Business Times

Sri Lankan economy set to grow –Asian investors told

The end of Sri Lanka’s 30-year civil war last May had created the potential for a remarkable “Peace Dividend” for an economy that is set to grow rapidly in a stable political environment, the Credit Suisse Asian Investment Conference was told this week.

Senior executives from two of the island nation’s most eminent businesses told the meeting in Hong Kong that Sri Lanka represented a rare opportunity for investors to participate in a frontier market with many of the attributes of more developed markets.

Sri Lanka is not a familiar investment destination for many global money managers, but the CEO of its biggest telecoms provider and the Deputy Chairman of its biggest listed conglomerate told the AIC delegates they should pay attention to a country that has changed dramatically in the last year, according to Credit Suisse officials.

Ajit Gunewardene, Deputy Chairman of John Keells Holdings, stressed to investors that the civil war was over and that the Liberation Tigers of Tamil Eelam, or Tamil Tigers, would not return. “There is absolutely no doubt that the LTTE has ceased to exist,” he was quoted as saying, although he added that there was a formidable task ahead for Sri Lanka in reconstructing the Northern and Eastern parts of the island that were ravaged by the war.

Hans Wijayasuriya, Group CEO of Dialog Telekom, noted the effective expansion of the Sri Lankan economy since areas controlled by the Tigers came back under government control. “The country is suddenly one third bigger than it was,” he said, pointing out that the land mass of the economy had increased by 33% and the number of domestic consumers was up by 10% since the end of the war. “We were very bullish, moving into the North and East within three months of the war ending,” he added, saying that Dialog had gained a 90% market share in those areas.

Dr. Wijayasuriya said conditions in Sri Lanka’s US$21 billion economy had improved sharply. While inflation had been above 30% and interest rates above 20% during 2007 and 2008, these had stabilized, he said, adding that he expected Gross Domestic Product growth to rise from an expected 3.5% in 2009 to 6.7% in 2010 and 7.9% in 2012.

Looking at improved prospects across John Keells’ portfolio – which includes transportation, consumer foods, financial services, hotels and property – Mr. Gunewardene offered several examples of the rapid acceleration of economic activity in Sri Lanka over the past year.

He noted that record volumes of maritime freight were passing through the Port of Colombo and that prices for Colombo’s 2,000 five star hotel rooms had risen from US$40 with occupancy around 50% to US$100 with occupancy at 100% - perhaps the only bad news for any investors planning to see Sri Lanka for themselves.

Looking beyond the immediate “Peace Dividend”, Mr. Gunewardene said Sri Lanka’s proximity to the Indian market could be a source of prosperity for the island. “Our giant neighbour India presents serious opportunities for Sri Lanka,” he said.

While Sri Lankan stocks have risen some 85% since the end of the war, the panelists agreed that the illiquidity of the market made it challenging for investors.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
CSE will remain small market
SLIC gets Central Bank sanction to buy over 10% of NDB
CB/EPF stakes in banks: Conflict of interests?
Top banks, Indian firm aim for broking licenses
No passengers to Jaffna? Airlines withdraw
Finance firms may not be attractive in the long –term
Change at the top
Comment - New strategy to attract investments
Feature - Longevity risk: Death of retirement?
Feature - Additional income from rubber plantations and new carbon negative concept
Singer rebrands to ‘Singer Homes’ from ‘Modern Homes’
Derivatives anideal product in post-war economy
Seylan Bank AGM held on Friday
5,000 kgs of tea withdrawn from domestic market last week
UNP puts its economic view online
Computer firm Ezy aims to raise Rs 100 mln by 2015 for its new racing segment
SL Convention Bureau promotion in the Far East
Hedging Cases: Deutsche Bank claim in international arbitration in July
Knowledge Conglomerate to launch ventures
DHL Keells positive on Sri Lankan growth
Credit Card helps eliminate risk in carrying cash
Globalisation led to 'knowledge economy' : Chief Justice
Solid response to NTB’s 2010 warrants (shares)
Sri Lankans have limited access to their own seas-industrialist
AMW Obtains IMI Accreditation – first in South East Asia
Taj Hotel group opens regional skills centre in Colombo
SLT ranked number one in Top 10 competition
HSBC cash for special clients thro’ Keells Super
Sri Lankan economy set to grow –Asian investors told
Fiscal deficit causes IMF to delay loan
Groundwork of pruning the cabinet gets underway
Bank of Ceylon to open 31 more branches in the North and East
Lumiére Residencies receives CMA certification
IFS signs US-government prime contractor Sabreliner
Eight Kurunegala poultry farmers receive assistance
Israel to 'enhance' economic ties with SL
Heritance Ahungalla organises Six-a-Side Beach Cricket Tournament
Dialog receives award for M-waste Management
Corporate climate responsibility - Case for a green economy
Former Malaysian PM Mahathir here in June for business event
Only 0.14% of SL GDP towards R&D, others 1.5%
Column - The office: Paperless and work on the move
New SKAL committee
Fitch affirms rating on Singer
Lanka Ceramic sales pick up after showroom upgrade
Global Finance picks Commercial Bank as Sri Lanka’s best for 12th year in a row
Oracle solutions for mid-sized Sri Lankan companies


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution