Sri Lanka shines in the Land of the Rising Sun!

An important exercise to promote Japanese investments in Sri Lanka was successfully undertaken last week under in Tokyo a joint initiative by the New World Securities Ltd. (NWS), its Japanese partner A2Media and the Sri Lanka Embassy.

The latest initiative was based on the encouraging response to the inaugural conference also organised by the same institutions in December last year.

Around 100 representatives from Japanese companies, fund managers, investment banks, trading organisations and others attended the half-day conference, which was followed by a reception.

Senior Minister for International Monetary Cooperation Dr. Sarath Amunugama and Central Bank Governor Nivard Cabraal also addressed the Japanese participants.

Held at the Akihabara Convention Hall, the Sri Lanka Investment Promotion Conference saw presentations by Sri Lanka’s Ambassador in Japan Admiral Wasantha Karannagoda, Securities and Exchange Commission Director Capital Market Development and Research Vajira Wijegunawardena, NWS Chairman and Japanese investor/shareholder Takashi Igarashi, Expolanka Holdings Group CEO Hanif Yusoof, Pan Asia Bank Chairman Nimal Perera, Citrus Leisure Director Dilith Jayaweera, Ceybank Asset Management Ltd., Fund Manager Indika Rajakaruna, Vallibel One Group Greener Water Ltd., and Royal Ceramics Director Tharana Thoradeniya, MAC Holdings Chairman Andre Fernando. Participants were provided with simultaneous translations in Japanese.

Additionally , A2Media Corporation Senior Managing Director Dai Tohma and Gentosha Total Asset Consulting Inc Director Masayoshi Yamashita also made presentations on Sri Lanka, recent macro economic trends, performance of the Colombo stock market, and tourism sector in Japanese.

Apart from those who made presentations, the Sri Lanka delegation for the Tokyo Conference also included Ceybank Asset Management Ltd. Chairman K.L. Hewage, SEC Assistant Director External Relations and Market Development Tushara Jayaratne, NWS Director and CEO Viraj Malawana, and Director Institutional and Foreign Trades Jaliya Wijeratne.

The NWS forum in Japan was also timed when IMF-World Bank Annual Meetings were on in Tokyo, whilst another significant feature is that it also formed part of the overall year round program of the Sri Lanka Embassy in Japan to celebrate 60 years of diplomatic ties between Japan and Sri Lanka in 2012.

Ambassador Karannagoda in his speech traced the origins of Sri Lanka-Japan relations several centuries before the formal establishment in 1952. He said bilateral relations politically, culturally and economically have continued to strengthen between Sri Lanka and Japan.

Ambassador Karannagoda pinpointed President J.R. Jayawardena’s speech in defence of Japan in San Francisco at the UN in 1951, Japan’s immediate grant of $ 80 million for Sri Lanka to rebuild itself after devastation from the 2004 December tsunami as well as Sri Lanka’s quick response to Japan’s call of help when tsunami struck in Sendai in March last year as key highlights of the bilateral ties.

The Ambassador said Japan is one of the largest donors to Sri Lanka with official assistance increasing to $ 525 million in 2012 from $ 350 million in the previous year. “This reflects the growing and strong confidence Japan has in Sri Lanka,” Karannagoda added.

He also emphasised that Japan was a key trading partner, a major investor and an important source market for Sri Lanka tourism.

He told Japanese participants at the forum that following the end of the war in May 2009, Sri Lanka has seen rapid progress with the economy growing by 8% for two consecutive years whilst estimate for 2012 was around 7%, which remains one of the highest growth rates in the world.

It was emphasised that 30 years of conflict robbed Sri Lanka of effective growth as well as foreign companies to maximise the opportunities of investments and partnership. In that context, Ambassador Karannagoda said Japanese companies can benefit from a host of opportunities under President Mahinda Rajapaksa Government’s strategy of developing Sri Lanka as a hub for maritime, aviation, commerce, energy and knowledge.

He said in support to promoting Japanese tourists to Sri Lanka, JICA has provided a soft loan for two years for destination marketing. Following the dawn of peace, Japanese tourist arrivals in Sri Lanka have risen by 44% in 2011 to 22,400 whilst forecast for 2012 is around 30,000.

The decision by the Japan’s Ministry of Land, Infrastructure, Transport and Tourism to enlist Kajima Corporation to do a study on business prospects in Sri Lanka’s property development and real estate sector was further boost. He said the study will be completed by March 2013 and will be widely promoted among Japanese public and private sector institutions.

The Ambassador also said another Ministry is also in the process of undertaking an additional study on investment and trade opportunities. It was pointed out fresh initiatives will help substantially increase the base of Japanese investors and companies operating for many years in Sri Lanka. “Post-war, already several new Japanese companies are currently either engaged in new ventures or carrying out feasibility studies in Sri Lanka,” Karannagoda added.

NWS Chairman Igarashi gave a personal account of his experience and success so far in investing in Sri Lanka and working with Sri Lankan public and private sector institutions. He also emphasised that Sri Lanka is very attractive base for Japanese companies interested in tapping opportunities in rest of South Asia as well.

SEC’s Wijegunawardane made a presentation focusing on the Sri Lanka’s capital market. “The benchmark All Share Index had enjoyed a growth rate of over 24% on CAGR basis from January 2000 to October 2012 whilst within the past three years it was over 70% per annum,” he told Japanese participants. Among other highlights shared by him was the Rupee depreciation against the US Dollar of 2.2% per annum on a CAGR basis, and against the Yen by 6.5%, average 364-day Treasury Bill yield of around 11.34% over the past 10 years and 8.4% per annum in the last two years.

“Return of peace has driven growth and development,” Wijegunawardane stressed in his presentation, which also captured GDP growth, per capita income and inflation data and launch of large-scale infrastructure projects.

The SEC Director also  spoke on the role of the SEC, key capital market development initiatives, provided an overview on the capital market, the Colombo Stock Exchange and benefits for and facilitation  of investors.

Ceybank’s Rajakaruna in his presentation invited Japanese participants to tap the growth opportunities in Sri Lankan capital market via investing in Ceybank funds.  With Bank of Ceylon, Sri Lanka Insurance, Unit Trust of India and Carson Cumberbatch as shareholders Ceybank Asset Management is the biggest licensed mutual fund manager in the country holding one third of the industry assets or $ 165.7 million. Ceybank’s presentation also highlighted the performance of the equity market, the record net foreign inflows, a snapshot of government debt market and performance of Ceybank funds as well as incentives for foreign investors.

Expolanka Holdings’ Yusoof in his presentation told Japanese investors that post-war Sri Lanka will be next most important shipping and maritime hub in South Asia. “We are going to be what is Singapore or Jabel Ali is today,” he said highlighting some of the Government’s initiatives in the maritime, aviation and commerce hub policy as well as Expolanka’s own regional expansion. He said Sri Lanka was strategically located and well poised to be the hub for the Indian sub continent to serve booming market of India and rest in South Asia as well as the Middle East.

He said Expolanka is a Sri Lankan company with sub continent exposure and is a value added logistics provider for international fashion retailers with a strong reach within the Asian region. “We growth focussed with profitability and ROE targets and are leveraged to play on Asian consumers through logistics and freight,” said Yusoof, adding that Expolanka has further expanded with a new office in Singapore, and operations in Hong Kong, China and the US whilst plans to enter Myanmar in December.

Pan Asia Bank Chief Nimal Perera spoke on the company’s progress and highlighted some of the services beneficial for Japanese firms exploring prospects for investments and/or setting up operations in Sri Lanka.

Citrus Leisure Director Jayaweera showcased some of the ongoing new resorts that are being built or planned in Waskaduwa and Kalpitiya. In his capacity as a shareholder Director, Jayaweera also promoted ongoing and planned new real estate and property development projects of the Colombo Land and Development for prospective Japanese investors present at the forum.

Vallibel One’s subsidiary Greener Water’s upcoming mega resort in Negombo was promoted as well by Director Thoradeniya for interested equity investors present at the Tokyo forum.

Chairman Fernando showcased some of the existing and planned activities and projects of MAC Holdings Ltd., for Japanese firms keen to tap booming prospects in Sri Lanka’s logistics, tourism, and renewable energy sectors.

New World Securities Ltd., in which Japanese investor Takashi Igarashi has around 28% stake, is a trading member of the Colombo Stock Exchange whilst the Group also has interests in financial services sector. NWS has also been highly successful in attracting over Rs. 6 billion worth of Japanese investments into Government securities so far this year. Japan is considered as an emerging investor source for Sri Lankan debt market and through aggressive marketing as well as given attractive returns, NWS is confident of more Japanese investments  flowing in to both debt and equities market of Sri Lanka.

The investment promotion conference last year was a success as well in creating the right awareness among Japanese companies and establishing links with Sri Lankan counterparts. The two conferences have been successful in encouraging firms from the two countries to forge new alliances or start negotiations.