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Business


 

ADB predicts slower growth in next 2 years

Finance, trade, telecom, and ICT will perform robustly. But tourism,
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.

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Developing Lankan offshore oil and gas industry

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 of Commerce.

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.

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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.
- (QP)

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Keells introduces re-usable red bag for custormers

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 non-biodegradable material.

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.
- (QP)

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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 any more.
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 capital.
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 rapidly.

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 location.
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 complex.
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.

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Brandix ranked Lanka’s largest apparel exporter

Brandix the Sri Lankan apparel powerhouse with global aspirations, has been formally confirmed as the country’s largest apparel exporter by the Export Development Board (EDB).
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 six exporters.
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 design capabilities.

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 merchandising operations.

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.

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