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Migrant workers to rebuild Iraq? By Feizal
Samath Jose S. Brillantes,
Undersecretary at the Department of Foreign Affairs in the Philippines,
suggested that labour-sending countries should come together and
ensure that their workers benefit from the opportunities that would
emerge in post-war Iraq. But local NGOs
dealing with migrant workers were horrified by the suggestion. "Are
we also going to share the spoils of war like the Americans? We
should not be seen benefiting over a tragedy (even it means more
jobs for our workers). What I would have expected the ministers
to do is to at least issue an appeal to stop the war," a senior
official from one of these groups said. At the meeting,
Brunson McKinley, Director General of the International Organisation
for Migration (IOM), immediately backed the proposal saying migrant
workers would have an important role to play in the rebuilding and
reconstruction phase. "We will (seriously) look at this proposal." McKinley, who
took the opportunity to list steps being taken to protect stranded
migrants in Iraq, however, said that not many foreign workers wanted
to leave the battered country. "Not many of your nationals
want to go home," he told ministers and officials from 10 countries
at Wednesday's meeting. He said IOM had helped to send home some
2,000 mostly African workers from the borders that Iran, Jordan
and Syria share with Iraq. Local officials
said that all the Sri Lankans in Iraq have left the country including
a woman who is married to an Iraqi national. "She did not want
to leave earlier because of her husband but she has now left,"
said an official at the Foreign Employment Bureau. Employment
agencies here welcomed the Philippines proposal for migrant workers
to be part of Iraqi's reconstruction effort. Suraj Dandeniya, President
of the Association of Licensed Foreign Employment Agencies (ALFEA)
said Sri Lanka was part of the development of Iraq in the late 1970s
to mid-1980s with engineers, drivers and construction workers being
among the 15,000 to 20,000 Sri Lankans working there. "We lost control of that market thereafter. It's a good opportunity for us to get back in and it would be good if Sri Lanka supports the Philippine proposal," he said. Ministers and
officials from Bangladesh, China, India, Indonesia, Nepal, Pakistan,
the Philippines, Thailand, Vietnam and Sri Lanka met under an initiative
by Labour Minister Mahinda Samarasinghe and the IOM to discuss common
issues and come up with practical suggestions for cooperation and
to manage the migrant worker industry. It was the first ever meeting
of its kind in Asia. The ministers,
in a declaration at the end of the one-day session, agreed that
countries - in their individual capacity - would also look at mechanisms
to promote and provide a kind of preferred country status on receiving
states that follow best practices in the employment of migrant workers. Most of the country presentations dealt with problems faced by migrant workers like non-payment of wages, poor working conditions and sudden loss of jobs while little was discussed about the issue of harassment of mainly female workers which is a serious issue often raised by rights groups and migrant worker associations. Minister Samarasinghe
said among new welfare measures being provided to migrant workers
from May 1 is a special identification card in the form of a chip
carrying personal details that would help them in case migrants
lost their passports overseas or faced other problems. A special uniform was also being provided to migrants. The economic
shocks of the war against Iraq intensified last week as prices of
low grown teas dipped further at the Colombo auction although there
were less unsold lots, and the tourism industry said new bookings
had fallen sharply. The government
moved to support the tea industry seeking US backing to supply Ceylon
tea to post-war Iraq and talking with the World Bank about how to
help workers in tea small holdings whose income has dropped sharply
because of lower demand. "The auction
was better than the previous week with much fewer teas unsold but
prices dropped further - by about 3-5 rupees across the board,"
said Lalith Ramanayake of brokers John Keells Ltd. " However, most
teas were saleable." The sale average
for low grown teas, which make up more than half of Sri Lanka's
crop, had plunged to Rs. 132.84 per kg at the March 25-26 auction
from Rs. 144.84 the week before. Over 60 percent
of Sri Lanka’s output goes to Middle Eastern markets from where
demand has dropped sharply owing to the uncertainty caused by the
war against Iraq. Most Sri Lankan
low grown teas are bought by the Middle East and the Commonwealth
of Independent States. Dhammika Wedanda of Asia Siyaka Commodities
said that buyers were attracted by the lower prices. Given the crisis
caused by the Iraq war, he said it was more important to sell the
teas, even at lower prices. “There
was more demand than last week for most types of teas at slightly
lower levels,” he said. “There seems to be some kind of
improvement in Middle Eastern demand but it is not where it should
be.” John Keells
said in a report that the industry usually relies on Middle Eastern
buyers to make the bulk of the purchases at this time of year as
Russia and other CIS states reduce their buying with the approach
of summer. Niraj de Mel,
CEO of the Tea Association of Sri Lanka, said there was more interest
in low growns as buyers in consumer markets in the Middle East would
have found other routes to ship the tea despite the closure of certain
borders. A pending order
from Iraq could not be fulfilled because letters of credit did not
come in time before the war broke out, he said. Plantations
Industry Minister Lakshman Kiriella held talks with US Ambassador
Ashley Wills last week seeking American help in resuming shipments
of tea to Iraq. Sri Lanka won
a contract to supply 10 million kg to Iraq under the 13th phase
of the programme. Iraq was once
one of the biggest markets for Ceylon tea and last year imported
over 17 millions kilos. Harsha Aturupane,
a senior economist at the World Bank, said development agencies
including the World Bank have been discussing with the government
the impact of declining tea revenues, which might lead to workers
in small holdings falling below the poverty line. Robert Holzman,
director of the World Bank’s Social Protection Network, said
the impact of the Gulf war on poorer social groups in the world
have been under discussion for the past year and that they were
looking at various strategies on how to tackle the problem. Tourist Hotels
Association president Kumar Mallimarachchi said there had been a
marked drop in new bookings. “New bookings
aren’t coming - only repeaters who know there are no problems
here are ready to come,” he said. Of the existing bookings
over 95 percent had arrived. Wasantha Leelananda, managing director
of Walkers Tours and Travels, said potential visitors had adopted
a wait-and-see approach, which he said “has a significant impact
for the summer season.” New bookings were “very slow in
coming” but there had been “not that many cancellations,”
he said. “Air routes
to Colombo have not been badly impacted because we can bypass the
war zone,” he said. “Also, we’re now a peaceful destination.” But he said
there was a need to promote the island more vigorously in new markets
such as India. Ceylon Biscuits in Rs. 700m expansion project By Thushara
Matthias The company
has set up a fully owned subsidiary, CBL Foods International (Pvt)
Ltd, in Ranala, that will employ about 150 people to make the new
product as well as other products under its market expansion project,
Ceylon Biscuits managing director Lakshman de Silva said. He declined
to immediately identify the new product.The company has always been
a forward looking one that took advantage of the incentives offered
by the Board of Investment to expand its range of products and generate
more employment while helping to modernize the island's industrial
base, he said. The company
at the initial stage hopes to concentrate on the domestic market
and later on venture into exports. "We are
confident this will be successful overseas as the equipment is capable
of manufacturing sophisticated products catering to the foreign
market as well as products suitable for the Sri Lankan palate,"
de Silva said. "The products
manufactured for the Sri Lankan market will be targeted at the mass
market hence emphasis will be placed on manufacturing a very hygienic
product at an affordable price." Among Ceylon Biscuits' export markets are Oman, UAE, USA, Canada, Australia, Fiji, United Kingdom and China. Depositors badger bank officials Desperate depositors
of Pramuka Bank have said they have begun bombarding Central Bank
officials with telephone calls to find out the fate of their money,
sometimes even calling them at home. A number of depositors interviewed by the Sunday Times FT said they resorted to this tactic as they were uncertain how long they would have to wait to get their money back and were worried by the delays in the efforts to revive the bank. Central Bank
officials were not immediately contactable for comments about the
barrage of telephone calls. Meanwhile Pramuka
Bank directors rejected calls by the Pramuka Depositors' Association
and the Stakeholders' Association to resign during a meeting with
some of the directors including the chairman, Udaya Nanayakkara,
in Nanayakkara's residence. Depositors
want the directors to resign to facilitate the Janashakthi Capital
Ltd offer to restructure Pramuka. They have filed
several court cases challenging the cancellation of the Pramuka
licence by the Central Bank and its proposed liquidation. The validity
of the recent amendment to the Monetary Act - relating to the Pramuka
issue - is also being challenged by the Centre for Policy Alternatives
in the Supreme Court as the new provisions stated in Section 30
(10) to the Monetary Act were placed in the order paper of Parliament
without being gazetted. A spokeswomen
for CPA told The Sunday Times FT that the amendment has already
been passed in parliament and now is law. The Central
Bank, in its statement of objections in the Court of Appeal in answer
to the petition of the depositors, indicated that following the
suspension of operations of Pramuka, the Central Bank has found
the condition of Pramuka to be much more serious than earlier envisaged. Former chairman
of Pramuka Rohan Perera unlawfully helped himself to a large sum
of money from his own account at the bank just as a suspension order
had been served on Pramuka, it said. The independent auditors, Ernst and Young, has reported that Pramuka's accumulated losses were so great that to sustain its operation in the short run it would need additional capital of Rs. 1.3 billion. Banks in bad shape, broker's report says Behind the stunning
profits reported by the big commercial banks in the last financial
year lie a host of hidden problems that has made the banking sector
in "dire need" of reform, a report by a stock broker has
said. Many banks
suffer from weak asset quality and low operational efficiency, while
overstaffing meant layoffs were in the offing and new capital adequacy
requirements threaten the survival of smaller unlisted commercial
banks, DFCC Stockbrokers said. Margins are
expected to come under pressure this year because of improved liquidity
- a result of reduced government borrowing and an increase in customer
deposits. Cuts in benchmark
rates and lower government borrowing are expected to drive interest
rates lower. However, the
report said, the pressure on earnings owing to lower margins can
be offset by higher credit growth and an increase in fee-based income. It pointed
out that the economic recovery, proposed infrastructure projects
and the resumption of economic activity in the north and east following
the ceasefire is likely to improve credit growth. But, the DFCC
Stockbrokers' report said, "drastic cost cutting initiatives"
are required to improve the operational efficiency of commercial
banks. "Currently,
high cost-to-income ratios of banks are sustained by the high margins
maintained on lending. However, this is unlikely to be maintained
in the prevailing low interest rate scenario and cost reduction
initiatives including automation and staff reductions are a dire
need." Equity investors
are likely to place a "significant premium" on balance
sheet quality and shift their focus to asset quality from reported
earnings, the report said. Investors should
expect banks to report higher levels of provisioning for bad loans
in the current financial year in order to improve their cover. The
mandatory credit rating requirement imposed on banks will force
them to improve provisioning as they strive to get favourable credit
ratings. "The efficiency
level of the listed banks as measured by the cost to income ratio
lags far behind regional norms and the levels reported by foreign
banks operating in Sri Lanka," the report said. However, one
exception was the Commercial Bank, which it said operates at regionally
comparable levels. Other banks
suffer from excess staffing, pension funding, low automation levels
and poor cost optimising operational strategies. “We believe
that there is significant room for efficiency improvements in listed
banks through pruning low-volume retail clientele that contribute
to high personnel costs and increased automation of both back office
and delivery channels,” DFCC Stockbrokers said. “The low
efficiency level in the local banking sector is an integral cause
for the low ROA (return on assets) in the sector.” DFCC Stockbrokers
also forecast a wave of mergers among banks. “We believe that
the current banking sector is too fragmented to achieve the economies
of scale that will lower the industry cost-to-income ratio and become
comparable with the more efficient regional banks. “It is
evident that the Central Bank is keen to see a high level of consolidation
in the sector by a possible increase in minimum share capital requirement
for commercial banks which presently stands at Rs. 500 million.
This is expected to set off a wave of consolidation with smaller
banks merging with highly capitalised larger banks to meet the share
capital requirement.” With the increase
in the capital adequacy requirement to 10 percent from 2003 (inclusive
of FCBU), the brokers said they expect the survival of the small,
unlisted commercial banks, which are saddled with high bad loan
portfolios, to be threatened. The proposed consolidation of unlisted commercial banks, Union Bank with Sampath and NSB, may be the forerunner to several more such consolidations. There were 25
licensed commercial banks - 11 domestic and 14 foreign bank branches
- operating in the island as at end-2001. The report
said 2002 was “an exceptional year” for the big four banks
- Commercial Bank, HNB, Seylan and Sampath - who were able to boost
interest margins because of the time lag between cuts in deposit
rates and lending rates. Interest rates on deposits were reduced
immediately after a benchmark rate cut while lending rates were
maintained until banks were compelled to reduce them because of
competition. It warned that
the 10 percent Value Added Tax on banks and financial institutions
is likely to reduce earnings growth in the sector. The report also described as “potential time bombs” the pensions schemes of large banks that could explode unless urgent action is taken to contain future funding requirements.
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