BUSINESS

Major international trade fair
begins next month

The country's first major international trade fair since the peace process began - IMEXPRO 2003 - is expected to boost imports and exports through the participation of many foreign trade delegations.

This event will be held from March 30 to April 1 at the Exhibition and Convention Centre. It will coincide with the meeting of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) scheduled to be held in Colombo from March 29 to April 3.

IMEXPRO 2003 is being organised by the Ceylon Chamber of Commerce (CCC) in association with the Ministry of Foreign Affairs, the Export Development Board and the Board of Investment.

Trade delegations from 34 countries (of which over half are IOR-ARC members) have confirmed their partication. They include Australia, Bangladesh, Canada, China, Czech Republic, Dubai, Egypt, Finland, France, India, Indonesia, Iran, Italy, Japan, Kenya, Madagascar, Malayasia, Mauritius, Mozambique, Myanmar, Norway, Oman, Pakistan, Russia, Sandi Arabia, Seychelles, Singapore, South Africa, Syria, Tanzania, Thailand, UAE, UK, and Yemen.

"We expect a substantial number of export orders to be negotiated," said Senior Assistant Secretary-General, CCC, Puvi Domingopillai.

Exhibitors from Canada, France, India, Pakistan and South Africa have already confirmed their participation.

The trade fair will include 175 booths, of which 90 have already been reserved.

CCC sources said the unprecedented interest in the trade fair by high-powered foreign delegations clearly indicates that foreign investor confidence in this country is building up.

They added, "The ongoing peace process has paved the way for the right climate to organise a huge international trade fair of the magnitude of IMEXPRO 2003  in Sri Lanka. This is the first major international trade fair being organised in Sri Lanka after the signing of the ceasefire agreement between the government of Sri Lanka and the LTTE."

Ms. Domingopillai said 250 foreign visitors have thus far confirmed their participation, and they continuously receive inquiries.

The chamber feels the trade fair will open new avenues for local companies to expand their activities in the international market. The organisers stated that it offers an ideal opportunity for companies to exhibit and offer high quality products and services and meet prospective business partners from various parts of the world.

The event would also provide an opening for the exchange of technology, information and tie-up strategic deals, to discuss and negotiate joint venture proposals and transfer of technology with local and overseas participants. Buyer-seller meetings between foreign and local companies will also be arranged.

Ms. Domingopillai said this is the first time the IMEXPRO fair is being held, and they may consider holding it once every 2 years. The event is being promoted by our missions overseas, counterpart chambers and other MoU partners of the CCC. The main sponsor will be John Keells Holdings.

Products/services to be displayed at the trade fair include aquaculture and ornamental fish, boats and yachts, coconut products, chemicals, communication services, dairy products, finance and banking, floriculture, food and beverages, gems and jewellery, handloom, home furnishing , bags and handicrafts, machinery, motor vehicles and accessories, plastic products, poultry and meat products, rubber and rubber products, shipping and freight forwarding services, seafood, telecommunication, textiles, apparel and garment accessories, tiles - floor and wall, wooden products, airline industry, computer and IT related services, coffee, culinary products, electronic, electrical and engineering products, fruits and vegetables, footwear, furniture-wooden, CKD and metal, gift and home products, Insurance, medicinal herbs and ayurvedic products, pharmaceuticals, printing and packaging material, porcelain, ceramic and glass products, silk products, soft toys, stationery, tourism and travel industry, tea, spices and essential oils, wooden toys, and yarn.

Exhibitors will be eligible to win awards for excellence in the presentation of stalls. A panel of judges including experts in exhibitions and conventions from abroad will select the winners in several product and service categories. The quality of information provided by the stalls will be an important factor in the selection criteria.

The Sri Lanka Software Exporters Association (SEA) plans to host a software industry pavilion at IMEXPRO 2003, followed by a Software Industry Road Show to coincide with the same event.

SEA hopes that the plan to project the Sri Lankan software industry through a country pavilion would better expose the potential of the local software industry. The road show will be in the form of an evening event where the products and services offered by the local software industry would be presented through a social and interactive gathering.

Both initiatives are part of SEA's commitment to aligning the industry to the eSri Lanka initiative of the government. The two activities will also expose the talents and skills available in the industry.

The SEA's country pavilion will be open to all organisations that are members of SEA or the Sri Lanka Association of Software Industry.

CICL achieves record premium income

The General Division of Ceylinco Insurance Company Limited (CICL) achieved a record premium income in 2002. The figure of Rs.2.541 billion is a 34% increase over the previous year, and the highest in the industry. The average industry growth is believed to have been around 18%. The company's Life Division recorded a premium income of Rs. 2.4 billion.

Director - Operations, CICL, H.M. Guneratne Banda said they had increased their market share in general insurance from 20% to 23%. He also claimed they have been the leading private general insurer for the last nine years consecutively.

He said their record premium income could be attributed to their service and settlement of claims within 14 days; the wide variety of products; and their sales force and distribution channels.

The company has introduced over 50 unique products to the market, having moved away from conventional products.

Banda noted that households and industries have their own risks. He added that they have identified the potential risks and have developed 'package polices' targeted at different segments of the market, in accordance with their specific requirements and risks.

CICL has 65 branches and 24 VIP (Vehicle Insurance Policy) centres for motor insurance. There are over 500 salespeople all over the island who promote their products. The company's distribution network has increased, and they opened a branch in Jaffna last year.

"We take the message of insurance to the doorstep and educate people on the importance and benefits of insurance," Banda said.

The company has won some prestigious awards in recent years. In 2001, they received the award for 'Best Product Innovation' by Asia Insurance Review and World Insurance Review. In 2000, the company was chosen as one of the best four general insurance companies in Asia. In 1999, they won the award for 'Best Product Innovation.'

Banda said that due to the recognition they have achieved both nationally and internationally for innovative product development and management, they have been approached by various companies in the SAARC region. In fact, the company intends entering into strategic alliances with firms in Pakistan and Myanmar.

CICL already has strategic alliances with Agrani Insurance Company in Bangladesh and Ceylinco Stella Insurance Company in Mauritius.

It is also the only insurance company in Sri Lanka to have invested in a joint venture with a foreign party. This firm, Sagar Matha Insurance is located in Kathmandu, Nepal. CICL holds a 20% equity in this venture, and their staff are managing it. It has recorded a significant growth over the last five years.

Banda said that last year they introduced an affordable insurance product called 'Support Line' for self-employed people, and the outstation branches are selling it.

He also noted that their 'one day cover' (which can be extended to one month) introduced for the first time in the world, has received a very good response. Around 1.5 million such policies were sold since its launch in March last year upto end December.

Ceylinco Insurance traces its roots to the Ceylon Insurance Company - the first company registered under the Companies Ordinance. The Ceylon Insurance Company was registered way back in 1939, under Senator Justin Kotelawala, father of present Chairman Lalith Kotelawala. When the industry was de-nationalised in 1987, the company began operating under the name of Ceylinco Insurance.

CTC contributes Rs. 25 bn
to government coffers

Ceylon Tobacco Company regained profitability at 2000 levels, and this is mainly attributed to the government's excise restructure in 2002. Revenue to the government has also improved during the same period. Meanwhile, CTC estimates indicate that the illegal cigarette market has declined by almost 60%.

Profit after tax during the year 2002 was Rs. 845 million, mainly due to the company's ability to have captured part of the illegal market, its continued focus on productivity and cost reduction measures. Whilst this reflected an increase from 2001 levels, the current profit is in line with the profit delivery in the year 2000 of Rs. 845 million.

MD/CEO, CTC, Paul Hiltermann said, "Year 2002 has been a challenging and exciting year for CTC, during which the company was able to ensure a reasonable return to its stakeholders. A 45% dividend was paid to shareholders by way of three interim dividends of 15%, which were paid in July, October 2002 and in January 2003." There will be no final dividend proposed for year 2002, to its shareholders in view of the above.

Meanwhile the government's successful restructure of excise reversed an unavoidable decline in state revenue from the sale of cigarettes. Thus, government revenue improved to Rs. 24,848 million in 2002. This represents approximately 10% of the government revenue in 2002.

Advent, a subsidiary of CTC recorded an increase in turnover. Advent International Ltd., was formally incorporated during the period under review. This is a strategic investment which leveraged the strengths of the company in a field which is in line with the government's stated intention of making the country the IT hub of the region.

Hiltermann added that "we are confident that progressively this company will demonstrate our ability to make this new venture profitable and add a revenue stream to Ceylon Tobacco Company, as well as earn valuable foreign exchange for the country."

"Whilst welcoming the government's peace process, the company should perform better with the prevailing economic stability in the country," concluded Hiltermann.

The whipping boys of the third world

By Dinesh Weerakkody

The economic reforms that are poured down the throat of developing countries by the World Bank (WB) and the International Monetary Fund (IMF) appears to be mandatory for many of the developing nations of the world and some third world countries have in fact suffered both economically and politically by following IMF and WB sponsored economic reforms.

In fact, unlike any other international organisation, the WB and the IMF have rather unenviable reputations of being formidable fortresses of monetary orthodoxy with a straight jacket of standard rules and regulations that govern countries access to its resources.

Since the Low Developed Countries (LDC) are currently in the process of development and their needs are different to the needs of industrial nations, the LDCs often, and not always without justification, criticise the WB for the uniformity of treatment it gives to its developing member countries.

Furthermore, the WB imposes stringent conditions on economic policy when it lends.

Poor countries in South Asia have little options but to accept these conditionalities, for without their compliance, the development aid the WB gives would not be forthcoming. 

However, countries like Malaysia that have defied institutions like the IMF and the WB during severe economic crisis have also survived and achieved rapid growth.

Change

The WB and the IMF began a process of dialogue between the banks, state institutions and NGOs some years back to identify the policy changes needed to accommodate the changing needs of its member countries.

Such a dialogue was long overdue considering the fact that many third world countries were openly criticising the WB sponsored Structural Adjustment Programmes (SAPs) that the two institutions have relentless pursued since the seventies.

In fact, economists point out that they have actually undermined their social stability. 

Also, the single policy prescription of the WB is not likely to work for all countries, because countries differ in their structure and capacity. Yet, that is not the way of thinking of the Western dominated WB and IMF. They insist on the single prescription.

Poverty

Today, over one billion people live in abject poverty around the world, despite the ratification by 106 countries of the covenant on social, economic and cultural rights and the UNO declaration on the right to development.

Several economists in the LDCs have argued that International Financial Institutions (IFIs) are part of the global problems.

Economists say the WB's SAPs, which most governments has so enthusiastically adopted, has made it very difficult for the most vulnerable to survive. The reduction of food subsidies, the decontrolling of prices and devaluation of currency increase the prices of imports and basic consumer goods has caused political havoc in many developing countries.

Therefore, the people who are starving or malnourished in developing countries do not have time. So they will not wait in patience for the IMF led SAPs to work and deliver prosperity for them.

Protection

At a forum on economic and social rights and democracy, a then vice president of the WB said, "We are keenly aware of the need to protect the most vulnerable." He spoke of social safety nets to ensure that the poorest suffer least from the imposition of "necessary" SAPs.

However, there is a big gap between the bank's policy and its implementation.  For example, the WB would be hard pressed to find one of its resettlement programmes that has been a success.

As aid is becoming increasingly conditional, the WB should take a dose of its own medicine and become more accountable.

Third World analysts strongly recommend that all the international financial institutions (IFIs) incorporate human rights criteria into their policies and procedures and that IFIs should inform and obtain the participation of people affected by their programmes.

In order to further protect the poorest communities, the West must allow poor communities in the third world to submit formal complaints alleging violations of their rights under any IMF SAPs.

Economic growth

Rich Western governments more than ever must help to create an environment conducive to economic growth on a continuing and environmentally sustainable basis.

The alternative is another lost decade for development, with the world's poorest regions consigned to a future of deepening poverty, malnutrition, disease and deprivation. The WB must enable all people in its borrowing countries to enjoy the freedom from poverty.

This is indeed one of the most essential human freedoms that are still denied to more than one billion people, due to the pervasive poverty resulting from slow growth and rapid population growth exacerbated by wars, civil strife, natural disasters and the failed policies of many governments.

Today in Sub Saharan Africa one child in six dies before the age of five. In South Asia barely a third of adult women can read or write. Three million children in the developing countries die each year simply because they lack access to clean water.

The full enjoyment of all human freedoms is no doubt diminished by such wide spread poverty, illiteracy, malnutrition and hunger. Hence, the WB when addressing sticky issues of 'governance' and human rights in the course of their activities, and particularly in helping to promote the goals of 'openness,' 'transparency,' 'accountability' and the due process of law, must also strive to establish the basic framework for the enjoyment of all human rights whether civil and political or social, economic and cultural.

Furthermore, the WB, which is the bank meant for international reconstruction and development ought to take into account national characteristics of each and every nation before it decides to impose its 'magic formula' of devaluation, desubsidisation, pruning public spending, retrenchment and privatisation as the panacea for all economic ills and the sole perception for the economic development of the developing countries.

In the final analysis, while the changes that are being considered testify to the fact that the WB and the IMF are moving with the times in a rapidly changing world, the source of this new dynamism has to be traced.

These stubborn institutions have not easily been moved before by the clamour of the third world to recognise their economic problems, but it has changed now because the pressure for change has come from a different constituency.

Rs. 5 billion investment in SFML

Members of the Al Ghurair Group of Companies of Dubai, National Flour Mills (NFM) and Emirates Trading Agency (ETA), plan on bringing a US$ 53 million (Rs. 5 billion) investment into Sri Lanka through their joint venture, Serendib Flour Mills (Pvt) Ltd (SFML), they announced in a press statement.  Subsidiaries of one of Dubai's largest conglomerates, NFM and ETA together have a turnover in excess of US$ 4 billion. The investors have had a presence in the flour milling business in the UAE for the past 25 years, together with operations in the Middle East and Africa.

NFM currently operate/manage two flour mills in the UAE and one each in Sudan and Lebanon. A fifth mill is scheduled to commence commercial production in Algeria shortly. ETA owns and operates 14 handy, handymax and panamax vessels and also charters many more. They will be combining their strengths in flour milling, ocean transport, commodity trading, logistics and local marketing in Sri Lanka.  The Sri Lankan market will undoubtedly benefit from this international expertise. Wheat flour can be considered an essential commodity for Sri Lanka. Since wheat is not grown locally, the total wheat requirement is imported from countries such as United States, India, Australia and Argentina.

The current demand for flour in Sri Lanka outstrips the supply. Industrial users like confectioners import their supplies due to non-availability of the required quality and quantities. Market forces and changes in consumption patterns are likely to increase the demand of wheat flour in the future. So far 65% of the country's flour requirement are consumed in four provinces, namely the central, western, southern and uva provinces. However, with peace hopefully returning to the country, the demand from the north and east is also expected to see a quantum jump.

The project envisages setting up of a state-of-the-art flourmill in the Colombo port, within close proximity to the consumption centers. The plant will have an initial milling capacity of 1000 metric tonnes per day with a provision to increase production to 2000 metric tonnes per day. Serendib Flour Mills is a turnkey project, with the equipment needed for milling purposes being imported from Buhler, Switzerland. The mill is expected to go into production in the third quarter of 2004. The foreign exchange savings from importing wheat for milling flour locally, compared to importing flour for consumption is almost US$ 20 to US$ 30 per ton. With an initial milling capacity of 300,000 tonnes, SFML would help save US$ 6 million to US$ 9 million in valuable foreign exchange annually. Moreover, there would be potential to export both bran and flour (in case of excess capacity) in the future, bringing foreign exchange into the country. The Al Ghurair currently exports flour to Sri Lanka, Bangladesh, Male, Indonesia and Africa; which opportunity will be available to SFML.

Recently, Cooperative Development Minister, Abdul Cader had expressed concern at the improper distribution of flour. SFML will considerably ease the national burden by preventing such shortages. With its initial milling capacity in the region of 300,000 tonnes, a balanced distribution of flour within the country would be ensured. This would assist the government in making considerable savings of national funds that would otherwise be spent on flour imports for consumption. A regular supply of flour will be possible with the entry of a new miller, avoiding stock-out situations. Customers stand to gain by way of competitive prices and a wider choice. SFML plans to deliver high quality wheat flour and maintain the same standards of NFM in Dubai, which meets stringent international standards. The Dubai flour-milling complex manufactures 42 varieties of flour. One of these is imported by Maliban biscuits. General Manager/CEO, NFM, Easa Abdulla Al Ghurair and Group Managing Director, ETA, Seyed M. Salahudeen said that the Al Ghurair Group has an eye on further investments in Sri Lanka as well. They are also confident that the success of the SFML project will encourage others both in the UAE and GCC member countries to seriously consider Sri Lanka as an investment option.

G.L. Peiris on three day tour

Minister of Investment Promotion and Constitutional Affairs, Prof. G.L. Peiris, was on a three day tour of the Hambantota and Matara Districts with the objective of finding out the problems encountered by industrialists, providing suitable solutions and inspecting the industrial projects implemented in these districts.

The Industrial Development Board regional office and common service centre were opened by the Minister.

Pictured is Chairman, Industrial Development Board, Dr. Bandula Perera explaining matters to the Minister soon after the inspection of the common service centre. Minister of Fisheries and Ocean Resources, Mahinda Wijesekera, Deputy Mayor, Matara, Nandasena Sellahewa and officials of the Industrial Development Board are also in the picture.