ADB predicts slower growth
in next 2 years
Finance, trade, telecom, and ICT will perform robustly.
agriculture will expand slower
By Quintus Perera
The growth rate in the Sri Lankan economy would be 6 per cent for the next two
years, though it grew to 7.2 per cent in 2006 at its fastest since 1978, Sri
Lanka Country Director, Asian Development Bank Richard Vokes said, addressing a
press conference in Colombo to announce the release of the Asian Development
Outlook (ADO) 2007 in Tokyo, last week.
This was recorded in the ADO and the high growth in 2006 was due to the private
sector growth and expansionary macroeconomic policies, but the growth would be
moderate over the next 2 years given the conflict, the slow pace of structural
reform and the need to cool the economy.
Vokes said that tighter fiscal and monetary policies will gradually curtail
aggregate demand by 2008 and growth will be around 6 per cent over the next two
years. He said that the conflict will curtail tourism growth.
With regard to the total pledges to Sri Lanka by ADB, he said that during the
last year the total commitment was only US$ 60 million, but the figure would
shoot up to around US$ 400 to 500. He said the average disbursement during the
period from 2000 to 2006 has been US$ 166. The projects that are ear marked for
2007 are US$ 300 million for the Colombo South Port Breakwater construction and
US$ 90 million for Colombo- Matara Expressway, US$ 60 million for waste water
management project for Colombo and US$ 60 million for a secondary and tertiary
education. ADB would also assist in SME development projects and water supply
project for Jaffna.
He said that the finance, trade related services, telecommunications, and
information technology will perform robustly buoyed by continued consumer demand
and public sector expansion. Agriculture will expand more slowly than in 2006.
The Report indicated that the impressive growth in 2006 reflected the strong
performance of services of 7.7 per cent, unexpectedly high out-turn in
agriculture of 5.9 per cent, peaceful conditions in the west and south of the
island and the demand for consumer goods and services.
Mobile and land phone business thrived to double the foreign investment inflow
from US$ 234 to 480 million. Tourism failed in 2006 profit margins falling by 50
per cent due to the tsunami impact and due to the escalation of hostilities
between the government and LTTE.
Ending the quota system in garment exports made some impact and the growth in
2006 is only 5 per cent. Construction industry continued to grow. Government
spending was up by 26 per cent in 2006. Workers remittances increased from US$
400 million to 2.3 billion in 2006 and helped check the current account deficit.
Although the private sector accounts for over 85 per cent of GDP, the government
owns institutions that manage about 60 percent of all financial assets as well
as all public utilities.
ADO indicated that growth prospects have become more complex and risks have
risen since last year. The factors that could potentially lay the foundation for
strong economic growth and that show a marked departure from previous approaches
are, first, a powerful president whose first term will end in 2011, and who has
now also succeeded in forging a parliamentary majority with crossovers of
members of Parliament from the more private sector oriented UNP.
The civil conflict is the main long-term challenge to development, shaving off
an estimated 2 per cent of GDP growth each year. However, despite the
opportunity costs of the conflict, the economy has grown at an annual average of
4.6 per cent since the conflict started in 1983. The current policy focus is on
infrastructure development to improve electricity supply and roads which is
crucially important, but would need to go hand in hand with preparing the ground
for higher productivity gains.
Developing Lankan offshore oil and gas
Interventionist or market driven?
The Government of Sri Lanka (GOSL) is now
preparing to offer exploration licenses for oil and gas in the Mannar Basin
since recent seismic data have shown that Sri Lanka has potential for
hydrocarbon accumulations. Thus, Sri Lanka may well be on the verge of
developing an offshore oil and gas industry. The question is, if Sri Lanka is to
develop an offshore oil and gas industry how should the government go about it?
Sri Lanka at present is totally dependent on imported fossil fuels and the
escalating oil and gas prices have not only led to the increase in the cost of
living but also the reduction of competitiveness of Sri Lankan exports. Due to
the high oil prices, Sri Lanka has been facing energy crises from time to time
with serious repercussions on the Sri Lankan economy. The development of the oil
and gas industry will not only solve major problems in the power and energy
sector but also have a spin off effect on the whole economy. In short, the oil
and gas industry has the potential to change the destiny of Sri Lanka.
The potential for job opportunities, not only in the probable new industry
itself but also in its support services is immense. In a country where the lack
of employment for skilled and non-skilled persons is a national issue,
opportunities such as this to develop a new industry should not be taken
lightly, since it would also bring about new business opportunities on a newer
and larger scale for the manufacturing, supply and services industries. These
opportunities will arise not only for the larger companies but will also open
the door for all levels of business.
The Ceylon Chamber of Commerce is organising a presentation by Director General
of Petroleum Resources Dr.Neil de Silva with a view to educate the business
community on government plans to develop the oil and gas industry in Sri Lanka.
The presentation will also highlight the new business opportunities related to
oil and gas industry and take place on April 6, 2007 from 3.00– 4.30 pm
(including a Q & A session) at the Ground Floor Auditorium of The Ceylon Chamber
Dr Neil de Silva is the Director General of Petroleum Resources who has a BSc
(Hon) in Geology from the University of Ceylon and MSc and PhD. degrees from the
Memorial University of Newfoundland in Canada. He has a Diploma in Business
Administration from the Dalhousie University in Halifax, Nova Scotia, Canada.
Since 1980, Dr De Silva has worked as a petroleum geologist, petroleum
geophysicist and an exploration manager and is the author of a number of
publications. He is a consultant to the Integrated Ocean Drilling Program at the
Texas A&M University.
Fiat re-launched with three new models
Fiat Cars re-entered the Sri Lankan market with
a bang through Euro Motors (Pvt) Ltd as their GSA with three new generation Fiat
models – Panda, Doblo and Grande Punto.
The launch of these three Fiat models took place at BMICH Exhibition Hall, last
week. Fiat cars were popular in Sri Lanka earlier when they first entered around
100 years ago.
The present models are unique in that they are fuel economic and low priced,
while with advanced engineering and unique technology applications to enhance
driving quality. Other features include Fiat Powertrain technologies and
patented Multijet engines.
Panda was labeled as the car of the Year in 2004 by several international
automotive publications. It is able to meet different needs. Panda will cost
between Rs 2.6 million to 2.8 million.
Fiat Doblo received the European Van of the Year award for 2006 and is ideal for
those who have a love for raveling the world, which is extremely easy to handle.
This vehicle is priced at Rs 2.9 million.
The Fiat Grande Punto is one of the most stylishly designed vehicles, setting
the benchmark in safety and quality standards.
Its agility and stability make it the car for any occasion with its excellent
performance and low fuel consumption. Punto is priced at between Rs 3.4 million
to Rs 4 million.
Speaking at the launch CEO of Euro Motors Mahinda Jayaratne said that Euro
Motors was looking forward to a strategic partnership with Fiat both for its
enhanced business potential and for the exciting possibilities for potential car
buyers in Sri Lanka.
Keells introduces re-usable red bag for
In an effort to minimise harmful effects on
environment Keells Supermarket chain introduced to their customers a reusable
‘Red Bag’ and each time the customers brings the bag to their outlets for
purchases, they would be offered an incentive.
The Red Bag was introduced at the Keells Super Outlet at the Crescat Boulevard
last week. At the press briefing along with the launch, Director John Keells
Holdings Sumithra Gunasekera said that the introduction of the bag was a part of
their CSR programme and a fulfillment of their commitment to be an
environmentally friendly organisation.
He said that this initiative was a much needed effort towards the environment
and that it was the first time any supermarket chain has undertaken such a
proactive programme to reduce the environmental pollution caused by
Gracing the occasion, Founder, National Programme on Recycling of Solid Waste Dr
Ajantha Perera said that Keells Supermarkets should be complemented for their
efforts in working towards the preservation of the environment.
“ The hazards of polythene and plastics are a growing threat and it should be
addressed seriously,” she added.
Privacy and comfort at ‘47th Lane’
By Santhush Fernando
The search for the perfect apartment has indeed been a major ordeal for Sri
Lankans especially those in search of apartments in the heart of Colombo. Not
Although situated in the heart of Colombo- Forty Seventh Lane Apartment Complex-
offers quality apartments away from the hustle and bustle of Sri Lanka’s
Once completed in 18 months time, the complex will offer owners of its elegantly
designed apartments, state-of-the-art features as well as easy access to both
commercial and government establishments in a neighborhood that has developed
One of the striking features is that the apartment complex is not facing the
main road but 47th Lane which guarantees security as well as privacy of the
owners. Although the road comes to an end with the complex due to its strategic
location, it is still close enough to most day-to-day amenities in Wellawatte.
Unlike other apartment complexes in the locality which are built down narrow
congested roads, owners of Forty Seventh Lane Apartments have the benefit of a
30-feet wide road, minimizing hassle and parking constraints.
The cul-de-sac also guarantees very high security and adds to the privacy of the
Apartment owners at 47th Lane will have easy access to their homes because the
complex is located close to Marine Drive.
The complex is also very close to banks, super markets, places of worship,
schools, recreation centers, hospitals, commercial and government
establishments. The Kalubowila Teaching Hospital is also a 10 minute drive from
The project is funded by London based investor and Director of IDP Holdings,
Prem Perera, who says that the response from buyers has been astounding so far.
“We want to give something different to our buyers. Security, privacy and the
benefits and advantages of a good neighbourhood,” Perera said.
Chairman of IDP Holdings is experienced businessman, Thilak Illepperuma who has
a personal interest to make the project a success, Perera added.
The construction would be carried out by Landmark Engineering, an experienced
contractor, well versed in developing property in the locality. The contractor
has built over five similar projects in the Wellawatte area. The Complex has
also been designed by a very experienced designer, Perera added,
“Attractive early bird discounts will be made available to buyers who reserve
their apartment within the next two weeks, on full payment,” Perera said.
Brandix ranked Lanka’s largest apparel exporter
the Sri Lankan apparel powerhouse with global aspirations, has been formally
confirmed as the country’s largest apparel exporter by the Export Development
A ranking of Sri Lanka’s top six exporters on the basis of export turnover was
released by the board this week, at a meeting convened for Minister of Export
Development and International Trade Prof G L Peiris to meet representatives of
the six organisations for a discussion.
Brandix with a consolidated group turnover of US$ 320 million for the year
ending March 31, 2007, is the highest ranked apparel sector player among the top
Commenting on the formal recognition of the group’s contribution to the national
economy, Brandix CEO Ashroff Omar said: “Brandix has been making substantial
investments in Sri Lanka and it is encouraging to see that our efforts have
contributed very tangibly to the export economy of the country.”
Brandix has pursued an aggressive growth strategy to counter the challenges of
the post quota regime. Over the last three years it has invested Rs 6.6 billion
and in the last year alone the group has invested more than Rs 2.5 billion to
expand its Sri Lankan operations. Investments of Rs 3.5 billion are in the
pipeline for the new financial year.
Omar said that the group, which provides direct employment to over 20,000
people, had invested in manufacturing infrastructure for new product categories
like Activewear, and in the enhancement of its research and development and
Elaborating on some of the group’s recent investments in Sri Lanka, he said that
the Brandix Centre of Inspiration (BCI) the has already contributed in terms of
productivity and effectiveness. BCI is a 250,000 square foot state-of-the-art
and uniquely designed facility. It houses a top notch product development and
design center, central warehousing and cutting facility, marketing and
Another recent investment, Sintesi Limited, will provide research, design, and
manufacture of moulded products. This new venture will add value to the
manufacture of intimate apparel and will commence operations at a 10 acre
facility shortly. Focused on innovation, the operation is equipped with
state-of-the-art hot-melt, foam moulding, bonding machines and other equipment.
In September 2006 Brandix formed a three-way joint venture with Quantum Clothing
Group, UK and Lanka Equities (Pvt) Limited to establish Stevensons Lanka (Pvt)
Limited, an exclusive garment dyeing operation at the Biyagama Export Processing
Zone. The plant is the only exclusive dyeing plant in the country and is
equipped with state-of-the-art machines for dyeing cotton garments as well as
softer garments such as lamb’s wool, cashmere, acrylic and more sensitive blends
of cotton and woollen garments.
Brandix has also ventured into innovative related vertical operations such as
the Brandix Apparel City in India, a 1000-acre apparel manufacturing park which
is expected to generate investments of US $ 1 Billion in its first five years.
This mega undertaking has also paved the way for Brandix to create opportunities
for organisations aspiring to provide related services at a global level. In
February, the Hayleys Group’s third party logistics specialist Logiwiz entered
in to an agreement with Brandix to set up and manage a US $ 15 million central
logistics hub for the Apparel City.
“We are firmly rooted in Sri Lanka and are committed to investing in the future
of the country’s apparel industry, whilst leveraging on our expertise and
experience to position Sri Lanka as a regional apparel hub.” Mr. Omar said.
Brandix, which comprises 25 fully-integrated manufacturing facilities backed by
strategically located international sourcing offices, is a preferred solutions
provider to some of the world’s best brands, including Gap, Marks & Spencer,
Victoria’s Secret, NEXT and Abercrombie & Fitch. The Group specialises in casual
bottoms, intimate and active wear, textiles, knitted fabrics, sewing and
embroidery thread, accessories and hangers, and offers wet processing and
finishing and fabric printing.
Brandix facilities in Sri Lanka comply with global standards and practices that
exceed customer expectations. The company is a member of the Worldwide
Responsible Apparel Production (WRAP) Certification Programme and firmly adheres
to its principles, ensuring that apparel is produced under lawful, humane and
ethical conditions. Brandix also follows SA 8000 social accountability standards
and was recently awarded the Occupational Safety & Health Assessment Series (OSHAS):
18001:1999, an accreditation that encourages continuous improvement in workplace
health and safety. This is in addition to the Group’s investment in Greener
Production Techniques, waste reduction, waste water management and energy saving
initiatives, best practices that will be extended to its operations in India,
through training and other initiatives.