• Govt. bonds: more dealers facing axe
• Squeezing 2 nuts milk from one
• With Jabiru, Lanka begins building planes
• Local web names to be corrected
• Regional co-operation in South Asia
• Revenue loss in GST
• GST a threat to local industrialists

Govt. bonds: more dealers facing axe

By Mel Gunasekera

An expert group has recommended that the number of primary dealers engaged in trading government securities should be cut by more than half.

If the proposal of this group appointed by the Central Bank to study primary dealers, is accepted the dealer network will be reduced to eight from the present 18. In 1995 the Central Bank withdrew the Accredited Primary Dealer (APD) status from two dealers, and from five dealers in 1997.

Debt securities traders say the most likely candidates to lose the APD status are the foreign banks, which do very little secondary trading. But domestic commercial banks, including Bank of Ceylon which is the largest primary dealer and non-bank primary dealers such as MBSL, Vanik, Asia Securities and Waldock MacKenzie, are likely to remain as APDs.

Another proposal recommends that APDs be incorporated as separate bodies to engage exclusively in government securities trading. At present debt securities trading is carried out as a supplementary activity to the main business of commercial banks and other non-bank primary dealers.

It is expected that specialised institutions would be more committed to the development of the debt market, enabling better surveillance and making it easier for incentives to be targeted.

The National Savings Bank, which is a large purchaser of government securities is at present legally barred from setting up subsidiaries.

All foreign banks operating in Sri Lanka are also branches, making it difficult for them to set up subsidiaries. However experts have noted that if any foreign bank is sufficiently interested in engaging debt securities trading, they could set up a local office through their affiliated companies that are engaged in capital market activities.

It has also been recommended that the APD subsidiaries be capitalised at Rs 100 mn initially. Incorporating subsidiaries would also eliminate the anomaly among banks.

Squeezing 2 nuts milk from one

Sri Lanka's Coconut Research Board (CRB) is developing a coconut milk product that would be cheaper to use in households, to be marketed through small milk centres as instant milk or in the form of milk packs, a senior researcher said.

Dr. U.P. de S. Waidyanatha, chairman of the Lunuwila-based CRB told The Sunday Times Business that they were completing a project this month in which a household would be able to obtain twice the amount of milk that is normally extracted from a coconut through the traditional scraping method.

"What we have developed is a machine that can extract twice the amount of milk from one coconut, than the coconut scraper. So you virtually get two coconuts for the price of one," he said.

The CRB is awaiting the arrival of an automatic packing machine to test the product, which would be made available in liquid-packet form and have a shelf life up to two weeks.

"We are working on improving this innovation. The ultimate objective is to provide cheaper coconut milk to the consumer," he said.

Cheaper coconut milk is not the only objective. The CRB says that in the household use of coconut, there is a lot of waste.

While the coconut extraction method is not the most efficient, coconut refuse and the coconut shell is thrown away when these could be used as by-products to make poonac (animal feed) and charcoal.

Dr. Waidyanatha said that more than 30 percent of the coconut is wasted in household consumption by the non-use of the refuse and shells.

Sri Lanka's annual coconut output is around 250-260 billion nuts and 20-25 percent of this is exported through copra. The balance is for household use of which 30 percent is wasted, instead of made productive.

The CRB is constantly trying to devise ways of improving coconut production, maximise utilisation and make it cheaper for homes.

The new extraction method would mean that consumers need not buy nuts in the marketplace. Instead the milk would be available in polythene packs or in small milk centres where a specially-designed scraping and expelling machine would produce instant milk.

Such a system prevails in Malaysia where most grocery stores have the machine enabling a customer to choose between buying coconut scrapings or the full coconut.

Coconut milk is widely used in Sri Lankan households and in recent years, coconut milk in powdered form, produced by a multinational company, has also become popular because it saves time. The cost of powdered coconut milk is however higher than scrapings.

Dr. Waidyanatha said that they hoped to invite private companies interested in utilising the proposed new techonology and marketing milk packs next month. The refuse and charcoal can then be commercially used too.

"We would also promote the concept of small 'kiri halas' (milk centres) across the country so that instant milk is available everywhere," he said.

With Jabiru, Lanka begins building planes

A Sri Lankan company is to build and sell aircraft in the Asian region, in a pioneering venture that will take Sri Lanka into the high-technology engineering sector.

A pre-production model of the Jabiru ST 3 built by a Lion Air Group company has already made its first flight successfully.

"Jabiru is the name of an Australian bird," says Wing Commander (Retired) Palitha Wijesuriya, CEO of Lion Air (Pvt.) Ltd. Unlike the mostly metal Cessna however, the shoulder winged, fixed undercarriage aircraft with twin side-by-side seating is made of modern lightweight composite materials.

The trainer is a variant of a pleasure aircraft originally developed by two Australian aeronautical engineers. It will cater to a niche market replacing the Cessna 152 trainer.

"Though there are trainer aircraft in the market, no one has so far come with a basic trainer to successfully replace the Cessna 152," say Wg. Cdr. Wijesuriya. The aircraft will be built at a Rs 500 mn BOI factory in Koggala. The project company is Jabiru Asia (Pvt) Ltd, a joint venture with Lion Air Group and the technical partners, Jabiru Australia (Pvt) Ltd.

Though the 2200 horsepower petrol driven piston engine, avionics and some components will be imported from abroad from specialist manufacturers, the fuselage and wings and other structural components will be fabricated in Sri Lanka itself. Lion Air technical personnel had already been sent to Australia to train on using composite materials such as fiberglass. Technicians have been drawn for the Lion Air group's own Aeronautical Engineering training school.

Lion Air's subsidiary CDE Aviation Company (Pvt.) Ltd., already makes aircraft components.

The aircraft has already been certified in Australia and the Directorate General of Civil Aviation (DGCA) in Sri Lanka for training purposes.

In the first year they hope to sell at least 15 aircraft. In the second year they hope to sell 25 units, going up to 40 in the third year. Its first major market would be Indian flying schools. Lion Air has already sought approval from Indian civil aviation authorities for the Jabiru.

The Lion Air Group also provides training services following its acquisition of Asian Aviation Centre. Its training school takes in batches of trainees for Commercial Pilots License (CPL) with Instruments Rating every 4 months. A CPL costs Rs 195,000. Several Maldivian students are under training here. It has provided training for Sri Lanka Air Force Cadets.

"The time of Air Force instructors are valuable, some of them have to fly operations" says Wg.Cdr. Wijesuriya. "It is more cost effective for them to contract out the basic training, and provide only military flying training on their own equipment."

The Group has already set in motion plans to set up a helicopter service in India after its own Bell Jet Ranger was grounded after local defence authorities banned domestic helicopter flights. In India the company had also acquired a Bell model 47 which will be mainly used for crop spraying.

The helicopters operate from Juhu Airport Bombay for passenger charters. They also undertake work for offshore oil exploring companies, provide helicopters for the thriving film industry there. Lion Air will also set up a flying training school at Trichy airport. Lion Air Group has also applied permission o fly to Moscow, Johannesburg and Guangzhou using leased Boeing 767s.

Locally the group also hope to provide an air ambulance service in association with a private hospital and an insurance company. The twin engined Piper Senecca used for training could be quickly re-configured to carry a stretcher and medical staff.

The aircraft manufacturing unit hopes to build a four seater in the future, once Jabiru ST3 has proved itself to be a commercial success. One of the key advantages the ST3 has is the low production cost in Sri Lanka. Production models are expected to be priced at around US $ 75,000, compared to around US $ 135,000 for a somewhat similar aircraft made in developed countries.

More Business * Local web names to be corrected * Regional co-operation in South Asia