Business

COLOMBO — Sri Lanka's economic growth slowed slightly to 4.8 per cent last year due to a fall in exports of its main commodity, tea, official figures showed on Tuesday.

The figure marked only a marginal decline on 2014, but will add to concerns after international lenders and ratings agencies warned the country is heading for a debt crisis.

Tea production dropped 2.6 per cent during 2015 to about $545 million, the Department of Census and Statistics indicated in a statement, while exports fell by nearly 7 per cent to 306 million kilogrammes.

The declines were offset by services, which grew 56.6 per cent, and industrial output, which expanded by 26.2 per cent.

Last week, the government announced a series of emergency tax increases to combat a debt crisis that has forced it to seek a bailout from the International Monetary Fund (IMF).

Prime Minister Ranil Wickremesinghe has put on hold for one year plans to lower corporate taxes, and has revived a capital gains tax abolished in 1987. 

The moves are aimed at repairing the economy, battered by mounting debt repayments that led ratings agency Fitch to downgrade Sri Lanka's credit rating last month. 

In a special statement to parliament, Wickremesinghe blamed the previous government for allowing debt to spiral, saying his ministers had uncovered $7 billion in loans unaccounted for in the national budget. 

However, the current administration embarked on a spending spree after taking power in January 2015 to deliver on election promises of higher wages and lower prices, increasing the deficit and sparking concern over the balance of payments. 

Last month, Sri Lanka received pledges of over $2 billion in loans and equity from the Asian Development Bank over three years.

It is in bailout talks with the IMF, although the sum it is seeking has not been disclosed.

Separately, Sri Lanka announced lengthy daily power cuts nationwide as the staterun electricity monopoly struggled to restore supply after the island's worst blackout in 20 years.

The Ceylon Electricity Board said its main Chinese-built coal-fired power plant that supplied more than half the country's electricity was still offline following a massive system breakdown on Sunday.

"We will need a few days more to get this power station online and this means we need to ration electricity across the country on a staggered basis," a board official told AFP.

Several small plants are now supplying power to the whole of the country until the 900-megawatt plant is restarted, but cannot produce enough electricity to go around.

The cuts will occur for seven and a half hours, five and a half hours during the day and two hours at night, the official said, without saying how long the rationing would last.

Authorities are probing the cause of an explosion and fire at a main distribution centre outside the capital Colombo on Sunday that caused the entire electricity grid to switch off automatically.

Power and Energy Minister Ranjith Siyambalapitiya has said authorities have not ruled out sabotage.

The country, which suffers sporadic power cuts, was plunged into darkness for at least seven hours on Sunday before electricity was restored. 

The former government's power minister criticised the Chinese-built plant in 2014, saying it had broken down more than 35 times in the first three years of operation.

Sunday's was the second major power failure in less than a month, following a three-hour disruption in late February, and the worst since May 1996 when the entire country was without electricity for four days.

The latest outage came as an investigation was under way into last month's embarrassing disruption during a visit by New Zealand Prime Minister John Key, who had described Sri Lanka as a shining light in Asia.

In an another development, a Chinese company said Tuesday it will resume construction of a $1.5 billion port city project in Sri Lanka, about a year after it was suspended because of questions about its environmental impact.

CHEC Port City Colombo said it welcomed the Sri Lankan government's decision to allow the project to continue. It said a supplementary environmental impact study has been completed to "understand and fully assess the project's impacts and mitigation measures in developing a comprehensive plan to maximise the benefits".

The city is to be built on reclaimed land off Sri Lanka's west coast and include a golf course, marinas, apartments, hotels and malls.

The project created disquiet in neighbouring India over the possibility China might be allowed outright land ownership. China's influence in Sri Lanka makes India anxious because it considers the Indian Ocean region to be its strategic backyard.

Chinese President Xi Jinping inaugurated the project during a visit in September 2014 during the tenure of former president Mahinda Rajapakse. At the time, Xiwon Colombo's support for a proposed maritime "Silk Road" link between China and Europe.

The leading company in the consortium building the port city is a major Chinese contractor, China Communications Construction Co.

Rajapakse relied heavily on China for infrastructure projects. During his administration, China provided loans for an airport, seaport, highways and power plants, and became the largest investor in Sri Lanka.

The port city project was suspended after Rajapakse lost an election in January 2015. The government of his successor, Maithripala Sirisena, said it wanted to review all projects to ensure they were environmentally viable and corruption-free.

Sirisena's government has also moved to mend relations with the United States and India which were strained during Rajapakse's pro-Beijing administration.

The decision to continue the port project is seen as an effort to reassure China.

AMMAN — Deputising for His Majesty King Abdullah, Prime Minister Abdullah Ensour on Tuesday inaugurated the INTERCEM international conference for the Middle East and North Africa for cement industries.

Ensour highlighted the significance of benefiting from economic opportunities available in the Middle East and enhancing the performance of industrial sectors to face social and industrial challenges.

The cement sector has always been a main driver in the economic development since the establishment of the first cement factory in Jordan in 1951, until the cement industry became a "successful" sector in Jordan, where five companies produce and market cement, the premier said. 

He added that cement companies have acquired a special characteristic in the economy and the development of local communities through their corporate social responsibility initiatives .

The government cooperated with investors, local communities and non-government organisations to develop regulations that protect the environment and preserve it, until reaching environment-friendly cement factories that use the most modern technologies, Ensour continued.

Amman Chamber of Industry (ACI) President Ziad Homsi said the industrial sector contributes to around 25 per cent of the national economy, and the total capitals of the sector's institutions exceed $6.2 billion. 

The industrial sector's exports constitute some 90 per cent of the total national exports, and reach more than 120 countries, Homsi added, noting that the sector is the second highest employer after the public sector.

There are five factories working in the Kingdom's cement sector with a total capital exceeding JD236 million and an annual production of more than 12 million tonnes, the ACI president noted.

INTERCEM Chief Executive Malcolm Shelbourne said the conference is held with the participation of more 250 representatives of international cement companies and investors from the MENA region.

The event provides a good opportunity for industry experts to meet and discuss the latest challenges facing the sector to cope up with new ideas that can contribute to the growth and prosperity of the sector, Shelbourne added.

Amman hosts the conference for the first time since its inception in 1985, after it spanned more than 50 countries across the five continents.

Ensour toured an exhibition, held on the sidelines of the event, which showcased new technologies in the cement industry and relevant logistics services.

AMMAN — Royal Jordanian (RJ) announced on Tuesday in a press statement that it registered a JD21 million net pretax profit in 2015. 

The company ended 2014 with a JD49.5 million net loss before tax.

According to audited financial results, endorsed this week by the board of directors, RJ's net profit after tax stood at JD16 million, while in 2014 the company's net loss amounted to JD39.6 million.

RJ Chairman Suleiman Hafez attributed the growth to the efficiency and loyalty of the staff, and to the company's keenness to implement the 2015-2019 business plan.

"The plan focuses on constant renewal of the fleet and review of the route network, restructuring in all areas, taking measures to increase revenues and reduce operating costs, and working to increase the company’s market share," the press statement said.

It added that RJ will be looking for available growth opportunities, all the while improving the quality of services and maintaining the airline's leading position in the Levant.

Expressing satisfaction with the positive results, Hafez described the performance as a quantum leap, particularly at this point in time when air transportation is strongly affected by regional instability.

"Turbulence in Jordan's neighbouring countries negatively influences travel and tourism both to the Kingdom and the Middle East, " he said in the press statement, stressing that these positive results achieved will help the airline continue the current restructuring process.

The chairman indicated that in the first nine months of 2015, the company registered JD27 million pretax profit.

"Air traffic is seasonal in nature," Hafez explained in the press statement. "Normally airlines, RJ included, achieve better financial results in the second and third quarters, which witness active traffic, particularly during the summer season."

Although the first and last quarters of each year usually see a drop in the number of travellers, the chairman added, the airline achieved JD21 million at the end of 2015.

He credited the airline's policy of cost control for reducing the operating cost last year to JD559 million in 2015, a 22 per cent drop from the JD715 million in 2014.

The chairman said the fall in fuel prices last year partially offset the drop in revenues; that was due to lower ticket prices imposed by fierce competition in the sector. 

"The lower fuel prices also helped offset some of the JD12.3 million losses incurred due to suspending destinations like Sana’a and Aden for security reasons," he elaborated.

Hafez underlined operating efficiency as an important factor for reaching the positive results. RJ shut down a number of stations in light of their weak economic feasibility and, consequently, reduced the number of its aircraft. 

The stations are Delhi, Mumbai, Colombo, Lagos, Accra, Milan, Alexandria and Al Ain.

At the same time, RJ started reaching new destinations, like Tabuk, Najaf, Ankara, Jakarta and Guangzhou, the last launched this month .

Hafez highlighted RJ's increased flights frequency to certain destinations in response to the greater demand for travel, particularly in the peak seasons.

For instance, the flights to Aqaba increased from 11 to 16 weekly, with changes to the flight schedules to meet passengers’ needs.

Flights to eight destinations are still halted due to security reasons; they are Damascus, Aleppo, Mosul, Tripoli, Benghazi, Misrata, Sanaa and Aden. 

"RJ is a prominent Jordanian success story that owes its accomplishments to employees’ capability and expertise, which helped it overcome difficulties throughout its history," the chairman said in the press statement. 

He stressed that RJ is constantly looking for new and promising opportunities to increase revenues, enhance competitiveness and improve air and ground services in a way that enables it to run safe and seamless flights and to achieve its vision of being the airline of choice that connects Jordan and the Levant with the world. 

"The airline staff members are determined and dedicated to continuing to improve the company's overall performance in order to meet its aspired goals," concluded the chairman, who also expressed RJ's pride in being the national carrier of Jordan under the leadership of His Majesty King Abdullah Bin Al Hussein, and one of the country’s economic pillars and major contributors to the nation’s progress at all levels.

AMMAN — Social Security Investment Fund (SSIF) Chairman Suleiman Hafez on Tuesday unveiled a project to develop the Petra Crowne Plaza Hotel owned by the Social Security Corporation (SSC).

The SSIF approved the project in light of the technical, financial and economic studies carried out and the field visits stakeholders paid to the location in coordination with officials at the Petra Development and Tourism Region Authority (PDTRA), Hafez said in an SSIF statement.

The SSIF also had to receive a UNESCO approval on implementing the scheme, because it is located in an area classified as a world heritage.

The implementation of the project include increasing the total number of rooms to 235 and revamping current ones along with their facilities, Hafez said. 

He added that a comprehensive health club will be established in a separate building, to be the first of its kind in Petra.

The upgrading will also include the establishment of a main restaurant that can accommodate 300 people, a gym and a swimming pool, which will contribute to increasing economic and development revenues of the project in terms of creating new jobs to local residents, stimulating tourism and boosting SSC investments, the SSIF chief indicated.

Moreover, the project will include building a conference hall according to international standards that can accommodate 600 people, making it the first conference hall in Petra, which would contribute to attracting and providing a good environment for conference tourism.

Hafez commended PDTRA's efforts and continuous support to facilitate the implementation of the project, which accords with the authority's future plans aimed at improving tourist services in Petra, the statement concluded.

AMMAN — The value of East Amman Industrial Zone’s (EAIZ) exports in the first two months of 2016 reached some JD33 million, compared to JD32 million in the same period of last year.

According to a statistical report issued by the EAIZ Investor Association, the supply, food, and agricultural industries and the livestock amounted for JD20 million, and cosmetics for JD3 million.

EAIZ is the oldest industrial zone in the Kingdom, which witnessed the establishment of the first factory in the early 1960s, and now houses 1,800 small- and medium-sized facilities that provide 26,000 jobs for Jordanians.

CAIRO — Egypt's central bank said on Monday it had devalued the Egyptian pound by 14.3 per cent to 8.95 to the US dollar to face "challenges" emerging from declining foreign currency inflows.

The bank has been battling an acute US dollar shortage over the past few months, with the local currency often trading at a rate of almost 10 pounds to a dollar on the black market.

The devaluation boosted sentiment on the stock market, with Egypt's benchmark EGX30 index rising 6.7 per cent to 7,003.91 in midday trading.

The Central Bank of Egypt said the move to devalue the pound was aimed at adopting a "more flexible foreign exchange policy" that would be driven by demand and supply.

"This will resolve the exchange rate irregularities, resulting in a more regular and continuous flow of foreign currency," it added in a statement.

The move would also help face "challenges from a noticeable decline in foreign currency inflows from tourism, direct investment and remittances from Egyptians living overseas".

Tourism, a cornerstone of the Egyptian economy and a key foreign exchange earner, has been severely hit by years of political turmoil triggered since the fall of longtime leader Hosni Mubarak in 2011.

It was dealt a body blow with the bombing of a Russian passenger airliner over the Sinai Peninsula on October 31 that killed all 224 people on board, mostly Russian tourists.

Revenues from tourism slumped 15 per cent year-on-year to $6.1 billion in 2015.

Egypt's foreign exchange reserves have fallen from more than $36 billion in 2010 to about $16 billion, despite some $20 billion given in aid to Cairo by its powerful Gulf allies.

But the bank said, the reserves would reach $25 billion by the end of 2016 on the back of "foreign investments and an increase in the competitiveness of the Egyptian economy".

Separately, Egypt's tourism minister said in an interview last week that Cairo plans to announce incentives for low-cost airlines such as easyJet and Germany's Air Berlin and Condor to help combat a slide in tourist arrivals.

"We already have a programme for tour operators that have flights, but we never had a programme for airlines alone," Hisham Zaazou told Reuters on the sidelines of the ITB travel fair.

Visitors to Egypt's beaches and ancient sites bring in business which accounts for 11.5 per cent of the country's economy.

The government has been offering tour operators an incentive of $30 per seat on aircraft on which between 60 and 90 per cent of seats have been filled.

Zaazou said it was not yet clear whether the new programme for commercial airlines would pay a certain amount per seat on planes or whether it could offer alternate incentives such as lower handling fees at airports.

"I will announce that [programme] very soon when I meet with everybody and listen to everybody," he said in the interview.

The number of tourists coming to Egypt fell around 6 per cent to 9.3 million in 2015 from a year earlier due to a drop following the plane crash in October, while receipts slid to $6.1 billion from $7.2 billion, he indicated.

That is a far cry from around $12.5 billion in annual receipts Egypt earned before the 2011 uprising which scared away tourists and foreign investors.

Zaazou said arrivals in the first couple of months of 2016 were down 30 to 40 per cent compared with a year earlier and said he did not expect to see a significant improvement before the second half of the year.

"If we can stabilise the [2016] number around where we were last year, around 9 million, I will be happy. We can then enter 2017 on better grounds and make up for lost time," he added.

LONDON — The Organisation of the Petroleum Exporting Countries (OPEC) on Monday predicted global demand for its crude oil will be less than previously thought in 2016 as supply from rivals proves more resilient to low prices, increasing the excess supply on the market this year.

OPEC's monthly report contrasts with that of the International Energy Agency (IEA), which on Friday said producers outside OPEC were cutting production by more than it had expected.

Saudi Arabia in 2014 led a change in OPEC strategy to defend market share instead of cutting output to support prices, hoping to slow growth in rival supplies such as US shale oil. The move accelerated a collapse in prices, which hit a 12-year low of $27.10 in January.

The price drop has started to slow the development of relatively expensive supply sources such as shale and forced companies to delay or cancel billions of dollars worth of projects, putting some future supplies at risk.

In the report, OPEC said it still expected supply from outside the group to fall by 700,000 barrels per day (bpd) this year. But it revised up the absolute level of non-OPEC supply in 2015 and 2016, and said producer efforts to maintain output made its 2016 forecast more uncertain.

"There has been a reduction in production costs, mainly in the US, as well as increased hedging, with producers choosing to produce with losses rather than stopping production," OPEC indicated. "This has caused the non-OPEC supply forecast in 2016 to become more uncertain."

As a result, OPEC now expects the global demand for its crude to average 31.52 million bpd in 2016, down 90,000bpd from last month's forecast.

The group pumped 32.28 million bpd in February, the report said citing secondary sources, down about 175,000bpd from January, mainly due to outages in Iraq and Nigeria.

Saudi Arabia told OPEC it kept output in February steady at 10.22 million bpd, after the top oil exporter struck a preliminary deal with fellow OPEC members Venezuela and Qatar, plus non-OPEC Russia, to freeze output.

Iran, which wants to regain market share after the lifting of Western sanctions on Tehran rather than freeze output, told OPEC it raised supply to 3.39 million bpd, about 250,000bpd more than the secondary sources' estimate.

The report indicates supply will exceed demand by about 760,000bpd in 2016 if OPEC keeps pumping at February's rate, up from 720,000bpd implied in the previous report.

The IEA said the oil price may have finally bottomed out after an unprecedented drop over the past 18 months, noting oil's "remarkable recovery" over recent weeks.

Recent sharp gains in the oil price, taking it to around $40 per barrel now from $28.50 in mid-January, do not necessarily mean that the worst is over, the IEA added in its monthly oil market report.

"Even so, there are signs that prices might have bottomed out," it continued.

Oil had seen a dramatic fall since trading above $110 in mid-2014 to lows seen in January of this year, before staging a modest recovery to current levels.

CMC Markets analyst Jasper Lawler credited the IEA's outlook with sparking the oil price rise by calling for "a possible bottom".

The report was "bullish", added DNB Bank.

"Undoubtedly, one of the reasons for the price strength is the monthly report on global supply/demand published by the IEA this morning," commented oil brokers PVM.

But there is a long way to go before supply and demand find a real balance, probably in 2017, the IEA said in its report.

"For prices there may be light at the end of what has been a long, dark tunnel, but we cannot be precisely sure when in 2017 the oil market will achieve the much-desired balance," it added.

Among factors supporting higher prices are talks among producers launched by Saudi Arabia, Venezuela, Qatar and Russia to freeze production which the IEA said amount to "a first stab at coordinated action that is intended to stabilise prices" with the presumed aim of pushing oil up to $50 a barrel.

The outcome of negotiations is, however, uncertain and a big supply overhang in the oil market means it would have little impact in the months ahead.

"Later this month some oil producers are expected to meet to discuss a possible output freeze. We cannot know what this might be and in any event it is rather unlikely that an agreement will affect the supply/demand balance substantially in the first half of 2016," the report said.

'Market forces working their magic' 

Among other factors keeping a lid on oil supply, Iran's return to the market following the lifting of Western sanctions in January has been "less dramatic than the Iranians said it would be", the IEA added.

"Provisionally, it appears that Iran's return will be gradual," continued the 29-nation agency that provides analysis on global energy markets.

Iran's Oil Minister Bijan Zangeneh said earlier this month that Iran was pumping 400,000bpd more than a year earlier, which is short of the 500,000-barrel increase Iran announced in January.

The IEA mentioned supply disruptions in Iraq, Nigeria and the United Arab Emirates, steady demand for oil and recent weakness of the dollar as other reasons favouring expectations of a price upturn.

Also, there are signs that high-cost producers, including of US shale oil, are lowering output as they can't cover their costs because of oil price weakness.

Consequently, the IEA has lowered its output target for the US, Brazil and Colombia.

"There are clear signs that market forces, ahead of any production restraint initiative, are working their magic and higher cost producers are cutting output," it said.

Global demand for oil is expected to grow by 1.2 million bpd this year, unchanged from the IEA's previous estimate.

But the agency said that risks are on the downside, with demand in the US expected to be flat and in China below that seen in recent years.

Most oil demand growth this year will come from India, smaller Asian countries and the Middle East, the IEA indicated.

While many market analysts agreed with the IEA's oil price assessment, Goldman Sachs this week gave a dissenting view.

"We maintain our near-term view of a trendless oil market with substantial volatility" between $40 and $20 per barrel, Goldman said.

AMMAN — There are several fields of cooperation between Jordan and the United Arab Emirates (UAE), especially at the economic sector which witnessed the signing of bilateral agreements and memoranda of understanding, Industry, Trade and Supply Minister Maha Ali said on Monday.

At a meeting with Maj. Gen. Abdul Razaq Obeidli, chairman of the Emirati association for intellectual property, and an accompanying delegation, Ali highlighted the solid relations between Jordan and the UAE which became a model for Arab-Arab cooperation at all levels.

She also stressed the importance of cooperation in the intellectual property sector, especially in the fields the ministry is tasked with, such as trademarks and patents, in addition to training and exchanging expertise.

Obeidli, who is also assistant general commander of Dubai police for quality and excellence, expressed keenness to develop cooperation with the Kingdom in the intellectual property sector through benefiting from both countries' expertise.

AMMAN — Apartment sales increased since the beginning of 2016 in terms of number of transactions and areas, the Department of Land and Survey (DLS) said on Sunday. Sale transactions in the Kingdom in the first two months of this year increased by 9.3 per cent to 5,279 compared to 4,831 in the same period of 2014, according to the DLS.

Data also showed that sales of apartments less than 120 square metres increased by 9 per cent to 1,885 transactions by the end of February compared to 1,729 ones in the same period of 2014.

Also by the end of February, sales of 120 — 150 square metre apartments increased by 10 per cent, reaching 2,036 transactions compared to 1,856 ones in the same period of 2014. Sale transactions for apartments of more than 150 square metres totalled to 1,358 in February, compared to 1,246 at the end of the same month in 2014.

A total of 728,000 square metres of apartments were sold in January and February, registering an 18 per cent increase compared to 618,000 square metres sold in the same period in 2014.