Upgraded rail tracks in south coast of Sri Lanka: Big surge in vehicle import after duty cut

On February 16, 2011, Sri Lanka inaugurated its upgraded south coast rail track. The track has been upgraded with Indian aid and it would enable trains to travel at an speed of 100 km per hour reducing the overall traveling time.

The 42 kilometers long track from Galle to Matara has been upgraded by Indian Railway Construction (IRCON) International Limited, a state run company. This development is the first phase of the construction of railway tracks from Sri Lanka’s capital Colombo to Matara. These areas had been affected by tsunami and Indian government provided a loan of 167.40 million US dollars to rebuild these areas.

Now the second phase of the project has started under which, the track from Galle to Kalutara will be completed.

With the end of a 30-year long civil war and reduction in import duty the country is observing major surge in car import. In 2010, car import went up by 300 percent to 23,072 units.

In 2009, a total of 204,075 vehicles were registered with the motor traffic department of which there were only 5,762 cars. In 2010, there was a 76 percent increase in the number of vehicles to 359,243.

More than two million two-wheelers had been registered with the motor traffic department in 2010.

There is a heavy demand of cars in the northern and eastern part of the country that were previously war zones. In addition, banks’ improved loan and leasing facilities played a major role in this regard.

Related article:

Lanka Business Online (1)

Lanka Business Online (2)

Jetairfly of Belgium introduced Sri Lanka as the new tourist destination

Jetairfly, one of the top tour operators in Belgium, introduced Sri Lanka as one of its new winter destinations. The airlines will operate weekly charter flights from Brussels to Colombo starting from October 2010.

The announcement was made at the Jetairfly Summer Road Show 2010 that took place at the Event Lounge in Brussels. More than 600 agents attended the event.

Ravinatha Aryasinha, Sri Lanka’s Ambassador to Belgium, Luxembourg and the EU was the special Guest of Honor at the launch. Mr. Aryasinha said, “while overall tourist arrivals to Sri Lanka grew by 48% in the first six months of 2010 over the corresponding period the previous year, arrivals from Belgium was almost 60%.”

While introducing Sri Lanka, Bart Brackx, CEO, Jetairlfy said, “despite the economic crisis the Belgian travel market is expanding and as a tribute to the Belgian traveler we are introducing the South Asian destination.”

Jetairfly offered three travel packages- ‘Initiatique ideal’ tour (3 days tour and 4 days in a beach resort), ‘Beauté naturelle inégalée’ tour (11 days tour and 3 days in a beach resort) and ‘Sri Lanka Classique’ (8 day tour for small groups) with local partner, Aitken Spence Travels in Sri Lanka.

He hoped that more and more Belgian travelers would choose Sri Lanka this winter and would have a novel experience to their lives.

Mahindra & Mahindra is planning to invest in Sri Lanka

With the end of the civil war, many Indian companies are now planning to invest in Sri Lanka. Famous Indian business conglomerate, Mahindra and Mahindra group announced that it would invest in tourism and financial services and also focus on increasing vehicle sales in the country.

Anand Mahindra, Vice Chairman and Managing Director of the Mahindra Group came on a two-day visit to Sri Lanka. He attended discussion with the Sri Lankan government officials to explore business opportunities in the country.

During his visit, he said, "Sri Lanka can provide a platform for large multinationals like us,……There is a feeling of Sri Lanka being on the move……A group like ours is capable of integrating and aligning with the new growth opportunities in Sri Lanka,……We can engage Sri Lanka in all these 10 sectors. We think there are huge opportunities in each of these sectors."

Mahindra would send a bigger team from all of its 10 business sectors to Sri Lanka pretty soon. The representatives would talk with the Board of Investment.

Lanka Business Online reported that Mahindra group would introduce its tractors and other agricultural equipment and vehicles in the country that would be sold through its local partner, Ideal Motors.

Due to the increasing number of tourists from India, Mahindra Holidays and Resorts is also planning to invest in the tourism sector of the country.

Sri Lanka observed bumper paddy buffer stock post civil war

Sri Lanka reported record paddy buffer stock due to cultivation in the paddy fields in the North and Eastern region that have been abandoned due to civil war.

On August 10, 2010, Johnston Fernando, Co-operative and Internal Trade Minister, Sri Lanka, said that the country currently has a buffer stock of 80,000 MT of paddy. Cultivation in wartorn areas coupled with fertilizer subsidy provided by the government resulted into bumper harvest this year.

According to the report of Daily News, Mr. Fernando said that Sri Lanka is now self-sufficient in paddy and the government will maintain a two-month buffer stock so that citizens do not face any artificial shortages created by the market.

He said that government has not stopped buying paddy harvests from farmers and made necessary arrangements to store the yala season paddy harvest. The government is going to use the store houses of the Food Department as well as those of the private owners.

He said that government is paying Rs.28 for per kilogram of Nadu paddy and Rs.30 for per kilogram of Samba paddy. The farmers are required to bring their crops to 136 store houses of the Paddy Marketing Board (PMB) located around the country.

Emirates will start new flights between Maldives and Sri Lanka

In the face of revival in the tourism sector, Dubai-based Emirates airlines is going to start additional flights between Sri Lanka and Maldives to meet the growing demands of tourist in the region.

In a statement issued by Emirates, the carrier said that it is going to add one extra flights from Sri Lanka to Malé from August 1, 2010. This would increase the number of flights between Maldives and Sri Lanka to four to five flights per week.

Majid Al Muall, Senior Vice President-Commercial Operations West Asia & Indian Ocean, "As tourism and economies revive in the region, there is increasing demand for seats on the Malé-Colombo sector."

These additional flights would increase the airlines’ services in Maldives to 19 flights per week making it one of the most active international carriers in the country.

As per new schedule, Emirates flight no. EK652 and EK 654 will fly from Malé at 16:30 and arrive in Colombo at 18:30. On Monday, Tuesday, Thursday, Saturday, Sunday- return flight EK-653 will leave from Colombo airport at 21:35 and arrive in Malé at 22:35.

On Wednesdays and Fridays, flight EK654 will continue on to Dubai from Colombo.

Emirates will provide Airbus A330-200 for these flights. These aircrafts have 12 seats in First Class, 42 seats in Business Class and 183 seats in Economy Class.

Ceylon Tourism Fund: The first tourism sector fund introduced in Sri Lanka

On July 27, 2010, Ceylon Asset Management and Deutsche Bank AG tied-up introduced the Ceylon Tourism fund in order to tap into the profits of the top ten tourism companies of Sri Lanka that are listed on the Colombo Stock Exchange.

Licensed by the Securities and Exchange Commission of Sri Lanka, the Ceylon Tourism fund is the first ever tourism sector fund in the country. It will distribute tax-free income from its profits on yearly basis.

The Ceylon Tourism Fund invests in ten key companies in the country’s hotel and travel sector. The companies are- Aitken Spence Hotels, John Keells Hotels, Asian Hotel and Properties, Taj Lanka Hotels, Ceylon Hotels Corporation, Hotel Services (Ceylon), Royal Palm Beach Hotels, Amaya Leisure, Light House Hotel and the Fortress Resort PLC.

Daily News reported that the Ceylon Tourism Fund is an open-ended equity fund which allows investors to invest and exit any time.

The stocks will be offered for sale in the market on July 28, 2010 at Rs.10 per share with a minimum investment limit of Rs. 10,000.

Tourism is one of the major sectors for Sri Lanka. Till date, the country’s tourism sector could not flourish due to civil war and political instability. Now, that the war is over, Sri Lankan government is working hard to turn around the country’s tourism sector.

Recently, Sri Lankan government organized the 11^th IIFA Awards in Colombo in order to boost Sri Lanka’s image around the world.

LIRNEasia says mobile broadband quality is satisfactory in the western province of Sri Lanka

In a recent study, LIRNEasia, a research organization that specializes in information and communication technology (ICT) policy and regulation, revealed that the mobile broadband quality of the two largest carriers in Sri Lanka’s western province, where the capital of the country is located, is satisfactory when compared to international benchmarks.

LIRNEAsia said, “Mobile broadband users in most places in western Province can expect a reasonable quality unless a rare issue like the distance from a tower or a higher number of simultaneous users hinders it,”

The study had been carried out using post-paid SIMS from a moving vehicle. LIRNEasia researchers compared their test results with the promises made by the operators. In any case, if the operator can not be determined, researchers used international standards. The organization did not mention the name of the two carriers on which they conducted the study.

In a statement, Chanuka Wattegama, Senior Research Manager, LIRNEasia said, "We see little reason testing mobile broadband quality from fixed locations. It should be done on the move as that is how it is used……We could have done it from a car, but purposely did it from a bus to examine how conditions beyond our control can affect the performance."

The tests had been carried out on Symbian and Windows CE platforms to meter high speed packet access (HSPA) services provided by the carriers and one mega bytes per second had been used as a benchmark.

Sri Lanka: The Best Place to Travel in 2010 According to New York Times

Tourism is one of the main foreign exchange earners for Sri Lankan economy. Because of the civil war, this sector was badly hit. The civil war ended a few months ago and as a result, it is expected that many people would come to the country again. The tourism sector of Sri Lanka would surely get a good boost thanks to New York Times. The US newspaper mentioned it as the top place to travel in 2010.

NY Times wrote:

The island, with a population of just 20 million, feels like one big tropical zoo: elephants roam freely, water buffaloes idle in paddy fields and monkeys swing from trees. And then there’s the pristine coastline. The miles of sugary white sand flanked by bamboo groves that were off-limits to most visitors until recently are a happy, if unintended byproduct of the war.

Sri Lankan government should focus on developing infrastructure for this sector. If tourism flourishes then many foreign companies would happily come and invest.

Sri Lanka: More Conflict Less Inflation?

In this blog, I try to cover South Asian business and economy news. That is why, every day, I try to take a look at the media headlines of Sri Lanka. It seems that these days, it is all about conflicts and war in the country. That is why, this news item caught my eyes today that rate of inflation is going to decrease in February 2009 compared to a year ago at the same month. This news may come as a shock to some of you as it is normally expected that when there is civil war in a country, the inflation must increase as agriculture and industrial productions get disrupted.

The reason behind the decrease in inflation is that because of global economic recession, the price of many commodities has fallen in the international market. Another thing that had decreased a lot is oil price. As a result, there should be less pressure on importers in the country and the ordinary people are enjoying the benefit.

Well, it seems that the on going civil war is affecting the country in another area: balance of payments crisis. It is perhaps time that Sri Lankan decision makers start to give the same amount of focus on country’s economy like the civil war.

(This entry was first published in February 2009. Because of a technical problem, the entry had to be deleted and I am reposting again now.)