BUSINESS

Govt. negotiating petroleum deal with Iran

By Shehan Moses

Power and Energy Minister, Susil Premajayanth has reportedly visited Iran for discussions regarding a soft loan to purchase crude oil from Iran. Premajayanth met officials from the Iranian government for a soft loan and purchasing crude oil from Iran at a concessionary rate.

The UPFA government on Friday dealt a body blow to motorists, splapping an additional Rs. 8 per litre on petrol, raising the price of a litre to Rs. 65. The government is also expected to hike diesel and kerosene prices shortly.

Speaking to The Sunday Leader, Finance Minister, Dr. Sarath Amunugama said that if the government receives this facility and succeeds in purchasing oil at a concessionary rate, this would ease the burden on the economy, thereby cushioning further price hikes.

According to sources, 70% of crude oil imported to Sri Lanka is purchased from Iran. Minister Amunugama is also due to visit Vienna next month to discuss the purchase of oil at concessionary rates. Amunugama would hold discussions with senior officials at Organisations for Petroleum Exporting Countries (OPEC).

"OPEC is providing oil at concessionary rates to countries such as Sri Lanka which finds it difficult to maintain oil prices locally due to the boost of world oil prices," Amunugama said. According to him, the US$ 150 million soft loan from India will be used to cover the increased oil importsz bill.

"Last year's budget has allocated funds for purchasing oil at the price of US$ 30 per barrel. However, during our tenure the price of a barrel is US$ 38. Therefore, we have to pay a higher price to purchase oil than the price stated in the budget and as a result we have to use this US$ 150 million credit line to cover up this extra cost," he said.

Chairman, Ceylon Petroleum Corporation (CPC), Saliya Medagama told The Sunday Leader there is an immediate need for the government to increase oil prices. "The government should consider a price revision in order to maintain prices accordance to international oil prices," he said.

He further stated the government has to pay Rs. 1 billion as compensation to CPC for the month of July. According to Medagama, the CPC has arrears of Rs. 4.7 billion since February. "We cannot operate in the future with these losses. The government should pay CPC its due payments from the loan acquired in accordance to the Indian Line of Credit," he said.

According to Medagama, a litre of petrol is brought to Sri Lanka at the cost of Rs. 29.60. However, after relevant taxes and other overhead costs are added, the price of petrol would increase to approximately Rs. 65.

Managing Director, Lanka Indian Oil Corporation (LIOC) M. Nageswaran told The Sunday Leader if the government decides to settle the dues related to petroleum from the Indian credit line, it would ease the burden in the local market.

However, Minister Amunugama told The Sunday Leader the government presently has no plans to use the Rs. 150 million to settle dues from imports of crude oil to Sri Lanka. "We are at an early stage to decide whether to pay the dues of petroleum imports," Amunugama said.

Sri Lanka's annual requirement for petroleum products is 3.4 million metric tonnes, of which 3.1 million metric tonnes is crude oil while 1.1 million metric tonnes is refined products. Sri Lanka spends around US$ 1,000 million for imports of petroleum products.

Economic turmoil on the cards

By Jamila Najmuddin 

With allegations abound that the government is expected to issue a development bond in exchange for US$ 50 million from the Non Resident Foreign Currency (NRFC) accounts in local banks next month in order to sustain current spending, Former Deputy Minster, Finance, Bandula Gunewardana told The Sunday Leader that he raised a point in parliament last Wednesday with regard to the government taking such a decision.

"The government is committing a serious offence by borrowing from the NRFC accounts as this includes the savings of expatriate Sri Lankans," he said, adding, "if they borrow from the NRFC, the expatriates would stop depositing foreign currency in local banks and due to this the country would lose foreign exchange," he said

However, when The Sunday Leader contacted the Finance Ministry, Ministry officials denied all allegations stating they were false and baseless. "No such decision has been taken to date," officials claimed.

Meanwhile, Gunewardana said the country is presently facing an economic disaster with the government in debt as the installments on the borrowing from dollar bonds have not been paid to local banks and further, the government has not received the two installments of the poverty reduction growth facility from the International Monetary Fund (IMF).

"The country has no financial discipline and as a result the cabinet is currently unaware as to what exactly is taking place," he said.

The former Deputy Minister added that if the depreciation of the rupee continues, the cost of living would rise immensely as essential items such as dhal, sugar, wheat grain and rice are all being imported.

"Raw materials such as petrol, diesel, motor vehicles and building components are all imported as well and if the dollar keeps increasing, this would have a serious effect on the country's import industry," Gunewardana said.

He added that the country's export industry was also affected as a result as most of the items that were required to make the finishing products for the export market were all imported.

"Today in the garment industry, essential items such as buttons and cloth are all imported. Even though the exporters are unaware of it, their profit margin has decreased to a great extent due to the high import bills," Gunewardana said.

In order to save the economy from collapsing, the government has to prepare a micro economic policy, which should be implemented rather than kept for reading purposes only, he said.

"The economic policy that the government has currently prepared seems to have been kept for reading purposes only as nothing has been implemented to date," he charged, adding that at the time the UNF handed the government over to the UPFA, the outstanding liability on Treasury bills amounted to only Rs. 11 billion, but today the liability now exceeds Rs. 52 billion.

Meanwhile, leading businessmen in the country have also sent out panic signals, claiming that the country is headed for disaster if the government does not take immediate steps to stablise the rupee and prevent the dollar from increasing further.

With the import market currently facing a crisis due to the rapid increase in the dollar, leading businessmen claim there is a serious economic crisis brewing in the country and if the government failed to take immediate action, the country would face an imminent crisis.

Speaking to The Sunday Leader, Chairman, Joint Business Forum (J-Biz), Mahendra Amarasuriya said if the dollar continues to rise, the prices of imported raw materials such as oil and petroleum would rise immensely, thereby increasing the cost of living.

"Other essential products such as sugar, milk and fish would also rise as these products are also imported," Amarasuriya said.

He added that if the government could not control the prices of these products and put the "burden" onto the consumers, then the country would suffer due to the high cost of living.

"Another important factor that has to be considered is the power cost as the price of electricity has already increased. The government has to act as soon as possible to control these prices," Amarasuriya said.

Meanwhile, Research Manager, HNB Stockbrokers, Hasitha Premaratne told The Sunday Leader that the rapid increase of the dollar would affect not only the imports industry but also the healthcare system.

"Today in the private hospitals most of the medicines are imported. Once the import costs are increased, it will have a direct impact on the consumers," Premaratne said.

He further said other important sectors such as agriculture and power and energy would also be affected and the end result would be a rapid increase in the cost of living. "The government should arrive at an appropriate decision soon in order to control the economy," he said.

Chairman, Ceylon National Chamber of Industries, Ranjith Hettiarachchi told The Sunday Leader that today, most of the country's local industries were seriously affected due to the rupee depreciation as over 60% of raw materials are presently being imported and if the government did not take any action soon, the prices of products would increase rapidly.

"Already the country has lost competitiveness due to the many number of holidays and the high cost of electricity. With the dollar increasing almost every week, the final result would lead to the country facing an economical disaster," he said.

Ranil, Chandrika - country first 

By Dinesh Weerakkody 

The UPFA's showing on July 10 to many MPs in the alliance was a landslide victory for Chandrika and her key alliance partner the JVP. What these MPs failed to realise was that the UPFA had lost over 450,000 votes in just three months and to add to that the voter turnout was less than 50%. This was by no means a mandate for change.

Ironically for Kumaratunga, the PC result gave her very little to crow about because the UPFA had only secured around 28% of the total number of registered voters. More than half the electorate had boycotted the election because the public had got fed up with both the UNP and the UPFA.

To many the PCs were a waste of time and a burden for the taxpayer. Moreover, having won the general election a little over three months ago the party was destined to win this poll. Also three months was no doubt too short a period to pass judgment on a new government, but the events during the last three months was definitely disadvantageous to the UPFA.

UNP failure

The task for the UPFA however was made easier because many of the UNP organisers were asleep and failed to infuse young candidates with a better track record to contest the PC elections. Furthermore, the UNF did very little to inform the people of this country of the peril the nation finds itself in and to counter the multitude of untruths and contradictions that was being spread in the state media by the JVP.

For the UPFA, the PC polls results will help them to take stock and do what is required to secure a majority to conduct business in parliament. On the other hand, for the UNP this is a good opportunity to regroup and bring in the young and the educated to carry forward the party mission and develop another group to reach out to the rural poor before the upcoming presidential election in November 2005.

The UNP could not generate any goodwill from the public despite the UPFA not fulfilling any of its promises, therefore the party more than ever needs fresh talent to work with Wickremesinghe to give the party direction. The UNP needs a Ranjan Wijeratne or a Gamini Athukorale as general secretary to put the UNP machinery back to work and to take on the propaganda savvy UPFA leaders.

Like the BJP, the UNP should be working aggressively to stage a major comeback and maintain unity and discipline within its ranks. Focusing on issues that are detrimental to the party and the country will only help them to remain in opposition. It is the UNP's job to inform the people of the perils facing this country, which the government will not do, and also force the government to keep its manifesto promises.

If they fail to do this effectively in the coming months they could very well isolate the party further from the electorate.

Lankan economy

Few people have yet come to terms with the fact that we are in deep trouble. We have a President determined and desperate to hang in post 2005, a minority government that has so far failed to pass a bill in parliament because it lacks parliamentary majority, an opposition pulling in different directions, a depreciating rupee that could very well derail the government's economic programme and push the cost of living to record levels and to add to all this a suicide bomb blast that jolted the markets and could very well jeopardise the peace process.

Therefore, now that the elections are thing of the past, the UPFA should start focusing on winning back the confidence of our lenders. Borrowing money from the market to meet current expenditure will only push interest rates further and fuel inflation. In fact the liability on Treasury bills has increased from Rs .11 billion to Rs. 52 billion in three months.

Therefore, we need to get international support to bridge the budget deficit, if not our foreign reserves will erode very fast, depreciating the rupee big time. However, aid will not be forthcoming until we get the peace process back on track. So at least for the sake of the country Kumaratunga and the JVP should try and work with Wickremesinghe to get the peace process back on track.

Playing games with the LTTE will only lead us back to war. In order to secure a working majority, the UPFA should try and work with the opposition without intimidating the opposition unnecessarily and postponing parliament. Buying over MPs will be only a temporary measure. This country needs stability to develop and grow.

On the other hand, if Kumaratunga tampers with the constitution to ensure her survival, she could very well inflict deep and abiding wounds on the polity of Sri Lanka. Then if the UNP continues to pull in different directions they will fail to curb her excess and also fail to ensure the government keeps to its promise of providing employment for those unemployed.

Currently the government is preoccupied with remaining in power by any means and is not focused on resuscitating the economy but is focused on taking short-term decisions at crisis management compounding the economic problems long-term.

Peace talks

As a result business confidence will continue to be at low ebb and international assistance will not be forth coming until the resumption of peace talks. The government at least now must accept the reality that they are a minority in parliament.

The government should stop portraying that the present crisis as a constitutional crisis. Because we all know that this crisis is essentially stemming from a number game in parliament. Therefore, before the government brings forth a new constitution the government needs to put our economy and the peace process back on track, if they do not do so now, the reality we will face belatedly may well be that we are without a country.

According to JVP sources, they are keen to ensure the UPFA manifesto promises are met, because the JVP leadership is coming in for increasing ridicule and criticism for not delivering on a single of the promises made by the alliance. In fact the majority that voted for the alliance in April did so with the hope that the UPFA would be guided by the JVP and deliver the goods.

It is with this in mind that the voters made sure that most of the JVP candidates were elected to parliament, and to the PCs. The JVP has now realised that governing with CBK is no easy task and they run the risk of getting ridiculed big time. Very soon the JVP will also have to take a stand on the ISGA and has clearly stated they would reject the ISGA outright.

JVP accountable

Giving warnings to the President will not help them to satisfy its rank and file. The party may gradually therefore try to give itself a new identity distinct from the alliance. However, the opposition should ensure that the JVP is held accountable for all UPFA blunders, they should not be allowed to pass the buck to the SLFP.

Therefore, if the JVP fails to get the alliance moving to put the country back on track it will end up being remembered for failing to pass a single bill in parliament for three months, for giving false promises and devaluing the rupee big time, a record that could affect its popularity at the next general election, especially if 75% of the registered voters decide to cast their vote.

So what the people want from the UPFA is to get down working and delivering on its multitude of promises, and for the opposition to do its part by informing the masses and curbing the government's excess.

The business community has appealed many times to our national leaders and heads of political parties to get together at least for three years and work as a government of national unity and reconstruction. Therefore it is imperative that Kumaratunga and Wickremesinghe put the country first and shed their political differences and work together to pull our country from the current political crisis.

Kumaratunga and Wickremesinghe must realise that they have to get smart to the facts, if not this moribund nation may well be on the point of no return. Furthermore, we are facing this serious crisis because our two main political parties cannot read the writing on the wall.

Therefore, making repeated attacks on the UNP and Wickremesinghe, or enacting a new constitution is not going help this country to survive the current crisis. So it is important for Kumaratunga and Wickremesinghe to shed their political differences and work together to rebuild this country.

However, for this to happen, Kumaratunga and the JVP will have to stop lambasting the UNP and Wickremesinghe for all their problems in order to gain cheap political mileage. If not we will only help the LTTE to create more chaos in the south. Also if Wickremesinghe's UNP is serious of forming a government in the future, they too must act in accordance with that reality and be focused on pulling Sri Lanka away from the edge of the abyss.

Future

The recent bomb explosion and the utterances of the LTTE could affect the tourism industry very badly. Occupancy has already fallen and the wheels of the economy are now turning slowly. The constitution is being challenged and parliament is not functioning.

The reality is internal political animosities are standing in the way and preventing the emergence of a national consensus. In this desperate situation, at least now, our political parties must size up the situation and realise that they need to work on the basis that the nation must exist for the government to exist and that they are elected to serve the people and not to be served by them. If not the people of this country will turn against the PA, JVP and the UNP.

Treasury in a quandary 

By Mandana ismail Abeywickrema 

Chairman, Joint Business Forum (J-Biz), Mahendra Amarasuriya told The Sunday Leader the weakening of the rupee shows a shortage of dollars in the country and the impact on the Treasury has resulted in the government auctioning Treasury bills.

Amarasuriya said the country's increasing oil bill, wheat flour and fertiliser subsidies and the government's involvement in the Ceylon Electricity Board (CEB) have put the Treasury in a somewhat difficult position.

He pointed out that all these issues together with the government's policies play a key role in the country's economy, adding that while the previous regime adopted a policy of stopping and cutting in a bid to increase revenue, the present government has pledged to give and increase and their economy policy too is considered a "pro-poor policy."

Amarasuriya observed that the government has to deliver, adding that the indications so far show that the country will see an increase in the level of inflation, which would also create a cash crunch on the Treasury.

However, Amarasuriya said his personal view is that it is difficult to maintain a low inflation level and solve the employment problem and that the level of inflation in China still remains quite high.

He observed that an increase in the level of inflation is all right as long as the country generates enough employment and pointed out that the power sector also plays a key role in the country's GDP.

Citing an example, he said the country recorded a negative GDP growth at the time it was also facing a power crisis. Therefore, Amarasuriya asserted that the power sector should also be looked into.

The Ceylon Chamber of Commerce (CCC) maintained that it is too early to give an opinion on the performance of the economy given the fact that the government has just released its economy policy. However, the CCC states the increase in global oil prices would have implications on the country's balance of payments and on local oil prices.

The CCC further said although the government has managed to secure credit facilities from the Indian government to meet part of the fuel bill in a bid to reduce the impact on the balance of payments, the progress is yet to be witnessed.

The CCC noted that while the depreciation of the rupee will provide benefits to some of the exporters, it would not be beneficial to certain others like the bulk tea exporters. However, the depreciation will exert pressure on prices of imported items, which the government has cushioned so far and if the local oil prices are increased, it will have an effect on the transport and energy sectors as well as on consumer items due to the cost of transportation.

The Sri Lankan economy, which registered a growth of 6.2% during the first quarter of this year saw a growth with an expansion of 9.5% in the service sector. During the same period, exports increased by 16% as against the exports during the same period of 2003. Imports have also risen at a faster pace.

The consumer price inflation, according to the CCPI, bottomed in May and increased to 3.9% in June.

Be that as it may, the mid year fiscal position report released by the Finance Ministry there has been a decline in the total cash inflows when comparing the period between January-April 2003 and the same period of 2004 with the total cash outflows from operating activities seeing an increase as well.

Bata closure sends shockwaves 

By Shehan Moses 

The closure of the Bata factory due to labour unrest has sent shock waves through the business community regarding future investments to Sri Lanka.

Director, Industrial Relations, Board of Investment (BoI), L. Wijeweera told The Sunday Leader that if such incidents occur it would send a negative message to potential foreign investors. However, he emphasised that this effect could be overcome by other benefits Sri Lanka offers to its investors. "The labour force in our country is significantly cheaper than other countries in the region. This would encourage investors to invest in Sri Lanka," he said.

Chairman, Ceylon National Chamber of Industries (CNCI), Ranjit Hettiaarachi however told The Sunday Leader that cheap labour in Sri Lanka cannot overcome the negative impact to Sri Lanka. "Investors are eying countries which are productive rather than countries with cheap labour. Regardless of the cost of labour at the end of the day what most matters is productivity," he stressed.

According to Hettiaarachi, a country with productive resources, both physical and human, would lead to economic growth.

Meanwhile, Wijeweera stated the geographical setting of Sri Lanka is also a favorable sign for foreign investors. "We are a platform to other Asian countries and the Middle East," he said.

Wijeweera pointed out this is a controversial situation because on one hand, the government should safeguard labour rights and on the other hand, investors are looking for the best returns for their investments. "There should be a balance between the labour rights the government is offering and how the government encourages investors to Sri Lanka," Wijeweera stressed.

Speaking about the labour unrest within factories, Hettiaarachchi said the relevant authorities should take immediate action about this matter, which, if unattended to, would adversely affect the economy of Sri Lanka. "Investors are continuing to watch Sri Lanka and its environment. Therefore this type of action should be prevented," he said.

Hettiaarachchi added that authorities have to take immediate action to reopen all factories that have been closed due to this reason and the government should take measures to restructure labour related laws within the country.

"We should have the freedom to be flexible. Since the present labour related laws and policies are beyond our control, there is necessity to restructure the laws," he emphasised, pointing out that presently Sri Lanka is facing severe competition from imported goods.

"If there is labour unrest in Sri Lanka and factories continue to close down, the economy would be severely affected," he reiterated, adding that there should be continuous production. Hettiaarachchi further stressed that in the event production is halted due to labour unrest, importers would not face any competition from local producers eventually leading to a severe balance of payments deficits.

Meanwhile, Chairman, Federation of Chambers of Commerce in Sri Lanka (FCCISL), Nihal Abeysekara told The Sunday Leader that labour unrest in the country would send negative signals to foreign potential investors. "If they see Sri Lanka as a country with labour unrest they would simply not invest," he said, stressing that the present labour laws need to be amended.

"The National Labour Advisory Council which was established by the government with participation of trade union members and private organisations a couple of years ago is studying prospective changers to labour laws in this country. These changes would benefits all parties involved and once the proposals are submitted, it may prevent labour unrest thereby securing foreign investments to Sri Lanka," Abeysekara said.

LIOC IPO postponed for September 

Lanka Indian Oil Company (LIOC) is to go public in the first week of September, having postponed its Initial Public Offering (IPO) which was due to take place in August.

"We extended the IPO by a month due to documentation issues. We are presently overloaded with work which makes it difficult to go public on due date," said Managing Director, LIOC, M. Nageswaran.

LIOC is a fully owned subsidiary of Indian Oil Corporation (IOC), which purchased 100 filling stations from Ceylon Petroleum Corporation (CPC) for US$ 75 million in December 2002.

IOC is India's largest commercial enterprise with an annual sales turnover of US$ 25.22 million and profits of US$ 1,287 million. IOC is India's sole representative to be listed in the Fortune 500 magazine. The company is also the 17th largest petroleum company in the world.

IOC, which began in 1959 as Indian Oil Company merged with Indian Refineries and formed Indian Oil Corporation in 1964. IOC presently controls 18 refineries in India with a current combined capacity of 49.8 million metric tones per annum (MMTPA) or one million barrels per day. These include subsidiaries of Chennai Petroleum Corporation and Bongaigaon Petroleum Corporation.

IOC also owns and operates India's largest network of cross country crude oil and product pipeline of 7.7575 km with a combined capacity of 50.85 MMTPA.

The company has performed well during the previous financial years. For the financial year 2002-2003 it earned a turnover of US$ 25.55 million and for the same year a gross profit of US $2.28 million. The company also paid US$ 51 million as dividends for its share holders.

- S. M.

Pan Asia banking on technology 

Pan Asia Bank is moving ahead to achieve its vision of becoming the most customer preferred commercial bank in Sri Lanka by expanding its technology and is formulating new plans for the benefit of its clientele. With envisaged expansion of the customer base each year and in order to expand its business to target market segments, Pan Asia Bank has put its strategies in place and gearing up to achieve its long term objectives.

According to Head (Information Technology), Sujeewa Dissanayake, the bank initially strategised themselves by studying the market and concentrating more towards the retail businesses. "We want to expand our business more towards the retail market and we made the business formulas right by moving the business more towards being transaction oriented (retail business). Therefore in order to expand our business towards the retail market and our customer potential, we made a substantially large investment," Dissanayake said.

Dissanayake added that the first phase of the IT initiative was to invest in the bank's main servers. "In order to be geared up with business volumes, on par with current technology and to enable future expansion, we replaced our old servers and invested a sum of Rs. 20 million on new SUN servers V1280 and V880," Dissanayake said.

"The second phase of this IT initiative is to upgrade the banks client PC base to take advantage of the current technology and to use newer business processing tools. For that bank has replaced over 75 PCs and standardised flat screens across all its branches," Dissanayake said.

According to Dissanayake, the bank has also introduced a new credit card operation. "With the retail business being the focal point, we wanted to introduce a new credit card operation. In order to penetrate the card market, Pan Asia Bank introduced for the first time the miniature card and this unique product will also be the trend setter," Dissanayake said.

Dissanayake added that the third phase in this strategy is to strengthen the bank's Wide Area Network. He said that plans are currently underway to deploy the IP/VPN communication technology. "By moving into the IP/VPN technology we can introduce many innovative products and this will also enable the bank to have further enhanced secure connectivity using IP security - which means that there will be better security in all our branches and its network - and we can also expand to higher bandwidth as and when we require. By having a wider bandwidth the bank will be able to do more and more intensive work to improve customer service," Dissanayake said.

He added that even as the productivity increases this will also help lower the operational cost. "With these facilities by the end of the third quarter we will be moving our entire branch network to IP/VPN and currently an evaluation is underway in some of our branches with IP/VPN technology," Dissanayake said.

He further added that the bank will also be widening the access of ATM network globally and to be on par with the market, the ATM network will be linked to Cirrus. "With this facility our customers will have the ability to access or withdraw cash any where in the world. Currently we are involved with a local network only but we will be moving into the cirrus network, to enable customers to withdraw cash globally, by the fourth quarter," Dissanayake said.

The next phase of the strategy is to upgrade the bank's core banking software. Dissanayake said the banking software will be upgraded to the latest versions as this will enable newer features and will also be beneficial to provide speedy customer service.

One of the main projects that the bank is currently concentrating on is to launch an 'e-wave.' Dissanayake said this concept will be introduced to be on par with the market as well as to introduce a better features on internet and SMS banking.

"We have gone to the drawing board to launch an internet and SMS banking with many innovative functions which will further enable customers to perform full range of banking facilities through this solution," Dissanayake said.

"Potentially we are looking at technology called Wireless Fidelity (WiFi), allowing the customers to use their laptops and do internet banking or correspondence once they come into the bank. The bank would choose a few locations to enable WiFi 'hotspots' where customers can come into the bank and use their laptop computers to access internet banking and other 'e-wave' related features. "In Pan Asia Bank we believe customers come first and the profit follows."

Insurance plans with a difference from Takaful 

With the company's very name meaning joint guarantee, Takaful Insurance has an ambitious plan to take Sri Lanka to the world by offering insurance plans with a difference.

Established in the year 1999, Takaful Insurance has over the past five years earned the trust of a very large clientele due to the several benefits that the company has on offer and to expand its popularity even further, the company will launch three new products and also expand its branch network within the course of this year, both within and outside Sri Lanka

With five branches set up in the island and an overseas branch in Maldives, Takaful Insurance is a joint venture between Amana Investments and Takaful Malaysia. Speaking to The Sunday Leader, Head (Sales and Marketing), Takaful Insurance, Ashfaque Mohammed Ali said that the main concept of the company was to offer a savings concept where insurance is more like a benefit for its clients, to put it simply "value for money."

"In the conventional insurance industry customers have to pay a premium. The Takaful concept is that customers contribute money in a 'pool' and we are the managers of this money. We refund the remaining money after deducting any claims back to the customers, which we call surplus contribution," Mohammed Ali said.

According to him, since this unique concept was not included in the Insurance Act, the Insurance Board of Sri Lanka (IBSL), realising this concept was not only advantageous but also beneficial for all, went up to the extent of modifying the act in parliament to incorporate the Takaful concept of insurance. "We are extremely thankful to the IBSL as they were extremely cooperative and went to the extent of modifying the act in parliament," Mohammed Ali said.

Other than the existing life and general insurances, Mohammed Ali added that the company would also introduce three new products, out of which one was the first of its kind in Sri Lanka and a much needed and awaited one for the general well-being of the people of Sri Lanka.

"From the first of August we are launching three new products, 'Hearth and Home,' which is a family life insurance; the 'Baby Boomer' which is an education plan; and a new product called 'Hale and Hearty,' which is insurance for surgical and hospitalisation, and could be taken without the mandatory life cover as it is present with insurance products, which makes an important cover like surgical and hospitalisation expensive," Mohammed Ali said.

"This is an economically based product that we will offer to our customers who will realise the values that they will get for their money. We expect a lot of interest which will result in many Sri Lankans going for this plan which is based absolutely on our principal of 'Value for Money,'" Mohammed Ali added.

According to him, customers are given a refund according to the amount of donations that are made and provided they have not made any claims during that period. "Last month we declared a 13% refund when bank rates were going at 3% to 4%. We were giving our clients two and a half times more," Mohammed Ali said.

He added that when a client paid a premium of Rs. 5,000 the company gave back their customers a 13% refund with profits. "For big time insurance industries who are dealing in billions, these are very big amounts as they are absorbed into the company as underwriting profits, but we refund it back to non-claiming clients as surplus contribution. Can you imagine what a 13%-15% refund would do to a corporate client's bottom line? We are looking to provide value for money to corporates as well as individual clients. Today when a 4% to 5% makes a very big difference, what would 13% to 15% do?" Mohammed Ali queried.

According to him the company penetration is over 100% each year and in 2003 Takaful Insurance had a growth of over 170%. "People are under the impression that we are only a Muslim company but this is untrue as today we deal with clients from all religions and 30% of our clients are top non-Muslim clients. We intend to increase this number to anything between 40% to 45% and more by the year end. We cater to all segments of the community and the main reason why non-Muslim clients come to us is that they see a benefit because in a business anything that you get back or save is a profit," Mohammed Ali said.

With the company intending to open a branch in Pakistan, Mohammed Ali added that today, the main aim of the company was to take Sri Lanka to the world and to put Sri Lanka on the world insurance map as a company which provides value for money.

"We already have a branch in Maldives and now Pakistan has shown interest and requested us to open a branch in their country. Today in most countries it is mostly the European companies that open up their branches but we want to take Sri Lanka to the world as well. South Africa has also shown a keen interest for us to open a branch," Mohammed Ali said.

Mohammed Ali added that Takaful Malaysia, their parent company, was the largest Takaful operator in the world and today, they own 20% of Takaful Insurance. "This is very important as it gives our customers a lot of confidence and peace of mind just to know that we are coming from the largest Takaful operator in the world and each one of them is part of this world family," Mohammed Ali said.

Trex to revolutionise real estate in Sri Lanka 

Expat Homes (Pvt) Ltd, a revolutionary new real estate company incorporated only one year ago in Sri Lanka operates in a niche lease market for expatriates with their 'easy to use' website www.expatriate homes.net.

The company has recently expanded into sales with plans to offer relocation services, full property management and home loans, insurance and valuations.

This small company has merged with another operation. The Real Estate Company (TREC), www.realty .lk, an associate firm of Multivision who operates the local cable television network, to form Trex (Pvt) Ltd.

Through advertising in Multivision's Comet Cable channels and the Comet Cable programme magazine it is hoped to capture a significant market share from the independent operators leveraging the Multivision client viewer-ship that exceeds 100,000 all from the higher income segment in Sri Lanka.

This new alliance will be substantially stronger in the market place over the informal operators due to the huge marketing potential available via the Comet Cable TV.

A number of new companies have already entered the market but Trex will have an edge over the competitors due to its advertising strength and customer service.

The intention is to assist the general public, corporate clients, international schools and embassies. It is hoped to provide customers with the total solution when it comes to entering the property market in Sri Lanka.

"We are in the process of building a very strong real estate team in Sri Lanka. The entire real estate image in the country has to be changed and brought into like with international standards. This factor forms the basis of the strategic management plan drawn up to form the new venture, in an attempt to revolutionise the industry," said a spokesperson.

AMBA to ensure quality of MBAs 

As the demand for MBAs increases in the local market, so does the need to ensure the quality of the programmes which are offered by many business schools.

The Association of MBAs (AMBA) through its accreditation service assesses the characteristics of a business school and its MBA programme against a set of criteria established by the International Accreditation Advisory Board. The senior academic and cooperate representatives who sit on the board constantly monitor the accreditation criteria to reflect changes in business and management practice.

The benefit of the association is diverse. It provides a reliable list of schools, and enable employers to recruit top talent.

The AMBA offers a development service to help institutions further improve their product. It incorporates a quality audit scheme, which conducts a thorough audit of the schools' MBA provision and offers suggestion for improvement.

Furthermore, institutions can make use of their consultancy service, which can be applied to the whole or part of their provision.

University of Northumbria a Newcastle, U.K, through its principal representative in Sri Lanka, Business Management School, Colombo offered places to suitably qualified Sri Lankan students to enter the final year of the BSc (Hons) Applied Computing degree in UK.

Career  guidance workshop in Beliatta 

A career guidance workshop organised by the Center for Development of Personal Skills and Abilities of Getamanna  under the guidance of National Apprentice and Industrial Training Authority will be held at Beliatta Technical College on July 31 and August 1 for the benefit of school leavers and unemployed youth in the area. This workshop is entirely sponsored by the Lions Club of Rakwana under the guidance of International District 306 C Governor, Kassapa Mahendra De Silva

The chief organiser of the workshop, Rohan Wijesinha said that since the introduction of open economic policy, the chances of rural youth securing employment in the private sector are very slim for the simple reason that though they possess intelligence and a keen sense of business acumen, they have little or no knowledge of the prospects in the private sector.

Most of the rural youth, who cannot get in to university are unaware of the career opportunities available to them. Once they complete their advance level exams they just waste their time  doing nothing at home, as they are not aware of alternative career paths available to them. This type of workshop gives unemployed youth guidance and support to choose the correct course of studies.

The aim of the programme is to help the unemployed youth with career and labour market information, advice, guidance and individual counseling service, enabling them to make a choice as to what careers may be of interest to them and what skills and training they will need to be successful in their chosen career. And also to inculcate in youth the factual requirements of employer in the competitive private sector.

According to President, Rakwana Lions Club, Nalaka Aluthge, about 2,000 to 3,000 unemployed youth will be invited for the workshop. During this two day programme, vital information will be offered by professionals of various educational institutions. The youth will get an opportunity to interact with professionals and be guided in their choice of career.

Professional organisations taking part are ICMA, CIM, ICA and NIBM. Aruna Pathirana and M.L.P Fernando of NITA will give a brief introduction to career guidance and V.G Dayananda of Beliatta Technical College will speak on technical training. Vice Principle, Mount Lavinia International Hotel School, A. S. Yapa and Director (Culinary Affairs), Mount Lavinia Hotel, T. Pubilis will speak on career opportunities in the hotel sector. Training Director, ICMA, Upali Ratnayaka will discuss the career alternatives in accountancy.

Chairman, Acura Agencies, Suraj Dandeniya and Director, Dana Group of Companies, Gamini Rajakaruna will speak on technical education and opportunities in the international labour market. President, Institute of Chartered Accountants of Sri Lanka, Indrajith Fernando will offer an insight in the accountancy. Padmasiri Fernando of NIBM will speak on the job and career opportunities in the management sector.

The Vocational Training Authority will conduct lectures on how to prepare a CV and how to face an interview. The importance of English language and the incompatibility of labour market and what exactly private companies looking for will be explained by General Manager, HR Ceylon Biscuits Private Ltd., Vasantha Senanayaka. Deputy Head (HR), People's Bank, Rohitha Amarapala and AGM (HR), Sri Lanka Telecom, G. Weeratunga will explain HR as a career alternative. Kanishka Kodikara, lecturer at Raytronics Computers Pte. Ltd., will clarify avenues in  the IT sector.

A few government institution such as the army, navy and air force will take part at this workshop .