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Business

Businesses take a gamble in north-east development
By John Breusch
Sri Lankan business leaders in the south are defending the rapid speed with which they are establishing trading links with counterparts in the north and east, arguing that economic development can act as a catalyst for peace.

The deputy chairman of the Ceylon Chamber of Commerce, Mr. Jagath Fernando, acknowledged it was a risk to commence business in the former conflict areas before there was any certainty of lasting peace.

But he said the risks associated with such a move were outweighed by the potential benefits.

"It's a huge gamble but it's a gamble that we need to take and a gamble well worth taking,'' Mr. Fernando last week told a panel discussion on the economy hosted by the Foreign Correspondents' Association of Sri Lanka.

"Economic co-operation could [reduce] the number of people who would lend support to the war effort.''

The president of the Federation of Chambers of Commerce, Mr. Macky Hashim, said it was critical that Jaffna residents be given the opportunity to enjoy the benefits and prosperity that comes with greater business opportunities.

"If we strengthen the business community we may be able to overcome this mindset of war," he said.

"We [as business people] have to show that we have the confidence. Let the political side do what it has to do [for peace].''

Businesses in the south have wasted little time taking steps to push into the north and the east since the cease-fire between the Government and the Liberated Tamil Tigers of Eelam (LTTE) was announced three months ago.

Insurer Ceylinco Life earlier this month unveiled plans to open branches in Jaffna, Trincomalee, Kantalai and Batticaloa, while the Commercial Bank recently opened Jaffna's first automatic teller machine (ATM).

A number of other companies in the region, with the backing of Chambers of Commerce in the south, have also moved to establish joint ventures with counterparts in the south.

ETF workers taken for a ride
I would like to clarify some issues raised in the news item under the above caption published in your newspaper last week. At the moment claims are being processed for periods over one month and at times up to six months. We have a target to process all normal claims within 21 days and we have achieved within a short period of two months a reasonable percentage of claims within the said lead time.

In the circumstances until the backlog which has accumulated over the past few years is cleared the special category of claimants such as those who emigrate for employment and those who have to make speedy decisions on re-locations have to obtain their claims within the shortest possible time. In order to process such claims the ETF Board has to deploy available staff to trace the claimants' records and speed up the process which results in many other claimants' applications being suspended for an interim period as well as the additional cost in terms of processing these claims which is the precise reason why an Express Claim Processing Procedure was introduced. The enhanced cost in terms of man-hours and disruption to routine, will have to be compensated for in terms of a charge of Rs. 1,000 per application which is reasonable in our view.

It is purely voluntary if a person wishes to obtain his clearance quickly for any of the above stated reasons he or she should meet the minimum cost involved. This, however, does not mean that we are not willing to process normal claims within the said time of 21 days. We hope to standardise all claims processing within this lead time. As a relief for other categories of employees, particularly the estate employees and other lower income earners who cannot afford this Express Claim costs, the special claims procedure which was initiated some time ago is still available for them to use.

Under this scheme any employee who makes a bonafide application for a special claim will have his or her claim processed within 14 days, for which any attendant costs will be absorbed by the ETF Board.

I am sure this is the best relief we can provide for members of the lower income category. At the same time I am sure you would agree that an Express Claim Processing Procedure would be a boon to many busy mercantile as well as other sector employees who have a large balance and are willing to meet the cost to have their claims processed fast.
Dinesh Weerakkody,
Chairman, ETF Board.

Development banks lack vision
By K. C. Buddhadasa
The two development banks which have been set up under specific Acts of Parliament with a specific mission to promote development-oriented lending in the country are making a big fuss over not being allowed to deviate from their mission and enter into commercial banking. There are 26 commercial banks but only two development banks. These two banks often come out with very flimsy excuses for changing their business. One famous excuse is that the long-term credit lines are drying up and, as a result, they are faced with the problem of raising long-term funds. But the question is what action have they taken so far to explore new avenues of long-term funding? Even commercial banks, which normally lend short-term, have taken the trouble to launch long-term deposit products such as minors' savings accounts.

But sadly none of the development banks have taken the trouble to introduce any long-term deposit products when the Banking Act permits them to offer any kind of time and savings products, excluding only demand deposits.

There is a strange situation in our economy with regard to long-term funds. The EPF and ETF, which are premier suppliers of long-term funds in the economy, have invested the bulk of their long-term funds in short-term instruments such as Treasury Bills. The two development banks which are on the demand side of long-term funds grumble that they do not have such funds. The government should intervene and arrange for them to borrow long term from the EPF and ETF who have enormous volumes of such long-term funds. Hence, the diversion of a fraction of these funds to the two development banks could put an end to their complaints about the paucity of long-term funds.

The other famous excuse given by the development banks for venturing into commercial banking is "consolidation" which appears to be "fashionable" these days. Consolidation is good only when it can maximise stakeholder value. It is often said that the Sri Lankan banking sector is too fragmented and hence there is a need for consolidation. We agree. But the consolidation should be between the small commercial banks and the big ones. Obviously, the tiny commercial banks with their low capital bases cannot compete with the big ones. So it is logical for them to amalgamate with the big ones but we can't see any justification for the amalgamation of the two development banks with any of the commercial banks in the country.

Hence the government should tell the two development banks that the national interest should take precedence over their hunger for commercial banking, particularly at a time when they should be at the forefront of national development through long-term development credit for needy projects. This is particularly important at a time like this when the north and east are about to be opened up for development. Otherwise the government should appoint suitable people with a proper vision to run these two institutions.

John Keells software joint venture in London
John Keells Computer Services last week announced it has set up a new joint venture 'Newburn Keells' in the United Kingdom to offer software development services.

This new venture between the John Keells Holdings subsidiary and the UK-based Newburn Consulting Plc will address many of the perceived weaknesses of offshore software development by ensuring reliable project delivery through its Swindon office, a company statement said.

"We are delighted to be entering this new phase for our business," said Ajit Gunewardene, Director of John Keells Holdings, "Above all John Keells values quality as displayed by our zero-defect guarantees and this new strategic alliance will bring together two companies for whom service and excellence are paramount."

Newburn Keells marries the two firms' expertise in project management and software development. Together they have developed a proprietary delivery model that exploits the time differences between the two countries, the statement said.

The Sri Lankan software development facility is combined with Newburn's UK project management expertise to deliver fast, cost effective solutions, it said.

Newburn Keells has over 300 expert programmers across a wide range of skills, particularly in the global airline, financial and telecoms markets. The two firms are already working with Emirates and Lufthansa airlines.

Newburn Consulting is an independent IT management consultancy which offers multi-disciplined, impartial advice to create business oriented solutions.

Golden Key - Best IBM iSeries Partner
The Golden Key Company walked away with four out of the seven awards presented by IBM to its business partners at the recent 'IBM Business Partner Kick-Off".

These included: "Product Leadership Award iSeries, Sales and Distribution", "Best Customer Satisfaction Award, Sales and Distribution" and the coveted "Business Partner of the Year Award, Sales and Distribution".

One of two personal awards presented, was also carried away by Golden Key employee Chandana Pathirana, in the category "Best Sales Champion of the Year Award, Sales and Distribution".

The annual event recognises the top performances in the IBM distributor network in Sri Lanka, a Golden Key press release said.

Explaining the significance of an annual event like the 'Kick off" to both IBM and their Business Partners, Yukthi Gunasekera, Business Partner Relationship Manager IBM said that this event not only gives IBM an opportunity to recognise the hard work and achievements of their business partners during the previous year, but is also an opportunity to introduce IBM Corporation's new strategies, products and vision for the year.

The Golden Key Company has also been the recipient of many other awards from IBM in the past, including the IBM ASEAN Business Partner of the Year award for the best in Customer Satisfaction for 1995, 1996 and 1997.

In 1997 GKC also received the ALL STAR Business Partner Award from IBM. and the IBM ASEAN/S A Top Business Partner in South Asia award for 1998.

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