Sri Lankan stocks end at 11-week low; investors uncertain

Reuters: Sri Lankan shares ended lower on Wednesday led by blue-chip shares such as John Keells Holdings Plc while cautious investors awaited some direction from the budget.

The main stock index closed down 0.49 percent at 7,050.87, its lowest close since July 15.

Foreign investors were net sellers of 87.4 million rupees worth of shares on Wednesday extending the year-to-date net foreign outflow to 3.16 billion rupees.

"Budget is the holding factor as investors are looking for clear direction," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

The new government, which was elected after the Aug. 17 polls, will present its maiden budget in November.

Shares of conglomerate John Keells fell 1.74 percent while Nestle Lanka Plc fell 0.06 percent. Shares in biggest listed banker Commercial Bank of Ceylon fell 1.79 percent.

Turnover was 1.29 billion rupees ($9.14 million), slightly above this year's daily average of 1.12 billion. 

($1 = 141.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Commercial Bank adjudged ‘Bank of the Year’ 2015

Commercial Bank was adjudged Sri Lanka’s ‘Commercial Bank of the Year 2015’ by the UK-based International Banker, giving the Bank its sixth international award since June this year.

The award is the first from International Banker to a bank in Sri Lanka.

In June this year, Commercial Bank was adjudged the Best Bank in Sri Lanka by FinanceAsia, and received the Euromoney award for the Best Bank in Sri Lanka in July. In August, the Bank received the award for Asia’s Best Employer Brand, and the award for Talent Management at the 2015 edition of Asia’s Best Employer Brand Awards in Singapore.

In September the Bank was recognised for its “Green Banking” efforts at the fifth Asian Customer Engagement Forum (ACEF) Awards in held in Mumbai, India.

“These awards are valuable affirmations of the results achieved through the dedication, passion and professionalism of the bank’s employees at all levels, as well as the loyalty of our customers,” the Bank’s Managing Director and CEO Jegan Durairatnam said.
www.dailynews.lk

Renuka City Hotels re-brands

Renuka City Hotels have invested Rs. 550 million in the last two years to re-brand, refurbish and build a new wing.

Niruja Thambiayah, Executive Director, said that they introduced 18 super luxury rooms to the new win with a roof top swimming pool and also invested a further Rs. 300 million to refurbish 30 rooms in the old wing. “We also invested in conference, restaurant and other facilities.”

She said that profits from the operations were reinvested to the hotel. “The two hotels are three star plus and is mainly a business hotels,” she said.

The hotel’s gym, pool and lounge areas were also fully renovated as stage one of the project prior to the main refurbishment process. The banquet hall equipped with deluxe interiors and state of the art lighting is ideal for celebrating any special occasion, hosting a corporate function or conference. It has the flexibility to accommodate audiences from 250 to 20 people.

“However with the revamp of our hotel, we wanted the hotel’s identity to fully reflect the contemporary nature of our new offerings. With the hotel being refurbished, the opportunity was presented to us and we have aimed for a modern, luxurious and elegant touch on what the hotel already offers.”

“The new brand reflects Renuka Hotel Group’s continued commitment to meeting the changing needs of a global traveller today; a traveller that seeks the best accommodation and efficient service at a reasonable rate for a memorable stay in the heart of the city. “

“The newly designed logo is a testament to our willingness to adapt as a brand. After all, our first responsibility is to our guests and we are confident that the new offering will lead to an even more enjoyable stay for both business and leisure travellers.”
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Sri Lankan stocks edge up from near 11-week low amid foreign buying

Reuters: Sri Lankan shares ended Tuesday slightly firmer from the previous session's 11-week low, snapping a losing streak over three straight sessions, helped by foreign buying of blue chips.

Foreign investors were net buyers of 40.3 million rupees worth of shares on Tuesday, but they have been net sellers of 3.07 billion rupees worth of shares this year.

The main stock index closed up 0.1 percent, or 6.74 points firmer, at 7,085.38, edging up from its lowest close in nearly 11 weeks in the previous session.

"The market was pushed up on low volumes. But the buying is not that prevalent," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

"Still investors are largely waiting for the government's policy direction and budget."

Shares of Nestle Lanka Plc rose 3.96 percent while Sri Lanka Telecom Plc rose 2.30 percent.

Turnover was 816.3 million rupees ($5.78 million), less than this year's daily average of 1.11 billion. Turnover has been roughly half of this year's daily average since Aug. 31, stock exchange data showed.

On Monday, the central bank chief said he would not rule out a possible rate hike if credit grew faster. 

($1=141.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Clarence Fernandez)

Fitch affirms Abans at 'BBB+(lka)'

Fitch Ratings has affirmed Abans' National Long-Term Rating at 'BBB+(lka)' and revised its outlook to stable.

Fitch has also affirmed the National Long-Term Rating on Abans' unsecured redeemable debentures at 'BBB+(lka)' and its outstanding commercial paper at National Short-Term Rating of 'F2(lka)'.

The outlook revision reflects improvements in Abans' net leverage due to improvements in the operating environment and its margins, which Fitch considers sustainable in the medium term.

The outlook is also supported by Fitch's expectations that Abans' capex and investments are likely to be minimal in the medium term, which would help sustain improvement in its leverage.

Abans' leverage, as measured by lease-adjusted net debt/operating EBITDAR (excluding Abans Finance PLC), improved to 6.48x in the financial year ended March 2015 (FY15) from 8.04x in FY14, supported by strong top-line growth and a wider EBITDAR margin.
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MTD Walkers Rs 3 b debenture full

MTD Walkers has received applications for over Rs 3 billon for the company’s debenture issue which has been oversubscribed.

The company announced an initial issue of 25,000,000 Rated, Senior, Unsecured , Redeemable, debentures of Rs 100, each with an option to issue up to a further 5,000,000 of said debentures at the discretion of the company in the event of an oversubscription of the initial issue of totaling up to a maximum of 30,000,000 debentures.

The issue closed yesterday as per the prospectus. The basis of allotment will be notified to the CSE in due course.
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Palm Hotels amalgamates with two subsidiaries

The Board of Directors of Palm Garden Hotels have resolved to amalgamate with Southern Cleaners and Central Services. They are wholly owned subsidiaries of Palm.

By the terms of this amalgamation, all Southern and Central shares will be cancelled without payment or any other consideration and Palm will acquire all assets and liabilities of Southern and Central.

The Board of Directors of the companies are of the opinion that the proposed amalgamation is in the best interests of all Companies and are also satisfied that the amalgamated company, Palm will immediately after the amalgamation becomes effective, satisfy the Solvency Test.

The amalgamation will take effect on October 30, 2015 or such other date as may be decided by the Registrar General of Companies.
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EPF,ETF to merge

Hiran H.Senewiratne (hsenewiratne@gmail.com)

Sri Lanka’s pension funds,the EPF and ETF, will be merged to provide more benefits to the people in the private sector, Central Bank Governor Arjuna Mahendran said.

This was also in the last election manifesto, the Governor said.

“We are exploring the possibility to merge the pension funds which runs into more than rupees one trillion to simplify the fund.” Today the employee has to contribute to two funds,” the Central Bank Governor told the media yesterday.

Mahendran said this will benefit the small employees who run small business entities. This huge fund will help large amount of people to obtain benefits out of this huge fund.

The Governor said Sri Lanka’s economic growth is estimated at 6.7 percent in the second quarter and there was sufficient economic momentum due to prudential economic policies in the country, “he said.

“The rupee was now determined by market forces and the government is not involved in it. Therefore, the recent fall in the rupee will increase export competitiveness, Mahendran said.

Bank lenders were asked to finance only 70 percent of loans of cars, which were being imported in large numbers, taking away the competitive advantage from a reduction in oil prices, he said.

Uncertainty in global markets had made many currencies volatile and the situation may continue until the US hikes rates, he said.

An eventual hike in US interest rates need not necessarily signal a domestic hike he said, if credit, inflation and balance of payments are stable. He said core inflation has been rising, but headline inflation was low.

He also said that US Federal Reserve will likely increase interest rates before the end of this year. Due to that short term investors move away from emerging markets and invest different investment tools in US markets, Mahendran said.

Sri Lankan car prices which spiked with the sharp depreciation of the local currency has seen weak demand following the Central Bank’s move to curtail credit for vehicle purchases, dealers said.
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Free flow of information vital for financial markets: CB Governor

(LBO) – A free flow of information is vital for financial markets to grow, Sri Lanka’s Central Bank Governor Arjuna Mahendran told media on Monday.

He was responding to a question posed by Lanka Business Online about concerns of market participants that they should censor information when dealing with the media.

Some bank dealers had also said the central bank may be listening into conversations over official dealing room lines.

“I can say categorically that we don’t tap any phones,” Mahendran said.

“What we have been trying to achieve in the last six months is bringing a greater degree of market related activity in the financial markets,” he said.

“When we had an extended debate in the media about bond markets and how bonds were being traded and polarization about direct placements versus auctions, I suppose that degree of polarization was something market participants may have got worried about,” he said.

“It was politicized, which led to a huge amount of acrimony on the political front,” he added.

He said the media had a major role to play in helping grow financial markets, and the financial press should engage in more discussions, especially in the vernacular Sinhalese and Tamil language press.

This is something the central bank would like to encourage, he added.

Colombo Stock Exchange to transform into a sustainable stock exchange

(LBO) – The Colombo Stock Exchange is to be transformed into a sustainable stock exchange while enhancing corporate transparency on Environmental, Social, and corporate Governance (ESG) issues.

CSE recently joined the United Nations Sustainable Stock Exchanges initiative, launched by UN Secretary General Ban Ki-moon in 2009.

It aims to explore how exchanges can work together with investors, regulators and companies to promote sustainability initiatives.

“CSE wishes to publicly demonstrate its commitment to sustainability, while promoting better business practices within the Sri Lankan Capital Market,” CEO of the CSE, Rajeeva Bandaranaike said.

‘CSE also encourages listed companies to measure and publicly report their ESG performance and impacts.” He further added.

Commenting at the event Sutheash Balasubramaniam of the UN Global Compact Network Sri Lanka said the partnership will enhance the global positioning of CSE while creating a platform for the Sri Lankan capital market to be abreast with international trends.

Sri Lanka sells 04, 06 and 13 year bonds; 13 year bond yields up

(LBO) – The issue of treasury bonds amounting to 13 billion rupees have been oversubscribed with 64 billion rupees of bids received from investors.

The Central Bank has accepted 3.0 billion rupees of 04 year bonds maturing on 15 September 2019 at a weighted average yield rate of 9.50 percent.

The bond auction held on Monday also accepted 6.5 billion rupees of 06 year bonds maturing on 01 August 2021 at a rate of 9.90 percent.

Debt department of the Bank also accepted 3.6 billion rupees of 13 year bonds maturing on 01 September 2028 at a weighted average yield rate of 11.04 percent.

The bank has rejected all the bids received for the 8 year bond.

At the last auction the 13 year bond maturing on 01 September 2028 rated at 10.88 percent.

Sri Lankan stocks end near 11-wk low on retrospective tax concern

Reuters: Sri Lankan shares ended near 11-week lows on Monday led by diversified and banking shares on concerns of a retrospective tax on corporates, brokers said.

The main stock index closed down 0.45 percent at 7,078.64, its lowest close since July 15.

"The index fell because of the government's move to impose a retrospective tax on corporates that had earned more than 2 billion rupees in profit last year," said a stockbroker on condition of anonymity.

"But the turnover is high because some investors are gradually taking positions."

Finance Minister Ravi Karunanayake last week tabled finance bills to raise 80 billion rupees in revenues, including from a super gain tax to be paid by corporates that earned more than 2 billion rupees in the last financial year.

Shares of Ceylon Tobacco Company Plc fell 0.58 percent, while biggest listed lender Commercial Bank of Ceylon Plc dropped 0.91 percent.

Turnover was 1.88 billion rupees ($13.34 million), the highest since Aug. 26 and more than the daily average of 1.12 billion rupees. The turnover has been roughly half of this year's daily average since Aug. 31, stock exchange data showed.

On Monday, the central bank chief said he would not rule out a possible rate hike if credit grew faster.

Analysts said investors were waiting to see how the government would bridge the budget deficit and where the revenue would come from, in its November budget.

The IMF on Sept. 18 said the fiscal deficit is likely to range between 5.5 percent and 6 percent in 2015, much higher than an official target of 4.4 percent, due to falling government revenues.

Foreign investors were net sellers of 630 million rupees worth of shares on Monday, extending the year-to-date net foreign outflow to 3.12 billion rupees.

($1 = 140.8800 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka luxury property market under threat: OBG

(LBO) – Sri Lanka’s high end residential property market is at a possible risk as supply is set to overtake demand, a recent real-estate update by the Oxford Business Group said.

The supply of luxury apartments in the commercial capital could reach 6000 units by 2018-19, according to a recent report by the Research Intelligence Unit (RIU), up from 783 in 2009 and 2657 this year, the report quotes.

“In the premium residential segment, insufficient demand will be a problem,” Pravir Samarasinghe, chief executive of Overseas Realty said in the report.

“There is a maximum off take of 500 units a year in Colombo, and there are probably 3500 under construction over the next three years.”

The report lists several residential projects which are expected to be completed in the years ahead.

John Keells Holdings’s 850 million dollar Cinnamon Life waterfront project scheduled for completion in 2018 will include an 800-room hotel, apartment and office complexes, a convention centre and a shopping mall.

Colombo’s Havelock City mixed-use development is also expanding, investing some 130 million dollar to add another four residential towers and nearly 650 units.

Other luxury residential projects, such as the Astoria luxury condominium development, two 194-metre Shangri La residential towers and the 240-metre Altair skyscraper, will further add to stock in the city.

Though sales are steady, the update says the increase in the supply of top-end residential units in the capital could outstrip existing demand.

Quoting Pradeep Moraes, director and president of sales and marketing at Altair/Indocean Developers, it says nonetheless, sales could see the demand gap narrow over time as the economy gains momentum.

“The improved political and economic environment will drive many more people and businesses to come to Sri Lanka,” he told OBG.

Demand could also be spurred by wealthy Sri Lankans returning to cities in search of better accommodation.

“In the past there was an exodus out of town in search of larger properties, but there is a new emerging segment for rental apartments in the city,” he told OBG.

This in turn could boost sales, encouraging buyers to invest in upscale properties for residential rentals.

Currently, more than a third of premium residential sales are generated by Sri Lankans living abroad, while less than 4 percent of investments are made by foreign buyers with the balance coming from locally based, high-net-worth individuals, the update says.

Damages payable between Rs. 1 and 5 Billion- NITF shortlists eight reinsurers

By Ishara Gamage

Ceylon Finance Today: Sri Lanka's only reinsurance provider, The National Insurance Trust Fund (NITF), on Friday shortlisted eight reinsurance brokers, backed by some of the world's largest reinsurers.

These eight have submitted bids for the retrocession programme for 2016 and they will be paying reinsurance claims of between Rs. 1 Billion and Rs. 5 Billion, NITF Chairman Manjula de Silva told Ceylon FT, late Friday night.

"The objective of this programme is to obtain protection for the balance sheet of NITF in the event of a major catastrophe, and also it will be a major relief for the Treasury," he said.

The shortlisted eight reinsurance brokers were:
Lockton Reinsurance Brokers ,J.B. Boda & Co(s) Pte Ltd, K.M.Dastur Reinsurance Brokers (pvt) Ltd, Guy Carpenter, JLT Independent Insurance Broker (pvt) Ltd, Aon Reinsurance Brokers , India Insure - The risk Managers (Foresight) and Life & General Insurance & Reinsurance Brokers (Pvt) Ltd

Some of the above companies have their local representatives as well.he added.

NITF is the only organization, State or private which offers reinsurance in Sri Lanka. There is a government ruling and gazette notification that all primary insurance has to cede 30% of their total liability with our reinsurance division which is a compulsory cession and rest of 70% with a foreign reinsurer, NITF Chairman Manjula de Silva told Ceylon FT.

What this effectively means is that we will be transferring our entire reinsurance liability to a foreign party, which will be useful in the event of a major catastrophe such as the 2004 tsunami or the recent earthquakes in Nepal, he said.

We are ready to pay up to one billion rupees as reinsurance claims. But claims above Rs one billion, we have to transfer in to the newly selecting reinsurer effective from 01st January 2016, he added.

The NITF is planning to close this final selection within a few weeks from now on, after a comprehensive evaluation of the NITF's Technical Evaluation Committee and the ministerial level committee.

The National Insurance Trust Fund was established in 2006, as a statutory body to offer Agrahara Insurance policies for public sector. "We have been providing insurance covers for all Strike, Riot, and Civil Commotion and Terrorism through our SRCC and T Fund. We currently manage over Rs 10 billion worth of assets, the NITF Chief remarked.

Currently, NITF serves over 750,000 government servants and their families. Altogether we were serving more than 2.8 million people, he said.
www.sundaytimes.lk

Singapore’s Temasek model for State enterprises- PM

By Ishara Gamage

Ceylon Finance Today: The government will follow the Singaporean Temasek model for managing all State owned enterprises, Prime Minister Ranil Wickremesinghe said on Thursday night.

"Those State Enterprises will pay taxes and let's hope twenty million people of Sri Lanka will get adequate returns of this benefit within this concept by ensuring a broadbased ownership and the creation of a strong middle class," he predicted.

Prime Minister Wickremesinghe made these remarks at the 50th Anniversary celebrations of CIMA Sri Lanka at the Cinnamon Grand.

"We are going to make our State Enterprises viable on the model of the Singapore Temasek investment company where the commercial enterprises hold by the one holding company responsible for their performances sharing that company with people wealth trust.

So the people will ultimately benefit from this, "he added. He also said that state managed private sector pension's funds, the Employees Provident Fund (EPF) and the Employees'. Trust Fund (ETF) will come under one Council with a proper fund management. It will be a large fund valued at over Rs 1.6 trillion.

"With these two measures Sri Lankan twenty million people will be largest owners of wealth in this country."

The government also has measures to hand over the titles of land to the owners of houses and flats to the people who occupied them, creating a broad basing ownership and to bring them all into the market economy.

"I must say we are living in a country where we don't know what are our national debts and assets were, so the Finance Minister must find out those exact debts and assets."

Mentioning about the role of CIMA, the Prime Minister said that CIMA has a vital role to play in creation of one million jobs of making Sri Lanka in a highly competitive social market economy, while in raising the income and living standard of people of creating strong middle class an uplifting of rural economy.

"We need enough qualified people in this march forward," he added.

Addressing the gathering CIMA President Myriam Madden said that CIMA global is ready to be partner Sri Lanka's economic development and also said that the UK Government's confidence over the new Sri Lankan Government was also a very high.

" A well run State sector was vital for Sri Lanka's economic development and we as a CIMA global body, is ready to partner with Sri Lanka's economic progress," she remarked.
CIMA CEO Charles Tilley also addressed the occasion.
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Today is World Tourism Day -Important aspects of Hotel Revenue Management

By Sujeewa Gunaratne

Hotel Revenue Management is about making the right room available for the right guest at the right price at the right time via the right distribution channel.

The fundamental focus of any business is to obtain profits. In this process, Revenue Management concepts have become popular methods in the business world. Revenue Management is combination of market research, competitor benchmarking and customer relationship management that categorizes customers into price bands based on various services to optimize revenue. It is the science of optimizing profits through market demand by forecasting and maximizing rates and availability. If applied correctly hotels should be able to expand their market size and increase revenues.Today's complex multi-channel distribution landscape requires hotels to match the needs of diverse customer segments with a fixed supply of rooms, thereby driving the increased adoption of advanced Revenue Management technology.

Market Segmentation in hotel Industry: Market segmentation is a crucial element in hotel Revenue Management. It allows you to target and market to a variety of consumer groups with different behaviour with offers that match their needs and budget levels. Market segmentation in hotel industry begins with the identification of the purpose of the trip: whether it is for business or leisure. The price does not decide the market segmentation. Clear distinction must also be achieved between individual and group business. The market segmentation will help to identify the trends of the business: Length of Stay, Day of Weeks stays, Total Revenue per room, Total Revenue per client, Booking Lead Time, Cancellation %, No Show ratio and etc.

Here is an example of hotel market segmentation:
Public: BAR Website, BAR Direct, BAR Indirect Commissionable, BAR Indirect Net
Promotions: Opaque; hidden hotel discount programmes, Flash Sales; promotional website offering membership discounts, Mobile; mobile websites offering same day or last minute discounts, Online Campaigns; internet publication offers and packages, Offline campaigns; print publication offers and packages, Special Event; packages and offers during holidays, festivals, concerts

Negotiated Rates: Corporate Dynamic Rates, Corporate Flat Rates, Government, Crew
Groups: Leisure, Business, Conference / Banquet, Incentive, Wedding, Events, Crew
Wholesale: FIT, Tour Operators, Wholesalers,

Other: Complimentary, Barter, Walk-In, Overflow (from another hotel), House Use, Time Share

The above segmentation is a general guideline. Each hotel has to decide what segmentation best fits their market and property.

Building a Revenue Management Culturein the organizations is the primary and most important part of this process. Revenue Management is becoming more complex, but at the same time more rewarding. Revenue Management in some shape or form plays a role in many strategies and tactics deployed in most companies in the modern business world. 

The relationship between the teams within an organization that set the strategies and the teams that deploy the tactics are extremely important. Without a defined link, strategies and tactics may conflict, leading to neither being successful. Many hotels have seen double-digit revenue improvement by employing Revenue Management techniques. This is especially true with the GM's support. By staying proactive about Revenue Management within their hotels, GMs can help their teams drive toward top-of-the-line revenues for the hotel and stand out as true revenue drivers within their organizations.

Setting Revenue Management Goals and Objectives: The proper goal of a Revenue Management programme is not to increase average room rates. Neither is it to increase average occupancy rates. Revenue Management programmes must focus on optimizing Revenue through right pricing strategies.

Forecasting demand, optimizing demand,controlling demand and monitoring demand are the four main components that form the Revenue Management cycle.

Forecasting Demand and Occupancy: Good demand forecasting is a key aspect of revenue management. Improvements in the demand forecasts used as inputs to the inventory allocation process translate directly into increased revenue in the form of higher average rates per customer and better utilization of the demand without losing a reservation that should have been accepted.

Optimizing Demand: Once the analysts have a forecast, analysts can determine on which days it is likely that analysts will have to turn down or up demand to decide the right price for rooms.

Controlling Demand: Historically analysts may be able to determine that the demand accepted has only really been controlled by the capacity of the hotel, that is, reservations have only been denied when a night was full. Alternatively,analyst may know that in some cases, length-of-stay and rate controls were put in place to control the amount and type of demand that analysts accepted.

Monitoring Demand: This stage of the process is when analysts look at what is happening and compare it to what analysts expected to happen based on your forecasts.

Choosing an Automated Revenue Management Solution: Hotels can achieve a greater market share by using an intelligent Revenue Management System. It bases room rates on real-time changes in the marketplace. Managing prices by demand allow hotels to fill rooms that would otherwise remain empty. Through dynamic pricing models hotels can gain a competitive advantage by basing rates on a calculation of occupancy, competitors and season.

Star Class Hotels have to adopt technological advancements in order to optimize revenue. 

Revenue Management system enable hotels to process all the booking data more systematically, effectively and efficiently. These systems use mathematical calculations to forecast guests and revenue demand at different times. The systems perform micro analysis to give high accuracy outputs and eliminate human errors and inefficiencies.

Selecting right Distribution Channels: There have been many changes in the technology over the last few decades within the Revenue Management field. In the past, guests chose a hotel by looking for the glowing vacancy sign in the window. Now, guests spend hours on their iPod looking for the best deal. As we move into the digital revolution, we must constantly update and monitor our online distribution channel strategies. Online Travel Agencies (OTAs) are a blessing and a curse for hotels. They're a blessing because they give additional exposure to potential customers, but a curse due to the high commission rates. 

As with any business, it's a good idea to diversify the channels. If become too reliant on a few and one isn't direct bookings, then hotels could become a slave to those few revenue generating channels. Many hotels find themselves in this situation with OTA's, and it becomes obvious that the hotel is not making as much money as they should be with every OTA booking. Most guests will now check guest reviews, compare pricing and find exactly what they are looking for. Management should evaluate performance of distribution partners and contracted rates (OTA, FIT, tour operator, corporate, consortia, crew, groups, etc...) which will help to manage the operation.

Choosing the Best Fit Technology: Deciding the right price for rooms at different times through Dynamic Pricing is the biggest challenge for hotel management. Maintaining right Revenue Management practices will help hotel management to optimize revenue from its inventories. Experienced and knowledgeable Managers in Revenue Management field could help hotels to achieve this task. By deploying automated Revenue Management tools could keep on a track of the continuously fluctuating data that make up a hotel's 24-hour cycle of supply and demand. Automated systems are eliminating the day-to-day manual data-crunching tasks. With integrated software in place, hotels gain visibility on niche travel sites, major OTAs and outshine competitors by beating their rate offerings. Online channel management technology is giving hoteliers the chance to gain control of extensive markets and global audiences.

Future for Hoteliers in Sri Lanka is Revenue Management
With the development of peace in the country, number of tourist arrivals into Sri Lanka is increasing rapidly. Hotels shouldn't slash prices especially during high season where there is a demand. Most of the good hotels get filled in advance through slashing room rates where they miss opportunities to sell at a higher rate later. They tempt to fill the rooms in advance by undercutting rates of its competitors instead of taking a calculative risk to sell at a higher rate later during the high season. Also during the low season hotels miss business opportunities by quoting higher room rates when similar hotels sell rooms at lower rates due to the market competition. In Sri Lanka, whilst some hotels enjoy profits and others run at losses. The loss making hotels should review their People-System-process Cycle. If it is not in order they should go through Business Process Reengineering (BPR) to reduce cost wherever possible and restructure their daily operation whilst optimizing revenue through right Revenue Management practices. Also they should focus that right sales strategies are in please and right sales channels are approached. Even the hotels that make profits should analyse further to ensure that their People-System-Process in order and that Right Revenue Management Practices are in place. After all, any business has unseen areas that can be ventured into or existing sectors that can be developed further. Top Management should oversees the Revenue Management and distribution strategy of the hotel and manage day to day yield operations.

For students pursuing hotel management courses in Sri Lanka, it is important to focus on Revenue Management and online distribution aspects. This will help them excel in this field and ensure they have an idea of how technology can help them achieve quicker and smarter results in the long run.
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Seven bills to raise revenue through mega taxes

By Chandani Kirinde

Finance Minister Ravi Karunanayaka has reintroduced the Finance Act (Amendment) Bill which seeks to impose the Mansion Tax and Migration Tax and the Super Gains Tax on a company or individual whose profit before tax exceeds Rs. 2,000 million.

This and six other bills aimed at raising state revenue were presented to Parliament by the Finance Minister this week amid opposition protests.

The bill was earlier presented in parliament consequent to the interim budget in January. The amendment to the Finance Act provides for the imposition of Bars and Taverns Levy, Casino Industry Levy, Super Gains Tax, Mobile Telephone Operator Levy, Direct-to-Home Satellite Services Levy, Satellite Location Levy, Dedicated Sports Channel Levy, Mansion Tax, Migrating Tax and the Motor Vehicles Importer Licence Fee.

The Direct-to-Home Satellite service levy of Rs 1,000 milllion will be imposed on every person in the business of providing Direct-to-Home services through satellite having more than 50,000 subscribers in Sri Lanka. The Migrating Tax will be charged from any citizen of Sri Lanka who permanently leaves Sri Lanka, at the rate of 20% of the foreign exchange released to be taken out of the country by such citizens.

This tax will be collected by the Controller of Exchange at the point of outward remittance of foreign currency, in accordance with the provisions of the directions and regulations made under the Exchange Control Act, and the money will be remitted to the Consolidated Fund within 15 days from the date of collection.

The Mansion tax will be imposed on every owner of a mansion constructed on or after April 1, 2000, at the rate of Rs 1 million per year, in addition to the rates and taxes charged and levied by any local authority, and shall be paid in four equal installments.

A Mansion has been described as “any building constructed on or after April 1, 2000, for residential purposes, of which the floor area is not less than 10,000 square feet as per the building plan approved by the local authority of the local authority area wherein such building is situated, or the value of such building, as at the first day of April of any relevant year, is not less than Rs 150 million, as determined by the Government Chief Valuer, or by an officer authorized by him, after making any adjustment as may be prescribed, and in the case of a condominium property , a condominium unit of such property shall be deemed to be a building for the purposes of part.

The other Bills presented by the Minister were the Inland Revenue (Amendment) Bill, Value Added Tax (Amendment) Bill , Nation Building Tax (Amendment) Bill, Economic Service Charge (Amendment) Bill, Telecommunication Levy (Amendment) Bill and the Betting and Gaming Levy (Amendment)Bill.
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Nawaloka Group eyes managing a Dubai hospital

By Duruthu Edirimuni Chandrasekera

The Nawaloka Group, primarily in private healthcare, plans to take its core competencies international in a bid to beat shrinking margins here. The group is in talks with a hospital in Dubai to manage and operate it, a top official told the Business Time.

He said this is a skill/expertise the company wants to capitalise on in terms of going international. He added that in this respect, the group is eyeing similar opportunities in the region. “We want to take this core competency to the region mainly because it is more ‘manageable’ in terms of controlling costs and general efficiency as its closer in terms of travel time,” he said. He said plans will materialise by next year on the Dubai hospital.

The doctor-centric nature of the Sri Lankan healthcare industry suggests that patient volume depends on the quality of the visiting consultants, healthcare analysts say, adding that the lack of skilled medical personnel and the high negotiating power of consultants press margins by increasing personnel costs.

According to the Nawaloka official, this is the primary reason that Nawaloka wants to expand to Dubai. He said that the low margins earned on services can be attributed to the high bargaining power of doctors in the industry. “This dominance (doctors’) enables hospitals to absorb about 55 per cent of the charges made for surgical interventions and nearly 20 per cent of the charges made for medicinal treatments. We are left with only a small portion to cover the hospitals costs.”

He added that shortage of medical personnel is more distinct in private hospitals which are dependent on visiting specialists to attract patients, given the doctor-centric nature of the Sri Lankan healthcare industry.

An increasingly sedentary lifestyle, rapid urbanisation and an ageing population have amplified the pervasiveness of non-communicable diseases (NCDs) in the world and especially in Middle Eastern countries, according to healthcare analysts. The official added that this is intensified by the fact that NCDs typically require specialised treatments which entail longer hospital stays. “The private sector in the Middle East is, therefore, poised to benefit from the resulting anticipated demand for treatment of NCDs.”
www.sundaytimes.lk

Sri Lanka considering removing old vehicles off roads

Sri Lanka is seriously considering the possibility of removing old 15 years and over unroadworthy vehicles numbering around 1.2 million from the roads to meet more efficient transportation needs of urban areas, Transport Ministry sources said. Old vehicles have been one of the major causes for road traffic accidents, vehicular congestion and air pollution.

The Motor Traffic Department (MTD) has been directed to devise legislation providing regulations to prohibit the use of old vehicles on roads and empowering the traffic police to seize un-roadworthy vehicles, a senior department official said. This is one of the measures suggested in the Urban Transport Master Plan for Greater Colombo prepared with Japanese funding, he said, adding that the new Transport Minister Nimal Siripala de Silva is keen to implement the plan.

Welcoming the move, Past Chairman, Ceylon Motor Traders Association (CMTA), Tilak Gunasekera told the Business Times that the government should devise a scheme to persuade franchised motor vehicle importers to buy old vehicles for scrap so that they could be removed from the roads or to exchange the old one with a new model.

He said that there should be a mechanism to encourage consumers to opt for brand new vehicles and increase duty/tax band for reconditioned vehicles. Sri Lanka opened the floodgates to re-conditioned vehicle imports from Japan and some other countries, regardless of the age of the vehicles in the late 1970s.
www.sundaytimes.lk

Suspects in CIFL case bailed out

Chulaka Gunawardena alias Deepthi Perera, former chairman of the failed Central Investment and Finance (CIFL) and two other suspects in the CIFL fraud case were allowed bail on Friday by the Colombo Chief Magistrate Gihan Pilapitiya. The other two suspects are J.K. Wickramaratne, former CIFL CEO and S.B. Kondadeniya, a former CIFL director.

At Friday’s hearing both the Central Bank (CB) and the CIFL Depositors Association (CIFLDA) rejected the revival plan submitted by the first suspect. After the submissions of the counsel for the accused, CB, CID and CIFLDA the magistrate ordered the suspects to be released on bail and directed Mr. Perera to submit to court within three months a scheme that offers satisfactory relief to depositors. The case was postponed to 22 October.

The suspect better known as Deepthi Perera had been on the run and hiding in Cambodia since after 2009 when the finance company began to collapse and shocked depositors stopping receiving interest payments or were unable to withdraw their money.
Earlier the CIFL depositors received a major blow when the case instituted by the CIFLDA against the CB in the Appeal Court and the stay order granted in September 2013 by court was vacated without hearing the case.

In mid 2014, CIFLDA monitoring the stock market found one individual, believed to be a politically powerful government advisor, to be continuously buying CIFL shares in large numbers worth Rs. 250,000 for a few days. The CIFLDA appealed to the Supreme Court against the Appeal Court order, but the CB asked the depositors to get the Supreme Court case withdrawn on the undertaking that the CB would find a suitable investor to revive the failed CIFL but never found an investor.

(Quintus)
www.sundaytimes.lk

5-pronged strategy including tax hike to curb rising vehicle imports

By Bandula Sirimanna

Sri Lankan authorities, tackling an acute case of depleting foreign exchange reserves and a rising vehicle population, is resorting to a 5-pronged approach to cut imports and make vehicles costly to the population resulting in a likely 20 per cent cut in vehicle imports.

While a depreciating rupee in which the US dollar traded in the Rs.140-142 range this week from Rs. 134 flat a few weeks ago has made car imports costlier and restricted leasing facilities made it even more difficult to potential owners, an impending 100 percent cash margin for letters of credit (LCs), proposed hike in taxes and suspending car permits is seen plugging a hole in foreign exchange reserves.

The special facility of car permits given to taxpayers whose income tax liability in respect of any period of five years of assessment of not less than Rs. 250,000 a year has also been suspended to curb vehicle imports. Economists say the country’s total debt has skyrocketed to Rs. 8.2 trillion ($58.7 billion), almost half of which is foreign debt.

The government’s annual debt servicing costs have now surpassed total government revenue, aggravating the country’s balance of payments problems. The trade deficit has increased to US$4 billion during the first six months of the year, a 15.6 per cent increase compared to last year.

The Government is to also re-impose a 100 per cent margin deposit requirement against the LCs opened with the commercial banks for vehicle imports, official sources said. “Accordingly, LCs for the importation of vehicles cannot be opened in commercial banks without a minimum cash margin of 100 per cent and this will affect motor traders badly specially small scale dealers,” Ashok L. Ganwani, Director Lekhraj Automobiles (Pvt) Ltd told the Business Times.

Small players will be affected greatly as they have to pay upfront the value of the vehicle which is a huge burden to them, he said, adding that they are being already battered with the currency depreciation. The high import bill is the main concern of the Central Bank (CB) with declining currency other than fuel cost (though it is low in current market) and exceeding traffic congestion, he said.

Whatever policy issues to be brought up in the near future for the interest of national economy only is to be shouldered at the expense of the community, he pointed out.He noted that vehicle importers will have to block large amounts of their money for LC’s till the landing of vehicles.

Earlier they had the facility of opening the LC with a part payment and the balance could be settled after the arrival of the vehicle, he added. Tilak Gunasekara, Managing Director of Sathosa Motors Plc, said the new margin facility should apply only for cars, not for commercial vehicles and buses. He said transport and logistics sector is important for the Sri Lankan economy as it impacts on the country’s transportation of agricultural produce from the fields to retail shops.

On leasing facility constraints, the CB imposed limits on banks and finance companies in which loans and leases of vehicles should not excess 70 per cent of the value of the vehicle compared to 100 per cent earlier. This was welcomed by Rajiv Gunawardena, Chief Executive Officer, Asia Asset Finance Plc, who said the move would have a positive impact on the finance industry as well as on the overall economy.

He noted that it will mainly affect first-time buyers and those who are looking for their second vehicle. It should not have an impact on those replacing their vehicles. Leasing and hire purchase loans of motor vehicles have been one of the biggest product portfolios for the finance industry; therefore in terms of business activity there will be an immediate impact until the market adjusts for the change.

However this will help to improve the quality of the vehicle loan portfolio in the longer term, he pointed out. Abans Finance Plc Managing Director Kithsiri Wanigasekera was of the view that this move could restrain future credit growth of Sri Lankan leasing and finance companies and also reduce bad loans and defaulters.

He noted that most of the finance companies are not allowing 100 per cent vehicle leasing facilities, therefore its impact will not threaten the industry. www.sundaytimes.lk

Scrip issue from DCSL will be considered says Harry

The Distilleries Company of Sri Lanka PLC (DCSL), one of the country’s wealthiest conglomerates, will consider a bonus share issue, the company’s chairman, Mr. D.H.S. Jayawardena, said in response to a shareholder’s request at its annual general meeting last Monday.

The shareholder pointed out that DCSL carries very large reserves – Rs. 22.75 billion reserves and Rs. 37.95 billion retained earnings in its books as at March 31, 2015, and suggested a scrip issue.

Jayawardena responded the matter would be considered.

In response to another question on what the government owes the company on account of profits earned by the Insurance Corporation of Sri Lanka when DCSL was in control, Jayawardena did not give the figure of the sum owed but said that the "government auditor" was sitting on the matter and there had been no progress since "Mayadunne (a previous Auditor General C. Mayadunne) left."

The Supreme Court ordered that the Insurance Corporation which was sold to DCSL be taken back by government but profits earned during DCSL’s tenure be paid back to the company.

"With regard to the Sri Lanka Insurance Corporation Ltd. (SLIC), even after a lapse of six years, we still await the payment of profit earned during DCSL group’s tenure at the helm of SLIC," Jayawardena said in his chairman’s message in the company’s latest annual report.

"We are hopeful that the profit earned, which has to be paid back to us as per the Supreme Court directive, will be reimbursed to us as early as possible."
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Monetary Policy Review – September 2015 - Policy rates unchanged

Headline inflation, on a year-on-year basis, remained in the negative territory at -0.2 per cent for the second consecutive month in August 2015. Headline inflation, on an annual average basis, moderated further to 1.0 per cent in August 2015 from 1.3 per cent in the previous month. Meanwhile, core inflation increased to 3.9 per cent in August 2015 on a year-on-year basis, from 3.5 per cent in the previous month. However, annual average core inflation remained unchanged since June 2015 recording 2.8 per cent in August 2015. Going forward, headline inflation is expected to remain comfortably within 2.0-3.0 per cent by year end, supported by improved domestic supply conditions and subdued global commodity prices. 

In the monetary sector, broad money (M2b) recorded a year-on-year growth of 16.2 per cent in July 2015, driven entirely by the expansion in domestic credit aggregates. While credit granted to the private sector by commercial banks increased by 21.0 per cent, on a year-on-year basis, in absolute terms, credit granted to the private sector in July 2015 was Rs. 40.9 billion totaling to Rs. 245.9 billion during the first seven months of 2015. The increased credit flows to the private sector have been sustained mainly due to prevailing low market interest rates amidst low inflation environment. Meanwhile, the Central Bank has observed with concern the recent rapid growth of exposure of banks and financial institutions to certain categories of lending, in particular lending in respect of motor vehicles. Accordingly, with a view to preempt this trend which could develop into a system-wide risk to the financial sector, as a prudential measure, the Central Bank decided to impose a maximum Loan to Value (LTV) ratio of 70 per cent in respect of loans and advances granted for the purpose of purchase or utilisation of motor vehicles by banks and financial institutions supervised by the Central Bank. Going forward, the Central Bank will continue to be vigilant on the overall trends in the growth of credit as well as monetary aggregates and take pre emptive measures in the case of emerging risks threatening the maintenance of price stability on a sustainable basis. 

On the external front, the decline in expenditure on imports in July 2015 has been greater than the decline in earnings from exports, narrowing the deficit in the trade account of the month. With the Central Bank’s decision to allow greater flexibility in the determination of the exchange rate, so far in 2015, the rupee has depreciated by around 7 per cent against the US dollar. The recent depreciation of the exchange rate, which would enhance exports, while curtailing non essential imports, is expected to have a favourable impact on the trade balance. Such improvement, together with regular inflows of workers’ remittances and earnings from tourism along with other inflows to the services account would help narrow the deficit in the current account balance and strengthen the resilience of the external sector. Meanwhile, the gross official reserves, which stood at US dollars 6.8 billion at end July 2015, are estimated to have decreased to US dollars 6.4 billion by end August 2015. However, official reserves are expected to increase during the remainder of the year with the expected long term external financial flows to the government. 

According to the Department of Census and Statistics (DCS), the Sri Lankan economy is estimated to have grown by 6.7 per cent during the second quarter of 2015, recording a growth rate of 5.6 per cent for the first half of 2015 compared to 1.3 per cent recorded in the corresponding period of 2014. Economic growth during the second quarter has been largely supported by the improved performance in the Services sector along with positive contributions from the Industry and Agriculture sectors. 

Taking the above developments in the economy into consideration, the Monetary Board, at its meeting held on 25 September 2015, was of the view that the current monetary policy stance is appropriate. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 per cent and 7.50 per cent, respectively.

Sri Lankan stocks little changed ahead of policy rate decision

Reuters: Sri Lankan shares ended little changed on Friday ahead of the central bank's policy rate decision later in the day where it is widely expected to keep its policy rates unchanged.

The main stock index closed near its more than two-month closing low hit on Monday, down 0.06 percent at 7,110.80.

"There seems to be some investor confidence coming into the market. But investors are waiting to see the direction," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

"Going into October, the market will be positive with confidence improving. The rupee is also seen settling gradually."

The monetary policy rate announcement is scheduled at 1230 GMT.

A weak rupee curbed investor risk appetite and rising market interest rates also hit sentiment, with t-bill yields at their highest level in more than five months at the last auction.

Turnover was 1.12 billion rupees ($7.95 million), its highest since Aug. 27 and in line with the daily average of 1.11 billion rupees. The turnover has been roughly half of this year's daily average since Aug. 31, stock exchange data showed.

Analysts said investors were waiting to see how the government would bridge the budget deficit and where the revenue would come from, in its November budget.

The IMF last week said the fiscal deficit is likely to range between 5.5 percent and 6 percent in 2015, much higher than an official target of 4.4 percent due to falling government revenues.

Foreign investors were net buyers of 317.4 million rupees worth of shares on Friday, but they have been net sellers of 2.49 billion rupees so far this year.

Shares of Ceylon Tobacco Company Plc fell 0.88 percent, while Peoples Leasing Plc dropped 3.49 percent. ($1 = 140.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Finance Houses and Leasing Companies to appeal to CB Relax vehicle leasing directive

By Ishara Gamage

Ceylon Finance Today: The Finance Houses Association of Sri Lanka and the Leasing Association of Sri Lanka have planned to request the Central Bank of Sri Lanka to relax its recently imposed vehicle loans and leases directive as it could restrict growth in their leasing and vehicle lending books, relevant Associations members told Ceylon FT yesterday."We are drafting separate letters to send the Governor of Central Bank by explaining our grievances and suggestions", they said. They believe that except vans and luxury vehicles all other vehicles could be omitted from this directive."Re-registered vehicles, two wheelers, three wheelers and commercial vehicles can be easily omitted from this directive; they have minimum effects for foreign currency outflows, an official of the Finance Houses Association," added. He also emphasized that limiting commercial vehicles such as agricultural vehicles, SME vehicles and buses could adversely affect the country's economic activities.

Leasing is the core business of the Sri Lanka's finance companies and it account for nearly 75% of its business. Leasing is represented around 5-10% of the banking sector business.In an offer to scale down vehicle imports weighing on the country's Balance of Payment (BOP) the Central Bank sent directives to all banks and finance companies imposing restrictions on loans and leases to vehicles.According to the condition, all banks and finance companies are now only allowed to provide a lease of up to 70% of the vehicle value.The directive came into effect from midnight of September 14.Meanwhile, JB Securities releasing its August vehicle registration review said," Contrary to popular belief balance of payment crises that this country faces from time to time are not due to vehicle imports but due to a combination of monetary policy (not allowing a free floating exchange rate and/or not revising interest rates) and fiscal policy (public servant salary increases, not collecting enough taxes, under recovery of petroleum taxes, etc.). Thus the solution to the BOP crisis is to address the fundamental issues rather than meddle with vehicle taxes.

Brand new car registrations were 4,990 units in August lower than 5,773 units recorded in July but significantly higher than 788 units recorded 12 months ago. Small cars (<1,000 cc) accounted for 94% share of brand new registrations. Maruti's accounted for 4,075 units down from 5,024 units recorded in July but significantly higher than 380 units recorded 12 months ago. Maruti financing share was 61.2% lower than 68.4% recorded in July which may explain the slow down. Micro Panda accounted for 402 units up from 238 units in July.

Investor: Future bright for Sri Lanka if policies are consistent, says intl hotel developer

Author CHAMATH ARIYADASA

(LBO) – With more stability in Sri Lanka, investors are keen to make long-term commitments, but their one ask is that policies are clear and remain consistent, Goulam Amarsy, an international hotel developer said.

Amarsy appreciated the potential of the island during his first visit to Sri Lanka in August. Now he is back, a month later, this time exploring investment opportunities and business tie ups.

“Future is great so long as there is clear and consistent policy,” Amarsy told Lanka Business Online.

Recent political developments after the August elections also points towards more stability, he said.

Amarsy has developed shopping centres, entertainment centres and hotels in North America and the Middle East, and is the managing director of Dubai-based Malchas Consultants.

His company has been involved in mixed-use real estate projects in the UAE, Pakistan, India and African countries, and facilitated retail deals on behalf of Carrefour, Landmark, CinePax and Virgin. In 2012, they entered into a joint venture with the Paris-based Warwick hotel group to manage hotels in the UAE and the Indian sub-continent.

Commenting on the international investment and financing environment, he said: “Investors in the Middle East are interested in making investments in Sri Lanka and the international financing environment is positive.”

“This is a new destination being rediscovered by international tourists. With everything it has to offer, we are convinced Sri Lanka will find its niche” he added.

Amarsy believes one of the standout strengths in Sri Lanka is the friendliness of the people which bodes well for tourism as a service industry, as it grows in stature as a major tourist destination.

Tourist arrivals increased 17 percent in the first eight months of this year to 1.1 million. The island is well on its way to 5 million tourist arrivals in the medium term, according to him.

Sri Lanka will benefit from increased tourists from the greater region and should target top income segments in the Indian sub continent, he added.

Good prospects seen for Sri Lanka home mortgage market

ECONOMYNEXT – Low interest rates in Sri Lanka have the potential to activate the home mortgage market into which a large pool of savings can be channelled, a senior analyst at a stock brokerage said.

In Sri Lanka housing finance is only about seven percent of total loanable assets with much of it backed by pension fund balances, said Murtaza Jafferjee, Managing Director of JB Securities.

In most countries the home mortgage market has a much higher share, he told an investment fund and asset management forum held by Fitch Ratings.

In the United States it is about 40 percent of total loanable assets and in countries like Thailand and the Philippines it is about 20 percent.

“So if you ask me where will this capital appetite really come from, this is the big one which has not taken off in sri lanka – that we don’t really have a mortgage market,” Jafferjee said.

Single digit interest rates would make it more likely the mortgage market would get activated, he said.

Sri Lanka has about five million households and an organised home building market can create a huge appetite for capital, he added.

“Everybody has a house but over 50 percent have a substandard house,” Jafferjee said. “That is where people like the funds can create bond funds. That has to activate. That is the big one to go. That is perhaps where most of these savings can go.”

Sri Lanka tea exports fall sharply in August

ECONOMYNEXT – Sri Lanka’s tea export shipments and earnings fell in August 2015 from a year ago with value-added products again showing a significant fall, brokers said.

Forbes & Walker Tea Brokers said tea exports in August fell by 6.3 million kilos to 21.1 million kilos from the previous year.

"Total revenue too show a fairly substantial decline of 5.8 billion rupees year-on-year with August 2015 realizing only 13.2 billion rupees when compared to 18.8 billion rupees in August 2014."

John Keells Ltd. said total revenue from tea exports in the first eight months of 2015 (January – August) fell by a “substantial” 21.3 billion rupees to 119.9 billion rupees compared to the same period in 2014.

"The export quantities too show a decline of 6.3 million kilos totalling 201.5 million kilos," they said in a report.

The drop in the approximate average unit Free On Board value per kilo of 78.65 rupees, when compared to the same period last year too, has had a “significant negative impact” on export earnings, the brokers said.

Forbes & Walker said that in August 2015 tea bags have shown a "significant decline” in volume while bulk tea and packeted tea volumes too declined but to a lesser extent when compared to August 2014.

On a cumulative basis, up to August 2015 bulk tea exports have grown but packeted tea and tea bags have fallen.

Brokers said Russia has re-emerged as the largest importer of Ceylon for the period January – August 2015 displacing Turkey from the top spot.

Sri Lankan stocks little changed ahead of policy rate decision

Reuters: Sri Lankan shares ended little changed on Wednesday ahead of the central bank's policy rate decision on Friday.

The main stock index closed near its more than two-month closing low hit on Monday, down 0.05 percent at 7,114.83.

The central bank's monetary policy rate announcement is scheduled on Friday at 1230 GMT.

"There was no real investor interest in the market," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd, adding the market moved sideways as there was no clear direction.

The weak rupee curbed investor risk appetite and rising market interest rates also hit sentiment, with t-bill yields at their highest level in more than five months at the last auction.

The rupee ended marginally higher due to inward remittances ahead of the Hajj, though importer demand for the greenback limited gains, dealers said. It has declined 4.4 percent since the central bank effectively floated the currency on Sept. 4.

Turnover was 747.6 million rupees ($5.31 million), compared with the daily average of 1.11 billion rupees. The turnover has been roughly half of this year's daily average since Aug. 31, stock exchange data showed.

Analysts said investors were waiting to see how the government would bridge the budget deficit and where the revenue would come from, in its November budget.

The IMF last week said the fiscal deficit is likely to range between 5.5 percent and 6 percent in 2015, much higher than an official target of 4.4 percent due to falling government revenues.

Foreign investors were net buyers of 155.7 million rupees worth of shares on Wednesday, but they have been net sellers of 2.8 billion rupees so far this year.

Shares of Nestle Lanka Plc fell 1.35 percent and John Keells Holdings Plc dropped 0.74 percent.

Both stock and currency markets will be closed on Thursday for the Hajj festival holiday. Normal trading will resume on Friday. 

($1 = 140.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka JKH’s Cinnamon Life has 40 pct of residential tower prebooked: Official

(LBO) – Sri Lanka’s blue-chip John Keells Holdings said that its 850 million US dollar mixed development project “Cinnamon Life” has already started selling apartments in its integrated resort under the concept of live, work and play.

“We call it a city-within-a-city which will have office space, shopping, dining, entertainment, playing area, apartment and a 5-star hotel,” Ajit Gunewardene, deputy chairman of John Keells Holdings, said.

“They can live eat and work within this.”

“Locals and tourists need a destination to gather and enjoy themselves when they work, live or play and Cinnamon Life will be their playground.”

“The integrated resort concept will attract investors, high-end brands, leisure and business travellers and local populace who will be compelled to be part of its unique contemporary ethos.”

Cinnamon Life is a 4.5 million square feet integrated resort consisting a 800 room luxury hotel, large high end retail mall, luxury residencies, state of the art office space and convention, ballroom & banqueting space, which was previously branded as “Waterfront project.”

The project is expected to be completed by 2018.

“Our view was that Colombo would be the modern capital of South Asia, the next Singapore that would be created in Asia, and we wanted to be part of that,” Gunewardene said.

“And this this project will be the centre of gravity of this new growth sector of Colombo,”

“Also it will be a marketing tool for the country.”

He said the new project will generate 7,000 – 8,000 direct jobs and may also create up to 50,000 indirect employment opportunities.

“None of these jobs going to be in minimum wage,” Gunewardene said.

The project main building, shaped like a guard stone, is built with two residential towers which will have 450 apartments.

Suresh Rajendra, President of the John Keells Property Group, said that 40 percent of the first residential tower is already booked.

“John Keells will be replicating its successful guaranteed rental scheme which was operational at both its Emperor and Monarch projects. A similar scheme with a fixed guaranteed annual return for a limited number of apartments for a limited period will be available for Cinnamon Life.” Rajendra said.

“Another attractive feature is the state of the art, 24 story office space, half of which will be operated by the developers themselves and the remaining will be sold on an outright basis.”

Gunewardene said the project targets to capture the meetings, incentive travel, conventions and exhibitions market (MICE) in the region.

He said the project will have a facility to have conference for 4000 delegates at any given time.

“Our view was that Asia was going to be the growth engine for the next 30 to 40 years,” he said.

“We are placed right at the centre of this zone.”

Japan to increase FDIs after 10 years

Hiran H.Senewiratne (hsenewiratne@gmail.com)

Japan now intends increase foreign direct investments in Sri Lanka, Japanese Ambassador Kenichi Suganuma said.

Japanese foreign direct investments to the country have been stagnant for more than a decade. Japan is now impressed with the government's economic policies,the envoy said."Sri Lanka needs a clear, consistent and transparent economic policy to promote foreign direct investments into the country. Therefore, several top end high tech Japanese companies are now exploring possibilities to invest here,and they are quite positive to invest, "Suganuma told the Daily News Business.

He said that Sri Lanka has a very high potential for private sector business development with the change of government polices and could harness the geographical advantage due to the access Indian, Bangladesh and Pakistan markets.

Suganuma said the national government concept in Sri Lanka is an excellent move for the country to move forward as it could create a lot of confidence to prospective investors to invest here. "Therefore, they are also considering signing the Free Trade Agreement in the future," he said.

He said that the Japan is now keen on promote bilateral trade relationships and FTA with Sri Lanka to enhance trade and investment in both countries.

Suganuma said that the balance of trade is not in favour of Sri Lanka and for Sri Lanka exporters to penetrate the complex Japanese market, it demands high quality global standards.

He said that Sri Lanka exporters should focus and identify markets in Japan. "At present there is a high demand for virgin coconut oil and high quality tea to name a few, he said. He also said that JETRO Sri Lanka is now taking steps to encourage Sri Lanka exporters to penetrate into lucrative market. They take prospective exporters on study tours and other required knowledge for them to enter the market, he said.
www.dailynews.lk

Pan Asia Bank debentures oversubscribed

Pan Asia Bank's listed debt offer for four billion rupees had been oversubscribed Wednesday and has closed on the same day yesterday. The bank offered 20 million debentures at 100 rupees each with an option to issue 20 million further. The basis of allotment will be notified to the CSE in due course.
www.dailynews.lk

Germany to help revive GSP+ for Sri Lanka: Visiting Foreign Minister

(LBO) – Germany would lead the European Union to revive the GSP+ relief for Sri Lanka, the German Foreign Minister said in a statement.

“I will take action in that regard, in coordination with the Foreign Ministry of Sri Lanka,” Frank Steinmeier, foreign minister of Germany said when he called on President Maithripala Sirisena, Tuesday.

President Sirisena, commending the cooperation of Germany extended to Sri Lanka for a long time, said that to maintaining a good association with every country in world is the foreign policy of the new government of Sri Lanka.

“Ensuring of the democracy and reconciliation is the course of the government,” he said.

“The government is also committed to ensure the freedom of judiciary.”

The German Foreign Minister expressed the satisfaction of the government of Germany on the program carried out by the Sri Lankan government to ensure democracy and achieve reconciliation.

Steinmeier conveyed the invitation of German Chancellor Angela Merkal for President Sirisena to visit Germany and the President accepted the invitation, the statement said.

Deputy Foreign Minister Mr. Harsha de Silva, Secretary to the Ministry Mr. Sivageeshwara and German Ambassador in Sri Lanka Dr. Jürgen Morhard also participated in this occasion.

JKH promises $ 850 m Cinnamon Life will be game changer

Premier blue chip John Keells Holdings (JKH) yesterday promised that the biggest-ever private sector investment of $ 850 million for Cinnamon Life in Colombo 2 would be an economic game changer for Sri Lanka and an icon in South Asia. A trendsetting project in Sri Lanka, Cinnamon Life has been launched with pride by Waterfront Properties Ltd., a member of the John Keells Group. This architectural icon has been envisioned as a 4.5 million sqft integrated resort consisting of an 800-room luxury Cinnamon hotel, avant garde experiential and entertainment haven, residential apartments, state-of-the-art office spaces, a wide variety of food and beverage offerings and ballroom, conferencing, theatre and banqueting spaces. This mixed development project is Sri Lanka’s largest private sector investment. Cinnamon Life, with its vibrant and inspired concept, is a project of significant national importance and will become the epicentre of modern South Asia. This integrated resort development will be executed as a ‘life capital’, an architectural heartbeat, where different aspects of life, living, working and playing blend seamlessly, interacting with one another, empowering one another in new and exciting ways. Internationally renowned architect, artist and engineer, Cecil Balmond, the design visionary behind some of the most popular buildings in the world, including the ArcelorMittal Orbit in London and the CCTV in Beijing, will be bringing this inspired concept to life, while a consortium of contractors headed by Hyundai Engineering and Construction are the contractors for the project. With Cinnamon Life, Balmond has dreamed up a design that combines a contemporary international feel, with a local flavour. He is determined to use Sri Lanka’s largest private sector investment as a chance to put the nation on the world map. “Looking at it from an architecture and design point of view, it will be a composition of several forms. It will be like nothing Sri Lanka has ever seen. The integrated nature, unique design and the lifestyle it offers will make this the flagship development of Sri Lanka. The shape and form of the project is such that it will stand as a guard stone for the city,” he emphasizes.The structure of the project provides a backdrop to the city and the sea. It has massive projections which are powerful dynamic statements in architecture. The scalloped form gives it a romantic shape and mirrors the Beira Lake. The structure reflects a functional, yet aspirational, feel with the massive projections it will provide a theatrical sensation, for those within to watch the city in the front and the drama within the architecture itself.Articulating the John Keells vision for Cinnamon Life, Ajit Gunewardene, Deputy Chairman of the company, commented: “Cinnamon Life was conceptualised as a flagship project for Sri Lanka as it stakes its claim in the international arena after decades of remaining on the sidelines. The first of its kind in the region, Cinnamon Life will shine bright like a beacon of prosperity and help support the country’s development. “Locals and tourists need a destination to gather and enjoy themselves when they work, live or play and Cinnamon Life will be their playground! The integrated resort concept will attract investors, high-end brands, leisure and business travellers and local populace who will be compelled to be part of its unique contemporary ethos. This project will generate numerous benefits for the economy and the community. More importantly, Cinnamon Life will engender a sense of pride to be Sri Lankan as it will signal the march of the country towards a vibrant future.”The Property arm of the John Keells Group has successfully executed prominent landmarks such as Monarch and Emperor at Crescat City; Onthree20; and its latest project, 7th Sense – Gregory’s Road.Suresh Rajendra, President of the John Keells Property Group, commented: “The legendary reputation of the company precedes us in the marketplace and we are overwhelmed by the expressions of interest for bookings for ‘The Residence’. In fact, I am happy to announce that 40% of the first tower is already booked. John Keells will be replicating its successful guaranteed rental scheme which was operational at both its Emperor and Monarch projects. A similar scheme with a fixed guaranteed annual return for a limited number of apartments for a limited period will be available for Cinnamon Life. Another attractive feature is the state-of-the-art, 24-storey office space, half of which will be operated by the developers themselves and the remaining will be sold on an outright basis. We remain steadfast in our commitment to deliver the highest gains for this project.”Based on its sheer scale and powerful ambition, Cinnamon Life will showcase Sri Lanka’s aspirations and reliability to the region and define Sri Lanka as the place where possibilities are endless.
www.ft.lk

Portfolios and functions of Ministers gazetted; CBSL, SEC, ETF under PM

(LBO) – Sri Lanka’s Prime Minister Ranil Wickremesinghe has taken several important financial institutions under his purview, as per the gazette notification published on the subjects under each minister.

The Prime Minister as the Policy Planning and Economic Affairs Minister has taken the Central Bank, the Securities and Exchange Commission, the Employees Trust Fund and CRIB under his purview.

All together 20 institutions including the Public Utilities Commission, National Wages Commission, Department of External Resources and Department of Census have been gazetted under Prime Minister’s control.

Wickremesinghe also kept these institutions under the period of 100 day government.

Meanwhile Finance Minister Ravi Karunanayake has been given 26 institutions including the Treasury and its departments, the Inland Revenue Department, Valuation Department and Sri Lanka Customs.

The Minister is also in charge of Insurance Board of Sri Lanka, Excise Department and National and Development Lotteries Boards.

Urban Development Authority, Land Reclamation and Development Corporation and National Physical Planning Department are under the purview of Megapolis and Western Province Development Minister Patali Champika Ranawaka.

Public Enterprise Development Ministry has 19 state institutions to develop including all state Banks, Sri Lanka Insurance Corporation and as well as troubled SriLankan Airlines and Mihin Lanka.

Newly formed Telecommunications and Digital Infrastructure Ministry has two key institutions namely the ICTA and SLT under its purview apart from the control of all IT parks.

Meanwhile newly formed Development Strategies and International Trade Ministry headed by Malik Samarawickrama is in charge of 4 institutions namely the BOI, Export Development Board, Export and Import Department and ‘Mahapola’ Trust Fund.

Civil Aviation Authority and Airport & Aviation Services (Sri Lanka) Limited have been gazetted under the Ministry of Transport.

Sri Lanka brings back retrospective, telecom, small car importer tax

ECONOMYNEXT - Sri Lanka has re-introduced to parliament, a series of taxes including a controversial retrospective punitive tax and a levy aimed at hindering small car importers.

The administration elected in January was not able to pass the taxes as the then opposition did not support the taxes.

Opposition members at the time said the taxes amounted to taking vengeance on some companies including telecom companies and casino as firms perceived to have made 'ill-gotten' gain with the help of the last regime.

A tax on large 'mansions, changes to the value added tax, nation building tax was also tabled, to be taken up for a second reading tomorrow.

Opposition member Bandula Gunewardene said a debate was needed for the taxes.

Analysts warned that the retrospective taxes, and punitive taxes would hurt Sri Lanka's investment environment, just rule of law and open the door for the elected ruling class to wreak vengeance of other companies based on political connections.

Analysts say instead of using the taxation system to take back 'ill-gotten gains' those who made ill-gotten gains should be brought before the law.

Anura Kumara Dissanayake an opposition legislator said Avant Garde Security, a company which had made millions of dollars, apparently breaking the law was getting off scot free.

Sri Lanka’s Sierra Cables to set up plant in Kenya

ECONOMYNEXT – Sri Lankan cable manufacturer Sierra Cables said it plans to set up a manufacturing plant in Kenya to supply transmission and distribution cables to East African countries.

A stock exchange filing said the firm had recently done a survey in Nairobi, Kenya on the feasibility of setting up a cable manufacturing plant.

“The feasibility study had indicated favourable financial outcomes and a formal project report has been approved by the Board of Directors for implementation in forthcoming months.”

It said the Kenyan economy is expected to grow by six percent in 2015 and infrastructure would be a significant contributor to that growth.

“The company could take part in this growth wave and establish its place in the Kenyan manufacturing sector,” it said.

“The returns would depend on the time considering the facility construction time, initial trial production, and the establishment of the marketing processes.”

Sri Lanka Treasuries yields flat

ECONOMYNEXT - Sri Lanka's Treasuries yields were flat at Tuesday's auction with 22.5 billion rupees of 3-month bills being sold, at an average yield of 6.78 percent, down one basis point from a week earlier.

The 6-month yield was 7.07 percent with 2.7 billion rupees of bills being sold. Last week bids were rejected.

The 12-month yield was just up 01 basis point at 7.18 percent with 3.0 billion rupees of bills being sold.

The debt office sold a total of 28.3 billion rupees of bills.

Sri Lankan stocks recover from more-than-2-month closing low

Reuters: Sri Lankan shares snapped a five-session losing streak on Tuesday and recovered from their lowest close in more than two months hit in the previous session after the government gave some clarity on the specific duties of each ministry.

Despite parliamentary elections ending in August and the appointment of the cabinet early this month, the government had until Tuesday failed to announce the institutions and their role under each ministry, leading to uncertainty among investors.

The government notification through the gazette and some foreign interest in stocks boosted sentiment, brokers said.

The main stock index ended 0.2 percent up at 7,118.38, edging up from its lowest close since July 15 hit on Monday.

"Investors were waiting for some kind of positive news. The gazette notification with subjects and functions of each ministry has given some kind of clarity to the market," said a stockbroker asking not to be named.

However, a weaker rupee and upward pressure on interest rates weighed on sentiment.

The rupee fell 0.11 percent on Tuesday to a fresh low of 141.00 per dollar due to importer demand for dollars, while exporters held on to the greenback on expectations of further depreciation.

Turnover was 806.4 million rupees ($5.72 million), compared with the daily average of 1.11 billion rupees. The turnover has been mostly about half of this year's daily average since Aug. 31, stock exchange data showed.

Analysts said investors were waiting to see how the government would bridge the budget deficit and where the revenue would come from, in its November budget.

The weak rupee curbed investor risk appetite and rising market interest rates also hit sentiment, with t-bill yields at their highest level in more than five months at the last auction.

Foreign investors were net buyers of 30.6 million rupees worth of shares on Tuesday, but they have been net sellers of 2.96 billion rupees so far this year.

Shares of Lanka ORIX Leasing Company Plc jumped 5.99 percent while conglomerate John Keells Holdings Plc rose 1.33 percent. 

($1 = 140.8900 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Revenue Act Amendments to House today -Treasury Secretary confident of approval

By Ishara Gamage

Ceylon Finance Today: The government will re-submit the controversial Revenue Act amendments to Parliament today (22nd), Finance Ministry Secretary Dr. R.H.S. Samaratunga told Ceylon FT.

"We will re-submit those long delayed amendments to the Finance Act and Inland Revenue Act without any single omission or revision", he said.

The Ministry is confident that it will get required parliamentary approval without any hassle.

"First of all we have to re-submit it and then we have to wait another week for approval," he added.

The Mini-Budget of the new government was presented to Parliament on 29 January and it introduced several controversial taxes such as super gain tax and mansion tax.

Dr. Samaratunga told Ceylon FT yesterday that all those revenue amendments were still at the Committee Stage of Parliament and if they were not passed within this fiscal year, they become null and void, which, he said, would impact revenue targets for 2015.

All those new taxes come under the Finance Act amendments, the Ministry Secretary said.

Though the expected revenue has not been gained through these taxes the new government has made all payments properly, he said. We don't have any revenue issues. 

But somehow we have to collect this money, he remarked.

Except the revenue proposals which have been brought under Gazette notifications, other all revenue proposals have to be passed in the same fiscal year. Otherwise they become invalidated, he said.

We are not saying that we are going to lose that tax money, but we are very much frustrated with this unusual delay," he said

The Government imposed a retrospective ‹super gain tax› in its supplementary budget.

This proposes a 25 percent tax to be imposed on corporates which have gained profits of over Rs. 2 billion during 2013-14.

According to the new amendments, the government has said a Rs. One million Mansion Tax will be imposed on houses valued at Rs. 150 million and over or 10,000 square feet floor area, which have been built after 1 April 2000.
www.ceylontoday.lk