30% to N.E.

Around 30% of funds from the World Bank’s (W.B.’s) Country Assistance Strategy (C.A.S.) programme-which has an allocation of around US$ 900 million for the next four years beginning from this year will be set aside for north and east reconstruction and development, W.B. Country Director Ms. Naoko Ishii told Benchmark last Sunday.

She asserted that conflict sensitivity was at the heart of WB’s assistance: “At the beginning of the C.A.S., we made it clear that the W.B. would like to assist or address the conflict issues: the causes and consequences of the conflict throughout our country programme the conflict filter is our instrument to ensure that our project will do the right thing,” she said.

Ishii also stressed that Sri Lanka’s fiscal deficit and high debt “wouldn’t necessarily help the Government to position itself to prepare a response to the global economic crisis, because it will limit the room for fiscal stimulus and increase the risk of debt borrowing”.

She also said: “Public-Private Partnerships (P.P.P.) is our dream. Sri Lanka is at a critical juncture to move out of being a low-income country to a middle-income country and should utilise the private sector’s engine as a key lever to move that transition successfully. Even if there are difficulties, we shouldn’t give up. The enthusiasm for P.P.P. is not strong enough, but we continue to encourage the Government, private sector and civil society to harness that momentum for the future of Sri Lanka.”

Rates will decline only if I.M.F. or Libyan money comes 

Inflation, interest rates bottom-out

Treasury (T) Bond rates of 2012 and 2013 maturities in secondary market trading moved up by 25 basis points (b.p.s) to the 13.60% and 13.70%  levels on Friday, over that of Thursday’s rates due to profit taking and complemented by Thursday’s T Bond primary auction which saw the weighted average yield (W.A.Y.) for the April 2013 maturities fetch 13.60%, market sources told The Sunday Leader.

Players bought these bonds for rates as high as 21% only four months ago, in January, so there is an element of profit taking that pushed rates up, they  said.

“However both inflation and interest rates appear to have had bottomed out, average inflation will remain at the double digit level throughout the year because of Government’s added expenditure burden for relief, rehabilitation and reconstruction works in the war ravaged Northern and Eastern provinces,” they said.

The moving annual average inflation this month was 14.7%, two percentage points less than that of the previous month, while point to point inflation was 3.3%, 0.4 percentage points more than in the previous month.

 Meanwhile, W.A.Y.s at Wednesday’s primary T Bill auction remained flat week on week (W.o.W.), with W.A.Y.s  for 91, 182 and 364 day T Bills, dropping by only one b.p. each to 12.04%,  13.14% and 13.40% respectively.

Selling T Bills and T Bonds to the market is a popular way that the Government raises money to meet its expenditure needs.

The movement of T Bill rates is also a gauge in regard to the movement of lending rates.

Recently the President appealed to the banking sector to bring down lending rates, however, Upali de Silva, Secretary General, Sri Lanka Banks’ Association (S.L.B.A.) said that banks’ have told the President that lending rates can come down only if deposit rates too come down.

“ T Bill yields will continue to remain at these levels until and unless the Libyan or the I.M.F. money comes,” a market source said.

“Though the Central Bank (C.B.) expects inflation to be in the single digit level by the year end, he opined that the average annual inflation rate by the year end would be in the 11-12% levels. “So, W.A.Y.s are in line with this figure,” he added.

And the policy rate cut made by the C.B. recently was only a ¼ %, not enough to bring interest rates down, the source said. With this cut, C.B.’s benchmark, overnight (o/n) policy lending rate to banks and primary dealers is 11.50%, while the o/n rate it pays banks for parking their excess money with it is 9%. However with exporters encashing their dollar proceeds, one of the Government’s agents in the market, State owned Bank of Ceylon was buying dollars at Rs. 114.90 per unit last week in order to stem the further collapse of the greenback. There is sluggish demand for the dollar in the market, he said.

“In order to protect the exporter, the ideal rate of the dollar should be Rs. 115,” the source opined.

However, Sunil Wijesinha, chairman Dankotuwa Porcelain said that the dollar should appreciate to Rs. 120 in order for exporters to be competitive. He further said that Dankotuwa exports most of its products to the E.U. region. However, the rupee in recent times has made gains over the Pound and the Euro, said Wijesinha. The rupee is the strongest currency in the region, making exports uncompetitive, he added.

Meanwhile, in the first quarter of the year banks’ loan growth remained flat at Rs. 1.6 trillion year on year (Y.o.Y.). S.L.B.A.’s de Silva attributed this performance to “no takers’ due to the dissipation of consumer spending power as a result of the economic downturn, coupled with the non-availability of good borrowers.

Banks’ non performing loans in the quarter ended March 31, 2009 increased by Rs. 25 billion quarter on quarter to Rs. 125 billion, comprising 7.2% of banks’ total loan portfolio. De Silva attributed this increase to an increase in housing loan defaults.

200 mn., unemployed

International Labour Organisation (I.L.O.) said that 2009 will represent the worst global performance on record in terms of employment creation.

 It said that the global labour force is expanding at an average rate of 1.6%, equivalent to around 45 million new entrants annually, while global employment growth decreased to 1.4% in 2008 and is expected to drop further to between 0-1% in 2009.

In the Global Employment Trends Update, May 2009, I.L.O. revised upwards its unemployment projections to levels ranging from 210 million to 239 million unemployed worldwide in 2009, corresponding to global unemployment rates of 6.5 and 7.4% respectively.

The Trends report projects an increase of between 39 and 59 million unemployed people since 2007 as the most likely range. Updated projections of working poverty across the world indicate that 200 million workers are at risk of joining the ranks of people living on less than USD 2 per day between 2007 and 2009.

The global economic crisis is hitting youth hard. The number of unemployed youth is expected to increase by between 11 and 17 million from 2008 to 2009. Youth unemployment rate is projected to increase from around 12% in 2008 to a range of 14-15% in 2009.

ILO Director-General Juan Somavia cautioned that past experience suggested a considerable lag of 4-5 years on average in the recovery in labour markets after economic recovery. There was a risk of the global jobs crisis “persisting” for the next several years.

Demobilisation

Whilst, no doubt, a large number of troops will be needed to man newly established or re-established camps in the North and East to ensure that there is no repeat of terrorism from those areas, there may still remain a surplus of soldiers who are no longer needed by the army, now that the 26 year long war with the L.T.T.E. is over.

What then is the Government going to do with those excess numbers of military personnel who have been trained to handle weapons, who have been trained to kill, but whose services are no longer required now that the war is over is the million dollar question.

Therefore the onus before the Government is to find alternative avenues of employment to those demobilized troops.

For this to happen, they may need to be trained in various vocational skills in order to be made employable elsewhere, similar to what the Government is doing to those captured or surrendered terrorist cadres who are now in the process of being rehabilitated, before being released to society.

Of course the excess number of troops are not terrorists, that is the subtle difference. But the sheer numbers involved in the case of demobilized troops may be phenomenal, possibly numbering in the thousands, if not in the tens of thousands, gigantic, when compared with the head counts of those Tigers who are being rehabilitated, and whose numbers may add up to only a few hundreds, if not a couple of thousands at the most.

The Government may also be hard pressed to find the necessary resources to train them in various vocations so that they would be equipped with the necessary skills to make them suitable for employment in non military jobs.

A man who has been trained to kill, if not gainfully employed in other trades in the event of being demobilized, may be a threat to society itself, this is the reality.

One way that the Government may make these demobilized troops useful is to employ them in construction and reconstruction works, a very real requirement for a country whose assets have been destroyed and development and progress stultified as a result of the 26 year old conflict.

However, a cash strapped Government with little resources will be hard pressed to do this alone. It will need to muster the support of the donor community and N.G.O.s  to see this through.

These are one of several issues which the Government faces in peacetime, for which international goodwill and international support are essential for lasting peace and sustainable development of this island nation.

Militant labour

Last week, the main story in the business pages of this newspaper was about the closure of Nisol Corrugated Cartons Ltd., a company set-up in 1978.

Its closure was not due to bankruptcy, but due to militant labour which had the temerity to assault its General Manager when one of its workers were asked to do some work.

The numbers affected due to this liquidation may be small, some 200 workers and 20 staff, but the bigger picture is the attitudinal problem of some of our workers who feel that they could do just as they please in their workplaces and are not prepared to take orders from their superiors, a dangerous situation, and a threat to the economy.

And the consequence, 220 being made redundant due to the action of one bad egg.

The message that Nisol’s liquidation brings about is that there are those employers who will not tolerate indiscipline among its workers even if it results in the closure of their establishment, and the other is, naturally, the need for a more disciplined labour.

To prevent such incidents being repeated, there also needs to be flexible labour laws that will allow for the swift punishment of such miscreants to ensure that the majority won’t suffer for the sins of a few, thus ensuring that the wheels of business/production will continue to move along, unimpeded and uninterruptedly, despite unlawful acts by some of its labour.

Nisol’s liquidation also brings home the need for a continuous dialogue between the Government/Labour Ministry, employers and trade unions that such things will not recur, more so, in these times where the world is going through one of its worst economic crisis since the Great Depression of the 1930s, where jobs are being lost not only globally, but in Sri Lanka as well, due to falling consumer demand and tighter credit.

Otherwise the country may be sitting at the edge of a volcano due to rising unemployment caused not due to a dearth in job opportunities, i.e. in cases such as Nisol, but due to militant labour who take the law into their own hands, not realizing that they are recruited or paid to work, and not to shirk.

Setting up a “school of work” which will teach labour their duties and responsibilities in their workplaces may not be a bad idea, so that they would then be equipped with the correct mindset and right attitude when they enter the labour market, thereby being an asset to their employers and their country, and also ensuring that their home fires would be kept burning, continuously.

From manufacturing to services

Nokia is offering e. mail facilities on its mobile phones, the second mobile phone manufacturer to offer such services after Blackberry.

“But the difference is that our hand phones which are equipped with such services are sold at ¼ th the price of a Blackberry device,” its General Manager Emerging Asia Prem Chand told reporters from Sri Lanka, Bangladesh and Nepal in Dhaka last Saturday.

Prices of Nokia hand phones equipped with such applications range from US$ 50 and upwards. 

Chand further said that those Nokia devices also come with the company’s own e. mail service, ovi.com.

“Having our own e. mail service, other examples being google and yahoo, helps us to strengthen our brand image,” said Ms. Paula Laine, the company’s Vice President, Entry Category Marketing.

Since the launch of this service six months ago, they have had got 300,000 such subscribers.

This service was officially launched in Bangladesh last Saturday, with plans to roll it out in Colombo next month.

Ovi in Finnish means door.

Nokia, from making devices, added on offering services to their business portfolio only 2½ years ago. It’s also enabling the offering of such e. mail services in local languages, including in Sinhalese. However, Laine said that Nokia will continue with its core business, i.e. of manufacturing devices.

Go West, East with Qwest

When we founded Qwest Destinations we were determined to create a special kind of travel Company. We had a vision and a goal for seeking out new destinations which reflect our spirit. Quality is one of those over-used words. Quality that we emphasize is about accommodation, comfort travel and unique experiences: as in a ride to a most sought destination like Machu Picchu in Peru or a thrilling rollercoaster ride in Orlando.

In April Qwest  operated almost 12 tours across half the world to amazing destinations.

The West’s summer months, i.e. its weather conditions are excellent for travel, and due to the downturn in economies several offers are available to discover new lands. To coincide with the July/ August school holidays, even extending up to December, Qwest will offer value added tours to many countries.

Europe-8 country tour: Italy, Austria, Germany, Switzerland, Holland, Belgium, Luxembourg and France, starts in the “ city of love”–Venice and thereafter through Padua-a city devoted to St Anthony-Austria over the Alps via the Brenner pass travelling on the longest bridge in Europe-Europa Bridge-to Innsbruck, then to Switzerland-Lake Lucerne, to Germany.

A short cruise on the river Rhine passing vineyards and castles in Germany to Amsterdam and through the Benelux Countries ending in France. The Europe Tour unfolds great travel experiences.

Qwest has a terrific Tour to Alaska on a 7 night voyage of the glaciers stopping in almost four cities in the heart of Alaska-Ketchikan, Juneau, Skagway, etc. Something new this year will be to combine three days in Seattle. After the cruise, Los Angeles is offered to you. This 16 day tour is memorable and you will carry treasure-troves of experiences.

Baltic Region and Scandinavia: Qwest’s 11 day Baltic Cruise takes you to the historic city St. Petersburg-Russia’s No. 1 travel destination.

Stockholm, Oslo, Copenhagen and Helsinki are all offered to you on the Baltic Cruise together with Poland and Estonia. Europe’s unique magic will be seen through the eyes of experienced guides. Qwest has been exceptionally strong to U.S.A. and we have affordable 20 day tours covering Orlando, New York, Washington D.C. and Niagara Falls.

National Geographic recently rated Machu Picchu as the world’s most sought after destination.  Machu Picchu is now a wonder of the world visited by so many. Qwest unfolds a 15 day tour to the heart of Peru covering all “must see” cities and sights including Lake Titikaka, the highest navigable lake in the world. Qwest Peru Tour is planned for October 17.

Our September Qwest Tour to China will give you flexibility to discover this vibrant country which has great sights.

The greatest wildlife show on earth unfolds in Kenya in Masai Mara especially during the migration period when millions of animals cross between Tanzania and Kenya. We now offer a 12 day tour in August combining the world famous Ngoron Goro crater with parks in Kenya.

Egypt-Home of the Great Pyramids at Giza, the Sphinx, leaving either from Luxor or Aswan, explore the wonders along the Nile, Qwest offers a four night cruise on a 10 day tour in November/ December.

Qwest Destinations in August take you on a spiritual journey to Lourdes, Fatima, Rome, Vatican and Nevers Prague and Krakow are also offered. Holy land continues to grow as one of the most important destinations in the Qwest Travel calendar offering series of Tours throughout the year.A 7 night cruise to the Greek Islands and to Istanbul.

Qwest’s travellers  benefit from the planning expertise of our specialist tour consultants plus the knowledge and support of the very best guides and tour representatives across half the world.

Borrowings at discounts

“When the world’s economies are contracting, it is the individual borrower, entrepreneur, the small household that are hit hardest.

To weather the storm and ride the crest of the wave in the upturn, business must continue and borrowing must continue. Hatton National Bank (H.N.B.) realizes the importance of proper pricing that will keep the wheels turning.”

H.N.B., “Partnering the Progress” of millions of Sri Lankans, continues assisting in the development of every Sri Lankan.

H.N.B. which introduced home loans in 1996 under the ‘Shanthi’ brand is the leader in this sector amongst private commercial banks.  H.N.B. has played a dynamic role in disbursing large amounts of money for purchase and construction of houses amongst a wide spread clientele catered to by a network of 178 customer services centres located countrywide.

The bank is conscious of providing this service at affordable interest rates, during this month home loan interest rate was reduced twice.

PFS & BD Asst. General Manager P. Sridharan said that H.N.B. which

launched the first branded product in the banking industry titled ‘Singithi’ Minor Savings almost 15 years ago, introduced education loans and “graduate” loans a few years back, thus providing a continuation of “Singithi” minors to pursue their higher education when reaching major status.

This facility is also available even for non-Singithi accountholders.  “At a time when external degree qualifications are costly, HNB has consciously reduced the rate on graduate/educational loans. Keeping in line with the state focus of promoting agriculture, H.N.B. has taken the initiative to provide attractive leasing packages to this sector coupled with tailor made promotions organized through various partners.

A significant feature in such promotions has been the bundling of insurance and credit cards to provide a total solution at reasonable interest rates. The bank has reduced the interest rate further to facilitate the farming community. 

The bank is promoting the ‘Gami Pubudu Upadesaka’ (G.P.U.) scheme to elevate the entrepreneurial poor to take part in economic development.  Advances under the G.P.U. loan scheme have always been at special rates. The success of this scheme could be measured from the large number of small time borrowers who have now borrowed in excess of Rs. 500,000-1,000,000. The mission of the bank of promoting the entrepreneurial poor through micro financing to the SME sector is a vision accomplished.

Developing the Wanni

“Sri Lanka is a multi-cultural, multi-lingual, multi-religious and multi-ethnic society. That diversity must be respected, protected and nurtured. It is only through that kind of a conscious strategy that we would be able to build confidence among each and every Sri Lankan to think Sri Lankan,” Disaster Management and Human Rights Minister Mahinda Samarasinghe told Benchmark recently.

“We have to address economic grievances-there are many because these areas have been neglected for a long time. When we go to Kilinochchi and Mullaitivu we see that nothing has been done for the people in those areas…”

Outlining the steps that are being taken to resettle the IDPs and initiate reconstruction of areas that were under conflict, Samarasinghe told the show’s Special Correspondent Ms. Savithri Rodrigo that it was important to first secure their villages.

The primary obstacle is mines. De-mining has to take place as a matter of priority. And we will carry this out to meet UN standards. Infrastructure development has to take place.

Government services have to be put into place,” he pointed out.

 All of this has to be put into place before resettlement starts. Our objective is to act fast. Do all these things followed by resettlement and then address economic, political, cultural, linguistic and religious grievances through a political solution. What we have at the moment is the 13th Amendment. Hopefully something else could be built up.” The widely-watched business TV programme is presented by LMD and produced by the wrap factory.

Suspension lifted

Janashakthi announced on Wednesday that the suspension of the registration imposed on it by the Insurance Board of Sri Lanka (I.B.S.L.) has been lifted with immediate effect.

The company was requested to show cause on why the suspension should be lifted. I.B.S.L. has accepted the Company’s explanations and the suspension has been accordingly revoked.

Rs. 1.7 bn. net foreign outflow

Though the Government announced that the war ended on May 18, the Colombo bourse, in the nine market days from May 18-29 saw a net foreign outflow (n.f.o.) of Rs. 1.8 billion, indicating that more needs to be done to entice foreign investments in the backdrop of a global recession.

However, the market, mainly driven by locals, recorded a daily average turnover of Rs. 1.2 billion during this period.

The inherent weakness of the bourse, i.e. the absence of net foreign inflows (n.f.i.s)was witnessed at Friday’s trading which saw market indices move in opposite directions (see above) due to month end “window dressing” of accounts and settlements on investments made from borrowed money having to be paid, market sources said.

Friday however witnessed a marginal n.f.i. of Rs. 60.50 million.

 “Foreigners are adopting a ‘wait and see’ attitude, the market is dominated by retailers who have no holding power (a reason for Friday’s staticism), high networth individuals and occasional institutional investors,” they said.

Locals however  may continue to drive the bourse in the week beginning tomorrow, the sources added. They were however unsure when foreigners would step in. That is the Achilles heel, the sources said.

S.L., India, black sheep

Malaysia last year scrapped the “visa on arrival” facility for Sri Lankans and Indians because it was being abused.

This scheme was introduced in 2007.

However, other countries in the region, such as Bangladesh and Pakistan continue to enjoy this facility, Rosli Ismail, High Commissioner for Malaysia in Sri Lanka told reporters on Tuesday.

Meanwhile outbound tourism to Malaysia from Sri Lanka increased by a third, from 30,000 to 40,000 last year. However, the same was not true in regard to inbound tourism from Malaysia, with the war being a detrimental factor.

Bullish on S.L.

Nokia is optimistic about Sri Lanka’s future in the context of its 26 year long war coming to an end, its manager to this part of the region told reporters in Dhaka last Saturday.

Prem Chand, the company’s General Manager Emerging Asia, in whose purview Sri Lanka, Bangladesh, Nepal, Maldives and Bhutan comes under, said that among the added pluses in Sri Lanka’s favour is its high literacy and G.D.P. rates.

War creates uncertainty among both investors and consumers alike, he added.

Chand however said that a constraining factor is Sri Lanka’s high duty structure.

Hand phones imports to Sri Lanka are charged with a 15% duty, whereas in a country like Bangladesh it’s a flat rate of US$ 4 per mobile phone that is being charged regardless of its value.

Nokia’s phones are priced from U.S.$ 23-24 and upwards.

A high duty structure also spawns a grey market which ultimately hits government revenue, said Kumar.

Survival of the fittest

It’s not the strongest of the species that will survive, but it are those that are adaptable to change that will survive-CIMA President Glynn Lowth quoting Charles Darwin, the father of evolution, at a function in Colombo on Wednesday to celebrate CIMA’s 90th anniversary.

J.K.H. P.A.T. down 9%

John Keells Holding Group  in the financial year  ended March 31, 2009 saw net profits decline by 9.1% year on year  to Rs. five billion, while revenue in the period under review increased by 2% to Rs. 41 billion.

Syllabus change

CIMA has introduced a new syllabus effective from next year.

Called “CIMA Future,” this change was done with inputs received from the University of Bath and from recommendations made by scores of employers, CIMA President Glynn Lowth, speaking at a function in Colombo on Wednesday to celebrate CIMA’s 90th anniversary said.

Talented photographer

Lakshan Ferdinando (23), a  talented photographer launched his website recently. He had his secondary education at St. Benedict’s College, Colombo.

Even during school days he had an interest and liking for. photography  which  he inherited from his father who was also a keen photographer.

Nevertheless  Ferdinando has acquired a style of his own unlike other photographers which gives a new dimension to his photographs and when entrusted with an assignment his vision is to create and set new standards that go beyond the term customer satisfaction.

His main assignments are weddings, events and commercials.

Hameedias sales down 30%

Hameedias, a clothing retailer, saw sales down by 30% year on year (Y.o.Y.) in value terms in the quarter ended March 31, 2009.

Its Y.o.Y. decline last year was also 30%.

“We are hoping that things will get better, now that the war is over,” Hameedia Managing Director Fouzul Hameed told The Sunday Leader.

On Wednesday the company relaunched its Adidas outlet at Havelock Road, Colombo at a cost of Rs. 25 million, bringing its total investment on this project to Rs. 75 million, since its launch nine years ago.

CIMA in Arabic

HSBC employees have to follow CIMA’s certificate in Islamic Finance course introduced in 2007.

“This course, for the first time is being translated into the Arabic, a record, as this is the first time that CIMA is being taught in another language other than in English-CIMA President Glynn Lowth, speaking at a function in Colombo on Wednesday to celebrate CIMA’s 90th anniversary.

Chevron’s P.A.T. down 33%

Chevron Lubricants in the first quarter (1Q) ended March 31, 2009 saw profits decline by 33% year on year( Y.o.Y) to Rs. 232.93 million. A high cost base oil inventory was attributed to the reduced margins.

Nestle’s P.A.T. down 30%

Nestle in the 1Q ended March 31, 2009 saw profits decline by 30% Y.o.Y to Rs. 465.33 million.

S.L.T. P.A.T. down 41%

Sri Lanka Telecom in the 1Q ended March 31, 2009 saw profits decline by 41% Y.o.Y to Rs. 974 million.

Cey. Ins. P.A.T. down 29%

Ceylinco Insurance in the 1Q ended March 31, 2009 saw profits decline by 29% Y.o.Y to Rs. 101.16 million. Its lower earnings were attributed to a decline in premium growth in life and non life business. (Source: John Keells Stock Brokers)

To university after O/Ls

Imperial Institute of Higher Education (IIHE) has introduced a global passage to students who wish to enter international universities after successfully completing Ordinary Level Exams.IIHE, which is the only validated centre of Wales University for Business & Computing degrees in Sri Lanka, in collaboration with Edexcel UK, which is a global giant in providing quality International qualifications, is offering the Edexcel BTEC National Diploma in Business which is accepted by almost all British based universities and many more universities in the Commonwealth as an entrance qualification straight after O/Ls. This is a truly global pathway to university straight after O/L,, rather than most ‘foundation courses’ offered today.