.

Preliminary Central Bank approval received for OTB deal
Rs. 12 bank share an investment opportunity for public

The public will get an opportunity of investing in the new National Trust Bank, the successor to the Overseas Trust Bank (OTB) in Colombo whose business is being purchased by a consortium including John Keells Holdings and the Central Finance Groups, JKH Chairman Ken Balendra said.

Preliminary Central Bank approval for this deal which has been in the pipeline for some time has now been received, Balendra said.

A Rs. 80 million price for the OTB business has been agreed upon and the chief stake holders will be the JKH Group (25%), the Central Finance Group (20%) and the World Bank’s soft loan window, the International Finance Corporation (IFC) which will take 15%.

Balendra said that the balance 40% is to be offered to the public at a price of Rs. 12 per ten-rupee share. It was originally intended to privately place these shares and no difficulty in finding takers was anticipated. The promoters now feel that it would be better to give the public an investment opportunity instead with only a modest two-rupee premium placed on the share.

Very preliminary thinking on how this share issue will be made suggests that investors will have to take a minimum thousand shares instead of hundred as is possible in most initial public offers (IPOs). Hopefully, the issuers will be able to give applicants of up to 10,000 shares their full allotment and then pro-rate allotments for the bigger issues.

No firm decisions on these matters that will probably require the concurrence of the Colombo Stock Exchange and the Securities and Exchange Commission have yet been taken. This is merely the very preliminary thinking on the subject, we understand.

One advantage in such a strategy will to some extent be that it will keep out traders looking for a quick buck, as demonstrated in many recent plantation IPOs when applicants used the names of friends and relatives to increase their share of allotment. While the same malpractice will be possible even if the new bank follows the procedures outlined above, it will necessitate greater cash outlays.

These, nevertheless, are not plans that have been finalised and there is a lot of ground to cover before the final form of any prospective share issue is decided. But it is clear that the promoters intend offering the public an investment opportunity in the bank at a very modest premium.

No quoted bank shares are available on the Colombo stock market for a price as low as Rs. 12. However, they were offered at the IPO stage at par - Rs. 8 in the case of Sampath Bank where the shares are still partly paid.

Akbars top tea export league for fifth year running

Akbar Brothers Group has for the fifth consecutive year emerged as the largest tea exporter of Sri Lanka in the year 1998. According to the Customs Export Statistics, Akbar Brothers Group exported 30.9 million kilograms of tea during 1998 and generated Rs.5.8 billion as foreign exchange earnings to the country.

The second place was secured by Van Rees with a total export s of 26.8 million kilograms and the third place by Unilever Group with a total exports of 21.6 million kilograms.

Among the exporters of the value-added teas in 1998, Akbar Brothers topped the list of exporters of teas in packets with a total of 13.8 million kilograms whilst M.J.F. Group topped the list of exporters of tea in bags with a total of 3 million kilograms.

Tea has been one of the main props of Sri Lankan economy during 1998 in the wake of the East Asian Crisis. The total export earnings from tea amounted to Rs.50 billion. With the recent downturn in tea prices, the tea circles forecast that the year 1999 will be a challenging year for the entire tea industry.

Although the total tea exports have moved up in 1998, the ratio of Sri Lanka’s value-added tea exports to total tea exports has declined. This is a disappointing feature of the performance in 1998.

According to the Tea Trade circles, the policy makers must address this matter before Sri Lanka loses out to other tea exporting countries. India has abolished income tax on profits derived from exports of tea and she has now overtaken Sri Lanka in the exports of value-added teas to the world markets. Indian tea exporters also enjoy enormous advantages under the Rouble-Rupee Agreement negotiated with Russia

"If Sri Lanka is to maintain her competitive position, it is necessary for the government to provide fiscal support and other incentives to the exporters of value-added teas", said a leading exporting company.

Durdans-Indian alliance gives Lanka classy heart centre

The Durdans-Escorts Heart Centre, a strategic alliance between the old established Durdans Hospital in Colombo and Escorts Heart Institute and Research Centre in India, has provided Sri Lanka with what doctors and visitors described as a ''modern and extremely well equipped heart centre."

The new heart centre has a well equipped 10-bed coronary care unit manned by staff trained at Escorts in New Delhi. The recent soft opening of this centre was attended by Dr. Ravi Kasliwal, the eminent cardiologist at the New Delhi Research Centre.

A spokesman for Durdans said that Sri Lanka too was affected with heart disease which is the number one killer in the world. The new heart centre is the result of their desire to provide Sri Lankans with a specialised unit for cardiac investigation and treatment aimed at reducing the incidence of heart attacks.

It was in this context that they entered into a strategic alliance with Escorts of India which has acquired a reputation for specialisation in the prevention and treatment of heart disease as well as research on the subject.

Escorts is affiliated to the New York University Medical Centre which is also reputed as a centre of excellence for prevention and treatment of heart disease.

The spokesman said that these contacts facilitate the centre in Colombo keeping abreast of global developments in medical technology and research and also gives them access to the specialised services of eminent cardiac surgeons and cardiologists if the need arises.

Durdans noted that Dr. Naresh Trehan the world renowned cardiac surgeon who has done about 14,000 open heart surgery cases is the head of Escorts in New Delhi.

The spokesman said that they now provide total and intensive cardiac treatment at Durdans and have installed ultra modern equipment covering diagnostic, operational and integrated health care units capable of dealing with every aspect of non-invasive cardiac treatment.

"The second phase of development at the hospital scheduled for the year 2000 will provide for invasive cardiac care treatment as well", a Durdans news release said.

The Cardiac Investigation Centre at Durdans has the following facilities: Electro Cardiography (ECG); Echo Cardiography/Colour Doppler; Echo Cardiography; Vascular Doppler; Treatment Testing; Stress Echo Cardography and pulmonary Function Testing (including Transfer factor).

Sri Lanka shares did well in last quarter of 1998

The Colombo share market which is now on a downturn had a good last quarter ending December 31, 1998 with the All Share Price Index gaining 98.2 points (19.6%) and the Sensitive Price Index gaining 212.4 points (29.8%) to close the quarter at 597.3 points and 923.0 points respectively, the Colombo Stock Exchange said in a report.

The Colombo Stock Exchange said in its quarterly facts and figures report that the turnover in the quarter ending December 31, 1998 at Rs.3.2 billion was down from Rs.3.8 billion a year earlier. The average daily turnover dipped to Rs.52.5 million from Rs.60.3 million a year earlier.

The old Sensitive Price Index has now been replaced by the Milanka Price Index (MPI) which takes size and liquidity of various counters into account. Milanka has been devised with the base index set at 1000 points as at December 31, 1998.

During the quarter under review, foreign investors were net sellers in October and December with net sales of Rs.64.8 million and Rs.83.1 million respectively recorded. However, there was a net inflow of Rs.152.2 million in November giving the quarter a net inflow of Rs.4.2 million. A year earlier, foreigners were net sellers with net sales of Rs.595.8 million.

Interim results released by listed companies for the quarter ended September 30, 1998 recorded a 13% decline in profits. But 132 companies or 61% of those reporting recorded a growth in profits on a cumulative basis up to this quarter over the same period in 1997.

CSE said that noteworthy profit improvements were seen in oil palm companies, services and beverage food and tobacco sectors.

With Central Banks around the world following the US move to reduce interest rates, most developed stock markets performed well during the quarter. This made equities relatively more attractive to fixed income securities.

"In that context, most stock markets experienced an inflow of funds during the quarter," the report said.

In New York, the Dow Jones index appreciated 17% during the quarter while the London FTSE index closed the quarter 16% up from its opening. Tokyo’s benchmark NIKKEI moved up only by 3%.

In East Asia, Hong Kong appreciated 27% and Kuala Lumpur rose nearly 56% during the period. In South Asia, Bombay shed 2% while Karachi was down 15%. Colombo did well in comparison by moving up 19%, CSE said.

Morison’s amend articles to utilise extended credit

J.L. Morison Son & Jones (Ceylon) Limited has successfully negotiated additional borrowing facilities from its bankers to expand the business activities of the company, shareholders have been told.

However, utilisation of these facilities require current restrictions on the borrowing powers of the directors to be expanded and this is being done by amending the articles of association of the company. An extraordinary general meeting (EGM) of the company has been summoned for this purpose on Feb. 19.

Currently, the directors are permitted by the existing articles to borrow up to 20 times the total of the issued capital of the company plus the balance lying to the credit of the share premium account.

The directors wish to enhance this to 45 times the issued capital plus the share premium balance and the EGM will to consider a special resolution to this effect amending article 106 of the company’s present articles of association, shareholders have been told in the notice summoning the meeting.

Richard Pieris and Asia Capital now on each other’s boards

Richard Pieris & Co. Ltd. and Asia Capital Ltd. who have made strategic investments in each other have each nominated two directors to sit on the board of the other company.

The Colombo Stock Exchange (CSE) has been notified that Mr. Ian Pieris, a senior director of Richard Pieris & Co. Ltd. and Mr. Lalith Wijeratne, its financial controller, will sit on the Asia Capital board. These appointments have been made with effect from Jan. 22.

Asia Capital’s nominees for the Richard Pieris board are its Chairman, Mr. Nigel D.C. Austin and Mr. Dirk Flamer-Caldera. These appointments are effective from Jan. 8.

Asia Capital which recently acquired a substantial slice of Asian Hotels Corporation Ltd. , the owners of the Hotel Lanka Oberoi, has nominated Mr. Austin to sit on the board of Asian Hotels and he has been appointed a director of that company.

Asian Hotels are also the controlling shareholder of Hotel Services (Ceylon) Ltd., the owners of the Hotel Ceylon Intercontinental and a major stake holder of Trans Asia Hotels Ltd.

The CSE also announced that two new directors have been appointed to Galadari Hotels (Lanka) Ltd. with effect from January 21. They are Mr. G. Jinadasa and Mr. Q.M.Y. Aquil.

CF Venture Fund Ltd. has appointed Mr. Samantha Rajapakse a director of the company with effect from January 21 while Walker & Greig Ltd. has appointed Mr. S.S. Deheragoda a director from January 6, CSE said.

Dr. Nimal Sandaratne who retired from the National Development Bank at the end of his term in office has also resigned from the chairmanship and directorate of the NDB subsidiary, Capital Development & Investment Co. Ltd. (CDIC), with effect from January 1.

Mrs. G.N.M. Alles who retired recently from the position of Deputy General Manager of the Bank of Ceylon has quit the board of Lanka Cement Ltd. with effect from December 25 while Mr. A.K.L. Jayewardene has retired from the board of Asian Cotton Mills Ltd. with effect from December 15, CSE said.

Textile and garments exports and the World Market

by Kanes
As textiles and garments constitute the leading export of Sri Lanka - 49 per cent of total exports in 1997 - a study of the world market for textiles and apparel and the major problems the exporters are likely to face in the coming years is timely. Although textiles and garments are grouped as one item for statistical purposes, Sri Lanka exports very little of textiles; thus it is mainly garments we are concerned about. Garments or clothing exports are one of the fastest growing products in world trade. They increased at an average annual rate of 17 per cent in 1985-1990 and 7 per cent in 1990-1994. World trade in clothing has increased from $42 billion in 1980 to $158 billion in 1995. Asia’s share in world trade of clothing in 1995 was 41 per cent, Europe’s 28 per cent and Latin America’s 5 per cent. The leading exporters in 1980 were Hong Kong, Italy, South Korea, Germany and Taiwan, but by 1995 the picture had somewhat changed and the leading exporters were China, Italy, Hong Kong, Germany and US. The importance of European countries as exporters of clothing is declining while that of Asian developing countries is increasing.

Pattern of Exports
The share of clothing of Italy (second largest exporter), Germany, France, UK and Netherlands has fallen from 31 per cent of world exports in 1980 to 22 per cent in 1995. Perhaps the only industrial country which increased its share of exports is USA - from 3.1 to 4.2 per cent in this period. Asian countries generally have had a higher export growth rate than Europe and consequently they have increased their share of world clothing trade from 34 per cent in 1980 to 41 per cent in 1995. China has become the world’s largest exporter of clothing, accounting for 15.2 per cent of the total in 1995; together with Hong Kong, it accounts for 21 per cent or over one-fifth of world clothing exports. It is relevant to note that while China increased its share of clothing exports from 4 per cent in 1980 to 15.1 per cent in 1995, Hong Kong’s share has declined from 11.5 per cent to 6.0 per cent - or from the position of the leading world exporters in 1980 to the third leading exporter in 1995.

Most of the Asian countries, apart from China increased their share of the world clothing market in the 15 years 1980-1995. The Asian countries which lost their share of the world market are the four newly industrialized economies- Hong Kong as mentioned earlier, South Korea, Taiwan and Singapore. This has taken place mainly because of the rising labour costs in the four NICs and their consequent inability to compete with low labour cost exporters.

Clothing exports play a vital part in the economies of most Asian countries. They constitute over 50 per cent of the exports of Bangladesh and Mauritius, nearly 50 per cent of Sri Lanka’s one-third of Hong Kong’s, one-fifth of China’s and Pakistan’s, 14 per cent of India’s and 10 per cent of Thailand’s. They are of minor importance in South Korea, Taiwan and Singapore where they have more than halved since 1980 and constitute less than 5 per cent of their total exports. A word of caution is needed regarding the exports of Hong Kong and Singapore because of their entreport trade and their export figures include their domestic exports as well as re-exports. Actually, the value of re-exports exceed that of domestic exports in both; thus, in Hong Kong re-exports formed 8.5 of world exports as compared to 6.0 of domestic exports and in Singapore re-exports were 0.6 per cent and domestic exports 0.5 of world exports in 1994. It will be noticed that Sri Lanka has raised its share of world clothing exports from $109 million or 0.3 per cent in 1980 to $1474 million or 1.1 per cent in 1994.

Imports
The greater part of the world trade in textiles and garments is regulated by the Muiti Fibre Arrangement (MFA) under which the importing developed countries negotiate bilateral agreements with exporting developing countries to restrict the volume of exports of specific products in order to protect the domestic producers in the developed countries. These products are defined clearly in detail and there are for example about 148 product categories which are monitored by the USA authorities. The MFA is to be phased out by 2005: in the first phase from 1995 to 1997, at least 16 per cent of the trade is to be integrated into international trade, i.e. quotas will be removed; in the second phase 1998-2001, about another 17 per cent of the trade will have restrictions removed; in the third phase 2002-2004 restrictions will be removed on another 18 per cent of the trade; and in 2005 restrictions will be removed on the balance 49 per cent and the entire trade will be liberalized. During these phases, the quota growth rate will also be increased from 16 per cent in the first phase to 25 per cent in the second and 27 per cent in the third. Importing countries have published the list of products which will be freed from quotas in these stages. The most sensitive products have been postponed until 2005.

Garments are normally produced by locally owned factories for foreign buyers - large retailers, bonded marketers and trading companies - who design, supply the specifications and order the goods. Some of the retailers are well known firms such as Wal-Mart, Sears, Roebuck, J.C. Penny and Marks & Spencer; they do the research, designs, sales and marketing while the factories do only the production. Many retailers have their own brand names which compete with national brands. Retailers are so strong that their share of the US retail market is estimated to rise from 34 per cent in 1991 to 60 per cent in 2000. Rising labour costs in the Asian NICs resulted in triangular manufacturing where foreign buyers place orders with the NICs with whom they had a long relationship, who in turn shift a part or all of their production to affiliated factories in low cost countries like Sri Lanka who ship the finished goods direct to foreign buyers using their allocated quota. The low cost countries also get orders from foreign buyers direct in addition to triangular production for NIC firms. Sri Lanka factories for instance, manufacture garments on direct orders from overseas buyers while those factories here owned by foreigners (Hong Kong, South Korea, Singapore, etc.,) produce to fulfil orders received by their head offices in their respective countries.

The USA and the European Union together purchase more than 70 per cent of the world clothing imports; the share of the USA is about 26 per cent and that of European Union about 45 per cent. Although the European Union is the larger market, it is the USA which purchases the larger share of Asia’s exports. In 1995 Asia’s exports to North America’s formed 16.8 per cent of world exports while exports to the European Union were 11.6 per cent. While Asia’s exports to North America have risen from 14.8 per cent of world exports in 1980 to 16.8 per cent in 1995, Asia’s exports to the European Union have fallen from 14.4 per cent to 11.6 per cent in the same period. An interesting feature is the increase in this period of intra-Asian exports from 4.3 per cent to 12.8 per cent or trebling of mutual trade.

USA is also the largest market for Sri Lanka’s garments. In 1996, textile and apparel imports of USA from Sri Lanka amounted to $1139 million or 2.5 per cent of her total imports of textiles and apparel.

The largest suppliers of textile and clothing to the US market, are China, Mexico, Hong Kong, Taiwan and South Korea. An interesting development is that while the shares of China, Hong Kong, Taiwan and South Korea in the US market have dropped between 1993 and 1996, the share of Mexico has risen from 3.8 per cent to 9.2 per cent. Imports from Mexico to the US are increasing rapidly because of the North American Free Trade Association (NAFTA) under which apparel assembled in Mexico from fabric made and cut in US can enter US free of duty and free of quota. This explains why imports from Mexico have increased at the expense of South Korea and Taiwan and others. The other countries which have increased their shares in the US market are India, Indonesia, Bangladesh, Sri Lanka, Pakistan and Macao. Sri Lanka increased its share marginally from 2.3 per cent in 1993 to 2.5 per cent in 1996. The share of China and Hong Kong in the US market is 29.2 per cent and in the European Union 14.3 per cent.

Composition of US Imports
The largest items of clothing imports of USA are cotton men’s trousers, cotton men’s knit shirts, cotton women’s trousers, cotton men’s non-knit shirts, cotton women’s knit shirts, cotton other apparel and man-made fibre (MMF) women’s coats; these seven items comprised about a third of USA imports of MFA clothing and textile products in 1996 - or $45,933 million. Sri Lanka’s share in the US market was significantly in the following items:- Cotton skirts 7.7%, cotton women’s coats 7.6%, cotton women’s non-knit shirts 5.9%, cotton other apparel 5.3%, MMF dresses 4.9%, MMF skirts 4.5% and MMF women’s knit shirts 4.2%. The other items accounted for less than 4 per cent each. There were only two MFA product categories where Sri Lanka was among the three largest suppliers: cotton skirts where she was the third largest supplier after Hong Kong and India and cotton women’s coats where she was also the third largest supplier behind China and Hong Kong.

There is a wide variation of the import prices in the US market. Hong Kong products for instance are more expensive than those from China, India and Bangladesh partly because of Hong Kong’s high labour costs and partly because in order to overcome the problem of high labour costs it has moved up to produce high quality or specialized products which are more expensive. Thus, although the volume of exports of clothing in Hong Kong has declined, the value has risen because of more expensive quality goods with improved finishing and superior designing by foreign experts. South Korea and Taiwan are proceeding along similar lines as high labour costs make their popular clothing manufactures uncompetitive.

Apparel labour costs are highest in developed countries and that is why they are importing much of their requirements from low wage Asian developing countries. In Japan for instance, apparel labour cost per hour in 1993 was $10.64. Labour costs in the Asian NIE have risen in recent years to the level of $3-$5 per hour. In Malaysia labour costs are $0.77 cts and in Thailand $0.71. The countries where labour costs are between $0.25 and $0.35 are Sri Lanka, Indonesia, India, Pakistan and China. Bangladesh has the lowest - $0.16 per hour. Sri Lanka’s hourly labour costs in 1993 was $0.35 which was higher than Indonesia’s $0.28 India’s $0.27, Pakistan’s $0.27, China’s $0.25 and Bangladesh’s $0.16. Actually, Sri Lankan labour costs were virtually double those in Bangladesh. Thus, Sri Lanka may not be able to compete with a number of Asian countries on cheap labour alone. This underlines the need for Sri Lanka to: (a) strengthen its links with the major foreign buyers and meeting their full requirements; (b) improving productivity to keep production costs down; (c) moving up the production ladder to produce specialized quality products like Hong Kong and even develop local brand names; (d) investing in backward linkage industries for manufacturing quality textiles and fibre which are now being imported as inputs for garments exports and; (e) linking technical training with the emerging requirements of the labour market in textiles and garment industries.

b
Educational Reforms - Do they tackle the real problems?

by Analyst
Reforms in education has been in vogue not only in Sri Lanka but in many countries of the world. Our educational standards are low and falling - the drop out rates are high and rising. Even those who complete schooling are only semi-literate and hardly numerate.

Too many students leave school with inadequate knowledge and skills. They are unable to obtain employment, nor are they able to adjust to society. The schools are unable to teach good behaviour and ragging has spread from the universities to the schools - a form of torture indeed.

School and the community
The proposed educational reforms are tackling only the superficial problems and not the fundamental causes of the educational impasse. In most countries schools form an integral part of the community. Reforms in other countries have sought to get away from state domination of schools and tended to vest them with the community.

Our village schools should be part of the community, owned and managed by the representatives of the community. Presently the schools are owned by the central government and managed by a monolithic Ministry of Education.

In other countries schools are conferred a lot of autonomy and the governing bodies of schools draw up their own budgets and implement them. They recruit the teachers and see that their decisions are implemented by the principal. Even if the state provides the money, there is no reason why each school should not be given the authority to draw up and implement their own budget within the framework of some general guidelines laid down by the ministry.

What makes a good school
What are the good schools today? They are the prestigious schools in Colombo and the major towns. Why are they prestigious and why is the rush by parents to admit their children to these schools? These schools suffer less from the dead hand of the Ministry of Education. They have their own governing bodies. They are assisted by the state through grants.

These schools have developed their own ethos over many decades. These schools have their own religious philosophy although they are unable to develop an educational philosophy of their own owing to the bureaucratic control of the Ministry of Education. These schools have been able to develop their own distinctive ethos because they were able to recruit and retain dedicated teachers who also accepted their religious and educational philosophy.

The Ministry of Education has sought to create mischief even in these schools by placing teachers who do not go along with the religious philosophy of these schools. Unless a school is staffed by teachers who are committed to the schools religious philosophy the notion of a distinctive ethos is purely rhetorical. As Peter Drucker, the famous Management guru has written "Only a clear, focused and common mission can hold any organisation together and enable it to produce results".

If our prestigious schools are grappling with the Ministry of Education to maintain their distinctive ethos, the large bulk of state schools have no chance at all of developing a distinctive ethos, simply because the staff are transferred periodically and incoming teachers may not have the same orientation or commitment.

Teaching in government schools has never been a vocation but purely an occupation and many of the teachers do not have any job satisfaction. They merely go through the motions of teaching with no commitment to stay in the profession. They have entered the teaching profession having failed to obtain any other job. They are often on the look out for alternative jobs which pay more. Such people are a drag in any organisation. What good can they do to any school?

The so-called Educational Reforms have not tackled this problem which is the root cause of the chaos in our schools. These reforms have accepted the present form of school organisation without question. They have also accepted the kind of people who should staff the schools and undertake the teaching function. They have also accepted the present system of recruitment and promotion to the posts of principals.

Good teachers are not necessarily good head teachers or principals just as good doctors are not necessarily good administrators of hospitals. The present system takes the best teachers out of the classrooms and leaves the less effective there for life. Promotion of teachers should not normally be into management but instead to the status of consultant-teachers like the consultant doctors in the medical profession.

The management of the school should be vested in an administrator who need not be a teacher at all. There should be a professional manager for the school and the head-teacher should work in partnership with him.

It would seem that the state schools are saddled with a large number of ineffective heads or principals on the one hand and ineffective teachers on the other. How can any educational reform work without getting rid of such inefficient principals and incompetent teachers?

All teachers as well as principals or head teachers should be on contract say for 3-5 years and their contracts should only be renewed if their performance is satisfactory and the decision should be taken not by bureaucrats in the Ministry of Education but by the governing bodies of the school, governing bodies which need to be set up for every state school.

The removal of inefficient heads and incompetent classroom teachers would make the most notable contribution to the improvement of education. Most teachers and even some principals have been political appointments. The contracts of head masters should be renewed by the governing bodies and the contracts of teachers renewed only on the advice of the head teachers. Without such radical action there is no hope of improving a politicised service.

Coping with the world
Most young boys and girls increasingly realise that schools should teach what is useful for them when they enter jobs or worldly life. But most teachers have entered the profession of teaching straight from university or secondary school. They do not bring with them any other experience of life.

If students are to be prepared genuinely and usefully for the world of work, they must be exposed to men and women who have such experience. It is useful to allow part-time teachers who are skilled as carpenters, fitters, machinists, professional photographers etc; to teach vocational subjects in the schools.

The local community will know best how to obtain the services of such persons. The students themselves should be taken on visits to factories, farms etc; so that they begin to appreciate the world of work, not the work done in the service industries like hotels or banks and insurance.

The British Educational Reforms Act of 1988 states that schools are required to help prepare pupils for the opportunities, responsibilities and experiences of adult life.

Moral values
Perhaps the biggest problem in our schools is how to educate the young in moral values. Being a plural society it is necessary to ensure that people with different religious and ethical values, languages and cultural traditions can live together in harmony. Perhaps what we need is bilingualism. The first language is designated as the mother toongue. But it should be left to the parents to choose and need not be determined by whether they are Sinhalese or Tamil.

It is the language that connects the family, the group and the historical traditions that underlie them. But we need a language to learn to live together. Sinhalese would have been the ideal to cement the communities together. If not for the Sinhala only Act which sought to force Sinhala down the throats of the Tamils, Sinhala would have played this role.

The next option is to insist on Sinhalese and Tamils learning each other’s languages at least to understand the spoken word. We therefore need, not two but three languages, the last being English. But English is necessary only for a minority of students who will go on to university education although it has to be introduced at the secondary level.

English should connect the individual with modern knowledge and technology if the student goes on to higher education. The large majority of pupils will not need it. They should be able to communicate with the other communities in Tamil or Sinhala depending on which is their first language and the link language.

Religious Education
There is general agreement that religious education, particularly Buddhist religious education has not been successful. The ragging and indiscipline the show that moral and religious education has not produced as results. There seems to be much confusion about the aims of religious education. Is it only to impart moral and ethical values rather than understand and acquire religious beliefs and practices.

It is no doubt essential to equip young people with moral values and a moral code to protect them from the social evils of drugs, promiscuous sex and crime, if not to push them into being upright and happy. While many people see a close link between the moral and the religious, with the former as being derived from the latter, there are many others who think that a moral code without religious belief is tenable.

Moral values are based differently in different religions. Each religion will want to maintain its distinct identity and ground the students in their culture and faith or beliefs as well. Each religion claims to the truth and it is not possible to gloss over their differences by seeking to impart a common moral or ethical system.

It would seem to be better to accept the fact that religious education to be effective must go beyond the teaching of moral values. The advantage of the denominational schools which we had prior to their take-over by the state was that they could impart a distinctive religious and moral ethos. Such religious schools could assert their distinctive link between religion and morality.

The school and the home should transmit the same moral and religious beliefs. The school would then sustain the same religious and moral convictions. Would it not be better to go back to religious schools? This proposal is vulnerable to the argument that religious schools are socially divisible. But the divisions already exist in society and religious schools need not be more divisive or injurious than it already is. The condition for these schools should be that each religious group teaches tolerance and respect for other religions.

The problem is what to do with state schools? How are they to be handed over to the community? The problem is not difficult in the case of village schools. They could be managed by a village governing board and run like religious schools reflecting the religious values of the community.

The problem arises in the state schools in the urban areas where there is no homogeneous community. In these areas there are several communities living side by side, all sending their children to the same school. Such schools may have to continue the present system of teaching all the religions.

If the religious communities are free to set up their own schools with state aid, then the parents will be offered a choice between state schools and religious schools. But the state must insist on tolerance and respect for other religions. While religious schools can teach that morality based on each religion takes a certain form, other forms of morality based on different religious beliefs should be taught as equally valid.

Religion and moral education in particular should be taught by example and not merely by study. This is where the state schools have failed. There is no method of finding out whether those who impart moral and religious education are suitable for doing so.

Learning is Understanding
The purpose of education is for pupils to understand the various disciplines they study not to memorise a text or lecture notes and regurgitate them at an examination. Understanding means the student should be able to apply the knowledge he has acquired, apply the concepts, facts and skills in new situations where they are appropriate.

Unless students can apply what they have learnt in school, there is no evidence that they have understood. The bitter truth is that there is no evidence that our university graduates or students leaving school have any understanding of the subjects or disciplines they have learnt. Given situations in which they must apply their knowledge obtained in school or university they do not know what to do.

Our children particularly from the rural areas enter school with ideas transmitted from their parents. Their parents have conceptions of the world and of life which are traditional. These ideas are often wrong or misleading in the light of modern science and current knowledge.

It is not the rational philosophic aspects of Buddhist thought but the mixture of practices, inherited over the years and which are at variance with the core of Buddhist thought that dominate their thoughts and feelings. Superstitious ideas and occult beliefs guide their day to day activities. Villagers still resort to "bali" and "thovil" to cure diseases particularly mental diseases and psychological problems. Even those leaving school and university after studying modern science, still resort to charms "manthras" and fortune-telling.

Some children are looked upon as bringing bad luck and are given away for adoption or sent away to the temple. Life continues to be based on astrology and auspicious times. In spite of teaching modern science in the schools and universities, the students continue to hold a superstitious world view and negative attitudes to life.

The large number of suicides, particularly among the young show what a defeatist and negative attitude to life they hold in spite of education. The only way to replace these negativist patterns of thought is to sand them off and painstakingly construct new ones.

All are born with tendencies to violence. It is the function of education and civilisation to tame these feelings and help the young to suppress them and keep them under subjection. Our system of education has failed to tame these instincts as seen by the violence and ragging in our universities. It seems that the traditional values which they would have inculcated from their parents and from the village society have been eroded but not replaced by a new set of modern values.

The attitude to the state as a benevolent provider has only strengthened the paternalist state. The university graduates who are unemployed look to the state to give them jobs. But the state saddled with an expensive war, does not have the funds to invest and create job opportunities.

If they learnt anything of economics in the universities they should know that a government already committed to a welfare state and free education, free health etc. cannot spend billions on a long and costly war without much negative fall out on the economy.

Consider the problems in the transport sector. The analysis of the problem merely requiries an understanding of micro-economics. We hardly read or hear any informed analysis or policy recommendations.

Consider the politics of our country. Have any students of political science sought to explain what is wrong with our state and political system? How did we reach the present state where the rule of law has collapsed? Have the universities taught the students the thoughts of the great political philosophers from Aristotle and Plato to Loche, Bentham, Marx etc? Have they been taught the idea of freedom and the conditions under which freedom can be preserved? How did the people, an educated populace come to have such faith in politicians?

The Nobel Prize winner James Buchanan explained how politicians behave in the "Theory of Public Choice". Any student who has studied the works of the great political philosophers would understand the need for checks and balances. Institutions have to be built up, power must be restricted.

Variety of Intelligence
People have multiple forms of intelligence. But our community understands only the logical, mathematical form of intelligence and the linguistic ability which stresses verbal thinking. The students who excel in reading and writing are the bright ones who go on to universities. Others are considered dumb.

But there are other forms of intelligence like the spatial visualisation which helps produce architects, engineers, painters etc. There is musical intelligence. There is the intelligence of the naturalists which is valued by biologists.

Modern society requires all sorts of people to fill a variety of jobs and occupations. There are graphic artists, designers, which require artistic ability. There is the aesthetic ability which is also a form of intelligence exhibited by dancers, athletes, craftsmen etc.

There are other forms of personal intelligence - the interpersonal intelligence that recognizes how to understand other people, displayed by sales people, politicians etc. To foster these kinds of intelligence we need far-reaching changes in our system of education.

We don’t have the variety of schools or teaching to take note of the differences in the abilities of the children and to develop their different types of intelligence. It’s necessary to co-opt educational experts from abroad to overhaul our education.

JKH will not invest in Ceylon Tobacco

John Keells Holdings Chairman Ken Balendra’s appointment last week to the board of directors of the Ceylon Tobacco Co. Ltd. (CTC) does not indicate any interest on the part of JKH in buying into the equity of CTC, Balendra said.

'They’ve been asking me to join their board for some time and I felt that it would be mutually beneficial," Balendra said discounting any possible JKH investment in CTC.

The British American Tobacco Company (BAT) owns nearly 90% of CTC equity and the balance shares are widely spread. Unless BAT wishes to divest, no sizable equity stake will be available to any investor, however interested.

''It will be useful for me to pass on how they think to our people and they too can perhaps learn from our experience," Balendra said.

In a news release issued after his appointment to the company’s board, CTC noted that Balendra, as chairman and CEO of JKH, heads a conglomerate comprising over sixty diverse subsidiaries and associates with the listed companies of the group accounting for over 12% of the market capitalisation of the Colombo Stock Exchange.

Outside the JKH Group, Balendra is also a director of Union Assurance Ltd. in which JKH invested at start-up owing to the insurance connections of its Whittalls acquisition and United Motors whose shares were acquired by JKH on the secondary market.

Well informed business circles said that there is a likelihood of CTC divesting itself of its majority interest in CTC Eagle Insurance Co. Ltd., a quoted subsidiary, probably to the National Development Bank which already has a considerable holding in CTC Eagle. This is consistent with BAT globally getting out of financial services and concentrating on its core tobacco business.

"Any development on that score is down the road," sources said.

The CTC board now comprises Lt. Gen. Dennis Perera (non-executive chairman), Messrs. Gottfried Thoma (MD/CEO), J.D. Bandaranayake, Chandra Jayaratne, Vijaya Malalasekera, J.S. Mather, J.R. Patrick, B.T. Kurian and K. Balendra.

DFCC invests in Nil Kamal Eswaan joint venture

Recently, DFCC Bank raised US$ 65 million in floating rate notes from the international market to help promote Sri Lanka’s domestic corporate debt market. The money is to be used to purchase tradable corporate debt issued by medium and large scale enterprises. The first such investment by DFCC was finalized last Thursday for Nilkamal Easwaran Plastics Pvt. Ltd., a joint venture between Nilkamal Plastics Ltd. (India) and Easwaran Bros. (Sri Lanka). The company was floated for the manufacture of moulded plastic furniture. The money which amounts to Rs 85 million in redeemable debentures will be used to finance the machinery and the working capital requirements of the project.

Nilkamal Plastics Ltd. (NPL) is a public quoted company listed on the Bombay stock exchange. In India NPL is a leading manufacture of plastic injection moulded furniture and crates. It has five plants spread around India totaling a capacity of 10 million chairs a year. Easwaran Brothers, a reputed business entity here, has been the long-time agent and distributor for Nilkamal in Sri Lanka. The association of the two companies will now be consolidated with this joint venture.

This deal also reflected the growing relationship between DFCC Bank and Commercial Bank of Ceylon, two blue chip corporates in the banking sector who forged a strategic alliance two years ago. Commercial Bank acted as the trustee for the deal. The two banks have plans to work together on the debt market programme.

The joint venture company, Nilkamal Easwaran Plastics (Pvt.) Ltd. with a holding of 76% By Nilkamal of India and 24% by Easwaran Bros has given an undertaking to obtain a listing for the debentures on the Colombo stock exchange, eighteen months from the date of the first subscription

C.W. Macke finalises cash infusion plans

C.W. Mackie & Co. Ltd. has circularised shareholders setting out details under which the company plans to raise Rs.265.7 million by way of a rights issue of its ordinary ten rupee shares at a premium price of Rs.12 per share.

Shareholders are entitled to 8 new ordinary shares for every 5 they already hold.

The circular dated February 1, informs shareholders that Mackies’ shares were last traded on the stock exchange at a price of Rs.8 per share on January 20.

Mackies are assured of raising the capital sought as their principal shareholder, Aar