Sri Lanka Tea Earns a Record High in October

04th December 2009, www.lankabusinessonline.com

Sri Lanka's tea export earnings in October hit a record high and average auction prices this year were much higher than in the last two years, although shipments were down owing to production problems, brokers said.

Prices at this week's Colombo auctions fell sharply owing to lower quality and less demand although a global tea shortage is likely to keep prices buoyant in the short term, they said.

Brokers Asia Siyaka Commodities said October tea exports from the island fell marginally to 25 million kilos from a year ago.

"The rupee value of exports in October 2009 is the highest ever at 13.3 billion rupees, 17 percent more than the previous high of 11.6 billion rupees earned in 2008," they said.

Earnings for the year reached 110.7 billion rupees, on a quantity of 239 million kilos exported, down six percent on the 2008 record earnings of 118.9 billion rupees earned from exports of 270.8 million kilos.

The approximate US dollar value of earnings for the January-October 2009 period was 963 million, 12 percent lower than in the same 2008 period.

But brokers said average prices at the Colombo auctions have stayed much higher than in the last two years owing to a global shortage caused by production shortfalls in key producing countries, especially Sri Lanka.

At the sale in the last week of November the average price was 3.37 dollars a kilo compared with 2.03 dollars at the same sale in 2008 and 2.88 dollars a kilo in 2007.

The year-to-date average price of tea was also higher at 3.14 dollars a kilo compared with 2.91 dollars in 2008 and 2.45 dollars a kilo in 2007.

Forbes & Walker Tea Brokers said there was less demand at this week's auction and consequently lower prices all round.

In teas from plantations company estates overall quality levels showed a decline resulting in a greater volume of teas on offer comprising of "Fair Average Quality", they said.

"Consequently, the price parity between the better teas and the below best varieties narrowed down, whilst the increased volumes continued to put downward pressure on prices for all others."

Prices of low grown teas, which account for the bulk of the crop, also fell, dropping by 10-15 rupees a kilo for most types.

Image courtesy of lakdora.com

Sri Lanka Rupee Trading in a Band after a State Bank that Acts for Monetary Authority Quoted a Two Way Price

27th November 2009, www.lankabusinessonline.com

The Sri Lanka rupee started trading in a band Friday after a state bank that usually acts for the monetary authority quoted a wide two way price, dealers said.

A state bank that was largely quoting a buying price amid dollar inflows into money markets in recent months offered a wide two way price of 114.35/60 against the US dollar in the style of a 'trading band' for the Sri Lankan currency.

Market quotes for rupee was around 114.50/55 in mid-morning trade.

Sri Lanka has a 'soft-peg' against the US dollar in the sense that the monetary authority has powers to fill liquidity losses coming from dollar sales made to defend a peg, a process which makes the peg inherently unstable.

But a flexible peg, which moves can help keep a country stable by allowing the exchange rate to weaken when there is pressure for foreign exchange outflows, which also prevents the need to make liquidity injections.

Until 1950 Sri Lanka had a 'hard' peg which does not break as liquidity injections (money printing) does not take place and any dollar sales causes a contraction in local money supply, which however can lead to higher interest rates.

Under a 'hard peg' the monetary authority has no policy rate and only the exchange rate is targeted.

The inherent instability of 'soft pegs' comes from a monetary authority that tries to target interest rates and the exchange rate at the same time.

Many high inflation countries which are prone to macro-economic instability and balance of payments crisis, have experimented with soft pegs of various kinds, including trading bands and crawling pegs, and peg that are hit by sudden 'step devaluations'.

Most stable pegs (especially in East Asia) have come from maintaining consistently higher policy interest rates than the anchor currency (usually the US dollar) which results in large foreign reserve accumulations.

Sri Lanka Can be Best in Asia - Milcris, an Oman-based Sri Lankan Owned Company

04th December 2009, www.dailymirror.lk, By Sunimalee Dias

Milcris, an Oman-based Sri Lankan owned company, aspires to take on the challenge of opening doors to the world by helping the country become one of the best in Asia, the firm's CEO Millan De Silva said yesterday.

"If all Sri Lankans unite, we can become one of the best Asian economies," he said at the media briefing held in Colombo to announce the company's plans to set up local operations and get connected with post war development work.

Having participated in the workshop organised by the Government with the President's attendance, De Silva noted that they realised it was time for them to contribute in Sri Lanka.

"Here we can invest in professionalism and contribute our expertise to the Government and retain much of the foreign gains," he explained.

He noted that the company's aim was to become the preferred cost consultancy service provider in the region and that it hoped to expand services to Sharjah, Abu Dhabi and Mumbai as well as Sri Lanka in 2010.

The Milcris Chairman is Syyid Shihab Bin Tariq Al Said, a high profile Royal family member, and the company is currently handling the cost consultancy for the construction of two new airports in Muscat and Salalah, valued at US$4.5 billion, each with a passenger load of 12 and two million respectively per annum.

The company's Quality Assurance and Training Manager Udhyani Jayasuriya said that they provided both on the job training services as well as training programmes for prospective quantity surveyors.

The company provides a continuous development of their human resources observed to be the most valuable asset of the organisation.

Milcris Head of Corporate Affairs Upul Jayasuriya speaking with the Daily FT on the sidelines of the meeting said that following the conclusion of the two-day meeting with the government, Milcris along with several other investors were not convinced on how they could play a definite role although they were ready to render their services to the country.

He noted that some officials were not capable of assisting them with ready answers to queries made upfront. However, the company is interested in assisting and providing its expertise to the relevant sectors that are part of the development drive currently taking place.

Arugambay Travels and Tour Opens New Office in Colombo, Sri Lanka

04th December 2009, www.dailymirror.lk

The new office of Arugambay Travels and Tour was declared open on Wednesday by Minister of Tourism Promotion Faiszer Musthapha at No. 20,Deal Place, Colombo 3.

Deputy Minister of Higher Education Minister M.M. Musthoha Advisor to the President A.H.M.Aswer, Secretary Ministry of Tourism Promotion George Michael, President Federation of Chamber of Commerce and Industry Sri Lanka Kosala Wickramanayake, Partner Arugambay Travels and Tours and Arugambay Travels Hotels Mark John Scannell, Chairman Sri Lanka Tourism Development Authority Bernard Goonetilleke and members of the business community were present at the inauguration.

Inbound and outbound tour packages, air line ticketing, transportation, hotel reservations and real estate are the services offered by the company, which is also engaged in promoting investments to the east, and will provide necessary information and consultancy services to potential investors.

Arugambay Travels Hotels is engaged in building a three star hotel facility in Arugambay. The total investment of the 25 room hotel which will come up with all necessary facilities will be Rs. 203 million. The project cost is to be met with local and foreign investment.

The first stage is expected to be completed by the end of 2010. This is the first such facility to come up in the area with approvals from relevant Government institutions and the BOI.

In his welcome address Managing Director of Arugambay Travels and Tours A.M. Jaufer said that since the company started operations in 2004, it was involved in promoting tourism to the east.

He said that although the plans to built the hotel were delayed due to the situation of the country during the past few years now the company was able to pursue its targets.

"Be it local or foreign tourists, we will serve all of them with more emphasis on introducing new and exotic locations to visitors," he added.

Minister Faiszer Musthapha said: "Due to the efforts of President Mahinda Rajapakse and the Government, problems created by the 30-year-old war are over. Now it is time for all of us to build our country. There is an immense potential in the north and east for the development of tourism."

He further said that the President had given a target to increase tourist arrivals to 2.5 million by 2016. "The requirement of hotel rooms to cater to the incoming tourists is around 35,000. It is important to meet this target with good quality facilities. The hotel project started by Arugambay Travels will certainly contribute towards achieving this target."

The Minister further said that while all facilities would be provided to the foreign tourists, local tourism will also be promoted.

Scannell in his address said: "With the improved business conditions in Sri Lanka I can confidently say that Sri Lanka will become a major tourist destination in a few years. We will be trying our utmost to promote tourism in the east."

He further thanked the Ministry of Tourism and the Sri Lanka Tourism Development Authority, The Board of Investment, Lanka Orix Leasing Company for all the support given for the hotel project to become a reality.

Image courtesy of go-lanka.com and mysrilankaholidays.com

Sri Lanka Tea Factory Hotel Rebranded Heritance, Aitken Spence Re-launch Successful Hotel under Up-market Brand

03rd December 2009, www.lankabusinessonline.com

From abandoned tea factory to luxury resort, Aitken Spence will re-launch its successful tea factory hotel under its up-market brand ‘Heritance.’

Since its launch in 1996, the hotel which is situated on a hilltop overlooking Hethersett village, has gained a reputation for being an unusual holiday attraction.

Visitors can experience life on a tea estate as it was during the colonial era, the company said and includes features such as tea themed cuisine and cocktails. Guests can also pluck their own tea and watch it being processed and packed at the hotel’s micro tea factory.

The hotel is also positioned as an eco-friendly hotel. Hot water and central heating for example are provided by biomass from locally farmed gliricidia wood instead of diesel.

Waste and water management is based on sustainable recycling processes, while vegetables are organically grown or sourced locally, generating income for the area.

The hotel has also been refurbished with modern luxuries to upgrade to a boutique property.

With its branding as a Heritance resort, The Tea Factory joins Heritance Kandalama, Heritance Ahungalla and Heritance Madurai.

CSE - Trading Thursday: Stocks Gain and Rose above 3,000-point Mark on the Benchmark Index

03rd December 2009, www.lankabusinessonline.com

Sri Lankan stocks extended gains and rose above the 3,000-point mark on the benchmark index Thursday boosted by high volume transactions on Hatton National Bank (HNB) and John Keells Holdings (JKH), brokers said.

The All Share Price Index closed at 3,004.61 up 1.78 percent (52.45 points) while the Milanka Price Index of more liquid stocks closed at 3,415.18, up 1.35 percent (45.50 points).

Turnover was pushed up to 2.57 billion rupees by the JKH and HNB deals, according to provisional Colombo Stock Exchange statistics.

"The market reacted positively mainly due to the confidence created by the large scale investors who entered the market during the week," Thakshila Hulangamuwa, vice president at stock brokering firm Asha Phillip Securities said.

"The main reason behind the investors making a positive approach towards the market was mainly due to the premiums paid by large investors, particularly the funds who took strategic positions."

Brokers said 7.76 million HNB shares changed hands at 162.00 rupees, and over 2.76 JKH shares changed hands at 154.00 rupees.

HNB closed at 163.25 rupees, up 25 cents, while conglomerate JKH closed at 152.00 rupees, up 2.00

Distilleries Company of Sri Lanka closed at 94.75 rupees, up 4.75 and diversified Hayleys closed at 155.25 rupees, down 1.75.

Commercial Bank of Ceylon closed at 175.00, up 4.25, Housing Development Finance Corporation closed at 130.00 rupees, up 5.00, and National Development Bank closed at 182.25, up 2.25.

Brokers said trading was thin apart for the large volume deals.

Plantations stocks also went up in price.

Agalawatte Plantations closed at 20 rupees, up 50 cents, Balangoda Plantations closed at 22.50 rupees, up 50 cents, Kegalle Plantations closed at 33.00 rupees, up 1.50, and Udapussellawa Plantations closed at 31.50 rupees, up 3.50.

Sri Lanka Telecom, Sri Lanka's largest fixed line operator closed at 42.25 rupees, up 75 cents, and Dialog Telekom, a unit of Telekom Malaysia closed flat at 7.00 rupees.

400kW Solar Plant in Hambantota with Japanese Aid, Helps Demonstrate the Sustainability of Commercial Scale Solar Power Generation

03rd December 2009, www.lankabusinessonline.com

The Japanese government will give Sri Lanka a grant of 860 million yen or just over a billion rupees to build a 400 kiloWatt solar power plant in the southern Hambantota district which will be connected to the national grid.

Investment Promotion Minister Anura Yapa told a news conference the island's Cabinet had approved the project aimed at introducing clean energy.

The plant will help to demonstrate to developers, lending agencies and equity investors the sustainability of commercial scale solar power generation, a government statement said.

"Development of renewable energy sources using solar power is vital due to the fact that only hydro power sources are used as renewable energy sources at present," it said.

The solar project will be implemented by the Sri Lanka Sustainable Energy Authority under the Ministry of Power and Energy.