The Sunday TimesBusiness

21st, April 1996




Employers' body calls for equal treatment

In the latest twist to the controversial Labour Charter, The Employers Federation of Ceylon (EFC) has called for the Charter to be applied to state sector employees as well.

The EFC has also decided not to participate in any further discussions on the draft Bill of the Charter unless the government is prepared to include modifications submitted by the business community.

The EFC said in a statement the draft Bill presented at the National Labour Advisory Council (NLAC) meeting recently went far beyond what was contemplated in the original policy statement of the government. "The draft Bill in fact is largely a reproduction of a Charter which was prepared in 1970 but abandoned thereafter", the EFC said.

The EFC claimed that double standards were applied against it. Along with the proposed Labour Charter other laws such as the Termination of Employment Act were also not applicable to state sector employees, the EFC statement said.

The EFC has submitted that fixed term contracts should be permitted in the case of employees who have retired; that bodies or persons other than trade unions who can now bargain in terms of the Industrial Disputes Act should continue to enjoy these rights; that supervisory, managerial and technical grades should be subject to a minimum 12 month period of probation and that disciplinary action should not be specifically dealt with in the Bill except for requiring a suspension to be followed by a written communication within two days.

In addition to these submissions the EFC has said that employees should be allowed to be laid off on non-disciplinary grounds by paying compensation of up to 18 months salary equivalent and that compensation could be increased by a Labour Tribunal only where the dismissal is mala fide.

A list of unfair labour practices of employees has also been suggested. These include; wilful damage of property belonging to the employer or fellow employees, causing injury to the employer, his representatives or fellow employees, wrongful restraint of persons, or forcible occupation of employer's premises, sabotage of equipment or goods belonging to customers or suppliers, refusal to provide essential services to prevent the destruction or deterioration of perishable property, initiating strike action without giving 14 days notice, initiating strike action while conciliation proceedings are underway in terms of the Industrial Disputes Act, initiate strike action against the provisions of a collective agreement and resorting to go slows or work to rule.

Major concern over Indian take-over

Asantha Sirimanne

Local tea producers have protested against the purchase of Sri Lankan plantations by Indian companies, alleging that Indian companies already in control of some plantations do not have a good track record.

In a letter to the President, the Tea Small Holder Producers and Exporters Association alleged that moves to sell George Steuarts Management Services which owns Kotagala Plantations to an Indian firm would impact negatively on the local tea industry.

The Association alleged that George Steuarts Management Services had been previously sold to a Thai registered company by the name of Roven Co. Ltd. Roven Co., in turn were now attempting to sell the company to an Indian tea giant. A top official of George Steuarts group told The Sunday Times Business that they were not party to any negotiations Roven Co., may be involved in.

The Association warned that such transactions would give a large Indian company, which also has interests in the Indian tea industry, the power to manipulate the local tea market to the detriment of local producers.

"An examination of the performance of the plantation companies which are dominated by Indian companies would bear out the fact that their main interest is to reap the maximum benefits in the short term even at the risk of agriculturally running them down", the Association charged. "Valuable timber and fuel resources in the plantations were destructively exploited. Illicit gemming was carried out paying scant regard for soil fertility and conservation".

The Association said payments to smallholders who supplied factories in Indian controlled plantations were delayed despite the firm prices of tea. "Kahawatte plantations are in arrears of payments from November last year. In the Ratnapura district alone, the arrears of green leaf payments to smallholders amount to over Rs. 7 million", the Association said.

The delayed payments would threaten the viability of the 230,000 odd smallholders in the country, the Association claimed.

At present plantation companies still under government control were unable to avail themselves of concessionary funding as the government had been forced to suspend further privatizations due to questionable sales to foreign companies.

"The intended re-sale of George Steuarts Management Services would aggravate this issue further, delaying the use of funds by the plantations. Further such concessionary funding too can end up in the wrong coffers unless all channels for possible diversion are effectively removed before the implementation of credit schemes", the Association added.

Hi-tech banking taking roots in rural areas

Sri Lankan rural customers of banks are easily taking to hi-tech banking services, a top banking official said.

Sampath Bank Deputy General Manager Kumar Abayanayaka said when a branch was opened in Anuradhapura last year, it was swamped with over 1000 applications for its trademark SET automated teller cards.

Sampath was rated the best bank in Sri Lanka by Asiamoney magazine last month. "Sampath Bank is the most technologically advanced bank in Sri Lanka. Its sophisticated computer system enables deposits to be better utilised and funding costs to be kept down," the magazine commented.

"Sampath started as an urban and suburban bank," Mr. Abayanayaka said. "People took to digital electronic technology more easily in the urban areas. But now the message has filtered to the countryside."

At present the bank operates 23 branches with plans to open three more outside the city this year.

Asiamoney made special mention of the bank's costs as a proportion of income which were the lowest among local banks, at 49 per cent.

Mr. Abayanayaka says technology plays a major role in keeping costs down. "This takes a lot of donkey work out of the business. So our people are more thinkers than doers. We have been able to maintain our staff strength at around 900," he said.

In addition, computerised systems has also enabled the bank to benefit from fast and accurate management information, which resulted in better decision making.

Analysts say Sampath was one of the few banks that were net lenders in the inter- bank market at a time when most banks were tight for money. "We were liquid because we were prudent lenders," Mr. Abayanayaka said.

Last year, the bank has made a post-tax profit of Rs. 241mn, up 41 per cent from 1995. Deposits had grown by Rs. 1,200 mn to Rs. 8,190 mn, and gross assets by Rs. 2000mn to Rs, 12,000mn.

Return on equity had improved to 30.2 percent from 28.85 percent, while share capital and reserves had grown to Rs. 940mn as at end of 1995 from Rs. 685mn in 1994.

"The bank is also strongly capitalised with BIS ratio (requirements set down by the Bank for International Settlements in Basle, Switzerland) of 14.7 percent, comfortably exceeding the BIS stipulated risk weighted capital ratio of 8 percent, enabling new loan growth to continue," Asiamoney had commented.

Last year advances had grown by 35 percent to Rs. 7,300mn. Most banking analysts have, however, predicted lower growth this year with demand for loans easing.

Sampath Bank says it is prepared for a less conducive economic climate in 1996. The bank, which has a policy of providing for specifically identified loans had deviated to make an additional general provision this year to help cushion the impact of future shocks.

"We think 1996 might be a little tougher," said Mr. Abayanayaka. "We felt there may be some clients who may get into trouble and we had enough profits this year to provide for it," he said.

Trade with Brazil on the rise

Two way trade between Brazil and Sri Lanka has grown 37 fold during the past five years, according to statistics released by the Brazilian embassy in Sri Lanka.

Two way trade had climbed to Rs. 4479 million in 1995, up from Rs. 119 million in 1990. This was almost double the 1994 figure of Rs. 2228 mn.

The trade balance is heavily weighted in favour of Brazil. While Sri Lanka imported Rs. 4,227 mn worth of goods, Brazil had imported only Rs. 252 mn worth of goods from Sri Lanka. Brazil has exported mainly cane sugar to Sri Lanka.

Exports from Sri Lanka included, coconut, coconut powder, natural rubber, printed and knitted fabrics, sports footwear, artificial flowers and ceramic articles.

Brazil had reduced averaged tariffs on imported goods from 51 per cent in 1987 to 12 per cent this year, Brazilian Ambassador L.F. de Macedo Soares said in a statement.

"In 1993 Brazil's imports rose to more than 25 bn dollars, in 1994 to 33 billion and in 1995 to 49.6 billion dollars", he said.

Exports, meanwhile, had also grown from 31.4 bn dollars in 1990 to 46.5 billion dollars in 1995.

Brazil accounts for 38.9 per cent of the GDP of Latin America. Europe absorbs 24.8 per cent of its exports, Latin America 23.26 per cent, United States 22.21 per cent and Asia Pacific region 16.74 per cent.

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