Economic Capsule - May 2017

Economic CapsuleMay 2017

Research & Development Unit

C O N T E N T S

ECONOMY & BUSINESS

Sri Lanka tops island economies ranking

Sri Lanka Regains GSP Plus

Debug Hospitality and Leisure launches Amber Collection in Sri Lanka

Jetwing Lake opens

India’s ITC Group to build mid-market hotel chain with MMBL Leisure

INTERNATIONAL

BANKING & FINANCE Commercial Bank offers e-FDs online

Exciting new features in Combank’s re-launched ‘Dotcom Teen Account’

Commercial Bank Results as at 31 March 2017

China's One Belt One Road

Condominium Industry in Sri Lanka

October, 2014


Banking & Finance

Commercial Bank offers e-FDs online

< Research & Development Unit >

Commercial Bank’s Online Banking platform has been further enhanced with the introduction of Electronic Fixed Deposits (e-FDs) in both local and foreign currencies.

• The e-FD facility is available 24 x 7, 365 days of the year, to Sri Lankan citizens and holders of Non Resident Foreign Currency Accounts (NRFCs), Resident Non National Foreign Currency Accounts (RNNFCs), Resident Foreign Currency Accounts (RFCs) and ‘FC Plus’ accounts in the Domestic Banking section, the Bank said.

• Foreign Currency e-FDs may be opened in four major currencies – the US Dollar, Great Britain Pound, Euro or Australian Dollar.

Exciting new features in Combank’s re-launched ‘Dotcom Teen Account’


Banking has just become more exciting for teenagers and pre-teens with the re-launch of ‘Dotcom’ Teen Account – the popular Youth Savings Account of Commercial Bank of Ceylon, with a host of new features and benefits.

• Dotcom Teen Account holders, who are between the ages of 10 and 18 years, can now obtain loans for educational purposes, use their debit cards to make purchases or withdrawals and enjoy Online Banking and Mobile Banking free of charge.

• Additionally, the parents or guardians of Dotcom Teen Account holders can transfer funds to their children’s accounts via standing orders free of charge, and receive SMS notifications on all transactions carried out with the Dotcom debit card.

• The Dotcom debit cards are Near Field Communication (NFC) enabled for secure ‘tap and go’ transactions. Cardholders are also eligible to receive COMBANK Max Loyalty Rewards points on all payments.

Commercial Bank Results as at 31 March 2017


Profit before Tax Profit after Tax

Cont…


Due to other Customers Loans and Receivables to other Customers

Commercial Bank Results as at 31 March 2017 (cont..)


October, 2014


Economy & Business

Sri Lanka tops island economies ranking


“If this result confirms the country’s potential for investment achieved in the past few years it does not necessarily mean that this potential has fully materialized yet. In fact levels of FDI remain relatively low. In 2016 foreign investment accounted for less than one percent of GDP, well below the rate for South Asian countries which the World Bank says is about 1.8% on average,” stated fDi Magazine Deputy Editor Jacopo Dettoni making a short presentation.

fDi Magazine, part of The Financial Times UK, has selected Sri Lanka as the top pick among twenty seven island economies around the world as having the most potential to attract investment.

Sri Lanka Regains GSP Plus


EU - Sri Lanka's biggest export market (nearly 1/3 of SL's total exports)

Total bilateral trade - Almost EUR 4 bn (2016)

EU’s imports from Sri Lanka - EUR 2.6 bn (or USD 2.8 bn) (Mainly of apparel, rubber products, fisheries, food (including tea) and light engineering products)

Immediate tariff benefit - EUR 300 mn (around USD 330 mn) a year

The European Union removed a significant part of the remaining import duties on Sri Lankan products with effect from 19th May, 2017 as part of a special arrangement of the EU's Generalised Scheme of Preferences, known as GSP Plus.

Cont…Source: A. Wijesinghe & J. Ratnayake - EIU of CCC, K. Hewage & S. Satarasinghe - IPS

Sri Lanka Regains GSP Plus (cont..)


Main sectors that will benefit under GSP Plus;

In many apparel categories duties will be cut from 9.6% to zero

Seafood sector - 18.5% to zero

Fresh & processed fruits and vegetables sector - 12.5% to zero

Porcelain and ceramic ware sector - 8.4% to zero

Toy products sector - 1.2% to zero.




Sri Lanka’s top export product, apparel which accounts for 61% of total exports to the EU will get a major boost due to regaining the GSP Plus facility.

Indications are that more EU customers would now change their sourcing strategy (which currently is tilted towards duty free countries like Bangladesh and Cambodia) in favour of Sri Lanka.

Given that Rules of Origin (ROO) under GSP Plus requires fabric to be sourced from Sri Lanka (or from an area that qualifies for regional cumulation) in order to qualify for GSP Plus, an increase in demand for fabric sourced from Sri Lankan fabric mills (rather than from countries such as China) is anticipated




Within the EU, Britain is the biggest market, accounting for the bulk (approximately 30%) of Lankan exports.

Sri Lankan exports will no longer qualify for preferential access to the UK once it leaves the EU, unless a similar arrangement is negotiated directly between Sri Lanka and the UK.

Therefore, Sri Lanka should prepare to face an economic shock, at least temporarily, to its export sector, once the UK officially leaves the EU.

In apparel, for instance, the UK accounts for more than 40% of total Sri Lankan exports to the EU. Therefore, the government would need to move early to forge a deal with the UK.

Source: A. Wijesinghe & J. Ratnayake - EIU of CCC, K. Hewage & S. Satarasinghe - IPS

Debug Hospitality and Leisure launches Amber Collection in Sri Lanka


The leisure arm of the renowned Sri Lankan brand Debug – Debug Hospitality and Leisure Ltd. has officially unveiled ‘The Amber Collection’, the newest high-end offering by the company for leisure and business travellers.

The collection consists of boutique service apartments called ‘Amber FR 16’ and a fleet of luxury houseboats ‘Amber Flow’.

Jetwing Lake opens

The 94-room, all new Jetwing Lake is located 5 km away from the Dambulla town.

India’s ITC Group to build mid-market hotel chain with MMBL Leisure


India’s giant ITC Group is to build a mid-market hotel chain with MMB Leisure with first of its kind city hotel planned in Trinco and several other popular provincial cities.

WelcomeHotels Lanka is the project company for the ITC Sheraton coming up in Galle Face with an investment of over USD 300 mn.

ITC Hotels is India’s premier chain of luxury hotels that has become synonymous with Indian hospitality and operates over 100 hotels in over 70 destinations in India.


October, 2014


International

China's One Belt One Road

Cont..

China's One Belt One Road The Belt and Road Forum is China's answer to Davos or the G20, centered around the colossal One Belt, One Road (OBOR) trade initiative, which takes its inspiration from the ancient Silk Road trading route.

• In 2013 Chinese President Xi Jinping unveiled an ambitious economic and foreign policy - the "Silk Road Economic Belt" and the "21st Century Maritime Silk Road".

• China wants to revive the network of silk-trade routes across ocean and land of centuries past.

• It's instigating an infrastructure-building boom across Central Asia up to Europe to boost trade and improve transport logistics.

• The land-based projects are the belt. Various economic corridors are on the cards too, including with Pakistan, Mongolia and Bangladesh.

• The maritime route will connect up China's southern provinces to south-east Asia and the east coast of Africa with ports and railways.


Disclaimer: This presentation has been issued for the information of the customers of Commercial Bank of Ceylon PLC only. The Bank and its employees do not accept any responsibility for the accuracy or completeness of the contents and any losses arising from any use of this material.

Cont..

China's One Belt One Road: WHY • Beijing wants to exercise regional leadership, and make the Renminbi the main

trade and investment currency in countries involved.

• China needs to channel "excess capacity" somewhere.

• It's about standard setting. China wants to shift from lower-level manufacturing to higher-end industrial goods. It believes emerging markets in its neighbourhood will be more willing to accept Chinese-made high-speed rail, energy generators and telecommunications equipment than developed countries.

• China is trying to close the inequality gap between inland western provinces and its wealthy eastern seaboard.

• China has used the initiative to help portray its economy as open to the world, distinct from a rising wave of global protectionism, as U.S. President Donald Trump promotes an "America First" policy.



Cont..

China's One Belt One Road: IN NUMBERS

• One Belt One Road has USD 1.3 trillion worth of projects already initiated.

• President Xi announced an extra USD 124 billion at Belt and Road Forum in Beijing on May 14-15,2017.

• One Belt One Road is more than seven times larger than America's Marshall Plan to rebuild Europe after the Second World War.

• Countries involved: 68< Research & Development Unit >


Cont..

Sri Lanka’s place in China’s ‘Silk Road’

Silk Road and its potential for high level infrastructure boom offer Sri Lanka an opportunity to build a platform that would attract the attention of other prospective development partners.

Sri Lanka should view it as an opportunity to diversify, rather than one of dependence.



Source: CNN, NZ Herald & Sri Lanka’s place in China’s ‘Silk Road’ by Ranga Jayasuriya (DM 2017-05-16)

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.


Those who speak do not know. Those who know, do not speak. Sincere words are not fine; fine words are not sincere.

Lao Tzu

Economy & Finance

Economic Capsule - May 2017