DEBENTURE ISSUE TO PARTLY FUND ‘PORT CITY’ PROJECT

By Azhar Razak

Following the example set out by the Urban Development Authority (UDA), Sri Lanka Ports Authority (SLPA) is likely to opt for a debenture issue to fund the much exaggerated ‘Port City’ project, which plans to change Sri Lanka’s map.

SLPA, which is in charge of building a new ‘port city’ adjacent to Colombo’s Galle Face Green, is expected to raise part of the required funding for the project through a debenture issue, of which the number are yet to be disclosed, a source close to the project said. The rest of the funds are expected to be raised through foreign borrowings, the source added.

UDA, another state run organisation successfully issued debentures to the Colombo Stock Exchange recently to raise Rs.5 billion to fund a housing project in the city of Colombo.

The proposed US $400 million ‘Port city’ project, which aims at expanding out to sea on reclaimed land with material dredged to build the Colombo South Harbour will add a further 300 acre land to the city’s western sea front.

“We are hoping that the project will kick off by at least the middle of next year and take around two to three years to complete,” SLPA Chief Engineer Planning and Development, Susantha Abeysiriwardena told The Bottom Line. He, however, declined to disclose anything material regarding the financial side of the project.

According to Abeysiriwardena, the sea is to be dredged up to one and a half kilo metre distance from the shore and would remain in parallel horizontally with the vertical length of the existing breakwater that is being built adjacent to the site, when complete.

“It has been projected that out of the 300-acre land that we can reclaim, around 200 acres will be utilised as useful area providing the basic infrastructure while the remaining 100 acres could be used to construct the high rise and low rise buildings for a commercial centre,” Abeysiriwardena said.

Sources said that Lanka Hydraulics Institute, providers of hydrographic and modelling services and the Moratuwa University are also involved in the planning.

Also envisaged is the extension of the Marine Drive (a road running parallel to the main Galle Road) from the Colpetty municipal ward into the land reclaimed from the sea, providing another approach road into the city.

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Ailing IFL to be recapitalised

The troubled Industrial Finance Limited will be re-capitalised within the next three months, thereby redeeming the nearly 50-year-old institution in danger of going bust, Central Bank Governor Ajith Nivard Cabraal said. He also said the Central Bank was holding regular meetings with the management the IFL and they are hopeful that the finance house can be taken out of danger.
“The management agent we’ve appointed to help the IFL for a turnaround, People’s Leasing Company is still very much involved in the matter and slowly IFL is expected to come out of trouble,” Cabraal said.

 
With the run on deposits of the Golden Key Credit Card Company, IFL also felt the heat as depositors started to pull out their deposits despite it being a registered finance company, regulated by the Central Bank. Unable to manage the institution with the looming threat of defaulting depositors, the owners of IFL at that time, the CIFL Group sold their ownership to a company called Rock Millennium (Pvt) Ltd, run by UK based Sri Lankan investor, Upul De Zoysa.

 
With the acquisition, the new management of the IFL promised the depositors to bring Rs700 million by mobilising foreign funds and restructuring the company.
However, the depositors currently claim that although they have surrendered their matured FD certificates they’ve been unable to obtain the due payments.
Even though the Central Bank appointed People’s Leasing as the management agent, sensing the crisis, the depositors say that the management agent also has failed and currently everything is in the doldrums.

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External Sector Performance – August 2010

Earnings from exports increased by 7 per cent to US dollars 760 million in August, recording the highest monthly value thus far in 2010. Cumulative earnings from exports during the first eight months of 2010 increased by 11 per cent to US dollars 5,040 million compared to the corresponding period of 2009. Expenditure on imports increased by 36 per cent to US dollars 1,143 million in August 2010 reflecting substantial increases in all major categories of imports. Cumulative expenditure on imports during the first eight months of 2010 increased by 37 per cent to US dollars 8,670 million compared to the corresponding period of 2009.  As a result, the trade deficit expanded to US dollars 3,630 million during this period from US dollars 1,782 million in the corresponding period of 2009.

The largest contribution to the growth in exports in August was from the industrial sector, led by a significant increase in exports of machinery and equipment. This comprised mainly of transport equipment such as boats and bicycles and electrical equipment such as electrical transformers, static converters, inductors and insulated cables. Earnings from exports of rubber products and petroleum products have also performed well. However, earnings from exports of food and beverages, textiles and garments, diamond and jewellery and other industrial products declined on a year-on-year basis. At US dollars 309 million, earnings from the textiles and garments sector recorded the highest earnings thus far, during the year. Earnings from food, beverages and tobacco exports have declined by 17 per cent mainly due to the lower exports of fish. Earnings from agricultural exports, which accounted for 23 per cent of total exports, increased in August 2010 led by higher earnings from exports of rubber and minor agricultural products, which continued to fetch premium prices in the international market. Rubber prices rose by 81 per cent to US dollars 3.27 per kg compared to the same period of 2009. Earnings from minor agricultural exports increased by 21 per cent mainly due to the higher prices fetched by cardamoms and cocoa products. There were also significant increases in the export volumes of tobacco, cardamoms, sesame seeds and cashew nuts. The average price of tea, however, declined marginally to US dollars 4.29 per kg in August 2010. Earnings from coconut exports also declined, in terms of value as well as volumes, compared to August 2009.

Expenditure on imports increased due to higher demand across all three major categories of imports in August 2010. Textile and clothing imports, which are used as an input for apparel exports, increased by 27 per cent to US dollars 152 million in August 2010, reflecting the potential growth in apparel exports in the coming months. The average import price of crude oil increased by 9 per cent to US dollars 73.53 per barrel in August 2010, from US dollars 67.52 per barrel in August 2009. Expenditure on imports of fertilizer also increased in August 2010, compared to the same period in the previous year, mainly due to the substantially higher import volumes. Expenditure on imports of consumer goods rose in August 2010, with significant increases in the non-food category, led by motor vehicles (US dollars 60 million) and electrical equipment (US dollars 8 million). Expenditure on investment goods increased by 65 per cent to US dollars 264 million in August 2010, reflecting higher growth in all sub categories.


During the first eight months of 2010, workers’ remittances increased by 12.9 per cent to US dollars 2,479 million over that of the corresponding period of 2009. Including the proceeds of the Sovereign Bond issued in September 2010, the gross official reserves, (without Asian Clearing Union (ACU) funds) increased to US dollars 6.8 billion by 25 October 2010. Based on the previous 12 months average expenditure on imports of US dollars 1,070 million per month, the gross official reserves, without ACU funds, were equivalent to 6.4 months of imports. Considering the Central Bank’s aim of maintaining a foreign exchange reserve level equivalent to around 5 months of imports, the quantum of the current reserve is substantially over the planned level.

The performance of external trade during the period is further illustrated in the following table.

External Trade Performance: August 2010 and January – August 2010

Category	August 2009 US$ mn	August 2010 US$ mn	Growth - August (per cent)	Jan - Aug 2009 US$ mn	Jan - Aug 2010 US$ mn	Growth - Jan - August (per cent)
Exports	710.4	760.3	7.0	4,551.3	5,040.4	10.8
Agricultural	168.5	176.9	5.0	1,051.0	1,267.1	20.6
of which, tea	121.0	123.3	1.9	738.3	869.8	17.8
Industrial	533.3	574.9	7.8	3,442.0	3,713.3	7.9
of which, textiles and garments	324.1	309.3	-4.6	2,162.3	2,076.1	-4.0
Mineral	8.5	8.5	-0.9	58.2	60.0	3.1
Imports	842.1	1,142.6	35.7	6,333.0	8,669.9	36.9
Consumer Goods	155.0	248.3	60.3	1,262.5	1,832.0	45.1
of which, food and drink	94.6	124.9	32.0	801.8	1,144.2	42.7
of which, other consumer goods	60.3	123.4	104.6	460.7	687.7	49.3
Intermediate Goods	516.8	622.1	20.4	3,439.8	4,812.3	39.9
of which, petroleum	218.3	230.8	5.7	1,285.5	2,008.6	56.3
of which, textile and clothing	119.6	152.3	27.3	915.7	1,054.7	15.2
Investment Goods	160.1	263.7	64.7	1,551.1	1,877.8	21.1
of which, machinery and equipment	60.7	112.9	85.9	681.1	731.0	7.3
of which, transport equipment	24.5	48.4	97.9	203.2	427.1	110.3
of which, building material	55.6	75.4	35.5	474.8	526.6	10.9
Balance of Trade	-131.7	-382.3	190.2	-1,781.7	-3,629.6	103.7
Workers’ Remittances	291.7	337.5	15.7	2,194.7	2,478.8	12.9

                                                                                                                      Sources: Central Bank of Sri Lanka

                                                                                                                                            Sri Lanka Customs

 









   

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Apple launches online shop in China

Apple introduced the Apple Store in China (apple.com.cn), an online shop for Apple products including the iPhone 4 and iPad. Apple's online store in China features free shipping, free personalized engraving on any iPod or iPad, and the ability to custom configure any Mac with just a few clicks. The online Apple Store also offers a wide selection of third-party products and is the only place online to buy the iPod nano RED. The online Apple Store also lets eligible students and faculty members take advantage of special education pricing on Apple products. Also starting today, customers in China can access Apple's App Store in Simplified Chinese, with localized featured apps and charts of the most popular paid and free apps in China. The App Store offers iPhone, iPad and iPod touch users access to a catalog of apps with over 300,000 apps in 20 categories including games, business, news, sports, health, reference and travel.

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India to start MNP testing in Haryana

India's Department of Telecommunications (DoT) will begin mobile number portability (MNP) testing for the Haryana circle on 8 November and will go live on 25 November, reports the Business Standard. For the rest of the circles, it will be implemented in phases. DoT had given licences to Syniverse Technologies and MNP Interconnection Telecom Solutions to implement MNP. In March 2009, the Ministry of Home Affairs revoked the FIPB approval to Telcordia, citing security concerns. DoT has now asked Syniverse to be ready for implementation of MNP across the country, as it may have to withdraw the licence to Telcordia.

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Bharti Airtel to launch 3G services this year

Indian communications firm Bharti Airtel will launch its 3G services this year.The company successfully bid for 3G spectrum in thirteen telecom circles across India and is rolling out networks in these geographies. Bharti is also in advanced discussions with other operators to be able to offer roaming and 3G broadband to its entire customer base in India. Bharti will be deploying high speed HSPA networks provided by Ericsson, Nokia Siemens Networks and Huawei.

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Bharti Airtel outsources African customer service

Indian operator Bharti Airtel has inked contracts with IBM, Tech Mahindra and Spanco to outsource its customer service operations across 16 African countries. Bharti Airtel, which has over 40 million customers under the Zain brand in Africa, will outsource core customer service functions like call centres and back office. The mobile operator said the widespread adoption of the BPO model across its operations will also have tangible benefits for the development of the sector in each country, create additional job opportunities and develop local talent. This is the second major partnership announcement from Bharti Airtel on the African subcontinent. In September this year Bharti selected IBM to build and manage IT systems to power the mobile network across Africa. Currently over 4,000 people are employed in Africa supporting Bharti Airtel's customer service operations. Going forward the number of people employed in managing Bharti Airtel's customer service functions will increase as Bharti Airtel expands its network and customer base.

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