Economic fundamentals improved in 99

For a year that was widely considered a disaster for business by most businessmen, economic fundamentals tracked by economist actually improved. Inflation came down significantly to 3.6% from 7.3% the previous year and the widely quoted Colombo Consumers Price Index rose by only 4.7 per cent in November 1999 compared to 10 per cent YOY.

With a further relaxation of monetary policy interest rates were lower than they were at the end of last year. The twelve month treasury bill rate was 12.69 per cent for the week ending 24 th December 1999 compared to 12.97 YOY.

The slow down in the economy that everyone seemed to be complaining about was however reflected in the central bank statistics and gross domestic product growth was 3 per cent in the first half of the year compared to 5 per cent YOY.

The economy continued to be sucked out by the war and treasury bonds to the tune of Rs 104.867 bn. Treasury bills worth Rs 124.995 bn had been issued at the end of November 1999. And plans to raise a further Rs 25 bn by the end of March 2000 were detailed in the vote on account. However tourists were immune to the war and the tourism sector was a star performer, with arrivals for the ten months ending 31 st October recording 354.200 compared to 297'500 YOY.

The rupee depreciated 6 per cent against the dollar and closed at Rs 71.4 at the 30 th of December 1999. The current account deficit had declined slightly in comparison to the previous year and was US $ 907.2 mn at the end of October. Last years deficit at the end of October was Rs 911.6 mn.

Hopeful Millennium for rubber industry

Rubber industry officials say that the season has given them hope after all and given hope for the natural rubber industry to step into the new millennium with a positive note.

Officials said the industry is facing a shortfall in natural rubber from last month and that it was pushing up prices. They said this was the repercussion of the East Asian countries over exploiting their plantations to make a living during the East Asian crisis. In addition the floods in Vietnam had also affected the availability of natural rubber, officials said.

Officials also said the recent upsurge in oil prices also contributed towards the rise in natural rubber prices. Officials said that since one of the main raw materials used in the manufacture of synthetic rubber came from oil, the price of it might increase.

They said rubber goods producers were substituting synthetic rubber with natural rubber wherever possible. However they added that synthetic rubber was not a substitute for natural rubber and that they had their separate uses. Hence they said that the natural rubber industry would not be affected in any way unless there was a drastic change in oil prices.

The local rubber industry has been lagging behind the rest of the world due to relatively high overheads. Lower prices from competing countries and the East Asian crisis only added to its troubles. In addition the industry took a blow when the International Natural Rubber Organisation (INRO) failed to prop up prices and its subsequent closure in October this year when the two largest producers decided to leave the organisation.

Members of the organisation in October decided to establish an open ended work group, which was due to meet this month to consider the future of international co-operation in natural rubber. However, on an earlier date the council had decided to liquidate its stock within the three year period stipulated for it. Accordingly 138,297 tons of rubber will be liquidated within the next three years. Officials said that this liquidation would not in anyway affect the rising prices.

Setting sail to go study

With the dawning of the new millennium The Securities and Exchange Commission (SEC) will see new blood at its helm as its present Director General vacates his post. Come January 5, 2000, Kumar Paul, Director General of the SEC will vacate his seat at the SEC for a seat at Harvard University to read for his masters, SEC officials said.

This old Peterite who came from the Attorney General's department four years ago was at the helm of the SEC for three years and as the Manager for legal affairs for one year.

During his tenure as DG, he was instrumental in the development of the market. However, SEC officials said that a successor for Mr. Paul was not named at the time this article went to press.

MIND YOUR BUSINESS

BY BUSINESS BUG

Caught in the legal net

More stringent guidelines for finance companies are in the offing in the next financial year.This follows a series of public complaints against several companies, ranging from changing interest rates without notice, non-payment of interest and unethical advertising to downright swindling.Apparently these companies are only exploiting several existing loopholes in the law. And when prosecution was attempted, it could not be proceeded with. Representations have now been made and the laws will be changes appropriately.

Oh you professor !

And now that the blues have won, the budget must be prepared and with the unfortunate professor still recuperating, a replacement will have to be found, or so the treasury boys thou-ght.But the lady wou-ld have none of it, though she herself once said that the only thing he does is to read it out loud to the House. There will be no immediate changes, the leading lady has told associates and the next budget too will be with the compliments of the learned prof...

IPS studies tea industry

The Institute of Policy Studies (IPS) is currently doing a study on the Sri Lanka tea market sector pertaining to the cost benefits of liberalising tea imports - a much debated subject today amongst the industry, an IPS official said.

IPS executive director Dr Saman Kelegama said the study, commissioned by the Ceylon Chamber of Commerce, would relate to the tea sector and a cost-benefit analysis of tea imports for blending purposes.

It would also look into other aspects like the viability of an international tea blending centre that would ideally take over the function of the London Tea auction centre which closed in June 1998.

The liberalisation of tea imports is a hot topic these days with tea smallholders and some tea export companies with established brand names abroad opposing a concept that is backed by the Tea Board, brokers and multinational trading companies.

The promoters argue that the future of Sri Lankan tea lies in blended teas for which imports must be allowed while small producers fear imports would affect local prices. Companies which have established Ceylon tea brands abroad are concerned that a blended product would eat into their niche markets.

HNB's Annual Report best in SAARC

HNB's Annual Report and Accounts for the year 1998 was adjudged as the winner in the Financial Sector for the Best Presented Accounts in the SAARC Region for the third consecutive year. The competition for the best presented accounts was conducted by the South Asian Federation of Accountants (SAFA). The SAFA, which is a recognized body of SAARC, is composed of the accountancy bodies of India, Pakistan, Sri Lanka, Bangladesh and Nepal, a bank release said.

The award was presented by the Foreign Minister of Nepal Dr. Ram Sharan Mahatt on December 10 in Kathmandu.

HNB has also maintained its consistency by winning several awards at the competition organized by the Institute of Chartered Accountants of Sri Lanka as well. In this competition, HNB was the winner in the "Banking Institutions" category and was adjudged as the runner-up in the Overall Competition for the past five consecutive years.

HNB also won the Overall Award in the competition held in 1993 and was also adjudged as the Joint Overall Winner in the competition held in 1992, the release added.

HNB, having recognized that the Annual Report and Accounts of a company is perhaps the best medium through which companies can express their performance to shareholders and other stakeholders in both financial and non-financial terms, invest considerable resources in producing timely and high quality annual reports incorporating relevant historical data, current and future trends, operational ratios, graphs, charts and photographs.

Mobitel signs agreement with Bar Association

The Bar Association of Sri Lanka (BASL) was the latest institute to be served exclusively by Mobitel for all the mobile communication services.

The BASL and Mobitel signed a Memorandum of Understanding recently to provide Mobitel cellular service to all its members. Ms. Cathy Aston, Managing Director/CEO of Mobitel said that it was a privilege and honour to be appointed "Official Mobile Phone Provider" for a prestigious institution such as BASL.

She said that Mobitel is truly a customer-focused company constantly striving to improve on customer care.

"The BASL made the right choice," she added.

Super Extras from KLM and Northwest

KLM, Northwest Airlines and its partner airlines are offering passport to an innovative idea that lets you see more of Europe and saves you valuable time and money.

With as few as three coupons, an itinerary can be planned to such widely separated cities as Athens and Copenhagen at prices far below regular airfares, a company release says.

Purchasing Passport to Europe coupons along with KLM or Northwest intercontinental round-trip ticket ensures eligibility to participate. You can choose to fly to more than a hundred destinations in the programme, but only on KLM or any of its participating partner airlines (KLM City hopper, KLM UK, Alitalia, Martinair, Braathens, Transavia Airlines, Regional Airlines, KLM Excel and Eurowings. Each coupon is good for one flight segment in Economy Class. Should you decide to add more cities, you can purchase additional coupons while in Europe at a KLM or Northwest ticket office or should your plans change while en route, you can make changes for a nominal fee. For those intending to visit several locations in USA, an USA pass can be used on Northwest's network across the USA and Canada and can also be extended to include destinations in Alaska, Hawaii, Mexico and the Caribbean. The passes must be purchased prior to arrival in the USA and travel must be made by scheduled services of KLM and Northwest only.

Masters teams up with DDB

36 years, 8 months and 13 days to the day Masters Advertising was founded by Cyril E Masilamani, the company enters the millennium with a new identity - Masters DDB.

At a quiet ceremony attended by Mr. Greg Taucher, Managing Director, DDB Asia Masters Advertising Limited, formally signed off as an Associate Company of the DDB Worldwide Communications Group Incorporated.

DDB is the largest Advertising Agency in USA and the 3rd largest Agency Worldwide. It services more than 1300 clients through 306 offices worldwide and Sri Lanka is the 97th country in which it is represented, a news release said.

Prior to this agreement, DDB has worked with Masters on their international clients for Sri Lanka such as - Compaq and McDonald's. Mike Masilamani, Managing Director says in a news release. "The challenge was to take the learnings from the international market and adapt it to our Sri Lankan clientele which is approximately 80% of our business.

Masters' current client portfolio includes Development Lotteries Board, Hemas Marketing, Elephant House Soft Drinks, Darley Butler & Co., National Savings Bank, Swadeshi Industries, Associated Electrical and Mount Lavinia Hotel. The Agency is also involved in public service campaigns such as - the Colombo Environmental Improvement Project and the campaign against the advertising and promotion of Tobacco and Alcohol in Sri Lanka.

Andrew Weeraratne, Media Manager - Planning said in the release that the significance of the tie up was the access it gave his department to DDB's specialised media buying arm, Optimum Media.

Dhishna Bastians, Account Manager for Compaq explained the huge input DDB makes through their regional office, which acts as an extension to Masters, given the fact that the client is based out of Singapore.

Kaushik Mukherjee, Creative Director said in the release that brilliant ideas can achieve extraordinary results, for our clients and for ourselves. By instinct and inclination we are enemies of the ordinary. Impatient with the status quo, we are driven to avoid what is comfortable in order to find advantage in the new and unexpected. Our struggle against ordinary solutions is relentless, but never for the sake of being different. Only for the sake of finding a better way."

Eagle Insurance on the Internet

Eagle Insurance, a member of the Zurich Financial Services Group, has launched a website that not only provides details of their business, but makes insurance more interesting with an innovative approach to information.

The interactive website makes it possible for those who access it to learn about safety, risk management and insurance in an absorbing, user-friendly way. Visitors to www.eagle.com.lk will be pleasantly surprised by the wealth of information it has to offer and the eye-opening experience of learning about little known facts related to insurance and planning for the future. a news release said.

Apart from games, the website has important details one would want to know before deciding on an insurance package - whether it is for life insurance or general insurance.

For the first time in Sri Lanka quotations are offered on line for house insurance.

Eagle offers their clients who promote business over the internet an unique opportunity to be linked to Eagle website and promote their businesses as well. The company requests clients to send an e-mail to info@eagle.com.lk to avail themselves for this exclusive offer.

The first thousand visitors to this interesting website will receive a millennium gift the release says.

Even those who are not on the Internet have a surprise for the millennium from Eagle.

If you send your e-mail address to info@eagle.com.lk - you can regularly receive a useful, single page e-newsletter that will have news and tips on making your world safer. Eagle website is connected to the Eagle NDB, NDB, Zurich Corporate websites as well.

CEE plan to step into the millennium with modern equipment

For many years Colombo Engineering Enterprises has been acclaimed as the most efficient ship repair and commercial diving organisation in Sri Lankan waters.

Its underwater specialized services have been fully approved and accepted by international classification societies and ship owning companies all over.

The world contact "CEE" for their specialised requirements.

All ship repairs and underwater services are carried out keeping to high international standards using the most uptodate state-of-the-art equipment.

CEE is headed by popular businessman Kiran Atapattu and has ship repair and diving teams with fully equipped back-up services to counter any contingency at sea.

For many years "CEE" has been accepted by ship owning companies world over as the most efficient marine service organisation in Sri Lankan waters and go into the new millennium with more modern and sophisticated equipment.

Muara Port: Competitive and efficient

Borneo's Ports Director Haji Ibrahim Ali says that Muara Port has a bigger role to play in the development of shipping in the region. To make this a success all facilities have been put in place. Muara Port is the busiest port in Borneo, if not in BIMP-EAGA. With this situation, Muara Port shall continue to attain its vision to be the hub port for the BIMP-EAGA. In the months ahead, Muara Port will be very busy with the new global port operator who will be operating the Muara Container Terminal. Adjustments in the adoption of new technology as well as new operation will greatly affect port users. These changes are very essential towards the making of the port services to be more competitive and more efficient.

With the arrival of the global operator at Muara Port, customer service would be at the forefront. A special committee shall be set up to ensure the smooth transfer of port services to the global player. Listening to the customers' needs and focusing on the port services at Maura Port would be given top priority in the port management agenda.

Last year, Quality Control Circles (QCC) was successfully implemented. The winner of the Muara Port QCC competition represent the Port in QCC competition between Departments under the Ministry of Communications for which our QCC project came first in the presentation category. QCC Culture and training of Ports staff at various levels shall be continued to ensure the betterment of Port Services.

With wide hinterland that includes the Borneo and the BIMP-EAGA, Muara Port has a biggar role to spearhead the development of the surrounding region. With the operation of the Muara Container Teminal by the global player, the deepening of Muara Entrance Channel to 12.5 metres and the future development of Brunei Bay Project as the gloldmine for the millennium project of Brunei Darussalam, Muara Port would become the catalyst for the future development of the country.

In order to become a hub Port in the BlMP-EAGA Region, the Ports Department needs to upgrade its facilities including Container Handling Equipment for handling big ships such as Third Generation Container Ships. Rising to the challenge posed by the new generation container- ship, the Ports Department continues to upgrade its terminal facilities and invest in the state-of-the-art equipment.

By acquiring two new quay cranes panamax type will further assist the handling of containerised cargo. The cranes are equipped with electrical drives, computerised fault diagnostics cum crane management systems, electronic anti-sway and computer-aided operation systems. The special features boost the efficiency of the crane.

To ensure uninterrupted service to the vessels, the Muara Container Terminal will have a fully equipped modern Workshop, which would have the capacity to support all new equipment. This Workshop will be manned by experienced and factory trained personnel who would ensure minimum downtime for the machinery. The state of the art equipment in use will ensure that fault diagnosis will be carried out with the minimum of delay thus providing for the demanding services required from these machines.

Evergreen launches Ever Utile

Evergreen is currently constructing a series of 18 post-Panamax U-type containerships, each able to load 5364 TEU and having a service speed of 25 knots.

On December 3, Ever Utile, the 13th in the series, was launched by Mitsubishi Heavy Industries at its Kobe shipyard. She is due to enter service on Evergreen's Hong Kong/Taiwan-US West Coast (HTW) service in March 2000.

Five U-types were built by Mitsubishi in 1996/7 and were introduced onto the Trans-Pacific trade. A further 13 were ordered later for delivery 1999-2001 and the first five of these were also placed in the Pacific, allowing Evergreen to offer separate weekly five-ship Pacific South-West and Pacific North-West schedules using fast, post-Panamax tonnage. These services, designated TPS and TPN, are in addition to three other Evergreen Trans-Pacific services: the aforementioned HTW service, the KJW (Korea-Japan-US West Coast) service and the Round-the-World service.

Evergreen has revealed that it is also negotiating with Mitsubishi for the construction of five even larger post-Panamax ships able to load in excess of 6000TEU.

By mid 2001 when all of new post-Panamax U type ships should be in service, the Evergreen Group fleet should stand at 138 vessels totalling 360,000TEU. The Evergreen global network currently embraces more than 226 service points in 68 countries.

Evergreen has also announced that in order to match the recovery of global economy the company is planning to reinforce its presence in Europe. This includes to assign larger ships to call at the port of Hamburg and the designation of London as its European head office, effective 1 January 2000.

According to Slin Yeh, President of Evergreen UK Ltd., the move will reinforce Evergreen's UK operations and improve efficiency:

Sea Consortium to enter Mediterranean region

Sea Consortium, a part of the X-Press Feeders group of companies, would enter the Mediterranean region early in the new year, a news release said.

With the growth of the Mediterranean the principal interntion of the new company would be to safeguard and improve the service provided to Sea Med Link's current customers.

The company would be simultaneously introducing additional services to principal ports in the area.

Sea Consortium's Managing Director, Tim Hartnoll said they had been contemplating the westward extension of their current activities into the Mediterranean for some time.

"We now judge that this is the right opportunity to make this move," he said.

(PA)

K LINE to order eight 5,500-TEU container ships

Kawasaki Kisen Kaisha (K Line) has announced its decision to order eight 5,500-TEU containerships from South Korea's Hyundai Heavy Industries and Imabari Shipbuilding of Japan for completion between the latter half of 2001 and the first half of 2002.

Of the total, Hyundai will build five and Imabari three, it said.

K Line is the first Japanese shipping company ever to order a new building from a South Korean shipbuilder, although many major carriers outside Japan are using ships built by Korean builders or have new buildgings on order at Korean shipyards.

Major reasons for K Line's ordering the ships from Hyundai and Imabari include their competitive prices and delivery schedules. Most of the vessels are expected for delivery in 2001.

Brave new deregulated world

Rate agreements die as greater emphasis on openness and competition threatens cosy relationships in the shipping market

THE COMING of deregulation on May I presages a brave new world for the shipping industry. The tempest that has been buffeting the US conference system the past few years finally capsized the Transpacific segments: both the Transpacifc Westbound Rate Agreement (TWRA) and the Asia North America Rate Agreement (ANERA) went under as the month began.

Replacing them were made-to-measure individual contracts with shippers and discussion agreements for carriers.

Equipped with anti-trust immunity and the right to negotiate confidential contracts, these loosely organised confederations of ex-conference stalwarts and independents are the dominat mode of communication for the shipping lines at the turn of the 21st century.

On the east coast, the Trans Atlantic Carrier Agreement (TACA) has given way to another discussion group, the planned North Atlantic Agreement, while lines serving the Latin America trade are setting up the East Coast of South America discussion pact.

The fallout from the Ocean Shipping Reform Act (OSRA) has also overtaken such traditional rate making groups as the 8900 Lines. The point of these metamorphoses is that the rigid structure of a cartel like the steamship conference is no longer necessary in a deregulated environment.

Big companies like Sunkist chartered their own ships but generally corporate America remained tied to a system that put it in an adversarial relationship with transportation providers. The philosophical implications of deregulaiton are profound. What is involved is a megashift in traditional relations between shippers and carriers. Because it permits confidential contracting with a minmum of oversight from the Federal Maritime Commission, deregulation revolutionises common carriage.

In a virtually free market, shipper and carrier are now able to take a team approach to transporation and logistics needs.

Implicit in this new maritime milieu is a sink-or-swim rationale. No longer will the smaller or less efficient outfits sign "me too" rate agreements, as secrecy is the hallmark of a deregulated market. Look for the weaker lines to combine with their competition or go under. Use of consolidators and other third parties may lower the risk.

Deregulation has actually been a two-cycle process. Cycle one came with the 1984 Shipping Act, which permitted conference lines to lower their rates unilaterally, that is, take independent action.

The kicker was that IA rates were public and became a benchmark for tag-along operators or shippers who sought the lowest rate available.

The basis of OSRA is confidential contracting making May 1, 1999 the beginning of a new era in ocean shipping. Competition-driven partnerships between carriers rule the waves these days anyway, and a "free market" bargaining situation is now their legacy.

This is clearly a benefit to Big Carrier and Big Shipper. The latter has the clout to hammer out a favourable transportation and logistics package with the former. And the current system of carrier alliances gives a shipper global reach, including inland transportation and a grab bag of logistics options.

Shippers with large payloads can negotiate individual or alliance-wide service contacts tailored to their products, routes and specific needs.

Critics argue that the small and medium-size companies will not have the bargaining power of their "similarly situated" competitors. And non-vessel operating common carriers (NVOs) complain that they cannot write service contracts. Deregulation boosters say that they can join forces with others in the same trade lane, just as NVOs can team up in associations to secure the most favourable terms.

The fact that shipping rates no longer have to be filed for public consumption will prevent smaller shipper, associations and third parties from demanding the same terms as the megashipper. It will also prevent competing carriers and/or alliances from using "tag along" rates as competitive devices.

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