The preliminary report by surveyors on the damage to the World Trade Centre (WTC), following the blast, is expected to be released this week, Chief Executive Officer Union Assurance Ltd., Hydery Rehmanjee told The Sunday Times Business.
The terrorist cover for the WTC is fully insured by Union Assurance Ltd., which in turn has a secured re-insurance with Lloyds of London.
Surveyors from Resolve International who were in Colombo last week, together with engineers from Union Assurance Ltd., and local surveyors conducted a preliminary survey of the damage, Mr. Rehmanjee said.
A senior surveyor from Resolve International is expected to be in Colombo within the next 10 days, Mr. Rehmanjee added.
Meanwhile, Union Assurance Ltd., is awaiting an estimate of the damage from Overseas Realty Ltd., the owners of the WTC.
Mr. Rehmanjee added that Union Assurance Ltd., carries 30 per cent risk of a separate Fire and Allied Perils Policy cover for US$ 110 mn, taken by Overseas Realty Ltd. The cover is also shared by Sri Lanka Insurance Corporation (40 per cent), Ceylinco Insurance (15 per cent) and CTC Eagle (15 per cent).
The damage to the World Trade Centre (WTC) Twin Towers is estimated to cost around US$ 5-7 mn, its local promoters told the Sunday Times Business.
Director, Overseas Realty Ltd., Hussain Cassim said, unqualified preliminary assessment for the damage is around US$ 5-7 mn. He said that part of it would be funded by insurance, but an accurate figure would be available once the foreign Loss Adjusters visit the site.
The US$120 mn building has US$ 3 mn terrorist insurance cover, he said. Industrial and Commercial Insurance Brokers (Pte) Ltd,. the local insurance brokers have re-insured the policy with Lloyds of London. A spokesperson for the company told the Times Business that the Loss Adjusters from London has visited the site for a preliminary inspection, but the loss is not quantified yet.
At the time of the disaster, the WTC housed around 60-80 tenants. Despite the damage caused to the building, Mr. Cassim said that not a single tenant has said that they want to re-locate elsewhere. Even prospective tenants who have signed-up prior to the disaster have not withdrawn, he said.
He said that President Kumaratunga has promised Government assistance to the three main affected parties for the reconstruction and damage done to the buildings.
Asked if there was a jinx behind the name world trade centre, he said, "our company owns 260 world trade centres around the world", though the Islamic militants bombed the WTC in New York and the one in Colombo was also attacked by terrorists, "our security arrangements in Colombo has always been excellent".
He added that this is the first time a foreign investor has been attacked by terrorist in Colombo.
Fears that Fort, the hub of Colombo's financial sector would be deserted seem unfounded. The offices based in the damaged hotels are still operating from their original bases. Paul Goh, General Manager Singapore Airlines said that ìthe company does not have definite plans to re-locate to any building out of the city, though their office was partly damaged.
P M S Packeer, Director United Airlines Holidays Ltd., the general service agents for United Airlines which was housed at the Galadari Hotel said, though their office was damaged, they are not re-locating at present, but will play it by ear, because we are in a convenient location.
Hotel Ceylon Inter-Continental, Director Sales & Marketing, Anil Udawatte said the hotel has received inquires from offices that were displaced after the bomb explosion, but the hotel has limited office space available. Whatever we have, has been taken over by these offices. They are looking at short-temporary contracts for around 4-6 months.
Despite the blast, we are continuing to operate our head office from the Inter-Continental Hotel, said Gabo Travels Chairman Gabo Peiris. Fort is the financial hub, and till it enjoys that position, we will be based there.
The destruction of the hotels has led to fears that employees attached to the two hotels affected may be displaced.
Speaking of the 700 employees, Public Relations Officer Galadari Hotel, Manthri Perera told Times Business that no decision has been made with regard to the staff, until the Board sorts things out.
Galadari's neighbour, the Hilton Hotel's spokesperson Yasmin Cader said that no staff would be displaced. Infact we are paying full service charge to our staff for the month of October, but it would be hard to send staff on annual leave. Our staff is operating to make every effort to keep the hotel going. The Il Ponte restaurant and the gymnasium are already in operation, and we hope to open the ballroom in November, she said.
The spotlight also falls on the entertainment industry, which has been hit on numerous occasions not only due to terrorist attacks, but also because the hotels and various organisations have curtailed their entertainment activities. Most of the bands playing at the Galadari and the Hilton were also contracted elsewhere. But observers said the city's night life may be curtailed for a while. However, with the festive season on the way, they were confident that things would pick-up, as the night life was a source of income to bands, DJ's, and a host of entertainment acts.
Trading resumed at the Colombo Stock Market last week but the question on everbody's lips was where the market is heading, now that overseas investors are conspicuous by their absence.
The consensus was that third quarter corporate results will be impressive and that would offset somewhat the negative impact of the Poya Day blast.
All is all, most brokers expect the market to close at the 800 - level by year's end, though hotel sector stocks are expected to take a beating...
Insurance companies were busy last week assessing the extent of their damage in the aftermath of the bomb blast.
Most of them have only limited liabilities with the brunt of the bill being borne by overseas re-insurers.
Even the market leader is expecting a bill of less than two hundred million rupees, and that amount, their bosses say won't hurt the institution much.....
But there are others who are not so happy.
Many institutions housed in one of the towers that was blasted are now on the lookout for new office space.
That, and not reconstructing the edifices, might be the real problem of the property developers in time to come, real estate watchers say.
And, without a doubt, rents in prime lands which are in high security areas are bound to decline they say.....
To characterise the mid October bombing as one having a very slight impact on the economy or to deem it as one having a disastrous impact are both exaggerations. The bomb blast would have both an immediate and mid-term impact on the Sri Lankan economy. Yet the main production sectors of the economy, which are agriculture and industry, which together contribute nearly 50 per cent of GDP, remain basically unaffected. The financial sector, tourism, long-term investment and some other services are no doubt adversely affected. Some of the impacts would no doubt be temporary, others would have an effect over the next few years.
This bomb blast once again underscores the need for a lasting solution to our problem rather than a mere containment of security, which always has an overhang of terrorist attacks. The most recent bomb blast no doubt is a strong reminder of this.
The most serious impact of the continuing terrorist attacks is on foreign direct investment. The country has been looking towards a major breakthrough in foreign direct investment, particularly in more sophisticated and complex industries. Such investments require a greater degree of stability and security, which these regular bomb blasts do little to help The improved security situation since March last year till mid October gave some signs of hope that foreign investors may turn to Sri Lanka for large industrial investments. That hope may have to be shelved for some time still.
The sector most directly and adversely affected would no doubt be tourism. Just when tourist arrivals were picking up to reach the level of 1995, and perhaps even exceed it, the bad publicity generated by this blast would no doubt result in a cut back on tourist bookings as well as cancellations.
Although most tourists are quite safe in the country, it is difficult to project an image of safety when the capital city has a serious bomb blast. In this particular instance publicity was even more focused on tourism as foreigners were injured.
It was also particularly unfortunate that at a time when several South-East Asian tourist locations were becoming unattractive, we lost an opportunity of attracting them here. It may take some time once again for tourism to recover from this set back. This is indeed a regrettable fact as tourism is one of the potentially high growth sectors and a considerable amount of investment has already been made in hotel construction. The under utilisation of hotel capacity makes many of the hotels unprofitable and their difficulties affect banks and financial institutions as well.
In as far as the main sectors of the economy are concerned, these bomb blasts have hardly any effect. Agricultural and industrial production remains unaffected. This year' s industrial growth is clearly witnessed in an 18 percent growth in industrial exports.
Tea and rubber production has shown an increasing trend and the structural changes in the plantations are showing beneficial results. The tea industry in particular has also been fortunate to have the benefit of improved prices. This has made the plantation companies highly profitable and given them the opportunity of reinvesting some of their profits in the plantations.
However, we must not forget that the overall conditions in the country have already had an adverse impact on agriculture and fish production in the North and East. This impact has already been absorbed by the economy for nearly 15 years. Its visible impact is minimal now but the country and people in the affected areas have suffered much. A return to peaceful conditions would however mean increased production and improved trade and commerce in these areas.
To deny that a bomb blast of this magnitude has only a minimal impact may be too complacent a view. There is the high cost of replacement, repair and re-construction. There is also dislocation of economic activities in the city. The disruption of financial and other services would have an impact for a short time.
Yet it is still a bearable impact in financial terms owing to the main production sectors of the economy being unaffected.
This underlies once again the need for redoubling efforts in agricultural and industrial production so as to offset the adverse impacts of terrorist attacks. A commitment to increased efficiency and productivity could be one means by which we could reduce the adverse impacts of such terrorist attacks as well as strengthen our capacity to fight terrorism.
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