News

Kahawatte Plantations in reluctant hands 

However they could only come up with Rs. 100 mn. Vanik Incorporation therefore entered into an agreement with the MJF Group who agreed to provide a loan of the balance Rs.100 mn. The 66 per cent stake in Forbes Plantations was pledged as collateral for the loan.

The MJF group's management has had numerous discussions with CHCL since May in an effort to collect their dues and incurred Rs.20 mn to service the Rs.100 mn loan they gave. The agreement now sees them owning a 51 per cent stake in Kahawatte Plantations, for a consideration of Rs.100 mn. However sources said MJF Holdings had been keen to hand over the plantation to CHCL and collect its dues without exploiting the potentially lucrative situation.

Meanwhile the directorate of CHCL is litigating against its Chairman and the company faces a split. 
First Capital -Money Market

Renewed public interest for government bonds

Call money and the Repo market

As the Central Bank maintained its reverse repo rate at 20%, the overnight market repo rate was persisted same at 19.8%~20%. 

Central Bank open market operations

Treasury bill auction.

Therefore, the subscription level for treasury bills in this week's auction was poor and the 91day and 182 days category was under subscribed. Yields of all the categories surged by more than 100 basis points. Yet the gap between 364 days yield and 2-year yield is more than 275 basis points. The 1-year effective yield on the callable 2-year bond is even higher. Given the lower level of subscription, the Central Bank intervened for Rs.559Mn. 

We expect the aggravated liquidity shortfall and the unprecedented gap between bond yields, the pressure will remain on the treasury bill yields. 

Mixed reactions to CSE deregulations

According to the Director General CSE , Hiran Mendis, these rules will contribute towards lowering the cost of obtaining a listing. 

He also added that the high cost of obtaining a listing and the cost involved in compiling with the stringent disclosure requirements of the CSE, has deterred many companies from obtaining a listing. 

However these measures have given rise to two schools of thought in the market. One, that the transparency and a heavy disclosure requirement creates an inefficient market. The other that more transparency coupled with a high return on shareholding will create a stronger market.

Former regulator, Aritha Wikramanayake said the deregulation of the public float requirement, would defraud the government of its legitimate revenue. " This will allow family held companies to obtain a listing by finding 100 friends to be shareholders. They will be able to benefit from the Tax exemptions. The reason why we employed a statutory advertisement, was to inform the general public of IPO's. With the requirement now being abolished the average member of the general public will not be aware of a IPO," Wikramanayake said. "Effectively this will allow all related parties of the company to subscribe shares at the IPO and sell it to the general public at manipulated high prices," he added.

According to fund manager, NAMAL, Probodha Samarasekera, the effectiveness of the deregulation will depend upon the macro economic conditions in Sri Lanka and abroad. " Return on equity, shareholder value and transparency should be given paramount importance. But those views are currently being challenged. 

"I believe the market will take care of itself if the transparency and return on equity is acceptable for the shareholders," Samarasekera added.

Indian Textile Show 2000

The theme of the show is "Indian Fabrics - Sri Lankan Garments" which will highlight the suitability and availability of Indian fabrics to the Sri Lankan garment industry.

The show is being organised by the High Commission of India and the Synthetic and Rayon Textiles Export Promotion Council of India. All the major textile/garment associations - Sri Lanka Apparel Exporters Association, Free Trade Zone Manufacturers Association, National Apparel Exporters Association, Ceylon Textile Manufacturers Association, and Sri Lanka Garment Buying Offices Association - have endorsed the show, a High Commission release says. 

Products on display at the show would include the latest range of Indian synthetic, rayon and blended textile items like suiting, shirting, dress materials, embroidered fabrics, sarees, furnishings; made-up items like scarves, stoles, dupattas and various types of yarn. 

Eagle Insurance records 28% 

Non-life business recorded a satisfactory growth despite fiercely competitive market conditions with a 13% increase in premium income over the corresponding period in the previous year. Life growth was significantly higher, with written premium increasing to Rs. 1 billion, a 28% increase verses the same period last year. The Life Fund too recorded an appreciable growth and now stands at Rs 3.5 billion. 

The company enhanced the "insurance for living" product range by extending the hospital income cash scheme to children as well. Mixed reactions to CSE deregulations

Too much too late seems to be the market sentiment to the revised listing rules of the CSE. The massive deregulation announced last week was aimed at increasing the market capitalisation of the declining Colombo market. The CSE removed the underwriting requirement for equity issues and the minimum public holding requirement of 25% for main board companies and 10% for the second board. The revised rules only require a 100 shareholders for a company to list. No past profit record is required for a listing on the second board where the requirement for a minimum of 50 shareholders has been removed. Also the minimum capital requirement has been reduced to Rs 75 mn for the main board and Rs 5mn for the second board.

According to the Director General CSE , Hiran Mendis, these rules will contribute towards lowering the cost of obtaining a listing. 

He also added that the high cost of obtaining a listing and the cost involved in compiling with the stringent disclosure requirements of the CSE, has deterred many companies from obtaining a listing. 

However these measures have given rise to two schools of thought in the market. One, that the transparency and a heavy disclosure requirement creates an inefficient market. The other that more transparency coupled with a high return on shareholding will create a stronger market.

Former regulator, Aritha Wikramanayake said the deregulation of the public float requirement, would defraud the government of its legitimate revenue. " This will allow family held companies to obtain a listing by finding 100 friends to be shareholders. They will be able to benefit from the Tax exemptions. The reason why we employed a statutory advertisement, was to inform the general public of IPO's. With the requirement now being abolished the average member of the general public will not be aware of a IPO," Wikramanayake said. "Effectively this will allow all related parties of the company to subscribe shares at the IPO and sell it to the general public at manipulated high prices," he added.

According to fund manager, NAMAL, Probodha Samarasekera, the effectiveness of the deregulation will depend upon the macro economic conditions in Sri Lanka and abroad. " Return on equity, shareholder value and transparency should be given paramount importance. But those views are currently being challenged. 

"I believe the market will take care of itself if the transparency and return on equity is acceptable for the shareholders," Samarasekera added.

Indian Textile Show 2000

The theme of the show is "Indian Fabrics - Sri Lankan Garments" which will highlight the suitability and availability of Indian fabrics to the Sri Lankan garment industry.

The show is being organised by the High Commission of India and the Synthetic and Rayon Textiles Export Promotion Council of India. All the major textile/garment associations - Sri Lanka Apparel Exporters Association, Free Trade Zone Manufacturers Association, National Apparel Exporters Association, Ceylon Textile Manufacturers Association, and Sri Lanka Garment Buying Offices Association - have endorsed the show, a High Commission release says. 

Products on display at the show would include the latest range of Indian synthetic, rayon and blended textile items like suiting, shirting, dress materials, embroidered fabrics, sarees, furnishings; made-up items like scarves, stoles, dupattas and various types of yarn. 

Eagle Insurance records 28% 

Non-life business recorded a satisfactory growth despite fiercely competitive market conditions with a 13% increase in premium income over the corresponding period in the previous year. Life growth was significantly higher, with written premium increasing to Rs. 1 billion, a 28% increase verses the same period last year. The Life Fund too recorded an appreciable growth and now stands at Rs 3.5 billion. 

The company enhanced the "insurance for living" product range by extending the hospital income cash scheme to children as well. 

Greetings from Telecom

This is a novel way of sending Christmas and New Year greetings, which is more convenient when compared to the traditional method, a company release says. 

Themed of "getting closer" the SLT offers a choice of 20 beautiful cards in two sizes : medium and large, which will be published with reference numbers in the print media. A medium size card is priced at Rs. 20/= while a large card is Rs. 30/=. 

These prices include the cost of delivery to a given address. Senders are required to call 133 and give their reference number of the card with the address and the desired greeting. 

The first 10 words of the greeting excluding to and from are free of charge and any additional word will be charged at the rate of Re. 1/

Well-wishers can send their greetings in either Sinhala, Tamil or English. All charges will be added to the monthly telephone bill, the release says.

SLT also plans to continue such services for other festivals throughout the year.

DFCC's half year profits Rs. 388m

The Bank's overall non-performing assets portfolio did not record a material change from 31 March 2000. However, taking into account the recent experience relating to realization of collateral the Bank has thought it fit to adopt a more aggressive provi-sioning policy for its larger doubtful debts. This has resulted in an acceleration of provisioning compared with the minimum stipulated by the regulator as well as applying additional discounts when valuing collateral. The Bank made provisions of Rs. 178 million for bad and doubtful debts, an increase of 40% from the Rs. 127 million in the previous year for the same period. 

Investment securities recorded a temporary dimi-nution in value of Rs. 91 million. Whereas during the 6 months ended 30 Sept., 1999 there was a reversal of such temporary diminution to the extent of Rs. 160 million. The temporary diminution was charged to reserves. The Group tax liability reduced by 37% due to a one-off reversal of an earlier provision made by a subsidiary company which was no longer required. 

There was a marginal decrease in the Bank's customer loan and lease portfolio. The Bank cons-ciously adopted a conservative approach to credit expansion. However, undisbursed credit approvals as at 30 Sept., amounted to Rs. 2,808 million.

CIMA in Kandy 

A competent panel of lecturers will conduct the programmes. Students will be provided access to library and IT facilities, a news release says. Strict evaluations of students' academic progress will be made during the course, which will conclude with past paper discussions, mock exams and tutorials in time for the May 2001 exam.

Students in Kandy and the surrounding districts - Kegalle, Kurunegala, Matale, Nuwara-Eliya and Ratnapura, now have the convenience of sitting the CIMA examination in Kandy at its new examination centre.

L. B. Finance opens "The Pawn Shop" 

L. B. Finance already operates two specialized pawning centres at Maradana and Grandpass. 

L.B. pawning services are provided to customers from their branches in Kandy, Badulla and Negombo too, a company release said. 

The release added that the new pawning shop would feature low interest rates and other features like easy redemption facilities, computerized checking of articles and extended services till 6.00 p.m and the specialized "L. B. Saturday Services" on Saturdays.

AccXES: Sri Lanka's first digital document system 

The Digital Document System, XES 8825 DDS which will be operational in early December streamlines work flow through concurrent scanning, printing and copying of wide-format documents, and offers distributed scanning and printing capability that allows users in different departments and work groups to print, scan or copy on-demand right from their desktops, a news release says. 

The simultaneous use of the copy, scan and print functions is enabled by the AccXESTM controller architecture. 

Distributed printing allows engineering and architectural documents and collated sets to be printed or digitally copied straight from the desktop, without time-consuming delays, cost of physical distribution, or PCs dedicated to these functions. 

The XES 8825 DDS also simplifies management and distribution of wide-format documents as it can scan legacy or other engineering documents into digital formats for easy storage and to achieve documents. 
Appointments 

New CEO for RESCO

Mr. Pinto has to his credit fourteen years of management experience and skills from the tea and rubber plantations industry, and is enthusiastically looking forward to implementing ambitious new plans for RESCO and to establishing the company's position as the leading wireless solar electric services company in Sri Lanka. 

For the last four years he has been serving as superintendent of Houpe Estate, Kahawatta Plantations, the best performing estate in the Forbes & Walker Group.

RESCO-Asia is the Sri Lankan subsidiary of Solar Electric Light Company (SELCO), an international solar power services company. Established in 1997, the company works to bring solar power to rural Sri Lankans who lack access to grid power.

RESCO is a subsidiary of SELCO with headquarters in Washington DC, and subsidiaries in Sri Lanka, India, Vietnam, and a joint-venture in China. The Hivios-Triodos Funds of the Netherlands and People's Venture Investment Corporation of Colombo are also RESCO shareholders.

The company has 6 fully-owned branch offices in Sri Lanka, and sells, installs, services and helps finance solar power lighting systems in most parts of the country. 

Ken Balendra Consul of Poland 

Mr. Balendra assumed office as the first Sri Lankan Chairman of John Keells Holdings in 1990. He sits on the Boards of some 60 companies in the John Keells Group. 

He also serves as Chairman of Union Assurance Ltd. (in which JKH has a significant share holding) and of the Securities & Exchange Commission of Sri Lanka. He is also a non-executive Director of Ceylon Tobacco Co. Ltd. (a subsidiary of British American Tobacco) as well as Bata Shoe Company of Ceylon Ltd. and Bata Exports (Pvt) Ltd. Mr. Balendra retires from the John Keells Group at the end of December 2000 after 31 years of service, a news release says.

Unafraid and unbowed

Q. The Business Community holds the opinion that the JVP is against the free market economic policies. What are your plans to win their confidence?

A: Our plans are geared towards wining the confidence of the nation and not only of the business community. We are asking this question; Who benefits from this present open market system? Is it our local producers and the businessman or the multinational companies. We are against the present system, which is a puppet show controlled by the Western countries. But we make it quite clear that JVP is not proposing a economy covered by a coconut shell. We are proposing an economy, where Sri Lanka will have the bargaining power and the decision making power independent of the Western influences. The Businessmen who are national minded and genuinely interested in the growth of the nation should have nothing to worry about us.

How do you evaluate the economic progress of the P.A. government during the past six years.

Rather than a progress, it has been a regress during the past few years of P A rule. According to the Central Bank reports unemployment is on the decline. But for their statistics they regard anyone who is working even one day of the week as employed. If you think likewise, yes unemployment has reduced. 

Crime rates and other social problems are on the up-rise, these are mainly caused by bad economic conditions. People are resorting to crimes to survive. PA has not initiated anything new. The party is just carrying on the economic policies of the UNP. Thanks to them the whole country is suffering the consequences.

What is the JVP's policy towards public sector reforms and privatisation?

We do not see any socio-economic benefits to the country in the present privatisation program. Privatisation has been a method used to fill the pockets of the racketeers and friends of the ruling party, by selling State assets at undervalued prices. Politicians have also been eager to sell various government organisations at undervalues, merely to earn commissions and kickbacks from multinationals. The famous success story the government is harping about is the Telecom privatisation, how the number of phones expanded etc. But even today the SLT accounts are showing losses. 

They show losses in their accounts and plough back their profits to Japan by other means. Same about the P&O, they take their profits to Singapore even without going through the local banks.

JVP as a party believes that more State intervention is needed to develop a country like Sri Lanka. Government should set economic targets and formulate plans to achieve them. Private sector should also be invited to participate in this process, but to what extent should they depend on the economic target the government is trying to achieve. Right now the treasury is selling of assets when it is hard up for cash. We do not see a proper policy or direction in this process. 

But on a global context, the world is moving towards less public sector involvement and more private sector initiatives in the economies. Isn't your policies against the way the world is moving? 

No that is wrong. If you take the developed countries we don't see the type of privatisation that was carried out in Sri Lanka. They have kept the vital institutions of the economy under State control, either directly or indirectly. Even in Singapore the harbour is under the government. These countries show us a wrong picture. Outwardly, they show us a depleted public sector and a widespread private sector. But in reality they operate with very high taxation and massive State sponsored benefits to their citizens. 

While the reality in the developed countries is this, yet they are telling us; "The world is moving towards more privatisation and less public sector involvement". The motive behind this false picture is to make their multinationals benefit from our State held assets. This is a trap. Sri Lanka has become a begging bowl for foreign aid because of this trap.

A political party is promoting the Oluvil port strongly. But independent research has pointed out that Hambantota is a better location. What is your opinion?

Muslim Congress is promoting Oluvil not because it is a suitable location, but simply because they need to create a power base in Oluvil.

We see Hambantota port as a potential goldmine for Sri Lanka. Hambantota is in the shipping route and its depth and the natural setting is one of the best in Asia. If we can build a modern port in Hambantota, Singapore would lose a major part of their business. We also believe that Singapore will go to any extent to prevent a port being built in Hambantota.

If there is any political party interested in the rapid economic growth of the country, they should give the priority to Hambantota.

How do you see the role of international donor agencies such as World Bank and IMF in Sri Lanka.?

In the 1800's Western countries used their navies and fire power to spread colonialism. In the modern world it is done through the donor agencies. Today our economy is virtually run by these agencies. We cannot survive without them. To get their aid we have to comply with their policies. For example shifting the focus from paddy cultivation, putting a price to water etc. Sri Lanka has to implement them regardless whether they have long term bad consequences or not. The ultimate aim of the IMF and the World Bank is to make sure that the under developed nations remain under developed.

Recently the World Bank has moved from its set of economic policies towards a set of political proposals. They are suggesting localisation of power. We see this as an attempt to destabilise the underdeveloped nations.

But the highest growth rate in Sri Lankan economy was achieved during the early 1990's. It is a known fact that there was two World Bank projects operating in Sri Lanka at that time. What is your opinion?

What the World Bank has done is , set the rules, play the game and umpire themselves. Growth rates can be artificially shown when you are the person who is setting the parameters. Mahathir Mohamad of Malaysia says in his book Vision for Asia,"Our economy was strong and vibrant, but somehow the Donor Agencies destabilised it. Today what they want is to maintain the under developed nations in their weak position".

When credit is infused into the economy, it shows short-term growth. But the set of economic policies that accompany them could destroy the economy in the long run. A good example is the World Bank's proposal to shift the attention from paddy. What they want is to disrupt the self sufficiency in rice and to make us dependent on foreign wheat in the pretext of promoting export oriented crops in Sri Lanka.

JVP vehemently opposes the IMF"s proposal to encourage private sector involvement in the utilities sector. 

But the IMF has pointed out that Sri Lanka needs Rs. 80 billion to provide water to its citizens during the next 20 years and the State sector could provide only Rs 40 Billion. How do you propose to finance the deficit?

If we were ruling the country we would have shown how to raise the Rs.40 billion. Since we are not, lets look at the ways this government is wasting the funds that could be used for this purpose.

The government is today wasting billions on its ministers. The vehicles imported for each minister cost about Rs. 3.6 million each. 

What we are saying is, during the next ten years, drinking water will become a scarce economic resource in the world. What the IMF is trying to do is to secure this resource to Western multinationals through this privatisation process. What our government should do right now is to recognise this potential and protect our water resources, with an aim of catering to the world market in the future.

What the World Bank wants to do is to use our resources to their advantage, not to our advantage.

JVP has traditionally opposed any steps towards privatising the higher education. Especially Medical and Engineering fields. But today thousands of our students are spending millions of dollars in foreign universities. And our universities are underfunded and no longer in the top 100 in Asia. Don't you think that Sri Lanka could have saved the forex and our Universities could have benefited from the funds of the paying students, if it was allowed?

First of all it is wrong to believe that the additional funds will remain within Sri Lanka. Since most of the Universities will be foreign, they will plough the profits to the country of their origin.

What the government should have done was to provide university education to all those who pass the A'levels. Instead they were trying to provide university education to the wealthy only. What about the poor people? 

If the government provided an equal opportunity to the poor also, we would have not protested. We are not jealous of any one who is paying for his education. But the rights of the have-nots also should be met.
 

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