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Tea party over as economy loses steam

By Amal Jayasinghe
When East Asia plunged in crisis after crisis, Sri Lanka boasted it was immune from the contagion and in fact the economy grew thanks to high tea prices, but the latest figures show the party is over.

Exports fell sharply in August indicating the economy which picked up momentum from unusually high tea prices earlier this year was running out of steam and into serious trouble.

An analyst at the private Institute of Policy Studies (IPS) think-tank said good prices for tea, the country’s main export commodity, saved this South Asian nation from the effects of the East Asian crisis but not any more.

"We are generally in a de-flationary environment and the global economy in going into depression," said Sisira Jayasuriya. "In that context there is no way Sri Lanka is going to avoid getting into a serious situation.

Jayasuriya said it would be better for the government of President Chandrika Kumaratunga to warn the people of the possible consequences of a serious down turn and prepare the country rather than paint a rosy picture.

"It is better to tell the people the truth, that things are pretty bad rather than say everything is hunky-dory," Jayasuriya said.

Opposition politicians as well as government officials privately agree the economy is headed for a major crisis because of the falling tea prices and the possible decline in foreign job opportunities for Sri Lankans.

The falling oil prices have helped Sri Lanka reduce its import bill but at the same time the lower incomes in oil producing countries would make it difficult for them to employ Sri Lankan labour, analysts said.

Economists say the August figures showed an alarming turning point for the economy.

Sri Lanka’s three main commodity exports fell sharply in August. Tea by five percent, rubber by 38.3 percent, coconut by 12 percent. Gem exports fell sharply by 71 percent and garment exports by 5.7 percent.

Overall the total exports fell by 13.2 percent although the figures for the first eight months of the year still showed a deceptive picture of growing by 5.3 percent in dollar terms because of exceptionally high tea prices in the first quarter.

The Central Bank of Sri Lanka said in July the country recorded a robust 5.8 percent growth in gross domestic product (GDP) in the three months to March compared with the corresponding period last year.

Central Bank’s research director R. A. Jayatissa said trends suggested the country would achieve an overall GDP growth of 5.5-to-6.0 percent this year compared with 6.4 percent in 1997 and 3.8 percent in 1996.

The growth forecast for this year has now been scaled down by the government itself to 5.0 percent. Former finance minister Ronnie de Mel said he believed the real growth would be closer to 4.0 percent.

"The country is facing a very real danger," de Mel said. "But we don’t want to tell the government how they can overcome it because we are all getting ready for elections. Why should we help them (the government).

However, Deputy Finance Minister, G. L. Peiris, did not agree saying the country had done so well Sri Lanka was fast becoming a middle-level income country. The poor were becoming richer and the richer 20 percent were seeing a drop in their incomes making them poorer, he said.

"Incomes have come to be distributed more equitably than in the past. Unemployment declined steadily. The resilience exhibited by our economy during the recent global economic crisis is largely due to our prudent economic management."

But even the usually optimistic International Monetary Fund does not appear to be convinced by the government.

The IMF representative here, Anton Op De Beke, said the 1999 budget unveiled by the government 10 days ago did not seem realistic.

Over runs in the defence expenditure coupled with falling revenues affected the up beat projections made in the budget, Op De Beke said.

While the defence spending may be beyond anyone’s control there was no excuse for not maintaining other fiscal targets, the IMF official said adding revenue estimates for next year were also unrealistic.

He said the government hoped to raise 30 percent more revenue through the Goods and Services Tax next year but there was nothing to back up the expected revenue growth. (AFP)

If Thimpu principles are adhered to with cross party concensus
LTTE ready to give up separate state, saya Mannar Bishop

by Sumadhu Weerawarne reporting from Mannar
The Bishop of Mannar Rayappu Joseph referring to a letter handed over by the LTTE to the President of South Africa Nelson Mandela said that he believed that the LTTE had given up its demand for a separate state but was demanding that the solution must be based on the Thimpu Principles. He added that for any meaningful discussions to end the conflict there was a need for a "cross party consensus" on the principles for negotiations based on the four Thimpu principles.

The Bishop was addressing a bipartisan delegation of PA and UNP Pradeshiya Sabha members from Matara. The six Pradeshiya Sabha members, some of whom were chairmen of their respective Sabhas were on an exposure visit to see for themselves the situation in the war torn areas of the country with a view to people-to-people bridge building.

This visit was arranged by the National Peace Council of Sri Lanka whose representatives accompanied the delegation.

Bishop Joseph also said that there was a misperception that the Catholic Church in the North was supportive of violence but this was not so. ‘The church is against violence. The Church is against war. But that does not mean we want the people to be inert. People must have their rights and the Church will be by their side"

It is clear that the Bishop is emerging as the leading spokesman for civil society in Mannar, which is the only district in the country to have a Catholic majority. Senior military sources said even they recognised this fact. The Catholic Church had become the bridge between the army and the people though they suspected some of the clergy to be sympathetic to the LTTE. They said that this role also enabled the Catholic Church to increase the number of adherents.

The delegation from the south also met the Citizens Committee of Mannar who said that if there was a bipartisan consensus on a "genuine federal solution" they would be prepared to take it up with the LTTE leadership. They said that the government’s devolution package was not acceptable as it had been watered down greatly, and also as it did not have a consensus in the south and they feared it would come to nothing.

Several members also expressed their ire at the statement of President Kumaratunga in South Africa that the Tamils were not original inhabitants of the country and were simply a minority. They said that this attitude towards the Tamils was one that informed all actions of the government to their detriment, including indiscriminate aerial bombardment.

Later at a meeting with members of the Mannar town community, the delegation was told that the people would rise against the LTTE if they did not accept a "genuine and just" solution. "We understand that much of our hardships, such as queues for passes and shortages comes from the war situation. What we want are not favours, but we want our rights as an equal people in this country.

Mannar Bishop laments over disinterest shown over Lionair tragedy

By Sumadhu Weerawarne reporting from Mannar
The Bishop of Mannar Dr. Rayappu Joseph bemoaned the fact that neither the government nor Lionair had shown any interest in following up on the fate of the missing passengers on board the ill- fated Lionair flight that disappeared off the coast of Mannar on September 29.

The Bishop said that he was willing to provide assistance to the families of any persons on board the Lionair flight which was shot down to visit the grave site. He added that "On making further inquiries on this matter from some more first hand witnesses I have to sadly reconfirm that there is no chance of any survival of those in that ill fated flight." He said that 31 bodies had floated to shore and had been buried along the beach covering upto 8 kilometres. There were reports that other bodies had drifted to Jaffna.

The Bishop said that two of the passengers were university students from the Mannar area. Their identity cards had floated to shore. He added that it had been reported to him that the personal effects of the passengers and crew which had floated ashore were in the hands of the LTTE.

Sources said that immediately following the downing of the aircraft, LTTE sea cadre had come to the site a few metres off the southern coast of Iranaitivu island and had moored the tail of the craft which had been jutting out of the water. They said that the falling aircraft had been first spotted by pearl divers in the area. Two bodies, which they believed to be of the Russian crew, had been seen floating shortly after the crash.

Sources in Mannar also expressed puzzlement that no proper inquiry had still been held, and speculated that possible negligence issues and insurance claims were factors in the delay. They observed that the plane had taken a shorter route closer to the shore, which is avoided by military flights.

LTTE attack during ‘Heroes Week’ speculated

by Sumadhu Weerawarne reporting from Mannar
Military sources in Mannar said that the LTTE would be aiming to uproot one of the major army camps in the area on account of Heroes' Week from November 22 to 28. They said that there were reports that a senior LTTE military commander Karuna was scouting along the banks of the Yoda Weva (Giant’s Tank) with a group of LTTE cadre. The sources added that leave to soldiers had been cancelled in view of the rising tension.

On Thursday artillery firing was heard in the dead of night. Later it transpired that an army camp on the mainland had fired at a suspected group of LTTE cadre in a nearby village. Skirmishes have also been taking place in recent days, with fire fights between the army and LTTE. But community leaders claimed that some of these incidents had involved civilians who were trying to smuggle a few litres of kerosene from Mannar into the uncleared areas in the night.

Civilians also said that the LTTE had threatened "all out attacks" on "all military camps" in the north-east. But they pointed out that the LTTE was finding it difficult to recruit new cadre into their ranks. "The people want an end to the war, not continued bloodshed," they said.

It is believed that the LTTE will be using Heroes’ Week to launch a concerted recruitment drive using a video of the Kilinochchi attack. Civilian sources also said that the LTTE was itself facing internal security concerns due to infiltration. This meant that Prabakaran’s Heroes’ Day speech would not be open to all members of the public. Families who had lost a child in the fighting would be given priority in attending the event.

While the situation in Mannar has been relatively calm with no sizeable attacks being reported for several months, there is an appearance of vulnerability with army checkpoints on the road being manned only till 6 p.m.. Even then, the number of soldiers at each point seem few.

A policeman who was accompanying the convoy of civilian vehicles into Mannar said that security was thin. However a senior military source who was questioned on this point said that civilians were not the proper judges of military strategy. "They want soldiers stationed like lamp posts on the side of the road. But this is not what security is about," he said.

UNP zeroes on vehicle duties

The UNP yesterday hit out at the duty adjustments on vehicle imports announced by the government in the budget saying that there was a big reduction of prevailing rates on luxury vehicles while the duty on more modest vehicles had been substantially increased.

"Duties on vehicles used by the rich like Mercedes Benz, Pajero Intercoolers etc. have been reduced while the duty on vehicles used by the less affluent section of the population has gone up,'' said UNP spokesman Karunasena Kodituwakku, MP.

He said that the duty on a reconditioned vehicle valued at Rs. 500,000 had gone up by Rs. 200,000 while the duty on a Pajero Intercooler or Toyota Land Cruiser and come down by Rs. 1.5 million. He said that a duty on a Benz was down by Rs. 2 million under the new duty rates.

"The government is not giving the benefit of a sharp reduction in the international price of petroleum to the people. The prices have come down by about a third but the government continues to sell fuel at exorbitant prices,'' he said.

Sentiment changes on Colombo Stock Exchange

The Colombo stock market reacted fast and sharp to external event last week with the all share index jumping 15 points on Wednesday to breach the 550-point barrier, going way above the 520-point resistance level favoured by many brokers.

Although a technical correction followed with the index adjusting to 541.3 when the market closed for the weekend on Friday, analysts pointed out that the index had moved up 30 points from levels of around 510 in seven trading days.

``The sentiment has changed from negative to neutral,'' said the head of a big stock broking firm, ``the market has moved from a discounted position to one of perceived fair value.''

He said that several factors had contributed to that position including upward movements of global markets as well as the lifting of the embargo on India and Pakistan that had a favourable reaction on the sub-continent.

While the pick-up in Colombo was largely attributed to local investment with some unit trusts among others picking up bargain blue chips, he said that the net outflow of foreign investment had reduced sharply and a near balance of inflow against outflow had been achieved.

``But it's local investment that has been dominating,'' he said. But there was no substantial investment from institutional investors like the EPF and ETF.

Although he thought an index of about 600 would signal fair value, he said that whether it would go up to that level was an open question. ``But 570 seems a distinct possibility.''

Brokers said that the big jumps last week naturally led to a correction. But the less than one point drop in the index on Friday suggested that this process was tailing off.

IGP unaware of any arrest of top banker

IGP Lucky Kodituwakku said yesterday that he was unaware of any arrest of a top banker as alleged in a weekend newspaper last week.

The sensational report provoked a press release from the Pramuka Savings and Development Bank saying that ``implications and innuendo'' in that report would cause speculation and false information that it was under a cloud. It also said that there was a poster campaign backing the report.

It assured the public that there was no truth whatever in the ``diabolical implications and innuendo.'' Pramuka's chief executive officer, Mr. Rohan Perera, said he thought those responsible for spreading such allegations were jealous about the rapid progress they had made within a short period.

Perera denied that he had been arrested, quizzed or detained in police custody in connection with allegations made against him. He also denied that political pressure had been used to obtain his bank's license from the Central Bank.

MD of Hiru, Tharu, Sun and Sooryan radio stations arrested in London

From Sujeeva Nivunhella - Our London Correspondent
The managing director of the radio stations Hiru, Tharu, Sun and Sooryan, Mr. Avtar Lit, was arrested last week in London by Scotland Yard in a police investigation into media corruption, according to a report published in 'The Asian Age' newspaper.

Mr. Lit, who is also the managing director of the UK's largest Asian radio station Sunrise was arrested together with Ms, Janet Lee, deputy head of programming and advertising of the Radio Authority, Britain's licensing and regulatory watchdog.

The pair was since released on police bail and asked to appear in court at the end of January 1999.

According to the report police have seized incriminating documents from Ms, Lee's residence and Mr. Lit's Sunrise radio station premises.

Ms, Lee who is responsible for handling radio licence applications, complaints against existing radio licensees and controlling the programming and advertising content of radio stations has been suspended from her post with immediate effect.

Other than the radio stations, Mr. Lit owns the Leicester Square nightclub, the Capital Club and rated among the top 200 Asian business leaders in the United Kingdom in a arecent survey.

When contacted over the phone by this writer, a spokesperson for Scotland Yard confirmed an arrest of a man in his late 40s on 11th November in London on suspicion of corruption and later released on bail but refused to name names until the person is tried and charged.

Vasu quits politburo over budget

by Zacki Jabbar
LSSP firebrand Vasudeva Nanayakkara last week resigned from his party's politburo for being refused permission to vote against the governments fifth budget.

The LSSP rejected his proposal that they vote against the budget. He then sought a free vote for himself which too was disallowed.

Nanayakkara was not present in parliament for the second reading vote taken on Wednesday, but was in the House earlier in the day when he informed Speaker K. B. Rat-nayake in writing of his decision not to vote for the budget.

Asked why he kept away at voting time Nanayakkara said he did not want to embarrass his party colleagues Minister Batty Weerakoon and Deputy Minister Athauda Seneviratne who voted for the budget.

Nanayakkara said he sought permission to vote against the budget since he felt it was anti-people and drafted without consulting the constituent parties of the Peoples Alliance.

"Another reason why I oppose this budget is because it provides no relief to the July "80 strikers," he said.

Nanayakkara said that when his request for a free vote was refused, he resigned from the politburo since he knew he would be violating the politburo's decision when the vote was taken in parliament.

The LSSP it is learnt is in a dilemma over the course of action it should take against Nanayakkara for violating a politburo decision since it is still to move against Athauda Seneviratne who has voted with the government on various issues against the party whip which decreed abstention.

A disciplinary inquiry against Senevi-ratne has been pending for a very long time and it seems unlikely it would ever be completed, LSSP sources said.

A section of the LSSP was earlier considering publicly highlighting the party's inaction against Senevi-ratne even though he had consistently violated party decisions.

The LSSP abstained from voting against the budget last year because it had not been consulted.

Headless body found in three-wheeler

By Kalinga K. A. Weerakkody
Police found the headless body of man dumped inside a three-wheeler at bakery junction in Attidiya last Friday.

The victim, it's alleged, had been involved in a series of robberies and other criminal activities in the Ratmalana, Dehiwala, and Maharagama areas.

The severed head of the man was found on the Attidiya main road, a short distance away from the three-wheeler in which the body had been dumped, Mt. Lavinia police said.

The sword believed to have been used to kill the victim, known in the area as "three-wheeler Saman", was also found by police.

No suspects have been arrested so far in this connection. The motive behind the killing has still not been ascertained, according to police.

Police said the victim worked as a three-wheeler driver in the Nedimala, Dehiwala area.

A police team under the directions of Mt. Lavinia HQI Chandana Athukorala is conducting further investigations.

Troops repulse LTTE attack

On Friday LTTE terrorists launched a mortar attack on troops manning defences North West of Mankulam. Troops retaliated effectively with artillery and mortars. One soldier was injured, Defence Ministry said yesterday.

Troops continue to dominate newly captured areas.

On 19 November 1998 around 11.00 a.m. at Sinnawatta in Batticaloa District STF troops on patrol confronted a group of terrorists and killed five of them. Subsequently troops recovered five T 56 weapons, two hand grenades, two radio sets, one binocular, two cyanide capsules and few military items.

On 20 November 1998 around 7.55 a.m. at Korakkankaddu-kulam in Kilinochchi district troops engaged three terrorist bunkers with the help of armoured tanks and completely destroyed the bunkers.

New political party spells out its policies

The leader of the newly formed Sri Lanka Jathika Pakshaya Wimal Geeganage said there was a need to create an atmosphere ideally suited to safeguard a sense of freedom if a genuine service was to be rendered to the suffering masses of the country. That was the motive that triggered them to form a new political organization. Their objective was to make Sri Lanka a propressive nation while safeguarding the independence of the people.

He was speaking at a recent media conference at Modera held to spell out the objectives and principles of the party.

Mr. Geeganage said there were nearly 40 political parties in the country at present. But all of them were confined to their name boards. They were that inactive. If not, those political organizations were maintained to work for the welfare of a handful of people.

One of the main aims of the Sri Lanka Jathika Pakshaya (SLJP) was to create a healthy, mentally and physically fit population in the country that would be free from fear. There was also the need to safeguard the national civilization, culture and morality which were now distancing from the people. It was also necessary to identify the country's national resources with a view to developing them to facilitate the country's forward march. The people's rights had to be preserved on a solid democratic base. It was also essential to maintain a neutral stance in all matters particularly in relation to the country's foreign policy. The country could not afford to attach itself to any particular camp on group in international matters. It should steer clear of all groups and maintain a neutrality. Their party on principle would not condone terrorism and corruption under any circumstances.

Mr. Geegange also said that although he was not born during the time of the late S. W. R. D. Bandaranaike was living he held with high esteem and respect the Bandaranaike policies. He also respected the policies of late Ranasinghe Premadasa and also those of Vijaya Kumaratunga. But that did not mean he would pursue these policies blindly.

Among others who attended the conference were the Ven. Minipe Dhammakitti Thera, the President of the SLJP, General Secretary Ms Sudeepa Chandrasekara, Vice President B. D. Jayatilake and the party's national organiser Anuruddha Kalan-suriya.

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