Loss of GSP+ shrinks SAGTs domestic volumes

The recent decline in domestic container throughput volumes at private-run port-terminal, South Asia Gateway Terminals (SAGT) may have been partly due to the recent loss of GSP+ concessions

, a recent research report has suggested.

SAGT’s higher-margin domestic volumes declined by 13% YoY in September 2010 to 25,259 Twenty-foot Equivalent Units (TEUs), following a 9% YoY decline in August 2010, although both were off relatively high bases, statistics showed.

“The drop in volumes may in part be due to lower Sri Lankan apparel sector (and other affected sector) exports, resulting from the loss of GSP+ concessions in August 2010,” CT Smiths Stockbrokers Private Limited stated in its September 2010 SAGT update.

The report said domestic volumes had earlier recorded double digit YoY growths for the periods between October 2009 to May 2010 (although off relatively low bases), but fell to low single digits thereafter.

“Apparel sector exports (accounting for 41% of total Sri Lankan exports in July 2010) declined 11% YoY in July (in anticipation of the GSP+ termination in August), and it is likely that this trend has continued in August and September,” the report highlighted.

Domestic volumes year to date (from January to September 2010) at SAGT were, however, up by 17% YoY to 281, 227 million TEUs, accounting for 19% of total throughput.

SAGTs total container volumes in the month of September 2010 also fell by 2.5% YoY to 157,441 TEUs, albeit off a relatively high base of 161,450 TEUs in September 2009 (the second highest throughput recorded in 2009).

Statistics, however, showed that this was the second consecutive monthly YoY decline with August 2010 throughput declining 2.3% YoY to 159,334 TEUs, also off a high base. September 2010 throughput is also the lowest recorded in 2010 but cumulative volumes for 2010 YTD are up 16% YoY to 1,499,947 TEUs.

Meanwhile, CT Smiths report also stated that SAGT is likely to increase rates for transshipment (one way) in line with the rates of State-run rival, Sri Lanka Ports Authority’s (SLPA) as SAGT’s transshipment business is suffering from lower margins.

SLPA rack rates for tariffs are currently US$37 per TEU for transshipment (one way), and US$140 per TEU for domestic cargo operations.

SAGT’s overall market share (calculated using the latest Central Bank statistics) stood at 48% in July 2010 after peaking at 54% in February 2010.

The two largest contributors to JKH’s key transportation sector have historically been the now 42% owned associate SAGT and the fully owned marine bunkering subsidiary Lanka Marine Services (LMS).

Following the Supreme Court ruling against JKH on a Fundamental Rights Application on LMS in FY09, SAGT is currently the main contributor to JKH’s transportation sector earnings. SAGT is one of the two terminal operators at the Colombo port; the other being the government owned Jaya Container Terminal (JCT).

The Port of Colombo has a current annual capacity of approximately 4.5 million TEUs

Read more ...

Leopard Sri Lanka Fund to close in Jan 2011

By Azhar Razak

Leopard Capital Sri Lanka, which postponed its self-imposed deadline of launching two funds in Sri Lanka earlier in the year, after failing to raise the required funding, is now targeting to launch one of its funds by early 2011.

According to a top official involved in managing the fund, the private equity Leopard Sri Lanka Fund of US $100, which seeks to buy into unlisted firms, is targeting to kick off in January 2011.

“We are expecting to launch the private equity fund at least by early 2011, possibly somewhere in mid-January,” Leopard Capital Vice Chairman and Managing Partner Nirosh de Silva told The Bottom Line.

Although Leopard Capital Sri Lanka, a joint venture between Orion Capital Partners in Sri Lanka and Leopard Capital of Hong Kong started fundraising for the private equity fund since November last year, the fund was not able to accumulate at least the required minimum funding and therefore was not able not meet its goal of April 2010 to start making investments.

“The delay is because we have were not able to raise the required funding but we are confident that the new deadline for next year is achievable,” Nirosh said admitting that the global recession has been a huge constraint in raising the funds although Sri Lanka has some unique opportunities in the post-war era.

However, he declined to disclose on how much they had raised until now.

The US $100 million Leopard Sri Lanka Fund is to have a lifespan of 10 years, with redemptions allowed only after five years and intends to invest in unlisted companies in Sri Lanka, typically taking minority positions.

According to officials, the fund requires a minimum US $ 60 million to launch and aims to help fund the post-war development of Sri Lanka’s economy by investing in sectors such as tourism, seafood processing, agriculture, healthcare, retail, processed food, property development, financial services, power infrastructure and manufacturing sectors.

When asked about Leopard’s US $ 30m public equity fund known as Sri Lanka Value Fund, de Silva said they would ‘for the moment’ only concentrate on raising capital for the major private equity fund and decide on the other fund afterwards.

Other members of the investment team of the fund apart from de Silva, who is the Managing Partner include Analyst, Kaminda Karunanayake and Associate Partners Vidhumin Grero and Chaminda de Silva.

The funds are advised by renowned contrarian investment gurus - Marc Faber, Jim Rogers, retired US Senator Larry Pressler and Rolf Jud.

Read more ...

UK to introduce new business visa

UK to introduce a new business express visa program for companies tofacilitate their staff, who travel regularly to the UK.

The British Deputy High Commissioner, Mark Gooding said the High Commission has introduced the new visa to provide extensive market support to British companies who expect to invest in Sri Lanka and Sri Lankan companies that want to do business in the UK.

Gooding said the British government had taken effective steps to promote bi-lateral trade and investment in Sri Lanka.

Read more ...

Govt. Commences Construction Of Largest Saltern In SL

The government has commenced the construction of the largest saltern in the country at Kurumpity in Trincomalee.

The government announced that construction is underway to build the saltern in a 1,800-acre land. Upon completion it is expected to produce 50,000 metric tons of salt per year.

The public venture is a part of the large scale development work to improve infrastructure facilities in the formerly war-torn areas of the country and to provide livelihoods to the people in the area who have faced severe hardships due to the three-decade long war.

According to the Fisheries and Aquatic Resources Development Ministry, the project will generate 800 direct employments and over 1,500 indirect employments. The project will also help reduce the present salt prices.

The government has said that nearly 60% of the current annual salt requirement of the country is produced locally and the remaining 40 % is imported at a cost of nearly Rs .380 million.

Read more ...

Sri Lankan Airlines to acquire seven more aircraft by 2011 end

Sri Lankan Airlines will acquire its first brand new aircraft in more than a decade, among the seven aircraft it plans to take delivery of by the end of 2011. They include five Airbus A320’s, including three brand new aircraft, and two Twin Otter floatplanes.

Sri Lankan’s CEO Manoj Gunawardena said: “We will be celebrating an important new chapter in the history of SriLankan Airlines with the arrival of this large number of aircraft within a short period. They will allow SriLankan to significantly enhance the passenger experience on board our flights, give us the ability to fly to more cities in the Subcontinent, Middle East and Southeast Asia, and to also increase capacity to existing destinations in these regions.”

The last time Sri Lanka’s National Carrier took delivery of a brand new aircraft was in June of 2000, when it received the last of six A330-200’s. The three brand new aircraft are scheduled to be acquired in from May-November 2011, and will sport the latest comforts and entertainment systems including Audio-Video On Demand (AVOD) in both Business and Economy Classes.

These three aircraft would be preceded by two other A320’s which are likely to arrive in December 2010 and early 2011. All five aircraft would be on operating leases at very attractive terms of monthly payments. In addition, two Twin Otters are to be acquired for the re-launch of its domestic service SriLankan Air Taxi this winter. The airline is also exploring the possibility of obtaining at least one more long-haul wide-body aircraft to launch services to more new destinations in Europe and the Far East.

“Our fleet expansion plans are constantly updated to support Sri Lanka’s rapidly growing tourism industry, while keeping in mind the financial requirements of the airline,” said SriLankan’s CEO.

Sri Lanka’s National Carrier began a re-fleeting programme shortly after its management changed hands in April 2008, acquiring three A320’s in 2008 and 2009 to replace old aircraft. A wide-body A330-200 was also added to the fleet two months ago.

These seven aircraft will join SriLankan’s fleet of 13 – three A320’s, five A330’s, and five A340’s – with a global network covering 49 cities in 31 countries. The twin-engined A320’s operate to destinations in the Subcontinent, Maldives, Southeast Asia, and parts of the Middle East, while the A330’s and A340’s operate to the Middle East, Europe, and the Far East. 

Source : The Hindu

Read more ...

One Shot arrested

UNP MP Ranjan Ramanayake was arrested by the Police a short while ago in Kandy for allegedly giving a woman false hopes of marrying her...

Read more ...

Microfinance needs re-evaluation to achieve financial inclusion - Experts

There is a broad international agreement on the importance of Financial Inclusion as a policy goal for all governments, including the developing countries of Asia. While microfinance is an important tool in achieving financial inclusion, it is increasingly becoming clear that inclusion is much more than providing access to microcredit alone.





What role microfinance can play in achieving financial inclusion was the topic of discussion at the opening panel of Asia Microfinance Forum in Colombo, Sri Lanka today.  Setting the tone of the panel, Mr. Philip Brown, Managing Director and Director of Risk, Citi Microfinance said, “To remain a growth sector the microfinance industry is undergoing another period of re-evaluation with a focus on improved client understanding and product innovation”.





Speaking about the role of microfinance in achieving financial inclusion, Mary Ellen Iskenderian, President and CEO of Women’s World Banking said, “I think MFIs are uniquely placed to play a role in financial inclusion as they can provide a full range of financial services to the poor. Since MFIs are focussing on women, who form the major part of financially excluded communities, microfinance can be instrumental in achieving financial inclusion of a large population”.





Ms. Ellen also delved on the impact of commercialization on the operations of microfinance institutions. Acknowledging the fact that donor money alone cannot meet the huge unmet demand of microfinance and MFIs do need to access commercial capital, she said “Investors must play constructive role in the decision making of microfinance organizations”.





Dolores Torres, President and CEO, CARD MRI, Philippines, who was also on the opening panel introduced the audience to her organization’s training program. “We established CARD MRI development institute where we train our staff. In 2006, we started CARD MRI life insurance agency and in 2007, we got registered as CARD institute bank. We are also helping our members to develop their businesses and marketing.”





Ms. Torres highlighted the uniqueness of CARD bank which has a full equity share holders owned by CARD members. “We also ensure that women participate in every aspect of the management. The total insured individuals are 6 million. For one insured member, her husband and children are also insured, making our contribution a lot higher” she added.





Briefing the audience about the current status of microfinance in Sri Lanka, W M Karunaratne, Assistant Governor of the Central Bank of Sri Lanka said, “In Sri Lanka, law and order has been established for stability. The country has entered into a new era, an era where interest rate has come down to just 5% today. Sri Lanka government has supported the economic growth.





“As far as I know Sri Lanka MFIs are well ahead and in the process to promote microfinance. Self help groups and technology to reach the masses are in place. This will be a new initiative for us to reach more people at low cost” he added.





Stressing on the need of regulated microfinance Mr. Karunaratne said, “In many countries, microfinance main objective is not to make profits but under situations when their funds have dried up, they move towards profit making. Once that happens, it becomes a financial business. At this state, MFIs need be subjected to some sort of regulation. The government of Sri Lanka has taken steps to regulate the MF system”.





The central bank of Sri Lanka reaches to the low income people by promoting linkages between banks and MFIs. It implemented a programme on behalf of the government to reach the under banked areas. “Through microfinance, we hope to promote more income opportunities and reduce income disparities.  Sri Lanka people are ready to learn, they have the capacity to come out of any adversity”.





Source : Microfinance Focus

Read more ...

Sri Lanka wins boxing gold

Heartbreak for Wales's Sean McGoldrick, who is narrowly beaten by Sri Lanka's Manju Wanniarachchi on countbacks following a 7-7 thriller after three rounds. That's Sri Lanka's first gold medal in 72 years at the Commonwealth Games.

Sri Lanka’s Manju Wanniarachchi on Wednesday won Commonwealth Games gold in the bantamweight division for Sri Lanka’s first boxing title in 72 years.

The 30-year-old from Kandy won a points decision 16-14 to beat Welsh teenager Sean McGoldrick over three rounds in a closely contested bout in which the scores were tied 7-7.

Barney Hennricus won Sri Lanka’s only boxing gold medal at the 1938 Empire Games in Sydney.

The first round was scored even 3-3 while Wanniarachchi who hails from the central hill capital of Kandy trailed 5-6 after the second round.

Wanniarachchi nosed ahead of the 18-year-old from Newport 7-6 during the third round but the Welshman leveled with about 20 seconds remaining.

The Sri Lankan was declared the winner on a countback of the scores.

Sri Lankan boxers won two silver and a bronze medal at the next edition of the Games in Auckland in 1950.

Bronze medallists were the beaten semifinalists Tirafalo Seoko of Botswana and Louis Julie of Mauritius.

Northern Ireland’s Paddy Barnes won gold in the light flyweight division.

Barnes - the British province’s first European champion in 19 years - beat defending champion Jafet Uutoni from Namibia 8-4 on points.

Bronze went to losing semifinalists Muhammad Waseem of Pakistan and India’s Amandeep Singh.

In the picture above, the Sri Lankan boxer points to a higher power when the judges announce their decision before soaking in the adulation from his compatriots in the stands. 

Read more ...

Where is the Bourse heading?

Rumours are that the Colombo Bourse is on the verge of a collapse stemming from a predicted market correction although analysts say the present downslide could only be temporary.

The upmarket Milanka Price Index at the Colombo Stock Exchange fell sharply by about 5 % a while ago (10.30 am) on Wednesday prompting Exchange authorities to halt trading under the 'cooling off' period rule.

Both indices at Colombo bourse took a beating right from  the start  go on Tuesday morning as selling pressure continued to materialized throughout the day, analysts said.

 Richard Pieris was the highest traded counter for the day. Aitken Spence came in at second, while Seylan Bank Non voting came in at third.  John Keells Holding was the top contributor to daily turnover with Rs.605 million.  Hayleys came in at second with Rs.4 million.





Analysts speculated that brokers have slowly started to unload debtors to the market and is trying to out do/out sell each other in to meet the credit granting timeline.

The All Share Price dipped 267.81 points to close at 6,566.79 points (-3.92%), whilst the Milanka Price Index also dropped  361.31 points to close at 7,141.72 points (-4.420%).

Turnover was Rs2.96 billion.

The stockmarket has been seeing sharps 'ups' and 'downs' in post-war Sri Lanka with punters having a field day, making millions of rupees in speculative trades.

Read more ...

MR to be a guest at C'wealth closing ceremony

Sri Lanka President Mahinda Rajapaksa is set to be the guest of honour at the closing ceremony of the Commonwealth Games in India, on Thursday night.Diplomatic sources and protocol officials in Delhi today confirmed that Rajapaksa had accepted a "joint" invitation from the Indian government and the event organisers, and would be flying to India on Wednesday.

Aslam Khan, head of protocol for the games, confirmed that the choice of guest for the closing ceremony in the Jawaharlal Nehru stadium in Delhi was a "joint venture between the Indian government and the organising committee". Rajapaksa is not expected to speak at the event, Khan said.

Sri Lanka however has been blocked from hosting the next meeting of Commonwealth leaders in 2011, after Britain and Australia joined forces last year to protest at alleged human rights abuses. 

Read more ...

Tata Housing to launch projects in Sri Lanka

Tata Housing, a unit of Tata Sons, is foraying into international markets with the launch of projects in Sri Lanka and Maldives in the current quarter

, a recent foreign media report said. The real estate company, known for low-cost housing projects, plans to do a mix of luxury and affordable housing projects in these markets.



"We have got interest from other foreign countries also, which we are examining. But for now, we are planning to launch our projects in one of the cities in Sri Lanka or Maldives in the current quarter," said Brotin Banerjee, managing director and chief executive officer.



The company may partner with local governments and land owners to launch its projects, he said.



He denied that the company was going the Tata group way, which derives 70 per cent of its revenues from international markets through companies such as Tata Steel , Tata Motors and others.



"It (international markets) will be a significant portion in the coming years but we will go in the reverse way to our parent. Nearly 80 per cent of our revenues will come from India [ Images ] and the rest from abroad," he said.



The company today launched an arm by the name of Smart Value Homes which will sell houses in the range of Rs 500,000 to Rs 35 lakh (Rs 3.5 million).



Tata Housing today announced the launch of its second 'Shubh Griha' project at Vasind, on the outskirts of Mumbai [ Images ], part of Smart Value Homes.



The new company will sell low-cost homes below Rs 10 lakh (Rs 1 million) and affordable homes between Rs 12 lakh (Rs 1.2 million) to Rs 35 lakh, he said.



The company has acquired five to six million sq ft of land and plans to acquire six-seven million sq ft more to launch its projects in Bangalore, Chennai, Hyderabad, Pune and Mumbai.



"All the segments of housing have high potential. But if Tata Housing did all of them, it would lead to dilution of our potential. Hence, we launched the new company," he said.

Source : Rediff.com

Read more ...

Microsoft unveils first Windows Phone 7 handsets

Microsoft yesterday unveiled the first phones based on its Windows Phone 7 operating system. The first nine handsets are from Dell, HTC, LG and Samsung and all run on the Qualcomm Snapdragon processors. 



A number of operators have announced plans to offer the phones, including America Movil, AT&T, Deutsche Telekom, Movistar, O2, Orange, SFR, SingTel, Telstra, Telus, T-Mobile USA and Vodafone. 



Microsoft said a "broad selection" of the phones will begin shipping in time for this year's holidays, with more arriving in 2011, including phones from Sprint and Verizon Wireless. In addition, select models will be available at Microsoft Store locations and from Amazon. Unique features of the new OS include Live Tiles, similar to widgets which bring live updates form applications and services to the handset's home screen; mobile games over Microsoft's Xbox Live service; the Zune music service, available as a susbcription or via downloads and streaming from the Windows Marketplace; dedicated web search from the home screen with Bing; Windows Live to manage personal content, agenda and information from other Windows software; and the free Find My Phone service to remotely ring, lock, erase and show the location of the phone on a map.

Confirmed launches in time for the holdiays include AT&T with the HTC Surround, Samsung Focus, and LG Quantum; T-Mobile USA with the HTC HD7 and Dell Venue Pro; Telus with the HTC 7 Surround and LG Optimus 7; and America Movil with the LG Optimus 7 in Mexico. 



In Europe, O2 will offer the HTC HD7 in the UK and Germany; Orange will sell the HTC 7 Mozart and Samsung Omnia 7 in France and the UK; France's SFR has the HTC 7 Trophy and Samsung Omnia 7; Movistar will sell the LG Optimus 7, HTC HD7 and Samsung Omnia 7 in Spain; T-Mobile will offer the HTC 7 Mozart and Samsung Omnia 7 in Germany; and Vodafone has the HTC 7 Trophy in Germany, Spain and the UK and LG Optimus 7 in Germany, Italy, Spain and the UK.



In Asia, Singtel will sell the HTC HD 7 and LG Optimus 7 in its home market, while Telstra is launching the HTC 7 Mozart and LG Optimus 7Q in Australia. Vodafone will also sell the HTC 7 Trophy in Australia. Microsoft said that in total over 60 operators have confirmed plans to launch the phones in 30 countries.

Read more ...

Airasia named the Best Asian Low-Cost Carrier

AirAsia was named the Best Asian Low-Cost Carrier by TTG, Asia Pacific’s leading travel news publisher.AirAsia was unanimously named Best Asian Low-Cost Carrier by the readers of TTG Asia, TTG China, TTGmice, TTG-BTmice China and ttgasia eDaily who cast 48,000 votes in a poll held from June to August this year.  The award reflects the airline’s popularity among travel trade insiders and the traveling public.Dato’ Aziz Bakar, chairman of AirAsia, received the award at the 21st Annual TTG Travel Awards 2010 Ceremony & Gala Dinner in Centara Grand & Bangkok Convention Centre at CentralWorld, Bangkok.  More than 700 travel industry professionals attended the event.

Dato’ Aziz said, “We are proud to be named the best low-cost airline again.  This award reflects AirAsia’s commitment to excellence and to growing travel and tourism in the region.  We have flown 100 million guests in only eight years of operations as a low-cost airline that has made it truly possible for everyone to fly.”

“The innovation that is AirAsia will go on serving the region with low fares, an extensive network of destinations, great flight frequencies and friendly ASEAN service,” he added.
Dato’ Aziz thanked the almost 8,000-strong AirAsians who have been instrumental in the success of the airline across all fronts.

In 2009, TTG’s editorial board also named AirAsia Group CEO Tony Fernandes the Travel Personality of the Year for being the “most outstanding individual for taking proactive steps to develop the travel industry and for demonstrating innovation in his field.”  Tony has led the airline in revolutionizing air travel and popularizing low fares that now allow everyone to fly.

The airline has invested millions of dollars in quality improvement measures that include the running of its world-class training center, the AirAsia Academy.  Technology is integrated in operations across the airline’s entire network to improve operational efficiency, and training programs are in place to ensure high quality service.

AirAsia, the leading and largest low-cost carrier in Asia, services the most extensive network with approximately 136 routes covering destinations in Asia, Australia and Europe. In 8 plus years of operations, AirAsia has carried more than 100 million guests and grown its fleet from just two aircraft to approximately 96. The airline today is proud to be a truly Asean (Association of Southeast Asian Nations) airline with established operations based in Malaysia, Indonesia and Thailand, servicing a network stretching across all Asean countries, China, India, Bangladesh, Sri Lanka and Australia. This is further complemented by AirAsia X, its low-cost long-haul affiliate carrier that currently flies to destinations in China, Australia, Taiwan, India, Iran, Japan, Korea and the UK. AirAsia is the regional carrier with the largest destination network and highest flight frequencies. AirAsia was named World’s Best Low Cost Airline in the annual World Airline Survey by Skytrax for two consecutive years in 2009 and 2010.

Read more ...

Sri Lankans arrested in major illegal immigration investigation

In one of the largest enforcement operations ever undertaken, the UK Border Agency and police officers undertook a series of raids on twenty-one locations in Sussex, Surrey and Kent at the end of September. These raids followed an eight month investigation by the UK Border Agency's South East Immigration Crime Team into a gang suspected of facilitating illegal working by immigrants for an employment agency in Crawley, Surrey.

Five people, including two Sri Lankan nationals, were arrested for various immigration offences including facilitating breach of UK immigration laws and money laundering. A further twenty-five people, mainly understood to be Sri Lankan nationals, were also arrested for immigration offences at a number of locations in Sussex and Surrey. The UK Border Agency will seek to remove those found to be working in the UK illegally.
Damian Green, Minister for Immigration, said:
“This was part of a nationwide UK Border Agency campaign to tackle illegal working and organised immigration crime.
“Working with the police and other law enforcement partners we are determined to tackle the organised criminals who prey on vulnerable immigrants, and take action against those who break the law. Today’s operation is an example of that.”

Andy Cummins, who heads up the South East Immigration Crime Team, said:
“We believe that we have disrupted a significant international organised criminal network, which aimed to assist people to enter and stay in the UK illegally.
   
“Today’s operation is the result of an extensive investigation involving both the UK Border Agency and the police South East Organised Crime Directorate. That investigation continues”


The South East Immigration Crime Team is a specialist unit of seconded police officers and UK Border Agency staff have been set up to investigate immigration crime, and prosecute those behind it. Officers from Sussex, Surrey, Hampshire, Kent and Thames Valley Police forces are involved.
 
Anyone who suspects that illegal workers are being employed at a business or any other immigration crimes can contact Crimestoppers on 0044 (0) 800 555 111 ,or visit www.ukba.homeoffice.gov.uk/report-immigration-crime  where anonymity can be guaranteed.
 
A fine of up to £10,000 can be imposed on an employer for every illegal worker found in the business, unless the employer can prove that it carried out the correct right-to-work checks on the employees.

Employers can find guidance on how to employ workers legally at www.ukba.homeoffice.gov.uk/employers or by calling the UK Border Agency’s Employers’ Helpline on 0044 (0) 300 123 4699.

Read more ...

Fishing ban lifted

Sri Lanka has lifted all restrictions for fishing imposed due to LTTE terrorism making the country's territorial waters free and open for fishing.

Fisheries and Aquatic Resources Minister Dr. Rajitha Senaratna said according to Defence Ministry the sea will now be free of restrictions except for areas where landmines were not yet removed.

The decision has taken by the Defence Ministry after a discussion held between Minister Senaratne and the Defence Secretary Gotabaya Rajapaksa, early last week.

He said following the decision to lift the ban on fishing, the restrictions imposed on fishing boats with 40 HP engines has also been lifted. 

" This is the first time the government has lifted the ban on fishing boats with 40 HP engines. We expect a good harvest this time", he said.

The Defence Ministry has agreed to release the 141 fishing boats with 40 HP engines held in their custody to the Fisheries Ministry .

Read more ...

Labour Federation opposes amendment to EPF Act

The Ceylon Federation of Labour (CFL) has filed a strong objection against the proposed amendments to the Employees Provident Fund (EPF) Act.The federation, which is an organisation bringing together trade unions in the private, semi-government and co-operative sectors of Sri Lankahas urged the authorities not to introduce any proposals in the amendment that could eat into the balance of members of the EPF and ultimately leave only a meagre sum at retirement to the individual.

“It is the considered view of the CFL that the original objective of the EPF which is to provide tax free benefits for the individual worker at retirement should not be harmed in any reform of the EPF but it appears that your amendments allow too many pre-retirement withdrawals,” an extract from a letter, dated October 4 sent by CFL secretary-general of CFL, S Siriwardena and addressed to Labour Relations and Productivity Promotion Minister Gamini Lokuge said.

The letter said the Federation does not object to the stipulated withdrawal for housing purposes but are certainly opposed to the allocation of EPF funds to build ostentatious secretariat urging the Minister to find other means to fund projects of this type.

“The proposal to allow withdrawals in respect of medical wants is not welcomed as it overlaps with the medical facilities provided by the Employees Trust Fund (ETF).We suggest that the medical benefits proposed by you be undertaken by the ETF by widening the scope of the medical benefits offered by them at present.”

The letter added: “The CFL considers your proposals to have an insurance and pension scheme built into the EPF as ill conceived and these are best operated as separate schemes outside the EPF. However, we are unable to comment further on these proposals as details are not within our knowledge.”.

Meanwhile, CFL has also alleged that the Minister had proceeded with the amendments to the EPF Act by obtaining cabinet approval for the proposals without any consultation with the National Labour Advisory Council. (NLAC)

“You would recall at the last meeting at the NLAC, it was agreed that an opportunity would be provided for NLAC to discuss the proposals before amendments to the EPF are made.

“However, we now learn that you have sought and obtained cabinet approval for your proposals,” it said.

“This is most unsatisfactory and we lodge our strong protest against your cavalier attitude towards the NLAC and wish to place on record our objections to the amending Act,” the letter highlighted. (AR)

Read more ...

Tourism stakeholders concerned over promotion curbs

Tourism stakeholders in Sri Lanka have expressed their concern over a recent policy change advocated by the tourism authorities to halt promotional campaigns for the next two years.

The stakeholders are puzzled over the recent comments expressed by Sri Lanka Tourism chairman Dr Nalaka Godahewa where in a recent speech made at the ‘CIM Talking Point’, he had been quoted in the media to have said that Sri Lanka Tourism would refrain from running promotional campaigns for the next two years.“I think stopping all promotional campaigns completely is not good although I agree that building infrastructure should take precedence over the promotional campaigns. In this competitive global environment, Sri Lanka should be constantly known just as you advertise a product to the market,” Sri Lal Miththapala, the immediate Past-President of the Hotels Association who is now a project director at the Ceylon Chamber of Commerce told The Bottom Line.
He said that although stopping promotions for a few months will not impact the numbers in the short term, stopping them for as much as for two years, would impact the numbers drastically in the long run.
Similar views were expressed by some other industry stakeholders this paper also spoke to.
Earlier, Dr Godahewa, in his speech had argued that a severe reduction of publicity was being contemplated as a result of the unpreparedness of the industry and due to present ‘infrastructure constraints’.
He is also reported to have said that sweeping changes will be made to Sri Lanka tourism in future such as the amalgamation of the five tourist boards into one authority and that the planned 2011 as ‘Visit Sri Lanka Year’ will now not be celebrated in a full scale.
During the speech, Dr Godahewa is stated to have said that Sri Lanka would get 850,000 tourists next year even without running promotional campaigns and commented that the targeted 2.5 million tourists by 2016 is ‘not a very well calculated number’.
Attempts to get a response from Dr Godahewa on his opinion proved futile as he did not call back to a message left with his secretary nor reply to an email sent to his email address.

Read more ...

Laugfs IPO ‘may fund Shell takeover’

By Azhar Razak

Local petroleum gas distributor Laugfs Gas Holdings (LAUGFS) is hoping to utilise funds raised through its forthcoming Initial Public Offering (IPO) to partly fund a possible acquisition of a 49 percent stake in Shell Gas Lanka Ltd (SGLL), a top company official said.

LAUGFS has expressed interest in buying the 49 percent stake of Shell from the Sri Lanka government if the ongoing Royal Dutch Shell (RDS) deal with Sri Lanka government is signed and a 49 percent stake is then divested by the government.

 

“If a 49 percent stake held by the government is sold to the public through a listing, as proposed, we are very interested in grabbing the full 49 percent stake,” Chairman Laugfs Gas Holding, W K H Wegapitiya told The Bottom Line.

 

According to him, LAUGFS would not have a problem in raising the necessary finance to acquire the stake of Shell, since at that time it might even have the funding raised by a forthcoming Initial Public Offering (IPO) which commences early next month.

 

“As far as funding is concerned, we could also use funds raised through the forthcoming IPO as well if necessary,” he suggested.



LAUGFS seeks to raise Rs. 2.5 billion through the IPO which is set to officially open on November 04, 2010. However, according to calculations, if US $63 million (Rs7.056 bn, assuming 1 USD = Rs112) is required by the Government of Sri Lanka to buy a 51 percent stake, LAUGFS might need an approximate Rs6.8 bn for a 49 percent stake of Shell.

 

Media reports that came in earlier in the week however suggested that part of the funds raised through the LAUGFS IPO would be used to retire expensive debt, finance further expansion and to diversify into the leisure sector.

 

“Out of the total money raised, we are hoping to use Rs. 1 bn for our expansion drive and use another Rs. 800 m to set off our borrowings from the banks,” one media report quoting the LAUGFS chairman had stated.



The government, which already owns a 49 percent in Shell and is presently finalising a deal with RDS to buy the balance 51 percent stake said that it is looking to divest a 49 percent stake after buying out the controlling stake.

 

According to the media minister and government spokesman Keheliya Rambukwella, the government is looking to divest the 49 percent minority stake by way of listing in the stock exchange to pave way for an effective public public-private partnership.

 

Addressing a cabinet briefing on last Thursday, he said the government had offered US 63 million dollars to acquire the remaining 51 percent stake of SGLL with talks between the two parties now over and the deal currently being finalised.



According to sources, state institutions such as Sri Lanka Insurance Corporation, state banks and Employees Trust Fund may help finance the purchase.

 

RDS, which originally acquired the firm as part of a privatisation drive undertaken by the Sri Lanka government would be exiting its Asian oil operations if the controlling stake in the Sri Lankan operation is divested.

 

SGLL is engaged in importing, storing, filling, marketing and selling liquefied petroleum gas in Sri Lanka. Presently, it is a joint venture between RDS and Government of Sri Lanka with 51% and 49% shareholding, respectively. (AR)

Read more ...

What is there to burst bubble?

By Indika Sakalasooriya

The idea of a possible bubble forming in the Colombo bourse, the world’s second best performing market at the moment, has been cast aside by local market analysts dispelling the claims by several foreign fund mangers, terming them as ‘regret notes’.

The latter part of last week saw the market loosing some of the steam, triggering the fears of a possible bubble as speculated by some. 

“Sri Lanka is a long term bull market. It is true that some shares are trading beyond their intrinsic values. But this doesn’t mean that a bubble is forming. Let’s assume that there is a bubble. But I don’t see any material evidence that would lead to burst it, such as a threatening interest rates scenario or at least a wild card situation like the re-emerging of the LTTE,” CT Capital chief executive Channa Amaratunga said.

He, however opined that the impact of restrictions on broker credit from January 1, 2010 by the market regulator, entrance of sizable IPOs in the early part of 2011 and continuous rights issues by firms can mop up the liquidity in the market and this may cause a slowing down of the momentum.

“Due to the regulatory restrictions, currently many stockbrokering houses provide ‘unofficial margin’ facilities and extended credit to retail investors to keep the momentum going,” he said.

Also noting that the “future looks bright”, Amaratunga added a cautious note — “this doesn’t mean that we should overlook the budget and trade deficits and finding actual political solutions to the problems that need urgent attention”.

In a recent interview with CNBC, regional economist at Barclays Capital Pakriti Sofat said Sri Lanka’s capital market rally is supported by strong economic fundamentals. Sofat, during her brief interview also said that in the near term Sri Lanka is not facing any risks arising from political or economic fronts.

But she averred that loss making state enterprises should be reformed.

She remarked that country’s fiscal side is improving as the government is making an effort to broaden and streamline the tax base via a Presidential Tax Commission.

She also said that she expected the rating agencies to upgrade Sri Lanka’s sovereign rating to BB- in 2011.

Sighting the comments made by some of the foreign fund managers about a possible bubble, Bartleet Mallory Stockbrokers research manager Rakshitha Perera said: “When the time was right these foreigners couldn’t get into the market. They resorted to the idea that the shares were over priced and the market is overheated. At the same time foreigners who held to their shares during the troubled time exited the market making a killing. They also thought they’d be able to get back into the market at low prices. But that is not happening. So now they complain the market is overvalued and a bubble is forming.”

Colombo Stock Exchange has risen by more than 100 percent this year — its main index crossing 7000 points — compared with the second best equity market in Asia, Indonesia, which is only up around about 40 percent.

Read more ...

Distributors ask payout from Royal Dutch Shell

By Jithendra Antonio

In the wake of the governments’ sky high promises to offer LPG at lower prices to consumers after the buyback, The Bottom Line reliably learns that Royal Dutch Shell PLC has faced serious criticism from its distribution channel in Sri Lanka and talks are on to compensate its distributors by the world’s second largest oil and gas giant before its exit from the country. 



“Shell asked us to expand our operations in the country last year or to ‘step down’ from business if we did not have the capacity to expand from our own investments. So we had to generate funds through various ways. They were using our money to build their brand at no cost without revealing us their exit strategy. There abrupt exit will cost us serious losses,” said an official from Shell Gas Lanka’s distributors.

According to the distributors, Royal Dutch Shell PLC has encouraged its distribution channel in Sri Lanka two years ago on its sole behest to expand the distributor capacity and double the volume of sales on the expense of medium scale distributor business community of Shell Gas Lanka Limited.

The official also said that each of the distributors had to invest nearly Rs.40 million to upgrade and expand their operations as requested by Shell Gas Lanka.

According to him, the sale of Shell Gas Lanka would result in for them to lose the backing of a strong brand and hindering of credit lines.

He said that they are not asking for the whole Rs40 million afforded by each of them but at least some reasonable compensation. However since the negotiations are happening at the moment he refused to give us further comments on the matter.

There are around 30 Shell gas distributors islandwide.

However, neither the present country manager of Shell Gas Lanka Ltd, Walter Sanchez or any other official was not available for comments.

The Bottom Line also learns that Shell Gas Distributors’ Association is planning to hold a press conference next week to communicate the matter to the media.

Analysts say that Royal Dutch Shell is exiting from its core business LPG, in Asia and some South American Countries with a view of investing its money in oil drilling in some identified locations.

However, many ventures which Royal Dutch Shell had started during last decade has been shut down from time to time globally such as its solar energy and renewable energy projects.

Read more ...