Milton Rajaratne (B.Com, M.

Sc, PhD)
Senior Professor of Management,
Development Economist,
Founder Dean - Faculty of Management, Peradeniya
Former Central Banker
A •POLITICAL ECONOMY OF GROWTH

B •GROWTH STATISTICS OF SRI LANKA

C •GROWTH CONSTRAINTS & CONSEQUENCES

D •CAUSES OF GROWTH CONSTRAINTS

E •REDEFINING ECONOMIC GROWTH

•GROWTH MANAGEMENT PROCESS & ROLE OF THE

F GOVERNMENT
 Business Economic
Re- Growth Growth
(From infinite
(From
investment activities)
definite
activities)
Public
wealth
Developme
nt (Wealth
Private sharing)
wealth
• Private sector • Market leadership
leadership SOCIALISM • Private & public
• Private property property
rights • Government as
• Government as • Public sector participator for
watchdog leadership achieving national
• Minimum intervention • Public property goals
Market determines • Direct government Market and the state
wealth creation and controls determine wealth
sharing • Maximum creation and sharing
Eg: US, UK, HK intervention Eg: Scandinavian
State determines countries
wealth creation and
sharing SOCIAL
CAPITALISM Eg: Russia, Cuba, NK CAPITALISM
 Average
Annual
Period Regime
Growth
Rate
1948-55 4.3 DS/Dudley
1956-65 3.2 SWRD/SB
1966-70 5.2 Dudley
1971-77 2.9 SB
1978-94 5.0 JRJ/RP
1995-2005 4.5 CBK
2006-2014 6.4 MR
2015-2019 3.6 MS/RW
1948-2019 4.4 Whole period
Composition of GDP (%)

Annual Change
Change (1950-
Sector 1950 2018
(Nett of

2018)
Taxes &
Subsidies)

Agriculture 46.3 7.9 -38.4 -0.56

Industry 19.6 27.0 7.4 0.11

Services 36.9 56.8 19.9 0.29

External Trade (US$ Million)
Annual
Average
Item 1950 2018 Increase
(US$)

(1950-2018)
Exports 297 11,890 170
Imports 246 22,233 323
Trade Surplus/Deficit 51 -10,343
Trade Surplus/Deficit 17% -87%
as % Exports
Per Capita Income No. of Annual 1 Health
Range Years Average
(US$) Spent (US$) 0.8 Index
0.6
100-1000 55 16 Educati
0.4 on
1000-2000 04 250
0.2 Index
2000-3000 03 333
Income
0
3000-4000 07 143 Index

Turkey
India

Malaysia
Sri Lanka

Saudi Arabia
Growth of Per capita Income (1948-2018)
HDI
Annual Average growth:
$4000/70 Years = $57
Savings & Investments (%)
50
45
Chan Annu 40
ge al 35
Avera 30
Item 1959 2018 (1959 ge 25
- Chan 20
2018) ge 15
(%) 10
5
National Savings 13.4 25.4 12.0 0.20 0

National 17.3 28.6 11.3 0.19

Investments
National 85.1 78.8 -6.3 -0.10
Consumption
Foreign reserves, Debt, Exchange rates

Change
Item 1950 2018 (1950-2018)

Imports (Months) 11.6 5.2 -6.4

External debt (% GDP) 3.2 58.7 55.5
Rupee depreciation 4.77 182.75 177.98
(SLR/US$)
Debt service ratio (%) 3.1 28.9 25.8
Fiscal sector operations (% GDP) Government Consumption (%
of GDP)
Chang
Item 1950 2018 e 20
(1950-
2018) 15
Revenue 16.1 13.4 -2.7
10
Expenditure 20.3 18.6 -1.7
5
Total Debt 16.9 82.9 66.0 0
Domestic Debt 13.7 41.6 27.9

Foreign Debt 3.2 41.2 38.0

 Additional
Average Rates Investment Savings
Item
(1959-2018) (%) requirement (%) requirement
estimates (%)
Average GDP growth rate (1950-2018) 4.4
Average National Investments (1950-2018) 23.2
5.3 Investment
Average Capital Output Ratio (Productivity) units for 1 unit
of growth
National Savings Rate at 2018 = 25.4%
For 10% of growth 53.0 27.6
For 9% of growth 47.7 22.2
For 8% of growth 42.4 17.0
For 7% of growth 37.7 12.3
For 6% of growth 31.8 6.4
For 5% of growth 26.5 1.1
 Primitive agriculture and manufacturing
 Pre-industrial services sector
 Lack of industries with ‘spread effects’ to promote ‘industrial clusters’
 Lack of industries with ‘forward & backward linkages’
 Lack of integrated production systems
 Industries with meager ‘local content’ and ‘net exchange earnings’
 Missing ‘Technology Ladder’ in FDI led growth strategy
 Expensive ancillary services sector
 Exports with wide ‘technology gap’
 Lack of inventions and innovations
 Poor export drive
 0.60
Agricultural crops

0.50 Minerals

Food & Beverages

0.40

Export Ratio Textiles & Garments

0.30
Leather, Paper,
Wood
0.20 Rubber Products

Petroleum Products
0.10
Ceramic Products

0.00
Plastic Products
2000

2004
1994

2002
2003
2005
2007
2001

2006
1992

1997
1991
1993
1995
1996
1998
1999
 Effective Sources of
Growth

Growth
Economic
Management Integration
Growth
(Government Role)

Effective
Use of Growth
 Selecting the right sources of growth (Eg: SL&JPN)
 Creation of ‘priority industries’ (Singapore)
 Creation of growth centers to generate ‘spread effects’ – Industrial clusters (Korea)
 Improving ‘local content’ in industries – Increased factor income (Japan, China)
 Transforming subsistence agriculture and petty trade to productive economic activities
 Climbing ‘technology ladder’ with FDI led industries – From labor intensive to knowledge intensive
(East Asian Tigers)
 Modernizing/ upgrading production systems (Use of technology to save labor)
 Creating inclusive/ participatory growth system – Local labor, capital, technology (Japan, Korea,
China)
 Integrating means of growth – Agri - Industry – Services – Trading (with growth objectives)
 Growth directed to socioeconomic transformation:
 Work skill development
 Invention development (R&D)
 Entrepreneurial skill development
 Social modernization

 Growth directed to life quality improvement:

 Improved participatory opportunities – Instead of ‘giving’ jobs
 Improved purchasing power – Instead of increasing money income
 Improved social security (Caretaking) – Instead of extensive welfare
 Modernized public services – Instead of treasury dependent
operations
 Uncompromised natural environment – Instead of living with
pollution
4. Controlling growth 1. Planning growth
Monitoring progress Setting growth objectives
Correcting deviations Setting growth strategies
Feedback to planning

ECONOMIC
GROWTH

3. Leading growth 2. Organizing growth

Political leadership
Business leadership
Setting up institutions
Setting up business ventures
Organizing entrepreneurs
Organizing resources, trading
and markets
Let’s Manage Economic Growth
and achieve 2030 development goals
Reviving the Sri Lankan
Capital Markets
September
2019

Vajira Kulatilaka, BSc Eng (UoM,) MSc (AIT), FCMA, CFA

24
What is the Capital Market
Capital Markets enable channeling of wealth of savers to those who can utilize funds
productively in the long-term
There is no intermediation cost (as opposed to Banks)
both savers and borrowers gain

Capital Markets deal in:

Debt Instruments
Equity Instruments
Quasi Equity Instruments
Derivatives
25
Why we need a Capital Market
Provide long term funds
Can develop gradually to very long term
Shortage of capital in Sri Lanka
• Well structured offerings can attract high foreign participation
• Improved balance of payments
Essential for the growth of the country
Enable disintermediation
Cost to issuers would reduce
Returns to investors would increase
26
Why we need a Capital Market
Provide higher long-term returns to Investors
Ageing population
Will accrue to beneficiaries of Pension Funds, Provident Funds, Insurance Funds,
etc.
Social benefits
• Power of Compounding for long-term investors
Invested Amount Investment Period Invested @ 10% Invested @ 12% Difference in Savings
for 2% Return
Increase
LKR 1 million 5 years LKR 1.6 Mn LKR 1.8 Mn LKR 0.2 Mn

LKR 1 million 30 years LKR 17.4 Mn LKR 30.0 Mn LKR 12.6 Mn

27
Why we need a Capital Market
Per capita income has reached levels where wealth management is feasible
Investors will demand higher returns
New instruments with acceptable risk will be required
Exit/Liquidity for share/security holders

With capital adequacy related constraints, banks cannot

match the depth and breadth of the capital market

28
State of the Capital Market
- Continuous decline in the equity market
8,000

ASPI ASPI Trend

7,500 Linear (ASPI)

7,000

6,500

6,000
• Super Gains Tax

5,500

• Run-up to the General Election

5,000
• Speculation of Capital Gains Tax
• Uncertainty over key
• Reemergence of • Constitutional
4,500 development projects
speculation on Crisis
• Uncertainty over budget
Capital Gains Tax • Easter Attacks
proposals
4,000
Sep-14

Sep-15

Sep-16

Sep-17

Sep-18
May-14

May-15

May-16

May-17

May-18

May-19
Jul-16
Jul-14

Jul-15

Jul-17

Jul-18

Jul-19
Mar-14

Jan-15

Mar-15

Mar-16

Mar-17

Mar-19
Jan-14

Nov-17

Mar-18
Nov-14

Nov-15

Jan-16

Nov-16

Jan-17

Jan-18

Nov-18

Jan-19
Source:- CSE, Broker Research 29
State of the Capital Market
- Decline in the average daily turnover of CSE

LKR Mn 1,415
1,400

1,200
1,059
1,000
915
800 834
737
600 639

400

200

-
2014 2015 2016 2017 2018 Jul 2019

Daily Average Turnover-Domestic Daily Average Turnover-Foreign

Source:- CSE data library

30
State of the Capital Market
- Low activity in the listed corporate debenture market

80.0 30.0

70.0

25.0 15.5 Withdrawal of Tax 25.0

60.0

Concessions
50.0
20.0 26.0
20.0

17.0
40.0

11.1 10.5 15.0

30.0

58.5 11.0 10.0

20.0

39.4 4.0
33.1 34.2
10.0
5.0 5.0

16.0
- -

2014 2015 2016 2017 2018

Amounts raised by companies excluding BF Amounts raised by Banks and Finance (BF) companies
Total(LKR
number
Bn)
of debentures listed (LKR
Bn)

Source:- CSE data library

31
State of the Capital Market
- Reduction in Unit Trust AUM
Budget proposal
(LKR 140 for withdrawal
Bn) 127 130 of Tax 129
Concession
120
104 Implementation
of Withdrawal
100
of Tax
Concessions
80
64
60

40

20

0
2014 2015 2016 2017 2018

Source:- UTA website

32
State of the Capital Market
- Inactivity of EPF and ETF in the equity market

100.0
(LKR
Bn) 90.0 8.1
80.0 8.4
8.8
70.0 9.1
60.0 7.3
50.0
40.0 85.8
77.3
70.6 65.0
30.0 59.0
20.0
10.0
-
2014 2015 2016 2017 2018
EPF ETF

*Proxies used for 2017 and 2018 data Source:- EPF & ETF annual reports, Bloomberg 33
State of the Capital Market
- Decline in Market Capitalization to GDP ratio
Market Capitalization to GDP
30.0% (2014 - 2018)

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%
2014 2015 2016 2017 2018
Source:- CSE data library
34
State of the Capital Market
Most of the KPIs related to Capital Markets have deteriorated
Profitability of institutions linked to capital markets have declined rapidly
Most are loss making
Professionals attached to these institutions have moved to other industries or
migrated to other countries

35
Plans to revive the Capital Market
Sentiment should change
But it is a short term solution
Political
Improved Stability
Security

Economy
Growth

Clear and consistent messages should go to

the public
36
Plans to revive the Capital Market
Regulations should be brought in par with Upgrading of infrastructure at CSE
global standards Initially implementation of Delivery vs
New SEC Act Payment (DVP)

Enabling civil proceedings amongst others Leading to a CCP

Create a level playing field to all A number of investors ignore Sri Lanka
due to a lack of a CCP
Confidence will increase
Turnover can go up by c. 20% - 30%

37
Plans to revive the Capital Market
Improve governance structures

Demutualization of the Attracting strategic

Listing of the Exchange
CSE investor(s)

Develop strong institutions linked to capital markets

Consolidation of institutions
Re-capitalization of firms
Attracting strategic investors/partners
Improve distribution and technology transfer
• Get local Investment Banks to work with international Investment Banks
• Ex: Sovereign debt issuances

38
Plans to revive the Capital Market
Develop Human Resources
Training of personnel
Research
Advisory
Investment Banking Support from foreign
Wealth Management strategic partners

New products
Systems and Processes
Setting up a capital market academy
Can go up to a Post Graduate qualification or a Charter
Attract Sri Lankan experts working abroad
Reverse brain drain
39
Plans to revive the Capital Market
Increase the participation of local investors
Encourage captive sources to invest (EPF, ETF, SLIC and other funds)
Conduct educational programs to retail investors
Reduce transaction cost for fixed income instruments  Enabling trade
Promote unit trust as an investment vehicle
Outsource Fund Management where institutional capabilities are lacking
Digitalization of processes
Convenience to local investors
Attraction of foreign investors
Country should be stable
Conduct road shows in strategic financial centres
Organize Fund Managers conferences in Sri Lanka
Gradually get into regional and global Indices

40
Plans to revive the Capital Market
Increase the depth of the capital market
List commercially viable smaller scale SOEs
ESOPs
Restructure and list large scale SOEs
Encourage/promote private companies to list  Will take place when valuations are right
and liquidity improves
Increase the breath of capital market
Introduce new products
Exchange Traded Funds
Have a level playing field for taxation
REITs
Derivatives
Promote/Upgrade Dollar Board to list regional entities
41
Plans to revive the Capital Market
Others
Introduction of Securitization Act
Incentives for venture capital and private equity funds
Encourage distribution of wealth management products through financial
institutions
Obtain CBSL support
Credit rating of the country should improve

Medium to long term focus should be to promote

Colombo as a regional capital market

42
Concern 1
Lack of Counterparty Guarantee and the resultant Counterparty
Risk

Consequence Trading in the market is restricted to the fund managers who are
willing to bear this risk
Short Term Medium Term

 Introduction of Delivery vs. Payment  Introduction of a Central Counter Party

(DVP) (CCP)
Solutions

 Platforms/software need to be upgraded  Platforms/software need to be further

Other upgraded
Considerations  Usually the turnover of the market go up by 20
– 30% after setting up the CCP

Responsibility  CSE/SEC  CSE/SEC

43
Concern 2 Regulatory framework not on par with global standards

Consequence Lowering of confidence in the capital market

Short Term Medium Term

 New SEC Act has to be sanctioned  Institution Building at all levels including
SEC, CSE and stockbrokers
 Surveillance capabilities to be
Solutions strengthened  Introduction of IT systems including the
use of AI to identify malpractices

 The proposed Act will give more enforcing powers  Continuous improvement and upgrades
to SEC and CSE and will enable civil proceedings
Other amongst others. are required
Considerations  It will also impose a fiduciary responsibility for
advisors and other intermediaries

 Line Ministry  CSE/SEC

Responsibility  CSE/SEC

44
Concern 3 Lack of Independence at CSE which is now owned by stockbrokers

Consequence
Self-regulation is constrained due to conflict of interest leading to
lowering of confidence in the system
Short Term Medium Term

 Demutualization of CSE  Attraction of a strategic investor,

preferably a top tier stock exchange with
Solutions technology transfer possibilities
 Listing of the CSE

 CSE is lagging behind in the SARCC region as most of the leading exchanges have been
Other demutualised. This has a negative impact on the brand
Considerations

 Line Ministry  CSE/SEC

Responsibility  CSE/SEC

45
Concern 4 Weak institutions in the capital markets

Consequence Low investments in technology, marketing, training, etc

Short Term Medium Term

 Consolidation of Institutions to take place  Encourage bringing strategic investors

 Strengthening the capital market academy so that
 Recapitalization of firms linked to the CSE candidates can go up to graduate/post graduate
Solutions levels or a charter
 Digitalization of processes to bring in convenience
to investors and data analysis to better understand
the customers (Big data analytics)
 Most capital market institutions are incurring losses
Other
Considerations  Educated/Skilled personnel in the capital markets have migrated to other industries or
other countries
 CSE/SEC
Responsibility  Colombo Stock Brokers Association, Primary Dealer’s Association, etc.

46
Concern 5
Lack of participation of local investors in capital markets (Debt and
Equity)

Consequence Low liquidity in the market

Short Term Medium Term

 Get captive sources (eg: EPF, ETF, SLIC, etc.) to Recruit, train and retain professionals and

participate in the market both in debt and equity change constitution of Funds in various Govt.
 Conduct educational programs for retail institutions to enable investments in capital
investors markets and obtain better returns to
Solutions  Promote unit trusts as an investment vehicle beneficiaries
 Do a study on available funds in the country for  Outsource fund management when there is no
capital markets (currently only being invested in institutional capabilities
bank deposits)  Improve financial literacy from a young age by
changing school curriculums (introduction of
Bourse games, Business TVChannels, etc)
 Better returns will accrue to beneficiaries through active management
Other
 Especially for long term funds, the “power of compounding” will substantially enhance returns
Considerations which in turn will bring in social benefits
Responsibility  Line ministries  SEC

47
Concern 6
Lack of participation of foreign investors in capital markets (Debt
and Equity)

Consequence
Self-regulation is constrained due to conflict of interest leading to
lowering of confidence in the system
Short Term Medium Term
 Conduct roadshows to promote investment  Need large issues with an attractive
opportunities investment thesis (refer concerns 7 and 8
Solutions  Conduct fund manager conferences in Sri Lanka below)
 Increase public float in closely held listed firms
to enhance liquidity
 Larger Issues will attract large scale investors. This results in inflow of much needed Long
Other term capital to fund the growth phase
Considerations

 Line ministries  Capital Market Firms

Responsibility  CSE/SEC

48
Concern 7 Lack of depth in the capital market

Consequence Lack of liquidity and unattractiveness to large portfolio investors

Short Term Medium Term

 List commercially viable smaller scale  Restructure and list large scale SOEs
SOEs or subsidiaries of SOEs (eg: LTL)
 Listing of PPP Projects: Initially debt
Solutions

 China, India, Vietnam, etc., have all carried out similar exercises (eg: Large Banks in India
Other and China)
Considerations
 These IPO proceeds will help to bring in foreign exchange and reduced budget deficits
 Line Ministry
Responsibility  CSE/SEC

49
Concern 8 Lack of breadth in the capital market

Consequence Lack of diversification possibilities

Short Term Medium Term

 Launch of REITs: Transactions costs of Real Estate
need to reduce
 Level playing field in terms of taxes with regard to
Solutions government debt and other fixed income securities
 Use the existing CSE platforms to trade in
government securities
 Introduction of a foreign currency board
 The Govt. to use its holdings in EPF, ETF and
SLIC to utilize to form Index Funds
 Issuance of derivatives after CCP and proper
education of stakeholders.
 Creation of specialized funds such as for
Infrastructure

 Index funds are essential for issuance of derivatives. Investors of Index fund/REITs should be broad based
Other  Govt. can setup REITs for real estate rich, cash short SOEs  Monetizing of idle assets
Considerations  Index funds are attractive to passive global investors. This can bring in forex to the Country
 In creation of long term fixed income instruments, would help mitigate asset and liability mismatches
 Line Ministry
Responsibility  CSE/SEC

50
Other initiatives to develop the capital Market

 Introduction of the Securitization Act

 Create alternative fixed income investment opportunities
 Will help to optimize capital management of financial institutions
 Support PE, Venture Capital in terms of tax structures
 These are feeders for the capital market
 These funds would foster innovation and make businesses more efficient
 Attraction for Non-Resident Sri Lankans with ideas to create startups in Sri Lanka

 Encourage market makers

Activities  This will improve liquidity
 Reduction of transaction costs for both fixed income and equity
 Improve liquidity and catalyse trading
 Encourage selling of wealth management products through banks
 Obtain CBSL support for this

51
 Thank you

August 2019

52
Future Of Sri Lanka Tourism
Opportunities and Challenges

Hotel Association Of Sri Lanka

 1. Global Tourism

UNWTO tourism towards 2030: International tourism

by region of destination
Average a
Region Arrivals(million)
year (%)
2018 2023 2010-’20
Africa 67.10 70.19 5.4%
America 215.70 220.45 2.9%
Asia and the Pacific 347.70 362.30 5.7%
North-East Asia 169.20 176.31 5.7%
South-East Asia 128.70 134.23 5.8%
Oceania 17.00 17.34 2.9%
South Asia 32.80 34.54 6.8%
Europe 710.00 722.78 2.7%
Middle East 60.40 62.82 5.2%
1400.90 1438.53

Opportunity
Highest growth projected in south Asia and East Asia while 80% of global arrivals are
shared by 20 countries.
 2. Regional Performance

Country 2017 2018 % Change

Thailand 35,381,210 38,277,300 8%
Malaysia 25,950,000 25,800,000 -1%
Vietnam 12,922,151 15,497,791 20%
India 10,035,803 10,558,571 5%
Sri Lanka 2,116,407 2,333,796 10%
Pakistan 1,750,000 1,900,000 9%
Maldives 1,389,542 1,484,274 7%
Mauritius 1,341,860 1,399,408 4%
Bhutan 255,000 274,097 7%

Conclusion – Market size is sufficient for Sri Lanka to easily reach 3-4 times more arrivals.

Action – A comprehensive plan to benefit from the global tourism arrival potential.
 3. Carrying Capacity
Potential
Month 2018 Capacity
January 238,924 253,169
February 235,618 253,169
March 233,382 253,169
April 180,429 253,169
May 129,466 253,169
June 146,828 253,169
July 217,829 253,169
August 200,359 253,169
September 149,087 253,169
October 153,123 253,169
November 195,582 253,169
December 253,169 253,169
Total 2,333,796 3,038,028
 3. Carrying Capacity
Tourism
Density per
Country Surface Area (km²) Arrivals (2018) sq.km

Hawaii 28,311 9,954,548 351.61

Mauritius 2,040 1,399,408 685.98

Bali 5,780 6,073,353 1,050.75

Bahamas 13,878 6,600,000 475.57

Vietnam 331,210 15,497,791 46.79

Malaysia 330,803 25,800,000 77.99

Sri Lanka 65,610 2,333,796 35.57

Total 777,632 67,658,896 87.01

Conclusion – Current capacity has the potential to host 3 to 4 times than the current arrivals.

Action – Short –term marketing plan to increase arrivals and Conduct a proper carrying capacity study.
 4. Importance Of Defending The Current Market Share From Europe And
Increasing The Share From Asia
Region Arrivals - 2018 Market Share
Europe
UK 254,176 11%
Germany 156,888 7%
France 106,449 5%

Other European
Countries 500,348 21%
Total 1,017,861 44%
Asia
India 424,887 18%
China 265,965 11%
Other Asian Countries 400,948 17%
Total 1,091,800 47%

Conclusion – Europe and Asia have a similar market share.

Action - Defend an yield manage the European market and increase the volume from Asia.
 5. Intra – Regional Travel

Region 2018 Market Share Region 2017 Market Share

ASEAN & South
South Asia 543,160 23% Asia 10,500,000 30%

South East Asia 84,013 4% South East Asia 14,500,000 41%

Middle East 71,636 3% Middle East 800,000 2%

Total 698,809 30% Total 25,800,000 73%

Arrivals to Sri Lanka – Arrivals to Thailand – 35,300,000

2,333,796

Conclusion – Intra regional travel to Sri Lanka is lower compared to far East - Asian countries.

Action – Develop a strategy to increase intra regional travel to increase arrivals specially during off season.
 6. Easter Sunday Attack – Impact Analysis Model

Short Term Long Term

 Reduction of Risk
Positive Perception
 Recovery Marketing
Plan Reduction
Easter
of Arrivals
Sunday
Attack
 Travel Bans  Alternative
 Stereotyping by
Destinations
 Media Exposure Consumers
Negative Received

Source - Impact Analysis Model @DM

61
 7. Impact Analysis Post Easter Sunday Attack - Assumptions

Bali Monthly Sri Lanka

Months to Arrivals After Assumption
Recover Incident
‘02 Actuals SCENARIO FOR SRI LANKA
1st month -38% -20%

2-4
-55% -40%
months
5-7
-33% -30%
months
8-9
-24% -20%
months
10 month -28% -10%

11 - 12
20% Increase 10% Increase
months

62
 8. Role of Private Sector

Conclusion – We should not wait until government does everything

Action – Private sector should have their own action plans to promote tourism.
 8. Role of Entertainment in Tourism
Number Of Apartments
Project Type Year
Cinnamon Life Luxury apartments, Office, Mall & Hotel 2021
Altair Luxury apartments, Retails & entertainment 2020
Shangri-La, Galle Face One Luxury apartments, Office, Retail & Hotel 2019
ITC, Colombo One Luxury apartments, Office, Mall & Hotel 2020
Abans, Colombo City Centre Apartments, Hotel, Mall &3D Cinema 2019
Cinnamon Life

Altair Shangri-La Colombo One (ITC) Colombo City Centre

 8. Role of Entertainment in Tourism
Hotel TBO
Cinnamon Life 800
Hyatt 559
ITC 300
Marino Sands 270
NEXT 200
Radisson 300
Ritz Carlton 200
Sheraton 306
Welcome Hotel 300
Total 3585

Conclusion – The current room capacity will be doubled by 2021.

Action – City of Colombo should have sufficient attractions and experiences to attract and retain visitors.
 8. Role of Entertainment in Tourism
Country Entertainment Tax Withholding Tax VAT/GST Total
15% +NBT+VAT = 16%
Sri Lanka 10%- 14% 15% 41%- 45%
**
Maldives N/A 10% 6% 16%
25% (withholding tax can be
Thailand N/A 15% 10% reduced or exempted based on
double taxation treaties)

17% (concessionary rate is given

Singapore N/A 10% 7% for entertainers as opposed to
22% for others)

Dubai N/A N/A 5% 5%

5% (USD 5 billion fund to create

Saudi Arabia N/A N/A 5% entertainment)

Conclusion – Sri Lanka is the most expensive to stage international events.

Action – Provide a moratorium for few years to increase the no of international events to draw travelers from the
region.
 8. Role of Entertainment in Tourism

1. Removal of Withholding Tax For Events Categorized As “Destination Promotional Events”.

2. Sri Lanka Tourism Promotion Bureau (SLTPB) implement and introduce a comprehensive events
policy with criteria for sponsorship based on audience, global reach, star power, etc.
3. 15% entertainment tax paid to municipality to be reduced to 5% via entertainment ordinance as
stated here in which will also benefit local artists.
4. Removal of customs duty on luxury retail consumer goods.
5. Sponsorships received from private companies for destination promotional events endorsed by
SLTPB to be exempted from income tax.
 9. Propositions to Increase Tourist Arrivals
1. Movie Tourism

2. Running an effective communications campaign –

• Decide ‘’What To Do? ’’ before worrying about ‘’How To Do?’’.
• ‘’What To Do’’ has the following 6 key steps ;
1. Define the communication strategy.
2. Global or integrated campaign?
3. What should be the budget ?
4. When to commence the campaign ?
5. One local agency or a different agencies in identified countries?
6. Ensure timely , effective and efficient execution of the campaign (project management unit).
 9. Propositions to Increase Tourist Arrivals

3. Policy to encourage shopping tourism from the region

Conclusion – Over 1. 5 million sq. ft. of shopping space in Colombo by 2021.

Action – Conducive tax policy to bring international brands.

 10. Running an effective communications campaign

Managing risk factors

I. Sustaining the process for 11 months with the elections etc.
II. Even if we complete the tender procedure how to ensure effective implementation- scope creep and the
capacity limitations of respective organizations.
III. Some of the process related difficulties to implement global campaigns.
 11. Summary and Action Points

1. Implementation of tourism marketing plans to optimize the tourism arrivals.

2. A focused plan to increase intra-regional travel.
3. Making Colombo a hub for regional tourists and supporting policies for international events and
entertainment facilities.
4. Capacity at the Bandaranaike International Airport and other touch points.
5. Current tax policies.
6. Organization strength of NTO.
7. Managing the risk factors.
National Infrastructure
Development (NID)
Strategy Overview

Presented By: Dr. Priyath B. Wickrama

8th September 2019
74

Construct National City Cluster

Region City Positioning
International Western Trade & Financial Center in Indian Ocean
Colombo
City SL and South Asia

Southern International & Regional logistics hub &

Hambantota
SL National industrial engine
Connecting Cities
International & national cultural &
Central SL Kandy
historical destination

National Northern Jaffna- International processing base for the

Central City SL Kilinochchi South Asian subcontinent

Tourism destination in eastern coast of

Eastern SL Trincomalee SL & future industrial port city in eastern
SL
Recreation tourism destination in the
Galle southwest coast of SL & famous
historical & cultural city
Tourism gateway city to northern &
Dambulla central of SL & national agricultural
Regional Central City trade center
The logistics hub in central and western
Kurunegala
Sri Lanka
A key coastal tourism city along the
Batticaloa
eastern coast of Sri Lanka
75

C-3 Economic Corridor Establishment

C1 Economic Corridor Regional Integrated Networks of Infrastructure with
Jaffna C2 Economic Corridor
C3 Economic Corridor Commercial Facilities Within a Geographical Area
Designed to Stimulate Economic Development.
Kilinochchi

Mannar
Trincomalee

Road Networks Railway Links Regional & Ports & Fisheries

Puttalam
Dambulla International Airports Harbors

Kurunegal
Batticaloa
a
Negombo
Kandy

Government City Cluster Housing Scheme Electricity &

Colombo Nuwara Eliya Pothuvil Facilitations Planning Development Water

Hambantota
Galle
Matara
Value Addition Agriculture & Industrial Parks Tourist
Centers Farming Attractions
76
CMB as Smart Efficient International City
CMB Suburb Road
Network
Reducing Waiting Time by 50%
• Radial & Circular Traffic Flow
• Vertical Parking
• Ariel Passes for Connectors
• Systematic Bus System
• Centralized traffic Control
Proposed Mono-Rail System - Colombo City
Five Lines Connect From
Major Suburban Cities to
Green Line
Stations in Suburbs have
High Rise Parking to
Facilitate “Park & Ride”
Utilizing existing rail & road
link with minimum
investment
Circle Line (Blue Line)
Elevated Circle Line Runs Continuously Around Colombo City Center
Connecting CMB Fort, Port City, Maradana RW (Hub Central Station),
Town Hall, Colpetty
77

Air Sea Cargo HUB

Connecting SL to World with Air Sea Cargo Hub Operations
CMB-Katunayake and Hambantota-Mattala Air-Sea clusters
Integrating both port and aviation sectors to achieve massive benefits
Linking with Industrial Zones and Free Ports

Expansion of BIA and Mattala Airport

BIA 2nd Runaway Mattala Taxi way
BIA Terminal Expansion Mattala Cargo Terminal
BIA Domestic Wing Mattala Domestic Wing

Expansion of Colombo & Hambantota Port

CMB Completing ECT HTA Renegotiating Contract
CMB Constructing WCT HTA Free Trade Zone
CMB Pax. Terminal Expansion HTA Fully Fledge Service Hub

Creating Value Addition to SL Logistics Sector

Online bill payment booking & documentation
Custom System Integration
Facilitating One Stop Shop
78
Improve Tourist Facilities
Expand Airport
Capacity
- Expedite Check-in Process
- Enable Hot Seat Concept
- Upgrading Domestic Airports
10 Million
Tourists by 2030
Improve Transport
Facilities
- Developing Tourist Routes for
Main Tourist Attraction Cities
- Establish National Tourist Centers
- Establish Tourist Cruise Routes
Expand Reception
Facilities
- More Facilities for High-End
Tourism
- Properly Maintained Adventure
Tourism Related Facilities such as
Caravan Parks & Camping Sites
1 Million Employment
by 2030
Improve Supporting
Facilities
- E-booking, Online Transactions,
Tourist Hubs and Main Touring
Circuit in Sri Lanka
Money Exchange Facility Expansion
- Develop Sanitary Facilities in All
Tourist Attractions
- Training & Certification Centers for
Local Employees
79

Colombo City Exploring the Horizons

▸City Beautification
▸Integration with Port City
▸Improving Green
▸Entertainment
▸Recreational Facilities
▸Mobility Improvement
▸Garbage Management
80

Improve Electricity & Water Systems

‘Power for Everyone’ ‘Water for Everyone’

• Building More Water Saving Facilities as per Local
• Increase power Generation Capacity
Conditions
• Uninterrupted Supply of Electricity
• Smart Water Management System
• Re-Start of Suspended Energy Plant Projects
• Improve Water Supply Facilities to Increase Capacity
• Renewable Energy Input Capitalization
and Quality
• Building a Smart Grid System
• Manage & Control Flooding in Kelani, Kalu, Gin,
• Using More environmental Friendly ways to
Nilwala Rivers through Reservoirs Tunneling &
generate Power in the Long Term
Pumping while Distributing to Dry Areas
81

Creating a Smart Nation

Improve Urban Encourage Application of Improve Information

Communications Frontier Communication & Communication in
Facilities Technology Rural & Remote Areas
82

“Let’s Build Our Nation Together”