• Forwarders to self regulate
• Lanka to set world record on holidays
• Ferntea to bag Indian deal
• Annual Report awards to be redesigned
• Paddy problems at festive times
• Cost of war: Two years of GDP says IPS
• Plantation wages up for discussion again
• Trading only on two days - Market update
• Five stars fare better
• No auctions next week - Tea report
• Awards for Wayamba
• Aitken Spence Travels receives ISO 9002 certification
• Mind your business - By Business Bug

Forwarders to self regulate

By Dinali Goonewardene

The Sri Lanka Freight Forwarders Association (SLFFA) is considering a set of standards to regulate the industry. The standards being considered will have to be adhered to by freight forwarders who wish to become members of the Freight Forwarders Association, Chairman SLFFA, Sumith Guruge told The Sunday Times Business.

The standards require freight forwarders to have a minimum paid up capital of Rs. 1 mn and at least one manager with more than five years freight forwarding experience at managerial level. Registration with the Central Bank's department of exchange control is also necessary. The standards require freight forwarders to have liability insurance cover. We get a lot of complaints that freight forwarders who freight millions worth of goods do not ship it on the contracted basis, Mr. Guruge said.

These complaints are usually about non-members of the Freight Forwarders Association and there is nothing we can do about it , he said.

At present when freight forwarders fail to perform contractual obligations shippers have to resort to common law, which is a time consuming process in Sri Lanka. In the absence of laws governing freight forwarding, freight forwarders have approached the government with a set of proposals which could be enacted as legislation. However this will involve a government bureaucracy such as a director of freight forwarding and a Freight Forwarding Act, which the proposed set of freight forwarding standards seek to avoid through self regulation. The SLFFA is presently carrying out an awareness campaign designed to inform shippers of the Freight Forwarders Association and the standards maintained.

Issues of concern to shippers involve freight forwarders releasing goods to consignees who have not paid up. Time delays of shipments are also among the complaints of shippers. A bank will also release money on the presentation of a letter of credit and a document of carriage from a freight forwarder. Freight forwarders may issue documents without shipping goods. Thus the industries effort to self regulate. The SLFFA, which is a member of the Shippers' Council, maintains a registry of freight forwarders and standard trading conditions under which forwarders trade.

In Sri Lanka the freight forwarding industry is about 20 years old. Almost 80 per cent of air freight and 30 per cent of sea freight are moved by forwarders.

Lanka to set world record on holidays

Sri Lanka is poised to enter the book of world records for its astoundingly high number of holidays a year. Officials say that the estimated 171 holidays this year, like in all other years, is a drain on Sri Lanka's economy. Labour productivity is an especially sensitive economic indicator and is one of the major measures used to chart a nation's or an industry's economic advance. An overall rise in a nation's labour productivity signifies the potential availability of a larger quantity of goods and services per worker than before and, accordingly, a potential for higher real income per worker. Countries with high real wages are usually also those with high labour productivity, while those with low real wages are generally low in productivity.

Officials said that the scattered nature of the holidays made matters worse as it broke the momentum and hence most activities had to resume from scratch.

According to experts on the subject and corporate sector officials, holidays other than the weekends hamper productivity, especially in April. They said that even if a company worked around the holiday season, it would not be able to operate productively as everyone else was on holiday. Officials said that for instance, last week's new year celebrations saw a flurry of activity at transit points, but the corporate sector was dozing off as support services were not available.

They said that the economy would not come into full swing until April 19, as that was the auspicious day to return to work. In addition, they said that the unavailability of regular goods and services like bread and domestic workers had many alternating from their regular schedules to compensate for it, hindering their work.

Cricket matches are another productivity killer. Cricket crazy Lankans love to watch the game ball by ball and even some avid enthusiastic bosses wished for more employees who were not interested in cricket!

Sri Lankans did not seem to mind a pay cut at the end of the month or day (depending on work and institution) as long as they watch 22 or so chaps chasing after a ball!

Officials said that though Sri Lanka did not have an officials productivity index, unofficial studies show that Sri Lanka is far below the average level of productivity compared to many of the developed countries.

An unavoidable (under present circumstances) hindrance to productivity is traffic. Increasingly Sri Lankan's seem to be spending more time on the road than in their offices. For instance, it takes an average of 45 minutes at least, to travel to the city centre from the outskirts of Colombo City. In addition, travel in between takes even more time, especially during the close of school. Officials said that if a fraction of all these hindrances were resolved, Sri Lanka's productivity would soar to new heights.

Ferntea to bag Indian deal

Ferntea Lanka said at the recent tea convention in India, that it was keen on pursuing possible joint ventures to sell tea-bagging machines in India. The company also hopes to venture into the Indian domestic and export tea markets.

Chrisantha Perera, General Manager Ferntea said that following the only presentation made by them at the convention that they were confident that they would sell at least 10 machines within the next two years. It is understood that Ferntea is in talks with Jared Morgan of India to jointly market the tea-bagging machine in India.

He said though the alliance would initially be strategic, it would develop into an equity based joint venture later.

Ferntea International Private Limited, a subsidiary of Ferntea Lanka is the agent for H&S Tee/PT tea bagging machines, Sollas packaging and wrapping machines and Fernsack Craft paper sacks in Sri Lanka. The company believes that the Indian tea market has a need for its portfolio of products. However he said that the company was still scouting for Indian buyers.

Mr. Perera also said that they were looking at exporting tea to the Indian market through the Indo-Sri Lankan Free Trade Agreement under which Sri Lanka would be allowed to export 15 million kilos of tea to the Indian domestic market.

Mr. Perera said that though India was uncharted territory, their partners in India would provide them with the insight to exploit every opportunity. He said that they were considering exporting tea from the Bengal and Coonoor belt of India to Europe and possibly other markets in future. The company hopes to start export operations from India by the end of 2000, he added.

Annual Report awards to be redesigned

The Institute of Chartered Accountants of Sri Lanka (ICA) is planning to review and redesign its annual report awards. The new trend in corporate reporting requires us to look beyond statutory regulatory requirements and its historic performance to a company's future performance, President, ICA, Ranel Wijesinha said at the recent annual report award ceremony. A company's future may be assessed through details of risks a firm is exposed to, future investment and acquisitions planned etc. As a first step to change the structure of the awards ceremony titled Best Corporate Report and Accounts has been renamed the Annual Reports Awards Ceremony.

Presently annual reports are evaluated based on disclosures which are mandatory and those which are non mandatory but considered best practice.

Mandatory requirements refer to compliance with the Companies Act, accounting standards and industry specific acts such as the Banking Act, Finance Companies Act and Insurance Act. Non compliance with mandatory requirements could result in an annual report being awarded negative points. Non mandatory requirements which include compliance with corporate governance and even measures considered best practice abroad allow an annual report to earn positive points but cannot be awarded negative marks. While timeliness of an annual report is also considered in the marking scheme, clarity is evaluated by the ability of ratios, key performance indicators and graphs to convey a clear message.

Entries are first evaluated by a technical committee comprising members of the ICA. A peer review of annual reports is carried out by a committee of co- ordinators who are senior members of the institute. The National Development Bank was pipped at the post to remain first runner up while Hayleys Ltd was placed second runner up.

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