The document is a newsletter from the Research & Development Unit of Commercial Bank of Ceylon containing summaries of economic and business news from Sri Lanka and internationally. Some of the key points from the Sri Lankan section include that business confidence slumped in March, inflation increased, private sector credit growth decreased, vehicle and tea output fell. Tourism arrivals also dropped in March. Internationally, the newsletter notes that Bill Gates topped Forbes' 2017 rich list of billionaires which saw a record increase in the number of billionaires to over 2,000 total. The newsletter provides concise summaries of recent economic indicators, business and industry news both domestic and international.

1. Economic Capsule
March 2017
Research & Development Unit
243nd Issue

2. C O N T E N T S
ECONOMY & BUSINESS 
 Business confidence slumps in March
 Central Bank raises policy rates
 Sri Lanka Economy Grows by 4.4% in 2016
 CCPI & NCPI increase
 Private sector credit growth decreases
 Sri Lanka Vehicle registrations falls further
 Sri Lanka February tea output falls
 Shangri-La hikes Sri Lankan investment by 60% to USD 800 mn
 Sino Great Wall Engineering to build Dusit Thani Sri Lanka beach property
 Hilton, Melwa in hotel deal
 Sri Lanka tourist arrivals drops in March
 Sri Lanka to build 100MW floating solar plant in reservoir
INTERNATIONAL
BANKING & FINANCE
 Commercial Bank named Best Bank in Sri Lanka for 18th time
 Asiamoney affirms Commercial Bank ‘Best Domestic Bank’ & ‘Best Digital Bank’ in Sri Lanka
 Commercial Bank wins international award for Best Sustainable Strategies
 Commercial Bank’s NFC Payment Machines at Dialog Outlets
 Bill Gates tops Forbes' 2017 rich list

3. Condominium Industry
in Sri Lanka
October, 2014
Research & Development Unit
Banking & Finance

4. Commercial Bank named Best Bank in Sri Lanka for 18th time
< Research & Development Unit >
Commercial Bank of Ceylon has been named Sri Lanka’s Best Bank
in 2017 by USA-based Global Finance.
• This is the 18th year that Commercial Bank has won this prestigious award as
Sri Lanka’s Best Bank, in the 24th edition of Global Finance’s Best Bank awards
programme.
• Objective criteria considered included growth in assets, profitability, geographic
reach, strategic relationships, new business development and innovation in
products. Subjective criteria included the opinions of equity analysts, credit rating
analysts, banking consultants and others involved in the industry.
Asiamoney affirms Commercial Bank ‘Best Domestic Bank’ & ‘Best Digital Bank’
in Sri Lanka
Commercial Bank of Ceylon has annexed two more prestigious
international awards, being adjudged the ‘Best Domestic Bank’ and the
‘Best Digital Bank’ in Sri Lanka by Asiamoney, considered the most
authoritative voice for the banking industry in the Asia Pacific region.

5. Commercial Bank’s NFC Payment Machines at Dialog Outlets
< Research & Development Unit >
Commercial Bank of Ceylon has entered into an agreement with
Dialog Axiata to install its NFC (Near Field Communications)-enabled
point-of-sale machines at key Dialog outlets island wide.
• Commercial Bank customers visiting Dialog outlets can simply tap
their Visa or Mastercard credit cards on the machines to carry out
payments, and cardholders no longer need to hand over their
cards to outlet staff.
Commercial Bank wins international award for Best
Sustainable Strategies
A strategic approach to sustainable business has won the Commercial
Bank of Ceylon a prestigious award at the Global Sustainability and
CSR Excellence and Leadership Awards in Mumbai, India.
• Commercial Bank received the award for ‘Developing Sustainable
Strategies’ at these awards , and was the only Sri Lankan corporate
entity to be honoured at the event.

6. Condominium Industry
in Sri Lanka
October, 2014
Research & Development Unit
Economy & Business

7. Business confidence slumps in March
< Research & Development Unit >
The April edition of LMD reports that the LMD-Nielsen
Business Confidence Index (BCI) is at its lowest point in
nearly four years.
• The unique index shed 15 basis points in March to
register 112 – a 44-month low, the leading business
magazine notes.
• Nielsen’s Managing Director Sharang Pant points out in
LMD that “negative sentiments have crept back in,”
which is brought into focus by the share of respondents
who believe that the economy will be worse off in 2017.
• The private sector claims that the country’s investment climate remains unattractive and is looking
for policy consistency. Pressure on the balance of payments, a rising oil bill amidst the drought,
issues with loan repayments and fears of currency depreciation are causing more anxiety.
• The exclusive monthly survey reveals that 36% of respondents feel that the state of the economy
will ‘get worse’ in 2017.
Source: DailyFT

8. Central Bank raises policy rates
< Research & Development Unit >
• Sri Lanka's central bank raised interest rates by 25 basis points for the
first time in eight months, saying tighter policy was a precaution
against a build-up of inflationary pressures.
• The central bank warned of the possible acceleration of demand side
inflationary pressures through excessive monetary and credit
expansion.
• It last raised its policy rates in July 2016, keeping rates steady for
months despite pressure on the fragile rupee and high credit growth.
Previous As at 24.03.2017
SDF Rate (%) 7.00  7.25
SLF Rate (%) 8.50  8.75

9. Sri Lanka Economy Grows by 4.4% in 2016
< Research & Development Unit >
Composition of the GDP - 2016Growth rates of the three main
economic activities - 2016
 Sri Lanka experienced inclement weather during the year 2016.
 Industrial activities have recorded a significant growth rate.
 The ‘Construction’ activity, which accounts for a considerably higher share of the industrial
activities recorded a 14.9% growth.
GDP growth
4.4 %
cont…
Source: DCS

10. Sri Lanka Economy Grows by 4.4% in 2016 (cont...)
< Research & Development Unit >
Annual growth rates of Agricultural activities - 2016
Annual growth rates of Service activities - 2016
Annual growth rates of Industrial activities - 2016
 4.2%
 6.7 %
 4.2 %
Source: DCS

11. CCPI & NCPI increase
< Research & Development Unit >
• Headline inflation, as measured by the
year-on-year change in the Colombo
Consumers’ Price Index , accelerated to
7.3 % in March 2017 from 6.8 % in January
2017.
• A similar trend was observed in the
National Consumer Price Index based
headline inflation, which rose to 8.2 %
(y-o-y) in February 2017 from 6.5 %
January 2017.
• Year-on-year core inflation based on both
CCPI and NCPI also remained high.
• According to CBSL, the recent acceleration
in inflation is largely due to the impact of
prevailing drought conditions and
adjustments to the tax structure.

12. Private sector credit growth decreases
< Research & Development Unit >
• The year-on-year growth of private
sector credit decelerated further to
20.9 % in January 2017 from
21.9 % at end 2016.
• Meanwhile, credit to the public
sector increased noticeably,
causing year-on-year broad money
(M2b) growth to remain high at
17.7 % in January 2017, although
this was a deceleration compared
to 18.4 % in December 2016.

13. Sri Lanka Vehicle registrations falls further
< Research & Development Unit >
• Total motor car registrations recorded 2,148 units down in February 2017 from 3,079 units the
previous month.
• In the brand new segment registrations were 786 units down in February 2017 from 1,149 units the
previous month and 1,070 units 12-months ago.
• Pre-owned motor car registrations recorded 1,362 units down in February 2017 from a relatively
high 1,930 units the previous month and also down from 1,831 units 12-months ago.
Source: JB Securities

14. Sri Lanka February tea output falls
< Research & Development Unit >
• Sri Lanka's tea output fell 19.7% in February compared
to a year earlier due to the drought during the past six
months and the lack of fertilizer use, according to the
Sri Lanka Tea Board.
• Production in the first two months of the year also
dropped 17.1 % compared to the same period last year.
“Mainly it is the drought. There is no way of applying
fertilizer with the drought”- Acting Director General – Sri Lanka Tea Board
• Sri Lanka is facing its worst drought in 40 years, hurting
the island nation's economy. Tea is Sri Lanka's top
agricultural export and a major foreign currency earner.
• Sri Lanka's tea output hit a seven-year low in 2016,
falling 11.1 % in its third straight year of declining
production due to adverse weather.
 19.7%
TEA OUTPUT – FEB 17

15. Shangri-La hikes Sri Lankan investment by
60% to USD 800 mn
• The international hotel brand had originally planned
to invest USD 500 mn in a 541-room hotel and 390
apartments in Colombo and another 300-room resort
in the island nation's southern district of Hambantota.
• According to head of sales and marketing at
Shangri-La Hotels Lanka (Private) Limited, the
company has changed the design of the apartments
due to demand for larger units.
• The Colombo hotel was expected to be completed by
2017, later than an initial target of 2015, while the
apartments, shopping complex and conference
facilities would be finished by 2018.
Hong Kong-based Shangri-La Asia has increased its investment in Sri Lankan
properties by 60% to USD 800 mn, in order to meet demand for
larger-than-planned apartments in Colombo.
Source: Reuters
< Research & Development Unit >

16. • Dusit Thani Sri Lanka announced it would commence the
first phase of the construction of the 8.5-acre apartment
project in Balapitiya in March with an investment of over
USD 200 mn.
• The construction contract for the beachfront project in
Balapitiya was awarded to Sino Great Wall International
Engineering Ltd of China, a listed company on the
Shenzhen Stock Exchange.
Sino Great Wall Engineering to build
Dusit Thani Sri Lanka beach property
• “The first phase of Beachfront Balapitiya, which consists
of two high-rise buildings of 14 and 20 floors comprising
162 apartments, will commence construction on 20
March to be completed within 700 days.
• According to Indola Group Director Wijesinghe, “we hope
to commence the second stage within the next year,”. The
proposed Dusit Thani Sri Lanka Beachfront Balapitiya has
been sold already, stamping investor confidence for the
project as well as for the real estate and leisure sector of
the island.
“Investors receive a freehold title, guaranteed
returns of 6% net for five years per annum, paid
quarterly in US dollars, the potential of
approximately 30% in capital gains in two years
and no ongoing costs. Additionally, apartment
owners can avail themselves of a 21-day free stay
per annum. - Indola Group Director
Source: Dusit Thani Sri Lanka
< Research & Development Unit >

17. Hilton, Melwa in hotel deal
• Hilton signed six management agreements with Melwa
Hotels and Resorts Private Limited to manage three Hilton
Hotels and Resorts and three ‘Double Tree by Hilton’
properties in Sri Lanka.
• Melwa, a steel manufacturer which has diversified into the
tourism sector, will invest USD 100 mn to construct the six
resorts.
• The project will be completed between 2019 and 2025 and
will see the addition of 795 star class rooms to the islands
hotel stock.
• The six new-build properties, including three resorts
scheduled to opened between 2019 and 2025 are:
< Research & Development Unit >
 Hilton Kandy Resort – a 150-room five star hotel
 Hilton Yala Resort and Spa – a 42-room luxury boutique hotel
 Hilton Kosgoda Resort – a 200-room seafront five star hotel
 DoubleTree by Hilton Nuwara-Eliya – a 97-room luxury corporate hotel
 DoubleTree by Hilton Katunayaka Int. Airport – a 200-room five star transit hotel
 DoubleTree by Hilton Negombo – a 106-room luxury seafront hotel

18. Sri Lanka tourist arrivals drops in March
< Research & Development Unit >
• Sri Lanka's tourist arrivals rose 3.4 % to 604,953 in the
first quarter of March 2017 despite a daytime closure of
the main airport but arrivals in March decreased by 2.5 %
to 188,076.
• Visitors from India dropped 10.3 % to 27,075 in March,
Maldives dropped 10 % to 8,076, and Pakistan also
dropped 10.4 % to 2,433, taking South Asian arrivals
down 9.9 % to 39,804.
• Meanwhile, Chinese tourists rose 12.9 % to 22,172,
visitors from Japan rose 4.8 % to 4,271.
Sri Lanka's is expecting a revival in tourist arrivals after the airport
re-opened for daytime operations, after a runway upgrade that also
made it capable of landing Airbus A30 aircraft.
Daytime operations resumed from April 07.
The ministry said potential tourists from the West had bypassed Sri Lanka
due to long waiting hours for connections at intermediate airports and a
5-hour check-in requirement imposed domestically to ease congestion.

19. Sri Lanka to build 100MW floating solar
plant in reservoir
• Sri Lanka's cabinet of ministers has given the go
ahead to call international tender for a 100
MegaWatt floating solar farm in Maduru Oya
reservoir which is expected to cover an area of
500 acres of the 15,790 acre water body.
• The solar plan will be a joint venture with Sri Lanka's Mahaweli Authority which
will have to be paid a 10 percent royalty.
• The investors will have to bid for the cost of the plant and battery. Stored energy
will be released to the grid during the night peak when Ceylon Electricity Board
operates diesel reciprocal engines at over 20 rupees a unit and gas turbines at
higher cost.
< Research & Development Unit >

20. Condominium Industry
in Sri Lanka
October, 2014
Research & Development Unit
International

21. Bill Gates tops Forbes' 2017 rich list
Forbes list facts:
• Bill Gates has topped the Forbes list for 18 of the past 23 years
• There were 195 newcomers on the list, dominated by billionaires from mainland China
• The youngest billionaire for the second year running is Alexandra Andresen, 20, after her
father transferred some $1.2bn
• The youngest self-made billionaire is John Collison, 26, worth $1.1bn after founding the
Stripe online payment site
• The sole US self-made woman newcomer on the list is Thai Lee, who moved to the US as a
child and runs tech reseller SHI
• Of women billionaires, iron ore magnate Gina Rinehart had the best year, with her net worth
jumping $6.2bn to $15bn
It was a record year for the richest people on earth,
as the number of billionaires jumped 13% to 2,043
from 1,810 last year, the first time ever that Forbes
has pinned down more than 2,000 ten-figure-
fortunes.
Their total net worth rose by 18% to $7.67 trillion,
also a record. The change in the number of
billionaires up 233 since the 2016 list was the
biggest in the 31 years that Forbes has been tracking
billionaires globally.
Source: Forbes

22. The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC
The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the information,
it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in consequence
of using such information for whatever purpose.
< Research & Development Unit >