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The Ceylon Inter-Continental Colombo has announced the appointment of Lal Leanage as Manager with effect from May 01. He will take over responsibilities from Rolf Hubner, who has been appointed as the General Manager of the Bali Inter-Continental Resort, Indonesia.
Shipbuilding and related activity has been growing in Colombo over the past year, and there has been no discernible slowdown after the port attack, a worldwide ship classification and surveying society has said.
"The Colombo Dockyard is bustling with activity", Lloyd's Register Senior Surveyor for Sri Lanka and Maldives Swarrajay Shukla said.
Lloyd's Register is said to be the world's leading ship classification society having around 21 percent of or 102 gross tonnes (gt) of the world merchant fleet currently estimated at 490mn gross tonnes in its books.
LR sets industry standards for shipbuilding issuing rules for structural design, materials and construction for all types of marine craft. It monitors ships during construction and carries out periodic surveys throughout the life of the ship to maintain the classification.
In addition, it provides similar services for fixed and mobile offshore structures, petrochemical and other large industrial and general engineering project inspection, testing and management. It also publishes the Lloyd's Register of ships detailing the 76,000 odd merchant fleet of the world.
Last year over 100 ships had come for repairs at Colombo Dockyard, many of them Lloyd's Register classified tankers and bulk carriers on which major hull repairs were carried out.
"A large amount of business is from India, for example, from the Shipping Corporation of India", Mr. Shukla said. In addition vessels from Pakistan, Iran and a number of other countries had docked at the yard. Several new craft were made under Lloyd's Register classification (built to Class) including two fast patrol boats and a landing craft. Work was in progress on three further fast patrol boats and a 45 ton tug.
"Activity in the Maldives had also shown progress," Mr Shukla said. Periodic surveys had been carried out in several Maldivian flag ships, and now fish collecting vessels had been delivered.
Mr. Shukla said Colombo Dockyard had improved in efficiency over the past year.
On the industrial front, inspection of the fuel oil pipeline for Colombo airport was carried out by Lloyd's Register last year.
LR hopes to expand its quality assurance and safety work in Colombo. This is handled by a separate subsidiary LR Quality Assurance Ltd., (LRQA) for which Mr. Shukla is a lead assessor. The company carries out assessments for the ISO 9000 series quality management systems and issues certificates.
The increasing activity of portfolio management companies has raised concern among other investment managers leading to the Unit Trust Association of Sri Lanka calling for regulation of the industry.
"There are no regulations of monitoring the portfolio management services offered by institution," outgoing Unit Trust Association President A. Kathirvelupillai said.
"False promises and unethical practices, which endanger the interest of the investor at large, if allowed to continue, will not only be a threat to the trust industry but also hinder the interest of investors in innovative instruments."
SEC Director General Arittha Wikramanayake, told The Sunday Times Business that legislation would be introduced shortly to cover all investment management activities, including portfolio management. Amendment to the SEC act has already been submitted to the Finance Ministry for approval.
"We want to ensure that the interest of the investors is protected" Mr. Wikramanayake said. "For example, assets of investors would be kept separate form those of the company and records maintained."
Mr. Kathirvelupillai said while the portfolio management companies operated without supervision, the communications of unit trust with the public were restricted by the Unit Trust Code which was gazetted last week. In addition, the Unit Trust Association was itself preparing a code of professional conduct and standards to improve investor protection, by strengthening self regulation.
Portfolio managers welcome the move to regulate the industry as setting down clear guidelines for the industry to operate would benefit the industry and investors, CTC Management Chief Manjula de Silva said.
However, he cautioned against over- regulation which might hamper the operational flexibility of portfolio managers.
He said restrictions should not be placed on the type of financial products they could invest in. "A portfolio manager should be able to invest in any area that an ordinary individual is allowed to. If there are restrictions, it will deter individuals from handing over funds to portfolio managers," he pointed out.
Ceylinco Shriram Capital Management which recently launched a product with a guaranteed return, said they had established procedures to protect investors and the guarantees given by the company would be honoured.
"We have indicated where the money is going and we will give regular reports on the status of the portfolios," Ceylinco Shriram General Manager Hiran de Silva said.
Mr. Kathirvelupillai said the biggest challenge faced by the unit industry is to sustain investor interest in the product in the context of a depressed stock market.
In the four years of unit trust operation in Sri Lanka, the four funds have mobilized Rs. 3,500mn worth of funds via 25,000 unitholders. He said the number of unitholders continued to rise despite the unsettled environment that prevailed.
Unit Trusts number among the top ten shareholders in some of the largest listed corporates in the country providing substantial equity finance for growth.
Mr. Kathirvelupillai called for the removal of corporate taxation on unit trust profits as such income was again taxed in the hands of income paying unitholders. The unit trusts are currently under a tax holiday for a further 10 years.
On the other hand, small unitholders who were not liable for income tax were unable to recover withholding tax that was levied on distributed profits. He said the government should recognise that unit trusts were simply a conduit for channelling investments and lift the liability for corporate tax permanently as has been done in some other countries. "We would appeal to the relevant authorities to initiate a study on the impact of such tax reform and recommend the timely implementation of such proposals for the benefit of the capital market," Mr. Kathirvelupillai said.
The rupee is likely to depreciate more sharply in 1996, an equities research house said.
While the rupee depreciated by only 3 percent in 1994 and 8 percent in 1995, this year the rupee may depreciate by 13 percent to end the year at around Rs. 60 to the US dollar, Union Bank of Switzerland (UBS) John Keells Research said.
In 1994 and 1995 the inflation differentials between Sri Lanka and her main trading partners such as the US and Germany were almost 10 percent.
In addition Sri Lanka's main export, textiles, have to compete with neighbouring countries such as India and Pakistan. "Given the sharp depreciation in these countries' currencies, there could be considerable pressure on the Sri Lankan rupee to depreciate to protect the country's export competitiveness," UBS John Keells Research said. "However the government is likely to be wary of a devaluation since a sudden dip in the value of the rupee could put enormous pressure on essential defence and food imports", it added.
UBS predicts a GDP growth of 4.5 percent in 1996, compared to a government target of 6 percent. Inflation is likely to stay at 10 to 11 percent.
Treasury Bills rates which have fallen substantially in recent months are also expected to pick up during the second half of the year. "Given the expected high budget deficit in 1996, we do not anticipate the decline in T-Bill yields to be sustained at current level", UBS John Keells Research said.
George Steuarts may be the first company to be back at the devastated Janadhipathi Mawatha following the Central Bank bomb attack in January.
While the group is officially due to move back into the premises in early June, preparations are in the final stages to shift George Steuarts Travels, which is heavily dependent on communications links to keep in touch with airlines and other travel related firms. The pharmaceuticals division of George Steuarts Agencies and the Human Resources division are expected to follow suit.
George Steuarts Director, S. Skandakumar said the facade of the building which was retained in its original condition when the premises was re-built in 1979, dated back to 1835. He said Goerge Steuarts was the oldest functioning business house in the country.
Mr. Skandakumar said the costs of maintaining offices in temporary accommodation was extremely heavy and there was no provision to claim insurance for consequential losses arising out of a terrorist attack. All expenses were at the moment being borne by the company itself.
George Steuarts will probably be the first company to come back to the block. "This would not have been possible without the loyalty and commitment displayed by our staff, who have gone through an extremely difficult period," Mr. Skandakumar said.
Swiss-Sri Lankan commercial and industrial relations in such spheres as joint-ventures, investment in BOI companies and bilateral trade connections show immense potential and should be developed for the mutual benefit of both countries, a Swiss official said in Colombo.
Sri Lanka's Honorary Consul Lorenz Lutz who headed a Swiss Trade Delegation and was instrumental in forming the Swizerland-Sri Lanka Business club said he believed Sri Lanka, with a steady growth rate and immense skilled human resources, was poised to play a leading role in South Asian commercial activities.
"The country's BOI schemes with its numerous incentives have attracted a number of leading Swiss investors to Sri Lanka", he said, citing the case of the giant Swiss shipbuilding firm, Bertschi which plans to set up a local subsidiary known as Bertschi Lanka (Pvt) Ltd., with an initial investment of Rs. 32 million, within the next two months.
"Bertschi plans to set up a yacht building facility here which will employ 30-60 persons and is considering joint-venture partnership with a leading local firm.
"In addition, Bertschi has also been appointed to run the planned facilities for the Trans-Ocean club, an association of sailors which handle ship repairs and provides rest and recreation to weary seamen", he said.
As for the Zurich-based Switzerland-Sri Lanka Business club, established in early 1994, he said the club, though lower in status than the conventional Chamber of Commerce was a vital link for industrial and commercial connections between both countries as it provided information on trade and investment possibilities as well as helped forge joint-ventures between Swiss and local firms. "Besides", he said, "we help local manufacturers find reliable agents to market their produce in Switzerland.
"We have as members, some of Sri Lanka's leading companies and maintain a close relationship with all local Chambers of Commerce and Industry."
"Sri Lankan firms involved in the export of tea, rubber products, gems and non-traditional exports are welcome to join our club", Mr. Lutz said.
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