Lal heads Insurance Corp.

Lal de Mel who has served the private sector more than three decades assumed duties as the Chairman of Sri Lanka Insurance Corporation Limited with effect from 22nd January 2001.

He possesses a B.Sc. Degree obtained from Peradeniya University. He is also a Member of the Chartered Institute of Marketing - United Kingdom possessing a Diploma in Marketing from the same Institute.

He joined M/s. Chemical Industries of Colombo Limited in 1966 and became the Managing Director of CIC Paints (Pvt) Limited in 1995. At present he holds Directorates of Bank of Ceylon, Chemanex Limited, CISCO Speciality Packaging (Pvt) Limited Skills Development Fund and Construction & Guarantee Fund. He is also a Board member of Fair Trading Commission and the Chairman of Tharuna Aruna Institute.

He was the Chairman of Ceylon National Chamber of Industries during the period 1992 to 1993, President of Sri Lanka Branch of the Intenational Advertising Association in 1995/1996. He has been the President of the Federation of Chamber of Commerce & Industry from 1999 to date and has taken steps to improve the contribution made by the private sector to the ecomomy. He was also the President of Sri Lanka Institute of Marketing during 1997/1998 and is a Honorary Member of the same Institute.

New CEO of People's Bank

Religious ceremonies were held at the People's Bank Head Office to invoke blessings on the new Chief Executive Officer (CEO)/General Manager of the Bank, Mr. Derek Kelly. Maha Sangha led by Venerable Dr. Bellanvila Wimalaratana Nayake Thero, chanted Seth Pirith to bless the new CEO.

Ven. Nayake Thero is seen trying the "Pirith Noola" (Sacred Cord) on Mr. Kelly's hand.

The Chairman of the Bank Mr. Mano Tittawella, Members of the Board of Directors, Additional General Manager, Mr. Asoka de Silva and other members of Staff participated at the ceremony.

An international Manager with proven experience in Senior General Management in a broad range of roles, Mr. Kelly has taken up the responsibility of implemen-ting the Corporate Plan of the Bank and leading it forward.

Mr. Kelly who has completed 31 years of service with HSBC has been its CEO in Lebanon, Jordon and Vietnam. With his vast experience in guiding the destinies of HSBC in emerging and fast changing markets, Mr. Kelly is committed to enhance and expedite the process of commercial orientation of the People's Bank.

Bob Kuperman returns to DDB New York as new Chairman

Bob Kuperman, former President and CEO of the Americas at TBWA Worldwide, has been named Chairman of DDB New York.

In his new position, Kuperman will oversee all aspects of the office's business in partnership with DDB New York President John Berg.

He joins the DDB New York team at a time of increasing momentum with account wins over the last six months such as BestBuy.com and Hasbro toys, as well as additional assignments from longstan-ding clients Merck and Hershey Foods. The office along with Amsterdam and Chicago, also played a key role in DDB Worldwide's recent win of Philips Electronics.

The position of Chairman has been vacant since December when Peter Tate was named Excutive Vice President of DDB U.S.

DDB New York is the flagship office of DDB Worlwide (www.ddb.com), the second largest advertising agency in United States and third largest agency worldwide (based on consolidated gross income).

The agency has 206 offices in 99 countries and is acknowleded as the indus-try's most creative multi-national network, based on its dominance of advertising award competitions.

DDB is represented by Masters DDB in Sri Lanka.

People's Merchant Bank appoints new CEO

Mr. Naomal Soysa has been appointed as Chief Executive Officer of People's Merchant Bank with effect from January 15, 2001. He succeeds Mr. H A Wehalle who retired in December 2000.

People's Merchant Bank is the second Merchant Bank to be incorporated in Sri Lanka. The Bank which was established in 1983 is quoted in the Colombo Stock Exchange with over 10,000 shareholders.

The major shareholders of People's Merchant Bank are People's Bank (39%), Hatton National Bank (10%), DFCC Bank (10%) and Southbridge Capital Investments (Sri Lanka) Ltd. (15%). The Bank's Board of Directors are, M/s Mano Tittawella, Rienzie Wijetilleke, Mrs. Kanthika Abeyesundere, Asoka de Silva, Martin Fernando, S.Sundaralingam, Rodger Johnston and M. Radhakrishnan (Alternate to Mr. Johnston).

People's Merchant Bank provides investment banking services, such as loan syndication, corporate restructuring, mergers and acquisitions, Investment Advisory services (Privatisations) Lease financing, Bills discounting and secretarial services. A news release from People's Merchant Bank states that it will be venturing into new areas of business that will supplement the present investment banking services.

McCann-Erickson named Global Agency of the Year for the third year

For the third consecutive year, Adweek Magazine has named McCann-Erickson as its Global Agency of the Year. Adweek first launched the Global Agency of the Year category in 1998, which means that McCann-Erickson is the only agency to have earned this distinction.

With worldwide billings of more than US$ 21 billion and operations in 131 countries, McCann-Erickson WorldGroup is the globe's biggest network and one of the best.

Not only was it enormously gratifying to win Adweek's Global Agency of the Year honour again this year, but also the reasons for the Agency's selection were particularly satisfying. In an editorial that accompanied the honour, Adweek pointed out that this year, the criteria for winning was made tougher. Stellar work and financial results remain critical, but were simply the point of entry. In Sri Lanka, McCann-Erickson in partnership with Grant advertising created a truly global Agency, Grant McCann-Erickson when they joined hands in 1995.

As the country leading advertising agency Grant McCann-Erickson services both local and multi-national clients spanning a wide range of industries.

UN offers 87 remedies to help poor nations develop

Declaring no task more urgent than rescuing a billion people in the world from "abject and dehumanizing poverty", the United Nations has come up with dozens of ways to finance the economic development of poorer countries.

In a report titled "Rural Poverty Report 2001: The Challenge of Ending Rural Poverty" prepared by the United Nations International Fund for Agricultural Development (IFAD) and released recently on behalf of the Secretary-General Kofi Annan, UN offered no fewer than 87 remedies, many aimed at attracting more private investment and promoting trade to offset declines in foreign aid.

The report recommended "significant and immediate" debt relief for the poorest countries, the reduction or removal of duties and market quotas on exports from developing countries, and mechanisms to reduce the risk of fluctuating markets and commodity prices. It also urged countries to make financial services more available at home for poor people, especially women.

The 64-page report broke ground in calling for a study of the potential for international co-operation on taxation matters, including tax evasion. It also suggested an arrangement to assemble all creditors whenever a country needs to restructure foreign debt. And it raised the prospect, "in exceptional circumstances and where appropiorate", of a moratorium or cancellation of debt when a country cannot pay.

"While debt releif is just one of various financial assistance instruments", the report said, "It is important to recognize that in some cases debt burdens represent insurmountable obstacles and need to be addressed urgently."

Developing countries could do more to attract foreign investment, the report said, by reducing corruption and by enhancing financial and legal safeguards. Last September, world leaders at the Millennium Summit meeting set a goal to be met by 2015 of reducing by half the proportion of people who earn less than $1 a day and who go hungry. The leaders expressed concern about "the obstacles developing countries face in mobilizing resources needed to finance their sustained deve-lopment," prompting the report this week.

Nitin Desai, the Under Secretary-General for Economic and Social Affairs, said the report formed the basis for further discussion leading to an international conference on development financing in March 2002. "The purpose is to get a shared basis of action", among countries, Mr. Desai said, "and what you have here is a starting of the process".

The report was compiled from information and advice provided by United Nations agencies, international organizations like the International Monetary Fund and the World Bank, and business people, among other sources.

"We are starting with a common purpose", said Enrique Rueda-Sabater, a Senior Manager of the World Bank, who contributed to the report. "we are trying to reduce poverty. That is a tall order, but a motivating one".

The report noted that the worlds of finance and development meet through the system of saving and investment. An estimated $ 7.5 trillion was saved or invested worldwide last year, of which $ 1.7 trillion went to developing countries. But the net transfer to wealthy countries amounted to $ 450 billion, three-fourths of which was absorbed by the United States.

One proposal said industrialized countries should open their markets, without duties or quotas, to exports from the least developed and most indebted countries.

But the report suggested that developing countries foster a more attractive climate for investors with a "transparent, stable and predictable framework for private investment". It said countries needed to fight corruption harder in order to allocate their limited resources effectively. And to ensure that more people paid taxes, the report said, countries should simplify their tax codes and enforce them.

Japan rehabilitation of the theatre at the Batticaloa General Hospital

A grant contract for Rs. 6.73 million (appr-oximately US$ 85,000) was signed by Mr. Seiichiro Otsuka, Ambassador of Japan, and Mr. Gabriel Trujillo, Head of Medicins Sans Frontiers (MSF) for the rehabilitation of the surgical theatre at the Batticaloa General hospital on February 5, at the Japanese Embassy. The Government of Japan provides this grant under the "Japanese Assistance for Grassroots Projects" (GGP) scheme.

The Batticaloa General Hospital, the only General Hospital in the Eastern Province renders a great service to over 13,000 patients annually.

However, although the demand for health service is increasing as the conflict becomes more critical in the region, resources for health and medical care are limited.

MSF has set up a 3 year project to rehabilitate the surgical theatre of the Batticaloa General Hospital where the renovation of 3 operation theatres and the reparation of beds for the surgical ward have already been completed in the first stage, the cost of which was borne by MSF.

The Japanese Government will provide funds to carry out the remaining work on the project, which is to replace the roof, extend the building, construct toilets for patients and improve the waste water system, with the aim of greatly improving the quality of medical care.

Support from Norway

Norway and Sri Lanka last week signed an agreement on rural development research amounting to Rs. 30 million. The grant will be utilized towards transforming the Integrated Rural Development Projects in the South to broad-based programmes of regional economic advancement, focusing on private sector development, employment generation and sustainable institution building.

Norway has been supporting Integrated Rural Development Projects of Sri Lanka since 1978, covering several districts such as Hambantota, Moneragala and Batticaloa.

The grant will be made available to the University of Colombo to initiate a research programme to provide research based services to the NORAD funded Moneragala Integrated Rural Development Project (MONDEP) during its final phase (2000 to 2003). The research project is intended to assist the transformation of the MONDEP to a Regional Economic Advancement Programme (REAP) by means of high quality research. The project is also expected to provide important lessons to other development programmes and initiatives at district and regional levels.

Cleaner production

Norway and Sri Lanka signed an agreement last week on Norwegian support to establish a National Cleaner Production Centre (NCPC) in Sri Lanka. The purpose of the centre is to promote more efficient and environment friendly production methods in the industry. The Norwegian grant amounts to Rs. 130 million.

The project has been designed on the basis of the experiences gained by United Nations bodies (UNIDO and UNEP) through establishing such centres in 20 countries. The UN Industrial Development Organization (UNIDO) has formulated a major Integrated Industrial Development Support Programme for Sri Lanka. The NCPC has been identified as one of the components of this programme.

The rapid pace of industrialization has brought in its wake the increased industrial pollution. It has been proved that application of cleaner production technologies significantly improve the environmental performance of existing production processes. It further improves the utilization of resources, and as such ensures more cost-efficient production.

Norway, a significant donor to Sri Lanka, has so far supported nearly 20 Cleaner Production centres in developing countries.

Korea gives US$ 200,000 to the Colombo Plan

The Korean government recently contributed US$ 200,000 towards the Programme for Private Sector Development of the Colombo Plan for the year 2001.

The grant was handed over by Song Young-oh, Ambassa-dor of the Republic of Korea to Sri Lanka to the Secretary-General of the Colombo Plan, Dr. U. Sarat Chandran.

Korea has been contributing to the Colombo Plan by providing voluntary assistance as well as personnel to the Secretariat. Dr. Hak-Su Kim, a Korean national was the Secretary-General from 1995 to 1999. Between 1995-1998, Korea contributed US$ 600,000 in the form of grants and services of two experts from the Korea International Co-operation Agency (KOICA), on a non-reimbursable basis, to work in the newly created Programme for Private Sector Development (PPSD).

The Colombo Plan would utilize the present Korean contribution to PPSD to hold four programmes in 2001 in the area of private sector development with emphasis on the small and medium sector. The programmes envisaged are Debt Markets, Fixed Income Analysis and Credit Rating in the context of SMEs, Marketing and Marketing Management, Enterpreneurship and New Enterprise Creation and Understanding Modern Financial Markets and using Capital Markets for Mobilisation of funds for SMEs. The training programmes would benefit nearly a hundred SME entrepreneurs and public and private sector professionals of developing member countries of the Colombo Plan. It is also proposed to initate a networking arrangement among the Federations of Chambers of Commerce/Industry of the member countries for enhancing trade and investment related activities in selected sectors of economic activity.

Japan to help clean

Kandy

A grant aid under the "Grant Assistance for Grassroots Projects (GGP) scheme amounting to approximately Rs. 4.9 million was signed by Seiichiro Otsuka, Amba-ssador of Japan, and Mr. Harindranath Dunuwille, Mayor of Kandy on February, 5 at the Embassy of Japan.

Kandy which is of national importance to Sri Lanka as a tourist attraction centered around the Dalada Maligawa and other archeological sites, has been facing grave problems as regards garbage disposal, especially the disposal site situated in the outskirts of Kandy. Proper sanitary conditions have not been maintained due to lack of heavy equipment necessary for covering and compacting these garbage, which has resulted in large scale pollution to the environment and become a breeding ground for harmful disease bearing animals and micro-organisms.

With the assistance provided by the Government of Japan under this scheme, the Kandy Municipal Council will purchase and commission urgently required bulldozers for this disposal site and will thereby improve the sanitary conditions of this waste dump while at the same time enhancing its usage for a longer period in the future, the Japan Embassy said in a press release.

Belgium team arrives

Belgium will send an influential trade mission to Colombo next month, to explore potential avenues for further promotion of trade and investment between the two countries.

Announcing the mission, Belgium's Honorary Consul in Sri Lanka Pierre Pringiers said it would comprise representatives of 10 leading Belgian companies and officials led by the Ambassador of Belgium in New Delhi, Guy Trouveroy.

The visitors will meet - during the March 1 to 4 trip- officials from the Board of Investment (BOI), the Ceylon Chamber of Commerce, the Ceylon Electricity Board (CEB), and the ministries of Power and Energy, Trade, Industries and Ports. There are one-to-one meeting also with local companies.

Trade between Belgium and Sri Lanka has grown by about 27 per cent between 1994 and 1999, and the balance of trade, which once stood in Sri Lanka's favour, is now marginally weighted towards Belgium. In 1999, Sri Lankan exports to Belgium were worth Rs. 9.6 billion, while the imports from Belgium totaled Rs 10.2 billion.

Colombo Plan Programme in life skills

Program (DAP) of the Colombo Plan Secretariat had launched the publication of a training manual entitled "Skills for Drug Prevention."

The manual will be used to train drug abuse prevention specialists from member countries to act as trainers. DAP will then use these trainers to work with targeted communities to enhance personal and social competence skills to resist the use of illegal drugs.

"This manual is an essential resource tool for training the trainers in enhancing life skills," said, Dr. U. Sarat Chandran, Secretary General of the Colombo Plan. "Research has shown that drug abuse prevention programs that incorporate life skills in order to resist drugs also strengthen personal commitment to a drug-free lifestyle."

The community-based drug prevention programme of the Colombo Plan will base its training activities on this manual. The program will train teachers in drug abuse prevention, as well as train supervisors and managers in employee assistance programs, and train parents, community leaders, and NGO's.

The inter-bank call money market and the overnight repo market

First Capital - Money Market

During the week ended 15th February, the inter bank money market rates eased slightly. Despite the liquidity shortfall remaining at higher levels, the call money rate moved downwards to hug the Central Bank's reverse repo rate. Most of the call money transactions were within 24% and 23%.

The liquidity shortfall in the money market was marginally increased to Rs. 30Bn~31Bn. The weekly call money average declined by approximately 175 basis points to 24.18% from 25.93% of the previous week. The one month term money rate too witnessed a modest reduction on expectation of a lowering interest rate to 22~23%.

The unchanged Central Bank open market operations rate held the overnight market repo rate at 23%.

Central Bank open market operations

Though the rupee depicted signs of stabilizing, the Central Bank's open market rates, repo and reverse repo rates remained persistent at 20% and 23% respectively resulting in a higher short-term interest rate. During the period the reverse repo window of the Central Bank released Rs. 154.8Bn, averaging Rs.30.9Bn a day. The Central Bank reverse repo window will continue to bridge the liquidity gap in the money market, while the Central Bank's reverse repo rate will continue to guide the interest rate structure.

Treasury bill auction

In the treasury bill auction held during the week, Rs. 3870mn worth of bills were offered to the market. Though the auction was well supported by investors, the bids were at higher yields, as the market expects the rising momentum to prevail in the near future. The auction was oversubscribed by 180%. Given the prevailing interest rate structure, most of the investors preferred getting into longer maturities. Hence, once again the Central Bank accepted more in the 364-day category.

For the sixth consecutive week, yield of all categories surged up. The gains on short-term categories were comparatively high.

Given the prevailing liquidity shortfall and the weakened fiscal outlook the short-term interest rate are likely to remain under pressure.

Treasury bond auction

Rs. 2000 mn worth of 2-year bonds were offered at the auction held during the week. As the auction was well subscribed, the Central Bank accepted the full amount.

As no improvement was observed in the economic fundamentals and the short-term interest rates, the investors continued to increase the expected yields for longer term maturities. Hence, the 2-year bond yield escalated by 49 basis points to reach 21.72.

The investors are likely bid for higher yields until they get strong evidence and confidence of an improvement in the economic fundamentals.

Dollar movement

The lowered demand and the improved supply helped the rupee to further appreciate against the dollar. During the week, the rupee regained by approximately 86 cents. However, the depth in the market was very shallow. Therefore, the market could be eratic for significant volumes. The market spot closed at Rs. 86.10 to Rs. 86.28, as against the Rs.87.00 to Rs. 87.10 of the previous week. The rupee deprecation for the year was at 4.07%.

Treasury bill auction

91 ` 182 ` 364

Last Week 19.31 19.47 20.68

This Week 19.79 19.97 21.00

Change 0.48% 0.50% 0.32%

Maturity 26-Jan-03

Coupon 13.00

Amount offered Rs.Mn 2000

Amount Accepted Rs.Mn 2000

Weighted Average 21.72

Change (0.49)

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