Foliage is the rage now

It seems that there is no end to the line of products Sri Lankans export to the international market. Entrepreneur Gamini Rathnasiri from Kurunegala exports cut foliage like Song of India, coconut, habarala and palm leaves under an EDB-backed venture. Picture shows Rathnasiri surrounded by queen palm grown at his 15-acre nursery off Ibbagamuwa. (Please see page 10 for connected story) Pic. by J.Weerasekara.


Civil aviation hub in Sri Lanka
A hi-tech air traffic management system proposed by the giant American defence and aerospace company Lockheed Martin Corp has the potential to make Sri Lanka a regional hub for civil aviation and enhance her earnings from servicing aircraft.

The Board of Investment is now evaluating the proposal by Lockheed Martin, which has teamed up with Airways Corporation of New Zealand, a specialist air traffic management firm, BOI chairman and director general Arjuna Mahendran said.

The investment could run into several million dollars and the project would bring in technology that would enhance flight safety, he said. This in turn could attract more aircraft to fly through airspace within the jurisdiction of the Colombo Flight Information Region (FIR), an area covering 950,000 square miles stretching from the middle of the Indian Ocean, from the Maldivian FIR to the Australian FIR.

Lockheed Martin, which had 2001 sales of $24 billion and employs about 125,000 people, is well known for its fighter planes such as the F-16 Falcon and F-117 Stealth Fighter, transport aircraft such as the C-130 Hercules which is used by the Sri Lankan airforce, and ballistic missiles.

It was also the successful bidder for the United States Air Force multi-billion dollar future joint strike fighter programme with its F-22 Raptor that will replace the F-15 Eagle multirole fighter/attack aircraft, as America's premier front-line fighter jet starting in 2005.
Airways Corporation of New Zealand specialises in air traffic control and manages a huge area of the airspace over the south Pacific.

A team from the consortium is in the island to collect data about air traffic control from the Airport and Aviation Services Ltd (AASL) whose radar surveillance centres control Sri Lankan airspace and the Colombo FIR.

According to Captain Sudharshan Manamperi, the Sri Lanka co-ordinator of the project and former AASL chairman, the proposal by Lockheed Martin and Airways Corp is for an airspace management system that would be done in partnership with the government.

"The project will bring several benefits to Sri Lanka," he said. "The new air traffic management system will help better manage crowded skies, allowing aircraft to fly closer laterally and longitudinally.

"It will enhance flight safety, encouraging more aircraft to use our airspace, and enabling the government to earn move revenue by servicing such aircraft." The presence of a company like Lockheed Martin would help to attract other American investors to the island, he added.

The investment also could lead to other projects such as the setting up of an aircraft maintenance base here, Manamperi said. The proposed air space management system will help Sri Lanka modernise its air traffic control in the Colombo FIR and be compatible with the requirements of the Future Air Navigation System (FANS), a satellite-based air traffic control system that will replace existing ground-based navigation and monitoring sensors and communications systems by 2005.

FANS, designed to cope with the increasing volume of air traffic and provide more effective navigation and greater safety, is being implemented world-wide mainly through the auspices of ICAO (the International Civil Aviation Organisation).

100 % foreign stakes in banks, insurance violate rights
Lalith Kotelawala, the Sri Lankan business magnate, has slammed the government over recent budget decisions to allow foreigners 100 percent ownership in banks and insurance companies.

"While Sri Lankans can own only up to 15 percent in the bank, foreigners are allowed unlimited control. This is a violation of our fundamental rights," the chairman of the Ceylinco Group told The Sunday Times Business in a no-holds-barred interview.
Ceylinco is one of the biggest conglomerates in Sri Lanka with interests ranging from insurance, banks, finance, IT to higher education.

He said foreigners could bring in their money and invest in anything and in the absence of proper safeguards there could be money laundering, drug money or money from terrorist activities. "There is no safety mechanism to check such investments. You open a SIERRA (foreign) account, bring the money in and take it out," he said highlighting the need for the economy to be a Sri Lankan-oriented one without relying too much on foreigners.

"Sri Lankans have the skills, talents and ability plus cash. We need to harness these resources instead of depending on foreign money," he said, adding that multinationals operating in this country have brought little benefit to the country since most of the profits are repatriated.

He warned that with costs of production rising in Sri Lanka, multinationals would - instead of producing locally - import cheaper products from countries like India where labour is cheaper, resulting in job losses and other social problems.

Kotelawala said that the stock exchange was expanded in the 1990s with the intention of creating a share-owning democracy amongst Sri Lankans, which is unfortunately not the case today because of wider foreign participation in the markets.

Plea for fuel price changes bi-annually
Sri Lankan industry has been affected by monthly changes in fuel prices resulting in a situation where manufacturers find it difficult to distribute costs, industrialists say.
Rangith Hettiarachchy, Deputy Chairman of the Ceylon National Chamber of Industries, said the recent monthly changes in petroleum prices have placed most sections of industry in a critical situation.

"The government is correctly marketing petroleum products in line with world market prices but when prices are revised on a monthly basis industrialists find it difficult to distribute the cost of their products. If this cost is not distributed properly, the manufacturer is not in a position to recover it."

He said that the government should introduce a price structure for petroleum products valid for six months, saying that it is possible to predict a price structure that would be valid for such a period.

Stockmarkets picking up ahead of talks
Is optimism over the peace process finding its way onto the Colombo Stock Exchange?
The local bourse has certainly come to life in the past month. The All Share Index finished on 684.7 points on Friday, up almost three percent for the week and 11 percent for the month. Turnover has also been strong.

"Things are much more positive now on the economic front and on the front of the peace process," said Dushyanth Wijayasingha, head of research at Asia Securities.
"So that has really been reflected in investor sentiment."
But others are not so sure.

Namal Kamalgoda, fund manager at Eagle Insurance, said the activity of the past few weeks had more to do with a few individual investors taking some big punts on selected stocks.

Excited by the sudden activity, retail investors had also jumped in. "Strategic buying started it and then everybody got on the bandwagon," he said. "I think there is greater optimism. People are willing to pay premiums."

Another contributor to the surge in the market has been by the release of mandates by the Insurance Corporation General Fund. However, Kamalgoda played down the role of the peace process, although he said the commencement of face-to-face talks would spur confidence.

In fact, there was more potential for the market to go down should peace talks stall.
"Most people have been burnt before and they will require something much more concrete before they start investing on the basis of peace," he said. Regardless of the causes of the sharemarket surge, there is agreement about which way the bourse should go from here.

"This is just the beginning," said Prabodha Samarasekera, fund manager at National Asset Management. "This market is on its way up." The sharemarket is currently trading at a price to earnings multiple of about nine times.

But if the peace process continues, it could easily climb to over 11 times, Wijayasingha said. The biggest winners in this re-rating should be not only the tourism sector but also the banks.

"The banks are generally the first to benefit from any improvement in the economy," said Wijayasingha. "We see a fairly significant upside in the banks sector." The banks have already been the focus of much attention in recent weeks.

Kamalgoda pointed to recent trading in Commercial Bank and DFCC as evidence of the level of retail speculation in the market. Commercial Bank climbed a further Rs. 15 during the week to close at Rs. 158, while DFCC gained Rs. 13 to finish at Rs. 158.
The two banks' share prices - which rose 23 per cent and 40 percent respectively during May - have been buoyed by speculation surrounding the upcoming privatisation of Sri Lanka Insurance Corporation, which owns 30 percent of Commercial Bank and 11.5 percent of DFCC.

"It is thought they will probably sell off the holdings before privatisation," Kamalgoda said.

Dilmah encounters branding drama
By John Breusch
Five months after its launch in Britain, Dilmah Teas has reported strong sales growth despite coming up against an unusual branding problem. Director of operations Malik Fernando said the company had received many letters from customers asking whether their product was "Fairtrade" safe.

Fairtrade is an organisation - backed by groups such as Oxfam, Christian Aid and the Catholic Agency for Overseas Development - which promotes improved conditions for workers in developing countries by labelling products deemed to have complied with certain prescribed standards.

But Fernando said that while Dilmah complies with the criteria set by Fairtrade, it goes much further. Fairtrade is really targeted at international brands that source their raw materials from producers in developing countries, he said.

But as a Sri Lankan-owned company that grows and packages its tea in Sri Lanka, Dilmah makes profits which are returned to Sri Lanka and the local tea industry.
And that, Fernando argued, is a claim no other tea brand can make. However, Fairtrade's labelling criteria does not even seem to contemplate a company such as Dilmah.

"There is no structure to acknowledge a company like us so we're really in limbo," he.
"There is no provision - because I've searched high and low - which looks at something which is more ethical than fair trade, which is a technology transfer, a value added transfer to Sri Lankans."

So Dilmah has to rely on its own resources to inform consumers of its unique position, which it calls "ethical trade". "We say on our packaging that we are more than free trade, that we are ethical trade," Fernando said.

"There is some confusion because fair trade is a label that [consumers] look for whereas for ethical trade there is no label. We have to convince them through our promotions and advertising and I think customers realise that this is a Third World company that is bringing this across."

Fernando said brands using the Fairtrade label are able to sell at a premium. "The good thing about it is that a portion of the profits do go back to these groups [that back Fairtrade]," he said.

"But really it comes back to aid, so what we're saying is, we say trade, not aid. Instead of giving a hungry man fish, it's better to teach him how to fish." With Dilmah's launch into the British market, the Sri Lankan tea industry's 135-year relationship with its founders appears to have come full circle.

"We're going very well for a new brand in an extremely British dominated culture," said Dilmah founder Merrill Fernando. "I told them [at the British launch] the industry that you gave us was an important one but all of its fruits went out of the country. I am bringing you a product to the supermarket that you can drink straight away. There are no middlemen and we retain all the profits here for the welfare of the country."

Back to Top
 Back to Index  

Copyright © 2001 Wijeya Newspapers Ltd. All rights reserved.