Official Hopes UN Report Won’t Hit Industry
Gihan Karunaratne
With Sri Lanka on a tourism boom after the recent end of its 26 year old terrorist war, an airline official was however keeping his fingers crossed that the UN Panel’s adverse war crimes report on the island would not boomerang on the industry.
Gihan Karunaratne, Country Manager Sri Lanka & Maldives, Oman Air, told reporters on Tuesday that the industry has had no adverse repercussions because of the UN war crimes report which has called for an investigation.
He further said that the Airline’s Country Manager in Germany had told him that there is a clamour among German tourists to visit the island despite this adverse report. Germany is Sri Lanka’s third largest tourism generating market. At one time it occupied the top slot.
When asked whether there would an impact in the event that crisis was not resolved, he said that he hoped, as a Sri Lankan that such a thing would not happen.
President Mahinda Rajapaksa targets a tourist arrival figure of 2.5 million by 2016.
But the fear among certain quarters is that if the Government of Sri Lanka won’t act on the UN Panel’s war crimes report, backed by the West in the final days of its war against terrorism, which accuses Colombo of complicity of committing such crimes and calls for an investigation of such, that that may be a precursor to sanctions being imposed on the island.
The West is also Sri Lanka’s single largest tourism generating market. Countrywise, India occupies the top slot.
Karunaratne said that in the first four months of the year his airline had an over 80% load factor (85% inbound and 88% outbound).
Due to this resurgence in airline travel, the airline would, from next month, up its flights to Colombo from five times weekly, to daily. It flies an A330 aircraft which can carry 20 business class and 190 economy class passengers, to Colombo.
Karunaratne said that the inbound tourism boom on his airline was led by Germany, France and UK (Sri Lanka’s number two tourism generating market) and of late also increased interest from Italy. He said that the outbound market comprised a mix of Sri Lankan workers to the Middle-East who offload at Muscat, and those travelling to London.
Gihan Karunaratne, Country Manager Sri Lanka & Maldives, Oman Air, told reporters on Tuesday that the industry has had no adverse repercussions because of the UN war crimes report which has called for an investigation.
He further said that the Airline’s Country Manager in Germany had told him that there is a clamour among German tourists to visit the island despite this adverse report. Germany is Sri Lanka’s third largest tourism generating market. At one time it occupied the top slot.
When asked whether there would an impact in the event that crisis was not resolved, he said that he hoped, as a Sri Lankan that such a thing would not happen.
President Mahinda Rajapaksa targets a tourist arrival figure of 2.5 million by 2016.
But the fear among certain quarters is that if the Government of Sri Lanka won’t act on the UN Panel’s war crimes report, backed by the West in the final days of its war against terrorism, which accuses Colombo of complicity of committing such crimes and calls for an investigation of such, that that may be a precursor to sanctions being imposed on the island.
The West is also Sri Lanka’s single largest tourism generating market. Countrywise, India occupies the top slot.
Karunaratne said that in the first four months of the year his airline had an over 80% load factor (85% inbound and 88% outbound).
Due to this resurgence in airline travel, the airline would, from next month, up its flights to Colombo from five times weekly, to daily. It flies an A330 aircraft which can carry 20 business class and 190 economy class passengers, to Colombo.
Karunaratne said that the inbound tourism boom on his airline was led by Germany, France and UK (Sri Lanka’s number two tourism generating market) and of late also increased interest from Italy. He said that the outbound market comprised a mix of Sri Lankan workers to the Middle-East who offload at Muscat, and those travelling to London.
Sustainability Pays
Dr. Nalaka Godahewa, Dr. (Ms.) Sriyanie Miththapala , Srilal Miththapala and Prema Cooray
Sustainable Tourism may not necessarily be a byword as exemplified by an official at a function in Colombo on Wednesday.
Dr. Nalaka Godahewa, Chairman, Sri Lanka Tourism, drawing an analogy from the garment industry said that at the height of that sector’s boom there were a thousand factories in operation.
That was in the 1980s when the quota system was there. Most factories operated as sweatshops with poor worker conditions. But they made a lot of money. However a few companies which were prudent ploughed back their profits in to their operations to provide for better worker conditions and for environmentally friendly production facilities.
And in the post quota era it’s those companies that have had survived, not just survived, but being recognized as world class players in their respective fields and at the same time reaping windfall profits.
He said that those thousand companies have now been telescoped to only 30.
Godahewa said that that was a lesson for the tourism industry to bear in mind, to be sustainable.
The occasion was the launch of a book titled “Good Practice Guidelines on Environmental Management for Sri Lankan Hoteliers,” authored by Environmentalist Dr. (Ms.) Sriyanie Miththapala.
Miththapala in her speech said that at present one in seven people go hungry and one in three don’t have sufficient water. She said that at the rate at which the earth’s resources are being consumed, two and a half (2½) earths would be needed to sustain the world’s population by 2050.
Srilal Miththapala, Project Director/Consultant Switch Asia Programme in his speech said that Travel Foundation UK, a union of British tour operators, has teamed up with them, to spread the message that Sri Lanka is promoting sustainable tourism (See The Sunday Leader of May 8, 2011).
Switch Asia is also working with ILO’s Green Jobs programme and the Environment Ministry on this score.
Miththapala further said that Sri Lanka’s hotels are poor in record keeping in relation to electricity and water consumption.
He said that smaller hotels with 5-6 rooms and one small airconditioner plant were more interested in sustainable tourism compared to some of the bigger players. Due to a lack of resources, Switch Asia, an EU funded project to promote green tourism, was working with NGOs such as Oxfam and Practical Action to address that matter.
Managing Director CCC Solutions Prema Cooray in his address said that hotels’ energy bills were bigger than their payroll bills.
CCC Solutions is a Ceylon Chamber of Commerce subsidiary under which ambit the Switch Asia Programme operates.
“Energy poses the biggest challenge with energy bills set to rise,” he said.
Dr. Nalaka Godahewa, Chairman, Sri Lanka Tourism, drawing an analogy from the garment industry said that at the height of that sector’s boom there were a thousand factories in operation.
That was in the 1980s when the quota system was there. Most factories operated as sweatshops with poor worker conditions. But they made a lot of money. However a few companies which were prudent ploughed back their profits in to their operations to provide for better worker conditions and for environmentally friendly production facilities.
And in the post quota era it’s those companies that have had survived, not just survived, but being recognized as world class players in their respective fields and at the same time reaping windfall profits.
He said that those thousand companies have now been telescoped to only 30.
Godahewa said that that was a lesson for the tourism industry to bear in mind, to be sustainable.
The occasion was the launch of a book titled “Good Practice Guidelines on Environmental Management for Sri Lankan Hoteliers,” authored by Environmentalist Dr. (Ms.) Sriyanie Miththapala.
Miththapala in her speech said that at present one in seven people go hungry and one in three don’t have sufficient water. She said that at the rate at which the earth’s resources are being consumed, two and a half (2½) earths would be needed to sustain the world’s population by 2050.
Srilal Miththapala, Project Director/Consultant Switch Asia Programme in his speech said that Travel Foundation UK, a union of British tour operators, has teamed up with them, to spread the message that Sri Lanka is promoting sustainable tourism (See The Sunday Leader of May 8, 2011).
Switch Asia is also working with ILO’s Green Jobs programme and the Environment Ministry on this score.
Miththapala further said that Sri Lanka’s hotels are poor in record keeping in relation to electricity and water consumption.
He said that smaller hotels with 5-6 rooms and one small airconditioner plant were more interested in sustainable tourism compared to some of the bigger players. Due to a lack of resources, Switch Asia, an EU funded project to promote green tourism, was working with NGOs such as Oxfam and Practical Action to address that matter.
Managing Director CCC Solutions Prema Cooray in his address said that hotels’ energy bills were bigger than their payroll bills.
CCC Solutions is a Ceylon Chamber of Commerce subsidiary under which ambit the Switch Asia Programme operates.
“Energy poses the biggest challenge with energy bills set to rise,” he said.
Source: The Sunday Leader
China heads India for economic growth, Sri Lanka 14th
*Mongolia best performing stock exchange, Colombo second best
China ranks first among 22 emerging Asian economies as the country most likely to maintain steady and rapid growth over the next five years, according to the Bloomberg Economic Momentum Index for Developing Asia, Bloomberg Business Week reported.
‘China scored 76.2 percent in a ranking of 16 areas including economic competition, education level, urban migration, high-technology exports and inflation that measure a country’s ability to continue delivering high growth. India was second with a score of 64.1 percent followed by Vietnam at 61.9 percent. Timor-Leste was last at 25.3 percent.
"The index suggests China and India’s economic surge is durable and will likely continue to drive global growth as the U.S., Europe and Japan lag behind. Gross domestic product in each of the top three Asian countries in the index expanded at least 5.4 percent a quarter on average throughout 2008 and 2009 while the U.S., the eurozone and Japan fell into recession, the Bloomberg report said.
"China has a proven track record, as they have maintained superior growth for a long time," said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. In particular, the Chinese government "demonstrated their ability to manage the global crisis."
In the past 30 years, China’s economy has expanded on average by 10 percent a year as it overhauled state-owned companies and allowed more foreign investment. Among economies with annual gross domestic product above $1 trillion, India posted the second-highest growth rate after China last year, expanding by 8.2 percent in the last quarter of 2010.
Stocks Lag
The Organization for Economic Cooperation and Development forecasts U.S. economic growth of 2.6 percent this year, 2 percent for the eurozone and a 0.9 percent contraction for Japan.
Still, the leading countries’ economic track record hasn’t been mirrored by stock market performance in the past 12 months. Vietnam and China are among the worst-performing indexes in the 22-strong Bloomberg index.
Fourth-ranked Mongolia, where a mining boom is fuelling inflation and driving up the currency, has the world’s best- performing stock market in the past 12 months. The MSE Top 20 Index has more than doubled in that time. Sri Lanka, ranked 14th out of 22 countries by the Bloomberg index, comes second with a stock index advance of 82 percent, the report said.
Risks
The Bloomberg index may overstate China’s rank relative to India’s and other countries, in part because Chinese official figures understate debt levels, said Victor Shih, a professor who studies China’s financial system at Northwestern University in Evanston, Illinois.
China could face economic and political shocks that would impact on its growth. Fitch Ratings said in March that China faced a 60 percent chance of a banking crisis by mid-2013 in the aftermath of record lending and surging property prices. Strikes, riots and protests are also on the rise, doubling in five years to 180,000 incidents last year, according to Sun Liping, a sociology professor at Beijing’s Tsinghua University.
The Bloomberg index put some countries with among the world’s highest growth rates in the past several decades, including Malaysia and Thailand, behind such countries as Vietnam, which ranked third, and Bangladesh, which ranked fifth.
The index gives weightings of 10 percent each to four categories: the competitiveness of market structure, which rewards countries for having fewer big companies that dominate equity markets; the quality of the labour force, including education levels, the age of the work force, and the growth rate of scientific journal publications; gross national savings as a percentage of GDP; and the growth of high-technology exports.
A further 12 areas have 5 percent weightings, including growth in GDP per capita adjusted for the cost of living, growth in world share of GDP, stability of inflation rates, diversity of top trading partners, external and public debt burdens, lending costs, net foreign direct investment and deforestation. Four "cohesiveness factors" include ethnic and religious homogeneity, income equality, rates of urbanization and poverty reduction, and variation in the jobless rate.
Lanka’s Eurobond enjoying good demand
*Traded as low as 5.5% at one stage, below 6.25% issue price
Sri Lanka’s US$ 1 billion euro bond is enjoying good demand trading in global secondary markets, and with US led quantitative easing expected to continue for some time resulting in generally high demand for emerging markets debt, the island economy has a good chance of selling its up coming euro bond issue at a much lower cost to the government.
HSBC Head of Global Markets, Sri Lanka, Sachith Perera, speaking to The Island Financial Review said the US$ 1 billion sovereign bond, issued in 2010 at 6.25 percent, was trading in the secondary market at around 6 percent, even improving beyond 5.5 percent at one stage.
"This suggests Sri Lanka’s sovereign bonds are enjoying good demand," he said.
Perera said the good demand for the 6.25 percent sovereign bonds, in addition to the positive story of the country, is partly due to the excess liquidity in global capital markets which was the result of excessive quantitative easing (printing money by governments, particularly in the US, EU and Japan) to stimulate ailing developed economies.
"With global credit demand sluggish in these markets, investors believe these are the best times to invest in emerging economies. With the current US quantitative easing programme expected to continue until late 2012 or early 2013, we believe these are good times for Sri Lanka to consider issuing its next euro bond. We also believe the bonds would be priced lower from previous issues," he said.
He said once the US economy begins to rebound and Federal Reserve starts to tighten monetary policy, there would be some capital flight back into US debt, which could put pressure on yields of emerging economies.
In September 2010, the US$ 1bn sovereign bond issue closed within 14 hours of the order books being opened. Around 362 investors threw in more than US$ 6.3 billion with the issue being prices at 6.25 percent, lower than previous issues in 2007 and 2009.
The maiden sovereign bond issue to international markets in 2007 was priced at 8.25 percent through competitive bidding while the second, soon after the war in 2009, was 13 times oversubscribed and was priced at 7.4 percent.
The Cabinet of Ministers have already approved another US$ 1 billion euro bond issue for later this year.
The Central Bank has written to reputed financial institutions on Bloomberg’s Top Ten list of lead managers to manage this issue and the bank is expected to announce the lead managers after a comprehensive selection process.
With the ratings agency reviews still ongoing, the Central Bank said it has not decided on the issue date.
Representatives from Standard and Poor’s were here last week meeting with a broad range of stakeholders. The Central Bank is now expected to lead a delegation to Standard and Poor’s head quarters in New York.
Fitch Ratings is expected to visit the island in June followed by Moody’s in July.
Cyber soldiers training in Sri Lanka
CICRA Institute of Education has been accredited to train cyber soldiers to fight against the newest forms of cyber terrorism that could cripple national security interests and corporate network structures.
This follows a partnership with US based International Council of E-Commerce Consultants (EC-Council). The EC Council is endorsed by US Department of Defense and the National Security Agency (NSA).
Under this partnership, CICRA will retain EC-Council accredited international trainers to coach and certify individuals in the specific network security discipline including security officers, auditors, security professionals, site administrators, and anyone who is concerned about the integrity of the network infrastructure in Sri Lanka.
For the first time in Sri Lanka, CICRA will run EC-Council certified combo training programs in Certified Ethical Hacker (CEH), Computer Hacking Forensic Investigator (CHFI), Licensed Penetrating Tester (LPT) and Advanced Security Training in Advanced Penetration Testing (APT), Digital Mobile Forensics Deep Dive, Advanced Application Security (AAS), Advanced Network Defense and Cryptography Deep Dive.
A Certified Ethical Hacker is a skilled professional who understands and knows how to look for the weaknesses and vulnerabilities in target systems and uses the same knowledge and tools as a malicious hacker, CICRA Director Boshan Dayaratne said.
Computer investigation techniques are being used by police, government and corporate entities globally and many of them turn to EC-Council for the Computer Hacking Forensic Investigator (CHFI) Training and Certification Program.
"Computer Security and Computer investigations are changing terms. More tools are invented daily for conducting Computer Investigations, be it computer crime, digital forensics, computer investigations, or even standard computer data recovery. The tools and techniques covered in EC-Council’s CHFI program will prepare the student to conduct computer investigations using groundbreaking digital forensics technologies," Mr. Dayaratne said.
"Licensed Penetration Tester (LPT) offered by EC- Council, unlike a normal security certification, trains security professionals to analyze the security posture of a network exhaustively and recommend corrective measures authoritatively," he said.
EC-Council’s license vouches for their professionalism and expertise thereby making these professionals more sought after by organizations and consulting firms globally.
CICRA is also offering training in advanced security testing through EC-Council’s Center for Advanced Security Training (CAST) that has been created to address the need for highly technical and advanced security training for information security professionals. CAST programs stand out from others thorough their extreme hands-on approach. These highly technical lab intensive advanced security training courses will allow a participant to combat real life scenarios.
E-C Council is a member-based organization that certifies individuals in cyber security and e-commerce and is the owner and developer of 16 globally recognized security certificates. Its certificate programs are offered in over 84 countries around the world.
EC-Council has trained over 90,000 individuals and certified more than 40,000 members worldwide. These certifications are recognized worldwide and have received endorsements from various government agencies including the U.S. Federal Government via the Montgomery GI Bill, Department of Defense via DoD 8570.01M, National Security Agency (NSA) and the Committee on National Security Systems (CNSS).
EC-Council based in Albuquerque, New Mexico, USA also operates EC-Council University and the global series of Hacker Halted and TakeDownCon security conferences.
High growth comes at a cost
Sri Lanka’s economy is steaming ahead two years into peace with macroeconomic fundamentals as sound as never before during the thirty year bloody conflict which sapped the economy. But growth comes at a cost.
The Island Financial Review spoke to HSBC Head of Global Markets, Sri Lanka, Sachith Perera who shared with us the bank’s forecasts for growth, inflation and interest rates and other macroeconomic variables.
Sri Lanka’s economy grew 3.5 percent in 2009 but rebounded sharply to record a growth rate of 8 percent in 2010, the first full year of peace. The Central Bank expects growth to reach 8.5 percent this year. HSBC’s forecast for growth is around 8 percent.
Inflation...
Inflation has been increasing in recent months, hitting 9.8 percent in April, largely due to supply side issued caused by flooding and global commodity price increases. According to the Central Bank, inflation is expected to subside from this month on improved domestic production. At the same time, the Central Bank did not remain idle in addressing demand side pressures on inflation, particularly the threat caused by growing credit demand.
"The economy is expected to grow at around 8 percent this year, and this fact also can add pressure on inflation. Added to this is the risk of global commodity price increases. We expect inflation to be higher this year with the annual average reaching 8.5 percent by the year-end. We defer from the Central Bank’s position that monetary policy rates would remain stable. We believe interest rates would have to be increased towards the end of this year in order to contain inflation, or look at adjusting the statutory reserve again, in which case the banks’ credit intermediation cost will widen," Perera said.
Interest rates...
Despite inflation’s upward momentum, key interest rates have remained stable over the weeks.
This is because of the excess rupee liquidity position of the banking system. Long term Treasury bond yields dropped around 40 basis points last week with the four year 2015 bond yield reaching 8.7 percent. "We expected bond yields to pick up but this did not happen. Because of the surplus funds, banks need to invest them, with the best option being government securities," Perera said.
Liquidity in the secondary Treasury bond market remains shallow with intra-day trades reaching Rs. 500 million to Rs. 1 billion. On better days, the market has seen trades total Rs. 5 to 6 billion.
Short term benchmark Treasury bill rates have remained stable over the past few weeks for the same reason as well.
Surplus liquidity in the banking system is somewhere around Rs. 70 billion, almost half of what it used to be towards the latter half of 2010. This high rupee liquidity was caused by the absorption of dollar inflows from remittances, export conversions and investments in the capital markets. While this helped the Central Bank boost its reserves, the outcome was a high rupee liquidity surplus, which the bank mops up through open market operations because so much money in the system would lead to inflation.
Banks too are reluctant to hold on to dollars, preferring to invest in rupees because of the interest rate differential, with dollars yielding much lower than the interest rates on rupee instruments.
Perera said many of Sri Lanka’s large companies were borrowing in dollars because of the much lower interest rates. He said importer and exporter demand would offset each other going forward, stemming the creation of rupee liquidity surpluses.
BOP...
The rupee appreciated 3.2 against the greenback last year and the Central Bank is expected to ‘gently’ strengthen it further this year. Perera said the exchange rate would depend on how weak, or strong, the dollar compared to other major currencies. If the dollar weakens the rupee is expected to appreciate further but Perera said HSBC forecasts suggest the exchange rate would hover around Rs. 109 – Rs. 110 or ‘slightly stronger’.
"We are absolutely not concerned about the balance of payments position or trade deficit. We expect the balance of payments surplus to reach US$ 500 million this year. A reasonable trade deficit is not a bad thing because it would absorb the large foreign currency inflows and contain inflation.
Stronger growth...
Although recording never-before-seen improvements in fiscal data, the government has limited space to deal with growing commodity prices. But Perera said if Sri Lanka could sustain the sector-wide economic growth inflation’s sting could be soften.
In fact, as earlier reported in The Island Financial Review, HSBC believes the vibrant growth would help Sri Lanka absorb the international commodity price increases to a certain extent, while improved food production is expected to keep food inflation under control as well.
Source: The Island
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