Economic & Market Bulletin
[December 25, 2005]

	Today's Stories
	FEATURE: Economic & Market Bulletin

A weekly publication of the Economic Affairs Division of the Ministry of Foreign Affairs
Volume 2:Issue 41 
23^rd December, 2005 

South and Southeast Asia Goods FTA to start 

• Seven South and Southeast Asian nations are set to launch goods Free Trade Agreement from July 2006. This was announced after a foreign ministers’ meeting of BIMSTEC (Bay of Bengal Initiative for Multi Sectoral, Technical and Economic Cooperation) in Dhaka.

• According to the New Delhi based think tank, if the deal comes into full force, it could generate additional trade worth 40 – 60 billion dollars among BIMSTTEC member countries.

Japan pledges US$ 40 million for NE road development 

• The Government of Japan pledged to provide US$ 40 million for road development in Northeast areas. Japan has already provided nearly US$ 180 million for the rehabilitation needs of Tsunami affected areas. Out of this US$ 180 million US$ 100 million has been granted as a soft loan at a concessionary interest rate of 0.75% with a 40 year repaying period.

• A Finance Ministry official reports that, US$ 100 million has been allocated for infrastructure development of tsunami affected areas and the Susahana Loan Scheme, which was designed for tsunami affected Sees by the Central Bank. Approximately, Rest. 47 million being utilized from the funds. The balance Rest. 80 million was provided under the non- project grant aid programme for reconstruction efforts.

• Under non project grant the highest amount of funds being used for rehabilitation of fisheries sector and it is recorded as 27%, 21% is used for road development and 20% is for education. Funds also being utilised for water and sanitation, health, housing and electricity.

Extension of Development Cooperation Agreement between Sri Lanka & Sweden  

• The Swedish Government has extended the period of the Development Cooperation Agreement with Sri Lanka with a commitment of grant funding amounting to Swedish Kronor 180 million (approximately Rs. 2.34 billion) for 2006 and 2007. This is an extension of the current Development Cooperation Agreement which was signed in 2003.

• The priority areas for funding under the Swedish Development Cooperation are to promote peace, democracy, human rights, pro poor growth and contribute for the rehabilitation of areas affected by the tsunami.

BOI deal to manufacture embroidery lace for export 

• The Board of Investment of Sri Lanka (BOI) finalized an agreement involving $8.5 million Foreign Direct Investment (FDI) with a consortium of Swiss and Thai investors to manufacture high value embroidery lace for the export market.

• The new company, Bishoff Gamma Lanka (Pvt) Ltd will be housed in Biyagama Export Processing Zone. The foreign principals are reputed for turning out embroidery for intimate apparel needs. The local output will be exported mainly to USA and European countries.

IMEXPRO 2006 to promote Sri Lankan exports & imports   

• The IMEXPRO 2006 International Trade Fair organised by the Ceylon Chamber of Commerce (CCC) will be held from March 16 – 18, 2006 at the Sirimavo Bandaranaike Memorial International Conference Hall.

• The objective of the exhibition is to assist the business community in Sri Lanka and abroad to source suitable business partners and promote Sri Lankan exports and imports.

• The IMEXPRO 2006 will benefit the public and the private sector to meet the overseas trading community on their home ground and promote their products and services. They have offered 160 stalls to service local and overseas organisations and expect 300 overseas buyers to attend the exhibition.

• Coinciding with IMEXPRO 2006, the CCC in partnership with the Economic Chamber of the Czech Republic will host “Sri Lanka – Czech Enterprise”, a two-day match making event at the same venue. The event is specifically aimed at expanding trade and investment between the two countries. The event offers an opportunity to Sri Lankan companies to establish strategic partnerships with Czech companies at zero cost.

• The event will focus on rubber products, energy and environmental technology. The exhibition is organized by CCC together with the Ministry of Foreign Affairs, Export Development Board and the Board of Investment.

New coins from Central Bank 

• The Central Bank of Sri Lanka issued for circulation of a new series of coins in the denominations of Rest. 5, Rs.1, 50 cents and 25 cents.

• The year of the coins appears as 2005. The size and colour of new Rest. 5 and Rest. 2 coins remain unchanged while the weight and alloy have changed. Rest. 1, 50 cent and 25 cent coins are smaller than the existing coins of similar denominations and colours for easy identification purposes. The new coins will be circulated along with the existing coins in circulation.

• According to the Central Bank officials, this will save over Rs. 600 million in mining costs as the new series of coins would minted in steel and plated according to the different denominations instead of using expensive alloys.

Germany provides Euro 74.3 million for development projects

• Sri Lanka and Germany were signed Four Financial and Technical Cooperation Agreements. The total amount of the funds provided by the German Government under these four agreements is Euro 74.3 million of which 57 million is grant funds and the balance Euro 17.3 million is in concessionary loan funds.

• The 1^st agreement is for a concessionary loan of Euro 17.3 million (approximately Rs. 20.9 billion) provide by the German Government through the German Reconstruction Bank (KIW).

• The 2^nd agreement is for a grant of Euro 21 million (approximately Rs. 25.4 billion) under the regular technical cooperation programme provided by the German Government through the German Agency for Technical Cooperation (GTZ).

• The 3^rd agreement is for a grant of Euro 36 million (approximately Rs. 43.6 billion) provided for the rehabilitation and reconstruction of tsunami affected areas.

• Tsunami grant fund will be used for technical cooperation for vocational training, housing, rehabilitation of infrastructure, education and promotion of Micro, Small and Medium Enterprises.

• The deferred debt will be repaid in seven equal, semi-annual instalments, commencing from December 2006.

Government plans to modernize plantation sector

• Plantation Industry Ministry reports that, the Government is planning to implement a 10 year plantation sector development plan. This would begin from early 2006.The Government has allocated Rs. 10 billion from the recent budget for the plantation sector.

• Officials of Sri Lanka Tea Board  (SLTB) also report that, SLTB also in the process of devising a strategic plan to modernise tea factories in the country to meet the HACCP food security standards to penetrate in to lucrative European markets.

Rs. 8 billion debt relief from UK

• The Government of United Kingdom signed an agreement to offer debt relief to the tune of Rs.8 billion to Sri Lanka under its multilateral debt relief initiation originally announced in September 2004.

• Under this agreement the Government of the United Kingdom will contribute 10% of the payment owed by the Government of Sri Lanka to the International Development Agency (IDA) of the World Bank in all debt incurred up to 1^st January 2004.The Government of UK intends to continue this arrangement until 2015 and the total value of the debt relief is approximately US $ 80 million (approximately Rs. 8 billion).

• The funds reimbursed by the UK can be used as budgetary support for implementation of Government tsunami reconstruction and poverty reduction programmes. A Memorandum Of Understanding was signed for the reimbursement of US $ 5,6891 million (approximately Rs. 575 million). 

Emirates introduces Internet check in facility

• Emirates introducing a online check in facility which can save their passengers time. Emirate’ passengers departing from Colombo can now select and secure their preferred seats online, and check in for their flights from their homes, hotels or offices, by logging on to www.emirates.com.

• Once the check in process has been completed, they will be provided an online check in receipt. Passengers can proceed to a dedicated counter at the airport to check in their luggage and exchange their online check in receipt for boarding passes. Passengers are required to present themselves at the airport counter at least 90 minutes prior to departure.