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A high powered inter-ministerial advisory committee has been appointed to iron out problems faced by foreign investors, BOI officials said.
The committee consists of Secretaries to the Ministries of Finance, Industrial Development, Irrigation and Power, Agriculture, Lands and Forestry, Shipping and Ports, Post and Telecommunications, Transport and Environment, Tourism, Fisheries and Aquatic Resources, Housing, Construction and Public Utilities, Trade, Commerce and Food, Labour and Vocational Training.
In addition, the heads of the following institutions are also included. The Ceylon Tourist Board, Central Environmental Authority, Urban Development Authority, Sri Lanka Telecom, Ceylon Electricity Board, Sri Lanka Ports Authority, National Water Supply and Drainage Board and The Road Development Authority. The BOI Director General has also been authorised to co-opt additional ministries or institutions to the advisory committee.
BOI Executive Director, M. P. T. Cooray said a number of problems faced by investors were attended to at a meeting of the Advisory Committee last week. He said action could be initiated quickly following the monthly meetings as top officials from key institutions and the relevant ministry were present.
Meanwhile the Board of Investment has also been given powers to alienate land for use in investment projects by rules gazetted under section 18 of the BOI law.
The turnover tax on imported capital goods to non-export oriented BOI ventures has also been waived by the President with effect from the February 14. BOI said 128 projects which had begun construction including 48 hotels and 39 housing projects were faced with a 12 to 20 per cent rise up front cost which had not been budgeted for following the budget proposal to charge turnover tax with effect from November 8, 1995. Some investors had halted construction and refrained from clearing goods which had already arrived at the Port. The turnover tax waiver would also benefit further 69 projects which have signed agreement but have not started production.
Share prices showed a slight increase since Tuesday at Colombo's bourse last week. The CSE All Share Price Index closed on Thursday at 657.3 points which is 1.3 points up from Wednesday and 2 points up from Tuesday.
The Sensitive Price Index, however, fell since Monday when it stood at 1024.5 points. On Tuesday it stood at 1020.7 points and on Wednesday at 1019.9 points.
Foreign transactions recorded a net inflow with purchases outstripping sales significantly. Foreign purchases on Tuesday stood at Rs. 26 million compared to sales of Rs. 24 million. Foreign purchases on Wednesday amounted to Rs. 10.7 million compared to sales amounting to Rs. 0.14 million.
Shares that declined on Thursday included HNB down Rs. 4 to close at Rs. 356. A number of companies recorded price rises including Aitken Spence up Rs. 2.75 to close at Rs. 178.75, E. B. Creasy, up Rs. 6.50 to Rs. 134.50 at close, NDB up Rs. 5 to Rs. 230 at close. John Keells Holdings up Rs. 2.25 to Rs. 162.25 at close.
Shares that were traded in large quantities during the week include, Hayleys (which involved 170,300 shares), Aitken Spence, Seylan Bank, Kelani Tyres and Ceylon Glass Company. According to a Brokering Source, Foreign buyers had shown considerable interest in blue chip companies' shares during the past week although local response has been very poor.
Dr. Anush Amarasinghe of Crosby Research said that the market had improved during the past six weeks. He attributed this to two factors, the wide use of 'crossings' in the stock market (the ban on 'crossings' was lifted only last month) and a fall in interest rates in the US which has in turn prompted US investors to invest their funds in the Asian region including Sri Lanka.
He said that foreign investment in shares was generally limited to companies with large market capitalisation such as DFCC, Hayleys and John Keells.
Treasury Bill yields fell a record 250 basis points last week taking many dealers by surprise. Most private sector primary dealers were left high and dry as their bids were rejected by the Central Bank.
One year T-Bill yields fell to 15.38 per cent from 17.88 per cent while six and three months yields fell to 15.4 and 15.63 from 17.83 and 17.46 per cent respectively.
Dealers expressed puzzlement as to why such a sharp decline occurred, while funds could have been invested at higher rates via the Central Bank's secondary window. "Anyone could have invested at 16.7 per cent via the secondary window," one dealer pointed out. "No one in their right mind would have put in a bid at less than that! Dealers speculated that state owned institutions had been pressured into putting lower bids, in an effort to push down rates faster.
Analysts however welcomed the drop which they said was inevitable but said it would have been better for the market if the rates were allowed to drop naturally.
The Central Bank's overnight repo rate also dropped to 10 per cent, the lowest since March 1995 when it was at 12 per cent. Analysts said T-Bill yields may remain low for the moment and is likely to start moving up around April.
Low T-Bill rates are likely to cause renewed interest in the stock market as well as spurring investment in productive areas. In addition the National Savings Bank will also be forced to bring down their interest rates below the T-Bill rates as most of its income is derived from T-Bills.
Most investors who invested in T-Bills especially on the longer term at high rates now stood to make substantial capital gains.
The expatriate Managing Director of the Commercial Bank of Ceylon has left the Bank after serving less than half the period of his initial contract.
J. M. Morrison, the former head of Standard Chartered Bank in Colombo joined Commercial Bank on his retirement from Standard Chartered. The Standard Chartered owns a substantial stake in Commercial Bank.
Commercial Bank Chairman, Mahendra Amarasuriya said Mr. Morrison has left for personal family reasons shortly before the end of the first year of his contract. The two year contract was renewable every year.
Meanwhile Amitha Gunaratne has been appointed General Manager and Chief Executive.
Mr. Amarasuriya said a new Chairman also be appointed in the near future to Commercial Fund Management, as the previous Chairman, Dr. W. M. Tillekeratne had resigned in October. The Managing Director of the company, Kumar Rajendra who was asked to leave had been replaced by Rohan Fernando. Mr. Amarasuriya declined to reveal the reason for the removal of Mr. Rajendra as legal action was in progress.
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