Business


02nd November 1997

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Four more channels next year

By Mel Gunasekera

Four new private radio stations are due to go on air early next year, broadcasting sources said.

The equipment to be used, is estimated to cost around Rs. 90 mn, sources said.

There will be one station each for Sinhala, English and Tamil, while the medium for the fourth is yet to be decided. Initially, the licence holders intend to commence operations on the Sinhala medium station, sometime in January next year, sources said.

The stations will be owned and managed by the E A P Edirisinghe group, which already owns two television stations; ETV and Swarnavahini.

Director/General Manager ETV Rosmand Senaratne told The Sunday Times Business "we have applied for a licence to operate a radio station," but he declined to confirm reports that the company has obtained the licence for four private stations.

"We do have an idea in this respect, but it is a bit too premature to say anything, as further information in this type of competitive market, might be counterproductive," he said.

"It is advantageous to have a radio station together with two TV stations. Even cost-wise, we can use same material. But more than cost, proper planning for a radio station is important," he said.

The company intends to go for a big budget, but it's too early to say anything. "For instance, if you are going to war, you won't publicise the amount of ammunition you have, it is the same in this field, we can't divulge information due to competition," he said. "We want to keep the market excited!"

The station will cater to a wide audience, but is mainly targetting young people by way of educational programmes. "Education is not merely algebra, or geometry, we can talk about social problems that they face today," and we intend to come up with new strategies to attract the younger generation, he said.

He did agree that the local market is inundated with broadcasting stations. "The market is small, competition is high. But it will depend on what type of strategy they (the other stations) offer, it's a matter of survival of the fittest," he said.


CSM reflects world market turmoil

Market forcus By Analyst

World-wide turmoil in the markets has had its effect on the CSM, with ASPI declining nearly 30 odd points during the week to record at 730 levels.

Foreign investors were active in picking-up stocks in the blue-chip banking sector. Retail investors were mainly on the selling side with large parcels of NDB/Vanik and Forbes being transacted over the week.

In the debt market, it is expected that the TT interest rates are likely to increase marginally over the coming months. It is expected that the 3 months and the 12 months T-bill to be around 11% to 13% over the next few months.

Maskeliya plantations trading of shares has been postponed till October 31, and it is expected to trade at a premium over & above the IPO price at Rs 15. LB Finance IPO at Rs 20 would be opened to investors from the November 10, 1997.

Company performances for the third quarter (3q) of 97 seem to have improved marginally, but for the market to improve significantly on the basis of fundamental performances, it seems inadequate.

The tourism industry has also taken a severe hit with expected arrivals being down graded to 320,000 from as high as 420,000 for 1997. If no other unforseen catastrophy occures, the market is expected to climb upto ASPI 825 levels before the end of 1997.

The war-front seems to be in a stale-mate situation with both parties having no absolute advantage. The possibility of the implementation of the devolution proposals seems to be unlikely without L.T.T.E support, which seems to be not probable at the present time.

The probability of a quick referendum and general election is likely in the beginning of 1998, which would have repercussions in the market. The budget, which is to be presented next Wednesday, November 5th, is expected to contain further liberalization in trade with more incentives for investors, other than the mainstream industries, which would be a catalyst for attracting investments in less developed areas in the industrial spectrum.

The economy as a whole is in a recovery stage from the recession of the past 2 1/2 years, led by export growth. Due to the decline in tourist arrivals and bomb explosion, related factors the GDP growth forecast would decline to 5.6% from earlier forecast of 6%.

Recommendation: Plantation sector: good weather would help the agricultural sector to grow by 4%.


Expo '97 to draw 3000 foreigners

Partly helped by a high tech promotional campaign the Expo 97 trade fair next month is expected draw in more than 3000 foreign visitors despite the bomb blast in October, organisers said.

Already more than a 1000 foreign participants had registered for the fair from 30 countries.

"We had new registrations when we were in the United Kingdom for the Commonwealth meeting," Trade Minister Kingsley Wickramaratne told journalists. A businesswoman who had been caught in the blast had also addressed a business meeting in United Kingdom and declared her intention to visit Sri Lanka again to attend the fair.

The Expo 97 has two websites at http://expo97.tradenetsl.lk and http:// www. asiabusiness. com/ expo97.

Executive director Dr. Lalith Gamage said visitors could also register on line via a registration form at the website.

Organisers had also distributed promotional material on a compact disc at overseas business meeting in the run up to the Expo 97.

The fair will be held from November 7 to 11 at the BMICH.

Officials said at the end of the last Expo held in 1994 Rs 500 mn confirmed orders had been received by exhibitors.

This year they were aiming for at least one billion in confirmed orders. More than 300 exhibitors, half of them who are participating in the Expo for the first time will exhibit products and services from 25 broad categories.

The apparel sector would have the largest number of stalls (39), followed by gem and jewellery (36), Coconut products (25), tea, spices and essential oils (24), fruits, vegetables and processed foods (19) and electronic and electrical products (17).

From the SAARC region a ministerial delegation from Maldives, and trade delegations from Kerala, Andra Pradesh, Bombay and trade chambers from Pakistan have confirmed their participation.

Large delegations would also arrive from Canada and Thailand, the Export Development Board said.


Exports growing, trade deficit widening

Despite an impressive export growth, the trade deficit has in creased. In the first seven months of this year exports grew by 16 per cent in dollar terms, yet the trade deficit increased from US$ 790 million in the first seven months of last year to US$ 913 million for the same period this year.

Despite the 16 per cent growth in exports, our trade balance deteriorated by around 16 per cent, owing to a growth of imports of around the same proportion. Since the volume of imports is much higher than our export volumes, the increase in imports of 16 per cent is a larger amount than the 16 per cent growth in exports.

Therefore although exports and imports grew by around the same proportion, exports grew by US$ 355 million, while imports grew by US$ 478 million. Therefore import growth was US$ 123 million more than our export growth.

This feature of export growth, not being able to offset the increase in imports, has characterised Sri Lanka's balance of trade in the last two decades. The widening of our trade balance over the years requires us to look at our trade policy and indeed our overall economic policies to correct this imbalance.

This could be achieved by either exports increasing at a much faster rate than imports or by reducing the annual growth of imports. Perhaps the solution would lie in achieving both these objectives so as to reduce the trade gap.

All three categories of imports grew significantly. Consumer goods imports increased the largest at nearly 21 per cent in dollar terms. Intermediate goods, which include raw materials for our industries and semi-finished goods, increased by nearly 16 per cent.

The high dependence of our exports on imported raw materials is one reason for this. This is seen by the fact that when industrial exports grew by nearly 19 per cent intermediate goods imports increased by about 16 per cent. The expansion of industry would have been the main reasons for a 17 per cent growth in investment goods, like machinery.

Some curtailment of intermediate goods may be possible by the development of backward linkages in our industries. Some of the current dependence on semi-finished goods and inputs to industry could be produced in Sri Lanka. For instance, buttons and labels for our garment industry are mostly imported. These could surely be produced in the country.

What also requires to be looked at is whether we are importing an excessive range and quantity of consumer goods. The liberalisation of trade and the high cost structure of some of our consumer goods are no doubt the reasons for the continuing high increases in consumer imports.

This year also saw almost a doubling of our imports of rice. This reflects lower paddy production in the country. The import of other food and drinks increased by about 5 per cent. Petroleum imports increased considerably by as much as 35 per cent.

The question that should be asked is whether the country could afford to import large quantities of these products given our per capita incomes and weakness in our trading account.

It is not possible to adopt an import substitution strategy with high tariffs as this goes against the framework of economic policies that are being pursued. What must be looked at is the possibility of making our local products more competitive and also perhaps developing a demand for locally produced goods.

There may be several imported products which could be easily substituted by local products but high powered advertising may have developed a bias for imported commodities. There is probably also some reason to think that many locally produced goods, especially vegetables and fruits have large marketing margins resulting in consumer prices being unduly high compared to producer prices.

Post harvest losses too increase the prices of agricultural produce. Consequently imported produce may be cheaper. There is also the question of dumping. Is there foreign produce imported into the country at lower than production costs?

Adopting a liberalised trade policy must not lull us into a complacency regarding our trade balance. Although the trade deficit has been often offset by capital inflows the nation's international trading strength would lie in a healthy trade balance. Strategies to reduce our trade gap are indeed overdue.


Continue to Business page 3 * The Phillips curve returns? * Lanka eyes world green tea market * Rubber under IBRD wing * Britain out of Euro for now

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