business Sri Lanka

China’s non-manufacturing activities eased pace but maintained steady expansion in April. The non-manufacturing purchasing managers’ index came in at 54.3 this month, down from 54.8 in March, the National Bureau of Statistics (NBS) said in a statement Tuesday.

A reading above 50 indicates expansion, while below reflects contraction. “Steady momentum for the sector continues, as the index stood above the relatively high expansion range of 54 percent for the fourth consecutive month,” said NBS senior statistician Zhao Qinghe.

The service sector recorded stable performance, with the sub-index measuring business activity in the industry standing at 53.3, down 0.3 percentage points from March. (chinadaily.com.cn)

Chinese tech giant Huawei reported a 149 percent rise in research and development spending from 2014 to 2018, faster than its counterparts Apple and Samsung, according to a Bloomberg report released last Friday.

The company’s R&D expenditure increase was just behind Amazon, which rose 210 percent during the 5-year period.

In 2018, Huawei spent $15.3 billion on technology R&D, ranking in fourth place following Samsung, Google’s parent Alphabet and Amazon. Data also showed the company took 14 percent of its annual sales on research last year, the second-highest after Alphabet.

Huawei’s R&D spending totaled 480 billion yuan ($71.3 billion) over the past 10 years, according to its annual report. Besides, the tech behemoth achieved 721.2 billion yuan in global sales in 2018, a 19.5 percent increase year-on-year, and net profit reached 59.3 billion yuan, up 25.1 percent compared with a year earlier.

Smartphone sales from the company gained 348.9 billion yuan last year, a 45.1 percent rise year-on-year accounting for 48.4 percent of total revenue.

As of April 15, Huawei has secured 40 commercial contracts for 5G equipment and shipped over 70,000 5G base stations, the company announced at its annual Global Analyst Summit.

The telecoms leader will also invest $300 million annually to support academic research on basic science, technology and technological innovation, said Xu Wenwei, Huawei’s director of the board and president of the company’s newly established Institute of Strategic Research.

Huawei posted first quarter revenue of 179.7 billion yuan last Monday, a year-on-year growth of 39 percent. (Chinadaily.com.cn)

Minister of Finance Mangala Samaraweera will lead the Sri Lankan Delegation to the 52nd Annual Meeting of the Board of Governors of the Asian Development Bank to be held in Nadi, Fiji from 2nd to 5th May 2019.

The Annual Meeting of the ADB Board of Governors provide opportunities for member governments to interact with ADB staff, nongovernment organizations (NGOs), and representatives of observer countries, international organizations, and the private sector. ADB’s annual meetings have become a premier forum for the discussion of economic and social development issues in Asia and the Pacific. Delegates from 67 member countries will attend this meeting and the Sri Lankan delegates include Secretary to Treasury Dr. R.H.S. Samaratunga, Deputy Secretary to Treasury Mr A.M.P.M.B. Atapattu, Director General of the External Resources Department Mr.Priyantha Rathnayake Director General of the National Planning Department Mr. S.S. Mudalige and other senior officials from the Ministry of Finance.

ADB provides concessionary project loans to Sri Lanka annually amounting to approximately US dollar 800 million and there are already eight funding proposals in the pipeline  to the tune of US dollars 815 million for the year 2019. Of which the Port access elevated highway with US dollar 300 million funding is ongoing now. The negotiations for the Railway efficiency improvement project loan of US Dollar 160 million will be held in Colombo in May. This project is aimed at improving the railway signaling system and the age-old ticketing system.

On the sideline of the ADB annual meeting arrangements have also been made to conduct the SAARC conference of Ministers of Finance on May 02, at Nadi in Fiji.

The Bourse ended on a positive note yesterday as the ASPI increased by 0.11% or 6.25 points to close at 5,443.31 points, while the S&P SL20 Index also increased by 0.48% or 12.61 points to close at 2,613.37.

Market turnover decreased by 0.09% relative to last Friday to amount to Rs. 0.16 billion, while turnover of John Keells Holdings and Sampath Bank accounted for 45.9% of the day’s total turnover.

Foreign investors meanwhile, recorded a net inflow of Rs. 24.3 million yesterday, compared to a net outflow of Rs. 4.5 million recorded last Friday.

Security had been beefed up in Nadi Fiji in preparations for the 52nd Annual Meeting scheduled to kick off on May 2.

The Nadi International Airport yesterday, witnessed the arrival of top delegates, including Sri Lankan Finance Minister and other Ministers and Governors of Central Banks to participate in the event. Over 3,000 delegates from 67 nations are expected to participate at the event.

The Sri Lankan contingent is led by Finance Minister Mangala Samaraweera.

The Sheraton Fiji Resort had embarked on refurbishing the drive to upgrade the facilities which includes the installation of $4 million worth of new fibre optic cables in preparation for the 52nd Asian Development Bank’s Annual Meeting of Governors in Nadi.

The Annual Meeting of the ADB Board of Governors scheduled from May 1 to 5, is an opportunity to provide guidance on ADB administrative, financial and operational directions.

The main venues for this big meet is the Sheraton Fiji Resort, Denarau Island, Nadi, Sheraton Villas Denarau Island. The Westin Denarau Island Resort and Spa, Sofitel Fiji Resort and Spa and Inter Continental Fiji Golf Resort & Spa Natadola Bay, Natadola.

The event is being hailed as the stepping stone for Fiji to host many more large conferences and also a chance to showcase Fiji to a big and influential audience around the world through live streaming.

The ground was broken in Galle Fort yesterday, to build Thaproban Galle Fort boutique hotel.

Thambapanni Leisure and Ayura Holdings Pvt. (Ltd.), would jointly invest Rs. 350 million for this project catering for high end tourists. The hotel project would consist of 10 suites designed by Philip Weerarathna, to resemble ancient Dutch architecture.

“We are keen to open this project by the end of December 2019, catering to the Winter tourism traffic,” said Managing Director Thambapanni Leisure Prashan Dissanayake. He said that despite a series of bombings during East Sunday even targeting five star hotels, they were confident that Sri Lankan Tourism sector would bounce back.

“Though many countries are issuing adverse travel warnings against Sri Lanka and investors shunning away from Sri Lanka, we have taken a bold decision to invest as we see a bright future in Sri Lanka,” Dissanayake said.

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Under the Southern Expressway Extension Project, the route from Mattala to Matara would be ready by December this year, according to Project Director K.W. Kandambi.

He said that Rs.103.3 billion would be spent for the first stage of the project and 55.2 Billion would be spent for the second and third stages.

He said that the fourth and final stage of the project was estimated to cost Rs.52.2 Billion. The project is being funded by the China Exim Bank, he said.

He said that the Southern Highway would be divided two ways from Andarawewa in Hambantota, one would be directed to Mattala, and the other will run to Hambantota, adding that the distance from Andarawewa to Mattala is six kilometers and Andarawewa to Hambantota 14 kilometers.

The Central Bank issuing a notice said the main objective of this decision was to accelerate monetary policy transmission through the financial sector, enabling licensed banks to reduce their interest rates on lending products in general and to SMEs in particular and thereby enhance credit flows to the real economy.

Accordingly, Hatton National Bank has reduced its 3-month fixed deposit rate to 9.5% from 10%. However, the bank has not yet reduced the current rate of 11%, charged for its 12-month fixed deposits.

In addition, HNB said the bank has reduced its 6-month fixed deposit rate from 10.5 to% 10.25% and also 5-year deposit rate was reduced to 13% from 15%.

Meanwhile, Sampath Bank and the Commercial Bank have also reduced their deposit rates after the Central Bank directed banks and finance companies to cut deposit rates.

Meanwhile, a senior official from National Savings Bank said that the bank is in the process of making a positive decision in this regard.

(IW)

The government has taken proactive measures to address much of its major external debt obligations for 2019 despite the possible negative impact for Sri Lankan economy, owing to recent Easter Sunday attacks in Sri Lanka.

Finance Minister Mangala Samaraweera said, that investors must understand that the fundamentals of the economy have not substantively changed negative short term impact for both FDI and portfolio investment.

Minister Samaraweera said the government has taken measures to address the challenging debt repayments in 2019. Accordingly, the external financing objectives were front loaded enabling the government to raise US$ 2.4 billion at favorable rates in March.

“Sri Lankan government has successfully met much of its major external debt obligations in 2019 including sovereign bond repayments in January amounting to US$ 1 billion and US$ 500 million in April - thus eliminating another key economic risk in the short term.”

However on the fiscal side, there will be a fiscal cost of the payments for damages and compensation, Minister said adding that this has not as yet been quantified but it is not expected to be an unmanageable cost.

The response to the attacks will also require some re-alignment of defense expenditure, he noted.

Minister Samaraweera also revealed that just prior to the attacks, the Ministry of Development Strategies and International Trade was about to finalize a US $ 1 Billion FDI agreement.

The Minister also said, the economy of the country was on a steady path when the Easter Sunday attacks occurred in Sri Lanka. He also made a request to those foreign investors who were planning to invest in Sri Lanka to go ahead with their projects rather than reversing them.

To this end, the government will provide security and other host of benefits to foreign investors, he said.

“The motive of the attackers was to destabilize the economy, but it won’t happen. We are confident that Sri Lanka economy will bounce back to normalcy soon.” he said.

Speaking further Minister Samaraweera said the government was able to stabilize the economy as inflation was brought down to 2.9% by March 2019, the trade deficit declined to its lowest level in over five years in February, accordingly the rupee has appreciated by 4.5% becoming the third best performing currency in the world in 2019.

“Our foreign reserves stand at US$ 7.7 billion, covering over four months of import requirements. Interest rates have declined by over 100 basis points this year as fiscal consolidation delivered results with a 0.6% primary budget surplus in 2018,” Minister Samaraweera said.

“Furthermore, exports and FDI reached all time high in 2018,” he said.

On Saturday April 27, despite the devastating events in Sri Lanka, the TukTuk Warriors successfully finished their 1,000 km adventure around Sri Lanka at the Suriya Resort in Waikkal, Sri Lanka.

The group had been camping in the middle of a forest in Mannar, when the unfortunate incidents of last Sunday first occurred and even though the group was shocked and saddened all participants came together with the intention of completing the challenge as planned.

This year, (Large Minority) in partnership with Connaissance de Ceylan, Sri Lankan Airlines and Sri Lanka Ministry of Tourism, organized the 14th edition of Lanka Challenge. Territory from Minuwangoda, Kalpitiya, Wilpattu, Mannar, Jaffna, Trincomalee, Sigiriya, Riverstone, Kandy and Waikkal were covered, while the participants rode approximately150 km per day over 9 days.

The self-drive Tuk-Tuk Challenge gave 53 participants in 20 tuk-tuks from 10 countries, an up close and personal experience of some of the most fascinating historical sites and views of this island, all the while raising money for local charities, environmental organizations and above all not giving into terror.

In this edition, the participants faced some unusual challenges from tasting the hottest chilies to selling fish at the local market to (probably the most comical for us locals), taking groceries to a random home in a village and getting the home dwellers to cook for them.

It was important that The Lanka Challenge event was seen through to the end especially, given the existing climate here in Sri Lanka, as the event supported local partners such as ‘the Red Cross Society of Sri Lanka’ and ‘Land Owners Restore Rainforest in Sri Lanka (LORRIS).’ A total of 10 percent of each team’s entry fee was given directly to charity partners,” one of the organisers, Julian Carnall said.

“Last year, we collected over US$ 8,000 which was used for different charitable projects including donating textbooks, musical instruments and planting more than 200 indigenous trees to offset our carbon emissions. In 2019, we raised even more funds in Sri Lanka and were able to touch many more lives.

“We are grateful to this year’s brave participants and Large Minority, who decided to stay and witness their 1,000km challenge through to its completion. A special mention must be made to the Police, Army and the Ministry of Defence along with Connaissance de Ceylan and Sri Lanka Ministry of Tourism, who went the extra mile to provide the additional infrastructure and security needed for our visitors to complete their mission post-Easter Sunday attacks.”

Some of the select senior management of corporate, tour operators and travel agents from Sri Lanka and Bahrain at the Tourism Promotion and Road Show along with Ambassador Dr. Mendis, Director of SLTPB, Madubhani Perera and Country Manager of SriLankan Airlines in Bahrain, Samantha Nagahawatta, among others at the event.  

The Sri Lanka Tourism Promotion Bureau (SLTPB) of Ministry of Tourism, in close coordination with the Embassy of Sri Lanka in the Kingdom of Bahrain, conducted a mega tourism promotional Road-Show in order to entice, encourage and woo tourists and visitors from Bahrain to Sri Lanka recently.

The mega Road-Show and Promotional event consisted of Business to Business (B2B) sessions, comprehensive and informative presentations and workshops, pro-active interaction between Sri Lankan and Bahrain basedselect corporates and tour/travel agents, Q & A session and raffle draws followed by dinner at the foremostGulf Hotel in Bahrain.

Nearly 20 corporate, travel agents, tour operators and hoteliers from Sri Lanka travelled to Bahrain to participate at this Promotional event along with officials of Sri Lanka Tourism. Well over 120 travel agents, tour operators and companies from Bahrain attended the event and interacted with the Sri Lankan travel and hospitality contingent, thus making the Tourism Promotional event highly successful, productive and result oriented.

Some of the leading companies from Sri Lanka, which participated included, Hilton Hotel Colombo, Diethelm Travel Group, Serendib Leisure Ltd, Hamoos Travels Ltd, George Steuart Travel, Jetwing Travels and Sunway Holidays, among others.

This expansive Promotional event and Road Show commenced around 4.30 in the evening, thus enabling both Sri Lankan and Bahrain companies and travel/tour companies to engage in B2B activities on a pro-active and comprehensive basis till about 7.30 in the evening.

Today, there are daily Srilankan Airlines direct flights and Gulf Air operates five direct flights a week, thus establishing easy connectivity to Bahrain and Middle Eastern tourists and travelers. AirArabia, which too was a sponsor of the Tourism Promotional event, made a presentation of touristic attributes and characteristics of Sri Lanka as well as the connectivity of AirArabia.

Ambassador Dr. Mendis, highlighted that a number of travel and tourism magazines of repute such as “Lonely Planet”, “BBC Good Foods”, “I-Escape Website of UK”, “Asian Mirror”, “British Airways”and “National Geographic” among others, have listed Sri Lanka as amongst the most sought after touristic destinations in the world on par with other highly visited destinations such as France, Spain, Hawaii and Thailand. 

Fairview Hotel Wellawatte, has received the ‘Loved by Guest’s Award for 2018/2019’ from Expedia.com. This was based on the feedback from their guests who had patronized the hotel.

Owned and operated by the Tangerine Group, the 50 roomed Fairway Hotel was opened in July 2015.

The hotel had also received the ‘Guest review award from Bookings.com from its inception’ and from Hotels.com.

The modern and economically priced hotel facilities include, Tea/coffee making facility, Free WI-FI, Satellite TV, Hair dryer, built in ironing board and iron. The hotel also offers a daily laundry service.

The hotel is owned and managed by Tangerine Group of Hotels and Mercantile Investments and Finance PLC.

Thambapanni Leisure and Ayura Holdings Pvt. (Ltd.), would jointly invest Rs. 350 million to build a boutique hotel in the iconic Galle Fort.

Sri Lanka is the only country which defeated the 30 year old war and started rapidly growing in the tourism sector and was named as the number one travel destination by Lonely Planet in 2018 and became the little paradise of millennial most favourite destination in the world”, Managing Director Thambapanni Leisure Prashan Dissanayake said.

“We are observing the strengthening of intelligence and a free hand is now being given to the Security Forces. Most importantly, we observe the maintaining of unity among political leaders and the people. This in turn, would help Sri Lanka recover from this scar created from the Easter Sunday bombings.”

“We are confident that Sri Lankan Tourism too would bounce back soon.” Thambapanni Leisure is one of the leading hotel chains which owns four hotels, Thaproban Beach House, Thambapanni Retreat, Thaproban Pavilion Resort and Spa, while Thaproban Pavilion Waves operated under three different concepts.

Ayura Holdings Pvt. (Ltd,), Adhil Fouz has been set up over twenty five years ago and is into various industrial and service aspects.

The Bourse ended the week on a negative note as the ASPI decreased by 169.29 points (or -3.02%) to close at 5,437.06 points, while the S&P SL20 Index also decreased by 109.51 points (or -4.04%) to close at 2,600.76 points.

Turnover & Market Capitalization

JKH was the highest contributor to the week’s turnover value, contributing LKR 2.17Bn or 70.44% of total turnover value. Commercial Bank followed suit, accounting for 10.25% of turnover (value of LKR 0.32Bn) while Sampath Bank contributed LKR 0.14Bn to account for 4.61% of the week’s turnover. Total turnover value amounted to LKR 3.08Bn (cf. last week’s value of LKR 0.56Bn), while daily average turnover value amounted to LKR 1.03Bn (+447.97% W-o-W) compared to last week’s average of LKR 0.19Bn. Market capitalization meanwhile, decreased by 3.01% W-o-W (or LKR52.81Bn) to LKR 2,553.09Bn cf. LKR 2,632.39Bn last week.

Liquidity (in Value Terms)

The Diversified was the highest contributor to the week’s total turnover value, accounting for 72.46% (or LKR 2.23Bn) of market turnover. Sector turnover was driven primarily by JKH, Hemas Holdings & Melstacorp which accounted for 99.43% of the sector’s total turnover. The Banks, Finance & Insurance sector meanwhile accounted for 18.16% (or LKR 0.56Bn) of the total turnover value, with turnover driven primarily by Commercial Bank, Sampath Bank & LB Finance which accounted for 86.71% of the sector turnover. The Beverage, Food & Tobacco sector was also amongst the top sectorial contributors, contributing 3.55%(or LKR 0.11) to the total turnover, with turnover driven primarily by Cargills accounting for 91.55% of the total turnover.

Liquidity (in Volume Terms)

The Diversified sector dominated the market in terms of share volume, accounting for 31.80% (or 17.54Mn shares) of total volume, with a value contribution of LKR 2.23Bn. The Banks, Finance & Insurance sector followed suit, adding 0.56Bn to total turnover volume as 16.92Mn shares were exchanged. The sector’s volume accounted for LKR 30.66% of total market turnover value. The Manufacturing sector meanwhile, contributed 5.26Mn shares (or 9.53%), amounting to LKR 0.06 Bn.

Top Gainers & Losers

Printcare PLC was the week’s highest price gainer; increasing 15.0% W-o-W from LKR30.10 to LKR34.60 while EB Creasy(+14.9% W-o-W), Sunshine Holdings (+9.6% W-o-W) and Amana Takaful (+9.6% W-o-W) were also amongst the top gainers. SMB Leasing[NV] were the week’s highest price loser; declining 33.3% W-o-W to close at LKR0.20 while Blue Diamonds[NV](-33.3% W-o-W), Beruwala Resorts (-28.6% W-o-W) and Palm Garden Hotel(-20.0% W-o-W) were also amongst the top losers over the week.

Point of View

Investor sentiment took a nosedive on the first trading day this week in the wake of a devastating terror attack on Easter Sunday. Equity markets on Tuesday fell ~204 points to close the day at a near 61/2-year low of 5,402.85 points (since Dec’12) following the attack. The shocking developments are the second major blow to equity markets in the last 6 months, the previous being the political turmoil in Oct’18. The ~3.6% drop on Tuesday in the Benchmark index was the largest daily drop since Feb’12 and was led by large-caps CTC (-6.0% W-o-W) and JKH (-5.6% W-o-W).

The ASPI however reversed gears on Wednesday and the market recorded 3-consecutive days of gains to pare down the week’s earlier losses. Gains amounting to a total of 34.5 points during the rest of the week were paltry however as the ASPI closed for the week slightly higher at 5,437.06 points (169.3 points down or -3.0% W-o-W).

Following the ~7.7% price drop in JKH on Tuesday, foreign investors sought value in the Sri Lankan blue-chip thereby pushing turnover to nearly Rs. 2.0Bn on Wednesday. Foreign investors were net buyers this week, recording the largest net inflow for the year of Rs. 1.6Bn during the week (cf. Rs. 0.1Bn). The YTD sell-off on domestic equities consequently fell to Rs. 4.3Bn (cf. Rs. 5.9Bn last week). Activity levels in the Colombo Bourse meanwhile increased considerably this week (despite trailing off on Friday) due to investor interest in JKH which accounted for ~70% of total market turnover for the week.

Hence, average daily turnover for the week increased 311% W-o-W to Rs. 0.8Bn cf. Rs. 0.2Bn last week, well above the YTD average daily turnover of Rs. 0.6Bn. Local HNI and institutional participation however remained paltry, accounting for ~14% of total market turnover for the week (cf. YTD average of ~38%). Large parcels in Commercial Bank accounted for 47% of total crossings for the week while investor interest was also focused on Cargills (24% of crossings), JKH (23% of crossings) and LB Finance (6% of crossings). Markets in the week ahead are likely to closely monitor the security situation in the country while also looking for cues in economic and political developments in the aftermath of the attack.

“Decisive policy and security measures” key to shore up confidence: IMF Following IMF’s confirmation regarding the recommencement of its EFF progam in Jan’19, the IMF stated the next tranche of the $1.5Bn facility is to be released mid-May on the basis of a positive Budget. The Group however warned that Sri Lankan authorities would need to take decisive policy measures in order to reinforce confidence despite the limited initial financial market pressure following the deadly attacks on Easter Sunday. Commenting on the current situation, the IMF added that “decisive policy and security measures” are crucial, especially for the tourism industry which accounts for 5% of GDP. The Group further stressed on the importance of shoring up market confidence given Sri Lanka’s high debt burden and refinancing requirements. The IMF meanwhile stated that the 2019 Budget strikes a “good balance” between advancing revenue-based fiscal consolidation, business friendly tax measure and capital & social spending. The Budget targets agreed with the IMF however may have to be revised given that growth is likely to slow significantly after the attack.

The Tourism industry is the 3rd largest foreign exchange earner in the country and a drastic drop in earnings could put significant pressure on the rupee amid upcoming debt repayments. The Central Bank meanwhile may likely be unable to support the currency given its low reserve balance. The Sri Lankan Government had set a target of 3.0Mn tourist arrivals (cf. 2.3 in 2018) and $5.0Bn in earnings for 2019, however local hoteliers estimate a loss of revenue amounting to $1.5Bn from the terror attacks.

The President of The Hotels Association of Sri Lanka meanwhile stated that ~20% of bookings have been affected so far.

The Sri Lanka Retail Association (SLRA) strongly condemn the Easter Sunday attacks that took place across the country which took the lives of many innocent people, injured hundreds more,causing substantial damage to the economy of the country.

“We are indeed shocked and deeply saddened by the multiple attacks that shook the entire country and disabled the Lankan economy” stated Sidath Kodikara, President of SLRA. “As an Association that comprises of members operating across the country, on behalf of all its members, SLRA pledges to extend its commitment and assistance to the Government and Security forces, enabling them to restore the country and economy to normalcy”.

SLRA was formally established with the intention being the apex body for organized retailing in the country with an ambitious vision of achieving ‘Retail Excellence’ by being the ‘voice of the Retail industry in Sri Lanka’and inclusive in its Approach.

Currently, the Association represents over 42 leading corporates including members from diverse retail sectors such as FMCG, Clothing, Fashion &Jewellery, Household & Consumer Durables, Footwear & Accessories, E-Commerce, Entertainment & QSR and Healthcare & Wellness.

“Whilst extending our deepest condolences to the victims and their families/friends, we indeed wish them strength and wisdom to tread through these difficult times” stated Murali Prakash, Vice President SLRA. “Adversities needs greater commitment and courage to build bridges of trust and goodwill. Extremism is beyond any particular religion, race, caste, creed or any other group and the light of friendship and understanding will enable us to defeat eviland propel the country to return back to be a safe destination that it was in the past”.

Sri Lanka’s Retail sector accounts for approx. 34% of the country’s’ GDP, 14% of employment and over 250 Mn. Footfall per annum, thus contributing positively towards the National Economy of the country. In the years 2016 and 2017 consequently, Sri Lanka was ranked 12th in the Global Retail Development Index (GDRI) among 30 Countries for Potential in Retail Investment and growth.

“In Sri Lanka, we have always found unity in diversity” stated Hussain Sadiq, Founder President, SLRA. “It is this unity and diversity that has enabled us to overcome adversity, spread peace and bring prosperity to this little nation. As members of SLRA, we will continue in our quest to restore the country, by continuing to contribute positively towards the economy ensuring Sri Lanka gains back its lost glory and is put back on the world map for the right reasons”.

The Sri Lanka Retailers’ Association (SLRA) established in 2015. Subsequently it was incorporated in June 2016 as a Company Limited by Guarantee registered under the provisions of the Companies Act No 7 of 2007 and under the auspice of the Ministry of Industry and Commerce.

Vehicle registrations rebounded on most categories in March recording a total of 35,150 units up from 29,837 units the previous month due to the higher number of working days in March compared to February.

Total motor cars recorded 2,961 units in March up from 2,347 units in February and significantly down from 6,207 units 12 months ago. Brand new cars recorded 422 units in March up from 434 units in February and significantly down from 1,069 units 12 months ago. Small cars (< 1,000cc) accounted for 79.3% of units. Financing share was 50.7% in line with the normal monthly average.

Preowned cars recorded 2,539 units in March up from 1,913 units in February but significantly down from 5,138 units 12 months ago. Premium branded cars recorded 160 units in March up from 111 units in February and significantly down from 222 units 12 months ago. The brand-new segment recorded 63 units of which Mercedes Benz accounted for 50 units (C-class 41 units, E-class 8, etc.). In the pre-owned segment 97 units were recorded of which Mercedes Benz was 27 units (C-class 25 units), BMW was 34 units (3-series 19, 7-series 9) and Audi 36 units (A1 20, A3 9).

SUVs recorded 488 units in March down from 534 units in February and 538 units 12 months ago. Brand new accounted for 240 units and preowned 248 units.

Hybrids recorded 1,032 units in March up from 953 units in February but significantly down from 3,341 units 12 months ago.

Motor cars accounted for 947 units followed by SUVs with 76 units and vans with zero units. In the car category Suzuki accounted for the bulk of the units recording 812 units.

Three-wheelers recorded 2,192 units in March significantly up from 1,341 units in Feb and 1,515 units 12 months ago. The registration figure is the highest recorded over the past 24 months. Bajaj remains the category leader commanding a 95% share. Financing share was 67.5% in line with the normal monthly average.

Two-wheelers recorded 26,851 units in March up from 23,165 units in Feb but down from 30,381 units recorded 12 months ago. Scooters accounted for 17,196 (64%) in March up from 15,120 units the previous month.

J B Securities (Pvt)Ltd

Any negative impact on tourism caused by Easter Sunday terrorist attacks could be minimized by the security establishment by promptly identifying and eliminating the radicalized elements and communicating the measures effectively, Economic Adviser, Ministry of Finance Deshal De Mel told a press conference held in Colombo on Friday.

De Mel however said that the immediate economic impact of the attacks will be felt by the tourism sector and typically countries that suffer isolated ISIS style attacks see tourism recovering (to high growth) within one to two years (Belgium, France, Spain, and Tunisia).

De Mel said, “We are entering the off-season for Sri Lanka. Any negative impact on tourism can be minimized by the security establishment promptly identifying and eliminating the radicalized elements and communicating the measures effectively”

Meanwhile sources said, ‘the tourism industry which resulted in external earnings of US$ 4.4 billion in 2018 is projected to reach US$ 5 billion in 2019. If there is a 30% reduction in tourist arrivals in the 3 month period May-July, the impact would be around US$ 350 million. A 15% reduction in full-year arrivals would amount to a US$ 750 million impact.’

Prime Minister Ranil Wickremesinghe in a press conference on April 23 said that resort hotels were not targeted during the attacks and were safe. Indrajit Coomaraswamy speaking to Bloomberg the same day said “The tourism sector over the 30 years (civil war) has gained a great deal of experience and expertise on how to keep people safe. Those drills and processes will be switched on again.”

In terms of addressing liquidity shortages, press notes stated: ‘In addition, the government is engaging with stakeholders to help bring down market interest rates by a further 200 basis points in the near term. We will engage with the Chartered Accountants to provide temporary flexibility in applications of IFRS 9. We will engage with the Central Bank to provide some flexibility in the application of Basel 3.’

Finance Minister Mangala Samaraweera will lead the Sri Lankan delegation at the 52nd Asian Development Bank (ADB) Annual Meeting to be held in Fiji from May 1 to 5.

With over 3,000 delegates expected, the Annual Meeting would be a premier forum to discuss economic and development issues affecting Asia and the Pacific. Participants will get the opportunity to interact with ADB senior management, policy makers, private sector leaders, civil society, and the region’s leading development experts, among others.

The Annual Meeting is the year’s largest gathering of the organization and an annual opportunity for ADB Governors to engage in focused discussion on development issues and challenges facing Asia and the Pacific. The theme of the 2019 Annual Meeting, which also marks the first time a Pacific island country will host the event, is ‘Prosperity Through Unity.’

Among the issues that will be discussed during the event in Nadi are sustainable tourism and its potential to boost national and regional development efforts; the role of private sector financing for disaster risk management and climate resilience in Asia and the Pacific; importance of concerted efforts to improve ocean health; ways to respond to heightening global economic uncertainty; the role of digital technologies for financial inclusion; and new tools for sustainable infrastructure development; among others.

Since 1966, ADB has been a strong partner in the development of Sri Lanka, signing loans, grants, and technical assistance totaling $9.7 billion, and making ADB the country’s largest source of multilateral development assistance.

ADB has also planned to commit an average of $800 million annually in sovereign loans to Sir Lanka during 2019–2022. Over the period, the bank’s operations will focus on strengthening drivers of growth by diversifying Sri Lanka’s economy and enhancing productivity, and improving the quality of growth by promoting inclusiveness.

ADB is also committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion.

Established in 1966, it is owned by 68 members wherein 49 are from the region.

The Central Bank of Sri Lanka has observed high interest rates charged on lending products and excessively high interest rates offered on deposit products by licensed commercial banks and licensed specialized banks (licensed banks) and Non-Bank Financial Institutions (NBFIs) despite the measures taken to bring down overnight interest rates and enhance market liquidity through the reduction of Statutory Reserve Ratio (SRR).

Especially in the context of well contained inflation and inflation expectations, Sri Lanka’s interest rates in real terms also have been found to be excessive in comparison to other regional economies.

Accordingly, the Central Bank has requested licensed banks and NBFIs to reduce interest rates on deposits to accelerate monetary policy transmission through the financial sector, enabling licensed banks to reduce their interest rates on lending products in general, and to SMEs in particular, and thereby enhance credit flows to the real economy.

Interest rates on Savings and other deposits with tenures less than 3 months offered by licensed banks and NBFIs will be linked to the Standing Deposit Facility Rate (SDFR) whilst longer tenures will be linked to the 364 day Treasury bill rate. Licensed banks and NBFIs may offer an additional interest rate up to 50 basis points for savings deposits of children under the age

of 18 years, and for Fixed Deposits (FD) of senior citizens with tenure of 01 year or more. Debt instruments issued by NBFIs will also be subject to maximum interest rates. In spite of these measures, interest rates on deposits are expected to remain competitive, providing a substantial real return to depositors.

Through the above measures, that would reduce excessive cost of funds borne by the financial sector, the Central Bank expects the lending rates to reduce by around 200 basis points to SMEs in the near term. The reduction in SRR by 250 basis points in two steps in November 2018 and March 2019 has already reduced cost of funds and is expected to result in a narrower margin between deposit and lending rates.

The Central Bank will closely monitor the behaviour of interest rates of licensed banks and NBFIs on both deposits and loans and take further measures as appropriate in future.

Chartered Institute of Personnel Management (CIPM) Sri Lanka President-Dhammika Fernando and the Governing Council of CIPM Sri Lanka in a statement said that they were shocked and deeply saddened by the events that took place in the country on Easter Sunday targeting innocent civilians.

CIPM Sri Lanka wishes to extend its heartfelt condolences to the families of the deceased and a quick recovery for those injured during the attacks.

“We have lived together in harmony for centuries as one Nation, and this dastardly act by a few extremist elements should not be a reason to affect this longstanding mutual trust and co-existence between our communities. We urge everyone concerned to act with restraint and responsibility in the days and months to come” said Dhammika Fernando-President, CIPM Sri Lanka.

CIPM Sri Lanka is confident that the authorities will do justice to the Nation by apprehending the perpetrators of this heinous crime and ensuring that similar incidents do not happen in the future.

CIPM Sri Lanka as a responsible national body is ready to help the national effort to bring back normalcy to the country if we are called upon any time.

Sri Lanka Telecom (SLT), the national ICT solutions provider entered into a partnership with Asiainfo International Pte. Ltd., a leading IT solution and service integrator in the global communication industry, to introduce digital products and solutions to the Sri Lankan market.

The agreement would facilitate SLT to develop viable digital solutions to consumer, SME and enterprise segments in the country and would make a significant contribution towards Sri Lanka’s journey of digital transformation.

The agreement was signed by CEO/SLT, Kiththi Perera and Vice President and Regional Head/Asiainfo Michael Chan at the SLT premises recently.

The entire globe is being swept by digital revolution today. Sri Lanka is no exception, with Sri Lanka’s ICT industry being at the forefront of this transformation. With digitalization comes numerous benefits including greater efficiency and productivity, increased GDP as well as improved standards of living for all.

To keep abreast of the digital revolution, Sri Lanka has embarked on a journey of digitalization to make Sri Lanka the Digital Hub of the Indian Ocean by 2025.

Accordingly, SLT, the company that has been vested with the responsibility of being the backbone of Sri Lanka’s communication industry as the national ICT solutions provider and national backbone network services provider, has also embarked on a transformational journey with its Vision 2022: to become the country’s most preferred digital lifestyle provider by the year 2022.

It is in this wake that the company had entered into this key agreement with Asiainfo to gain from the latter’s years of experience and expertise in IT innovation as well as integrating industrial solutions to facilitate the provision of digital products and solutions to the Sri Lankan market.

Commenting with regards to the partnership, SLT CEO Kiththi Perera said, “Digital is the future. The SLT Group remains passionate and committed to driving the digital revolution of Sri Lanka, and transforming lives into digital lifestyles. This partnership with Asia Info International, is one of the key steps that we are taking towards this vision. We are confident that we would be able to successfully leverage on Asiainfo’s expertise and knowledge in the areas of IT Innovation and service integration that would help us to effectively build a Digital Partner Eco System, so that we could steer our digital transformation journey and introduce more digital products and solutions rapidly in the coming months.”

“The digital revolution is totally changing life as we know it would, even as we speak. It calls for a total transformation of business models,” commented Michael Chan, Vice President and Regional Head of Asiainfo International. “We are excited to partner with SLT, the pioneering ICT company in Sri Lanka, with its long and impressive history that spans over 160 years. We thank SLT for the confidence placed on us. We remain confident that our expertise would help add value to SLT and facilitate the company to drive more digital services through its platforms that would help the company to successfully guide Sri Lanka into the new digital era.”

About Asiainfo International Pte Ltd.

Asiainfo International Pte. Ltd., is a high-tech Singapore based enterprise, leading IT solution and service integrator in the global communication industry and possessing expertise in innovating and integrating industrial solutions.

Asiainfo’s product portfolio offers leading telecom business support system (BSS) solutions by incorporating advanced technologies for cloud computing, big data and artificial intelligence that empower global communication service providers to market cutting-edge services in the areas of 5G, IoT, Edge computing etc. AsiaInfo’s industry experience which spans over 25years, has provided tremendous support and empowered many telecommunication service providers in China as well as several renowned international operators.

The explosions on Easter Sunday morning, one of which was at the Taprobane restaurant at the Cinnamon Grand Hotel, Colombo, claimed precious lives and injured many.

This senseless act took away from us and also injured our team members and our valued guests. Our heartfelt sympathies go out to all those affected at Cinnamon Grand and in the attacks in other locations a release from the hotel said.

The courageous and speedy action by the team at Cinnamon Grand, in assisting with emergency medical evacuations for those affected, in the face of shock and profound grief was truly remarkable and led to saving many lives. This extraordinary attitude and response at a time of strife, including the securing of the hotel, gave comfort to our guests, with most of the guests at Cinnamon Grand opting to remain at the hotel.

The hotel has remained operational throughout for in-house guests. We are humbled by these actions and salute our team at Cinnamon Grand and all those who have assisted us in numerous ways including hospital staff, the police, security forces and so many others, too numerous to mention.

The attacks on Easter Sunday will have a negative impact on the tourism industry and other sectors of the economy. While we will play our part to help the industry and country achieve a speedy recovery, we call upon the relevant authorities to take urgent steps to prevent a recurrence of these heinous acts.

In the aftermath of this tragedy, security measures have been enhanced and additional safety measures introduced, in consultation with the authorities and security experts, to ensure the safety of our guests and team members in all our Cinnamon City and Resort Hotels and all our places of business.

Cinnamon Grand, Colombo has commenced taking new bookings from 22nd April 2019 and all its Restaurants - excluding those in the affected area on the lower ground floor at the rear of the hotel, will open to the public from 30th April 2019. All prior bookings for banquets and rooms continue as planned.

‘Dialog Foundation’, a charitable trust under the aegis of Dialog Axiata PLC, invites all Sri Lankans to help victims of the tragic events on 21st April, 2019, (Easter Blasts) that claimed the lives of 253 people and injured hundreds.

Dialog pledged to double every donation up to Rs.100 Million and utilise these funds towards long term educational support for more than 500 children and psychosocial rehabilitation for over 250 families whose lives were devastatingly impacted by these tragic incidents last week.

Dialog Foundation will carry out this initiative in partnership with Sarvodaya and World Vision Lanka, while PricewaterhouseCoopers, Sri Lanka will function as the independent auditors overseeing the disbursement of funds and the actions of this initiative.

Donations from customers can be made via SMS by typing DON and SMS to 7700 (to donate Rs.100. Multiple donations can be made), through any of the donation options listed in https://www.dialog.lk/donate/, by redeeming Star Points by dialing #141*5*7#, or by making donations via the Genie app, or eZ cash app.

Contributions can also be made to 0766421421 number or by dialing #7700# with any amount for Postpaid and Prepaid.

“The Dialog family is shocked and saddened by the unfortunate events on 21st April. We hope that this initiative via Dialog Foundation together with World Vision Lanka and Sarvodaya will assist and bring some relief to those devastated by these attacks, by way of educational scholarships and psychosocial support, and help unite the nation with love and compassion”, said, Supun Weerasinghe, Group Chief Executive of Dialog Axiata PLC, at the MOU signing with World Vision Lanka and Sarvodaya.

The Trade Finance Association of Bankers at its 22nd Annual General Meeting held on February 27, at the Rainbow Room, Grand Oriental Hotel, elected its new Council for the year 2019/2020.

Trade Finance Association of Bankers has from its inception, been actively engaged in imparting knowledge and the required skills to its members by conducting seminars, lectures, discussions, workshops, on a wide range of topics relating to International Trade.

Educating the Sri Lankan entrepreneurs who are engaged in International Trade is also an objective of the Association in order to assist them to keep abreast of the changes that are taking place in the Industry.

The Membership comprises from almost all commercial banks operating in Sri Lanka. A number of senior bankers play major roles in conducting its activities towards the achievement of the goals and objectives of the Association.

The Association is backed by an Advisory Committee comprising of four senior bankers and former TFAB Presidents A. Kathiravelupillai (Inaugural President), Michael Peiris, Nilam Jumat and Thushy David, all having extensive experience in the International Banking business.

The following persons were elected as office-bearers of the Trade Finance Association of Bankers for the year 2019/2020 during the annual general meeting.

President - A.S.M.W. Kumarasiri, Assistant General Manager - Trade Finance, Peoples Bank. Senior Vice President - Lawrian Somanader Chief Manager - Exports, Commercial Bank of Ceylon PLC. Vice President - Janath Ilangantileke, Assistant General Manager – Trade & Financial Institutions , Hatton National Bank PLC. Secretary General - Sanjeewa Jayasooriya, Standard Chartered Bank Limited. Treasurer - Shyam De Silva ,Hatton National Bank PLC. Assistant Secretary - K.R. Naguleswaran, DFCC Bank PLC. Assistant Treasurer - Senaka De Silva, National Development Bank PLC. Immediate Past President - Susantha Fernando, Seylan Bank PLC.

Other council members comprise of:

Gaya Manamperi (formerly at Sampath Bank) , Manjula Gunawardana (National Development Bank PLC), , Neil Handapangoda (Citi Bank N.A), Kasun Muthukuda (Nations Trust Bank PLC), Indika Liyanage (Pan Asia Banking Corporation PLC), Kanchana De Silva (Union Bank of Colombo PLC), Susantha Weerasinghe (People’s Bank), Tharinda Amarasinghe ( Sampath Bank PLC), Niranjan Dabare (Deutsche Bank AG), K. K. Susantha (Bank of Ceylon), Rochelle Fernando (Bank of Ceylon), Imthiyaz Rajab (The Hong Kong and Shanghai Banking Corporation Ltd), Saroja Pathirana (Sampath Bank PLC).

Helping school children acquire valuable soft skills the SLIIT Business School held ‘Soft Skills + 2019’ for the 07th consecutive year at SLIIT Malabe Campus.

The objective of organizing an event of this manner is to uplift the soft skills of school children and cultivate essential skills such as team work, problem solving, leadership skills and creative thinking.

A total of 850 students from 112 schools island - wide participated in the preliminary rounds. These events took place between 27th February to 8th March 2019, and were held in several major cities island - wide, includingMalabe, Jaffna, Matara, Kurunegala, Bandarawela, Kandy and Rathnapura.

Ananda College, Colombo emerged the champions, while Kattankudy Central College, Batticaloa was adjudged the 1st runner-up and Mahajana College, Jaffna was placed 2nd runner-up. Attractive awards and prizes were presented to the winning schools.

These winners were selected for the final round from amongstforty five teams consisting of thirty nine schools. Students participating faced-off in two qualifying rounds showcasing their knowledgeanswering questions on international trade and general economics.

Ensuring the programme was unique and stimulating for all those participating, SLIIT engineered the preliminary rounds into two segments; a quiz competition with questions on brands, Sri Lankan businesses and global commerce was designed to enhance their knowledge and generate interest in these topics. Teams who scored the highest marks were selected for the final round. Additionally, a soft skills workshop on emotional intelligence was held for these students helping them to maximize their development providing them guidance and confidence necessary to transform into successful students.

Explaining the importance in spearheading this programme, Prof. Samantha Thelijjagoda, Dean, SLIIT Business School said, “While many students are focused on developing expertise in their chosen field they need guidance to enhance their soft skills which are critical in the workplace. The ‘Soft Skills+ 2019’programme provides participating students with the ideal platform to sharpen their soft skills and boost their personality development.”

ATHE Global Campus (PGC) presented their new programme, the American Degree completion programme at the American Alumni Association (AAA) function recently.

American University Programme (AUP) is a 3 year Bachelor of Business Administration (BBA) completely delivered in Sri Lanka in collaboration with Cleary University (USA). Students can enroll with GCE O/L results and may transfer to Cleary University in the USA at any time during their programme to finish their degree in the USA.

Cleary University is a Non-Profit specialized business university founded in 1883. It is regionally accredited in the USA and recognized by Sri Lanka’s UGC. The U.S. Department of Education College Scorecard ranks Cleary University No. 6 for graduate salaries in its region and it was recently ranked number for ROI (Return on Investment) in Michigan. Cleary University is excellent value and its graduates enjoy high employability in the US and abroad. Students in the AUP program receive personalized Career Coaching from the American Director and are well prepared for great jobs locally and regionally.

This is the only program in South Asia that offers internationalized career coaching. Successful students have the option of attending their graduation ceremony in the USA or receive their degree in Sri Lanka. Further, graduates are offered the chance to enroll for a unique MBA at Cleary University in the USA which includes curricular practical training, which requires MBA students to gain career experience as part of their curriculum.

The AUP is conducted at the PGC at No. 7, Rajaguru Sri Subuthi mawatha Colombo 6.

Sri Lanka tea exports in March 2019 totalled 26.4 Mkgs showing a gain of .3Mkgs in comparison with 26.1 Mkgs for March 2018.

Tea bags and packeted tea have shown a growth year on year whilst bulk tea showed a decline compared to the corresponding month of 2018. Total revenue realized for March 2019 of Rs. 22.45 billion too has shown a growth of Rs.9 billion in comparison of Rs. 21.56 billion of March 2018 resulting, in the FOB value for March 2019 realizing Rs. 850.48, an increase of Rs. 25.22 compared to Rs. 825.26 of March 2018, according to Forbs and Walker tea market report.

Data integrity is critical for the successful implementation of Business Continuity Plans (BCPs) and risk management strategies at any business entity as failure in any part of the organizations’ business processes can translate to a loss of revenue.

In terms of national and regional data, there is a big requirement for us to understand the data credibility in a timely manner, for any business entity to map out BCPs, risk management strategies to mitigate the disaster risks, loss of revenues and minimize time to full recovery. Eventually, it will help create resilient businesses and economies, said Azam Barkeer Markar, Assistant Vice President Business Development and Head of Sustainability at Aitken Spence.

He expressed these views speaking at the Asia Pacific International Symposium held in Colombo recently, under the theme ‘Partnerships A Catalyst in Saving Lives and Businesses.’

“The government does a lot of work in collaboration with various local and international organizations in terms of disaster mitigation and prevention. I’m sure the government also realizes that there is a room for improvement in terms of proliferating that data and making it available on time in a transparent and credible manner,” he said. Noting that globally business entities are as big as countries, he said in Sri Lanka, business entities especially in the private sector are quite large and their impact is felt across value chains and millions of livelihoods.

“A lot of businesses are stepping up their efforts to address sustainable business challenges. In Sri Lanka, there are many companies who would look at managing their environmental and social impacts. It is part of their businesses now to look at risk management as something that is integral as HR , marketing or finance and we see many companies looking at that in a central way,” he said.

He said further that private sector represents millions of employees, much more than the government sector employees.

“The disruption to the private sector means, the disruption to the entire Sri Lankan economy. In other words, our livelihoods will be lost and people will have difficulties when it comes to earning money,” he said. In this context, he stressed that the government has to make sure that the private sector is got involved, right from the beginning in terms of planning, implementation of disaster mitigation and prevention initiatives, spearheaded by the government.

The demand for Strike, Riot, Civil Commotion and Terrorism insurance in Sri Lanka has suddenly increased according to several local insurance companies.

This is after last Sundays Easter bombing which had killed over 350 people including foreigners.

An official from Ceylinco Insurance said that they have suddenly seen a surge of requests for ‘add-ons’ for this cover especially from the corporate sector. “Companies want to add the terrorism cover to their existing insurance covers,” he said.

Meanwhile Sri Lanka Insurance also endorsed this and said that they are expecting to see a new demand for terrorism insurance. This scenario is also seen in the Motor Insurance segment as well as Insurance agents are calling vehicle owners and asking them to get insulated against Civil Commotion and Terrorism insurance with an additional fee. The response is increasing. (SS)

The visa on arrival programme which was to be rolled out on May 1 has been put on hold in response to security concerns.

Visa to enter Sri Lanka was to be granted to citizens of 39 countries on arrival in the country from May 1 on gratis basis as per a Cabinet decision earlier this month. However owing to the current security situation following the terror attacks on Easter Sunday, the government has decided to put the programme on hold until further notice. “Although arrangements were in place to issue visa on arrival for citizens of 39 countries we have now decided to hold it for the time being in consideration of the current security situation. Investigations have revealed foreign links to the attacks and we don’t want this facility to be abused,” noted Minister of Tourism, Wildlife and Christian Religious Affairs, John Amaratunga.

The visa on arrival pilot programme was part of a larger initiative to increase tourist arrivals to the country during the six month off-season period from May to October.

Three Chinese airlines, China Eastern, China Southern and Air China flying to Sri Lanka have curtailed their flights with effect from May.

China Eastern Airlines G.S.A Dart Aviation Director and General Manger Eustace Silva said that they will cancel their Sri Lankan summer schedule from May 1 until further notice. “This means that we will be stopping the four weekly flights operating from Colombo to Shanghai from May 1. However the four weekly Colombo Beijing and Kunming flights would continue until further notice.” Meanwhile officials from Hemas Aviation Ltd, GSA China Southern airlines and Jetwing Air GSA for Air China said that they too would reduce their flights to Colombo.

China has issued a travel advisory to those travelling to Sri Lanka owing to the explosions which rocked the country last Sunday. Accordingly, Chinese citizens have been cautioned to refrain from visiting the island nation until the situation has been restored to normalcy. The Chinese government has already instructed Chinese citizens in Sri Lanka to move away from crowded places.

“This has led to a lot of cancellations and the airlines too have to reduce our frequencies,” local airline officials said.

The vulnerability of the Sri Lankan economy to global and domestic disturbances became increasingly visible in 2018, with a modest expansion in real economic activity amidst a low inflation environment during the year.

Real GDP growth was recorded at 3.2 per cent in 2018, compared to 3.4 per cent in the previous year, the CBSL Annual Report stated.

This growth was largely supported by services activities that expanded by 4.7 per cent and the recovery in agriculture activities, which recorded a growth of 4.8 per cent. Industry activities slowed down significantly to 0.9 per cent during the year, mainly as a result of the contraction in construction.

According to the expenditure approach, both consumption and investment expenditure supported growth. Investment as a percentage of GDP stood at 28.6 per cent in 2018 compared to 28.8 per cent in the previous year, while the savings-investment gap widened during the year indicating increased dependence on external resources to fill the shortfall. The total size of the Sri Lankan economy was estimated at US dollars 88.9 billion, while the per capita GDP was recorded at US dollars 4,102 in 2018, which was marginally lower than in the previous year. Amidst the moderate growth in economic activity, a marginal increase in the unemployment rate and a decline in the labour force participation rate were observed during the year.

External sector

The external sector of the economy was volatile during the year due to both global and domestic factors. Globally, monetary policy normalisation, particularly in the United States of America (USA), resulted in global financial conditions tightening, thus causing capital outflows from emerging market economies and increased pressure on exchange rates of twin deficit economies, in particular. Sri Lanka also experienced these headwinds, particularly from mid-April 2018, which were exacerbated following the political uncertainties and the downgrade of the country’s Sovereign rating in the fourth quarter of the year. Domestically, the trade deficit surpassed US dollars 10 billion for the first time in history with higher growth in import expenditure outpacing the growth in export earnings, which were at a record level in nominal terms.

Services and exports

Although services exports are estimated to have grown substantially, the deficit in the merchandise trade balance, stagnant workers’ remittances and rising foreign interest payments resulted in a widened current account deficit of 3.2 per cent of GDP during the year. The financial account benefitted from increased foreign direct investment (FDI) inflows which recorded its historically highest level in 2018, as well as borrowing from abroad, particularly through the issuance of International Sovereign Bonds (ISBs).The combined result of these developments was a deficit in the overall balance in the balance of payments (BOP).

Market based exchange rate policy

In 2018, the Central Bank followed a market based exchange rate policy and allowed a sharper depreciation of the rupee, but intervened in the domestic foreign exchange market, particularly at times when large capital outflows and undue speculation caused excessive volatility in the market. In order to address the widening trade deficit, the Central Bank and the government implemented a series of measures to curb non-essential imports by increasing tariffs, imposing margin requirements, tightening loan-to-value ratios on selected types of lending, and suspending the issuance of letters of credit (LCs)on concessionary permits for vehicle imports. In response to these measures and the global financial markets becoming less unfavourable, the pressure on the BOP and the exchange rate subsided during late 2018 and early 2019, and the Sri Lankan rupee appreciated against major currencies during the first quarter of 2019, thus correcting the overshooting of the exchange rate observed in the previous year to some extent. The resumption of discussions and the achievement of staff level agreement with the International Monetary Fund (IMF) on the programme under the Extended Fund Facility (EFF) arrangement in February 2019 also helped improve investor sentiments.

In spite of the sharp depreciation of the rupee and the introduction of the pricing formula for domestic petroleum price adjustments, headline and core inflation remained well anchored in low single digit levels during the year, supported by proactive monetary policy measures, improved domestic supply conditions, and also due to subdued aggregate demand conditions. Headline inflation fluctuated largely in line with the price movements of the food category, where food prices declined mostly during 2018 owing to favourable weather conditions that prevailed during the year.

Inflation is expected to remain well within mid single digit levels in the medium term, particularly under the envisaged flexible inflation targeting (FIT) regime.

Subdued inflation and inflation expectations and lower than potential growth in real economic activity prompted the Central Bank to signal an end to the monetary tightening cycle in April2018 by reducing the Standing Lending Facility Rate (SLFR) by 25 basis points. Thereafter, the Central Bank maintained a neutral monetary policy stance throughout the year, in view of the continued pressure on the external sector amidst the subpar performance in the domestic economy. Nevertheless, the large and persistent liquidity deficit in the domestic money market, particularly since September 2018, compelled the Central Bank to inject liquidity on a permanent basis in November 2018, by way of reducing the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of commercial banks by 1.50percentage points. However, at the same time, to neutralise the impact of the SRR reduction and maintain its neutral policy stance, the Central Bank increased the Standing Deposit Facility Rate(SDFR) by 75 basis points and SLFR by 50 basis points, further narrowing the policy rate corridor to100 basis points. Accordingly, by end 2018, SDFR and SLFR stood at 8.00 per cent and 9.00 per cent, respectively.

As the shortage in rupee liquidity persisted into early 2019, the Central Bank reduced the SRR by a further 1.00 percentage point to 5.00per cent effective March 1, 2019. Meanwhile, the year-on-year growth of broad money (M2b) decelerated in 2018 driven by the contraction in net foreign assets (NFA) of the banking sector. However, within broad money growth, the overall expansion of credit granted to the private sector by commercial banks in 2018 was higher than expected, in spite of tight liquidity conditions and high nominal and real market interest rates.

In the meantime, fiscal operations during2018 demonstrated some improvements witha higher primary surplus and a lower budget deficit, notwithstanding the decline in revenue mobilisation.

Government revenue

The government revenue declined to 13.3 per cent of GDP in 2018 while expenditure and net lending declined, particularly due to lower public investment, which was affected by political tensions that prevailed towards the end of the year resulting in delays in the implementation of budgetary operations. Reduced capital expenditure also contributed to a dampening of economic activity.

The current account deficit increased in 2018 as a percentage of GDP reflecting dissavings of the government. The primary balance, which mirrors the difference between the government revenue and non-interest expenditure, registered a surplus of 0.6 per cent of GDP in 2018 compared to the surplus of 0.02 per cent of GDP in 2017. The budget deficit declined to 5.3 per cent of GDP in2018 from 5.5 per cent of GDP in 2017 as a result of the substantial reduction in capital expenditure, but a deviation from the target level of 4.8 per cent of GDP envisaged in the Budget 2018 was also observed. The outstanding central government debt increased to 82.9 per cent of GDP at end2018 from 76.9 per cent at end 2017, which is attributed to the depreciation of the rupee that affected the rupee value of foreign debt, relatively low nominal GDP and higher net borrowings during the period. Rollover risks can be contained through the implementation of the provisions of the Active Liability Management Act (ALMA) and the introduction of the Medium Term Debt Management Strategy (MTDS), which would help manage the government’s debt obligations in the period ahead, with the support of continued commitment towards revenue based fiscal consolidation.

Financial sector

The financial sector continued to expand in 2018, supported by the moderate but stable growth of the banking sector. However, the profitability of the banking sector declined during the year mainly due to some deterioration in the asset quality, a rise in operating costs and higher taxes. The Central Bank strengthened the prudential policy measures, including the implementation of BaselIII requirements and the adoption of Sri Lanka Accounting Standard - SLFRS 9 during the year. Meanwhile, the Licensed Finance Companies (LFCs) and Specialised Leasing Companies(SLCs) sector also recorded moderate growth amidst a challenging environment, and the Central Bank took measures to resolve distressed finance companies and to address the lingering concerns in the sector. The Colombo Stock Exchange (CSE)recorded yet another year of poor performance due to adverse developments on domestic and global fronts, which affected investor sentiments.

Amidst efforts to maintain the country’s macroeconomic stability over the past several years, the postponement of much needed structural reforms has moved the Sri Lankan economy to a modest growth path. Sri Lanka’s graduation to the middle income status almost a decade ago required far reaching policy reforms to move towards higher income status by avoiding the so-called middle income trap. However, delays in addressing barriers to growth and introducing growth enhancing reforms in the areas of export promotion, attracting FDI, reducing budget deficits and debt levels, reforming factor markets, strengthening public administration, and ensuring the rule of law have largely contributed to Sri Lanka’s economic stagnation, while peer economies have progressed rapidly as a result of growth supporting reforms.

Therefore, for Sri Lanka to succeed as a higher income economy and improve the wellbeing of its people, it is essential that the root causes for the continued low economic growth are addressed by expediting the required structural reforms with a focus on improving productivity and efficiency of the economy. In this background, it is vital that all stakeholders make concerted efforts to expedite the reform agenda that is already in place, which includes the National Export Strategy (NES) and New Trade Policy (NTP) to improve earnings from merchandise and service exports, the fiscal consolidation programme to improve fiscal discipline and debt sustainability, and the Central Bank’s move towards adopting FIT by 2020 to ensure sustained price stability.

The timely implementation of these reforms will not only improve Sri Lanka’s economic outlook and its prospects as a highly sought after destination for investments given the country’s strategic location in the Indian Ocean, but also would be essential to uplift the overall standard of living and quality of life of its people. The country can no longer afford to postpone such reforms, if Sri Lanka is to progress along a high and sustainable growth trajectory over the medium term and catch up with countries that were behind Sri Lanka several decades ago.

TOKYO -- Bank of Japan Governor Haruhiko Kuroda said Thursday the central bank will likely continue its ultra-easy monetary policy for well over another year, signaling it remains far from its price goal.

In a statement after a two-day policy meeting, the BOJ unexpectedly changed its forward guidance to say it will keep extremely low interest rates “at least through around spring 2020.”

The announcement sets a date on the duration of its current policy, having previously said it would continue for an “extended period.”

Kuroda told reporters the move was intended to “clarify” its position of continuing monetary easing for the foreseeable future.

“It means that we will keep extremely low interest rates for quite a long time,” he said. “It will be longer [than spring 2020], but not shorter.”

The announcement signals the BOJ’s concerns over Japan’s economy. Kuroda said there is a “large downside risk” in its inflation outlook, and “uncertainty remains” over whether global economic growth will pick up later this year. Domestically, a planned consumption tax hike in October risks cooling consumer spending.

In its quarterly outlook report, also published on Thursday, the BOJ projected it would not reach its 2% inflation target for at least three more years.

Kuroda came to office in 2013 with a promise to hit the goal in about two years. Still far below 2%, the central bank last year dropped its time frame for the target, saying it would keep loose policy in place until the objective is met consistently.

The report said consumer inflation is projected to reach 1.6% in the fiscal year starting April 2021. Prices are forecast to rise 1.4% in fiscal 2020, down from the previous forecast of 1.5%. For the current fiscal year, inflation is expected to be 1.1%.

The BOJ decided to keep its short-term interest rates at minus 0.1% and reiterated it would strive to keep 10-year Japanese government bond yields around zero.

The central bank kept the pace of increase of its JGB holdings at 80 trillion yen ($715 billion) a year and that of exchange-traded funds at 6 trillion yen a year. The decision to stand pat was approved by a vote of 7-2.

Thursday’s tweaks in forward guidance had little impact on financial markets, as most economists do not expect a rate rise in the next year.

The Japanese yen was hovering at around 112 yen against the U.S. dollar. The benchmark Nikkei 225 stock index closed about 0.5% higher.

(asia.nikkei.com)

Huawei 2019 first quarter results showed that the company generated US $ 26 billion in revenue which is an increase of 39% year-on-year.

The company’s net profit margin in Q1 2019 was about 8%, slightly higher than the same period last year.

Huawei maintained its focus on ICT infrastructure and smart devices, and continued to boost the efficiency and quality of its operations, which has helped contribute to its solid performance in Q1 2019.

2019 will be a year of large-scale deployment of 5G around the world, meaning that Huawei’s Carrier Business Group has unprecedented opportunities for growth. By the end of March 2019, Huawei had signed 40 commercial contracts for 5G with leading global carriers, and had shipped more than 70,000 5G base stations to markets around the world.

Also in Q1 2019, Huawei’s Enterprise Business Group launched its Digital Platform and its new “Huawei Inside” strategy. Huawei is committed to building the foundations of a digital China and the core of a digital world by delivering the Digital Platform along with ubiquitous connectivity and pervasive intelligence. Huawei’s Enterprise Business Group also deployed the world’s first 5G-enabled Wi-Fi 6 access point. As of the end of Q1 2019, Huawei had shipped more Wi-Fi 6 products than any other company worldwide.