Economic & Market Bulletin
[July 19, 2005] 

A weekly publication of the Economic Affairs Division of the Ministry of Foreign Affairs
Volume 2:Issue 18 
15^th July 2005 

• Standard Chartered Bank would be increasing capital in its Colombo office by Rs.2.5 billion (USD 25 million) this year to fund growth in their business.

• The Bank has invested in expanding and upgrading its customer interface channels such as the branch and ATM network and introducing new technology. Recently the Bank opened a new ATM in Battaramulla, a new service center in Wattala and relocated its Branch in Rajagiriya to modern premises.

Top International Apparel Buyers will be in Sri Lanka

• Top international apparel buyers such as the J.C.Penny Corporation, Steve & Barry, the V.F. Corporation and Collins Company will be in Sri Lanka to attend the country’s first ever Fabric and Accessory Suppliers’ Exhibition (FASE).

• The exhibition, which takes place from July 19-21 2005, is jointly organized by Lanka Exhibition and Conference Services (LECS) and the Sri Lanka Apparel Institute (SLAI). It is endorsed by the Sri Lanka Garment Buying Offices Association and the Joint Apparel Association Forum (JAAF) with the Fabric and Apparel Accessory Manufactures Association (FAAMA) acting as the Industry Partner.

• FASE is being organized to provide Sri Lankan manufactures and suppliers of fabrics, accessories, trimmings and other support services to the garments industry with a forum to showcase their products.

• A special feature at FASE 2005 will be static exhibition of the University of Moratuwa Textile Department’s Fashion Design and Product Development Course.

Sri Lanka granted US$ 64.5 million for telecom reconstruction 

• The International Telecommunications Commission (ITC) has granted 64.5 million US$ to develop Sri Lanka’s tsunami affected telecommunication network.

• According to officials all post offices and damaged telecommunication networks would be rebuilt with the aid. Free telephones would be provided to all the Sri Lanka Telecom subscribers who were affected by the tsunami.

• The Institute of Construction Industry (ICTAD) is empowered to collect the CIGF (Construction Industry Guarantee Fund) Levy on behalf of the Government, which was approved by Parliament under the Finance Act Number 5 of 2005. 

• It is proposed to increase the capital of the CIGF levy to Rs. 500 million as local construction firms find it difficult to submit bonds and raise funds due to lack of proper securities.  A cess of 0.25 % from small constructors and 0.5% from medium constructors and 1% from large constructors on their contract turn over would be imposed and earmarked for the fund.  The Government would also contribute Rs. 250 million.

• The Act provides to collect the Levy on every construction contract enforced in Sri Lanka by every construction contractor on contracts entered into on or after 1^st January 2005. 

• The construction contracts valued at less than Rs. 15 million are not subjected to the Levy while the contracts valued at Rs. 150 million or above will be subjected to 1% levy.

Trade Delegation from Sichuan to visit Colombo

• A Chinese trade delegation from Sichuan Province will visit Sri Lanka shortly to establish business contacts.  This is subsequent to a business promotion visit made by the Federation of Chambers of Commerce and Industry Sri Lanka (FCCISL) for the sixth Western Trade Fair in Chengdu, China earlier this month. 

• FCCISL signed an Agreement to promote trade and economic development, investment and exchange of technology with China Council for the Promotion of International Trade Sichuan Council (CCPITSC).

• The Chinese delegation to visit Sri Lanka would include businesspersons involved in rubber-based products, medical equipment suppliers and officials.

• Sri Lanka plans to start textile manufacturing to boost the apparel industry and increase local value addition of apparel products.

• According to industry sources if textiles are manufactured in the country, the total value addition of the apparel exports will increase by another 10%.

• In terms of value addition, the apparel industry is well ahead of other main export industries.

• Sri Lanka’s apparel industry is targeting US$ 5million in annual exports. At present the total export value of apparel is US$ 2.7billion and the industry accounts for around 60% of the total exports of the country.

Rs.5000 million for 14,000 Samurdhi Projects 

• The Samurdhi and Poverty Alleviation Ministry has been given an allocation of Rs.5000 million to implement 14,000 projects to renovate dilapidated roads, bridges, culverts, wells and other infrastructure facilities in remote rural areas throughout the country.

• The Programme will start on July 15, with each of the projects being allocated between Rs.20, 000 to Rs.50, 000 to be utilized expeditiously to cover the programme within one week.

Rs. 4.8 billion boost for Private Sector from Germany

• The Government of Sri Lanka, KFW Bankengruppe (KFW German Development Bank) and DFCC Bank signed an agreement, which will provide DFCC access to a long- term credit line of Rs. 4.8 billion.

• The loan proceeds can be utilized to finance procurement of machinery, civil construction and initial working capital related to investments by the private sector.

• The loan is in 2 portions and will be extended by the KFW. The first portion, which is 25% of the total amount, is provided by the Government of Germany an out of its development cooperation funds and the balance 75% is raised from the German capital market with a guarantee extended by the German Government.

• Forbes and Walker Tea Brokers is maintaining a bullish outlook for 2005 for the tea market. According to its report, Sri Lanka Tea Review 2004, following could be considered as the key drivers towards a bullish outlook for Sri Lanka tea in 2005.

* Growth of global tea consumption.

* Supply and demand globally almost reaching equilibrium.

* Major component of over supply being CTC teas.

* Free Trade Agreement with Pakistan.

* Liberalization of imports into Iran.

* Reduction of duty to Egypt.

* Shortfall of Good Quality Orthodox teas.

* Expected growth in the economy of the CIS and Middle East.

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Last Updated Date: July 19, 2005 .