Sri Lanka Holds Key Policy Rates. Prospects for Domestic Economic Activity Improved

14th December 2009, www.lankabusinessonline.com

Sri Lanka's central bank said it was holding its key policy rate at which money is injected to the economy at 9.75 percent and the rate at which money is drained at 7.50 percent to support credit growth, despite a pick up in inflation.

"Prospects for domestic economic activity have improved with the more favourable investment climate that now prevails and the gradual recovery of the world economy, supported by the relaxed monetary policy stance of the Central Bank," the monetary authority said.

"Hence, it is expected that credit flows will gradually pick up, with the more favourable credit conditions that prevail on account of the decline in market interest rates as well as the more stable conditions in financial markets."

The Central Bank said the outlook for inflation was "benign" though inflation in the 12-months to November picked up to 2.8 percent.

There have been rising concerns that inflation was being stoked up amid loose US monetary policy (the rupee is pegged to the dollar) and excess liquidity in the banking system.

Though money supply was expanding, the Central Bank said it was within targets.

Sri Lanka Could Have Hydrocarbon Deposits off the Northern and Southern Coasts. Oil Exploration Activities Bring New Business to Colombo Dockyard

14th December 2009, www.island.lk, By Devan Daniel

Petroleum Minister A H M Fouzie said Sri Lanka could have hydrocarbon deposits off the Northern and Southern coasts. The Cabinet is yet to approve a paper allowing the Ministry of Petroleum and Petroleum Resources to call for bids from oil exploration companies, he said.

If all goes well, Sri Lanka’s waters could be teaming with oil exploration vessels.

The Island Financial Review spoke to Mangala P B Yapa, managing director and CEO of blue-chip ship repair and heavy engineering company, Colombo Dockyard PLC, about the potential of new business the oil exploration activities and possible off-shore oil excavations could bring the company.

"Colombo Dock Yard specialises in dry dock and offshore ship repairs and maintenance. We have also carried out repairs and maintenance to oil rigs and dredging vessels. We are focusing a lot on Dockyard General Engineering Services, which specialises in engineering, construction, maintenance and auxiliary services," Yapa said.

Yapa said oil exploration activities bring new business to other sectors as well.

"Logistics and crew transport is something we do not provide, but yes other companies in Sri Lanka could provide this service," he said.

Yapa, however, said the limiting factor would be space constraints in Colombo.

"We do not have the space in Colombo required to carry out repairs on rigs and dredging vessels. Because of the monsoons, these repairs must be carried out in calm waters. Rigs would have to be completely towed to calmer waters.

"Rigs on the Mannar Basin that need repairs cannot be towed to Trincomalee — a natural harbour — from the North so Colombo is the closest destination. Hambantota — when it is ready —would be too far as well," Yapa said.

Public Utilities website Launched. Official Website of the Regulator for Infrastructure Industries

11th December 2009, firstlanka.com

Public Utilities Commission of Sri Lanka (PUCSL) has launched its official website (www.pucsl.gov.lk) for the benefit of all the stakeholders at the Government Information Department. PUCSL as the regulator for infrastructure industries in the country started regulatory activities in the electricity industry with the enactment of Sri Lanka Electricity Act No.20 of 2009.

Accordingly, PUCSL regulate economic, safety, and technical aspects of the industry through the licenses issued to Ceylon Electricity Board, Lanka Elecricity Company and other independent energy producers, the PUCSL Chairman Jayatissa De Costa said at the launching ceremony of this official website.

He pointed out that the PUCSL website provides lot of information about the organization and industries it regulated.

For the benefit of all the stakeholders, salient features of the website have been summarized as follows;

1. Website has been developed in three languages (English, Sinhala & Tamil) and it will be updated in all the languages.

2. Website provides an opportunity for consumers to submit their complaints to the commission directly.

3. Consumers can verify their electricity bill using the bill calculator provided in the website more easily.

4. Detailed explanation has been given about the industries it regulates.

5. Events calendar provides information on scheduled forthcoming events of the commission.

6. Latest news and notices of the Commission are shown in home page of the website.

Courtesy: Government Information Department

Sri Lanka’s Rural Roots at "The Village in the City". Cinnamon Grand's Nuga Gama, Concept that Highlights Rich Traditional Heritage and Culture

13th December 2009, www.island.lk

Cinnamon Grand pays tribute to Sri Lanka’s rich traditional heritage and culture with its newest concept, Nuga Gama (meaning Banyan Village) which is now open to the public. Here tradition beckons in an inspiring journey that takes you back to Sri Lanka’s rural roots at ‘the village in the city’. Bask in the steep traditional atmosphere that hearkens back to a simpler, less urbanised era. Traditional sights to be seen and visited include a karatha, ambalama, kussiya, salawa, pokuna, gama gedara, kamatha and bissa.

A return to our traditional roots is the driving force behind Nuga Gama, a locale designed by Dipika Dharmadasa. Nuga Gama represents myriad different aspects of Sri Lankan culture and tradition, long forgotten to most urbanites. Surrounding the awe inspiring 200 year old banyan tree that is its namesake, Nuga Gama gives patrons the opportunity to experience the ambience of rural life in addition to enjoying typical Sri Lankan cuisine with a taste of truly indigenous flavours.

"The Nuga Gama concept takes its inspiration from its centrepiece; the towering banyan tree," said General Manager Rohan Karr. "Throughout its existence, it has undoubtedly seen a lot of urbanization but it retains its traditional roots symbolizing survival even through progress. The Cinnamon Grand team found this traditional symbol evocative of the indomitable Sri Lankan spirit and felt it was something to be proud of. As a local brand we believe in honouring and fostering this sense of pride in our culture and history," he said.

There is no shortage of activities, attractions and ambience at Nuga Gama. Experience a healthy dose of Sri Lankan history, develop an appreciation for local and authentic handicrafts and learn about important facets of village life such as harvesting. Rural handicrafts and foodstuffs at the kade are made by rural people and are unique to Nuga Gama. Vegetable plots and endemic flora abound at Nuga Gama with a "home garden" which provides vegetables, medicine and other useful products.

Beverages at Nuga Gama include Nuga Gama specials and fresh juices. Traditional favourites such as Veralu, Ambarella, Nasnarang, Inguru, Nelli, Ceambala, Karapincha, Kiri pani, Sapodilla and much more comprise the Nuga Gama specials. Fresh juices include Carrot, Guava, Cantaloupe, Orange, Pineapple, Wood apple, Papaya, Watermelon and Thambili.

The breakfast buffet is a satisfying spread, including Hoppers, Egg Hoppers, Milk Rice, String Hoppers, Coconut Roti, Roasted bread, Mutton curry, Fish ambulthiyal, Potato white curry, Sambar, Pol sambol, Katta sambol and lots more.

The luncheon spread comprises White Rice, Red Rice, Seer fish in red chilli curry, Black spicy chicken curry, Pork curry cooked with roasted spices, Fried Mutton curry, Beetroot tempered with onion, garlic, curry leaves and spices, Snake gourd in white curry, Fried Brinjal Curry, Shredded Mukunuwanna cooked with grated coconut, Sri Lankan village pickle, Lime pickle and lots more. Dessert choices include Curd with treacle, Watalappan, Cream Caramel and more.

Tea time snacks are also offered with a variety of Sri Lankan sweetmeats and savouries: Bibikkan, Kokis, Muscat, Thalaguli, Lavariya, Dodol, a range of herbal drinks and much more.

Dinner comprises an a la carte menu with dishes ranging from Fried sprats, Spicy tempered prawns, Fried Maniyok, Sri Lankan style noodles with vegetables, Crab and murunga leaves curry, Chicken giblet curry and Dosai to Chicken curry, Mutton simmered in coconut milk with curry powder, Beef dry curry, Fried brinjal curry and lots more. Accompaniments comprise Fried chillies, Fried dried fish, Papadum, Achcharu and Lunumiris. A dessert selection with fresh fruits will also be available.

Sri Lankan Spices Can Double Per Capita Incomes in 5 Years

13th December 2009, www.sundaytimes.lk

Sri Lanka’s Treasury Secretary predicts that Sri Lanka can increase per capita incomes to US$ 4,000 – US$ 5,000, over the next five years, by value adding thrust industries like Sri Lankan spices.

“The per capita income is now around US$ 2,200. Five years ago this was around US$ 1,000. So in five years we have doubled our per capita income. My prediction is, that within the next five years we will cross the US$ 4,000 – US$ 5,000 per capital income mark,” said the Secretary to the Treasury, Dr P B Jayasundara, speaking at the AGM of the Spice Council on Tuesday.

The agriculture sector like spices is expected to benefit directly from the end of war and the expanses of lands released for agricultural purposes in the north and east. “The President’s development strategy has brought new space to agriculture. A substantial area for agriculture disappeared because of 30 years of war. We did not have the production space in the north and the east. The country now has a substantial area of land and sea brought into the production process,” said Dr Jayasundara.

On top of opening up more land area for agriculture and other industries, the government’s development plans are also expected to boost private sector growth by enhancing connectivity. “The next 10 years will be a period of infrastructure, to link the provinces to allow us to move to more rapid development. The government vision is to establish Sri Lanka as a really solid middle income county by 2010,” said Dr Jayasundara.

However, the agriculture sector was told to go for a “mindset change” to contribute to post-war per capita growth. “In agriculture it is mostly a trading mindset still. The message now is ‘let’s stop sending anything out in primary product form,” said Dr Jayasundara.

At this point most of Sri Lanka’s spices leave the country in primary form. However, Sri Lankan spices are noted for their potential in pharmaceutical and other value added areas. The Treasury Secretary said value added agricultural exports have the potential to improve the trade balance by increasing export incomes and reducing agricultural and food imports.

Spicing up exports

Meanwhile, the Spice Council is to declare 2010 the year of Value Addition in the Spice Industry of Sri Lanka, to drum up awareness and support for the sector. Sri Lanka’s spice traders say they are now looking for government support to increase production of Sri Lankan spices and to add value to exports.
“Today we spend around Rs 2.2 billion on importing chilli. As much as 70% of the chilli consumed, is imported. But we can very easily grow it here. So we are going to ask the government for support to grow 1,000 acres of chilli in 10 areas of the country, including the north and east. We have already started one project in Trincomalee,” said the Chairman of the Spice Council, D A Perera.

The spice traders are also hoping to expand output of other spices like cinnamon and pepper and to add value to these products. The traders say there is global demand but Sri Lanka has not been able to supply the demand.

“Sri Lanka produces the word’s best pepper. The active ingredient in pepper is called ‘piperine.’ In pepper from other countries, like India, the piperine content is around 6%. Sri Lankan pepper has 12% piperine content. This is why we have the best pepper in the world, but we only produce around 2.5% of world pepper output,” explained Mr Perera.

The spice traders are hoping to negotiate a deal with the government to get assistance to add value to spices like pepper. The traders are also asking for support to expand cultivation into the north and east of Sri Lanka and for technological innovations.

Image: Dr. P.B. Jayasundera speaking at the event.

Sri Lankan IT BPO Industry Targets FAO with the Second Largest Pool of UK Qualified Accounting Professionals outside of UK

23rd July 2009, www.itpro.lk

Sri Lankan IT BPO Industry Targets FAO with the Second Largest Pool of UK Qualified Accounting Professionals outside of UK ....

Tell us something about the Sri Lankan IT BPO industry?

Sri Lanka has a vibrant young IT-BPO industry which is poised for rapid growth. It is currently about 250 million dollars and grew at over 23% YoY prior to the global recession. This level of growth was achieved while a significant negative risk perception prevalent due to the LTTE terrorist activities in the north. We have sound basics in place for growth. Now that the war is behind us, as the global economy bounces back, Sri Lanka will take of on a significant growth trajectory. In fact right now, Sri Lanka must be the country with the highest growth potential in Asia.

AT Kearney Global Location Services Index is a well known index of where a country stand in terms of its attractiveness for IT and BPO services. In 2007 Sri Lankan was ranked 29th on this index and in 2009 the ranking has significantly jumped to 16th. This was also done "before" the war ended, so in the 2011 index this will further climb up. Only one or two other counties had a 13 point jump in the AT Kearney Global Location Services Index during 2009. This is a great testament to the potential.

What is the USP of Sri Lanka as an outsourcing destination?

We don't have millions of people like India or China. Sri Lanka is A small country with 21 million people. So our focus clearly is on few key niche areas.

First is Finance and Accounting (FAO) BPO. Sri Lanka has the second largest pool of UK qualified accounting professionals outside of UK. This makes it very attractive for BPOs who are looking for FAO. We have some early movers like WNS, RR Donnelly, Amba Research, HSBC etc. taking advantage of this. There are several other verticals we are focusing on to build Centers of Excellence where we will be able to command a lead position globally. Mobile and Telco Engineering, Software Testing, Travel and Leisure sector are the core verticals Sri Lanka is focused on. So, city Center of Excellence is one of the USP. We are actively working to bring in leading global players, international conferences in these verticals to Sri Lanka to create awareness.

Sri Lanka also offers a unique advantage for SMEs who are looking to outsource. In a larger market like India, SMEs will not have the right level of service and attention. Our market being small, matches very well with the needs of the SME sector. SMEs are also a growth sector for offshoring. Many SMEs who have not looked at outsourcing earlier now look at this as an option to reduce costs, due to the global slowdown. We see an increase number of new SMEs are looking to take advantage of offshoring. Sri Lanka is an ideal place for an SME to outsource their services or for an SME who is looking to set up a small BPO or a R&D Center. SMEs will have premium quality resources at affordable prices and above all a superior service.

Third area that Sri Lanka has an advantage is the low industry attrition (typically 10-12% for IT and BPO). In other well developed markets IT attrition is as high as 20-23% and BPO attrition can go as high as 40%. Even the larger global players such as Infosys, Cognizant, IBM etc can take advantage of this low attrition environment by locating their high investment competency centers in Sri Lanka. For example, if you are building a global sourcing center for SAP skills, which is a high cost investment, if the center is set up in Sri Lanka, your chances of loosing people will be very very limited as not many other players will be in the same space. Many companies have taken advantage of this and build their niche competency centers in Sri Lanka out of harm's way.

Complete Article : http://www.itpro.lk/node/2702

Maersk to Stop Direct Chennai-US Service. Colombo, Sri Lanka to Gain on Trans-shipments

10th December 2009, www.slasscom.lk

The world’s biggest container shipping firm, Maersk Line, will stop a direct service from Chennai to the US east coast from 5 February and run it from Colombo instead, dealing a blow to the Union government-owned Chennai port’s ambition to become a hub. At least two Chennai-based shipbrokers familiar with the development confirmed Maersk’s plan, declining to be named as they are not authorized to speak to the media. Maersk is the container shipping unit of Danish shipping and oil conglomerate AP Moller-Maersk Group A/S.

This move will also increase costs and mean delays for shipments from India, eroding the competitiveness of exports, said S.R.L. Narasimhan, secretary of the Western India Shippers Association.

The Maersk service, introduced in 2007 to tap the boom in container shipments to and from the US, is being stopped as traffic between the countries has dropped as the effects of the global slump have made the service unviable, shipping executives in Chennai said.

Clients in south India will now have to ship cargo to the Sri Lankan port on smaller feeder vessels, a process known as trans-shipment, which will add three-four days to the process.

Other trans-shipment destinations from India are Singapore, Port Klang in Malaysia, Dubai or Salalah in Oman.

India spends at least Rs1,000 crore a year on trans-shipment alone, as big ships are not able to call at the country’s ports due to depth restrictions, according to the Union shipping ministry.

From Jawaharlal Nehru Port, India’s busiest container port located in Mumbai, there are three separate weekly direct services to the US. One is run by Maersk, the second by a consortium comprising Hapag-Lloyd AG, CMA CGM SA, APL Ltd and NYK Line and, the third by a consortium of UASC Ltd, Hanjin Shipping Co. Ltd, K Line and Yang Ming Marine Transport Corp.

According to the terms of a contract signed with the Union government-owned Chennai port in 2001 for operating the terminal, DP World has to ensure that big main line vessels call at the port to haul cargo directly to destinations. This clause stipulated that at least 30% of the total container cargo handled at the terminal had to be moved in this way as part of efforts to make Chennai a container cargo hub on the east coast.
Maersk Line confirmed it was making changes to the existing MECL2 service between Chennai and North America from 5 February.

“We will offer multiple feeder sailings from Chennai to Colombo for onward connection to the MECL2, thereby providing more frequent sailing options to our customers,” said Rajiv Arvind, an executive looking after corporate communications at Maersk Line India.