Sri Lanka's export growth has continued to outpace imports in 1997, contracting our trade deficit for the third consecutive year.
According to preliminary customs data, Sri Lanka has exported Rs 271 bn (US $ 4,596 mn) worth of goods in 1997 and imported Rs 332 bn (US $ 5,640 mn) worth of goods resulting in a trade deficit of Rs 61.5 bn (US $ 1,044 mn) down from Rs 62.6 bn in 1996.
The trade deficit which hit a high of US $ 1,559 mn in 1994, fell to US $ 1,512 mn in 1995 and US $ 1,319 mn in 1996.
Up to November 1997, for which adjusted Central bank data is available, the trade balance had contracted to US $ 1,096 mn down from US $ 1,272 mn in 1996.
Exports have grown by 14.4 per cent (22 per cent in rupee terms) and imports by 7.1 per cent (14 per cent in rupee terms).
While exports growth remained healthy with garments, activated carbon and ceramics doing well despite the East Asian crises, growth in consumer goods and some intermediate goods had moderated, a Central Bank official said.
Low international prices of commodities such as, sugar and rice had reduced expenditure on consumer goods.
Though textile imports, which feeds the vibrant garment industry grew some 18 per cent up to November, overall intermediate goods import growth remained lower at 7.8 per cent. Low international prices of wheat (which is classified as an intermediate goods) had helped keep the import bill lower, the Central Bank said.
However with the economy picking up investment goods imports had grown.
Textile and Apparel exports had grown to Rs 134 bn according to preliminary
Customs data, amounting to half of all Sri Lankan exports.
A moratorium on the construction of new resort hotels is likely to be enforced as there is an excess capacity of hotel rooms in Sri Lanka, a leading hotelier said.
At present, there is an excess of 12,857 rooms in 164 hotels. If the hoteliers are to maintain the excess rooms, around 650,000 visitors are required each year, to fill around 60-70 per cent room capacity, he said.
Preliminary clearance has been given for 35 hotels housing 2,700 rooms. At the pending preliminary stage, permission has been granted for 53 hotels to construct 3,073 rooms.
Presently another 1,200 rooms in 22 hotels are under construction.Final clearance has been given to another 15 hotels giving accommodation to 988 rooms.
Sri Lanka attracted around 350,000 tourists in 1997, which is fairly good considering the disturbance in the country.
Though President Kumaratunga has targeted Sri Lanka to attract one million tourist by year 2002, target number of rooms ready will be more than what is required.
Already prices of hotels rooms are sold below their true value. Any investment that does not get a reasonable rate of return is wasteful, a Tourist Board official said.
The Board is advising prospective investors to invest in other tourist related areas like water-based and land-based recreational facilities. This will benefit industry by diversifying product to make it more attractive, the official said.
Despite drop in tourist arrivals, investor confidence has risen particularly in hotel infrastructure.
This is an indication of investor confidence in tourism sector, the official said.
However, many of the new hotel constructions are BOI approved ventures. Since the government is keen to promote foreign investment, the Tourist Board is at crossroads whether to impose the moratorium on BOI projects or not. If they do, they would come under fire from non-BOI investors. The Tourist Board has also informed the BOI to encourage future investors to invest into other tourist related activities instead of constructing hotels.
Members of the hotel trade too have also made representations to impose a moratorium.
Though the Board has yet to officially impose any restriction, watchful investors seem to have self imposed restrictions on building new hotels, hotel industry sources said.
This is not the first time the question of a moratorium has arisen. Previously too when the tourist industry was at its lowest ebb, the Ceylon Tourist Board was contemplating the introducing a moratorium to curb the hotel room rates from declining further. But the idea was shelved when the industry eventually picked up gradually.
"No final decision has been made, but it is under consideration," the official added.
Sorry, no, can do
Prince Charles may have come and gone but the airline of his homeland wants to leave our shores.
The reason is simple - the profits are not good enough. We understand there was some diplomatic armtwisting attempted to convince the Brits to stay, but that was not good enough.
The final answer was, we'll co-operate with your bird of paradise in anyway we can, but we won't fly to Colombo on our own..
In a world where all prices are rising, there was a surprising exception recently.
The charges levied by private hospitals for channelled consultation of medical specialists have actually decreased.
Why this sudden generosity, many wanted to know.
The answer to that is those fees are now tightly monitored by health authorities, so they do not dare to charge anymore.
Last week we wrote of how the South East Asian currency crisis has effectively reduced the value of forthcoming financial aid to the country.
But there are others who make a quick buck, even out of a crisis.
Travel agents are cashing in on the decline of South East Asian currencies, offering bargain priced tickets to Bangkok, Burma and the like.
But don't be fooled by the bargains. The profit margins for the agents
are as high as ever, they say...
The BOI, who is to acquire the now defunct Wellawatte Spinning Mills, is hunting for a foreign investor to build a low cost housing scheme on the premises.
BOI chief Thilan Wijesinghe said they were hoping to convert the property into a low-cost housing complex for wage earners. "At the moment, there is a shortage of flats in Colombo," he said. "The government has identified the housing sector as one of the future thrust industries,"he added.
The Sunday Times Business learns that the BOI is going for a mixed development project with high-rises containing low-cost housing units like in Thailand, Hong Kong and Singapore.
The complex would also include restaurants, shops and places for people to gather. The individual flats may be sold on a rent purchase scheme. Would-be tenants could gain ownership of the flat with a small down payment, the balance finance would come from banks and lending institutions, an official said.
The National Development Bank (NDB) which has been assigned with the task of conducting a due diligence study, is to present its report within a few days to the BOI.
Industries Ministry sources say the BOI has already identified a foreign buyer, who is waiting for the diligence report to submit his proposals.
Meanwhile, a group of tenants living on the premises are refusing to vacate the premises unless the authorities find alternate accommodation for them. Around 120 tenants are said to be occupying former staff quarters.
There are also four official bungalows belonging to the mill situated down Mayura Place, in Wellawatte.
Of the four bungalows, two are unoccupied, the third is in the hands of the relevant Competent Authority, and the fourth is housing a relative of a leading politician.
"The 12 perch property ear-marked for development is not encumbered, but the authorities will have to do something about the tenants occupying a section of the Mill," an Industries Ministry official said.
Meanwhile, a further one-acre of prime land belonging to the former Ceylon Silk Industries (part of the Wellawatte Mill)is also left for future development.
The Pakistani businessmen who bought the condemned machinery of Ceylon Silks, is now using the very same machines to manufacture synthetics.
"We have now allocated land for him at the Peliyagoda Industrial
Park. Nothing has been earmarked for this balance parcel of land, as the
government wants to get the housing complex off the ground as soon as possible,"
the official added.
Continue to Business page 2 * Crowing
about something * From greed is good to green is
good * Little stitchers warn of tight times
Go to the Business Section Archive
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