ISSN: 1391 - 0531
Sunday December 30, 2007
Vol. 42 - No 31
Financial Times  

Main events for the year

Here is a summary of the main business and economic events for 2007:

January 2007
Lankan roadmap
The Central Bank this week released its monetary policy for 2007 spelling out controlling inflationary pressures, managing reserves to guarantee confidence in the economy together with enhancing regulatory framework such as expanding the Financial Investigations Unit (FIU) and enhancing measures to address terrorist financing, money laundering, pyramid schemes and financial scams.

Cinnamon to acquire four global properties
Cinnamon Hotels and Resorts, part of the John Keells Holdings (JKH) group is gearing to sign a deal with an 'island' and enter India by the end of the year making it four properties. "We are serious about entering India and having two properties there by the end of the year and we are also very close to signing a third deal with an island which is 1,000 miles away," CEO Cinnamon Hotels and Resorts, Rohan Karr, told The Sunday Times FT, but declined to give more details about the properties. He said after April, Cinnamon would be an international brand with the launching of Alidhoo Island in the Maldives as 'Cinnamon International'.

February 2007
Virtusa going public in US
Virtusa Incorporation, the leading US IT firm, will go down in history as the first Lankan run US firm to list on the NASDAQ Stock Market in the United States, according to company officials.

Tea Board saga
An interim injunction issued against the Sri Lanka Tea Board (SLTB) based on an application by its former chairman was vacated on February 2, enabling the current directorate to function. The battle of wits between the board and the former chairman B. A. C. Abeywardane – over his dismissal – has been going on for awhile and even led to the latter calling a board meeting, even after he was ousted.

StanChart gets oil hedging deal
The Ceylon Petroleum Corporation (CPC) together with the Central Bank has selected Standard Chartered Bank for oil hedging to counter swelling oil prices in the world market. Oil hedging will enable the government to take a position in a derivative instrument that gives an equal and opposite financial exposure to the underlying physical position to protect against major adverse price changes in the global marketplace.

Sinhala on Microsoft
Microsoft Windows Vista was officially launched in Sri Lanka this week amidst a dazzling spectacle of lights, an array of colourfully costumed dancers and even elephants at the BMICH, truly fitting one of the most anticipated products in the IT world. It is being described as the biggest and most strategic launch in the history of Microsoft. Three products were introduced to the public, those being Windows Vista, Microsoft 2007 Office and Microsoft Exchange Server 2007.

CB and illegal remittances
The Central Bank (CB) is targetting foreign investors and Sri Lankan expatriates to invest in Sri Lanka Development Bonds (SLDB) worth US$ 200 million in the coming year. The move is partly devised to curb illegal channelling of remittances from expatriates. An estimated 30 – 40% of remittances from expatriates come into the country through unofficial channels causing concern to a foreign cash-strapped government.

March 2007
Touchwood in trouble over assets claim
The Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB), after launching an investigation into the financial statements of Touchwood Investments Ltd, has 'determined that the estimates of fair value of biological assets used by Touchwood Investments Ltd in its financial statements for the years ended 31 March 2005 and 31 March 2006 are clearly unreliable.'

Inflation as measured by the Colombo Consumer Price Index (CCPI) has been rising to dizzy heights causing anxiety and worry to monetary authorities as well as the business community. According to the Central Bank inflation has been on the increase since April 2006 and reached 19.3 % in December 2006 and jumped to 20.5 % in January 2007. It is widely believed that inflation above 20% could cause many economic setbacks.

EU trade benefits
The European Commission (EC) office says Sri Lanka could lose trade benefits from the European Union (EU) if allegations of human rights and labour rights violations continue to pile up.

Sri Lanka is one of 14 countries given GSP+ trade concessions by the EU. The GSP+ scheme gives bigger trade benefits than the usual GSP scheme of the EU and under the GSP+ Sri Lanka can export around 7,000 items into the EU duty free.

Largest conference hall in Hambantota
A massive four storied administrative complex including the country’s largest international conference hall is to be built in Hambantota with Korean assistance, Minister of State Revenue and Finance, Ranjith Siyambalapitiya told The Sunday Times FT.
All government institutions including Pradeshiya Sabha and local government offices will be housed at this complex costing US$ 26 million plus an additional US$ 9 million for the conference hall making it a grand total of US$35 million.

April 2007
Offshore oil in Sri Lanka likely by 2009
The potential for hydrocarbon accumulation in the Mannar Basin could have Sri Lanka producing its own oil and gas by 2009, a senior official said this week. Neil De Silva, Director General of the Petroleum Resource Development Secretariat, said there is a 70% chance that hydrocarbons will be found in the Mannar Basin.

Dhammika’s plans on jump-starting the BOI
The new ambitious Chairman at the Board of Investment (BOI) has given six months to the investors to start their projects once approved. Dammika Perera, also an entrepreneur in his own right, is planning to sanction the 550 aspirant investors within less than two weeks. “We will take less than two weeks to approve these applications. I have gone through them and 80 percent of each project can be cleared in three hours,” he told The Sunday Times FT.

May 2007
Central Bank resumes GoldQuest probe
The Central Bank has resumed investigations into the GoldQuest multi level marketing (MLM) business amidst reports that Vijayeswaran S. Vijayaratnam, Group Managing Director of Quest International (QI) which owns GoldQuest and whose business interests in MLM activities here have been swirling in controversy, was arrested in Jakarta on May 3.

SLIC privatization
The Sri Lanka Auditing and Accounting Monitoring Board (SLAASMB) has absolved Ernst & Young and PricewaterhouseCoopers (PwC), the two auditing firms at the centre of a storm regarding the privatisation of the Sri Lanka Insurance Corporation (SLIC) of wrongdoing, after a more than 18-month probe.

June 2007
Tariffs refund crisis forcing NTT to sell
The controversial sale of a bigger slice of the NTT stake in Sri Lanka Telecom (SLT) may have been prompted by calls by the Supreme Court forcing the refund of excessive tariffs amounting to billions of rupees which would leave the Japanese firm in financial ruin.

Police weak against abductions, ransoms
The Police, as an arm of the government, are weak in containing abductions and threats-for-ransom, an email poll by The Sunday Times FT shows.
A majority of the respondents from the business community and professionals said the police had failed in their duty while some also accused the police of involvement. “The police are not doing enough as some of them are also involved,” said one respondent.

July 2007
Hotels seen delisting over solvency issue
Some hotels are contemplating to delist from the Colombo Stock Exchange (CSE), as they cannot meet the solvency test stipulated by the new Companies’ Act and many want the government to give some relief in order to avoid being driven to bankruptcy.

The solvency test introduced in the new law deals with the solvency of a company, where it requires the Board of a company to satisfy the solvency test and to obtain a certificate of solvency from the auditors before any dividend distribution is made.

Dhammika buys Aussie High Com building
LB Finance, owned by wealthy businessman Dhammika Perera, sealed a deal on Wednesday with the Australian High Commission for Rs. 450 million to buy its premises situated at Cambridge Place.

Activated carbon issue resolved
A comprehensive judgement was handed down by the Supreme Court this week directing Jacobi Carbons, a Swedish company manufacturing activated carbon to comply with conditions stipulated in their agreement with the Board of Investment (BOI) regarding the use of local raw materials.
According to the court ruling made by Chief Justice Sarath N. Silva and Supreme Court Justices Raja Fernando and Saleem Marsoof, Jacobi Carbons would be bound by the ceiling on the sourcing of coconut charcoal and activated carbon as imposed by the BOI of Sri Lanka.

August 2007
Norway firm dupes Lanka
A Norwegian company that conducted preliminary investigations on oil deposits off the Sri Lankan coastline and sold the data 'exclusively' to the government is now selling the same data to the global industry in direct violation of the agreement, The Sunday Times FT reliably understands. TGS NOPEC, the Norwegian company which was paid US$8 million by the Sri Lankan government for data from two dimensional (2D) seismic surveys on gas and oil exploration which the company gathered in 2005, has been selling the exact same data on the Internet through a website for US$3464, despite the fact that this data is owned by the government.

Insurance regulator investigating Asian Alliance
Asian Alliance Insurance Company (AAIC), a subsidiary of Asia Capital, is to be asked to submit to a special audit by the Insurance Board of Sri Lanka (IBSL) for violating its rules.
This is the first time the IBSL is ordering an audit on a local insurance firm, a decision that is to be conveyed to the company in a few days time, an industry source said.

Treasury uses tea money for other needs
It seems that everyone in Sri Lanka’s premier export commodity – tea, has a problem. From the big and small producer, buyer, exporter and the government, a top government official said.
Lalith Hettiarachchi, Chairman of the Sri Lanka Tea Board (SLTB), in a well researched article, also argues that it’s unfair for the Treasury to have taken away the power of the tea cess coming direct to the SLTB. Now it is collected by the Treasury and then distributed to the three state agencies involved with tea.

More Lankan firms invest abroad
An unfriendly business environment plus an uncertain climate are among new reasons for some conglomerates and middle-sized companies with exceptional skills to invest overseas, an analysis by The Sunday Times FT shows.
Boldness and being where the action is (India and China), labour costs, infrastructure constraints and inconsistent policies are also reasons for Sri Lankan companies to venture out. Local companies investing abroad is nothing new but according to economists, the trend has intensified in the past 18 months after the present government, widely regarded as being unfriendly towards the private sector, came into power.

September 2007
Building a new empire
Ashok Pathirage, who burst into Sri Lanka’s corporate scene by pioneering Softlogic, and took over Asha Central Hospital this week, has come a long way since the 1990’s by taking on the likes of business tycoon Harry Jayawardena and successfully beating him at his own game.
“I believe that we have the capacity to do what we have set out to do and I am here to make some noise,” the 43-year-old business tycoon declared in a telephone interview with The Sunday Times FT, fresh after sealing his latest deal.

Concern over port deals
Bids for the massive Colombo South Harbour infrastructure project were opened on Monday with three companies having submitted bids but not without some controversy swirling around one bidder.
The bidders are Hanjing Heavy Industries and Construction of Korea (Rs.76 billion), China Harbour Engineering Company Ltd (Rs.61 billion) and Hyundai Engineering Construction of Korea (Rs.36 billion).
Informed sources told The Sunday Times FT that Hyundai had initially been the highest bidder but due to some improprieties, had significantly lowered its bid.

PERC moves to the Treasury
The Public Enterprises Reform Commission (PERC) has been moved under the purview of the Treasury Department's Division of Public Enterprises (DEP) with PERC Chairman W.A.S. Perera and Director General Alexis Silva no longer serving on the Commission. Former PERC Director V. Kanagasabapathy is now serving as the Director General of the DEP. He told The Sunday Times FT that this was in line with a cabinet decision three months ago to repeal PERC. "PERC is still there but we cannot use the name because the functions are under the DEP of the Treasury," he said.

October 2007
GoldQuest seen exiting from Colombo tea firm
GoldQuest, the controversial multi-level marketing firm, is considering selling its majority stake in Ferntea after company chairman Anura Fernando quit following an ongoing dispute with other shareholders.

No drinking, smoking scenes on TV
Some television channels have begun following to the letter, rules pertaining to advertising and promotion of alcohol and tobacco – much to the annoyance of viewers.
In recent weeks, MTV and Sirisa have blacked out drinking scenes or cigarette-smoking saying, in a notice that ran while the dialogue was on, “We are abiding by regulations in the Alcohol and Tobacco Act.”

Plantation workers get increased wages
Weeks of negotiations between the Employers' Federation of Ceylon (EFC) companies and the unions have resulted in a fresh Plantation Collective Agreement which raises the daily wage of workers from Rs.200 to Rs.290.

Odiris Perera widely regarded as one of Sri Lanka's best known entrepreneurs in the post independence era passed away this week at the age of 94. Odiris (as he was popularly known and to many as Odiris Silva) was responsible for bringing products such as gas stoves, kerosene lamps and coconut scrapers to the Sri Lankan market and his products are still held in great admiration.

November 2007
SLT refunds
Following a Supreme Court ruling earlier this year requiring Sri Lanka Telecom (SLT) to refund excessive tariff charges from January 1, 2007, The Sunday Times FT received several letters from SLT subscribers alleging the telecom giant had arbitrarily disconnected their telephone services.

Abans gets into finance
Consumer electronics giant Abans Group has taken a decisive step in its strategy of diversification by setting up of the country's latest finance company, Abans Finance.
Managing Director of Abans Finance, Mano Alles told The Sunday Times FT that the Central Bank (CB) approved its license application in part, due to the company's unique position in terms of penetration, owing to the wide network of Abans showrooms and dealer networks that exist across the country.

December 2007
CPC's entire crude from Iran
The Ceylon Petroleum Corporation (CPC) will be importing its entire crude requirements for the next seven months from Iran under a new credit line facility but this is unlikely to impact on prices.
Chairman CPC Asantha de Mel said Iran has extended a 7-month credit facility to import the entire crude oil requirement from there.

SEC gets major contract in Qatar
The Qatar government has awarded a contract worth US$ 80 million to the State Engineering Corporation to build villas in Qatar, Construction and Engineering Services Minister Dr Rajitha Senaratne said.
New index reflects real inflation levels.
The release of a new Colombo Consumer Price Index (CCPI) by the Department of Census and Statistics (DCS) is expected to more accurately and precisely reflect inflation levels in Sri Lanka.
Director of the DCS, D.C.A. Gunawardena, told The Sunday Times FT that no other country in the world used such an outdated index. He explained that the old index was from 1952 and despite approximately six revisions made to the index over the years, it still remained inadequate.

Mega rights issue from Apollo
Apollo Hospitals Colombo, which last year changed ownership and management to Sri Lanka Insurance (SLI) from the Indian hospital group, wants to raise a billion rupees from a rights issue this month to take care of rising debt which is also over a billion rupees.(NG)


Top to the page

Reproduction of articles permitted when used without any alterations to contents and the source.
© Copyright 2007 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.