Rs. 200 bn. cut to meet I.M.F. conditions
(G.o.S.L.) expenditure will have to be maintained at
last year’s level and revenue collection will have to be
enhanced by Rs. 50 billion going by current trends if
G.o.S.L. is to contain the budget deficit at 7% as per
I.M.F. conditions this year, a tax consultant said.
Gajendran, chairman of the International Fiscal
Association Sri Lanka branch speaking at a seminar on
Wednesday however said that if the present status quo
continues unchanged, Sri Lanka will end up with a budget
deficit of 12%.
the conditions of the I.M.F. soft loan (standby
arrangement) of U.S. $ 2.6 billion in order to
strengthen G.o.S.L.’s/Central Bank of Sri Lanka’s
balance of payments position is that the budget deficit
should be maintained at 7% this year, and be reduced to
5% by 2011.
Gajendran said that for G.o.S.L. to subscribe to I.M.F.
conditions, expenditure needs to be kept at last year’s
levels, of Rs. one trillion. “But going on the first
four months performance for the year, expenditure will
shoot to Rs. 1.2 trillion,” he said. This is however as
per budget 2009 estimates.
However to maintain it at Rs one trillion to suit I.M.F.
conditions, then expenditure estimates will have to be
slashed by Rs. 200 billion or 4% of G.D.P., said
Gajendran. He estimated 1% of G.D.P. to be equivalent to
Rs. 50 billion.
that alone is not enough, going on present performance,
revenue will also have to be enhanced by 1% of G.D.P. to
meet I.M.F.’s budgetary criterion, Gajendran said. He
said that going on the first five months figures,
G.o.S.L. revenue amounted to Rs. 220 billion. If
extrapolated for the full year that would amount to
around Rs. 550 billion, still a Rs. 50 billion shortfall
to meet a Rs. 600 billion revenue figure, which, coupled
with an expenditure cut of Rs. 200 billion would then
meet the I.M.F. requirement of a 7% budget deficit, he
Revenue estimate in budget 2009 was Rs. 855 billion.
Last year the revenue shortfall vis-à-vis budget 2008
proposals was Rs. 95 billion.
Gajendran however said that considering the economic
downturn it was difficult to add further taxes on the
taxpayer. He said that he knows of one company whose
quarterly tax payment was down to Rs. 250 million from
Rs. 1.4 billion a year ago because of the economic
downturn. “Those companies were resorting to 25% pay
cuts and paying staff monthly salaries for 27 days
instead of for the full 30 days in order to survive,” he
were finding it difficult to keep to their tax returns
obligations because of the economic crisis.
Therefore donor assistance would be needed to fill in
the breach, Gajendran said. He urged Inland Revenue
Department (I.R.D.) to focus more on bottom line taxes.
“E.S.C., V.A.T., N.B.T. and W.H.T. are all headline
taxes,” he said.
also requested I.R.D. to have a separate desk manned by
professionals to track down related party international
said that this was resorted to by corporates, to take
advantage of the lower tax charges operational in
overseas tax regimes, compared to that of Sri Lanka.
Gajendran said that India collects substantial revenue
by maintaining such a desk, i.e. a transfer pricing unit
for international transactions, but in Sri Lanka,
collections from such operations are zero, he said.
Gajendran also advocated that in order to enhance
revenue public servants be made to pay taxes, whilst at
the same time imposing taxes on certain luxury items,
which, thus far, has been allowed to be imported duty
holidays also need to be stopped. However, a distortion
was promoting a five year tax holiday for investments in
the East, Gajendran said. “One can only speculate what
sort of tax holidays would be offered when G.o.S.L.
also opens up the North for investments,” he said.
Exports to take Rs. 1,000 bn. hit
By Rohantha athukorala
heard the good news on the IMF loan I was the happiest,
given that way back in November 2008 I was advocating
that we must start the discussion process so that no
questions can be asked on Sri Lanka economy’s health.
The logic for this argument was declining export revenue
and increasing import that Sri Lanka experienced in
today if we analyse the situation things have changed
drastically with Sri Lanka being as at end April, export
revenue declining only by 16.2% even with the global
economies crashing with some key countries at a minus
growth and the import bill decreasing by 36.9%, whilst
remittances declining by only 1.6%. Overall BOP was at a
+288 million which is encouraging. This means that Sri
Lanka is somehow keeping home fires burning ,but the
challenge is how recurrent expenditure should be managed
whilst servicing the debt component. I guess IMF loan
conditions can help bring in the fiscal discipline that
make Sri Lanka stand out in Asia to be the ‘emerging
miracle.’ These conditions can also have a positive
impact on correcting the first four months performance
where revenue collection had declined by 9.6% to Rs.
190.1 billion as against Rs. 210 billion in 2008. A
point to note is that the current account deficit has
risen to Rs. 118.2 billion in the first four months of
2009 as against Rs. 18.8 billion in 2008 which needs our
focus in the balance part of the year.
we can be upbeat on the resiliency, let’s accept it that
Sri Lanka cannot be insulated against the global
economic downturn which has driven unemployment level to
almost 20 million with the
reeling at 8.5% and the UK at 6.6% which are
incidentally the key focus markets for Sri Lanka
best estimate coming in is that Sri Lanka can have
around a Rs. 1,000 billion impact on exports this year
with current decline at -16%. The recent ILO report says
that an estimated 96,000 people lost jobs in the 1st
quarter only. The worry is eminent economist Harry
Dent’s prediction that just like the Japanese slide to a
recession in the 1990s, the current blips we see of a
positive nature will once again get arrested and a fall
will begin in the year end and will bottom out only in
2011. Hence it is important that Sri Lanka focuses and
drives to niche market strategies on a survival mode so
that we keep being resilient than just sitting back on
the current projections that are coming out to be a
positive 4% for the year 2009. I feel that Sri Lanka
will beat the 4% growth forecast this year and 6% in
2010. However as a nation we need to make sure that
industry specific strategies are in place so that we use
this time period to recoup and be robust globally in the
that we have secured the IMF stand by facility we now
need to leverage this to the benefit of the country. One
area of focus is that we must push for a stronger credit
rating but be sensitive to the impact the moneys coming
can have on the Exchange rate. The logic being that Sri
Lanka must maintain its balance on the area of exports.
On the area of reforms Sri Lanka needs to be careful
given that there are social ramifications and we cannot
have any issues in this area given that we live in a
political economy. The best example is India. The recent
budget clearly demonstrates that no major reforms have
been planned for, even after the overwhelming victory at
the recently concluded elections.
Drive Tourism harder
recommend that we drive the Tourism industry harder as
this is the industry that can have the quickest positive
impact on the ground as well as visually. Both aspects
are important strategically to demonstrate a feel good
factor as well for economic growth. We have to invest on
developing the current rooms of 15,000 as almost 50% of
these rooms need to come to international quality
standards. Once this is done Sri Lanka can still
accommodate only 800,000 tourists. However, this will
double the current income earnings. On the other hand
this data gives us an idea the focused development that
needs to be done for the infrastructure if we are to
accommodate 2.5 million tourists in Sri Lanka. We also
need to take a quick ground view of the overall tag line
and introduce it so that we achieve a coherent and clear
positioning globally. This must be done with urgency so
that we continue the strategic work that the Tourism
sector has been doing in the last two years.
Take Apparel to next level
Lanka must drive the Indian and Pakistani market by
linking the designer element to apparel manufacturers.
It’s important given that Sri Lanka is now having
Bangladesh becoming the hub status with the FTA it has
got into with Japan. We also see that Bangladesh is
attracting the management talent from Sri Lanka which we
need to keep our attention on. The “Designer Apparel
Week’ coming up in November can be used to re-position
the industry to be “Ethically manufactured directional
fashion’ so that it can have a positive rub off on
footwear and other accessories sectors too. We must make
this industry a five billion dollar industry in the near
future. The top retailers who will be coning with
fashion designers like Gabriella from Brazil and Carlos
Fernandez from Spain can give a boost to Sri Lanka’s
Tourism sector too.
Areas to watch
must drive for a formation of a Job pact. We must
sharpen the Economic Policy aspect with a strong social
policy so that we balance growth with the fabrication of
a Sri Lankan culture. It’s a new beginning post the
liberating of the country from terrorists that we must
not miss. This specifically holds true to the North.
Whilst we can be upbeat on economic growth, we need to
ensure that the economy does not overheat given the
experiences the world has had on counties that have come
out of a conflict and driving focused industry
strategies. An important area to watch is labour
mobility. When development happens research reveals that
for speedy implementation labour migration is done. We
saw this happening some what in the construction
industry in the Eastern development programme which we
must ensure does not happen in the Northern development
Human capital formation
this area we need to drive up capacity development and
invest on education. IT and English programme is timely.
But it must be linked to business opportunities so that
there is a road map for the youth of the country. There
has to be a focused investment on vocational training so
that if a youth does not make it main stream then there
are optional employment opportunities. If this is not
addressed as a priority we will see another movement
similar to the terrorist outfit that emerged lately. We
must improve the country’s overall health standards so
that we are a healthy nation, linked to the country
productivity. “It’s important we integrate productivity
to the outbreak of epidemics like Dengue and HIN1 so
that as a country we provide a health work force.” This
includes monitoring the garbage disposal system which
has become a key issue for Sri Lanka lately.
to focus will be the donor moneys that will be coming
in, in the near future and ensuring that the utilization
level is increased. We also must keep an eye on the
budget deficit and strive for the 5% target. This will
require a systematic planning on capital expenditure
which needs to be balanced with livelihood development
and managing the current expenditure given that we will
have a hit of almost a 1000 billion on our export
strategic decision will have to be taken on if Import
for quick growth should be done as a policy. Sri Lanka
is looking for visible impact post terrorism
eradication. Some countries which came out of a conflict
like Rwanda used this model which helped them bring
quick stability. Given the global down turn we must
spruce up local production. 1st half year agricultural
output is encouraging. “The challenge is how to increase
the per capita income of a family that lives on
agriculture is way below the number for service and
industrial sector in comparison.” It’s important also
that we drive up bilateral trade given that we have a
strong relationship with India. Currently year on year
exports to India has been declining. This must be
addressed. Caution must be maintained on the CEPA
agreement that will have to be implemented for stronger
regional integration. “The IMF loan must be used to
attract FDIs into the country given that confidence
levels will naturally increase.”
Lanka must have a team to sell the economic opportunity
to the world. This includes the movement of the economy
from a war to peace mode. The crackdown on the
underworld is great move of this strategy. But now we
need to balance this with policy consistency and drive
so that the score on the Enabling Environment front
increase. I feel Sri Lanka has the potential to be the
“Emerging new miracle of Asia.”
Soft loans for hotels
Government of Sri Lanka (G.o.S.L.) is working out on a
package to give soft loans for hotels to start on their
refurbishment work, an official told The Sunday Leader
Lanka Tourism Promotion Bureau (S.L.T.P.B.) Director
General S. Kalaiselvam said hotels which would be
eligible for this package are those that have an under
50% occupancy rate and which have not retrenched its
staff. They are mainly those that come under the Three
Star category, he said. S.L.T.P.B. together with the
Finance Ministry will work out the modalities of this
scheme, such as how much is being offered and what is
the concessional interest rate to be charged on such
loans in a few days time.
however said that no soft loans would be available for
those who want to build new hotels under this scheme.
Thomas, General Manager Taj Airport Garden Hotel,
speaking to this reporter last Sunday said that the
hotel sector needs to spruce up to prepare for the
tourism influx now that peace has dawned.
Otherwise the local industry would lose to competitor
countries like Thailand, he warned.
“Thailand has a large hotel inventory, as such it is in
a position to compete with Sri Lanka on price,” Thomas
reply to a question, Thomas admitted that high bank
interest rates were a disincentive to do hotel
Thailand their government is actively involved in
assisting the tourism industry, likewise, G.o.S.L. too
needs to support the industry,” he said.
need for hotels to invest on refurbishment works was
highlighted on these pages in our last week’s issue.
LOANS TO HOTELS
news item found elsewhere on these pages saying that the
Government of Sri Lanka (G.o.S.L.) is planning to give
concessionary loans to hotels for refurbishment, is
indeed a welcome sign.
industry, which, by and large suffered the most among
our thrust industries due to the 26 year old war, though
obtaining a brief respite during the 2002 ceasefire
period, is now once again showing signs of picking up
after the war end.
fact the need to improve our hotels was highlighted on
these pages in our last week’s issue. And also in our
last week’s editorial, which quoted a Malaysian economic
planner, who saw the potentiality of this industry as an
authorities seem to have now got the message, the
importance of the tourism sector to the economy, and two
months after the end of the conflict, they are now
taking steps to protect the goose that lays the golden
However, G.o.S.L. which is cash strapped, may find it
difficult to obtain the necessary funds to provide soft
loans to this sector, despite however good its intention
may be to revive the industry, whose potentiality was
first discovered by the then State Minister
J.R.Jayewardene in the late1960s when Sri Lanka’s first
tourism masterplan was drawn up under his aegis, and
which ironically ended-up in the backburner, after the
1983 riots, when he was the President.
thankfully, the end of the war has not only brought
peace to the country, but has also released funds, which
otherwise would have had been eaten up as military
fact Chief of Defence Staff General Sarath Fonseka has
gone on record to say that the country saved a sum of
U.S.$ 200 million, which, otherwise would have had been
utilized to buy defence stores, because of the war end.
these bits and pieces of funds won’t do. There needs to
be an integrated, and an effective plan, giving funds to
the most deserving and not for bootlickers and party
favourites, which hopefully the Treasury, together with
the Sri Lanka Tourism Promotion Bureau will implement,
in order to spruce up this industry, to be ready to face
the possible influx of tourists.
high interest rate regime still prevalent in the economy
despite the lowering of inflation, this announcement of
a concessionary loan package to the industry provides it
with a much needed lifeline.
danger in having neglected hotels due to the lack of
funds or more precisely due to the high cost of funds,
as said elsewhere on these pages, is to give competitor
destinations like Thailand, which have a bigger hotel
inventory than Sri Lanka, to undercut the local market
and woo tourists to that South East Asian destination
from an entertainment point of view, Thailand, arguably
has a greater variety to offer to the visitor than this
island. All the more reason for the local industry to
seize whatever opportunity, when such an opening is made
available to it, not least to be spruced up and to be
attractive, to the expectant visitor.
reported elsewhere on these pages, the availability of
diaspora funding, comprising a mix of Sinhalese and
Tamils, targeting the hotel sector is another welcome
is encouraging is that the Tamilian diaspora too has
come forward to invest in this sector.
is now needed is to solidify this confidence that the
minority community has shown on G.o.S.L., by speedily
resettling the 280,000 refugees back to their homes,
mainly in the Kilinochchi and Mullaitivu areas.
Speaking of tourism, Maldivian Airlines Managing
Director Bandhu I. Saleem, who, together with other
Maldivian investors also own a four star hotel property
in Katukurundha, Kalutara, told this reporter that half
of Maldives’ 300,000 population travel overseas.
is a 150,000 tourism market, equivalent to a third of
the number of tourists who currently visit the island on
an annual basis. Sri Lanka is also the Maldive Islands’
closest neighbour and the latter country is also the
richest economy in South Asia.
However, the war had been a distraction, with a number
of Maldivians opting to visit destinations other than
Sri Lanka instead. And a number of Maldivians
preferring to go to India for healthcare.
Despite Sri Lanka’s war, the island had however figured
prominently among the Maldivians as an entertainment
destination. Three thousand Maldivians are currently
living and studying in Sri Lanka.
that peace has dawned in the country, it may be well
worth for the local tourism industry to focus its
attention on the Maldives market, and its cash rich
traveller population. Sri Lanka’s cultural sites, its
wildlife and hill country among others should be
marketed to the peoples of this archipelago.
said that there is a cultural affinity among our two
peoples. That too could be used as a tool to promote
Sri Lanka among the Maldivians.
Lanka which has been traditionally promoting itself to
the West as a tourism destination, made a paradigm shift
in this promotional drive in 2001, after the attack on
its airport by the terrorists and the subsequent travel
advisories that came with it from the economies in the
West, by focusing instead, on the Indian market. This
move brought in dividends, with India now being Sri
Lanka’s single biggest tourism market.
time may now be ripe to tap the Maldivian market as well
now that peace has come to the island. It’s also a
closer and possibly a cheaper destination than the U.K./E.U.
markets for canvassing purposes, and the archipelago is
also cash rich.
industry needs to think “out of the box” if it’s to move
forward. After all in the West, other than in the U.K.,
the travel advisories, obviously for political reasons,
still persist, and continues to be a stumbling block to
is however no such travel warning from the Maldives, in
fact relations between the two countries are warm and
Seminarian to hotelier
Expelled while studying to be a priest in a seminary in
Bangalore for practising liberation theology
(emancipation of the poor), Ashok Fernando (51) finally
ended up as a hotelier in 1983.
Fernando, Manager Accommodation, Airport Garden Hotel,
told this reporter that his expulsion took place when
he, together with some Indian priests, who also believed
in liberation theology, fought for the rights of the
smaller fishermen in Kerala, whose basic fishing boats
were of no match to the trawlers operated by the richer
fishermen, and thus ended up with a scarce catch of
Fernando, a Roman Catholic, who was a deacon at the time
of his expulsion, said that at that time liberation
theology was taught as a subject in the seminary. This
was during the time of Pope Paul VI. But with the ascent
of Pope John Paul 2, a Pole, liberation theology found
disfavour, and with Fernando’s radical activities, he
had to leave the priesthood.
then joined the J.V.P., this was in 1982, but after
Lionel Bopage left the party, I too decided to quit,” he
said. Fernando became close to Bopage because the latter
was married to an ex nun, who was known to Fernando, and
who too had “progressive” ideas, he said.
Fernando then joined Browns Beach hotel as a
receptionist, before ending up at Airport garden.
Fernando who is married has one daughter.
years ago his hotel sacked over 40 of its staff for
carrying out illegal strikes. They were allegedly
members of the J.V.P. However Fernando justified those
sackings saying that their demands were unjust.
Stock market announcements
Surgical Hospital Plc and Asiri Hospitals Plc have
announced a Rs. 0.075 and Rs. 0.75 interim tax free
dividends respectively. Excluding dividend (X.d) dates
for both August 6, 2009 and payment dates: August 13 and
August 17, 2009 respectively.
Tobacco Plc has announced a Rs. 4 second interim tax
free dividend. X.d. August 7, 2009 and payment: August
Chevron Lubricants Lanka Plc has announced a Rs. 3.50
second interim dividend. X.d July 30, 2009 and payment:
August 11, 2009.
Vidullanka Plc has announced a Rs. 0.60 dividend per
share. A.g.m.: August 20, 2009; X.d. August 21 and
payment: August 31, 2009.
Investment Plc and Ceylon Guardian Investment Trust Plc,
two Carson & Cumberbatch companies have announced Rs. 7
and Rs. 11.50 first interim dividends each. X.d. for
both of those companies are July 29, 2007 and payment
date: August 7, 2009.
Brewery (Ceylon) Plc has announced a rights issue in the
proportion of “three for five” at an issue price of Rs.
40 a share to reduce the current gearing level of the
company. Quantity offered: 30 million shares. X rights:
August 31, 2009. Provisional allotment: August 28, 2009;
renunciation: September 18, 2009; last date of
acceptance and payment: September 22, 2009; dispatch of
provisional letter of allotment: September 7, 2009 and
trading starts on: September 11, 2009.
Ashok Leyland Plc has announced a first and final
dividend of Rs. 7.50 a share for the financial year (f.y.)
2008/09. A.G.M. September 18, 2009; x.d.: September 22
and payment: September 23, 2009.
On’ally Holdings Plc has announced a final dividend of
Rs. 1.35 a share for the f.y. 2008/09. X.d.: July 22 and
payment: July 31, 2009.
Sathosa Motors Plc has announced a final dividend of Rs.
6 a share for the f.y. 2008/09. A.G.M. August 28, 2009;
X.d.: Aug. 31 and payment: September 10, 2009.
Sunshine Holdings Plc has announced a final dividend of
Rs. 2.50 a share for the f.y. 2008/09. A.G.M. July 30,
2009; X.d.: July 31 and payment: August 11, 2009.
People’s Merchant Bank has announced a final dividend of
Rs. 0.40 a share with dates to be notified.
$3 bn., investment
South Korean government will build a second passenger
terminal at Incheon International by 2015.
the new $3 billion terminal, the government expects
annual passenger handling capacity to reach 62 million
per year, compared to the current 44 million.
expansion of the cargo terminal is also planned, with
cargo capacity expected to increase to 5.8 million tons,
from the current 4.5 million. (Washington Aviation
I.M.F. conditions & army recruitment
balancing act of keeping the budget deficit at 7% of
G.D.P. this year as per I.M.F. conditions and the recent
comment made by Chief of Defence Staff General Sarath
Fonseka of his wanting to increase the cadre of the army
by 50% to 300,000 figured at a Central Bank of Sri Lanka
(C.B.S.L.) organised press conference on Monday.
Increase in army recruitment means an increase in
Government of Sri Lanka (G.o.S.L.) expenditure. The
budget deficit in the first four months of the year was
equivalent to 4% of G.D.P.
C.B.S.L. Governor Ajith Nivard Cabraal refused to be
drawn into a controversy over this issue.
reply he told this reporter that requests for the
increase in cadre strength are made by various quarters
in the Government. It’s upto the authorities to evaluate
such requests and take appropriate action, he said.
Cabraal however said that I.M.F. conditions haven’t
precluded recruitment to the public sector.
question of increasing Government revenue, when revenue
year on year (y.o.y.) had fallen by 9% in the first four
months of the year and curbing expenditure in order to
fulfil I.M.F.’s 7% budget deficit condition for the
year, C.B.S.L.’s Chief Economist Dr. Nandalal
Weerasinghe said that the first four months fiscal
performance was an aberration.
have now passed the worst and better times are ahead,”
Cabraal was confident that the 7% target could be kept.
It has to be reduced to 5% by 2011 as per I.M.F.
conditions for the U.S.$ 2.6 billion standby
arrangement, of which the first tranche of U.S.$ 323
million was paid to C.B.S.L. on Tuesday.
Training during recession
By Ben Manickam*
visionary organizations agree that cost cutting during
recession is important, they also acknowledge that to
really keep company costs down, you need employees
performing at their peak-and that means streamlined
training. They also know that cutting back on staff
training has no coherent justification to business
decision to invest in training during lean times rather
than layoff staff is indicative that an organization
views people not as mere assets who are used during good
times and disposed of during bad times.
common excuse given is that training is expensive and
therefore cannot be justified during difficult economic
times. This approach would be shortsighted, because the
need for talent has never been greater. According to a
survey conducted by Conference Board USA, talent is one
of the top priorities amongst CEOs around the world.
Visionary organizations have understood this reality,
hence see the benefits of training far exceeding costs,
more so on the long run. When the economy brightens,
staff is better equipped and more proficient to deliver
superior service thereby.
writer is the Director Centre for Graduate Studies and
serves as lecturer on the MBA and MSc (Organizational
Development) programmes at Peradeniya University.
Notebook to netbook
Enterprises, the company that dedicates its resources to
make technology more affordable has launched a power
packed net book at an “unbelievable” price to the local
Describing this venture, Managing Director Chinthka
Wijewikrama said, “We have been observing the lifestyle
trends of young , upward mobile corporate executives who
are moving to laptops which provide them the freedom to
work from anywhere. We wanted to take it a step further
and introduce another innovative product that is
capturing the world by storm, the netbook, which allows
ultimate mobility due to its compact size. The Prolink
atom net book is being introduced at a price which is
‘unbelievably superior.’ Also it is backed by our
reputed after sales guarantee.”
added, “ Our vision is to keep innovating, to ensure
technology is available to many, this is a classic
example of the enterprising solutions we can provide.
The Prolink atom netbook that is being introduced to the
market this month is compact, stylish and power packed,
and it comes at a price that would delighted the
consumer.” Prolink Glee TA009, which will be introduced
as the Prolink atom netbook locally weighs a mere 1.1
kg., and is 1.8cm in thickness. However the netbook is
boosted by the Intel atom N270 processor running at
1.6GHz and 512KB L2 cache. It is accompanied by a 160
GB hard disk and 1GB DDR2 RAM. The TFT LCD display with
LED backlight spans 10.1 inch. It’s designed to comply
with all the lifestyle demands of a busy executive who
works with advanced technology. Sala Enterprises Ltd.,
is a leading company dealing with computer peripherals
in the local market.They are the sole distributor for
world renowned Prolink products in this market. Their
business is geared to provide both sales and after sales
support to all its customers.
Enhancing productivity HP way
Designed to enhance office productivity for small to
medium-size businesses of about 20 employees, many HP
Officejet products provide professional colour documents
for up to 40% less cost per page and energy use than
lasers. These printers and all-in-ones are ideal for
producing professional business documents,
business-quality photos and inhouse marketing materials.
Officejet printers and all-in-ones are “right” for
smaller offices and businesses. These products are
designed for basic networks with fewer users. Plus,
these compact products fit on a desktop and have a lower
purchase price. HP Officejet Pro printers and
all-in-ones are designed for small businesses that need
fast, professional document printing. With HP Officejet
Pro, you can print laser quality black text, “vivid”
colour graphics and colour photos at high speeds without
sacrificing quality. HP Officejet 6500 All-in-One will
save you up to 40% per colour page compared with laser
printers, as well as let you use 40% less energy. You’ll
reduce intervention with the 35-page automatic document
feeder. And you can network this versatile machine for
group use via built-in Ethernet networking.
Recession ends growth begins
world is at the end of possibly the worst financial
crisis that we will see in our lifetime. At the same
time our country has been rid of what was the single
largest negative factor holding back economic progress
for the past two and a half decades.
was said by Institute of Chartered Accountants of Sri
Lanka (ICASL) Conference Committee Chairman Sujeewa
Rajapakse speaking at a press conference held in
connection with ICASL’s 30th National Conference that
will take place at Water’s Edge from September18-19.
theme of this year’s conference is “Leading a New
Rajapakse continuing said, “This year’s theme focuses on
our situation today. World economic crisis or not, we
now need to embrace this new beginning before us and
start realising the opportunities that are ‘apparent’ as
well as those that are ‘not-so-apparent’. With renewed
energy and the new mindset we need, we will be leading a
new beginning that will create a new future of hope,
opportunity and peace in Sri Lanka”.
said that chartered accountants are no longer mere
number crunchers in accounting and auditing but have a
larger role to play in society today, especially given
the country’s economic situation.
Rajapakse said, “You’ll never find an unemployed
chartered accountant and with the development of the
country that’s taking place we may even run into a
shortage of these professionals,” adding that student
enrolment at ICASL has been on the increase.
looked forward to event in Sri Lanka’s corporate
calendar for three decades, the main sponsors of the
30th National Conference are Hatton National Bank, John
Keells Group, Sri Lanka Insurance, Sri Lanka Telecom and
Tokyo Cement Group.
Technical Committee Chairman Channa Gunasekera said
that a group of eminent and respected corporate
personalities from overseas as well as from Sri Lanka
will conduct the technical sessions and take
participants through five main presentations titled;
‘Leaders and Market Makers’, ‘Agile Organisations’,
‘Making Corporate Boards More Accountable’, ‘Cash Alert’
and ‘Common Cents’.
According to Gunasekera, the sessions will cover a wide
range of issues from what makes an organisation grow and
what it takes to keep it on top, to discussions on CFOs
and corporate board members and their roles and the cash
issues that bring businesses down.
final session, ‘Survive and Thrive’ is a panel
discussion which connects all the topics that were
discussed in the previous five sessions. It looks at
‘particle’ solutions to what the basics of running a
good business are and what companies must do in an
economic downturn, the best way to prepare for the
upturn and how to balance the needs of the different
stakeholders while doing all of this.
Gunasekera said, “It will be a great sharing of
knowledge, experience and ideas and we hope that this
will help Sri Lanka be better equipped to lead this new
President Nishan Fernando said that as Sri Lanka’s
premier National Accounting Body, ICASL’S National
Conference has been an annual platform for professionals
to gather, deliberate and confer issues that go beyond
the paradigms of reading and writing.
‘With a little help sick finance companies can bounce
Q: Following the crash of the finance companies in the
early ’90s and scams such as Pramuka, the authorities
don’t seem to have learn’t much going by the financial
carnage around us…
In 2008 the whole world was engulfed in financial
turmoil. This however did not affect us much primarily
because of the small size of our economy where GDP is
less than US$ 40 billion which is equivalent to a mid
size Fortune 500 company. The other reason was that,
whatever people might say, the Central Bank had put in
place the necessary regulations and controls. As a
result we were resilient to an extent.
out of the blue the Sakvithi scam came about. Sakvithi
held around Rs. 5 billion worth of deposits. Today
Sakvithi has disappeared and no one is talking about it.
The depositors have been left in the lurch. This
scenario led to the depositors of Golden Key becoming
jittery. This company that held about Rs. 25 billion in
deposits found there was a run on the money. That’s when
things started to go wrong.
financial sector that was steady in 2008 despite the
world turmoil suddenly began to come under pressure.
the run on the Golden Key money, depositors in most of
the finance companies even those such as with Danduwan
Mudalali began to withdraw money. Queues began to form
in front of finance companies. It was apparent that
depositors had lost confidence in the system.
such a scenario no financial institution, especially
those such as finance companies can survive. This is
applicable not only to Sri Lanka. We have seen this
happening in countries such as the US and Japan where
the biggest companies have crashed overnight when there
was a run on the money.
Q: Can you explain how finance companies make money?
Finance companies and banks depend on public deposits.
These funds in turn are re-invested in their businesses
activities such as lending and investments. The yields
invariably are long term. A surplus of deposits is
always maintained which is used for new investments in
business activities and day to day operations. Their
general reserves is about 15 –20 % of deposits kept as
real liquidity. So, when lets say 15 - 20 % of
depositors overnight decide to withdraw their money,
which in effect is what is called a run on deposits, no
financial institution can survive, especially in these
lean times. This is applicable not only in Sri Lanka but
all over the world.
compels financial institutions to impose curbs on
withdrawals. This is what has led to the agitation by
depositors leading to an erosion of confidence in the
system. It is due to this that I place much of the blame
for the current crisis at the doorstep of the depositors
Q: Depositors of Ceylinco finance companies complain
that they are not allowed to withdraw their matured
deposits and to do so they are made to go through a
tedious and at times embarrassing process with no
guarantee of getting back their money?
When there is an erosion of confidence in the
finance companies what happens is that all the
investors/depositors want their money back at the same
time – they feel insecure and whether the deposits have
matured or not they want the money back. This is not a
problem limited to the Ceylinco companies but all
finance companies. It happens all over the world.
must realize that there are three parties involved in
the operation of a finance company. One is the
investor/depositor, the other is the company and the
third party is the regulator. The company having
accepted the deposit carries out various business
activities with it. These may include leasing, hire
purchase, housing loans, personal loans, property
development etc. It is with the profit made on these
business activities that interest is paid to the
depositor and repayment of the capital when it is called
the drop in confidence there has been a drastic drop in
deposits. Yet even in this scenario we are obliged to
pay the promised interest, there are no two words about
that. With regard to capital, technically we are not
obliged to pay back until maturity. Also in any finance
company under normal circumstances there is a 80 to 85
percent renewal rate. It is around 15 percent that is
withdrawn. But when it came to the Ceylinco companies we
witnessed this rate shoot up to 100 percent. Companies
have to wait for the income from the loans that have
been granted. Disposing of assets like real estate takes
time. No company can survive in a situation like this.
So what do we do then?
order to protect the interests of the customer we are
compelled to bring in curbs on withdrawals. After all
the company must survive to pay back deposits. This is
what we have done. Investors need not panic.
Q: There have been questions raised as to how qualified
Merchant Bank is to be the managing agent of The
Merchant Bank of Sri Lanka was the first true merchant
bank that was established in Sri Lanka, 27 years ago.
The bank is engaged in fee based and fund based
activities. Fund based activities are leasing, hire
purchase, loans etc. Fee based activities are IPOs,
corporate planning, business restructuring and
consultancy etc. Through Merchant Bank and its
subsidiary Merchant Credit we have over 25 years
experience in leasing and finance. Therefore no one can
say we don’t have much experience in this field.
the local finance company crisis first began to emerge
we volunteered to help. Initially we took over the F&G
Group – to come up with a restructuring plan, which we
Unfortunately some depositors did not agree with the
plan we came up with. However we still act as the
management agent only for the registered finance company
of the F&G Group namely Finance and Guarantee Company.
With regard to the other two companies in the group –
F&G Property Development Company and F&G Real Estate
Company Ltd - the matter is under litigation so I do not
wish to comment on it.
we were assigned to manage the second specialized
savings bank, which came under the Ceylinco group,
Ceylinco Savings Bank by the Central Bank. With our
management and supervision, today, this company has been
fully restored. MBSL has acquired a 78 percent
controlling stake of the bank through a capital
infusion. We have proved that we are capable of
resurrecting and restructuring sick companies. This bank
is now under the MBSL umbrella as the MBSL Savings Bank.
have managed to re-establish the confidence of the
customers and day-to-day business activities are going
on as usual. We hope to make reasonable profits – after
a decade – by the end of this year. The balance sheet is
have new deposits, we engage in lending and most
importantly we hope to expand our activities to the
north and east. With the level of success we have
achieved we are confident of going for an IPO in the
near future. So this is a true success story of how sick
companies can be turned around.
Probably having taken note of this the Central Bank
handed over to us the oldest and largest finance company
in Sri Lanka, The Finance Company. They wanted us to do
the same thing with The Finance as well.
Finance at present has deposit liabilities of Rs. 25
billion. The company has assets in excess of Rs. 35
billion. However the problem is most of the assets are
not liquid. I must also say that since last December,
due to high withdrawals, The Finance has paid out over
Rs. 5 billion. This is a massive amount for a finance
company to pay in just a few months. Depositors, without
thinking about the health of the company have been
rushing to withdraw their money mostly based on hearsay
and I would say they are partly to blame for the mess
that finance companies got in to.
is why we had to appoint a special committee to inquire
into every withdrawal request. Every customer is of
utmost importance to us - whether its Rs. 5 million or
Rs. 5000 - and each request is given due respect. We
have to safeguard the company to safeguard their
interests. With the funds available to us we have paid
back the majority of such requests. We want customers to
understand that there is a genuine problem and to have
Q: What is the status of The Finance today?
Today it is business as usual at The Finance and we
operate on the funds generated daily through fresh
deposits. I must also point out that the company pays Rs.
500 million a month only as interest on deposits. To pay
this money we need to earn this amount. In a crisis
situation when we are put under pressure by depositors
we cannot do this – that is engage in profit earning
activities. Investors need to understand this reality
and support us. All stakeholders are part and parcel of
the business and dependent and responsible for each
Q: There is some sort of criticism that interest rates
offered to depositors in the restructured companies have
One cannot look at this in isolation. One needs to look
at the macro picture and study the overall pattern. In
December the Treasury Bill interest rate was 19 percent,
now as at last week it has come down to 11 percent, a
fall of 40 percent. As a result there has been a pruning
of interest rates across the board by all finance
formula specified by the Central Bank for all finance
companies is AWPLR + 5%. We are keeping to this formula.
No one can afford to offer the rates that were offered
one year ago. Despite all this when most other finance
companies could not afford to pay more than 16%
interest, The Finance was paying 17% last month.
Interest rates have been reduced by the treasury
essentially to stabilize the system, and I think this
goal has been achieved.
Q: Who will be the owners of the restructured companies?
Ownership of the restructured companies will largely
depend on the capital infusions made. For instance MBSL
infused capital to revive Ceylinco Savings Bank and now
we own that bank. It will be likewise for the other
companies under restructuring.
Q: How is the restructuring of The Finance progressing?
We are quite positive with the progress being made. The
restructuring process for The Finance will take one to
two years. The Finance is now averaging Rs. 100 million
a month in new deposits. This speaks volumes of the
confidence that we have been able to build. We have
regained the confidence. After all it is the oldest
finance company in the country and people trust that
of the present customers have been with the company for
over 20 years. They trust MBSL’s style of management and
appreciate the emphasis placed on good governance at
addition to the customers the Central Bank trusted us
and our skills, and entrusted The Finance to us. We took
up the challenge and I can say with confidence on behalf
of the board and senior management of Merchant Bank that
we will deliver the expected results.
Q: What message do you have for the investing public?
As far as The Finance is concerned I can assure
investors that their interest payments will be paid on
the due date. We will move forward with our business
plan and there is nothing to stop us especially with the
end of the war that went on for 30 years. There will be
heightened economic activity from which we hope to
benefit. Also in the next nine to 10 months most of the
present economic problems will be resolved.
strictly adhering to Central Bank guidelines and there
is little room to go wrong. In addition The Finance is
subject to monitoring by the Cabinet Appointed Sub
Committee and regular reports are sent to the Central
Bank and progress reports are sent to the expert group
appointed by cabinet. The overall framework is in place
and there is absolutely no need for concern by the
Q: So are you saying investors jumped the gun as it were
with the fall of Golden Key and precipitated the present
What I’m saying is the companies under restructuring
must be allowed to carry on their normal day-to-day
operations without being put under pressure by making
premature withdrawals. The investors must trust the
system, the guidelines in place, and give room for the
companies to operate. They must not demand deposits
because in the end the repercussions affect all the
stakeholders. I can say that at The Finance, interest
will be paid on time and other commitments will be
honoured on the due date but the company must be allowed
to carry on its normal business activities.
Q: What about those who have been accused of
I must say that putting people behind bars is not going
to help because these people can then live care-free
lives without any pressure whereas they are the people
who should be held accountable to deliver. When
companies are put under pressure we have seen how people
vanish like Sakvithi and how some people perish like in
the case of Danduwam Mudalali. Others have been banished
to prison where they are insulated from all the problems
Q: What is the criteria one should follow when investing
in finance companies?
The lesson to be learnt from all this is that when
investing funds in any company don’t be guided by greed.
Interest rates are not the best criterion to go on. One
must take time to study the organisation, its history,
stability over the years, financial performance, etc.
company crashes there are three things that can happen.
Firstly the company can go in to liquidation. This is a
long drawn out process. We have witnessed this in the
recent past where in the last 20 years or so more than
15 finance companies have gone in to liquidation. The
legal process can drag on for 10 or 15 years at the end
of which the depositor gets something like 25% of his
second thing that can happen is where the culprits are
held liable. Here again some can vanish, some can perish
and some can be put behind bars. What does the depositor
gain in the end? Nothing.
third thing that can happen is to restructure the sick
companies. However like I explained earlier, for this to
happen successfully depositors must give these companies
room to bounce back.
is the request we at MBSL make of the depositors in
companies that have come under our wing.
Tourist arrivals to be flat in ’09
Lanka needs 35,000 rooms to accommodate 2.5 million
tourists by 2016 as per President Mahinda Rajapasha’s
target, Jetwing Hotels Chairman and President elect of
PATA Hiran Cooray told Benchmark last Sunday.
Lanka currently has 15,000 guest rooms according to the
industry. There may not be major growth this year,
because we are starting with a
negative up to end June. The positive trend will take
off from last month (July) onwards. We will probably
have around 400 to 450,000 tourists this year. But the
real growth will start next year and we can comfortably
expect a 10-15% increase in arrivals, said Cooray.
“Finally, we have a level playing field; that’s what
we’ve all been hoping and praying for. Now it’s up to us
to start building more rooms and improve existing
hotels. Products in countries like Thailand, the
Maldives, and Bali especially are fantastic. We need to
now come up and work that much harder. What the others
have done in 25 years, we
probably have to do in two to three years, to have a
much better product. So that’s now up to us in the
private sector and hopefully some foreign investors will
come in,” Cooray said.
discussing plans to revamp tourism and make Sri Lanka
the destination of choice.
said, “There are infrastructure issues, roadways need to
be improved, tourist transportation has to be improved,
the quality of transport, the quality of guiding, the
experiences we create. I can go on and on, but that’s
what we need to start doing. The human-resource factor;
we’ve lost lots of our good people to the Middle East,
the Maldives, Australia and New Zealand. We need to get
some of them back again. We need to develop our youth,
engage the people in the north and east in tourism, and
ensure they also benefit from this.”
Commenting on immediate measures that need to be
implemented to attract
tourists, Cooray told the show’s Special Correspondent
Ms.Savithri Rodrigo: “Get tourists coming back to Sri
Lanka. That’s what will give the next level of
confidence; confidence is coming back into the country
and we already notice the numbers returning. We’d like
to see the hotels filled in November-December.”
Touching on PATA estimates thatarrivals for South Asia
will rise while
Lanka will remain in the negative, he noted that these
targets would have been set prior to the end of the war.
“Now we are looking at an era post-Prabhakaran and the
LTTE. And obviously those numbers will change.
the travel advisories in place, he noted that they would
“slowly become irrelevant” since people are aware of the
fact that the war has come to an end. However, in order
to attract 2.5 million tourists, Cooray pointed out that
we need another 35,000 rooms. “We have to have the
product right,” he asserted.
widely-watched business TV programme is presented by LMD
and produced by the wrap factory.
At Elakanda Road
National Bank (HNB) opened its 179th Customer centre at
Elakanda Road, Hendala, recently. The Chief Guest for
this occasion was HNB Managing Director/CEO Rajendra
Theagarajah. Board Director Mrs Pamela Cooray was the
guest of honour.
large gathering, which included senior bank officials,
government officials, local businessmen and customers
was present on this occasion.
Hendala Customer Centre offers a range of facilities
from savings and current accounts, import/export loans,
Singithi (minor savings accounts), Shanthi home loans,
financing under the Gami Pubuduwa scheme, credit cards,
NRFC/RFC accounts and leasing facilities. HNB drives on
the cutting-edge of technology with an islandwide ATM
network exceeding 275 ATMs, online banking and tele-banking
Expanding in N.E.
present contest, North and East (N.E.) provinces take
the lime light in most boardroom planing meetings.
organizations are geared to planning strategy on how to
execute the untapped market potential of the N.E.
Union Assurance Plc (UA) started our planning to enter
the Northern market way back in 2002, we were the 1st
private sector insurer to start operations in the north,
and this move was duly recognized to be a wise
investment when the Jaffna branch office was bestowed
with the best region office award at the Union Assurance
Annual Awards 2005,” said UA General Manager Marketing &
Distribution Rukman Weerarathne.
Jaffna branch currently houses over 70 staff members
recording a significant momentum in both life and
general insurance operations.
the coming months we will be opening branches in
strategic locations covering the Valikamam,
Vadamarachchi and Thenmanachchi zones in Jaffna
Peninsula and we hope that theses expansions will create
thousands of job opportunities and will be able to
provide insurance solutions to the community, having a
direct impact towards the development of the northern
and eastern regions,” said Weerarathne.
are evenly poised and well established in the eastern
region with branches in Batticaloa, Kalmunai, Trinco,
Valachchani and Ampara, coupled with those branch
offices being staffed with over 300 members and hope to
recruit more members to the team. “
a part of the development process of the N.E. is not
something new to UA, said Weerarathne. “We have
conducted many social responsibility initiative in
theses regions, through initiatives such as ‘Union Neth
Hamuwa’which focuses on developing skills and best
practices in business and introducing modern teaching
techniques. UA has always been in the forefront of its
social responsibility initiatives. Therefore the N.E.
areas of the country have been no exception when it
comes to our social responsibility initiatives. This was
largely shown when the company started its 7th phase in
the Eastern Province by installing crime prevention
awareness boards last year. In addition to this UA
contributed towards uplifting the hospital facilities of
two main hospitals in Jaffna and Karainagar. Commenting
on this initiative he said, “ We at UA strive to ensure
that our business operations add value to the
communities with whom we interact.” The contribution
made towards these two hospitals was made during his
frequent visits to Jaffna and other areas in the north.
Weerarathne said that there is a good business potential
in the Jaffna region and that he and his team intends to
further invest in the N.E. by offering their products
and services to the markets. This will enable them to
provide more job opportunities and services and thus
enhance the lifestyles of the communities living in
over 49 branches and a staff strength of more than
Credit card usage down 4%
number of active credit cards as at end May 2009 shrank
by 13,942 (1.6%) month on month (m.o.m.) to 879,485;
Central Bank of Sri Lanka data showed.
decline, in the five month period since December 2008 is
even sharper, at 37,933 or 4.1%.
Meanwhile, total outstanding credit card balance at Rs.
33,673 million as at end May 2009 is a m.o.m. decline
of Rs. 511 million (1.5%), and from its December 31,
2008 figure, a Rs. 539 million (1.6%) decline.
Adding 20 more ATMs
Nation’s pioneer banking and financial services provider
Sampath Bank joined forces with DFCC Vardhana Bank to
offer more comprehensive ATM network facilities with
wider location coverage in the island for their
combined set up of DFCC-Sampath ATM network comprises
over 212 ATM points islandwide, enabling customers of
both banks to access their savings and current accounts
with “ease.” This service is available 24 hours, 365
days and is real time, on-line banking facility that
enhances customer convenience.
Sampath Bank plans to add another 20 ATM points under
their expansion programme that is in progress for year
present Sampath Bank boasts of the largest ATM network
facility of 522 access points in Sri Lanka due to
previous alliances formed with other state and private
banks for ATM network sharing. Sampath Bank is the
leader in ATM network sharing amongst financial
institutions in Sri Lanka, resulting in foreign exchange
saving in the form of fees payable to foreign financial
institutions for ATM usage.
Sampath Bank hopes to link with several more financial
institutions in the future with the view of allowing
better service and easier access to customers,
irrespective of their bank. The bank hopes to share
their technical expertise with their partners who will
join forces to enhance the ATM network, thereby
increasing customer convenience.
Sampath Bank is the trendsetter in technology driven
banking in Sri Lanka, having revolutionized the banking
industry by introducing networked ATM facilities for the
first time in 1987.
Quality global education by ANC
part of a university that prepares its students to
become global citizens equipped with the necessary tools
to face global challenges is no longer limited to
Monash University a student is provided with a quality
College is an entry pathway to Monash University, one of
Australia’s most prestigious and innovative universities
in the world.
and operated by Monash University, Monash College in
Australia offers its programmes delivered through its
partners overseas in Sri Lanka, Singapore, China and
Indonesia. They provide an excellent choice to begin
your connection with the Monash community in an
environment of supported learning and development.
College offers full-time undergraduate diploma
programmes and university foundation programmes which
provide an entry pathway to the prestigious Monash
University degrees in Australia, South Africa and
programmes are offered in partnership with ANC Education
Holdings, a leading provider of private tertiary
education in Sri Lanka. Serving to bridge the gap
between your current qualification and the accepted
academic qualification by Monash University, Monash
College Diploma programmes offer direct entry to the
second year of over 50 selected Monash University
degrees in Arts, Business, Engineering and IT.
the Monash University Foundation Year (MUFY) programme,
recognized as the equivalent to the Australian Year 12
qualification provides entry to the full range of Monash
University degrees including Business, Engineering,
Medicine, Science, Law, Architecture and any other
College Australia Deputy Director (Teaching and
Learning) Ms. Kim Styles, during her recent visit to Sri
Lanka said that when one chooses a university, it is not
only about the courses offered by the respective
university, but the quality of the university that open
doors for the student. “The quality of the degree makes
a difference,” she said.
member of Australia’s prestigious Group of Eight (Go8)
leading universities and ranked among the top 50
universities in the world, Monash University boasts of
its international reputation for research excellence and
outstanding graduates produced each year in an array of
“Prestige and recognition are important when choosing a
university,” Styles said.
Located in Melbourne, Australia, rich in cultural
diversity and a home to a significant number of Sri
Lankans, Monash University provides a vibrant and a
healthy study environment and a global alumni network
which enhances the opportunities for professional
According to Styles, the quality of education at Monash
is witnessed at every level, from teaching to research
University currently has eight campuses located in
Australia, South Africa and Malaysia. “These are not
token campuses, but fully operational ones,” she said.
Referring to the quality assurances on maintaining
Monash standards at Monash College Sri Lanka, Styles
observed that unlike in some university programmes,
Monash College in Sri Lanka uses the same textbooks,
syllabus and content as Monash University. “It is not an
equivalent unit that is used, but the same unit,” she
noted that the work of the teachers at Monash College
Sri Lanka is moderated by Monash University staff.
the same programme that is do ne here. Similar systems
and standards are maintained with regard to the
professional development of the teaching and
administration staff,” she said, adding that the high
standards maintained at Monash University are closely
monitored by the national accreditation authorities in
Speaking of the progress in Monash College Sri Lanka
students, Styles said there are 45 Sri Lankan students
currently studying for their bachelors at Monash
Lankan students have fared very well,” she said.
College Sri Lanka student Thushanth Ganeshan was the
recipient of the Global Award of Excellence for IT this
year while an MUFY student, Madushan Dahanayake was the
recipient of Global Award of Excellence for achieving
the highest results in Globalization Part A. “They
received the highest marks from eight countries.”
Monash College Sri Lanka has produced several other
students who have won this prestigious award.
College Sri Lanka students could complete their degrees
in Monash campuses in Australia, Malaysia or South
student could complete any degree in Malaysia and
Australia. They could complete degrees in business, art
and IT in South Africa,” Styles said.
observed that Monash College students have now moved to
higher levels than bachelors and even complete their
2,170 Monash College students have completed their
bachelors while 215 have completed their masters, which
is a considerable number,” she said.
number of students from Monash College sitting for their
masters now is due to the acknowledgement that it is a
genuine pathway to a higher level of education and not
just a bachelors’ programme as perceived earlier.
According to Styles, Monash closely monitors the quality
of education, teaching practices and prepares reports on
them to determine how well Monash College students fare
after they transfer to Australia and Malaysia.
“Monash college Sri Lanka students are in second level
and above,” she said. Several Sri Lankan students have
even received prestigious scholarships as well. The
Monash Engineering Leadership programme offered to
international students from Monash College was received
by Kaushalya Perera from Sri Lanka. Students in the
business and economics sections have received the Dean’s
scholarship. “Monash Colleges international students
have performed extremely well at Monash University,”
Monash, a student is also taught of graduate attributes
in order to make a complete person. “It is about
learning on how to learn and the way we teach and what
we teach,” she said, adding that it is important to look
outwards and not just inwards.
Al-falaah”, LOLC Group’s Islamic arm, made a significant
stride in Sri Lanka’s Islamic financing sector by
marking two significant events simultaneously. While
introducing the country’s first Mudharabah Savings
account with a fully integrated savings pass book and an
ATM Card, LOLC Al-falaah’s Sharia’h Supervisory board
was further strengthened with Shaikh Shafique Jakhura
Mudharabah Savings account will be the most attractive
solution available in Sri Lanka with its fully
integrated savings pass book and ATM card which is
accessible from more than 350 locations countrywide.
Further more the account offers the highest profit
sharing returns in the county to the customers. The fact
that LOLC Al-falaah is supervised and regulated by the
Central Bank of Sri Lanka (C.B.S.L.) attests that this
is the safest investment option available to the
ORIX Finance Company Ltd. (LOLC), the first and only
finance company to be registered under the C.B.S.L. to
offer Sharia’h Financing, launched the Islamic Business
Unit in late 2007. Since then LOLC Alfalaah offered
Ijarah (Leasing), Murabaha (Trade Financing),
Diminishing Musharakah (Property/Project Financing) and
now Mudharabah (Profit Sharing Investments & Savings) to
their clientele in compliance with sharia’h principles.
LOLC Alfalaah is facilitated with its own infrastructure
such as IT, Documentation and Financial Accounting which
are based on Shari’ah principles. While the dedicated
Islamic Business Unit is currently operating under the
supervision and guidance of the Sharia’h Supervisory
Board comprising Islamic Scholars Shaik M. Fazil Farook
and Shaik M.Murshid Mulafar, the joining of Shaik Mufti
Jakhura is of significance and will further strengthen
Jakhura serves in the Fatwa Department preparing and
issuing Islamic Juristic rulings at the Darul Ihsan
Centre in Durban, South Africa. He completed, the
Aalimiyah Course at Madrasah Taleemuddeen in 2002 in
Durban and finished a three year specialization course
in Islamic Jurisprudence (Fiqh & Fatwa) from Jamia Darul
Uloom, Karachi, Pakistan in 2005 under the guidance of
Mufti Taqi Usmani which culminated in the submission of
a thesis on the topic of Shirkat and Mudharabah.
Loans at 18%
Chartered Institute of Marketing Sri Lanka (CIM SL)
recently signed a Memorandum of Understanding with HSBC-The
world’s local bank, for a two year period where an
education loan scheme was introduced exclusively for CIM
short term loan facility is offered at a special
interest rate and is designed to fit each semester, so
that students can finance their studies from beginning
to end. Furthermore students are also being offered the
convenience of obtaining the loan within 24 hours of
providing all necessary documentation in a hassle-free
manner with no guarantors nor collateral required at the
point of applying.
can also be obtained by parents on behalf of their
children who are looking to gain CIM qualifications.
Consumer Assets, Liabilities & Strategy Senior Manager
Thanuja Gunasekera said, “HSBC has had a long
association with CIM and we are delighted to further
strengthen our partnership by providing financial
support to Sri Lanka’s marketing professionals. This
tailor made loan scheme offered at a low interest rate
with a choice of repayment periods will help students
pay their subscription and exam fees without undue
student loan scheme is one of the latest initiatives
being introduced by CIM SL under its Student Development
Programme; catering to a need of its student members who
count for over three fourths of its total membership.
Chairman Shiraz Latiff speaking on this occasion said,
“In our pursuit of creating accessibility to a quality
marketing qualification for students we have come to an
arrangement with HSBC to offer a loan facility to
complete student exams. This we believe, will encourage
school leavers to equip themselves with a world-class
qualification before they enter the job market.”
the world’s largest professional body for marketing. CIM
SL is the largest and fastest growing CIM body outside
CIMA pass rates increase
world acclaimed business management body CIMA announced
the highest ever number to complete TOPCIMA in Sri Lanka
at a single “diet,” where 301 students successfully
completed the final exam at the May 2009 diet.
exam results are a 17% increase from the last exam diet
in November 2008. The pass rate increase is not only
encouraging to the tuition providers who have over the
years specialized in CIMA training, but is also a boost
to the corporate world where CIMA is seen as the most
sought after qualification for management positions.
Speaking on the growing success of students in Sri
Lanka, CIMA South Asia and Middle East Regional Director
Bradley Emerson was full of praise for the students. He
specially mentioned the CIMA tuition providers who are
probably the best for their commitment in preparing the
students for this global exam. “Whilst we are pleased
with the performance of our students, we will continue
to work on improving our tuition delivery.”
Lanka pass rates at the recent exams showed a 60%
increase when compared with previous exam diets. The
pass rate of the final TOP CIMA paper has improved to
51% from 49% at the last exam diet.
has an online dedicated area for student support, full
of tips and advise for exam success in the official
student section of the cimaglobal.com website. The site
consists of student guides and post-exam guides which
focus on performance in all past papers. These are
invaluable tools for exam success, and CIMA recommends
that this website area is accessed regularly. In
addition to the student e-magazine Velocity which gives
students support, advise and guidance to help them
through the exams and in their career progression,
CIMAstudy.com, the only CIMA-endorsed online resources,
are now available for all levels of the CIMA
Sri Lanka Division supports students with a library and
study hall facilities for 250 students. During exams
the divisional library is kept open every day including
on public holidays.
Members of the Board of Review (B.o.R.) on tax disputes
should be qualified. It should not be a geriatric unit
for the retired. They must be up to the task,
independent and decide matters before them without fear
who appear before the B.o.R. find that the same people
are hearing most of their appeals and those members who
demonstrate signs of independence are either not
reappointed or not empanelled to hear appeals. This
process is unsatisfactory and does not ensure due
process and fair procedure and is in need of urgent
reform. I hope that the Taxation Commission will address
these concerns - Dr. Shivaji Felix speaking at a seminar
on taxation on Wednesday.
Rs. 5 bn., soft loan
five billion J.I.C.A. soft loan channelled through a
state bank is available for agriculture and livestock
development in the East, an official said.
Eastern Province’s Agriculture and Rural Industries
Development Ministry Secretary V. Pathmanathan speaking
at a seminar on opportunities in the East for the
private sector last Friday said that a potential
investor could draw upto Rs. 300 million from this
organised by the Ceylon Chamber of Commerce.
Peace has losers
is good for the economy, but in the short term it may
affect a certain industry located in a particular
geographic area, while benefiting others of the same
Fernando, Manager Accommodation, Airport Garden Hotel,
told The Sunday Leader that with peace business has
fallen in his hotel.
concerns of the tourist visiting the island were the
security situation and traffic, he said.
with the war end, the tourist does not feel a security
threat, he now prefers to stay in Colombo despite the
traffic, rather than staying at our hotel which is
adjacent to the airport, and which was a comfort factor
for the tourist during the war,” Fernando said. “As a
result we have lost business,” he added. The global
recession does not augur well for the leisure industry
as a whole. Fernando however said that the Tamil
diaspora had made bookings in his hotel this month which
is the summer holidays, as well as in December.
Misuse & abuse
question arises whether the misuse of public funds
collected ostensibly for nation building under the
Nation Building Tax, if appropriated for any other
purpose, would constitute a breach of public trust on
the part of the concerned parties -Dr. Shivaji Felix
speaking at a seminar on taxation on Wednesday.
Checkpoints have to go
Checkpoints, though a necessary evil, will have to go
with time, a Maldivian businessman told this reporter.
I. Saleem, Managing Director Maldivian airline, said
that tourists from the West are not used to check
who is also a shareholder of Kani Lanka, a four star
hotel in Katukurunda, Kalutara, which is owned by
Maldivians, however said that not a single Maldivian has
been harassed at these checkpoints.
Import decline hits revenue
Falling of imports was the main reason for revenue
shortfall, Commissioner General of Inland Revenue E.M.M.
Medagoda told The Sunday Leader.
Government revenue in the first four months of the year
declined by 9% year on year (y.o.y.) to Rs. 191.5
had affected Customs duty collection, it was not a
problem of the Inland Revenue Department (I.R.D.), I.R.D.
revenue collection has grown y.o.y., but not in line
with Budget 2009 estimates, he conceded.
planned to rectify this by widening the tax net and
collecting some Rs. 12 billion in tax arrears, Medagoda
have to file 54 returns and have to make 92 payments
annually in order to be tax compliant -Suresh R.I.
Perera, Principal, Tax & Regulatory, KPMG Ford, Rhodes,
Thornton & Co. speaking at a seminar on taxation on
$ 1 bn., repayment
Government’s foreign debt servicing is estimated at
U.S.$ 1.025 billion this year.
this figure, U.S.$ 225 million is commercial and the
Treasury Bill weighted average yields at Wednesday’s
primary auction slipped by 15 basis points (b.p.s.),
11.46 b.p.s. and 12 b.p.s. to 10.64%, 11.46% and 11.97%
for 91, 182 and 364 day maturities respectively.
seminar on Responsibilities of Directors in an Adverse
Financial Climate will be held at a
hotel on Friday.
the speakers are Securities and Exchange Commission
Director General Channa de Silva, co-founding partner
Nithya Law Firm Naomal Gunewardena, Dr. Harsha Cabral
(PC), Deputy Solicitor General Yasantha Kodagoda and
former Ceylon Chamber of Commerce Chairman Chandra
Jayaratne. It’s organised by Alumni Association of the
International Development Law Organization Sri Lanka.
Multiplicity of taxes
Corporate entities who now have to pay the Nation
Building Tax are already subject to the Social
Responsibility Levy (S.R.L.). Therefore, the
multiplicity of taxes increases the amount of corporate
time spent on tax compliance. It also results in Inland
Revenue Department being burdened with additional
administrative work. It would have had been better to
have had increased the amount of tax charged as S.R.L.,
Income Tax or V.A.T., rather than imposing a new type of
tax. This would have been more “transparent,” cost
effective and administratively simpler-Dr. Shivaji Felix
speaking at a seminar on taxation on Wednesday.
derived from sustainable biomass sources meet aviation
reports a new study endorsed by Boeing and an industry
Laboratory, ground and flight tests conducted between
2006 and 2009 indicated test fuels performed as well as
or better than typical petroleum-based Jet A. Testing
included commercial airplane engine types using blends
of up to 50% each of petroleum-based Jet A/Jet A-1 fuel
and sustainable biofuels.
fuel blends met or exceeded technical parameters for
commercial jet aviation fuel, including freezing point,
flash point, fuel density and viscosity, with no adverse
effects on engines or components.
study showed that the fuels have greater energy content
by mass than typical petroleum-derived jet fuel, which
potentially could lower fuel consumption per mile. (Washington Aviation Summary)
the war, Trincomalee, after
was the island’s main red onion belt, an official said.
seed onions were got from
Eastern Province’s Agriculture and Rural Industries
Development Ministry Secretary V. Pathmanathan
addressing a seminar on opportunities in the East for
the private sector last Friday said that the acreage
under red onion cultivation in Trincomalee had come down
from 60,000 to 600 acres since. However, since the dawn
of peace, an additional 7-800 acres had been brought
under the plough.
seminar was organised by the Ceylon Chamber of Commerce.
was the strategy behind reducing V.A.T. by 3%, from 15%
to 12%, and introducing N.B.T. at 1% and subsequently
increasing to 3%?-Suresh R.I. Perera, Principal, Tax &
Regulatory, KPMG Ford, Rhodes, Thornton & Co. speaking
at a seminar on taxation on Wednesday.
Ad hoc tax laws
Revenue (Amendment) Act No. 19 of 2009 was certified as
law on March 31, 2009. Thus the Act has legal effect
after this date. Therefore any return that has been
filed after the amending legislation came into force
will be subject to the operation of the revised time
question however arises whether the time bar should be
changed in this arbitrary manner.
Talawakelle p.a.t. down 21%
Talawakelle Tea in the second quarter (2Q) ended June
30, 2009 saw profit after tax (p.a.t.) dip by 21% year
on year (y.o.y.) to Rs. 31.92 million. P.a.t. in the
first half (1H) ended June 30, 2009 declined by 93%
y.o.y. to Rs. 8.74 million.
p.a.t. down 39%
Bank Plc in the 2Q ended June 30, 2009 saw p.a.t. dip
by 39% y.o.y. to Rs. 187.84 million. P.a.t. in the 1H
ended June 30, 2009 declined by 58% y.o.y. to Rs. 188.03
C.T.C. p.a.t. up 44%
Tobacco Company Plc (C.T.C.) in the 2Q ended June 30,
2009 saw p.a.t. increase by 44% y.o.y. to Rs. 769
million. P.a.t. in the 1H ended June 30, 2009 increased
by 41% y.o.y. to Rs. 1,262 million.
Chemanex p.a.t. down 78%
Chemanex Plc in the 1Q ended June 30, 2009 saw p.a.t.
decline by 78% y.o.y. to Rs. 28.89 million.
Dankotuwa’s losses up
Dankotuwa Porcelain in the 2Q ended June 30, 2009
increased its losses by 63% y.o.y. to Rs. 15.81
million. The company’s cumulative losses in the 1H ended
June 30, 2009 increased by 62% y.o.y. to Rs. 15.69
Autodrome’s p.a.t. down 5%
Autodrome Plc in the 1Q ended June 30, 2009 saw p.a.t.
decline by 5% y.o.y. to Rs. 8.07 million.
LB Finance p.a.t. up 8%
Finance Plc in the 1Q ended June 30, 2009 saw p.a.t.
increase by 5% y.o.y. to Rs. 76.66 million.
Chevron’s p.a.t. up 45%
Chevron Lubricants Lanka Plc in the 2Q ended June 30,
2009 saw p.a.t. grow by 45% y.o.y. to Rs. 399.26
million. However p.a.t. in the 1H ended June 30, 2009
grew by 2% y.o.y. to Rs. 632.19 million.
Hayleys MGT p.a.t. down 7%
Hayleys MGT in the 1Q ended June 30, 2009 saw p.a.t.
decline by 7% y.o.y. to Rs. 70.75 million. (Source: John
Keells Stock Brokers)
J.K.H. p.a.t. down 22%
Keells Holdings Plc in the first quarter (1Q) ended June
30, 2009 saw profit after tax (p.a.t.) decline by 22%
year on year (y.o.y.) to Rs. 650.45 million.
Lanka Ventures p.a.t. down 25%
Ventures Plc in the 1Q ended June 30, 2009 saw p.a.t.
decline by 25% y.o.y. to Rs. 24.86 million.
Pelwatte Sugar losses up 88%
Pelwatte Sugar in the 1Q ended June 30, 2009 increased
their losses by 88% y.o.y. to Rs. 24.86 million.
U.A. p.a.t. down 16%
Assurance (U.A.) in the 2Q ended June 30, 2009 saw p.a.t.
decline by 16% y.o.y. to Rs. 41.01 million. The company
in the first half ended June 30, 2009 saw p.a.t.
increase by 2% y.o.y. to Rs. 92.24 million. (Source:
John Keells Stock Brokers)
Policing illegal financial institutions
collapse of illegal deposit taking institutions such as
Sakvithi and Golden Key, and the knock on effects on
Seylan Bank as a result, with the threat of a systemic
risk thereby, shows the danger that such illegal
institutions pose to the economy.
Chanaka Wickramasuriya, Country Head, Fitch Ratings
Lanka, speaking at a seminar recently, therefore
emphasized the importance of the Central Bank having to
police even such illegal deposit taking institutions as
seminar was organised by M.T.I. Consulting.
Holdings New York recently announced the formation by
AIG of a special purpose vehicle into which AIG intends
to contribute the equity of AIU Holdings, the
appointment of Kristian P. Moor as its President and
Chief Executive Officer and the creation of Chartis.
unify its worldwide businesses.
Chartis’ business includes commercial insurance, foreign
general insurance and private client group operations.
Chartis serves more than 40 million clients in over 160
countries and jurisdictions.
SriLankan Airlines took delivery of its third new Airbus
A320 recently. The current A320 fleet is two and half
SriLankan’s narrow-body A320s operate mainly to
destinations in the Subcontinent-India, Pakistan, and
Maldives and also Abu Dhabi. Its wide-body A330 and A340
fleets serve destinations in other parts of the
airline’s network, including Europe, the Middle East,
and Far East.
Flights to Colombo from London and Australia have been
fully booked this month, a tourism official told The
Kalaiselvam, Director General Sri Lanka Tourism
Promotion Bureau said that these flights are bringing
down the Tamilian diaspora to the forthcoming Nallur
Kovil festival in celebration of the Hindu god Murugan.
will be flown to Jaffna on Sri Lanka Air Force flights,”
he said. Kalaiselvam was of the opinion that the A 9
road would be opened soon.
President Mahinda Rajapaksha’s recent abortive attempt
to make Appeal Court Judge K.T. Chitrasiri as
Commissioner General of Inland Revenue, had met with
approval by some tax officers, it’s learnt.
However this appointment did not go through, as
Chitrasiri had subsequently declined to take up this
offer, it’s alleged.
Instead E.M.M. Medagoda, a tax officer with over 30
years experience at Inland Revenue Department (I.R.D.)
was appointed to this chair. If Chitrasiri’s appointment
had gone through, he would have had been the first
person from outside the I.R.D. who would have had been
appointed to this post.
also alleged that R.P.L. Weerasinghe, an adviser to the
Finance Ministry, who is also a former Commissioner
General of I.R.D., was even prepared to resign if
Chitrasiri’s appointment had gone through. This was
allegedly because Weerasinghe would have had felt that
I.R.D. officers would have wrongly thought that it was
Weerasinghe who had wanted Chitrasiri to take over I.R.D.
Maldivians travel to Sri Lanka for entertainment and not
to India, an airline manager told The Sunday Leader last
Maldivian Airline Marketing Manager Ms. Mabrouka Amyl
Jalyl said that last Sunday was Maldives National Day.
said that as a result their flights the previous day
were full. The airline which usually operates five daily
flights to Colombo weekly, was compelled to increase
their flights to two last Thursday.
apparent controlling selling, the weighted average
yields of 2019, 2014, 2013 and 2012 maturing Treasury
Bonds fetched 13.09%, 12.94%, 12.88% and 12.83%
respectively at Thursday’s primary auction.
amounts offered in the aforesaid chronological order
were Rs. 500 million; Rs. 1,000 million; Rs. 1,500
million and Rs. 2,000 million; while the amounts
accepted were Rs. 220 million; Rs. 750 million; Rs.
1,350 million and Rs. 1,700 million respectively.
Rs. 25 bn., revenue
on financial services raked in Rs. 25 billion to
Government coffers last year,Tax adviser to the Finance
Ministry R.P.L. Weerasinghe speaking at a seminar on
fiscal legislations on Wednesday said.
However Suresh R.I. Perera, Principal, Tax & Regulatory,
KPMG Ford, Rhodes, Thornton & Co. who also spoke at this
event said that this profit based V.A.T. system was last
practised in Israel in the 1940s. Since then Israel has
done away with this system, said Perera
Myth & reality
Budget 2009 the Finance Minister proposed the
introduction of a new tax with effect from January 1,
2009 which was expected to operate on a quarterly basis
until December 31, 2010. It was also said that the tax
would be levied at the rate of 1% on importers,
manufacturers and service providers.
fiscal enactment giving legal effect to the budget
proposal was the Nation Building Tax (N.B.T.) which was
effective from February 1, 2009. However the Act did not
indicate that the period during which the tax was to be
imposed was subject to a time cap that ended on December
reality is that the tax appears to be one that is
permanent in character since the Act does not have any
indication that its operational period is limited to
only two years. Initially the tax rate was fixed at 1%
per annum, however it was swiftly changed to 3%
effective from May 1, 2009-Dr. Shivaji Felix speaking at
a seminar on taxation on Wednesday.
Para militaries in East
issue of para military operators in the East and the
consequent extortion rackets that go therewith, was one
of the concerns that was raised at a forum on
opportunities for private sector investment in the East
that was organised by the Ceylon Chamber of Commerce
Eastern Province’s Agriculture and Rural Industries
Development Ministry Secretary V. Pathmanathan in reply
said that though their presence was visible six months
ago, they were not so active now.
has come down a large extent, six months ago it was
there,” he said.
Lanka Tourism Promotion Bureau (S.L.T.P.B.) Director
General S. Kalaiselvam told The Sunday Leader that the
diaspora was coming forward for tourism investments in
are a mix of Sinhalese and Tamils,” he said.
Kalaiselvam said that five blocks totalling 25 acres of
Government land in Trincomalee have been taken up by
those investors for hotel development.
will be given a six month time period to develop these
block, comprising five acres, have been given on a 30
year lease, Kalaiselvam added.
Including those lands already leased out, there are a
total of 500 acres of Government land available for
tourism investment in Trincomalee, he said. Kalaiselvam
also said that 150 acres at Pasikudah has been given to
30 investors, as well as in Ampara and Arugam Bay for