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8/10/2019 News Bulletin - November 2014.pdf
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In Economic news:
In Business news:In Consumer news:
Monthly Bul let in : November 2014
Less than 10 days after the budget 2015 speech the
government expenditure increased by 16%.
COPE reveals another series of state institution losses.
Private sector credit continues to grow in Sep 2014, up 4.6%
YoY to Rs.2,581.9bn.
Demand for cement declines as the construction industry
impacted by high costs.
Sri Lanka drops to 62nd in the Prosperity Index.
Sri Lanka wins Oshoring Destination of the year, for the
second year running.
All Share Price Index closes at 7,115.89, down 2.9% MoM.
Ination rose 1.5% YoY in Nov 14 (-10bps MoM).
Rupee ended the month at 130.02/133.15 vs. USD (Rupee
weaker 0.50% MoM).
Tommy Hilger to open its rst store in
Sri Lanka in Dec 2014.
Credit credits in Jun 14 rose to
974,144, up a modest 4.6% YoY with
outstanding balance growing a
signicant 14.1% YoY to Rs.53.6bn.
Nielsen consumer condence
index in Oct 2014 edges up to 65
(+3 points MoM).
Tourist arrivals in Oct 2014 were 121,576, up 13.6% YoY resulting in Jan-Oct
trac reaching 1.2m about 45,000 short of 2013.
Vehicle registrations up 71.5% YoY in Oct 2014, 34,976 motorcycles booked as
government distributed them among its eld ocers.
Sri Lankas tea production increased to 28.9mkgs (+15.3% YoY) in Sep 14.
Trade decit in Sep 2014 expands to USD 764.2m (+30.1% YoY), exports (USD
903.3m, +0.5% YoY) and imports (USD 1.5bn, +15.5% YoY).
LMD-Nielsen business condence index slides for the third consecutive month,
drops to 128 in Oct 14 an eight month low.
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In Economic news:
Monthly Bul let in : November 2014
by Rs.356bn for 2015. This would increase overall government
expenditure by a staggering 16% to Rs.2,566bn, causing budget
decit to expand to Rs.877bn, with the decit to GDP rising to
7.7% from the proposed 4.6%. This is to be funded through debt
as the Prime Minister also sought an increase in the debt ceiling
from Rs.1340bn to Rs.1,780bn. Credit growth is likely to continue
in the upcoming months driven by current low ination, reduced
electricity taris boosting disposable income and VAT adjusted to
11% from 12% decreasing prices of select consumer goods.
Govt. expenditure for 2015 increased, defenseand urban development to benefit.Less than10 daysafter the budget 2015 speech Mr. D.M Jayaratne, Prime Minister
presented an Appropriation Bill 2015-Amendments in Committee
in Parliament seeking to increase government expenditure
Source: Ministry of Finance and Planning and Gradient Estimates
Private sector credit continues to grow in Sep2014. Credit to private businesses and personal customersgrew 4.6% YoY in the month to Rs.2,581.9bn. CBSL kept policy
rates unchanged for the tenth consecutive month. An uptick
in credit growth since September is driven by low ination and
loose credit in the market. Credit growth is likely to continue in
the upcoming months driven by current low ination, reduced
electricity taris boosting disposable income and VAT adjusted to
11% from 12% decreasing prices of select consumer goods.
Source: CBSL Source: CBSL Source: CBSL
Sri Lanka drops to 62nd in the Prosperity Index.Legatum Institute ranked Sri Lanka 62nd from 142 countries in
its Prosperity Index for 2014, a drop of two places from 2013. The
index measures the well-being of countrys people and its wealth.
Norway topped the ranking with Switzerland and New Zealand
making the top three.
Sri Lanka was ahead of its South Asian neighbours, Nepal (96th),India (102nd), Bangladesh (104th), Pakistan (127th) and Afghanistan
(137th).The Index ranks countries on eight sub-indices Economy,
Entrepreneurship & Opportunity, Governance, Education, Personal
Freedom, Health, Safety & Security and Social Capital.
8/10/2019 News Bulletin - November 2014.pdf
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In Economic news:
Monthly Bul let in : November 2014
COPE reveals another series of state institution losses. The Committee on PublicEnterprises (COPE) presented yet another damaging report on government institutions for the period
ending September 2014. Despite such disclosure there is little evidence that state institutions key
ocials will be held accountable, deterred or implicated. Select COPEndings;
Ceylon Petroleum Corporation, National Paper Company and SriLankan Airlines incurred a combined
loss of Rs.40.2bn in 2013.
The Sri Lanka Ports Authority (SLPA) had not settled a bill of Rs.4.8bn in relation to the construction of
Sooriyawewa Cricket Ground, Hambantota, a venue for the ICC World Cup 2011.
Sri Lanka Cricket (SLC)s granting of local television broadcasting rights in 2011 was deemed not
transparent. Only one bid was received to the tender notice which had not been given enough
publicity due to the small size of the advertisement and short time to respond. Broadcasting rights was
awarded to a company in which the SLC secretary was CEO, giving rise to a clear conict of interest.
Receivables amounting to about Rs.316m had been written o and Rs.1.1bn relating to the construction
of a World Cup Stadium was considered as bad debts.
In spite of the initial estimate of Rs.2.5m, the tender related to refurbish13 hotel rooms at the Taj
Samudra Hotel had been awarded by the Sri Lanka Institute of Tourism and Hotel Management at
Rs.3.9m per room.
Investigations leading to the misplacement of 5000MT of fertilizer valued at Rs.388m, which
commenced in 2008 were yet to be completed, despite the distributor having being found
responsible.
Due to the lower depth (a construction aw) at the Oluvil Port only small vessels can be accommodated.
The Port cost a staggering Rs.7.2bn.
Rs.391m was wasted on improving the eciency of the Colombo Port as the project was abandoned
midway since the government changed policy.
State Printing Corporation was ned Rs.54.9m for delays in printing books and not printing in
according to specications.
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In Economic news:
Monthly Bul let in : November 2014
costs. Demand for cement during Jan Aug 14 was 3.7m MT(-10.2% YoY). During this period local production was only 1.2m
MT (-2.5% YoY) and imports were 2.5m MT (-13.5% YoY). Drop in
demand can be attributed to the cost of construction rising to a
historic high in 2Q14 as the industry is dependent on importedraw materials for almost 90% of its requirements.
Key industry news, Maga Engineering says it has nearly Rs.80bn worth of projects
to be launched in the current nancial year. According to its MD
Weve submitted a proposal to the government to undertake a 28km
stretch of the Northern Highway. Its worth Rs.54bn. Past years have
seen a growth of 20 - 25%, with the incoming Chinese investments
for construction, the industry has only seen an annual growth of 13
- 15%.
Renuka Land, a joint venture between Renuka Hotels and Cargo
Boat Development is to construct a Rs.2.0bn modern rentable
Class A oce building complex on No. 29, Braybrooke Street,Colombo 2. The property will cover an area of 204,343 sq. ft.
of which 108,138 sq. ft. will be available for rent. Operations to
commence Apr 2017.
Sri Lanka 71st in Global Entrepreneurship Index.Sri Lanka was placed 71st among 130 countries in the US-based
Global Entrepreneurship and Development Institutes Global
Entrepreneurship Index for 2014. The country was placed 11th in
the Asia Pacic region and best in South Asia.
The Index focuses on eciency of national startup ecosystems
through sub index, Attitudes, Abilities and Aspirations. Sri Lanka
is ranked at 103rd in the Attitudes sub index, 54th in Abilities sub
index and 59th in Aspirations sub index.
The US is number one followed by Canada and Australia. The
14 pillars of entrepreneurship as per the Index are Opportunity
Perception; Startup Skills; International isation; Networking; Process
Innovation; Risk Acceptance; Cultural Support; Human Capital;
Technology Absorption; Opportunity Startup; Competition; High
Growth; Product Innovation and Risk Capital.
Demand for cement declines as theconstruction industry is impacted by high
Source: CBSL Source: CBSL
Renuka Holdings is to construct The Renuka Tower a 28 storey
tower providing A grade oce facilities on Galle Face Terrace andUttrananda Mawatha, Col. 3. Once completed, the tower will have
200,000 sq. ft. of rentable oce space. The total project cost is
estimated at Rs.3.2bn.
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In Economic news:
Monthly Bul let in : November 2014
Inflation rose 1.5% YoY in Nov 14 (-10bpsMoM). CBSL acknowledged the continuing reduction inination to Prices of items in the Non food category decreased on
average, supported by the declines in prices in the Housing, Water,
Electricity, Gas and other Fuels sub group. Downward revision of LP
Gas prices with effect from October 10, 2014 contributed significantly
to this decrease.
The Department of Census and Statistics (DCS) is to introduce
a new ination basket in 2015. According to Mr. D C A
Gunawardena, DCS, We are going to change the inflation basket
next year and introduce a national index covering all the districts.
Source: CBSL,CAL
Source: CBSL
All Share Price Index closes at 7,115.89, down2.9% MoM. Best performing sectors were construction &engineering (+8.4% MoM), oil palms (+5.3% MoM) and power &
energy (+1.4% MoM). Worst performing sectors were information
technology (-15.7% MoM), footwear & textile (-13.2%) and
plantations (-10.4% MoM).
Source: CSE
There is price stability with the government policies introduced in
2006 and every five years we change the inflation basket. So now
its high time to change it. Because the inflation now measured
taking 2006/2007 as the base year.
Rupee ended the month at 130.02/133.15 vs. USD(Rupee weaker 0.50% MoM).
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In Business news:
Monthly Bul let in : November 2014
Tourists arrivals cross 1.2m for the year. Touristarrivals in Oct 2014 were 121,576, up 13.6% YoY resulting in Jan-
Oct trac reaching 1.2m about 45,000 short of 2013 full year
level. According to Sri Lanka Tourism Development Authority
key sector performance;
Tea production at 28.9mkgs in Sep 2014.Accordingto Forbes & WalkerSri Lankas tea production increased to
28.9mkgs (+15.3% YoY) in Sep. High grown tea production was5.6mkgs (-2.5% YoY), medium grown was 3.8mkgs (-0.9% YoY)
and low grown was 19.3mkgs (+26.8% YoY). Tea exports during
the month was down to 26.7mkgs (-7.3% YoY) as auction prices
for high, low and medium grown were -12.0%, -10.5%, -7.1% YoY
in the month.
Source: Forbes and Walker
Indian arrivals were 26,148 (+19.8% YoY).
Western Europe: U.K: 10,112 (+2.7% YoY), Germany: 7,996
(+23.8% YoY) and France: 4,523 (+7.9% YoY).
East Asia arrivals were up signicantly, with 11,894 tourists
coming from China and Hong Kong (+120.7% YoY).
Russian arrivals declined 4.0% YoY to 5,512, while North America
trac was 5,206 (+10.4% YoY).
Sri Lanka targets 1.5m tourist arrivals for 2014 and 2.5 million by
2016. In related industry news;
Browns Hotel and Resorts signed an agreement with Starwood
Hotels & Resorts which will give Starwood the management
rights to the ve-star Sheraton Kosgoda Turtle Beach Resort. The
172 room hotel is to open in 2015.
ITC, an Indian conglomerate will build a USD300m hotel andapartment complex opposite Colombos Galle Face beachfront.
The investment was increased from USD 140m. ITC Colombo will
have 350 rooms, 170 luxury residences, banquet facilities, retail
and oce space. Operations to start by Aug 2017.
SriLankan Airlines to start ights to Kunming, China from Dec14
adding to its current 15 weekly ights to Beijing, Shanghai,
Canton and Hong Kong.
Source: Sri Lanka Tourism Development Authority
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Monthly Bul let in : November 2014
Sri Lanka wins Offshoring
Destination of the year, for thesecond year running. Sri Lankawon the National Outsourcing Associations
Oshoring Destination of the year award 2014 for the second
consecutive year. The accolade conrms the countrys status as
leading destination for outsourcing of information technology
In Business news:and business process management, with revenue rising from
USD213m in 2007 to USD720m in 2014. According to Mr.
Jayantha De Silva, Chairman, SLASSCOM Im proud to have Sri
Lanka recognised with a second award as a destination for offshoring
businesses. The award itself is a testimony to the exceptional qualitybeing offered from Sri Lanka.
SLASSCOM is the countrys IT/BPM industry body. In an
outstanding year for the industry, it was shortlisted for the
European Outsourcing Association (EOA) Oshoring Destination
of the Year Award 2014.
In other related news; Ashok Leyland received an order to supply 630 buses to Sri Lankan operators at a cost of USD 17m. The order follows a
recent order for 2,200 buses.
Hyrax Oil from Malaysia is to establish a lubricant oil mixing plant in Sri Lanka at a cost of USD 10m. The company already
markets its products in collaboration with the CPC.
According to Minister, Mr. Rohitha Abeygunawardena vehicles exporters from Japan and Thailand are looking to use the
Hambantota harbour as a transshipment port.
A vehicle registrations up 71.5% YoY in Oct2014.According to JB Securities total vehicle registrations were49,957 in the month.
Motor cars registrations were 2,635 (+23.6% YoY) Maruti recorded
336 units in Oct(564 units in Sep). The tariffs reductions should help
volumes going forward in the small car segment. In the preownedsegment - the main driver of volumes are from hybrids 624 Aqua,
256 Axio, 304 Prius and 527 Honda Fit.SUV registrations were 1,359
(569 units Oct 13) - 1,065 units of Honda Vezel.
3 wheeler registrations were 7,195 (+7.4% YoY).
Source: JB Securities
Motor cycle registrations grew to 34,976 (+120.3% YoY)
2-wheeler registrations hit an all-time monthly high. The
government made a decision to provide 100,000 2-wheelers to field
officers at Rs 50,000 a unit, the level of subsidy is a lot less taken from
the duty free price. A lot more 2-wheelers will be registered in Nov as
part of this program.
Truck registrations declined to 1,995 (-8.7% YoY) Pickup trucks
registrations recorded 254 units in Oct slightly down from 265 units
in Sep but significantly up from 100 units 12 months ago. Tata
recorded 162 units comprising of 83 207Di and 79 Xenon.
In related news;
Sri Lankan company Code Gen is to introduce a fully electric
super car called Vega. The two motors and the battery cell
will be imported from the US whilst all other parts are to bemanufactured in Sri Lanka. The car can reportedly travel 240
miles on one charge and will be available from USD 400,000
onwards.
According to Associated Motorways (AMW) post the Budget
2015 announcements prices of select motor vehicles have
reduced. It noted that current high demand meant buyers
having to wait for about three months. Select prices from
AMW and United Motors;
Type of vehicle Previous price Latest price
Alto Rs.1,850,000 Rs.1,498,000
Suzuki Wagon R Rs. 2,765,000 Rs. 2,450,000
Suzuki StingRay Rs. 2,855,000 Rs. 2,615,000
Suzuki Celerio Rs. 2,540,000 Rs. 2,465,000
Suzuki Omni van Rs. 1,850,000 Rs. 1,675,000
Suzuki Swift Rs. 3,150,000 Rs. 2,850,000
ViVA (850cc) Rs. 1,925,000 Rs. 1,760,000
Panda GB Rs. 1,545,000 Rs. 1,245,000
Panda GS Rs. 1,670,000 Rs. 1,395,000
Panda Cross Rs. 2,075,000 Rs. 1,825,000
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Monthly Bul let in : November 2014
Banking sector consolidation continues.During Oct14 consolidation between Central Finance and IsuruLeasing, Arpico Finance and Associated Motor Finance as well
In Business news:as Hatton National Bank and Prime Grameen Micro Finance were
publicly announced. CBSL commented that 41 Non-Banking
Finance Institutions (NBFIs) and nine banks have confirmed their
consolidation plans. Out of this, 8 NBFIs and 2 banks have alreadycompleted their respective consolidation plans, whilst 33 NBFIs and 7
banks are still progressing and are in different stages in their plans.
Trade deficit in Sep 2014 expands to USD764.2m (+30.1% YoY). Exports in Sep 2014 rose a tepid0.5% YoY to USD 903.3m with imports growing 12.2% YoY to
USD 1.5bn. The resulting trade decit was nanced by USD
575.0m (+3.1% YoY) of worker remittances.
Agriculture exports (~22% of exports) were USD 231.9m down
2.9% YoY as tea exports declined to USD 133.6m (-4.8% YoY).
Industrial exports (~77% of exports) were USD 667.9m up 3.3%
YoY on higher apparel exports (USD 403.8m, +4.4% YoY).
Consumer goods imports (~18% of imports) were USD 365.5m,
up 56.9% YoY, driven by food and beverages (USD 151.7m,+79.3%
YoY) and motor vehicles (USD 97m,+88.3% YoY).
Intermediate goods imports (~59% of imports) were USD
870.7m, down 5.1% YoY, as fuel imports declined to USD 295.3m
(-24.1% YoY)
Investment goods imports were USD 428.8m, up 27.9%YoY.
Imports of machinary and equipment were down (USD
177.2m,-10.1% YoY) and transport equipment was up
(USD140.1m,+290.3% YoY)
Source: CBSL
LMD-Nielsen business confidence index
slides for the third consecutive month. LMDsBusiness Condence Index dropped to 128 in Oct 14 an eight
month low.
According to Mr. Sheen cader, Managing Director, LMD Despite
increasing optimism about the economy, the BCI has continued its
gradual decline, as seen in recent months mainly as a result of
concerns about consumers spending power being restricted due to[the] high cost of goods and services. Another factor which seems
to have a bearing is the increasing concern of political activities
impacting business, which has been an apprehension in the past as
well, when elections occur.
Source: LMD
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In Business news:
Monthly Bul let in : November 2014
In other news. Merchant Bank of Sri Lanka (MBSL) wasreported to be planning to sell its stock broking arm Lanka
Securities. This had raised interest as the Colombo Stock
Exchange has been performing really well. MBSL Chairman M.R.
Shah was accused to have trying to rush through a sale and not
having communicated the same prior to the meeting. MBSL
owns a 29% stake in the rm whilst its parent Bank of Ceylon
holds a 20% stake.
According to the CSE foreign purchases from Jan to 14th Nov
2014 amounted to Rs.95.0bn, surpassing the previous highest
foreign purchases of Rs.92.4bn in 2010. Mr. Vajira Kulatilaka,
Chairman, CSE, We believe that investors entering the market are
being cautious and basing their decisions on the fundamentals
of companies. Foreign investors therefore have confidence in the
liquidity of their investments, this buoyancy is being reflected in the
foreign inflow over the past months.
Aberdeen Holdings acquired Expolanka Teas, Expolanka
Plantation, World Spice and Teas, Castle Commercial, Neptune
Holdings, Expolanka Pharmaceutica, Bio Extracts and Saron
Foods for Rs.1.16bn. According to Aberdeen Holdings Chief
Executive Ocer Mr. Omar Kayaam, We see a strong business
case and value proposition for the companies we have just
acquired. We have a robust strategy and management expertise to
ensure these companies deliver strong performance and superior
shareholder value.
Anilana Hotels and Properties rights issue worth Rs.767m wasoversubscribed. The funds will be used to nance the remaining
construction of Phase-I of the Dambulla hotel and to retire
approximately Rs.167m of debt.
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Monthly Bul let in : November 2014
Credit card usage continues to increase. As perCBSL, the number of active credit credits to Jun 14 rose to
974,144, up a modest 4.6% YoY to its highest level. However
the total outstanding balance grew a signicant 14.1% YoY
to Rs.53.6bn, causing debt per card to increase to Rs.55,036 ahistoric high.
Outstanding debt volumes will continue to rise as the interest
rates on credit cards have been reduced since June. Cards are
attractive among the 3.6m urban population in the country
whose under pressure disposable income have created
demand. Urban monthly household income only rose at an
annual rate of 8.5% to Rs.68,336 in 2012/13 from 2006/07 lower
than its household expenditure growth of 9.0% during the
same period.
In Consumer news:
Tommy Hilfiger to open in Sri Lanka.Tommy Hilgerwill open its rst store in Sri Lanka in Dec 2014. According to LBO
the Current FH14 collection that will be launched in Colombo is
inspired from his classic American roots with a signature twist.
Nielsen consumer confidenceindex in Oct 2014 edges up to65 (+3 points MoM).
Source: lmd.lk
Source: CBSL
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