03rd – 09th May 2010 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Content Page
1. DEVELOPMENT ECONOMICS 1.1 Oil price surge to trigger bond activity in Gulf 05 1.2 SL’s economy must be run just like the elections… 07 1.3 US economy expands as consumers boost spending 11 1.4 Chinese firms eye bigger slice of US assets pie 13 1.5 Waste can be used as a resource 15 1.6 Central Bank says govt should contain budget deficits 18 1.7 Nuclear Power: Is it the 'Energy Miracle' in the post fossil fuel era? 20 1.8 Nutrition Status of Sri Lankans: Solving existing issues 22 1.9 Lanka Hospitals offers new hope for children with congenital heart diseases 25 1.10 Nationalism, Good Governance and Ethics 27 1.11 High growth expected 29 1.12 Lanka needs an 'IPL' for the economy 31 1.13 Govt committed to containing budget deficits, 35 1.14 Asia-Pacific must up social spending to turn rebound into recovery 37 1.15 PIGS: the Achilles heel of the EU 38 1.16 CB has key role in economic development – Basil 41 1.17 Social discipline needed for economic development 42 1.18 A Bankrupt Greece: The Tragedy of Profligacy 45
2. INVESTMENT 2.1 Oil palm investments by RPCs showing high returns 49 2.2 Tips for successful long-term investing 51
3. MANAGEMENT 3.1 Organizational reforms and restructuring 54 3.2 Firing - How to let go.... 56 3.3 Energy Management Where are we? 59 3.4 Logiwiz receives ISO 9001:2008 for Quality Management Systems 63
4. TRADE & MARKETING 4.1 Global natural rubber outlook encouraging 65 4.2 Holidays and monsoon rain grip rubber market 69 4.3 Boost for Ceylon Tea in Japan 70 4.4 Domestic Potato Industry and its sustenance 72
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5. TOURISM 5.1 Tourism soars with victory in Lanka 76 5.2 Kalpitiya tourism project in spotlight 77
6. EXPORTS 6.1 Increase in tea exports, revenue 79 6.2 Gem exports bounce back after recession 80
7. STOCK MARKET 7.1 SEC to improve CSE structure 82 7.2 Indices continue to post decent gains 84 7.3 CSE eases, profit taking on Vallibel, interest in Nawaloka 86 7.4 Stocks close 0.3% higher 87 7.5 Activity levels high in CSE this week 88
8. EDUCATION 8.1 Directing education on a new path 90
9. AGRICULTURE 9.1 Agricultural production campaign takes root 93
10. ICT 10.1 ICT conference and exhibition in Jaffna this week 96
11. ENVIRONMENT 11.1 Timely decision helped save the environment 99 11.2 Let us make peace with the ENVIRONMENT 101
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Development Economics
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The Island – May 3, 2010 OIL PRICE SURGE TO TRIGGER BOND ACTIVITY IN GULF
Despite an improvement in crude prices and expectations of domestic economic recovery, the debt market in Gulf oil-producing states declined sharply in the first quarter of 2010 because of widening uncertainty and better prospects about growth in bank lending, according to a key Saudi investment firm.
Conventional bond activity in the six-nation Gulf Co-operation Council (GCC) tumbled by nearly 70 per cent in the first quarter of this year compared with its average in the previous three quarters, said NCB Capital, an affiliate of National Commercial Bank, the largest bank in Saudi Arabia by assets.
The sukuk (Islamic bonds) market in the region suffered more, with the value of their issuance plummeting by around 81 per cent, in sharp contrast with South-east Asia, where the value shot up by nearly 114 per cent.
While prospects for such activities in the GCC remain bleak in the near term, they are expected to brighten in the medium- and long-term as regional economies gain steam on the back of firm oil prices.
Projections by the International Monetary Fund (IMF) show that real gross domestic product (GDP) growth in the GCC is expected to rebound from around two per cent in 2009 to nearly 5.8 per cent in 2010 and 2011.
All member states are forecast to record positive growth while Qatar’s economy will roar up by nearly 18.5 per cent in 2010 and 14.3 per cent in 2011.
"The opening quarter of 2010 brought the GCC debt markets little closer to recovery. Market uncertainty, sovereign risk fears and restructuring worries caused yields to shoot up," NCB Capital said in a 10-page study on the GCC debt market for the first quarter of 2010.
"At the same time, issuance volumes fell sharply, especially in the case of sukuk. However, the proposed Dubai World deal helped brighten prospects towards the end of the quarter. While the near-term outlook remains uncertain, structural drivers for the GCC debt capital markets are very strong with a growing need for long-term financing," said the study, sent to Emirates Business.
The study noted that the near-term outlook for the GCC debt market remains uncertain, adding that the market is not immune to the deteriorating situation in the European bond markets following the Greek fiscal crisis.
"However, we see an encouraging outlook in the medium- to long-term. The GCC debt market holds significant potential given the long-term financing needs of the region and the size of the current pipeline. But structural risks such as ambiguous insolvency provisions and a lack of clarity among sukuk structures, will require greater attention than they have received to date." According to the report, the growing optimism that characterized GCC debt markets during much of 2009 seems to have largely evaporated during the first quarter of 2010 due to uncertainty and an expected improvement in bank credit. 5 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
It said sentiment was shaken by high-profile events such as the disputes associated with the $100 million (Dh367m) TID Global Sukuk issued by Kuwait’s Investment Dar and the Dubai debt issue. Both cases heightened market uncertainty and raised broader concerns about sukuk structures and the lack of widely accepted mechanisms for dealing with default-type situations, it said.
"Further anxiety was caused by rising sovereign risk worries in Europe, which spilled over into conventional bond markets. The widening spreads caused potential issuers to shy away from the market. The reversal in market sentiment was especially sharp in the case of sukuk."
NCB Capital’s figures showed there was an unusual wave of sovereign debt issuance in the GCC countries through most of 2009. Government bond issues in the six members totalled $20 billion during the first three quarters of the year, and mostly came from Abu Dhabi and Qatar. Dubai continued the trend in the fourth quarter.
In contrast, the GCC conventional bond market recorded a lacklustre performance in the first quarter of 2010 as the private sector is yet to replace the government as the key market driver, the report added.
Figures showed that the value of conventional bond issues was down by some 70 per cent from the average of the previous three quarters, to about 3.4 billion. The first quarter of 2010 registered only six new conventional bond issuances, down 65 per cent from the average of the previous three quarters.
"The significant decline in conventional bond issuance was largely linked to continued debt market uncertainty" the report said.
-Emirates Business
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The Island – May 3, 2010 SL’S ECONOMY MUST BE RUN JUST LIKE THE ELECTIONS…
By Rohantha Athukorala
"We have to make Sri Lanka known to be the nation that beat terrorism and now, the economic tiger of Asia. Currently many are talking positive of Sri Lanka but this fan fare will last only for two year the most. Thereafter, another country will become a buzz nation in the world stage. We must make the best of it now".
Last week at the inaugural session of the first parliament after defeating the LTTE took place and it was great to see so many young faces in the system. Having served the country in the pivotal economic policy making body-NCED for two successive Presidents in the country and also chairing the premium export arm of Sri Lanka the EDB, I had the privilege of frequently visiting parliament for meetings but what I experienced last week was different. The enthusiasm, commaradie and youthful laughter of the young members of parliament sure gave me hope that Sri Lanka was poised for a 8-10% GDP growth in the years to come. All that was needed was for us to support the developmental agenda.
The challenge Whilst being very optimistic, the reality is that the challenges we are up against are gigantic in nature and unless the private and public sector work in synergy, we will not be able to do justice to the hype that surrounds the country.
From the data that has been released by Central Bank in the month of January, imports have shot up by 70.1% to 1160.9 million dollars whilst exports has dipped by 3.9% to 472 million dollars which not very healthy. The trade gap has ballooned to 688.9 million dollars from the 191.5 million dollars the year before. What’s worrying is the declining Industrial exports by $16.9 million with textiles and garments dipping by 27.8% which indicates that urgent action required.
Election best practices The need of the hour for Sri Lanka is a robust and sharp development programme but on a strategic footing. The good news is that all the policy makers who took oaths last week to form the new government has publicly demonstrated the new competitive culture that is required to succeed. Hence, all that is required is to ensure that an enabling environment exists so that together with the support of the private sector this same behaviour demonstrated at the elections can be extended to driving the economy. If this becomes a reality, I strongly feel Sri Lanka is not far away from being the ‘Miracle of Asia’. Let me capture the best practices we witnessed at the elections and why the economy needs to be run just like the elections so that we as a nation can be the new economic tiger of Asia.
Best Brains A first key feature of the last elections was that competition was so entrenched that there was no room for a back of the envelop strategy to be implemented. Hence, many politicians hired professional marketers and advertising agencies to conceptualize and implement the campaign. The manner in which the campaign rolled out on media and how hit the masses, demonstrated the professionalism which is commendable. Scientific techniques were also used by some candidates to evaluate the effectiveness of the
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communication with concepts like awareness and top of the mind awareness (TOM) so that voter behaviour can be tracked and corrective action taken if need be.
What is now required is for the similar behaviour to be extended by the same policy makers in running of the economy. The best brains must be picked for strategy development from each sector so that the most relevant game plan can be orchestrated. The National Council For Economic Development (NCED) was a very good model that existed in the country at one time. Policy making and evaluation was done by the top six private sector and public sector officials under the mandate of the Presidential Secretariat. A similar model can be used so that a ‘home grown developmental model’ will come into play. This is some times called a ‘National Committee on Economic development in some countries.
The private sector must also respect that being politically right is also very important, in today’s day and age. As history has proved in South Asia a developmental model based only on an economic developmental agenda has resulted in the government getting kicked out. It happened in Sri Lanka in 2004 and in Indian in 2006. Hence we must be sensitive that in our part of the world, community development is equally important together to be practiced with a very more urban approach. Hence if this balance is not maintained in Sri Lanka, we will loose the opportunity to grow even after winning a record 144 seats in the new parliament.
Strong game plan Going back to the best practices in the last elections, we saw that the candidates that had a sharp strategy came through well at the elections. We need to extend same in the economic development agenda too. This requires discipline and the ability of focusing on a few key priorities that will generate the best results. For example if we take the tourism sector as a case in point, the focus should be how do we build more hotel rooms in the country, given that the room current capacity even at a 100% occupancy can attract only a 760,000 visitors into the country.
If this single-minded strategy of developing tourism infrastructure is pursued, then all it requires is to flesh out the components that fit under this strategy like approvals from different stakeholders such as wild life, archeology, and environment. We also require a competitive financing model for the private sector to use he credit structure of the banking system. If this is not conceptualized and launched we will be up against the project being not be financially viable..
If I take the tea industry as a case in point, we need to address the supply chain issues in the industry like re-planting, fertilizer applications, lease period of the privatized tea sector to be extended whilst from a demand side, driving home the unique positioning of Ozone friendly ethically manufactured tea proposition are some of the strategies that can be pursued. This needs to be supported by a multi barrel dollar marketing budget if we are serious of the development of this noble industry. Currently the pivotal promotions agency for tea- the Sri Lanka Tea Board is on survival mode to be very specific with responsibility.
Passionate delivery If we analyze the most successful candidates of the general elections a key feature that stands out is the passionate delivery of activity at the ground end. Be it the house-to-house leaflet operation or the reminder telephone campaign it was done with a lot of passion. We need to extend this into the detail dynamics when implementing the economic development initiatives.
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This is especially a tough task given the Financial Regulations (FRs) and the Administrative Regulations (ARs) that come in to play, but it has to be worked around. If not, all the beautiful strategy documents will only collect dust just like what has been in the past. A key point that needs to be highlighted is the million of cabinet appointed committee reports that keep getting collected over time. This must ideally be curtailed and more emphasis given for driving passionate implementation just like the elections.
If I am to take some national projects that I was personally involved in that Sri Lanka where passionate delivery was seen in Sri Lanka. One of them was the first Hikaduwa Beach Festival that was staged by the Ministry of Tourism at the height of the ground operation against the LTTE in 2008. This event attracted almost 17,000 people in to Hikkaduwa and its surroundings properties that was a total sell out. The Sri Lankan Designer Festival in 2009 was another project that demonstrated passionate delivery in the Apparel industry. The model Public-Private partnership that was used, came out very successfully where the industry in chorus told the world buyers please practice ethical purchasing so that Sri Lanka can practice ethical manufacturing.
We need to use such model in other industries too which has driven a culture of being bias for action. This is especially important as we as a nation are perceived to be having an island mentality instinct that is quite laid back.
Take the high ground Going back to the elections once again, some of the candidates who garnered the highest preferential votes were candidates that took a very strong stance in their campaign and there by cutting through the clutter. Meaning, those who aimed very high made it to parliament. This was either by the single minded campaign idea or the money’s spent on the campaign. Incidentally this beaviour was seen by the new comers. My take out is that we need similar thinking in running the Sri Lankan economy, if we are to achieve a 8-10% GDP growth.
If I am to take an example the world’s chocolate nation it is not a nation that either grows cocoa processes cocoa. But it happens to be a land lock nation called Switzerland. The only reason they succeeded is because of the high ground stance the decided to take and then stuck by this decision over time. I will be failing in my duty if I do not mention the cricketing extravaganza of India- IPL. Be that it may on the scandal that has emerged, the fact of the matter is that it’s a powerful idea that has been creatively crafted to take the high ground of the game that undoubtedly has become the super bowl of India.
We must draw a few lessons from the innovative steps that India took to make this a money spinner for the Indian Economy. We need to take a similar high ground with strong financial commitment in our thirst to searching oil in Mannar, the making of the 2nd international airport in Hambantota, driving a novel Tourism project in Kalpitiya, launching of BPO’s in Jaffna or in the making of Sri Lanka a hub port in South Asia so that Sri Lanka also create an IPL for the economy.
We must make Sri Lanka known to be the nation that beat terrorism and now the economic tiger of Asia. A point to note is that we will enjoy this fan fare from the world only for two year duration the most. After that, another country will become a buzz nation in the world stage so we have to make the most of it. Currently, National Geography has ranked Sri Lanka the 2nd most recommended place to visit and the New York times has selecting us to be in the top ten growth nation of the world. We now need to
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make this recognition into driving foreign investment in to the country of diversifying our export portfolio.
Winning at any cost May be I am too aggressive when I say this but, in today’s world the ethos is winning at any cost. It’s not how you played the game. The election was a classic example to this fact. Coming from a sports background I commend those candidates who played the game strong right to end and won. I know of one candidate who employed all his school mates to man the counting centers. This is the spirit we need to run the Sri Lanka economy too.
Competition for Sri Lanka is very tight. Kenya in the tea industry, Bangladesh in the Apparel Industry, the emerging of Cassia in the Cinnamon industry that is dominated by the Sri Lanka is what Sri Lanka is up against. On the Tourism from Malaysin, Cambodia, Thailand and India is what we have to fight against. Competitors spend millions of dollars to woe consumers in to their brands and countries. This is the entrenched competition that we are up against. We have to win at any cost and there is no excuse for non delivery. If we do not we cannot bridge the budget deficit or the ballooning trade gap.
Conclusion Whilst being upbeat on the new chapter unfolding in Sri Lanka, we as a nation should be known for the ‘home grown economic model’ that has helped achieved a double digit economic growth. We must also drive towards zero poverty, zero child mortality and zero un employment levels which are all achievable goals. However, we must be smarter post the IPL fiasco and ensure a strong regulator exist so that we do not allow entrepreneurship drive corruption.
If we do not do have a strong regulator from an industry wise basis, we might move to the same dilemma just like what has happened to IPL. To be honest, I do not blame Laith Modi and his team for the fiasco of IPL but the policy makers like BCCI for not regulating this industry. Entrepreneurship drive development and regulating it in mid stream can kill the industry. We must ensure we avoid this happening in Sri Lanka whilst we take the election spirit to running the economy.
Athukorala is a double recipient of the "Marketing Achiever of the year award in Sri Lanka and a Business Achiever Award from PIM Alumni University of Sri Jayewardenepura. He also won a Business Achievement Award from the Johnson-Lever Industrial business for business leadership. Currently the Head of National Portfolio Development for Sri Lanka and Maldives in the United Nations Operations (UNOPS) and sits on the Management Team of the Sri Lankan Mission too. Athukorala is a past member of the sovereign rating team for Sri Lanka in the Central Bank and Chairman of the Sri Lanka Export Development Board and National Council for Economic Development (NCED) when the country crossed the 7.4% GDP growth. He has served two Presidents of Sri Lanka in his tenure of service to the country.
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Daily Mirror – May 3, 2010 US ECONOMY EXPANDS AS CONSUMERS BOOST SPENDING
WASHINGTON (Reuters) - The U.S. economy expanded at a 3.2 percent annual rate in the first quarter as consumers increased spending at the fastest pace in three years, the strongest sign yet a sustainable recovery may be taking hold. While growth slowed from the fourth-quarter's rapid 5.6 percent pace and was a touch weaker than economists expected, the details of Friday's report from the Commerce Department were fairly upbeat. President Barack Obama, whose popularity numbers have suffered because of public discontent over the economy, hailed the data as a step in the right direction, but stressed more needs to be done. "Our economy is stronger, that economic heartbeat is growing stronger," Obama said at the White House. "While today's GDP report is an important milepost on our road to recovery, it doesn't mean much to an American who has lost his or her job and can't find another." High unemployment remains a sore point as the economy climbs out of its worst recession since the 1930s. While the economy has now grown for three straight quarters at an average of 3.7 percent, widespread joblessness is hurting Obama's approval ratings and dimming his fellow Democrats' prospects for November elections, in which they face a fight to keep their majorities in both houses of Congress. Consumer spending, which normally accounts for about 70 percent of U.S. economic activity, added nearly 2.6 percentage points to gross domestic product growth last quarter -- the biggest contribution since the fourth quarter of 2006. "The growth appears to be more organic in terms of the consumer being the driver. We need to make sure it's followed up with additional more broad-based gains," said Daniel Penrod, a senior analyst at the California Credit Union League. Markets disappointed but stock market investors were disappointed growth fell short of the 3.4 percent analysts had expected. Combined with reports of a federal criminal probe of Goldman Sachs, stocks on Wall Street posted their worst week since January. U.S. government debt prices rallied, tapping a safe-haven bid, while the dollar fell for a third straight day against the euro on hopes debt-stricken Greece would soon receive emergency aid. Consumer spending rose at a 3.6 percent rate in the January-March period, more than double the fourth quarter's 1.6 percent pace and the biggest gain since the start of 2007. "Consumers don't seem as panicked as they were last year and they are beginning to unleash some of the pent-up demand," said Ryan Sweet, a senior economist at Moody's Economy.com in West Chester, Pennsylvania. "But that pace of (spending) growth is unsustainable. We're going to see a more cautious consumer over the next few months because we still have a nearly double-digit unemployment rate."
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The United States has emerged from recession more swiftly than Europe or Japan. Euro zone first- quarter GDP data due in mid-May is expected to show annualized growth of roughly 0.8 percent. Japan, which has been struggling with deflation, does not report its data until later in May. Analysts said the welcome but moderate pace of U.S. growth meant the Federal Reserve could bide its time before raising benchmark interest rates from their current levels near zero, particularly with unemployment hovering near 10 percent. Fed seen on hold "This should provide additional comfort for the majority on the (Fed's policy panel) that will look to keep rates on hold into 2011," said Joseph Brusuelas, chief economist at Brusuelas Analytics in Stamford, Connecticut. The central bank on Wednesday noted activity had strengthened and that the labor market was starting to improve. Still, it said it expects a modest recovery and renewed its vow to keep rates low for an extended period. The Commerce Department report showed that business inventories increased $31.1 billion in the first quarter, adding 1.57 percentage points to GDP growth, as firms restocked to meet rising demand. It was the first inventory increase since the first quarter of 2008. Businesses also continued to spend on software and equipment, though a bit less vigorously than in the prior quarter, boding well for the economic recovery and jobs. Last month, the economy registered its strongest jobs growth in three years as private employers stepped up hiring. "If they are spending on equipment already, it shows a lot of confidence for future hiring which supports consumer spending. If we continue to have employment growth, we will have a good year," said Kurt Karl, head of economic research at Swiss Re in New York. But new home construction was a drag on growth in the first quarter after two straight quarters of gains, with residential investment contracting at a 10.9 percent rate. Business spending on structures subtracted from GDP for a sixth straight quarter. A bigger trade deficit as export growth slowed sharply also weighed on first-quarter GDP. Signs of a durable economic recovery were bolstered by other reports showing manufacturing activity in the Chicago area rose to a five-year high and increased for a ninth consecutive month in New York City. Separately, the Thomson Reuters/University of Michigan's Surveys of Consumers showed sentiment falling in April from March as consumers saw the recovery as well underway, but slow. However, their view on how the economy will look 12 months from now improved from the prior month.
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The Island – May 4, 2010
CHINESE FIRMS EYE BIGGER SLICE OF US ASSETS PIE
There is no Chinatown in the state of Maryland, but a small corner of the local university could well qualify for that label.
Of 14 companies based at the Maryland International Incubator - part of Governor Martin O’Malley’s drive to attract multinationals, create jobs and boost exports - a total of 10 are first-time investors from China.
In the Midwest, a Chinese performing arts company bought an American theatre last December, the first deal of its kind. And a small Chinese entrepreneur plans to open a shopping mall in Wisconsin in August - another first.
Over on the West Coast, the story is similar, if not more frenetic, as Chinese companies continue to make the most of a chance to gain access to Silicon Valley skills, funds and technology at recession-era prices.
Clearly, all the wrinkles in Beijing-Washington ties - whether over the United States’ arms deal with Taiwan, the Dalai Lama’s White House visit or the anti-dumping duties on Chinese manufacturers - have not stopped ambitious Chinese companies from acquiring assets in the US.
Last year, Chinese direct investment in the US touched US$6.4 billion, according to an estimate by the Heritage Foundation think-tank’s Dr Derek Scissors. It is a huge jump from under US$500 million in 2004 and US$1.2 billion in 2008, going by figures from the US Bureau of Economic Analysis.
"The main explanation for the increase in 2009 is China Investment Corp deciding it was a good time to buy cheap financial and property assets," said Scissors, referring to China’s sovereign wealth fund. The fund accounted for 91 per cent of the investments in Scissors’s estimate, which counts only deals valued at US$100 million and above.
Indeed, many of the bigger deals have been making the headlines here, such as the Chinese government offering technology and finance to build a high-speed rail system in California two weeks ago.
But many lesser-known transactions have also taken place over the past year, with Chinese firms moving aggressively to take over start-ups, open or expand corporate offices, and even roll out manufacturing plants in a range of industries.
At the Maryland International Incubator, tenants include a solar energy player, a pharmaceuticals concern and a medical-equipment maker. Its director, Kai Duh, expects more companies to follow as the Chinese Science and Technology Ministry promotes the project.
"The Chinese firms are expanding their operations, exploring the American markets, linking up for technology and increasingly interested in accessing American capital as the Chinese banks tighten funds disbursement," said Rudy Dahl, the president of a business consultancy that helps Chinese firms. 13 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
While Chinese investment in the US still falls behind that of other Asian nations - Japan firms invested US$259 billion in 2008, Singapore US$12.7 billion and India US$4.5 billion - Chinese firms are likely to rise exponentially, in keeping with its trend of increasing Chinese outward investment. Last year, China invested a record US$60 billion overseas, a number that is expected to top US$100 billion by the middle of the decade.
What has made Chinese investment in the US more palatable is the recession, which is wearing down some of the Americans’ past misgivings.
For American towns and cities still struggling with the financial crisis and high unemployment, the new investments and jobs are welcome prospects. Many states have revamped their tax policies and dispatched delegations to China to drum up interest.
Some resistance lingers in areas like sophisticated technology and strategic resources like oil, said Scissors, but in sectors most affected by the downturn, such as finance and real estate, US appetite for Chinese investment has gone up.
At their end, Chinese investors seem to be getting over the bitter aftertaste of seeing two large deals killed by security and political concerns. China National Offshore Oil bit the dust when it made a bid for Union Oil of California in 2005, while Huawei’s 2008 bid for a stake in 3Com met the same fate.
With no shortage of funds, active encouragement by Beijing and the likelihood of a rising yuan, US assets will only continue to appear cheaper and more attractive to Chinese investors.
And, like in Maryland, more Chinatowns are likely to be sprouting up in the months to come.
-ANN
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Daily News – May 5, 2010 WASTE CAN BE USED AS A RESOURCE SEETHAWAKAPURA URBAN COUNCIL SHOWS THE WAY:
Mohamed S. Rakeeb-Waste Management Authority
In most cases, our thinking is Municipal Solid Waste (MSW) is “just a waste” and it should be dumped in an open place or in a land fill site away from our living places. Why don’t we ask ourselves why MSW cannot be used as a resource. If we think positively for a minute, we have the answer, that is “waste can be used as a resource”.
If we take measures to recycle our MSW, we can find a solution. Recycling means to use something again. Newspapers can be used to make new newspapers. Aluminum cans can be used to make new aluminum cans. Glass jars can be used to make new glass jars. Mohamed S. Rakeeb Perishable waste can be used to make organic fertilizer (composting). Recycling often saves energy and natural resources. Natural resources are things of value provided by the Earth. Natural resources include land, plants, minerals and water.
By using materials more than once, we conserve natural resources. The composition of our daily generated MSW comprises around 70 per cent perishable/ organic waste which can be diverted into organic compost in terms of a solution of the burning issue of MSW.
Why composting? Composting has been practiced worldwide by the farmers and gardeners for over centuries. The art of composting seems to have started some 7,000 years ago and the Chinese had developed expertise in this by 500 BC. Solid waste composting is an important component of an integrated solution for solid waste management.
Composting can divert organic and compostable materials from the solid waste stream and convert them into a useful product.
Composting is environmentally sound, technically and economically feasible and meets local waste management needs. The recent upsurge of interest in composting has been largely as a result of the Landfill Directive and associated targets for reducing biodegradable waste sent to landfill.
Advantage of composting Composting provides a way not only of reducing the amount of waste that needs to be disposed of, but also of converting it into a product that is useful for gardening, landscaping, or house plants.
Composting is the aerobic processing of biologically degradable organic waste, such as garden and kitchen waste, to produce a reasonably stable, granular material, usually also containing valuable plant nutrients.
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When applied to land, it improves soil structure and enriches the nutrient content of the soil. The reduction in organic waste reduces methane emissions and the threat to ground water. Composting can successfully be carried out at a wide range of scales, from multi-acre commercial or municipal windrows to simple backyard heaps.
Seethawakapura Urban Council’s disposal practice Seethawakapura Urban Council (SUC) is located at Avissawella in the Colombo District with an area of 19.1km and the population of 28,626, where 15 metrictonnes of MSW is collected daily. Officials inspecting a waste site
All daily collected mixed MSW was dumped in an open area for more than 40 years where a huge waste rock was accumulated which caused climate change, air contamination, surface and ground water contamination, fires and other environmental and social effects. The reason of these causes were found that the separate collection of various categories of municipal solid waste, as a precondition for their subsequent reuse, was not practiced to any significant extent in the area.
Commitment of Urban Council In order to avoid the burning issue of MSW, a new concept for municipal waste management in the Avissawella Urban Council was being developed by the SUC to make medium-scale composting facility as a viable and sustainable component of an integrated solution for solid waste management. In order to establish a medium-scale composting plant, the SUC took measures to convert perishable waste to compost and non-perishable waste to recycle using the old open garbage dump site.
In terms of renovating a degraded dump site, the Waste Management Authority of Western Province provided the necessary technical and financial assistance to the SUC and the establishment of the compost plant was initiated in late September last year. All municipal solid waste, including food waste, yard waste and paper and cardboard waste transported to the plant and segregation activity was initiated to separate perishable from non-perishable waste.
This commitment included the environmentally sound management of waste generated in the whole area of the SUC. While engaging in this activity only the SUC from a product stewardship perspective believed that the composting was a more environmentally sound management practice than disposal of waste in an open site.
Use waste as a resource After the segregation of MSW at the facility, around nine metrictonnes of perishable waste is being composted at daily basis. The final product of organic fertilizer free from heavy metals and in the required level of N,P,K is sold under the brand or “SUC compost” at Rupees Ten (two kg packet) to the public, farmers and plantation industries.
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Currently the “SUC compost” capturing the market and in the near future there will be a good demand, the Chairman of SUC proudly believes. The Chairman further said “this attempt solved my waste problem and made to earn an income monthly”.
Non-perishable waste The segregated non-perishable waste materials such as paper/card board, plastic/polythene, glassware, tin/metals and coconut shells are being stored at a centre called Sampath Kendraya from where they are sold to the registered recycling companies through out the island. As the SUC on one hand had taken steps to divert recyclable non- perishable waste materials for recycling process, on the other hand they provide their contributions in protecting the excess use of merging materials which can be saved for the future generation. In addition to this activity, the SUC earns a profit by selling these recyclable materials.
Separation at sources The SUC is currently taking action to segregate waste at source to ease the workload of the workers who separate waste daily at the facility. In order to implement this task, a program has been launched under Pivithuru Pura in two Grama Niladhari Divisions where Municipal Solid Waste will be separated at house hold level and institutional level and it will be followed by other Grama Niladhari Divisions as well.
The program is implemented in association with the Waste Management Authority of Western Province with technical and financial support. It is necessary to point out the dedication rendered by the Seethawakapura Urban Council Chairman who stood firmly to bring about a solution to the waste problem of the area with support given by Council Members, officers including Secretary, PHI and TO, surrounding villages, well-wishers and traders.
They found a permanent solution to the waste problem on their own in solving social, economical and environmental issues. This achievement should be highly appreciated and anyone can witness it. the composting site
The leadership and the dedication rendered by the Chairman and his colleagues to the compost facility was enormous and that can be taken as an example by other Local Authorities as well not only in the Western Province but also by other Local Authorities.
Facility open to visitors The compost facility can be used as a knowledge sharing centre by schoolchildren, local authorities, institutions, plantation sectors, general public to learn about collection, transportation, separation, treatment/ recycling process (composting of perishable waste, separate collection of recyclable waste materials, recyclable materials forward to recycling companies).
17 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The Island – May 6, 2010 CENTRAL BANK SAYS GOVT SHOULD CONTAIN BUDGET DEFICITS
By Devan Daniel
* Low inflation, interest rates at risk, public debt too high * Public-private partnerships needed to fast track infrastructure projects, reduce deficits * A comprehensive strategic plan needed
Several top officials of the Central Bank called on the government to push for fiscal consolidation and rein in consistently high budget deficits so as to bring down public debt to a more manageable level, maintain inflation and interest rates at low levels and spur sustainable economic growth.
They also called for fiscal policies that would complement the bank’s monetary policy aimed at keeping a check on the cost of living.
Economic Development Minister Basil Rajapaksa visited the Central Bank last morning where he was briefed on several issues regarding the countries economy from the management of public debt to maintaining price stability and financial systems stability.
In 1950, Sri Lanka’s debt stock stood at Rs.0.8 billion (16.9 percent of GDP) and has grown to Rs.4,161.4 billion or 86.4 percent of GDP by end 2009. The debt stock almost doubled from Rs.1,219 billion since 2000.
Vicious cycle... C. J. P. Siriwardena, Superintendent Central Bank Public Debt Department, said the doubling of the public debt stock over the past nine year was a result of continuously high budget deficits and depression of the rupee.
When governments run high budget deficits more needs to be borrowed to finance the deficit and an appreciation of the currency makes it more expensive to payback foreign debts.
"High budget deficits had a 69 percent share in the increase of the debt stock from Rs.1,219 billion in 2000 to Rs.4,161.4 billion in 2009 where as the depression of the rupee had an 18 percent share in the increase of the debt stock," Siriwardena said.
Of the Rs.4,161.4 billion, or Rs.4.16 trillion, debt stock, domestic debt accounted for 58 percent while foreign debt accounted 42 percent and Siriwardena said Sri Lanka would continue to service a level of debt.
For this year, Sri Lanka has to service debts amounting to Rs.801.1 billion of which 44 percent is interest.
Siriwardena said it was important for the government to bring down the budget deficit to sustainable levels so that inflation and interest rates can be kept at low levels which is necessary to spur growth. Persistently high budget deficits put pressure domestic funding sources and drives up interest rates, this is in turn drives up inflation and the cost of living. More debts result in higher repayment obligations leading to higher deficits, a vicious cycle. 18 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
"Each time the budget deficit increases by 1 percent, the net borrowing requirement of the government increases by Rs.54 billion and the debt stock increases by this same amount. If interest rates increase by 1 percent, the government’s expenditure on interest payments would increase by Rs.10 billion and if the rupee depreciates by 1 percent it would cost the government Rs.9 billion," Siriwarndena said.
"This is why it is important for the government to bring down the budget deficit to sustainable levels so that interest rates and inflation can be maintained at low levels," he said.
Better fiscal policy... Assistant Governor Ananda Silva said the Central Bank’s monetary policy is formulated to check the growth of inflation and maintain price stability. The banks pursued a tight monetary policy stance since 2007 and continued to tightened it as inflation spiked to 28.2 percent in June 2008 on the global food and oil crisis, which resulted in a gradual decrease in inflation reaching 5.6 percent last month (helped also in part by declining global commodity prices, which are expected to be on the rise as the global economy recovers).
Silva warned the government’s high debt obligations would lead to high inflation and undo the Central Bank’s monetary policy in keeping the cost of living under control.
The government had estimated the budget deficit to be 7 percent of GDP in 2009 but the actual deficit reached 9.8 percent of GDP on high interest payments, public sector wages and pensions and expenditure on the last stages of the war on the rehabilitation and humanitarian activities in war affected areas after the 30-year conflict with the LTTE ended last May.
"There has to be better coordination between fiscal policy and monetary policy if inflation is to be sustained at low levels in the long term," Silva said.
Public sector reforms... The Central Bank continued to call for public sector reforms. Acting Additional Director Central Bank Economic Research Department Mahinda Siriwardena said the government should push for reforms to key public institutions such as the Ceylon Electricity Board, Ceylon Petroleum Corporation, Sri Lanka Railways, Sri Lanka Transport Board and the National Water Services and Drainage Board.
"Making them more efficient and productive can ease the fiscal burden and also lead to better services to the public," Siriwardena said.
More pubic-private partnerships... Siriwardena stressed the importance of formulating a comprehensive strategic plan for infrastructure development so that progress could be well monitored which would also help the government focus on priority sectors.
"Although the government acknowledges the importance of forming partnerships with the private sector in infrastructure development activities we are not seeing this happen at desired levels. More public- private partnerships could help the government fast track infrastructure development projects and they would also help reduce the budget deficit," he said.
19 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily Mirror – May 6, 2010
NUCLEAR POWER: IS IT THE 'ENERGY MIRACLE' IN THE POST FOSSIL FUEL ERA?
All energy experts worldwide are aware that there is no future for fossil oil and coal because of the high rate of depletion of resources and the prevalent challenges to control climate change. The pertinent question against this backdrop is “what are the alternatives for fossil oil and coal?” Nuclear power which was considered the most promising alternative in the early 1970's lost its momentum drastically in 1980's. However, it is enjoying resurgence in the minds of policy makers as a cheap power option. Though the last U.S. commercial nuclear reactor to go on-line was way back in February 7, 1996 the current US President Barak Obama recently declared that the US will pay attention to reviving its nuclear power program as an alternative to fossil fuels. In July 2009, the Italian Parliament passed a law that cancelled the results of an earlier referendum of facing out nuclear power and allowed the immediate start of the Italian nuclear program. The Sri Lankan government took the initiative of exploring the possibilities of nuclear options last year despite the fact that CEB has ruled out nuclear power as a candidate option for its long-term generation expansion strategy. The nuclear power industry so far has gone through three generations. The first generation from the mid 1940's to the mid 1960's . The second generation (which is called the generation of commercial power reactors) started in mid 1960's and came to an end in the mid 1990's. . Third-generation reactors which had passive safety features were less vulnerable to operational upsets, and had a higher availability and longer operating life - typically 60 years. Current reactors in operation around the world are generally considered second or third generation systems. Despite the current popularity of nuclear technology amongst decision makers, we must take a sober look at the dangers that they pose. The Chernobyl catastrophe was 400 times more potent than the Hiroshima bomb. Since the Chernobyl disaster in 1986, there have been at least 22 major accidents at nuclear power stations of which 15 involved radiological releases. Of these, 2 came close to meltdown. The primary goal of Generation IV is to improve nuclear safety, improve proliferation resistance, minimize waste and natural resource utilization, and to decrease the cost of building and running such plants. Nuclear fusion reactors which are safer and generate less radioactive waste is another option currently under consideration. Many experts and civilians alike believe fusion to be a promising future energy source due to the short lived radioactivity of the produced waste, its low carbon emissions, and its prospective power output. The European Commission estimates that there may be only 2-3 million tonnes of exploitable uranium sources globally. The global nuclear industry requires approximately 68,000 tonnes of uranium ore a year to operate. At current projections of nuclear capacity, uranium mining operations will need to increase output by 100% within 10-20 years to meet demand. It is estimated that global exploitable reserves of uranium will likely be depleted within 30-40 years. The UN’s Intergovernmental Panel on Climate Change outlines a scenario whereby 3,000 nuclear reactors would be needed by the year 2100.. If all the world’s existing fossil fuel based power stations were replaced by nuclear, there would only be enough uranium for 3-4 years. Another alternative currently under discussion is to breed uranium from thorium as fission fuel in the thorium fuel cycle. India has also done a great amount of work in the development of a Thorium centred fuel cycle.
20 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
As of 2010, India has 19 nuclear power plants in operation generating 4,560 MW out of total plant capacity of 140,000 MW which is just 4.2% of the total power requirement of India. India; the sleeping giant which is about to be awakened can by no means rely on nuclear power. A new nuclear renaissance, such as that already being seen in India, only introduces more risks of future accidents. Is nuclear power really a solution to climate change? Unfortunately it is not. Nuclear power plants may not directly emit climate-damaging carbon dioxide, but if you look at the whole lifecycle of a nuclear power station it produces 20-40% of the CO2 of a typical gas fired power plant. France has long been seen as the model nuclear nation – deriving over 70 per cent of its electricity supply from nearly 60 nuclear power reactors. However, in the past few years, heat-waves have brought a number of stations near to closure. The French Government has temporarily allowed the plants to breach safety rules rather than force costly closures. In 2009, estimates for the cost of a new plant in the U.S. ranged from $6 to $10 billion. In 2008, new nuclear power plant construction costs were rising faster than the costs of other types of power plants. Sri Lanka by no means can afford such high capital costs for power generation at present. Cheap nuclear power without underlying waste problems is yet been solved. There are also some nuclear experts who warn that the promise is a snare and a delusion. The arguments against nuclear power are as valid today, as they were 20 years ago. The technology is still extremely dangerous; relies on dwindling supplies of uranium; and remains so costly that massive government subsidies are required. It is also vulnerable to terrorism; can feed weapons proliferation; and produces volumes of toxic waste with no satisfactory storage solution. It’s not that something new and important and good has happened with nuclear, it’s that something new and important and bad has happened with climate change. Nuclear power is only a straw for the drowning human civilization and the more fundamental questions about the way we live, the nature of our economic system, and how we build meaningful movements for change still remain.
21 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily Mirror – May 6, 2010 NUTRITION STATUS OF SRI LANKANS: SOLVING EXISTING ISSUES
By Visakha Tillekeratne Consultant The nutrition status of the Sri Lankan population has been a subject of much attention over the past 5 to 10 years. The reason for this could be analyzed in many ways. One of these is that we Sri Lankans are justifiably proud of our health and socio economic indicators but our nutrition status indicators are foxing us. Nutrition and food are also “very political” issues around the world, as it has put powerful politicians out of power. It also touches the hearts and minds of the population as all human beings have a basic right to food. Development agencies too have done much to bring this issue to centre stage in a number of ways . Agencies have been especially interested in “emergency” nutrition as the country went through a prolonged conflict. The Government of Sri Lanka too deserves an accolade for designating a Ministry for “Healthcare and Nutrition” and increased investment ,in nutrition related services. But one wonders if a Ministry designated for nutrition within the health sector, in fact defeated the purpose of improving nutrition, as this subject requiring a multi- sectoral approach However even if one takes a closer look at health indicators, all is not well. Among the health indicators Sri Lanka is so proud of, the Infant Mortality Ratio (IMR) takes pride of place. IMR is determined by a number of factors being effective delivery of a good package of services in antenatal clinics, hospitals and post natal care, having adequate birth weight, not being prone to infections as a new born and upto a year of life and optimum breast feeding and complementary feeding practices. IMR is very low as a national figure as certain Districts have all of the determining factors in the right measure. So it is very clear that in the Districts which have higher IMR all is not well in the determinants. So even the effect of nutrition interventions in having uniform IMR values throughout the country needs to be questioned. This needs to be supplemented with an evenly spread package of health services as well.. Low birth weight has not seen any improvement in the past decade and is stagnating at 16.6 %. The only significant achievements as far as nutrition is concerned, is that one indicator of protein energy malnutrition - stunting or shortness of under 5 children according to age has reduced substantially from the 70s onwards. Stunting is a reflection of long term or chronic under nutrition and reflects the relationship between malnutrition and poverty. The most rewarding success in one aspect of micronutrient malnutrition is that the reduction of iodine deficiency disorders has progressed to elimination status. The other key micronutrient deficiencies Vitamin A and Iron have seen a reduction across population groups, but not adequately so. However wasting or thinness among under 5s has been hovering around 14% persistently for the past 25 years. According to WHO if wasting levels are over 10% it is considered that the country is in a state of nutritional emergency. So Sri Lanka has been in a “lingering emergency” for the past thirty years. Weight-for-age the composite or blunt indicator, which reflects a combination of both stunting and wasting also shows very slow improvement. Compounding all this is that as a country typically in transition, Sri Lanka carries the double burden of both under and over nutrition. A less than healthy life 22 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
style of diets high in salt, sugar and fat and not having enough exercise is swelling overweight and obesity rates and ever increasing chronic diseases. New Information: A number of significant pieces of work in shedding light on this situation were done in the recent two years, where the government was supported by UNICEF, WFP , WHO and the World Bank One of the most interesting is the Nutrition and Food Security Survey (NFSS) 2009, conducted by the MRI led by Dr Renuka Jayatissa. The actual objective of this survey was to see the impact if any, of food price increases on nutritional status. Of course two surveys are required to compare and this was designed to be the first one. These findings do not bode well for Sri Lankans’ nutrition achievements in the years to come. Significant information gaps however exist regarding the nutrition status of the adult and elderly, especially males. Suggested action It is necessary to calculate the malnutrition status of the whole country either by survey or mathematical modeling. Set a target for nutrition status achievement for the country as a whole and then quantify the target for each District Map the community nutrition situation with a simple causal analysis, up to Divisional Level, with a general overlay of District characteristics such as socio economic indicators, comparing the assigned target with the resource profile available for nutrition improvement. Draw up plans at the lowest possible level. This could be done through a participatory planning process where the community takes responsibility and leadership. A Government /NGO/community team should be formulated. These plans could be upwardly integrated to Division, District, Province etc. Currently plans are top down. Quantifying food requirements for the country together with relevant stakeholders is another central level activity, which is not done in a systematic way currently. A District level activity for the officials for example; is to connect poverty and access to food resources and see what actual needs are there for food assistance. A far reaching poverty alleviation plan needs to be put in place in affected Districts as this cannot be only done at the village level. The quantification of poverty alleviation must be closely done in relation to improvement of nutrition. For enigmas such as persistent wasting, extrapolate causes, model a set of interventions and carry out operational research. By using a multi-sectoral team approach, and a Division/village resource profile, identify gaps in food resources and request stakeholders to increase resource base through a variety of methods. For instance if animal protein availability or affordability is a problem working with the Livestock Ministry or Aquaculture Development Authority to initiate livestock rearing and inland fisheries. Entities such as Samurdhi and microcredit schemes would assist as part of the villager led plan. Costing of interventions at all levels should be undertaken as part of the planning process. Measurement of nutrition indicators should be in line with the cost of intervention. The targeting of supplementary feeding programs should be strictly aimed at the malnourished, taking into consideration the degree of malnutrition of a particular child. The current Integrated Nutrition Package for under 5 s formulated by the Family Health Bureau is a good approach. But the community component of this package should be strengthened far more in order to achieve the community led process. As severe malnutrition levels are very low in Sri Lanka, with very
23 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
little investment it should not be difficult nor expensive to move a mildly or moderately malnourished child onto the median growth curve. There should be a costing on this as well. Professionals in Food and Nutrition should be employed at all levels to facilitate nutrition improvements together with other sectors. The Provincial Planning Secretariat should have a Focal Point for nutrition and food security to get all stakeholders together to activate provincial plans. This person should also constantly monitor and evaluate the situation through integrating data from lower levels. The District can have a similar position. It is important for the community at the very lowest level to have easy access to a nutritionist/dietician. The midwife/family health worker too would find this useful to refer their target beneficiaries to such a person, for better quality advice. A high level coordination sector is a top priority to get the whole exercise moving in the right direction. This should be supported by a coordination structure such as the National Institute of Nutrition, where scientists, trainers, decision makers and implementers work as a team. The nutrition surveillance system already initiated should act as the compass of a well integrated nutrition program and should provide regular reports, for reviewing and making corrective action. In summary, if we Sri Lankans want to see improvement in nutrition resulting in better health, some serious nutrition planning needs to be undertaken. Diets rich in fruits and vegetable with adequate protein should be actively advocated for and achieved for all age groups, especially as part of complementary feeding. All interventions should be costed against impact. It is also far more prudent for nutrition to be moved into the Planning arena once again, as multi stakeholder ownership will not be achieved in reality. Let us take examples from countries such as Bangladesh, who have made bold inroads and reduced malnutrition substantially and cost effectively, without looking down upon such countries from our oh so superior positions. Of course the situation of Bangladesh is still much worse than Sri Lanka, and the numbers to target are vast. However Bangladesh has been strategic in its approach and civil society continues to play their role. If everything is taken over by the state, this will not be sustainable nor effective. But most of all we need to hold hands with the community and exact behavior changes in nutrition.
24 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily Mirror – May 6, 2010
LANKA HOSPITALS OFFERS NEW HOPE FOR CHILDREN WITH CONGENITAL HEART DISEASES
By Gayani Perera
Dr. Richard Firmin is a consultant cardiac surgeon from the UK, who has been providing his services in Lester. His very first visit to Sri Lanka was in 1997 where he visited the Karapitiya Hospital in Galle to conduct the first ever heart operations in the district.
Dr. Firmin has specialized as a pediatric cardiac surgeon and has made it his mission to provide his services in this area, where Sri Lanka has been given a special prominence. Dr. Firmin provides his services at Lanka Hospitals where he treats children suffering from congenital heart complications.
The Mirror Business spoke to Dr. Firmin to find out more about the services he provides at Lanka Hospitals.
What is your mission at Lanka Hospitals? It was Lanka Hospitals that provided me the opportunity to help children suffering with heart complications. The government sector hospitals have the required amount of surgeons providing their services however in the private sector there is a shortage of cardiac surgeons.
Having understood this, Lanka Hospitals invited me to provide medical and surgical services in this particular area for which I was more than willing. Unfortunately I am unable to provide my services on a fulltime basis, but however I visit Lanka Hospitals every three months.
One of the most severe problems that I see in Sri Lanka is the fact that there are a high number of children with congenital heart diseases who do not have access to the required medical and surgical facilities.
Studies show that over 2000 children suffering from congenital heart disease are born each year in Sri Lanka and out of these children only a 1000 are receiving proper treatment.
How many surgeries will you be performing during your stay in Sri Lanka? At present I have ten surgeries scheduled but this number could increase depending on the demand. Also sometimes I might have to perform a few very urgent surgeries during my stay here.
Once you leave what happens to the aftercare of these patients? The hospital has leading local cardiac surgeons and a special team of doctors to look after these patients so they will definitely be in proper hands. If patients have any major complications I will revisit these patients but however as I am with them for a period of three months most often any complications usually take place within this time period.
How successful is surgery for the treatment of congenital heart complications? The most common heart problem among children is the 'Hole in the Heart' for which surgery is highly successful. However there are other forms of more complicated types of congenital heart problems which are rare and highly complicated and which may require two or more surgical procedures. Surgically 25 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
inserting artificial tubes or valves in the heart may require further medical surgeries as the child outgrows them.
What prompted you for this worthy cause? I have traveled to many parts of the Asian region and have seen the need for cardiac surgeons especially in this particular part of the world.
In the future I would like to work fulltime in India or Sri Lanka as I feel I can provide an invaluable contribution through my services to many who do not have access to this type of treatment.
What are your feelings about the surgical facilities that are currently available in Sri Lanka? The surgical facilities and services currently available in Sri Lanka are very impressive. The country has highly qualified and professionally trained doctors and surgeons, but however there is shortage of these professionals.
When it comes to cardiac surgeries in children proper pediatric healthcare services and facilities are of the utmost importance, which is lacking in Sri Lanka. So the country needs more infrastructure facilities as well as proper training facilities in order to expand.
Sri Lanka is experiencing a shortage of cardiac surgeons which is an area that must be addressed if this sector in healthcare is to progress.
26 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 7, 2010 NATIONALISM, GOOD GOVERNANCE AND ETHICS
Last week we discussed the importance of the need for a sense of nationalism among the masses that constitutes a nation to propel it towards development and that nationalism is the collective identity of a mass of people bound together by reason of language, culture or geography to ensure their collective protection, well-being and the way forward.
In the international arena, your passport is your first piece of identity of who you are to the rest of the world and the Government of country to which the person belongs issues that guarantee. The weight of this guarantee depends on the weight of the country that stands by you and hence in foreign travel you are first judged by your passport before they 'size' you up for your other personal attributes such as your profession, your social position, your wealth etc.
In practical terms this 'recognition of the Passport' is so important because in the scale of international recognition this general tendency could even stretch to a point where they treat an ordinary citizen of a 'world super power' ahead of the Foreign Minister of a 'third world developing country'.
National identity In the Middle-East where persons from all over the world are recruited to supply human labour to their administration and industry, the employees are paid
Passport is your first piece of identity of who according to their passport and not according to their you are to the rest of the world. File photo job per se. The argument here is that if you need to hire an American Accountant you need to pay so much to get him to accept the job while you can employee a Sri Lankan accountant for a salary ten times less. Hence we see the relevance of a person's passport to his well-being and such realizations should spur us to augment the position of our Passport i.e. the national identity in the eyes of the world. Hence naturally a person who has travelled abroad would necessarily have a better sense of nationalism than a person who has not and further it is for this personally beneficial position that some people change their nationality and with that their Passport.
Therefore Sri Lanka's position as a nation in the world has a direct bearing on the personal reputation of every Sri Lankan no matter who he is, they are all judged against the 'standing' which is world perception of what a Sri Lankan is. For instance, the post independent Sri Lanka was known for its quality tea and then as a 'country of lotus eaters' for our over reliance on the global capitalist system. Then with all the adverse publicity for the war, Sri Lanka became a 'war ravaged country' with war escalation and then as a 'supplier of servants' in the Middle East.
When we won the Cricket World Cup our reputation soared in the Cricket playing countries. Hence just as much as we strive a lifetime to enhance our personal standing, every Sri Lankan should realize the need to enhance our national standing in the eyes of the world and that depends on our strengths as a nation.
27 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Human need hierarchy It was Abraham Maslow, that theorist on human motivation that theorized the human need hierarchy, stating that each person has a hierarchy of needs ranging from basic physiological requirements like food and shelter, through social requirements such as reasonability and fairness, ending up in self actualization needs.
What is important about this needs hierarchy however is that a person's or a nation's upward mobility depends on the satisfaction of the needs at the preceding level. This is proof enough to say that a person's standing in the society, national or international, is as equally important as his own hunger or shelter given the position he is placed in the hierarchy. Hence the advanced nations in the world have utilized these needs hierarchy, knowingly or unknowingly, among its own citizens to spur the nation in to development. After all a nation could only be as capable as the people who constitute that nation.
Good Governance In national development, we often talk of the need to practice Good Governance, transparency on administrative actions and then corruption as a national malaise. But these are not mere practices that can be introduced in a vacuum. People need to realize the importance of national development from a nationalist perspective and then only they will appreciate the need for good governance, transparency, and ethicality in their transactions. First they have to realize the benefits of these practices to the nation as a whole for them to recognize their relevance. Hence a 'nationalist government' is always better motivated to instill a sense of better management in national affairs than a Government that advocates those practices merely because 'the others have become successful by applying those'.
However it is a fact that the performance of Sri Lanka as a nation in its post independent history has not been very successful in harnessing the talents and the capabilities of our people for its own development, mainly due to lack of coherent thinking on the lines of nationalism and hence most the cream of our national talents have been used by other nations in their development. This is an area that needs careful and practical consideration if we are to forge ahead to the heights that other nations in the region have achieved during the recent past.
Nationalism is a collective form of selfishness and selfishness is not any less altruistic than offering arms to the needy. You are in a position to offer arms because you have amassed enough wealth to be in a position to do so. Therefore, nationalism is a very positive force on which every nations' and hence every man's existence rests.
28 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 7, 2010 HIGH GROWTH EXPECTED
STABLE MACROECONOMIC ENVIRONMENT:
INFLATION MUST REMAIN AT SINGLE DIGIT LEVEL:
Sanjeevi Jayasuriya
Sri Lanka’s actual potential growth rate is above eight percent and can reach even nine to 10 percent by 2015 like India and China, a senior economist said.
Economic growth in 2010 will be closer to six percent and to make this growth sustainable and move to a higher growth of seven percent in 2011 and to an even higher level beyond 2011.
Sri Lanka should bring down the budget deficit and create a stable macroeconomic environment, Institute of Policy Studies Executive Director Dr Saman Kelegama said.
“Sri Lanka has been growing at average five percent during the first two and a half decade under the open economy and averaged around six percent during 2005-2008 period,” he said at the launching of Economic and Social Survey of
Dr Saman Kelegama Asia and the Pacific report yesterday.
The two key impediments to achieve high growth - war and lack of political stability is now out of the way.
Action should be taken to implement the required institutional and regulatory measures to gear the economy to be more competitive to face the challenges of the modern world.
“It is necessary to strengthen social protection, promote agriculture and rural development, support new engine of growth, enhance financial inclusion and evolve regional framework for cooperation for inclusive and sustainable growth. “It is important to ensure low inflation and keep it at a single digit level in 2010. This will be a challenge specially with international oil and food price escalations and the large budget deficit financing in 2009,” Dr Kelegama said.
Keeping inflation low and stable is key to better management of interest rates and the exchange rate which is vital to promote investment and growth.
29 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Currently foreign exchange reserves are adequate, but the situation can change with the large inflow of imports with higher growth in the economy and debt repayments. The IMF package in place is a great comfort and will also create positive investor confidence. The package facilitated to build foreign reserves by $ 5 billion and assisted in maintaining the exchange rate stability.
The Government policy direction is to strengthen the domestic economy by building the production base for export promotion and import substitution, create five hubs - knowledge, ports, aviation, energy, commerce and finance, to create more employment and reduce poverty and moving development to the provinces and to set targets.
These targets include exports to be increase to $ 20 billion by 2015, FDI to be increased to $ 5 billion, remittances to be increased to $ 5 billion and tourism earnings to increase to $ 1 billion.
It will be a challenge to bring about some stability in the macroeconomic environment, initiate the stalled economic reform agenda, remove barriers to “doing business” and to create the proper regulatory framework for private investment.
The Economic Development Ministry will be a prime mover in achieving these targets. It will play a similar role to what Trade and Industry Ministry played in Japan during its development drive.
The one-stop-shop concept will be promoted to expedite matters related to security, environment and tax incentives for investment for rapid progress, Dr Kelegama said.
30 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 7, 2010 LANKA NEEDS AN 'IPL' FOR THE ECONOMY
Rohantha Athukorala
Today the economic value of IPL as a brand exceeds $4 billion to the Indian economy. Even though IPL- Gate has been unearthed, I blame the policy makers for not regulating this industry. Once an industry is blooming, for it to be regulated is a very difficult task. I guess it's a lesson for Sri Lanka. I remember the days when I was part of a larger team that was fighting the war on terror. Whilst the final ground attack was in force in the Vanni, our task was to keep the Jaffna economy engaged and linked to the country's economy.
Travelling in military flights together with the soldiers, when in Jaffna having to travel in armored vehicles in a daily life that sure beat the fifteen years of multinational experience that I have previously enjoyed. The bravery demonstrated by the private sector to work in the North was commendable. The first industrial exhibition that we staged way back in December 2008 amid the height of the ground operation attracted 168 companies from Colombo and almost three quarter of population from Jaffna peninsula, indicated the burning need the people had to engage with the rest of Sri Lanka.
Even with the many logistical issues that we faced such as the A9 being closed for civilian traffic and the successive air attacks by the LTTE on the city, the economy continued to perform and cross the 6 percent GDP growth mark which I believe would have been a dream that any other country would like to emulate. Credit must be given to the private sector that drives almost seventy-five percent of the economy. At the recently staged BPA investment symposium the Yalpanam chamber head commented that at one time the people of Jaffna had almost 5 quasi governments ruling the business community and it will be a case study to determine how the Jaffna business world coped with such a situation.
Cost of the war A latest study has revealed that the war in the last thirty years has robbed the country over 6,300 billion rupees of 6.3 billion dollars. Apparently between 1976 and 1982 the tourist arrivals had increased by 24 percent per annum registering 407,203 visitor arrivals. But with the conflict breaking out in 1983 visitor arrivals started dropping and ultimately registered a low ebb of 230,106 which gives us an idea the impact the industry had had due to the conflict.
If not for the war, we would have been attracting around 1.5 million tourists which explain's the capacity development that would have happened in Sri Lanka if not for the war. In contrast if we take a country like Cambodia the country registered 200,000 tourist arrivals in 1983 and today attracts over a 2.1 million travellers. This has been the opportunity cost for Sri Lanka. If we take the 14,700 hotels rooms that are available currently in Sri Lanka, even at a one hundred percent occupancy rate we can attract only a 760,000 tourists at best.
It is estimated that if Sri Lanka wants to attract 2 million tourists in the years to come we will have to invest a minimum of 3.5 billion dollars building new hotels to match this capacity. Which tells us the step change in thinking that will be required to draw investment into the country. Current studies reveal that there is a strong relationship between the security situation and the FDI flow into the country. It is estimated that Sri Lanka has lost around 3 billion dollars on FDI's during the last 24 years.
31 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
In the recent past we have seen the positive trend in the tourism sector catapulting the visitor numbers by almost 37 percent in January and a mega 67 percent in February and 40 percent+ in March vs last year. This explains the gold mine that Sri Lanka is sitting on. In the last five years Sri Lanka's GDP has grown from a 24 billion dollar economy to a 42 billion tiger in South Asia. The overall poverty at a low twelve percent, the literacy rates are at the high nineties with the un-employment level at a low 5.8 percent which makes Sri Lanka an outstanding country in the South Asian region.
Like other economies of the world, Sri Lanka is having its set of woes with the budget deficit exceeding a ten percent and the current account deficit ballooning that sure calls for strong financial discipline after the April 26 elections. If we take our neighbor Maldives, it is a clear example of how an economy can manage the budget deficit where from an out of control 27 percent registered in the recent past it has improved to a commanding 18 percent and now with strong leadership is targeting to end 2010 at below eight percent which means that it can be achieved provided that there is a political will.
Sri Lanka targeting for a zero poverty rate, a zero unemployment rate and a zero infant mortality is not unrealistic given the infrastructure development that has been taking place given that even with all the issues in the last five years the development agenda continued with a very strong drive on infrastructure development. The challenge is for the country to have a strong leadership and a strong public policy framework to support the agile private sector to grow as Sri Lanka must not let go of this opportunity. Believe it or not we are currently one of the top ten best growing economies of the world as ranked by the New York Times.
This calls for a string public-private partnership approach to drive a development agenda than just pointing the finger towards the government to solve every issue that arises. In my tenure of heading the pivotal policy making body the National Council For Economic Development (NCED) at a time when the economy expanded a seven percent plus, I saw that the industries that really progressed were the industries that had a strong private-public partnership. The best case in point was the apparel sector and the renewable energy clusters of the country.
Sri Lanka needs an IPL I strongly feel that India is a model economy that has very cleverly identified the waves of growth in the world and used it for the developmental agenda. Be it the IT revaluation or the BPO industry, India sure lived up to the ethos of Incredible India. In the recent past the drive towards nuclear energy sure makes the country to be in good stead of being a super power nation in the future. However, I believe the one event that unfolded in the economy that made the country relevant and youthful to the world was the launch of the Indian Premier League or more popularly called the IPL. Lalith Modi articulated the belief that selling cricket stars for big money auctions was possible.
Today the economic value of this brand exceeds a 4 billion dollars to the Indian Economy. Even though IPL-Gate has been un-earthed the blame is squarely on the policy makers for not regulating the industry. Once an industry is blooming for it to be regulated is a very difficult task. I guess it's a lesson for Sri Lanka. This in contrast to the Sri Lanka's total exports that account for almost twenty-five percent of the economy accounting for only a 10 billion plus dollars for the country whilst the number one brand BOC commanding a 0.1 billion dollars only. Hence the need of the hour for Sri Lanka is an 'IPL' for the economy which is in line with global business trends.
32 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
I am not sure if it is the IT/BPO sector or if it will be value added fisheries but Sri Lanka sure needs an IPL for the economy. The last IPL that Sri Lanka saw was the apparel industry way back in 1977.
The export landscape If one does an in-depth analysis of the export industry of Sri Lanka what we see is that there has been no shift in the strategic direction of exports during the last eight years which is worrying given that a progressive country like India keeps innovating and keeping the country relevant in the changing global template.
Export Composition of Sri Lanka The sectorial contribution remains the same with Industrial Exports contributing around 75 percent whilst Agriculture a 19 percent and Fisheries at 2 percent. This clearly demonstrates that we as a nation have not influenced the overall strategic direction to be in line with global template of world trade. If I may take India once again we can see how the State identified a specific sector where the nation can have a competitive advantage and thereafter instills policy reforms that lead to attracting the private sector do drive the new opportunity.
The best case in point in India's IT sector where radical policy changes were made by the policymakers that has resulted in making India emerge as a dominant player in the global IT arena. When Lalith Modi said that he was going to take IPL to South Africa when it ran into an issue in IPL season two may be was another directional change in exports that the world saw. This is exactly required for Sri Lanka to my mind. The last of such a directional change took place in Sri Lanka as mentioned before was when the apparel sector was launched in the 1980's in Sri Lanka.
The dominance of this industry remains even today, though it's fast eroding due to competition from China. For instance in the United States we are experiencing a drop of 13 percent in the textile and garments segment whereas the total US markets for clothing business is growing at 9 percent per annum. It clearly reveals that Sri Lanka is losing share in the US market which is incidentally the number one market for Sri Lanka exports.
Strategic policy shift If we closely analyse the directional change taking place in India, we can see that once again there is a strategic policy shift that is making a composition change of the India export industry. State of art investment parks are being developed with up-to-date infrastructure facilities in Andra Pradesh backed with a strong marketing campaign which offers to the world a competitive manufacturing environment that has resulted in attracting the top manufacturing operations of the world into Andra Pradesh.
Sri Lankan has also been lured into strategy, where we see a leading apparel company like Brandix deciding to set up operations in India. May be if we do not save GSP+ it will put the nail on the coffin that's going to sure make many other companies to follow suit. If Sri Lanka wants to be competitive we need to prioritize spending and drive up focused investment for growth.
It can be aviation, oil exploration, a BPO hub or the fisheries sector. If we do not do this, Sri Lanka will not be in line with the changing global business landscape. If Sri Lanka does not do this fast in another five years, the composition of the export industry will remain the same in Sri Lanka. May be, we might see India taking over the export industry of apparels that Sri Lanka developed for the South Asian region. 33 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
R&D investment low For a strategic shift to take place in a country a policy is required to invest on research. A country needs to move into a knowledge based economy. If we examine the current spending on R&D in Sri Lanka it is a mere 0.14 percent of GDP down from the 0.30 spent, way back in 1996. This is even way below the investment by countries like Bangladesh and South Korea which experienced phenomenal growths in the last two decades.
These countries in the last decade has increased R&D spending from 0.2 percent to a fantastic 2.8 percent of the GDP value which explains the strategic thinking required to create a change in export strategy. Scandinavian countries spend nearly 4 percent of GDP on R&D while India has increased the investment to 1 percent of the gigantic economy.
We see that there has to be a strong directional change to the Sri Lanka export industry so that we can have an IPL in the Sri Lankan Economy to be in line with the realities of the business world.
This is important given that Sri Lanka's long term economic growth and economic stability depends heavily on the future of the country's exports.
* In three years the 'IPL' economic value has crossed $4 billion
* After 30 years SL's exports are $ 10 billion plus of GDP
* 'SL's No 1 brand Bank of Ceylon (BOC) is valued at $ 0.1 billion
* Any industry must be regulated if not business can become dirty like IPL-Gate
34 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The Island – May 7, 2010
KEEPING INFLATION AT SINGLE DIGIT LEVELS A CHALLENGE WITH HIGH DEFICIT FINANCING GOVT COMMITTED TO CONTAINING BUDGET DEFICITS, BUT REFORMS NEED TO COME FAST
By Devan Daniel
Public debt continues to mount as a result of high budget deficits but a senior economist says the government has taken some steps in the right direction to contain fiscal deficits although the question remained as to how soon the government would be able to bring its fiscal position to more manageable levels.
Institute of Policy Studies Executive Director Dr. Saman Kelegama said Sri Lanka’s economy was poised to grow at around 6 percent this year after recording a 3.5 percent growth rate in 2009, a tough year for economies around the world because of the global financial crisis. Sri Lanka’s economic growth was stagnant growing at a 5 percent average during the first two and a half decades under the open economy and averaged around 6 percent during 2005 to 2008 but this was because the global economy had grown and Sri Lanka was feeling the benefits of the trickle-down-effect.
"Economic growth will be somewhere close to 6 percent this year. If this growth is to be sustainable and move to a higher growth rate of 7 percent or more beyond 2011, Sri Lanka should bring down the budget deficit and create a stable macroeconomic environment while creating the necessary institutional and regulatory reforms to gear the economy to be more competitive to face the challenges of the modern world," Dr. Kelegama said.
He identified four major challenges facing Sri Lanka’s economy; containing the budget deficit to bring about macroeconomic stability, initiating the stalled economic reform agenda, removing barriers for doing business and creating a proper regulatory framework for private investments. The budget deficit expanded to 9.8 percent of GDP in 2009, overshooting a 7 percent target and public debt increased to 86.2 percent of GDP from 81.4 percent of GDP the previous year, this was because the government expenditure far exceeded revenue during a year which saw an intensification of the war effort and more spending on subsequent rehabilitation and humanitarian activities. The global financial crisis affected growth resulting in low revenue.
The Central Bank last Wednesday warned that high budget deficits lead to more debts and could impede economic growth as inflation and interest rates come under pressure as the government borrows more to cover deficits while debt repayments and interest payments in turn expands the deficit further (see Island Financial Review of May 06, 2010). Dr. Kelegama said that keeping inflation at single digit levels this year would be a challenge as international oil and food prices continue to rise and large budget deficit financing.
Speaking at the launch of the Economic and Social Survey of the United Nations Economic and Social Commission for Asia and the Pacific last morning, Dr. Kelegama said Sri Lanka no longer had the war or political instability which made it difficult for tough economic reforms to be implemented in the past and suggested several areas in which the government could cut expenditure. The fertilizer subsidy amounted to Rs.26.9 billion in 2009, or 0.6 percent of GDP which is too high according to Dr. Kelegama. 35 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
"The fertilizer subsidy can be trimmed as it accounts for only 5 percent of a famer’s costs. Likewise, the Samurdhi programme also needs to be streamlined as it is poorly targeted." These expenditure cuts are expected to make welfare programmes more affective. Dr. Kelegama said loss making state owned enterprises need to be turned into profit making enterprises as they continue to drain the public purse. The Ceylon Electricity Board made a Rs.7.4 billion loss in 2009. The Ceylon Petroleum Corporation, Sri Lanka Transport Board, Postal Service, Railways, SriLankan Airlines and Mihin Air all recorded losses amounting to Rs.12.3 billion, Rs.5.1 billion, Rs.2.5 billion, Rs.4.8 billion, Rs.12.2 billion and Rs.900 million respectively.
"These losses amount to a total of Rs.45 billion which is close to 1 percent of GDP and this is a high amount. There are other state owned enterprises which are making losses as well, so the total loss exceeds 1 percent of GDP and this is too much," Dr. Kelegama said. These are concerns the Central Bank and the Institute of Policy Studies and civil society groups have been voicing for years.
Dr. Kelegama said the government need not privatize these enterprises but could easily facilitate a turnaround through effective, transparent and regulated public-private partnerships. "In this context, the Ministry of State Resources Management and Enterprise Development is a positive step taken by the government in the right direction and it is an indication that the government is committed to restructuring state owned enterprises. But the question is how fast the government would be able to carry out these reforms," Dr. Kelegama said.
The Public Utilities Commission and the Strategic Enterprises Management Agency would have crucial roles to play in the restructuring process.
Dr. Kelegama also said the formulation of the Economic Development Ministry was also a positive sign. A presidential taxation commission will present its recommendations to President Mahinda Rajapaksa next month and Dr. Kelegama said he hoped the government would accept many of the recommendations as it would result in simplifying the tax system, broaden the tax base and increase government revenue without increasing tax rates, so that the tax environment would be pro-business. Government revenue amounted to Rs.14.6 percent of GDP in 2009, far below the potential of 20 percent of GDP and was exceeded by three recurrent expenditure items, subsidies, salaries and pensions and interest payments on debt.
He said Sri Lanka’s true potential growth rate was above 8 percent and could reach growth rates of 9 to 10 percent like India and China depending on how effective the government was in facing the economic challenges the country is faced with.
36 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily Mirror – May 7, 2010
ASIA-PACIFIC MUST UP SOCIAL SPENDING TO TURN REBOUND INTO RECOVERY
BANGKOK (UN ESCAP Information Services) -- A United Nations report released yesterday urges governments in the Asia-Pacific region to increase social spending to consolidate the region's stronger than anticipated economic rebound and to spur over the long term a fairer, more balanced, and sustained economic recovery. "Governments must embrace this opportunity to secure the gains of the economic rebound by investing in social programs that directly benefit people hardest hit by the crisis, act to reduce poverty, and create a more sustainable economy," said Noeleen Heyzer, UN Under-Secretary-General and Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). ." The Economic and Social Survey of Asia and the Pacific 2010, an annual publication of ESCAP provides the governments of the Asia-Pacific region - representing 62 per cent of the world's population - a roadmap towards a more inclusive and sustainable development path. According to the Survey, even at the height of this crisis, Asia and the Pacific was still the fastest- growing region in the world, supported in large part by fiscal stimulus packages adopted by the region's biggest economies. The Survey finds the outlook for 2010 has improved significantly, with Asia-Pacific region developing economies forecast to grow by 7 per cent, led by China (9.5) and India (8.3). However, rising inflationary pressures, especially of food products, and asset price bubbles, in a number of countries make 2010 a complex year for policy makers who will have to balance sustaining the momentum of growth with financial stability. While monetary tightening may be necessary to restrain inflationary pressures, policy makers must be cautious about withdrawing fiscal stimulus packages lest the fledgling recovery process is disrupted. The Survey also recommends the use of capital controls to moderate short-term capital inflows - the result of a massive expansion of liquidity in western countries - which has created asset bubbles, inflationary pressures and exchange rate increases in the region's developing economies. "We know from experience following the 1997 Asian Financial Crisis that it may be years before the poorest people are able to recover from the past two year's global crisis; governments need to maintain programmes to help people recover their assets and livelihoods," continued Dr Heyzer. According to the Survey, a sustained, long term development for all economies within the region will have to rely on creating new engines of growth by rebalancing the region with greater regional consumption through increased intra-regional trade, accelerating the development of an Asia-Pacific consumer market. "This is the moment when the Asia-Pacific region can assure the long term benefits of the recovery by creating a sustainable, interconnected, greener, regional economy, while reducing the social and economic disparities which left it vulnerable to such crisis," said Dr Heyzer. "The region has the opportunity to strengthen its economy, its environment, its society, and better connect itself." The Survey promotes a number of regional policy recommendations for inclusive and sustainable growth, such as strengthening social protection and enhancing financial inclusion. 37 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Sunday Times – May 9, 2010 PIGS: THE ACHILLES HEEL OF THE EU LESSONS FOR OUR NATIONAL POLICY MAKERS AND FOR OUR CORPORATE SECTOR
By Sunil G. Wijesinha
First it was the Swine Flu and now it’s the PIGS. The four countries of the European Union; Portugal, Ireland, Greece and Spain, saddled with the current debt crisis, weak economies, and high unemployment; are referred to by the acronym PIGS. Will it be the end of the road for the European Monetary Union (EMU)? The EU “fortress” was meant to withstand such crises and provide protection for its member states. However its “immortality” has been threatened by its Achilles heel, the PIGS. Greece started it and so I thought it appropriate to refer to Achilles.
We all know the term “Achilles heel”. However, for those who need to refresh their memories, Achilles was the son of the Sea Nymph Thetis and King Peleus of Thessaly, in Greek mythology. He was half divine hero, made immortal by his mother when he was a baby, by holding him by his heels and dipping him into the river Styx. Thetis made Achilles’ whole body immortal, except his heels.
Achilles became a hero with many battle victories under his belt, but was finally killed by the Trojan prince Paris who, knowing Achilles’ weak spot, shot an arrow at his heel, - the only vulnerable part of his body. To draw a parallel, the most vulnerable of the 16 EU countries, the PIGS, may even destroy the EU. As an exporter, I hope this worst case scenario does not happen, because the weak Euro is already causing havoc with our export earnings converted to Sri Lanka Rupees.
The crisis, which first surfaced in Greece, blew up quite unexpectedly because according to some analysts the accounting in most Greek Government offices and Ministries is chaotic and the exact situation difficult to assess.
Some even suggest that their accounts were knowingly or unknowingly falsified, and some have alleged that even the national accounts have been ‘padded up’ for decades. This is hardly surprising in the country where Aesop’s fables originated! Perhaps that is unfair by Aesop, though, whose fables have tremendous educational and moral value.
Greece’s Achilles heel: expensive civil servants While the most vulnerable part of the EU right now is Greece, the most vulnerable part of Greece seems to be the inflated public service. Apparently, public servants there are paid extremely well, receive two bonuses a year, are paid extra allowances for using a computer, for speaking a foreign language and even (hold your breadth) for coming to work on time. They enjoy attractive pensions, and on the demise of a pensioner it passes on to any unmarried (even divorced) daughter.
There are many Government committees that recruit additional staff, and all are paid by the Government. It is estimated that there are more than 10,000 employed by these committees, costing 220 million Euros a year. There is a story that there still exists a committee to manage a Greek lake, Lake Kopais. Lake Kopais dried up in 1930!
Estimates are that about 40,000 women benefit from the pension system where the pension of the dead civil servant parent is transferred to them. Civil servants could opt to retire at 40 even though the normal 38 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
retirement age is 60 for women and 65 for men. The retirement age would be reduced if they work in potentially harmful environments or where their job is physically strenuous. These details have emerged in many articles recently. Their accuracy, I have not verified.
Now, the Greek Government is planning to reduce these benefits and cut salaries. It is a bitter pill, and it’s no surprise that the affected population is marching the streets in protest. These cuts will no doubt be politically unpopular but it is the delay in courageously addressing them that has made things even more difficult.
The lessons for Sri Lanka are obvious. We need to keep the budget deficit within control. What percentage of GDP this should be, is for our policy makers and economic advisors to decide. We should not go overboard and burden the government budgets with fancy non-contributory pension and other benefit schemes. We should carefully assess the feasibility and economic returns of the projects we undertake, and restructure the loss making state enterprises without delay.
Lessons for our corporate sector Even privately managed companies which had been very generous in good times are suffering today. They are unable to reduce the benefits that have been given to their employees. When times were good some companies wanted to be model employers and introduced many benefits, but when the recession struck they were no longer competitive.
They lost out to producers in countries such as Bangladesh and Indonesia where worker benefits are generally lower. I am not for a moment advocating a poor working environment, but simply stating that whatever we do should be sustainable in difficult times and in the long term.
Hundreds of factories have closed recently and thousands have been rendered jobless. Many of the workers have taken loans to build houses, leases to acquire a motor cycle, and embarked on education programmes for their children. They never dreamt that their employer would close down and that their dreams of the future would evaporate so suddenly.
Perhaps, it would have been better to have created lower expectations. I have come across several senior persons in companies who complain of the high employee costs of their permanent workers and say that even retrenching is out of the question because Sri Lanka has the fourth most expensive severance payment structure scheme in the world.
Lessons from international giants There are many international examples of this too. An oft-repeated issue when Ford Motor Company ran into difficulty was the so called “legacy costs”. The high wage and pension benefits made their unit labour costs, and the pension and healthcare cost per vehicle, one of the highest.
Henry Ford never liked unions. He had refused to recognize a union and even vowed to close down the plant rather than recognize unions. He gave in only after the Federal Government intervened and his wife threatened to leave him. Subsequently, the unions fought and obtained many benefits over the years. By 2007, Ford was in deep trouble.
39 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The retired employees who enjoyed pension and health care benefits far outnumbered those in employment. Labour historians now argue that Ford and General Motors made a terrible blunder by agreeing to long-term promises such as the health and pension benefits and cost-of-living adjustments. I have always advocated having unions. It is easier than dealing with a multitude of individuals. However the unions, including the parent unions in Sri Lanka are very ignorant of current international economic trends and have no interest in productivity or competitiveness. A trade union leader once told me that he began losing membership because he was promoting productivity. We need an institution that provides guidance to union leaders. Unions have to understand that we need to be competitive with the rest of the world.
The famous ceramic and crystal company Waterford Wedgwood is now under bankruptcy protection after a glorious history of 250 years. Here too it was partly the “legacy costs” that were to blame. Production facilities are moving to countries where input costs are less. We need to keep inputs under control, or change the entire production structure to higher value-added products. This requires a more educated and skilled workforce which we do not have. When the cost of living rises, governments tend to increase minimum wages without addressing the fundamental issue of weak skills.
Learning from others’ mistakes Sri Lankans usually detest being warned. Most believe that what has happened in other countries are either irrelevant or would have no bearing on Sri Lanka. We saw this with the recent Global Economic Crisis. As the crisis unfolded, there was reluctance to admit that the economic woes of other countries would impact our country. When I suggested to a government committee at the beginning of last year, that we even conduct a series of seminars educating companies on how to handle the crisis and exchange experiences of successful coping strategies adopted by some companies, I was told that it would mean an admission that there is a crisis, and my idea was shot down.
The subsequent experience of factories closing down, many more downsizing, and thousands being laid off, was enough proof that we actually did have a crisis, although the nation as a whole did not suffer. Of course, the government servants who received their salaries on time, every month, with no uncertainty, never did experience a crisis.
I will still take a risk and make my point, not only for national policy makers but also to the corporate sector, because what Greece has gone through as a nation, and what many international companies have gone through, are cases in point and we could learn many lessons from their mistakes.
In recent times I have noticed several articles and letters warning that a large public sector and high public expenditure would spell doom for our country one day.
However, we are still surviving and the economy is still strong. I hope national policy makers would not disregard these warnings and behave like the villagers did in perhaps the most popular tale “The boy who cried wolf” by Aesop, the renown Greek story teller. Nevertheless, I still hope that the wolf would never come.
40 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Sunday Times – May 9, 2010 CB HAS KEY ROLE IN ECONOMIC DEVELOPMENT – BASIL
By Natasha Gunaratne
The Central Bank (CB) has a large responsibility and role to play in developing Sri Lanka’s economy after decades of war and internal unrest. According to the newly appointed Minister of Economic Development Basil Rajapaksa who spoke at a presentation on the economy and the financial system at the CB this week, all stakeholders must work together to achieve economic growth. In the presentation, the CB said infrastructure development is essential to accelerating economy growth and enhancing the pace of socio- economic development. Significant changes have to be made to state institutions such as the Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC), Sri Lanka Railways, Sri Lanka Transportation Board (SLTP) and the National Water Supply & Drainage Board (NWSDB) in order to increase operational efficiency. The government is also encouraging public private partnerships (PPP’s) as state funded infrastructure development will only increase the budget deficit and debt.
The CB said the government is also planning on addressing problems surrounding administrative procedures, procurement delays and land acquisition. The government will also establish a strong development planning and monitoring process. History shows that the public debt stock has doubled every five years due to a persistently high budget deficit and sharp depreciation of the Sri Lanka rupee against major foreign currencies. The total outstanding debt in 2009 increased to Rs.4,161 billion from Rs.1,219 billion in 2000. In 2009, the Rupee/Japanese Yen rate was Rs.1.23, up from Rs.0.03 in 1977. Similarly, the Rupee/US Dollar rate was Rs.114.94 in 2009, having increased from Rs.8.87 in 1977. The Rupee/Pound rate was Rs.179.9 last year, an increase from Rs.15.49 in 1977.
The CB explained that the out of the total outstanding debt of Rs.4,161 billion in 2009, Rs.1,760 billion was from foreign debt, 72% of which is concessional loans. If the Sri Lanka rupee depreciates by 5% against major currencies, the foreign currency ebt will be Rs.9 billion. The CB also said Sri Lanka’s GDP growth is projected at 6.5% for 2010, increasing to 7.5% GDP growth in 2011 and 2012. In comparison, India’s GDP growth for 2010, 2011 and 2012 is forecasted at 8.8%, 8.4% and 8.1% respectively while the GDP growth in the United States is estimated to be 3.1%, 2.6% and 2.4% over 2010, 2011 and 2012 respectively. Furthermore, GDP growth for 2010, 2011 and 2012 in Europe is projected to be 1%, 1.5% and 1.7%.
The CB noted that export earnings in February 2010 grew by 20% to $629 million, partly due to higher earnings from the agriculture sector. Growth in export earnings is expected to exceed 17.5% in 2010. Expenditure on imports also increased by 61% in February 2010 with further increases expected by end 2010. The tourism sector is also picking up according to the CB. The number of tourist arrivals in 2010 is expected to pass the record level of arrivals of 566,202 in 2004. The CB further noted that the public has highlighted several issues such as high interest rates on lending, the inability to pay loans and low income on deposits. Other issues include low lending to the private sector and low levels of financial literacy. The CB said it will work to persuade banks to lower interest rates, introduce measures to expand credit in line with doubling of per capita GDP and expand the banking network outside of the Western province. The CB will also work towards increasing lending to the agricultural sector and develop a deposit insurance scheme to act as a buffer and safety net.
41 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Sunday Island – May 9, 2010 SOCIAL DISCIPLINE NEEDED FOR ECONOMIC DEVELOPMENT
Y R.M.B Senanayake
The Defence Secretary has performed a signal service to restore social order and good governance by dismantling the shops of the pavement hawkers. He is perhaps the only member of the Rajapaksa family who is apolitical.
People admire the Singapore model of economic development. Those who have been to Singapore in the early sixties would remember how the average Singaporean would spit on the streets and have no hesitation in littering their surroundings. Lee Kuan Yew realized the need to transform the people before there could be economic development. So he brought laws to punish those spitting in public places and fined them $5.00 for each offence stopping these practices.
In 1956 SWRD introduced mass mobilization and the masses steeped in their traditional behavior traits broke all social restraints. So while Singapore went in one direction we went in another. If we are serious about economic development we cannot ignore the need for socialization and all praise for the Defence Secretary. He should restore order in the streets by disciplining the three wheeler drivers whose Association is said to be making annual donations to the Police.
There must be law and order before there can be economic development. There cannot be popular opulence unless the individuals are disciplined in their behavior. If there is to be development then it must be development through disciplined individuals participating actively in the process. But this means that the State must set certain parameters within which the individual must behave. These parameters should be those conducive to economic development.
The Defence Secretary could do a signal service to society and promote economic development if he would stamp out two other social evils which undermine the economy. They are the narcotic smuggling trade and the illicit liquor trade. Both are great social evils. The addicts would have to be specially treated. Remember how the British colonials issued opium permits for those addicted through the Government Agents as provided in the Opium Ordinance. What is wrong with the "mathata thitha’ is its interference with the freedom of the individual consumer. Of course no one can claim a right to sell what is banned legally. But before banning liquor sales the government must realize that the desire for intoxicants is part of the human psyche and wise religious teachers like the Buddha never prohibited it but preached against the evil. It is the illicit ‘kasippu’ trade that must be stamped out first.
The Defence Secretary should also cut off the connection between the politician and the underworld criminals by enforcing a law calling upon the politicians to disclose their campaign funds and their sources. These evils must be stamped out if there is to be economic development which will benefit the people at large instead of only certain segments of the population which is the type of economic development we have witnessed. The Defence Secretary should also direct the energies of the Armed Forces to development like the Chinese government. He is of a rare breed, one of a kind in our power structure and he could be the key player in the economic development process.
Development requires social discipline, something which is woefully lacking in our society. Read any newspaper and you come across the stories of how girls and women both young and old are molested and 42 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
raped. The police are a useless outfit today and it is right for the Defence Secretary to overhaul it. A colleague of mine who was a former IGP once told me that the first twenty in the Police hierarchy should be sent home if the police are to be reformed. He told me that he had so advised President Chandrika. But politicians have their own agendas, apart from any consideration of good governance.
The Objective of Economic Policy Welfare Economists would say that the objective of economic policy is to maximize the social welfare function. But this is too theoretical. The public choice theorists seek a framework of rules that allow individuals to pursue their own ends without any attempt to maximize any "social good" The Neo-Classical economic model is based on the assumption that people are self interested and pursue their self interests when they are behaving in society. But such self interest must be within a framework of morality. Adam Smith who is often cited when talking about self interested behavior and the need to make it the basis of economic policy, wrote another book which is less known. He did not say that the individual should not be constrained in his behavior by the ruling moral principles. He took them for granted. He would not have justified the violation of moral principles in the pursuit of self interest.
The perception of self interest in the East and the West are different. The West traditionally is more reliant on individualism, freedom and self-sufficiency, while the East is inclined towards collectivism, subordination and cooperation. The West is used to placing a man or a private individual and private interest higher than any kind of social structure. The East, on the other hand, was more eager to subordinate personality to interests of the higher stages of social hierarchy - of a clan, of some social and economic group and of the State. The East favors co-operation rather than competition.
We need discipline if we are to develop economically and the Singapore model of enforcing social discipline may look attractive. But it went too far when it started interfering with liberal values and forms of behavior. So while South Korea and Taiwan have developed pluralist democratic societies with a large degree of individual freedom, Singapore has not emulated them. While countries like South Korea and Taiwan possess a civil society that is relatively vibrant and autonomous, Singaporean civil society has lacked a strong grassroots base and are willing to work within the parameters deemed permissible by the state.
We have to develop our own model of socialization and social discipline. The 1956 social revolution mobilized the ordinary masses in the political process but in the process undermined the prevailing socialization processes which were characterized as colonial. But though 50 years have passed since then, we have not developed an alternative social discipline. Such a social discipline is a sine qua non for the process of economic development to take place. We have to teach the people those economic, social and political values which can make the country to develop economically, socially and even spiritually. These involve honesty and trust in economic and social relationships at a minimum and self reliance rather than dependency on the state. Without these values no popular opulence is possible.
Development models To my mind neither individualism nor collectivism is a complete answer to the problem of individual actions in society and the economy. We need both competition and co-operation and how to promote the balance between them is an important objective of economic policy. South Korea and Japan promoted local capital and local enterprise, protecting them from foreign capital and foreign enterprise. Whatever justification there was for such a policy in the early stages of development, they were not conducive to
43 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
globally competitive economic activities. Singapore adopted a different model where state capital and state enterprise played a key role.
The Singaporean government favored the promotion of state-owned and controlled enterprises but encouraged foreign capital as the major locomotive for industrial growth. But this resulted in stultifying the growth of local private capital and local enterprise to some extent. The relatively weak standing of local private capital was further undermined by the extensive commercial undertaking of state enterprises, statutory bodies and government-linked companies (GLCs), generously shored up by the extensive financial and management resources of the state relationships.
We cannot depend on the Singapore model of using the State sector enterprises as the engine of growth. We need foreign investment and foreign enterprise and we need to restore our relations with the West. We must understand that the antiwar crimes cry and human rights cries are part of modern society. We fought our war and won and we may have had our failings from the highest standards. But the Government should not suffer from a persecution complex. It must make amends by compensating the Tamil people who suffered from the war, never mind whether at the hands of the LTTE or the Armed Forces. We must rebuild their lives without letting India take the credit for it and making India the savior of the Tamil people.
Those who shout against devolution and want decentralization have no practical experience of public administration. Why were the British so keen to democratize just before they handed over Hongkong? They knew that democracy is a divisive force and party politics creates dissension. The Chinese being wiser resisted such efforts. So instead of decentralization where the blame will come on the central government (the Sinhalese majority) for their failures in governance let us devolve power to the north and east.
Look at how devolution has worked in the southern state of Tamil Nadu. Have the Tamils of Tamil Nadu achieved any superior economic development? They at least cannot blame the central government. But the recent proposals of the government seem to be to appoint another horde of Gram Niladharis at another tier of local government called Jana Sabhas. The British had the headman system but they appointed as headmen the acceptable leaders in the village. In a semi-feudal society they tended to lord over the villagers.
The 1956 government appointed Grama Sevakas from outside to the village. They may be educated and less feudal in outlook but they lack acceptance as village leaders. So the proposals of the government will mean more of the same, another batch of officials who cannot provide village leadership. What is required is to have elected Jana Sabhas and officials should be accountable to them and not to the central government.
44 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Sunday Island – May 9, 2010 A BANKRUPT GREECE: THE TRAGEDY OF PROFLIGACY
By Dr. D.B.Nihalsingha
The New York Times recently quoted a Greek florist: "I am disgusted because we Greeks brought this mess upon ourselves." And a car rental worker: "We did this to ourselves." Payback time had come for Greece. ‘Greek’ drama of wanton lifestyles, spendthrift government expenditure, the sprawling Greek welfare state, easy living, had led to a country gone bust. The Greek government was bankrupt, about to default on Euro 8.5 billion payment due on May 19.
What is there to worry when conventional wisdom has held that countries cannot go bankrupt, that only individuals and institutions could default on loans? "The assumption that the solvency of governments may be taken for granted is enshrined in the international Basle Accord" (Shutt, 1999). The Basle Capital Accord looked at sovereign government debt as "effectively riskless and [therefore] zero weighted" had become the global standard by which financial soundness of banks are judged. By the same token, lending to governments has been considered safe. (Karacadag and Taylor, 2000). After all, governments, facing bankruptcy, simply cannot/will not close shop and disappear to some distant land.
Possibly on this basis, not only Greece, but many governments around the world have borrowed heavily, run up deficits as if there was no tomorrow. Greece will not ‘flee’ their debtors. But there was a catch. The possible Greek default posed a special problem because it had been downgraded to junk status and the world was staring at Europe’s first sovereign debt default. That created the panic among EU members and around the world because non-payment would have engulfed not only Greece, but the rest of the Euro monetary system.
To add to the urgency there were other countries in Europe teetering on near bankruptcy. Credit ratings of a big foursome had dropped to below sustainable levels. Italy is indebted with a $1.4 trillion, Ireland with an $867 billion debt, Spain with a $1.1 trillion and Portugal with $286 billion. Nearby countries: Latvia, Hungary and Romania, outside the Euro community but whose government extravagance also had led to a struggle to meet sustainable economic and fiscal goals, are also in trouble. The Greek mess could engulf the world economy as well: the Singaporean Prime Minister worried that the events in Greece thousands of miles away had the potential of hurting Singapore.
By May 8, the Guardian reported: "The growing crisis in the euro zone threatened to undermine the global economic recovery as markets plunged across the world on fears that European leaders may not be able to contain the debt contagion spreading from Greece." Australia's Prime Minister, Kevin Rudd, was scathing about the EU package for Greece over three years agreed last weekend by 15 euro zone countries and the International Monetary Fund: "Markets have judged those arrangements to be inadequate." "This is a global issue," Japan's deputy finance minister, Rintaro Tamaki, told Bloomberg news agency. "All the financial markets are now in turmoil … The impact of the Greek crisis has gone beyond the euro area."
But not to worry: Greeks, with their ‘tiny’ debt in comparison to the debts of Italy, Ireland and Spain, have a support community to go a begging to - the European Union. After some dithering (led by Germany), along with the European Central Bank and the ever present IMF, had no choice but the bankroll Greece with a Euro 110 (or $146 billion) loan. 45 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
That was to give Greece’s socialist led government breathing space to get its house in order - slash what has been called her "infamous government profligacy," rein in the soaring deficit of 14% to under 3% of GDP, raise taxes, cut the lavish, bighearted government wages, pensions, and benefits of the bloated government employment structure (which had contributed to the crisis), match expenditure with revenue. With axing of the Greek welfare state on the cards, Greeks, accustomed to "an easy lifestyle," reacted in ‘shock and awe’ in typical Greek fashion of violent demonstrations.
Things would not be easy again in a country used to extensive bribery and tax default as a way of life. Said Suzanne Daley of the New York Times: ``Ducking taxes is a part of a broader culture of bribery and corruption…cash on the side, a practice known as ‘fakelaki’- Greek for small envelope, bribing a government official to grease the wheels of bureaucracy… had resulted in only a few thousand declaring taxable income.’’
The question is why Greece got into this mess, when the quantum of its looming default was minuscule in comparison to debts owed by other countries? To begin with the concept of the so-called "safe" sovereign debt had become shaky, as irresponsible politicians and governments the world over shifted bankers and amassed unsustainable debts without any prospect of repayments, in the face of scenarios where revenue does not match the expenditure. Still lenders continued to give, because these governments paid ever higher interest rates.
The US, which often wags its fingers at other puny countries, is one of the biggest culprits: the ratio of government debt to GDP- the key yardstick of a government financial standing, will reach 100% in the US. Benjamin Friedman, the Nobel prize winning economist stated in his "Day of Reckoning" way back in 1989: "We are living well by running up our debt…America has thrown itself a party and billed the tab to the future…by selling our children’s birthright… our government has borrowed record sums on our behalf, we owe foreigners more than they owe us." The amazing part is that this is almost similar to the unfolding Greek Tragedy.
OECD statistics show that by 2011, US Government debt as a percentage of GDP of OECD nations will rise from 70% in 2000 to 100% 2010. Japan will become the leader of the pack when it reaches and astounding 200%! Ireland’s debt is due to reach 93%, Britain will reach 94%. Greece is in good company. While Europeans, dithering and leaderless fry in their own fat, how are we as a country in terms of a possible default of repayment of loans of our own? The perpetually optimistic Governor of the Central Bank, Nivrad Cabraal, pointing to Sri Lanka’s massive foreign exchange reserves, sees a sunny side up scenario for the country. Sri Lanka is sitting on a pile of foreign exchange.
In Washington, to where he had gone to talk to the IMF, when asked about the long term changes and challenges to Asia as a result of the global economic crisis, he was candid in stating that there was work to be done in the region, Sri Lanka included: "The banking sector stability as well as the financial system stability, has to be strengthened further, which means that regulation has to be strengthened. These are good lessons for us. One of the problems is that when problems ease, everything is forgotten, and people think that there has been a strong recovery - faster-than-normal recovery - and they are back to business. That can lead to a false sense of complacency. We need to guard against that." (F&D, IMF, Dec, 2009, p.47).
Good advice, except that the good Governor is the one who needs to follow his own counsel and guard against complacency. A few years ago, the Central Bank, facing a disastrous foreign exchange reserve 46 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
situation, had to plead with Lankans aboard to bank their foreign exchange in NRFC accounts; so grave was the situation, it went to the extent of paying bonuses of 20% on interest earned (in SLR) as encouragement.
Then there was the time when Sri Lanka could not get loans from ‘traditional lenders’ (read IMF). Was it because they had tight conditionalities? Whatever the reason, the country went to commercial bankers and borrowed $500 million and another $300 million at commercial rates. These loans are falling due for repayment shortly and money has to be found for that purpose.
Despite thumbing our noses at the IMF, we are back with them. Is it possibly because the country cannot find more commercial bankers who will lend at exorbitant rates? The governor states that we will not bow to IMF pressures and but seems to be anxiously (and optimistically) awaiting the disbursement of the third tranche of the $2.5 billion loan. However, Koshy Mathai, IMF Representative, is also waiting. "What we are looking for is the budget and meaningful steps towards reducing the deficit and to also doing it in an economically sensible way." With no budget still in sight as well as for the past year, the IMF may be in for a long wait.
Greece could not find any lenders to borrow from at 13%. What is the scenario facing Sri Lanka when it comes to repayment of its loans? Borrow more?
This is a reasonable question given that state expenditures and revenues don’t match up, hence the deficits which the IMF wants the country to reduce. How is this to be done when there are leaks in the system? For example many state enterprises are hemorrhaging money, running up losses the country can ill afford for e.g., Petroleum, Rs.12.3 billion; Sri Lankan Airlines, Rs.12.2 billion; Railways, Rs.4.7 billion; CEB, Rs.7.4 billion, SLTB Rs.5.1 billion; Mihin Lanka Rs.0.93 billion- altogether a staggering sum of Rs.42.6 billion in losses.
With the arbitration award due on the hedging deal there may be other dues to pay, and with other loan repayments looming, and the IMF hedging on the third tranche of its loan as well, what is plan B? Is there one? Has the country fallen in to the trap of complacency which Governor Cabraal cautioned against? After all, the Managing Director of the IMF has gone on record recently stating that the situation can change at any moment and turn into a crisis.
Greeks did not listen to its own Cassandra to cut its profligacy. Consequences followed. The Greek car salesman realized this when he told the NYT, "We did this to ourselves."
How can we avoid the trap of complacency which Governor Cabraal cautioned against in Washington?
47 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Investment
48 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 5, 2010 OIL PALM INVESTMENTS BY RPCS SHOWING HIGH RETURNS
The Planters' Association of Ceylon says diversification by Regional Plantation Companies (RPCs) into non-traditional areas such as palm oil cultivation and processing, is showing good results.
The AEN palm oil processing mill, a joint venture between Agalawatte, Elpitiya and Namunukula Plantations, is one such project that has shown impressive results in terms of high productivity, improved value addition and export capability and higher ROIs for the plantation companies while also benefiting domestic consumers.
The local production of palm oil has also reduced import dependence for vegetable oils and has helped consumers by stabilizing prices of vegetable oil," said AEN Oil Palm Processing Pvt Ltd General Manager Ruwan Goonewardene.
AEN says the palm oil venture is a win-win operation for both the cultivator and the palm oil mill, as seen in countries such as Malaysia and Indonesia, where economies have grown due to such cultivation. A palm oil mill Oil palm venture
The AEN oil palm cultivation project was initiated in 2000 by the three RPCs Agalawatte, Elpitiya and Namunukula. The three plantation companies began the cultivation of palm trees by bringing down seedlings from Papua New Guinea. The area between Kalutara and Akuressa was selected to farm palm trees, due to more conducive rain fall patterns. At the moment about 3,000 hectares have been planted in oil palm.
"As a strategic step in crop diversification and based on the trends observed in the South Asian plantation industry, Agalawatte, Elpitiya and Namunukula plantations embarked on an Oil Palm Cultivation and Processing Project. The joint venture agreement was signed in 2000 and a BOI agreement, to set up the palm oil processing facility, was signed in 2003," said Goonewardene.
49 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The AEN palm oil mill was commissioned in 2007, in a four Hect land in Mohameddi Estate in the Kalutara District belonging to Agalawatte Plantations PLC, using Malaysian technology. Malaysia is one of the world's largest producers of palm oil.
The AEN mill, purchases palm fruit from the cultivating estates and manufactures crude palm oil and crude palm kernel oil for export as well as for local consumption. The mill also produces palm kernel meal, which is used as an animal feed ingredient.
"The crude palm oil is sold to refineries, to manufacture vegetable oils that are used for cooking purposes. Crude palm kernel oil, which is derived from the seed of the oil palm fruit, is used for manufacturing soap. The kernel meal is also sold as animal feed ingredient," said Goonewardene.
Expanding production
The demand for edible oil in Sri Lanka is about 10,000 metric tonnes per month and the company expects to expand production over the coming years.
"Our palm trees are still young. So the yields will increase over the next few years. At the moment the average yield is about 12 - 14 metric tonnes per year, per hectare, but this yield will further increase over the next 4 - 5 years," said Goonewardene.
"The three RPCs, Agalawatte, Elpitiya and Namunukula Plantations are also looking at expanding the acreage under oil palm. The three companies are also hoping to expand cultivation from the current 3,000 hectares to 4,000 hectares in the next three years," said Goonewardene.
50 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Sunday Observer – May 9, 2010 TIPS FOR SUCCESSFUL LONG-TERM INVESTING
While it may be true that in the stock market there is no rule without exception, there are some principles that are tough to dispute. Let's review 09 general principles to help investors get a better grasp of how to approach the market from a long-term view. Every point embodies some fundamental concept every investor should know.
1. Sell the losers and let the winners ride.
Time and time again, investors take profits by selling their appreciated investments, but they hold onto stocks that have declined in the hope of a rebound. If an investor does not know when it's time to let go of hopeless stocks, he or she can, in the worst-case scenario, see the stock sink to the point where it is almost worthless. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice.
2. Do not chase a "hot tip". Whether the tip comes from your brother, your neighbour or even your stockbroker, you should not accept it as law.
When you make an investment, it's important for you to know the reasons for doing so: do your own research and analysis of the company before you even consider investing your hard-earned money. Relying on a tidbit of information from someone else is a risk you could take in investing in companies. Sure, with some luck, tips sometimes pan out. But they will never make you an informed investor, which is what you need to be successful in the long run.
3. Do not sweat the small stuff. As a long-term investor, you should not panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture.
Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term. The gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself.
4. Do not overemphasize the P/E ratio. Investors often place too much importance on the price-earnings ratio (P/E ratio). Because it is one key tool among many, using only this ratio to make buy or sell decisions is dangerous and ill-advised.
The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes. So, a low P/E ratio does not necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued. 5. Resist the lure of 'penny stocks'. A common misconception is that there is less to lose in buying a low-priced stock. But whether you buy a Rs. 5 stock that plunges to Rs.0.50 or a Rs.75 stock that does the same, either way you have lost 100% of your initial investment.
6. Pick a strategy and stick with it. Different people use different methods to pick stocks and fulfil investing goals. 51 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
There are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it. An investor who flounders between different stock- picking strategies will probably experience the worst, rather than the best, of each. Constantly switching strategies effectively makes you a market timer, and this is definitely territory most investors should avoid.
7. Focus on the future. The tough part about investing is that we are trying to make informed decisions based on things that are yet to happen. It's important to keep in mind that even though we use past data as an indication of things to come, it's what happens in the future that matters most.
8. Adopt a long-term perspective. Large short-term profits can often entice those who are new to the market. But adopting a long-term horizon and dismissing the "get in, get out and make a killing" mentality is a must for any investor. This does not mean that it's impossible to make money by actively trading in the short term. But, as we already mentioned, investing and trading are very different ways of making gains from the market. Trading involves very different risks that buy-and-hold investors don't experience.
As such, active trading requires certain specialized skills. Neither investing style is necessarily better than the other - both have their pros and cons. But active trading can be wrong for someone without the appropriate time, financial resources, education and desire. Most people do not fit into this category.
9. Be open-minded. Many great companies are household names, but many good investments are not household names.
Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow.
In this article, we have covered 09 solid tips for long-term investors.
There are exceptions to every rule, but we hope that the common-sense principles we've discussed benefit you overall and provide some insight into how you should think about investing.
(Source: www.investopedia.com) (Courtesy: CSE)
52 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Management
53 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 4, 2010 ORGANIZATIONAL REFORMS AND RESTRUCTURING
Dr. K. Kuhathasan CEO: CENLEAD
Today, several organizations are undertaking reforms as part of an ongoing exercise to re-structure their activities. Whether you perceive reforms as a threat or an opportunity whether it excites or depresses you, it’s all in the mind. Successful implementation of reforms depends on:
Your attitudes. Your enthusiasm.
Your willingness to allow people’s reactions to influence the reforms as it goes along. The way you role-model the kinds of new behaviour you are seeking. Your willingness to reform yourself.
Believe you can make a difference Management is not about preserving the status quo, but about creating the highest rate of reforms which the organization and its people can sustain. It is, therefore, necessary for you to develop: The courage to re-structure what has to be re-structured. The tolerance to accept what can’t be re-structural
The wisdom to know the difference. Effective leaders are characterized by the basic self-assurance that they can influence their own destiny and those of other people, events and organizational achievements. This contrasts with the kind of passiveness and helplessness which is frequently found among the ranks of disillusioned middle managers who have reached a plateau, feel they have few options open to them and have basically given up.
The paradox of personal change The person over whom you have the most control is yourself. The hardest person to reform is yourself! In any business organization the behaviour of the manager who initiates reforms will be closely watched to see if it is consistent with what he or she is saying. It’s not what you say, it’s what you do, from which your people will read the true message. If there is a mismatch between the two, they will draw their own conclusions about your commitment to reforms. You are the ultimate role model. In the process of introducing reforms, your actions speak louder than words.
Managing personal transition Before you try to transform other people, it may be salutary to remember how difficult it can be to achieve personal reforms. Most people, when initially asked for their views, will say that they like reforms, because this is what they think they are expected to say. Frequently, further discussion reveals that this simply is not true. As managers get in touch with their own pain in experience reforms they usually adjust their original statement.
If managers genuinely don’t like reforms, then it is understandable but worrying. If they do like reforms it is almost more worrying, as the manager may assume that everyone likes reforms just as much as he or she does and may, therefore, fail to put in place support mechanisms to manage the transition process.
54 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Generally, managers of maturity, who have suffered some setbacks in life, are most able to understand the process of reforms and the pain it can cause and can therefore, be more sensitive in the way they handle those around them. To manage people effectively through reforms necessitates knowing the individual, not just as an economically viable unit of production, but as a whole person. Knowing the other starts from ‘knowing yourself’. Reforms rarely happen smoothly and easily. There are always reasons for some people to hang on to the ‘old way’ and even those who accept the need for change create blockages through a lack of knowledge or skill in how to go about it.
Ignorance: Due to a lack of information or understanding Disagreement: Because alternative solutions are preferred or there are feelings that the plan will not work. Personal cost: The effects on individuals are unwanted Anxiety: There is uncertainty as to how to do what is required or how to handle the situation. Loss of authority: Individuals will lose power or control. Mistrust: There is suspicion over motives or real objectives. Alienation: Individuals do not share the proposed vision/values or feel socially isolated.
Reward (or lack of it) ‘What’s in it for me’ has not been addressed.
Resistance Equally important is the degree of resistance to reforms. If everyone wants reforms, the implementation methods may be very different from those chosen when resistance is high. The style of strategies suggested for handling the various reforms vary from participative to dictatorial and the following suggestions are appropriate approaches for each situation. The problem with general advice is that situations are always specific, and certain situational factors should be considered which may modify the approach.
The following questions should also be considered. What are the skills and abilities of those affected by reforms? Participation may have to be reduced if the people involved lack the ability to contribute, and cannot be brought up to speed quickly. Where lack of ability limits the effectiveness of participation, it may be necessary to substitute extensive and regular communication for total involvement.
Are people motivated to participate? The method chosen will also be affected by the willingness of those affected to play a part. Even where resistance to reforms are low, those affected may not wish to play an active part in determining how to implement the reforms. When the reforms are fundamental, such as removing layers of management, motivation may be different at a different stage of implementation. Does the suggested approach fit the organization’s culture? It may not be impossible to use and approach which goes counter to the normal culture of the organization, but it may sometimes be more effective to modify the approach to achieve a better fit.
Extensive participation may be viewed with suspicion in an organization with a boss-powered, fear culture. Equally, a totally dictatorial approach may be demotivate if the organization is normally participative. It should be remembered that fundamental change often includes a need to change culture, and if so the way in which change is implemented should give consideration to both old and new values. Reforms rarely go smoothly and easily. There are always reasons for some people to hang on to ‘Old way’ and even those who accept the need for change face setbacks through a lack of knowledge or skill in how to set about it.
55 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 5, 2010 FIRING - HOW TO LET GO.... THE ART OF THE MOST SACRED OF MANAGEMENT DECISIONS:
Nishan Wimalachandra -Corporate Trainer and Lecturer
Today lot of CEO's and HR people have something in common, that is how to get rid of the people they think are a liability to their company. Believe it or not most organizations who brag about 'Employee empowerments' and 'Our employees are our assets' usually consider the salaries and benefits paid to their employees as a big liability.
In the present context, people lose their jobs for various justifiable reasons starting from poor performance, unprofitable business, mergers and my all time favourite- management changes or acquisitions. Today there are no permanent jobs and employers shouldn't expect "Employee Citizenship Behaviours" from their employees anymore. Gone are the days where people work for one organization for the rest of their lives. The more permanent the job is, the more cumbersome it becomes, and when it comes to firing employees, there are always more procedures to follow, more legal aspects to watch for and lot of compensation to give away. Of course these could add up to lots of unnecessary expenses and struggles.
So how should a CEO/HR junkie carry out a proper Guilt Free Firing Session? It may sound difficult than it is, but with little practice you will get where you want by following simple steps. It is assumed that before a person is fired from employment, they are monitored by a senior official for real reasons such as frequent absenteeism, poor performance, lack of interest and all other valid reasons which could be included in a performance appraisal sheet which is pre-organized before the real firing scene commences.
But unfortunately, firing always leaves behind bad memories and guilt feelings and also scared employees whose performance will be definitely affected by witnessing their colleagues being fired. Even though a wound is healed sometimes the memory of the incident may haunt people for ever. How should a proper firing be done? You don't need expert advice nor do you need lot of firing experience. Your worst enemy is guilt of firing a person if you are aware of their personal lives, their family, children's education, the loans they got to pay off, and what happens if they lose their job, etc.
It must be noted that a proper CEO should reconsider these things before a person is fired, whatever said and done, because of firing, people have lost their homes too and sometimes their marriages end. After all it is business, nothing personal, but results could be very different. Word of Caution: Firing is an Art, not a Skill - Just because you are good at hiring, you may never be a good fireman. But following the below steps will ensure a guilt free, hatred free experience to the parties involved.
Step 1 - Find enough evidence to justify the firing It is usually presumed that the employee knows that he/she will be fired soon, but just because they are aware of the situation you shouldn't limit the evidence against the person. Step 2 - Keep them informed
56 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Keep the subject informed in writing as many instances as possible that their job is in danger regardless of your liking to keep him/her employed by the organization in the future. Step 3 - Provide lot of training and development opportunities
This is a giant step CEO's/HR people should take into consideration. You must send the subject to many trainings possible to enhance their skills, this is not done to keep them in your organization. Trainings must be in areas the subject will be likely to be successful in the future if worked hard. The most important thing is that the subject realizes that they are given lot of training before the organization actually fired them. It must be seriously noted that training is provided only once the subject is identified to be fired later. Please note that if you provide training to your good employee, they will always repay you by joining your competitor and matters will be worse. But instead provide training to the ones you want to let go.
Step 4 -how and make happy Provide them a sponsored trip to a country which they have never been for at least for few days and make them feel that they are very important regardless of the in-writing communications made on their poor performance or the company policy in finalizing Voluntary retirement schemes. If you are the one who will be firing the person make sure that they are aware that the overseas trip is based on your recommendation. At least when they are actually fired they will appreciate the fact that they got an opportunity to travel abroad. Organize a cheap training program as part of the trip so that they can include it in their future CV's to show that they were even sent on foreign trips for training.
Step 5 - Inform them that priorities have changed The subject must be verbally informed that he/she may lose his/her job regardless of the attempts the company had made to keep him/her with all the training and the overseas exposure. Inform them that the organization will do its best to make him/her not lose the job.
Step 6 - Organize interviews through head hunting firms This is a very important step that the person who is involved in firing be actively involved in providing leave necessary for the interviews organized for the subject so that the transition is managed effectively. Please note that the interviews organized are real jobs and real organizations; always avoid mocking the subject by sending them to job interviews which you know will surely not work. It is recommended that the Organization pays a considerable amount to the head hunting firm more than what is paid by the new firm who is willing to hire the employee. By doing this their interest in placing a job for your subject is done with much enthusiasm.
Step 7 - Secure the new job and now make your arrangements Once the job is secured, make sure that you address them on personal grounds and explain that you could have fired them immediately, but it could not be done because they were dear to you even though the decision to fire them had always crossed your mind.
Step 8 - Now talk about compensation Now the time has come to talk business, you must place the offer in front of them before the final document is signed. Don't make it look like a firing, paint the picture of a Voluntary Retirement Scheme which comes with benefits. Do not cancel their life insurance; make it active until the policy is matured.
57 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Step 9 - Organize a grand farewell Organize a grand farewell and ask them to visit the office whenever they could.
Make sure that the farewell is well accepted for the service rendered by them regardless of how poor their performance has been. Handover a certificate of appreciation framed by a well known picture framing firm so that they could hang them at home and show off to their family and friends.
Step 10 - Have a gala meal with them on their last day of work. Don't forget to give them a personal gift supposedly by your own money to make the event more memorable. Later on send the bill to the accounts division, its nothing personal, fully business.
You have successfully gotten rid of the people you hate to work with. These steps are valuable whatever the reason of your choice to lay off employees. After all most such reasons are man made.
Organizations shouldn't be successful in hiring alone. Firing is also one of the most sacred of management decisions which cannot be given little room to discuss.
It is with sincere regret that this final part must be reminded, any organization which does not go forward, remains stagnated, sometimes the only option is getting rid of the bad blood concerned.
Blood letting has always been a cure for a number of illnesses and sure it could be applied to organizational management.
58 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 7, 2010 ENERGY MANAGEMENT WHERE ARE WE ?
Dr. Krishan Deheragoda
'Management' is a terminology used in modern texts to describe a wide array of aspects. In the generic sense, Management means to control a system to achieve maximum outputs from a given input. In this respect, 'Energy Management' becomes a very apt term in the context that Energy is the most common and perpetual input to a system.
As it directly speaks of the output in relation to a given input of energy, it is 'Efficiency' that matters. Understanding that 'Energy at Usable Level' is a limited resource, Energy Management becomes very relevant and important. Therefore, it is of use to look at Energy Management and understand on where it stands in the current context.
Energy management has been given due prominence at the policy level under the National Energy Policy and Strategies, which emphasises on energy security of the country. Energy conservation is one of the elements earmarked for achieving that. An energy audit conducting unit
As far as the institutional set up is concerned, the Sri Lanka Sustainable Energy Authority (SLSEA) is the focal government entity for the promotion of energy management. Energy management activities of SLSEA are carried out with a long-term target of maintaining the energy intensity in economy at 500 toe/XDR, meaning - to achieve economic growth of the country without making an additional energy burden.
Regulatory interventions At the present levels of consumption and the predicted growth in the demand, this economic target is, around 20 percent reduction of the electricity consumption of the current year, to be achieved in a 10- year time horizon. Activities in this area are concerned of establishing a conducive framework to implement energy management by all consumers covering industrial, commercial, state and domestic sectors.
Everybody is a candidate for conserving or managing energy, but the benefits are obviously, to each individual and to the country in general. Nevertheless, due to the lack of awareness or rather the commitment energy efficiency in practice is rather limited. So, in order to make it a fairly systematic approach, regulatory interventions are a prime necessity.
Guided by the provisions of SLSEA Act, numerous regulatory initiatives have been taken towards, basically to establish a framework for energy management activities and to popularize energy efficient technologies and products Energy labelling program, Regulations on Energy Manager, Energy Auditor and Energy Consumption Reporting, Code of Practice for Energy Efficient Buildings, are the activities we have at this end right now. 59 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The actual impact of energy efficiency improvement can be achieved at field level only if we go for high efficient products when we are purchasing electrical appliances. On the other hand, it is the public who becomes part and parcel of the energy efficiency improvement projects right at the implementation stage, especially when it comes to the domestic sector. Therefore, if we do not equip the public with the knowledge to identify efficient equipment, the real implementation is yet to do with.
All in all, when there is a proper mechanism for denoting efficient products, when products enter the market, when people are buying, energy efficiency can be spoken of in a common language; that is energy label. Energy labelling is the internationally accepted methodology for designating energy efficient products. Notations are in different ways. In the one we have introduced to Sri Lanka, there are positions of 1 to 5 stars, wherein products are ranked based on the level of efficiency. Compact Fluorescent Lamps (CLFs) were the first equipment to be energy star rated, and they are now available in the market.
Building Code The Code of Practice for Energy Efficient Buildings (Building Code) is a very practical guide to introduce energy efficiency into large-scale buildings at the design stage itself. The importance here is, in a building, there are quite a number of opportunities for conserving energy, especially in lighting and air conditioning. But, having identified them once the building is in use, can we adopt them? In most of the cases it is practically difficult. Through the Building Code we expect the buildings to comply with some basic criteria related to energy consumption.
To make that compliance it is necessary to go for efficient technologies, efficient products, in addition to the structural modifications. The long-term economic impact is significant.
In terms of implementing energy efficiency regulations, the SLSEA is designated the authentic entity for obtaining energy consumption data of organizations, based on which they will be directed for taking to conservation steps.
Energy managers appointed by large establishments will be playing a key role here in coordinating the activities.
Energy auditors, who are the personnel technically competent to provide consultancy on energy management are expected to provide with the required know how in implementing energy conservation activities. Regulations, on these and energy consumption reporting will be introduced this year.
The SLSEA is compiling energy consumption baselines to be used as the reference levels in energy consumption.
Energy Efficiency Services The SLSEA is not only a regulatory body; it provides various services in order to facilitate energy conservation among end users. In energy efficiency improvement activities, establishing the existing situation with appropriate measurements is quite important. The SLSEA has developed a sophisticated bank of instruments for energy system measurements, and those are available at a nominal fee.
Technical consultancy the SLSEA does provide this, however in view of the large clientele, the SLSEA has registered companies called ESCOs (Energy Services Companies) and they provide consultancy in energy auditing and implementation of energy efficiency improvement projects as well. 60 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Introducing energy conservation in taking establishments as clusters has been identified as a highly beneficial intervention, because the systems, methods of energy use, know how of personnel, are similar in nature, of the establishments of a typical cluster. Such sector specific energy efficiency improvement programmes have been successfully implemented in tea industry, hotel sector, national water supply and distribution. One unique nature for easy implementation of activities is the keenness of these sectors on energy conservation. Tea Research Institute (TRI) has been the focal point for energy efficiency improvement activities in the tea industry, and SLSEA conducted program to develop the capacity among tea factory officers to carry out energy conservation program.
The hotel sector has launched a program called Greening Sri Lanka Hotels, where they want to go for energy conservation, water conservation and reduction of waste. The SLSEA is providing technical assistance in energy management under the Greening Sri Lanka Hotels program. The National Water Supply and Drainage Board, the organization with the highest energy consumption, has initiated improving energy efficiency in pumping systems, which will greatly help to reduce energy consumption.
Energy efficiency project financing Like in any other development activity, funding has been a major issue in energy efficiency improvement projects. Firstly, banks are rather hesitant for releasing funds for these projects for want of collaterals. The SLSEA addressed this issue through establishing a mechanism for providing technical and financial guarantees for the projects. This mechanism known as Sustainable Guarantee Facility was introduced couple of years back, and observing the dire necessity of having a dedicated funding facility for energy efficiency projects. The SLSEA is now working towards establishing such through donor assistance.
Awareness creation Enhancement of awareness on energy conservation is yet another requirement for successful implementation of energy management programs. Tailor-made awareness programs are conducted for various sectors including the industrial and commercial sectors, and especially for office buildings.
Also, the SLSEA has launched Sri Lanka National Energy Efficiency Award scheme, for recognizing organizations successfully carrying out energy efficiency projects, and through that, to encourage others to follow suit.
How much we have achieved Energy consumption reporting and labelling program are good examples for systems that are being developed in Sri Lanka and are based on successful international experiences.
This has laid the foundation for a long-term energy management programme. As a result, an energy saving of 280 GWh has been recorded in year 2009. Specially, penetration of compact fluorescent lamps (CFLs) is more than 50 percent of the households, and in the urban areas it is even higher.
So, despite their comparatively high costs, CFLs have been popularized because people have understood the life cycle savings, and also attractive payback periods. Thus incandescent lamps are gradually being phased out, and eventually this has been highly helpful in cutting down the peak electricity demand, which is the most wanted intervention to relieve the economic burden in the energy sector.
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The way ahead Future environment will be conducive for energy management activities. Specially, the approaches like Green Building concepts will provide more opportunities to go ahead with energy management activities in a more integrated manner.
Already there are some establishments who have earned Green certificates. And, the concerns at global level in environmental aspects will become more severe and solid steps will have to be taken by the industrialized countries.
In that situation we will be able to better access for funding through clean development mechanism (CDM), and thereby we will be able to enhance the economic feasibilities of energy conservation projects.
The SLSEA is obtaining assistance from Japanese International Cooperation Agency (JICA) under a three-year project for establishing a sound framework for energy management.
Laboratory facilities and other necessary infrastructure development have been duly focused, and will be addressed in near future.
Keeping pace with the technological improvement has also been taken into consideration. In the area of lighting, a significant milestone has been reached through establishing Regional Centre for Energy Efficient Lighting.
Technical assistance for this is obtained from Lighting Research Centre of Rensellar Polytechnic, USA. Within the country, a good organizational network has been developed, with SLSI, NERD Centre and universities.
These will be highly supportive environments for sound energy management programmes and therefore, we are of the view that SLSEA will be able to intensify energy management activities in the country in the coming years.
62 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily Mirror – May 7, 2010
LOGIWIZ RECEIVES ISO 9001:2008 FOR QUALITY MANAGEMENT SYSTEMS
Logiwiz Limited, the third-party logistics (3PL) arm of the Hayleys Advantis Group, has achieved an important milestone. Its quality management systems have been certified compliant with ISO 9001:2008. The certification by DET Norske Veritas (DNV) covers the provision of 3PL services and includes a quality policy related to customer needs and the needs of other stakeholders. The quality policy encompasses areas such as the need for customer satisfaction, continual improvement, evaluation of risk and business continuity planning, identifying resources, supply chain processes and stakeholder management. "The ISO certification will help Logiwiz further enhance customer satisfaction and loyalty, build morale and motivation and improve internal working processes," said Omar Raban, Managing Director of Logiwiz, at the occasion of the awarding of the certification to Logiwiz by DNV. "The majority of our clients are also ISO certified. The support we have received from them in going for the certification has been valuable." He added that the certification would also act as a platform to address business priorities and corporate plans in relation to the organization’s value chain and would renew emphasis on quality management while recognizing it as one of the main company goals. An ISO 9001:2008 certified company is able to offer its clients much more than just service as it centralizes all its operations around internationally accepted working practices, Raban explained. This results in inculcating best practices in quality management into the organizational culture and bridges the gaps between procedures and productivity, leading to greater efficiency which will ultimately benefit its clientele. This would also bring about many benefits such as lower costs and shorter cycle times through effective use of resources; flexibility and speed of responses to changing market or customer needs and expectations; increased revenue and market share obtained through flexible and fast responses to market opportunities and increased effectiveness in the use of the organization’s resources to enhance customer satisfaction, Raban added. Logiwiz (Pvt) Limited (Logiwiz) offers end-to-end logistics and supply chain management solutions and is the specialist third party logistics company of Hayleys Advantis (www.hayleysadvantis.com), which represents the transportation and logistics arm of the Hayleys Group. The company provides contract warehouse management services and production line logistics services to several customers at their own premises. As a total logistics and supply chain execution company, Logiwiz leverages on the strengths of the Hayleys Advantis network to provide a range of customized solutions in Inbound and Outbound logistics. Today, Logiwiz has grown beyond the shores of Sri Lanka, and moved in to India, in keeping with the company's vision to be the Supply Chain Solutions Provider of choice throughout the Asia Pacific region.
63 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Trade & Marketing
64 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 3, 2010 GLOBAL NATURAL RUBBER OUTLOOK ENCOURAGING
Dr. N. Yogaratnam
Global natural rubber (NR) prices continued to maintain their upward trend fetching around US$ 3.00 in early 2010, says the International Rubber Study Group (IRSG). Prices increased on an average by 36 percent from early December approaching close to US$ 3.00 level attained in early 2008. The physical price index for Thai RSS 3 increased by 30 percent; Indonesian SIR 20 and Malaysian SMR increased by 38 percent and 39 percent respectively, over the same period.
The upward trend is partly supported by fundamental factors as well as improving market sentiment following an easing in the global recession; physical prices also advanced following the surge in future prices.
Aggressive replenishing of stocks by buyers to avoid supply scarcity over next few months on signs of demand recovery supported by the upward trend in prices, is expected to continue during this period.
The trend in domestic market (Sri Lankan) is equally encouraging, with rubber prices in the Colombo Auction reaching an all time high with a kilogram of rubber fetching around Rs.450 in the 3rd week of April. Latex crepe as well as RSS1 fetched these high prices in the same auction. The RSS1 grade of rubber fetched only around Rs.105.00 per kg at the Rubber tapping auction in November 2008.
It is also interesting to note that, there is a good demand for the lower grades of RSS as well. This increasing trend in NR prices provides a tremendous boost to domestic rubber producers, some of whom were out of rubber business due to the drastic drop in NR prices that was experienced over the last two years.
NR output Global output of NR fell by 5.1 percent to 8.686 million tonnes during the 12 months ended December 2009 from 9.150 million tonnes in the previous year. The fall in supply is attributed to a decline in productivity in spite of expansion in yielding area due to adverse climatic conditions. Thailand witnessed a 6.1 percent drop in supply during 2009 from 3. 090 million tonnes in 2008 to 2.900 million tonnes in 2009. In Indonesia, the supply dropped by 5.7 percent in 2009 to 2.595 million tones from 2.751 million 65 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
tonnes the year before. NR out put in Malaysia drastically fell during 2009 by 22.1 percent from 1.072 million tonnes in 2008 to 835,000 tonnes in 2009. India’s production came down by 7.3 percent to 817,000 tonnes during 2009 compared to 882,000 in 2008.
In sharp contrast to the first four major producing countries (Thailand, Indonesia, Malaysia and India), NR supply registered a positive growth in Vietnam, China, Sri Lanka and Cambodia, due mainly to expansion in yielding area. China strengthened its position in the global supply of NR by clocking 17.9 percent output growth during 2009 while the supply in Vietnam grew by 9.7 percent during 2009. Cambodia recorded 81.1 percent rise in supply year before.
Output in Sri Lanka grew by 4.7 percent during 2009. Production in January/ February 2010 had been 12.9 kg.mn, which is higher by 5.7 percent compared with the production of 12.2 kg.mn. in the same period in 2009. In 2010, with the expected higher GDP growth and an improving outlook for prices, global NR production is forecast to reach almost 10.56 million tonnes, a rise of 11.9 percent, compared to the previous forecast of a 3.7 percent increase to 10.0 million tonnes, with higher output seen in all the major NR producing countries.
Despite domestic NR production which has been showing an increasing trend over the last six years from 90,500 MT in 2002, reaching 133,400 MT in 2009, it is expected to record a significant increase of around 5.7 percent, in 2010. If this trend in production continues, our total NR production in 2010 would be around 141,003 MT.
Challenges Prices have surged across the world in recent times, following supply crunch in the major NR producing countries. The crunch was caused mainly by climate change and the surge in the price of crude oil, now around US$ 80. There had been a fall in production of NR in the major rubber producing countries. The fall was mainly attributed to variation on weather pattern. Climate change appears to have been a real threat to several agricultural crops and a tree crop like rubber is no exception.
It had been reported that there were days of heavy rains as well as hot sunny days during the peak yielding months of August to September, in the Indian rubber growing areas. While the rains had disturbed tapping operations, the unusually hot days experienced in their rubber growing areas may have resulted in the evaporation soil moisture and delayed nutrient uptake.
Rains continued with intensity in the other major rubber producing countries of Thailand, Malaysia and even in Sri Lanka, whereas the Indonesian crop, it has been reported, has been affected by dry weather. This is reported to be owing to the unusual weather phenomenon, which has caused rains or dry weather in different regions at the same time. Moreover, heavy downpours have been forecast in Southern Thailand during the three months of October, November and December 2010, which may bring about a fall in the country’s NR production by about 10 percent. Thailand produces 250,000 tonnes of NR a month on the average, but traders expect the annual production to stay within 2.9 million tonnes, whereas the country’s national estimates for NR production in 2010 is over three million tonnes.
The forecasted weather pattern suggests that the country’s official estimates may look unrealistic. Indonesia had a Massive earthquakes in some NR producing countries, may also put NR production in disarray.
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It is also known that among the terrestrial ecosystems, natural forests sustain the most efficient moisture conservation system. The water use by rubber plantations is still more efficient and is estimated to be 500-600mm lower than the typical tropical rain forests ecosystem. The rate of evaporation is lower in rubber plantations compared to the forest ecosystem where mean daily evapo-transpiration of rubber is about 4.5 mm per day.
The crop co-efficient values of a rubber tree are reported to be lower during dry seasons, being in the region of 0.179, and even under wet conditions, it is around 1.058. The transpiration rate (TR) is also lower than many other forest species. These data highlight the ability of rubber plantations to conserve soil moisture more efficiently than most other tree species and thereby they are in a position to adapt themselves to drought conditions. But the problem appears to be extreme weather conditions that are of regular occurrence now and that this trend is expected to continue with more vigor in future.
Crude oil Price of crude oil moved ahead of US$ 80 a barrel now. Sheet rubber that was fetching around US$ 3.00 may move up further. Since the price of crude oil is showing a tendency to move up further on higher consumption by the US, world rubber market is expected to witness a continued price boom.
Rubber consumption The Industry Report of IRSG, forecasts an improved out look for global NR and SR consumption growth as compared to the previous projections for 2009 and 2010. The extended recession scenario would result in a 3.3 percent increase in NR consumption to below 10.0 million tones in 2010, compared to the 8.2 growth rate of 10.6 million tones envisaged in the base case. SR consumption would rise 7.4 percent to 12.6 million tones in 2010, compared to a 14.9 percent increase to 13.5 million tones in the base case. In Asia/Pacific, the largest consuming region, the latest data suggest that the sharp decline seen in total consumption earlier in 2009 may have been arrested.
Consumption of NR by Indian tyre industry has seen around 6 percent growth during 2009. Automobile tyres accounted for about 60 percent of the total NR consumption in the country. The total rubber consumption saw only about 2.55 percent growth during the same period, due to the decline in the consumption by non-tyre sector.
India is emerging as a large market for automobiles as its fuel-efficient, compact environment-friendly small cars are increasingly in demand in the Asian, European and Latin American markets. Economic and the rising fuel prices are forcing people in these countries to go for small vehicles. The ‘scrap page incentive’ offered by the European countries for replacing nine-year old cars with small, fuel-efficient vehicles has helped the Indian cars to enlarge its market share in these countries. Though this incentive ended in December 2009, but the trend in preferring compact vehicles will continue.
China has been progressing steadily in rubber consumption, with the tyre sector scaling up production in a bid to mitigate the effect of the US Government’s imposition of 35 percent duty on import of Chinese tyres into the country. The decision has seriously affected Chinese tyre exports to the US. Robust domestic vehicle sales, however, have been driving up demand for tyres in China, which in turn, has necessitated large import of NR into the country.
Vietnam is expected to expand rubber cultivation by 220,000 hectares by 2015, to enhance the total cultivated rubber area to 800,000ha. The prospect of exporting substantial quantum of NR to China is 67 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
believed to be, behind the move for the expansion. Vietnam is a regular supplier of NR to China. 65 percent of its total NR exports of around 490,000 tons up to September 2009, was to its neighbour China.
Outlook Global NR production is forecast to rise by 11.9 to reach almost 10.56 million tones in 2010 compared to the 7 percent increase envisaged earlier with higher out put expected in all the NR producing countries, according to a Rubber Industry Report.
Asin out put is forecast to rise to 9.92 million tonnes in 2010 from 8.82 million tonnes forecast for 2009. Malaysian Rubber Board’s estimates indicate that the country’s current output of NR is around one million tonnes. The current yield level stands at 1,400 kg per hectare. Malaysia targets to enhance the productivity to 1,800 kg per hectare in five years’ time.
A proposal already drawn by them indicates, that the area under the estate sector would be almost doubled from the current extent of 61,000 ha to 120,000 ha in five years’ time. Thailand is also on a move to expand the rubber area.
The country has already extended rubber cultivation to 160,000 ha during the five- year period between 2004 and 2009 and has drawn up proposals for planting another 160,000 hectares from 2010.
Sri Lanka also had embarked on a new planting program in the Low country Intermediate Zone covering an extent of 40,000ha, but the pace of replanting activities indicates that the replanting target may not be achieved as desired.
The Global demand for rubber gloves, is also expected to grow by 10 percent per annum says a ‘Rubber World’ report. The demand for rubber gloves is reported to be increasing from India, China and Vietnam due to increase in health and hygienic awareness. Plantation expansion plans of the major NR producing countries have obviously been developed based on the rising trend in rubber prices. Since the global supply of NR is forecast to fall behind its consumption up to 2020, the current boom in the NR market is expected to continue.
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Daily Mirror – May 3, 2010 HOLIDAYS AND MONSOON RAIN GRIP RUBBER MARKET
By Cheranka Mendis Holidays and monsoon showers have changed fortunes of the rubber market in April, with high prices and low volume production. Assistant Chairman of the Rubber Trading Association, M. S. Rahim stated that traders were apprehensive about the future of the market with low demand, especially against the backdrop of the financial quandary world over. "In the world market we see low demand due to the rising economical and financial problems all over the world, especially in the European sector. The market is currently enjoying high prices, with buyers biding their time and purchasing only low amounts at a time," Rahim said. With low production due to the rainy season, Sri Lanka's position in the world rubber market is low - so much so that the traders are expecting prices to decline in the near future. "A change in the current trend is expected if we are to better the existing situation," he said. According to the results of the latest auction conducted last week, he asserted that the decline in process could be perceived as price stabilization at a slightly lower level after Friday's auction, following a high of the last few weeks. "The quantities have been little less at yesterday's auction." The auction was held two days after the previous auction. As at 27 April the volume of rubber recorded was 262 tonnes while only 189 tonnes were recorded Friday. The main reason for the drop in quantity is twofold - the miserable weather patterns and the long stretch of holidays that greeted workers last month. "Every day is a holiday and this has had a negative impact on the total volume production of the industry. From general elections to New Year to May Day, the large number of holidays puts the industry off track. Again during Vesak the same problem will arise, even though the impact will be milder than what was experienced," he pointed out. "A total of 4,950 kilos have been sold on an average of Rs.411. That is not even one third of a container," Rahim said. "The yield has been high and then it started to drop because it was too hot for plucking and now it rains. The months of April, May and June are considered the worst months for production. The industry will regain its pace again in August."
69 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 7, 2010 BOOST FOR CEYLON TEA IN JAPAN
Stemming from effects of the diverse agro-climatic conditions of Sri Lanka, speciality Ceylon Tea has been synonymous with excellent quality and taste for over a century. As part of a program to specifically promote straight line Garden Marks and Single Origin Estate teas of Sri Lanka, the "Ceylon Speciality Estate Teas of the Year" competition was launched in Japan by the Sri Lanka Tea Board and the private sector tea trade in consultation with the Japan Tea Association recently. The event was well accepted by the Japanese tea connoisseurs and the tea traders alike, which has given a tremendous momentum to Ceylon Speciality Tea in Japan.
This speciality tea promotion project was launched for the first time by the Sri Lanka tea industry in USA during the year 2000, and again in 2002 and 2008. This is the fourth occasion that the event has been carried out, and it is the first of its kind to be held in Japan.
"The Ceylon Speciality Estate Teas of the Year competition was launched with the objectives of promoting speciality tea in international markets whilst recognizing and rewarding Sri Lankan tea factories for excellence in manufacturing and to encourage them to continuously manufacture and market top quality single origin unblended teas", said Sri Lanka Tea Board, Director Promotions, Hasitha De Alwis. "The main aim of scheduling the Ceylon estate tea of the year competition in Japan was to take advantage of the tremendous popularity of the tea houses concept in that country and since both straight line Garden Marks and Single Origin Estate teas show a good potential of marketing directly to end-consumers," he said.
This event was considered extremely important to rekindle the popularity of Ceylon tea amongst the Japanese consumers especially since Japan is considered as the most sophisticated tea market in the world with great opportunities for expansion with Ceylon Tea has been synonymous expensive garden fresh speciality teas. It was intentionally with excellent quality and taste for scheduled just prior to the FOODEX 2010 exhibition in Japan in over a century order to effectively utilize it as a platform to promote the winning teas, as well as to advertise the sales propositions. The Japan FOODEX Exhibition is undisputedly considered as the largest food and trade exposition in the entire Pacific Rim where approximately 100,000 business visitors gather once a year.
The competition was advertised to the trade through the tea brokering community last year. A total of 441 entries were received for the agro-climatic tea categories as well as the newly introduced innovative speciality tea category - which added a new dimension to this year's competition. The entries selected for final judging were of a very high standard and it was a tough task for the expert panel of independent tea-tasters from the private sector - jointly with the Sri Lanka Tea Board - to go through the samples in December 2009 and short-list the entries which were then dispatched to Japan for the final competition. 70 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
40 entries obtained eligibility to participate in the final contest in Japan. All the winning speciality teas were displayed at the Sri Lanka Tea Board booth within the Sri Lanka pavilion at FOODEX 2010. The winning teas were canvassed to Japanese buyers and customers during the entire exhibition period from March 2 to 5. The project itself had also been publicized to members of the Japanese tea trade several weeks before the competition.
An eminent panel of specialized tea-tasters from Japan supported by a couple of members from Sri Lanka evaluated the finalists to select the winners of the competition during March 2010 in Tokyo, Japan. Each of the seven agro-climatic regions as well as the innovative category had a Gold winner (first place), Silver winner (second place) and Bronze winner (third place). All the winning teas and runners-up of the 40 entries which were sent to Japan were included in the sales offer that was allocated to the highest bidders. Due to the tireless dedication of the Sri Lanka team, the majority of the winning teas were sold at record prices.
The highest bid went to Lovers' Leap, OP at Japanese yen 24,000 (Sri Lankan Rupees 30,000) per kilo purchased by Musica Tea House in Osaka. The gold winner of the Innovative category, "Jayachakra" of Lumbini Tea Gardens also received a record price of Japanese Yen 20,000 (Sri Lankan Rupees 26,250) per kilo from F.T.I. Corporation in Kobe. The sales bids of the Japanese buyers for the winning teas in each of the categories were opened on March 5, and the proceeds amounting to 3.55 Million Yen (Rs.4.6 Million) will be utilized for charitable projects involving the welfare of families in the tea sector.
The winners of the competition were presented with Gold, Silver and Bronze awards at the Awards Ceremony graced by the Ambassador of Japan Kunio Takahashi on May 5 at the Hotel Ceylon Continental in Colombo amidst a gathering of eminent personalities from the tea industry.
The competition provided immense promotional mileage for Ceylon tea in Japan whilst helping the popularization of winning garden marks among tea connoisseurs who patronize speciality tea houses/tea shops in "the land of the cherry blossoms".
While the project re-emphasized the power of close partnership between the public and private sector, it is hailed as a model case study of sustainability for a Corporate Social Responsibility program in the tea industry since the proceeds go towards funding several projects relating to the welfare of tea plantations/estate workers.
The Tea Board is making arrangements to hold the next speciality tea promotion event in the Russian Federation during 2011.
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Sunday Observer – May 9, 2010 DOMESTIC POTATO INDUSTRY AND ITS SUSTENANCE
By: A.R. Wickramaratna,
Until the early 1990s, potatoes were grown and consumed in Europe, North America and countries of the former Soviet Union. Since then, there has been a dramatic increase in potato production due to the demand in Asia, Africa and Latin America.
At present, of the world potato production, which is 330 mm mt in 2008, 52 percent is produced by the developing countries.
China is the biggest potato producer (74 mm mt in 2008), followed by the Russian Federation and India. Europe takes the first place in terms of per capita consumption of potatoes and it is about 3 times higher than the average world per capita consumption of potato, which stood at 31.4 Kgs.
The per capita consumption of potato in Asia is about 24 Kgs with the highest per-capita in China. The corresponding figure in Bangladesh and India is about 24 Kgs, 17 Kgs respectively.
However, since there are many varieties of alternative tubers such as sweet potato, manioc and other non traditional yams and also rice being the staple food, the per capita consumption of potato in Sri Lanka remains low and at present it remains about 7 Kgs per annum.
The cultivation of potato in Sri Lanka dates back to the period of Dutch and since then potato has been cultivated in several districts where the climate and the soil type is conducive for this crop.
At present, there are about 30,000 growers involved in potato cultivation, of which 80 percent occupies less than 0.4 ha (1 acre). Potato is cultivated mainly in the Badulla and Nuwara-Eliya districts in an extent of 3982 ha (2008/09). In addition, the cultivations also carried out in other areas such as Kalpitiya in Puttalam, Hanguranketha and Jaffna.
The cultivation in these areas is confined to around 40-50 ha. But there has been a drop over the past few years due to declining profitability as against the rising cost of production. For instance, the extent under cultivation was around 5500 ha in 2004/05 has declined to 3982 ha by 2008/09.
This drop has taken place in both Badulla and Nuwara-eliya districts. The cultivation in other districts also shows a slight decline over the past years. However, with the eradication of terrorism, in the North, there is a potential to increase potato cultivation in the Jaffna district in the future.
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Cost of Production The average cost of production of potato greatly varies due to the type of seeds and other agronomic practices. Assuming the seed cost is Rs.8750 per 50 Kg and productivity is around 6000 Kgs per acre, the cost of production is estimated at around Rs.292,000. The locally produced good quality seeds are limited and it caters only for 10-15 percent of the seed requirement.
The price of good quality imported seeds is 30-35% higher than the locally produced seeds. It is also estimated that 2500 Kgs of seeds are required for one acre. This shows that the seeds itself accounts for about 55-60 percent of the total cost.
Most of the farmers (65-70%) therefore tend to use the locally produced seeds or the seeds obtained from the previous harvest. The quality of these seeds is quite lower and it leads to reduce the production. This mainly attributed to the low profitability of potato growers.
Seasonality and the Cultivation Pattern Potato cultivation in the Badulla district, particularly in Welimada, Bandarawela, Uva-Paranagama and Kappettipola areas is done in Yala and Maha seasons. The cultivation in Yala takes place in May - July and the yield is ready to be harvested by the end of September - November.
The Maha crop in the same district starts by the end of November and is harvested by March-April in the following year. The potato cultivation in Yala in Nuwara eliya starts by January - February and the harvest is ready by April.
The Maha cultivation in Nuwara eliya is limited and is undertaken only in certain locations in the district. The cultivation in these areas is ready to be harvested by early October and continued until early December.
On the whole, the domestic potato production is available during the months of March-April and September to early December. The highest production is expected in the period from September to October, which is about 35,000-40,000 mt. Of this harvest, 10-14 percent is used as seed potatoes. Therefore, the actual quantity available for consumption remains around 28,000-35000 mt.
Domestic Production and Import The domestic production of potato has decreased by 24 percent from 2005 to 2007. In the meantime, there has been a significant increase in the import of potato. The quantity imported in 2009 was more than two fold compared to that of 2005.
This has been mainly attributed by the reduction of taxes on the imported potato. After potato was named as an essential food item in 2007, it was subjected to a Special Commodity Levy (SCL) under the Special Commodity Act. A levy of Rs.20 per kilogram was then imposed on the imported potato.
From November 2009, this has been reduced to Rs.10. However, before 2007, the imported potato was subjected to Custom Duty of Rs.20 per Kilogram and all other taxes such as PAL, SRL and VAT.
The custom data reveals that the import of potato has taken place in different quantities throughout the year. Out of 95,000 mt of potato imported in 2009, the highest quantity of 13217 mt has been imported in December. This was mainly to maintain a reasonable price in the market during the festival season. The 73 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
import was also high in January, June and July as the domestic production remained low during these months.
The lowest quantity of 1580 mt of potato has been imported in October. This is due to the harvesting of the Yala crop. However, sometimes, the imported quantities are available in the market during the harvesting season which prevents a good price for the local producers.
Key Issues * The potatoes which are locally produced are available in the market mainly during two seasons; March- April and September-early November (There may be slight variation due to seasonal effect). The importation of potato should be reduced during these seasons.
* The increasing cost of production reduces the margin of the growers. The high cost of seeds is the main cause for this.
* The shrinking of the profit margin of growers is also associated with the price of imported potato in the market. The tax reduction has encouraged the import and discouraged the cultivation.
The importation of potato could be done during the months of January, February, June, July, August and December to minimize the negative impact on the domestic growers. During the harvesting seasons, the balance requirement can be imported to ease the consumers.
The actual quantity to be imported should be determined based on the per capita consumption. The extent under cultivation be increased by 7500 ha by 2018 on an average of 940 ha of new lands per year from 2011 onwards.
This could be done mainly in areas like Jaffna, Kalpitiya and in the Kandy district.
The imports have to be reduced by 7500 mt per year from 2011 onward to encourage the growers to invest in the cultivation.
The domestic seed production has to be strengthened by providing required infrastructure and the human resources to the Potato Research Station, Seetha-eliya.
The writer is Assistant Director, Department of National Planning.
74 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Tourism
75 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily Mirror – May 3, 2010 TOURISM SOARS WITH VICTORY IN LANKA
By Ruchika Kher After over a quarter century of civil war, Sri Lanka is finally witnessing an upswing in tourism. The island with abundant natural beauty is luring visitors, particularly from India, not just with sun, sand and sea but also with new attractions like Ayurveda and adventure. "The tourism figures in the first quarter have doubled in comparison to last year, with nearly 16% of it being tourist arrivals from India," said Dileep Mudadeniya, managing director of the Sri Lanka Tourism Promotion Bureau.
"After the historic defeat of terrorism, the tourism industry has been on the rise with increased interest from foreign tourists as well." Since 1983, the threat of attacks by the Liberation Tigers of Tamil Eelam (LTTE) loomed, as the separatist organization fought for an independent Tamil state in the north and the east of the island nation. The Sri Lankan military defeated the Tamil Tigers in May 2009. The insurgency caused significant hardships for the people, environment and economy of the country, with over 80,000 people officially listed as killed during its course. Now with things promising to come back to normal, the tourism industry is looking up. "Tourism is finally seeing an upward trend. I've been working non-stop since December. Usually I used to work for just 18 days a month, but after the war ended there has been an upswing in tourists and thus more work for me," said Wije Manawadu, secretary general of the National Tourist Guides organization. "We are looking at 2011, which we call the year of Sri Lanka. We are focusing on bringing close to 1.5mn tourists to the country by that time. At the moment we have close to 14,500 hotel rooms in the country. The government is trying to bring it up to close to 50,000 by then," he added.
Developmental programmes and marketing strategies are being worked out to lure as many foreign visitors as possible. "Vigorous promotions in terms of trade and consumer fairs will take place in our key markets; this includes Britain, the Middle East, India, France, Germany and China. The communications campaign will also be launched in these markets," said Mudadeniya. "Traditionally the product offering has been restricted to sun, sand and sea. However, now, new product offerings are being developed to improve the experiential component of tourism. They include Ayurveda, wildlife, eco-tourism and adventure tourism, to name a few," said Mudadeniya.
Even tourists are happy to be in the country that boasts of beautiful, clean beaches, tempting water sports, breathtaking mountains, bounteous rivers and waterfalls and an abundance of wildlife. "I'm here for the first time and I have to say that it's one of the most beautiful places I've visited. It's hot here no doubt, but the scenic beauty is breathtaking. I'm enjoying my time here," said Linda Christopher who is from London and staying at the Mount Lavinia hotel, almost 12km from Colombo. Jasmine Shankar from India said: "I had planned to come to Sri Lanka with my husband four years ago, but everyone discouraged us because of the terrorist problem here. I'm glad that finally now, when it's over, we have got a chance to come here and see the place. It's beautiful." In order to give a boost to tourism, the country is also pinning its hope on the International Indian Film Academy (IIFA) Award that will take place in Colombo from June 3-5. The number of visitors is expected to increase manifold during the event. "This event will help us change our image internationally and will confirm that we can host an event of a big magnitude," said George Michael, secretary, tourism ministry. (www.gulf-times.com) 76 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The Island – May 4, 2010 KALPITIYA TOURISM PROJECT IN SPOTLIGHT
By Mario Andree
Tourism is gaining at a rapid pace and the recent past has seen some positive indicators for the boost which Sri Lanka hopes to achieve by 2016. In order to showcase another beautiful Sri Lankan spot, as well as increase room capacity, it is necessary to expedite the development of the Kalpitiya Integrated Tourism Resort Project (KITRP) at the Dutch Bay Islands, an official said. Therefore, six investors in Kalpitiya have been requested to set up two hoardings on their lands in Kalpitya, which will display the layout of their hotel as per their concept, according to Sri Lanka Tourism Development Authority (SLTDA).
They will also construct an abstract model of an accommodation unit (guest room/villa/chalet) to scale, using the materials anticipated for the construction of their hotel. This presentation will showcase the new designs and concepts being developed by Sri Lanka’s tourism industry, as well as help monitor the quality of workmanship and standards being followed prior to the final approval of the Sri Lanka Tourism Development Authority for construction, SLTDA data showed. These model units will be constructed before the end of this year with the investments from; Heritage Reserves (Pvt) Ltd, Dutch Bay Resorts, West Agro Property Developers (Pvt) Ltd, Palm Lanka Holdings (Pvt) Ltd, M. S. A Sham Saudeen Development & Reality (Pvt) Ltd and Alpha Tours (Pvt) Ltd, data showed.
Also, the SLTDA said many resorts in the Eastern province are well in progress and construction of the washrooms and changing rooms in the Passikudah Resort commenced last month and will be completed in August. The Environmental Impact Assessment (EIA) Report for the Resort was published for public comments until April 15. Upon approval of the EIA Report by the CCD, work of the resort will begin. Approval has been granted by the CCD for a pilot hotel project consisting of 40 chalets. The Environmental Impact Assessment Report for the development of Kuchchavelli is being carried out. Investors for the development of 48 hotels sites have been selected; the land will be allotted accordingly. Around 150 acres will be developed as a championship golf course.
The Project Implementation Unit for the East Coast Action Plan identified sites for the following development projects,
= Observation platform to view elephants at Lahugala = Observation platform to view birds at Kumana
SLTDA also awarded star ratings to nine hotels this year during the period of January 1 to April 30. Four hotels received 1-star category under the programme; they were Full Moon Green Hotel Seeduwa which has 30 rooms, Kandyan Reach Hotel Kurunegala with 23 rooms, Randiya Hotel Moratuwa with 10 rooms and Emarald Bay Induruwa with 50 rooms in the capacity. Also three hotels were awarded two stars which are Yapahuwa Paradise Yapahuwa with 20 rooms, Browns Beach Hotel Negombo with 140 rooms, Induruwa Beach Induruwa with 90 rooms in their capacity. The Grand Hotel Nuwara Eliya and Hilton Residencies Colombo were awarded four stars.
77 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Exports
78 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 3, 2010 INCREASE IN TEA EXPORTS, REVENUE
SURPASSES RS.12 B IN FEBRUARY:
Harshini Perera
Tea export for the first three months of this year has had a 50 percent growth compared with the same period last year.
The increase of 50 percent in tea Tea production (including green tea) export is seen as a result of the increased production for the same March January/March Elevation 2010 2009* 2010 period, Sri Lanka Tea Board Kgs Kgs Kgs Chairman Lalith Hettiarachchi told High Grown 4,982,302 4,699,362 17,414,871 Daily News Business. 13,988,738 Medium Grown 3,737,044 3,241,501 11,684,034 8,395,953 He said due to the considerably high Low Grown 11,779,008 11,072,286 prices in the international market, 44,173,165 27,394,758 the export revenue for tea has also Total 20,498,353 19,013,149 73,272,069 49,779,450 increased.
A total value of Rs.10,033,891,354 was earned in tea export in January, this year. Russia and UAE have been the major buyers of Ceylon tea in January.
A total amount of Rs.12,174,265,465 was earned from tea exports in the month of February.
The total reported production of tea in Sri Lanka in March 2010 amounted to 20,498,363 kgs as against 19,013,149 kgs produced during the corresponding month last year. This shows a 7.8 percent increase, Sri Lanka Tea Board announced.
The total tea production during the first quarter of January to March 2010 amounted to 73,272,069 kgs as against 49,779,450 kgs produced during the corresponding period last year which shows a 47.2 percent increase.
All the categories of tea including high grown, medium grown, low grown and green tea have had an increase in March.
79 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 7, 2010 GEM EXPORTS BOUNCE BACK AFTER RECESSION
EARNINGS RISE TO RS 14.92 B UP TO APRIL:
Charumini De Silva
Gem exports during the first four months of this year showed a growth of 31 percent compared to the corresponding period of 2009.
It is not enough to compare statistics of 2009 and this year's first four months since the industry had to face a difficult time due to the global financial downturn, National Gem and Jewellery Authority (NGJA) Deputy Director General, Ajith Perera told Daily News Business.
However, compared to the statistics of the first four months of 2008 this year shows a positive trend as the negative growth has reduced remarkably. "We expect by the end of May we will continue to record a positive growth," he said.
Perera said there is a 24 percent increase in gem exports by the end of April this year. Re-exports of diamond accounted a growth of 36 percent. Jewellery exports increased by four percent and the total of these exports showed an increase of 31 percent compared to the corresponding period.
The stimulated total earning of the country as at end of April was Rs.14.92 billion compared to the 11.36 billion in 2009. However, it is a drop when compared to Rs.16.39 billion recorded in 2008. There was a change in the hierarchy of the top ten gem export countries. Thailand has became the first beating the USA into second position. The rest were followed by Switzerland, Hong Kong, Malaysia, India, Singapore, Japan, Germany and a new market Belgium.
The Deputy Director General said the new market in Belgium has much potential. India entering into the Sri Lanka's top ten gem exporting countries is encouraging.
"Although China is also a good market, it has still not made a significant remark to be in the top export countries. NGJA expects China will be in the top ten countries".
"It is important to identify and penetrate particular markets such as Belgium. We are also focusing on the Indian and the Chinese markets foreseeing the possibilities," he said.
80 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Stock Market
81 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 3, 2010
CSE TRANSACTION COST TO BE REDUCED: SEC TO IMPROVE CSE STRUCTURE
ENCOURAGING DECISION FOR INVESTORS:
The Securities and Exchange Commission (SEC) will improve market microstructure of the Colombo Stock Exchange (CSE). Securities and Exchange Commission (SEC) Director General, Channa de Silva told Daily News Business that this was an encouraging decision for the investors and fundamental changes like this were required.
The crossing threshold will be increased from Rs.10 million to Rs.20 million. The tick size on transactions will be reduced to 10 cents across the board.
The threshold for negotiable brokerage will be reduced from Rs.100 million to Rs.50 million. The minimum brokerage floor will be 0.15 percent.
The SEC Cess, CSE fees, Central Depository System (CDS) fees and Government levy are to remain unchanged as per the existing structure for negotiable trades. Director General, Channa de Silva De Silva said that the two band fee structure which exists at present will be removed.
There will be one band for transactions up to Rs.50 million. Once the change is effective the total transaction cost up to Rs.50 million will be 1.02 percent.
The Director General said the biggest beneficiaries of this reduction would be investors transacting less than Rs one million as at present whose effective reduction is
28 percent, whilst the reduction for transactions over Rs one million at present is over 16 percent.
It was further decided to revisit and review the changes towards the end of the year. 82 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The changes to the market microstructure of the CSE including transaction costs will be active with effect from July 1 this year, he said.
The reduction of the high transaction costs was a combined effort of the Securities and Exchange Commission (SEC), the Colombo Stock Exchange (CSE) and the Central Depository System (CDS), de Silva said.
The Director General said that the reduction of the transaction costs will show a rapid increase in the trading and it will also make the CSE more attractive.
Reduction of the transaction cost was the first step and the SEC would like to move further towards a low cost structure.
This regulatory reform was very meaningful as the capital market is performing outstandingly and the country’s economy is stabilizing in a faster manner.
With the reduced transaction cost the SEC expects an increase in the number of local and foreign investor participation in the CSE and these developments in the capital market will affect the country’ economy very favourably, he said.
SEC with the CSE and market stakeholders decided the above changes at its 257th Commission Meeting held on April 23 this year.
CdeS
83 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 3, 2010 INDICES CONTINUE TO POST DECENT GAINS Stocks continued to rally on anticipated strong earnings with ASPI closing up substantially compared to last week. The ASPI (All Share Price Index) closed the week at 4188.9 points up by 67.2 points or 1.6 percent compared to last week, while the MPI (Milanka Price Index) picked up by 16.6 points or 0.4 percent to close at 4712.9 points on Friday.
KHZ placed highest in terms of activity levels for the week helped by few crossings on the counter. The high cap conglomerate added over Rs.1.0 billion to the week’s turnover, with a trading a volume of 5.5 million shares. JKH saw its share price close unchanged Week on Week (WoW) at Rs.185.25 per share on Friday.
Raigam Wayamba Salterns (RWSL) initial public offer of 80 million shares at Rs.2.50 a share which was oversubscribed on the opening day of March 23, came into listing on April 29 the counter gained substantial interest on its opening day on Thursday which generated a contribution of Rs.268.9 million for the week.
The share price witnessed an increase of 72.0 percent to close at Rs.4.30 per share, becoming the week’s second largest price gainer. The property firm Overseas Realty (OSEA) contributed Rs.432.7 million towards the turnover, with the bulk of this amounting to Rs.389.1 million coming on Thursday. During the week 25.7 million OSEA shares traded at a highest price of Rs.18.00 and a lowest price of Rs.15.75 before closing the week at Rs.17.50, up 9.4 percent on Friday.
Activity remained moderate this week in spite of the reduced number of trading days this week, with JKH’s trades boosting turnover levels. Total turnover for the week amounted to Rs.6.8 billion this week whilst the average daily turnover this week stood at Rs.1.9 billion, showing a 3 percent decline in turnover comparing last week’s average daily turnover of Rs.2.0 billion.
Foreign investors were net sellers this week amounting to Rs.1.3 billion. Foreign purchases showed a 27.6 percent decline to stand at Rs.842.4 million, while foreign sales witnessed a similar 27.4 percent decline to amount to Rs.2.1 billion. Foreign participation stood at 21.8 percent of total activity.
Volume-wise highest traded stocks this week were, Raigam Salterns, Nawaloka, Overseas Realty, Janashakthi Insurance and Colombo Land.
84 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Expectations of improved earnings to push market up
The week ended 30.04.10, saw the ASPI move 67.2 points, and the MPI 16.6 points.
Our prediction of the ASPI reaching 4200 during this week fell short by 10 points, due to a holiday dragged week. However, we predict the ASPI to move beyond the 4200 mark with the March earnings season round the corner. With the expectation of improved corporate earnings; we expect the bourse to be in “Green” for the next couple of weeks, with occasional “profit taking”.
The information contained herein has been compiled from sources that Acuity Stockbrokers (Private) Limited (ASB) believes to be true and reliable but we do not hold ourselves responsible for its completeness or accuracy. No matter published herein create any liability of any kind on ASB. All opinions, views, findings and conclusions included in this report constitute ASB’s judgment of this date and are subject to change without notice.
ASB has the sole copyright for this report and the information and views contained cannot be reproduced or quoted in part or whole in any form whatsoever without the written permission from ASB.
85 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The Island – May 5, 2010
TURNOVER AND INDICES DOWN CSE EASES, PROFIT TAKING ON VALLIBEL, INTEREST IN NAWALOKA
The Colombo bourse eased off yesterday with a turnover of Rs.1.45 billion, down from the previous day’s Rs.3.27 billion, with both indices moving down – the All Share by 3.70 points (0.32%) and the Milanka by 3.63 points (0.08%) with the bulk of the turnover contributed by Horana Plantations, Vallibel Finance and Nawaloka Hospitals with 99 losers running ahead of 50 gainers.
Vallibel, whose recent public offer at Rs.22 a share was heavily oversubscribed, began trading yesterday at a high of Rs.34.25 and a low of Rs.29.50 gaining Rs.8.00 to close at Rs.30 on 4.3 million shares traded.
The share opened at Rs.30, moved up to a high of Rs.34.25 before closing with a large number of small parcels done during the day, brokers said indicating that many investors getting small allotments had taken profit.
Horana Plantations. A member of the Ceylon Theatres Group, which contributed the day’s top turnover of Rs.251.2 million saw nearly 8.1 million shares done between Rs.31 and Rs.33.25 losing Rs.2.25 to close at Rs.31.50.
"There were several large trades at a price of Rs.31 with around eight million shares done mostly in large parcels," Prashan Fernando of Acuity Stockbrokers said. "There were no crossings and all trades were done in the open market."
Nawaloka Hospitals too attracted major interest with nearly 25.3 million shares done between Rs.4.90 and Rs.5.75 gaining 60 cents to close at Rs.5.75 generating a turnover of Rs.134.2 million.
Brokers said that the interest in Nawaloka was largely due to that company’s 25% holding of Galadari Hotels where a pending big deal is rumored.
Distilleries saw over 0.8 million shares done between Rs.124 and Rs.127 gaining 75 cents to close at Rs.126. There was a crossing of 0.8 million shares at Rs.127 of these counter, brokers said.
JKH moved up 75 cents to Rs.192 trading between Rs.186.25 and Rs.194 while HNB where two crossings at Rs.237.50 (99,000 shares) and at Rs.240 (44,000 shares) were reported lost Rs.2.50 to close at Rs.2.40.
Dialog with nearly 5.3 million shares traded between Rs.7 and Rs.8 gained 25 cents to close at Rs.8 with brokers reporting that whatever shares were on offer were mopped up shortly before the market closed at prices ranging from Rs.7.50 to Rs.8.
"Dialog moving up at the end of the trading day helped the indices to recover ground lost earlier in the day," a broker said.
86 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The Island – May 6, 2010 STOCKS CLOSE 0.3% HIGHER
Stocks closed 0.34 percent higher Wednesday as investors scrambled for Nawaloka Hospitals shares after it sold a large stake of Galadari Hotel which had hurt the hospital group’s balance sheet earlier, brokers said.
The All Share Price Index closed at 4,219.76, up 14.25 points while the Milanka index of more liquid shares gained 0.79 percent (37.59 points) to close at 4,786.19.
Turnover was 2.83 billion rupees, according to stock exchange provisional figures.
"With the sale of the Galadari Hotel shares, Nawaloka Hospitals took some weight off its balance sheet and also in terms of financing costs," Nikita Tissera, research manager at stock brokering house, SC Securities said.
"The news of Nawaloka’s capital gain in the process was well received by the investors."
Galadari Hotels, a five star hotel in Sri Lanka’s capital Colombo, closed at 34.00 rupees, down 4.00 with 15.7 million shares traded, and Nawaloka Hospitals closed at 5.75 rupees, up 25 cents with 61.5 million shares changing hands, Wednesday.
Brokers who did want to be named said the Nawaloka group, controlled by the Sri Lanka’s Dharmadasa family would have made a capital gain near to a billion rupees from the Galadari sale.
The Galadari parcel was believed to have been bought by a foreign buyer, brokers said.
Over 5.0 million shares of E-Channeling changed hands Wednesday. It closed at 14.00 rupees, up 1.00.
John Keells Holdings closed at 190.25 rupees, down 1.50, and Distilleries Company of Sri Lanka closed at 126.00 rupees, up 25 cents.
Commercial Bank closed at 237.25 rupees, down 1.75, Hatton National Bank closed at 237.75 rupees, down 2.25, Sampath Bank closed at 281.25 rupees, down 5.50 and Seylan Bank closed at 54.00 rupees, up 50 cents.
Sri Lanka’s largest celco, Dialog Telekom, a unit of Axiata, Malaysia, closed at 8.50 rupees, up 1.00 with almost 24 million shares traded, and fixed line operator Sri Lanka Telecom closed at 38.00 rupees, up 1.00. -LBO
87 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Sunday Times – May 9, 2010 ACTIVITY LEVELS HIGH IN CSE THIS WEEK
By Duruthu Edirimuni Chandrasekera
The Colombo Stock Exchange (CSE) increased its website bandwidth capacity to 150 mega bites (MB) per second on Thursday, to meet the increasing website hit demand, amidst witnessing a host of activity this week.
“We initially increased the CSE website bandwidth last year November to 10 MB from 1.5 MB earlier. For the last one month alone there was an increase of more than 300% in hits, according to reports from e-futures, our Internet service providers which is why it had to be increased again,” Tushara Jayaratne, Manager Business Development CSE said. He said that there were some 20 million hits within last week. Analysts said that it is a timely move as the hits on the CSE site are ever increasing due to the high activity levels.
This was boosted by large deals of Commercial Bank (CB) and Janashakthi Insurance. A Janashakthi source told the Business Times that the company may even consider applying to enter the main board at CSE from their current Diri Savi board, now that Janashakthi’s free float is much higher. Brokers said that the Bank of Ceylon (BOC) bought some of these shares along with some high networth traders when Janashakthi owners, the Schaffter family reduced their stake to below 80%.
Sri Lanka Insurance Corporation (SLIC) on Monday sold down 2% of their Distilleries stake in keeping with the government’s Mathata Thitha (halting consumption of alcohol). SLIC sources said that they will be ‘gradually selling their stake in Distilleries’. Some time ago Dr. Nalaka Godahewa, Managing Director SLIC told the Business Times that the government policy is ‘full stop’ to alcoholism (Mathata Thitha) and that SLIC will only be considering DCSL as an ordinary investment.
Tuesday saw the World Bank’s private sector investment arm, International Finance Corporation sell 2% in CB in two large negotiated deals with Aberdeen Fund picking it up, thereby upping its total stake in CB to over 5%. Vallibal, whose recent public offer at Rs.22 a share was heavily oversubscribed, began trading on Tuesday, with 4.3 million shares changing hands. Wednesday saw the All Share hit an all time record high of 4,260.11 points during mid-day boosted by James Finlays Ltd in the UK increasing its shareholding in its Sri Lankan subsidiary Finlays Colombo PLC by 1.64% to 85.82%.
British American Technologies (BAT) purchased 11.62% of E-Channeling with brokers saying that London Stock Exchange (LSE) owned Millennium IT gradually sold their 20% stake in this firm to BAT. Wednesday saw Nawaloka Hospitals selling 13 million out of the 40 million it had in Galadari Hotels. “This is about 23% of their holding in the hotel and the Galadari Brothers, who are majority owners of the hotel may have acquired some quantity,” one broker said. Thursday also saw Environmental Resources Investment purchasing 21.48% of Ceylon Leather Products. Interest in the Nawaloka Hospitals continued on Thursday with about 18 million shares trading hands. Several corporates, including plantation and tile firms released exceptionally good results during this week.
Analysts said that bargain hunters would start establishing positions now in anticipation of the good results expected in corporates.
88 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Education
89 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Daily News – May 6, 2010 DIRECTING EDUCATION ON A NEW PATH
Prof. Dayantha Wijesekera
At a time when there is severe competition to enter the Sri Lanka Conventional Universities, cost being prohibitive to pursue degree programs overseas, economic reasons, aptitudes and skills for technical education, there are many opting to pursue foundation programs of study, immediately after the GCE ‘O- level’ in lieu of GCE ‘A-level’ qualifications to enter reputed degree programs of studies both locally and overseas.
University entrance Looking back into the past, entry to Universities has been mainly through University entrance examinations, High School Certificate (HSC), or GCE ‘A-level’. But since the early 1980s with the establishment of the Open University (OUSL), Foundation Courses have been conducted in Sri Lanka, in science, engineering technology, humanities and social studies respectively. These are for students most of whom i) did not attempt GCE ‘A-level’ examination,
ii) did not achieve the required GCE ‘A- level’ results to enter the conventional University system,
iii) pursued other certificate/ diploma level courses considered suitable to enter the first year or even the second year of the degree courses.
In addition to the implementation of the OUSL Foundation Courses from 1980, since of late, the entry to overseas degree programs could be pursued a). through Skills should be promoted to cater to modern job market. Foundation Courses conducted in Sri File photo Lanka by the respective Universities and / or their accredited awarding bodies, b). through the National Vocational Qualifications (NVQ) system to the Colleges of Technology leading to their Diploma, and c). thereafter proceed to the University of Vocational Technology (UNIVOTEC) for the Bachelor of Technology (B. Tech) degree.
Overseas degrees However, those who aspire to obtain reputed overseas degrees for various reasons, could initially with GCE ‘O-level’ results pursue the respective Foundation Courses locally, and even further levels and thereby obtain an overseas degree eventually by studying most of the years or fully in Sri Lanka. 90 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
There is a concern however about Foundation Courses vis a viz GCE ‘A-level’ completion.
The well designed Foundation Courses have been so designed, that relevant subject material up to GCE ‘A-level’ or even higher are being taught and with more modules such as soft skills, IT skills and language skills all of which are relevant and truly a foundation to the aspired degree program.
There is a misconception however that only by pursuing the GCE ‘A-level’, maturity could be achieved by two more years in a secondary school.
For students who are confident on obtaining the required GCE ‘A-level’ results and being selected from the district or on the national merit quota to conventional State University system, the two years of study for GCE ‘A-level’ at the secondary school would definitely contribute not only for maturity but also deep satisfaction in being selected to be an undergraduate. But those who do not get admission would be mature but frustrated specially when they notice their classmates having pursued the Foundation Course route (two years duration same as that for the GCE ‘A-level’ in a tertiary level education Institute) ending up with a valuable employable degree.
Different avenues Hence, this article is to encourage all those who are confident to enter the conventional University system, to pursue their studies in the traditional path conscientiously, but for those specially with other aptitudes, economic reasons, lack of confidence to secure the required GCE ‘A-level’ results for a conventional university, to consider recognized Foundation Programs available now mainly in three different established avenues through
1) OUSL for a wide range of disciplines
2) CoTs for Technical Education and the UNIVOTEC
3) Private overseas degree program providers in selected areas.
91 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
Agriculture
92 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
The Island – May 3, 2010 AGRICULTURAL PRODUCTION CAMPAIGN TAKES ROOT
By Mario Andree Sri Lanka’s agricultural development projects are gathering pace with fresh efforts to achieve self-sufficiency and to export local products.
This programme is supported with a total budget of 3,664.46 million, the Department of Agriculture (DOA) data revealed.
The programme was launched in 2006 and is in progress.
According to the department, Sri Lanka hopes to reach 100 percent self-sufficiency with a production of three million tonnes of rice, mainly through increased productivity with an output of 5.44 tonnes per hectare, ensuring year-round availability by 2010.
There also efforts to reduce the per-capita wheat flour consumption by 20 percent by the end of this year, said a DOA press release.
Last year’s Maha season total paddy production was 2,383,989 metric tonnes while the Yala season output reached 1,267,684 metric tonnes.
This year’s rice production development efforts are being supported by a budget of Rs.436 million, according to DOA data.
The DOA indicated that Sri Lanka aims to be self-sufficient in other field crops as well to cut imports. Sri Lankan output currently meets 50 percent of chilli, 100 percent red onion, 40 percent of big onion and 30 percent of maize of the domestic demand.
It is also focusing on producing 100 percent of the required Soya beans, green grams, black grams and kurakkan.
The plan is to increase the output of quality raw materials required for animal feed and human food industries, fulfilling domestic needs.
Relevant hybrid varieties and appropriate technologies to suit different climates in Lankan provinces are being introduced.
The budget for the programme this year would be 104.20 million, according to DOA data.
The DOA also revealed that they are hoping to achieve a sustainable production growth rate of one percent per year by the end this year in the vegetable and tuber crops sector.
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It is also targeted to achieve desired national nutritional standards through increased per-capita availability and exports.
The DOA said the increase in production will also boost farmer income through value addition.
The programme is supported by a budget of 84.79 million this year, DOA data shows.
The DOA also aims to achieve self-sufficiency in potatoes through increased productivity by the end this year. It is implementing plans to increase share of domestically produced potato from the current level of 3.7 to 5.1 kg /capita by the end this year.
The potato production is to be strengthened by a budget of 8.99 million this year, DOA data shows.
The DOA is also positively looking at fruit production.
According to the DOA release, the aim is to increase the current level of fruit production to one million tonnes by 2010 through a growth rate of one percent per year to meet domestic requirements and export demand.
This would be achieved by developing environment-friendly and economically viable production and processing technologies at commercial farms.
The support budget for this programme this year would be 19.96 million, according to DOA data.
Floriculture plays a key role in bringing more foreign revenues to the country and the DOA hopes to increase export earnings by developing this industry through research and development efforts.
The DAO continues to support research to generate new varieties, improved agronomic and post-harvest practices in addition to providing better infrastructure facilities for small and medium scale farmers.
The DOA would assist this programme this year with a budget of 81.60 million.
In addition to the budgets for the crops, the DOA is providing a budget of 135.00 million this year to develop the human resources in the sector.
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ICT
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The Island – May 5, 2010 ICT CONFERENCE AND EXHIBITION IN JAFFNA THIS WEEK
The Information and Communication Technology Agency of Sri Lanka (ICTA) has focused its attention on further improvement of the standard of life of the people of the North. As one of the steps in this regard, ICTA has organized a workshop and an exhibition at the the Jaffna library this week.
ICTA said that this event will be conducted to disseminate information on projects that will benefit especially farmers, women, children, small scale entrepreneurs as well as differently abled persons. The workshop will be held today (May 5) and the exhibition will be on tomorrow (May 6). A special focus at this event will be creating awareness of projects initiated by the e-Society programme of ICTA.
On the first day of the event, a training workshop will be held for selected CBOs and Nenasalas in the District. On the second day, May 6, the public will be able to benefit from the ICT exhibition open from 9am to 5pm for which entrance will be free.
At this exhibition web-sites including www.goviya.lk ; www.navagoviya.org; www.smeguide.lk ; www.lankasign.lk ; www.happylife.lk ; www.firstaider.org, special CDs and other ICT facilities will be used for the awareness creation and dissemination of information and advice to the public in an attractive manner. The subjects dealt with can be categorized under those focusing on farmers and agro-industries, women and children, small and middle level enterprises, students, differently abled persons, and services useful to everyone.
Farmers and agro industries The subjects explained to the public at the exhibition on May 6 with special interest to famers and agro industries will include cultivation of brinjals, Bombay onions, tomatoes, paddy, papaw and Anthurium and pest control.
The CD called Anthurium story describes Anthurium varieties, cultivation practices, propagation techniques, pest and diseases, post harvest handling, Information is presented using video clips, digital photographs, pictures, illustrations and text.
Women and children The following subjects will be covered with special focus on women and children: Home gardening, nutrition problems in estates, food and nutrition, vaccines for preventable diseases, nutrition for pregnant women and breastfeeding mothers, recommended practices during pregnancy, unprotected bottle lamps, toilets and sanitation, infant nutrition, first aid, safe drinking (potable) water, indoor air pollution, waste management in estates and happy family.
Small and middle level enterprises A tool kit for small and middle level enterprises (www.smeguide.lk ) including a how to do and what to do guide on taxation, accounts, legal aspects of business and English for business will be of special interest to small scale entrepreneurs.
The visitors to the exhibition could also benefit from the video course provided by the Industrial Technological Institute (ITI). This will cover subjects such as
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fruit and vegetable dehydration, rice snacks, manufacture of rice toffee, preparation of ready to serve products from fruits food including banana and mango juice and preparation of rice-based bread (rice bakery). Visitors will be informed how this can link up with ITI via video conferences.
Learning made fun for kids The interactive audio and video materials from Azim Premji Foundation India available at the exhibition will make learning attractive to children. The content has been designed to enable students to participate in the learning process with minimum help from teachers.
It also contains additional information necessary for teachers. It will help teachers answer questions posed by students. The subjects this CD covers include Science, Mathematics, General Knowledge, Tamil Language and English Language.
Differently abled persons Teaching sign language to hearing impaired persons and their family members (www.lankasign.lk ) This software that teaches electronic sign language available at the exhibition has two sections: one helps the teacher and the student to learn the sign language. Every sign is demonstrated through a permanent picture and the movement of the lip is explained through the video.
Some services useful to everyone The way the Government Information Centre (www.gic.gov.lk ) functions will be demonstrated at the exhibition. The public can obtain correct and reliable information about the different Government Departments from this web-site. In addition it is also possible to download forms connected with public service issued by Government Departments. The information is available in all the three languages.
Focus on Happy Life The Happy Life web (www.happylife.lk )-site demonstrated at the exhibition provides information connected with family and procreative health useful for adults and youths. It also gives solutions and advice with regard to problems of youths in a variety of ways: interactive voice response (IVR), short message service, web chat and internet.
Focus on First Aid This web-site (www.firstaider.org)available at the exhibition provides information on how to act when faced with danger and on how to resolve it. The information is provided through video, photographs and text.
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Environment
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The Island – May 3, 2010 TIMELY DECISION HELPED SAVE THE ENVIRONMENT
By Ifham Nizam
A timely decision by three farmer organizations not only but to uplift the standards of farmers. In fact, some of these farmers were self sufficient in a short period. Deforestation of reservations on both sides of Deduru Oya gave rise to declining ground water levels in the water bodies of the area. The initial ground water level being 8-12 metres from the surface level had increased up to 30 metres where sometimes river water did not flow at all due to the drying up and deepening. To make matters worse, the salinity level too increased causing numerous hardships especially to those heavily depended on agriculture and farming.
Ground water wastage through lateral seepage too affected the primarily agro-based economy of the people. Water scarcity made specially youth, abandon agriculture and adopt sand mining. To put a stop to sand mining 5–8 year ban had been recommended to minimize further devastation. Ground water seepage must be stopped to demonstrate agriculture was profitable. Bio-engineering technology- Geotext, in other words erosion control netting, a cost effective method was applied for the first time in Sri Lanka with Global Environment Facility/Small Grants Proramme funding Navoda Farmer Organization (NFO) for implementation.
"With two other Community Based Organizations, we filed a fundamental rights case in the Supreme Court obtaining an interim order to ban mining activities," NFO Project Manager P. Devapriya told The Island. He said that everything started with lack of ground water. He said a detailed study was conducted by his organization, with the assistance of Prof. T. N. G. Katupotha, Senior Lecturer, Geography unit at Sri Jayewardenepura, University. The study was possible due to financial support by the Green Movement of Sri Lanka, Devapriya said. "This study stressed there is no balance between the deposition and removal of sand from the river, and thus, recommended banning sand mining in the river," he added.
The study also recommended removing river deposits to be stopped immediately as river bank stabilization is an urgent requirement to minimize further devastation. Due to the Supreme Court actions NFO and two other Communities based Organizations an interim order was imposed banning mining activities in Daduru Oya. He said that when bio engineering technology was proposed, many experts were reluctant to recommend the method, since it was not used in a river bank before, especially on a sandy soil formation like in the project area. However, experiences from other part of the world and the information gathered managed to convince the concept to the experts. New Concept of Soil BIO Engineering Techniques was discussed in details and later a special design suitable for soil condition was recommended by the experts.
He said that although developing nations have resources such as knowledge of indigenous plant and tree species, freely available labor, contacts with people and associations in the agro based industries, the lack of quantifiable standards, lack of soil mechanic and climate data have created a certain antipathy among the local specialized scientist to practice bio engineering techniques. After producing gas the waste from the bio gas pits are used for agricultural purposes, which is an alternate to chemical fertilizer used previously. Promoting liquid milk in sub urban and urban areas. As communities in suburban and urban have limited access to purchase liquid milk, a Mobile service was initiated under the project to bargain for 99 FCCISL News Alert Weekly Business Highlight 03rd – 09th May 2010
better price, and compete against the monopoly owned by the government company MILCO. "While MILCO Company paid Rs.30 per litre, we directed the beneficiary to pay Rs.40 per litre and MILCO was compelled to raise the rates from Rs.30 per litre to Rs.36," Devapriya said. The beneficiary was provided with a motor bicycle and the collecting utensils worth Rs.108, 000.00. He now sells 30 liters per day within five hours and sale Rs.60 per liter delivered to door step. Out of the Rs.600, 50 per cent is set off for fuel and wear and tear and he earns Rs.300 only from the milk he sells. Also he has increased his income by taking vegetables and fruits to his regular customers at the same time.
In the 1.5 kilometer stretch of the river covering 6000 square meters a totally new concept in bio engineering technique (100% coir fibre with living plants as live cuttings) was implemented. Live cuttings embedded into the soil acted as soil reinforcement, barrier to earth movement, moisture wicks and hydraulic drains. The embedded stems and branches provide secondary forests. 4000 trees were planted on the remaining areas to create plant cover protecting the watershed. Money was provided for construction of cowsheds for dairy farming and maintaining nurseries with their help.
Results =Banning all sand mining. =Awareness programs to link the community with the government authorities and police.
=Dairy farming was established as a profitable venture and use of chemical fertilizer was minimized by introducing bio fertilizer for domestic purposes and agriculture. Alternate energy in the form of biogas was also popularized.
=Organic farming successfully introduced.
=The knowledge of individuals, government authorities and Police was enhanced emphasizing their respective duties as citizens of the country to protect the environment in accordance with the constitution.
=The community shouldered responsibility for conserving the river banks and securing participation in reforesting the reservation lands. Catchment management was improved by planting water retaining plants.
Bio engineering technology being cost effective and environment friendly is also replicable. Declining ground water levels due to improper land use activities especially deforestation of existing forest and reservation on both sides of the Deduru Oya and other water bodies, destructions of natural ecosystems as well as manmade structures and the impact on society were considered major problems. Initially the ground water level in the area was around 8-12m and this increased up to 30m. In some places water is not flowing due to low amount of water and due to the deepening of the river. About 20 years back the river bed was about -8m from the surface level and today this level exists at 12-15m in many places. This has resulted in the flowing of the ground water into Deduru Oya through lateral seepage.
The main income producer in the area, agriculture, was affected due to water scarcity and jobless youth are extorting money from the vehicles carrying sand from the Daduru Oya. The no cost no effort method of income "illegal sand mining" had allowed irresponsible people to earn quick money at the expense of the environment by exploiting the water source.
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Daily News – May 7, 2010 LET US MAKE PEACE WITH THE ENVIRONMENT
Lionel Wijesiri
The struggle to save the global environment is in one way much more difficult than the struggle to vanquish Hitler, for this time the war is with ourselves. We are the enemy, just as we have only ourselves as allies. - Al Gore
The new Environment Minister Anura Priyadharshana Yapa recently said that his priority would be to educate the people to love and live with the environment without harming or polluting it. “People must learn to protect the environment as a habit. We can maintain a clean and unpolluted environment only through an attitudinal change in ourselves, he further added.
Minister Yapa is correct. Like most other developing countries, Sri Lanka is today facing environmental problems of enormous magnitude that adversely affect the lives of its people from all walks of life. Many of these problems have resulted due to a lack of understanding and concern about environmental and sustainable development issues. This has led, among other things, to over-exploitation of natural resources and badly planned development and industrial projects. These have intensified socio-economic problems as well as created large scale air, water and soil pollution. Green valley in Diyatalawa. Pictures: Saman There are big disparities in incomes and lifestyles of Sri Wedage people in Sri Lanka. This means that a large percentage of the population lives in poverty, with few options to choose environmentally appropriate lifestyles. Others are in a position to make environmentally sensitive decisions but rarely do so, partly because of lack of awareness.
In order to ensure people make positive choices about the environmental impacts of their lifestyles, there is an urgent need to create mass scale awareness on environmental and development issues. If Sri Lanka’s environmental problems are to be effectively tackled, then it is critical to have an informed public that understands and supports environmental initiatives.
Education But how do we get around this hurdle? I believe we have an urgent need for educational institutions to be more research-oriented and not mere centres of learning. The educational institutions must create awareness of environment conservation and hygiene among the students. Education is critical for promoting sustainable development and improving the capacity of the people to address environment issues. Education is indispensable to changing people’s attitudes so that they have the capacity to assess and address their sustainable development concerns.
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It is also critical for achieving environmental and ethical awareness, values and attitudes, skills and behaviour consistent with sustainable development and for effective public participation in decision- making. To be effective, environment and development education should deal with the dynamics of both the physical, biological and socio-economic environment and human (which may include spiritual) development and also should be integrated in all disciplines.
If we do recognize that we have to develop, on a priority basis, a national environmental education program, first of all, we should set our goals right. I propose the following objectives: (a) Morning sunlight on the hills To achieve environmental awareness in all sectors of society on a national-wide scale as soon as possible; (b) To strive to achieve the accessibility of environmental education linked to social education, from primary school age through adulthood to all groups of people; (c) To promote integration of environment concepts, including demography, in all educational programmes, in particular the analysis of the causes of major environment and development issues in a local context.
The program should draw on the best available scientific evidence and other appropriate sources of knowledge, and give special emphasis to the further training of decision makers at all levels.
Strategies As the next step, the Government should strive to prepare strategies aimed at integrating environment and development as a cross-cutting issue into education at all levels within the next three years. This should be done in cooperation with all sectors of society. The strategies should set out policies and activities, and identify needs, cost and means for their implementation, evaluation and review.
A thorough review of curricula should be undertaken to ensure a multidisciplinary approach, with environment issues and their socio-cultural and demographic aspects and linkages. Due respect should be given to community-defined needs and diverse knowledge systems, including science, cultural and social sensitivities.
Relevant authorities should ensure that every school is assisted in designing environmental activity work plans, with the participation of students and staff. Schools should involve schoolchildren in local and regional studies on environmental health, including safe drinking water, sanitation and food and ecosystems and in relevant activities, linking these studies with services and research in national parks, wildlife reserves, ecological heritage sites etc.; Educational authorities, with appropriate assistance of non-governmental organizations, including women’s and indigenous peoples’ organizations, should promote all kinds of adult education programs for continuing education in environment and development, basing activities around local problems.
These authorities and industry should encourage business, industrial and agricultural universities or higher institutions to include such topics in their curricula. The corporate sector could include sustainable development in their education and training programs.
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Role of media One of the most effective ways of getting the message across to the largest possible audience in a country diverse as Sri Lanka is through the mass media, including television and the English and vernacular press. Both these media have the potential of being extremely effective tools for environmental communication. However, they have not been sufficiently exploited for this purpose so far.
The television provides an excellent opportunity to reach out to the literate as well as the illiterate population of the country. Since the advent of satellite television, TV today attracts audiences ranging from the educated elite to poor villagers in all parts of the county. The vastly increased penetration of TV to all sections of Sri Lankan society remains under-utilized in terms of this objective. There is a great dearth of good programs on TV and very few incisive articles on environmental issues in the written press.
Most environmental documentaries shown on TV today attract few viewers because of the academic or pedantic manner in which they are presented. Similarly, although many English newspapers are now carrying more and more features on environmental issues, they are usually superficially researched and poorly written. Vernacular papers still carry very little or no environmental news.
There is a famous saying: “If you plan for one year, plant rice, if you plan for ten years plant trees, and if you plan for hundred years educate people”. So if we want to save our country and the mother earth, there is a strong need to conserve our natural recourses and make judicious use of them. We must think earth as a habitat, not of today but of distant tomorrow where there will be a place and means for every being to live in harmony.
The preservation and conservation of environmental heritage is our sacred duty. All of us living on this planet, whether rich or poor, industrialist or workman, farmers or labourers, office goers or house wife, VIP or common men, as individuals or groups, are responsible for the present dismal state of our environment and each one of us has to contribute towards its rehabilitation, preservation and conservation.
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