50% less than SLT

Lanka Bell, a Rs. eight billion turnover telecoms operator, in a bid to increase its customer base, is paying 50 cents for every one minute on an international call that terminates through a Lanka Bell connection.

This concession follows the company slashing its call rates by 40% recently in order to be competitive.

"Our call rates are now 50% less than that of Sri Lanka Telecom (SLT)," Lanka Bell Managing Director Prasad Samarasinghe told The Sunday Leader.

All international calls terminating at the local end are entitled to receive a commission from the international operator from which end such calls originate.

In a distorted scenario of local market operations, Lanka Bell allegedly does pay a termination commission to Sri Lanka Telecom (SLT) on calls originating from Lanka Bell connections to that of SLT's. However, allegedly the vice-versa does not take place.

Meanwhile, referring to their newest IDD concession, a Lanka Bell spokesman told reporters on Wednesday :  "We are paying our subscribers for incoming IDD calls,"

This may result in some subscribers earning as much as Rs. 1,500 monthly, chipped in Samarasinghe.

The company in under four years, from 2005 to the present has seen its customer base grow from 50,000to 1.1 million. Samarasinghe attributed this success to the fact that their's is a wholly owned Sri Lankan company.

2005 was also the year that the company introduced to the market CDMA telephony connections, a telecoms solution, which, just like mobile phones are portable (though the law precludes users from using it like a portable mobile phone, having the usage of such phones strait-jacketed to the geographical area of registration, similar to a fixed line phone) and does not need wires to stay connected.

Lanka Bell is a subsidiary of the publicly listed Distilleries Corporation, the latter company being controlled by business magnate Don Harold Stassen Jayawardena. Lanka Bell per se is not a listed company.

Samarrasinghe told reporters on Wednesday that the company in the six months ended September 30, 2008 saw turnover grow by 5% year on year while earnings however remained flat.

He attributed these developments to the slashing of tariffs in order to be competitive, in addition to the ripple effects of the company's US$ 30 million investment in FLAG, the world's longest undersea cable that provides global connectivity and which is of 60,000 kilometres in length.

"Our finance costs are as large as our profits," Samarasinghe said.

He said that despite Central Bank statistics that showed that telecoms penetration in the country was over 60%, his company however was still providing new connections every month.

This is because some customers have more than one connection, he said. "I'm sure that other telecoms operators like us are growing monthly, this shows that there is still a way to go before saturation is reached," Samarasinghe said.

The company has virtual islandwide connectivity, except in Jaffna and in the uncleared areas of the North, and some parts in the East.

Govt., brings new regulations to curb dollar outflows

Pressure on $ to go beyond Rs. 110 levels

Despite the government allowing the US dollar to gain by Rs 2 in spot trading on Thursday, there is pressure for it to make further inroads, market sources who did not want to be named told The Sunday Leader.

Previously the government was defending the rupee-at Rs. 108 to the dollar at the expense of depleting the country's foreign reserves.

There is however uncertainty in the market in which way the government would allow the rupee to go, with pressure  building up for it to dip further, they said.

The weakness of the rupee has been compounded with dollar inflows into the country (other than traditional remittances and export proceeds) drying up due to the global credit crunch and foreigners who have invested in the Treasury Bill and Bond markets as well as in the Colombo Stock Exchange (CSE) withdrawing their investments, thereby causing further pressure on the local currency.

On Thursday the Government removed this peg which resulted in the dollar shooting-up by Rs. 2 (1.9%) to Rs. 110, before government intervention through the State owned commercial bank-Bank of Ceylon (BoC), prevented it from appreciating further.

One of the popular ways such Government intervention takes place is the Central Bank (CB), the Government's principal agent for such transactions, offering dollars to the market via sub agents such as the BoC at the Rs. 110 levels in spot trading, like what is currently happening, thereby preventing the dollar from appreciating further.

Previously, i.e upto Wednesday, the government prevented the dollar from going beyond the Rs. 108 levels.

But this resulted in the country's foreign reserves being depleted by 25% in the short space of two months, the sources said.

CB's foreign reserves fell from US$ 3.4 billion to US$ 2.6 billion in that two month span, they said.

But on Thursday, the Government temporarily removed this peg, but reintroduced it a few hours later, by capping the dollar at the new price of Rs. 110 to the dollar, to prevent the local currency from depreciating further.

"However, there is still pressure for the dollar to make further gains vis-…-vis the rupee, " the sources said.

For instance, People's Bank (PB), the government's other State controlled commercial bank was buying dollars from the BoC at the Rs. 110 levels on Friday, akin to a scenario of "robbing Peter to pay Paul," while the market too was buying dollars at those prices from the BoC, thereby causing pressure on the exchange rate, they said.

Such transactions by the two State controlled banks are widely believed by the market as actions, other than meeting their own needs to also fulfil Government requirements.

The Treasury maintains accounts with both the PB and BoC.

Meanwhile the government on Friday brought in further restrictions to prevent forex outflows.

Those included increasing margins on letters of credit opened for vehicle imports from 100% to 200%; 100% margins imposed on forward dollar bookings (previously there were no margins) and overnight inter-bank dollar transactions being restricted to 50% of the overnight value.

Garments to feel credit crunch in 1.5 years

The local garment industry will feel the credit crunch in the UK in another 18 months, an industry academic warned.

Ms. Carmel Kelly, a lecturer in fashion designs from the UK told reporters on Thursday that the UK consumer was still buying garments, complemented by orders already made, and which are being honoured.

However the industry would feel the pinch in another 18 months, when new orders would be slow to take-off. UK is Sri Lanka's biggest garments importer in the EU region.

Kelly has been seconded by the London School of Fashion to help Moratuwa University (MU) to introduce a degree in fashion design, a path which MU embarked upon in 2002. Since the inception of this four year undergraduate programme, 80 graduates have passed out, Dr (Ms.) Nirmali de Silva, MU's Course Director told The Sunday Leader.

On Tuesday,  a further 40 graduates would pass out, taking the number of students armed with a Bachelor of Designs degree since the inception of this course to 120, she said. De Silva further said that MU is the only local university offering degrees in fashion design.

Qualifications required to do this course is similar to having the necessary A'Level qualifications to enter MU to do an engineering degree, she added.

The 40 graduates that will pass out on Tuesday will be the fourth intake that would be passing out since the inauguration of this degree programme. 

Some of the designs made by these newly passed out graduates will also be modelled at Galle Face Hotel on that day.

Such designs have also been modelled in the past, with success as items of commercial value, said de Silva. Those designs are not necessarily intimate wear, for which Sri Lanka has gained a niche market, but also includes spring wear, summer wear and such like, Kelly said.

Other designs such as swimwear and sportswear and active wear were also gaining ground as major exports from Sri Lanka, reporters were told.

MU's relationship with this London School dates back to the inauguration of this degree programme. This contract however expires next year.

"Our graduates have found employment in leading garment exporting firms in the country as well as among its top retailers," said de Silva.

They command starting salaries ranging from Rs. 35,000-50,000; she said. Passed out designers are not necessarily directly involved in the designs departments of those firms which employ them, said Kelly. Some of them are employed in other departments, like Supply Chain Management, she said.

FMCG, good business

Barcoding, process automation and corner stores business will take DPJH, an unquoted company, to be a Rs. 700 million company by the year end, up from Rs. 500 million last year.

Group profit after tax is expected to pass Rs.100 million in financial year (fy) 2008/09, up from Rs.70 million in 2007/08.

DPJH Chairman Prasantha Jayamanna (34)  told The Sunday Leader  that operating corner stores is good business, bringing in a turnover of between Rs. 1.5-3 million per mensem, per corner store.

The company currently operates 20 such corner stores (up from five at the beginning of the year), all located in the city, which will be increased to 25 before the year end.

"Is the current business climate of high interest rates and high inflation compounded by the war conducive to business expansion?"  this reporter asked Jayamanna.

In reply, Jayamanna said that high inflation and high interest rates were bug-bears.

"We are one of the few countries where banks are among the top 10 companies," he alleged.

One can just imagine the profits they earn, he said.

Jayamanna further said that despite economic liberalization,  parts of  the country's economy, just like that of India's, is not exposed to globalisation.

That provides an insulation.

Therefore, despite the gloom and doom scenario, that part of the economy is still keeping business ticking, said Jayamanna.

The war is not an excuse for business downturn, opined Jayamanna.

Look at Israel, despite constant attacks that economy is booming, he said.

Certain sophisticated technological equipment developed by Israel is even exported to the USA, Jayamanna said.

What is important is to have the right mindset, like disbelieving that that which is foreign is always superior to local products, he said.

Jayamanna, besides venturing out into corner stores and providing barcoding solutions to local businesses (his clients include Brandix, MAS Holdings, Dilmah, Cargills and Keells Super and the fish export industry) has also exported this technology to Bangladesh.

"Agora, one of the biggest supermarket chains in Bangladesh imports our barcoding technology," said Jayamanna.

"Each time they open a supermarket branch, that's an additional Rs. 2-3million income for us," he said.

How about exporting your barcoding technology to India? This reporter asked Jayamanna.

There are cheaper sources there, so it's difficult to compete, he replied.

Is India's barcoding technology a threat, where they could steal clients like Agora?

"We win on quality," replied Jayamanna, so there is no threat.

DPJH which employs 300, also exports its barcoding technology to the Maldives fishing industry, some garment industries in Africa, as well as to Doha, Qatar.

Contact centre solution

Singer (Sri Lanka) Plc, a leading electronics and home appliances retailer in the region signed up Duo Software to implement the DuoContact Contact Centre solution.

DuoContact developed by Duo Software revolutionizes the way a Contact Centre operates through the adoption of an IP based contact centre solution which eliminates the need for a traditional PABX.

DuoContact is a unified contact centre solution which incorporates functional aspects of a contact centre including Interactive Voice Response (IVR), Automatic Call Distributor (ACD), CRM and a Predictive Dialler.

The unified solution ensures lower ownership cost of a complete contact centre solution, and is designed to enhance productivity of agents and empower them to deliver superior customer experience by providing a single interactive and intuitive interface to access information with regard to the customer and the contact centre.

Singer Sri Lanka Contact Centre Manager Rohan Rogers said, "Duo Software was selected after an evaluation of their product and the extent to which Singer's objectives are met by this solution. DuoContact was found to have the functionality required to operate a world class contact centre and we are confident that this solution will help us deliver high standards of service to our customers."

Duo Software CEO Muhunthan Canagey said, "We are proud to be associated with Singer and are pleased to deliver a solution that meets their needs in terms of superior service delivery and contact centre management.

We look forward to working with Singer to implement the solution, while helping them continuously improve ways in which they service customers."

Duo Software is a provider of Subscriber Management, Billing, Contact Centre Management, CRM and Enterprise Resource Management solutions. Duo Software marks a global presence with offices in regions across four continents and continues to expand its presence.

Singer continues to enhance its contactability with its consumer base widespread among every nook & corner of the island & will hasten the speed of problem resolution through Duo Contact applications through its Contact centre located in Colombo.

CB buys T. Bills from market

Central Bank's (CB's) Thursday's auction for the purchase of a total of Rs. six billion worth of maturing Treasury Bills (T. Bills) from the market saw the Government's principal agent for such transactions buying only Rs. 183 million worth of such maturing T. Bills.

What were offered to the market were to buy three parcels of maturing T. Bills of Rs. 2,000 million in value each. They were of tenures of 70 days (maturing on January 9, 2009), 77 days (maturing on January 16, 2009) and 84 days (maturing on January 23, 2009) respectively.

CB accepted bids for the purchase of Rs. 15 million worth of T. Bills in regard to the 70 day maturity T. Bill parcel (the value of bids received was also Rs. 15 million for that tenure) at a weighted average yield (WAY) of 17.50%.

In respect of the 77 day maturity T. Bill parcel, CB accepted for the purchase of Rs. 168 million worth of such T. Bills offered by the market at a WAY of 17.05% (the value of bids received was Rs 218 million), while in the case of the T. Bill parcel of 84 day maturity, CB received bids for the sale of T. Bills from the market of only Rs. 63 million, which auction the CB rejected.

Imaginary bail out

With Dankotuwa Porcelain plc exporting over 60% to the European market and dependent on the GSP+ duty concessions, the removal of GSP+ is most likely to cause substantial order losses, particularly at a time when there is a reported downturn in consumer spending for durable household goods.

Although the government speaks of a bailout package if GSP+ is not extended, it is unlikely that this mechanism will work efficiently. At a time when the government itself has cash flow difficulties and cannot deliver VAT refunds expeditiously, it is inconceivable how the government could administer a bail out package where companies would receives regular cash inflows to meet salaries and raw materials. 

 Purchases.

If the government does not seriously address the three issues of exchange rate, energy cost and GSP+ it is likely to lose foreign exchange earnings through a reduction of export income.  Dankotuwa earned foreign exchange equivalent to US Dollars 10.2 million last year and has already earned USD 8.3 million for the nine months of this year.

 The recent appreciation of the rupee against the Euro and Pound is causing substantial revenue losses to Dankotuwa.

For the past 25 years the cost escalations driven by high inflation in Sri Lanka was mitigated by the rupee depreciation.

The Company suffered a significant hit when the rupee appreciated against major currencies, particularly the Euro soon after the tsunami when the massive inflows appreciated the Sri Lanka rupee.

However, the GSP+ came to the rescue and we were able to obtain some price increases with the argument that for the European customers the duty was reduced to zero. 

The Company has been doing its best to cut cost, improve productivity and improve quality and obtain higher prices and emerged to a breakeven level in the third quarter of this year.  However, if the current rupee appreciation is not reversed the future would be uncertain. 

Dankotuwa produces one of the finest porcelains in the world and therefore, markets it only to quality conscious customers at relatively high prices.  However, there are emerging competitors in the Asian Region who are gradually challenging the Dankotuwa quality and for whom energy is much cheaper.  While worldwide energy prices have come down and for many manufacturers energy costs have reduced, it is only in Sri Lanka that energy is still at high prices.  This too erodes Sri Lanka's competitiveness particularly the export oriented Ceramic Industry.

Tracking NPLs

Only biscuit cleared of melamine

The good name Ceylon Biscuits Ltd., was justified recently after their popular brand of biscuits Munchee Lemon Puff was cleared by the Sri Lanka Health Ministry following the receipt of test results of market samples of the product sent for testing overseas by the Food Control Administration Unit of the Ministry.

An adverse internet report originating from Switzerland triggered an unwarranted suspicion on the Munchee Lemon Puff brand and Ceylon Biscuits acting as a responsible corporate and in terms of Company policy based on ISO 22000 (HACCP) procedure decided to immediately withdraw the product from the market in the interest of consumer safety and peace of mind till the government concluded their independent investigations.

The Health Ministry confirmed that the tests results of the random market samples taken by them and sent to the Health Science Authority of the Singapore Health Ministry had been received and that Munchee Lemon Puff had been confirmed as Melamine free.

They further said that the product has been removed from the list of prohibited items.

Company Chairman Mr. Mineka Wickramasingha said, "As one of Sri Lanka’s leading companies with over 40 years of experience and serving not only the local market but also over 40 countries worldwide, we were confident that our food safety and quality assurance procedures would stand the rigour of any testing and we are pleased that our faith in the quality standards of our products have been vindicated by the test results. Consumers can continue to enjoy Munchee Lemon Puff with confidence as it is the only Lemon Puff in Sri Lanka to be cleared by the Health Ministry as melamine free.

We also wish to convey to the public that CBL has voluntarily got all its key products tested and are happy to inform them that they are all confirmed as melamine free."

The Company was taken by surprise when the Swiss internet report came as they had sourced all milk ingredients for the manufacture of their products only from Australia, Holland and Canada. The Company was further concerned when this issue appeared to be used to tarnish their good name locally. The Company confirmed that there were no permanent setbacks in any of their overseas markets and that their brands have continued to receive increased orders from several countries spanned across the globe, including UK, Australia, Canada, Czech Republic, Dubai, Kuwait and Maldives who would have conducted independent testing to clear any doubts about Munchee products

The Company affirms that it maintains a rigorous quality assurance regime which includes both quality certification from suppliers and local testing of ingredients and product at various stages of manufacture.

The Company states that as a manufacturer of a wide range of popular food products with local and international certifications including SLS, ISO 9001, ISO 14001, and ISO 22000 (HACCP), their quality was never in question and is pleased that this unwarranted allegation has now been resolved.

Alternative financial system

The leading professional in the alternative banking industry Dr. Z. M. Rafeek, Executive Director and Chief Executive Officer Ceylinco Profit Sharing Investment Corporation Ltd suggests some alternative ideas to deal with the present global financial crisis.

He says: " We are currently in the midst of an extraordinary time in world history.

All the attention has diverted from wars and terrorist activities to economics and finance. Newspapers are stirring emotions with headlines such as "meltdown," "economic crisis," "global recession" and "billions written off."

Political parties and governments are putting aside their differences and working together to come up with a joint approach to the problems. Established institutions such as Lehmans and AIG are falling before our eyes. Trust is at an all-time low with no-one willing to lend.

As billions of cash is injected back into the global economies, politicians and economists are wondering what went wrong, what lessons can be learnt and how to change things so that such problems don’t happen again.

UK prime minister Gordon Brown suggested that he wanted world leaders to gather for a new Bretton Woods- the conference held to decide how the post-war financial system should be run.

He said there had to be ‘a new financial architecture for the years ahead.’ This is all well and good, but are these solutions going to be radically different from the current ones? Will this new proposal really help prevent the mini crises we have seen every decade or so?

I think it’s time that world leaders and central bankers considered a fundamentally different system,one that is not based on debt or encourages people to live beyond their means.

A system that promotes individuals to "save now, buy later" rather than "buy now, pay later."

A system that moves away from wealth being concentrated amongst a select few whilst hundreds of millions go hungry."

Explaining on this subject Rafeek said, " Now is the right time to look at an alternative solution. Something that ensures that money is invested with people that have good ideas and viable projects rather than being given to people who have the best credit which leads to the rich getting richer and the poor, poorer.

But what is this alternative solution we are referring to? Let’s look at some of the causes of the current crisis and how this alternative solution would have dealt with it.

It is universally agreed that the economic crisis we are in now started with sub-prime mortgages.

This is where banks and other financial institutions lent money to individuals in the USA, often at more than the value of the properties they intended to purchase. The loans were offered at attractive fixed rates which would revert to the market floating rate after a couple of years. As rates rose and property prices fell, most of these individuals were not able to pay back their loans resulting in many defaults and re-possessions.

The alternative solution we propose does not believe in lending to buy property, but instead the financial institution will either buy the property by itself or in partnership with the individual and then allow them to pay rent for the part they don’t own. Since financing is based on the value of the property it does not allow it to exceed the asset cost. Furthermore, when people are unable to pay, this system encourages wealthy financial institutions to give them time to reorganize their finances rather than kick them out into the street.

The risk from these sub-prime loans did not stay with the institutions that provided them to individuals. Instead the loans were aggregated, split into different components (eg. interest only, principal, etc) and sold to third parties. Institutions buying these loans created further instruments with different risk characteristics and sold them on to other parties willing to take them on. This continued until the risk from these sub-prime loans were spread to institutions far removed from the original borrower.

This led to a couple of problems; firstly those buying these instruments didn’t often understand fully the risks involved and hence were not able to manage them appropriately. Secondly, it was difficult for regulators and central banks to determine the extent of this distribution, hence when something went wrong, the impact was impossible to assess.

So, how would this alternative system have handled this situation?

Firstly, the sale of debt is not allowed. This is because money is not considered to be a commodity which has a price of its own; instead it is only a medium of exchange and a measure of value. A loan or debt to be repaid in cash is considered as "money" hence this system does not allow it to be sold for anything other than its par value.

Secondly, the concept of risk management is different. In the current system, risk is transferred, i.e. split and sold.

In the alternative system, risk is shared, almost like a collective insurance scheme. This means that instead of the sub-prime loan risk being sold and sold until it reaches a bank in the Middle East or Asia, it will be concentrated and managed by the institutions that can assess and react to any changes in circumstances.

Another advantage of this alternative system is that when two parties transact with each other, for the trade to be valid both parties must have full knowledge of the potential risks and rewards. In other words those individuals taking out the mortgages would be aware of what they were getting into if market conditions turned.

Also, those institutions buying complex instruments such as CDOs (collateralized debt obligations) would not consider it as another ‘black-box’ transaction priced for its credit, but understand the parameters involved in the valuation including understanding the assumptions being made."

He further said, "This alternative system also discourages speculation. It insists that transactions are linked to the real-world economy rather than being paper being pushed around. One of the reasons which led to the collapse of Lehmans and the falls in share price of various established institutions such as the leading British Bank HBOS was due to the concept of short-selling, whereby you sell something you don’t own by borrowing it on the premise that you will return it after purchasing it at a lower price.

When you sell a lot of something the price falls as there is more supply. However, when people start short-selling this drop in the price is accentuated resulting in a more dramatic price reduction. This activity was highlighted when the UK & US central banks temporarily put a ban on short-selling. The alternative system, I recommend, does not allow short-selling because you are only allowed to sell something you own.

So, what is this alternative system I have been discussing here?

It is not something I have thought up myself. In fact it has been around for over 1,400 years and is currently one of the fastest growing areas of finance.

It is, for those who haven’t guessed already, Islamic Finance.

Though the abandonment of the current economic system to be replaced by Islamic economics is unlikely to happen in the near future, there are advantages in considering or even applying some of the basic principles involved.

Former Employers’ Federation of Ceylon Director General Franklyn Amerasinghe gave "A Review of the CEO’s Forum" that was recently conducted by Dave Ulrich.

He said: " We should congratulate Dinesh Weerakkody, CIMA and the IPM for having brought to our doorstep Ulrich who has now come to be recognized as an outstanding figure in the sphere of Human Resource (HR) Management and Development.

It was clear that Ulrich based his wisdom on his own encounters which as he said did not include any prior knowledge of Sri Lanka and its peculiar issues.

Theoretically the presentation was not only exceptional but it was thought provoking and it is up to us to adapt his message to a workable formula in our own organizations. His fluency in terms of presentation and his wealth of examples showed his years of experimentation with his theories and application of them in situations.

In order to show that organizational results depended on performance as a team he asked us the question of what it was like in relation to Cricket, quoting the example of the US Basketball team which in 2004 had outstanding players but performed badly as a team. The management identified the lack of teamwork and worked together on a team strategy that enabled them to breeze their way to Gold at the 2008 Olympics. It was hilarious when he asked the audience to name a cricketer they regarded as outstanding and someone from the audience suggested the name of Steve Waugh!

Maybe everyone was so stunned that they did not react and point out that not only had Waugh retired many moons ago but that we had produced some unique players like Sanath and Murali of whom the country is proud of, and the world regards with awe and admiration!

In a whistle stop presentation Ulrich could not have been expected to be more country specific but some comments made by him showed that he had some valid thoughts for our political leaders regarding their own obligations to build talent.

The private sector maybe the engine of growth but the fuel and the tracks have to be supplied by the political leaders and we trust that the political leaders who were present will stop to take on board the message which was given to them by Ulrich.

The Public Service needs to recruit and retain talent. The points made about talent management requiring Competence, Commitment and Contribution; and what each meant is worth recalling. Both the private and public sector must flag the valuable exhortation. Competence means recruiting people with the right criteria, training them with specific skills needed to be a technically sound player and educating them in relation to how they form a team for the attainment of organizational goals.

Commitment comes as a result of a host of conditions which the organization provides, such as the working environment, its stability and the stability of the job itself, the rewards and the recognition of the employee’s performance. Finally, the contribution flows from the fact that the employee is comfortable with what he does so that his contribution is made with enthusiasm and gives him/her satisfaction. We need to ascertain the likes and dislikes, the needs and interests, and also the aspirations and desires of the individual employee so that we allocate to him/her tasks and functions which enthuse him/her.

One further point, which was not discussed in this context, is that, even with these factors in place, the employee may not perform if the external environment does not provide the security which every human being yearns for.

The need for security was identified by Maslow and is an issue in South Asia.

Many writers have expressed the point that human beings look for security in each and every facet of life and insecurity breeds fear, which Jidu Krishnamurthi says is the greatest problem. Security is not merely in relation to life and limb but covers other aspects of our existence such as job security, security of our families and friends and so on.

The impact of the external environment on the workplace is better appreciated by those with an Industrial relations background as often these issues of insecurity are expressed collectively and are often the rallying point for trade unions (TUs). This also is a good point to refer to HR strategies sometimes focus more on dealing with individual issues and neglecting issues which have a tendency to make employees band together. However satisfactory the strategy is in terms of recruitment, motivation, recognition and reward; the external environment can spoil it all and cause anxiety expressed by low output or even by an employee exiting. Perhaps this was at the back of his mind when one CEO asked the question about employees exiting from financial institutions which looked after the standard HR issues and had good policies in place.

Ulrich had something to say about talent management in the Public Sector and in the sphere of politics which should have had the attention of the politicians who participated. Everything which was said about talent and its management are relevant to running a State, and he made this clear. A study made by an ILO project showed that employees in the public sector charge that at least 80% of the disputes in the public sector are caused by failure by management to adhere to regulations and agreements.

Politicians are the cause of these disputes and the bureaucrat who carries out a directive finally gets the blame so that he is forever after marked as a trouble maker and stooge of a particular political shade.

The need for teamwork to manage a country effectively was stressed and Ulrich referred to Ireland as a case study where it had managed its talent brilliantly that it is a preferred place for investment in recent years lifting it from a poor developing country into a thriving economy.

I’m glad that he mentioned Ireland which is the right size for comparison and also had a multiple TU situation where initially the unions themselves could not find a common agenda to protect their own interests. Subsequently all stakeholders came together and signed the first Partnership Agreement which has been renewed several times and helped implement common strategies for development.

A good analysis is found in ‘Saving the Future’ by Hastings/ Sheehan and Yeats-Blackhall 2007. The stakeholders discarded their adversarial approach and adopted a ‘think tank’ approach for the good of all.

It was encouraging to see so many CEO’s listening to Ulrich and absorbing every word which we hope will bear fruit as it seemed to be settling on what according to the good book could be described as fertile ground.

It is hoped that politicians would also change their adversarial and defensive positions for ones which are conducive to a proper dialogue attuned to the development of talent and measures which would stop the outflow of our brilliant youth to greener and safer pastures."

IT solutions

Endangered species

On a recent edition of Benchmark, Ceylon National Chamber of Industries Chairman Newton Wickramasuriya discussed chamber expectations of Budget 2009, asserting that future fiscal policy should grant some relief to industrialists.

Pointing out that industrialists now belonged to an "endangered Species," he said that constraints such as the cost of living and high cost of finance were affecting, especially the SME sector negatively.

Discussing an envisaged revision of the tax structure, Wickramasuriya told Benchmark’s viewers that the problem lay in the multitude of existing taxes.

"What the government has to do is implement an efficient way of collecting taxes rather than allowing the industries to suffer," he added.

Wickramasuriya also asserted that simplifying the tax structure would result in drawing in more people to pay taxes, even voluntarily.

Could SMEs afford to pay more taxes, BENCHMARK queried?

Wickramasuriya responded, "Certainly not. In this country we have a small market and contrary to popular belief that competition brings increases or improves efficiency, and brings down the cost of production, it never happens in a small market."

In the course of the wide-ranging interview, this chamber chief emphasised that additional tax burdens at this time would only be detrimental to the promotion of industries.

Asked whether a less complex system would encourage more entrants into production and manufacturing, Wickramasuriya answered in the affirmative, asserting that "a coherent industrial policy" was the need of the hour.

He asserted that the increase of up to Rs. 1.7 trillion on expenditure, including military spending, would translate into the SME sector being unable to expect any benefit or salutary measures for the promotion of the industry.

"This is our biggest concern right now," he added.

Benchmark is presented by LMD and airs on TNL on Sundays at noon with a repeat at 9.05 p.m. The programme is also carried over Dialog TV as well as on LBN (as well as on Bloomberg Channel on Mondays at 10 p.m.). The weekly biz show is produced by The Wrap Factory.

NAC appointments

Export Development Minister. Professor G.L Peiris recently appointed a 14 member National Advisory Council for Export Development. They are: Ceylinco Consolidated Chairman Deshamanya Dr. Lalith Kothalawala; Ceylon Biscuits Ltd., Chairman M.P. Wickramasinghe; Mount Lavinia Hotel Chairman Sanath Ukwatte; Mackwoods Ltd. Chairman Dr. Chris Nonis; MJF Exports Managing Director Malik Fernando; Hemas Travels (Pvt.) Ltd., Chairman Abbas Esufally; John Keells Holdings Ltd., Deputy Chairman Ajith Gunawardena; Janashakthi Insurance Co. Ltd., Deputy Chairman Chandra Shafter; B.P. de Silva Investments Pvt. Ltd., Chairman Mahen Dayananda; Ms. Aban Pestonjee (Abans Ltd.), Nestle Lanka Ltd., Director Cubby Wijetunge; Chandra Senanayake ("Senanayake Buildings"); Mercantile Investments Ltd., Chairman George Ondatjee and Senok Trade Combines Ltd., President Noel Selvanayagam.

NBQSA winners

10th National Best Quality Software Awards (NBQSA) winners: Lifetime Achiever Award: Dr. Dileepa de Silva, Microsoft Award Best product developed using Microsoft tools "Knowledge And Memory Centralizing Approach (KAMZA 2008)": SLIIT; Overall Gold: Microimage Mobile Media (Pvt.,) Ltd.,-"Microimage vStation"; Overall Silver: Dialog Telekom PLC-"RapidEz"; Overall Bronze: Epic Lanka (Pvt) Ltd.-"Epic Dial a Bank Management System"; Financial Applications-Gold: Epic Lanka-"Epic Dial a Bank Management System"; General Applications (Silver): X-ONT Software-"Omox Geoware"; Security Applications (Gold):Epic Lanka-"SecureData"; eGovernment and Services (Silver): Sanje Lanka (Pvt) Ltd.-"Formless Document Systems (Document Management Solution)"; Security Applications (Silver): Golden Key Software Solutions Ltd.,-"TEF Workflow Solution (Using PKI Technology)";Industrial Applications (Silver):Epic Lanka-"Mobile Enterprise Automation (MEA) Solution"; Industrial Applications (Bronze): Excel Technology Lanka Pvt Ltd-"QMark Design Commander"; Healthcare Applications (No Winners); Media & Entertainment (Gold): Microimage Mobile-"Microimage vStation"; Communications Applications (Gold): WaveNET International Pvt. Ltd-"Video Suite"; Communications Applications (Bronze): X-ONT Software (Pvt.) Ltd.,-"X-ONT CellMagix"; Startup Applications (Silver): Cinergix Research Pvt., Ltd.,-"Creately"; Start-up Applications (Bronze): Lunar Technologies (Pvt) Ltd.,-"MDS (Multi-Disease Surveillance)".

Inhouse Category (Gold): Sampath Bank PLC-"Credit Approval System"; Inhouse Category (Silver):Nations Trust Bank PLC-"Collect Module"; In-house Category (Bronze): Dialog Telekom PLC-"M-Points"; In-house Category (Merit): Sampath Bank PLC-"Sampath eRemittance System" & Union Assurance PLC-"Click&Go Motor Insurance Policy Issuance Via Web."

Education & Training Applications (Silver):AKLO Information Technologies (Pvt) Ltd-"VIDLO-University Management System"; Education & Training Applications (Bronze): University of Colombo School of Computing (UCSC)-"e-BIT"; Research & Development (Gold): Dialog-"RapidEz"; R&D (Silver): Science Land Software (Pvt.,) Ltd "Interoperable Transliteration Software"; R&D (Bronze): Hatton National Bank "KPI Wizard System"; Tourism & Hospitality (Gold): S.P. Solutions (Pvt.) Ltd.,-"Holidasia-Destination Management Platform." Applications & Infrastructure: No Winners; Tertiary Category Applications (Gold)-Sri Lanka Institute of Information Technology-"Knowledge And Memory Centralizing Approach (KAMZA 2008)"; Tertiary Category Applications (Silver):UCSC-"Community Mobile Network (COMONet)" & Tertiary Category Applications (Bronze):UCSC-"Web Media Agent."

In Brief

Liquidity vs., Inflation

Central Bank (CB) extension of credit to the Government by way of purchase of Treasury Bills (T. Bills) increased by 44.6% week on week to Rs. 69, 088 million as at Thursday.

Further, CB's T. Bill holding in the six week period from September 18 to October 30 increased from Rs.1,911 million to Rs. 69,088 million; a 3,515% increase.

When The Sunday Leader asked a CB source who did not want to be named whether such credit to the Government extended by the CB won't stoke inflationary pressure, he said that on the contrary inflation was coming down. (See separate story found elsewhere on this page).

But when it was pointed out that inflation would have had come down at a faster rate if not for this credit extension, he contended that it would then have had caused a liquidity crisis.

The source further said that in First World economies like the USA, billions of dollars were being injected by their central banks in order to provide liquidity to those markets which were also suffering from a credit crunch.

Market to be illiquid

Overnight call money market rates, the rates at which commercial banks borrow from each other for a day continued to remain high, peaking at over the 19% levels (the Central Bank's penal borrowing rate) on Friday, as the market not being liquid persisted, market sources who did not want to be named told The Sunday Leader.

They expected these high rates to continue in the new week beginning tomorrow.

 Market sources previously blamed this continuous shortfall to the Government's decision to not to allow the US dollar to appreciate beyond the Rs. 108 levels.

However on Thursday the Government through the Central Bank allowed the dollar to make a Rs. 2 gain before capping it at the Rs. 110 levels, but this has not caused an abatement in the pressure for the demand for dollars even though they are more expensive now, the said.

Thursday's move by the government to allow the rupee to depreciate by 1.9% (Rs. 2)

did not give any respite to the shortfall the market has been experiencing, with the market suffering from a rupee shortage for the 30th consecutive market day upto Friday.

The market on an overnight basis was short by Rs. 20.3 billion on Friday. (See also main story on this page)

Inflation: 20.2%

Inflation, as measured by the new Colombo Consumers' Price Index (NCCPI) saw its 12 month moving average marginally increase by 0.2 percentage points to 23.4% last month (over that of September), while its point to point change declined by 4.1 percentage points during the same period to 20.2%.

T.Bond WAYs pass 20%

Thursday's Treasury Bond (T.Bond) primary auctions of tenures of 1 year and 11 months and two years and 11 months, fetched weighted average yields (WAYs) of 20.43% and 20.25% respectively.

These auctions had on offer parcels of Rs. 3,300 million and Rs.2,450 million respectively.

However, the amounts accepted by the Central Bank from each of these parcels were Rs. 1,300 million and Rs. 1,050 million respectively.

900 secs., lost commuting time

Nine hundred seconds commuting time lost in VIP caused peak hour traffic jam.

Yours truly lost 900 seconds of commuting time when the office van in which he was travelling after an assignment on Thursday got caught to a peak after-office traffic jam at Maitland Crescent, Colombo.

This jam was ostensibly caused by traffic being stopped to allow a VIP convoy to pass through. Traffic was halted at 6pm and was only allowed to continue after 6.15 pm.

Budget '09

The Ceylon Chamber of Commerce (CCC) will hold its seminar on the National Budget on November 13,

Policy Directions of 2009 Budget will be analyzed by Treasury Secretary Sumith Abeysinghe, while the Tax Proposals will be analyzed by KPMG Sri Lanka Partner (Tax Services Head) Ms. Premila Perera. Industry Sector views, panel discussion and open forum will follow.

The panel will comprise Fiscal Policy Director General S.R. Attygalle, Finance Ministry Senior Tax Advisor R. P. L. Weerasinghe, Ernst & Young Partner Duminda Hulangamuwa and Gajma & Co. Senior Partner N.R. Gajendran.

Hotel Corp., reduces losses

Ceylon Hotels Corp., in the second quarter (2Q) ended September 30,2008 saw its losses decline by 36% year on year (YoY) to Rs. 12.41 million. Cumulative losses in the 1H ended September 30,2008 was down YoY by 28% to Rs. 29.75 million.

PAT dips 95%

Dipped Products PLC in the 2Q ended September 30,2008 saw its profit after tax (PAT) decline by 95% YoY to Rs. 5.73 million.

Kelani Valley PAT down 28%

Kelani Valley in the 3Q ended September 30,2008 saw its PAT decline by 28% YoY to Rs. 61.24 million. Cumulative PAT in the nine months ended September 30,2008 was however up YoY by 32% to Rs. 283.75 million. Source: John Keells Stock Brokers

Mini hydros

Vidullanka PLC has been listed under the main board of Colombo Stock exchange rcently.

The company currently owns and operates two mini hydro projects which supplies a total capacity of 5.2 MW to the main Grid under a 15 years Power Purchase Agreement with the Ceylon Electricity Board.

Vidul Construction a fully owned subsidiary engaged in construction of mini hydro plants successfully commissioned the 600kwh Sheen Mini Hydro Power Project owned by Elpitiya Plantations PLC on October 10, where Vidullanka PLC is an investment partner.

Vidul Construction has begun preliminary work on the 3rd mini hydro project owned by Vidullanka which has a capacity of 1.2 MW