The Ceylon Chamber of Commerce last week urged Prime Minister Ranil Wickremasinghe to arrange a workshop on investment, knowledge transfer and trade promotion. This proposal is being suggested as an integral part of the new government's 100 day programme. It was suggested that the workshop be held towards end April this year, following the announcement of the budget proposals.

CCC Chairman Chandra Jayaratne, in his letter to Wickremasinghe, stated the workshop should promote the concept of Sri Lanka as a preferred destination for investment, knowledge transfer and international trade. He felt this forum will be an ideal launching pad to initiate and announce the initiatives of the new government.

Such initiatives include introducing essential economic reforms and de-regulation within an open market operational framework, enhancing the competitiveness of Sri Lanka as a key regional investment and trade destination, and securing peace and internal security islandwide.

It was also felt the workshop could provide a forum to announce the government's policy framework together with the incentive package to promote investment, knowledge transfer and trade with specific reference to the selected 'thrust industries.'

"The target audience should be foreign and local entrepreneurs, business conglomerates and chambers of commerce. The participants will need to be carefully selected and encouraged to attend the workshop and it would be desirable for the target group to originate from the important areas of trade investment not only from the region but also from the rest of the developed world," Jayaratne said.

Jayaratne added that it is important to ensure the presence of eminent speakers at the workshop whilst agreeing on an appropriate theme which would focus on a carefully selected topic of current global interest.

The CCC has proposed 'The Regional Perspectives of Global Competitiveness' as a possible theme which would lend itself quite appropriately to the recently issued Global Competitiveness Report.

It was also suggested that the strategy papers compiled by the USAID Competitiveness Initiative and the government's policy response and policy package for growth and development should form the basis of at least two of the presentations at the workshop. In addition, two further presentations should focus on the launch of the Global Competitiveness Report and a country report on Sri Lanka.

Suggested speakers for the workshop include Prime Minister Ranil Wickramesinghe, Finance Minister K.N. Choksy, Chief Minister of Karnataka S.M. Krishna or Chief Minister of Andhra Pradesh Chandra Babu Naidu. Other names suggested are Mahatir Mohamed on Goh Chok Teng, Senior Advisor, World Economic Forum, Clade Smadja, Prof. G.L. Peiris, David Dollar of the World Bank, BOI Chairman Arjunna Mahendran, Milinda Moragoda and Ravi Karunanayake.

The CCC said this initiative could be further supplemented by holding, during the period of the workshop, an export promotion exhibition and the launch of the National Competitiveness Initiative.

"It would be desirable to approach the USAID sponsored competitiveness initiative with a request to support the workshop in association with the Board of Investment of Sri Lanka and the Sri Lanka Export Development Board," Jayaratne said. He added that the BOI and EDB should perhaps be made responsible for the organisation of the workshop and the infrastructure arrangements.

The CCC has pledged to facilitate and assist in organising the proposed workshop. "This would include establishing close contact with local and foreign business leaders quite apart from utilising to maximum advantage our already established networks with the Confederation of Indian Industry, British Chambers of Commerce, SAARC Chambers of Commerce and other Regional Chambers including the Asia Pacific Chamber of Commerce," said Jayaratne.

He added that the CCC believes this proposed workshop will add much value to the vision of the new government with specific reference to the future growth and development of Sri Lanka.

The Sri Lanka Export Development Board (EDB) has commissioned Affno to build Sri Lanka's official trade portal. This will represent a step change in EDB's previous pioneering initiative - Trade Net. The new trade portal will be more than a showcase for Sri Lankan companies with the government's endorsement and patronage, but also a place to sell their products on-line.

Dr. Lalith Gamage, Executive Director, EDB and Managing Director/CEO of the Sri Lanka Institute of Information Technology (SLIIT), explaining the rationale for a government- endorsed trade portal said, "Small and medium scale enterprises (SME's) will play a vital role as the Sri Lankan economy moves forward. Even in the United States the economy is not dependent on the General Electrics and Microsofts but rather on the enormous number of SME's. Our objective is not just to provide another channel for Sri Lankan companies to market their products but also to get them engaged in the idea of e-business and demonstrate to them the power of the Internet. We plan to set up and manage the portal in a manner that will provide synergies to the vast and diverse number of Sri Lankan manufacturers from producers of food products to clothing to commodities, components, electrical and electronic products and a whole host of others".

Affno's CEO Suren Kannangara said his company was happy to be entrusted with the prestigious task of building Sri Lanka's official country gateway for business.

The trade portal will enable each participating company (referred to as member companies) to advertise their products on the portal. Visitors would find these companies or their products in one of several ways. To enable this Affno will be building advanced search features and also grouping the companies into logical groupings depending on the complimentary nature of their products.

By Dinesh Weerakkody

The UNP victory on December 5, was to many the beginning of a new economic order. The stock market boomed at the time and the business community was jubilant that the UNP would put the right people in the right places and the UNP would immediately begin to revive the economy, and also begin to woo investors through confidence building measures.

However, six weeks in to the term, other than for some progress in the peace front, some of the key positions remain empty and furthermore, according to analysts some of the people appointed to key positions have gently gone to sleep, exposing the party to unwanted criticism. It is time these people demonstrated a sense of urgency and deal with some of the key issues like reforming the presidency, undo the wrong things the PA did, and appoint trusted and competent people to key positions to run the administration.

What the UNP needs at this moment are a few more Charitha Ratwattes, Arjunna Mahendrans and Ranjit Fernandos to give direction to the economy. We all know that Ranil is a very competent and experienced politician and therefore, when the UNP won the December 5th general election, the people of this country were jubilant that they had installed a Lee Kwan Yew in office.

However, for Ranil to deliver he needs to have dynamic, fresh thinking people to execute his strategy and also to feed him with the correct information. Employing people who are not tuned to the new market dynamics to execute his plans will only slow down the change process and his 100 day programme risks developing into a farce. Ranil should see his role not as managing the day to day business but as setting and reinforcing the vision, values and the new political culture. His trusted advisors should ensure that all activities of ministries are totally aligned with his vision and strategy.

Confidence

The UNP was elected to power because the people of this country were fed up with Chandrika and her government and wanted a visible change in the way things were done. Six weeks have passed, there is no visible change in the administration because some of the people who guided the PA to its downfall are still in office and furthermore, some of the public servants who were responsible for the UNPs downfall in 1994 are back in the saddle.

In fact, the Colombo Stock Exchange saw a major rally in mid December, with many investors who had stayed in the sidelines for over a year due to PA bungling, coming back in hordes and analysts predicted in mid December that the market would be on a roller coaster ride because investors were pinning their hopes on the UNP administration to rebuild the devastated economy.

However, six weeks into the new administration the market remains sluggish because of UNPs inaction to bring about radical change and the wait and see attitude of certain key institutions. In fact, there is growing suspicion among some analysts that certain ministers are lacking direction. The UNP therefore must act fast and support the market through institutional intervention to support the new found confidence. People of this country elected the UNP expecting fundamental change to the way we do things. Ranil on his own can't do that, so his 50 plus ministers without dashing around in their Volvos, BMWs and Pajeros with their armed escort, should ensure the work of the government goes on and they deliver tangible results. The UNP should not fall into the error of making excuses like the PA, especially now with the local government elections staring in the face and the JVP waiting in the wings.

Economic stability

Economic growth is below zero for the first time in 50 years. The growth slow down is not a sudden thing, it has been there for some time and Chandrika as the finance minister did very little to address the policy lapses and institutional inefficiencies. The policy lapses, corruption and political instability has adversely affected our exports and economic growth. We all know political stability is a must for economic growth.

Now it's is upto Ranil's team to take appropriate action to address the structural reforms, ailing infrastructure and provide macro economic instability. The UNP has got a golden opportunity to show their capabilities to the country. The UNP alliance has a good opportunity to implement a common programme with the support of the PA if necessary, to pull this country out of this current rut.

This maybe the last opportunity the UNP has to redeem itself and the country, and secure the future of this country. Therefore, the 50 plus ministers had better get off their high seats quickly and focus single-mindedly on establishing a new culture and thereby bring about the much needed reform. The UNP will have to demonstrate with deeds and not words, its commitment to due process in public life. If not, like the PA the dustbin of history awaits it.

Presidency

Chandrika's downfall was because of the incompetence and arrogance of some of her ministers and the way they responded to criticism. In addition, Chandrika's inexperience, ad-hoc, impulsive and irrepressible style of governance led to her government's undoing.

Furthermore, many of her ministers were only interested in enjoying the privileges of power for as long as possible. Only a few ministers were able to accomplish anything worthwhile for the voter. If the PA is to make any impact in the future, Chandrika will have to do some soul searching and repackage her party.

On the other hand, to save her presidency she may also have to learn to co-exist with Ranil. By undermining Ranil's efforts to bring about prosperity through subtle moves would lead to her own downfall, because the UNP will be forced to go all out to deal with her politically. There is already heavy agitation within the UNP to take her head on, therefore attempting to block progress towards peace or economic prosperity will only lead her to losing her presidency.

So, for the benefit of this country, Chandrika should agree to concede gracefully when required and corporate fully with the government of the day.

Peace

Many people are happy that the UNP has reactivated the peace process with the LTTE and therefore it is important the UNP discusses their strategy with all parties and agree on the constitutional reforms that are needed to transfer more power to the provinces.

Today, the majority of people in Sri Lanka put peace on top of their agenda, even ahead of economic reform. Therefore, the government and the opposition must realise that this is the best possible moment to formulate a bipartisan approach to address the most difficult problems facing this country. We all know that defence expenditure is stifling our development effort. The present spend of 80 billion rupees is unbearable, and today the war is the key factor that is preventing Sri Lanka from realising her full potential.

In fact, the PA government because of poor management existed on the various taxes drawn from the people and on temporary IMF facilities. Therefore the new UNP government should urgently do something to temporarily tide over the crisis and work on long term strategies with the support of the other political parties.

Way forward

In the final analysis, all our political leaders must realise that the people of this country desperately want Sri Lanka to become a nation that they can be proud of and also work and live in. Therefore, only the return to a rule of law and a work ethic of integrity and hard work will ensure that that dream is realised. However, with Ranil in the driving seat there is a very good chance that this dream could be realised and Sri Lanka could become the Singapore or Dubai of South Asia by 2020.

The domestic market of Liquid Petroleum Gas (LPG) has become cause of much controversy. The price of LPG cylinders has been the main concern of consumers as the increasing price of LPG became unbearable. It was the consumer who had to pay the final price and it was he who had to suffer. At one point it was hard to comprehend the need to increase LPG prices at a time when global LPG prices were on the way down.

Chairman, Laugfs Lanka Gas (Pvt) Ltd., W. K. H. Wegapitiya stated that consumers for the last seven years have experienced a price increase while the quantity has been reduced. Wegapitiya explained that three months before Laugfs entered the domestic LPG market, Shell company - the rival company in the domestic LPG field - was on the brink of increasing their prices yet again. But once Laugfs domestic cylinders were launched, the expected price increase never took place, leaving many to wonder whether the price increase was actually needed in the first place.

Speaking of Shell's high prices, Wegapitiya said that he had taken measures to explain to the present government that at a time when LPG prices were coming down in the world market, Shell too should take steps in reducing its prices. Wegapitiya after analysing world market reports, stated that in January 2002, LPG prices have gone down the world over and added that it is predicted that by next month LPG will go down even further to be sold at US$ 195.

Wegapitiya speaking on the point raised by Shell stating that if they received gas only from the Ceylon Petroleum Corporation (CPC) and did not import gas, they could have given gas to the consumers at Rs. 250, stated that Shell's prices kept increasing from 1995. For the past seven years Shell has been purchasing the entire output of CPC at Rs. 12,000 per metric ton and with the world market prices of LPG coming down, Wegapitiya questions as to why Shell did not consider a price reduction at such a time and pass the benefit to its consumers. Wegapitiya added that at present, Laugfs purchases LPG at Rs. 15,000 per metric ton from the CPC.

When asked of the allegation that Laugfs has plans to use its gas in industries and other forms, Wegapitiya explained that according to the Central Bank reports, Shell's connections are rated as 20,000 connections per annum. If Laugfs is to use the whole capacity of the LPG purchases from CPC for domestic use, Laugfs will acquire 120,000 12.5Kg cylinders.

Wegapitiya explained that in the first month, Laugfs has received a customer base of 75,000 and the rest of the accumulated LPG is stored. But this LPG accumulation will increase month by month and at a certain stage there will be no space for the LPG to be stored. These unpractical conditions have been explained to the present government, and Laugfs has requested permission to use this accumulating gas for industrial or other purposes, said Wegapitiya.

Laugfs has also offered to pay a higher price for the accumulated gas.

Wegapitiya stated that Laugfs Lanka Gas (12.5 Kg) which is now priced at Rs. 409 will be reduced further once an MoU will be signed with the CPC highlighting certain features.

Speaking further of the ill doings of Shell, Wegapitiya explained that the total of the refundable deposit when purchasing a Shell cylinder (Rs. 2,950 per cylinder) adds up to Rs. 2.2 billion per annum. But, when returning a cylinder a consumer would receive only Rs. 1,300. One would at this point wonder what happened to the balance of Rs. 1,650.

Shell at present is worried that the market they've been monopolising for almost seven years will now be taken over by a Sri Lankan company.

Wegapitiya stated that Shell's fear is that once a Sri Lankan owned company becomes financially strong, it will be time for Shell to take the back seat in the domestic LPG market. But local companies need to be strengthened as it will then strengthen our country and not any other country, said Wegapitiya.

He added that at present, Shell has taken up the concept of confusing the local market with various ideas, but one has to really look deeper into the matter to see how baseless their ideas are.

Though Shell (holds 51% of the Colombo Gas Company's shares) states that they do not make a profit in the Sri Lankan domestic LPG market, the Sri Lankan government - which holds a 49% stake of Colombo Gas Company - has not confirmed this statement. It is also alleged that CPC still has to claim Rs. 320 million from Shell.

Wegapitiya stated that it is the consumers, specially the Sri Lankan housewives who suffer the consequences of such unjustifiable acts. Shell still keeps justifying their unjustly acts and has begun to harass a Sri Lankan company which tries to benefit the country, noted Wegapitiya.

He explained that the maximum Laugfs market penetration is 10% and that their target is 120,000 cylinders. Todate, Laugfs has sold 85,000 cylinders. Wegapitiya added that even after importing LPG, Laugfs will not increase the prices of domestic LPG cylinders.

- MIA

BOI Chairman Arjunna Mahendran has proposed a long-term economic linkage with India, which could be undertaken by building a land route, establishing free ports and the large-scale transfer of technology in sectors like agro-based industries and information technology. He made this suggestion in his presentation themed 'A New Vision for Regional Investment into Sri Lanka', at a summit held in India (Bangalore) recently.

It was also stated that to facilitate trade, Colombo would soon have an open sky policy with no restrictions on the number of Indian carriers flying to Sri Lanka. Mahendran hoped this would lead to Indian private carriers flying to Colombo.

He also said Sri Lanka was moving ahead on the path to reforms, and the government's first priority was to resolve the ethnic problem and the second was the revival of the Sri Lankan economy.

A press release issued by the Confederation of Indian Industry (CII) stated that Mahendran had said that petroleum prices would soon be in accordance with world prices. As a result foreign oil companies would be allowed to enter the market. Already the insurance and power sectors have been opened to private investment.

On investment opportunities in Sri Lanka, Mahendran observed that there were no restrictions on foreign ownership, except in defence and certain strategic areas. There are no restrictions on repatriation of profits and dividends, no compulsion on conversion of foreign currency, import duties are low and there are no export restrictions, according to the CII release.

Commenting on the benefits of the Indo-Lanka Free Trade Agreement, he said foreign direct investment in both countries will increase due to the growing attractiveness of integrated markets and greater economies of scale.

The potential sectors for investment in Sri Lanka were identified as rubber, paper and paper boards, garments and textiles, ceramics, precious stones and jewellery, electronics, processed foods, and automobiles and spare parts, among others. It was also pointed out that infrastructure was available for shipbuilding, ship repairing, oil storage, power and mineral processing. Indian companies already operating in Sri Lanka include Ceat Tyre, Taj group of hotels, Gujarat Ambuja and the Tata Group.

The CII press release quoted Ceylon Chamber of Commerce Chairman Chandra Jayaratne as saying that there was a need for the two nations to be linked together to increase investment. He said Sri Lanka could be used as a base for targeting other markets of the region.