7th October 2001
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E-pact makes one PC into five PC's

E-PACT International (Pvt) Ltd.,is proud to introduce multi-user computer environment for the first time in Sri Lanka a press release said. E-PACT International (Pvt) Ltd., has been appointed as exclusive Distributor in Sri Lanka to sell different varieties of IT solutions manufactured by Austin Federation Ltd., of Singapore the press release further said.

As a result " SupiPi" System was launched by E-PACT recently. "SupiPi" is a System introduced by E-PACT using "BeTwin" software developed by Austin Federation Ltd., of Singapore. Presently BeTwin is used in America, Europe, Africa, Australia and Asian countries. This system helps to turn one PC upto five PC's instead of spending for many computers, anyone can buy one computer and makes it into many according to his requirements. Additional cost has to be made only for BeTwin, Key Board, Mouse, VGA Card and Monitor.

Even the person who already owns a computer, can add more computers into his present system using " BeTwin".

The SupiPi is very useful for organization such as Schools, Training Centres, Cyber Cafes, Hotels, Universities, Garment Factories, Trading Organization etc.

In Addition to saving of 50% of initial investment on computers, the SupiPi carries other benefits such as low maintenance cost, low upgrading expenses and low operating expenses. Instead of many PC's in normal computer environment you have to operate, maintain and upgrade on one PC which leads to save lots of your money, time and energy.

To serve the customers in better way and cope up with their need and demand E-PACT recently opened "One Stop Computer House" in close proximity to Rajagiriya Junction at No. 45, Park Lane, Nawala Road, Rajagiriya.

This showroom is opened daily from 8.00 a.m. to 8.00 p.m. except for poyadays. The showroom offers all kind of computer products such as PC's, Components, Peripherals, Accessories, Consumables and so on.

Step into LifeStyles Furniture Store

Furniture designed in varies shapes, contours and shades, wholesome and solid in design or arty and seemingly of masterpiece silhouettes, is what meets the eye when you step into the lifestyles furniture store. Pleasant staff and a talented interior designer are there to greet you.

The lifestyles inhouse interior designer is full of loads of decor advice on colour themes and lighting effects, she will tell you how best to mix and match a buy, so you have the choice of mixing several pieces of different bedroom suites and combining your very own set or of course, you can take a total matching bedroom suite and add in a single designer chair or extra coffee table, the choices are endless, and you will no doubt find choosing furniture at the life styles furniture store can be a very pleasing adventure you will enjoy.

The lifestyles furniture range is available in a wide choice of colours and wood grains, tones and finishes which means you could buy a single piece to match the rest of your furniture at home. when it comes to wardrobes and cupboards, the store will go as far as matching alternate doors and drawers the way you would like it- just to please you.

Nokia confirms GPRS programmes are on track

Matti Alahuhta, President, Nokia Mobile Phones, reiterates Nokia's intention to release its GPRS products according to its announced plan a press release said. The first units of the Nokia 8310 will become available this month, while the Nokia 6310 will start selling in the 4th quarter, and the Nokia 8390 at the end of 2001.

Alahuhta, speaking at an investor conference, also gives updates on various mobile phone industry related topics. "With the GPRS business system, our industry is moving to a new level of complexity, which means that careful attention has had to been paid to the smooth functioning of all elements of the entire system before the volume roll-out of terminals and services.

Lanka Internet extends through the hills

Lanka Internet, the pioneer Internet Service Provider in Sri Lanka and market leader opened a new branch office at 827A, Peradeniya Road, Kandy as part of its expansion programme a press release said.

The new branch was declared opened by Prof. Pitigalaarachchi Deputy Vice Chancellor, University of Peradeniya and Guest of Honour, His Worship the Mayor of Kandy, Harendranath Dunuwille.

Speaking on the occasion, Lanka Internet Chairman Mr. Kalinga De Alwis said that Lanka Internet's decision to open up a branch in Kandy was due to several reasons:

"Kandy is the 2nd largest town and a prime location in terms of business potential in addition to being a tourist hub.

De Alwis also said that Lanka Internet with its cost effective data communication solutions, state-of-the-art technology, backed up by a service level that no other ISP would provide in Kandy, will certainly change the data communication landscape in Kandy".

Looking Beyond

Recessionomics : A tale of two banks

By Arjuna Mahendran

Sometime in 1996 or thereabouts, Standard Chartered Bank of Hong Kong decided to cash in on its 40% shareholding in Commercial Bank of Ceylon (CBC). The bidders were the main shareholders in HNB and the DFCC. The regulatory bodies decided that the sale did not warrant a formal takeover, which under the SEC law is triggered by the acquisition of a 30% stake. DFCC was thus awarded a 29.8% stake in Commercial Bank.

Thus the DFCC saved the day for the CBC management and shareholders who were petrified at the thought of their main rival, HNB, gobbling them up and spitting out the unpalatable pieces. HNB, whose main shareholder has deep pockets, has long held the ambition of becoming the largest private bank in Sri Lanka, by a wide margin. If they had succeeded in buying CBC then, it would have been a formidable private sector rival to the Bank of Ceylon and People's Bank.

But the Central Bank probably reasoned that there was no need for a private commercial bank to get too big for its boots, whereas a marriage between a development bank and a commercial bank might provide interesting synergies.

In hindsight, the Sri Lanka banking sector lost an opportunity for the emergence of its first large private banking entity. This would have triggered a wave of consolidation in our banking sector, which is becoming a dire necessity for the country's development. I have argued in a previous article that Sri Lanka's banks need to get much bigger if they are to absorb the risks that have to be absorbed in lending to new sectors in an emerging economy such as Sri Lanka. The current fragmented state of the private banking segment also means that the state-owned banks do not face competitive pressures to become more efficient.

Today, five years later, CBC probably sees no real benefit from merging with the DFCC. It has got its own long-term lending facilities so the idea of synergies between the DFCC's long-term lending focus and the CBC's short-term lending is largely illusory. On the other hand, the DFCC desperately needs the retail branch network of CBC to lower its cost of funds and spread its outreach of lending to bankable development projects. Already, DFCC's pre-tax profits this year have been boosted 77% in the Apr-June quarter by the income from its shareholding in CBC. A compromise seemed to be reached by the formation of a holding company in the DFCC. This was initially mooted to enable the DFCC/CBC combine to bid for an insurance company and further diversify its combined prowess in financial activities. But the mere act of forming a holding company has put paid, it seems, to the argument that DFCC and CBC would bring synergies to each other's operations.

Indeed, even the formation of a holding company has run into legal snags with amendments to the Banking Act and the DFCC Act likely to take a while to be passed by parliament.

So what does one make of this muddle?

First, the regulators should NOT stand in the way of mergers and acquisitions in the private banking sector, so long as there is no harm caused to the banking public. The merger of CBC with DFCC will not lead to less choice for the banking public as there are numerous banks, both local and foreign, operating in Sri Lanka today. If one of the bidders had been allowed to acquire the full 40% stake in CBC in 1996 and make a general offer to CBC shareholders then, we could have seen a rapid consolidation ensuing.

Secondly, it is pretty clear now that the two development banks in Sri Lanka have no desire to remain purely focused on development lending. This is in keeping with the international trend towards universal banking. The ultimate beneficiary are the clients who get a complete smorgasbord of banking services at one bank instead of having to patronise different banks for different services.

Allowing development banks to engage in commercial banking activity will not dilute their commitment to long-term lending. Long-term lending is being held back in Sri Lanka by a host of other issues, including macro-economic imbalances stemming from a large fiscal deficit and the slow development of infrastructure to enable the creation of a liquid secondary market in government and corporate bonds.

Bleak future for garment industry?

By Daham Wimalasena

The importance of the garment industry for Sri Lanka and its people is unquestionable.

The apparel export industry is the largest foreign exchange earner with exports in excess of 54% of total Sri Lanka exports and 70% of total industrial exports. But what is more significant is the fact that it provides employment to over one million Sri Lankans both directly and indirectly. This means that 3-5 million Sri Lankans or 28% of the total population are dependent on the apparel export industry for their livelihood.


At present the garment industry is going through a critical phase. The success of the industry is dependent on the availability of export quotas. In other words, the industry is quota driven. This quota system will be phased out by 2005. All competitor countries have allocated large sums of money to improve their apparel export industry by introducing new technology, new equipment, modern facilities, improving the documentation process through EDI - Electronic Data Interchange - in an effort to be competitive and to face the challenges of a quota free era. Sri Lanka is also facing competition as a result of NAFTA - North American Free Trade Agreement - which provides quota free and duty free access. Mexico has now become the leading supplier of garments to the USA. Similarly countries in the Caribbean region, and now more recently Sub Sahara Africa, as a result of the Trade Development Act of 2000, are permitted duty free and quota free status. In contrast exporters from Sri Lanka are called upon to pay duties ranging from 22-29% in the USA.

Consequently, apart from Mexico and the Caribbean region, we now face competition from Sub Sahara Africa where a few Sri Lankan firms have established factories in Kenya, Madagascar and Botswana.

We find today that many factories in Sri Lanka are without work due to the recession in the USA and Europe where spending on clothing is much less. While other countries which are dependent on the garment industry are providing their industrialists with concessions and incentives, our government is silent and is only concerned about who is sitting in the chair at the Ministry of Industries. In addition, the power cut has not only hampered planned production but also increased the cost of production. The rising cost of living and the inadequacy of wages will put more pressure on the industry and make it less competitive with other countries. The government should have awoken from its slumber and introduced a series of measures to keep the industry afloat.

Present position

It is in this background that we have to assess the effects of the disaster at our airport on July 24. This disaster resulted in Sri Lanka being declared a war zone. Difficulties in obtaining freighters to transport our garments and the resulting backlog was to some extent minimised by getting Russian freighters to move the cargo to Dubai and Singapore. This, of course, was at much expense because of the additional cost incurred and the resultant delay due to transshipment time.

The travel warning and difficulties in getting flights to and from Colombo has also resulted in many buyers not coming to Sri Lanka particularly at a time when they usually place their spring and summer orders for production from October onwards.

The situation with regard to sea freight appears critical. The immediate result of the Katunayake disaster was that ships were bypassing Colombo and garments could not be shipped on time. Raw materials required for production on ships that by passed Colombo were unloaded in other ports. Given the fact that buyers are cancelling orders or asking for discounts of 25-50% for delays, many firms will have large unsold stocks and this would result in inability to settle bank dues. Indeed many will find it difficult to pay wages. A number of firms have closed down with many others expected to follow during the year.

The success of the Sri Lanka Apparel Export Industry was to a great extent due to the availability of regular flights and shipments to and from Colombo. Prior to this disaster we had one ship each day to the United States and one ship per day to Europe. Unless this problem is resolved speedily the garment industry in this country is doomed. Does this government have a strategy to bring back the airlines and shipping lines back to our ports? Whatever the government has done is totally inadequate and this is a case of "too little too late".

Terrorist attack in the USA

The most recent terrorist attack in the US is probably the knockout blow to the industry as the market for garments in the US will decline. We need a strategy to sustain this business as well as restore our image as a reliable supplier. A firm offer of support by the government to the US in their war against terrorism is imperative to prevent an unprecedented closure of garment factories in the country. Secondly, Sri Lanka will have to look at other markets more closely and mount a campaign to increase its market share in Europe and also tie up with fashion houses in Europe. Such a strategy would only be undertaken if the government and the banking system assists the industry with a substantial reduction in interest rates now running in excess of 22%. Finally, the effect of the weakened US market, restricted air and shipping services, high interest rates, unbearable power cuts plus inadequate wages to meet the rising cost of living will result in the closure of factories. The government should offer some sort of exit mechanism to reduce staff in factories and thereby prevent total closure of this important industry.

This government was not receptive and sensitive to the problems facing the garment industry for some time. The attack that destroyed the Twin Towers in New York could also be the knockout blow that would destroy our garment industry.

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