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1. Economic Capsule
December 2019
276th
Issue
Research & Development Unit
Economic Capsule
January 2021
288th Issue

2. C O N T E N T S
BANKING & FINANCE
 ComBank launches Sri Lanka’s first ‘WhatsApp Banking’ facility
 ComBank introduces ‘e-Slips’ mobile app for paperless cash and cheque deposits
ECONOMY & BUSINESS
 Sri Lanka reopens for tourism
 Stock market soars to all-time high
 SL moves up 34 positions in Global Human Development Report
 Southeast Asia’s largest USD 250mn tyre plant opens in Sri Lanka
 Sri Lanka’s Manufacturing PMI - Dec 2020
 Sri Lanka’s Services PMI – Dec 2020
 Korea agrees to extend USD 500mn support for SL
 Sri Lanka China RMB swap may come in weeks, India in the works: Central Bank
 News Snippets
INTERNATIONAL
 Joe Biden's Economic plan
 African Free Trade Bloc opens for business, but challenges remain
 Germany’s economy contracted by 5% in 2020 as Coronavirus
lockdowns hit growth
 China’s V-shape recovery is ‘complete,’ but analysts warn of a
slowdown ahead

3. Banking & Finance

4. ComBank launches Sri Lanka’s first
‘WhatsApp Banking’ facility
Research & Development Unit
Demonstrating its innovative use of new-age communications,
CBC has pioneered a ground-breaking product on the world’s most
widely-used messaging platform WhatsApp to become the first
Sri Lankan bank to offer Banking Services on the platform.
Possibly the easiest and fastest form of contactless banking yet for
smart phone users, Commercial Bank’s WhatsApp Banking offers
services to both accountholders and non-customers, and
importantly, can facilitate opening of accounts for those seeking to
become customers.
Customers of Commercial Bank can use this facility simply by typing ‘Hi’ on WhatsApp and sending the greeting to
the designated number, 0713 353 353.
A set of simple instructions such as entering numerical commands to receive the information they are looking for
will follow, and the required information will be shared with the customer after he or she enters a unique One-
Time-Password (OTP) sent by the Bank via SMS.
A simple onetime registration process would be in place to verify the customer’s identity prior to sharing any
sensitive data, ensuring sensitive data is secured and protected.

5. ComBank introduces ‘e-Slips’ mobile
app for paperless cash and cheque
deposits
Research & Development Unit
Cash and cheques can now be deposited paper-free into current or savings accounts at
Commercial Bank of Ceylon, following the launch of an innovative new app that
generates ‘e-Slips.’
This is the first app to be launched in Sri Lanka for cheque deposits, and significantly
enhances customer convenience in the new normal environment, the Bank said.
The Commercial Bank e-Slip app enables customers to create electronic deposits on
their smart phones in respect of cash and cheque deposits.
This app can be downloaded free of charge from the App Store or Google Play Store.
The app is operable in English, Sinhala and Tamil and is compatible with both Android
and iOS powered smartphones and devices. The Bank said anyone with the app can
now support its green initiative by eliminating the paper and envelopes used in the
standard deposit process.

6. Economy &
Business

7. Sri Lanka reopens for tourism
Research & Development Unit
World travel
According to ‘The Economist’ magazine’s – ‘The World in 2021’ publication, three big changes will
define travel in 2021.
 Firstly, “as countries open, most countries will impose two-week quarantines on incoming and returning
travellers. As a result trips will be fewer and longer”.
 Secondly, “domestic tourism is expected to boom in 2021”.
 Thirdly, “as trips get fewer and longer, those who can work from home will find an attractive alternative in
working from somewhere-a-lot-nicer-than-home”. Accordingly, “travellers will get used to longer trips, more
flexibility and combining work with leisure”
Tourism in Sri Lanka
The Government of Sri Lanka has expressed confidence in attracting 1.5 million tourists this year
(2021) with the opening of the airports on the 21st of January, 2021 in compliance with COVID-19
health and safety guidelines.
Last year (2020) tourist arrivals were estimated at 508,000 with most of them coming prior to the closure of the
airport in mid-March when the country’s borders were closed to contain the spread of COVID-19 pandemic. In
2019, Sri Lanka attracted 1.9 million tourists, down from a record 2.3 million in 2018.

8. Sri Lanka reopens for tourism (cont.)
Research & Development Unit
Safety protocols published by Sri Lanka Tourism
Source: https://www.srilanka.travel/helloagain/
These measures ensure the
creation of a bio-bubble for the
international visitors, assuring
the safety of the local
communities, employees of the
industry and the visitors to the
industry.
The respective hotels and
accommodation providers along
with the travel agents and tour
operators will be entrusted to
ensure that visitors do not break
the bubble of safety.

9. Sri Lanka reopens for tourism (cont.)
Research & Development Unit
The Level 1 hotels
The Level 1 hotels cannot accept bookings from locals and are not allowed to hold any events or banquet functions
for locals.
Visit https://srilanka.travel/helloagain/ to view the list of Safe & Secure Certified Level 1 Hotels published by the
Sri Lanka Tourism Development Authority.
As Sri Lanka opens its borders for international visitors, it will be mandatory for them to have a pre-booking at a
‘Safe and Secure’ Certified Level 1 hotel.
These hotels from across the country are comprised of one to five star hotels, tourist hotels, guest houses, boutique
hotels, boutique villas, bungalows and camping sites. This ensures the visiting tourist has a wider option.
Sri Lanka Tourism Development Authority has identified following tourist attraction sites exclusive for visiting
tourists to patronize under controlled arrangements as at 14th January 2021.
These include; Temple of the Sacred Tooth Relic, Sinharaja Forest Reserve, Yala National Park, Udawalawe National
Park Safari, Eth Athurusevana, Kaudulla National Park, Wilpaththu National Park, Mirissa Whale Watching,
Pinnawala Open Zoo, Pinnawala Elephant Orphanage, Ridiyagama Safari Park, Sigiriya Fortress, Anuradhapura
(excluding Sri Maha Bodhi), Polonnaruwa, Royal Botanical Gardens - Peradeniya, Laksala-Kandy & Pinnawala
Tourist attraction sites
Fernando expects the Lankan diaspora to be the first to seize the opportunity to visit Sri Lanka following the opening
of the airports, followed by Europeans and others as restrictions are eased in their home countries in tandem with
the reduction of severity of the COVID spread.

10. Stock market soars to all-time high
Research & Development Unit
The Colombo stock market ended 2020 with a
10.5% gain, the highest annual increase since
2014.
The Colombo Stock Exchange also said the 2020
gain was the only the 12th occasion the index
had seen a double-digit percentage growth in
CSE’s 35-year history.
It added that 2020 market turnover rose to the
highest since 2011 and market capitalisation
grew by a trillion rupees since 12 May 2020,
when the CSE resumed operations after the
first wave of COVID-19 shutdown.
The CSE ended 2020 with a market
capitalisation of Rs. 2.96 tn, up 3.8% from a
year earlier.
CSE Price Indices as of 20th January 2021
ASPI 7,884.45
S&P SL 20 3,096.35

11. SL moves up 34 positions in Global
Human Development Report
Research & Development Unit
Sri Lanka has moved up 34 positions in the latest Global Human
Development Report but remains vulnerable to risks from climate change in
its effort to improve human development, a statement from the United
Nations Development Programme (UNDP) said.
In the Human Development Index (HDI), Sri Lanka is positioned at 72 out of
189 countries and territories, with ‘High Human Development’ with an HDI
value of 0.782.
Yet there is no time for complacency. Because Sri Lanka is one of the most
vulnerable countries to climate change ranking 6th on the Climate Risk
Index; the country is at crossroads with a choice to exercise – of choosing a
development trajectory that progresses human development while easing
pressure on the planet.
The Global Human Development
Report (HDR) was launched by the
UNDP in Sri Lanka bringing together a
wide range of high-level participation
from the Government, Public and
Private sector, Development partners
and Civil Society Organisations (CSOs).

12. Research & Development Unit
Southeast Asia’s largest USD 250mn tyre
plant opens in Sri Lanka
Source: Daily FT
Southeast Asia's largest tyre manufacturing facility
Ferentino Tyre Ltd. was opened on 14th January
2021.
With an investment of USD 250mn, the project's
Phase 1 has been completed while Phase 2 is slated
to be completed and ready for commissioning in
March 2021.
Ferentino Tyre Corporation Ltd. is a venture
facilitated by the Board of Investment of Sri Lanka
(BOI) and features state-of-the-art European
technology optimised to deliver a premium output.

13. Sri Lanka’s Manufacturing PMI - Dec 2020
Research & Development Unit
Benefitting from the gradual normalising of economic
activities in the country, the Manufacturing PMI continued to
increase in December 2020, on a month-on-month basis,
recording an index value of 61.2.
The significant increase in Production and New Orders sub-indices, particularly in the manufacture of food
& beverages sector, has mainly contributed to the improvement in the overall index.
Meanwhile, Employment sub index also increased during the month of December 2020. Some
respondents in the manufacture of food & beverages and textiles & wearing apparel sectors highlighted
that they could better utilize employees amidst the improved factory operations with increased demand.
The Stock of Purchases sub-index increased significantly in line with the expansion in New Orders and
Production, as well as with the intended accumulation of stocks anticipating supply chain disruptions in
coming months, particularly due to upcoming Chinese new year holidays

14. Sri Lanka’s Services PMI – Dec 2020
Research & Development Unit
Reaching 55.6, Services PMI returned to the growth territory in
December 2020, after recording index values less than the threshold
level of 50.0 for two consecutive months
The Index
PMI is calculated as a ‘Diffusion Index’, where it takes values between 0 and 100.
PMI = 50 - sector remained neutral on month-on-month basis
PMI > 50 - sector is generally expanding on month-on-month basis
PMI < 50 - sector is generally declining on month-on-month basis

15. Korea agrees to extend USD 500mn
support for SL
Research & Development Unit
The Government said the Republic of Korea had agreed to supply
Korean Won not exceeding USD 500 mn for implementing projects
recognised within the period of 2020- 2022.
Therefore, the Cabinet of Ministers has approved the proposal
tabled by Prime Minister as the Minister of Finance for entering into
a new activity framework agreement between the two parties.
The Government said the Activity Framework Agreement between
the Republic of Korea and Sri Lanka enabled financing for
implementing recognised projects from the Economic Development
Cooperation Fund of Korean Import-Export Bank for implementing
identified projects.

16. Sri Lanka China RMB swap may come in
weeks, India in the works: Central Bank
Research & Development Unit
A 10bn Yuan swap (about USD 1.5bn)
with the People’s Bank of China could be
concluded as early as two weeks while a
USD 1bn swap with the Reserve Bank of
India is also awaiting approvals, Central
Bank officials said.
Negotiations with the People’s Bank of
China have come of the final stage and a
definite decision could be expected as
soon as two weeks, CBSL Deputy
Governor Dhammika Nanayakkara said.
Source: Daily FT

17. Research & Development Unit
January-November FDI rises
The foreign direct investments (FDI) into Sri Lanka increased to USD 548 mn during January to
November, from USD 351 mn end-June in 2020, but will not be enough to meet the revised
USD 750 mn target set for 2020.
Sri Lanka was estimated to have received USD 793 mn in FDI in 2019. Sri Lanka wasn’t hopeful
of anything more than USD 300 mn in direct investments into job creating businesses during
2020 as the prospects turned gloomy with the pandemic, but the quick rebound since June
prompted authorities to set a USD 750 mn FDI target.
Sri Lanka is expecting at least USD 3 bn worth of foreign investments in 2021 to Colombo Port
City, Hambantota port and other industrial zones being planned throughout the country.
Foreign interest back on
govt. securities
Foreign holdings of Sri Lanka
government securities have increased
(as of 18th Jan) during 2021, the official
data showed.
Foreigners bought Rs.550mn worth of
government securities in the week
ended January 13, 2021, logging an 8%
increase from a week earlier.
Foreigners sold Rs.1.7bn or USD 9mn
worth of government securities
following the sovereign rate
downgrade by S&P on December 11,
2020, according to ICRA Lanka
Ratings. With the most recent
additions, foreigners now hold
Rs.7, 424.09mn worth of treasury bills
and bonds issued by the government
of Sri Lanka.
News Snippets
Govt. to amend three Acts relating to money laundering and terrorism
financing
The Cabinet nod has been granted to amend the Financial Transactions Reporting Act No. 06 of
2006, Prevention of Money Laundering Act No. 05 of 2006, and Convention on the Suppression of
Terrorist Financing Act No. 25 of 2005.
The Government Information Department noted that these proposed amendments are based on
findings of the Legal Review Committee and the Asia Pacific Group on Money Laundering of the
Financial Action Task Force (FATF) during the mutual evaluations conducted in 2010, and 2014/2015.

18. International

19. Joe Biden's Economic plan
Research & Development Unit
JOE BIDEN'S ECONOMIC POLICY: TOP LINE AGENDA
Provide health insurance coverage for 97% of Americans in 10 years.
Raise an additional USD 4tn in tax revenue by increasing top tax rate to 39.6%, taxing
capital gains at ordinary rates and raising the corporate tax rate to 28%.
Forgive student loan debt and make college free for those making up to USD 125,000.
Raise minimum wage to USD 15 an hour and repeal "right to work" laws.
Expand "Buy American" policies through government purchasing, while using
subsidies, federal matching, and incentives to make American products more
competitive.
Invest USD 1.3tn in infrastructure over 10 years.
Spend USD 2tn on clean energy during first term as president.
Source: Investopedia
Joseph Robinette Biden Jr. was sworn in 20th January 2021 as the 46th president of the United States

20. African FreeTrade Bloc opens for business, but
challenges remain
Research & Development Unit
African countries began officially trading under a new
continent-wide free trade area on 1st January 2021, after
months of delays caused by the global coronavirus
pandemic.
But experts view the New Year’s Day launch as largely
symbolic with full implementation of the deal expected to
take years.
The African Continental Free Trade Area (AfCFTA) aims to
bring together 1.3 bn people in a USD 3.4 tn economic
bloc that will be the largest free trade area since the
establishment of the World Trade Organization.
It will boost trade among African neighbours while
allowing the continent to develop its own value chains.
The World Bank estimates it could lift tens of millions out
of poverty by 2035. Source: Reuters

21. Germany’s economy contracted by 5% in 2020 as
Coronavirus lockdowns hit growth
Source: Statistics Department -Germany
Research & Development Unit
Germany’s economy contracted by 5% in
2020, according to full-year GDP (gross
domestic product) data released.
The preliminary figures, which were
slightly better than the 5.1% forecast,
come after a year of economic
turbulence for Germany, and the rest of
the world, as the coronavirus pandemic
prompted disruption to businesses and
large swathes of the economy.

22. Research & Development Unit
Source: CNBC
China’sV-shape recovery is ‘complete,’ but
analysts warn of a slowdown ahead
China’s economy ended 2020 on a strong
note after official data showed activity
picked up further in the fourth quarter, but
some economists warn of a longer term
slowdown in the country’s growth
momentum.
China reported that its economy grew 2.3%
in 2020 as the world struggled to contain
the coronavirus pandemic.
Gross domestic product rose by 6.5% in the fourth quarter from a year ago, official data from the
National Bureau of Statistics showed. Those numbers beat analysts’ expectations.

23. The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC
The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the information,
it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in consequence
of using such information for whatever purpose.
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