Sri Lanka aims to lure 2.5mn tourists in 2017

ECONOMYNEXT – Sri Lanka has set a target of attracting 2.5 million tourists in 2017, despite difficulties posed by the partial closure of its international airport and the withdrawal of the national carrier from key markets.

The island got 2,058,000 tourists in 2016, up 14 percent from the year before, Minister of Tourism Development, Christian Religious Affairs and Lands John Amaratunga told a news conference.

Although last year’s number of visitors was below the government's target of 2.2 million tourists, Amaratunga said it was the highest ever and augured well for the industry.

However, he said, the numbers were far below that of competing destinations like Thailand and Malaysia, which draw 25-30 million tourists annually.

Sri Lanka’s earnings from tourism in 2016 were estimated to be around $3.5 billion, he said.

“We expect to do better this year despite the partial closure of the airport for about three months, from 6 January to 5 April,” Amaratunga said. “That’s a tremendous setback because it will be the height of the tourist season.”

SriLankan Airlines had also pulled out of some of the best tourism markets like France and Germany, Amaratunga said.

“But other airlines have increased the number of flights,” he added.

Sri Lanka will also launch a long-delayed international tourist marketing campaign this year, Amaratunga said.

Sutheash Balasubramaniam, managing director of the Sri Lanka Tourism Promotion Board, said growth is expected mainly from India and China, which have emerged as the biggest sources of visitors, with high-growth rates.

“This year we also plan to increase our digital marketing, especially in leading markets in Europe like the United Kingdom, France and Germany,” he said.

Sri Lanka’s Laugfs buys third LPG carrier vessel for USD2.9mn

(LBO) – Sri Lanka’s Laugfs Maritime Services has purchased its third Liquefied Petroleum Gas (LPG) carrier vessel for 2.875 million US dollars.

The company said in a stock exchange filing that the vessel earlier named as “Lady Martine” will be renamed as “Gas Courage” under the Sri Lankan flag.

Laugfs Maritime Services private limited is a fully owned subsidiary and the maritime arm of the Laugfs Gas PLC, which operates with Board of Investments of Sri Lanka approval to carry out a business of sea cargo operation services.

In 2015 October, Laugfs Maritime Services said it acquired their second LPG ship to provide logistic support for the growing LPG demand in the country.

This second acquisition was made with investment of 6 million US dollars and has a capacity to carry 3,500 M/tons of LPG.

Its maiden acquisition of LPG ship MT “Gas Challenger”, with a capacity to carry 3,500 m/tons of LPG, was made in 2014 marking its entry into maritime business.

Laugfs Maritime provides ocean freight services and related logistics to the LP gas downstream industry in the region.

Colombo Stock Exchange Market Review – 06th Jan 2017

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Colombo Stock Exchange Trade Summary 06-Jan-2017

Colombo bourse snapped the five day losing streak amid thin market activity on Friday. Main index edged up by 5.50 index points or 0.09% to end at 6,153.02 while S&P SL20 index gained 15.27 index points or 0.44% to close at 3,462.25.

Blue-chips, Ceylon Tobacco (closed at LKR 810.00, +1.2%), Melstacorp (closed at LKR 58.20, +1.6%) and Ceylon Cold Stores (closed at LKR 750.00, +1.3%) contributed positively to index performance. However, losers outweighed the gainers 61 to 42, while 84 stocks remained unchanged.

Daily market turnover was merely LKR 238mn. Top contributor was John Keells Holdings (LKR 41mn) followed by Hatton National Bank (LKR 32mn), Chevron Lubricants (LKR 26mn) and Commercial Credit & Finance (LKR 16mn).

High investor activity was seen in textile manufacturers, Teejay Lanka (closed at LKR 43.40, +1.6%) and Hayleys Fabric (closed at LKR 15.00, +0.7%). Chevron Lubricants, HVA Foods and John Keells Holdings were among heavily traded counters.

Foreign investors were net buyers with a net foreign inflow of LKR 27mn. Foreign participation was 33%. Net foreign inflows were seen in John Keells Holdings (LKR 33mn), Hatton National Bank (LKR 17mn), Commercial Bank (LKR 11mn) while net foreign outflow was mainly seen in Chevron Lubricants (LKR 22mn).
Source: LSL

Sri Lankan shares rise on bargain hunting, snap 5-day losing streak

Reuters: Sri Lankan shares edged higher on Friday, ending a five-day losing streak and recovering from a nine-month low hit in the prior session as investors picked up battered down shares.

Foreign investors turned net buyers on Friday after offloading shares for five straight sessions.

The bourse hit a nine-month low on Thursday as foreign investors sold close to one billion rupees worth of stocks in the first four sessions of 2017 amid worries over a weakening rupee and rising interest rates hurt sentiment.

Foreign investors bought a net 26.95 million rupees ($180,026.72) worth of equities on Friday. They have been net sellers to the tune of 969.69 million rupees so far this year.

The Colombo stock index ended 0.09 percent up at 6,153.02, edging up from its lowest close since April 4 hit on Thursday. It fell 0.64 percent for the week and was down 9.7 percent in 2016, its second straight annual decline.

The index has been trading in the oversold territory since Tuesday with the 14-day relative strength index breaking below 30, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

The day's turnover was at 273.7 million rupees.

"Market edged up in thin volumes despite continued selling pressure," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Analysts said interest rate volatility and policy uncertainties are also hurting investor sentiment.

Yields on treasury bill auctions rose 5-6 basis points at a weekly auction on Wednesday, a day after the central bank governor signalled less intervention to defend the currency as market has braced for a depreciation.

Shares in Ceylon Tobacco Company Plc rose 1.17 percent while Colombo Cold Stores Plc rose 1.26 percent and Dialog Axiata Plc rose 0.95 percent.

Shares in biggest listed lender Commercial Bank of Ceylon Plc rose 0.42 percent while Conglomerate John Keells ended 0.43 percent up.

Talks of a high net worth foreign investor exiting from Keells has triggered panic selling, dealers said. 

($1 = 149.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Monetary Board likely to issue directive on banks’ minimum capital

The Central Bank is likely to issue a formal directive in due course to the effect of higher minimum capital requirements for licensed banks after the Monetary Board, the institution’s governing body, studies the proposal as they are well in favour of sector consolidation, according to the Central Bank Governor. 

 Speaking to the press after unveiling the bank’s mid-term monetary and financial sector policies in its road-map, Dr. Indrajith Coomaraswamy said a final decision would be taken by the Monetary Board, which he chairs and the Secretary to the Finance Ministry has voting powers. However, the road map itself is silent on raising minimum capital level of banks as proposed by the country’s Finance Minister. Finance Minister, Ravi Karunanayake proposed to double the minimum capital of licensed commercial banks from Rs.10 billion to Rs.20 billion in its 2017 budget which was passed by a majority in Parliament December, last year. 

 Asked if a directive was likely to be issued raising minimum core capital level of licensed commercial banks, Dr. Coomaraswamy said, “I think so, yes. Personally I think, we need to move in the direction of consolidation. This is one of the means through which you can encourage or incentivize consolidation. But it’s a Monetary Board’s decision”. 

 Despite the fact that the Central Bank welcomes the Finance Minister’s proposal to raise minimum core capital, the proposal apparently could face an obstacle if foreign banks, which are either likely to resist the move outright or close down shop if they do not see the financial rationale of raising capital bar compared to the scale of operations in the country. The Central Bank is already believed to have communicated the concern with the Finance Minister and the matter is now being evaluated at ministerial level. 

 The Central Bank in recent times came under flack for the under - capitalisation of some of the small and mid-sized commercial banks for their regulatory forbearance. However, the Governor said he wanted to do away with such “go-soft” policies and would be tougher on financial sector going forward. Meanwhile, higher minimum capital requirements are less likely to impact many players in the financial sector as in recent times even some of the small and mid-sized commercial banks, which were falling well behind the capital threshold, have taken some tangible steps to raise the capital.

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Sri Lanka tea auction prices up, good demand

(LBO) – Sri Lanka tea’s first Auction of the year concluded seeing good demand with high grown tea prices recording gains and low grown teas fluctuating, a report said.

“Prices for low grown teas tend to fluctuate whilst High and Mid Grown small leaf teas made an impressive start recording significant price gains,” Forbes & Walker Tea Brokers said in a report.

Ex-Estate offerings totalled 0.9M/Kgs.

Overall quality of teas from Western planting districts – had on offer a wider selection of brighter teas whilst teas from Nuwara Eliya and Uva/Udapussellawa regions were mostly similar to last.

“There was improved widespread activity from most markets which is indeed encouraging,” the report added.

The full report follows:

The first Auction of the year concluded today had on offer a total of 6.7M/Kgs. There was good demand. Prices for Low Grown teas tend to fluctuate whilst High and Mid Grown small leaf teas made an impressive start recording significant price gains.

Ex-Estate offerings totalled 0.9M/Kgs. Overall quality of teas from Western planting districts – had on offer a wider selection of brighter teas whilst teas from Nuwara Eliya and Uva/Udapussellawa regions were mostly similar to last. Best Western BOP’s -majority of teas gained Rs. 20/- per kg and more from a selection of improved invoices following special inquiry. Corresponding BOPF’s which at the commencement of the sale was up to Rs. 20/- per kg dearer, moved up as the sale progressed recording gains of Rs. 40-60/- per kg and more by the closure. BOP’s in the below best category gained Rs. 10-20/- per kg whilst the plainer sorts were up to Rs.30/- per kg dearer. Corresponding BOPF’s which at the commencement was up to Rs.30/- per kg dearer appreciated by Rs. 40-60/- per kg and more by the closure. Nuwara Eliya’s were barely steady. Uva/Udapussellawa BOP’s were up to Rs.20/- per kg dearer whilst corresponding BOPF’s gained Rs. 30-40/- per kg. CTC BP1’s appreciated Rs. 10/- per kg all around. Corresponding PF1’s in High and Mid Grown categories gained Rs. 20-30/- per kg whilst Low Growns gained Rs. 10-20/- per kg. The limited availability of Liquoring Leafy Teas witnessed renewed interest and consequently prices ranged from Rs.550-820/-

There was improved widespread activity from most markets which is indeed encouraging.

Low Growns totalled approximately 3.3M/kgs in the Leafy/Tippy catalogues this week. There was fair demand at slightly lower levels. In the Leafy Catalogue better BOP1/OP1’s were lower. Others particularly the improved below best were firm. At the bottom end however, prices were fully firm. OP/OPA’s commenced Rs.5-10/- per kg lower but declined further towards the close. PEK’s too were irregular and lower. Better PEK1’s were easier whilst selection of improved sorts maintained. In the Tippy catalogues better FBOP/FF1’s were irregular and lower. Cleaner secondaries were fully firm to selectively dearer. In the Premium catalogues too a selection of teas were fully firm to selectively dearer. Others were mostly lower. There was good demand from shippers to Dubai,Iraq,Turkey,CIS, Saudi Arabia and Kuwait.

Sri Lanka central bank chief warns against political expedience in policy making

ECONOMYNEXT – Sri Lanka’s Central Bank Governor Indrajit Coomaraswamy has called for government policy making to be free of short-term political expedience and for consensus on critical reforms for the island to break out of stop-go economic cycles.

And the private sector needs to take more risks and make investments to take advantage of emerging opportunities, he said in a speech on the central bank’s monetary and financial sector policies for 2017.

“Government policy making needs to be proactive,” Coomaraswamy said. “It has to be more data driven and less influenced by short-term political expedience.”

Sustained growth requires strengthening macroeconomic fundamentals, implementing structural reforms that increase the competitiveness of the economy, and improving the business environment, he said.

“The challenge that we are having right now is to put in place policies that give us sustained stabilisation of macroeconomic fundamentals in the country, amidst uncertain global conditions,” Coomaraswamy said.

“This journey ahead also requires a rebalancing of economics and politics in economic decision-making, if we are to stay on course.”

Coomaraswamy said that stabilising the economy after decades of fundamentally unstable macroeconomic policies cannot be achieved without discipline and “inevitably result in some pain in the short-term.”

“For this to happen, consensus must be built among politicians, policy makers and the general public on the need for cohesive reforms around the three pillars of robust macroeconomic fundamentals, improving productivity/competitiveness and the improved business environment.”

Coomaraswamy acknowledged that it is “naïve to believe economics can be separated from politics” but noted: “we need to ask why Sri Lanka, which was second to Japan in Asia, on most socio-economic indicators, has slipped so far behind today.”

Sri Lanka needs a new economic growth model, built on the core tenets of high value-added entrepreneurship, creativity and innovation to generate benefits for all Sri Lankans, Coomaraswamy said.

The country has a number of structural problems that have been amplified over the years by the large fiscal and trade deficits.

“Being a twin deficit country increases vulnerability in an uncertain and volatile global economic environment,” Coomaraswamy said.

“We cannot continue with repeating stop-go cycles, with each successive trough becoming more dangerous. We need decisive policy initiatives implemented with commitment. More importantly, we need to take a longer term view and act accordingly.”

Coomaraswamy also said the private sector “needs to recalibrate its risk appetite” and take advantage of opportunities generated by improving macroeconomic policies and a more conducive, enabling environment for business.

“We would all like progress to be faster but the direction of travel is clearly positive. There is also the likelihood that, as the reforms gain momentum, the pace of change will accelerate, provided there is the commitment to persist with the measures that are necessary to place the economy on a higher trajectory of growth, employment generation and incomes.”