January 2010 - Federation of Chambers of Commerce and Industry

Transcription

28th – 03thJanuary 2010
FCCISL News Alert
Weekly Business Highlight
Content
Page
1. DEVELOPMENT ECONOMICS
1.1
SENIOR ECONOMIST TELLS PRESIDENT ECONOMIC WAR
1.2
875 VILLAGES TO GO FROM RAGS TO RICHES
1.3
CALL TO ATTRACT HIGH-TECH GLOBAL COMPANIES
1.4
TO DERIVE BENEFITS FROM GROWTH MOMENTUM
1.5
HAMBANTOTA BECOMES THE LATEST GROWTH CENTRE
2. INVESTMENT
2.1
LAOS: LOGISTICS, IT SEEN AS FUTURE GROWTH AREAS
2.2
PRIVATE INVESTORS WOOED FOR SUSTAINABLE
ENERGY PROJECTS
3. MANAGEMENT
3.1
PROGRESS, PROSPERITY AND PRODUCTIVITY IN THE NEW YEAR
3.2
PERSONAL AND ORGANIZATIONAL PRODUCTIVITY
4. TRADE & MARKETING
4.1
TEA PRICE TO STABILISE IN 2010, WEATHER BETTER –FAO
4.2
WILL BRANDS USE ENDORSEMENTS IN 2010?
4.3
MARKETING AND SELLING IN TOUGH ECONOMIC CONDITIONS
4.4
HOW TO CONDUCT EFFECTIVE RESEARCH
4.5
VALUE ADDED RUBBER PRODUCTS TO BOOST REVENUE BY
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07
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13
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17
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50 PERCENT
TEA INDUSTRY'S FUTURE LOOKS OPTIMISTIC
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5. MONEY & BANKING
5.1
PLANS DRAWN UP FOR PEOPLE-FRIENDLY TAX REGIME
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4.6
6. TOURISM
6.1
TOURISM BOOST AS SLTDA SEIZES NEW OPPORTUNITIES
6.2
SRI LANKA’S TOURISM
6.3
CONSULATE TO PROMOTE SRI LANKA IN WESTERN CHINA
6.4
SRI LANKA LAUNCHES TOURISM PROMOTION CAMPAIGN
IN CHINA
7. EXPORTS
7.1
EXPORTERS EYE ELECTIONS AND GSP PLUS IN ‘UNCERTAIN 2010’
7.2
REWARD SCHEME FOR EXPORTERS DYSFUNCTIONAL
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8. STOCK MARKET
8.1
STOCKS YIELD HIGH RETURNS
8.2
SHARES AT NEW PEAK, UP 123 % THIS YEAR
8.3
CSE TO REPOSITION SRI LANKA AS AN EMERGING
8.4
8.5
8.6
8.7
8.8
8.9
MARKET IN ASIA
SRI LANKANS BUY MORE SHARES IN 2009
AUSTRALIAN STOCKS RECORD BIGGEST ANNUAL GAIN
IN 16 YEARS
STOCK EXCHANGE IN NEED OF NEW LISTINGS
COLOMBO SHARES RIDE HIGH ON LAST TRADING DAY OF 2009
BLUE CHIPS DRIVE S. LANKA STOCK MARKET UP 1.6 PCT
GAINS IN BLUE CHIP STOCKS PUSHED THE COLOMBO
STOCK INDICES HIGHER.
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9. SHIPPING INDUSTRY
9.1
SHIPPING SECTOR HITS OUT AT COPENHAGEN ACCORD
9.2
PRIOR TO WISHING FOR THE HUB STATUS…
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10. AGRICULTURE
10.1 NEW PLANTATION WAGE FAVORABLE TO WORKERS – RPCS
10.2 GOVT ENCOURAGES PUBLIC/PRIVATE SECTORS IN AGRICULTURE
10.3 BAM VENTURES OUT IN EAST WITH AGRI PROJECT
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Development Economics
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The Island – December 28, 2009
SENIOR ECONOMIST TELLS PRESIDENT ECONOMIC WAR
NOT AS DIFFICULT AS WAR ON TERROR, BUT
‘CORRUPTION, ON THE INCREASE SINCE THE SEVENTIES, MUST END’
By Devan Daniel
A senior economist told Sri Lanka’s President that winning the socio-economic war would not be as difficult
as winning the war on terror unleashed by the LTTE, but corruption needs to be eliminated as it reduces
Sri Lanka’s productive potential and aggravates poverty.
Emeritus Professor of Economics, University of Colombo, A. D. V. de S. Indraratna, President of the Sri
Lanka Economics Association and Chairman of the Monetary Policy Consultative Committee of the Central
Bank, was inducted last week as the 29 President of the Organization of Professional Associations (OPA).
President Mahinda Rajapaksa was the Chief Guest at the induction ceremony.
"Winning the socio-economic war will not be as difficult as winning the war against terrorism and a
conducive environment for this must be created which means there has to be good governance, corporate
social responsibility, law and order, civic consciousness and public spiritedness," Prof. Indraratna said.
"For this, the Government has to eliminate corruption, waste and ostentation on the one hand, and
lawlessness, crime and violence on the other hand, wherever they occur. Corruption which is a scourge on
the body politic and society is not a recent phenomenon. It has been on the increase since the seventies," he
told Rajapaksa while delivering his induction speech.
Prof. Indraratna said Sri Lanka’s professionals were concerned at the level of corruption prevalent in the
country and reminded Rajapaksa of his pledge to fight corruption.
"We of the OPA are very concerned about the nature and level of corruption, because corruption reduces
the productive potential of the economy and aggravates the country’s poverty. Professionals are glad that
Your Excellency has vouched to stamp out this curse of corruption," he said.
Right to Information ...
Prof. Indraratna also urged the Media Minister, Anura Priyadarshana Yapa, who attended the induction
ceremony, to speed up efforts to introduce legislation on the right to information.
"The media minister also can help in this campaign against corruption by follow-up work on the Draft
Right to Information Act. We are confident, that Your Excellency will be able to win the socio- economic
war too, as you have won the war against terrorism," Prof. Indraratna said.
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Corruption…
An economist addressing the Annual Sessions of the Sri Lanka Economics Association in 2008 said that
according to a survey conducted by the association; about 2 percent of GDP was lost due to corruption and
bribery in the sphere of infrastructure development.
"Economists should demand that the 13th and 17th Amendments be activated," Lloyd F. Yapa a consultant
on strategic development said.
Making the executive answerable to the judiciary, recruitments to the public sector based on merit,
streamlining rules and procedures and enforcing accountability are some of the attributes to good
governance.
Sri Lanka does not have an accountability system and well trained media and there is no transparency, little
delegation and devolution and there is no place for criticism and consultations; corruption is rampant.
Poor governance has prevented Sri Lanka from realizing its full potential and what gains have been made
are not shared equitably.
The majority of people have not realized the strong link between poor governance and inequitable growth.
Yapa said that economists should dedicate themselves into making the people aware of the nexus between
governance and prosperity.
Waste…
While Sri Lanka’s economy has shown improvements since the end of the war which unleashed its potential
to grow further, the Central Bank and government think tank, the Institute of Policy Studies, indicate in
various publications that the government needs to do much more to curtail or eliminate wasteful
expenditure in order to deliver sustainable and equitable economic development to all Sri Lankans.
"The government has a target of reducing the fiscal deficit to 5 percent of GDP by 2011, and this is the
same undertaking that was given to the IMF. The target for this year is 7 percent and 6.5 percent for 2010.
Many wonder how these can be achieved given the current pressure on the deficit," an economist said on
condition of anonymity.
"One way is to increase the tax base, as I understand it, even the IMF believes tax revenue can be increased
without introducing new taxes. But this alone will not help. The government needs to rationalize
expenditure.
"A bloated cabinet, excessive foreign jaunts and misguided investments such as Mihin Lanka cause pressure
on the spending size. How much more can the government achieve if these are eliminated," he said.
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Daily Mirror – December 28, 2009
875 VILLAGES TO GO FROM RAGS TO RICHES
CABINET APPROVAL GIVEN FOR RURAL DEVELOPMENT PROJECT USING US$ 75
MILLION WB LOAN
By Uditha Jayasinghe
Over 800 rural villages are to be developed by a special world bank approved Ida credit of us$ 75 million.
Having received cabinet approval last week, the project is expected to concentrate primarily on promoting
sustainable and equitable rural development under the broader title of Gama neguma community driven
rural development.
A cabinet memorandum paper noted that the project would implement intra village development activities
in about 514 selected grama niladari divisions, which totals around 875 villages and 10 pradeshiya sabha
areas.
The project will span seven districts - moneragala, badulla, hambantota, ratnapura, kegalle, nuwara eliya
and polonnaruwa - which are among the poorest in Sri Lanka. The financial agreement between the World
Bank and Sri Lankan government was signed on October 22.
"around 85% of the us$ 75 million will be used for intra-village development and inter-village connectivity
development," said enterprise development and investment promotion minister anura priyadarshana yapa,
adding that the project would also concentrate on public private and people partnerships as well as project
management and monitoring to ensure that sustainable development is achieved.
The implementation of the project will be undertaken by the nation building and estate infrastructure
development ministry through its gemidiriya foundation, registered under the Companies act of 2009. It
will have other board members such as the rural industries ministry secretary and representatives of the
finance ministry and samurdhi authority as well.
In around 50-100 villages, the project will be implemented by the samurdhi authority. At district level,
project implementation responsibility is with the district secretary who will be assisted by a district
facilitation team to liaise with all district level government officials and political leaders to obtain their
assistance.
The divisional role would be facilitation, coordination and monitoring project activities by the divisional
facilitation team, which will coordinate with both the pradeshiya Saba and divisional secretariats.
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Daily News – December 30, 2009
CONDUCIVE ENVIRONMENT CREATED:
CALL TO ATTRACT HIGH-TECH GLOBAL COMPANIES
Ramani Kangaraarachchi
Sri Lanka should move into a high tech industry base by 2020 by attracting global high tech companies to
the country, having met a number of pre-requisites to create an environment for such companies to operate
in Sri Lanka, Pathfinder Foundation, Executive Director Luxman Siriwardena told Daily News Business.
Economic growth
* Sri Lanka transformed to a
low-industry based economy.
He said that Sri Lanka has been transformed from an agrarian to a lowindustry based economy during the past few decades and its industrial
exports have grown to become the major export category by the turn of the
century.
* Need to satisfy prerequisites necessary
Today industrial exports account for 78 percent of the total exports.
However, given its high concentration on low tech garment and apparel
* Government will introduce exports the country’s economy will become vulnerable to the adverse
reforms in vital sectors.
impact generated by unfavorable domestic or external developments.
Therefore, it is necessary to move into a high-tech industry base as
countries such as Singapore, Taiwan and Hong Kong had done, he said.
By attracting high tech global companies, Sri Lanka could produce a number of high tech products such as
micro chips, communication equipment drugs, products based on nano technology, computer peripherals,
vessel and boat building and petro chemical products.
However, there are certain pre-requisites which Sri Lanka has to satisfy to attract high tech global
companies.
A consistent economic policy package avoiding policy reversals on an ad hoc basis, the maintenance of law
and order, observing the rule of law and proper legal enforcement of contractual arrangements of the
highest level are needed, he said.
Siriwardena said that the Government will introduce reforms in the area of taxation, import duty structure
and labour regulations in the near future to maintain the competitiveness of Sri Lankan products in the
international market. BOI facilities will also be extended to local entrepreneurs to overcome discrimination.
With the end of the war, Sri Lanka is becoming ripe for a quick economic take off and people from all
corners of the country should be empowered to unleash their talents, skills and initiative to create wealth
and generate prosperity for the nation, he said.
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TO DERIVE BENEFITS FROM GROWTH MOMENTUM:
EFFECTIVE LOGISTICS SYSTEM VITAL
Sanjeevi Jayasuriya
Sri Lanka needs an effective national logistics system to derive the benefits from the growth momentum
created by the peaceful environment. The year 2010 will be a challenging year for the industries particularly
for the shipping industry as the international business community is looking forward to the country as a
phase of development, National Chamber of Sri Lanka Shipping, Ports and Aviation Committee Chairman
Sujeiva Samaraweera told Daily News Business.
National logistics system
* Sri Lanka - strategic
location for global business
community
* Increased air transportation
facility - a boost to tourism
sector
* Prospects bright for
logistics industry
The country’s shipping industry is well poised to
attract more shipping lines and volumes and is geared
to provide an efficient service.
The opening of the Northern entrance to the Colombo
Port is an added advantage as the country’s level of
performance could be enhanced.
The war risk premium would not be a necessity in Sri
Lanka any more. The world’s recession is slowing
down and improvement in the global trade could be
anticipated during the year, he said.
Sujeiva
Samaraweera
The international business community views the country as a strategic location and we need to encourage
more and more shipping lines to call at the Colombo Port. There would be higher growth in the shipping
industry with the construction of the Hambantota Port and related development activities, he said.
There are indications by major airlines to resume flights to Sri Lanka and also a few budget airlines have
expressed willingness to operate flights. The country also needs more charter carriers. The increased
facility for air transportation is a boost to tourism as the Government expects a huge growth in the
industry. It will be a decisive year for the shipping, ports and aviation industries, Samaraweera said.
The logistics industry would thrive with growth opportunities. With plans under way to make a fullyfledged free trade zone in Jaffna, there will be a growing demand for logistic operations.
The prospects are bright for the logistics industry. It is timely that Sri Lanka Customs will become 100
percent automated next year and the National Chamber of Commerce of Sri Lanka appreciates the efforts
taken to provide an efficient service, he said.
New market opportunities have been created in the North and the East with over 90 percent of the resettlement process completed. There are pressing needs in these provinces that should be fulfilled which
would be an impetus for industrial and economic growth in the region, he said.
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Sunday Observer 3, 2010
HAMBANTOTA BECOMES THE LATEST GROWTH CENTRE
Hambantota, one of the most underprivileged districts in the country in the past has become a growth
centre today with the massive development projects launched by the Government.
Mega development projects such as Hambantota harbour, airport, roads and industrial parks that are under
construction has changed the agro based economy of the district to an industrial and service hub.
Apart from these mega infrastructure projects thousands of rural development projects have been
implemented by the Government to improve the living conditions of the people. According to the latest
poverty statistics Hambantota is still the poorest district in the country with the lowest district official
poverty line Rs.1338 (minimum expenditure per person, per month to fulfill the basic needs) lower than
Rs.1423 the national poverty line.
However, the situation is fast changing with the various projects being implemented under different
Government programs.
The Ministry of Nation Building recently organized a media tour to view the ongoing rural development
projects under the Ministry. Gama Neguma, Gemidiriya, Maga Neguma and Jathika Saviya programs have
invested huge amounts of funds on infrastructure and livelihood development projects in rural villages of
the Hambantota district.
Under the Second Community Driven Livelihood Improvement Project (Gemidiriya) of the Ministry of
Nation Building Rs.922.80 million has been allocated for the rural development in 204 Grama Niladhari
(GN) division in the district. In addition Gama Neguma program has allocated Rs.346.62 million for the
district.
Gemidiriya has disbursed Rs.389.21 million for livelihood development projects, Rs.164.26 for
infrastructure development and Rs.91.72 mln for capacity building of the people. Total amount disbursed is
Rs.645.19 million. These funds have been disbursed directly to the community through 236 village
organizations, the registered companies established by Gemidiriya.
The capacity building fund of a village organization provides financial assistance for the youth to follow
vocational training courses to find employment. There are around 2000 youth who have obtained loans and
followed vocational training courses and 888 of them have found jobs or started self employment ventures.
The capacity building fund has also been used to set up rural IT centres in the villages where 117 IT
centres have been set up to cater to the needs of the villages.
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Gemidiriya launched 279 rural infrastructure projects to look into the long felt needs of the villages. The
participatory development approach followed by the project gives the decision making power to the
community and the priority of such infrastructure projects are decided by the community themselves.
The project funds only 70% of the cost of the infrastructure project and community contribute 10% cost in
cash and 20% in labour. Out of 279 infrastructures sub projects 166 have been completed with Rs.164.26
million project funds and Rs.58.53 mln community contribution. Among the infrastructure projects there
are 44 multipurpose buildings, 42 rural road development projects (22.5 km), 14 culverts, 16 drinking water
supply projects and 78 sanitation projects.
Under livelihood development Gemidiriya provides capital, technology, market linkages and
entrepreneurship skills for the members of the village organization to start new ventures or develop their
existing ventures. The community has been organized in small groups and there are 27712 members in
4443 small groups. The members have saved Rs.57.88 million in their small groups and have obtained
Rs.29.37 million loans from the small groups. GW
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Investment
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LAOS: LOGISTICS, IT SEEN AS FUTURE GROWTH AREAS
Minister Counselor (Commercial) of the Royal Thai Embassy to Laos has predicted the information and
technology (IT) and logistics sectors will form the main trade and service investments in Laos in coming
years.
"I see investment in the banking sector has boomed since last year. However it may not be so next year
because it is mostly full now," said Mr Chalaempon Pongchabubnapa in a recent interview.
In 2006, investment was mainly in agriculture. In 2007 it was followed by a boom in energy and mines and
recently the banking sector was the main growth area.
Mr Chalaempon predicts that logistics and IT will be the next growth industry because currently Laos is
training staff in these sectors. "Already some Thai businesses have been attracted to these sectors," he said.
Logistics will become increasingly important in virtually all aspects of business, especially budget
management.
Currently Laos is upgrading roads and bridges nationwide and linking with neighboring countries. These
logistical developments will help establish Laos as a land-linked country.
“Laos will be a goods distribution centre supplying neighboring countries, including China and Vietnam,"
he said.
Laos has a local company that is a large supply and distribution centre for construction materials imported
from Thailand.
"Another centre that is needed and may be set up soon is IT," Mr Chalaempon said.
Currently IT service and supply in Laos is limited to mostly hardware. Laos should have an IT centre with
consultants and provide services in both software and hardware, systems installation and an information
service similar to Google.
“Laos does not have a comprehensive IT service industry but business and particularly government services
are growing and will need such an industry in the future," he said.
Tourism and service investments will also grow in Laos due to the SEA Games as many people from abroad
have now seen the level of development in Laos.
Other commercial opportunities include food services, vehicle servicing and hospitals.
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PRIVATE INVESTORS WOOED FOR SUSTAINABLE ENERGY PROJECTS
By Mario Andree
Sri Lanka is stepping up private sector investments in renewable energy resources, said a top official.
Many areas in Sri Lanka have excellent wind resources that are ideal for commercial development,
Sustainable Energy Authority (SEA) Chairman Dr Krishan Deheragoda said.
In Sri Lanka, as in other countries, energy shortages and high tariffs are hampering economic growth.
The competitiveness of industries and the provision of reliable energy services should be addressed in an
efficient manner to achieve growth targets.
And foreign experts have been urging Sri Lanka to derive maximum benefits from its vast wind energy
resources.
Sri Lanka still has only one small wind power plant connected to its national grid, these experts have
pointed out.
The Authority is working on a development process to fulfill 10 per cent of Sri Lanka’s power requirements
through sustainable energy, said Dr Deheragoda.
Under the project, SEA will facilitate private sector investment in renewable energy resources, such as
wind, small-scale hydropower and biomass, he said.
The US National Renewable Energy Laboratory (NREL) conducted a comprehensive wind energy resource
assessment in Sri Lanka and the Maldives in 2003, under USAID’s South Asia Regional Initiative for
Energy (SARI/Energy) programme.
The assessment showed that many areas in Sri Lanka have excellent wind resources that are ideal for
commercial development.
Development of technology, especially in the area of renewable energy, has a high potential for growth.
Officials highlight the need to develop energy utilization methods with indigenous resources.
SEA is currently looking at biomass energy with top priority, say officials.
Biomass plays a major role as it contributes 47.92 percent to the energy sector.
SEA is studying the issue in various segments including efficiency improvement of biomass utilization in
lime kilns, fuel-switching with replacement of fuel oil usage with biomass in brassware manufacturing
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industry, quality improvement in agro-processing with solar-assisted biomass dryers, development of woodchippers for different volumes of biomass consumption.
Wind is an energy resource for which proven technologies are applied in other countries for large-scale
power generation as well as small-scale power generation at off-grid level.
In order to initiate power plant development using this technology, it is necessary that the potential of this
energy resource is identified and also the potential wind sites are properly located.
Identifying this necessity, the Sustainable Energy Authority reviewed previous projects carried out by other
organizations.
Ceylon Electricity Board has been involved in an earlier study in this respect, and a mess-scale wind
resource map has been developed by National Renewable Energy Laboratory (NREL) of the US, SEA
pointed out.
The Industrial Services Bureau (ISB) pointed out that the Wayamba province, which is focusing on
industrial development in order to gain a higher share of GDP in national economy, will need access to
sustainable energy.
The province has high investment potential for biomass and wind power, ISB Director Neelakanth
Wanninayake said.
As a solution to climate change, all the countries around the globe are looking forward to better systems of
sustainable energy,
"No global solution can be found to the climate change challenge without real progress being made in the
transport sector, especially in Asia," said Kuroda.
"Annual transport-related carbon dioxide emissions in Asia are estimated to double between 2006 and 2030,
from one billion to 2.3 billion tones," a recent ADB report pointed out.
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Management
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PROGRESS, PROSPERITY AND PRODUCTIVITY IN THE NEW YEAR:
PROFESSIONAL EXCELLENCE AND ORGANIZATIONAL PRODUCTIVITY
Dr. K. Kuhathasan, CEO: CENLEAD
A new year is a few days away. You too, can be born a new if you can discover self – the real you.
You are the most important person in the world. Most people have not yet
discovered this fact about themselves. The vast majority spend their days in
work without identifying their true potential.
Scientists and psychologists tell us that the average person uses only a small
percentage of this mind’s potential. Actually the percentage is somewhere
between 3 percent – 10 percent.
All great men and women of the world since the dawn of civilization first
discovered self before they achieved distinction in the fields of Endeavour for
which we remember them.
Set up your day every day
Manage your days before they disappear
Start by organizing each day in advance. Make a list of all the things you
want to get done that day. Group the tasks by project and estimate roughly
how many minutes of your time each task is likely to take.
To start, you may have no idea how long each task will take. You may not
even know how you spend your time. As you make each day’s list and review
yesterday’s list, you will quickly see how you spend your time and get better
at estimating how long things will take.
Now you know what you need to achieve. Cross off each task as you
complete it. This can be very satisfying. You will know when you had a
successful day because you will see that you got everything done. If at any
point during the day you aren’t confident of what to do next, refer to the list
and move straight to the next task.
Add tasks to the list as new jobs come your way. Your action list will help
you to defend yourself against taking on too much or agreeing to do things
sooner than you will be able to manage.
A new year resolution will
help you to plan the year
well and accomplish your
vision, mission, goals and
objectives in a planned and
systematic manner. Your
resolution may also include
the following: Work is a
fundamental element of my
life. Improvement in work
will improve all other
aspects of my life. My work
can and should fulfil and
satisfy me at the deepest
levels.
Throughout the week
Weekly planning moves you up a gear
Daily list – making and execution is vital for you. It tends to produce a strong commitment to complete
your activities.
However, without longer term planning, less urgent but often no less important activities will tend to be
neglected.
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If there’s a strong bias towards daily planning, some non-urgent but important work may never be done.
You will get a slightly longer term perspective by planning the week. To get the best results, you need to
do rather more than when you plan the day.
A simple list won’t do. To begin to set your own agenda, think about your different roles as an executive
and also in your non-executive life. You may work on a number of projects, or for a number of bosses. Then
there’s your social life too. If you haven’t done so, make a list of the five to seven most important parts of
your executive life.
You also have a role within your family or home. May be you are active in a voluntary group. That’s
important too. And remember to include your own self-development as one of the most central roles.
For each of these roles, try to identify a single activity you could do that would make a big contribution this
week. Take time to do this and see what comes up for you. Your list may include things that have been
coming into your mind.
If you’ve been fire fighting for months, or even years, your important list may include things that have been
coming into your mind for a long time. It may seem to you that there’s never been enough time, yet only by
doing them will you find more time.
Throughout the month
Monthly planning is more powerful
Once you have mastered weekly planning, try planning the month. Planning the month gives you even
more leverage.
It may be obvious that you can accomplish more in a month if it is planned well. At the end of the month,
take some time to reflect on what you want to achieve next month.
Throughout the year
You could make this year the best one to date
Most executives work with other people’s agendas. They may look for their own ways to do things each
day, week and month, but in the longer term, they are working within the constraints of other people’s
purpose.
Creating and controlling your own agenda isn’t easy, but you will increase control if you get clear on your
own medium – and long-term objectives.
Annual planning can be a powerful weapon in your armoury. A year provides a good period of time to frame
some of your lifetime objectives. They can be big objectives which may motivate you more. You may want
to support this with ways of providing extra value to your firm, or at least a commitment to do so.
New Year resolution
Adopt this resolution for a productive new year.
* Work is a fundamental element of my life, an activity essential to all aspects of my life.
* Improvement in work will improve all other aspects of my life.
* Work is not just a means to an end. My work can and should fulfill and satisfy me at the deepest levels.
* I possess unique capabilities and talents from which I can create something of lasting value.
* The responsibility to improve “how work” rests first and foremost in my own hands.
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* Work occurs in three basic dimensions: doing, developing and discovering.
* The key to success in any Endeavour lies in recognizing when and how to emphasize and mix the three
dimensions of work, thereby enabling me to enter the Fourth Dimension.
Self-check
* Do you want to be in-charge of your schedule?
* Can you create a schedule and master it?
* Do you plan your month in advance?
* What could you achieve next month?
* What are your targets for the month?
* Do you keep a note of how you spend your time each month?
* How much of your time do you spend working on your monthly goals?
* Are you locked into day to day urgent actions?
* Do you get around to important but non-urgent work?
* Do you plan your week in advance?
* Do you identify the outcomes you want?
* Do you know in advance what would represent a successful week?
* Are you working to a weekly plan?
*Are you working to any plan of your own?
* How much time do you want to spend on self-indulgence?
* Do you check at the end of the week to see how you have progressed?
*Do you set fresh goals for the coming week?
* Have you prepared a New Year resolution for the year 2010?
* How are you going to transform this year as the most productive year for you?
* Let your organization usher in an era of, progress, prosperity, plenty and productivity!
* Let your esteemed staff be gifted with creativity, innovation, motivation, enthusiasm and commitment.
* Let the New Year be a year of achievements and accomplishments for you!
* May all your efforts be crowned with success this year!
* May your vision, mission, goals, objectives and targets be achieved this year and let it be a memorable
Year for you!
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Daily News – January 1, 2010
NEW YEAR PLEDGE:
PERSONAL AND ORGANIZATIONAL PRODUCTIVITY
Dr. K. Kuhathasan CEO: Cenlead
The emotional intelligence pledge is a pledge that should be taken by you as soon as you get up, preferably
before 6 a.m. This pledge will help you to develop emotional intelligence energy. Emotional intelligence
energy will help you to be positive and productive all throughout the working day. You will be able to enjoy
your work and arrest stress at work too.
* Today is a good day!
* Today is a fine day!
* Today is an excellent day
* I am very healthy today!
* I will perform my functions very well today!
* I will shine very well today!
* I will be very happy, healthy and wealthy today!
* I will be steady, strong, sound and systematic today!
* I will be very active, alert and smart today!
* I will be very positive, constructive dynamic and cheerful today.
Productivity pledge
The productivity pledge is a pledge that should be
taken by you and by your staff before commencing
work for the day. This pledge has been introduced
in several organizations and there has been
significant improvement in productivity in
organizations where this productivity pledge is
taken on a daily basis.
* I will be very steady, smart and systematic today!
* I will enjoy and rejoice at my performance today!
* I will be very effective, efficient and excellent
today!
An emotional intelligence pledge will help you to be * I will be appreciated and admired for my
active, alert, smart, happy, enthusiastic and excellent contribution today.
productive throughout the whole working day. This * I will be very happy, healthy and strong today!
pledge will also help you to arrest stress at work. * I will work with "Can Do", "Will Do", "Shall Do"
This pledge should be taken as the first activity of the and "Yes" attitude today!
* I will be very positive, productive, proactive and
day, preferably before 6 a.m.
perfect in every aspect today.
* I will generate positive emotions and remain cool, calm, confident and enthusiastic today!
Job satisfaction pledge
A pledge that should be taken jointly by you and your team members before you leave home, at the end of
day's work.
* We are very proud and happy about our performance today!
* We are very proud and happy about our achievements and accomplishments today!
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* We feel pride about our ability to perform well!
* We are fully satisfied with our continuous progress and improvements!
* We have a dynamic team environment that is fulfilling professionally and personally!
* We are growing and growing. Our progress is on the move!
* We are leaving home with a lot of job satisfaction and contentment!
* We will be always happy, healthy and sound at our work and at home!
* We shall always balance our work and family commitments.
Time Management Pledge
* I will be always punctual.
* I am a good Time Manager.
* I am in full control of my time.
* I am very good in Time Management.
* I will utilize my time very effectively
* I will always perform my tasks on the basis of my priorities.
* I will handle each piece of paper work only once.
* I will maximize usage of peak energy period.
* I will maximize usage of my Prime Time.
* I will always eliminate all unnecessary tasks
* I will always have a plan to improve efficiency in handling routine matters.
* I will prepare a daily "Things to do list"
* I will not waste time.
* I will work according to my short, medium and long term goals.
* I am very systematic in all my activities.
* I will set targets for myself and my staff.
* I will work according to a well planned schedule.
* I can complete all my tasks according to my schedule.
* When I find myself wasting time, I get back on track
* I will never postpone scheduled activities.
* I will undertake a "Time adult" every night.
* I will prepare a "Plan for tomorrow" every night.
The 5-S pledge
* I am committed to create a pleasant working environment.
* I greet everyone pleasantly every morning.
* I am always pleasing, pleasant and happy
* I will make cleaning a habit in my life
I will separate what is wanted and what is not wanted
* I will fix a place for everything and keep everything in its place.
* I will not get things dirty.
* I will not spill
* I will not scatter things around.
* I will do things in order of their importance.
* I am very neat and efficient in my work.
* I will clean things right away
* My desk and office is well organized and free from clutter.
* I will re-write things that have got erased
* I will take up things that have come down
* I will clean all the tings that need cleaning perfectly
* I will implement 5-S activities well.
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* I will keep my work - units as an exemplary one.
* A healthy working environment will give us health wealth and happiness.
Before you retire to bed Self-motivation through affirmations Examples:
* Every day and in every way, I am getting better and better. Day by day, I will continue to be more
confident, better balanced, more energetic, more capable and more enthusiastic. I am perfect in everything! I
am excellent in everything! I am progressing well!
* I am fully committed to excellence. Day by day, I am emerging more and more efficient, more and more
effective, and more and more excellent in my work and life. I have a very bright future! I will do well! I will
shine well!
* I am a positive thinker! I am optimistic in outlook! As an optimist, I generate positive emotion every day.
Day by day, I am more and more healthy, more and more wealthy, and more and more happy. I will
continue to enjoy better health, better wealth and better happiness all throughout my life. I am very healthy!
I am very happy! I am very lucky!
* Day by day, month by month, year by year, I will continue to rise - up higher, grow-up further and further
and improve deeper and deeper in developing my personality and leadership and emerge as an outstanding
performer in my organization. I have an excellent personality! I am an excellent leader! I am excellent in all
what I do!
* I am mentally alert and physically fit than ever before. Day by day, month by month and year by year, I
shall continue to enjoy better mental alertness and physical fitness. I am mentally alert! Physically Fit!
Emotionally Sound!
* I am fully impressed with my progress. I will continue to shine and shine brighter and brighter in every
aspects of my work and life and emerge as an outstanding personality. I am first! I am best!
* I am loved by all. I am appreciated by all. I am a winner! I am always a winner! I am the greatest!
Personal Productivity Pledge
* I am my final authority for everything I do.
* I accept full responsibility for all my actions.
* I am always pleasing, pleasant and persuasive.
* I begin the day with positive hopes and constructive plans.
* I can identify and make the best use of all opportunities.
* I am always active, alert energetic and smart.
* I make the best choice I can at the time.
* I am always a winner. I am proactive.
* I am positive constructive and dynamic.
* I am always accepted, admired and appreciated by all.
* I am the master of my fate, captain of my soul and master of my destiny.
* I am in charge of my thoughts. I only allow positive thoughts to dominate my mind.
* I am unique special and extraordinary.
* I have deep faith in my actions and activities.
Most of these pledges have been introduced by me in several organizations. By practicing these pledges on a
daily basis, you will be able to transform this new year into an year of progress, prosperity and productivity.
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Trade & Marketing
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TEA PRICE TO STABILISE IN 2010, WEATHER BETTER -FAO
MILAN (Reuters) - Tea prices, which hit record highs in 2009 due to droughts in India, Sri Lanka and
Kenya, should stabilize in 2010 as weather has returned to normal in the main producing regions in Asia
and Africa, the U.N. food agency said.
The Food and Agriculture Organization (FAO) said its Tea Composite price, the indicative world price for
black tea, hit a high of $3.18 a kg in September, driven by the droughts and higher demand, up from an
average price of $2.38 per kg in 2008.
"The return of normal weather patterns in the main producing regions indicates that the tight global
market situation should begin to ease, alleviating the pressure on world tea prices in the New Year," Kaison
Chang, Secretary of FAO's Intergovernmental Group on Tea, said in a statement.
A supply response to high tea prices has been delayed because it requires long-term investment decisions. It
takes at least three years before a tea bush can be harvested, FAO said.
There was also a concern about future oversupply if tea producers overreacted to the current high prices
and planted more crops.
"Some producing countries, such as India, have acted responsibly and announced that they would not be
expanding current tea areas beyond what is required for replanting and rehabilitating existing tea gardens"
Chang said.
Some price rises were passed along the value chain to consumers as retail prices rose by five percent across
supermarkets in Europe, FAO said.
Tea consumption growth outpaced production between 2005 and 2009, with the gap between consumption
and output growth being largest between 2007 and 2009, when it reached 3.4 percentage points, coinciding
with the surge in prices, FAO said.
Tea demand remained robust despite the global recession, showing that tea consumption is relatively price
inelastic for most blends except higher priced quality teas, FAO said.
The share of household income spent on tea purchases is relatively small, it added. Higher tea prices have
not affected the consumer much in developed countries because of strong competition in the beverages
market.
But in developing countries, manufacturers are likely to pass a larger share of the price rise to consumers
because tea procurement costs account for a significant share of the final retail price, FAO said.
In India, for example, average retail tea prices were quoted about 15 percent higher in September 2009 than
in the same month in 2008. In Pakistan, retail prices rose by 12 percent in September 2009 from September
2008, it said
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WILL BRANDS USE ENDORSEMENTS IN 2010?
Rohantha Athukorala
Being a marketeer most of my life, when the Tiger Woods saga hit the media the thought that went through
my mind was that an organization has only two types of investments - research/development and brand
building. Every other cost is recovered immediately when a consumer purchases a brand.
However, one of the key components of brand building-endorsements is
in question today with the Tiger-gate scandal. I guess time will unfold
how the business world will react to this new development, just like the
financial crisis that hit us last year but let me throw light to this
strategy-endorsements and how it can be managed by organizations
given my experience of managing one of the most controversial
celebrities -Susanthika when I was leading the Dettol brand in Sri
Lanka.
The Promise
The task of a brand is to sell a promise. The logic being, at the end of
the day, people are prepared to surrender money in exchange for a
promise that a brand can deliver. For instance if we take a brand like
Surf, the brand promises a modern day mum who’s kids clothes are
covered with dirt that these clothes will be spotless when washed with
Surf. With this in mind at the launch stage of the brand if it used an
Tiger Woods endorses Nike
ideal mum to endorse the brand then, it naturally catches the eye of the
customer and thereby influencing trial. This is how endorsement helps a trigger consumer purchase.
Tiger Woods saga
If we take Tiger Woods as an endorsee, it is no doubt that this personality is any marketeer’s dream when
having to drive brand strategy. Clean cut, hardworking aspirational personality and conquered the
American dream even after being an Afro American. What better brand icon can a organizations brand be
signatured with. Nike invests $30 million to get this brand grain wrapping. Accenture invests $20 million
for Tiger, Gillette $15 million and Electric Art $8 million. The annualized earnings exceed a $100 million
which gives us an idea of the importance that marketeers assign for this strategy in the market place. A
point to note is that we need know what happens to a consumer psychologically, when a company uses
endorsement as a strategy?. Let me give clarity to this.
How endorsements work
The underlining psychological theory in endorsements is called “The Balance Theory”. How this works is
when a typical consumer has a positive attitude towards a brand which is lower than to a celebrity, then the
ideal setting exits for an endorsement to be used as a strategy.
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For example if we take Tiger Woods the positive attitude that people had
towards Tiger was higher than the positive attitude that the target consumer
had towards a brand like Gillette with the Tiger endorsement, Gillette
received a rub off from the higher positive attitude that Tiger enjoyed.
Thereby a consumers achieved an attitudinal balance in their mind
psychologically that increases the propensity of a consumer picking up a
Gillette from a supermarket shelf. This is the essence of Balance Theory.
The multimillion dollar question that is being asked by Managers of
celebrities is, does the celebrity experiences a loss of positive attitude post an
endorsement. Yes it is, and that’s why a payment is demanded by an
endorsee. Greater the Attitude gap that the endorsee has to fill, greater the
value of the contract deal. It is reported Cadbury had to pay a fat pay check to
get Amitharb Batchan to endorse Cadbury’s in India, post the quality issue.
Katrina Kaif
Kumar Sangakkara endorsed Airtel when it was launched in Sri Lanka when
people had no imagery of the brand. Hence this explains the inner workings endorses Pantene Shampoo
of Endorsement when used by an organization.
Problem with endorsement
Let me now discuss the problems associated with endorsements. There are situations where an incident like
Tiger-gate that causes the attitude score to decline towards a celebrity. In such an event if action is not
taken by a company the brand will suffer the same loss due to the concept of ‘Balance Theory’ that I
explained if action earlier. This is the logic that Accenture announced the axing of the Tiger deal on
December 13, 2009. Gillette has already reduced the engagement of Woods in its marketing programme
whilst AT &T currently evaluating the decision but there has been a significant reduction of face time on
TV.
Reality of Tiger
The above decisions annul the Woods engagement makes good business sense given that the latest Gallup
poll reports that Woods favorable rating has fallen from 88 percent in 2005 to 33 percent. This is a
staggering 53 percent drop that is extremely damaging for a brand if used as an endorsee even though
Tiger Woods has a reputation of being one of the best athletes that Golf has seen with over 14
championship victories and a 1 $billion dollars under his belt with endorsement earnings.
Another important piece of statistics that organizations must note is
that unfavorable ratings for Tiger Woods has jumped from 8 percent in
2005 to 57 percent today which means that if Tiger comes on TV
endorsing a brand this unfavorable attitude will flow to the brand too
which is suicidal from a business sense. This is why from November 29,
channels have experienced a zero share of voice from any brand that had
woods in. It’s a harsh reality but from a psychological consumer analysis
point of view it’s the best that a brand can do.
Next steps
Kumar Sangakkara
The most ruthlessly rational thing that Tiger Woods should do is to get
endorses Airtel
back to the game of Golf and win a few championships to restore the
ratings by consumers. However, it’s a choice between keeping his family
in tact versus the reputation of the world which is very tough call to make given that Tiger Woods has a
strong family upbringing where his dad trained him during the formative years of Golf. The last week
award of the PGA Player of the year 2009 sets the stage for the comeback of woods in my view.
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From an organization perspective the decision to move forward will hinge on three aspects. The balance
monies left to be used in the contractual agreement and the time duration left. Secondly, his importance to
the brand and thirdly the legal obligation if the contract is to be annulled. In fact the organizations can
request Woods to get permission from an organization prior to making any public statements or
appearances. These are tough decisions that should be made so that one can manage the situation given that
today information is viral and it cannot be controlled.
Future of endorsements
Whilst the above is the reality, companies like Nike are taking a different perspective which is good for the
business of endorsements. The spokesperson for Nike Beth Gast made a very bold statement saying “Tiger
Woods is the best golfer that the world has seen and the greatest athlete in the world.
We look forward for his return to Golf. He and his family have Nike’s full
support”. But a point to be noted is that this kind of bonding exists rarely in
the harsh business world. For instance Tiger dons the famous Nike swoosh
even when appearing on sponsorship deals of American Express, General
Motors, Tag Heur watches which is a high order endorsement which is
psychologically called high order classical conditioning.
A buzz that’s going around the business world currently is should an
organization hinge ones future brand reputation on a single celebrity
endorsement. Rolex watches users a safe strategy where multiple brand
endorsees are used so that the risk is reduced in the event of a tiger-gate
scandal. It is a good strategy but can be costly on a brand budget. A recent
study done in India has revealed that 57 percent of the people believe that
celebrity brand endorsements makes a brand stand out and drive top of the
mind awareness which increases the propensity for a brand to be picked up by
a consumer which is the essence of business.
Amitabh Bachan
endorses Cadburys
This brings the link between Endorsement and business. However a point to note is that this same research
study reveals that only 33 percent of the consumers will trust the brand more due to a celebrity endorsee
which means that Kathrina Kaif’s endorsement of Pantene shampoo in India to reduce falling hair will not
drive trial. Which means that endorsements together with other elements of the marketing mix is what
actually will drive brand purchase.
Way forward for Sri Lanka
Given the issues faced by organization when using Endorsements as a strategy, let me sketch out a way that
one can insulate a organization when using this strategy.
* Do research on the concept of the ‘Balance Theory’ before selecting a celebrity. There after, agree that if
the favorable score drops below a certain point an exit clause exits. This will make a decision of annulling
more logical.
* Use the celebrity advertising together with strong brand value advertising so that the brand does not
hinge on the celebrity solely.
* Have an acceptable behavior clause in the agreement as a safety net. Some companies employ professional
councilors when top celebrities are picked to guide them in handling fame and the media.
* Beauty brands be careful when using beautiful faces. Todays face is replaced by a new one tomorrow by a
consumer. Which means a fat marketing budget must exists like what Lux manages very effectively.
* Use multiple endorsements like what Nike does with Roger Federer, Nadal, Woods and Karka.
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MARKETING AND SELLING IN TOUGH ECONOMIC CONDITIONS:
OUT-OF-THE-BOX MARKETING STRATEGIES
Prasanna Perera, Marketing and Management Consultant, Chartered Marketeer, CIM U.K.
In slow moving markets, traditional marketing strategies do not always work. There is a need to think and
act differently, to energize dormant markets to achieve growth for organizations. In this brief article, I will
endeavor to share some insights.
1. Segmentation of markets
There are many niche marketing opportunities in both products and services.
Take for example, the hospitality industry. Niche tourism segments such as eco-tourism, agri-tourism,
adventure tourism, discovery tourism to name a few. In the beauty care industry, there are many new
market segments and related products and services have been developed. Take the beverage sector, where
health beverages, organic beverages and energy boosting beverages have taken centre stage.
Hence, the ability to creatively segment markets becomes a critical skill in marketing. Not only do you need
to identify mass segments but more importantly, niche segments. There is a saying - "Riches in Niches",
which is indeed true.
2. New products and services
When new market segments are identified, new products and services need to be developed. In healthcare,
"doctors on wheels", "mobile laboratories" and specialized types of care are interesting examples. In fast
foods, you observe many specialized food outlets and chains, catering to niche market segments.
For example sandwich bars, donuts, coffee houses, hotdog houses, sushi bars to name a few. In food you also
observe players catering successfully to the masses.
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Numerous catering establishments have developed winning business models, be it
catering for weddings, office parties, get-togethers or even day-to-day meals.
Budget airlines are a new service concept that has achieved much success by
catering to a totally new market segment i.e. passengers who have never flown due
to economic reasons. The names of Air Asia, Southwest Airlines and Easy Jet come
easily to mind.
3. Should Marketeers be market driven or market driving or both
In textbook marketing, an organization needs to be market driven i.e. to identify
market opportunities and develop products and services to cater to them. There is
nothing wrong with this approach, except that all players are doing so. World
class organizations not only are market driven, they are also market driving i.e.
creating new markets/needs that consumers have not even identified.
Take for example the many innovations of the Sony Corporation - Walkman,
Discman, Video Walkman, Handycam. None of these products were outcomes of
existing consumer needs. They all created needs in consumers, that consumers had never identified! In Sri
Lanka, we have observed many market driving initiatives in the Insurance Industry. For example, on-thespot, call-and-go etc. Even in the telecommunications industry many market driving initiatives have been
observed.
Prasanna Perera
4. Innovative promotions and methods of distribution
The amount of noise and clutter in the Sri Lankan marketplace and communication sphere is high. Hence,
traditional methods of promotions do not deliver the desired results. How many TV and Radio Stations are
available to viewers and listeners in Sri Lanka, not to mention newspapers and magazines. My advise is to
explore interactive and two-way promotional methods, in order to engage audiences. Web based
communication and mobile communication needs to be utilized more regularly and effectively.
Customers also need to be rewarded for their loyalty. Hence, loyalty marketing programs are popular but
they need to deliver "real" values to customers. Merely giving points for purchases, will not suffice.
In the area of distribution, the organized trade (or organizing trade) is growing and even lower middle class
Sri Lankans are patronizing hypermarkets, supermarkets and mini-marts.
However, the traditional trade (kade's) are still the most prevalent methods of distribution for many product
categories. Within these kade's the clutter is simply unbelievable - lots of products, point of sale material
etc., Marketeers will need to find a way to overcome this clutter at outlet levels, in order to highlight their
offerings to consumers. This is where "out-of-the-box" distribution strategies are required. Many
marketeers are now making their products available in non-traditional outlets. For example FMCG
products in hardware and electrical outlets. Innovative POSM will also be required at outlet levels. How
long are we going to rely on posters, danglers, streamers etc.?
5. The benefits of " out-of-the-box" marketing thinking
The biggest advantage is the opportunity for differentiation - in product, service, marketing mix. This leads
to higher sales growth, profitability growth and ultimately greater shareholder value. Creative marketing
strategies also help to position organizations as "innovative"; hence, providing opportunities for charging
higher prices.
Creative marketing also provides an organization with a "window of opportunity" to capture a sizeable
percentage of the market, before the competition catches up.
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HOW TO CONDUCT EFFECTIVE RESEARCH
Market research is only valuable if you ask the right people the right questions. So how do you get the most
from surveys, focus groups and mystery shoppers?
Marketeers are on an eternal quest to understand what motivates their customers. And that desire to get
inside customers’ heads is what drives market research.
So although it might seem blindingly obvious, the very first thing to
ask about market research is whether this is what you need. Rather
than rushing to put numbers and ticks in boxes, marketeers need to
stop and think about exactly what it is they want to find out, and
assess whether market research can do that.
POV Marketing and Research Head of Insight Anthony Tagal says:
“There’s a knee-jerk response. Clients feel they should do research
when there’s nothing better to do. Business and marketing are about
creating new ideas and insights for the product, brand idea or creative
route. So it’s about finding meaning. Research is one way of finding
meaning but we can get lazy with what we ask and assume that
research will give us everything we need.”
Let’s start at the very beginning
How you start a research project is crucial if you want to avoid
wasting time and money. Research International Client Services
Director Robin Birn, suggests beginning by writing down what you
do know and what you don’t. This will form the basis of a brief.
Marketeers are on an eternal quest
to understand what motivates
their customers
HPI Research Senior Partner Juliet Strachan says: “All things stem
from the brief. The most important things to include are what the business problem is, how the research is
to be used and how the outcome will answer that business issue.”
It’s easy to fall into the trap of using research to validate something you’ve already decided to do, cautions
Vodafone Global Marketing Director of Customer Insight Andy Moore. “Don’t decide to do it and then
think, ‘I’ll check it out with the customer’. A much better route of gaining genuine insight is first arming
yourself with an understanding of the core consumer drivers and then making sure that’s shaping your
thinking.
Great marketeers will listen to what the consumer is actually saying.”
When to outsource
Once a good brief has been drawn up, other decisions flow from that. One of the first will be whether the
research can be done in-house or whether it should be outsourced. The majority of marketeers simply do not
have the manpower or resources to run research projects themselves. Even companies with large
departments dedicated to insight and research will usually outsource the legwork and use internal
intelligence for analysis.
Besides the cost, there are risks to doing research in-house. Among them is the possibility that responses
will be influenced by respondents’ awareness of who is asking the questions - an organization conducting its
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own research must make that fact clear. Equally, if your research base is flawed, those flaws could be
perpetuated throughout the results.
“Carrying out research in-house, you run the risk that the hypothesis in the organization drives the design
and outcome of the research, so you don’t get a fresh perspective,” says Strachan.
Another problem with in-house projects is that they slip down managers’ priority lists and are in danger of
being dropped as more pressing matters arise. But before you rush headlong into a research project and get
into detailed methodology, ask yourself whether you can solve your problems using existing information does new information really need to be collected?
Sometimes the question or problem requires some digging closer to home. If, for example, you don’t know
who your core customers are then there’s no point in looking for new ones. So doing your homework inhouse may be the first stage to address. Of course, existing information, be that articles, directories or
reports, won’t give you everything you need and, if what you’re after is specific to a product or company,
you will probably need primary information.
Quant or qual?
As with most things in business, you get what you pay for. So the methodology will vary according to the
scope of the research as well as what you’re trying to find out. The two main options to consider are of
course qualitative and quantitative research, depending on whether you’re looking for more detail and depth
on a topic, or hard figures on recall or use, for example.
With quantitative research people need to be questioned for their response; methods range from telephone
to internet, face-to-face to printed questionnaires. a Course Director for The Institute and Founder and
Managing Director of Market Research Agency Actionline Research and Training Sales, Jean Sutton says
the most efficient and cost-effective route is likely to be via telephone.
This has the advantages of face to face - be it for qualitative or quantitative work - in that you get more
depth and detail.
But the internet is becoming an increasingly popular route, especially as broadband and PC penetration
increase. “When the internet first came along it was a very cheap way to conduct research. But internet
research is no longer the compromise it was. Now it’s an extraordinarily powerful research tool because
you’re talking one-to-one,” says Strachan.
Whether your questionnaire reaches its audience on- or offline, there are a number of points to consider.
Should your questions be structured or “closed” - yes or no - or should you go for a semi-structured
questionnaire with open questions as well? The latter provides more qualitative responses while the former
lends itself to quantitative findings.
“It comes back to what information you need and what you want to do with it. You wouldn’t use a closed
questionnaire for an audience of CEOs. Semi-structured allows for a two-way conversation,” says Sutton.
Crucial to remember is that average response rates to self-completed questionnaires range between three
percent and five percent. So to get 50 responses, you need to send out 1,000 questionnaires. And you have
little control over who chooses to complete - often only those who are very happy, or very unhappy, with a
product or service, or those who have time on their hands, will fill them in. The only way of limiting this
effect is to ensure high response rates to reduce the bias.
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Offering an incentive is a common solution. But keeping the questions short and simple and making the
sponsor’s identity clear will also improve the response rate.
Time to focus
The classic market research tool for gaining depth of understanding is the focus group. Many are quick to
sneer at the image of a cosy room of housewives, chatting over tea and biscuits about their favorite
fragrance for toilet cleaners, all keenly observed by researchers behind a two-way mirror. But this method of
research is still used to great effect and can provide a forum for a target group to interact and open up in a
relaxed environment.
GfK NOP Social Research Associate Director Amrita Sood, runs many focus groups for clients. She says
clients are often surprised at how specific the agency can be in recruiting the right sort of people to a group.
“We’ve done projects with people who’ve committed benefit fraud or crimes or with a specific range of
ethnic groups. The target sample is a really important aspect of research,” she says.
Focus groups are unusual environments for most people so it’s important to compensate participants for
their time, says Sood, and to be as transparent as possible about the research. While focus groups are useful
for highlighting attitudes and behaviors, they should not be used for quantifying behavior. “If you end up
with 100 people in your focus groups and 80 say they love the new product, it doesn’t mean you can say 80
percent love the product,” cautions Sutton. “Focus groups are hand-picked and so you can’t extrapolate from
that,” he said.
In the pursuit of ever more effective ways to understand the customer, market research is spreading its
wings and techniques span ethnography, semiotics, longitudinal studies and even mystery shopping.
“Ethnographic techniques are good for immersing and gaining insight,” says Sood. “We may go to their
home and spend time with them, observe their daily routines, look around their house, see how they use
technology and media,” he says.
With more time and depth these research tools can be useful for context and bringing to light things that
the consumer doesn’t realise are important.
Birn says FMCG clients in particular are adopting these techniques where they might go into shoppers’
homes to see how they stack tins in their cupboards or what selection of cereals they choose.
Continual and ad hoc
For many big companies, research will involve a wide range of continuous measures from brand tracking to
customer satisfaction surveys, as well as ad hoc research. At Vodafone, for instance, Moore says about 40
percent of research is continual tracking, while the rest is ad hoc.
Royal Mail Group uses ongoing programs to act as a health check and to identify business challenges. It
then instigates ad hoc research to delve into those challenges as necessary, says Director of Insight,
Intelligence and Analysis Crispin Beale at the organization.
The company also uses mystery shopping. One shopper survey, called Effect, is about improvement in Post
Office branches. It’s carried out in partnership with employees, consulting them about what they think is
important for the customer. There’s a danger that research can go wrong when companies get obsessed
with measuring the wrong thing or measuring too frequently. “I’ve seen customer satisfaction measured on
a weekly basis, which is too often as things move with a margin of error. I’ve been in companies where the
measures were changing faster than the program could keep up with it,” says Beale. The most valuable
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FCCISL News Alert
research results are those where a performance improvement in a product can be proven to add directly to
the bottom line, he says.
Research can and should produce real insight that can have a fundamental effect on the business. At
Nationwide, TV advertising was developed following research revealing that people don’t think financial
companies treat them as fairly as they should. Nationwide, Advertising Controller Paul Hibbs, says the
theme for its advertising came from posing the question “what can we do to treat our customers fairly?” “On
mortgages we don’t do ‘new customer only’ deals and we also don’t charge to use cards abroad. Most of that
was driven by research into what frustrates customers,” says Hibbs.
Market research can be a detailed and complicated science but Beale boils it down to some pertinent advice
for marketers: “Research should be seen as the radar of your organization - it give you the early warning
sign and then you respond to it. Research only makes a difference if you actually use it,” he says.
“It’s all about making money or saving money for the organization, it shouldn’t happen otherwise. It should
drive the business forward - how do we get ROI on this and increase income?”
The Marketeer
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FCCISL News Alert
QUALITY CERTIFICATION AND ACCREDITATION VITAL:
VALUE ADDED RUBBER PRODUCTS TO BOOST REVENUE BY 50 PERCENT
Ramani Kangaraarachchi
Sri Lanka will produce high value added rubber products for niche markets using natural rubber to increase
exports' revenue by 50 percent by 2014. Moratuwa University Prof. R.A. Attalage told a seminar organized
by the Small and Medium Entrepreneurs Developers (SMED) of the Federation of Chambers of Commerce
and Industry of Sri Lanka (FCCISL) at Hotel Cinnamon Lakeside recently.
He said that the aim of the rubber sector is to export value
added rubber products only in the future instead of exporting
natural rubber without any value addition.
Although Sri Lanka has the best quality natural rubber, it is
necessary to obtain quality certification and accreditation for
Sri Lanka's rubber products to get recognition in the
international market. He proposed that a marketing arm should
be set up to promote Sri Lanka's rubber products in line with
niche markets.
Rubber tapping
Elaborating on the strategy for the rubber sector to achieve its
objectives, he said that increasing the extent of land under
rubber is necessary as a long term strategy to increase the
supply and reduce the price volatility.
Lifting import restrictions for high quality rubber to cater to excess demand, promoting latex and other non
traditional rubber product FDIs and promote SMEs manufacturing import substitutes and establishment of
R and D facilities and improve cohesion among rubber stakeholders are the other priorities. Prof Attalage
said that agro management practices will be implemented and high yielding clones and plants and new
tapping techniques will be introduced to increase natural rubber production under the strategic plan.
Reviewing rubber plantation programs through a proper survey, encouraging new rubber plantations to
non traditional areas and introducing inter cropping programs to diversify cultivation will help increase
rubber cultivation.
He said that cost effective, less labour dependent user friendly, energy and environment friendly raw rubber
manufacturing would be introduced to increase natural rubber production by upgrading raw rubber
manufacturing processes, he said.
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FCCISL News Alert
TEA INDUSTRY'S FUTURE LOOKS OPTIMISTIC
Dr N. Yogaratnam
Tree Crops Agro Consultants
Global tea prices are likely to ease next year on higher output with weather patterns returning to normalcy
in the main tea producing regions of Asia and Africa, says the FAO in its latest report. Global tea prices hit
the roof in 2009 due to production shortage.
India
However, Global producers are not willing to buy the FAO forecast. India, a leading tea producer, says that
it is likely to drive tea prices up, as the current year's 65 million kg shortage is not going to be made up so
easily.
Added to it, a year-onyear consumption growth
of about 30 million kg in
India alone (consumption
is presently about 800
million kg and production
about 960 kg), and
therefore it appears that
prices will remain strong.
Tea pluckers
The shortage in the
system will not be made
up, even if the crop is very
good. They also say that
they are confident of the
Indian story and about
Indian prices driving
global prices.
The FAO Tea Composite price, the indicative world price for black tea, reached a high of US$ 3.18 kg in
September and October, amid droughts in India, Sri Lanka and Kenya, underpinned by increased demand,
compared to an average price of US$ 2.38 per kilogram in 2008. The concern that FAO is raising is that tea
producers could over-react to the current high prices by planting more crops.
The Indian industry sources say that the global shortage is 165 million kg now.
The new year is expected to be very optimistic in outlook. Even if prices hold out at the current level, it's
still very good. Overall, the long term trend in India is very positive, given their consumption figures. In
tea, they are still exporters, but that situation is expected to change.
In seven to 10 years; they could become net importers. The scenario looks very positive because of the India
story. It is going to make a difference on global prices like sugar and some other agricultural commodities.
The basic premise of the confidence level among Indian producers is a growing consumption at three
percent on a year-on-year basis, which negates the FAO perception that tea prices would ease next year on
higher estimated output.
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FCCISL News Alert
The short rains in Africa were not as good as expected. Consider the statistics: India is likely to end the year
with a shortage of 65 million kg.
Factoring in a pipeline shortage in other tea producing countries, like Africa and Sri Lanka, the shortage is
expected to be around 165 million kg. According to official figures during January- September, world tea
production stood at 1,275.5 million kg, down by about 89 million kg.
FAO has said there may be more plantations in the major producing countries in Asia and Africa. But, it has
been said that some producing countries, such as India, have acted responsibly and announced that they
would not be expanding current tea areas beyond what is required for replanting and rehabilitating existing
tea gardens. Sri Lanka is also not expected to expand their tea cultivated extent. In fact some of the
marginal tea lands are going into rubber.
On global consumption, FAO says the global growth in tea consumption outpaced production between 2005
and 2009 - a 0.8 percent surplus of production had got converted to a deficit vis-a-vis consumption of 0.6
percent.
The gap between consumption and production growth was largest between 2007 and 2009, when it reached
3.4 percentage points, coinciding with the surge in prices.
FAO noted that elevated tea prices did not affect consumers in the developed countries because of intense
competition in the beverages market and some of the price increases were passed along the value chain to
consumers, as retail prices increased by only five percent across supermarkets in Europe.
However, in the developing nations, manufacturers are likely to transfer a large share of the price increase
to consumers as tea procurement costs account for a significant part of the final retail price. In India,
average retail tea prices were quoted about 15 percent higher in September than in the same month in 2008.
While in Pakistan, retail prices increased 12 percent in September 2009 compared to September 2008. In Sri
Lanka also, similar increases were seen.
Kenya
Kenyan tea prices hit a new record very recently of an average US$ 5.30 per kg for the Best Broken Pekoe
Ones (BP1s) from US 5.23, at a recent sale according to Reuters based on a regular market report. Kenya,
the global leader in black tea exports, has seen prices rise this year as drought has cut back production by
about 20 percent. The average Best BP1 price has risen 93 percent this year from US$ 2.74 per kg at the
first auction in 2009 when they fetched between US$ 2.82 and US$ 2.65 per kg.
The average price for Best BP1s sold at between US$ 5.22 and US$ 5.38 per kg at a recent auction
(November 17, 2009). Those of top Pekoe Fanning Ones (PF1s) stood at US$ 3.76 to US$ 3.68 per kg.
There was strong general demand for the 97,004 packages (6.1 million kg) on offer. Some 10 percent of the
tea on sale, however, remained unsold. Egypt's packers sector dominated trade while Afghanistan lent
strong support and increased interest from Britain, Sudan and Pakistan packers were also active.
Sri Lanka
The profitability of the Sri Lankan tea industry, like any other plantation, rests heavily on the movement of
global market and production costs. The industry has had its ups and downs.
The global economic meltdown at the end 2008 had a disastrous effect in freezing of the tea purchases by
international buyers which resulted in Sri Lankan tea remaining either unsold or fetching very low prices.
However, with global economy showing signs of recovery by mid this year, drought in early part of this
36
FCCISL News Alert
year and the labour agitation in September for higher wages enabled Sri Lankan tea industry to recover
with inflated tea prices being fetched at the auctions due to improved economy and restricted supply.
Tea production has shown a decline of 14.4 percent at end October this year in comparison with the same
period in 2008. The production in January - October 2009 is 234.8 million kg while in the same period in
2008, it was 274.4. If this trend in production continues until end of this year, our production would stand
around 272.8 million kg as against 318.7 in 2008.
The industry is optimistic about the outlook with average tea prices now in Colombo being around Rs.385
to Rs.450 per kg. At the auctions. The steady increase from about Rs.200 per kg in 2008, to around Rs.450
per kg in the same period this year, in low grown teas has provided an impetus to the Sri Lankan tea
industry.
But the cost of production is a different story altogether. Sri Lanka's cost of production has been recording
steady increases from around US$ 1.75 per kg to around US percent 2.04 now, which is well above that of
Bangladesh (US$ 1.35) India (US$ 1.25), Kenya (US$ 1.00) and Vietnam (the lowest at around US$ 0.75 per
kg).
Three possible ways available for the producer to enhance profitability are: to fetch attractive prices for their
produces, to increase their productivity level and to reduce the COP. There are several avenues open to
improve profit margins even in the face of increasing costs, through wage hikes being granted in response to
work force agitation, which are unavoidable. The go-slow campaign followed by work stoppage in some
estates has compelled the management to grant a minimum daily wage increase from Rs.295 to Rs.405, a 40
percent increase which is expected to be linked to productivity. This is expected to be an additional burden
which the industry is expected to bear, despite their current high COP level.
Long term perspective
In the final analysis, one way to shield against global "boom and doom" cycles and enhance bottom lines is
to increase value-addition. One only has to look at the price differentials as the value addition scales moveup. The corporate sector has been steadily progressing into value-addition, yet much remains to be done,
besides improvements in the marketing system Despite unprecedented volatility in tea market that was seen
globally as well as in Sri Lanka in 2008, Sri Lanka's tea market is now expected to be stable possibly with
restricted supply. Drought is a natural phenomenon that had been a perennial problem over which we had
very little control. Labour unrest in plantations, is also another worry, but total elimination under the
present context will be a huge task to the management as this has political dimensions.
Nevertheless, inconsistency in crop production should be arrested in order to minimize tea market volatility.
Tea, being a climate sensitive crop, plantations should adopt mitigation / adaptation measures for it to
retain its leading position in the domestic economy. Fluctuating weather patterns can cause inconsistency in
cropping. Water and temperature, whether too little /low or too much /high are constraints to tea
cropping.
Plantations in the low and mid-country, which together account for about 76 percent of the tea production
in the country, are the most vulnerable areas that have to survive the wrath of climate change. Rise in
temperature is likely to adversely affect the quality of tea at high and mid- elevations, with the absence of
the traditional flavour.
To a large extent, the effects of these initiatives are expected to mitigate/adapt to the challenges arising
from fluctuating markets for tea and ensure optimistic out look for the Sri Lana's tea industry.
37
FCCISL News Alert
Money & Banking
38
FCCISL News Alert
The Island – January 1, 2010
PRESIDENTIAL COMMISSION TO PRESENT COMPREHENSIVE REPORT
PLANS DRAWN UP FOR PEOPLE-FRIENDLY TAX REGIME
By Devan Daniel
A member of the Presidential Taxation Committee, Dr Saman Kelegama, says a comprehensive report to
broaden the tax base and clean up the administration with recommendations for a business and peoplefriendly tax regime would be ready when the new parliament convenes after elections in April this year.
"The Taxation Commission is serious about cleaning up the tax administration and to ensure the
government’s revenue base becomes solid," Dr Kelegama, who is the Executive Director of the Institute of
Policy Studies, a government think-tank, told the Island Financial Review.
Dr Kelegama declined to comment on the Commission’s recommendations.
"All I can say at this point is that we are strongly intending to broaden the tax base and eliminate
complications so that the tax regime would business and people friendly," he said.
Dr Kelegama said the first five months of 2010 could be uncertain with Presidential elections this months
followed by Parliamentary elections in April.
"What ever happens, the government in power would have to bring down the budget deficit, which has
remained to be the root cause of Sri Lanka’s macro-economic problems," he said.
The Central Bank, Institute of Policy Studies and the IMF have all said at various times during 2009 that
eliminating wasteful expenditure and broadening the tax base would help curtail the budget deficit, warning
that a failure to do so could impede Sri Lanka’s true growth potential.
The fiscal deficit expanded by 30 percent during the first nine months of this year. Although revenue
improved by 12 percent, total government expenditure and net lending increased by 19 percent while
capital expenditure — long-term social investments — declined 2.7 percent.
The overall budget deficit for the first nine months of 2009 reached Rs.322.6 billion or 6.5 percent of GDP
increasing 30 percent compared to a deficit of Rs.246.9 billion for the corresponding period of 2008 which
was 5.6 percent of GDP, according to data from the Central Bank.
The Taxation Commission handed over an interim report to the President last November and the final
report is expected to be ready by the time the parliamentary election ends this April.
The Taxation Commission is headed by Prof W D Lakshman and comprises, with Dr Kelegama, Dr R.H.S.
Samaratunga, Sarath Jayatilleke, Rajan Asiriwatham, Nihal Fonseka, B R L Fernando, , Samantha
Kumarasinghe, R P L Weerasinghe and K J Weerasinghe.
No transparency…
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FCCISL News Alert
President Mahinda Rajapaka mooted the Taxation Commission when he delivered the 2009 budget to
parliament in November 2008.
The President said the country’s tax rate eroded as a result of various concessions granted from 1977 to
promote investments.
"Different tax rates prevail in the country, for entrepreneurs in the same region. Local entrepreneurs have
been subjected to second class treatment," Rajapakse said when he presented the 2009 budget proposals to
parliament.
"A tax system that lacks transperancy has evolved consequent to there being no consolidated or coordinated
approach between revenue administration institutions such as the Inland Revenue Department, Customs
and the BOI," he said.
Sri Lanka’s rankings in Paying Taxes 2009 report
Sri Lanka ranked 164th out of 181 economies for ease of paying taxes in a ‘Paying Taxes 2009’ report
compiled by the World Bank Group and PriceWaterHouseCoopers.
Sri Lanka has a total of 62 tax payments that must be paid for a given year. There are 5 corporate income
taxes, 24 labour tax payments and 33 other taxes; and this gives the country a ranking of 170.
The country is ranked 96th for the time taken per year to comply with taxes. The time taken to comply with
these taxes is estimated at 256 hours a year. Corporate income tax time is 16 hours a year, labour tax time
amounts to 96 hours and the time taken to comply with consumption tax amounts to 144 hours a year.
Sri Lanka’s total tax rate is 63.7 percent according to the report which gave Sri Lanka a ranking of 157.
The total tax rate for corporate income tax is 26.5 percent, 16.9 percent in labour taxes and 20.3 percent in
other taxes.
40
FCCISL News Alert
Tourism
41
FCCISL News Alert
TOURISM BOOST AS SLTDA SEIZES NEW OPPORTUNITIES
By Mario Andree
The Sri Lanka Tourism Development Authority (SLTDA) is actively pursuing new opportunities with the
rise of visitor numbers, says a top official.
SLTDA is the sole authority to process and approve tourism-related development projects, he pointed out.
Given its desire to see the industry grow, the SLTDA is encouraging local and foreign investors to launch
various development Projects.
Investors can play a vital role in this process as the country’s situation has stabilized now, said Sri Lanka
Tourism Board director T Suriyagoda.
Investors can also locate their ventures in the liberated northern and eastern provinces without any fear,
Suriyagoda pointed out.
SLTDA offers all facilities to potential investors as the tourism business is expected to overtake all other
leading industries in the near future.
The growing number of tourist arrivals is boosting the earnings of hotels and other businesses linked to the
industry.
The SLTDA provides business support to all related parties during the setting up of their tourism-related
activities, Suriyagoda said.
Ensuring that procedures are easily understood and providing adequate assistance are vital to the SLTDA
and its staff, and to the success of Sri Lanka tourism, Suriyagoda said.
The Authority is committed to achieving a six-fold increase in revenues within the next 10 years.
Suriyagoda said all guesthouse holders have an opportunity to register themselves to benefit from the
tourism boom.
Sri Lanka offers a variety of hotels to tourists.
Tourists traveling around Sri Lanka can choose from a wide range of quality accommodation facilities in
different parts of the country to suit their budget.
Boutique hotels, villas, spas, luxury hotels and lower grade hotels can be found all across the island.
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FCCISL News Alert
A typical guesthouse has five bedrooms with attached bathrooms, a common living and dining area. Priced
low in comparison to hotels, guesthouses are comfortable and offer low-budget holidays.
SLTDA is aggressively seizing opportunities and leverages Sri Lanka’s competitive advantages.
It also strives to adopt a visitor/tourist centric approach and adopts best global practices.
This approach will help build a more diverse product range and grow traditional markets and open up new
markets, thus making Sri Lanka more accessible.
The SLTDA will also utilize effective partnerships with clear accountabilities and deliverables.
With the high goal of achieving 2.5 million tourist arrivals by 2016, plans are underway to develop 15,000
rooms.
Although the SLTDA is largely focused on tourism hotel projects in Kalpitiya and Pasikuda, the board is
pushing for other investments too and plans to develop the existing registered accommodation centres.
Unregistered lodges also are being to register with the SLTDA so that they can be helped to reach better
standards.
SLTDA is working on all the potential opportunities to boost the industry’s capacity to achieve the targets
set for 2016 and all who register with the board will stand to gain in an expanding market, Suriyagoda said.
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FCCISL News Alert
SRI LANKA’S TOURISM:
TREMENDOUS GROWTH POTENTIAL
PJ HOTELS TO INITIATE NOVEL CONCEPT:
Charumini de Silva
Sri Lanka’s tourism industry has tremendous potential to grow further with the dawn of peace. The opening
of the North and the East has brought positive hopes to Sri Lanka’s tourism as two-thirds of the coastline,
which was formerly under the control of terrorists, has been liberated making it accessible to tourists PJ
Hotels (Pvt) Ltd., Chairman, Prasanna W. Jayewardene told Daily News Business.
PJ Hotels (Pvt) Ltd., will initiate a novel concept to the tourism and hotel industry with the Farm
Accommodation in Vakarei, Mannar and Welikanda.
These farms designed in an eco-friendly manner, will enable tourists to experience natural habitats. Each set
of suites in each location will be individual in design, simple though large, with building material from the
area.
The food will be prepared in local specialties using
only organic farm products to ensure the ecofriendly concept, he said.
He said that President Mahinda Rajapaksa has
declared the year 2011 as the ‘Visit Sri Lanka Year’
and is targeting 2.5 million tourists.
The country has already surpassed the number of
tourist arrivals of 450,000 during the last month
and it is not an impossible target to attract 2.5
million tourist
Eco-tourism
* Farm suites de-signed in an eco-friendly manner
* Sri Lanka to attract 2.5 million tourist arrivals
by 2011
Value-added services vital to attract more tourists
arrivals by 2011.
The target market for the range of hotels is mainly
Asians as they have shown a huge interest in exploring
Sri Lanka.
* Asians, the target market
Asia has the fastest growing economies and Sri Lanka
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FCCISL News Alert
has the potential of attracting more tourists to the country with the dawn of peace. Through the increased
developments in these medium-term and long-term investments of the hotels, it would expand the Gross
Domestic Production (GDP), foreign exchange earnings, job opportunities within the area and as a result
the per capita income will also grow substantially, he said.
It is essential to highlight new concepts, activities and diversifications such as eco-tourism, adventure
tourism, beaches, surfing, snorkeling, mountains, wild life, ancient city exploring, food, shopping, religious
backgrounds, cultural events and ayurvedic medicaments.
Tourists will not only arrive by air, but the ferries will also increase and there is already a weekly-operated
cruise from Cochin to Colombo, which targets Indian tourist arrivals to increase by over 20,000 annually,
Jayewardene said. With the increased number of tourists the hotel industry should launch value added
services to attract more tourists by fulfilling their needs. Hoteliers should adopt the concept of being green
as it is important to have sustained tourism in the country, he said.
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FCCISL News Alert
CONSULATE TO PROMOTE SRI LANKA IN WESTERN CHINA
The newly established Consulate of Sri Lanka in Chengdu together with Sri Lanka Tourism organized a
country promotion workshop recently at the Consulate premises. The workshop, the first ever of its kind
organized by Sri Lanka in the Sichuan province, was attended by over 60 representatives from local travel
agencies, media and airlines.
Presiding over the event, Deputy Minister of Foreign Affairs Hussein
A. Bhaila elaborated on the recent developments of Sri Lanka,
particularly on the peaceful post-conflict environment prevailing
throughout the country.
Tourists enjoy a ride on
elephants
Outlining the wide ranging tourist attractions and unique travel
experiences Sri Lanka has to offer, the Deputy Foreign Minister invited
the Chinese travel agencies of Western China to work together with
Sri Lanka Tourism in promoting the island in the Sichuan Province and
the neighboring provinces.
He invited the travel agencies and the media to visit Sri Lanka on a
familiarization tour which would help them gain first hand experience on the country.
Deputy Director General of Sichuan Foreign Affairs Office Tan Xin and the Vice Director of Tourism
Administration of Sichuan Province Wu Mian shared their experience and feeling on Sri Lanka and
described the country as a beautiful island and a friendly neighbor which has continued to build strong
relations with China.
They said that the setting up of the new consulate in Chengdu would promote Sri Lanka as a favorable
travel and investment destination among the people of the Sichuan province and the neighboring provinces.
They encouraged local travel agencies to work together with Sri Lanka Tourism in their promotional
efforts.
The invitees were presented with detailed information on key tourist attractions, cultural and heritage sites
and niche tourism products, through a multimedia presentation followed by interactions with the travel
agencies, media and the airlines.
Important issues in areas such as new travel packages to Sri Lanka, visa procedures and convenient air links
were discussed at the event. The travel agencies were very keen on organizing special packages for Sri
Lanka for local travelers and sought better air connectivity to Sri Lanka.
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FCCISL News Alert
Sunday Observer – January 3, 2010
SRI LANKA LAUNCHES TOURISM PROMOTION CAMPAIGN IN CHINA
The newly established Consulate of Sri Lanka in Chengdu, China together with Sri Lanka Tourism
organized a country promotion workshop on December 16, at the Consulate premises.
The workshop, the first of its kind organized by Sri Lanka in Sichuan province, was attended by over 60
representatives from local travel agencies, media and airlines.
Presiding over the event, the Deputy Minister of Foreign Affairs Hussein A. Bhaila, spoke on the recent
developments in Sri Lanka, particularly on the peaceful post-conflict environment prevailing throughout the
country.
Emphasizing on the wide ranging tourist attractions and unique travel experiences Sri Lanka has to offer,
the Deputy Foreign Minister invited the Chinese travel agencies of Western China to work together with
Sri Lanka Tourism in promoting the island in Sichuan Province and the neighboring provinces.
He invited the travel agencies and the media to visit Sri Lanka on a familiarization tour which would help
them gain first hand experience of the country.
The Deputy Director General of Sichuan Foreign Affairs Office Tan Xin and the Deputy Director of
Tourism Administration of Sichuan Province Wu Mian shared their experience on Sri Lanka and described
it as a beautiful island and a friendly neighbor who has continued to build strong relations with China.
They expressed confidence that the establishment of the new consulate in Chengdu would have positive
outcome in promoting Sri Lanka as a favorable travel and investment destination among the people of
Sichuan province and the neighboring provinces. They encouraged the local travel agencies to work
together with Sri Lanka tourism in their promotional efforts.
The invitees were presented with detailed information on key tourist attractions, cultural and heritage sites,
niche tourism products, etc., through a multimedia presentation followed by interactions with the invited
travel agencies, media and the airlines. Important issues on areas such as new travel packages to Sri Lanka,
visa procedures and convenient air links were discussed at the event.
The travel agencies were very keen in organizing special packages to Sri Lanka for the local travelers and
sought better air connectivity to Sri Lanka. CTS Agency, one of the key travel agencies in Chengdu sought
the possibility of arranging chartered flights directly from Chengdu to Colombo during special Chinese
holidays such as the Chinese Spring Festival and the Mid-Autumn Festival when many Chinese tend to take
vacations abroad.
The travel agencies were particularly interested in promoting the well-preserved beaches of the east coast of
Sri Lanka and expressed that they are looking forward to organize special tour groups to the eastern parts
of the island.
Sri Lanka's Ambassador to China Karunatilaka Amunugama, Marketing Officer of Sri Lanka Tourism
Bureau Office in Beijing Shan Lin and a Representative of the Sri Lankan Airlines spoke at the event.
47
FCCISL News Alert
Exports
48
FCCISL News Alert
EXPORTERS EYE ELECTIONS AND GSP PLUS IN ‘UNCERTAIN 2010’
By Devan Daniel
Elections and a possible withdrawal of trade concessions for exports to Europe are some of the major
worries Sri Lanka’s exporters have to deal with in 2010, apart from exchange rate uncertainty, lending
rates, poor energy policy and labour market inflexibility.
"The biggest problem exporters would have to face next year is the uncertainty and delays in the official
decision-making process caused by the elections. Political bickering has always been a problem and next
year with two elections, industrialists’ confidence is going to be shaky," Rohan Fernando, immediate past
chairman, National Chamber of Exporters, said.
"There will be a colossal waste of energy and public funds because of the elections. Public institutions would
also work at a very slow pace and decisions would not be made until the elections are over by the end of
April. It is shaky time for politics and industrialists would be tested," he said.
Fernando said demand for Sri Lanka’s exports were showing signs of stabilizing. But a lot more needs to be
done. A reward scheme for exporters, for which the government had allocated Rs.8 billion, has so far been a
disappointment.
"We do not need handouts. What we need are clear policies on labour, energy and finances. It is true the
government stepped in and requested banks to reduce lending rates but this is not happening," Fernando
said.
"Banks are imposing various levies and charges at such a rate that the benefits of reduced lending rates are
not felt. Also, some banks are charging as much as 10 percent for dollar borrowings," he said.
The Central Bank has slashed policy rates since inflation began to contract from 28.2 percent in June 2008
to 0.7 percent in September 2009 but commercial banks were slow to respond with lending rate cuts. The
government had to intervene and order state-owned banks to reduce rates to as low as 8 percent for selected
sectors.
Sunil Wijesinha, Chairman Dankotuwa Porcelain PLC, told the Island Financial Review that a lower rate of
inflation had a positive impact allowing for better control of input costs.
Wijesinha said a major worry was the possible withdrawal of GSP Plus trade concessions to exports to
Europe.
"We will lose 50 percent of European market if GSP Plus is removed. I do not mean to say we should
depend on trade concessions, but demand for exports have taken a hit because of the global recession and
until things recover, we would need GSP Plus," he said.
Wijesinha said the recent appreciation of the rupee against the dollar and euro has also caused margins to
contract further.
"We are planning for 2010 not expecting the rupee to depreciate," he said.
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FCCISL News Alert
REWARD SCHEME FOR EXPORTERS DYSFUNCTIONAL
By Devan Daniel
Exporters say the government’s Export Development Reward Scheme (EDRS) is dysfunctional with
officials trying their best to avoid making payments, while some exporters charge that a reward scheme was
unnecessary as it overlooked those sectors that really needed a boost during the global financial crisis.
The government allocated about Rs.8 billion rupees to reward exporters who maintained over 80 percent of
exports of 2008 during this year and maintained the same number of workers as of the September 2008
payroll.
The government’s intention was to reward exporters who improved productivity and retained workers
during the global recession. Three to five percent of revenues were to be paid each quarter starting January
this year, but the first quarter payments were only made in the third quarter and some payments are still
overdue, and exporters are unhappy with delays in payments for the second and third quarters.
Delays, aside, exporters charge public officials are trying their best to disqualify exporters eligible for a
rebate.
"The EDRS is not a scheme to encourage exporters. The whole thing is an eye-wash as officials are trying
their best not to approve exporters to be eligible for a rebate under this scheme. There are instances where
voluntary retirements are considered as retrenchments despite providing documentary evidence," Chairman
of the National Chamber of Exporters, Rohan Fernando, told the Island Financial Review.
"The Sri Lankan government was probably the only government in the world that did not have to pump in
billions to uplift industries during the global recession, so they have to appreciate the role played by
exporters during this time. However, the EDRS is not being carried out according to the true spirit of what
it was supposed to be," he said.
Meanwhile, another exporter said the EDRS made no sense because it gave to those already doing well
while those exporters who needed it the most were overlooked.
"The entire scheme was designed by those who have no understanding of the issues in export markets,"
Dankotuwa Porcelain PLC Chairman Sunil Wijesinha said.
"The scheme overlooked those export sectors that were affected by the global financial crisis, those who
really needed assistance. Those who did well, are those exporting cheaper goods because during a recession
people do not care much for luxuries and tend to spend more on other things such as clothing," he said.
Wijesinha said the Treasury had suggested that exporters sell at a discount in order to maintain volumes.
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FCCISL News Alert
"It was suggested that we give a 5 percent discount, but even this would not have helped in some cases as
the purchasing power of consumers in most markets had fallen," he said.
Wijesinha also pointed out that workers who had retired voluntarily were considered to be laid-off and
officials expect vacancies to be filled over-night so that the eligibility criteria of maintaining employment
levels are met.
Export volumes remain lower that last year but there are signs of recovery.
Export earnings for the first ten months of this year declined by 15.6 percent to US$ 5.7 billion from US$
6.8 billion earned during the corresponding period of 2008.
Exports earnings from all sectors declined: Agricultural 15.1 percent (Tea exports down 12.7 percent),
industry 15.4 percent (apparels down 5 percent) and minerals 32.5 percent.
An unemployment benefit insurance scheme was mooted by the government to assist those workers who
lost their jobs as a result of the global financial crisis, but after more than a year when the global financial
crisis began to unravel and is now showing signs of bottoming out, this is yet to be finalized.
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FCCISL News Alert
Stock Market
52
FCCISL News Alert
IN DECEMBER:
STOCKS YIELD HIGH RETURNS
Stocks rose further since ASPI (All Share Price Index) reaching its peak high last week, sending the
benchmark index above its highest close ever, on Thursday to close at 3292.8 points.
The week started with the indices sustaining the positive trend from the previous week, however,
witnessing a minor setback on Wednesday. Compared to the Week on Week the ASPI improved by 103.9
points or 3.3 percent to 3292.8 points compared to the previous week, while the MPI (Milanka Price Index)
gained by 146.8 points or 4.0 percent, to close above last week’s closing level at 3777.2 points.
Similar to what was witnessed the previous week, JKH drove the market last week as well, becoming the
highest traded stock and the highest contributor towards weekly turnover. Around 5.8 million JKH shares
traded during the week.
Contribution towards weekly turnover amounted to Rs.982.7 million. The share closed at Rs.170.25 per
share gaining 6.1 percent Week on Week (WoW). During the week the counter traded between a wide
range of Rs.160.00 and Rs.180.00 per share. JKH was the top contributor on three of the four trading days
during the week.
Meanwhile other blue chip counters to lead in terms of contribution to weekly activity were HNB, AHOT
Properties. NDB with Rs.705.3 million, Rs.439.3 million and Rs.422.5 million contributions. Renewed
interest on Aitken Spence saw its share price gain an impressive 19.9 percent to close the week at
Rs.1198.75 per share whilst managing a contribution of Rs.170.2 million towards market turnover.
Total turnover stood at Rs.4.6 billion while the average daily turnover amounted to Rs.1.2 billion for the
week (The week consisted of four trading days only). Turnover for the week was down by 49.1 percent
compared to last week.
Foreign investors were net sellers during the week amounting to a staggering Rs.1.6 billion. Foreign
purchases showed a 92.1 percent decline compared to previous week to total Rs.464.8 million, while foreign
sale witnessed a 41.5 percent drop to amount to Rs.2.1 billion. Foreign participation saw a dip in the week
which stood at 27.6 percent of total activity compared to 52 percent posted last week indicating the strong
input by local investors.
The highest traded stocks for the week were JKH, AHOT Properties, HNB, Seylan Bank (Non Voting),
Janashakthi Insurance and Piramal Glass.
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FCCISL News Alert
Momentum should continue
The week ended 24/12/2009 saw the ASPI moving from 3188.8 points to 3292.8 points amounting to 103.9
points while the MPI moving from 3630.5 points to 3777.2 points amounting to 146.8 points.
The bourse was predominantly up during the concluded “four day” week (three days out of the four days).
Heavy local buying was witnessed during the week, compared to foreign purchases, which only accounted
for 10.04 percent of total purchases value for the week. The local buying pressure was created by local
institutions and high net worth clients.
However, the all expected “respite”, from the market was not seen during the week. However, with a three
day week coming ahead, and with the current buying pressure we expect the market to sustain the upbeat
with less steam.
The information contained herein has been compiled from sources that Acuity Stockbrokers (Private)
Limited (ASB) believes to be true and reliable but we do not hold ourselves responsible for its completeness
or accuracy.
No matter published herein creates any liability of any kind on ASB. All opinions, views, findings and
conclusions included in this report constitute ASB’s judgment of this date and are subject to change without
notice. ASB has the sole copyright for this report and the information and views contained cannot be
reproduced or quoted in part or whole in any form whatsoever without the written permission from ASB.
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FCCISL News Alert
SHARES AT NEW PEAK, UP 123 % THIS YEAR
Sri Lankan shares hit a fresh record high on Tuesday led by blue chip buying, on expectations of better
performance due to post-war economic optimism amid low interest rates ahead of a January election.
The All-Share Price Index of the Colombo Stock Exchange gained 0.82 percent or 27.62 points in the first
hour of the trade to 3,372.51, surpassing its previous high of 3,350.50 points hit on Monday.
The bourse ended up 11.70 points or 0.35 percent at a record close of 3356.59 and has risen over 123
percent so far this year and 15.6 percent this month.
Analysts said local investors were driving up the market after they have seen foreigners buying shares when
the market slows down.
"Foreign buying confidence is still encouraging the market," Danushka Samarasinghe, head of research at
Asia Securities, said.
Analysts also said investors were positioning ahead of Jan. 26 presidential polls, betting that regardless of
the outcome the stock market will continue its climb, fuelled by post-war economic optimism.
Foreign investors have sold a net 657.9 million rupees worth of stocks so far this year, compared to a record
net foreign inflow of 13.9 billion rupees in 2008.
But analysts said the number largely reflected the exit of Galleon hedge fund after its founder Raj
Rajaratnam was charged with insider trading by U.S. authorities and that foreigners had been net buyers in
recent weeks.
Analysts said investors are also buying shares heavily due to low interest rates prevailing in the market.
Conglomerate Carson Cumber batch rose 3.94 percent to 455.50 rupees, while top listed private lender
Commercial Bank of Ceylon closed 0.53 percent at 190 rupees.
The day's turnover was 620.9 million rupees ($5.4 million), more than last year's daily market average of
464 million rupees.
Sri Lanka's presidential poll is scheduled for Jan. 26 and will be followed by parliamentary election due by
April.
Analysts and traders said the broader market is still waiting for direction from the economic policies of the
main presidential candidates Mahinda Rajapaksa and Sarath Fonseka.
The Sri Lankan rupee closed firmer at 114.33/38 per dollar, compared with Monday's close of 114.42/45
due to exporter conversion of dollars, currency dealers said.
The interbank lending rate or call money rate edged down to 9.004 percent from Monday's 9.079 percent.
(Reuters)
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FCCISL News Alert
CSE TO REPOSITION SRI LANKA AS AN EMERGING MARKET IN ASIA
INVESTORS IN RURAL AREAS TARGETED:
Charumini De Silva
This year will be very challenging as the Colombo Stock Exchange (CSE) will strive to structure and
reposition the country as an emerging market in Asia, Securities and Exchange Commission (SEC) Director
General, Channa de Silva told Daily News Business.
He said that there was a possibility of introducing new areas such as dual listing and listing of foreign
companies in the CSE. It is important to have a more inclusive set of investors to join the CSE, especially
from rural areas, outside Colombo and those who have not invested in the CSE. Therefore, the CSE could be
considered as an alternative investment vehicle.
The participation of those in rural areas in stock market
activities is very low and one of the objectives of the CSE
this year is to increase their participation and to support
local entrepreneurs to get listed while introducing a
novel investment instrument in the CSE, de Silva said.
It is vital to increase the demand and the supply chain of
the CSE. From the institutional standpoint it is essential
to have pension funds, Employees Trust Funds,
Employees Provident Funds, retirement savings and
insurance companies investing in the CSE to increase the
demand.
Trading at the Colombo Stock Exchange
More local entrepreneurs, new companies and new
investment instruments, exchange traded funds, real estate investments and derivatives should enter the
market to increase the supply chain this year, he said.
The Director General said that the CSE is an alternative way to invest. More SMEs, insurance companies
and financial companies entering the market is timely since it will create opportunities to raise funds.
This will also create much interest in the stock market with the new market players. The CSE hopes that
these activities will encourage people to invest in the CSE, as it is the lead indicator of the economy.
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FCCISL News Alert
The movement of the stock market will be thoroughly scrutinized by the fund managers and investors
especially when they make new allocations this year. The CSE will gain significantly as it is destined to do
so this year.
Sri Lanka’s stock market activities are still in the early stage of development and it is vital to change the
savings’ mindset of people as the stock market offers higher returns on their investments, he said.
He said that corporate governance is necessary when moving into different levels of business to create a
degree within the companies and be more accountable for their shareholders and to increase the
transparency of the company. Therefore, corporate governance is compulsory for all listed companies in the
CSE.
The SEC has plans to conduct a few road shows in East Asia and in Western countries to attract more
foreign investors to the market. The target of these road shows is to attract foreign funds and the Sri
Lankan diaspora into the country’s capital market. The CSE, being in the forefront of the economy is
optimistic about the year ahead and is confident that this momentum will continue, de Silva said.
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FCCISL News Alert
NET FOREIGN INFLOW HIGH;
SRI LANKANS BUY MORE SHARES IN 2009
Harshini Perera
Foreigners bought 38
percent of the total
shares of the Colombo
Stock Exchange (CSE)
at the end of year
2009. Foreign
companies accounted
for 25.1 percent of the
total purchases and
local companies have
accounted for 33.3
percent whereas Sri
Lankans accounted for
38.8 percent and
foreigners 2.8 percent,
CSE, ManagerBusiness Development,
Tushara Jayaratne told
Daily News Business.
“The All Share Price Index (ASPI) went up by 72 percent after the war. At present, there are 5,257
transactions per day. There were around 2,600 transactions during the first five months of 2009,” he said.
He said that the net foreign inflow from January to November 2009 was recorded in the beverage, food and
tobacco, healthcare sector, investment trust sector, oil palm sector and stores supplies.
The interest rates offered by banks have decreased drastically and instead investing in the stock exchange
can be introduced as a better solution for depositors. Hence Asha Phillip Securities Ltd. has conducted
awareness campaigns in various districts of the country, Asha Phillip Securities Ltd., Director/CEO,
Dimuthu Abeyesekera told Daily News Business.
He said that they have already visited 10 areas all over Sri Lanka. Asha Phillip Securities Ltd., will soon
expand into the North and the East as well. Online trading facilities and qualified investment advice will be
given to investors. With the end of the war in Sri Lanka, the ASPI has increased.
According to statistics of Asha Phillip Securities Ltd., the ASPI value was 1509.79 in December 2008 and it
had reached 3290.46 up to now. With the end of the war, the ASPI which was at 2520.14 reached the
highest ever record of 3280.8 in CSE history.
Foreign investments were high in August and October amounting to a net inflow of Rs.2,121,392,834 and
Rs.1,338,690,550. The Milanka Price Index also reached 3770.71 from 2721.64 after the war, according to
records.
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FCCISL News Alert
AUSTRALIAN STOCKS RECORD BIGGEST ANNUAL GAIN IN 16 YEARS
Australian stocks rose by 31 percent in 2009, their best yearly gain since 1993, as the nation's commoditydriven economy steered clear of the worst of the global financial crisis.
The benchmark S&P/ASX 200 index ended a shortened New Year's Eve trading session up 37.28 points at
4,870.6, based on the latest data, led higher by miners and banks in light trading.
That's the biggest annual gain since a 35 percent rise in the then-benchmark All Ordinaries index 16 years
ago.
"There's definitely been a sense and there has been for the last several months that in Australia we
weathered this so much better than anyone else," said a market analyst at IG Markets in Melbourne
Cameron Peacock.
"All our banks have stabilized, the credit markets have stabilized, a lot of companies have recapitalized their
balance sheets, a lot of over-leveraged players have fallen away and now the fit are ready to move forward in
2010." New Zealand's benchmark NZX 50 index ended the year up 18 percent at 3,230.14. It added 9.2
points, or 0.3 percent on Thursday.
Australia's S&P/ASX 200 index has risen by 56 percent since March when it hit a low of 3,120.8 on fears
that the global credit crisis could damage Australia's financial system.
Peacock said, however, that the market's almost 5 percent gain in the past nine trading days has been on
thin volumes, and it would be difficult to tell how much conviction is behind the buying until mid-to-late
January when more investors return from the traditional summer holiday period.
Thursday's gains were helped by a rising oil price and strong performance from base and precious metals in
recent days that has pushed resources stocks higher.
BHP Billiton closed up 1 percent at A$43.12 and gold miner Newcrest Mining ended up 1.1 percent at
A$35.33.
Commonwealth Bank led the big four banks higher, adding 0.8 percent to A$54.85.
The outlook for stocks in 2010 is dependant upon the results for US company earnings in January and
Australian earnings in February, said Lucinda Chan, a division director at Macquarie Private Wealth in
Sydney.
"We will probably open a bit slow (in 2010) but the feeling is still very positive," said Chan.
Signs of confidence in the economic recovery in the U.S., the world's largest economy and Australia's thirdlargest trading partner, augured well for the Australian market, she added. SYDNEY, Reuters
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FCCISL News Alert
The Island – January 1, 2010
AFTER A PHENOMENAL SECOND HALF IN 2009
STOCK EXCHANGE IN NEED OF NEW LISTINGS
By Devan Daniel
Securities and Exchange Commission (SEC) Director-General Channa De Silva said it was crucial for new
companies to list on the Colombo Stock Exchange in order for the capital market to grow further.
"We cannot expect stock prices to double in 2010 as the market is almost fully priced. We will quickly have
to bring in large and medium sized businesses. The market is liquid and there is money to accommodate
new listings. This we know because the public offerings in 2009 were all oversubscribed," De Silva told the
Island Financial Review.
After the war ended last May, the Colombo Stock Exchange recorded phenomenal growth as domestic and
foreign investor confidence grew.
The exchange ended the year on a high with its All Share Price Index growing by 122 percent.
The Colombo Stock Exchange became Asia’s best performing exchange, according to Bloomberg. It is the
second best performing exchange in the world behind Russia.
There several initial public offerings (IPOs) after the war.
The first IPO to be announced after the war, the IPO of NAMAL Acuity Value fund had attracted Rs.537.56
million.
Hemas Power made an IPO which was oversubscribed by more than three times. The final count of this IPO
was 8,552 applications amounting to Rs.2.3 billion.
The IPO of Renuka Agri Foods was oversubscribed within one hour. It offered 120 million shares at Rs.2.25
each.
De Silva said the exchange would have to attract new listings in order to grow further.
"The current price to earnings ratio is about 15 percent, there is room for it to increase to 18 percent but for
it to grow more than that there has to be newer companies listing in the exchange," he said, adding that
market capitalization was now about 25 percent of GDP but could improve to 50 percent, provided, newer
listings take place.
De Silva said the SEC would focus on improving the supply side of the exchange (new listings) and at the
same time, promote the concept of investing to rural Sri Lankans.
He said new products such as derivatives, exchange traded funds and real estate investment funds would be
introduced to the Colombo Stock Exchange as the year rolls out.
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FCCISL News Alert
Sunday Times – January 3, 2010
COLOMBO SHARES RIDE HIGH ON LAST TRADING DAY OF 2009
On Wednesday, the last trading day of 2009, the Colombo bourse surged high with analysts saying that
investor sentiments were ‘more than positive’.
“Since it is the year end, (tomorrow being a Poya holiday) firms ending their financial year in December
want to start the new financial year (on Friday) on high share prices. The firms were seen wanting to push
their share prices up,” an analyst said.
Colombo Stock Market was the world's best performing in 2009 behind Russia he said adding that it has
recorded an 128%increase in All Share becoming Asia's best Stock Market this year.
Charuka Suchendra, Research Analyst Asha Phillip said that market sentiments were really positive right
throughout the day today.
Arjuna Dassanayake, Director Acuity said that many investors closed their purchase orders two weeks early
which saw the market indices increase.
“Most institutions and banks which had excess liquidity cash which they invested in bonds were not giving
good returns now as opposed to three months ago as treasury bill rates are down. So they were investing
their moneys in the share market,” he added.
All Share saw a 0.86% rise to 3385.55 with Milanka seeing a 0.75% increase to 3849.38 on a Rs.765.4 million
turnover. (DEC)
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FCCISL News Alert
BLUE CHIPS DRIVE S. LANKA STOCK MARKET UP 1.6 PCT
Sri Lanka's stock market surged on Monday, led by blue chips like AHPL , John Keells Holdings JKH.CM,
Commercial Bank of Ceylon COMB.CM, Caltex lubricants and Tokyo Cement on an expected post-war
recovery led growth ,analysts said .
"Blue chips drove the market," said a stock broker adding that "Investors buy these blue chips without
considering whether they are overvalued or not. Declining interest rates, rising tourist arrivals, and
improved liquidity in the bourse, helped the stock market to attract more investors, he said. He added that
the current presidential election campaign has so far not exerted any impact on the market.
The All Share Price Index increased by 52.14 points or 1.58% to 3344.89points, while the Milanka Price
Index gained by 31.78 points or 0 .84%, to close at 3809.02 points.
Turnover hit Rs.563.2 million more than last year's daily average of Rs.464 million and 14.1 million shares
traded today.
HNB was the highest contributor to the turnover with Rs.104.6 million and its share closed at Rs.168.75 up
by 25 cents. Around 633,500 HNB shares traded today, the stock broker said.
City Housing and Real Estates Company formerly known as Ceylinco Housing gained Rs.2.75 to close at
Rs.21.25 contributing Rs.40.4 million to the turnover. JKH closed at Rs.170.50 up by 25 cents and its
contribution to the turnover was Rs.38.9 million.(BS)
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FCCISL News Alert
GAINS IN BLUE CHIP STOCKS PUSHED THE COLOMBO STOCK INDICES HIGHER.
Sri Lankan Stocks closed higher Thursday while high investor interest on conglomerate John Keells
Holdings (JKH), AHPL, HNB, and Aitken Spence pushed the turnover to over 800 million rupees, analysts
said.
"Despite the profit taking by investors yesterday ahead of the year-end festival, turnover levels remain
healthy, showing investors have come to the market for the long term a stock broker said." He added that
the share trading in blue chips boosted the Colombo Stock market.
The indices at Colombo Stock Exchange closed higher with All Share Price Index (ASI) closing 26.75 points
higher to end at 3292.76 while Milanka Price Index (MPI) closed up 32.91 points to end the day at 3777.24.
Turnover was Rs.868 million and the share volume was 15.9 million.
JKH was the highest contributor to the turnover with Rs.282.2 million and its share closed at Rs.170.25 up
by 25 cents. AHPL closed the day 50 cents higher at Rs.90.50 and its contribution to the turnover was
Rs.125.6 million. HNB closed at Rs.160.50 up by 50 cents contributing Rs.108.2 million to the turnover.
Aitken Spence posted gains of Rs.63.00 to close at Rs.1198.75 contributing a sum of Rs.57.6 million to the
total turnover.
However analysts and traders said investors were eagerly watching the latest political developments as
General Sarath Fonseka was now seen as the main Presidential candidate who could challenge President
Rajapaksa .December was usually a quiet month for share trading with many investors on holiday. Colombo
Stock Exchange will be kept closed tomorrow for Christmas holiday and the trading will resume on
Monday the 28. (BS)
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FCCISL News Alert
Shipping Industry
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FCCISL News Alert
SHIPPING SECTOR HITS OUT AT COPENHAGEN ACCORD
The shipping sector has criticized the Copenhagen Accord that came out of the UN’s climate-change
conference for failing to set any emissions reduction targets for the industry.
The International Chamber of Shipping (ICS) said it was "disappointed" with the accord, while the UN’s
International Maritime Organization (IMO) said it was concerned by the lack of a legally binding
instrument.
"ICS is disappointed that the text of the accord is silent on the treatment of international shipping in the
delivery of further CO2 emission reductions, to which the industry remains firmly committed," the ICS said.
"UN Framework Convention on Climate Change has been unable to agree a clear mandate for the industry’s
regulator, the UN’s IMO, on how to build upon the considerable work already undertaken by IMO on a
package of technical, operational and economic measures for reducing shipping’s emissions on a global basis
- a mandate strongly advocated by the shipping industry," it added.
IMO secretary general Efthimios Mitropoulos said: "I have viewed the end result of the Copenhagen
Conference with mixed feelings.
"With concern that the target initially pursued, following the 2007 Bali Conference, of a legally binding
instrument, was not achieved.
"With measured satisfaction that, through the accord tabled at the end of the deliberations, a step in the
right direction was taken enabling progress to be made towards a legally binding instrument.
"And with hope that, following new rounds of consultations to be held post-Copenhagen, the required
consensus on action needed to be taken to save the planet will be reached at the next Conference."
Mitropoulos said the IMO would study the outcome of the conference to see what, if any, repercussions it
may have on shipping.
It would report back to the IMO Marine Environment Protection Committee on its findings so that
appropriate action can be taken.
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FCCISL News Alert
PRIOR TO WISHING FOR THE HUB STATUS…
The local shipping industry is involved in a dialogue on the idea of achieving hub status for Sri Lanka with a
renewed vigour. This necessitates some discussion on the subject by looking at the very concept, essential
infrastructure for the successful achievement and maintenance of a hub status and a few existing models,
thus providing some more inputs to the ongoing dialogue.
Therefore, this article intends to cover the above aspects briefly with a view to provoking thoughts of those
who are involved in this process.
A hub is defined as a central or main part of something where most activities take place like the central part
of a wheel on to which the spokes are fixed. In the case of a transshipment hub a more appropriate definition
was given by Baird in 20011 which says a transshipment hub is a container port that provides terminal and
marine services to handle and facilitates the transfer or transshipment of containers between feeders and
mother vessels in the shortest possible time’. Timing is crucial for shipping today. Therefore, a hub should
be essentially geared to save time for the line in absolute terms, in order to retain the client and also in
relative terms, in order to protect the hub status from competing rival ports
One finds several hub-ports in the globe today. Singapore, Hong Kong, Rotterdam, Gioia Tauro, Salalah are
the most famous and among the less famous are the Algeciras Free Port (Bahmas), San Juan, (Puerto Rico),
Kingston, Manzamillo, New York, Miami, Halifax, Scape Flow (Scotland). Having studied most of the hubports, Fleming, in a World Bank Report of 2002’ has identified the following as essential features of a hubport.
* Strategic location to cargo sources
* Proximity to shipping lanes
* Proximity to feeder ports
* Ability to handle large ships
* Extent of terminal facilities
* The efficiency of container-handling operations
* Availability of frequent feeder services with an appropriate geographical spread.
* Attractive cargo handling charges
* Some hinter land cargo.
Undoubtedly these are the essential features one finds in a hub-port which is primarily concentrating in
serving the shipping industry. But apart from these, there are some other ‘hub-ports’ which act as the back
bone of the economy of a country. For instance, Singapore and to a great degree Hong Kong, are examples
of the second category and therefore, based on the functions of these two, hub-ports may be identified under
the following two categories:
1) Transshipment hub or Maritime or logistics hub, ie Rotterdam, Salalah, Gioia, Tauro etc.
2) Commercial hub-ports ie Singapore
Whilst transshipment hub-ports are supposed to be equipped with the facilities mentioned previously,
offering directly shipping related services, the commercial hub-ports goes beyond this in that it acts as the
main impetus for the economic development of the country, and the port becomes the most important vital
part of the integrated economic development process. It does not work in isolation as in the case of a
transshipment hub port; merely being one of the efficient and vibrant components among many obsolete and
rusty parts of the economic machinery. Taking the Singapore model as an example, Tsaiya Tonie Huang
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FCCISL News Alert
and others have identified the following factors as stimulus for the present day Singapore, (‘Shipping hub
feasibility study for Azores and Cape Varde, 2001).
* Free and open economy.
* Encouraging private sector for investment in all but a few services
* Strong and stable government
* A transparent legal system
* Good infrastructure and educated work force
* A state of the art telecommunications system.
Singapore model
The fact that in Singapore, about 99 percent of imports are duty free has given birth to huge entreport
related businesses. For example, re-exports, consist of 43 percent of Singapore’s total sales to other
countries.
Manufacturing and financial/business services are the twin engines of the economy accounting for 24.26
percent and 15.22 percent of GDP in 2008. ‘Ease of Doing Business Index’, 2009, compiled by the World
Bank, places Singapore as the No 1 among 181 countries. On this, Sri Lanka occupies 102nd place, well
below Maldives at 69th and Pakistan at 77th. Sri Lanka is, however, ahead of India, which is 122nd. This
conducive climate has paid good dividends in the case of Singapore where over 3,000 MNCs from the US,
Japan and Europe have set up their companies. It is said that MNCs account for over two-thirds of
manufacturing output and exports sales.
Political stability has played a key role in making Singapore an attractive commercial hub. Continuous
national policies on key issues at macro level of the economy strengthens the level of confidence among
users. The importance of the foregoing factor is reflected in an ADB/World Bank survey carried out in Sri
Lanka to identify the constraints for business operations of foreign and domestic firms in Sri Lanka’. They
have found that (a) economic policy uncertainty (b) macroeconomic instability, as the top-most constraints
in doing business in Sri Lanka. (Senanayake et el, 2008).
Singapores labour force was about 2.9 million by 2008 of which 99 percent are members of the sole trade
union the National Trade Unions Congress (NTUC). The Executive legislature covers general labour and
trade union members, The Industrial Arbitration Court handles labour management disputes that cannot be
resolved informally through the Ministry of Labour. The Singapore Government has stressed the
importance of cooperation between unions, management and government (‘tripartism’), as well as the early
resolution of disputes. There has been only one strike in the past 15 to 20 years!.
Singapore has one of the most advanced infocommunications infrastructures in the world. This has been
possible due to the small size of the country, the high national income, and the government’s commitment to
develop the country into a premier telecommunications and broadcasting hub in the region.
On the other hand PORTNET and CITOS are real-time e-commerce and computer-integrated terminal
operations systems in the PSA which delivers highly reliable services tailored to meet a wide range of
activities required by customers. As the "World’s Port of Call", PSA’s Singapore Terminals provides
shippers a choice of 200 shipping lines with connections to 600 ports in 123 countries. This includes daily
sailings to every major port in the world. The PSA is a pioneer in the innovative application of technology
to Singapore Terminals, the PSA’s flow-through gate system processes one truck every 25 seconds, the
fastest time in the world.
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FCCISL News Alert
To facilitate trade and promote the handling of transshipment cargos, there are six Free Trade Zones
within the port area. In these zones, goods can be stored free of charge for a Iimited period and are
processed with minimum customs formalities. Warehousing and distribution services are another important
adjunct to a global port. To cater to this need, four major Distriparks offering over 500,000 square meters of
storage space are located near the port. The most modern of these, keppe Distripark, which was opened in
1993, has a 14-metre high ceiling to support high-rack automated storage and, retrieval systems.
Conclusion
Facilities needed to become a transshipment-hub are not that complicated in comparison to developing a
port to become a commercial hub. In the case of the latter, the level of efficiency, facilities and commitment
required at national level by all the sectors and all the stake-holders, irrespective whether they are involved
in shipping or not, as depicted in the Singapore model is quite extensive as discussed, albeit briefly,
restricting only to the very essentials. Thus Sri Lanka has two choices. Is she going to achieve a
transshipment hub or a commercial hubstatus?
When the Singapore government wanted to grow the local economy during the 1950s, it undertook an
infrastructure building initiative to grow the port. The location of the port and the shipping opportunities
were there for the taking and the government took and ran with it. Singapore invested not only in physical
infrastructure development but education, legal, financial, banking and all other sectors. Even attitudes and
behavioural patterns of the populace were transformed to suit an open economy. Singapore was made
practically a corrupt-free society and the combined effect of all these resulted in Singapore becoming the
world’s no I commercial hub with over a US$240 billion economy by 2008 in an area of 633 sq km.
Sri Lanka is blessed with two crucial factors; an excellent location and a fast-developing neighbor with the
second largest population in the world. The same basics, Singapore had. (In the case of Singapore, instead of
one gigantic neighbour, She had many small and medium sized countries as it’s catchment area) These two
factors alone would provide sufficient stimulus for Sri Lanka to try achieving a commercial-hub status. But a
lot of transformations are needed in many sectors in the economy and the society and for that, the political
will be the first and foremost. Will Sri Lanka be bold enough to do it? If she does the Singapore model a
glimpse of which shown above could play the role of the guiding star.
- Sri Lanka Exporter
68
FCCISL News Alert
Agriculture
69
FCCISL News Alert
NEW PLANTATION WAGE FAVORABLE TO WORKERS - RPCS
The Planters Association of Ceylon said the new plantation sector wage package has been adopted by
Regional Plantation Companies (RPCs), to be favorable to employees.
According to the Planters Association the formal plantation sector, represented by the 23 RPCs, now fully
implemented the new wage package.
The Planters Association said the various components of the wage package are aimed at increasing
productivity, while also being fair
by employees.
"The new wage of Rs.405 per day
is designed in such a way as to
encourage and reward workers for
better productivity," said Lalith
Obeysekera,
representing
the
Planters Association of Ceylon and
the Plantation Services Group at
the Employers Federation of
Ceylon (EFC).
Employees
qualify
for
the
attendance incentive of Rs.90 per
Plantation workers
day, if they report to work for 75
percent of the work-days offered by the estate. Employees qualify for the Rs.30 per day productivity
incentive, if they meet the daily plucking norm set by the estate.
Planters Association Secretary General Malin Goonetilleke said that in the formal plantation sector,
workers are not unnecessarily penalised when wages are calculated. "RPC estates do not penalize workers
for not meeting the exact number of kilos set by the norm. Even if they fall short of 2 or 3 kilos of leaf, the
companies still pay them the full basic daily wage.
Workers are also not forced to report to work on Poya days and Sundays.
The RPCs calculate the number of work days by excluding Poya days and Sundays. If they don't come to
work for 75 percent of the work days offered, they are still paid the basic daily wage for the days they do
report to work.
70
FCCISL News Alert
The company also provides many non-cash welfare services not just to workers, but to entire families," said
Obeysekera.
The attendance incentive and the productivity incentive in the wage package are aimed at increasing the
efficiency of Sri Lanka's plantation sector, as the sector is somewhat less productive than some competitor
countries.
The three signatory trade unions to the Collective Agreement, representing about 60 percent of the formal
plantation sector workforce, are also in agreement with the need to retain productivity.
The plantation sector needs to increase productivity to remain competitive.
"This is something that the three signatory trade unions to the Collective Agreement, also agree on. That is
why the latest Collective Agreement is a landmark agreement because it directly encourages productivity
through a productivity incentive," said Employers Federation of Ceylon (EFC) Director General Ravi
Peiris.
The three major plantation sector trade unions also agreed to a 'pro-rated wage' instead of the standard
basic daily wage during the non-cooperation campaign at the time of wage negotiations.
"There was a clear agreement with the three signatory trade unions to pro-rate wages of workers during
the non-cooperation campaign period of the wage negotiations.
That is, workers on non-cooperation or go slow, will be paid a pro-rated wage instead of the full basic daily
wage. This is because during this period, productivity dropped drastically," said Peiris.
71
FCCISL News Alert
GOVT ENCOURAGES PUBLIC/PRIVATE SECTORS IN AGRICULTURE:
SUBSIDY SCHEME INCREASES DEMAND FOR FERTILIZER
Charumini de Silva
The demand for fertilizer has increased rapidly due to the Government's subsidy scheme. The Government
is encouraging the public and private sectors in agriculture development. The average fertilizer imports per
annum are around 600,000 - 650,000 MT. However, during 2008 it grew up to 800,000 MTs, which shows
that there is a big demand for fertilizer, a senior official of CIC Agri Business told Daily News Business.
He said that of the 800,000 MT fertilizer, 600,000 MT is for paddy
cultivation and the remaining are for other crops. Of the 130,000 MT,
* Demand for fertilizer grew up 800,000 MT was for agricultural activities in the Eastern province, 25,000
to 800,000 MT in 2008
MT for coconut and 135,000 MT for vegetables and fruit crops.
Fertilizer demand
* Significant increase in
agricultural sector
* Huge potential for growth in
the Northern and Eastern
provinces
There has been a significant increase in the agricultural sector in the
country due to the Government encouraging the public and private
sectors. Uncultivated lands and introduction of different crops such as
maize has made an impact on the agricultural sector and as a result the
demand for fertilizer too has increased dramatically, he said.
He said there was an increase in fertilizer consumption with the opening of the Northern and the Eastern
provinces. People are more keen on cultivating and therefore, there is a huge potential for growth in the
Northern and Eastern provinces in the agricultural sector.
The Cost of Production (COP) for paddy cultivators is very low since the Government and agricultural
institutions are heavily involved in assisting these farmers.
Paddy farmers have shown much interest in cultivation compared to other cultivators. There is also a
growth in other agricultural crops.
The demand for tea dropped drastically during the global financial meltdown. Sri Lanka is now enjoying the
highest prices for tea, as there is a huge demand for tea especially in the international market. Although
there was a slight drop in the demand for coconuts and vegetables, at present there is an upward trend, the
official said.
If the Government continues with the subsidy scheme for paddy, tea, vegetables, fruits, coconut, rubber and
other crop cultivators, the demand for fertilizer will eventually grow up to 800,000 MT or even more. With
the global financial trend also recovering, there is an improving trend in the agricultural sector, he said.
72
FCCISL News Alert
Sunday Observer – January 3, 2010
BAM VENTURES OUT IN EAST WITH AGRI PROJECT
Even if we don’t get the GSP+facility garment factories will not be closed down but if we get the facility it
will be a bonus point and we should be ready to face the situation and find efficient methods to manage the
factories, said Chairman BAM Group B. A. Mahipala.
If the factories have to close down it is due to bad management, he said.
The government should minimize placing the burdens on entrepreneurs by reducing of taxes and also
improve infrastructure facilities.
The number of holidays in the country is far too much and it has become a problem when dealing with
international buyers.
He said, to continue with the textile business it should be vertically integrated and therefore the group has
started to manufacture collars as well as fabric dyeing. The group plans to go in for fabric production by
mid next year.
We will initially produce fabric for childrens wear. Our prices will not be the cheapest but it will be of high
quality.’ He said after the financial crisis the buyers go for small quantities. Based on that they will place the
order for the bulk. The buyers need a quick response from the manufacturers and therefore the factories
have to be vertically integrated to supply the order.
Mahipala said, that the initial expansion will cost Rs.100 mn while the upgrading of machines will cost
another Rs.500,000.
73
FCCISL News Alert
BAM group is also planning an agri based project in the Eastern Province. The pilot project is estimated to
cost Rs.75 mn.
We plan to grow fruits such as lemon to make juices.
All the profits we get from the project will be invested for the well-being of the people in that area, said
Mahipala. In addition the group will also build an eco-friendly resort, in Nilaveli for which 10 acres have
already been leased. The project is expected to cost Rs.350 mn.
He said, that after a certain stage he didn’t want to further expand the business but now as the family
members are getting involved and shouldering the burden we as a group decided to expand for stability.
74

January 2010 - Federation of Chambers of Commerce and Industry

Transcription

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