Tuesday, November 19, 2019

LAUGFS Gas release significant energy plans (Part 2)

He acknowledged that going public was the product of last year's structural change aimed at a long-term strategy. "We found that under the same umbrella, it was difficult to attract investment to the organisation with similar companies. Therefore, by offering investors equal or mirrored stakes, we isolated leisure, energy and eco.

Mr Wegapitiya clarified that the company last made substantial shipping investments involving the purchase of ships in Bangladesh. "We will reap the real benefits of all this in the coming years." Meanwhile, the US dollar's appreciation, the increase in world market LPG rates, and the failure to achieve the required price increases have dented their bottom line.
The business is severely affected by last year's currency depreciation. "Our industry is heavily dependent on imports. We usually get credit for 30 days. So with the devaluation of the currency when we purchased, it was one price, and it was a completely different price when we paid it in 30 days. We suffered a significant currency loss, "explained Mr Wegapitiya.
LAUGFS Gas will discuss the introduction of a gas formula similar to the petroleum formula with the Consumer Affairs Authority and the other authorities. "There has been a plan, but it has not applied. We are asking for this formula to reactivated. Hopefully, after the discussions, it will happen, "said Mr Wegapitiya.
OSL Take: The success story of Sri Lanka’s Laugfs Gas group and its expansion into foreign markets shows the strength and growth potential of the country’s private sector. The continuous development recorded by a Sri Lankan company like the Laugfs Gas Group is indicative of the growth potential of local companies. Laugfs Group has that commenced business as a supplier of liquid petroleum has now diversified into many sectors like retail marketing, leisure as wells as power and energy.
As stated by the company’s Chairman, the company is engaged in discussions with foreign investors to expand the LP gas and leisure businesses further. The growth shown by Laugfs sets an example of the possibility of expansion for other similar business entities.
Also, the Company’s move to further invest and expand its solar power generation capacity indicates the opportunities for projects and investments in Sri Lanka’s renewable energy sector. All these are indicative of the conducive business environment in the country. Therefore, foreign businesses/investors could explore business/investment opportunities in Sri Lanka and also look at the possibilities of forming partnerships/joint ventures with local companies.


VBS/AT/20191119/Z_TB3

LAUGFS Gas release significant energy plans (Part 1)


LAUGFS Gas PLC looks forward to operating its spanking new Hambantota Terminal with three of its companies going public and commissioning a hydro and two solar power plants this year. The company set up an LPG storage complex in Hambantota Port with a capacity of 30,000 metric tons at the cost of US$ 80 million and expected the first gas shipment last December.

The company is moving towards the development of an integrated regional LPG Terminal for the import, re-export and distribution of LPG to Indian Ocean Rim retailers. "We've just contracted Hambantota Terminal, and the revenue it will produce will have a foremost impact on this country's planned export goal," said W.H.K. Wegapitiya, Chairman, LAUGFS Gas PLC in an interview.
LAUGFS Gas (Bangladesh) Ltd has entered Bangladesh in 2001 and is a major supplier of LPG in Bangladesh, importing and supplying more than 50,000 metric tons (MT) of LPG each year. LAUGFS Gas is already using Hambantota with LPG downstream in Bangladesh to become the country's favoured supplier of LPG, Mr Wegapitiya noted. It had 26% market stake in Bangladesh when LAUGFS Gas began. Mr Wegapitiya said that while it is growing every day, it must now be below 50%.
The firm also plans to supply LPG in East Africa to Myanmar and Kenya. "We will provide in the next two months to Myanmar. Mombasa is a gateway to other Eastern African landlocked countries in Kenya. We are also exploring the Mombasa venture. We want to supply in bulk initially, "Mr Wegapitiya said adding that this will happen after the Hambantota Terminal call for commercial operations.
The port of Hambantota has two jetties dedicated to the coal, gas and oil industry. LAUGFS ' storage facility situated 3 km from the dock of the pipeline. LAUGFS Hambantota plant can obtain and store refrigerated propane and butane separately or in a mixed form via large gas carriers and pressure vessels. The company expects capacity expanded to 45,000 MT. The company currently owns three LNG ships and plans to increase the number of ships in the short term to 10 – both owned and chartered.
This year at Ginigathhena, LAUGFS Gas will set up a 2 megawatt (MW) hydropower plant. They have a 3MW hydro plant now. Mr Wegapitiya said a 2 MW solar power plant would be commissioned this year in Ambilipitiya and a 10 MW solar power plant in Hambantota in addition to the 20 MW solar power plant they have.
Three LAUGFS companies are going to go public this year. Mr Wegapitiya said that this year LAUGFS Leisure, LAUGFS Power and LAUGFS Eco Sri would be on the Colombo Stock Exchange. "We are now in the development of listing all three corporations and waiting for governing approval, which will happen soon," added Mr Wegapitiya. He noted that going public was the result of last year's structural change aimed at a long-term strategy.
 VBS/AT/20191119/Z_TB2
 To Be Continue..


Lanka Milk Foods invests US$ 7mn to boost the Sri Lankan dairy sector


Lanka Milk Foods said it was investing $7 million more in its Ambewela dairy farm to increase production for the Sri Lankan market. The firm said the Investment Board had approved its intention to create a subsidiary company to set up Ambewela's dairy farm for the local market in a stock exchange filing.

The BOI has grant approval to raise the project's planned investment to US$ 7 million (3.03 million rupees) out of US$ 10 million, it said.
Sri Lanka is a net dairy importer. In 2018, the nation imported $349 million in milk and milk products. In 2018, the United States exported just $8 million in dairy products to Sri Lanka. (Source: Export Development Board)
OSL Take: The decision by Lanka Milk Foods to set up a new $7 million venture to meet the demand for fresh dairy products indicates the growth in the local market. Foreign dairy companies could look at opportunities to set up experiments through partnerships with local companies to address the growing demand for fresh dairy products.
Sri Lankan authorities have paid much attention to the development of the country’s dairy industry, thereby expanding the business/investment opportunities in the industry. Many large scale local companies have also diversified into the dairy industry due to the untapped business potential in the industry.
The increased productivity and the strengthening of the manufacturing line would result in a constant supply of dairy milk. Given Sri Lanka’s need to develop the country’s dairy industry and become self-sustained in fresh dairy, foreign businessescould explore the business opportunities in Sri Lanka’s dairy sector as it is a continually growing sector.
VBS/AT/20191119/Z_TB1


Monday, November 18, 2019

Sri Lankan Trade Deficit reduces by $2.3 Bn


The trade deficit in Sri Lanka contracted by $2.3 billion to $4.8 billion in the first eight months 2019, the Central Bank said yesterday, with imports decreasing by 16.6% in August, while exports are declining by 0.4%. The trade account deficit contracted in the first eight months of 2019 by $2,386 million to $4,854 million, compared to $7,240 million in the corresponding period of 2018, the Central Bank reported in its latest External Performance Report.

The trade deficit expanded in August 2019 as the import downturn accelerated, while the previous month's export drop has mostly recovered. Import expenditure decreased by 16.6% (year-on-year), and export earnings declined by 0.4% (year-on-year) in August 2019, primarily due to lower prices of significant export categories.
In August 2019, the trade deficit fell to $540 million compared to the $717 million deficit reported in July 2019. Moreover, trade terms, reflecting the relative export price of imports, increased by 5.2 per cent (year-on-year) as import prices dropped at a faster pace than export price reductions. Nevertheless, on a cumulative basis, trade terms in the first eight months of 2019 declined slightly by 0.1 per cent relative to the corresponding period in 2018.
In August 2019, merchandise export earnings declined slightly by 0.4 per cent (year-on-year) to $1.033 million, guided by a decrease in agricultural exports followed by mineral exports as industrial exports increased, backed by higher textile and clothing earnings. Textile and clothing earnings increased by 7%, reflecting the higher demand from all major markets, especially the European Union, which saw a 12.9% rise.
There has also been a rise in export earnings from chemical products, products from the printing industry, animal fodder and plastics, and their papers. Export earnings from rubber goods, however, declined as a result of lower revenues from tires, surgical, and other exports of gloves, while exports of meat, beverages, and tobacco declined with lower exports of vegetable, fruit, and nut preparations as well as the tobacco produced. During this time also decreased export earnings from machinery and electrical equipment, petroleum products, transportation equipment, base metals, and items and clothing, travel goods, and shoes.
In August 2019, earnings from agricultural exports dropped due to lower revenues from all sub-categories except tea, seafood, and vegetables. In August 2019, tea export earnings increased due to higher volumes of exports, given the drop in average export prices. Revenues from spices, however, declined in cinnamon, clove, and pepper due to poor performance. Besides, coconut export earnings decreased in both kernel and non-kernel items due to lower export rates.

OSL Take: The latest report by the Central Bank of Sri Lanka highlighting the decrease in the trade deficit, increase in the tea export revenues, and the easing of pressure on the rupee is all indicative of an economy on a buoyant growth path. International lending agencies have recognised Sri Lanka's economic policies like the IMF, World Bank, and ADB, which have expressed confidence in Sri Lanka and expressed willingness to assist the country. The country’s economic policies have also helped the growth of several key industrial sectors in the country. Hence, this has resulted in the opening of many business/investment opportunities along with the aggressive development program undertaken by the GoSL. The country is, therefore, a hotbed for foreign investments, and interestedbusinesses/investors could explore opportunities in Sri Lanka.
 VBS/AT/20191118/Z_TB3

Sri Lankan dairy sector benefits from $ 14.1 mn ‘Market-Oriented Dairy’ program


Ambassador of the United States, Alaina B. Teplitz recently met with dairy farmers benefiting from an SLR 2.2 billion ($14.1 million) program called ' Market-Oriented Dairy. ' The project is estimated to increase milk production by 94 per cent by 2022 and will help make Sri Lankan dairy production more sustainable and profitable – and the livelihood of thousands of dairy farmers.

"Farmers are the main agricultural backbone of the economy of Sri Lanka, and this project helps the country achieve its goal of self-sufficiency in dairy production," said Ambassador Teplitz. The project, which supports more than 15,000 Sri Lankan farmers, aims to increase the commercial sustainability, quality, and safety of the dairy sector. Farmers trained in best practices, such as providing animals with clean water 24/7 and improved feeding techniques.  
For example, feeding better quality grasses that are cut to the right size and combined with concentrate feed can increase milk yield by 2-3 litres per day per cow. Since the project launched in May 2018, the participating farmers have produced remarkable results. Since the following best practices, 70% increased milk production and 68% improved milk quality.
The project Market-Oriented Dairy is funded by the U.S. Agriculture Department (USDA) Food for Progress. USDA is working on the initiative with the International Executive Service Corps, Florida University, Global Dairy Network, and Sarvodaya.

OSL Take: Sri Lankan authorities have paid much attention to the development of the country’s dairy industry, thereby expanding the business/investment opportunities in the industry. Many large scale local companies have also diversified into the dairy industry due to the untapped business potential in the industry.
The increased productivity and the strengthening of the manufacturing line would result in a constant supply of dairy milk. Given Sri Lanka’s need to develop the country’s dairy industry and become self-sustained in fresh dairy, foreign dairy companies could look at opportunities to set up ventures through partnerships with local companies to address the growing demand for new dairy products.
VBS/AT/20191118/Z_TB2

Sri Lankan Business Registration Service is now online


With a new chapter in the development of the private sector in Sri Lanka, it is now possible to incorporate a new company in Sri Lanka from the comfort of one's own home, reported Minister of Industry and Commerce. According to Minister Bathiudeen, online company name reservations could obtain, and company registrations could also submit online.
"Physical attendance at the company registrar's department is not necessary," the minister said. The Minister declared this in parliament on Tuesday (October 08) when shedding light on the House's regulations made by him with the President's consent to the Public Contract Act regulations. The Minister declared this in parliament on Tuesday (October 08), thus shedding light on the House's rules made by him with the President's consent to the Public Contract Act regulations.

Accordingly, fees payable, except VAT on four types of contracts, have amended. The new payment will be Rs. 2,000 for a registration application as an agent, sub-agent, representative or nominee for or on behalf of a tenderer, Rs. 10,000 for a public contract registration application, Rs. Two thousand for a registration renewal application and the new fee will be Rs. 10,000 for a federal contract re-registration application. Minister Bathiudeen added that if you have a computer with internet facilities, you can easily do the necessary procedures at home.
He said the company's registrar department plays a vital role in the country's economy. All expenses related to the Department covered through the business fund except for officials ' salaries. The Company Registrar's Department received revenue of approximately Rs. Six hundred million in 2017 and the Department's revenue for 2018 rose by 11 per cent (from 2017) to Rs 664 million.
Sri Lanka was ranked 100 among 190 countries in the 2019 Doing Business Index of the World Bank. Ease of Doing Business ratings for Sri Lanka's "Beginning a Business Indicator" (at 87.87 of 100) placed the country in second place in South Asia just after the Maldives (at 89.17). The regional average in South Asia for starting a business indicator is 85.44.
OSL Take: Sri Lanka’s latest positioning in the World Bank’s Doing Business index for 2019 will undoubtedly help attract foreign investments to the country. By climbing 11 notches in the index, Sri Lanka has indicated the improvements made in the country’s ease of doing business environment. Therefore, foreignbusinesses/investors should explore investment opportunities in Sri Lanka.
VBS/AT/20191118/Z_TB1

Monday, November 11, 2019

Sri Lankan BOI Zone attracts USD 2.3 Million Investment


AmSafe Bridport (Pvt) Ltd., an American company that manufactures cargo pallet networks and other aircraft equipment, has expanded its Sri Lankan factory with an investment of US$ 2.3 million, the investment promotion agency said. In a statement, the Investment Board announced the new factory is creating unique production and employment opportunities in its Wathupitiwala Export Processing Zone.

"This is Sri Lanka's $2.3 million investment," said Jason Abbott, AmSafe Bridport (Pvt) Ltd's chairman. “As part of our commitment to continuing our investment and growth in Sri Lanka, we opened this facility. We will continue to invest in this country." Founded in November 2001, Amsafe Bridport was initially named Bridport Aviation. "The recent expansion reflects the continued growth of our business," said Chandani Ekanayake, General Manager of the Sri Lankan operations of AmSafe Bridport.
"We began with a storage area of 35,000 square feet and added another 75,000 square feet later. We have a team number of 550 at the moment. The recent addition of 55,000 square feet will set the stage for AmSafe Bridport's much greater growth and hence jobs.”
"AmSafe Bridport (Pvt) Ltd has significantly expanded and diversified the company's range of products over the years. We began with subassemblies of cargo pallet net, but are now the world leader in this sector, with many international airlines being our customers" She said the company is now starting to produce more complex products, many of which originated in Sri Lanka, including a fire containment cover that can withstand 815 degrees Celsius water.
OSL Take: The BOI export processing zones have continuously made significant contributions to Sri Lanka’s export earnings. Most of the export processing zones have many foreign business entities and joint ventures that have positively benefited from the trade benefits enjoyed by Sri Lanka with many international markets.
The BOI zones also provide the required infrastructure facilities to set up businesses with ease and also offer many concessions to the foreign enterprises looking at setting up base in Sri Lanka. International companies could explore the possibilities of setting up businesses in the BOI export processing zones to gain maximum benefits for their business.
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Sri Lanka celebrated as a rising star in international trade by Standard Chartered Global


In a new report published by Standard Chartered Global Research, Sri Lanka has been featured as one of the rising stars of international trade, putting the country among the top 20 performers with the highest potential for trade growth.  The report, titled 'Trade20: The Rising Stars of Global Trade', looks at the 20 markets that have shown impressive growth potential for trade over the past decade.

Côte d'Ivoire heads the list, followed by India, Kenya, China, Ireland, Vietnam, Indonesia, Thailand, Oman, and the UAE, to round off the top 10.  In the report, Sri Lanka is ranked 14, below Hong Kong and Russia, but above Bahrain, Singapore, Switzerland, Chile, Turkey, and the Philippines.

Such markets are defined by evaluating improvements in 12 indicators along three pillars: economic dynamism (direct foreign investment, export, and growth in GDP), preparation for trade (infrastructure, e-commerce, and business-friendliness), and diversity of commodities.
The Trade20 index identifies the economies with the most significant potential for trade growth in each region. The index highlights emerging trading forces such as China, India, and Singapore; medium-sized trading economies such as Vietnam, Indonesia, and Thailand that are continuing to make good progress; and smaller trading nations such as Côte d'Ivoire that are promising.
Asia-Pacific markets remain concentrated on improving trade growth potential, home to both emerging stars and export powerhouses. Asia-Pacific markets dominate the Trade20 – including India, China, Sri Lanka, and ASEAN.
Nine of the Trade20 states are in this region, suggesting that Asia has an unusually high potential for individual markets to boost their trade growth, the report said. It also noted that a cluster of Asian markets, including emerging trading giants China and India, and ASEAN accelerators such as Vietnam, Indonesia, Thailand, and the Philippines, are making particularly good progress in terms of trade readiness.
China's trade readiness developments, including ambitious infrastructure projects, to be launched as part of the Belt and Road Initiative (BRI) to strengthen cooperation between China and its trading partners, underpin its continuing development, but it is China's effect on other nations' trade growth potential that positions it in its league.

OSL Take: Sri Lanka’s Export Development Board (EDB) is engaged in an aggressive program to promote the country’s export sector and fully utilise the benefits of the trade agreements as well as trade concessions enjoyed by the state.
Over the past few years, business reforms have helped improve Sri Lanka’s ability to score companies, move closer to global best practices, and raise the potential for trade growth. Such improvements made starting a business more straightforward, securing construction permits, raising capital, paying taxes, and importing and exporting goods.
The many trade agreements and trade concessions enjoyed by Sri Lanka have played a vital role in the development of the country’s export sector. It has also created many business/investment opportunities in Sri Lanka’s export market, as well. Hence, foreign businesses/investors interested in doing business with Sri Lanka could explore opportunities in Sri Lanka’s export sector.
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Memorandum of Interest (MOI) signed between Sri Lanka and India for Milk supply


India, the world's largest dairy producer, signed an Interest Memorandum (MoI) with Sri Lanka on Friday to supply milk and milk products. The MoI signed at the opening at Pragati Maidan of the country's first-ever International Cooperatives Trade Fair. The government of Sri Lanka signed three MoIs, which showed interest in buying Indian milk. “The quantity and cost have not yet been decided,” a National Cooperative Development Corporation (NCDC) senior official said.

The Tamil Nadu Milk Cooperative Federation, which owns the brand Aavin, the Puducherry Milk Cooperative Federation, which owns the brand PonLait, and the Indian Potash Ltd. fertiliser company, have signed a separate milk supply pact with the Sri Lankan government.
India, with about 70 million farmers, is the largest milk-producing nation in the world. The country's milk production is expected to reach 175 billion litres this year, almost twice of what is expected to be produced by the US, the second-largest milk-producing nation.

OSL Take: Signing of the MOI is indicative of the growing business ties between Sri Lankan and Indian businesses as well as the increased confidence levels in the strength and growth potential of Sri Lankan businesses. Sri Lanka and India enjoy strong bilateral and trade ties that have been further strengthened by the FTAs between the two countries.
All this has resulted in many joint ventures/partnerships formed between Sri Lankan and Indian businesses. Sri Lanka’s geographical positioning in the Indian Ocean, the ease of doing business environment, and the many trade agreements, as well as trade concessions enjoyed by the country, have made Sri Lanka the ideal business destination in the South Asian region.
Foreign businesses/investors looking at doing business with India could explore the possibility of setting up base in Sri Lanka. Also, Indian businesses/investors could confidently explore business opportunities in Sri Lanka as well as look at forming partnerships with local companies and vice versa.
VBS/AT/20191111/Z_TB1

Tuesday, November 5, 2019

LMD-Nielsen Business Confidence Index on Sri Lanka shows improvement in September


The latest poll from LMD-Nielsen Business Confidence (BCI) shows that sentiment around the economy remained mostly unchanged in September with 25 per cent (up from 24 per cent in the previous month) of respondents anticipating that the economic conditions to improve over the next 12 months.  In the meantime, 29% of those polled assume that economic conditions should stay the same while 46% expect them to deteriorate over the same period.

A corporate executive comments: "We hope that after the upcoming election, the economy will change. The country is quite unstable at the moment, and there are no proper economic policies in place." As far as market expectations are concerned, a larger share (nearly a third) of survey respondents think that sales volumes will increase over the long term compared to the 24 per cent who expect better times in the next three months.
"The influence of the attacks on Easter Sunday is taking a turn for the better. And the tourism industry seems to draw more business slowly," reports one businessman. The sentiment around the investment climate remains silenced as 72 per cent (compared to 70 per cent in August) of poll respondents perceive this as not a convenient time to invest, while a mere five per cent view the conditions positively prevailing.

OSL Take: The results of the Business Confidence Index is indicative of the growth path of Sri Lanka’s economy. The government’s economic policies, the development drive, and measures taken to improve the ease of doing business environment in the country have all contributed to the overall growth of Sri Lanka’s economy.
Given the increasing business confidence in Sri Lanka and the country’s geographical positioning in the Indian Ocean along with its many trade pacts with foreign states, Sri Lanka is undoubtedly the best business destination in the South Asian region. Key sectors of the Sri Lankan economy have shown continuous signs of growth and added to Sri Lanka’s development drive. The island nation is poised to attract foreign businesses/investors to the country with many business/investment opportunities.
VBS/AT/20191105/Z_TB4

Central Bank commences new revenue avenues to expand the balance sheet


Central Bank had begun to buy bonds in its open market operations, Central Bank Governor Dr Indrajit Coomaraswamy told the press following the announcement of monetary policy on Friday. The Central Bank's Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) remained at their existing 7% and 8% rates, respectively.

The Central Bank has begun to provide financing for liquidity to individual primary dealers. "We have expanded the reach of open market operations to include some liquid bonds," Coomaraswamy said. It was just treasury bills in the past. Now it's a few liquid bonds.
The governor put forward reasons for rule relaxation. He said, "Kristalina Georgieva has shown that this year, 90 per cent of the world's countries are growing slower.” There is a belief that the global economy is undergoing a synchronised slowdown.
That argues for some monetary policy easing which gives us space for intervention in domestic policy. Unlike in 2018, when there was such an external climate that limited the room for local policy action, we now have more space.
The governor has put forward reasons to loosen legislation. He said, "In the short run, inflation is likely to rise. Inflation in food prices has risen. The annual rises in fish prices and vegetable prices have also increased some of the factors. The production of Yala was less than expected. We had a perfect Maha, but a little less was the Yala. Hence, it might put pressure on the prices of rice. The rate of inflation is expected to rise to the upper end of the 4-6 per cent inflation target. We have to be alert. Clearly, in an inflation-targeting regime, the inflation target is the main target.”
Most central banks globally have lowered interest rates. India's Reserve Bank has lowered interest rates to counter India's economic slowdown. Accommodation, food service, and transportation services have contracted following the attacks on Easter Sunday.


OSL Take: The call by the Central Bank of Sri Lanka for private investment banks has opened up an investment opportunity for foreign businesses/investors. Sri Lanka’s economic indicators show the country is heading in the right path to development, and the government’s development agenda would also help in this aspect. Therefore, foreign businesses/investors could invest in Sri Lanka without having any doubts.
VBS/AT/20191105/Z_TB3

Cable car project in the hill country gets the green light


This week, the government signed an agreement with Austrian company Outdoor Engineering Lanka Ltd.'s Sri Lankan unit to launch the country's first-ever cable car venture in Nuwara Eliya with an investment of over Rs. 56 billion (ä 28.8 million). The government is aiming to promote Nuwara Eliya as a leading tourist hotspot in the country with the launch of the cable car campaign.

"This Nanu Oya to Single Tree cable car project will revolutionise Sri Lanka's tourism sector and add value to Nuwara Eliya as one of our country's top tourist destinations," Minister Navin Dissanayake of Plantation Industries said. The plan will consist of a total of 86 vehicles, each capable of carrying ten people, while 43 cars will be operational in the first phase. He also said the project would begin within the next two months, and in a year, the early stage of it would be operational.
When asked what made the government select Nuwara Eliya in particular, Dissanayake said he decided upon it after careful consideration of its natural beauty and elevated connection points, which could provide both local and foreign travellers with a memorable experience as well as a bird's eye view. Outdoor Engineering Lanka Ltd. and its international partner Dopelme Cable Car Company, have submitted a proposal to launch a cable car project from Nanu Oya through Single Tree Mountain to Gregory Lake.
After Plantation Industries Minister Navin Dissanayake submitted a proposal to enter into a Memorandum of Understanding (MoU) to undertake this project as a Board of Investment (BOI) project, the Cabinet approved the cable car project in July this year. Following approval by the Cabinet, the Minister said they were seeking support from all related line ministries and the relevant line agencies, including the Ministry of Tourism and Wildlife, the Central Environmental Authority, the Civil Aviation Authority, and the Municipal Council of Nuwara Eliya.


OSL Take: The proposed cable car project would be an added attraction among foreign tourists. It would undoubtedly add to Sri Lanka’s destination package. Also, the interest shown by the international company to invest in Sri Lanka’s tourism development program is a clear indication of the confidence foreign businesses have in the growth potential of the country’s tourism sector. Foreign businesses/investors could explore the opportunities in proposing innovative development programs targeting Sri Lanka’s tourism sector.
VBS/AT/20191105/Z_TB2

Cabinet approves Luxury Mixed Development Project in Sri Lanka


The Cabinet approved Richard Pieris Distributors from Sri Lanka for a mixed development project to lease an acre of land in a southern suburb of Colombo near an entry point to the Southern expressway. The proposal made by the Minister of Megapolis and Western Development received Cabinet approval to vest a land plot of 1 acre, 1 rood, and 19.40 perches on a 99-year lease basis bordering the High-Level Road.

The project is a mixed development project consisting of a supermarket, luxury shopping malls, recreational activities, and residential components with 80 apartments. The project comes under the purview of Sri Lanka’s Megapolis and Western Development Ministry.
OSL Take
The agreement between Sri Lanka’s UDA and Richard Pieris Distributors to commence a massive mixed development project in Sri Lanka indicates the overall growth momentum in the island nation.
The move by the cabinet of ministers to approve this project in Colombo is an indication of the level of confidence in Sri Lanka’s growth potential where international businesses are concerned. Other foreign business ventures could also explore similar investment opportunities in Sri Lanka. Meanwhile, the mixed development project, once completed, would also create investment opportunities for potential businesses/investors.
VBS/AT/20191105/Z_TB1

Friday, November 1, 2019

U.S. company to modernise Sapugaskanda oil refinery


The U.S. based Honeywell UOP has won a contract in Sri Lanka to design improvements and upgrade the state-run Ceylon Petroleum Corporation's crude oil refinery. Secretary of the Ministry of Petroleum Resources, Sunil Hettiaarachchi told the media that the contract is going to Honeywell UOP, previously known as UOP LLC or Universal Oil Products, a multinational company.

He said the project was planned to upgrade the machinery, allowing the Ceylon Petroleum Corporation to increase production at the refinery from the current capacity of 50,000 barrels per day to 70,000 barrels.
The Secretary of the Petroleum Ministry highlighted that the company was selected after calling for tenders as per the International Competitive Bidding (ICB) methodology, and the only bidder was the U.S. firm. The firm also had previous experience in building Sapugaskanda's new refinery.  Under the three-year project. which is expected to begin in the latter part of 2019, the first year of the project is dedicated to designing and the next two years is for construction.
The central crude distiller column would be removed under the plan to increase the efficiency of the refinery. Also, the company will modernise the oil refinery to raise its capacity from 500 Mt to 1000 Mt. Mr. Hettiaarachchi said it was planned as such that the modernisation of the refinery would minimise the import of finished petroleum products taking it from 70% to 50%.
Only about 30 per cent of the oil requirement in Sri Lanka is currently refined by the state. The modernisation would also require the improvement of various types of crude oil. At present, only two classes are refined, Mr. Hettiaarachchi said.

OSL Take: The Sri Lankan government’s decision to re-commence the manufacture of Bitumen in the country is indicative of the growth in demand for the particular petroleum product. The statement by the Petroleum Minister of Sri Lanka also indicates a rapid increase in the country’s construction industry, which is a positive sign for foreign companies who are considering investing in Sri Lanka’s construction sector. Also, the Sri Lankan government’s decision to construct a second oil refinery indicates growing investment/business opportunities in the country’s petroleum sector. 
VBS/AT/20191101/Z_TB6

Sri Lanka records LKR 5.6 Billion Share Swap Acquisition


Lanka Realty Investments Plc (LRI) – a Sri Lankan based investment management company has recently concluded the largest-ever acquisition share swap, which is estimated to be worth circa LKR 5.6 billion.
LRI is a listed firm on the CSE in Sri Lanka, with operations spanning over five decades. The firm was subject to a takeover in 2017 by a consortium of British and Sri Lankan investors with the mission of becoming the market leader in real-estate based investment management.

Before being acquired, LRI raised LKR 633 million through a rights issue in October last year, and they have now completed a share swap acquisition of six private companies that are into commercial real estate, residential housing and tourism and leisure sectors. Hence, LRI is moving closer to achieving the ultimate goal of leading the pack, expanding its footprint in the local market,.
Through the acquisition-based share swap, LRI managed to issue over 149 million ordinary (voting) shares to the shareholders of the six companies at a published share price of LKR 37.52. Post- acquisition, LRI now has a full controlling stake in 11 companies that are majoring in commercial real estate, residential housing, property banks, tourism and manufacturing.  Hence, the mix of operational, growth and land-based assets is anticipated to improve yields to LRI Group shareholders further down the line.
The Group owns 8.4 acres of freehold property in Colombo with a planning permit for the development of 1,649 housing units, an approximately 100,000 ft office building in Colombo 10, three operating boutique hotels and villas in Colombo, Weligama and Ahangama with 44 rooms, two recreational development projects under construction for 30 apartments in Yala, and 53 offices in Ambalangoda.

OSL Take:  The recent share-swap based acquisition by LRI is anticipated to increase foreign investor interest in Sri Lankan businesses for M&A deals due to the confidence that LRI is signalling to the global investors to participate in investments in Sri Lanka. Further, the share swap acquisition concluded by LRI would open the private equity space in Sri Lanka for investment banks such as JP Morgan, Goldman Sachs, and Credit Suisse who are currently targeting companies in South Asian Tiger economies.
VBS/AT/20191101/Z_TB5

Sri Lanka receives £10 million from the UK to support peacebuilding


The UK has promised £10 million to encourage peacebuilding and reconciliation, support resettlement and livelihoods in Sri Lanka for displaced communities and to uphold the rule of the law. This statement was announced during a visit by the Commonwealth Minister of State, UN and South Asia, Tariq Ahmad of Wimbledon, Special Representative of the Prime Minister to Avoid Sexual Violence in Conflict.  

The Commonwealth Minister of State met with political and religious leaders from across the communities of Sri Lanka in a program cut short by flight delays. They agreed on the importance of reconciliation in their meeting with President Maithripala Sirisena and the need for governments in promoting inter-community communication and addressing discrimination.
Commonwealth Minister of State had a broad-based meeting with Foreign Minister Tilak Marapana to discuss the ongoing development of bilateral relations between the United Kingdom and Sri Lanka. They explored the shared responsibility of political leaders and communities in ensuring that minority concerns and desires were heard and answered in their meeting with Tamil National Alliance leader R. Sampanthan.
The Minister also met with business leaders from Sri Lanka during the visit to exchange ideas on economic growth and development opportunities and improve trade ties between Sri Lanka and the United Kingdom.

OSL Take: The FDI of £10 million to support reconciliation and the resettlement process by the UK, would have a definite positive impact on Sri Lanka’s tourism industry. Several other countries that are vital tourist sources to Sri Lanka have already supported the nation in order to strengthen security including China, recently providing Sri Lanka with security equipment.
All these actions, along with the incentives presented by the Sri Lankan government to the country’s tourism sector, would help the industry’s quick return to normalcy. There have also been several international industry experts that have pledged support to the country and emphasised on Sri Lanka’s growth potential. Therefore, foreign businesses/investors could explore business/investment opportunities in Sri Lanka’s tourism industry.
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Sri Lanka receives $50 Million from Saudi Development Fund


Saudi Development Fund (SFD) has agreed to provide a concessional loan valued at an approximately $50 million, to create a medical faculty at Sabaragamuwa University. The GOSL will bear the balance of 20.46 million dollars. Accordingly, on behalf of Sri Lanka and on behalf of the Saudi Development Fund, the loan was signed by the Secretary to the Ministry of Finance, Dr. R.H.S. Samaratunge and Vice Chairman and Managing Director, Dr. Khaled Sulaiman Alkhudairy, at the Ministry of Finance on 18 September.

The government views the provision and enhancement of social goods such as education, skill growth, and healthcare as part and parcel of its growth agenda in line with the government policy framework 'Vision 2025.' The amount of medical officers per 100,000 communities in Sri Lanka is about 77, according to access data from the Ministry of Health, Nutrition and Indigenous Medicine. However, according to the World Health Organization, in developed countries, the density of medical officers per 100,000 inhabitants is tested above the Sri Lankan level.
Thus, by raising college enrollment, the government will take measures to boost tertiary education. As the government seeks to extend the advantages of growth to every portion of the nation, it should be followed by quality and qualified healthcare experts in the country to establish healthcare services with suitable norms. The economic cooperation agreement between the Sri Lankan government and the Kingdom of Saudi Arabia was launched in 1981 through the Saudi Development Fund to extend a $30 million loan to the Second Water Sector and Sewerage project.
Development initiatives funded by the Saudi Fund Development through concessional funding are essential milestones in the two-country relationship. The complete quantity of loans expanded by the SFD was $386 million at the end of 2018. The SFD agency’s priority regions are sectors of highway, health, irrigation and community growth, higher education, etc.
OSL Take: The commitment of US$ 300 million by the Kingdom of Saudi Arabia towards Sri Lanka’s development program is indicative of the close ties maintained between the two countries. Apart from being the largest employer of Sri Lankan migrant workers, Saudi Arabia also imports a large quantity of Sri Lankan tea. Both Sri Lanka and Saudi Arabia have been engaging in trade activities for many decades. Therefore, Saudi companies could explore possibilities of doing business with Sri Lankan entities and foreign companies involved in the higher education sector could explore potential opportunities in Sri Lanka.
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Sri Lanka opens domestic flights to international airlines


Sri Lanka has approved providing licenses to foreign airlines to operate flights between domestic airports to boost the local aviation industry, the government said. Under current bilateral agreements, international airlines operating in Sri Lanka are unable to bring traffic within the island between airports, generally known as ‘6th freedom’ and beyond.
However, the ministers' cabinet provided the approval to the civil aviation authority in Sri Lanka to grant one-year operating licenses to foreign airlines interested in flying within Sri Lanka, the state information office said.

Jaffna International Airport, Batticaloa, Colombo, Ratmalana and Mattala International Airport will require airlines to operate. Sri Lanka expects Indian airlines to fly with smaller regional aircraft to Jaffna later this year, which may also be useful for liberalisation. Domestic aviation, however, is still in its infancy. The International Airport of Mattala is also mostly unused.
Eastern Asia had liberalised air travel even earlier than in South Asia. Countries like Vietnam, which later started to expand beyond Sri Lanka, have moved ahead. Foreign airlines are flying with the state, including Cebu Pacific, Bamboo, and Jetstar Pacific. AirAsia, headquartered in Malaysia, approached the government of Sri Lanka to set up an airline in Sri Lanka, but no progress was made. A joint venture has since formed in Vietnam.

OSL Take: The government of Sri Lanka is engaged in a programme to uplift the country’s airport and aviation industry by launching a plan to develop regional airports in several parts of the country. The local airports aim at further developing Sri Lanka’s connectivity to foreign destinations and trading markets. The government has also helped boost the country’s tourism industry and the operation of many international airlines in the island.
Further, Sri Lanka’s geographical positioning in the Indian Ocean, the ‘ease of doing business’ environment in the country and the strong trade ties with other countries, as well as the continuously growing tourism industry make the island the ideal business/investment destination in South Asia. Foreign businesses could, therefore, confidently explore business opportunities in Sri Lanka’s airport and the aviation industry as well as the opportunities in developing additional infrastructure facilities.
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Sri Lanka plans US$ 250mn tea deal with Iran

Sri Lanka is negotiating a US$ 250 million barter deal to restart Iranian tea exports and settle a legacy 2012 oil loan that was blocked due to U.S. sanctions imposed in 2016, ministers said. The state-run Ceylon Petroleum Corporation in Sri Lanka was unable to resolve a $250 million loan, and the country also lost its tea market in Iran amid U.S. sanctions, Plantation Minister Navin Dissanayake said.

Sri Lanka's state-run Ceylon Petroleum Corporation will pay $5 million equivalent a month to Ceylon Tea Board for 50 months, said Petroleum Minister Kabir Hashim, the state industry regulator. Based on the current exchange rates, the Tea Board will then pay exporters who ship tea to Iran. Importers in Iran must pay the petroleum business in Iranian currency until the $250 million loans have been resolved.
Sri Lanka's ministerial cabinet had cleared the agreement on Hashim and Dissanayake's joint offer. Dissanayake said yesterday, after the cabinet approval, that he had met the U.S. ambassador and was sure that Iran would not object.
Revenue from tea exports in Sri Lanka has reportedly increased by Rs. 7.6 billion in the first seven months of 2019, reaching Rs. 141.4 billion, compared to Rs. 133.8 billion earned during the same period in 2018, as recently quoted by tea brokers.

OSL Take: Sri Lanka’s tea sector has been recording continuous growth with increased recordings in the exports sector as well. The proposed bilateral trade agreement will provide a further boost to Ceylon Tea.
The government of Sri Lanka has also offered many incentives to promote the country’s tea industry. Foreign businesses/investors could explore business/investmentopportunities in Sri Lanka’s tea industry.
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