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Due to escalating costs SL’s real estate business seen as unviable

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By Hiran H.Senewiratne

The Sri Lankan real estate business at this juncture is not viable due to the new tax system and high inflation. These factors have compelled these businesses to shift into other sectors, such as the hotel and leisure industry, chairperson, Natwal Parikh Group Rohan Parikh said.

” Due to the rupee depreciation, the cost of construction is very high. Consequently, import duty has become unaffordable. On top of that the 15 per cent Value Added Tax for the end price added a high cost to the price, which is one of the major factors for housing prices to escalate , Parikh told The Island Financial Review.

Parikh added: “We have no plans to go ahead with our businesses right now. One apartment has already been completed, which is known as ICONIC, situated at Rajagiriya along the Parliament road. Another was nearing completion, known as ICONIC Galaxy Skye at Buthgamuwa, Rajagiriya.

“At present we have two prime properties at Rajagiriya and have no plans to go ahead with the apartment business. The cost of mortgage is very high for the customer to purchase apartment units due to high interest rates and 15 per cent VAT on the end price.

“With the escalation of the cost of production, high inflation and unpredictable future inflationary pressure, we cannot reconcile our business with our theme ‘Affordable Luxury’. We are compelled to look at other avenues and business opportunities in Sri Lanka. We would preferably be in the hotel and leisure sector, where they have plans to purchase hotel properties which are right now non-operational or defunct.

“The cost of construction of one square foot is very high in Sri Lanka due to the considerable import duty. Imported items, such as tiles, fittings and other materials cost a lot.

“Owing to these factors, affordability of housing has become difficult. The current economic crisis will continue for some time. This really hinders the growth of the economy. Because housing wealth is a very important component for economic development. Further, BOI is also not considering any tax incentives for foreign investment.

“Amid all these odds and tribulations in the country, Colombo has been really impacted by the wiping out of the bottom half of the real estate market.”

Natwal Parikh set up in 1947 in Mumbai, is into construction of school educational assets, hospitals and other businesses confined to Mumbai and Pune areas and is also into the logistics trading and investment business in Singapore. The Sri Lanka entity/partner is known as ICONIC Development (Pvt) Limited.



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Business

ADB approves $100 million loan to boost skills development and jobs for youth in Sri Lanka

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The Asian Development Bank (ADB) has approved a $100 million results-based loan to help Sri Lanka transform its technical and vocational education and training (TVET) system, equip more young people with industry-relevant skills, and strengthen the country’s competitiveness and inclusive growth.

The Skills Development System Transformation Program will support the Government of Sri Lanka’s efforts in improving the quality and relevance of skills training, strengthening links between training providers and industries, and expanding employment opportunities for youth. The program will increase women’s employment opportunities in nontraditional jobs in fields including automotive technology, engineering, information and communications technology, construction, and renewable energy.

“A skilled workforce is essential to Sri Lanka’s long-term economic transformation and competitiveness,” said ADB Country Director for Sri Lanka Shannon Cowlin. “This program will help create stronger pathways from education to employment by making training more responsive to industry needs, expanding opportunities for young people and women, and ensuring that graduates have the skills required by a modern and evolving economy.”

Though Sri Lanka’s economy is recovering, it faces skills shortages in priority sectors, high youth unemployment, and low female labor force participation. Many employers report difficulty finding workers with the skills needed in a changing economy.

Aligned with the Government of Sri Lanka’s Technical and Vocational Education and Training Sector Strategic Framework 2026–2035, the nationwide program will be implemented from 2027 to 2031 and is expected to directly benefit more than 100,000 young people through improved access to quality, employment-oriented training.

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USD 40.84m pipeline to secure aviation fuel supplies to BIA

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By Ifham Nizam

The government has cleared a USD 40.84 million and Rs. 8,548.75 million contract to build a dedicated aviation fuel pipeline from Muthurajawela to Bandaranaike International Airport (BIA), alongside a massive new fuel storage facility with a capacity of 92,000 cubic metres.

Energy Minister Anura Karunatilaka said the project represented a major investment in strengthening the infrastructure underpinning Sri Lanka’s aviation fuel supply and ensuring more reliable fuel availability at the country’s main international airport.

‘This project will provide the infrastructure required to strengthen the reliability and continuity of aviation fuel supplies to Bandaranaike International Airport, Karunatilaka said.

The contract has been awarded to China Petroleum Pipeline Engineering Company Limited, following an international competitive procurement process in which three bids were received.

The project will see a new aviation fuel storage tank complex constructed at Muthurajawela, together with the associated infrastructure required for handling and transferring aviation fuel.

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CSE activity up, turnover weak at Rs. 1.4 billion

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By Hiran H Senewiratne 

Trading activity on the Colombo Stock Exchange (CSE) gathered pace yesterday as global fuel prices began to show signs of easing, according to market analysts.In this context, both indices moved upwards. All Share Price Index up by 67.97 points while S and P SL20 up by 8.30 points.

Turnover stood at Rs 1.4 billion with seven crossings. Those crossings were reported in Sampath Bank 1.7 million shares crossed to the tune of Rs 238 million and its share price traded at Rs 140, Access Engineering two million shares crossed to the tune of Rs 159 million and its share price traded at Rs 79.50, LOLC one million shares crossed to the tune of Rs 129 million and its share price traded at Rs 129, HNB 100,000 shares crossed to the tune of Rs 38.4 million and its share price traded at Rs 384, JKH 1.9 million shares crossed to the tune of Rs 35 million and its share price traded at Rs 18.60, Hayleys 100,000 shares crossed to the tune of Rs 22.50 million and its share price traded at Rs 225 and Richard Pieris 847,000 shares crossed to the tune of Rs 22 million and its share price traded at Rs 25.50.

In the retail market top seven companies that have mainly contributed to the turnover were Sampath Bank Rs 114 million (813,000 shares traded), JKH Rs 100 million (5.3 million shares traded) LB Finance Rs 49 million (325,000 shares traded), HNB Finance Rs 30 million (27 million shares traded), HNB Rs 27 million (70000 shares traded), NTB Rs 25 million (82000 shares traded ) and Lanka IOC Rs 21 million (666,000 shares traded). During the day 65 million shares volumes changed hands in 10433 transactions.

The Banking and manufacturing sector counters performed well.  In the banking sector Sampath Bank let the market while manufacturing sector especially JKH also significantly performed well. With the fuel revision Land IOC also a significant stock at the floor.

Meanwhile, First Capital Treasuries said that Ramesh Schaffter resigned as a Non-Independent Non-Executive Director with effect from October 1, to facilitate the restructuring of the company’s board.

Yesterday the Central Bank announced the US Dollar rate as against rupee. The rupee was quoted flat at Rs 330.65/80 to the US dollar in the spot market , while bond yields dropped, dealers said.

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