Annual Report 2010 - Ministry of Finance and Planning

1 | DEVELOPMENT PERSPECTIVEScost. However, the sector was assistedby the increase in demand for semiprecious stones, improvement inconstruction and electricity gas andwater sectors.Ceramics and porcelain exports duringthe year was Rs. 3886 million.Apparel exports to the EU and USAwas Rs. 109.45 billion and Rs. 92.46billion in 2010 respectively at end ofthe 3rd quarter. Earnings from textileand garments exports increased by121.9 percent in 2010 compared to2009.Coir product exports in 2010 was Rs.5,839 million.Service SectorOverall service sector marked 8.0percent growth in 2010. The Sectorwas boosted by promising highergrowth of its major sub sectors suchas, Hotels and Restaurants by 39.8percent, Transport and Communicationby 11.9 percent, Banking, Insurance andReal Estate by 7.5percent, Wholesaleand Retail Trade by 7.5 percent andConstruction sector by 9.3 percent.Banks, finance and insurance sectorexhibited strong performance in termsof earnings during the year, mainly dueto accelerated economic activities inthe country.Telecommunication sector, totaltelephone connections increasedby 17.6 percent in this year. Thesector comprises of four fixed accessoperators, five mobile operators, sixfacility based data communicationoperators, 16 non-facilitated datacommunication operators and 33external gateway operators. Furtherwith government reducing the callcharges it is expected that the revenuewill grow due to the high elasticity ofthe product coupled with the growingper capita income.Healthcare Sector spending in thiscountry is expected to increase overthe coming years. At present there areabout 700 hospitals and about 70,000beds available in the country.Healthcare sector recorded a 148percent increase during the year 2010.The sales of pharmaceutical items inSri Lanka has increased by about Rs.5328 million in 2010. The chemicaland pharmaceutical sector grew by 55percent in 2010 compared to 2009. Thebudget 2011 presented in November2010, provides incentives such asexceptions from both import duty andVAT and this could lead to reduction ofcost of pharmaceutical products.Construction & Engineering sectorperformed relatively well during 2010.This was mainly backed by increasingincome generated through post wardevelopments and increasing demandfor land and property in the Colombocity limits. The growth was furtherfacilitated by reduction in incometax for construction companies andreduction in custom duties for rawmaterials and capital equipment.Construction and Engineering sectorearnings increased by 5 percent in2010.Hotel and Leisure sector which is theprimary beneficiary of the completeend of the three-decade long warexhibited tremendous improvementin earnings by 54 percent in 2010and due to increased tourist arrivalsand the improvement of occupancyrate Hotels and Restaurants sectorrecorded 39.8 percent growth in 2010as against the growth rate of 13.3percent for the last year. Tourists’arrival increased to 654,476 in 2010from 447,890 in 2009 registeringa growth of 46.1 percent for thereference year.With the tourist arrival figureexceeding 600,000 marked in 2010,the blue-chip companies in the leisuresector are spending approximately Rs.33.3 billion for additional hotel androoms, targeting 2.5 million touristarrivals by 2016.The trading sector earnings grew byan impressive 272 percent in 2010compared to 2009. With the latest taxand tariff reforms implemented in June2010 there seem to be a favorableprospect for the trading sector inthe future. Motor sector recorded animpressive 300 percent increase in2010. The recent 50 percent importduty reduction on motor vehicles hashelped this growth.126