15th June 1997


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Tender details surface in port duty-free case

By Shamindra Kulamannage

A senior public officer went to the Supreme Court to complain of how he was sent on compulsory leave, for objecting on behalf of the Ship Suppliers Association to a second duty free shop being opened in the Colombo Port.

According to the petition of Mr. Wimal Kalubowila, General Manager of Ceylon Port Services Ltd. (CPS), and Secretary of the Sri Lanka Ship Suppliers Association , the tender had been awarded to the only tenderer Seatrans International (Pvt) Ltd . The directors of Seatrans are M.S.M Hamsa, M.S.M.Naushad, M.S.M.Ilmi and M.A.H.M.Fazil.

President Chadrika Kumaranathunga is reported to have called for a report from the Ports Ministry following complaints by the Ship Suppliers Association about this tender.

The establishment of a second duty free shop at the Colombo port had been turned down by the earlier regime on the advice of the Sri Lanka Ship Suppliers Association, the governing body for ship services.

The association's contention was that a second duty free shop would pose a threat to the livelihood of the 9000 odd direct and indirect workers in the existing duty free shop.

With the change of government, authorities in the Ports and Shipping Ministry is said to have obtained presidential approval to set up a second duty free shop.

The notice calling for tenders required the prospective tenderer, to be a registered and reputed company with a minimum of 5 years experience in port operations as a ship chandler (supplier) with 3 years experience as a Bondsman and has no litigation with the Sri Lanka Ports Authority at present.

Of the 78 ship chandlers, operating in Colombo, only 3 companies qualified under the above mentioned guidelines. The companies that qualified were Ceylon Ports Services Ltd., Seatrans International (Pvt) Ltd., and N.M.M Ishak and Son Ltd.

Mr. Kalubowila requested his officers to submit a bid for a rent of Rs 125,000 a month for the new duty-free shop before he left the country on business. The declared minimum rent was Rs 75, 000 per month. M/S Seatrans Int: (Pvt) Ltd the only other qualified bidder had submitted a bid for the minimum rent of Rs 75,000.

Upon Mr. Kalubowila's return to the country , he discovered that CPS had not made the bid as the Ports and Shipping Ministry Secretery, Mr. Junaid had ordered the Board of Directors of CPS not to bid for the tender. Thus the only bidder Seatrans Int. (Pvt) Ltd, who quoted the minimum rent had been awarded the tender, says the petition.

Mr. Kalubowila, on a directive of the Association wrote to President Kumaratunga explaining the facts. A copy of this letter was also sent to Shipping Minister M.H.M Ashraff.

On August 6, 1996, Mr. Kalubowila received a letter from Chairman CPS, informing him that he was to be sent on compulsory leave, on the advice of the Secretary to the Shipping Minister.

Mr. Kalubowila thus far has not been given any reasons or been given a charge sheet for his being sent on compulsory leave.

Mr. Kalubowila in his plaint claims that his fundamental rights have been infringed.

He is looking to be reinstated as General Manager of CPS and to be reinstated as the Secretary of the Ship Suppliers Association which post was also stripped off him.

The plaint adds that, as a result the minister-in-charge and the Ministry Secretary "became ill-disposed towards the petitioner."

At the time of going to press Ports Minister A. H. M. Ashraff and senior minsitry officials were not available for comment. Secretary M. N. M. Junaid was out of the country.

Business Bug

A court in Colombo last week issued a restraining order on a leading trade union against launching any more strike campaigns in the near future.

But the union is perturbed and vows to carry on the fight to win their demands.

The first step, they say, will be challenging the restraining order in a higher court....


International schools are dime a dozen these days and there appears to be stringent control over them.

Another significant factor is that they are also good businesses, though many would fight shy of declaring their profit margins.

Now, all that is likely to be changed soon as education sector big-wigs ponder tougher new regulations to monitor these colleges.

And, among the regulations proposed is a hefty annual licence fee, we hear.......


With the reshuffle, the transport top job has changed hands, but not some ideas about bus and rail fares.

Madam ex-Minister tried hard but in vain to implement a fare hike but was vetoed by her lady Boss.

Now, the tough talking new man has vowed he will obtain the greenlight for the hike. Some colleagues in the Cabinet say they will not agree but the new man will always try and try again........


Japanese Loan package

The Japanese government has provided a Rs 18 bn loan package for Small and Medium Industries and infrastructure deelopment in Sri Lanka.

The National Development Bank of Sri Lanka has been given Rs 2.7 bn or Yen 5.4 bn to provide SMI loans to the private sector.

The Road Development Authority has ben given Rs. 1.1 bn to develop the Baseline Road, Rs 5 bn for teleom expansion in Colombo, Rs 1.5 bn to EB for transmission expansion, Rs 5.6 bn for the Kauganga watersupply project and Rs 1.4 bn for the Mahaweli Authoriy to upgrade System C.

"The main objective of this project is to increase productivity of existing paddy fields and strengthen the functioning of farmers; organizations to enable farmers to managee and maintain the irrigation system by themselves," the Japanese Embassay said.

Food laws violated

By Deshini Liyanaarachchi

Despite efforts to enforce local food laws in respect of all food products available for sale within the country, laws are still violated by many of the larger importers of food products, says Chairman , Lanka Confectionery Manufacturers Association Anura Wijesekera ." One has only to go to the larger and well advertised supermarkets spread throught the city to see to what extent the food laws of our country are being blatantly violated," Mr. Wijesekera says in an annual review of the associations" operations.

"We have also been reliably informed that powerful importers of foreign products are strongly lobbying the government to exempt imported products from the operations of these food regulations", he said.

According to Mr. Wijesekera, these products service mainly the upper income sector of society which constitutes a small percentage of the total population . Therefore any attempt to condone contraventions of the law is seen as unnecessary. Total compliance with such as labelling laws can be achieved by merely affixing an inexpensive sticker containing the required information on the product Mr Wijesekera observed.

Further , he urged the government not to be pressured to exempt imported products from the operation of these food regulations which will once again give rise to double standards within the food industry.


Workers against investment

In recent weeks there have been a number of investors who have visited Sri Lanka with the intent of exploring investment opportunities. Most investors tend to be polite and say how good Sri Lanka is as a country for investment. They say complimentary things about our hospitality, friendliness, climate, high literacy rate and some good words for the government. Despite all these the amount of actual investment which comes from them has been negligible. Big investors in particular have been shy of investing in Sri Lanka.

Some of the recent investment teams indicated in their personal contacts that they were thinking positively about Sri Lanka as they felt the war was coming to an end and they thought the security situation was improving. These investors said that they did not consider Sri Lanka as a good location for investment in the past mainly owing to security conditions. Now they see a prospect of a change and they are looking to Sri Lanka as a location for their big investment projects.

These same investors confided that their biggest concern about investment in Sri Lanka now is the labour unrest and the persistent strikes that plague several industries. This they see as a serious deterrent to their investing in Sri Lanka. Unless the government is either able to resolve this problem or come out with a solution which is special to foreign investments, these investors are likely to keep off.

Ironically workers appear to be the main detractors of employment. In an economic context where it is very clear that without substantial foreign investment there would not be adequate employment opportunities it is a pity if the labour situation hinders such employment opportunities being created. Foreign investors are used to the concept of hire and fire which ensures higher productivity and the dependability of the workers. Without these conditions investors are not likely to consider Sri Lanka's other concessions to be adequate incentives to locate their large industrial concerns in this country.

It is vitally important that we resolve this problem early especially as the advantages which Sri Lanka could get from the development of a free trade area in South Asia would be beneficial to Sri Lanka only if we could make the country a location for large foreign investments, which produce goods for the South Asian market, particularly the large Indian market.

It is quite clear that both in agriculture and other traditional industries we are hardly competitive with India and free trade would only result in Indian goods flooding the Sri Lankan market. We would have little to sell in the Indian market and our balance of trade would turn even more unfavourable. To offset this it would be very necessary for new internationally competitive industries to be established in the country, and thereby for Sri Lanka to gain some of the advantages of the South Asian Free Trade Area (SAFTA).

Time is running out. If during the course of this year a solution is not found, we may once again be missing opportunities and putting ourselves at a handicap with respect to other South Asian countries. Besides this there is a strong competition to induce foreign investors to the other countries in South Asia and East Asia. We must come up with attractive conditions if we are to induce new foreign investments.

The time is also opportune owing to the developments in Hong Kong and some of the reduced rates of economic growth witnessed in countries like Thailand. The economic situation in Japan itself gives the impression of a need for Japanese investors to move into rapidly growing, emerging economies. We should be able to capitalise on these if we are able to improve our labour situation.

If not, all the other incentives which the Board of Investment offers and all the other pleasant prospects in the country may be in vain. Will we take any meaningful steps speedily or let this opportunity pass by as indeed many other opportunities have in the past?

Clean fuel

It is the wish of every motorist to have clean fuel in his or her fuel tank, for it is well known that without clean fuel a motor vehicle cannot achieve its peak performance, says a press release.

Fuel whether petrol or diesel contaminated with impurities such as sediments, minute particles of water, water-alcohol mixes, micro biological growths, hydro carbon emulsions etc., not only will affect the performance of motor vehicles, but also can bring about harmful effects on automotive engines, necessitating heavy expenses to the owners.

Fuel free of such impurities will ensure a long lease of life to automotive engines and will also help to keep the environment free of pollution with partially burnt hydrocarbons etc.

So far in this country no effective measures have been introduced to curb such harmful effects on automotive engines and the environment.

In developed countries various techniques are being adopted to prevent the use of fuel contaminated with impurities. Perhaps due to the lack of relevant information being made available to fuel station owners the necessary preventive measures have not been introduced at almost all the fuel stations in the country so far.

At the recent Third American Trade Fair 1997 (at Galadari Hotel, Colombo) Supreme Trading Company exhibited certain petroleum related products of American origin among which was a fuel filter that can be connected to a fuel dispensing pump which will ensure filtered fuel to the motorists free of any impurities.

Such a filter will also prevent any sediments and/or water deposited in underground fuel storage tanks from entering pump units, thus ensuring a trouble free long life to the fuel dispensing pump unit as well as your vehicle. Installation of such an environment friendly filter of the model described will be beneficial both to the motorists and the fuel station owners.

Supreme Trading Company which has had experience in the installation and maintenance of hundreds of fuel dispensing pumps throughout the country for about one-and-half decades is the sole representative for three international companies specialising in fuel dispensing pumps and related accessories, Wayne, OPW and Cim-Tek.

S.S. Sarath de Silva, sales manager says that a new programme to clean the underground storage tanks of fuel stations will also be launched shortly. What is used for this purpose is a portable contaminant removal system known as 'Cim-Cart'.

This unit, which is about 1.5 meters high and resembling a wheel-barrow has a long hose which can be inserted into the storage tank through a man-hole and sucks out all the deposits at the bottom of the tank thus making the fuel in the tank free of impurities.

The procedure currently adopted for the same purpose is to empty the tank, make it gas free and then clean it making use of manual labour. In order to carry out such an operation fuel distribution at the station will have to be interrupted at least for a couple of days thus causing an indirect financial loss to the owner and inconvenience to the motorists.

The use of 'Cim-Cart' will eliminate waste of time. It takes about two hours for the cleaning of a tank and fuel station need not suspend its operation while the tank is being cleaned.

Supreme Trading Company exhibited all these items at the recently concluded third American Trade Fair. They also received encouraging remarks from many who visited their stall including the Minister C.V. Gooneratne, who inaugurated the trade fair.


BY P.M.N. Bandara

Colombo Dockyards Limited

Colombo Dockyards Limited reported a Rs. 463.8 m. turnover for the three months ended 31st March, 1997. This shows 24% increase over the corresponding figure in the previous year.

Profit before taxation declined by 20% from Rs. 21.4 m. to Rs. 17.0 m. The decline of profit after taxation was 37% from Rs. 15.1 m. to Rs. 9.5 m. However, shareholders' funds increased by 8% from Rs. 683.2 m. to Rs. 738.5 m.

The Finance

The Finance Limited reported favourable financial performance for the year ended 31st March, 1997 in terms of provisional financial statements.

The company's net turnover increased by 10.4% from Rs. 1497.3 m. to Rs. 1654.2 m. Profit before taxation was Rs. 87.4 m. This shows 5% increase over the previous year. Increase of profit after taxation was 6.6% from Rs. 67.9 m. to Rs. 72.4 m.

Shareholders' funds as at close was Rs. 653.1 m. This shows 11.9% increase over the previous year.

Asia Capital

A sharp drop of group turnover, and profit are the significant features reported by Asia Capital Limited for the year ended 31st March, 1997. Comparative figures are given below:

                         1996             1997                %
                        (RS. M)         (RS. M.)           Change
                                                        increase (+)
Turnover                110.6             50.9           -54%
Profit before taxation  104.9             61.1           -42%
Profit after taxation   57.8              41.1           -29%
Shareholders' funds     1214.1          1255.2            +3%

Fathers' Day

By Mel Gunasekera

Fathers' Day dawns again. Another day where greeting cards and confectionery shops thrive on business. This traditional American holiday, was introduced to Sri Lanka about 7 years ago. Though it is not as popular like Mothers' Day, Fathers' Day has been receiving much prominence over the years.

Greeting card shops display various types of cards all stating 'Dad we love you, Happy Father's Day'. Confectionery shops display an array of hand-made chocolates and cakes. Hotels have special buffets and brunches. The electronic media, not to be left behind also come up with special promotions for this special day. On the whole, it has become another commercial day to celebrate a loved one.

With many preparations on the way for this memorable event, we asked a number of people, 'Do you celebrate Father's Day? What do you think of Father's Day? Do you think this day is commercially exploited? And 'Do you think it is relevant to our country?' The response was varied.

Most corporate clients we spoke to had no knowledge of Father's Day. They even asked us on what day it was. Some had heard of Mother's Day. They had all heard of Valentine's Day (of course!). A few who had heard about this special day said they treat it as an ordinary Sunday. A few actually celebrated it.

A Bank Executive said he takes his family out to dinner on this day. He said he does not expect any gifts from his children, though they usually give him a greeting card. But they all commented that it was another form of embracing American culture and for our commercial gimmick put out by the hotels and greeting card shops to sell their products.

The younger generation was not enthusiastic about it either. Young executives working at various commercial establishments did not think much of the day itself. They regarded Valentine's Day as more important.

A group of young lady executives admitted that they buy gifts for their fathers on Father's Day and they were glad that there is a separate day in the calendar for such an important person. "We don't spend much money to buy expensive presents..... and spend a maximum of Rs. 600.00.... very often it is a gift voucher for two at a restaurant or a sarong or T-shirt," they said.

Only a few school children we spoke to did something for Father's Day. A young boy attending an International School said that his teacher encouraged them to make cards for their fathers, but was not sure if he would continue the tradition after he left school.

"It is just an American tradition", said another executive. "People usually like to follow American ideas and commercial establishments are cashing in on this. They shouldn't make it commercial, after all, it's the thought that matters," he said.

Most hotels and restaurants were not having anything special for Father's Day. When The Sunday Times Business spoke to them, they said that Father's Day is not as popular as Mother's Day, hence not commercially viable. Few establishments like the Galadari Hotel and Kandos Chocolates are bringing out goodies for this occasion.

The Galadari Hotel has an array of chocolate shaped cigars, matchboxes, golf balls, ties etc., filled with marzipan, mint and brandy. They are sold individually or in a box. They also offer a sumptuous whisky flavoured chocolate mousse cake. Kandos Chocolates offer chocolate coated mint flavoured cigars and ties.

Father's Day is celebrated on a grand scale in the west, because people do not have time to spend with their parents. It's a day where they can soothe their guilty conscience to buy a gift, visit their parents, or even take their fathers out for a drink. However it is embedded in our culture to care our parents not only when they are old but also throughout their lives. As one executive mentioned, "we see our parents every day, even after marriage we live closer to home, so we could spend more time with them.... such days on this one are only for westerners who have no time for their parents."

It is also interesting to note that as Sri Lankans we are door to our mothers than our fathers. We also refer to our country as "Motherland" not "Fatherland". But with rapid urbanisation our cultural traditions are diminishing and people spend more time away from their parents. In times like these western traditions have become set into our culture and with it comes commercial exploitation. Father's Day is a good concept to remind us about our parents, but commercial exploitation should stop.

Meat call

A top local processed meat producer has called for the rationalization of turnover tax to help boost the local livestock industry.

The government has already reduced prohibitive excise duties which crippling the processed meat industry earlier. But turnover tax continued to be a heavy burden.

Last year Keells Food Products had paid Rs. 55.5mn in turnover based levies from an annual revenue of Rs. 298 mn.

The government had exempted imported products such as canned fish from turnover tax to make it a cheap source of protein for low income groups.

"Considering that the country's import expenditure on canned fish which is exempt from turnover tax is a staggering Rs. 800mn, relief in turnover taxes on locally produced processed meats will enable considerable foreign exchange savings and import substitution which will benefit the country and the consumer," Keells Food Chairman Ken Balendra told shareholders in the companie's recent annual report.

Last year the company had been hit by the CEB strike in May 1996 and power cuts. Large quantities of stock had to be destroyed. "However due to the improvement in tourist arrivals and strategies used to broad base usage of our products, we were able to achieve a turnover of Rs. 298mn (as against Rs. 310mn in the previous year) and end the year with a profit of Rs. 3mn," Mr. Balendra said. After tax profit for the year ended 31st March 1997 was Rs. 1.4mn.

The company had also won the award for the Best Corporate Report and Accounts in the Food and Beverages sector in the annual competition conducted by the Institute of Chartered Accountants of Sri Lanka.

"Winning this award acknowledges the commitment the company has towards disseminating detailed relevant and timely information of its affairs to its shareholders," the company said in a statement.

Last year Keells Food supported the import of parent stock to enable genetic improvements of the pig population of the country with the help of AgEnt and USAID.

The company has also obtained patent rights to a new rice based product.

Rs. 22.8mn had been spent on a new automated facility to produce Chinese rolls.

The company's exports to the UAE has grown by 30 per cent on top of a 43 per cent growth in the previous year.

Control on fares seen as barrier for bus

Regulated fares are preventing the purchase of sufficient new buses to build the public transport fleet in the country to present requirements, a private bus building company has said.

According to the budget speech of Deputy Finance Minister G. L. Pieris the country needed a 21,000 buses but only 12,500 were on our roads.

"Therefore there is an immediate requirement for 8,500 buses acknowledged by the government," Diesel and Motor Engineering Company (DIMO) Chief Executive A. R. Pandithage told shareholders in the annual report.

"Once these buses have been supplied there will be an annual replacement requirement amounting to 1,400 units."

This estimate was based on the assumption that each bus has a life span of 15 years. Despite this DIMO associate DIMO Auto Industries Ltd., had suffered losses due to lack of orders from local bus operators.

"The company has not been able secure local business because omnibus operators are not able to purchase new buses due to the high cost of financing and low revenues owing to regulated bus fares," Mr. Pandithage said.

The parent company made an operating profit of Rs 14 . 4 mn. But due to continued losses at the bus building associate it had decided to write off its Rs 87 investment in the company resulting in an after tax loss of Rs 70.4 mn.

Group losses were Rs 31 mn for the year ended 31st March 1997.

However, DIMO Auto Industries Ltd's export market looks positive, Mr. Pandithage said. Last year 150 buses were exported to Bangladesh, and an order for 32 luxury buses is being executed for Singapore.

Prototype luxury buses are being made for the UK and Dubai markets. The company also built two prototype taxis for a UK company.

"DIMO Auto Industries Ltd., cannot exist on the present volume of export orders, since these quantities are still very small when compared to the production capacity of the company", Mr. Pandithage said.

"All endeavours have to be made to secure local orders to keep this company alive."

At present, the management of the company are negotiating with the government to find avenues of offering the end user (omnibus operator) reasonable financing terms to purchase buses. The company's survival beyond 1997 depended on the success of these negotiations.

Marketing and distribution of other products have shown considerable growth in the turnover and profitability of the company, compared to 1995/96.

In the period ending 1995/96, the company increased its issued capital from Rs. 36 million to Rs. 48 million by a bonus issue.

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