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All eyes on Sri Lanka

From the ashes of a bloody civil war, modern Sri Lanka was born. Today it is one of the most promising business destinations in Asia, with unprecedented growth and plenty of opportunity. Rita Lobo looks at the long road from war to riches


Colombo is a very special city indeed. Part burgeoning business centre, part colonial capital, the city is dotted with skyscrapers and ancient Hindu temples. It is a city still struggling to find its place in the world after a long and bloody civil war scarred the face of Sri Lanka – but it is a hopeful place. Since the peace agreement half a decade ago, the local government has invested in modernising the country’s infrastructure and attracting foreign business.

The island’s capital has been a vital trading port for over two millennia. Because of its strategic Indian Ocean location and its natural geography, Colombo has always been a bustling hub of activity. The fortress that gave rise to the settlement that is Colombo today was built on a plateau between three mountain peaks known as the Trikuta Mountains, according to the ancient Hindu epic Ramayana and the Mahabharata. The city, then known as Lankapura, was at the centre of a vicious battle between Indian kings in the twelfth century, before being claimed by Rama. These battles are depicted in the murals of the Khmer temple of Angkor Wat in Cambodia.

Where to eat

Ministry of Crab
Old Dutch Hospital, Colombo
+94 11 2 342722
Located in The Old Dutch Hospital – one of the oldest buildings in the Colombo Ford – Ministy of Crab is a celebration of all things crustacean. Founders Mahela Jayawardene and Kumar Sangakarra are highly decorated international cricketers, and they’ve seamlessly moved from trying not to shell catches, to shelling crabs. With an emphasis on ‘export quality’ monsters – no one-clawed shufflers around leg off here – the menu offers ‘crabzillas’ of up to 2kg . Known for its role in the spice trade, Sri Lanka’s black peppercorns are put to great work in The Ministry’s pepper crab – highly recommended, unless of course you’re not out, in which case you should just order room service.

231 Galle Road, Colombo 4
+94 114 520 130
For dinner in style head to HVN at Casa Colombo, a boutique hotel that’s an oasis of quiet just off busy Galle Road. HVN is found in the grand hall – replete with carved ceilings – of a beautifully restored 200-year-old Moorish mansion. In the past it was owned by one of the wealthiest Indian trading families in Sri Lanka. Boasting a menu heavily influenced by the spices and cooking traditions of the island, HVN offers a blend of local flavours and contemporary south east Asian fusions. Seafood, well-spiced meats and Sri Lankan influenced international dishes make up the majority of the options, but if you fancy just one more thing, the soft godamba roti rolls are our pick of the desserts.

The Lagoon
77 Galle Road, Colombo 3
This is for those after something a little more formal: that means no shorts, chaps, no matter how hot the evening, although emergency sarongs are available. With views of a man-made lagoon from which its name derives, The Lagoon at the Cinnamon Grand Hotel Colombo offers some of the finest seafood available on the island. The restaurant uses a market-style concept: fresh fish, caught that day, is laid out for you to chose from, before picking a sauce, cooking method and culinary style. Given Sri Lanka’s multicultural background it should come as no surprise that Thai, Chinese and Indian culinary influences can be found here. The lobster and the tamarind fish both came highly recommended to us.

Portuguese colonisers arrived in Sri Lanka in 1505, drawn to the island for its strategic location and convenient natural harbour. They concluded the first of a series of treaties made between Sri Lankan kings and European rulers looking for a foothold in the West Indies. These deals, though centuries old, have defined modern Sri Lanka in many ways: it is a country welcoming of foreigners, and eager to trade and do business. Though the trade agreements between Sri Lanka and the Portuguese quickly soured, King Rajasinghe II of the central Kingdom of Kandy was able to broker deals with the Dutch. In exchange for protection against Portuguese Goans, the Dutch were granted access to the island’s main trading goods, such as cinnamon and teak.

Sri Lanka became a vital trading hub for the Dutch East India Company, until 1796, when the British moved in. The colonial architecture from this period is a defining aesthetic feature of Colombo. The city is dotted with grand Portuguese forts, Dutch houses and British administrative offices, making it one of the most visually diverse Asian capitals. When the British finally granted Ceylon – as it was then known – independence in 1948, they left behind some of the urban infrastructure that makes Colombo so unique today. Tramlines and cars crisscross the city and past the Khan Clock Tower.

Colonial roots
The centuries of different colonial rulers have made Sri Lanka unique in Asia. Though the country retains its Hindu and Tamil roots, the Europeans that roamed the island for so long have indubitably influenced it. Places are named using Portuguese, Dutch and English words, people have European names and Colombo remains a multi-ethnic, multicultural hub despite losing its status as capital in the 1980s. However, like many other former colonies in Asia, the country was left in disarray when the British withdrew in the late forties. No representative administrative structures were established and tensions started to mount between the Sinhalese population and the minority Tamils. Historic conflicts between these two ethnic groups have always existed but peaked under British rule in the 1920s and were then left to fester when they withdrew.

Where to stay

Hilton Colombo
2 Sir Chittampalam A Gardiner MW
+94 11 249 2492

A sure sign that money and business are moving into Sri Lanka, Hilton Hotels and Resorts now boasts two high-end properties in the city of Colombo. The Hilton Colombo Residence consists entirely of luxury suites – perfect for those staying in the city for a while or looking to entertain clients and establish business in the area. For those desiring a more traditional hotel, the Hilton Colombo is perfect. In the centre of the main business district, a stay here ensures you’re never far from your next meeting. Or, thanks to a range of meeting and conferencing facilities, including a specialised business centre, you can bring your business to the hotel.

The Hilton Colombo’s gym, pool, tennis court and shopping arcade should provide enough fun to fill up your down time, but if not, the National Zoological Gardens, the Dutch Museum and some stunning Sri Lankan temples are all within walking distance. An impressive selection of nine restaurants and bars allows guests to select the perfect place to take a business partner or unwind with friends in the evening. And if you’re staying in for the evening, be sure to sample some traditional Sri Lankan cuisine at the Curry Leaf restaurant.

Galle Face Hotel
2 Galle Road
+94 11 2 541010

As economies in Asia continue to offer good growth rates and investment opportunities, Colombo is gearing up to become a go-to destination for global MICE. The Galle Face Hotel, which claims to be the oldest hotel east of Suez, is situated on the Indian Ocean seafront opposite the Galle Face Green, and is hoping to take advantage of Sri Lanka’s rising profile with a recent refurbishment and expansion of its MICE facilities. With just under 100 well-appointed rooms, restaurant and café facilities, and a newly opened meeting centre replete with cultural attaché, planning teams and your own personal concierge, it might just be the perfect business-district location for international meetings.

By the early 1980s the situation was unsustainable and the Sri Lankan Tamil youth and their militant factions including the Tamil Tigers (LTTE), started operating a parallel government, independent from the ruling Sinhalese government in Colombo. In 1981 the incumbent government attacked Jaffna Library, burning over 90,000 books, including palm scrolls of high historic importance for the Tamils. Two years later, 13 soldiers were killed in a Tamil ambush, sparking riots and what came to be known as the ‘First Eelam War’. The Tamil government decided to demand secession.

What followed were 26 years of terror and violence; the Tamil Tigers used guerrilla techniques to target members of Prime Minister Jayawardene’s ruling United National Party, who retaliated with bloody massacres and ethnic cleansing policies. Atrocities were committed almost daily by both sides.

International forces got involved and sanctions were approved but nothing calmed the violence. However, in 2001, the Tamil leaders announced they were once again ready to negotiate a ceasefire. By then the Sri Lankan economy was in tatters and the south of the country was a wasteland after two and half decades of near-constant shelling. A new political party, the United National Front, won the 2001 elections with an overwhelming majority, campaigning on a platform of peace and unity.

By 2002 the Tamils and the new government had reached an ‘understanding’. Though by no means a straightforward process, the ceasefire meant international flights could be re-established between Colombo and other capitals, and the process of slowly rebuilding the economy could begin. Though many regions, particularly in the poverty-stricken south, were still under Tamil control, the ceasefire held.

Where to meet

Sri Lanka Exhibition & Convention Centre
12 D R Wijewardena Mawatha, Colombo 10
+94 112 343 239
Pico, launched in 1994 as a joint venture between the Sri Lanka Convention Bureau and the Ministry of Tourism, currently runs and operates the Sri Lanka Exhibition & Convention Centre. It is the largest purpose-built exhibition space in Sri Lanka. Boasting 4,000sq m of air-conditioned exhibition space, and a central Colombo location, it’s readily accessible by rail and is a short walk to many of the area’s key hotels. With 20 years of experience, hosting, managing and supporting events, the team at Pico have been a boon for Sri Lanka’s burgeoning global status as a key Indian Ocean destination for MICE.

Cinnamon Lakeside Colombo
115 Sir Chittampalam A Gardiner Mawatha
+94 112 491 000

Back in 2012, Business Destinations recognised the Cinnamon Lakeside Colombo in its annual Travel Awards. At the time we were taken with its great location overlooking the gorgeous Beira Lake and luxurious facilities. It’s fair to say that not a lot has changed. The Cinnamon Lakeside is well located for the Sri Lanka Exhibition & Convention Centre, the port, business district and hotels along the Indian Ocean coast. Facilities include a sixth-floor business centre, meeting rooms, ample guest bedrooms, and when it’s time to relax, a sumptuous outdoor pool, spa and restaurants.

As 2008 approached, tensions mounted. Terrorist action plagued Sri Lanka once more. It seemed that the dream of peace was dead when the Foreign Minister, a Tamil, was assassinated. The government was terminated and accused of war crimes, and combat resumed on the embattled island.

Though this period was the bloodiest in Sri Lanka’s recent history, government forces finally crushed the Tamil resistance, amid cries of human rights violations and the slaughter of civilians. According to Human Rights Watch, the Sri Lankan army was responsible for indiscriminate artillery attacks, while the Tamil Tigers refused to grant safe passage for fleeing civilians.

An estimated 200,000 people were killed in a narrow 14km strip of land near the coast at Vanni – a supposed no-fire zone. But by 2009, the Tamil Tigers had been beaten down, and President Mahinda Rajapaksa told the world from a summit in Jordan that his government, “with the total commitment of our armed forces, has in an unprecedented humanitarian operation, finally defeated the LTTE militarily.”

Rebuilding and healing
Throughout the civil war, Sri Lanka maintained some enviably high socio-economic indicators; according to Colombo Fort, the Sri Lankan board for business, in 2009 the country already boasted one of the highest literacy rates in Southeast Asia, with 91.4 percent of the population being able to read and write. Overall, 50 percent of university graduates have studied technical or business disciplines, making the Sri Lankan workforce one of the most competitive in market terms.

The Sri Lankan government has been diligently ensuring the rest of the world knows that not only are the hard civil war days over, but that the island is open for business too. It is a slow process – at the moment, the fastest-growing industries are tourism and regional banking. But there is a lot of potential. Foreign direct investment rose nearly four percent in 2013, from $1.34bn to $1.39bn. The figures are significantly short of the $2bn target set out by the government, but the economy did grow. Over the last four years, as much of the world endured sluggish growth and emerging markets cooled off, Sri Lanka grew by an average of 7.4 percent annually – albeit thanks in part to huge state-led infrastructure schemes.

The signs are looking very positive for 2014. Lakshman Yapa Abeywardena, the Investment Promotion Minister, told Reuters that in the four months to May 2014 the island had already attracted 100 percent more investment than during the same period in 2013. “This year, we will be able to get at $2bn,” he said. He is probably right.

Sri Lanka is revered for its great beauty. Conflict over the years has held the country's tourism industry back, but - now the civil war is over - Sri Lanka's fortunes are set to rise
Sri Lanka is revered for its great beauty. Conflict over the years has held the country’s tourism industry back, but – now the civil war is over – Sri Lanka’s fortunes are set to rise

When the US announced it would be tapering its asset purchase programmes in October last year, most emerging economies rose rates in order to stop fund outflows. Sri Lankan authorities did the exact opposite and lowered their rates. “We have seen inflation at the lower levels,” Ajit Nivard Cabraal, Governor of the Central Bank of Sri Lanka, told CNBC. “We have been seeing the growth rates at the right levels. We have seen the external sector coming back to fairly robust levels. So all those gave us the confidence that we were on track to having inflation at lower levels in the future.”

Cabraal suggests the economy could grow by eight percent in 2014. And while that is probably true, much of this is driven by state-owned infrastructure development, funded by foreign commercial loans, and according to Abeywardena, around $4bn in FDI will be required to sustain these levels of growth. Investors are also concerned by government nationalisation of key private ventures and the takeover of nearly 40 private companies. But while this wave of nationalisation, which mainly affected private transport companies, may have been a misstep, the local economy remains strong.

“We have developed our infrastructure, particularly the ports and airports, which means our services have now improved quite dramatically,” said Cabraal. “And we are seeing the services sector, particularly the hubs we are looking at – maritime, aviation, knowledge, activities as well as the commercial and energy – all now contributing a lot more to our economy than they did in the past.”

The performance of the Colombo Stock Exchange proves the country’s economy remains resilient. Stocks here gained an average of five percent in 2013, and did even better during the first quarter of this year. The exchange is now working to attract a greater number of international investors. With government support initiatives – such as requiring companies to make more shares available, and developing a strong brokering infrastructure and regulation – have been introduced. “It’s the growth story,” Rajeeva Bankaranaike, CEO of the Colombo Stock Exchange told CNBC. “Some of these sectors are trading at deep discounts. Particularly in the Sri Lankan economy, we have some of the growth sectors very well represented and these are trading at deep discounts to the market price-to-earnings ratio.”

So while the outlook remains positive, and there is certainly growth potential, the international investment community remains sceptical. The failure to attract much-coveted FDI is worrying, and consumer spending remains slow, but development of the local market and industry is promising. It is still too early to declare the Sri Lankan recovery an out-and-out success story, but five years clear of war, and with robust growth, the island’s future is looking good.

City diary

Annual Vintage Car Rally
September 1-30
Every September, visitors to Colombo are delighted by a daily parading of classic vehicles. Orchestrated by The Vintage Car Owner’s Club of Sri Lanka, a line-up of nearly 200 cars features everything from old Edwardian gems and early MGs, to romantic mid-century convertibles.

Colombo Book Fair
September 10-17
Sri Lanka’s biggest book fair draws in a diverse crowd looking to explore and buy books and journals from an impressive selection of 500 stalls. Now in its 16th year, the fair managed to attract around 150 publishing companies in 2013, and hopes to showcase even more this year.

Hotel, Hospitality & Food
October 3-5

With Sri Lanka’s tourism scene booming and the economy riding high on the success of the hospitality industry, this is the perfect time to explore what Colombo has to offer – from architecture and audiovisual equipment to franchising opportunities and furnishings.

Techno Exhibition
October 10-12

No, not that kind of techno, although certainly just as exciting. Technology and engineering are vital to the growth of most industries, and with Sri Lanka at such an electrifying crossroad, this convention hooks up technological advances with the right businesses.

Deepavali Festival
October 22

With a large Hindu population, Sri Lanka, and especially southwest Colombo, widely observes the festival of light, with community gatherings and candle-lighting. Seek out a local kovil (Hindu temple), to enjoy one of the annual firework displays that conclude festivities.

Saree Festival
October 22-26

Gain an intimate knowledge of sarees at this colourful, fun-filled, but business-minded festival. Industry experts and designers will guide you through the latest trends and investment opportunities. Enjoy the displays of handloom sarees, embroidery, batik and more.

Image Today 2014
Oct 31 – Nov 2

The international photography and video festival comes back to Sri Lanka with a host of product launches, new technology, live demonstrations, discussions and debates with influential industry professionals, networking events, and plenty of business opportunities.

Elephant Gathering
Minneriya National Park
Until October

Every year, around 300 Asian elephants descend on the banks of the Minneriya Lake, looking for food and water after the dry summer. Take the opportunity to watch the creatures roam, in what is the largest gathering of elephants that occurs anywhere
in the world.

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