srilanka 2011& beyond

8/6/2019 SriLanka 2011& Beyond

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© Research & Develo

Sri Lanka2 0 1 1 & b e y o n d…

Asia: Still in theAsia continues to outpace other regions, buoyed by r

and strong do

- World Economic Outlook, A

Sri Lanka has wtakes to be the W

of- Dr. Ngozi Okonjo-Iweala, Managing Director of

Sri Lanka best plainvest in South



Sri Lanka: The Wonder of Asia

B

y

2

0

1

6 USD 4,000 per capita income

GDP growth above 8% on average

2.5 mn tourist arrivals per annum

Over 10 sectors contributing USD 1 billion each in export earning

Private investment around 22-24% of GDP (now 18-20% of GDP)

FDI to be around 5% of GDP (2011-2% of GDP*forecast )

ICT literacy rate to increase to 75% from 30% at present

2nd International Air Port & more than 5 International Sea Ports



What the End of the Internal War offered to Sri Lanka ?

An undivided focus on growth and development

The biggest obstacle for attracting FDI to the country (internal war) has been rem

A surge in tourist arrivals and enhanced prospects for travel industry and related

industries.

War risk premium on reinsurance removed – better prospects for trade and expo

A larger workforce (including military personnel) who can now be deployed for

development drive.

Opening up of serene coastlines and enhanced prospects for the natural harbour

(Trincomalee)

More land to develop and cultivate

Unencumbered connectivity of people

Surge in capital market - ASPI 226%, MPI 173% *

*Ma



Why invest in Sri Lanka

Political Stability.

Rapid infrastructure development – Sea Ports, Air Port, Power Plants, Roads etc…Sri Lanka’s social indicators are among the best in the South Asian region. The cou

has achieved near universal literacy (91%) & perhaps more remarkably, the gendernarrow, and Sri Lanka is among the top 20 countries, ranked on gender equality by World Economic Forum.

Excellent health facilities with ample availability of UK qualified specialist doctors.

Per capita GDP reached USD 2,014 in 2008 & the IMF recognized Sri Lanka as a mincome emerging country (2009 - USD 2,057 & 2010 – USD 2,399).

Easily trainable and versatile workforce. Sri Lanka has the second largest pool of Uqualified accountants which helps to compete in the financial and accounting BPO m

English is widely spoken and understood

Greater emphasis on education with particular emphasis on ICT, technical educatioEnglish language proficiency

"If you were smart in the 1800s’ you moved to London, if you were s

1900s’ you moved to New York City, and if you are smart now

to Asia" - J

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Fitch Ratings

India BBB-

Why invest in Sri Lanka

It is important to note that even during its darkestmoments Sri Lanka’s GDP growth fluctuated

between 4%-5% over a period of 20 years,signaling the economy’s substantial resilience toshocks & adverse conditions.

Free Trade Agreement (FTA) with India clearlydemonstrates the goodwill & commitment betweenthe two nations. The agreement createsinvestment opportunities for local & multinationalfirms based in Sri Lanka seeking business

opportunities in India.

Sri Lanka has climbed nine positions from 2009 tobe ranked 59 among 110 nations, in the WorldProsperity Index – 2010, by the Legatum Institute,a UK based independent research institute. SriLanka is also the highest ranked country amongSouth Asian nations. In the overall rankings SriLanka is just behind China, ranked 58. Among

other South Asian nations India has been rankedat 88, Nepal 91, Bangladesh 96 and Pakistan 109.

Sri Lanka Poised for Rapid Growth:

S&P

India BBB-

Bangladesh BB-

Pakistan B-

OUTLOOK ON SR

Moody

India

Bangla

Pakista

Research & Development Unit

Fitch & S&P

Grading AAA

AA A

BBB

BBB

CCC CC

C

D(+)/(-)

Moody’s Aaa, Aa, ABaa, Ba, B

Caa, Ca, C(1)/(2)/(3)

Standard &Poor’sB +Stable

Fitch RatingsB +Positive

GDP Growth Rate (%)

2010 4Q 8.6

2010 8.0

2011e 8.5

2012e 9.0

2013e 9.5

2014e 9.5

a – Provisional e – ForecastSource: CBSL Annual Report 2010

Per Capita GDP (USD)

2009 2,057

2010a 2,399

2011e 2,794

2012e 3,200

2013e 3,660

2014e 4,190


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Sri Lanka - Key Indicators



Sri Lanka - Key Indicators (Cont…)

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Indicators Projections

Real Sector Units 2009 (a) 2010 (b) 2011 2012 2013

Real GDP Growth % 3.5 8.0 8.5 9.0 9.

GDP Deflator % 5.9 7.3 6.0 5.5 5.

Per Capita GDP US$ mn 2,057 2,399 2,794 3,200 3,66

Total Investment % of GDP 24.4 27.8 29.5 32.0 33.

National Savings % of GDP 23.7 24.7 25.8 29.1 30.

External Sector

Current Account Balance % of GDP -0.5 -2.9 -3.7 -2.9 -2.

Overall Balance US$ mn 2,725 921 775 525 82

External Official Reserves (c) (d) Months 5,097 6,610 8,004 8,938 9,66

Debt Service Ratio (e) % 18.9 14.6 13.5 16.2 12.

Fiscal Sector

Current Account Balance % of GDP -3.7 -2.1 -0.8 1.0 1.

Overall Budget Deficit % of GDP -9.9 -7.9 -6.8 -5.2 -4.

Financial Sector (f)

Reserve Money Growth % 13.1 18.8 14.5 14.5 14.

Broad Mone Growth (M ) % 18.6 15.8 14.5 14.5 14.

ium Term Macroeconomic Framework 2010 – 2014

(a) Revised, (b) Provisional (c) Excluding receipts of Asian Clearing Union, (d) External official reserves include the proceeds from the IMF Stand-by Arrangement facility-2009. (e) Total debt service paymentsearnings from exports of goods and services, (f) Year-on-year growth in end year values

Sources: Ministry of Finance and Planning, Department of Census and Statistics, Central Bank of Sri LankaResearch



Towards Enhanced Macroeconomic Stability

Overall, taxes have been cut and a complicated system smoothed out. Tax incentives for large investments and tax concessions on profits frdebentures and equity for foreign investors.

Lower tax regime

Relaxation of strict foreign exchange controls and BOI Reforms

The new measures are expected to boost dollar liquidity while the rising trend of the rupee may also attract off shore interest, as has happentreasury securities market. Restrictions on inflows to open up new business offices also have been eased. Reforms at the Board of Investmeare expected to further reduce red tape.

A clear focus on cutting the budget deficit and other prudent public finance measures in the budget should boost state revenue and hopefudeficit to a 19 year low of 6.8 % in 2011.

Lower interest rates

Higher liquidity from reduced taxes is expected to keep interest rates in check and encourage more economic growth. This will also soften thgovernment domestic borrowing.

Fiscal prudence

Infrastructure projects worth over USD 6 Bn have been given priority with a public investment figure of Rs.413.7 Bn (USD 3.7 Bn) budgeted

Infrastructure development

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“Sri Lanka has what it takes to be the Wonder of Asia”

Above all, implementing policies that promote the inclusion of all segments of society in the growth process, as en

‘Mahinda Chintana’, will be crucial.

Dr. Ngozi Okonjo-Iweala also announced Sri Lanka’s eligiblity for IBRD financing – funding from the Bank’s non-cowindow.

IDA resources will continue as it is important that Sri Lanka benefit from these highly concessional resources to suconflict reconstruction and rehabilitation needs. Together, these financing sources have the potential to significantamount of resources available on an annual basis.

This is an important recognition of the middle income country status of Sri Lanka and signals a different sort of relaforward – a relationship that is founded on knowledge sharing that complements the available financing.

Dr. Ngozi Okonjo-Iweala, Managing Director of the World Bank, during her

official visit to Sri Lanka had stated that Sri Lanka has what it takes to be th

of Asia through inclusive growth acceleration.

To get there, raising investments, improving productivity of those investmen

innovation policies, skills development and macroeconomic stability will be

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Ease of Doing Business in Sri Lanka According to the World Bank’s ‘Doing Business 2011’ report, Sri Lanka’s Ease of Doing Business

ranking has remained unchanged from 2010 at 102 nd out of 183 other economies.

India 13

Bangladesh 10

Maldives 8

Pakistan 8

Singapore 0

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The President of Sri Lanka in his address to the United Nations General Assembly (2010) had stated that

Sri Lanka aims to improve its ‘Doing Business’ ranking to 30 by 2014.

Central Bank of Sri Lanka (CBSL) together with the Ministry of Economic Development is coordinating thestrategy to achieve the goal articulated by the President. The Budget for 2011 has already made significantstrides to simplify taxation, and thereby improve the ranking in the area of “Paying Taxes.”

There is also ample scope for eliminating a large number of “procedures” involved in various areas by

establishing “one stop shops” where an entrepreneur needs to submit required documents at one point onlyand all the necessary formalities and clearances are undertaken by the agency concerned. This could beeffectively done in the area of Dealing with Construction Permits and Trading Across Borders.

In the area of land registration, introduction of title registration could reduce time involved substantially. Courtprocedure also has to be closely studied in order to devise a method to reduce the delay and improve theranking in Enforcement of Contracts.

CBSL will be looking at other aspects also to facilitate business. In particular, to reduce the time and effortspent on searching for information, CBSL has already produced a booklet “A Step by Step Guide to DoingBusiness”, which contains necessary information needed by an entrepreneur during each stage of operatinga business. (For more info - web: www.cbsl.gov.lk , Tel: +94 11 2477377)



Sri Lanka Moves up in the Economic Freedom Index

The country’s overall economic freedom score was 57.1 which is animprovement of 2.5 from the 2010 figure of 54.6, reflecting major gains intrade, monetary, and investment freedom.

Sri Lanka is ranked 19th out of 41 countries in the Asia–Pacific region, and its

score improvement is one of the 10 largest in the 2011 Index.

Sri Lanka has moved up considerably in the “2011 Index of Economic Freedom” released by The World Heritage Fo

and the Wall Street Journal. Sri Lanka has been ranked as the world’s 107 th (from 183 economies) freest economy in

higher in comparison to the 120 th place in 2010.

Hong Kong and Singatopped the ratings, finone and two, respectthe 17th straight year.

But Singapore cut intoKong’s lead significanmainly on the strengtbetter score in anti-co

and a significant gainfinancial freedom.

The third and fourth pfinishers also remainesame: Australia and NZealand, respectively

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Areas for further improvement & some concerns…

ResearchSource: www.imf.org

S i L k D i Gl b l H b Fi H b C



Sri Lanka as a Dynamic Global Hub – Five Hub Concep



N l /L i ti H b



Sri Lanka will be developed as a major global naval/logistics hub in the South Asian region for trinvestment, communications & financial services. Sri Lanka is strategically positioned at the crosof the eastern & western sea routes. It is located at the entry point of South Asia from Middle Ea

Africa, Europe & America.

The Colombo port ranked as the number 01 port of South Asia & the 26 th of the world in 2010. TColombo port is computerized & linked to all major freight stations. The proposed Colombo southarbor will be located west of the present south west breakwater in an area of approximately 600hectares.

The Galle port is the only Sri Lankan port that provides facilities for pleasure yachts. The increas

arrival of yachts has revived the tourism industry of the country in general & of Galle in particulardevelopment of the Galle port as a tourist destination will act as a catalyst for the economic growthe southern region of Sri Lanka.

The Trincomalee harbour is the fifth largest natural harbour in the world & the availability of watespace is about 10 times as much in Colombo. Trincomalee is identified as a suitable harbour focargo heavy industries, tourism & agriculture.

With the objective of port & regional development ,the government of Sri Lanka is promoting thedevelopment of ports like Hambanthota and Oluvil to be a catalyst for the growth of eastern & otrural areas of Sri Lanka.

Naval /Logistics Hub

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N l /L i ti H b



Colombo South Harbour Development Project

Area Approx. 600 hectares.

Scope Four terminals of over 1,200m in length each to accommodate 3 berthsalongside depths of 18m and provision to deepen to 23m to accommodate deeper draftvessels of the future.

Stages Two stages. The 01 stage - infrastructure - USD 300 Mn and 02 stage- terminal facilities - USD 700 Mn

Engineer Scott Wilson Ltd – UK

Contractor Hyundai Engineering & Construction Co. Ltd., Korea

In 2010, GOSL signed a USD450 Mn deal with China Merchants Holdings andAitken Spence to build the first of the 03 terminals. Each terminal is expectedto add the capability to handle 2.5 Mn TEUs more. The port now handles 4.5Mn TEU.

Hambantota Port Development

Port of Hambantota is planned to develop as a

industrial port.

Cost - Phase 1 : USD 361 Mn(85% funded by the Ex-Im Bank

Duration : 39 months.

The port will be able to berth 04 vessels on complephase.

Sri Lanka is situated along the major east-west shipbetween the Malacca Straits and the Suez Canal wand Europe. An estimated 36,000 ships including 4use the route annually and daily around 200 vessel

southern sea of Sri Lanka.The second phase of the port will include a containthe third phase a dockyard. Upon completion the po4,000 acres of land and accommodate around 30 v

The contract for the Second phase of construction oHambantota Port was awarded to a Chinese CompDecember 31 2010, CHEC Ltd. signed on for the EProcurement and Construction (EPC) of the Hamba

The contract value amounts to USD 810 Mn with a

period of 36 months.

Port of Trincomalee

Trincomalee harbour is the second best natural harbour in the world and theavailable water and land area is about 10 times as much as the Port of Colombo.

Trincomalee was tentatively identified to cater for bulk and break bulk cargoand port related industrial activities including heavy industries, tourism andagriculture etc.

At present SLPA is in the process of re-developing Trincomalee as ametropolis growth centre.

SLPA plans to advertise internationally and locally to call for proposals frompotential investors for Industrial Park and Tourism Zone.

Naval /Logistics Hub (Cont…)

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Naval /Logistics Hub (C t )



Oluvil Port Development

Stage I

Contract Period : 27 months

Estimated Cost (Stage-1) : Euro 46.1 million

Source of Funding : Denmark (DANIDA)

Government of Sri Lanka, in its plan to give impetus to economic development inthe Eastern region, has decided to build a port at a site in Oluvil under the“Nagenahira Navodaya” Programme which was launched to expedite thedevelopment activities in the region.

This port will form the southeastern link in the developing chain of coastal harboursin the country and will provide more convenient and cost effective access to andfrom the southeastern region for goods and cargo originating on the west coast.

The proposed project is comprised of the construction of a commercial harbour anda basin for the fishing crafts and it covers a land area of 60ha in the first stage and105ha in the second stage. The harbour basin would cover an area of 16ha of thesea and would spread 1.2km along the coast line.

Stage II - Developing the Harbour to cater to 16,000 ton ships, Increasing harbour basin depth to 11 m. Construction of additional 470 m quay wall & other structures.

Port of Kankesanturai and Poin

Another rehabilitation and improvement planned for Kankesanthurai (KKS) Harb

include the repair of the breakwaters, piroads, including dredging and wreck remthe harbour basin.

To ensure cargo handling work continueinterruption, the SLPA committed by utilfunding to carry out emergency repairs tbreakwater and dredging of the basin. Inmeantime the government of India has iwillingness to grant USD 23 m for remov

wrecks and construction of a New Pier.

Out of four barges damaged by the TsuDecember 2004 at PPD – Point Pedro, tthem are beyond use. Two new barges fabricated with funding from National BuSLPA Budget. Additionally the feasibilitydeveloping Point Pedro to the level of anregional port for the Northern Province wexplored.

Naval /Logistics Hub (Cont…)

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Sailboat Manufacturing in Sri Lanka

Barramundi Boatyard Pvt Ltd., which is a BOI approved manufacturer of Luxurysailboats has released their second sail boat, which was made in Sri Lanka inWeligama. Ships & Boats manufacturing sector, which recorded a 57.81% growthin 2009, had grown by 38.9% on average over the last three years.



Commercial Hub COLOMBO



A new ColomboFort redefined

According to zoning plan of the Colombo City, theFort area is classified as a concentrated development

zone.The most prominent of land marks in the area are thecrossroad of Chatham Street & JanadhipathiMawatha, formerly Queens Street.

A transformation to the Fort takes place fromtransworks building that is based on lower ChathamStreet in the heart of the fort or Colombo 1, which isset to become the epicenter for the transworkssquare designed by the UDA.

Colombo Fort area will be reconstructed withincreased accessibility for conducting tradingactivities.

Commercial Hub – COLOMBO

Port City in Galle FaceThe UDA and the Sri Lanka Ports Authority (SLPA) are now planning to reclthe sea and build a 400-acre port city under the Galle Face development prexpected to cost around Rs. 30 bn and will be completed in 03 years. The chotels, apartments, malls, yacht marinas & a golf course.

Residential housingThe Mount Mary mixed development project aims at demolishing the now dunderutilized housing units along Dematagoda to make way for the construccommercial housing..

The lands owned by the state timber corporation along Baseline road in Orube used for high density housing.

Eco- Friendly cityThe scenic road around the beira will open up space for jogging & walking wwill provide rowers with a place to exercise their skills. The green & blue conunder the Sir Patrick Geddes plans to make Colombo a green destination babe put into operation today with the dream of making the city of Colombo “Tof the East”


Developments in Colombo at a glance

Provision of alternate dwellings for aprox. 70,000 families living in city slums withinFreeing land for development via clearance of unauthorized structures and shiftingof Colombo.Restoration and redevelopment of historic buildings.Creation of pedestrian-friendly locales & changing the character of city into a greeenvironment.Reclaiming 400 acres of land from the sea and creating a new city on the reclaimUpgrading Galle Road, the Marine Drive and expansion of the one-way system.Introducing dedicated parking spaces, disabled crossings and strict enforcement oIntroduction of an alternative transport system via development of waterways and

Commercial Hub (Cont )



Greater Hambantota Development Project

New Town – Siribopura

Siribopura town which is located 1.5 km north of Hambantota town is to be re-modeled to act as the administrative and financial

Hambantota. All the administrative functions to be relocated in the new town by end 2010.

Establishing a separate 15-20 acre area for f inancial related institutions including banks is also considered. At present UDA has gapproval for 10 banks (CBC, HNB, Sampath, Seylan, PB, BOC, NDB, NSB, Ruhunu Development Bank, Sanasa Development Blocate their branches in the identified location. Many banks have proposed to establish their regional offices here.(please see appendix map, area marked as ‘CBD 1-Siribopura’ within the demarcated area for the New Town development)

A commercial centre for the new town has also been identified. The Hambantota urban council has been proposed to be upgradeMunicipal Council in 2011 and the Divisional Secretariat – Hambantota is also to be re-modeled to suit the present conditions of t

Sri Lanka co-hosted 2011 cricket World Cup-semi finals with the introduction of a new cricket stadium in Hambantota.Hambantota Cricket stadium with its state-of-the-art amenities was added to the ICC`s list of main cricket venues inthe world.

International Cricket ground (Suriyawewa)

Hambantota International Airport will be the second international airport of Sri Lanka, the length of which will be 3.5km, where even the largest aircraft can be landed. The airport, estimated to cost USD 210 Mn, will cover an area of 2,000 hectares. Hambantota airport will be one of the green airports in the world and will commence its commercialoperations in 2013. It is estimated that this project would generate over 50,000 direct and indirect employment.Mattala airport would cater 60% for cargo handling & 40% for passenger handling.

International Airport Hambantota (Mattala)

Commercial Hub (Cont…)

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Appendix Map



pp p

Commercial Hub - Greater Hambantota Development Project



Hambantota International Seaport (Magampura Harbour)

This is expected to be one of the three major harbours of Sri Lanka and will attract a considerable percentage of 36,000 ships that pass Hambantota using the East-West global shipping route at present and currently divert to other regional ports for their supplies, spending additional money and time. The first phase (one of the three) of the harbour was completed in December 2010. The first phase facilitates the anchoring of three ships. The total investment for

Phase 1 - USD 361 Mn.

Commercial Hub Greater Hambantota Development Project

Investment Promotional Zones

Located in Siribopura, Hambantota, the project started in 2006 with Korean aid. It has direct access to the southernexpressway between capital Colombo and the other regions. Commonwealth Summit 2013 is proposed to be hosted atHICC.

The high end apparel industries are based at Bata-atha, Mirijjawila, and Beliatta. Export Processing Zones yield manyopportunities for investments. The government has already implemented its plans to develop the Hamabantota districtas a business friendly district that actively pursues the government policies on economic liberalization with emphasis onprivate sector investment.

The investment promotion zone is part of the government plan to develop Hambantota as an economic centre. TheGovernment has allocated 1100 hectares (2717 acres) of state land in Hambantota, to be used as an Investment

Promotion Zone. The Board of Investment of Sri Lanka will allocate this land within the IPZ to the prospective investorson a 50 year lease basis. The investments will cover diverse industries and sectors.

Hambantota International Convention Centre (HICC)

The Hambantota International Sports Hub (HISH) will consist of vivid sports utilities: Sports Business Enterprise Park, Athletics Warm Weather Training Facility, Cycling Development Centre, Hockey Centre, 18 Hole Golf course, Squash Centre, Aquatics C& Football Development facilities, Multi Sports Halls & State-of-the-art media centre.

This sports complex figures prominently in Hambantota’s bid to host the Commonwealth Games in 2018.

Hambantota International Sports Hub (HISH)

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Commercial Hub - Greater Hambantota Development Project (Cont…)



Hotels and Tourism DevelopmentMain attra

Angulmaduwa Bras

Bundala NatiDeep South Tourist City – Ham

Kat

Jungle Riv

Mulkirigala rock m

Kudawella blow hole – Hum

Tissam

K

Situlpaww

Us

Yala Nati

Udawalawa Nati

With the increase in tourist arrivals to the Southern region, alarge number of hotels will be constructed. Approval has been

given to top hotel brands to commence construction. Hotelswhich are currently operating in the area are to be upgraded.

New Projects:

Seven Star Hotel – Shangri-La Hotels & Resorts, a world renowned

luxury hotel chain

03 Five star hotels

Artificial Island with an area of 15-20 acres – inspired by theSantosa Island of Singapore.

A Resort with an 18 hole golf course

Old Hambantota city to be developed as a Tourist city

Botanical Garden & Singha Safari Park at Ridiyagama

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Commercial Hub Greater Hambantota Development Project (Cont…)

Commercial Hub – Jaffna Revival



Location : 65 acre industrial estate in Atchchuvely

Cost : Rs. 199 Mn (GOSL – Rs. 25 Mn., India – Rs. 174 Mn.)

Commencement : 2011/2012

Reactivation of Atchchuvely Industrial Zone – Jaffna

The infrastructure facilities will be developed by the Industrial Development Board and Board of Investment.

It is expected to generate 4000 direct employment opportunities.

First phase – 25 acres will be developed with 04 large apparel companies waiting to operate with an investment of USD 3 M

SMEs will commence their businesses.

The industrial zone was operational in 1971 and ceased functioning in 1990 when the war broke out.

Commercial Hub Jaffna Revival

The medical sector has been slow in moving into the north compared to other service sectors like banks, insurance & finance This project is the second stage of the expansion program of the central nursing home which is already in existence. Construc2010. This project is expected to be a fillip to the medical sector in the North.

World class hospital in Jaffna soon

A Credit Agreement for USD 416 Mn for the construction of the Northern Railway line was signed between India and Sri Lankaconstruction of the railway line will be carried out in three segments, from Madhu to Talaimannar, Madawachchiya to Madhu aPalaly. The Indian government-owned Transport IRCON, is rebuilding the 110 km rail track from Medawachchiya to Talaimanphases, which is expected to be completed by end-2011. Cost: 149.7 million dollars.

Rebuilding of Northern Railway line

The 288-metre-long two-way Sangupiddy Bridge declared opened in January 2011, linking the shortest landbased route between the South and the Jaffna peninsula. This bridge built at a cost of Rs 1,037 million on asoft loan from Britain will reduce the travel time through A- 32 Highway, between Colombo and Jaffna by 110km (three hours).

Sangupiddy Bridge


Indian Investments in Sri lanka



Seventy percent of the volume handled by the Colombo port is transshipment of goods

imported by India. Sri Lanka has embarked upon a plan to increase capacity by circa 50% at

the Colombo port in three years. Currently volumes handled by the Colombo port include75% of transshipment goods whilst the balance accounts for import/export boxes.

India & Sri Lanka are expected to sign a new economic agreement covering both goods &services. Due to the FTA with India bilateral trade volumes were up from USD 658m in 2000to USD 3.04 bn in 2010.

Sri Lanka enjoys a free trade agreement with Pakistan, in addition to India. It also has apreferential trade agreement with its south Asian neighbors, which is currently in the process

of becoming a free trade agreement. Sri Lanka also benefits from special concessions fromChina, Korea, Thailand & Bangladesh.

Many experts are calling Sri Lanka the “Hong Kong of India”. Sri Lanka will benefit from its proximity to India, just as Hong Kong b

from being a trade hub to China.

Indian Investments in Sri lanka

Mphasis moves to ColomboMphasis, the fastest growing IT Company in India, has invested USD 3.5 mn in their global delivery centre in Colombo. There vthat Sri Lanka is a poised in achieving a high economic growth with much potential and the talent and capabilities of Sri Lanka’sprofessionals. This would create 500-1,000 employment opportunities.

Indian Investments in S

Atchchuvely Industrial Zon(USD 3 Mn)

Northern Railway line (USD

Renovation of the southern(USD 167.4 Mn)

Wind power project in Upp(USD 18.55 mn)

Oil exploration in Mannar basMn)

Rehabilitation and improveme& Point Pedro harbours (USD 23

Reconstruction and resettlemeNorth (USD 800 Mn)

Fortis Global Healthcare enters Sri Lanka

India and Singapore based Asia Pacific’s fastest growing healthcare provider, Fortis GlobalHealthcare Holdings Pvt. Ltd., buys minority 28.6% stake in Lanka Hospitals for Rs. 4 Bn.

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Chinese & Japanese Investments in Sri Lanka



Chinese Investments in SL

J p

Since 2006, the Chinese Government has provided SriLanka USD 3.04 Bn in financial assistance;

Katunayaka-Colombo expressway (USD 292.4 Mn)

Railway extension from Matara to Kataragama (USD300 Mn)

Norochcholai Coal Power Plant (USD 222.5 Mn)

Hambantota Port Development Project (USD 361 Mn)

Centre for the Performing Arts in Colombo. (USD 21Mn)

Sri Lanka granted China an exclusive economic zone onthe lines of Special Economic Zones (SEZ) to attractmore investment from China. The Hong-Kong basedChinese company; Huichen Investment Holdings Ltd willinvest USD28 million to develop the zone located inMirigama.

China has now become Sri Lanka’s largest aid donor replacing the traditional donors from Europe and theWest.

Japanese Investments in SL

Improvement of Anuradhapura Teaching Hos2.9 Bn

Vavuniya-Killinochchi Transmission Line – Rs

Improvement of central functions of Jaffna TeHospital – Rs. 3 Bn

New Mannar bridge and improvement of the cRs. 2.3 Bn

Kandy City wastewater management project –

Eastern Province water supply development pRs. 7 Bn

Provincial/rural road development projects – R

Upper Kotmale Hydro Power project – Rs. 50

Solar Electricity Power generation – Rs.1.1 Bn

Southern Transport Development Project – R

Digital Topographic mapping of the Northern

Rs. 2 Bn

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MPerformance



M

Forbes: ‘Sri Lanka’s beach stretch from Tangalle

Bay to Weligama and Bentota among the Top 10 in

Asia…’

The New York Times: ‘ Sri Lanka - the number oneholiday destination for the year 2010’…

Sri Lanka recorded 654,476 tourists arrivals in 2010

and 2.5 million arrivals are expected by 2016

Visit Sri Lanka Year 2011- Sri Lanka Tourism Development

Authority

Tourist Earnings – USD 506.1 Mn in 2010 USD600 Mn in 2011*, and USD 2.5 Bn in 2016*

In 2011, for the first time in the history of Sri Lanka tourism, tourist

arrivals had surpassed 250,000 within the first four months.

*forecast

Over 800,000 tourists expected

in 2011

S i L k U C i H t l P j t Taj o



Six Senses Resorts & Spas (SSR) together with theFavourite Group, Auro Holdings and TimexGarments signed an agreement with Aitken SpenceHotel Holdings PLC, in September 2010 to establishits first Six Senses project in Sri Lanka.

This is a Board of Investment approved ventureworth USD 45 mn. In addition, SSR intends to makeSri Lanka its Indian Ocean Regional Headquartersin the near future, overseeing new and existing Six

Senses properties in the Maldives and IndianOcean region.

The dual project includes, Six Senses Ahungalla, aresort and spa, including residential villas, on a10.5-acre plot, adjoining Heritance Ahungalla on theSouthern coast; and Six Senses Meeraladuaa, anecological, environmentally very low impact site, of semi tented structures, on a 27-acre island nearby.

The proposed opening date is late 2012. SixSenses expects an average room rate in the range

of USD 400-450.

Sri Lanka: Up Coming Hotel Projects

Shangri-La hasalready acquiredstate land by thecapital's 'Galle Face'beachfront to build aUSD 500 mn multi-use complex withhigh-end retailfacilities, deluxeapartments and a500-key luxury hotelto open in early 2014.

Shangri-La is alsoplanning to develop asecond property, a300-key city resort onapproximately 100acres of land inHambantota, on thesouthern coast of SriLanka, to open in2013.

Shangri-La to open twohotels

China NationalAeroTechnologyImport &ExportCorporation(CATIC)intends to builda multifunction

complex,comprising afive star hoteland ashopping mallwith directinvestment of nearly USD500 mn. inColombo's

mainbeachfront

USD 500mnhotel from Chinaaviation firm

Six Senses Ahungalle & Meeraladuaa to open inlate 2012

Swiss-based MővenpickHotels and Resorts,which is to manage acity hotel in Sri Lanka'scapital Colombo is alsolooking for opportunitiesto run a resortelsewhere in the island.

Movenpick has struck amanagement deal withSri Lanka's Softlogicgroup which is planningto build a 24-floor tower hotel in Colombo whichwill have 224 rooms.The group has a 12-year deal with options toextend another 10 years

with Softlogic

Second hotel Scouted bySwiss Leisure Group

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Research

Sri Lanka: Up Coming Hotel Projects (cont…)



Jetwing Hotels is getting into what is called as ‘mixed use development’ at a Colombo property it owns – combining an, exquisite boutique hotel withapartments for rent. At Ward Place, the company is hiring a Singapore architect to create a 60-room boutique and 25 apartments. According to JetwingHotels Chairman Hiran Cooray, the company is planning boutique hotels in many other parts as Sri Lanka takes off in the post-war era. Sri Lanka’sJetwing Group, the third largest hotel group in the island will revamp two of its hotels this year, one in the north western coast of the country andanother in the central province, at a total estimated cost of 500 million rupees

Citrus Leisure aims to build a four-star resort with 150 rooms and 28 villas in Kalpitiya. The villas which will have individual pontoons giving access to the seout on 99-year leases to high-net-worth individuals.

Jetwing Hotels

Citrus Leisure PLC (Hotel Reefcomber PLC)

A large number of leisure firms have submitted proposals to build hotels and other leisure facilities in 10 islets off Sri Lanka's North Western coast (KalpitiyaDevelopment). According to Chairman of Sri Lanka's tourism development authority Mr. Nalaka Godahewa, the islands off the coast of Kalpitiya will be givenleases, and investors could engage in 40 approved areas including building, hotels, golf course and boat services.

Sri Lanka to get large number of tourism proposals for 10 islets at Kalpitiya

Domestic business groups, John Keells Holdings and Amaya too are either planning and/or started building new properties, expanding / upgrad

properties.

Vallibel One goes for USD 38 mn five star resort hotel

A total of 48 hotels are to be constructed on a 500 acre land in Kuchchaveli. The project with a combined strength of 3000 rooms is to be comp

USD 30 Mn is being spent to build 4 hotels of 5 star grade. Requests have been received for the construction of 58 hotel projects , of which 26been approved. These include 5 star, 4 star and 3 star hotels.

Kuchchaveli tourism zone

The leisure sector of the Vallibel One Ltd - Greener Water Ltd is to build a five star luxury hotel in Kochchikade, Negombo at a cost of USD 38 mn,according to the private placement prospectus of the company.

The company has already invested Rs. 268 mn on a 14 acre land in Kochchikade for this purpose and hopes to build mega 382 luxury rooms which willbe offered to customers at an average rate of between USD 136-165. Apart from the luxury 382 rooms, the hotel will include 42 suites, a spa and fitnesscentre, 600 seating capacity banquet hall, restaurants, retail arcade, a 1500 square metre outdoor pool, and many other modern amenities.

The construction of the hotel is estimated to take 2 years with commercial operations expected to commence in 2013.

Research

RE



Southern Highway

Completion : Mid-2011

Sponsors : JBIC, ADB and GOSL

Cost : USD 600 MnContractors : Kumagai Gumi, China Harbor Engineering Company, Taisei Corporation

Southern highway, the first toll road project in Sri Lanka, is a 126km-long express highway running from Colombo to Matara oncoast and will be further extended to Hambantota. The speed limit of the express highway is 100km/hr. Once the project is finistravel time between Colombo and Matara will be reduced from four hours to 1.5 hours.

Colombo-Katunayake Expressway

Contractor : Metallurgical Construction – China

Cost : USD 292.4 MnCompletion : end 2012

Capacity : 25.8 k.m., four lanes. It is designed for speeds of between 80-100 k.m. per hour which reduces the travelling tim

to 20 minutes.

Colombo-Kandy Expressway

Capacity : 6 lanes & 98 km in length. Reduce travel time from 03 hours to 50 minutes. Facilitate vehicle speed up to 110k

hour. Due to land acquisition issues this will be built as an elevated expressway on a concrete wire bridge ‘duct

Phases : Phase 1- Kadawatha to Ambepussa (48.2km with 4 lanes, is expected to be expanded to 6 lanes)

Phase 2- Ambepussa to Katugastota (50+km with 4 lanes elevated)

RE


Infrastructure(Cont )



(Cont…)

Reviving Railways - 12 stations to be upgraded

Investment : Rs. 300 bn (Rs 60mn as investment & Rs 240mn as loans)

Plan : 12 stations would be developed with modern five storey buildings, accommodating shopping malls, horooms & luggage locker rooms. Each building has the capacity of putting up high rising towers which could reach stories, accommodating apartments & office complexes.

Colpetty- Electronic Mall

Bambalapitiya- Clothing Mall

Wellawatte - Toys & everything relating to toys

Dehiwala - Computer mall

Ratmalana – Wholesale/retail imitation jewellery mall

Electrification:

Electrification of trains which come to Colombo Fort from Panadura, Veyangoda, Kelani Velly & Negombo. Whole prwould need 23 electric trains.

Project cost: USD 180 mn

Outer Circular Highway (OCH)

Capacity : 29 km (18 mile) 04 lanes, with provisions to upgrade the road for 06 lanes.

Completion : Mid 2013.

Access will be provided to all “A” class roads via interchanges and the OCH will have an operational speed limit of 80 km/h.

Research

Sri Lanka to List Stake inInfrastructure(Cont )



Mono Rail System

The Government has decided to introduce an UrbanMonorail Development Project on the Korea Urban MonoRail system Technology.

Investment: USD 500 mn (Garam Space Ltd Korea)

First stage - Construction of a railway line from ColomboFort to Mount Lavinia.

Second stage - Construction of a railway line connectingColpetty and Battaramulla via Rajagiriya.

Sri Lanka is to start building a 3telecom tower in the capital Colointends to sell shares to the pubto be set up to operate it.

According to director general of Telecommunications RegulatoryCommission Mr. Anusha Pelpitatower ,which will be called 'Lotusto be built with a USD 100 mn do

financing from China.

The state is planning to list a 30 the tower in the Colombo stock ein two years.

The telecom tower will be built oowned by the State Engineering

Corporation in Peliyagoda.

Sri Lanka to List Stake inBroadcast Tower Northern Road Connectivity Project

Investment : USD 173 mn (ADB - USD 154.4 mn & GOSL - USD18.6 mn.)

Completion: 2015

Activities covered: Rehabilitation & improvement of about 140kmof provincial roads with rehabilitation or replacement of selectedbridges in Northern Province.

Project implementing agencies: The RDA under the supervisionof the Ministry of Highways

Objective: Improve road connectivity within the NorthernProvince & between the Northern Province & southern region inSri Lanka

(Cont…)




Aviation Hub



Hambantota International Airport will be the second international airport of Sri Lanka, which is 3.5 km in length, where even thaircraft can be landed. The airport, estimated to cost USD 210 Mn, will cover an area of 2,000 hectares. Hambantota airport wone of the green airports in the world and will commence its commercial operations in 2013. Mattala airport would cater 60% handling & 40% for passenger handling.

International Airport Hambantota (Mattala)

Cessna Aircraft Company, a US based company, is eyeing Sri Lanka's fledgling domestic aviation industry after the end of a has prompted liberalization of the sector and a tourism boom is increasing demand for international flights.

Cessna and their agents for Sri Lanka and Maldives, Infotechs, demonstrated it Grand Caravan aircraft in Sri Lanka, which caaround 12 passengers and also comes with an optional underbelly cargo pod. A tourist could travel to Arugam Bay, from Colo journey which takes around eight to ten hours by road, in 45 minutes and to Kandy in 22 minutes which takes 03-3½ hours by

US aircraft maker eying on Sri Lanka domestic aviation market

A New terminal with an additional eight gates is proposed to be built and expected to becompleted in 2012.

Mini international airport at Iranamadu In the Kilinochchi District, 8,000 acres of land in the Iranamadu area has been earmarked to build a mini international airport.

estimated cost is Rs. 70 mn. This would enable passengers to take flights to Jaffna, Mattala and other destinations which arebeing upgraded.

The aim is to increase the passenger capacity from 06 million to 09 million by 2013 with plans tobuild the region’s first star class airport hotel in BIA. These developments includes, aTransitHotel Complex - with 24 rooms, Play port – a kids play area, new domestic airport, within theBIA, which could connect to Palali, Trincomalee, Mattale etc.

Major Development at Bandaranayake International Airport (BIA)

Research



Energy Hub



Norochcholai power plant

Goal : Construction of a 300 MW coal firedthermal power plant with Infrastructure for 900MW (III

phases .Cost : USD 455 Mn.Donor : EXIM Bank – ChinaEngineer : Access Solar (Pvt) LTD

Upper Kotmale Hydro Power Plant

Scope: The 150 MW power plant of Upper Kotmale will annually gGWatts.

Stages: The total estimated costs of the Project is US $ 350 millioProject is expected to be completed during 2011. Over 80% of thenow been completed; the final stages are presently underway.

Contractors: CEB and Maeda Corporation, Japan.

Sri Lanka’s biggest wind power project inUppudaluwa

Scope: Seven 1.7MW wind turbines, with a totalcapacity of 10.5MW, were installed in Puttalam,

Uppudaluwa, with a view to increasing wind power generation to 100MW.

Stages: USD 18.55 mn, Indian investment. The ventureis expected to commence operations by June 2011.Contractor: Orient Green power Limited, India (OGPL)

Oil to Sri Lanka - Search on for oil off Southern Coast

3D seismic data of the 3,400 sq km exploration block has been ofCairn India. The data is being analyzed by Cairn’s geologists with

identifying the best location to start drilling. Exploration /drilling is ecommence in 2011 and there is a 60% probability of finding offshodeposits.

Project: 08 years, 03-stage oil exploration project

Contractor: Cairn Lanka (India)

Cost: USD 172 Mn or Rs.18 Bn

Kerawalapitiya power plant

Kerawalapitiya Dual-Cycle thermal power generation plant with a capacity of 300 megawatts was commissioned in February 2

Cost : USD 222.5 Mn




Knowledge Hub



IT sector delegation led by the Board of Investment recently took several important steps in strengthening coordination and fainvestments to develop Jaffna as a knowledge hub. The objective was to encourage IT companies to start operations in Jaffninto the peninsula's educated workforce

Jaffna to develop as a knowledge hub

Telecommunications and Information Technology ministry is aiming to increase the IT literacy rate to 75%while optimising IT as a foreign exchange earner by 2016.

75% ICT literacy by 2016 and IT sector as a great export earner

Plans Afoot for 15 International Universities

Sri Lanka is becoming an attractive location that could provide higher education for the growing middle class in Asia. ThereforeMinistry of Higher Education is planning to establish about 10-15 private international universities in Sri Lanka.

The Knowledge Hub initiative will help to develop Sri Lanka as a destination for investments in higher education and

nation as a centre of excellence and regional hub for learning and

innovation.

Providing Necessary Infrastructure and Cutting-edge Technology

Over 110 infrastructure development projects are being implemented in state universities at a total cost of over Rs. 10 billion tnecessary facilities such as lecture halls, hostels, health facilities, administrative infrastructure etc.

Designate and establish a Knowledge City

The government will designate a specific area for the proposed knowledge city and provide improved facilities for internationaand education institutions to setup their affiliated institutions. (e.g. Gampaha, Jaffna, etc…)

Research

SOURCES



• www.treasury.gov.lk

• www.cbsl.gov.lk

• www.boi.lk

• www.neweast.lk

• www.treasury.gov.lk

• www.news.lk

• www.englishandit.lk

• www.nenasala.lk

• www.srilankatourism.org

• www.sltda.gov.lk

• Road Development Authority

• www.worldbank.lk

• www.imf.org

• www.lankabusinessonline.lk

• Bloomberg

• Reuters

• Daily News

• Sunday Observer

• Daily Mirror

• Sunday Times

• The Island

SOURCES

The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain acinformation, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses

otherwise, suffered in consequence of using such information for whatever purpose.

The views expressed in the presentation are not necessarily those of the Management of Commercial Bank of Ceylon PLC

Research & Development UnitCommercial Bank of Ceylon PLC

©Sri Lanka: 2011 & Beyond – 28-04-2011

srilanka 2011& beyond

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