18 June 2010

Sri Lanka's Dasa Joins Sunway to Invest $78mn on 34 Storey Tower

18th June 2010, www.dailynews.lk, By Ramani Kangaraatachchi, Picture by Saliya Rupasinghe

A leading conglomerate in Malaysia, Sunway Holdings entered a joint venture agreement with Dasa Group in Sri Lanka to invest on a 34 storey tower to the value of US $78 million yesterday.
The MoU with regard to this, was signed by Dasa Group Chairman S.D. Gunadasa and Sunway Holdings Managing Director Yau Kok Seng at the Cinnamon Grand yesterday.

Seng said as per the agreement, a 60,000 square feet prime land situated in Bambalapitiya belonging to Dasa Group will be developed by Sunway Holdings within the next three years.

The mixed development will include 220 medium and high class housing units. This is the first investment in Sri Lanka by Sunway Holdings and they hope to expand the business further.

He said that Sunway Holdings has done a feasibility report and a market survey on the project and found that there are lot of opportunities to further explore.

Sunway will bring their expertise and technology to Sri Lanka and execute the Blue Ocean theory during the development.

The project will create a large number of employment opportunities and Sri Lanka can offer resources such as skilled and unskilled labour and other services which will be outsourced for the project.

The Sri Lankan property market has shown a tremendous progress in the recent past and it can be positioned as the gateway to India as cross border investments are important to global relationship, Seng said.

Sunway Holdings established in 1974 has throve to become one of Malaysia’s widely recognized and diversified conglomerates with a multitude of established businesses.

Its core businesses include civil engineering and construction, building materials, trading and manufacturing, quarrying information technology, property development and investment, leisure, entertainment and hospitality, healthcare and education.

Image: Dasa Group Chairman S.D. Gunadasa with Sunway Holdings Managing Director Yau Kok Seng at the launch.

Sri Lanka's Eastern Coast to See a Boost in Tourism. 4000 Rooms in Trincomalee District

17th June 2010, www.news.lk

Tourism in Sri Lanka is in the upward trend and the tourist resort areas especially in the eastern coast is regaining its glory with the end of 30 year war.Several new projects in the tourism sector are due to be launched in the province with the nod of the Board of Investment.

Many local investors have expressed their willingness to be stake holders in the government's pet plan of increasing the accommodation facilities with 4000 rooms in the area in the Trincomalee District alone.

Then value of investment is in the region is 20 billion rupees. 3000 rooms will be constructed along Kuchchaveli scenic beach resort, while 1000 hotel rooms are planned to be built in Pasikudah.

Work on the Pasikudah project is already underway. It is due to be completed before the end of next year.

Sri Lanka to Allow Private Universities. A Regulatory Agency to Monitor Liberalized Tertiary Education

17th June 2010, www.lankabusinessonline.com

Sri Lanka's president Mahinda Rajapaksa has backed a plan to liberalize university education and set up a mechanism to monitor and evaluate the quality of foreign and local higher education, an official said.

A proposal for a 'National policy framework on higher education and technical and vocational education' to revamp higher education, has been drawn up by Sri Lanka's policy-making National Education Commission (NEC).

"The commission wants to establish non-state degree awarding institutions," Dayantha Wijeyesekera, chairman of Sri Lanka Tertiary and Vocational Education Commission and member of the apex National Education Commission told reporters.

"The President has also given his consent, the President was happy with our proposals"

Since 1978, Sri Lanka's president has sweeping powers, which are controversial and there have been calls to trim them. The president won a second term in a landslide victory in January and the ruling coalition was returned to power in parliamentary polls in April.

Sri Lanka has had a state monopoly in degree awarding and attempts to break it grip have been resisted by the Janatha Vimukthi Peramuna, a Marxist-National party which has a strong grip in the state university system.

At present Sri Lanka's higher education system is limited to 15 state controlled universities and a handful of cross-border institutes which award foreign degrees and national vocational qualification institutions, Wijeyesekera said.

"I don't think that it (opening high education to private universities) can be limited to one discipline," Wijeyesekera said.

"It will be open to all disciplines."

Liberalizing higher education would allow more opportunities for Sri Lankan students to gain a university degree.

At present Sri Lankan universities can only accommodate less than 10 percent of students who sit for advance level high

school exams.

The crisis in the universities which are 'free' and funded by people's money reached a peak in 2004 when tens of thousands of

graduates had to be given state jobs with lifetime pensions at tax payer expense.

He said the NEC has proposed to the government to set up a new body which will monitor and evaluate the quality of academia

and syllabi in state and private higher education institutions.

"We have proposed to establish a national quality assurance centre (NQAC) to cover all areas of higher education and

technical and vocational education in Sri Lanka," Wijeyesekera said.

"The president has agreed to this proposal as well."

Education in Sri Lanka now comes under three separate ministries, who will have to take the proposals forward.

"We don't have any authority to implement this, it's up to the respective ministries to do that," Wijeyesekera said.

"We want to implement this as soon as possible."

Sri Lanka Cement Demand to Grow 7pct in 2010

16th June 2010, www.lankabusinessonline.com

Sri Lanka's cement demand is expected to grow between 6.0 and 7.0 percent in 2010 driven by reconstruction demand from former war-torn areas, a top Sri Lankan cement maker said.

"There is an increased demand from all areas of the country," Manilal Fernando, chairman of the Sri Lanka unit of Holcim, a Swiss-based firm said.

"We feel that coupled with the increase in reconstruction in the North and the East cement demand will grow by 6.0 to 7.0 percent this year."

Holcim is the island's only integrated cement maker, which produces cement from limestone and it also has a grinding plant.

Tokyo Cement, a listed group operates several grinding plants.

A war in Sri Lanka's north east ended in May 2009, along with a balance of payments crisis, and interest rates have come down with the monetary authority ending contradictory policy.

Lower interest rates have also paved the way for a recovery in a burst housing bubble.

Official data showed that the cement market was growing by double digits in 2010.
Data released by the Central Bank showed that in the first quarter of 2010 local cement production grew 10.6 percent to 417,000 metric tonnes and imports grew 12.5 percent to 486,000 metric tonnes from a year earlier.

In March local production grew 5.1 percent to 143,000 metric tonnes, and import grew 9.4 percent to 326,000 tonnes from a year earlier.

16 June 2010

Sri Lanka's Maliban Wins Superior Taste Award 2010 of International Taste and Quality Institute (iTQi)

16th June 2010, www.dailynews.lk, Picture by Sudath Nishantha

Sri Lanka's premier biscuit manufacturer, Maliban Biscuit Manufactories won the prestigious Superior Taste Award 2010 of the Brussels-based International Taste and Quality Institute (iTQi) for three of its brands, namely, Chocolate Cream Biscuit, Gold Marie and Cream Cracker.

Maliban is the first Sri Lankan biscuit manufacturer to win the globally recognised iTQi award, which is increasingly being regarded as a benchmark for quality and taste of the food products world over.

Over the years, Maliban has been committed towards offering world-class products of unparallel quality. A leader in the industry, Maliban was the first biscuit manufacturer in Sri Lanka to receive the ISO 9001:2000 accreditation in 1995 and the National Quality Award in 1996.

The iTQi is the world's leading independent chefs and sommeliers based organisation, dedicated to testing, awarding and promoting superior tasting consumer food and drink. It serves as a powerful tool for distributors and consumers to identify products that of world-class quality and taste. The iTQi Jury comprises of chefs and drink experts from renowned European culinary associations including France, Belgium, Portugal and Spain and the Association de la Sommeliers International (ASI). Every year, it rewards food and beverage products of superior quality and taste following a rigorous evaluation process. All products submitted are tested on a solely blind basis, without packing or identification.

Various aspects including the aroma, texture, flavour, and appearance of the product are analysed and commended on by each judge. A sensory analysis graph is provided to the participant along with the results, with suggestions by the jury for further improvement of the product.

Image: Maliban officials at the press conference

14 June 2010

Sri Lanka's EDB for more Agressive Entrepot Trade

14th June 2010, www.dailynews.lk, By Harshini Perera

Sri Lanka needs to re-consider the entrepot trade that was not aggressive during the past few years, Export Development Board (EDB) Chairman Janaka Ratnayake said. In the entrepot trade, value is added to an imported product in Sri Lanka which is less than three percent and will be re-exported with a higher value.

The products that can be considered under entrepot trade ranges from chemicals and cigarettes and to numerous products that will increase the country’s foreign exchange, Ratnayake told Daily News Business.

He said a financial arm has to be established similar to that of Ex-Im banks operating in other countries to address the financial needs of the SMEs in the country.

The EDB has recorded an increase of exports by 9.83 for the first quarter of this year as against the respective period of 2008 and 2009.

Among the sectors that have improved, agricultural sector is significant in which tea, rubber and other export crops showing significant highs. The agricultural sector has contributed 23.5 percent of the total exports last year.

The EDB expects to promote products for which Sri Lanka is famous such as organic fruits and vegetables, garments without guilt, high quality products and services.

There is a slight decline in fisheries products, textiles and garments, ceramic and porcelain products.

The turnover of exports for the first quarter this year was US $ 2.3 billion whereas it was US$ 2.08 billion in the respective period last year.

The country’s total exports contribution to the world export is as low as 0.05 which is in value nearly US $ 8 billion. It is similar to the revenue of a multi-national company of fortune 500 companies in the world, he said. He said that the exports turnover of the country was US $ 8.1 and US $ 7.08 billion for 2008 and 2009 respectively. Though there was a decline last year, EDB expects to regain the turnover of 2008 exports which is US $ eight billion this year.

Since Sri Lanka is politically stabilised now, the EDB expects to accelerate promotional activities to exploit international markets.

In the process, Sri Lanka will be promoted as a brand that is famous for specialized products such as Ceylon tea, gem and jewellery.

The EDB has developed a five-year corporate strategic plan in which Sri Lanka can position its products in the high end markets internationally.

Road shows of Sri Lankan products in different continents with the optimum support from the stakeholders including national and international chambers of commerce and foreign missions will be conducted in the future, Ratnayake said.

“We will be popularising Sri Lankan products with media campaigns in foreign magazines and Journals such as BBC, CNN. A wide space will be given to IT BPO service oriented professional services. We have recognised triggers and barriers of each and every product which will be promoted aggressively in the future,” he said. The EDB will support the SMEs sector with subsidies, technology, guidance and advisory services. He also emphasised the need to trickle down the benefits of exports to the SMEs.

“We will be presenting new budget proposals to the authorities to support SMEs as well as overall exports of the country. We as an Apex body, will be conducting the Presidential Exports Awards, the highest recognition for exporters in November this year which was not conducted for the last three years. Sri Lanka Expo Fair will also be held early next year.

Sri Lanka Sells 275mn of Dollar Denominated Bonds in June

14th June 2010, www.bloomberg.com, By Anusha Ondaatjie

Sri Lanka plans to sell $275 million of dollar-denominated bonds locally this month to pay for maturing debt, three months after failing to raise a targeted $100 million through a debt auction.

The South Asian nation will issue $175 million of two-year debt and $100 million of three-year paper, the Central Bank of Sri Lanka said on its website today.

Subscriptions for development bonds close on June 18. The nation raised $92 million by selling development bonds through competitive bidding in March, and the central bank subsequently raised $8 million through placements that month.

“Looking at the liquidity situation, I expect favorable rates” for the June issuance, C.J.P. Siriwardena, head of the central bank’s public debt, said in a telephone interview. “We want to extend the yield curve and maturity structure.”

President Mahinda Rajapaksa, who was re-elected to a six- year term in January, has pledged to spend $1 billion on ports, roads and power plants this year to help drive economic growth to as much as 7 percent.

The government is targeting a budget deficit of 7.5 percent of gross domestic product in 2010, compared with an actual shortfall of 9.7 percent last year. The International Monetary Fund set a deficit target of 6 percent for this year when it granted a $2.6 billion emergency loan in July 2009 to help the nation tide over a foreign-exchange crisis.

Sri Lanka may find it “challenging” to meet this year’s budget-deficit target as the government steps up spending to rebuild infrastructure after the end of a three-decade-long civil war, central bank Governor Nivard Cabraal said on Feb. 9.

In March, Sri Lanka sold $37 million of two-year bonds at a weighted-average yield of 380 basis points above Libor and $55 million of three-year debt 395 basis points over Libor. A basis point is 0.01 percentage point.

The June issuance will pay a margin over the six-month London interbank offered rate.

To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net

Sri Lanka Development Bonds - Details

Sri Lanka Tourist Arrivals up by 48.5% for the 1st Five Months

14th June 2010, www.news.lk

Tourist arrivals in Sri Lanka have doubled from January to May this year when compared to tourist arrivals for the same period last year.

Tourist arrivals for the first five months last year amounted for 157,000 and compared to this number the tourist arrivals during the first five months this year amounted to 233,000 showing an increase of 48.5% compared to the same period last year.

This massive increase in the tourist increase has been possible following an intensive tourist promotion campaigned launched by the government in several foreign countries and through popular madia channels including CNN, Aljazeera, and National Geographic Channel.

Media personnel from National Geographic Channel and leading publications such as New York Times visited Sri Lanka and made first hand investigations on the tourist facilities and scenic, cultural,historical locations, and food varieties attractive to
tourists in Sri Lanka and following such visits the National Geographic Channel named Sri Lanka as the 2nd most attractive place to visit while the New York Times named Sri Lanka as the best among the 32 most attractive tourist locations in the world.

The tourists arrived in Sri Lanka during the last five months showed a 101% increase from the Middle East countries, 40% increase from the East European countries, 77% increase from France, 74% increase from Germany and 79% increase from India.

Tourist arrivals in Sri Lanka last year amounted to 450,000 tourists and the government targets to increase this number to 600,000 by end of this year, and the government is confident that this target can be easily achieved with the ongoing projects being launched to improve infrastructure facilities, room facilities and beautification programmes.

Related Info:
Sri Lanka Tourist Arrivals (2009 to 2010) : A comparisan chart and other statistics from SLTDA.

Sri Lanka Tourist Arrivals Grow - Statistics from 1999 Show an Upward Trend

Sri Lanka's Hemas Builds another Hydropower Plant

14th June 2010, www.lankabusinessonline.com

Sri Lanka's Hemas Power is building another hydropower plant, raising generation capacity to 24 Giga Watt hours (millions of units) of energy a year from hydro plants which it plans to expand in preference to fossil-fuel power.

Managing director Kishantha Nanayakkara said the firm, a unit of the Hemas group, believes demand for electricity is expected to rise faster than forecast with the end of a war.

"We remain bullish on hydropower," Nanayakkara told shareholders in the firm's annual report for the financial year ending March 31, 2010.

In December 2009 the firm spent 196 million rupees to buy Upper Agra Oya Hydro Power, formerly known as Senok Mark Hydro, an operational 2.6 MW mini-hydropower plant located at Lindula in the central hills.

The year also was the first full year of operations at its 2.0 MW Giddawa hydropower plant, which however generated less than expected owing to poor rainfall in its catchment.

"Operations underpinned by a higher tariff prevailed and tight cost control measures enabled Giddawa to post commendable financial results during the year," Nanayakkara said.

The firm began construction work on its Magal Ganga hydropower project which is to be commissioned towards end-September 2011.

"When the operations of Magal Ganga project commences, our renewable energy portfolio will carry a potential annual generation capacity of 24 GWh," Nanayakkara said.

Hemas also has a joint-venture company called Heladhanavi which generates thermal power and contributes about seven percent of the nation’s annual electricity generation.

Nanayakkara said that in "a buoyant post-war era" the power generation sector is a "key catalyst in unlocking the nation’s economic potential."

The island's 30-year ethnic war ended in May 2009 resulting in an economic revival.

"If economic activities gather momentum as widely anticipated, the country’s per-capita income level is likely to grow at a faster pace," Nanayakkara said.

"With that, it becomes obvious that the household electricity consumption will also rise. Greater economic activity could also fuel greater electricity demand from the industrial front."

Demand for electricity is seen rising faster than that forecast by government before the war ended, Nanayakkara said.

While almost half of the increase in demand is to be met through coal-power plants, Nanayakkara said they believe coal-fired power generation of such magnitude, despite costing less, could pose different challenges like environmental pollution.

He said he expects the bulk of future renewable energy generation, be it hydropower, wind or bio-mass, to be supplied by the private sector.

Sri Lanka's target is set to meet 10 percent of the country’s energy generation by 2015 through renewable energy sources.

"Taking stock of the available opportunities in the country, we find it most prudent to align our strategic direction on the renewable energy sector," Nanayakkara said.

"Therefore, despite the existence of challenges and hurdles, your company continues to be bullish on the country’s hydropower sector.

"We are strongly committed to pursue opportunities to acquire or develop viable hydropower projects whilst keeping a vigilant but cautious eye on emerging opportunities in other renewable energy segments," Nanayakkara said.

Two Wind Power Plants in Puttalam, Sri Lanka

14th June 2010, www.dailynews.lk, By Indunil Hewage

Rs 4.3 billion has been invested in two wind power projects in the Puttalam district.

Seguwantivu Wind Power and Vidatamunai Wind Power Chief Executive Officer Manjula Perera said two investments relating to wind power sector have been undertaken up to now.

Apart from Seguwantivu and Vidatamunai plants they managed to start two wind power plants of 10 megawatts each in Mullipuram.

Many countries in the world plan to alter their existing power generation methods to renewable energy sources in the face of global warming which affects the whole world,” he said. Perera said there is potential for renewable energy sources especially in the wind power sector in the country and these sectors should be tapped well.

He said the country should be able to develop at least 500 megawatts in the next five years.

Private sector in the country has been allowed to generate renewable energy sources in mid 1990. The corporate sector was also able to invest in the mini hydro industry in the country. Same is applied to wind power sector and the investments which have been undertaken so far, by Sri Lankan corporate investors. The National Renewable Energy Laboratory of USA in 2003 conducted a comprehensive study on the wind potential for Sri Lanka.

According to their study, it has been revealed that the potential of wind power in the country is more than 20,000 megawatts.

Investors are not in a position to generate this much power supply due to many restrictions.

Around 70 companies have ventured into the mini hydro industry. Perera expressed confidence that many investors will venture into wind power if appropriate policies are adopted. Apart from wind power, Ginisiria is considered as one of the effective renewable energy sources in Sri Lanka.

Wood chips of Ginisiria will be burnt to generate power. This will immensely benefit rural people.

Wind power plants need a fair amount of land during the development stage. The Government is in possession of most of these lands.

Related Info:
Sustainable Energy Authority - Wind Projects

12 June 2010

London Underwriters Remove Sri Lanka from War Risk Isurance List

11th June 2010, www.lankabusinessonline.com

London underwriters have removed Sri Lanka from the area listed for war risk insurance following lobbying by the island's government that risks have been eliminated with the end of the ethnic war.

A statement from the Joint War Committee in London said it recently reviewed the Listed Areas for Hull War, Strikes, Terrorism and Related Perils, last altered on March 11, 2010, and deleted Sri Lanka.

"The application of this list on individual contracts will be a matter for specific negotiation," it said.

The rating is only a guideline published by the Joint War Committee of London underwriters.

The risk rating was reduced last year after the 30-year ethnic war ended in May with the defeat of Tamil separatists.

Since then the government has been lobbying insurers to remove the country as a listed area.

Lines which call Colombo regularly were not charged additional war risk insurance premiums in recent times.

But the government and shipping businesses were worried that the post-war economic revival could be affected if the island remained as a listed area for war risk.

Sri Lanka to Upgrade Sovereign Rating to Investment Grade

12th June 2010, www.dailynews.lk

As announced in the Central Bank Road Map 2010 and beyond, the Central Bank of Sri Lanka (CBSL) will take the necessary steps to upgrade the country’s sovereign rating from the current B+ (stable)/B (positive) to an investment grade of BBB- or higher over the next four year period.

Towards this end, a carefully designed, forward looking and effective strategy with the participation and co-operation of the all stakeholders, country authorities, private sector business leaders, chambers and rating advisors, will be implemented.

For this purpose, the CBSL has now appointed the following high level Sovereign Rating Committee, which will make regular reviews on the developments of the economy and convey these improvements to the rating agencies through rating advisors to upgrade the country’s rating level.

The committee comprises Chairman - CBSL Deputy Governor, K.G.D.D. Dheerasinghe, Deputy Chairman - CBSL Assistant Governor, J. Mampitiya, CBSL Chief Economist and Economic Research Director, K.D. Ranasinghe, CBSL, Public Debt Superintendent, C.J.P. Siriwardena, Treasury Deputy Secretary, U.R. Seneviratne, Public Debt Additional Superintendent C.N. Wijayasekera, Brandix Lanka Ltd, Chief Executive Officer, Ashoff Omar, Nestle Lanka PLC, Managing Director, David Saudan, Ceylon chamber of Commerce, Chairman, Dr. Anura Ekanayake, Sri Lanka Banks’ Association, Secretary General Upali de Silva, Triad Advertising, Managing Director, Dilith Jayaweera and Lanka IOC Ltd., Managing Director K.R. Suresh Kumar.

Billabong Joins Surfing's ASP 6 Star SriLankan Airlines Pro at Arugam Bay, Sri Lanka from 18 - 24 June

03rd June 2010, www.arugam.info

The fast approaching SriLankan Airlines Pro at Arugam Bay today announced the inclusion of Billabong as a support sponsor to this exciting new addition to the Association of Surfing Professionals (ASP) Six-Star World Tour.

With just two weeks remaining until the event begins, Billabong’s involvement adds to the events prestige and its overall activation. Billabong Asia Brand Manager Peter Thew is excited to enter into this partnership in a region that boasts a myriad of incredible surf locations.

“We are constantly having new places and new pockets of surfing communities brought to our attention all through the Asia region” said Thew. “It’s a huge honour to be teaming up with SriLankan Airlines and ASP Australasia to further help highlight another one of these truly amazing parts of the world.”

The event begins on June 18 and the field line-up is super high quality and international with surfers travelling from all key ASP regions throughout the world. Wild card surfers into the event are to be announced shortly.

The SriLankan Airlines Pro will be live webcast and will include a quality produced and globally distributed television show along with television newsfeeds distributed internationally throughout the event as well as highest quality digital images focusing on the event, the environment, wildlife and of course the abundance of surf from the region.

Sri Lankan Stocks Rise to New Highs. Turnove over 3bn

11th June 2010, www.lankabusinessonline.com

Sri Lankan stocks rose to new highs Friday, passing the 4,500 points mark as institutional investors bought blue chips while retailers took profit from over-priced shares and re-invested in cheaper ones, brokers said.

The All Share Price Index (ASPI) closed at 4,561.33, up 65.09 points, while the Milanka index of more liquid stocks rose 0.87 percent (44.79 points) to close at 5,182.16.

Turnover was 3.3 billion rupees, according to stock exchange provisional figures.

"Retailer and institutional activity pushed the indices to an all-time high," said Nikita Tissera, research manager at SC Securities.

"We also did see an encouraging net foreign inflow."

Foreign buying was 908 million rupees and selling 769 million rupees.

The market historical PER (price-to-earnings ratio) rose to 22.5 times with Friday's rise in the indices.

Index heavy Distilleries Company of Sri Lanka shares were heavily traded. It closed at 127.75 rupees, up 5.00 with almost 2.8 million shares traded.

John Keells Holdings, another index heavy conglomerate closed at 199.75 rupees, up 1.50 with over 1.27 million shares changing hands.

Aitken Spence closed at 1,560.25, down 9.75, Hayleys closed at 308.00 rupees, up 3.50 and Hemas Holdings closed at 174.75 rupees, up 14.25.

Dankotuwa Porcelain closed at 13.50 rupees, down 3.50 with three million shares traded, while 13.6 million shares of First Capital Holdings changed hands, Friday. It closed at 20.75 rupees, up 75 cents. Nawaloka Hospitals closed flat at 6.25 with 4.16 million shares traded.

Nation Lanka Finance, which in a stock exchange filing reported a serious loss of capital closed at 13.50 rupees, down 50 cents.

Piramal Glass Ceylon closed at 2.50 rupees, down 10 cents with over 10 million shares traded, brokers said.

Banking sector shares, apart from Hatton National Bank, continued to gain, brokers said.

Commercial Bank closed at 280.50 rupees, up 1.25, HNB closed at 290.50 rupees, down 5.00, Nations Trust Bank closed at 47.25 rupees, up 25 cents, Sampath Bank closed at 348.00 rupees, down 50 cents and Seylan Bank closed at 69.50 rupees, up 3.25 with over a million shares traded, brokers said.

DFCC Bank closed at 262.00 rupees, up 3.00, and National Development Bank closed at flat at 247.00 rupees.

Dialog Telekom, a celco closed at 9.00 rupees, up 25 cents with over 3.1 million shares traded, and fixed line operator Sri Lanka Telecom closed at 38.00 rupees, up 25 cents.

08 June 2010

Sri Lanka Tea Earns Highest Ever in January-April

08th June 2010, www.island.lk, By Steve A. Morrell

Tea export earning for the period of January-April reached Rs. 45.6 billion, or US$ 399 million in dollar terms, which is not that high when compared to US$ 410 million earnings in 2008.

In 2008, FOB value in dollar terms was US$ 3.91 per kilo, this year it is US$ 4.39, therefore the rupee earnings this year is an all-time-high.

All indicators point to an exceptional year in foreign exchange earnings from tea and this trend is expected to continue well in to the future.

Information at hand from The Asia Siyaka Tea Brokers Weekly Tea market report pointedly suggested although crop was not as high as expected, tea earnings were rising. However 2010 to date, the ‘all time high’ tag was real and singularly outstanding.

Monthly exported quantity to date was however not quite that encouraging whereas April 2008 was exceptional with Sri Lanka shipping 105 million kilos which was a record.

Sales destinations were that of Russia, or CIS countries, which continued to be highest buyers of Ceylon tea increasing their absorption by 21 percent. UAE too recorded higher import quantities, up some 5 percent. But there was no evidence on exports to new markets.

Meanwhile our export markets remain just about the same. Apart from Jordon, Chile, Japan, and Germany, most other destinations are based in the Middle East. Hong Kong has been tried, but apart from media hype about some sort of competition, there was nothing tangible emanating from that source. Not, that is, considering their draconian business and trade ethics, recorded in our Sunday edition about two weeks ago.

End April 2010, exports stood at 91.5 million kilos; of this quantity, bulk exports continued to dominate product quantities. Value additions although talked of ever so often, has not had significant impact on end user influences. Other exported forms were tea in packets at 25.5 million kilos, Tea bags, 5.4 million kilos, Instant tea 509, 000 kilos approximately, and green tea about 1.3 million kilos. There was also 2.6 million in re-exported tea, included in the export figure.

The Tea Board in their recent communication said low-growns continued to dominate production, 61.4 million kilos were produced at this elevation, where as high growns produced 24.2 million kilos, and mid growns 16.6 million kilos.

The market last week staged ‘come back’, returns. All elevations had good price resurgence. Eastern Brokers Tea report said westerns, Nuwara Eliyas, low growns, all recorded positive gains. Off grades, Dusts, and CTCs, too gained about Rs. 10 per kilo.

At this weeks sale, after quite a while, 8.2 million kilos will be on offer. Brokers said the market remains strong.

Volumes Up at Colombo Port Private Terminal, SAGT Run by John Keells

08th June 2010, www.lankabusinessonline.com

Cargo volumes at a Colombo port private terminal run by an associate firm of John Keells Holdings surged 22.3 percent in May to 175,514 twenty-foot equivalent container units (TEUs) from a year ago, latest data shows.

Container flows at the terminal as well as the port's other terminals which are owned by government have been rising on the back of a recovery in trade with the end of global recession.

Container volumes at South Asia Gateway Terminals, a big contributor to JKH profits, are up 30.4 percent to 851,435 TEUs up to May this year from a year ago.

The containers handled in May were the second highest-ever monthly volumes at the private terminal, analysts said.

SAGT handled a record 181,991 containers in March 2010 as transshipment traffic, which accounts for two-thirds of the terminal's business, rose sharply with the recovery in regional trade.

SAGT is part of the transport business of the JKH conglomerate which has been making an increasing contribution to group profits in recent years.

Mahathir Mohamed in Sri Lanka to Address Sri Lanka Malaysia Business Council

06th June 2010, www.news.lk

Former Prime Minister of Malaysia Dr. Mahathir Mohamed will arrive in Sri Lanka on Tuesday the 8th, to address the 6th Annual Business Awards ceremony of the Sri Lanka Malaysia Business Council.

Dr. Mahathir Mohamed has been acclaimed as the architect for transforming Malaysia into a modern economic giant in Asia. He will be the chief guest at the 6th Annual Business Awards of the Sri Lanka Malaysia Business Council to be held in Colombo on 9th of this month.

This will be Dr. Mohamed’s second visit to the island. Earlier he arrived in the island and participated as the keynote speaker at the CIMA Global Leaders’ Summit in Colombo in May 2005.

IIFA 2010 Awards Concludes in Colombo

06th June 2010, www.news.lk

The most colourful and spectacular International Indian Film Academy (IIFA) awards ceremony, the grand finale of the three-day extravaganza, was staged last night at the Colombo's Sugathadasa Indoor Stadium.

In addition to the cream of Bollywood, invitees and fans have gathered for this gala show. The Indian International Film Academy has organized this spectacular event for the 11th occasion taking the Indian cinema to the World.
Here is the List of all awards:
Debut of the year (Male): Omi Vaidya - Jackie Bhagnani
Debut of the year (Female): Jacqueline Fernandez - Mahie Gill
Best Lyrics: Swanand Kirkire - 3 Idiots
Playback Singer (Female): Kavita Seth - Ek Tara (Wake Up Sid)
Playback Singer (Male): Shaan - Behti Hawa Sa Tha Who (3 Idiots)
Music Direction: Pritam - Love Aaj Kal
IIFA Green Global Award: Vivek Oberoi
Technical Awards Winners
Best Screenplay: Abhijat Joshi, Rajkumar Hirani, Vidhu Vinod Chopra (3 Idiots)
Best Cinematography: C.K. Muraleedharan (3 Idiots)
Best Dialogue: Rajkumar Hirani, Abhijat Joshi (3 Idiots)
Best Background Score: Sanjay Wandrekar, Atul Raninga, Shantanu Moitra (3 Idiots)
Best Editing: Rajkumar Hirani (3 Idiots)
Best Sound Recording: Bishwadeep Chatterjee, Nihal Ranjan Samel (3 Idiots)
Best Song Recording: Bishwadeep Chatterjee, Sachi K Sanghvi (3 Idiots)
Best Sound Re-recording: Anup Dev (3 Idiots)
Best Choreography: Bosco Martis, Caesar Gonsalves (Love Aaj Kal)
Best Costume Designing: Anahita Shroff Adajania, Dolly Ahluwalia (Love Aaj Kal)
Best Art Direction: Sabu Cyril (Aladin)
Best Special Effects (Visual): Charles Darby - Eyecube Labs (Aladin)
Best Action: Shyam Kaushal (Kaminey)
Best Make up Artist: Christien Tinsley, Domini Till (Paa)

05 June 2010

IIFA 2010 Awards Ceremony at Colombo on 3rd June, the Grand Finale of the 3 Day Extravaganza

05th June 2010, firstlanka.com

The attention of Bollywood fans worldwide is now focused on Sri Lanka with the launching of the 11th International Indian Film IIFA Awards Festival.

Today, being the second day of the IIFA Weekend, is set aside mainly for the Charity Cricket Match at the SSC Grounds in Colombo. Bollywood super heroes would be seen together with Sri Lanka cricketers in this encounter. All proceeds would go for the Housing Project planned in Jaffna. The IIFA Global Business Forum is another highlight today and it will be graced by President Mahinda Rajapaksa.

The curtain of the Videocon IIFA Weekend will come down with the most glamorous and colourful event, the Awards ceremony which will be staged at the fully modernized Sugathadasa Indoor Stadium.

The grand finale of the three-day extravaganza, the IIFA awards will see star studded performances from Hrithik Roshan, Salman Khan, Saif Ali Khan, Bipasha Basu, Riteish Deshmukh, Vivek Oberoi and Jacqueline.

Sri Lanka President Opens FICC-IIFA Global Business Forum at Colombo

05th June 2010, www.news.lk

President Mahinda Rajapaksa inaugurated the FICC- IIFA Global Business Forum at the Colombo Hilton today the theme of this year’s forum is India-Sri Lanka Partnership - The Way Forward.

The Forum will focus on investing and rebuilding the new Sri Lanka, North and East Building Economic Partnership between India and Sri Lanka and cricket and entertainment.

Economic Development Minister Basil Rajapaksa, Central Bank Governor Ajith Nivard Cabraal, Indian High Commissioner in Sri Lanka Ashok K. Kantha and other speakers representing local and Indian corporate sector were present.

Over 60 Indian corporate are here to participate in today’s FICC IIFA Global Business Forum and also over 300 local corporate leaders representing different industries shared their views in the FICC IIFA global Business Forum.

Deputy Economic Development Minister Lakshman Yapa Abeywardana said the Sri Lankan Government has taken every effort to make this event a success.

04 June 2010

Cairn India Drills 3 Oil Wells in Mannar Basin, Sri Lanka

26th May 2010, www.dailymirror.lk, By Sandun A. Jayasekera

Cairn (India) will drill three wells in block M2 in the Mannar Basin between January – March next year, while Sri Lanka will call international tenders for the rest five blocks within this year, Petroleum Minister Susil Premjayantha said.

“In the first bidding in the first part of 2007, Sri Lanka offered three blocks, C1, C2 and C3 in the Cauvery Basin and five M1,M2,M3,M4 and M5 in the Mannar Basin when it called international tenders after an international road show and Cairn (India) won a bid as only the Indian company was able to meet the conditions of the tender and was offered block M2 for oil exploration,” Minister Premjayantha said.

Cairn (India), the Indian arm of the British energy company, has already conducted Three Dimensional Seismic Tests in the last couple of years and on the results of data collected from these tests, is now in a position to drill oil wells in M2 block, he added.

Cairns (India) will use its know-how and machinery and manpower to drill test wells off Jaffna, he said.

Five blocks in the Mannar Basin, M1, M2, M3, M4 and M5 situated off North West coast have been lined up for this year’s international tenders, Minister Premjayantha added.

“The decision on conducting an international road show for these blocks will be taken at the next ‘Petroleum Resources Development Committee’ meeting scheduled to be held on June 3rd, he said.

Those who are bidding, would have to collaborate a minimum 10% of oil exploration with Sri Lanka National Oil Company, s fully government owned venture. In addition, all contractors are required to pay 35% income tax on petroleum profits and another 10% in divided remittance tax according to the provisions of the Inland Revenue Act.

Sri Lanka has identified and demarcated 12 blocks vis-à-vis three in the Cauvery Basin (off North East coasts of Sri Lanka), eight in the Mannar Basin (off Western and North Western Coasts) and one in the Southern Basin (off Hambantota) for oil exploration and will call international tenders for all blocks except M2.

Sri Lankan Import Tax Cut Sends Motor Shares Up

02nd June 2010, www.lankabusinessonline.com

Sri Lankan motor company share prices shot up again Wednesday after news of tax cuts of up to 50 percent on motor vehicle imports, brokers said.

Diesel and Motor Engineering (DIMO), agents for German luxury car manufacturer Mercedes Benz, Cherokee of the US and heavy vehicles and car manufacturer TATA Motors in afternoon was trading at 648.00 rupees, up 97.25.

On Tuesday it closed at 550.75 rupees, up 105.00.

United Motor Lanka, agents for Mitsubishi Motors Corporation of Japan was trading at 145.00 rupees, up 9.25, and Sathosa Motors, agents for Isuzu cars and heavy vehicles was trading at 167.75 rupees, up 15.25.

Colonial Motors was trading at 116.50 rupees, up 9.00.

On Tuesday, UMLL closed at 135.75 rupees, up 30.25, while Sathosa Motors closed at 152.50 rupees, up 15.50 and Colonial Motors closed at 116.50 rupees, up 9.00.

The motor companies will only realize the tax cut benefits in the medium to long term, Thakshila Hulangamuwa, vice president at stock brokering firm Asha Phillip Securities said.

Another area of concern is if the government would increase or introduce new taxes on motor vehicles in future, he said.

Related Information:
Sri Lanka Vehicle Tax Slash Lauded by Motor Industry. SUVs to Come Down by Rs4mn. Car Prices too Come Down

Sri Lanka to Sign CEPA Agreement with India this Year

02nd June, 2010, www.dailymirror.lk, By Sandun A. Jayasekera

The controversial Comprehensive Economic Partnership Agreement (CEPA) will take centre stage during official talks between Mahinda Rajapaksa and Indian Premier Manmohan Singh next week and will be signed later this year, Co-operatives and Internal Trade Deputy Minister Neomal Perera said.
“It is true that it would be disadvantageous to Sri Lanka if the CEPA was signed in the present form. President Rajapaksa wants to have a dialogue with all the stakeholders to the issue – mainly the business community of Sri Lanka and incorporate their ideas and suggestions to the agreement which is expected to benefit the country immensely,” Mr. Perera told the Daily Mirror.

The Government is determined to give an opportunity to the business community, industrialists, investors, importers and exporters and even the consumers to air their views on the CEPA in the coming months. The agreement will be signed probably at the end of 2010 only after their suggestions and ideas are evaluated and incorporated in the agreement, Deputy Minister Perera stressed.

02 June 2010

Sri Lanka Vehicle Tax Slash Lauded by Motor Industry. SUVs to Come Down by Rs4mn. Car Prices too Come Down

02nd June 2010, www.thebottomline.lk, By Santhush Fernando

The local automobile industry, badly hit hitherto by the global financial crisis and exorbitantly high domestic tax regime, is expected to see a drastic drop in vehicle prices after Treasury slashed excise duty on vehicles yesterday.

Almost all vehicle importers whom The Bottom Line spoke to were very positive over the tariff revision, but majority opined that they were in the dark regarding the exact net duty levels applicable. (Pl see below JKSB Comment with item-wise chart of new duty/tax).

“It’s very difficult to tell precisely. However, this will give a badly needed boost to the automobile industry. At a glance, the price drop of cars may range from Rs.300,000 to Rs.1 million. Sports Utility Vehicles (SUVs) could anticipate a drastic decline up to Rs.4 million, while double cabs could come down by Rs.1.5 to 2 million, roughly,” President of Ceylon Motor Traders’ Association (CMTA), Zeeniya Rasheed said.

Unconfirmed sources say that the excise duty applicable to vehicles with an engine capacity below 1,000cc has come down to 7 from 34%. Vehicles with the capacity between 1,000 to 1,600cc would see excise duty drop from 44 to 17% while luxury vehicle categories would be subject to 64%, instead of the current 27%.

Fifteen percent surcharge, which is also applicable on electrical appliances imports, has also been scrapped.

“It’s really difficult to ascertain the exact formula as there’s cascading structure with one tax touching another tax. Nobody knows until we get confirmed through a ‘Cusdec’ (Customs declaration). It’s very complicated,” an automobile industry source said.

At present vehicle imports are subject to six ‘fixed’ taxes – Ports Authority Levy (PAL) of 5%, surcharge of 15%, Nation Building Tax (NBT) of 3%, Social Responsibility Levy (SRL) of 1.5%, Road and Infrastructure Development Levy (RIDL) of 2.5%, Value Added Tax (VAT) of 20% and three ‘varying’ taxes – Customs Import Duty (CID), Cess, and Excise Duty.

Speaking to The Bottom Line, Chairman United Motors PLC, Ranjith Fernando, said that the tariff revision would be a relief to both importers and buyers, alike.

“It’s certainly a welcoming move. The prices of cars will come down drastically. As many importers refrained from bringing large stocks and kept minimum stocks,” he said.

According Fernando, currently a Pajero was subject to between 300 to 400% total compound tax, depending on engine capacity and type of fuel.

The new tariff is likely to have an impact on locally-assembled vehicles.

“As it is there’s a huge price differential between imported and locally-assembled vehicles. However, with this tariff cut prices of the latter will also have to come down,” he added.

General Manager – Sales and Marketing, Associated Motorways (Pvt) Ltd., Shivantha de Zoysa said that they were yet to ascertain the full impact of the tariff revision.

“There are nine different types of sub-duties, while the government had introduced the tariff cut on excise duty. Currently, petrol vehicles with an engine capacity below 1,000cc are subject to a total net duty of 187%, on its CIF (Cost Insurance & Freight),” he pointed out.

According to de Zoysa, prior to the duty revision, a total net tariff of 217% was applicable for petrol vehicles with an engine capacity between 1,000 to 1,600cc, while vehicle categories from 1,600 to 2,000cc and above 2,000cc were subject to total net duty of 290 and 299%, respectively.

The number of brand new vehicles registered in 2009 was a mere 7,437 when compared with 25,325 registered in 2008, which was a massive drop of 70.63%. Government tax revenue, in contrast to Rs.17.4 billion earned in 2007, dropped to Rs.11.06 billion in 2008 and to Rs.3.25 billion in 2009.

Vehicles registrations expected to increase
In an Equity Research Report, releases by Bartleet Mallory Stockbrokers (Pvt) Ltd, says it expects vehicle registrations in 2010E and 2011E to increase.

“New vehicle registrations over the first four months of 2010 amounted 95,929, indicating an upward movement. Vehicle registrations could see an immediate improvement in 2010 with the economy gaining traction coupled with low interest rate,” it stated.

“In addition, tax reforms could further benefit vehicle imports, in our view,” the report noted.

Related Information:
A Comment by JKSB with Item-wise Chart of New Duty/Tax - Details of key tariff revisions pertaining to motor vehicles and consumer electronics

Download : Sri Lanka_Customs_Tariff_Calculator.xls

Sri Lanka Customs Tariff Calculator by HS Code

Sri Lanka Tests 1st Coal Power Plant in Sept. 300MW out of 900MW Norochcholai Plant to National Grid by 2011

01st June 2010, www.lankabusinessonline.com

Sri Lanka will start testing its first 300 MegaWatt coal power plant in September with plans to connect it to the national distribution grid by January 2011, power minister Patali Ranawaka said.

Sri Lanka's state-run Ceylon Electricity Board is building a 900 MegaWatt Chinese financed coal power plant on a design-build-transfer contract in Norochcholai in the north-western coast of the island. The first phase of the project is 300MW.

"We will start testing the first phase in September," minister Ranawaka said. "We hope to commission it and connect to the grid by January 2011."

Power secretary M M C Ferdinandez said the state power utility had made the first purchase of coal from Indonesia at a price of about 70 US dollars a tonne.

Sri Lanka Shipping Corporation has been engaged for transport and with freight and insurance costs, the landed cost will be about 10 US dollars higher, he said.

Ferdinandez said Sri Lanka is buying low sulphur, low moisture coal which generate lower volumes of ash when burned, which was available from Indonesia, Australia and South Africa.

The coal plant will be a base load plant which will operate throughout the day. Sri Lanka has been running expensive liquid fuel plants including gas turbines for base load making the CEB run large losses.

Coal is expected to reduce the costs of power generation. The CEB is expecting to lose about 40 billion rupees in 2010.

Sri Lanka's Last Mega Hydro Power Project at Upper Kotmale to Compelete by 2011

30th May 2010, www.news360.lk

The construction work of the Upper Kotmale Hydro power project, the last such mega hydro power plant to take place in Sri Lanka will see its completion by the 3rd quarter of 2011.

Project Director Shavindranath Fernando told www.news360.lk “by the 3rd quarter of 2011, the project will be completed”

Once completed the plant will add 150 MW into the national grid, which according to energy specialist Dr. Tilak Siyambalapitiya will contribute 3.5% of the country’s total electricity requirement for the year 2012.

He said “By 2012 the total electricity requirement of the country will be 12,800 million units and if Upper Kotmale operates by that time, it will contribute 430 million units to the total figure”.

The UKHP is located in the Nuwara Eliya district and will be using the water flowing from the Kotmale Oya, a branch of the Mahaweli Ganga.

The US$ 450 JICA funded Upper Kotmale Hydro power project was in the drawing board since 1985 and was expected to be fully operational in the early parts of 2000.

However pressure from area politicians citing socio-economic and environmental issues delayed the project.

Project Director Fernando said ”all these issues are resolved”.

497 families who lost their homes owing to the project has being settled down in new homes.

Sri Lanka’s electricity demand is growing at 8% per annum.

01 June 2010

Indian Tourist Arrivals in Sri Lanka Increased Rapidly in 1st Quarter. Over 90pct to Attend IIFA 2010

01st June 2010, www.dailynews.lk, Charumini de SILVA

There is over 75 percent increase on Indian tourist arrivals to Sri Lanka during the first four months of this year, Colombo City, Hoteliers Association Vice President, Amal Gunathilake said at a press briefing yesterday.
She said that Sri Lanka has a great opportunity to attract more Indian visitors in the coming years through hosting the Indian International Film Academy (IIFA) awards. Colombo city hotels have given 20 percent of their luxury rooms for celebrities who will participate at the event as a compliment.

Deputy Economic Development Minister Lakshman Yapa Abeywardana said Sri Lanka could expect an increase of 50 percent in the number of tourist arrivals by 2012. There is an opportunity to attract more tourists from all parts of the world.

The Deputy Minister said 97 percent of the participants have confirmed their participation at the IIFA event. Reliance Industries Chairman/Managing Director Mukesh Ambani, the world’s fourth richest man will also participate at IIFA.

This will encourage the business community in the country and will be an opportunity to draw the attention of the other global giant investors.

The Sri Lankan fashion industry has many prospects to have an exposure to the Indian market. As the cultures of both countries are similar there will be a good opportunity for local designers as well as for the models.

Sri Lankan designers Yoland And Kanchana (KT Brown) will feature in the IIFA Fashion Extravaganza an official said.

Bollywood Actor Jacqueline Fernandez said IIFA would create opportunities and benefits for the country’s tourism and film industries.

Jiffy Products Signs Investment Agreement to Expand Manufacture of Coir Horticultural Products

01st June 2010, www.dailynews.lk

The Board of Investment of Sri Lanka granted investment approval to Jiffy Products S. L. (JPSL) to expand operations under the BOI. Chairman/Director General Jayampathi Bandaranayake signed the agreement on behalf of the BOI and presented the BOI approval to the investors. The company will be investing over US $ 2.5 million for the expansion process.

Jiffy Products S.L. Limited is the Sri Lankan subsidiary of Jiffy International AS Kristiansand, Norway. Jiffy International is a US $ 250 million transnational company engaged in manufacturing, sales and distribution of plant propagation substrates, substrate systems and related horticultural products throughout the globe.

The company operates manufacturing sites in Norway, Netherlands, Denmark, Germany, Estonia, Sweden, Spain, USA, Canada, Japan and Sri Lanka. Jiffy International operates sales offices in Netherlands, Norway, Denmark, Italy, France, Germany, Spain and importers to cover Europe, US and Asia.

The motivation behind Jiffy Group’s venturing in to Sri Lanka is the availability of Coir fibre pith which is gaining popularity all over the world as a versatile plant propagation and growth medium.

Also Sri Lanka’s geographical location plays a key role in serving the fast growing Asian economies like China and India and the established horticultural markets like Japan, Australia and South Korea.

JPSL started its operation in Mirigama Export Processing Zone and has its head office located in the zone.

In 2006 JPSL started its own coir fibre pith processing plant at Pannala in the Kurunegala district. With the increased substrate capacity, JPSL ventured into other Coir substrate product lines such as Jiffy Grow Blocks, Jiffy Coco Discs and Jiffy Grow Bags.

In 2008 the company ventured in to producing its own plastic propagation trays as it represents a major portion of the cost of Jiffy Pellet Pack systems. A 75-Acre land has been acquired in the Kobeigane area in the Kurunegala District with the expectation of expanding the coir substrate capacity.

Currently JPSL provides employment for 250 and the total investment in JPSL amounts to USD eight million. JPSL earn a revenue of USD three million annually. With the new investments it is expected the revenue will increase to more than USD 5 million by the end of 2010.

Image: BOI, Chairman/Director General Jayampathi Bandaranayake with Jiffy Director Operations Frank Skapness and General Manager Sandeeptha Gamlath.

China May Set Up a Tractor Plant in Sri Lanka to Meet the Demand from the Farmers

01st June 2010, www.lankabusinessonline.com

A visiting Chinese business delegation is considering setting up a tractor assembly plant in Sri Lanka to meet the demand for the machines from the island's farmers, the investment promotion agency said.

A six-member delegation from Chengdu City, in China's Sichuan Province, held talks with the Board of Investment to explore areas of economic co-operation and investment, the BOI said in a statement.

The delegation included senior Chinese officials in the agriculture machinery and health sectors.

"The Chinese delegation's main interest was to look at the possibility of starting an assembly plant for two-wheel and four-wheel tractors, a developed industry of Chengdu," it said.

"It is estimated that Sri Lanka's annual demand is for 3,500 four-wheel and 5-6,000 two-wheel tractors."

The BOI briefed the Chinese visitors on Sri Lanka's economic climate and the Board's incentives and facilitation.

The BOI provides tax holidays and enables investors to get other incentives like duty free imports of raw material and machinery.

Also present at the meeting was Nihal Wadugodapitiya, Managing Director of the Jinasena Group, a big manufacturer of agricultural machinery.

Fast Train Services Link Sri Lanka's International Airport to Colombo City

01st June 2010, www.news.lk

A Super fast train service links the Bandaranaike International Airport with the city of Colombo from today.

The journey will take 30 minutes and it will run three to four times each way daily. This will greatly facilitate the distinguished visitors arriving this week to attend the Indian mega film awards ceremony IIFA.

Transport Minister Kumar Welgama and Member of Parliament Namal Rajapaksa inaugurated the new train service this morning.

The luxury train service is administered by the Airport & Aviation Services Limited (AASL). The AASL has hired a luxury train with air-conditioned coaches from Sri Lanka Railway for this special service.

Airport Express Luxury Train Service Operating Schedule

Sri Lanka Slashes Excise Duty on Vehicles, Taxes Taken Out on Electronic Items

01st June 2010, www.dailymirror.lk

Sri Lanka has slashed an import excise duty on vehicles by 50 percent amid a pick up in economy and demand for vehicles, lifted a general 15 percent surcharge on all imports and slashed duties on electronic items, an official said.

With effect from today a car such as an Indian made Maruti which had attracted excise duties of up to 183 percent of its value will now be charged a duty of 90 percent, Sri Lanka's director general of fiscal policy S R Attygala said.

Cars attracted over 300 in excise duties, import duties, value added taxes, port and airport development levies and national security levies.

The government expects more revenue from car imports which plummeted last year amid high taxes. Attygala said with a pick up in the economy there was a demand for vehicles including the tourist industry.

The government has also lifted 15 percent surcharge on all imported items. Several import duty bands had also been adjusted.

Current bands of 0, 6, 16, and 28, have been revised to 0, 05, 15 and 30.

But Attygala said with the removal of the 15 percent surcharge there was a reduction even in the 30 percent band as earlier a 33 percent was paid with the surcharge.

Meanwhile taxes on items such as watches and camera's have been brought down to 10 percent to encourage retail trade especially targeting foreigners, he said.

Sri Lanka is expecting a surge in tourist arrivals and in many East Asian nations including Thailand and Singapore attract visitors simply for shopping.

John Keells Group Earns Record Profit of Rs 5.2bn After Tax

01st June 2010, www.dailynews.lk

John Keells Holdings Group revenue increased by 17 percent to Rs 47.98 billion for the year 2009/10 ended March 31, 2010. Group profit before tax (PBT) increased by 4 percent to Rs 6.54 billion. Group profit after tax (PAT) attributable to equity holders increased by 10 percent to Rs 5.20 billion.

Cash EPS increased by 54 percent to Rs 12.04.

Net cash flow from operating activities increased by 136 percent to Rs 9.79 billion. Return on equity was 10.9 percent compared to 10.6 percent in the previous year the JKH Chairman Susantha Ratnayake said.

Transportation remained the main contributor to the Group’s after tax profits, contributing 41 percent to the Group’s profitability with a PAT of Rs 2.28 billion, an increase of 38 percent. The industry group contributed 20 percent to the Group’s revenue.

The group’s profits were mainly driven by the operations of South Asia Gateway Terminals (SAGT), at the Colombo port, where the throughput grew 7 percent year on year to 1.88 million TEUs primarily due to the significant growth in demand from key customers.

Leisure recorded a significantly improved performance with tourist arrivals increasing consequent to the end of hostilities.

Overall, the Leisure industry group contributed 24 percent to the Group’s revenue and 18 percent of the Group’s profitability with a PAT of Rs 973 million, this being a sevenfold increase over 2008/09 [2008/09: Rs 128 million].

In anticipation of a rejuvenated Leisure industry in Sri Lanka, a total of over Rs. 6 billion has already been invested and/or committed by the Group.

The Property industry group contributed 3 percent to the Group’s revenue and 6 percent to the Group’s after tax profitability with Rs 342 million for the year, a 30 percent decline [2008/09: Rs 486 million].

There has been renewed interest in apartments in recent months and we are currently reviewing the plans that were shelved when demand was sluggish and are revisiting our strategy to develop the Group’s substantial land bank in Colombo, Ratnayake said.

The Consumer Foods and Retail industry group contributed 33 percent to the Group’s revenue and 2 percent to the Group’s after tax profitability with Rs 88 million, this being a 28 percent decline compared to the previous year.

The Beverages and Frozen Confectionary businesses recorded a PAT increase of 15 percent due to increased volumes in the North and the East and the Retail business.

Financial Services reported a PAT of Rs 530 million, an increase of 56 percent compared to last year.

Information Technology recorded a PAT of Rs 18 million in the current year compared to the loss of Rs 167 million in the previous financial year.

The industry group contributed 3 percent to the Group’s revenue and 0.3 percent to the Group’s after tax profitability.

Plantation Services, which is included under ‘Other’ in our segment report, recorded a PAT of Rs 275 million which is a 5 percent contribution to the Group’s profitability.

The PAT increase of 56 percent was mainly a result of higher tea and rubber prices in the international markets.

“We also acquired a stake of 24.6 percent in Central Hospital (Private) Limited through John Keells Capital. Overall, the ‘Other’ segment contributed 6 percent to Group revenue and 24 percent to the Group’s profitability, Chairman Ratnayake said.

Image: JKH Chairman, Susantha Ratnayake

Sri Lanka Inflation down to 5.3pct, Long Term Treasury Bill Rates Up, Dollar Trades at 113.80/85

01st June 2010, www.island.lk, By Devan Daniel

The general level of prices increased 1.6 percent in May while the rate at which prices increase, or inflation, declined further to 5.3 percent during the month of May after reaching 6.9 percent in February, data from the Department of Census and Statistics showed.

The Colombo Consumers’ Price Index, the official inflation index in Sri Lanka, gained 1.6 percent to 215.9 points in May from 212.6 points the previous month. The annual average rate of inflation however continued to move upwards, reaching 3.6 percent.

A senior official of the Department of Census and Statistics said overall prices of goods represented in the CCPI increased 1.6 percent from April to May due to price increases of gas, flour, vegetables and fish.

"The heavy rains we experienced during the last weeks of May resulted in price increases for vegetables and fish," he said.

The Monetary Board of the Central Bank decided to hold policy rates steady at 7.50 percent and 9.75 percent for commercial bank overnight deposits and borrowings respectively with the Central Bank.

With inflation expected to be benign over the coming months, the Central Bank said there was still room for commercial banks to reduce their lending rates further and increase their lending in a bid to stimulate economic growth.

The credit stock to the private sector increased a marginal 0.1 percent in March to Rs. 1,235.4 billion from Rs. 1,234 billion in March 2009. Credit from the domestic banking sector increased 0.5 percent to Rs. 1,084.3 billion. Foreign sources accounted for credit amounting to Rs. 150.8 billion, a 2.4 percent decline from the previous year.

Net credit to the government declined by 6.9 percent to Rs. 655.2 billion from Rs. 704 billion a year ago. Credit to corporations increased by 84 percent to 96.9 billion from Rs. 52.6 billion.

However, analysts are worried that government borrowings could lead to inflationary pressure.

Public debt which was 86.2 percent of GDP in 2009, from 81.4 percent in 2008, has already expanded by 2.5 percent during the first two months of this year.

Dealers said rupee liquidity in the domestic market was still high at around Rs. 24 billion, and with relative quiet, the dollar was trading at around 113.80/85 yesterday.

With high levels of excess liquidity in the market, commercial bank appetite for government securities has not subsided.

At last week’s primary market auction to re-issue maturing Treasury bills amounting to Rs. 13 billion, bids came in for Rs. 18.3 billion. However, the Public Debt Department of the Central Bank accepted only Rs. 6.4 billion, rejecting the rest in a bid to control rates.

Rs. 6.5 billion was pumped into the system as the Public Debt Department paid off the maturing bills, for which re-issue bids had been rejected. Analysts said this was done by printing new money to this value, but the Central Bank said it has excess funds for this purpose.

If commercial bank confidence improves and more lending takes place, such liquidity injections could lead to inflation as consumption picks up.

Longer-term Treasury bill rates increased marginally last week.

The three-month Treasury bill rate fell marginally to 8.10 percent at last week’s auction from 8.13 percent a week ago. Rates on the six-month and 12-month bills increased marginally to 8.91 percent and 9.26 percent respectively from 8.88 percent and 9.23 percent a week before.

Dinesh Ambani Signs Iced Tea Project in Sri Lanka on behalf of Walters Bay Bogawantalawa

01st June 2010, www.dailynews.lk

Bogawantalawa Tea Estates PLC Chairman Dinesh Ambani, signed the BOI agreement on behalf of “Walters Bay Bogawantalawa Estates (Pvt) Ltd” to setup a state-of-the-art processing centre to manufacture iced tea in packaged form for export to Walters Bay US, in fulfilment of its contract obligations with the global multiple brands.

The initial investment would be US $ 2 Mn to set up the processing centre which provides the entire iced tea program including the brewing machine, the water filter system and own water recipe with adjusted TDS/hardness to guaranteed consistency of its product quality.

Bogawantalawa Tea Estates PLC (BTEL) is a Blue Chip Plantation Company. Its group annual turnover exceeds US$ 30 million.

BTEL shares at present are actively traded at the Colombo Stock Exchange.

The company’s high grown tea estates are located in the Bogawantalawa Valley known as the “Golden Valley of Ceylon Tea”, producing some of the most sought after high grown teas in the world.

Mukesh Ambani in Sri Lanka to Participate in IIFA Global Business Forum

31st May 2010, www.news.lk

Mukesh Ambani, the Chairman and Managing Director of Reliance Industries- the largest private sector enterprise in India, and the world's 4th richest man will arrive in Sri Lanka to participate in Indian Film Academy Awards’ (IIFA) Global Business Forum.

The forum is geared towards making Sri Lanka an investment hub. It is considered to be the highlight in the scheduled events and will define the economic and intellectual component of the four day long IIFA weekend. The forum will convene an elite group of speakers representing industry, government and academia in a candid panel discussion on the sectors that power Trade, Commerce & Investment, Cricket and Entertainment, and examine promising areas of cooperation
between Sri Lanka and India.

While serving as a platform to showcase Sri Lanka to a delegation of 50 high ranking members of India’s corporate and business world (including Ambani), the Forum will be broadcast by CNBC and CNN-IBC to over 46 countries while also attracting a host of other local and international media.

IFFA Global Business Forums in the past have attracted potential investors and businessmen to the host destination, which has resulted in a range of economic benefits to destination.

Forbes Magazine values Ambani’s personal wealth at US$29.0 Billion, making him the world's fourth richest person and Asia's wealthiest person.

Mukesh Ambani directed and led the creation of the world’s largest grassroots petroleum refinery at Jamnagar, India, with a current capacity of 660,000 barrels per day (33 million tonnes per year) integrated with petrochemicals, power generation, port and related infrastructure. Today, he leads the largest private sector conglomerate in India. Ambani will fly into Sri Lanka on his plane, Boeing 737 BBJ2.
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