31 January 2010

25th – 31st January 2010 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 Content Page 1. DEVELOPMENT ECONOMICS 1.1 SRI LANKA’S ECONOMY LOOKS FORWARD TO GROW 05 1.2 SRI LANKA, A NATION BEYOND THE FIRST WORLD 11 1.3 SIXTH FASTEST GROWING ECONOMY IN 2010 21 1.4 PRIVATE SECTOR OUTPERFORMS PUBLIC SECTOR 24 1.5 SL NEEDS SKILLS DEVELOPMENT, NOT FINANCIAL ASSISTANCE 25 1.6 RPC SOCIAL WELFARE PROGRAMMES INVIGORATE ENHANCED WORKER LIFESTYLES 26 1.7 FIGHT CORRUPTION, WASTE TO DELIVER ECONOMIC DIVIDENDS 28 1.8 NORTH AND EAST DEVELOPMENT TAKES OFF THURSDAY 30 1.9 HOW TO INTEGRATE THE NORTH WITH THE REST OF THE ECONOMY 31 1.10 INCREASED OCCUPANCY HAS COLOMBO HOTELIERS OPTIMISTIC 34 1.11 TOP TEAM NEEDED TO LIFT SRI LANKA’S ECONOMY 35 1.12 ECONOMIC DEVELOPMENT -- IN SEARCH OF CONSENSUS 36 1.13 SUPPLY CHAINS: PLAN FOR THE FUTURE FROM FORK TO FARM 40 2. MANAGEMENT 2.1 HOW TO BECOME A GOOD MANAGER 43 3. TRADE & MARKETING 3.1 EARLY WEEK PROFIT TAKING DRIVES THE INDICES DOWN 46 3.2 FREQUENTLY ASKED QUESTIONS IN BRANDING 47 3.3 A SOCIAL NETWORKING CHECKLIST FOR CAREER SCHOOL MARKETING 49 3.4 SALES PROFESSION VITAL FOR GROWTH 51 3.5 CAPITAL MARKET THRIVING 52 3.6 TEA CROP LOWEST SINCE 2001 WHAT NEXT? 53 3.7 EUROPEAN AMBASSADOR SAYS LANKA’S NUMBER ONE TRADING PARTNER IS EU 54 3.8 CROSS-PECKING OVER CHICKEN FEED 56 4. MONEY & BANKING 4.1 CREDIT CARDS AND ITS WISE USAGE 59 4.2 ACCA’S 12 TENETS OF TAXATION 63 4.3 IMF REVISES UP GLOBAL FORECAST TO NEAR 4 PERCENT 66 4.4 SRI LANKA POLICY CERTAINTY HIGHER AFTER POLLS: CB GOVERNOR 68 4.5 MANY CONSIDERED HIM AS THEIR ‘WORKING GURU’ 69 2 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 5. TOURISM 5.1 ECO-FRIENDLY TOURISM ZONES VITAL FOR GROWTH 71 5.2 TOURISM BUREAU TIES-UP WITH NAVY 73 6. LABOUR 6.1 TRADE UNIONS ASK PRESIDENTIAL CANDIDATES TO UPHOLD WORKERS’ RIGHTS AND DIGNITY 75 7. STOCK MARKET 7.1 ALL SHARE PRICE INDEX HITS A NEW HIGH ON THURSDAY 79 8. BUSINESS 8.1 CLOUD COMPUTING TO ENHANCE BUSINESS EFFICIENCY 81 9. EMPLOYMENT 9.1 EFC TO FOCUS ON EMPLOYMENT GENERATION AND PRODUCTIVITY IN 2010 84 9.2 VULNERABLE EMPLOYMENT AND POVERTY ‘ON THE RISE’ 86 9.3 JOB-SECURE SINGLES MOST ACTIVE SEARCHING SPOUSE 87 10. FISHERIES 10.1 GOVT. TO BOOST SOUTHERN FISHERIES SECTOR 89 11. CONSTRUCTION INDUSTRY 11.1 GREEN BUILDING COUNCIL FOR CONSTRUCTION INDUSTRY 92 12. TRADE DELEGATION 12.1 SRI LANKA EXPORT-PROMOTION DELEGATION TO VISIT CROATIA 93 3 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 Development Economics 4 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 Daily News – January 25, 2010 SRI LANKA’S ECONOMY LOOKS FORWARD TO GROW DEVELOPMENT HAS BEEN GOING ON THE FASTEST EVER IN THE HISTORY: Business Desk Central Bank Governor Ajith Nivard Cabraal speaks to Daily News Business on the economic development that country has gained during the past four years. Q: Governor, what could you say about the economic development that country has gained during the past four years? A: There has been a tremendous economic growth during the past four years in the country. When you say an economic growth there are some economic indicators such as per capita income, inflation, employment, poverty, reserves and infrastructure development. It took Sri Lanka 55 years to reach a per capita income of US$ 1,000 and during the last four years the Central Bank doubled it, which indicates a clear progress while increasing the country’s GDP by 100 percent. Sri Lanka recorded a remarkable growth during the past four years, while maintaining a continuous growth. The growth was better every year comparatively to the corresponding previous year. Inflation differed with an average of about 11 percent for the past 30 years and with that liberation of the country the Central Bank Governor inflation dropped to three percent recording a single digit after Ajith Nivard Cabraal over 25 years. Our reserves, which recorded a maximum of US$ 2.5 billion earlier has grown at present more than US$ 5 billion signifying the excellent response from foreign investors, soon after the establishment of peace. The debt market, treasury bills and treasury bond markets have responded outstandingly. The unemployment rate, which was around 8 to 9 percent few years ago has dropped to six percent and the country’s infrastructure development has been going on the fastest ever in the history. All major projects were launched while the conflict raged such as five harbours, one international airport, 14 domestic airports, Moragahakanda major irrigation project, two major power plants, expand in road network, village tank developments and expansion of electricity coverage. In 2005 electricity coverage which was 75 percent and today it has covered up to 87 percent and the idea of the Government is to make it 100 percent in next two years. Poverty, which was 22 percent has come down to 15 percent last year. 5 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 This year, we hope to reduce the poverty to 10 percent and we intend to make it to two percent by the end of 2016. In every aspect there has been tremendous scope particularly with the end of war. What is significant was that even during the war development took place rapidly in every nook and corner of the country. Kerawalapitiya power plant The path was cleared a progressive economy while fighting the war and today we have come to a very important stage in our history where all the negatives have been removed. As a result recently the New York Times had said that Sri Lanka is the best place to visit in 2010, Wall Street Journal had said that Sri Lanka will be one of the top ten countries for growth this year and the IMF has said that we are no longer a poor country, that we are a middle income state. The outlook of the country has been changed over the past four years to a positive image and that is one of the reasons for the rest of the world to rate the country in this manner. Q: Does the country highly depend on foreign funds and aid? A: If we want to develop rapidly we have to borrow and use that money now to develop the infrastructure and out of the money that we gain we pay off. What is important is to see that your income is sufficient to pay the loan. For a country the assessment is debt to GDP ratio as against how much is your debt. In 2002 the debt was more than the GDP, which was 104 percent when the GDP was 100 percent, but today the debt is 84 percent and the GDP is 100 percent. It has been growing so that we are managing it much better than before and that is one of the reasons that the IMF has rated us as a middle-income country. We have a sustainable and a manageable debt. We are borrowing to develop. The previous Government borrowed money not to build bridges or to build power plants, but to import wheat flour and for consumption. We have more than US$ 500 million of loans that we are paying now for the bread that we ate in the past. Q: The opposition is complaining that the Central Bank is injecting money to the economy without a control on its supply and demand. What is your view? A: We have to inject a certain amount of money because otherwise the economy cannot move, but we do it scientifically. We inject only what is needed for the economy to progress and that is done with great responsibility, which the Central Bank is entrusted to do. We do it in an orderly manner and that is one of the reasons that we have been able to bring down inflation and ensure economic stability, when the whole world was going through difficulties. None of the banks in Sri Lanka collapsed and we are proud to say that it was because we managed it well. 6 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 Opposition has risen certain allegations on some infrastructure projects such as Kerawalapitiya power plant, Uma Oya project and the Weerawila airport. Q: What was the actual cost of the Kerawalapitiya power plant? A:The cost of the Kerawalapitiya Power Plant was originally estimated in 2002 as US$ 390 million. However, due to careful planning and execution, the cost of the project is now estimated to be only about US$ 295 million for the power plant of 300 megawatts when fully completed. That works out to roughly about a million US$ per megawatt. That is satisfactory as it is close to the current industry norm of about US$ one million per megawatt for petroleum based thermal power plants. The Kerawalapitiya plant is a combined power cycle plant. The first 200 megawatts is generated with furnace oil. The exhaust from the first phase is to be converted into steam to generate another 100 megawatts. The first phase is already in operation and the second phase will be operational soon, in a matter of a few days. The cost of setting up this plant will thus be distributed over the entire 300 megawatts. Q: Did the estimated cost of Uma Oya project increase? A: The structure of a project can change from time to time based on the project components.

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