Sri Lankan Prime Minister Ranil Wickremesinghe, preparing to visit the United States next week, will unveil to the world an ambitious plan for peace and economic stability at the United Nations later in September, government and private sector officials said.

The focus of the UN trip is an address to the general assembly on September 19 followed by a presentation to the New York Stock Exchange the following day where Wickremesinghe will talk on Sri Lanka's potential as an investment centre.

"We'll showcase Sri Lanka and demonstrate what its true potential is and ask the world community to recognise it as a country coming out of conflict,'' Chandra Jayaratne, chairman of the Ceylon Chamber of Commerce told The Sunday Times Business.

The CCC is sending a business delegation along with the PM. The chamber, UNDP here and the UN office in New York, the Prime Minister's office and SriLankaFirst - the business-peace group, are also involved in preparatory work for the UN programme.

Economic Reforms Minister Milinda Moragoda confirmed Wickremesinghe's UN visit but said he didn't have details. Moragoda flew to Washington yesterday to prepare for the PM's July visit in addition to joining the Prime Minister on that tour.

The PM's office along with other partners will also host a business visit next March in Colombo by a group of some 100 CEOs of US firms looking at investment prospects here.

The CCC with help from the American Chamber of Commerce in Colombo is preparing a list of 20 projects for presentation at the UN general assembly as potential areas for investment. They include infrastructure like power, roads, airports, railways, telecommunications, water and sanitation; promoting the island as a regional export centre to sell to India and Pakistan; exports of IT-related services; logistics; agri-business; marine resources and boat building.

The UN presentation would be followed by roadshows by a Sri Lankan government cum private sector delegation in Europe, Japan and South East Asia.

A UN source, who declined to be named, said UN Secretary-General Kofi Annan's office was personally involved in the PM's UN visit. "The UN Secretary-General would endorse the Prime Minister's call and urge the business community to invest in Sri Lanka," the source said.

But analysts say investors are unlikely to rush to Sri Lanka unless there is absolute peace. "It is too early,'' said Paikiasothy Saravanamuttu, executive director at the Centre for Policy Alternatives. "The peace process has to be taken up to a particular point and stabilised before investors are going to come out and start giving us money.'"
Wickremesinghe will meet US President George Bush and Secretary of State Colin Powell during his July 21-25 visit, in addition to meetings with the heads of the World Bank and International Monetary Fund.

Marapana revamps RMV
Transport Minister Tilak Marapana has ordered the Commissioner of Motor Traffic to dispense with examining new and re-conditioned motor vehicles when initially registered in a significant move aimed at improving efficiency at the department

The change also follows representations made by Berty Widanagamage, President of the Motor Vehicle Importers' Association, to streamline work at the department. After a meeting called by Marapana on June 29 at the department, the minister last week directed that the registration process should also be simplified with "vehicle numbers to be assigned immediately upon presentation of the application for registration".

He also minimised procedures relating to the transfer of vehicles and ordered that driving schools - under attack because of the rising number of fatal accidents due to bad driving - should be effectively monitored and standards regulated.

Three more centres - along with the RMV - would be set up for the testing and issuing of driving licences in Colombo with three locations already identified, Marapane said adding that "examiners of motor vehicles should be cautioned to be careful in assessing the competence of the drivers to be issued with licences".

CB alerts trading in banking stocks
Feverish trading in banking stocks over recent months has forced the Central Bank of Sri Lanka (CBSL) to warn local banks to be vigilant to ensure shareholders do not purchase bigger stakes than financial laws allow. At a meeting with bank chiefs last month, CBSL officials stressed the need for banks to check that individual shareholdings do not exceed 10 percent of issued capital - the level at which approval must be sought from the CBSL and the Minister for Finance. The banking sector has been at the forefront of the share market's gains in recent months. Commercial Bank shares have risen about 60 percent this year while DFCC is up about 50 percent. Deputy general manager, finance and planning at Commercial Bank, Ranjith Samaranayake, said investors have recently been paying "exorbitant prices" for bank shares, including Commercial Bank. While it encourages more people to invest in its shares, Samaranayake said Commercial Bank would now "strictly monitor" trading. "If anybody has violated these provisions by buying our shares we will simply refuse to register them. If we have reasonable grounds to believe that somebody has purchased our bank shares as the nominee of another person we will aggregate them and will refuse to register anything above 10 percent without [the necessary] approval. This will be implemented uniformly for everybody, including foreigners," he said.

The need for banks to monitor trading in their shares is nothing new. The Banking Act has for years required banks to ensure that individual shareholdings greater than 10 percent must seek their necessary approval. Asked why the Commercial Bank now felt the need to declare its vigilance, Samaranayake said: "No one was buying shares like this so there was no need for us to follow it." Although Commercial Bank has so far not detected anybody breaching the 10 percent limit, "the possibility is always there," he said. Samaranayake would not say whether Commercial Bank was investigating any particular instances of trading in its shares, but sources at the bank said it has identified individual shareholders about whom it is concerned. There is also a belief in the bank that the prices being paid for its shares are so high - and so far from reasonable valuations - that some investors must be acting for strategic reasons.

Individual shareholders are often able to get around the restrictions by buying shares through investment vehicles to which they are apparently not connected.

Sampath Bank chief executive Anil Amarasuriya said changes may be needed to make these vehicles more transparent.

"There might be certain ownership details sought from the funds," he said. Sampath is perhaps the best-known example of a bank challenging the conduct of its shareholders. In mid-2000, Sampath alleged that Hatton National Bank, acting in concert with one of its major shareholders, Harry Jayawardena's Stassen group of companies, had acquired more than 30 percent of shares in Sampath, thereby breaching a number of statutory limits including the 10 percent rule. Sampath has successively argued its case in court and the case is currently in appeal.

LTTE prepares NE development plan
Tamil Tiger guerrillas have prepared a development plan for Sri Lanka's north and the east with the help of the Tamil Diaspora, a senior private sector official said.

"We are hoping to get a copy of the plan to study it," said Chandra Jayaratne, chairman of the Ceylon Chamber of Commerce. Jayaratne steps down later this month as CCC chairman with AMW chief Tilak de Zoysa taking over as chamber head.

Jayaratne said the chamber has been invited to be the "scorekeeper" for the government's Poverty Reduction Strategy (PRS) and the Triple R project (Relief, Rehabilitation and Reconstruction).

"Our Economic Intelligence Unit will monitor the progress of these two programmes," he said.

The CCC has also been invited to be represented on the national operations room to be set up in July by the government. This ops room would monitor all development projects undertaken by the state and make sure they keep to schedule.

Cement tariffs hurt producers
By John Breusch
Sri Lanka's biggest cement producer has condemned the government's decision to reduce the industry's tariff protection as a result of the Indo-Lanka Free Trade Agreement (FTA), warning the move illustrated the sort of unpredictable decision-making which could deter potential foreign investors in the country.

Holcim Cement managing director Tim Mackay said the decision to reduce the tariff on cement imported from India to 6.5 percent from eight percent provided "a pretty scary signal" to international investors.

The two major foreign cement manufacturers in Sri Lanka - Holcim and Tokyo Cement - have together invested about $100 million in the country on the basis of assurances from the previous government that the eight percent tariff would remain in place for as much as eight years, Mackay said.

But following negotiations with Indian officials, the Minister for Trade, Ravi Karunanayake, last weekend announced the tariff would be reduced this year as part of a package of new measures under the FTA.

Mackay said he recognised the government had to provide a major concession to India in return for Sri Lankan garment manufacturers being granted easier access to the sub-continent.

"We are a major investor in this country. I'm clearly disappointed that the cement industry's meagre protection is what has been traded off," he said. Mackay said he recognised that the minister had sought the best outcome from the negotiations, after India has pushed for the cement tariff to be reduced to as low as five percent.

But he said his concern was not so much the change itself as government's willingness to change.

"What we need is certainty. An investor can't come here on this basis and that is what worries me."

Potential investors looking at establishing new businesses in Sri Lanka would have to look very carefully at these sort of decisions, he said. "I think it sends some pretty scary signals."

Holcim - formerly Puttalam Cement - has invested about $ 60 million in Sri Lanka since it commenced operations in 1996 through the Board of Investment.

The company, a subsidiary of the Swiss-based multinational Holcim Group, directly employs more than 800 people. Mackay said local cement producers would now have a harder time competing with Indian companies which are themselves subsidised by their government.

"[The reduction in the tariff] hurts but it's manageable," he said.

Rama Krishna, the chief executive of the Sri Lankan arm of India's Ambuja Cement, said that although it was too early to be sure, he did not think the reduction in tariffs would force the company to close its Sri Lankan manufacturing operation and rely instead in imports.

"We have spent millions but have not yet broken even. We're increasing our market share," he said.

Ambuja and Larsen and Toubro, the other major Indian cement company operating in Sri Lanka, are understood to be the only cement producers in the sub-continent that have their own export facilities.

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