Sri Lanka hopes for post conflict growth

Sri Lanka is hoping the end of the decades long war will attract much needed foreign investment boosting the ailing economy.

"For a very long time, every time someone spoke about Sri Lanka's economy, they responded saying if not for this war things would be better. Now the war is over and we have a tremendous scope for economic development," Sri Lank’s Central bank Governer Ajith Nivard Cabraal said.

Hoping the post conflict scenario to introduce a fresh influx of investors to the island, the central bank plans to revise upwards the island's economic forecast for 2009 to between four to five percent, from 2.5 percent to 3.0 percent announced earlier this year.

Sri Lanka's economy posted 6.0 percent growth in 2008, down from 6.8 percent in 2007.

Speaking at a nationally televised ceremony in Colombo, Sri Lankan President, Mahinda Rajapakse, also shared the same view and said: "Reducing the budget deficit, investment promotion and economic development is possible after defeating terrorism".

Rajapakse said the military had unified the country at great human cost, and the entire country owned a debt to young people who sacrificed their lives and limbs and also their families.

The country has eliminated the 'border villages’, Rajapakse said in a reference to areas bordering Tamil Tiger controlled territory.

"Our challenge is to remove difficult villages now," he said.

"Like we defeated 30 years of war in 2.5 years we have to have a development drive".

"We will be not like any other country," President Rajapaksa said. "We, who were blessed by Asia when we defeated terrorism, must now be the pride of Asia." Rajapakse added.

Sri Lanka’s Board of Investments expects foreign direct investments to quadruple to $4 billion by 2012, led by investments in ports, tourism, telecommunication and textiles.

With the end of the war, Sri Lanka Tourism Promotion Bureau revised its projections and now aims to increase tourist arrivals by at least 20 percent each year, using a $20 million worldwide advertising campaign to promote the island’s attractions.

“The main task we have is that of image building,” Dileep Mudadeniya, managing director of the Sri Lanka Tourism Promotion Bureau said in an interview in the capital Colombo.

“We have an image that has been challenged by war and travel advisories.”

However, Jerome Auvity, general manager at Hilton Colombo casted doubts at the Sri Lankan officials optimistic view and said: “There is still this dark cloud, this debate and issue regarding the displaced people,”

“Give it another six months to see whether confidence returns to Sri Lanka’s leisure market.”

Meanwhile, British insurance underwriters have removed a war-risk surcharge on Sri Lanka's airspace after the island ended nearly four decades of ethnic conflict.

The London-based Joint Cargo Committee also lowered its risk status from " severe" to "high," said Lasinee Serasinhe, the director general of the Insurance Board of Sri Lanka.

"We were informed of the decision. However, the war risk premium for (sea) ports remain unchanged" and at the highest risk level, she said.