News

Chambers clash over ACU

The Ceylon Chamber said the ACU was of little benefit to Sri Lankan exporters, importers and commercial banks.

But the NCCSL in a statement said, "getting out of the Union which helps the country, for the sake of a few importers seems unreasonable, especially as the delays of remittances could be taken on a case by case basis."

It said Sri Lanka has been in the ACU for a decade with other members being India, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan and Iran. "As stated by the Central Bank governor, members of the ACU are given a grace period of two months to make settlements. This, he says, relieves the pressure on our reserves," the NCCSL noted.

The ACU affects importers more than exporters as 12 percent of imports come under the ACU while only 2 percent of exports come under it.

"With the budget deficit running at over 10 percent of GDP as well as the delay in the release of the next installment of the IMF stand-by facility, the outflow of foreign currency from the country should be monitored closely. Therefore it is important at this point of time for the Central Bank to check the outflow of foreign currency," the statement said while welcoming the decision by the governor to get an expert from outside to review the ACU position.

The Ceylon chamber, in its statement, said that both the Sri Lanka Banks Association and the Exporters' Association of Sri Lanka have also earlier recommended withdrawal from the ACU for the same reasons.

It said the ACU has proved to be cumbersome and has placed unnecessary constraints on exporters in terms of delayed settlement of payments particularly in respect of transactions concerning the various branches of banks in member countries.

Globalisation and the poor

He made these comments while delivering a lecture on "Globalisation and the nation state" organised by Sri Lanka's Central Bank at the auditorium of the Centre for Banking Studies in Rajagiriya, recently.

Cox said those (opposing) industries were among a few industries in which poor countries can provide effective competition.

Referring to environmentalist groups, Cox said organisations such as Friends of the Earth and Greenpeace argue that globalisation harms the environment.

"In general they blame global corporations for global warming, the depletion of natural resources, the production of harmful chemicals and the destruction of organic agriculture," he said.

Moreover, Marxist organisations see globalisation as the spread of capitalism, in which the labour of the poor is exploited for the benefit of the rich.

"Globalisation is primarily an economic phenomenon involving the increasing interaction, or integration of national economic systems through the growth in international trade, investment and capital flows."

Cox said some trade unions opposed globalisation saying that it leads to a lowering of wage and workplace standards.

"The argument generally presented is that globalisation encourages the trade in goods produced in countries which do not allow unions to defend their workers' rights. They undercut the goods produced in countries where unions do defend workers' rights. This leads to a race to the bottom as the markets are won by those with the lowest standards."

He said not all unions took this stand, citing the case of the Australian Council of Trade Unions as an example.

WTO:developing countries win 

Developing countries emerged with several big gains from the recently-concluded WTO ministerial meeting in Doha, winning concessions on key points from the US and the EU. Though they came to the Doha meeting deeply sceptical of the chances for making their voices heard, they nonetheless managed to make their presence felt, the reports said.

Ultimately, the US and Europe made big concessions to the developing world, concessions fiercely resisted by pharmaceutical and steel companies in the US and farmers in Europe.

Speaking for Africa, Kenyan Commerce Minister Mustafa Bello said at a final plenary session that the continent was "satisfied with the conclusions that have been drawn. Unlike in Seattle, Africa has been satisfied with all the stages of consultations."

By any account, the sweetest victory for developing countries in Doha was the agreement that a WTO accord on patent protection does not prevent them from manufacturing or importing cheaper, generic medicines to combat public health scourges such as AIDS, the newspaper reports said.

The agreement approved in Doha opens the door to the eventual elimination of agricultural export subsidies offered by the EU and to a lesser extent the US. In the section on agriculture, WTO members commit themselves to negotiations aimed at "phasing out" export subsidies, which according to the World Bank, distort trade and harm poor countries unable to compete with subsidised prices in global markets.

Stockmarket Report

By Ashwin Hemmathagama

On Wednesday, the market gained leading to trading on Thursday crossing the 500-point psychological barrier in the All Share Price Index.

The last trading day of the week saw a major improvement in the stockmarket, resulting in an overall increase of 26.6 points and 42.7 points in the ASI and MPI indexes, respectively. During the day total foreign selling and buying worth Rs. 41.4 mln was reported, contributed by NDB worth Rs. 6.7 mln, Sampath Bank worth Rs. 12 mln, Kelani Valley Plantations Ltd worth Rs. 10.4 mln and Colombo Dockyard worth Rs. 1.3 mln.

According to stockbroker SC Securities, investors have been urged to concentrate on undervalued stocks. Brokers said the sudden surge in the market was due to renewed optimism of the UNP regaining power.

Chamber of Small Industry urges both major political parties to unite 

National govt. the only way out

"With our industries teetering on the brink of total disaster we feel the people of Sri Lanka have the inalienable right to demand from our leaders a more responsible attitude to face the problems that beset the nation," said chamber president Aloy Jayawardene.

In a letter of appeal to both President Chandrika Kuma-ratunga and opposition leader Ranil Wickre-mesinghe, Jayawardene said the need of the hour was a return to law and order and hard work.

"Our leaders should insist on the highest standards of work and productivity, and the new government should work in partnership with the private sector to secure a prosperous nation," the letter said.

Jayawardene proposed the setting up of a joint Inter-Ministerial Committee with private sector participation to study local manufacture with imported components, saying a significant number of industries fall into this category.

He said the new government must make urgent contingency plans to meet the situation that has arisen from the war in Afghanistan while urging the two major political parties to get to the negotiating table and end Sri Lanka's conflict.

"The alliance of the two major political parties is the only way out of this political and economic crisis," the chamber chief noted, echoing a widely accepted view amongst the public, civil society and the business community.

Jayawardene said future governments should refrain from interfering in private sector wages since this sector doesn't have the type of funding resources available to the government.

"Today industries are facing total disaster with the downturn in the economy, unsettled bank loans, operating manufacturing units for just three days of the week and the cash flows hardly sufficient to meet the cost of production," he said adding that there is an urgent need for amendments to labour laws.

"We need a reduction of labour in a crisis, paying 50 percent of the basic salary and also retrenchment."

He urged the new government to restructure the National Labour Advisory Council to cover wider representation which should include the private sector and the chambers. The council should study urgent amendments to labour laws, even permitting retrenchment during a crisis.

The chamber chief said a complete ban on imported used goods and used spares should be enforced and strict standards imposed on imports.