• Japanese tourists cruise away
• TRC to rule on pay telephone
• Coconut lands pushed to new limits
• Negative sentiment rubs shine off company profits
• Confidence attracts Lankans
• Another view of the Asian crisis
• Good governance for quality growth
• Cyberspace to be made a tax free zone

Japanese tourists cruise away

By Mel Gunasekera

Visitors from the Land of the Rising Sun have always been a bright source of income to the Sri Lankan tourist trade. The Japanese are attracted by our rich cultural heritage and the warm friendly Sri Lankan people.

But the profitable Japanese tourist market is now in jeopardy, due to a travel advisory issued by the Japanese Foreign Ministry.

The Tourism Minister together with the CTB and several tour operators are due to visit Japan from March 22-27. The tour will include a promotional evening on March 25, to which nearly 100 Japanese tour operators are to be invited.

Tourist industry sources say the delegation would request the Japanese authorities to reduce the severity of the travel advisory.

However after last Thursday's bomb in Maradana the prospects of this strategy succeeding are dim.

The travel restriction imposed on January 29, 1998 after the Kandy bomb blast, advised Japanese tourists to exercise caution when travelling in the city of Colombo and its outskirts. A map of Sri Lanka is included in the circular indicating danger areas like travelling to the North and East and the Yala national park.

Even areas where emergency regulations operate such as Gampaha, Northern Puttalam, West and North east of Anuradhapura, parts of Polonnaruwa, Hambantota and Moneragala are indicated on the map.

"There have been travel restrictions imposed on Sri Lanka before, but this is the first time that we got something so serious involving Colombo and the surrounding areas." a Ceylon Tourist Board (CTB) official said. "A quick glance at the map would scare people away, which is a very bad image for the whole country," the official said.

Previously after the Central Bank bomb blast in January 1996, a restriction came into place in February 1996, which was subsequently lifted in October the same year, and tour operators were able to attract clients in December.

The restriction was re-imposed following the Galadari bomb explosion in October 1997, but was lifted by December 1997, only to be slapped back after the Kandy blast in January.

Despite a downturn in the Japanese economy, there has been a steady flow of Japanese tourists to other countries. However, the Japanese are very sensitive to terrorism and violence, and the constant negative publicity has put a damper on the once lucrative market.

In October 1997, arrivals has dropped 11 per cent to 3,327 from 3,771 in 1996. November saw a 15 per cent drop to 3,207 from 3,786 in 1996. December 1997 was the worst, when arrivals plummeted 33 per cent to 3,063, against 4,623 in 1996. Arrivals for January 1998 declined by 22 per cent (2,886) compared to 3,702 in 1997.

"Official data for February 1998 are unavailable, but we expect a similar decline like in January," the CTB official said.

Tour operators who cater specifically to the Japanese market had a number of Japanese groups booked till April. Things have since taken a turn for the worse, with groups cancelling their travel arrangements to Sri Lanka.

Last year, a luxury cruise liner 'Askar' carrying 500 very wealthy up market clients on a world-wide cruise made a day stopover at Colombo. Passengers were taken on tours to Kandy, Fort and other destinations and the Japanese organisers promised a repeat trip this year.

"We managed to get this group with great difficulty after giving assurances to our agents in Japan, that Colombo was safe. But the travel restriction imposed in January this year, has caused a cancellation of the stopover in Colombo," Director-Operations, D. Holidays (Pvt.) Ltd., Sasanka Nanayakkara said.

The company also lost a further six Japanese groups who were due to come in April for bird watching. "Companies like ours, who specialise in the Japanese market are the worst said another cruise liner 'Neptune', with 250 Japanese due to dock on April 21, has also pulled out. 'Neptune' passengers were due to stay one night in Colombo and the tour operators had plans to take them to Sigiriya.

Tour operators who cater to the Japanese market are now shifting their focus towards the European market. The Europeans are not affected by adverse reports. "But they are not high spenders like the Japanese.

The Europeans are mostly low-budget travellers and go for cheap charters," a leading travel operator said. "It also takes awhile to win the confidence of the Japanese. Unlike the Europeans, most tour operators liaise with the Japanese on a personal basis," he added.

TRC to rule on pay telephone operations

By Asantha Sirimanne

Sri Lanka Telecommunications Regulatory Commission of Sri Lanka (TRC) is talking with payphone operators to bring them within the TRC Law, The Sunday Times Business learns.

The TRC has already set up a task force including representatives from the players to examine the problems dogging the industry.

Payphone operators are considered to be re-sellers of telecom services, who previously had no status with the telecom regulatory law in this country, except for The Payphone Company Ltd, which operates the Supercard network using the electromagnetic spectrum space.

But a new amendment to the TRC law in 1996 (Section 18 a) made it an offence to re-sell telecommunications services without permission from the TRC. This applies to payphone operators as well as the so called telex bureaux scattered around the country.

"We are now working to regularise these relationships," TRC Director General Professor Rohan Samarajiva said.

There is a possibility that the TRC may issue licences to the payphone operators if deemed necessary.

"We might go that way," Prof. Samarajiva said. "We have not made up our minds on that."

At one time there was concern among mobile phone operators, that the Mobitel network - at first a BOT project between Sri Lanka Telecom and OTC Australia which was later made in to a 40/60 joint venture - had a special relationship with Sri Lanka Telecom.

"But just on the face of it there is no problem as long as Sri Lanka Telecom treats everyone else the same way as they treat their subsidiary," Prof. Samarajiva explained. "The rule is non-discrimination."

But the situation with payphones is somewhat different. Unlike Mobitel which operated as a completely separate legal and financial entity, payphones are an integral part of SLT itself, making it difficult to draw the line between payphones and other operations. But as in mobile phones, the TRC would only be concerned if there was evidence of actual discrimination.

Payphone operators have been pressing Sri Lanka Telecom to give bulk discounts for years, as they are large customers. They also install and operate their own delivery equipment.

However Sri Lanka Telecom treats them the same as any other retail subscriber charging them retail rates. Due to the existing turnover tax rates there is an anomaly in the turnover taxes charged on telecom coin boxes and other payphones.

However the cascading effect of turnover tax would be eliminated if GST comes on schedule next month. There was also a question of whether card phones and coin operated phones, were identical or differentiated services. Meanwhile another payhone service TriTel, has started operations with coin, prepay and credit card payment systems, blurring any such distinction.

It is not only SLT that owns a payphone network. The wireless operator Telia Lanka (Suntel) now owns the Metrocard payphone network. The interconnection agreement between Suntel and Telia provides for a discount , opening up the possibility of eventually passing on at least some of the discount received from Sri Lanka Telecom to Metrocard.

Payphone operators have also experienced other problems when dealing with Sri Lanka Telecom. For example, before selling a loop to a payphone operator, SLT required the operator to submit a report on the expected revenue and customer use, based on a market survey.

This opened the way for SLT to install its own payphone based on the payphone operators market survey.

Though such practices were tolerated when SLT was government owned, with the regulator being strengthened players in the industry are now in a better position to fight back.

But the TRC will not make a determination until a full examination has been made.

"Sri Lanka Telecom has been very constructive in trying to resolve the problem," says Prof. Samarajiva.

Industry analysts say Payphone companies so far have not proved very profitable and there are indications that revenue is going down.

"The fact remains that very few people own telephones in Sri Lanka," Prof. Samarajiva said. "Therefore we think payphones are important because many ordinary consumers use them."

Coconut lands pushed to new limits

Inter-cropping of coconut lands leading to sustainable development of the coconut industry with multiple benefits such as increased land productivity, employment generation increased food production and farmer income has been recognised as a priority area by the Coconut Cultivation Board (CCB).

The recent budget allocated Rs. 100 mn for the specific purpose of developing inter-cropping on coconut lands.

The resources available within the state sector organisation responsible for development of the coconut industry, the CCB and the Coconut Development Authority (CDA) are to be harnessed in the above development tasks.

The CCB has already designed a loan scheme to help growers develop coconut lands through coconut based farming systems. Credit facilities would be provided through commercial banks, state banks and co-operatives for this purpose.

The loan scheme will operate for five years (1998-2002). The investment envisaged under the loan scheme in 1998 is around Rs. 150 mn and the physical target for 1998 is 4,500 acres, CCB Chairman, Dr. Sunil Jayasekera said.

The budget allocation of Rs. 100 mn is to be utilised to further strengthen and widen the scope of the loan scheme.

The additional loan schemes would be for supplementary irrigation systems in coconut inter-cropping farming systems, establishment of inter-crops nurseries for supply of quality planting materials, provision of farm equipment for coconut inter-crop farming systems, and provision of risk guarantee for bank loans for participating credit institutions.

The project will ultimately provide farm irrigation for 25 holdings (200 acres), establish 500 inter-crop nurseries, provide and farm machinery for 35 farm holdings.

Loans would be provided through SANASA (Co-operative Credit Society), Sri Lanka Coconut Producers Co-operative Societies Union (COCO Union), Regional Development Banks, Bank of Ceylon, Peoples Bank, Hatton National Bank and Seylan Bank. The total loan disbursement would be Rs. 234 mn.

The project will provide a 25 per cent risk guarantee to participating credit institutions.

The total loan interest for the first year would be paid back to the farmer as a rebate. Rs 41 mn has been set aside for this purpose.

The project will establish district level trading house system for regulated marketing of coconut, copra and inter-crops. A trade and market information base will be developed to collect and disseminate daily market information and market trends to growers.

Though the project would cover the whole country the initial focus would be in the major coconut areas like Gampaha, Kurunegala, Puttalam, Hambantota, Moneragala and new areas with high potential.

More Business * Negative sentiment rubs shine off company profits * Confidence attracts Lankans
* Another view of the Asian crisis