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Double taxation in the north could ruin Sri Lanka’s peace process By Quintus
Perera "We cannot
have the construction companies who undertake reconstruction work
in the north and east taxed by the Sri Lankan government as well
as the LTTE. This matter has to be negotiated and settled, otherwise
this would be a big issue for the peace process and if this is not
resolved, the peace process will not work," warned Peter Harrold,
World Bank Country Director in Sri Lanka speaking on "Economies
of Reconstruction", at the annual sessions of the Sri Lanka
Institute of Architects held in Colombo recently. One of the
key sessions discussed the role of the architects in the reconstruction
of the north and east with particular reference to the "Reconstruction
of Lebanon after the civil strike from "Warchitecture"
to Architecture. Harrold said
that they would not allow reconstruction work in these areas to
be handled only by the public sector companies, and that the private
sector companies should also be developed to help in the north. One of the
agencies that undertake projects in the North and East was the Asian
Development Bank, which had already undertook to refurbish the A9
Kandy-Jaffna road. He said that
to do this work ADB negotiated with the National Construction Association
of Sri Lanka and awarded the contract to six members of the Association,
who were private sector companies. He insisted
that the private sector should be involved in the implementation
of the reconstruction projects. Harrold said
a significant amount of money was pledged and it would be around
$ 110 million, adding that hundreds of millions of dollars would
be pledged for the reconstruction in Sri Lanka. He pointed
out that there should be a clear picture and an assessment of what
the actual cost of reconstruction in the north and east would be.
The international donors were keeping a close look at the total
situation and there were about 70 people collecting information
in these areas to prepare a solid financial and time plan for the
north and east reconstruction. He said that
remarkable things were happening in reconstruction work where people
themselves have got themselves mobilized. He said donor
money for the reconstruction process will take about a year to come
in and thereafter, it would take another two to four years for private
investments to take root after the initial confidence is build. Some of the
infrastructure projects would start by the middle of next year while
major infrastructure work would be undertaken towards 2004-07. Assuming
peace would be continued in the middle of next year some major infrastructure
projects would commence, he added. He said that there should be simple and rapid framework for the creation of new NGOs/construction/consulting companies as the donors were interested in the private sector handling the reconstruction work. Success for Suntel amidst accumulated losses Suntel Ltd recorded
a net profit of Rs. 200 million for the year ended 31st December
2002, an eight-fold increase from Rs. 23 million recorded in the
previous year, the company said. But it noted
that: ""While recognizing that this is a significant year
of probability for the company, it must be understood that the company
needs a further 2-3 years of profitability at this level before
it can cover the accumulated losses of Rs. 1,030 million reflected
in its balance sheet as of 31st December 2002." Increases in
profit were reflected in Revenue 13.5%, Earnings before Interest
& Tax Depreciation Amortisation (EPITDA0) 17.6%, Earning Before
Interest Tax (EBIT) 16.0% and Net Result 769.6%. Suntel said
it was satisfied with its revenue increase of 13.5% over the previous
year - achieved in a year of volatile and relatively unstable political
and regulatory environment. The achievements in EBITDA and EBIT,
both of which reflect higher increases than that achieved with revenue,
signifies the efforts the company takes in managing its costs, the
statement said. Although Suntel continues to implement a well-managed cost structure as a means of ensuring adequate margins to sustain a viable operation, like all other business enterprises, it is compelled to take a periodic tariff increase to compensate at least partially for inflationary increases on operating costs, it said. While being in favour of de-regulation, Suntel said it hopes to see a level playing field being set for fair competition amongst the existing and potential new operators. Shippers oppose security documentation fees Shippers are
opposing plans by shipping lines to impose new security manifest
documentation charges on cargo bound for the United States, saying
they are unjustified and not transparent. Shipping lines
in Colombo have told shippers they intend charging $25 per Bill
of Lading and as much as $40 for any subsequent amendments. "This
is a very clear case of shipping lines trying to make an extra buck.
There are no charges levied on lines by US Customs, only the 24-hour
advanced manifest rule," said Rohan Masakorala, head of Ascobips
(Association of Shippers' Councils of Bangladesh, India, Pakistan
and Sri Lanka), the regional organisation of shippers' councils,
and former chairman of the Sri Lanka Shippers' Council. Shipping lines
say the charges are meant to cover extra costs incurred in complying
with the new US Customs anti-terrorism rule requiring manifest information
24 hours before US-bound cargo is loaded onto ships in foreign ports,
enforced since the beginning of February. Masakorala
said the new rule would benefit lines in the long run as it forces
shippers to be more disciplined and systematic. Exporters were
unable to pass on the new costs to buyers because they were "struggling
to survive" in international markets, he said. Ascobips is
to take up the matter with the US Federal Maritime Commission and
US embassies in the region, he added. Lines had not
held any talks with shippers nor had they provided evidence to justify
the charges, which have come on top of a new $20 documentation fee
for a B/L introduced earlier this year by lines in Colombo. Masakorala
said it was the shipper's responsibility to ensure manifest information
is sent on time and that it was the shipper who bears the risk of
having his cargo shut out if he fails to comply with the new rule. He also noted
that consignees might have problems with LCL (Less than container
load) when freight forwarders use multiple Bills of Lading. All the major
container lines calling at US ports have announced they have come
to an agreement with US Customs and will charge $25 per bill of
lading from March 17. These new charges
are being imposed under what is called 'Security Manifest Documentation
Charge' by the lines to ensure compliance with the 24 hours advance
manifest rule. Lines applied to the US Federal Maritime Commission during February, providing 30 days notice to implement the charges. Dale of Norway to open design centre Dale of Norway,
which makes authentic Norwegian knitwear, has expanded its existing
operations in Sri Lanka and is building a design centre for students
and other industries which need such facilities. The company
has a collaborative agreement with the University of Moratuwa and
has begun recruiting instructors. The centre
will provide facilities to students following the bachelor of design
degree programme conducted by the Department of Architecture of
the University of Moratuwa. The students
will explore different areas of design such as fashion, jewellery,
furniture, ceramics and graphics. The company
also would provide the use of the design centre to other companies
interested in designing for international markets. "I have
been overwhelmed by the seemingly endless talents of the people.
The passion of these people provided all the inspiration I needed
to convince my board, that this was the perfect place for our company
to invest," said Dale of Norway President, Sturle Harald Pedersen. Since 1981 Dale of Norway has worked with local craftsmen through Dale Craft Knit, producing the hand-knit collection of sweaters and cardigans known internationally as Dale Exclusive. In recent years Dale of Norway has expanded involvement in the region and now produces various accessories, such as caps, gloves, and bags. The new design centre, Dale Research and Development Services (Pvt) Ltd (Dale R & D) would develop designs not only for knitwear, but other products as well. Dale of Norway, founded in 1879, is a top manufacturer of yarn and authentic Norwegian knitwear, and is the official supplier to the Norwegian Ski Team, the U.S. Ski and Snowboard Teams, the Canadian Alpine Ski Team, the U.S. Olympic Committee and the International Olympic Committee. PMB raises Rs. 150 mln for People's Leasing Co. People's Merchant
Bank (PMBL) said in a statement it recently structured and placed
securitised notes to the value of Rs. 150 million on behalf of People's
Leasing Co (PLC). Funds raised
through this placement will provide PLC with a hedge against exposure
to liquidity mismatches and interest rates fluctuations. PLC will
utilize these funds to further augment its long-term fund base and
pursue its aggressive growth strategy. The entire issue of Rs. 150 million was taken up by Hatton National Bank while Deutsch Bank AG acted as trustee to the issue. This issue is the 4th in a series of securitised notes issued by PLC. The total value of these issues amounted to Rs. 1.5 billion which were placed with several leading financial institutions. PMB has featured prominently in several key debt placements that took place recently. The key shareholders of People's Merchant Bank include, People's Bank, Hatton National Bank, DFCC Bank and Southbridge Capital Investments (Sri Lanka) Ltd.
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