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2005
in retrospect The news was also dominated by tycoons like Harry Jayawardena, whose attempts to seize control of banks like DFCC Bank and Commercial Bank drew protests and raises fears about too much concentration of ownership, and prominent stock market investor Dhammika Perera whose Vallibel Holdings revealed ambitious plans to expand in the hotel sector and eventually become a conglomerate. While the stock market soared to new highs, trading was marred by reports of market manipulation and insider dealing with the Securities and Exchange Commission summoning investors over unusual price increases in some low valued stocks and top businessmen being fined for alleged insider dealing. The year closed with a major change in the leadership of John Keells Holdings where Susantha Ratnayake succeeded chairman Vivendra Lintotawela upon the latter’s retirement. January -- Government raises VAT on luxury items to 18 percent. -- An increasing number of Sri Lankan companies such as top conglomerates like Hayleys, Aitken Spence, Carsons and John Keells are reported to be setting up manufacturing plants or marketing outlets overseas in a series of bold moves that marks an emerging new trend and reflects the growing confidence and entrepreneurial spirit among local businesses. -- Central Bank governor Sunil Mendis meets exporters and assures them that the bank would intervene to prevent the rupee from appreciating to levels that would make exports uncompetitive. The Central Bank will intervene if the dollar goes below Rs.99 because of inflow of foreign tsunami aid. -- Aitken Spence reported as having frozen planning on $15m luxury resort in Ahungalla, a joint venture with the up-market Six Senses group, owing to uncertainty over the coastal buffer zone -- Susantha Ratnayake, newly appointed deputy chairman of John Keells Holdings (JKH), prepares to take over the conglomerate in one year by progressively shedding direct responsibility for business units he headed and getting ready to assume overall control of the group. February
- Insurance Board of Sri Lanka issues new guidelines aimed at ensuring more transparency and strengthening the financial health of insurers amid concerns that some firms may have difficulties in meeting asset and solvency requirements owing to massive tsunami-related claims. – In keeping with its regional diversification strategy, Commercial Bank reported to be planning to venture into India, following the success of its Bangladesh business. - Coconut growers concerned about spread of coconut mite, aceria guerreronis, that has resisted control efforts, resulting in fears that it could significantly reduce crops during lean cropping months. - Depositors of the failed Pramuka Bank claim damages totalling Rs 6 billion from the Central Bank, Pramuka Directors and auditors KPMG Ford Rhodes Thornton & Co alleging the authorities had mismanaged the issue leading to the bank being suspended and its licence being cancelled. – Government initiates scheme to monitor post-tsunami inward remittances received by the government, NGOs and others for tsunami relief activities. – Banks asked to submit monthly and quarterly compliance reports to the Bank Supervision Department of the Central Bank. - Designer-label clothes in some of the 'hottest' stores in Colombo are among a growing number of counterfeit items here that have drawn the attention of local authorities. Commercial Crime Investigation unit of the Criminal Investigation Department says 30 percent of the goods in the market today are counterfeit products. - Hotelier George Ondaatjie pays Rs 2 million to compound an insider dealing offence, the Securities and Exchange Commission announces. March
- John Keells Holdings announces it is bringing in changes inclusive of independent audit committees and non-executive directors to its listed subsidiaries, in the overall structure in line with imminent SEC guidelines. – Requirement introduced for directors of banks to submit an affidavit and a declaration to assess the ‘fit and proper’ criteria under the Banking Act. - Board of Investment announces it is tightening the rules with a new system of approvals aimed at weaning out foreign investors with a dubious past, an issue that has plagued the agency for many years and drawn a lot of criticism. - Aitken Spence Shipping Limited, the shipping arm of the Aitken Spence conglomerate, reveals it is going to acquire two more cargo ships under its plans to expand its small fleet which is making a growing contribution to group profits. - National carrier SriLankan Airlines unveils new strategy on flights with daily flights to New York and increased frequencies to Singapore and Malaysia with a promise of a multiple choice of flights to travellers during the most preferred times of the day. – MJF Group, known for its Dilmah Ceylon tea brand that has been successful in key overseas markets, expands its network of trendy t-bars, the upscale tea 'cafés' styled like cocktail bars and reveals it is developing a ready-to-drink (RTD) product. - Brown and Company Ltd. Announces it has been shedding loss-making businesses and selling off some of its numerous properties scattered around the island with the aim of cutting flab, reducing its debt and becoming a more dynamic business. The company, one of the oldest in Sri Lanka, also says it is revamping its extensive islandwide branch network and thinking of new ventures as part of the turnaround. – Vallibel Holdings, owned by the investor Dhammika Perera, whose forays in the stock market are keenly followed by others, reveals ambitious plan to build 1,000 more rooms by end-2007 in a Rs 6 billion hotel spree. The group, whose main sectors now include finance, manufacturing, leisure, power and exports, aims to eventually become a conglomerate like Hayleys. - Securities and Exchange Commission (SEC) plans to summon investors regarding sudden price increases in some low valued stocks. The move comes in the wake of concern by market regulators about unusual movements in the prices of certain shares. – Government establishes new bank for the development of the SME sector. April - PABC Bank, formerly Pan Asia Bank says it has 'turned around' by recording a net profit of Rs. 41 million for 2004, the first positive result in six years. – Central Bank raises minimum capital requirement for licensed commercial banks to Rs 2.5 billion from Rs 500 million and for licensed specialised banks to Rs 1.5 billion from Rs 200 million. May – Retail prices of petrol, diesel and kerosene increased by Rs 6, Rs 4 and Rs 3 to Rs 74, Rs 46, and Rs 28.50 respectively. - Depositors of Pramuka Bank describes Central Bank move to substantially raise the minimum capital requirements of all banks as another frustrating attempt to scuttle efforts by desperate depositors to revive the failed bank. - A 14-year dispute over rights to the MTV 1ogo between Viacom, owners of US-based Music Television, and Sri Lanka's Maharaja Group ends with the Supreme Court ruling in favour of Viacom. In a judgement, the court said the registration of the MTV logo by the Maharaja Group was contrary to provisions of the Code of Intellectual Property and overturned a lower court ruling approving the Director of Intellectual Property's decision to allow that registration. - Central Bank raises repurchase (Repo) and reverse repurchase (Reverse Repo) rates by 25 basis points to 7.75 percent and 9.25 percent, respectively. June – Central Bank raises minimum issued and paid up capital for money changers to Rs 10 million from Rs 1 million to strengthen and discipline money changers. – Passenger bus fares increased by 15 percent. – Sri Lanka – Pakistan free trade agreement comes into effect. - Haycarb, the Hayleys subsidiary making coconut shell charcoal-based activated carbon, reveals it has begun making activated carbon products for more hi-tech, specialised applications after clinching a deal with Calgon Corporation of the US, a dominant player in the industry, to acquire closely-guarded value adding know how. – Central Bank raises repurchase (Repo) and reverse repurchase (Reverse Repo) rates by 50 basis points to 8.25 percent and 9.75 percent, respectively. - Top British clothing store Marks & Spencer withdraws consignment of baby garments shipped from a Colombo-based supplier after sewing needles were found in some, in what local industry officials described as sabotage. – Parliament approves bill to prevent fragmentation of coconut land for urban and industrial development. - Aitken Spence Shipping Limited reveals it has spent about $27 million on acquiring five second hand cargo vessels and plans to double its fleet to 10 in the next two years. – Government withdraws duty waiver on import of wheat grain (2.5 percent) and wheat flour (15 percent). July - Cabinet approves plans to introduce gliricidia as the fourth plantation crop to set up agro-energy plantations with the aiming of developing dendro power. – Sri Lanka becomes eligible to get concessions under the European Union Generalised System of Preferences plus (GSP+) scheme. - The government and Ceylon tea industry begins lobbying the European Union to extend the deadline for new food safety rules that come into effect on January 1, 2006, as most factories are yet to meet the new standards and face the prospect of having their teas shut out of key European markets. - Dialog Telekom’s initial public offering exceeds expectations and is oversubscribed close to eight times locally and four and a half times in the foreign markets. The week also saw both indices of the Colombo Stock Exchange hitting new highs, making it Asia’s best performing bourse. August - 15 percent VAT on diesel imports removed. – 18 percent VAT rate band on luxury items increased to 20 percent. – Government doubles excise duty on imports of heavy vehicles more than five years old. – Five percent VAT on milk powder and 15 percent VAT on LPG removed to help public cope with rising cost of living. - John Keells Holdings, which has said it is intensifying its internationalizing efforts and wants to double its size in the next three years, announces plans to put up a new 100-roomed five-star tourist resort on Alidhoo island in the Maldive Islands. – Securities and Exchange Commission announces that it had compounded yet another offence - the offence of market/price manipulation by Dinesh J. Ambani and Metropolitan Office Ltd. with each paying a fine of Rs 3.3 million, and that in terms of the SEC Act, compounding does not entail a finding of guilt. Ambani and Metropolitan had denied the charge and asked the SEC to compound the offence. September - Galadari Hotel Lanka Limited earns a profit of Rs. 146 million, or 80 cents per share, for the six months ended June 30, 2005, its first profits since a 1997 Tamil Tiger terrorist bomb blast that wrecked part of the hotel. – Central Bank raises Repo and Reverse Repo rates by 25 basis points to 8.50 percent and 10 percent, respectively. - NDB Bank grants three months from August to the multilevel marketing company, GoldQuest to reduce its 13 percent stake in the bank to 10 percent, in accordance with the new amendments to the Banking Act which prohibits any individual, company or a partnership holding more than 10 percent in a licensed commercial bank without prior approval from the regulator’s Monetary Board. – Central Bank introduces scheme to monitor foreign exchange drawings using credit cards, debit cards and other electronic funds transfer cards to combat pyramid money making scam. – Sri Lanka Transport Board (CTB) re-established. October - Hemas Holdings Ltd. reported making further moves to position itself as a newly emergent conglomerate with a share sale that brought in institutional investors who would support its future growth, amid plans to hire a director legal to enhance the grou’s skills required for acquisitions and expansion. - Aitken Spence decides to go ahead with planned luxury resort and spa in Ahungalla, now expected to cost almost $20 million, and is also expanding its Meeduparu island water bungalow resort in the Maldives. - Brown and Company Ltd., one of the oldest firms in Sri Lanka, whose ownership changed hands recently with the Cooray family selling their stake to a new group of investors, plans to hire fresh talent to drive the group’s expansion, its chairman M. V. Theagarajah said.
- Another effort by tycoon Harry Jayawardena to speed up plans to take control of the embattled Commercial Bank fails after the Appeal Court refuses a plea to advance a case that had stalled the march towards control of the bank. - Sri Lanka insurance accuses unnamed insurance competitors of inventing 'products' purely to increase premiums and increase market share at any cost. - The vital plantations industry, which remains the main net foreign exchange earner, could face a crippling shortage of skilled manpower at both management and field levels as an alarming exodus of planters and workers continues unabated. - Dhammika
Perera acquires control of a 10 percent stake in Sampath Bank as
of November 17, the CSE is told. December - Prominent stock market investor Dhammika Perera seeks approval from the Central Bank to hold a stake in Sampath Bank in excess of that allowed by the Banking Act following the bank’s refusal to register his shares on the grounds that it violates banking regulations. - Efforts underway by President Mahinda Rajapakse’s new administration to revive the failed Pramuka Bank and save scores of desperate depositors. The defunct Pramuka Bank -- involved in a tedious legal wrangle -- would be nationalized. – John Keells Holdings, one of the largest corporate real estate owners in the city, announces plans to build another luxury high rise apartment complex on its prime property at ‘Crescat City’ in Colpetty at a total cost of $40 million, through its subsidiary, Asian Hotels and Properties Ltd. – John Keells Holdings chairman Vivendra Lintotawela retires to be succeeded deputy chairman and joint managing director Susantha Ratnayake.
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