President Rajapaksa highlights Tourism as a hot sector to invest in Sri Lanka

President of Sri Lanka Gotabaya Rajapaksa has instructed the related officials to prepare a focused program to develop the tourism industry to generate US$ 10 billion in tourism revenues by 2025. President Rajapaksa at a meeting Monday at the Presidential Secretariat with officials from the Ministry of Tourism and Aviation, said tourism should use as the primary sector that can lead to rapid economic growth. President Rajapaksa, speaking the officials, said a talented team with field experience and engagement required for the sector's growth.

"Each move needs to produce immediate results. I'm prepared to make the decisions that need to take without fear for the country. I want officials to devote themselves to delivering the outcomes of the decisions to the country and the people. If there is a tailored plan, any obstacle can be solved, "the president said. The problems found in the tourism industry discussed at length, as well as the decisions to be taken to promote growth in the field.

The President stressed the need to improve and control the facilities given to the tourists from the airport itself. The President also described the need for a more comprehensive advertising framework to develop tourist attractions and provide a better knowledge of the sites. He noted that tourists are very much in favor of the local Ayurvedic system. The President directed out to the officials that the development of maritime sports, Sri Lankan tea and tourist attractions unique to Sri Lanka should give priority.

The President recommended holding trading complexes defining tourist needs and clarified the need for a proper system to get tourists in. The President instructed the Tourist Board to introduce programs through diplomats that would enhance the reputation of Sri Lanka and raise awareness as a tourist destination in Sri Lanka.

He stressed the need to develop the airlines like SriLankan as quality services. Inputting together the Tourism Board that acts as four bodies, the President clarified the importance of teamwork and team-work. President Rajapaksa noted that the establishment of direct air connexions could attract more visitors and focus attention on launching direct flights to European countries.

We also discussed the possibility of developing hotel managers by providing hotel school training to undergraduate students studying in the tourism and hospitality industry. It was determined that the tourism police should reactivate and a senior DIG named appropriate to the sector.

The improvements in industry-promoting rules and regulations were discussed during this meeting. Minister of Tourism Prasanna Ranatunga and Minister of State Arundika Fernando, Ministerial Secretary Mrs. SM Mohamed, State Ministry Secretary SSS Fernando, and other senior ministry officials were also present at the discussions.

OSL Take: Sri Lanka’s tourism industry has recorded continuous growth during the past few years. The growth momentum seems to be continuing, given the increase recorded in tourist arrivals to the country. Sri Lanka has also made its way to many essential global lists as a must-visit destination. Therefore, foreign businesses/investors could explore business/investment opportunities in Sri Lanka’s tourism sector.

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Opportunity for investors as Sri Lanka’s Pan Asia Bank to raise LKR 750mn from debentures

Pan Asia Banking Corporation Plc (PABC) of Sri Lanka said it plans to build 750 million rupees through a debenture problem with an option to increase further by 500 million rupees in the event of over-subscription. PABC said it would issue a non-viability conversion feature of 7.5 million unlisted, unsecured, redeemable subordinated Basel III compliant debentures.

The debentures will have a maximum tenure of five years and must approve by the shareholder and the regulator.

At the end of September 2019, PABC's core capital ratio to risk-weighted assets grew from 11.51 percent at the end of December 2018 to 12.25 percent, compared with a minimum requirement of 8.5 percent. The overall capital adequacy increased from 13.32 percent to 13.68 percent, compared with a regulatory minimum of 12.5 percent.

The bank's lending book fell 1 percent from nine months earlier in the September quarter, while bad lending accelerated from 5.44 percent to 6.56 percent. PABC posted a net profit of 270 million rupees, which increased by 4 percent in the quarter of September 2018 compared to the same period in the previous year.

Interest income for the September quarter was stable at 4.8 billion rupees from a year ago, while interest expenses dropped 2 percent to 3.16 billion rupees, resulting in net interest income rising to 1.69 billion rupees. In 2014, PABC had last released 3 billion debentures with interest rates ranging from 9.52 to 9.75 percent, which matured in 2019. Currently, five-year treasury bonds trad around 9.60/70 percent.

OSL Take: The increase in opportunity for debentures is indicative of the level of confidence in Sri Lanka’s economy and interest in investment. The economic policies of the country that have resulted in the overall growth of Sri Lanka’s banking sector would undoubtedly serve the requirements of the foreign businesses/investors exploring opportunities on the island.

Further, the increase in economic activity in Sri Lanka following the incentives offered by the government of Sri Lanka will push economic growth to higher levels next year.

The government of Sri Lanka is engaged in introducing many policies aimed at strengthening and consolidating the country’s economy while attracting foreign investments by continuously improving the ease of doing business environment in the island nation. Looking at the comments made by Sri Lanka’s Finance Minister and Senior Adviser to the Finance Ministry, it is evident that Sri Lanka is heading on a path to achieve overall economic growth.

The conducive business atmosphere in the country will attract foreign businesses/investors to explore opportunities in Sri Lanka. Given Sri Lanka’s geographical positioning in the Indian Ocean, the ease of doing business environment in the country and the many trade agreements, as well as trade concessions enjoyed by the state, have made it an attractive business destination in the South Asian region. Related

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Norway to host energy investment forum in Sri Lanka

In collaboration with the University of Jaffna and the Western Norway University of Applied Sciences, the Norwegian Embassy in Colombo is hosting an expert panel discussion at the Galle Face Hotel on Tuesday, 21 January 2020, entitled "A New Decade: Investing in Clean Energy in Sri Lanka-Drivers and Barriers."

Both Norway and Sri Lanka are devoted to reducing carbon emissions and increasing the use of clean energy technology to meet potential demands for electricity. In 2018, Norway and Sri Lanka formed a partnership on clean energy, which includes academics, researchers, and private companies from both countries.

Norway is also helping Sri Lanka develop a mix of environmentally friendly sources of energy, with a specific focus on increasing solar energy production in Sri Lanka. The panel discussion is a forerunner to the opening on 24 January 2020 of Sri Lanka's first floating solar power plant, built-in collaboration with Western Norway Applied Sciences University and the University of Jaffna.

The local media has reported that the investment forum would offer the perfect blend of opportunities aimed at elevating institutional, corporate and individual investors and business houses with a comprehensive set of rules for their investment decisions, and act as an interacting opportunity for introductions to potential foreign business partners with a view of creating partnerships/investments in Sri Lanka.

The investment forum is to be inaugurated on September 16 followed by a presentation on “Sri Lanka’s growing consumer market and investment opportunity for development,” a panel discussion on Strategies for Growth – Foreign Direct Investment, National Export Strategy, Navigating the Operating Landscape including Regulations, Tax, Forex, Land, Foreign Investment Viewpoint and Public-Private Partnerships, a Presentation on Port City Colombo, B2B and G2B business matchmaking sessions followed by a Strategic Networking Event facilitating participants to directly network with Senior Ministers and Officials attached to various Government Institutions in addition to participants from multiple other countries.

OSL Take: The scheduled conference will bring in to focus the many business/investment opportunities in Sri Lanka. Given the participation of all key state entities in the confab, participants would be able to build initial contacts as well as find out first hand the business/investment opportunities in Sri Lanka.

The government of Sri Lanka is engaged in an aggressive development program, and the continuous progress in developing the ease of doing business environment in the country has expanded the business/investment opportunities in key economic sectors. The country’s geographical positioning in the Indian Ocean and the many trade agreements, as well as trade concessions enjoyed by Sri Lanka, have made the country a business hub in the South Asian region.

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John Keells Properties is revolutionizing the property market

Sri Lanka is at the cusp of economic change. Per capita GDP will reach US$ 6,000 from the current US$4,000 in a couple of years, leading the way to an increase in consumer spending. Sri Lanka will be an attractive destination for investors, but that is not all.

The iconic mixed development project for Cinnamon Life consists of an 800-room five-star hotel, 427 luxury residential units, banqueting and meeting facilities that can host up to 5,000 guests, a state-of-the-art office tower, multi-story shopping mall, and entertainment center. However, it's much more.

Improving policy stability, gaining traction in the Colombo Port City growth, the burgeoning tech industry, and deepening trade relationships with regional economies would increase the attractiveness of investors and global talent.

John Keells Holdings is positioned to capture the next growth wave in Sri Lanka, comprising 70 companies across a variety of sectors. The flagship project is Cinnamon Life, a mixed-development resort in downtown Colombo. We believe the opportunity here is real. Apartments dominate Sri Lanka's high-rise property market, though nascent, as an investable asset. Office spaces are not purchasable and tradable hot commodities. Commercial property designers rent out office spaces in Sri Lanka.

Half the capacity of the office tower will be sold to potential investors while the remainder will lease. When there's demand, we can always sell more. There was recognition by prospective investors and by local corporates, which was very encouraging until the building began several years ago. We've already sold a couple of floors to local businesses and keep generating interest.

The groundbreaking mixed development project Cinnamon Life by the John Keells Group has altered all that. We created a market for office spaces as an opportunity with the 30-story office building in Cinnamon Life, which will be the first to come online in 2020.

There are opportunities to lure regional offices to Sri Lanka, as cities are becoming too costly in places like Hong Kong, Singapore, and even India. Colombo has what it takes to attract talent internationally. Port City is going to transform the business center of Colombo. The ex-pat community is growing, and professional Sri Lankans are returning home. What that does to any business and the economy relevant to customers is just amazing.

OSL Take: The positive movements in the property market by John keels an indicative of the growth in Sri Lanka’s economy. Sri Lanka’s business potential is on the increase, along with the expansion of investment opportunities in the country. The positive growth in the vital economic sectors islandwide has resulted in increased business/investment opportunities in Sri Lanka. Also, Sri Lanka’s geographical positioning in the Indian Ocean, the ease of doing business environment in the country and the many trade agreements, as well as trade concessions enjoyed by the state, have made it an attractive business destination in the South Asian region.

 VBS/AT/27022020/Z_TB9

Global Fund provides US$ 22 million grant to strengthen the Sri Lankan health system

The Global Fund is a project organized to speed up resolving epidemics like HIV, tuberculosis, and malaria. The Global Fund, as an international organization, mobilizes and spends more than US$ 4 billion a year in support of initiatives run by local experts in over 100 countries. They are breaking obstacles and promoting progress in collaboration with states, civil society, professional organizations, the private sector and the people affected by the diseases.

For 2020-2022 Sri Lanka will receive 20 million euros in funding to support the improvement of health systems, courtesy of the Global Fund. Minister of Health and Aboriginal Media Services, Pavithradevi Wanniarachchi, has asked officials to make sure the funds are used rationally.

Minister has directed Bhadrani Jayawardena, Secretary of the Ministry, to use all the money to improve the health sector. It is known that ten new Electronic X-ray machines are proposed with the top priority being Gene expert machines. The Ministry has said the Global Fund had issued US$ 101 million since 2003.

Institute of Health Policy helps the health ministry in writing and applying to the Global Fund. The Global Fund, established in 2002, is a collaborative agency of the 21st century, designed to accelerate the end of epidemics such as AIDS, tuberculosis, and malaria. The Geneva-based fund provides financial assistance to countries where the diseases exist.

Health infrastructure is generally sound, although there is a recognized need for new investment, especially in the north and east of the country where conflict has damaged parts of the health system, according to the Global Fund Sri Lanka. Because of inbound migration from India and China, tuberculosis remains a public health problem in Sri Lanka.

The health infrastructure in Sri Lanka is generally sound. There are still areas of need, however, especially in the country's north and east, where violence has devastated parts of the health system. Tuberculosis remains a public health problem, despite significant changes, due to inbound migration from India and China. In 2016, WHO certified Sri Lanka malaria-free.The incidence of HIV in Sri Lanka is minimal.

OSL Take: The setting up of Global Fund investments to diagnose non-communicable diseases is a development undertaken by Sri Lanka’s health sector, which is engaged in the event of its facilities as well as improving the medical technologies in line with global trends.

Sri Lanka’s health sector is a hotbed for investments given the many projects ranging from the development of the state hospital network to the manufacturing of pharmaceuticals and medical supplies. Interested foreign investors could explore investment opportunities in Sri Lanka’s health sector.

The latest commitment by the Global fund to offer US$ 20 million to Sri Lanka in support of its development agenda shows the growing ties between the two countries. Sri Lanka already enjoys US GSP trade concession, which has helped boost Sri Lankan exports to the US. The close link between Sri Lanka and the US is an encouraging sign for businesses in both nations since they would look at forming successful business/trade partnerships. Also, US businesses could explore opportunities for taking part in Sri Lanka’s development programme.

 VBS/AT/27022020/Z_TB8

Bawa-designed Hotel Cinnamon Bentota Beach re-opens doors in Sri Lanka

Cinamon hotel group said that Cinnamon Bentota Beach, a historically significant hotel designed by Geoffrey Bawa in 1967 that helped inspire an architectural style known as tropical modernism, has reopened after its restoration. "Bawa was able to establish an experience that was rooted in place and time, using the available art skills and crafts to offer an experience exclusive to Sri Lanka," said Cinnamon Hotels and Resorts. The hotel is situated on an 11-acre property across from the Indian Ocean and Bentara River. It is a hotel of 159 rooms, with 16-suites and 144-sized offices.

"Cinnamon Hotels & Resorts decided to restore and preserve the building, due to its importance in the world's architectural history." Bawa himself planned and contributed to the spread of buildings across South and South East Asia in the style of tropical modernism. Initially Bentota Beach, the hotel is now known as Cinnamon Bentota Beach, under the John Keells group name, which runs a network of 15 Sri Lankan and Maldivian hotels.

"We commenced this project eighteen months ago, and set a tight timeline for completing it," said Krishan Balendra, chairman of the John Keells Group. "I am glad to say that what we have is a hotel restored to the original feel of the creation of Geoffrey Bawa.”

"Bentota Beach Hotel, as it was then known, as we all know, has been an icon in Sri Lanka, and we are eager to share the history and heritage value of this hotel with our guests." The hotel highlights creations by local artists as well as works by Bawa's associates.

Ismet Raheem's paintings (artist, architect, and author) decorate the lounge walls while seventeen suites containing local artists' art and creations correspond to each suite's name. Eight artists were commissioned to represent a theme and document what they thought the suite name meant for them, resulting in each suite telling a story about local people and local languages.

The restoration involved reinstalling Ena de Silva's ceiling at the entrance, Barbara Sansoni and Barefoot's hand-loom fabric design, the recreation of the lounge and the bar ceiling with the assistance of a designer Marie Gnanaraj.

OSL Take: As stated by Sri Lanka’s Tourism Development Minister earlier this month, opportunities are bountiful in the country’s tourism industry. A business/investor seeking an excellent business opportunity in Sri Lanka could explore investment opportunities in Sri Lanka’s tourism sector, which is recording continuous growth and poised for further growth. Sri Lanka is open to the latest developments in the global leisure and hospitality sectors. Looking at the cross-section of tourists arriving in Sri Lanka, it is clear that the country could venture further into new tourism concepts as well.

Further, the government of Sri Lanka has already introduced many measures to help the tourism sector bounce back after the Easter Sunday attacks. Also, tourism authorities have already commenced drawing up short, and long term plans to promote Sri Lanka in the global platform.

However, as stated by the Tourism Minister, foreigners have already started to arrive in Sri Lanka. Considering all these factors, foreign businesses/investors could explore business/investment opportunities in Sri Lanka’s tourism sector.

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ADB plans to invest $100mn in Sri Lanka

The Asian Development Bank (ADB) said it would review a proposal in February to invest US$ 100 million in a credit guarantee company serving small and medium-sized enterprises (SMEs). A conference to discuss the management will take place on 24 February. The final step before a proposal submitted to the ADB board for approval is a Management Review meeting.

After sending a report to the cabinet in 2016, the Manila-based lender approved the definition in February 2017. The ADB then embarked on a fact-finding mission to support the creation of the new non-bank finance firm. SMEs account for 52 percent of Sri Lanka's gross domestic product but have difficulty accessing finance to grow their businesses due to a highly conservative and risk-averse banking sector.

The ADB said the Sri Lankan government had launched various credit guarantee schemes for SMEs in the past, but none had succeeded due to slow processing of claims, limited coverage of the guarantee, and high premiums.

"The new guarantee institution should be well-funded, controlled efficiently, financially sustainable, free from political influence, run at the highest level of corporate governance, and subject to central bank regulation and supervision," ADB said.

The regional lender has already provided a credit line of US$ 175 million to support SMEs in Sri Lanka, with a particular focus on empowering women-owned businesses. The original loan facility of US$ 100 million approved in the latter part of 2016 was fully expended over two and half years to over 1,700 MSMEs with exceeding targets of its first-time borrowers and women borrowers.

Considering the importance of economic development and job creation in Sri Lanka, the ADB had approved an additional US$ 75 million financings for the MSME line of credit project to increase the available loans for ten participating banks to US$ 175 million by 2020, from the original loan figure of US$ 100 million approved in February 2016.

According to reports, the program has included a US$ 2 million technical assistance grant project supported by the Japan Fund for Poverty Reduction to educate the MSMEs on ethical business practices. “I urge banks to reach out and realize MSMEs without creating market distortion, ADB’s projects structured to be behaviourally-driven models that provide enticements and penalties to banks,” Hoshino has said.

According to him, the program had targeted 5% of the lending to women-led MSMEs initially, which had expanded the target to 20% by October 2018, and funding had disbursed to 27.6% to MSMEs led by women.

The government of Sri Lanka is engaged in a massive island-wide development drive to take the country to the next level in development. Sri Lanka’s development program is being carried out in all parts of the country and covers all vital economic sectors. This project has stemmed from the opening up of many business/investment opportunities for foreign businesses/investors.

OSL Take: The Asian Development Bank’s commitment towards helping the upliftment of MSMEs in Sri Lanka is an encouraging sign for foreign businesses/investors interested in forming joint ventures with local businesses. Sri Lanka’s economy is on an expansion path, and the government’s development agenda together has created many business/investment opportunities in the country.

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Sri Lanka’s first floating solar plant launched in Kilinochchi

Trine Joranli Eskedal, the Norwegian ambassador to Sri Lanka, opened the first floating solar plant in Kilinochchi in Sri Lanka Friday. This morning at the Teaching Body of Engineering, Kilinochchi Campus, Jaffna University, the launch of the 42KW floating solar plant held.

Installed under the Capacity Building and Establishment of Research Consortium Project, the floating solar plant is a result of research collaboration between the University of Jaffna and the Western Norway University of Applied Sciences (HVL), reinforced by the Royal Norwegian Embassy in Colombo since 2017.

As the Norwegian Embassy in Colombo said earlier, the partnership between universities and Norwegian private companies has been crucial to realising this project. Current Solar AS is the Norwegian manufacturer under the trade name "Norwegian Solar Floats™" of floating PV solutions.

The project was also funded by the Norwegian Energy company Equinor and Innovation Norway, which is the Norwegian government's agency for innovation and development of Norwegian companies and industry.

The floating solar power plant development is based on Norwegian offshore and aquaculture marine know-how and combines well-known features with the pioneering use of composite beams for solar panel mounting.

The government of Sri Lanka strives for a country that is self-sufficient in electricity by 2030. The target is to raise the country's power generation capacity from the current 4,000 MW to 7,000 MW by 2025 with a substantial renewable energy increase. Sri Lanka has already achieved a 98 per cent grid coverage, which is relatively high according to South Asian standards. 

There are three primary sources of electricity generated in Sri Lanka: thermal power (including coal and fuel oil), hydropower, and other non-conventional renewable energy (solar power and wind power). (Data Source: Ministry of Power and energy). The newly elected government aims to expand the following areas in the power sector:

OSL Take: Sri Lankan authorities are continually exploring new and cheap power generation methods to address the impending power crisis in the country. This exploration has resulted in the expansion of business/investment opportunities in Sri Lanka’s power and energy sector. The looming power crisis in Sri Lanka has resulted in the opening up of many business/investment opportunities in the country’s power and energy sector.

The government of Sri Lanka is continuously exploring solutions to address the rapidly increasing demand for electricity. The government is also focusing on sustainable energy generation methods. Therefore, Sri Lanka’s power and energy sector is a hotbed for business/investment opportunities.

VBS/AT/27022020/Z_TB5 

LOLC signs deal acquisition to sell Cambodian unit to Korea’s Kookmin

LOLC Holdings of Sri Lanka said it had signed two agreements to sell its Cambodian subsidiary PRASAC to Kookmin Bank of Korea for 603 million US dollars. Kookmin Bank, South Korea's largest commercial bank, has signed a share purchase agreement and shareholders agreement with LOLC Holdings, subject to final approval by the National Bank of Cambodia and the Republic of South Korea's Financial Services Commission, the Sri Lankan firm said in disclosure of the stock markets.

PRASAC is Cambodia's largest microfinance institution, with a 70 per cent stake in LOLC's Singaporean subsidiary LOLC International Private Limited.

LOLC will sell PRASAC's 70 per cent ownership in two tranches; an immediate 422 million rupees and 2022 balance. The Group also controls LOLC Cambodia Plc, the South East Asian nation's fourth-largest microfinance company.

In 2007 PRASAC was the first foreign investment by LOLC. The group also has microfinance companies operating in Myanmar, the Philippines, Indonesia, Pakistan, Zambia, and Nigeria. Before the deal announced in early December, LOLC's share price had risen 179 rupees by December 30, from 113 rupees one piece. During the last week, the share price has fallen to 169 rupees.  

OSL Take: The acquisition by one Sri Lankan company of a business unit of another local company indicates the strength of local businesses. It is also an indication of the overall growth of the country’s economy. Therefore, foreign companies could look at forming joint ventures with local companies to expand their business ventures in the South Asian region. The latest acquisition of a local entity is yet another indication of the strength and growth of the country’s private sector.

The business conducive environment and the ease of doing business environment in the country have helped the growth of Sri Lankan companies. Sri Lanka’s geographical positioning in the Indian Ocean, the ease of doing business environment in the country and the many trade agreements, as well as trade concessions enjoyed by the state, have made it an attractive business destination in the South Asian region.

China remained a top foreign acquirer of Sri Lankan assets in 2018, as measured by transaction value, with over $1 billion investments to date. Hence, Sri Lankan companies remain popular hotspots, targets for multi-billion-dollar Chinese businesses/investors who could explore business/investment opportunities in Sri Lanka with an increase in the M&A deals in later 2019. Therefore foreign businesses/investors could explore opportunities of investing in local businesses or look at forming partnerships/joint ventures with Sri Lankan companies to use the trade facilities enjoyed by the island to expand activities in the Indian Ocean region further.

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India offers $50 million in financial aid to support Sri Lanka’s development

India promised $50 million in assistance to Sri Lanka to help the country buy equipment for its security forces when India's National Security Advisor Ajit Doval called on Saturday for President Gotabaya Rajapaksa.

During the meeting, Doval, who arrived on an official visit in Colombo on Saturday, addressed several bilateral issues and exchanged views with President Rajapaksa on improving bilateral relations in several fields, including reinforcing defence cooperation. The topics discussed included enhancing collaboration between the two countries' security forces, enhancing maritime security, co-operation and interaction between the two countries' coast guards.

"Yesterday, a very cordial discussion took place with India's National Security Adviser, Ajit Doval. Strengthening bilateral cooperation on national security, sharing intelligence, maritime security, and promoting regional collaboration were some of the critical points of discussion, "said the President in a tweet.

Doval pointed out the importance of studying Sri Lanka, Maldives and India's awareness of maritime zones. He also stressed the need for other regional states to take part as observers in this process. He also said that $50 million would give to purchasing equipment for Sri Lankan security forces as part of enhancing security cooperation. India has also committed to helping Sri Lanka collect intelligence information and set up a geo-coordinating centre.

The visit to Sri Lanka by India's top security official follows the appointments of several high-ranking foreign officials this week, including the Chinese and Russian Foreign Ministers and Assistant Secretary of the US Department of State Alice Wells.

OSL Take: The commitment of approximately US $50 million line of credit by India to Sri Lanka indicates the close bilateral ties enjoyed by the two nations. Sri Lanka and India have an active free trade agreement as well. India has played an active role as Sri Lanka’s development partner. Therefore, business opportunities between the two countries are very high.

Foreign businesses/investors interested in doing business with India could look at setting up base in Sri Lanka to get the trade benefits enjoyed by Sri Lankan businesses in India. The ancient ties between the two nations have further strengthened through trade ties that have been benefited by a free trade agreement (FTA) between the two countries. While many Indian companies have formed joint ventures with local businesses, the Indian government has continuously assisted Sri Lanka in its development program.

The strong trade ties between Sri Lanka and India could be beneficial to foreign businesses/investors interested in doing business in the South Asian region as well as India. On the other hand, given Sri Lanka’s continuous efforts to develop its railway sector, foreign companies engaged in rail transport could explore business opportunities in Sri Lanka’s railway sector as well as help build supplementary facilities.

 VBS/AT/27022020/Z_TB3

CICIR advise on strengthening China-Sri Lanka cooperation

Assistant President Professor Zhang Li recently visited the Pathfinder Foundation (PF) together with his team representing the China Institute of Contemporary International Relations (CICIR) to discuss improving bilateral cooperation between the two institutions.

CICIR is a long-standing, broad, and multifunctional research and consulting company that focuses on financial, political, and security research. The statement, as mentioned earlier, addresses all the geographical areas and the major strategic and systematic issues that the world faces. The Pathfinder Foundation and CICIR have enjoyed a long-term relationship, culminating in a joint publication in 2016 on the theme 'The Island of the Lion and the Land of the Dragon: Essays on Sri Lanka-China Relations’.

PF Founder Milinda Moragoda presented Prof. Zhang with a copy of the 'Pathfinder National Security Strategy 2020 for Sri Lanka' at the beginning of the discussion at River Point Peliyagoda, PF's head office. He suggested a joint conference on Track II dialogue on relations between China and Sri Lanka during the follow-up discussion with CICIR.

PF Chairman Bernard Goonetilleke stressed China's desirability to build new technical and vocational training institutions as well as tertiary-level educational institutions aimed at providing young people with engineering and other skills to meet the demand of large-scale industries planned for the Hambantota Industrial Zone, the port and the airport in the area.

PF Executive Director Luxman Siriwardena highlighted the importance of improving relations between China and Sri Lanka and suggested the China's FDI and opening its markets to Sri Lankan products as the most effective way to help Sri Lanka achieve its economic development goals with new technology, especially with new concepts such as 'Smart Cities.'

By conducting a joint study to identify new digital economic opportunities for Sri Lanka, both sides agreed to pursue future relations.

OSL Take: The Belt and Road Initiative expected to possibly become the most significant infrastructure project ever involving 68 countries around the world resurrecting the old “Silk Road” that used to link Europe and Asia.

The initiative’s objective is to make economic and trade activities along the route dynamic and vigorous once again, establishing it as the world’s most dominant trading area. The Belt and Road Initiative will complement the government of Sri Lanka’s aim of establishing Sri Lanka as a global hub and also open avenues for innumerable opportunities.

 VBS/AT/27022020/Z_TB2

China invests $800 mn on a Marina Track in Colombo

CHEC Port City Colombo (Pvt) Ltd, a Chinese Communications unit, has invested $800 million of a total of $1.4 billion in land reclaim, and is preparing to market and build support facilities, an official said. "So far, only $800 million has spent from the initial $1.4 billion investment," Nihal Fernando, project manager for the Port City initiative, told the media. The City of Port rolled out with the Urban Development Authority of Sri Lanka.

In 2019 under the first phase of the project, it completed the reclamation of 269 hectares of land from the ocean south of the Colombo Port. Fernando said the rest of the funds from the initial investment used to build a yachting marina. It will have a central park, as well as other facilities.

The second phase of the project will see the firm marketing the plan to invest internationally. Overall, it expected that Port City, also known as the Colombo International Financial Centre, will attract US$ 15 billion in investment to Sri Lanka. They have already allocated the first three buildings. Fernando said some of the building has already begun, and the first building will open in 2023.

He said CHEC await concessions from the government to go out and sell the project. A new law is a draft on how the Port City will operate, making it easier to arbitrate and settle international contracts and becoming a hub for such activity in South Asia.

"Everything has now lined up, and the government is very keen on that as well. The legislation is coming out very early," said Fernando. "China-Sri Lanka partnership is getting stronger day by day," he said.

The sale of real estate in the Colombo Port City is an ideal investment opportunity for foreign investors to invest in Sri Lanka’s future. Investments in Port City are possible in several areas that range from business, leisure, health and many other sectors.

Local businesses could also grab the opportunity to seek foreign business entities to form partnerships/joint ventures to set up new investments in the Port City. Even with Sri Lanka closing in on achieving hub status in the Indian Ocean region, holding a land space in the Colombo Port City will be a great asset in the global business sphere.

OSL Take: The Belt and Road Initiative expected to possibly become the most significant infrastructure project ever involving 68 countries around the world resurrecting the old “Silk Road” that used to link Europe and Asia.

 The initiative’s objective is to make economic and trade activities along the route dynamic and vigorous once again, establishing it as the world’s most dominant trading area. The Belt and Road Initiative will complement the government of Sri Lanka’s aim of establishing Sri Lanka as a global hub and also open avenues for innumerable opportunities.

 VBS/AT/27022020/Z_TB1

EU assures GSP+ to continue till 2023

The EU is the second-largest trading partner in Sri Lanka after India but also its leading export destination, consuming 31 percent of Sri Lankan exports in 2015. Sri Lanka was the 62nd most significant trading partner for products in the EU in 2016, representing 0.1 percent of EU trade. Textiles and clothing dominate Sri Lanka's exports to the EU, accounting for over 80 percent of Sri Lanka's total exports to the EU in 2016. (Data Source: European Commission)

“The Comprehensive Scheme of Preferences Plus tax concessions from the European Union to Sri Lanka will continue until 2023,” said Prasanna Ranatunga, Minister of Industry, Export, Investment Promotion, Tourism, and Aviation.

Minister Ranatunga made that claim following a meeting at the Ministry on Sunday with Thorsten Bargfrede, Head of Economic, Trade and Communications Section of the European Union Delegation to Sri Lanka and the Maldives, and EU members.

The EU official promised at the meeting that the GSP+ concession would continue until 2023, and the related observation process would not change. During the conference, the Minister pointed out the GSP+ tax concessions given to the country's clothing industry, and that 60 percent of Sri Lankan clothing exports go to EU member states.

Minister Ranatunga noted that the garment industry accounts for about 43 percent of the country's total exports and earns about US$ 5 billion annually to the government. He said the apparel industry has grown exponentially and thanked the nations of the EU for their help in this area.

Noting that EU investors are keen to invest in Sri Lanka, Bargfrede has requested that the SriLankan Airlines resume flight services to EU countries. The minister responded to the matter, having already considered the request.

Also present at the discussion was Secretary of the Ministry of Industrial Export and Investment Promotion, Mapa Pathirana, and Secretary of the Ministry of Tourism and Aviation, Mrs. Marina Mohammed.

This strategy is in line with the governments' expectations via the budget to get more investors by offering incentives. The GSP+ concession will now be backed by the earlier proposed tax holidays for investors making large scale investments in the country. According to the Sri Lanka Apparel Exporters Association, they expect that securing GSP would bring in an immediate US$ 400 million to 500 Million to the Sri Lankan economy.

OSL Take:  The continuation of the US GSP trade facility for Sri Lanka, would boost Sri Lanka’s export market to the US. Sri Lanka already enjoys the EU’s GSP Plus trade concession. The benefits from these two trade concessions from two of the world’s largest markets would undoubtedly result in a boost in Sri Lankan exports to the US and the EU. Foreign businesses/investors could use the benefits of these trade concessions enjoyed by Sri Lanka to engage in an export business based in the island nation.

Also, the incentives for private sectors to construct mini industrial parks in areas such as Moneragala, Puttalam, Jaffna/Vanni, and Ampara will gain momentum through the value addition the GSP+ will bring to the country and by the opening of more product lines.

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John Keells Mega Deal Boosts Foreign Investor Confidence

Foreign investor confidence is back in Sri Lanka and the Rs. 22.7 billion mega-deal on the premier blue-chip John Keells Holdings (JKH) was flagged off as a big boost last week. Advisor to the broker to the deal, CT CLSA Securities Marianne Page reported that several foreign investors were keen to buy into JKH while Citigroup Global Markets Ltd., Agency Trading Prop Securities A/C had snapped up the 10.7 percent stake.

The seller was Khazanah Nasional Berhad, the sovereign fund of Malaysia.

"On JKH stake, we didn't do a global roadshow, but the market got wind of it, and there were some inquiries. There was interest locally too. All of those for were smaller parcels rather than the entire," the Singapore-based Page said while declining to be precise. Page said the price the transaction occurred at (141.8 million shares each at Rs. 160) was "fair" for mutually the seller and the buyer. The deal took place amid Middle East tensions, and the rest of the world felt its spillover effects.

"The fact that Citigroup Global Markets Ltd., Agency Trading Prop Securities A/C took over the big block completely reflects JKH and Sri Lanka's trust. The deal is a big boost in that sense," said Page, who has been promoting equity investments into Sri Lanka for several decades. She told the Colombo stock market was oversold, and valuations are moving ahead attractively. "I think interest from foreign investors is gathering momentum after General Elections. Post presidential election, signs were promising, ' added Page.

Market analysts were linking the account to the giant Fairfax, based in Toronto, Ontario. The HWIC Asia Fund, related to Fairfax, already had a 3% stake before the mega acquisition on Thursday, and its latest stake was close to 14%. The seller was Northern Trust Co S / A Broga Hill Investments Ltd., which affiliated with Khazanah. The deed deal lifted the confidence of investors and pushed CSE's turnover to Rs 23.6 billion, the highest since 2008. After suffering a 2 percent drop on Wednesday (the most severe in over two months), the ASPI shot up 85 points or 1.44 percent on Thursday, and the S&P SL 20 Index increased 64 or 2.3 percent. It was down 2.6 percent on Wednesday.

Fairfax Financial is a financial holding company involved in the management of property, casualty, insurance, and reinsurance, investment, and insurance claims.  Fairfax first entered Sri Lanka via the HWIC Asia Fund in 2013, acquiring a 15 percent stake in the JKH Trust Bank, a subsidiary of Nations. Fairfax bought 78 percent of the general insurance company of JKH-linked Union Assurance for Rs. 3 in 2015. 7 billion. A year later, Softlogic Holdings purchased 100% of the Asian Alliance General for Rs. 1. 2 Milliarde.

Market analysts said Fairfax had been negotiating the block for several months, while others said Khazanah had been searching for more than a year to get out of JKH. Fairfax's acquisition also allowed JKH to remain intact at 598.3 million shares or 45.4 percent. Captains and related parties own a 20% stake in JKH, followed by Melstacorp linked to Harry Jayawardena at 9.8%.

OSL Take: The news of the LKR 22.7 billion deal by John Keells is a clear indication of the development and growth of the Sri Lankan economy. Hence, this event should add to the confidence of foreign businesses/investors to explore business/investment opportunities in Sri Lanka.

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Japan interested in investing in high growth sectors in Sri Lanka

Japan announced yesterday that steps would take to improve its long-standing bilateral relations with Sri Lanka further. The visiting Japanese Minister of State for Regional Revitalization. Kozo Yamamoto, gave this assurance when he delivered a courtesy call at the Presidential Secretariat to President Gotabaya Rajapaksa.

"Sri Lanka has a government that is reliable and balanced. The economy is also making progress. In this perspective, a favorable investment environment for Japanese shareholders has established in Sri Lanka," the Minister of State said, according to a statement issued by the President's media.

"As a country that has conquered industries such as security, and high-quality public services development among many other areas, Japan has a lot to give to Sri Lanka," Yamamoto said. President Rajapaksa explained that Sri Lanka's growth rate, which in 2014 was around 7 percent, has since declined, and the most significant challenge before him is to revive the economy.

The President also called on Japanese Minister Yamamoto to invest in high-tech assembly plants. Minister Yamamoto responded positively and promised to advance Sri Lanka within the business community in Japan.

Sri Lanka and Japan have discussed the commitment to further strengthen bilateral cooperation between the two countries via vital sectors of economic development. Some of the critical areas for such cooperation have identified as,

•         Information technology (IT),
•        Harbor infrastructure,
•       Eastern Container Terminal (ECT) Development,
•       Highways and Freeways,
•       Agriculture,
•      Digitalization of television transmission,
•      Catastrophe prevention, and
•      Defense cooperation.

“Our country is small, but we have a talented, knowledgeable, and capable workforce. I anticipate building an employment-oriented, technology-driven financial system. We pursue Japan’s aid to reach that goal,” President Rajapaksa has stated. The President has further noted that he was open to foreign investments from all nations, especially the countries from surrounding regions, such as China, Japan, India, South Korea, Australia, and Singapore.

OSL Take: The commitment of the Japanese government to further strengthen its bilateral dealings with Sri Lanka is a positive sign for Japanese businesses to explorebusiness/investment opportunities on the island. Given the economic sectors the Japanese government has shown interest in investing in, local companies could look at forming joint ventures/partnerships with Japanese companies to engage in projects in the relevant sectors.

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Sri Lankan Tourism features on the CNN Business Traveller Program

CNN's leading international business correspondent and presenter Richard Quest will feature Sri Lanka at 1400 India Standard Time (IST) in the latest edition of CNN Business Traveller on January 08.

The CNN Business Traveler documentary created during September 2019 in the edition of the Cinnamon Future of Tourism (FOT) Summit, which was hosted by keynote speaker Quest as part of multiple campaigns to spearhead the island's hard-earned and fast-track recovery as the world's top travel destination.

This week's documentary explores travel, transport, and defense, portraying Sri Lanka as a nation recovering from the April 2019 terror attacks. "It's health first on the streets and in the wild," Quest was quoted as saying.

Quest has visited numerous Sri Lankan locations enjoying hospitality at Cinnamon hotels, flying on John Keells Holdings ' Cinnamon Air flights. During his stay at Cinnamon Lodge Habarana, Quest was witness to one of the world's top wildlife activities, the Elephant Gathering.

A highlight of Quest's stay in Habarana was the sunset high-tea overlooking the Minneriya Tank. He held at the conference venue, Cinnamon Grand Colombo, in Colombo.

Quest had a one-on-one conversation on the group's flagship mixed-development project Cinnamon Life with Krishan Balendra, the chairman of John Keells Holdings.

In his keynote address at the Cinnamon FOT Summit, Quest addressed insights and strategies that are essential to overcoming a destination's challenges to the hospitality and tourism industries, especially following a crisis.

His emphasis was on ' Seeing Beyond the Crisis, ' showcasing the types of challenges that destinations around the world have faced and resolved in a rapidly changing market to reach their full potential.

Speaking of the relationship with CNN, Vice President John Keells Groups, Head of Brand Marketing and Chief Executive Officer of the Cinnamon Life Mall, Dileep Mudadeniya said, "We were in long negotiations with CNN, which continued about six months to clear the dates for the CNN celebrity host."

"We are thankful to the public relations staff and business executives from CNN that helped us make this a certainty." "Our extraordinary thanks also go to Richard Quest for accepting the proposal during the Cinnamon Future Tourism Summit to host this conference for Sri Lanka."

OSL Take: Sri Lanka’s tourism sector is on a revival path following the Easter Sunday attacks. The industry has recorded an impressive growth rate following the initial slump recorded by the tourism industry in the outcome of the Easter Sunday attacks.

The recognition of Sri Lanka as the destination of the year by leading global travel magazines has given a further boost to the country’s tourism industry. Also, the many development programs that have launched on the island to supplement the new growth of the tourism sector have expanded business/investment opportunities in Sri Lanka’s tourism sector.

The conference aligned with the government’s goals of driving tourism and investment into the region and is a timely proposal to connect investors and stakeholders, to propel the hospitality sector forward. OSL is happy to provide you with information 24X7 on the Hospitality Investment Conference Indian Ocean 2021, so please get in touch with the biz-friendly OSL Team today.

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Cabinet approves US$ 900 Million Luxury Mixed Development Project in Sri Lanka

The government has approved a US$ 900 million mixed development project to be developed in Colombo on six acres of property owned by the Urban Development Authority (UDA). A top official has made a statement involving an entity Shang Properties Ltd. Minister for Investment Promotion, Keheliya Rambukwella, said the project would initially invest US$ 500 million with plans to expand the project to US$ 900 million under the first phase. It will include apartments and office space and will finish in six years.

"The very first meeting of the Cabinet held after the establishment of the Government, approved this project. We are now in negotiations to identify the concessions, and we expect to start the project as quickly as possible," Minister Rambukwella told the international media. According to the Board of Investment, the investment first negotiated in 2017, and a deal was signed the following year.

The agreement approved with Shang Properties Ltd., a joint venture with Kerry Properties Ltd., listed in the Philippines', and Hong Kong and Shang Properties Inc., endorsed a 99-year land lease contract with the UDA, which was then under the Colombo 2 land parcel of the Megapolis and Western Development Ministry.

The BOI selected the company after responding to a tender for the six acres of land near the Beira Lake in the heart of Colombo from the former government. The company said to have acquired the site at the time for a consideration of Rs. 12.8 billion without taxes. The land plot located at Colombo 2 at Sir James Peiris Mawatha.

The company planned to build on this site, a modern mixed-use development, but the project postponed after tax and other allowances granted for BOI projects were not allowed as expected by the company. The new government, which has placed the BOI under President Gotabaya Rajapaksa, then gave the delayed project the go-ahead.

The company has full faith in the potential of this project, given the strong demand for premium property developments at prime locations in Sri Lanka. Taking advantage of the exceptional quality that Kerry Properties and Shang Properties are continually bringing to many prestigious areas in Asia, the company looks forward to creating an ultimate living and business space on the Beira Lake.

Other investments by the Kuok Group in Sri Lanka include hotels, one of which is the Shangri-La Hotel, which opened in 2017, as well as luxury apartments and the One Galle Face (OGF), the high-end shopping mall which opened last year. The Group also runs a Hambantota Golf Resort.

OSL Take: The agreement between Sri Lanka’s UDA and Shang Properties Ltd. 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.

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Standard Chartered Bank reveals a pipeline worth of $16 billion investment opportunities

The Standard Chartered SDG Investment Map shows an opportunity for private-sector investors across all emerging markets to nearly $10 trillion ($9,668 trillion), with Sri Lanka representing $16.2 billion of the total. The most significant opportunity in Sri Lanka found in achieving and maintaining universal access to electricity (a key SDG 7 indicator), representing a $7.3 billion private-sector investment opportunity.

Sri Lanka's most significant opportunity is to achieve and maintain universal access to electricity (a primary SDG 7 indicator), which represents a $7.3 billion investment opportunity in the private sector. It takes into account the proportion of the population of Sri Lanka currently without electricity access (2 percent), the expected population growth, and the increasing demand for power as the economy grows.

For SDG 9, which supports change in business, innovation, and technology, Opportunity2030 highlights incentives for the private sector to invest in transport and to improve digital access.  Securing full digital adoption in Sri Lanka–a mix of mobile phone subscription rates and internet connectivity–will entail some $4.1 billion of private-sector investment. To significantly improve the transport infrastructure in Sri Lanka by 2030 provides the private sector with a $4.6 billion investment opportunity.

Bilingual Thewarathanthri, CEO of Standard Chartered Sri Lanka, said: "Sri Lanka's commitment to the Sustainable Development Goals (SDGs) makes investing with the impact an attractive prospect for the private sector. The state is looking to expand public-private-partnerships, and its Vision 2025 program is aligned with the SDGs, demonstrating a commitment to the goals.

"Opportunity 2020 shows the potential that private sector investors have to create to achieve the SDGs. These findings indicate that there is an opportunity in Sri Lanka over the next decade to have an encouraging economic impact on the lives of millions of people. '

OSL Take: The statements by the top management of the Standard Chartered Bank reveals the many business opportunities in Sri Lanka, and also for global companies, it is a welcome sign looking at expanding into other parts of the region. Further, the government of Sri Lanka focused on increasing the inflow of foreign direct investments to the country.

Contemplating the need to modernize the country’s laws to attract more foreign investments to Sri Lanka is a positive sign for international businesses/investors looking at doing business with the state. Sri Lanka’s geographical positioning in the Indian Ocean, the ease of doing business environment in the country and the many trade agreements, as well as trade concessions enjoyed by the state, have made it an attractive business destination in the South Asian region.

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Sri Lanka government introduces new tax concessions for Foreign Direct Investments

Yesterday, the government said it would reintroduce tax concessions to boost FDIs, as well as renegotiate all prevailing and proposed bilateral and investment agreements, some of which may take place after the Elections. "We will construct Sri Lanka to be relatively advantageous for any investor and bring back tax concessions for investors looking into the country's investment opportunities," Minister of State Investment Promotion Keheliya Rambukwella told reporters.

He said they hoped to renegotiate all post-General Election bilateral agreements next year. The contracts include the Hambantota Port, deal with China, the Singapore Free Trade Agreement (FTA), the India Economic and Technology Cooperation Agreement (ETCA), and the Millennium Challenge Corporation (MCC) Compact with the US.

"We have made numerous statements and representations to Parliament on some of the aspects of these treaties that were severely detrimental to Sri Lanka. We need to reconsider and renegotiate all of these, and I hope that the global community will look at it in the right determination, and maybe turn it around to be a win-win deal that helps all countries, "he added.

The State Minister noted that regardless of the size of the economy, the parties involves must assign the same status to any agreement signed between two sovereign nations, and it must be a win-win treaty.

Reiterating that trade agreements are not wrong instruments, he said the government would pursue the FTA with China following next year's general election while pointing out that FTAs are an excellent vehicle for attracting much-needed foreign exchange to the economy. However, government FTAs must treat professionally.

He noted that there are no quantified goals given to the Ministry to achieve in the next four months. Further, he said the primary focus during this time is to rationalise investments and the enablement process to attract FDIs and lay a robust foundation to ensure long-term investment development over the next five to ten years.

He said, however, the government was keen to attract individual foreign investment (FIIs) in the short term through the stock market. The government will also explore international and local private-public partnerships (PPPs) for infrastructure projects, the State Minister said.

Ensuring the timely announcement of the new Investment Board (BOI) officials, the Minister of State said that the Ministry's ease of doing business would be a crucial focus. He said that the ease of doing business is to ensure that BOI operates as a one-stop-shop (OSS) rather than a non-stop shop.

“Infrastructure projects such as the coal power plant in Norochcholai and the Southern Expressway have already made more money than expected. To be able to market those as viable PPP projects to international investors, we need to turn around the underperforming State-owned enterprises (SOEs). They can partner in the construction of roads, power plants, and other infrastructure development projects based on build-operate-transfer (BOT),” he added.

OSL Take: The Sri Lankan government’s efforts to promote and develop the country’s FDI sector continue with the incentives offered to the industry in its 2020 Budget. Along with the international roadshows and digital campaigns planned for next year would result in a boom in Sri Lanka’s FDI sector. Therefore, many investment opportunities would open up in the island nation’s tourism sector shortly. 

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US ambassador assures to boost Sri Lanka's global trade competitiveness

US Ambassador Alaina B. Teplitz yesterday vowed to expand support to be part of the rising tide of Sri Lanka, especially in the areas of alliances, regulatory continuity, political stability and the rule of law, to improve the competitiveness of Sri Lanka. Speaking at the 2019 ICSE International Women's Conference, the Ambassador said the US looked forward to working for a stable and independent Sri Lanka with President Gotabaya Rajapaksa, based on extensive partnerships that can promote economic growth.

"I tweeted a congratulatory message to the people of Sri Lanka shortly after the presidential election and said that I was looking forward to working with President Rajapaksa. The President responded to me by emphasising his desire for warm and mutually beneficial relationships, relationships with a focus on bilateral economic and trade ties, including increased investment inward, "she said.

"American business offers jobs, skills, emerging technologies, and the business environment's highest ethical and workforce standards. Sustainable and equitable economic development is crucial to protect the future of Sri Lanka," said Teplitz. She also emphasised that higher growth would result in innovation, fair trade, and workforce changes that generate real opportunities.

She noted, however, that an accelerated rate of growth depends on comprehensive alliances, effective regulatory strategies, stable laws, and the rule of law. "These strengths are alliances, regulatory flexibility, political stability, and the rule of law that will improve the competitiveness of Sri Lanka," said the Ambassador.

The Ambassador said that shared prosperity is vital to Sri Lanka and the United States. "The soaring tide that raises all boats is shared prosperity. I hope the U.S. can be a part of the rising tide of Sri Lanka," she said.

OSL Take:  The US ambassador’s statement reflects the sentiments of the US towards Sri Lanka and its economy. The confidence expressed by the top US official in Sri Lanka would result in more American business ventures exploring business/investment opportunities in Sri Lanka. Therefore, it would be opportune for local businesses to venture into the EU business market to form joint ventures.

Sri Lanka has been recording a continuous growth in its trade sector through the adoption of the latest techniques and technologies. Also, Sri Lanka’s geographical positioning in the Indian Ocean, the ease of doing business environment in the country, and the many trade agreements, as well as the trade concessions enjoyed by the state, have made it an attractive business destination in the South Asian region. All these have resulted in further strengthening Sri Lanka’s trade and bilateral ties with many countries. Foreign businesses/investors could, therefore, explore business opportunities in Sri Lanka for lucrative returns.

VBS/AT/10022020/Z_TB4