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Mobitel wants to be No. 1 in three years
Sri Lanka Telecom (SLT), which concluded an IPO selling off a 12 percent stake in the company, says it hopes newly acquired Mobitel will be the top mobile operator in three years, company chairman Thilanga Sumathipala said.

"We want Mobitel to operate as an independent company and be the number one mobile operator in three years," he said, adding SLT will provide all the financial backing required.

Sumathipala, a former Cricket Board chairman and businessman who took over SLT and has now successfully steered an IPO that has been stalled for more than two years and also ended a costly management contract with NTT Japan without much fuss, said SLT Tele shops would continue to sell mobile phones of all operators including Mobitel.

The SLT chief, pleased with the success of the IPO raising Rs 3.25 billion, noted that this was one of the best examples of a successful privatization and a listing process. "The offer document was one of the best seen in the share market. It cited all the risks, disclosed everything and held back nothing."

Meanwhile a statement from issue manager DFCC Bank said retail investors would be given preference in the allocation of shares under the IPO, which the government has decided to limit to a 12 percent stake despite it being oversubscribed.

Priority would be given to domestic retail investors, domestic non-state institutional investors and foreign investors in the allocation of shares. Applications from state controlled investment funds and institutions would be accommodated only after satisfying the demand from private and foreign sources, the statement said.

"The basis of allotment for the SLT shares emphasizes the government's desire to make progress in the development of the capital market by creating a broad-based share owning democracy and encouraging foreign portfolio investment," it said.
The response, especially from retail applicants, was "unprecedented" with over 23,000 applications being received, the statement said.

Stockbrokers said the government probably did not get enough subscriptions to exercise its option to raise the stake on sale in the IPO to 15 percent. "From SLT's perspective, the IPO has enabled a true privatization of the company with a likely increase in its shareholder base to over 30,000, including existing shareholders," the statement said.

To afford maximum participation by the private sector, the government has decided to scale down allocations on the larger applications made by the state controlled investment funds and institutions.

Accordingly, the resulting subscription profile after allocation is expected to be as follows: domestic retail - 34 percent, domestic non-state institutions - 23 percent, state institutions - 27 percent and foreign - 16 percent. Sumathipala said the NTT management agreement which cost SLT, US $ 5.5 million a year was also amicably terminated with the company retaining the NTT-nominated CEO and the CFO

"We agreed to keep the CEO and CFO as per the shareholder agreement, working on monthly salaries paid by SLT. The company is saving 45 to 50 million rupees a month after the management agreement ended," he said.

Udaya Nanayakkara heads Pramuka
Travel trade veteran Udaya Nanayakkara was last week appointed the new chairman of Pramuka Savings and Development Bank Ltd. after Rohan Perera resigned.
The bank's operations were suspended by the Central Bank in October because of alleged irregularities in its finances.

Central Bank officials said they had no advanced knowledge of Nanayakkara's appointment. Nanayakkara said he had informed the Central Bank after he was appointed and said he was unaware of any requirement to tell the Central Bank beforehand. Nanayakkara said he hopes to reopen the bank "within the next two or three weeks" and that the depositors' money was safe.

"We're quite liquid," he said. "It is just a matter of re-staring the business." He denied there were irregularities in the bank's accounts which are being probed by the Central Bank following allegations that the bank was illiquid, found it difficult to pay its liabilities, and had a large amount of non-performing loans.

The Central Bank suspended Pramuka for a maximum period of 60 days, starting October 25.

WTO rep nearly loses his job
Sri Lanka's WTO representative in Geneva, K. Weerasinghe, who was appointed Chairman of the WTO Customs Valuation implementation committee, almost lost his position when he faced strong opposition from other countries due to his failure to implement the agreement in his own country.

However, he retained his job after a last ditch effort by Sri Lankan authorities, including members from the Customs and Ministry of Commerce, in which a visiting WTO counsellor was assured the agreement would be implemented on time.
The authorities had invited WTO counsellor, Xiobing Tang, who was in the island in late October 2002, to inspect the measures taken by the country in its efforts to implement the agreement as per the deadline.

Tang had been very impressed with the seminars and workshops that were organised in preparation for the agreement to take effect, the Sunday Times learns.
He had also been given a copy of the proposed Bill, which he claimed as reassuring evidence that Sri Lanka was ready to implement the agreement on November 1. However, the bill has not been passed thus far.

Importers grumble over new shoe tax
By Hiran Senewiratne
Shoe importers in Sri Lanka are complaining that a new tax imposed in the 2003 budget to protect the local industry, is unfair and could affect consumers rather than help them.

"The future is going to be difficult and bleak for importers under this new tax system" Wijitha Perera, vice president of the Shoe Importers Association said.
He said the tax of a flat rate of Rs 100 imposed on every pair of imported shoes with effect from November was not practical as there is a big demand for imported shoes from all sections of the public.

The tax was to be effective from November 6 but was delayed till November 30 at the request of importers to help clear a backlog at the port. Local industry officials concede that imported shoes, which account for about 30 percent of the demand, are less expensive than locally manufactured shoes because of cheaper production in countries like China, India or Thailand.

Shoe importer M.S. H Ameen said the tax was unfair as a flat rate had been imposed without any categorization such as kiddies', children, and ladies and gents. "Whether the shoes cost Rs 200 or Rs 2,000, the same rate of Rs 100 is applicable."

Chairman of the Ceylon National Chamber of Industries Ranjith Hettiarachchi, also a director at local manufacturer DSI, said the tax was a safety net for small shoemakers, not for big manufacturers who are part of a cottage industry, adding that there was a lot of dumping of imported shoes.

He said that 60 percent of the country's population didn't wear shoes because of the cost and either wore rubber slippersor were barefoot.Mahesh de Alwis, Financial Controller at the Bata shoe company, said the imported shoes that flooded the market didn't conform to proper standards. Under valuation of imports was a common problem allowing importers to sell products cheap. He said what is more important is to permit imported shoes only if they cannot be manufactured in Sri Lanka.

Indian Oil signs deal with BOI
Indian Oil Corporation (IOC) last week signed an agreement with the Board of Investment to supply petroleum, petroleum products and also to provide retailing infrastructure facilities in the country.

The agreement covers petroleum, petroleum terminals, storage depots with fuelling facilities, information kiosks and cyber cafes, the BOI announced.
It is one of the largest foreign investment projects in Sri Lanka under the BOI regime with an investment amounting to $62 million.

Under the deal, IOC will use the excess refining capacity in India to meet Sri Lanka's petroleum product import requirements.
Sri Lanka imports about 1.2 million tonnes of petroleum products each year.

CR survey reveals disappointing results
By Mihiri Wikramanayake
A recent survey on corporate responsibility (CR) among Sri Lankan businesses has revealed discouraging results with many firms having only a superficial idea of the issues involved.

The survey indicated that only one third of the companies have a public environmental policy and that resource allocation for environmental protection and upgrading was not at a satisfactory level.

Most companies do not seem to have understood the concept of issues such as sustainable development, gender issues, biodiversity, environmentalism, human rights, equal opportunities, and HIV/health issues which go hand in hand with CR.
In the case of community issues, the survey indicates no clear policies among most companies regarding the rights and needs of host communities while welfare activities are largely restricted to sponsorships and donations to some charitable causes.

Corporate responsibility goes well beyond business's traditional involvement with charities; it involves concerns as varied as human rights, family-friendly workplaces, environmental protection and community development. In Sri Lanka's corporate world, responsibility is a misnomer.

The survey, carried out by LGA Consultants and conducted by TERI-Europe and the New Academy of Business, UK, discovered that the Sri Lankan business community is generally 'conservative and bound by tradition.'

Fifty private sector organizations from manufacturing, agriculture, service and conglomerates were surveyed on CR. Many perceived corporate responsibility as obligatory sponsorships of sporting events, donations to charities and other social service activities.

Then, there is the politicization and historical factors of industrial and commercial development in the country. According to the survey conducted by Chandana Rathnasiri of the Department of Marketing Management of the University of Sri Jayawardenapura, the corporate sector has been subjected to 'political manoeuvering which has affected the larger fabric of society.'

Survival for most has meant casting their lot with the political power base of the time and the funding of politicians and their parties has become the accepted norm.
Another unacceptable principle is that, in general, business philosophy indicates that consequences do not matter in the quest for corporate profitability; i.e. the recent Enron and WorldCom scandals in America.

In Sri Lanka, many industries have to comply with foreign investor codes of responsibility to bring about cleaner and socially conscious developments if they are to vie for investment opportunities. Many players, for example, in the garment industry are subjected to scrutiny by investors who demand a correlation between good corporate citizenship and biodiversity, hazardous material handling, toxic reduction, proper elimination of resource waste and energy efficiency.

What influence, therefore, can investor and consumer pressure have on the government and the companies? Better awareness of CR will have to be implemented to benefit the country as a whole. Standards for CR must be established with a development of a rating system based on specific industries which will then enable the country to develop and expand ethical business practices.
Customers, financiers and investors must also take it upon themselves to deal with businesses that practice CR as an integral part of business.

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