SRILANKA BUSINESS

Mexican telecom giant Carlos Slim first in world rich list

2010-03-14T01:00:00.000-08:00

Mexican shakes up world rich list

Mexican telecom giant Carlos Slim has topped Forbes magazine's billionaire's list - the first time since 1994 that an American has not led the rankings.

Mr Slim's fortune rose by $18.5bn (£12.4bn) last year to $53.5bn.

That beat Microsoft founder Bill Gates ($53bn) into second place, with US investor Warren Buffett ($43bn) third.

In 2009 332 names left the list after a tough year, but the total number of billionaires on this year's list rose from 793 to 1,011, Forbes said.

'Dominating businesses'

A spokesman for Carlos Slim refused to confirm the Forbes estimate of the Mexican tycoon's wealth, saying they did not "waste their time" on such calculations, but he welcomed the result.

"We're pleased that he has been considered the best businessman of the world," spokesman Arturo Elias told the BBC. "It means there is trust among the investors."

Forbes magazine's chief executive Steve Forbes told the BBC that Mr Slim had been slowly climbing the rich list for a number of years.

"He has been dominating businesses in Mexico, and businesses in the US as well," Mr Forbes said.

"He foresaw the rise in telecommunications, particularly cell phones. And he is also big in cement."

The year's biggest gainer, Brazilian mining tycoon Eike Batista, broke into the top 10 for the first time.

He came in at number seven, having boosted his wealth by $19.5bn to $27bn.

France's Bernard Arnault ($27.5bn), the man behind the world's biggest luxury goods firm LVMH, also moved back into the top 10, increasing his fortune by $11bn to $27.5bn.

Their mounting wealth helped to push Ikea's Ingvar Kamprad and Theo Albrecht - one of the men behind Aldi - out of the top 10.

Asian rise

One of the most notable aspects of the Forbes list in recent years has been the growth in Indian and Chinese billionaires, as the economies of the two countries have grown strongly.

CARLOS SLIM

· Full name - Carlos Slim Helu

· Age - 70

· Widower with six children

· Family empire now controls more than 200 companies

· Controls more than 90% of Mexico's phone landlines

· Other interests include Inbursa financial group and the Grupo Carso industrial conglomerate

This year there are 41 Indian billionaires, and 60 from China.

The richest Indian is Mukesh Ambani in fourth place. Worth an estimated $29bn, he owns Reliance Industries, India's largest company. Its business interests range from oil and gas, to food and clothing.

China's wealthiest billionaire - excluding those based in the Hong Kong special administrative region - is Zong Qinghou.

In 103rd place on the list, Mr Zong is worth an estimated $7bn. He owns Hangzhou Wahaha, China's largest soft drinks company.

Upturn

In a sign that the global economy could be improving, the average net worth of the world's billionaires is now $3.5bn, up $500m from last year.

Furthermore, 97 names made their debut while a record 164 returned to the list in 2010 - including Facebook founder Mark Zuckerberg ($4bn), who, aged 25, also regained the title of youngest billionaire.

The news was a far cry from 2009 when the financial crisis took its toll on the world's richest people, wiping 332 names off the list and an average of 23% off the wealth of the remaining billionaires.

Falling stock markets and collapsing commodity prices were blamed. Russia's ultra-rich appear to have recovered from last year's commodity-related losses, however, with 62 billionaires on the 2010 list, compared with 27 last year.

Consumer focus

In Europe, shopping dominated the money list with six of the top 10 European billionaires making their money in retail and three more in consumer products.

Top of the list was Bernard Arnault (7) from LVMH, closely followed by Amancio Ortego of clothes retailer Zara (9), Karl Albrecht of cut-price supermarket Aldi (10), Igvar Kamprad and family (11) of Ikea and Stefan Persson (13) of discount retailer Hennes & Mauritz.

In the UK, the sixth Duke of Westminster Gerald Grosvenor (45) remained the wealthiest Briton with a net worth of $12bn as he improved his finances by $1bn despite the UK property slump.

Meanwhile, two Britons also made their debut - real estate investor Xiuli Hawken ($2.4bn) and hedge fund manager Alan Howard ($1.8bn).

On the up

The improving health of the global economy meant that 55 countries were represented in the Forbes list - with Pakistan (Mian Muhammad Mansha, number 937) and Finland (Antti Herlin, number 773) adding their first billionaires.

Strengthening stock markets and several large public offerings during the past year helped Asia close the gap with Europe.

A total of 234 Asian billionaires were featured in the 2010 list compared with 248 from Europe.

Russia's reversal of fortunes in the past 12 months also helped Moscow to inch up the league of cities that are home to the most billionaires after it slipped to third place last year.

In 2010, New York remained at the top of the pile with 60 ultra-rich residents, Moscow was second with 50 billionaires and London third with 32.

Story from BBC NEWS:

Jaffna BPO programme draws 4,000 students

2010-03-08T20:07:00.001-08:00

An education programme focusing on the Back Process Outsourcing (BPO) in Sri Lanka's North has resulted in the participation of 4,000 students in the mostly O/L (60% of participants) and pre-final A/L categories with girls slightly outnumbering boys, the country's Information and Communication Technology Agency (ICTA) said.

At the event

Further indicating that the programme held at the end of last month at the Jaffna Vembady Girls’ High School elicited "huge interest", the statement suggests that IT-BPO was considered by students as being a career choice on "par with or higher than professions like those of doctor, engineer or accountant".
These students, said to be "from schools in the Jaffna district and from distant places like Vavuniya and Mannar with IDPs among them", were made privy to a "one-hour seminar followed by visits to career guidance booths where nearly one-and-one career guidance was given by counsellors from the Ministry of Education and the industry. There were five one-hour seminars each of the three days.
The counselors who were young yet well trained comprised 13 from the Northern Province Ministry of Education offices in Jaffna such as Kilinochchi, Thenmaraachchi Mannar, Mullaitivu and Vavuniya and 11 from the IT industry in Jaffna," the ICTA added.
In total, as per ICTA, "about 140 schools attended the seminar with an average of 40 students from each school. While 87 schools from the Jaffna district participated in the programme, there was particularly large number of participants from Vavuniya schools. The ICT knowledge of participants ranged from students who had never seen a computer before to those who were adept in computer applications."

Jaffna trade fair to draw Indian exhibitors too

2010-03-08T20:05:00.000-08:00

The Jaffna International Trade Fair 2010(JITF) is being organized by Lanka Exhibition & Conference Services (Pvt) Ltd in collaboration with the Federation of Chambers of Commerce and Industry of Sri Lanka and being held on April 18 to 20 at the Jaffna Central College, Jaffna.

Pic shows K. Pooranachandran - Chairman, Chamber of Commerce and Industries of Yarlpanam (CCIY) addressing a press conference in Jaffna to announce the event. Inset – a section of the media and other participants.

Organisers said the fair, themed ‘Your gateway to Yarlpanam’, is to strengthen trade links between the North the rest of Sri Lanka. The fair will see a display of a range of products and services across a wide section of industries like building, construction and interiors, processed food & agriculture, food & beverages, packaging, machinery, cosmetic and beauty products, electrical ppliances, electronics, fabrics and garments, gifts and toys, glassware, handicrafts, hardware and tools, health and hygiene, home appliances, industrial products, sanitary ware, stationery etc. Indian exhibitors are also expected to take part while the organizers are also planning to work together to have investor forums to develop Jaffna.

Tax revenue from Jaffna: IRD targets Rs 100 m

2010-03-08T20:00:00.001-08:00

The Inland Revenue Department has received Rs 77 million as income tax from Jaffna in 2009. The Department targets a tax income of Rs 100 million this year from Jaffna as the tourism industry and trading activities have shown a considerable increase.

Mahinda Medagoda

It expects to open 2,000 new files for Jaffna this year, Inland Revenue Commissioner General Mahinda Medagoda said.
As activities related to tourism, transport and agriculture are emerging, regional offices in Jaffna and Batticoloa have been very active ever since.
Taxpayers in those areas have been paying their due taxes for the development of the country, Medagoda said.
He said taxpayers make it a duty by themselves in those areas to pay taxes and their past activities are not counted when they open new files.
Public taxes are utilized for the development of the area.
There will be more officers allocated to the Jaffna regional office soon and then the staff is fully geared to cater to the enterprises and individual tax-payers in those areas.
The number of the total income tax files opened in Jaffna upto January this year was 3867.
The total turnover tax files opened for the same period was 2709.
The Department is conducting awareness programs in Jaffna to enhance tax-payer education. Entrepreneurs, enterprises and individuals have shown an increasing interest with the developments taking place after the war.
“We expect many will follow in the footsteps of current taxpayers and voluntarily open files to pay taxes,” the Commissioner General said.

Infotel in Jaffna experiences Microsoft's Tamil LIP

2010-03-08T19:55:00.001-08:00

As part of the company's much admired Gamata IT initiative, and following the launch of its very successful Sinhala Language Interface Pack (LIP) last year, Microsoft Sri Lanka made an amazing impact at the Infotel Exhibition in Jaffna with the launch of the Tamil Language Interface Pack. The pack was also launched as part of the companys efforts to support the "Uthuru Wasanthaya" programme initiated by the Government.

Speaking on the launch, Channa de Silva, Director, Enterprise and Public sector Microsoft Sri Lanka was enthusiastic about the impact the software would have on the lives of the residents in the North and East. "Our objective is to give people the agility to operate a computer in their own language. Countries across Asia have boosted their ICT penetration through the use of Local language software, thereby removing the barriers to ICT penetration because of the lack of English competency. We believe that one of the best ways to heighten the rate of adoption of Technology in our rural communities is to enable the use of a computer in both Sinhala and Tamil. We may even enable them to learn English through the use of a computer - the possibilities are endless."

While the current Tamil LIP launched in Jaffna is one that was developed in India, ICTA has gathered a team of experts who are working on a more localized version. Microsoft expects to work closely with ICTA team to explore the possibility of creating a more localized version with a future release of the software.

Mr. Fayaz Hudah, Programme Head of ICT Agency of Sri Lankaspeaking on the future and benefits offered by technology he said. "With the long term goal of helping individuals contribute to the development of their communities and the national economy, the use of technology is imperative. Providing the residents of the north and East with access to technology as well as the software to operate it in Tamil is an essential step towards this end. Technology will provide the opportunity and ability to innovate, regardless of the language used".

Speaking on the Tamil Language Interface Pack, Honorable Professor Tissa Vitharana, Minister of Science and Technology. "The three decade long terrorism has been fully eliminated and now people breathe the air of freedom. At this time, Infotel has organized a grand IT exhibition in Jaffna. People in Jaffna have suffered a lot during the three decades of war. These people will get a good opportunity to improve their IT knowledge through this exhibition. It is also much appreciated that Microsoft has come forward to release the Tamil Language Interface Pack for the benefit of the Tamil speaking people in this country. I am very happy to see that people from this part of the country can now practice computing in Tamil. Those who do not have English knowledge can operate a computer in their mother tongue. Through this software, I hope the Tamil people in Jaffna will gain more benefits. I also hope that these people will now get an opportunity to improve their IT skills, get more job opportunities and thereby upgrade their living standards".

The importance of the ability to operate a computer in Tamil was stressed on by Mr. Jeyaranjan Yogaraj, IT Consultant, Ministry of Science and Technology. "The launch of the Sinhala LIP software saw many individuals all over Sri Lanka look beyond their reluctance to operate a computer because of their inability to operate it in English. Having Vista, XP, Office 2007 and Office 2003 in Tamil provides tamil users the opportunity to make the most of the technology available for their own benefit regardless of if they speak English or not. The benefits of this will pass down to every aspect of their lives, enriching them and making more things possible now and in the future".

The introduction of Vista, XP, Office 2007 and Office 2003 in Tamil will bring the best of world class technology to many communities in Sri Lanka, and will fulfill Microsoft Sri Lankas promise to work to ensure that every citizen has access to the ICT tools they need in order to reach their full potential

Standard Chartered 2009 operating profit climbs 13% to US$ 5.15bn

2010-03-08T19:53:00.000-08:00

Standard Chartered PLC today announced a seventh successive year of record income ($15.18 billion) and operating profit before tax ($5.15 billion) during 2009, demonstrating the underlying strength and momentum across our markets and businesses, despite the ongoing adverse global economic conditions. Our strong liquidity and capital position enabled us to continue building out market share across our footprint, generating positive business momentum as we enter 2010.

2009 delivered strong and diversified profit and income growth across our markets in Asia, Africa and the Middle East. Five markets delivered income of over $1 billion, with India and Hong Kong also delivering over $1 billion in operating profit before tax (OPBT). Wholesale Banking continued to demonstrate strong business momentum with significant increases in both client and own account income growth, while Consumer Banking saw a strong upturn in performance during the second half of the year.

Throughout the tough environment, Standard Chartered has continued to provide support for its customers and corporate clients, significantly increasing lending and other forms of support across our markets. 2009 total lending climbed 13% per cent ($28 billion) to $250 billion. We helped many more of our customers buy their own homes, increasing our mortgage lending by nearly 21 per cent to US$58 billion. We helped small and medium enterprises start up and grow with an extra 14 per cent increase in lending to more than $13 billion.

The Group continued to focus on the basics of good banking, keeping a tight grip on costs and risk control and maintaining a liquid and conservative balance sheet. Normalised cost/income ratio fell to 51.3 per cent from 56.1 per cent in 2008, although expenses rose slightly by 4 per cent vs 2008. Strong organic equity growth of over US$3 billion supplemented by a successful capital raising saw core tier 1 capital rise to 8.9 per cent, with total capital at 16.5 per cent. The advances to deposits ratio remains strong at 78.6 per cent, while continued action to de-risk the asset book positions us well to deal with any future economic uncertainty.

A clear strategic focus saw Wholesale Banking deliver another year of strong performance, with income up 24 per cent to US$9.29 billion and OPBT rising 36 per cent to US$4.08 billion. An 'open for business' approach to our client base throughout the financial crisis resulted in client income growing 22 per cent to US$6.88 billion, accounting for 74 per cent of all Wholesale Banking revenue. Client income growth was driven by the lending, corporate finance and financial markets businesses, coupled with an expansion in product capability and increased cross-selling opportunities. Own account income climbed 30 per cent, on the back of ALM and leveraging client flows, particularly on the back of intra-day credit and commodity trading.

Consumer Banking continued its repositioning strategy to build longstanding and multi-product relationships with customers. Further investment in the branch network, marketing and relationship management capability helped build a strong foundation for growth. While full year income and OPBT fell due to margin compression, business performance showed positive momentum through the year, delivering progressively stronger performance with income climbing every quarter. Deposits grew 11 per cent, while customer lending climbed 17 per cent as we took market share from competitors. Mortgage lending also rose by 21 per cent, whilst retaining a low average loan-to-value of around 50 per cent. Income and profit climbed strongly during the second half - income rose 10 per cent H209 vs H109, whilst OPBT climbed 49 per cent in the same period. Wealth Management products also delivered strong fee income, climbing 35 per cent from the first quarter of 2009 to the last.

Loan impairments for both Consumer and Wholesale banking showed a significant reduction during second half of the year. Consumer Banking loan impairments fell 13 per cent H2 vs H109, whilst Wholesale Banking loan impairments declined 19 per cent in the same period.

Markets showed strong performance in 2009, reinforcing the underlying strength of our business footprint. Hong Kong, Singapore, Korea, India and the UAE individually delivered income of over US$1 billion. India produced profits in excess of US$1 billion for the first time, supporting our intention to list IDRs during 2010 in this critical market. On the back of increasing Asian inward investment the Africa region produced very strong growth, with income climbing 20 per cent to over $1 billion, and profits climbing 54 per cent.

Peter Sands, Group Chief Executive, Standard Chartered said:

"2009 was the seventh consecutive year when we produced record income and profits. The bank has used its strong capital and liquidity position and its increasingly powerful brand to capture market share from competitors and to deepen relationships with customers and clients. We enter 2010 with real resilience and momentum

Sri Lanka employers should have closer dialogue with workers: ILO

2010-03-02T03:52:00.001-08:00

Mar 02, 2010 (LBO) – Businesses can ride out economic downturns easier by having stronger relations with their workers through collective bargaining; an approach used countries like in Germany, an International Labour Organization (ILO) official said.

"Collective bargaining is essential to the survival of business and employment, so it is very important that dialogue is maintained between the employees and employers," Karen Curtis, deputy director of the ILO Standards department said.
"Sri Lankan businesses can benefit and face economic downturns better through collective bargaining with their employees."

Through collective bargaining, employers and trade union can discuss on conditions of employment, working conditions, grievance procedures and rights and responsibilities of trade unions.

Curtiss said the challenging economic environment had has led to a deteriorated labour standards in some parts of the world, and to a fall in productivity.

Through a collective bargaining agreement companies and their workers can jointly take decisions and actions to face a crisis as and when it comes, Curtis said.

"It's very important to maintain a healthy dialogue now due to the economic down," Curtis said.

"Those who have maintained healthy relations with their respective trade unions can make changes faster."

Curtis was speaking at the tripartite workshop on freedom of association in collective bargaining in Sri Lanka, Nepal, the Maldives and Bangladesh held in Colombo.
German companies keep a very good relationship with their workers and communicate frequently on challenges the business might face in future, Curtis said.

Both Germany and Japan had good labour relations and strong export growth in the 1970's when many developed countries had high inflation, strikes, wage hikes and a decline in their industrial sector.

The world went to the so-called 'Great Inflation' period following the Vietnam war as the US printed money and the dollar finally went off the gold standard in 1971 to become a floating currency fuelling an 'oil shock' and commodity boom.

In a landmark study in 2007, Edward Nelson, a US Federal Reserve economist, showed that the good labour relations in German called 'Concerted Action' was made possible by the early stamping out of inflation by the Bundesbank.

Nelson's 'Monetary policy neglect hypothesis' argued that "countries that experienced relatively low inflation, such as Japan and Germany from 1975 onward, did so because their policymakers converted early to a monetary view of inflation."

Bank of Japan which mistakenly cut discount its discount rate to 4.75 following fuelling inflation further, started raising rates from March 1973 eventually raised rates to 9.0 percent by 1974. From 1975 Japanese inflation fell.

Nelson argued rather than mandated wage freezes, control of inflation by the central bank created grounds for peaceful labour relations. Both Germany and Japan has strong exchange rates and low inflation.

In the current economic downturn, Germany, the world's second largest exporter behind China should have been more susceptible to global recessions.

According to ILO statistics, in 2009, German unemployment had only increased by 0.1 percent from 2008.

In the US, Germany's largest export market, the unemployment rate had increased by 2.6 percent during the same period.

"People need to genuinely believe in the system," Tine Staermose, director, ILO Colombo office said. "Belief in the system can't happen overnight."

Call to focus on North-East industries

2010-03-02T03:50:00.000-08:00

Sri Lanka should focus on developing the industrial sector in the North and East within the next two years, said National Chamber of Commerce of Sri Lanka president Lal De Alwis,

The war crippled the economy in the once active industrial zones in those provinces. The number of such companies reduced to 32 from 754.

The government and the public institutions should assist the SMEs in areas recovering from the conflict to develop the national economy.

Unemployment is a radical issue in the provinces as their livelihoods are being driven to the edge.

The Netherlands donation of US$ 2 million to the national chamber has been distributed to develop the SME sector in those provinces and it has helped develop numbers of industries, he said.

The country now needs further assistance from developed nations for social upliftment in these provinces,

Currently, he said the tourism industry had taken a leading role in helping to boost the livelihoods of people in these zones.

Sri Lanka is at the early stages of an economic boom and it only can be strengthened further with proper development assistance being provided to the North and East, he said.

AVIATION :SriLankan optimistic

2010-03-02T03:46:00.000-08:00

SriLankan Airlines is optimistic about this year’s performance and anticipates steady progress in its operational activities.

“We are changing the way we fly and the way we experience travel. It is totally a customer oriented approach and a complete uplifting of the products and services.

A Sri Lankan aircraft

We will use innovation to enhance quality and standards,” SriLankan Airlines Chief Executive Officer Manoj Gunawardena said.
SriLankan Airlines unveiled new cabin crew uniforms designed by Orient Lanka Garments at a ceremony at Water’s Edge Battaramulla last week.
“We unveiled a new image before the entire world and this is not a cosmetic change, but a meaningful change.
We are changing our customers travel experience in a multi-dimensional manner and stretching the boundaries of hospitality. The airline will be positioned to project our country in a positive way.
Efforts will also be taken to make the company as a commercial viable entity. For this the service level will be improved,” he said. “Last year was a difficult and challenging year for us.
However, the global economy being on the path of recovery, peace being established in Sri Lanka and the anticipated growth in the tourism sector would have a positive impact on the airline industry and in particular the SriLankan Airlines,” he said.
“Today marks a new beginning of a long process. The refurbishment and re-fleeting activities currently underway would reflect the aim to achieve five star status in services offered.
The industry is looking forward for a better year with the stabilization of inbound travel business,” he said.
“We are striving to reach the next level of customers service by voluntarily inviting the globally reputed airline rating organization Skytrax to conduct a full audit of our customer experience.
The audit is in progress and will run for several months as the Skytrax team travels on board SriLankan flights in all regions and evaluates every aspect of customer service and products,” he said.

More SIA routes to feature new cabin offerings

Singapore Airlines’ Airbus A330-300 aircraft, featuring the Airline’s latest product and service offerings, will soon operate on selected routes serving the Middle East, West Asia and North Asia.
From March 28/29, the airline will commence A330-300 services to Abu Dhabi, Jeddah and Kuwait (the latter two points via Abu Dhabi) as well as Male. From April 28, A330-300s will be deployed to Fukuoka and Taipei and from May 1 the aircraft will serve Colombo.
The services will replace the Airline’s Boeing 777 operations on the routes.
A330-300 aircraft will also be progressively deployed on other regional and medium-haul routes later this year as part of Singapore Airlines’ ongoing product enhancement efforts.
The Airline currently operates A330-300 services to and from three Australian cities, Adelaide, Brisbane and Perth and two Japanese cities, Nagoya and Osaka. The Singapore Airlines A330-300 is configured in a two-class layout with 30 Business Class and 255 Economy Class seats.
The Business Class cabin is laid out in a 2-2-2 configuration featuring a new seat specially designed for regional and medium-haul routes.

Currently operating at 70 percent capacity:

Oman Air fully geard to serve Sri Lanka

Sanjeevi Jayasuriya

The new look Oman Air, the national carrier of the Sultanate of Oman would focus on expanding its commercial operations with profit oriented strategy towards Sri Lanka.

Peter Hill at the Press Conference. Picture by Sudath Nishantha

The airline has purchased new aircraft and plans to acquire more during the coming years to increase its fleet, Oman Air Chief Executive Officer Peter Hill said.
“We are currently operating at 70 percent capacity and expect better performance with the boom in the tourist industry and enhanced business relationships. We like to see more Sri Lankans coming and experiencing Oman, a country that is a well kept secret and to explore the unseen treasure,” he said.
Oman Air will strive to maintain high quality service and would assure the passenger demand is met. Steps have been taken to increase the level of efficiency in handling of cargo and promote the carrier as a customer friendly service, Oman Air Corporate Affairs Chief Officer Philippe Georgiou said.
“The airline needs to continue and sustain its operation and also pay attention to the bottom line. We need to be profitable as a commercially viable operation and offer products and services of high quality. With the recommencing of operations between Sri Lanka and Oman, the airline is fully geared to fulfill customer expectations,” he said.
“Oman Air is moving on with measurable and sustainable rythm. We expand, consolidate and move on. We have acquired 20 aircraft and plan to increase the fleet up to 30 by 2012. In the process, the airline plans to add a healthy number of destinations during the year,” he said.
Oman is a country having unique features and is a genuine tourist attraction. The variety of landscape, mountains and riverbeds could offer the tourists an opportunity to enjoy the beauty of the country, he said.

Treasury Secretary optimistic: GSP+ can be revived

2010-03-02T03:43:00.000-08:00

To discuss unresolved issues with EU:

The effects of the suspension of the GSP+ facility by the European Union will not be felt in the next six months. The European Union has indicated its willingness to discuss unresolved issues to which the Government has responded positively, Finance Ministry Secretary Dr. P.B. Jayasundera told Daily News Business.

Finance Ministry Secretary Dr. P.B. Jayasundera. Pictures by Sudath Nishantha

There is still a possibility of reviving the GSP+ concession for the country. With the recovery in the global economy and improved economic outlook in Sri Lanka in the post-war environment the adjustment to the GSP+ withdrawal will not be difficult, he said.

The Finance Ministry

The apparel industry in Sri Lanka has gone through a similar challenge in the past when the US withdrew the Multi-Fiber Agreement in 2004/5 where the country faced tough competition from China, Vietnam, Indonesia and Bangladesh.
“However, the availability of the GSP+ facility will provide a comfort margin for post-war recovery in Sri Lanka and also strengthen longstanding bi-lateral relations between Sri Lankan and European Union countries,” Dr. Jayasundera said. Sri Lankan economy is likely to record 6 to 7 percent economic growth in 2010.
The growth has been around 6 percent from, 2005 until middle of 2008 when the global economy was confronted with a major economic crisis.
With the collapse of major export markets in the US and Europe Sri Lanka’s exports declined by 12 percent. There was also reduction in imports.
However, the economy managed to maintain positive growth throughout 2009 due to resilience in the domestic economy, Dr. Jayasundera said.
Economic growth in many countries including India and China fell sharply. Sri Lanka’s economy towards 2009 recorded 6 percent with a favourable agricultural outlook in paddy, tea, rubber, cinnamon, fish, livestock, fruits and vegetables.
It is anticipated that the agricultural sector would generate over 6 percent growth in 2010.
The recovery in global outlook and financial stability has also paved the way for over 6 percent growth in manufacturing and services sectors.
Improved performance in tourist arrivals, new demand for hotels and similar facilities would augur well for the economy. “The construction industry will also get a boost due to the Government’s public investment in roads and water supply for post-war reconstruction work in the North and the East,” he said.

SLBFE branch offices in Jaffna, Vavuniya

2010-03-01T23:38:00.001-08:00

The Sri Lanka Bureau of Foreign Employment will set up branch offices in Jaffna and Vavuniya on President Mahinda Rajapaksa's directive, Social Services and Social Welfare Minister Douglas Devananda said.

These offices will be made use of for awareness raising and help foreign job seekers, migratory workers and public, in addition to their routine service, the Minister said at a ceremony at his Ministry, Colombo 5 to receive 245 bicycles gifted by the Sri Lanka Bureau of Foreign Employment for distribution among the resettled. Cases of harassment of migratory workers at the hands of touts are on the increase, he said.

The setting up of Foreign Employment Bureau offices will save Northern migratory workers from unscrupulous touts, the Minister added.

The bicycles have been purchased from proceeds of the Hands of Brotherhood Extended to the North Fund established at the Sri Lanka Bureau of Foreign Employment with assistance of the migratory workers to help those rescued from the LTTE. Rs. 2.1 million has been spent to purchase these bicycles that will be distributed among those who have resettled.

The bicycles are fitted with special luggage carriers to assist those engaged in self-employment ventures. Sri Lanka Bureau of Foreign Employment Chairman Kinsley Ranavaka said migratory workers helped the displaced from the North consequent to the humanitarian operation and the fund Hands of Brotherhood Extended to the North, was launched at the Sri Lanka Bureau of Foreign Employment with their financial assistance.

Through this fund assistance had been granted to the displaced in earlier occasions. Monies received to this Fund will be utilized for the welfare of the war displaced in the North, Ranavaka added.

World Bank assists rehabilitation in North

2010-02-28T01:58:00.000-08:00

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The World Bank has allocated US$ 65 million for the Emergency Northern Recovery Project (ENRP) to support the Government's effort to resettle the Internally Displaced People (IDP) in their place of origin in the Northern Province and to assist them with the social, economic and livelihood development.
The World Bank will help the Government to assist over 100,000 returnees mainly from the areas of Mullaitivu, Kilinochchi, Vavuniya and Mannar as they are keen to continue their economic and social livelihood development, said Naoko Ishii, Country Director, World Bank, Sri Lanka.
The project components include emergency assistance to IDPs (US$ 6 million), work-fare (US$132 million), essential infrastructure rehabilitation and reconstruction (US$ 44 milion) and project management, monitoring and evaluation (US$ 3 million).
Nihal Fernando, Senior Rural Development Specialist of World Bank said that the project will help reconstruct village level infrastructure such as roads, drinking water, irrigation facilities and public buildings damaged during the conflict. A special programme called ‘Cash for Work' will give an opportunity to returnees to fill the income gap between the time of return and resumption of livelihood. In addition, the project will provide assistance for returnees who wish to resume farming and fishing.
"We have designed the project to be completed in a fast track basis over a period of two years," he added.
Also speaking at the event, Amali Rajapaksa, Senior Infrastructure Specialist, World Bank, said that the Provincial Road Project will rehabilitate and upgrade 150kms of road in three provinces, namely North, East and Uva provinces.
The work will include the rehabilitation and widening of existing roads.

How the Budget Deficit can be reduced

2010-02-28T01:21:00.000-08:00

The government economic spokesmen say that the deficit in terms of the GDP is coming down. True but that is not because of any action to reduce expenditure or to increase tax revenue. It is due to the increase in nominal GDP and part of that increase is the inflation component. This ratio is not based on the real GDP but the nominal GDP. As long as we have inflationary growth the ratio could come down. But does this resolve the problem? No because it depends on inflation to reduce the deficit.

Similarly the Gross Public Debt to GDP ratio also comes down if we have inflationary growth - higher the inflation lower the ratio. The real position is that if we do not take steps to reduce the budget deficit in absolute terms or run a primary account surplus ( budget deficit excluding interest) we will get the country into a unsustainable debtor position and debt default will be the inevitable outcome.

In USA the government and the opposition party set up a joint committee to work out expenditure reduction proposals. But we cannot expect any such co-operation given the hostility of the government to the opposition. The country has a political system that is dysfunctional and cannot resolve any economic problems.

The first step is to see that the public sector enterprises stop being a drain on the Treasury. The two biggest failures are the CEB and the CPC. The failure to recover costs by these two enterprise means the whole system of market prices as a system of allocating resources is hopelessly distorted. The Government is committed to the IMF to eliminate their losses by 2011. Fat hope that any such resolution of their deficits will take place!

The next step is to freeze public sector recruitment and salaries. There is no chance of this either for the Government thinks the problem of educated youth unemployment can be resolved only by absorbing them to the public sector.

The next priority is to postpone or do without some of the capital investment projects. This too is against the so-called Mahinda chinthanaya.

This leaves the tax system. Most of the private sector companies are over-burdened by taxes. They are unable to make a sufficient return on equity to enable them to invest more. They cannot plough back any profits or provide sufficient return to the shareholders. The cost of capital is high and the real rate of interest is too high. The nominal rate was brought down by government fiat but unless it is monitored, the banks will find many excuses not to follow low interest lending. The lack of competition in banking enables them to dictate the lending rates and charge any risk premium from businessmen who do not belong to the first class borrowers list.

The government is perhaps waiting for the report of the Taxation Commission. Any tax will reduce supply according to economic theory. So any increase in taxes will be at the expense of private sector growth. Economic growth occurs when businesses increase investment and hire more workers to expand their operations. But the firms are not being adequately compensated for risk taking. Nor can they get enough credit from the banking system because the State sector is pre-empting resources.

Government can promote economic growth by pursuing policies that do not create excessive burdens on the ability of entrepreneurs to make investments and create jobs. Economic studies have shown that lower corporate tax rates can substantially boost growth. A high corporate tax rate decreases economic growth because it reduces the incentive to take risks, accumulate capital and engage in entrepreneurial activity. The most pro-growth tax systems are characterized by broad based low rate taxes.

Hong Kong – Taxation System

When it comes to designing a simple tax system that does the least damage to the economy, it would be difficult to find a better model than Hong Kong. As The Economist wrote a few years ago, "The territory’s tradition of simple and low taxes ... is widely seen as a main reason for its stunning rise to prosperity.’’

Hong Kong taxes are among the lowest in the world, and its tax regime is simple and predictable. Hong Kong’s simple and low tax system is a great attraction to foreign investors. This low fiscal burden for all, domestic or international players, corporates and individuals alike makes Hong Kong attractive. In fact low tax is the most cited reason for regional offices to set up in Hong Kong! This tax regime makes Hong Kong one of the lowest tax environments among developed economies.

Hong Kong operates a territorial basis of taxation under which taxes are only imposed on profits or income with a Hong Kong source. Foreign-sourced income is not taxable even if remitted to Hong Kong. The principal direct taxes are profits tax on business profits, salaries tax on salaries and property tax on income from property. Hong Kong does not have any capital gains tax, withholding tax on dividends and interest, inheritance tax; value added tax and collection of social security contributions. Few items attract duty.

The profits tax rate is the same for foreign and local companies - a low 16.5 percent. The actual tax bill is often even less after various deductions and depreciation allowances.

There is no capital gains tax in Hong Kong, withholding tax on dividends and interest or collection of social security benefits. The salaries tax rate is at a maximum rate of 15 percent, imposed only on all salary income of individuals derived in or from Hong Kong. We can broad base the income tax by removing the tax exemption of public employees and politicians including judges.

The property tax applies to owners of land or buildings situated in Hong Kong- 16 percent (for 2004/05) of the rental income from the land or buildings and an allowance of 20 percent is permitted for repairs and maintenance. There is no sales tax or VAT in Hong Kong. The limited tax base, combined with exceptionally low tax rates, makes Hong Kong’s tax incidence much lower than in virtually all other developed economies.

Profits Tax

Incorporated and unincorporated businesses are taxed at different rates - incorporated businesses at 16.5% and unincorporated at 15%. Profits tax is paid initially on the basis of profits made in the year preceding the year of assessment and is subsequently adjusted according to profits actually made in the assessment year. Some general details in calculating profits tax: deductible items include: all expenses incurred in the production of assessable profits; losses of the company (can also be carried forward indefinitely) ; capital allowances on capital expenditure (varying between 4-20%) and plant and machinery, up to an immediate write off of 100% ; certain trademark and patent registration fees; contributions to an employee retirement scheme, up to specified limits ; some costs attributable to scientific research. items exempt from profits tax - interest income, other than that received by financial institutions, and dividends received from corporations capital gains there is no withholding tax on dividends paid by corporations groups cannot file a consolidated tax return in Hong Kong.

Profits tax produces about 20% of the Government’s revenue.

Salaries Tax

Taxpayers receive their salary gross i.e. the tax is not deducted. Salaries tax is demanded on a yearly basis, and is normally paid in two installments between December and March.

Foreign nationals who spend less than 60 days in Hong Kong in any year of assessment are exempt from salaries tax.

Taxable income includes: Commissions; bonuses; awards; gratuities; allowances; like housing allowance. Deductions include: allowances prescribed in the Ordinance, charitable donations and certain payments for relevant educational courses.

The earnings of husbands and wives are reported and assessed separately. However they may elect to be assessed jointly if this results in a lower tax bill or if allowances are unused.

Salaries tax is calculated in two ways and the taxpayer pays the lesser amount. The two methods are: tax calculated at a stepped rate on the net income figure i.e. after tax allowances. The stepped rates are: 2% on the first HK$40,000; 7% on the next HK$40,000; 12% on the next HK$40,000 and the balance at 17%. Academic studies of optimal taxation have long concluded that marginal tax rates should be lowest at the highest levels of income. As Joseph Stiglitz wrote in 1987, "the marginal tax rate on the highest income (ability) individual should be zero." Hong Kong does not go quite that far, but the marginal rate is reduced from 20 to 16 at the highest incomes, while keeping their average tax high by eliminating personal exemptions.

Property Tax

Property tax is charged at a standard rate of 15% on rentals received less rates and an allowance of 20% for repairs and maintenance.

For corporations, rental income is included in their profits tax calculations so they are not subject to property tax.

Trade and Customs Regulations (HK)

There are no customs tariffs in Hong Kong and goods imported or exported require minimal customs formalities. Excise duties are levied only on tobacco, liquor, methyl alcohol and hydrocarbon oil, whether imported or locally manufactured. Import/ Export declaration is required within 14 days after the importation/ exportation of any articles, other than exempted articles. Many advantages of the Hong Kong tax system have been widely emulated in Asia.

Sri Lanka to invest $ 2 bn. in push to reduce power tariffs

2010-02-28T01:16:00.001-08:00

Sri Lanka commissioned its biggest single electricity generator Thursday as part of a two billion dollar investment to reduce tariffs which are among the highest in the world, officials said.

President Mahinda Rajapaksa formally linked the 300-mega watt combined cycle power plant at Kerawalapitiya, on the northern edge of Colombo and urged the state-run electricity utility to work towards reducing costs.

Rajapaksa said 85 percent of Sri Lanka's 20 million population had access to electricity and the rest would be covered by next year, but consumers complained that rates were too high.

"When I go to the villages, people tell me that the rates are very high and they can't afford it," Rajapaksa said. "We need to focus on reducing our generating costs while we increase our capacity."

High domestic consumers pay up to 30 US cents for a unit (one kilo watt hour) making Sri Lanka one of the most expensive places for electricity.

Secretary to the Ministry of Power and Energy M. M. C. Ferdinando said a Chinese-funded coal power plant will add 300 mega watts of electricity by September while two more hydro electricity generators will be added soon.

"We are looking at investing about two billion dollars in the next two years on projects already in the pipe line," Ferdinando said. "These, as well as grid upgrading, will be done with soft loans from China, India and Iran."

He said the benefit of cheaper power generation could be passed on to consumers soon.

Electricity costs have steadily increased because of Sri Lanka's extensive use of diesel power plants. The country has an installed capacity of 2,700 mega watts of power with 35 percent of that coming from hydro-electricity.

COLOMBO, Feb 27, 2010 (AFP) -

Tigo becomes etisalat

2010-02-28T01:10:00.001-08:00

Etisalat launch : The United Arab Emirate’s telecom giant, etisalat was launched in Sri Lanka with the takeover of Tigo which was Celltel earlier. The launch was at the Water’s Edge yesterday. Here Director/Chief Executive Officer, etisalat Lanka (Pvt) Ltd. Dumindra Ratnayaka and etisalat Chief Marketing Officer, Essa Al Haddad at the launch. Picture by Saliya Rupasinghe. See Business Pages for more information.

*Will add 1,000 more base stations

*Offer customer made packages

*Preferential rates for group networks

The United Arab Emirate’s telecom giant, Etisalat launched operations in Sri Lanka with the takeover of Tigo which was Celltel earlier.
Telecommunications has become a major factor in development to which Sri Lanka is heading and Etisalat will cater to customer oriented needs, Etisalat Lanka Director/Chief Executive Officer Dumindra Ratnayaka said.
Speaking at the launch of Etisalat Lanka at Water’s Edge yesterday, he said Etisalat Lanka expects to link Sri Lankan customers in the United Arab Emirates and the Kingdom of Saudi Arabia with their relatives in Sri Lanka.
The company will double the existing coverage network of 1,000 base stations in the island.
Moreover 450 base stations for 2G technology as well as 500 base stations for 3G technology will be installed within 12 months of its operation. Out of 500 base stations for 3G, more than 100 base stations will be installed in Jaffna and adjoining islands.
The service of Etisalat Lanka is available from yesterday for the people in North and East covering 95 percent of the population there.
Among the prevailing base stations in Jaffna, eight were given coverage from yesterday. Cable TV facilities too will be introduced in the near future.
“Etisalat Lanka will ensure preferential rates for the group networks covering overseas customers,” he said.
“At a time where all the other telecommunication providers work hard to cut down rates, we will be concerned on the needs of the customers while reducing our costs,” he said.
“Etisalat has its presence in UAE, Saudi Arabia, Egypt, Tanzania, Indonesia, India, Pakistan, Niger and Ivory Coast and has a large customer base amounting to 100 million.

SriLankan Airlines staff gets new look

2010-02-16T20:54:00.001-08:00

SriLankan Airlines introduced a whole new experience on ground and in the air with a change in the uniforms.

The airline unveiled its new uniform for front line staff from cabin to ground crew yesterday.

The cabin crew with their new uniforms

SriLankan Airlines CEO Manoj Gunawardena said: "We've struggled to stay airborne during the past two years. In the process we didn't deliberately set out to do anything new and revolutionary.
In fact we were often thought to have lost focus of our customers. With these wide ranging and sweeping changes we now reassure our thousands of customers that they certainly are our focus. We are changing their travel experience in a multi-dimensional manner and stretching the boundaries of hospitality".
"We're striving to reach the next level of customer service by voluntarily asking the globally reputed airline rating organisation Skytrax to conduct a full audit of our customer experience. The audit is in progress and will run for several months, as the Skytrax team travels on board SriLankan flights in all regions, and evaluates every aspect of customer service and our product.
"I'm proud to say that refurbishment and re-fleeting are on the cards in the near future thus reflecting our vision to achieve a five-star status not in terms of size but quality onboard service", he added.
SriLankan Airlines will continue this journey of new discovery with more comfortable seats on board with more leg space and flat bed seats in the business class. Trimmings and trappings on board, like the seat covers will also change to give a completely new look and feel to the experience of travelling with SriLankan Airlines, which aims to be one of the best in Asia.

Sri Lanka Economic Summit and CACCI Conference

2010-02-16T02:43:00.000-08:00

Asian economies are confronted with crucial changes in international economic and financial conditions as a result of the recent global crisis. Renewed inflationary pressures and slackening external demand have created new policy challenges for macroeconomic management, while the sub-prime crisis has refocused attention on financial regulation, supervision and reform.

The conference will focus on the current challenges faced by
economies in the Asian region

Persistent global imbalances and the weak dollar also suggest that global conditions will continue to complicate stabilization efforts and threaten to magnify the consequences of policy missteps. To address these and other critical issues, the Ceylon Chamber of Commerce will hold its 11th Sri Lanka Economic Summit together with the 24th Confederation of Asia Pacific Chambers of Commerce and Industry (CACCI) Conference from July 5 to 7 at the Cinnamon Grand, Colombo.
The conference will focus on the current challenges faced by economies in the Asian region, and recommend some policy responses to the changing conditions at home and abroad that governments, international financial organizations and private sector participants can adapt that will serve as crucial determinants of growth and macroeconomic stability in Asia over the medium term.
The joint event is targeted to draw together possibly the largest gathering of industry leaders, foreign dignitaries, leading public and private sector decision makers, diplomats and professionals from many spheres of the regional economy. This will present an ideal occasion for the region to map out its growth strategy; an opportunity for progress that we cannot afford to miss!

January to October 2009 Budget deficit expands by 50 percent, 8.4 percent of GDP

2010-02-16T02:41:00.001-08:00

Sri Lanka’s budget deficit has expanded by 50.8 percent with government expenditure rising at a faster rate than revenues while the annualised budget deficit as a percentage of GDP has reached 8.4 percent, latest data from the Central Bank shows.

According to the revised 2009 Budget, the deficit for the entire year was estimated at Rs. 346.4 billion but the actual difference between government spending and revenues had already exceeded this full year target, reaching Rs. 416.4 billion by October.

According to data released by the Central Bank last Friday, the budget deficit for the first ten months of 2009 amounted to Rs. 416.4 billion, a 50.8 percent increase from a deficit of Rs. 276.1 billion for the corresponding period of 2008.

During this period, total expenditure of the government increased by 24.93 percent to Rs. 992.2 billion from Rs. 794.2 billion during the corresponding ten months of 2008.

Current expenditure, accounting for 75 percent of total expenditure, increased by 27.06 percent to Rs. 749.4 billion from Rs. 589.8 billion while capital expenditure increased by 18.73 percent to Rs. 242.7 billion from Rs. 204.4 billion.

Total revenue increased by 11.3 percent to Rs. 575.8 billion from Rs. 518.1 billion. Tax revenue, accounting for 88 percent of total revenue, increased by 8.4 percent to Rs. 506.1 billion from Rs. 468 billion while non-tax revenues increased by 39.2 percent to Rs. 69.7 billion from Rs. 50.1 billion.

According to the 2009 budget, revenues were estimated at Rs. 855 billion and later revised downward to Rs. 727.7 billion and so far 79 percent has come into government coffers for the first ten months. Expenditure was estimated at Rs. 1,191.7 and subsequently revised down to Rs. 1,074.1 billion, 92 percent already being accounted for by October.

Economists argue that it would be difficult for the government to meet the budget deficit target of 7 percent of GDP for 2009 as laid out in the agreement with the IMF. The targets for 2010 and 2011 are 6.5 percent and 5 percent respectively.

According to data presented in the Central Bank’s Recent Economic Developments: Highlights of 2009 and Prospects for 2010, the estimated budget deficit for 2009 is Rs. 346.4 billion (revenue Rs. 727.7 billion minus expenditure Rs. 1074.1 billion).

The revised budget deficit as a percentage of GDP for 2009 is estimated at 7 percent. Using this figure we could estimate the nominal value of GDP for 2009 which works out to Rs. 4,948 billion (deficit Rs. 346.4 divided by 7 and multiplied by 100).

The annualised deficit as a percentage of GDP for the first ten months of 2009, therefore, works out to 8.41 percent of GDP.

The Central Bank over the past few months has warned the government against reckless spending and increasing public sector wages which threatens the low inflation and low interest rate environment of the country and the ability of the private sector to grow and contribute to the country’s productivity and employment generation.

Govt debt increases by 21.6 percent

2010-02-16T02:40:00.001-08:00

Sri Lanka’s outstanding debt stock has reached Rs. 4.1 trillion by end October 2009, increasing by more than 20 percent year-on-year latest data from the Central Bank shows.

The outstanding debt stock of the government has increased by 21.6 percent to Rs. 4.1 trillion as at October 2009 from Rs. 3.37 trillion a year ago, data released by the Central Bank last Friday showed.

About 56 percent of this is domestic debt, increasing by 16.22 percent to Rs. 2.33 trillion from Rs. 2.01 trillion. Total outstanding foreign debts amount to Rs. 1.77 trillion growing by 29.63 percent from Rs. 1.36 trillion.

Furthermore, the government’s debt increased by Rs. 83.2 billion during the month of October from Rs. 4.023 trillion in September.

The public sector is also showing signs of healthy growth in bank borrowing whereas the private sector is still in negative territory, according to latest data available for the month of November.

Net credit to the government from the domestic sector increased by 25.1 percent to Rs. 650.5 billion in November 2009, year-on-year.

The domestic banking sector accounted for 67.8 percent of this, reaching Rs. 441.2 billion, an 82.1 percent growth from the previous year. Credit to corporations grew by 74.5 percent to Rs. 73.4 billion, the entire amount coming from the domestic banking sector.

Net credit to the private sector declined by 6.1 percent to Rs. 1.18 trillion with the domestic banking, accounting for 87 percent at Rs. 1.03 trillion.

The fiscal situation is in a precarious position and maintaining fiscal discipline this year would be a challenge, according to economic analysts and the Central Bank, where inflationary money printing and increased domestic borrowings crowding out the private sector are the real threats faced by the economy that is expected to boom after a decades long war.

HSBC returns to JaffnA: To build international investor confidence

2010-02-16T02:38:00.000-08:00

HSBC is the first foreign bank to open a branch in Jaffna after the 30 year conflict. The branch was opened on February 11. On this occasion the Sunday Observer interviewed the CEO of HSBC Nick Nicalaou on the bank’s decision to open a branch and what plans are in place for the branch. The excerpts of the interview.
Q: What made HSBC open a branch in Jaffna?
A: HSBC today is a leading financial institution in Sri Lanka’s banking sector that offers a wide range of banking and financial services tailored to meet a wide spectrum of needs, from those of multinational corporations to local businesses and individuals. Given our remarkable history of 117 years in banking and financial services in Sri Lanka, we are pleased to play our part in bringing a truly global banking experience to Jaffna and to empower the local community with our strong vision backed by initiatives and capabilities. Establishing HSBC’s Hexagon logo in Jaffna will be symbolic of our commitment to Sri Lanka in general and Jaffna in particular, and our aim is also to build international investor confidence and to support industrial growth, be it in travel and tourism, agriculture, or manufacturing as well as larger infrastructure projects, in driving the development agenda in Jaffna.
HSBC is very positive about contributing to the Jaffna local economy, and will be providing customers the ability to bank with an organisation which has a truly global reach. We will be able to connect Jaffna directly with the rest of the world, and handle both ends of remittance and investment transactions. We see the potential for many business opportunities and expect to be fully involved in them.
In actual fact, HSBC is returning to Jaffna, having first established its presence there in 1959, when the then Hongkong & Shanghai Banking Corporation Ltd. acquired the Mercantile Bank Ltd. But due to regulatory changes for foreign banks, HSBC’s operations were rationalized to one office in Sri Lanka and during 1973/74, the Mercantile Bank was closed and its offices sold to local banks.
Q: Will the bank get involved in financing infrastructure projects?
A: The Bank has facilitated over US$1bn of infrastructure lending in the power, water, harbour and telecom sectors during the past 12 months, cementing its place as a leader in the infrastructure space in Sri Lanka and will continue to do so, as the government’s ambitious plans to develop infrastructure facilities takes shape. HSBC remains the only bank with a local presence to be mandated as Co-Lead Arranger to both highly successful USD 500M sovereign bonds issued in 2007 and 2009.
Q :What is your targeted market segment?
A: Our Branch in Jaffna will be offering a full range of products and services for both Corporate and Personal Financial Services clientele similar to products and services offered throughout our existing branch network. Products will be customized based on requirements offering unparalleled flexibility and convenience. A strategy for SME clients has also been developed.
We will also be offering personal customers the opportunity to experience “ HSBC Premier” , which is HSBC’s flagship product globally.
This will provide customers with a personal relationship manager and a host of other unparalleled benefits and facilities. We will also be launching our HSBC Advance mid market proposition in mid February 2010.
Q: Has the bank introduced any new schemes to cater to the needs of the people?
A: The Bank will make use of its global connectivity to facilitate financial transactions of the diaspora. Our ability to combine both ends of international financial transactions, coupled with our expertise with in-depth local knowledge and experience, places us in a unique position to serve customers’ domestic and international needs.
In addition, fund transfer and foreign remittance facilities will be made available for the convenience of our local residents, and HSBC credit cards and loan schemes will be introduced to the Jaffna market. As mentioned above, a new mid market proposition named “HSBC Advance” will be introduced shortly for personal banking customers.
Q: What are the industries targeted by the bank?
A: We plan to support industrial growth, be it in travel and tourism, agriculture or manufacturing. Our Business Banking Unit, which serves the SME sector, in particular will have significant opportunities. We will also promote and support larger industrial sector projects of our economy to drive the development in these areas. We remain committed to catering to all segments of the community with a wide array of products and services.
Q: What was the recruitment plan?
A: Manifesting our stance as the “World’s Local Bank”, HSBC has recruited four out of seven staff from Jaffna. The Branch Manager himself is a local resident of Jaffna and well experienced, with comprehensive local knowledge in banking. He will be well supported by a dynamic team of individuals in delivering an exceptional service to our customers of Jaffna.
Q: What is the strategy to promote credit cards?
A: HSBC Credit Cards provide our customers the global recognition, safety and security and many other benefits and privileges that suit their life styles and we are pleased to extend this value proposition to our potential customers in the North of the country. We have seen an increase in the number card acceptance outlets in Jaffna and this will help our customers to start transacting more conveniently without carrying cash all the time. Customers can talk to our branch and sales staff to get more details about how to apply for a credit card.
Q: Any other observations and comments?
A: HSBC’s local network now consist of 15 branches and a Premier center, with automated service channels across the country. These include ATM’s, phone banking and internet banking services, easy pay machines, express banking centres and a 24 -hour call centre. In addition, the bank can be accessed through 156 local post offices and at over one thousand third party outlets, such as Cargills, Singer, NSB, Abans, Commercial Bank and Lanka Bell, for credit card payments and cash and cheque deposit services.
HSBC believes in supporting the local communities in which we operate. Jaffna is reputed as an illustrious hub of knowledge and the Public Library; is a monumental treasure that has long stood as a historic landmark and is of great significance to its people.
Hence, we are happy to donate to the library much needed equipment and study material today. Furthermore, as part of HSBC’s corporate sustainability initiative, 25 computers will be donated to Sarvodaya - Fusion and 200 scholarships granted to deserving youth in the North, East and South. This initiative was launched in Dec 2009, in partnership with Microsoft Sri Lanka and Sarvodaya to help build IT capacity skills among youth and improve their employment prospects.

First South Asian national to head ADB's South Asia Department

2010-02-16T02:36:00.001-08:00

S. Hafeez Rahman, a Bangladesh national has been appointed Director General of Asian Development Bank's (ADB) South Asia Department, with responsibility for ADB operations in Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka.

Rahman, who took up the appointment on January 11, was formerly Director General of ADB's Pacific Department where he was responsible for ADB's work in its 14 Pacific member countries. Prior to this, he spent two years as Deputy Director General of the South Asia Department, and worked in the Department for eight years. He thus brings extensive regional knowledge to his new position.
Rahman has enjoyed a distinguished career at ADB since joining in 1992. He led the resumption of ADB operations in Vietnam in 1994, and Afghanistan in 2002-2003 and helped initiate assistance to Kazakhstan in 1995 in the aftermath of the collapse of the Soviet Union. He was also Country Director in Nepal at the peak of the civil conflict from 2003-2006, and was deeply involved in ADB's stabilization and recovery assistance work to the countries hardest hit by the Asian financial crisis of 1997-99. In 1999, Rahman received a performance award from ADB for his work in helping author ADB's Poverty Reduction Strategy.
More recently, he was appointed to head ADB's Task Force during the food crisis of 2008, and is currently involved in another Task Force overseeing ADB's response to the Global Economic Crisis. He has also served as Advisor to ADB's Vice President (East) in the Office of the President.

Oil rises above $74 on bullish EIA demand outlook (Agencies)

2010-02-16T02:35:00.001-08:00

Oil rose above $74 a barrel last week after the US Energy Information Administration raised its forecast for crude demand and prices this year, a sign it expected economic recovery to gain steam.
Oil reversed an earlier loss after the US dollar pared gains against other currencies. A firming dollar can make oil, priced in dollars, less attractive to investors.
US crude futures rose 36 cents a barrel to $74.12 as of 1:10 pm EST (1810 GMT), after dipping as low as $72.60. ICE Brent crude futures rose 9 cents to $72.21.
The EIA on Wednesday forecast world oil demand to rise 1.2 million barrels per day in 2010 from a year earlier, raising its forecast by 120,000 barrels a day from a previous one.
The agency also forecast that oil prices would average $81 a barrel in the second half of the year, well above current levels.
"A recovering economy and tighter supplies should help oil prices, even though we haven't seen inventories coming off yet," said Gene McGillian of Tradition Energy in Stamford, Connecticut. "After a sell-off last week, oil prices are now holding."
The EIA's demand forecast went counter to one earlier Wednesday from the Organization of the Petroleum Exporting Countries, which cut its 2010 demand estimate citing the slow pace of world economic recovery.
The dollar firmed against a basket of foreign currencies including the euro, on uncertainty over the outcome Europe's potential bailout of debt-strapped Greece, and after comments from US Federal Reserve chairman Ben Bernanke led some investors to expect the Fed could tighten US monetary policy soon.
A Greek bailout could alleviate jitters about the fiscal health of European economies and boost demand for riskier assets like oil, analysts said.
"News that major European economies have resolved to help Greece and possibly other peripheral economies within the euro zone is bullish for risk assets," said Brad Samples, an analyst at Summit Energy in Louisville, Kentucky.
Earlier Wednesday, oil prices had come under pressure after the American Petroleum Institute industry group reported a large increase in US crude inventories last week, and amid a fall in Chinese crude imports.
Crude stocks in the United States, the world's largest oil consumer, increased by 7.2 million barrels to 337.6 million barrels in the week to Feb 5, industry group American Petroleum Institute (API) said late on Tuesday.
The increase in crude inventories exceeded analysts' expectations for a 1.5 million barrel rise.
Official stocks data from the US Energy Information Administration (EIA) has been delayed to Friday from Wednesday as government offices were closed due to a snow storm.
Chinese crude imports slid in January, to 4.03 million barrels per day from their December peak of 5 million barrels per day, although they were still up 33 percent on the year. (Courtesy: China Daily)

Dialog, HSBC in mega deal on a joint loyalty scheme

2010-02-16T02:33:00.001-08:00

HSBC, and Dialog Telekom, two giants in their respective fields, have come together to offer their clientele share benefits of their respective customer loyalty schemes. This unique agreement, the first in a series of offers between the two companies, gives customers the opportunity to switch loyalty schemes based on their convenience.

Picture shows the exchanging of agreements between Dr Hans Wijayasuriya, CEO of Dialog Telekom Pvt Ltd (left) and Nick Nicolaou, CEO of HSBC Sri Lanka and Maldives.

Accordingly, now all Dialog Mobile customers would be able to use Star Points to purchase products and services at all lifestyle Reward Merchants of HSBC such as Odel, Hameedias, Cargills and Cinnamon Lakeside which are not part of the Star Points merchant network.
Further Customers can take advantage of the Airmiles programmes such as Kris Flyer , Asia Miles and Q miles. Similarly, HSBC customers could now benefit from exclusive offers from 400-plus Star Points merchants and over 1,000 outlets island-wide through this innovative customer conversion mechanism, according to an HSBC statement.
Nushad Perera, Chief Marketing Officer of Dialog Telekom PLC, said, “HSBC and Dialog share a common vision of being champions in customer experience in our respective fields, and our unique loyalty programme, Star Points, and HSBC Rewards reflect our shared desire to deliver a multitude of benefits to our customers.
What’s unique about this partnership is that it presents customers the very best of both loyalty programmes, a value offering unlike any other loyalty programme in the country.” Nick Nicolaou, Chief Executive Officer of HSBC Sri Lanka and Maldives noted, “We are happy to tie up with telecom giant Dialog in a strategic alliance to offer customers more value in rewards, honouring their loyalty.
This scheme will provide HSBC customers the option of redeeming their rewards points or converting them into star points and enjoy more benefits, at over 1,000 merchant outlets around the
island.”

BOC'S new full banking unit in the UK

2010-02-16T02:31:00.001-08:00

Bank of Ceylon UK operation to open more overseas branches

Recording another first in the local banking sector, the Bank of Ceylon (BOC) is to diversify its operations in the United Kingdom (UK) by upgrading its London branch to a fully fledged bank aimed at using it as a platform for global banking and to attract more foreign investment to the country.
Outlining new strategies of the bank to the Business Times, Chairman BOC Gamini Wickramasinghe said that it would introduce new products and financial instruments for British customers and Sri Lankan expatriates through the Bank of Ceylon UK after fulfilling the conditions required by British authorities.
The banking business of the London branch of Bank of Ceylon has been allowed to be transferred to a new unit, Bank of Ceylon (UK) Ltd, he said.
He disclosed that the Bank of Ceylon UK regulated by the Financial Services Authority UK will set up its branches in countries like Canada, Japan, and Australia securing the status of the BOC as a financial powerhouse with global reach. "This will see the Bank of Ceylon's business at its best - innovating to meet the challenges of a fast-changing world, and delivering truly sustainable prosperity for Sri Lanka," he said. The bank branch now operated as an exchange house for lending and trade financing activities as well as taking deposits and making remitences. Sri Lankan expatriates in European countries will be encouraged to invest in the country's capital market through the Bank of Ceylon UK as Sri Lanka is now a good place to make investments, he said.
Meanwhile at a press conference, Mr Wickramasinghe said that taking advantage of the dramatic shift of the economic potential of post-war Sri Lanka, the BOC has launched a medium-term corporate plan aimed at achieving a Rs 1 trillion Balance Sheet and Rs.10 billion in profits by year 2012.
He said the new strategy is based on current world banking dynamics in which commercial banking and interest based revenues become relatively less prominent and other fee based incomes are explored more actively. The whole bank including its senior managers, branch managers and through them the staff has reached a unified understanding of this 3-year strategic transformation, he said.
A specialized investment banking unit has been set up to support new services in local and international investments, alternative investments, debt and equity distribution, corporate advisory services, and global research. An umbrella of innovative investment opportunities is to be taken to an islandwide customer base through the investment bank.
Mr Wickramasinghe said, "We will focus on mergers and acquisitions in our journey towards a one trillion balance sheet. We have already earmarked certain industries and companies of interest to achieve the synergies and asset growth necessary. The whole bank will carry out this transformation strategy and keep in line with its strategies which impact various economic sectors."

More than 30 bank branches to open in Jaffna this quarter

2010-02-16T02:30:00.000-08:00

Jaffna - Out of the 43 Central Bank (CB) approved commercial bank branches, 10 have already started operations in Jaffna, according to CB officials. “There are 33 more to start business and many are slated to open branches this quarter,” Ananda Silva, Deputy Governor CB told Business Times on the sidelines of the opening ceremony of HSBC’s branch in Jaffna.

“This programme is expected to cover the reconstruction of roads and other transportation infrastructure, the upgrading of electricity for domestic housing and industry, water supply, agriculture and irrigation infrastructure and the improvement of the manufacturing framework. The government also intends to implement a special poverty reduction programme and establish the required social safety net, quickly,” he said.He said that approvals are granted maximum within a week for branch openings. CB Governor, Nivard Cabraal, who was the chief guest at the ceremony, said that with a view to fast-tracking the development in the North, the government has now launched a development program titled ‘Vadakkin Vasantham’ where about Rs. 295 billion (US$ 2.7 billion) will be invested during the next three years, towards rehabilitation and development activities.
He said that the CB has introduced a Special Loan Scheme to boost the livelihood development of the people in the North. Under this scheme, an initial sum of Rs. 3,000 million has been alloted to be disbursed at a concessionary interest rate of 9% per annum to the eligible micro, small and medium scale enterprises, through several participating financial institutions. The repayment period could extend up to five years with a grace period of six months.