Pudara Withanage (left) and Upeksha Ranatunga from Gothami Balika Vidyalaya, Borella are not only students but also young entrepreneurs in Sri Lanka. The two youngsters together with 28 others have floated a company that sells bookmarks and food items in the school through the Young Entrepreneurs of Sri Lanka (YESL). The programme is part of Junior Achievers International, a global NGO that helps promote practical business knowledge and skills for children. Small, informal businesses like these are growing in the country and the Central Bank in a study released last week of small businesses said they account for one percent of Sri Lanka's gross domestic product. Pic. by M.A. Pushpakumara. (See separate story on YESL next week).


US golfers on Lanka tour mean business
A group of 200 businessmen from US-affiliated chambers across Asia will visit Sri Lanka on a golf-and-business trip in November this year with Sri Lankan authorities hoping their interest would turn to investment apart from teeing on the green.

Local officials said they were hopeful that meetings between US executives and local businessmen could become prospective deals.

The November 1 to 6 visit of these senior executives working in US firms affiliated to AmCham (American Chamber of Commerce) offices in Asia occurs some seven weeks after Prime Minister Ranil Wickremesinghe's second scheduled visit to the United States to unveil a peace-and-economy plan at the United Nations.

Contrary to earlier plans of visiting only New York in September, Wickremesinghe is now also expected to visit Washington - for the second time in three months. The prime minister was in Washington last week for meetings with US President George Bush and other senior officials. "The prime minister's US schedule has been altered and we are told he would like to visit Washington after New York," said Maria Rasanayagam, executive director at Amcham Sri Lanka.

Amcham is assisting the Ceylon Chamber of Commerce in sending a 20-member business delegation along with Wickremesinghe. Representatives on the delegation are taking along bankable projects as joint ventures to offer to US businessmen, she said, adding that a lot of preparations are underway over the visit.

The New York and Manhattan chambers of commerce have been requested to submit a list of the top 40 investment bankers there to be invited when the prime minister addresses the New York Stock Exchange on September 20, a day after he addresses the UN General Assembly, the AmCham official said.

But apart from the September event, Amcham Sri Lanka views the November charity golf tournament as an excellent exposure for Sri Lanka's investment potential given the presence of 200 top executives from US firms in 22 countries in Asia and the Pacific including Japan, Singapore, Hong Kong and Australia.

"Unless people come and see this country, they wouldn't know what to expect," Rasanayagam said, recalling how a US congressional delegation was amazed at the development here during a visit to Sri Lanka last year.

This would be the biggest gathering of business executives in Colombo since the business-friendly United National Front won power at the polls last December.

"The golf course is a relaxed place to talk business as you spend a lot of time and are at ease," said Rasanayagam noting that another 200 local golfers, most of who are businessmen, would be pitted against the visitors. "It's a case of mixing business with pleasure."

While the 200 golfing executives would spend two days in Kandy and three days in Colombo on two golf courses, the Board of Investment is expected to organise an investment seminar for them and other meetings if necessary, she said.

Susantha Pinto, chairman of Amcham's golf committee, said Amcham was seeking the collaboration of related official bodies such as the Tourist Board and BOI as the visit would "undoubtedly benefit the tourism and investment scenario in Sri Lanka".

Tea output to top 300-mln kg
Production of Ceylon tea might exceed the 300-million kg mark this year, brokers John Keells said last week.

The crop had recovered from the effects of drought earlier this year and has exceeded last year's production levels, they said in a statement.

The output to end-June was 159.2 million kg, up slightly on the same period last year.

John Keells described the first quarter of the year as rather "lean" for tea production mainly because of drought.

But in May production hit an all-time high for the month of 33 million kg, exceeding the May 2001 output by 2.3 million kg.

"This increase and a further gain of 2.6 million kg in June has made good the deficit in the first quarter," the brokers said.

"It is likely that Sri Lanka will reach the magical figure of 300 million kg in the present calendar year," they said.

The only time production exceeded 300 million kg was in 2000.

Brokers Asia Siyaka Commodities said tea production in June rose 11 percent to 26 million kg compared with the same month last year.

Sharp increases in tea production have been seen in the last three months, the gains mainly coming from the two higher elevations with low growns still trailing behind last year's output.

Delays hold up minerals exploration
Delays on the part of provincial councils are holding up the issue of minerals exploration licences to foreign and local investors, according to the Geological Survey and Mines Bureau.

"We have re-scheduled all pending applications," said Janapriya de Silva, chairman of the Geological Survey and Mines Bureau. "Some applications for exploration licences are as old as 1994."

Under the Mines and Minerals Act of 1992 applications must be processed in 30 days, he said.

The approval of government agencies such as provincial councils was required where land earmarked for exploration for mineral deposits came under their purview.

Exploration licences are issued for apatite, ceramic raw materials, graphite, gold and precious metals, limestone, mineral sands and other minerals.

Despite repeated reminders by the bureau, there were lengthy delays on the part of provincial councils in processing exploration applications.

The delays were earning the country a bad reputation among investors keen on exploiting the island's mineral wealth, de Silva said.

"We can't afford to delay," de Silva said. "The faster we issue licences, the faster they can start investigations and the better the prospects of finding new deposits of minerals."

The delays had a snowballing effect because it meant delays in mining, royalties, employment generation and tax revenue.

The bureau earned Rs. 29 million in 2000 from royalties collected from minerals that have been mined.

Caltex, Shell eye fuel market
The local units of two petroleum multinationals, Caltex Ceylon and Shell Gas, are interested in entering the market for refined products under government plans to liberalise the industry.

The government is keen to open up the petroleum sector and attract more players to provide competition to the Ceylon Petroleum Corporation (CPC) and the Indian Oil Corporation (IOC), Board of Investment chairman Arjuna Mahendran said in Singapore last week. A third company will be licensed to carry out fuel retailing and bulk storage to boost competition, he said.

"We're looking for a third operator, preferably one of the big multinationals,'' Mahendran said, adding that the local units of ChevronTexaco, the second-biggest U.S. oil company, and Royal Dutch/Shell, which operates the sole gas terminal in the island, are interested in the licence.

Shell Gas Lanka and Caltex, the local unit of ChevronTexaco, both confirmed they were holding talks with the government on the possibility of entering the market. They said that, in response to government requests, they had submitted position papers on their views on liberalising the petroleum products market.

"We are interested in participating in the market and are awaiting guidelines," said Roberto Moran, managing director and country chairman of Shell Gas Lanka.

Shell was interested in importing, distributing and marketing refined products as well as in storage facilities, including the CPC's new storage complex being built at Muthurajawela which the CPC has said is up for sale.

"It depends on how they (the government) want to play it," said Moran. "We suggested shared facilities and terminals. We would also like to see a commitment from the government for a level playing field, based on our experience in the gas sector. The rules should be consistent for all players and should be transparent."

Caltex Ceylon is also exploring the possibility of entering the market for petroleum products.

"Yes, we're interested," a senior company official said. "But it is still in the very early stages. There are a lot of things to be looked at."

The government recently opened up the market with an agreement with the Indian Oil Corporation (IOC) to lease the CPC's storage facility in China Bay, Trincomalee and sell 100 CPC petrol sheds to store and distribute petroleum products mainly in the north and east of the island.

Meanwhile, the CPC last week signed a deal with the IOC to buy almost half a million tonnes of petroleum products annually in what the Indian oil giant described as one of its largest export orders in recent times.

The value of supplies under the term contract, under which IOC would supply 30,000 tonnes of diesel and 10,000 tonnes of aviation turbine fuel each month on a C&F Colombo basis starting in September, would amount to over $100 million at current prices.

"This is the largest export order that Indian Oil has bagged in recent times, and is in line with our corporate vision of becoming a transnational energy major," IOC chairman M.S. Ramachandran said.

"Through this initiative we hope to expand our market base and to convert the surplus petroleum products available into more wealth to the stakeholders," he said in a statement.

The CPC spent a total of $731 million on importing 1.9 million tonnes of crude oil and 1.4 million tonnes of refined products last year.

Half of the crude oil imports came from Iran with the rest from Malaysia, Saudi Arabia and the United Arab Emirates.

Sri Lanka imports refined products mainly on the "spot market" because the CPC's Sapugaskanda refinery is unable to meet the entire domestic demand.

The IOC said the agreement with the CPC would help Sri Lanka to lower import costs because of geographical proximity and reduce its exposure to the volatility of the "spot market" by almost 40 percent.

RPC and the "lone" raider
By John Breusch
Depending on who you believe, Dr. Sena Yaddehige is either the mastermind of an illegal takeover-by-stealth of Richard Pieris and Company (RPC) or he is a welcome challenge to the family-based cronyism that hinders the development of too many Sri Lankan companies.

Two weeks ago, the High Court of Colombo, responding to an application by RPC's corporate partner, Asia Capital Ltd (ACL), and ACL's chief executive, Dirk Flamer Caldera, issued an order prohibiting trading in RPC and ACL by a number of companies alleged to be associated with Dr. Yaddehige.

Caldera and ACL claimed that Dr. Yaddehige, a UK-based Sri Lankan expat, had breached the Takeovers and Mergers Code by accruing a stake of more than 30 percent in RPC and ACL without making a formal takeover offer for either company.

The court declared that the respondents make an offer to each company's shareholders at the highest price they had paid for their shares - Rs. 140 for RPC and Rs. 19 for ACL.

The respondents will be given an opportunity to respond to the allegations in court this Wednesday.

The saga began in March when Dr. Yaddehige purchased a 27 percent stake in RPC.

But ACL and Caldera claim that through shareholdings held by a number of other investment vehicles, Dr. Yaddehige actually controls more than 40 percent of the group - and that he intends to increase his influence by building a larger stake in ACL.

ACL and RPC are closely aligned.

Following a strategic alliance struck in 1998, each has a stake in the other of more than 20 percent.

But the connections between the two companies go far deeper than their share registers.

Caldera is the son-in-law of RPC managing director Ian "P.I." Pieris, who is himself the cousin of the company's chairman, Henry Pieris, and the father of its chief operating officer, Ranil Pieris.

P.I. Pieris is also the son of Percy Pieris, who helped found the company with his brother Richard.

The tight family relationships between and within ACL and RPC have emerged as a central aspect of the dispute with Dr. Yaddehige and the companies with which he is allegedly connected.

On Wednesday, Sezeka Ltd - one of those companies - launched legal proceedings against ACL and Caldera.

Sezeka denied any link with Dr. Yaddehige and instead alleged that Caldera was running ACL not in the interests of its shareholders but for the benefit of P.I. Pieris' aspirations for RPC.

It also claimed that Caldera and P.I. Pieris forged the 1998 alliance to secure their control over the two companies.

Thilan Wijesinghe, the former Board of Investment chairman who has been acting as a representative for Dr. Yaddehige in Sri Lanka, told The Sunday Times that his friend was confident the court would find there had been no wrongdoing.

Asked what might have caused the misperception about Dr. Yaddehige, Wijesinghe said that when an outsider buys a large parcel of shares in a listed company in Sri Lanka it can "create an anticipation of certain cosy relationships being undermined".

But P.I. Pieris rejects any allegations that the dispute is about protecting his family's grip on RPC and ACL.

"It seems to me that certain people seem to be clutching at straws by talking about fathers-in-law and sons-in-law and all that nonsense," he said.

"In a sense it's a family company but it's also a public company. It's just the way we have grown. We have professionals running each part of the company. So it's not a question of family as such, it's a question of tradition and culture and organisation."

P.I. Pieris said Dr. Yaddehige appeared to be pursuing a different agenda for RPC, with plans to turn it into a low cost export company that fails to look after the interests of its employees. "We feel responsible for the lives and the careers of everybody. There's a lot of family connections."

But Wijesinghe said Dr. Yaddehige's intentions have been misunderstood.

"I do not believe for a moment that it was Dr. Yaddehige's intention to come over here and rabble rouse."

"We see no reason for concern on the part of management or any party because essentially the shareholders concerned, including Dr. Yaddehige, have only the company's best interests at heart."

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