The Sunday TimesBusiness

17th March 1996



Your tea is like a gem, says Japanese tycoon

Fifteen years ago when he visited Sri Lanka to buy some gems, he had his first taste of local tea and took an immense liking to it. Thereafter he decided to introduce Sri Lankan tea to the Japanese people, according to Naotake Kumekawa, President of Cross Over Business Development in Japan.

Mr. Kumekawa now in Sri Lanka again bought tea at a record price of Rs. 300 per kilogram at the Tea Auctions on Wednesday. He said he had tasted "Lot No. 183" of tea produced by Hebtulabhoy and was very impressed. Thus he bought it at this record price. According to Mr. Komekawa the quality of Sri Lankan tea has improved tremendously over the years.

"He is becoming an increasingly popular drink in Japan, especially among the young people who are health conscious and feel that it has more nutritional value than coffee", he says.

Cross Over Business Development deals primarily with the export of tea and has a staff of 15. The company has tea shops in two leading Japanese Department Stores, Daimaru and Hankyu in Kobe and Osaka. It also sells tea cups, sugar and other items that are used to drink tea. Tea is very popular in Kobe, with 250 grams of tea being sold for about 1,800 yen.

Mr. Kumekawa said the the Japanese people were not familiar with different types of tea such as "Dimbulla, Uva, Nuwara Eliya. Therefore he hopes to introduce these different varieties of tea to the Japanese on his return and was confident they would be popular.

The Japanese trace the origin of tea to the tea ceremony called "Chanoya" which began in the 12th century, when Abbot Yesai introduced into Japan a new process of manufacturing powdered tea. Tea drinking developed into a highly formalized social function, with the tea ceremony being carefully performed. Rigid rules laid down hundreds of years ago govern the conduct of hosts and guests. They reflect the great influence of tradition on the Japanese way of thinking and living .

Mr. Kumekawa who returns to Japan next week predicted a bright future for the Sri Lankan tea industry.

Trade Unions and EPF: lesson from Malayasia

Asantha Sirimanne reporting from Kuala Lumpur

In sharp contrast to Sri Lankan trade union opposition to government efforts at investing Employees Provident Fund (EPF) monies in equities, business-savvy Malaysian trade unions have demanded that the EPF be allowed to invest more funds in the stock market.

This comes in the wake of Malaysian Trade Union Congress (MTUC) criticism of the present investment policies of the Fund which saw only 7.5 per cent dividends being paid out last year. Over 80 per cent of the Fund is said to be invested in government securities and equity investments are currently limited to 10 per cent though the last budget has proposed an increase to 15 per cent.

"We feel that the 15 per cent limit restricts the ability of the EPF investment panel to derive the full benefits of equity investments," MTUC chief Zainal Rampak told newsmen here last week. He wanted a bigger share of the country's burgeoning private sector to be owned by the workforce.

Mr. Zainal proposed that the EPF be allowed to invest up to 50 per cent of its funds in equities so that more income could be generated for a higher dividend payout. MTUC felt that the 7.5 per cent dividend was not sufficient to keep pace with inflation.

However, Deputy Prime Minister Anwar Ibrahim who is also the Finance Minister said the EPF proposal was too risky, and a gradual increase in keeping with the recent budget proposals was more appropriate. "We feel that the 50 per cent limit is too high" he said. However he declared the government's readiness to consider MTUC's other proposals.

Though the Sri Lankan government, spurred on by donor agencies, has attempted to change EPF regulations to enable at least 5 per cent of the fund to be invested in equities, the move has so far been resisted by the union movement. Central Bank officials said last year that real returns on EPF funds was only marginally higher than inflation.

Economists say that, in a growing economy subject to inflationary pressures, wealth tend to move away from labour into capital. More EPF involvement in business ownership therefore would see a slowdown of the trend. The Sri Lankan equity market is also currently at a near historic low in terms of price earnings multiples.

Private sector seeks

Economic vision above petty party politics

Sri Lanka's private sector seems deeply disappointed at what it terms the government's political mindset and obsession with politics and its apparent lack of clear cut economic policy and commitment to sustained economic growth.

This was one of the main issues that emerged from the panel discussion on 'Sustaining economic growth in a war situation,' held at Hotel Galadari, in Colombo, last Wednesday. The panellists were Managing Director Mast Lanka and Chairman Apparel Exports Association, Ashraff Omar, Director John Keells, Ajith Gunawardene and Chief Executive Officer, Asia Capital, Ian Hardy. It was organised by the foreign Media Journalists' Association.

According to Mr. Hardy, the government has 'some sort of plan, hut no real commitment to it. If you have an economic plan, you must jolly well believe in it,' he said. Even the plan there is, said to be implemented too slow so that the Sri Lankan economy is ''drifting gently downwards."

"The key issue is long term vision," said Ajith Gunawardene. As he said, governments may come and go, but investor confidence must be sustained by the economic vision of the people and the country. Yet, it is up to the government to instill and sustain confidence in the investors by giving the right signals. "For that, economic policy must be divorced from politics."

"What we need today is definitely a faster response from the government, said Ashraff Omar.

The private sector is said to generally believe that the painfully slow process in getting things done stems from the PA government's focus on "transparency."

The panellists did not quite agree with the term "war situation" in its literal sense. They preferred instead to call it a "terrorist problem", which was not as dampening to business as the government's noncommittal stance. Mr. Gunawardene insisted the terrorist issue had to be militarily and politically settled and should run parallel to the economic issue . "Economic growth cannot be sacrificed for political issues," he said.

"I don't believe this conflict is the be all and end all of everything," said Ian Hardy. He feels the most important thing is to have a clear cut economic programme which shows where the country is heading. According to him, in other countries, governments win or lose elections based on their economic policies.

"A political programme by its very nature harps on differences, even though it may be geared to resolving them. But an economic programme treats everybody equally and fairly," he said.

He also feels Sri Lanka can ill afford welfare. Even developed and affluent western countries have rejected welfare as unaffordable. The main issue, is said to be to stimulate the economy so the corporate sector can hire more people, provide employment so that the people can fend for themselves.

Mr. Hardy says the government must rectify its economic plan to transform the economy. He says corporate taxation should be dropped to stimulate business and to give a raison d'etre for new corporate entities. He also feels the government should stress on proficiency in English for the people, for, otherwise, Sri Lanka would get left behind in the intense competition for overseas investment.

The panellists agreed the prevalent education system is "archaic" and breeds unemployable graduates who are unable to fit into contemporary corporate life. But they passed the issue up as "too volatile" to handle right now .

While the private sector in general is said to feel the government has turned a deaf ear to it, the panellists agreed there is no point in the government paying lip service to the private sector as the country's future engine of growth, without offering direction to that growth.

Private sector seeks economic vision divorced from party politics

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