Economic Capsule - October 2012

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ECONOMIC CAPSULE

October 2012

FINANCIAL SECTOR NEWS

CBC Partners Ray Wijewardene Charitable Trust to Help Country’s Best Inventor Commercialise His or Her Invention

Commercial Bank Launches Advanced e-Banking Platform


C O N T E N T S

ECONOMIC & BUSINESS NEWS

Doing Business 2013 — Rank of SL Improves to 81 from 96

Net Foreign Inflow at CSE Tops USD 263.5 Mn

Nobel Prize for Economics Awarded to Two U.S. Economists

Sri Lanka Wins Two Prestigious Awards at FutureGov Summit 2012

ANALYSIS & FORECAST

Macro Trends

FINANCIAL SECTOR NEWS


CBC Partners Ray Wijewardene Charitable Trust to Help Country’s Best Inventor Commercialise His or Her Invention

Invention has received a revitalising shot in the arm with the Commercial Bank of Ceylon coming forward to partner the inaugural ‘The Ray’ Award presented by the Ray Wijewardene Charitable Trust to help a recognised Sri Lankan inventor to commercialise his or her invention.

As Principal Sponsor of this prestigious life-time award, which is to be presented biennially, the Bank has undertaken to extend a credit line of Rs 1 Million to enable the winner prepare the award-winning invention for commercialisation.

Indresri Karunatilaka was the winner of the inaugural ‘The Ray’ award for invention presented by the Ray Wijewardene Charitable Trust in collaboration with Sri Lanka Inventors Commission and powered by Commercial Bank, Sri Lanka’s largest private bank.

The Commercial Bank of Ceylon has extended a grant of Rs 1 million to award-winning Sri Lankan inventor Indresri Karunatilaka, to commercialise his invention of a waveless boat that can traverse inland waters without disturbing riverbeds.


CBC Partners Ray Wijewardene Charitable Trust to Help Country’s Best Inventor Commercialise His or Her Invention (Cont…)

Presented in memory of Sri Lanka’s legendary inventor Ray Wijewardene (1924 – 2010), The Ray Award is open to all Presidential Award winners of the Sri Lanka Inventors Commission.

Vidya-Jothi Deshamanya Philip Revatha (Ray) Wijewardene gave the world the two-wheeled hand tractor in 1955. Educated at Cambridge and Harvard, he is also referred to as the ‘Father of Dendro Power’ and as the architect of Sloping Agricultural Land Technology (SALT).


Commercial Bank Launches Advanced e-Banking Platform

Banking via the Internet has become infinitely more experiential and expedient for customers of the Commercial Bank of Ceylon, following the re-launch of the Bank’s e-Banking platform.

The Bank recently unveiled an all-new version of its e-Banking service, based on the Microsoft Framework.

Offering exceptionally user-friendly menus and benchmark security and encryption features, the new e-Banking platform puts customers in control, and requires less intervention by the Bank.

Self registration, a customisable ‘My Profile’ feature that can accommodate a personalised image, self-addition and registration of payment recipients, customisable templates for payments, multiple payments via a single basket, a Quick Navigation menu that reduces key strokes and customisable viewing of transaction histories are among the exciting new features of the system.

CBC Share Price Movement


Commercial Bank Launches Advanced e-Banking Platform (Cont…)

Enhanced security features include 2-factor authentication for third party fund transfers; two-layer login; a virtual keypad; personalised security questions; password change and third party fund transfer alerts; and password encryption and verification via an advanced Hardware Security Module (HSM).

The e-Banking platform supports bill payments to more than 36 entities in nine categories – Telephone, Electricity, Water, Credit cards, Insurance, Pay TV, Schools, Rates and Other. Investing in Treasury Bills and effecting payments for share trading transactions is also possible, with self-registration of the user’s Central Depository System (CDS) number.

All users of the e-Banking service are provided 24-hour customer support through the Bank’s Call Centre. The mobile (WAP) version of Commercial Bank’s re-launched e-Banking service has also been enabled, and can be accessed via https://www.commercialbk.com/monline.

A Corporate version, which will include features such as multilevel authorisation, is to be launched by the end of 2012.

ECONOMIC & BUSINESS NEWS


Doing Business 2013 — Rank of SL Improves to 81 from 96

Sri Lanka best in South Asia and in world’s top 10 for most number of regulatory reforms in 1H, says IFC-WB report

Country moves up in Doing Business 2013 ranking to 81 from 96 previously, despite widespread concerns over Revival Of Underperforming Enterprises And Underutilized Assets Bill

● A new IFC and World Bank (WB) report finds that from June 2011 to June 2012, Sri Lanka implemented the most regulatory reforms among the eight economies covered in South Asia, helping to create a better environment for local entrepreneurs.

● ‘The Doing Business 2013: Smarter Regulations for Small and Medium-Sized Enterprises’; ranked Sri Lanka among the 10 economies globally that improved the most in the past year across three or more areas measured by the report.

● According to IFC-WB it marked the first time since 2005 that a South Asian economy has ranked so high.

● Sri Lanka was also ranked 81 out of 185 economies as opposed to 96th position in the previous survey.

● IFC-WB said Sri Lanka launched a host of computerised systems that made it easier to open a business, register property, and export products through customs.


Doing Business 2013— Rank of SL Improves to 81 from 96 (Cont…)

● It also strengthened its secured transactions system by publishing in the official gazette in August 2011 the regulations regarding the operation of the Secured Transactions Registry maintained by the Credit Information Bureau of Sri Lanka.

● The report shows that Bangladesh and India also improved business regulations in the past year as measured by Doing Business.

● India made dealing with construction permits easier for firms by establishing strict time limits for preconstruction approvals. Bangladesh improved access to credit information by establishing an online platform for sharing such information.

● Globally, Singapore tops the ranking on the ease of doing business for the seventh consecutive year.

● Doing Business analyses regulations that apply to an economy’s businesses during their lifecycle, including start-up and operations, trading across borders, paying taxes, and protecting investors. The aggregate ease of doing business rankings are based on 10 indicators and cover 185 economies.

TOP 10_________ Singapore Hong Kong SAR, China New Zealand USA Denmark Norway UK Korea Georgia Australia


Doing Business 2013— Rank of SL Improves to 81 from 96 (Cont…)

● Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure the quality of fiscal management, other aspects of macroeconomic stability, the level of skills in the labour force, or the resilience of financial systems.

● Its findings have stimulated policy debates worldwide and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies.

DB 2013 Rank DB 2012 Rank Change Starting a Business 33 71 38 Dealing with Construction Permits 112 116 4 Getting Electricity 103 104 1 Registering Property 143 164 21 Getting Credit 70 80 10 Protecting Investors 49 46 -3 Paying Taxes 169 175 6 Trading Across Borders 56 54 -2 Enforcing Contracts 133 134 1 Resolving Insolvency 51 49 -2

DB 2013 Rank DB 2012 Rank Change 1 Poland 55 74 19 2 Sri Lanka 81 96 15 3 Ukraine 137 152 15 4 Uzbekistan 154 168 14 5 Burundi 159 172 13 6 Costa Rica 110 122 12 7 Mongolia 76 88 12 8 Greece 78 89 11 9 Serbia 86 95 9 10 Kazakhstan 49 56 7

Sri Lanka Ranking—Overall—81

The 10 Economies Improved the Most—Doing Business 2013

Sri Lanka is the highest ranked country in South Asia and is the only country in the region to improve its ranking in

2013. For the first time in seven years a South Asian country, Sri Lanka, ranks among those improving the most >>>


Net Foreign Inflow at CSE Tops USD 263.5 Mn

Foreign buying into selected blue chips continues unabated as net inflow crossed the USD 263.5 Mn mark in mid October. During September, the net foreign inflow amounted to USD 23.28 million, up from USD 21.42 million in August. During the quarter ended September, foreign net inflow was USD 63.26 million.

However, according to analysts, foreign buying has been largely on attractive valuations of select blue chips, which the majority of local institutional investors fail to see. The foreign inflows at an all-time high is in comparison to the USD 171.84 million outflow in 2011 on top of USD 229.96 million flight in 2010.

JKH, which remains the most outstanding liquid blue chip by offering over 20% year-to-date return, saw a fresh round of foreign buying during October.

Analysts said that the market had risen sharply in recent months, hence profit taking by previously-battered retailers was understandable. Others pinned the downturn of late to uncertainty over the direction of the interest rate, which has been less convincing.

Stock broker analysts however took comfort from the fact that a strengthening rupee was welcome and the Government’s stated move towards a lower interest rate scenario would help the equity market.


Nobel Prize for Economics Awarded to Two U.S. Economists —Alvin E. Roth and Lloyd S. Shapley

Alvin E. Roth of Harvard University and Lloyd Shapley of UCLA have been awarded the Nobel Prize in economics "for the theory of stable allocations and the practice of market design".

Roth and Shapley's work focuses on finding the most efficient way to match parties in a transaction, whether it be students to schools or organ donors to recipients, according to the academy.

Sri Lanka Wins Two Prestigious Awards at FutureGov Summit 2012

Sri Lanka won two prestigious awards at the FutureGov Summit 2012 awards ceremony held in Thailand.

The two awards bagged by Sri Lanka come respectively under the ‘eGovernment’ category and the ‘Public Sector Organisation of the Year’ category. The ‘Visa Online’ and ‘eSamurdhi’ was highly acclaimed by top Government officials of Asia Pacific.

ANALYSIS & FORECAST


Macro Trends

The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC

The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the information, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in consequence of using such information for whatever purpose.

Research & Development Unit

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Economic Capsule - October 2012