In the past too there was high inflation,
with
no proper development, terrorist problem to
justify
Cabraal supports CB subscription of T. Bills
A senior Central Bank (CB) officer justified
to reporters on Thursday the CB's recent
subscription of Treasury Bills (T. Bills)
that stokes inflationary and interest rate
pressure on the economy, saying that a
balance has to be struck between the four
sectors, namely interest rates, inflation,
exchange rates and market liquidity.
CB Governor Ajith Nivard Cabraal said that
inflation in the country in the past four
months have been falling, whilst in other
countries it has been rising.
He however brushed aside a query made by The
Sunday Leader that such an example may not
be quite correct considering the relatively
high base in which inflation is operating in
Sri Lanka, some 24% currently, according to
a watered down new measurement introduced by
the government controlled Census and
Statistics Department. The CB in the four
week period from September 18 to October 16
has increased their T.Bill holdings by
nearly 1,775% to Rs. 35, 697 million; an
action that has resulted in more paper money
entering the monetary system.
He said that in the past too there was high
inflation in the country, with no proper
development works and no terrorist problem
to justify for such an increase in
inflation.
World Bank Country Director Ms. Naoko Ishii
recently told reporters that high inflation
hits the urban poor the hardest.
Meanwhile the CB made a seemingly record
disbursement of Rs. 25.6 billion to the
market through its overnight reverse repo
window on friday to meet the market's
liquidity shortfall.
Cabraal at this meeting was tight lipped as
to what action the Bank would take in regard
to the demand for US dollars in the local
market that is placing pressure on the rupee
to decline in the market, coupled with rupee
illiquidity in the market.
He told reporters that they are watching the
situation and would take appropriate action
accordingly.
Market sources who did not want to be named
told The Sunday Leader that the reason for
this liquidity crisis is the drying up of
dollar inflows into the country due to the
international financial crisis.
They also blamed CB's action to protect the
rupee vis-…-vis the dollar by not
depreciating the former against the dollar
as the cause for this market illiquidity.
The sources said that matters have been made
worse with the CB not allowing the dollar to
appreciate beyond the Rs. 108 levels.
They alleged that this was the primary cause
for liquidity pressure in the market because
both the government and the market were
rushing to buy dollars at those prices.
Some even predicted that because of this
demand for dollars that the greenback would
appreciate to the Rs. 109 levels before the
month end.
Cabraal did not want to comment on the
status of their tender which recently called
for international bids to raise a sum of US$
300 million from the market.
However, CB Additional Director
International Operations R. A. A. Jayalath
who also spoke at this meeting said that the
London Inter-Bank Offered Rate (LIBOR), the
rates at which banks in London lend to each
other had gone up from 2% to5%, an increase
of 300 basis points in recent times because
of the liquidity crunch.
But in Sri Lanka inter-bank borrowing rates
for a day are nearly five times as high, at
over 17%.
Meanwhile, the CB in the past 26 consecutive
market days upto friday has been injecting
liquidity to the market to support overnight
inter-bank borrowings, with the three
biggest inflows experienced on Wednesday,
Thursday and Friday, with the sums lent
amounting to Rs. 15.7 billion, Rs. 22.3
billion and Rs. 25.6 billion respectively.
In addition, the CB has reduced banks'
statutory reserve requirement (SRR) by 75
basis points (bp), from 10% to 9.25% on
October 13, thereby making an additional
Rs.7.5 billion of liquidity available to the
market on a daily basis.
But this has not eased liquidity pressure in
the market.
Further, the CB expended US$ 200 million
last month in trying to keep the dollar at
the Rs. 108 levels in spot trading, whereas
the market was selling dollars at 10 Sri
Lanka cents higher, at the Rs.108/10 levels.
The CB said it had expended a total of US$
622 million in the first eight months of
this year in order to defend the rupee.
Cabraal however justified this action as a
confidence building measure.
CB Deputy Governor (Price Stability) W.A.
Wijewardena who also spoke to reporters at
this event said that the bail out plan of
the US government which envisages the
injection of US$ 700 billion to Wall Street,
had recently resulted in the US dollar
appreciating against other major
international currencies.
Cabraal admitted that foreigners in the past
two months liquidated a sum of Rs. 20
billion of their T Bond and T. Bill
holdings, with their balance holdings now
amounting to Rs. 44 billion. Such
liquidation means dollar outflows from the
country.
The CB recently opened upto 10% of T. Bond
and T. Bill outstandings to foreign
investments.
Cabraal didn't expect falling oil prices to
have an adverse impact on remittances, where
a number of Sri Lankans are working in the
Gulf and remitting monies to the country.
Meanwhile, Wijewardena said that despite the
global upheaval export earnings this year
were on track to achieve a 11% year on year
growth.
Meanwhile, the CB in a statement said that
the current reduction in oil and commodity
prices is expected to ease the pressure on
future foreign exchange (forex) outflows
substantially over the next couple of months
and the normal increase in remittances which
takes place during the months of November
and December is further expected to reverse
the overall dip in foreign currency reserves
that has taken place so far this month.
The impact of the postponement of the
payments due on petroleum bills under the
extended credit facility of the Iranian
Government (from 4 months to 7 months) is
also expected to ease the pressure on the
forex market during the next couple of
months. These favourable trends are
expected to result in continued stability in
forex markets, it said.
The recent decline in rupee liquidity
resulting from the regular supply of forex
into the market by the CB has also been
addressed by several policy measures: First,
the relaxation of the statutory reserve
requirement; second, the relaxation of the
limit on the access of commercial banks and
primary dealers to the reverse repurchase
window of the CB and third the purchasing of
T Bills in the primary market by the CB
within the leeway available in the reserve
money programme, it said.
SriLankan slashes flights by 20%
SriLankan Airlines has gradually begun
scaling down on their flights to India due
to a slowdown in traffic, a tourism official
alleged.
"The number of weekly flights to Indian
destinations have come down from 100 to 80,
S. Kalai-Selvam, Director General Sri Lanka
Tourism Development Authority told The
Sunday Leader.
However, SriLankan sources who did not want
to be named said that this curtailment of
flights was effective only from this month.
They said that this was as per their new
flight schedule.
They were unable to immediately say as to
whether the new schedule was detailed on
"demand and supply" principles.
India
is among the top two tourism generating
markets to Sri Lanka, the other being the
UK.
But due to the country situation tourist
arrivals in the first nine months of this
year declined by 9.5% year on year (YoY) to
370,000.
"India and UK contributed 70,000 each to
those arrival figures," said Kalai-Selvam.
The credit crunch in the UK is another blow
to the industry as this would result in a
decline in the number of guests visiting the
island this winter, he said.
Kalai-Selvam projected tourist arrivals for
the year at 450,000 and earnings at US$ 400
million, down from the earlier projected
figure of 500,000 arrivals and an earnings
figure of US$ 430 million.
Last year 470, 000 tourists visited the
island and brought in US$ 400 million, said
Kalai-Selvam. About100,000 of those visitors
were Indians and 90,000 from the UK, he
said.
Kalai-Selvam expected this number to depress
to 90,000 from India, while YoY arrivals
from the UK were expected to come down by
between 15-20,000 this year.
Tourism is
Sri Lanka's
fourth biggest foreign exchange generating
source.
Kalai-Selvam further said that the expected
consistency in tourism receipts this year
vis-…-vis last year despite an envisaged
drop in arrivals was due to inflation.
ADB commits $ 630mn.,
The Asian Development Bank (ADB) and the
Government of Sri Lanka (GoSL) have forged a
new Country Partnership Strategy (CPS)
2009-2011 designed to help improve the
investment climate, unclog infrastructure
bottlenecks and ensure all segments of
society benefit from the nation's solid
economic growth.
Under the new three-year CPS, ADB is
committing $630m in loans for public sector
operations, while overall assistance is
expected to be higher with additional funds
raised through private sector operations,
public private investment partnerships, and
cofinancing.
An ADB statement said that Sri Lanka has
posted an average economic growth of 5% per
year over the past 30 years, putting it on
the point of becoming a middle-income
country. However, it has failed to reach its
full potential because of civil conflict,
weak infrastructure and high public debt.
Recent high global oil and food prices, a
surge in inflation and worsening prospects
for the global economy also pose a threat to
future growth and poverty reduction efforts.
ADB's Country Director in Sri Lanka Dr.
Richard Vokes said: "The aim of the CPS is
to unlock the growth potential in an as
equitable a way as possible. Economic growth
in 2008 first half has remained strong at
around 6.6%. However, external risks have
increased, compounded by further signs that
the global slowdown is more profound than
many had expected, and this could have a
significant negative impact on Sri Lanka's
economy."
The partnership strategy has a twin focus:
Firstly, ADB will continue to back stronger
fiscal management to improve the
macroeconomic environment and will step up
support for infrastructure development,
particularly in power and transport and
public-private investment partnerships.
Currently, many private sector investors are
reluctant to plough significant funds into
the economy because of poor infrastructure,
high taxes, policy uncertainty, civil
conflict, and high financing costs.
Secondly, ADB will target better delivery of
power, water, transport and other essential
services in poorer provinces to make sure
the fruits of development reach those most
in need.
ADB country economist in Sri Lanka Johanna
Boestel said: "The CPS will focus on
provinces outside the relatively wealthy
western province targeting electrification
of rural areas, linking provincial roads to
rural roads and villages, upgrading water
supply in lagging regions, and supporting
urban development in selected secondary
towns."
To help achieve this, it will also seek to
increase the capacity of provincial councils
and local authorities to improve public
service delivery. By strengthening rural
infrastructure, ADB's support will also help
boost agricultural efficiency which has
become increasingly important with the spike
in global food prices.
Because of uncertainties sparked by renewed
fighting since 2006 in the
more-than-two-decade conflict between GoSL
and the LTTE-and to provide greater
operational flexibility, ADB has reduced the
term of the CPS from the usual five years to
three years.
The issue of the conflict and how best ADB
can contribute to its resolution have been
central to the work of the CPS team. To this
end, ADB will strive to provide a balance of
support throughout the country while
continuing implementation of ongoing
projects and initiating new projects in
areas that have been affected by the
conflict wherever possible. ADB will also
ensure that its interventions are conflict
sensitive, with strong emphasis on
transparency and full and active
consultation among all stakeholders.
The strategy supports the government's
10-year Development Framework that targets
inclusive economic growth through improved
infrastructure, increased private sector
investment and measures to boost the
country's competitiveness.
US$ 822mn., to defend rupee
The Central Bank (CB) has so far for the
month released US$ 200 million to defend the
rupee, market sources said on Friday
Ie so far for the year they have released
US$ 822 million to prevent the US dollar
from appreciating against the rupee, and
currently not allowing the dollar to go
beyond the Rs.108 levels.
Previously the CB capped the dollar at
Rs.107.90.
Meanwhile, because of the drain in rupees as
a result of this action, the money market
saw the CB opening its overnight (O/N)
reverse repo window and lending Rs. 25.6
billion at the concessionary interest rate
of 12% on Friday.
Sources also said that such borrowings were
due to the market having to meet certain
limits, compounded by the long week-end.
Tomorrow is a bank holiday.
On Wednesday and Thursday too the CB opened
its O/N reverse repo window and lent to
commercial banks and primary dealers sums of
Rs. 15.7 billion and Rs. 22.3 billion
respectively. Friday was the 26th
consecutive market day that the CB has
opened its O/N reverse repo window and lent
to the market.
Meanwhile, as a result of this liquidity
crunch, O/N call money market rates, the
rates at which commercial banks lend to each
other for a day shot up by around 200 basis
points on Friday (over that of Thursday), to
be commanding rates of between 18-20%.
Further, 2010 and 2012 maturing Treasury
Bonds (T.Bonds) were trading at the
19.90-20% and 20.50% levels respectively in
the secondary market, with foreigners
wanting to sell their T. Bond holdings to
regain their dollar investments. (See also
main story on this page)
Making Koththu int'l
A hotelier hoped that the annual koththu
fest organized by his hotel would be the
forerunner for such an event to become an
annual feature in the country's tourism
calendar.
"My dream is that this food festival would
spread right down to Galle Face and become
an annual event," William Costley, General
Manager Colombo Hilton told reporters on
Wednesday.
Koththu is something which is unique to Sri
Lanka, it is eaten by both rich and poor
alike, he said.
Meanwhile, the hotel will be holding its
second koththu fest on November 9.
"Last year's fest brought in US$ 40,000; of
which most of it were directed to the Deaf &
Blind School in Ramalana, Costley said.
An alternative to wood
Alumex (Pvt) Ltd, the market leader in Sri
Lanka's Aluminium Extrusion business,
recently announced the introduction of the
'wood finish' and polished anodizing to its
aluminium extrusions.
Alumex Marketing Director Mrs Nadira William
said that with this new innovative process,
an authentic timber effect such as Teak,
Mahogany or Rosewood can be given to the
surfaces of extrusion products such as
aluminium doors and windows.
"The wood finish is totally new to Sri
Lanka. Apart from satisfying consumers'
desire for an attractive wood finish, the
polished anodizing will, in turn, offer a
brilliant finish to anodized extrusions,
providing an elegant look to modern
buildings and thus brightening the streets
of Sri Lanka," William said.
She added that by capturing the housing and
building construction market in Sri Lanka to
a great extent, this new and revolutionary
feature will also have a great impact on
saving the forests of this country.
Incorporated in 1986, Alumex began its
commercial operations in the year 1988. Now
established as the leader in the Aluminium
Extrusions market, Alumex has an impressive
factory at Makola, equipped with
state-of-the-art machinery and a
manufacturing staff of over 450 employees
with a capacity to produce over 600 metric
tons a month.
Offering consumers an environmentally
friendly alternative to wooden doors and
windows,Alumex specialises in the production
and design of aluminium extrusions, powder
coating and anodizing.
Its distribution operations are undertaken
through a dealer network established in all
major cities and towns of Sri Lanka.
In addition to being the only ISO 9001:2000
certified Aluminium Extrusion manufacturer
in
Sri Lanka,
Alumex Aluminium Extrusions manufactures in
line with a range of other specifications
and standards, including British and Sri
Lankan specifications and standards,
signifying their stature in the industry,
both locally as well as on an international
stage.
Money in provinces
Hatton National Bank (HNB), Sri Lanka's
premier private sector commercial bank
relocated its Kantalai Customer Centre at
Agrabodhi Mawatha, Main Street, Kantalai
with HNB Zone I Deputy General Manager Mrs
L. L. C. C. Thambiah being the Chief Guest
for the relocation ceremony.
A large gathering was present on this
occasion including North Eastern Region
Senior Manager A. V. Beeadle, government
officials, local businessmen, HNB's regional
and head office officials and members of the
community.
With the opening of this customer centre HNB
will now provide better, more spacious and
modern infrastructure facilities to its
customers to carry out their banking
transactions with ease.
HNB offers a range of products and services
ranging from current/savings accounts (Pathum
Vimana), to import/export facilities.
Singithi (minors savings accounts), Shanthi
home loans, Gami Pubuduwa loans, credit
cards and NRFC/RFC accounts.
ICT skills for migrant workers
The initiator of ICT for migrant workers ,
Microsoft Sri Lanka, implements a five to
six day training programme in all three
languages for all age groups based on a
module which is an abridged version of its
Unlimited Potential (UP) curriculum.
All trainees receive a practical training on
computers, especially since most of them
have never even touched a computer before,
which includes.surfing the net, chatting,
e-mailing and sending images.
This certificate course which includes a
combination of basic and advanced computer
skills (inclusive of training in the
Sinhalese package) is held at the Sri Lanka
Bureau Foreign Employment (SLBFE) and NGO
training centres.
In addition there are mentoring services by
a volunteer migrant returnee who would share
his/her experience of working in a foreign
country with other potential workers, and
assist in the familiarization process,
preparation for life overseas and adapting
to a foreign environment.
There is also be low cost communication
access for migrant workers and their
families trained at these centres through an
"ID" scheme at the Nansalas, SLFEB, Sri
Lanka Anti Narcotics Association (SLANA)-the
firms principal NGO partner and other NGO
centres.
SLBFE Chairman Kingsley Ranawaka said:
"Through the implementation of the first
phase of this project in three centres we
have been able to assess that training in
ICT is well received by migrant workers.
Many who did not see it as important as not
being associated with their particular
pursuits abroad are now beginning to
understand its usefulness in their daily
lives as a low cost communication tool.
Through this partnership we are embarking on
a national level capacity building of
migrants and their family members, intending
to encourage participation and enthusiasm in
the training with a passion for ICT not only
as a powerful tool in communication but as a
means for improving future job prospects and
economic stability even upon return."
Ms. Nithya Kalyani, a migrant worker said:
"I got an opportunity to go to Singapore and
work. I also participated in the Microsoft-SLANA-SLBFE
training programme, where I learnt to surf
the net. Thereafter, I was able to learn
more about a childhood passion-I wanted to
be a beautician, and as a result, opened up
a saloon in Sri Lanka just two years after
my arrival back into the country. This
training programme was the turning point in
my life."
Mrs. Alwis, another migrant worker said: "I
knew nothing about Cyprus (where some 20,000
Sri Lankans are employed) before I started
the course, but, by the time I 'left,' I
knew everything I needed to know about the
country and even managed to locate some
online friends there, so there would be some
friendly faces at that end too. I also
didn't know anything about computers, but
now I want to pass on my knowledge to my son
too as it's sure to benefit him in the
future."
Living with his mother and siblings in
Wellawaya, where he runs a small fresh fruit
business, Prabath Rukshan got a chance to go
to South Korea recently and thus, attended
the programme. "I received a basic knowledge
of the computer. Also, as one of my sisters
works in Bahrain, I managed to communicate
with her via her friend there as my sister
didn't have this opportunity available to
her before she left. Now, I have a dream to
export fruits, for which I need to raise
some capital over the next couple of years
and brush up on my IT skills as well so I
can pursue my career from there onward." he
added.
Microsoft, in addition to its existing
training centres in Colombo, Kurunegala and
Chilaw, plans to open 15 such other training
centres.
The estimate of migrant workers from Sri
Lanka is 1.5 million, raking in US$ 2.7
billion dollars by way of foreign exchange
into the country. Half of them living
overseas reside in the Gulf region, whilst
50% are women. SLBFE says the outflow is
over 200,000; with an increase of 7.6% in
2005.
Migrant workers are typically characterized
by low levels of access to technologies,
poverty, illiteracy and language barriers.
In Sri Lanka policy changes are being
considered for minimizing the export of
unskilled labour, thus replacing it with
knowledge-based vocations that earn higher
foreign exchange, much needed by the
country.
New Toshiba agent
October 11 was a red letter day for Abans,
the newly appointed exclusive agent for
Toshiba products in Sri Lanka, with the soft
launch of Toshiba's 32, 42, 47 and 52 inch
LCD Televisions.
Toshiba Consumer Electronic Division Country
& Regional Manager Lester Lieu who was
present at the occasion made a presentation
of Toshiba's LCD range and expressed
confidence that Abans would efficiently
promote the brand image of Toshiba to be a
market leader in Sri Lanka. The superior
video technology in Toshiba LCD TVs deliver
optimum picture quality in all conditions
with convenience that ensures a satisfying
viewing experience. System connection,
operating control and picture adjustment is
made easy with Toshiba's unique REGZA LINK
technology.
REGZA CV 500 Series LCD TVs, the first LCD
TV series featuring Toshiba's intelligent
video technology brings the dazzling colours
of real life onto the screen. The Power
Meta Brain engine-a powerful LSI that
achieves 10-bit video processing projects
natural pictures with true-to-life picture
quality never experienced before. These TVs
also have an Ambient Light Sensor and other
functions that ensure the highest possible
resolution in all conditions.
But quality is not the only thing that sets
Toshiba's CV500 models apart. They are
convenient, both to operate and to integrate
into a high quality home theatre system,
thanks to REGZA LINK, HDMI inputs and other
innovative features.
With 2 HDMI terminals dedicated to digital
process, Power Mega Brain reproduces
faithful and true-to-life HD contents on
screen like never before.
Looks are also important to add a touch of
class and lustre to your home. The new REGZA
design with soft rounded corners, a silver
bottom bezel and a rich glossy finish make
these TVs an impressive addition to any
interior. The range of Toshiba LCD
televisions is now available at Abans
Showrooms islandwide.
"All Incoming Free"
In a revolutionary step towards bringing
services closer to customers' needs, Tigo
announces to provide "All Incoming Free."
With this offer, customers can now enjoy
unlimited incoming free. Most customers
currently enjoy up to 2 minutes free. Tigo
has now taken that barrier away to enable
customers to receive as many calls as they
want, bringing to its customers freedom to
communicate as and when they like.
Just like "Per Second Billing," Tigo brings
an industry first for prepaid customers, ie
"All Incoming Free, No Conditions Attached."
"This is a natural step in Tigo's
development. All Incoming Free follows
Tigo's goal of bringing services that are
relevant and meaningful to our customers, eg
per second billing that was launched in
October 2007 and the lifetime bonus with
every refresh that was launched in January
2008. These are based on what customers
want," says Senior Manager Brand
Communications Sunjeewa Perera. "We believe
that listening to the customer is the key to
our success."
"We are the only operator that offers All
Incoming Free without any barriers. Most
tariff plans today have 'conditions apply'
attached to them. Our All Incoming Free
allows our customers to receive calls
anytime from either landline or mobile
network. We wish to keep our plans simple so
that the customer can communicate with their
friends and family without having to worry
about any hidden conditions. We believe this
gives our customer true freedom to
communicate", said CEO Dumindra Ratnayaka.
"All incoming free" follows the same
philosophy of "per second billing." It is
all about only paying for what you use. Just
as you don't want to pay for a full minute
when you only call for 20 seconds, similarly
why should you pay for calls you do not
initiate?
"We believe this brings substantial benefit
to customers and allows customers to talk
more and freely without worrying about how
much they spend or keeping track of the
exact duration of the call. With a minimum
reload, many more calls are possible with
"per second billing" as making a call is
almost as affordable as sending an sms.
Coupled with Tigo's lifetime bonus scheme, a
customer who is with the network for more
than 3 years enjoys 30% bonus on each
reload. "Our products bring true freedom to
our customers to make or receive a call
whenever, wherever and at what ever time
they wish."
Tigo's goal of taking mobile telephony to
every household in the country has been made
possible with Tigo's islandwide coverage
that covers even the most remote areas of
the country.
The best deal about all this is that this is
available for the normal price of a
connection, without any extra charges.
Ratnayaka added that Tigo continues to
listen to the needs of mobile customers all
over Sri Lanka. With the launch of "All
Incoming Free, No Conditions Attached"
signifies Tigo's commitment to enable
customers to freely express themselves at
very affordable rates, central to Tigo's
global theme in delivering Affordability,
Accessibility and Availability to its
customers.
Water proof
Golden Shellback is a unique coating that
protects material against damage caused by
exposure to water.
The technology was developed by Northeast
Maritime Institute, a private maritime
education and training Institute located in
Fairhaven Massachusetts, USA.
During the testing process Northeast
Maritime Institute has submerged an IPOD
Touch, Blackberry Pearl, numerous VHF radios
and other equipment without noticeable
damage. One such device operated
continuously while immersed in water for
over 450 hours prior to failure. (Marine
Talk)
Hope amidst gloom
"Even though
Sri Lanka
will not have a direct financial crisis,
Sri Lanka
will definitely be impacted by the slowdown
of the global economy," says Tony
Weeresinghe, Managing Director and CEO of
Millennium IT, a technology solutions
provider serving the global capital market
industry.
"Inter bank borrowing rates in the
short-term, have risen sharply. As a result,
banks have fewer funds to lend to
individuals and businesses. This means
slower businesses growth and lower demand
for goods and services.
As many countries like
Sri Lanka
are supplying goods and services to western
buyers, the lower demand will trickle down
to all parts of the world," he points out.
"For instance if people don't buy shirts,
the demand for shirts will drop. Therefore
manufacturing orders to Sri Lanka for shirts
will drop. This means businesses will have
to downsize for mere existence and it's the
same for the service industry."
"IT work outsourced to countries like Sri
Lanka will drop as there is reduced demand.
Furthermore, if you were servicing larger
banks such as Lehman Brothers, you will no
longer have business as these
institutionshave collapsed," he says.
Weeresinghe said: "What can be seen now are
signs of a spill over from the financial
crisis to the real economy. For instance
auto financing is less available and car
sales have dropped, approvals for home
mortgages have got much tougher and credit
card interest rates have gone up," adding
that the the situation is not expected to
change any time soon. "I personally think
this will take 12 to 15 months to stabilise.
While financial risks would have to be
resolved by 'concentrated' policy activism,
the economic picture is unlikely to reverse
quickly," says Weeresinghe.
He however said that like most situations
however the global economic crisis also has
two sides to it. Despite its potential
threats to IT and BPO service providers in
Sri Lanka,
the changing economic conditions are also
generating new opportunities.
MillenniumIT's Chief Deployment Officer
Hemantha Jayawardena said: "For instance
MillenniumIT is tapping into new
opportunitiesin capital markets that are
emerging because of the changing economic
environment. The volatility in financial
markets have pushed up trading volumes at
stock markets generating an opportunity to
create new systems to deal with the volume
surge.
"Within one year, the order volumes handled
by the trading system supplied by
MillenniumIT to the American Stock Exchange,
went from three million orders per day to
30 million and within the next year it
increased to over 60 million orders per day.
So in the last two years volumes increased
20 fold."
This massive rise in stock market activity
is attributed to new regulations in the USA
and also the prevailing market
uncertainties. "People are buying and
selling a lot because of the crisis. New
regulations have also increased order
traffic. So stock exchanges are looking to
increase their system capacities.
This means there is a demand for new systems
that can deal with the ever increasing
capacity requirements," he says. More
regulatory changes governing financial
markets are also in the offing in the USA
and EU, to limit the. kind of volatility
seen now. This means demand from stock
exchanges, for more cost effective and
flexible systems, will actually increase,
creating numerous opportunities for
companies like Millennium IT.
Jayawardena also points out that many other
opportunities will also emerge with the
changing global economic landscape for IT
and BPO service providers, but companies
need to watch the market to spot the
opportunities.
Sampath's PAT up 26%
Despite turbulent market conditions that
prevailed in the country, Sampath Bank group
which consists of the Bank, its subsidiaries
and the associate company recorded
impressive results for the nine month period
ended September 30, 2008, said a statement.
Group post tax profit crossed the Rs. one
billion mark and stood at Rs. 1, 123. 1
million which represented a 25.6 % of
Rs.228.9 million growth over the post tax
profit of Rs.894.1 million recorded for the
corresponding period in 2007.
Sampath Bank, the largest entity of the
group too recorded a, post-tax profit of
over Rs. one billion that stood at Rs.1,
007.7 million for the period, which amounted
to a growth of Rs.240.5 million or 31.3%
over the post tax profit of Rs.767.2 Million
for the corresponding period in 2007.
However, corporate taxes of the Group and
Bank for the nine month period ended
September 30, 2007 given in the comparative
columns of the quarterly accounts were
restated as Rs.1, 021.4 million and Rs.
1,013.9 million respectively due to the
reversal of Deferred Tax Assets recognized
on the Statutory General Provision on loan
losses which were made as per Central Bank's
new provisioning requirement.
Similarly, Group pre-tax profit for the
period under review crossed the Rs. 2.0
billion mark and reached Rs. 2,111.4
million, registering a Rs. 195.9 million or
10.2% growth over the previous year. Bank's
pre-tax profit for the same period at
Rs.1,986.5 million too recorded a Rs.205.3
million or 11.5% growth over the
corresponding period in 2007.
These results were achieved despite the drop
in foreign exchange income by Rs. 375.2
million or 64.9% and the increase of 42% in
the charge for Financial VAT during the
period. The drop in foreign exchange income
was primarily due to the drop in revaluation
gains on the FCBU's retained profits kept in
US Dollars, resulting from the appreciation
of Sri Lankan Rupee against the US Dollar
from Rs.113.40 as at September 30, 2007 to
Rs.107.85 as at September 30, 2008. The
increase in Financial VAT was mainly due to
the change in the method of calculation of
this tax as instructed by the tax
authorities.
It is significant to note that despite the
adverse effect of the above factors, both
the group and the bank have recorded an
impressive growth in profits primarily due
to the increase in net interest income from
the fund based operations of the bank, which
recorded a growth of Rs.1,066.1 Million or
2'8.9 %, as compared to that of the previous
year.
This was despite a moderate growth of 4.2 %
in total deposits and 4.4% in total advances
during the nine month period under review,
which were very much in line with industry
trends during the period. This significant
improvement in net interest income was
achieved mainly through better management of
interest margins in an extremely volatile
market. This was amply demonstrated by the
improvement in net interest margin of the
bank which rose to 4.68 % in the nine month
period under review in 2008, from 4.14 % in
2007.
It was also possible to maintain the net
charge on provisions for loan losses
(provisions less recoveries) of both the
Group and Bank for the nine month period
under review, even below the 2007 levels
despite the general increase in loan loss
provisions in the industry during the
period. This position was achieved due to
prudential lending policies and success in
the Bank's recovery efforts.
The bank made full statutory general
provisions up to 1% on its performing
advances as at September 30, 2008 as against
the required level of 0.8% as of this date.
The Bank's pawning advances portfolio too
was adequately covered by loan loss
provisions though such provisions were not
mandatory.
Apart from the increase in net interest
income, Group and Bank's other income
representing commission and fee-based income
too recorded a satisfactory increase of
15.2% over 2007. Non-interest operating
expenses however recorded an increase of
26.3% and 25.7% respectively at Group and
Bank levels during the period, which were
mainly attributed to the inflationary trends
in the market.
Total Capital Adequacy Ratios of the Group
and Bank stood at 11.18 % and 10.52%
respectively as at September 30, 2008,
reasonably above the minimum of 10%. ROA
(before tax) of the Bank improved from 1.83
% in 2007 to 1.95% in 2008. Bank's ROE too
improved from 14.37% in 2007 to 14.94% in
2008.
Lankabangla Finance Ltd, Sampath Bank's
oversees Associate Company continued to
perform well.
Meanwhile, with total assets over Rs.138.2
billion and a branch network of 113, coupled
with 156 ATMs built within a relatively
shorter period of 21 years, Sampath Bank is
the fourth largest private sector bank in
the country.
The bank's total deposit base crossed the Rs.
100 billion mark recently and stood at
Rs.103.6 billion as at September30, 2008.
Sampath Bank also continued with its branch
expansion programme in 2008 by opening eight
branches, including three in the newly
liberated Eastern Province, namely Kalmunai,
Akkaraipattu, and Batticaloa.
Sampath Bank underwent a significant
management change recently. Arthur
Senanayake, a founder director and Deputy
Chairman of the Bank took over as new
Chairman, upon the retirement of Edgar
Gunatunge. Similarly, Harris Premaratne, a
seasoned banker and the former Senior Deputy
General Manger of Commercial Bank took over
as the Chief Executive Officer (Designate),
to replace Anil Amarasuriya, who is due to
retire shortly.
Fitch Credit Rating Agency recently
reaffirmed Sampath Bank's credit rating at
AA-(lka).
Financial crisis hits airlines
Airline passenger traffic declined 2.9%
while cargo traffic dropped 7.7% last month
(September) compared to the same month in
2007, International Air Transport
Association (IATA) said.
International load factors tumbled by 4.4%
percentage points from August to 74.8% in
September.
"Deterioration in traffic is alarmingly
fast-paced and widespread. We have not seen
such a decline in passenger traffic since
SARS in 2003," said IATA Director General
Giovanni Bisignani. "Even the good news that
the oil price has fallen to half its July
peak is not enough to offset the impact of
the drop in demand. At this rate, losses may
be even deeper than our forecast US$5.2
billion for this year," said Bisignani.
This is the first time since the SARS crisis
in 2003 that global passenger traffic has
shrunk. Capacity cuts were not able to keep
pace with the fall in demand. September load
factors in all regions fell compared to
August.
For September, all major regions reported
that passenger traffic shrank, with the
exception of Latin American carriers which
saw an increase of 1.7%. Even this is
shockingly down from the 11.9% growth of the
previous month.
Up to August, the drop in international
passenger traffic was isolated to
Asia-Pacific (AP) carriers.
The economies of the region's two major
growth markets-China and India-slowed and
Japan saw industrial production drop 5% in
August. The sharp downturn in world trade
disproportionately impacted AP carriers with
a 6.8% drop in traffic in September.
The steady 5% international growth of North
American carriers turned into a 0.9%
contraction. European carriers saw traffic
drop from last year (-0.5%) as the region's
economies head for recession. After years of
double-digit growth, passenger traffic by
Middle Eastern carriers turned to a negative
2.8%. While the region's oil-based economy
remains strong, the large portion of transit
traffic exposes the region's carriers to the
global economic weakness.
African carriers posted the largest decline
in traffic (-7.8%), a continuation of the
previous month's trend.
This is also the worst decline in cargo
since the technology bubble burst in
2001.Declines in air freight have slowed
year-to-date growth to 0.1% with all regions
except the Middle East and Africa reporting
negative results.
The most alarming drop was with AP
carriers-the largest players in the market.
The region's carriers reported a 10.6%
decline. Europe and North American carriers
which had seen flat growth through August
saw cargo traffic fall 6.8% and 6%
respectively.
"The industry crisis is deepening-along
with the crisis in the global economy.
Airlines, like all other businesses, are
facing enormous challenges,"said Bisignani.
"Look at what the banking industry is doing.
They are taking government handouts. They
are accessing global capital. And we have
seen mergers without anybody asking to see
the investors' passports. Airlines are not
asking for handouts. But today's crisis
highlights the need for airlines to be able
to run their businesses like normal global
businesses," said Bisignani from Istanbul on
the eve of the Agenda for Freedom Summit.
Singer emulates ebay
Singer Sri Lanka held the country's first
internet auction on Tuesday.
The country's Internet users will finally be
able to join the world of internet bidding,
competing as in other well established
auction sites such as ebay with other users
to post the most competitive bid.
Users who register will be able to bid for a
range of singer products including LCD TVs,
mobile phones, and even furniture online.
Payments can be made by credit card or cash.
Bids will start at a reserve price set
significantly below the retail selling
price.Participants in the auction will be
able to raise their bids in multiples of 100
and bids will be accepted up to a maximum
bid price which will be below the retail
selling price thus ensuring that every
bidder on the Singer auction will be paying
far less than the retail price. These
auctions however, are time bound giving the
bidders two weeks to up their bids and claim
the products.
The site is already operational and has been
designed with the latest safety and data
protection systems to ensure that online
payments are easy, safe and secure.
If yours is the winning bid you will be
notified by email and as an added bonus the
product will be delivered to your doorstep
by Singer's islandwide delivery service free
of charge. While online auction sites have
become established internationally,
Sri Lanka
has been late in joining the world of
internet bidding. Low internet and credit
card penetration have dissuaded local
companies from launching online auction
sites along the lines of Ebay and Prosper
but Singer (Sri Lanka) PLC has consistently
worked to uplift the lives of the common man
in Sri Lanka and the company believes the
local market is ready for the online bidding
experience.
As the first company to offer this new and
innovative service to Sri Lanka, Singer
believes its website will offer customers
genuine discounts and all the excitement of
an auction giving people a whole new way to
shop. Ultimately the website represents the
future of shopping in
Sri Lanka
and it will allow people in every part of
the country to access to the competitive
prices offered by an online auction.
Millions of people will have the chance to
shop and bid without leaving their own homes
and enormous discounts are just two clicks
away. This new way of shopping will not only
be a good bargain, but will also give people
who are too busy to visit a showroom to shop
online.
Paperless insurance
Union Assurance's unique IT capability
continues to deliver top-notch customer
solutions.
Among the first in
Sri Lanka's
corporate sphere to launch complete IT
capability, Union Assurance stands tall
among its insurance peers as having been one
of the first to introduced cutting-edge
technology solutions and infrastructure for
interactive customer solutions.
"Union Assurance is backed by strong
corporate conglomerates such as John Keells
and Carson Cumberbatch", says Union
Assurance Information
Technology General Manager Chandana
Jayasooriya.
"Many prestigious awards related to
corporate excellence and governance that we
have received over the years vouch for our
constant focus on expanding our horizons to
reach greater heights."
"Leveraging Union Assurance PLC's (UAPLC's)
inhouse capability to enhance its core
insurance activities, the company stresses
on timely delivery and cost-effective IT
solutions closely aligned to our business."
To ensure maximum efficiency and customer
satisfaction, UAPLC relies on a selection of
commercial application systems with
customised interfaces as well as open-source
platforms.
"From an IT perspective, Union Assurance is
a firm believer of maintaining certain
values. Firstly, we look at maintaining
integrity and confidentiality of
information. Secondly, we have taken
adequate steps to ensure high availability
of IT systems to provide uninterrupted
customer services," says Jayasooriya.
UAPLC recently launched its online 24/7
product portfolio with its flagship
'Click-and-go' insurance policy issuance
channel to maximise convenience features for
its growing customer base.
Among many firsts, UAPLC also launched
"Union SMSlink," a unique SMS service
channel that enables customers report
accidents, check claim status and also
receive premium payment reminders,
confirmations and other added services. The
latest, as yet another first in Sri Lanka,
was the launch of auto-generated SMSs to
settle motor claim payments. Thereby UAPLC
customers now enjoy the luxury of receiving
over-the-counter cash for their motor claim
payments from any Commercial Bank branch.
"We are also moving towards a paperless
office. Our primary focus has been the motor
claims area which generates one of the
highest volumes, where we have now reduced
usage of paper by 90%," Adding that, "these
initiatives have lead to staff being
utilised more productively as a lot of
processes and systems are now automated.
Reallocation of employees to increase
business volumes without additional staff is
now in play," he concluded.
People's insurer
Ceylinco Insurance was selected as the "Most
Preferred Insurer by the people of Sri
Lanka" for the 3rd consecutive year at the
recently concluded People's Awards conducted
by the Sri Lanka Institute of Marketing in
association with Neilsen, a world renowned
market research agency.
People's Awards recognise companies for
their standing and stature in the minds of
the people.
Ceylinco Insurance-General Assistant General
Manager Marketing Senaka Rajapakse said. "It
was an honour for Ceylinco Insurance to be
recognised as being the preferred choice of
the people. For us it is a clear indication
of our ability to be close to the people and
understand and speedily respond to their
needs. Also, having won the award for three
consecutive years we are assured of the
immense trust that Sri Lankans have placed
on us as a Sri Lankan company.
We have always strived to maintain customer
focused, innovative thinking in developing
our products and services. The On The Spot
Claim Settlement methodology which is now
recognised as an industry standard setter
is one such product. We believe the award
was made possible through our key strengths-thehigh
level of service standards we maintain and
the speed with which we serve our customers
which enable us to stay close to the hearts
and minds of the public. We take this
opportunity to thank our customers,
shareholders, and Sri Lankans forthis
magnanimous gesture."
Ceylinco Insurance has many laurels among
its long list of accolades-recently the
Ceylinco Insurance Brand was selected as the
most valued insurance brand in Sri Lanka
with a brand value of Rs.6.9 billion and an
enterprise value of Rs.25 billion.
The Ceylinco Insurance Brand was also
selected as the 6th most valued brand in the
entire countryand the company was assigned a
Brand rating ofAA-by Brand Finance PLC,
UK.
Ceylinco Insurance is also the only company
to receive the Most Innovative Insurance
Company in Asia award not once, but twice-in
2003 and in 2006.
Ceylinco Insurance operates the widest
network of branches for both Life and
General Insurance, with distribution
pointsnumbering over 410 .
Ceylinco Insurance-General Chief Executive
Director Ajith Gunawardena noted that under
the guidance of Ceylinco Consolidated
Chairman Deshamanya Dr Lalith Kotelawala,
Ceylinco Insurance had gone on to achieve
outstanding results as a truly Sri Lankan
company, committed to fulfilling the diverse
insurance needs of Sri Lankans. He also
recalled that the high level of public
confidence in the company was evident in the
success of its recently concluded Meanwhile,
Ceylinco Insurance was also rated as the
Most National Minded Company in Sri Lanka by
LMD, in a reflection of the company's strong
Sri Lankan heritage.
Levinson tuned systems
LG Electronics, a global leader in consumer
electronics and home appliances recently
launched another innovation in technology-a
range of state-of-the-art Audio and Home
Theatre Systems tuned by world renowned
audiophile Mark Levinson.
Levinson is a highly acclaimed 'Golden Ear'
who has the ability to hear higher music
scales and identify sounds more accurately
than a specialized machine. He played an
integral role in the tuning of LG's latest
range of Audio and Home Theatre Systems
which are designed to give consumers the
"ultimate" in sound.
Leading the range of audio masterpieces is
the flagship HT953TV home theatre system.
This stylishly designed unit features five
curved speakers and LG's signature
navigation touchpad in sleek piano-black
which easily adds splendour to one's dcor.
The system boasts a high-output of 1,000W
RMS and LG's exclusive VSM (Virtual Sound
Matrix) Pro technology that produces a 10.1
Channel sound effect giving consumer's
"unparalleled" sound quality without any
distortion or exaggeration of the original
tune when watching movies, TV or listening
to music.
To enhance user convenience, the HT953TV
features a Simplink function which under
HDMI mode allows users to perform an
automatic AV input search and use a single
remote to control the HDTV, Audio and DVD
system. The HDMI connection also acts as a
replacement for upto 15 types of current
analogue connections and up-scale 576i SD
signals to 1080p HD.
The new Home Theatre range is packed with
many unique features such as USB and i-Pod
connections which allow playback through
portable music players, USB direct recording
and also provides maximum playback
compatibility via DVD/ R/ RW, DVD-Audio, WMA,
MP3, JPEG, DivX, CD-R-/ RW.
Also available is the HT762 series which
feature Champaign glass styled speakers and
HT503 series which feature soft curved
speakers.Visit Abans Elite Showrooms to
experience the ultimate in sound with Mark
Levinson tuned LG audio systems.
SL & global turmoil
The turbulence in the financial markets of
advanced economies which erupted last year
and continued into this year has
exacerbated, spurring cascading effects on
most economies world over.
Its effects on credit markets and the
resulting contraction in liquidity have
brought on a period of instability and
uncertainty in global financial markets.
As a consequence, many central banks
worldwide have taken measures to improve
liquidity conditions and provide stability
to markets.
The Central Bank of Sri Lanka too initiated
a series of temporary precautionary measures
such as relaxing the limits on access to its
reverse repurchase window as well as
reducing the statutory reserve requirement
to provide additional liquidity to the
market to alleviate any pressures that may
arise due to the current situation and
thereby to ensure the smooth functioning of
the domestic financial system by removing
any liquidity constraints, the Bank in a
statement said.
The perceived global slowdown as evident by
the downward revision to growth prospects of
many countries has induced a further
moderation of international commodity
prices.
Decreasing external price pressures, reduced
demand pressures due to the tight monetary
policy stance adopted by the Central Bank to
curb demand driven inflation as well as
domestic supply side improvements, in
particular the record high levels of output
in respect of many agricultural products
including rice, have lowered inflationary
pressures in the economy. Inflation, as
measured by the year-on-year change in the
New Colombo Consumer's Price Index
(base=2002) reached 24.3% in September,
having continuously declined from the peak
of 28.2% in June 2008. This declining trend
is expected to continue into November.
With the successful achievement of quarterly
reserve money targets so far this year, the
steady deceleration in the growth of the
broad money supply would continue further.
Broad money (M2b) expansion decelerated to
10.3% year-on-year in August 2008 compared
to the growth of 16.6% in December 2007 and
22.2% in August 2007.
This deceleration was facilitated by a
slowing down of credit extended by
commercial banks to the private sector as
well as public corporations. The outcome of
these developments would be evident in the
forthcoming months through a further
deceleration in inflation. The release of
the next regular statement on monetary
policy will be on November 10, 2008.
"Sealife" guarantee
Thordon Bearings has recently introduced a
15-year bearing wear life guarantee for its
COMPAC pollution free stern tube bearings.
This move aims to demonstrate to commercial
ship owners that modern seawater lubricated
propeller shaft bearing systems do offer
wear life predictability, reduced operating
costs and elimination of stern tube oil
pollution risks.
Thordon is offering this guarantee based on
proven bearing wear life experience in
commercial vessels over the last 20 years.
(Marine Talk)
Stock market announcements
Chevron Lubricants Lanka PLC has declared a
third interim dividend of Rs. 2.50 a share.
Excluding dividend (XD) date: October 23,
2008 and payment date: November 5, 2008.
Kelani Tyres plc has declared a 58 cents
interim dividend. XD date: October 30, 2008
and payment date: November 11, 2008.
The Finance Co., plc has declared a Rs.1.80
first and final dividend. Shareholders'
meeting: November 27, 2008; XD date:
November 28 and payment date:
December 4, 2008.
Property Development's' PAT up 36%
Property Development's in the 3Q ended
September 30, 2008 saw PAT grow by 36% YoY
to Rs. 66.79million. The company in the nine
month period ended September 30, 2008 saw
PAT grow by 73% YoY to Rs. 245.43 million.
(Source: John Keells Stock Brokers)
