Economic & Market Bulletin
[May 25, 2005] 

A weekly publication of the Economic Affairs Division of the Ministry of Foreign Affairs
Volume 2:Issue 10 
20^th May 2005 

Sri Lanka Development Forum 2005 a major success

• The first ever Development Forum chaired by Sri Lanka was concluded successfully in Kandy this week. The Government and its development partners had a constructive dialogue at the two-day Forum on the post tsunami relief and recovery experience and the overall development challenges facing the country.

• The development partners reaffirmed their continued commitment to assist Sri Lanka. The pledges made stood at approximately US$ 3 billion including debt relief.

• The Government presented its discussion paper on a “New Development Strategy, a Framework for Economic Growth and Poverty Reduction (FEGPR)” based on accelerated growth and reduced regional imbalances for the poor. The Government also presented Sri Lanka’s country report on the Millennium Development Goals to the Forum.

• There was express support for a possible joint mechanism to manage post- tsunami assistance in the affected areas of the North and East. The international community strongly endorsed the idea of such a mechanism and encouraged parties to continue their efforts to bring it to fruition early in order to ensure effective aid distribution at grownd level.

Korean Government funds Greater Galle Water Supply Project Phase 11.

• The objective of the Greater Galle Water Supply Project is to provide uninterrupted potable water supply to the entire Greater Galle area.

• The project is also intended to enhance economic, social and health conditions of about 160,000 people living in the area.

• The Republic of Korea in 2001 provided the equivalent of US$ 33.4 million for implementation of phase 1 of the project. For phase 11 an equivalent  of US$ 14.8 million is being provided by the Republic of Korea.

Sri Lanka – India comprehensive economic partnership agreement meeting successful

• A technical level meeting between India and Sri Lanka to discuss the Comprehensive Economic Partnership Agreement (CEPA) to expand the scope of the current India – Sri Lanka Free Trade Agreement (ISLFTA) was held in Colombo recently.

• The Comprehensive Economic Partnership Agreement will include two additional components, that is investment and services.

• The negotiations on CEPA will be an important milestone in the relations between Sri Lanka and India in strengthening bilateral linkages, and promote greater trade and investment flows between the two countries.

• Both countries agreed to provide CEPA provisions for National Standard Bodies of the two countries to enter in to Mutual Recognition Agreement in respect of products that are of mutual export interests. 

Tourism Promotion Complex for Matale

• The Central Provincial Council (CPC) has made plans to establish a tourism promotion complex to boost the tourism industry in the province.

• The CPC and Development of Trade, Commerce and Tourism has jointly allocated Rs.40 million for the project. The complex is currently being built in Matale. 

• The primary objective of this project is to promote provincial tourism while laying much emphasis on community participation.  

• The complex will consist of an information center, community theatre and a hotel school. The information center will provide comprehensive information to foreign and local tourists about the central province.  

Sri Lanka Garment exports to target US$ 4.5 billion revenue in 2007

• According to an industry official Sri Lanka is aiming for a revenue of US$ 4.5 billion from garments exports in the year 2007. This is helped by a long-term strategy that will offset the effects of the end of a preferential trade agreement with the US.  Sri Lanka’s revenue from garments and textile exports climbed 9% to US $ 2.8 billion in 2004. 

• Sri Lanka already enjoys a healthy market for intimate apparel with retailers such as Victoria’s Secret, Marks & Spencer, Learner, Express and BHS among its key customers.  The US is the largest buyer of garments and textiles, accounting for more that 60% of the total garment exports. Textiles and garments are Sri Lanka’s largest export earners and make up 50% of its total export earnings.

Export driven growth boosts profits for Watawala 

• Watawala Plantations, Manufacture and Marketer of “Zesta”, one of the top value added brands of tea in the country, has reported excellent growth in financial indicators for the year ended in March 31^st, 2005 on the back of strong growth of revenue from exports.

• The company has reported a pre- tax profit of Rs166.78 million, an increase of 316 per cent over the previous year.  Post tax profit at Rs161.8 million reflected a growth of 303 per cent.

• The total turn over for the financial year was a record Rs.2.72 billion, up a healthy 22 per cent, Rs2.23 billion earned last year.  Turn over from exports rose to Rs689 million, which was a quarter of the total turn over.  Profit after the tax from exports was Rs130.95 million.

Government, ADB working on Securitisation Bill

• The Government with assistance from the Asian Development Bank (ADB) is currently working towards establishing a new securitisation bill.

• Securitisation is a relatively new concept in Sri Lanka, which is growing in popularity. The necessity to develop an effective and efficient securitisation market in Sri Lanka is increasingly felt by the industry as well as the authorities regulating the market. The Bill would ensure availability of more cost efficient funding.

• The ADB feels that there was a need for financial market progress for Sri Lanka’s private sector development.

• Securitisation is the issuance of marketable securities by the expected cost flows from specific assets.

Construction industry to gain steady growth in 5 years

• With a view to infuse world- class products, services and state of the art technology to Sri Lanka’s construction industry “Construction 2005”, Sri Lanka’s largest Housing and Construction Exhibition will be held from August 12^th to 14^th this year.

• The exhibition has been organized for the fifth consecutive year by the National Construction Association of Sri Lanka (NCASL) and will showcase the achievements of Sri Lanka’s construction industry.

• “Construction 2005” is expected to bring together the entire value chain of the building and construction industry, under a common roof. 

• Construction 2005 will bring together builders, architects, engineers, constructors, interior designers, and quantity surveyors among many others, in what is expected to be a most comprehensive construction trade exhibition in the country.

Visit of President Clinton

• Former US President Bill Clinton will arrive in Sri Lanka from 27^th to 28^th May 2005.

• President Clinton will be visiting Sri Lanka primarily in his capacity as the United Nations Secretary General’s Special Envoy for Tsunami Recovery.

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Last Updated Date: May 25, 2005 .