GAIN
Complimentary with The Nation
to sustain earnings from exports. Further, earnings from trade in services
are poised to grow with the 5-hubs,
namely the maritime, aviation, knowledge, commercial and energy sectors
and tourism emerging as key growth
sectors in the economy.”
The Central Bank said Sri Lanka’s
economy grew by 6.4% in 2012 and is
projected to expand at a rate of 7.5 per
cent in 2013 and gradually move to a
higher growth trajectory of over 8 per
cent in the medium term.
“Sustaining this higher growth momentum requires raising investments
to a level of around 31–33 per cent of
GDP. The growth in the medium term
needs to be supported by capacity expansion and adapting and upgrading
the technology used in the production
process, diversifying into higher value
added sectors and broadening export
destinations,” the report said.
Noting that inflation is expected to
moderate in 2013 with the easing of
demand driven inflationary pressures
and favorable supply side developments, the report stated that maintaining price stability is important for
investor and consumer confidence as
well as to maintain macroeconomic
stability.
Continued on page 3
>>>
p4
Credit crunch for private sector
p4
Seven of Sri Lanka’s biggest State Owned Enterprises (SOE)
the Ceylon Petroleum Corporation (CPC), Ceylon Electricity
Board (CEB), Sri Lanka Transport Board (SLTB), Sri Lanka
Railways (SLR), the Department of Posts (DOP), SriLankan
Airlines and Mihin Air have suffered an accumulated operating loss of a staggering Rs. 185bn in 2012, the Central Bank’s
2012 Annual Report released last week disclosed. Accordingly,
CPC’s financial position eroded further during the year reporting operational loss of Rs. 89.7bn in 2012 compared to Rs. 94.5bn
in 2011 whilst the financial position of CEB weakened by more
than three fold mainly due to the rise in average generation cost
caused by higher thermal power generation resulting in an operating loss of Rs. 61.2bn in 2012 compared to a loss of Rs. 19.3bn
in 2011, the Central Bank Report said.
WEF network
readiness index
Lankan kids learning robotics!
SL moves
two places up
The Research and Development division of Sri Lanka’s leading electrical accessories manufacturer, Orange Electric has
recently come forward to teach a group of students aged between 6 and 12 on how to make robots, a highly advanced
technology that is sweeping throughout the world. Pictured are the company’s engineers teaching Robotics to students
of Northwood Global College in Borella, which is the first ‘corporate international school’ in Sri Lanka
Seven SOEs pile
Rs.185b losses
Azhar Razak
8 pages
Regulating professional services
Narrowing deficit,
way forward
Although improved access to international capital markets and a more
flexible exchange rate helped cushion
the external sector in 2012, policies
should focus on narrowing the current
account deficit to a more sustainable
level by reducing import dependence,
improving export competitiveness and
diversifying goods and services exports as well as markets, the Central
Bank highlighted in its 2012 Annual
Report released last week.
The Bank said that expenditure on
the importation of food and beverages
could be significantly reduced through
policies being taken to encourage domestic production, particularly in the
areas of dairy and sugar production.
“Further, the importation of oil is
expected to decline over the medium
term with the shifting to coal power and
other alternative sources of energy,”
the Bank noted.
In the area of exports, the Central
Bank report said merchandise trade
needs to penetrate into emerging market economies to benefit from the rebalancing of the global economy, while
retaining and increasing market share
in traditional export destinations.
“Policies to promote value addition
into fast expanding supply chain industries and entrepot trade are expected
Sunday, April 14, 2013
Losses at a glance
(Operating loss in Rs. Billion)
Ceylon Petroleum Corporation (CPC)
89.7
94.5
Ceylon Electricity Board (CEB)
61.2
19.3
Sri Lanka Transport Board (SLTB)
3.8
3.3
Sri Lanka Railways (SLR)
3.8
4.1
On the passenger transportation side, operational loss of
SLTB increased to Rs. 3.8bn in 2012 compared to the loss of Rs.
3.3bn recorded in 2011 whilst the SLR managed to decrease its
operating losses to Rs. 3.8bn in 2012 compared to the loss of Rs.
4.1bn suffered in 2011.
Meanwhile, operating loss at DOP increased by 8 per cent to a
substantial Rs. 5bn in 2012, following a 52 per cent increment in
2011, the Central Bank stated.
On the other hand, the financial performance of the aviation sector also remained weak in 2012 with the national carrier, SriLankan Airlines posting an operating loss of Rs. 20.5bn
whilst Mihin Lanka recorded an operating loss of Rs. 1bn in
2012 compared to the operating loss of Rs. 455.3m incurred in
2011.
Continued on page 3
The Department of Posts
5
4.6
Sri Lankan Airlines (SLA)
20.5
19.1
Mihin Air
1
0.455
>>>
2012
2011
TUs allege tariff hike unfair “Proper water management,
The newly revised tariff hike to recover losses of the Ceylon Electricity
Board (CEB) is an unwanted burden
on the public, as the best way to do so
is by wastage minimization and eradicating exploitation within the authority,
Secretary of Joint Trade Union of CEB,
Ranjan Jayalal reiterated last week.
In addition, he also said contrary to
the country’s development approach
and encouragement to utilize technology, if the power gets expensive by the
day and is unaffordable to the general
public; whatever other facilities provided to enhance lifestyles becomes
futile.
“The state doesn’t tolerate with
people. If a person fails to settle their
bills on time, the CEB will excluded
them from the service. Likewise, most
people who consume electricity pay,
on time. So public are not be blame
regarding the losses whatsoever. The
state trying to charge it from public is
illogical, unnecessary and unfair”, Jayalal strongly remarked.
Addressing the same discussion
on the controversial Tariff Hike organized by the Transparency International Sri Lanka, Energy Forum,
Executive Director, Ashoka Abeygunewardena said that although
the estimated expenditure for 2013
is given at Rs.256bn and its revenue is Rs.174bn, under the new
tariff scheme, the estimated revenue
would be Rs.222bn. However, Abeygunewardena said that the aforementioned figures are misleading as
the actual gap between expenditure
and revenue should be somewhere
around Rs.2bn, maximum.
“Although electricity is not a need
according to fundamental theories in
economics, certain equipment and
functionalities are of irreplaceable
importance”, he said. Adding he also
noted that the new tariff scheme cannot be justified because it had been
formulated in such a way, where the
people who consume less are more
affected, which thereby doesn’t encourage conservation of power.
CK
recycling mechanisms needed”
Crystal Koelmeyer
Sri Lanka should tap proper water management and recycling mechanisms as
means of ensuring sustainability of the
scare resource, in facing the projected target of 2.5 billion tourist arrivals by 2016
without hassle, Senior Environmental Engineer for SWITCH Asia, Prof. Niranjanie
Ratnayake highlighted last week.
Furthermore she also suggested that
hoteliers in particular should distinguish between requirements, and thereby
strictly avoid utilizing potable water for
gardening, cleaning and other activities
of the sort.
“As surface waters are being over utilized by people around the world, likely
that the next world war will occur over
water - for it is fast turning out to be the
determinant factor of a country’s wealth”,
she expressed, addressing the launching
ceremony of the Eco Nest waste water
treatment system.
She also noted that it would be a timely
move by the industrialists to exploit new
sources and substitutes in order to cater
to the water requirement that is set to rise
in tandem with the infrastructure developments, particularly the 22500 fresh hotel room facilities that are to be constructed in the coming years, under the Tourist
Development strategy formulated by the
Sri Lanka Tourism Development Authority (SLTDA).
Meanwhile, Eco Nest (Pvt) Ltd, Chairman, Rejean Appleby said that the system
is fairly unique from other competitive
products and solutions in the market because a patented bacteria medium is used
in the treatment process, which is proven
effective and distributes evenly throughout the tank volume as opposed to traditional media.
Continued on page 3
>>>
>>> p6
Sri Lanka has moved up two places in a ranking compiled by the World Economic Forum,
which measures how well information communications technologies are used by the people to
69, just behind India.
Last year Sri Lanka was 71 out of 142 countries. Sri Lanka moved up in 2013 out of 144
countries without an increase in the score of 3.9
points.
Sri Lanka scored very high in the affordability
measure, ranked at number 5 for mobile tariffs
based on purchasing power parity dollars and
number 2 for fixed broadband though ranked low
in internet and telephony completion (129).
Sri Lanka did less well on the political and
regulatory sub-index bogged down by legal delays in contract enforcement, piracy and judicial
independence.
Sri Lanka also scored moderately well on skills
(38), government and business usage (57), but
lagged behind other countries on individual usage (110).
Ranking on top was Finland, Singapore, Sweden, the Netherlands, Norway, Switzerland, the
United Kingdom, Denmark, United States and
Taiwan (China).
The report Growth and Jobs in a Hyperconnected World suggests that national policies in
some developing economies stopping ICT investments from translating into tangible benefits
in terms of competitiveness, development and
employment.
ADB tips economy to
recover in 2013-2014
ADB’s flagship annual economic publication
Asian Development Outlook 2013 (ADO 2013),
released last week says Sri Lanka’s economic
growth is expected to recover gradually to 6.8%
in 2013 and to 7.2% in 2014.
Sri Lanka’s performance in 2012 reflected a
strong showing in industry, which grew by 10.3%,
driven by a doubling of growth in construction.
Services sector growth, however, slowed down
due to subdued international trade and the impact of tightened monetary policy measures.
The agriculture sector suffered from drought and
floods.
Earnings from garments fell due to slackened
economic conditions in the US and European
Union and the loss of the Generalized System
of Preferences Plus facility, while tight monetary
policy, Sri Lankan rupee depreciation, and high
tariffs led to a decline in consumer and intermediate goods imports. Foreign direct investment inflows in 2012 are estimated to remain at US$1bn
level which is same as in 2011.
Merchandise exports are projected to grow at
a slow pace of 4% in 2013 and 5% in 2014, while
imports are projected to grow by 6% in 2013 and
10% in 2014 without widening the current account
share of GDP. ADO 2013 notes that Sri Lanka’s
policymakers will need to address the challenge
of narrowing the budget deficit by improving tax
efficiency and widening the tax base.
Inflation continued to remain in single digits at
7.6% during 2012, although nonfood price rises
came from increases in government-administered prices for fuel and electricity and rupee depreciation. The 2012 budget deficit estimated to
meet the target, which was achieved by reducing
current expenditure.