BUSINESS

Five-year industrial plans unveiled

The gems & jewellery, packaging, plastics and wood-based industries last Thursday unveiled five-year plans to increase productivity and competitiveness. These plans were the outcome of a partnership between the Ministry of Enterprise Development, Industrial Policy and Investment Promotion and the private sector.

Task forces representing 16 key industries either have completed or will complete strategies linking ideas with products and services aimed at sustaining long-term growth on a global basis. Although each  is specific to respective industries, the strategies share a common philosophy based on the simple idea of competitiveness, ‘adding value’ at each step of the production or service delivery process.

Chairman of the Gems & Jewellery Task Force, Chanaka Ellawala outlined a “vision” to secure Sri Lanka’s position as the world’s ‘Sapphire Capital’.

“The gem industry is historically one of the oldest industries in Sri Lanka and an important source of foreign exchange earnings, but it is also one of the least developed industries in the country”, he noted. He outlined what he called a three-pronged strategy to ‘reposition’ the industry, with each building upon the other.

First, a manufacturing strategy aims to increase the value of Sri Lanka’s product in a two-step process that responds to two questions – ‘What can be done to increase value to domestic products alone?’ and ‘What foreign raw material can we add to increase the value of our domestic products?’

Second, a branding and repositioning strategy will differentiate the products and services from Sri Lanka to move the industry ‘up-market’ by increasing this country’s share of high value products and then further develop the market for these products and services.

Third, a hub strategy will support the other two strategies by providing the necessary infrastructure, support services. policy and business environment.

It is estimated that in five years, the annual export of gems and jewellery would increase to US$ 370 million (from US $80 million in 2001) to create around 20,000 new direct job opportunities, establish 70 new gem cutting production units with an annual capacity of  2 million carats of gemstones, and establish 90 new jewellery manufacturing units with an annual capacity to manufacture 1.75 million pieces of jewellery.

Packaging

Presenting the five year sectoral overview on the packaging industry, Chairman of the Packaging Task Force, Dharmatilake Ratnayake and Co-Chairman J. D. Amarsooriya said that the long term objective to achieve packaging sector competitiveness would be to acquire packaging service leadership in value, quality, reliability and responsible service, with a view to capturing an overall market share of 80% of the total packaging demand in Sri Lanka.

 “For this we must look at specific options like productivity, competitive position, employee development, technological leadership and public responsibility involving both micro and macro perspectives of industry development. But to improve on these specific options, the current status of the industry is inadequate. Hence we have worked on strategies that are directed at two perspectives. The first will be aimed at shaping the remote and operating environment, organisational process re-engineering, redefining the packaging cluster and establishing intra cluster linkages. The second perspective encompasses adjustments to the policy environment, factor creation and adding new value to value chain links.”

Plastics

According to Plastics Task Force Chairman Sarath Wijesinghe, rapid changes in technology and materials in developed countries have led to relocation of their plastics processing industries to countries with the ability to manage technology.

Newly industrialized countries like Singapore, Taiwan and Korea were the first to benefit, but, in turn, are losing these plants to Vietnam, Indonesia and China.

These relocations led to other related foreign direct investment linked to those industries, Wijesinghe said. “Effectively, it’s a two-for-one proposition.”

According to him, Sri Lankan policymakers in the past paid little attention to local industry, even though it was one of the fastest growing industries in the world.

“The size of the local processing industry is presently nearly 120,000 metric tons per year with an annual average growth rate of around 10 percent,” he said. “The industry processes all commodity plastics and many engineering plastics using a range of technologies with products manufactured for both the local and international markets.”

In order to gain sustainable advantages in international trade, Sri Lanka needs to identify products and markets for processing and assembly of high value added engineering plastics. At the same time, the industry needs better, more flexible labour laws to attract investment leading to the higher value products.

Wood-based Industry

Wood-Based Industry Task Force Chairman Major Douglas Wijesinha said that the wood working industry in 2001 earned US $10.8 million from exports, which is about 0.2 percent of total national export earnings.

When the strategic initiatives recommended by the Task Force are implemented, exports can be increased ten fold and the domestic market three fold over the next five years, generating over 100,000 new jobs.

The construction industry consumes about 75 percent of sawnwood while the furniture industry takes 15% and other wood-based industries use 10%.

The Wood Based Industrialists Association (WBIA) is actively seeking donor funding for the setting up of the Institute of Wood Technology which would be a partnership between the government and the private sector.

SLT assures no big tariff increase

By Risidra Mendis

Sri Lanka Telecom (SLT), in a clarification regarding the increase in tariff rates, has stated that the   tariff rebalancing exercise is being carried out as per the provisions of the shareholders agreement.  Speaking to the media, Chairman of SLT Thilanga Sumathipala said the agreement reached by the Sri Lankan government and NTT Communications Corporation, Japan provides for an annual domestic revenue increase of 25%, 25%, 20%, 15%, and 15% respectively in each year as compared to the immediate preceding year, over a period of five years, commencing from 1998.

“This revenue increase is achieved by revising a basket of domestic tariffs consisting of installation charges, rentals, and call charges. The rebalancing exercise also provides for the reduction of IDD call charges as well”, Sumathipala said.

According to him, SLT’s fifth and final rebalancing exercise specified in the agreement was due in last year. However tariff rebalancing due in 2001 was implemented in 2002 due to delays in the approval process.

“SLT submitted their tariff proposal for 2002 to TRCSL in July 2002. While this proposal is still under consideration SLT would like to state that the tariff proposal was supposed to be a highly confidential document between SLT and TRCSL”, Sumathipala said.

SLT’S current tariff structure subsidizes low users and unfairly burdens high users.

Meanwhile, a letter sent to the Secretary of the Mass Communication Ministry by Senior Vice President and member of the board, NTT Communications, Mitsuhiro Takase states that they are deeply concerned about the long delay in the implementation of the fifth tariff rebalancing. The fifth tariff rebalance should have been in effect from January 1, 2002.

According to Takase, the delay will cause the SLT serious financial damage leading to a substantial negative impact on the corporate value of SLT. He has requested the Mass Communication Ministry to take steps to implement the fifth tariff rebalancing as soon as possible.

New aviation refuelling terminal built

The Ceylon Petroleum Corporation has just completed the construction of a modern aviation terminal and an underground  fuel hydrant system at the Bandaranaike International Airport, Katunayake. This facility is one of the best installations built in the region for aviation refuelling meeting all the international standards in the industry, for the quality of fuel, operational flexibility, safety and environment protection. This terminal is designed to serve another twenty years demand and provisions are built in for expansion without interruptions to the operations.

The project involved an investment of Rs. 765 million. Major benefits of the new aviation refueling terminal include efficient and faster refuelling of aircraft, facility for parallel refuelling operations, increased storage capacity at the terminal, increased productivity and income, and in-built safety and fire fighting facilities.

Given below are some of the main features of the project:

– Tankage for 6000 MT in 3 tanks (with provision for 3 more future tanks) for nine days storage of Jet-A1 (Aviation turbine fuel) with provision to increase capacity depending on the increase in future demand.

– Three fuel hydrant pumps to API-610 standard (each 1200 GPM) through filter water separators and a metering system with a pump sequence control system has been provided for automatic refueling of aircraft through the underground fuel hydrant system, using hydrant dispensers to connect upto the aircraft tanks, with provision to add three new hydrant pumps in future. The new hydrant system is capable of refueling six aircraft at the same time through the new hydrant system. Additionally the refueler vehicles are capable of handling two aircraft at a time.

– Computerised (PLC controlled) inventory management system for product receipts, issues and stock balances and servo type (ENRAF) tank gauging system is installed for the three fuel tanks for accurate measuring and the accounting of fuel at the terminal.

– The terminal has an up-to-date laboratory for regular testing of fuel samples for quality control. The CPC has a Technical Service Agreement with Shell Aviation Ltd., of UK for certification to international airlines for quality and safety of operations.

Leo Burnett wins Campaign of the Year Award

Leo Burnett Solutions Inc. won the prestigious ‘Campaign of the Year’ Award at the SLIM Awards Ceremony held recently. The campaign themed ‘Odel Unreal’ was recognised as the campaign which demonstrated and stretched the creative concept through a multitude of effective communication channels. The award was given to this agency for their ability to translate a single idea effectively across several media vehicles, whilst enhancing the core of the message. Other aspects taken into account were the impact of the communications and execution.

Leo Burnett, which has been in existence for only 3 years, also won the ‘Campaign of the Year’ gold in 2000 for the Odel ‘No Limits’ campaign and the bronze for the “Full Stop for Cancer” campaign in 2001.

The company’s Managing Director Ranil De Silva said, “A good campaign should tackle the target audiences with a total communications approach. We need to go beyond the traditional media and strike the right balance of above-the-line as well as below-the-line communication to create an overall impact. Unreal Odel is an excellent example of this.”

Govt. has no business to be in business

By Dinesh Weerakkody

Led by the example of the developed countries, the UNF administration is returning state managed enterprises to the private sector for an economic boost and to raise money to bridge the budget deficits.

Our new generation politicians whose basic need for economic miracles is no less pressing, have discovered at least in part how to hum the trick.

They believe that the dullest state owned company, the heaviest loss making utility, or the least efficient public sector service could be transformed almost overnight into a viable entity and contributor to the national coffers by saying the magical word privatisation.

However, in Sri Lanka, privatisation has not been without controversy, or the occasional hiccup. Few programmes anywhere in the world have.

In Sri Lanka, however, the positive benefits of privatisation, in terms of revenue raised, new jobs created, productivity gains and increased investment have been clearly demonstrated.

Power

Generally, privatisation refers to the sale of majority stake in a state owned enterprise and with it the power to manage the enterprise.

Private sector professionals who have managed state-owned enterprises say it is impossible for those who have never had to tailor their commercial instincts to suit the whims of government ministers to realise just how much it means to escape from their political masters and their supporters.

Therefore, the importance of the government carrying out an effective role as a facilitator of growth rather than the engine of growth has been recognised by a government for the first time since independence, this augurs well for the development of the private sector.

In fact, Commerce Minister Ravi Karunanayake recently in an interview clearly articulated the vision of the government. He said the government should not be in business. We have no business to be in business. Our job is to facilitate.

Panacea

In South Asia, privatisation has become a word with a considerable cachet, one that encapsulates the advances made by state-owned industries, which have moved into the private sector.

Further, the increased interest creates awareness amongst the general public with regard to the benefits of share ownership.

It implies streamlined and efficient business, achieving big profits and finding better ways to compete. However, it must not be forgotten that it is not merely the act of moving the public to the private area, which causes these things to happen.

On the contrary, it is the sustained, hard work at every level of a company, which is required to ensure that they compete effectively.

Becoming private itself is no immediate panacea for improvement. In fact unaccompanied by anything strategic it would very well result in additional travail.

Privatisation, according to many bureaucrats, brought a cultural revolution: bureaucratic hierarchies were broken down, recruitment and promotion policies re-written and over and above all this, managers were encouraged to manage.

Sir G. Jefferson, a former chairman of British Telecom once said, “They found that the quality of their people was as good as that of the workers in the private sector, but state ownership had never allowed them to realise their full potential.”

Research suggests that public ownership generally leads to confused objectives for a business, because social and commercial objectives get intertwined to the detriment of both.

Privatisation gives management a focus, but it also intoxicates the factory floor, even in countries like Britain, where there is little record of mass participation in equity markets and where prior to the sales of stocks, share ownership was confined to only a tiny fraction of the population.

Again, there is no real magic in the reasoning: it has been found that when employees see the management being given the right to manage, and seizing the opportunity, they being to respect it and respond themselves.

A former chairman of Canadian Airlines once said, “I am a believer in the idea that public companies are a lot freer to be innovative and entrepreneurial than government-owned companies.”

“Since we’ve come up with some very innovative ideas for financing equipment, we’ve become a lot more customer focused. In the long run, I believe the public will be better served because of our privatisation.”

Success

Privatisation is a success story and a big business not only for governments and corporations concerned but for the investment banks, management, consultants, brokers, securities houses and law firms — indeed for all who have a part to play in keeping the financial system flexible and mobile.

Now the world map of privatisation shows that the policy is being considered in every corner of the world including, astonishingly, some communist regimes such as Cuba and Poland.

In the final analysis, some of the privatisation of our state monopolies has taken considerable time, however, the effort in some instances has been a tremendous success.

However, for us to benefit from privatisation we need to ensure that the privatisation proceeds are channeled for capital investments, because capital investments add to the capacity of the economy and thus promotes growth.

EXIM Bank of India signs US$ 5 million line of credit with HNB

Export-Import Bank (EXIM) of India and the Hatton National Bank (HNB) have entered into an agreement where EXIM will make available a line of credit for US$ 5 million to promote the export of Indian goods into Sri Lanka.

This agreement was recently signed by General Manager, EXIM, Prabhakar Dalal and Senior Deputy General Manager, HNB (Mumbai), Rajendra Theagarajah.

Commenting on this deal Theagarajah said, “In 2002, India was the largest source of imports into Sri Lanka (approx US$ 630 million).”

“The Indo-Lanka Free Trade Agreement has opened more opportunities for bi-lateral trade between the two countries and this line of credit will certainly offer local importers an attractive source of financing.”

Applicants will be subjected to the normal internal credit evaluation of the bank and will be able to finance up 90% of the contract value for periods up to five years.

It is of particular attraction to those importers who have a US$ income stream as they could finance imports from India with a natural hedge against foreign currency risk.

Both institutions entered into a formal MoU in January 2002 with the objective of promoting bi-lateral trade opportunities and also in assisting Indian companies setting up operations in Sri Lanka through foreign direct investment.

Eifel — the epitome of luxury living

Strategically located in the heart of the city of Melbourne — a multicultural metropolis — the Eifel Apartment Towers is a dream come true when it comes to high-rise living.

A very attractive investment opportunity that may not present itself again for a long time, Eifel is the place of the future. Not only is it situated in a prime location; it is also available at a very attractive price.

Located at 550, Flinders Street, Melbourne, Eifel Apartment Towers is another quality development construction by the Brady Group with apartments that are planned for ultra-functional, space-efficient living, with panoramic views in all directions.

Access is important and at Eifel, access is available to everything: it is located minutes away from 216 restaurants, 83 cafes, 47 bars, 493 shops, nine parks, two museums and three universities.

Eifel is located in such a way that it has restaurants all around and public transport at the doorstep. With 24-hour security, a gym, a health club, pool, a concierge, laundry facilities and room services, Eifel is guaranteed to meet all your requirements.

Located on the Yarra and the city edge, just next to the Melbourne Docklands waterfront, Eifel provides easy access into the city and is situated opposite the Crown Casino and Southbank.

“Melbourne is a growing market and very good for investments. The property prices are about 30%-40% below that of property prices in Sydney and therefore, there is a lot of room for Melbourne to catch up. The prices are relatively low for a major cosmopolitan city and very attractive,” said Sales Director (Asia), Brady Group, N.G. Sweekian.

“Pertaining to Sri Lanka, Melbourne is the favourite city of Sri Lankans. There are over 40,000 Sri Lankans in Melbourne – the highest concentration of Sri Lankans among all Australian cities.”

An excellent investment in a premium real estate property located in the hub of the city, each Eifel apartment is built to exacting standards by the group’s experienced construction team and the floor areas at Eifel are bigger too.

Brady provides a great service: they arrange bank loans of up to 70%, arrange lawyers for clients and provide all the services that makes everything hassle free. Brady also handles all aspects of the development process from the sale to the quality, delivery of construction and ongoing property management.

“At Brady, we are the developer and builder both. That way we have tighter control of the prices. That is why the prices are so attractive. Our objective is to build something that will stand apart from all other apartments. We did studies in major cities in the world and top location, top quality and top design at attractive prices will always hold its value at all times.”

“We strongly believe that Eifel Apartment Towers will command very good capital appreciation and rental income.”

The Brady Group is a Melbourne based property developer and master builder renowned for building excellence. The group has already completed developments in Melbourne at 270, King Street, Morgan Place, The Gill, Empire Apartments, Fairfield Views Hudson on LaTrobe and Wills Tower. Wills Court in Melbourne is presently under construction.

The group will complete construction of the Eifel Apartment Towers by the end of 2004. Sri Lankans, like all astute investors, recognise a gem when they see one. The combination of the location, quality and being marketed at such good value is an opportunity not likely to ever be repeated.

Impressive performance by Commercial Bank

Sri Lanka’s top corporate, the Commercial Bank of Ceylon, announced recently it had continued to outperform industry averages in 2002, turning in financial results that reinforced its position as one of the best performing banks in the country.

Releasing its annual results at a news conference, the bank said it had clearly emerged as the private sector bank with the second largest business volumes with healthy growth in all areas of business in what was a tough year for the banking sector.

The bank’s turnover grew by Rs. 442 million to Rs. 8.1 billion in the year under review, yielding a pre-tax profit of Rs. 1.525 billion, up 15.1%. Profit after tax, bolstered by the abolition of the surcharge on income tax, grew 19.2% to Rs. 1.204 billion.

Total assets at the end of the year stood at Rs. 73.3 billion, having grown 24% or Rs. 14 billion over the year. Group results were even more impressive, with pre-tax profit up 19.8% to Rs. 1.704 billion, and post-tax profits growing 25.4% to Rs. 1.312 billion.

Chairman, Commercial Bank, Mahendra Amarasuriya described these results as very satisfactory in the context of the conditions that impacted on the banking sector during the year.

He said the government policy of reducing interest rates had narrowed interest margins, directly impacting on net interest income, the bank’s main income source. Lower credit demand in the first three quarters of the year had saddled banks with excess liquidity.

A relatively stable exchange rate had impacted on translation gains, the second largest source of revenue, while international developments had kept interest margins on foreign currency deposits down.

Despite these factors, Amarasuriya said the bank had increased deposits by Rs. 8.2 billion, up 17.8% to Rs. 54.5 billion, and net advances by 27.8% to Rs. 51.7 billion. The bank had also continued to maintain its key finance ratios such as capital adequacy, return on assets and cost income ratio as the best in the industry, he said.

Managing Director, Commercial Bank, Amitha Gooneratne said the bank’s performance in 2002 had shown it was still running ahead of the pack.

At the end of year, the bank had over a million customers, no mean achievement for any bank in a country with a population of about 19 million, he said, disclosing that every month some 12,000 new customers begin to bank with Commercial Bank.

Explaining the factors that contributed to the success of the bank in 2002, Gooneratne said consistent marketing had enabled the bank to increase market share and maintain its growth momentum in key areas of business.

The bank’s judicious assets and liabilities management policy, including a strategy of timely pricing of products in a scenario of interest rate volatility had minimised the impact of narrowing interest margins.

“Greater emphasis was also made on improving the deposit mix of the bank, resulting in a significant growth of savings deposits and demand deposits, reducing our dependence on high-cost time deposits. This resulted in significant drop in the cost of funds,” he said.

Jetwing’s flights of success

By Ranee Mohamed

For over 25 years, Jetwing has been able to soothe the mind and hearts of visitors to this land. But what they have on offer today can put the wings of happiness on any Sri Lankan.

With interests far and wide incorporated in names as Jetwing Travels, Jetwing Hotels, Jetwing Air, JetAsia, Jetwing Eco Holidays, Jetwing Cargo and Jet Travels, the Jetwing Group is able to instill a sense of comfort and confidence among its clientele.

The hospitable Manager (Marketing and Business Development), Nalin Ariyaratne is a personification of the friendliness, care and concern that Jetwing Holidays has in store.

Ariyaratne’s work is holidays and he does work so hard to give us the best.

It is evident that Nalin Ariyaratne is a key figure in a team that has worked hard at giving us Sri Lankans holidays we deserve and we can afford, down the years.

Jetwing Holidays’ latest addition to its out-of-the-ordinary destinations is Iran. For Rs. 100,000 Jetwing Holidays will take us  to this hitherto unexplored holiday land of mythology and house one in luxury hotels with airports transfers and all.

Jetwing Holidays offers its holidays in style. In keeping with the holiday season, especially the school holidays, Jetwing Holidays makes a breathtaking offer in the latter half of this month.

In March, for Rs. 49,999, you can go and see the Malaysian Grand Prix, stay in ultimate comfort and be transported to the venue of the Grand Prix. You can have the fun while Jetwing Holidays will be working behind the scenes to give you that holiday.

A tour to Hong Kong in time for the Rugby 7s is also offered at this price with the same frills.

If you want to get musical, though you are sporty, you can choose to go for the Rolling Stones in concert after cheering at Rugby 7s in the morning.

In April, you can visit India with Jetwing Holidays, you can go to Bodhgaya or Golden Triangle, visit Agra, Jaipur and Delhi for Rs. 75,000 or be on that inaugural flight on SriLankan Airlines and go to Cochin.

In May, Jetwing Holidays is offering to take you to Egypt. You will be in awe of the civilisation of Egypt, and you will also be equally in awe of the price that Jetwing Holidays is offering this tour to you. For three nights and four days with a cruise on the Nile and a stay in comfort the cost is Rs.99,999. All this is inclusive of airtickets too.

If you want to see what Australia is like, you can visit its most popular cities with Jetwing for Rs. 149,999.

If you like to see wildlife in a different land, call Jetwing Holidays for a tour of Kenya from May 9 to 19. Or you can chose to go to China at the same cost.

Jetwing is unusual, that is why they are offering to take you to Prague, to visit this beautiful country in Europe that is not on the usual list of tours.

Jetwing is able to do things differently and they certainly do them well.

“In the past years we have had about 60 people on some of these tours. But we try to limit our groups to 20,” pointed out Ariyaratne. “People enjoy these tours because there is no hassle. We look after everything and more importantly, we look after them,” said Ariyaratne.

“We do customised tour packages and are strong in this field. We go to new areas, not Singapore, Malaysia and Thailand. Iran is unusual and it was a challenge and it was wonderful,” said Nalin Ariyaratne. “Whether it is 10 people or 20, we always send a representative,” he added. “We like to have small groups. We try to minimise a group to about 15 or 20 people and children enjoy these trips too. Small groups make our services customised,” he said.

Speaking of the Jetwing Group, Ariyaratne said that Jetwing is one of the leading inbound and outbound tour operators in Sri Lanka. He said that Jetwing also has the largest hotel chain in this country. “We handle over 50,000 clients. Total arrival to Sri Lanka is about 40,000. Out of this we handle one eighth.”

Jetwing is a very successful establishment, bringing in tourists and taking Sri Lankans abroad as tourists. They are engaged in care and comfort, in happiness and in bringing happiness and serenity to tired minds.

Edexcel office in Sri Lanka

Edexcel International, one of the leading providers of high quality academic and vocational qualifications in the UK, recently opened their office at the World Trade Center in Colombo, as a step towards strengthening its operation in Sri Lanka and catering to the increasing demand for its qualifications in the country.

Maintaining quality with extensive local support, the country office will enhance service and provide better support to Edexcel London Examinations and BTEC qualifications.

Edexcel was formed in 1996 by the merger of two of the leading examination and assessment boards in the UK: Business and Technology Education Council (BTEC), and the University of London Examinations and Assessment Council (ULEAC).

All Edexcel qualifications are regulated by the Qualification and Curriculum Authority (QCA), the UK government body responsible for the development, accreditation, assessment and certification of qualifications other than degrees.

London Examinations, provider of O Level  and A Level has over 1.5 million candidate entries each year. Recently, London Examinations introduced modular A Levels (Advanced GCEs) and will launch  international GCEs in September this year.

Gaining fast popularity in Sri Lanka are the vocational qualifications — BTEC National and Higher National Diplomas which offer an extensive range of qualifications from computing, business information technology and software engineering to fashion and textiles, health care and hospitality.

Edexcel firmly believes that education has to adapt constantly to meet new demands and Edexcel qualifications ensure that what is being learned today meets the needs of tomorrow.

Life Insurance Corp. launched

Life Insurance Corporation (LIC) Lanka — a joint venture between Life Insurance Corporation India and Bartleet Group — was launched recently.

The new company’s CEO, R. Gopinath said their vision is to emerge as the premier life insurance company in Sri Lanka, catering to all the demographic segments of society. He said that in a period of five to 10 years, the company will make its major presence felt in the insurance market here.

Gopinath stated that LIC should have around five to 10 branches in Sri Lanka by the end of this year and 30 branches within three years. The company hopes to introduce a variety of life insurance products into the local market in a phased manner.

LIC (Lanka) Ltd. has a capital base of Rs. 100 million and will venture out to become a public company in three years time.

Citibank receives Fitch SL ‘AAA’ rating

Citibank N.A. Sri Lanka branch became the first bank in Sri Lanka to receive the prestigious SL ‘AAA’ rating which is the highest rating given by Fitch Ratings Lanka in recognition of the bank’s lowest expectation of credit risk.

The prestigious SL ‘AAA’ rating is assigned only in the case of exceptionally strong capacity to meet financial commitments that can be paid in full and on time.

As such, with the SL ‘AAA’ rating, Citibank N.A. Sri Lanka would gain repute as being resilient to negative environmental effects, making it one of the most sound financial entities in Sri Lanka.

The rating was officially announced at a press conference in the presence of Chief Executive Officer/Country Head of Citibank in Sri Lanka, Kapila Jayawardana and Chief Executive Officer/Managing Director, Fitch Ratings Lanka, Ravi Abeysuriya.

SL ‘AAA’ rating offers the highest safety of timely payment of interest and principal. The rating gives investors a ranking on parity with other investment instruments available in the market place, which have already been rated.

The government in the 2003 budget announced that credit rating and publication of such rating will be made mandatory for all deposit taking institutions and all debt issues over Rs. 100 million for the public to find out the default risks of their investments.

Credit ratings would not only instill a greater degree of market discipline on financial institutions but also help bring down the lending rates in general through disintermediation.

Another benefit of Fitch Ratings is that there is a lower cost for funding as debt instruments can be sold directly to investors.

The need to guarantee investments through financial institutions only applies if long and short-term ratings are speculative grade.

Ratings also help savers and investors find out the true credit risk of any fixed income investment prior to investing their hard-earned money.

The Fitch Ratings are based on wide research that goes beyond the typical quantitative analysis realm of profitability ratios, earnings measures, cash flows, etc.

There are also qualitative analysis such as the industry risk level: the operating environment in a social, demographic, regulatory and technological changes context, the management focus in relation to corporate strategy, risk tolerance and funding policies.

Accounting policies are also evaluated to judge the aggressiveness of the accounting practices and restate figures, where necessary, to make the company’s financials comparable with those of its peers.

The detail and invasive nature of the accreditation requires that the company being judged being fully cooperative with the rating agency to ensure that no aspect of the business is overlooked.

Sunderam speaks on insurance

“The buzz word in insurance today is LPG — liberalisation, privatisation and globalisation. Free competition is the order of the day. It is only a question of time when tariffs are abolished.” So said veteran insurance professional V.R. Sunderam, Deputy General Manager of Kuwait Reinsurance Company delivering this year’s ‘Eagle-Insurance Development Oration’ arranged by Eagle Insurance Company in collaboration with the Sri Lanka Insurance Institute.

Eagle Insurance sponsors this annual event in its efforts to promote knowledge sharing and development of professionalism within the local insurance industry. To support this initiative, an ‘Eagle-Insurance Development Oration Trust’ has also been set up to sponsor a gold medal to be awarded to the best orator every year.

Elaborating on the prevalent situation, Sunderam explained that liberalisation involves abolition of tariffs. This will affect the insurance industry in five ways, which he prefaced as ‘the five Cs’ — customer, competition, controller, capacity provider (reinsurer) and capital (shareholder). “All five have to be satisfied. It will be a free for all situation under liberalisation where there will be severe competition with new players appearing in the market and where the existing business will have to be shared. Rate cutting will be the order of the day. There will be erosion of the solvency margins,” he pointed out.

Speaking with over 30 years experience in the general insurance industry, Sunderam warned that each insurance company should realise that competitors will be looking at their customers in order to grab them. He stressed the need to create customer loyalty by providing a good service. This involves the timely issue of documents, timely response to claims, quoting the best rates at all times but not losing sight of the minimum rates, and keeping the customer with you.

“Have a good market image for which the timely settlement of claims becomes a key factor when everyone begins to talk about it and it becomes a valuable reference for you. With competition increasing, maintaining the loyalty of customers becomes a big problem. You will be under pressure to show growth every year. Leaving aside showing growth, even to retain the business will become a challenge,” he said.

“In order to be in business, you will have to look at many alternatives. Yet don’t think that you will be able to save much by cutting down management expenses, particularly reducing salaries of skilled personnel. Skilled employees form your most valuable asset,” he stressed.

The provision of regular training due to the constant changes in the market place, implementing proper internal administration procedures, installing of efficient IT systems in order to obtain information quickly, proper control of management expenses were cited as vital areas to meet the impending situation in the industry. Sunderam quoted several examples from the Asian region to illustrate the current trend of events.

Emphasising the need for self-discipline, he advised the industry professionals not to start blaming each other for any shortcomings but to remember that each one is responsible for the actions. He was also of the opinion that a good rapport must be maintained with the authorities including the police, the government, the ministries and the regulating authority.

He felt that it is always best that the problems and difficulties are presented in a common forum rather than individually. “Only our behaviour will show whether we deserve liberalisation,” was his parting message.

Ceylinco Grameen assists the poor

Ceylinco Grameen Credit Company first commenced business in May 1999 in the heart of Colombo.

This company came up after Deshamanya Lalith Kotelawela and his wife visited Bangladesh and saw how a bank started by Professor Mohammad Yunus to help the poor and unprivileged people with small amounts of capital to start a business was helping them immensely.

In this company the poor are given small loans of up to Rs. 5000.  Loans will also be given on a second and third opportunity if needed.

The interest these borrowers pay will only be 2% of the loan.

According to Lalith Kotelawela, the company does not make profits at the moment, however, in the future they are confident that they will be earning profits once the people repay the loans.

For a loan to be given the borrowers do not have to show any security, as the bank’s sole purpose is to give loans to people the other banks are afraid to give loans to.

The Ceylinco Grameen Credit Company has centres in more than 90 villages around the island where people can get loans.

Some of the products made after getting the capital from Ceylinco Credit Company are shirts, soft toys, food, and other products.

Some of these products have also been exported because of the assistance the poor have in starting their business.

Professor Yunus first started this concept of giving soft loans to the poor with very a very low interest rate in Bangladesh with his own money after he found that no bank was willing to help the poor.

Since the banks were not willing to provide loans for the poor, Professor Yunus created a separate bank on his own — Grameen Bank — in 1983 to provide assistance for the poor.

It was the success of this bank and the service they provide that made Lalith Kotelawela start a bank similar to this in Sri Lanka.

Lalith Kotelawela was confident this system will be a success and sent Victor Ratnayake, now the Executive Director and another Director, Glenda Parthipan of Ceylinco Grameen Credit Company in Sri Lanka to Bangladesh to study this entire system.

Since the inception of Ceylinco Grameen Credit Company in Sri Lanka, the company directors are confident that the poor women of this country are courageous, dedicated and most importantly, the company is sure that these poor women will pay back their loans and that they are credit worthy.

Singapore Informatics launches certificate

Singapore Informatics has launched the Certificate in Network and Computer Engineering awarded by Informatics Academy, Singapore.

This provides an excellent technical education for job seekers and skill upgraders to acquire learning for direct applications of concepts to rapidly changing engineering work environments. Introducing an engineering certificate programme allows students after GCE O/L, adult learners and those in the industry without formal engineering knowledge to acquire a solid learning foundation towards the entry of an industry with career opportunity abundance.

With the successful completion of just three modules, namely computer support engineering, computer systems support and computer systems network, students will be awarded with a Certificate in Network and Computer Engineering by an international tertiary qualification awarding body, Informatics Academy, Singapore.

This award will also allow for exempted entry into the computer engineering diplomas with a degree progression pathway.

Bogtstra buys control of Wayamba Plantations

Willem L. Bogtstra, together with his Dutch associates, successfully negotiated a management buy out of a 44% stake in Wayamba Plantation (Pvt) Ltd. held by the S.A.Silva/Silvermill Group.

Together with his own holdings, this now gives them a 56% control of Wayamba Plantation (Pvt) Ltd.

Wayamba Plantation (Pvt) Ltd. owns a 56% stake in Malwatte Valley Plantations Ltd. which controls and manages 5,000 hectares of some of the finest tea properties in Sri Lanka.

In addition, it has 2,200 hectares of prime rubber in the Avissawella area which yield over 1,000 kgs. per acre on average.

Malwatte Valley Plantations Ltd. is known to be one of the lowest cost leaders in both tea and rubber and has consistently paid out dividends to its shareholders in spite of a crippling management fee paid out to its managing agents.

However, Bogtstra stated that since he now controls both boards he will immediately (on April 1) reduce the management fee structure to give all stakeholders a very fair return on their investment.

Wayamba Plantation (Pvt) Ltd., also manages Chilaw Plantations Limited which owns 5,000 acres of high yielding coconut plantations including the famous Palugaswewa Estate in Chilaw, formerly owned by A. Baur & Co. Ltd.

Wayamba Plantation (Pvt) Ltd. is therefore the only plantation company to have a large and enviable interest in all three major crops, tea, rubber and coconut, and will be an attractive investment when it applies for a public listing in the Colombo Stock Exchange once it has been suitably restructured.