Japan's Marubeni Returns to Sri Lanka for LNG and Power Generation

19th January 2012, www.island.lk

Sri Lanka’s search for FDIs received a major boost yesterday with Japan’s top multinational conglomerate, Marubeni Corporation, announcing its intension of returning to Sri Lanka after leaving these shores in 2008 citing the then weak economic environment. Since then, a lot has changed and top officials of the Japanese diversified group visited the country on a fact-finding mission to recommence operations here, the Ministry of Industry and Commerce said.

"Marubeni wants to re-commence operations in Sri Lanka in due course. The discussions with their fact finding mission today was very successful," Rishad Bathiudeen, Minister of Industry and Commerce of Sri Lanka said yesterday (Jan. 19).

Marubeni’s fact finding mission was led by Wataru Yoshida, Marubeni’s Tokyo based Corporate Officer and Senior Operating Officer and comprised three other officials including Shinya Watanabe, Chairman and Managing Director of Marubeni India.

Marubeni, which was already active in Sri Lanka for 25 years, closed its operations on May 1, 2008 citing unfavourable economic conditions. Marubeni’s return is also expected to boost Sri Lanka’s FDI inflows further.

Marubeni reported US$ 48 billion revenue in 2010.

Among Marubeni’s major stockholders is JP Morgan Chase Bank.

The diversified multinational conglomerate is engaged in diversified trading activities handling imports and exports of food materials, food products, textiles, materials, pulp and paper, chemicals, energy, metals and mineral resources, transportation machinery, offshore trading.

"We also are present in power projects and infrastructure, plants and industrial machinery, finance, logistics and information industry, and real estate development and construction," said Wataru Yoshida. "We are the largest independent power operator in Japan and energy trader in Japan. We have more than 40 operations across the world including Qatar and even Papua New Guinea. We have projected a net profit of US$ 1.8 billion for 2011 which we want to invest in selected countries, including Sri Lanka. Now, we want to recommence operations in Sri Lanka. In fact, we want to open our Colombo office as soon as possible," Yoshida said.

Shinya Watanabe, Chairman and Managing Director of Marubeni India revealed: "Marubeni India is keen on power projects in Sri Lanka. Marubeni India is now in a position to supply with LNG Gas (Domestic gas) to Sri Lanka if necessary, using our LNG terminals across the Eastern Indian shore. We import around five million tonnes of LNG to India." Shinya Watanabe added: "We are also strong in the Combine Cycle Power Plants (CCPP) sector which we think that Sri Lanka can make good use of. We already have ongoing CCPP projects in Thailand and Indonesia in association with Siemens, among the many project countries." CCPPs use both gas and steam turbines to supply power to the grid and is considered to be an efficient generation mechanism since it uses waste heat to produce steam which in turn generates additional electricity through the steam turbine.

 Image: Rishad Bathiudeen, Minister of Industry and Commerce of Sri Lanka (left) greets Shinya Watanabe, Chairman and Managing Director of Marubeni India as Marubeni Sri Lanka Mission team leader Wataru Yoshida, Marubeni’s Tokyo based Corporate Officer and Senior Operating Officer (right) looks on.

$4bn Investments for Sri Lanka in First Half of 2011 for Tourism, Manufacturing & Infrastructure

04th July 2011, www.bloomberg.com

Sri Lanka’s Board of Investment approved 28 projects worth $4 billion from foreign and local companies in areas including tourism, manufacturing and infrastructure in the first half of 2011, acting chairman A.M.C. Kulasekera said in capital Colombo today.

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

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India was the Largest source of FDI to Sri Lanka in 2010

19th April 2011, www.lankabusinessonline.com

India was the largest source of foreign direct investment to Sri Lanka in 2010 with 110 million US dollars followed by Malaysia with 72 million US dollars and the United Arab Emirates 66 million dollars, the Central Bank said.



Telecoms continued to lead FDI, the Central Bank said. Malaysia's Axiata, which owns Sri Lanka's Dialog Axiata, has been a top source of FDI to Sri Lanka. UAE's Etisalat has also bought into the telecom sector. India's Airtel also owns a mobile firm.

Sri Lanka's foreign direct investment in 2010 was 516 million US dollars, including 39 million US dollars in loans, down from 601 million US dollars a year earlier, the Central Bank said.

There was also 43 million dollars of outward investment by Sri Lankan firms, up from 20 million dollars a year earlier.

This reduced the net FDI figure in Sri Lanka's balance of payments (without third party loans) to 435 million US dollars, which was higher than the 384 million US dollars recorded a year earlier.

"It is necessary for Sri Lanka to attract more non debt creating foreign investment flows if it is to increase the level of investment required to maintain the envisaged economic growth path, given the shortfall in domestic savings," the Central Bank said.

"Creating a business friendly environment is needed to improve investor confidence and attract foreign investments."

"While the recent relaxation of exchange control regulations, a strengthened macroeconomic environment as well as the re-establishment of peace in the country incentivise investment, further steps need to be taken to encourage foreign investments."

A working group was already identifying measures to improve Sri Lanka's 102nd place in the World Bank's 'Doing Business' ranking.

Analysts say Sri Lanka has also other problems including increasing problems with rule of law and governance which authorities will need to address.

Sri Lanka's foreign investment promotion agency, the Board of Investment is expecting a billion US dollars this year, partly helped by several high profile hotel projects on state land in Colombo.

Related Info :

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• FDI to Sri Lanka Falls 14pct in 2010 due to Global Financial Crisis - Central Bank Year 2010 Annual Report

FDI to Sri Lanka Falls 14pct in 2010 due to Global Financial Crisis - Central Bank Year 2010 Annual Report

18th April 2011, www.dailymirror.lk

Foreign Direct Investment to Sri Lanka during 2010 had fallen by 14 percent to US$ 516 million, as against the US$ 601 million in the year 2009.

According to the 2010 Central Bank Annual Report such a reduction may not entirely be unexpected given the adverse effects of the financial crisis on the global financial flow.

The report pointed out that at the onset of global financial crisis which hindered economic activity in all major advanced economies, the increasing trend of FDI flows was reversed drastically.

According to UNCTAD statistics, global FDI flows have declined by 16 percent to US $ 1.8 trillion in 2008 and by some 37 percent to US $ 1.1 trillion in 2009.

Sri Lanka’s FDI data for 2010 reveals that about 59 percent of investments were pumped into infrastructure development projects, while manufacturing and services sectors attracted about 31 and 9 percent respectively.

The flows to agricultural sector were minimal.

In the backdrop of emerging and developing countries having a better chance to attract FDIs than the developed economies due to the increasing growth prospects, Central Bank annual report says that Sri Lanka has a substantial potential to improve FDI inflows particularly into the services and agricultural sectors.

“As Sri Lanka has already embarked on a programme to promote tourism in the post-conflict era, tourism related FDIs need to be strengthened further.

In the meantime, more FDIs needs to be attracted to areas such as education and research & development, in order to ensure sustainable economic growth over the medium and long-term,” the annual report noted.

The report further highlights that the agriculture sector seems to have been largely unexplored, as a potential investment area in Sri Lanka.

“There is growing interest among the international organizations in promoting investment opportunities in the agricultural sectors, as they have begun to foresee some likely threats, given the forecasts of the United Nations on world population growth”, the report said.

It also said that to realize the FDI potential of the Sri Lankan economy, the Sri Lankan government has taken several progressive measures in order to promote financial openness and to enhance the investment climate instead of ad-hoc and costly tax incentives practiced by earlier regimes.

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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.

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Australia's Mitchell Group Signs Sri Lanka’s Biggest ever FDI Project, $700mn Trinco Gateway Park Industrial Development Project

12th March 2011, www.dailynews.lk

The Mitchell Consortium, an international group led by Australian company Mitchell Group Holdings, has signed an exclusive agreement with the Sri Lankan Government to head up Sri Lanka’s largest ever foreign direct investment for an industrial development project.

The Sri Lankan Government will remain as a strategic partner.

The project master plan includes development of a bulk commodities terminal with stockpiling and blending capabilities, an export coke production plant and an iron ore palletisation plant at Trincomalee Bay.

The project will be delivered in phases, with a total value exceeding US $ 2 billion.

The first phase of the project, valued at US $ 700 million, includes a deepwater jetty and stockpiling facility. The consortium is also investigating development of other related industries in the region.

Dubbed the Trinco Gateway Park, the project will open pathways for the export and import markets of Asia, Africa and Australia and provide a strategic access gateway to satisfy the growing demands of the Indian market.

The project consortium will operate through Sri Lanka Gateway Industries Pte Ltd.

It consists of Mitchell Group Holdings, specialising in delivering international energy-related projects; Salva Corp, specialising in international bulk materials marketing and large scale international project delivery; Sri Lankan development partner Asset Holdings and is being advised by a number of international firms, including PricewaterhouseCoopers and Ausenco Sandwell.

Mitchell Group Holdings CEO Nathan Mitchell said Trincomalee Bay would serve as a strategic gateway.

“The development will be a centrally-located, deepwater gateway for international bulk commodities movements, which has the potential to accommodate 400,000t Chinamax vessels,” he said.

The group has completed detailed engineering and environmental studies, now progressing to the next technical planning phase using World Bank environmental standards as a benchmark for the project.

“Conceptual Development Plans for the project will see construction of a deepwater port with upto 80Mt capacity, together with bulk commodity stockpiling and loading facilities, a 5Mtpa coke plant and a 5Mtpa iron ore palletisation plant,” Mitchell said.

Mitchell said the Trinco Gateway Park project would serve to economically benefit local communities and the wider region. “The Trincomalee region will benefit through direct employment opportunities, community development and up-skilling during construction and long-term operation of the project,” he said.

The consortium will establish local vocational training centres in partnership with leading industry specialists.

Image: Board of Investment Chairman Jayampathy Bandaranayake exchanging the agreement with Mitchell Group Holdings CEO Nathan Mitchell.

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BOI Announces New Structure & Strategy to Raise FDI to 4-5pct of GDP over Next Three Years

15th February 2011, www.dailynews.lk

The BOI announced a new strategy to raise FDI in Sri Lanka to the desired level of four to five percent of GDP over the next three year period.

The FDI this year is expected to reach the highest ever achieved by the country and will be well in excess of one billion US dollars, the BOI said. The changes aim to focus the BOI’s resources on priority investment projects most critical to national development - thereby accelerating job creation and income growth in all areas of the country.

The expected outcomes are the speedy raising of income levels of all people of the country in a move to achieve the vision of being the “The emerging wonder of Asia.”

“With the end of the war and the dawn of a new era of opportunity for Sri Lanka, we in the BOI need to take a lead in defining investment priorities and marketing these to investors, rather than just responding to proposals only” BOI Chairman Jayampathi Bandaranayake said.

The core of the new organization structure will be Sector-focused Investor Relations Teams. These teams (together with special units to handle high-profile projects and regional initiatives) will cover all vital sectors of agriculture, manufacturing, services including tourism and infrastructure.

Each team will work with the ministries and agencies in their sector to develop a joint sector strategy, identify investment priorities and promote these to target companies.

The same teams will act as relationship managers for all investors in their sector, from project evaluation to implementation to post-investment aftercare.

In addition, an integrated Investor Solution Centre will be established to guide investors through the business start-up process.

The Centre will assist investors with all aspects, including access to land, environmental and construction approvals, as well as legal, financial and labour

requirements, bringing together disparate departments to better serve investor needs.

The existing industrial Zones of the BOI will transform as model zones with excellent infrastructure and modern and enlightened practices of labour relations, with concerns for the environment and sustainability addressed.

The zone management will be given more independence and accountability to continuously improve the services that they provide to investors.

The zone management will also be responsible for developing strategy for future development of additional zones around Sri Lanka.

The BOI headquarters at the World Trade Centre will also be reorganized. All offices will be relocated to a single elevator bank, with dedicated floors for investors to meet with the Sector Teams and Investor Solution Centre.

This will free additional floor space which will be put to productive use.

The BOI is also expecting to make significant savings on overhead costs well in excess of Rs 100 million annually. These savings of public funds will be redirected into more productive uses.

The proposed changes have been developed and communicated through an extensive consultation and awareness building process with all levels, departments and unions of the BOI.

“We are encouraged by the enthusiastic support that we have received from the vast majority of staff in the BOI and the unions to have a real opportunity of serving the country and to bring about the desired change for a better Sri Lanka,” the Chairman said.

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Sri Lanka Targets $1bn FDI in 2011 Led by a Booming Leisure Sector - Chairman BOI

11th February 2011, www.lankabusinessonline.com

Sri Lanka is expecting more than a billion US dollars in foreign direct investments in 2011 led by a booming leisure sector, after the end of a three decade war made the country more attractive, an official said.

"Our expectations (for 2011) are well over a billion (US dollars)," Board of Investment chief Jayampathy Bandaranayake said.

A three decade war ended in 2010 but actual FDI disbursements were 'very close to' 2009, he said. In 2009 when the intensity of the conflict reached its height foreign direct investments fell to 384 million dollars.

In the first quarter of 2010 there was a 30 percent drop in FDI due to a series of elections in the island, Bandaranayake said.

The International Monetary Fund earlier forecast at least 725 million US dollars of FDI this year.

On Friday Bandaranayake signed a 150 million US dollar investment agreement with Dialog Axiata which is expected to invest the money in expanding its network over the next two years.

Dialog had become the top foreign investor in the country clocking up a billion US dollars by December 30, and the latest investment will push it to 1.2 billion dollars, officials said.

BOI director Duminda Ariyasinghe said most of the cash would come into leisure and infrastructure.

Though information technology and business process outsourcing was generating high quality jobs and attracting a lot of interest the actual dollar values were smaller, he said.

Several high profile foreign leisure and property investments have already been announced, including 500 million dollar projects by Hong Kong based Shangri La and a CATIC, a Chinese state firm.

The two firms also will spend 500 million US dollars to buy state land.

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Sri Lanka Attracts US and Indian Foreign Investment

31st October 2010, www.sundaytimes.lk

A top US multinational has invested its pension fund in the Colombo bourse while top investment delegations from India, China and Germany are due to visit the island next month as Sri Lanka draws foreign investor interest at the end of the conflict.

“There was no point in time in history when the country received so much interest. This is solely due to these two reasons,” External Affairs Minister, Professor G.L. Peiris told an eminent gathering in his address as the Chief Guest at the inauguration of the 31st annual conference of the Institute of Chartered Accountants of Sri Lanka (ICASL), on Thursday.

He said the recent past saw US-based General Electric (GE) deciding to invest its pension funds in the Colombo Stock Exchange (CSE) while Janus Fund has already bought large holdings in blue chips. “Shangri-La Chairman Ian Koch spent 3-days on invitation to Sri Lanka and has decided to build a hotel in Colombo and another in the deep South. Ananda Mahindra of the Indian Mahindra and Mahindra Group will come into the leisure sector in a very significant way,” he said. He said other top delegations from India, China and Germany are also due to visit Sri Lanka.

He said that in this regard, the removal of road blocks by the government this week was a conscious decision to improve the ‘optics of this situation (to attract more investment)’ and also in the reduction of emergency rule.

He said that a report on the modalities for simplifying the tax structure is out now and asserted that this will make the tax structure predictable, which in turn will facilitate foreign investment. Delivering the keynote address, Attorney General Mohan Peiris noted that Sri Lanka is on the springboard of development and prosperity. “We are witnessing a resurgence of foreign direct investment from all parts of the world. The 31st ICASL National Conference is taking place at a time when reconstruction, rebuilding and the march towards peace, brotherhood and economic prosperity have become the clarion call of all citizens of the country. We have promising signs of development emerging in all parts of the country that tell us how resilient we are in moving towards economic prosperity and millennium development goals,” he said.

He also noted that the CSE became the second best performing bourse in the world, while development has commenced in the areas of ports, shipping and aviation. “The indicators of development are manifest today when one notes the drop in inflation, interest rates, the existence of forex reserves of almost $6.5 billion which is equivalent to six months of imports.

These factors coupled with a stable government in place sans an election for the next six years gives Sri Lanka the potential for its growth in investment and makes it the cynosure of all eyes,” he noted.

Mr. Peiris noted that the accounting profession comes into contact with the drivers of economy – namely the multinational companies and foreign investors at various stages. “When a year draws to a close, annual reporting is a mandatory requirement and the corporate world looks to you for the proper preparation and presentation of financial statements. The auditors, in the auditors’ report, express their opinion on the truth and fairness of the financial statements and an investor would be looking at your unqualified opinion in order to make his investment,” he asserted, adding that it’s this statement that the

investor will use as a monitory mechanism of the buoyancy or of the company.

Some pertinent questions were also posed by Mr. Peiris to the accountants. “What happens if those investors claim that they have relied on your opinion to make a decision and they suffer loss owing to wrong opinion given by the auditors in the auditors’ report? Are the auditors liable to third parties for negligent misstatements in the auditors’ report? For example, the auditors express the opinion that the financial statements truly and fairly present the financial position and results of the operation of the client company but in fact the financial statements contain material misstatements.

Of course there would be sanctions imposed by regulatory bodies such as the Accounting and Auditing Standards Board and impaired professional reputation. But could there be litigation by the investors? How does the legal liability of the Accountants for misstatements stand at the moment? These are the questions I would like to look at as the world sees opportunity in Sri Lanka,” he said.

Image: Seen here former BOI Chief and now a Singapore - based investment banker, Arjuna Mahendran (right) in conversation with local businessmen at the conference.

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BOI Sri Lanka Accelerates Projects under Rapid Investor Facilitation

22nd April 2010, www.dailynews.lk

The Board of Investment (BOI) is now accelerating proposed projects under implementation through rapid investor facilitation.
The BOI has taken this step since there were many Foreign Direct Investments (FDIs) directed to Sri Lanka during the first four months of this year which was US $ 250 million, BOI Chairman Dhammika Perera said.

Thirty percent of the FDI to Sri Lanka is directed fully by foreign investors. Joint ventures too have a 30 percent share in FDIs. The locals have contributed with 30 percent share in to total investments.

“We are at present looking at re-evaluating our resume of incentives to the investors. Apart from that, BOI expects to encourage investments in the Northern and Eastern areas. The investments in agriculture, fisheries and food processing will be encouraged in the Northern and Eastern areas,” Perera said.

The BOI encourages joint venture investments with Sri Lankans. Those joint ventures will promote application of latest technology and knowledge to various industries. Thus the focus on joint ventures should grow further, he said.

“Tourism will be the other area that many investments should focus on.

“There are several infrastructure facilities that must be developed to accommodate many tourists. These facilities definitely have to be on par with international standards,” Perera said.

There is good potential in the East coast with many natural reserves.

But what Sri Lanka needs at present is formal training institutes to improve the service provided by leisure sector employees.

He said that industries such as agriculture, fisheries should come to the market with value addition.

Sri Lanka Leisure Sector Attracts more FDI. Telecoms and Power to Get only 40%

08th April 2010, www.lankabusinessonline.com

Telecom and power sectors which accounted for 65 percent of foreign direct investment to Sri Lanka in recent years will play a less dominant role as cash pours into leisure with an upturn in tourism, an official said.

In the first quarter of this year around 250 million US dollars have come as foreign direct investments (FDI) compared to 602 million for the whole of last year, Board of Investment chief Dammika Perera said.

"In the past telecoms and power sector contributed around 60 percent of FDI, while 40 percent came from other sectors," Perera told reporters in Colombo.

"In the future the telecoms and power sectors will come down to around 40 percent."

With a pick up in tourism after a 30-year war ended last year, more cash is expected to pour into the sector.

Leisure firm have started to expand to increase capacity and about 200 million dollars in investment commitments are expected soon, Perera said.

Private power plants supplying the state-run Ceylon Electricity Board have invested 73.6 billion rupees through and generate about 40 percent of the country's power need, BOI deputy director general A M C Kulasekera said.

There are 18 telecommunication service providers that have invested 194.6 billion rupees, Kulasekera said.