Online edition of Daily News

The year 2004 had been an eventful year as far as the country's business sector is concerned amid political turbulence, natural disasters and various new initiatives by the Government and private sector for the development of the country.

The new year dawns with the challenge of recovering from the massive damage caused by Tsunami waves on December 26 which destroyed thousands of lives and infrastructure of nearly two thirds of the country's coastal area.

The year 2004 has also seen several achievements in the tea sector

This unfortunate event had a direct impact on key sectors including tourism, fisheries and livelihoods of millions of people living along the coastal belt of Sri Lanka. The disaster will have an impact on the growth prospects for 2005.

Another daunting challenge we have ahead of us is the phasing out of the textile quota system thanks to which Sri Lanka has benefited immensely to become one of the leading apparel exporters of the world.

Having a look back at the important happenings in the year concluded may help us to see where the country stands in order to lay the foundation to effectively face these challenges.

The main positive factor is that the Government was able to keep war at bay which had a positive effect of the country's overall economic growth.

The Government’s efforts to extend IT to rural areas has been commendable.

According the Central Bank the growth in the first three quarters was consistent with the expected economic performance for that period and the growth rate forecast for year 2004 of 5.5 percent.

The three major sectors namely agriculture, services and industry showed mixed performance last year. The performance of the third quarter of the year (7.5 percent growth) according to the Central Bank statistics gives an indication as to how the sector has performed through out the year.

The growth of agriculture sector which was affected by natural disasters such as floods and droughts during the last couple of years contracted in the third quarter and it would have a negative impact on the overall economy.

The 5.4 growth of the industry sector in 3Q also shows positive signs of overall economic growth of the country last year.

The Government's first budget promised numerous benefits specially for the rural sector. The proposal to set up an SME bank is one such proposal, which has been lauded by small and medium scale industrialists and almost all the chambers of commerce.

The pro-poor budget was mainly targeting the development of the rural economy. However, the effect of merciless Tsunami will be an initial setback as most of the rural areas were also affected by the disaster.

This unfortunate event took place at a time when the tourism sector was performing very well recording 505,000 arrivals during the year. Undoubtedly the success for the local tourism sector was the peaceful environment in Sri Lanka and the aggressive marketing campaign launched by the Sri Lanka Tourist Board.

The confidence of both the local and foreign investors also increased last year with international hotel chains such as Amana Resorts, Banyan Tree, Universal Resorts Maldives and Sheraton group deciding to invest in Sri Lanka.

The local hotels also were engaged in extensive refurbishment programs and the star class rooms increased to over 14,000.

The year 2004 has also seen several achievements of the tea sector. The low grown sector which contributes almost 60 percent of the national tea crop achieved an all time record crop of 180 million kilograms.

The total export growth increased by 16 percent from January to October in 2004 compared to 2003 according to the Export Development Board. Export of Agricultural products including tea, rubber and coconut and other export crops, industrial products, diamonds, gems and jewellery showed an average increase.

In addition the manufacturing sector which include food, beverage, tobacco, wood and wooden products, rubber and rubber products, chemicals and plastic products, electrical and mechanical products, ceramic and porcelain products and toys, games and sports requisites, petroleum products too have shown an increase.

An important landmark in the IT sector was Microsoft Corporation setting up its subsidiary `Microsoft Sri Lanka' in May.

In keeping with the Government's efforts to extend IT to rural areas Microsoft Lanka is fully geared to bring Microsoft technology and ICT solutions to grassroots level and to contribute to the success of the e-Sri Lanka initiative.

Another important happening was Lanka Indian Oil Company (LIOC) Initial Public Offering (IPO, which was oversubscribed 11.62 times with 37,673 applications recording one of the most successful IPOs in Sri Lanka.

We saw several new developments as far as corporate giants are concerned. John Keells Hotels were restructured in to one Holding Company "Keells Hotels Ltd. JKH Chairman Vivendra Lintotawela retired as the Chairman and Sunsantha Rathnayake was appointed as the new Chairman JKH on December 16.

Year 2004 has been the most successful year for the Ceylinco Group in terms of profitability and new investments and joint ventures.

The aviation sector maintained an upward trend last year and the sector is poised to gain more this year.

One of the key factors for this positive trend was the open skies policy agreement Sri Lanka government signed with India and other countries. In addition the airport expansion program paving the way for 10 areo bridges also augured well for the industry.