LTTE
unlikely to resume war - HNB
By John Breusch
Hatton National Bank (HNB), one of Sri Lanka's biggest private
banks, and its board of directors are confident the country
will not return to war and are already seeking out opportunities
to support development in the north and the east, its Managing
Director Rienzie Wijetilleke said.
Viewing
economic growth as a crucial part of the peace process, Wijetilleke
has lured one of his former Jaffna branch managers out of
retirement and asked him to re-establish links with old customers.
"We
have already made contacts with the large businessmen in the
north and east with a view to providing them with various
facilities which would be required for infrastructure development
in the area,'' he said. Sri Lanka's business community - in
its effort to take a leading role in the peace process - has
moved quickly in recent months to commence activity in the
war-affected areas.
However,
there are still concerns that investments could be lost if
the cease-fire were to break. But following a careful assessment
of the peace process, Wijetilleke said he and his board "are
convinced that we are most unlikely to go back to a war situation."
"It's most unlikely that the LTTE will go back to war.
They've made it very clear that they are most unlikely to
go back to war [although] we are bound to have problems down
the line coming to terms."
Wijetilleke
said that while there are different perceptions of what constitutes
peace, he believes economic freedom is a vital part of the
concept. "I feel the priority should be economic opportunities
for the young people in the north-east and the south,"
he said.
"So when those things are provided I feel that the peace
will automatically be there and we will have a major role
to play. We are doing it very gradually and carefully.''
HNB has branches throughout the north and the east, including
Mannar, Trincomalee, Batticaloa, Vavuniya and Jaffna.
With its
large presence in this area and its status as the biggest
private bank in Sri Lanka, HNB would be expected to play a
crucial role in the rebuilding of the region should peace
be achieved.
"We
have already activated the process," Wijetilleke said.
"In fact I have re-recruited one of my very senior Jaffna
people who was manager of my branch there. "I have taken
him back on a very special assignment to identify our old
customers who had a good track record with us [and to move
to] to reactive their businesses."
From
illicit fags to CTC brands
Ceylon Tobacco Company has welcomed the government's decision
to change the excise tax structure to fight sales of illegal
cigarettes saying the impact of the move is already being
felt with smokers switching to CTC brands.
"First
quarter results reflect the early signs of a business recovery
as a result of changes in excise duty and better market conditions,"
the company announced in a statement to shareholders. Net
revenue in the first quarter ending March 2002 rose four percent
to Rs. 1,047 million while profit after tax was up 14 percent
to Rs. 200 million, it said.
Export
turnover in the first three months more than doubled with
the company securing sales to new markets in the Maldives
and East Africa and also owing to increased demand in the
Middle East.
Pulmoddai
mineral shipments to resume
Shipments of mineral sands from the Pulmoddai beach deposit
on the northeast coast, disrupted after Tamil Tiger rebels
sank a bulk carrier, look set to resume now that the guerrillas
and government forces are observing a truce and preparing
for peace talks.
Mineral sands at the Pulmoddai mine run by the Lanka Mineral
Sands Ltd are known to be rich in ilmenite, monazite, rutile
and zircon.
Bulk shipments
from Pulmoddai were suspended in September 1997 after Sea
Tiger rebels blew up and sank a bulk carrier. Since then,
small quantities of rutile and crude zircon brought by road
have been exported in 40-kg bags through Colombo port mostly
to China, India and the United Kingdom.
"Now,
there is a lot of demand for our mineral sands," said
Muhammad Nassar, chairman of Lanka Mineral Sands. "We
hope to resume production shortly. The factory has been out
of production for five years so a fair amount of maintenance
is needed." For bulk shipments to resume, the wreck of
the bulk carrier lying in 75 feet of water needs to be removed,
the pier repaired and a conveyor installed.
The Tigers
had taken care not to damage the plant, which is in the region
they claim as their homeland, but cut off the water supply
required to process the mineral sands and disrupted bulk shipments.
Big stocks
of minerals have accumulated over the years, including 180,000
tonnes of ilmenite and 200,000 tonnes of crude zircon. The
company processed about 300,000 tonnes of mineral sands a
year.
The Pulmoddai
beach mine is known to have high concentrations of minerals
and is a renewable deposit with sand being washed up by the
sea. Shipments are not possible during the northeast monsoon
from October to February because there is no sheltered anchorage
at the site.
Reviving
coconut plantations in Jaffna
An extensive coconut replanting programme is required because
almost one-fifths of the island's bearing palms are senile,
Lincoln Fernando, the new chairman of the Coconut Cultivation
Board (CCB), said.
The CCB
also hopes to revive coconut production in the north, Fernando
said following a visit to Jaffna where he visited coconut
estates in Tiger rebel-held areas. "We need a massive
replanting programme," he said in an interview.
Around
18.5 percent of bearing palms throughout the island are senile
- over 60 years old. About 70 percent of the trees are bearing
palms under 60 years of age while almost 12 percent are young
palms not yet in production.
Fernando
said his main aim is to ensure stable prices for coconut throughout
the year.
Coconut prices have remained high in recent months because
of the shortage created by last year's drought but prices
are expected to come down this month because of a better crop.
"Coconut
is essential for this country - it has to be looked after,"
he said.
"I aim to get three billion nuts in 2004, which would
mean the island would be self-sufficient in coconuts with
the crop being able to serve the domestic market as well as
meet the needs of exporters," Fernando said.
The crop
fell to 2.7 billion nuts last year, from three billion nuts
in 2000, because of the lagged effect of drought. The shortfall
sent nut prices soaring and made it difficult for desiccated
coconut exporters and oil millers to find enough raw material
to serve their markets.
Farm-gate
prices have now fallen to eight rupees a nut and retail prices
to around Rs. 12 while the cost of production is less than
three rupees, Fernando said. Smallholders with less than 50
acres each account for 95 percent of the crop with the rest
produced by plantation firms.
The CCB
was offering grants and low-cost loans to encourage growers
to look after their palms, for replanting and new plantings.
Fernando also said about 30-35 percent of coconut plantations
in the Jaffna and Kilinochchi districts had been destroyed
by shell fire with the worst destruction caused by multi-barrelled
rocket launchers, he said. Large numbers of trees had been
cut to build bunkers.
He said
he visited Pallai in the company of the Tigers where the CCB
has three estates comprising of 600 acres with young palms
- about 20 years old - which are in good health but are not
accessible because the land is mined.
"Pallai
is a very important coconut area which before the war had
very productive lands," he said. "The Jaffna soil
was fairly good and the estates were very profitable."
Dollar seen hitting 100-rupee
level in September
The depreciating Sri Lankan rupee is expected to fall through
the magic 100 rupees per US dollar in the September quarter
as it continues to come under pressure from the trade deficit,
analysts said.
It would
be the first time in the currency's history that the rupee-dollar
rate has hit Rs. 100 although some traders reported offers
beyond that price when the Rupee plummeted briefly in the
wake of its float in January last year. "The forward
premiums indicate that the Rupee will cross the 100 mark in
September," said Gamini Karunaratne, senior deputy general
manager of treasury at Hatton National Bank.
He said
the depreciation was driven mainly by the growing value of
imports and occasional buying of US dollars by the Central
Bank. It also received a kick-along in March when the government
eased restrictions on the overnight foreign currency positions
that can be held by commercial banks. Dealers said the move
increased demand for dollars.
The steady
depreciation of the Rupee is a consequence of Sri Lanka's
import dependant economy, which creates demand for foreign
exchange. A year ago, the rupee-dollar rate was about Rs.
90.
By the
end of 2001, it had climbed up to Rs. 93 and it is now trading
a little above Rs. 96. Dula Weeratunga, head of treasury at
Commercial Bank and president of the Association of Primary
Dealers, said the recent power cuts had reinforced the trade
deficit by increasing the demand for oil.
And even
with the lifting of power cuts, the higher price of oil -
a product of political problems in the Middle East - should
mean the trade deficit would widen further, he said.
While the Rupee's steady decline is driving up costs for importers,
it is not all bad news for the economy.
"Right
now export is a problem because many [exporters] have to compete
with countries like China and India," Karunaratne said.
"Unless the Rupee goes down in line with our competitors
our exports will not be competitive.''
Mangala
Boyagoda, head of global markets at Standard Chartered, said
he expected the Rupee to depreciate 9-10 percent this year.
Commercial Bank's Weeratunga is tipping a 8-8.5 percent decline
over that period. (JB)
Unqualified
support for oil palm-Kiriella
By Hiran Senewiratne
The government supports the cultivation of oil palm on neglected,
unproductive land in rubber estates but does not advocate
replacing yielding rubber trees with oil palm, says Minister
of Plantation Industries, Lakshman Kiriella.
"We
are not encouraging the uprooting of all rubber trees and
the planting of oil palm," he said in an interview. "But
we support the growing of oil palm in neglected lands and
also removing very old rubber trees and replanting those lands."
It would
not be prudent to uproot yielding rubber trees and replant
those lands with oil palm with the idea of popularising oil
palm cultivation in existing rubber lands, he said.
"Since oil palm cultivation is still in an experimental
stage we cannot jump to the conclusion that oil palm is better
than rubber," Kiriella said responding to the oil palm
versus rubber debate in the country's plantation sector which
even led to a Malaysian oil palm consultant being assaulted
at a southern oil palm plantation.
Environmentalists
say the oil palm drains water resources and could cause other
ecological damage while producers are defending oil palm as
they are of the view that the latter crop is more profitable
than rubber.
Kiriella
said he was confident that the rubber industry would bounce
back and that it has a bright future despite the prevailing
poor prices for natural rubber. Every crop has a product life
cycle and this was what rubber was going through right now,
he said adding that the prolonged slump in prices did not
mean the industry would die.
Kiriella
also said that the ministry was giving every possible support
to the rubber sector and plans to bring 10,000 acres of untapped
rubber land back into production in an effort to revive the
industry.
The Ministry
of Plantation Industries is in the process of preparing a
three-year action plan to develop the whole sector in order
to turn rubber into a lucrative industry, Kiriella said.
Value addition is the only way to revive the whole industry,
he said, adding that the ministry is encouraging more private
sector companies to go for value addition by using local raw
rubber.
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