The document summarizes recent news in banking and finance, the economy, and international news. Specifically: - Commercial Bank of Ceylon won several awards including Bank of the Year and for its annual report. It also launched new banking products and services. - Sri Lanka's economy grew 2.7% in the third quarter recovering from impacts of the Easter attacks, with growth in services and industry. - Fitch revised Sri Lanka's outlook to negative but affirmed its credit rating at B, citing risks from shifts in fiscal policy and potential rollback of reforms. Measures were also outlined to offset revenue losses from tax cuts. - The President appointed a new board for the ICT agency to advance Sri

1. Economic Capsule
December 2019
276th
Issue
Research & Development Unit
Economic Capsule
December 2019
276th Issue

2. C O N T E N T S
BANKING & FINANCE
 ComBank wins ‘The Banker’ Bank of the Year award
 ComBank makes exceptional impression at Best Corporate Citizen awards
 ComBank’s 2018 Annual Report adjudged best in Sri Lanka
 ComBank launches ‘Achiever Salary Account’ with salary advances and more
 ComBank launches ‘ComBank RemitPlus’ a mobile app for users of its
remittance services
 ComBank launches Pre-paid Spend Card and Pre-paid Web Card with online
top-up facility
ECONOMY & BUSINESS
 Economy grows by 2.7%
 Fitch Revises Outlook on Sri Lanka to Negative; Affirms at 'B‘
 President appoints tech-studded ICTA board to drive digital Sri Lanka
 Sri Lanka Computer/Digital Literacy Statistics 2018
 Govt. to double tea production by 2025
 Sri Lanka’s tallest A-grade office complex MAGA ONE achieves full occupancy
 Cabinet nod to USD 250mn new mixed development project by Shangri La
INTERNATIONAL
 Nine major trends reshaping the world economy: The Economic
times
 Global growth will be half as fast over the next decade, EIU predicts
 Property magnate warns greed will lead to ‘disaster’ for Dubai’s
housing market
 Russia opens Siberian pipeline to China as Beijing expands its
influence in the Arctic

3. Banking & Finance

4. Research & Development Unit
ComBank wins ‘The Banker’ Bank of the
Year Award
The Commercial Bank of Ceylon has been crowned the
‘Bank of the Year’ 2019 in Sri Lanka by The Banker
Magazine of the UK, the longest-running international
banking publication in the world.
Considered the Oscar equivalent in the global banking
fraternity, this award is presented to financial institutions
excelling in growth and performance, strategic initiatives,
innovation in technology, new or upgraded products and
services, and other noteworthy achievements in the field.
This is the 11th time the Bank has won this award.

5. Research & Development Unit
ComBank makes exceptional impression at
Best Corporate Citizen Awards
The Commercial Bank of Ceylon’s commitment to People,
the Planet and Profit – the three pillars of sustainability –
saw Sri Lanka’s benchmark private bank win seven
awards including the award for second place overall at
the 2019 Best Corporate Citizen Sustainability Awards
presented by the Ceylon Chamber of Commerce.
The Six other accolades won
Triple Bottom Line Award for Social Sustainability
(People)
Winner in the Finance Sector
Winner of the Category Awards for Customer
Winner of the Category Awards for Relations
Winner of the award for Best Presented Application
Award for being among the Top 10 Best Corporate
Citizens in Sri Lanka.

6. Research & Development Unit
ComBank’s 2018 Annual Report adjudged
The Best in Sri Lanka
The Commercial Bank of Ceylon PLC emphatically demonstrated
its superiority in financial reporting, winning for the 10th time,
the Cyril Gardiner Memorial Trophy – for the best annual report
by a listed company in Sri Lanka for 2018
In an all-Gold performance, Sri Lanka’s benchmark private bank
also won the Edmund J. Cooray Memorial Trophy for the Best
Annual Report among Banking Institutions, the Gold Award for
Management Commentary, the Gold Award in the Corporate
Governance Disclosure category and the Gold Award for
Integrated Reporting in the Best Disclosure on Business Model
category.
This is the 15th year that an annual report of Commercial Bank
has been adjudged the best among banking institutions in Sri
Lanka and the 15th occasion that the Bank has been ranked
among the top three companies overall for financial reporting.

7. Research & Development Unit
ComBank launches ‘Achiever Salary
Account’ with salary advances and more
The Commercial Bank of Ceylon has launched a new salary savings account for upwardly-mobile executives
under the Bank’s ‘Achiever’ brand, offering benefits including salary advance facilities as well as loans and
leasing facilities at lower interest rates.
Eligibility - Employees of government, semi-government or private sector organizations above the age of 18
who can commit to remit a minimum monthly gross salary of Rs 40,000
Main features
 Once remittances are made for three consecutive months, account holders can obtain an advance of up to
75% of their monthly salary.
 Holders will be eligible to obtain Personal Loans, Home Loans and Leasing facilities with repayment interest
rates that are 0.5% lower than the published rates
 E- passbook as well as e-statements will be offered free of charge along with Debit Card facilities exempt
from first year fee, while Online Banking and Credit Card facilities will be provided free of joining fee and
annual fee for the first year

8. Research & Development Unit
ComBank launches ‘ComBank RemitPlus’ a
Mobile App for users of its Remittance
Services
The Commercial Bank of Ceylon has launched ‘ComBank RemitPlus’ –
a Remittance App to enable those who use the Bank’s remittance
services to conveniently access remittance-related information and
services.
‘ComBank RemitPlus’ can also be used to check interest rates of
deposits and foreign exchange rates, enables users to locate
remittance partners, the closest Commercial Bank branch, and even
Business Promotion Officers (BPOs) attached to the remittance
services network.
Users can contact Commercial Bank via the app in addition to
receiving information related to contact details of Sri Lankan
diplomatic missions overseas, as well as details of promotions and
offers relevant to this segment.

9. Research & Development Unit
ComBank launches Pre-paid Spend Card
and Pre-paid Web Card with online top-up
facility
The Commercial Bank of Ceylon has launched pre-paid cards that can be topped up with funds online and
can be used for different or specific purposes while allowing their users to better manage spending and enjoy
minimal exposure to risk.
Among the cards introduced to the market are a multi-purpose ‘Prepaid Spend Card’ that can be used by
individuals to provide money for spending to family members, and a pre-paid Web Card for online
transactions.
A pre-paid Spend Card can be obtained from any Commercial Bank branch or service point by depositing Rs
1,000 to a pre-paid account.
The cards can be used by topping them up or reloading via multiple channels including bank counters or
through online banking. There is no annual fee for the card, which is valid for five years.
The ‘Prepaid Web Card’ is designed for customers who carry out regular online transactions and prefer to
maintain a separate card for ease of monitoring their transactions.

10. Economy &
Business

11. Economy grows by 2.7%
Sri Lanka’s economy grew by 2.7% (YoY) in
3Q, 2019, recovering somewhat from the
Easter attacks that slashed the previous
quarter‘s growth to a five-year low of 1.5%
(YoY), and showing stronger expansion in the
industry and services segment, the Census
and Statistics Department said. GDP growth
for the 9 months of 2019 recorded 2.6% (YoY).
Key Points
• In 3Q, 2019, the ‘Services’ activities which account for 60% of GDP, reported a positive growth of 2.8% (YoY) compared
to 1.6% (YoY) in 2Q, 2019.
• ‘IT programming, consultancy and related services’, even though its share of the GDP is low (0.2%), has reported an
outstanding performance, recording a 20.5% growth (YoY) during 3Q, 2019.
• The sub-activity of ‘Telecommunication’ grew significantly by 11.1% (YoY) during 3Q, 2019.
Research & Development Unit
Source: DCS

12. Research & Development Unit
Economy grows by 2.7% (cont.)
Source: DCS

13. Fitch Revises Outlook on Sri Lanka to
Negative; Affirms IDR at 'B'
Research & Development Unit
Fitch Ratings has revised the Outlook on Sri Lanka's Long-Term Foreign-Currency
Issuer Default Rating (IDR) to Negative from Stable and has affirmed the IDR
(Issuer Default Rating) at 'B'.
Revision of the Outlook to Negative from Stable reflects rising risks to debt
sustainability from a significant shift in fiscal policy and the potential for roll-back
of fiscal and economic reforms in the aftermath of November's Presidential
elections.
“We believe the departure from the previous revenue-based fiscal
consolidation path has created policy uncertainty and increased
external financing risk for the sovereign, particularly given the large
external debt repayments due in 2020 and beyond.” Fitch ratings
said.

14. Fitch Revises outlook on Sri Lanka to
Negative; Affirms IDR at 'B' (cont)
Research & Development Unit
However, Fitch has observed that the government has identified offsetting revenue and expenditure
measures that will mitigate the revenue loss due to the tax cuts. These include a hike in the excise duty on
liquor and cigarettes (which accounts for about 10% of VAT revenue), and an increase in the Ports and
Airports Development Levy (PAL) to 10.0%, from 7.5%. Further, financial services, which account for 15% of
VAT, will not be affected by the rate cut.
On the expenditure side, the government has proposed to set up a committee of officials under the
chairmanship of the Cabinet Secretary to observe Cabinet papers on government expenditure and
investment with a view to rationalizing government expenditure. The government has also proposed to
suspend purchasing and renting of office premises and vehicles for the public sector for a three-year period.
Despite the above efforts on the part of the government, Fitch expects the budget deficit to record around
6.5% of GDP in 2020 and 6.2% in 2021.
Fitch has forecast GDP growth to pick up to 3.5% in 2020 and 3.7% in 2021, from their forecast of 2.8% for
2019. These forecasts reflect Fitch’s expectation of a boost to growth in the short-term from the tax cuts,
higher agricultural output and an ongoing recovery in tourism following last April's terrorist bombings.

15. President appoints tech-studded
ICTA board to drive Digital Sri Lanka
Research & Development Unit
President has appointed a tech-studded board for the
Information and Communication Technology Agency of Sri
Lanka (ICTA), featuring industry leaders, technology
entrepreneurs, academics, and public sector technologists, to
steer digital Sri Lanka. The Board came into effect from 18
December 2019 and will work towards digitally transforming
Sri Lanka.
The ICTA board composition
 Mr Jayantha De Silva Co-Founder of IFS Sri Lanka
 Mr Mano Sekaram CEO of 99X
 Dr Sanjiva Weerawarana Founder of WSO2
 Prof Lalith Gamage CEO of SLIIT
 Mr Reshan Dewapura CEO of GSS International
 Ms Manori Unambuwe SAP India Country Sales Manager
 Mr Wasantha Deshapriya Former Digital Secretary and ICTA Programme Director

16. Research & Development Unit
Sri Lanka Computer/Digital Literacy
Statistics 2018
Computer literacy: A person (aged 5-69) is considered as a computer literate person if he/she could use computer on his/her own. For example, even if a 5 years old child
can play a computer game then he/she is considered as a computer literate person.
Computer literacy rate: Computer Literate population expressed as a percentage to the total population, (aged 5 – 69 years) within the respective domain.
Computer literacy rate % by sector
Sector 2015 2016 2017 2018
Sri Lanka 27.1 27.6 28.6 29.0
Urban 39.2 39.2 40.5 40.4
Rural 25.5 26.1 27.1 27.5
Estate 9.0 10.4 9.1 10.8
Highest Computer literacy rate - Western Province 40.0%
Lowest Computer literacy rate - Eastern Province 14.8%
Digital literacy rate % by sector
Sector 2018
Sri Lanka 42.4
Urban 56.6
Rural 40.5
Estate 18.7
Definitions
Digital literacy: A person (aged 5-69) is considered as a digital literate person if he/she could use computer, lap top, tablet or Smartphone on his/her own.
Digital literacy rate: Digital Literate population expressed as a percentage to the total population, (aged 5 – 69 years) within the respective domain.
Source: DCSSource: DCS

17. Govt. to double tea production by 2025
Research & Development Unit
The Government recently said it focuses
on doubling the annual tea production to
over 600mn kilograms by 2025, while
outlining plans to introduce new
mechanisms of tea planting to increase
production.
In 2018 the national tea production was
303mn kilograms and the government
targets increasing production by 40mn
kilos in 2020 .

18. Sri Lanka’s tallest A-grade office complex
MAGA ONE achieves full occupancy
Research & Development Unit
MAGA ONE, Sri Lanka’s tallest A-grade
office complex developed by Maga
Engineering, has reached full occupancy
within its first year of operations.
Standing at 33 floors, the building is a
state-of-the-art, purpose-built business
tower with an array of modern,
sustainable features.

19. Research & Development Unit
Cabinet nod for USD 250mn new mixed
development project by Shangri La
The Cabinet approved a USD 250mn mixed development
project by Shangri La to build an apartment and shopping
complex along Baladhaksha Mawatha in Colombo 2. The
site is behind the existing Shangri La Hotel and One Galle
Face Mall
The 30-storey building will have between 600-700
apartments in addition to a shopping complex.
The project is due to be completed in six years.

20. International

21. Research & Development Unit
Nine major trends reshaping the world
economy: The Economic times
1.New Phase of Globalization: Although goods are still traded in higher
volumes, some services are growing up to 3X faster. This changes the mix
of industries and countries involved in this shift from goods to services.
2. Asia’s Ascent: Trade with and within Asia is rising. The
region’s economic might is growing rapidly, and with higher
disposable incomes, consumption is growing as well.
3. China’s Changing Relationships: China has been reducing
its exposure to the world, while the world’s exposure to
China has risen steadily This unequal engagement has a
ripple effect on everything, from financial markets to flows
of technology and innovation.
4. Digital India: India’s burgeoning digital population could
make it one of the world’s biggest consumer markets.
5. New Geography of Work in the US: Significant amount of talent
and investment will be concentrated in a few regions. Sixty
percent of job growth by 2030 could be concentrated in 25 cities
and their peripheries.
6. Automation’s Effect on Gender at Work: Globally, men and
women at similar risk of losing their jobs to automation
7. Declining Labour Share of Income: Long considered stable, labour shares in
recent years have seen a secular downward trend with negative
consequences, boom-bust commodity cycles and rising depreciation being the
main factors behind this trend, more than automation or globalisation.
Stagnating incomes mean less purchasing power at a time when costs of
housing, healthcare and other basic necessities have risen.
8. Changing Consumption Costs: Global inequality gap has narrowed, but
within developed economies, it has actually increased. Higher costs of basic
items have eaten into disposable incomes in many mature economies.
9. Rise of Corporate Superstars: In the past two decades, the top 10%
of companies with more than USD 1bn in revenue account for a larger
share of total profits while losses of the bottom 10% have also grown.

22. Global growth will be half as fast over the
next decade, EIU predicts
Research & Development Unit
Global economic growth will be half as fast over the next decade as it was in the
2010s, according to a chief economist at the Economist Intelligence Unit (EIU).
With the global economy already showing signs of a slowdown, he suggested that
patterns of growth are changing, and that growth itself can no longer be taken for
granted.
Over the past ten years, a dozen or so countries have ended up with a lower level of
real GDP than they had at the turn of the decade, including the likes of Greece, Iran
and Libya, while Ukraine and Italy were flat. He also suggested that the world will now
have to grow accustomed to a slowing Chinese economy as well.
Source: CNBC

23. Property magnate warns greed will lead to
‘disaster’ for Dubai’s housing market
Research & Development Unit
Source: CNBC
Dubai property magnate Hussain Sajwani has repeated calls for an immediate halt to
construction, warning the city faces “disaster” if oversupply continues.
Dubai’s economy grew at just 1.94% last year, its slowest pace since the dark days of the
city’s near economic collapse in 2009.
Ten years ago, a debt crisis sparked by a property crunch forced Dubai to seek a USD 20bn
dollar bailout from its more conservative and moneyed neighbor, Abu Dhabi.
The situation is unlikely to repeat, but the state of the property market has raised concerns
in some circles about a possible ripple effect into the country’s banks. Lenders in the
emirate extended loans worth USD 66bn to Dubai’s real estate sector last year, according
to the UAE Banks Federation.

24. Russia opens Siberian pipeline to China as
Beijing expands its influence in the Arctic
Research & Development Unit
A new natural gas pipeline connecting Russia and China is the latest example
of increasing collaboration between Moscow and Beijing in the Arctic Circle.
The pipeline comes after China unveiled a plan nearly two years ago called
the “Polar Silk Road,” expanding its campaign for influence to the Arctic. While
Beijing has branded itself as a “near-Arctic state,” that far-stretched claim on
the region is dependent on its partnership with Russia.
Source: CNBC

25. 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.
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