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Invest
now, urge banks and brokers Investors should
invest now rather than wait for a final peace agreement between
the government and the Tamil Tigers, according to an opinion poll
of Sri Lankan banks and stockbrokers conducted by the Sunday Times.
An overwhelming
91.3 percent of those polled said investors should invest now while
only 8.7 percent said they should wait until a final peace agreement
is reached before making investments. (See chart) The survey with
24 respondents was conducted to ascertain the views of the private
sector on issues pertaining to the business environment and the
economy. The Sunday Times FT is publishing the results to give readers
an indication of the expectations and thinking of the business community. The majority
of those polled also approved the manner in which the government
was handling the peace process with 87.5 percent rating the government's
performance on the peace front as "Good" and only 12.5
percent saying it was "Average". However, they
were less enthusiastic about the government's handling of the economy
with 63.6 percent rating it as "Good" while 9.1 percent
said they found it "Disappointing". Half of those
polled were unsure about the success of the 'co-habitation' arrangement
between President Chandrika Kumaratunga and the United National
Front government of Prime Minister Ranil Wickremesinghe. Asked whether
they believed the 'co-habitation' exercise will break down, 22.7
percent said 'Yes' and 27.3 percent said 'No' with the rest - exactly
half - being undecided. And nobody
seems to want another election. Asked whether another election was
desirable a decisive 87 percent of those polled said 'No' while
13 percent were undecided. In a quick poll by the newspaper last
week on the issue of elections only, business leaders were unanimous
in opposing it, saying it would be "bad for business"
and could make the state of the economy deteriorate even further. The banks and
stockbrokers also gave their (2002) year-end forecasts for key economic
performance indicators, which are as follows:
Top
firms violate accounting rules The most common
offence was not providing for the diminution in value of investments,
according to significant cases detected in the last two years and
released by the Board. "The aim
was to show that the companies are doing better than they actually
are," a Board official said. Among the significant
cases detected in 2001 was Central Finance which had not provided
for the diminution in value of shares, other than temporary, in
six companies held as investment securities in its financial statements
for the year ended March 31, 2000. After inquiries
by the Board, the company agreed to provide for the diminution in
value amounting to Rs. 34 million and to indicate the correct position
in the following year's financial statements. Trans Asia
Hotels was found to have not provided for depreciation in respect
of furniture, fixtures and fittings, and soft furnishings, but had
maintained a replacement reserve to meet the cost of replacement. After inquiries
by the Board, the company agreed to provide for depreciation with
effect from the dates of acquisition and to reflect the same in
subsequent financial statements. The additional
depreciation charge made by the company for the year ended March
31, 2000 as a result of the agreement with the Board was Rs. 20
million, and Rs. 174 million in respect of previous years. The company
reversed transfers to the revaluation reserve made in the year ended
March 31 2000 of Rs. 38 million and transfers made in prior years
of Rs. 164 million, the Board said. The Board also
found that Asian Hotels Corporation had not provided for depreciation
in respect of furniture, fittings and equipment, but had maintained
a replacement reserve to meet the cost of replacement. The company
agreed to provide for the depreciation and to show the correct position
in their subsequent financial statements, after inquiries by the
Board. In significant
cases detected in 2000, the Board found that Merchant Bank of Sri
Lanka had not provided for the fall in value of Rs. 145 million
of preference shares of two subsidiaries companies, which were shown
as non-current investments in the financial statements of the year
ended December 31 1999. Following inquiries
by the Board, the bank agreed to recognise the fall in value of
shares. Board officials
said they decided to reveal the outcome of their investigations
to create more public awareness. "We feel
there's a need for more transparency in what we're doing,"
an official said. "The Board has a duty to inform the public
of serious cases we detect." It also hopes that releasing the names of violators would serve as a deterrent to others. New
money or inflation? Chitra Ariyaratne,
the bank's currency chief, said fresh signatures were obtained from
the finance minister and the governor for all rupee notes - 10,
20, 50, 100, 500 and 1000 - last December. "This is a routine
exercise when a new finance minister or Central Bank governor takes
over," she said adding that the 10-rupee note was issued first
because of the demand. Commercial banks reported that the 10-rupee
coin was unpopular because it was too heavy. Ariyaratne said the 500-rupee and 1,000-rupee notes bearing the two signatures in the same heritage series would be issued next year with new security features. Economists said fresh notes are unlikely to fuel inflation but noted that money supply growth is still high at a current 14 percent due to the Central Bank being forced to pump money into the economy to finance the budget deficit. "Money supply growth should ideally be around nine percent since inflation is at 11 percent and GDP is at 2-3 percent," one economist noted. More
promotions needed in NY - AMCHAM "There
is a need to promote Sri Lanka more than once a year. It would be
good to go out to New York and revive interest once again,"
he said noting that a one-off promotion event is not enough to attract
foreign investment. He said it
would take some time before Sri Lanka gets on the map of US investors
and " sees concrete results from the September promotion in
the US". "For many US businessmen, Sri Lanka has been
an 'out of sight - out of mind' place because of the conflict." Some US investors
are still reluctant to travel to Colombo because of the conflict
and also recently in the context of the Bali blasts. However, "once
they come they are convinced and happy to come again," Mckenna
noted in an interview. This is what
happened when AMCHAM tried to twin its annual golf charity tournament
with a business tour, which finally didn't work. "We have separated
the two and are now holding the golf tournament next month and the
business conference in February/March," he said. "Most
American businesspe-rsons in the region were also not attracted
to a golf tournament in Sri Lanka due to competitive packages offered
in other Asian golfing regions like Thailand or Japan. Questions
like - is it safe to travel to Sri Lanka? - still persist in the
minds of some people. There should be more visits by US businesspersons.
People need to know it is a safe place to do business." AMCHAM is also
reviving the International Executive Services Corp (IESC), a popular
international business volunteers' programme, which was discontinued
two years ago. McKenna said
USAID has provided funding for a feasibility study, on reviving
the programme, to be completed in early 2003. USAID will provide
startup funds for the IESC project to be made a self-financing unit
under AMCHAM. "AMCHAM
will market the programme and offer the services of mostly retired
business professionals to the Sri Lankan private sector," McKenna,
resident representative of the US-based Asia Foundation, said. Dozens of retired
US executives use their expertise to help companies across the world.
Under the IESC programme which ran here from 1983 to 2000, local
companies took up the accommodation and food costs while airfares
and a nominal retainer were paid by USAID. Approximately
700 companies in every export sector except apparel and agriculture,
benefited from the services of US experts under the programme. It
was discontinued as part of the scaling down of USAID. McKenna said
the new plan entails marketing IESC as a self-financing project.
"A typical IESC volunteer would cost around $ 20,000 for a
two to three month stint in a local firm here. This includes airfares,
food/accommodation and other costs," he said. The AMCHAM president said the Sri Lankan branch was moving away from only being a service provider to its members to being more "outwardly looking and proactive as a business unit." |
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Copyright © 2001 Wijeya Newspapers
Ltd. All rights reserved. |
The note
- unchanged from the old one - bears the signatures of Central Bank
Governor A.S. Jayawardene and Finance Minister K.N. Choksy and is
dated December 12, 2002 - the day Choksy was sworn in along with
other members of the cabinet. 
