Economists say Japan's optimism will run out

TOKYO, Jan 21 (Reuters) - Japan's central bank governor said on Thursday the relentless two-year slide of the nation's economy will finally end by the first half of this year — but economists said they remained doubtful.

"As the government's economic stimulus measures are implemented, the worsening of the economy will stop within the first half of this year," Masaru Hayami, governor of the Bank of Japan (BOJ), said at a regular news conference.

Economists said Hayami, along with most government officials, was still too optimistic when making such forecasts, adding that effects of previous stimulus measures would run out soon.

"There will likely be more of a downside risk in the economy in the second half of this year, when effects of public works spending recede," said Takao Hattori, an economist at Dai-ichi Securities.

Earlier on Thursday the BOJ issued a monthly report in which it maintained its overall assessment from its previous report in December, saying "a deterioration in the Japanese economy is moderating due to an increase in public works spending". But economists said the latest report showed a more apparent concern from the central bank on moves in financial markets, especially the recent rise in long-term interest rates.

"The BOJ doesn't say it directly, but the report shows it has become nervous about recent long-term interest rate rises," said Teruki Morinaga, an economist at the Industrial Bank of Japan.

The report pointed to a need for the central bank to monitor the effects on the economy of developments in the bond and stock markets. Both markets had fallen due to concerns of oversupply of Japanese government bonds, but they had now somewhat recovered, it added.

Japanese government bond (JGB) prices initially rose on the cautionary comments by the BOJ but ended lower on gains in Tokyo share prices.

The key 203rd 10-year JGB ended with a yield of 1.780 percent, up one basis point from Wednesday. Hayami said present long-term interest rates were not particularly high, but that a yield on the key 10-year benchmark JGB below one percent was too low.

On the political front, the Liberal Party, which last week formed a coalition government with the ruling Liberal Democratic Party (LDP), began asserting its presence on the economic front, with one key member hinting at more stimulus measures financed by government bonds.

"Depending on economic conditions in the January-March period, we may need to consider additional issuance (of government bonds) in the April-June period," said Yoshio Suzuki, deputy chief of the Liberal Party's policy body.

His remarks, which came after markets closed for the day, could unnerve markets already wary of a glut in government debt. But most economists agree that Tokyo's previous stimulus measures alone would not be enough to pull Japan out of its worst postwar recession, something Prime Minister Keizo Obuchi has pledged — not only domestically, but to Japan's outspoken trading partners as well.

The pressure was on again as U.S. Federal Reserve Chairman Alan Greenspan, in a speech on Wednesday, urged Japan to accelerate the reform of its ailing financial sector and said this was essential for the economy to return to vigorous growth. "

I am hopeful that the Japanese will address the issue of their ailing banking system with a great deal more alacrity than has been the case of late," Greenspan told the U.S. House Ways and Means Committee.

"Unless and until they resolve their banking problems it strikes me that the economy's ability to come back in a vigorous manner is going to be limited," he added. Some ruling party politicians appeared to agree.

An LDP panel is mulling a plan to set up a fund worth 20 trillion yen ($176 billion) to inject into the real estate market, buying up unused property held by bad loan-laden financial institutions and other firms, in order to promote the disposal of the nation's bad debts hobbling the banking sector. LDP sources say the public funds would come from outside the current budget, and would require a new budgetary measure. REUTERS

Mind your Business

By Business Bug

On the Ball

Our cricketers may not be doing all that well down under, but that hasn't stopped them from being vigilant about the ads that feature them.

There was one such ad featurring the now out of form master blaster but also mentions the names of the cool captain and his injured deputy. Representations were quickly made to the effect that the latter had no contract with the Cola company and the offending footage has now been removed…

Road up

Trouble is brewing in the building of an expressway between Colombo and Kandy. It was the horse-riding General's idea to link the two cities, knowing it would boost his stock in his hometown in the hills.

But someone else, whose subject it is anyway, is making a fuss over it saying he will agree to it only if it is done to his specifications, not the General's!

New Bank

A corporate giant is now all set to begin banking operations. It is a highly competitive sector, no doubt but the giant is equally confident it could make a success of it.

Initially about four branches will be opened in major cities, which could be as early as June this year, they say…

JKH downgrades earnings growth

John Keells Stock Brokers have downgraded their corporate earnings growth forecast for FY99 to 8 percent. The earlier forecast was 17 per cent and the brokers have also forecast a 17.5 per cent increase for FY2000.

Interim results of 48 frequently traded companies at the CSE have shown a declining trend for six months FY99 and nine months FY98, a John Keells report says.

While net profits of December year end companies (nine months FY98) show a growth of 26%, March year companies (FY99) indicate a decline of 4.7% the report says.

The decline is primarily due to the drag down effect from plantations and banking and finance sectors, the report says.

It adds that the earnings growth for their sample was 54%, boosted mainly by the plantations sector. Given that plantation earnings are expected to record a negative growth, an 8% FY99 corporate growth from a high FY98 base is more than modest, they say.

Revenue growth for both periods was comparatively lower than that achieved for the period ended 30 June 98.

During this period the banking and finance sector showed a negative growth due to the lethargy of the capital market while the plantation sector suffered in terms of volumes for tea and rubber. Food and beverage sector recorded the highest growth in revenue for the period. Motors and Trading sectors too showed high growth though few in number.

Net profit for the 6 months FY99 declined 4.7 percent yoy compared to the 7 percent growth recorded as at 30 June 98. Banking and plantations sectors once again created the drag down effect with large yoy declines, while the food and beverages sector recorded the highest gain.

The 9 months companies however, continued to remain attractive with a 26 percent growth yoy, led mainly by the manufacturing sector.

The plantation companies with a December end performed well because of the unusually high tea prices in 1Q FY98 along with the manufacturing sector.

Ambuja cemented

Gujarat Ambuja Cements, one of the top cement companies in India is planning an integrated cement plant in Galle.

The company is investing US$ 50 million in a two phase project that includes a storage terminal and a clinker grinding unit. In the initial stage, the plant will have an annual capacity of half a million tons. Another half a million ton capacity will be added.

The company's Sri Lanka arm, Midigama Cements Pvt. (Ltd.) is a BOI company. Midigama Cements has already completed preliminary formalities and work at Galle is expected to begin early February.

We are happy to come to Sri Lanka. The government and the people of Sri Lanka have welcomed us with open arms." said Mr.Ramakrishan the Chief Executive officer of Midigama Cements. "On our part, we will repay out gratitude to the people of Sri Lanka by completing the project ahead of schedule. We will do our best to make this project a model for Sri Lanka," he added.

Irish teen's e-mail code

(CNN) An Irish schoolgirl has become a technological celebrity after devising a code to send secure files over the Internet, a code said to be 10 times faster than the one currently in use.

The phone in the Blarney home of Sarah Flannery, 16, has been ringing off the hook since her idea won a student science contest last week.

"We haven't been able to peel two potatoes in this household," said Elaine Flannery, Sarah's mother.

"It's so weird. I could never have imagined it would be this big," said Flannery, who has been inundated with offers of jobs and scholarships from international computer companies and universities.

Her code for the Internet transmission of credit card numbers and other information that needs to be kept secure could transform the future of Internet commerce if it proves successful.

The e-mail data protection code now in use was formulated by three students at the Massachusetts Institute of Technology in 1977.

Flannery's grasp of cryptography astounded the judges at the Irish Young Scientists and Technology Exhibition last weekend. They described her work as brilliant, and one judge advised her to patent her e-mail idea.

"If she plays her cards right I think she will make a lot of money. I would be very surprised if a lot of companies are not knocking on her door very soon," said Dr. Tony Scott from University College in Dublin.

Flannery, however, said she is not after financial gain. "I certainly didn't set out on this project to make money. I set out to have some fun with it," she said.

She said that she would prefer to publish her discovery rather than patent it, because making money from it would go against the spirit of science.

Better weather

Could there be hope for the five-day forecast, that famously unreliable feature of the nightly weather report? Scientists think so, pointing to new computer and satellite technology that could give meteorologists the ability to zoom in on weather patterns, says Reuters.

They hope for results to double in the length of accurate weather forecasts.

The growing speed and power of computers, combined with new satellites that can peer down with lasers and radar, are adding unprecedented detail to computer models of how the climate behaves, the scientists said at the annual meeting of the American Meteorological Society.

"This next decade is going to be revolutionary, in my mind, in our understanding of the planet, in our ability to project," said Robert Corell, associate director of the US National Science Foundation.

NASA's Ghassem Asrar said the space agency was working with the National Weather Service to extend the accuracy of weather forecasts by improving computer projections of the broader climate patterns that create weather.

"Today we have three-day weather [forecasts] with about 70 percent reliability," Assar said. "In five to seven years, we should have the same level of skill — about 70 percent — for five days."

Until now, available computer power has only allowed scientists to create climate models for large areas measuring hundreds of square miles, Corell said.

"At that level you don't get enough resolution, you can't understand any of the processes involved," Corell told a news conference on advances in weather forecasting. "To do that, we're going to need about a thousand-fold increase in computer speed.... By 2000 to 2004, somewhere in that time scale, we will have computers to do that."

Airship takes tourists to space

A TRIANGULAR AIRSHIP could soon be used to take tourists into space.

Coopership, a Dallas company, claims its airship will win the £6m X Prize for the first commercial space flight.

According to Dale Harris, the inventor of the Coopership, it would allow a shuttle carrying several passengers to get into space simply and cheaply.

"We hope to announce a partnership with a big aerospace company later this year," he says.

The airship would have three sides of 600ft and be made from a rigid composite material to give it a hard outer shell. This would allow the top of the ship to be used as a launch track for the space shuttle. The hull would be filled with a mix of helium and oxygen to provide lift. Several high-powered engines at the rear would provide propulsion, allowing it to cruise at speeds of 170mph.

The airship would be launched from the sea and soar to 50,000ft. Then the shuttle would be launched with an electric catapult being developed by Coopership.

"One of the things we discovered during the development of the airship was that it is easy to store electrical energy within it," says Harris. "This led us to look at different ways of launching a shuttle and we think we now have a way to use electrical energy to propel the shuttle down a track on top of the ship."

The shuttle would be catapulted off the airship and, with the help of rocket engines, rise to a height of 65 miles. It would then start to descend, bouncing off the edge of the Earth's atmosphere to reduce its speed. When the shuttle has re-entered the atmosphere and come down to 50,000ft an air-breathing engine would be turned on to start a controlled descent.

Coming down over water, the shuttle would lift its nose and use the ground effect just above the water to skim along at 100mph until it reached the airship from which it was launched.

Harris says the shuttle would land on the track on top of the floating Coopership. Once refuelled, the shuttle would be able to take off again within hours.

Harris hopes to build a prototype of the airship in 2001. This would be a smaller version of the space launch system, measuring about 250ft on each side, and carrying three 100ft by 25ft television screens to be used for advertising.

"We decided we may as well use our prototype for something, and advertising seems an obvious thing to go for - the market for advertising blimps is huge, and we think we can offer something a bit different," says Harris. The advertising blimp would also carry 25 passengers, and be able to fly at 30mph.

The company is also planning a larger 800ft long, cargo-lifting airship capable of carrying modules for 1,000 tonnes of cargo or 2,000 passengers and 1,500 crew.

The Coopership will cruise at 170mph and Harris says it would be able to go around the world without refuelling.

"Airships were originally used as luxury passenger carriers, and I think we can go back to those days. The one thing that worries everyone about airships is safety, and because we use helium rather than hydrogen, and we also have a rigid hull that is difficult to puncture, we think we can offer total safety," says Harris.

To increase the safety of the cargo Coopership, it would contain dozens of spheres holding the helium and oxygen mix: several could be punctured without bringing down the ship. According to Harris, different modules can be picked up by the ship, allowing the same craft to carry either cargo or passengers.

"We think a passenger Coopership will be comparable in both cost and luxury to a top-of-the-range cruise ship. The advantage is that we can go to more interesting places - for instance, we could offer a 12-day flight around the world," he says.

Each passenger ship would cost about £14m, and Harris claims to already be in discussions with several cargo and passenger lines about the system.

Pig liver for failed livers

PIG LIVER has been used to keep a man alive after his own liver failed.

The pioneering procedure, carried out at the University of Pittsburgh medical centre, could offer hope to hundreds of people who are waiting for liver transplants.

In the new technique, instead of patients having their blood cleaned of toxins by their own liver, the job is done by a cylinder full of polymer-coated pig-liver cells.

Doctors have now carried out the first of 16 planned operations on patients with liver failure and say it was a complete success. They hope the technique can be used as a holding therapy for patients who are too ill to undergo a transplant.

It also offers hope to those who face the possibility of dying on a waiting list because there is a shortage of donor livers. And for some patients, the pig-tissue therapy will give enough time for their own livers to recover and regenerate.

The technology used by the doctors in Pittsburgh relies on liver cells from pigs as a substitute for the real thing in patients with liver failure. The system was developed with Excorp, a biomedical company.

In the operation, a tube is used to connect the patient to a cylinder that remains outside the body. Blood flows into the cylinder or bioreactor, which is full of pig-liver cells.

The cells are encapsulated by a polymer material that allows the toxins from the blood to enter, but which prevents potentially harmful pig-cell toxins from infecting the blood and triggering an immune response.

The fibres act as a barrier to prevent proteins and byproducts of the pig cells from coming into direct contact with the patient's blood but allow the necessary contact between the cells so that toxins in the patient's blood can be removed.

Patients will be continually monitored because of worries that pig viruses and infections may be transmitted. David Kramer, co-principal investigator on the project, believes the system is safe. "Because this is a phase one clinical trial, we are most concerned about the safety of the system. But we will be looking at efficiency, too, and the system may benefit patients if their condition improves and they can be considered eligible for transplantation or if their liver regenerates and resumes normal function," he says.

Daniel Miller, chief executive of Minneapolis-based Excorp, says there are at present no proven bio-artificial therapies for liver failure.

"We are hopeful that the research with this system will offer some hope to the 10,000 patients waiting for liver transplants," he says.

The job of the liver is to clean the blood. But in patients with liver failure, the organ is unable to function properly and the toxins it normally removes circulate in the blood stream and get into the brain.

They can become life-threatening and patients can lapse into a coma. Although some livers do recover, for most patients the only treatment is a transplant. But not all patients are medically stable enough to be considered, and a shortage of organs mean that many die waiting for a transplant.

Scientists around the world are looking for a liver substitute. While pacemakers, heart pumps, kidney dialysis machines and ventilators, have all been developed to help patients with other organ failures, a successful and safe liver substitute has yet to be found.

Thinking shoe adjusts to feet

Ronald Demon, 21, a student at the Massachusetts Institute of Technology (MIT), recently patented his plans for the smart shoe.

The shoe which he claims automatically adjusts to the wearer's needs, changing the amount of cushioning to suit the activity.

A tiny battery-powered computer is built into the sole of the shoe, which uses a pressure sensor to work out exactly what the user is doing. Air bladders in the shoe are then able to open and close to adjust the cushioning. A cushioning fluid is also contained within the bladders, which can move through the shoe to alter its stiffness.

When the user is slowly walking or sitting down, the cushioning in the sole is increased, making the feet more comfortable.

However, if the wearer speeds up and begins running, for instance, the sole will stiffen, giving less bounce when the feet hit the ground.

Athletes will benefit from the cushioning as it lets their feet rest when they are not competing, making them more relaxed and, according to Demon, able to perform better. Extra cushioning should also make them less susceptible to injuries.

Demon says: "The computer is always switched on and always looking at what you are doing and can act on it instantly. The solenoids that control the flow of air into the bladders can open and close instantly. If the user is not moving, the valves remain open, allowing the fluid in the bladders to move around and cushion the feet. However, as the activity level increases, we can close the valves, stopping the liquid from flowing around and stiffening the shoe."

Demon has already built a working prototype of the shoes and is conducting usability studies on his invention before testing it on MIT's star athletes later this year.

"I've been working on this for such a long time, I know everything works. Now it's just a question of refining the system and finding a manufacturer," he says.

Demon is in discussions with several sportswear manufacturers and hopes to finalise a deal within a few months. He says: "The technology is almost ready to go now. There is no reason a manufacturer would need more than a year to get this technology onto the street.

Because the electronics are so small and the bladders are also very compact, I designed this to work around an existing shoe - there is no need to redesign a shoe, you just add in the computerised sole."

According to Demon, each sole will cost only a few dollars to produce. "This really shouldn't add a premium to the cost of shoes," he says.

Demon says his shoes will last for two or three years, as long as users remember to change the batteries regularly.

"The electronics in the shoe use little power, so a single battery should last six months. We plan to make a small compartment in the heel which will let users easily change the battery when the power has run out," he says.

The original concept for the shoe was thought up by Demon when he was just 16 and came from his dissatisfaction with the trainer designs of the day. "I had a pair of Reebok inflatable trainers, but they just didn't work for me. I really hated having to pump them up," says Demon.

Business briefs

ITMIN offers privacy

ITMIN Internet Services Ltd., (IISL) recently announced the launch of a secure end to end data transmission facility on the Internet which guarantees security against unauthorised access for all on-line communications.

The first of its kind in Sri Lanka, the service is designed to be used with Internet browsers such as Internet Explorer or Netscape Navigator, a company release said.

All on-line communications at IISL have been secured through this system and users can now be assured of complete confidentiality for all information and data supplied to and from IISL.

Pakistan trade delegation

A fifteen member trade delegation from Pakistan will be in Sri Lanka from January 28 to 31.

Drawn from the Lahore Chamber of Commerce and Industry (LCCI) and headed by its President, Pervez Hanif, the delegation includes leading businessmen, importers/ exporters, industrialists and investors.

Their areas of interest are engineering goods, computer software, cotton yarn, textiles, garments, domestic and electric meters, auto parts, rice, sugar, pharmaceuticals, LPG cylinders, insurance, tourism, textiles machinery, electrical fans and household appliances, a High Commission release said.

When you retire - Eagle wisdom

Eagle Insurance has introduced EAGLE WISDOM Retirement Plan which builds an extra fund at retirement. It has a limited premium paying facility and gives a 10 year free life cover, a company release said.

Customers have the option to select either a 20- or 25- year plan, but need to pay premiums only for the first 10 or 15 years. Even after one stops paying the premium, (after 10 or 15 years) the customer is entitled to a free life cover for the balance ten years.

During this period the investment continues to grow with compounding dividends, enabling customers to obtain a substantial retirement fund at the end of the plan, the release added.

Ceylinco honours staff

Ceylinco Insurance Co. Ltd., felicitated 140 personnel for their dedication and loyalty to the company at the company's Long Service Awards ceremony held recently, a company release said.

The awards were presented in four categories for 10 - 15 years service, 16 - 20 years service, 21 - 25 years service and for employees with more than 25 years service. A significant event was the presentation of an award to Ceylinco Insurance's most senior employee W. Julian, who had completed 52 years of service. Twenty employees who had completed over 20 years of service to the company also received plaques and gold sovereigns as tokens of appreciation.

Minister opens SLSI new building

Minister of Science and Technology Batty Weerakoon opened the new SLSI building at Elvitigala Mawatha, Colombo, recently.

The minister speaking after the opening said Standardisation and Quality Management are two important activities in development.

He referred to legislation that would be introduced soon to control laboratory testing activities and said that all laboratories should obtain certification to ensure the reliability of test reports, a SLSI release said.

The stage 2 phase 1 of the building project estimated at rupees 40 million commenced in January 1996 and was completed on schedule to enable the Head Office to shift. All other branches of the SLSI presently located in Colombo 04 and Colombo 7 will shift by December 1999.

Talk is cheaper on board Emirates

It is now even cheaper to stay in touch while flying Emirates, the International airline of the UAE. The cost of making a telephone call or sending a fax has been reduced from US$8 per minute to US$6.50.The promotion, a reduction of nearly 20 per cent, is being offered in co-operation with Satellite Aircom, which provides the telephone services to Emirates, and Inmarsat. Emirates' telephone system is connected via one of four Inmarsat satellites, which are located in geostationary orbit, 35,786 km in space.

Don Foster, Emirate's Senior General Manager for Inflight Services, said: "We are confident that the more competitive rates for making a call or sending a fax will be welcomed by our passengers, who will be encouraged to use the service to tell their family and friends that they're on their way, or to make an urgent business call.

It costs an enormous amount of money to equip each aircraft with the required avionics and telephony equipment. Furthermore, the cost of calls connected via satellite have remained high todate. Emirates makes no profit from providing this service to our passengers, and while we are somewhat limited by its high cost to us, we do hope to be able to reduce charges even further in the future.''

Passengers can pay for the use of both telephone and fax by major credit card, or by purchasing an Emirates pre-paid Telephone Card onboard at DH46 (US$13).

Fourth American trade fair in SL

The American Chamber of Commerce of Sri Lanka ( AMCHAM) will hold its Fourth American Trade Fair at the Colombo Hilton from February 8 - 11.

The Trade Fair will provide a unique platform for increasing awarensss of American products and services while providing an opportunity for new American firms to enter the Sri Lankan market, a USIS release said.

The United States is currently Sri Lanka's biggest trading partner and a key source of capital and technological know-how for direct investment.

Trade Fair Exhibitors will gain company and product exposure, have access to distributors and retailers, and establish direct contact with decision-makers.

AMCHAM SRI LANKA is affiliated with the U.S. Chamber of Commerce, which represents the interests of over 2000,000 U.S. companies. The U.S. Embassy is working closely with AMCHAM to ensure the success of the Fourth American Trade Fair. U.S. Ambassador Shaun. E. Donnelly will lead the US Official and American presence for this event.

A highlight of this upcoming American Trade Fair will be the presence of a U.S. Trade Mission.

SL promotion drive in Australia

Sri Lanka will launch a promotional campaign in Australia in the coming weeks to improve trade and to attract more tourists and investment.

Foreign Minister Lakshman Kadirgamar told a news conference in Colombo on Monday that "the promotional events are being carried out following a recommendation by the Ministry of Foreign Affairs to President Kumaratunga. They had been organised as part of the activities undertaken to commemorate Sri Lanka's 50th independence anniversary year and to coincide with the visit of the Sri Lankan cricket team to Australia. The Minister also announced that he will be visiting Australia later this week for bi-lateral talks with his Australia counterpart Alexander Downer, ahead of the Sri Lanka Promotional Drive.

'Focus Lanka', which will take place in Sydney from January 28 to February 3 and in Melbourne from February 5-6 will include a BOI investment promotion seminar, one-to-one business meetings, a trade exhibition, a food festival and cultural show featuring the Channa-Upali Dance Ensemble.

ANZ reaches major Year 2000 milestones

ANZ Bank, the parent of ANZ Grindlays, has announced that Year 2000 repair and individual testing of ANZ's own software applications and core technology platforms had been completed.

ANZ Chief Information Officer David Boyles said: "ANZ's preparations for the Year 2000 are on track and ANZ's own systems have been successfully tested in line with the British Standards Institution's Year 2000 Readiness Standard."

"ANZ's Year 2000 Project has already undertaken over 500 person years of effort and the completion of internal repair and testing had been achieved on budget and ahead of schedule, which was a tribute to the staff involved,'' Mr Boyles said.

The testing has included ANZ's new Commercial Banking System (CBS) for international sites.

This system has been successfully implemented in 13 countries and will be implemented in a further three countries by April 1999 in readiness for Year 2000.

ANZ will now proceed with end-to-end testing across application in the Year 2000 environment including testing with other financial institutions. This testing should ensure that, for example, a transaction initiated by a customer at one financial institution's Eftpos will be successfully executed across all the various networks and interfaces to its destination. End-to-end testing is expected to be completed by the end of June 1999.

Hertz appointsWorldlink its GSA

Hertz, one of the world's leading car rental companies, has appointed Worldlink Air Services as its General Sales Agent (GSA) in Sri Lanka,.The Herz Sri Lanka sales office is based at Galadari Hotel.

Hertz is the world's largest and longest established car rental company. Found in over 5,400 locations in about 140 countries worldwide, Hertz operates a fleet of about 500,000 cars and handles approximately 25 million rentals annually.

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