Leading Advertising Professionals are campaigning to regulate the volume of advertisements on electronic and print media.
Heavy advertising or 'commercial abuse' of the media could have a negative impact on the public and be counterproductive, advertising officials say.
J. Walter Thompson (JWT) International Vice President, Ranil de Silva told The Sunday Times Business that Sri Lankan consumers are exposed to about 800 television commercials per week, whereas in other countries this figure was very much lower.
With several private networks competing for a piece of the estimated Rs 1.5 bn annual ad-spend in Sri Lanka, TV viewers in particular have been complaining of too many advertisements intruding into programmes, especially at prime time.
In 1996 Sri Lankan companies are estimated to have spent Rs 663 mn on TV, Rs 335 mn on radio and Rs 509 mn on print advertising.
Mr. de Silva observed that this was due to a lack of self regulation on the part of private television and radio channels, unlike in countries such as India and Singapore where the media adheres to a code of ethics.
Unless television stations cut their ads to about 400 per week, commercial spots would have a negative impact on the viewer and the purpose of advertising would be lost, Mr. de Silva said.
A forum to discuss ways and means of improving advertising related aspects of the electronic media would be constituted early next year, he said.
However, unlike private stations the state-owned mass channels Rupavahini, ITN and the SLBC adhere to a code of conduct and ethics.
Rupavahini Deputy General of Commercial Operations, Piyadasa Ratnasinghe says on an average his station limits commercial time to about 12 minutes per hour and in seasonal times to 15 minutes per hour.
There have been instances during the Christmas and New Year periods where the Corporation has rejected commercials amounting to about Rs 500,000 per day, due to its stringent regulations, Mr. Ratnasinghe said.
Meanwhile the International Advertising Association (IAA) Sri Lanka chapter is also pushing for advertising content of the print media to be reduced as well. Currently Sri Lankan newspapers are believed to carry more than 50 per cent advertising content at times, while international standards require newspapers to have 60 per cent editorial content against only 40 per cent advertising.
The privatized Sri Lanka Telecom is seeking a Rs 5 bn commercial loan from the local banking sector, to fund a part of its Rs 23 bn investment programme for next year, in a significant departure from it previous practice of being dependent on concessionary foreign financing.
If successful, the financing would be one of the largest ever structured within the country.
SLT has had discussions with the development banks and local branches of foreign banks to work out the means of raising the funds.
"A single institution will not be able to provide the funds," an SLT official said. "We would require the funds over a period of time and we will go with the bank or consortium that will provide the funds at the best terms."
Most Sri Lankan banks are very liquid at present and the National Development Bank only recently raised Rs 4.5 bn abroad which is mainly to finance smaller industries.
SLT itself may go for local or internationally placed debt instruments to find the Rs 5 bn.
SLT hopes to give 150,000 new connections in 1998, with Colombo getting 87,000. It will also boost switching capacity and add new cable pairs (loops), connect to SEA-ME-WE 2 (South East Asia - Middle East - Western Europe) optical fibre submarine cable (at a cost of US $ 24 bn), introduce state-of-the-art ISDN (integrated services digital network) lines and enhance Internet and data transmission capabilities, SLT's Emergency Team Director Christie de Alwis said.
At present the company has 325,000 subscribers and 300,000 are waiting for new connections.
During the next two years SLT is hoping to invest Rs 40 bn in network expansion eliminating the waiting list.
Of the Rs 23.2 bn investment earmarked for 1998, Rs 8 bn would come from the Japanese government's Official Development Assistance (ODA) programme which had been one of the main sources of finance for Sri Lanka Telecom.
Another Rs 6 bn would come in the form of suppliers' credit from equipment manufacturers.
SLT would have to find the balance Rs 9 bn.
Chief Executive Hideki Kamitsuma said internally generated funds would provide Rs 4 bn, leaving the rest to be borrowed from other lenders.
NTT of Japan bought a 35 per cent stake and management of Sri Lanka Telecom for US $ 225 mn under the government's privatization programme.
SLT is now seeking a hike in domestic call charges to compensate for a planned reduction in overseas call charges to international standard levels. Officials said this was a part of a 'tariff rebalancing' exercise, to reduce the cross subsidy to domestic consumers, whose charges have been kept low by charging high prices from overseas calls.
The government has allowed the company to increase call charges to a maximum 25 per cent a year, but all rate hikes have to be referred to the Telecommunication Regulatory Commission (TRC).
larger and more complex than necessary or one of inferior quality that will not perform to the required standards and may also require costly upkeep and repairs, the researchers say.
Another form or corruption is where political personalities steer projects towards their home districts. Projects may be piloted towards particular areas because of convenience, in a bid to political support or as a means of increasing the value of assets (such as land owned by politicians) in those areas.
The drop in interest rates is driving more savers to alternative forms of investment to traditional bank deposits. Pensioners who depend on interest have been particularly hit by the low interest rates.
Deputy General Manager Operations Bank of Ceylon, Sarath de Silva said, the government was guiding the economy towards a low interest rate regime - a trend being adopted world-wide.
Low interest rate economy would mean people switching to the equity share market. Some insurance companies are also trying to attract customers to purchase insurance policies, as another means of saving money.
"In the future, we will become a nation of investors, not a nation of depositors," he said.
Growth in time and savings deposits of NSB has decreased to 9.1 per cent up to October 1997 compared to a 10.5 per cent growth up to October 1996, according to Central Bank data.
Total deposits of commercial banks have however risen by 9 per cent ( from Rs. 248,769mn) in 1996 to 10.6 per cent (Rs. 285,550 mn).
The National Savings Bank had been conducting an aggressive marketing campaign to attract savings in recent times going on the same trail as commercial banks.
Despite a drop in interest rates, they still controlled 24 per cent of the market share.
"We have not seen a decline in our savings base, instead a 13 per cent growth. In 1996, total savings deposits were Rs. 68 bn, which grew to Rs. 77 bn as at the end of October 1997. In fact, in October alone our total savings mobilisation amounted to Rs. 1,012mn," he said.
The NSB targets a wide range of savers, including people in rural areas who look for 'safe' savings options to invest their money. "With the stock market opening up to target investors outside Colombo, we may see a change in people's savings habits. However, our records show that both rural and city folk still prefer to invest their money in traditional schemes, like the many offered by us," the NSB official said.
Commercial bankers say the recent growth in the stock market was drawing away their traditional customer savings base. "With the stock market gathering momentum, the recent budget gave a boost to attract investors into capital markets, and people are gradually moving away from traditional methods of saving, preferring to take more risk than before," a banker said.
Manager Services Hong Kong and Shanghai Banking Corporation said, the bank has maintained a steady deposit base over the years and have not seen any significant changes in the saving habits of their customers.
"Our stock market is not very big and people are still cautious and prefer safe traditional methods of saving," he said.
The escalating cost of living in Sri Lanka, where around 35-40 per cent is spent on food alone, has made it difficult for people to maintain a steady savings habit.
larger and more complex than necessary or one of inferior quality that will not perform to the required standards and may also require costly upkeep and repairs, the researchers say.
Another form or corruption is where political personalities steer projects towards their home districts. Projects may be piloted towards particular areas because of convenience, in a bid to political support or as a means of increasing the value of assets (such as land owned by politicians) in those areas.
Though foreign investors have been net sellers in the Colombo market during the second half of 1997, analysts are hopeful of renewed interest in equities in the new year backed by strong economic fundamental and better corporate earnings.
Most analysts expect the economy to grow by slightly under the 6 per cent official forecast, especially if the predicted drought significantly depresses the agricultural sector in the first quarter of 1998.
"A lot depends on the regional scenario," says Rajiv Casiechitty, Research Manager at C. T. Smith Stockbrokers.
Though at first the turmoil seemed to be subsiding, countries such as Korea and Indonesia have again been hit, sending jitters across capital markets world-wide.
During the last two quarters foreign investors have been net sellers in Colombo. Up to June 97 foreigners had purchased Rs 2.24 bn worth of shares and sold Rs 2.41 bn. But selling pressure had increased in the third quarter to Rs 3.31 bn while only Rs 1.85 was purchased.
In October foreigners had sold Rs 889 mn (purchases Rs 783 mn) and in November they had sold Rs 796 mn (purchases Rs 556 mn).
Political uncertainty also seems to dog sentiment with an impeding election also disturbing investors. There is also speculation of a general election which has made investors cautious," says Nouzab Fareed Head of Research at Allied Philips Securities.
"Fundamentally, there is nothing to prevent the market from moving up," he says. Corporate earnings are estimated to grow at around 20 to 22 per cent by the end of the financial year.
Though the market is currently trading at around 12 times earnings on a historical basis, it is trading at around on forces earnings it is trading under 7 times earnings, making it the cheapest in six years.
"Looking at the market in a bottoms up approach there are opportunities for good stock picking, especially on a six months view," says Deva Ellepola, Deputy General Manager of Jardine Fleming HNB Securities.
Last week the all share index hovered around 680 and the sensitive slightly over the 1000 mark.
The low interest rate regime however could bring in more local investors to the market, as investors shift more of their savings from fixed income instruments to equities.
However the exchange rate continues to cast a shadow over the market keeping jittery foreign investors away and also causing fears that the high value added exporters may be hit by cheaper East Asian competition, pressuring their earnings.
Most analysts are hoping for an accelerated depreciation over the first half of next year with the dollar moving up to about Rs 64, instead of a sharp devaluation.
A.S
larger and more complex than necessary or one of inferior quality that will not perform to the required standards and may also require costly upkeep and repairs, the researchers say.
Another form or corruption is where political personalities steer projects towards their home districts. Projects may be piloted towards particular areas because of convenience, in a bid to political support or as a means of increasing the value of assets (such as land owned by politicians) in those areas.
Continue to Business page 2 * Capital spending
may lead to corruption: IMF * Economic performance in 1997 * Year's business
events
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