Srilanka Newspapers Monday 02/04/2012

The Ministry of Industry and Commerce says a Chinese firm is planning to invest an unbelievable US$ 50 billion in Sri Lanka to develop a port city in Hambantota, which would be the largest ever foreign investment in the country at a staggering 83 percent of GDP.

This was disclosed by the Ministry in a statement announcing a bilateral meeting on the sidelines of Expo 2012 last week. A spokesman for the ministry confirmed to The Island Financial Review that the proposed investment was indeed US$ 50 billion.

"Sri Lanka now wants to run its’ successful international ‘Sri Lanka Expo’ series once in very two years. "Under the directive of His Excellency Mahinda Rajapaksa, our President, we are now planning to host this international series once in every two years. As a result, our next ‘Sri Lanka Expo’ series is now being primed to be held in early 2014," said Rishad Bathiudeen, Minister of Industry and Commerce of Sri Lanka.

Bathiudeen announced this to the 13 member Chinese investment delegation that made a courtesy call on him on 30 March in Colombo. The Delegation was organised by Beijing based Sino-Sri Lanka Rich Investment, led by Ms Song Jien Hua, its Chairwoman.

The 13 member Chinese Business delegation arrived as part of the overall 150 Chinese business group that arrived in Colombo to take part in the Sri Lanka Expo 2012 organised by the Export Development Board under the Ministry of Industry and Commerce.

The delegation comprised of powerful, state of the art have state-of-art technology players in fertilizer, port development, energy, petrochemistry, cement, and machinary. "We are now hoping to invest $50 billion in Hambanthota Trade City Project, hoping to establish an international port that can compete with the Singapore port in 10 to 15 years and can bolster up Sri Lanka’s ambition to be the hub of shipping in south Asia. We want to invest US $ 50 billion in this project," revealed Ms Song Jianhua and added: "We had a good experience during this visit to Sri Lanka and believe the country has investment promise. We are committed to creating jobs and promote economic growth in Sri Lanka with financial strength."

Responding to the delegation, Bathiudeen said: "The Expo 2012 and also the conducive business and investment environment you see today in Sri Lanka is a result of the development vision of the President. Last year we recorded 8.3% GDP growth and the safety of foreign investments in Sri Lanka are guaranteed by the constitution, some reasons Expo 2012 became a success."
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Shirajiv Sirimane
The regions second comprehensive seven star hotel would be opened in two years in the Kalpitiya integrated tourism zone. The first hotel is currently being built by the Hong Kong based Shangri-La Hotel chain in Galle Face at the former the Army Headquarters. This would be a US $ 500 million investment and would have 500 rooms.


Apeiron Hotel in Dubai
A leading Dubai real estate developer along with a Sri Lankan counterpart has undertaken building the second seven star hotel. The total investment for the project would be around Rs. 6 billion.

The company has already decided on a 250 acre land for the project. The proposed seven star hotel would comprise 200 individual chalets with each having its own swimming pool, dining area, gym and other facilities. In addition there would be a golf course, mini casino and other facilities. An under water spa or a viewing facility too is planned .

A company official said that they are mainly targeting up market clients from the gulf region, Europe, USA, and UK. There is also a large number of European expatriate population who earn high salaries and are looking for short holidays. “We are hoping to price a villa for around US $ 1,500 per night which makes it the most expensive property in the region,” he said.

Under the first phase of the Kalpitiya Tourism Zone, six islands will be developed - Ippantivu Island, Vellai Island I, Vellai Island II, Vellai Island III, Eramativu Island, and Kakativu Island -by the Sri Lanka Tourism Development Authority .The islands that have been leased out by the government are Ippantivu and Vellai. The Vellai Islands have been leased for a sum of Rs. 3.7 million for the first five years to Sun Resort Investment Lanka Private Limited, which is a joint venture between Sri Lanka, Maldives and Switzerland. The Ippantivu Island has been leased out for Rs. 14 million to Qube Lanka Leisure Properties Private Limited, an Indian investor.

Qatari investors are also expected to build hotel in Kalpitiya and the Colombo Airport highway is to be extend to Kalpitiya.

With increased arrivals and high spenders patronizing Sri Lanka, the country hopes to attract nearly US $ 1.5 billion worth of hotel investments this year. Dubai saw the world’s first seven star hotel in Burj Al Arab and currently the second seven star hotel, Apeiron Hotel is being built in Dubai. The hi-tech futuristic hotel Apeiron designed by UK’s Sybarite architects, would feature a two-storeyed jungle at the top of the 28-floor complex, 14 lifts, two cinemas and an under water spa and restaurant.
shirajiv@yahoo.com
http://www.dailynews.lk/2012/04/02/bus01.asp

CB says foreign currency inflows healthy

Foreign exchange inflows continued to remain healthy during the past few weeks, the Central Bank said in a statement last week.

"Reflecting this trend, the exchange rate appreciated to around Rs. 128 per US dollar by 30th March from around Rs. 130 a week ago. The Central Bank also absorbed a substantial part of such foreign exchange inflows, resulting in the gross official reserves increasing considerably during March 2012. In the meantime, the month-to-month growth in import expenditure decelerated to 20 per cent in January 2012 from 34 per cent in December 2011. A further deceleration in import growth is expected in response to various policy measures introduced by the Central Bank and the Government in February and March 2012," the bank said.

"At the same time, other foreign exchange inflows to different sectors of the economy are being realised as expected. In addition to funds already raised by commercial banks to strengthen their capital base, more than US dollars 500 million of further investment is expected during the next few weeks. Positive inflows to the equity market are continuing with the total net inflows to the Colombo Stock Exchange amounting to US dollars 164.2 million by 30th March. The inflows in respect of Treasury bills and bonds have also amounted to US dollars 400 million so far in 2012," it said.
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The United States exported more than US$100 billion in goods and services to China in 2011 and 30 states now count the country as one of their top three export markets.

That’s according to a report released by the Washington-based US-China Business Council on March 28.

The annual report said China is the third most common destination for US exports, just behind Canada and Mexico, which border the US and have a free-trade agreement with it.

"Exports to China are vital to America’s economic health and create good jobs for American workers," said Erin Ennis, vice-president of the US-China Business Council, which represents about 240 American companies doing business in China.

Wang Haifeng, director of international economics at the Institute for International Economic Research, a think tank under the National Development and Reform Commission, said the export figures reveal a great opportunity.

"The fact that a record was set in US exports to China, which shows the great potential of US exports, not only reduces the trade imbalance between the top two economies but also alleviates unemployment in the US and speeds up the US’ economic recovery," he said.

Between 2000 and 2011, US exports to China rose by 542 per cent - going from $16.2 billion in 2000 to a record $103.9 billion in 2011 - while its exports to the rest of the world only increased by 80 per cent. After the recent recession, the US exports to China regained momentum faster than the country’s exports to any other place in the world, the council said.

In 2010, US President Barack Obama introduced the National Export Initiative, a plan to double US exports by 2014. Meeting that goal will require exports to increase by at least 15 per cent a year on average for five years.

Among markets that receive large amounts of US exports, China is the only one in which they have increased by more than 15 per cent a year since 2000, the report said.

Last year in China, the demand for US exports was the greatest for crops, computers, electronics, chemicals and transport equipment.

"American companies from every corner of the nation are exporting high-value computers, electronics, agricultural products, chemicals, transportation equipment and machinery to an expanding marketplace in China," Ennis said.

Wang said US high-tech products have certain advantages and the country should make good on its promise to loosen the restrictions on the export of such products.

"To get more US exports coming into China, both countries should cultivate two promising export categories in the future: services, including technology trade and the transfers of patents, and high-tech products, including high-end manufacturing exports," he said.

Gary Locke, the US ambassador to China, said last week that the US is "in the midst of a major reform and simplification that will enable more high-tech goods to be exported to China".

Shen Danyang, spokesman for the Ministry of Commerce, said that China has not yet seen any real steps taken by the US to loosen export restraints on high-tech products.

Last year, China bought more US agricultural products than any other market in the world, importing about $20 billion worth of them, according to the US Department of Agriculture.

Vice-President Xi Jinping’s visit to Iowa in February strengthened agricultural ties between the two countries. Xi’s travels brought him to a corn and soybean farm - the Kimberley Farm - a trip that was welcomed by various local farmers.

-ANN
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China, the world’s second-biggest importer, will cut import duties on selected energy products and raw materials as well as consumer goods to boost purchases, the State Council said in a statement yesterday.

The decision underlines Beijing’s intent to buy more from its trade partners to boost domestic consumption and comes after China posted its largest monthly trade deficit in at least a decade in February.

It is the first time the State Council has devoted a regular meeting to the issue of boostingimports, which is usually the responsibility of the Ministry of Commerce.

"As we maintain stable growth in exports, we should focus more on imports and appropriately expand its amount," the State Council said in a meeting.

China, the world’s largest exporter, will have to rely less on exports to drive its economy in coming years, when growth in the US and European markets is predicted to slow.

Importing more will lift living standards and ease China’s disputes with its trade partners, according to the ministry.

Vice Premier Li Keqiang said earlier this month that China will import US$10 trillion worth of goods and services in the five years ending 2015.

Wang Shouwen, director of the ministry’s department of foreign trade, said on Friday thatChina is set to boost imports of capital goods and consumer goods as the country plans to further diversify and expand imports.

"One of the ministry’s top trade priorities this year is...to increase imports of capital goods, especially spare parts, and consumer goods," Wang said at an Import Expansion and Balanced Trade Development Forum in Kunshan, Jiangsu province.

According to the ministry, China’s imported goods are currently divided into three main categories: capital, consumer and resources. Resources such as iron ore, copper and aluminum comprise the majority of the country’s total imports.

"Encouraging the import of capital goods such as advanced spare products is undoubtedly helpful to upgrading China’s industry, the promotion of investment efficiency and improving international competitiveness," Wang said.

To boost imports, the State Council said it will cut duties on "some energy products, raw materials, consumer goods closely related to people’s daily lives, and key items that Chinadoes not produce".

China’s import tariffs on energy products are generally low. For instance, an import duty of 1 per cent is levied on mainstream gasoline products and diesel is duty-free.

Beijing will also encourage importers to buy more from countries that have free trade agreements with China, such as Pakistan, New Zealand, and member countries of the Association of Southeast Asian Nations.

The new move is expected to reduce China’s trade surplus by increasing imports, which may help reduce trade frictions with other countries, experts said.

At present, China has trade surpluses with 75 per cent of its trading partners, resulting in a series of disputes and protectionist barriers, according to the ministry.

To transform into a more consumer-driven economy, Beijing is adopting a "buy more but not sell less" approach, which helped narrow its trade surplus by 14.5 per cent in 2011 to $155 billion. In February, China posted a $31.5 billion trade deficit as commodity imports pushed total purchases up 39.6 per cent compared with a year ago, more than double the pace of export growth.

Last year, China’s imports reached $1.74 trillion, accounting for 9 per cent of the global figure, according to the ministry. Currently, that amount is expected to grow about $100 billion annually.

The ministry said greater effort on expanding imports will be significant for the recovery of the global economy.

"We will strengthen cooperation with the General Administration of Customs to further facilitate customs clearance and provide greater convenience for enterprises," said Wang from the commerce ministry.

With more import liberalisation, China’s overall tariff rate is about 9.8 per cent, much lower than the average of other developing economies.

Zhang Yansheng, director of the Foreign Economy Research Institute under the National Development and Reform Commission, said the government should carefully consider the adverse effect on domestic companies brought by increased imports of capital and consumer goods.

"Companies involved in these industries will face fierce competition from foreign investors and foreign exporters," Zhang said.

-ANN
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