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Dispute
could trigger unrest "We consider
this event as an unnecessary confrontation which detracts from national
priorities. Furthermore this has potential to lead to a dangerous
precedent resulting in uncertainty in the minds not only of the
cabinet ministers but also of all institutions and people working
within such ministries," a statement issued by Nihal Abeysekera,
chairman of the Joint Business Forum (J-Biz), said on Friday. It said these
institutions will then work with limited effectiveness and will
not be motivated to take a long-term development view, vital for
nation building. "This will destroy the very fabric of mutual
trust and respect, a fundamental ingredient necessary to implement
the many plans regarding the process of peace and economic restructuring,"
noted the statement issued on behalf of nine chambers and associations. Last week J-Biz
tried without any success to meet the president and the prime minister.
"There was no response to our letters (to the two leaders).
This worries us as the business community has a important role to
play in this country," Abeysekera, who is also chairman of
the Federation of Chambers of Commerce and Industry of Sri Lanka
(FCCSL), told The Sunday Times FT. On top of the
DLB crisis, the scheduled donor meeting in Tokyo on June 9 and 10
increasingly appeared unlikely to take place with the LTTE insisting
that its participation would depend on the government setting up
the northeast reconstruction fund among other issues. A World Bank
spokesman said a preparatory meeting in Colombo - as part of the
run-up to the donor meeting - scheduled for the second week of May
was postponed due to the developments connected to the LTTE’s
suspension of peace talks. Foreign investors
too were concerned over the dispute. A Maldivian investor, part
of the trade delegation that accompanied President Maumoon Abdul
Gayoom to Colombo, is believed to have postponed plans for a $250
million investment in a Sri Lankan hotel project owing to the political
crisis. "If the
two sides are fighting over a minor issue, I wonder what would happen
if the president carries out her threat to take over the Media Ministry,"
said a stockbroker, reflecting general concern that the current
dispute would lead to bigger problems in the cohabitation process. J-Biz comprises
the Ceylon Chamber of Commerce, National Chamber of Commerce of
Sri Lanka, Ceylon National Chamber of Industries, Federation of
Chambers of Commerce and Industry of Sri Lanka, National Chamber
of Exporters of Sri Lanka, International Chamber of Commerce of
Sri Lanka, Employers' Federation of Ceylon, Exporters' Association
of Sri Lanka and the Sri Lanka Bankers' Association. It is expected
to meet tomorrow or on Tuesday to review a crisis which has been
blamed on both the president and the ruling party. Business analysts
said while Kumaratunga, in the spirit of cohabitation, should have
consulted the prime minister before deciding to take over the DLB,
the unrest at the Government Printers' office in which UNP goons
were responsible should never have happened. Analysts said
that the president's action may have been triggered by fears that
proceeds from the DLB to the president's fund could shrink or get
delayed. The DLB, whose
revenues soared last year as reported in a government advertisement,
has spent heavily on various projects while its advertising budget
has more than doubled, according to informed sources. The DLB for
the first time began paying a 20 percent VAT from this year. J-Biz urged
all politicians of all political parties to proactively help resolve
this conflict and forge a new platform of consultation, compromise
and consensus. "We are hopeful that better sense will prevail in the larger interest of the nation," it said. Depositors
continue fight to save Pramuka A joint statement
said the restructuring proposal would be supported by a MoU representing
various interest groups and includes raising operational funds of
about Rs. 300 million. "Reputed financial experts will scrutinize
the restructure proposal before submission to the Central Bank.
The depositors and stakeholders are confident that this would be
accepted by the authorities," the Pramuka Depositors' Association
and Pramuka Stakeholders' Association said. Central Bank
governor A.S. Jayawardene, in an interview with The Sunday Times
FT last week, dismissed efforts by Janashakthi Insurance Company
to revive the bank saying that the company had not indicated how
much money they were willing to spend on the effort. "We don't
think it is a serious offer," Jayawardena said. The joint statement
said the proposal would be supported by the reconstituted Board
of Directors of Pramuka Savings and Development Bank. Depositors
said they were able to convince Pramuka's current board to accept
seven more nominees from depositors to the board. "The seven new directors are high calibre personalities who are interested in reviving the bank in the public interest," said Ranjan Arambewela, president of the Depositors' Association. Top
official to head ICT Agency The official
who is part of an IT company that has made a mark in the international
arena, is being targeted notably for his project management skills,
the sources said. This will be a key factor in the implementation
of the five-year strategic action plan that is already behind schedule.
The Ministry for Economic Reforms, Science and Technology earlier
this year posted a newspaper advertisement calling for applications
for the top posts in the agency. The agency was scheduled to be
established by March 2003 according to the roadmap. Meanwhile, a draft national ICT policy has been posted on the eSri Lanka website for public review and comments. Tough
laws to fight credit card fraud "Commercial
banks must be vigilant about the people to whom they issue credit
cards," he said. Banks must
be cautious about evaluating the creditworthiness of their customers. "If a
bank loosely issues credit cards because it is in a competitive
market and people who don't deserve it get credit cards, then of
course the bank is opening itself up to various risks from which
banks should guard themselves against," Jayawardena said. "We're
helping draft some tough laws which will bring in serious punishment
for people who engage in credit card fraud." He said the
Central Bank is also examining the use of overdraft facilities by
commercial banks in an effort to consider restricting the practice,
which has helped boost bank profits. "Temporary
overdrafts have to be temporary," the governor added. "It
cannot be a permanent facility continuously extended." Giving overdraft
facilities to customers was also contributing to the high cost of
borrowing by entrepreneurs. Overdrafts are given at the highest
lending rates - usually 30-35 percent. "In Sri
Lanka there is an unfortunate custom that when somebody goes to
a bank without security but with a good project banks generally
put him on a temporary overdraft without even examining his project.
It shows weakness in credit evaluation and administration,"
Jayawardena said. "A large
number of people who are on temporary overdrafts are paying very
high interest rates. That also tends
to increase the profits of commercial banks," he added. Commercial
banks have come in for criticism for not doing enough to lower lending
rates and for maintaining high spreads between borrowing and lending
rates which have helped fatten their profits. "So that
is another thing we are looking into - to see how much of commercial
bank lending is in the form of temporary overdrafts," Jayawardena
said. One option
was to impose ceilings or restrictions on such practices but these
could be circumvented easily, he said. "Central banks have strong powers of regulation but the problem is that ceilings cannot be enforced. Most countries have given up ceilings because they can be circumvented so easily," he said. Garment
orders surge on SARS Exports have
also increased in the first quarter of this year with more orders
coming from the European Union, industry officials said. "We're
getting cancelled orders from East Asian countries to our factories,"
said Board of Investment chairman and director general Arjunna Mahendran. "Most
of our factories are seeing a surge in volumes. But the downside
is that prices are still extremely competitive - the piece rate
is coming down all the time mainly because China entered the market
after getting membership of the World Trade Organization." Asked about
reports that garment manufacturers in East Asia were thinking of
shifting their factories to the island because of the threat from
the Severe Acute Respiratory Syndrome, Mahendran said there was
potential for factories to relocate here but added: "It's
still early days. People are waiting to see if SARS becomes a massive
pandemic in China, in which case factories might be relocated." SARS has killed
more than 260 people in China and infected more than 5,000. Virtually
all of China's 31 provinces and municipalities have reported SARS
cases, and the World Health Organisation has issued warnings against
non-essential travel to several provinces as well as Hong Kong and
Taipei, capital of Taiwan. Ashraff Omar
of Mast Lanka said garments exports had increased by 10 percent
in the first quarter of this year compared with the same 2002 period. He attributed
the increase to the access into the EU market. "We're
seen the effects of our being non-quota to the EU," he said.
"Now our factories seem to be full - it is very difficult to
get sub-contractors." He added: "We
have seen a surge of orders but no one told us it was because of
SARS." Orders undertaken
now would have been confirmed in December and January before the
SARS epidemic spread. Lyn Fernando
of Creations said some factories had been unable to get their requirements
of accessories from China because of the SARS crisis. "We depend
on accessories from China and Hong Kong but people are unable to
travel there," he said. Sri Lankan
exporters had also got more orders because the uncertainty in the
Gulf caused by the US-led war against Iraq prompted buyers to shift
orders to local manufacturers. "We have had a bit of business from the Middle East coming in with those factories not functioning," Fernando said. |
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