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Hotel industry warned of JVP unions

The JVP is gaining ground in the south - where it launched its destructive campaign some 10 years ago - and conducting secret classes in a bid to paralyse workplaces, a senior police officer has warned.

"The JVP is conducting a number of seminars at secret locations in the south and this is something you have to watch out. They are trying to paralyse the workplace through their campaign of wage demands," said M. Sivaratnam, DIG of the southern range.

He was speaking at a seminar last week at a Kalutara hotel organised by the Industrial Security Foundation (ISF) on the subject of threats confronting the hotel industry. The seminar - which follows several recent incidents in hotels including murder and rape of foreign guests and robberies - drew participants from hotels and security firms.

A range of issues faced by the industry was discussed with industry officials concerned over robberies, the beach boy menace, organised gangs disrupting supplies, the underworld, Tamil rebel threats and wildcat strikes.

Police Superintendent Bernard Silva, a top intelligence expert and deputy director of the Special Branch of the police, said violence was spreading to hotels as evident from recent reports.

He said the police had reports that JVP-led trade unions, which organised the noon-time picketing campaign on Tuesday for higher salaries to tide over escalating living costs, would continue to organise more strikes.

"We have intelligence reports that more strikes are being planned," he told representatives of the hotel industry.

The JVP has repeatedly denied charges by the government that it was organising strikes in the public and private sectors in a bid to disrupt the economy. The group, while accusing the government of spreading these reports to discredit the organisation, says it would resort to protests only to back legitimate demands.

Industrialists and private firms have expressed concern over the growing infiltration of the JVP into the trade union movement in the private sector. This issue was raised at a recent meeting between industrialists and President Chandrika Kumaratunga where the latter said the government would deal firmly with such unrest.

The Sunday Times Business reliably understands that one such move being contemplated by the government, in the event of a trade union-led crisis, is for the police to arrest rebellious trade unionists at their workplace, take them home in trucks and release them after an initial warning.

Police intelligence experts have also prepared a confidential report on the JVP which provides details of meetings at secret locations and other information. "We are keeping these locations under surveillance," one senior officer said.

Business analysts said that it was unlikely that the JVP would resort to mass-scale disruption similar to the 1988-1990 period after losing public support during that campaign, but the group could create a stir in companies that could disrupt work and result in financial losses.

They said there were reports that 14 companies, including a toffee factory, plan to close due to worker unrest driven by JVP trade unions. a multinational company had a similar problem some months ago. The JVP-led trade union organized a strike making unreasonable demands mainly that the union should be recognized. We had to shut down production for a week due to losses and informed all agencies concerned including the Presidential secretariat about the JVP threat, a senior company manager, who declined to be named said.

In Colombo, hotel industry experts say the threat is rapidly shifting to the underworld from Tamil rebels.

"In the case of the LTTE, we regularly take precautions but a more disturbing problem is the presence of underworld gangsters at hotels particularly in night clubs," said a senior manager at a city five-star hotel.

He said recently a gang forced its way into the hotel nightclub despite being refused by staff. Police were called in but the gang leader brandishing a revolver told the police officer and his men to "get out", which they did sheepishly, the manager said.

"These underworld thugs have powerful political backing and roam the streets targeting hotel nightclubs. It is a very serious situation and could affect hotels as foreign guests get a first hand experience of these incidents. These gangs have even threatened the families of some of our employees," he added.

The Kalutara discussion also centred around security measures that should be put in place in hotels and the kind of equipment that should be used.

The ISF is an organisation made up of mostly retired service personnel who want to raise the profile of the private security industry in the country.

Mind your Business

For whom the…

With an electricity price hike looming, there were many representations made by grassroots-level politicos to the powers that be to try and defer the increase because it would affect all and sundry and make the ruling party even more unpopular.

There was even a proposal to raise telecommunication rates and use the excess revenue to make up the shortfall at the Electricity Board, the argument being that it will not worsen the plight of the low-income earners.

But that idea has been vetoed and the power price hike will come into effect. So, there will be no robbing Peter to pay Paul.

No No no NO

The idea of launching a blue-party sponsored trade union to counter the threat of a general strike by the greens and reds has been mooted, and enrolment has already begun.

But when attempts were made to set up branches in several private banks, the answer was a firm 'no', from their respective managements.

Now, there are attempts to entice employees with offers of concessionary loans and other perks but the response is not encouraging, we hear.

Long time to go

Ever wondered when you will be able to sit in front of your computer, visit the supermarket, do your shopping on-line and pay by credit card?

That might be a reality sooner rather than later with one supermarket chain toying with the idea right now.

The only snag? They have been advised that it would be years before the initial investment of cataloguing all the products on-line could be recovered simply because there are so few households with computers.

Ranil seeks full disclosure on budget "assumptions"

Sri Lankan opposition leader Ranil Wickremesinghe is expected to ask the government for a full disclosure of "main underline assumptions" of the state budget before it is presented to parliament on March 8, United National Party (UNP) officials said, This move is in line with budgetary transparency practices by governments of developed economies.

UNP parliamentarian Milinda Moragoda said assumptions regarding the main income and expenditure segments of the budget including assumptions regarding defence expenditure, oil prices and tea prices would be sought by the opposition.

"The disclosure of the assumptions will facilitate the members of parliament to evaluate the budget effectively. The transparency could also enlighten the general public on the budget process," said Moragoda, a member of the UNP economic thinktank.

He explained that the government should for instance let the public know how they arrived at proposed oil expenditure and what average prices were taken as the base for calculations.

Moragoda said the government was no longer the sole authority on information.

UNP economists said the government, in the past few years, has constantly overshot budget allocations, posing serious doubts about the accuracy of the initial assumptions. The budget deficit of 7.5 percent of GDP was off target by more than two percent last year.

IMF studies float implications

The International Monetary Fund (IMF) has sent a foreign exchange specialist to study the recent free float of the US dollar in Sri Lanka and suggest any changes which could simplify trading, officials said.

"We wanted to look at the changes arising out of the free float and to offer suggestions, improvements or advise the government on how to tackle problems that may arise when such developments take place," said Dr Nadeem Ul Haq, IMF representative in Colombo.

Trade and industrial chambers said the Central Bank had brought in tight restrictions along with the free float to ensure export proceeds are brought back and curb unnecessary imports.

In this context, one of the biggest problems currently faced by importers was the 50 percent cash margin required by banks when importers book forward dollars.

"That is a lot of money to raise particularly under the high interest regime. Most importers are holding back on opening LC's and there could be food shortages if this crisis continues," one chamber official explained, adding that the Central Bank should ease the restrictions now that the free float is a couple of weeks old. IMF's Haq said that the fund's foreign exchange expert was looking at the foreign exchange markets both from the imports and exports side. "He is looking at the whole market structure, not necessarily from the free float standpoint," Haq added.

He said when major changes like the free float are effected in the system, all kinds of things could happen. "What we need to look at is the policies that are in place in forex markets and suggest recommendations while looking at how the government manages the forex markets."

Cash-rich Cricket Board to convert to a company

Sri Lanka's cash-rich Cricket Board (BCCSL) is finally turning into a full incorporated company, the board said.

A board statement said a meeting was held in Galle on Thursday - on the opening day of the first test between England and Sri Lanka - called by its acting CEO Anura Tennekoon to discuss the BCCSL's plan to form and incorporate a company styled BCCSL (Pvt) Ltd.

Tim Lamb, chief executive of the English Cricket Board (ECB) was invited for the meeting. "The BCCSL feels that Mr. Lamb's experience on this matter, taking into consideration the conversion of the TCCB to the ECB would be invaluable," it noted.

The BCCSL with annual turnovers in the region of 800 million rupees is one of Sri Lanka's richest organisations.

Affected SMIs seek moratorium on loans

Sri Lankan President Chandrika Kumaratunga has promised to appoint an official committee including private sector representatives to review problems faced by small industries who are requesting a one-year moratorium on loans to banks, industry sources said.

The president gave this assurance at a meeting with the Joint Forum of Business chambers last week where a series of issues confronting the business community were discussed.

Many small industries or SMI's are deep in debt or closed down due to mounting production costs and cheaper imports. Banks have foreclosed on many ventures prompting chamber groups to seek a moratorium on the payment of loans.

Mergers Code to be amended

By Chanakya Dissanayake

Sri Lanka's Securities and Exchange Commission (SEC) is bringing crucial amendments to its Takeovers and Mergers Code giving it greater flexibility to deal with takeovers and mergers on a case-by-case basis, officials sources said.

The amended version of the code, expected to be effected by next December, includes section 31 which covers the mandatory offer.

The current section 31 creates a statutory requ-irement for the proposed acquirer to make an mandatory offer to the remaining shareholders of a company, the moment he or she secures a 30% stake in that company. The rule does not recognise any exceptions and has become obsolete in the modern commercial envir-onment, the sources said.

"The strict liability created by the 30% limit is inflexible and it hampers the com-mercial benefits arising from takeovers and mergers. Sometimes an investor might exceed the 30% limit without having any intention of acquiring the company, yet he will be forced to make the mandatory offer to the remaining share holders under the present Code," said a SEC official.

According to legal analysts, the present provisions are obsolete especially in the banking sector, portfolio investments and privatisation deals. " A bank may acquire over 30% of a company for strategic investment purposes. But, it does not mean that the bank wants to acquire the company or control it," said a legal analyst.

The amendments will also attempt to strike a harmony with the proposed Consumer Protection Law which governs monopolies and mergers.

"Sometimes the mandatory offer could lead to a monopoly situation. The amendments will allow enough flexibility to the SEC to avoid conflicts with other statutes," the SEC official explained.

The concept of the control of a company is not clearly defined in the present Takeovers and Mergers Code.

The law presumes the acquisition of a 30% stake to automatically constitute control. The amendments will recognise control arising from; acquisition of assets, equity and even the management of a company, the official noted.

The present Code was initially introduced to safeguard the interest of minority shareholders of a target company, by enabling them to sell off their shares to the acquirer at a fair price, if they resent the acquisition.

Former SEC Director General Aritha Wickram-anayake, commenting on the proposed amendments, said the main objective of the Code's mandatory offer was to give minority shareholders the same opportunity to shed their shares, as enjoyed by the main shareholders, in the event of a company changing control.

"For example an acquirer of a company with a wide shareholding may negotiate with the large shareholders and buy their share at a high price. Subsequently, the share price might decline and the minority shareholders will get a raw deal.

This is the reason for the mandatory offer to be made to the minority shareholders to buy their shares at the same high price," Wickramanayake explained.

Now or never for the port

The Colombo Port is facing a grave danger of being pushed to a feeder port status from it's current sub hub status, if drastic measures are not taken to improve its current disadvantages.

During the early 1990's, the Colombo Port's volumes grew by 20%-30% annually and it showed great potential in becoming a mega-hub.

However, since 1995, the port has not catered or geared itself to accommodate ever expanding trade volumes and ship sizes. As a result, since 1997, the port has been unable to accommodate large ships that were coming into operation having 6000+ TEU capacity.

These facts were revealed by Rohan Masakorala, head of the Ceylon Chamber of Commerce's shippers council in his presentation given to the chamber last week on " Growth of Sea Ports and the impact on Sri Lanka".

Masakorala pointed out that the major shipping lines are investing in other regional ports.

Both India and Pakistan have raised their ability to handle bigger ships while ports in Salala, Dubai, Aden and Ports in Malaysia have been growing at a faster rate than Colombo and have already taken a considerable volume of transhipment from Sri Lanka.

He said experts have highlighted the possibility of losing major shipping lines from Colombo due to regional competition. The repercussions are already felt in trade, through the escalating freight costs, surcharges and limited space.

It was also noted that, Colombo handles only 20% of India's volumes and the balance is transshipped via East Asia or the Middle East.

According to Masakorala, Colombo's main disadvantages are; Limited capacity to expand within the current port, Current draft not sufficient for future ship size demands and the poor productivity levels aggravated by the inconsistent service. He also pointed out that the use of modern technology is minimal, adding to inefficiencies of the port. An Electronic Data Interface(EDI) facility linking up the Port, Customs, and other trade related authorities has been proposed by the Chambers to enhance the efficiency of the Port.

New chamber offers "doorstep" service

The Business Chamber of Commerce (BCC), Sri Lanka's newest trade chamber, is planning to offer a range of services including hand-delivered certificates of origin to local exporters in a bid to bring services to the doorstep of the business community.

"We are already providing certificates of origin at the doorstep of companies in the north of Colombo but we would go one step further in offering a range of services that would be beneficial to both exporters and importers in this region," said Jagath Savanadasa, BCC secretary-general.

He told reporters at the chamber office tucked away in a building down Bloomendhal Road near Kotahena that the association was launched in 1999 arising out of a need to provide facilities and services to companies located in the north of Colombo.

"That doesn't mean that companies from outside this region cannot join. We welcome members from anywhere," he said. The BCC, though relatively young and with a small 35-strong membership, is already setting its sights on providing some unique features in the history of industrial chambers in this country.

While already providing certificates of origin at the doorstep of exporters, the BCC also wants to hand-collect these documents from clients, ultimately providing the complete personalized service. Plans are also underfoot to invite foreign companies to take membership. "We are looking at representing foreign companies if the need arose."

Mr. Savanadasa, a veteran chamber personality who has been in this industry for the past 30 years, believes there is a need for more chambers to operate in this country. He points out to the success of chambers that have emerged in the outstations like the Hambantota chamber for instance, as a welcome development.

While there are some 35,000 registered businesses in Sri Lanka, less than 4,000 of them are members of local chambers - about 8 to 12 in all -, suggesting that the scope for expansion is there as long as chambers can provide the services and facilities sought by the community.

"I can't find reasons as to why businesses are not members of trade chambers. Maybe it's because they are unaware of the range of services offered by these institutions," he said.

The BCC is also unique because it is the only chamber located in the city of Colombo servicing a particular region in the capital. "The north of Colombo has a high concentration of import and export activity and some businessmen from this area felt there was a need to start a chamber given the time taken to travel to Fort or other business areas for business transactions," Savanadasa noted.

Some of the chamber's members like Ceylon and Foreign Trades (CFT), Trico International, AdamExpo and Eswaran Brothers are top firms in Sri Lanka. The BCC was given approval by the government in March 2000 to issue certificates of origin and since then it has approved hundreds of such certificates.

Savanadasa believes in the adage "small is beautiful" and says the chamber, though small compared to giants like the Ceylon Chamber of Commerce and the National Chamber of Commerce, wants to provide a personalised service to its members.

The chamber chairman is Shabbir A. Ghulamhusein while the rest of the BCC committee comprises Cecil Cooray (vice-chairman), S. Navaratnam (vice-chairman) and D.S.R. Patrick (secretary).

Taking stock

* Reckitts & Colman of Ceylon Ltd has changed its name to Reckitt Benckiser (Lanka) Ltd with effect from December 2000.

* P.D. Keells Ltd has changed its name to Kelsey Developments Ltd with effect from January 2001.

* CDIC Sassoon Cumberbatch Stock Brokers (Pvt) Ltd has changed its name to Chinkara Securities (Pvt) Ltd with effect from January 2001.

* Keells Food Products Ltd announced the payment of a 15% interim dividend for the financial year 2000/2001.

* John Keells Ltd announced the payment of a 20% interim dividend for the financial year 2000/2001.

* Habarana Lodge Ltd announced the payment of a 10% interim dividend for the financial year 2000/2001.

* John Keells Holdings Ltd announced the payment of a 10% interim dividend for the financial year 2000/2001.

* Ceylon Cold Stores Ltd announced the payment of a 25% interim dividend for the financial year 2000/2001.

* Kelani Valley said it was paying a 10% first and final dividend for 2000.

* Dipped Products said it was paying a 20% interim dividend for 2000/2001.

* CIC said it was paying a 15 % dividend for 2000/2001

* Royal Ceremics said it was paying a 15 % interim dividend for 2000/2001.

Hayleys profits double last year

The Hayleys Group, one of Sri Lanka's biggest three conglomerates listed at the Colombo bourse, has reported favourable profits for the nine months to 31 December 2000 to 872 million rupees, up from 371 million a year ago.

The company, releasing its unaudited accounts for the nine-month period on Thursday, said net group turnover rose to 14.3 billion rupees from 11.3 billion rupees.

It said the main contribution to turnover came from inland marketing, coir, rubber, environment, transportation and plantations. Hayleys is one the country's biggest exporters of rubber-made goods.

Exports mainly went to the United States (33 percent), Europe (37 percent) and Asia (18 percent). Export turnovers alone were worth 5 billion rupees against 4 billion in the 1999 nine-month period.

COMBANK extends "honeymoon" promotion

COMBANK card center's wedding anniversary promotion "Re-live your honeymoon" has been extended for another three months due to the heavy participation of cardholders, the bank announced.

The second phase of the promotion targeted at credit cardholders celebrating their wedding anniversaries from February to April 2001, provides them an opportunity to win a fully paid weekend for two at Riverina Hotel or Eden Hotel each month.

The first phase of the promotion which was for couples celebrating their anniversaries between June and December 2000 was successfully completed and winners chosen for each month. The winners were Mr Hector Perera from Kuliyapitiya, Mr Chandana Herath of Colombo, Mr Karuna Wimaladasa from Polonnaruwa, Mr Ajith Gunatilleke from Nugegoda, Dr Thilak Weeraratne from Galle and Mr Ruwan De Zoysa from Colombo.

Ceylinco rewards its policy holders

Ceylinco Insurance Co. Ltd., now among the first four General Insurance Companies in Asia, has paid claims over twenty eight million rupees in Traders Combined Policies during the Year 2000 the company said. With many innovative policies in its products portfolio specially designed for traders, there are over ten thousand policies issued and these policy holders vary from small boutiques to large super markets.

The reason for the popularity of this policy is due to the range of benefits the policyholder is entitled to such as, Fire & Allied Perils, Burglary, Money, Personal Accident Benefits, Workman's Compensation, Public Liability, Electrical, extra - cover and also special benefits for each category of the policy.

The prominent feature of the policy is that it offers a comprehensive cover to the trader that covers all probable risks and eliminates the need to pay a higher premium for separate insurance policies. As an example for Hardware Stores, the policy holders will be covered against public liability during loading and unloading of goods, indoors as well as outdoors. If the holder is an owner of a restaurant he will be covered against the claims for food poisoning the company noted.

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