SL investment potential impresses UK investors

These comments were made when Mangala Moonesinghe, Sri Lanka's High Commissioner in the UK and Lalith de Mel, Chairman of the Board of Investment (BOI) hosted a luncheon meeting for UK businessmen and investors in Sri Lanka on October 12 in London.

A High Commission press release said such meetings would form a part of an ongoing process aimed at attracting new investment to Sri Lanka from the UK.

During the discussions, an investor said that he was initially dissuaded from investing in Sri Lanka because of the ongoing conflict. However, he said, he applied for permission to invest in Sri Lanka in March and by August of that year had commenced production in the factory.

"Those who dissuaded him from investing in Sri Lanka were amazed at his experience. He said that some of them now wish to invest in Sri Lanka. Another large investor said that the labour and mid-management in Sri Lanka was 'so good' that his company is now transferring their research and development section from UK to Sri Lanka," the release said.

Welcoming the guests at the meeting, Moonesinghe detailed the political developments in Sri Lanka and assured the businessmen that all the major political parties in Sri Lanka are unreservedly committed to continuing the open economic policies which began over two decades ago. 

Both the government and the opposition are in favour of privatisation.

De Mel said the objective of the meeting was to share the views and the experience of UK investors in Sri Lanka and address any problems that they may encounter in Sri Lanka, particularly in view of the current economic developments.

Some of the investors pointed out that Sri Lanka would need to further streamline its infrastructure facilities including roads and power supply.

The businessmen discussed the need to promote tourism and the importance of fostering closer cooperation between employers and employees instead of trade unions. 

It was their view that problems between employers and employees should be resolved in an acceptable and amicable way and requested the High Commissioner and the BOI chairman to take up these matters with the policy makers of the government of Sri Lanka.

Empowering managers to take PB to profitability

By Hiran Senewiratne

"We will empower our branch managers to manage their businesses by responding effectively to customers, competitors and the market. Greatly enhanced information technology, well-managed products and training will help them. We will combine this with an imaginative human resource policy that will motivate our people and provide them with an environment to develop and grow," said PB Chairman, Mano Tittawella.

His comments appear in PB's latest annual report for 2000 released last week.

The bank has reported a loss of Rs. 1.84 billion compared to Rs. 8.5 billion in 1999 after making full provision for all non-performing loans up to December 2000. According to the Auditor-General's comments in the report, the liabilities of the bank exceeded its total assets putting it in a position where it was unable to meet the minimum capital adequacy limits prescribed by the Central Bank.

For this reason, it received a government guarantee through the form of a "letter of support", in which the Finance Ministry provides finances to fulfill the capital adequacy ratios.

The report said the key position of the bank and its hold on the economy is "regrettably" not reflected in PB's financial position. 

"We have lost our market share and the quality of our assets has deteriorated. Our profitability has eroded as a result of a high cost base and the poor return from our assets," the report said, adding that the bank didn't have the financial autonomy to make crucial decisions and pursue new areas of income.

"Our policies have sometimes been shaped by external pressures which have had a negative impact on our profits and productivity," Tittawella noted, stressing, however, that the bank has been reformed and "we have broken free from the shackles of a traditional state institution and taken a giant step forward."

He said despite the government's financial guarantee, there would be no interference by the state with new lending and other policies being guided by financial considerations and not political ones. 

"We aim to enhance profitability by growing fee-based income, attracting more low cost deposits, assertively pursuing the recovery of bad debts and selling more products to each and every customer," he said.

Derek J. Kelly, CEO/General Manager, said the bank over the next three years plans to have a 28 percent market share of deposits, up from 23-24 percent now, to bring cost and income ratios to market norms, to reduce the bank's non-performing advances and to restrain growth of risk assets "until we rebuild out capital base."

The PB has approximately four million customer relationships with some being productive, and the others not. About 40 percent of this customer base consists of small industrialists and farmers, and middle and low-income families.

In declaring the interests of the directors, the report said bank director A.N. Subasinghe was given a permanent overdraft of Rs. 27,000 and a block loan of Rs. 227,600 during the year under review. 

Subasinghe is also a director of two companies, Killis Almond & Masters Ltd and Sandalanka Industrial & Coconut Producers' Co-operative Society, which together received facilities of more than Rs. 1.5 billion.

The bank also gave an overdraft of Rs. 3.4 billion and loans worth Rs. 239 million to the government and in turn earned interest income of Rs. 1.1 billion on the OD facility to the state.

WTO summit to go ahead in Doha

WTO Director-General Mike Moore said the conference, which intends to start work on new international trade agreements, would only be cancelled if "something seismic or catastrophic happens." The conference had been in doubt because of heightened security fears in the wake of the September 11 attacks and the bombing campaign against Afghanistan.

Separately, the US has sent a powerful message that it is determined to overcome the effects of [the war on] terrorism by reaffirming its commitment to the staging of the upcoming WTO summit in the Middle East. The WTO was expected to announce that it will go ahead with plans to hold its ministerial meeting next month in Doha, Qatar - ending uncertainty about plans for a new trade round [that has been growing] since the US attacks on Afghanistan.

US Vice President Dick Cheney is understood to have assured the Emir of Qatar that the US intended to send an official delegation to Doha unless security in the region deteriorated seriously, agency reports said. The renewed US commitment is expected to reassure other WTO members, some of whom fear Washington would pull out of the five-day meeting at the last moment. Such a move would effectively have scuppered the talks and jeopardised efforts to launch a global trade round.

Russian tourists are big spenders in Sri Lanka

Ninety percent of the Russians stay at only four or five star hotels and they stay for a minimum of ten nights, noted Nilendra Jayatilleke, Director at Tropical Vacations Asia (Pvt) Ltd.

He told a press conference last week that there had been only 4,000 Russian tourists in Sri Lanka last year but a slight increase is expected this year. Tropical Vacations organised a familiarisation and study tour consisting of 12 Russian delegates from the travel sector to promote Sri Lankan tourism.

Bangkok, Thailand, Malaysia and Indonesia are favourite destinations for Russians but "with some effort we could lure them to Sri Lanka," he said. The biggest problem, however, is the non-availability of direct flights after Aeroflot recently stopped flying to Colombo.

"The most disturbing scene was the absence of a crowd at your airport," lamented a Russian delegate. The delegates said that Sri Lanka is one of the best tourist destinations they have visited and plan to promote Sri Lanka in Russia in the future.

Hands off salaries structure, EFC tells state

Earlier the EFC wrote to Labour Minister Athauda Seneviratne taking this stand when the latter appealed to the private sector to follow a recent government decision to raise salaries of the public sector.

At the EFC annual general meeting last week, EFC Chairman Ratna Sivaratnam again raised the issue and said the association – representing private sector employers – had repeatedly appealed to successive governments to refrain from interfering in private sector wages. "It needs to be borne in mind that private enterprises do not have the type of funding resources to which governments have access," he said. Sivaratnam, also Aitken Spence group chairman, was re-elected chairman at the meeting while Vivendra Lintotawela, chairman of the John Keells group, was re-elected as the EFC deputy chairman.

"From the lessons learnt this year in the plantation sector we believe that governments, whosoever should constitute them, will desist from intervention in private sector wages and also assure us that employers will not be compelled into submission in industrial disputes due to the breakdown in the rule of law and under threats to the security of life and property of management personnel," he added. Sivaratnam appealed to all parties that would constitute the new parliament, and the new government in particular, to implement badly-needed reforms that would transform labour laws to facilitate growth and stability of the Sri Lankan industry, which on the long run is the best guarantee for security of employment.

Man with a wallet of gold

At the recent Asia Society's annual dinner in Hong Kong, Soros gave a broad brush picture of where he felt the world's economic and financial systems would or should go, rather than an in depth analysis of market mechanics.

In broaching the subject on everyone's mind - the tragic September 11 events in the US - he said, with conviction, that the economic fallout would see a recession, which was "steeper, deeper but hopefully shorter". When asked to justify this conclusion, he shrugged it off: "That's my hunch, or interpretation. Evidence will come later."

The Asiamoney report said no one can deny that, despite a couple of flops (such as withdrawing from Internet stocks a year too early), Soros's feel for trade is pretty darn good. Indeed, his influence in matters financial is so pervasive it leaves market regulators quaking. For this reason, he assured his Asia Society audience, he would not hedge on the stock price anomalies brought about by September's events - not because he viewed this as unseemly or unpatriotic, but because investor sheep would be certain to follow his lead. These days Soros wishes to make his name in social policy, rather than in money management. What he proposes appear extravagantly idealistic and ironic, given he is often blamed for the 1997 currency crisis, a result of his penchant for hard-nosed, big dollar speculation. His most conspicuous critic is Malaysia's prime minister.

Asiamoney reported that in adopting the moral high ground - a position justified by generous six digit donations to numerous social causes - Soros asserts that the world's richest countries should come to the aid of developing nations. This is based on the notion that market discipline by itself is inadequate: there is a natural lack of equilibrium in the markets with a playing field that is inherently uneven.

While Soros believes that the IMF bailout scheme is fundamentally flawed, he is concerned about the effects of its withdrawal: "The IMF took a 180 degree turn. Instead of bailing out, it now wants to bail in the private sector. This change in direction will ensure that there will be no repetition of the emerging markets crisis that ended in a bust in July 1997," says Soros. But, he adds: "The danger now comes from the opposite direction, from an inadequate flow of capital to the emerging economies. This is already happening." Accordingly, the billionaire proposes his global taxation scheme, together with the issuance of special drawing rights to send capital to parts of the world where it is most needed.

In seeing a redistribution of wealth, however, Soros stresses the need for governments to be open and free from corruption. "It is not enough to introduce a tax; we must also ensure that it is put to good use," he notes. Soros's pet theme for some years has been the notion of an open society based on liberal democracy. He has injected billion of dollars into his open society funds in pursuit of this objective.

Misleading investors with figures

But this is not the case in finance companies, which are reluctant to release the deposit even after completion of the deposit period of three years. Many depositors have got carried away by high interest rates offered by finance companies and lost their lifelong savings. 

When comparing advertisements of banks and finance companies, there is a greater tendency for the latter to carry misleading advertisements. A recent advertisement, however, by a reputed bank, belonging to a local conglomerate, promoted a share issue that has resulted in banks sinking to the level of finance companies in trying to hoodwink depositors. First of all the most important fact that it is irredeemable is cleverly camouflaged, hence a depositor can never hope to get it back. 

A high rate of interest is given which is far above current bank and even finance company rates. 

But the small print on the prospectus says that it is only for the first year with the rate thereafter being uncertain. So depositors are misled on both basic characteristics of a deposit; period of deposit and rate of interest. Unlike other preference issues, this one will not be listed on the Stock Exchange and hence is not freely transferable or saleable. It isn't possible for a depositor to find out its value at any given time and will never know if it is trading at a premium or discount. With all these drawbacks, this bank is promoting it among present depositors and others through telephone and personal visits.

It is very likely that this product has been approved by the Central Bank. If not they must at least investigate even at this late stage before many more gullible depositors tie up their lifelong earnings in a unprofitable scheme. 

Hugh Ratnasekera
Pannipitiya.

SL trade delegation visits South Africa 

A Foreign Ministry statement said the programme was organised with the assistance of the Export Market Development Programme of the Commonwealth Fund for Technical Cooperation (CFTC) following a request made by the Sri Lanka Export Development Board.

It said the visit was a great success for many participating companies securing orders and establishing positive business contacts with leading South African companies such as Woolworth's, Truworths, Edgar's and Dynamic Cables. It is expected that these contacts will result in substantial orders in the near future.

This is the first time a large number of Sri Lankan companies participated in a promotional tour to South Africa. The programme included one-to-one meetings with potential South African importers and joint venture partners, which was conducted in Johannesburg, Cape Town and Durban.

LECO bags National Quality Award

The National Quality Award in the Large Scale Service Category is in recognition for LECO's sustainable and enduring commitrnent for higher standards in Business Leadership, Strategic Planning, Customer and Market Focus, Information and Analysis, Human Resource Focus, Process and Business Results.

The Sri Lanka National Quality Award is the highest level of recognition for excellence in business management and execution. The selection for the National Quality Award is based on the world renowned Malcolm Baldridge Quality Award Programme practised in the U.S.A.

LECO is a fully government owned private limited liability company whose core business is retailing electricity purchased in bulk from the Ceylon Electricity Board and distributing to its own customers through its distributor network.

Currently LECO operates in six areas, namely Kotte, Kelaniya, Moratuwa, Galle, Kalutara and Negombo. LECO was incorporated on 19th September 1983.

Tradlanka opens international wing 

Over the last two months Tradlanka has been engaged in an extensive search of the US markets to identify a new base for operations. In late September, Tradlanka (Pvt) Limited entered into partnership with Concuro Management Group, LLC of Southern California as its exclusive partner to anchor the Tradlanka International U.S.A. venture. Concuro's Managing Partners Raymond Ribble and Trond Flagstad are veterans with over 40 years in consumer product markets and consultancy covering Europe, Asia and North America. Leading the new expansion into the US are Managing Directors, Chintaka Deraniyagala and Prasad Vithanage.Ariyasiri Vithanage, Chairman of Tradlanka (Pvt) Limited on that occasion stated, "I believe that Sri Lanka is a beautiful country. 

We are well educated and becoming more prominent in global economies. Now is the time for us at Tradlanka to enter into major markets like the US and actively secure expanding business relationships with established businesses that brings continuing wealth to Sri Lanka, while providing profitability to our partners".

Touchwood Art Competition

Millennium City creates history 

Ironically, large areas of buildable land in the suburban areas were left untouched due to lack of proper motives and planning. It was at a time like this that the CDL ventured on this one and only national project to cater to this rising demand. Ceylinco Group which has been in the forefront of real estate and housing development sector over the last decade, came up with this futuristic concept designed to create a wholly self-supporting township project, the Millennium City. Located just 9.4 miles from the Colombo city limits and just 7.5 miles from the major towns of Nugegoda and Maharagama this was just the right place for an eco-friendly housing complex at Malabe, Athurugiriya.

Being fully aware of the individual needs and affordability of the vast majority, they initiated three prime complexes, namely Paradis, Olympus & Heartland which gave the option of selecting what is best from a variety of architect designed houses.