11th June 2000

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Doubts on Dumping Duties Bill

By Chamintha Thilakarathna and Dinali Goonewardene

Despite the completion of the preliminary draft of the Anti-Dumping and Countervailing Duties Bill to safeguard domestic industries, business circles are doubtful of its benefits for domestic industries. At a recent seminar organized by the Federation of Chambers of Commerce and Industry in Sri Lanka in collaboration with the Department of Commerce, industrialists expressed concern that the bill would be sterile because of the prohibitive cost of implementing it. It is feared that international legal cost would be prohibitively expensive.

However anti dumping laws can be implemented when there is evidence of imports being dumped and domestic industries suffer injury as a result, Legal Affairs Officer, World Trade Organisation (WTO), Guy Evans said.

Mr. Evans is on a mission to assist Sri Lanka in drafting the bill which has to comply with existing WTO legislation on anti dumping.

Dumping occurs when an exporter sells at a lower price in the export market than in the home market. Domestic industries threatened or injured by these lower prices will be able to enforce the provisions of the proposed bill.

The draft outlines how the value of a product can be established, taking into account its cost of production and factors which need to be considered in determining its export price. It also defines how a dumping margin can be arrived at and confers power on the Director General of Commerce to determine individual dumping margins.

An investigative procedure to determine whether dumping has taken place is also outlined. Written applications on behalf of injured Sri Lankan industries must contain sufficient information to warrant the initiation of an investigation. Investigations must be recommended by key players including the director general of commerce and an interministerial committee of ministers.

The draft specifies that the investigation must be conducted within twelve months with a maximum time frame of eighteen months being stipulated. While the Director General of Commerce must maintain confidentiality he is also required to maintain a public file of information which could be released to interested parties.

The director general is empowered to seek information from parties related to the investigation but must make a preliminary decision on the investigation between the third and sixth month of the investigation and notify the public. A final decision must be made within six months of the preliminary decision.

In imposing anti dumping duties the interest of consumers, domestic manufacturers and even the economic interest of Sri Lanka must be considered. The final authority of imposing a duty lies with the Minister of Finance. However its initial recommendation will be made by the director general of commerce who will recommend it to the Interministerial Committee which will forward it to the Minister of Commerce.

Duties will be effective after the preliminary determination. But the director general of commerce may suspend the investigation if an exporter gives a voluntary price undertaking.

Ms. S. Fernando, Deputy legal Draftsman, of the Department of Legal Draftsman, explaining the salient features of the draft bill said that this only spells the implementation of the GATT 1994 article 19 on anti dumping. Mr. M.G.Hewage, Director General of the department of Commerce, pointed this is a new concept to Sri Lanka and that many local industrialists are not in a position to fund such action.

"We are not familiar with 'dumping' and no doubt Sri Lanka would have to take technical assistance. Although this is a way of protecting the weaker against the stronger, lack of technical assistance and financial aid to hire such help is unbearable by countries such as ours," he said. Already the government has sent a SOS to the European Union in this regard. However Guy Evans, said that this bill allows developing countries to exert power on developed countries that could exploit the market.

Mind your business

More money the merrier

If you thought the price hikes in the utility services have all been announced, don't be sure just yet. There have been broad hints that charges for water may be increased and the Treasury is looking hard at a fuel price hike, again. Politically, the powers that be are not interested in pampering the electorate just because the polls are around the corner, those in the Treasury have been told. Instead, the advice is to find as much money as possible to fund the war...

Ad wars

The advertising war between the cellular networks is at a peak now, with each network trying to out do the other, in terms of call charges and rentals leading to claims of unfair trading practices. The matter is likely to be placed before the watchdog commission, which at present has only issued broad guidelines to the industry, without imposing restrictions on call rates. There will be requests by at least one network asking for not only maximum call charges to be fixed but also for minimum charges to be determined by the watchdog- a condition which their competitors have vehemently opposed...

Nail in the coffin

Companies which convert motor vehicles from petrol to LPG using domestic cylinders were dealt another blow last week when auto-gas companies announced they will be raising their gas prices in keeping with the recent gas price hike.

But the final nail in the coffin is expected to come when the use of domestic gas for motor vehicles will be declared illegal under new regulations. One question was how the regulation would be implemented. Now it has been decided that all vehicles will be inspected when their insurance is being renewed...

ADB wants bond improvements

By Mel Gunasekera

A proposal to establish a 'consultative committee on government bond market development' and 'government bond market unit' has been mooted by the Asian Development Bank.

The proposals also urged the authorities to set up a robust clearing and settlement system (with the possibility of using the Colombo Stock Exchange's central depository system) and a screen based systems for government securities to be developed without delay, to facilitate transparency of the bids/offers quoted by the dealers and order matching system, the ADB said in a report titled "Study on the Development of Government Bond Markets".

ADB commissioned debt market specialist Mangala Boyagoda, Head of Treasury Standard Chartered Bank to present a report on the Sri Lankan debt market.

The report suggests that the Central Bank should introduce a formal consultation process to enable them to get the views of market participants on strategic debt management policy issues.

A consultative committee on government bond market development should be set-up and include a wide range of market practitioners ranging from Primary Dealers, institutional investors, commercial and development bankers, market makers in corporate debt, stock exchange, regulators.

At a later stage when macro economic stability is attained, the opening up of the capital account of the balance of payment should be seriously considered.

"If there are reservations about complete opening up of the capital account, partial opening up with due safe guards as far as the government securities market should be considered."

In the present state of the market development, the government's commitment is required broadly in the following three areas; a) facilitating the development of the secondary market infrastructure and efficient regulatory framework; b) strengthening the intermediaries such as Primary Dealers to enable them to compete with retail commercial bank network by providing access to adequate resources and increasing the public awareness of the government securities; c) continued commitment for financial sector reforms towards broad-basing the market participation and ensuring their independent decision making and thereby avoiding market distortions created due to the impact of captive sources.

The report recommends the role of market development and government bond market regulatory role be placed with an independent unit established away from the Superintendent of Public Debts Department. This independent unit may be called "Government Bond Market Unit" and be staffed by the Central bank employees headed by an officer, who is at least in equal level in hierarchy to the Superintendent of Public Debt. The Head of the proposed Government Bond Market Unit should be responsible to the Governor.

An integrated government bond management programme has been broadly identified in terms of three time frames of short, medium and long-term targets.

The proposed government bond market unit of the Central Bank in consultation with the 'consultative committee on government bond market development' needs to play an active role in providing the leadership to the market development programmes.

The report recommends a bond market development specialist should be appointed as a consultant to the government bond market unit to provide the necessary technical inputs in strategy formulation and resolving any issues arising during the implementation.

The report suggests a market surveillance division be established within the government bond market unit. The division will monitor the secondary market activities and transactions of Primary Dealers to evaluate their compliance with the regulations, potential market behaviour that have an impact on free and fair mechanism of the market and actions that may violate the interest of the investor public.

Marketing education to the outstations

Marketing stops at nothing. The new president of the Sri Lanka Institute of marketing (SLIM) believes marketing and communication are needed to help solve war torn Sri Lanka's national crisis. Rienzie Martinesz who was appointed president of SLIM recently is the head of marketing at Lanka ORIX Leasing Company Ltd. He wants to have a hand in shaping national policy and plans to take marketing education to the outstations.

By Dinali Goonewardene

STB: There is a large presence of Indian marketing personnel and advertising agencies in Sri Lanka. Why is this?

RM: In the last two or three decades many multinational marketing and advertising firms employed expatriate marketing and advertising personnel from the west. Currently we do not have so many people from the west but from India for obvious reasons of cost. If we look at numbers a large proportion of Sri Lankan marketing and advertising personnel are serving in other countries.

It is a global practice. The question here is why are we employing Indian marketing and advertising personnel instead of our own. The bold answer to this is we have failed to nurture good marketing and advertising personnel within the country to meet the current day business practices. Not only marketing or advertising, but at the rate we are going we will have sales people from India going out and selling products and services, door to door, shop to shop. SLIM has identified this national need and is currently making a concentrated effort to fulfill this.

STB: SLIM does not monitor on the job training and there are no approved institutions providing on the job training unlike in other fields such as accountancy. Why is this?

RM: We have been discussing it. We have a unit called qualification management which I chair. We are going back to shareholders to ask them what type of people they want. That information is used to design our programme to suit their requirements. We also get information from them about problems of the existing marketing people they have in the company. And when they say there is a lack of marketing research we respond with a market research programme. We have identified the fact that we need a diploma in market research, which we are going to launch this year.

So coming on to your question of why we are not monitoring them, we really don't have the infrastructure to do so. We need to get our stakeholders to be a part of us. Somebody in an organization has to do it. SLIM as a body will not be able to do it. So we are looking at how we can get our members support.

But of course we initiated last year a SLIM mentoring process where we invite any student following a diploma in marketing UK, Sri Lanka or NIBM to come to us. And we have about 30 marketing people, I'm one of them. Right now I have about 12 enrolled students who are call on a regular basis about problems in office.

STB: Marketing does not play a key role in the state sector. Is anything being done to encourage this concept?

RM: I would agree with you if you made that comment ten years ago. But I wouldn't agree with you now. Ten years ago many so called private multinational organizations were practicing so called production orientation and sales orientation. They were not practising marketing orientation. Only now we are getting into marketing orientation.

What is marketing? Marketing is basically making profits through customer satisfaction. Sometimes the customer himself doesn't know what level of satisfaction he wants. There is no practising of marketing. I would say Unilever (who I also worked for) is very much a marketing oriented company. But we still didn't find a demanding customer, saying this is what we want, where is the product for us. It was never there.

Whatever is produced, whatever is put on the normal channel of distribution, consumers came and bought. They thought that was the best. Todays situation is different because of the government policy that has changed and encouraged free competition. Monopolistic situations are basically now being killed.

There is so much of competition, now consumers begin to see the differences of products. And now they are demanding. Now they give a silent vote for a product which they don't want to buy. Earlier they had no choice, but to buy what is available.

Like to take an example of what happened in Russia. Going in to more globalisation and an open econmic situation.

Now there we see what are the products and the brands that they could buy. If they don't like to buy products in their own country they can fly to Dubai, buy what they want and get back. So the same thing is happenig here in Sri Lanka. The customer is so demanding it has compelled any organization to be marketing oriented. Including the state sector.

Take for example there was no proper marketing professional in state sector organizations. If you had seen in the papers a couple of months ago, Bank of Ceylon had asked for a head of marketing. Sri Lanka Telecom had asked for a head of marketing, which was not there before.

The biggest problem the head of marketing will have in the state sector today is not to practise marketing. But to practise internal marketing. Not external marketing, internal marketing. Converting all the people in that company to become marketing oriented. That would be their task number one. So it is evolving. We are moving towards marketing orientation. The country and the consumers. The whole business. Therefore now there is an opportunity for the marketing people. We see that the state sector is being taken over by many marketing professionals. The Head of marketing Sri Lanka Telecom is now a very professional marketer.On the marketing side of the Board of Investment is a senior marketing person.

STB: Marketing exams are confined to the urban sector. For example exams are not conducted in Sinhalese. Is anything being done to take marketing to the outstations?

RM: We are the Sri Lanka Institute of Marketing. Although we are a non profit organization we have to look at the viability of the things we do. Even if we don't make money we can't lose. Because we are not being funded by the government but are funded by our own programmes plus our membership. Our membership is contributing Rs. 1500 per year to see that the knowledge of the fraternity is enhanced. So we have to make maximum use of this money. Because of that we have really concentrated on where the big market is. Which is Colombo. But we have already started in Kandy. We are conducting the Diploma in marketing, Sri Lanka as well as the preliminary course in marketing has been launched in Kandy. From Kandy we are now looking at Badulla, Matara, Negombo. So we are now going into regions. I would say three years from now, I'm sure that we will be in most of the provinces.

About courses in Sri Lanka, the problem is that we need lots of care, lots of effort in terms of translating marketing terminology, which is not an easy task, and takes a long time. Deepal Sooriyarachchi who is our ex president has taken an initiative in writing a book in marketing in Sinhalese. So he has separately helped us to identify some of those Sinhalese terms for most of these marketing terms. While the sinhala translation will be helpful and useful, we wont be able to launch a Sinhala program probably for the next two years. We are now not having the Diploma in Marketing in Sinhalese. Also we wouldn't have the preliminary course in marketing.

But we have various customer care programmes now being conducted in Sinhalese. We are taking this to the level that is expected. Sales people have to be proficient in sinhala. Because we are talking about a trade salesman, selling products to the trade.

He doesn't need much English to convince a Mudalali, a trader in an outlet, to buy his goods. We launched the national sales congress last year which was basically focussing on motivating and educating the sales people in sinhalese. We actualy hadn't done it in Sinhalese but we did it in 'Singlish.'

A combination of Sinhala and English. But if we want, probably as time goes on we would do it exclusively in Sinhalese.

STB: In what areas would you like to change government policy and what efforts have been made in this regard?

RM: we haven't made much progress in terms of the Sri Lanka Institute of Marketing. We basicaly would like to get involved in the national policy. Whatever you do today, you need marketing. You need some aspects of marketing. Marketing is communicating, marketing is also identifying customer needs, anticipating the future. It is also selling the idea. So marketing is needed in anything you do. When the government wants to launch a programme on controlling aids or awareness, its marketing. You name it, anything. Even for example the conflict that we have in Sri Lanka, at the end of the day you need a little bit of marketing. You need a little bit of communication. Some aspects of marketing have to be used in that.

What we are trying to do now is that we have a forum called the National CEO's forum which we are focusing on. We had it last year and we got the deputy minister of finance to address our membership.

Also we got some academics who are experts in terms of economics and information technology, globalisation and demographics to come out and talk to our membership as well as the policy makers. This year they are going to take it one step forward. We are actualy giving an opportunity for the head of state to tell our members of her policy.

Basically her policy will be governed by what is happening in the market environment. Which will be highlighted by the academics, experts in that area. So we give a forum where our membership can interact with the national policy makers. The vision is that the National CEO's conference would be a forum where the government could interact with the CEO's to collect information in order to determine national policy.

Also we have a consultative committee. We have spoken to the minister of trade and told him that we have a consultative committee whom he can consult for this national policy making.

That is the proactive approach rather than the reactive approach where once the policy is made we go and shout and say it is not right. The programme will start from the appointing of the consultative committee and then also the National CEO's conference.

We are looking at some of the imminent marketing personalities to appoint as patrons to the Sri Lanka Institute of Marketing, who will actually take this initiative, who are very close to the national policy makers. Through him the information can be passed on to the national policy makers for their decisions.


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