• Insurance open to all
• Mind your business
• Company info on the web
• Cellular call rates to be revised
• CTC calls for lower cigarette taxes
• Accountability in banking
• FDI: facts, figures and the real flow

Insurance open to all

Foreign firms to come in

By Asantha Sirimanne

The Sri Lankan insurance industry may be a major target for foreign investors if the proposed changes to the insurance law open the door for their entry.

At present insurance is part of the so-called negative list into which foreign investment is restricted. However the proposed new insurance law is expected to permit foreign investment into insurance companies.

A high powered committee was appointed more than two years ago to recommend changes. Of late the Public Enterprise Reform Commission (PERC) has also been engaged in expediting the process.

"PERC is assisting the government in making the act a reality," PERC Director General Mano Tittawella said.

"It will iron out anomalies in the old act and give new powers to the insurance regulator."

The government is eventually expected to list both Sri Lanka Insurance Corporation and National Insurance Corporation in the stock market, though PERC says it has so far not been mandated to proceed with either. However no float is likely to be successful unless foreign investors are allowed to make at least minority equity investments.

"We are looking at the equity issue," Mr. Tittawella said. "Not to sell controlling stakes but at least a certain percentage hopefully also to allow some foreign investment to come."

However the first company to see a direct foreign investment may be CTC Eagle Insurance, a private insurer that is already on the stock market.

British American Tobacco's local arm, Ceylon Tobacco Company which owns 63.8 per cent of CTC Eagle said it was not planning an immediate sell off, despite BAT's strategic decision to get out of the insurance business. Such a sale would be worth at least Rs 700 mn.

BAT has already sold its insurance interests to Zurich Insurance.

"Even if we wanted to sell we cannot sell to a foreign party because Sri Lankan law does not allow it," CTC Group Chief Executive Gottfried Thoma said.

At the moment CTC was also not planning a local sale, but the decision may be reviewed later.

During the past few years BAT has been selling off business units in non-core areas to focus on developing its tobacco business. CTC's fertilizer, printing and a consumer goods trading divisions have already been sold.

CTC Eagles' financial performance is also not consolidated with CTC's accounts. Last year CTC also dropped one of its board positions in CTC Eagle. National Development Bank, which bought into Eagle's fund management subsidiary is now represented on the board. Eagle's own chief financial officer was also elevated to the board last year. The company's foreign technical collaborator Eagle Star, is also represented.

Managing Director Chandra Jayaratne said last week that Zurich Insurance officials had already visited the company. However he downplayed any special significance the visit may have had.

"We are a good company, so people should visit us," he said.

Last year CTC Eagle posted after tax profits of Rs 100.2 mn up from Rs 83.8 mn. General Insurance premium has shown only marginal growth due to stiff competition. Gross written premium (life and general) rose to Rs 1,321 mn from Rs 1,200 mn.

Mind your business

July secret

In the Treasury, these are times for change, with the controversial Secretary finaly saying goodbye.

His successor has already been named and one of his first tasks would be to find money for another wage hike in July.

This would be the second instalment of the hike originally planned for January.

But why July, you may ask. That's about when the Provincial Council polls are due, they say..............

No 2 for Cola?

First it was the Master Blaster who was signed on by a soft drinks giant for a mega sponsorship deal..

Now, their Cola rivals are looking for another local willow wielder to be their promoter.

And, with the skipper declining all commercial offers, they are eyeing the deputy, we hear..............

Company info on the web

Web-based online information providers are emerging in Sri Lanka challenging established international services.

"We focus on local content," says Eric Wickramanayake, Managing Director of South Asia Securities Information Network (SasiaNet), the latest entrant to the market pioneered by companies such as Lanka On Line.

"We cover issues and information relevant to investors here on local companies," Mr. Wickramanayake said.

The fledgeling company eventually hopes to cover all South Asian stock exchanges by forming alliances or setting up similar units in SAARC countries.

The main advantage of web-based companies is their cheap delivery method. Instead of leasing dedicated high quality data lines, the web-based information services can be accessed over ordinary telephone lines.

The service can be accessed by investors here and abroad by simply getting on the net. SasiaNet can also be dialed direct. The company originally started as a division of David Pieris Motor Company but later the management bought out the company. It's now owned by the management and employees.

"Because we are not owned by any specific company we are independent," says Mr. Wickramanayake. The company operates an extensive database of published information. It has search tools to extract and analyse information which can be operated with java enabled browser software.

"We are mainly targeting investors, stockbrokers and fund managers," says Mr. Wickramanayake. The full service however would still be beyond the reach of most small investors. The company is planning e-mail-based customised information updates for small investors.

Japan says only NE, Yala highlighted

Responding to our story headlined 'Japanese tourists cruise away' last week, the Japanese Embassy says only the Northern and Eastern provinces and Yala National Park are highlighted in the map issued with the travel advisory issued by the Japanese government and not all areas where emergency regulations are in force.

After the Central Bank bomb, in January 1996 the Japanese government in a travel advice announced a recommendation to defer no-essential travel to Colombo in addition to North and East.

On May 1 last year, the travel advice to Colombo was downgraded to travel caution and was not lifted. The travel caution which was already in force had only been re-issued after the Galadari and Kandy blast, the embassy said.

Cellular call rates to be revised

By Mel Gunasekera

The Telecommunications Regulatory Authority (TRC) which ruled on the telecom pricing recently is to issue a ruling on mobile call charges soon.

All cellular operators submitted proposals to the TRC last week.

If these proposal are accepted, the cost of calling a mobile phone from a fixed phone will go up, while incoming calls will be free for mobile phone users. At present, fixed phone users pay the STD (long distance) rate when calling mobile users.

"This will make calls to cellular phones more expensive. But we are yet to make a final decision on this issue," Director General Telecommunications, Prof. Rohan Samarajiva told The Sunday Times Business.

Last week, the TRC allowed Sri Lanka Telecom to increase peak hour calling rates and monthly rentals.

Wireless local loop charges remain unchanged. They have not requested an increase.

Peak local (8.00 - 12.00 h and 14.00 to 18.00h Mon-Sat) unit was reduced from 86 to 60 seconds, and peak STD from 36 to 30 seconds effectively raising the costs of a call though unit prices were not increased.

Local standard (12.00 to 14.00 h Mon-Fri) unit was reduced from 120 to 90 seconds.

Local economy (0000-0800 and 2100-0000 Mon-Sat) was reduced from 240 seconds to 90 seconds, though SLT requested a higher increase.

A request to raise STD standard and STD economy rates was denied. A concessionary rate of Rs 1.10 would apply to subscribers using less than 200 unit a months benefitting 100,000 households.

The new charge bands meant that short duration call could be made without incurring high costs, but long duration peak calls would be more expensive, the TRC said. It was hoped that households would shift to off peak hours freeing networks for business users.

Monthly rental charges were increased to Rs 180 from Rs 100. But if SLT failed to repair telephones with no service for more than seven days rental would be reduced by the equivalent of one and a half days applicable rental for each day without telephone service.

The proposed reduction of turnover tax from the present 22 per cent to GST of 12.5 would also reduce the impact of increase, the TRC said.

SLT's request to reduce installation base installation charges while maintaining high regional surcharges was also denied. TRC had been unable to refute its own previous claims that a new installation cost more that Rs 10,000.

"Such a reduction would have had to be made up by increasing call charges," the TRC noted.

"The proposed reduction world have disproportionately benefited customers in Greater Colombo (where distance from telecom bases were less) and made it more difficult to provide affordable connections in the regions."

More Business * CTC calls for lower cigarette taxes * Accountability in banking