BUSINESS

UPFA yet to confirm economic policies

By Ann Nicholas

Although Commerce 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.

However Finance 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 Authority."

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 situation.

Fernandopulle stated, "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.

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."

The market 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 international level.

JVP and the mixed economy

By Dinesh Weerakkody

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 make profit.

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?

Unbridled capitalism 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 past.

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 unsuspecting population.

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.

SCB 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 Hong Kong.

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 support."

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".

By Sehan Soyza

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.

Jayawardena is showcasing Sri Lanka’s oil exploration potential with the aim of attracting interested parties and multinational companies to conduct oil exploration.

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 generation.

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 petroleum resources.

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 appoint them.

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 barrels.

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 resources found.

Petroleum resources 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.

Shell 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 market.

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 business."

"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.

ICTA ties-up with NCCSL to promote local SMEs

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.

These information 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.

Central 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.

Investors call for national consensus

By Shehan Moses

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 the bourse.

"The large-scale 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" said Nakib.

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.

However his 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.

SCB 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.

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.

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’ annually.

The closing date for submission of business plans is the May 14, 2004.

CIMA 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 conference attendees.

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.

Commercial Bank named 
‘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.

Managing Director, 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 improved."

"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.

"Emerging markets 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.