By Asgar Hussein

According to him, an intensive study by the Coconut Research Institute (CRI) showed that public fears of environmental harm, particularly a water shortage, are totally unfounded.

He also implied that the recent protests may have been engineered by unscrupulous individuals with the ulterior motive of land grabbing.

The PAC said there is no indication of any adverse impact following large-scale planting of oil palm in Malaysia and Indonesia. It was also claimed that the agriclimatic conditions in Malaysia are very similar to those prevailing in Sri Lanka.

The CRI report stated, "The survey team is of the view that the villagers' perceptions on the effect of oil palm on ground water is mere conjecture and scientifically unfounded".

Meanwhile, CEO of Watawala Plantations Vish Govindasamy said their foreign investor was "very disturbed" over the brutal attack on the foreign consultant assigned by them.

The PAC stated that the many dug wells in Nakiadeniya Estate under oil palm cultivation are all located in valleys. "The water levels of all the wells are within one meter from the surface and some of the valleys are found to be waterlogged and there is considerable water flow in small streams within the estate," it added. The association said there is no evidence to support the contention of villagers in the area that oil palm planting would deplete water. It pointed out that the CRI report clearly states this activity has not adversely affected the ground water level or the water flow of the streams.

It was also pointed out that the plant density of oil palm (at 148 per hectare) is lower than rubber (500 per hectare) and tea (13,500 per hectare). Further studies have revealed that the consumption of water in oil palm is less considering the evapotranspiration rate.

The PAC also stated, "As for the availability of firewood, there should be no problem since only part of the hectarage will be diversified into oil palm. It must also be mentioned that the industry is gradually moving away from using rubber wood as firewood and pursuing value-addition due to the increasing demand for rubber wood products which include furniture."

Amarasuriya noted that producing crude palm oil locally will save valuable forex - at present around 80,000 metric tons is consumed locally of which nearly 90% is imported.

He referred to rubber as a "sunset" crop with little future while calling oil palm a "sunrise"crop. It was stated that even when rubber prices were good, the profit from oil palm was more than four-fold in Malaysia.

Amarasuriya said it was on expert advice that Sri Lanka undertook diversification from rubber to oil palm. Many factors were considered in this regard, including viability of the companies and the income of workers.

Oil palm cultivation began in this country more than 30 years ago, and in the last 20 years the area covered has grown to 2050 hectares. Nakiadeniya is the largest producer, accounting for 1095 hectares.

Amarasuriya said Watawala Plantations Ltd., have carefully drawn up a replanting programme to increase the land under cultivation (by 2005) to 2800 hectares yielding an annual oil production of 7500 tons.

He noted that the current annual production is around 4000 tons of crude palm oil, and around 1000 tons is supplied by small growers.

He added that three other plantation companies, namely Elpitiya, Namunukula and Agalawatte have undertaken oil palm planting in the Nagoda and Matugama areas as an alternate crop to rubber. They are expected to invest approximately Rs. 550 million and cover around 3000 hectares by next year. A mill costing around Rs. 200 million is to be constructed at Agalawatte - it would process the output from these estates.

The CRI report has identified the major issues requiring the authorities' attention. It stated, "To meet palm oil requirements in the country, 15,000 - 20,000 ha should be brought under oil palm cultivation. The identification of suitable lands for oil palm cultivation, acquisition of high yielding planting material, establishment of a seed garden to produce high yielding hybrid seeds, improvement of current production levels, disposal of waste with no environmental pollution, and villagers participation for expansion of the industry, are the important issues which need immediate attention of the concerned authorities."

HSBC and Bank of Ceylon (BoC) recently entered into a Service Level Agrement (SLA), according to which BoC will collect cheques, drafts or cash on behalf of HSBC customers and then credit them to the current account of HSBC at the relevant BoC Branch. This allows corporate customers with operations, distributions and/or agents islandwide the chance to expedite their collections via the BoC branch network, thereby improving cash flow. The bank alliance between BoC and HSBC forms part of the collections management solutions offered by HSBC's global payments and cash management.

CEO, HSBC, Nik Cherrill, DCEO, HSBC, Sarath Piyaratna, and General Manager, BoC, Sarath de Silva were present at the signing ceremony.

The BoC - HSBC SLA is essentially an alliance between the two banks to offer customers of HSBC a wider network of branches through which they can arrange for collection from buyers, agents or distributors. "The process is very simple," says HSBC's Manager-Payment and Cash Management, Chamila Fernando. "All HSBC corporate customers need do is contact their relationship manager or the manager payments and cash management at HSBC to utilise the SLA."

"Once this is done the corporate customers can ask their depositors to fill in a special deposit slip in triplicate and deposit the money to a collecting account at any of BoC's 297 branches. This money will then be transferred to the corporate customers' account at HSBC on a daily or weekly basis depending on the terms agreed to by the said customer," she said.

A spokesman for the Bank of Ceylon said, "It is our belief that the signing of the service level agreement is the beginning of new era in the banking industry of the country." He added, "HSBC sought the services of our branch network/delivery systems to give their clients a better service. Although we are aggressively competing with each other for the domestic market share, we thought an agreement of this nature would yield far reaching benefits in the long run for all concerned."

Manager - Commercial Banking, HSBC, Ajith Pasqual said that HSBC was planning a major initiative in global payment and cash management solutions for corporate customers. "Today's financial world can only be described as volatile," he said, explaining, "because of the uncertainly and to an extent the unpredictability, treasures will feel the need to focus more and more on cash and treasury management. Our global payment and cash management solutions offer corporate customers better cash flow management, enhanced risk management, improved security and audit controls, the ability to minimise costs and reduce operating expense and maximize returns and interest benefits," he said.

Further, HSBC's global payment and cash management ensures that corporations and financial institution are provided with a practical analysis of the various cash management and outsourcing techniques available in Asia. This includes the features and benefits of automating manual processes, outsourcing 'non-core' activities, such as account management, payments and collections management, liquidity management, and also recommendation and advice on the establishment of shared service centres and regional treasury centres.

"Helping our corporate customers manage their cash more effectively is one of our major goals. In order to ensure they get the best possible options, HSBC Colombo will be rolling out a number of new products and services in the near future," Chamila Fernando said. 

President, Zydus Group of Companies, Ganesh Nayak will arrive in Sri Lanka on October 16. During his visit Zydus Cadila Healthcare, a subsidiary of the Zydus Group will introduce to the local market three anti viral drugs (for AIDS) at less than half their current market price, as well as launch a brand new anti diabetes drug, namely Piogli-tazone (a class of insulin sensitizers) which improves insulin efficiency.

Nayak who was appointed president, Zydus Group in 1995, had the responsibility of establishing Zydus as one of India's five top healthcare companies, which he accomplished.

Cadila Healthcare, a Rs. 8000 million group based in Ahmedabad, has 13 of its brands among the top 250 pharma brands in India. Recently, Cadila acquired a 28% stake in German Remedies from Asta Medica. Zydus has invested Rs. 1000 million in a state of the art plant in Moraiya Gujarat which conforms to international standards and which has already received certification from BFAD Philippines, MCA South Africa, TGA Australia, as well as US FDA approval.

Today, Zydus operates in 43 countries and has more than 500 product registrations across the world. Zydus has operated in Sri Lanka for more than two decades and the company is represented by Lanka Medical (Imports) Ltd., the sole distributor for Cadila Healthcare products in Sri Lanka. With brands that include Ciprobid, Ocid, Loridin, Zycel, Atorva and Losacar, the latest additions to their drug portfolio are bound to firmly establish Zydus as a force to reckon with in the international drug market.

Zydus who are leaders in the cardiac segment in India will also be setting up cardiology clubs within their overseas markets, a forum whereby doctors can come together and discuss issues pertaining to cardiovascular disease.

Zydus has also set up a state of the art research centre with an area of 80,000 square mts and a lab area of 150,000 square feet, comparable to the best in the world. With 200 dedicated staff, it is the aim of the Zydus Group to bring out new drugs that will be developed at this centre within the next four years.

The Sri Lanka Standards Institute has named Dialog GSM (MTN Network Pvt., Ltd) as National Quality Award winner in the Large Scale Service Category for year 2001. The Sri Lanka National Quality Awards (SLNQA) were announced recently in conjunction with World Quality Day. Dialog GSM is the first telecommunication company in South and South East Asia to win a National Quality Award given for business excellence, placing it among an exclusive grouping of large scale service providers in the region.

The selection criteria for the National Quality Award is based on the world-renowned Malcolm Baldrige Quality Award Programme practiced in the USA. The Sri Lanka National Quality Award is Sri Lanka's highest level of recognition for excellence in business management and execution. Awardees are those companies recognised to adopt "world class" management, human resources, and service delivery practices.

"Receiving this award is a great honour to everybody within the Dialog family. This award is won by our employees and they will no doubt treasure it as a recognition of many years of hard work - we know this is another beginning and are all aware that this award brings with it an even greater responsibility to continue with our commitment to business excellence," said Chief Executive Officer, MTN, Dr. Hans Wijesuriya.

The National Quality Award follows several other milestones in Dialog's commitment to quality and business excellence. Dialog GSM became the first telecommunications operator in South Asia to be awarded ISO 9002 certification in 1998, and more recently became one of the first operators in Asia to be conferred ISO 9001 certification.

Deputy General Manager, Caltex Lubricants Lanka Limited, Shibly Latiff was awarded the prestigious 'Marketing Excellence Award' presented by Caltex Corporation, making him the first Sri Lankan to win this accolade.

The award was presented by Vice President - Lubricants Sales and Marketing, Martin B. Southern, in recognition of outstanding performance in the field of marketing within the Caltex operating region.

Caltex is an undisputed leader in lubrication technology in Sri Lanka. It gathers strength from its parent companies Chevron and Texaco to provide its customers a world-class product and an unparalleled service proposition. According to Shibly "it all starts by creating a progressive vision while ensuring that all stakeholders understand and embrace that vision positively. We had to be steadfast in our determination to realise this vision in a multi brand market, utilising Sri Lankan resources. And today when we talk of holding 98% market share in Sri Lanka, it is a manifestation of high investor returns, strong brand loyalty, and increased consumer confidence."

Caltex revolutionised the lubricant market in Sri Lanka by changing the paradigm from supply driven to one determined by consumer choice. The initiatives, value proposition and actions employed have enabled Caltex to win in the marketplace.

Speaking of the award, Shibly says "an award of this nature cannot be achieved singlehandedly. It is a representation of the many long hours and hard work of the sales and marketing team. I believe that we have some of the country's most talented professionals and when you have such positive forces working on your side, creating a winning proposition in the market place becomes a reality. My role in this equation was to identify the common overreaching threads that link this talent with the products and services we sell locally and blend it into the fabric and culture of a high performing global organisation."

By Asgar Hussein

The dissolution of parliament and announcement of fresh elections has given new hope to the business sector. Many seem to be overjoyed at the prospect of a UNP victory and a stable business friendly government. In fact, the share indices shot up after the crossover of PA dissidents to the opposition benches.

The All Share Index (ASI) which opened on Monday at 401.86 rose to 477.27 by close on Friday. The Milanka Price Index (MPI) also increased from 599.78 to 783.6

The total market turnover during the week was high as Rs 533.78 million, largely driven by local retail investors speculating a UNP win in December. A resurgence in local and foreign investor interest is predicted if the UNP does assume power.

The lack of political stability in the recent past has affected the business community and investors. The unfolding global scenario and a likely economic depression in the US and other major economic powers have added to their worries. The power crisis, the rising cost of production and a downturn in tourism following the Katunayake and New York attacks also aggravated their burdens. They now simply want an efficient administration that will provide proper governance and leadership.

They call for a visionary government with clear cut policies and strategies to help overcome their many problems. However, there is a perception that the leadership in both major parties is a serious impediment.

Yet, whichever party assumes power, things are unlikely to change fast. A well known analyst predicts negative economic growth this year, foreign reserves of only US dollars 1 billion and a budget deficit of nearly 10%. Many however feel that if the UNP wins, and its leader Ranil Wickremesinghe addresses issues in a positive manner, then there is a good chance for economic recovery.

The business community in general are hoping that a future government will place emphasis on the de-escalation of the ongoing ethnic conflict, speedy reforms and improved infrastructure. Some even felt the business community should create awareness in the rural sector against misleading statements and false promises made by politicians. They also urge that parties should clearly spell out their plans in their manifestos.

The ability of minority parties to make and break governments continues to be a worrisome factor. Many feel minority parties should not be in a position to act as kingmakers - a situation which could force the government to bow down to unjust demands.

Local industrialists in particular have been adversely affected in recent times, and many ventures are facing closure and massive retrenchment. They hope a new government will initiate policies that will ensure their survival.

There is also a general feeling that the PA administration did nothing positive to improve the economy, but instead stifled it through short-sighted policies, inefficiency and corruption. CEO of the credit rating agency Fitch Rating Lanka Ltd. Ravi Abeysuriya said the country lacks proper governance and leadership. He added that the business community wants to see a major change in government policy making.

He also noted that 60-70% of the population is rural-based, and they tend to be gullible and fall for false promises.

Abeysuriya believed the contending parties should clearly spell out what they intend implementing in their manifestos. He felt that priority should be accorded to ending the long drawn out ethnic conflict which has resulted in horrendous human, economic and social costs. "Our national income is insufficient to pay the national debt, and we have been selling so much of the national assets that there isn't much left to sell," he added.

He also believed it was the 'herd instinct' which led to local retail investors speculating on the Colombo bourse, and felt the rising trend will continue.

However, Abeysuriya said investor sentiment will be much more positive if the UNP comes to power. From the industrial or economic perspective, the UNP is perceived as pro-private sector, so coporates will record better profits and offer higher dividends, he stated.

He doesn't anticipate foreign participation at present, but says if there are clear indications that the UNP is going to win, there will be more foreign investors in the market.

There is also a feeling in business circles that people should focus less on the need to reduce the cost of living, and lay more emphasis on economic growth which in turn leads to higher income and a better standard of living. They also lament that Sri Lankans still believe in old paradigms, like state involvement in services such as banks, posts and railways.

They noted that efficiency of resource use is best under private ownership.

There is also a feeling that Sri Lanka has missed out many opportunities due to poor governance. Some believed Sri Lanka should take advantage of its strategic geographical location to be the 'Singapore of the SAARC region.' They felt the island should be the hub for all service sectors, including financial, ports and telecommunications.

According to chairman of the Ceylon National Chamber of Industry Asoka Gunasekera, the share market's response to the announcement of fresh elections indicates a yearning for stability (in government and policy) and the type of business environment that is needed.

He claimed that local industry is 'breathing its last' and facing closure and massive retrenchment.

He felt the situation in the country is such that as much as 22% of generated power is being lost 12% through piracy and 10% due to the non availability of meters.

Gunasekera also pointed out that two local power plants (that would have supplied 700 million units from 1999 onwards at a price well below Rs. 5.50 per unit) were oustructed by the Board of Investment (BOI). He noted that contingency power now purchased by the CEB costs over Rs. 12 per unit, and this is a reason why the CEB is heavily indebted to banks.

Other issues which he felt should be addressed are the lack of anti-dumping laws (which will enable China to dump substandard goods into countries like Sri Lanka) and the necessity to revise the tariff structure (so as to eliminate duties on machinery, raw material and packaging material).

Gunasekera further believed there should be a level playing field between BOI and non-BOI companies, and CIF prices on imported goods should be strictly monitored to prevent under-invoicing.

The cost of finance also continues to be a detrimental factor. Gunasekera noted that while the reverse repo rate was brought down by the Central Bank from 23% in January to 15% in August, there had been no corresponding action by Commercial Banks to lower their lending rates. He added that the spread between fixed deposit rates and bank lending rates is far too high.

Many market analysts feel that retail investors are UNP friendly and express positive sentiments because the market performed well under UNP rule. Earnings potential is also expected to go up. It is however felt that institutional investors are still unlikely to enter the stock market, as they have already invested in government securities. Even prior to 1994, the market was mainly foreign and retail-driven. At present, equity is not being considered seriously by foreign investors even regionally or globally. Analyst Rajiv Casie Chetty estimates negative economic growth this year - foreign reserves of only USD 1 billion and a budget deficit close to 10%. He pointed out that this dismal situation cannot be changed overnight, but said investors will react to a positive change in policy or direction.

He also said the key to improved foreign participation in the Colombo bourse lies in improving the fundamentals, including fiscal management and an improvement in the external sector as well as industrial policy to attract FDI.

Casie-Chetty said de-escalating the ongoing ethnic conflicts will play a major role in the economy and stock market. "Reducing the budget deficit will stem from the ability to reduce the level of the conflict," he added, noting that negotiations with the LTTE should be emphasised upon by any future government.

He also stated that infrastructure issues need to be sorted out, pointing out that the CEB is facing financial crisis.

John Keells Chairman V. Lintotawela said the business community now needs to evaluate who the leaders should be and assess their capability and vision of politicians. "Basically, we need somebody with a clear-cut vision, with strategies to achieve, with clear time frames," he added.

He also said the forthcoming election provides an opportunity for the formation of a stable government. Lintotawela expects a future government to lay a strong foundation to improve economic policy, spell out how to attract FDI and improve infrastructure and initiate labour and educational reforms.

He lamented that shares of corporates are undervalued, and the price to earnings ratio is very low, due to poor market sentiment and lack of confidence. He also noted that the country's competitive advantages are very minimal at present.

Senior Vice Chairman of the Industrial Association of Sri Lanka and former President of the National Chamber of Commerce Arymyne Wirasinha also emphasised on political stability, which would create the necessary environment for business and economic development.

He felt it was good that parliament was dissolved and fresh elections announced since the efforts at forming a coalition ran into problems. He said this was a good development as the country can now elect a parliament that can provide stability, offering hope for economic progress.

Wirasinha said, "We are particularly concerned because the world situation is also very volatile, and has adverse effects on all countries, particularly developing countries like Sri Lanka. So a strong and stable government would be absolutely a high priority for this country."

Former president of the Ceylon National Chamber of Industries Dr. Bandula Perera said what is needed is a stable, strong government which should practice what it preaches. He emphasised that corruption and bribery must be brought down to a minimum.

He also said it doesn't matter who assumes power, so long as they are principled and honest.

Dr. Perera believed that though the American market is shrinking, Sri Lanka now has an advantage over Muslim countries like Indonesia and Malaysia, and should not miss this opportunity to boost exparts.