31st August 1997


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Mirror Magazine


Vital sectors to be handpicked for privatisation

By Ruvini Jayasinghe

The Public Reform Enterprise Committee (PERC) will identify and prioritise vital sectors of the economy for privatisation, Director General, Mr. Mano Thithawela told the Sunday Times Business.

The selection will be based on sectors that need the most urgent capital injection, management and technical input, Mr. Thithawela added.

Accordingly, public utilities could be high on the list but with the government going on record that the two state banks will not be privatised, the financial sector will need far reaching structural reforms before they can be privatised, he said.

"We are going for a top down approach. We will be looking at reforming sectors rather than going for individual privatisations in an ad hoc manner," Mr. Thithawela explained.

Mr. Thithawela said that PERC has redefined itself as a public enterprise reform unit rather than an engine to facilitate individual privatisations.

We work in close collaboration with line ministries, taking into consideration their individual policies, in privatisations and reforms, Mr. Thithawela said.

Playing its role as a state enterprise reformer, PERC has moved to combine the Department of Internal Trade and the Fair Trading Commission.

The merger has already received cabinet approval and the Consumer Protection Act will convert these two entities into the Consumer Protection Authority, Mr. Thithawela said.

The draft amendment to the Consumer Protection Act is expected to be submitted to parliament soon, giving the new authority more teeth in its role as regulator.

The regulatory authority is vital in eliminating unfair trade practices like unwarranted price hikes, formation of cartels, the sale of substandard goods or any other trade practice that is against free market operations, Mr. Thithawela said.

Mr. Thithawela said that the government is on target with its privatisation program. After the 35% equity sale of Sri Lanka Telecom and the conversion of NDB debentures, privatisation proceeds have reached Rs. 20 billion, he said.

About Rs. five million of these proceeds will be used for budgetary purposes and the balance will be used mainly to service government debt, he said. The government retired Rs. ... million in Treasury bills immediately after the 35% sale of Sri Lanka Telecom.

With the plantation sector privatisation nearing completion, PERC is studying the national carrier, Air Lanka which may well be next in line for reform and privatisation, Thithawela said.

Of the 23 plantation companies up for sale, 19 have already been privatised, but only six floated on the Colombo Stock Exchange. PERC will begin listing the 13 other privatised plantation companies from mid September, a process that is estimated to take 3 - 4 months to complete.

PERC has decided to float 20 per cent of the shares of each privatised plantation company on the CSE, and distribute 10 per cent of its shares among the employees, he added.

FACETS: gem of a show

By Michelle Henricus

Sri Lanka's gem window to the world, FACETS '97 has once again put the country's on the world gem map.

Amidst the glitter and the sparkle of the show which concluded last week at the Colombo Hilton was a new promise of better times was in store for small time entrepreneurs.

The Export Development Board (EDB) again promoted the small and medium scale companies.

"Giving the opportunity to these small companies from the provinces is our main goal. And especially introducing jewellery into this fair is very important, EDB Director Indira Malwatta said.

"FACETS has always been a trade fair for big businessmen and expatriates., and always it's the gem comapanies that get the big breaks because they can afford to have a stall of their own. The companies from the provinces have very little recognition due to the fact that the trader takes all the credit for the craftsman's jobs,"she added

Ms. Thejani De Alwis (Assistant Director EDB) said, "The main reason in assisting small scale companies to come to this trade fair is to help them get more contacts and help them promote their own handicrafts done by themselves instead of dealing through a third party ."

"This time we had six new companies at the fair, two from Kandy and four from Galle. They bring in their goods and we provide them the booths and we help them to display their gems and jewellery," she said.

EDB's main aim now is to introduce gem studded jewellery, not just gems. " We are opening doors for the jewellers to come in and display their creations to the world," Ms. Malwatta said.

Future manufacturers with will be assisted with new technology by Valentines Jewellers who does all its designing on computer, making the craftsman see what they are about to cut into those beautiful shapes and also see the final product and get its value and dimensions too.

Most new campanies were grateful to the EDB for their assistence.

Foreign invesment promising

Market Focus

By Analyst

Renewed buying interest by retail investors have pushed up the ASPI indices towards the 850 levels. Foreign investments were mainly concentrated on the blue-chip banking sector. Gradual increase in unit-trust prices over the past few weeks was also noticeable. With more investors coming into the equity market an appreciable price increase in this sector is evident in the near to medium term.

It is expected that the offer for sale of NDB shares would be an all-out success due to the prevalent foreign interest in the company (69%).

Corporate focus:

Plantation sector companies have shown improved performances for this quarter as a year to year (YOY) comparison, due to the increase in world market commodity prices.

Bogawanthalawa Plantations Ltd: Managed by the Metropolitan Group, has released audited results for the first quarter of their financial year 97/98. Turnover has increased by 43.3% to record at Rs. 467.6 m YOY. Profits have increased by 45.6% to record at 44.9m YOY.

Agalawatte Plantations Ltd: Managed by Mackwoods Plantations (Pvt) Ltd., has released the results for the 2nd quarter by '97. The company has recorded an increase of turnover by 12.9% to Rs. 337.5m YOY while earnings have shot up by 16.9% YOY.

Tourism sector: Increase in arrivals of tourists to the South Asian region during the May-July period (15% approx), has raised hopes of all in this vital sector of the economy. Mainly resort hotels have performed admirably due to increase in tourists influx as analysing the increase in tourist influx reveal that most tourist arrivals to Sri Lanka are low to medium budget ($10 to $100 range per day segment) attracting the high rollers (above US$ 100) would create more value to the industry, and upto an extent the seasonality of the trade also could be avoided.

Company news: Magpek Exports has notified the CSE of its unavailability to submit quarterly reports before the stipulated deadline, and requested an extension until November. It is expected that the banks would work out with the management a re-structuring plan to overcome the present predicament.

Recommended: Fundamentally sound: NDB/DFCC/HNB/Cold Stores/Commercial Bank. Speculative: Veytex, Magpek, CSF. The Finance, Seylan, Blue Diamonds.

Continue to Business page 2 * Mc Donalds comes to Sri Lanka * Investments on upward trend * Credibility in Economic Policies

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