Budget 2012 to be presented in Parliament later this month is expected to give relief to the tourism industry.
This was said by Sri Lanka Tourism Development Authority Chairman Dr. Nalaka Godahewa to reporters on Wednesday after it was brought to his notice the difficulty the industry is facing to build the necessary infrastructure due to rising costs.

It is estimated that the cost to build a four star hotel room alone is Rs. 16 million.
An industry source told this reporter that as a result of those high costs no new investments are taking place in the East coast though there is land available.
Except for a few top of the line hotels like those belonging to the John Keells Leisure Group, other industry players have been slow to invest in their product due to the island’s previous debilitating 26 year old terrorist war which hit tourism and which only ended two years ago.
As such to take advantage of the post war tourism boom in the island there is a need for the industry to spend on infrastructure development, which however is affected due to the high costs involved in such investments coupled with high borrowing costs.

Relief is also expected in the sphere of electricity tariffs to the industry which is currently a hybrid between industry and commercial rates.
Government of Sri Lanka plans to attract 750,000 tourists by the year end and 2.5 million by 2016.
Sri Lanka Association of Inbound Tour Operators President Nilmin Nanayakkara said that this year’s target would be met. He also expected the current winter season to witness a 30% year on year (YoY) growth in tandem with the growth the industry experienced in the first nine months of the year of 30.1%, but much lower than the previous winter’s growth of 46.1%.
One of the chief reasons for this slowdown is due to the recessionary fears in the West on account of the euro debt crisis.

The industry’s cash cow is also the winter traffic from the West. Though India from a country perspective is the source of the highest number of tourist arrivals to the island, from a spending and from a “stay” perspective, the tourist from the West easily surpasses his Indian counterpart. The Indians who come here for shopping are low budget tourists, staying for a mere three days, whereas the Western tourist wintering here, generally stays in star class hotels for a minimum of 10 days.

Source: 

http://forum.srilankaequity.com/t12286-budget-boost-for-tourism#81595

By DANIEL WAGNER - AP Business Writer | AP

WASHINGTON (AP) — The European debt crisis has claimed its first big casualty on Wall Street, a securities firm run by formerNew Jersey Governor Jon Corzine.

MF Global Holdings Ltd., which Corzine has led since early last year, filed for bankruptcy protection Monday. Concerns about the company's holdings of European debt caused its business partners to pull back last week, which led to a severe cash crunch, the company said in its filing.

In a statement, the Securities and Exchange Commission and theCommodity Futures Trading Commission said that they and other regulators had been closely monitoring MF Global's situation for several days "in anticipation of a transaction that would include the transfer of customer accounts to another firm."

MF Global told the regulators early Monday that it hadn't reached an agreement on a deal and it reported "possible deficiencies" in customers' futures trading accounts, the two agencies said.

Corzine, the former head of investment banking giant Goldman Sachs Group Inc., oversaw MF Global as it amassed $6 billion in debt issued by financially strapped European countries such as Italy, Spain and Portugal. Their bonds paid bigger returns than U.S. Treasury debt because bond investors believed that they were more likely to default.

That bet eventually doomed the company. A regulator complained last month that it was overvaluing European debt, forcing it to raise more money, according to the papers it filed with U.S. Bankruptcy Court for the Southern District of New York.

MF Global's bankruptcy is the eighth-biggest ever in the U.S., according to the research firm BankruptcyData.com. It's bigger than Chrysler LLC's in 2009 and smaller than those of financial-crisis casualties Lehman Brothers Holdings Inc., Washington Mutual Inc. and CIT Group Inc.

Last week, MF Global reported its biggest ever quarterly loss, and rating agencies downgraded its debt. Its stock plunged 66 percent. Spooked business partners required it to post more money to guarantee its trades.

Soon short of cash, MF Global looked for outside investors or buyers, but no alternative emerged before regulators' Monday deadline, the company told the court. Trading in shares of MF Global Holdings Ltd. was halted early Monday.

MF Global's bankruptcy shows the danger of investing when the outcome will be determined by government action, said Daniel Alpert, managing partner at the New York investment bank Westwood Capital Partners LLC.

"I don't think it's a canary in the coal mine, but it does show you that it's still a very volatile market," he said. "The nature of this crisis is that events can lead in any number of ways, and markets are trading on news, not numbers."

The SEC and the CFTC said they have determined that a bankruptcy proceeding overseen by the industry-funded Securities Investor Protection Corp., whose mandate is to protect investors when a brokerage firm fails, "would be the safest and most prudent course of action to protect customer accounts and assets." SIPC, which can provide up to $500,000 for each customer of a failed brokerage, announced separately Monday that it is beginning the liquidation of MF Global under its customary procedures.

MF Global's big bet on Europe might not have happened before Corzine joined. Until he joined, the company was known mainly as a dealer in derivatives, which are investments based on the value of some underlying asset. Corzine wanted to build MF Global into a major investment bank.

One method: Trading for the bank's own profit, a practice known as proprietary trading. Corzine made his career at Goldman as a trader, and the company became a trading powerhouse under his watch.

Proprietary trading was responsible for much of MF Global's quarterly loss, it said in court papers.

As of last week, MF had amassed net exposure of $6.29 billion in debt issued by Italy, Spain, Belgium, Portugal and Ireland. Of that, $1.37 billion was from Portugal and Ireland, which already were bailed out by European authorities. More than half was from Italy, whose borrowing costs increased in recent days as investors grew concerned about its finances.

By comparison, Morgan Stanley's net exposure to those countries was only $2.1 billion as of Sept. 30, according to its latest quarterly filing. Morgan Stanley's stock was battered last month because of concerns about its exposure to European debt.

Corzine was hopeful that European leaders would solve the crisis and protect the value of MF Global's holdings before investors grew wary. Last week, he said he expected the firm to "successfully manage these exposures to what we believe will be a positive conclusion in December 2012."

MF Global turned a profit just three quarters out of the past 12.

Corzine also is a top fundraiser for President Barack Obama. Corzine has helped raised at least $500,000 for Obama's re-election campaign since April, according to records released by the campaign.

At worst, MF Global's bankruptcy could roil credit markets and make financial companies reluctant to lend to each other. But the impact on markets will likely be muted, said Karen Shaw Petrou of Federal Financial Analytics.

"It appears their exposure to risk was particularly acute," she said.

MF Global's bankruptcy has prompted comparisons to Lehman Bros., whose 2008 failure touched off a global credit crisis. Even though Lehman was bigger and more intertwined with other companies, investors appeared worried Monday about other financial companies' possible losses, either from deals with MF Global or unrelated losses on European debt.

Bank stocks fell sharply on Wall Street after the bankruptcy filing. Morgan Stanley lost 8.7 percent, Citigroup 7.5 percent, Bank of America Corp. 7.1 percent and Goldman 5.5 percent.

Including its subsidiaries, MF Global has assets of $41.05 billion and liabilities of $39.68 billion, according to its bankruptcy petition.

Petrou said other firms holding European debt might survive the market turmoil if European leaders can convince the world that they are on track to solving the problem.

"It will work as long as the market has confidence in it," she said. "That's what makes this whole situation so spooky — it's all driven by market confidence, or lack thereof."

____

AP Business writers Pallavi Gogoi and Chris Kahn in New York and Associated Press writer Ken Thomas and AP Business Writer Marcy Gordon in Washington contributed to this report.

Source: 

http://news.yahoo.com/mf-global-first-big-us-victim-europe-crisis-204708273.html

By Pamela Sampson - AP Business Writer

BANGKOK—Asian stock markets rose Friday, continuing to be buoyed by a European deal aimed at slashing Greece's massive debt and preventing the crisis from engulfing "too big to bailout" countries such as Italy.

Softlogic Finance Company is facing a threat of a financial meltdown, a senior official from the Central Bank of Sri Lanka said.

The crisis is due to the financial mismanagement on the part of the company’s Managing Director Ifthikar Ahamed. He had served at the NDB Bank and was removed from the institution due to a financial fraud.
Although the Central Bank should have carried out an inquiry into the appointment of a person with such a notorious background into the board of a financial institution, such an inquiry has not yet been conducted.
A proper investigation is not being carried out into the company due to the close friendship between the head of Softlogic Ashoka Pathirage and Central Bank Governor Nivard Cabraal.
Ashoka Pathirage is also closely affiliated to several senior members of the government and makes monthly payments to several government and opposition politicians on a request made by a senior government official.
The senior official from the Central Bank who gave us the information said there was a threat of about 10 financial institutions facing financial meltdowns like the Ceylinco Group due to financial irregularities.

Asia, which is estimated to contribute 52 per cent to the world’s GDP by 2050, has turned back a 260-year spell of declining contribution to the global GDP within a 80-year period and is now poised for better growth.

Central Bank Governor Ajith Nivard Cabraal addressing the Asian Bankers Association General Meeting and Conference 
According to a recent study conducted by the Asian Development Bank on the global composition of GDP over the past few centuries, it has been highlighted that Asia, once a large contributor to the world GDP, went through dark times before coming up in a slow uphill climb.
World favours Asia
Speaking at the first-ever Asian Bankers Association General Meeting and Conference held in Sri Lanka yesterday, Central Bank Governor Ajith Nivard Cabraal stated that the world growth trends favoured Asia and that the region was marked as an important cog in the global economic wheel.
He said that with the West faltering in its actions over the past few years, Asia, armed with the majority of the BRIC countries, had become a foremost driver in the global economic and development landscape.
ADB research showed that in the year 1700, Asia contributed to 58 per cent of the global GDP. Thereafter, Asia declined over a period of 260 years until 1960, when Asia’s share of GDP declined to 16 per cent, Cabraal said.“From a high of 58 per cent, Asia dropped to a low of 16 per cent. But the good news is that thereafter, Asia has been on the rise and now contributes little over 30 per cent of the global GDP,” he expressed. “The estimates show that by 2050 Asia’s contribution will increase to 52 per cent.”
Pointing out that the period in which Asia rose once again was shorter in comparison to the drawn-out decline, Cabraal stated that the turn of events was “encouraging,” adding that therefore “it is important to remind ourselves that Asia having a key role is not something abstract – it is something real”.
What Asia should watch out for with the road up ahead looking brighter, he cautioned, was that challenges would also be more intense in time to come.
The balancing game
“Balancing the innovation that is needed to move forward with the regulatory framework that you need is one of the key challenges,” the Governor said. Admitting that the two avenues often conflict, especially at times when speed is essential and bodies need to act fast while also practicing cautiousness, Cabraal stressed that striking a balance between the two was vital.‘Safety first’ must be practiced at all times.
“If you take away safety measures, you may find that after some time all the hard work you have put in and the speed at which you were moving can come to zero if safety measures are not in place. A regulatory framework is important.”Banks should not be confined to the idea that regulatory frameworks are merely for central banks or regulatory authorities. “There is a need for banks to understand as well, to accept and buy into the regulatory measures – that is the bedrock on which the growth should be targeted.”
Financialisation of commodity markets
“Why should hedge funds be interested in buying orange juice?” Cabraal questioned.
There are many commodities in the world that have become financial instruments today. At the same time, the imbalance that is created in the global economy due to financialisation is immense. “We can see many countries grappling with this situation because for mere financial reasons, you find that commodities fluctuate greatly making it difficult for people to manage.” People must understand that economics must go hand-in-hand with politics as well, he said. “You cannot have economic stability without political stability. You cannot differentiate between the two; the line is so blurred now that no one knows where one ends and the other starts.”Too much of financialisation, which puts pressure on the management of politicians, is also a key challenge. “Do not rock the boat – this is the clear message.”
Excess capacity
Sri Lanka is fortunate, he said. As a result of the internal terrorism issues, the country has experienced excess capacity in terms of many resources for a long time. This will however decrease over time. The capacity that we have to work with is diminishing.
Hard landing
“It is difficult to predict how and when to land because the turmoil is so great,” Cabraal said. With the global issues and financial crises that happen on a regular basis, there are no proper grounds to measure and assess future performances.
“From one chaotic situation to another, previously there was time to recover, breathe and then find out what you’re going to do next; now the number of global problems you may have to face within a week could equal to the number of similar problems a governor or bank chief had to face over several years in the past,” he said. “It is difficult to predict.”
Stability and growth are often difficult to manage, the Governor added.
Quality maintenance and unemployment
The two aspects must be kept low at all times, Cabraal said. “Today Asia is seen as a region on the rise. Naturally therefore people’s expectations are high; they want more and it’s difficult to manage unless we get our act together.”He stated that in many Western nations, unemployment and deficit was high and growth was low but in Asia, the expectations were much more diverse. The region will have to raise domestic demand and ensure that people are wealthier.
Early future for Sri Lanka
One of the challenges Sri Lanka will have to face over the next few years with the doubling of per capita income as expected is that the country will have to welcome the future earlier than expected.
“That’s a tough call to manage as expectations will be higher than what you can deliver. We need to get all banks on the same growth path.”
Rebalancing of investment strategies
Investor perception is important and needs to be thought-out carefully. A clear understanding on how reinvesting our strategies should take place in the future must be exercised. “It’s a tough call – when the whole world is in turmoil, where do you keep your money? How do you react? What is it that you do? If you keep it in one place, is the other place safer? There are no immediate right answers and no right answers that will stand the test of time. The circumstances are very fluid.”
Confidence all the way
“In my view the most important factor in banking is confidence,” asserted Cabraal. “That is what is forgotten in today’s context. We try to pump in all kinds of other instruments, such as liquidity, regulatory aspects and various other instruments, and forget that confidence is key.”
Banks must act decisively and in a way people will have confidence. Central banks and governments of the Asian region have worked hard and well to build confidence within the region, even though the situation in the West is far different. It is now time that those countries also got their acts together, the Governor expressed.
“We have been lectured by the West for a long time, but I think it’s time for them to listen to us now. They must get their act together otherwise we will all suffer because the rest of the world will also be affected.”
Consistency
Bankers also need to exercise policy consistency and clarity in the economy. “We need to look at the economy on the whole. Most only talk of one or two items on the agenda; you’ve got to put all things together. It’s like family or one body with several organs, if one is spoilt, nothing will work right.”To maintain a ‘healthy whole economy,’ one must ensure that unemployment levels and inflation levels are down and that growth stays up. One must also remember that not a single economic factor is a standalone factor and that everything is interdependent. Cabraal said: “Create your own batting pattern – good batsmen will score on whatever platform.”
Space creation
The economy should also have additional space to move and grow in. Drawing examples from Sri Lanka five years ago, he stated that inflation was at 28 per cent and the debt to GDP level was close to 100 per cent; growth was sluggish at 4-5 per cent and the country had seriously difficulties as a whole.
“What we did was we created spaces in each of those areas – we worked on the growth, the infrastructure, inflation and interest rates, which enabled us to have space in each of those areas. We are not hemmed in.”
Banks should also follow a similar pattern he said. “You’ve got to make decisions but at the same time, have the space for you to move in the event you face a shock.”
Up ahead
The next few months and years will be critical and crucial for Asia, he acknowledged. “The world will look to Asia for growth and stability and that is why it is essential that Asia remains robust and maintains its momentum.
It must remain strong and focused.” “It is our responsibility towards the world. In a pool of uncertainty, this beacon of certainty must prevail, otherwise there will be serious problems all over the world,” he concluded.

Tastyy (Pvt.) Ltd., one of the largest importers and distributors of edible oil and food ingredients with over 100 years of history, has appointed DGL Marketing as its Agent in Nuwara Eliya. With this appointment Tastyy Ltd. intends to expand its range of products to the market to serve its customer better.

DGL Marketing is owned by D.G.L. Dassanayake, a very well known businessman in the area. Here Tastyy Ltd., National Sales Manager Maheswaran is lighting the oil lamp at the opening ceremony. Sanath Elpitiya, Prabakaran Area Manager of Tastyy Ltd., and D.G.L Dassanayake (distributor) and a customer are also present.

The JKH group, lead player in Sri Lanka’s tourism industry, will continue to invest in the leisure industry, Mr. Ajit Gunawardena, Deputy Chairman of the group and President of its hotels sector said last week.

He was speaking at a press conference held to launch the group’s two extensively refurbished southern properties on which US 16.5 million had been invested – Chaaya Tranz at Hikkaduwa and Chaaya Wild at Yala.

Chaaya Tranz is the successor to the old Coral Gardens Hotel sited at what was once the Hikkaduwa Rest House until the 60s, now transformed into a 150-room four-star beach hotel with an investment of Rs. 1.2 billion.

``Are you happy that you failed in your effort to sell Coral Gardens?, Gunawardene was asked at the press conferece.

``Very happy,’’ he chuckled. ``But the people who talked to us (about buying it), must be very sad.’’

Gunawardene indicated that they will be selling the Chaaya Tranz rooms at USD 200+ against the $ 60 they commanded before it was closed for the makeover.

What was once Yala Village has been re-branded as Chaaya Wild where a game lodge with a beach front has been created.

JKH has invested close to US$ 100 million in the leisure business during the last two years and the group is confident that both properties upgraded to four-star level by extensive refurbishment will command top dollars.

``We are selling not just accommodation but an experience, Jayantissa Kehelpannala, sector head of JKH’s resort hotels commented.

Gunawardene indicated that a few more projects involving 200 to 300 rooms will be revealed in the next six months.

He explained that about 40% of JKH’s total portfolio was invested in the leisure segment which was now yielding attractive returns. This was not the case in recent years.

He estimated that leisure contributed about 30% of the JKH’s bottom line in the last financial year. Asked what he expected in the current financial year, Gunawardena declined to answer saying "I don’t want to go to jail!" (He was obviously alluding to `insider information’ laws of the SEC).

He was confident that they could sell their resort property rooms at much better rates than earlier because they were not just pricing a room but adding value and selling an experience.

Chaaya Tranz with 150 rooms now will be an excellent launching pad for whale watching at Mirissa and also for visitors to the Kaneliya rain forest near Galle which was as unique as Sinharaja.

Both revamped hotels upgraded to Four Star status will focus on the natural attributes of their locations – the corals at Hikkaduwa, nearby Kaneliya and whale watching at Mirissa while game watching will plus sea and sand will be on offer at Chaaya Wild.

Gunawardena said that the launch of the refurbished and expanded hotels was the beginning of the country’s new tourist products. Their new Chaaya Bey at Beruwela is being completed five months ahead of schedule and they expect to open it next June.

"Our philosophy is to be the trend setter in the hotel trade," he said. "We are investing significantly in the hardware (the properties) as well as the software with huge investments going into training and exposure of staff to international standards."

Sri Lanka's national career, SriLankan Airlines has dramatically reduced its net loss to Rs.202 million in 2010/11 compared with to Rs.6 billion incurred during the 2009/10, the airline said.

The airline's Revenue for the year under review was Rs. 78,515 million, compared to Rs. 63,358 million in the previous year. Total Passenger Revenue was increased by 25% or Rs. 12 billion.

Following this improved financial performance by SriLankan, the airline is now transforming itself to profitable business venture within two years time.

Sri Lanka's Cabinet has approved US$ 500 million for the development of SriLankan over the next five years and the airline's Chairman nishantha Wickramasinghe said that this infusion of funds brings a tremendous responsibility on them to deliver positive results.

PARIS (Reuters) - Societe Generale warned it would struggle to reach its 2012 profit target as its exposure to Greece and a tougher economic backdrop took its toll on second-quarter earnings.

France's second-biggest bank said on Wednesday its aim of 6 billion euros ($8.55 billion) in net profit in 2012, reiterated in May this year, would now be "difficult to achieve."