Flat first half performance by Hayleys group
Economic reforms and the search for a solution to end the ethnic war should be pursued separately, the International Monetary Fund (IMF) senior resident representative Dr. Nadeem Ul Haq said.
"The ethnic conflict certainly needs to be resolved and is definitely affecting economic activity with the war draining away resources," he said in a telephone interview. "Peace should be pursued on its own and economic reforms on their own," he said. "But please don't hold back economic reforms (while you search) for peace.
"Reforms are important not for us but for Sri Lanka," he said. "This has to make you grow."
Whichever government comes in, economic reforms are necessary, he added.
"If the markets rally, they will do so on the basis of expectations of reform," he said. "If the reforms do not happen - then the rally will fizzle out." The new government must recognise that there are economic problems - that the country's growth rate is at its lowest in recent years and that the world is heading into a recession, he said.
"The government needs to create open, flexible markets, deregulation must take place, we need flexible procedures, allowing people to do economic activity everywhere, without restrictions, and allowing very many different types of investment," Dr. Nadeem Ul Haq said. "Then you have a growing economy."
There was a need to ensure investments can be made easily and quickly, he said.
Sri Lanka's economic crisis is not entirely as a result of circumstances beyond the control of policy makers but also due to weaknesses in policies themselves and their implementation, the country's top economic research agency says.
"Over time these have exerted a negative impact on economic growth and stability," the Institute of Policy Studies (IPS) said in its state of the economy report for 2001.
IPS, in a report completed last month, said delays in addressing essential reforms resulted in Sri Lanka's economy being vulnerable to external shocks in addition to having an adverse impact on achieving long term goals.
Although the PA government faces the standard problem of most delicately built coalitions, many of the issues of governance are long-standing and not specific to the current government, IPS said.
"It is important to address these concerns so as to put in place the machinery that can navigate the economy in turbulent times and steer a course for economic take-off," the report said.
IPS said the medium term prospects for the Sri Lankan economy are buoyed by the resilience of the private sector, now expected to grow with a business-friendly government in place. "The greatest immediate challenge ahead is the provision of political and policy stability. Intricate political manoeuverings of the government and opposition have diverted from prioritising economic policy responses to the multi-dimensional crisis facing the economy," it noted.
ISB opens new auditorium
The Kurunegala-based Industrial Services Bureau (ISB) in addition to helping small, medium and large scale industrialists in the Wayamba region has extended its service to cover Sri Lanka, a German official said. Dr. (Mrs.) Marialies Salazar, resident representative of the Konrad Adenauer Stiftung (KAS) told a recent ceremony in Kurunegala to mark the opening of a new ISB auditorium, that KAS would continue its support to the ISB.
The ISB auditorium was named as the Konrad Adenauer auditorium after the German founder of KAS, one of the main financial backers of the ISB.
German ambassador Juergen Elias, who was also present, expressed his satisfaction at the steady progress made by the ISB and its contribution towards the industrial and economic development of Wayamba.
ISB director Gamini Senanayake said the auditorium was a long-felt need for the bureau and the business community in and around Kurunegala. He said the ISB's vision was to be the most efficient, effective and recognised service organisation in Sri Lanka in the field of industrial development and services.
The Board of Investment (BOI), in a major breakthrough in the fisheries sector, has approved a project which is to utilise hitherto unused technology in Sri Lanka, helping the country to upgrade its regional competitiveness in this sector.
Chun Cheng Fishery Enterprises (Pvt) Ltd, Singapore, will start a food processing plant with a proposed capacity of 12,000 metric tonnes per year. The technology involves the proper handing of processed frozen cargo from source to cold storage, to production and finally to the commercial end user at -50 to -60 degrees centigrade.
The process envisages the collection of regional stock of Tuna fish at -50 to -60 degrees centigrade on board Tuna long liners, the proper storage and maintenance of this product at the same temperatures and processing under +15 degrees centigrade room temperature and continually maintaining and transporting the product at -50 to -60 degrees centigrade to markets principally in Japan and the US. The process is essential for the sale of sashimi.
A BOI statement said raw materials would be purchased from various sources including the required long liners, which will also utilise suppliers and facilities of local ports and ship repairing and maintenance off the Colombo dockyard.
The project will also set up a flake ice plant. Ice will also be made available to local fisherman. The first phase of the project will provide training and employment to locals in technical and skilled grades. The project will also source export quality fish from local fisherman for export. As the second phase of the project, a fish-canning factory is to be set up subject to feasibility studies based on the availability of fish supply, the statement said.
The project will also require a large number of frozen containers to transport the cargo. "It will make Colombo a new world centre for distributing frozen seafood," said H.H. Chuang, President Chung Cheng group referring to the new project.
The proposed second phase includes the building up of the domestic logistic network of frozen products, which will help local fisherman to preserve their valuable catch. The project will also implement HACCP (Hazard Analysis Critical Control Point), which is a mandatory requirement for food processing industries in many countries.
A BOI spokesman was quoted in the statement as saying the Ministry of Fisheries and Aquatic Resources has confirmed that the technology of processing and storage of fish at -50 to -60 degrees centigrade has never been attempted anywhere in Sri Lanka. Further the storage capacity planned at 712 metric tonnes is based on the assumption that the fish products that are passing by Sri Lanka will now have value addition on the country's shores.
BUENOS AIRES/WASHINGTON (Reuters) - The International Monetary Fund (IMF) last week dashed Argentina's hopes for a much-needed $1.3 billion loan, taking the South American nation closer to committing the biggest sovereign debt default in history.
Adding to the country's woes, credit agencies warned that new government banking controls had effectively violated its decade-long policy pegging the peso currency on a par with the U.S. dollar.
The country's bonds tumbled on fears of a financial collapse of Latin America's third biggest economy, the darling of international investors in the early 1990s.
But local equities traders were encouraged by the possibility Argentina might "dollarise," or scrap the peso completely and replace it with the U.S. currency.
Economy Minister Domingo Cavallo, who denied the IMF was seeking a devaluation in the peso currency, announced some loosening of capital controls on Wednesday, including relaxing of cash withdrawals and foreign fund transfers.
The restrictive new bank rules have so far slowed a recent run on banks but sparked widespread confusion and outrage in a nation exhausted by decades of financial turmoil.
In a spartan statement, the international lender confirmed what IMF board sources had told Reuters on Tuesday when they said that any cash for Argentina was unlikely soon, given an increasingly strained relationship with Buenos Aires.
"The IMF executive board met this afternoon for an informal briefing on Argentina. Based on the findings of the mission that has been in Buenos Aires, fund management is unable at this stage to recommend completion of the review of the IMF-supported programme," the IMF said.
Recession-mired Argentina was hoping that the IMF could complete an ongoing review of its economy to release the loan. Cavallo was quoted on Wednesday as saying he expected the aid later this month.
Argentina owes $132 billion in public debt, the equivalent of $3,666 for every man, woman and child in the country.
A failure to honour the debts would dent the already weak global economy, stumbling in the wake of the September 11 attacks in the United States.
A key interest payment is due on Dec. 19 but cash is running short, making the IMF disbursement all the more important, analysts say.
After the IMF poured cold water on Argentina's hopes for quick payment, the U.S. Treasury limited itself to saying on Wednesday that it was "supportive" of continued contact between Argentina and the IMF.
But the government may have dug itself into a deeper hole by instituting the cash controls.
Credit agency Moody's said the restrictions amounted to a de facto abandonment of Argentina's one-to-one currency peg to the U.S. dollar.
"There are not enough 'real dollars' — with real claims on New York bank accounts or the Federal Reserve — in the formal system to make good on the one-to-one parity embedded in the Argentina law," Moody's said in a release.
Standard and Poor's made similar comments, saying the measures breach the peg since the country needs free movement of capital in order to have a currency board.
To protest the banking rules, Argentina's largest unions called on Wednesday for a 24-hour general strike to be held on December 13.
Argentina has been bound by a "Convertibility Law" pegging its currency at parity with the dollar since 1991, adopted to tame hyperinflation.
Happy Cow Cheese produced by Woerle of Austria and marketed by Stassen Foods marks ten years in the Sri Lankan market this year, the company said.
"Stassen Foods, established in 1977, gave Sri Lankan consumers the best of reputed international brands and Happy Cow Cheese is one of the best loved products the company has marketed here," it said.
In 1995, Happy Cow Cheese formed a partnership with Lanka Milk Foods, a member of the Stassen Group, and this helped the brand's already extensive network to expand even further, reaching 10,000 outlets across the island in that year. Today, Happy Cow is found in 20,000 outlets in this country, the statement added.
TWA's regional carriers which operated under the Trans World Express brand, have become affiliate members of the global airline alliance Oneworld, with the change of their name to 'American Connection'.
At the same time, American Airlines, which acquired TWA in April this year, has taken over the operating codes and marketing of all services that had been flown by TWA. This brings the expanded American Airlines schedule into the network covered by Oneworld services and benefits, a TWA statement issued in Colombo said.
The addition of the expanded AA and American Connection network adds a total of 864 daily departures to the Oneworld timetable, and brings 22 new destinations to the alliance map, taking the number of airports served by the eight member airlines and their affiliates to 570 in 135 countries.
'Oneworld' includes Aer Lingus, British Airways, Cathay Pacific, Finnair, Iberia, LanChile, Qantas and more than 20 affiliate regional carriers.
The performance of export manufacturing conglomerate Hayleys Ltd has been flat during the first half of this financial year ending September 30 with pre-tax profit down one percent to Rs. 534 million.
The group's coir, environment, rubber and transportation sectors were the main contributors to the half-year results. Chairman Sunil Mendis said the group remains "optimistic" about its performance for the rest of the year despite the depressed conditions at home and abroad.
The group's Inland Marketing sector performed "poorly" and was being revamped and made into three separate sections known as "Consumer", "Agro" and "Industrial solutions" for what he called a sharper focus on the firm's markets and the optimal use of its resources.
Exports a face saver
Hayleys Exports has reported a substantial increase in profit for the six months ended September 30. The company's unaudited results sent to shareholders showed the profits after tax had increased by more than 50 percent to Rs. 31 million. Turnover was up 26 percent to Rs. 157 million.
Adverse effect from closure
Hayleys Photoprint's decision to close its subsidiary Hayleys DocSolutions will have an "adverse impact" on the company's year-end results, the firm's Chairman Sunil Mendis has warned shareholders.
The company reported a loss of Rs. 3.9 million for the first half of this financial year compared with a pre-tax profit of Rs. 2.8 million in the same period last year.
Coco Lanka profits down
Net profits at Coco Lanka Ltd, the coconut-based food and beverage firm, fell during the first half of this financial year despite higher turnover.
Unaudited figures for the half-year ending September 30 show profits fell to Rs. 17 million from Rs. 20 million in the same period last year while turnover rose to Rs. 114 million from Rs. 88 million.
The company, which exports canned coconut milk and its by-products, had earlier reported that increased competition and higher costs had squeezed profit margins.
Profit for the year ended March 31, 2001 fell to Rs. 28 million from Rs. 34 million last year while turnover went down to Rs. 180 million from Rs. 207 million over the same period. "Although the devaluation of the rupee was beneficial, increased competition from both local and overseas suppliers and the increased costs of energy and labour resulted in us having to accept lower margins to maintain export turnover," chairman Dr. S. R. Rajiyah had told shareholders. "We're developing a long term export strategy to take advantage of the opportunities in the region," he said.
