Delay may cost taxpayer dearly

Contents

• Threat to Sri Lankan economy
• "Superstar" fund manager
• Uddaka quits Merc group
• Wije back as deputy governor
• Bombshell at JKH: Jagath to retire
• Protect rights of migrant workers
• Delay may cost taxpayer dearly
• News
• Attitudes more important than facts!

Economists predicted a disastrous impact on the country's economy and a chain reaction in many sectors if - as most people expect - Bangladesh is able to provide housemaids at lower salaries than what Sri Lankan housemaids get.

The Sri Lankan government gets some $1 billion in remittances from workers in the Middle East while losing another $300 to $400 million because of a money laundering racket. Of some 850,000 migrant workers in the Middle East, 80 percent are women who work as domestics.

"This is a serious issue and very worrying. We have to look for counter measures (to minimize the impact)," noted Susantha Fernando, chairman of the state-run Sri Lanka Bureau of Foreign Employment (SLBFE).

Sri Lanka is the only country in South Asia that allows women to work as domestics in the Middle East and for years had a monopoly which would end with Bangladesh's expected low-priced entry into this market. Competition in the foreign migrant domestic worker market comes from the Philippines, Thailand and Indonesia which cater to the top-end of the market while Sri Lanka provides for the bottom end at salaries of $100 per month per housemaid.

"We will get edged out as Bangladeshi's, I am sure, would be prepared to work at lower-than-$100 salaries," said a worried Suraj Dandeniya, president of the Association of Licenced Foreign Employment Agencies of Sri Lanka (ALFEA). "They need only to start training programmes and match the ability of our maids to offer their services for less."

The Bangladeshi development came to the fore when Dr Irene Fernandez, chairperson of CARAM Asia, an Asian NGO group working on migrant issues, at a regional summit in Colombo last week on migrant workers announced that the Bangladeshi government had decided to lift the ban on women going overseas on work.

Ashud Ahamed, first secretary and acting high commissioner for Bangladesh in Colombo, confirmed the statement saying the government has agreed in principle to allow women to work abroad as domestic housemaids.

"Even now there are illegal outflows of housemaids who are exploited. The government wants to formalize this," he said adding that millions of Bangladeshi men work abroad.

Sources in Colombo said some Bangladeshi women travel through Sri Lanka to their destination in the Middle East.

Of particular concern to Sri Lankan authorities is that the Middle East prefers Muslims housemaids which Dhaka can provide.

Some 25 percent of Sri Lankan housemaids are Muslims and "we can send more if we have more," said Dandeniya. Recruitment agencies get a deployment fee of $600 to $800 per housemaid, the higher figure being for Muslim women.

"If Bangladesh is able to penetrate our market share, there would be a sharp fall in employment opportunities, falling revenue for government and less business for airlines, travel agents," he said.

According to some conservative estimates, Sri Lanka could lose $600 million a year in foreign exchange from fees earned by employment agencies alone and much more from a reduced Sri Lankan workforce in the Middle East. "There are seven Middle East airlines catering mostly to labour traffic who would be forced to reduce flights here and shift to Dhaka if the traffic flow picks up there," another recruitment agent said.

"Superstar" fund manager
Raj Rajaratnam, the Sri Lankan-born investor based in New York who has generated much attention with his forays into the Colombo bourse, has been described as one of America's "superstar" fund managers who made a name for himself specialising in technology stocks.

The founder and manager of the Galleon Fund, one of the leading hedge funds in the United States, Rajaratnam has been featured among the elite US money managers in a book called "The New Investment Superstars: 13 Great Investors and Their Strategies for Superior Returns" by Lois Peltz.

Rajaratnam built up sizeable stakes in several blue chips during a vacation here and in subsequent acquisitions. He is now believed to own about seven percent each of the Hayleys and John Keells Holdings conglomerates and over five percent of Commercial Bank, one of the most profitable banks in the island, in addition to stakes in Colombo Dockyard and Tokyo Cement. Speculation has it that he was active again in the stock market last week and is believed to have bought more than half a million shares of JKH on Monday.

Born on June 15, 1957 in Sri Lanka, Rajaratnam had his early education at St. Thomas' secondary education and then went to the University of Sussex. His father, J.M. Rajaratnam, was the chairman of Singer (Sri Lanka) in the 1970s before being promoted to head the multinational's South East Asian operation based in Bangkok, according to S.K. Wickremesinghe, former chairman of Airlanka (SriLankan Airlines) and a one-time colleague of Rajaratnam senior.

"We used to call him James," recalled Wickremesinghe, who remembers Rajaratnam senior from his university days. "He did a science degree and then became a chartered accountant. He joined Singer as an accountant, and later became chief accountant and finally chairman in the late 1970s." Wickremesinghe himself was invited to join the Singer board of directors by Rajaratnam senior.

"He did well here and then went as head of Singer in South East Asia, stationed in Bangkok, supervising the region," Wickremesinghe said.

"From there he went to New York as vice president of Singer Exports." Raj Rajaratnam first studied engineering and then did an MBA Finance in the Wharton Business School at the University of Pennsylvania.

He joined the American investment bank Needham & Company, Inc. which specialised in emerging growth companies, and worked there for more than 11 years.

Rajaratnam started as an analyst of electronics stocks, and rose to become managing director of investment analysis for technology, healthcare and specialty retailing. He became President of Needham in 1991.

Rajaratnam set up the Galleon Group in January 1997, after leaving Needham. The Galleon Fund now has assets worth over $5 billion, according to Rajaratnam.

"At some point, you stop working for money, you work for pride," he once told an interviewer.

Married, with three children, he has described his hobbies as travel, world affairs and sports.

Uddaka quits Merc group
Uddaka Tennakoon, managing director of the Mercantile Merchant Bank, quit on Friday with colleagues saying there was no controversy over his departure.

Coming after Jagath Fernando's shock, early retirement at John Keells, the business community was naturally curious to know the reasons for Tennakoon leaving the Merc group. "He wanted to pursue other interests," said a bank spokesman.

Colleagues of Tennakoon, who could not be reached for comment, quoted him as saying that he had been considering for a long time to move into consultancy work.

Mercantile Merchant Bank Ltd (MMBL), a privately held investment bank, is a joint US - Sri Lanka venture and member of the MMBL group. The group's activities include investment banking, commercial banking, stock broking, exchange broking, supply chain management and business logistics, travel and tourism, tea sector related services and information technology. MMBL Group represents a number of multinational companies.

Wije back as deputy governor
W. A. Wijewardene, assistant to the governor of the Central Bank, has reverted back to his former position of deputy governor four months after the Supreme Court held that his appointment was irregular.

"He has been appointed as deputy governor of the Central Bank with effect from August 7," a spokesman for the bank said. Other officials said the bank called for applications for the post under a new selection procedure with Dr. Rani Jayamaha, currently assistant to the governor, and Wijewardene being the only applicants.

The Supreme Court in April ordered the bank to follow proper procedures in selecting its officers for high-ranking posts after quashing Wijewardene's appointment as deputy governor when a retired officer complained he was bypassed for the job although being more senior.

The court directed the Monetary Board of the Central Bank consisting the Governor, Secretary to the Finance Ministry and a member appointed by the president, to hold a fresh selection process for this post after "giving publicity to the criteria and procedure for selection."

Bombshell at JKH: Jagath to retire
Sri Lanka's corporate world was last week stunned by the news that John Keells Holdings (JKH) Deputy Chairman Jagath Fernando is taking early retirement after a 30-year spell with the giant conglomerate.

The former rugby star - in a letter to the board of directors last Tuesday - said he would be taking early retirement from August next year for personal reasons.

"He sent in his letter opting for early retirement but did not give any particular reason," said JKH Chairman Vivendra Lintotawela. He rejected rumours that Fernando had been eased out from the board due to differences of opinion.

Speculation was rife that the deputy chairman was asked to quit and a compromise formula of early retirement worked out so as not to upset the stockmarket in which JKH is a favourable stock.

Fernando's plans to quit in a year comes on the back of JKH Finance Director Ms. Anusha Coomaraswamy - some months back - announcing her resignation from October 2002 for personal reasons. This too triggered speculation that things are not right at the leisure, transport, plantations and food & beverages giant and raised questions about financial issues and impropriety. Coomaraswamy's post has already been advertised.

Business analysts said it was imperative that the group issues a statement addressing all these issues and growing speculation particularly as it is rare for two senior directors to call it quits within a period of six months.

"I had planned to take early retirement because I had a good innings with the company and would like to make way for younger people in the management ladder," said Fernando, when asked for his comments. He said he has given one year's notice to enable - among other matters - a smooth transition for his successor.

Among leading contenders for the deputy chairman's job are directors Susantha Ratnayake and Ajit Gunawardene.

Fernando, who started life at John Keells as a tea taster much before its transformation to a widely-diversified group from essentially a tea and commodities broking firm, was also a brilliant fly half for Royal College, the CR & FC (pairing off with scrum-half Malik Samarawickreme - now UNP chairman) and the Sri Lankan national rugby team.

His early retirement comes amidst reports that JKH's leisure divisions - which come under his control - have not been doing well in recent years though company officials insist that the crisis is essentially due to the nagging ethnic conflict. The LTTE attack on the Colombo airport last year and the terrorist attacks in the US exacerbated this situation.

"Fernando shouldn't be blamed for this," said one official. In recent months, the group has been divesting some of its hotel properties, looking for a buyer for Coral Gardens Hotel at Hikkaduwa and returning the management of the Ceysands Hotel at Bentota to its owners, the Ceylinco group. "Coral Gardens is up for refurbishing and it's a costly exercise as the refurbishing of Bentota Beach hotel showed us," said a JKH hotel executive.