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communications becoming more visual He was making his presentation on "In search of location independence" as guest speaker at the 26th AGM of the Association of Chartered Certified Accountants, Sri Lanka (ACCA) held last week in Colombo. He said GPRS users receive full access to the Internet with the same features as wire connection (Local Area Network (LAN). GPRS maximum data transmission speed exceeds more than three times the speed of wire communications and almost by 12 times GSM networks' data transmission. As of now the speed of up to 33 Kbps is available. He said that GPRS networks utilize the bandwidth only when they were in use. Wijayasuriya said that due to speed and efficiency GPRS has become a favourable way of data transfer. It enabled instant access and instant ability to send and receive information and has new applications to Internet, which is currently used on PCs. Other services include: file transfer and access and control of home appliances. Users could receive a wide range of information, e.g. stock prices, flight schedules, sports results, weather reports, horoscopes and services. These information need not necessarily be in text form; but could be in the form of maps, graphs or other types of visual information. He said that the new technology has facilities to send photos, images, postcards, greeting cards and presentations via mobile networks just like the fixed one. GPRS enables the transfer of an image from a digital camera connected to a GPRS device directly to the web page. He said that over time mobile communications have become less textual and more visual in their form and nature. The wireless industry went from text messages, through icons and picture messages, photographs and blueprints to video messages. Even movies could be watched using a mobile network. GPRS is the favourite technology of wireless service providers for high-speed data transmission networks. Most major wireless carriers in Europe have already announced the GPRS service or started developing a GPRS-based system. Wijayasuriya said that for the first time GPRS and other packet technologies would allow operators to charge less for transmitting data than for channelling voice traffic, while collecting greater revenues from the very same network capacity. He said that packet-based systems allow operators to maximize the efficient use of their networks by letting multiple data subscribers share network channels. Ajith Tudawe, chairman of Ceylon Hospitals Limited (Durdans Hospital) and Group Financial Director, Tudawe Brothers Ltd, was elected ACCA President. He said the future development of the accountancy profession would be at a global level replacing national ones, adding that the ACCA hopes to work closely with the Institute of Chartered Accountants of Sri Lanka. He said that after Enron and WorldCom, government bodies and regulators, employers, members of the public and shareholders would expect accountants and auditors to update their skills and knowledge on a regular basis throughout their working lives. Following Enron, legislators around the world have introduced new rules and provisions to shore up confidence in financial statements and the independence of auditors. He said that they would build on ACCA's well-received response to the Enron affair to provide continuing thought leadership in the areas of corporate governance and accountability. (QP) The
realities of savings deposits According to the Colombo Consumers' Price Index, inflation for May was at six percent (point to point) while the moving average was at 9.5 percent. However, many banks are offering an interest rate on savings deposits of 4-5 percent, which imposes a substantial negative benefit on savings depositors. Interest on deposits also reduces with the decline in inflation. Therefore, with inflation on the decline at present, interest on deposits may begin to fall. Dr. Dushni Weerakoon, Research Fellow of the Institute of Policy Studies, admitted that the present situation was unfavourable for those who aimed to earn an income through savings deposits. She said that one of the reasons why there was a sizeable gap between lending rates and deposit rates was the high Non-Performing Loans (NPLs) of the two state banks. This has created a situation where such losses can only be recovered by increasing the interest spread. “Since private banks are competing with these state banks, they are able to maintain a similar interest spread as the two state banks, which has resulted in them making significant profits,” she said. She added that since lending rates were being reduced by the Central Bank, commercial banks were unlikely to increase interest rates on deposits, as it would only reduce the interest spread and eat into their profits. However, financial sector reforms have been aimed at improving state bank management and reducing political involvement, in order to reduce the high percentage of NPLs and administrative costs. Dr. Weerakoon said that if such reforms were successful, it would lead to a reduction of the interest spread in line with market forces, requiring both private and state banks to offer more competitive interest rates on deposits than that at present. Anil Amarasuriya, Managing Director of Sampath Bank, explained that the Central Bank has purported to promote investment in line with government policy by reducing lending rates, rather than increasing interest on savings. He said that in addition to the Central Bank bringing down lending rates, the Repo rate, the Reverse Repo rate and the inter-bank rate have been decreased, in order to bring down the cost of lending. Government borrowings have also declined due to the cut in defence expenditure, resulting in interest rates on Treasury Bills dipping to eight percent from nine percent. “Therefore, if we increase interest rates on deposits, we would have a problem of excess liquidity. So at the moment the avenues for investment are few, and the demand for deposits is low," Amarasuriya said. Dula Weeratunga, Assistant General Manager-Treasury of the Commercial Bank of Ceylon, said that historically, the rate of interest payable on ordinary savings accounts was always below the published rates of inflation in the country. He explained that savings deposits were repayable on demand, and generally were costly accounts to maintain, due to the requirement of infrastructure such as a network of branches, ATMs and holiday banking centres, which facilitate convenient withdrawals by savings account holders. In addition, banks are also required to maintain 10 percent of all deposits in the Central Bank as a statutory reserve. “Thereby, the actual cost to the bank is far higher than the mere interest cost,” he said. Weeratunga observed that there was a substantial increase in the level of savings. He said that depositors did not save purely for the purpose of receiving interest. “When selecting a Savings Account, depositors tend to look for benefits such as 24-hour access to funds, access to other banking facilities such as loans, leasing and most importantly, the safety of the deposit which depends on the capital strength of the bank.” Weerakoon of the IPS had a similar view, in which she pointed out that several studies had failed to prove that depositors invested their money in savings deposits purely on the interest rates offered. However, Dr. Weerakoon was of the view that 12-month Treasury Bills and other government securities were the safest and most profitable investments, which were more in line with inflation rates. Weeratunga was of the view that depositors seeking a higher rate of interest should invest in alternative financial instruments such as Money Market Accounts, Savings Certificates, and Medium Term Deposits. He observed that there was a trend in which sophisticated customers with large deposit bases assigned different amounts to different types of accounts in order to spread their portfolio, and even-out any short term declines in the rate of interest. He was confident that with the increasing levels of financial literacy, depositors could manage their funds better to earn the highest possible rate of interest. Dr. Weerakoon, however, said that even though there were many financial instruments available in the market under which income from interest could be obtained, practical problems such as lack of knowledge and lack of access to such instruments remained. Another banking official who declined to be identified added: "The savings habit has been ingrained in Sri Lankans even though they do not get a sufficient return on their deposits." CCI
slams moves to woo foreign planners, architects "These firms are hardly firms of international repute and in that context certain Sri Lankan firms are better and more experienced than these foreign firms," noted CCI President Surath Wickramasinghe in a statement. He said Sri Lanka should get the best consultancy firms in the world, not the second best. The statement
said that the construction industry is slowly reviving after the
severe slump over the past 4-5 years with part of the southern highway
project started and several other projects in the pipeline that
are now moving towards implementation. "We must
get the best or follow the practice in some countries where local
firms collaborate with foreign firms. Why cannot Sri Lanka follow
this practice?" he asked. "This is extremely tragic and unfortunate since nobody seems to be held accountable for this expenditure. The irony is that the mistakes made by the previous government are being repeated by this government," he said. Referring to the Regaining Sri Lanka initiative, Wickramasinghe said they were not made aware of any comprehensive plans besides the sectorial assessments for the north and east. He urged the
government to work in partnership with them to accelerate the decision-making
and implementation process of several projects in this initiative.
"Inability to act on time may reduce the construction industry
to a level of mere spectators watching our projects being hijacked
by foreign companies for no fault of ours." |
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