Archives | Home | News | Editorial | Politics | Spotlight | Issues | Lobby  | Focus | Economy | Letters | World Affairs | Serendipity | Business | Sports

Unbowed And Unafraid                                                                       Unbowed And Unafraid                                                                       Unbowed And Unafraid                                                                       Unbowed And Unafraid                                                                      Unbowed And Unafraid                                                                      Unbowed And Unafraid                                                                       Unbowed And Unafraid

Business

   
 

 

Rs. 200 bn. cut to meet I.M.F. conditions

Government of Sri Lanka (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.

N.R. 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%.

One of 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.

But 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 said.

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 said.

Others 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. 

He also requested I.R.D. to have a separate desk manned by professionals to track down related party international transfer pricing.

He 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 free.

Tax 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

When I 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 2008.

But 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.

Economic impact

Whilst 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 USA reeling at 8.5% and the UK at 6.6% which are incidentally the key focus markets for Sri Lanka exports.

The 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 future.

Key Focus

Now 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

I 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

Sri 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

We 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 programme.

Human capital formation

On 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.

Fiscal Policy

Areas 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 earnings.

Trade

Here a 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.”

Enabling Environment

Sri 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 on Wednesday.

 Sri 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.

He however said that no soft loans would be available for those who want to build new hotels under this scheme.

Mathew 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 said.

In reply to a question, Thomas admitted that high bank interest rates were a disincentive to do hotel refurbishments.

“In Thailand their government is actively involved in assisting the tourism industry, likewise, G.o.S.L. too needs to support the industry,” he said.

The need for hotels to invest on refurbishment works was highlighted on these pages in our last week’s issue.


LOANS TO HOTELS

The 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.

This 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.

In 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 outsider.

The 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 eggs.

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.

But 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 expenditure.

In 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.

But 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.

With a 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.

The 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 instead.

And 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.

And as reported elsewhere on these pages, the availability of diaspora funding, comprising a mix of Sinhalese and Tamils, targeting the hotel sector is another welcome sign.

What is encouraging is that the Tamilian diaspora too has come forward to invest in this sector.

What 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.

That 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.

Now 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.

It’s 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.

Sri 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.

The 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.

The 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 the industry.

There is however no such travel warning from the Maldives, in fact relations between the two countries are warm and friendly.


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 fish.

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.

“I 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.

A few 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 

Asiri 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.

Ceylon Tobacco Plc has announced a Rs. 4 second interim tax free dividend. X.d. August 7, 2009 and payment: August 14, 2009.

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.

Ceylon 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.

Lion 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.

Lanka 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

The South Korean government will build a second passenger terminal at Incheon International by 2015.

With the new $3 billion terminal, the government expects annual passenger handling capacity to reach 62 million per year, compared to the current 44 million.

An 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 Summary)


I.M.F. conditions & army recruitment

The 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.

In 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.

On the 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.

“We have now passed the worst and better times are ahead,” he said.

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*

While 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 survival.

A 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.

The 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.

* The 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 

Sala 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 market.

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.”

He 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.

HP 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

The 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.

This 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.

 The theme of this year’s conference is “Leading a New Beginning”.

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”.

He 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.

A much 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.

The 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 beginning.”

ICASL 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 back’ 

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…

A: 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.

Then 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.

The financial sector that was steady in 2008 despite the world turmoil suddenly began to come under pressure.

With 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.

In 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?

A: 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.

This 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 themselves.

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?

A: 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.

One 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 for.

With 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?

In 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 Finance?

A: 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.

When 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 did.

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.

Then 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.

We 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 healthy.

We 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.

The 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.

Which 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 patience.

Q: What is the status of The Finance today?

A: 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 other.

Q: There is some sort of criticism that interest rates offered to depositors in the restructured companies have been slashed?

A: 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 companies.

The 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?

A: 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?

A: 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 institution.

Some 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 every level.

In 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?

A: 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.

We are 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 investing public.

Q: So are you saying investors jumped the gun as it were with the fall of Golden Key and precipitated the present problems?

A: 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 mismanagement?

A: 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 they created.

Q: What is the criteria one should follow when investing in finance companies?

A: 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.

When a 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 deposit.

The 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.

The 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.

This 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

Sri 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.

Sri 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.

He was discussing plans to revamp tourism and make Sri Lanka the destination of choice.

Cooray 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

winter 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

Sri 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.

As for 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.

 The widely-watched business TV programme is presented by LMD and produced by the wrap factory.


At Elakanda Road

Hatton 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.

A large gathering, which included senior bank officials, government officials, local businessmen and customers was present on this occasion.

HNB 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 facilities.


Expanding in N.E. 

In the present contest, North and East (N.E.) provinces take the lime light in most boardroom planing meetings.

Many organizations are geared to planning strategy on how to execute the untapped market potential of the N.E.

“We at 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.

The Jaffna branch currently houses over 70 staff members recording a significant momentum in both life and general insurance operations. 

“In 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.

“We 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. “

Being 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 those areas.

UA has over 49 branches and a staff strength of more than 3,000.


Credit card usage down 4%

Total 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.

This 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 customers.

The 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 2009.

At 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

Being 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 rhetoric.

At Monash University a student is provided with a quality global education.

Monash College is an entry pathway to Monash University, one of Australia’s most prestigious and innovative universities in the world.

Owned 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.

Monash 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 Malaysia.

These 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.

While 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 areas.  

Monash 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.

A 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 disciplines.

“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 networking.

According to Styles, the quality of education at Monash is witnessed at every level, from teaching to research to administration.

Monash 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 said.

She noted that the work of the teachers at Monash College Sri Lanka is moderated by Monash University staff.

“It is 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 Australia.

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 University.

“Sri Lankan students have fared very well,” she said.

Monash 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.  

Monash College Sri Lanka students could complete their degrees in Monash campuses in Australia, Malaysia or South Africa.

“A student could complete any degree in Malaysia and Australia. They could complete degrees in business, art and IT in South Africa,” Styles said.

She observed that Monash College students have now moved to higher levels than bachelors and even complete their masters.

“About 2,170 Monash College students have completed their bachelors while 215 have completed their masters, which is a considerable number,” she said.

The 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,” Styles said.

At 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.


Islamic finance

LOLC 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 joining.

The 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 customers.

Lanka 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 it.

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 students.

The 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.

Loans can also be obtained by parents on behalf of their children who are looking to gain CIM qualifications.

HSBC 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 delays”.

The 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.

CIM SL 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.”

CIM is the world’s largest professional body for marketing. CIM SL is the largest and fastest growing CIM body outside UK.


CIMA pass rates increase 

The 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. 

May 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.”

 Sri 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.

CIMA 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 qualification-Certificate, Managerial.

The 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


In Brief

“Kangaroo court”

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 or favour.

Those 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

A Rs. 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 facility.

It was organised by the Ceylon Chamber of Commerce.

Peace has losers

Peace 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 industry.

Asoka Fernando, Manager Accommodation, Airport Garden Hotel, told The Sunday Leader that with peace business has fallen in his hotel.

The concerns of the tourist visiting the island were the security situation and traffic, he said.

“But 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

The 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.

Bandhu I. Saleem, Managing Director Maldivian airline, said that tourists from the West are not used to check points.

Saleem, 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 billion.

This 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.

I.R.D. planned to rectify this by widening the tax net and collecting some Rs. 12 billion in tax arrears, Medagoda said.

Compliance burden

Banks 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 Wednesday.

$ 1 bn., repayment

Government’s foreign debt servicing is estimated  at U.S.$ 1.025 billion this year.

Of this figure, U.S.$ 225 million is commercial and the balance concessional.

Yields fall

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.

Directors’ responsibilities

A seminar on Responsibilities of Directors in an Adverse Financial Climate will be held at a Colombo hotel on Friday.

Among 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.

Biomass fuel

Fuels derived from sustainable biomass sources meet aviation requirements,

reports a new study endorsed by Boeing and an industry team.

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.

The 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.

The 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)

Red onions

Before the war, Trincomalee, after Jaffna, was the island’s main red onion belt, an official said.

The seed onions were got from Jaffna. 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.

This seminar was organised by the Ceylon Chamber of Commerce.

Fiscal manoeuvres

What 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

Inland 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 bar.

The 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.

Seylan p.a.t. down 39%

Seylan 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 million.

C.T.C. p.a.t. up 44%

Ceylon 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 million. 

Autodrome’s p.a.t. down 5%

The 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%

LB 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%

John 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%

Lanka 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%

Union 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

The 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 well.

This seminar was organised by M.T.I. Consulting.

Chartis

AIU 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.

These 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.

3rd delivery

SriLankan Airlines took delivery of its third new Airbus A320 recently. The current A320 fleet is two and half years old.

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.

Fully booked

Flights to Colombo from London and Australia have been fully booked this month, a tourism official told The Sunday Leader.

S. 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.

“They 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.

Inland Revenue imbroglio

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.

It’s 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.

Entertainment destination

Maldivians travel to Sri Lanka for entertainment and not to India, an airline manager told The Sunday Leader last Friday.

Maldivian Airline Marketing Manager Ms. Mabrouka Amyl Jalyl said that last Sunday was Maldives National Day.

She 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.

Controlled selling

In 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.

The 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

V.A.T. 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

In 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.

The 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 31, 2010.

The 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

The 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 last Friday.

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.

“It has come down a large extent, six months ago it was there,” he said.

Diaspora investments

Sri 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 the country.

“They 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.

They will be given a six month time period to develop these lands.

Each 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 tourism development. 


 

 

 

 Supplement

 

 

 

In Brief
 
 
 
 
 

 

 


©Leader Publications (Pvt) Ltd.
24, Katukurunduwatte Road, Ratmalana Sri Lanka
Tel : +94-72-47218,9 Fax : +94-7247222
email :
editor@thesundayleader.lk