threatens economic recovery
and British armoured cavalry forces charged across the Iraqi desert
last week, preceded by Tomahawk cruise missile shots, in the first
phase of a military campaign to disarm the oil-rich Gulf state,
Sri Lanka's business community warned that the war could set back
the island's fledgling economic recovery.
possible losses resulting from imminent freight rate hikes, higher
insurance premiums, and delays and diversion of export cargo with
the Ceylon tea industry, whose low growns are much in demand in
the Middle East, being hit hard. Higher oil prices could translate
into increased transport and production costs and fuel inflation,
which could hamper government efforts to lower borrowing costs.
foreign aid that have come with the progress of the peace talks
might also be affected if donors divert funds to rebuild Iraq after
of the Colombo Tea Traders' Association and deputy chairman of the
Ceylon Chamber of Commerce, said the war could further dampen demand
at the Colombo tea auctions.
had slightly less demand in the auctions over the last couple of
weeks but now that the war has actually broken out it could get
worse for teas which are normally bought by the Middle East,"
may not have enough orders to operate on a regular basis if war
continues for a period of time at which stage the buyers' cash flow
get affected which means pre-shipment credit is going to be an issue,"
are not moving smoothly to the Middle East we could have storage
problems in Colombo."
who heads a Ceylon Chamber crisis committee involving the affected
sectors, said they were trying to liaise with the goverment to see
what support could be given to help the private sector.
in the auction is not sustained the negative effects will flow down
to the producer which we must try and avoid by having plenty of
liquidity in the export system so buyers can continue to operate
in the auctions."
factory owner Herman Gunaratne said low grown tea prices had plunged
as a result of the crisis and shipments to the Gulf were being held
has assured the industry of support to buy and store unsold teas
until the war is over.
industry is worried that the war would affect last-minute spring
shipments, according to Ashraff Omar, managing director at Mast
orders probe on Ibis deal after media spotlight
media spotlight, including reports in last week's Sunday Times newspaper,
on the controversy surrounding the Ibis bus privatization deal,
saw Prime Minister Ranil Wickremesinghe call for an immediate report
from Treasury Secretary Charitha Ratwatte on the issue.
according to informed sources, had called for a report within three
days on why the sale of 39 percent shares of six cluster bus companies
to Ibis could not be finalised.
Asked for his
comments, Ratwatte confirmed that a report had been called for and
said: "We are trying to get to the bottom of this (issue)."
Times FT last week in a story headlined "IBIS bus privatization
a major scam?" raised concerns that the deal was heading for
a disastrous scandal. The report said that attempts were being made
to provide a loan to the British company sans the 39 percent stake
in the six bus companies, violating rules of the Public Enterprise
Reforms Commission (PERC).
A fresh valuation
of the 39 percent stock had also been called for in a bid to raise
the loan facility, the paper said. The Sunday Times, in a separate
report in its main section, also raised issues about delays and
extensions connected to the controversial deal.
and unions have raised serious concerns over the Ibis offer.
The prime minister's
intervention came amidst reports that he summoned senior officials
of the Board of Investment (BOI) and expressed annoyance over the
lack of progress at this institution.
national media survey
Research Lanka (Pvt) Ltd, a Sri Lankan market research agency, has
carried out what it says is the "first, truly national media
survey" in nearly 20 years.
It said the
year-old ceasefire between the government and the LTTE enabled the
agency to carry out a countrywide survey which included the northern
and eastern regions, untapped for many years by research agencies
and the Census Department due to the conflict.
Lanka last week released the findings of this bi-annual Media Habits
Survey conducted in January - February 2003 in all nine provinces
of the island.
Some of the
findings of this interesting survey would be exclusively published
in The Sunday Times FT next week
for allowances too!
of the failed Pramuka Bank, currently drawing their salaries paid
from the deposits of frustrated investors, are now trying to persuade
authorities to pay their allowances too.
said that Labour Department officials have been approached by some
senior employees for a ruling on this matter. For most top executives
in the banking and private sector, the allowances often far exceed
the monthly, taxable salary. The Central Bank began paying the salaries
of Pramuka employees after its liquidation process was temporarily
halted by a court action from depositors.
lines abused war risk premiums
shipping lines abused war risk insurance premiums imposed by underwriters
after the terrorist attack on the Katunayake international airport
in July 2001 to earn "windfall profits", according to
a report by the Institute of Policy Studies, an independent semi-government
underwriters have still not completely removed the war risk premium
on Sri Lanka and the country still remains an excluded area, it
said in a report on the state of the economy. Following the airport
attack, the entire island was brought under "held cover"
status under which underwriters are free to levy an additional insurance
premium as war risk. Previously, only the northern waters were under
on ships are based on their market value, depending on size, age
and condition of the vessels.
But two powerful
shipping cartels serving Sri Lanka, IPBCC (India, Pakistan, Bangladesh,
Ceylon Conferences) and TACA (Trans-Pacific Stabilisation Agreement)
fixed war risk premiums at uniform rates without taking into account
the market-based value of the vessel, the IPS report said.
risk premium was abused by several lines in order to earn windfall
profits and to discriminate against Sri Lanka's exporters and importers,"
only affected the Sri Lankan economy adversely but it was implemented
in the most discriminatory and disorderly manner by some shipping
of shipping lines dismissed the charges in the IPS report.
were no windfall profits," said Rohan Perera, chairman of the
Ceylon Association of Ship Agents. "During that period the
premiums were yo-yoing because of the volatility at the time."
were forced to pay very high premiums to call at Colombo during
that period, he said.
today despite there being peace the country is still under held
cover status," he added. "Some lines are actually paying
war risk premiums to call at Colombo. It is just that it is not
former chairman of the Sri Lanka Shippers' Council and head of Ascobips
(Association of Shippers' Councils of Bangladesh, India, Pakistan,
and Sri Lanka), said the island was under held cover status although
no surcharge was imposed so that underwriters can impose extra premiums
if and when needed.
industry had repeatedly asked the government to lobby the London
insurers and get the held cover status removed but nothing had been
done, industry officials said.