Strong rupee weakens hearts

The Central Bank has applied the breaks to a further appreciation of the rupee against the dollar but dealers are concerned the currency is under pressure to appreciate in the medium term, which could make life difficult for exporters.

Dealers said the rupee was under pressure to appreciate further last morning with exporters converting their dollar holdings.

The dollar traded at Rs. 112.74/78 during the day after opening the day’s trading at Rs. 112.77/79, dealers said.

"Some exporters were converting their dollars and this created some pressure for the rupee to strengthen further against the dollar, which would have happened if not for intervention by state-owned banks," a dealer told The Island Financial Review.

Last week, the rupee reached its strongest position against the dollar in a year. "The week began with the dollar trading at 113.05 but it fell against the rupee, trading at Rs. 112.75/84, the strongest since the war ended. State-owned banks intervened to prevent a further appreciation of around 30 cents," a dealer said.

State-owned banks intervene in the market to carry out the policy objectives of not preventing the rupee from gaining too much against the greenback.

"If the rupee appreciates too fast exporters would suffer because their real incomes would fall. And given the production costs in the country our export sector could be severely undermined by a strong rupee," another dealer said.

"Most of our competitors in the region are depreciating their currencies and this makes it difficult for exports to maintain their competitiveness. Moving forward, we are concerned about the appreciation of the rupee and the impact it would have on export sector," another dealer said.

Dealers said the Central Bank was attempting to maintain a stable exchange rate, but an increase in foreign inflows would make its task difficult.

"What we are seeing right now is foreign investments into government securities and the stock exchange. We are seeing very little in terms of long term foreign direct investments at the moment, but once they pick up, and remittances and export earnings improve, the rupee would be under real pressure to appreciate," a dealer said.

The plus side of a stronger rupee is that it would be less expensive for the government to finance its servicing of foreign borrowings. Also, imports would be cheaper, which means inflation would not be under pressure from rising import bills.

"The rupee is not appreciating, or under pressure to do so, because our productivity as a nation is improving. The rupee is appreciating, for the most part, because of short term foreign investments that can easily be taken out. This should be a matter of concern," a dealer said.

An economist argued that the rupee was allowed to appreciate at the expense of the export sector so that the government could pay its debts. "This makes sense, but for how long can this continue. We should remember that the export sector is necessary if the country is to increase its wealth," an economist said.

However, officials argue the rupee’s strength was determined by the market. "We are intervening to prevent the rupee from appreciating further as this would hurt exporters," an official said.

Sri Lanka’s trade deficit expanded by 122.2 percent during the first four months of this year with imports picking up faster than growth in export earnings, with apparels declining 11.6 percent, latest data from the Central Bank showed.

Export earning grew 10.7 percent to US$ 2,307 million for the period from January to April 2010 but the largest export earner, apparels, saw a 11.6 percent drop in earnings to US$ 930.7 million from US$ 1,053.2 million last year.

Import expenditure grew much faster at 42.9 percent during this period to US$ 4, 191.9 million from US$ 2,933.1 a year ago. The petroleum bill grew by 112.9 percent to US$ 1,034.7 million from only US$ 434.7 million last year.

The trade deficit grew by 122.2 percent to US$ 1,884.9 million from US$ 848.1 million.

Worker remittances, which grew 14.5 percent to US$ 1,198.8 million from US$ 1,046.9 million last year, was not enough to cover the trade deficit as it did for most of 2009.

Exporters were disappointed the mini-budget for 2010 failed to provide any relief to their struggling businesses, but several top officials said the budget gave an indication as to what the government planned to do.

Ministry of Finance and Planning Director General for Fiscal Policy S. R. Attygalle, told a post- budget seminar at the Ceylon Chamber of Commerce that imported raw materials would be given tax concessions while imported goods that can be produced locally would be heavily taxed.

Treasury Secretary Dr. P. B. Jayasundera said the government was planning to discourage exports in their primary forms. He said creating value added exports was the only way for Sri Lanka to establish 10 industries earning more than US$ 1 billion a year.

Hotels ready for winter season Industry targeting 600,000 tourists this year:

Hoteliers expect tremendous growth in tourist arrivals during this winter season. They expect high earnings for this season. Speaking to the Daily News Business Colombo City Hotelier’s Association (CCHA) Vice President Amal Goonetilleke said the tourism industry has shown a 50 percent growth and is one of the fastest growing industries in the country.

Sri Lanka’s game parks popular among visitors. ANCL file photo

“Sri Lanka could expect that the winter season will be rewarding,” she said.

The European market is selling the winter bookings in August, but with the present trend in the bookings there will be a tremendous improvement comparatively to last year, she said.

As the business is picking up hoteliers are also upgrading their products and services to compete with the other countries. The initiative taken by the Government by introducing a minimum room rate for the hoteliers impacted positively. Earlier the rates were around US$ 40 to 50 including taxes.

At present the average room rates in five star hotel is around US$ 85 and by January next year it will be increased to over US$ 100. This will provide a better chance for the hotel industry to compete with the other countries in the region.

The tourism industry is performing extremely lucrative. The number of tourist arrivals during the first six months recorded 278,652 which is an increase of 48.4 percent compared to the same period last year, Tourism Development Authority (TDA) Director General S. Kalaiselvam told the Daily News Business.

He said during the month of June there was an increase of 47.9 percent tourist arrivals compared to 30 percent in the corresponding period last year. The increased tourist arrivals were mainly from India and the United Kingdom.

“We are targeting 600,000 visitors this year and are confident that the industry will achieve the target without difficulty.

“Already there are many inquiries for the winter season and this indicates that the tourism industry is poised for a rapid growth in the years to come,” Kalaiselvam said. The hoteliers are confident in re-investing their revenues to refurbish the hotels and upgrade them to cater to the expanded demand.

There will be no rooms added to the hotel industry during this year since planning and construction need at least one and half years.

However, there will be additional rooms by 2012.

Arugambay Travels and Tours opens office

M.A. Phakurdeen - Addalaichenai group corre.

Foreign Affairs Director of Germany Dr. Norbert Schurgers opened the Arugambay Travels and Tours Office presenting a school kit to a child in Arugambay. Pictures by M.A. Phakurdeen

Arugambay Travels MD A.M. Jaufer

Arugambay Travels and Tours opened their office in Arugambay recently. The office hopes to help tourists who visit Arugambay and Ulle to provide them with the first-hand information to spend their holidays in a most useful manner.

The Office housed at Arugambay – Ulle Main Street was office opened by Foreign Affiars Director Germany Dr Norbert Schurgers in association with Dentists without Limits Foundation – a German Nonprofit Organization. Stiffer/ Founder and President Dr. Claus Macher and the Managing Director – Surgeon – Translator Tuul Sodnompil, Nurnberg (Germany) – Sri Lanka Friendship Association Amana Haniffa and the delegates from Germany. Dr. Norbert said that he was happy to open this office which has been a long felt need of the foreigners who had hitherto been deprived of the facility of getting any sort of information to tourism in Arugambay. Tours Ltd. Managing Director A.M. Jaufer said that his intention to open this Office was to help the tourists and guide them in a proper way in order to enjoy the natural beauties of Arugambay, Ulle, Kumana and suburbs which is famous for safe surfing, sun bath and watching birds and animals in Lahugala.

He regretted that hitherto the tourists’ who make frequent visits here had to undergo hardships as they are not given proper guidance. They were also not in a position to stay in the restaurants as they wish and according to their financial stability.

He assured that he would take all possible action to overcome these shortcomings.

Sri Lanka's Arugam Bay surfing paradise

June 25, 2010 Arugam Bay, SRI LANKA (LBO) - Top professional surfers from around the world were at Sri Lanka's Arugam Bay, a small village in the eastern coast of the island which was limited to an adventurous few until now.

"It is a fun wave," says Nat Young from USA, who shone at the Association of Surfing Professionals (ASP) SriLankan Airlines Pro championship this week."The waves are so close to the shore."
World Class
Arugam Bay has a right breaking wave, which runs almost parallel to the shore.
"A fun wave means a surfer can try out almost any manoeuvre," says Dane Anderson, ASP Australasia's tour manager.
"Everybody is very happy with the waves. These are world class.
"Yesterday we stopped the tournament early and someone said 'Why are we stopping, the waves are good?’
"But the organisers said waves can get much better, and they did. Then everyone knew what we were talking about."
Australia's Julian Wilson won the tournament beating Young in the finals. Wilson says he will be back to defend his title next year.

Wade Sharp, who was one of the judges at the championship, says the waves at Arugam Bay can be bested by only a very few places in the world.
"These waves are probably better than in the USA," says Sharp who is from South Africa.

"But probably not as good as in Indonesia."He says right breaking waves breaking so close to the shore allow surfers to run along to the shore and try more waves instead of swimming laboriously against the wave to get to the starting point.

"The waves are very consistent here," adds Wade. "So you can be sure to get the waves when you come."
Permanent Fixture
SriLankan Airlines, the island's national carrier, who was the main sponsor of the championship, wants to make the Arugam Bay event a permanent fixture on the ASP circuit.
"We first negotiated with them in 2004, but the war broke out and we shifted to the Maldives, because of the security situation," says SriLankan Airlines chief Manoj Gunewardena.
"But now people can come here freely.
"Our intention is to make this a high profile global event and over the next three years also encourage other corporate sponsors to come in."
Lanka Sportreizen, a Sri Lankan inbound tour operator specializing in water and adventure sports who provided logistics support for the championship, believes the event has helped raise the profile of surfing in the island.
"We would like to see more tourists coming here and both tourists and locals learning to surf," says Lanka Sportreizen chief Tilak Weerasinghe, himself a windsurfer who went on to form his own sport travel firm and training school.
ASP's Jordan says the surfing body brought down instructors who not only taught the local surfers better technique, but also taught them how to teach others. About two dozen local surfers either took part or worked with ASP for the event.
"They are in the process of forming their own association," says Jordan. "If you want to encourage surfing in this country, you need to build up skills and also know how to teach young people."
Tourist Industry
Sri Lanka's tourism promotion office says facilities, which were somewhat rustic, will be improved next year.
"We need to overcome infrastructure challenges," say Dileep Mudadeniya who heads Sri Lanka's tourism promotion bureau.
"Next year we will have a better access road and other facilities."
Until now it was the local community which built the infrastructure to support the mainly Western amateur surfers who knew about Arugam Bay.
Surfers from around the world made the somewhat arduous, eight to ten hour journey from Sri Lanka's capital Colombo braving travel advisories through the long years of its 30-year war.
A large number of guest houses and even surfboard repair shops have sprung up during the period. Mudadeniya estimates that about 250 to 300 rooms are in the area.
One such hotel is Galaxy Lounge, a close-to-nature set of cabanas with a rustic charm nad a family atmosphere run by Sriyanjali Gunasena, a British-born Anglo-Sri Lankan who is married to an Australian.
She says tourism traffic had probably doubled to the village over the last year. Arugam Bay's 'season' is from April to October when the winds are just right, which is 'off season' in the rest of the island.
"Until last year only Westerners came here," she muses.
"But now many people from Colombo and also families with children come from abroad. That shows how the world view of this place has changed."
Surfing Paradise
Lanka Sportreizen's Weerasinghe says Arugam Bay is not the only place where there are good waves to surf.
"There are several places nearby, though probably not as good as Arugam Bay," he says.
"But elsewhere in the island there are good waves in Mirissa (south coast), in Hikkaduwa (south west) and Kaluthara (west coast).
Near Arugam Bay in eastern Sri Lanka, at places including Pottuvil Point and Crocodile Point surfers says it is possible to ride the waves.
"A few people tried out the waves over there yesterday," says Jordan, pointing to white breakers at the far end of Arugam Bay.
"They said the waves were good.”

Jordan says he saw likely-looking waves while scanning the shore off the Yala National Park to the south of Arugam Bay through Google Earth.
"I will need to see it close up to say definitely but it looks good. Even in Colombo's Galle Face there are good breakers," he says.
"Why hasn't someone tried them out?"
Surfers say one of Sri Lanka's attractions at the moment is that the waves are not crowded.
"Waves like these will attract more than 300 surfers if it was in the USA," says Sharp.
"When the popularity of this place grows, other places will have to be found."

FAM tour for German travel agents

Participants of the FAM tour

An FAM tour comprising fourteen German travel agents took place May 30 to June 5, to give them a view of the products they are selling at the counter and to increase sales to Sri Lanka. The places covered were the Cultural Triangle, Trincomalee, Kandy, Nuwara-Eliya, Bentota and Negombo. The SL Tourist Promotion Bureau conducted workshops on sales arguments and product variety.

Tobias Bandara of the SLTPB said: "The increase of 74.6 percent of german arrivals from January to May 2010 compared with the same period in 2009 shows Sri Lanka's potential as a top destination.

By training counter sales staff on location with FAM trips, we ensure that their positive personal experience will lead to more interested holidaymakers to Sri Lanka".

SriLankan brings surfing to Arugam Bay

SriLankan Airlines is bringing one of the worlds most glamorous and highly rated surfing events to Sri Lanka, part of the airlines multi-faceted strategy to position the island as one of the worlds most sought after travel destinations.

The SriLankan Airlines Pro 2010 tournament will draw some of the top stars in the surfing world to Arugam Bay from June 18 to 24, among the 128 competitors from the United States, Australia, Spain, Portugal, New Zealand, the United Kingdom, Germany and other countries.

SriLankan Airlines Pro 2010 is expected to showcase the picturesque southeast resort of Arugam Bay as one of the most beautiful beaches in the world, positioning it as a destination for all types of beach lovers and not just for surfers.

It will also generate massive publicity around the world for Sri Lanka, already experiencing a continuous boom in tourism over the last 12 months.

Profiling 'Up Market' tourism clientele

Vipula Wanigasekera

Promoting Sri Lanka as a destination and venue among up-scale tourists and visitors has always been in tourism plans, programs and agendas.

Sri Lanka has a few themed products positioned for high spenders

The subject comes up in most tourism deliberations which emerges as a priority that both authorities and Industry have to pursue vigorously.

This was briefly put across by experts as 'value against numbers' with the notion that Sri Lanka should make more efforts to go after high end market segments and niches in order to enhance the tourism receipts that will flow down to peripherals and stakeholders particularly the informal sectors.

At a time tourism industry has shown a tremendous growth and arrivals have been increasing after peace dawned on the country, it is desirable to focus the marketing spot light on high end visitors to gain optimum revenue although package tourism helped us all these years and kept the institutions above the water.

Meanwhile a few smart moves in the past by several industry members made it possible for Sri Lanka to have a few themed products that were positioned for high spenders.

Some luxury boutique hotels were charging as high as US$ 400 a night even before the conflict ended and it is time we took a serious note on their approach towards their success.

It is hoped therefore, until such time the star class hotels are built in tourism development areas, the Boutique, Bungalow, Villa concepts will generate this extra revenue with effective communication by the respective industry members with a lot of promotional efforts. Who are these up market clients and segments as against mass tourism and package holidaymakers?.

Obviously the MICE visitor is a high spender and this is simply the reason for Singapore and Malaysia to promote MICE before they launched their countries as brands for leisure.

Apart from meetings, Conferences and Exhibitions, the incentive traveller needs more attention by the industry as most incentive groups, knowingly or otherwise, are also treated as packaged holidays down the line.

Those who are given a tour abroad as a reward, bonus or special training fall into this category and they have high expectations.

This area calls for attention in shifting the promotional efforts to Incentive travel sector.

Medical tourism is a rapidly-growing practise

Similarly, segmenting the products and promoting them will result in creating interest among various interest groups who will pay the extra dollar.

Agritourism has different definitions and refers to farm stays but extended to wide variety of activities involving the visitor within the areas from picking fruits and vegetables, riding bullock carts and tasting fresh curd.

Agritourism if developed, is one alternative for improving the level of income and economic viability of small farms and rural communities.

Culinary tourism or food tourism is defined as experiencing the food of the country, region or area, and is now carried out by many destinations as a vital component of tourism experience.

The basic factor of dining out habit of tourists is the opportunity taken to develop this segment which Sri Lankan could exploit.

In cultural tourism, Sri Lanka is in a leading position but unfortunately the visits are confined to a round tour and there is little knowledge to ascertain who is interested and in what?

The inclination to learn more about kingdoms over colonial times or vice versa, if known, can enable the industry to tailor the itineraries for which the visitor will not hesitate to pay the price.

Cultural tourism entails beyond visits to locations of historic sites to learning of lifestyles and traditions of people in various regions.

Ecotourism or ecological tourism appeals to socially conscious individuals although some argue that the extra dollar is still not paid by the traveller. It could be debated in a way that pay day of Eco tourism is on its way.

In other words it is futuristic and benefits are associated with offering tourists insight into the impact of human beings on the environment, and to foster appreciation of our natural habitats.

Geotourism aims to preserve the geographical character of places, the concept of which was introduced publicly in 2002.

Geotourism provides a local incentive to protect what tourists are coming to see, and incorporates all characteristics that contribute to sense of place, such as historic structures, living and traditional culture and landscapes.

A few countries such as Thailand thrives on medical tourism which is a term coined by travel agencies and the mass media to describe the rapidly-growing practise of travelling across international borders to obtain health care.

Sri Lanka also gets quite a number of visitors for medical treatment and to expand this area, the hospital and insurance companies must get together to encourage linkages with counter parts to send their patients across to Sri Lanka.

There are issues to be resolved in accreditation and other measures of quality and treatment.

In religious tourism, Ramayana tours are picking up but the country is yet to succeed in realization of her true potential in promoting Buddhism and Buddhist culture considering that Sri Lanka is primarily a Buddhist country.

One aspect that writer has repeatedly pointed out is the need to present the core teachings of Buddhism to visitors from which they could benefit spiritually.

Wildlife tourism is still a part of package tourism and this requires to be extended to specially targeted wildlife enthusiasts.

A few industry experts offer many facilities from camping sites and even erecting luxury tents with super service for high end clients from where they could experience Sri Lanka's wildlife including the whale and dolphin watching.

Countries like Africa, Indonesia, India and South America exploit this opportunity which have experienced a dramatic and rapid growth in recent years which is also closely aligned to eco and sustainable tourism.

Emotional appeals in communication methods and modes, offering an 'experience' as against a holidays and delivering what is promised are the pillars behind the success of shifting from number to value tourism.

With the infrastructure developing and other issues such as beggars, stray dogs, garbage being solved one by one, the overall approach is now expected to move towards high end tourism which the Sri Lankan industry is quite capable of achieving after being resilient to vicissitudes for three decades.