Business

War, cause for UNP defeat

 Selling war victories to the masses brought about the UPFA victory at the recently concluded Western Provincial (WP) Council elections though the economy is in a mess, a UNP MP said.

Sagala Ratnayaka, UNP MP for Matara District speaking to The Sunday Leader said that people have not reached starvation levels to feel this crisis, as was the case in 1977, where the UNP won the polls resoundingly that year.

In regard to his party’s recent rout in the WP Council elections, he said that the people being blinded by the war was the cause of the UPFA’s win.

“The masses felt that a defeat of the government would derail military operations,” said Ratnayaka.

The economy was secondary.

He further said that the constitution precluded President Mahinda Rajapaksa from holding a presidential election prior to November 17, where, on that date Rajapaksa would have had completed fours year in power, after which only it was possible for him to go for a Presidential election.

Ratnayaka however evaded answering what the UNP’s modus operandi would be, in the light of a possible Presidential election after November 17.*

 He also claimed that the poor 60% voter turnout at the WP Council election was due to UNPers not going out to vote. “Especially in the villages, the UNPers are marked,” he alleged. As a result they were afraid to go out and vote, Ratnayaka alleged.

He also charged that the Government has polarized the Sinhalese and Tamils, and even the Muslims.

He said that Tamils in Colombo voted UNP because they had nothing to lose. The same could be said of the Colombo Muslims who are traders, they voted UNP because the economy is in shambles. Ratnayaka alleged that the current military operations had caused some 20-30,000 deaths among the military while another 20,000 had been maimed for life.

He alleged that international pressure has had brought about a cessation of hostilities with the army alleging that LTTE leader Velupillai Prabhakaran  had escaped in a submarine, while the navy had alleged that he has gone deeper into the Wanni.

* Media Minister Lakshman Yapa Abeywardena told reporters on Tuesday that the Presidential election will be held before April 2010.

IT co.sacks 200 workers

A software export company recently laid off 200 ICT contract workers due to the global downturn.

This company which is headquartered in the USA also has software development centres in India.

“Their contracts were not renewed after the company did not get orders that they were expecting from the U.S.A.,” industry sources said.

English secondary

It’s maths and science and not English that is essential for software development, an IT professional told reporters on Wednesday. Mano Sekaram, Board member, Sri Lankan IT-BPO Industry Chamber (SLASSCOM) said that what is needed for software development is analytical skills which are provided by maths and science. He said that 85% of those involved in the ICT industry are those who come from rural backgrounds, where English is not the first language in their homes.

English vis-à-vis ICT is a “trading” language, said Mano Sekaram.

And those maths and science graduates are intelligent enough to master English in not time, he said.

 Proper prosecution reason for win

A Minister claimed that the proper prosecution of the war was the cause for the UPFA’s win at the recently concluded Western Provincial council elections.

Plantation Industries Minister Milroy Fernando told The Sunday Leader that that has been the feature of the Government’s recent wins at provincial council elections beginning with the Eastern Province provincial council win last year.

He also disputed UNP MP Sagala Ratnayaka’s claim that the economy was in shambles. Fernando said that he went to a shop at Hiniduma during Easter and observed that people were on a buying spree.

“People have money,” he said.

The Minister also disputed Ratnayaka’s claim that the recent fighting had caused 20-30,000 deaths among the military while another 20,000 had been maimed for life.

He was however unable to give the exact figures, but said that every month the Premier reads out the military casualty figures to parliament.

“A war cannot be fought without casualties,” he added. Fernando further said that due to the troops wearing boots made out of buffalo hide which were resistant to anti-personnel mines, those being disabled, unlike in the past, were much less.

“Weren’t 600 policemen serving in the East asked to surrender to the LTTE during the UNP government at that time and weren’t they murdered?” he asked.

Fernando also disputed another claim of Ratnayaka’s that military operations had ceased. “It’s the use of heavy weaponry to avert civilian casualties that has been stopped,” the Minister said. Commando operations are going on.

He also said that LTTE leader Velupillai Prabhakaran has not escaped from the island because of the navy placing a ring round the Mullaitivu coast.

In regard to only a 60% voter turnout, Fernando said that that would be the feature in future elections, with only around 65% turning out to vote.

This is because a number of voters are overseas and also because of the requirement of the national identity card (NIC) for voting, he said. “In my household alone five are overseas and from my electorate Wennappuwa, 35,000 are in Italy,” said Fernando.

Previously, when the NIC was not a “must” for voting, both sides engaged in impersonation, he claimed.

Two F&G cos. out

Merchant Bank of Sri Lanka Plc (MBSL) which announced the take-over of the troubled Finance and Guarantee (F&G) company, a registered finance company (RFC) of the Ceylinco Group, and two of its associate companies which were also into deposit taking but were not registered, has now relinquished its hold in the latter two companies.

“This is because depositors of those companies were not happy with our repayment scheme,” MBSL chairman Janaka Ratnayake told reporters on Tuesday.

Those two companies which had a total deposit base of Rs. 8.1 billion, in MBSL’s proposed repayment plan, allowed for full repayment of deposits to the value of under Rs. 50,000 only, while depositors with deposits in value of over Rs. 50,000 were to be entitled to only 60-80% of their capital. None of those depositors were to get interest payments either.

“Those depositors have gone to courts for relief, so we have nothing to do with those companies now,” said Ratnayake.

He however said that the RFC F&G which has a Rs. 3.2 billion deposit base was on the mend, with those depositors being paid their interest dues. They are however not allowed to withdraw their deposits at maturity till a liquidity crisis in the company is first sorted out.

6th highest forex earner

The export of IT and IT Enabled Services (ITES)-such as call centre operations was the sixth highest foreign exchange earner in the country after garments, remittances, tea, rubber and tourism.IT and ITES exports generated a turnover of US$ 213 million in 2007, Mano Sekaram, Board member, Sri Lankan IT-BPO Industry Chamber (SLASSCOM), told a meeting presided over by Export Development Minister Prof. G.L.Peiris on Wednesday.

2008 figures were however not out.

Despite the global recession, he expected the industry to have had grown by 20% last year.

The two industries together, i.e. IT and ITES, in relation to their exports, employ 13,850.

He said that despite the recession, and the possibility of losing orders, opportunities were being made available to obtain more overseas outsourcing contracts, because labour in the West, the primary export destination, was more expensive, than compared with here.

As such importers were trying to source IT and ITES contracts from places such as Sri Lanka, said Mano Sekaram.

He said it was possible to make this industry, like tea, a billion dollar industry in a couple of years.

Micro finance

Central Bank (CB) Governor W.A. Wijewardena speaking at a seminar on micro finance (MF) in Colombo recently said that there are two ways a country can get out of the poverty trap.

One is by sustained high growth over a period of time where benefits of the trickle down effect will uplift the poor out of poverty and the other is through MF.

According to him the latter was a better instrument for poverty alleviation because the “slow and the weak,” i.e. those who cannot at least keep pace with the market would be left out when adopting the “high GDP instrument” for poverty alleviation.

The merits and demerits of Wijewardena’s statement is debatable because even in the case of MF, the “slow and the weak” may lose out in the market to those who are innovative and quick to adapt to changes taking place in the business environment, possibly adopting both of these instruments would be the ideal for poverty reduction.

That said, many are the success stories of micro entrepreneurs who graduated out of poverty thanks to MF.

Wijewardena in his speech also stressed that what micro entrepreneurs want are not interest rate subsidies, but a reduction in transaction costs to zero to be sustainable. Those even include bribes and commissions that such entrepreneurs have to pay to get their loan approved, he said

Wijewardena said that in a particular case study done by the ADB, it had determined that when considering the transaction costs involved, it was cheaper for the beneficiary to have had sought assistance from the money lender, rather than to have had sought assistance from an MF institution because of the higher cost involved when transaction costs too are added on to the loan interest.

This is where regulation is important to check such abuse.

MF however is an unregulated industry in the island.

Sadly, there is a proposed MF Act that has been pending for at least a couple of months,  and is yet to see the light of day.

Some players who want the industry regulated say that the Act is being delayed due to various pressure groups, while others say that it’s due to a manpower problem.

For instance if the CB is to regulate this industry, apparently there are several dozen players in this industry, it does not have the wherewithal, already having their hands full in trying to regulate registered finance companies and banks, and specialized leasing companies.

Sri Lanka’s poverty headcount according to the last poverty survey which was done in 2007 is 15%, too bad for a country which was deemed to have had been the second most prosperous country in Asia immediately after World War 2.

Wijewardena in his speech said that countries such as Malaysia and Korea reduced their poverty levels from 50% to 6% by following the high growth theory.

The high growth theory however comes with a political price, i.e. by cutting down on subsidies and by proper targeting of the same, making the government’s impact on the economy to be small, that includes making the public sector small but efficient, and handing over the means of production and sale to the market, with the government playing the role of a facilitator and regulator.

If the CB is already having its hands full and are unable to regulate the MF industry, then what needs to be done? Should it be allowed to continue the same way, unregulated, and, as a result subject to abuse, or should a ban be imposed on MF?

Bans never work, besides, MF as a whole has been a success in Sri Lanka, and, according to Wijewardena, a certain MF project that had been facilitated by the CB had enabled 70% of it beneficiaries to get out of the poverty trap.

He told The Sunday Leader that another important ingredient for its success was that it left politicians out.

This Government which came to power with the promise of providing an uplift to the poor as being one of its major slogans, need to nurture and protect this goose that lays the golden eggs called MF if it wants to take its people out of poverty, rather than allowing them to lose confidence in this system because of abuse and corruption, and, as a result to have them ever entrapped in the eternal ring of poverty, having no other solace to seek, other than the money lender, village or urban.

New Tamil service

ITN, one of two government owned TV stations, plans to launch a Tamil service on June 12, coinciding with its 30th anniversary.

W.P.A.M. Wijesinghe, General Manager ITN told The Sunday Leader that the market for a new Tamil service was bigger than that for a Sinhala service, considering the fact that there are allegedly only two main channels catering to the former, namely Rupavahini and Sirasa TV.

Called “Vasantham,” he said that initially the service would be restricted to Colombo, before going islandwide.

“The cost for the first stage will be Rs. 40 million, while the islandwide beam will entail another Rs. 20 million in costs,” said Wijesinghe.

“It will mainly be focused on entertainment, however, the ITN Tamil news segment will ultimately be taken out and transferred to this channel,” he said.

“We shall provide this service with the existing staff, with the possible recruitment of an additional one or two staff at the most,” said Wijesinghe.

The ITN Group which comprises the TV channel and Lakhanda radio service saw turnover pass the Rs. one billion mark for the first time last year, with profit after tax estimated at Rs. 50 million, as opposed to Rs. 20 million in 2007.

“We took a hit in 2007 because of government directed salary increases,” said Wijesinghe.

“The salary bill after taxes is our biggest expenditure component,” he said.

The Group which has between 560-600 employees is burdened with a salary bill amounting to between Rs. 18-20 million monthly,  Wijesinghe said.

The company also plans to invest another Rs. 40 million before the year end on the installation of a transmitter station at Kikiliyabala, Nuwara-Eliya, to improve its broadcasting service to Nuwara-Eliya town.

“The ideal location to instal this transmitter station is Piduruthalagala, but space from that mountain has already been taken-up by Rupavahini  which has installed transmission towers, and the Civil Aviation Authority that has established a radar station there, said Wijesinghe.

Not a free lunch

Micro finance (MF) is not “subsidized” credit, Central Bank (CB) Deputy Governor W. A. Wijewardena told The Sunday Leader.

MF is extending credit to small entrepreneurs who have no recourse to bank borrowing.

He said that in 1990 CB began a MF credit scheme called ISURU with donor assistance, where the interest charged was 16% as opposed to the market rate which was 20% at that time.

“Now in its 19th year of operation, it has only a 2% default rate,” he said.

Wijewardena attributed to its success because it was bereft of political interference.

Spread over four districts, Puttalam, Matara, Galle and Kandy, ISURU has benefited over 100,000; lifting 70% of the beneficiaries out of poverty, he said.

 “Some of them began their businesses with just Rs. 200 obtained as credit, to start a project such as selling green leaves,” Wijewardena said.

This project is being implemented through rural development banks.

“In  1994 when Ms. Chandrika Bandaranaike was elected President, she wrote off all loans outstanding that had been channelled through the CB,” he said. As a result the loan repayment rate which was 70% fell to 40%, said Wijewardena.

But ISURU beneficiaries did not subscribe to this “free lunch” offer, he said. They knew that if they did, they would be unable to get future credit, Wijewardena added.

He further said that a number of ISURU beneficiaries were women. A condition of this project was that 40% of the beneficiaries should be women, said Wijewardena.

Women empowerment

By Ms. Naoko Ishii*

I would like to share with you a few initiatives in the World Bank (WB) Sri Lanka programme that is working towards achieving this objective of socially and economically empowering women.

WB assisted the Women Development Federation (WDF) which is popularly known as Janashakthi Bank in Hambantota. 

WB provided assistance under the Japanese Social Development Fund mainly for capacity building and access to credit.

WDF is managed by women themselves who belong to the lower income groups in one of the less developed areas of the country. 

This movement started in 1989 and has survived all these years despite a large number of members being seriously affected by the Tsunami.                                  

During the period 2003-07, with the assistance from the WB, WDF expanded their activities to two other DS divisions; Walasmulla and Ambalantota.  They were able to set up 21 banking units in those areas and at the close of the project all these banking

units were making profits and were paying their rent and their staff salaries.

They managed to increase their membership by 5,400 and establish 160 village societies in those areas. They also mobilized about Rs. 20

million in deposits and had an outstanding loan balance of Rs. 98 million, while their repayment rate was 98%. 

In addition they also set up 737 small enterprises while handing out a large number of cultivation loans.

Business activities are wide ranging, from food and beverage, manufacturing, trading, and handicrafts. 

These women mostly come from very poor families and they have been affected not only by the recent events like the ongoing conflict and

the Tsunami, but also by the JVP insurrection in 1989.

However, by joining the WDF, the participating women have been able to have access to credit not only for businesses and agriculture, but also for basics like food, housing and children’s education.

In doing these they have gained social recognition.

This is one example where Sri Lankan women have done very well as entrepreneurs with advice and training.       

WB also supports the Government of Sri Lanka to implement the Gemdiriya project which makes a mandatory 50% participation of women in all project activities from preparation to completion.                                   

I recently visited one of these projects and I was able to see how this project has been successful in empowering women to take leadership positions in their village based organizations and businesses.

I met women who were once garment factory workers who are now engaged in their own self employment related to carpentry which seems non-traditional for a woman in the traditional social context.

They are doing well and making more money on their own than they did when they were wage earners.

Here, I feel one reasons for the success of this training component was the availability of counsellors and trainers from the village

organization itself, who provides constant follow up support to these women, till they realize the profitability of the trade and its benefits for their family.

Now they are able to carry on their work on their own and are doing well.                  

We also have a similar Community Driven Development project that reaches out to women in the North and East.

Here the situation is somewhat different and also challenging as these are people affected by the conflict and rebuilding their lives and livelihoods will take time and effort.                                                                 

Nevertheless women’s groups there too have been successful in coming together not only to support each other in developing income        generating activities, they also find solace in these small group meetings by sharing commonly experienced consequences of the     conflict.

So our experience has been to encourage and make fair and equal opportunities available for both men and women.

The social and cultural challenges remain and I am not sure if it will go away quickly.

But I am sure we all agree that sky is the limit for women once they set their minds to success.

*The author is the WB Country Director in Sri Lanka. The aforesaid is an edited version of the address she made at the Luncheon Meeting of the Key Persons Forum organized by The Women’s Chamber of Industry and Commerce recently.

Exports down 18%

Export earnings declined by 18.4% to US$ 524 million in February 2009 reflecting contractions in all three major export categories, agricultural, industrial and mineral.   The largest contribution (53%) to this decline was from industrial exports followed by agricultural exports (41%).

 Industrial exports declined by 13.4% to US$ 408 million in February 2009.  Textiles and garments, which is the major subcategory within industrial exports, however grew by 7%, helping to contain the impact of negative growth in other subcategories.

Textiles and garments exports to the E.U. and U.S.A. increased by 15.4% and 1.5% respectively in February 2009.  With respect to agricultural exports, both tea and rubber recorded YoY declines due to depressed demand and lower prices.Coconuts exports however increased in February 2009 despite lower prices in  international markets. Overall, earnings from agricultural exports declined by 31% in February 2009 to US$ 109 million. Cumulative export earnings have declined during the first two months by 15.2% to US$ 1,015 million.Import expenditure declined by 37.3% to US$ 602 million in February, 2009 in view of the reduced demand for imports within all sub sectors. Investment goods expenditure declined by 31.2% in February 2009 to US$ 165 million.   Consumer goods declined by 33.1% to US$ 142.1 million in February 2009.  Sugar imports declined despite the increases in the average import price by 19.5% in February 2009.  Amongst the non-food consumer goods imports, expenditure of motor vehicles declined by 78.6%.

  Intermediate goods expenditure declined by 42.7% in February 2009 to US$ 289 million led by petroleum imports which accounted for nearly a third of this as crude oil prices continued to hover around US$ 45 per barrel.  Textiles and clothing imports declined by 21.8% to US$ 93 million in February 2009.

Cumulative imports expenditure decreased by 40.2% to US$ 1,277 million by end February 2009.The trade deficit contracted by 75.5% in February 2009, year-on-year (YoY) to record US$ 78 million, the lowest monthly value in four years owing to the sharp decline in imports which significantly outpaced the fall in exports.

The cumulative trade deficit decreased by 72% to US$ 262 million in the first two months of 2009 from US$ 937 million in the corresponding period in 2008. 

Private remittances decreased by 5.3%, from US$ 523 million recorded during January and February 2008 to US$ 495 million in the corresponding period of 2009.

 Remittances during January and February were 89% (US$ 233 million) in excess of the trade deficit, thereby easing pressure on the current account balance.Gross official reserves with and without Asian Clearing Union (ACU) funds recorded US dollars 1,816 million and US dollars 1,369 million respectively by end February 2009. Based on the previous 12 month average imports (US dollars 1,098 million per month), these reserve values are equivalent to 1.7 and 1.3 months of imports respectively.  However, in view of the current and expected low imports resulting from the sharp reduction in oil and petroleum product import bills, the actual number of months of imports is much higher.

Rs. 732 mn. PBT

Ceylinco Insurance PLC recorded a Rs.732 million pre-tax profit for the year ended  December31, 2008.

In the year under review Ceylinco Insurance made a Rs.1,149 million operational profit before making provision for fall-in value of investments and writing off non-yielding investments to the tune of Rs.416.8 million. This move served to make the financial statements of the company more transparent, while expressing a clearer picture to share holders.

Announcing the profit, Ceylinco Insurance-General Deputy Chairman Ajith Gunawardena, said; “what we have achieved in 2008 is remarkable, given the conditions that prevailed. We are positive that Ceylinco Insurance will be able to post even better results by end  2009. Our entire team is determined to achieve the desired results during this year, while staff morale is at a high level. Everyone is rallying round, giving a little bit more than their best.”

Commenting on the Life Division’s performance in 2008, Deputy Chairman R. Renganathan said: “Our ability to outperform the industry’s average growth is evidence of the trust and confidence that Ceylinco Life has built up over the years. This is an invaluable asset that we intend to nurture and build on in the years ahead. It is noteworthy that Ceylinco Life planned and executed several spectacular promotions in the year reviewed and paid Rs 1.4 billion in bonuses, significantly exceeding policyholder expectations.”

In 2008 Ceylinco Insurance PLC recorded a consolidated Rs.20,087 million gross premium income with the General Division contributing Rs.11,287 million and the Life Division accounting for Rs.8,257 million. Meanwhile, premium income from The Maldives operation accounted for Rs.543 million.

The company’s total investments, including Life and General Divisions exceeded Rs.23,100 million, out of which Rs.9,591 million (42%) accounted for Government Securities, while another Rs.7,302 million ( 32%), remained as deposits in licensed banks. The company’s total assets grew by 25% over the previous year and stood at Rs.37,449 million as at  December 31, 2008.

During the year under review the General Division sold over 320,000 new policies, bringing the total policies in force to over 1.4 million. Also in 2008, the General Division paid claims to the tune of Rs.4,766 million.  General Insurance solvency ratio stood at 142%, meaning that General Insurance admissible assets exceeded its liabilities by Rs.2,461 million.

Net transfers to the Life Fund for the year was Rs.4,735 million; thus increasing the Life Fund to Rs.21,301 million, recording a 26.5% growth. The Life Division meanwhile, sold over 188,000 new policies during the year while Life solvency stood five times over the required solvency ratio. Total claim benefits disbursed by the Life Division in 2008 amounted to Rs.2,113 million.

Ceylinco Insurance, the market leader in both Life and General Insurance in Sri Lanka enjoys market shares of 34% and 33%  respectively.

London invites Chandula

Hatton National Bank Deputy General Manager Chandula Abeywickrema has been invited by the internationally renowned Wilton Park Conference to speak at the next Wilton Park Conference to be held from May 18–22, 2009 on “ Financing Affordable Housing for Low Income Groups: Innovative Funding for Urban Housing ”.

Wilton Park has been influenced by international decision makers for six decades through “ off the record residential conferences ” as an academically independent Executive Agency of the Foreign and Commonwealth Office, U.K.,  globally renowned for holding key international forums, conferences and dialogues and bringing together decision makers and opinion formers from around the world to address  “pressing” global issues.

 Wilton Park has academic independence and from time to time at major conferences, bring together senior policy practitioners, politicians, academics, NGO representatives, journalists and other opinion formers from a range of countries for deliberations, discussions and dialogue.

Among the other speakers will be Reserve Bank of India Deputy Governor Rakesh Mohan, UN Habitat Executive Director Anna Tibaijuka, Lain Wright (Parliamentary Under Secretary of State, Department for Communities and Local Government, London) and several housing ministers from South Africa, Brazil, Tanzania, Dominican Republic, Congo and Zimbabwe.

The proceedings of the conference will be covered by BBC World TV Debate. 

Abeywickrema is also Banking with the Poor Network (BWTP) Chairman, the largest Asia based micro finance network with a membership of over 50 leading financial institutions in Asia. 

With over 26 years of experience in the banking and finance industry and his expertise in the Micro Finance, he was invited to the Board of Lanka Financial Services for Underserve Settlements (LFSUS), a joint venture between UN Habitat and the Government of Sri Lanka and was elected as its Chairman and in the last two years has given leadership to this Organisation and its many initiatives in eradicating slums and upgrading low income housing in Sri Lanka.

Recently he was invited by Harvard University together with Harvard Business School, Harvard Law School and the Kennedy School of Government at Harvard Asia Conference which was held in Boston to speak on Micro Finance and Technology. And at the Singapore Management University & Centre for Social Innovation to speak at the Social Innovations, Social Conversation conference at the Singapore Management University.

 He was also invited by the Alliance for Financial Inclusion for a key Financial Inclusion Forum in Tokyo which was organized by the Asia Pacific Economic Corporation, Asian Development Bank and the Institute & Alliance for Financial Inclusion to speak at this conference on the issues facilitating banking sector participation in financial inclusion and at Paris for “ Convergences 2015 ” to speak at the Micro Finance Conference organized by the Agency for Technical Co-operation and Development (ACTED) on the perspectives for micro finance in Asia.

HSPA +

Dialog Telekom, Sri Lanka’s flagship telecoms services provider, announced the pilot launch of HSPA+ (Evolved High-Speed Packet Access also known as HSPA Evolution), technology in Sri Lanka, becoming the first mobile operator in the South Asian region to employ this next-generation technology.

With HSPA+ customers can experience download speeds of up to 21Mbps, and uplink speeds of up to 5.76Mbps. HSPA + technology is currently available on a pilot basis at the Dialog Future World in Darley Road, Colombo and Dialog plans to extend the pilot network across key locations in its 3.5G network over the next few months.

Dialog Mobile CEO Supun Weerasinghe said: “This pilot service is an indication of Dialog’s commitment to offer the best in technology to our customers, resulting in a user experience that is unparalleled. Wireless data applications that are smarter and offer greater flexibility will shape the future of broadband, which in turn has become a vital element of the mobile product. Dialog will continue to be at the helm of this broadband innovation in Asia as we deliver upon our promise of The Future Today.”

 HSPA+ offers mobile users faster response and less latency for media-rich applications, including high-definition video streaming, web surfing and other next-generation wireless applications with high bandwidth requirements.

Upon successful completion of the proposed trial phase, Dialog will progressively expand its HSPA+ coverage across its 3.5G network spanning Colombo, Kandy, Galle, Kurunegala, Anuradhapura, Nuwara Eliya, Trincomalee and other major towns in Sri Lanka. Dialog operates the largest and widest 3G/3.5G network in the country, offering high-speed internet access. Dialog supports a range of cutting edge services for enterprise as well as consumer segments including but not limited to mobile TV, mobile video portals, multi party video conferencing, mobile video surveillance and 3rd Generation roaming across 55 countries.

Offers at top hotels

American Express (AmEx) credit card acquired and issued in Sri Lanka by Nations Trust Bank Plc (NTB) joined their Partner John Keells Hotels to offer card members and their family benefits for the long weekends.Card members have the option of choosing from Citadel Kandy, Yala Village, Lodge Habarana or Chaaya Village, Club Oceanic Trincomalee, Bentota Beach Hotel or at Coral Gardens Hikkaduwa.

Titled ‘Good things Come in Pairs’, the benefit allows  card members  and their family and friends to stay at any John Keells Hotels on full or half board on either single, double or triple room basis, and enjoy the second night  free of charge.

 What’s more this benefit offers a one-for-one offer, which means that for every one night booked, the next night is free, for every two nights booked card members will enjoy a further two nights at no additional cost and so on. Additional rooms booked by the card member for his group of family or friends will be offered at a 20% discount.NTB Chief Manager Cards and Consumer Assets Lewie Diasz said, “We are delighted to give our card members an opportunity to stay at some of the finest resorts in the country. Whether you wish to make use of the extended stay at these hotels or just head out for a weekend getaway, these deals are certain to give  card members the choices and the comfort of an excellent and well deserved break. What makes this offer unique is that we believed in making this vacation a time to spend with either the special person in your life, your family or even just a time to hang out with your friends and AmEx will give away the second night free of charge.”

EBITDA up 23%

Bharti Airtel Ltd recently announced  audited US GAAP results for the fourth quarter and full year ended March 31, 2009, saw consolidated total revenues for the quarter ended March 31, 2009 of Indian Rs. 9,825 crore grew by 26% and EBITDA of  Rs. 4,001 crore grew by 23% on a year on year basis.

Cash profit from operations of Rs. 3,788 crore grew by 25% over last year. Net income for the quarter ended March 31, 2009 was Rs. 2,239 crore, a21%  growth over last  year.

Revenues and net income for the full year ended March 31, 2009 was Rs. 36,962 crore and Rs. 8,470 crore, a growth of 37% and 26% over the same period last year respectively.

Bharti had 9.66 crore subscribers, as on March 31, 2009, an increase in the total subscriber base of 50% over the corresponding period last year and maintained its leadership position. This through an improved market share of all India wireless subscribers at 24% as on March 31, 2009, up from 23.7% corresponding to the same period of last year.

Commenting on the results and performance, Bharti Airtel Chairman & Managing Director  Sunil Bharti Mittal said, “ ‘Our focus on rural penetration and customer affordability have been instrumental in delivering this strong growth. The India growth story continues and we expect economic revival in the second half of this fiscal year. I have no doubt that the telecom sector will lead the economic revival and Bharti Airtel will be at the forefront.

 The Board has decided to give a maiden dividend of 20% of face value for the year. Further Board has proposed sub-division (share split) of existing equity shares of Rs. 10 each into two equity shares of Rs. 5 each.  

Sampath honours N.U.

The centenary Birth Anniversary of Deshamanya Neville Ubesinghe Jayawardena (1908-2002)-economist, senator, banker, entrepreneur and Sampath Bank Founder Chairman is being commemorated with a series of events organized by the N. U. Jayawardena Charitable Trust.

As a part of the commemoration, the Trust published the biography “N. U. Jayawardena – The First Five Decades” written by Kumari Jayawardena & Jennifer Moragoda. Sampath Bank has come forward with a sponsorship for a re-print of this book, including a paperback edition which will be reachable to a wider reading public. The new edition will be available for purchase at leading bookstores in the near future.

 The book covers the first 50 years of the life and times of this finance legend who rose from modest circumstances of being the son of a resthouse keeper in rural Tangalle, to becoming the first Sri Lankan to be appointed as Exchange Controller and Central Bank Governor.

Jayawardena played a key role in forming and shaping some of Sri Lanka’s commercial and economic policy frameworks in the years before, during and after the country’s Independence. At an early stage of his career he assisted in the work of the Banking Commission of 1934 which resulted in the establishment of the Bank of Ceylon and was a lead player in the establishment of the Central Bank of Sri Lanka.

Later as Sampath Bank founder Chairman, he was the trail blazer in many ground breaking initiatives that revolutionized the country’s banking industry. Under his stewardship Sampath Bank’s Initial Public Offering (IPO) was the most successful at the time, making Sampath Bank the most widely held public company with over 17,500 shareholders throughout the island. His vision made Sampath Bank become a legend in electronically and technologically driven banking.

Sampath Bank is honoured to take an active part in the commemoratory events which pay tribute to a financier par excellence who had done yeoman service to the bank as its Founder Chairman as well as to the country throughout his long and eventful career.

Venturing into modern retail

After making history by being the first group of companies headed by a Sri Lankan and the first Sri Lankan owned company in Dubai to offer Sri Lankans a way of buying their own homes in Dubai, AMG International is making history once again.

The diverse group of companies based in Dubai started in 2004 by entrepreneur Anthony Malik Gunasekera is expanding its business operations into “Modern Retail” supermarkets with a series of Sri Lankan supermarkets soon to be opened across the Middle East.

AMG International is allegedly the only group of companies to be owned by a Sri Lankan in Dubai and also operates in the real estate, hospitality, trade and foliage industries.

Speaking to The Sunday Leader, AMG International CEO/ Managing Director Anthony Malik Gunasekera said that even in the face of economic downturn, Dubai, a hub of business and trade activity in the Middle East (ME), is faring comparatively well.

 “Even though the real estate market is not doing too great (and no one expected this recession), the Middle East has always been a stable and secure place for businesses and the companies that are focused and work intelligently-the entrepreneurs-will continue to do well.”

Gunasekera believes that Dubai, as with the rest of the world will bounce back from the recession. He also believes now is the time for businessmen and entrepreneurs to rise above the challenges they face. He said, “In the face of this recession, we too have changed and adapted the ways we do business. But thankfully since our projects and investments are with the Dubai government they are safe and secure.”

Together with a team of professionals that include AMG Director General Manager Viraj Ekanayake and Group Marketing Manager Jerome Jayasinghe, the idea of a Sri Lankan supermarket was born. Gunasekera explained, “Everywhere you go there are shops and restaurants and services in general that cater to people of all nationalities except Sri Lankans. No real Sri Lankan restaurants or stores, if you ask me I’d say that Sri Lankan consumers are seriously neglected.”

But all this is about to change as Gunasekera hopes to unveil the first Sri Lankan supermarket chain in the world (outside Sri Lanka) to cater solely to the needs of Sri Lankans living abroad.

This first ever Sri Lankan supermarket is scheduled to open on June 15 in Sharjah and will offer over a 1,000 Sri Lankan brands, from “frozen foods like meats to fresh vegetables,” spices and even cosmetic products and newspapers, books and music, the supermarket will have it all.

With a large amount of Sri Lankan expatriates who miss home this venture is expected to be a lucrative and popular one.

He said, “This project will also take Sri Lankan brands to the international market, help keep Sri Lankans living abroad closer to home and we’ll have only the best Sri Lankan brands available. I want people to step into this supermarket and feel like they’ve been transported back home.” Jayasinghe added, “From our research we know that Sri Lankans in the ME miss their home brands, so we hope to provide them the total range in all ‘SKUs’ they’d have back home, be it beverages, baked goods, chilled foodstuff, frozen meats, fresh vegetables, sauces and chutneys, spices and even cosmetics, ‘homeware,’ books, music and right down to the local newspapers. ”

Even the supermarket staff will be Sri Lankan to give it added authenticity. Jayasinghe said that to maintain standards the company has decided to approach Sri Lankan companies behind these brands directly. A central purchasing unit is located in Negombo where all products will be received before being sent to Dubai.

With success in its core business sectors that include Real Estate and Investments, Foliage and Hospitality and Specialty Services, the success of AMG International according to Gunasekera lies in the high level of professionalism displayed by the AMG team of experts who are sensitive to customer needs in all spheres of activity.

Gunasekera says he couldn’t have picked a better team to work with and is  thankful for the talent and dedication his staff brings to the business.

Insolvency & recession

By Riyad Riffai

Sri Lankan businesses should be more cautious and assess customer creditworthiness more often, especially during recession, said a senior corporate executive.

They should watch out for bad debts as during such times previously solvent customers can quickly become insolvent, Chemanex chief executive Preethi Jayawardena told the LBR-LBO CEO Forum recently.

“The assessment of the credit risk is very important. If your debtor is not repaying on time, that is the first indication he’s in trouble,” said Jayawardena.

“The next indication is if he’s giving cheques for post presentation and if these cheques are dishonoured, then he’s in real trouble.”

During recessionary times, unlike inflationary periods, the value of currencies go up, prompting consumers to hold on to their cash as the same good or service can be bought at a cheaper price later on.

This hurts companies as vigorous discounts offered by retailer’s to reduce bulging inventories then erode bottom line margins which finally blows over to balance-sheets.

Even though top economists have said the global recession would come to an end soon, Jayawardena said it will take another two years at least for the world to recover. 

Jayawardena said a common mistake made by most finance managers is believing well established clients will always pay their dues on time.

However, past experiences such as Enron, WorldCom and Sri Lanka’s very own Kabool Lanka scam have been bitter experiences to businesses.

“Constantly review and not go by big names even if they had a long relationship with you,” said Jayawardena.

He said maintaining a credit score of clients is vital as write-offs and delayed payments increase  financing costs, which have to be factored in in  accounting.

It is prudent to keep an additional 25% margin of safety when arranging banking facilities, said Jayawardena, as banks charge a penal rate of interest when clients want to exceed their borrowing limits.

“It was brought down to 30-32%, but I know certain banks were charging even 50%,” said Jayawardena. “So that is very important.”

Most companies can’t get the best deal available due to weak balance sheets.

Jayawardena said banks demand higher interest rates to cover the higher risks associated with lending money to institutions that are highly geared.

Under the first pillar of the new Basel II global accounting accord, banks have to follow an internal rating-based (IRB) approach to mitigate risks.

The internal-rating base allows banks to develop their own pragmatic system to assess the probability of defaults.  

Credit risks are calculated on credit ratings generated by external rating agencies such as Fitch, Moody’s and Standard and Poor’s, while some banks can evaluate client risks internally. Borrowers with lower ratings have to pay higher interest for their loans as the banks have to cover the borrowings with higher reserves.

This pushes up the risk rate and makes bank borrowings expensive.

“The weaker the balance-sheet, the higher the interest rates will be,” said Jayawardena.

“It can go from the average weighted prime lending rate (AWPLR) plus 1% to even 5-6%.”

Jayawardena, a fellow at the Institute of Chartered Accounts Sri Lanka said it is always wise for finance heads to keep the banks informed of the company’s current financial situation and renegotiate loans early on to avoid further damage.

“You should inform banks of whatever has happened and tell them the real situation,” said Jayawardena.

“Always keep the banks in the loop on what’s going on. If you do that, they will at least try to accommodate some of your requests.”

At times of uncertainty, capital expenditure should be cut and recurrent expenditure should be minimized as much as possible, said Jayawardena.

At a time of a downturn, the return on assets is lower, which pushes up the payback time making the investment less attractive.

“At times such as this if you have no choice and need to undergo a capital expense then finance it with equity; for working capital you go for debt,” said Jayawardena. (LBO)

Avurudu for IDPs

Sampath Bank Deputy General Manager Finance & Planning Lalith Jayakody handing over a gift parcel to one of the children.  The occasion was when a Sampath Bank team visited three Internally Displaced Persons (IDPs) Camps in Vavuniya during the Avurudu Season.

Also in the picture are Sampath Bank Operations Manage Mahil Kuragama,  Lieutenant Mahagedara and other IDP Camp officials.

The camps visited were the Poonthottam Science Academy, Poonthottam School and the Kovilkulam Hindu College. Sampath Team ensured to do whatever possible to make this Avurudu festival a happier one for the people there in the newly liberated northern province, who have nothing to call their own except for the clothes they wear and for whom the sound of gun fire and the miseries of war are still fresh in their minds.

The team gave away gift parcels for the children and essential items for the families.

Rural empowerment

“A corporate entity will never be able to expand its market unless the rural population is included, and in Sri Lanka, 70% of the population is rural. These people must be economically empowered and enriched, and their purchasing power must be increased. If this group is not empowered, then corporates are marketing their products to a very small segment of society,” Hatton National Bank Deputy General Manager Personal Banking and Network Management told Benchmark last Sunday.

Asserting that “donors are focused on micro-finance initiatives foremployment as well as entrepreneur creation”, he told the show’s Special Correspondent Ms. Savithri Rodrigo that the micro-finance sector in Sri Lanka is mainly donor driven.

“I think donor funding has depleted in developed countries. In the next couple of years there will be a drop in funding inflows from donors which will have a major effect. With donor agencies tightening (their) lending, micro-finance institutions will find it difficult to sustain their work in time to come unless banks and financial institutions support these institutions,” he added.

Discussing the future of the SME sector in relation to the overall development of the economy, Abeywickrema noted: “The SME sector will not grow unless we feed it through micro finance. Banks and financial institutions should have a long-term approach and put people on a programme of graduation. Start from micro and then graduate them to the

next level until they reach an SME level. As they graduate their profit levels will increase. Banks could then improve their profitability by feeding the SME sector.”

The widely-watched business TV programme is presented by LMD and produced by the wrap factory.

Opening retirement accounts

Ceylinco Life has launched its second Retirement Planning Month in a continuation of an effort begun last year to promote retirement planning in Sri Lanka. Here, the Company’s Joint Deputy Chairman R. Renganathan elaborates on the need for retirement planning.

Question (Q): Why has retirement planning become so important today?

Answer (A): It is a well-known fact that the percentage of older people in Sri Lanka is increasing. According to 2001 statistics, the percentage of people aged 60 years and above stood at 10%. It is estimated that this percentage will increase to 15% in 2011, 18% in 2021, 22% in 2031 and 27% in 2041. Sri Lanka will face a social challenge to provide income, health and other support to its elderly population in the future. This is why it is important that individuals think about how they will provide for themselves after they retire, start investing now.

Q: How can Sri Lanka overcome this challenge?

A: From a macro stand point it is vital to support informal care arrangements for the most vulnerable among the aged, strengthen formal income support for the elderly and re-orient the health system to respond to an ageing population.

In strengthening formal income support for elderly, it is essential to improve social assistance programmes and integrate retirement schemes for private and public sector workers, to introduce schemes for informal sector workers and encourage the expansion of coverage by fiscal incentives such as targeted matching contributions.

As a private insurance company our message is that depending on reform or community support is risky. It is far more practical for income earners to make provisions while they have capacity to do so for their retirement.

Q: Please elaborate on retirement planning as a concept?

A: Retirement planning in a financial context refers to the process of making financial provision for retirement prior to reaching retirement age. This normally results in the purposeful allocation of money or other assets with the intention of deriving an income from those once the person is retired from employment. The process of retirement planning aims to assess a person’s readiness-to-retire given a desired retirement age and lifestyle and to identify decisions or actions to improve readiness to retire.

Q: Who is retirement planning targeted at?

 A: The vast majority of people are employed in the private sector and the informal sector where there isn’t any safety net for them after retirement. Sri Lanka does not have a broad state-run programme to care for elders either. Therefore retirement planning is targeted at all wage earners in the corporate sector as well as those who are self-employed.

Q: What is the current level of penetration of retirement planning in Sri Lanka?

A: It is very low at present. In the past people did not bother about their retirement because generally Sri Lankan families look after their elders. But the present cost of living and inflationary factors have impacted on families’ income. This is something that people should think about and start planning their retirement as early as possible to ensure they will not be a burden on their children in the future.

Another reason for the low penetration of retirement planning is a lack of awareness about the different retirement planning methods available.

Q: How can we increase the penetration of retirement planning in Sri Lanka?

A: This must be done mainly through increasing awareness and by offering effective retirement planning schemes. It is important to educate the public on the importance of planning retirement and how they can do it. Once the demand is created many retirement planning solutions could be introduced to the market.

Q: In this context what does the Ceylinco Retirement Planning Month do?

A:The Retirement Planning Month is intended to create awareness about this aspect and to promote retirement planning in the target market. We have organized many interactive programmes to create awareness on this.

Ceylinco Life offers a comprehensive retirement planning option through its Ceylinco Retirement Planning Account through which any working person can start saving for his or her retirement. Our objective is to introduce this concept to the masses.

Q: This is the second such programme undertaken by Ceylinco Life, what is unique about this year’s programme?

A: In addition to creating awareness, this year we are providing an additional incentive for people to open Ceylinco Retirement Accounts (CRA). Anyone who buys a CRA during this month or those who increase the value of their accounts during the month will automatically qualify for a draw at which 10 Singapore holiday packages will be presented. These packages will include air tickets and accommodation for three days.

Bee keeping

Ceylon Biscuits Ltd (CBL) on Tuesday inaugurated a project to increase honey production by 100%.

Research indicates that although Sri Lanka had the ideal inherent environment for abundant, quality honey production, but ironically over 50 tons of honey is imported annually.

 CBL in its intervention offered a guaranteed price scheme together with the services of its marketing network. The project begun in Keppetipola saw over 150 beekeepers been given bee boxes, smokers and protective gear, while each 10 member farmer group were provided with a centrifugal honey extractor.

Each farmer group will also receive five training programmes during the next six months covering technical aspects of management of a bee colony for higher production.The project has its roots in 2008/09 when CBL in response to a request made by the Uva Agriculture Provincial Director decided to give a helping hand to bee keepers in the Badulla District to uplift the once flourishing industry from decline.The industry reached a crescendo during the Upper Catchment Area Development Programme of the Mahaweli Project and showed a rapid downhill race thereafter.

Micro-finance boosts assets

LB Finance announced that 40% of its total disbursements were in micro-finance during the financial year ended March31, 2009.

The momentous rise in this less explored sphere of financing is said to be attributed to the Company’s aggressive and perceptive strategy in taking leasing to the informal economy, serving people with little access to the financial domain.

The just concluded financial year saw the Company laying special focus on pawning facilities, lease financing for three-wheelers and agro-based equipment. With a solid presence in all Sri Lanka’s main towns, LB Finance has throughout the past year extended its presence to the more remote areas of the country where villagers have limited options when it comes to financial solutions.

LB Finance currently operates 57 pawning centres islandwide, including in far-flung areas like Pitigala, Mahiyanganaya, Matale, Monaragala and Embilipitiya, affording small-scale borrowers the services of one of the top financial institutions in the country. The Company also hopes to soon take its services to the east as well, with the opening of a branch in Batticaloa.

The Company realizes too that its significant forays into micro-finance would play a considerable part in the country’s development drive. For example, the periodical promotions in three-wheeler leasing conducted at specially-picked towns throughout the island give people in the provinces the opportunity to lease a three-wheeler almost within an hour, thanks to an on-the-spot credit evaluation. Three-wheelers are a source of income for many a people in struggling localities; used for not just hires but other transport purposes as well, hirers now have the chance to be owners, in just a short period. Repayments through 57 outlets which include main branch, pawning centres and service centres and its online payment facility give better access to clients.

“The management saw it fit to concentrate more on short-term income generating assets, small investments that mitigate risk and would also help the Company be directly involved in helping provide a source of employment,” said Micro Finance Manager Lakshman Wanniarachchi.

“There are so many untapped areas with much potential for growth, not just for a business but especially for individuals,” he said.

LB Finance prides itself in setting benchmarks for the financial industry, offering a range of products including fixed deposits, hire purchase, micro-finance, agro-finance, letters of guarantee, finance leases, pawn broking and the express Western Union international money transfer facility.

LB Finance is a public listed company, registered with and monitored by the Central Bank of Sri Lanka. Chairman B.M.Amarasekara is a lawyer by profession and possesses over 50 years of experience in the field of law. The Company’s major shareholder and Deputy Chairman Dhammika Perera is a renowned entrepreneur and investor, also serving as BoI Chairman/Director General.

Perera’s business interests extend into hydro power generation, shipping, manufacturing, leisure and banking and finance.

Managing Director Sumith Adhihetty’s visionary and strategic know-how has contributed immensely to achieve the landmark results that the Company has been posting during the past few years. Others in the Board comprises non-executive directors Nimal Perera, A.W.M.Weerasinghe, Anurada Perera and Mrs. Kimarli Fernando; independent directors:M.D.S.Goonatilleke and Lalith De S.Wijeratne and executive directors Niroshan Udage and  March Perera.

Cheap new vehicles

Abans Auto recently moved their showroom and sales office from Battaramulla to Nawala Road, Nugegoda for the convenience of their numerous customers.

 Abans Auto, a member of the Abans Group was established in 2005 to handle the imports and sales of “economical” commercial and passenger vehicles and provide Sri Lankan businesses with affordable options of brand new vehicles to increase their transport fleet.

In 2006 it obtained an exclusive agency from Geely, the second largest car manufacturer in China. Geely began automobile manufacture in 1998 and exporting its cars in 2003. Geely is in the process of finalizing discussions with Ford Motors for acquiring Volvo which will be a boost to the Geely brand.

The first agency got by Abans Auto was Force Motors, India. Force Motors, a company which stands on the threshold of a new era in the automobile industry in India with a stake in five product segments; Balawan modern tractors, sporting synchromesh transmission, Bosch Hydraulics, “’excellent’ ergonomics and fuel efficient engines.” Balwan Tractors, Trax Cargo King, Traveller Coach, Tempo Excel 4 Truck and Minidor three-wheelers from Force Motors were the first vehicles imported and marketed by Abans Auto which were well received in the local market.

Force Motors’ Traveller and Excel range of passenger and goods carriers are powered by a family of DI and IDI engines including Mercedes derived OM 616 engines and reliability axles and transmissions add value and quality. Now Abans Auto imports the complete range of multi utility vehicles including Trax Judo, Trax GAMA, Trax Cruiser and Trax Cargo King, a range of single cabin and double cabin pick-ups and Trax Gurkha, a 4 x 4 cross country vehicle.

Abans Auto got the Dong Feng Motor Corporation agency in 2007, one of three giant auto manufacturers in China of passenger and commercial vehicles, engines, auto parts & components and equipment. With over 40 years in the business, Dong Feng has advanced in both design and technology to hold its own as one of China’s leading motor manufacturers with an extensive distribution and after-sales network.  Abans Auto imports and markets Dong Feng Single Cabin Trucks and Crew Cabin Trucks.

In Karachi

Responding to an increasing demand for international finance professionals throughout the region CIMA opened its latest branch in Karachi recently.

Among the speakers were Institute of Public Policy, Lahore Vice Chairman and Beaconhouse National University Social Sciences School Dean Dr. Hafiz Pasha (Chief Guest), CIMA Director Andrew Harding,  Regional Director Bradley Emerson and CIMA Karachi Centre correspondent Javeed Iqbal (keynote speaker).

Pasha commended CIMA for opening its office in Pakistan despite negative propaganda, providing an opportunity for its  students to acquire world class accounting professional education.

Harding said,  “Pakistan is amongst the world’s most exciting emerging markets, recording a recent average growth in GDP of 6-8% and attracting multinationals globally. Our new office in Karachi will allow us to offer even greater support to our existing members and students and to create opportunities for the talented young people of Pakistan.” 

Emerson speaking to the exclusive gathering of corporates, tuition providers, members and students hinted that South East Asia will play a significant role in providing a talent pool to the global economy in the future.   Sri Lanka, India & Pakistan have already made substantial headway in providing international education to the youth.  It is in this context that the CIMA office was opened in Pakistan which complements the youth population and the education strategy in that country. 

The Sri Lanka Division will be the hub and be responsible in providing the back office support for operations in Pakistan which is a major boost to the division which is now called on to play a regional role.

As a leading global professional institute, CIMA offers an internationally recognised qualification in management accountancy and has seen a 22% membership growth over the last five years. As chief executives increasingly turn to their financial directors to lead them out of the downturn, CIMA provides professional qualifications that are relevant to today’s ever changing business world.

Three contracts

Lanka Hydraulic Institute (LHI) was recently awarded three ADB funded North East Community Development projects.Those are on improving Surface Water Drainage in Pottuvil, Valaichchenai Fishery Harbour Rehabilitation project and Design and Construction Supervision Consultancy for the improvements of the Cod Bay Fishery  Harbour.

The Valaichchenai Fishery Harbour which was opened in 1981 was shut down in 1991 by the Ceylon Fishery Harbour Corporation due to the comflict.

In Brief