By Isabel Stoker, Alaco
Sri Lanka is set to sign a major trade deal with India later this year, which it hopes will be the first step towards the island becoming a financial and business hub in the region. But the government of Ranil Wickremesinghe, prime minister, will have to work harder to win over domestic opponents of the Economic and Technological Cooperation Agreement (ETCA) who fear it will result in the country’s exploitation by Indian businesses.
Earlier this month Mr Wickremesinghe announced that the ETCA would be signed by the end of December. Sri Lanka has two other free trade agreements in the pipeline, with Singapore and China. The government began negotiations on the former in June and is expected to complete the latter by March 2017. Read more
At the tip of the teardrop of India, as Sri Lanka is often described, lies the Thalsevana Holiday Resort. From here you could once walk to India over 30 miles of limestone shoals.
Long since washed over by the Palk Strait, its silver shoreline and turquoise waters make this an idyllic spot to contemplate the passage of time. In an area ravaged by nearly three decades of civil war, the first green shoots of tourism and economic regeneration are starting to appear. Read more
For centuries, street vendors across southeast Asia have hacked open fresh coconuts, selling their refreshing water to thirsty passers-by to drink through a straw. For just as long, teenage girls have doused their hair in the coconut’s fortifying oil.
More recently, western consumers have discovered the benefits of coconut products thanks to diet fads and celebrity endorsements — but will those benefits extend to producing countries? Read more
The Chinese banks and companies that have bankrolled Sri Lanka’s recent infrastructure boom have much to lose from the recent change of government.
To prime Sri Lanka’s economy in the aftermath of the damaging Tamil separatist war, Mahinda Rajapaksa, the outgoing president, pursued a Chinese-style growth model of massive infrastructure investments in roads, energy projects, airports and sea ports. Much of this was bankrolled by loans and grants from Chinese state-owned banks: by last May, these totalled $3.8bn, according to the Sri Lankan government (the China peoples daily and Times of India last year put the total closer to $5bn). Read more
As Sri Lanka’s new president, Maithripala Sirisena, takes the reigns in Colombo, the focus is on his plans to overhaul politics on the island – to call a general election and return to parliamentary democracy.
It may be relatively straightforward to win support with those measures, as he takes over from Mahinda Rajapaksa, whose decade-long rule is remembered for nepotism and creeping authoritarianism. But matching the economic boom Sri Lanka saw under its former leader will be more difficult. Read more
When the government finally defeated separatist Tamil guerrillas in 2009 – bringing an end to a 25-year civil war – tourists began to swarm back to Sri Lanka.
The government of former president Mahinda Rajapaksa, who lost power in an election this month, was eager to draw foreign visitors who provide valuable foreign exchange. And groups like Jetwing, the hotels-to-agency tourism group, have felt the benefits. Read more
The streets of Colombo were strangely quiet in the hours after Mahinda Rajapaksa, the former Sri Lankan president, conceded defeat on Friday. The shutters were down at most shops and restaurants, the pavements were empty and the capital’s red tuk-tuks were hurtling around virtually empty streets.
The contrast with the cacophonous celebrations that greeted the result of India’s elections last year could hardly have been starker. There are, however, similarities between the two game-changing polls. Read more
“When eating an elephant, take one bite at a time”, US Army officer and Vietnam veteran Creighton Abrams once said.
In his new book, The Rise of the New East, Ben Simpfendorfer does just that. His elephant is “The East”, the group of almost 50 emerging markets ranging from Turkey to China that is home to well over half of the world population.
Simpfendorfer gives his topic a thorough treatment. While his insights seem logical and intuitive, taken together they give an impressive oversight of into key trends shaping the region. beyondbrics noted five insights that particularly stood out. Read more
Concern about the worst bout of communal fighting to hit Sri Lanka’s since the end of its civil war in 2009 deepened on Tuesday, after a second evening of clashes between Muslims and Buddhist groups resulted in at least one further death, despite an overnight curfew.
But while daylight appeared to bring relative calm to the streets of two southern towns that endured the worst of this weekend’s disturbances, any further upsurge in ethnic tensions is likely to have broader implications for one of Asia’s most vibrant frontier markets. Read more
With inflation in Sri Lanka tamed to single digits for the longest period on record, there is room to cut interest rates further below current historic lows to steer the country towards its growth target, says its central bank governor.
In the five years since its bloody 26-year long civil war ended, the southeast Asian island nation’s $67bn economy has enjoyed rapid expansion thanks to tourism bouncing back and rising exports of goods such as manufactured textiles, tea and coconuts. Read more
A leading British hotelier in Sri Lanka faces deportation after hanging the Sri Lankan flag upside down. Should foreign businessmen on the island beware?
The bizarre turn of events began shortly before the biennial Commonwealth heads of government meeting, held in Sri Lanka in November. Geoffrey Dobbs, a British and Australian citizen who owns four boutique hotels in and around Galle, one of Sri Lanka’s largest cities, noticed that at least four commonwealth flags – including Australia’s – had been hung upside down or manufactured back to front. Read more
Sri Lanka watched nervously as India’s rupee plunged, not least because it too suffers from the high current account and fiscal deficit mixture that turned investors sour on its larger neighbour.
Now India’s currency is recovering, and Sri Lanka seems emboldened too, as its central bank today shunned IMF advice and surprised forecasters by cutting rates by half a percentage point. But is it a cut too far? Read more
Investors may not look at school attainment rates very often but perhaps they ought to. Study the indicators and you see that – in terms of education at least – Sri Lanka far outshines the rest of south Asia.
The country is far from paradise. Sri Lankans hunger for a lasting peace after a long and painful civil war; sections of the Tamil minority still complain of repression. But the country’s record in education at least holds out some hope. Read more
Will South Koreans earn higher wages than the French, Germans, Americans and Brits in twenty years or so? Perhaps, according to a study published on Thursday by professional services firm PwC. Read more
Ajith Nivard Cabraal, the Sri Lankan central bank governor, is on a mission – to China.
As the world waits for the US Federal Reserve to start “tapering” its $85bn monthly bond purchase programme – the prospect of which has hit many emerging market currencies including the Sri Lankan rupee – Cabraal is heading to China to attract more investment to the south Asian economy. Read more
Count it again
Sri Lanka’s government says its economy will grow at a zippy 7.5 per cent this year, making it the self-styled fastest growing economy in south Asia.
Yet on Friday morning the central bank suddenly and unexpectedly brought interest rates down by half a percentage point, citing fears of a slowdown. Something doesn’t add up. Read more
It isn’t every day that a country cancels a plan to seek $1bn in emergency loans from the International Monetary Fund, just a few weeks after announcing it.
But having unveiled plans to go cap in hand for money earlier in the year, it seems this is just what Sri Lankan President Mahinda Rajapaksa is about to do, following a row with the IMF. So what exactly is going on? Read more
Having been forced into a dramatic interest rate hike earlier this year to fend off a balance of payments crisis, Sri Lanka’s central bank has made more small waves in the south Asian tourist island this morning, with a rate cut.
The move caught out local analysts, as there had been no hint of a change in policy in recent weeks. Read more
Actis, the emerging markets private equity fund, has invested $32m in Asiri Hospital Holdings, a private hospital chain in Sri Lanka with five hospitals under its umbrella.
Asiri will use the proceeds to buy out minority shareholders in some of those hospitals as it prepares for further expansion in the country. The deal again underlines Sri Lanka’s appeal to foreign investors, attracted by sustained GDP growth of 7 per cent a year against a backdrop of economic downturn in the west. Read more
Sri Lanka’s central bank raised key interest rates for the first time in five years on Friday and directed banks to slow lending in an effort to curb credit growth and to stem the worsening balance of payments.
The repo rate rose 50 basis points to 7.5 per cent a year and the reverse repo rate rose by the same margin to 9 per cent. It came despite the central bank’s downward revision of its GDP growth forecast for 2011 to 8 per cent from 9 per cent. Read more