th May 2010 - Federation of Chambers of Commerce and ... alerts/en/2010/April 16, 2010.pdfBrand IPL The IPL has become a runaway success todate and is currently ranked as the most

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FCCISL News Alert Weekly Business Highlight

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Content Page

1. DEVELOPMENT ECONOMICS 1.1 IPL GATE – lesson for Lanka! 05 1.2 Remaining glossy in gloomy global economy 10 1.3 EU creates $1 trillion package to save euro 12 1.4 ADB delivering development results - Perceptions Survey 14

2. INVESTMENT

2.1 Oil palm investments by RPCs showing high returns 16 2.2

3. MANAGEMENT

3.1 Excellent practices in time management 19 3.2 What good HR must do for a business 23

4. TRADE & MARKETING

4.1 Marketing vs selling: The internal battle 26 4.2 Modest gains in Asian markets as euro fears remain 28

5. MONEY & BANKING

5.1 Lending rates too high, deposit incomes too low – Central Bank 31 5.2 Global Finance Services to focus on micro credit 33 5.3 How the emerging world can deal with surging capital inflows 35 5.4 Why Islamic finance has not reached critical mass 37 5.5 Top 10 things to know about life insurance 41 5.6 Loan scheme to promote rice flour industry 43 5.7 Low interest rates to stay - CB Governor 44

6. TOURISM

6.1 Sri Lanka, Thailand have potential for pilgrim tourism 46 7. EXPORTS

7.1 Exports increase in February 48 7.2 Proposals for achieving National Export Target of $ 20b by 2020 58

8. STOCK MARKET

8.1 Stocks close flat, Dialog heavily traded 52 8.2 Sri Lankan shares gain on profit taking 53

9. BUSINESS

9.1 Training to customers drives results 55


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10. EMPLOYMENT

10.1 Maternity leave and benefits 58 10.2 Eliminate child labour by 2016 62

11. CLIMATE CHANGE

11.1 Solution to climate change 64

12. AGRICULTURE 12.1 250 farmer families in Badulla fight for common cause and succeed 68

13. ENVIRONMENT

13.1 Saving our water 71


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Development Economics


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The Island – May 10, 2010 IPL GATE – LESSON FOR LANKA! By Rohantha Athukorala "A regulator’s role is not only to protect an investor, ensure the markets are fair, efficient and transparent but also avoiding systemic risk that happens due to entrepreneurship. A modern day Regulator also gets involved in capital formation and economic growth and not just play watch dog" Coming from a multinational brand building background of over fifteen years, the IPL intrigued me not for the extravagance of the event but for the marvel of how a mundane 20-over cricket match has been wrapped around with celebrities, the best names of in cricket and the most sought after brands in the world that has resulted in capturing millions of eyeballs into the event in just three years. It is a dream for any aggressive marketer or upwardly mobile corporate entity. This has in fact has made brand India very youthful and hip in the world stage. Brand IPL The IPL has become a runaway success todate and is currently ranked as the most innovative company in India worth over $4 billion in sponsorship value, advertising space and team franchises. Some of the most powerful brands like Sony, Google, Citi and Hoda has flocked to use the IPL to reach the attractive urban Indian consumer group where viewership ratings across all markets in India crossing the 6.95 TVR’s from the 5.55 that was registered in season 2. Cumulative viewership of the event rose from 102.5 million to 123.5 million that has even challenged the Hindi soaps that have been running for years on Indian TV that gives one an indication of the popularity of the event. Even in a market out side India like the UK the viewers range between 300,000 – 400,000 on ITV4 which is ten times more than previous season of IPL that gives us the diffusion of this new product in the global landscape. In fact, the IPL TV rating is equivalent to the success achieved by programmes like ‘Bob the builder’. The brand has even proliferated new media like You Tube where almost 5,000 have turned to DLF- IPL on day one while a record 15 million page views was registered on the first day of ipl20.com and a 12 million SMS traffic during a match which are indications of the income that one can generate in the years to come from this power brand. Some even argue that the IPL league will supersede the much acclaimed soccer league in Europe. Modi a hero? From a business outlook the brilliance of the architect of IPL –Lalith Modi must be commended. Will the game continue to grow even with out Modi? I feel it will, because the brand has cut across many consumer groups in urban India and has left a strong foot print in their life just like what it did among many of us in Sri Lanka. Some say Lalith Modi saw tomorrow but didn’t quite see the day after tomorrow but in my view here was a man who saw the future and ruthlessly and passionately made this happen. If one track back, it was as far back as 1996 that Modi saw the future and wanted to introduce the short version of the game to India but the then BCCI president Jagmohan Dalmiya turned it down.


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Modi, being and entrepreneur by birth, did not give up but kept working on this model for almost ten years and in 2005 got into the BCCI as Vice President when Sharad Pawar ousted Dalmiya. Modi did not waste time and in 2007 convinced BCCI that the time was right to launch IPL and made a iconic statement on the on April 18, 2008 where he said "When the country rises and cricket loving hoards shout action, be ready for the greatest roller coasters in your life" which sure has actually been. IPL has also been successful in changing life in India and garnered record crowds into the stadiums and the highest number of viewers into Indian TV in the shortest possible time. It has also excited Bollywood, front line cricketers and even politicians in to the game. Modi’s brilliance is such that he has been able to seduce the top business magnates to own the teams and got the whole of India to run in one direction for a six week duration. This wave that was created in the world has not been seen since the launch of the famous Walkman to my mind. The first season made a profit of around $230 million and 171 million in season two. But the third season is currently estimated to bring in a whopping $4.1 billion which are amazing figures for a new brand in a country. I strongly feel that Modi cannot be replaced as quickly as it is reported in the Indian press due his ability of cutting through the bureaucracy and making quick sharp decisions that earned him respect in many circles. We must also not forget that it was this man that brought ESPN into India to show cricket that has made cricket a holy grail in India. But as the ethos goes, no one in indispensable. Trouble erupts Trouble erupted when the career diplomat turned charismatic politician Shashi Throor tried to push Kochi team which Lalith Modi did not like for some strange reason and then the skeletons started to emerge post the deadly tweet by Modi. It was alleged that the Junior Foreign Minister’s close friend Suananda Pushkar had sweat equity worth 16 million dollars of the Kochi team. The fiasco turned distasteful with the media hooked on to the controversy that ultimately led to Tharoor resigning and a charge sheet issue on Modi covering kick backs, rigging of bids of the two new teams, financial violations, holding of undisclosed proxy’s, arm twisting of bidders, un explained millions for facilitation fees, irregularities in the award of broad cast rights, non disclosure of interests and breaching confidentiality that also resulted in Modi having to go, after an emotional address in the IPL financials that sure shocked the millions of fans, players and stakeholders of the game. What is Regulation It’s important to reflect this sad saga of events and identify the root cause so that it can be lesson to the world. In my view the absence of a regulator is the cause of this issue. The logic being entrepreneurship and adhering to norms/rules do not go hand in glove. It’s been proven through empirical research that there is a strong positive correlation between development and corruption and the only way out is to regulate. This also holds ground for Entrepreneurship and building successful innovative business models similar to IPL. Let me define what a regulator’s role is. Regulators task is to protect an investor, ensure the markets are fair, efficient, transparent as well as to avoid systemic risk that stems from aggressive business initiatives. This is exactly what IPL as an industry lacked which can be pointed out to be the real root cause of the behaviour that has un folded in the recent past.


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In the interim, IPL could have embarked on stronger policy making by BCCI and the governing council of IPL and may be beefed up the structure of the organization so that a quasi regulatory role could have existed. But in the absence of both has led to this debacle that has happen. Cost to IPL Had BCCI or the governing council played the role of a regulator, out of the 11 charges on Modi, 9 of them could have been avoided and this would have saved the IPL millions of dollars from its future earnings. A point to note is that a modern day regulator’s task is not confined to be a watch dog of a particular industry but also facilitate economic growth and capital formation. Hence a typical regulator of today does not block entrepreneurship but actually stimulate business. In my opinion, the leadership of India must rescue such talented individuals like Lalith Modi who are victims of the circumstances but also bring in regulations that regulates the industry. However, an argument against such a move was when the Indian IT industry vehemently protested when the government of India tried to introduce a regulator. In fact some commented that by regulating this industry performance can become stunted which are decisions that need to be made. Importance of regulation The logic of placing squarely the blame of the current irregularities towards the BCCI and the Governing council of IPL and not just only to one person –namely Lalith Modi is fair given the checkered career of Lalith Modi. The logic being this Modi has had a string of failed ventures and defaults and it is only in the last three years that the sun has been shinning on him. Today, Modi enjoys owning a private jet, Luxury yacht, a fleet of Mercedes Benz S class and BMW vehicles which have been reported many times in the media. Given these reports the BCCI or the Governing Council of IPL should have enforced some regulation by at least appointing a strong organization structure with top legal experts, Marketing Champions and reputable finance specialist from the corporate world so that professional and accountable decision making can support the entrepreneurial behaviour of Lalith Modi. In the absence of these checks and balances, the finger gets pointed to the failure of Corporate India where personalities over powered the system. In fact this point was echoed by BCCI’s Chief Administrative Officer Ratnakar Shetty who said ‘The success is not because of Modi. BCCI will put a good team to make IPL even more successful’. I guess this argument holds grounds in the current scandal that has emerged too where the news is bad. Lesson for Sri Lanka Be that it may, the time will let destiny take it course on the future of IPL and its personalities involved. The key question is if there is a lesson for corporate Sri Lanka. There are many examples that I can site but for authencity let me share some information that is in the public domain where a 10 member President appointed committee to which I belong to unearthed the reality of Sri Lanka’s treasured asset theTea Industry. The scope was focused to the privatized tea plantations better known as Regional Plantation companies (RPCs). I will quote the data which is in the public domain and why effective regulation can help the stakeholders perform better. A point to note is that at one time there was an effective regulator in play called the Plantation Monitoring Unit (PMU) but today, it has lost its effectiveness.


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1. Production decline A 1.5 billion rupee loss making venture that once belonged to the state has been turned around successfully by the RPCs which is commendable. But we must note that these are state lands that have been leased out to the private sector in exchange for a specified lease rental where the 100% ownership still remains with the government. From the data released by the RPCs the output has declined from 143.9 million kilograms in the year 2000 to 125.6 million kilograms in the corporate sector(RPCs). This decline in production needs to be understood if the desired level of replanting has taken place and if the proper fertilizer applications had happened. This could ideally be done by an effective regulator not for fault finding but, to help the private sector perform, better. Available reports indicate that the replanting rate done by the RPCs is only 0.7% when the Tea Research Institute state that the level should be 2-3%. However, an important point to note is that to replanting 1 hectare acre of tea it costs almost Rs.2 million and the gestation period is around 7 years. This results in the Internal Rate of Return (IRR) of around 13.7%, which makes it non-viable financially. Especially when the land has been lease out to the RPC’s for a 53 years time period of which over sixteen years have already lapsed. Once again points to the importance of a regulator who can influence the policy makers so that the root cause can be addressed than just media highlighting the declining production. 2. SL can loose Rs.9.9b If we analyze the reason for declining production another reason emerging is that from the stock of Old Seedling Tea (OST) in Sri Lanka, 75 per cent belongs to the RPCs and 91% of them are above 60 years of age which is the main reason for the declining production of tea. If replanting does not happen, the research indicate that the current volume of 126 million kilograms out put from the corporate sector will decline to 98 million kilograms of tea within the next five years. The loss to the country in volume terms will be 28 million kg of tea per annum and in value it will be 92 million dollars. In rupee terms it is a colossal 9.9 billion. However as mentioned above replanting must be made financially viable and the state must step in to correct same with adequate financial assistance which ideally can be task of a Regulator to influence the system. In the absence of same, Sri Lanka is in fact loosing one of its greatest assets of the country. 3. Moneys due to the RPCs As per the agreement between the government and RPCs there is compensation that is due to the RPCs in the event land is acquired by the state. Whilst 2% of identified lands are allowed be acquired by the state for public purposes currently, there is moneys almost 400 million rupees due to RPCs due to non settlement of dues. This needs to be properly analyzed and corrective action taken so that the spirit of the privatized agreement can be maintained. Which I feel once again can be supported by a regulator who can also monitor the lease payments made by the RPC’s in turn. 4. Spiraling wage bill Another key issue that a Regulator can address is that in 1995 at the time of privatization the total wage package of a plantation labourer was Rs.83.08 per day. It was revised to Rs.115 in 1998 and further to Rs.135 by 2004. Thereafter in 2006 it was further increased to Rs.260 in 2006 (with the basic daily wage of Rs.170, plus a price share supplement of Rs.20 and an attendance incentive of Rs.70). Today this stands at a staggering Rs.410/- which has no link to productivity. The issue at hand is that 60% of the cost in the manufacturing process is the wage bill which results in a Return on Equity (ROE) of the industry as per the annual report of 2007/8 being 27% whilst in 2004/5 the Industry recorded a low ROE


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of 9.30%. This gives us an indication of the critical financial situation that the industry has been faced with. This can also be a task of a regulator given the fluctuating market prices. 5. Fifty reports gather dust Latest research reveals that almost 58 committees have been appointed in the last six years by successive governments to look into the different issues that RPCs have been faced with, but due to an absence of a Regulator who can ideally follow up on the decisions made there has been limited outcomes. In fact the industry has lost respect to these special high powered committees that get appointed time and again. I guess if a strong regulator exists then all these committees can be avoided. 6. Entrepreneurship? On of the most frequently cited regulatory issues in the media has been where a particular RPC had entered into an operative agreement with a company (equivalent to sub-lease) for the management of their rubber estates for the unexpired lease period on a high consideration based without the approval of the Golden Share holder. The monies paid by the sub leased party to the RPC was at a value which was over and above the lease rental payable by the RPC to the Government of Sri Lanka. From a spirit of entrepreneurship its right but from a regulatory policy it should have not happened. However, the issue could have been corrected so that it will not be repeated but the absence of a Regulator this behavior has become systemic. To be specific there is an another that followed where a RPC sub leased six estates in the Namukular geographical area without the formal approval of the government, to a party who totally mismanaged the plantations. This was subsequently revoked but the outstanding bill on non payment of statutory dues has exceeded over three hundred millions. Having being brought up in this part of Sri Lanka, the social unrest created for the people residing in the Namunukular area are very serious that needs to be urgently addressed. This once again highlights the importance of the regulator. Conclusion The above is only one case in point I guess, there are many such issues in Sri Lanka. For instance the telecommunication industry where the industry is in the red with cut throat price cutting and de hiring of people a order of the day which once again highlights the importance of a ‘Regulator’. But a point to note is that a modern day regulator must not to be a watch dog in today’s business world but, to be a driver of economic development to support business. I guess the IPL-GATE will be the case study to the world on the importance of a Regulator. The million dollar question is can we positively accept this proposition of a Regulator?

Rohantha Athukorala is the Head of Portfolio Development in the United Nations Operations (UNOPS) and also advises the Government on many Economic Development initiatives. He was appointed to a committee by the President to evaluate the effectiveness of the privatized Tea plantations in Sri Lanka and also chairs the Tea Advisory committee of the Ministry of Industries. Athukorala is a member of the Sri Lanka Tea Board Promotions and Marketing committee.

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Daily News – May 11, 2010 REMAINING GLOSSY IN GLOOMY GLOBAL ECONOMY Dr Mathu H Liyanage Prudent economic policies and far-sighted leadership have rescued the Sri Lanka’s economy from being shattered in the wake of global economic downturn Dark clouds of financial crisis are hovering over European countries as a result of the prospect of global contagion from the financial turmoil sweeping Greece. The drastic cuts such as slashing pensions and civil servants’ pay, and raising consumer taxes are said to be too harsh for the people to bear forcing them to take to the streets. More riots are expected as Greece approves budgetary controls to secure international rescue loans amounting to 110 billion euros.

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They are aimed at containing national debts and halting the spread of the crisis to Spain, Portugal and probably to Ireland with vulnerable State finances. The funds are expected to come from the International Monetary Fund (IMF) and other 15 countries whose standard currency is the euro. Global investors are concerned about the risks if Europe falls back into recession. The emerging economies such as China, India and Brazil have led the world out of recession and the US about three-quarters of recovery. In the midst of the European debt crisis, the prospect of a hung Parliament in Britain has added fuel to the fire. It is expected that this year the British Government will borrow another 160 billion sterling pounds with the total likely to exceed one trillion sterling pounds.

Agricultural drive, imperative to thwart a future crisis.

China and India will also experience significant fallout from the debt crisis as millions of people in those countries move into the middle class and share global wealth. Where Australia is concerned, Finance Minister Wayne Swan is confident that the economic recovery is picking up speed in line with the Reserve Bank’s forecast that growth and inflation are accelerating and that he does not expect the recovery to be derailed by the financial crisis in Europe. The 40 percent super-profits tax on profits of mining and resource industries to be imposed by the Government as part of economic realignment has, however, caused a stir among the mining and resources sectors. Australia’s comparative advantage lies not in the supply of fairly cheap labour but in highly sought-after minerals that will continue to increase Australia’s future export earnings to an appreciable degree.


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The global financial crisis has not made history as yet but the risks that generate are real. Trade chaos underlines fragility. It is incredible that Sri Lanka has been able to make rapid advancement in economic growth due to the foresight and policies of President Mahinda Rajapaksa in accordance with the Mahinda Chintana. During the past 10 years, the average GDP growth rate has been around 4.5 percent despite the 30-year ruthless civil disturbances, which stalled the economic growth to an appreciable degree. Nevertheless, despite the tremendous expenditure spent in fighting the terrorists and the development programs launched by the Government, the GDP growth rate rose to about 7 percent during 2006 and 2007. It is heartening to note that, according to a recent announcement made by Dr Saman Kelegama, Sri Lanka’s actual potential growth rate is above eight percent and that it could even rise to nine to ten percent by 2015 following that of

India and China.

Boosting investor confidence

* Directing investment in less developed areas * Developing small and medium enterprises *Promoting agriculture * Eradicating of terrorism * Reconstruction projects in North and East

The Government now has a statistic economic approach and is keen to reduce poverty by directing investment in disadvantaged areas throughout the country and developing small and medium enterprises and also by promoting agriculture and allied agrarian industries - the mainstay of the economy - as repeatedly pronounced by the President and actively pursued by relevant authorities. The total eradication of terrorism and the reconstruction and development projects in the North and the East have immensely raised the Government’s budgetary commitments to unprecedented levels. To add to more, the 2008-09 global financial crisis exposed Sri Lanka’s economic vulnerabilities and nearly caused a balance of payments crisis, which was averted by a $2.6 billion IMF standby agreement in July 2009. These factors have undoubtedly, helped to increase investor confidence. It is no exaggeration to say that Sri Lanka’s Stock Market gained 100 percent during 2009 earning plaudits as one of the best performing markets in the world.


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The Island – May 11, 2010

EU CREATES $1 TRILLION PACKAGE TO SAVE EURO

BRUSSELS (AP) — The European Union spearheaded a $1 trillion plan yesterday to contain Europe’s spreading debt crisis and keep it from tearing the euro currency apart and derailing the global economic recovery.

Central banks around the world joined the coordinated effort to prop up the euro and repel speculative attacks against Europe’s weakest countries. The European Central Bank used what analysts called its "nuclear option" — buying public and private debt to shore up liquidity in "dysfunctional" markets and lower borrowing costs. The US Federal Reserve separately reopened a currency "swap" program to ship billions of dollars overseas, pumping more short-term cash into the financial system.

Many investors, rattled for weeks by the prospect Greece would default on its mountain of debt, showed relief. The euro climbed as high as $1.2984, up from the 14-month low of $1.2523 it hit late last week. Japan’s Nikkei 225 stock average rose 1.5 percent and Hong Kong’s Hang Seng index added 1.3 percent. European markets jumped higher — major indexes were up more than 3 percent — and Wall Street was also expected to surge on the open, with Dow futures also 3.0 percent higher.

There was cautious endorsement from analysts who still feared the measures may not be enough to save the common currency, which was adopted by many of the EU’s member states in 1999.

"It buys time. We don’t know if it will be enough. They’re trying to give the impression that they’re still united. They’ve bought some breathing space but that’s all," said Song Seng Wun, an economist with CIMB-GK Research in Singapore. "This perhaps just postpones the inevitable, the euro may have to ultimately give way, that’s the worst case scenario."

Under the three-year plan, the European Commission — the EU’s governing body — will make euro60 billion ($75 billion) available while countries from the 16-nation eurozone would promise backing for euro440 billion ($570 billion). The IMF would contribute an additional sum of at least half of the EU’s total contribution, or euro250 billion.

"We shall defend the euro whatever it takes," EU Commissioner Olli Rehn said after an 11 hour-meeting of EU finance ministers that capped a hectic week of chaotic sparring between panicked governments and aggressive markets.

Officials hope the massive sums will deter currency speculators from betting on a euro collapse after political posturing and soothing words failed to convince investors that Greece’s financial implosion could be contained.

Markets had battered the euro and Greek government bonds even as EU leaders insisted for days that Greece’s problems were a unique combination of bad management, free spending and statistical cheating that doesn’t apply to other euro-zone nations.


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Market jitters also partly contributed to a nearly 1,000-point drop in the Dow Jones industrials last Thursday. The Securities and Exchange Commission is meeting with heads of exchanges Monday to discuss how conflicting trading rules may have exacerbated the historic stock market plunge.

In the end, even longtime skeptic Germany realized Europe had to show the money after financial attacks on Greece’s debt seemed poised to spread to other weak European nations such as Portugal and Spain. Fear of default led to investors demanding high interest rates that Greece could not pay, forcing it to seek a bailout. Many feared market skepticism would make Portugal and Spain pay more and more to borrow, worsening their plight.

"We now see herd behaviors in the markets that are really pack behaviors, wolf pack behaviors," Swedish Finance Minister Anders Borg said Sunday. If unchecked, "they will tear the weaker countries apart. So it is very important that we now make progress."

Spain and Portugal have committed to "take significant additional consolidation measures in 2010 and 2011," a statement from EU finance ministers said. The two countries will present them to EU finance ministers at their meeting on May 18.

"We are facing such exceptional circumstances today and the mechanism will stay in place as long as needed to safeguard financial stability," the ministers said.

Some eurozone nations, meanwhile, blamed financially weak nations and a lack of European cooperation for the crisis.

"I’m against putting all the blame on speculation," said Austrian Finance Minister Josef Proell. "Speculation is only successful against countries that have mismanaged their finances for years." German Chancellor Angela Merkel said her government would approve the rescue plan on Tuesday before parliament gave it "quick but thorough" consideration.

Separately, eurozone leaders on Saturday gave final approval for a euro80 billion ($100 billion) rescue package of loans to Greece for the next three years to stave off default. The IMF also approved its part of the rescue package — euro30 billion ($40 billion) of loans — on Sunday. The Fed’s move to back the euro defense plan reopens a program put in place during the 2008 global financial crisis under which dollars are shipped overseas through foreign central banks. In turn, these central banks can lend the dollars out to banks in their home countries that are in need of dollar funding in so-called swap agreements.

The Fed said action is being taken "in response to the reemergence of strains in US dollar short-term funding markets in Europe" and to "prevent the spread of strains to other markets and financial centers." A "swap" line with the Bank of Canada provides up to $30 billion. Figures weren’t provided for the other central banks involved. They include the Bank of England, the European Central Bank, the Swiss National Bank, and the Bank of Japan.


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Sunday Observer – May 16,2010

ADB delivering development results - Perceptions Survey The Asian Development Bank (ADB) has made a positive impact on lives of the poor in the Asia and Pacific region, and is considered a trusted development partner by its member countries, says a new independent perceptions survey commissioned by the organisation. The survey - conducted with 900 stakeholders in 31 Member countries late last year - shows that the overwhelming majority of respondents thinks ADB is helping its member countries meet their development goals and objectives. Many of those interviewed described ADB as a trusted, reliable, and competent organisation with excellent knowledge of the region. On its core mission of reducing poverty, a majority of stakeholders rated ADB's performance as either good or excellent. It also received high marks for improving infrastructure and supporting regional economic cooperation and integration. Positive feedback was given on the technical skills of ADB staff and their understanding of the countries in which they work. Respondents also cited some weaknesses which ADB will need to improve on, including perceptions that it is bureaucratic and lacks speed in decision making, and project execution and monitoring. Promotion of gender equality and governance were also identified as areas where ADB will have to do more work. "The survey findings provide us with invaluable insights into how we can better serve our clients and achieve the development goals of our long-term strategic framework, Strategy 2020," said ADB President Haruhiko Kuroda. ADB commissioned a professional polling firm to seek feedback from partners and opinion leaders about key development issues in Asia and ADB's role in fighting poverty. The latest poll, which follows a baseline survey conducted in 2006, included randomly selected stakeholders in government, development partners, the private sector, civil society, media, and academia. Respondents were required to have a basic knowledge of ADB to take part.


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Investment


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The Island – May 10, 2010 OIL PALM INVESTMENTS BY RPCS SHOWING HIGH RETURNS

The Planters’ Association of Ceylon says diversification by Regional Plantation Companies (RPCs) into non-traditional areas such as palm oil cultivation and processing, is showing good results.

The AEN palm oil processing mill, a joint venture between Agalawatte, Elpitiya and Namunukula Plantations, is one such project that has shown impressive results in terms of high productivity, improved value addition and export capability and higher ROIs for the plantation companies while also benefiting domestic consumers.

"This local production of palm oil has also reduced import dependence for vegetable oils and has helped consumers by stabilizing prices of vegetable oil," explained Ruwan Goonewardene, the general manager of AEN Oil Palm Processing Pvt Ltd.

The AEN oil palm mill is one of two factories in Sri Lanka that produces palm oil from locally grown oil palm plantations.

AEN says the palm oil venture is a win-win operation for both the cultivator and the palm oil mill, as seen in countries such as Malaysia and Indonesia, where economies have grown due to such cultivation.

Oil palm venture

The AEN oil palm cultivation project was initiated in 2000 by the three RPCs Agalawatte, Elpitiya and Namunukula.

The three plantation companies began the cultivation of palm trees by bringing down seedlings from Papua New Guinea. The area between Kalutara and Akuressa was selected to farm palm trees, due to more conducive rain fall patterns. At the moment about 3,000 hectares have been planted in oil palm.

As a strategic step in crop diversification and based on the trends observed in the South Asian plantation industry, Agalawatte, Elpitiya and Namunukula plantations embarked on an Oil Palm Cultivation and Processing Project. The joint venture agreement was signed in 2000 and a BOI agreement, to set up the palm oil processing facility, was signed in 2003," said Mr. Goonewardene.

The AEN palm oil mill was commissioned in 2007, in a 4 Hect land in Mohameddi Estate in the Kalutara District belonging to Agalawatte Plantations PLC, using Malaysian technology. Malaysia is one of the world’s largest producers of palm oil.

The AEN mill, purchases palm fruit from the cultivating estates and manufactures crude palm oil and crude palm kernel oil for export as well as for local consumption. The mill also produces palm kernel meal, which is used as an animal feed ingredient.


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"The crude palm oil is sold to refineries, to manufacture vegetable oils that are used for cooking purposes. Crude palm kernel oil, which is derived from the seed of the oil palm fruit, is used for manufacturing soap. The kernel meal is also sold as animal feed ingredient," said Mr. Goonewardene.

Expanding production

The demand for edible oil in Sri Lanka is about 10,000 metric tonnes per month and the Company expects to expand production over the coming years.

"Our palm trees are still young. So the yields will increase over the next few years. At the moment the average yield is about 12 - 14 metric tones per year, per hectare, but this yield will further increase over the next 4 - 5 years", said Mr. Goonewardene.

"The 03 RPCs, Agalawatte, Elpitiya and Namunukula Plantations are also looking at expanding the acreage under oil palm. "The 03 Companies are also hoping to expand cultivation from the current 3,000 hectares to 4,000 hectares in the next 3 years". Said Mr. Goonewardene.

Environmentally friendly

AEN maintains that contrary to some theories, oil palm cultivation does not deplete ground water, and says the mill itself, is environmentally friendly and a good example of best practice in the use of a biomass-fuelled energy system from agricultural waste as a sustainable means of addressing energy supply issues.


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Management


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Daily News – May 13, 2010 EXCELLENT PRACTISES IN TIME MANAGEMENT Dr. K. Kuhathasan- CEO: CENLEAD Goal - Setting is the key to effective Time Management. daily goals define what

action should to be taken today to achieve results. If you set goals, you wil l be able to focus your full attention on goal achievement and thus manage your time effectively. Non-productive time can be minimized. Be goal driven, goal oriented and goal centered. Take charge of your time. Get control of your work-l ife.

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Time is a resource. It is a resource given equally to all. Like money it cannot be saved, stored or transferred. It cannot be lent or borrowed.

It cannot be saved and banked. “If you cannot manage time, nothing else can be managed.” If you are not in control of your time, you will never control your work-life. You will be inefficient, ineffective and inactive. First Activity for the day should be to set your goals for the day. As soon as you wake up, think in terms of your organizational goal, professional goal and personal goal. What is my goal for today? How should I act, today to achieve my goals? Plan in terms of activities to be accomplished. Some are “early birds”. They get-up early and are most creative during the tranquil morning hours. You must also be an early bird to plan the day well! Planning your day. Jot down all your jobs on a paper. Prepare action plans for them, with due deadlines for completing such plans. Today’s preparation determines tomorrow’s achievements. Achieve results by planning. Take a pledge to avoid interruptions and make the best use of the day. “Today I will reduce the number of interruptions,” “reduce time spent on unnecessary telephone calls” and “double the time for planning and thinking.” It is easy to decide and adopt resolutions as how you would change and what you want to achieve by that change. You will always find a way to make things happen. Demarcate your tasks. Identify the steps needed to achieve your tasks. Break tasks into smaller components enabling them to appear manageable. Set deadlines to accomplish such tasks. Set a daily routine and keep to it as far as possible. Like any other new skill, time management has to be practiced on a regular basis before it becomes a habit. Undertake routine functions at routine time. Your power of concentration and efficiency will improve. Time-audit. In business time equals money. The final activity for the day should be to undertake a time-audit. Systematically appraise your achievements for the day. Have I achieved all what I have planned? Be proud of your achievements! If you have failed, ask “What went wrong” “Where did I fail?” Have I successfully solved all my problems? Have I successfully taken all decisions? What should be my priority for tomorrow? A systematic time audit on this basis will activate your mind, When you wake up the next morning, fresh ideas, new thoughts, new insights new approaches will flash your mind to act in a dynamic manner and make the next day a productive day.


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Principle of prioritization Work on what’s important. Working on your most important tasks prevents projects from getting out of hand. When a project becomes a crisis, the opportunities for mistakes are greater. Work on what’s important and aim to beat your deadlines. By staying ahead in the game of time, you create time for the unexpected. Your priorities. Perform tasks in order of their importance. To manage time well, you must understand and identify your priorities. Organize to achieve them. Execute the tasks and think about what you have achieved and what should be achieved next. Give priority. The process of prioritizing keeps you focused on what is important. Classify tasks under the following four categories and allocate time intelligently accordingly. Undertake all urgent and important work when you are at your peak period of performance, which is normally in the morning. But be prepared to be flexible, depending on circumstances. Focus your energy on what you want to achieve by acting quickly, decisively and effectively on the priorities. Your stress can be minimized. * Urgent and important * Not urgent but important * Urgent but not important * Not urgent, not important Create a “To-do list.” Prepare a “Daily To Do Action list” and prioritize your activities. Cross off the activities when completed. You will feel good. You can avoid stress and anxiety. You will feel proud of it. With a schedule, you could give direction, reduce crisis and work towards goals. Keep work ready for your staff as they report for work. Set the tone and trend for good performance early in the day. Make the best use your staff’s peak performance levels early in the morning. Keep papers ready for discussion with visitors. Do not look for them only after their arrival. You will not be able to trace them. Dictate letters at a stretch. Do not call your Secretary and other staff very often. Give them autonomy. Allow them to work independently. Guide them early in the morning.

Principle of personal effectiveness Avoid road blocks in time management. Good working habits can save you much time and effort. Fear, lack of goals, tolerance to delays, inefficiency, a feeling that the tasks are difficult, diverse, unpleasant will result in poor time management. Try to avoid them. Poor working environment such as noise, poor house-keeping, poor lighting, poor ventilation, organizational disorder, lack of tools and instruments will cause fatigue and stress and hamper effective time management practices. Try to improve the working environment. Industrial Stress. Poor time management will lead to stress. Stress at work is associated with a wide range of diseases, physical and mental. Staff ineffectiveness, poor performance, higher absenteeism and poor morale are associated with industrial stress. Be on time. Leave for appointments 10 minutes early. Being early for appointments makes you mentally fit and alert. Clear your desk. Your desk says a lot about you and your efficiency. Keep your work clear of clutter. If your desk is clear and clean you will enjoy a pleasant day’s work. If your desk is untidy and unwelcoming, you will spend hours looking for a piece of paper. The following desk rules will help you. Set up a system and stick to it. File in a filing system. Equip your desk with what you need. Use charts to store information on the wall. Keep the telephone in sight and with a note pad.


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Budget Classify you time into company and personal slots. Company time must also provide for face-to-face meetings and other official business such as travel, inspection, planning, scheduling and meetings. Early bird Reach office at least 15 minutes ahead of schedule to set the pace of work and inspire others to come on time. Use this extra time to keep work ready for your staff or handle work involving higher concentration levels. Put enthusiasm into your work. Set realistic but attainable goals to your people. Fix deadlines for all important jobs and inform them accordingly. Earn a reputation for being an achiever by meeting deadlines and getting things done. Evaluate the challenges at hand on a daily basis. Check your list of unfinished tasks on the previous day. Focus on “one thing at a time”. Constantly plan your work. Think before you act. making time to think and get organized is a sound investment. Once you commence your task, try to complete it. Complete the difficult ones first. Working on “one thing at a time” helps you complete more tasks. Choose the project that’s most important to you, create a step-by-step approach to completing the project, set deadlines for the completion of each of your steps, and stick with each task until it is done. The more tasks you complete, the more accomplished you’ll feel and the happier you’ll be at the end of the day. Schedule your activities, several days, weeks in advance. Become conscious of time. Strive for goals and objectives. Look for techniques that best suit your style of work. Meet your staff: have a five-minute meeting with your staff as you commence work. Discuss with them, “What are we going to achieve today? Who is responsible for a given activity? What should be our total output? What we have achieved: At the end of the day, let your staff feel satisfied by proclaiming “We have performed..” “We have achieved...” “We have completed ...” and report off for the day. Let your staff have a greater sense of achievement at the end of the day. Make them to go home with “Job satisfaction.” Allocate different time slots to various jobs, ensuring that essential jobs get adequate attention. Make provisions for handling unanticipated emergencies. Commit yourself to responsible tasks. Try to get your priorities right.

Principle of delegation of authority Delegate routing and less important functions for people. Empower those around you. Learn to organize deputies and supervise. Design the appropriate structure and delegate. Give them adequate authority to feel that they too are important players. Develop people to shoulder responsibilities. Appreciate the talents of others. Accept that they need new challenges and learn to trust their abilities. Delegate intelligently and follow-up on the progress made. Once the principle of time management is successfully implemented it would help in streamlining procedures, cutting down unnecessary paperwork, effective delegation, and making proper use of secretarial time. Besides, it will facilitate clear thinking and problem solving. Busy executives bogged down by routine matters may not find sufficient time for policy matters nor for thinking a problem through.

Principle of decision making Timely decision making is an important function of leaders. Understand the importance and significance of timely decisions. A delayed decision may result in loss of a contract worth millions of rupees loss of trust and confidence in your company. Make smarter decisions.


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Recognize the need for a decision, set criteria for a sound decision, gather and analyze the facts and opinions, set out and consider alternative courses of action, consider the effects and outcome and take a timely, relevant and appropriate decision. Delayed decisions, indecision, failure to communicate decisions, will only result in bad time management and waste of productive time. Avoid wasting time at unproductive meetings. Encourage well organized meetings by clear agenda, agreed procedures, maximum time limits, good preparation, effort to reach conclusions, discussions centered only on relevant matters, few interruptions, regular summarizing and speedy circulation of minutes of the meeting. Problem solving When you have a problem, solve it then and there if you have the facts to make a decision.

Principle of interruption and control Never postpone tasks. Activities must be completed in time. Set your own deadlines for tasks, when they are not externally imposed. Avoid doing things at the last minute as it results in a mounting crisis. Keep busy. Never blame external factors for bad time management. You own internal factors such as lack of self-discipline, commitment for improvements, indecision and excuses postponement will lead to waste of time. Avoid negative emotions such as anger, frustration and worry which will hamper clear thinking, good judgment and concentration. Negative emotion will only lead to loss of time, loss of production and loss of efficiency. Do not harbour unnecessary worries. Turn your energies to the job at hand. Time Waste. Lack of self-discipline, inadequate planning, postponement, personal disorganization, ineffective delegation, attempting too much, management by crisis, poor communication, leaving tasks unfinished, confused responsibility, in adequate controls and program reports, unnecessary meetings, incomplete information, drop-in-visitors, unnecessary paper work and telephone interruptions are your real time wasters. Learn to handle such interruption and prevent them from disrupting planned activities. To make time work for you, you must eliminate the time wasters and implement the time savers. Plan your calls Spend a few seconds by arranging your message and the points you wish to make prior to making your telephone calls, or sending your e-mail messages. Before making a call, set your own agenda and stick to it. “When you make a “call plan” what you want to say and what you want the outcome to be you can save valuable time and make your messages clear.

Principle of implementation Set targets for people. Set deadline for such targets. Deadlines have a way of compelling people to complete tasks in a timely manner. Set deadlines. Deadlines for each task will help you get started sooner, produce more in a shorter period of time, limit delays caused by perfectionism. Deadlines force you to focus. You will produce better quality work. Note on your calendar your final deadline as well as any mini deadlines leading up to the date when you project is due. Your list of daily activities can also include deadlines. Adhere to “One-page - three minutes rule” All reports must have a one page summary whereby it can be read within three minutes. In implementing complex assignments, try to divide them into several action plans, each covering one aspect of the job and each containing a list of manageable activities. Pounce on that paperwork. Be disciplined in your paper work. You can cut down on your paperwork by vowing to “handle each piece of paper only once.”


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Daily News – May 13, 2010 WHAT GOOD HR MUST DO FOR A BUSINESS Dinesh Weerakkody Good people are very crucial for any business. So finding them, managing them, motivating them and holding them are key responsibilities of HR.

However, in many companies we know of, unfortunately, HR gets it wrong - either operating as a cloak-and-dagger society or a health-and-happiness sideshow. These are extremes, of course, but if there is anything we have learned over the past three years in our consulting practice, it is that that's an outrage, made only more so by the fact that most HR leaders aren't scrambling to fix it for reasons best known to the HR heads. In our view HR

should be every single company's engine of growth. "What could possibly be more important in a company than who gets hired, developed, promoted, or moved out of the door? After all, business is in a game to make profit and, as with all games, the team that puts the best people on the field and gets them playing together as a team wins and makes adequate money to breed more success, give salary increases to their players and to become famous. It's not that simple anyway to get the best out of your human resources. You would never know that though, until you get the right man on board as your HR head.

Why the CFO reigns supreme However, even though many CEOs believe that people power is the real engine of any business, in many companies the CFO reigns supreme and as a result HR is relegated to the background. It just doesn't make sense. If you owned the Indian cricket team, for instance, would you hang around with the team captain or the Treasurer of the Board? Sure, the treasurer can tell you how much money the board has, but the captain knows what it takes to win, how good each player is and where to find strong recruits to fill talent gaps. That's what HR should be all about. And as we see when we move around, it's usually not. That was never as painfully clear to us as it was few years ago when we spoke to some HR professionals about their role. At one point, we asked the audience: "How many of you work at companies where the CEO gives HR a seat at the table equal to that of the CFO?" After an awkward silence, fewer than five people raised their hands. Awful! Since then, we've tried to understand why HR has become so marginalized and often treated as the poor cousin in the management team, and as noted above, there are at least two poles of bad behaviour. The cloak-and-dagger role: That occurs when HR managers become stealthy little kingmakers, making and breaking careers, sometimes not even at the CEO's behest.

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These HR departments can indeed be powerful but often in a detrimental way, prompting the best people to leave just to get away from the palace intrigue of it all, then after a while become a drag on the business and finally get marginalized. Just as often, though, you get the other extreme: HR departments that plan picnics, put out the in-house newsletter and generally drive everyone crazy by enforcing rules


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and regulations that appear to have no purpose other than to increase bureaucracy. They derive the little power they have by being the 'you can't do that,' which we call the audit or police role.

Get HR do its real job So to get it right, it all starts with the kind of people boards appoint to run their HR - not kingmakers or cops but real HR professionals, people with real stature and credibility. In fact, they need to fill HR with a special kind of hybrid: people who are one part a priest, hearing all sins and complaints without recrimination, and other part the parent role, loving and nurturing but giving it to you straight when you are off-track. Priest-parent types can rise through HR, but more often than not, they have run something during their careers, such as a factory or a function. They get a good feel of the business - its inner workings, history and tensions, the hidden hierarchies in people's minds. They are known to be relentlessly candid, even when the message is hard, and hold the confidence at any cost. Indeed, with their insight and integrity, the priest-parent earns the trust of the organization. But priest-parent types don't just sit around making people feel warm and happy. They make the company better, first and foremost by overseeing a rigorous performance management system that lets every person in the organization know where he or she stands, and monitoring that system with the same intensity of Sarbanes-Oxley compliance. CEOs should also make sure that HR fulfils two other roles. It should create effective mechanisms, such as rewards, recognition, and training and to motivate and retain people. And it should motivate organizations to face their most charged relationships, such as those with unions, individuals who are no longer delivering results, or stars who are becoming problematic, for instance, becoming arrogant, greedy, instead of growing. Now, given our experience with HR, the kind of high-impact HR activity we talked about probably sounds like a pipedream to a CEO. But given the fact that most CEOs loudly proclaim that people are their "biggest asset," CEOs need to put their money where their mouth is and get HR do its real job: elevating people management to the same level of professionalism and integrity as financial management. Since people in our view are the whole game, what could be more important in a business than to put money behind the people who run your business and create that competitive advantage that other companies cannot copy in a hurry?


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Trade & Marketing


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Daily News – May 11, 2010

MARKETING AND SELLING IN TOUGH ECONOMIC CONDITIONS: MARKETING VS SELLING: THE INTERNAL BATTLE Prasanna Perera, Marketing and Management Consultant, Chartered Marketeer, CIM U.K. I have been observing and hearing of many instances where internal marketing battles have developed between Marketing and Sales staff. Hence, it is my endeavor to address this important issue that can draw down productivity, morale and effectiveness. Q: What is the difference between Marketing and Sales? Sales is the transactional aspect of Marketing. Basically, sales makes marketing happen! However, marketing is a holistic discipline and sales is a part of it. Hence, it’s incorrect to equate marketing and selling.

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Whilst sales in the transactional aspect of Marketing, Marketing encompasses a multitude of activities such as research, advertising, promotions, branding, packaging to name a few.

Brand management is a sub-function of marketing and responsible for the effective performance of brands.

Q: Should marketing and sales be managed by a single manager or not? There is no hard and fast rule about this. However, there has to be integration between the two, which indicates that overall responsibility has to be centralized. If this does not happen, conflicts will arise as observed in many organizations. Sales staff are of the opinion that they are the revenue earners, whereas marketing is the glamour! Q: What needs to be done to improve coordination between marketing and Sales? All marketing staff must be given exposure in sales and vice-versa. Further, all sales staff must be encouraged to obtain qualifications in marketing. This is really important for “holistic” thinking and exposure. Q: Can Sales revenue and volumes be sustained without Marketing support? No. Many sales staff have a false notion, that sales can be achieved with their efforts and dealer promotions. Whilst this is possible in the short-term, in the longer term brand equity and customer equity hold the key. For this to happen, effective marketing is a must.


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Q: Is there merit in managing the marketing and selling functions separately? Yes, provided a complete understanding prevails between the parties managing the two areas. Further, both the Sales Manager and Marketing Manager must report to either the Marketing and Sales Director or CEO/MD. Q: What role does brand managers play in sales? Brand management is a sub-function of marketing and responsible for the effective performance of brands. One aspect of the brand performance is sales. Hence, brand managers need to contribute to sales development. However, it is important that brand managers should not be expected to perform sales functions. (Go to the field and help the sales rep to sell!!). The brand manager visits the field to observe market conditions, competitor activities, customer behaviour and outdoor advertising/publicity. Please remember that the brand manager is not a super salesman! Q: What role should salespersons play in marketing? Obtaining feedback on product/brand performance, putting up point-of-sale (POS) material, providing after sales service, carrying out word-of-mouth (WOM) advertising, executing promotions to name a few. Hence, salespersons play a vital role in marketing as well. Q: Sales as a profession, seems to be losing some glamour amongst today’s younger generation. Why is this? Sales is a tough profession. Field work, working under difficult climatic conditions, away days from family and home and continuous pressure to achieve targets. Today’s generation is looking for the easy way out, to make money. Hence, difficult professions such as sales are shunned for more glamour and status oriented careers. Further, unlike in the past, many career options are available today. Q: How can the glamour be put back to sales? A tough question. Using technology for selling may be one aspect. (Computers and PDA’s). Re-focusing the selling job on “Selling” rather than on information gathering and market surveys. After all, the basic function of a salesperson is to sell!! Sales related professional qualifications should be available. For example, PCS (Preliminary Certificate in Selling), Diploma in Sales and even a Diploma in Sales Management. Q: Are other departments within organizations adding to the rift between marketing and sales? Sometimes this could be the case. Specially in certain support service departments that interact with both marketing and sales staff. It must be said that in certain organizations all departments work in harmony, towards common goals.


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MODEST GAINS IN ASIAN MARKETS AS EURO FEARS REMAIN

Relieved markets edged mostly higher Tuesday after Europe and the IMF agreed on the biggest financial

system bailout since the 2008 banking crisis, but questions over its implementation capped gains.

Global stocks and the euro soared Monday after Europe and the International Monetary Fund announced

750-billion-euro (one-trillion-dollar) package of loans, guarantees and credits to ease the immediate crisis.

Central banks from the United States to Japan also played a crucial part in efforts to stop the Greek debt

crisis spreading, as they agreed to intervene to ensure there was plenty of liquidity on the money markets.

However, in Asia gains were limited Tuesday and the euro eased back against other major currencies as

investors focused on how the massive bailout will be carried out and the implications for the eurozone’s

underlying fiscal woes.

“Yesterday’s gain seems to have reflected much of the cheer from the EU’s bailout plan,” Lee Kyoung-

min at Woori Investment & Securities in Seoul told Dow Jones Newswires.

“Investors will likely bet on stocks strongly when they are convinced that fundamentals in Europe

wouldn’t be hurt by those countries with debt troubles,” he added.

Tokyo trimmed early gains to close up 0.08 percent at noon, while Sydney was 0.31 percent higher and

Seoul lifted 0.45 percent.

Shanghai was 0.91 percent stronger as dealers digested data showing China’s consumer prices rose 2.8

percent in April compared with the same month a year earlier, while industrial output expanded 17.8

percent in the same period.

However, they will keep an eye on the fact that house prices continued to soar and bank lending jumped

last month.

Singapore added 0.32 percent.

However, Hong Kong edged 0.24 percent lower in early trade on profit taking after soaring 2.54 percent

Monday. The euro, which briefly jumped above 1.30 dollars on the financial rescue package Monday,

bought 1.2766 dollars in Tokyo morning trade, down from 1.2778 dollars in New York late Monday.


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The single currency was also hit by a warning from Moody’s Investors Service that it may downgrade

Portugal and lower debt-laden Greece’s rating to junk status, after a similar move by Standard & Poor’s

which saw borrowing costs spike for Athens.

“The EU’s rescue package seems to have soothed immediate fears of a spreading of the European debt

crisis,” said Mike Jones, currency strategist at the Bank of New Zealand.

“However, market sentiment is still fragile and the eurozone’s structural issues, including whopping

budget deficits, still need to be addressed.”

The debt crisis began as Greece teetered toward default, triggering fears that other weak economies such

as Portugal, Spain and Italy may be next.

“The question is if (debt-ridden European) governments can exert leadership in pushing with austere

measures,” said Hideaki Inoue, a senior dealer at Mitsubishi UFJ-Trust and Banking Corp.

The euro members have given reassurances they would commit to austerity measures that will bring their

fiscal positions back into line but markets remained cautious.

The British pound held at 1.4836 dollars after Prime Minister Gordon Brown said he would resign as

Labour leader by September and hold talks with the Liberal Democrats on forming a government after a

general election ended in stalemate.

Oil was higher. New York’s main contract, light sweet crude for June delivery, gained 51 cents to 77.31

dollars a barrel while Brent North Sea crude for June soared 42 cents to 80.54 dollars.

Gold opened at 1,202.00-1,203.00 US dollars an ounce in Hong Kong, up from Monday’s close of 1,187.50-

1,188.50 dollars.

AFP


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Money & Banking


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LENDING RATES TOO HIGH, DEPOSIT INCOMES TOO LOW – CENTRAL BANK By Devan Daniel

The Central Bank is engaging commercial banks that are charging high rates of interest on loans, much too high compared to the low interest rate environment in the economy, while depositors are being offered much lower rates for their deposits as they continue to maintain their profitability and interest margins at high levels.

Central Bank Director Bank Supervision Ms. Yvette Fernando said the public continued to pay high interest rates on their borrowings.

"We have regular meetings with the heads of commercial banks and we keep requesting them to bring down their lending rates in line with the recent reduction of policy interest rates and we are closely monitoring their progress," Ms. Fernando said.

She said depositors were also receiving low income from their deposits held with commercial banks and called for a fairer adjustment of interest rates.

Policy interest rates are down to 7.5 percent and 9.75 percent for repurchase and reverse repurchase transactions respectively (rates at which commercial banks deposit and borrow from the Central Bank). These rates are down from 9 percent and 11.75 percent a year ago.

Benchmark interest rates on government Treasury bills have also come down to 8.24 percent, 8.97 percent and 9.25 percent respectively (for the three month, six month and twelve month bills) from 12.22 percent, 13.44 percent and 13.78 percent a year ago.

The average prime lending rate of commercial banks is down to 10.57 percent from 18.14 percent last year while average weighted fixed deposit rate is 9.61 percent, down from 16.27 percent a year ago, while the average weighted deposit rate is 7.13 percent, down from 11.52 percent a year ago.

The prime lending rate is offered to high net-worth organizations and individuals and commercial banks dealers said ordinary borrowers, the vast majority of individuals and SMEs, had to borrow at much higher rates of interest.

The low interest rate environment came about after tight monetary policy of the Central Bank brought down inflation to single digit levels last year after peaking at 28.2 percent in June 2008. The Central Bank loosened its tight monetary policy stance in stages in a bid to stimulate the country’s post war economy as credit picks up on lower interest rates.

However, banks did not respond fast enough, preferring to invest their excessive rupee holding in government securities instead to the private sector which saw some hard times in 2008 and 2009.


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President Mahinda Rajapaksa intervened late last year and ordered state-owned commercial banks to reduce their lending rates to as low as 8 percent on credit to selected sectors.

This decision was taken with the hope that private commercial banks would follow suit and some of them did announce reduction in interest rates.

According to Ms. Fernando, commercial banks have room to reduce their lending rates much further and the Central Bank continuous to persuade them to do so.

Commercial banks seem to be charging the highest possible interest rate on lending, much higher than policy rates or benchmark rates. At the other end, they are offering deposit rates lower than the low policy rates and benchmark rates.

Borrowing rates ought to come down further, while there was space for deposit interest rates to move upwards, this was what Ms. Fernando intimated.

2009 was a difficult year, and according to the Central Bank, the worst year in Sri Lanka’s economic history. But the banking sector continued to maintain its profitability.

"Profitability of the banking industry was maintained in 2009. Compared to the corresponding period since 2006, the sector recorded the highest interest margin during the first quarter of 2010.

Total advances increased by 3.8 percent or Rs.61 billion to Rs.1,647 billion in the first quarter of 2010 while non-performing loans increased to 8 percent from a high of 8.9 percent in 2008.


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MORE FINANCE COMPANIES NEEDED:

GLOBAL FINANCE SERVICES TO FOCUS ON MICRO CREDIT

Sanjeevi Jayasuriya

Sri Lanka’s financial market needs more players with wider investment instruments, a top analyst said.

“There is healthy competition among the industrialists and it is important to build confidence to attract

depositors. It is necessary to provide enhanced training opportunities to fulfill cadre requirements with

the expansion of the financial industry, Global Trust Financial Services Limited Managing Director

Susantha Fernando told Daily News Business.

“The country’s financial sector will experience a growth momentum in

keeping with the expected economic growth. There will be a

substantial market for prudent financial instruments. More finance

companies are necessary to meet this demand,” he said.

Susantha Fernando

Global Financial Services Limited (GFSL) has applied to be registered

as a leasing company with a capital of Rs.75 million and in the process

of obtaining the licence as a leasing company from the Central Bank.

They plan to apply for full financial company status meeting the

Rs.200 million capital requirement.

The company has identified potential investors and they would come on board within the next three

months.

“The company will be listed and go for an IPO within the next two years,” Fernando said.

The GFSL will concentrate on the micro finance sector. They have already set up credit centres at

Grandpass, Kotahena, Negombo, Kochchikade, Wennappuwa, Keselwatte, Horana, Matara and

Batticaloa.

These credit centres are fully equipped to handle gold financing activities with all necessary

infrastructure including vaults, interiors and other improvements.

The main branches will be in Negombo and Matara.

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“There is a vacuum in the micro credit sector where loan applications are entertained only from people

with collaterals.

The GFSL is interested in catering this sector.

The public fear to deposit monies in financial companies should be addressed with properly constituted

companies with acceptable names as directors should be formed to overcome this problem.

The company plans to introduce a special scheme for pensioners with higher interest rates for those who

depend on interest income for their daily living. “We will offer 25 percent more than normal interest rate

for senior citizens above 60.

“Once we obtain full finance company licence we will convert the existing credit centres to fully fledged

branches. We have identified Embilipitiya, Ratnapura, Jaffna, Trincomalee, Vavuniya, Mannar and

Kilinochchi as our priority areas,” Fernando said.

They have also negotiated for a accredit line with low interest rate for the benefit of customers.

The GFSL Director Board comprises Chairman M.R. Fernando, Deputy Chairman K.A.K. Kodituwakku,

Managing Director Susantha Fernando, Director M.A.P. Perera Seneviratne and S.A.K. Alahakoon.


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HOW THE EMERGING WORLD CAN DEAL WITH SURGING CAPITAL INFLOWS Gerard Lyons A problem is brewing across much of the emerging world. Many countries, large and small, are on the receiving end of a surge of capital inflows and global liquidity. These flows are broad-based, including

estment, plus hot money which move in response to interest rates. Most of the money flowing into these markets often end up in equity or real estate, adding to inflationary pressures in both. Moreover, the hot money flows can persist until the incentive to speculate is eliminated.

bank lending, direct and portfolio inv

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The longer it is before this is addressed the bigger the problem will be. Just as excess liquidity contributed to problems in the Western developed economies ahead of the financial crisis, excess liquidity has the potential to trigger a fresh financial crisis across the emerging world. There is a difference with the West, in that for many emerging economies this problem is a consequence of success,

reflecting optimism about growth prospects. Nonetheless it needs to be addressed with an appropriate and timely policy response. The exact policy may vary for each country. The best response is greater currency flexibility and a move to deepen and broaden capital markets, although this will take time. Thus there will be more immediate responses, including a further build-up of foreign currency reserves, tightening fiscal policy, macro-prudential measures to curb rising house prices, and even short-term capital controls may be needed in some countries if inflows persist. All of this creates big policy dilemmas. The question is whether countries and policymakers will implement necessary corrective action. The first way to deal with the surge in capital flows is through currency flexibility. The challenge for policymakers is what has become known as the 'impossible trinity'; it is not possible to have capital mobility, exchange rate stability and an independent monetary policy. Something has to give. Thus the best option is letting the currency be the shock absorber. Allowing a currency to appreciate may be like waving a red rag to a bull: further speculative inflows may be attracted. Despite that, a number of

currencies have appreciated since the bottom of this crisis in March 2009: for instance the South African rand is up 45 percent, the Korean Won 41 percent, Brazilian Real 40 percent, Polish Zloty 34 percent or the Indonesian Rupee 32 percent. Some countries, keen to suppress appreciation, have intervened, building up foreign currency reserves. This is ominous, as it was one of many problems that fed the crisis, but it is understandable. In the decade following the 1997 economic crisis, Asian countries saw their holdings as a proportion of global reserves rise from one-third to two-thirds. Such intervention was justified partly by the aim to remain competitive but was aimed at building up safety nets in the


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event of another crisis. This proved to be a positive tool in this crisis, and that lesson has not been lost on other emerging economies. Thus, intervention may be seen as desirable for some. Over the last year, the rise in reserves has been sizeable and has been largely concentrated in Asia, with reserves rising 39 percent in Hong Kong, 32 percent in South Korea, 27 percent in Indonesia and 25 percent in China. This has complications, boosting domestic monetary growth when their economies may not need it, adding to inflation worries. Heavy reserve increases can lead to sterilization, as seen in China, with the need for increased issuance of bills and bonds to soak up the flows. Such sterilization does not act as a deterrent to persistent capital inflows. Instead, it is a further cost to be borne. Another way to tackle surging capital inflows is through the deepening and broadening of capital markets. Some of the countries on the receiving end of inward liquidity have current account surpluses, explained by high domestic savings. These countries should bear in mind one of the lessons of last May's Asian Development Bank meeting in Indonesia. Then a number of features were identified as necessary for Asia: social safety nets; help to small and medium-sized enterprises so that they can be the drivers of sizeable employment growth; and the need to deepen and broaden Asia's bond markets. All these issues are commendable, but their implementation will take time. Many emerging economies should be tightening monetary policy. Normally this would take the form of higher interest rates. The fear is that they would attract more hot money. Given this, tightening fiscal policy may be an option or the use of macro-prudential measures. These are aimed at curbing rising house and property prices, and may include limits on how much can be borrowed or lent. The most controversial option can no longer be ruled out: capital controls. These ideally should be implemented as a last recourse and only where such measures would be effective. Brazil's use of a tax on portfolio inflows into equities at the end of last year shows that controls are back on the policy agenda. As the scale and speed of inflows has intensified, the question then is in what circumstances are controls justified and in which situations are they likely to be effective? Moreover, even if they do work, exits from controls can be as difficult to manage as their imposition. There can also be contagion, with controls in one country having spill-over effects onto others. There are a series of controls that can be implemented: unremunerated reserve requirements (URR), as implemented by Chile in 1991 or Thailand in 2006; time requirements stating the minimum time for which inflows must remain, as in Columbia, in 2007, or Malaysia, in 1997; limits on the size, as in Taiwan in 2009; a direct tax on financial transactions, as in Brazil in 2009; or regulation of trade between residents and non-residents, as we saw in the Asian crisis in Thailand and Malaysia. The reality is that controls may not always be the best option. They may be an effective stop-gap. But imposing capital controls sends a signal that could deter future direct investment inflows as well as causing higher premiums to be paid in the future to compensate for the risk that such controls will reappear. As capital and liquidity flows into emerging economies, the lesson is to set policy to suit domestic needs. This was a lesson of the Asian crisis itself. For some, capital controls may be effective, but, far better to go for greater currency flexibility and deeper and broader capital markets. These measures may not only help cushion or absorb the inflows but may also help to achieve a balanced global economy. (Dr. Gerard Lyons is Global Research Head and Chief Economist at Standard Chartered Bank)


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Daily News – May 12, 2010 WHY ISLAMIC FINANCE HAS NOT REACHED CRITICAL MASS Charlie Corbett The market for Islamic bonds, or sukuk, is expected to pick up in 2010, but its appeal will remain limited until the industry can agree a set of global standards and proper legal protection for creditors in case of default. The idea that the conservative strictures of Islamic finance somehow offered protection from the wider global financial crisis was proven false in 2008 and 2009. The nascent market for Islamic bonds, or sukuk, was hit hard by the financial crisis. Since their peak in 2007, when almost $35bn worth of sukuk financing was issued worldwide, volumes have plummeted. About $15bn worth of sukuk were issued in 2008, recovering to $23bn in 2009. The sector, however, is tipped to rally strongly in 2010.

Ratings agency Standard & Poor's (S&P) estimates about $20bn of sukuk issuance is due to come to market this year, with other estimates as high as $30bn to $40bn. "We're going to see a good sustained pick-up in volume of issuance this year," says Mohammed Dawood, director of global capital markets at HSBC Amanah. "Despite Islamic finance taking slightly longer to recover than other markets, there is still a lot of liquidity around looking for a home. Right now there is an extremely good opportunity for issuers generally to be able to tap the Islamic market." This issuance will largely be driven by sovereign or quasi-sovereign deals, according to most sources The Banker spoke to. Sukuk are expected to originate from across the world, but issuance will likely be dominated once again by Asia. Malaysia alone accounted for 54 percent of all sukuk activity

in 2009. It is a sign of the broadening appeal of the asset class that many of these deals will also originate from non-Muslim countries. The UK is mulling a potential sukuk, as are the governments of France and Germany. Debut issuers this year could also include Kazakhstan and Jordan. Elsewhere, Malaysia, Indonesia, Singapore, Hong Kong and South Korea are all considering issuing sovereign sukuk in 2010.

The market for Islamic bonds, or sukuk, is expected to pick up in 2010

Untested appetite

If achieved, this pipeline would exceed the upper limits of volumes in 2007 and signal a return to the previously strong growth in the sector. The success of any potential sovereign issuance could also lead to a rush of corporates to the sukuk market, further boosting confidence and, in turn, volumes. However, the appetite for sovereign sukuk has yet to be tested by any issuance so far this year. In fact, the only activity reported in the asset class to date in 2010 has been a $450m Islamic bond for Saudi property developer Dar al-Arkan.

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The only other news has been negative. The Philippines cancelled its debut $1bn sukuk in March after fears its Islamic finance industry did not have a sufficiently robust sharia-compliant legal and regulatory system. Furthermore, in April the Qatar Islamic Bank decided to postpone a $500m sukuk due to a reported lack of investor confidence. Away from raw market sentiment, a number of other obstacles stand in the way of so many new deals coming to fruition. While not directly affected by the collapse of the sub prime market in the US, Islamic finance was indirectly hit by the repercussions.


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Tightening global credit conditions, combined with the bursting of the property bubble in the Middle East, led to two high-profile sukuk defaults last year - that of Kuwait-based Investment Dar and Saudi Arabian conglomerate the Saad Group. A third sukuk default in the region was only narrowly avoided when Dubai property company Nakheel was rescued at the last minute. Perhaps more important than the defaults themselves, however, was the way in which creditors were treated afterwards. And it is this that has sparked wider questions about how such deals are structured in the first place and will undoubtedly affect the market's development. "I don't expect the sukuk market will experience the same kind of growth as in the past," says Mudassir Siddiqui, head of Islamic finance at law firm Denton Wilde Sapte and a sharia scholar. "Islamic finance is nascent. It's still work in progress. There will be more emphasis on sharia compliance and on better contracts."

Structural difficulties It did not help confidence in the market that at the height of the crisis, in late 2008, the body which regulates Islamic finance, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), announced that a number of sukuk issued since 2002 did not conform to Islamic principles. A recent report from S&P warns that from an investor's point of view, "major questions remain about the treatment of sukuk holders and recovery in the event of default". This uncertainty, perhaps more than any other market-related issue, is what could potentially hold back sukuk issuance in 2010. "What we need to agree on is structure, in view of the recent defaults and what that has brought out in the courts," says Ikbal Daredia, managing director and head of capital markets and institutional banking at Unicorn Investment Bank in Bahrain. "We need some kind of consensus in structure from the legal side and the sharia side. That could be one of the hindrances in terms of take-up of sukuk." The key point here is that many sukuk contracts are governed by UK law but refer to assets located in the Gulf. Investors also fear that the definition of what deals are sharia-compliant and what deals are not sharia-compliant could change and thus have an impact on their status after a potential default. One case that has spooked investors in Islamic finance was Kuwait-based investment house Investment Dar's (TID's) default on a commonly used Islamic financial instrument called a 'wakala' agreement. Lebanese lender Blom Bank took TID to court in July last year over the non-repayment of a $10m wakala, which had defaulted in 2009. TID argued that the instrument was void as it did not comply with Islamic law and was therefore outside the company's remit. Yet more uncertainty was caused in the case when a UK court ruled that if the case went to a full hearing, Blom Bank would probably win, but it conceded that TID also had an "arguable case". Legal experts say this could result in Islamic companies potentially attempting to overturn contracts on the basis of whether they comply with Islamic law. Fortunately, however, cases like this are few and far between in Islamic finance and it is worth noting also that the restructuring of $2bn of debt for Kuwait-based Global Investment House, much of which was Islamic finance, was a huge success and set a benchmark for all others to follow. Harris Irfan, head of Islamic products at Barclays Capital, notes another obstacle to the development of the sukuk market in the future. He says AAOIFI guidelines from 2008 have put issuers off asset-backed sukuk - which allow assets to be placed in trust to a special purpose vehicle - and encouraged the use of more inflexible asset-based sukuk.


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"Almost no issuer has had the courage to issue an investment-based sukuk - in other words, a non-ijara sukuk such as 'musharaka' - using the new guidelines," says Irfan. AAOIFI requires that issuers are not allowed to guarantee to buy back a maturing investment-based sukuk at par. Instead, they can only buy back at market price. According to Irfan, this has placed a huge structural constraint on new sukuk and, as a result, all those issued since early 2008 have been lease-based, which typically have a property as the underlying sale and lease-back asset. "It has not been a very courageous market and I suspect issuers will remain reluctant to put their head above the parapet," says Irfan. "This may change in terms of sovereign issuance, but only if sovereigns are willing to take the brave step of securitizing some of their assets. I'd like to see a move towards securitization by sovereigns as this will encourage corporates to follow suit and we will see the re-emergence of the musharaka and mudaraba sukuk."

Broadening appeal For many commentators the global sukuk market will not truly grow in popularity until such issues as legal jurisdiction in case of default and standardization of deal structure, in terms of Islamic law, have been codified. It is the case today that many Islamic financiers in the Middle East do not consider sukuk issued in Asia to be fully sharia-compliant. According to Jinesh Patel, head of investment banking and strategy at Gulf Finance House, some scholars and companies in the Gulf Co-operation Council (GCC) question the Malaysian interpretation of sharia, believing it to be too liberal. "There is a lack of globally accepted standards, not least regarding the legal environment and sharia compliance," says Patel. "If there is a default, then it remains unclear as to which jurisdiction the laws apply." However, most in the market are confident these issues can be ironed out. The Islamic capital markets are in an early stage of development and it is inevitable some teething pains will be felt. In terms of future issuance there is optimism that investor appetite will be strong. HSBC's Dawood believes more and more investors are looking at sukuk. "What was interesting last year was that a number of the sukuk we were involved in saw very strong support from private banking clients. I think the market is reaching a critical mass, which now finally allows Islamic and private clients to actively view sukuk as a genuine part of their portfolios," he says. "Some of the earlier issuances weren't rated, were smaller in size and had questions of liquidity. Whereas last year we saw a healthy number of large benchmark, liquid issues that have all performed remarkably well in the secondary market." The key to unlocking the market's true potential, however, lies in awakening retail interest in the asset class. This could be an uphill struggle, according to Mr. Irfan. "The investor base has typically been conventional. What we haven't really seen to date is a driver of the sukuk market by the end Islamic investor," he says. "We're in a time of limbo and waiting for investor education to catch up." Establishing liquidity through a true secondary market will also be critical to attracting more mainstream investors. "With sukuk there is increasing liquidity, but it is nowhere near the kind of scale one would expect of a truly global sukuk market to be operating under," says Patel. "Once these liquidity issues are resolved, you will find sukuk is traded a lot more - and that will bring in more conventional investors. At the moment, just a few fringe players are making the market."


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Future expansion Looking ahead, despite its growing pains it is clear that the market for global sukuk will continue to increase in size and expand its investor base. The remaining months of 2010 are critical for the industry and one successful issue by a sovereign state could provide the impetus for many more. Until that first big issuance, however, the market will remain on tenterhooks. It is also worth remembering that about $1000bn worth of infrastructure projects are slated to take place across the GCC over the next 10 years, much of which will be funded by sukuk. In terms of concerns over last year's defaults and the impact they could have on the market, Irfan is clear. He concedes that confidence was shaken but stresses this was not because these were sharia-based instruments but because the credit of the companies that issued them was not very good. "This was a commercial issue not a sharia issue," he says. The only obstacle that will truly hold back the growth of the sukuk market is internal, according to Patel. "We need to address the issues of standardization, legal enforcement and also acceptance of the jurisdiction where the deal is launched. A couple of high-profile defaults did not help the market last year."

Setting a benchmark Kuwait-based Global Investment House's (GIH) $2bn debt restructuring started out in December 2008 as a landmark deal for all the wrong reasons. It was the first ever publicly declared default in the region and the first default to have an Islamic element. However, by the time the restructuring was completed almost one year later, it had become a poster child for the region and set a benchmark for others to follow. The deal also stood out because there was no recourse to government coffers, and all matters were settled through a commercial process. The restructuring, which has a tenor of three years, was a groundbreaking transaction in a region where most investors are entirely unused to the concept of default. HSBC's European structuring group Co-head Neil Goldie-Scot, played a leading role. He says at the start of the process there was a sense of shock, denial and "quite a lot of anger and frustration at what had happened". This is unsurprising given GIH's problems were a first in a region governed by strict financial principles. HSBC was the sole advisor and managed to forge a deal between 53 banks, 50 private institutional and corporate bondholders, multiple derivative products and a number of murabaha counterparties. "We had to get every one of them over the line," says Goldie Scot. "The vast majority were relatively straightforward but there was a small handful that took a lot of effort to persuade, but ultimately this was achieved with no special deals for these creditors." GIH's chief financial officer Sunny Bhatia, agrees this was by far the toughest element of the restructuring. "Some of the banks were not prepared to co-operate initially and a small minority of regional banks kept holding the process up," he says. "More than two months were wasted convincing a very small amount of banks, but the best part was that even those banks eventually realized this was the way forward." So what was the secret of the deal's success? Both Bhatia and Goldie-Scot agree honesty was vital. "Being open and transparent with the banks," says Goldie-Scot. Bhatia echoes this and says GIH was determined to admit the problem, rather than hide away from the issue. "After the initial anger the creditors realized we were serious and genuine in our desire to address the problems." (Global Islamic bond volume by issuer - April 2009-March 2010 The Banker)


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Daily Mirror – May 13, 2010 TOP 10 THINGS TO KNOW ABOUT LIFE INSURANCE We all recognize the importance of life insurance. After all, we want to make sure that our loved ones are taken care of when we die. But before you run out and purchase a policy, do some research ahead of time. That way, you'll be sure to get the best possible coverage at the right price. Here are some helpful tips to get you started:

1. Shop around

2. Never buy more coverage than you need

3. The healthier you are, the better the rates

4. Buy sooner rather than later

5. Realize the importance of periodically reviewing your coverage

6. You don't necessarily have to pay a commission

7. You may be paying more for monthly premium payments

8. Don't rely solely on the life insurance offered by your employer

9. Tell the whole truth and nothing but the truth

10. Buying more is sometimes cheaper

Shop around

When it comes to life insurance, it pays to shop around because premiums can vary widely. And thanks to the Internet, it's now easier than ever. Try out one of the many insurance websites that can provide you with instant quotes. Make sure the website you shop from takes into consideration the factors in your medical history that can affect the premiums.

Never buy more coverage than you need

The key to purchasing the right amount of life insurance is to have just enough coverage to meet your needs. If you have more life insurance than you need, you'll be paying unnecessarily for higher premiums. On the other hand, it's important not to have too little coverage, resulting in you being underinsured.

The healthier you are, the better the rates

It's true - healthy people get better rates on life insurance. You will be asked to pay a higher rate for anything that shortens your life expectancy (e.g., if you smoke, take medications regularly, are overweight, have a bad driving record).

Buy sooner rather than later

If you've been putting off purchasing life insurance because you don't want to pay the premiums, you may be doing yourself a disservice in the long run. The younger you are when you purchase life insurance, the lower your premiums will be.

Realize the importance of periodically reviewing your coverage

http://www.dailymirror.lk/print/index.php/business/127-local/10447.html


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Any life change signals the need for a review of your overall financial plan. When it comes to life insurance coverage, you'll want to make sure that this major life event (e.g., birth of a child, children are grown) won't leave you underinsured or over insured.

You don't necessarily have to pay a commission

One of the reasons for higher premiums is that most life insurance policies pay commissions to the agent/broker. However, you may be able to purchase a no-load policy through an insurer that sells no-load policies directly to consumers.

You may be paying more for monthly premium payments

You may not realize it, but you may be paying more for your life insurance if you pay your premium in monthly installments. Many insurance companies charge extra fees if you make monthly premium payments instead of paying the annual premium.

Don't rely solely on the life insurance offered by your employer

Many employers offer their employees some sort of group life insurance. But this amount of coverage is usually not enough to adequately meet your life insurance needs. In addition, group life insurance policies are not portable, meaning that if you leave your job, you can't take your life insurance coverage with you.

Tell the whole truth and nothing but the truth

If you're thinking about lying on your insurance application, think again. If your insurance company finds out that you lied about a health-related condition or your lifestyle (e.g., smoking habit), they may be able to terminate your coverage. -insurance.com


10th – 16th May 2010

Sunday Observer – May 16, 2010

Loan scheme to promote rice flour industry

Manufacturing of rice flour for the bakery industry will commence within the next two months with financial support from two state banks under a special development loan scheme implemented by the Central Bank. According to a senior official of the Central Bank two investors have already been selected to grant loans amounting to Rs. 42 million to start the rice flour industry in the country. They have visited China to examine the State-of-the-art machinery before purchasing them. The loans will be granted at a concessional interest rate of 10% per annum to purchase the machinery and plants with a longer repayment period of eight years. According to the official investors will be eligible for short term loans at 12% per annum to purchase paddy directly from farmers under forward sales agreements.

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The rice flour will be supplied to bakery owners to produce rice flour based bakery products. According to food scientists rice flour based products are nutritious than wheat flour based products. The country spends around $900 million per annum to import wheat flour from USA, Brazil and other countries.

Rice flour bread being made

The main staple food of Asians is rice and rice flour based food items. With the commencement of paddy cultivation in the North and the East it is expected that paddy production will be more than the required amount the country needs within the next 2-5 years. Under such an environment it is essential to introduce rice flour based bakery products including rice flour bread to the market to utilize the excess production in rice. Over a period we have gradually transformed to a bread eating nation disregarding the value of rice and rice based products. However, with the increase in various food related diseases majority of the people have understood the advantages of consuming rice and rice based products. Once the rice flour industry starts people will be in a position to use rice flour bread and many other rice based food items.


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Sunday Observer – May 16, 2010 Low interest rates to stay - CB Governor Central Bank Governor Ajith Nivard Cabraal said that ‘encouraging’ inflation figures mean he plans to keep the current stance on interest rates, after policy-makers last month kept borrowing costs at a five-year low. “It’s too early to tell, whether higher rates will be needed this year, Cabraal said in an interview with Bloomberg Television, speaking from Bloomberg’s Washington office yesterday local time. The central bank’s current policy will stay for now, he said.

Sri Lanka’s policy-makers are seeking to stoke growth after the end of a civil war in 2009, a development that’s helped the nation’s stock market become one of the world’s best performers in the past year. The country is also seeking a loan disbursement from the International Monetary Fund to help bolster the South Asian economy’s development. Cabraal said he’s very positive, that the IMF team will see the country is on the right track, and that the fund understands why 2009 fiscal targets were missed. Highlighting that foreign-exchange reserves have exceeded targets, he said I don’t see a risk for the nation’s sovereign-debt ratings.

Consumer prices in the capital, Colombo, rose 5.8 percent in April from a year earlier, according to the Statistics Department. Inflation has averaged 12.6 percent in the five years through 2009. The Central Bank expects the economy to grow 6.5 percent in 2010, the fastest pace in three years. The Central Bank of Sri Lanka left the reverse repurchase rate unchanged at 9.75 percent, its lowest level since August 2005, and maintained the repurchase rate at 7.5 percent, according to a Central Bank statement on April 22. Sri Lanka plans to nearly halve its budget deficit in the next three years as the end of the island’s 26-year civil war spurs economic growth and boosts revenue, Treasury Secretary P.B. Jayasundera said April 7. The government aims to narrow the budget shortfall to 5 percent of gross domestic product by 2012 from 9.7 percent in 2009 and an estimated 7.5 percent in 2010, Jayasundera said. Sri Lanka was supposed to reduce its budget deficit to 6 percent of GDP in 2010 from 7 percent in 2009 as part of a $2.6 billion bailout package the IMF gave the South Asian nation in July last year to help avert a foreign-exchange crisis. The IMF said in February it will decide whether to grant Sri Lanka a third loan tranche of about $330 million after the government presents its 2010 budget. Fitch Ratings said in March that the island’s credit rating may be lowered if the government fails to narrow its budget shortfall. An IMF mission was scheduled to visit Sri Lanka this week to discuss the 2010 budget of President Mahinda Rajapaksa’s newly elected government, according to remarks by Koshy Mathai, the fund’s resident representative, in Colombo on May 4. Sri Lanka’s foreign-exchange reserves are at $5 billion, after dipping to $1.27 billion before the IMF rescue package was approved, according to Bloomberg data.

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Tourism


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SRI LANKA, THAILAND HAVE POTENTIAL FOR PILGRIM TOURISM

Charumini de Silva in Thailand

Sri Lanka and Thailand have the positive potential to promote pilgrim tourism and develop the tourism industry between two countries.

Sri Lanka and Thailand had a close relationship from ancient times.

Both countries have Buddhism as the main religion and similar cultural

activities.

Therefore the two countries have the positive potential to promote pilgrim tourism in a sustainable

manner for Thailand travellers as they are highly devoted Buddhists.

Many Thailand tourists visit India and Nepal annually as it is Buddha’s birth place, ASEAN, South Asia

and South Pacific Region Tourism Authority of Thailand Executive Director, Pongsathorn Kessasamil

told Daily News Business.

At present the number of tourist arrivals from Sri Lanka to Thailand accounts to around 40,000 annually

while 4,000 to 5,000 Thailand tourists visit Sri Lanka, he said. The tourist arrivals from Thailand reduced

mainly due to the three decade war, which took the country backwards.

Nevertheless, with restoration of peace the number of visitors from Thailand is increasing in a sound

manner, he said.

Tourism promotional activities are essential to attract more travellers. Promoting different ways of

tourism rather than the conventional leisure tourism such as eco-tourism, agro-tourism, pilgrim tourism,

medical tourism, adventure tourism and knowledge tourism is vital to attract new markets.

The Executive Director suggested to the Sri Lanka Tourism Promotion Bureau (SLTPB) to organize a

trip for a Thailand press delegation to promote our tourism in Thailand.

Since tourism is one of the fastest growing industries in the country with the restoration of peace, such

promotional activities would add more value to Sri Lankan tourism, he said.

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Exports


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EXTERNAL SECTOR PERFORMANCE SATISFACTORY:

EXPORTS INCREASE IN FEBRUARY

Sri Lanka’s external sector performance showed signs of improvement along with the gradual recovery of

the global economy. Earnings from exports grew by 20.0 percent in February 2010 to US $ 629 million led

by higher earnings from agricultural and industrial exports, the Central Bank said yesterday.

The expenditure on imports also increased by 60.6 percent to US $ 973 million, due to the increased

demand for imports within all the sub sectors.

Accordingly, the trade deficit expanded to US $ 344 million in February 2010.

Earnings from agricultural exports, which accounted for 27.0 percent of total exports, increased in

February 2010, year-on-year, led by tea, rubber and minor agricultural exports.

Tea and rubber, whose export volumes increased by 20.1 percent and 44.1 percent, respectively,

continued to fetch higher prices in the international market. Tea prices increased by 25.7 percent to US

dollars 4.35 per kg mainly due to the finer quality of Ceylon tea exports and the supply shortages in the

international market.

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Rubber prices increased to US $ 2.86 per kg, reflecting a 95.4 percent increase compared to February

2009, mainly due to the recovery in international demand. Supply shortages due to the adverse weather

conditions that prevailed in the major rubber producing countries in Asia also helped increase the

international rubber prices.

Earnings from minor agricultural exports increased due to higher prices fetched by fruits, coffee, and

cocoa products and increased volumes of vegetables, areca nuts, cashew and essential oils.

Export earnings from certain spices, such as cinnamon and cloves, increased led by higher volumes and

prices.

The industrial exports, which were affected by the global economic crisis, rebounded in February 2010,

led by the exports of processed food and beverages as well as rubber products.

Although exports of textile and garments and ceramic products declined in February 2010, year-on-year,

they reflect an improvement since January 2010.

All major categories of imports increased in February 2010.

Expenditure on imports of consumer goods increased significantly, with notable increases in food imports

such as rice, sugar and wheat.

Expenditure on imports of non-food consumer durables also increased significantly in February 2010.

Amongst intermediate goods, expenditure on petroleum imports increased substantially in February,

year-on-year, as the average import price of crude oil rose by 71.4 percent to US $ 78.23 per barrel.

Import expenditure on fertilizer increased in February 2010, compared with the same period in 2009,

mainly due to the substantially higher import volumes.

Imports of investment goods also increased in February 2010 led by higher expenditure on transport

equipment, building materials and machinery and equipment, which augurs well for future economic

activity. During the first two months of 2010, foreign remittances increased by 13.0 percent over the

corresponding period of 2009 to US $ 564 million.

The gross official reserves, with and without Asian Clearing Union (ACU) funds, were at US $ 5,408

million and US $ 5,032 million, respectively, by end of February 2010. Based on the previous 12 months

average imports of US $ 921 million per month, the gross official reserves, without ACU funds, were

equivalent to 5.5 months of imports.


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Sunday Observer – May 16, 2010 Proposals for achieving National Export Target of $ 20b by 2020 Value addition and branding, an Exim Bank land for export production enterprises and import substitution, streamlining Customs services and procedures imposition of a development levy and the reduction of the number of holidays are key issues to achieve the National Export Target of US$20 billion by the year 2020. President NCE Sarath De Silva forwarded these proposals to Treasury Secretary Dr. P.B.Jayasundera recently. Export of high value added products and branding of Sri Lankan products through appropriate assistance and incentives to reach high end world markets, for example in the tea sector where several indigenous brands have made their presence felt in the most sophisticated markets such as Japan, US and Europe. Similar approaches are possible in other high growth sectors such as spice products, value added agricultural products and processed food products as well as gems and jewellery. He said, that there is a dearth in innovative development banking services in the country to support export oriented enterprises specially SMEs to reach the world market. To effectively tackle the issues related to financing the time is right for the State to seriously consider the setting up of a specialised Export-Import Bank with adequate capitalisation to compete in the market and provide competitive and innovative financing products to deserving enterprises. He said, that it is a known fact that identification of suitable land as well as obtaining identified land from the state authorities remains a frustrating exercise which only discourages entrepreneurs. Therefore, there is an urgent need to establish a land bank and a one stop shop for the allocation of land specially for agricultural purposes and also for industrial purposes speedily by streamlining procedures. The land ceiling of 50 acre units prohibits aggressive agricultural raw material production for export as well as for import substitution. Streamlining Customs clearance procedures and transparency in operations is imperative in a computerised environment. Though computerisation has been effected to a certain extent in regard to customs procedures and clearance, exporters continue to encounter delays and bear additional costs due to inefficiencies and breakdowns in the system. Although clearing facilities are available for airfreight cargo round the clock seven days of the week for other cargo only perishables are provided this facility. As such enterprises which need to clear urgent spare parts to facilitate their operations cannot do so during the weekends. At present funds that are collected from cess imposed on various product sectors such as tea, rubber fruits as well as others are not utilised for the intended purposes of development of the particular sectors. But such funds are utilised for other state expenditure. It is a must that funds collected through cess be ploughed to the development of particular sectors to meet the overall export target of US$ 20 billion to be achieved by 2020. De Silva said that it is a well known fact that Sri Lanka enjoys an excessive number of holidays which has an adverse impact on the productive output. As a result many exporters need to work during holidays to meet the schedules which causes additional payments for the staff such as overtime. Therefore, NCE proposes a rationalisation in the number of holidays to achieve the export target.


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Stock Market


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STOCKS CLOSE FLAT, DIALOG HEAVILY TRADED

Shares closed flat yesterday as gains on small and midcap shares were offset by price drops on selected high value stocks, while Dialog Telekom shares rose after it returned to profitability, brokers said.

The All Share Price Index closed at 4,222.04, down 0.03 percent (1.09 points), while the Milanka index of more liquid shares fell 0.32 percent (15.39 points) to close at 4,746.98.

Turnover was almost 1.35 billion rupees, according to stock exchange provisional figures.

"The indices seem to have hit a plateau as some shares which were seemingly overbought by investors seem to be losing steam," Nikita Tissera, research manager at stock brokering house SC Securities said.

"However, we remain positive on the March quarter earnings. So far the earnings did not disappoint.

"Companies like Chevron, Dialog and Sampath Bank showed that bottom lines could be improved on flat revenues by paying more attention to prudent cost management."

Brokers said over 9.28 million shares of Dialog Telekom were traded, Monday. It closed at 8.50 rupees, up 25 cents, while Sri Lanka Telecom, Sri Lanka’s largest fixed line operator closed at 37.25 rupees, down 25 cents.

Sri Lanka’s Dialog Telekom group made a profit of 705 million rupees in the March 2010 quarter from its core celco operations, after a loss of 1.86 billion a year ago.

Commercial Bank closed at 242.00 rupees, up 50 cents, Hatton National Bank closed at 234.00 rupees, down 1.25, Sampath Bank closed at 282.25 rupees, up 4.00 and Seylan Bank closed at 58.75 rupees, up 25 cents.

Conglomerates Aitken Spence closed flat at 1,450.00 rupees, Hayleys closed at 280.25 rupees, up 25 cents, Hemas Holdings closed at 136.00 rupees, up 2.25 and John Keells Holdings closed at 185.00 rupees, down 3.25.

JKH is the largest listed company at the Colombo Stock Exchange and accounts for 8.5 percent of market capitalization.

Chevron Lubricants Lanka closed at 170.50 rupees, down 50 cents, and Colombo Dockyard closed at 286.50 rupees, down 3.50.

Distilleries Company of Sri Lanka closed at 123.75 rupees, down 1.25.

LBO


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Sunday Times – May 16, 2010

Sri Lankan shares gain on profit taking

Sri Lankan shares gained Thursday after two days of dull sessions as small-scale investors continued to take profits on a resurgent market but analysts expect a market correction to drive down the bourse soon, analysts said.

They said that retail investors searched for shares with low prices compared with earnings while Dialog and Sri Lanka Telecom shares pushed the indices up. Dialog closed at Rs.8.50 up 25 cents and SLT closed flat at Rs.38.00 The All Share Price Index closed at 4,242.67, up by 13.27 points while the more liquid Milanka index rose 32.09 points to close at 4774.26. Turnover was almost Rs. 1.18 billion rupees, and the share volume was 41.3 million according to stock exchange provisional figures. "The market opened positive today but towards mid-day there was a bit of selling pressure because of retail investor profit-taking, ," said a stock broker . "It was mainly the 'mid caps' that moved today," he said. He added that foreigners may wait for directions from disbursement of an IMF loan facility and the next budget 2011. An International Monetary Fund mission is now in Sri Lanka to discuss the country’s fiscal reforms and fiscal deficit targets in the next budget before deciding whether to disburse its delayed third tranche of a US $2.6 billion. Walker & Greig was the highest contributor of Rs.174 million to the turn over with 3.1 million shares changing hands on matuarity he said. JKH closed at Rs.1.86 up by 50 cents contributing Rs.121 million to the turnover. (BS)

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Business


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Daily News – May 11, 2010 TRAINING TO CUSTOMERS DRIVES RESULTS Tim Barber and Anthony Vottima In almost any business, customers determine how successful you will be. In fact, one of the best ways to enhance the financial strength of your company-especially when times are tough is to help your customers survive, and even thrive, despite economic conditions.

And in times like these, one of the most effective ways to succeed in the business-to-business (B2B) world is to help customers identify new opportunities in emerging markets and provide products and services that meet the needs of the top players in those markets.

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To accomplish that goal, training customers on how to leverage industry trends and teaching them what they need to know to build those trends into their business or product plans can help them reach their business objectives, while contributing to your business results as well. The key to leveraging training in B2B is to provide education that will help your customers reach their consumers more effectively. The idea is to not just

sell the fishing pole, but to offer fishing lessons with the pole so the customer learns how and where to fish. For example, in the high-tech industry which Avnet serves as a global distributor technologies change so dramatically and rapidly that even the most highly-skilled engineers may spend more than half their time just locating the information they need to remain current in their fields. The objective for successful B2B training is to become a trusted advisor and expert resource for customers.

One of the best ways to enhance the financial strength of your company-especially when times are tough is to help your customers survive

Companies can achieve this through bundling information and providing it directly to customers and their employees in an easy-to-digest format, so they can move faster and accelerate their time-to-market. The first step in implementing a successful customer training program is to keep the program as simple as possible and then deliver the information through flexible formats such as virtual trade shows and workshops. One strategy that has worked for Avnet involves partnering with several suppliers on a global program called “X-fest” essentially a traveling training workshop combined with a hands-on trade show that allows customers to learn about the latest technologies, how the technologies can be used in real-life applications, and see hands-on product demonstrations all at the same event. Engineers and other customer representatives select classes at the event depending on their areas of expertise and interest. After each class, the participants attend the trade show, where they can see real-time demonstrations of the technologies described in the training sessions. This program has taken the training directly to customers’ engineering employees in more than 37 cities around the globe so participants don’t have to travel far, and in the last three years more than 15,000 engineers have been trained on the technologies they then design into their applications.


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Ultimately, this strategy keeps customers up-to-date on the latest technologies available in their industry and enables them to bring solutions to market more quickly and with greater expertise. Another way to help B2B customers leverage market trends is to focus the training efforts on specific vertical markets. For example, let’s consider the healthcare industry. Naturally, it would not be practical for a technology salesperson to walk into a hospital emergency room and start asking staff members, “What are your data management needs?” There is no doubt hospitals have intensive technology needs, even though they don’t think of them in technical terms because they are focused on patient care. However, armed with an in-depth understanding of the specific vertical industry challenges involved in running a healthcare facility, that technology sales rep can be effective in both selling their products and services and helping a clinic, hospital, or health network provide better patient care. So in this case, the idea is to train business professionals that are not part of or familiar with the healthcare industry, such as technology providers, on the needs of health providers, the terminology used in their industry, and details on how they operate. In truth, professionals within vertical markets such as healthcare rely on technology experts who have in-depth training in selling technology to their industry to be trusted advisors, rather than just “salespeople.” In other words, they “get it” when it comes to the role of technology in healthcare and what health-care providers really care about. In the B2B world, by definition, we aren’t selling directly to the end consumer in this case, the consumer being the health-care provider but it could be any vertical industry such as finance or government, so it’s critical we train those who are selling to the hospital, bank, or government agency to understand how that industry works. This level of training requires two components: theoretical and practical. At Avnet, we implemented a methodology called Solutions Path in which the theoretical component takes place in a classroom setting over a period of three days. We train our customers on the nuances of different vertical markets so they can be more successful in selling to their customers. This intense training focuses exclusively on key issues within a specific vertical market in this case, healthcare. The classroom training focuses on the challenges hospital administrators face daily, including responding to legislative mandates such as HIPAA; meeting new requirements regarding the digitizing of all medical records; and facilitating the permanent storage and archiving of new records. After the classroom training, attention turns to practical, hands-on experience in a five-day internship program in a true hospital setting with doctors, nurses, and hospital administrators teaching the technology providers about the challenges they face in their day-to-day work. Prior to this experience, most students have seen a hospital operate only from the perspective of the patient. They have no idea of the actual work behind the scenes that goes into running a hospital, and they have little awareness of how the issue of patient care can affect the most important business and technology decisions for that environment. Our experience has shown the combination of classroom and hands-on training programs has contributed to a growth in revenue of 20 to 50 percent for participants. In today’s economy, training is a wise investment in leveraging growth opportunities in the supply chain. (Tim Barber is senior vice-president, Design Chain Global Business Development, Avnet Electronics Marketing, and Anthony Vottima is vice-president, Avnet Technology Solutions, Solutions Marketing and Development. sales and marketing)


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Employment


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Daily News – May 11, 2010 MATERNITY LEAVE AND BENEFITS Dr.K. Kuhathasan CEO : Cenlead Institutions covered by the Shop and Office Employees Act Maternity leave for the birth of the first and second child * In respect of the birth of the first child a female employee is entitled to 84 working days as maternity leave on full pay. * In respect of the birth of the second child also, she is entitled to 84 working days on full pay. * For an employee to be entitled to maternity leave, the confinement must result in the birth of a “live” child. Maternity leave for the third or subsequent confinement

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* A female employee, if at the time of the confinement already has two or more children, the employees is entitled to 42 working days on full pay * If an employee has lost a child and at the time of the third confinement and she has only one child, she could qualify for 84 working days of maternity leave for the third confinement. Notice of confinement A female employee who expects to be confined must inform the management of the number of children she has on the date she expects to be confined. It is important that the employer is informed of whether the child was born alive or not, as it is relevant to ascertain the quantum of leave.

Health happiness and protection for working mothers during period of confinement

Birth of twins If a female employee had twins on the first confinement, she will be entitled to 42 days as maternity leave on the basis that she already has two living children. What is important is the number of living children at the time of the confinement and not the number of previous confinements. Computation of leave Fourteen days of the maternity leave, can be taken before confinement, and the remaining days after confinement. However, if she decides to take 14 days pre-confinement leave and the child is born before the expiry of the 14 days, then the unutilized portion of the pre-confinement leave should be added to her post-confinement leave. * In computing maternity leave all holidays below will be excluded.


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* 1-1/2 day weekly holidays (an employer who works of five day week is obliged to exclude 1-1/2 days and not two weekly holiday)

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* Poya days * Statutory holiday (Mercantile holidays) This means they are entitled to have extra leave added to the confinement leave in respect of weekly holidays, statutory holidays and Full Moon Poya holidays that fall within the entire period of maternity leave. Shop and Office employees are not entitled to the nursing interval leave granted to workers covered by the Maternity Benefits Ordinance. Shop and Office employees have to receive full pay for all the maternity leave entitlement. Maternity leave in the event of a stillbirth or the issue of a viable foetus In both situations a female employee is entitled to 42 working days on full pay. The term “viable foetus” is defined as a foetus of at least

28 weeks gestation and in the event of a doubt; one of the following conditions should be satisfied for the foetus to the considered 28 weeks old- * Length of the foetus should be at least 12 inches: or * The weight of the foetus should be least 2 1bs. Protection of the mother and child * Where a female employee gives notice to her employer that she is expecting a child (not exceeding three months) from the date specified in the notice, she shall not be employed or be caused or permitted to be employed during the period commencing on that date and ending on the date immediately preceding the date of her confinement on any such work as may be injurious to her or her child. * A female worker who has delivered a child shall not be employed or be caused or permitted to be employed, during the period of three months commencing on the date of her confinement, on any work which may be injurious to her and her child. Security of service *The employment of the female employee shall not be terminated by reason only of her pregnancy confinement or of any illness consequent to her pregnancy or confinement. * When a female employee is absent on leave, her employer shall not give her notice of dismissal during such absence or on such a day that the notice will expire during such absence.


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Burden of proof * When an employer is prosecuted for the offence of terminating the services of a female employee by reason of some fact other than pregnancy or confinement or any illness consequent to her pregnancy or confinement, the burden of proving shall be upon the employer. Institutions covered by Maternity Benefits Ordinance (MBO) * Under this ordinance a ‘women worker’ is defined, so as to include a number of categories of employment: women workers who are paid whether on time rate, or at piece rate or whether the contract of employment is oral or in writing. * However, women employed purely on a casual basis are not entitled to receive maternity benefits. * “Trade” is defined as to include any industry or business undertaking, occupation, profession or calling carried out, performed or exercised by an employer. * Maternity benefits can be granted only to those women who had served the employer from whom she claimed benefits for at least 150 days during the year preceding the confinement. Leave period * Entitled to 12 weeks leave in relation to the birth of the first or second child. * Holidays are included in the calculation of 12 weeks. * The 12 weeks can be taken as two weeks pre-confinement leave and 10 weeks post-confinement leave. * In relation to the birth of a third or subsequent child, entitled to six weeks leave, including the non-working days. * Two weeks pre-confinement leave and four weeks post-confinement. No termination on account of pregnancy or confinement * The maternity Benefits Ordinance (MBO) provides security of employment during the time of pregnancy. It specifies that the employment of a woman worker should not be terminated in consequence of pregnancy or confinement or illness resulting from pregnancy or confinement. * Notice of termination of employment should not be served on a woman worker during her absence or on a day that the notice will expire during such absence. Safety and health of the woman worker and her child * A duty is cast on the employer by law to offer light work to the woman worker for the three months before the confinement if the women worker has notice of such confinement. After the birth of the child * Until the child is one year old, the mother is entitled to two nursing intervals per working day. * Such internals should be given in the morning and evening at times specified by the worker. * These nursing intervals are in addition to all other intervals allowed for meals and rest. * If facilities have been provided to nurse the child, the intervals shall be of half an hour’s duration. * The nursing intervals should be considered as time worked. * Employment should not be terminated because of the pregnancy or confinement or in consequence of an illness resulting from such pregnancy or confinement. * They should not be given work which is injurious to the mother and child.


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* MBO provides for the setting up and maintenance of creches for children under six years. Maternity benefits payments * In addition to leave entitlements the MBO also prescribes cash payments to be made as follows: * A sum equivalent to at least 6/7th of the wages due, if the worker has actually worked during the entirety of the six months or 12 weeks as the case may be. * In respect of the worker paid at a time rate, it should be 6/7th of the wages payable in respect of a normal working day calculated at a time rate. * In respect of a worker paid a piece rate, the amount payable per day should be at least 6/7th of the average daily wages earned by her, during the six months preceding her confinement. * If a woman worker dies at the time of or after the confinement, the benefit is payable in respect of the period upto and inclusive of the day on which the death occurs. In such instances the benefits are paid to the woman’s nominee, or in the absence of such nomination, to her legal heirs. Proof of confinement Payment of maternity benefits will be on proof of confinement within 48 hours of such notice and supported by one of the following documents:- * Certificate from the Officer-in-charge of the lying - in - home, maternity hospital or other institution where the confinement has taken place. * A certificate signed by two persons who attended at the confinement and bear witness to the confinements. * A birth certificate. Alternative maternity benefits The Maternity Benefits Ordinance also provides for what is known as alternative maternity benefits. To get alternative maternity benefits the employer should get a certificate from the Labour Commissioner. This certificate would be given only in estates where there are adequate arrangements made for provision of alternative maternity benefits. Such arrangements are: * A maternity ward or lying-in-room for the use of such woman worker who is confined. * Services of a midwife at the time of confinement. * The woman worker should be allowed to stay for not less than 10 days in the maternity ward or lying - in - room and should be provided with free food during this period. * She should be paid such benefits at the rate of 4/7th of the benefits due.

GLOBAL CONFERENCE AGREES ON A ROADMAP TO STEP UP ACTION :


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Sunday Observer – May 16, 2010 Eliminate child labour by 2016 More than 450 delegates from 80 countries have agreed on a Roadmap aimed at 'substantially increasing' global efforts to eliminate the worst forms of child labour by 2016. Approved at the end of a two-day conference on child labour organised by the Government of The Netherlands in cooperation with the International Labour Organisation (ILO), the Roadmap calls on governments, social partners and civil society organisations to strengthen access to education, social protection and decent work. The Roadmap constitutes an important document to promote coherence and direction in national and international policies leading up to the 2016 target.

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But let's not mistake ourselves: it does not mark the end of our concerted efforts, quite the contrary. We must keep on meeting and working together, if only to encourage, inspire and sustain one another again on the road ahead', said Piet Hein Donner, Minister of Social Affairs and Employment of the government of The Netherlands. 'The experiences and ideas discussed during this conference have seriously improved our awareness, knowledge and commitment to child labour. They clearly show that if we stick to business as usual, the goal of eliminating the worst forms of child labour by 2016 will simply be missed. We now have a Roadmap that helps in finding the way forward andiscussions at the ILO and elsewhere.

d provides key input for future

It is up to all of us to follow it through', said ILO Executive Director Kari Tapiola. The Roadmap specifically calls on governments to 'assess the impact of relevant policies on the worst forms of child labour, taking into account gender and age, put in place preventive and time-bound measures and make adequate financial resources available to fight the worst forms of child labour, including through international cooperation'. It also calls on social partners to take 'immediate and effective measures within their own competence to secure the prohibition and elimination of the worst forms of child labour as a matter of urgency, including through policies and programmes that address child labour'. The conference in The Hague took place against the backdrop of a slowdown in the results of the global campaign against child labour, as evidenced by a new ILO Global Report issued last week. The report Accelerating Action Against Child Labour shows that the pace of reduction in child labour has continued, but it has slowed down to a worrying extent. The report warns that unless decisive action is taken, the 2016 target will not be met. The new report contrasts with the positive trends of the previous study done in 2006, which then led the ILO to set the goal of eliminating the worst forms of child labour by 2016.


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Climate Change


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Daily News – May 12, 2010 SOLUTION TO CLIMATE CHANGE SOLARISATION OF SOUTHERN EXPRESSWAY FOR ZERO EMISSION: Somaratna Consultants Chairman/Managing Director K. C. Somaratna speaks of this new proposal to Daily News Business Question: You are a proponent of fixing solar panels above highways and using that energy to charge batteries of electric cars. You have been working on this concept since 2008. What is the basis of this proposal and how will it benefit the environment? Answer: I will explain the concept using the southern expressway. If you take the southern expressway and assume it to be 20 metres. wide and 125 kms long we have eliminated 250 hectares of vegetation. This amount of vegetation would have absorbed about 1250 mt of CO2 and 150GWhrs of solar energy per year. So building the highway itself would have contributed to global warming by not absorbing 1250mt of CO2 per year and allowing an additional 150 GWhrs of solar energy per year to warm the environment. On the other hand if vehicles on this highway consume 50,000 mt of petrol per year (this is 10 percent of total consumption of Sri Lanka in 2008), this would emit nearly 150,000 mt of greenhouse gas Carbon Dioxide. This petrol consumption would have also let at least 500 GWhrs of heat energy to warm the atmosphere.

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If we lay solar panels above and along the highway, and use the energy generated to power electric cars then 150,000 mt/year of CO2 emission would be completely eliminated and 500 GWhrs of heat energy been emitted to warm the atmosphere would also be completely eliminated. These solar panels would have absorbed at least 400 GWhrs of solar energy (this is nearly three times the solar energy originally absorbed for photosynthesis by the vegetation). So you will see that it attacks the problem of global warming on three frontiers. So in my mind, solarisation of highways is the most viable and beneficial solution to global warming.

Using solar power for transport is more

profitable than using petrol

Question: This word solarisation is not a word found in any dictionary. What does it mean? Answer: Yes, it is not a word found in any dictionary; but it is the word I have coined up to express this process of laying solar panels along the highways (it could be either above or on the sides or on the surface itself) and using this solar energy captured to charge batteries of electric cars plying along the highway. It is basically converting the highway to be a source of power using solar energy. I believe it is a nice word and it conveys the meaning well. Question: But they say that energy from solar panels are more expensive than main grid electricity. How much would it cost? Answer: You are right. Energy from solar panels is more expensive than main grid electricity. If you look at the Sri Lankan situation, main grid electricity is Rs.14 per kWhr and solar panel electricity is around


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Rs.60 per kWhr. We need to remember a few things here. Main grid electricity is Rs.14 per kWhr because part of it comes from hydropower. Even in 2008, 40 percent of electric power generated was from hydro power. Thermal power generation would be generally at an efficiency of 40 percent while in the internal combustion engine (ICE) of a car the efficiency is only 20 percent. So in order to get one(1) kWhr energy, in the ICE it burns five (5) kWhrs and the moment this efficiency factor comes in, solar energy becomes competitive with petrol for powering automobiles. So using solar power for transportation is more profitable than using petrol although it is not profitable for generating main grid electricity If you look at the Southern Expressway, the total cost of solarisation will be about US$ 1 billion. This includes the structures for the panels, solar panels themselves, charging stations and equipment, swapping mechanisms, recharged battery warehousing and transportation, software for billing. Question: But from where would that sort of money come? It is a lot of money by any standard. Answer: I agree. Initially I thought that we would be able to get from the US$ 30 billion that was promised at Copenhagen to help poorer countries. I know we are no longer a poorer country - to meet climate challenges. This could be a model for the future and other countries to follow. As such if this funding becomes available, I believe we should be able to qualify for the same. On the other hand there may be other sources of funding. It was only recently that ‘Investment Forum for Climate’ met in Philippines to work out funding for projects to protect humanity from climate change. There are huge amounts of venture capital going into other techniques like algae farms. So once we are prepared to take on the project I am sure funds will come or vice versa. But one thing for sure, this would happen, the latest by mid 2011. Question: So we invest US$ 1 billion on this project and what would be the returns like. Have you calculated the return on investment? Answer: My first response to your question is do we look at return on investment, when we build a highway. I don’t think, we go to that extent of quantifying the return from the highway in exact rupees and cents. Nevertheless we have calculated the revenue that could be earned by selling recharged batteries in a year and it works out to about rupees twelve billion a year if we sell electrical energy equivalent to that of litre of octane 90 petrol at one hundred rupees. On top of that there could be some carbon credit, considerable but not so much from the perspective of this investment. The country would be able to save about rupees six billion at rupees 50 per litre of petrol. Question: What was the basis for these calculations? What was the price of a solar panel taken into consideration, how many days of sunlight was assumed? Answer: The price of the solar panel was the price that was quoted for any quantity above 1000 pieces (14W panels) which amounted to around euro 35 per panel. For the quantities that would be required actual price could be much less. We assumed there to be 200 days on which sunlight be available. Actually there are different standard values which could be used. One is assuming total solar energy falling on the area in kWhrs per m2 per day and multiplying by the area, rate efficiency of the panel and number of days or the other one may be multiplying the rating of


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the panel in Watts by the number of panels, by number of hours in a day with proper sunlight and then by the number of days. These different ways were used and in fact any figure we came across in literature which could ultimately end up in this computation was used to verify our calculation. Question: How does this compare with other options being considered as solutions to reduce global warming due to transport. I am sure the well-known Nobel Prize winning IPCC Report would have identified certain solutions. Answer: Yes, I read the IPCC Report with much enthusiasm and especially the Chapter five on Transport. It provides us with a whole heap of data on greenhouse gas emissions due to transportation, the GHGs emitted till fuel comes to storage tank and then from there to the wheel, the mitigation steps prevalent today and projection of GHG emissions till 2050 taking these mitigation measures into considerations. Unfortunately, this is one solution which they have not looked at. And none of the solutions they have considered do address global warming on all these three frontiers I mentioned; i.e. reduce emission of greenhouse gases, reduce heat pollution due to exhaust gases, reduce warming of atmosphere due to solar energy falling on the highway. On the other hand these other solutions - say biofuels - from either cane or cellulose or whatever - need space for cultivation, if it is going to be in adequate quantities; you need to transport the fuel to the highway. In fact according to IPCC Report the greenhouse gas emission during tank-to-wheel phase for ethanol from sugar just balances the greenhouse gas absorption during well-to-tank phase; leaving no benefit to compensate for the impact of loss of vegetation for growing the plants. It is for these reasons - commercially viable, technically feasible, environmentally least damaging, globally equitable and addressing the global warming issue on three frontiers - that we say that this is the most viable and the fastest solution to global warming. President Mahinda Rajapaksa’s expectation that Sri Lanka should become a hub for power and energy and knowledge during this decade would become a reality if we could practice this concept and show the world our contribution towards solving the most pressing problem of humanity or all living beings today - the problem of global warming.


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Agriculture


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250 FARMER FAMILIES IN BADULLA FIGHT FOR COMMON CAUSE AND SUCCEED By Ifham Nizam * Organic farming a huge success * Women can buy their own needs due to higher income levels * Marked reduction in agro chemicals * Better taste vegetables Despite Sri Lanka being considered an agricultural country - farmers continue to be neglected or marginalized in our society. Surely, such trends should change especially with our President who in his manifesto clearly said the government would give prominence for agriculture development. In this article, The Island focuses the timely initiatives and polices of a farmer organization protecting the environment from imminent crisis. Farmers in Welikadagama District Secretariat Division in Badulla fought hard for their rights and in the end they were not only successful in defeating the adhoc policies of the Forest Department but also made their ventures profitable, especially a focus on organic farming. Walikadagama Farmers Organization President V M B Athula Priyantha told The Island that they were self-sufficient 40 years ago but a recent decision by the Forest Department to plant Eucalyptus and Pine resulted in soil erosion and less water. The project is situated in the Welikadagama DS Division, Badulla which is the upper catchment area of the Uma Oya. The association consists of 316 families. He says rehabilitation of the land towards its original state-especially having native plants will provide water for cultivation purposes. "We stood together and resisted power and authority for the common good, is the most sustainable feature of our project. Our activities helped make people’s actions even more organized giving a new lease of life to the environment," he added. He says collection of vegetables and sure market facilities in Kandy guaranteed them to continue with sustainable methods of cultivation which brought long term benefits. "We have 15 organic farming families. And each of these of families are getting very good yields. It is not easy to grow leeks, carrot and beetroot using organic farming but our farmers were successful in breaking that barrier," he further said. According to Athula, the mountainous lands planted with Eucalyptus and Pine by the Forest Department in the sixties resulted in the absence of undergrowth, which was also vulnerable to fires. And their high water absorption caused severe soil erosion in the rugged and steep terrain. "The environment impact was so bad that it resulted in the natural springs and streams drying up in the micro catchment area," he said. In 2004, the State Timber Corporation felled 65 acres causing heavy silt deposition exposing gravel and rock with the possibility of land slides. Nearly 250 families depended heavily on water for paddy cultivation, now diminished by 75 per cent and wash down clogging irrigation canals. He said that before the plantation, as mere grasslands or Patna the streams had been active and the wells below were full. Grasses, not having canopy interception and absorbing even less water than trees adds to the infiltration capability of soils helping the water table. He said that when the Forest Department tried once again to replant the same area their move was prevented by villagers by holding


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strong protest campaigns. "Our protest was to allow us grow plants that are native to the area. Former Environment and Natural Resources Minister A. H. M. Fowzie immediately instructed the Forest Department to leave the place. Minister Fowzie’s action helped us to become once again self sufficient and get back the much needed water," he stressed. Four massive Shramadanas were held. Natural succession was allowed to take place where Eucalyptus was absent. The live fences were pruned and re-established in places where they were not doing well, he said. In the dried up stream gullies and streams where soil should be developed more plants were grown. The community involved themselves in nurturing and protecting the hillside. Nearly 25 households were encouraged to establish multi-cropping in analogous forest gardens. Training was given to farmers on organic farming methodology. Bio gas was introduced as suitable farmers were supplied with cattle and a hand tractor was purchased for common use and transport. The older method of cultivation by turning soil was abandoned to preserve what was left of the top soil. In June 2008, UNDP’s GEF/Small Grants Program funded the Welikadagama Farmers association to restore the eroded hillsides by active removal of Eucalyptus and establishing and maintaining live hedges - Mana grass - to prevent soil erosion from the nurseries maintained by the members. "Our objective was to allow the degraded land to reforest naturally letting the indigenous trees grow back," he said. Stone hedges were to be established to stop further erosion. Enrichment planting was planned where necessary, introducing organic farming on the lands below to ensure food safety and security and to improve the income of the community. Establishing marketing avenues for the excess produce was also planned. "These marketing avenues had become all instant success. The World Bank had inquired about our projects and are ready to support us," he added. "Our community was brought together to raise awareness on the aims and objectives of the planned project. Indigenous plants that grew naturally on the hillsides were identified and 18 nurseries numbering nearly 500 plants were established." He said that they also had a hurricane task when Pine and Eucalyptus competed for the natural vegetation. Members were mobilized to actively remove these invasive exotics. Members were responsible for the care and replanting of 2000,000 plants of Kanaf which prevents fires and slows surface run off in their nurseries. Achievements at glance

= Re-emergence of the natural streams in the micro catchment area at the summit of the reforested hills. = Self sufficiency in vegetables, fruits and food crops for the 25 framers and income from the excess with a steady market provided by sales outlet in Kandy - ‘Bio Foods’. = Marked reduction in the use of agro-chemicals. All farming house households in the project having natural compost sites make their own liquid fertilizer and natural pesticides experiencing beneficial results- better taste and bigger size carrot and beet. = The participatory map making of the status of the cultivation and their progression provides a point of reference. = Bio gas for fuel saves money and effort. = The project has been filmed and is available for learning and replication. = Forest protection - a halt to robbing, setting fire, firewood removal. = Women can buy their own needs – eg. Scissors for sewing from first harvest = Change from mono crops to Multi cropping which is less susceptible to pest attack.


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Environment


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Daily News – May 10, 2010 SAVING OUR WATER Disna Mudalige In the present era, the water pollution caused by releasing wastewater from industries directly to waterways is a major issue of concern in Sri Lanka. Specially the textile waste water containing dye and industrial wastewater containing organic materials have raised many environmental and health problems. Due to the consumption of these contaminated water, the extinction of fish and other kinds of species living in water is reported time to time in many parts of the country.

Not only fish, but also the birds which hunt fish are also affected by this. This shows the degree of disturbance human activities cause to the natural cycle of the nature.

Aaquatic life of Lunawa lagoon has been degraded due to continued discharge of wastewater. File photo

Kelaniya River, Beira Lake, Bolgoda Lake and Lunawa lagoon are visible examples for the water pollution by human activities. The aquatic life of the Lunawa lagoon has been degraded due to continued discharge of wastewater into its tributaries. The lagoon is now devoid of aquatic life and considered to be biologically dead.

Wastewater disposal As recorded a considerable number of people use rivers and tanks to get drinking water. The safety of these means for drinking water purposes is becoming hazardous day by day. Most of these rivers are also being used by the general public for various purposes such as washing and bathing etc. Among major illnesses of water pollution, typhoid/paratyphoid fever, shigellosis, food poisoning, amoebiasis, intestinal infections, malaria and dengue fever are reported to be quite common. As Central Environmental Authority (CEA) Environmental Protection Director Ramani Ellepola brings out in her paper ‘Implemention of Industrial Pollution Control Programs in Sri Lanka’, the industries which generate the largest quantities of wastewater in Sri Lanka are the textile, natural rubber processing and food processing industry sectors. These three industry sectors are widely distributed throughout the country. The effluents generated from these industries are generally disposed into nearby water bodies such as rivers, lakes or into the ocean, due to the lack of a proper system for the disposal of wastewater.

Irrigation purposes The National Environmental Act No: 47 of 1980 with amendments Act No: 56 of 1988 lays down that, ‘no person shall pollute any waters of Sri Lanka or cause or permit to cause pollution in the inland waters of Sri Lanka’. Understanding the seriousness of the issue general standards have been laid down by CEA for the discharge of effluents into inland surface waters.

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As Ellepola discribes industrial effluent standards are as follows: a. General standards for discharge of effluents into inland surface waters. b. Tolerance limits for industrial effluents discharged on land for irrigation purposes. c. Tolerance limits for industrial and domestic effluents discharged into marine coastal areas. d. Tolerance limits for effluents from rubber factories discharged into inland surface waters. e. Tolerance limits for effluents from textile industry discharged into inland surface waters. f. Tolerance limits for effluents from tannery industry. These are included in the Environment Impact Assessments and Environmental Protection Licence. All new industries as well as the existing industries are encouraged and recommended to establish central treatment plants within them. As a good solution to the existing problem of wastewater disposal in the country University of Moratuwa Chemical and Process Engineering Department senior lecturer Padma Amerasinghe has designed a waste biomass for the removal of heavy metals from wastewater. This biomass can be operated by using rice husk, saw dust, tea waste or choir pith, which are called solid absorbents. Dyes and industrial wastewater can be cleaned in this way. The liquid is sent through an absorption column with a perpetrated bottom filled with one of the solid absorbents. In the process, the dye component will be transformed to the solid material.

Natural waterways As Dr Amerasinghe mentioned, 1,000 liters of wastewater containing roughly 30 milligrams of dye per liter can be cleaned by using five kilograms of rice husk. The water coming out of this system is checked with the COD and BOD standards, and results are within the possible limits of these standards. The outcome is safe to release to natural waterways. She suggested to burn the used solid absorbent to get energy, and further said that the ashes can be used in cement. She also mentioned that better results can be acquired if this method is coupled with other established methods to clean water such as coagulation. In that way, less quantity of solid can be used as well. It should be noted that innovative methods like the above must be given serious consideration and attention, as a means to reduce the existing water pollution in the country.

Documents

th May 2010 - Federation of Chambers of Commerce and ... alerts/en/2010/April 16, 2010.pdfBrand IPL The IPL has become a runaway success todate and is currently ranked as the most