03rd – 09th May 2010 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010 Content Page 1. DEVELOPMENT ECONOMICS 1.1 Oil price surge to trigger bond activity in Gulf 05 1.2 SL’s economy must be run just like the elections… 07 1.3 US economy expands as consumers boost spending 11 1.4 Chinese firms eye bigger slice of US assets pie 13 1.5 Waste can be used as a resource 15 1.6 Central Bank says govt should contain budget deficits 18 1.7 Nuclear Power: Is it the 'Energy Miracle' in the post fossil fuel era? 20 1.8 Nutrition Status of Sri Lankans: Solving existing issues 22 1.9 Lanka Hospitals offers new hope for children with congenital heart diseases 25 1.10 Nationalism, Good Governance and Ethics 27 1.11 High growth expected 29 1.12 Lanka needs an 'IPL' for the economy 31 1.13 Govt committed to containing budget deficits, 35 1.14 Asia-Pacific must up social spending to turn rebound into recovery 37 1.15 PIGS: the Achilles heel of the EU 38 1.16 CB has key role in economic development – Basil 41 1.17 Social discipline needed for economic development 42 1.18 A Bankrupt Greece: The Tragedy of Profligacy 45 2. INVESTMENT 2.1 Oil palm investments by RPCs showing high returns 49 2.2 Tips for successful long-term investing 51 3. MANAGEMENT 3.1 Organizational reforms and restructuring 54 3.2 Firing - How to let go.... 56 3.3 Energy Management Where are we? 59 3.4 Logiwiz receives ISO 9001:2008 for Quality Management Systems 63 4. TRADE & MARKETING 4.1 Global natural rubber outlook encouraging 65 4.2 Holidays and monsoon rain grip rubber market 69 4.3 Boost for Ceylon Tea in Japan 70 4.4 Domestic Potato Industry and its sustenance 72 2 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010 5. TOURISM 5.1 Tourism soars with victory in Lanka 76 5.2 Kalpitiya tourism project in spotlight 77 6. EXPORTS 6.1 Increase in tea exports, revenue 79 6.2 Gem exports bounce back after recession 80 7. STOCK MARKET 7.1 SEC to improve CSE structure 82 7.2 Indices continue to post decent gains 84 7.3 CSE eases, profit taking on Vallibel, interest in Nawaloka 86 7.4 Stocks close 0.3% higher 87 7.5 Activity levels high in CSE this week 88 8. EDUCATION 8.1 Directing education on a new path 90 9. AGRICULTURE 9.1 Agricultural production campaign takes root 93 10. ICT 10.1 ICT conference and exhibition in Jaffna this week 96 11. ENVIRONMENT 11.1 Timely decision helped save the environment 99 11.2 Let us make peace with the ENVIRONMENT 101 3 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010 Development Economics 4 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010 The Island – May 3, 2010 OIL PRICE SURGE TO TRIGGER BOND ACTIVITY IN GULF Despite an improvement in crude prices and expectations of domestic economic recovery, the debt market in Gulf oil-producing states declined sharply in the first quarter of 2010 because of widening uncertainty and better prospects about growth in bank lending, according to a key Saudi investment firm. Conventional bond activity in the six-nation Gulf Co-operation Council (GCC) tumbled by nearly 70 per cent in the first quarter of this year compared with its average in the previous three quarters, said NCB Capital, an affiliate of National Commercial Bank, the largest bank in Saudi Arabia by assets. The sukuk (Islamic bonds) market in the region suffered more, with the value of their issuance plummeting by around 81 per cent, in sharp contrast with South-east Asia, where the value shot up by nearly 114 per cent. While prospects for such activities in the GCC remain bleak in the near term, they are expected to brighten in the medium- and long-term as regional economies gain steam on the back of firm oil prices. Projections by the International Monetary Fund (IMF) show that real gross domestic product (GDP) growth in the GCC is expected to rebound from around two per cent in 2009 to nearly 5.8 per cent in 2010 and 2011. All member states are forecast to record positive growth while Qatar’s economy will roar up by nearly 18.5 per cent in 2010 and 14.3 per cent in 2011. "The opening quarter of 2010 brought the GCC debt markets little closer to recovery. Market uncertainty, sovereign risk fears and restructuring worries caused yields to shoot up," NCB Capital said in a 10-page study on the GCC debt market for the first quarter of 2010. "At the same time, issuance volumes fell sharply, especially in the case of sukuk. However, the proposed Dubai World deal helped brighten prospects towards the end of the quarter. While the near-term outlook remains uncertain, structural drivers for the GCC debt capital markets are very strong with a growing need for long-term financing," said the study, sent to Emirates Business. The study noted that the near-term outlook for the GCC debt market remains uncertain, adding that the market is not immune to the deteriorating situation in the European bond markets following the Greek fiscal crisis. "However, we see an encouraging outlook in the medium- to long-term. The GCC debt market holds significant potential given the long-term financing needs of the region and the size of the current pipeline. But structural risks such as ambiguous insolvency provisions and a lack of clarity among sukuk structures, will require greater attention than they have received to date." According to the report, the growing optimism that characterized GCC debt markets during much of 2009 seems to have largely evaporated during the first quarter of 2010 due to uncertainty and an expected improvement in bank credit. 5 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010 It said sentiment was shaken by high-profile events such as the disputes associated with the $100 million (Dh367m) TID Global Sukuk issued by Kuwait’s Investment Dar and the Dubai debt issue. Both cases heightened market uncertainty and raised broader concerns about sukuk structures and the lack of widely accepted mechanisms for dealing with default-type situations, it said. "Further anxiety was caused by rising sovereign risk worries in Europe, which spilled over into conventional bond markets. The widening spreads caused potential issuers to shy away from the market. The reversal in market sentiment was especially sharp in the case of sukuk." NCB Capital’s figures showed there was an unusual wave of sovereign debt issuance in the GCC countries through most of 2009. Government bond issues in the six members totalled $20 billion during the first three quarters of the year, and mostly came from Abu Dhabi and Qatar. Dubai continued the trend in the fourth quarter. In contrast, the GCC conventional bond market recorded a lacklustre performance in the first quarter of 2010 as the private sector is yet to replace the government as the key market driver, the report added. Figures showed that the value of conventional bond issues was down by some 70 per cent from the average of the previous three quarters, to about 3.4 billion. The first quarter of 2010 registered only six new conventional bond issuances, down 65 per cent from the average of the previous three quarters. "The significant decline in conventional bond issuance was largely linked to continued debt market uncertainty" the report said. -Emirates Business 6 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010 The Island – May 3, 2010 SL’S ECONOMY MUST BE RUN JUST LIKE THE ELECTIONS… By Rohantha Athukorala "We have to make Sri Lanka known to be the nation that beat terrorism and now, the economic tiger of Asia. Currently many are talking positive of Sri Lanka but this fan fare will last only for two year the most. Thereafter, another country will become a buzz nation in the world stage. We must make the best of it now". Last week at the inaugural session of the first parliament after defeating the LTTE took place and it was great to see so many young faces in the system. Having served the country in the pivotal economic policy making body-NCED for two successive Presidents in the country and also chairing the premium export arm of Sri Lanka the EDB, I had the privilege of frequently visiting parliament for meetings but what I experienced last week was different. The enthusiasm, commaradie and youthful laughter of the young members of parliament sure gave me hope that Sri Lanka was poised for a 8-10% GDP growth in the years to come. All that was needed was for us to support the developmental agenda. The challenge Whilst being very optimistic, the reality is that the challenges we are up against are gigantic in nature and unless the private and public sector work in synergy, we will not be able to do justice to the hype that surrounds the country. From the data that has been released by Central Bank in the month of January, imports have shot up by 70.1% to 1160.9 million dollars whilst exports has dipped by 3.9% to 472 million dollars which not very healthy. The trade gap has ballooned to 688.9 million dollars from the 191.5 million dollars the year before. What’s worrying is the declining Industrial exports by $16.9 million with textiles and garments dipping by 27.8% which indicates that urgent action required.