• Telecom watchdog act to be revised
• World Bank to fund state bank audit 
• BAT Zurich merger causes stir here 
• Kaplan recipe for success
• Mind your Business
• Strengthening the tea industry
• IMF doesn't dictate, it only advises: says resident rep Op de Beke 
• Coca Cola plans its future in Lanka
• Dialog launches DiaText
• NDB gifts Multi Media computer to GHS Kandy
• Business Briefs
• Bangkok Bonanza
• Mobitel felicitates Abans
• Lion continues to roar across boundaries
• Fourth American trade fair at Hilton
• Mindada from SLIC
• Price of Big Mac here and a broad
• AATSL holds its 7th convocation
• Pelawatte goes for alcohol

Telecom watchdog act to be revised

By Mel Gunasekera

The Telecommunications Regulatory Commission (TRC) Act is to be revised next year to gear the industry to face the challenges of the next millennium, TRC Director General, Prof. Rohan Samarajiva said.

He said a team of officers is due to fully examine and revise the regulations and procedures that stand in the way of effective use of telecommunication resources. 

"We will start work on this shortly," Prof. Samarajiva told 'The Sunday Times Business'. The proposed changes would bring in a 'forbearance clause' to give the Commission flexibility to take decisions. 

For instance, in the case of tariffs, if the forbearance clause says that the area of tariffs needs not be controlled, the Commission would have to refrain from doing so. 

In a competitive telecommunications industry where market forces play a major role in determining tariffs, there would be no need for the industry watchdog to regulate tariffs.

At present, the TRC cannot refrain from regulating tariffs, as the Act says they have to regulate everything that is mentioned in the Act. "This will hinder competition," he said. 

"The present Act does not give the power for forbearance. The forbearance clause should be good for a liberalised industry, he said.

Equipment sales is another area that the Commission hopes to look into. At present, all vendors of equipment require a licence from the TRC. This clause is a stumbling block in the event of disaster relief management, where emergency telecommunication kits like satellite phones need to be brought down at short notice.

"We can have an escape clause in type approvals for emergency temporary use of spectrum."

The Act is unclear in some areas like for instance cable operators. The present TRC Act does not regulate cable operators. But the TRC issues a frequency licence to them as they partly use telecommunication services .

Cable operators usually come under the Broadcasting Act (which was thrown out of court a few months ago). In the absence of an Act, all operators come under the Media Ministry.

"In any revision of the Act, we would also be looking at the convergence issue on areas where different types of technologies come together."

Certain things done using broadcasting frequencies can now be done using the telephone. For instance vide- oconferencing can be done over the telephone and the internet etc.

Audio text is another area, where subscribers use telephone lines to dial up for the services required. This system has come under fire from the USA newspaper industry as advertisers insert small ads giving their phone number together with brief details about their services. The consumer can then dial the number and get the full details of the services on offer. The newspapers then lose revenue on such advertisements.

"We have given the licence to an operator to commence audio text operations in Sri Lanka. But they are yet to commence operations, Prof. Samarajiva said.

"However, the present Act is basically a good piece of legislation," he added. 

The Ministry of Posts and Telecommunications has the authority to amend the Act. The TRC could recommend policy changes that require amendments to the ministry.

The TRC Act was enacted in 1991 and thereafter amended in 1996.

The telecom watchdog is generally regarded by industry observers as one of the better regulated utility sectors since privatisation.

World Bank to fund state bank audit 

By Vasana Wickremasena

World Bank is to fully fund the special audit on loan portfolios of the two state commercial banks to find out their exact health by international audit firms early next year, authoritative sources told the Sunday Times Business yesterday.

This move comes after the audited accounts the Bank of Ceylon(BOC) and the People's Bank, by the Auditor General's Department through private audit firms have been brought to question by the international donors.

A top official of the Central Bank said that tenders for the audit would be called soon by the two banks. 

The People's Bank has yet to publish its accounts for year ending December 1997.

Although the BOC accounts show a pre-tax profit of nearly four billion, Auditor General S.M. Sabry has stated that the bank's annual accounts for 1997 do not comply with the international accounting standards.

The report had not received the audited accounts of eleven out of sixteen related companies in which investments have been made.

The Auditor General doubts whether the bank could recover Rs. 2,596 million invested in some companies.

The bank has invested  #

BAT Zurich merger causes stir here 

The recent merger between British America Tobacco (BAT) financial arm and Zurich Group has created a stir in Sri Lanka, with speculation rife about changes taking place in BAT's local operations. 

The merger means that the tobacco component of BAT has been de-linked from BAT's financial services operations. BAT's well-known financial services entities Eagle Star Insurance, Allied Dunbar, Farmers and Threadneedle Asset Management are now parts of ZFS and BAT operates its global tobacco businesses as freestanding operations except in Sri Lanka. 

Ceylon Tobacco Company (CTC) owns about 64 per cent of CTC Eagle Insurance Company (CTCE) with tobacco and financial services continuing to remain a 'mixed bag' in Sri Lanka, whereas globally, BAT has divorced itself from all financial services as a result of the merger with the Zurich Group.

From ZFS's perspective as well, it may not wish to tarnish its exclusive financial services with the globally censored substance of nicotine. 

Capital Development and Investment Co. Ltd. (CDIC) is the second largest shareholder of CTCE owning 15per cent. The NDB owns 75% of CDIC and 49% of Eagle-NDB Fund Management, which is 51% owned by CTCE.

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Kaplan recipe for success

To remain competitive within a fast changing global business environment, Sri Lankan businesses will no longer be able to rely on traditional financial accounting based information, a top management expert said.

"A world class business needs not only historical financial information, but information on the future and a measure of the intangible assets of an enterprise," Prof. Robert S. Kaplan of the Harvard Business School in Massachusettes said.

Prof. Kaplan was delivering the 10th anniversary lecture of CIMA Sri Lanka branch . He is one of the architects of the 'Balanced Scorecard', a revolutionary new management system that creates an economic map of an enterprise of the information age, for managers to adapt to change and initiate change within businesses.

Instead of relying solely on financial data, the Balanced Scorecard uses a broad range of leading and lagging indicators to evaluate whether a business is moving forward towards its strategic goals based on four perspectives - customer perspective, internal business processes, learning and growth as well as financials.

"Traditional accounting systems lumped together could not be defined financially as intangible assets," Prof. Kaplan said. "So financial accountants used to write off expenditure on such assets as soon as possible. But for a company in the information age, such assets are among the most important."

The balanced scorecard considers factors that are difficult to quantify. Though it may be difficult to put a value to customer satisfaction, for example, it could be measured by product return rates, cancelled contracts, number and duration of service calls, repeat orders and refunds. It takes into account, human resources, information technology and other knowledge based assets.

The balanced scorecard draws upon activity based costing (ABC) to give a true financial picture of an enterprise. Instead of accounting for overhead expenses by departments, it uses the actual activities going into production measure the amount of overhead that is used to make goods or provide services.

Traditionally overheads used to be apportioned based mainly on volume, which gave good results when companies made large volumes of standard goods. "But this peanut butter approach of spreading costs does not reflect the real picture when companies produce a number of different goods, of differing complexity and order size," Prof. Kaplan said.

Traditional cost accounting techniques tended to overcost large volume production, and undercost smaller custom tailored orders. The most misleading signal that resulted from this process was that 'low margin' large volume production seemed to show less profits that they were actually generating while small volume premium products, though actually generating losses, were shown to be profitable. Traditional costing methods had stressed on simplicity, but with the availability of computers, and especially combined with the enterprise resource planning software, it is now relatively easy to process large volumes of complex data. Once the Balanced Scorecard had been developed it has to be used as a strategy to achieve the goals set for the enterprise.

"Though it has an aesthetic appeal, a map is of little use unless it is used to go forward," he said.

The Balanced Scorecard has been successfully implemented in companies like Mobil (US Refining and Distribution Division) and the Chemical Bank Prof. Kaplan said. From being one of the least profitable petroleum distributors in 1993, when the balanced scorecard was initiated within the company, Mobil had become the most profitable for three consecutive years in 1995, 1996 and 1997, Prof. Kaplan said. 

Mind your Business

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