Annual Report 2010 - Ministry of Finance and Planning

Ministry of Finance and Planning Sri Lanka > Annual Report 2010All Share Price Index (ASPI) ofColombo Stock Exchange (CSE) roseby 96 percent to 6,635.9 points in 2010from 3,385.5 in 2009 whilst the marketprices had appreciated by 96 percent.Subsequently, Milanka Price Index(MPI) of CSE rose by 83.4 percentfrom 3,849.3 points in 2009 to 7,061points in 2010.The CSE’s equity turnover, whichwas at Rs.142.4 billion in 2009 roseto Rs.570.3 billion in 2010, increasingmarket’s daily average turnover toRs.2.39 billion in 2010 compared toRs.593.5 million in 2009, resultingin an increase in the total number oftransactions to 3.35 million, from 1.26million in 2009. Colombo Bourse hadraised to total of Rs.4.3 billion in 2010against Rs.1.2 billion in 2009.Market capitalization had doubledfrom Rs.1 trillion to Rs.2.2 trillion withina year adding a total of Rs.26.3 billionforeign cash inflows in 2010 comparedto Rs.789 million foreign cash inflowin 2009. On the other hand, CSE’sdividend yield had fallen from 3percent in 2009 to 1.2 percent in 2010.However, foreign investor contributionto total turnover had decreased to18.8 percent in 2010 from 30.5 percentin 2009 whilst the number of listedcompanies had increased to 241 in 2010from 231 in the previous year 2009.Proposed ‘demutualization of CSE’is expected to make the CSE moredynamic and efficient and will increasethe confidence of the foreign investorsas well as the local investors in the SriLankan capital market.The Securities and ExchangeCommission (SEC) endeavors toincrease the Colombo Bourse marketcapitalisation by 45 percent during theyear 2011. They foresee approx 75 IPO’sduring the year 2011.Private Sector DevelopmentThe government expects the privatesector to play a transformative role indoubling per capita GDP by 2016. Thiswould require private sector to invest25 - 30 percent of GDP annually.The incentives for private sectorinvestments will shift from overdependenceon tax and dutyconcessions, to genuine businessopportunities that will emerge andevolve in an environment of peace,availability of quality infrastructure,stable financial environment and theoptimisation of the use of skilledworkforce.Using this conducive environment theincremental investment, to meet thegrowth targets would have to originatefrom the private sector, domestic andforeign.The conducive business environmentcoupled with political stability andpositive economic outlook, thatprevailed in the country has raised thebusiness sentiments and the corporateearnings of Sri Lankan firms, despitethe slow global economic recovery.The percentage share of the threemajor sectors, namely the Agriculture,Industry and Services to the total GDPconstituted 11.9 percent, 28.8 percentand 59.3 percent respectively in 2010.Agriculture SectorThe growth rate of the Tea sectoris registered as 13.1 percent incomparison to 2009. The favorableweather conditions during the periodfrom January to September in 2010had supported this growth. Exportvalue of the Tea sector in 2010 was Rs.81,840 million.The value added of Rubberproduction grew by 12.7 percent in2010, compared to 2009. The majorreason for this growth was due to theincrease in average price of Rubber(at Colombo auction) which rose toRs.397.70 per Kg in 2010 from 201.66per Kg in 2009 registering a 97.2percent price increase.The agriculture sector growth wasfurther fuelled by increase in paddyand fish production with the openingof the North and East to the rest ofthe economy. The growth rate of MinorExport Crops was 37.6 percent, Paddy17.5 percent, Fishing 12.2 percentcompared to 2009.Export value of the ProcessedFood and Spice Sector in 2010 wasRs.5,960 million and Rs.10,541 millionrespectively.Other Food crops (highland crops,vegetables and Fruits) have recordeda growth of 4.4 percent in 2010 andearnings grew by 12 percent YoY inthe 4th quarter of 2010. (The growthwas due to the improved earnings ofCeylon Tobacco, Nestle Lanka andCeylon Tea Services).Poultry sector also sustained theirgrowth rate benefitting from theincreased chicken consumption in thecountry.Industry SectorIndustry sector grew by 8.4 percentin 2010. Manufacturing which is thelargest sub sector of the industrysector grew by 7.3 percent in 2010.Industry sector performance wasaffected by the rising production125