists of the RIZ we are not sure on what basis we need to pay a tax for production capital,” they said.According to Rohan Weeraratne, the BID award winning Chairman of Elcardo, the municipality has imposed a tax on new machineries installed by all manufacturers in the zone. “The taxes appear to be imposed arbitrarily with no one paying a standard rate. I myself have to pay a hefty tax for installing new machinery in my factories which I believe is unfair. We believe that this tax is against the industrial development policies of the government,” Weeraratne said. Minister Bathiudeen directed officials to look into the matter.

Reported in Dailynews
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...by i3gconsultants@ 09:07:56 on 2012-07-02

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Sector: Plantations

Tea industry could achieve US $ 5 b export mark by 2020- Dr Jayasundera


The country’s tea industry could achieve US $ 5 billion export value by 2020 through increased productivity and value addition. “Sri Lanka will be a country with an identification and differentiation that could achieve the $ 20 billion export mark by 2020. I am optimistic that we could cross $ 5 billion mark in tea exports by 2020 not by doubling our production, but tripling the prices as volumes could only increased by 2 to 3 percent. Moving away from conflict trap and being a middle income country, one can look at the future with fair degree of optimism, Treasury Secretary Dr. P.B. Jayasundera said.
“The country has applied some brakes in the sectors of imports and reserve to boost the production side. We need to go through these adjustments with optimism and confidence as our economy is entering the middle income country trap, he said addressing the 118 Annual General Meeting of the Colombo Tea Traders Association held last Friday in Colombo.
The way forward to achieve $ 5 billion is that by becoming high in productivity and quality driven up market exports. Sri Lanka needs to define boundaries clearly and start branding rather than importing tea. The country should process the entire value chain to derive economic benefits.
As against exporting Sri Lankan tea to reach $ 15 billion from $ 4 kilo tea price, good practices, quality control and branding separating from competitors is necessary. The industry players needs to keep an open mind to generate results as there are challenges the industry has to manage and mitigate in the next eight years,” he said.
The country is in term of economy is different at present. Efforts are needed to lead the world in terms of tea, as tea is rich man’s drink. This beverage industry has tremendous scope to bounce back sustaining its richness. With plans to become $ 100 billion economy by 2020, the tea industry should strategize to contribute to the economy is similar proposition.
Sri Lanka is really on a path of economic growth and it has eight years of journey as a middle income country. The infrastructure is coming in to shape. Many projects that were thought not feasible have been completed including the expressway and reasonable road network. The business world could do better with sincerity, good vision and action. We need to achieve growth allowing corrections to take the direction. The plantation sector by deploying good cultivating practices, correct techniques and targeting new markets by way of a new model will be able to reach the targets even before the timeframe, Jayasundera said.

Reported in Dailynews
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...by i3gconsultants@ 09:07:42 on 2012-07-02

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Sector: Bank Finance and Insurance

TKS Group braces for big business after Rs. 1.7 b Malaysian investment


Subsidiaries Asian Finance, TKS Securities and TKS Finance re-branded
Newly set up TKS Capital to provide support services
TKS Group of Companies, which is Malaysian-owned, last week unveiled its new corporate structure and logo with a view of further enhancing its efficiency and highlighting the business synergies within the Group itself.
The new corporate logo and structure is expected to bring the various companies under one banner so as to better serve its growing client base.
TKS Group has diversified interests in the Sri Lankan market. In the financial sector, it has three companies in its stable, namely Asian Finance Ltd., TKS Finance Ltd. and TKS Securities Ltd.
To ensure a more efficient environment within these companies and to propel these companies forward, TKS Capital Ltd. has been established to provide various support services to the Group such as audit functions, information technology support, secretarial services and human resource management, amongst others.
“This will help make the three subsidiaries more efficient as well as focus on their core businesses,” TKS Group Deputy Chairman and top Malaysian banker including former Head of its National Savings Bank, Azim Zabidi said.
He also said that the Group’s finance arm would rapidly expand its operations in Sri Lanka to provide its customers a wider product range.
“We want to strengthen the brand and reach the public with simple solutions and strong commitment,” Zabidi told a press conference on Friday.
He said that the three companies have got excellent CEOs in Sanathan Dalugoda at Asian Finance, Hussain Gani at TKS Securities and Rasika Kaluarachchi at TKS Finance.
The Board of Directors of Asian Finance has been reconstituted with the inclusion of professionally qualified Directors, nominated by the new shareholders.
Asian Finance prides itself in that none of its depositors were required to have their fixed deposits be converted into the shares of the company. Stringent internal control and vigorous provisions have also been made on the loans portfolios and real estate stocks of Asian Finance to put the company on a stronger footing to face the challenges ahead.
“Additional capital will be further injected to fund the company expansion program within the next few months,” Zabidi revealed. The current capitalisation of Asian Finance stands at Rs. 900 million.
He also said Asian Finance would not engage further in the business of real estate but instead focus purely on its core business, which is providing finance to the people and small businesses of Sri Lanka.
As part of its exit strategy in the real estate business, Asian Finance recently undertook a corporate exercise to unlock the value of its Head Office at R.A. De Mel Mawatha by disposing and subsequently leasing back the property. This corporate exercise is expected to generate cash flow for Asian Finance.
According to Asian Finance CEO Sanathana Dalugoda, the company has a real estate base of around Rs. 1 billion.
Zabidi said that the completion of this exercise is expected in the next few months.
As for TKS Finance, now entering its second year of operations, plans are afoot to expand its network of branches throughout the country. A total of 20 new branches are expected to be opened within the next three years. This should place TKS Finance as a force to be reckoned with in the ensuing years, Zabidi said.
To differentiate the TKS Group finance arm from the rest of its competitors, Asian Finance is planning to co-brand the issuance of Visa Credit Cards with a local bank in Sri Lanka.
Going forward Zabidi said depending on the progress and prospects, TKS Group might consider merging Asian Finance and TKS Finance or sell down on one of the entities.
The TKS Group’s finance arm is expected to venture into Shariah-compliant finance business, by launching its first Shariah-compliant product soon. In addition, the Group’s finance arm together with TKS securities will be collaborating further to innovate and launch new products to meet the needs of TKS Securities’ clients.
TKS Securities, the equity investment arm of the Group, is managed by a highly experienced team of stockbrokers and analysts and can be regarded as one of the leading stock brokers in Sri Lanka. The company is also the exclusive partner in Sri Lanka for New York based Auerbach Grayson and Company, one of the largest equity investors in the Colombo bourse. TKS Securities have set up branches in major cities in Sri Lanka to expand and serve its corporate and retail clients better. According to TKS Securities CEO Hussain Gani, the firm is currently ranked number six out of 28 whilst Deputy Chairman said plans are to rise to within top three or five.
Zabidi stressed that the Group was heading in the right direction with its members gaining market share and would show strong growth and good profits in the coming years.
He also said that Malaysia was one of the top investors in Sri Lanka and given post-war potential Sri Lanka was in a great position to benefit from Malaysia’s success and lessons learnt.

Reported in Dailyft
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...by i3gconsultants@ 09:07:43 on 2012-07-02

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Sector: Manufacturing

Big boost as US GSP is back on track


Sri Lanka’s external relations have received a boost following the decision by the US to continue with its duty free Generalised System of Preference (GSP) program for trade after a review that took over three years.
United States Trade Representative Ron Kirk announced on Friday said that the USTR has closed the GSP country practice review on worker rights in Sri Lanka without any change to Sri Lanka’s GSP trade benefits.

Following the loss of the European Union’s GSP+ a few years ago, the future of the US scheme had been in the balance with some fearing its end as well.
“The closure of the GSP country practice review of Sri Lanka was based on the Sri Lankan Government’s noteworthy efforts to address worker rights issues over the past few years. This welcome outcome to the review demonstrates that GSP remains an effective tool for engaging GSP beneficiary countries on worker rights,” Ambassador Kirk said.
The US action follows an interagency review of a petition filed by the AFL-CIO in 2008, alleging shortcomings in Sri Lanka’s recognition or worker rights.
A US statement said that over the course of the last few years, the Government of Sri Lanka has taken significant steps to improve worker rights environment in the country.
Among these steps are: Progress in initiating, investigating and resolving unfair labour practices cases; the establishment of trade union facilitation centres in each of the three largest Economic Processing Zones; improved procedures for conducting union certifications; and enactment of legislation to increase the fines for labour practices violations.
The Governments of the United States and Sri Lanka will continue to engage on worker rights issues in the newly-established Labour Affairs Committee of the United States-Sri Lanka Trade and Investment Council.
As part of the annual GSP review, an interagency US Government committee led by USTR receives and considers petitions seeking to withdraw or limit a country’s eligibility for GSP tariff benefits based on that country’s compliance with statutory eligibility criteria. One such criterion is whether a beneficiary country “has not taken or is not taking steps to afford internationally recognised worker rights to workers in the country”.
US imports from Sri Lanka under GSP totalled $ 135 million in 2011 and include tyres, activated carbon, rubber gloves, plastic products and kitchenware. In comparison to overall exports of $ 2.14 billion, shipments which came under GSP scheme were only 6.2%. However in 2010, the share amounted to 8.6% as GSP-benefits enjoying products export value was $ 147 million.
Under the GSP program, up to 5,000 types of products from 128 beneficiary developing countries are eligible for duty-free importation into the United States. In 2011, the total value of imports that entered the United States duty-free under GSP was $ 18.5 billion.
Products included tires, activated carbon, rubber gloves, plastic products, kitchenware, machinery, electrical goods, chemical products, agricultural products and jewellery. Most textiles and apparel are not eligible for preferential benefits under the program.

Reported in Dailyft
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...by i3gconsultants@ 09:07:58 on 2012-07-02

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Sector: Hotels and Travels

Tourism targets begin with reforming taxi-drivers


For every 15 tourists that arrive in Sri Lanka, one job opportunity is created in the Sri Lanka tourism industry, said the Chairman of the Tourist Board of the Western Province, Claude Thomasz. He said this at an event to mark the successful conclusion of a program that rehabilitated and trained 300 taxi drivers in the Western Province.


Sri Lanka has a long way to go in terms of gaining significant edge in tourism if we want to tap into the massive volume of tourists flocking to other countries in South East Asia. However, more than just achieving the target of attracting 2.5 million tourists by the year 2016, it is educating our tourism stakeholders, service personnel and those completely dependant on tourism profits. "Once we gave the opportunity for taxi drivers to come and understand about the various cultures, the behaviour and how to treat tourists, they showed a remarkable progress which led to better profits in the form of more hires and ethical standards," said Thomasz.He stated that not only taxi drivers but they are expanding to give this training service to boatmen transporting tourists, site and area guides and vendors. He said, "Our aim is to provide all logistic assistance together with the Sri Lanka Tourism Development Authority with the aim of providing a better standard of service."


According to the Sri Lanka Tourism policy as stated by the Ministry of Economic Development, they are planning to increase tourism related employment from 125,000 in 2010 to 500,000 by 2016 and expand tourism based industry and services all over the island. "We are starting at the taxi drivers because they have the ability to make a tourist feel welcome or irritated. The Western Province also has the benefit of welcoming a tourist and also sending them off back home but if we don't know how to keep them happy after they arrive here, then we should change our tourism culture among our tourism service personnel," he said. Under the program, while 300 taxi drivers have been trained, there are many others who are keen to train and take back what they learnt and turn it into practice. Thomasz said, "We are certifying all the taxi drivers who have qualified under our program with a special licence, certificate and a wide network base so that they are equipped to deal with whatever questions and problems a tourist might have. In addition, we are also planning to teach them languages and take the program one step further by getting the taxi-drivers not only help themselves but also their friends and colleagues to take the message across."


Reported in Sundayobserver

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...by i3gconsultants@ 18:07:25 on 2012-07-01

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Sector: Power and Energy

Sri Lanka dendro power plants may face higher costs: official


Dendro power plants in Sri Lanka may be unviable if too many are licensed to operate close to each other because competition may drive up firewood prices to high levels, an industry official has warned.

Tokyo Power, a unit of Sri Lanka's Tokyo Cement group is building a 5 MegaWatt dendro power plant in Mahiyangana, and is encouraging farmers and residents in surrounding areas to grow gliricidia.  S R Gnanam, joint managing director of the Tokyo Cement group says in some countries dendro plants have run into a trouble because competition drove up feed material prices to levels beyond which the power utility was buying energy. "We have asked the Sustainable Energy Authority to give only once license within a 50 kilometre radius," Gnanam said in a recent interview. "Otherwise we will have a big problem." He said farmers do not grow gliricidia as a monocrop but used the planted it as a live fence or in gardens. Gliricidia leaves are rich in nitrogen and are useful as animal fodder and fertilizer. Sri Lanka's power grid is already paying about 22 rupees for dendro and 18 rupees a kilowatt for power generated from other types of biomass. Tokyo Cement is already running a biomass plant to power their grinding plant in Trincomallee which burns paddy husk. The 10MW plant buns up 300 tonnes of husk or more than 30 trucks a day. Though Sri Lanka's east is a rich paddy area, he says even now paddy husk is being used in large scale to produce parboiled rice.

Reported in LBO

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...by i3gconsultants@ 18:07:25 on 2012-07-01

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Sector: Power and Energy

Electricity Sector Needs To Open Up..


A market economy is sine qua non to develop the electricity sector, a Sri Lankan born engineer domiciled in the USA told a forum in Colombo on Monday. Don Nissanka, President & CEO Exergonix, a company which provides “green” energy solutions, said this, when he was told by this reporter that state owned Ceylon Electricity Board  and Lanka Electricity Company (Pvt.) Ltd. have the sole monopoly in Sri Lanka in regard to the sale of electricity to the consumer. This was in the context of his speech, which was about selling green electricity energy products to the customer. Nissanka in reply said that the uniqueness of the American system was its entrepreneurial based market economy. Speaking from his experience in the USA, he said that selling the idea of marketing electricity, is bankable. “Any bank, if it’s assured of revenue streams for a sustained period of 20 years will fund such a project,” said Nissanka. The consumer may be a municipality or an industry or a community, he said.
Nissanka said that the Americans consume a lot of electricity. A household may have as many as eight TV sets coupled with air conditioners, he said. For such households he sells 25 kilo Watt (kW) battery cells powered by a mix of wind energy and solar power. Nissanka said that it’s more cost effective if these battery storage cells are dual powered, ie by both sunlight and wind energy.
For the Sri Lankan off grid household, where the needs are basic, probably an electric light for the children to study at night, a 1-2 kW battery storage cell would be sufficient, he said. The price of such a cell is US$ ($) 1,000 and its lifespan 15 years, said Nissanka.
This is new technology, but once it’s mass produced costs will go down, he said. For instance an electricity unit from a one mega Watt storage battery which was previously sold for $ 2.50, has since come down to $ one and as even as low as 50 US cents, Nissanka said. In time to come such green storage batteries will be able to compete with generators, he said.
Green energy is the future, a lot of countries are moving towards that path, he said. Last year the global energy market was valued at $ 5.8 trillion of which the renewable energy sector was the fastest growing, Nissanka said.
They could be connected to the conventional grid run by fossil fuels.
Its development, particularly in the USA was due to the high cost of conventional energy that had even led to blackouts. As a result, in certain areas, energy prices which were a mere 2-3 US cents per unit, shot up to 40-50 cents.  A 1,000 acre campus is being developed in the USA for the study of green technology, he added. The US Government has invested $ 2.4 billion for the development of green technology.
“Capturing renewable energy and feeding them back to the grid, we are prepared to do that in Sri Lanka,” said Nissanka. The event was organized by the Institution of Engineering and Technology, Sri Lanka Network.

Reported in Sundayleader
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...by i3gconsultants@ 09:07:10 on 2012-07-01

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Sector: Hotels and Travels

Switch Asia support hotels, enhances energy efficiency


Around 220 Sri Lankan hotels have registered with the Switch Asia Greening Hotel initiative and have shown a marked improvement in energy management said EU- Switch Asia Greening Sri Lanka Hotels Project Director, Srilal Miththapala.He said that over 50 hotels have implemented sustainability guidelines and have enhanced energy efficiency. The number of hotels that are keen to come on board and enhance sustainable consumption and production, has increased.
"Promoting sustainable consumption and production will help position Sri Lanka tourism well in the global arena and woo more visitors to the country", Miththapala said."Greening Sri Lankan Hotels is a European Commission funded project under the Switch-Asia program targeted at enhancing environmental performance of Sri Lankan hotels through improvement of energy, water and waste management systems and reduce cost of operations and increase market acceptance of Sri Lankan hotels "Miththapala said. "Many hotels have reduced energy costs by adopting good practices such as switching on to solar energy, rain water harvesting and the use of biogas.
Goldi Sands Hotel Negombo, Windsor Hotel Nuwara Eliya and Thambapanni Hotel Unawatuna are some of the hotels that have achieved remarkable growth in sustainable practices", he said.
Miththapala said that similar to the garment industry, tour operators were keen to know how hotels are run, what mechanisms are used to manage waste and whether they were using renewable energy sources to reduce carbon emission."The time will soon come when hoteliers will not be able to market their properties due to high energy consumption and unsustainable practices. Tourists will refuse to stay in hotels which are not environment friendly", he said. Around 22 percent of tour operators in the world want to stay in hotels which are green and have low energy consumption, according to Kuoni, a leading global tour operator. Miththapala said that the primary objective objective of the project is to enhance the environmental performance of Sri Lankan Hotels through the improvement of energy, water and waste management.
A large number of hotels are keen to switch on to good practices and reduce cost. Switch Asia will support hotels by sharing its expertise to enhance energy efficiency and adopt productive waste management such as use of bio-gas and rain water harvesting. Miththapala said that awards will be presented for the first time to hotels which adopt sustainable energy practices.
Switch Asia will conduct a seminar on 'Why Sustainability is Important for Tourism'on July 4 at the Cinnamon Lakeside from 8.30 a.m. to 1.00 p.m. World renowned tourism industry experts and environmentalists will speak on the occasion.

Reported in Sundayobserver
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...by i3gconsultants@ 09:07:56 on 2012-07-01

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Sector: Hotels and Travels

Gardiner Group builds 120-room hotel in Kandy


The Gardiner Group, owners of Ceylon Hotels Corporation (CHC) and the Galle Face Group having refurbished most of its hotels is building a new 120-room hotel in Kandy costing US$ 10 million, officials said. “This is a joint venture with Sino Lanka Hotel Holdings and we plan to open it in 2013 September,” an official told the Business Times. He said that the refurbishment of all their CHC properties, predominantly patronized by the domestic travellers, is now geared to attract foreign tourists as well.
Some 58 rooms of the 88-room The Surf-Bentota (formerly Lihiniya Surf) and the 52-room The Safari (formerly Tissa Rest House) were refurbished fully with a comprehensive development programme under the auspices of the company Group Chairman at a cost of nearly Rs. 600 million, he said, adding that the balance 30 rooms of Surf are being refurbished with added facilities.
Chethiya Perera, Vice President Strategy and Development CHC told the Business Times that all these properties have been upgraded into four star category and most travel agents who visited the two properties on a familiarization tour have agreed to promote them to their overseas counterparts. Having refurbished Heritage Ambepussa (Ambepussa Rest House) Ambepussa Avanhala, Heritage Pussellawa (Pussellawa Rest House), Polonnaruwa Rest House, The Surf and The Safari CHC; the company has now embarked on refurbishing Dambulla and Habarana Rest Houses (which will be re-opened on 15th October), he added.
Mr. Perera said that during last year occupancies of these properties have increased significantly. Grand Ella Motel and Kithulgalla Rest House, Belihuloya Rest House, Sigiriya Rest House and Hotel Seruwa are also being refurbished. The cost of these projects is estimated to be over Rs. 500 million.
“Hotel Mihintale, Madawachchiya Rest House, Weligama Bay Inn and Hanwella Rest House also will be refurbished thereafter,” Mr. Perera said.

Reported in Sundaytimes
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...by i3gconsultants@ 09:07:12 on 2012-07-01

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Sector: Power and Energy

Replacing old pipes with new ones


The Sri Lanka Ports Authority (SLPA) has initiated a Rs. 250 million project to replace existing dilapidated bunker fuel pipelines which are more than 60 years old, running from the Bloemendhal Oil Terminal to the Colombo Port. Seen are Deputy Ports Minister Rohitha Abegunawardene and SLPA Chairman Dr Priyath Bandu Wickrema examining the new pipes. Pic by Athula Devapriya.

Reported in Sundaytimes
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...by i3gconsultants@ 09:07:26 on 2012-07-01

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Sector: Motor

Bajaj trishaw sales crash by 50 %


Sri Lanka’s pioneer and exclusive Bajaj 3-wheeler dealer, the David Pieris Motor Company is stumbling from the current duty shock, forcing job cuts. The sales of Bajaj autos have dropped by 50 per cent following the increase of import duties by 49 per cent in March 2012 making it impossible to survive in the business, company sources said.
Bajaj’s sales in Sri Lanka rose 76% in 2010-11, according to its latest financial results.“We are seeing a (sharp) drop in sales after the government’s duty hike and it has compelled us to retrench our staff drastically,” a top official of the company, who declined to be named, said.At least 200 employees lost their jobs at the Bajaj auto assembly plant at the state-of-the-art factory at Ranna in the Hambantota district, he revealed.
Bajaj 3-wheelers are now being assembled in this ultra-modern factory on 23 acres of land with the total project involving an investment of Rs.2 billion. “By producing three-wheelers locally the company aims to provide more employment opportunities for youth in the area and boost Sri Lankan industry, but this plan is now crashing,” he added.
The company is now experiencing difficulties and hard times but it expects an improvement in the situation within two to three months as the market normally absorbs the hike in duties, he said. The company has passed on the duty hike, which has gone up to 100 per cent from the earlier 61 per cent to consumers and prices have gone up by 32 per cent, he added. Sri Lanka imports about 10,000 3-wheelers monthly from India’s Pune-based Bajaj Auto and the island nation is the second largest export market for Bajaj Auto, after the Africa continent, he said.
But, he noted that Bajaj Auto of India will also lose as many as 55,000 units in exports to Sri Lanka in the current fiscal year.
Bajaj Auto’s plan to introduce its 4-wheeler RE60 to Sri Lanka has been shelved due to the present uncertain marketing trends, he said.
The 3-wheeler taxi service has become a very popular transport mode countrywide and has created self-employment opportunities for many, as an urban-poverty reducing instrument.
According to the Motor Traffic Department, the registration of 3-wheelers dropped by 6.37 during the first five months this year to 46,471 from 49,633 in the same period last year.The All Island Three Wheel Drivers’ Union, President Lalith Dharmasekera told the Business Times that the price of a Bajaj 3-wheeler has come down to Rs. 445,000 from Rs.515,000 as the company has decided to absorb the duty shock to a certain extent.
However he said the tax increase will badly affect the existing 3-wheeler owners were planning to replace their old vehicle with a new one, and those who want to enter to this business. He noted that his union has suggested to the Finance Ministry to devise a methodology to categorise 3-wheeler taxi drivers and owners currently engaged in passenger transport service and to provide them some concessions to overcome this difficult situation.
He said that as a remedial measure the union plans to form a cooperative society to provide loan and leasing facilities at reasonable interest for 3-wheeler drivers to purchase new ones.“More than 400,000 3-wheel taxis are operating countrywide, with over two million people depending on the earnings from this service,” Mr. Dharmasekera said.

Reported in Sundaytimes
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...by i3gconsultants@ 09:07:55 on 2012-07-01

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Sector: Hotels and Travels

'Importance of sustainability for future tourism'


An European Commissioned -funded project under the Switch Asia programme will host a half a day workshop on 'The importance of sustainability for future tourism' next Wednesday at Cinnamon Lakeside Colombo.The workshop will be attended by foreign tour operators and agencies along with local marketing staff of hotels and senior engineers.
The seminar will create awareness as green initiatives have gained wide recognition in the hospitality industry, Switch Asia Project Director Srilal Miththapala said."The seminar will be participated by over 150 participants which is conducted free of charge.The participants from the industry are expected to attend the seminar which is being jointly organized by Walkers Tours, Kuoni, Travel Foundation UK, Travel Life UK and the Switch Asia Program," he said. There is an increase in the concern in the areas of sustainability and eco friendliness among the travelers.This has indicated in a global research as 22 percent of the travelers look in to these aspects before embarking on bookings.Sri Lankan hotels such as Hotel Goldi Sands, Jetwing Sea, Jetwing Beach, Randoli Hotel, Cinnamon Grand and Chaaya Hotel will be showcased as models for greening initiatives for the tourists. There are 220 hotels in Sri Lanka that has been registered with the Switch Asia programme at present. We are working with SLTDA to make proper green accreditation scheme for hotels. It is now in the final stages. 
This will augur well for the industry as there is an increasing trend in the sustainability and eco friendly accommodation worldwide, Miththapala said.
The Ceylon Chamber of Commerce has also made a place for Switch Asia in its Corporate Social Responsibility and Governance Awards by adding a new category for hotels come under Switch Asia programme. 
"We want to make sure the hoteliers know what to expect. More and more travelers are looking for sustainable and good practices. This is the right time to work according to the check list to ensure best practices are in operation," he said.

Reported in Dailynews
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...by i3gconsultants@ 08:06:20 on 2012-06-30

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Sector: Bank Finance and Insurance

Banking and finance sector firm raided for software piracy


The Sri Lanka Police reaffirmed its focused determination to protect intellectual property (IP) rights, when it carried out yet another copyright enforcement raid.
This time, the Colombo Crimes Division raided an established corporate entity in the banking and financial sector suspected of using pirated and unlicensed software. The raid took place in Colombo last week, with the inspection and identification of suspected pirated software taking over five hours. Thereafter, the Police took the computers installed with pirated software into custody and will be produced in Court as evidence.
Given the country’s aim of building a vibrant IT industry and becoming a strong off-shoring destination for global companies, the focus of the Police is on taking action on an ongoing basis against companies that persist in using pirated and unlicensed software. Many of these companies are, by now, clearly aware that copyright infringement is a criminal offence and yet continue to disregard the law.
The law governing Intellectual Property rights under the Intellectual Property Rights Act No. 36 of 2003 is comprehensive and specifies that computer programs are protected work and original intellectual creations. Any person who wilfully infringes any of the rights protected under the act shall be guilty of an offence and shall be liable, upon conviction, after trials before a Magistrate, to a fine not exceeding Rs. 500,000 or imprisonment for a term not exceeding six months or both.
Section 187 of the Act goes on to state that where an offence under this act has been committed by a body corporate, every person who at the time of the commission was a director general, manager, secretary or holding similar office shall be deemed guilty of that offence, unless they prove that the offence was committed without their knowledge.
BSA Committee in Sri Lanka Consultant Shalini Ratwatte said: “Companies need to audit the software they have installed and ascertain its legality by identifying the gaps between licenses that they have purchased versus the number of copies that they have installed. A software audit is one of the most cost effective ways of managing software assets and reducing the risk of piracy in an organisation. The BSA website www.bsa.org has free software audit tools to assist organisations in carrying out internal software audits. In addition, businesses should always insist on original software and maintain records, invoices and documentation on file at all times.”
Sudath Perera Associates acted as the lawyers for the aggrieved party.

Reported in Dailyft
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...by i3gconsultants@ 07:06:20 on 2012-06-30

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Sector: Bank Finance and Insurance

Sri Lanka meets all June-end IMF loan targets-cbank


(Reuters) - Sri Lanka has met all June-end targets set by the International Monetary Fund (IMF) for the last tranche of a $2.6 billion loan, Central Bank Governor Ajith Nivard Cabraal said on Friday.
"We have met all the targets. Net domestic financing, net internal reserves, and the reserve money targets have been met," Cabraal told Reuters.
After concluding a two-week assessment, an IMF mission on June 15 said Sri Lanka's policy measures including policy rate hikes, flexible exchange rate, and credit restrictions have been yielding results.
If satisfied, the global lender will disburse the last tranche of the $2.6 billion loan -- around $420 million -- by mid July. Currency dealers in the last two weeks said the rupee currency, which hit a fresh record low on Thursday, has been under severe pressure as the central bank continuously bought dollars to meet the net internal reserves target.

Reported in Reuters
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...by i3gconsultants@ 19:06:28 on 2012-06-29

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Sector: Bank Finance and Insurance

We are here for the long haul – HSBC


Sri Lanka CEO Nick Nicalaou dismisses exit rumours; says local operations robust and post-war future in the country looks very promising  World’s local bank celebrates 120 years of excellence in Sri Lanka on 1 July, invests $ 7 m for major upgrade of Head Office in Fort . HSBC, which is celebrating 120 years in Sri Lanka on 1 July 2012, reiterated this week that the global bank is firmly rooted in the country, with great optimism for higher growth aided by the end of the war momentum and overall resilience. 
The bank in 2011 had a record year with its leading positions in several segments of its core service offerings of global banking and markets, commercial banking, retail banking and wealth management. 
This supremacy as well as the legacy of a over a century of innovative banking and support for socioeconomic development in Sri Lanka has reinforced HSBC’s resolve to remain a dynamic partner for progress for both corporate and retail customers as well as the Government and its agencies. 
In response to rumours of a possible pullout as part of global restructuring, HSBC Sri Lanka and Maldives CEO Nick Nicolaou said: “I can categorically say that such rumours are unfounded.”
“We have a business model that works well in Sri Lanka, so our operations in Sri Lanka are in good shape,” Nicolaou told the Daily FT in an interview. 
HSBC which styles itself now as the leading international bank also remains one of the most profitable commercial banks in Sri Lanka. 
That apart, the overall dynamism and huge potential following the end of the conflict has made Sri Lanka, along with its strategic location amidst giant markets India and China, an important hub. 
“Sri Lanka is a network market, a trading hub and has immense potential within for greater growth. All these make Sri Lanka exactly the kind of market HSBC wants to be in and delivering value,” Nicolaou added. 
Reinforcing HSBC’s commitment for the long haul, the bank is investing $ 7 million for a major 18-month refurbishment program of its Head Office in Fort. 
“We are investing in our business and people. HSBC remains committed and focused on building a strong sustainable business in Sri Lanka,” the CEO added. 
He said that global restructuring was to free up around $ 55 billion risk weighted assets and redeploy them in more dynamic markets. “In fact, of the 20 priority markets for HSBC, half of those are in Asia. Sri Lanka is amidst the growth engine of the world – Asia Pacific, which accounts for 60% of the Group profit,” Nicolaou emphasised.
As opposed to dominance of trade finance within HSBC Sri Lanka’s portfolio several decades ago, today there is a good mix with all core service offerings contributing equally. 
“Yes trade finance is our bread and butter. Overall we have our unique selling propositions in global and corporate banking and as reflected by our growing portfolio of retail and personal banking with products such as Premier and Advance, our reach has increased considerably,” he added. 
Last year HSBC saw its advances increase, whilst its dominance in credit card market is 26% in terms of number of cards issued and 45% as per spend. The launch of Visa Signature early this year has added further impetus to HSBC’s business. 
“As a bank we can do well only if our customers do well,” Nicolaou pointed out, adding that HSBC has been conscious of this and remained steadfast in empowering its customers, be it institutional or individual. 
“For example for corporates, we just don’t lend money but we provide a total package of solutions,” said the CEO of HSBC Sri Lanka, which at present has 17 branches including one in Jaffna, opened in 2010. 
The bank also takes pride in having supported the rapid expansion in infrastructure in the country. “During the past five years we were engaged in financing worth over $ 2 billion for infrastructure areas such as roads, bridges, telecom, tourism and power (including three of the four wind powers set up in the country),” Nicolaou said, adding that the future pipeline looks robust. 
HSBC also has a unique distinction of being the only bank to have been engaged by the Government in all of its sovereign bond issues. It is also a joint Lead Manager, Bookrunner and Underwriter for the planned $ 1 billion sovereign bond whilst it played a key role in the country’s first corporate global bond of $ 500 million of Bank of Ceylon, which saw an oversubscription of seven times. HSBC also helps other banks in syndicated loans. 
Commenting on prospects for 2012, the HSBC Sri Lanka CEO said that due to global factors, a slowdown in economic growth was inevitable, due to the global economic situation – especially in Europe. “We have had two years of 8% growth and in 2012 there will be a slowdown, yet an economic growth of 6 or 7% is commendable in the current global context,” Nicolaou pointed out. 
Notwithstanding the outlook, during the first five months of 2012, HSBC has had reasonable growth in its business whilst first quarter has been “quite strong”. “Our asset portfolio is very clean and so far we haven’t seen any signs of stress,” he said, adding that HSBC also has more stringent liquidity and provisioning policy than what is set out by the Central Bank. 
“Being a well capitalised strong bank is the best value we can give to our customers, especially during difficult times,” Nicolaou said. 
Based on feedback from its top clients, he is also optimistic that exports will rebound in the latter half of the year, whilst he also agrees that the rupee will strengthen as a result of envisaged robust foreign inflows, a moderation of imports and relatively low oil prices. 
“The Government and the Central Bank have so far taken the right policy measures to manage Sri Lanka out from current challenges and we remain confident,” the HSBC Sri Lanka CEO added. 
With regard to the overall banking industry in Sri Lanka, Nicolaou noted that the key challenge was to remain operationally efficient and attractive to shareholders/investors. For this, he said going forward some degree of consolidation was required in the Lankan banking industry. 
“At present the industry is too fragmented, which means the optimal structure is not being achieved. The average return on equity is low in the regional context and in the future, to attract more capital, investors and shareholders would look to higher returns,” he added. 
Nicolaou also emphasised that HSBC in Sri Lanka was not only making good business but doing it in a socially responsible and sustainable manner. “Our corporate sustainability program encompasses some critical sectors and communities,” he said. HSBC’s support covers livelihood development, environment conservation, education, heritage, art and culture and sports. 
Globally HSBC serves around 89 million customers through four global businesses: Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking.
The HSBC Group’s network covers 7,200 offices in 80 countries and territories in six geographical regions: Europe, Hong Kong, Rest of Asia-Pacific, Middle East and North Africa, North America and Latin America. With assets of US$ 2,556 billion at 31 December 2011, HSBC is one of the world’s largest banking and financial services organisations.

Reported in Dailyft
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...by i3gconsultants@ 03:06:40 on 2012-06-29

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Sector: Bank Finance and Insurance

Dollar Exchange rate hits 134


Reuters: The Rupee hit a record low of 134.10 to the dollar on Wednesday on importer demand for the US currency, sparked by worries it will weaken further after banks started quoting spot prices again. The rupee closed at 133.90/134.00 to the dollar, down from its Friday’s close of 132.80/133.00, extending its fall to 1.6% since June 18.Several banks had stopped quoting spot rates for the rupee in the previous two sessions after what dealers said was a request by the central bank not to trade above 133.00 in a bid to halt a months-long slide. On Wednesday, several banks quoted spot prices around the rupee’s previous record-low level of 133.60, hit on June 12, dealers said.

“No pressure from the central bank today and the highest deal was done at 134.10 for spot,” a currency dealer said on condition of anonymity, adding that there was heavy importer demand for dollars.The rupee has lost nearly 18% of its value since November, when the government allowed a 3% devaluation.

Reported in Dailyft

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...by i3gconsultants@ 03:06:55 on 2012-06-29

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Sector: Hotels and Travels

Lanka needs right hotel mix – Report


Development of tourism in Sri Lanka will require stakeholders to strike a proper balance between developing 3-star and 4-star properties on the one hand, and luxury and boutique hotels on the other, in addition to implementing a more liberalized pricing structure, according to a report from Sri Lanka-based strategy consulting firm Vox & Co.
“Sri Lanka is poised for unprecedented growth in tourism, and has set ambitious targets for itself within a highly accelerated time-frame. But a bumbling policy environment and underinvestment in core infrastructure continues to pervade the atmosphere, confusing first-time investors and exasperating existing players.”
“With Colombo’s inflated rates, travellers will seek out alternative accommodation types such as budget business hotels and serviced apartments. Developers seeking to address this market gap are likely to be positioned for the win in the medium and longterm,’ the report stated.
The need for more budget hotels was reiterated by certain large tour operators, it was quoted in the report.
“We honestly need everything. First, we need to balance out the 3-star and 4-star properties, which should comprise around 45% of the stock of hotel assets. We have a huge gap in 3-star properties on the island and that’s a big market gap,” a tour operator had reportedly stated.
Tour operators speaking to Vox had also noted a greater demand for boutique hotels on the South Coast, which is thought to appeal to MiddleEastern tourists looking for high end 4-star hotels.
Nevertheless, the report cautioned against rushing into investments in boutique hotels.
“It would appear that on every patch of rolling green with a waterfront, a new developer builds a boutique hotel. However, all boutique hotels were not created equal, and using them as means to escape restrictive classification standards is more likely hurt proprietors in the longer-term,” the report stated. “Escaping the grade may be temporarily advantageous to investors, but most tourists prefer graded properties simply because they are able to anticipate the value of the offering against international standards,” it added.
Such views were also advocated by another large tour operator, who stated:
“I think if 5% of the hotel formats were boutique hotels that should be sufficient. It’s a reverse situation on tour; places like Sigiriya only have 3-star, and fewer 4-star, so in these highly popular and common destinations we need to balance out some of the accommodation formats.”
In addition to finding the right mix of hotels to cater to a wider base, the report also delved into issues of pricing, in particular concerns over whether Sri Lanka was out pricing itself as a destination.
“Budget and first-time travelers—the most price sensitive segment across the board were consistently enthralled at competitive room rates, inexpensive but lavish restaurants and a good time had by all on a shoestring budget.”
“However, over the past few years Sri Lanka has managed to quite firmly shake off its reputation as an inexpensive destination. Within a decade, Sri Lanka’s accommodation, transportation and food prices have undergone a total inflation of over 80%,” the report stated.
Such high rate of inflation in the industry, whilst serving to bolster larger players, has largely worked to the detriment of budget properties in the 2 and 3-star class however. “At the lower end of the spectrum, pricing has jumped by at least 75%, with little to no proportionate increase in value or service, effectively serving to alienate the price-sensitive traveler. Colombo’s price floors are excellent news for those five-star properties at the top end of the spectrum.”
“Though a modest increase in prices serves to draw in new investment and employment—in an industry that has taken a beating over decades—with inflation of this scale, tourists simply want to understand: what are they paying for? As high prices filter downwards, budget properties and 2 and 3 star class accommodations have been hit the hardest.”
High inflation within the industry has also prompted many stakeholders to criticize the various interventions of the government with regards to pricing.
“Many industry players argue that with compounding our rampant inflation, the imposition of tourism development levies, heinous rate increases and price floors for Colombo room rates, policymakers must realize that pricing growth cannot occur in a vacuum.”“It is more important than ever to bring value back in to tourism rather than growing prices in a vacuum. Once the dust has settled on this period of corrective inflation, there must be allowances for market adjustments which can determine rates through the natural forces of demand and supply.”
Forces of supply and demand would also have to be considered in a more realistic sense, particularly in the context of the on-going shift away from country’s traditional tourist markets.
“There has been much discussion by tour operators on the veracity of arrivals statistics. Many claim that the growth in Asian tourism can be attributed to a surge in traders and wholesalers travelling on tourist visas,” the report stated.
One large tour operator speaking to Vox had stated: “Here is why the numbers look over-inflated. There are several Indians who come on tourist visas, but they are not tourists. They are traders. Apparently we had 110,000 tourist arrivals last year, but all of these don’t use our services. They don’t use our transport, they don’t stay in our hotels. I would say of the 110,000 only around 30,000 are tourists in the real sense.”
The report also noted that many of these visitors tended to visit Sri Lanka on very short stays contributing very little to the overall industry, and preferring instead to “hit the roulette tables hard”.


Reported in Dailymirror

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...by i3gconsultants@ 13:06:43 on 2012-06-27

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Sector: Telecommunication

Airtel awards Managed Services contract to Sierra Global


Bharti Airtel, a leading integrated telecommunications company and world's third largest in-country mobile operator in the world with over 255 million customers across 20 countries in Asia and Africa with their aggressive expansion in to the Sri Lankan market over the past few years has awarded the Managed Services (MS) Passive contract to Sierra Global, a leading telecommunication infrastructure development and Managed Services firm in Sri Lanka. Bharti Airtel Lanka commenced commercial operations of services in Sri Lanka in 2009 and was the fastest operator to reach 1 million customers. With its robust network coverage across the country and having captured strategic ranking positions across Sri Lanka in less than three years of operations, Airtel has emerged as Sri Lanka's fastest expanding network. "We are extremely pleased in entering into a strategic business partnership with Sierra Global, for the management and maintenance of Airtel towers - Passive Operations and Maintenance. In the next years to come, voice with a special focus on data, riding on the waves of 2G and 3G technologies will be the main trust in Sri Lanka and it is imperative that customers experience high connectivity through an interruption free service. This partnership is evidence to our commitment in working towards new ways of delivering seamless network experience for our customers" said Suren Goonewardene - MD / CEO of Bharti Airtel Lanka. "Considering the past performance and long term working relationship build since the inception of the operation of Bharti Airtel in Sri Lanka, we were awarded this important contract which directly links with our business plan for next 5 years" said Dr. Arosha Fernando, Director/CEO of Sierra Global. "Through a contract with a global telecommunication equipment manufacturer, Sierra Global has embarked in to the Managed Services (MS) Passive area on 1st August 2011 by undertaking 350 of telecommunication base station tower sites of the Airtel network located in 10 regions - Chilaw, Puttalam, Kurunegala, Anuradhapura, Dambulla, Vavuniya, Polonnaruwa, Trincomalee, Kilinochchi and Jaffna. Currently the number of sites has increased up to 425 in these areas and the company has been continually improving the performance. Due to the proven good performance and awarding of this new contract to us directly by Bharti Airtel, we expect Bharti Airtel to allocate further more sites to us in the future" Dr. Arosha said.


Reported in Dailynews

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...by i3gconsultants@ 12:06:48 on 2012-06-27

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Sector: Bank Finance and Insurance

Sri Lanka banks stop quoting rupee spot rate after cbank request












The Sri Lankan rupee market came to a standstill on Tuesday as banks stopped quoting spot prices against U.S. dollar, after what dealers said was a request from the central to stop trading the ailing currency beyond the 133 level."The whole market is distorted as central bank does not like to see the spot trading above 133.00. So nobody is quoting spot and everybody quotes spot-next," a dealer said on condition of anonymity, referring to the possible spot rate a day later.Four other currency dealers confirmed the move and said there were no deals done in the market during the first two hours of the day. The rupee's spot-next traded at 133.70/134.20 by 0500 GMT per dollar, dealers said.Though many banks stopped quoting spot prices in the early trade on Monday, a state bank dollar sale at 132.90 provided direction to the market and some banks traded spot at that rate.Banks stopped quoting spot rates on Monday after the monetary authority had told the dealers not to trade above 133.00.Central Bank Governor Ajith Nivard Cabraal declined to comment.The rupee hit a record low of 133.60 on June 12. It has lost some 17 percent of its value since last November.

 

Reported in Rueters
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...by i3gconsultants@ 13:06:12 on 2012-06-26

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Sector: Bank Finance and Insurance

S&P’s soother!


Perhaps to calm a boiling banking industry over its assessment or in an apparent move to give greater clarity to its rational Standard and Poor’s has addressed some contentious issues to provide better read though Central Bank and Sri Lanka Bank Association have refuted the original report.
In a Credit Frequently Asked Questions (FAQ) titled “Understand Standard & Poor’s BICRA Assessment of Sri Lanka” the rating agency whilst stressing some of its core take homes, however had said BICRA is not an absolute measure of risk in any banking system. “We scored Sri Lanka on various factors and sub-factors as per our BICRA methodology. Our assessment on these factors is on a pre-defined set of descriptors – such as “very low risk”, “low risk”, “intermediate risk”, “high risk”, “very high risk”, and “extremely high risk” – to reflect relativities in a globally consistent manner. Our criteria use these descriptors to enhance transparency and provide a basis for comparability among banking systems,” it added in response to the question “Does Standard & Poor’s view the Sri Lankan banking sector as “very high risk”? For a poser “Does S&P’s assignment of BICRA group ‘8’ for Sri Lanka suggest the performance trend of the country’s banking industry?, S&P said it has just initiated coverage on the Sri Lankan banking industry. “The score of ‘8’ is not a reflection of either the deterioration or an improvement in performance of the banking industry. Instead, it reflects our opinion of where the Sri Lankan banking industry stands relative to other banking industries globally.”     


S&P’s…
With regard to how does the BICRA score of ‘8’ for Sri Lanka compare with that of other banking systems in emerging Asia?, S&P said “It is common and understandable for banking industries of emerging markets to rank lower on the BICRA than banking industries in developed countries.” “Typically, emerging economies have low income levels (per capita GDP of less than US$5,000) and their economic structure has many structural weaknesses. These economies also have underdeveloped institutions. These factors make them vulnerable to adverse developments, such as external shocks or internal imbalances,” S&P added. The S&P’s FAQ also clarifies its observations regards to the Central Bank’s oversight of the EPF and the conflict of interest. Whilst maintaining central bank is exposed to a potential conflict of interest, S&P however clarified that it has information of any specific incidences occurring. “We expect the central bank to have mechanisms to limit this risk. However, in our globally consistent assessment, we assess systems without such potential conflicts of interest as relatively less risky than those with,” the S&P’s FAQ added.
Though emphasising that the banking regulations and supervision are improving and the regulator has an adequate record of managing the financial sector, S&P said the regulation of finance companies is somewhat lax. Nevertheless S&P also noted “Additionally, the Sri Lankan Government is “supportive” of the banking industry and is committed to maintaining financial system stability and market confidence.”


Reported in Dailyft

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...by i3gconsultants@ 12:06:55 on 2012-06-26

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Sector: Bank Finance and Insurance

CB gobbles $ 229 m demand for Dev. Bonds, 52% above offered amount


Central Bank yesterday accepted $ 229 million worth of bids for Sri Lanka Development Bonds (SLDBs), 52% above the offered quantity.“In view of the high demand by the investors, the Government decided to accept $ 229.02 million in 3 year maturity at the market determined rates of US Dollar 6 month LIBOR + 410 bps (weighted average margin). The US Dollar 6 month LIBOR rate yesterday was 0.73 per cent,” the Central Bank said.
The original issue was for $ 150 million in 3 year tenor with SLDBs eligible investors for subscription at a rate of US Dollar six month LIBOR plus a margin to be determined through competitive bidding.The offer was opened from 18 t o25 June for bidding with the settlement on 2 July.Both foreign and local commercial banks subscribed bids at the auction. The offer was oversubscribed by 1.5 times with total bid received amounting to USD 229.02 million.The SLDB issue was executed in terms of Section 2 (a) and 2 (c) of the Foreign Loans Act No. 29 of 1957 as amended.The SLDBs are transferable by endorsement, delivery and registration with the Superintendent of Public Debt of the Central Bank of Sri Lanka.
Eligible investors may purchase SLDBs in the secondary market through Designated Agents appointed by the Central Bank of Sri Lanka.


Reported in Dailyft

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...by i3gconsultants@ 12:06:55 on 2012-06-26

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Sector: Bank Finance and Insurance

Understanding Standard & Poor’s BICRA Assessment Of Sri Lanka


Standard & Poor’s Ratings Services recently assigned Sri Lanka to its Banking Industry Country Risk Assessment (BICRA) group ‘8’.  That was S&P’s first assessment of Sri Lanka’s banking industry under its BICRA methodology. This article addresses questions investors and market participants may have about S&P’s rationale for assigning Sri Lanka to BICRA group ‘8’. S&P’s also assess what this means for banks operating in Sri Lanka.


Q: What is BICRA? What does it communicate?


A: The strengths and weaknesses of an economy and its banking industry are critical factors that underpin the creditworthiness of a country’s financial institutions. Under our criteria, we distill this analysis into a single measure called BICRA. The BICRA framework is designed to evaluate and compare global banking systems on a relative scale. It is not an absolute measure of evaluation of any banking system. A BICRA analysis for a country covers rated and unrated financial institutions. It incorporates the entire financial system of a country by considering the relationship of the banking industry to the financial system as a whole.
A BICRA is scored on a scale from 1 to 10, where group 1 is assigned to lowest-risk banking systems and group 10 is assigned to the highest-risk banking systems.
Contributing to these overall scores are our assessments of economic risk and industry risk, which are the two main elements of the BICRA. The rating methodology for banks uses the economic and industry scores produced by the BICRA analysis to determine an anchor, which acts as a starting point for determining a bank’s stand-alone credit profile. Our risk-adjusted capital framework methodology also uses the BICRA score and the economic score of a country to determine the risk weight of its various asset classes (namely financial sector, corporate sector, retail sector etc).


Q: What are the factors behind  assigning the Sri Lanka banking system to  BICRA group ‘8’?
A:
The following factors underpin our assessment of Sri Lanka’s BICRA:
A large proportion of highly stable core customer deposits mainly drive funding in Sri Lanka’s banking system.The banking industry is therefore less dependent on wholesale or external debt.
Economic imbalances have started to build up in Sri Lanka with the recent pickup in growth of private sector credit (28% annually for the past two years). High loan growth, coupled with rising competition; a slow foreclosure process except for mortgages, pawning, and hire purchase; and evolving risk management practices could expose the sector to increased credit risk.
Banking regulations and supervision are improving and the regulator has an adequate record of managing the financial sector. However, the regulation of finance companies is somewhat lax.
Sri Lanka is a low income economy with per capita GDP of about US$2,750. However, its economic growth prospects have improved following the end of the civil war and a subsequent shift in the government’s focus toward boosting the economy and diversifying sources of growth.
Additionally, the Sri Lankan government is “supportive” of the banking industry and is committed to maintaining financial system stability and market confidence.
(For more details, see “Sri Lanka Banking System Assigned Group ‘8’ Banking Industry Country Risk Assessment,” published June 19, 2012, on RatingsDirect on the Global Credit Portal).


Q: Does Standard & Poor’s view the Sri Lankan banking sector as “very high risk”?
A:
We have assigned Sri Lanka to BICRA group ‘8’ to reflect the banking industry’s risk profile relative to banking systems in other countries. BICRA is not an absolute measure of risk in any banking system. We scored Sri Lanka on various factors and sub-factors as per our BICRA methodology. Our assessment on these factors is on a pre-defined set of descriptors–such as “very low risk”, “low risk”, “intermediate risk”, “high risk”, “very high risk”, and “extremely high risk”–to reflect relativities in a globally consistent manner. Our criteria use these descriptors to enhance transparency and provide a basis for comparability among banking systems (see “Banking Industry Country Risk Assessment Methodology And Assumptions,” published Nov. 9, 2011).


Q: What does assignment of Sri Lanka to BICRA group ‘8’ mean for the credit ratings on banks operating in Sri Lanka?
A:
A BICRA score provides an anchor to bank ratings as per Standard & Poor’s bank rating methodology (see “Banks: Rating Methodology And Assumptions,” published Nov. 9, 2011). For Sri Lankan banks, based on the economic risk score of ‘8’ and industry risk score of ‘7’, the anchor would be ‘bb-’, which is one notch higher than the sovereign rating on Sri Lanka (B+/Stable/B). That means the starting point for our rating analysis of each bank operating only in Sri Lanka is ‘bb-’. The stand-alone credit profile of a bank could either be higher or lower than the anchor, depending on bank-specific factors, specifically its business position, capital and earnings, risk position, and funding and liquidity.


Q: Does S&P’s assignment of BICRA group ‘8’ for Sri Lanka suggest the performance trend of the country’s banking industry?
A:
We have just initiated our coverage on the Sri Lankan banking industry. The score of ‘8’ is not a reflection of either the deterioration or an improvement in performance of the banking industry. Instead, it reflects our opinion of where the Sri Lankan banking industry stands relative to other banking industries globally. Our BICRA assessment is a combination of the economic and banking industry risks that determine the operating environment to which banks in Sri Lanka are exposed.
Our economic risk assessment is based on: the structure and stability of the country’s economy; the central government’s macroeconomic policy flexibility; actual or potential imbalances in the economy; and the credit risk of economic participants–mainly households and enterprises.
Our industry risk assessment is based on: the quality and effectiveness of bank regulation and the record of regulators in reducing vulnerability to financial crises; the competitiveness of a country’s banking industry—including the industry’s risk appetite, structure and performance; and possible distortions in the market. Industry risk also assesses the range and stability of funding options available to banks, including the role of the central bank and government.


Q: How does the BICRA score of ‘8’ for Sri Lanka compare with that of other banking systems in emerging Asia?
A:
The relevant peers to compare Sri Lanka’s banking system with are banking systems in emerging markets. Within Asia, Sri Lanka’s peers are Indonesia, Philippines, Cambodia, and Mongolia. Indonesia and Philippines are in group ‘7’, Sri Lanka is in group ‘8’, Cambodia and Mongolia are in group ‘9’, and Vietnam is group ‘10’  . It is common and understandable for banking industries of emerging markets to rank lower on the BICRA than banking industries in developed countries. Typically, emerging economies have low income levels (per capita GDP of less than US$5,000) and their economic structure has many structural weaknesses. These economies also have underdeveloped institutions. These factors make them vulnerable to adverse developments, such as external shocks or internal imbalances.


Q: With regards to the central bank’s oversight of the Employees’ Provident Fund (EPF), why does Standard & Poor’s hold the view that there is a potential conflict of interest?
A:The monetary board of the Central Bank of Sri Lanka oversees EPF investments as well as policy formulation and supervision of banks (See the organization structure of the central bank at its website http://www.cbsl.gov.lk/pics_n_docs/03_about/_docs/organisation_chart.pdf for more details). The EPF is also a large investor in Sri Lankan banking stocks. For these reasons, we think the central bank is exposed to a potential conflict of interest, although we have no information of any specific incidences occurring. We expect the central bank to have mechanisms to limit this risk. However, in our globally consistent assessment, we assess systems without such potential conflicts of interest as relatively less risky than those with.


Reported in Dailyft

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...by i3gconsultants@ 12:06:55 on 2012-06-26

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Sector: Bank Finance and Insurance

Sri Lanka Insurance relocates Kanthale Branch


The Sri Lanka Insurance Kanthale Branch was recently relocated to No. 62B, Main Street, Kanthale to cater to the needs of the people in the area. The new office was open by Chief Officer (Life) Suresh Paranavithana in the presence of a large gathering of well wishes and Sri Lanka Insurance’s senior officials. Paranavithana addressing the gathering stated that modern atmosphere and the branch’s enhanced IT systems will offer customer convenience at every step of the way. (Reported in Dailyft)



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...by i3gconsultants@ 12:06:03 on 2012-06-26

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Sector: Hotels and Travels

‘Jungle Beach’ opens in Trincomalee


‘Jungle Beach,’ the first new style Resort in the Kuchchaveli tourism development area was opend last week by Economic Development Minister Basil Rajapaksa.







Minister of Economic Affairs, Basil Rajapaksa at the opening. The Vice Chairman of the FINCO Group, Harsha de Sarem, the Managing Director of UGA Resorts (PVT) Limited Priyanjit Weerasooria, Governor of the Northern Province, Mohan Wijewickrema participated.


Jungle Beach is the second Resort owned and operated by UGA Resorts (PVT) Limited the first being Ulagalla Resorts in Anuradhapura, Uga is a subsidiary of the FINCO Group. This is the first environmentally friendly Resort built in the Trincomalee District after three decades of war. Built at a cost of Rs. 750 million and located 27 kilometres away from Trincomalee town on a strip of land between the sea and dense mangroves, it takes maximum advantage of the beach front and the lagoon view. The property offers a jungle experience at one end with the other opening out onto the ocean, close to the popular Nilaweli Beach. The hotel has 48 spacious cabins that feature king-sized beds, high-end entertainment systems, sun decks and other modern amenities. From the hotel it takes only a very short time to travel to places of interest including the Trincomalee Harbour and Hot Water Springs. The strong focus will be on adventure at Jungle Beach with some water based activities such as jet skiing, parasailing, snorkeling and whale watching being on offer. Among the land-based excursions that will be held are bird watching, tours to the Thiriyaya archaeological Site, Sri Lanka’s oldest Buddhist temple and an ilmenite factory.


Participating in an observation tour of the area Minister Rajapaksa said it was commendable that the management of UGA Resorts (PVT) Limited relied on local products for providing the required services. Only the most essential items that could not be produced here have been imported. He said environmentally friendly Resorts such as this had a very good market worldwide.


Reported in Dailynews

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...by i3gconsultants@ 11:06:30 on 2012-06-25

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Sector: Hotels and Travels

‘Jungle Beach’ opens in Trincomalee


‘Jungle Beach,’ the first new style Resort in the Kuchchaveli tourism development area was opend last week by Economic Development Minister Basil Rajapaksa.







Minister of Economic Affairs, Basil Rajapaksa at the opening. The Vice Chairman of the FINCO Group, Harsha de Sarem, the Managing Director of UGA Resorts (PVT) Limited Priyanjit Weerasooria, Governor of the Northern Province, Mohan Wijewickrema participated.


Jungle Beach is the second Resort owned and operated by UGA Resorts (PVT) Limited the first being Ulagalla Resorts in Anuradhapura, Uga is a subsidiary of the FINCO Group. This is the first environmentally friendly Resort built in the Trincomalee District after three decades of war. Built at a cost of Rs. 750 million and located 27 kilometres away from Trincomalee town on a strip of land between the sea and dense mangroves, it takes maximum advantage of the beach front and the lagoon view. The property offers a jungle experience at one end with the other opening out onto the ocean, close to the popular Nilaweli Beach. The hotel has 48 spacious cabins that feature king-sized beds, high-end entertainment systems, sun decks and other modern amenities. From the hotel it takes only a very short time to travel to places of interest including the Trincomalee Harbour and Hot Water Springs. The strong focus will be on adventure at Jungle Beach with some water based activities such as jet skiing, parasailing, snorkeling and whale watching being on offer. Among the land-based excursions that will be held are bird watching, tours to the Thiriyaya archaeological Site, Sri Lanka’s oldest Buddhist temple and an ilmenite factory.


Participating in an observation tour of the area Minister Rajapaksa said it was commendable that the management of UGA Resorts (PVT) Limited relied on local products for providing the required services. Only the most essential items that could not be produced here have been imported. He said environmentally friendly Resorts such as this had a very good market worldwide.


Reported in Dailynews

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...by i3gconsultants@ 11:06:30 on 2012-06-25

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Sector: Services

Long way for comprehensive EDI, hub status – Freight forwarders .


Development of physical infrastructure without proper co-operation between the public and private sector and the development of systems to increase efficiency will likely hinder Sri Lanka’s efforts to develop itself as a logistics hub, according to the Chairman of the Sri Lanka Freight Forwarders Association (SLFFA),Mohan Mohanadas.
In that context, Mohanadas asserted that the development of a comprehensive Electronic Data Interchange (EDI) for the logistics sector would play a pivotal role.
Speaking at the Association’s Annual General Meeting, Mohanadas said: “We have made good progress in physical infrastructure development in terms of roads, ports and airports but that alone does not make us efficient. We must have proper systems in place to go with physical infrastructure. In this regard, we are very late. We as a country are far behind in terms of EDI compared to what is happening around us.”
“What we are doing, we are doing in isolation and in bits and pieces without co-ordination. We are more concerned in addressing day-to-day issues that are looking at the bigger picture. We still lack a comprehensive platform to bring all the stakeholders and effectively roll out a complete EDI or Tradenet. We need to have a clear road map on all of this to be able to achieve a comprehensive EDI platform with a definitive timeline.” Mohanadas said.
Touching on recent regulations imposing a limit on foreign ownership of freight forwarding companies, Mohanadas stated that whilst foreign participation in the industry was to be welcomed, it would also require strict regulations and monitoring in order to protect local stakeholders.
“It is my view and also that of many members in the industry that opening up the industry reciprocally for foreign ownership will no doubt help Sri Lanka in its march towards the hub and free port status, and help more Sri Lankan companies to venture out. However, before we embark on such an ambitious change in the foreign investment policy in this sector, we must have in place, the required standards and regulatory framework.” Mohanadas said.“As it is, we see a serious lack of proper monitoring controls. Going ahead with it, without proper controls would cause more damage to the local entrepreneurs and human resources than the benefits it would gain,” he added.Mohanadas stated that lack of a proper regulatory framework and monitoring had, in the past, resulted in several instances of Board of Investment approved companies shutting down operations in Sri Lanka overnight, defaulting customers, local banks, vendors, service providers and employees.“These are clear examples of the loopholes and poor controls that we have. We do not want such a situation in our industry. Countries which have opened up foreign investment successfully in different sectors have strict criteria for investment and employment, and have an efficient monitoring process, thus protecting the local industry and human resources while enjoying the benefit of international participation. We must study them and take a leaf out of their experience and put in place a proper legal framework and controls,” Mohanadas said. Citing improvements by Sri Lanka in the World Bank Logistics Index from a rank of 133 out of 155 countries to its current rank of 81, Mohanadas said: “While we have made good headway in the last year or two in improving our logistics excellence, in my view, we are still a long way off to being considered an efficient hub.”
He added that if Sri Lanka was to achieve hub status then it would need to enter the Top 20 in the Logistics Performance Index, within the next two years.


Reported in Dailymirror

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...by i3gconsultants@ 11:06:30 on 2012-06-25

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Sector: Bank Finance and Insurance

Standard Chartered optimistic Rupee will appreciate in Q3-4


Standard Chartered Bank has expressed optimism that the over the medium term the Rupee will appreciate owing to a host of factors.
"We are optimistic on the LKR over the medium term and expect sustained appreciation from late Q3-Q4 onwards. Key to this view are the disbursement of the final USD 430mn tranche of the SBA facility, the upcoming sovereign bond issuance and reports that further IMF funding in the form of a USD 500mn security arrangement is likely upon the completion of the SBA," Standard Chartered Bank said.



"Together, these should return Sri Lanka’s BoP to a USD 0.9bn surplus in 2012 from a USD 1.06bn deficit in 2011," it added.
It also said risks appear quite balanced for the Rupee into quarter-end and a pullback towards the Bank’s Q2-end target of 128 cannot be ruled out in the coming days, especially if import demand remains muted. Also, the substantial depreciation in the currency year-to-date is likely to provide a floor below exports at some point, thereby leading to a narrower trade deficit.
Reported in Dailyft

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...by i3gconsultants@ 11:06:30 on 2012-06-25

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Sector: Bank Finance and Insurance

Monetary Board members term must be limited like for bank directors


With the Central Bank restricting term of office for bank directors to nine years, a retired banker yesterday called for similar limitations for members of Monetary Board as well.“As a policy setting body of good governance to banks, there is onus on the Central Bank and Monetary Board to ensure their terms also limited. The benefits of good governance envisaged via the rule for bank directors will be felt within monetary board as well,” the senior banker explained. At present the term of office of the Central Bank Governor and the three non-executive Board members is six years.
Nivard Cabraal was re-appointed for another term whilst Treasury Secretary Dr. P.B Jayasundera as an Ex-Officio has been on Monetary Board for several years as well.


Reported in Dailyft

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...by i3gconsultants@ 11:06:30 on 2012-06-25

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Sector: Bank Finance and Insurance

Austerity or business as usual on borrowed money?


An individual who wants to live beyond his means can’t do so for long as no one will keep lending to him knowing how he busts the money. But it is not so with a government. With the introduction of paper money and the government making it its monopoly, it can borrow unlimited amounts of money from its citizens while at the same time increasing the money incomes of the people through the spending of the borrowings from the people, the banks and the Central Bank. Although the government has no problem in repaying the lenders with its new money, yet the public realize that the new money they get is does not have the same purchasing power as the original. They realize they are being cheated and hence demand higher rates of interest.But the government is averse to paying out more for debt servicing. The short term interest rates are determined by the Liquidity Preference theory of money, which says the interest rates are determined by the supply and demand for money, not capital. So the government prefers to borrow from the Central Bank and the commercial banks which can afford to lend their funds at low rates of interest, rather than from the public who demand higher interest. So with money printing (lending by the Central Bank and the banking system) the money supply keeps increasing at a higher rate than the growth in the Gross Domestic Product, setting the stage ultimately for hyper inflation as in Zimbabwe.But before that, the expansion in credit by the government to the state corporations by 37.3% and the private sector by 34.5% in 2011, there develops a crisis in the balance of payments. Remember the public buys not only domestic goods but also imported goods. So as more and more money is created and given to the government, and as the government proceeds to spend such money raising the money incomes of the people, the people demand more goods and more of imported goods (volumes up by 23.5%). But exports which depend on demand from world markets don’t expand at the same speed (volumes up by 10.4%) and with import prices rising much higher than export prices ( terms of trade adverse by 9.3%)  there arose a huge trade deficit as much $ 9.9 billion in 2011.Unlike in the past there is a huge amount of transfers from our workers abroad who keep sending money to their home folk. This money which comes through the banking system can be used to fund the increase in imports. But in 2011 even these were not enough to offset the trade deficit. So we had a current account deficit of US$ 4,615 million.There is another source that can provide foreign exchange to fund the current account deficit. This is the capital account which shows the inflows and outflows of foreign capital to the government and the private sector either as direct foreign investment or as short term flows to the stock and bond markets. In 2011 this account showed a net inflow of $ 4,097. This was still not enough to cover the current account deficit of $4,615 and hence the shortfall (including errors & omissions) of $ 1,061 million was met by drawing down our official Foreign Exchange Reserve. This reserve must be sufficient not only to fund three months imports at a minimum but also to repay any maturing foreign debt. If we default on the foreign debt either due to insolvency or temporary lack of liquidity, the rest of the world will stop trade finance to us. So we cannot run down our Official Reserves below a certain critical level. The fall of the reserve was made worse by using them to defend an artificial and over-valued rupee which was unjustifiable. The over-valued rupee we had for 2011 also encouraged imports and discouraged exports.The country is facing a balance of payments crisis owing to the large trade deficit. The foreign exchange to meet the deficit can be found from foreign borrowings but it has also to be brought down as it is unsustainable. Otherwise in two or three years time the balance of payments crisis would turn into a foreign debt crisis as in Greece, Ireland and Portugal. But any such correction takes time. If an individual were to lose his job which is his only livelihood, one can’t expect the person to die of hunger. He will have to borrow to survive. But nor can the person afford to live on borrowings forever. He must get a job and live within his means.The same reasoning applies to a government. The government will have to borrow in foreign currency to meet its urgent foreign payments but merely because foreigners are willing to lend to it, it is not prudent for the government to borrow and carry on business as usual. It must borrow foreign money but also set in motion spending cuts. The government, business and the households must all curb their imports even if it means a reduction in their living standards. In short the government and the country must practice austerity.These days Keynesians are preaching that there should be fiscal stimulus, another Quantitative Easing (meaning money printing) despite little evidence to show that the Quantitative Easing 1 and 2 followed by the Federal Reserve System in the USA has succeeded in reducing unemployment or increasing growth. In the Euro Zone there is the same debate - whether the countries whose governments are unable to honor their debt should practice austerity which leads to recession or stimulate their economies through fiscal expansion funded by money printing.There is however one country in the Euro Zone - Estonia, which has come out of the recession of 2009 without borrowing more. It did so by practicing austerity. Estonian GDP 2008 was 16.3 billion euros. In the middle of the slump of 2009 it went down to 13.8 billion euros (-14,3 %) and last year 2011 it was 16 billion euros (all in current prices). Peak in the unemployment rate was 17 % in 2010 and now at the end of Q1 2012 it is 11.5 %. Estonian government debt is 0.4 billion euros (about 3 % of GDP and one of the lowest in the world as it has always been). Household debt has come down from the peak (2008) 7.6 billion euros to 6.9 billion euros (2012) which accounts for 43 % of the GDP. Corporate sector debt has come down from the peak (2008) 7.2 billion euros to 5.9 billion euros (2012). At the end of 2011Estonian current account balance was surplus 0.3 billion euros. Estonian gross external debt (government + households + corporate) is 97 % of GDP and the net external debt is 5 % of GDP. Estonian budget deficit in 2011 was 1 % surplus (by the way Estonian budget has been in balance past 20 years). Estonian consumption has started to recover and for example the  import of cars has doubled since 2009. All this has been achieved without new debt.


We too were affected by the global financial melt down of 2008 and 2009.Our growth rate fell to 3.55% in 2009 from 6% in 2008. Our Gross Foreign Reserves fell below $ 1 billion in March 2009, as foreign investors repatriated their money from the stock and bond markets. But our solution to raise growth and restore the foreign reserve was more and more foreign borrowing and borrowing from the  IMF. The government used these foreign borrowings to fund its infrastructure investments with scant attention being paid as to whether they produced a return in excess of the cost of interest and disregarding the fact that such foreign borrowings have to be repaid in the short term when our exports were not increasing sufficiently.The Government is planning to go for fresh foreign borrowings by way of another Sovereign Bond issue to repay the $500 million previous bond issue which is maturing in October. While foreign borrowing may be necessary to roll-over the existing foreign debt, should the government carry on its expansionary policies and the Central Bank accommodate the budget deficits through money printing? Politicians have only a short term perspective and are unwilling to resort to austerity measures. They prefer business as usual at least until their term of office is over. So it would not be surprising if the government carries on regardless. But the public would have the problem not only this year but in every other year in the future with a worse crisis turning into a foreign debt crisis through more and more foreign borrowing  unless measures are taken to reduce imports as well. The government seems to be depending on raising tariffs to reduce imports. But such policies also create inflation ( IMF estimates higher inflation at 9%) unless the money demand in the economy is also reduced. Otherwise the continued high spending quickly erodes any temporary improvements in the trade balance. Economists distinguish between expenditure switching policies and expenditure reducing policies. The government prefers expenditure switching policies by way of higher tariffs and restrictions on credit which affect only the private sector. But such expenditure switching polices are unlikely to succeed unless there is some reduction in over-all expenditure as well.


Reported in The Island

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...by i3gconsultants@ 12:06:42 on 2012-06-24

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Sector: Bank Finance and Insurance

Credit risk high at combanks -Rohit Bammi


KPMG India's Partner and Head of the Financial Risk Management (FRM) practice, Rohit Bammi said that local banks have the opportunity to enhance their risk management functions. He was speaking at a forum organised by KPMG in Sri Lanka for Chief Financial Officers and Chief Risk Officers of Banking Institutions, Bammi discussed the increasing importance of banking sector risk management functions in meeting emerging regulatory and compliance requirements as well as in enhancing the Bank's competitive positioning in the marketplace, providing for adequate liquidity and high quality capital. Since Banks essentially hold public deposits and in many instances have a capital structure that is significantly leveraged, it is imperative that significant attention be devoted to managing credit risk, operational risk and market risk exposures, as well as asset liability mismatches, Bammi said. According to Bammi, Commercial Banks have the largest exposure in credit risk areas. Weak controls and unmonitored lending in several global economies resulted in significant non performing loan portfolios which was a key contributor to the global financial crisis. The more stable banks which pulled through were those with stronger risk management functions. Having the right processes in place with adequate controls, risk evaluation and monitoring can minimise non performing loan risk exposure and robust stress testing can allow management to take remedial action well in advance even where such instances are foreseen.


Director for Financial Risk Management at KPMG Kuntal Sur, said that banks also have heavy dependence on information systems and technology to operate their businesses and in the generation of management information which is vital for decision-making. Systems and processes are key considerations in operational risk areas. The third area for consideration is market risk, often to do with economic circumstances such as exchange rate volatility, interest rates movement, reputation risks and related market exposures. "I believe most of the larger banks in Sri Lanka have risk management functions in line with the Basel standardised framework and are moving towards the requirements of the advanced approaches of Basel II and in time, Basel III.


Reported in Dailynews

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...by i3gconsultants@ 11:06:22 on 2012-06-24

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Sector: Bank Finance and Insurance

Sri Lanka banks face no high risk, S & P incorrect, illogical: Central Bank


Sri Lanka's banking sector did not face high risks as assessed by Standard & Poor's, the island's Central Bank said in a detailed response to the rating agency's ranking of Sri Lanka as a high risk economy for banks.

The Central Bank said S & P's statement was "is factually incorrect, illogically analysed, and is highly contradictory." S & P placed Sri Lanka on category '8' on a banking sector assessment scale of 1 - 10. The rating agency said Sri Lanka's banks faced high economic risks and industry risks and regulation was relatively weak, in a June 19 statement. The Central Bank has made a detailed response to concerns made by S & P. S & P however also said that Sri Lankan bank capitalization was higher than average. A high capital buffer can absorb unexpected risks. The regulator said it wished "to assure the public that the Sri Lankan banking system is sound and resilient and is not prone to high risk as indicated in the statement of Standard and Poor’s."


The full statement is reproduced below:

Bank Supervision Department 20 June 2012

Response of the Central Bank of Sri Lanka to the Standard and Poor’s Assessment of the Sri Lankan Banking System

The Central Bank of Sri Lanka notes with grave concern, a statement by Standard and Poor’s, issued yesterday, on the Sri Lankan Banking System and wishes to state that the statement is factually incorrect, illogically analysed, and is highly contradictory.

1. Soundness of the Banking System

Quite contrary to the rationale for the statement, Sri Lankan banking system is sound and resilient with the performance of the banking industry improving over past few years. As indicated in the Table below, key financial soundness indicators of the banking sector which accounts for 55% of financial system assets, were maintained at healthy levels.

Table


The Key Financial Indicators display a conspicuous improvement in the gross non performing advances ratio (NPA) from 5.2% in 2007 to 3.8% in 2011 with absolute volumes of NPA indicating only a relatively lower growth of 25% in comparison to the overall credit growth of 69%, during this period. This evidence is contrary to the comment on the existence of a ‘weak payment culture’. The capital base of the banking sector has increased nearly two fold since 2007 with the introduction of the Basel capital standards and enhanced minimum capital requirement for banks. Profitability of the banking sector, which has continuously increased, has further reinforced the level of capital. These factors have contributed to the improvement in capital adequacy ratios despite the significant growth in assets. It is pertinent to note that the core capital ratio and total capital ratio of 5% and 10%, respectively, imposed by the Central Bank are more stringent than the international standards. Liquidity of the banking system has been well managed with the statutory liquid assets ratio being maintained well above the limit of 20%. The growth in deposits and significant representation of retail deposits, further support liquidity risk mitigation. Concentration of credit exposure is regulated by the Central Bank with Directions on maximum amount of accommodation, lending to related parties and banks being advised to impose sector wise exposure limits. Any concentrations to certain entities have been permitted by the Monetary Board in consideration of national priorities and/or national interest and the ability of the banks to withstand any potential risk arising from such exposure. Mandatory lending of at least 10% of the advances portfolio to the agriculture sector was introduced with the intention of enhancing the food sustainability of the country.

2. Regulatory framework governing licensed banks

Despite the global financial distresses, the Sri Lankan banking industry stands resilient and the regulations in force are of international standards. Licensed banks are required to comply with the requirements of the Banking Act and Directions issued on fundamentals such as capital adequacy, liquidity, related party exposure, ownership of share capital, classification of loans and advances, income recognition and provisioning, risk management in foreign exchange business, integrated risk management, off-shore banking transactions and assessment of suitability of bank directors and the key management. The compliance of banks with these regulations is monitored strictly on an on-going basis and corrective action initiated. A mandatory Direction on corporate governance encompassing all aspects of good governance and transparency is already in place. All these prudential regulations are given effect in line with the Basel Core Principles of effective bank supervision issued by the Bank for International Settlement, Basel and in text and action they are more stringent than those in many countries in the region as well as globally. Additionally, the mandatory requirement for banks to obtain certifications from external auditors on their compliance with corporate governance directions and internal controls on financial reporting, which are required to be published along with the audited financial statements provides an independent assessment for the general public on each bank’s level of internal controls, transparency and governance. Further, Anti Money Laundering procedures and Know Your Customer requirements are also in place with respect to all banking transactions. Sri Lanka possesses a well-developed payments and settlement system to facilitate banking transactions, which is subject to the provisions of the Payments and Settlements Act. Thus, the views of Standard and Poor’s that ‘the risk management practices are evolving’ and that ‘the banking regulations in Sri Lanka are somewhat weaker than international standards’ and specifically ‘governance and transparency are weak by global standards’ are baseless. Importantly, this statement of Standard and Poor’s is self-contradictory with their contentment on key regulations for Sri Lankan banks.

3. Supervision of banks

The Central Bank has a continuous supervision process which is an uninterrupted monitoring of banks to assess the trends of banks on an individual and a system-wide basis. This process facilitates early identification of any potential risks. Spot examinations of banks are carried out on specific issues as and when required based on triggers identified through the continuous supervision process. Thus, the supervisory process is well equipped to proactively detect any build up in risks. Further, the affairs of banks are assessed through on-site examinations which are conducted at least once in two years. However, the Central Bank conducts follow up examinations on a more frequent basis based on the risks and significance of the examination findings. Measures have already been initiated to increase the frequency of conducting on-site examinations in the future. Hence, Standard and Poor’s statement that the frequency of on-site supervision may not be sufficient to detect risk build ups in banks is not justifiable.

4. Mandatory deposit insurance

With a view to further strengthening financial stability in the country, the mandatory deposit insurance scheme was introduced in 2010. This has helped to ensure continued depositor and investor confidence in the financial system. The deposit insurance fund amounted to Rs. 4.7bn by end 2011. The financial safety net mechanism afforded by the above is further strengthened and supplemented by access to the lender-of-last-resort facility available through the Central Bank. There have been no banking failures in Sri Lanka despite the global financial crisis. In December 2008, a licensed bank faced a distress situation due to a crisis in a credit card company within the Group and not due to a failure of a finance company. The resolution framework put in place by the Central Bank in late 2007, well before the global financial crisis emanated, proved to be an anchor to the overall financial system stability especially when other countries, including ones with advanced financial systems, were struggling to protect the financial system stability at the cost of public funds.

5. Regulation and supervision of licensed finance companies and specialized leasing companies

In addition to banks, all licensed finance companies (LFCs) and specialized leasing companies (SLCs) are also closely monitored and regulated by the Central Bank. LFCs and SLCs are subject to on-site examinations at least once in every 2 years and weekly, monthly and quarterly reports are obtained through a web based data reporting system. Apart from the regular supervisory procedures, spot examinations are conducted when the Central Bank identifies an issue. Both LFCs and SLCs are also subject to appropriate prudential regulations which include Directions on capital adequacy, liquidity, business transactions with related parties, classification of loans and advances, income recognition and provisioning, assessment of suitability of directors and key management personnel and corporate governance. Further, the Finance Business Act, No. 42 of 2011 was enacted recently, which provides for enhanced supervisory and regulatory powers on LFCs and powers to curb unauthorized finance business. All LFCs are required to list with the Colombo Stock Exchange in order to increase transparency of financials and corporate governance. In conclusion, Central Bank of Sri Lanka wishes to assure the public that the Sri Lankan banking system is sound and resilient and is not prone to high risk as indicated in the statement of Standard and Poor’s.

Reported in LBO

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...by i3gconsultants@ 17:06:49 on 2012-06-23

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Sector: Hotels and Travels

Sri Lanka tourism receipts up 25-pct to May


Sri Lanka has earned 399.3 million US dollars from tourism in the first five months of 2012, up 25.5 percent from the 318.1 million US dollars earned a year earlier, official data showed. Tourist arrivals rose 18.2 percent to 387.622 in the same period. Sri Lanka's tourist sector has been booming since the end of a 30-year war in 2009.  The rupee value of tourist receipts rose 39.8 percent to 49.14 billion rupees, data released by the Central Bank showed. Sri Lanka's currency fell steeply in the first quarter.  Tourist receipts (exports of tourism services) increase the spending power of domestic economic players and help generate a trade deficit along with remittances that come from exports of labour.  However tourism earnings do not expand what economists define as the current account of the balance of payments, as such revenues are also current receipts.  Terms such as the 'merchandise trade account' and 'current account' are arbitrary sections carved out of parts of the overall balance of payments, which is always in balance if the Central Bank does not sterilize its foreign exchange operations.

Reported in LBO

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...by i3gconsultants@ 17:06:57 on 2012-06-23

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Sector: Bank Finance and Insurance

EPF response to statement made by 'Standard and Poors'


Employees' Provident Fund (ETF) attention is drawn to a statement made by 'Standard and Poors' that was issued on Wednesday, in which they seem to have drawn attention to a possible conflict of interest as a result of the EPF investing in shares of banks. In this regard, the EPF wishes to state that different departments in the Central Bank deal in exclusive fields of different operations with high confidentiality and professionalism. Within the Central Bank, the EPF Department functions independently from all other departments of the Central Bank, with stringent firewalls that have been established for this purpose. These are adhered to at all times and the integrity of the Central Bank or the EPF is not compromised in any way. Based on the above, the EPF wishes to affirm that there has been no conflict of interest and that the EPF believes that this statement by Standard and Poors' seems to be based on certain recent allegations that have obviously been designed to achieve the objective of discrediting the EPF. Further, the EPF wishes to state that the banking sector is one of the fastest growing and most profitable sectors in the CSE. In that context, being the country's biggest Fund, it would be highly prejudicial to the local EPF members, if the EPF were to refrain from investing in such a sector.


Reported in Dailynews

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...by i3gconsultants@ 12:06:48 on 2012-06-23

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Sector: SLTL

Mobitel Successfully Concludes a Large-Scale Network Expansion Drive to lead the ICT transformation of Sri Lanka


No other invention has had a greater impact on social interaction than the advent of mobile communications. How Mobile Communication has revolutionized the way businesses and humans interact needs no elaboration. Yet what we witness around is just the change that has been brought in by the facility of voice communication and to a smaller extent the textural messages which is only the first phase of the revolution. We have now stepped on to the second rung of mobile data communications and Mobitel as has always been in the past is leading in the forefront. Mobitel is determined to be the leader of the ICT transformation of Sri Lanka and as the national service provider consider it as its bounden duty.


......

...by i3gconsultants@ 12:06:48 on 2012-06-23

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Sector: Bank Finance and Insurance

Banks drag down Bourse after S&P’s report


Reuters: Sri Lankan shares fell on Thursday after Standard & Poor's ranked the island nation's banks at "very high risk" in an assessment the central bank said was incorrect and contradictory.The Colombo Stock Exchange's main index lost 0.71%, or 35.99 points, to 5,042.07, slipping from its highest since May 22. It had gained 5.6% in the six sessions through Wednesday.
The finance sector index fell 1.75 percent to a one-week low with top lender Commercial Bank of Ceylon and second largest lender Hatton National Bank losing 0.4% and 2% respectively."The fall in the banking shares was totally due to the S&P report," said an analyst on condition of anonymity.
The central bank hit back at S&P and said the facts used for the analysis were illogically analysed, incorrect and highly contradictory.
Turnover was 529.5 million rupees ($3.99 million), below the daily average of around 925 million rupees this year.The rupee fell for a fourth straight session, edging down to 132.80/90 against the dollar from Wednesday's close of 132.70/80 on importer dollar demand amid intervention by a state bank, dealers said. It hit a record low of 133.60 on June 12.Last week, Treasury Secretary P.B. Jayasundera told Reuters the rupee had hit its low and would stabilise around 125 per dollar in the medium term.

Reported in Dailyft
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...by i3gconsultants@ 13:06:16 on 2012-06-22

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Sector: Bank Finance and Insurance

Banks’ Association refutes S&P’s assessment


The Sri Lanka Banks’ Association (SLBA), which represents the licensed banks operating in Sri Lanka, in a statement, said yesterday that it was concerned over the statement made by Standard and Poor’s.
SLBA said S&P’s statement was issued on 20 June, where attention was drawn to concerns over credit risk in the banking industry. Concerns were also expressed on relaxed lending practices, underwriting standards and a weak payment culture.

Reported in Dailyft
In the last two years with peace being ushered in, understandably industry credit growth has been significant at 23.7% and 31.3% in 2010 and 2011 respectively reflecting the banks’ role of supporting the  industry – agriculture, tourism, construction, infrastructure, transport, food and beverages across different business segments from small business enterprises to large corporates across the country.
The banking sector plays a pivotal and responsible role in channelling public deposits to investment and consumption lending that ultimately assists in improving standard of living and quality of life of the citizens of this country. It should be a source of significant comfort that despite the levels of credit growth recorded, asset quality has improved significantly reflected in gross nonperforming assets level improving to 3.8% in 2011. 
Several banks were successful in raising dollar funds from international capital markets at very attractive interest rates which is a sound reflection of international investors’ perceptions. Whilst it is fair to say that majority of bank lending is backed by collateral, this in no way reflects the credit standards adopted by the banks in assessing the cash flow repayment ability of borrowers.
The regulator whilst emphasising the role banks need to play in stimulating economic growth has also in the same vein significantly strengthened standards and focus on corporate governance, risk management, capital adequacy requirements, transparency and disclosure. There is strong supervision to ensure banks adopt best in class practices and maintain or exceed global standards of measurements in these areas.
In the context of a volatile and challenging global economy we are well aware that banking industry in Sri Lanka cannot be fully insulated from risks arising from commodity prices, reduced purchasing power from Western Economies and the contagion impacts of a global downturn.
However, banks in Sri Lanka have been tested for resilience in far more challenging times in the past and confident that adequate capacity has been built in the areas of risk management, capital and liquidity to continue to play a pivotal role in the economy in managing the future. There is no evidence to suggest that the public’s confidence in the health and stability of the banks in Sri Lanka needs to be shaken.
Taken in the context of  bank failures in  other parts of the world, especially in the United States of America and which still appear to take place long after the financial crises, Sri Lanka’s banking system is considered quite stable and robust by the international community.
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...by i3gconsultants@ 13:06:54 on 2012-06-22

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Sector: Bank Finance and Insurance

LB Finance partners zMessenger for integrated mobile service portfolio


Reputed financier LB Finance is set to improve upon their already strong technological platform with its latest tie-up with zMessenger, an integrated Mobile Marketing strategist. With up to 41 years in the industry, LB Finance has a strong tradition of adapting proven financial tools to modern demands via technology and innovation. 

LB Finance Managing Director Sumith Adhihetty (left) exchanges the agreement with zMessenger CEO Jayomi Lokuliyana. Others from left are Roshan Jayawardena, Senior Manager – Marketing and Chethana Kanhandugoda, Assistant General Manager – IT from LB Finance and Wasula Rathnayake, Head of Mobile Marketing and Business Development, Suraj Randel, Manager – IT and Chathuranga Wickremarachchi, Senior Executive – Sales and Marketing from zMessenger

“We believe that joining with a strong partner like zMessenger, a long-standing entity in the mobile marketing sphere, is a move in the right direction,” LB Finance Managing Director Sumith Adhihetty said. “They will be providing the necessary services to better integrate our customers with up-to-date information and knowledge,” he added.zMessenger is an integrated mobile marketing company specializing in planning, creating and executing effective mobile marketing. The LB Finance database of customers will be able to receive updates regarding new developments with their financier such as rate changes, branch additions and new promotions and deposit schemes. “All this would add value to their personal finance experience,” Adhihetty said.
LB Finance clocked in steady results at the end of Q1 of 2012, with stable increases shown in Public Deposits, Asset base and Profits. The company also recently celebrated 41 years in the financial sphere, with a Blood Donation Campaign spearheading their anniversary celebrations. The newly acquired service will complement not only LB’s financial portfolio but also its spate of new developments, helping customers maximise on the rapid improvements.LB Finance deals primarily in fixed deposits, leasing and hire purchase facilities, and also includes factoring, margin trading, power drafts, gold loans, microfinance and Islamic finance in its portfolio.

Reported in Dailyft

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...by indikakm@ 02:06:28 on 2012-06-22

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Sector: Plantations

Sri Lanka's May tea output falls 8.4 pct yr/yr


COLOMBO, June 20 (Reuters) - Sri Lanka's tea production fell 8.4 percent in May from a year earlier, the fourth straight month of lower output, state-run tea board data showed on Wednesday, and analysts attributed the decline to irregular rain.
    Sri Lanka's May tea output was 30.81 million kg compared with 33.65 million kg in the same month a year ago. 
    Production in the first five months dropped 3.8 percent to 135.63 million kg from 140.92 million compared with the same period in 2011.
    High grown tea output, which accounts for about a fourth of production, fell as much as 18.4 percent in May amounting for 59 percent of the total fall. 
    "High grown continue to be badly affected due to the irregular weather pattern," said Anil Cooke, head of Asia Siyaka Commodities, a tea brokering firm.
    "It's the inability to go about normal agricultural practices because of the irregular rain fall." The tea board expects 330 million kg output for the full
year, slightly higher than last year's 328.37 million kg, and sees 2012 export revenue at a record high, surpassing last year's $1.5 billion, due to higher prices. 
     Output hit a record 331.43 million kg in 2010.
    Revenue from the island-nation's top agricultural export commodity fell 11.7 percent to $421.1 million in the first four months of 2012 compared with the previous year, central bank data showed.
    Analysts say the earnings outlook for 2012 is unclear due to a possible dip in exports to Iran, which buys a fifth of Sri Lanka's tea directly, as banks have been reluctant to finance the trade fearing consequences from impending U.S. sanctions on ran.
    Other countries in the Middle East are also major buyers, but political turmoil may limit their appetite for Sri Lankan tea, traders say.
    Tea is one of the $59 billion economy's main foreign currency earners, along with remittances, garment exports and tourism.
    Following table shows Sri Lanka's May tea output (in kg):   
        
                                        May                      Jan-May  
                              2012         2011         2012          2011
 High Gr         7,369,693   9,033,670    31,942,304   36,262,201
 Medium Gr   5,586,842   6,005,294    23,446,025   23,221,780
 Low Gr       17,856,458  18,607,711    80,240,510   81,435,109
 Total           30,812,993  33,646,675   135,628,839  140,919,090
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...by i3gconsultants@ 16:06:26 on 2012-06-20

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Sector: Bank Finance and Insurance

Banks stable despite NPL rise - IMF


Despite an increasing trend in non-performing loans (NPLs) being recorded over the first quarter, the International Monetary Fund (IMF) has expressed confidence in the stability of Sri Lanka’s banking system.
Speaking at a recent press conference, visiting IMF review mission chief, Dr. John Nelmes said, “There is a small issue in terms of nonperforming loans in the banking system but this is really a very small issue. Overall, the banking system remains sound, solid and well capitalized with a strong liquidity position.” “To date, there has been a very small increase in NPLs. However, these are natural movements that you can expect to see in this macroeconomic environment,” he added.
Nevertheless, Dr. Nelmes’ reassurances failed to put some analysts at ease, with speculation still circulating as to whether local banks will be as well insulated from impact of a spike in NPLs in the wake of February’s interest rate hike.

A rise in NPLs was recorded across the banking sector during the quarter with Union Bank of Colombo PLC recording the highest percentage increase in NPLs during the quarter, reaching a level of Rs.2.82 billion, 18.4% over the previous year. Hatton National Bank PLC recorded the second highest increase in NPLs year-on-year (YoY) at 17% to reach Rs.13.95 billion, whilst Nations Trust Bank’s NPLs accounted for Rs.2.60 billion, 12% over the previous year.
Meanwhile, Commercial Bank saw an 8.51% YoY increase in NPLs at Rs.17.2 billion. Sampath Bank saw its NPLs rise by 5.5% to Rs.5.61 billion, whilst the National Development Bank recorded a 4% increase to Rs.1.42 billion.  Pan Asia Banking Corporation recorded the lowest increase during the quarter with Rs.2.68 billion in NPLs, 4% over 2011's figures. According to analysts, hike in interest rates and slow down in economic growth will impact the ability of those who have drawn loans from banks. Due to the loose monetary policy the country had been following, a lot of bank loans were taken for consumption. In fact, most of the credit went for motor vehicle purchasing, pushing Sri Lanka's private sector credit growth to new heights.


Reported in Dailymirror

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...by i3gconsultants@ 12:06:06 on 2012-06-20

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Sector: Services

Online cargo clearance system struggles to find wider acceptance


Sri Lanka Customs is delaying moves to go fully online with 20 percent of the trading community not willing to avail themselves of the online cargo clearance system already in place. Sri Lanka Customs has introduced a faster system of online documentation for exports and vehicle imports (for now, with plans to cover the entire import sector). However users are not yet prepared to welcome the new mechanism. Sri Lanka Ports Authority last year installed an online system to clear cargo which was expected to centralize the port, yards and Customs for faster clearance reducing many hassles faced by clearing agents. Sri Lanka Customs marching in parallel introduced ‘Asycuda World’, a platform for exporter and initially only vehicle importers to submit their documents online for faster service. Senior Customs official Dr. Tharaka Mahaulpatha said the Customs was ready to provide an accurate and faster service using the new platform to reduce delays and unnecessary queuing. According to him, the new system was in place despite minor shortcomings due to network and technical errors. However 20 percent of the stake holders were not ready to make use of the platform, he told a forum organised by the Sri Lanka Shippers’ Council at the Ceylon Chamber of Commerce last morning (19). With the new system, the number of documents which required in the past had been reduced to one and four CDs and he hopes it would support a paperless environment in the near future. Sri Lanka Customs has had several discussions with the Sri Lanka Ports Authority and the yards to link the service to provide a one-stop-shop platform to minimize hassle, which was being designed currently. Dr. Mahaulpatha said, "We are ready with the system to support our clients, currently we are working on several options to provide a smooth operation with minimum paper work and in the future we will launch a paperless environment, now we are waiting for the green light from our Director General to shift our system fully online." Director General Customs Dr. Neville Gunawardana said they had tried to fully implement the online system however the industry was not ready for such a move and the procedure was reversed. "We are ready and I will give the green light if the trade and industry gives me the consent that they were ready to accept the fully automated platform."


Reported in The Island

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...by i3gconsultants@ 12:06:06 on 2012-06-20

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Sector: Bank Finance and Insurance

RDB opens 257th branch


Regional Development Bank (RDB) ceremonially opened its 257th branch, at No. 27, KKS Road, Maruthanamadam, Chunnakam in the Northern Province. Chunnakam branch was opened by the cabinet minister of Traditional Industries & Small Enterprise Development, Douglas Devananda, on the invitation of the Chairperson Ms. Keshala Jayawardana and General Manager / CEO Rathnasiri Siriwardhane. The occasion was crowded with the people of Chunnakam and Regional Development Bank was able to introduce a number of savings schemes to help them increase their savings habits. The Chairperson of the bank said that RDB was committed to developing capacity among the small and medium entrepreneurs in the region. The bank intends to develop small-scale dairy farms and uplift the agriculture and fisheries sector in the provinces.


Reported in The Island

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...by i3gconsultants@ 12:06:06 on 2012-06-20

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Sector: Hotels and Travels

Sri Lanka allows private helicopter operations in Colombo


Sri Lanka's Deccan Aviation said it had established a privately run helipad in Colombo city after authorities relaxed rules that prevented civil aircraft approaching within 10 miles of the capital. Deccan Aviation said Sri Lanka's Civil Aviation Authority and the Ministry of Defence have allowed private operators to establish eight locations in the city.  The operator said its helicopters will use Colts Cricket ground in Havelock Road.  Deccan Aviation operates helicopters and fixed wing aircraft which are used to carry high end passengers throughout the island.  "This is exactly what our clients have been asking for," Suren Mirchandani, vice chairman of Deccan Aviation said.  "While we have developed over 300 helipads throughout the island, this was the one we are most excited about. Our thanks should go out to those in authority who made this decision."  Only Sri Lanka Air Force helicopters were allowed in to the city earlier due to civil war which ended in 2009. Private helicopters had to land in Ratmalana south of the city centre. Deccan said it will add an amphibian aircraft to its fleet in the within three months.


Reported in LBO

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...by i3gconsultants@ 12:06:06 on 2012-06-20

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Sector: Manufacturing

Sri Lanka to build 'green' apparel plants in former war-zone


Sri Lanka's Timex and Fergasam group, will begin construction of two energy efficient 'green' apparel factories in the northeastern Mannar region this month, the state investment promotion agency said. The five million US dollar factory is expected to be in production by January 2013 creating 1,200 jobs in an area where a 30-year war ended in 2009. Sri Lanka's Board of Investment quoting unidentified company officials said the factory will have energy efficient air conditioners which will cut power use by a quarter, fuel efficient boilers and compressors. The plants will also use solar cells and have net metering to sell excess power to the national grid. The factory will use water efficient fixtures and will have storm water management system to get water. "Environmental factors are an important variable which international investors take into consideration when making their choices," BOI chairman M M C Ferdinando said. "Sri Lanka has the advantage of having high environmental standards. Already a number of companies that operate under the BOI regime have taken the lead by setting up green Factories." Timex and Fergusam already have 17 plants in Sri Lanka employing 10,000 people exporint apparel to the European Union and the USA.


Reported in LBO

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...by i3gconsultants@ 12:06:06 on 2012-06-20

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Sector: Power and Energy

i Lanka thermal power generation up


Sri Lanka's thermal power generation had picked up sharply in the first quarter of 2012 with total generation up 8.8 percent from a year earlier while hydro generation fell steeply, official data shows.Total generation rose 8.8 percent to 2,956 GigaWatt hours (millions of units) indicating strong demand in the quarter. State-run Ceylon Electricity Board's own hydro generation fell 70 percent to just 475 GWh in the period from 1,625 a year earlier. Thermal generation rose to 958 GWh from 298 a year earlier. The CEB now also generates power from coal in addition to furnace oil and diesel. Power generated by private producers rose 91 percent to 1,524 GWh in the period. Private producers mainly use furnace oil and diesel. Non-conventional renewable energy fell to 12 GWh from 15.5GWh in the first quarter. In dry periods small hydro power generation also falls. In the month of March, power generation up was 5.6 percent to 1,044GWh from a year earlier. CEB's own thermal generation was up 149 percent to 219GWh. Private power generation was up 42.3 percent to 518GWh. Sri Lanka's thermal power generation picked up sharply from the second quarter of 2011 and higher levels of credit taken to finance energy subsidies ultimately triggered a currency depreciation from 110 to 130 rupees to the US dollar. In February 2012, energy prices were raised but petroleum minister Susil Premajayantha has told parliament that the petroleum utility has run up debt of 60 billion rupees by end May 2012 due to subsidized furnace oil sales for power. Global energy prices have since started to ease, amid credit trouble in reserve currency countries.

 

Reported in LBO
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...by i3gconsultants@ 12:06:06 on 2012-06-20

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Sector: Land and Property

Cautious optimism for real estate




  • Leisure sector outpaces housing as the driving force of the construction industry


  • Upward pressure on interest rates, inflation likely to trigger slow down

The country’s real estate and property development sector has shown rapid growth post-war but several new factors have prompted leading consulting firm KPMG Sri Lanka and specialist Research Intelligence Unit (RIU) to have “cautious optimism”. The latest Real Estate Market Brief Issue 2 – 2012 titled ‘Changing cityscape’ done by the two firms noted that for the first time in Sri Lanka, the leisure sector has outpaced housing as the driving force of the construction industry.
“This is a strong indication of a short-term boom whilst in the long term, the market is expected to settle on a steadier incline that reflects the overall international travel environment,” it added. The report also confirmed that the first quarter of 2012 witnessed a number of developments in the real estate sector in Sri Lanka, coming on-stream. “Leisure projects were among the major contributors to activity in the market, with the commencement of construction of several hotel projects and the opening of some recently-completed boutique hotel properties,” KPMG Sri Lanka’s Principal – Financial & Real Estate Advisory Shiluka Goonewardene said in the report.
The steep rise in the number of tourist arrivals signified a potentially increasing demand for hotel rooms in varied categories, with existing capacity still falling short of the anticipated requirement. Selective properties in scenic locations with good amenities continued to attract investor interest.
Ongoing construction activities continued in the city of Hambantota, primarily in the completion of the Ruhunu Magampura Sea Port and in the International Airport in Mattala, which is due for completion later this year.
While there is still a wide disparity in the price of property in the region, it is likely that properties in areas allocated for housing projects as well as properties in proximity to commercial developments will appreciate in value.
“The recent increases in interest rates and the likely consequences of inflation as a result of price increases of a number of essentials, are likely to have both demand-side and supply-side implications for the real estate sector. It is envisaged that the momentum of real estate transactions will slowdown in the year ahead, a result of the rising cost of funds, along with margins also being affected consequent to the increased cost of construction. Hence ‘cautious optimism’ is likely to be the sentiment,” Goonewardene said in his foreword to the report. The report provides a snapshot of developments in the new city of Hambantota, a glance of suburban property market as well as valuation dynamics based on an interview with W. Seneviratne, former Chief Valuer, Valuation Department. Additionally it also provides an updated assessment on developments in the city, with emphasis on the leisure market.


Reported in Dailyft

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...by i3gconsultants@ 12:06:52 on 2012-06-20

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Sector: Bank Finance and Insurance

Sri Lanka Insurance speeds up medical claim settlements via TAB solutions


Sri Lanka Insurance has extended its TAB solutions to Medical Technical Officers, to speed up and fine-tune the medical claim settlement process, to enhance customer convenience at the time of a claim. The software was developed by the company’s own IT division.The Technical Officer now has the ability to receive the claim intimation from the call centre via SMS. And on sight filling of claim forms checking policy information and uploading approval documents will be possible through the TAB machine, which would be sent to a claims underwriting officer at the claim authorisation centre real time. The claim will be assessed and authorised immediately and would pass on to the payment section to process the settlement. This  on time inspection system, which enables the coordinator to immediately share the claim details with the claims processing officers’ located at head office, will no doubt make the claim process a pleasant experience for the customers, with less forms to fill and less places to visit, Sri Lanka Insurance as always has pioneered the vision of a paperless, efficient and a hassle free claim settlement experience to its customers, which will be the future of claim settlement in the Sri Lankan Insurance Industry.  
Sri Lanka Insurance, the largest government owned composite insurance provider in   Sri Lanka is the first insurance company to have been assigned a global rating for financial stability AA (lka) from Fitch Ratings, London which is an assurance of the company’s long term financial sustainability.  Sri Lanka Insurance is the only insurer who was awarded RAM Ratings AAA for its ‘long term claim paying ability’, which further affirms the corporation’s capacity to meet financial obligations to policyholders.
The Company has also been awarded ISO 9001:2000 certification for correct governing and operational procedures in line with accepted global standards which is further endorsed by the recent international awards the company has claimed which includes World Quality Commitment Gold Award in 2011 in Paris, the Platinum Award 2012 in New York and a World Finance Award in London as the Best Insurer of the Year 2010 in Sri Lanka.  
Reported in Dailyft

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...by i3gconsultants@ 12:06:26 on 2012-06-20

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Sector: Beverage Food and Tobacco

Control price to be introduced for infant milk


The Consumer Affairs Authority stated that a control price for infant milk foods will be introduced from midnight today.As a result the price of 19 varieties of milk foods will decrease.


Reported in Ceylontoday

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...by i3gconsultants@ 14:06:57 on 2012-06-19

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Sector: Hotels and Travels

Top UK diplomats express confidence in local tourism industry .


Sri Lanka has a very good potential to be a top tourist destination in the region and is unique in its natural beauty, against any competitor in the region, a top diplomatic group from United Kingdom (UK) stated.
The ‘ Consular Corps of London’, an association of all London-based consuls general, consuls, honorary consuls and career diplomats involved in consular and immigration matters, made this observation after a familiarization tour to the major tourist attractions in the island including Sigiriya, Jaffna, Down-South, Kandy and Pinnawala.
Addressing a recent press conference held in Colombo, Bernard Silver, Executive Committee Member, Consular Corps of London, also pointed out Sri Lanka’s opportunities to become a top tourist destination in the region.
“Sri Lanka is very rich in its resources and I’m sure opening up its Northern area to the industry of tourism would definitely bring about positive results, as in the case of its South,” he said.
He added that they are indeed happy and contented of the postwar development process and its benefits to all the communities in the island.
Expressing his ideas in this regard, Rumy Jauffer, Managing Director, Sri Lanka Tourism Promotion Bureau stated that it’s a great opportunity for Sri Lanka to show her post-conflict achievements to a group of top diplomats from the UK.“Their experience of our tourism product will truly be a determining factor for our market,” he noted.
The tour of the Consular Corps was organised by Sri Lankan High Commission in the UK. It is also a part of the image building exercise of post–conflict Sri Lanka, by which, the diplomatic community of the UK is exposed to the ground realities.

Reported in Dailymirror ......

...by i3gconsultants@ 14:06:57 on 2012-06-19

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Sector: Hotels and Travels

Where have all the tourists gone? .


All newspapers carried headlines a few days ago stating that May 2012 tourist arrivals have increased by 17.5% from last year. It is reported that the May arrivals of 57,506, were higher than even that of April, which showed only a 9% increase YOY. So far, the total arrivals for 2012 up to end May is 327,627, which is almost an 18.2% increase over last year.
However, most hotel industry professionals are of the opinion that May 2012 occupancies have been very poor. In fact, some of the larger hotel companies have stated that the May 2012 occupancies have been in fact worse than even during the war years.
Detailed arrival figures for May indicate that all generating markets showed a YOY increase, with India only surprisingly showing a small drop.
Hence, there seems to be something fundamentally amiss here, where the national arrival statistics show a healthy double digit growth figure YOY, while most hotels are reporting considerable reduction in occupancies. This therefore warrants some careful and serious investigation.
National arrival figures
The national arrival figures are established on the basis of international norms, where a person holding a foreign passport staying in the country for more than 24 hours is deemed to be a tourist. There has always been the debate that this does not capture the ‘proper’ tourist who stays for several days in the country and that the number is enhanced by short staying, transit passengers. However, this has been a practice right along, so that there has always been this small error margin included in the system.
The diaspora factor
There is also the debate that these national figures include Sri Lankan diaspora, holding foreign passports, returning to the country for vacation. Most of these persons stay with relations and therefore do not get ‘caught up’ in the hotel occupancy statistics.
A study done by the writer last year and published under the heading ‘Tourist Arrivals – Food for Thought’, looked at the arrivals statistics in comparison with the foreign guest nights (FGN) in graded and supplementary establishments, as given by the SLTDA. FGN gives an accurate indication of the number of tourists who actually stayed in graded tourist establishments and this study revealed that of the total arrivals of 654,476 recorded for 2010, only 82% were ‘real tourists’ who stayed in proper hotels.
Hence, there is this 20% ‘error margin’ due to diaspora arrivals, who are not really tourists but categorized as visiting friends and relations (VFRs). It was also revealed that in the post war era, there could be a slight increase in this diaspora VFR ‘error margin’.However, this error margin cannot be the cause for this disparity in May 2012, since the majority of the diaspora influx is during the months of November, December and January.
Is there really a downturn in May 2012?
Certainly there is a dramatic downturn in occupancy levels in all upper-end (5/4-star) hotels. This is quite evident from the newspapers, which carry some exciting offers for weekend packages. ‘Buy one and get one free’ attractive credit card discounts of up to 65% and ‘partner stays free’ offers are abundant in the market today. It does not take rocket science or high level marketing knowledge to conclude that these hotels are having low occupancy with reducing demand, forcing them to make these tactical promotions to drive occupancy up.

Unlike any other industry, the rooms in a hotel are 100% perishable stock, which does not have any shelf-life whatsoever. A room not sold is gone forever. Therefore, any hotelier knows that when demand drops, promotion and discounting has to take place, to break even (of course there is a limit to this discounting, because there  will come a point when it is perhaps cheaper to keep the room closed than to sell it at a price less than the operational overheads).
Hence, it can be deduced from the foregoing that the larger, higher category hotels are ‘feeling the pinch’ right now.
On the contrary however, there does not appear to be too many such market signals of promotions and special offers, emanating from the lower category of hotels and smaller guest houses. This then could possibly mean that they are not doing too badly. A rudimentary telephone survey of a small sample set did seem to confirm this.
Pricing
It is a known fact that in the post-war period, Sri Lankan hotel room rates have gone up considerably, some as much as 50% from a few years ago. This is evident from the tourism earnings recorded, which has also shown a spectacular increase YOY.
In fact, up to April 2012, earnings have grown 25.7% to almost USD 340 million, compared to USD 440 million for the whole year during the time the civil war was raging. This clearly indicates that hotel rates very definitely have increased YOY quite steeply and the market is possibly showing a resistance for the first time this summer.
Up until now, the pricing, particularly during winter, though still considerably high was still acceptable because of the pent up demand factor for Sri Lanka.Summer rates are traditionally at a generous discount and perhaps Sri Lankan hotel rates are beginning to be too expensive on a waning demand curve during the summer. A glance at the weekend newspapers will reveal that a weekend in Thailand, inclusive of air fare for two people would be cheaper than staying in a high-end Sri Lankan hotel.
It should not be construed however that rate increases are bad. Certainly, Sri Lankan hotels have suffered for over decades in a survival mode, giving highly discounted rates in a buyer’s market. But today, with the shoe on the other foot, so to say, one must always guard against price increases larger than the market can bear, in too short a space of time. One must also take note of the competition, particularly in the Asian region which offers superior product quality at very competitive rates.So, eventually, supply and demand market forces will kick in and there will be a phase of price wars and discounting, after which rates will stabilize to realistic levels.
Conclusion
Due to the lack of good up to date and accurate data, analysis and investigations such as this necessarily have to end up as deductions and postulations. No define conclusion can be analytically arrived at. (Unfortunately, the  Sri Lankan hotel industry is somewhat guarded in sharing information so that assessing national bench marks such as average room rates, accurate occupancy figures etc. is always a difficult task. In some other Asian countries however, such important data is collected and collated on a monthly basis by national tourism bodies or private sector tourism associations, providing useful and timely information for decision-making.)
Hence, from the foregoing it appears that a larger number of tourists coming to Sri Lanka now are patronizing lower level, cheaper accommodation options. This is particularly evident in the summer months in the western hemisphere, which is not the traditional long haul holiday period, so that bargain hunters would shy away from the more expensive upper end hotels. The emerging economic crisis in Europe can also be another factor causing this shift in demand.
So, in the short term, it would appear that higher-end star-class hotels would have to paraphrase Peter, Paul and Mary or The Kingston Trio and lament…“Where have all the tourists gone, long time in May, Where have all the tourists gone, long time in May, Gone to guest houses everyone…oh when will they return, When will they return?”
(The writer is a senior tourism professional and was the former Chief Executive Officer of Serendib Leisure Management Ltd. and immediate past President of the Tourist Hotels Association of Sri Lanka)
Reported in Dailymirror

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...by i3gconsultants@ 14:06:57 on 2012-06-19

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Sector: Services

Services sector shrinks in 1Q


The country’s dominant services sector has suffered the biggest setback as the economy shrank in the first quarter to 7.9%, from 8% and above a year earlier and fourth quarter of 2011.Accounting for 57.3% share of the economy, the services sector grew by only 5.8% in the first quarter, down from 9.5% a year earlier and 8.5% in the fourth quarter of 2011. The drop is significant as it amounted to 39% year on year and slightly above 31% quarter-on-quarter. The wholesale and retail trade sub sector, which accounts for near half of broader services sector and one fifth of overall economy, grew by 7.1%, down from 10.7% a year earlier and 9.9% in 4Q of 2011.The exports trade sub sector managed only to record a growth of 1.7%, down from 15.3% a year earlier and 6.5% in 4Q of 2011.The transportation and communication subsector, accounting for 14% of overall GDP, reported a sharper dip in growth, 5.7% as against 12.9% in the 1Q of 2011 and 11.2% in 4Q of 2011. Within the sub sector, posts and telecom had grown y only 6.6%, sharply down from 18.7% a year earlier and 15.4% in 4Q.
Banking, insurance and real estate sub sector accounting for around 8% of the total economy, grew by 7.2% which was lower in comparison to 9.2% a year earlier and 8.8% in 4Q of 2011.
Whilst the setback in the services sector remains the biggest concern, industry sector managed to remain afloat, though its growth was marginally lower.Accounting for 30% of the economy, industry sector grew by 10.8%, down from 11.1% a year earlier and 10% in 4Q of 2011. The manufacturing sub sector, the biggest within industry sector, reported a 6.7% growth, down from 8.2% in 1Q of 2011 and 7.7% in 4Q of 2011.
The construction sub sector, accounting for 7.7%, grew by 17.5%, confirming buoyancy in comparison to 14.3% a year earlier and 14.4% in 4Q of 2011.The most positive development was the sharp rebound in agriculture sector, up by 11.5% as against a negative growth of 4.3% in 1Q of 2011 and 2.4% of 4Q of 2011. Its share in the economy remained at 12.7%, marginally up from 12.7% a year earlier.
Whilst major traditional crops tea and rubber dipped by 6.7% and 5.5% year on year, coconut improved by 9.8%. The biggest gain was from paddy, up by 35% as against a negative growth of 20% in 1Q of 2011. In 4Q of last year, paddy grew by 12.4%. Other food crops saw a growth of 11% in comparison to a contraction of 4.6%, and vegetables sub sector grew by 15.3%, a turnaround as against a 5% negative growth a year earlier.
The fisheries sub sector had grown by 6%, though down from 13% improvement in 1Q of 2011 and 15% growth in 4Q of 2011.
The overall growth of the economy was in line with forecast as the Government expects GDP to grow by around 7% this year, down from record 8.3% last year and 8% in 2010.
Reported in Dailyft

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...by i3gconsultants@ 13:06:19 on 2012-06-19

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Sector: Manufacturing

Japanese concepts hugely improved Lankan manufacturing processes: Rishad


apan continues to be a top partner of Sri Lanka as our bilateral trade with the Land of the Rising Sun topped $ 1.2 b in 2011 and knowledge transfer of Japanese manufacturing practices to Sri Lanka has helped improve quality of manufacturing here.



“Japan has always been a key trading partner as well as a generous donor nation for Sri Lanka. We remember of the multitude of Japanese assistance extended to Sri Lanka with warm gratitude, amongst them were granting of the first island-wide TV network Rupavahini. Concepts as the Japanese ‘5S’ have made a huge impact on the improvement of our product quality,” said Minister of Industry and Commerce Rishad Bathiudeen.
Minister Bathiudeen was addressing the opening of the ‘JASTECA Exhibition & Trade Fair 2012’ organised by Colombo’s Japan Sri Lanka Technical & Cultural Association on Friday  to commemorate 60 years of Japan-Sri Lanka diplomatic relations.
More than 3,000 Sri Lankans have received Association for Overseas Technical Scholarship (AOTS) training on technical and managerial aspects in Japan and are now steadily contributing to industry sectors in Sri Lanka-both products and services.
Established in 1984, JASTECA is a non-profit service organisation functioning as the alumni of AOTS Japan. The Executive Committee and the membership of JASTECA consists of returned trainees of AOTS scholarship programs, who have volunteered their services to coordinate scholarship activities and also to disseminate the knowledge and expertise gained in Japan to other Sri Lankans.
“Japan and Sri Lanka have been having close, cordial and warm bilateral relations not only in the trade and economic fields but also in several other areas such as culture and education. The bilateral discourse also goes back to a long time. According to historical records, Emperor Showa travelled to Ceylon in the early 1920s as the Crown Prince of Japan and visited cities like Colombo and Kandy. The successive Governments of Japan and Sri Lanka have been able to further strengthen the friendly relations to even higher levels that we are witnessing today.
“We remember the strengthening of Sri Lanka Telecom, grant of Sri Jayewardenepura General Hospital and grant aid to develop various road networks, enhance education and academic scholarships. Such aid has been a solid pillar of generous Japanese assistance to Sri Lanka. I am aware that many of the participating companies in the JASTECA Exhibition & Trade Fair 2012 are currently employing Japanese Good Manufacturing Practices (GMP),” Minister Bathiudeen said.
The total bilateral trade, which stood at US$ 493 m in 2002, has increased to US$ 1249.03 m in 2011. Balance of trade with Japan is unfavourable to Sri Lanka, due to imports of high value motor vehicles, in particular. However, total trade has significantly dropped in 2009 due to the impact of the global recession, although it increased in 2011.
Tea has been the main item of exports from Sri Lanka to Japan, which accounts for 29.8% of the total value of Sri Lanka’s exports to Japan in 2010. Tea exports have risen from US$ 19 million to US$ 50 m in 2010.
Other items of exports to Japan are shrimps and prawns, apparel and clothing , precious and semi-precious stones, natural rubber, machines parts and accessories, brooms, brushes, tyres and vegetables, fruits and nuts.
Imports of motor vehicles from Japan accounted for more than 50% of the value of total imports from Japan in 2010. Other import items from Japan include electrical machinery, self-propelled bulldozers, iron or steel, parts and accessories of motor vehicles, etc. In 2009, the value of total imports from Japan to Sri Lanka recorded the lowest value since 2002, but it increased in 2011 due to the duty reduction.
There are already 60 Japanese enterprises operating in Sri Lanka under the BOI with a total investment of US$ 350 million, providing more than 12,000 people employment.



Prospects for a Free Trade Agreement (FTA) between Sri Lanka and Japan have also come under discussion at bilateral level. In the first week of June 2011, the then Japanese Ambassador Kunio Takahashi, during a meeting with Minister Bathiudeen in Colombo, acknowledged the idea that an FTA with Japan would help Sri Lanka contribute to Lanka-Japan bilateral trade dialogue.
Speaking of JASTECA’s role, Minister Bathiudeen said: “I understand that JASTECA is organising this exhibition to commemorate this important landmark event of 60 years of friendly relations and also to showcase the success stories of the trainees who have been sent from Sri Lanka to Japan for technical and managerial training. With all these achievements, it is clear that the valuable assistance from the Government and the people of Japan has made an unprecedented contribution towards the progress of Sri Lanka. I am confident that our relations with Japan will go from strength to strength.
“I am aware that the Japan Sri Lanka Technical and Cultural Association is a non-profit service organisation and functions as the alumni of the Association for Overseas Technical Scholarship Japan. I am pleased to note that many Sri Lankan professionals and academics acquired their valuable skills and techniques from the training they received from many AOTS centres in Japan. I warmly compliment the Executive Committee and the membership of JASTECA for volunteering to disseminate knowledge and the expertise they gained in Japan to other fellow Sri Lankans through JASTECA and other frameworks.”
Nobuhito Hobo, Ambassador of Japan in Colombo, addressing the event, said: “I’d like to thank JASTECA for its close cooperation with the Embassy and all the support it gave with regard to celebration of the events. Developing the industrial sector is of vital importance for countries trying to sustain economic growth while addressing the balance of payments and living standards of the people. Moreover now that Sri Lanka has emerged as a middle income country it is vital that due emphasis is given to industrialisation, quality improvement and overall productivity. I hope this trade fair would provide a valuable opportunity for Sri Lankan industries and services to showcase their products and services to enhance marketability.”
Overseas Human Resources & Industry Development Association of Japan President Kazuo Kaneko addressing the event said: “JASTECA has gone a long way by training more than 3,000 Sri Lankans trainees in Japan, on technical and managerial aspects through AOTS now called HIDA. There are many success stories of AOTS Japan training. This training helped improve quality of products manufactured in Sri Lanka, thereby contributing to Sri Lanka’s economic growth. We at HIDA Japan are very proud of these achievements.”


Reported in Dailyft

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...by i3gconsultants@ 13:06:19 on 2012-06-19

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Sector: Bank Finance and Insurance

KPMG presentation emphasises potential for banks to enhance risk management functions


Speaking at a forum organised by KPMG in Sri Lanka for chief financial officers and chief risk officers of banking institutions, KPMG India’s Partner and Head of the Financial Risk Management (FRM) practice, Rohit Bammi emphasised that local banks have the opportunity to further enhance their risk management functions.
In his opening remarks, Rohit discussed the increasing importance of banking sector risk management functions both in meeting emerging regulatory and compliance requirements as well as in enhancing the bank’s competitive positioning in the marketplace, providing for adequate liquidity and high quality capital.
Since banks are essentially holding public deposits and in many instances have a capital structure that is significantly leveraged, in this context it is imperative that significant attention be devoted to managing credit risk, operational risk and market risk exposures, as well as asset liability mismatches, Rohit added.
According to Rohit, commercial banks generally have the largest exposure in credit risk areas. Weak controls and unmonitored lending in several global economies resulted in significant non performing loan portfolios which was a key contributor to the global financial crisis. The more stable banks which pulled through were those with stronger risk management functions.
Having the right processes in place with adequate controls, risk evaluation and monitoring can minimise non performing loan risk exposure, and robust stress testing can allow management to take remedial action well in advance even where such instances are foreseen.
Kuntal Sur, Director for Financial Risk Management at KPMG, said that banks also have heavy dependence on information systems and technology to operate their businesses and in the generation of management information which is vital for decision making.
Systems and processes are key considerations in operational risk areas. The third area for consideration is market risk, often to do with economic circumstances such as exchange rate volatility, interest rates movement, reputation risks and related market exposures.
“I believe most of the larger banks in Sri Lanka have risk management functions in line with the Basel standardised framework and are moving towards the requirements of the advanced approaches of Basel II and in time, Basel III. Planning ahead- banks will also need to consider the implications and requirements of the Basel III framework which will set a new benchmark for risk management functions,” Kuntal added.
Jagath Perera, Partner – Head of Risk Consulting of KPMG Sri Lanka, said that Sri Lanka’s banking sector has been one of the fastest growing service sector industries in the country and is an important part of the Sri Lankan economy. He added that this growth however also brings risks which should be understood, assessed, managed and mitigated.Sri Lanka presently has 24 licensed commercial banks, nine licensed specialised banks and over 40 licensed finance companies. The banking sector comprises over 2,000 bank branches and had a total asset base in excess of Rs. 4,000 billion as at 30 September 2011.


Reported in Dailyft

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...by i3gconsultants@ 13:06:19 on 2012-06-19

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Sector: Power and Energy

Rising cost of energy and Sri Lanka's dilemma


It was only a few months ago that the Ceylon Electricity Board (CEB) raised tariffs by a significant amount following the Government's increase in petrol and Liquid Petroleum Gas (LPG) that is used by many for cooking.
These indicate the financial stress borne by the people. In the capital intensive industrial sector, fuel is in demand to keep the wheels in motion. The transport sector comprising ships, aircraft, trains, buses, lorries and cars depend on the refined fuel to pursue their activities.
Two of the fastest growing economies - China and India have been increasing fuel consumption rapidly promoting higher prices which are causing issues to countries such as Sri Lanka.
Meanwhile, the CEB and the Ceylon Petroleum Corporation are losing billions of rupees mainly due to high cost of inputs. This is the current scenario of Sri Lanka's energy sector.
"While the commitment of the Government to improve the infrastructure base of the country is commendable, financially viable institutions, effective regulations, proper pricing and precise targets are essential to maintain sustainability of services provided. In this context, the recent fuel price adjustments followed by electricity tariffs and transport fare adjustments are steps in the right direction".(Central Bank Annual Report 20111)
The other day at the monthly lecture series of the Centre for Banking studies, Secretary to the Ministry of Power and Energy, Dr R H S Samaratunga, gave a comprehensive view of the country's energy sector and the issues faced by the Government and the public. Fuel costs are on the increase and the demand for fuel is rising. The refinery set up in 1969 cannot increase output without incurring significant capital expenditure. 
It could process only Iranian light type crude, imported mostly from Iran and limited amounts from Saudi Arabia. Any other crude oil from other origins are yet not acceptable at the Sapugaskanda refinery. What's clearly emerging now is modernising the refinery is an absolute necessity to cater to rising demand. 
A decade ago, the larger part of fuel oil, the entirety of kerosene, approximately 40 percent of diesel and 66 percent of petrol were supplied by the refinery. Added to refinery capacity constraints another major blow is the new US sanction against Sri Lanka's key source of supply Iran, this situation is likely to worsen Sri Lanka's financial burden.
Meanwhile, the second phase of the Norochcholai power plant fuelled by coal power and the Uma Oya along with the Upper Kotmale is likely to enhance capacity.
The Coal power plant in Trincomalee is expected to join the National Grid by 2016.Increasing demand with the growing economic conditions, poses a dilemma to the authorities. According to Dr Samaratunga in view of the increasing challenges, the only way out is to evaluate necessities of incorporating new technology to the refinery process to circumvent issues of a similar nature in the future. 
In the mid seventies, the then government took a bold step in reducing the Mahaweli project to five years from the originally planned 25 years and that delivered substantial economic benefits. That apart an interest free grant too was obtained from the former UK Prime Minister, Margaret Thatcher to build the Victoria dam. Perhaps a move of that nature may be needed to enhance the depleted refinery.The Government is also pursuing renewable energy sources and a solar energy project in Hambantota is timely action.
Given the potential benefits of importing crude and delivering refined petrol through an upgraded refinery could deliver significant economic benefits that could relieve the debt ridden CEB and CPC that are heavily dependent on tax payers contributions. 
The Government is also pursuing oil exploration activities with the licensee Cairn India Limited that owns a block in the Mannar basin.

Reported in Sundayobserver
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...by i3gconsultants@ 10:06:48 on 2012-06-17

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Sector: Hotels and Travels

On-line visa, speedy system to woo tourists


"The on-line visa system is a huge advantage to woo tourists to Sri Lanka, especially from countries such as China which do not allow its citizens to leave the country without an exit permit" said Controller General of the Department of Immigration and Emigration, Chulananda Perera. He said that the new system was successful as a large number of tourists visit the country on the on-line visa system.
The on-line visa system known as the Electronic Travel Authority (ETA) was launched last year by the Department of Immigration and Emigration to issue on-line visas to visitors from 78 countries. "Visiting Sri Lanka is no longer a cumbersome process as travellers could get a Sri Lankan tourist visa within 24 hours", Perera said. Hassle free and speedy travel procedures are vital, if Sri Lanka is to reach its tourist arrival target, tourism industry experts believe.
An ETA could be obtained by applicants themselves, a third party, a registered agent and Sri Lankan Embassies overseas. Those attending seminars, sports events, business delegations and government sponsored functions are exempted from the administrative fee levied for the issuance of visas.
Tourists from the Maldives and Singapore are provided 'visa on arrival' in reciprocation to the same facilities offered to Sri Lankan visitors.
Perera said that the move to link Sri Lanka's Immigration Department data base with Interpol was a timely intervention to strengthen border security and curb illegal immigration and emigration.
The Immigration and Emigration Department teamed up with Interpol, the world's largest international police organisation to launch South Asia's first Integrated Interpol Database Service.
"Information on lost and stolen travel documents and nominal information containing records of international criminals with photographs and finger prints are stored in the system" the Controller General said.
The Department could link with the data base of Interpol and obtain information on all individuals entering and leaving the country. The project to prevent illegal immigration and emigration is being jointly implemented by the Department of Immigration and Emigration and the Sri Lanka Police.

Reported in Sundayobserver
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...by i3gconsultants@ 10:06:38 on 2012-06-17

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Sector: Hotels and Travels

Uncertain, World Bank-funded tourism project finally off the rails


The World Bank is expected next week to finalise a US$18 million agreement with Sri Lanka Tourism for a project on sustainable tourism development, officials said on Thursday. The project was dragging its feet since 2010 since authorities were not too pleased about it. Senior External Affairs Officer Sandya Salgado of the World Bank office in Colombo told the Business Times that there were "deliberative meetings between the bank and the government" that were ongoing.
This comes in the wake of a number of discussions and meetings conducted between the institution and the Tourism Ministry and the Sri Lanka Tourism Development Authority (SLTDA) since 2009.
Ms Salgado declined to comment on the discussions, delays in implemention or the concerns intimated by the World Bank to the government. She said the process was expected to finalized next week. 
Other sources quoted project staff as saying that this project had not found favour with the Minister or the Secretary to the Ministry (Economic Development) due to which staff was demoralized.
Funding is provided through an International Development Association (IDA) credit facility of US$18 million equivalent with a maturity period of 20 years and a grace period of 10 years. The project is aimed at strengthening the institutional framework for the tourism sector to facilitate environmentally and socially sound investments, in particular in eastern Sri Lanka.
Sources said previously World Bank officials had been concerned over the continued delays and lack of adequately qualified personnel to man the team involved in this project from the government. This comes in the wake of the Tourism Authority that possessed the technical capability being sidelined and ministry-appointed personnel replacing the former; however access to senior ministry officials continued to be a stumbling block in the project's progress.
The financing agreement for the project was signed in January 2010 after the pledge was made in 2009. Since then there were several persons assigned by the government to head the project as at least two of the project directors had stepped down, sources said. Due to the delay in obtaining approvals from the ministry and even regarding procurement the government’s disinterest had led to this project to be held back for quite some time, sources observed. World Bank authorities had in fact requested that this project be handed back to the Tourism Authority with the ministry acting as the monitoring agent during progress, sources said. This project involves the World Bank providing technical assistance and funding to all institutions including the Tourism Ministry enabling them to improve their overall efficiency and efficacy.

Reported in Sundaytimes
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...by i3gconsultants@ 10:06:31 on 2012-06-17

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Sector: Bank Finance and Insurance

SL medical transcription to grow in insurance sector


A Sri Lankan Knowledge Process Outsourcing (KPO) company which operates in the medical transcription outsourcing niche by targeting US-based hospitals is expecting more and more of its future business to come in from that country's insurance industry, according to company officials.
Claiming to be part of the "single largest KPO operating locally", medical transcription service MedSource noted that it started operations in February 2008 and currently has 150 employees. And, according to company officials, Vice President (Operations) Brian Lacey and Director (Operations) Elvis Peters, the majority of its current revenues are derived from transcribing voice recordings of medical histories made by doctors.
Further, it has also indicated that the niche in which it operates had now changed significantly due to the availability of voice recognition software, which has resulted in a bigger component of MedSource's work now having to do with editing computer-generated medical transcriptions.
Part of a 500-person KPO group that includes revenue systems management company MediGain, engineering design shop Quantum and insurance claims processor Legacy, MedSource also revealed that, while it took three years to break even, it was now fully profitable and experiencing year-on-year growth in excess of 100%.
It was also anticipated that MedSource would more than double in size within the next one or two years. In fact, it was also indicated that MedSource was currently looking to fill 20 new vacancies and that hiring people with the required English and science skills locally was hard. However, for those that fit the bill, average monthly salaries would be Rs. 33,000, with many employees also presently following education opportunities, due in large part to a flexible work schedule that spanned three shifts of eight hours each.
MedSource officials also signalled that, in terms of the US$25 billion global medical transcription sector, an emerging high growth area in the field was Medical Coding (or Classification), and that MedSource was also benefiting from this trend locally.
This trend pertains to coding and / or classifying terms in medical transcripts into medical codes which simplifies insurance claims processing. And, as such, this was resulting in MedSource being given more work by US-based insurance companies, in addition to its existing customer base of hospitals and their medical institutions.
Reported in Sundaytimes
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...by i3gconsultants@ 10:06:03 on 2012-06-17

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Sector: Hotels and Travels

Centara to open two hotels in Sri Lanka


Jun 16 (eTN) Centara Hotels & Resorts is to open its first two properties in Sri Lanka during the second half of this year named "Centara Passikudah Resort & Spa Sri Lanka" and "Centara Ceysands Resort & Spa." Both of the resort hotels will be operated by Centara under a management contract and will be part of the companys core brand of four-star properties.
Centara Passikudah Resort & Spa Sri Lanka is a 126-room property located next to the beach at Passikudah, renowned for its long stretch of shallow coastline, while Centara Ceysands Resort & Spa, Sri Lanka is located on the Paradise Island peninsula at Bentota, flanked on one side by the Indian Ocean and the other by the Bentota River.

"These two superb hotels mark our debut in Sri Lanka, a market that we feel holds great promise for us," said Thirayuth Chirathivat, Chief Executive Officer of Centara Hotels & Resorts. 
"They are an important stage in our development strategy for the Indian Ocean," added Thirayuth Chirathivat.
Chris Bailey, Senior Vice President for Sales and Marketing at Centara Hotels & Resorts said that the two properties will open in time for this years tourism high season in Sri Lanka.
"This is the perfect opportunity, with two beautiful resort hotels in two very different locations, to achieve a high profile in the market," he said, "Our response from the industry is already a very positive one."
Centara Ceysands Resort & Spa with 166 units is flanked by a river on one side and a pristine beach on the other; the hotel is accessible only by ferry, and all rooms have spectacular views.
Room types include Superior, Deluxe, Deluxe Pool Access, Family Residences, and Suites.
Restaurants include an all-day dining outlet serving Sri Lankan, Asian, and international cuisines and features live cooking stations, while a seafood restaurant and the Ceylon Club will have an emphasis on the Ceylonese tea heritage. The hotel will also operate dinner cruises up and down the river each evening.
Centara Ceysands Resort & Spa will have a Spa Cenvaree with six treatment rooms designed for singles and couples, and a Kids Club.
Centara Passikudah Resort & Spa is located on a long sweeping portion of Passikudah Beach, whose shallow waters are ideal for windsurfing, kayaking, and bathing.
Room types include Superior, Deluxe and Premium Deluxe, Family Residence, and Suites.
Along with the all-day restaurant and an attractive bar lounge, the hotel will feature Spice Market Restaurant and Elements, with interactive cooking stations focusing on freshly prepared Asian, Indian, and Middle-Eastern dishes.The hotel will feature a Spa Cenvaree, a fitness center, and a Kids Club.
Meetings and events will form an integral portion of the market mix featuring Vandeloos Bay Ballroom, which can welcome up to 150 guests at one time and is complemented by state-of-the-art audio visual equipment and professional event specialists to assist guests and delegates in exceeding their expectations.

Reported in Colombopage
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...by indikakm@ 23:06:14 on 2012-06-16

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Sector: Motor

More officials get duty free vehicles .


The government is offering a bonanza to a large number of senior public and provincial council officials who are entitled for duty free vehicles.
The Finance and Planning Ministry in a circular under the signature of Director General P.A. Dias has called for applications from public and PC officials, who had not bought duty free vehicles from 2007 to apply for import permits under a special duty waiver. All public officers entitled to a duty free vehicle are permitted to import one every five years. 
A senior Treasury official said the government spent US$2.6 billion this year to import vehicles for Pradeshiya Sabah Chairmen and provincial councillors. The cabinet had increased the ceiling on vehicle permits for parliamentarians from US$35,000 to 50,000 in 2010. He said public servants are given tax waivers to import a vehicle up to the value of US$25,000 and some 1,000 public and Provincial Council officials will get the opportunity to obtain this facility.  The permission to import vehicles under the new circular will impose an added burden on the economy as the rupee is depreciating rapidly against the dollar at Rs.130.35 yesterday. The official said the country’s exports suffered the biggest fall of 10 per cent in the first quarter of this year when compared with last year while imports grew by four per cent. The foreign reserves are estimated at US$ 5.8 billion as opposed to US$ 7 billion last year


Reported in Dailymirror

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...by i3gconsultants@ 14:06:13 on 2012-06-16

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Sector: Motor

More officials get duty free vehicles .


The government is offering a bonanza to a large number of senior public and provincial council officials who are entitled for duty free vehicles.
The Finance and Planning Ministry in a circular under the signature of Director General P.A. Dias has called for applications from public and PC officials, who had not bought duty free vehicles from 2007 to apply for import permits under a special duty waiver. All public officers entitled to a duty free vehicle are permitted to import one every five years. 
A senior Treasury official said the government spent US$2.6 billion this year to import vehicles for Pradeshiya Sabah Chairmen and provincial councillors. The cabinet had increased the ceiling on vehicle permits for parliamentarians from US$35,000 to 50,000 in 2010. He said public servants are given tax waivers to import a vehicle up to the value of US$25,000 and some 1,000 public and Provincial Council officials will get the opportunity to obtain this facility.  The permission to import vehicles under the new circular will impose an added burden on the economy as the rupee is depreciating rapidly against the dollar at Rs.130.35 yesterday. The official said the country’s exports suffered the biggest fall of 10 per cent in the first quarter of this year when compared with last year while imports grew by four per cent. The foreign reserves are estimated at US$ 5.8 billion as opposed to US$ 7 billion last year


Reported in Dailymirror

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...by i3gconsultants@ 14:06:13 on 2012-06-16

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Sector: Power and Energy

Sri Lanka targeting to slash industrial power use by 10%


Sri Lanka is on a drive to reduce manufacturing costs by slashing industry power consumption. "I am pleased to announce that my ministry has implemented a much needed industry grade energy efficiencies at factory level, using the Public Private Partnership (PPP) model. We are targeting to reduce industrial energy consumption by 10% initially," said Rishad Bathiudeen, Minister of Industry & Commerce of Sri Lanka earlier this week.Minister Bathiudeen was addressing the inaugural event of "Power Sri Lanka International Expo 2012" at Sri Lanka Exhibition & Convention Centre in Colombo on 14 June. The event, which is endorsed as Sri Lanka’s Int’l Exhibition on power generation & transmission, PV power, energy & renewable energy and has strong Indian private sector presence, is a combine of three concurrent events into one- Renewable Energy Solutions, Solar Photo Voltaic Power Generation and Electric Power Equipment & Technology.According to the organisers of the event, the event was a B2B platform for the entire Power & Energy Industry of Sri Lanka including Sri Lankan Industry stakeholders, to see the latest technologies and innovations in the Power Generation and Energy sector thus delivering a networking opportunity.Sri Lanka is one of the three countries where this event is held annually-the other two being Bangladesh and Indonesia. Among the int’l and local firms that took part were LeyPower (Ashok Leyland-gensets), Alpha Thermal Systems (solar hot water solutions), Malco Power (power plant operations), Vikram Solar (high efficiency PV modules), FG Wilson (gen-sets), and Browns (power generation and power systems). Among the institutions was the Central Engineering Consultancy Bureau. The themes include Solar Thermal utilisation, Wind, Hydrogen & Fuel Cell, Biomass, Geothermal, Marine Energy, Carbon Management and Environment preservation.   Addressing the latest World Bank/Bloomberg data on Global Renewable Power, Minister Bathiudeen said: "The Government is in the process of developing several districts that have been devastated by the three decades of war. With these regions coming to national grid, our energy demand has increased. The other reason that this is a timely event since it coincides with this week’s release of latest Global Trends in Renewable Energy Investment data released by the World Bank in association with Bloomberg. Accordingly, global investment in the renewable energy sector increased by 17% to $ 257 Bn which is a six-fold increase in comparison to 2004 investments. This clearly shows the future trend of energy, which is renewable. It’s time for alternative energy" Bathiudeen said.Discussing Sri Lanka’s power sector, Minister Bathiudeen said: "I am given to understand that the Power and Energy Ministry is way ahead of the target of achieving 100 per cent electrification by end of this year.  I commend our Power and Energy Minister Patali Champika Ranawaka for his efforts in this regard."Minister Bathiudeen added: "Sri Lanka has a total installed electricity capacity of about 2,700 mega watts of which 49.5% is Thermal power and 50.5% is hydro power. 5% of FDI received in 2011 went to the power sector. As the country develops, Sri Lankan energy use per capita which stood at 318 kilo grams per person in 1989 too has increased to 449 kilo grams per person by 2009. With the increasing demand, total primary energy requirement is expected to increase to about 15,000 kilo-tons oil equivalent by the year 2020 at an average annual growth rate of about 3%.  These numbers signify that energy use has increased across all sectors in the country including commercial, manufacturing, transportation and domestic. A total of 48000 industrial power connections were active in 2010 and power demand for industries only from Ceylon Electricity Board increased by 14% while Lanka Electricity Company separately reported 10.1% demand growth from industries. Starting December 2011 and with a $ 39500 investment, My Ministry has implemented a much needed industry grade energy efficiencies at factory level, using the Public Private Partnership (PPP) model. We are targeting to reduce industrial energy consumption by 10% initially."


Reported in The Island

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...by i3gconsultants@ 14:06:13 on 2012-06-16

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Sector: Telecommunication

Airtel Lanka customer promotion 'Stay Active and Win'


Bharti Airtel, a leading global telecommunications company with operations in 20 countries across Asia and Africa, today announced the launch of a unique customer promotion 'Stay Active & Win' whereby customers who use their Airtel connections stand a chance to win from a range of prizes such as talk time, cash, motorbikes, gold and a car.
Speaking about the promotion, Suren Goonewardene, CEO - Sri Lanka, Bharti Airtel said: "As our all island coverage strengthens on the back of industry speed test wins, it becomes increasingly apparent that the best communications offering isn't necessarily just about handsets and devices anymore.'Stay Active & Win' is Airtel's tribute to this understanding which rewards our customers for being active on our network. This promotion is our way of saying, thank you - we appreciate your patronage."
Unlike other promotions where customers have to register or purchase talk time to a certain value, under this promotion customers have only to use their Airtel connections daily to be eligible to win any of these prizes.
The promotion further broadens in scope to include Airtel customers who have not used their Airtel connections for some time.
These customers are encouraged to participate in the promotion by reactivating their SIM with a Rs. 55 reactivation fee.Non-Airtel customers are also eligible to participate in the promotion by purchasing a SIM card and remaining active during the promotion period of 2 months.
Prize Pool Offering
During the promotional period which commences on June 8, 2012 and ends on August 7, 2012, every hour of every day a winner will be selected randomly from customers who have made calls the previous day and awarded Rs. 1000 worth of talk time.
Customers also stand a chance to win multiples of the Rs. 1000 talk time, based on the total number of calls made the previous day, up to a maximum of 5 multiples. If that's not enough, one hour of every day will be picked as the 'bumper hour' where the winner who is randomly chosen from customers who had made calls the previous day and awarded talk time of Rs. 15,000.
What's more, a weekly cash prize of Rs. 100,000 will also be on offer to one lucky customer every week for the duration of the promotion.
Airtel customers who stay active during the promotional period also stand a chance to win one of 5 motorbikes on offer. A pool of Rs. 1 million worth of gold is also on offer to 16 lucky Airtel customers during the promotion.
All these fantastic giveaways all culminate in the ultimate prize of a Maruti Suzuki Swift which will be awarded to one lucky customer at the end of the promotion.

Reported in Dailynews
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...by i3gconsultants@ 20:06:43 on 2012-06-14

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Sector: Plantations

The role of standardization with special reference to the tea industry


The present day market is a consumer market. It is unlike that of past years, when the products were manufactured by limited manufacturers having their monopoly, the consumer had to buy or accept whatever was available and above all at dictated terms and prices. Due to economic liberalization, the scenario has all together changed. More and more organizations, in particular the multinational organizations, have come into the market, providing better options for the customers and better value for their money. This has increased the competition in the market. This transformation calls for better quality at competitive prices. To achieve this, manufacturing units have to reconsider their corporate policies placing a major thrust on areas like quality, safety, reliability, cost effectiveness, etc. To meet these factors standardization of the product/process is a most important prerequisite.
Standardization
Standardization is a scientific activity which compels formulation and application of standards for the benefits of all concerned. A well known fact is that Standardization helps in quality, safety, productivity, technology upgradation and overall improvement of quality of the end product. The important benefit of standardization is improvement of the suitability of products and services for intended purposes. In other words, the most important tool for making available the right quality of material is standardization. Standardization and quality depends on each other in several ways.

In fact they are the two sides of the same coin while quality has to be measured against standard, standards can be established effectively only with the experience of manufacturing process in building quality into the product. The outcome of standardization effort is a specification or standard. Therefore, standardization and quality control are effective management tools designed for progress. The different levels of standardization are international, regional, national, association, company and individual. In the course of the last 10 years, there has been a sudden increase in the number of standards and technical regulations. The activity of standardization has recorded a very high growth rate. Today, standardization is linked to the technological and economic growth of a country.

Standards
Standards are useful to individual and business organizations of all types, to governments and other regulatory bodies, to trade the officials, to conformity assessment professionals, to suppliers and customers of products and services in both public and private sectors, and ultimately to people in general in their role as consumers and end users. Standards take care of prevailing practices by stabilizing them at current attainable and acceptable levels and serves as a basis for growth. It defines the optimum level of quality in the interest of overall economy of resource and management.
The Role of SLSI
Sri Lanka Standards Institution (SLSI) being the National Standards body of Sri Lanka is playing a key role in the development of Sri Lanka Standards at national level. For formulating standards, SLSI functions through a structure of technical divisions and relevant Sectoral/Working Group Committees comprising of representatives of various interests such as consumers, regulatory and other government bodies, industry, scientists, technologists, testing organizations and individual experts. Keeping in view the importance of Tea Industry, SLSI has published a number of standards in the area of tea. These standards are in the form of glossary of terms, Code of practice, Specifications and Test Methods.

The National Scenario
Tea is one of the major exports and the main agricultural export product in Sri Lanka. At the national level, the National Technical Advisory Committee on Tea of SLSI is responsible for the standardization activities in the field of tea products. This Committee is constituted of concerned Govt. Departments, Competent Authority, Industry, Trade and Research organizations. The scope of this Committee is to formulate and update Sri Lanka Standards for terminology, methods of testing and sampling, product specifications, code of practices, etc. on tea.
The International Scenario
International Organization for Standardization (ISO) is the premier organization engaged in formulation and propagation of the standards globally. SLSI is a founder member of ISO and actively participates in the development of standards at ISO level. ISO/TC 34/SC 8 - TEA is the technical committee engaged in the standardization activity in the area of tea at international level. SLSI is one of the 16 Participating "P" - members on this technical committee, which has 25 Observing 'O' members. British Standards Institution (BSI) functions as its Secretariat.
This sub committee (SC8) meets once in two years (biannually) in different parts of the world and this year to be held in Sri Lanka. Sri Lanka participates actively in all the activities of SC8. In fact, ISO/TC 34/SC 8 meetings provides an excellent opportunity for the tea industry in the country to understand the various standards being formulated fulfilling the international market requirements. Participating in various stages of the formulation of international standards, the interests of the country can best be reflected in international standards. It is also the continuous endeavour of SLSI to harmonize national standards with international standards so as to have uniformity in tea industry.
This facilitates international trade. It is evident that considerable standardization work has been done in the field of the tea industry at national as well as international level. In SLSI, apart from covering new areas, the National Technical Committee on Tea is constantly, engaged in a regular review of the existing standards, so that they are constantly, updated keeping pace with the latest technological developments in the field (such as value added products). This makes the national tea standards a dynamic entity which is always ready to meet the new technological frontiers and assimilate the new emerging trends so that the practices and processes emerging out of new developments are successfully adopted in our country. Continuous review and harmonization with International Standards, incorporation of new technologies in national tea standards make them a vital link in the process of development in the industry.
SAARC Regional Standards
South Asian Association for Regional Cooperation (SAARC) was formally launched in 1985. The countries of South Asia have common values rooted in their social, ethnic, cultural and historical traditions. However, the South Asian Region is a huge market and has substantial human and natural resources. The intra-regional trade in SAARC is about four percent of its total international trade. There is certainly greater potential to increase the share of intra-regional trade. The South Asian region needs to adopt a strategy of regional economic integration so that the region's full potential can be harnessed and people benefit from the development of the region.
To promote intra-SAARC trade through reduction of technical barriers to trade, a sub-group on Standards and Quality working under the auspices of the SAARC Committee on Economic Cooperation has decided to set up the SAARC Standards Coordination Board (SSCB) comprising a member from each of the National Standards body of the Member States, as a precursor to the setting up of the SAARC Regional Standards Body. Later SAARC Standards Coordination Board noted that SAARC was the only region which did not have any Regional Standards Organization and recommended the setting up of the SAARC Regional Standards Body, to be formally named as the South Asian Regional Standards Organization (SARSO). SARSO is to be located in Dhaka, Bangladesh.
There are several objectives and functions of SARSO once established and one of these is to promote and undertake harmonization of national standards of the SAARC Member States with a view to removing the technical barriers to trade and facilitate the flow of goods and services in the region. To start harmonization activity, SSCB has identified a few products for harmonization in the region and one such product is Black Tea.
Harmonized SAARC standards would provide a barrier free intra-SAARC trade environment. By taking a unified stand at the international standards setting organizations, SAARC nations can project their views emphatically in the development of those International Standards that are related to the goods and services being traded or having potential for trade in the Region. As Sri Lanka is a member state of SAARC, SLSI, representing Sri Lanka, is actively involved in these standardization activities.
Conclusion
It can thus be concluded that the need for standardization and quality control in the field of tea industry is much more intense and necessary for the survival, growth and competitiveness in the world market. SLSI is playing a predominant role by placing the tea industry and trade including exports on a sound scientific basis by harmonizing national standards with regional and international standards. Therefore the role of standards can thus, not be undermined by any circumstances as they impact the economic growth of the country. This renewed status of standards is here to stray.
Reported in Dailynews


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...by i3gconsultants@ 20:06:19 on 2012-06-14

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Sector: Hotels and Travels

Vietnam travel agents meet Lankan partners


Three Vietnam's leading travel agents Fiditour , Hanoi Toserco, and Saigontourist, met with over 100 Sri Lankan partners, to promote tourism at the Hilton Colombo Residencies in Colombo on Friday.
Speaking at the event Vietnam ambassador to Sri Lanka, Ton Sinh Thanh, said the event was aimed to give local travel Vietnam's agents gain a better understanding of Vietnam's people, land, history, culture, landscape and cuisine.The ambassador hoped to organize a FAM tour of 10 days for 15 Sri Lankan tourism and media representatives in August to further promote tourism and cooperation between the two countries. Travel Agents Association of Sri Lanka (AITA) Vice Chairman U.Silva said Sri Lankans are showing increased interest in Vietnam as a holiday destination and called on local travel agents and media companies to exploit the potential market.
He said this was a good chance for Vietnam to promote tourism and to meet with partners to explore the potential tourism market in Sri Lanka.
Tour agent Travel shared their experience about a recent tour to Vietnam with the participants.Also the embassy staff educated the participants about the visa procedure and how to apply for different types of visa to enter Vietnam.

Reported in Dailynews
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...by i3gconsultants@ 20:06:25 on 2012-06-14

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Sector: Motor

Vehicle importers honk for fair deal


Request meeting with Treasury Secy; say industry in vicious cycle; want relief from regulations
Alarm bells are ringing for Sri Lanka’s vehicle importers after numbers plummeted by 20.8 per cent in April, motivating the industry to demand talks with the Government, an industry official said yesterday.
Ceylon Motor Traders Association Chairman Thilak Karunaratne told the Daily FT that the industry was worried over the increasingly lower demand driven by high taxes, interest rates, expenses and a credit crunch.
The association has requested a meeting to discuss the issues with Treasury Secretary Dr. P.B. Jayasundera but an appointment given for 7 June had been subsequently cancelled with no new date given.
However, Karunaratne has asked for another appointment to discuss industry challenges, even though it is yet to be granted.    
The Central Bank in its April External Performance report noted: “Expenditure on consumer goods imports declined by 12.9 per cent in April 2012, reflecting a decline in expenditure on most food and non-food consumer good categories. With respect to imports of non-food consumer goods, expenditure on personal motor vehicle imports declined by 20.8 per cent in April 2012 to US$ 56 million.”
Listing out industry woes, Karunaratne pointed out that the industry is “affected from all corners” due to “ad hoc” tax increases by the Government that came into force in April. He recalled that even smaller cars were slapped with heavy tax increases that put them beyond the reach of average income earners and depleted the market severely.
“A 200 per cent tax increase is too high for most vehicles,” he said, adding that the depreciation of the rupee was pushing customers to be wary. According to Reuters, since February the rupee has dropped 13.6 per cent, resulting in car prices becoming unreachable.
Mandatory Government regulation for all vehicle importers to use the Hambantota Port has also caused waves with Karunaratne stating that each vehicle costs around Rs. 40,000 extra.
“Importers cannot absorb all these costs, but if they don’t, then there will be no buyers. Many of our members try to take on around 50% of the additional costs from taxes and other expenses, but it is impossible not to pass on at least some of it to buyers.”
High interest rates of around 20% are also not helping matters, charged Karunaratne, emphasising that the Government was also discouraging consumption-based loans, resulting in a credit crunch. Topping all these issues is the recent move to establish a licensing system for vehicle importers.
It was reported that a scheme has been proposed to issue licenses for the purpose of vehicle imports ranging from a Rs. 5 million fee for small scale importers of reconditioned vehicles and Rs. 10 million for large-scale firms as well as Rs. 25 million for those who import brand new cars.
Even though the Finance Ministry has insisted that this will promote standards, Karunaratne termed it “impossible” to pay the rates proposed by the Government. “This is a vicious cycle that is leaving the industry stagnant. People are not ordering cars and it will take a long time to recover.”

Reported in Dailyft
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...by i3gconsultants@ 09:06:07 on 2012-06-13

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Sector: Hotels and Travels

Sri Lanka's May tourist arrivals rise 17.5 pct yr/yr


Sri Lanka's tourist arrivals in May jumped 17.5 percent from a year earlier, government data showed on Tuesday. The number of visitors has risen every month since a 25-year civil war ended in May 2009.	
 The following table shows tourist arrivals in Sri Lanka:    
                   2012           2011          Change      
                                                (in %)      
   May            57,506         48,943          17.5       
   Jan-May       387,622        327,902          18.2       
   Jan-Dec                      855,975                     
 The island nation's tourism board expects over one million
tourists in 2012 with revenue of more than $1 billion, 20
percent higher than last year's $830.3 million.
 Revenue from tourism has risen 26 percent to $340 million in
the first four months of 2012 from the same period last year.
 Tourism is one of the main foreign exchange earners for  
Sri Lanka's $59 billion economy, along with remittances from
expatriate workers, garments and tea.
Reported in Reuters
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...by i3gconsultants@ 22:06:46 on 2012-06-12

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Sector: Information Technology

Pyxle brings results for Palagama Beach Resort


Pyxle, a top ranking Software and Web Development Company based in Sri Lanka proved yet again their competency in Internet Marketing solutions when their Search Engine Optimization (SEO) project for Palagama Beach Resort, resulted in a traffic increase of 650% for the Hotel within just 5-6 months of optimization. This success was far above the desired objectives and targeted deadlines of the project.


 


Enthusiastic about this online expansion John Balmond – owner of Palagama Beach Resort said, “Our primary desire when contracting Pyxle was to get to the top in the Google web searches. The support we got from Pyxle to achieve this was amazing.  We are very pleased with the web design, the development and search engine optimization solutions proposed and implemented by Pyxle which has significantly improved the web presence of Palagama Beach Resort”.


 


“A traffic increase of 650% in just 6 months after the Pyxle optimization surpassed all our expectations. I would like to thank the Pyxle team for their tremendous efforts to put us on the top of the targeted searches. They are very good in their optimization approaches and maintain the look and feel of the website without altering it,” Balmond concluded.


 


The Pyxle Internet Marketing solutions include Search Engine Optimization and marketing, Social Media Optimization (SMO), Online PR together with Online Research and Analytical Performance Reporting. Some of the key benefits enjoyed by the hotel through Pyxle’s comprehensive internet marketing solutions are an increase in online inquiries and sales, a higher hit rate from target countries, a boost in brand awareness, and above all a good return on investment. According to Balmond, Pyxle has been quite transparent about the technical effort behind the solutions they offer. Together with optimizing the Palagama Resort website, Pyxle has been meticulously implementing other strategies, such as Social Media Engagement, that would improve the online popularity of this award winning boutique resort. Presantha Jayamaha Managing Director of Pyxle commenting on this latest achievement said, “We are very happy about reaching the desired results much early than the expected time frame. Small boutique hotels are among the most sought after places in Sri Lanka. It is remarkable to note that the SEO work done has given Palagama the edge over other major hotels in the locality.  Palagama Beach Resort obtained the top slot for all the targeted keywords and we are now working on securing these positions in the long run”. Speaking further Presantha Jayamaha said, “This exercise just goes to show the effectiveness of Internet Marketing as in this example; a small hotel in Sri Lanka can attract and convince a prospective traveller in Europe to visit its hotel simply by marketing itself correctly online”.  Internet marketing is a broader mix of online marketing components, such as SEO, Social Media and Pay-Per-Click. It is essentially using the Internet to communicate a company's message about itself, its products, or its services online. It is one of the most economical and far reaching mediums of communication between a company and its clients. Established in 2003, Pyxle is a regional leader in internet and web based application development. The company focuses on providing its clients the opportunity to harness the true power and potential of the internet. It serves a global clientele of over 400 industry leaders with solutions in website development, software applications, internet marketing and business intelligence.  Visit www.pyxle.net for more details.


Reported in Ceylontoday

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...by i3gconsultants@ 18:06:57 on 2012-06-11

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Sector: Motor

Micro Cars to quadruple production by end 2012


One of Sri Lanka’s leading innovators - Dr. Lawrence Perera is hopeful that his brainchild- Micro Cars would be able to quadruple production  with the installation of an Automated Assembly Line.  “Up till now we have sold over 1,500 Micro Panda cars. There’s a bit of a delay not because of the manufacturing but due to tremendous demand. Some buyers even have to wait nearly three to four months as the demand is overwhelming,” explained Dr. Perera.“But that will all change once we get down an Automated Line for manufacturing, which is the first of its kind in Sri Lanka. With this in place we can manufacture nearly 1,200 vehicles a month. For the time being we are making preparations of setting up the plant in our own factory premises in Polgahawela. We have already ordered the Automated Assembly Line and once it is installed and we have finished testing plus training our staff, we would be able to match the demand.  Our target is to start by August,” he added.  “Our plan is to export at least 200 to 300 units a month, once we have this in place. We have already started exporting to Nepal, and we are negotiating with Pakistan and Bangladesh as well. We are looking at India in the near future.” Asked whether Micro would face tough competition from Indian local manufacturers, Dr. Perera said he was quite hopeful.  “We have to be unique and must have a niche market. India is a difficult market that’s why we have looked at it last out of all markets. But still there is a chance I strongly believe,” he said.   “Right now we are in a very good position. If you look back at the time we started, we are proud to say that we have now gone global and are exporting cars to other countries now.  So that’s where we stand now.” However he admitted that Sri Lanka was a late entrant to the automobile market.   “We are far behind, becau se we started quite late.  If you look at the time when late Upali Wijewardene started in early 70s, Sri Lanka was far ahead because we started at the right time. Although we did not go into designing a car but at least we were assembling vehicles here. To attract Fiat into Sri Lanka, was a great achievement for our country.”   “Also he was able to bring in Mazda. Attracting a Japanese company then too was a great achievement because none of them would be interested in Sri Lanka today as they already have a presence in China and in India.” “At that time we missed out a great opportunity. We had the right people who started. But unfortunately the then government did not support the automobile industry. However, President Mahinda Rajapaksa and even Treasury Secretary Dr. P B Jayasundara have given much-needed attention to local manufacturing.” Thanks to the industry-friendly policy of the current government towards local manufacturers Sri Lanka was headed in the right direction, he added. “At that time, had the government of Sri Lanka given him the right support I’m sure we would have been far ahead of not only India but may be even South Korea. Today South Korea is dominating the vehicle market and even China too is becoming a strong player.  If you take these countries, and even countries such as Germany, the vehicle manufacturing industry contributes significantly towards the GDP (Gross Domestic Production) of that respective country. No doubt, we have the talent but we must have clear-cut policies as well. If that is available I’m sure we can go quite far.”  Asked as to whether incentives given for local manufacturers were sufficient, Dr. Perera answered in the affirmative.   “Benefits given are adequate but our foremost concern is the consistency of policy. If that is guaranteed we can invest a lot more. I know a lot of engineers who are working for top automobile firms overseas and are willing come here to work.  If we can attract this talent back into the  country we can certainly develop our automobile industry.”  “We are just a twelve year old company since the designing of the first car in 1999. We have come a long way. Our company is very young but during this short period of time we have achieved a lot thanks to the farsighted, prudent policy of the government to encourage local industries.  With that strength we are able to compete with global brands. We are already competing with world brands, from Japanese to Korean to Indian. Competition is good because all players tend to keep their standards high then. I don’t see competition as a threat but as a challenge.” “I’m an optimist and a strong positive thinker and not a pessimistic at all. I am never a negative thinker. If I was not optimistic I wouldn’t be here today. Nobody was thinking of car designing and manufacturing in Sri Lanka. When people heard that time they thought I was stupid and crazy. But that has become a reality today.  That gave me the edge of   attracting automobile manufactures from all over the world,” he added.  


Reported in Ceylontoday

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...by i3gconsultants@ 18:06:57 on 2012-06-11

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Sector: Hotels and Travels

Sri Lanka, Vietnam in move to boost tourism


Sri Lanka and Vietnam are planning to boost tourism between the two countries following a visit by Vietnamese travel firms to Colombo which will be followed by a familiarization tour by Sri Lankan travel agents, officials said. "We would like to promote two-way flows tourism, both to Sri Lanka and to Vietnam," Hanoi's envoy to Colombo Ton Sinh Thanh told a gathering of travel agents. "We know that Sri Lanka is a very beautiful country. It is worth for Vietnamese tourists to come here."  SaigonTourist, a large leisure services company based in South Vietnam, Hanoi Toserco, a state-run travel service company and FidiTour visited Colombo to meet local tour operators and strike partnerships. "Vietnam's economy is developing fast and more and more Vietnamese will find new destinations," ambassador Thanh said. "We hope that you can make use of the presence of leading Vietnamese tour operators here to bring the Vietnamese tourists."  Udaya Silva, Sri Lanka's IATA travel agents association said he expected mutually beneficial partnerships to develop that will allow peoples of both countries increase visits. A familiarization tour for Sri Lankan travel agents and writers was planned for August. Ambassador Thanh said Vietnam had 10 UNESCO recognized world heritages, a 4,000 year old history that has left the country with 3,000 national heritage sites including war memorials, ancient temples and 125 beaches. It also had a rich and varied culture ranging from the people of Sapa in North Vietnam highlands which became snowbound in winter to the hot Mekong Delta in South Vietnam where the weather was like Sri Lanka and people lived in floating villages. The country also had a wide variety of food and drink. People could travel by aircraft, train, and car or even rent a motorcycle. Since Vietnam started to open up in 1986 under its free market 'Doi Moi' or 'renewal' program the tourism industry has boomed. The country of 80 million people now had 13,000 hotels with 265,000 rooms. Foreign investment is flooding into the sector. Sri Lanka's Jetwing group also had a joint venture there. By 2015 Vietnam expected to have 390,000 rooms and 900,000 rooms by 2010, Thanh said. Last year Vietnam, which is part of the ASEAN visa free travel area, welcomed 6.0 million tourists. Up to May 2012 Vietnam has received 2.9 million tourists. By 2020 the country was expecting to receive 20 million tourists. "Tourists can go to Vietnam anytime of the year," Thanh said. "In the South, it is the same as Sri Lanka we have wet and dry seasons. But the north has four seasons; if tourists from Sri Lanka want to enjoy cool weather they can go in the winter." "We have already brought Vietnam official delegations to Sri Lanka," said Quach Thi My Hoa from Hanoi Toserco, a state-run firm started in 1988.  "Our main outbound markets are Europe, North East Asia, Korea and Japan. "But after we came here we are very interested in the Sri Lankan market because the attractions and hotels are very good. The food here is also compatible for the Vietnamese people." Huyn Cong Han, from SaigonTourist Travel Services said Ha Long Bay, a karst mountain formation emerging from the sea was among the most popular destinations, where tourists could spend the night on a junk and visit a cave. In Danang in Central Vietnam Hoi An and Hue ancient cities, which were world heritage sites could be visited. "I know Sri Lanka has a lot of beaches but you can also try Vietnamese beaches and see the difference," Han said.


Reported in LBO

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...by i3gconsultants@ 16:06:44 on 2012-06-11

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Sector: Bank Finance and Insurance

Foreign insurers keen to set operations in Sri Lanka


More foreign insurance firms are considering investing in Sri Lanka, according to Insurance Board of Sri Lanka (IBSL) officials. “There’re a few inquires by foreign insurance companies and we’re currently finalising licensing for one firm," an IBSL official told the Business Times. In March this year, Arab Orient Insurance owned by the Al-Futtaim Group launched Orient Insurance in Sri Lanka. Former Eagle Insurance was taken over by UK-based Aviva in an alliance with local NDB Bank.The official said that firms are interested in getting into the general insurance sector, with insurance classes of motor, marine, property, liability, medical and all other classes coming within the general insurance classification.Meanwhile the IBSL’s annual report for 2011 said that the overall Gross Written Premium (GWP) income for Long Term Insurance and General Insurance businesses was Rs. 78,512 million compared with the previous year's amount of Rs. 66,253 million, up 18.5% growth."The General Insurance Business has demonstrated growth in overall GWP income during 2011 when compared to the year 2010," it said. Commenting on this, the official said that the Long Term Insurance Business has shown a growth in overall GWP income during 2011 when compared to 2010, but it has room for improvement. The overall Gross Written Premium Income of General Insurance Business amounted to Rs. 43.3 billion reflecting a growth rate of 23.45% (2010 – Rs. 35.1 billion) while the overall Gross Written Premium Income of Long Term Insurance Business amounted to Rs. 35.2 billion during the last year reflecting a growth rate of 12.93% (2010 – Rs. 31.1 billion). Total assets of the insurance companies have increased to Rs. 265.4 billion at the end of 2011, against Rs. 222 billion earlier, the report said. It said some 46 insurance broking companies were registered with the IBSL mainly concentrating on the General Insurance Business.


Reported in Sundaytimes

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...by i3gconsultants@ 15:06:16 on 2012-06-10

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Sector: Plantations

The Queen and Pure Ceylon Tea


What better promotion of the world famous beverage – Pure Ceylon Tea – than Elizabeth Alexandra Mary better known as Queen Elizabeth II from Britain, the nation that gave Sri Lanka a legacy and a brand that is largely responsible for its economic success over many decades.At the Queen’s jubilee celebrations in London last week, also attended by President Mahinda Rajapaksa, a special jubilee lunch at the Westminster hall drew some 700 guests. On the course-meal menu were dishes like ‘Marinated Uist Island Salmon with Lyme’, ‘Sancerre Sauvignon Blanc, Bué Loire Valley’, ‘Saddle of Welsh Cambrian Mountain Lamb with Braised Shoulder of Lamb’ and ‘Grilled Isle of Wight Asparagus, Jersey Royal’ followed by a ‘Symphony of Dessert’ This was accompanied by ‘Ceylon Tea’, ‘Fairtrade Coffee’ and ‘Petit Fours’. The tea came from Pedro Tea plantation in Nuwara Eliya where a Ceylon Tea bush was planted by the Duke of Edinburgh (Prince Phillip) during the Queen’s state visit to Sri Lanka (then Ceylon) in 1954, two years after she ascended the throne, according to details contained in the invitation. The use of Pure Ceylon Tea for such an important occasion comes at a time when a debate is raging in Colombo where a group of exporters are pushing for more multi-origin tea exports as against the Pure Ceylon, single-origin, Tea that the country has been famous for, for many decades ever since colonial British rulers shifted from coffee growing, after it was destroyed by a blight, to tea. Sri Lanka (formerly Ceylon) has been synonymous with Ceylon Tea which is also responsible for the growth of tourism and Britain being the country’s main source market until India grabbed that position a few years back. Furthermore tea bungalow tourism among the country’s lush, tea-carpeted hills has become a big hit with foreign travellers, including non-Brits.


Reported in Sundaytimes

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...by i3gconsultants@ 15:06:16 on 2012-06-10

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Sector: Manufacturing

Sri Lanka industrialists forging ahead amid uncertainty


Sri Lanka's see sawing policy ranging from labour, exchange rate, taxation and interest rates are challenging manufacturers, who are also finding ways to remain competitive in the export market, officials said."We need policy consistency from the government," Sunil Wijesinha, chairman of Dankotuwa Porcelain, a tableware maker said, referring to a sharp drop in the exchange rate, higher interest rates that has chipped away earnings last year. Sri Lanka rupee fell from late 2011, with the sharpest drop in March from 110 to 130 rupees, after the Central Bank started to sterilise foreign exchange sales to prevent interest rates going up.

Policy Contradiction To keep an exchange rate fixed, interest rates have to be allowed to float. Such a monetary arrangement, where monetary and exchange rate policy is complementary, is known as a hard peg or currency board. Sterilising foreign exchange sales with freshly printed money is also a 'stimulus', boosting domestic demand and bank credit to an unsustainable level which then spills over to the balance of payments via imports. To correct the problem coming from contradictory monetary and exchange rate policies, high interest rates or a steep depreciation or both is needed. "In the early 2000s, when we were importing machinery, we knew where the exchange rate was heading broadly, what the government’s direction was on ceramics, energy and so forth," Wijesinha told the LBR-LBO CEO Forum, a gathering of senior executives in Colombo on Thursday. "Now we don't know. It's very haphazard." No monetary authority which has powers to sterilise foreign exchange sales, or engages in open market operations to target an interest rate can defend an exchange rate. Wijesinha said his company, was unable to take advantage of the recent weak rupee, as it was saddled with dollar debts, borrowed at high rates months earlier. Many industries borrowed in dollars, lulled into a false sense of security, unaware that a central bank that tries to control both the interest rates and exchange rate, can do neither in practice, as East Asia and Latim America has learned to their cost. The phenomenon is identified by economists as 'liability dollarisation' and is found in countries where a central bank improves its monetary policy after a period chronic inflation and currency depreciation. When the currency depreciates steadily for a long time 'deposit dollarisation' occurs.

Economic Nationalism Wijesinghe said taxes on foreign ceramic imports were raised in the November budget, but then lowered 10-days later, which showed a lack of clear policy direction. "So I am asking, is manufacturing being encouraged or imports being encouraged?," he queried. Pulling back from a promise of nationalist protectionism to give freedom to ordinary citizens is somewhat unusual in Sri Lanka. Critics say that policy in Sri Lanka has tended to err on the side of undermining economic freedoms, rule of law, justice and promoting nationalism - economic and otherwise - since gaining self-determination from the British. In recent years, protectionist industrial oligarchs have scored several successes in curbing the freedoms of ordinary citizens, managing to scuttle an entire free trade deal in at least one case. Former banker Moksevi Prelis, commented that a topsy-turvy policy indirection continues to prevail, despite government intentions to keep growth high and unemployment low. Wijesingha, who also specialises in productivity improvements and labour management, said a number of workers now looked for easy jobs, with easy money, that did not require them to get their hands dirty. "The 3Ds are no more, the dirty, difficult and dangerous jobs no one wants. Today more female labour prefers to work in Cargills Food City (a supermarket chain) than factories," he said. "Their social life is outside the factory, 20 years ago it was within the factory." Productivity Protectionism which gives rents to some industries in the economy can result in wages being bid up with no improvements in productivity and an import duty becomes a tax on exports (Lerner theorem). Protected industries can also bid up interest rates and raw material prices, hurting exporters, especially if imports of such material are not free. Countries like Vietnam, which have freed trade rapidly, have become large exporters, though imports are also growing fast, resulting in a virtuous cycle of higher living standards. Sanjay Tiwari, who heads the Indian-run Piramal Glass Plc, said rigid labour laws in addition to making termination difficult also made it more difficult to devise productivity linked wages when dealing with trade unions. "The big issue here is labour reforms, people are not very receptive with productivity linked raises," said Tiwari. "We have JVP unions (linked to the Marxist-Nationalist JVP political party). We give staff transport, food and other benefits. But it took awhile to implement productivity based wages," he said. He said Sri Lanka also had a lot of public holidays. Productivity linked wages, can result in workers getting better pay. Sri Lanka recently raised fuel prices to mitigate losses incurred by state-run Ceylon Electricity Board. DSI chief Kulatunga Rajapakse said his group of companies, which largely engages in footwear was forced to look at biomass energy to offset electricity costs. Rajapakse said though local sales was healthy, his group is forced to look at export to get the economy’s of scale to produce. "For this, we need to know, what exactly the government plans to do, wants us to do. You need industries to survive in an emerging economy. We are not asking for protectionism,” he said.

Footware is already a protected industry.

Dhananjaya Rajapaksha, from Brandix, an apparel exporter, urged the state to allow flexible working hours, which can also allow employees to earn more. Apparel is Sri Lanka's most successful export and enjoys no protection. "Many people do more than one job today. Because factories are governed by the 60 hour work rule," Brandix's Rajapaksha said. "Even if a worker is willing to work, he can’t work, so he goes next door and does sub-contract. "I must also caution, that extending the working hours can be abused. It has to be carefully thought through," he said.

 

Reported in LBO
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...by i3gconsultants@ 15:06:15 on 2012-06-10

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Sector: Hotels and Travels

Sri Lanka tourism urges Europeans to ignore bad media reports


Sri Lanka’s tourism chief is urging European businessmen to ignore negative media reports in their home countries that highlight the island's human rights record and may lose them investment opportunities.The Indian Ocean Island is experiencing a boom in tourists and leisure industry related-developments, three-years after government forces ended the decades long conflict with ethnic Tami Tiger separatists. Many international chains have put down cash to build hotels and resorts across the tropical island, while the government sets about building infrastructure to support the tourism boom. Nalaka Godahewa, who heads Sri Lanka's Tourism Development Authority said while European businessmen pass-up an opportunity to invest in Sri Lanka, Chinese and Indian investors have moved in to fill the void. "Ours is a virgin market. Unfortunately what’s happening is the Europeans are holding back," Godahewa was quoted in an interview with a British newspaper. "They’re listening to all these media stories talking about a problem in Sri Lanka Human Rights Western governments have often been critical of Sri Lanka human rights record, particularly the way the island handled the final months of its ethnic conflict. International human rights groups also accused Sri Lanka’s military of allegedly committing war crimes during the final months of the war that ended in May 2009. In March the UN Human Rights Council moved a resolution against Sri Lanka over its no-holds-barred military offensive. Rights groups estimate that tens of thousands civilians also died in the final offensive, but Sri Lanka maintains its troops did not kill civilians. London-based Amnesty International has accused the government of abuses including a campaign to intimidate peaceful critics since the end of the war, while minority Tamils say they face discrimination and abuse.

Bad press Sri Lanka has repeatedly dismissed this criticism, and Godahewa says European investors should also ignore them. "By the time the European investors come, it will be too late. So my message is don’t listen to these media stories, come and see for yourself and grab the opportunity now," he said. International hotel chains like Hong Kong-based Shangri-La, the Sheraton and Four Seasons have signed up to develop luxury properties in Sri Lanka. In 2010, Sri Lanka had some 22,000 hotel beds, enough to accommodate about 900,000 tourists. By 2015, Sri Lanka plans to add 45,000 rooms, according to tourist board figures. "There are other requirements, things like theme parks, racecourses, casinos, yachts, marinas, and light aircrafts. There are so many things that are not there yet and can be built in the next three to four years." Since the war ended in 2009, Sri Lanka has forecasted a five-fold increase of 2.5 million foreign visitors by 2016, who will generate some 2.75 billion dollars in revenues. "Tourism is most directly affected by international perceptions, and tourism is a key economic driver for the country," Godahewa said.

New experience While English, a language inherited during colonial times, is widely spoken throughout the island, the tourist board is encouraging people to learn Chinese. "We are also promoting the Chinese language, as by 2035 China will be the largest economy in the world." Godahewa said tourism promotions are now centeredaround “eight experiences within eight days." "There are eight types of tourism products that we promote: business, heritage, wildlife, yoga and religious tourism, festivals, sports and adventure, scenic beauty, and the eighth is our essence, the feeling of being in Sri Lanka, our customs, costumes, dancers, music, and the smile." Historically, Europe, led by Germany and the UK, have been Sri Lanka’s strongest tourism market. But the number of holidaymakers from those destinations slipped during the war, though no tourist was hurt. Sri Lanka, has since turned to emerging markets like India, China, Russia and the Middle East to fill empty hotel rooms. "We are a primarily European driven market ….. The UK is definitely a key market, and remains our second biggest market after India," Godahewa added.

 

Reported in LBO
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...by i3gconsultants@ 15:06:15 on 2012-06-10

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Sector: Services

Shipping giants happy over MRMRP success



Picture shows the first largest Ro - Ro transshipment consignment un loaded at the Magam Ruhunupura MahindaRajapaksa Port by M.V.ASIAN SUN
Inquiries are flowing into seeking increased and continued opportunities to carry out Ro-Ro operations at Magam Ruhunupura Mahinda Rajapaksa Port following the success of the first ever Ro-Ro consignments accomplished on June 6at the brand new port.
M.V.FRISIA with an LOA of 176m and a capacity of 3721 units belonged to K Line Ltd; and ABC Shipping (Pvt) Ltd; as the local agents was the first to call at MRMRP with 15 units as a local Ro-Ro consignment. The vessel was made to leave the port within few hours of the same day following successful Ro-Ro operations. She was followed by M.V. ASIAN SUN with the first largest Ro-Ro transshipment consignment at the new port. The vessel registered in Panamawith an LOA of 184m and a capacity of 4200 units, belonged to Hyundai Glovis and Aitken Spence Shipping as the local agents brought nearly 1000 vehicles at MRMRP to be transshipped to Algeria. The efficient operations conducted at the port in time enabled easy maneuvering and the total unloading was accomplished within the same day enabling the vessel to leave MRMRP early Thursday 07th June 2012.
A number of representatives from renowned Ro - Ro shipping lines and their local agents keenly interested to witness the success of the commencement of Ro-Ro operations at MRMRP were seen present at the new port to have a first hand sight of the eligibility of MRMRP to function as an efficient and dedicated facility to manure and operate Ro-Ro vessels in its transshipment activities.They also stated their consent that the new initiative would exp ress Magam Ruhunupura Mahind a Rajapaksa Port as a much reliable and safer facility to handle Ro-Ro vessels and their operations in the entire region. Dr.Priyath B. Wickrama - Chairman of Sri Lanka Ports Authority (SLPA) expressed his extreme confidence over the success of the first ever Ro-Ro operations at MRMRP, stating that with the largest ever infrastructure projects booming in the southern area, no force could stop the region becoming the industrial capital of Sri Lanka.
Deputy Minister of Port and Highways - Rohitha Abegunawardhane, Hambantota District Parliamentarian - MP Hon. Namal Rajapaksa, Secretary of the Ministry of Ports and Highways Ranjith Pemasiri, Managing Director of SLPA - Capt.Nihal Keppetipola, Executive Director of SLPA, and several distinguished personalities were present at the commencement of Ro-Ro operations at the Magam Ruhunupura Mahinda Rajapaksa Port in Hambantota.


Reported in Dailymirror

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...by i3gconsultants@ 12:06:35 on 2012-06-09

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Sector: Telecommunication

Sri Lanka telecom subscriber growth in single digits


Sri Lanka's mobile subscribers grew in single digits in the first quarter of 2012 from a year earlier and wireless fixed access users dropped from a quarter earlier, two years after telephones in use first exceeded the population.Mobile subscribers grew 6.4 percent to 18.86 million in the first quarter of 2012, in country of 20 million people. In the last quarter of 2010, Sri Lanka's teledensity, or telephones per 100 people rose to 100.7.Mobile subscribers grew in double digits up to the third quarter of 2011..The mobile market is shared between five operators, Malaysia's Axiata, UAE's Etisalat, Sri Lanka Telecom Mobitel which is part owned by Malaysia's UT group, India's Airtel and Hutchison Telecom.

Fixed access wireless users grew 0.6 percent to 2.65 million rupees in the first quarter from a year earlier but dropped from 2.66 million in the last quarter of 2012.Sri Lanka's wireline users, who are customers of Sri Lanka Telecom, grew 5.5 percent to 958,038 by the end of the first quarter.Wireline use picked up after Sri Lanka Telecom started to promote broadband.

Reported in LBO

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...by i3gconsultants@ 13:06:50 on 2012-06-08

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Sector: Motor

Sri Lanka car registrations fall in IQ


Sri Lanka's motor car registrations fell 16.1 percent in the first quarter of 2012 to 12,496, with a steeper 23.3 percent fall to 4,246 in the month of March, official data show.Interest rates on leases, which are used to buy cars, had gone up steadily since the last quarter of 2011 and the rupee also fell steeply in March, pressured by earlier sterilized sales of foreign exchange by the central bank.The slowdown in car registrations came ahead of a hike in vehicle taxes by the finance ministry.On March 31, the finance ministry raised taxes on most vehicles, a standard Sri Lankan knee-jerk reaction to balance of payments crises which are triggered when credit is accommodated and rates manipulated with printed money by the Central Bank.
The most recent balance of payments crisis was partly caused by a sudden surge in credit taken by state energy enterprises to manipulate energy prices from the second quarter of 2011.
The sudden tax hike left many hopeful car owners who had scraped together money to buy a car in great difficulty, in a graphic demonstration of the economic uncertainty that a Sri Lankan citizen suffers in the country.
Sri Lanka's ruling class of elected politicians get tax-free cars, while state workers get tax-slashed cars.In Sri Lanka import taxes are raised through mid night gazette by rulers - literally while the citizenry is sleeping - with no consultation of the victims. Single-owner car importers had appealed to allow them to import at old prices following the tax hike.But Treasury Secretary P B Jayasundera told reporters at a recent press briefing that the appeal could not be granted. In that case, such concessions would also have to be granted to others who imported items like milk powder, he said.
"We cannot reduce taxes on anyone. We can give concessions like more time to pay, if they have difficulties, but taxes are imposed according to a law," Jayasundera said."If a milk powder user said 'A 92 rupees taxes were imposed on a kilo. Give about six months until learn to drink liquid milk,' what can I say?
"For that man, 92 rupees is as big as the car tax. I do not see the principle. In the import of potatoes or anything else if we imposed taxes giving notice, you know what will happen."Sri Lanka imposes taxes on even basic foods of people outside the budget, a practice which became rife during the 1970s, worsening the uncertain lives of the citizen.Taxes are increased outside the budget, usually because rulers spend beyond planned allocations. Nationalist elements also mis-use taxes in the island to influence the consumptions habits of helpless citizens.Jayasundera said though the last vehicles tax increases were done secretly in the night, with only himself and another person knowing - without the knowledge of anyone in the Treasury - some banks had back-dated letters of credit."There should be governance and respect for the tax system," Jayasundera said. "There should be better governance even in banks. We make taxes at mid-night because of that."
In the first quarter bus imports rose 5.2 percent to 1,184, three-wheeler imports rose 13.7 percent to 35,263, motor cycle imports rose 12.8 percent to 67,158, goods transport vehicles rose 34.7 percent to 4,288 and land vehicles rose 40.3 percent to 7,135.Dual purpose vehicle imports rose 146.7 percent to 4,552, data released by the Central Bank showed.Total vehicle imports rose 15 percent to 139,373 in the first quarter of 2012 from a year earlier.

Reported in LBO

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...by i3gconsultants@ 13:06:42 on 2012-06-08

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Sector: Bank Finance and Insurance

Don’t burn bridges, bank chairman urges govt. Turmoil in the EU, Middle East:


DFCC Chairman J. M. S. Brito urged authorities to be more pragmatic than reactionary and not burn bridges in dealing with recent geopolitical issues, while commending the government for taking crucial steps to address longstanding structural problems in the economy.
Recent geopolitical developments have made things more complicated for the Sri Lanka economy already struggling to come out of a balance of payments crisis and while the domestic economy is undergoing some readjustment pains, the banking sector continues to generate healthy profits.
"Geopolitics has a significant bearing on Sri Lanka. From Sri Lanka’s perspective, the external macro situation has been made more complicated by the geopolitical developments in the West as well as in the Middle East. The former is still our largest trading bloc and source of tourism while the latter is a key market for our tea exports and principal source of oil. Therefore, the fallout from the recent imposition of sanctions and other politically driven actions would be better dealt with in a pragmatic rather than a reactive fashion," Brito told shareholders in the bank’s latest annual report.
As has been repeatedly highlighted in The Island and other media, Sri Lanka’s diplomatic corps has been found wanting on many occasions, while politicians back home are often irrational in their actions and pronouncements when it comes to geopolitical issues.
"Given the new geopolitical realities, this will require a fine balancing act if Sri Lanka is to assert itself without burning any of the bridges that have long stood the test of time," the DFCC Chairman said.
He also commended the government for biting the bullet, adopting measures to contain a balance of payments crisis.
"In 2011, the Sri Lankan economy recorded a growth of 8.3%, the highest in its post-independence history. It was achieved whilst maintaining inflation in single digits and unemployment below 5%. This performance, which was driven by the consumption and investment boom following the end of the conflict in 2009, merited the upgrade of the sovereign credit rating in June 2011. However, in  the second half of 2011, some overheating was evident and developments in the external sector were not positive."
"A widening trade deficit raised concerns about Sri Lanka’s external finances and led to corrective measures in the form of the depreciation of the rupee, the hike in policy rates and a ceiling on credit growth. It delivered the message that the authorities were willing to bite the bullet and accept a lower growth in the context of giving priority to the external sector. This is crucial given that Sri Lanka’s external financing hinges on retaining investor confidence in a consistent and rational policy framework."
Economists have for long argued that artificial exchange rates, unrealistic pricing of fuels and lax fiscal discipline would bring short term fixes but would sooner or later catch up with the economy. The policy reversal announced this year as a late response to the balance of the payments crisis has resulted in positive reviews from sovereign ratings agencies, the IMF and our own economists, including UNP economic spokesman Dr. Harsha De Silva, who was quoted in these pages as saying the policy measures should work as there was no other option."Despite some systemic pressures in the latter part of the year, the industry reported a healthy performance with strong balance sheet growth, higher asset quality and increased profitability despite the narrowing of margins as the year progressed," Brito noted.

Reported in Island
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...by i3gconsultants@ 12:06:41 on 2012-06-08

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Sector: Hotels and Travels

Industry not ready for 2.5 m tourists by 2015


Putting a dampener on optimism over the country being ready to receive 2.5 million tourists by 2015, Galadari Hotel General Manager Sampath Siriwardena yesterday announced that the industry was not ready to host the desired number.“The in