25th – 31st January 2010 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Content Page
1. DEVELOPMENT ECONOMICS 1.1 SRI LANKA’S ECONOMY LOOKS FORWARD TO GROW 05 1.2 SRI LANKA, A NATION BEYOND THE FIRST WORLD 11 1.3 SIXTH FASTEST GROWING ECONOMY IN 2010 21 1.4 PRIVATE SECTOR OUTPERFORMS PUBLIC SECTOR 24 1.5 SL NEEDS SKILLS DEVELOPMENT, NOT FINANCIAL ASSISTANCE 25 1.6 RPC SOCIAL WELFARE PROGRAMMES INVIGORATE ENHANCED WORKER LIFESTYLES 26 1.7 FIGHT CORRUPTION, WASTE TO DELIVER ECONOMIC DIVIDENDS 28 1.8 NORTH AND EAST DEVELOPMENT TAKES OFF THURSDAY 30 1.9 HOW TO INTEGRATE THE NORTH WITH THE REST OF THE ECONOMY 31 1.10 INCREASED OCCUPANCY HAS COLOMBO HOTELIERS OPTIMISTIC 34 1.11 TOP TEAM NEEDED TO LIFT SRI LANKA’S ECONOMY 35 1.12 ECONOMIC DEVELOPMENT -- IN SEARCH OF CONSENSUS 36 1.13 SUPPLY CHAINS: PLAN FOR THE FUTURE FROM FORK TO FARM 40
2. MANAGEMENT 2.1 HOW TO BECOME A GOOD MANAGER 43
3. TRADE & MARKETING 3.1 EARLY WEEK PROFIT TAKING DRIVES THE INDICES DOWN 46 3.2 FREQUENTLY ASKED QUESTIONS IN BRANDING 47 3.3 A SOCIAL NETWORKING CHECKLIST FOR CAREER SCHOOL MARKETING 49 3.4 SALES PROFESSION VITAL FOR GROWTH 51 3.5 CAPITAL MARKET THRIVING 52 3.6 TEA CROP LOWEST SINCE 2001 WHAT NEXT? 53 3.7 EUROPEAN AMBASSADOR SAYS LANKA’S NUMBER ONE TRADING PARTNER IS EU 54 3.8 CROSS-PECKING OVER CHICKEN FEED 56
4. MONEY & BANKING 4.1 CREDIT CARDS AND ITS WISE USAGE 59 4.2 ACCA’S 12 TENETS OF TAXATION 63 4.3 IMF REVISES UP GLOBAL FORECAST TO NEAR 4 PERCENT 66 4.4 SRI LANKA POLICY CERTAINTY HIGHER AFTER POLLS: CB GOVERNOR 68 4.5 MANY CONSIDERED HIM AS THEIR ‘WORKING GURU’ 69
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5. TOURISM 5.1 ECO-FRIENDLY TOURISM ZONES VITAL FOR GROWTH 71 5.2 TOURISM BUREAU TIES-UP WITH NAVY 73
6. LABOUR 6.1 TRADE UNIONS ASK PRESIDENTIAL CANDIDATES TO UPHOLD WORKERS’ RIGHTS AND DIGNITY 75
7. STOCK MARKET 7.1 ALL SHARE PRICE INDEX HITS A NEW HIGH ON THURSDAY 79
8. BUSINESS 8.1 CLOUD COMPUTING TO ENHANCE BUSINESS EFFICIENCY 81
9. EMPLOYMENT 9.1 EFC TO FOCUS ON EMPLOYMENT GENERATION AND PRODUCTIVITY IN 2010 84 9.2 VULNERABLE EMPLOYMENT AND POVERTY ‘ON THE RISE’ 86 9.3 JOB-SECURE SINGLES MOST ACTIVE SEARCHING SPOUSE 87
10. FISHERIES 10.1 GOVT. TO BOOST SOUTHERN FISHERIES SECTOR 89
11. CONSTRUCTION INDUSTRY 11.1 GREEN BUILDING COUNCIL FOR CONSTRUCTION INDUSTRY 92
12. TRADE DELEGATION 12.1 SRI LANKA EXPORT-PROMOTION DELEGATION TO VISIT CROATIA 93
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Development Economics
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Daily News – January 25, 2010 SRI LANKA’S ECONOMY LOOKS FORWARD TO GROW DEVELOPMENT HAS BEEN GOING ON THE FASTEST EVER IN THE HISTORY:
Business Desk Central Bank Governor Ajith Nivard Cabraal speaks to Daily News Business on the economic development that country has gained during the past four years.
Q: Governor, what could you say about the economic development that country has gained during the past four years? A: There has been a tremendous economic growth during the past four years in the country. When you say an economic growth there are some economic indicators such as per capita income, inflation, employment, poverty, reserves and infrastructure development.
It took Sri Lanka 55 years to reach a per capita income of US$ 1,000 and during the last four years the Central Bank doubled it, which indicates a clear progress while increasing the country’s GDP by 100 percent. Sri Lanka recorded a remarkable growth during the past four years, while maintaining a continuous growth.
The growth was better every year comparatively to the corresponding previous year.
Inflation differed with an average of about 11 percent for the past 30 years and with that liberation of the country the Central Bank Governor inflation dropped to three percent recording a single digit after Ajith Nivard Cabraal over 25 years.
Our reserves, which recorded a maximum of US$ 2.5 billion earlier has grown at present more than US$ 5 billion signifying the excellent response from foreign investors, soon after the establishment of peace. The debt market, treasury bills and treasury bond markets have responded outstandingly.
The unemployment rate, which was around 8 to 9 percent few years ago has dropped to six percent and the country’s infrastructure development has been going on the fastest ever in the history.
All major projects were launched while the conflict raged such as five harbours, one international airport, 14 domestic airports, Moragahakanda major irrigation project, two major power plants, expand in road network, village tank developments and expansion of electricity coverage.
In 2005 electricity coverage which was 75 percent and today it has covered up to 87 percent and the idea of the Government is to make it 100 percent in next two years. Poverty, which was 22 percent has come down to 15 percent last year.
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This year, we hope to reduce the poverty to 10 percent and we intend to make it to two percent by the end of 2016. In every aspect there has been tremendous scope particularly with the end of war. What is significant was that even during the war development took place rapidly in every nook and corner of the country.
Kerawalapitiya power plant The path was cleared a progressive economy while fighting the war and today we have come to a very important stage in our history where all the negatives have been removed. As a result recently the New York Times had said that Sri Lanka is the best place to visit in 2010, Wall Street Journal had said that Sri Lanka will be one of the top ten countries for growth this year and the IMF has said that we are no longer a poor country, that we are a middle income state.
The outlook of the country has been changed over the past four years to a positive image and that is one of the reasons for the rest of the world to rate the country in this manner.
Q: Does the country highly depend on foreign funds and aid? A: If we want to develop rapidly we have to borrow and use that money now to develop the infrastructure and out of the money that we gain we pay off. What is important is to see that your income is sufficient to pay the loan. For a country the assessment is debt to GDP ratio as against how much is your debt. In 2002 the debt was more than the GDP, which was 104 percent when the GDP was 100 percent, but today the debt is 84 percent and the GDP is 100 percent.
It has been growing so that we are managing it much better than before and that is one of the reasons that the IMF has rated us as a middle-income country. We have a sustainable and a manageable debt. We are borrowing to develop.
The previous Government borrowed money not to build bridges or to build power plants, but to import wheat flour and for consumption. We have more than US$ 500 million of loans that we are paying now for the bread that we ate in the past.
Q: The opposition is complaining that the Central Bank is injecting money to the economy without a control on its supply and demand. What is your view? A: We have to inject a certain amount of money because otherwise the economy cannot move, but we do it scientifically. We inject only what is needed for the economy to progress and that is done with great responsibility, which the Central Bank is entrusted to do.
We do it in an orderly manner and that is one of the reasons that we have been able to bring down inflation and ensure economic stability, when the whole world was going through difficulties. None of the banks in Sri Lanka collapsed and we are proud to say that it was because we managed it well. 6 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Opposition has risen certain allegations on some infrastructure projects such as Kerawalapitiya power plant, Uma Oya project and the Weerawila airport.
Q: What was the actual cost of the Kerawalapitiya power plant? A:The cost of the Kerawalapitiya Power Plant was originally estimated in 2002 as US$ 390 million. However, due to careful planning and execution, the cost of the project is now estimated to be only about US$ 295 million for the power plant of 300 megawatts when fully completed. That works out to roughly about a million US$ per megawatt.
That is satisfactory as it is close to the current industry norm of about US$ one million per megawatt for petroleum based thermal power plants. The Kerawalapitiya plant is a combined power cycle plant.
The first 200 megawatts is generated with furnace oil. The exhaust from the first phase is to be converted into steam to generate another 100 megawatts. The first phase is already in operation and the second phase will be operational soon, in a matter of a few days. The cost of setting up this plant will thus be distributed over the entire 300 megawatts.
Q: Did the estimated cost of Uma Oya project increase? A: The structure of a project can change from time to time based on the project components. There may be add-ons by the time a project is finalized, and it may even have certain components that are dropped by that time. The original project had an irrigation as well as power generation component and the estimate of the project amounted to US$265 million based on input prices in 1999.
The Uma Oya project at that time, was meant to produce 50 megawatts of hydropower and irrigate around 5000 acres of paddy land. Later, the project scope was expanded and the hydropower generation capacity was increased to 120 megawatts and the irrigation scope to 12,500 acres of paddy. As a result of such add- ons, the project cost has been re-estimated at US$545 million in 2009 prices.
It is generally estimated that the capital cost to produce one megawatt of hydroelectricity is about US$ three million. In fact, for the Upper Kotmale project, which aims to produce 150 megawatts, the project cost is US$460 million. When all those factors are taken into account, the increase in the project cost of the Uma Oya is reasonable and there is ample justification for the increased project cost.
The Export Development Bank of Iran funds the financing for the Uma Oya project. Usually, the agreement in such cases is that the contract has to be handed over to a company from the country providing the financing.
The general practice under the bilateral loan agreements is that construction contracts are awarded to a contractor of the lending country has been followed here too. However, having Mihin Lanka identified the contractor, the Government has taken the necessary measures to ensure the project is cost effective. In fact, the Government has been able to negotiate and enter into the contract at a lower price than the estimated value.
At the same time, any unexpected costs and adverse movement in prices will also have to be borne by the contractor and no additional payments need to be met by the Government. 7 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Q: Did the feasibility study for the Weeravila airport cost Rs.500 million? A: That is completely untrue. According to the information we have, the Airport and Aviation Services has spent just Rs nine million million (not 500 million) for the initial work relating to the Weerawila airport. This includes the Environmental Impact Assessment (EIA) as well. In any major project, an Environmental Impact Assessment has to be done. Once the EIA was completed, and the location was found to be not suitable, the project was shifted to Mattala. There is nothing unusual in this. A location has to be studied to determine whether it is suitable for such a project.
Q: Purchasing and selling of gold by the Central Bank been highly criticized by the Opposition. As the Central Bank Governor what is your opinion of this and how important is it for a country to have gold as a reserve? A: Earlier the opposition was shouting that the Central Bank was bankrupt and we were selling gold. After that they were upset when Central Bank purchased gold.
When there is a income you will buy gold and if not you will sell gold. But Central Bank did not sell gold even at a crucial time, but we bought gold to have certain anchor. Because of this even at a difficult time we will have these gold as tangible assets backed with real value and we believe purchasing gold is a correct decision.
Q: Military forces found a huge amount of gold, which was belong to the LTTE. What has happened to it? A: Any gold or any asset when it has to be vested in the state there is a certain procedure to be followed. Because policeman found a golden bangle or even gold captured by the forces the Central Bank cannot easily take it since there is a legal procedure and courts need to declare it. Even some accounts, which had TRO funds have been seized with a court order. The gold been captured during the JVP period had also been handed over by the courts and then it was added to our reserves.
Q: What is the true story behind the hedging deal of Ceylon Petroleum Corporation? A: In this hedging deal the total amount that the five banks have claimed from the Ceylon Petroleum Corporation amounts to US$418 million. This amounts to about Rs.47 billion and not Rs.230 billion. In this case of the hedging transactions, there are certain norms to ensure that such transactions are structured in a proper, orderly manner.
In many countries it has been found that certain hedging deals have not been structured properly. For example, in China, Korea and India, there have been instances of mis-selling and there was no liability at all established in relation to claims that were made by various banks.
The Central Bank looked into the transactions entered into by the CPC and the banks, and after a detailed investigation, we have made a very clear determination that these transactions have not been structured properly, and that these transactions are tainted, and accordingly should not be given effect to.
There is no money due to be paid by the CPC, but that is not to say that the banks cannot make claims. If an accident occurs, claims can be made from the insurance company, but the insurance company may find that something is not right, in which case, they are not obliged to make the payment. In this instance, 8 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 the Central Bank has determined that the transactions are tainted, and the CPC is not obliged to pay. So nothing has been paid as alleged neither will any such payment be made.
It was certainly not Rs.230 billion or even Rs.47 billion. Further, I also know that the Attorney General is defending the CPC in arbitration proceedings abroad, and he is confident that the country will not have to pay any money at all.
Q: There was Rs.35 billion VAT fraud. What is this VAT fraud? A: This fraud happened during the period, November 2002 to December 2004 before President Mahinha Rajapaksa was elected and became Finance Minister. The amount involved is not Rs.35 billion but Rs.3.5 billion. Action has been filed against those involved.
Q: Has Mihin Lanka made a Rs.4 billion loss? A: This Rs.4 billion is the total capital investment of this project, which is a very modest capital for an airline. You need a initial capital to commence a business and the Government has made an initial capital investment of Rs.4 billion for Mihin Lanka and this is not a loss that airline has made. Over a period of time the company will make money.
Even a grocery business will take some time to make profits. In any business you need to build the clientele and processors right to make profit. Normally airlines take at least five years to make profits. This is not a project that will give profits as soon as you start business. But now we have seen a break even at Mihin Lanka and over a period of time it will generate profits. People should not mix up the Mihin Lanka capital investment with a loss.
Q: SriLankan Airlines also made losses what can you say about this? A: This happened not only to SriLankan Airlines. Last year not a single airline made profits due to the recession. Japanese Air Lines had a bankrupt, British Airways and Singapore Airlines also made losses. High fuel prices and less air passenger traffic had negative impact on the airline business. In addition to all the global issues, Sri Lankan airlines had to face more challenges. In the latter part of the year there were less people coming in because the conflict escalated. Also, the decline in tourist arrivals due to travel advisories being issued by certain countries also affected the airline. When all these matters put together, made the airline suffer a loss. However, when the global situation eases, the profitability of SriLankan Airlines should improve. But now SriLankan Airlines is bouncing back to normalcy.
Q: What can you say about the Golden Key and Sakvithi credit fraud? A: In each of those there has been shown developments, even though we are not directly responsible. President Mahinda Rajapaksa has given a clear indication that he would intervene to safeguard the depositors in whatever way possible.
So there are certain matters, which are in Courts so we need to respect the judgements of the Court and ensure that we do not do anything against those. Within those limits there are things to be done. Once all the assets are identified and free from encumbrances the Government will take over the assets and pay them so that there will not be any delay.
There are other complications where the assets are not free. Currently we have engaged qualified and experienced firms who are now advising, as to how this should be solved because there are various complications and we have to unravel them. This audit firm will examining it and sorted it out. The Government is presently considering the issue of treasury bonds to the value of net assets transferred in settlement of dues.
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Q: Last week Sri Lanka was promoted to a middle-income state. How will this impact on the economic growth? A: There will be major positive feelings that will be catered. Actually the economy is working on confidence, on good feelings and on certain macroeconomic fundamentals. As much as the macroeconomic fundamentals are important the good feelings as well as positive feature of a economy are important.
So this graduation of Sri Lanka to a middle-income market emerging country gives it a new light. Out of all the countries in the world about 80 countries is termed low-income countries and we were in that lot earlier. The way people deal with Sri Lanka is different. If you’re in a high network or a middle network the way the people are treating you is different from the low network. So when Sri Lanka moves to the next stage we will be projected as a country, which will have a different outlook.
Q: Sri Lanka recorded a single digit inflation rate after 25 years. How did the country gain a single digit inflation rate? A: Managing inflation is a longtime process. So for 20 months we used several instruments that we used to bring down the inflation rate to a single digit rate.
We kept interest rates at a high level, aggressive open market operations, reserves money very diligently through all these mechanisms we maintained the target that we had, we gave clear information to the market that the inflation will not rise.
At present we have come to a reasonable level of inflation and we will ensure that we will not get this out of hand at anytime. We think that it was due to sacrifice and hard work and with an overall expectation people will think that the country will grow.
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Daily News – January 25, 2010 SRI LANKA, A NATION BEYOND THE FIRST WORLD
Manisha Fernando
We are Sri Lankans, a nation of people of diverse cultures, rich traditions and a long and proud heritage, documented to date back thousands of years, much longer than any comparative Western chronicle found to date. Yet we are branded as ‘third world countries’ or ‘developing nations’ and sometimes even as ‘failed states’ by some. Whilst some people are bold enough to challenge the classification, a majority are passive in aspirations of who they want to be as a nation in the future.
As always there are a few who are too earnest to accept the classification without even knowing the origins or validity of such classifications as well as pretending to be oblivious to the true facts for political and personal gains, ultimately diluting the potential Sri Lanka has to emerge a winner.
The classification of the 1st world was in the 1950s during the Cold War when the countries that were allies of the United States were called the 1st world whilst those that were allies of the USSR were called the 2nd world. The countries that were neutral or ‘non-aligned’ were called the 3rd world.
As time progressed, the 1st world was also linked to capitalistic economic policies whilst the 2nd world was linked with socialistic policies. Alfred Sauvy, an economist defined the 3rd world as “developing” or “under- developed” nations, in addition to being ‘non-aligned’, and made reference to the 3rd world as Tiers tathello, or the ‘Third Estate’ which were the ‘commoners’ in France. He said that the 3rd World has “nothing”, but wants to be “something”.
Whilst the definition itself infers a sense of lost vision it hides the fact that almost all the developing nations were pillaged and plundered for their resources (both physical and human) during the times of colonization by the very same 1st world nations by brute force! Even today, the recent accusations and actions of some of the Western nations are clear indications of their perceptions of Sri Lanka as a 3rd world nation (“with Nothing” - wanting to be “something...”) and forced by various mechanisms to be a virtual colony to these 1st world nations once more. The sad part is that there are a few who do not wish to acknowledge this reality -simply because they lack the essence of national pride and have the ability to thrive on the ignorance of masses!
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The purpose of this article is to show a radically different view of several key aspects with selected examples to highlight the points. It wishes to highlight that Sri Lanka has during the last four years become one of the best performing economies in the so called 3rd world and has the potential to aspire marching beyond the 1st world if we break away from the ‘third world mentality’ and demented political dimensions and personal agendas and grudges.
Economic Growth and Economic Development Many accept the fact that developed countries have a higher level of economic development with a very dominant Services Sector. The rationale is that economic development would transforms into a high per capita income and a high Human Development Index (HDI) whilst in most cases, countries with a high GDP per capita is observed to fit this description. Besides this tertiary sector, there are two other sectors, the Primary Industry which includes agriculture and fishing etc., and the Secondary Industry which includes Manufacturing and Industries. A rice seller in the Pettah market It should be made clear that economic growth and economic development are two different concepts. Economic growth refers to an increase in the real national income or the aggregate output of the economy. If one were to analyze the economic growth of Sri Lanka, as published by the Central Bank of Sri Lanka as well as several international bodies like the ADB and the World Bank, it is quite evident that on a comparative basis, the average growth was 6 percent during the period 2005 to 2009.
The same figures reveal that despite the perceived economic intelligence of previous eras, economic growth in 1994 to 2004 period had been low and even negative whilst most social indices were the lowest during the period. In fact when all major economies crumbled during the financial crisis, Sri Lanka maintained its growth between 4-6 percent during the last two years. The global growth as per (international) expert estimates for 2009 is said to be about 1.2- 1.4 percent, whilst Sri Lanka is expected to have grown by about 4.5 percent to 5 percent.
Despite the factual reality it is quite incredible that some people argue these facts and keep repeating that the economy in Sri Lanka is suffering. Despite the loud lamentations, if one were to look at all the statements made by such ‘experts’ it would show that most statements are purely verbal without sound backing of factual proof and rationale.
When one has no proof it is sometimes hilarious to note that even the Central Bank of Sri Lanka (CBSL) is accused of window dressing its figures! If CBSL is window dressing the figures, the simple question to these critiques is how come international bodies such as ADB, IMF or the World Bank have sometimes higher perceptions and estimates compared to those of CBSL? Surely it would be extremely crazy to say that the officials of such institutions were ‘bribed’ by the government!
Whether one wants to admit or not, the facts and figures are clear, the policies of regimes prior to the implementation of Mahinda Chinthana had not supported a sustainable economic growth in Sri Lanka. Perhaps one of the major reasons for their failure was the lack of focus on the primary industries or the agricultural sector which is the largest employer. 12 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
In contrast, the concept of “api wawamu rata hadamu” has proved its validity and reaped the potential of the agricultural sector just like the other sectors, with contribution to the GDP increasing from about 4 percent in previous regimes to about 12 percent within the last 4 years. Some economists argue that the service sector is wealth consuming, whereas manufacturing and agriculture is wealth producing! Economic development has a deeper meaning, and refers to improvements in a variety of indicators, such as literacy rates, life expectancy, standard of living, quality of life, and poverty reduction to name a few. The standard of living refers to the quality and quantity of goods and services available to people and the way these services and goods are distributed within a population.
Before liberation, these negative critiques were hyping the non-availability of goods in the North and East, yet after the liberation the positive aspects are never highlighted. Standard of living is generally measured by standards such as income inequality, poverty rate, real income per person etc. The standard of living may mean different things to different cultures. Since the heat of the election has focused the spotlight on critiques of the Mahinda Chinthana policy both one and two (‘Idiri dakma’), it would perhaps be enlightening to use figures and facts published by the CIA fact book for 2009. The life expectancy is an indication of the quality of life, and to some extent it is also an indication of the quality of healthcare and life styles of the nation. Accordingly, the life expectancy in Sri Lanka was at 73.41 in 2005 and we were ranked 96 in the world. However, by 2009 the life expectancy had improved to 75.14 whilst the global rank improved to 83.
Just to ensure that opposing critiques do not huff at this performance, it should also be noted, that the so called Western nations, such as France, US and UK, have life expectancies of 81, 78, and 79 respectively for the same period. The highest life expectancy is about 84 of Macau and the lowest is Swaziland at 32. In addition the WHO statistics show that about 97 percent of all births in Sri Lanka are attended by skilled health personnel. Infant mortality gives the number of deaths of infants under one year old in a given year per 1,000 live births in the same year and is an indicator of the level of health in a country. The rate was 19 for Sri Lanka in 2009, whilst extreme high figures were observed for African nations (of over 100) whilst the lowest was for Singapore with a figure of two. This is again quite interesting since the healthcare in Singapore is under the Government. Looking at the fertility rate, a rate of two children per woman is considered the replacement rate for a population. A rate above two children indicates a populations growing in size and whose median age is declining. Higher rates indicate difficulties for families, in terms of feeding, providing education, and prevalence of child labour as well as more women entering the labour force.
This is proved to be true with India and African nations having a rate above 2.5. On the other hand, a rate below two indicates a population decreasing in size and growing older. In countries like the UK (1.66), Canada (1.58), Japan (1.21) and Italy (1.31), City of Colombo,A fruit the businessstall in Pettah capita l of Sri Lanka rates are quite low.
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Global fertility rates are declining especially in Western Europe, where populations are projected to decline dramatically over the next 50 years. In Sri Lanka, the fertility rate was about 1.85 in 2005, whilst now it is estimated to be about 1.99. Fertility rate has improved in Sri Lanka inferring that the standard of living too has improved over the last 4 years compared to previous eras.
On the lighter side, it is most apt to ask the simple question from the industrialized nations boasting of a great economy (advocated by some of our own nationals as well), what they would do with all the accumulated wealth and greed with low fertility rates inferring that they will eventually grow old and die, without heirs!? Infra-structure development and policy developments.
Sri Lanka fought a hard battle with LTTE terrorist and won - again a feat that was stated clearly in the Mahinda Chinthana, a feat that previous Government leaders thought was not possible for over 30 years! Whilst it’s again a great indication of positive mind frame (can-can) the battle was won in about 2 1/2 years with team work and leadership. Compare this with the battles raging in Iraq and Afghanistan years now, and even other parts of the world where the Governments of so called developed nations are fighting terrorists, but failing to end it. Perhaps it’s because they simply do not wish to end the war since it would stabilize these nations or simply it’s a good excuse to keep their economies going in times of recession since war is always a profitable ‘business’! Perhaps it would be good idea for the scholars to use the prolonged wars as an indication of corruption too!
Whilst the war was won and land was liberated from terrorist clutches, the infra-structure developments were quickly implemented in all parts of the country. To name a few of a great list, seven fly-overs, three harbours, one airport, 222 bridges and over 24,000km of roads, stadiums, economic centers, and cities were built or renovated during a short span of just 4 years - another feat unachieved by any other nation (if we exclude Singapore since it did not have a terrorist problem).
In addition, the SME sector as well as rural and agricultural development took place which is physically evident in these areas now. ven compared to the last 30 years, this country had never embarked on such ambitious targets and projects. Hence to argue that these are false is more a sign of defeat and naivety than accepting true facts and evidence!
If a nation is to develop it should have a clear policy and the required infrastructure to support the achievement of the goal. In this sense many argue that the exports and imports were greatly affected in 2009 due to Government policies. But the reality is that the financial industry (including the state banks) curtailed lending to several sectors due to perceived impacts on such sectors by the global financial crisis. Whilst it can be argued that this was a prudent decision, some businesses would suffer since curtailment of credit would affect cash flows and working capital requirements especially if dealing with exports. This proves that to boost the exports or investment activities, right infrastructure is a pre-requisite. Perhaps the intended implementation of the EX-IM Bank would suffice this requirement which is a classic example of policy supported by institutional reforms.
The list is quite endless, one can show so many indices that prove the applicability as well as the validity of the current policy document, the Mahinda Chinthana of the current president, Mahinda Rajapaksa.
The document is not limited to words, for it has been prepared by a well learned panel of economic and social architects who have covered all the important aspects required for Sri Lanka to emerge as a great nation. In fact as far as criticism is concerned, you can always pick a handful of indices that have not performed and harp on these - but what should be questioned is the extent of validity in the context of Sri Lanka, its people as well as its unique economic and social structure.
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Productivity The common perception among most people is that we are an unproductive bunch! Why? Because the Westerners advocate so! This is not true, however if we say that we like to snuggle up in our own comfort zones that perhaps is more acceptable. In addition ‘this is not my job’, the ‘blame game’ and ‘negative mentality’ are other factors that contribute to the low productivity levels.
Whilst working with a British consultant, a joke was made that Sri Lanka had a holiday for everything and that we were a lazy nation; to which with typical dignified Sri Lankan hospitality I reminded him that it was only after the British colonization that we became heirs to the large number of holidays we have now when they tried to pacify all communities with various holidays!!!
What we should debate is not the number of holidays we have but what we had done during the remainder of the period which sadly is never debated in any circle! The reality is that quality of life takes into account not only the material standard of living, but also other more subjective factors that contribute to human life, such as leisure, safety, cultural resources, social and family life, mental health, values and environmental quality issues etc.
In such definitions the leisure and time spent with family is considered important aspects as well as parts of the social value system. Globally, employees in Finland, Brazil and France are entitled to receive as many as 30 days statutory holiday a year, with those in Lithuania, Russia and the UK being entitled to 28 days. Employees in Greece, Austria, Denmark, Sweden and Norway are entitled to 25 days statutory holiday. Comparatively, the total number of holidays in Sri Lanka is still about 25!
If we are so keen on productivity, then we should undoubtedly measure it in appropriate and practical ways as applicable to individual businesses. For example, manufacturing businesses can measure productivity by the volume of output and waste whilst for service sector, the cost to income ratio among several others would be more applicable.
But the reality is that most often, we are unproductive mainly due to the excuse culture! Rather than pro- actively looking at ways of getting the job done efficiently, most people find it ‘productive’ to blame everything under the sun. The lack of fair and transparent performance management systems in many private institutions is also a key factor that affects the low productivity, whilst the lack of business foresight and strategic planning affects the sustainability of one’s business in a dynamic environment.
For the state sector, striking the balance between productivity and policy objectives is a key aspect of good governance and management. Many private institutions resort to limiting their work force as a means of improving productivity which is focused on the cost side, in contrast to the pro-active approach of improving income and processes.
The government sector expanded giving employment to thousands of youths despite the wage burden. Yet with expansion of government services to various parts in the island this worker base is deployed to enhance the service.
Though some still say it’s a ‘gimmick’, the reality is that with the expansion in the state sector several technological developments were also implemented such as the e-based payment systems for renewing revenue licences etc. Sri Lanka’s unemployment ratio fell to about 5.2 percent in 2009 whilst in major economies it increased like in the USA (7.2 percent), UK (5.6 percent) and Japan (4 percent). One key question to ask some of the critiques is that in the event a policy of privatizing is implemented to improve productivity, where would the balance be in reducing unemployment?
15 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
In terms of energy production, the production of electricity was 6.7 Bn. Kilo watt hours with a consumption of 6.2 Bn. KWH. However, estimates for 2009 show that production was 9.8 Bn. KWH and consumption about 8.3 KWH. Yet again the achievements are far better than any previous regime’s economic policy framework. With these first few steps there is still space for further improvements in productivity in all areas.
The subsidies are also a point of argument and many say that the agriculture sector is the least productive, and hence subsidizing it would reduce productivity levels further. Yet if we are to talk of standards of living, then it is important to help elevate the income of these people who are dependent on agriculture! Yet the hypocrisy is that these advocates of productivity fail to look at the global context.
It’s a known fact that the highest subsidized agricultural sector is in the US, where their cost of production is far greater than the market price. Hence the government is compelled to buy wheat from their farmers at high rates, and dumps the excess into the ocean to manage the demand and supply equation and resulting in high market prices. In addition the advocates of good governance are seldom to compliment Sri Lanka in implementing ethical trade practices compared to some nations that resort to non-tariff barriers despite having FTAs!
Investments A key principle of a good business is that it should not depend on the party that comes to power. But ideally all businesses should support a leader who builds an equitable society, and provides a level playing field for all sectors of the economy with proper legislations and infra-structural support.
If one were to look at ground realities, the growth of the economy and the developments taking place in all parts of the country are ample proof of inducing businesses. Some fail to acknowledge this fact, merely because the policies are nationalistic in orientation, but it can be argued that these nationalistic policies are pre-requisites to become an emerging market in the world, since it was due to the implementation of nationalistic polices by the now developed nations that they became the 1st world.
The Mahinda Chinthana’s development initiatives attracted nearly USD 30 billion in four years, a feat that is even above the cumulative FDIs of USD 28 billion achieved from 1977 to 2004! This in itself is an indication of the confidence and investment potential within Sri Lanka, which means that the investors would not have brought in so much money unless they were sure of a better return in the next few years under the economic development initiatives of the Mahinda Chinthana! In addition, the gross investments which records total business spending on fixed assets, such as factories, machinery, equipment, dwellings, and inventories of raw materials, is a reasonable basis to evaluate future production.
It is measured gross of the depreciation of the assets, i.e., it includes investment that merely replaces worn- out or scrapped capital. Accordingly, the highest ratios are seen after the 2005 period when it was 22.4 percent, and by 2007 it was 28.2 percent and by September 2009 about 24.5 percent.
Failure of Industries - what are the real impediments of growth? Often heard is the statement that the current economy is heading for doom and that almost all the industries are badly affected due to the political ideologies of the existing government. Despite all the complaining and blame, it is rare to hear a debate on why and how and what caused industries to fail. For example, Sri Lanka was the number 1 global tea exporter prior to 2007, but now its Kenya. If one were to analyze the actual factors for the low performance of the industry, it would reveal that the core reason was lack of strategic planning and long-term business foresight.
16 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Facts show that 72 percent of the global tea production is from China, India, Kenya and Sri Lanka. Whilst China and India are the largest producers of tea their domestic consumption is far greater than anywhere in the world and hence the greater portion of production is consumed internally leaving Sri Lanka and Kenya to compete for the top export notch.
From 2004 to 2007 global statistics show that global tea supply had always exceeded demand and under such conditions, it was easier for Kenya to overtake us since they were able to cater to the global market at lower prices than Sri Lanka, since their cost of production was comparatively low.
However, in terms of quality, Sri Lanka is still considered globally as the best exporter of black teas. According to recent market information from Bloomberg, the global tea shortage which began in 2008 is said to increase in 2010 as well due to demand from ME, Russia and East Europe where the demand for tea is virtually inelastic. Global experts say the Russian market alone is worth over $3.3 billion.
A simple analysis of the supply side shows that India’s tea output would continue to drop, as witnessed in 2009 due to weak monsoons and domestic consumption, whilst Kenya too would be affected due to prolonged drought conditions and time lag to commence production. Obviously in a scenario where the supply is decreasing whilst demand is increasing, a strategic tea exporter should definitely be able to exploit the situation.
If so then why did the Sri Lankan tea exporters fail? It is a known fact that when global prices were falling prior to 2007, most plantations reduced their investments in the plantations gradually. When the tea prices started to increase the volumes produced were insufficient to meet the global demand depriving producers of higher income.
In addition the curtailing of credit to vulnerable sectors affected the working capital of tea factories. This obviously shows the lack of business preparedness and long term planning. This lapse cannot be blamed on others, as responsible businessmen, we need to accept the reality, learn from our mistakes and move forward with better business foresight. Though profit is an important factor for sustaining businesses in the long run, we should not forget that in any industry profit margins would fall due to the industry life cycles. It is also important to invest in your own business to sustain it.
Yet the commonest argument among several tea producers and negative critiques was the increasing wages which many blamed on the government and the President. Businesses need to strike a balance between costs of production including reasonable wage structures, and market prices conducting market studies. Diversification of production to the local and global markets too would help spread risk as well as earn better profits.
Global tea watchdogs state that the average retail price for tea in Russia was about $18 - 20 per kg compared to the average global retail price of about $10 - 13 per kg, but due to the shortfall these prices are expected to rise. In Sri Lanka the cost of production (including labour) is about $4-6 per kg, which leaves a margin of about $7 globally and about $12-13 in the Russian market. If an organization cannot play within a margin of $7 to $12, then it is in fact a radical implication on productivity rather than anything else!
Even the GSP+ issue is blamed on the current regime. If one were to critically analyse the circumstances surrounding the GSP+ issue, it is quite evident as per reports of the European Commission that even at the time of granting the GSP+ concessions initially, a clause was entered saying that an investigation into violation of ratified conventions is pending. Yet these actual facts are never discussed in unbiased debates, and the issue itself is used as propaganda for political benefits, which is not ethical for any professional.
17 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The brunt of the global financial crisis hit the apparel industry in Sri Lanka mainly due to decreasing demand caused by global liquidity constraints, inflation, and loss of employment in major export destinations. A look at the garment exports, show that in 2000 the export volume was about USD 2 Bn., whilst by 2004 it had reached about USD 2.7 Bn.
By end of 2008 in spite of all the negative impacts of the global markets, exports were about USD 3.5 Bn. Out of the total garment exports about 49 percent was directed at the EU market whilst about 45 percent was for the US market in 2008. During previous years, about 50 percent to 56 percent of garment exports were for the US market. As the financial crisis affected the US market more than the EU market, the growth over 2007 was 10 percent for EU bound garment exports whilst exports to the US shrunk by 9 percent. Yet it is important to note that other export destinations and specially Canada had grown by about 30 percent. Sri Lanka is by far the only nation that does not employ child labour, whilst maintaining a high standard of treatment of workers in most factories and focused sharply on quality and deadlines.
It is therefore quite appropriate that Sri Lankan garments are branded as ‘garments without guilt’, for only in Sri Lanka do we have such high worker standards compared to any competitor nation. If the EU removes the GSP+ concessions, Sri Lanka would fall under the standard GSP structure, which has reduced tariffs. According to a press release by the European Commission, in 2008 the EU imports from Sri Lanka under GSP+ totalled EUR 1.24 billion which includes a major portion of apparels. The statement goes on further to say that if the GSP+ treatment had been withdrawn, the EU would have collected an additional EUR 0.078 billion in import duties.
There is no argument that Sri Lankan exporters would greatly benefit from the GSP+. Though controversial, it could be argued that under high inflationary conditions, unemployment rates and recessionary conditions in almost all the major garment export destinations in the EU, the removal of GSP+ for Sri Lanka would indirectly affect their own economies as well.
Further a decrease in imported quality garments (without guilt) from Sri Lanka would perhaps shift a portion of the EU market demand to low quality substitutes of other nations, which have track records of employing child labour. If such were the case, the EU would become contributory to advocating child labour and other forms of unfair employment practices in the third world, which would amount to actual violation of the very same conventions they are now advocating to us!
Corruption - the rationality When critiques find it difficult to pin the blame on the achievements made during the last 4 years with the implementation of the Mahinda Chinthana under a strong leadership, it is perhaps the only available option to resort to accusations of corruptions. These accusations are however never based on factual evidence as various eminent professionals have shown.
One of the much hyped ‘figures’ used by several economists in Sri Lanka is the Corruption Perception Index (CPI) which is a ‘figure’ and a ‘rank’ given to nations by Transparency International (TI) a self proclaimed global civil society organization that claims to lead the ‘fight’ against corruption and claims to have improved the lives of millions. They define corruption as “the abuse of entrusted power for private gain. It hurts everyone whose life, livelihood or happiness depends on the integrity of people in a position of authority.”
However as rational people, it is not prudent to accept this index or its figure for two major reasons. Firstly, it is only a ‘perception’ and not based on the performance of a basket of indicators of any relevant industry or the economy or any other demographic aspect. Though some may argue that its absurd to use such indices in forming an index for corruption, the rationale is simple, if corruption exists at such unprecedented 18 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 levels, then obviously there can be NO economic development or improvements in other social indicators either! It is appropriate to use either lag or lead measures for such controversial indices because they can be factually proven and shortfalls can be identified for improvements more constructively. Secondly, this index is absurd in methodology adopted and way the perception scores are calculated. It is not the intention of this article to give details of the fundamental violations committed in the calculating process, but a few instances are appropriate for highlighting.
The surveys are conducted from the data given by ‘experts’ selected by TI itself, and not on any rational selection methodology used in valid surveying, hence the political biases as well as halo and horn effects are obviously rampant. In addition, several mechanisms are adopted to ‘smooth’ out the figures in line with previous years’ and lastly the figures are based on the preceding 2 years which actually distort the figures. The detailed calculation and methodology, is publically available at the TI website for you to individually ascertain the truth!
As rationale beings, we should accept the fact that corruption exists in every nation, and what matters is not the harping of corruption itself, but debating whether suitable and practical mechanisms to control it at a minimal level are in place and what we can do to have them in place. This should be a collective effort and not limited to ‘that’s your job,’ ‘not my job’ mentality. If one really wishes to compare the levels of corruption, it should be done in line with the size of the economy, which would actually show that the highest volumes lie in some of the nations that are ‘perceived’ to have low corruption indices!
Danger of the Western Political Factors and Conclusion The recent changes in the political agendas of various parties in Sri Lanka highlight a much sinister plot. Firstly, the facts and figures both available in the domestic and international front prove beyond a doubt that Sri Lanka is indeed developing on all fronts, economically, socially and politically.
The political stability under the Mahinda Rajapaksa government and the relevance of the Mahinda Chinthana one and two policy documents in uplifting the nation is now evident with all major international reputed bodies acknowledging the facts and Sri Lanka being categorized as an emerging market by the IMF after just four years of leading the nation. However, we should not be naive to intentions of various Western powers especially in the wake of their actions and sentiments towards Sri Lanka. Firstly they tried to incriminate Sri Lanka on war crimes, which when stalled were shifted to the GSP+ issue.
A critical analysis of the conventions advocated by EU for GSP+ show that it would allow for international bodies to extradite a Sri Lankan individual and try him/her in the international courts irrespective of other laws in the home nation. This is the same ‘law’ adopted by the British when they colonized our nation and offenders were ‘extradited’ to England and tried there. A very visible and dangerous indication of virtual colonization of us Sri Lankans once more - this time with conventions. These conventions would never allow a democratically elected ruler to remain in power if he or she is firm in national policies.
Secondly, it is only the President, Mahinda Rajapaksa that had the gut to stand firm in principle without stooping to various advocates of the Western world when they tried to forcefully implement various policies and conventions on issues such as war crimes and baseless accusations, implementing of subsidies for the agricultural sector, development initiatives, political reforms etc.
These actions are clear indicators of the earnestness of Western Powers to ensure that Sri Lanka remains in an underdeveloped and poverty stricken status simply because that would amount to political instability. Just like the colonial days when nations were subdivided and ethnic disharmony was always manifested, the political instability would mean that there would never be a strong leadership and a common focus for people making it easy for the Western powers to have proxy governments to plunder the nations resources. 19 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
This means that the West undoubtedly views Mahinda Rajapaksa as the birth of a strong leader in a so called poor nation, a leader who can elevate the nation to greater heights as seen with the progress in just four years amidst a war.
The emergence of a ‘non-white’ strong political leader with economic links to nations such as China and Russia as well as Cuba and Libya is perhaps a great headache and threat for these Western nations given the strategic location of Sri Lanka and its resources.
It is during Mahinda Rajapaksa government that oil explorations in Sri Lankan waters commenced, which is also a matter of concern for an energy deprived West. Further, as shown above, these Western nations are now growing ‘old’ without a replacement population, which means that they would need to ‘colonize’ the third world again to ensure the well-being of themselves during ‘retirement’ years!
Lastly, the same episode of Sri Lanka, where the opposition is contesting with a common candidate was repeated in the CIA’s famous operation Ajax, in 1953, when the Iranian coup d’‚tat deposed the democratically elected government of Iranian Prime Minister Mohammed Mosaddeq who was perceived to be an emerging strong leader with nationalistic views.
The United States’ Central Intelligence Agency (CIA) organized and executed the overthrow of the nationalist government of Prime Minister Mosaddeq with support from the British government. The simple reason for overthrowing the democratically elected leader was that he was firm to ensure that profits from oil would not flow to Britain but would remain in Iran to benefit its people and the development of the nation.
This enabled Mohammad Reza Pahlavi to become an authoritarian monarch who ironically was also a military leader. Pahlavi ruled Iran for 26 years until he was overthrown in 1979 and during that period Iran never profited from its resources.
Similarly the Western powers have always resorted to various ratifications of conventions or baseless accusations of corruption or war crimes to extradite nationals of emerging nations such as Sudan and Argentina especially in instances where the leader is perceived to be firm and unyielding and the governments (irrespective of the size of the cabinet etc.) is comparatively stable and consists of a majority. Negativity, ‘no can do’ culture, ‘blame’ culture and naivety of the truth are the true aspects of under- development and third world mentality.
A nation would have taken the first step, the moment its people embrace national pride and strive to work towards a common goal! All these facts prove that Mahinda Rajapaksa is indeed a great leader, strong and firm in commitment and performance.
The Mahinda Chinthana ‘Idiri dakma’ is comparatively a more suitable policy legislature that identifies and addresses the unique economic and social structure of Sri Lanka! It is nationalistic and embeds the transformation of a nation to rise up with national pride and emerge a winner - to be the Paradise that we once were and should be.
The choice for the people is factually clear in spite of all baseless accusations which have been proven to be false! Therefore Sri Lanka definitely needs a firm President such as Mahinda Rajapaksa to take the next step of transforming Sri Lanka from an emerging market to that of the 1st world and then beyond!
20 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 25, 2010 LANKA NEEDS GREEN ECONOMY BASED ON GREEN ENERGIES – ENVIRONMENT MINISTER SIXTH FASTEST GROWING ECONOMY IN 2010
By Ifham Nizam
The Economist magazine states this year (2010) the Gross Domestic Product (GDP) of China will be US$ 9,845 billion, Brazil US$ 2,113 billion, India US$ 3,876 billion whereas the GDP of the US is US$ 14,840, Germany US$ 2,807 billion, Britain US$ 2,160 billion and Japan US$ 4,228 billion.
This clearly indicates the strength of the emerging economies and the declining of the western economic might.
The same report placed Sri Lanka as the sixth fastest economic growth country in 2010. These developed western countries comprise only 46 per cent of the global economy in 2009 and their share has been constantly declining.
Most of their growth rates are either minus or near zero. On the other hand, the Asian economies are catching up the markets.
To maintain the competitiveness, the western countries need more and more fossil fuels. These developed nations clearly had seen the catastrophic environmental disasters which may annihilate the entire human civilization. If they are allowed to continue business as usual model, -burn more fossil fuel- to achieve more growth at the expense of the environment.
Now, the US and EU have realized that they cannot bargain with the rest of the world. For them, the rest is too big to be handled. They could not achieve their motive to have a new deal which includes mitigation targets for China, Brazil, India and the rest of the developing countries.
Although, these western countries always used to preach democracy, equality and human rights they tried to show the world that the so-called Copenhagen agreement which was endorsed by a very few countries as the general consensus.
In the mean time, the west want to burn more fossil fuel in the future as they did in the past disregarding the equity principal of other nations realizing modern day climate Nazism where some `super nations’ exist. And they just endanger the very existence of the future generations by allowing catastrophic environmental disasters.
Now both the USA and EU are evolving a new phenomenon. According to a Newsweek report in December 2008 European and the US law makers are weighing bills to impose taxes on trade partners who fail to reduce their carbon footprints.
Environment and Natural Resources Minister Patali Champika Ranawaka says these broader tax adjustments were meant to stop `carbon leakage’. "When companies operating in nations with rigid emission controls -say EU- move their factories to countries with more tax standards -say China or Sri Lanka. Some advocates say that the taxes are a green stick, wielded to force developing nations in to a global climate compact."
21 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
He added that if one look at the American clean energy and security act of 2009 proposed by Waxman – Markey, it clearly indicates the coming green taxes to control goods imported to the US from developing countries. The legislation has four titles,
1. A clean energy title that promotes renewable source of energy and carbon capture and sequestration technologies, low carbon transportation fuels, clean electric vehicles and the smart grid electricity transmission.
2. An energy efficiency that increases energy efficiency across all sectors of the economy including building appliances, transportations and industry.
3. A global warming title that places limits on the emissions of heat trapping pollutants, including Carbon Dioxide emission from fossil fuel burning where the USA emits 25,000 Kg per capita in 2009.
4. A transitioning title that protect the US consumers and industry and promotes green jobs during the transition to a clean energy economy.
He said transitioning to a clean energy economy, there is a sub title called ensuring domestic competitiveness which says `to ensure that the US manufactures are not put at a disadvantage relative to the overseas competitors’.
The draft authorizes companies in certain industrial sectors to receive `rebates’ to compensate for additional cost incurred under the program. Sectors that use large amounts of energy and produce commodities that are traded globally would be eligible for the rebates.
If the President finds that the rebate provisions do not sufficiently correct the competitive imbalances, the President is directed to establish a ‘border adjustment’ program. Under the program foreign manufacturers and importers would be required to pay and hold special allowances to cover the carbon contain in the US bound products.
Similar piece of legislature has been prepared in EU countries as well, aiming to achieve these twin goals. By imposing carbon trade barriers for foreign manufactured goods and services, they want to enhance competitiveness of locally manufactured goods –protectionism- and at the mean time force the goods manufacturing countries to cut their emission levels.
Ranawaka believes by that way, they (west) are going to wage a green trade war on developing countries that refuse to accept the so-called Copenhagen agreement which advocates binding emission cut targets for developing countries as well.
Sri Lankan export market heavily depends on North America and EU nearly 70 per cent of total export. Therefore, these western countries could use this green trade tariff to control Sri Lanka exports if we were going to produce our energy from fossil fuels. So far Sri Lanka is categorized as a very low Carbon Dioxide emitting country.
Sri Lanka’s per-capita emission level in 2009 is 660 kilogram’s whereas in India it is 2000 kilogram’s and in China it is 5000 kilogram’s.
Ranawaka says over this value in 2009 no country could impose a green trade tariff on the US – Sri Lankan, because even according to the IPCC’s carbon budget, environmental permissible level per-capita for 2009 is 2170 kilograms. 22 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
"We are far below that level. But we are now in the process of introducing 1000 Mw coal plant in Norochcholai and another 1000 Mw plant in Sampur. Generally, coal power is being used as based load power where it generates electricity continuously over the time.
So, it may increase our per-capita emission level dramatically -nearly doubled. According to the Ceylon Electricity Board’s national plan, they are going to install another 3600 Mw capacity coal plants in the time to come.
This type of emission clearly goes far beyond the carbon budget stipulated in IPCC, meaning the carbon foot print of our manufactured goods will be very high.
Ranawaka added: "We could not be able to sell these goods to western countries in the near future. Whatever the green trade sanctions that would be imposed by western countries we should discourage ourselves using more and more fossil fuels and as an alternative we should encourage renewable energy sources as clean energies."
He said that because the depletion of fossil fuel coupled with global warming caused by burning of same fossil fuel will force us to do so besides the western trade sanctions.
Ranawaka strongly believes Sri Lanka needs to have a green economy based on green energies.
On the other hand developing nations should evolve new trade avenues. While imposing counter green trade tariffs for the worst polluted markets and countries of the western world, they should improve their own markets and act together to combat climate change and climate terrorism perpetrated by the western world.
23 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 26, 2010 INDUSTRIAL INDICES PRIVATE SECTOR OUTPERFORMS PUBLIC SECTOR
By Devan Daniel
With the main presidential candidates going into today’s elections promising wage increases to the public sector, latest data from the Central Bank shows that the private sector industries outperform public sector industries as the private sector industrial production index recorded positive growth while the index of the public sector declined.
The Public Sector Major Industrial Output Index decreased by 15.4 percent from 100.2 points in October 2008 to 84.8 points in October 2009, according to economic data released by the Central Bank last Friday. The base year for this index is 1997. The Private Sector Industrial Production Index, with a base year also of 1997, grew by 3.4 percent to 181.9 points in October 2009 from 176 points in October 2008.
For the first ten months of 2009, the Private Sector Industrial Volume Index gained 2.2 percent to 170.6 points from 166.9 points in the corresponding period of 2008. The food, beverages and tobacco category gained 5.1 percent, the textiles, apparels and leather products category declined 0.9 percent, wood and wood products gained 3.1 percent, paper products gained 3.7 percent while chemical products gained 0.8 percent.
These figures were presented in the latest Monthly Economic Indicators released by the Central Bank for the month of November 2009. Public sector industrial output was available for the first nine months of 2009. The Public Sector Industrial Output Index for January to September 2009 declined a marginal 0.38 percent from 82.75 points in 2008 to 82.44 points.
The food, beverages and tobacco category declined by 25.63 percent, paper products sector declined by 1.23 percent while non-metallic mineral products sector declined 41.32 percent. The Wood and wood products sector gained 23.82 percent while chemical products gained 0.17 percent.
With public finance in a precarious position, the Central Bank warns against increasing public sector wages and other ‘reckless’ spending as it could badly effect the growth of credit to the private sector.
According to latest Central Bank data, credit to the government from the domestic banking sector had grown 25.1 percent in November 2009 from November 2008 which had grown 44.3 percent from 2007. Private sector credit growth had declined by 6.1 percent in November 2009 from November 2008 where a positive growth rate of 8.5 percent was recorded from 2007.
The country’s industrial sector grew by 4.4 percent during the third quarter of 2009, which was an improvement from the 1.9 percent and 3 percent growth rates for the first and second quarters respectively. Mining and quarrying grew by 5.6 percent during the quarter. The manufacturing subsector grew by 3.2 percent with the country’s leading export, apparels, growing by 1.1 percent. Electricity gas and water grew by 6.7 percent, with the electricity sector growing by 6.6 percent.
The construction sector grew by 6.4 percent led by infrastructure development activities of the government, the statistics department said.
According to the department of Census and Statistics, about 89,000 jobs in the industrial sector were lost during the September 2009 quarter.
24 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 26, 2010 SL NEEDS SKILLS DEVELOPMENT, NOT FINANCIAL ASSISTANCE - HIROYUKI ARAI FIELDS INCLUDE HOUSING, FISHING, HEALTH CARE, EDUCATION AND TOURISM
By Zacki Jabbar
Sri Lanka needs skills development and not financial assistance, says Japan Renaissance Party Secretary- General and House of Councilors member Hiroyuki Arai. Hiroyuki, who was in Colombo recently, told The Island that the purpose of his visit was to help Sri Lanka in its post-war recovery process, by providing expertise in skills development.
Asked how he can assist while being a member of the opposition, Hiroyuki said opposition parliamentarians are allowed to submit their proposals directly to the Japanese legislature. Once approved, the government has to act on it. Stressing on the importance of harmonizing all communities, he observed that it was a prerequisite for economic development in a multi-ethnic and multi-religious country such as Sri Lanka.
"What Sri Lanka needs is skills development. Not financial assistance. I am here to study, how Japan can help in your post-war recovery process. There are about 250,000 war refugees in the North. They need, housing, infrastructure development and jobs," Hiroyuki said.
"We have a 62-year-old partnership and are ever grateful for the speech made in support of Japan, by former President J. R. Jayawardene at the San Francisco Peace Conference." Citing fishing as an example, he said Sri Lanka does not have the necessary technology to separate the big and small fish that are caught. "So, we can bring one of our fully equipped fishing ships to Colombo and train your fisherman to use its advanced features."
Questioned if the ship would be given to Sri Lanka on completion of training, Hiroyuki replied that it could be arranged through a joint venture, established between Japanese and Sri Lankan companies. "Another area where we want to assist in, is in health care. Today, I observed the manner in which your patients, are taken to hospital. Here, too skills development can be provided. There is a big gap between the number of medical personnel and ambulances in Sri Lanka. Ambulances can be gifted to bridge the difference." Speaking regretfully, he said Sri Lankan drivers were indisciplined and skills development could be imparted in this respect as well.
Co-operation can be extended to the fields of education and tourism also. This would include teaching Japanese to Sri Lankans who are interested in participating in University Exchange Programmes and employment in Japan.
With regard to tourism, the Japanese people will be encouraged to visit historical and archaeological sites in Sri Lanka, Hiroyuki said.
Matsuhita, a member of the visiting JRP delegation, said that they do not want to force Sri Lanka to follow Japan.
"We are trying to help in a manner, that you can be independent in the future. Look at us, like a parent who is assisting a child develop." Sri Lanka’s Honorary Consul to Japan, Sunil Gamage, said the JRP delegation, had done a needs assessment study before leaving for Japan.
They are due to return on a follow-up visit shortly. 25 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 26, 2010
RPC SOCIAL WELFARE PROGRAMMES INVIGORATE ENHANCED WORKER LIFESTYLES
By Steve A. Morrell
Talk of worker welfare, talk of worker housing, talk of the Plantations, usually preconception is a forgotten group of people in an assumed situation of captivity relegated to some forgotten limbo of servility. That was what it was? Maybe not. But pan into its present day and age. This is what you will see.
Lets assume you drive on the Colombo, Hatton road; first class road, by the way, and you enter the Ginigathhena Pass. That entry point takes you to real Tea country. You journey to the Hatton border and beyond and an unfolding kaleidoscope of manicured tea- land orderliness delivers, literally, scenic natural beauty with every bend on the road.
What follows is not about natural beauty, but that element of worker welfare welded into the landscape where worker homesteads have now been established and each family have their homes with their garden plots; but its most important phenomenon is that established housing schemes ensure privacy and dignity.
Having said all that, there are yet about 158,000 old, line rooms on the plantations; true; these are, and have been baneful images of plantation workers and their way of life, but there are changes brought to bear on the entire concept of social welfare on the plantations.
New housing now about 20 percent of those old line rooms are just one aspect of social development on the plantations. Doubtless a long way to go to have every family live in their own house, but things are happening.
We have examples of two Plantations where worker welfare has taken on new meaning. Talawakelle estate in the Talawakelle mountain range, managed by Talawakelle Plantations Limited, and Matakelle Estate, skirting the Tea Research institute, also in Talawakelle; managed by Maskeliya Plantations limited.
Talawakelle has a resident population of about 3365 souls; 651 of them workers. The estate is divided into administrative Divisions each with its child development center. Child development is now an established priority and emphasis on child care facilities could match any nursery school located in most urban centres.
Nutrition, organized educational recreation, and more so children are constantly under care of a trained care giver who ensures safety of infants and toddlers till they are old enough to go to school. Parents therefore attend their daily work routine confident their children are well cared for.
Maskeliya Plantations Limited manage 18 Plantations and have invested about Rs.138 million over the years, on welfare activities on their estates, we are informed.
Talawakelle housing schemes now have 92 new homesteads built, and families in residence have already experienced new life styles and added on confidence to their bearing.
26 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
General Manager Human Resources and Quality Management Development, and also Visiting Agent in the company, Theja Dharamaratne, said health services in estates managed by his company also concentrated on educating worker’s children. He said seven youngsters had entered university with financial assistance from the company.
It is now not surprising that they have their land telephones, mobile phones, TV sets and those with big city influences, fridges, and usual family accoutrements one sees in urban locations.
Housing and social development on the plantations is in continuous development through interventions of the Plantation Human Development Trust (PHTD) ( The Trust), and the NHDA.
Matakelle Estate too has seen similar welfare development procedures in place.
As done on most Estates, because pregnant mothers are sent in time to Government hospitals for maternity. The Health department ensured maternal deaths are now nearly not the social problem it was. So too infant mortality. Infant mortality which was 100 per 1000 births on Estates early 1980s, is now below the national average of 15 per 1000 births.
These are good pointers that worker welfare is an ongoing phenomenon eventually to be in sync with any national average.
Maternity wards built on Estates are now maternity clinics, he said, and serve health needs of workers.
Both these Estates have trained health personnel who ensure worker welfare is constantly reviewed and improved.
All welfare facilities and medical needs are provided free and benefits and do not in any way burden workers .
Social Welfare and worker development has come a long way. The question could be asked if privatization had its salutary impact on worker development socially.
Feed back is that such has had positive responses.
27 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 28, 2010
FIGHT CORRUPTION, WASTE TO DELIVER ECONOMIC DIVIDENDS
By Devan Daniel
Despite the war being won, pushing Sri Lanka’s growth prospects upwards, and the unprecedented infrastructure development activities that are underway, economists warn that unless Sri Lanka’s political leaders fight corruption, uphold democracy and eliminate wasteful and reckless spending sustainable peace dividends would not filter down to the people, especially the poor and underprivileged.
At the time of writing Mahinda Rajapaksa was leading the presidential poll with a little more than 58 percent compared to his rival Rtd. General Sarath Fonseka with more than 35 percent.
"It was the first presidential election to be held after the war ended last May and it was a shame that the run up to elections were marred with violence which saw four people killed. We also hear of several incidences on polling day and after. This is sad," an economist told the Island Financial Review on condition of anonymity.
"Sri Lanka’s economy is in cross roads. The 30-year-old war has ended and this should free resources to develop the country, but sadly corruption, nepotism and bribery are still part and parcel of Sri Lanka’s political administration.
"It is true that there are infrastructure developments taking place, perhaps at a level unprecedented in Sri Lanka’s economic history after the 70s, but democracy remains in shambles and public finances are unsteady as well. The next president of Sri Lanka would have to address these issues. He would have to be brave enough to do so," he said.
A study conducted by the Sri Lanka Economic Association says corruption at all levels of government had cost the country about 9 percent of GDP each year — less than what was spent on the war effort.
Sri Lanka went to the presidential polls with the Central Bank warning that public finances already lacked the capacity of realizing the economy’s full potential for generating employment and growth in productivity.
The Central Bank said the government finances were in precarious position (in a dangerous state because it is not safe from corruption and firmly fixed on good policies). The need to rationalize recurrent expenditure and reform the tax administration is often repeated in Central Bank publications.
The Institute of Policy Studies in its recent report ‘Sri Lanka: State of the Economy’ said fiscal policy management in the country has always been the bane of underlying weaknesses in the economy.
"Recent experience has not been very different," it said, although adding that there have been some improvements in the infrastructure development front and in some fiscal indicators.
28 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Current expenditure has declined from 18.1 percent of GDP in 2005 to 16.9 percent in 2008. Capital expenditure has not changed much, in fact declining from 5.8 percent in 2005 to 5.7 percent in 2008.
The budget deficit which was at 8.4 percent in 2005 has improved to 7.7 percent in 2008.
The significant inflationary pressure since 2006 is attributed to, in large part, to domestic financing of the government’s budget deficit.
The Institute of Policy Studies laid down the usual prescriptions: rationalizing recurrent government expenditure and reforming the tax administration. But most importantly it said the government would have to eliminate profligate (wasteful) expenditures.
Even Central Bank Governor Ajith Nivard Cabraal, accused by some for politicizing the Central Bank, had to warn the government that reckless spending would result in printing money, which would in turn fuel inflation and when interest rates are raised to curb inflation, the private sector would suffer without access to funds, putting pressure on expansion and working capital stunting their capacity to create jobs are provide decent wages.
Economists and analysts argue that the 17th Amendment to the Constitution had to be implemented.
"The 17th Amendment would ensure the independent commissions would be put in place to regulate all aspects of government, including the president. This is important if we are not going to repeat the instances of wasting and siphoning off public money as in the past," another economist said not wanting to be named.
A high percentage of Sri Lanka’s workforce, about 60 percent, are employed in the informal sector which leaves them vulnerable to exploitation as they are not entitled to statutory holidays, working hours and remunerations and compensations.
Furthermore latest unemployment figures suggest unemployment could pick up.
2009 Third quarter unemployment figures reached 5.9 percent after recording the lowest of 5.5 percent during the corresponding quarter of 2008 after a gradual decline from 8.1 percent in 2003, data released by the government’s statistics office showed.
Poverty levels have declined since 1995/96 where 28.8 percent of the population was below the poverty line to 15.2 percent in 2006/07, both indicators excluding the North and East.
The Samurdhi programme which was allocated a little more than Rs.10 billion in 2009, aimed at providing relief to poor households providing relief to 30 percent of the population despite the poverty rate being at 15 percent, is seen as safety net for politicians instead.
29 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily Mirror – January 28, 2010 NORTH AND EAST DEVELOPMENT TAKES OFF THURSDAY By Cheranka Mendis
Two provincial development loan schemes, 'Awakening North' and 'Development of the East', recently received the benefit of a slash in lending rates from 12 per cent to nine per cent. These schemes have been growing steadily since their implementation six months ago. Development of the war torn north and east has been progressive, with more people coming forth to obtain loans to start their own businesses. These medium term credit facilities are provided by the Central Bank for facilitating capital investments for the resumption of economic activities in agriculture, livestock, fisheries and micro and small enterprises. The maximum limit extended through these facilities is Rs.200,000. The maximum repayment time for the scheme is five years, with a six month grace period.
Records of the Central Bank show that by 31 December 2009, some 10,488 people from both provinces - 8,226 for 'Awakening North' and 2,262 for 'Development of the East' - have registered for loans in six financial institutions, which have come on board with the Central Bank to provide these loans. These financial institutions are Bank of Ceylon, People's Bank, Hatton National Bank, SANASA Development Bank, Commercial Bank and Seylan Bank. The total value of the registered loans is estimated at Rs.444.79 million.
A senior official of the Central Bank revealed that, even though 10,488 people had registered for loans, only 5,478 loans, valued at Rs.732.7 million, had been granted as at end December. "Up to December, 4,355 and 2,262 loans were granted by five of the six banks working with the Central Bank for the 'Awakening North' and the 'Development of the East' loan schemes, respectively." However, only 1,411 loans have been refinanced by the Central Bank at end December, representing a fifth of the total loans granted by the banks.
These banks have not claimed the amounts of all loans granted, according to the Central Bank official. Only Rs.151 million and Rs.31 million have been refinanced by end December for the north and east loan schemes, respectively. "Funds allocated for both loan schemes amount to Rs.3 billion, a facility which could be increased to Rs.4 billion with board approval. We have already given out Rs.182 million to the banks and are liable to pay a further Rs.550.7 million for 4,067 more loans." The Central Bank expects the number of loans taken to increase rapidly with the fast completion of the resettlement process.
"These loans are given for economic activity. The speedy completion of the resettlement process is vital for the development of the north and east. From our analysis, we estimate that proper development of the area will start only four to five months after people are resettled. They will live the first few months off the subsidies provided by the government; and only after five or six months will they think about cultivation or starting their own businesses." The lack of an adequate number of bank branches in the area was also seen to be a constraint for the fast movement of the loans. However, the DFCC Bank, Union Bank, and Sampath Bank have joined the other six banks to participate in the two loan schemes earmarked for the north and east.
"Soon, the Bank of Ceylon and People's Bank will start a new loan scheme offering up to Rs.50 million of loans for large scale businesses. This will be well received by the businessmen in the area." The official added that on top of the specific loan schemes offered, those in the area also benefit from three other islandwide loans schemes offered by the Government. These loans include the new comprehensive rural credit scheme for plantation and 34 other inter crops, the 'Krushi Navodaya' loan scheme from the 2007 budget and the agro livestock development loan scheme for milk production.
30 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Sunday Island – January 31, 2010
HOW TO INTEGRATE THE NORTH WITH THE REST OF THE ECONOMY By R.M.B Senanayake
I visited Jaffna last week along with some prospective investors and members of the trade chambers affiliated to the Business for Peace Alliance. Despite the much touted Northern Re-awakening or Northern Spring, there is hardly any evidence of reconstruction - at least not in the Vanni. Of course there are complex problems such as mine clearing before the IDPs can be re-settled in their former habitations. Firstly development planning requires the availability of data. There has been no data collection for the last several decades. Even the population of the Northern Province is not known for a certain. What is the density of population in the Jaffna peninsula and in the Vanni? What is the population in the Vanni? Are there figures of the number of colonists who originally held land under the major irrigation schemes like Iranamadu, Visvamadu, Kanagarayankulam, Mutthiyankaddu etc.? Where are the colonists? Are they all Internally Displaced people (IDPs)?
These major irrigation schemes have been badly damaged by the war. Several tank bunds have been damaged and require to be rebuilt. The irrigation channels taking water from these tanks to the cultivable paddy lands are in neglect and have to be cleaned up and restored. The A9 is not the only road that matters. The village roads and paths leading to the colonization schemes have to be reconstructed. The number of houses to be rebuilt for occupation by the colonists should be ascertained.
One speaker at the Jaffna forum said there are over 200,000 unemployed in Jaffna. Is this figure valid? The Department of Census & Statistics should carry out surveys to ascertain the facts. In the absence of such data how can businessmen ascertain the size of the market? In fact one local businessman said that his home appliances had sold well in the beginning but more recently his sales are stagnant. Someone pointed out that the market would have reached saturation since people do not buy several appliances for a household.
How many middle class families are resident in the Jaffna peninsula? So a priority need is for good economic statistics which could be undertaken by the Central Bank and the Department of Census & Statistics. What is the cost of transport of goods from Jaffna to Colombo and vice versa? Businessmen complain that when the LTTE was operating they extorted money from the lorries. Their complaint is that these costs have not come down. They seem to think there are levies by the Army as well. Perhaps this requires verification.
Costs can be brought down only when there is complete freedom as before for people and goods to move to and from Jaffna. The sooner this day dawns the better it would be for incomes in Jaffna. It would also bring down costs of goods brought from the South stimulate more business. The greater the trade the greater the prosperity of the regions both in the North and the South which enter into such trade for exchange enhances economic value. Trade is enhanced by reduction of costs and hence the transport costs for both goods and people must be brought down.
The tried and tested way is to allow freedom of movement without checkpoints and clearance from the Ministry of Defense. Lasting security does not arise from barbed wire fences or military checkpoints but from national reconciliation between the two major communities. These checkpoints and minor irritations they cause will be tolerated for a while but there is no doubt they will breed resentments as we all feel when we are checked in Colombo. We must build a united Sri Lanka where all have equal rights and equal opportunities without discrimination.
The blatantly unfair standardization for university entrance caused bitterness and anger among the youth. Peace can be built only on justice. The rebuilding of relations between the north and the south must begin 31 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 with rebuilding economic and social relations between individuals of the two communities. There must be free interaction between them. After the A 9 was re-opened there are daily visitors to Jaffna from the south. I saw several special buses from Kandy, Negombo and Kuliyapitiya parked on the roads overnight. It would seem there are about five hundred visitors to Jaffna from the south every day.
This is a good sign. Corporate bodies in the South like Hayleys, John Keells Holdings and the commercial banks have established or re-established their business. On a trip to Point Pedro I saw the cultivation of paddy, mostly rain fed. Bananas, red onions and chilies are being grown and one conglomerate is said to be interested in purchasing bananas for export. Another big company in the chicken farming business is interested in promoting the cultivation of maize.
Fishing has always been an important source of income for the people of these areas. The fishermen have suffered much because of the restrictions on fishing which prevailed during the war. These restrictions are now withdrawn. Many fishermen from the Pallai Divisional Secretary’s area were displaced when the Army and the Navy expanded the High Security Zones. Many are still in refugee camps. The sooner they are re- settled, fishing would increase as an economic activity and increase the national Gross Domestic Product.
Indian fishermen have intruded on our fishing areas in the absence of local fishermen due to restrictions placed on them going out to sea. The fishermen among the IDPs should be re-settled in their former habitations as soon as possible. They cannot be re-settled except in the coastal areas to carry out their occupation. There is a need for deep sea-going fishing vessels and ways and means of meeting the demand for them have to be explored. The fish could be canned and a local canning factory would be the most economically viable.
There is a shortage of capital. Although the Investor Forum hoped to attract expatriate Tamils, there were hardly any. Two expatriates from Australia were both Sinhalese. Apparently the expatriate community lacks confidence in the policies of the government and the restrictions on freedom would have to be removed and normalcy of the past should be restored before we can expect foreign investors to come in.
The foreigners who participated at the Investors forum were not allowed to travel by road and had to fly. Why is this restriction? Some say it is to prevent them seeing the destruction in the Vanni. But the foreign media are perhaps already aware of such conditions. Complete freedom of movement should include freedom for NGOs and INGOs to visit the Vanni and Jaffna freely without seeking the approval of the Ministry of Defense. The government just doesn’t have the kind of money that is required to carry out the reconstruction and resettlement work in the Vanni.
In any case why should the public alone have to carry the financial burden when these NGOs are willing to assist? These organizations are not willing to channel funds through the government. They want to be directly involved in the disbursement of their funds. One could hardly blame them with all these allegations of corruption being freely and even irresponsibly being flung at the government by the Opposition.
Fantastic figures of the extent of corruption are being thrown about. The usual method of estimating the extent of corruption is by determining it as a percentage of the capital expenditure of the government. According to World Bank studies the most corrupt states would have about 30% of the capital cost leaking out by way of corruption. The Annual Budget for 2008 provided for Rs.232 billion as the total Capital Expenditure. The figures touted by the Opposition are way above 30% and hence the Opposition should not mislead themselves by drawing expenditure schemes on the basis of non-existent savings by curbing corruption.
32 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Was the Investors Forum held last week premature? Several investors thought so. Apart from the restrictions on travel requiring approval from the Ministry of Defense and the checkpoint at Omanthai, there is the military in the streets. They also carry out patrols in armored cars. All this smacks of a country which is far from normal. Foreign investors or for that matter even expatriate Tamils are unlikely to invest in this environment. There is also another danger - the military presence in the streets. Experience of the American troops in Japan, the Philippines and South Korea have shown that when the soldiers interact with civilians in the streets minor incidents can take place with individual soldiers and citizens. These could erupt into violent incidents and brawls.
Let us be careful and keep the troops as far as possible away from the civilians. If the soldiers are withdrawn from the streets and kept only to guard strategic places like the airport, the ports and bridges, the risk would be minimized. It would also remove a sense of being under military domination. If we want reconciliation we cannot afford to have the military deployed in the streets. Yes, the military is deployed in the south as well. But this doesn’t generate the same feelings. The deployment of troops in the city also should be reconsidered.
If we want to have one country for which our soldiers fought and died we need to now review our policies to the Tamil minority and address their grievances. Unfortunately both candidates have not stated how they propose to address the issue of devolution. The President keeps silent of whatever commitments he made to the Indian government. But the speeches of the loudmouthed Wimal Weerawansa will be interpreted as his sentiments by the International community and the Tamil voters as well. His campaign seems to lack coherence.
33 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Sunday Island – January 31, 2010
INCREASED OCCUPANCY HAS COLOMBO HOTELIERS OPTIMISTIC By Justin Gouin
December and January were strong months for the Sri Lankan hotel industry as both occupancy and rates climb higher than in previous years. In the wake of the war, Sri Lanka has once again become an attractive option for foreign tourists, many of whom view the country as a budget destination compared to other South Asian destinations. "Occupancy is at 60%, up from 45% this time last year, and although there was a slight decrease because of the election, we expect that the summer will bring strong numbers for tourism and for conferences," says Neroy Marso, general manager of the Cinnamon Lakeside Hotel.
He explains that at the moment the majority of demand comes from local conferences and conventions, as well as some Indian organizations, but that he expects significant growth in international demand in the near future. While tourists still usually opt for the beach resorts outside of the city, a rejuvenated business community has provided a lucrative market for Colombo’s largest hotels.
Rates have also experienced growth, climbing higher in some cases than those mandated by the 1 November 2009 minimum rate structure that requires all hotels of the same star rating to post prices above a given base rate.
The law, which was initially met with skepticism, has benefited most parties by re-distributing business amongst Colombo’s hotels. For hotels with lower star-ratings the minimum rate structure played an integral role in making their businesses competitive again. With rates sinking in previous years, most tourists and business people would opt for a higher star hotel at a slightly higher price. Minimum rates have brought business back to 3- and 4-star hotels, making their lower prices attractive to both travel agencies and to international tourists looking for a bargain.
As demand from the business community increases, however, this has not had much of an effect on the upscale hotels. According to Mr. Sampath Siriwardena, general manager of the Galadari Hotel, "although it [the law] initially took away a portion of the tourist market, the large increase we have seen in conventions and conferences have more than counterbalanced any of these losses."
As well, he says that the European market is beginning to pick up and that this will likely result in a higher volume of tourists at top-tier hotels over the summer months.
After years of low demand and decreasing rates due to the war, all this bodes well for Sri Lanka’s tourism industry. As the political situation begins to stabilize, and as promises for infrastructural development are realized, expectations are that local and foreign direct investment (FDI) in new hotels and resorts will only multiply these recent gains.
Siriwardena claims that while Sri Lanka’s tourist volume in 2009 was around 500,000, future projections estimate that by 2015 there will be nearly 2.5 million visitors per year. With big potential for new resorts the south, east, and west, it is likely that Sri Lanka’s tourism industry is going to experience an unprecedented boom, and this can only mean good things for hotel industry.
"I believe we will see improvements to the infrastructure, and the construction of more hotels and resorts," says Siriwardena, "All this will help the tourism industry grow, it will benefit the us and the country as a whole."
34 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Sunday Times – January 31, 2010 TOP TEAM NEEDED TO LIFT SRI LANKA’S ECONOMY By Natasha Gunaratne
Economists, among other issues, are urging President Mahinda Rajapaksa to induct a set of open-minded, modernist and innovative economic advisers who can lift the Sri Lankan economy from medium-level equilibrium to a high-level equilibrium economy during his second term in office. One leading economist in Sri Lanka, Muttukrishna Sarvananthan who is also the Principal Research at the Point Pedro Institute of Development, told the Business Times that the government should focus on four policy priorities that are indispensable for achieving sustainable double-digit growth rate. Dr. Sarvananthan said it is imperative to restore good governance which includes ensuring freedom of information, particularly on financial and economic information and media freedom. The President should clamp down on corruption, instill transparency and accountability in economic policy and management and improve the protection of human rights in the country. He said the government should take concrete measures to wind down the over-sized public sector which has become a huge burden on more than 80% of the population that is outside the public sector. He also said appointments to public office, both government and semi-government, should be made on merit, competence and performance. Dr. Sarvananthan’s last point was to urge the government to undertake education reforms and increase private sector participation in primary, secondary and tertiary education including local and foreign private universities in the country. Another leading economist and Professor at the University of Colombo Sirimal Abeyratne said the President must focus on developing economic prosperity, undertake programs for national integration and should exercise fiscal discipline. Dr. Abeyratne said the Mahinda Chintanaya, the President’s manifesto talks about nurturing local entrepreneurship through the increased role of the government. He also said that the manifesto is seeking to develop local entrepreneurship with increased government assistance outside of the economic policy environment which is something that has never been done before in any country. Dr. Abeyratne said that according to the results of this week’s presidential election, President Rajapaksa managed to get a majority of the votes in the more rural and predominantly Sinhala areas of the country while the election results showed he was weak in the North and East, upcountry areas such as Nuwara Eliya and also in more urban areas. “This means he has not won the hearts of the Tamils in the North and East. Even in the more business oriented urban areas, it seems like there is a reluctance to accept his economic program,” Dr. Abeyratne said.
He added that over the past few years, other South Asian countries including India have improved tremendously in combating corruption according to Transparency International’s corruption perception index while Sri Lanka has gone down. Dr. Abeyratne said corruption levels are quite high in Sri Lanka while the rule of law is weak. The President will also have to address these issues during his second term. Speaking on the President Rajapaksa’s vision to transform Sri Lanka into a Fivefold Global Hub (naval, aviation, commercial, energy and knowledge hub), Dr. Abeyratne said Sri Lanka’s geographical location, diversity and human resources will be advantageous. However, he added that a peaceful political environment must prevail which requires political will and the correct economic ideology. Senior lecturer at the Department of Economics of the University of Colombo Lalith Gunaruwan said the Fivefold Global Hub project will be the engine driving the economy forward, pulling the agriculture, services and industry sectors along. Dr. Gunaruwan said maximum benefits must to be accrued to the local economy in the process. Dr. Gunaruwan said the priority for the President should be to focus on planning and implementing his vision in the 2010 Mahinda Chintanaya. Government agencies such as the Ministry of Finance and Planning, the National Planning Department and the external resources department amongst other institutions will need to meet and draw up a plan for implementation. He added that the government should also ensure that every dollar that is spent is spent efficiently with no leakages and no siphoning. He added that the government’s economic efforts should be beneficial to local entrepreneurs as part of the President’s national economic development plan as well. 35 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Sunday Times – January 31, 2010 ECONOMIC DEVELOPMENT -- IN SEARCH OF CONSENSUS
By Milinda Moragoda, Leader of the Sri Lanka National Congress, Minister of Justice and Law Reform The re-election of President Mahinda Rajapaksa with a historic mandate accounting for nearly 58% of the total votes cast presents a unique moment for Sri Lanka to capture the many opportunities for economic development which we have missed since Independence. This overwhelming victory should serve as a wake- up call for our political establishment across all party lines to stop squabbling on parochial and personality- based issues and to unite and work together on matters of national importance. The electorate has clearly demonstrated that they desire stability and continuity.
During the past four years, President Rajapaksa has been laying the foundation for a growth-based development agenda through an ambitious island-wide infrastructure development programme. The President has said that, during his second term, he intends to pursue national reconciliation, nation-building and economic development with the same single-minded determination that he prosecuted the war and delivered peace during his first term in office. It is very clear that uniting a nation that is deeply divided on race, class, caste, religious and party lines remains one of the major obstacles to progress. One hopes that all political parties will have the maturity and statesmanship to put an end to the culture of manipulation and brinkmanship. However, in this article I will focus primarily on the issues connected with economic development.
With the successful conclusion of the war, the recently concluded Presidential election and with the upcoming General Elections, an opportunity presents itself to review Sri Lanka’s overall development strategy. It is timely, therefore, for us to have a national discussion about the “vision” that should drive our development strategy and the policies and programmes that would bring lasting benefits for all our people. This discussion should be open-minded and pragmatic, not narrow-minded and grounded on false and unrealistic ideology. Unthinking and chauvinistic populism should give way to rational analysis focused on identifying what works in practice. Short-term political expedience should give way to a long-term perspective based on a rigorous assessment of Sri Lanka’s dynamic comparative advantage in the global economy. For years, partisan politics have driven economic policy-making. The current historical conjuncture presents the country with a unique opportunity to move away from “business as usual” that has given us two youth insurrections in the South and a separatist war in the North. The time is ripe to build a consensus around a long-term strategy for developing the country.
The need of the hour is a national discussion conducted without rancour, which focuses on policy and practice rather than personalities. President Rajapaksa’s pledge at the launch of his Manifesto to end the “politics of promises” and to begin an era of politics based on policies, is a step in the right direction. The intention of this article is to initiate this discussion. I will begin by presenting my thoughts on a “vision” for achieving sustained development of the country. I will then propose to set out some policies that, in my view, are necessary to achieve this “vision”. This article is intended to stimulate debate, which I hope will eventually yield a national consensus.
The “vision” for Sri Lanka’s development must be based on: • Accelerating the growth trajectory of the economy. • Maintaining macro-economic stability based on a predictable and transparent policy framework. • Implementing structural reforms that improve the competitiveness of the economy, including micro-economic measures. • Ensuring that growth is inclusive by maximizing its employment intensity. • Striving for both regional and urban/rural balance.
36 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
• Developing a targeted social safety-net that affords protection to the poor and vulnerable, as well as those who are affected by the adjustment costs of reforms. • Achieving sustainability by reducing the carbon intensity of the economy. • Fostering international relations that support the country’s commercial/trading interests.
A sustained reduction in poverty and increased prosperity cannot be achieved without “growing the cake”. Moving the economy to a higher growth trajectory requires a significant increase in the overall productivity of the economy. This involves enhancing both the quantity and quality of investment. Increasing productivity through strengthening investment performance is at the core of sustained development.
Investment as a percentage of GDP averaged 25% over the last decade. This resulted in growth averaging 5% during the same period. Our objective must be to achieve 8-10% growth per annum. This is well within our grasp, particularly as for the first time in three decades the whole country is in a position to contribute to accelerated growth. Investment will have to rise to the 30-32% range to achieve this. For this to happen, savings must be increased and the efficiency of capital allocation and utilization enhanced. National savings averaged 21% of GDP during the last decade and external flows 4% of GDP. Total savings need to rise to the 26% range to achieve 8-10% growth. Addressing this saving/investment gap will be crucial to achieve the growth objectives.
This cannot be achieved without addressing the structural budget deficit. The government’s fiscal performance is a source of instability in the economy. The current account deficit in the budget has averaged 2.8% over the last 10 years. This deficit must be converted into a surplus which contributes to public investment (capital expenditure). During these past 10 years domestic savings averaged 16% of GDP, and national savings were higher at 23.8%. This is attributable to the impressive levels of remittances from Sri Lankans working abroad. The overall policy framework should incentivise the increase of all forms of savings to bridge the savings-investment gap identified above. The savings performance in the economy cannot be improved without achieving macro-economic stability. The policy framework must be stable, predictable and transparent. It must create the conditions for low inflation and balance of payments viability. We need to get away from the stop –go policies that have characterized our post independence economic history. We need to create an economy that is efficient enough not to overheat (rising inflation and balance of payments pressure) when we achieve 5-6% of growth.
We cannot achieve macro-economic stability without fiscal consolidation. High budget deficits exert pressure on key prices, such as the exchange and interest rates which are important determinants of savings and investment decisions. Unsustainable budget deficits result in higher interest rates, which increase the cost of funds in the economy. This leads to lower growth, employment and incomes. In addition, large deficits would exert pressure on the exchange rate by increasing the inflation differential between Sri Lanka and its major competitors and trading partners. An uncompetitive exchange rate encourages imports by making them relatively cheaper and this discourages savings and investment by reducing the competitiveness of the domestic economy.
I would also like to reiterate that inflation fuelled by an unsustainable budget deficit is an implicit regressive tax on the poor, who do not have the compensating benefits of appreciating asset values. A rigorous public expenditure review, based on clear national priorities drawn from the elements of the “vision” set out above, would be central for meaningful fiscal consolidation. Improving tax administration and the efficiency and buoyancy of the tax system is also important. President Rajapaksa has established a Tax Reform Commission, which I expect will present us with concrete recommendations to achieve this. Stable macroeconomic policies must be supported by structural reforms which improve the efficiency, and therefore the competitiveness, of the economy. There are two large pools of low productivity in the economy: the public service and paddy production. These sectors absorb considerable resources yet yield 37 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 low returns. Policies need to be developed, which not only shift resources to other more productive sectors but also use the resources that remain more efficiently. The challenge is to achieve these objectives while minimising adjustment costs in terms of lost livelihoods and incomes. There is a debate to be had on the pace and sequencing of reforms in these sectors. There is, however, a strong case for arguing that “the pain in the short-run will ultimately yield gains in terms of more employment and incomes in the longer-term”. We need a national debate on the difficult issues surrounding the reform of these politically sensitive sectors. This debate should take place in the knowledge that much will be foregone in terms of future prosperity if we continue to adopt soft options as we have done in the past.
There are a number of other structural issues that need to be addressed. The financial system is the lifeblood of any economy. The recent crisis has demonstrated the importance of sound institutions operating in a well regulated sector. We need to ensure that the Sri Lankan financial system is fit for purpose in the coming decades of the 21st century. The recent actions taken by the Central Bank to reduce spreads are positive for business. However, we need to adopt a holistic approach in reducing the cost of intermediation in the economy. This has to be supported by measures that seek to make credit available to profitable businesses in all sectors.
In recent years, considerable progress has been made in developing infrastructure, particularly power generation and roads. There is a great deal more to be achieved to reduce the transaction costs in the economy, not least the uncompetitive prices of utilities in the economy. There must also be a pragmatic debate on how best Sri Lanka can take advantage of public-private partnerships to accelerate infrastructure development. Organisations such as the CPC and CEB also need to be reformed.
The global economy places a high premium on competitiveness. A skilled labour force with high levels of productivity is an important element of the competitiveness strategy for any country. Our education system, vocational training and overall skills development should be aligned to labour market dynamics. These in turn must be linked to Sri Lanka’s dynamic comparative advantage in a highly competitive global economy. The focus of policy in this area must be on raising the opportunities available to people in all parts of the country. The controversial area of labour market reforms is another subject that requires a pragmatic debate and effective action. We need to ensure that we have the right balance between the interest of labour and investors.
Sri Lanka possesses the most attractive investment climate in the South Asia region. However, there is much to be done if we are to be more competitive in the overall Asian region and the global economy more generally. Transaction costs must be reduced and “doing business” should be facilitated by reducing red tape and bureaucracy. A significant amount has been done in this respect but we now need to move to the next generation of reforms. These need to be formulated in collaboration with the private sector. However, the private sector, for its part, needs to move beyond narrow self-interest and contribute to constructive thinking on improving the overall business environment.
Employment generation is the best transmission mechanism for sharing the fruits of growth. Interest rates and exchange rate policies as well as the tax system must be geared to support inclusive growth. Priority must also be attached to providing the labour force with the opportunity to acquire marketable skills. Much has already been done to address regional disparities. This has been a priority for President Rajapaksa. However, more needs to be done. We need to explore how best to develop growth poles in various parts of the country. Rural/urban imbalances are less pronounced in Sri Lanka than in many other developing countries. However, the performance of the rural sector is heavily influenced by the low productivity of the paddy sector.
38 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Large scale resources are allocated to this sector through public expenditure on irrigation, the fertilizer subsidy, extension services and the guaranteed price scheme. Paddy and rice are an integral part of our culture and heritage and as such this cannot be viewed through an economic lens alone. However, we have to find ways to modernize and be competitive, perhaps drawing upon the experiences of other rice-centric cultures such as Japan, Thailand, etc. Another debate to be had and consensus to be developed is related to the structure of the agricultural sector in the country. Crop diversification and the balance between small- holder and commercial agriculture are issues that need careful and balanced consideration. We also need to explore what measures can be taken to promote agro-industry. historically, the country’s performance in this area has been disappointing. Priority needs to be attached to realizing the potential of this sector. As a humane society, we must provide social protection to the poor and vulnerable. However, such support should be carefully targeted, monitored and kept to the absolute essentials so that resources are not diverted from productive activity. We need a conversation among ourselves on whether there is an “entitlement culture” that is constraining Sri Lanka’s development. Do we need to move from an entitlement to a more entrepreneurial culture, which will create the conditions necessary to bring about a rapid transformation of the life prospects of our people.
Well designed compensation schemes to mitigate adjustment costs are an important element of any ambitious reform programme. Any such scheme must also support retraining for workers displaced by implementation of the structural reforms necessary to place the country on a higher trajectory of growth, employment and incomes. Despite the disappointing outcome at the Copenhagen Summit, it is inevitable that all countries will eventually have to reduce the carbon intensity of their economies. A concerted plan is needed to promote energy efficiency and the development of renewable energy sources. Any future vision for Sri Lanka must also take account of the need to adapt to climate change.
Sri Lanka cannot afford isolationist and inward looking policies. Our international relations need to be conducted in a manner that enables us to take advantage of all commercial opportunities. Our policies should be such that we have good relations with both the East and the West. The global economic centre of gravity is shifting to the East. We need to be alive to the opportunities arising from this qualitative change in the landscape. At the same time, it would be unwise not to nurture the relations that we have developed over the years with the West and multilateral organizations, such as the World Bank, Asian Development Bank and the International Monetary Fund.
Arguably the most critical determinant of the country’s future prospects is going to be our ability to capitalize on India’s emergence as a global power – both economic and geopolitical. The four southern states of India (Andra Pradesh, Karnataka, Kerala ad Tamil Nadu) are all experiencing rapid growth. The Indian economy was growing at 8% before the global economic crisis. There is confidence that such levels of growth will be restored in the coming years. If the country is recording an overall growth rate of 8%, the four southern states must be enjoying double digit expansion as the overall performance of the Indian economy is being dragged down by lagging states with large populations, such as Uttar Pradesh and Bihar (though performance in the latter has improved recently).
Our efforts need to be focused on how to tap into the rapid progress and rising disposable incomes in India, particularly in the four southern states which are in close proximity to Sri Lanka. We need to have a rational conversation on how best to take forward the Comprehensive Economic Partnership Agreement with India. Sri Lanka is faced with a unique opportunity for transformative change. We need to grasp this opportunity with both hands. We must not be held back by petty-mindedness and a lack of ambition. We must set aside our insecurities and look forward to the future with boldness. There are risks that need to be managed but we should be confident that we can do this and secure a much more prosperous future for all the people of Sri Lanka. 39 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Sunday Times – January 31, 2010 SUPPLY CHAINS: PLAN FOR THE FUTURE FROM FORK TO FARM
By Ross Tieman
FT.Com, London -- Building sustainable supply chains is not just about counting carbon emissions, says Professor Mohan Munasinghe, director general of the Sustainable Consumption Institute at Manchester University in the UK. Rather, it is about choosing development and production patterns that can still function “in 50 years’ time”.
The professor, who first unveiled his “Sustainomics” framework at the Rio Earth Summit 18 years ago, identifies four “core principles” that any food manufacturer or retailer needs to keep in mind for a sustainable supply chain.
Development, he says, needs to become sustainable, whether it is growing tea in Sri Lanka or beef in Brandenburg. Second, the three “key dimensions” of sustainable development – economic, social and environmental – must have equal priority.
He is emphatic about this. Farmers in much of the world need higher incomes, he says. Food production regimes that degrade soil or water resources, or that lead to social breakdown, merely stock up problems for the future. But if farmers can use economically resources and earn enough to pay for water, electricity, healthcare and schooling, those services will come to them.
Third, humans need to acquire “sustainable values”. The shift in thinking needs to run from farmers right through the supply chain to consumers. Finally, retailers and manufacturers need integrated tools to make a full life-cycle analysis of their products. This must span, he says, “from growing tea to picking, to shipping, to retailing, to brewing the tea to disposal of the tea-bag”.
That is a pretty sweeping list, but the professor is an optimist. “It’s not rocket science,” he says. “These are not intractable problems. We can do it.” In the past couple of years, an awful lot of people in the food industry have come round to Prof Munasinghe’s way of thinking.
Mella Frewen, director general of the Confederation of Food and Drink Industries of the EU (CIAA) says: “Sustainability is about a lot more than just carbon and carbon foot-printing.” The CIAA, she says, is working “with the entire supply chain from fork to farm”, tackling economic, environmental and sourcing issues.
Countless initiatives have been launched, often embracing international and government agencies and non- governmental organizations, such as the European Food Sustainable Consumption and Production Round Table, chaired by Pascal Grévarath, director of environmental sustainability at Nestlé. Food retailers, too, have begun serious efforts to develop environmentally sustainable supply chains. Altruism may play a part, but David North, consumer and government director at Tesco, a UK-based international supermarket group, insists there is also a strong commercial reason to develop sustainable supply chains.
“The supply chain is the big prize,” he says. “We think that in the future many of our customers are going to care about this: we think this will be an area of competitive advantage.” Last year, Tesco started looking both upstream and downstream in its supply chain. The company had achieved big environmental improvements in its own distribution activity. Yet studies suggested the environmental impact of suppliers
40 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 was about 10 times greater than that of its “in-house” activities, while the impact after goods were purchased was 100 times greater.
It is now looking for a 30 per cent reduction in carbon emissions among suppliers by 2020, while aiming to help consumers halve emissions arising from their purchases by the same date. Data about upstream carbon emissions is lacking. Nonetheless, by the end of next month Tesco aims to have established the carbon footprint of 500 of its products. Details will be added to the product label. Consumer choices will be closely watched.
Mr North reckons CO2 emissions and cost are generally synonymous. “We can reduce costs by stripping out CO2,” he says, and making supply chains more resource-efficient should make them more resilient. A study for Tesco found that foodstuffs were the biggest sources of carbon emissions, headed by fruit and vegetables, processed foods, meat and dairy, and beverages. Consumer goods were a long way down the table.
Euan Murray, head of carbon foot printing at the Carbon Trust, a not-for-profit group whose PAS 2050 standard has been adopted by many companies, says big retailers and food manufacturers are engaging with suppliers and farmers around the world.
He says: “A farmer can’t tell you what his carbon footprint is, but he knows all about stocking density, the feed he grows, and so on. He has the necessary data points.” Fragmentation of suppliers means thousands of farmers and suppliers have to be drawn into dialogue.
Today, the biggest challenge for development of sustainable supply chains is gathering information. Communication, and then action, will be the logical next steps.
41 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Management
42 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily News – January 26, 2010 HOW TO BECOME A GOOD MANAGER
T. Karekalan Department of Management, Eastern University, Sri Lanka.
Becoming a good manager is not only about getting your job done, but more importantly, earning the respect of your team. First you must stop thinking of yourself as a ‘Boss’ - whether you are the manager or not, you are first and foremost a part of the team. Don’t alienate yourself by sitting in a high chair. Nobody likes a windbag.
Lead by example - I always think that to be a good manager, you need to understand what your team is doing. Even if you are not ‘hands-on’, you need to earn the respect of the team and make them believe that you have an overall guiding vision of what the team is working on. If not, you will end up, at best, being a resource manager.
Learn to delegate - one of the hardest things for new managers is to delegate to and trust other team members. Typically, when a good engineer steps into the shoes of a manager, he still wants to do everything on his own - As a good manager, you should be able to give concrete responses don’t fall into this trap. If you do not on lacking milestones due to which they were not recognized delegate responsibility to your team, while others were your team members will feel stifled and will not be able to grow. And guess what, delegation is one of the hardest things a good manager needs to learn to do well. It involves trust and the ability to succeed without micro-managing.
Never micro-manage. No one likes being micro-managed. One of the things you will learn, as a new manager, is that when people are given a responsibility, most of them rise to the challenge. Give them a chance. Step back, keep a track of the overall goal but don’t walk up to your team members every half hour asking what is going on.
Be careful of overprotection - As a manager, it is critical for you to ‘take care’ of your team, which includes shielding them from harsh criticisms from others in the organization. However, be very careful of over protection. A good manager will always balance protection with positive criticism to ensure that while his team is motivated and happy, they also know their shortcomings so that they can improve. It is your responsibility to make sure that your team is on the path to constant personal improvement. The worst thing you can do is keep them under the impression that they are the ‘best’ and have them ignore areas of improvement.
Plan milestones for your team members well in advance (typically a year at least) - so that you can track their progress concretely through the year. Your team deserves to know how they performed objectively. Take performance reviews seriously - In a typical corporation, the rise of your team largely depends on the reviews that you propagate to the upper management. A review should be timely and as objective as 43 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 possible. If you have a problem with a team member, step back and think if it’s a problem with the team member or with you.
If it is the former, before you put it in the review, consider if it is one-off, due to special circumstances or a repeatable problem that needs to be corrected. Give an opportunity for your team to give you input on what they think of you. Most importantly, act on their feedback. Being a manager does not always make your right. Don’t let your ego get into the way - learning is a two way process, from you to the team and from the team to you. Self improvement is key for you to improve as a manager and into a leader.
All work and no play... - Don’t get too tied in with ‘deliverables’ and ‘schedule’. Make some time to take your team out for a lunch or a party. Challenge your team - once in a while push your team to achieve more than they think they are comfortable doing. Sometimes, team members need an extra nudge to innovative beyond their perceived limitations.
Recognize individuals and teamwork - I personally believe both are critical. Team recognition bolsters the team morale and person recognition provides a lot of individual motivation as well as urges others to rise to the challenge.
Be ready to objectively explain individual recognition (or the lack of it) - As I mentioned above, I am of the personal opinion that individual recognition is key in addition to collective recognition. However, remember that it is the right of other team members to challenge/question you on why they were not recognized. As a good manager, you should be able to give concrete responses on lacking milestones due to which they were not recognized while others were.
If your responses are objective and non-confrontational, it would usually be accepted and taken as an input for self-improvement. Before declaring a bad apple, consider if it’s another fruit’ - Remember that not everyone excels at every job.
If you have assigned a person to be responsible in a particular area and for some reason, that person is failing in his work, don’t just declare he is not “worthy” to be in your team. Often, a simple re-assignment to a different responsibility can change things drastically.
Be there in times of need. There will be a time for everyone when they face personal/family problems. Those who genuinely help during these times of need are those who form long lasting friendships.
Do as much as possible to help your team get over hard times, should they seek your assistance. Remember this - jobs come and go, teams form and break but friendships last forever.
When you genuinely help a person in time of need, this is never forgotten and this is how loyalty builds.
44 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Trade & Marketing
45 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily News – January 25, 2010 EARLY WEEK PROFIT TAKING DRIVES THE INDICES DOWN
Volatility in indices continued throughout the week, the market saw indices being down on Monday, Tuesday and Thursday, while rising on the remaining two days. This was mainly due to the retail investors selling their shares to book profits ahead of the Presidential poll next week. The ASPI (All Share Price Index) closed the week at 3531.7 points down by 31.4 points or 0.9 percent Week on Week (WoW). Meanwhile the MPI (Milanka Price Index) too retained a similar trend to close the week at 4044.8 points, down by 54.4 points or 1.3 percent compared to last weeks closing levels. The highest contributor for the week was C.W Mackie (CWM) managing a contribution of 749.8 million. Lankem (Ceylon) PLC and Kotagala Plantations PLC purchased 20.3 million shares of C.W. Mackie PLC on Friday at Rs.35.00 each, contributing Rs.744.2 million to Friday’s turnover. A 1.41 percent WoW fall in share price was observed during the week with CWM share price closing at Rs.35.00 per share. The counter traded within the range, Rs.35.50 and Rs.35.00 per share for the week.
Lanka Ventures (LVEN) was the second highest contributor towards weekly turnover, managing a contribution of Rs.709.4 million for the week. 39.1 million shares of Lanka Ventures PLC were purchased on Tuesday by Acuity Partners (Private) Ltd at the price of Rs.18.00 per share. DFCC sold 29.1 million shares while HNB sold 10 million shares which constituted to 78.31% of the issued capital of Lanka Ventures PLC. A 1.49% WoW increase in share price was observed during the week with prices closing high at Rs.17.00 per share. The counter traded within the range, Rs.16.75 and Rs.17.00 per share for the week.
The other contributors in terms of turnover were JKH and Browns. Turnover for the week stood at Rs.6.1 billion while the average daily turnover for the week stood at Rs.1.2 billion compared to Rs.1.5 billion posted during last week. Bulk of the week’s contribution which amounted to 24.0% of the total weekly turnover came from CWM and LVEN. Foreign purchases amounted to Rs.476.6 million this week, while foreign sales totaled to Rs.1.5 billion resulting in a net foreign outflow of Rs.1.0 billion. During the week foreign participation stood at a low of 16.4 percent of total activity. Volume based highest traded stocks for the week was Lanka Ventures, C.W. Mackie, Seylan Merchant (Non Voting) and Renuka Agri.
Keep Looking for the Undervalued Counters The week ended 22.01.10 saw the ASPI down 31.41 points. Subsequent to profit taking activity during the first two days of the week, (which brought down the market 82.84 points) the bourse did not seem to show signs of recovery from those levels. Though, the market showed signs of recovery towards the latter part, it ended at a low. People do have a misconception that, the market movement for the next week would predominantly be based on the results of the Presidential Elections. Hence, Acuity would like to advice the investors that the potential of the economy to grow remains, despite who turns out victorious on the 27th of January. Also, as mentioned over the previous “Weekly Reports” albeit, the market getting heated up (based on fundamentals), there are strong counters one could look to invest other than the overheated speculative counters.
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.
46 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily News – January 25, 2010
MARKETING AND SELLING IN TOUGH ECONOMIC CONDITIONS: FREQUENTLY ASKED QUESTIONS IN BRANDING
Prasanna Perera Marketing and Management Consultant, Chartered Marketeer, CIM U.K. With the renewed interest in branding, I am confronted with many interesting and taxing questions on the fascinating world of branding. I will endeavor to answer some of these queries.
Can a person be branded? (Personal Branding) Of course Yes. We all have a name and hence a sense of identity and differentiation.
Therefore, the initial requirements for branding is already there. A name of course does not automatically convert to a brand. To build a brand, it requires effort, resources and a vision. This applies to people as well.
Is it easier to develop product or service brands? Developing product or service brands is never easy. A great deal of effort and perseverance is required. In general, product brands are easier to build due to tangibility. Service brands on the other hand, are dependent on the persons who deliver the service, to tangibalize it. Overall, I believe that both product or service brands are never easy to develop.
Are customers in Sri Lanka brand loyal or price loyal? This is indeed a very difficult question to answer directly.
It depends on the nature of the product / service and the characteristics of the target customers. For example customers tend to be loyal towards personal care products, as well as luxury, high value goods. For essentials, price loyalty is a generally observed phenomenon.
Further, the degree of loyalty to brands depends on the psychological aspects of a customer. For example, perceptions, beliefs, and attitudes towards brands.
My message to marketeers is “believe in you brand and keep building it. The results in terms of loyal customers will follow.”
How do you convince finance professionals that investments in brands will deliver returns? Relate your brand investments to shareholder value. Show the relationship between brand equity and profitability. However, you need to emphasize that brands will not deliver returns in the short-term, but more so in the longer term.
What is meant by “Brand Positioning”? This was a concept introduced by Al Ries and Jack Trout. Basically, Positioning refers to situating a brand in the mind-space of a consumer. If a brand is well positioned in the consumer’s mind, brand loyalty can be achieved. It is important to note that you do not need to own a brand to have a special place for same in your mind.
47 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Are consumers willing to pay a premium for a brand? Generally yes. A brand evokes a certain level of trust and confidence to the user.
Hence, a higher price can be commanded, over a generic brand. It must however be kept in mind, that the level of premium depends on the equity of the brand and consumer characteristics.
What is meant by Private Labels/Own Brands? With the growing trend of supermarkets, hyper markets and mega malls developing globally, retailers are marketing certain product categories under their own store labels. For example “Arpico Family”, “Cargills Home” etc., Private labels or Own brands have developed globally and can be considered as a challenge to manufacturer brands.
In your opinion, what publications do you recommend as branding classics? There are many excellent books and publications in the world of branding. My personal recommendations would be “Positioning the battle for your Mind” by Al Ries and Jack Trout, “Creating Powerful Brands” by David Aaker and “Living Brands” by Raymond Nadeau.
What is special about Destination Branding? A Destination is a location such as a country, city, state, town or even an attraction. This term Destination Branding is used in the Hospitality Industry. For example “Sri Lanka” is a destination brand. The speciality about Destination Branding is that a more “holistic” mindset is required in brand building.
Is the designation “Brand Manager” still valid? Yes, and we do observe many organizations designating staff accordingly. However, with the growing interest in category management, certain organizations are creating positions of “Category Manager.” The logic in such organizations is category first, brand second.
However, my personal opinion is that both positions will continue to stay, as both categories and brands are equally important.
How relevant is branding in the not-for-profit sector? Very relevant since charity related brands are patronized based on trust and reliability. Take for example, OXFAM, UNICEF, Red Barna, Save the Children, Red Cross.
These are all powerful global brands in the not-for-profit sector. Hence, branding is valid for both profit and not-for-profit sectors.” Branding is everything. Without a brand you stand for nothing.” Anonymous
48 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily News – January 25, 2010
A SOCIAL NETWORKING CHECKLIST FOR CAREER SCHOOL MARKETING
Gayla Huber
Social sites provide communication, resources, or entertainment to a varied audience for multiple reasons, including research, networking, or community building.
Current students and graduates use social networking as a means to stay current with their school. By now, your school either is using social networking as a marketing tool, or wondering what you need to do to get in the game.
Making the decision to launch a social networking program requires a commitment to post and update content on an ongoing basis. Schools should have an enthusiastic and dedicated associate overseeing the program.
Editorial content should be updated weekly, while blogging requires more dedication than beyond a weekly to-do list.
“Tweets” or blogs should be posted at least twice per week. Blog about informational and interesting topics. Let your audience know what you are doing, and don’t be afraid to put some personality into it. Like any other advertising, it needs to be appealing and informative.
Career Schools should look to be on five to ten of the top social sites their target market populates. Depending on the site, content varies, with editorial, photo, and video all being part of the mix. Some questions to ask about your organization prior to launching a social marketing program are:
1. What are five reasons prospective students would want to attend our school? 2. What local events, charities, or sponsorships are we involved in? 3. What extracurricular or community activities do we offer? 4. What industry associations do we belong to? 5. What branding elements do we want to incorporate?
How are you going to get your message across? Content, content, content! Some additional news and information you can use to promote your school could include:
* Admissions contacts. * Photos of admissions representatives. * School events. * School calendar. * Open house dates. * Program awareness nights. * Financial aid nights. * High school events. * Programs list. * Services. * Campus photos. * Photos of campus events. * Published articles. 49 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
* News articles associated with your campus. * List of blogs the school’s instructors and students are associated with. * Professional e-zines/e-publishers the school’s instructors and students can subscribe to. * Newscasts of your campus programs and events. * Prerecorded audio programs. * Radio or TV commercials. * Videos.
After your content is posted, it is imperative to keep it up to date.
Ultimately, you want to make a connection with your audience and build the relationship with potential students with a positive message.
You also should keep the connection with current students and alumni to encourage community that will bring in future enrolments.
Social networking is not just a buzz word; it is an integral part of the career school marketing plan. Whether your school already is socially savvy or looking to build its first page, get new content and get it out there. salesandmarketing.com
50 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 26, 2010 SALES PROFESSION VITAL FOR GROWTH
By Mario Andree
Sales personnel should be treated as top professionals for the rapid growth of any industry, says Sri Lanka Institute of Marketing (SLIM).
Sales are a vital part for any organization and the backbone of a company, Ceylon Biscuits Limited Group Director Nandana Wickramage pointed out.
Although the effort is carried by them they do not get the appreciation they deserve. This has caused a decrease in the number of people interested in sales-related careers, and the vision of a proper salesman has faded away.
According to the panel of judges of NASCO, employees who step into the sales field do not have relevant qualifications. This factor could harm the reputation of the profession, it pointed out.
It is time to develop the profession so that skilled youngsters would step into it with confidence. Currently, sales representatives are awarded in a scale of company nomination, and it does not look in to the professional qualifications of an individual who could step in to the next level.
This method should change as sales representatives are not getting a chance to step forward in a company to build up their careers.
A proper method should be implemented to identify potential sales representatives who can climb up the ladder to develop their careers.
SLIM has taken a step forward to provide the opportunity to potential sales representatives in different industries, to have a high effect on the industries to look into the sales representatives for a high post will at least take six years, Wickramage said.
This will help the company to understand the capability of the sales representative to head a group, understanding whether to promote the individual to the next post in the chain.
Theoretical qualifications now play a major role in gaining top positions in companies, leaving behind the well-served sales representative with no much career prospects.
The theory is needed for the management of a post yet the field experience of a hard-working sales representative contains a high knowledge of the segments which should be focused on.
The sales group is the main archive of the company yet the top professionals get awarded to the effort which was carried out by the sales force.
This is not fair for the sales force. Although they cannot represent the company at a large award ceremony, they should at least given a chance to be promoted for the effort done by them.
A company might say we are paying the sales force high incentives for their work - which is an appreciation. Yet, sales representatives don’t want to be at the same post till they are retired. As a normal individual, they would like to step in to another higher post in life. 51 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily News – January 27, 2010 CAPITAL MARKET THRIVING
Sanjeevi Jayasuriya
The capital market in Sri Lanka is thriving today making record gains turning a new chapter in the economic development in the country. In this backdrop Financial Service Academy (FSA) as a premier capital market education provider has assumed the responsibility of gearing the capital market players with the essential knowledge, skills and professionalism require to face the new challenges posed by the fast growing and dynamic capital market in Sri Lanka, FSA Director Dr. Harendra Dissa Bandara told Daily New Business.
The programs conducted by the FSA cater to four segments namely professionals (intermediaries), existing and potential investors, issuers (listed companies) and market institutions.
The Certificate in Capital Market (CCM) and the Registered Investment Advisor (RIA) Certification are key features in the qualification framework that is specially designed for the capital market professionals, he said.
This will ensure that a standard level of proficiency to perform their job functions will be maintained at all times which is a prerequisite for safeguarding the interest of the investors and developing the capital market to function at an optimal level, he said.
The Securities and Exchange Commission (SEC) of Sri Lanka has directed that obtaining the RIA Certification is a mandatory requirement to function as an investment advisor in member firms of the Colombo Stock Exchange. The CCM spanning for a time period of 25 weeks includes a comprehensive syllabus that covers the core areas of Equity Securities, Debt Securities, Ethics and Securities Regulations in Sri Lanka, he said.
Another component in the qualification framework program - continuous professional development programs will be held in the forms of seminars and workshops for capital market professionals to constantly access and upgrade themselves with the latest trends in the industry.
The Diploma in Capital Markets will commence shortly for those who have successfully graduated from the CCM program, he said.
With in the next three years the capital market will have a very high growth.
The country needs to transform from fund saver to investor society and a paradigm shift is necessary to facilitate this process. The investors have to take certain risks and move away from traditional saving instruments like the banking sector, he said.
52 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 28, 2010 TEA CROP LOWEST SINCE 2001 WHAT NEXT?
By Steve A. Morrell
Although focus on production could yet fall on Regional Plantation Companies, (RPCC) collectively, subscription to deficit could also descend squarely on the small holder.
Or the Tea Commissioner, or the Chairman Tea Board. Pointedly, it is they who usually tout quantum for credit for good times, should be attributed to small holders, and inclusion of the Tea Board should follow consequently. Simultaneously they tend to shrug off responsibility for regression in that segment of the industry.
Crops are low. Specter of low crop intakes would persist first quarter this year. This is normal. But when March / April showers are on would the small holder who produces, purportedly 65 percent to 70 percent crop, falls short of production, would the Tea Board blame themselves for such deficit? Self blame is an extremely remote phenomenon with the Chairman Tea Board.
Asia Siyaka weekly Tea market report said incoming production figures indicate lowest crop intakes since 2001, was 2009.
Highest recorded was 2008 at 318 million kilos. Last year was an eight year low intake of 269.7 million kilos; indicating deficit in the region of some 28.92 million kilos. Defence trotted out would probably be that Kenya was worse than Sri Lanka with a deficit reading of about 29.81 million kilos. But India has nearly erased their deficit and all measurements are that the industry and crop increases there would see renewed progress.
Main priority of the Tea industry here is turn in a profit through increased crop intakes. On the plus side as contained in our report last week, Malawi is the only major tea producer who is substantially ahead in crop; plus production being 6.10 million kilos.
Considering that end 2010 RPCC would again have to grapple with another wage demand, at this point in time we have not had feed back what they would do to pre-empt such demands and be viable. They are yet complaining of losses; and although prices have remained good they did not convert this observable fact to profit.
Meanwhile Sri Lanka continues to hold top slot in exports to Russia, or CIS Countries.
Curiously UAE and Germany too export tea to Russia. A question could be asked ‘Where do they get their Tea?’ Germany and Arab Emirates are certainly not tea growing countries, Quantity sold this week was 6.2 million kilos. This would drop over the next few weeks because of dry weather in planting districts. Next week quantity offered for sale would be 6.7 million kilos.
Selling marks in the news, Western High growns, had Brunswick taking top slot selling BOP Rs.440. per kilo.
Of the Western high grown Cut Twist and Curl (CTC), grades, Mount Vernon realized Rs.400. per kilo. All told the market held, but there were some anxious moments. 53 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 28, 2010 EUROPEAN AMBASSADOR SAYS LANKA’S NUMBER ONE TRADING PARTNER IS EU
Addressing the AMCHAM January luncheon, Ambassador of the Delegation of the European Union to Sri Lanka and the Maldives, Bernard Savage spoke of the "The EU’s Activities and Projects in Sri Lanka". This was the first occasion that Ambassador Savage addressed an AmCham luncheon, where more than 60 business leaders and professionals were present.
In his address, Ambassador Savage pointed out that the European Union is Sri Lanka’s number one trading partner with imports and exports valued at Euro 3.55 billion, or 23.3 percent of Sri Lanka’s total trade. He also stated that Sri Lanka’s exports to the EU amounted to Euro 2.24 billion, both products and services, which represented 38 percent of Sri Lanka’s total exports. Continuing, Ambassador Savage said the European Union is Sri Lanka’s second largest import partner next to India, with imports valued at Euro 1.31 billion, or 14 percent of total imports.
Exports of garments and textiles to the European Union were accounted for more than 54 percent of the value of Sri Lankan exports to European Union amounting to Euro 1.17 billion. The growth in the trade between the two countries was due to the GSP Plus concessions granted by the EU. Ambassador Savage said that EU hoped that Sri Lanka will be able to rectify and put in place certain issues which would enable it to continue benefiting from the GSP Plus scheme. He said that many of those present may know that currently there is a decision pending at the European Council on Sri Lanka’s compliance with the GSP regulation and a decision is expected in February on whether Sri Lanka should continue to benefit from the scheme or whether it would be revoked after a period of six months.
Ambassador Savage pointed out that the EU’s relations with Sri Lanka went much beyond the GSP plus and elaborated on some of its recent support to Sri Lanka.
The EU’s role in Sri Lanka has always been to support programmes that have a development dimension and that which gives greater confidence and more opportunities to local businesses, especially SMEs, attract new investment and build strong regional markets. It is an approach he said that the EU believes will assist even the smallest of companies to eventually participate in global trade.
Ambassador Savage said that in the area of development assistance, the European Commission Delegation currently manages approximately Euro 200 million of on going assistance programmes to Sri Lanka. This is in addition to the emergency relief assistance provided by the European Commissions Humanitarian Aid Office ECHO, which continues to provide humanitarian support for both conflict and tsunami affected people. The EC’s current development support focuses on reconstruction linked to the tsunami, the conflict and return of IDPs, social development and good governance.
Over Euro 100 million was provided to Sri Lanka by the EC as Post Tsunami assistance or rehabilitation and development work, particularly infrastructure development, livelihood upliftment and environment restoration work.
He also highlighted that all assistance provided to Sri Lanka were not loans but pure grant assistance. He further went on to mention some concrete examples of recent assistance, the Vakarai Maha Vidyalayam in the Batticaloa district, which was completely destroyed by the Tsunami was fully reconstructed with European Union funding at the cost of Rs.300 million, and which now provides education to over 750 students. The Matara - Walkways road stretching 158 kilometers was reconstructed at a cost of Rs.4.6 billion. The rehabilitation of Siyabalanduwa- Potuvil- Akkaraipattu Road covering 78 km will be completed 54 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 in 2011. In Ampara District upto 400 km of community access roads are being built to provide better access to markets, health facilities and schools for adjacent communities. Through the Environmental Remediation Program, solid waste management systems are being put in place within the entire district of Ampara as well as drainage networks which are being constructed, of which about 3 km are now completed in Kalmunai.
He also said EU grants had been extended for livelihoods development activities to support the livehods of affected communities including assistance to several sectors, such as fisheries, agriculture and pottery. The EU also supported the mine clearance projects and Mine Risk Education programs to reduce the number of landmine and UXO casualties and promoting the physical and psycho-social wellbeing of survivors, as part of the Sri Lanka mine action program.
Ambassador Savage’s address was followed by a lively question and answer session. AMCHAM monthly luncheons features high profile members of the business and political community, addressing issues of pressing concern and are regularly attended by AMCHAM members and other dignitaries from professional associations, which provide an excellent opportunity for personal and business net working. Note from the business desk
The members of the American Chamber of Commerce met the Ambassador of the Delegation of the European Commission to Sri Lanka, Bernard Savage, behind closed doors, opting to discuss pressing issues away from public ears it seems.
When contacted, the chamber said the press were not accommodated on request of the European Commission office in Colombo.
The purpose of the meeting was to brief the chamber on EU activities and projects in Sri Lanka. The American Chamber of Commerce conducts monthly luncheon meetings featuring high-profile members of the business and political community where according to statement issued by the chamber, "Issues of pressing concern are addressed".
The chamber says these meetings are regularly attended by members of its chamber and ‘other dignitaries from professional associations’.
While business chambers, or any other organization, are entitled to have its closed doors meetings, to leave the press out at such meetings, after publicizing it, is disappointing.
The Island Financial Review was sent a press release which they wanted published prior to this event (we held it back due to space constraints, thinking that coverage of the event would be more fruitful) but declined to allow a journalist to cover it. It may have sufficed instead, to send out invitations to members and ‘other dignitaries from professional associations’ if the press was to be left out.
If the ‘issues of pressing concern’ are confined to the American Chamber of Commerce, then our observation maybe dismissed. But if the issues are of public concern, then, for organizations advocating transparency this is a bit disappointing.
55 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily Mirror – January 28, 2010 CROSS-PECKING OVER CHICKEN FEED INDUSTRY AND AUTHORITIES HENPECK EACH OTHER AS CHICKEN PRICES CONTINUE TO RISE By Senashia Ekanayake
As consumers face a chicken shortage at retail shops in urbanized areas, poultry processors, manufacturers, farmers and ministry officials are engaged in a stalemate that is scuttling the industry. According to Bairaha Farms Managing Director Yakooth Naleem, demand has outstripped supply, especially due to excessive Government taxing and import restriction on maize, resulting in a lopsided industry.
"The supermarkets keep a profit margin of Rs.50 per kilo and the Government imposes a tax of Rs.56 per kilo. On top of this we are required to sell chicken at Rs.320. So we are unwilling to supply to upermarkets," he noted. However, groceries and other retailers are sufficiently supplied, he assured. Attributing the current slight shortfall to excessive demand, he went on to say:
"It is impossible for the industry to keep up. Last month it was Christmas and now it is the elections. Hence, the consumption of chicken had tremendously increased. As a result of the price of fish being unstable, the public opts for the next most economical option, which is chicken."
The present shortage witnessed in most supermarkets is expected to ease by February. Meanwhile, All Island Poultry Association Chairman Dr. D. D. Wanasinghe pointed out that the "marginal shortage of about 8-10% of the national requirement" was due to the high cost of maize.
"The irony of the situation is that the Ministry strives to protect the local maize farmer, whereas the actual objective of the Ministry should be to safeguard the local poultry industry." He remarked that the Poultry Association had constantly appealed to the Government to mediate in terms of the price of maize as there was no price control imposed, which allowed the local farmers to take control of the pricing formula.
This resulted in Rs.28 being the common value of 1 kg. "This was very economical for all parties involved in the industry as the cost of maize kept production at Rs.18-20 per kilo," he continued. The circumstances now are different as Sri Lanka does not have maize for poultry feed.
Wanasinghe affirmed that they had repeatedly warned the Government that the country would require approximately 40,000 MT of maize during the period September-February. "However, given the estimation that was put forward, the Government imposed an import ban on maize in July 2009.
Though the ban was lifted in November and we are now allowed to import maize, it takes about six weeks to get the necessary permits and documentation sorted out.
Besides, we are allowed to import only 20,000 MT of maize," he remarked. He added that the industry is taxed at 13% on four occasions and that this had resulted in the reduction of production by small scale farmers, who make up 40% of those engaged in this industry. However, the Livestock Development Ministry claimed that it had "heard" reports of such a shortage and that it had deployed various officers to "look into the situation."
The Ministry opined that the increase in the price of poultry feed was the cause for the increase in the price of chicken and the prevailing shortage.
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CAA dismisses price increase According to Consumer Affairs Authority Chairman Rumy Marzook, the CAA disallowed the price increase of Rs.30 proposed by the All Island Poultry Association as it would have pushed up the price of chicken to Rs.356. According to Bairaha Farms Managing Director Yakooth Naleem, the industry has not received a price hike since 2008.
He added that if the proposed hike was allowed or the price control was taken off, the shortage witnessed in supermarket chains would not prevail any longer. Chicken was made an essential item by the CAA in 2007. The annual consumption of chicken is approximately 95 million kilos, of which 90% is produced locally.
• Annual consumption of chicken: 95 mil kilos (4.5-5 kg per capita) • Annual demand for maize: 200,000 MT (120,000 MT from local farmers)
57 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Money & Banking
58 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily News – January 26, 2010 CREDIT CARDS AND ITS WISE USAGE
K. Davidraja Faculty of Commerce and Management Eastern University
A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder’s promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.
The Proper use of Credit Cards Credit cards are a convenience, not a crutch. Credit cards are a great way to make purchases and record to the penny you’re spending. They also provide a way to postpone payment on items and thereby earn more interest on your money. For example, if you have a money market account that gives you 5% annual interest and you spend 1500 a month through your credit card, you can keep that 1500 in your money market account for an additional month.
At the end of a year you would have earned an additional 51.16 for doing nothing. Now 5100 may not be much but it’s free! Also you can use your credit card statements to keep track of exactly how much you are spending and where your money goes. With some credit cards you can use personal finance software to download your credit card transactions from the Internet right to your home computer.
Credit cards may actually save you money. Some people avoid making purchases if they do not have cash. Cash seems to “burn a hole” in our pockets, it just disappears. It is so easy to spend and it is right there. But a credit card takes more effort and you know that you have to pay the bill later that month.
Your credit card may also offer a rewards program where you get cash back, frequent flyer miles or discounts on services and merchandise. Credit cards are convenient. Some purchases, especially those on the Internet, will only accept credit card payment. Also you don’t have to continually go to the bank or ATM to get cash. A credit card also provides a measure of safety. You don’t have to carry large amounts of cash for large purchases.
Even if your card or credit card number is stolen, you are not responsible for the thief’s use of your card. But credit cards can also be a crutch. Too many people see their credit limit not as the maximum amount of debt they can go into, but as an account full of money that they can spend. Average household consumer credit balances have now topped Rs.70000.
The monthly interest charge for a credit card charging 18% interest is over 10,000. More than 1,20,000 a year just in interest. And this interest is not like home mortgage interest that you can deduct from your taxes. You are paying an additional 15-36% on top of the 12000 for taxes on the interest you are charged. That brings your interest charge total up to 14,000-16,000 each year. Even more if your balance or interest rate is higher. What is silly is that many people who are paying 18% interest rates on credit are also investing in a stock market that only averages 11%. Or worse, keeping money in money market, savings accounts or CDs that only pay .5-3%. Want an investment that returns over 20% Invest in paying down your debts.
59 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
In the above example you can save over 20% with taxes factored in many people have developed the habit of using their credit cards to buy what they want now and paying for it later. They then make only the minimum payments required. Often the minimum payment is set so that you only pay the monthly finance charge (interest) or just a small amount above it.
This will keep people paying that 18% rate for years. A 10,000 purchase can end up costing 15,000 when paid off after five years. Ironically many of these same people will wait months for a sale so that the item’s price goes down 10-20% and then make a purchase on their credit card and end up giving the savings to the credit card company instead.
Sometimes the credit card can lead a person into living a lifestyle that is beyond their means. If a person gets in the habit of dining out two to three times a week and these meals are paid for by credit card, the card balance increases quickly. Often the additional expense was not planned or budgeted. People can even end up spending more each month than the actually earn.
This can continue as long as the credit card balance is below the limit and the person makes their regular monthly payments. But as soon as the credit limit is reached, many credit companies will increase the credit limit and give the person more room to get into debt. I have personally seen a credit card limit expanded by Rs.100,000 within three months. This cycle can continue until the person is required to make a minimum payment that is more than they can afford. Now not only do they have to cut back on the lifestyle they have grown accustomed to over the years, but they also have to either increase their income or cut out things they enjoyed before increasing their lifestyle with their credit card.
Also what happens if the person is suddenly out of work or has to take a pay cut or lower paying job. That’s right, the credit card bills keep coming. And many people rely on the remainder of their credit limit to supplement their income until they are working again or can find a better paying job.
We have seen this cycle in America increase average credit card balances each year and eat up the equity in many people’s homes. Home equity loans are used as credit cards to live a lifestyle that is beyond people’s means. Or to purchase toys they really can’t afford to buy let alone keep and use.
Or the home equity money is used to “pay off high interest credit card debt” as the ads suggest. But then people continue the habit of living off their credit cards and get right back into debt again.
Important: pay off your credit card balance each month. Don’t buy something now and expect the big end of year bonus to pay off your credit card. Even if you do get it, you will probably spend it on something else. Don’t fall into the habit of living off your credit cards. If you have Rs.10,000 of disposable income to spend each month, whether through a credit card or in cash, only spend the Rs.10,000. Don’t try to make up for extra expense this month by assuming you can catch up on your credit card payment next month. It won’t happen. If you have developed bad credit habits, cut up your credit cards, or only keep one for emergencies and resolve to pay off the balance each month. Then create a plan to get yourself out of debt and stick to it.
You can relieve stress, avoid family conflicts and sleep better at night knowing that there are no credit card wolves howling at your door.
Use your credit cards wisely For many people, managing a credit card is harder than getting one.
60 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
* Understand that any time you use a credit card, you are borrowing money. If you don’t pay off your balance each month, interest will be added to the total amount you owe.
* Think before getting your first credit card. Think very carefully before you decide to get your first credit card. Do you really need a credit card or would another option work just as well? Some other options to think about:
* Getting a debit card, which is connected to your checking or savings account rather than borrowing money for each transaction.
* Considering sharing a card with your parents and asking them to help you stay on track.
* Waiting. Just put off the decision for six months or a year and see how well you might do without a credit card.
* Choose wisely. When selecting a credit card, you should shop around for the best deal. Compare different cards based on your own situation. Look for the following:
* A low annual percentage rate (APR). The lower the rate, the less interest you have to pay. Watch out for low introductory rates that are raised after a year or less.
* The interest calculation method. This affects how much interest you pay, even when the APR is identical.
* Low or no annual fees. If the issuer charges an annual fee, ask them to waive it.
* All other charges (i.e., late payment fees, transaction fees, over the limit fees, etc). These can really add to the total cost of your charges.
* A grace period. Some credit cards charge interest from the day that the charges appear on your account. Other cards offer a grace period for you to pay off your balance before interest charges begin to accrue.
* The credit limit. Keep your credit limit low (think about $500 or less), to make sure you don’t get in over your head.
* Wide acceptance. A major credit card is convenient, and easier to manage.
* Services and features, such as cash rebates, frequent flyer miles, extended warrantees, etc. Think carefully about the true cost of these programs when you consider interest and other charges.
* Limit the number of cards you get. It will be easier to keep track of your spending. * Track your spending. Waiting until your statement arrives once a month to think about your balance can get you into trouble quickly.
* Check your account online frequently. * Save receipts. * Maintain a ledger. * Consider signing up for balance notices and billing statement notifications from your credit card provider.
61 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
* For each of your cards, keep a record of the following in case your card is lost or stolen. Even better, keep a photo copy of the front and back of your card in a safe place at home.
* Account number * Issuer’s name *Phone number
How to use a credit card Steps
1. Decide whether you can afford the purchase and know how you are going to pay the credit card bill once it comes.
2. Be sure your card is signed on the back by you.
3. Slide your credit card through the machine. If the machine asks you for your P.I.N. number, press the cancel key. If the machine asks if you want a credit transaction, press the credit or yes key.
4. Sign. If the machine is an electronic machine, sign in the box. Press the OK or accept key. If the machine is not an electronic machine, circle the amount on the receipt (this forces you to see it and hopefully recognize errors) sign on the line on the receipt. Give the receipt to the cashier.
5. Present your card to the cashier if asked to do so. The cashier would check off the signature on the card with the one you just signed on the receipt.
6. At the end, you should get back your card.
How to use a credit card to save money Steps 1. Get on the Internet and check out credit card Web sites such as CardWeb.com or Bankrate.com, where you’ll find information about credit cards and rates.
2. Evaluate each card that offers an interest rate you can accept, as well as perks you want.
3. Know that the deals may change weekly or even daily. If you see a deal you can’t pass up, apply immediately.
4. Hunt for a card that offers travel benefits such as frequent flier miles or discounts on travel services.
5. Check out cards that offer free insurance benefits. Some provide Rs.10,000 or more of accidental death and dismemberment insurance. Others offer coverage of rental car accidents and lost luggage. 6. Evaluate cards offered by Internet service providers. Some will pay your monthly ISP subscription charges if you make big purchases on the card.
7. Look for cards that offer bonus points. The points can be exchanged for discounts or freebies at restaurants, department stores and bookstores.
The bottom line: Don’t spend more than you can afford to pay on a monthly basis.
Wise use of your credit cards will help you establish a solid credit rating and avoid financial problems. 62 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily News – January 27, 2010 ACCA’S 12 TENETS OF TAXATION
Avoidance/Evasion There is a clear division between tax avoidance (or planning, or mitigation), which is legal, and tax evasion, which is not.
The former attempts to reduce the amount of tax that is payable by means that are within the law, while making a full disclosure of the material information to the tax authorities. In contrast, tax evasion works outside the rules by hiding income through nondisclosure, or making wrongful deductions.
Tax law must be clear and certain (see points 3 and 5 below) and it should be remembered that businesses will try to minimise tax impact as a part of their normal commercial activity.
But, while most businesses try only to comply with the law, there are cases of convoluted tax planning schemes designed simply to exploit loopholes in the law. ACCA does not support this artificial activity.
Tax as a percentage of GDP ACCA accepts that the current unprecedented economic turmoil may require special measures from national governments.
Notwithstanding current conditions, we believe that levels of taxation should be clearly stated as a percentage of Gross Domestic Product (GDP), as far as is practicable.
Once new measures are put in place, there should be a means of measuring and evaluating their impact in terms of their proclaimed public policy objectives.
Government should rationalize and set a target of taxation as a percentage of GDP as part of its economic management, and then be held to account via objective measurement and variance analysis.
Tax simplification stability ACCA believes that tax legislation and operations should be simple to understand and comply with.. Research shows that, globally, companies spend almost two months per year complying with tax regulations – 15 days for corporate income taxes, 21 days for labour taxes and contributions and 21 days for consumption taxes.
It is essential that the volume of legislation is kept to a Taxpayers have rights as well as responsibilities minimum. Much of the increase in tax law and administration in recent years is due to new anti-avoidance measures introduced by tax authorities. Small businesses in particular have no time to engage in esoteric tax planning and are simply trying to cope with the volume of laws. Changes in tax law – particularly those which reverse tax breaks or incentives and on which basis business have made plans – should be kept to an absolute minimum. 63 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Openness, Transparency and Accountability Tax policies should be transparent and non-discriminatory unless part of a declared discriminatory policy, such as one aimed to encourage new enterprise, for example.
ACCA’s view is that this use of tax by elected governments is legitimate but such taxes should then meet the principles of being transparent, simple and effective. Governments should be wary of over-complicating the tax system with too much tinkering to ‘reward’ certain groups of taxpayers. On major issues of tax policy, there should be clear consultation where the options are specified at the start, and properly considered with an audit trail.
There should also be openness on the application of tax policy. So-called ‘stealth taxes’, such as the phenomenon of ‘fiscal drag’, whereby personal tax thresholds are not increased in line with rising prices and incomes, thus bringing more individuals into higher-rate tax bands, cannot be justified.
Certainty The tax systems in many jurisdictions can be criticized for their lack of certainty in outcomes or operations. The UK and US authorities do not explicitly ban certain types of tax planning, as they are within the law, but nonetheless take a negative view of them. Companies using these legitimate tax-planning techniques may find themselves having to report to the authorities or becoming the subject of onerous tax inquiries. Often these artificial ‘blocks’ are used by the tax authorities as a way of ‘fine-tuning’ the legislation. This is unacceptable for companies trying to plan their business activities. It should always be possible for different taxpayers who look at legislation to come to the same interpretation of the law.
Tax competitiveness The globalization of business means that each country should ensure its tax rates are competitive and its regime user-friendly. Tax is a key factor in ensuring the overall attractiveness of a location to new business. The danger with competition, however, can lie in very low tax rates, where offshore tax havens or flat tax systems can lead to ‘beggar my neighbour’ approaches which can entrench wealth inequality.
ACCA supports the principle of nations being free to determine their tax affairs within the context of a global competitive environment. But governments must be wary of causing retaliatory action and trade wars by drastic business tax cuts.
Efficiency Tax systems should be efficient for governments in terms of their ability to secure the revenue that is due to them and to prevent tax leakage and the development of a black economy.
But a tax system should also be efficient for taxpayers in terms of their ability to comply with its requirements. It should not be forgotten that small businesses represent the bulk of economic activity in most countries and the burden of regulation can have a disproportionate effect on small firms, as the smaller the business the heavier the compliance cost.
‘Sunset clauses’ Tax systems should have a review principle that demands tax legislation be periodically overhauled and consolidated to bring it up to date and make it easier to follow. Outdated laws should be removed. All anti- avoidance legislation should have sunset clauses attached. This will ensure that it is regularly reviewed.
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Clear link from tax to spend (hypothecation) There is a lack of credibility with tax systems in that taxpayers do not know why they are being taxed and where the revenue is being spent on. It would be of benefit to society, individuals and businesses if there is a clear link from tax taken to its application.
Avoidance of double taxation An essential principle of tax law must be that income be subject to tax only once. This applies both to direct tax and consumption taxes, such as VAT where input tax recovery should be available at each stage of the transaction chain. In the case of direct taxes there needs to be an efficient and effective mechanism available in all countries to give relief to a company which has already paid tax in another jurisdiction, before subjecting that same income, in whole or in part, to taxation. In practice, too many countries do not consider it important enough to offer this full relief.
The ‘arm’s length’ principle, whereby tax authorities treat transactions between connected parties by reference to the amount of profit that would have arisen if the same transactions had been executed by unconnected parties is a sensible and long-established convention which should be the basis of international tax affairs.
Human rights Taxpayers have rights as well as responsibilities. They are obliged to pay their tax in full and on time. But states have a responsibility to not impose their will in the field of taxation in an arbitrary or vexatious way. For instance, the incorporation into UK law since October 2000of the European Human Rights Act has empowered tax payers to challenge pernicious tax law in cases.
For example, where it could be argued there is fundamental uncertainty or unjustified additional cost of operating in one particular business vehicle rather than another. A similar approach throughout tax jurisdictions should become the norm.
‘Tax shifting’ – green taxes One of the most important ways in which elected governments can use taxation for social policy is to change behaviour which damaging to the environment.
Accountants should play an active part in efforts to reduce global carbon dioxide emissions. The concept of ‘tax shifting’, by increasing carbon taxes on the use of fossil fuels but reducing them for payroll, income or corporate taxes should be promoted.
Governments must also look to use tax policy to aid positive change by incentivising investment in new, cleaner technologies across a wide range of industries.
(Tax Principles: From Adam Smith to Barack Obama is available at www.accaglobal.com/tax_principles)
65 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island – January 28, 2010 IMF REVISES UP GLOBAL FORECAST TO NEAR 4 PERCENT
The global economy, battered by two years of crisis, is recovering faster than previously anticipated, with world growth bouncing back from negative territory in 2009 to a forecast 3.9 percent this year and 4.3 percent in 2011, the International Monetary Fund said in its latest forecast.
But the recovery is proceeding at different speeds around the world, with emerging markets, led by Asia relatively vigorous, but advanced economies remaining sluggish and still dependent on government stimulus measures, the IMF said in an update to its World Economic Outlook, published on January 26.
"For the moment, the recovery is very much based on policy decisions and policy actions. The question is when does private demand come and take over. Right now it’s ok, but a year down the line, it will be a big question," said IMF Chief Economist Olivier Blanchard in an IMF video interview.
IMF Managing Director Dominique Strauss-Kahn has warned that countries risk a return to recession if anti-crisis measures are withdrawn too soon.
The IMF said it had revised upwards its earlier forecast for global growth by ¾ percentage point from the October 2009 forecast.
Risk appetite returning
Along with the update to its forecast, the IMF also released a new assessment of global financial conditions in its Global Financial Stability Report (GFSR).
It said that financial markets have rebounded since the lows of last March, the result of improving economic conditions and wide-ranging policy actions by governments.
"Notwithstanding the recent sell-off, risk appetite has returned, equity markets have improved, and capital markets have reopened," Jose Viñals, Director of the IMF’s Monetary and Capital Markets Department, said.
But policymakers still face extraordinary challenges as they seek to unwind the unprecedented fiscal, monetary, and financial support they provided to keep their economies and financial markets from collapsing, the GFSR update pointed out.
The WEO forecast said that in advanced economies, the beginning of a rebuilding of corporate inventories and the unexpected strength of US consumption had contributed to a rebound in confidence, and inflation was expected to remain contained.
But high unemployment rates, rising public debt, and, in some countries, weak household balance sheets present further challenges to the recovery.
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The IMF report said that the varying pace of recovery across countries called for a differentiated response in the unwinding of measures used to stimulated the economy and combat the crisis.
Due to the still-fragile nature of the recovery, fiscal policies need to remain supportive of economic activity in the near term, and the fiscal stimulus planned for 2010 should be implemented fully. However, given growing concerns about fiscal sustainability, countries should also make progress in devising and communicating exit strategies.
Financial sector repair
Crucially, there remains a pressing need to continue repairing the financial sector in advanced and hardest- hit emerging economies.
In these cases, policies are still needed to tackle bank’s impaired assets and restructuring. Unwinding the financial sector support measures gradual; it can be facilitated by incentives that make measures less attractive as conditions improve.
Policymakers will also need to move boldly to reform the financial sector with the objectives of reducing the risks of future instability and rethinking how the potential fallout of financial crises would be borne in the future, while at the same time making the sector more effective and resilient.
At the same time, some emerging market countries will have to design policies to manage a surge of capital inflows.
Macro-prudential policies can be used to address the potential for bubbles at an early stage by limiting a buildup in risks.
– Courtesy IMF
67 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Sunday Island – January 31, 2010
SRI LANKA POLICY CERTAINTY HIGHER AFTER POLLS: CB GOVERNOR
Sri Lanka’s policy direction is clearer after a President Rajapaksa was returned to power with a bigger majority allowing investors to emerge from any ‘wait and see’ attitude, Central Bank Governor Ajith Nivard Cabraal said shortly after the election result was in.
"The mandate means we have a clear path charted for the next six years," he said.
"We have eliminated the war. We have obtained a mandate from the people. We have put forward a plan of action in the Mahinda Chinthana."
Though parliamentary elections are due before April 2010, Cabraal said the policy path is already set.
"The presidential elections have made certain the outcome of the parliamentary elections," Cabraal said. "There is no need to wait and see. Investors could set their plans in motion, notwithstanding the elections."
He said the government was committed to a fiscal consolidation of bringing down the budget deficit. For 2009 the government set a 7.0 percent target and 6.6 percent for 2010.
The mandate would strengthen the government’s hand to act on the basis of a report of a taxation commission that is being prepared.
"We have committed ourselves to a certain consolidation path," he said. "We are not digressing. We are looking forward to the taxation commission."
Cabraal said following the report from the taxation commission a changes will be made to taxes on a pre- determined path.
"There will be a cohesive plan," he said. "We want to give some certainty to economic agents to act."
Cabraal had earlier said that taxes on banks would be reduced on phased basis over several years to allow them to build up capital. Effective income taxes on banks are now nearly 60 percent.
The governor has already unveiled a monetary policy roadmap aimed at keeping inflation in single digits, the exchange rate steady and had warned against ‘reckless spending.’ (LBO)
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Sunday Times – January 31, 2010 MANY CONSIDERED HIM AS THEIR ‘WORKING GURU’
Appreciation – DR H.N.S. Karunatilake By W.A. Wijewardena - Retired Senior Deputy Governor
Dr H.N.S Karunatilake, an economist of rare breed, has passed away. He was a career central banker and retired from the Central Bank of Sri Lanka as its Governor, the highest position which a central bank officer can aspire to reach in that august institution.
The writer’s first encounter with Dr Karunatilake was in 1969 when he taught monetary theory to undergraduates at the then Vidyodaya University of Ceylon as a visiting lecturer. In the following year, Dr Karunatilake taught the writer another subject, Economic Development. At that time, Dr Karunatilake was a Deputy Director in the Economic Research Department of the Central Bank and it was amazing how he could find time to share his knowledge with undergraduates in several local universities.
Despite his busy schedule at the Bank, he was always on time to lectures. The writer could recall several prominent features in his lectures. He never brought any lecture note to the class room. Once he started talking, hard economic theories flowed from him freely. He was student friendly and was willing to answer their questions. Though he had received instruction all throughout in his academic career in English medium, he lectured very fluently in Sinhala without having to use any English word in the middle of a sentence for support. His lectures were clear, to the point and lively.
The writer had a very close working relationship with Dr Karunatilake after he joined the Central Bank in 1973 and especially after 1978 when Dr Karunatilake was appointed as Deputy Governor. Many in the Central Bank consider him as their ‘Working Guru’, because he led them not only in economic policy making but also in the day to day administration of the Bank. He was a builder of institutions on modern lines. To mention two such institutions which Dr Karunatilake took a personal initiative to build and with which the writer was also involved with him were the Institute of Bankers of Sri Lanka and the Credit Information Bureau of Sri Lanka. As regards the Institute of Bankers, he was one of the pioneering lecturers and examiners of the Institute’s predecessor, Bankers Training School or BTI set up in 1964.
When BTI was incorporated into the Institute of Bankers in 1979, Dr Karunatilake became its first Chairman and laid the foundation for that fledgling institution to become an advanced professional body in the country. Even after retirement, he could not keep himself away from that institute. He, along with his wife, was a prominent guest at every convocation of the Institute, except the last one where he excused himself on the ground of ill – health. Dr Karunatilake did not belong to any particular economic school. He could have conveniently been a Keynesian on account of his education at two such institutions of higher learning that had a Keynesian lineage: the prestigious London School of Economics on this side of the Atlantic and the reputed Harvard University on the other side of the Atlantic. He was a pragmatist and looked at only the final result of any economic policy.
His economic philosophy had at times been guided by Buddhist principles of economics. He was an economic nationalist to a fault. He was openly anti – IMF/World Bank type of economic policies and spent much of his retired life for finding a nationalist economic policy for Sri Lanka. He was at the receiving end from the mainstream economists of Sri Lanka on this count.
Dr Karunatilake is such a giant among contemporary Sri Lankan economists,that he will be missed by both his friends and foes.
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Tourism
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The Island – January 25, 2010 ECO-FRIENDLY TOURISM ZONES VITAL FOR GROWTH
By Mario Andree
The Sri Lanka Tourism Development Authority (SLTDA) says the development of tourism in specific zones will lead to some negative impacts on the environment, which also may raise human rights and health issues among the local population.
Possible mitigation measures will help prevent any possible negative impact on the environment with the aim of providing a better experience to tourists and local residents, SLTDA says.
Potential environmental impacts have been recognized by the SLTDA and it is studying ways to prevent such problems.
Impacts…
Pollution due to poor or inadequate facilities to dispose solid waste, waste water and sewerage is a key issue.
Other major issues are: unsustainable levels of water extraction from surface as well as ground water and damage to both marine and terrestrial wildlife habitats due to over-visitation;
Shore line erosion due to boats transporting tourists, over-use of forest trails by tourists and unsustainable use of local natural resources for construction of tourism facilities;
Excessive littering at tourism destinations, especially non degradable waste and use of unsustainable energy sources leading to pollution;
Pollution of water table and illegal construction of tourism facilities which may block of access or view of public recreation areas such as beaches and conversion of natural habitats for tourism development;
Possible mitigation measures are listed below:
Implementing a solid waste management programme including organic waste recycling, composting and establishing a central solid waste processing with an facility establishing treatment plants for sewerage.
Implementing water conservation and recycling measures to minimize the extraction and establishing treatment plants for sewerage and rainwater harvesting to minimize dependency on surface and ground water resources.
Conducting carrying capacities of tourism destinations and designing tourism activities not to exceed these carrying capacities by creating awareness among the tourists about the impacts that they may have on the ecology of the area and how they should behave in order to minimize those impacts.
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Implementing speed limits for boats with outboard motors and strict enforcement use of electrically- powered boats or non-mechanized boats wherever possible to minimize damage to shore lines as well as to reduce noise pollution design anchorage sites at locations where there is least impact to environment and create awareness among boat operates about best practices to follow during boat operation including safety measures that they should take to ensure passenger safety as well as minimizing damage to the environment.
Identify carrying capacities for forest trails and strict enforcement Identify areas where soil compaction can have an impact in vegetation along the trail and build elevated platforms in these areas to prevent visitors from walking on the ground.
Ensure that tourism development activities do not utilize local resources in an unsustainable manner by adopting designs that can minimize resource utilization from construction.
Work with local government to implement solid waste management plans for tourism destinations Encourage tourists to avoid the usage of non degradable material.
Follow best practice guidelines in the design, planning and construction of buildings and associated infrastructure to reduce energy requirements for lighting, cooling and heating Introduce energy saving measures such as dimming lights, using low energy appliances and light bulbs and enhancing the use of natural ventilation to achieve reduction in use, promote energy generation from renewable resources such as solar, wind, hydroelectric wherever possible.
Ensure effluent released to the environment is properly treated before being released and design septic tanks to ensure there is no leakage into the ground.
Follow defined legal setback rules during construction of tourism facilities and avoid location of any tourism activities in any areas declared as reservations.
Follow best practice guidelines during design and construction to ensure that structures developed blends with the surrounding environment. Ensure public access areas are not affected by tourism development during design stage by consulting local stakeholders who use the area. If this is not possible provide suitable alternatives for the local users to avoid conflict of interest.
During site selection, avoid sites that require filling of wetlands, clearing of natural habitats or sites that are close sensitive areas such as wildlife habitats or archaeological sites.
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Daily News – January 27, 2010 TOURISM BUREAU TIES-UP WITH NAVY: JETLINER TO SAIL FOR CORPORATE EVENTS Ramani Kangaraarachchi The Sri Lanka Tourism Promotion Bureau has tied up with Sri Lanka Navy to use the Jetliner ship formerly used for humanitarian operations as a venue for social and corporate events after refurbishment.
Chairman, Sri Lanka Tourism Promotion Bureau, Bernard Goonatilake on the occasion of ceremonial launching of the vessel at the Colombo port said there is a huge potential which was not explored due to the
The Jetliner cruiseship at the inauguration. Pictures courtesy Sri Lanka Navy war. “Now is the time to unleash this potential,” he said.
The Jetliner is a water jet driven fast passenger ferry, which has been designed to accommodate 600 passengers and 160 cars at a time. The vessel is presently docked at the Colombo Port. It will serve shortly as a venue for social and corporate events.
Sri Lanka tourism has grown rapidly since the conflict was resolved in May 2009 with new products and Navy Commander Vice Admiral Thisara services being introduced to the market and this is one Samarasinghe, Sri Lanka Tourism Promotion of such expansion, Tourism Minister Achala Jagoda, Bureau Chairman, Bernard Goonatilake and chinese Ambassador Yang Xiuping at the launch. the chief guest at the event said. Navy Commander Vice Admiral Thisara Samarasinghe said this vessel will introduce a maritime culture to the Sri Lankan population.
Although Sri Lanka is surrounded by the sea maritime culture was not in Sri Lanka earlier and therefore people must be educated on this potential which will change our economy, he said.
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Labour
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The Island – January 25, 2010 TRADE UNIONS ASK PRESIDENTIAL CANDIDATES TO UPHOLD WORKERS’ RIGHTS AND DIGNITY
The Trade Union Confederation of Sri Lanka issued the following statement in the run up to the presidential election to be held tomorrow. Another election will be held tomorrow to elect a president. At this election, people have to elect a president who could wage war more successfully because, as it has turned out, the two most talked about contestants, Mahinda Rajapaksa and Sarath Fonseka are emphasizing on their war capabilities.
We do not treat this as something that had happen accidentally in our country or that this is a personal conflict between two or them. We see this as an ill-effect of the programme followed by all successive governments in pursuing the war for their survival instead of effecting a political solution to the ethnic problem. The war mentality that has been created in the whole of the Sri Lankan society as a result of the war that continued for full 30 years and this situation has got aggravated as a result of the steps taken by the President to stabilize his position on war victories even after ending of the war leaving aside a political solution to the problem.
Already, civil administration has got militarized with the appointment of military officers too, to conduct civil administration work at all levels. The executive presidency that has contributed to the development of a constitutional dictatorship has been made an apparatus to build autocratic political power which was strengthened by baiting the members of the opposition to the government side and thereby weakening the opposition.
The attempt made by the present president to select tamed military leaders to make use of for the war for his survival was challenged by Sarath Fonseka. Both main contestants do not talk about the problems affecting the people of our country or about the steps be taken to bring the society that is afflicted with war mentality to the position of civil society, but they talk about the whole society being brought under severe discipline.
At the cessation of the war, present President Mahinda Rajapaksa declared that all citizens including government servants should be prepared to act with military discipline and make sacrifices to win development war in the country. Its real meaning is that the workers should refrain from making demands and leave aside issues of human rights and devote themselves for development. For the rulers who do not consider development of human rights, development is only a juggle of statistics. But what our society needs today is a process of development that regains our lost social values and that satisfies people’s needs. The following are pre-requisites to achieve that development
I. Implementation of the 17th amendment to the constitution. II. Removal of emergency regulations III. Abolition of executive presidency that has given rise to constitutional dictatorship. IV. Those who resign from the party for which he was elected by the people and seek to join any other party, generally for personal benefits should resign from his seat.
V. Appointment of civil administration officers for civil work and to remove military officers appointed to perform civil administration work. All governments that has come to power after the introduction of the current system of open economy has been operating the system in different forms of the basic policy that was highlighted to make out that the private sector is the moving power or the engine of the economy. That position has been found to be fictitious and false, in practice. Therefore it will be appropriate to discuss about an alternate economic system that can satisfy the basic needs of the people, in the context of the 75 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 presidential elections. Although Sarath Fonseka stated he would abolish the executive presidency system, he did not elaborate on it. He must declare to the country how this would be a done or what power would be amended.
The discipline that the society needs is not one that is required to satisfy the needs of the rulers but the discipline that would build an environment which can create self discipline among the people on the basis of social development and the satisfaction gained thereby. The candidates for the post of president should agree to take necessary steps to incorporate into our constitution the rights ratified internationally for the benefit of humanity at large, by Universal Human Right Convention and International Agreements.
Similarly it is important to note that the issue of corruption and cheating that has eaten into the whole society from top to bottom has been denounced at the presidential election and the issue of the need to its eradication has also come up. The candidates should explain to the people how the benefit received from eradication of corruption up cheating would be utilized for benefit of the people. Without the presidential candidates being committed publicly for a course of action as preconditions and without mobilization of the people to force implementation of such course of action, whoever may win on the basis of mere promises the people will be the losers.
Let us mobilize ourselves continuously, to force presidential candidate for such preconditions as well as for their implementation with continued mobilization even after the presidential elections and the general election that would follow thereafter. For the purpose of achieving the people’s aspirations we call upon all section of the people to mobilize themselves on the theme ‘’whoever may win, people will lose" under the organization, ‘’unity for workers right and people democracy".
The memorandum submitted to contestants for the post of President by trade unions The post of President in a country is placed in the political officialdom in that country according to the authority assigned to that post and the political culture of that country. In our country, the post of President wields enormous executive power. It occupies the highest position in the political officialdom. The authority of the parliament has been eroded.
Our attention to the Presidential Elections, scheduled to be held tomorrow, should be given with due regard to the aforesaid factors.
We propose to refer the following representations to the contestants of this election
1. For the establishment of Human Rights and for good governance
I. Removal of executive powers assigned to the post of President and empowering the cabinet with the Prime Minister with executive powers
II. Activation of independent commissions having restored Constitutional Council
III. To implement a political solution based on distribution of powers for the settlement of the ethnic problem
IV . Removal of legislation such as Prevention of Terrorism Act that violates basic human rights.
V. To establish by law and in practice Media Freedom and Right to information.
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VI. To ensure, to the citizens, the right to complain to the international institutions regarding violation of rights within the country.
VII. To establish an independent institution to formulate the control of funds in state organizations and to treat misappropriation of such funds as criminal offenses.
2. Establishment of a proper method of recruitment to government service i. Granting of employment in government institutions by politicians or such other authorities should be stopped and a procedure whereby, any citizen depending on his/her suitability, could secure employment, should be formulated. ii. For employment opportunities in provincial government institutions, selection to posts should be based on ethnic ratio of the population in that locality. iii. In case of government or provincial service, not less than 30 percent employment opportunities should be filled by women. iv. Since the main cause of high prices of essential consumer commodities is the taxes imposed by the government on such commodities, imposition of such taxes should be stopped.
3. I. Necessary provision to be made to implement, In law and in practice, the ILO conventions 87 and 98.
II. Increase of cost of living allowance by Rs.2.50 per point on the basis of former method of computation of that allowance in the government service and commencement of paying the difference of Rs.3,158 immediately . iii. To discuss with trade unions all circulars relevant to salaries of government servants with a view to removing anomalies and when new salary scales are introduced conversion to be effected on "step by step" basis. v. Circulars issued by the Public Service Commission to be cancelled. vi. Cancellation of the Public Administration circular No. 6/2006 and introduction of new fair salary structures for the government services. vii. The Salaries and Cadres Commission to be appointed by Constitutional Council.
4. I. Ensure the payment of a salary sufficient to meet the cost of living to private sector employees and as the first step towards that payment to increase the salaries of private sector employees by Rs.5,000 a month. ii. To take steps to eradicate inefficiency and corruption in the Labour Department which is the sole authority to deal with industrial disputes in the private sector
5. i. To implement the unemployment benefit scheme decided upon by the National Labour Advisory committee in respect of those who lose employment consequent to closure of work places.
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Stock Market
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Sunday Island – January 31, 2010
ALL SHARE PRICE INDEX HITS A NEW HIGH ON THURSDAY
The All Share Price Index on the Colombo Stock Exchange reached a new record high when the market closed for the week on Thursday with the growth trend on the CSE continuing after the election results.
Acuity Stockbrokers said in a market report that the ASPI was up 3% (104.7 points) while the MPI gained 3.4% (137 points) in the abbreviated trading week.
Expressing a point of view, the report said that the market had been moving on sentiment prior to the election and the first day of trading saw the bourse moving up further.
"As mentioned repeatedly on previous Weekly Reports, the bourse seems to be entering `overheated’ territory (based on fundamental grounds) surging at current levels,’’ the report said.
However, the brokerage said there were strong counters that investors could look at against what was described as "overheated speculative’’ stock.
JKH was the highest contributor to business volumes during two-and-half days of trading last week contributing Rs.533 million with 3.1 million shares traded against 1.8 million the previous week. The counter was up 1.6% week-on-week closing at Rs.176.50.
Other strong contributors to turnover last week were Touchwood and Commercial Bank with Touchwood generating Rs.400 million and ComBank Rs.344 million. Approximately 3.6 million Touchwood shares and 1.9 million ComBank traded during the week with Touchwood up 24.7% to close at Rs.116.25 while ComBank gained 2.8% to close at Rs.190.25.
Acuity said that Environmental Resources (Walker & Greig) attracted a lot of retail interest during the week.
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Business
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Sunday Observer – January 31, 2010 CLOUD COMPUTING TO ENHANCE BUSINESS EFFICIENCY APPLICABILITY OF CLOUD COMPUTING AS A BUSINESS TOOL FOR AN ENTERPRISE:
An interview with Ranjith Fernando -Head of Corporate Solutions, Suntel Ltd.
Q: How would you define cloud computing?
A: I believe cloud computing is defined as a pool of abstracted, highly scalable, and managed computing infrastructure capable of running end customer applications and is billed or charged by consumption. It has five primary attributes:
1. Dynamic Computing Infrastructure that should include a standardized, scalable, secure, and highly available physical infrastructure and must be virtualized with server, storage, and network virtualization.
2. Self-Service Based Usage Model - Interacting with the cloud requires a self-service oriented approach . The capabilities should include the ability to upload, build, deploy, schedule, manage, and report on the users business services, so they can manage the lifecycle of those services.
3. Minimally or Self Managed should have a technology platform that is self managed, such as with the following capabilities:- Deployment and recovery of business services and their computing resources (in the cloud). Self-service scheduling and reserving resource capacity, Configuration, management and reporting of resource capacity allocations, Access control and policies for usage of resources by users
4. Business Service Centric - cloud computing must be business service centric. This is in stark contrast to more traditional system- or server-centric models. In most cases, users of the cloud generally want to run some business service or application for a specific, timely purpose and would prefer to quickly and easily access a dedicated instance of an entire business service.
5. Consumption Based Charging or Billing - cloud computing is usage-driven. With consumers paying for only what resources they use . Cloud computing platforms must provide mechanisms to capture usage information that enables chargeback reporting and/or integration with billing systems.
Q: Are the advantages of cloud computing in your view most readily applicable to the large enterprise user, or to SMBs, or both?
A: There are compelling reasons for both large and medium-sized enterprises to be interested in cloud computing. For medium-sized companies, the top reason they are looking at cloud computing is that it is so much faster and cheaper to get started. Medium-sized companies may not have sophisticated. IT 81 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010 departments nor the money to invest in upfront capital expenses, so using a public cloud provider may be very attractive.
For larger companies, using an external cloud vendor may enable small teams or departments to get a new application or a development/test environment running in minutes instead of months, avoiding a long wait for IT departments to approve project requests, procure servers, find room for them in the data centre, install software and configured software.
Q: Do the current economic conditions bode well for this market, or hurt the chances for growth?
A: Clients are looking for technologies that help them save money in the long run, and cloud computing is certainly one model that would do just that.
Q: Describe the future of the cloud computing space.
A: Cloud computing has already had a huge impact in the Web 2.0 consumer space. In the coming years we will see businesses adopting cloud computing - not only to become more efficient, but also to take part in a growing global ecosystem of innovative new services that will link entire industries, like smart power grids and secure online medical record networks.
Q: How would the Sri Lankan companies benefit?
A: Today globally we are faced with a situation where operating margins are becoming thinner by the day. This calls for an organization to be agile and to off load unnecessary non yield giving investments. In effect we find many Sri Lankan companies increasingly talking about hosting the infrastructure outside the company.
The concept of cloud computing where you do not invest on hardware and racks of servers and instead host your applications or draw resources from a cloud or Internet and is a pay as you earn model, suits the pressures of modern days specially in terms of finances. Cloud computing is here to stay and Sri Lanka not being very far in terms of telecommunication developments will follow suit very quickly. It is our responsibility as a telecommunication company servicing high end corporates to introduce these concepts to the corporate world.
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Employment
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The Island – January 25, 2010
EFC TO FOCUS ON EMPLOYMENT GENERATION AND PRODUCTIVITY IN 2010
The Employers’ Federation of Ceylon, representing employers at the National Labour Advisory Council, issued the following statement last week:
The main stake holders of the ILO, government, trade unions and employers, subscribed to the Decent Work country Programme based on the ILOs decent Work agenda last year. The EFC clearly outlined that the concept of Decent Work should be regarded as a "moving target" which should consist of a minimum content which underpins most types of employment.
The concept of Decent Work also emphasizes the importance of enterprise promotion and development as being pre-conditions. Within this framework the EFC identified employment generation and productivity improvement as two main areas of activity that it would engage in promoting the Decent Work Country Programme in Sri Lanka. In fact, in November last year the EFC became one of the first Employer Organizations within the ILO to have released a publication on "Operationalizing Decent Work : An Employers Perspective" which was authored by Sriyan de Silva, a former Chief Executive of the EFC and a well-known author and an expert in industrial relations, both within and outside Sri Lanka.
On the basis of the key areas of activities identified, the EFC embarked on a project with the assistance of the ILO to identify training needs in the SME sector. An empirical study was undertaken in four regions, namely, Galle, Kurunegala, Kandy and Gampaha. The study included an analysis of 178 small and medium enterprises and the findings were quite revealing. Business planning and productivity enhancement were identified as the key priority areas which needed attention with regard to these enterprises.
As a follow-up to the findings of the study, the EFC will soon embark on a project which would identify SMEs that need training in these areas and provide a training package for them. This would be done with the assistance of some of the larger enterprises within the EFC membership who would be in a position to identify some of their own suppliers which would fall into the category of SMEs. The EFC believes that through this training package these SMEs would obtain the required assistance in making their businesses more vibrant and sustainable.
Enhancing productivity has been one of the key policy directions that has been identified in the Ten Year Horizon Development Framework under labour policies. However, the EFC has emphasized that we need to translate these ideas into action, especially in the context of making the required reforms in our labour relations framework. Quite apart from the fact that Sri Lanka has a very rigid labour relations framework with archaic laws, it is noteworthy to note that some of the members within the EFC have taken proactive steps towards enhancing productivity through collective bargaining and other forms of work place cooperation mechanisms. The EFC is happy to record that during the calendar year 2009, out of 41 collective agreements that were signed between employers and trade unions, 13 Agreements include productivity/performance based incentive payments.
One of the landmark collective agreements was finalized in the plantation sector in relation to the plantation workers between the three main signatory unions, namely CWC, LJEWU and JPTUC and the EFC representing the 23 regional plantation companies. The wage package of a plantation worker (Rs.405 per day) now includes a productivity incentive of Rs.30 per day which is linked to the norm/task of an employee. Although it is just over three months into the new agreement, it has been reported that the productivity incentive has made a tremendous impact on worker efficiency. The EFC will also release a publication which will entail simple guidelines to enhancing productivity and efficiency in the workplace. 84 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
This publication will not have technical jargon and will cater to explain the concept of productivity in a simple manner that could be understood by an average worker.
The latest report on "Labour and Social Trends in Sri Lanka 2009" that was released by the Central Bank, Ministry of Labour Relations and Manpower along with the ILO has revealed that skills mismatch continues to be one of the serious problems facing unemployment in Sri Lanka. We are aware of many youth with academic qualifications unable to find suitable employment in the job market. On the other hand, there are employers who continue to say that they cannot find candidates for employment in certain sectors. Therefore, in line with the EFC objective of promoting employment generation, it has decided to conduct a survey among the EFC membership on entry level skills and competencies that would be required by employers. A preliminary workshop will be held in this regard at the EFC on 19th January in order to ascertain some of the important areas that need to be identified in the questionnaire relating to the survey. The Responsible Business Initiatives Unit of the EFC has carried out its activities with a clear focus on strategic corporate social responsibility. The EFC believes that whatever activity that enterprises engage on in relation to CSR should have a strategic focus on business which would in turn make it a sustainable activity in the enterprise. The EFC Employers Network on Disability has already commenced training on IT to the visually handicapped. There are over 60 visually handicapped persons undergoing training at the EFC regularly on IT.
As Sri Lanka has been identified as a country which will have an ageing population, the Responsible Business Initiatives Unit of EFC has decided to embark on a special project in relation to the ageing work force within the EFC membership. The EFC will carry out a survey during this year amongst selected members on "expectations of an ageing working population". The purpose of this survey will be to identify enterprises which have an ageing work force and interview a sample of workers at different levels and ascertain their views in relation to the social security schemes, their own expectations to continue work, retirement plans and any other concerns they would have in relation to their retirement. The findings of this survey will be used as a foundation for follow up work on ageing work force population.
The EFC appreciates the fact that during the last 3 years the government has clearly recognized that private sector wages need to be determined on the basis of the capacity of the employer and market rates. This is the very foundation on which the free market economy can be sustained. Therefore, it is extremely important that policy makers take note of it. Arbitrary intervention in private sector wages will be counter productive to collective bargaining.
The EFC membership has acted in a responsible manner especially during the economic recession which affected some of the members very severely during last year. However, we are happy to record that the enterprises within the EFC have restructured their enterprises in a socially responsible manner looking at different options as alternatives to reducing the number of employees. In some enterprises this has resulted in having a more flexible work force willing to undertake work of a different nature to make the operations of the enterprises more efficient. Most employers have clearly indicated that retrenchment would be their last resort even at the worst times during the crisis.
Let us hope that the confidence and the strength our enterprises obtained during times of difficulty last year, will give them the required impetus to steer their organizations to a position of strength in the coming year.
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The Island – January 28, 2010 VULNERABLE EMPLOYMENT AND POVERTY ‘ON THE RISE’
The economic crisis has had a major impact throughout the world on the level of employment as well as its quality. The ILO’s annual report on "Global Employment Trends 2010" says the share of workers in vulnerable employment worldwide may have increased by more than 100 million in 2009, and with it global poverty. This is an interview with Lawrence Jeffrey Johnson who directed the publication of the report.
Q: How do you define ‘vulnerable employment’? Johnson: We define workers in vulnerable employment as the sum of own-account workers and contributing family workers. They are less likely to have formal work arrangements, and are therefore more likely to lack decent working conditions, adequate social security and ‘voice’ through effective representation by trade unions and similar organizations. Vulnerable employment is often characterized by inadequate earnings, low productivity and difficult conditions of work that undermine workers’ fundamental rights.
Q: Why it is important to look at vulnerable employment as a separate category? Johnson: While monitoring unemployment provides a good starting point to assess the health of labour markets in developed economies, particularly in developing economies it is essential to consider decent work deficits among the employed. Before the onset of the current economic crisis, there were large deficits reflected in high rates of vulnerable employment and working poverty in most of the developing world.
Q: How did the global economic and social crisis affect vulnerable workers? Johnson: Before the economic crisis, the share of workers in vulnerable employment was on a downward trend in all regions, decreasing globally by around 4 percentage points between 1998 and 2008. Today, the total number of vulnerable workers worldwide is estimated at between 1.48 and 1.59 billion – around half of the total global workforce. The number of workers in vulnerable employment may have increased by between 41.6 and 109.5 million from 2008 to 2009.
Q: Are there differences between industrialized and developing countries in terms of the impact of the crisis on labour markets? Johnson: The impact varied across countries, depending on the national economic structure, the level of integration in global markets, and labour market and social protection institutions, among other factors. In developed economies with strong social protection measures, workers who lose their jobs can move into unemployment, generally resulting in an overall decline in total employment. In many developing economies on the other hand, workers who lose their jobs do not have access to social protection schemes. Rather than becoming unemployed, these workers often take up various forms of employment, working on their own accounts, or contributing to family businesses. This, in turn, results in an increase in the number of workers in vulnerable employment.
Q: How does the rise in vulnerable employment relate to poverty? Johnson: In view of the impact of the economic crisis on vulnerable employment and labour productivity, the number of workers living with their families in poverty is likely to have increased as well. Estimates of the share of workers in extreme poverty suggest that, in the most extreme scenario, up to an additional 7.0 per cent of workers were at risk of falling into poverty between 2008 and 2009. This would translate into an additional 215 million workers, which is an alarming increase and would represent a setback of many years in reducing decent work deficits. At the US$2 a day poverty line, it is estimated that up to 5.9 per cent of workers (185 million workers) were at risk of falling into poverty between 2008 and 2009. - Courtesy ILO
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The Island – January 28, 2010 JOB-SECURE SINGLES MOST ACTIVE SEARCHING SPOUSE
People with a secure job are more active than those without in their efforts to search for a partner, according to a survey by a team at Tokyo University.
The university’s Institute of Social Science sought to shed light on changes in work and home life. Its survey found that the degree to which workers actively seek out a potential spouse — a process known as konkatsu — depends not only on their eagerness to marry, but also on whether they have a permanent work contract.
About 3,600 men and women aged 22 to 42 nationwide were surveyed between January and March last year.
The survey found that out of the workers surveyed, 800 were both employed and not in a relationship. The number excludes self-employed and freelance workers.
Of the workers with secure jobs, 53 percent of male and 51 percent of female permanent employees said they were actively seeking a partner, including asking friends and acquaintances to introduce them to someone and participating in matchmaking parties.
On the other hand, only 32 percent of male and 44 percent of female nonpermanent workers, including part- time and temporary workers, were similarly engaged.
It is generally thought that workers with permanent contracts have little free time to spend seeking a partner because they tend to work long hours compared with nonpermanent employees. But Associate Prof. Akane Murakami, a member of the survey team, said this is not always the case, and there are other factors to consider.
"Male nonpermanent workers who don’t earn a stable income may be reluctant to seek a wife due to established ideas about gender roles, which hold that a man is supposed to bring home enough money to support both himself and his spouse," Murakami said.
Since the standard methods of finding a partner can be expensive, such as going on dates and to matchmaking parties, Murakami said permanent employees, who usually earn more than nonpermanent workers, are thought to be able to more easily engage in such activities.
"Narrowing the [job security] gap between permanent and nonpermanent workers by increasing [the latter group’s] employment stability could lead to more single people deciding to seek marriage and increasing their efforts [to find a partner]," Murakami said.
-ANN
87 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Fisheries
88 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
The Island - January 26, 2010 GOVT. TO BOOST SOUTHERN FISHERIES SECTOR
By Don Asoka Wijewardena
The Fisheries and Aquatic Resources Ministry will embark on constructing massive infrastructure development projects in the Southern province.
As an initial project the Fisheries harbour in Devinuwara, Matara, will be developed with required facilities and the entire project will cost Rs.250 million, the Ministry said.
Fisheries and Aquatic Resources Minister Felix Perera told The Island Financial Review that the future treasury of Sri Lanka would be in the hands of fishermen because more fishing resources would bring a substantial amount of money to enrich the economy.
He said the development activities involved in the Devinuwara fisheries harbour development would include construction of a 100 metre long jetty, 100 metre long breakwater, 80 metre long sand barrier and 65 metre long coastal entrance. In the wake of tsunami the harbour was badly devastated and a number of fishermen lost their livelihood.
The Minister pointed out that as about 10 to 12 fisheries harbours had been destroyed by tsunami and all destroyed harbours had been reconstructed and rehabilitated. During the war fishermen from the Southern province could not go to the Northern province and speed limit of fishing trawlers was horse power 15. At the same time fishermen could catch fish between 6am to 6pm and some were even abducted by the LTTE.
He said the Fisheries Ministry had imported state-of-the-art surveillance machinery to in inform fishermen in advance about tsunami or any other unfavourable weather conditions. The opportunity to have modern refrigeration would also be made available to protect fish and a fair price for the fish would be made available in due course.
Referring to inland fishing, Minister Perera said the inland fish production had reached 40,000 metric tons at the moment. The sea tigers had launched attacks on fishermen and navy and as a result fishing was a risky task. The government had taken action to construct 100 anchorages in the Southern coast.
89 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Construction Industry
90 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Daily News – January 27, 2010
GREEN BUILDING COUNCIL FOR CONSTRUCTION INDUSTRY SLIA TO PLAY PIVOTAL ROLE:
Charumini de Silva
Sri Lanka Institute of Architects (SLIA) is planning to setup Green Building Council of Sri Lanka with all stakeholders in the construction industry to improve standards of the industry. All stakeholders such as engineers, architects, environmentalists, planners and quantity survey consultants will participate so that there will not be disparities in the quality of the construction industry. SLIA will play pivotal role in this initiative Sri Lanka Institute of Architects President, Chandana Edirisuriya told Daily News Business.
The majority of the architects are aware of the green concept and has shown interest. Energy efficiency is vital in construction industry.
The energy efficiency plan has to be included at the design stage of the plan.
The resources are being used unnecessarily when we could use daylight for some designs. These messages should be taken to the public and make them aware to take the maximum use of limited resources,” he said.
He said to have a growth and development, any industry must be able to perform individually.
“Young architects are very creative and talented. The talents of our SLIA President architects are recognized by the entire world and they are capable of Chandana Edirisuriya performing under any international standard.
But the opportunity for capacity building is lacking.
Sri Lankan architects have ventured into the international market. “We need support from the Government to safeguard these architects,” Edirisuriya said.
The Sri Lankan construction industry is still recovering from the global downturn and at present there is a slow progress. Economy has shown a steady growth and investments will come in.
“We are optimistic about the future of the industry. From 1990 to date our industry has been volatile. Many countries such as US, Dubai, Gulf region countries, Singapore, China and India were affected by the global economic downturn in the latter part of 2008. But China overcame that situation faster because the Chinese Government pumped money in to the industry,” he said. “Our industry is very sensitive to the entire internal and external factors in the market. During the global economic meltdown the impact of it reflected on the apartment and the tourism industry.
Apartment industry investments reduced since investors had not found it as a viable investment,” Edirisuriya said.
91 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Trade Delegation
92 FCCISL News Alert Weekly Business Highlight 25th – 31st January 2010
Sunday Times – January 31, 2010
SRI LANKA EXPORT-PROMOTION DELEGATION TO VISIT CROATIA
A Sri Lankan business delegation will be visiting Central European countries on an export promotion mission, a senior official of the Sri Lanka Export Development Board(EDB) told the Business Times. The EDB will lead the delegation to Austria, Croatia, Slovakia and the Czech Republic from February 15 to 19.
The delegation will comprise experienced exporters ranging from the agro-food, aqua-culture, garment and handloom-product to the IT and BPO, chemical, and power and engineering sectors. The visit is being arranged under ‘CEEPro 2010", the Central Europe Export Promotions 2010 initiative, which is a national campaign to promote Sri Lankan exports to Central Europe, he said.
The Croatian partner organization, the Croatian Chamber of Economy, will bring together potential Croatian buyers to meet with the Sri Lankan delegates on February 17, he added. The meetings will take place at Croatian Chamber of Economy headquarters in Zagreb. The Croatian Chamber of Economy, which has actively being promoting CEEPro 2010, has invited approximately 200 Croatian businessmen to the meetings.
"CEEPro 2010" is a national campaign to promote Sri Lankan exports to Central Europe.
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