Bond rating

Fitch rates Sri Lanka's upcoming bond 'B+'

Fitch Ratings has assigned Sri Lanka's upcoming USD bond issue a rating of 'B+', a statement by the rating firm said.
 The rating is in line with Sri Lanka's Long-term foreign currency Issuer Default Rating (IDR) of 'B+', which has a Positive Outlook

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Sri Lanka and Mexico 'best for long-haul value'

Sri Lanka and Mexico 'best for long-haul value'


Australia and Hong Kong were the least cost-effective destinations featured in the survey, which also revealed significant rises in the price of food, drinks and supermarket goods in Thailand and South Africa.
The Post Office's annual Long-Haul Holiday Report compares the cost of 10 essential holiday purchases – such as an evening meal, a cup of coffee and sun cream – in 22 destinations.

In Sri Lanka, the 10 items cost just £46.85, compared with £155.48 in the Australian capital, Sydney.
Research released this week by Hayes and Jarvis, a tour operator specialising in long-haul trips, also suggested that Sri Lanka is among the best-value destinations for a package holiday, with a one-week break in November costing £799 on average, bettered only by Egypt (£649) and the Dominican Republic (£729).
Sri Lanka has witnessed a sharp rise in visitors following the end to hostilities between government forces and Tamil separatists in the north and east of the island. 

Nearly 400,000 foreign tourists visited in the first eight months of 2010, an increase of 47 per cent on the previous year.
Thailand – the cheapest destination in the Post Office's 2009 report – fell to sixth in the survey, thanks in part to the strength against the pound of the Thai baht, which is worth 11.6 per cent more than last year. The 10 items cost £52.85 in Phuket, up by 16 per cent on last year.
Mexico and Kenya finished second and third in the survey. UK sales of the Mexican peso and the Kenyan shilling have risen by 5 and 11 per cent, respectively, while the Kenyan Tourism Board has reported a 7 per cent rise in British visitors.
Malaysia and Indonesia finished fourth and fifth in the survey, with the 10 items costing British visitors £51.89 and £52.39.

Sean Tipton from Abta , the travel association, emphasised the importance of prices on the ground, particularly with air travel becoming more expensive. The latest rises in APD, due in November, will add up to £240 to the cost of long-haul flights from the UK for a family of four.
"Long-haul travel can initially look unattractive, with air fares costing more than travelling to Europe," Mr Tipton said. "But many long-haul destinations are cheaper than the Mediterranean, with even a weak pound still going a very long way."
Elsewhere, prices in Australia, Canada and Brazil have all risen sharply, and sterling's recent weakness against the rand means that tourists visiting South Africa can expect to pay about 28 per cent more for food, drink and other holiday essentials this winter.

(Courtesy The Telegraph)

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Britannia to wind up ‘unviable’ Lanka operation

Britannia to wind up ‘unviable’ Lanka operation

The Nusli Wadia-promoted biscuit maker, Britannia Industries, has decided to wind up its ‘unviable’ Sri Lankan operations, according to foreign media.

 Britannia entered the Sri Lankan market in 2008 by launching a range of biscuits under the brand name Britannia Lanka.
“The company had decided to withdraw from the operations in Sri Lanka as they were not found to be viable. The right thing for a management to do was realise and recognise something and act on it and it is precisely for this reason that the company decided to withdraw,” Wadia told shareholders of the company recently.

Britannia could not turn around its business in the island nation , thanks to stiff competition from the local and already established brands in that counrty, sources said. 

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Welcome

The Bottom Line always provides quality content that is surely 'worth reading'. So please keep posting and do keep reading

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Welcome

The Bottom Line always provides quality content that is surely 'worth reading'. So please keep posting and do keep reading

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GSP crisis prompts top apparel firms to look beyond Lanka

The loss of the Generalised System of Preferences Plus (GSP+) facility offered to Sri Lanka and the wages board’s recent decision to raise the minimum salary of garment workers by 20% have prompted some top industry players to look for alternatives in other countries.
Industry sources said some major apparel manufacturers in the country were considering the possibility of shutting down their factories here and open then elsewhere to cut costs.
“This is the case at present with factories that have a greater exposure to Europe since they are reluctant to lose the higher margins that could be made through buyers in these markets,” a top industry official told The Bottom Line.
The sources said some players were contemplating on relocation based on the fact that costs of labour and raw materials were much lower in those countries.
It is learnt that some major players are conducting feasibility studies to operate from regional countries such as Bangladesh and the Maldives.
Joint Apparel Association Forum (JAAF) secretary-general Rohan Masakorala said the industry was facing a ‘tough situation.’
“There’s a grave threat of GSP-related orders moving out of Sri Lanka and to countries like India or Bangladesh. Exporters will feel the pinch by late September or October. However, it’s too premature to comment on this.”
He said the turnover forecast for apparels would be around Rs 333bn or US$ 3bn.
According to Masakorala, the minimum wage has risen to Rs 7,900 for a garment employee, starting without any skills.
“I can’t tell what the exact impact would be but certain industrialists will definitely feel the pressure. Although industrialists wanted the Wages Board to have January 1, 2011, as the implementation date the government wanted it to be
October 1, 2010.”
“It will affect within the trade and across the trade although we still haven’t heard of retrenchment or layoffs so far.”
Another top official, meanwhile, said the industry was currently trying to mitigate the loss of the GSP plus by portraying Sri Lanka as a country that is serious about its ethics in manufacturing standards such as employing greener production methods and adhering to accepted labour standards.
Sri Lanka’s garment industry is a US$3.2 billion export business and accounts for around 46% of the country’s export revenue.
Sri Lanka has nearly 300 garment factories including major suppliers such as Brandix, Hirdaramani and MAS Holdings.
Until recently, Sri Lanka had been one of the two Asian countries which enjoyed the GSP Plus benefits for trade with EU countries.
Sri Lanka was awarded the GSP Plus to facilitate its recovery from the Tsunami disaster in 2004.

http://www.thebottomline.lk/2010/09/05/page1.html

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Economic implications of the 18th Amendment

By Azhar Razak

Although certain sections of the government claim the implementation of the 18th Amendment last week could lay the foundation towards an accelerated economic growth derived from the political stability, a senior economist from the main opposition party says it could pave the way for a more politicised and autocratic economic culture.
“The Sri Lankan economy is certainly going to face dire consequences by the implementation of the amendment as it would make regulators such as the Central Bank of Sri Lanka to be completely managed by politicians and questions being asked over its independence,” economist and UNP MP Dr Harsha de Silva told The Bottom Line.
He charged that since the Constitutional Council, which earlier had a say in the appointment of the three non-executive board members to the Central Bank’s Monetary Board, is now replaced with the parliamentary council set up, the President would now get exclusive powers to appoint all five members to the board.
“Earlier although the non-executive board members are appointed by the President on the recommendation of the Minister of Finance, the approval of the Constitutional Council was also required for the appointment of these non-executive board members. However, since the Constitutional Council has now been repealed, additional approvals would no longer be needed in future with the President having powers to appoint anyone as he wishes,” de Silva explained.
He added that the 18th Amendment only required the President to seek observations from the Parliamentary Council, which does not necessarily mean he has to abide by the decisions taken by the council.
The Central Bank has a unique legal structure in which the Central Bank is not an incorporated body. In terms of the Monetary Law Act, the corporate status is conferred on the Monetary Board, which is vested with all powers, functions and duties and the Monetary Board is responsible for making all policy decisions related to the management, operation and administration of the Central Bank.
Meanwhile, heads of universities and academics who met at a recent discussion stated that the 18th Amendment to the Constitution could lay the strong foundation that is required to accelerate economic development in the country. Speaking to journalists, University Grants Commission chairman Professor Gamini Samaranayake said Sri Lanka suffered from both political and economic instability since independence due to the war.
“We believe that the 18th Amendment would give the long felt political stability to achieve the economic stability that is required to accelerate the country’s development process while ensuring the People’s right to appoint a president according to their wish,” Samaranayake pointed out.
He said Sri Lanka was able to record average growth rates of around six percent even during the war and with the political stability it derives from the implementation of the 18th Amendment, it could well mean that we could be heading towards ‘double digit growth rates’ in the future.
“In the past 40 years, although Sri Lanka tried to reduce inflation, unemployment, etc to single digits it had failed in the attempt due to the lack of political stability. Around 47,000 graduates were recruited to the Public Service in 2005. The 18th Amendment is a must for the country’s economic development and that is why even the entire private sector supports it,” Strategic Enterprise Management Agency (SEMA) Financial Service Cluster Director, who is also a senior economic advisor to the President said.
The 18th Amendment was also supported by the Vice Chancellor of the Open University Sri Lanka, Professor Upali Vidanapathirana and the Vice Chancellor at the University of Colombo, Professor Kshanika Himburegama, at the press briefing held at the Sri Lanka Foundation Institute.
One of the objectives of the 18th Amendment to the Constitution is to replace the Constitutional Council by a Parliamentary Council consisting of five members of which three are ex-officio (The Speaker, the Prime Minister and the Leader of the Opposition).
The other two members will be separately nominated by the Prime Minister and the Leader of Opposition to include ethnic groups not represented by the three ex-officio members.
President Mahinda Rajapaksa had earlier said that the Constitutional Council in the 18th Amendment to the Constitution will better assure the supremacy of the Parliament as there will not be a presidential representative in the proposed council and will only consist of parliamentary members.

http://www.thebottomline.lk/2010/09/12/biz_feature3.html

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