15th April 2001
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A pretty woman at a roadside "kade" selling traditional Avuruddhu sweetmeats like kavun and kokis?
No.. it's the New Year stall at the Cargills Food City at Nugegoda.
- pic by Iresha Waduge

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Munchee's avurudhu crunch

By Chanakya Dissanayake
Ceylon Biscuits Ltd (CBL), Sri Lanka's premier biscuits manufacturer, last week threatened to transfer its production facilities to India or China in the wake of massive labour unrest led by the JVP trade unions over a bonus issue for the Sinhala and Tamil New Year.

"If the situation does not improve we will pull out our production to India or China where it is much cheaper to produce," said CBL chairman M.P. Wickramasingha.

JVP spokesmen denied the allegations saying they were fighting for the rights of workers. The union, company officials said, had instructed CBL's entire 1,000-member workforce to stop working overtime. The officials told a press conference that this was an organised attempt to sabotage a US $ 250,000 export order to India that had to be shipped by April 17th and to disrupt the overall production at the peak of seasonal demand.

CBL's deputy chairman, Ramya Wickramasingha assessed the resultant loss from the labour crisis at Rs 75 million per month. 

The labour unrest arose over a dispute about the payment of an annual bonus to workers. CBL has been paying four bonuses per year since its inception in the 60s. Customarily, it has been spaced out as one-month bonus in December, two months bonus in March and one month bonus in April. The dispute had arisen over the two-month bonus payment in March 2001, with the union demanding an unspecified increase.

CBL chairman Wickramasingha said they were taking a hard line on the issue and disciplinary action would be taken against all workers boycotting overtime work. "Our salary scales are highest in the industry. No manufacturing entity in Sri Lanka pays its workers four bonuses per year, it is very clear that this is a sabotage attempt at a vital moment." Officials said the unions were trying to cripple operations and force the company to give into their demands when the CBL had export orders to fulfill and had to keep to schedules.

Wickramasingha added that the new demand is in contravention of the collective agreement signed between the company and the union, which is effective until December 2001. 

"I am not shy to say that shareholders have the first right to profit. Globally, countries are pursuing productivity to make them more competitive and to attract investment. Highly militarised union workers are on the way out, But Sri Lanka is going backwards in time with the JVP assaulting the country's economy on all fronts," he added.

He also said that politicians were in a deep slumber turning a blind eye to the growing industrial unrest in Sri Lanka. "How can we expect foreign investment, when even local investors are considering pulling out of Sri Lanka?"

Last month, multinational Unilever said it would be forced to move its production unit out of Sri Lanka if a labour crisis, again allegedly triggered by JVP unions, escalated and made it impossible for production and growth. Several other companies have been facing serious industrial unrest and have urged unions to be reasonable in their demands. 

Industry analysts said there had been moves to invite two companies which have had similar JVP connected crises, for the CBL press meeting and express their concern too over the labour unrest but officials from these companies were apparently unavailable for the meeting.

CBL officials said that a wave of subtle violence is being launched by the JVP against dissenting workers. "The workers who wanted to work overtime were threatened at their homes by motorcycle borne union members," one official said.

JVP's firebrand parliamentary group leader, Wimal Weerawansa denied the charges by the CBL saying if the management had been willing to cooperate and compromise, this crisis could have been avoided. "We operate in a large number of companies and we do not willfully create any trouble. But if the management is adopting strong arm tactics to deal with union issues, we also have to reply in the same manner," he added.

L. Amarasinghe, secretary of the JVP led trade union -Inter Company Workers' Union, denied the statement of the management. "The company made heavy profits in year 2000, hence our demand for an increase in the bonus is justified." Amarasingha further said that the union is contemplating legal action against the management if they disrupt the protest.

"CBL is the most profitable biscuit manufacturer in Sri Lanka. Also due to the devaluation, they have made huge gains through exports. All we ask is the rightful share of workers' profits," Amarasingha added. 

Other union leaders lashed out at some companies and politicians for using the JVP as a scapegoat for depriving workers their rights. "I don't know about this particular case (the CBL problem). But all unions in general have been perturbed at attempts to use the JVP issue to deprive trade unions due recognition and workers their rights," said veteran trade unionist Bala Tampoe.

Tampoe, leader of the powerful Ceylon Mercantile Union (CMU), said current (media) reports of industrial unrest by JVP unions were a ruse to stall the Workers Charter. "By raising the JVP bogey, there may be attempts to delay the Workers' Charter," he added.

The Workers' Charter, aimed at protecting workers' rights, was proposed soon after the ruling People's Alliance government came into power but vanished from the government's priority list after the private sector protested against the move. In recent months it has been revived with Labour Minister Alavi Moulana, a veteran trade unionist himself, promising to implement it after consultations with the private sector and workers.

Mind Your Business

Free local calls

The buzzword among telecommunication networks is competition and they are ever on the lookout for ways and means to steal a march on their rivals.

And the latest option being contemplated by one network is, believe it or not, free local calls. If the proposed scheme materializes then subscribers would be able, for a fixed monthly fee, to have access to unlimited calls within a local network area. 

But of course, the pros and cons of the plan are still being evaluated and anyway, the regulators will also have a say in the matter.

Share fixing

Cricket is anyway in the news these days but for the wrong reasons: alleged financial irregularities by those who ran the game earlier are now being eagerly investigated.

And now comes the news that a cricketer whose batting as well as betting abilities are being questioned, may have made some easy money by having access to inside info on the stock market.

The watchdog commission however can only bark about this because they don't have enough evidence to bite, we hear.

The lady loves it

And, that annual rumour is doing its rounds again: that a Cabinet reshuffle is in the offing. What has set the tongues wagging however is speculation that the finance portfolio will be allocated at last.

Treasury boys are quaking in their shoes fearing that the former sportsman might grab the job but the good professor was heard hinting broadly that he is the better choice.

But our prediction is that, reshuffle or not, the lady will not let go of the purse strings.

Credit rating agency downgrades Sri Lanka

Sri Lanka's attractiveness to international investors suffered a major blow recently when international credit risk rating agency Dunn and Bradstreet (D&B) downgraded Sri Lanka's credit rating to a high-risk category. 

According to private sector economists, D&B in its March 2001 issue of International risk and payment review has assigned a DB 5- high risk rating and advised businesses to limit their exposure to Sri Lanka.

The DB 5 rating is defined as - "considerable uncertainty associated with expected returns. Businesses are advised to limit their exposure and/or select high return transactions only." D&B's country risk indicator provides a comparative, cross-border assessment of risk of doing business in a country. The indicator seeks to present the risk that countrywide factors pose to the predictability of export payments and investment returns, over a time horizon of two years. The risk indicator is composite of; political risk, commercial risk, macro-economic risk and external risk present in a given country. D&B's country risk indicator is used by over two million customers in 230 countries to determine the risk of doing business.

Little lubricants in 'slippery field'

Minority players in the lubricant sector, including Mobil, BP and Shell, met Treasury officials recently and expressed uncertainty in continuing business due to high costs and lack of competitiveness.

Concern about the viability of the local market has arisen mainly due to the recent import surcharge, which raised import costs steeply to minority players and placed them at a competitive disadvantage with Caltex, the market leader. Caltex enjoys substantial duty concessions as the first player in the recently liberalised lubricant industry in Sri Lanka.

"We are at a huge price disadvantage. Caltex is taxed at 10% and we are taxed at 25%, the surcharge has come on top of it," said a leading minority player. He further added that the increased duty burden is almost entirely passed down to the market, effectively out-pricing themselves from Caltex products.

Treasury officials including Rose Cooray (director-general of fiscal policy) and economist Sanath Jayanetti have assured the lubricant companies that the surcharge is only temporally and to bear with them for the time being, industry sources said,

However one senior official in a lubricant company retorted: "We paid Rs 5 million for the licence. We were assured a fair playing field, all we ask is for the government to stick to its promise."

The lubricant companies also points out an unfair competition scenario to be created by the duty surcharge. 

"In any other developed nation, we would have been able to seek redress under anti-trust and fair trading laws. But, in Sri Lanka the fair trading laws are weak and ineffective," said an official.

The minority players also say that if they pull out from Sri Lanka, the consumers will stand to lose since Caltex would become the undisputed monopoly lubricants marketer in Sri Lanka.

Out of the coop: Chicken farmers fly to Thailand

More than 150 small-time Sri Lankan chicken farmers were in for a surprise last month an all-expenses-paid trip to Thailand and Malaysia.

The farmers were gifted this trip by Ceylon Grain Elevators (CGL) - the Prima group subsidiary that is involved in feed milling, poultry breeding, shrimp farming and seafood processing which included attending a premier poultry exhibition in Bangkok and later visiting Prima poultry farms in Malaysia.

They were also provided hotel accommodation and food vouchers during their stay from March 14 to 16 in Thailand and a few more days in Malaysia.

Industry sources said that the Prima group, a Singaporean-based firm with extensive interests here in the wheat milling, bread, poultry and noodles business, had provided 234 air tickets to Bangkok and Singapore for the poultry industry with nearly 90 percent of that constituting small town and village farmers coming under the Prima family.

CGL, in addition to its own farms, has buyback arrangements with small farmers where they provide day-old-chicks and buy the fattened chickens after a 42-day breeding period.

The sources said that in addition to farmers, others who went on the trip were Prima officials, family members of farmers, industry officials and even bank managers. "The company provided one or more tickets to each farmer and said they could bring along anyone of their choice," one source said, adding that some farmers invited their bank managers for the trip.

In addition to the CGL contingent, another 40 farmers and officials were sponsored for the Bangkok trip by Nutrena, the chicken feed multinational. Both groups visited the VIV Asia exhibition in Bangkok which is held annually and is an important event for Asia's poultry industry. A range of goods and services for the poultry industry are offered at the VIV show.

The sources said the trip was a good experience for farmers, for in addition to seeing new developments in poultry and high-tech farms it was the first time many of them have gone abroad.

"We went in virtually two plane loads," said one of the officials who went on the trip.


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