Kuruwitage Holdings (Pvt) Ltd.

Kuruwitage Holdings (Pvt) Ltd. Kuruwitage Holdings (Pvt) Ltd is a company that adds value for their customers,using several investment categories.

Kuruwitage investments mainly invest money in stocks, bonds and gold. Kuruwitage plantation mainly interest in vanilla, tea and rubber.

21/07/2012

Sri Lanka gets final IMF tranche, asked to watch inflation, state firms
July 21, 2012 (LBO) - Sri Lanka should watch inflation, the budget gap and fix energy enterprise to the economy stable in the future the International Monetary Fund has said ending a three-year bailout program.
The IMF released a final 415 million US dollar tranche under a 2.5 billion US dollar bailout package, a somewhat unusual occurrence in Sri Lanka where bickering among the elected ruling class has earlier de-railed many programs half-way.

Sri Lanka runs into frequent balance of payments crises due to contradictory exchange and monetary policy involving manipulating interest rates by the Central Bank in the wake of excessive state spending, usually to manipulate energy prices.

The IMF program which began with a BOP crisis ending in 2009, helped push growth to above 8.0 percent for two years and more importantly helped keep inflation to single digits until early 2011.

But a failure to tighten monetary policy in time, in the face of massive state spending to manipulate energy prices from mid 2011 plunged the country to another balance of payment crisis from around August 2011.

Policy Corrections

In February 2012 Sri Lanka's energy prices and interest rates were raised reducing damaging state interventions in the economy allowing markets to put the economy back on track, and a suspended IMF program resumed.

However the rupee fell due to the effect of money printed to sterilize foreign exchange sales, pushing up inflation, even as credit slowed.

"The current monetary policy stance is appropriate, and monetary conditions should remain firm in the near term given high headline inflation and possible second-round effects," IMF's deputy managing director Naoyuki Shinohara said in a statement.

"With a flexible exchange rate regime, monetary policy can increasingly focus on inflation control to achieve broader macroeconomic stability while allowing the exchange rate to act as a buffer for external shocks."

Sri Lanka has a so-called soft-pegged exchange rate regime where contradictory exchange and interest interventions are possible.

The central bank triggers a balance of payments crisis when it intervenes in the foreign exchange market and off-sets its contractionary effect on the monetary base and banking system by printing money (a sterilized foreign exchange sale) through Treasuries purchases.

Until 1950 under a so-called currency board law, printing money by purchasing Treasury bills (to sterilize foreign exchange sales or monetize debt) was legally barred in Sri Lanka and the exchange rate was fixed and inflation was low.

Severe exchange troubles emerged within two years of creating the Central Bank, resulting in the enaction of a draconian exchange control law against the people in 1952.

Flexible Exchange rate

If money is printed, the exchange rate has to be allowed to fall (a floating exchange rate) to prevent balance of payments crises from developing.

Conversely if monetary policy is kept tight (open market operations are directed at withdrawing liquidity) the exchange rate will tend to appreciate.

Two weeks ago the Central Bank started to sterilize foreign exchange purchases, a practice if continued will rapidly strengthen the exchange rate, analysts say.

Sri Lanka lost more than two billion US dollars of reserves until February 2012 with more than 200 billion rupees of money printed from around August 2011.

From February foreign reserve losses started to tail off as sterilized foreign exchange sales reduced, though inflation rose due mainly to currency depreciation.

"Headline inflation has increased, but core inflation remains relatively stable, while tighter monetary and credit policies have begun slowing credit and import growth," Shinohara said.

"The external current account deficit is narrowing, and international reserves have stabilized."

"Foreign exchange market intervention should thus be limited to smoothing excessive volatility, and steps should be taken to gradually deepen the foreign exchange market."

Sri Lanka cut overnight open forex positions of banks, reducing the depth of the forex market making the exchange rate extremely volatile.

Such practices - which also forces dollars to be converted to rupees by sales to the monetary authority creating more liquidity and putting further downward pressure on pegs - are prevalent is most balance of payments prone countries.

Budget Gap

IMF said the budget gap is widening, partly due to higher interest payments, but authorities are committed to keeping the budget gap to a planned 6.2 percent of gross domestic product.

Last year a central government budget gap of 7.0 percent of GDP gap was kept by making state enterprises, particularly energy enterprises run a 1.5 percent of GDP deficit mainly using bank credit, helping trigger the balance of payments crisis.

This year revenues are hit by slowing imports. The state also hit an own goal by imposing prohibitive taxes on vehicle imports (an indirect exchange control), in a misguided effort to cure a monetary problem with real economy restrictions.

"The slowdown in economic activity and declining imports are adversely affecting fiscal revenues, while interest payments on government debt are higher than budgeted," Shinohara said.

"The authorities are committed to meeting their 2012 deficit target by restraining expenditure, but a redoubling of effort to strengthen revenue administration is needed.

"Furthermore, continued structural reforms are required to put state-owned energy enterprises on a sound financial footing."

Analysts have called for a transparent pricing formula for energy to prevent arbitrary ruler interventions from triggering balance of payments crises, high inflation and currency depreciation and eventually even a banking crisis if high rates persist.

Going Forward

The IMF said an ongoing financial sector assessment program is looking at potential problems in the banking sector.

"The authorities should remain vigilant for systemic risks, and recommendations in the update can be used to strengthen the financial system further," Shinohara said.

"The Sri Lankan authorities have undertaken substantial macroeconomic policy adjustments to stabilize reserves.

IMF said it is looking at a follow up program. Sri Lankan authorities have also said they would like to have a surveillance program after the current program ends.

Rating agencies which give Sri Lanka a 'BB' level credit, slightly below investment grade are also expecting an IMF program to spending and inflation in line.

"It will be important to continue macroeconomic stabilization and structural reforms efforts, in particular maintaining exchange rate flexibility while building international reserves, given the uncertain global outlook," Shihonara said.

"A successor arrangement with the Fund would provide valuable support to the authorities in these endeavors."

The IMF was a useful confident booster to prevent foreign capital from fleeing as authorities were forced to take corrective action to stabilize the economy and thereby protect the people from further harm coming from energy price interventions.

Fleeing foreign capital can transform an energy price manipulation driven crisis, which is essentially confined to the current account, to a capital account problem. When capital flees extremely steep economic downturns are triggered.

21/07/2012

Sri Lanka corporate executives on 'pay for performance'
July 21, 2012 (LBO) - Sri Lanka's 'pay for performance' schemes should be carefully designed to be fair and transparent and linked to a firm's short and long term goals while incorporating the organization's core values, top corporate executive said.
Pay for performance is an incentive based reward scheme where workers are paid (variably) on productivity and achievement of goals as opposed to hours spent on the job.

"Some companies have grand schemes which are complicated, so the employee fails to realize the connection of what he is doing with the reward," Isuru Tillakawardana, Deputy General Manager, Human Resources of Commercial Bank said.

"The challenge is to connect the 'pay for performance scheme' to the overall corporate objectives," he said.

He was addressing senior executives at the 10th LBR – LBO CFO Forum titled "Pay for performance: Does it work always?"

Reward based performance schemes are widely used by high performing and progressive corporates to encourage employees meet goals and to pay the productive employees who do the most for the business than others.

"The concept of rewarding performance is the corner stone of most progressive organizations as it creates internal equity and creates adjustments between risk takers, shareholders as well as stakeholders including employees," Ronnie Peiris, Chief financial officer of John Keells Plc said.

However, studies have shown that waving a carrot at your employees to get them reach targets could backfire as they start banking on extra cash creating sustainability issues.

Experts say employees who will initially be content with the scheme may start resisting as managers adjust targets for the next stage claiming that the pay is an entitlement.

Performance based pay schemes can also drive employees to focus excessively on hitting targets to gain rewards at the expense of other things that would help the organization.

It can cast a shadow over self-esteem, teamwork, and creativity of employees and lead to increased frustration among individuals and teams.

Peiris said its performance management system at John Keells Holdings is based on the core values of trust, integrity, excellence, caring and empathy.

"If people don’t live by those values irrespective of their operational performance they will be marked down," Peiris said.

Tillakawardana said performance based reward schemes should be transparent and clearly communicated to employees if the organization expects to change the employee's behavior to become more productive.

"Sometimes pay performance schemes are there but not very well communicated. End of the year no one knows how it has been worked out," Tillakawardana said.

"This has no effect because you are not driving or influencing the bahaviour of the individual right throughout the year," he said.

20/07/2012

Sri Lanka starts construction of stalled high rise for Hyatt hotel
July 20, 2012 (LBO) - Sri Lanka has re-started the construction of a stalled 43-story high rise in the capital Colombo with a new company taking over assets, which will house a Hyatt branded hotel, a statement said.
Sri Lanka's economic development ministry said a vehicle called Sinolanka Hotels & Spa (Pvt) Ltd, where state-run Sri Lanka Insurance Corporation and unspecified private investors will have stakes, will complete the building.

The building was initiated by Sri Lanka's Ceylinco group which ran into difficulties from late 2008. The building was among several expropriated by the state through a controversial law last year.

The economic development ministry said Sri Lanka's Urban Development Authority has given a 99-year lease of the land to the firm and it will also get tax breaks under a strategic investment law.

The building will have a 565 room 5-star hotel spread through 94,000 square metres.

"The hotel complex is expected to be managed by Hyatt International under the Hyatt Regency brand and the terms of engagement are being currently concluded," the statement said.

Guests arriving at the hotel will be taken to a lobby on level 13 through high speed lifts. A 2-storey high 750 square meter 'pillar-less' ballroom will be built on level 04.
It could house 600 people seated, or 1,000 standing.

The hotel will have 54 suites, 265 'King' rooms, 150 twin rooms, and 6 rooms for the disabled.

Levels 31-41 will have 90 residential suites for long stay guests also managed by Hyatt International.

Construction was started on July 19 with at a ceremony attended by economic development minister Basil Rajapaksa, urban development ministry secretary Gotabhaya Rajapaksa and secretary finance P B Jayasundera, the statement said.

20/07/2012

Sri Lanka rupee makes steep gains
July 20, 2012 (LBO) - Sri Lanka's rupee made steep gains against the US dollar rising as much as 131.50/80 in late morning trade, after opening around 132.70/133.00 levels ahead of approval of proceeds from a bond sale.
Sri Lanka sold a billion dollar bond earlier in the week and proceeds are expected in the island next week.

In the recent past proceeds of large capital inflows had tended weaken the currency peg as the central bank bought dollars and pumped the banking system full of rupees, when credit growth was still high.

The Central Bank has however kept policy reasonably tight for several weeks running, and even sold a small amount of its Treasury bill stock outright, (a sterilized purchase of foreign currency) a move if continued steadily, can send the rupee zooming up.

The International Monetary Fund's executive board is expected to complete the last review of a 2.5 billion US dollar bailout package later today in the US.

20/07/2012

Sri Lanka to build 24km road with bank credit
July 20, 2012 (LBO) - A 24 kilometre road in Sri Lanka's from Maha Oya to Aralaganwila will be built under a scheme where a 500 million dollar bank credit will be used by the state road agency fund domestic contractors.
Sierra Construction (Pvt) Ltd has got the contract to build the road for 2,363 million rupee contract to build the road with financing from state-run Bank of Ceylon, the state information office said.

Sri Lanka's Road Development Authority gets the finance under a Treasury guarantee. Sri Lanka plans to re-build 692 kilometers of roads through domestic contractors under the scheme.

Bank of Ceylon gives the loans to be repaid over 3 years with bi-annual payments with an additional 18 months of grade. The rate is set at the average weighted deposit rate plus 2.5 percent.

Sri Lanka has been pouring large volumes of money to upgrade the country's infrastructure including in former warzones in the North and the East in recent years.

20/07/2012

Sri Lanka stocks flat, rupee stronger
July 17, 2012 (LBO) - Sri Lanka's stocks closed flat Friday, losing some of the gains made a day earlier while the rupee gained sharply against the US dollar, brokers and dealers said.

Representatives of Sri Lanka's stock market met President Mahinda Rajapaksa Friday.

The presidential secretariat said market representatives made proposals for an upcoming budget at the meeting where deputy finance minister Geethanjana Gunawardene, legislator Sajin Vass Gunewardene, secretary to the president Lalith Weeratunga and Treasury secretary P B Jayasundera was also present.

The Colombo All Share Price Index fell 2.89 points to 4,888 and the S&P20 Index of large cap stocks gained 0.3 percent (8.26 points) to 2,768.

Friday's turnover of 284 million rupees was dominated by HVA foods with 58 million rupees and Ceylon To***co with 31 million rupees.

Aitken Spence closed flat at 110.50 rupees. John Keells Holdings at 180.00 rupees, DFCC at 105.50 rupees and Dialog Axiata at 610 rupees.

Distilleries Corporation fell 1.50 to 122.0 rupees down 1.21 percent.

Commercial Bank gained 20 cents to 97.50 and Hatton National Bank fell 70 cents to 91.00 rupees.

In forex markets the rupee closed at 131.60/70 to the US dollar Friday after opening weaker at 132.70/133.00 levels dealers said.

20/07/2012

Sri Lanka domestic payments switch to cut transaction costs
July 20, 2012 (LBO) – LankaClear Private Limited, Sri Lanka’s main cheque and electronic clearing house, is spending 300 million rupees to deploy a nationwide common card and payment switch that allows customers to use any bank teller machine, officials said.
The company, which is jointly owned by the Central Bank and local commercial banks, says the national payment switch will carry out transactions at a nominal cost to banks and consumers.

"We are looking at considerably reducing transaction costs," said Sunimal Weerasooriya, General Manager/Chief Executive Officer, LankaClear.

Few of the some 2,500 automatic teller machines (ATM’s) spread across Sri Lanka, allow customers to operate their accounts via multiple commercial banks.

Those that offer the service, charge between 30 rupees to about 60 rupees, as the transaction is routed via the local banks and a foreign payment settle system.

"The common switch will create a platform that facilitateslocal payment card transaction process and save a considerable amount of foreign exchange to the country," Weerasooriya said Thursday.

The switch would be implemented in three phases. Under the first phase, a common ATM switch will be implemented. Phase two will see a mobile payment and Electronic Fund Transfer switch.

In the final phase, the company hopes to deploy a common point-of-sale switch, Weerasooriya said.

The company is investing its own money into the new system, using the revenue they earn from charging a flat fee of 2.50 rupees a transaction for all their services.

Work has already begun and the switch is due to be ready to link-up with banks by the end of this year.

Established in 2002, LankaClear currently clears about 30 billion rupees worth of cheques daily, while about 3.0 billion rupees worth of transactions take place daily through the Sri Lanka Interbank Payment System (SLIPS), said Harsha Wanigatunga, head of operations.

Chairperson Priyantha Liyanage said they were also looking at setting up a regional payment switch to South Asian neighbours. Currently, Malaysia has a similar model to enable customers to transact within ASEAN countries at lower costs.

20/07/2012

Sri Lanka rupee responding to policy measures: CB Governor
July 20, 2012 (LBO) - Sri Lanka's exchange rate is responding to policy measures taken earlier in the year, Central Bank governor Nivard Cabraal said, as the rupee rose sharply against the US dollar Friday.
"It is as expected and as consistently maintained that there will be an appreciation, when the policy measures take effect," Cabraal said.

The rupee closed around 131.60/70 Friday to the US dollar after opening at 132.70/133.00 levels.

Earlier in the day money markets were tight with overnight repos spiking to 9.70 percent close to the policy rate of 9.75 percent while un-backed call money rose as much as 10.55 percent.

Excess liquidity of 9.1 billion rupees that was in the market a day earlier disappeared, indicating that a large foreign payment had been made by paying rupees to the Central Bank, in a mostly unsterilized sale.

The central bank injected 3.1 billion rupees to partially sterilize the forex sale at 9.56 percent, below the reverse repo rate of 9.75 percent.

If the money is only injected overnight the borrowing banks would be forced to collect deposit to clear the short reserve position, preventing any permanent pressure from building against the currency peg from newly created rupees.

A banking system cannot extend significant volumes of credit for long periods with just overnight funding from the central bank.

20/07/2012

Sri Lanka's next stock rally could be driven on oil hopes: analyst
July 20, 2012 (LBO) - Sri Lanka's next stock rally could be driven by the discovery of a commercially viable deposit of oil, which will renew interest in the country, an analyst who correctly called the end of the last stock bubble has said.
Amal Sanderatne, head of Frontier Research, a consultancy said the last stock bubble which sent Sri Lanka's benchmark index careening over 7,000 points was driven by post-war hopes.

Foreign capital also flowed into government securities markets, driving up liquidity and keeping interest rates low. Following the balance of payments crisis interest rates were high and stocks were falling.

The market has so far fallen to around 4,800 point levels. After the 2001 balance of payments crisis the advent of a ceasefire also sent the market up.

Game Changer

The 'game changer' to driven the next rally, Sanderatne says, could be a confirmation of the existence of a commercially viable oil deposit. Exploratory wells sunk by Cairn India have found traces of hydrocarbons in off Sri Lanka's northeastern coast.

"Oil can impact an economy in the long run in many ways," Sanderatne told a business forum in Colombo organized by Acuity, an investment bank and DailyFT, a financial newspaper.

"There is a concept in economics called resources curse. If you do not manage it properly the economy gets messed up."

Typically when oil is discovered in a country run by an autocratic ruler with weak institutions and rule of law, his grip tightens, and extends. Aggressively nationalist countries will even go to war with their neighbors more easily backed by oil. Either way citizens suffer longer.

Oil exporting countries like Venezuela for example, has near 30-percent inflation and currency depreciation. But oil revenues make it easy to give subsidies to voters even as they impoverished and their freedoms are stolen.

Iran has also had 30 percent inflation.

"But I am talking about markets," Sanderatne said. "Markets do not necessary try to look at the long term. Markets love big news. Investors love it."

Sanderatne recalled a time in February 2001 when he was working for what was then known as Jardine Fleming HNB Stockbrokers, a predecessor to Acuity Stockbrokers, he wrote a report called 'Lion in Winter', when times were at their blackest.

The report placed a 20 percent chance for peace, at a time when Colombo airport was bombed and there were military setbacks against Tamil Tiger rebels but said 'don't bet against peace'. A ceasefire and a bull run followed later.

He estimates that there is a 40 percent chance of a commercially viable deposit of oil being discovered.

"Don’t bet against oil," he said.

In 2000 the value of all the listed stocks was 80 billion rupees. Even with a recent correction the market stocks are now worth 1,800 billion rupees.

Psychological Cycle

Sanderatne says it is difficult to exactly to time a bull run. But equity markets go through cycles of emotion.

Optimism, excitement and thrill are found on the upturn. A market peaks in a 'euphoria' phase when everyone is upbeat.

"Behavioral psychology tends to overpower how you think," says Sanderatne. "Two years ago there was huge euphoria in the market, everyone borrowing money: a clear sign to get out."

At the time, when Sri Lanka stocks were the best performing in the world, Sanderante told an LBR-LBO CEO forum that valuations were 'stretched' Sri Lanka stocks beat the world amid bubble fears.

"In my opinion the market is overheated," Sanderatne saidat the time. "The valuations are the highest in Asia. Forward multiples are 19 times earnings; far higher that we have ever been, except perhaps in 1993."

Foreign investors were actively selling out, with valuations in other Asian nations, were lower.

After 'euphoria' market psychology then goes through a period of 'anxiety' then 'denial', 'fear', 'desperation', 'panic' and finally 'capitulation' as everyone accepts that it is falling and turnover levels have collapsed.

Then there is 'despondency' and 'depression'.

"Now where do you think we are today? Despondency? Depression?," he asks. "You need to keep an eye where you are and of course if these are the emotions you see around you on other market players it gives a good idea where the market cycle is right now."

Valuations are now better. Price Foreign investors who sold out during the bubble are now back. The market price to earnings multiple has also halved to around 10 now.

"I am very bullish. Market sentiment is so depressed, anyway from a sentiment analysis it is a great time to get into the market. Also you have the traditional arguments based on valuations."

"You can make it very complicated. But in some ways it is simply buying when it is down and selling when it is up."

It is also difficult to predict the exact bottom. Stocks had fallen 10 percent over seven months after the 'Lion in winter' report, before picking up.

19/07/2012

Sri Lanka inflation spike could be one-off: IMF
July 19, 2012 (LBO) - Sri Lanka's recent spike in inflation following a steep depreciation of the currency is mostly a structural change in prices, and not continuous monetary inflation, an International Monetary Fund official said.
Sri Lanka's peg with the US dollar which has served as a solid external anchor for inflation since 2009 collapsed under pressure from over 200 billion rupees of money printed by the Central Bank to off-set (sterilize) foreign exchange sales.

The rupee fell from around 114 to 134 to the US dollar after contradictory state interventions in forex and money markets were eased beginning from February 2014.

"We have already seen inflation going up to around 9.0 percent, but we think this is mostly a price level increase," IMF's resident representative in Sri Lanka Koshy Mathai told a forum organized by Sri Lanka's Acuity, an investment bank and DailyFT, a financial newspaper.

"So the measure of inflation has increased, but we do not expect to see continued inflation month after month after month.

"We expect the statistical effect to fade out as the months move on."

A depreciation of the currency triggers a structural change in the price of traded goods, both imports and exports when measured by the domestic currency unit.

As foreign reserves are sold down by the Central Bank, the trade gap widens and the current account deficit of the balance of payments expands to unsustainable levels running beyond the net capital inflows to the country.

Flexibility in the exchange rate, which stops sterilized foreign exchange sales is needed to arrest the vicious cycle as happened in February 2012.

But during a balance of payments crisis, when liquidity tightens due to less-than-100-percent sterilization of central bank sales of foreign exchange, interest rates also move up, even as credit volumes increase.

Rising interest rates will eventually slow credit, which can slow new inflation after the crisis is ended.

Persistently high interest rates can trigger a banking crisis, which can even result in deflation (actual falls in prices) as bank credit turns negative, and the currency appreciates.

Sri Lanka had similar experiences after the 2000/2001 and 2008/2009 balance of payments crises, where risk free rates hit close to 20 percent.

If the depreciation is not reversed it will also feed into non-traded goods and services via higher salaries and other input costs. Any temporary gains seen by the traded goods sector, including exporters, will also be eventually lost by demands for salary increases.

But temporary increases in profits, at the expense of lower living standards of workers can drive capital into exports, increasing capacity as the entire population gets poorer.

"Over the medium term, there can be beneficial effects on growth as well, because exporters will definitely has some benefit and they will be able to export more. And that will drive growth and that will help to create more jobs."

Currency depreciation also destroys the real value of financial savings denominated in the local currency, which also destroys future investible capital, but it also helps highly leveraged entities, which include businesses and deficit spending states.

Currency depreciation also ensures that productivity driven gains in competitiveness are not needed for the production sector, especially exporters, as profits can easily be made at the expense of real wages of workers at least temporarily.

19/07/2012

Sri Lanka war-affected entrepreneurs to be recognised
July 19, 2012 (LBO) - Entrepreneurship awards by a Sri Lankan business chamber will include two new categories this year to recognise women running small enterprises in the former war zone and disabled entrepreneurs.
Sri Lanka's 30-year ethnic war which ended in 2009 left thousands of people disabled on both sides of the conflict and women widowed especially in the north and east which bore the brunt of the violence.

The new awards are part of the 'Sri Lankan Entrepreneur of the Year 2012' awards organised by the Federation of Chambers of Commerce and Industry of Sri Lanka and meant to honour enterprising business people.

"We have introduced a new category called the 'Differently-abled entrepreneur of the year'," FCCISL president Kumar Mallimaratchi told a news conference.

"Owing to war a lot of people become disabled. We as a chamber think it's time we look at people with disabilities who are trying to rise as entrepreneurs."

The awards will recognise entrepreneurial efforts irrespective of whether the entrepreneurs are civilian or former combatants and whether they are ex-military or former Tamil Tiger separatists.

The FCCISL was also partnering with Oxam, a global non-governmental organisation, to pick the best woman entrepreneur in the north and east, where many women lost their husbands during the war.

"A lot of women were widowed because of the war," Mallimaratchi said.

Roxanne Abdulali, programme manager for Oxfam, which is supporting the award for the emerging small women entrepreneur in the north and east, said the initiative was aimed at improving the status of women in the region and become community leaders.

"In the post-war era we're looking at how to support conflict-affected communities in rebuilding their livelihoods. This year we're partnering with FCCISL to recognise women entrepreneurs in the north-east where there are thousands of war widows."

19/07/2012

Sri Lanka hires Australia firm to ready expressway for bidding
July 19, 2012 (LBO) - Sri Lanka will engage SMEC International (Pty) Ltd, an Australia based consultancy develop an expressway project from the capital Colombo to the central part of the island, to bring in private investment, a minister said.
SMEC International will be contracted to conduct a feasibility study, an environmental impact assessment and prepare documents for requests for proposals from investors, cabinet spokesman minister Keheliya Rambukwelle said.

SMEC International is also the consultants to the Colombo - Katunayaka Expressway which is now under construction.

Phase one of the so-called Northern Expressway project from Colombo to Jaffna runs from just north of the capital to near Kandy in the Central Province via Kurunegala in the North Western province.

The first part of the Northern Expressway runs from Enderamulla, branching off from Colombo's outer circular highway and ends at Mirigama 42.5 kilometers later.

From Mirigama a 35 kilometer stretch of the expressway passes through Pothupitiya to Pellandeniya about 5 kilometers away from Kurunegala.

A 44 kilometer link expressway runs from Pothupitiya to within 9 kilometres of Katugastota town near Kandy near an existing road (A10) running from Kurunegala to Puttalam.

Treasury secretary P B Jayasundera said in May that at least serious bids have come from private investors in three countries to build the expressway which is estimated to cost 1.5 billion rupees.

The rest of the Northern Expressway involves connects to Jaffna. A connection is also expected to Trincomalee, where a port related industrial zone is planned.

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