The Island business

The Public Enterprises Reform Com-mission which recently offered shares in several state owned plantation companies at a parity price of Rs.10 is now seeking to raise Rs.15 per ten- rupee share in Namunukula Plan-tations Limited offered for sale.

This offer involves 4 million ordinary ten-rupee shares of Namunukula comprising 7 tea estates, 3 rubber estates and 10 tea and rubber estates covering a total area of 12,444 hectares.

3,442 ha of this extent is under tea, 4,184 ha under rubber and 1,101 ha under other crops.

The remaining area includes fuel reserves, areas unsuitable for planting, buildings, gardens etc.

As there was a run on previous offers of sale of plantation companies at the ten rupee parity price per share, in most issues allotments were limited to 100 shares per applicant. In some issues even these allotments had to be picked by lottery.

It is well known that many investors made multiple applications for these ``assured profit'' shares in the names of friends, relatives etc. but the authorities were unable to effectively shut out such multiple applications despite some Securities & Exchange Commission (SEC) guidelines on the subject.

The most recent plantation share offers evoked less interest than the earlier offers where substantial capital profits were made on the secondary market no sooner trading began. But such profits were much smaller following the most recent offers for sale.

Analysts and investors are keenly watching the Namunukula issue to see whether it would attract the same degree of interest as the previous offers and also offer traders at least some profit potential in a market now picking up after a disastrous plunge.

Waldock Mackenzie Limited are managing the Namunukula offer which opens for subscription on January 7 and John Keells Stock Brokers are the sponsoring brokers.

The offer of sale documents and share application forms were issued by the managers from last Thursday.

Mercantile Leasing Limited (MLL) has finalised arrangements to raise additional equity ad loan capital from two large financial institutions including the World Bank affiliate, the International Finance Corporation (IFC).

The second participant in this scheme will be the National Development Bank (NDB) which is one of the largest development financial institutions in the country, MLL has told shareholders.

If the NDB, which is already a large stakeholder in MLL and is the controlling shreholder of the Capital Development and Investment Company Ltd. (CDIC) that is MLL's biggest present shareholder, exercises its conversion option under the present restructuring, it will be the major player in MLL.

IFC has been increasing its presence in Sri Lanka in recent years and is expected to participate in the equity of an existing bank that John Keells Holdings and the Central Finance Company are looking at.

The NDB focuses primarily on development oriented lending and is already a wholesale supplier of capital funding to MLL's leasing operations.

The MLL directors have told shareholders that they have for sometime been considering the necessity of restructuring the company's capital to raise additional equity and loan funds to reduce dependence on high interest bank borrowings.

They said that such interest cost had hurt their profit margins. Also, They have in recent years seen a strong trend of both commercial and development banks aggressively entering the leaasing market using low cost funds.

MLL said that the result was the banks were able to quote rates that leasing companies like theirs, largely dependent on loans from such banks, could not match.

"It is evident that if this trend continues the resulting conflict of interest confronting lending banks will seal the fate of leasing companies who are totally dependent on bank funding'', the MLL directors said.

MLL was incorporated .in 1982 as a private limited liability company and was converted a year later into a public company with a stock exchange listing.

Lloyds Bank International of Britain acquired 30% of the then issued capital of Rs.20 million when MLL made its initial public offering. The other major shareholders were Mercantile Credit Limited (10%), HNB (7.5%) and the Commercial Bank (7.5%).

On the initiative of Lloyds, the company was named Mercantile Lloyds Leasing Limited. Lloyds further reiterated its commitment to the Sri Lanka company by seconding one of its senior employees to become MLL's first chief executive.

In 1988, the Lloyds Bank withdrew from the South Asian region and diversted its holdings in the Sri Lanka company which reverted to its former name of Mercantile Leasing Limited.

As at June 30, 1998, the Capital Development and Investment Company Limited (CDIC) was the major stakeholder in MLL's issued capital of Rs.82.9 million with a 15.7% holding. The other major shareholders were the NDB (14.9%), Insurance Corporation (5.2%), Thurston Investments Limited (5%) and the Ceybank Unit Trust (5.6%).

MLL today has three fully owned subsidiaries, primarily engaged in finance leasing and also offer debt factoring as a complementary product. It also engages in. trade finance and commercial lending on a limited scale to its regular clientele.

MLL's subsidiariy, Mercantile Leasing (Financial Services) Limited specialises in operating leasing and vehicle hire. The group recently extended its activities to include insurance broking through a new subsidiary - MLL Insurance Brokers Limited.

A third subsidiary, Allied Properties Limited, manages a new office building "Millennium House'', located on 65 perches of prime land at Navam Mawatha, Colombo 2, which is fast developing as a major financial district in the city.

MLL has long term funding arrangements with the Manila-based ADB and the NDB and short and medium term arrangements with four Colombo-based foreign banks and ten domestic banks.

The directors said that aggregate borrowings as at June 30, 1998 amounted to Rs.932 million.

MLL is confident that provided the business climate is reasonably favourable and interest rates are steady over the next three years, it could considerably improve its profitability and is pitching its capital restructuring arrangements on these projections.

Under such arrangements MLL intends issuing Rs. 220 million worh of hundred rupee redeemable debentures carrying a 14% interest as a rights issue. These debentures would be redeemable in full at the end of 5 years with payment of interest and capital guaranteed jointly by the NDB and the IFC.

The debentures are to be issued at par and allotted to MLL shareholders resident in Sri Lanka in proportion to their holdings subject to a minimum allotment of 100 debentures. Those unsubscribed will be available to shareholders wanting additional debentures.

The ETF is underwriting this issue at a commission of Rs.1.65 million and a devolvement fee of Rs.550,000.

MLL which has called an extraordinary general meeting for December 31 to consider these arrangements said that the debenture issue is intended to expand capital base of the company and reduce its dependence on bank borrowings. They are also seeking to augment resources for expected growth in their leasing portfolio.

The debenture issue will also reduce the risk of interest volatility and its impact on MLL's earnings by securing fixed interest term finance. It will give the public an opportunity to participate in a medium term fixed income tradable debt instrument and thereby help the development of the debt market in the country, the MLL directors said.

Additionally both the NDB and the IFC will take up the 14% debentures convertible to ordinary shares at Rs.35 at their option within a period of two years on the debenture issue.

NDB will take up Rs. 105 million worth of these debentures while the IFC will grant a convertible loan of USD 1.8 million carrying an interest rate of 2.7% above LIBOR. IFC too will have the right of converting the loans stock .into ordinary shares at Rs.35 per share after two years. However, there is a restriction that IFC's holding in MLL will not exceed 20% of its issued capital at the conversion date.

"The conversion entitlement under the above convertible instruments will be subject to an aggregate limit of 12% of the issued capital, in accordance with current policy of the Securities & Exchange Commission of Sri Lanka'', MLL said.

The Private Sector Infrastructure Development Company Limited (PSIDC) and the Export Development Corporation of Canada (EDC) have signed a memorandum of understanding for the establishing of USD 75 million line of credit by EDC for the purpose of on lending to private infrastructure projects here. A PSIDC news release said that the proceeds of the line of credit can be made use of for financing upto 85% of the cost of goods and services of Canadian origin. Pictured here is Daya Liyanage, Deputy Secretary to the Treasury (who is also the Deputy Chairman of PSIDC) and Ms. June Domokos, Vice President, Asia, Africa & Middle East of the Export Development Corporation, Canada, signing the MOU. Others in the picture from left to right are Leel Wickramarachchi, GM/CEO PSIDC, Anis Karim, Regional Manager (Asia Pacific) EDC and Ms. Karnika Jayatilake, Legal Advisor PSIDC.

The strategic alliance between Richard Pieris & Co Ltd (RPCL) and Asia Capital Limited (ACL) has been formally concluded and it has been expressly agreed that two nominees from each company will sit on the other's board.

The directors of Richard Pieris have written to shareholders informing them that their board now comprises 10 directors, the maximum permissible under the existing articles of association of the company. They have therefore sought shareholders approval to amend the articles to broaden the board to a maximum of 12 to accommodate two nominees from Asia Capital.

An extraordinary general meeting of Richard Pieris has been convened for January 8 to consider a special resolution authorising the expansion of the present board to a maximum of 12 from the present 10 directors.

Richard Pieris said that the main purpose of the strategic alliance is to take advantage of each other's strengths in the diverse areas of business ranging from manufacturing, plantations, consumer marketing to investment banking and capital market operations.

"We believe that a long-term relationship of this nature will add value to both companies and contribute significantly towards enhancing shareholder wealth'' the directors said.

Mr. Lakshman J.K. Hettiaratchi, a former CEO of IBM in Colombo, has been appointed a director of the Sampath Bank Limited with effect from December 10, the Colombo Stock Exchange announced.

There have been two resignations from the board of Eden Hotel Lanka Limited and two new appointments - those of Mr. W.M. Mendis and Mr. A.S. Lokuhetty. The directors who resigned are Mr. S. Nakada and Mr. K.A. Gunasena, alternate to Mr. Nakada.

Mr. F.G.N. Mendis has resigned from the Ocean View Limited with effect from November 30, 1998 CSE said.

Collettes Limited have named Miss Kamala Sagrani as its new chairperson/director with effect from December 7. Mr. Suraj Fernando has been appointed an alternate director of the same company to Natasha Prakash Advani, the CSE said.

Two new directors have also been appointed to Statcon Limited, previously Statcon Rubber Company Limited. They are Miss Shireen Sagrani and Mr. Suraj Fernando whose appointments take effect from December 11.

By Kanes
Attention was drawn in the two previous articles to the urgent need to increase domestic food production to create rural employment and income and conserve foreign exchange. Rural unemployment and underemployment and consequent low incomes are major problems in the country and systematic increase in food production offers a solution. The potential for increased production exists in most of the foods we import - rice, maize, subsidiary foods, fruits, milk, fish, poultry and food preparations - but increase in production is held back by several factors - the crucial factor being our inability to produce these goods at prices competitive with imports. Our import tariffs have declined from the high levels in the 1970s to very low levels in the 1990s, the weighted mean tariff on primary products being 23.6 per cent in 1997 and on manufactured goods 19.8 per cent. In addition, quantitative import restrictions have removed on the majority of imports; thus, the high protection local food production had in the 1960s and 1970s no longer exists. Most subsidiary foods are taxed at 35 per cent and milk 10 per cent.

Producer vs. Consumer
It is undeniable that the producer aims at getting the highest possible price in the market while the consumer wants goods at the lowest possible price. We are saddled with the task reconciling these conflicting interests and finding a formula to satisfy both parties however difficult it is. If our objective is to satisfy the consumer - the majority of the population - then we must import all the foods for ever as they are cheaper than domestic products. In fact, this is exactly what happened in the colonial days when practically all our foods were imported. Such a policy would, however, disrupt domestic food production, throw thousands out of employment, create an impoverished rural population with frightening social consequences. The majority of the country's population live in the rural sector and are closely linked to food production directly or indirectly and we cannot be indifferent to their fate.

Domestic food production is also important for another reason; it guarantees us with national food security. There is always a risk in depending excessively on imports of food; first, the supplies may be interrupted by floods, drought, civil disturbances or international wars and second the buyer may not have sufficient money to purchase the imports. The shortage of onions and potatoes in India for example has cut off supplies to us from the cheapest source, while the crisis in Russia has resulted in a shortage of funds to import food which she badly needs.

The third reason for increasing domestic food production is the possible world shortage of rice in coming decades unless a technological breakthrough can be found to boost production in rainfed areas. The green revolution - the development of high yielding rice varieties - has been running out of steam since the mid-1980s as areas suitable for irrigation are already fully used in many Asian countries and there is no scope for increasing the extent under highlighting varieties. With population increasing in many Asian countries by about 60 per cent or more in the next 25 years, the present rice production must rise from 520 million tonnes to 800 million tonnes by 2025. Sri Lanka's rice requirements on the basis of a per capita annual consumption of 104 kg (according to Central Bank Consumer Finances and Socio-Economic Survey of 1986/87) for a projected population of 23.1 million people in 2031 would be about 2,405,416 tonnes. As domestic production in 1997 was about 1,567,300 tonnes of rice, the gap to be filled by domestic production or imports will be about 838,116 tonnes. If this entire amount is to be domestically produced, then production should increase by 53 per cent in 33 years.

Protection in Developed Countries
Few countries in the world permit free imports of food to undermine their domestic production and destroy rural employment. The developed countries practice free trade in manufactured goods and services in which they have a comparative advantage, but remain persistently protectionist about food. Their trade barriers against food imports comprise tariffs, quotas, complicated health and safety regulations and subsidies to domestic producers. The U.S. protects its tobacco, sugar and groundnut growers, its dairymen and ranchers.

The European Union does not allow free trade in wine, citrus fruits, tobacco, vegetable oils, tomatoes, and dairy products and Japan protects its beef farmers and rice growers and force Japanese consumers to pay a multiple of the world price for their products. Japan even opposed cutting tariffs on fish products at the recent APEC Summit in Kuala Lumpur. In addition, developed countries subsidize their exports of wheat, beef, milk powder and other food surpluses and undermine food production in developing countries.

Producer subsidy equivalents, i.e.direct subsidies to farmers, cheap loans and guaranteed prices to agriculture in all developed (OECD) countries amounted to $150.8 billion in 1997: in the European Union $72.7 billion or 42 per cent of the value of agricultural production, in USA $22.8 billion or 16 per cent of agricultural output and in Japan $33.2 billion or 70 per cent of agricultural production by value. Under the WTO rules, the existing deficiency payments to farmers in U.S. - where the government compensates the farmers if market prices fall below target prices - will be replaced by a scheme of fixed grants and government loans for planting which the farmers are allowed to default in the event of bad crops. The subsidies on groundnuts and sugar, however, will continue with the U.S. consumer paying twice as much as the world market price for his sugar.

C.I.F. Costs of Selected Food Imports 1997
Item	Source	Rs. per kg
Rice	India Pakistan Malaysia Vietnam	14.57 13.72 11.99 13.17
Maize	China USA India	9.23 10.24 10.39
Potatoes	Netherlands India U.K	12.07 11.83 12.01
Big Onions	India Pakistan	11.01 10.76
Red Onions	India	19.36
Garlic	China	26.93
Chillies (Dried)	India	44.31
Lentils	India	33.98
Cummin seed	U.A.E	64.75
Fennel seed	India	39.58
Mathe seed	India	20.65
Coriander	India	31.55
Turmeric	India	30.91
Oranges	Pakistan	12.67
Sugar	Mexico Brazil Guatemala Thailand Columbia India	19.79 20.24 19.73 19.13 19.64 19.69
Source - Sri Lanka Customs: External Trade Statistics 1997

Need for Protection
It is virtually impossible for the Sri Lankan farmer to compete with many cheap food imports whose C.l.F. prices are shown in the table. Pursuit of laissez faire policies such as free trade and non-intervention by the State will only hasten the destruction of domestic food production. It is only by protection against cheap imports and support by way of subsidies that domestic food production can be increased and rural employment created. There is no justification for reducing or abolishing even temporarily the import tariff of 35 per cent on foods; in fact, the case of raising it to 50 per cent is strong. Such protection needs to be combined with direct assistance to stimulate production: cheap bank credit, supply of fertilizer, agro-chemicals, and tractors at low prices, efficient marketing facilities with guaranteed prices and expansion of irrigation facilities. This may mean raising the prices for the consumers in the short-term but it is a necessary cost to increase domestic food production and lower the price to the consumer in the long run.

True, we have an obligation to the consumer, but that does not mean he should be pampered; besides, he must be made to make a contribution to the country's development. Domestic food production is seasonal and it is characterized by gluts and shortages; as in periods of glut the consumer benefits while the producer loses, it is only but fair that the consumer should pay a higher price in periods of shortage to compensate the farmers' losses in glut. The policy of importing food to eliminate shortages and keep the consumer happy reduces incentives to domestic farmers and is likely to perpetuate the country's food deficit and aggravate the problem of rural unemployment.

There is some hesitation on the part of the authorities to face the problem squarely. In fact, instead of admitting that imports will nullify all efforts to increase food production, criticisms have been made of farmers - that they are inefficient - and that the seeds they use are lowyielding. Recently, for instance, much publicity was given to the fact that the high cost of local potatoes was due mainly to the poor quality of seed potatoes used.

The fact remains however that the bulk of the seed potatoes imported are from Germany and Netherlands and the Ministry of Agriculture has so far not found fault with the quality of these potatoes.

Why should be shirk the responsibility of finding out why potatoes and other foods are produced at lower cost in India and some other countries without searching for scapegoats? Why should we fear to protect and support our domestic food sector? Why should we be eager to open our doors for foreign food imports when other countries are jealously guarding their farmers against foreign competition?

By Analyst
When the President referred to a lack of knowledge of English among the unemployed graduates they are reported to have queried whether in Korea or Taiwan everybody speaks English. The President's reply was not reported.

The answer is that if the graduates are looking for jobs in the leading professions or in business in the managerial ranks, mere production of a degree certificate is not adequate. The employer has to be satisfied that they are competent in the fields of knowledge they claim to have sepcialised, be it a knowledge of science, history, economics, mathematics as well as the skills necessary to understand today's problems. They must also be able to use today's technology like computers.

How successful have the universities been in imparting analytical capacity in these subjects in Swabasha? Can it be said that they have acquired the same content of knowledge as the graduates in the fifties and sixties who were taught these subjects in English? This is the question that has to be faced and answered by those in charge of tutoring the university students.

Many an employer who wished to recruit an economist, a lawyer or even a doctor would prefer to select one who has competence in English, other things being equal like honesty, integrity. Why? Is it sheer prejudice or is it because they do not consider the two degrees, one in the English medium and the other in Swabasha as equal?

It is of course not the fault of the students. They are the victims of an ill considered change-over in the medium of instruction in universities which some extremists agitated and forced on the authorities although there were no teaching materials in Swabasha.

When after the Meiji Restoration in 1868, the Japanese wanted to acquire modern knowledge in science and technology they sent thousands of students to Germany who acquired such knowledge in German. The Japanese realised that the superiority of the west was based on their knowledge of science and technology and rushed to acquire such knowledge.

This knowledge of science and technology was a creation of the west unlike the traditional philosophy of the east. This knowledge gave power, economic power as well as military power. One of the most backward nations in 16th century Europe was Portugal. But they conquered many Asian lands through their use of guns.

The Japanese realised that if they don't acquire western science and technology they would be subjugated by the western nations. As Afgani, an Indian Muslim leader said in 1882, it was science that had given the power to European imperialists to subjugate the Muslims.

The attempt to acquire this knowledge through Swabasha was a colossal mistake, modern knowledge has exploded. The increase in modern knowledge is fantastic. There is no real possibility of acquiring this explosive growth in modern knowledge except through one of the international languages of science. There was a time in the late 19th century when the language of the Czar's court in Moscow was French.

Having been subjugated by colonial powers for over three hundred years there was a reaction against English in the 1950's. But we carried this reaction too far. However, the middle classes fostered knowledge of English among their forgery by speaking to them in English in their homes. The politicians including those who gave leadership to the Swabasha movement sent their children abroad. The present President is a product of Sorbonne University.

English of course is not necessary for the farmers and manual workers. But the education of the elite must be different if they are to be leaders in the economy and polity.

Horace Mann, an American educationist wrote in 1846 "intelligence is a primary ingredient in the wealth of nations". If we are to question economic growth and wipe out poverty we need to produce an elite which is intelligent, capable and versed in modern knowledge.

We have today a bureaucracy lacking such competence unlike in the past. We have failed to educate our elite properly. Education, particularly university education should be directed to purposefully develop intelligence. Can the present system of university education based on a few textbooks in Swabasha and notes from lecturers, develop the intelligence and analytical skills of undergraduates?

What creates human capital is not the mere accumulation of information, which is what our undergraduates are engaged in. What creates human capital is the application of knowledge to problem solving. It is not the mere accumulation of information or knowledge but its purposeful application in the professions and in business management, that is important.

Human capital is not created by increasing the numbers of graduates who lack such analytical skills.

Changes in technology
As we enter the age of the information super highway we must not confuse information with knowledge. For information to be transformed into knowledge, it must have a unifying principle," to distill and process into an organised whole."

Without imparting those principles, the mere gathering of information serves no purpose. In fact, information can today be retrieved through the internet.

The Time Magazine reports that nearly 60% of schools in U.S.A. are linked to the internet. How many of our universities are so linked and how many undergraduates have been taught to access it?

Technology exists today to teach anyone anything at anytime. But all this knowledge is mainly in English and the technology requires computer literacy. Children and adults will soon be able to dial up a programme on their home television set to learn whatever they want to know, at their own convenience.

More over the inter-active mode on the computer is much more interesting than listening to a dry lecture. These learning programmes will even identify the level of competence of the student and then move him to higher levels. Students can learn any subject, be it history, or economics or medicine.

Presently in the universities, students are fed on a poor diet of a few textbooks in Swabasha and notes from lecturers. This is not university education as understood in the modern academic world. The students are not able to explain ideas from the works of the great masters. They are unable to follow the disputes and controversies between different schools of thought. There are libraries packed with books written in English which are gathering dust. The students not being proficient in English cannot access them.

The award of degrees to students who have been successful in their studies is a universal practice. But the social recognition will depend on the reputation of the university. Our students are so naive as to think that calling an institute a university will make any substantial change. In U.S.A. there are a large number of universities but a degree from the more prestigious like Harvard or Princeton cannot be compared with one from an unknown Mid Western University.

Do our unemployed graduates understand these underlying realities? They no doubt deserve our sympathy as victims of a system foisted upon them by extremists in the 1970s. Should the government continue to turn out ever increasing numbers of such graduates who are frustrated and bitter? Will they not resort to violences?

Isn't it the duty of a responsible government to make the required changes inspite of opposition by a few misguided individuals?

The government must insist on proficiency in English for those aspiring to enter the universities. University education is for those who have the intellectual capacity to benefit from it. There is no doubt that rural students who do not have the facility to study English will be at a disadvantage. But who said life is equal?

We are born with different intelligence and capacity for learning. Unequal incomes and unequal opportunities are a fact of life. They cannot be eradicated in the short term if at all. If the government was to wait till everybody has an equal opportunity to study English, it will have to wait for a very long time, meanwhile producing more and more frustrated graduates who will join the ranks of the unemployed.

The number of jobs that require university graduates is limited. Supply must be limited to the available demand if we do not want to have an army of unemployed and frustrated graduates. Isn't it better to limit the number of those eligible to enter the universities by making English compulsory? At least there is a possibility then of turning out a bitter equipped graduate.

Isn't it better to limit the numbers entering the universities and if funds are available, utilize such funds to adopt modern educational technology and provides better accommodation and facilities for the undergraduates?

How good are the professors
The authority to teach most come from proved scholastic competence in the particular field of study. The status of professor should be conferred only on those who have made some contribution to knowledge by at least producing an original thesis. These professors must exhibit mental vigour, be thorough and competent in their chosen discipline. How many of our university professors qualify to be designated as such? How good are the lecturers? From what we hear there is musch to be desired.

Have our universities provided an environment for learning? We see undergraduates divided into rival factions unleashing violence on each other. In which other university in the world do you get such violent clashes among students? Is such an environment conducive to study?

There is something radically wrong in our universities. Perhaps it is the frustration among the undergraduates who realise that they are engaged in an enterprise which is far from worthwhile and of which they are helpless victims they can't improve university education. It is up to the university authorities to improve the quality of education and maintain a peaceful environment in the universities.

It is those who are in charge who have failed. Victims of oppression and persecution have a right of self defence in the eyes of the law. It may not be necessary to exercise it if the authorities are capable of maintaining law and order on the campuses. Political scientists have long argued that a government that will not or cannot maintain law and order, loses its legitimacy. So does a university Vice Chancellor. Its time to insist that those who cannot or will not govern should make way for others.

As for the students they have to allow their head to rule the heart. They cannot allow their extreme emotions to get out of control. An educated person is a disciplined person. If they lack basic discipline, they don't deserve to be in a university.

It is interesting to compare the scenario in a country like Singapore. As Lee Kuan Yew once said "We have a confirmed oriental background - he who is king can do what he likes. People will ask me "can you do this for me" and assume that I will, because I'm an M.P. I have to say to them "you just can't jump the queue."

Does this sound familiar to men who hold public office? What is the answer given by our public men to such requests? Do they tick off those who ask for undue favours or do they oblige them? This is the difference between Sri Lanka and Singapore.

Singapore example
It was also observed in Singapore that the key to the future was the official dominance given to the English language. In the colonial period of Singapore, Chinese education nurtured either traditional Confucian values, including a blind loyalty to the ruler, or Mao inspired communism. English education inculcated beliefs in law and democracy.

Language was fundamental to Lee Kuan Yew's idea of independence. The separate Chinese university was merged into the English medium one in 1980 - the Chinese language schools were gradually closed. Even when he went to Peking with his foreign minister S. Rajaratnam, he insisted that the proceedings be carried out in English.

Singapore gained from the use of English. She gained access to English dominated international trade and commerce, and it provided a levelling off of the economic balance between the Malays and the Chinese majority.

The attempt to go back to our traditional culture in 1956 caused serious problems with the ethnic and religious minorities. Politicians began to fan pride in race and religion. In India Nehru had fashioned an Indian identity without connotations of religion. Their countrymen were Indian nationals foremost. This took prededence over whatever other ties they might have as Hindus, Muslims, Sikhs or as members of different caste groups.

This view of political identity was largely unchallenged until the rise of the B.J.P. whose power is now waning. Unlike in India, modern Buddhism developed as a political movement which combined Sinhala consciousness with Buddhism, excluding from political identiy every other minority. The "us" versus "they" perception was between the "Sinhala Buddhist" and the others.

This consciousness and its assertiveness led to the nationalistion of the schools ostensibly to further equality of opportunity but really to enhance Sinhala Buddhist culture. But cultural imposition is resented by minorities every where in the world, be they religious or ethnic minorities the idea was to teach the majority community's language, history, literature including the myths and tales forging bonds of a common historical memory.

But in the process, ancient rivalries were revived. History was presented out of context in terms of modern labels, distinctions being drawn between "us" and (Sinhala Buddhist) and "their" (the others) since history is essentially a record of wars.

It is so in so many other countries too. So the ethnic division and the ethnic and religions consciousness was accentuated. It was not religion in any spiritual sense but as labels of identity. In this process state education lost sight of its main purpose of imparting a modern education.

State schools work best where communities are fairly homogeneous and where parents could safely entrust their children to the care of strangers. So we have, instead of a locally based, a community based schools system a state run schools system, administered uniformly by a vast impersonal bureaucracy, through circulars, circulars which do not take notice of local differences.

Did the state school system of education give equal access to education? No, not really.

We could look forward to a future of unlimited progress if we can reform our university education. But there is a catch. Any advance in knowledge creates inequities, among learners and non-learners.

When educational inequality can be traced to unequal resources. The solution would be to equalise resources. But when the inequality is more complex, there is no way in which educational opportunities can be equalised in the short run.

Modern society will reward those who learn to use their minds well; to innovate, to analyse, to plan, imagine, create and explain. Wanting the good life that they see on television, the educated do not want the low level jobs on offer.

Those university graduates who do not want to learn the disciplines which are on demand or who do not want to take the trouble to master them and become proficient in English will have dim prospects. They already know it and they are angry. The government, instead of solving the problem aggravates it by playing to the gallery.

Overseas Realty (Ceylon) Limited, the owners of the Echelon Towers in Colombo, has succeeded in boosting revenue during the first quarter of this year ending September 30, 1998, but has also seen an increase in its operating expenses.

However, operating profit of the company had grown during the quarter under review to Rs.42.7 million from Rs.31.7 million a year earlier.

Although this was insufficient to cover interest expenses and exchange losses, the picture has changed considerably for the better with costs of both accounts coming down substantially from a year earlier.

Interest expenses were down to Rs.49 million during the quarter under review from Rs.104.4 million a year earlier while exchange losses were down to Rs.37.7 million from Rs.116.6 million during the first quarter of the previous financial year.

After accounting for depreciation, Overseas Realty posted a loss of Rs.44.7 million during the period under review, down from Rs.192.5 million a year earlier.

The company's carry forward loss has now increased to Rs.1.7 billion as at September 30, 1998.

The company has been restructured in an effort to minimise its losses. It has an issued share capital of Rs.300.1 million and a preference share capital (non voting) of Rs.4.8 billion.

C.W.Mackie & Co. Ltd. has finalised its capital reorganisation under which a total of Rs.122.2 billion will be infused into the company from the Danish Industrialization Fund for Developing Countries (IFU) and Aarhus Oliefabrik A/S, a Danish company which is its principal shareholder.

In a circular to shareholders, the troubled Mackie said that the private placement of 1.4 million ten rupee shares at a price of Rs.15 per share with the Danish fund has been approved by the directors on November 11.

The share certificate for this placement, subject to the regulatory green light, will be issued within 7 market days of the shareholders approving the placement, the company said.

IFU and Aarhus Oliefabrik A/S are obliged to subscribe up to 10.2 million and 12 million ordinary shares of the company out of 22.15 million ordinary shares offered to existing shareholders under a rights issue.

The two Danish institutions have underwritten this rights issue and the cash infusion with which the C.W. Mackie Group hopes to come out of the woods is assured.

Mahaweli Reach Hotels Limited has maintained turnover during the first half of the current financial year but seen a fall in the trading profit partly compensated by other income.

Turnover during the 6 months under review at Rs.66.8 million was up marginally from Rs.66.5 million. The trading profit of Rs.18 million was down from Rs.22.9 million earned a year earlier.

Other income however of Rs.5.5 million was up from Rs.3.8 million earned a year earlier.

The company's net operating profit of Rs.23.6 million, down from Rs.26.7 million, was inadequate to meet its financial charges and depreciation of Rs.48.3 million.

The result was a loss of Rs.24.8 million, up from a loss of Rs.22.7 million a year earlier.

The company is now carrying forward unappropriated losses of Rs.181.8 million in its books.

Mahaweli has an issued share capital of Rs.188.4 million and a capital reserve of Rs.124 million.