The Sunday TimesBusiness

14th April 1996



Sunil gets top post

AirLanka chief marketing officer Sunil Peiris has been appointed vice chairman of the Sri Lanka Chapter of the Pacific Asia Travel Association (PATA).

Mr. Peiris began his career at Thai Airways in 1970 and subsequently joined Scandinavian Airlines, and later as General Manager Browns Tours Ltd.

Mr. Peiris joined the national carrier's senior management team in 1984 as Manager Sri Lanka/Maldivs. Since then Mr. Peiris has held several other senior positions at AirLanka both in Colombo and overseas. He was AirLanka's Chief Operating Officer from 1991 to 1992. He assumed the present office of Chief Marketing Officer in October, 1995.

Mr. Peiris has attended several previous PATA conferences in Singapore, Malaysia, Thailand, Japan and Mexico.

Step-motherly treatment to tea small holder

By Our Plantations Correspondent

There appears to be considerable agitation and concern among the small tea growers and ten private tea manufacturers about the governments proposal to aid the privatised plantations, to the exclusion of tea small holders.

The small holders' lament is that no government is yet fully aware of the contribution made by them to the national economy. In 1992 the plantations passed onto private managers the state having absorbed all the losses.

The plantation companies were also given 2 months working capital. Thereafter the government absorbed around 3060 million in losses incurred by the companies.

The new aid package contemplates loans to the tune of 6000 million. Half the loan is to be a grant. A five year grace period with no interest paid is provided. A fifteen year repayment period has been announced. The rate of interest for the whole package is 10%.

As compared to this the small holder and the private factory owner has not even received the relief package approved by the cabinet. He has to borrow at 22 to 26 percent. Interest has to be paid during the grace period. The rate of interest in between 18 to 22 percent for small holders and 26 to 29 percent to factory owners.

The beneficiaries of the government aid package will include Indian plantation interests.

The small holder sector which has contributed so much, are the indigenous people of this country. With this discriminatory aid package the small holder sector will be in a severe disadvantage. Indeed in course of time he could be suffocated out of production.

Small holder societies have expressed concern and total dissappointment at this discriminatory treatment.

The government has to move fast with the international aid agencies to afford the same terms of lending to the entire plantation industry. Donor sources have expressed their willingness to consider such requests favourably.

The plantations cannot be viewed in isolation. The whole industry must be assisted not only the big and the strong but also the small and the weak.

Move to tap radio frequencies for income

The fees for the use of radio frequencies for commercial communications will be raised to reflect the economic value of its use following a World Bank project to strengthen telecommunication regulation in Sri Lanka, the Bank has said.

Though the growing use of radio for communications has opened up a new source of revenue for the government, the existing telecommunications regulatory and management facilities were unable to derive its benefits.

"The radio frequency spectrum is increasingly recognised as a valuable resource that should be efficiently managed and protected," a World Bank statement said.

"This has resulted in deficient billing and lost revenue as well as illegal use of frequencies and interference. Furthermore, due to limited resources and staff, a number of regulatory areas have not been adequately implemented."

"The efficient management of the frequency spectrum has therefore become a regulatory priority," the Bank said. The increased number of operators and competitions in local as well as long distance services has also made it necessary to strengthen the capabilities of the regulatory body, Sri Lanka Telecommunications Authority (SLTA) regarding interconnection and revenue sharing arrangements between operators.

The World Bank says the SLTA's inability to efficiently manage the radio frequency spectrum is partly due to its existing manual systems used for radio frequency assignment, monitoring and billing.

The World Bank has therefore initiated a project to strengthen the institutional and regulatory capabilities of SLTA. This includes the setting up of a computerised frequency management and monitoring system by the provision of hardware, software, staff training and expert assistance during the initial years of operations.

"The project will provide SLTA with licensing and monitoring tools to adjust its fees of the radio spectrum towards their economic value thereby increasing fiscal benefits as well ensuring efficient allocation of scarce resources," the Bank said.

Strong regulation will promote investment in the area and the private operators will benefit from knowing rules for frequency assignments, tariff adjustments, interconnection, fair competition and licensing, the World Bank said. "Consumers will benefit from increased choice and competition in the provision of services, as demonstrated in the cellular market; the establishment of quality service standards; an the option to take their complaints to the regulator SLTA, in cases where the operator does not take adequate corrective action', the World Bank added.

The existing private radio-based telecommunications services, including mobile telecommunications services has sharply increased the use of the radio spectrum. By the end of 1995 there were 50,000 cellular telephone subscribers, or about 20 percent of all telephone subscribers, which the World Bank said is one of the highest percentages in the world. In 1994 40 percent of all new connections were to cellular subscribers.

"Competition between the four licensed cellular operators has led to some of the lowest tariffs in the region and cellular services are seen as a credible alternative to SLT's wired services, especially by business subscribers," the World Bank commented.

The growth in cellular services was spurred by the inability of Sri Lanka Telecom to satisfy customer demand reflected by a waiting list of nearly 200,000 applicants. Currently Sri Lanka had one telephone line for every 100 people. "This is at the lower end of what would be expected of a country at Sri Lanka's income per capita. Despite recent major network expansions and service improvements Sri Lanka Telecom will not be able to catch up on demand on its own", the Bank said.

To reduce unsatisfied demand for services the government had recently decided to license two additional private operators for domestic telecommunications based on wireless technology, in competition with Sri Lanka Telecom.

In some countries frequencies are auctioned off to the highest bidder.

'Experts say countries such as Australia earn millions of dollars by selling FM radio frequencies to radio stations for set periods of time.

In Sri Lanka, as in most other countries the licenses for existing mobile cellular and other radio-based services have been granted without auctions or high up front charges," the World Bank commented.

The World Bank will provide a US $ 15 mn via its concessionary lending window , the International Development Association. The monies will also be used to strengthen the Public Enterprise Reform Commission (PERC) by providing expert assistance, staff training and meeting marketing expenses. Of the total estimated project cost of US $ 21. 6 mn, the government of Sri Lanka is expected to provide US $ 6.6 mn. The US $ 15 mn IDA component will have a 40 year repayment period including 10 years of grace.

Indians interested in Kotagala teas

The Colombo Tea Trade circles were buzzing with rumours last week about the imminent sale of yet another plantations company to an Indian firm.

The sources said Kotagala Plantations of which George Steuarts Management Services own the majority stake may soon be sold to Harrison Malayalam, an Indian firm believed to be the possible buyer.

George Steuarts Management Services which was given the option by the government of buying a majority stake in Kotagala Plantations at Rs 10 per share by virtue of profitably managing the plantations was sold to a Malaysian buyer amidst much controversy some time ago.

Harrison Malayalam was earlier involved in managing the two plantation companies handed over to E. B. Creasy and Lankem Ceylon, trade sources said. However E. B. Creasy or Lankem officials were not available for comment at the time of going to press.

The privatization of plantations was suspended by the government due to questions being raised regarding some of the projects privatized already. The Planters Association recently said they hoped the government would resume privatizations once the loopholes which permitted such transactions were eliminated.

Ministry steps into stop seasonal price hikes

By Asiff Hussain

All trade bodies coming under the preview of the Ministry of Trade, Commerce and Food have effected price reductions in several essential items to help consumers during the Sinhala and Tamil New Year season.

According to a Government spokesman, the price slashes will not only help consumers purchasing directly from CWE and Salu Sala outlets but would also serve to bring down the cost of essential foodstuffs and cloth being sold in private establishments.

He said that the Government's policy is to effect price changes whenever necessary in order to control artificial price rises due to seasonal demand.

It is however uncertain whether the price reductions will continue in view of changes in world prices and other factors, he added.

Five to 10 percent price reductions in several essential foodstuffs and cloth became effective last Monday April 8th, at the all CWE and Salu Sala outlets.

As a result , the price of country rice was reduced from Rs. 17 per kilo to Rs. 15.75. The price of dhal has come down to Rs 36 per kilo from Rs. 38. A kilo of garlic has come down to Rs. 100 from a previous Rs. 120 while a kilo of dry fish which earlier cost Rs. 130 has been reduced to Rs. 100.

Fabric prices have been reduced by 5-10 percent while trouser material has been reduced from Rs. 315 to Rs. 299.

The price of Highland milk (400 gms. pack) marketed by Milco was also slashed from Rs. 73 to Rs. 65 two weeks ago following recommendations by a high powered Ministerial Committee studying the cost of living problem.

The Ministerial Committee which is headed by Prime Minister Sirima Bandaranaike includes Ministers Kingsley Wickremaratne, Lakshman Jayakody, Mahinda Rajapakse, Amarasiri Dodangoda and Indika Goonewardena.

Meanwhile Trade Minister Wickremaratne has said that the present COL index based on the 1952 'basket of items' is outdated and has called for a revision of the COL index.

A senior Census Department official whom The Sunday Times contacted said that this year's official COL (Colombo Consumer Price Index) which stands at 1758.8 was based on figures pertaining to the lower income group, i.e. the lowest earning 40 percent of the population.

"Under the present index, food is assigned 62 percent, clothing 9 percent, rent 6 percent, light and fuel 4 percent and miscellaneous (health etc.) 19 percent, he said.

Describing the present method as outdated and irrelevant in the present day context, the official said that the Department's recommendations that the COL calculation be revised, has finally won the approval of the Trade Ministry.

"The old method of calculating the COL has so far gone unrevised as it was beneficial to the Government of the day," he observed.

However he said that from 1997, the COL will be primarily based on the Household Income and Expenditure Survey which is undertaken every five years.

"The 1995-96 survey is being conducted at the moment. The entire country save for the North and East will be represented in the survey," he added.

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