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25th February 2001

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Former England fast bowler Jonathan Agnew (R) from the BBC, sits at the old Dutch fort of Galle providing live updates of the second day's play of the first test between England and Sri Lanka at the Galle international Cricket Stadium. Since Sky Sports got official rights in Britain of the test series, BBC's representatives could not enter the stadium during play. - AFP

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Prices soaring after import duty hike

By Feizal Samath

The government decision to raise import taxes on non-essential goods was linked to the US dollar and intended to curbing imports rather than protecting local industry, economists and industrialists said.

The Finance Ministry said on Tuesday it was imposing a surcharge on Customs duties effective between 21 February and 31 December, 2001. It said the surcharge would rise between two percent to 14 percent on a range of imported goods barring essentials like drugs, milk food and sugar or capital items like tractors and lorries or intermediate goods like crude oil. Goods with nil tariffs were left untouched.

Some of the items said to be affected are cars, televisions, radios and the range of fast moving consumer goods (FMCGS) like refrigerators, washing machines and floor polishers.

"Though it appeared to a be protectionist measure, it was more to do with making non-essential imports costly and reduce pressure on foreign exchange reserves," said Rajiv Casie Chetty, research director at C.T. Smith, a local stockbroker.

Patrick Amarasinghe, an industrialist and former chairman of the Federation of Chambers of Commerce and Industry, said industrialists were unlikely to benefit from this move since it was only for a limited period.

"Officials say it is to benefit local industry. I don't think so. Nobody is going to invest in industry or expand for that matter when the so-called benefits are for a 10-month period only," he said, adding that the status quo remained for local industry.

Until Friday however importers and local industrialists were at a loss to understand the extent of the impact or benefit in the absence of the expected gazette notification. "We have to look at the entire list of tariff and non-tariff items to assess the impact," said one industrialist.

Mr. Casie Chetty said the move appeared to be connected to improving the trade deficit by the old tradition of raising duties on non-essential imports and reducing consumption. Similar measures in the past have however failed to curb imports.

He said the rate of increase would be disproportionate as the affected goods would also see an increase in GST and NSL rates.

Other economists said the decision may have been enforced in consultation with the IMF as a temporary measure to reduce the burden on government. "On one hand it may have been aimed at raising revenue which if so would appear contradictory if the policy is to reduce consumption and boost reserves," an economist said.

Ironically while the policy appeared to be to protect local industry from cheaper imports and foreign multinational suppliers, at least one US multinational stood to gain from the move.

The increased tax on oil lubricants will benefit multinational Caltex which has a near 95 percent share of the local market.

"The surcharge would have a spiral effect on us. We will have to push prices up and in doing so would be outpricing ourselves. Once again Caltex stands to gain as they produce locally," said Trevor Reckerman, director at Mobil, the other US multinational in the same market.


Mahanayake says not aware of Norway moves

By Shane Seneviratne in Kandy

The Mahanayake of the Malwatte Chapter did some tough talking with a visiting European delegation on Friday, telling them he was not kept informed by the government about Norway's facilitation and reiterating his view that the LTTE must be defeated by military force.

The Ven. Rambukwelle Sri Vipassi Mahanayake Thera made the comments when he met the visiting European Union parliamentary delegation led by Ireland's Gerard Collins.

The Mahanayake repeated his view that Sri Lanka had a terrorist problem and not an ethnic problem, and that this terrorist problem must be dealt with by strict military means.

He asked what kind of liberation the LTTE was fighting for when it bombed such holy places as the Sri Maha Bodihya and the Sri Dalada Maligawa while brutally killing monks and civilians.

When Mr. Collins referred to the peaceful settlement of the Northern Ireland crisis, the Mahanayake said that in the history of Sri Lanka's conflict, each time the Tigers were weakened they started peace talks, and during those talks they strengthened themselves militarily and then returned to war and massacres. Therefore, the Mahanayake said he was totally opposed to any peace talks with the LTTE.

The prelate said there was no problem between the Tamils and the Sinhalese and he advised the EU delegation to walk around Kandy to see how the two communities lived together in peace. He said the conflict was caused by a small group which took to arms.

The Mahanayake strongly condemned the support extended by Europe to the LTTE and accused the LTTE of using its communication links to carry out false propaganda. The prelate said that if the visiting delegation did not have a proper understanding of the conflict here, he was more than ready to educate them.

The delegation also met Ven. Udugama Buddharakitha Mahanayake Thera of the Asgiriya Chapter.


Don under NDB hammer

The list was much longer than the menu card and its wine list put together.

All the kitchenware and crockery that made Don Stanley's Restaurant something like a mini Maxim of Paris, are up for sale.

The National Development Bank wants to collect more than Rs. 5.9 million which Don Stanley's had reportedly not repaid from a loan.

The restaurant is owned by one-time Mrs. World and now working Committee Member of the United National Party, Rosy Senanayake and her husband Athula.

The bank's board of directors had decided to sell the kitchenware and other items to raise this money. The items include kitchen trolleys, a reach in deep freezer, coffee machine, reception table, curtaining, neon sign boards, sound systems and flambe lamps.

A spokesperson for the restaurant said the NDB decision affected only their business located in the NDB building.

She said they had shut down businesses after harassment from a senior security arm responsible for VIP security. She also said they paid a monthly rental of around Rs 500,000 and Rs 200,000 for electricity but there were days when there was not a single customer.


Britain to announce terrorist list soon?

From Neville de Silva in London

As speculation mounts on whether the British government will ban organisations such as the LTTE as terrorist groups under the Terrorism Act 2000, some official sources are hinting of a possible announcement within days.

The law came into force last Monday and any list of banned organisations would have been submitted to parliament for comments from members. But parliament was in recess last week and resumes sittings tomorrow.

These official hints are possibly based on the fact that parliament meets again this

week and that the Home Secretary who is empowered under the law to proscribe organisations that are operating in London, needs to submit the list to the House for comments, but not approval.

However political figures keenly following the issue believe that Home Secretary Jack Straw will avoid issuing a list until around May. The general elections are expected to be held in late April or early May.

Even though the latest opinion polls give Labour a 15 point lead over the Tories, fears in Labour headquarters are that disgruntled voters will stay away threatening the Labour majority in parliament.

This places an additional importance on the ethnic minority vote. Since many of the groups that could possibly be proscribed belong to ethnic or religious minorities such as those from the Indian subcontinent, Islamic world and Sri Lanka, Labour fears that a premature announcement would anger the relevant minorities and cost it a substantial vote.

This is one of the key arguments the LTTE is using to persuade and pressure Labour MPs and party headquarters at Millbank to desist from banning it.

Meanwhile the LTTE here is lying low. A crew from Zee Television, the Asian TV channel which went to Eelam House — the operational centre of the LTTE here — had the door virtually slammed on their face.

Zee TV was doing a programme on the effects of the new anti-terrorism law for a documentary to be aired in London today and was seeking comments from the group.

Rumours are also afloat that Anton Balasingham, the LTTE's negotiator, has left for Norway. If he has indeed gone whether this is a move in anticipation of a British ban or temporarily in connection with the Oslo-facilitated peace talks, is unclear.


Peace talks in two months: CBK

President Chandrika Kumaratunga said yesterday she hoped peace talks with the LTTE rebels would start within two months.

In an interview with CNN in New Delhi, she said the two sides could probably meet in two months because the LTTE had asked for time to implement certain conditions.

Her comments are her most optimistic yet on the possibility of face-to-face negotiations with the LTTE. They come a day after the rebels extended a unilateral ceasefire in the north and east of the country, in what they said was a goodwill gesture aimed at promoting the peace process.

Although Ms Kumaratunga has said her government will not respond to "fake" ceasefires, her comments on the Norwegian-brokered peace process have become increasingly upbeat.

During her visit to India, President Kumaratunga also had extensive discussions on the deadlock in the SAARC regional grouping.

It was announced on Friday that India has agreed — subject to the convenience of all member countries — to a SAARC standing committee meeting in May.

The announcement came in an official press release of the Indian government, which the Sri Lankan Foreign Ministry duly copied for release yesterday in Colombo.

The standing committee is the foreign secretaries of SAARC, the seven-nation South Asian regional grouping that has stalled due mainly to India's intransigence based on its hostility towards Pakistan, especially heightened after the military coup in Islamabad in 1999.

India ensured that the SAARC summit scheduled for 1999 was indefinitely postponed. Only late last year did India agree to sending not-so senior officials of the External Affairs Ministry for a meeting in Colombo mainly to ward off mounting criticism that it stood in the way of SAARC progress.

Seven official level meetings were scheduled for early this year, but a directive from the Indian Prime Minister in the wake of the Gujarat earthquake that no External Affairs Ministry officials leave New Delhi put paid to holding these conferences.

India's recent move, according to diplomatic sources in Colombo, was the outcome of efforts by President Chandrika Kumaratunga, the longest serving chairperson of the regional grouping, to arrange for another SAARC summit early. In New Delhi on Friday, she raised the matter with Premier Vajpayee who had agreed to the Standing Committee meeting - a prelude to many preparatory meetings, including the meeting of the Council of Ministers (Foreign Ministers) ahead of a summit.

Before her departure, President Kumaratunga dispatched Foreign Minister Lakshman Kadirgamar to Pakistan for a meeting with military ruler Perveiz Musharaff on the question of reconvening SAARC. During talks, the Pakistani leader had agreed to take part in a SAARC summit if and when it is held, after criticising India for stalling SAARC.

President Kumaratunga who was due back in Colombo last night or early this morning also held bilateral talks with Indian prime minister.

The official Indian statement said: "The two sides noted with satisfaction the progress in the implementation on the India-Sri Lanka Free Trade Agreement, which took effect on March 1, 2000 and reiterated their commitment to the realisation of the full potential of the agreement. They agreed that the two sides would attend to any problems in the implementation of the FTA and resolve them.

"Problems faced by fisherman of both countries were discussed. It was agreed that the issue must be addressed in a spirit of compassion and understanding. India's concern at firing on Indian fisherman was reiterated and the need to avoid such incidents was emphasized. The Sri Lankan side stressed the need to expedite the ongoing process for the release of Sri Lankan fisherman in India.

"The Sri Lankan President appraised the Indian leadership of the current status of the process to initiate talks to end the ethnic conflict in Sri Lanka and to pursue constitutional reforms.

"India reiterated its consistent support for the unity, sovereignty and territorial integrity of Sri Lanka and for a negotiated political settlement of the conflict, as the only way to restore lasting peace which would meet the aspirations of all elements of Sri Lankan society."

There were no official word from the Sri Lankan government on the President's visit to New Delhi.

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