31 March 2011

Lancashire University to Set Up Rs35bn Uclan Sri Lanka, the First Research Based UK University in Sri Lanka

31st March 2011, www.dailynews.lk, By Ramani Kangaraarachchi

The construction of the first research based UK university in Sri Lanka is expected to commence this year on a 200 acre land. The project will have Rs 35 billion transaction value and create more than 3,000 employment opportunities other than academic jobs.

A high powered delegation from Uclan (Overseas Limited) University of Central Lancashire CEO Ian Robertson arrived in Sri Lanka on Tuesday to make the official announcement on the Pounds 30,000 million investment which is a BOI project.

The Central Lancashire University is a leading UK university widely regarded for international research partnerships in 17 different countries.

Robertson told Daily News Business that following initial discussions he had with Uva Wellassa University Vice-Chancellor Chandra Embuldeniya two years ago regarding this project, a survey conducted revealed that Sri Lanka is a source of talents with huge potential to become an education hub in the region.

The university will be named as Uclan Sri Lanka.

A lot of work has been completed by now including the concept, designs, programs and he appreciated the interest and attitude of the Sri Lankan Government to have a unique university focused on the entrepreneurial needs of the country that could be extended to global needs.

This university will add new knowledge to the country and generate intellectual properties, Robertson said.

Robertson said the international demand for education is growing rapidly and the industry will have to play a huge role. Therefore sixty percent of students will be from overseas to follow around twenty one undergraduate programs which include automobile, nano technology, healthcare, tourism and fashion with research facilities as required. It is expected to enrol the first batch of students in 2013 and the faculty will include both local and foreign personnel, fifty percent from each.

Ten thousand students could be accommodated once the whole project is completed within five years. Sri Lanka will be the international centre for research and conferencing on scientific subjects in the future with the commencement of this university.

Image: UK delegation Head and CEO Ian Robertson with Uva Wellassa University Vice-Chancellor Chandra Embuldeniya. Picture by Lalith Gamage

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30 March 2011

Sri Lanka's First Post War Year Achieves GDP Growth Rate of 8pct. 2009 only 3.5pct. Highest Ever Achieved Since Independence was 8.2pct in 1968 & 1978

30th March 2011, www.ft.lk

Sri Lanka in its first post-war year achieves 8% growth, second best ever in history behind 8.2% posted in 1968 and 1978; Industry and Services sectors grew unprecedentedly by over 8%, marking highest-ever growth since 2002.

The value of country’s Gross Domestic Product (GDP) crossed the Rs. 2.6 trillion mark in 2010 registering a second highest ever annual growth of 8%.

The Department of Census and Statistics revealed yesterday that the economic output of Sri Lanka as measured by GDP for the year 2010 at constant (2002) prices is estimated at Rs. 2,645.4 billion as against Rs. 2,449.2 billion in the previous year, registering an 8.0% growth rate as against 3.5% growth in the previous year.

“This impressive high growth is more important for the country’s economic progress and it is the second best GDP growth ever achieved since independence,” the Department of Census and Statistics said. “The highest-ever achieved GDP growth in the history of the country was 8.2%, and it was recorded in the years 1968 and 1978,” it added.

The three major sectors of the economy – Agriculture, Industry and Services – registered significant growth as 7.0%, 8.4% and 8.0% respectively, in 2010 over the previous year. Of these, Industry and Services sectors grew unprecedentedly, marking the highest-ever growth since 2002.

The sub sectors which registered relative significant growth among the major sectors in the reference year are Tea 13.1%, Rubber 12.7%, Minor Export Crops 37.6%, Paddy 17.5%, Fishing 12.2%, Mining and Quarrying 15.5%, Construction 9.3% , Electricity Gas & Water 7.8%, Wholesale & Retail Trade 7.5%, Hotels & Restaurant 39.8%, Transport & Communication 11.9%, and Banking, Insurance & Real Estate 7.5%.

However, the growth of the Coconut sub sector dropped by (-) 14.3% in 2010 as against previous year. The Livestock Production, Other Food Crops (Highland Crops, Vegetables, and Fruits) , Firewood & Forestry and Gas in 2010 have recorded relatively slow growth constituting 2.9%,4.4%, 3.1%, and 4.6%, as against the previous year.

The percentage share of the three major sectors, namely the Agriculture, Industry and Services, to the total GDP constituted 11.9%, 28.8% and 59.3% respectively. The year-on-year inflation as measured by Colombo Consumers’ Price Index is recorded as 5.9% in 2010, whereas it was 3.4% in 2009. The index number of GDP implicit price deflator rose to 211.8 in 2010, from 197.4 in 2009, registering inflation rate as 7.3% for the year 2010.

The GDP per-capita at market prices is estimated at Rs. 271,259 (US$ 2,399) in 2010 as against Rs. 236,445 (US$ 2,057) for the previous year depicting a growth of 14.7% for the rupee value and 16.6% for the US$ value.

Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs. billion 3,684.7 in 2010 as against Rs. billion 3,116.2 in 2009. Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs. billion 1,452.0 in 2010 as against Rs .billion 1, 147.4 in 2009. The corresponding share of GFCF to the GDP is 25.9% in 2010 and 23.7% in 2009.
Gross Savings at current prices in 2010 is estimated at Rs. 1,360.1 billion as against Rs. 1,141.5 billion in 2009 constituting 24.3% of GDP as against 23.6% in the previous year.

Agriculture sector

The Agriculture, Forestry and Fishing sector showed a 7.0% growth in 2010 as against the growth of 3.2% the year before. The growth rate of Tea is registered as 13.1% for the year 2010 as against (-) 8.4% for the year 2009, attributed to the recovery in tea production which had been dropped in 2009. The favourable weather conditions during the period of January to September in 2010 also supported this growth. However, tea production decreased by 1.0% in Q4 2010 owing to unfavourable weather conditions.

The value added of rubber production grew by 12.7% in 2010 as against the 7.9% for the last year. The major reasons for this growth was due to the increase in average price of rubber (at the Colombo auction) which rose to Rs. 397.70 per kg in 2010 from 201.66 per kg in 2009 indicating 97.2% price increase.

This price increase enthused over the maintenance of rubber estates and tapping activities which eventually propped up the growth. The value addition of coconut production showed a 14.3% decrease in 2010 although it grew by 5.3% in the previous year. Low rainfall in 2009, onset of pest and outbreak of diseases and low humidity in major coconut cultivating areas were identified as root causes to such a decline.

The growth rate of Minor Export Crops (MEC) was recorded as 37.6% in 2010 whereas it was 5.2% for the previous year. The export quantities of cloves, sesame seeds and cashew nuts have increased by 206.6%, 438.8%, and 94.7% respectively in the reference year.
Paddy grew by 17.5% in 2010 as against the negative growth of 5.1% in 2009. The gross extent sown and gross extent harvested increased by 9.0%, and 12.5% respectively in 2010 over the previous year. The higher paddy prices, adequate water supply, resumption of cultivation in paddy fields – especially in Northern and Eastern Provinces, which had been forbidden cultivation for years by the war, and pro-agricultural policies such as fertiliser subsidy, guaranteed paddy prices, etc., were the major driving forces for the growth of paddy production.

The sub sector of Livestock Production grew by 2.9% in 2010. The restored peace across the country supported the growth of livestock farming, especially in the east. The North Central Province was able to increase livestock production.

The overall fishing industry grew by 12.2% in 2010. Of these Inland Fishing grew by 10.1% and Marine Fishing grew by 12.5%. The expansion of breeding fish distribution to tanks, the development programmes currently being operated for inland fishing in the north, better management practices in the inland fishing industry and resumption of inland fishing in Mannar and Vavuniya Districts supported the outstanding growth of inland fish production.
The satisfactory growth of the marine fishing industry has been supported by the relaxation of restricted fishing time and fishing areas in the north, higher fish production in Northern and Eastern Provinces and the progress made in fishing industry related infrastructure facilities.

Industry sector

In real terms, Value Added of the industry sector grew by 8.4% in 2010 as against 4.2% growth in 2009. Manufacturing, which is the largest sub sector of the industry sector, grew by 7.3% in 2010. The growth rate of gem mining recorded 7.9% in 2010. Export quantities of both the precious stones and semi-precious stones increased by 4.7% in the reference period.
The Factory industry grew by 7.5%. The higher growth of factory industry has been supported by Chemicals, Petroleum, Rubber and Plastic Products by 12.2%, Non-Metallic Mineral Products by 10.4%, Fabricated Metal Machinery & Equipment by 8.2% and Textile, Wearing Apparel & Leather Products by 5.2%.

The growth rate for the sub sector of Electricity, Gas and Water is 7.8% for the reference year as against 3.7% growth in 2009. The overall electricity generation grew by 8.4% during the reference year, while hydro power generation recorded a 46.4% growth and thermal power generation recorded a (-) 16.4% growth.

In real terms, the Construction sub sector indicated a 9.3% growth for the year 2010 and it was 5.6% for the previous year. This growth was supported by the introduction of new development projects, the large scale projects already in operation and the operated rehabilitation and resettlement programmes, especially in Northern and Eastern Provinces.
Total cement production has increased to 3,749,005 MT in 2010 from 3,212,865 MT in 2009 indicating a 16.7% increase; the disbursement of loan for constructions of houses, business premises, other buildings and property developments increased by 39.6% during the reference year.

Service sector

The overall Service sector marked 8% growth in 2010 as against 3.3% growth in the year 2009 making the highest-ever growth in the annual series, since 2002.

The recorded high growth in the reference year has been boosted by the promising higher growth of its major sub sectors such as, Hotels and Restaurants by 39.8%, Transport and Communication by 11.9%, Banking, Insurance and Real Estate by 7.5% and Wholesale and Retail Trade by 7.5%.

The Export Trade sector grew by 3.4% at constant prices for the year 2010. According to the Balance of Payment (BOP) Statistics of Central Bank of Sri Lanka (CBSL), exports earnings increased to Rs. 937,737 million in 2010 from Rs. 813,911 million in the year 2009, indicating a 15.2% increase. According to trade indices of CBSL, export volume and export price level increased by 3.7% and by 11.1% respectively during the reference period.

The Import Trade sector grew by 9.5% in the reference period as against 8.2% drop in the previous year. Total expenditure for imports increased to Rs. 1,528,171 million in 2010 from Rs. 1,172,618 million in the year 2009 recording a 30.3 increase. According to the trade indices of CBSL, the import volume and import prices increased by 11.6% and by 16.7% respectively in 2010 over the previous year.

Domestic Trade sub sector grew by 7.6% in the year 2010. This was mainly due to the higher agricultural and industrial productions which mostly consume the domestic market. Higher production of paddy and fish, which are mostly consumed locally, are the major driving forces to higher growth of domestic trade.

The Hotels and Restaurants sector recorded 39.8% higher growth in 2010 as against the growth rate of 13.3% for the last year. Tourist arrivals increased to 654,476 in 2010 from 447,890 in 2009, contributing a growth of 46.1% for the reference year. It is the highest-ever recorded number since 1969. The major reason for these increments is the prevailing peace across the country. Tourist earnings increased by 62.0% and room occupancy rate increased to 70.1 in 2010 from 48.4 in 2009.

Transport & Communication sector indicated 11.9% growth as against that of 6.3% growth in the previous year. The Passenger and Goods Transportation, Cargo Handling and Posts and Telecommunication sub sectors grew by 11.4%, 16.8% and 13.2% respectively.

The total number of new registrations of vehicles increased by 76.0% in the reference year, as against a 23% decline in the previous year. Registration of buses, three-wheelers and goods transport vehicles increased by 237.1% 129.2% and 40.1% respectively in 2010. The boom of new registration of vehicles has been chiefly fuelled by the reduction of import duty with effect from June 2010.

Both passenger income and passenger kilometres flown by SriLankan Airlines increased by 25.3% and 19.7% respectively in 2010. Total telephone connections increased by 17.6% in this year due to expansion of telecommunication services, especially in the newly-liberated areas of the Northern Province and the introduction of new connections with advanced technology which attracted customers.

The Banking, Insurance & Real Estate sector grew by 7.5% in 2010, as against the growth of 5.7% in the year 2009. Loans and advances increased rapidly in the year 2010, compared with previous year.

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The estimated Gross Domestic Product (GDP) of Sri Lanka for the year 2010 at current and constant (2002) prices and its related economic indicators is hereby released by the
Department of Census & Statistics (DCS)


Sri Lanka Exports Highest in December 2010. Remittances up 23.6pct in 2010 while Trade Deficit Expands 66.7pct on Import Growth

Sri Lanka Needs to Develop Corporate Bond Market as Investors Eye Asian Instruments due to US Quantitative Easing

29th March 2011, www.island.lk

Sri Lanka needs to develop its corporate debt securities market in order to attract investments as the banking sector is not in a position to finance long term projects that are required for the post-conflict economy to realise its growth potential. John Keells Holdings President, Head of Corporate Finance and Strategy, Krishan Balendra said foreign investor appetite for rupee denominated bonds was healthy with the conglomerate receiving many inquiries.

"There is strong investor appetite for long term rupee securities and it is an excellent opportunity to develop the corporate bond market in Sri Lanka," Balendra said addressing the CMA Business Forum in Colombo yesterday (29). The forum was organised by the Institute of Certified Management of Sri Lanka together with RAM Ratings Lanka Private Ltd and its global partner Standard and Poor’s.

Sri Lanka has an active government bond market and the government in its recent budget paved the way for Sri Lanka’s corporate sector to issue bonds to foreign investors by relaxing exchange controls in this regard.

"Hopefully, the private sector can follow the government’s success," Balendra said adding that it would be a good thing for the government to issue a sovereign bond denominated in rupees.

For the corporate bond market to be a success, the government would have to issue bonds on longer tenures ranging from 10 to 15 years which are actively traded on the secondary market.

So far, the government has had three sovereign bond issues denominated in dollars totalling US$ 2 billion, most of which were snapped up by US based investment houses.

Foreign investors eye local currency bonds

Managing Director Standard and Poor’s Singapore Surinder D. Kathpalia said quantitative easing in the US (printing money to stimulate its struggling economy) resulted in investors looking at emerging economies where returns were relatively better.

He said foreign investors were interested in investing in local denominated bonds, resulting in the ‘internationalisation’ of local currency markets, particularly in Malaysia, Thailand, Japan and Hong Kong.

"Investors are primarily attracted by the liquidity levels in these markets, their attractive pricing and funding needs of the countries themselves. Global investors are increasingly holding local currency bonds (as against dollar denominated), driven by higher bond yields, potential currency appreciation and strong growth prospects.

In these Asian economies, banks financed around 1/3 of total investments along with equity which was also around 1/3 while bonds financed half of all investments in these economies.

"Perhaps the lesson for Sri Lanka is that it could try to deepen its bond market and allow cross-border bond issues," Kathpalia said adding that in Sri Lanka, banks financed a little more than half the investments while the equities market financed the balance, eluding to the fact that Sri Lanka had potential to develop the corporate bonds market as a cheaper sourced of financing compared to bank borrowings.

However, he cautioned that Sri Lanka would not be able to develop a vibrant bond corporate bonds market overnight.

The Securities and Exchange Commission has been trying to develop the corporate bonds market for some time, but absence of longer tenures in government bonds made it difficult to develop a yield curve that would make it possible to price private sector bonds.

Banks cannot do the job

Chairman Chemanex PLC Preethi Jayawardena, a member of the Central Bank Monetary Board Consultative Committee, said raising finances through a corporate bond issue would be cheaper than borrowing from the banking system.

"There is also a mismatch because banks prefer lending on the short to medium term, but large development projects require long term loans. Corporate bonds do not have this problem as the tenure would match the project."

Jayawardena criticised the banking sector saying that if policy rates were increased by half a percent banks would increase lending rates by 2 percent, a problem eliminated by sourcing funds through a corporate bond issue.

The corporate bond market must be developed immediately if the private sector is to find the finances to invest in the economy on a long term capacity, and fulfil its role as drivers of the economy, he pointed out.

In order to maintain economic growth at 8 percent in the medium to long term, a gross investment rate of nearly 34 percent of GDP would be required. In the past five years the gross rate of investment has been only 27 percent of GDP, with the government accounting around 6 percent of this.

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New Housing Project of 830 Houses Started at Rs200mn. Project to Complete in April 2012

30th March 2011, www.dailynews.lk, By Indunil Hewage

Nimavin Developers Director Duminda Liyanage told Daily News Business the company will be starting construction work on 830 houses in Horana within this week and project work is to be concluded by around April in 2012.

The company will inject over Rs 200 million to built 830 houses and the remaining investment will be done with financial assistance of banks.

The company will also embark on starting construction work of another 105 houses in Gampaha this week and construction work of the project is due to be completed in December this year.

The demand for houses and apartments has been increasing in the recent past.

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29 March 2011

Sri Lanka Calls for Proposals to Set up a Multi Asset Commodities Exchange for Spot & Forward Markets

28th March 2011, www.lankabusinessonline.com

Sri Lanka's securities regulator has called for proposals from international and domestic qualified investors to design, build and own an exchange which can trade "multi asset" classes in spot and forward markets.

Sri Lanka's Securities and Exchange Commission has called for expressions of interest from parties that now operate at least two licensed exchanges and have net assets of more than 100 million US dollars.

Prospective investors have to team up with a Sri Lankan party and submit proposals by April 29.

"The exchange should facilitate spot and futures trading of multi-asset classes and needs to incorporated as a demutualized limited liability corporate entity," the SEC said in a newspaper advertisement.

"It should adhere to global best practices and standards, and accommodate all necessary components of a commodities exchange including mechanisms for clearing and settlements of the instruments traded."

Sri Lanka already has an equities exchange which also has some debt listed. The advertisement for the new exchange for multi-asset classes did not specifically exclude either equity or debt.

The existing stock exchange is member-owned.

But the new exchange has to be set up as a limited company owned by shareholders.

Sri Lankan Venture Capital Firm Invests in Wind Power. 10MW Wind Power Plant to be Set up in Kalpitiya Peninsula

28th March 2011, www.lankabusinessonline.com

Sri Lankan venture capital Lanka Ventures said it will invest 384 million rupees through a subsidiary to set up a wind power plant on the island's north-west coast.

A stock exchange filing said LVL Energy Fund (LEF), a fully-owned subsidiary of Lanka Ventures, has signed a deal with LTL Holdings to set up a 10MW wind power generation plant in the Kalpitiya peninsula.

LEF will invest 384 million rupees for an equity stake of 40 percent in the project company named Pawan Danavi, it said.

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High Level Visit to the Czech Republic by a Sri Lankan Minister to Promote Trade & Investment. Investment Protection & Promotion Agreement Signed

28th March 2011, www.dailymirror.lk

External Affairs Minister Prof. G.L. Peiris yesterday began an official visit to the Czech Republic on the invitation of Deputy Prime Minister and Minister of Foreign Affairs of the Czech Republic Karel Schwarzenberg.

This was the first high-level visit by a Sri Lankan minister to the Czech Republic in recent years.

During the official visit, the Minister was scheduled to meet the President of the Czech Republic, Vaclav Klaus, Deputy Prime Minister and Minister of Foreign Affairs, Karel Schwarzenberg Minister of Industry and Trade, Martin Kocourek, Minister of Finance, Miroslav Kalousek, First Deputy Minister of Defence, Jiri Sedivy and Chairwoman of the Chamber of Deputies of the Czech Parliament, Mrs. Miroslava Nemcova.

He would also meet the Inter-parliamentary Group, Friends of Sri Lanka.

The Minister of External Affairs would address the Czech-Sri Lanka Investment Forum at the International Chamber of Commerce to help promote economic, trade and investment cooperation between Sri Lanka and the Czech Republic.

Representatives of the Czech Business and Investment Sectors would be present at this Forum. During the visit, Mr. Peiris and the Czech Minister of Finance Miroslav Kalousek were to sign an Agreement for the Promotion and Reciprocal Protection of Investment between Sri Lanka and the Czech Republic.

Image: Minister of External Affairs Prof. G.L. Peiris and Minister of Finance of the Czech Republic Miroslav Kalousek sign Investment Protection and Promotion Agreement at Ministry of Finance in Prague.

Sri Lanka Speeds up Investments in Transport Sector. Railways, a Priority. A New Master Plan being Prepared

28th March 2011, www.lankabusinessonline.com

The Sri Lankan government is seeking private investment proposals to modernise the neglected transport system and will give investors speedy approvals, a senior official said.

A new transport master plan is being prepared to economically move people and freight, said Dhammika Perera, secretary to the ministry of transport.

Investments are needed to modernise the existing infrastructure and systems which were neglected owing to a 30-year ethnic war that ended in May 2009.

Perera, a former head of the island's investment promotion agency, said the government had its own investments under the master plan but was also open to proposals by the private sector.

Perera, also a businessman and well-known investor in the stock market, promised speedy approvals to private sector investments, in contrast to the usual bureaucratic delays that investors face.

"Any private sector proposal - we can give an immediate 'yes' or 'no' answer," Perera told the business and the investor community at a transport and logistics forum Monday organised by the Shippers’ Academy Colombo.

"If we say 'yes' they can invest. You can come and meet me (any time). There are no pending files on my desk."

Perera said private sector investors willing to invest in the railway sector were particularly welcome.

The new 30-year master plan envisages an integrated national transportation system that will support Sri Lanka's aim of becoming a regional logistics hub.

"The existing transport system is a result of years of neglect, mainly due to lack of an integrated national transportation system," Perera said.

"Affordability of transport a is core consideration and prime factor in shaping the transport plan the ultimate outcome of which is a better quality of life for all Sri Lankans."

28 March 2011

Achchuveli Industrial Zone in Jaffna Attracts Over 30 Investors. Work to be Complete by End 2011

28th March 2011, www.dailynews.lk, By Charumini de Silva

The initial work of the Achchuveli Industrial Estate in Jaffna has begun recently. There is an impressive progress in the industrial estate. The Army is helping in clearing the 65 acres of land while removing mines that were planted during the time of conflict.

Traditional Industries and Small Enterprise Development Ministry Secretary P Sivagnanasothy said the initial work and infrastructure developments are taking place at a rapid phase.

The Ministry expects the infrastructure development to be completed by the end of the year. He said over 30 investors were keen on investing in the Achchuveli industrial estate. There were over 10 investors that have invested in the estate before the conflict and there is a good number of new investors as well.

Garment giants mainly the Board of Investment (BOI) approved companies have shown their eagerness in investing in the industrial estate.

However, the Ministry has not yet decided on the companies. Administrative work of the buildings are being done by the National Building Research Organization (NBRO). The initial environmental examinations and surveying have been already completed.

The Ministry will utilize the Indian grant of Rs 235 million in infrastructure development in the Achchuveli industrial zone. The steering committee along with Traditional Industries and Small Enterprise Development Ministry, the India Government and the External Resources Department has appointed UNOPS as the project managers for water supply, electricity and road development.

The total investment of the infrastructure development is around Rs 280 million out of that which the Sri Lankan Government has invested Rs 45 million.

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SLT Tops Rs50bn Turnover. First Sri Lankan Group to Reach the Milestone. Rs 5.96bn PBT and Rs3.94bn Profit After Tax

26th March 2011, www.island.lk

Sri Lanka Telecom (SLT) has become the first Sri Lankan group in the country to achieve the milestone of Rs.50 billion turnover having crossed this landmark in 2010, the company’s Chairman Mr. Nimal Welgama has said in the company’s annual report.

"Given the strategic focus we have instituted in all our areas of business and the emphasis we have constantly infused in ensuring that our end objectives and trades are met or exceeded, it is indeed noteworthy that we have posted a profit of Rs.3.9 billion and turned the company around to be a sustainable, profit making going concern," he said.

The year ended December 31, 2010 saw SLT posting group revenue of Rs.50.25 billion, up from Rs.48.1 billion a year earlier while company revenue at Rs.33.3 billion was down marginally from Rs.34.1 billion posted a year earlier.

Group profit after-tax at Rs.3.94 billion was up from the previous year’s Rs.778 million while at company level, SLT posted a profit of Rs.2.48 billion, up from Rs.1.23 billion the previous year.

Welgama said that SLT was now "Future Ready", having rolled out its national backbone based on Multi-Protocol Label Switching technology in readiness for next generation network services and standards.

With Mobitel, its wholly owned subsidiary, covering the mobile segment, the group had over 85% market share in fixed and mobile broadband areas.

"In addition to being prudently diversified, we are ready to take on the complex challenges of an economy that has long harbored the vision of becoming an ICT hub," he said.

"While physical infrastructure is being established, connectivity remains the key to holistic development."

Despite SLT being one of the biggest market capitalized companies in the country, the free float of its share remains below 3% - with 54 million shares owned by about 15,000 investors.

The Sri Lanka Government and connected parties and Global Telecommunication Holdings NV of the Netherlands, a partner of Malaysia’s Maxis group, hold more than 97% of the issued share capital of the company.

The Secretary to the Treasury with 49.5% of SLT is the biggest shareholder followed by Global Telecommunication Holdings (44.98%), EPF (1.05%) and the Life Fund of the SLIC (0.98%). Other major government shareholders of SLT included NSB (0.73%), Ceybank Unit Trust (0.49%), ETF (0.18%) and the General Fund of the SLIC (0.18%).

SLT has a stated capital of Rs.18.05 billion, total group assets of Rs.87 billion and group liabilities of Rs.37.18 billion.

The SLT Board has recommended a first and final dividend of Rs.0.60 per share which will absorb Rs.1.08 billion. The payment is subject to approval by shareholders at an AGM to be held on March 28.

The directors of the company are: Messrs. Nimal Welgama (Chairman), Sandip Das, Chan Chee Beng, Jeffrey Jay Blatt, Jayantha Dharmadasa, Shaamendr Rajapaksa, Kalinga Indatissa, Lawrence Paratz and Dayananda Widanagamachchi.

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26 March 2011

PUM Netherlands Senior Experts Help Sri Lanka Industries. Hans Blankert Fund Grants Given to Two Companies for Essential Equipment

24th March 2011, www.dailynews.lk

This year, two companies have already received grant from Hans Blankert Fund through PUM to purchase essential equipment necessary for the efficient and cleaner production in factories. Twenty six Sri Lankan companies received assistance in 2010 under PUM Netherlands Senior experts Technical Assistance Program.

PUM Netherlands Senior Experts have played an important role in the field of international development assistance for the past 30 years, sending senior experts in 75 sectors of specialty to more than 70 countries in Asia, Africa, the Middle East, Latin America and Central and Eastern Europe.

Over 2000 missions carried out in 2010. Sri Lanka is among the beneficiaries and received an increased quota for 2011.

Upon request, PUM’s experts offer their skills and, experience to businesses and organizations in places where these are most needed.

PUM concentrates its activities on small and medium sized businesses employing less than 100 workers.

PUM projects are intense and generally take two to three weeks.

In the course of their careers, PUM’s advisers have gained extensive experience in nearly every conceivable field. These experts are independent and work on a voluntary basis (they receive no wages).

International and insurance costs are paid by PUM and only local expenditure such as local food and lodging and travelling has to be borne by the applicants.

Sri Lanka PUM Representative SPC Kumarasinghe said that PUM has assisted over 400 industries and service organization in Sri Lanka during past 15 years.

PUM has appointed a second representative, SG Punchihewa for Sri Lanka to cover the Southern region.

PUM also offers further training in the Netherlands for the technical staff and managers selected and recommended by the visiting PUM expert. Over 80 Sri Lankans have been trained under this scheme. PUM also assists local entrepreneurs to develop business links with Dutch companies.

In 2010 Ten professionals from Sri Lanka was sent to the Netherlands for further training and business links, said Kumarasinghe.

Image: Sri Lanka PUM Representative SPC Kumarasinghe handing over the grant to Lloyd Perera of Lloyd industries to purchase an essential machine for his industry.

Fresh Capital for Sri Lanka Finance Firms that Got into Trouble Two Years ago

25th March 2011, www.lankabusinessonline.com

Fresh capital will soon be given to the remaining Sri Lankan finance companies that got into trouble two years ago, prompting intervention by the banking regulator, senior central bank officials said.

Strategic investors have been found for three finance companies and one leasing company while prospective strategic investors are being reviewed for the remaining four finance companies.

Three finance companies have started normal business operations and their boards reconstituted, said Nelumani Daulagala, director of the central bank's department of supervision of non-bank financial institutions.

Managing agents appointed by the central bank have been released in two finance companies while one public share issue has been completed to raise fresh capital.

Priyantha Fernando, central bank deputy governor, said the biggest of the troubled firms, The Finance Company, was on the road to recovery.

The Finance Company, earlier managed by the Ceylinco group, has raised 1.6 billion rupees from a share sale which was oversubscribed.

Fernando said The Finance was selected for restructuring first as it was bigger than the other troubled firms.

"We thought if we could bring it through that will boost the confidence of others and the general public," he told a public forum organised by the central bank on how the troubled finance companies were revived.

"The crux of the whole solution was capital infusion and conversion of deposits," Fernando said.

Altogether eight firms were affected by the crisis that began in 2008; five registered finance companies and a leasing company in the Ceylinco group and two finance companies in the Aspic group.

Talks are on with strategic investors to infuse fresh capital into the remaining troubled firms, Fernando said.

"We're at a very advanced stage of finalising discussions with capital infusion companies," Fernando said.

"We hope within a one-month period we would be able to . . . bring all the companies to a state of being rescued."

Daulagala told the forum restructuring can be considered successful only when the firms are turned around and deposit liabilities settled.

"The alternative was liquidation or winding up. Liquidation is a long drawn-out process which can take 10-20 years."

Six finance companies among 13 that collapsed in a crisis in the late 1980s were still under liquidation, she noted.

That bailout cost the central bank or the general public 2.5 billion rupees but this time the regulator decided not to risk tax payer money on bailouts.

"Under liquidation, depositors are ranked below secured creditors, hence they get lower priority."

She said the distressed finance companies are expected to list on the Colombo stock exchange in the next 12 months, which will provide an exit strategy to depositors who converted deposits into equity.

"It has taken over two years but was much quicker than the liquidation process."

Sri Lanka Banks' Exposure to Stocks to be Limited for Banking Sector Stability

25th March 2011, www.lankabusinessonline.com

Sri Lanka's banking regulator plans to limit exposure of banks to the stock market to prevent the risk of a downturn in equities affecting the financial sector, a senior central bank official said.

P Samarasiri, Assistant Governor of the Central Bank said they were aware that in some countries banks were making high profits lending to the stock market, but added: "When the markets collapse, banks are affected."

Equity Risk

He said the regulator was aware of the risks posed by the booming Colombo bourse, which began a bull run after the island's 30-year ethnic war ended in 2009.

The stock market has been among the world's best performing bourses in the last two years, hitting new highs in recent months and raising concerns of a credit fuelled stock market bubble.

Share prices have come down in recent weeks on selling pressure triggered by regulator limits on broker credit to investors.

"The stock market is booming - we know the risks," said Samarasiri.

"We're imposing regulations to ensure banks are not exposed to the stock market that much.

"Still, banks can have innovative devices to lend to stock markets despite the regulations," he said.

Samarasiri, who spoke at a public forum on how the central bank revived finance companies that collapsed two years ago, did not give details of the proposed restrictions on bank lending to the stock market.

But the central bank is believed to be considering imposing a cap on the use of bank guarantees by investors to apply for initial public offers.

Recent IPOs have been heavily oversubscribed mainly with bank guarantees, raising concern that small investors were being edged out and of the risks of bank exposure to the stock market.

The island's capital markets watchdog, the Securities and Exchange Commission, has imposed limits on IPO allocation of shares for those applying with bank guarantees, asking companies to reserve a proportion of shares for small investors and mutual funds.

One of the first triggers of the Great Depression was a collapse of a stock bubble fired by earlier loose Federal Reserve monetary policy.

Excess Liquidity

Fed's excessively printed money ended up in margin trading accounts as the economy could not absorb the liquidity, which fired a stock bubble.

"The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom," Alan Greenspan who later became chairman of the Federal, Reserve wrote nearly four decades after the depression.

"Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom.

"But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed."

Greenspan himself had been blamed for firing a housing bubble by trying to reverse deflation from 2001 leading to the current downturn.

The current limit of margin credit to 50 percent was first brought in the US following the experience in the run up to the great depression.

Analysts have warned that among the top 20 shareholders of some of the dodgiest stocks in Colombo are margin trading accounts.

Sri Lanka's banking system also has about 80 billion rupees of excess reserves, or about a quarter of the monetary base, which are sterilized overnight.

Sri Lanka FDI Goes up by $1bn on Hotel & Port Deals

24th March 2011, www.lankabusinessonline.com

Sri Lanka's foreign direct investments will pick up with planned projects in ports and hotels valued at 500 million dollars each, finance ministry secretary P B Jayasundera said.

He said a concession agreement has been signed in the Colombo port for a new terminal that will need 500 million US dollars to build.

"That is a 500 million dollar private foreign investment. A private foreign investment," he told a business forum in Colombo, organized by Sri Lanka's software and services companies (SLASSCOM).

"People ask 'Where is the investment?' That is the investment."

The terminal will be built by China Merchant Holdings, a Chinese state firm, and Colombo listed Aitken Spence group.

Jayasundera said investments at the port alone will be equal to the annual foreign investments realized a year between 1990 to 2010.

Sri Lanka has still not published a foreign direct investment figure for 2010 but it is expected to be around 300 to 400 million US dollars, lower than the 600 million dollars achieved a year earlier.

The state investment promotion agency is expecting about billion dollars in FDI in 2011.

"In addition new FDI is coming to the hotel sector, particularly to the city hotels, and each investment is in the rank of 500 million dollars. Investment in land alone is 125 million dollars up-front cash payment."

Hong Kong based Shangri La is being given a block of land in Colombo's Galle Face beachfront earlier used by the military.

The land is already being cleared and readied to be given over to the developer who is expected to build a hotel, shopping complex and apartments.

Another block of land is to be sold to CATIC, a Chinese state military hardware maker, who is expected to tap an international chain to manage the hotel it will build.

"We are no longer giving land without a fee or a nominal fee," Jayasudera said. "The World Trade Centre or the past investments that have happened in Sri Lanka, land has been given free. That is the effort probably made at that time to get the investment.

The World Trade Centre is a reference to a twin tower commercial property projects by Singapore based developer SP Tao in Colombo during the war.

"Today FDI is coming with upfront payment for the land whether it is in the form of a lease or whether it is in the form of outright sale."

"So that is the premium the country has gained during the last several months."

A 30-year war ended in 2009 and the post-conflict country is rapidly returning to normal, Jayasundera said. He said in the north refugees have been resettled and mines cleared.

He said security barriers were removed even in Colombo and transaction costs in the economy were down. Meanwhile the administration was also going on a massive infrastructure building drive.

Related Info :

Chinese Company to Build Another Luxury Hotel and Shopping Complex in Colombo, Sri Lanka

Shangri La Will Position Sri Lanka as a Prime Tourist Destination – Greg Dogan, Shangri La President & CEO

Colombo South Container Terminal. SLPA Signs PPP BOT Project with China Merchant International Holding, Aitken Spence Consortium

Sri Lanka IT/BPO Sector Targets Niche Markets in Finance & Accounting, Telco, Travel and Aviation

24th March 2011, www.lankabusinessonline.com

Sri Lanka's information technology and business process outsourcing sector is positioning itself as a niche player targeting finance and accounting, telco, travel and aviation sectors, an official said.

"We will focus on SMEs (small and medium enterprises), more that 90 percent of us are working with SMEs in other countries," Dinesh Saparamadu, head of Sri Lanka Association of Software and Service Companies (SLASSCOM).

"We want to be known for quality and ethics, which will be the differentiator."

SLASSCOM has 120 members who account for 90 percent of the exports.

Saparamadu said IT was now the country's fifth largest export and the industry wanted to push revenues to a billion dollars by 2015.

SLASSCOM was working with universities and higher education institutes to expand capacity and was also increasing awareness is schools with students and parents about opportunities available in the sector.

Saparamadu said the association has engaged a public relations firm in the UK to build international awareness about the country.

Recently a sector report on financial and accounting services outsourcing had been released which potential investors who want to set up shop can use.

Related Info :

Sri Lanka an Attractive Location for Finance & Accounting Outsourcing FAO BPO Operations. Has World’s Second Largest Pool of CIMA Professionals

NY Times Highlights Sri Lanka’s Contribution to Global Outsourcing - Accountants & Accounting Services BPO

City Corporation to Run Sri Lanka's Capital Colombo. Four Areas Run by Local Govt to be Brought under State Entity

24th March 2011, www.lankabusinessonline.com

Four areas of Sri Lanka's capital Colombo run by local government bodies will be brought under a new state entity whose head will be appointed by the island's president, the government's information office said.

Areas coming under Colombo Municipal Council, Dehiwela-Mt Lavinia Municipal Council, Sri-Jayawardenapura- Kotte Municipal Council, Kolonnawa Urban Council and Kotikawatta- Mulleriyawa Pradeshiya Sabha will come under the new entity.

The new entity styled Colombo Metropolitan City Corporation will have a 'City Governor' appointed by the president and will include heads and deputy heads of the four local bodies and a nominated opposition member each.

Twelve advisory committees made up of elected members of the local bodies will be set up, the government's information office said.

A bill to set up the corporation is being prepared for presentation to parliament.

Ceylon Chamber of Commerce, CCC Completes 172 Years. The First Chamber Established in Sri Lanka

24th March 2011, www.island.lk

It has been through British rule, independence, a thirty-year conflict and now peace, Sri Lanka’s oldest business chamber, the Ceylon Chamber of Commerce, celebrates its 172nd anniversary today.

The Ceylon Chamber of Commerce (CCC) the legendry institution in the Asia Pacific region, reaches another milestone on March 25, 2011 by completing 172 years of exemplary service to the business community in Sri Lanka.

When CCC was founded on March 25, 1839 under the British Rule, the Coffee industry took precedence over the current prime commodity ‘Tea’ which has now excelled as the leading export commodity in Sri Lanka. The agriculture based services provided by the CCC to its members, gradually elevated to value added services.

Over a period of years, CCC which plays a catalytic role in the development of the business sector, changed its focus on identifying key issues to assist in the development of strategic plans to meet new challenges and opportunities. With the close rapport maintained with the Government sector, the CCC continued to strengthen its role as a channel between the Government and the Private sector.

You may pose a question on how the CCC services differ from the other chamber services. Commencing from the aspect of its identity, CCC is the only Chamber in south Asia with BSENISO 9001:2000 quality Management System Certification and works towards its vision of being the Benchmark Chamber of Commerce in the Asia Pacific Region.

Another factor which adds to its credit is, it has been instrumental in the establishment of several key institutions such as the Employers Federation of Ceylon in 1927, The Mercantile Service Provident Society in 1939, The Sri Lanka Institute of Directors in 2000 and Indo Lanka Chamber of Commerce and Industry in 2006, to name a few.

The 21 Bi-lateral Councils covering Australia/New Zealand, Africa, Britain, Benelux, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Malaysia, Maldives, Nordic, Pakistan, The Middle East, Poland, Russia and Singapore which were formed by the Chamber and functions under the aegis of the CCC, focus mainly on promotion of trade, investment, joint ventures, tourism and services between Sri Lanka and the relevant country.

CCC, being the first Chamber to be established in Sri Lanka, is the prime mover of the Chamber movement in Sri Lanka. It was also the first Chamber to be represented in the Senate and House of Representatives in the days of Ceylon, first to be accepted as an affiliate member of Confederation of Asia Pacific Chambers of Commerce & Industry (CACCI) in 1983.

A few other services which were the first of its kind to be introduced by the CCC are the issuance of Certificates of Origin in 1925, introduction of e-Cos, Conduct of Commodity auctions (Tea, Rubber, Spices & Allied Products) from 1894, Gem Auctions in1980, services provided by Measurers/Surveyors/Assessors, Arbitration/Conciliation & Mediation services, the first Sri Lankan export exhibition was organized by the CCC in 1973, Initiated the First Export Awards scheme in association with the then Export Promotion Secretariat, Formation of Bilateral Business Councils in 1979, Launching of CSR awards in 2004, (Global Standard One) GS1 – which is the worldmost accepted standard for supply chain management - bringing Bar-coding Standards to Sri Lanka and the CCC is the sole authorized body in Sri Lanka to operate the GS1 Standards system.

Moreover, CCC has the unique feature of a Confederation of Chambers of Commerce and Industry, Trade Associations, Regional Chambers, Employer organizations and Bilateral Business Councils in Sri Lanka. The CCC claims this status having formed alliances with 20 Regional Chambers, 38 Trade/Product and service Associations and 21 Bilateral Business Councils.

The CCC Trade Fair Unit which was established in 2002 as the trade promotion wing of the Chamber, through Business Promotion Missions assists members to penetrate, diversify and establish links with overseas markets, whilst promoting expansion of trade and investment. Since its inception, the unit has led missions to 34 potential and untapped markets which have led to the participating delegates obtaining confirmed orders.

The SAARC Trade Information Project is jointly implemented by the SAARC Information Centre (SIC) and Germany Agency for International Cooperation (GIZ) in collaboration with twenty six leading national partners from both the private and public sectors in all eight SAARC nations. The Ceylon Chamber of Commerce is a national partner of the SAARC Trade Promotion Network and is the leading Network Partner of the Working Group SAARC Trade Information Portal (SAARC TIP). This portal is an easy accessible trade database for traders including SMEs by connecting existing databases within the SAARC countries to a common SAARC entry point for trade information.

The National Agribusiness Council is the latest affiliate of the Ceylon Chamber of Commerce and is housed at the Chamber premises – bringing yet another key aspect of the economy under our network.

The Ceylon Chamber also supports regional chambers to contribute more to the national economy - a key initiative taken in this regard is the regional Chambers meeting hosted at the Chamber, where regional issues are brought out and directed to the appropriate channels.

CCC having instituted CCC Solutions (Pvt) Ltd., which began on a firm foundation as a specialized arm to concentrate solely on projects, has been able to contribute immensely to enrich the overall profile of the Chamber. There are three main projects under the purview of this unit, two funded by the European Union and the other by the Norwegian Agency for Development Corporation (NORAD) programme.

The primary objectives of these programmes are to promote Sustainable Consumption and Production (SCP) in the Food and Beverage Sectors, assist the Hotel Sector in greening and the final one being Business Matchmaking with Norwegian companies. The CORE project (Connecting of Regional Economies) is a USAID project with CCC as the strategic partner to lead the workforce development strategy which was one of the five components structured under this very laudable initiative.

Youth Business Sri Lanka (YBSL) programme is the district expansion of the Hambantota Youth Business Trust (HYBT) which commenced in 1991. Implemented in 40 countries and modeled after the Youth Business International of UK, youth business programmes supports youth to be successful entrepreneurs.

Today the CCC comprises over 500 members with an outreach of over 3500 organisations covering the entire spectrum of the business community. CCC members enjoy a range of benefits. In addition to the above, the Chamber provides the following services:-

Secretarial services to sector associations

Registration of Commercial documents

Seminars/Workshops

Organising Trade Fairs/Exhibitions & events through its Event Management Unit

Trade information

Customised research reports

Business opportunities/Trade promotion bulletins

Economic information

Library facilities

Resolution of commercial disputes

CCC is spearheaded by Dr. Anura Ekanayake, Chairman, Susantha Ratnayake, Vice Chairman and Suresh Shah, Deputy Vice Chairman, Mr Jayampathi Bandaranayake, immediate Past Chairman and the Secretariat is led by Mr. Harin Malwatte, Secretary General/CEO and Alikie Perera, Deputy Secretary General, and is supported by a highly competent and qualified staff.

‘We invite our members and the business community to visit us and familiarize themselves with the range of services provided by us. To get an insight into what we provide, log on to our website www.chamber.lk," Mr. Malwatte stated.

The membership is open to all businesses registered in Sri Lanka. The present membership covers every field of business activity in Sri Lanka and every size of business from sole proprietorship, SMEs, conglomerates to the multinationals.

The Chamber of Commerce is unique in its history, its traditions, its credibility, its membership, its talent base, its potential and, most importantly, in the role it plays in the economy and contemporary Sri Lankan society.

Related Info :

Ceylon Chamber of Commerce Seminar on Fruits & Vegetables Helps Small & Medium Agro Processing Enterprises

British-Sri Lanka Chamber of Commerce Established in London

23 March 2011

Norochcholai Coal Power Complex First Phase Opened by President Adds 300 MW to the National Grid. 600MW more to be Added by 2014

23rd March 2011, www.lankabusinessonline.com

Sri Lanka will add another 600 MegaWatts of capacity to the national grid by 2014, ensuring uninterrupted 24-hour power supply, President Mahinda Rajapaksa said while commissioning the country's first coal power plant.

The country is also seriously looking at alternative, clean sources of energy, not wanting to depend on a single fuel source, Power minister Patali Champika Ranawaka said.

The official commissioning of the first phase of coal power complex in Norochcholai, on the north-western coast, add 300 MW to the national grid.

The power plant, built by China National Machinery Import and Export Corporation with a 450 million US dollar loan from China’s EXIM Bank, will later be expanded to 900 MW.

Rajapaksa said power plants under construction or planned will add another 600MW of power, including the Broadlands hydro power plant and a coal power plant in north-eastern Trincomalee that is to be funded and built with Indian aid.

"We have now given electricity to 87 percent of the people," Rajapaksa said. "There's no other country in the region without power cuts. We're able to provide 24-hour uninterrupted supply."

Power minister Patali Champika Ranawaka said the new 'Lakvijaya' coal power plant will help reduce costs at the state-owned power utility, Ceylon Electricity Board.

He said it costs six rupees to generate power at the plant given the price of the last coal shipment bought by the CEB but that the new plant was still cheap compared with other fossil fuels.

"Today coal has become expensive," he said.

The government is also looking at alternative energy sources and will not rely on a single fuel or power source as had been done in the past, first with hydro power and then with fossil fuel-powered plants.

"We intend to use all sources of energy to stabilise the power sector, including clean energy sources like wind, solar, mini-hydro and geo-thermal energy."

Over half the island's total power supply now comes from clean energy sources, Ranawaka said, referring to large and small hydro-electricity power stations and wind power plants.

Image: Sri Lanka’s first ever coal power plant Lak Vijaya was declared open by President Mahinda Rajapaksa at Norochcholai yesterday. Power and Energy Minister Patali Champika Ranawaka, Deputy Power and Energy Minister Premalal Jayasekera and Chinese Ambassador in Sri Lanka Yang Xiuping were also present. Pictures by Sudath Silva. (Image courtesy: www.dailynews.lk)

Sri Lanka Power Demand Hits New Peak Load of 2,000 MegaWatts amid Hot Weather & Growing Usage

23rd March 2011, www.lankabusinessonline.com

Sri Lanka's night power demand hit a new peak load of 2,000 MegaWatts on Tuesday amid hot seasonal weather and growing usage, in a day that the utility officially commissioned a new 300 MegaWatt coal plant.

Power demand hit a peak of 1,999 MegaWatts at 7.30 in the evening not counting power generated by mini-hydro plants which can go up to 200 MegaWatts.

State-run Ceylon Electricity Board cannot immediately count the power generated from private mini-hydros which are not controlled centrally.

"We usually have high demand especially in March due to hot weather," state-run Ceylon Electricity Board chairman Vidya Amarapala said "We have touched 2,000MW mainly to cater to the air conditioning load. We have also been increasing rural electrification which has increased the number of customers."

The CEB has a goal of electrifying most of the villages by 2012.

Amarapala said hotels were also using more power for air conditioning with high occupancy partly due to foreign fans that came to watch the cricket Word Cup series.

Tuesday had also seen the higher daily energy generated of 32.75 GigaWatt hours. Industry analyst say mini-hydro plants may have generated another one or two GigaWatt hours.

The CEB has also been giving power to the North and East of the country which emerged from a 30-year war in 2009.

Amarapala said the utility had enough installed capacity to meet the demand, which is expected to go up. On Tuesday the utility commissioned a 300 MegaWatt coal plant - the country's first.

Amarapala said the cost of generating a unit from the coal plant was 9.00 rupees a kilowatt hour at the latest coal prices.

This compares with just an energy cost of about 17 rupees for diesel combined cycles, around 9.40 for residual oil. The CEB sells power to small domestic users for only 3.00 rupees a unit.

Sri Lanka Insurers Invest in Listed Firms Propelled by a Booming Stock Market and Falling Interest Rates on Fixed Income Securities

23rd March 2011, www.lankabusinessonline.com

Sri Lankan insurance companies are increasing investments in listed firms, propelled by a booming stock market and falling interest rates on fixed income securities, a report said.

"Equity investments (of insurers) are expected to comprise a larger share of total investments going forward as the stock market remains buoyant," RAM Ratings Lanka said in a report on the sector.

"The shifting of investments into equities is also due to the lower returns from fixed-income securities."

However, the rating agency noted that the growth of investments in equity will be limited by new solvency requirements.

RAM Ratings Lanka said investment income is an important profit element for insurance companies supplementing their main earnings, and being especially important for most general insurers, which tend to incur underwriting losses.

The industry’s investment mix has stayed relatively unchanged, with government securities accounting for most of the investments.

Regulations require all insurance companies to hold 20 percent of their technical reserves and 30 percent of their long-term funds as government debt papers and most firms are well above these requirements, RAM Ratings said.

But the stock market boom that began with the end of the island's 30-year ethnic war in 2009 and falling interest rates have made insurers increase their investments in shares.

"In line with the booming stock market and the environment of declining interest rates, most insurance companies have been increasing their equity investments," the rating agency said.

Equity investments rose to 17 percent of the insurance industry’s total investments as at end-December 2009 from 14 percent at end-December 2008.

RAM Ratings said insurers maintained investment income through equity investments as interest rates fell.

"Previously, insurance companies’ investment portfolios had been dominated by fixed-income securities owing to elevated interest rates.

"However, income from investments has been maintained despite the current scenario of lower interest rates, mainly through investments in equity."

The report said listed insurers’ investment income ratios were rising.

Janashakthi's ratio rose to 24.50 percent in 2010 from 21.09 percent in 2008, Ceylinco's to 25.37 percent from 19.38 percent and HNB Assurance's to 28.02 percent from 23.73 percent over the same period.

Union Assurance's investment income ratio went up to 39.17 percent in 2010 from 27.75 percent in 2008, Aviva NDB's to 57.93 percent from 36.90 percent and Asian Alliance Insurance's ratio to 53.26 percent from 20.97 percent.

RAM ratings said regulations on classification of admissible assets and solvency margins of insurers have been revamped recently.

"The regulations widen the scope of investment products permitted as admissible assets, and place greater emphasis on credit ratings," it said.

"This is expected to encourage insurance companies to diversify their investment avenues." Deposits in investment-grade finance companies are now accepted as admissible assets.

Under the new rules, life insurers' investments in equities have been doubled to 40 percent but that of general insurance firms have been reduced to 30 percent from 35 percent.

RAM Ratings also said the decision to allow insurers to invest 20 percent of their long-term funds and technical reserves overseas will allow them to lock in long-tenured investments that are not available on home shores, "thus better matching their liabilities with their assets."

However, the rating agency said, this will also entail "additional risks for their balance sheets, for example foreign-exchange risk."

Shariah Compliant Share List from Sri Lankan Stock Broker Lanka Securities

23rd March 2011, www.lankabusinessonline.com

Sri Lankan stock broker Lanka Securities has introduced a 'Shariah' compliant share list to meet the requirements of both local and foreign Islamic investors on the Colombo Stock Exchange.

The screening methodology for stocks is designed to ensure compliance with the Shariah laws and principles of Islamic finance, a statement said.

Lanka Securities, a joint venture between Pakistan's First Capital Securities Corporation, Bank of Ceylon and Merchant Bank of Sri Lanka, said the list will be reviewed on a weekly basis to capture the impact of the price movements of the equities.

"LSL Shariah Compliant Securities List has been designed and developed to be used as a basis of Shariah complaint equity investments at the CSE," it said.

Shariah forbids interest and making ‘money from money’ and encourages that wealth be generated through legitimate trade.

While Shariah compliant investment avenues are now becoming available in most countries, Sri Lanka has not seen large-scale development, the statement said.

Companies involved in several activities will be filtered out as non Shariah-complaint, Lanka Securities said.

These are conventional banking, insurance, financial services, or any other interest-related activity, alcohol, pork-related products and non-halal food production, packaging and processing or any other activity related to pork and non-halal food.

Entertainment like casinos, gambling and pornography, tobacco, weapons, arms and defense manufacturing are also excluded.

Lanka Securities said the remaining companies are then further screened on a financial basis.

It identified several financial ratios that must be met for companies to be considered Shariah-complaint.

Total interest and income from non-compliant activities should not exceed 5.0 percent of the total revenue and interest bearing debt must be less than 30 percent of the market capitalisation.

Also, interest earning deposits must be less than 30 percent of the market capitalisation, and accounts receivable, prepayments and cash must be less than 50 percent of the total assets.

New firms listed in the CSE it will be added to the list if they meet the criteria.

The financial data on which the list is based on will be updated quarterly when the companies release the interim financials.

Lanka Securities said the business and financial screeners have been identified looking at the industry best practices along with the guidance set by the Accounting and Auditing Organisation for Islamic Financial Institutions.

Marriott & Hyatt Inspect Land in Sri Lanka’s Sports City in Hambantota Planned for 2018 Commonwealth Games Hosting Bid

23rd March 2011, www.bloomberg.com, By Anusha Ondaatjie and Asantha Sirimanne

Marriott International Inc., the biggest U.S. hotelier, and Hyatt Hotels Corp. (H) inspected land in Sri Lanka’s southern district of Hambantota to build 200-room hotels each, Nalaka Godahewa, chairman of the Tourism Development Authority said today.

Sri Lanka has included these two properties in a “sports city” plan as part of its bid to host the 2018 Commonwealth Games, Godahewa said in a telephone interview.

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

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net

Related Info :

Commonwealth Games 2018 Candidate City Hambantota Unveils the Model with 20 Key Venues

22 March 2011

Legal Status of Electronic Transactionse & e-Commerce. email & SMS Admissible as Valid Documents in Sri Lanka

21st March 2011, www.dailynews.lk, By Sunil D B Abeyaratne - BASL Secretary and IT Committee Chairman of the Colombo Law Society

Electronic transactions are carried over electronic medium (eg the Internet) while their counterpart, traditional commercial transactions take place using paper based medium.

There is no doubt that the entire world tends to maintain documentation electronically due to its involvement of low cost, less storage space for storing and the availability of facilities to enter into contracts even without meeting or having a conversation with each other from different parts of the world.

Further, considering its availability, convenience, involvement of low cost and time factor, transactions over Virtual Private Networks (VPN) are becoming popular day by day.

As a result, majority of business transactions in the world have taken place under e-Commerce and consumers prefer to enter into online purchasing with the development of internet.

Since there should be a legal acceptability, adoption and recognition of electronic transactions, the United Nations Commission on International Trade (UNCITRAL) made the General Assembly Resolution 51/162 of 16.12.1996 which guided to enact the Model Law on Electronic Commerce (1996).

Accordingly, most of the member countries have adopted laws to recognize electronic transactions like its counterpart traditional contracts without any difference. As a result, Sri Lanka also has enacted the Electronic Transactions Act No. 19 of 2006 following the said Model Law.

Legal recognition of electronic documents

To accept any documents as a reliable document before Law, the same must be in writing and authenticated. If the e-document is capable to fulfill the said requirements, it will be admissible irrespective of the medium of such document. However, different countries have given different level of recognition for electronic documents.

Position in Sri Lanka

According to Section 18 of the Prevention of frauds Ordinance in Sri Lanka; a document must be reliable to be legally accepted. Further, Legislature in Sri Lanka enacted the Electronic Transactions Act No 19 of 2006 mainly to recognize and facilitate for electronic commerce and to encourage both public and private sectors to promote electronic transactions avoiding disputes over the admissibility of e-documents and matters relating to e-transactions like in some other countries.

Accordingly, electronic documents like e-mails and short messages (SMS) are admissible as valid documents in Sri Lanka.

However, there are certain restrictions on application of Electronic Transactions Act as specified under section 23 of the Act.
Authenticity of an electronic document in Sri Lanka

Section 18 of the Prevention of Frauds Ordinance requires the signature of the maker of the document to prove its reliability. This is not new to the legal system in this country or elsewhere in the world.

There are two ways to authenticate a document in electronic transactions (I) by authentication according to provisions in a contact between parties and (ii) authentication through third party records.

Provisions on cryptography, encryption, digital signatures, Certification Authority and certification of Service Providers those are relevant to authentication and security of e-documents have been provided under the said-transactions Act.

Other important provisions relevant to Electronic Transactions Act in Sri Lanka

(i) Section 8 of the Electronic Transactions Act explains the use of electronic records and electronic signatures in Government Institutions and statutory bodies.

(ii) Chapter III of the Electronic Transactions Act explains the governing law for acknowledgment of receipt of electronic message, document or other communication relevant to Electronic Contracts.

(iii) Section 14 of the Act explains how to decide the time and place of dispatch and receipt of electronic records.
Differences on legal issues between e-commerce and traditional commerce

There are some universally accepted and established principles governing the law of contracts. Though there are lots of similarities between these counterparts, one has to face practical difficulties when the concepts under traditional contracts apply on e-commerce as they are.

There may be instances in which some modifications of traditional principles are needed for electronic transactions.

Electronic messages very often cross borders (of countries). There may be various theories applied by different jurisdictions on formation of a contract, applicable law, agreed terms by parties to the e-agreement and finally, jurisdictions to institute actions when there is a violation of such contract under e-commerce.

E-tailers’ advertising on the Computer screen shall be considered as ‘an invitation to treat’ and not as an offer unless otherwise agreed by the parties to the contract. The computer operator has to make an offer for goods or services by clicking ‘I Accept’ button and icon or click wrap agreement.

Thereafter, the e-trailer (advertiser) will have to accept or refuse (directly or indirectly) the offer.

Value of goods or services advertised by e-tailers, target groups or jurisdictions of such advertisements, financial risk on non-performance by ‘offerer’ or ‘offeree’ must be evaluated by look and feel of the website.

Under the Electronic Transactions Act in Sri Lanka, the law recognises expression of an ‘offer’ and ‘acceptance’ in electronic form.

Making of payments under online transactions

Parties can decide and agree on ‘the mode of payment’ even under e-Commerce like in traditional trade and commerce.

However, when there is no such agreement there are number of directions introduced by some countries dealing with this issue.
Risk involved in online payment

Consumers in most of the countries including Sri Lanka use to make payments using credit cards under online transactions. Such electronic transactions are vulnerable to intrusions by hackers and crackers and such payments are always under major security risk to the credit cardholder.

Further, a country like Sri Lanka does not have directions enforced for online transactions and there is no way to cancel or return the payment after the acceptance of goods or services.
Legal remedies available against breach of e-contracts

Aggrieved party can complain to the Consumer Protection Authority, institute of actions against unlawful enrichment, take actions under the ‘provisions of Payment Devices Frauds Act No. 30 of 2006, Computer Crime Act No. 24 of 2007 and Provisions under Payment and Settlement Systems Act, No. 28 of 2005’.

Preventive steps to be taken under e-commerce and e-transactions in Sri Lanka

It is always safe to have clear conditions agreed by the parties to the contract specifying the way to confirm transactions, applicable law to the contract, mode of payment and jurisdictions of courts under dispute resolution and so on.

Related Info :

Electronic Transactions Act No 19 of 2006
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