30 June 2011

Sri Lanka Allows Renminbi in International Transactions as Trade & Investment with China Grows

30th June 2011, www.lankabusinessonline.com

Sri Lanka will allow international transactions to be conducted through banks in Renminbi, China's currency, as trade and investment with the country grows, the island's central bank said. The monetary authority said China's currency has been "gradually evolving as a globally acceptable currency."

"China is recognized today as the world’s second largest economy, while also being a leading player in international trade, investments, and foreign reserves," the Central Banks said in a statement.

"Since Sri Lanka too has a growing volume of trade and investments transactions with China, the use of the Chinese currency, Renminbi, in banking transactions would significantly facilitate such trade and investments."

Sri Lankan banks are now permitted to do international transactions in the Australian Dollar, Canadian Dollar, Danish Kroner, Euro, Hong Kong Dollar, Yen, New Zealand Dollar, Norwegian Kroner, Sterling, Singapore Dollar, Swedish Kroner, Swiss Franc and US dollars.

China has become a key donor of Sri Lanka in recent years and is a key source of imports to the country. Political links between the two countries have also strengthened.

China's currency is pegged to the dollar, and has large US reserves, indicating that the currency is ultimately mostly backed by US government debt, but its central bank has been gradually appreciating it against the US currency.

China invented paper money, but its use was banned following high inflation and economic collapse.

From 1971, the world has again moved to paper fiat money.

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Sri Lanka to Permit Eco Friendly Hotels in Buffer Zones of Nature Reserves to Cater to Increased Local & International Interest

30th June 2011, www.lankabusinessonline.com

Sri Lanka will permit eco-friendly hotels in buffer zones adjacent to nature reserves to cater to increased local and international interest in the island's wildlife assets, a government minister said.

Aranya Resort - Yala
Deputy economic development minister Lakshman Abeywardene said discussions would start with wildlife protection authorities next month to change existing laws and develop guidelines to regulate resorts in buffer zones.

"More than just beach tourism there is interest in building eco-friendly hotels," Abeywardene said.

"We are talking to wildlife authorities to develop guidelines."

In Sri Lanka protected areas are under the department of wildlife or the department of forests.

Abeywardene said investors were also keen to protect nature now.

"Investors now do not want to damage the environment," he said. "That is helping us a lot. They come looking for nature reserves."

Aranya Resort - Yala
Abeywardene said there had been massive protests when a hotel was built near the banks of a tank in Kandalama in Sri Lanka's central province but ultimately no damage has been done as claimed by protestors.

Jetwing Leisure group's Yala Safari Lodge, a resort that was destroyed in the 2004 tsunami, was also in a buffer zone for decades. Industry officials say the hotel had even provided resources for authorities to keep water holes filled during droughts.

Vil Uyana, a resort started by Jetwing, was built around a man-made wetland.

Abeywardene said the sea around the Hikkaduwa beach tourism area in the South West coast has been declared a protected coral reserve from this week.

Guidelines had also been issued on boat use.

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Sri Lanka Motor Sector Profitability Drops but Rising income & Economic Growth Keeps Demand High

30th June 2011, www.lankabusinessonline.com

Sri Lanka's motor sector companies' profitability has fallen after the reversal of some import tax cuts that caused a profit surge, although vehicle demand remains strong with rising incomes and economic growth, a report said.

Motor sector companies reported the highest growth in net profit for the last couple of quarters after the government slashed import duties last year, Lanka Securities said in a report on corporate earnings for the January - March 2011 quarter.

Net profit growth in the sector was 132.5 percent in the quarter from a year ago owing to the tax cuts but profits were down compared with the previous quarter.

"The sector demonstrated a monstrous growth in profitability - by 132.5 percent year-on-year to 1,119.8 million rupees - which can be attributable to the overwhelming demand for vehicles hyped by the reduction in vehicle imports duties," it said.

Nevertheless, the sector saw a 13.4 percent quarter-on-quarter drop in earnings - a sign of the fading effects of the tax revision, the report said, referring to the re-imposition of some import duties by the government.

"Hence, we are not anticipating abnormal profit growth in the forthcoming periods that was seen in the last quarter," Lanka Securities said.

"But with the prevailing economic conditions in the country and growing demand along with per capita income we anticipate sustainable growth in the companies in the sector.".

Sri Lanka's economic growth has begun to accelerate with the end of its 30-year ethnic war in 2009 with vehicle imports remaining high.

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29 June 2011

Eastern Sri Lanka Tourism Takes Off with 1,000 Star Class Rooms in Pasikuda

19th June 2011, www.sundayobserver.lk, By Shirajiv Sirimane

The picturesque Pasikuda beach, considered to be one of the top beaches in the world, was first declared a tourist zone in 1971. Unfortunately, the zone was confined to a name board. A few private entrepreneurs also laid foundation stones for several projects, but those plans were also shelved.

While tourism took off in other areas including in Trincomalee with star class hotels being built, Pasikuda did not receive the momentum for take off. It was only 40 years later that this prime destination came under the focus of Minister of Economic Development, Basil Rajapaksa under whose purview comes tourism.

After a careful study, it was decided that the name boards in Pasikuda, planted 41 years ago, should no longer be made to rust and a master plan was formulated to turn the coastal belt around to an upmarket tourist destination. However, the interests of local tourists too were not forgotten.

The first step in this direction was to lease 140 acres of state land to 13 private sector entrepreneurs. An Indian and Maldivian company too have obtained land to build hotels in this beach frontage stretching over 140 acres.


Special guidelines were also issued with each hotel having to build over 40 rooms and have at least three star plus classification. Strict environmental regulations had to be met and a 45-metre buffer zone from the sea too had to be maintained. No skyscrapers are allowed and no more than 10 rooms can be built in one acre.

An Indian company had come forward to take care of the garbage problem. It has installed a plant and will charge one US dollar from each occupied room as a fee.

One of the first hotels to be built in this tourism zone is Maalu Maalu by veteran hotelier, Chandra Wickramasinghe of Culture Club and La Kandyan hotels fame.

Minister Basil Rajapaksa said he went to Pasikuda, to lay the foundation stone for the Maalu Maalu Resort and Spa on June 22, 2010. “On May 30, 2011, I was in Pasikuda again to open the Maalu Maalu Resort and Spa. This is a huge achievement within such a short period of time,” he said.

While congratulating Chandra Wickramasinghe, Chairman of the Maalu Maalu Resort and Spa and his staff for their excellent achievement in this challenging era he said this hotel is a part of the massive development projects currently under way in the Eastern Province.

”This includes livelihood, infrastructure, agriculture, fisheries and industrial development projects under the Reawakening of the East Program.”


"After the end of 30 years of terrorism, we have now entered a period of massive development that is not only for this region, but covers all regions of the country."

"As evidenced by the opening of the Maalu Maalu Resort and Spa in the once war-torn Eastern Province, Sri Lankans will enjoy the full benefits of post-conflict economic growth very soon," the minister said.

Wickramasinghe said that Pasikuda was one of the first areas in the South Asian region to be named a tourism zone, but sadly it did not take off. “We must thank the Minister for taking this initiative,” he said.

He said one of the main reasons for him to invest Rs. 360 million in Pasikuda was the manner in which the zone was planned by the Government and also the infrastructure that were provided to them.

“The transparent and professional manner in which the 30-year leased lands were distributed was praiseworthy. Thanks to the personal guidance of Minister Rajapaksa, today Pasikuda is the first planned tourist destination in Sri Lanka,” he said.

Wickramasinghe said he laid the foundation stone for the project in June 2010 and the hotel was commissioned last month, which makes it one of the quickest star class hotel projects to be built in Sri Lanka. The hotel now offers 40 luxury chalets, spa, infinity swimming pool, gym, Karaoke bar, disco, cable TV and many other amenities.

Wickramasinghe said that tourism is gearing for good times and the East coast would be a major tourist attraction. “I am confident of recovering my investment in five years,” he said.

He said unlike many global tourist destinations where there are off seasons, when it comes to Pasikuda there is no off season, which is a major plus point for investors. “This destination could help Sri Lanka attract new tourists from markets such as the Gulf and Australia.”

He also said unlike for many tourist projects launched in many new destinations all over the world, there were no objection from the public for this zone. “In fact, people in the area treat us like gods. During the construction period we did not even lose a nail,” Wickramasinghe said.

He said this is because people know that being an unmarketed destination the social pollution to the area would be low and since there is a limited population they can earn high income from the industry.

Reaping benefits

He said local contractors are already reaping benefits from the project as the hotels metalwork contract was handed over to a mini welder for Rs. 25 million. "This is the biggest contract he has handled and other hoteliers are already contracting him since he is very efficient."

Commenting on the infrastructure of the area, he said that it had taken over nine hours to get to Pasikuda. Now with carpeted roads and two new bridges being built, the driving time from Colombo is just around six hours. Train services have begun and a new sea plane landing port too is being built. New telecommunication towers, water lines and satisfactory connections too are being provided. "Even the bookings are flowing in and we have nothing to complain about," he said.

He said they are also happy with the staff from the area "who are very dedicated and most importantly, are quick to get in to the mindset of the leisure industry".

Deputy Director Planning, Tourism Development Authority Hemantha Wjekoon said the Government, on its part, while providing land for the investors, has also invested Rs. 800 million on infrastructure development in the area.

Twelve other investors have come forward to construct star class hotels with the total investment being Rs. 5,483 million. Over 90 percent of the rooms in the Maalu Maalu resort would be ready by the end of this year and many will open for December.

He said the Tourism Development Authority, in a bid to meet the local demand, has launched a program to register private residences with over six rooms as tourist hotels. He said about 296 such residences have already registered with them.

Commenting on the infrastructure for local tourists, Wijekoon said that a special area with beach frontage has ben dedicated to them. The Government has built modern toilets and changing rooms and would be providing locker rooms for day-users of the beach.

Modern facilities

A shopping complex, open air theatre, aquarium, dingy pier, art gallery, tsunami memorial tower and tsunami warning centre, Tourist Board office, car and bus park, medical centre, sewerage treatment plant, sports centre, life guard's post, cycle path, green belt and other facilities too would be built. Once again, most of this infrastructure is already falling in to place.

The fishing communities, which had been somewhat displaced by this development, have been provided a special area with a fish market being built for them. Companies such as Odel and Cargills have also requested for space in the proposed shopping complex.

"Our plan is to have 1,000 three star plus rooms in Pasikuda. The next region where we plan to have a similar tourism belt is Vakarei and Silawatura," he said

With the dawn of peace, local tourists are already flocking to Pasikuda, especially during weekends. An official from the Valachchenai Pradeshiya Sabha said that over 50 buse loads of people - from all over the country visit the beach. Due to this demand, a basic room in the area costs is around Rs. 1,500 and an air-conditioned room is priced at over Rs.3,000.

When high spending foreign tourists plan their holiday the name Pasikuda along with Gold Coast, Bali and Phuket, too would be in their agenda, further boosting the image of the country.

Minister of Economic Development Basil Rajapaksa, Deputy Minister, Lakshman Yapa Abeywardana and Chairman SLTDA, Dr. Nalaka Godahewa at the opening of the Maalu Maalu Spa, the first resort to open in the area after the ending of the conflict.

The foundation stone being laid by Minister Basil Rajapaksa and Chairman Maalu Maalu Resort Chandra Wickramasinghe.

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28 June 2011

Sri Lanka's Commercial Production of Oil Could Start by 2017 - Professor Stuart Burley of Cairn India

28th June 2011, www.news360.lk

Professor Stuart Burley, Head of Geo sciences of Cairn India says commercial production of oil in Sri Lanka will start by the year 2017.

He said this is taking into consideration that the country succeeds in finding oil in the Gulf of Mannar basin.

Burley who was speaking at a workshop held in Colombo this morning reiterated Cairn’s plans to start oil drilling work in the Gulf of Mannar during this August.

He said, 3 wells have been identified in the Mannar basin to start drilling activities and added that the explorers will drill one well at a time,

Burley says, drilling a well takes over 01 year while the Appraisal and the Development part will take another 4 years, leading up to starting of commercial production.

Cairn is planning to drill a well up to a depth of 3.5 kilometers.

“We believe there is oil and gas at that level” added Burley.

Already Cairn has hired “Chikyu deep-water drill-ship” from Japan to start drilling activities, which Burley says is a world class facility.

He says the cost for hiring a drill-ship per day runs up to US$ 500,000.

According to Burley finding of a “source rock” in Pesale, an area which was tested for possible existence of oil in the seventies is an indication of having oil and gas in the area.

Gulf of Mannar basin and Pesale is located in the same area.

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CSE's Automated Surveillance System Helps Detect Breaches of Securities Law of the Colombo Bourse. System Supplied by Millanium IT

28th June 2011, www.news360.lk

Securities and Exchange Commission says the “Automated Surveillance System” currently up and running in the CSE has helped the surveillance activities of the bourse.

According to the Director Surveillance of the Securities & Exchange Commission Chandu Epitawala, so far the system has helped to identify about 15 possible breaches of “securities law” taken place in the CSE during this year.

SEC says the system formally started operating from the 1st quarter of this year, but was under testing for nearly 6 months since the last quarter of 2010.

The system provides SEC with an analytic platform that supports and accelerates investigations and research functions.

A product of Millanium IT, a member of the London Stock Exchange, the system is also linked to several data bases of insiders of listed companies, their related parties and market intermediaries.

This situation according market regulator accommodates speedy detection of insider dealing.

Epitawala also said the Rs. 20 million worth state of the art system is installed in the London Stock Exchange and the Egyptian Stock Exchanges.

The SEC in its 2010 annual report said it has detected nearly 30 cases which are suspected to have breached the “Securities Law”.

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Sri Lanka Lures back Apparel Buyers Who Went to Bangladesh, Vietnam & Cambodia by Its Superior Service Levels

27th June 2011, www.lankabusinessonline.com

Sri Lanka has begun luring back foreign apparel buyers who shifted to other Asian producers following the global economic crisis after they failed to meet buyer expectations, an exporter has said.

Orient Garments, which is to list on Colombo Stock Exchange's second board, also said it aims to capture orders now supplied by Eastern Europe by offering shorter lead times.

"It has been evident that some of the world's leading apparel buyers have shifted their sourcing towards low cost countries such as Bangladesh, Vietnam and Cambodia from Sri Lanka in the light of the global economic turmoil," the company said in its prospectus.

"However, due to the reason that particular low cost destinations have failed to accomplish service levels with required standards such buyers are gradually returning to Sri Lanka."

According to the prospectus of the firm, which a unit of Sri Lanka's Finco group, Sri Lanka can also benefit from rising costs in China.

"Challenged with currency appreciation, subsidy withdrawals and escalating labour costs China is rapidly turning into an unprofitable garment manufacturing destination," it said.

"This trend in China presents an opening for Sri Lanka to reinforce its position as a cost effective sourcing country in the global fashion industry."

Orient Garments said Sri Lanka's garment manufacturing sector has been able to overcome hurdles like the end of textile quotas and the withdrawal of GSP+ import duty concessions by the European Union.

The company said it also plans to seize the demand in European countries for apparel orders shipped within a short lead time which is currently catered to by Turkey and other Eastern European countries at a premium price.

It plans to allocate 20 percent of its existing capacity of 3.1 million pieces to process export orders which require quick response time.

"Under the new scheme, the company will deliver goods within nearly 70/80 days from the order acceptance instead of 100/120 days," it said.

"This will enable the company to increase the market share by capturing new market segments while increasing its profitability by way of adding a premium to its price."

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Orient Garments supplies international fashion brands and retailers such as NEXT, Tesco, Tommy Hilfiger, Polo Ralph Lauren and Burberry.

It has five garment manufacturing plants with almost 1,500 direct sewing machines, two embroidery units with 105 embroidery sewing heads, and nearly 3,500 workers.

Bahraini Investors to Visit Sri Lanka Following the Agreement Signed between the Two Countries

26th JUne 2011, www.thebottomline.lk, By Srian Obeyesekere

A high level team of foreign investors will visit Sri Lanka shortly to explore the possibilities of investing in Sri Lanka following an agreement signed between the governments of Sri Lanka and Bahrain at the Finance Ministry in Colombo on Friday.

The agreement, which was signed between Sri Lanka’s Senior Minister for Finance, Dr Sarath Amunugama and the Prime Minister of Bahrain, Ahmed Bin Mohamed Kalitja is expected to make a significant contribution in boosting Sri Lanka’s economy, the minister said.

The agreement between the two countries also covers tax relief covering investors under which the hitherto 20 per cent tax levy on foreign investors has been cut down to 10 per cent applying to both countries, Minister Amunugama announced.

“While the 10 per cent tax reduction in respect of investors from Bahrain to Sri Lanka or vice versa will promote foreign investments, Sri Lanka’s economy will also be boosted with Bahrain opening the doors to Sri Lankan specialised in the fields of technology, teaching, finance and banking, tourism, IT and airlines for whom there is a big demand in Bahrain,” Minister Amunugama said addressing journalists soon after holding discussions with the Bahrain prime minister and stressed that this would add to the foreign exchange revenue impetus from the Middle East amounting to Rs. 6 billion annually.

“Today, a round Rs. 6 billion is remitted annually from an estimated one million Sri Lankan expatriate workers in the Middle East and I must say this has raised the living standards of the villagers who largely benefit by way of starting their own businesses, buying vehicles and building houses,” Minister Amunugama added.

He commented that the demand from Bahrain for Sri Lankan experts was a vindication of Sri Lanka being what he described as ‘the biggest country with people holding diplomas in accounting, ICMA and finance.’

He said that the people of Sri Lanka were so advanced that today, the 21 million population had an equal number of mobile phones.
“There are 21 million mobile phone users in our country which is equal to the population in the country.

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Prof Philip Kotler Praises Sri Lanka's Public Sector. Marketing Guru Impressed with Performance of STC

10th June 2011, www.ft.lk

Sri Lanka has a dynamic public sector which is successfully competing with the private sector in the field of marketing, said world renowned marketing guru Prof. Philip Kotler speaking at a public forum at Waters Edge, Battaramulla, Saturday 4 June evening.

The event was organised by State Trading (General) Corporation (STC).

Prof. Kotler appreciated the positive impact of the ‘Mahinda Chinthana’ policy on the development of public sector marketing activities. He said he was highly impressed with the performance of STC and especially the capabilities shown by it in the organisation of the forum.

The healthy competition between the private and State sectors augurs well for the country as its ultimate beneficiary would be the consumers, he added. Speaking about Sri Lanka he said it was the most hospitable among 82 countries he had visited. “Sri Lanka has a great potential for developing tourism,” he added.

Central Bank Governor Ajith Nivard Cabral and Post-graduate Institute of Management Chairman and CEO Prof. Uditha Liyanage conducted the panel discussion.

Education Minister Bandula Gunawardena, Science and Technology Minister Pavitradevi Wanniarachchi, Foreign Employment and Welfare Minister Dilan Perera, secretaries to the ministries and other Government officials, chairmen and CEOs of State and private sector institutions and over 250 invitees were present at the forum.

Image Courtesy : www.lankapuwath.lk

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26 June 2011

Sri Lanka's Port City Gets $700mn Investment. Land Reclaimed by Construction of Colombo's New Harbour to be Utilized

24th June 2011, www.lankabusinessonline.com

The Sri Lanka Ports Authority (SLPA) has secured a 700 million US dollar investment to build a 'port city' on land reclaimed on the capital's seafront with the construction of a new harbour.

SLPA chairman Priyath Wickrama said material dredged to build the new port next to the existing Colombo harbour will be used for the reclamation of about 200 hectares.

"We have got an investor who will invest 700 million US dollars for the landfill," he told a public forum, without naming the investor.

The land will be given on a 99-year lease and be used to build a 'port city' with port-related businesses along with other activities.

"The project will take 39 months to complete," Wickrama said. "It will have a mini-golf course, a Formula One race track, a small yacht marina and areas for water sports."

The land reclamation will be on the southern side of the new Colombo South Harbour, a deep-water port being built next to the existing port.

It is meant to cater to the latest generation, bigger container vessels which are too big to call at the existing Colombo port.

The dredging and breakwater of the new port was funded with a loan from the Asian Development Bank.

A consortium led by China Merchants Holdings which has partnered with the local Aitken Spence conglomerate is to build the new port's first container terminal at a cost of 500 million US dollars.

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First Ever IPO Fund in Sri Lanka Launched by Ceylon Asset Management

22nd June 2011, www.dailynews.lk, By Sanjeevi Jayasuriya

The country's first ever IPO fund was launched yesterday with focus to broadbase investor strength especially regarding retail investors. The Fund will invest only in IPOs in Sri Lanka providing an opportunity for the retail investors to increase their share purchasing powers at IPOs.

We do not invest in the stock market and the investors are guaranteed a fixed return on their investment, Ceylon Asset Management Managing Director Dulindra Fernando told the Daily News Business.

“Asia has a fast growing IPO market with two third growth coming from this region. The IPO companies represent new Sri Lanka and there will be an IPO boom in the country in the next five years,” he said.

The lull period in the Sri Lankan IPO market for the past decade due to war is now having an upward movement and there are a large number of IPOs in the pipeline.

“These companies secure funds to expand in the fast growing sectors in the Sri Lankan economy and markets. This will fuel the golden era of fast GDP growth, ” Fernando said.

The fund will offer direct exclusive opportunity for retail investors where its returns will not be subject to the volatility in the stock market. A special promotional offer of Rs 1,000 investment will be there to encourage the retail investors where the Units are offered at Rs 10 each.

Ceylon Asset Management (CAM) and Deutsche Bank AG have joined hands to launch the IPO Fund to exploit an opportunity created by the Security Exchange Commission of Sri Lanka (SEC).

The SEC has passed legislation that reserve 10 percent of each IPO for eligible Unit Trusts.

The tax-exempted Unit Trust is designed to safeguard capital investors while generating tax-free interest income by investing all excess cash in short term fixed income instruments.

The Fund will accept investments upto a maximum of Rs 10 million where several high profile IPOs are expected during this year.

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Sri Lanka Tourist Arrivals in May 2011 Up by 39pct

25th June 2011, www.lankabusinessonline.com

Tourist arrivals to Sri Lanka rose 39 percent to 48,000 in May 2011 from a year earlier, led by increases in visitors from India and East Asia, data from the tourist promotion office showed.

Last year arrivals rose 46 percent after a 30-year war ended. In the five months to May arrivals are so far up 40.2 percent to 327,902 from a year earlier.

In May visitors from India rose 55 percent to 16,649 driving arrivals from South Asia up 53 percent to 21,016.

East Asian visitors rose 66 percent 6,605, with across the board increases in most countries. Chinese visitors rose 100 percent to 1,337, while those from Japan rose 43 percent to 1,054, Malaysia was up 57 percent to 1,194 and Thailand

was up 179 percent to 785.

Arrivals from Western Europe rose 17.4 percent to 12,419 with French visitors rising 81 percent to 2,758.
Visitors from Britain fell 0.4 percent to 4,452 while German arrivals rose a modest 3.2 percent to 2,137.

Sri Lanka's resort tourism industry is now facing the so-called 'off-season' for European visitors who peak during the northern hemisphere winter.

The island's main beach resorts in the Western and Southern areas also face wet weather during the time.

However the island is now developing its East Coast for tourism after the end of a 30-year war which provides sunny weather at this time of the year.

Heavy demand has also pushed up room rates in Sri Lanka above comparable East Asian competitors.

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Sri Lanka's Jetwing Plans Resorts in Central & East to Add 500 Rooms over next 2 Years

25th June 2011, www.lankabusinessonline.com

Sri Lanka's privately held Jetwing leisure group, is planning new project in the central and war-torn eastern areas of the island that will add 500 rooms over the next two years catering to a post-war boom, officials said.

"We are really excited about the East and we want to build in Trincomalee, Arugam Bay and Pasikudah," Jetwing chairman Hiran Cooray said.

"We think there is lot of potential in the East."

Tourist arrivals have increased by 46 percent last year and the five months up to May arrivals have increased 40 percent to 328,000 from a year earlier.

Pasikudah, a once popular resort destination before ethnic riots and the Tamil Tiger insurgency is making a gradual comeback with hoteliers aggressively constructing hotels along the bay.

In May 2011 Maalu Maalu Resorts and Spas opened a 40 chalet fishing village style resort in Pasikudah, the first resort hotel to complete construction in the small fishing hamlet since the end of the war in May 2009.

The Jetwing group is looking at building an managing a 750 million rupee 80 room resort in Pasikudah.

"We are looking at 50 rooms in the first phase and another 30 in the second," managing director of Jetwing Hotels, Ruwan Samarasinghe said.

"Construction will begin as soon as approval comes."

Jetwing upgraded a hotel in Negambo, near Sri Lanka's international airport in the Western coast Friday to 4-star standard Friday relaunching it as 'Jetwing Blue'. The firm said it spent 8 million US dollars to spruce up the 112 room

property spread across nine acres.

The group has four properties in Negambo.

The company has already announced plans to build hotels in Colombo, Jaffna, Uppuveli and Nilaveli in Trincomalee, Kandy, Yala and Dambulla.

Jetwing says an 80 room four star hotel is on the cards for Dambulla, which will cost 800 million rupees to build.

The construction of the hotel will consolidate Jetwing’s presence in the island’s cultural triangle of Anudhapura, Polonnaruwa and Dambulla where the main tourist attraction is Sigiriya, an ancient rock fortress.

Construction of the hotel in Dambulla is set to begin over the next six month.

“We hope to add 500 hotel rooms to the industry within the next 24 months”, Jetwing’s Head of Sales and Marketing, Trevor Reckerman said.

Tourism authorities are expecting 750,000 arrivals this year and plan to attract 2.5 million tourists by 2016. Officials estimate that the industry needs 35,000 hotel rooms to cater to the demand up from the current 15,000.

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Sri Lanka to Continue Visa on Arrival Following Concerns about Impact on Tourism. Online Visas also to Function

26th June 2011, sundaytimes.lk, By Sunimalee Dias

The Government will continue with the Visa-on-Arrival (VOA) scheme from September for a short period while at the same time implementing the new online-visa for visitors, following concern from the trade that the move could reduce tourist numbers.

Deputy Economic Development Minister Lakshman Yapa Abeywardena told the Business Times that both the current (VOA) and proposed online system will operate until the new system is fully operational and depending on the feedback from visitors.

The online visa scheme operative from September, ironically when the lucrative winter season starts, could turn into a crisis with industry sources saying this would affect arrivals . However some sources say the twin schemes, even though temporary, could also cause a lot of confusion.

The online visa system is likely to have a “substantial impact” on the tourism industry with figures set to drop as it is coming at a time just prior to winter arrivals, Tourist Hotels Association of Sri Lanka (THASL) President Anura Lokuhetty told the Business Times, days before Mr Abeywardene explained that both systems would work.

Mr Lokuhetty urged that this scheme be delayed at least until May next year when the industry comes around (improves). “Winter will get definitely affected,” he said adding that most arrivals from India will be impacted.

Currently, India is the number one market for the tourism industry in Sri Lanka overtaking UK and Germany with the highest number of arrivals for last month growing by 55%. While Sri Lanka continues to place restrictions with marginal or no promotions the country is set to lose in the backdrop of competing nations like Malaysia at 15 million visitors, Thailand with 14 million and Singapore projecting 12.5 million arrivals this year. These countries have “massive tourist arrivals but still there are no visa restrictions,” Mr. Lokuhetty noted.

Indian tourists are likely to be hit the worst as Jetwing Hotels Chairman Hiran Cooray pointed out they will not be able to come down to Colombo on the spur-of-the moment anymore. While the government notes that such a system is required for security concerns however, the industry believes this could adversely affect the budding sector trying to make a comeback and grab a slice in the highly competitive market.

The industry noted that any discussions with the government after decisions have been taken will be beyond them right now. “We have no say on the matter,” Sri Lanka Inbound Tour Operators (SLAITO) President Nilmin Nanayakkara said adding that this new regulation was to be implemented in August last year however; due to objections by the industry it was postponed.

He however noted that should the online visa system be “user friendly” as explained to them the impact on arrivals could be minimal. The new system could reduce arrivals from the 800, 000 target for this year although an increase is envisaged over 2010.

A similar move was averted by the tourism industry back in 2007 with the imposition of an additional 10% on visa fees, which was later postponed.
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Indian Tourists, A Major Market for Sri Lanka’s Tourism Industry

25th June 2011, www.island.lk

India constitutes a big market with a growing middle class who creates an increasing demand for travel and tourism. This provides a major source market for Sri Lanka’s tourism industry, provided that the tourism industry is set to capitalize on the opportunity that it has within close proximity by recognizing the specific features of the Indian tourists.

Dr. Sirimal Abeyratne, Professor of Economics of the University of Colombo, made this remark presenting his research findings on the issue at the Sanvada Seminar of the Pathfinder Foundation, held at the Sri Lanka Institute of Tourism and Hotel Management on June 9.

The seminar was complemented by a timely and well researched analytical study for the Pathfinder Foundation, the economic think-tank on the Indian tourism market. This study includes a detailed analysis of the current status and characteristics of Indian tourist arrivals in Sri Lanka, and identifies a number of benefits from further promotion.

The seminar was chaired by Professor Rohan Samarajiva, Executive Director of Lirneasia, while Mr. Anura Lokuhetti, President of the Tourists Hotels Association of Sri Lanka and Mr. Hiran LinkCooray, Chairman of Jetwing made presentations.

According to eminent academic Professor Abeyratne, Sri Lanka attracts only about 1% of over 11 million Indian tourists whose attractive tourist destinations are Singapore, China, Thailand, Hong Kong and USA. These countries attract ‘high income’ and ‘upper-middle income’ tourists, while Sri Lanka caters to the Indian tourists from the ‘lower middle’ income groups.

Indian tourists are different from the Western tourists in terms of tourism interests and purposes, seasonal variation of arrivals, tourist nights spending and, tourism expenses. By identifying the importance of this growing market and its special characteristics, Sri Lanka should create a differentiated tourism product market, adopt simple and clear immigration procedures and develop regional ‘entry points’ by air and sea in the Northern part of Sri Lanka.

In addition, Indian tourism is associated more with business, shopping, and other purposes than with leisure. According to Professor Abeyratne, it is important to create a tourism sector that caters to divergent tourism interests and strengthen economic integration with India.

Mr. Anura Lokuhetti, President of the Tourists Hotels Association of Sri Lanka, elaborated the importance of the growing Indian economy and its middle class who creates an ever-increasing demand for travel and tourism. As India is projected to have over 50 million outbound tourist departures by 2016, given the close proximity Sri Lanka has the potential to become a major tourist destination for Indian tourists.

Mr. Hiran Cooray, Chairman of Jetwing, highlighted the importance of learning how to cater to the Indian tourists as they are a highly diverse group which requires designing differentiated tourism products to cater to all. He also stressed the potentials that Sri Lankan tourism industry possesses to cater the big Indian market, but as at present Sri Lanka caters only to its lower-end tourist market.

Wrapping up the Sanvada Seminar, the Chairperson, Professor Rohan Samarajiva, Chairman of Lirneasia, pointed out the importance of ‘Patel Points’ in USA, UK and many other countries which provide a memorial attraction to the Indian tourists. In Sri Lanka, there is hardly any ‘Patel Point’ that attracts Indian tourism.

The Sanvada Seminar is aimed at studying the importance of Indian tourist arrivals for the tourism development of Sri Lanka with inputs and comments from the resource persons to feed into a policy debate.

The final outcome of the event is to prepare a Policy Brief which will be distributed among the Parliamentarians, policy makers, and other government and non-government agencies in guiding the policy formulation.

The Pathfinder Foundation is conducting this seminar in collaboration with the Centre for Indo – Lanka Studies, interested parties on the studies can contact via phone 2372895 or e-mail to pm@pathfinderfoundation.org

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Sri Lanka Appoints Four Banks as Joint Lead Managers to Handle Sovereign Bond Issue

25th June 2011, www.island.lk

Sri Lanka’s Central Bank has appointed Bank of America Merrill Lynch, Barclays Capital, Hongkong and Shanghai Banking Corp, and Royal Bank of Scotland as joint lead managers to advise and handle a future international sovereign bond issue.

The appointments were made after evaluating proposals received from seven top international banks and investment houses, a statement said.

The central bank has said it intends to sell a billion US dollar sovereign bond this year with the money to be used to help pay off debt and build infrastructure.

Central bank governor Nivard Cabraal said the bond’s tenure was likely to be 10 years.

"We don’t want to go longer because then the situation will get tighter and tighter," he told LBO Wednesday.

"We don’t want to lock ourselves to a current credit number for a longer period. Interest rates – we cannot say for sure because it will depend on the world market conditions. We would certainly expect the rate to be lower than last year."

Cabraal said he expects the bond to be well received given the island’s accelerating economic growth after the end of its 30-year ethnic war.

"There is no doubt in anyone’s mind about Sri Lanka’s performance so we do not foresee any anxiety. So it will be a fairly well received credit."

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Sri Lanka's ICT Workforce Doubles in the Past Four Years

24th June 2011, www.lankabusinessonline.com

Sri Lanka's information and communications technology workforce has doubled in the past four years as the island ramps up training and investment to make the sector a key export industry.

A new survey said the number of ICT sector jobs increased by 100 percent to over 62,000 this year from 30,120 in 2006. Over 50,000 people are estimated to have been employed in the IT sector in 2010.

The national ITC workforce survey by the state-run Information and Communication Technology Agency covered 80 state institutions, 325 private sector firms, 30 BPO (business processing outsourcing) firms, and 75 IT training institutes.

It also showed that the number of female workers in the BPO sector was increasing and now accounted for 43 percent of the total BPO workforce

Reshan Dewapura, chief executive of ICTA, there had been 4,473 ICT graduates in 2010 of whom 3,970 were employed.

The ICT sector earns 375 million dollars a year and is now the island's fifth highest foreign exchange earner, he told a news conference.

The industry aims to increase the ICT sector export earnings to a billion dollars by 2016, he said.

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Sri Lanka Introduces Bus Ticket Booking Via Mobiles

21st June 2011, www.dailynews.lk

The National Transport Commission together with Dialog Axiata present the future of public transportation services in Sri Lanka with the introduction of the Mobile Bus Ticketing facility, allowing passengers to pre-book and purchase tickets through the mobile phone.

This innovative new service is implemented under the purview of the National Transport Commission, and seats could be reserved through this system on private transport buses plying identified long-haul routes. Colombo - Badulla, Colombo - Ampara and Colombo - Kataragama are the routes available with this service at the outset, and this would be extended to other long distance routes islandwide in the nearterm.

"The use of technology to enhance the passenger transport experience is a significant step in our national development drive as espoused in the Mahinda Chinthana. This effort will increase passenger convenience, and I'm pleased to have given lead to a programme of this manner.

There will no doubt be numerous challenges, but the National Transport Commission together with Dialog will be able to overcome these," Private Transport Minister C B Rathnayake," stated.

Speaking at the launch ceremony, Dialog Axiata Group Chief Executive, Dr. Hans Wijayasuriya, said: "Dialog strives constantly to empower every aspect of Sri Lankan life, and we acknowledge the commitment and encouragement received by the

minister and his staff to make the convergence of technology into the transportation sectors a reality."

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Sri Lanka's Aitken Spence Net Profits up by 20pct in March 2011

31st May 2011, www.lankabusinessonline.com

Sri Lanka's Aitken Spence group, which has interests in tourism, shipping, power and plantations said profits rose 20.7 percent to 754.4 million rupees in the March 2011 quarter, with revenues flat at 6.9 billion rupees.
In the full year to March the group's revenues rose 4.0 percent to 25.1 billion rupees and profits rose 23.4 percent to 2.53 billion rupees.

Aitken Spence said performance was helped by strong growth in tourism. The group owns or operates hotels in Sri Lanka, Maldives, India and Oman. Tourism arrivals to Sri Lanka have surged following the end of a war in 2009.

"I welcome the spirited and upbeat sentiment in the economy and believe that the next few years will bring the transformation of Sri Lanka to a truly competitive emerging economy," Aitken Spence chairman Harry Jayawardena said in a


"For Aitken Spence, our advantage will be on our home ground and this will be reflected in our interests within Sri Lankan economy.

"I can say with certainly that we will invest to expand our existing positions of strength while also aggressively exploring fresh opportunities for diversification in to growth sectors of the economy."

The group had it has fully refurbished three 'Heritance' branded premium properties.

A resort Heritance Ayurveda Mahagedara will be opened next month, while construction started on a 'Six Senses' hotel in Ahungalla in the South West coast which is expected to be finished in 2013.

A resort in Kalutara 'The Golden Sun' is closed for refurbishment upgrade to 4-star status and is due to be opened in December. A hundred new rooms will also be built pushing the total to 200.

A 200 room hotel will be built on the location of Browns Beach hotel which is being demolished. A new property will be built in a land in Nilaveli the eastern coast. In April the group had got majority ownership of Hilltop Hotel.

Tourism had brought 1.6 billion rupees in annual operating profits, up from 1.17 billion rupees a year earlier. Strategic investments brought in 1.6 billion rupees in operating profits, down from 1.4 billion rupees a year earlier.

Aitken Spence with China Merchant Holdings (International), a Chinese state firm, was making site investigations after getting a concession to build container terminal in Colombo port. It is expected to be built by 2013.

The firm had also bought Logilink (Pvt) Ltd, a container freight station catering to the garment industry. The cargo logistics sector brought in 601 million rupees in profits, down from 623 million a year earlier

The firm's thermal power sector has seen lower generation due to rain, but hydro power and wind power plant was in the works.

Sri Lanka's Aitken Spence Plans Resorts Complex in East at $100mn

18th June 2011, www.lankabusinessonline.com

Sri Lanka's Aitken Spence group, which runs resorts in Maldives, India and Oman is in talks with two international chains to find a joint venture partner to build a 100 million dollar leisure complex in the island's east coast, an official said.

The complex will be made up of two hotels, residential villas and entertainment facilities. One hotel will be built by Aitken Spence under its flagship 'Heritance' brand and the second will be built by the joint venture partner.

The group owns 108 acres of beachfront property in Nilaveli in Sri Lanka's eastern coast.

"We are looking at a high end integrated mixed development," Malin Hapugoda who heads the Aitken Spence's hotel division said.

"We are talking to a couple of brands."

He said the entire complex may cost 100 million US dollars to build with the contributions from the chosen joint venture partner.

In 2010 tourist arrivals to Sri Lanka surged 46 percent to 654,000 from a year earlier after a 30-year war ended in 2009.

Up to May 2011 arrival are up 40 percent to 327,000 and investors are scrambling to build new hotels. The war's end has also opened the former battle fields in the east for economic activity.

Hong Kong based Shangri La has bought beachfront property in Sri Lanka's capital Colombo and Hambantota in the South. The firms are planning 500 million dollar, hotel, leisure and apartment complexes in Colombo.

Aitken Spence and Six Senses an international leisure group almost finished a resort in Sri Lanka's South West coast with residential villas and luxury tents.

Hapugoda said the new resorts with international brand names would raise the image of the country and help bring in high end tourists.

But Sri Lanka's west coast is lashed by monsoon rains from May, ending a 'winter season' for European visitors, which runs from November to April. The monsoons in the East start around November.

Resorts in the east can make Sri Lanka a year-around destination for sun seekers.

"Sri Lanka's market mix is changing," Hapugoda said. "Indians travel right round the year. Middle Easterners come from July to August."

Singapore's Banyan Tree said it was also looking to build an integrated resort in the east.

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