New project for automated data capturing
By Akhry Ameer
HSBC Sri Lanka will review its short and long term plans if the peace process works and in such a situation is also looking forward to an easing of capital controls, its chief executive officer said.
"We hope the peace initiative works which would then result in reviewing our strategic plans. Industry and commerce will take off. We are also looking look forward to a relaxation of capital controls if the war ends," Nicholas Cherrill said in an interview with The Sunday Times Business.
He said the bank was hoping the government would relax regulations on hedging mechanisms like interest rate swaps.
Referring to the bank's 2001 performance, Cherrill said, "Although, the past year has been difficult, we have been extremely successful due to the loyalty of our customers. This is probably because of our services."
Some of the other developments include the re-designing of the bank website to provide a local flavour and a need-based operational structure. The website has now totalled over 80,000 hits.
Last year HSBC, said to be the market leader in credit cards, raised its credit card customer base to 98,000 while introducing various asset products for the retail banking sector.
This year HSBC is planning to launch a children's savings product that will complement its product portfolio enabling it to cover all sectors of the market.
Plans are also afoot for a public launch of HSBC's Internet banking service that was introduced to existing customers last month.
Cherrill said the terrorist attacks (in the US) last year has compelled HSBC to keep a tight rein on its Sri Lanka branch to prevent possible money laundering activity.
"Internet banking and other modern day technologies provide conveniences that could be easily used to transfer illegal money. Banks need to plug such loopholes.
As an international bank HSBC also has to take stringent measures to stay clear of these accounts."
The bank is hosting a conference in March for Sri Lanka's corporates on payment and cash management with an international panel of speakers.
The software of its state-of-the-art call centre will also be enhanced with the aim of better monitoring of staff and increased support service levels to customers.
The new software will help staff to make suggestions to customers on handling surplus deposits, upgrading their account, etc.
LOLC is the first non-bank to become the Participative Credit Institution (PCI) for the Indian line of credit in which the Bank of Ceylon acts as the apex bank.
An LOLC statement said an agreement to this effect was signed by Sarath Silva, Bank of Ceylon general manager and Raj de Silva, managing director of LOLC last week.
LOLC said it expects to extend this facility to their current customer base which represents all sectors of the economy.
The institution is also the first non-bank PCI under the Tea Development Project funded by the ADB.
The Indian line of credit amounts to US $ 100 million and has been given to the Sri Lankan government by the Indian government to be disbursed over a three-year period.
The Business Quiz 2001-2002 organised for the sixth successive year by the CIMA Students' Society will be telecast today at 8.30 pm on ITN.
The society said in a statement that KMPG Ford Rhodes Thornton and Co and the Mercury Institute of Management will battle it out for honours in today's finals. Dian Gomes, president of CIMA Sri Lanka will present the trophy (seen in picture) to the winners.The quiz is sponsored by CIC Paints (Pvt) Ltd and co-sponsored by Sri Lanka Telecom.
Point of View
(The following is a response from a tea analyst, who requested anonymity, to The Sunday Times Business story last week headlined "Unilever plant closure blow to tea hub hopes").
The Ceylon tea industry needs to put aside pointless discussions about making the island an international tea hub and focus on what is possible and important - value added marketing of Ceylon tea by Sri Lanka companies. That is the only practical way forward.
After all, producers of Scotch Whisky and French Cognac did not wait with bated breath for foreign companies to come in and benefit from their natural resources and competitive advantage.
Firstly, there is no industry vision of making Sri Lanka "an international hub for global tea trading" by allowing all types of teas from many origins to be imported into Sri Lanka for blending and packing. This has been the desire of a few trading companies and has never been agreed as an industry vision, certainly not by the tea plantations firms and Sri Lankan brand owners.
Secondly, the closure of the Unilever tea plant had very little to do with tea. In late 1999, Unilever unveiled a group wide programme entitled "Path to Growth" in response to a falling stock price and stock analysts' criticism of lack of focus compared to Unilever's rivals like Proctor and Gamble.
The key objectives of the programme were to phase out the smaller, less profitable brands and to make the supply chain shorter by locating plants in or near consuming markets. As part of that plan many of the markets that Colombo was supplying were reallocated to regional or in-country plants. For example, Russia, which was a major customer for the Colombo operations, has set up domestic manufacture in response to high import duties on packeted tea.
Sri Lanka, being remotely located from large consuming markets, had became unviable. The labour issues obviously played a part in this decision but the primary consideration was the group wide refocusing programme. There was an attempt to locate the UAE plant in Sri Lanka about five years ago and one of the several obstacles to that was the restriction on free imports of tea. However, many other considerations such as the political situation and the geographical location also played against such a possibility.
The plant primarily produced teabags; using well over 90 percent imported teas so the benefit to Ceylon Tea was very limited. Unilever's bulk tea purchase operations will continue unaffected, although the role of Ceylon Tea in their brands is very limited and continues to decline. Other tea companies are unlikely to locate a plant in Colombo even if free imports are permitted.
Tetley, due to their Tata connection, would naturally favour India as a location. Twinings are a value player not a volume one, hence capacity is not an issue for them and they would continue packing in the UK. Russian packers, due to tariff reasons, will continue to pack in Russia. There are no other global players. The tea industry has consolidated to such an extent that the regional brands have disappeared, acquired by the big players. Who does that leave to potentially come into the Sri Lanka tea hub, as espoused by certain sectors of the industry?
Sri Lanka has signed a double taxation relief agreement with Iran which is similar to agreements the country has concluded with others and provides incentives to stimulate foreign investment and transfer of technology.
A Finance Ministry statement said the agreement was effective from December 26, 2001 and provides for concessionary rates of tax on dividends, interest and royalties.
"In terms of tax benefits, an investor would be given credit in his home country not only for the taxes that he actually paid in the other country but also for the taxes 'spared' by the other country," the statement said.
The agreement also provides for the exchange of information between Sri Lanka and Iran to facilitate the enforcement of the provisions of the agreement and to assist in the prevention of fiscal evasion with respect to income tax.
Merchant Bank of Sri Lanka (MBSL) plans to launch equity fund management based on the MBSL Midcap Index with a brisk kick off, as the stock market strives to rebound from the prolonged depression.
The company said that although the market has seen a notable volatility, linear trends show that the market is on the recovery path. "We could also expect more fire as the government's efforts on peace negotiation progresses and the widely expected global economic recovery, starting mid-2002, makes headway," the statement said.
MBSL says that its MBSL midcap stocks have notably outperformed the market ever since it was introduced. Figures show that over the last three years the MBSL Midcap Index has offered an average return of 15% whilst the All Share Index (ASI) and the Milanka Price Index (MPI) have offered only 4% and 5% respectively. In 2001, MBSL Midcap offered a mammoth 66% return, which is far above the returns of the other two indices.
Visitors from South Asian countries can enter Sri Lanka without visas, the government said in a major step towards attracting tourists from other countries in the region.
Tourism Minister, Gamini Lokuge, said travellers from India, Pakistan, Bangladesh, Bhutan, Nepal and the Maldives would no longer require a visa to visit Sri Lanka. The move was effective from January 23.
Visitors from South Asia can obtain a one-month visa on arrival at the airport or harbour just like most travellers from the west. A longer stay would require permission from the Immigration and Emigration Department.
Lokuge told a news conference that the government has allocated 440 million rupees for the promotion of tourism this year. Plans to improve tourism include revamping and seeing the industry through the present crisis and aiming to fulfill the target of 400,000 tourists this year.
It also includes tapping new markets, launching confidence-building exercises and offering training to some 300 people through hotel schools.