Economic & Market Bulletin
[October 26, 2004]

A weekly publication of the Economic Affairs Division of the Ministry of Foreign Affairs

Volume1:Issue 12

• Records tumble at Bourse 

• US - Lanka talks on TIFA 

• Indo Sri Lanka Micro Wave Link

• Apparel Industry Suppliers’ Exhibition-AISEX 2004 

• Trade mission to Mumbai and Chennai

• JETRO assists Lankan ICT firms to enter Japan

• Expediting FTA with Pakistan

• Sri Lanka to chair Expert Group Meeting of WSIS 

• Colombo Dockyard Ltd. breaks into new market; manufacturing Crew Boats

• New tourism plan

Records tumble at Bourse 

• The All Share Price Index (ASPI) of the Colombo Stock Exchange (CSE) today recorded its highest level in its history reaching 1530.9 points.  The ASPI, which started the day at 1506 points, moved up by 24 points to close the day at 1530.9 points.

• The ASPI of the CSE has recorded a gain of 468.8 points (44.1%) so far for the year 2004 becoming the best performing stock market in Asia and one of the best performing markets in the world.

• The ASPI has recorded a growth of 1127.3 points (279.3%) from October 2001 to date.  Local investors were the main contributors throughout the period.

• The Matara & Kandy Branches of the CSE have contributed approximately 15% of the total turnover.

US - Lanka talks on TIFA 

• The Minister of Trade and Commerce, Jeyaraj Fernandopulle will lead the Sri Lanka delegation to the joint Sri Lanka –US Trade & Investment Framework Agreement (TIFA) Meeting which would be chaired by Ambassador Robert Zoellick, the US Trade Representative. The Sri Lanka delegation will include the Chairman / Board of Investment, Director General / Dept of Commerce and Sri Lanka’s Ambassador in the USA. Several other government and private sector officials are also expected to join the delegation.

• It is expected that the progress made so far with regard to a bilateral Free Trade Agreement (FTA) would also be discussed at this meeting. 

Indo Sri Lanka Micro Wave Link

• Sri Lanka Telecom (SLT) and Bharat Sanchar Nigam Ltd (BSNL) of India have signed an agreement to inaugurate Voice Traffic via Indo- Sri Lanka Micro Wave Link. The link was established between Talaimannar in Sri Lanka and Rameshwaram in India.

• SLT will use this link to offer good rates for Indian telecommunication traffic generated by BSNL and it will make Sri Lanka a business hub in South Asia.

• SLT and BSNL have principally agreed and have signed a MOU to initiate the construction of a submarine cable between India and Sri Lanka.

Apparel Industry Suppliers’ Exhibition-AISEX 2004 

• The Exhibition AISEX 2004, is scheduled to be held 18-20 November at the Sri Lanka Exhibition and Convention Center, Colombo. The event is expected to attract key apparel and textile machinery accessories & service providers from many parts of the world.

• 10,000 visitors are expected to turn out and the exhibition is also expected to generate more opportunities & benefits to the local apparel industry in numerous ways. The local manufactures would be able to see latest developments particularly in the apparel technology area through the exhibition, which will enable them to move in to more technology driven production and ultimate cost reduction.  

Trade mission to Mumbai and Chennai

• The Ceylon Chamber of Commerce will send a Trade Mission to Mumbai and Chennai to boost bilateral trade and Investments ties between Sri Lanka and India. The main objective of the visit is to strengthen trade ties, establish business links; source suitable business partners for trade, investment, joint ventures, and technology transfer and services. 

• The Free Trade Agreement between two countries has immensely increased the bilateral trade. Sri Lanka exports to India for the year 2000 was Rs.4, 217 million, which has now reached Rs.23, 275million by the year 2003. The imports too have been increased from Rs.45, 477 million to Rs.103, 871 million in the same period.

JETRO assists Lankan ICT firms to enter Japan 

• The business and ICT communities in Japan in partnership with the Japan External Trade Organisation (JETRO) Japan-Colombo and Genesys Corporation will assist Sri Lankan ICT companies to enter the Japanese market and set up potential joint ventures. 

• The initiative will allow Sri Lankan ICT companies to expand its wings to Japan and this effort comes in the wake of Japanese realising the software skills of the Sri Lankan ICT companies and its ability to provide solutions for e-Japanese strategy. 

• A workshop was conducted recently in Colombo by JETRO with a high level Japanese delegation to educate the Sri Lankan ICT community on ways to enter the Japanese market and facilities for investors. Collaborative management between business is a vital part of the next generation business model in Japan. 

• There is vast potential for foreign companies to establish development and training centres in Japan and systems integration market is a thriving business there. 

Expediting FTA with Pakistan

• The first Foreign Secretary level bilateral consultations between Sri Lanka and Pakistan were held on 15^th October 2004, in Colombo. The Pakistan delegation was led by Riaz Khokhar, Foreign Secretary of Pakistan and the Sri Lanka delegation by S. Palihakkara, Foreign Secretary of Sri Lanka. 

• On areas relating to bilateral economic cooperation, both sides agreed to expedite the conclusion of the Free Trade Agreement between Pakistan and Sri Lanka and emphasized the need to complete the negotiations. It was agreed to set fresh dates for the next round of negotiations. 

• Agreement was also reached on scheduling the next meeting of the Pakistan-Sri Lanka Joint Economic Commission for the first quarter of 2005. 

• Matters discussed included co-operation in tourism and archaeology, a proposed agreement on scientific and technical co-operation, strengthening the cultural exchange programme, air services negotiations, a proposed MOU on co-operation between the Pakistan Agricultural Research Council (PARC) and the Sri Lanka Council for Agricultural Research Policy (SLCARP), a proposed agreement on mutual legal assistance in criminal matters and the transfer of sentenced persons. It was also agreed that both sides would benefit from exploring the possibilities for employment of Sri Lankan professionals in Pakistan.

Sri Lanka to chair Expert Group Meeting of WSIS 

• Sri Lanka was elected as the Chair of the Expert Group Meeting (EGM) & Information, Communication and Space Technology (ICTC) on follow up to the World Summit on the Information Society (WSIS) scheduled to be held in Tunis in November 2005.

• Both these events held in Bangkok at UNESCAP headquarters, with the objective of building and Information Society, a global challenge in the new Millennium, in accordance with the decision of the International Telecommunication Union (ITU) Council and the UN General Assembly. 

Colombo Dockyard Ltd. breaks into new market; manufacturing Crew Boats

• Sri Lankan shipbuilder, Colombo Dockyard Ltd. listed in the Colombo Stock Exchange, has created a new market to build Crew Boats.

• Dockyard Limited won a contract, worth of US $ 6.5 million to build Crew Boats for two Middle Eastern customers of Saudi Arabia and United Arab Emirates.  

New tourism plan

• With a view to increasing by 10% the annual growth rate of the tourist industry during the period 2004 to 2010, the Sri Lanka Tourist Board (SLTB) has proposed a new Tourism Plan. “The Sri Lanka Tourist Board’s Plan 2005” will encourage all stakeholders of the industry and the people to drive tourism development and its returns.  

• The SLTB’s road map has been strengthened by the momentous progress of the tourist arrivals in the last nine months. On average tourist spending has increased from US $ 64 to US $ 70 and the number of tourist arrivals has increased from 338,050 to 375,630- an increase of 11 % over the comparable period in 2003. It is expected to surpass the target arrivals of 550,000 by the end of this year and the current room occupation is 74%. 

• Under the new plan, it is expected that tourist arrivals will reach the figure of 1 million by 2010 and average spending to be in the region of US $ 155. Earning are expected to be around US $ 1,727 million, which will be four times the current level of foreign exchange earned from the industry.

* Some of the prominent points of this new initiatives are;

• Acquiring and developing new Tourism Development Areas (TDAs) including the development of Passikudah, Mundal-Kalpitiya, Kandy, Sigiriya, Arugam Bay and Dedduwa as resort properties as well the repositioning of the prime tourist resort in Bentota.

• Doubling the current intake of the Board’s Hotel School in 2005 and setting up additional satellite schools.

• Creating number of world class events in 2005 and growing them; the Sri Lanka WOMAD Festival of Drums in March, and International Food Festival in October, a global fashion TV, the Festival of Visual arts, and Vesak koodu (Lanterns) celebration in May, novel Hot Balloon, an innovation to Sri Lanka.

• Developing new products for wellness tourism, traditional medicine such as ayurveda and spa.

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Last Updated Date: October 26, 2004 .