government to hold investment workshop
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
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
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
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
"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,"
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
Affno to build EDB trade portal
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.
UNP must get down to work
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.
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 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.
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.
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.
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.
Laugfs Lanka Gas keen on keeping LPG prices down
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
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.
Long-term economic linkage with India proposed
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
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
The Director of CDC Advisors Private Limited, Steven Enderby, who also addressed the
summit, said Sri Lanka offers an excellent investment climate, honours contracts, has good
corporate governance, excellent port facilities, good banking infrastructure and low