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Fitch to rate three banks
Fitch Ratings Ltd, the country's top rating agency, is currently working on ratings for three of Sri Lanka's top banks and two corporates, its CEO Ravi Abeysuriya said.
"Corporates are realising the importance of a ratings and we are having some work now," he said. The agency has completed 22 ratings so far of which only nine have been announced including Hatton National Bank.

"The other 12 companies including some banks are reluctant to go public with the ratings as they are low ratings. That's not good for transparency in the corporate sector."

The company had earlier planned to sell its local stake to Crisil, the Indian ratings agency and negotiations were underway with a team from Crisil doing a due diligence study in April, but the discussions broke down as Central Bank authorities were unhappy over the Crisil proposal to also offer consultancy and risk management services for corporates, along with ratings. Market sources said Fitch has now dropped plans to sell off its stake.

Anti-dumping law protects local industry
By Rajika Chelvaratnam
The new Anti-dumping and Countervailing Duties Act now being drafted would offer more protection to local industries from cheap imports. The Bill will codify certain provisions in the General Agreement on Trade and Tariffs and the Agreement on Subsidies and Countervailing Measures.

It gives legal backing for the investigation and imposition of anti-dumping duties and countervailing duties with regard to products imported to Sri Lanka for the first time.
"Other countries have been using their national legislation to counter dumping activities. What we didn't have was the national legislation which we have now," said Dr. Dayaratna Silva, Deputy Director of the Department of Commerce.

The World Trade Organisation agreement provides what is known as 'WTO sanctioned Trade Remedial Actions' to protect domestic industries from unfair trade practices by other member countries. However an agreement would not be as binding as legislation.

The Bill will confer powers on the Director General of Commerce to investigate whether a product is being dumped, whether it is causing injury to local industry and whether there is a 'causal link' between the dumping and the injury caused. The investigation must evaluate all relevant economic factors that have a bearing on the state of the industry in question. The protection under the Bill will apply only if there is material injury to the competing domestic market.

The Department of Commerce has the expertise to handle any investigation and even though the Bill authorises only the director to handle any complaints of dumping there will be a separate division in the Department of Commerce to handle the investigation together with the Director, said Dr. Silva.

Up to now Sri Lanka has had no protection from a company exporting to the domestic market products at a rate lower than the price in the local market. Such an action done systematically would eventually destroy the home market and give a monopoly to the exporter, who can later begin to sell the product at a higher price.
An anti-dumping action will empower the government to charge an extra import duty in excess of bound duty rates on the particular product from the exporting country in order to bring its price closer to the 'normal value' or to remove the injury to domestic industry in the importing country.

In the determination of 'normal value' the Bill authorises the Director General to determine the normal value of an investigated product on the basis of the price paid for the product when sold for consumption in the domestic market of the exporting country or the price paid for that product in the importing country. The Bill also says that in the event there is no comparable price in the importing or exporting country then the normal value would be the price in which the product is sold to a third country or the cost of production plus a reasonable amount for profits.

Under the draft Bill it is possible for the injured industry to initiate an investigation by a written application made to the Director General of Commerce. All interested parties (whether for or against the application) could also be joined in this application. However the number of persons who support the application must constitute not less than twenty five percent of the total production of the product in question. It is also possible for the Director General to initiate the investigation in special circumstances.

In accordance with the WTO, the Bill provides that anti-dumping investigations are to end immediately in cases where the authorities determine that the margin of dumping is insignificantly small, that is if it is less than two percent of the export price of the product or if the volume of dumped imports is negligible. It is negligible if the volume of dumped imports from one country is less than three percent of total imports of that product. This is in order to prevent frivolous charges.

The Bill also provides for the imposition of a duty on subsidies granted by other countries. Therefore if a country offers a subsidy on a certain product this would create a state of unfair competition to countries that do not grant subsidies. This Bill will ensure that Sri Lanka could impose a duty on products with subsidies in case there are unfair trade practices by other countries affecting the Sri Lankan industry.

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