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7th March 1999

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Distribution of household income

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Distribution of household income

Over 60 percent of the total working population earn less than Rs. 12,500 a month according to a recent survey .

Sri Lanka, ranked as a low-income economy by the World Bank and other international financial institutions has one of the lowest earning populations in Asia, the survey says. Sri Lanka also has a high rate of unemployment in the region. The unemployment rate as at 3rd quarter stands at 9.1 percent, a decrease of 1.3 percent over last year.

The report by leading research unit, Survey Research Lanka (SLR) says that around 14 percent of the total population live on less than Rs. 85 a day as at the end of October 1998.

The urban monthly households earning less than Rs. 7500 accounts for more than 30 percent of the total urban population, compared to the rural population where more than 80 percent earn less than Rs. 7500 a month. On average the total population earns only Rs. 6,759 per month.

These figures though do not show the true picture because these incomes might have been under or over stated.

Poverty is an issue that is prevalent in all economies, even in the most advanced economies like the United States and Britain. Heroes like Saradial have tried time and time again to rid Sri Lanka of poverty. They might have tried, but in vain.


Air Navigation Act gets $1.8 million reforms

By Mel Gunasekera

Sri Lanka's aviation industry is taking off to higher elevations with the present Air Navigation Act of 1955 being revamped, to establish a new autonomous Civil Aviation Authority.

Under a state funded US$ 1.8 million programme, the reforms to the Air Navigation Act would include regulating travel agents, compensation for denied boarding, aircraft airworthiness, personnel licensing and aircraft operations.

It would apply to all civil operations including internal flights, Civil Aviation Department Legal Consultant, Senarath Liyanage said.

The reforms also include a Safety Oversight Capability Enhancement Project, where the Civil Aviation authorities together with a foreign consultation team is working on enhancing the department's capabilities to establish the Aviation Authority within the next few months, he said.

Mr. Liyanage said that Sri Lanka presently follows the Hague Convention for death or injury caused by airlines limiting the airline liability up to US$ 20,000 per passenger for death or injury.

However, during the forthcoming worldwide aviation conference in May the authorities are proposing to raise the compensation limit to SDR 100,000 strict liability.

"The current thinking of Sri Lanka is that we will sign that convention and it would be incorporated in the new Act," he said.

He pointed out that Sri Lanka is lagging behind the rest of the world in incorporating international standards and recommended practices into law. The Sri Lanka Air Navigation regulations of 1955 have not been updated after 1969.

Whereas 18 annexures dealing with different aspects of civil aviation have been promulgated since the 1944 Chicago Convention, Sri Lanka has incorporated only six of them in its present regulations, he said. However, AirLanka adheres to all international norms, sans any oversight in the domestic mechanism. There was an outcry in 1997 when the USA started checking carriers and countries that do not enforce international standards.

Though this concept is against international norms, the USA's thinking was gradually spreading to Europe. "Since AirLanka flies frequently to Europe, we felt that AirLanka could get blacklisted," he said. This led to the International Civil Aviation Organisation (ICAO) sending a team to conduct a detailed safety oversight assessment of the local aviation industry.

The team highlighted the need for an autonomous regulatory body, and the dearth of qualified personnel capable of handling licensing operations due to poor remuneration.

Therefore, the main aim was to change this to an authority and let the authority be self-financed by charging fees for their services, thereby earning money to pay for the experts, he said.

The regulatory body would follow the European JAR (Joint Aviation Regulation) model. Sri Lanka would also benefit whenever changes are made to JAR.


Further drop in tea prices foreseen

Tea prices could drop below Rs. 100 per kilo if the current drop in tea prices continues, tea brokers said last week.

Higher global supply and the effect of the Russian contagion continuing through 1999 has led to a drastic decline in tea prices during the recent auctions, they said. The net sale average (NSA) which peaked at Rs. 140 per kilo in October 1998, plunged to a mere Rs. 101.91 per kilo at the last auction.

This is the lowest on record since the sale of January 15th 1997 and figures are likely to decline further once this week's figures are computed, Asia Siyaka Commodities Senior Vice President, Anil Cooke said.

Since the first auction in February with an NSA of Rs. 110.43 prices have declined by Rs. 10 towards the end of February.

Low growns once again witnessed a disappointing sale last week. The continuous decline in prices for the lowgrowns have brought down the NSA for the sale of February 24th to Rs. 105.36. This is the lowest average for lowgrowns since the sale of January 8th 1997.

Another alarming bit of news for Ceylon Tea is that Egypt has joined COMESA (Common Market for Eastern and Southern African countries) recently, Mr. Cooke said.

COMESA operates on a similar basis as SAARC, where duty concessions are given to member countries.

The danger here is that all African nations supplying tea, including Kenya would start supplying tea to Egypt at concessionary rates. Now Egypt is a significant buyer of Ceylon Tea and this latest move is a concern for us, he said. "Sri Lanka can ill-afford to be left out of the market at this stage," he said.

Ironically, the decline in tea prices has cropped up in a year where most tea exporting countries Sri Lanka, India and Kenya achieved record harvest, he added. There is also concern that declining tea prices may discourage tea smallholders from aggressively harvesting their crop this year.

Sri Lanka's tea crop for January '99 at 24.6 mn kilos is an all time record. Once again, the largest contributor was low growns.

Mediumgrowns too have shown a marginal gain while highgrowns however, show a decline compared to the corresponding year.

Tea export statistics for January 1999 reveal CIS as the largest buyer of Sri Lanka tea with 3.1 mn kilos although recording a decline of 0.96 mn kilos on the 4 mn kilos exported to this region during January 1998. UAE ranks as the second largest buyer followed by Turkey, Syria, Saudi Arabia and Tunisia. Exports to Tunisia have gained substantially by 190 per cent.

Total exports for January 1999 show a drop of 19 per cent in quantity and 26 per cent in FOB value compared to the same period last year.


CSE moves back to refurbished office

The CSE who took refuge up in the World Trade Centre after their official third floor residence was destroyed in the Galadari bomb explosion, moved back into their refurbished office last Tuesday.

True to Sri Lankan tradition the CSE commenced operations at a pre-determined 'auspicious time' on a lower key, hoping to kick off with better luck. Only a slight hitch marred the low key affair when trading was suspended for awhile, citing technical difficulties. They commenced shortly after and are operating smoothly so far.

Manager marketing and public relations, Rajeeva Bandaranayake said that they wanted to keep everything low key. Except for the CSE chairman the only other invitees were four religious dignitaries representing the four main religions who were brought in to invoke blessings for their second innings at the old home.


Credit and debit card from Com bank

Commercial Bank is to launch their own international credit card and a debit card by end of June, CEO/Managing Director Commercial Bank, A L Gooneratne said.

The bank would have direct franchise with VISA/Mastercard for their international debit card.

The debit card would have Maestro and Cirrus features similar to those offered by rival competitor Sampath Bank.

Mr. Gooneratne indicated that Commercial and Sampath Bank may team up to enable their customers to withdraw cash from either Commercial or Sampath's automatic teller machines as both banks share the Maestro and Cirrus features.


Business briefs

GST free IT

The Millennium is only so many days away and the prophets of doom say the Bug will have a field day when the next year dawns.

Be that as it may, the powers that be apparently want to encourage the use of the information superhighway - the internet - in this country.

So, with a little push from the computer trade, we might soon see an exemption from the dreaded GST being granted for all information technology services, sources say.

A year later

More about the Millennium, but this time in quite a different spirit, so to speak.

We know that the ban on advertising on liquor and cigarettes, earlier due to be operative from the beginning of this year was put on hold after protests from the two industries and thinly veiled threats of legal action. But, now it seems the health authorities have had their way and the ban will be definitely enforced, with necessary legal teeth, come January 1, 2000.

Not so perky

Heard that satellite is not so "perky" with the one that protects the state coffers and sells the family silver.

We are not surprised to hear that another 'Top Brass' has fallen from grace.

The only consolation we can offer the latest victim is that he is not he first nor will he be the last.

Now what we are wondering is whether another head is about to roll just to prove who the boss really is?


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