30th April 2000
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Plantation salary talks crumble; hope lingers

The latest round of negotiations between the plantation management companies and the workers unions has crumbled as they failed to reach a workable agreement. But both parties said they would come to an agreement soon, as they feared an upheaval in the plantation industry.

The unions disapproved the management companies' offer which was lower than their demand but included other financial fringes. 

Union officials said that they would like to see a real increase in the basic wage before discussing the fringes.

The unions have requested the wages be increased to Rs. 131 for tea estate workers and Rs. 115 for rubber estate workers.

Union officials said that they were willing to negotiate, but wanted a higher wage than that was offered at last week's meeting.

Plantation management Companies recently said that uneconomic and uncertain prices made it impossible for them to meet the unions' demands. They said it was difficult as it was for an industry of an estimated 600,000 workers. 

The Planters Association in a recent media release said that such a wage demand by the negotiating trade unions would spell unmitigated disaster on an industry that was struggling to keep its head above water. They claim that such an increase would catapult production costs by Rs. 4,000 million a year due to the labour intensity, causing severe damage to the industry. 

The release said this situation was compounded by lower yields compared to other large manufacturing countries. Yet, they claimed that wages and incentive payments (over kilo rate) in Sri Lanka was the highest in the world. 

"A wage package linked to productivity is therefore important," the Association said.

"Therefore the PA hopes that the long term interests and objectives of the plantation industry be reflected in the social partners jointly striving towards a wage policy that will stimulate productivity improvements, incentives estate operations and enable a fair sharing of the gains from improved market conditions," the release said.

Anderson to ensure NIC

A team of experts from Arthur Anderson is expected in Sri Lanka within the next few days to start work on National Insurance Corporation's (NIC) re-structuring process.

Officials from SJ Associates, who represent Andersen Worldwide in Sri Lanka said that, the team's work would include looking raising NIC's financial reports to international auditing standards and look at the local legal and regulatory framework.

PERC selected Arthur Anderson to advice them on NIC's privatisation, which is scheduled to take place later this year.

Officials from Arthur Andersen were in Sri Lanka last week to attend the South Asia Regional Representative Firms Conference. Antoine Mattar of UK said the objective was to discuss Arthur Andersen's new strategy with regional members, and to develop an action plan for the region.

The new strategy includes, providing professional services for assurance (auditing), business consulting (average growth 35%), corporate finance, e-business, advising clients on accounting human capital, providing legal services to clients, risk consulting and traditional tax services. Arthur Andersen has also embarked on outsourcing accounting services of companies. For instance, British Petroleum has outsourced its entire global accounting services to Arthur Andersen.

Arthur Andersen is presently placed second globally, behind PriceWaterhouseCoopers.

We need more financial experts, says Sasia

The Sri Lanka Association of Securities and Investment Analysts (SLASIA) is urging more Sri Lankans to uplift the local capital market by obtaining Chartered Financial Analyst (CFA) qualification.

CFA is a rigorous three year course, academically equivalent to a Masters Degree in Finance. Employers recognise the value of the CFA designation and the potential benefits of the knowledge, skills, and professionalism that Charter holders can bring to their organizations.

The course is administered globally by the Association for Investment Management and Research (AIMR) which SLASIA represents in Sri Lanka.

While many developing countries forward candidates for the examinations, few succeed in completing all three modules and being admitted as charterholders. However, 19 out of 80 Sri Lankans registered for the programme are CFA's and are presently resident in the country, DCR Lanka Ltd. Managing Director, Ravi Abeysuriya said. 

"This has directly resulted in raising the ethics and professional standards of our capital markets," he said.

Selecting a CFA charterholder to recommend investments or manage portfolios, means you get a professional who has extensive knowledge and understanding of the financial markets and who annually affirms a commitment to adhere to a stringent code of ethical conduct. 

"That is certainly a definitive international standard for measuring competence and integrity for the profession of investment management," Abeysuriya said during a media briefing. "Having a CFA behind your name gives instant international recognition and its an instant guarantee of professional respect," he said.

CFA course was first introduced in Sri Lanka in 1995 by USAID under a capital markets development programme. Initially USAID sponsored Sri Lankans interested in qualifying for a CFA. Abeysuriya incidentally is the first Sri Lankan to successfully pass the programme conducted in Sri Lanka. USAID has since stopped sponsoring Sri Lankan students. Though each stage costs around US$ 1000, most financial companies refund the entire cost of the CFA to employees who succeed in obtaining their charter.

At present, there is an increase in competition between local financial institutions to recruit the CFA charterholders.

Mind Your Business

By Business Bug
  • All's well that ends well
  • No more dollars
  • Health is wealth

  • All's well that ends well

    The service provider had apparently fallen foul with some of those who minister to their needs over a stolen e-mail that made headlines sometime ago and was being hounded for allegedly unethical business practices. 

    But saner counsel prevailed, especially after it was known that Uncle Sam will be displeased if the provider is punished. Now they have buried the hatchet and the provider even published a supplement in the state media recently. All's well that ends well, or so it seems... 

    No more dollars

    The elephant may have passed away but the incident is having severe repercussions in the city's financial houses. 

    Three major overseas investors- based in Hong Kong and Singapore- who held substantial stocks in Colombo gave instructions to their brokers to pull out their holdings over the next few weeks and others are expected to follow suit, depending on the events of the next few weeks as most are bracing for a do-or-die battle for Jaffna. 

    And the now familiar standing orders left by the departing investors were- no more dollars in Colombo until after the general election... 

    Health is wealth

    The state insurance companies were 'restructured' and so were the state banks, to some extent at least. The last bastion it seems is the state health sector where there have been rumours of a semi-privatisation. 

    But now the powers that be have decided that privatising this sector could lead to catastrophic political consequences, so those plans have been shelved. 

    Instead the boys at the Treasury are toying with ideas to make the sector more profitable and a mandatory health insurance scheme for all state employees is being seriously considered.


    Celltel gets INFINITY

    Sri Lanka will have three Global Mobile Standard (GSM) networks, with the launch of Celltel's INFINITY service this week. 

    We understand that Celltel hopes to introduce a completely new tariff for their GSM phones that will be lower than their existing tariff. 

    And also cellular handsets at a special promotional price. However, Celltel officials declined to confirm the rumours, but said that it was a surprise. 

    Celltel's CEO, Michel Schluter said Celltel would unveil several new concept tariff packages for GSM users with the launch this week. 

    He said that these tariff packages combined with what he called "a special surprise" offer on GSM handsets would make the latest technology affordable to the masses. 

    The new GSM network will operate alongside its existing islandwide (except North and East) analog coverage. 

    Services such as short message services (SMS), caller line identification and other value added services would be rolled out gradually within the next few weeks, Mr. Schluter said. 

    The GSM network expansion will be carried out in phases that would initially cover the greater Colombo area and a few others and eventually into other areas. 

    Officials said that customers had a unique advantage as they could own and operate two handsets in the two networks. 

    They said that any customer owning cellulars in both networks could make calls simultaneously while only one would receive calls. 

    Company officials said the Celltel's GSM network was a flexible system upgradable to the next new standard, GPRS (General Packed Radio Switched) technology.

    In addition, Mr. Schluter said an alliance with Media Solutions, a Sri Lanka based software developer that real time wireless access to the Internet directly from mobile phones would be available in the next few months.

    He said the virtual office 'Mobile OA' and a WAP solution would enable GSM subscribers to maintain a virtual office on the internet, with real time facilities to receive requests for appointments and schedule them, as well as to access e-mail, calanders and information from any website in the world on their mobile phones. 

    Rs. 3.5 bn injectors for Suntel

    Suntel announced the opening of its third gateway in Kandy last week . The gateway will have an initial capacity of 6000 lines expandable to 40,000 lines. 

    Suntel is also preparing to raise Rs. 3.5 billion for funding its up coming projects. It is most likely that the International Finance Corporation (IFC) would pitch in and assist to raise funds. Suntel MD, Hugo Cedeschiold said they were in the process of finalising details with the IFC and would come to a conclusion soon. Officials said that this might be the last external fund raiser as officials feel confident that by the end of the present expansion project, the company would generate sufficient internal funds to finance the next. Suntel services approximately 60,000 operational customers and expect an annual average growth of 20,000 customers. 

    Meanwhile, Suntel's parent company Telia AB of Sweden is planning a float, hopefully in June. There were some initial doubts about listing just after the recent correction of all major bourses. But officials said that work was going ahead for the listing and that there was no plans of pulling out at present. Up to 49 percent of Sweden's former monopolist Telia is an IPO scheduled to go for an. Telia has been valued by the market at up to $46 billion, and although this valuation is unlikely to hold in the current market climate, the expected 25-30 percent initial tranche of the listing should net at least $10 billion.

    The Department of Industry has to await the parliamentary rubber stamp before going ahead with what will be Sweden's largest initial public offering, led in the Nordic region by brokers Carnegie and Enskilda Securities. Morgan Stanley Dean Witter and Warburg Dillon Read will be lead managers for the international offering. Suntel is a joint venture company comprised of Telia AB of Sweden, Asian Infrastructure Telecommunication fund of Hong Kong, the Metropolitan Group of Companies and the National Development Bank (NDB). 

    The cold shoulder

    A Lanka Internet Services Limited (LISL) press release issued last week said that US authorities were taking a serious view of the ongoing developments with regard to the company.

    The release said that LISL was a licensed telecommunications operator providing, inter alia, enhanced voice services in terms of and within the confines of their license.

    And that all aspects of the operations were legal an authorised by the license and the law, and none of the interconnections with other operators could be classified as unauthorised.

    The release said that although indirectly accused of being engaged in unauthorised activities, no one in authority has to date notified the Company of the same. It said that nor were they required it to tender explanations in respect of the same or otherwise taken any legitimate action in respect of the same although the law specifically provides a mechanism for dealing with operators suspected to be violating their licenses or the law.

    It said that instead, various state authorities had resorted to roundabout methods of putting pressure on Lanka Internet to cease its enhanced voice operations.

    The issue took light when Electroteks commenced enhanced voice operations in 1998. Sri Lanka Telecom subsequently took Electroteks to Court on the basis that Electroteks' enhanced voice operations violated SLT's monopoly. SLT obtains an enjoining order against Electroteks. 

    However, the enjoining order was revoked and Electroteks is now providing enhanced voice services. Lanka Internet also provides enhanced voice services. But company officials say that since they began providing enhanced voice services, telecom authorities have been delaying their approvals, hampering, their expansion plans. 

    To bill or not to bill

    Whilst applications are certainly at the forefront of potential WAP players' minds, they are by no means the only concern. How to bill for WAP is one of the most enduring commercial puzzles to face the industry so far.

    Indeed, according to Tero Huostila, a representative of Finnish operator Sonera and the WAP Building Expert Group, it is "the biggest question". One of the principal challenges is the fact that the Internet is traditionally free, whereas telecom services are traditionally charged.

    There are several options for who should bill-the content provider, the telecom provider, and the credit card company or a third party billing agency. There are as many based billing agency. There are as many options again for how to bill: transaction based billing according to service usage; flat rate billing; subscription based monthly fees; making everything free, or a combination of the above.

    Sonera has opted for transaction based billing, with prices ranging from US$.20 to $1.80 depending on the service. These price are identical to those charged for SMS based services although users pay a $0.20 per minute surcharge for using high speed circuit switched data. Huostila raised a laugh when he explained that the most popular service so far has been checking the bill. "They spend money to find out how much they owe us," he grinned.

    As if operators really needed to be reminded, Eric Wurmser of Webraska Mobile Technologies urged them not to deny themselves money. Whilst some have advocated offering free service, Wurmser commented: "Users are used to paying for services. Don't forget this." He came down squarely on the side of revenue sharing claiming that the fact that all parties benefit directly leads to better co-operative development of high quality services.

    At the same time that some industry players are suggesting that services should be offered for free, others AE hoping that operators will not have to pay content providers for their information. John Strand, of strand Consult soon disabused operators of this notion. They must be prepared to pay for the information one way or another he said.

    As is always the way with these events, no definitive answers were given. But unlike some conference sessions, which see the numbers depleting progressively throughout the event, delegates remained fairly well rooted to their seats. 

    This is an indication of what everyone does seem to have realised about WAP: namely that there is big money to be made in the WAP world and there is little choice for operators but to get involved if they want to keep up with their competitors.

    WAP: what, why and when

    Operators, vendors and content providers are leaping onto the world of WAP (Wireless Application Protocol). But is it the future? We will have to wait and see. We take a look at this probable piece of history or hype.

    Phones and computers, two of the twentieth century's greatest inventions are about to converge, putting the Internet at your fingertips, anywhere, anytime. 

    The idea is to create a single smart gadget that will allow people to check their e-mail, consult the Internet, plan their schedule and, of course, make telephone calls; in other words, a mixture of an electronic organiser, a personal computer and a mobile telephone.

    Yes, we have managed without it, but we will surely need it to manage the wealth of information that will flood our futures. 

    And, many billions of $$$ and sleepless nights later we have an answer, actually many answers.

    Over the years the Cellular and computer companies have engaged in a remarkable collaboration to produce the infrastructure needed for a smooth convergence between the two, resulting in an orgy of alliances involving most of the big names from the two worlds.

    Around 90 companies joined the WAP (Wireless Application Protocol) Forum in order to develop a common protocol that allows users to gain access to the World Wide Web without typing fiddly letters. The Forum predicts that by 2003 as many as 525m of the WAP handsets that are beginning to appear on the market may have been sold in the United States and Western Europe.

    Over 1,000 companies have come together on another project, Bluetooth (named after a ninth-century Danish king with a reputation for bringing warring tribes together), designed to allow various wireless devices to talk to each other over infrared beams so that people can synchronise the information stored by their electronic servants. The most ambitious of these alliances is Symbian. In June 1998 Psion, a British high-tech manufacturer, signed a deal with Ericsson and Nokia in a bid to turn the EPOC operating system that drives its palm-top organisers into the de-facto standard for smart phones. Earlier this year Motorola, NTT DoCoMo and Sun Microsystems joined the consortium, followed a little later by Matsushita.

    The wireless industry has no doubt that there is a gigantic market for these gadgets. But do people really want a single device that can do everything? Most like their mobile phones small and their windows on to the Internet large. And is there enough bandwidth around to deliver data as well as voice? Mobile networks the world over are already struggling to accommodate the surging volume of voice traffic, and can deal with data only at a snail's pace.

    However, the big breakthrough might come when the International Telecommunication Union (ITU) begins to distribute higher frequencies in the next few years. These frequencies will allow wireless users to transmit data at lightning speeds. They will also begin to solve one of the most irritating problems plaguing mobile users today: the fact that, because of an anarchy of standards, they are often unable to use their phones when travelling abroad.

    Unless if sceptics assumption that people will use their phones to browse the web in the same way that they use computers turns out to be true, we are in for trouble with the present bandwidth. But, most others say that customers are much more likely to use them to exchange short messages and find specific information (unless they choose to plug their phones into their PCs and get on to the Internet wirelessly, an increasingly popular option for workers on the move). Internet content-providers are already tailoring their products for phone users: getting rid of power-hungry pictures, for example, and distilling long-winded news stories into the bald facts.

    Already there are many WAP web sites offering from everything to anything that is available on the World Wide Web (WWW). NTT DoCoMo reports that there are already more than 1,000 companies providing web pages for its phones. 

    NTT DoCoMo has sold more than 1m of its Internet-based i-mode phones in the six months since they were launched, and received remarkably few complaints. The rest of the world's producers are getting ready for a surge in demand as they release their products over the next few months. Motorola, for example, estimates that by 2005 the number of wireless devices with Internet access will exceed the number of wired ones. These smart new phones will not only give another boost to the sale of mobiles. They will change the nature of the Internet economy, making personal computers far less important, yet at the same time tempting many more people on to the information superhighway.

    It might not be as pleasant as surfing on a 15-inch screen though. 

    One of the most recent addition to WAP web sites by an multinational company was Audi's WAP site.

    However, a ferocious battle is raging over who controls the operating system that will drive these new devices. One of the reasons for founding Symbian was to prevent Bill Gates from turning the wireless world into another part of his empire. But Mr Gates is not easily thwarted. Microsoft is doing everything in its power to ensure that Windows CE, a slimmed-down version of the system that runs most personal computers, finds its way into the world's mobile phones.

    But is this really going to be the next big thing in cellular telephony - and if it is, what are the killer services/applications?

    Instant access to information on planes and trains, restaurants and hotels, parking places, cinemas, sports results and so on will doubtless prove useful to consumers once the price of next-generation smart phones comes down to high-street levels. However, that will take time - two years according to some industry observers. Subscribers will not trade up until the services they want are available and developers may wait until the big numbers appear. It's a classic chicken and egg scenario. 

    There will inevitably be a broad, horizontal consumer market for information services, but in the near-term the business community will be the early adopters - they will be the driving force behind this development. Mobile e-mail can be seen as a killer application. Calls made to a mobile reach people, not places, so it is logical to extend the concept to e-mail as some critics say. 

    3Com, a Silicon Valley-based company that makes the PalmPilot personal organiser (soon to be spun off), is betting against the all-in-one solution, concentrating instead on ways to enable its devices to communicate with any kind of phone.

    The company gives warning that "converged products" have been tried before and failed, and that what makes for a great phone does not necessarily make for a great organiser.

    However, WAP is a key, enabling standard. Indeed, in a couple of years we may decide that it was the key standard that brought everything together: phone vendors, suppliers of networking kit, content providers, and heavy hitters from the computing industry. 

    The market for mobile data has always been there, but thin client devices having lite browsers can now access Internet and intranet/extranet hosts - in other words, end-to-end applications are finally arriving. Moreover, when the GPRS packet-switched services are up and running, probably some time next year, all those applications will be IP from end to end. By then we should have Bluetooth and higher data rates - and who knows what else? 

    WAP in Sri Lanka
    Two cellular operators have said that they will offer WAP services by the end of the year. Dialog GSM the first GSM network in Sri Lanka recently launched its WAP test service. Celtell Lanka and analog service provider will launch their digital network this week. Officials said that the system they will be using was upgradable to facilitate WAP services. Mobitel and Hutchinson Telecom the other two operators have not yet disclosed any information regarding its plans to facilitate WAP services. 

    Meanwhile it is understood that internet companies are gearing themselves to facilitate and provide WAP services. 

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