Transcript Sri Lanka 2011 & Beyond

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Asia: Still in the Lead
Asia continues to outpace other regions, buoyed by resilient
exports and strong domestic demand
- World Economic Outlook, April 2011 – IMF
Sri Lanka best place to
invest in South Asia:
Jim Rogers
Sri Lanka has what it
takes to be the Wonder
of Asia
- Dr. Ngozi Okonjo-Iweala, Managing Director of the World Bank
Sri Lanka
2 0 1 1
&
b e y o n d …
© Research & Development Unit
Sri Lanka:
B y 2 0 1 6
The Wonder of Asia

USD 4,000 per capita income

GDP growth above 8% on average

2.5 mn tourist arrivals per annum

Over 10 sectors contributing USD 1 billion each in export earnings

Private investment around 22-24% of GDP (now 18-20% of GDP)

FDI to be around 5% of GDP (2011-2% of GDP

ICT literacy rate to increase to 75% from 30% at present

2nd International Air Port & more than 5 International Sea Ports
*forecast
)
What the End of the Internal War offered to Sri Lanka ?

An undivided focus on growth and development

The biggest obstacle for attracting FDI to the country (internal war) has been removed

A surge in tourist arrivals and enhanced prospects for travel industry and related
industries.

War risk premium on reinsurance removed – better prospects for trade and exports

A larger workforce (including military personnel) who can now be deployed for the
development drive.

Opening up of serene coastlines and enhanced prospects for the natural harbour
(Trincomalee)

More land to develop and cultivate

Unencumbered connectivity of people

Surge in capital market - ASPI 226% , MPI 173% *
*May 2009 – Apr 2011
Why invest in Sri Lanka
"If you were smart in the 1800s’ you moved to London, if you were smart in
the 1900s’ you moved to New York City, and if you are smart now
you move to Asia" - Jim Rogers
 Political Stability.
 Rapid infrastructure development – Sea Ports, Air Port, Power Plants, Roads etc…
 Sri Lanka’s social indicators are among the best in the South Asian region. The
country has achieved near universal literacy (91%) & perhaps more remarkably, the
gender gap is narrow, and Sri Lanka is among the top 20 countries, ranked on
gender equality by the World Economic Forum.
 Excellent health facilities with ample availability of UK qualified specialist doctors.
 Per capita GDP reached USD 2,014 in 2008 & the IMF recognized Sri Lanka as a
middle income emerging country (2009 - USD 2,057 & 2010 – USD 2,399).
 Easily trainable and versatile workforce. Sri Lanka has the second largest pool of
UK qualified accountants which helps to compete in the financial and accounting
BPO market
 English is widely spoken and understood
 Greater emphasis on education with particular emphasis on ICT, technical
education and English language proficiency
Research & Development Unit
Why invest in Sri Lanka
 It is important to note that even during its
darkest moments Sri Lanka’s GDP growth
fluctuated between 4%-5% over a period of 20
years, signaling the economy’s substantial
resilience to shocks & adverse conditions.
 Free Trade Agreement (FTA) with India clearly
demonstrates the goodwill & commitment
between the two nations. The agreement
creates investment opportunities for local &
multinational firms based in Sri Lanka
seeking business opportunities in India.
 Sri Lanka has climbed nine positions from
2009 to be ranked 59 among 110 nations, in
the World Prosperity Index – 2010, by the
Legatum Institute, a UK based independent
research institute. Sri Lanka is also the
highest ranked country among South Asian
nations. In the overall rankings Sri Lanka is
just behind China, ranked 58. Among other
South Asian nations India has been ranked at
88, Nepal 91, Bangladesh 96 and Pakistan
109.
Research & Development Unit
Sri Lanka Poised
for Rapid Growth:
GDP Growth Rate (%)
2010 4Q
8.6
2010
8.0
2011e
8.5
2012e
9.0
2013e
9.5
2014e
9.5
Per Capita GDP (USD)
2009
2,057
2010a
2,399
2011e
2,794
2012e
3,200
2013e
3,660
2014e
4,190
a – Provisional e – Forecast
Source: CBSL Annual Report 2010
OUTLOOK ON SRI LANKA
S&P
India
Bangladesh
Pakistan
BBBBBB-
Standard &
Poor’s
B+
Stable
HSBC
BBStable
Fitch Ratings
B+
Positive
Fitch Ratings
India
BBBFitch & S&P
Grading
AAA
AA
A
BBB
BB
B
CCC
CC
C
D
(+)/(-)
Moody’s
B1
Stable
Moody’s
India
Bangladesh
Pakistan
Moody’s Grading
Aaa, Aa, A,
Baa, Ba, B
Caa, Ca, C
(1)/(2)/(3)
Ba1
Ba3
Ba3
Sri Lanka - Key Indicators
Research & Development Unit
Sri Lanka - Key Indicators (Cont…)
Research & Development Unit
Sri Lanka - Key Indicators (Cont…)
Research & Development Unit
Medium Term Macroeconomic Framework 2010 – 2014
Indicators
Real Sector
Projections
Units
2009 (a)
2010 (b)
2011
2012
2013
2014
Real GDP Growth
%
3.5
8.0
8.5
9.0
9.5
9.5
GDP Deflator
%
5.9
7.3
6.0
5.5
5.0
5.0
US$ mn
2,057
2,399
2,794
3,200
3,660
4,190
Total Investment
% of GDP
24.4
27.8
29.5
32.0
33.0
34.0
National Savings
% of GDP
23.7
24.7
25.8
29.1
30.7
32.3
% of GDP
-0.5
-2.9
-3.7
-2.9
-2.2
-1.7
Overall Balance
US$ mn
2,725
921
775
525
825
1,325
External Official Reserves (c) (d)
Months
5,097
6,610
8,004
8,938
9,668
10,281
%
18.9
14.6
13.5
16.2
12.6
14.3
Current Account Balance
% of GDP
-3.7
-2.1
-0.8
1.0
1.7
1.6
Overall Budget Deficit
% of GDP
-9.9
-7.9
-6.8
-5.2
-4.8
-4.8
Reserve Money Growth
%
13.1
18.8
14.5
14.5
14.5
14.5
Broad Money Growth (M2b)
%
18.6
15.8
14.5
14.5
14.5
14.5
Growth in Credit to Private Sector
%
-5.8
25.1
18.8
17.1
16.4
15.9
Per Capita GDP
External Sector
Current Account Balance
Debt Service Ratio (e)
Fiscal Sector
Financial Sector (f)
(a) Revised, (b) Provisional (c) Excluding receipts of Asian Clearing Union, (d) External official reserves include the proceeds from the IMF Stand-by Arrangement facility-2009. (e) Total debt service payments as a percentage of
earnings from exports of goods and services, (f) Year-on-year growth in end year values
Sources: Ministry of Finance and Planning, Department of Census and Statistics, Central Bank of Sri Lanka
Research & Development Unit
Towards Enhanced Macroeconomic Stability
Lower tax regime
 Overall, taxes have been cut and a complicated system smoothed out. Tax incentives for large investments and tax concessions on profits
from listed debentures and equity for foreign investors.
Relaxation of strict foreign exchange controls and BOI Reforms
 The new measures are expected to boost dollar liquidity while the rising trend of the rupee may also attract off shore interest, as has
happened in the treasury securities market. Restrictions on inflows to open up new business offices also have been eased. Reforms at
the Board of Investment of Sri Lanka are expected to further reduce red tape.
Lower interest rates
 Higher liquidity from reduced taxes is expected to keep interest rates in check and encourage more economic growth. This will also
soften the impact of government domestic borrowing.
Fiscal prudence
 A clear focus on cutting the budget deficit and other prudent public finance measures in the budget should boost state revenue and
hopefully curb the budget deficit to a 19 year low of 6.8 % in 2011.
Infrastructure development
 Infrastructure projects worth over USD 6 Bn have been given priority with a public investment figure of Rs.413.7 Bn (USD 3.7 Bn)
budgeted for 2011.
Research & Development Unit
“Sri Lanka has what it takes to be the Wonder of Asia”
 Dr. Ngozi Okonjo-Iweala, Managing Director of the World Bank, during her two
day official visit to Sri Lanka had stated that Sri Lanka has what it takes to be the
Wonder of Asia through inclusive growth acceleration.
 To get there, raising investments, improving productivity of those investments
through innovation policies, skills development and macroeconomic stability
will be important.
 Above all, implementing policies that promote the inclusion of all segments of society in the growth process, as
envisaged in the ‘Mahinda Chintana’, will be crucial.
 Dr. Ngozi Okonjo-Iweala also announced Sri Lanka’s eligiblity for IBRD financing – funding from the Bank’s nonconcessional window.
 IDA resources will continue as it is important that Sri Lanka benefit from these highly concessional resources to
support its post conflict reconstruction and rehabilitation needs. Together, these financing sources have the potential
to significantly increase the amount of resources available on an annual basis.
 This is an important recognition of the middle income country status of Sri Lanka and signals a different sort of
relationship going forward – a relationship that is founded on knowledge sharing that complements the available
financing.
Research & Development Unit
Ease of Doing Business in Sri Lanka
According to the World Bank’s ‘Doing Business 2011’ report, Sri Lanka’s Ease of Doing
Business ranking has remained unchanged from 2010 at 102nd out of 183 other economies.
The President of Sri Lanka in his address to the United Nations General Assembly (2010) had stated
that Sri Lanka aims to improve its ‘Doing Business’ ranking to 30 by 2014.
Central Bank of Sri Lanka (CBSL) together with the Ministry of Economic Development is coordinating
the strategy to achieve the goal articulated by the President. The Budget for 2011 has already made
significant strides to simplify taxation, and thereby improve the ranking in the area of “Paying Taxes.”
There is also ample scope for eliminating a large number of “procedures” involved in various areas by
establishing “one stop shops” where an entrepreneur needs to submit required documents at one point
only and all the necessary formalities and clearances are undertaken by the agency concerned. This
could be effectively done in the area of Dealing with Construction Permits and Trading Across Borders.
In the area of land registration, introduction of title registration could reduce time involved substantially.
Court procedure also has to be closely studied in order to devise a method to reduce the delay and
improve the ranking in Enforcement of Contracts.
CBSL will be looking at other aspects also to facilitate business. In particular, to reduce the time and
effort spent on searching for information, CBSL has already produced a booklet “A Step by Step Guide to
Doing Business”, which contains necessary information needed by an entrepreneur during each stage of
operating a business. (For more info - web: www.cbsl.gov.lk , Tel: +94 11 2477377)
2011
2010
India
134
135
Bangladesh
107
111
Maldives
85
96
Pakistan
83
75
Singapore
01
01
Research & Development Unit
Sri Lanka Moves up in the Economic Freedom Index
Sri Lanka has moved up considerably in the “2011 Index of Economic Freedom” released by The World Heritage
Foundation and the Wall Street Journal. Sri Lanka has been ranked as the world’s 107 th (from 183 economies) freest
economy in 2011, higher in comparison to the 120th place in 2010.
 Hong Kong and
Singapore topped the
ratings, finishing one and
two, respectively, for the
17th straight year.
 But Singapore cut into
Hong Kong’s lead
significantly, mainly on
the strength of a better
score in anti-corruption
and a significant gain in
financial freedom.
 The country’s overall economic freedom score was 57.1 which is an
improvement of 2.5 from the 2010 figure of 54.6, reflecting major
gains in trade, monetary, and investment freedom.
 Sri Lanka is ranked 19th out of 41 countries in the Asia–Pacific
region, and its score improvement is one of the 10 largest in the
2011 Index.
 The third and fourth place
finishers also remained
the same: Australia and
New Zealand,
respectively.
Research & Development Unit
Areas for further improvement & some concerns…
The Sri Lankan economy continues to make progress under the fund-supported program and overall macroeconomic
developments remain favorable. Growth is strong, inflation remains in single digits, and reserves are at a comfortable
level. Recent heavy rains and flooding have negatively affected various crops, as well as rural infrastructure. However,
given the size and strength of the economy, the overall impact on output growth is expected to be limited.
The 2010 budget deficit target has been met and budget developments so far in 2011 are broadly in line with expectations.
The governments’ plan to handle the flood-related expenses by reallocating and reprioritizing expenditure within the
existing budget will help maintain the IMF-SBA program’s deficit target for 2011.
Reforming the two state energy enterprises (i.e. CEB & CPC) and bringing their combined operating balance to zero in
2011 would ensure the durability of fiscal adjustment. To this end, it will be important to allow adjustment of domestic
prices to reflect fluctuations in international fuel prices.
Steps to expand the liquidity management tools at the CBSL’s disposal will help maintain its control over monetary
conditions. Going forward, monetary policy will need to be vigilant about the possible second-round effects from higher
prices on core inflation and strike the right balance between supporting economic growth and preventing excess liquidity
from fueling inflationary pressures.
Allowing sufficient two-way flexibility of the exchange rate will help support the external position and meet the reserves
target.
Financial sector reforms will continue to focus on strengthening the resilience of this sector, and expand the scope of
financing options available to the private sector by increasing the depth of the corporate bond market and improving the
functioning of the stock market.
Source: www.imf.org
Research & Development Unit
Sri Lanka as a Dynamic Global Hub – Five Hub Concept
 Naval /Logistics Hub
 Sri Lanka will be developed as a major global naval/logistics hub in the South Asian region for
trade, investment, communications & financial services. Sri Lanka is strategically positioned at
the crossroads of the eastern & western sea routes. It is located at the entry point of South
Asia from Middle East, Africa, Europe & America.
 The Colombo port ranked as the number 01 port of South Asia & the 26th of the world in 2010.
The Colombo port is computerized & linked to all major freight stations. The proposed
Colombo south harbor will be located west of the present south west breakwater in an area of
approximately 600 hectares.
 The Galle port is the only Sri Lankan port that provides facilities for pleasure yachts. The
increase in arrival of yachts has revived the tourism industry of the country in general & of
Galle in particular. The development of the Galle port as a tourist destination will act as a
catalyst for the economic growth of the southern region of Sri Lanka.
 The Trincomalee harbour is the fifth largest natural harbour in the world & the availability of
water & space is about 10 times as much in Colombo. Trincomalee is identified as a suitable
harbour for bulk cargo heavy industries, tourism & agriculture.
 With the objective of port & regional development ,the government of Sri Lanka is promoting
the development of ports like Hambanthota and Oluvil to be a catalyst for the growth of eastern
& other rural areas of Sri Lanka.
Research & Development Unit
 Naval /Logistics Hub
(Cont…)
Colombo South Harbour Development Project
Area
Scope
Stages
Engineer
Contractor
Approx. 600 hectares.
Four terminals of over 1,200m in length each to accommodate
3 berths alongside depths of 18m and provision to deepen to
23m to accommodate deeper draft vessels of the future.
Two stages. The 01 stage - infrastructure - USD 300 Mn and 02
stage - terminal facilities - USD 700 Mn
Scott Wilson Ltd – UK
Hyundai Engineering & Construction Co. Ltd., Korea
In 2010, GOSL signed a USD450 Mn deal with China Merchants Holdings
and Aitken Spence to build the first of the 03 terminals. Each terminal is
expected to add the capability to handle 2.5 Mn TEUs more. The port now
handles 4.5 Mn TEU.
Port of Trincomalee
Trincomalee harbour is the second best natural harbour in the world and
the available water and land area is about 10 times as much as the Port
of Colombo.
Trincomalee was tentatively identified to cater for bulk and break bulk
cargo and port related industrial activities including heavy industries,
tourism and agriculture etc.
At present SLPA is in the process of re-developing Trincomalee as a
metropolis growth centre.
SLPA plans to advertise internationally and locally to call for proposals
from potential investors for Industrial Park and Tourism Zone.
Hambantota Port Development
Port of Hambantota is planned to develop as a Services
and industrial port.
Cost - Phase 1 : USD 361 Mn
(85% funded by the Ex-Im Bank, China)
Duration : 39 months.
The port will be able to berth 04 vessels on completion of
the first phase.
Sri Lanka is situated along the major east-west shipping
routes between the Malacca Straits and the Suez Canal
which links Asia and Europe. An estimated 36,000 ships
including 4,500 oil tankers use the route annually and daily
around 200 vessels pass the southern sea of Sri Lanka.
The second phase of the port will include a container
terminal and the third phase a dockyard. Upon completion
the port will cover 4,000 acres of land and accommodate
around 30 vessels.
The contract for the Second phase of construction of the
Hambantota Port was awarded to a Chinese Company on
December 31 2010, CHEC Ltd. signed on for the
Engineering, Procurement and Construction (EPC) of the
Hambantota Port.
The contract value amounts to USD 810 Mn with a
construction period of 36 months.
Research & Development Unit
 Naval /Logistics Hub
(Cont…)
Oluvil Port Development
Stage I
Contract Period
: 27 months
Estimated Cost (Stage-1)
: Euro 46.1 million
Source of Funding
: Denmark (DANIDA)
Government of Sri Lanka, in its plan to give impetus to economic development in
the Eastern region, has decided to build a port at a site in Oluvil under the
“Nagenahira Navodaya” Programme which was launched to expedite the
development activities in the region.
This port will form the southeastern link in the developing chain of coastal harbours
in the country and will provide more convenient and cost effective access to and
from the southeastern region for goods and cargo originating on the west coast.
The proposed project is comprised of the construction of a commercial harbour and
a basin for the fishing crafts and it covers a land area of 60ha in the first stage and
105ha in the second stage. The harbour basin would cover an area of 16ha of the
sea and would spread 1.2km along the coast line.
Stage II - Developing the Harbour to cater to 16,000 ton ships, Increasing harbour
basin depth to 11 m. Construction of additional 470 m quay wall & other structures.
Sailboat Manufacturing in Sri Lanka
Barramundi Boatyard Pvt Ltd., which is a BOI approved manufacturer of Luxury
sailboats has released their second sail boat, which was made in Sri Lanka in
Weligama. Ships & Boats manufacturing sector, which recorded a 57.81% growth
in 2009, had grown by 38.9% on average over the last three years.
Port of Kankesanturai and Point
Pedro
Another rehabilitation and improvement project
is planned for Kankesanthurai (KKS) Harbour,
to include the repair of the breakwaters, piers
and roads, including dredging and wreck
removal and the harbour basin.
To ensure cargo handling work continues
without interruption, the SLPA committed by
utilize its own funding to carry out emergency
repairs to the breakwater and dredging of the
basin. In the meantime the government of India
has indicated willingness to grant USD 23 m for
removal of wrecks and construction of a New
Pier.
Out of four barges damaged by the Tsunami in
December 2004 at PPD – Point Pedro, three of
them are beyond use. Two new barges were
fabricated with funding from National Budget
and SLPA Budget. Additionally the feasibility of
developing Point Pedro to the level of an SLPA
regional port for the Northern Province will be
explored.
Research & Development Unit
 Commercial Hub – COLOMBO
A new Colombo
Fort redefined
According to zoning plan of the Colombo City, the
Fort area is classified as a concentrated development
zone.
Port City in Galle Face
The UDA and the Sri Lanka Ports Authority (SLPA) are now planning to reclaim land
from the sea and build a 400-acre port city under the Galle Face development project.
This is expected to cost around Rs. 30 bn and will be completed in 03 years. The city
includes hotels, apartments, malls, yacht marinas & a golf course.
Residential housing
The most prominent of land marks in the area are the
crossroad of Chatham Street & Janadhipathi
Mawatha, formerly Queens Street.
The Mount Mary mixed development project aims at demolishing the now dilapidated &
underutilized housing units along Dematagoda to make way for the construction of new
commercial housing..
A transformation to the Fort takes place from
transworks building that is based on lower Chatham
Street in the heart of the fort or Colombo 1, which is
set to become the epicenter for the transworks
square designed by the UDA.
The lands owned by the state timber corporation along Baseline road in Orugodawatte
will be used for high density housing.
Colombo Fort area will be reconstructed with
increased accessibility for conducting trading
activities.
Eco- Friendly city
The scenic road around the beira will open up space for jogging & walking while the
waters will provide rowers with a place to exercise their skills. The green & blue
concept initiated under the Sir Patrick Geddes plans to make Colombo a green
destination back in 1921 will be put into operation today with the dream of making the
city of Colombo “The garden City of the East”
Developments in Colombo at a glance




Research & Development Unit


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
Provision of alternate dwellings for aprox. 70,000 families living in city slums within Colombo city.
Freeing land for development via clearance of unauthorized structures and shifting govt. offices out
of Colombo.
Restoration and redevelopment of historic buildings.
Creation of pedestrian-friendly locales & changing the character of city into a green urban
environment.
Reclaiming 400 acres of land from the sea and creating a new city on the reclaimed land.
Upgrading Galle Road, the Marine Drive and expansion of the one-way system.
Introducing dedicated parking spaces, disabled crossings and strict enforcement of road rules
Introduction of an alternative transport system via development of waterways and a ferry service
 Commercial Hub
(Cont…)
Greater Hambantota Development Project
New Town – Siribopura
Siribopura town which is located 1.5 km north of Hambantota town is to be re-modeled to act as the administrative and financial centre for
Hambantota. All the administrative functions to be relocated in the new town by end 2010.
Establishing a separate 15-20 acre area for financial related institutions including banks is also considered. At present UDA has given
approval for 10 banks (CBC, HNB, Sampath, Seylan, PB, BOC, NDB, NSB, Ruhunu Development Bank, Sanasa Development Bank) to
locate their branches in the identified location. Many banks have proposed to establish their regional offices here. (please see appendix map,
area marked as ‘CBD 1-Siribopura’ within the demarcated area for the New Town development)
A commercial centre for the new town has also been identified. The Hambantota urban council has been proposed to be upgraded to a
Municipal Council in 2011 and the Divisional Secretariat – Hambantota is also to be re-modeled to suit the present conditions of the area.
International Airport Hambantota (Mattala)
Hambantota International Airport will be the second international airport of Sri Lanka, the length of which will be 3.5
km, where even the largest aircraft can be landed. The airport, estimated to cost USD 210 Mn, will cover an area of
2,000 hectares. Hambantota airport will be one of the green airports in the world and will commence its commercial
operations in 2013. It is estimated that this project would generate over 50,000 direct and indirect employment.
Mattala airport would cater 60% for cargo handling & 40% for passenger handling.
International Cricket ground (Suriyawewa)
Sri Lanka co-hosted 2011 cricket World Cup-semi finals with the introduction of a new cricket stadium in Hambantota.
Hambantota Cricket stadium with its state-of-the-art amenities was added to the ICC`s list of main cricket venues in the
world.
Research & Development Unit
Appendix Map
Back
 Commercial Hub - Greater Hambantota Development Project
Hambantota International Seaport (Magampura Harbour)
This is expected to be one of the three major harbours of Sri Lanka and will attract a considerable percentage of
36,000 ships that pass Hambantota using the East-West global shipping route at present and currently divert to other
regional ports for their supplies, spending additional money and time. The first phase (one of the three) of the harbour
was completed in December 2010. The first phase facilitates the anchoring of three ships. The total investment for
Phase 1 - USD 361 Mn.
Investment Promotional Zones
The high end apparel industries are based at Bata-atha, Mirijjawila, and Beliatta. Export Processing Zones yield many
opportunities for investments. The government has already implemented its plans to develop the Hamabantota district
as a business friendly district that actively pursues the government policies on economic liberalization with emphasis on
private sector investment.
The investment promotion zone is part of the government plan to develop Hambantota as an economic centre. The
Government has allocated 1100 hectares (2717 acres) of state land in Hambantota, to be used as an Investment
Promotion Zone. The Board of Investment of Sri Lanka will allocate this land within the IPZ to the prospective investors
on a 50 year lease basis. The investments will cover diverse industries and sectors.
Hambantota International Convention Centre (HICC)
Located in Siribopura, Hambantota, the project started in 2006 with Korean aid. It has direct access to the southern
expressway between capital Colombo and the other regions. Commonwealth Summit 2013 is proposed to be hosted at
HICC.
Hambantota International Sports Hub (HISH)
The Hambantota International Sports Hub (HISH) will consist of vivid sports utilities: Sports Business Enterprise Park, Athletics Stadium, Warm
Weather Training Facility, Cycling Development Centre, Hockey Centre, 18 Hole Golf course, Squash Centre, Aquatics Centre, Rugby &
Football Development facilities, Multi Sports Halls & State-of-the-art media centre.
This sports complex figures prominently in Hambantota’s bid to host the Commonwealth Games in 2018.
Research & Development Unit
 Commercial Hub -
Greater Hambantota Development Project (Cont…)
Hotels and Tourism Development
Main attractions:
With the increase in tourist arrivals to the Southern region,
a large number of hotels will be constructed. Approval has
been given to top hotel brands to commence construction.
Hotels which are currently operating in the area are to be
upgraded.
Angulmaduwa Brassworkers
Bundala National park
Deep South Tourist City – Hambantota
Kataragama
Jungle River Safari
New Projects:

Seven Star Hotel – Shangri-La Hotels & Resorts, a world
renowned luxury hotel chain

03 Five star hotels

Artificial Island with an area of 15-20 acres – inspired by the
Santosa Island of Singapore.

A Resort with an 18 hole golf course

Old Hambantota city to be developed as a Tourist city

Botanical Garden & Singha Safari Park at Ridiyagama
Mulkirigala rock monastery
Kudawella blow hole – Hummanaya
Tissamaharama
Kirivehera
Kirinda
Situlpawwa Temple
Ussangoda
Yala National Park
Udawalawa National Park
Research & Development Unit
 Commercial Hub – Jaffna Revival
Reactivation of Atchchuvely Industrial Zone – Jaffna
Location
Cost
Commencement
: 65 acre industrial estate in Atchchuvely
: Rs. 199 Mn (GOSL – Rs. 25 Mn., India – Rs. 174 Mn.)
: 2011/2012
 The infrastructure facilities will be developed by the Industrial Development Board and Board of Investment.
 It is expected to generate 4000 direct employment opportunities.
 First phase – 25 acres will be developed with 04 large apparel companies waiting to operate with an investment of USD 3 Mn each. 48
SMEs will commence their businesses.
 The industrial zone was operational in 1971 and ceased functioning in 1990 when the war broke out.
World class hospital in Jaffna soon
The medical sector has been slow in moving into the north compared to other service sectors like banks, insurance & finance companies.
This project is the second stage of the expansion program of the central nursing home which is already in existence. Construction began in
2010. This project is expected to be a fillip to the medical sector in the North.
Rebuilding of Northern Railway line
A Credit Agreement for USD 416 Mn for the construction of the Northern Railway line was signed between India and Sri Lanka. The
construction of the railway line will be carried out in three segments, from Madhu to Talaimannar, Madawachchiya to Madhu and Omantai to
Palaly. The Indian government-owned Transport IRCON, is rebuilding the 110 km rail track from Medawachchiya to Talaimannar in two
phases, which is expected to be completed by end-2011. Cost: 149.7 million dollars.
Sangupiddy Bridge
The 288-metre-long two-way Sangupiddy Bridge declared opened in January 2011, linking the shortest land
based route between the South and the Jaffna peninsula. This bridge built at a cost of Rs 1,037 million on a soft
loan from Britain will reduce the travel time through A- 32 Highway, between Colombo and Jaffna by 110 km
(three hours).
Research & Development Unit
 Indian Investments in Sri lanka
Many experts are calling Sri Lanka the “Hong Kong of India”. Sri Lanka will benefit from its proximity to India, just as Hong
Kong benefits from being a trade hub to China.
Seventy percent of the volume handled by the Colombo port is transshipment of
goods imported by India. Sri Lanka has embarked upon a plan to increase capacity by
circa 50% at the Colombo port in three years. Currently volumes handled by the
Colombo port include 75% of transshipment goods whilst the balance accounts for
import/export boxes.
India & Sri Lanka are expected to sign a new economic agreement covering both goods &
services. Due to the FTA with India bilateral trade volumes were up from USD 658m in 2000
to USD 3.04 bn in 2010.
Sri Lanka enjoys a free trade agreement with Pakistan, in addition to India. It also has a
preferential trade agreement with its south Asian neighbors, which is currently in the process
of becoming a free trade agreement. Sri Lanka also benefits from special concessions from
China, Korea, Thailand & Bangladesh.
Fortis Global Healthcare enters Sri Lanka
India and Singapore based Asia Pacific’s fastest growing healthcare provider, Fortis
Global Healthcare Holdings Pvt. Ltd., buys minority 28.6% stake in Lanka Hospitals for
Rs. 4 Bn.
Indian Investments in SL
 Atchchuvely Industrial Zone –
Jaffna (USD 3 Mn)
 Northern Railway line (USD 416
Mn)
 Renovation of the southern
railway line (USD 167.4 Mn)
 Wind power project in
Uppudaluwa (USD 18.55 mn)
 Oil exploration in Mannar basin
(USD 172 Mn)
 Rehabilitation and improvement of
the KKS & Point Pedro harbours
(USD 23 Mn)
 Reconstruction and resettlement in
the North (USD 800 Mn)
Mphasis moves to Colombo
Mphasis, the fastest growing IT Company in India, has invested USD 3.5 mn in their global delivery centre in Colombo. There
vision being that Sri Lanka is a poised in achieving a high economic growth with much potential and the talent and capabilities of
Sri Lanka’s IT professionals. This would create 500-1,000 employment opportunities.
Research & Development Unit
 Chinese & Japanese Investments in Sri Lanka
Chinese Investments in SL
 Since 2006, the Chinese Government has provided Sri
Lanka USD 3.04 Bn in financial assistance;
Japanese Investments in SL
 Improvement of Anuradhapura Teaching Hospital –
Rs. 2.9 Bn

Katunayaka-Colombo expressway (USD 292.4 Mn)
 Vavuniya-Killinochchi Transmission Line – Rs.1.7 Bn

Railway extension from Matara to Kataragama
 Improvement of central functions of Jaffna Teaching
Hospital – Rs. 3 Bn
(USD 300 Mn)

Norochcholai Coal Power Plant (USD 222.5 Mn)

Hambantota Port Development Project (USD 361
Mn)

Centre for the Performing Arts in Colombo. (USD 21
Mn)
 Sri Lanka granted China an exclusive economic zone
on the lines of Special Economic Zones (SEZ) to
attract more investment from China. The Hong-Kong
based Chinese company; Huichen Investment
Holdings Ltd will invest USD28 million to develop the
zone located in Mirigama.
 China has now become Sri Lanka’s largest aid donor
replacing the traditional donors from Europe and the
West.
 New Mannar bridge and improvement of the
causeway – Rs. 2.3 Bn
 Kandy City wastewater management project – Rs. 19
bn
 Eastern Province water supply development project
– Rs. 7 Bn
 Provincial/rural road development projects – Rs. 18
Bn
 Upper Kotmale Hydro Power project – Rs. 50 Bn
 Solar Electricity Power generation – Rs.1.1 Bn
 Southern Transport Development Project – Rs. 47.2
Bn
 Digital Topographic mapping of the Northern
Province – Rs. 2 Bn
Research & Development Unit
TOURISM
Performance
Forbes: ‘Sri Lanka’s beach stretch from Tangalle
Bay to Weligama and Bentota among the Top 10 in
Asia…’
The New York Times: ‘Sri Lanka - the number one
holiday destination for the year 2010’…
Sri Lanka recorded 654,476 tourists arrivals in 2010
and 2.5 million arrivals are expected by 2016
Visit Sri Lanka Year 2011
- Sri Lanka Tourism Development
Authority
Over 800,000
tourists
expected in 2011
Tourist Earnings – USD 506.1 Mn in 2010
USD 600 Mn in 2011*, and USD 2.5 Bn in
2016*
In 2011, for the first time in the history of Sri Lanka tourism,
tourist arrivals had surpassed 250,000 within the first four
months.
*forecast
 Taj owners may
build another
hotel
Sri Lanka: Up Coming Hotel Projects
Shangri-La to open
two hotels
Shangri-La has
already acquired
state land by the
capital's 'Galle Face'
beachfront to build
a USD 500 mn multiuse complex with
high-end retail
facilities, deluxe
apartments and a
500-key luxury hotel
to open in early
2014.
Shangri-La is also
planning to develop
a second property,
a 300-key city resort
on approximately
100 acres of land in
Hambantota, on the
southern coast of
Sri Lanka, to open
in 2013.
USD 500mn
hotel from
China aviation
firm
China
National Aero
Technology
Import &
Export
Corporation
(CATIC)
intends to
build a
multifunction
complex,
comprising a
five star hotel
and a
shopping
mall with
direct
investment of
nearly USD
500 mn. in
Colombo's
main
beachfront
 Six Senses Ahungalle & Meeraladuaa to
open in late 2012
 Six Senses Resorts & Spas (SSR) together with
the Favourite Group, Auro Holdings and Timex
Garments signed an agreement with Aitken
Spence Hotel Holdings PLC, in September 2010
to establish its first Six Senses project in Sri
Lanka.
 This is a Board of Investment approved venture
worth USD 45 mn. In addition, SSR intends to
make Sri Lanka its Indian Ocean Regional
Headquarters in the near future, overseeing new
and existing Six Senses properties in the
Maldives and Indian Ocean region.
 The dual project includes, Six Senses
Ahungalla, a resort and spa, including
residential villas, on a 10.5-acre plot, adjoining
Heritance Ahungalla on the Southern coast; and
Six Senses Meeraladuaa, an ecological,
environmentally very low impact site, of semi
tented structures, on a 27-acre island nearby.
 The proposed opening date is late 2012. Six
Senses expects an average room rate in the
range of USD 400-450.
 Second hotel Scouted
by Swiss Leisure
Group
 Swiss-based
Mővenpick Hotels and
Resorts, which is to
manage a city hotel in
Sri Lanka's capital
Colombo is also
looking for
opportunities to run a
resort elsewhere in
the island.
 Movenpick has struck
a management deal
with Sri Lanka's
Softlogic group which
is planning to build a
24-floor tower hotel in
Colombo which will
have 224 rooms. The
group has a 12-year
deal with options to
extend another 10
years with Softlogic
According to
economic
development
minister Mr. Basil
Rajapaksa,
investors
connected to Taj
Samudra hotel in
Sri Lanka's capital
Colombo may build
another hotel in the
same premises.
The Taj group had
stated in late 2010
that the existing 5star Taj Samudra
may go through a
USD 60 mn
upgrade. The group
manages a 4-star
hotel near Sri
Lanka's main
international airport
and also has a
beach resort in the
Southwest coast.
Research & Development Unit
Sri Lanka: Up Coming Hotel Projects (cont…)
Jetwing Hotels
Jetwing Hotels is getting into what is called as ‘mixed use development’ at a Colombo property it owns – combining an, exquisite boutique hotel with
apartments for rent. At Ward Place, the company is hiring a Singapore architect to create a 60-room boutique and 25 apartments. According to Jetwing
Hotels Chairman Hiran Cooray, the company is planning boutique hotels in many other parts as Sri Lanka takes off in the post-war era. Sri Lanka’s
Jetwing Group, the third largest hotel group in the island will revamp two of its hotels this year, one in the north western coast of the country and another
in the central province, at a total estimated cost of 500 million rupees
Citrus Leisure PLC (Hotel Reefcomber PLC)
Citrus Leisure aims to build a four-star resort with 150 rooms and 28 villas in Kalpitiya. The villas which will have individual pontoons giving access to the sea are to be leased
out on 99-year leases to high-net-worth individuals.
Sri Lanka to get large number of tourism proposals for 10 islets at Kalpitiya
A large number of leisure firms have submitted proposals to build hotels and other leisure facilities in 10 islets off Sri Lanka's North Western coast (Kalpitiya Tourism
Development). According to Chairman of Sri Lanka's tourism development authority Mr. Nalaka Godahewa, the islands off the coast of Kalpitiya will be given on 30 to 50 year
leases, and investors could engage in 40 approved areas including building, hotels, golf course and boat services.
Vallibel One goes for USD 38 mn five star resort hotel
The leisure sector of the Vallibel One Ltd - Greener Water Ltd is to build a five star luxury hotel in Kochchikade, Negombo at a cost of USD 38 mn,
according to the private placement prospectus of the company.
The company has already invested Rs. 268 mn on a 14 acre land in Kochchikade for this purpose and hopes to build mega 382 luxury rooms which will
be offered to customers at an average rate of between USD 136-165. Apart from the luxury 382 rooms, the hotel will include 42 suites, a spa and fitness
centre, 600 seating capacity banquet hall, restaurants, retail arcade, a 1500 square metre outdoor pool, and many other modern amenities.
The construction of the hotel is estimated to take 2 years with commercial operations expected to commence in 2013.
Kuchchaveli tourism zone
 A total of 48 hotels are to be constructed on a 500 acre land in Kuchchaveli. The project with a combined strength of 3000 rooms is to be completed by 2016.
USD 30 Mn is being spent to build 4 hotels of 5 star grade. Requests have been received for the construction of 58 hotel projects , of which 26 have already
been approved. These include 5 star, 4 star and 3 star hotels.
Domestic business groups, John Keells Holdings and Amaya too are either planning and/or started building new properties, expanding / upgrading their
properties.
Research & Development Unit
INFRASTRUCTURE
Southern Highway
Completion
: Mid-2011
Sponsors
: JBIC, ADB and GOSL
Cost
: USD 600 Mn
Contractors : Kumagai Gumi, China Harbor Engineering Company, Taisei Corporation
Southern highway, the first toll road project in Sri Lanka, is a 126km-long express highway running from Colombo to Matara on
the south coast and will be further extended to Hambantota. The speed limit of the express highway is 100km/hr. Once the project
is finished, the travel time between Colombo and Matara will be reduced from four hours to 1.5 hours.
Colombo-Katunayake Expressway
Contractor
Cost
Completion
Capacity
: Metallurgical Construction – China
: USD 292.4 Mn
: end 2012
: 25.8 k.m., four lanes. It is designed for speeds of between 80-100 k.m. per hour which reduces the travelling time
to 20 minutes.
Colombo-Kandy Expressway
Capacity
Phases
: 6 lanes & 98 km in length. Reduce travel time from 03 hours to 50 minutes. Facilitate vehicle speed up to 110km an
hour. Due to land acquisition issues this will be built as an elevated expressway on a concrete wire bridge ‘duct’.
: Phase 1- Kadawatha to Ambepussa (48.2km with 4 lanes, is expected to be expanded to 6 lanes)
Phase 2- Ambepussa to Katugastota (50+km with 4 lanes elevated)
Research & Development Unit
Infrastructure (Cont…)
Outer Circular Highway (OCH)
Capacity
: 29 km (18 mile) 04 lanes, with provisions to upgrade the road for 06 lanes.
Completion
: Mid 2013.
Access will be provided to all “A” class roads via interchanges and the OCH will have an operational speed limit of 80 km/h.
Reviving Railways - 12 stations to be upgraded
Investment
: Rs. 300 bn (Rs 60mn as investment & Rs 240mn as loans)
: 12 stations would be developed with modern five storey buildings, accommodating shopping malls, hotels rest
rooms & luggage locker rooms. Each building has the capacity of putting up high rising towers which could reach over 50
stories, accommodating apartments & office complexes.
Plan

Colpetty- Electronic Mall

Bambalapitiya- Clothing Mall

Wellawatte - Toys & everything relating to toys

Dehiwala - Computer mall

Ratmalana – Wholesale/retail imitation jewellery mall
Electrification:

Electrification of trains which come to Colombo Fort from Panadura, Veyangoda, Kelani Velly & Negombo. Whole
project would need 23 electric trains.

Project cost: USD 180 mn
Research & Development Unit
Infrastructure (Cont…)
Northern Road Connectivity Project
Investment: USD 173 mn (ADB - USD 154.4 mn & GOSL - USD
18.6 mn.)
Completion: 2015
Activities covered: Rehabilitation & improvement of about
140km of provincial roads with rehabilitation or replacement of
selected bridges in Northern Province.
Project implementing agencies: The RDA under the
supervision of the Ministry of Highways
Objective: Improve road connectivity within the Northern
Province & between the Northern Province & southern region in
Sri Lanka
Mono Rail System

The Government has decided to introduce an Urban
Monorail Development Project on the Korea Urban Mono
Rail system Technology.

Investment: USD 500 mn (Garam Space Ltd Korea)

First stage - Construction of a railway line from Colombo
Fort to Mount Lavinia.
Second stage - Construction of a railway line connecting
Colpetty and Battaramulla via Rajagiriya.
Research & Development Unit
Sri Lanka to List Stake in
Broadcast Tower
 Sri Lanka is to start building a 350metre telecom tower in the capital
Colombo and intends to sell shares to
the public in a firm to be set up to
operate it.
 According to director general of the
Telecommunications Regulatory
Commission Mr. Anusha Pelpita, the
tower ,which will be called 'Lotus Tower'
is to be built with a USD 100 mn dollar
financing from China.
 The state is planning to list a 30 % stake
in the tower in the Colombo stock
exchange in two years.
 The telecom tower will be built on land
owned by the State Engineering
Corporation in Peliyagoda.
 Aviation Hub
International Airport Hambantota (Mattala)
 Hambantota International Airport will be the second international airport of Sri Lanka, which is 3.5 km in length, where even
the largest aircraft can be landed. The airport, estimated to cost USD 210 Mn, will cover an area of 2,000 hectares.
Hambantota airport will be one of the green airports in the world and will commence its commercial operations in 2013.
Mattala airport would cater 60% for cargo handling & 40% for passenger handling.
Major Development at Bandaranayake International Airport (BIA)
 A New terminal with an additional eight gates is proposed to be built and expected to be
completed in 2012.
 The aim is to increase the passenger capacity from 06 million to 09 million by 2013 with
plans to build the region’s first star class airport hotel in BIA. These developments
includes, aTransit Hotel Complex - with 24 rooms, Play port – a kids play area, new
domestic airport, within the BIA, which could connect to Palali, Trincomalee, Mattale etc.
Mini international airport at Iranamadu
 In the Kilinochchi District, 8,000 acres of land in the Iranamadu area has been earmarked to build a mini international airport.
The estimated cost is Rs. 70 mn. This would enable passengers to take flights to Jaffna, Mattala and other destinations which
are currently being upgraded.
US aircraft maker eying on Sri Lanka domestic aviation market
 Cessna Aircraft Company, a US based company, is eyeing Sri Lanka's fledgling domestic aviation industry after the end of a 30year war has prompted liberalization of the sector and a tourism boom is increasing demand for international flights.
 Cessna and their agents for Sri Lanka and Maldives, Infotechs, demonstrated it Grand Caravan aircraft in Sri Lanka, which can
carry around 12 passengers and also comes with an optional underbelly cargo pod. A tourist could travel to Arugam Bay, from
Colomobo, a journey which takes around eight to ten hours by road, in 45 minutes and to Kandy in 22 minutes which takes 03-3½
hours by road.
Research & Development Unit
 Energy Hub
Norochcholai power plant
Goal
: Construction of a 300 MW coal fired
thermal power plant with Infrastructure for 900MW (III
phases .
Cost
: USD 455 Mn.
Donor
: EXIM Bank – China
Engineer
: Access Solar (Pvt) LTD
Sri Lanka’s biggest wind power project
in Uppudaluwa
Scope: Seven 1.7MW wind turbines, with a total
capacity of 10.5MW, were installed in Puttalam,
Uppudaluwa, with a view to increasing wind power
generation to 100MW.
Stages: USD 18.55 mn, Indian investment. The venture
is expected to commence operations by June 2011.
Contractor: Orient Green power Limited, India (OGPL)
Upper Kotmale Hydro Power Plant
Scope: The 150 MW power plant of Upper Kotmale will annually generate 409
GWatts.
Stages: The total estimated costs of the Project is US $ 350 million. The
Project is expected to be completed during 2011. Over 80% of the project has
now been completed; the final stages are presently underway.
Contractors: CEB and Maeda Corporation, Japan.
Oil to Sri Lanka - Search on for oil off Southern Coast
3D seismic data of the 3,400 sq km exploration block has been offered to
Cairn India. The data is being analyzed by Cairn’s geologists with a view to
identifying the best location to start drilling. Exploration /drilling is expected to
commence in 2011 and there is a 60% probability of finding offshore oil
deposits.
Project: 08 years, 03-stage oil exploration project
Contractor: Cairn Lanka (India)
Cost: USD 172 Mn or Rs.18 Bn
Kerawalapitiya power plant
Kerawalapitiya Dual-Cycle thermal power generation plant with a capacity of 300 megawatts was commissioned in February 2010.
Cost
: USD 222.5 Mn
Research & Development Unit
 Knowledge Hub
The Knowledge Hub initiative will help to develop Sri Lanka as a destination for investments in higher education and
position the nation as a centre of excellence and regional hub for learning and
innovation.
Jaffna to develop as a knowledge hub
 IT sector delegation led by the Board of Investment recently took several important steps in strengthening coordination and
facilitating investments to develop Jaffna as a knowledge hub. The objective was to encourage IT companies to start operations
in Jaffna by tapping into the peninsula's educated workforce
75% ICT literacy by 2016 and IT sector as a great export earner
 Telecommunications and Information Technology ministry is aiming to increase the IT literacy rate to
75% while optimising IT as a foreign exchange earner by 2016.
Plans Afoot for 15 International Universities
 Sri Lanka is becoming an attractive location that could provide higher education for the growing middle class in Asia.
Therefore, the Ministry of Higher Education is planning to establish about 10-15 private international universities in Sri Lanka.
Providing Necessary Infrastructure and Cutting-edge Technology
 Over 110 infrastructure development projects are being implemented in state universities at a total cost of over Rs. 10 billion to
provide necessary facilities such as lecture halls, hostels, health facilities, administrative infrastructure etc.
Designate and establish a Knowledge City
 The government will designate a specific area for the proposed knowledge city and provide improved facilities for international
research and education institutions to setup their affiliated institutions. (e.g. Gampaha, Jaffna, etc…)
Research & Development Unit
SOURCES
•
www.treasury.gov.lk
•
www.cbsl.gov.lk
•
www.boi.lk
•
www.neweast.lk
•
www.treasury.gov.lk
•
www.news.lk
•
www.englishandit.lk
•
www.nenasala.lk
•
www.srilankatourism.org
•
www.sltda.gov.lk
•
Road Development Authority
•
www.worldbank.lk
•
www.imf.org
•
www.lankabusinessonline.lk
•
Bloomberg
•
Reuters
•
Daily News
•
Sunday Observer
•
Daily Mirror
•
Sunday Times
•
The Island
The views expressed in the presentation are not necessarily those of the Management of Commercial Bank of Ceylon PLC
The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain
accuracy/completeness of the information, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information
or for losses or damages, financial or otherwise, suffered in consequence of using such information for whatever purpose.
Research & Development Unit
Commercial Bank of Ceylon PLC
©Sri Lanka: 2011 & Beyond – 28-04-2011