Economic Capsule June 2010


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June 2010 - Sri Lanka Economic Capsule
by the Commercial Bank of Sri Lanka

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Economic Capsule June 2010

  1. 1. Research & Development Unit June 2010 CAPSULE ECONOMIC
  2. 2. <ul><li>Commercial Bank Sri Lanka’s Best Bank Again !!! </li></ul><ul><li>Commercial Bank Offers Cash Prizes to Customers Using Internet Banking </li></ul><ul><li>Commercial Bank Joins with DIMO to Offer Special Leasing Packages </li></ul><ul><li>Commercial Bank Branch Openings </li></ul><ul><li>CBSL Cuts Policy Rates </li></ul><ul><li>IMF Approves USD 407.8 Mn Disbursement </li></ul><ul><li>Sri Lanka: Economic Performance - 1Q, 2010 </li></ul><ul><li>Key Highlights of the 2010 Budget </li></ul><ul><li>Industries, Tourism, and Trade Sectors to Benefit from Significant Import Tariff Concessions </li></ul><ul><li>Recent Price Changes </li></ul><ul><li>Inflation - June, 2010 </li></ul><ul><li>Tourism - June, 2010 </li></ul><ul><li>Expansions in Leisure Industry </li></ul><ul><li>Snippets </li></ul>C O N T E N T S ECONOMIC CAPSULE – JUNE 2010 Financial Sector News Economy & Business News
  3. 3. Back to Contents NEWS FINANCIAL SECTOR
  4. 4. <ul><li>Commercial Bank has been adjudged Sri Lanka’s ‘Best Bank’ by Hong Kong based ‘FinanceAsia,’ one of the most eminent financial publications in the Region for the 2 nd consecutive year. </li></ul><ul><li>The publication’s latest rankings are based on financial performance for the 2008/9 period and the evaluation includes criteria such as capital adequacy, liquidity & cost income ratios, pre and post tax profits, provisioning for possible losses, return on equity, strong network of branches, agents & correspondents, among many others. </li></ul><ul><li>FinanceAsia also considered the Bank’s total Assets, Loans & Deposits portfolio, vision and long term strategy, as well as its market position versus its nearest competitor. </li></ul>Back to Contents Commercial Bank Sri Lanka’s Best Bank Again !!! Research & Development Unit
  5. 5. Commercial Bank Offers Cash Prizes to Customers Using Internet Banking Research & Development Unit <ul><li>Lucky users of Commercial Bank’s Internet Banking service are to be rewarded with cash prizes worth Rs 800,000 over the next eight months in a promotion launched by the Bank to stimulate higher use of the facility. </li></ul><ul><li>Accordingly, all personal customers of Commercial Bank who pay bills above the value of Rs 500 via Internet Banking will be eligible to enter a draw at which the Bank will reward 20 lucky winners each month with cash prizes of Rs 5000 each. </li></ul><ul><li>The promotion will run till end February 2011, and the money will be credited to the customers’ respective Commercial Bank accounts. </li></ul>Commercial Bank Joins with DIMO to Offer Special Leasing Packages Back to Contents <ul><li>Commercial Bank recently teamed up with Diesel & Motor Engineering PLC (DIMO) to offer attractive leasing options for TATA Commercial vehicles. </li></ul><ul><li>Under the agreement, DIMO will provide substantial discounts to Commercial Bank customers to lease TATA vehicles and the Bank will provide competitive rental for leasing facilities. The vehicles covered under this special scheme include TATA trucks and buses. </li></ul><ul><li>A special insurance cover through Commercial Insurance Brokers, an associate of Commercial Bank has also been introduced for customers who lease vehicles through the Bank. This cover requires a low insurance premium and policyholders will be eligible for accident cover worth Rs 1.5 million each. </li></ul>
  6. 6. Research & Development Unit 177 th @ Nawam Mawatha 178 th @ Kilinochchi   Back to Contents 179 th @ Bokundara   180 th @ Achchuvely   181 st @ Thirunelvely   Commercial Bank Branch Openings          
  7. 7. Back to Contents CBSL Cuts Policy Rates Research & Development Unit <ul><li>The Monetary Board, at its meeting held on 09/07/10 has decided to reduce the Repurchase rate and the Reverse Repurchase rate by 25 basis points each with immediate effect.  </li></ul><ul><li>Accordingly, the Repurchase (Repo) rate and the Reverse Repurchase (RRepo) rate of the Central Bank would be 7.25 % and 9.50 % , respectively.  </li></ul><ul><li>Policy Rate Changes 2009/10 </li></ul>Repo Rate: Interest rates applicable for repurchase transactions of the Central Bank with commercial banks on an over night basis under the standing facility. Reverse Repo Rate: Interest rates applicable for reverse repurchase transactions of the Central Bank with commercial banks on an over night basis under the standing facility. Date of Change Repo(%) RRepo(%) 11.02.2009 10.250 11.750 25.02.2009 10.250 11.750 22.04.2009 9.000 11.750 21.05.2009 9.000 11.500 16.06.2009 8.500 11.000 11.09.2009 8.000 10.500 18.11.2009 7.500 9.750 As at 10 July 2010 7.25 9.500
  8. 8. Back to Contents NEWS ECONOMIC & BUSINESS
  9. 9. <ul><li>SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. </li></ul>Back to Contents <ul><li>The International Monetary Fund (IMF) has completed the second and third reviews of Sri Lanka's economic performance under a program supported by a Stand-By Arrangement (SBA)  </li></ul><ul><li>The completion of the reviews enables the immediate disbursement of an amount equivalent to *SDR 275.6 mn (about USD 407.8 mn), bringing total disbursements under the arrangement to an amount equivalent to SDR 689.0 mn (about USD 1,019.4 mn). </li></ul><ul><li>The Executive Board also approved a request by the Sri Lankan authorities for a year’s extension of the SBA and accordingly a rephasing of the future disbursements into seven equal amounts of SDR 137.8 mn (about USD 203.9 mn) in light of the recent delay in the program. </li></ul><ul><li>The SBA was approved on July 24, 2009 for an amount equivalent to SDR 1,653.6 mn (about USD 2,446.7 mn) or 400 % of Sri Lanka's quota.   </li></ul>Research & Development Unit Back to Contents IMF Approves USD 407.8 Mn Disbursement
  10. 10. <ul><li>Sector Growth </li></ul>Research & Development Unit <ul><li>Sector Contribution to GDP (%) </li></ul>Services – 6.7% Agriculture – 9.0% <ul><li>Sub sectors which registered relative significant growth </li></ul><ul><li>Tea - 47.2% </li></ul><ul><li>Rubber - 11.7% </li></ul><ul><li>Minor Export Corps - 118.2 % </li></ul><ul><li>Construction - 8.5% </li></ul><ul><li>Hotels and Restaurants - 61% </li></ul><ul><li>Transport and Communication - 10.4% . </li></ul>Back to Contents Sri Lanka: Economic Performance - 1Q, 2010 Sri Lanka’s economy expanded by 7.1 % in 1Q, 2010 compared with the corresponding period a year ago helped by strong growth in tea, rubber, export crops and services. Industry – 6.9%
  11. 11. The Budget for 2010 is a transitional budget reflecting expenditure under the previously functioning ministries adjusted to the new ministries and is a stepping stone in making provision to prepare the work plans towards the 2011 budget, which is scheduled to be presented to the Parliament in November, 2010. Back to Contents Research & Development Unit Summary Of the Budget - 2010 Cont… Key Highlights of the 2010 Budget   ( Rs. Bn.) 2009 2010 Total Revenue and Grants 725.57 840.99 Total Revenue 699.64 817.79 Tax Revenue 618.93 729.01 Non Tax Revenue 80.71 88.77 Grants 25.92 23.20 Total Expenditure 1,201.93 1,279.82 Recurrent 879.58 928.34 Public Investment 330.45 361.48 Other (8.10) (10.0) Revenue Surplus(+)/Deficit (-) (179.93) (110.55) Budget Deficit (476.36) (438.84) Total Financing 476.36 438.84 Total Foreign Financing 83.89 123.50 Net Foreign Borrowings 26.48 93.50 Gross Concessional Foreign Borrowings 147.03 172.50 Debt Repayments 110.29 71.00 Foreign Commercial 57.41 30.00 Total Domestic Financing 392.48 315.34 Non‐bank Borrowings 196.53 235.84 Foreign Investments in T Bills / Bonds 146.92 34.50 Bank Borrowings 49.03 45.00 Revenue/GDP (%) 14.5 14.9 Expenditure/GDP (%) 24.9 23.3 Revenue Surplus (+)/ Deficit (-)/ GDP (%) (3.7) (2.0) Budget Deficit/ GDP (%) (Excluding Grants) (9.9) (8.0)
  12. 12. Grants Rs.23.20bn Other (Rs.10bn) Back to Contents Research & Development Unit Cont… Total Revenue & Grants Rs. 840.99 bn Total Expenditure Rs. 1,279.82 bn Budget Deficit Rs. (438.84) bn Revenue Composition – Rs. 840.99 Taxes on Goods & Services Rs.423.44bn Income Tax Rs.160.34bn Taxes on External Trade Rs.145.23bn Non Tax Revenue Rs.88.77bn Expenditure Composition – Rs. 1,279.82 Public Investment Rs.361.48bn Other Goods & Services Rs.91.54bn Subsidies & Transfers Rs. 202.89bn Interest Rs. 337.21bn Salaries & Wages Rs.296.71bn Key Highlights of the 2010 Budget (Cont…)  
  13. 13. <ul><li>Taxation </li></ul><ul><li>No changes to existing tax system have been introduced. </li></ul><ul><li>The Budget does not contain any new tax revenue proposals or any tax concessions. </li></ul><ul><li>It is proposed to implement the Taxation Commission’s recommendations, which are expected to be finalized in August, 2010. </li></ul><ul><li>Proposed Tax Reforms : </li></ul><ul><li>Abolition of multiple taxes </li></ul><ul><li>Move to simple, broad based, low tax regime </li></ul><ul><li>Reduction of tax rates on personal & corporate income </li></ul><ul><li>Reduction of taxes on banks & financial institutions </li></ul><ul><li>Address and manage the dichotomy between the BOI & non – BOI regimes </li></ul><ul><li>Phasing out ad hoc & unproductive tax concessions offered by BOI & Inland Revenue Act </li></ul><ul><li>Measures Adopted to Simplify the Tax System </li></ul><ul><li>Simplified four band customs duty structure (0, 5, 15, 30) </li></ul><ul><li>Rationalization of import duty on motor vehicles </li></ul><ul><li>Customs surcharge, cess abolished, significant reduction of excise duty </li></ul><ul><li>90% reduction of import duty on certain consumer durables - 6 levies abolished - PAL & NBT retained </li></ul>Back to Contents Research & Development Unit Cont… Key Highlights of the 2010 Budget (Cont…)  
  14. 14. <ul><li>Focus of Proposed Regulatory Reforms </li></ul><ul><li>Banking & Financial Laws </li></ul><ul><li>Securities & Exchange Commission Law </li></ul><ul><li>Administrative procedures of all laws </li></ul><ul><li>Opportunities for greater private sector participation </li></ul><ul><li>Focus of Proposed Public Sector Reforms </li></ul><ul><li>Modernization of strategic public sector enterprises </li></ul><ul><li>All State Enterprises to be self sufficient </li></ul><ul><li>Implementation of administrative changes for simplification / efficiency </li></ul><ul><li>Remuneration / pension structure </li></ul><ul><li>Textiles & Garment Industry </li></ul><ul><li>New incentive structure in next budget to; </li></ul><ul><li>be competitive </li></ul><ul><li>penetrate new markets </li></ul><ul><li>Key Growth Sectors </li></ul><ul><li>Agriculture, IT & business processing, Ports & aviation, Oil exploration & related services, Gem & jewellery, Furniture, Ceramics, Tourism, Livestock, Construction, Value added exports of tea, rubber & cinnamon, Professional services, Sanitary ware </li></ul><ul><li>Trade Policy for Development </li></ul><ul><li>Raw materials & intermediate inputs to be available at duty free prices </li></ul><ul><li>High duty on importation of goods that could be produced in Sri Lanka - milk powder, wheat, grain, sugar </li></ul><ul><li>New taxes on exports in raw forms </li></ul>Back to Contents Research & Development Unit Cont… Key Highlights of the 2010 Budget (Cont…)  
  15. 15. <ul><li>Summary of Key Benefits to the Public </li></ul><ul><li>Provision of Rs.7,363 mn for the free text books, nutritional food, school uniforms, subsidized transport and scholarships to school children. </li></ul><ul><li>Rs.2,500 mn have been provided in support of nutritional improvement of expectant mothers, lactating mothers and infants. </li></ul><ul><li>Rs.7,500 mn is provided for displaced people living in welfare centers. </li></ul><ul><li>Rs.9,300 mn have been provided to the low income families benefitting under the “Samurdhi” programme. </li></ul><ul><li>Retirement benefits to public servants and allowances for disabled soldiers have been allocated for Rs 102,500 mn. </li></ul><ul><li>Rs.35,000 mn have been provided in respect of fertilizer subsidies. </li></ul><ul><li>Rs.13,300 mn have been provided for free health. </li></ul><ul><li>Rs.6,650 mn have been provided to subsidize Sri Lanka Railways and Ceylon Transport Board. </li></ul>Back to Contents Research & Development Unit Cont… Key Highlights of the 2010 Budget (Cont…)  
  16. 16. <ul><li>The Budget estimates for 2010 provide approximately Rs. 30 bn for subsidies & transfers and Rs. 35 bn for welfare payments. Public investment is projected at Rs.361.5 bn of which: </li></ul><ul><li>Rs.83.4 bn is provided for development of highways; </li></ul><ul><li>Rs.30.5 bn for development of port and aviation sector; </li></ul><ul><li>Rs.25 bn for water sector development; </li></ul><ul><li>Rs.40.8 bn for education and health; </li></ul><ul><li>Rs.12 bn for continued work on irrigation; and </li></ul><ul><li>Rs.16 bn for rural sector infrastructure development. </li></ul>Back to Contents Research & Development Unit Key Highlights of the 2010 Budget (Cont…)  
  17. 17. The multiplicity of custom duty structure was simplified with a four band duty structure of 0,5,15 and 30 % while the 15 % surcharge was totally removed. Back to Contents 2.5 % import duty applicable on machinery and raw material has been removed. Import duty, VAT, excise duty and cesses imposed on most of the electronics items have been removed and brought under an effective tax rate of below 10 %. Implications of import duty reductions   <ul><li>Motor vehicle sales which had dried up are expected to pick up aggressively over the second half of 2010 boosting government revenue on the positive side and widening the trade deficit through an increase in vehicle imports and enhanced fuel consumption, on the negative side. </li></ul><ul><li>  </li></ul><ul><li>Leasing businesses , for which motor vehicle leases account for as much as 90% of business volume, are likely to face some short term stress in its assets as the value of collateral on leased vehicles drop. However an increase in new business volumes would more than compensate for this in the medium term. </li></ul><ul><li>  </li></ul>Research & Development Unit Cont… Industries, Tourism, and Trade Sectors to Benefit from Significant Import Tariff Concessions      
  18. 18. Back to Contents Implications of import duty reductions (cont…)   <ul><li>The general insurance business would benefit from the pickup in new vehicle registrations, although the sector would be affected in the short-term by lower motor premiums on insurance renewals as a result of the decline in motor vehicle prices. </li></ul><ul><li>Banks would also benefit from increased trade finance activity while an expected increase in imports could create moderate volatility on exchange rates. </li></ul><ul><li>  </li></ul><ul><li>The duty reduction in raw materials & machinery is expected to encourage industrial exports and be an incentive for development of new industrial exports while also encouraging industries with higher value addition. </li></ul>Research & Development Unit Tariff changes in motor vehicles (%)   Source: Sri Lanka Customs   Industries, Tourism, and Trade Sectors to Benefit from Significant Import Tariff Concessions (cont…)       Item Total Old Tariff Total New Tariff Cars (Petrol) < 1000 CC 187 94 1000 CC <1600 CC 217 119 1600 CC <2000 CC 290 150 2000 CC <3000 CC 299 156 3000 CC 299 192 Auto Trishaws Diesel 68 40 Petrol 47 40 Vans 10<13 Persons (Petrol) 299 192 10<13 Persons (Diesel) 524 192 Motor Cycles 68 61
  19. 19. Back to Contents Research & Development Unit Recent Price Changes     Commodity  Increased by (Rs.) Wheat flour 10.50 ( per Kg) 450g loaf of bread 4.00 Packet of 400g powdered milk 19.00 Packet of 1 kg powdered milk 48.00 Local & foreign liquor 50 ( per litre) Cigarette 1.00 Commodity  Decreased by (Rs.) Shell Gas (12.5 kg) 117.00 Laugfs Gas (12.5 kg) 85.00
  20. 20. Back to Contents Research & Development Unit <ul><li>The rate of inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2002=100), computed by the Department of Census and Statistics, had decreased to 4.8 % in June from 5.3 % in May 2010 on a point-to-point basis. </li></ul><ul><li>However, the annual average rate of inflation had increased marginally to 3.9 % in June from 3.6 % in May 2010. </li></ul><ul><li>Tourist arrivals to Sri Lanka had risen by 47.9 % to 44,730 in June 2010 from a year earlier with strong growth recorded from South Asia, Western Europe and North America. </li></ul><ul><li>Jan-June, 2010 arrivals were up by 48.4 % to record 278,652 compared to the corresponding period in 2009. </li></ul><ul><li>According to Mr. S Kalaiselvam, Director General of Sri Lanka Tourism, Sri Lanka expects to achieve 600,000 tourist arrivals in 2010. </li></ul>Inflation - June, 2010     Tourism - June, 2010     
  21. 21. Research & Development Unit <ul><li>Softlogic Holdings Limited , has announced its plans of moving into the leisure sector by commencing a 150-room business hotel offering one of its kind hotel/shopping experience in Colombo. </li></ul><ul><li>Amaya Leisure, is to invest USD 100 mn in the next four years in four new hotels in an aggressive expansion to meet growing post-war demand in the island. </li></ul><ul><li>Amaya Sands, in Wadduwa will be a 120 room hotel costing USD 15 mn . </li></ul><ul><li>In Negombo, the firm is planning a USD 30 mn, 200 room hotel on a 14-acre land </li></ul><ul><li>In Kalpitiya, it is planning a 30-room chalet type property estimated to cost USD 15 mn on a 24 acre plot of land. The group is hoping to start on it by February 2011. </li></ul><ul><li>Amaya is also planning a USD 20 mn 200 room resort on a 10-acre land it owns in Mirissa, near Matara . </li></ul><ul><li>Amaya Leisure would also spend USD 10 mn expanding existing properties </li></ul><ul><li>Aitken Spence is planning to invest USD 78 mn in to the leisure sector with new hotels in the south western coast being started first. </li></ul><ul><li>Continental Hotel, the oldest 5-star rated property in Colombo is to spend USD 60 mn to expand and refurbish to cater to an expected influx of tourists after the end of a war. </li></ul><ul><li>Sri Lanka has also approved two resorts by foreign investors in a new tourism development area in Kalpitiya on the north-west coast that opened up for investment with the end of a war. Qube Lanka Leisure, owned by an Indian firm, will build 200 beach villas with an investment of USD 16.8 mn while Sun Resorts, a Maldivian firm, will build 150 water bungalows at a cost of Rs.1.2 bn. </li></ul><ul><li>Kandy Hotels Company plans to refurbish Hotel Suisse at a cost of Rs. 100-150 mn by November 2010 which will be in time for the island’s main tourist season during the northern hemisphere winter. The firm’s Queens Hotel too would be refurbished in the 2011-12 financial year with details to be announced later. </li></ul>Back to Contents <ul><li>Jetwing has firmed up a Rs. 3.6 bn modernization and new development programme whilst Hemas hopes to invest USD 100 mn in the medium to-long-term to effectively harness the post-war tourism rebound and John Keells Holdings has announced a Rs. 4bn Board-approved initiative, part of which, it has already invested and is on-going. </li></ul>Expansions in Leisure Industry    
  22. 22. SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - - - - - - Back to Contents SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPE TS - SNIPPETS - - - - <ul><li>SLDB Issue Oversubscribed </li></ul><ul><li>Amount Offered: USD 275 mn. </li></ul><ul><li>Total bids received: USD 289.1 mn. </li></ul><ul><li>Amount accepted by CBSL on behalf of government: USD 102 mn of 3 year bonds and USD 176 mn of 2 year bonds at the market determined rate of USD 6 month LIBOR + 395 bps (weighted average margin) and 6 month LIBOR + 380 bps (weighted average margin), respectively. (USD 6 month LIBOR rate - 0.75% as at 21.06.10) </li></ul><ul><li>  </li></ul><ul><li>ODEL IPO Oversubscribed </li></ul><ul><li>ODEL’s initial public offering of Rs 250.5 mn has been oversubscribed by 63 times. </li></ul><ul><li>The issue is made up of 16.7 mn shares at Rs 15 per share. 1.2 mn shares are to be allocated to employees, 3.0 mn shares to retail buyers and 12.5 mn shares to high-net-worth and institutional investors. </li></ul><ul><li>Present CBSL Governor Re-appointed </li></ul><ul><li>Sri Lanka's Central Bank governor Mr. Nivard Cabraal has been re-appointed for a further term of six-years, with effect from 1st July, 2010. </li></ul><ul><li>Sri Lanka to Appoint Rating Advisor </li></ul><ul><li>Sri Lanka is to appoint an international investment bank as a 'rating advisor' ahead of a US dollar denominated sovereign bond to be sold later in 2010. </li></ul><ul><li>Sri Lanka will be approaching the rating agencies with the selected advisor. The rating advisor is to be chosen from among six international banks. </li></ul><ul><li>Sri Lanka has a rating of 'B' from Standard & Poor's, five levels below investment grade, and a 'B+' rating from Fitch. </li></ul><ul><li>According to the Central Bank Governor, Sri Lanka wants to see the country's rating pushed up to investment grade by 2013. </li></ul><ul><li>Sri Lanka Stock Exchange Revises Milanka Index </li></ul><ul><li>Sri Lanka's Milanka Price Index (MPI) has changed from July 01 for the second half of 2010, by adding three financial, two manufacturing and a healthcare group stocks. </li></ul><ul><li>Merchant Bank of Sri Lanka (MBSL), Janashakthi Insurance, Pan Asia Banking Corporation (PABC), Chevron Lubricants, ACL Cables and Nawaloka Hospitals would be the latest additions on the MPI list for the second half of 2010. </li></ul><ul><li>Companies that have been dropped from the MPI are Aitken Spence, C W Mackie, Ceylinco Insurance, Ceylon Tobacco, Hotel Services (Ceylon) and Tokyo Cement. </li></ul><ul><li>The Milanka index, one of the two main indices on the Colombo Stock Exchange, tracks the 25 most liquid stocks weighted on market capitalisation during the previous year. </li></ul><ul><li>Private Sector Credit Demand Up </li></ul><ul><li>After posting y-o-y declines since April, 2009, latest data from the CBSL show that private sector credit demand had entered positive territory with a 0.1 % y-o-y gain recorded for March, 2010 and a 1.7% y-o-y gain for April, 2010. </li></ul><ul><li>Low interest rates and single digit rates of inflation combined with political stability and peace provide a conducive setting for further gains in private sector credit demand in the coming months. </li></ul>Cont…
  23. 23. <ul><li>After Nine Years, Sri Lanka Free of Lloyds’ War Risk Tag </li></ul><ul><li>Sri Lanka has been finally deleted from the list of ‘War and Terrorism Risk’ countries by the London-based influential maritime insurance industry. </li></ul><ul><li>The Joint War Committee (JWC) of the Lloyds’ Market Association and International Underwriting Association of London has informed the world that Sri Lanka has been “deleted” from the list of listed areas for ‘Hull War, Strikes, Terrorism and Related Perils’. </li></ul><ul><li>Prior to de-listing, Sri Lanka, with a score of 2.6, was classified as ‘high risk’. </li></ul><ul><li>Flexible Yuan </li></ul><ul><li>China announced plans on 19/06/10 to make the Yuan more flexible, breaking its strict peg to the US dollar. </li></ul><ul><li>On 22/06/10, for the first time since the pledge, its central bank raised the centre point of the currency's official trading band. </li></ul><ul><li>The change in policy will make it easier for Asian countries that compete with China for exports to allow their own currencies to rise. </li></ul><ul><li>The country has come under increasing international pressure - particularly from the US and India - to change its currency policy. The US has complained that China is artificially keeping the value of the Yuan low to help its exporters at the expense of foreign competitors. </li></ul><ul><li>Meanwhile commodity prices rallied on expectations that China’s already high demand for raw materials would further increase. </li></ul>SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - - - - - - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - SNIPPETS - - - - - Back to Contents <ul><li>Port Expansion </li></ul><ul><li>Oluvil Port Project - According to the Sri Lanka Ports Authority, the first stage (out of the total 2 stages) of the Oluvil Port Project is expected to be completed by September, 2010. </li></ul><ul><li>The project which commenced on 1 July 2008 is funded by the Ministry of Foreign Affairs of Denmark (DANIDA). The total project cost of stage 1 of the project is Euro 46.1 mn. </li></ul><ul><li>Hambantota Port - The second stage of the Hambantota Port is to commence in November, 2010 with the completion of the first stage of the port project. </li></ul><ul><li>Stage two of the project, which will also be funded by China will include further excavation of the site for the harbor basin and dredging of the approach channel as well as building berths for ships. </li></ul>
  24. 24. The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the information, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in consequence of using such information for whatever purpose. The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC Jeffrey David Sachs is an American economist and Director of the Earth Institute at Columbia University. One of the youngest economics professors in the history of Harvard University, Sachs became renowned for implementing economic shock therapy throughout the developing world and in Eastern Europe, and subsequently for his work on the challenges of economic development, environmental sustainability, poverty alleviation, debt cancellation, and globalization. The truth of good economic doctoring is to know the general principles, and to really know the specifics to understand the context, and also, to understand that an economy may need some tender loving care, not just the so-called hard truths, if it's going to get by. Jeffrey Sachs