BUSINESS

CBK's BOI allegation boomerangs

By Ann Nicholas

The Board of Investment (BOI) last week dismissed allegations made by President Chandrika Kumaratunga that the institution had squandered millions of rupees over the last two years.

"The story that emerges is that the President during the People's Alliance (PA) regime had used the BOI as a tool to achieve her own political ends," said Chairman, BOI, Arjunna Mahendran, speaking to The Sunday Leader, refuting allegations in the state media last week that the BOI had squandered Rs. 990 million.

Mahendran alleges the Auditor General's observations in the annual report of the BOI for the year 2002 had been quoted verbatim and reproduced along with a few adjustments.

According to Mahendran, of the Rs. 990 million referred to by the President, more than 90% had been expended due to contracts entered into during the PA regime.

The 2002 report had been released in mid 2003 and its evaluation after a lapse of nearly a year was seen by the BOI as a politically motivated reaction. "In fact, the Auditor General's report for 2003 is in its draft form at the moment, so the publication of this at this juncture points to it being politically geared. It is totally because of the elections in an effort to sling mud at the government," said Mahendran.

The bulk of the Rs. 990 million has been spent in the form of subsidies to investors, amounting to around Rs. 430 million, in the less developed areas such as Hambantota and Polgahawela. "These were areas where investors were reluctant to go and therefore we had to give them a cash incentive. This was basically an interest free loan, and they are repaying the loans at the moment," Mahendran said.

The second highest expenditure had been with regard to the relocation of BOI offices.

"This expenditure was made again during the PA regime but the justification was that no one was willing to take up this building for rent because of the war situation at the time. The BOI created a lot of confidence by taking up 10 floors of the building and has made the property viable."

These two are the largest expenditures, which total up to around Rs. 760 million.

More than Rs. 27 million had been spent on the filling up of the old rock quarry at Madapatha, on the basis that people could buy the land and build houses on it. "Instead of filling it up with sand, the senior management had got it filled with garbage. The whole place was permeated with an unholy stench. As a result the villagers just refused to let us go there after a while."

The funds closing on Rs. 20 million spent on the Muthuwadiya bridge has gone to waste, a project uncompleted.

Almost on the eve of the 2001 elections, that is on October 31, 2001, a contract was entered into with a British advertising agency for Rs. 2 million for advertising in the Financial Times. "It was done very clearly in view of the elections by the President. In advertising with the most expensive business journal, she wished to raise her profile. Fortunately most of the advertisements were never carried. But almost Rs. 2 million was spent on it," explained Mahendran.

The report on setting up a global logistics hub was called for to rival a project planned to start in conjunction with Marks & Spencer by then member of the opposition and now Commerce Minister, Ravi Karunanayake. "They actually got one of Marks & Spencer's logistics people to leave and gave him Rs. 13 million to write a report on how the BOI could start up a global logistics hub. That report is still here. It never got off the ground," stated Mahendran.

In 2000, the old textile mill at Pugoda, was being converted into an IT centre with an expenditure totalling more than Rs. 13 million. Mahendran questioned as to why the President would want to invest in an IT centre at the time since IT could not be expected to flourish in a place like Pugoda because it was too far away from the city and lacked the basic infrastructure. He added, "now we have got the largest textile manufacturer in Singapore, South Asia Textiles Industries to take over the site and revive the textile mill."

According to Mahendran, when he took over at the beginning of 2002, the BOI found out that the land at Ja Ela purchased from Sri Lanka Telecom at a cost of Rs. 28.4 million had been distributed free among the people in the area. The BOI had to repossess some of the land and it is now handed over to Ceylinco and Nivasie for housing development.

"The money spent on the IT park at Kamburuptitya amounting to more than Rs. 27 million is a complete waste. This project is completely dormant," Mahendran added.

Concern over proposed 'mixed economy'

By Mandana Ismail Abeywickrema and Shehan Moses 

With the launching of the election manifestos of the country's two main political parties - the UNF and the UPFA - the public together with the business community has voiced concern over the country's progress in the future.

Many feared that the country might yet again experience the dark era from 1970-1977, complete with shortages and queues if a mixed economy is reintroduced to the country as proposed by the UPFA in its election manifesto. Sri Lanka, which was performing well economically made vast strides in GDP growth - from minus 1.5% in 2001 to an estimated 5.5% in 2003. Inflation too saw a decline from 14.2% in 2001 to 9.6% in 2002.

However, this growth has been in the balance for the past few months with the country experiencing a turbulent political environment.

International Monetary Fund (IMF) Resident Representative, Jeremy Carter told The Sunday Leader that the country had developed in several areas including the economy in the last two years. He noted that the country had done very well with regard to macro economic growth resulting in positive movements in the economic process.

According to Carter, the ongoing peace process has also played a key role in the country's development process. "It's a cycle and everything is connected," he said.

Carter said that any government that comes to power on April 2 should continue with the present development programmes. He said that whatever government should ensure steady economic growth; along with growing interest rates while fiscal deficits should be reduced.

However, according to Carter, the internal problems experienced during the last three months has resulted in various economic problems as uncertainty in a country would not help sustain high levels of economic growth.

Carter noted that there should be progress in improving performance of the public sector. He said that public enterprises should be made to perform more efficiently in case the government does not wish to privatise them. He also noted that a government should give priority to governance than engage themselves in businesses. An aspect of governance apart from the public sector is the introduction of regulatory systems.

Carter reiterated that in order to prosper, the country should be more productive, adding that the country presently has all ingredients to make things work.

Head of the Board of Investment (BOI), Arjunna Mahendran told The Sunday Leader that the promises of the UPFA manifesto are very unrealistic and contradictory. He said the manifesto makes many promises such as a large number of subsidies and other related incentives but the question arises as to funding.

He pointed out that the UPFA does not give a clear picture on how it will deliver on these promises and the fundings for this. Speaking about the proposed labour related issues of the UPFA manifesto, Mahendran said Sri Lanka has the best labour laws and this makes it the most friendly region in the world for Foreign Direct Investment( FDI).

Mahendran warned that if the trade unions in this country are made powerful, it may create unrest and the country may lose large scale foreign investments since the investors would seek other destinations for investment purposes, which would create many job losses.

Mahendran said that unlike the UPFA manifesto, the UNF manifesto is "very realistic." He was of the view that it would be possible for the UNF to create three million jobs as promised. According to Mahendran, last year the BOI only created 45,000 jobs and about 100,000 jobs were created by non-BOI companies. He believes that around 200,000 jobs may be created this year.

Speaking to The Sunday Leader, Nalini Perera (housewife), feared that an introduction of a mixed economy would definitely be a return to the dark era of 1970-1977. "All we had were queues and shortages in everything. People didn't have anything to eat or even wear." According to Perera, while the general public was deprived of going abroad, the people in power made sure their children were educated abroad.

"We had to eat sweet potato and manioc. Children didn't have milk to drink. Having a wedding during that period was awful with a lot of restrictions," she said. However, Perera said that reverting back to such an era would mean that Sri Lanka would never be able to raise its head, adding that the country would forever remain in the dark.

M. Haleem (shopkeeper) said that he has had enough of local politics. "Everyone is good at making promises, but when it is time to keep them, they all seem to suffer from amnesia," he said. However, he mentioned that from what he has seen so far, the country did seem to be on the right path for the past two years, adding that now people would, as always, have to wait and see. "There was no war and the country was doing well. People even had the freedom to strike and in most cases get what they wanted," he said.

According to Menik Perera (housewife), "It is sad to see that the country's politicians are more interested about their welfare rather than the actual development of the country." Perera went on to say that it is sad that leaders today lack true leadership qualities. "How can they be leaders when they are not in a position to be respected?" she questioned.

As for the manifestos of the two main political parties, Perera felt that they were both filled with beautiful promises, which only needed to be kept. However, she said that the past two years have been better than what the country has experienced before.

Politicians: Walk the talk

By Dinesh Weerakkody

The PA-JVP alliance has been screaming that the UNF is corrupt to the core, forgetting that the PA was labelled as one of the most corrupt administrations in our post independence, whilst the JVP has been accused of murder, robbery and destroying state property. None of these parties therefore have the credibility to accuse each other of corruption.

Therefore, without slinging mud at each other, these parties should leave it to the people to vote those corrupt politicians out of office.

The psychology of corruption in developing countries like Sri Lanka is deeply ingrained in the collective minds of an impoverished society.

Recently a respected President Counsel said, "Corruption in countries is due to weak legal institutions, poor enforcement mechanisms, vague and complex laws and regulations and too many discretionary powers at various levels of government" had perpetuated the culture of corruption.

Law enforcement

Everybody thinks everybody else is taking bribes, which generally disables any effort at enforcement of the law. The Commission to Investigate Allegations of Bribery or Corruption was mooted by Act No. 19 of 1994 by the PA government nine years ago. However, nothing significant has been achieved after so many years.

This raises the question whether it is just a another political tool of successive governments with no political will to investigate and eliminate corruption.

The syndrome of demand driven bribery and corruption has always remained an essential part of the affairs of the state. Kautilya, the adviser to the Mouryan Emperor, Chandragupta of India had observed in 300 BC that governrnent ministers should always be under scrutiny through a spy network, to prevent them from embezzling state funds. Just as it is not possible to know whether a fish is swimming in the water or drinking it, so it is impossible to know when officials in charge of state enterprises are misappropriating monies.

Power

Misuse of power, inefficiency, corruption and mismanagement are identified as the four factors that made the people vote against the PA government in 2001. It is also a fact that the PA manifesto even in 1994 promised to wipe out bribery and corruption that had prevailed during the UNP regime. It is common knowledge how the Bribery Commission has become a non-entity.

Corruption is an impediment to growth as corruption discourages investment. Corruption increases the cost of doing business, hampers development and growth.

If the country is to develop, we have to attract and encourage investment. Then we need to eliminate graft from top to the bottom and not the other way around. Such efforts however may prove hazardous.

Examples

Examples are the Sinhala audio tape Commisana, explaining the transfer of funds to a party coffer by a Sri Lankan tycoon, published by Satana Editor, Rohana Kumara which cost him his life (the murder to this day remains unresolved), the Thawakkal affair concerning the privatisation of the Puttalam Cement Factory, allegations have also been made in respect of the Galle Harbour development project, sale of Shell Gas, LATEC bus deal, the privatisation of the Steel Corporation, the Ruhunu fertiliser factory, BOC building, fisheries, bus privatisation, lotteries and so on.

Free of corruption

"Those who come into politics must be free of corruption," says the President but the PA administration sold Air Lanka (now SriLankan Airlines) to Emirates Airlines despite public criticism.

There seem to be an unsavoury nexus between investors such as casino owners and the prevailing vice and crime rate.

It is a well-known fact that criminals and army deserters enjoy the patronage of leading politicians. So much so that one former defence minister announced that the amnesty for army disasters would be strictly enforced and those found harbouring deserters will be dealt with by the law.

He however, failed to mention that there was an exception to the above rule - that cabinet ministers were exempt. Such double standards had severely crippled any effort at cutting the slack for those who responsible for encouraging or accepting bribes and bribe giving.

Investors

Most of the development projects mentioned above particularly where land alienation, power and energy or educational authorities were involved it promises to be nightmare experience for the foreign investor who plans to start up projects. Based on the findings of a survey undertaken in 2001/2002 by Transparency International, the Sri Lanka Police has been labelled the most corrupt.

Next in order are the health and education sectors followed by power and energy and land administration. Not withstanding the rhetoric, whoever wins the April 2 election has to bring in an enforcement mechanism which will ensure the implementation of the laws that are already in place.

This view is supported by the findings of the above survey where nearly 59% of the more than 2000 people surveyed were of the same opinion.

Factors

Another factor which causes the vicious cycle of bribery, corruption and retardation of development is low salaries of the public sector officials responsible of these decisions.

The faulty social system is another, where 15% of the surveyed population felt that a faulty social system is a factor which helped perpetuate the vicious cycle where the bribe receiver and bribe giver are accommodated in society and continue to enjoy privileges and be regarded as people who peddle influence.

The response to a question from many of the citizens whether to wipe out bribery and corruption would be a definite yes but the mystery of this situation is that many politicians of ill repute continue to be elected to parliament.

It is the confirmation of the truth that as long as people have to seek the assistance of politicians and their cronies for matters of job promotions, transfers, housing or land, bribery and corruption has little chance of being minimised leave alone eliminated.

The Global Corruption Report of Transparency International says the lack of accountability is a main reason for corruption. In fact Sri Lanka ranks in the corruption index in a global survey of 100 countries in the 56th position (see table).

Development

Most of the development projects particularly those relating to infrastructure are strategically planned to link the rural economy to the regional/urban hubs.

Providing enabling technologies such as IT and access to communication technology must go on.

Any delay in such development programmes will lead to an economy devoid of opportunities for the self-employed and for those in the labour force who are currently upgrading their employment skills.

We have much to lose. Most of the younger generation have not witnessed any major development since the beginning of the ethnic conflict 20 years ago.

Therefore, the forceful enforcement of the law is a crucial element in battling corruption. Many believe it is not an absence of legislation but the personality of the jobholder, which perpetuates this vicious cycle.

Every member of civil society has a responsibility to eradicate bribery and corruption. This he or she can do by saying no to anybody who demands a bribe in exchange for goods and services and by reporting such an individual or institution to the Bribery Commission.

The President must appoint the third member to the Bribery Commission to make it function effectively.

In the final analysis, the UPFA and the UNF without playing politics must give a pledge to the people that they really want bribery and corruption out of our system by installing the required institutional mechanism to enforce the law.

Today, sadly the alliance and the UNF both do not have the credibility to accuse each other of corruption. None of them have the right to talk. So it is high time both leaders walk the talk and demonstrate their credibility.

Four new processors

Intel Corporation is delivering four new processors, formerly codenamed Prescott, that are built on the company's high-volume 90-nanometer (nm) manufacturing technology. These processors are among six new offerings in Intel's line of desktop chips, bringing new features and high performance to a wide range of PC users, from mainstream consumers and business people to gaming enthusiasts and computer power users.

"This new manufacturing technology, along with numerous architectural enhancements, enable us to continue delivering products that allow end users to interact with a wide variety of digital devices," said Director (Marketing), Intel Technology India Pvt. Ltd., Jayant Murty, adding, "these processors provide improved responsiveness for today's corporate and home applications, and offer headroom for the next wave of technologies."

Intel Pentium 4 processors built on the 90-nm process retain the multi-tasking capabilities of Hyper-Threading (HT) technology, and include new features such as enhanced Intel NetBurst micro architecture, a larger 1 MB Level 2 (L2) cache and 13 new instructions.

According to Murty, this new technology will facilitate the coming together of computer electronics and personal computing, resulting in enhanced multiple flexibility and simplification of the way electronics are run even in one's own home. During the year 2004, Intel plans to expand its local presence and to invest in developing the local IT industry through training, eco-system building and sharing of best known methods. Through all this Intel hopes facilitate a greater level of IT literacy rate, which at present is at a low of 2%.

SLECIC completes 25 years

Sri Lanka Credit Insurance Corporation (SLECIC) completes 25 years of service and celebrates the anniversary with a vision to become the catalyst in international trade. SLECIC commenced its services in 1979 fulfilling the concept for an export credit agency for Sri Lanka.

During the formative years of SLECIC it grew fast. However, over the years SLECIC adopted a risk averse attitude and tagged along not keeping pace with the changes and developments that were taking place in the global economy.

All this was however destined to change in the year 2002. Restructuring activities were implemented during 2002 and 2003 and SLECIC is now equipped to move with a new focus defined information, support and protection for exporters. SLECIC today is a market oriented organisation with an appetite for risk taking and has become a true partner to the exporters of Sri Lanka. On March 18, SLECIC celebrated its 25th anniversary at the Hotel Colombo Plaza. The re-launching of its principal product was seen as the most appropriate event for commemoration.

Re-visiting its oldest product was a long felt need since there were incompatibilities identified. SLECIC reviewed the export payments insurance policy and as a result the premium will be revised downwards, the coverage will be increased and the terms and conditions will be liberalised.

This prime product of SLECIC was re-launched on March 18 under the brand name of Seller's Risk.

SLECIC will be also launching a new product under the brand name of CAT Policy to cover catastrophic losses of exporters. This new product covers major losses, thus protecting the balance sheet of an exporter.

Caltex Lanka best in Asia Pacific

Caltex Lubricants Lanka Limited (CLLL) has won the gold 'Best Performance Award' of the ChevronTexaco global lubricant companies in Asia Pacific region for the year 2003. The award was presented to Managing Director/CEO, CLLL, Kishu Gomes by Vice President (Asia Pacific Region), Martin B. Southern at a regional conference held in Singapore recently.

Competing with 17 other ChevronTe-xaco Lubricant companies in the region, including New Zealand, Australia, Japan, China, Philippines, Singapore, Thailand, India, and Vietnam, CLLL achieved this recognition due to its outstanding performance in all areas of consideration for the year end 2003 This follows its last year's achievement proving its competitiveness, by winning the silver award.

"I hope the recognition which couples this achievement will definitely motivate the Caltex Lanka family to do better in future. It's an achievement of the efforts of a big team, which includes all stakeholders," said Gomes, adding that this recognition would be a great motivating factor to meet the future challenges with confidence.

Performances of the regional companies were evaluated on '4+1' strategic intents followed worldwide in all ChevronTexaco companies with CLLL's success showing in all areas; whereby five critical business drivers are managed effectively, which are operational excellence, cost reduction, capital stewardship, profitable growth and organisational capability.

There has been a laid down criteria covering all aspects of the business in evaluating outstanding performance in the Asia Pacific region, which includes corporate compliance, social and environmental responsibilities, financial performance and stock market performance, market performance while defending margins, merger integrations and human resource development and management CLLL has performed exceptionally well in all the above aspects, to come ahead all other companies in the Asia Pacific region.

Apparel industry gearing for major jolt

By Shehan Moses

Dramatic changes will take place in Sri Lanka's garment industry and economy from the beginning of 2005 with the abolition of quotas under the Multifibre Agreement (MFA) from January 2005.

Among the negative aspects is the possibility of over 50% of garment factories being closed down, creating major job losses in the garment sector, which would have a huge impact on the labour force and the economy.

Speaking to The Sunday Leader, Labour Minister Mahinda Samarasinghe said he does not anticipate such a large percentage of job losses since the government has received General Special Preference (GSP) status from the European Union and is also currently negotiating a Free Trade Agreement (FTA) with the United States to export garments to the USA market.

He said there is a possibility of more job opportunities in the garment sector if these agreements are successful.

Sri Lanka is greatly benefited from the MFA compared to other South Asian countries. According to sources, in 1997 quotas per head for India was 0.33 while for Sri Lanka it was 2.20.

The high quotas and the cheap labour force especially in the Free Trade Zones (FTZs) and concessions to foreign investors has made Sri Lanka an investors hub.

Since Sri Lanka is heavily dependent on the industrial garment sector and exports, the phasing out of the quotas will drastically affect the country's economy.

Speaking to The Sunday Leader, Chairman, Export Development Board (EDB), R. Sivaratnam said that once the MFA is completely abolished, the local garment industry will not collapse completely. "Some of our garment manufacturers and exporters have upgraded their technology and skills. Therefore they may survive and will not be affected," he said.

However, Sivaratnam warned that once the MFA is abolished, nearly 50% of garment manufacturers and exporters may go out of business.

He emphasised that the remaining players in the market may have to face severe competition from the exporters of other garment manufacturing countries such as South Asian countries and the European Union (EU) countries.

"They should look for alternative markets and be more competitive in the international arena and face the challenges," he said.

Speaking about relations with India, Sivaratnam said Sri Lanka should make use of the FTA between the two countries and try to exploit the Indian market.

He pointed out that under this agreement Sri Lanka can export up to eight million units of garments to India under a concessionary rate.

However last year only 75,000 garments have been exported to India. He says this situation should be changed and Sri Lanka should export more of garments to the Indian market.

He said it was unfortunate that only about four-garment manufacture such as MAS Holdings and Hameedia have displayed their products at the Sri Lankan Trade Centre (STC) established by the EDB in Chennai, India. He expressed his belief that this is an ideal opportunity for garment manufacturers to display their products and capture the Indian readymade garment industry.

According to Sivaratnam, the Small and Medium Scale Enterprises (SME) would be directly affected once the MFA is completely abolished by the end of 2004. In order to minimise this effect, he suggests that SMEs should formulate special contracts with large-scale industries and become outsource agents and produce quality garments with high quality finishing touches and reliable services.

He stressed that Sri Lanka should be able to diversify into other sectors and give priority to the agricultural sector to overcome this situation.

Meanwhile, Board of Investment (BOI) Chairman, Arjunna Mahendran said the BOI is encouraging large-scale manufacturing companies to take over small companies by providing special incentives such as tax holidays for these industries.

Mahendran stressed on the importance for Sri Lanka to produce textiles and accessories instead of purchasing these items from other countries.

If this is done, Sri Lanka could be more competitive in the international market especially after the MFA quota system is abolished.

He pointed out that at present there are five such new textile mills that are under construction and these mills would produce garment accessories and textiles to the Sri Lankan garment manufacturers.

Therefore, the local manufacturers may be able to purchase the textiles and accessories at a cheaper rate and be more competitive.

He said Sri Lanka is concentrating too much on the garment sector and should find alternatives.

However, he felt instead of concentrating too much on the agricultural sector, Sri Lankans should look into other areas such as Information Technology (IT) and ceramic manufacturing industries.

Mahendran said there would be large-scale job losses once the MFA quota system is abolished, which would create a burden for the workforce.

"However if Sri Lanka can diversify to other industries such as IT and ceramics, there is a possibility that the workforce may get higher wages than in the garment industry," he said.

He pointed out that regardless of the industry that the country diversifies into, it is important that there should be a good supply chain.

He stressed that there should be better infrastructure facilities in the long-term rather than the short-term if Sri Lanka is to attract foreign investments and look in to other sectors.

Secretary General, Joint Apparel Association Forum, M. Corey said the future of the industry once the MFA is abolished completely would depend on the competitiveness of our products in the international market with countries such as India and Indonesia.

According to Corey, Sri Lankan garments are well known suppliers for leading international brands. He said that regardless of which government comes into power, priority should be given to establishing agreements with other countries and finding a solution such as new international markets for Sri Lankan garments once the MFA is abolished.

Meanwhile, Commerce Minister Ravi Karunanayake said that President Chandrika Kumaratunga should be held responsible if the garment industry is affected and large-scale job losses occur once the MFA is abolished.

According to Karunanayake, the UNF government was in the process of negotiating FTAs with the United States and United Kingdom, a process that was disrupted by the political unrest in the country created by the President.

Karunanayake said the abolishment of the MFA would create a huge impact  and the country would lose billions of rupees in lost exports. He said it would also result in the loss of thousands of jobs which would in turn affect the economy.

Mahapola instant ticket lottery to be relaunched

Mahapola Higher Education Scholarship Trust Fund (MTF) last week announced the relaunch of the Mahapola instant ticket lottery on March 23. GTECH Lanka (Pvt.) Ltd, a 100% subsidiary of GTECH, will manage this lottery. The relaunch of the Mahapola lottery has been made with a view to widen the coverage of the MTF scholarships, and to engage in other charitable educational, vocational and technical training activities in Sri Lanka.

Commenting on the appointment of GTECH Lanka as the operating company for the Mahapola lottery, Marketing Director, GTECH Lanka, Tusitha Kumarakulasingam said, "Nearly 70% of the world's government authorised lotteries have selected GTECH as their partners. The appointment of GTECH Lanka as the operating company for Mahapola lotteries will bring in the latest technology and the expertise of international standards that we at GTECH pioneer.

Another important aspect of the relaunch of the Mahapola instant lottery ticket is that it will continue to use most of the existing retail and distribution channels thereby providing livelihood to thousands of people, who depend on the lottery sales commission as their only means of income. The revival of the Mahapola instant lottery has met with an overwhelming response from the trade and we hope to launch many interesting products, on par with international standards in the Sri Lankan market soon."

The Mahapola Lottery was first launched in 1981 with a vision to provide higher education to the poor but talented children who abandon a higher educational career because of poverty. This idea to use the lottery as the means to collect money and use the proceeds to set up a fund to grant scholarships was conceived by the then Trade and Shipping Minister, Lalith Athulathmudali. At present, the fund provides about 7,000 to 8,000 undergraduate scholarships per annum.

Management education in SL has much to learn

Management education in Sri Lanka requires considerable learning from countries like India. Executives here can participate in executive development programmes conducted by the Indian Institutes of Management (IIMs). These are the views of Professor (Production and Operations Management), Indian Institute of Management Bangalore (IIMB), B. Mahadevan.

"The quality of management education in India is high," he noted. According to him, the IIMs are now ranked in the top five in many international ratings. The magazine Asian Incorporated, which ranks top business schools, has rated the IIMs among the top 10 in Asia-Pacific. The Wall Street Journal guide to top 100 business schools included IIMB - the only one in the Asia-Pacific region to be so listed.

"You have a neighbour whose quality of management education is very high. It is only natural that your management educators and management practitioners make use of that," said Prof. Mahadevan.

He added that IIMs are located in Bangalore, Ahmedabad, Calcutta, Indore, Lucknow and Calicut. He also believed that government chambers and academics need to find ways of promoting management education in India among Sri Lankans.

Prof. Mahadevan is the Chief Editor of the IIMB Management Review. Indian publications of this nature may be suitable for the Lankan market, as the corporate experiences in India are more relevant to this country; the cultural background, context, cost structures and mindset are similar.

According to him, the management practices followed in Sri Lanka require much improvement when compared to India. He noted that in every country, there is a pattern-countries open to the pressure of competition, etc. Upgrade technical skills; then comes the management skills.

"I think it is very important to identify areas where you need to focus," said Prof. Mahadevan. In his view, these areas include textiles, tourism, IT and software. It has been noted that South Asians have a predisposition of mind to develop knowledge-oriented applications. In India, for example, much progress has been made in the fields of IT, bio-technology and pharmaceuticals. "We need to identify the specific areas in which we have strength and need to develop," he said.

Prof. Mahadevan says, "Top management requires innovation skills. Top management should be able to visualise, create very distinctive models, have a sense of what the future trends are and innovate models."

He noted that developing countries, particularly in our region, are weak in branding. He attributes this largely to the fact that we have been in closed economies, and says we need to invest in branding.

According to him, we need to find a way of improving management skills at the whole organisation. He says communication skills are always an issue in developing management skills at a wholesome level.

Prof. Mahadevan says that new techniques (such as target costing, balanced scorecard, ERM, activity-based management) take a while before they get into practice; usually there is a stage of internalizing the idea.

He adds that conviction is important, because all these require changes, and there will be some resistance. The only way implementation will get accelerated is when organisations face problems arising from competition. However, it must be emphasised that proactive change is better.

For example, India's TVS group did not wait for a crisis, but changed proactively. As a result, they received international awards like the Deming award and the TPM prize.

He said that between 1996 and 2001, he could see a difference in Sri Lanka. "The trajectory is clear. You are on the right track. It is equally important a critical mass of efforts be reached for the benefits to be apparent," he stated. 

Prof. Mahadevan also has research interests. His research findings have been published in prominent international journals like European Journal of Operational Research, California Management Review, and International Journal of Production Research.

His book on 'the new manufacturing architecture' deals with issues pertaining to restructuring manufacturing systems for competitive advantage and he has developed software (MASCOT) to address these issues.

At present, Prof. Mahadevan's research is on electronic markets; he is studying the impact of business to business markets on several procurement practices.

"We are trying to see if the supplier will quote a different price if he participates in an auction in an electronic market. Because costs are low, our research suggests price will be low," he stated.

He says they believe electronic markets will increase supply heterogeneity. He has identified 12 market structures in electronic business, and provided directions on which markets buyers should go to, depending on their needs.

The three broad patterns he has identified are:

      Collaborative market mechanisms (e.g. trading partner network).

     Quasi-market (e.g. auction).

      Neutral market (e.g. exchanges, aggregators).

Prof. Mahadevan was also responsible for designing several executive education programmes for private and public companies and for several professional organisations in India and abroad.

He has conducted a number of programmes in Sri Lanka and recently delivered an evening fellowship lecture on 'Changing Paradigms in Management Accounting: Implications for Practice.'

Richard Pieris takes over RPK

Richard Pieris & Co. acquired 50% of the equity of RPK Management Services (RPK) from John Keells Holdings for Rs. 465.75 million to take control of the largest plantation management company in Sri Lanka.

RPK was formed in 1992 as a 50:50 joint venture between John Keells and Richard Pieris, to own and manage regional plantation companies privatised by the government.

RPK acquired a 60% stake in Kegalle Plantations Ltd., the premier rubber plantation company in Sri Lanka, and a 63% holding in Maskeliya Plantations Ltd., the finest upcountry tea company in the nation.

Additionally, RPK controls Exotic Horticulture (Pvt) Ltd. and Hamefa Kegalle Ltd., a company formed as a joint venture with a Dutch company, and which manufactures rubber wood furniture.

A company spokesman for Richard Pieris stated that "the rationale for the acquisition of RPK was to further consolidate and secure our sources of rubber, and to have control over tea plantations in order to venture into the export of branded value added teas."

Richard Pieris is also considering tourism and real estate development in the plantations.

Kegalle Plantation has a total land extent of 7,866 hectares with an annual output of 5.4 million kilogrammes of rubber and 2.6 million kilogrammes of tea.

Kegalle Plantations boasts of high yields in rubber and has one of the most sophisticated latex centrifuging facilities in the country. Maskeliya Plantations has 5,883 hectares of tea plantations, producing 10.5 million kilogrammes of tea and has the one of the highest yields in tea.

The premium quality high grown teas manufactured by Maskeliya are highly sought after by foreign buyers and thus earn prices above elevation averages.