yet to confirm economic policies
Minister Jeyaraj Fernandopulle recently announced that the country
would not be brought under a closed economy like that which existed in
the 1970-1977 era, no clear annunciation of the economic policies has
been made to date. Needless to say, most investors are taking a ‘wait
and see’ attitude, in anticipation of definite signals from the
government. This is more than apparent in the volatility in the stock
market and the holding back of funds in major infrastructure projects.
Speaking to The
Sunday Leader, Fernandopulle, refuting a closed economic stand,
spoke positively on going ahead with Free Trade Agreements (FTAs) but
added that such would be entered into only on the condition that they
are advantageous to Sri Lanka. Following the quota system coming to an
end in 2005, Fernandopulle stated, "Efforts were being made
towards a FTA with the United States, especially bearing in mind to
provide assistance to the garment sector in particular." He said
that the agreement is still under consideration and they have not yet
reached a final decision.
Prior to elections the
UPFA spoke of a mixed economic policy, where there will be
restrictions of imports and preference given to local produce.
Minister, Dr. Sarath Amunugama announced that the country will not be
dependant on imports.
With the Tax Amnesty
Act found to be against the Constitution by the Supreme Court, the
UPFA with renewed zest pledged that there will be tax reforms and the
burden of tax would be reduced. A measure of this nature would result
in the reduction of income to the Treasury.
According to the
International Monetary Fund (IMF) report on the recently concluded
Article IV Consultation the "Directors considered that the key
medium-term challenge remains restoring fiscal sustainability, while
ensuring that there are adequate resources for priority poverty
reduction and post-conflict spending. This will call for improved
revenue performance, in particular through simplification of the tax
regime and reduction of exemptions, to increase compliance, improve
tax system equity, and reverse the declining trend in the tax effort.
In that vein, Directors welcomed the tax reforms proposed in the 2004
budget, particularly the unification of the value-added tax rates and
the reduction of exemptions. Over the next few months, the authorities
should press forward urgently with fundamental reforms in tax
administration, not only to arrest the long-term deterioration in
revenues, but also to realize fully the benefits of changes in tax
policy. In this regard, several Directors urged that rapid progress be
made following the April elections in establishing the Revenue
Further to this, along
with the halting of the privatisation of certain state owned entities
and the additional fertiliser subsidy announced, the Finance Ministry
has made no definite statement as to how it is going to increase the
Treasury’s revenue accordingly and address the budget deficit
"The privatisation of the entities coming under the purview of
the Commerce Ministry will brought to a standstill." Some of
these are the State Trading Corporation and Salusala.
value continues to dip
The Colombo Stock
Exchange (CSE) has seen a wipe-off of more than 6% of its market
capitalisation value since the elections on April 2. Although the
market literally crashed when it opened for trading April 6 with Rs.
30 billion being wiped off in one go, the reduction in value has
accrued to around Rs. 20 billion by Friday.
Analysts believe that
prior to April, or even November for that matter, the market was
overvalued following unrealistically optimistic expectations of the
people. Speaking to The Sunday Leader, the Chief Executive
Officer, Frontier Research, Amal Sanderatne said, "I think that
the prices are now coming closer to a fair value."
capitalisation figure may increase if there is a large rights issue
made in the form of an initial public offering. However this will have
no positive bearing on the indices and will not be an indicator of
improved market conditions.
If the market is to do
well in the future, Sanderatne pointed out that three main conditions
need to be satisfied. "First, a clear indication of a no-war
situation, second, corporate earnings should continue to grow strongly
as it is doing at present and third, the lower interest rates scenario
needs to be sustained." Sanderatne believed that an increased
level of confidence in the economic policy and the stability of the
government would further strengthen market conditions.
Analysts were of the
view that the poor performance of the stock market, although not
necessarily a definite indicator of the country’s economic position,
may result in some negative publicity for Sri Lanka on an
and the mixed economy
The mixed economic
model proposed by the JVP has terrified some of our elitist
businessman on the basis that they would lose their dominance and the
economy will be dragged into the bathala era. These elitist
businessmen must now realise that top-down approach to development
does not work in a country where the private sector operates only to
It is time we all
realise that the country’s wealth doesn’t lie in Colombo alone. It
is there in the rural countryside. Agriculture will be the backbone of
the economy. So if the JVP has the competence to deliver, then the
model it professes may turn out to be just what we need — if it is
tempered with the reality of globalisation. The JVP will however have
to learn fast that it requires a different set of skills and varying
levels of maturity to get elected and to deliver effectively.
The advantage of
professing market capitalism or for that matter Leftist ideologies are
that they are clear as black and white. Black is dramatic while white
is stark. They draw immediate attention to themselves. It is also a
fact that both models of economic development steadfastly and
persistently try to impose their solutions on all of our problems. The
question that then arises is what is a mixed economy?
without social responsibility, unencumbered in the pursuance of profit
at all costs, unconcerned with the misery of the poor tends to
construct unjust structures in society. It even gives the picture of
victimisation of the common man. On the other hand the Karl Marx
doctrine is an ideology, which promotes community ownership of the
tools of production and questions the right of private ownership of
land. In the final analysis in a market economy the nation is best
served when the government leaves the production of goods and
services, which meet market demand, in the hands of the private
enterprise. Why? Because the entrepreneurs and the capitalists have a
right to the profits that their enterprises generate.
In this scenario the
more innovative the initiative, larger are the resources required,
more hazardous the risk, higher are the profits. However, the right to
private property is not an absolute right. It should contain the
responsibility to use private property not only to enhance wealth, but
also to meet the social obligations of the community.
What then of the middle
path? As one writer recently explained a mixed economic model calls
for social justice, fairness, equity and an avoidance of extremes of
economic policy. In this sense even in the most advanced capitalist
countries such as USA, regulatory regimes control agriculture,
education, defense and the police functions.
On the other hand even
a communist state such as China, collectivisation is not applied to
all economic activities. There are some degrees of privatised
enterprises and industries in operation. This largely has been
responsible for the economic wealth created in key cities such as
Shanghai and similar industrial areas in China.
The question, which
arises foremost in one’s mind, when the UPFA claims that its
policies are for the establishment of a mixed economy are, whether
plantations and estates are to be nationalized? Will the small farm
agriculturist have a place to own private property? Will private
health and education be discontinued? Will the state take over key
industries and manage them? How would they manage the Export
Processing Zones? Are they going to adopt two systems under a single
regime of control? Both the SLFP and the UNP - one following the other
in liberalized economic policies - have failed the rural people. So
the UPFA’s economic model should try to balance globalisation with a
human face - the kind of thing R Premadasa practiced in the 1990s.
One for the foreign
investor and the other managed by the state. Is it practical to manage
such a mixed strategy efficiently? Where is the level playing field,
which will be available for any form of enterprise? If you take our
recent history, direct foreign investment was US $ 171 million in 2001
as compared to US $ 230 million in 2002. An almost US $ 60 million
jump or 33% increase in FDI. GDP growth was negative in 2001. The
decline was minus 1.5% to a positive growth of 4.0% in 2002 and 5.5%
in 2003. How was this possible? What were the reasons? Simply that
free market capitalism motivates not only the mega entrepreneur but
also the small and medium enterprises in the country and particularly
the growth in the apparel industry and increase in investment in the
leisure and the tourist industry. This approach to development
leverages powerful forces to increase capital efficiency.
However, there is a
short term down side to this success story. That the working class low
income groups invariably has to make sacrifices and be happy with the
pittance coming their way until the wealth that accumulates trickles
down to them. This is where state intervention is required to sustain
the welfare measures in the absence of private sector participation.
At present, the
development economists advocate the alleviation of poverty and aim for
total human development. Public enterprises are largely privatised,
while crucial utilities such as power, water and in some instances
transport are managed by the state. The model also advocates
technological upgrading and the training of human resources. It sees
the private sector as an engine of growth. Is this the Mixed Economic
Model which the UPFA talking about? Or is it the out dated and
dysfunctional models, which was followed by the government in power in
1970-77 that is to be implemented? If it is the latter, then the world
trading arrangements will not permit such a radical change to the
We all hope the JVP has
done its homework and knows what this country needs to provide
prosperity to all. In fact the frame work of policies of the
international multilateral agencies as well as the trading blocs such
as ASEAN, NAFTA, the Asia Pacific as well as SAARC will compel that
they conform to an economic model which is far from economic
isolation. In actual fact more than 50% of the national debt is
foreign. 70% of the GDP and capital expenditure are from foreign
funding. This distortion is due to inadequate domestic savings, much
worse low efficiency of capital, and low productivity particularly in
the state sector and continued deficit financing by the Government.
We cannot be another
Cuba or North Korea in the current scenario. Incidentally these
countries labor under a regime, which ensures that large sections of
society continue to be impoverished. Where then is poverty
alleviation? When business confidence is dented due to instability of
the government and hazy thinking of the desired economic model for
development, then the out come is low efficiency of capital, poor
investor confidence and continued poverty.
The UNF and the PA have
both tread the path to development very clearly. The Regaining Sri
Lanka initiative promoted by the UNF aimed to bridge the immediate
weakness of over coming deficit financing, employment generation,
increasing productivity, mainly in agriculture, tourism, manufacturing
and service sectors. It also focused on major infrastructure
improvement for increasing the linkage between a predominantly rural
population and the major economic and agricultural centers in our
country. These strategies in many ways can be described as a mixed
economic model. The problem with this kind of policies is that it
takes a long time for it to create wealth for the rural poor.
Combining liberal state
policies with control of commodity imports which are locally produced
or nationalisation of plantation agriculture does not support a
solution to the compelling problems faced by the country as outlined
above. In such a scenario the productive capacity of the economy is
reduced, continued losses in public enterprises, due to either the
inability to match the demanding quality standards or investment in
technology and dynamic marketing strategies which are required in the
international market place. This will force a heavy burden on an
The question upper most
in the minds of the people now is can Sri Lanka survive in a vacuum
and come out of the current state of indebtedness and low per capita
income through a system of state ownership of property and enterprise
and a selective regime of controls while attempting to balance the
trade pattern in the country’s favour.
As one writer did
observe "half baked muddled economics and capricious economic
intervention" can destroy altogether even the temporary platform
on which we are now standing. So when the energetic Sarath Amunugame
recently said the treasury will not be obsessed with fiscal deficit
targets and spending cuts but development oriented policies people
assumed he was implying that the government will spend more on welfare
while creating more wealth at the rural level.
bags Euromoney award
Standard Chartered Bank
(SCB), as the mandated lead arranger for a seven year loan facility of
US $ 86 million for Mobitel (Pvt) Limited, was awarded the Euromoney
Trade Finance Deal of the Year 2003 Asia Award at the recently
concluded Euromoney Trade Finance & Project Finance Awards held in
The award was presented
at a formal dinner held on the March 17 at the Ritz Carlton, Hongkong.
"It is a great privilege to win this award amidst competition
from sophisticated financial markets such as Hongkong, Singapore,
Malaysia," said Senior Relationship Manager, Derick De Zilva who
along with CEO, Mobitel, Lalith De Silva and Chief Financial Officer,
Mobitel, Nandika Buddipala were in Honkong to receive the award.
Speaking about the
transaction, Head of Client Relationships in Sri Lanka, Kimarli
Fernando said " Not only is this transaction the single largest
debt raising by a Sri Lankan Corporate to date, but the financing was
made available in US $ and in local rupees at the request of the
borrower. Another unique aspect is that the facility incorporates the
largest local currency supported Swedish Export Credit Agency, EKN
transaction ever. It is also the first and largest Export Credit
Agency backed transaction in Sri Lanka without government
She further commented,
"The deal was very smoothly executed and closed during a
relatively difficult local political environment. This award is a
validation of the unique structure and precision execution that we
were able to achieve with the support of our partner banks in Sri
Lanka. It augurs well for the development of our local financial
market and the ability for local companies to raise long-term
financing internationally. We are delighted to lead the way with more
innovative transactions which we trust will bring even more credit and
recognition for Sri Lanka."
The other banks in the
syndicate, in addition to Standard Chartered Bank, were Bank of
Ceylon, DFCC Bank, Hatton National Bank, National Development Bank,
National Savings Bank, Peoples’ Bank, Sampath Bank and Seylan Bank.
At a recent function
held by Standard Chartered Bank Sri Lanka to celebrate this landmark
transaction, Chief Executive Officer, Vishnu Mohan, praised the role
played by the Bank’s syndication partners and noted that, "the
transaction is representative of Standard Chartered’s unwavering
commitment to Sri Lanka and to the local industry. It is also a
further demonstration of our proven capabilities in structured trade
finance and project finance. It is also important that we do not
overlook the significance of the US $ 54 million EKN cover for the
transaction which is testimony to the confidence Sweden has in our
country and the ongoing viability of Sri Lanka’s telecommunications
industry. Perhaps it will prove to be a precedence to many more OECD
country covered transactions".
being called for offshore oil exploration
The Ministry of Power
and Energy is going ahead with plans to call for bids for exploration
of Sri Lanka’s petroleum resources offshore. The Director General
for Petroleum Resources, Ministry of Power, Titus Jayawardena is
presently conducting booths at an annual energy convention in Dallas,
Texas in the United States and later on at a symposium in London in
the United Kingdom.
showcasing Sri Lanka’s oil exploration potential with the aim of
attracting interested parties and multinational companies to conduct
The Ministry believes
that Sri Lanka would reach saturation of hydropower with the
completion of the Upper Kotmale Hydro power project. This would result
in the Ministry having to turn to thermal power for electricity
According to the
Chairman, Ceylon Petroleum Corporation, Jaliya Madegama, the Ministry
would appoint the Petroleum Resources Development Committee (PRDC)
shortly. The PRDC would handle all maters relating to the countries
The committee would
consist of secretaries to the Ministries of Power and Energy, Finance,
Environment and Natural Resources, Fisheries and Ocean Resources and
Defense and also nominees by the Power Minister, who would also
The Ministry is placing
great importance on petroleum exploration as oil generation would
drastically curtail foreign exchange costs and solve Sri Lanka’s
energy problems. Sri Lanka’s total imports of crude oil and other
petroleum products continue to rise at a rate of 8% and presently
accounts for approximately 10% of the total imports of the country
making it a considerable drain on the foreign exchange earnings.
Initial seismic survey
carried out by TGS Nopec, a Norwegian based geophysical research
company, has shown that there is certain hydrocarbon accumulation in
the Cauvery basin and the gulf of Mannar along the western coastal
belt. According to scientific research, the accumulation of
hydrocarbon is a good indicator to ascertain whether oil is situated
in the seabed.
The Ministry estimates
Cauvery Basin to contain 10 to 50 million barrels while studies have
shown that the Gulf of Mannar might contain around 100 million
Initially the PRDC is
to offer five blocks for petroleum operations. Petroleum operations
include exploration, development and recovery of petroleum resources.
A prospective company has to enter into a Petroleum Resources
Agreement (PRA) to conduct such operations. The cabinet would then
consider the application and if satisfied, would enter in to a PRA.
Once the company has
concluded the signing of the PRA, the company would be able to conduct
geological surveys, well drilling, production testing, separation,
processing, storage, and recovery and to market the petroleum
include crude oil, natural gas, and hydrocarbons. The PRA would
contain the contracting companies ability to claim the costs of
recovery for the petroleum operations conducted.
During the course of an
exploration if a contracting company discovers petroleum resources in
commercially viable quantities the company would submit a project
development and investment proposal, which may be approved by the PRDC.
On approval, the company would be given a development licence that
would authorise it to recover and save commercial quantities of
petroleum resources in designated areas.
The royalty is
payable in cash or kind.
The contracting company’s
share of petroleum resources recovered would be exempt from all
customs and export duties but would be liable for taxes, fees or
levies of the relevant company’s share.
The cabinets of
ministers are also entitled to impose additional conditions to be
attached to the Development License for the maintaining of navigation,
protection of the environment, mitigating adverse social impacts on
communities and in the interest of national security.
The government could at
any time cancel or suspend the Development License for contravention
of the conditions stipulated.
According to past oil
explorations carried out in similar areas oil drilling is an expensive
venture requiring extensive capital. The Ministry estimates that an on
shore test well cost around US $ 5 million while off shore could well
cost around US $ 10 million to drill. Hiring of oil drilling machines
and equipment would cost millions in Sri Lanka rupees.
According to reports
India has also requested two blocks for a PRA.
Policy of the
United People’s Freedom Alliance government on Energy
As energy is connected
to every stage of production, action will be taken to resolve the
power crisis, treating it as a priority issue vital for community
life. A new Central Energy Authority affiliated to the Ministry of
Power & Energy Authority, responsible for management of power
generation and alternative sources of energy will be established.
Under this authority,
environmental, scientific and technological knowledge will be utilised
to study the already identified and unidentified energy potentials.
Action will be
initiated to curb misuse and wastage in production and distribution of
energy, and essential technologies and management techniques will be
introduced for this purpose.
Specially in the sphere
of electricity, steps will be taken to add to the national grid, 60
abandoned small grids out of over 500 small grids still maintained.
bosses ‘fooled’ the market
Judy Boynton is the
third Shell executive to step down in the recent past. Shell
executives knowingly hid the company’s oil and gas shortfalls as far
back as 2001, an independent review has revealed. In its most damning
piece of evidence it quotes one of the firm’s former executives
writing about ‘lying’ and how the firm had ‘fooled’ the
Following the review,
Shell downgraded its reserves for the third time in 2004 and its
finance officer resigned. Judy Boynton became the third casualty of
the company’s reserves crisis. Although she was not herself accused
of wrongdoing, her position was said to be untenable.
The Shell scandal first
broke back in January when it made its initial announcement that
reserves were being downgraded. last week’s internal, but
independent report firmly placed the blame on the shoulders of former
Chairman Sir Philip Watts and oil and gas chief Walter van de Vijver,
who had both resigned over the earlier reserves’ downgrades.
The review said that
although many executives had been aware of the problem, Sir Philip and
van de Vijver were "the most powerful forces in management"
and the issue was "particularly within their expertise and
experience". At the same time it cleared current members of the
Shell board of "material responsibility". Two of the key
memos the review unearthed were written by van de Vijver himself.
In one he wrote about
how investors could not be "fooled" forever, and in the
other he said he was "sick and tired about lying about the extent
of our reserves issues". Shell has cut its reserves for the third
time in as many months but a month later van de Vijver told staff to
destroy a document outlining part of the reserves shortfall, because
it was "dynamite". And while van de Vijver last week issued
a statement saying he had alerted the company to the reserve problem
back in 2001, the report said that he had pushed it as a "serious
and immediate business problem" rather than "a regulatory
and disclosure failing". Shell’s latest downfall means that its
oil and gas reserves for 2002 are now a combined 4.35 billion barrels
lower than previously thought. It also cut its reserves for last year
by 500 million barrels.
The overall impact of
the moves would be just over US $100 million per annum (£55.4 mn), it
said. The key task of management will be to rebuild investor
confidence. Chairman, Shell, Jeroen van der Veer said he hoped the
report would bring the matter to an end. "The [report and review]
draws a line under the uncertainties that have surrounded the status
of our reserves," he said, and added, "Despite the
difficulties of recent months, Shell is a sound and profitable
"When you have
these scandals, one of the things the market wants to see is a house
cleaning," said Lyle Brinker, from the US oil and gas industry
consultancy, John Herold. Despite van der Vijver saying he hoped to
draw a line under the matter, the saga is still not at an end. Shell
is under investigation in the US by both the Securities & Exchange
Commission and the Justice Department.
with NCCSL to
The National Chamber of
Commerce of Sri Lanka (NCCSL) has recognised that the information
needs of it’s SME members is not restricted to just those in
Colombo, and now with the introduction of technology has broadened the
access to dynamic information and content.
Joining hands with the
Information and Computer Technology Agency of Sri Lanka (ICTA) through
the ICTA’s pilot project programme, NCCSL has
established information centers all around the island.
centers have e-mail and connectivity to the NCCSL center in
Colombo, through which queries raised by SME members could be
facilitated on an individual one-on-one basis. Importantly,
these centers also have internet facilities and SME
members can browse the Internet to find information, buyers
& markets for their products.
A further benefit under
ICTA’s & NCCSL’s project is to develop websites for each of
the, approximately 800, District SME member companies, where the
profiles along with visuals of the company and their
products/services could be displayed. In addition each NCCSL
District office will have a ‘Member’s Website’ where non-NCCSL
members can view the member company profiles. The business information
portal http://www.sme.nccsl.lk will connect the entrepreneurs of
the region to the global business information super highway. This web
portal eventually will be equipped with a payment gateway, which will
be implemented with the assistance of Lanka Com Services, to
promote and assist online business to SME members.
Bank of Sri Lanka
appoints deputy governor
The Central Bank of Sri
Lanka with the concurrence of the Minister of Finance has appointed
Dr. Ranee Jayamaha as its Deputy Governor. This appointment is
effective from April 19, 2004.
Dr. Ranee Jayamaha has
been in the Bank for 32 years with wide experience in the Economic
Research Department, Banking Development Department and more recently
as Assistant to the Governor in charge of several policy and
operational departments. She holds a Special Degree in Money &
Banking from the University of Ceylon, Peradeniya, Master’s Degree
in Economics from the University of Sterling, Scotland U.K. and Ph.D.
in Monetary Economics from the University of Bradford, U.K. On
secondment by the Central Bank she has served as the Secretary to the
Presidential Commission on Finance & Banking, Advisor to the
Financial Sector Reform Committee, Ministry of Finance and Special
Advisor (Economics) at the Commonwealth Secretariat, London.
Dr. Jayamaha has
provided leadership for the successful implementation of payments
reforms and several key projects under the Central Bank’s
modernization programme. In recognition of her contribution, the
Central Bank has awarded Dr. Jayamaha the ‘Outstanding Service Award’
for the year 2002.
She has authored many
articles in reputed international and local journals in the areas of
economics, banking & finance, debt management etc.
Dr. Jayamaha succeeded
P.M.Nagahawatte, Deputy Governor who retired from the Central Bank on
April 18, 2004. This is the first time a lady has been appointed to
hold this position of the Bank.
call for national
The unstable political
situation in the country is a negative signal for both small retail
investors and large-scale investors. "The bourse pluged every
time a political uncertainty prevailed in the country. Due to the
political instability, many retail investors would panic and sell off
their shares, creating panic selling in the market," says Manager
Research, HNB Stock Brokers, Hasitha Premaratne. " We invest a
limited amount of money, which we would have saved in the bank
otherwise, therefore when we witness a sudden political disaster in
the country, we try to sell our shares so we could recover our money
and reinvest in the future," says G. Rodrigo a retail investor at
investor is taking a sensitive approach, when it comes to peace talks.
The government should resume the talks which would bring a boost to
investor confidence" Premaratne said. He also stresse the
importance for a national government between the two major political
parties, which may regain investor confidence in the market.
T.T Al Nakib a
large-scale global investor from Kuwait said the market performed
positively two years back. "If we look at the market several
years ago we were able to sell the shares above book value with less
difficulty, however today when we buy shares it is very difficult to
sell them above book value because the market is not at its best"
He also shows concerns
about the political situation in Sri Lanka. "There is political
instability in the country for sure, and we don’t know about the
market trend," he said. He stresses the importance for the market
to have fundamental reforms such as the companies act.
Al Nakib who has traded
in the local bourse for the last four years says, "The market is
stagnated and it needs adjustments, so it could perform in line with
the Singapore Stock Exchange (SGX)". According to Al Nakib the
Security and Exchange Commission (SEC) in Sri Lanka requires immediate
reforms to protect the rights of the shareholders, specially the
foreign investors, who may otherwise invest their money in other
global markets. He alleges the SEC of not taking any action to
safeguard the investors and although the laws are written in the books
of the SEC, they are not being effectively implemented. He also
emphasizes both the present and past governments and the SEC are
responsible for the present situation of the bourse.
He stated that
approximately 60% of shares traded in the market are sold below book
value, which is a bad sign for the local stock market. "Its much
easier to get in to the local market, but really difficult to get out
due to the liquidity position at the bourse," Nakib points out.
K.P Fernando, a retail
small scale investor says they invest in expectations of higher
returns. " One year ago we were able to make good profits in the
bourse, but today we hardly make any profits, due to lack of momentum
in the market," said Fernando. According to Fernando the bourse
today depends mainly on the political situation of the country, and it
has been a fact that during the previous regime the market was
performing at its best, while under the present government the market
is falling, which is not attractive for future investments.
Fernando, an investor
in the market since 1986, has witnessed the market situation during
different conditions and regimes. He, along with other investors,
shares the same view that a political solution is required for the
market to perform at its optimum level, until such a solution is
achieved, he does not see any future growth for the stock market.
M. Hussein, another
retail small scale investor, regards the market with a negative view.
He stated that the politicians should be held responsible for the
present situation of the market. Hussein, a newcomer to the share
market is regretting the investments he has made. "It was the
decision of the government to reduce interest rates that encouraged me
to invest in the market. Most of my earnings used to go to the fixed
deposit before the interest rates reduced. I used to receive around
10% for the fixed deposits, however after they reduced it I used to
get about 7%. Then a friend of mine told me about the stock market,
and the way it works, so I decided to withdraw my cash from the fixed
deposits I had and invest it in the market," said Hussein.
expectations to make big profits at the market were short lived,
because the shares he purchased lost its value in a short span of
time. The investment he made was not the best of choices he made, and
he is waiting for a quick political solution, which he believes would
raise the market. Then he hopes to sell off his shares and recover the
cash he invested.
R. Piyasoma, a retired
government servant, contrary to the other investors, was optimistic of
the market. He believes the market has the momentum for growth in the
future. According to Piyasoma the market fell drastically on the first
day of trading after the Freedom Alliance victory.
Many expected the
downward trend of the market to continue the following day, however it
did not happen due to investors willing to buy shares at low prices.
Piyasoma who earns a sufficient sum of profit in the market says he
would continue to trade at the stock exchange, since he believes in
the long-term growth of the market.
credit card payments made easy
To provide even greater
convenience to their credit cardholders Standard Chartered Bank
recently signed up with Commercial Bank of Ceylon to accept credit
card payments on their behalf at all their branches Island wide. All
Standard Chartered credit cardholders can now make payments in cash at
any of the 117 Commercial Bank branches including their Minicom
Centres located at Cargill’s Supermarkets and Arpico Malls. In an
era of rapidly changing life styles and time constraints, this payment
mode, which allows for significant flexibility in terms of time and
geography is a significant value addition.
Commercial Bank of
Ceylon account holders who enjoy Standard Chartered Credit cards can
also use Commercial Bank’s internet Banking service (Comserv) to
settle their bills. A nominal fee of Rs. 10 or 0.75%, which ever is
higher of the transaction value, will be charged to the customer when
using Commercial Bank of Ceylon to make a payment.
This is in addition to
the customer’s ability to make payment at any of Standard Chartered’s
existing payment channels such as their network of 9 branches, 10
cheque deposit machines or the 12 ATMs. Standard Chartered account
holders also enjoy additional payment channels of free phone banking
or direct debits.
Speaking about the
agreement with Commercial Bank, Head of Consumer Banking, Standard
Chartered, Sabry Ghouse said, "This is just the start of our
strategy to provide our customers with a value proposition and product
that will far surpass customer expectations."
He added, "I can
also confirm that within the next few months our cardholders are in
for a range of exclusive privileges and benefits, which have never
been seen before in the market."
Another feature is that
customers can obtain upto three supplementary cards and our unique
feature is that each supplementary card can have a different limit
thereby limiting usage according to need. For example, it can be given
to your child, but a lower limit ensure spending is controlled and
allows for financial planning.
"We also carry
value additions on our credit card such as safetynet, which is an
invaluable repayment protector insurance benefit covering your credit
card outstanding balance, a range of insurance benefits at special
rates, travel, hospitalization, motor and householders insurance, 24
hour dial-a-doctor service, cancer detection and special offers and
promotions at leading merchants and hotels," said Ghouse.
Record breaking year
for Ceylinco Insurance
General achieved a record increase in turnover of over Rs. billion for
the first time in the history of the Sri Lankan insurance industry.
The year 2003 saw Ceylinco Insurance General realise a net turnover of
Rs. 3.7 billion, compared to Rs. 2.6 billion in the previous year.
This translates into a 43% growth rate compared to 2002. The recorded
increase in market share for Ceylinco General rose from 23% in 2002 to
28% in 2003. Ceylinco Motor Insurance in particular did astoundingly
well, gaining a 31% market share in 2003. The growth rate for motor
insurance alone was a phenomenal 103%. Chief Executive Director,
Ceylinco Insurance Co. Ltd., Ajith Gunawardena, said the key reason
for this growth in the motor insurance sector was Ceylinco’s new ‘on
the spot settlement’ scheme, which has become very popular with the
insuring public. ‘On the spot settlement’ won Ceylinco the ‘most
innovative’ award at the Asian Insurance Industry Awards in 2003.
Commenting on their
recent success Gunawardena pointed out that it was largely due to the
commitment and achievement of the Ceylinco Insurance sales force.
Ceylinco Insurance has a sales staff of over 600, spread across 66
branches island wide. The sales force was rewarded at the l5th Annual
Sales Conference held recently at the Colombo Hilton under the
patronage of Chairman, Ceylinco Consolidated, Deshamanya Dr. Lalith
Kotelawela and Sicille Kotelawela.
Over 375 staff members
received handsome cash awards for their outstanding performance during
the year 2003. Many entered Ceylinco’s ‘Ten Million Circle’. One
staff member entered the hall of fame while others joined as either
gold, silver or bronze award winners, certificate members and members.
With their current success, coupled with almost two decades of
experience in the Sri Lankan insurance industry, Ceylinco Insurance is
confident of its ability to climb to even greater heights.
LiveWIRE launches fifth
Young Business Start-up Awards
Shell LiveWIRE launched
the Young Business Start-up Awards (YBSA) for the fifth consecutive
year recently. The YBSA 2004 is targeted at start-up businessmen in
the Micro and Small Enterprise Sector (MSME) in Sri Lanka. Rs. 400,000
in prizes will be on offer at this year’s Young Business Start-up
Awards ceremony, with the finalists receiving substantial cash prizes,
publicity, and vital networking business links.
The YBSA 2004 will have
three regional heats, conducted in July, which precede the national
finals in September later this year.
"In an effort to
make the competition more accessible to rural based entrepreneurs and
to encourage greater regional representation from all nine provinces
in the country, the three regional heats will be held in the Galle,
Anuradhapura and Ratnapura districts this year," said Project
Manager for Shell LiveWIRE, Michael de Soyza.
The awards for 2004
also include the Northern and Eastern provinces of the island for the
first time. The Chambers of Commerce in Jaffna and Vavuniya are
working closely with Shell LiveWIRE to disseminate the necessary
information to potential applicants in these areas. The CEO of the
Vavuniya Chamber of Commerce, Pathmathanesh, commenting on the
competition said, "We are very pleased to be a part of the YBSA
2004, and we are looking forward to sending as many applications as we
can from the Wanni."
The Young Business
Start-up Awards programme aims to recognise the achievements of young
people aged between 16 and 32 years who have been in business for not
less than three months but not exceeding two years. All legal
businesses are eligible to apply for the awards scheme. To be
considered for the awards, applicants have to produce a business plan
that will include a summary of the business, an analysis of the market
the business has entered, a marketing plan, details of costing and
pricing, a cash flow statement and a profit and loss account. Detailed
guidelines on how to produce a business plan are available through
Shell LiveWIRE. All business partners (if any) must also comply with
the specified age requirement and a photocopy of the applicant’s
national identification must accompany the business plan.
LiveWIRE is a people
centered organisation, funded principally by Shell, which concentrates
on youth entrepreneurship development. LiveWIRE is the main social
investment initiative of the Shell Companies of Sri Lanka. LiveWIRE
encourages youth between the ages of 16-32 to explore the option of
starting their own business, and assists those who pursue that option
through a range of programmes and initiatives. As one of its
objectives, LiveWIRE organizes the ‘Young Business Start-up Awards’
The closing date for
submission of business plans is the May 14, 2004.
26th National Conference
Two leaders in Sri
Lanka’s service landscape, Sri Lanka Telecom (SLT) and Smart
Media-The Annual Report Company, signed up with CIMA as Strategic
Partner and Value Added Partner respectively for the forthcoming 26th
National Conference to be held at the BMICH on May 27 and 28 this year
ClMA’s chosen theme
for the Conference is ‘Quest for Excellence - Leveraging Global Best
Practices.’ Sri Lankan companies, no matter how big or how small,
whether serving a domestic market or foreign markets, are increasingly
striving towards raising the bar. The Conference will revolve around
six key presentations by corporate leaders renowned internationally in
their respective fields. Their insights and experiences representing
global best practices are bound to be eagerly sought out by the
CIMA Sri Lanka’s
President, Pravir Samarasinghe commenting on the new partnership said,
"It is fitting that SLT and Smart Media have joined our fold.
They are two companies differing in proportion but bound by a common
philosophy and track record of providing a world class service in Sri
Lanka. Our telecom infrastructure and our annual reports led by SLT
and Smart Media respectively are considered to be the best in the
South Asian region. We are confident that both SLT and Smart Media
will make a proactive contribution towards uplifting the standards of
our conference this year."
Over 800 participants
comprising both local and international CIMA members, business leaders
and professionals from diverse disciplines are expected to attend the
conference this year. The particular ‘draw’ will be the topical
presentations delivered by a top international panel.
‘Best Bank’ for sixth time
The Commercial Bank of
Ceylon has been adjudged as the Best Bank in Sri Lanka for the sixth
consecutive year by ‘Global Finance’, one of the most prestigious
publications serving the international business community.
The annual survey by
the New York based monthly magazine’s editors, considers inputs from
industry analysts, corporate executives and banking consultants in
conducting their selection of the Best Emerging market Bank in each
country in the Region.
The criteria for
choosing this year’s winners included growth in assets,
profitability, capital strengths, strategic relationships, customer
service, competitive pricing and innovative products.
The Commercial Bank has
been named alongside famous establishments from Asia like HSBC, Bank
of China, ICICI Bank, India, Public Bank, Malaysia, Habib Bank,
Pakistan, Shinhan Bank, South Korea, Bank Sinopac, Taiwan and Siam
Commercial Bank, Thailand.
Commercial Bank, Amitha Gooneratne said, "We are honoured that we
have once again been chosen as the ‘Best Bank in Sri Lanka’. This
is an important endorsement that the quality of our products and
services offered to customers has been consistent, if not
"This award gives
us additional motivation to achieve our aim of establishing a visible
presence in the South Asian region over the next seven years and move
from being the No. 1 Sri Lankan Bank to the first Sri Lankan private
bank with a regional network in Asia," he added.
are attracting increased attention as the global economy
recovers," said President and Publisher of Global Finance, Joseph
D. Glarraputo. "We have identified the banks that provide a
superior service taking advantage of substantial opportunities for
growth in a sometimes challenging environment," he said.