Financial Times

BOI warns: Buy Apollo and lose benefits

The Board of Investment warned last week that it would be compelled to end tax holiday status and other benefits to the Apollo Hospital if the ownership changes at this premier institution in Colombo.

This came after the Harry Jayawardene-led Sri Lanka Insurance Co (SLIC) bought a major controlling stake in the Apollo and has made a mandatory offer to other shareholders.

The move worried the hospital company resulting in the Indian-based hospitals’ group saying it would resist the takeover bid. SLIC has raised its ownership to 36.07 per cent in Lanka hospitals (the local owning company) while India’s Apollo holds 32.92 per cent.

In a statement the BOI said Lanka Hospital Corporation (Apollo Hospital) had entered into the agreement in October 1999 for the establishment of a multi-speciality hospital with a 350-bed capacity. Furthermore, in their project proposal they also committed that Indian Hospital Corporation limited will manage the hospital professionally with specialist medical and paramedical manpower.

“The land upon which the hospital was built, was released to the company on concessionary terms, based on a cabinet decision identifying the hospital as a “Special Development Project” to operate an ultra modern hospital at Narahenpita with injection of foreign technology and capital. The Cabinet also took notice of the fact that Apollo Hospital India will hold substantial equity of the Company, and will manage it,” it said.

For these reasons the BOI said any change in the ownership of this large infrastructural project that has resulted in considerable improvement in the country’s medical service, affecting the fundamental characteristic of the project, will result in the BOI having to cancel the status granted to the project. This means that the company will forego the tax holiday granted; pay import duties on all goods imported and pay the current market price for the land which was granted for the establishment of a “Speciality Development Project”

The BOI said it was making this statement to safeguard investor confidence in Sri Lanka.

Letter - Save Sri Lankan entrepreneurs

It was perturbing to read the headline in a newspaper last week referring to attempts to protect Apollo Hospital from a Sri Lankan corporate raid. It is difficult to understand why there is so much animosity towards Sri Lankan entrepreneurship, in a country that looks outwards ‘open mouthed’ for foreign investment.

The profits earned by a Sri Lankan entrepreneur stays in Sri Lanka and contributes to the development of our people and our nation.

When a company lists its shares in the stock exchange, it is perfectly fair and legal for anyone to purchase those listed or quoted shares.

If a company needs to retain tight internal control it should not publicly list more than 51% of the company share.

There is no point-crying foul after publicly listing majority shares in the open market. It is like trying to keep the cake and eat it. This defeats the whole purpose of a stock exchange and a free market economy, paradoxically it seems that local investors are being discouraged.

It is indeed juvenile for some capitalists to run to their diplomats to use strong-arm tactics to curtail perfectly legal transactions. It is sad that the Sri Lankan politicians do not seem to have a modicum of the patriotism that the neighbour’s diplomats have.

No politician has taken adequate steps about the pollution caused by the scores of two stroke three wheelers and the transformation of our beautiful country to a land of ‘tuk tuks’. Free trade seems to be of real meaning only when it is advantageous to the ‘big brother’.

Mr. Harry Jayawardena is the quintessence of Sri Lankan entrepreneurship with a track record that is sine qua non. His innate ability to turn ailing businesses into world-class organisations needs no introduction and Apollo can perhaps make use of his ‘Midas touch’ for the benefit of the patients in Sri Lanka that patronise this organisation.

Dharshana Senerath
MBA, Chartered Marketer
Colombo

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