.

NTB allotments made but taxman non-committal

Allotments on the Nations Trust Bank share issue which attracted a flood of applicants who pumped Rs. 1.2 billion chasing 19.5 million ten-rupee shares at a price of Rs. 12 each have been completed on March 30, a spokesman for Waldock Mackenzie and Co. Ltd. who handled the initial public offer said.

"The letters of allotment and the refund cheques have already gone out," Mr. Ralph Lanerolle of Waldocks said.

But whether individual investors who have bought into this issue and who hold their shares for one year will be entitled to investment relief remains an open question with the Inland Revenue Department non-committal.

The 1998 budget concession of allowing investment relief to listed companies issuing new shares was extended up to March 31, 1999, by last November's budget. The company had a provisional letter of listing from the Colombo Stock Exchange and completed allotments before the March 31 deadline.

But trading in the shares will begin only in April. The question now is whether the company is "listed" before the shares are traded. There are arguments for both sides but investors say it is a non-issue because they cannot in any case trade their shares for a year if they are to be entitled to the investment relief.

Some very big applications, including by the underwriters, chased the shares. The underwriters who get preferred allotments did best with the Ayojana and the Himalayan Funds getting a million shares each and Carson's associates, Ceylon Guardian Investments and Ceylon Investments together getting 1.2 million shares.

Other big applicants included the Employees Trust Fund, the People's Bank and the Ceybank Unit Trust. There were 6,500 relatively small investors with applications for quantities of under a thousand shares. They are getting a preferential allotment on a bottom weighted sliding scale under which applicants for 1,000 shares get 70% and 10,000 shares 15%. Applications had to be in thousand share parcels and in-betweens get allotments between these two parameters.

All other applicants excluding the underwriters who got preferences get 13.4% of their applications. There were about 40 applications for 500,000 to 1 million shares each by high net worth individuals applying for between 500,000 to 1 million shares each.

Rental income erases Collettes trading losses

Collettes Limited have reported a trading loss of Rs.5.7 million during the first 9 months of the current financial year but made good this loss with other income of Rs.8.5 million, provisional figures now with shareholders said.

The company had seen turnover decline to Rs.0.75 million from Rs.4.5 million a year earlier while the trading loss grew to Rs.5.7 million from a loss of Rs.3.8 million during the comparable period the previous year.

Much of Collettes other income is earned from rentals on its property in a prime Borella location. This enabled an operating pre-tax profit of Rs.2.8 million for the period under review, down from Rs.5.4 million a year earlier.

As the company carried forward losses of Rs.36 million, current financial year earnings enabled their reduction to Rs.33.3 millions at December 31, 1998.

Collettes has an issued share capital of Rs.2 million, a capital reserve of Rs.155.6 million and net current liabilities of Rs.33.1 million in its books.

Bad debt provisions hurt LB Finance

Provision for bad and doubtful debts have eroded over half the profit earned by L.B. Finance Limited for the year ended December 31, 1998 according to a financial statement now with shareholders. A further charge against reserves to comply with Central Bank requirements had aggravated the position.

The company which had a profit before provisions of Rs.54.8 million, down from Rs.60.6 million a year earlier, have provided Rs.35.3 million for bad and doubtful debts during the year under review. This compared with provisions of Rs.20.4 million on this account a year earlier and left L.B. Finance with a profit of Rs.19.6 million for 1998, down from Rs.40.3 million a year earlier.

In addition to the provision of Rs.35.3 million on account of bad debts made in the profit and loss account, a further sum of Rs.38 million has been charged against reserves in order to comply with Central Bank regulations although the management considers this amount as recoverable.

As a result of this transfer, the company's reserves now stands at a negative Rs.17.4 million. L.B. Finance which has an issued capital of Rs.135 million have shareholders funds totalling Rs.117.6 million in its balance sheet as at December 31, 1998.

The Banana War

By Kanes
The European Union grants preferential market access, under its banana import regime introduced in 1993, to banana exports from the former colonies of European powers in Africa, the Caribbean and the Pacific described as ACP countries. This is in accordance with the Lorne Convention between the European Union and the ACP countries under which nearly 1 million tonnes of bananas are permitted from the former European colonies under preferential terms. The European Union, in addition, imports 'dollar bananas' from Central and South America, but they are required to pay tariff and are further restricted to a quota of about 2.35 million tonnes a year. The banana war is about the differential treatment given to bananas: the United States and Latin American banana exporting countries - Ecuador, Guatemala, Honduras and Mexico - have been protesting for over five years against the preferential entry given by the European Union to ACP bananas.

Both the World Trade Organization and its predecessor have ruled against the European Union's banana regime as discriminatory. When the WTO gave its ruling in September 1997, the European Union pleaded for a reasonable period to time - until January 1, 1999 - because of the complexity of the issue. First, it had to strike a balance between the obligations under two international agreements - the WTO and Lorne Convention; second, any changes in the import regime requires complex legislative processes involving the European Community, European Parliament and the Council of the European Union; third, it is obliged to consult the ACP countries under the Lorne Convention; fourth, any changes in European tariffs comes into force under the laws only on January 1 and July 1; and fifth, sufficient advance notice had to be given of any changes to the banana suppliers. Although the US and other complainants suggested that time up to 1 July 1998 was adequate to make the change, the WTO arbitrator gave time until 1 January 1999 in his award of, December 1997. The US, however, was dissatisfied with the changes made in the banana regime by the European Union subsequent to the award and has accused the European Union of favouring banana imports from the ACP countries in violation of its international trade obligations under the WTO.

U.S. Unilateral Action

In retaliation, the United States, has used Section 301 of the US Trade Act, to unilaterally impose trade sanctions against the European Union. These sanctions take the form of 100 per cent import duties on 16 types of European products such as French cheese and wines, German coffee-makers, and others like cashmere sweaters, chandeliers, vacuum cleaners, ball-point pens, toy trains, biscuits, candles, handbags and Christmas baubles with effect from 3 March 1999. It is likely that pork and other agricultural products would be added to the list later on. These particular products have been chosen to exert maximum pressure on the European Union while limiting injury to the US economy. The value of these exports is estimated at about $590 million and will hit UK, Italy, France and Germany mainly. Countries who are not in favour of the European banana import regime like Denmark and Netherlands have been exempted.

The strange feature of the banana war is why the US which is not an exporter of bananas, is so concerned about the European market. The Latin American exporters can fight their own battles and US is not intervening to fight for them. The real reason for US intervention is that although the bananas are exported from the Latin American countries, the bulk of them are owned by an American citizen - Carl Lindner - who controls 26 per cent of the world production and trade in bananas. He is one of the richest people in the world and his family wealth is worth over 1 billion. His family owns the Chiquita Brands International and controls the 'dollar bananas' coming from Latin American countries. Lindner entered the banana trade in 1984 by taking over 55.9 per cent control over United Brands and renamed it in 1990 as Chiquita. It will be recalled that United Brands was also called the United Fruit Company which was assisted by the CIA to overthrow governments of 'banana republics' hostile to the company's activities, and Lindner has been linked with the CIA and Guatemalan coup in 1954. He is also reported to contribute heavily to both political parties in the USA. Many believe that US is fighting an issue of principle as a direct result of Lindner's powerful lobbying to protect the interests of his Latin American banana empire from competition from APC countries.

The European Opposition

The European Union has accused the US of acting in a 'petulant and impatient' manner and formally filed a complaint in the WTO against the use of Section 301 of the US Trade Act to impose trade sanctions unilaterally. The European Union also feels that the US action is illegal as no WTO panel has yet given a ruling on its revised banana import regime and has asked for another WTO panel to review it. If the WTO agrees with this request, the panel will take 90 days to give a ruling; as the US is not prepared to wait so long it proposes to implement its sanctions on 3 March 1999. The European Union describes the US action as 'unilateralism at its worst'; in its view the United States is seeking to enshrine through the WTO a right to impose sanctions on other countries when Washington deems they are breaking trade rules. The European Union considers that while the US wants to protect transnational corporations, the European Union's banana import regime is designed to benefit thousands of banana growers in a few developing countries. When President Clinton said "We're being quite strong about it because we do have companies involved...". President Chirac of France replied "President Clinton just said that the United States had... corporations involved. My answer to that is that we have the actual workers who are involved".

The banana exporting countries of Africa, Caribbean and the Pacific are disappointed and annoyed with the US for ignoring their problems. They point out that the US-backed rivals have already secured more than 60 per cent of the European market as Germans and Swedes in particular prefer the bigger, thinner 'dollar bananas' and consequently they have little cause for complaint. They further point out that any change in Europe's banana import regime could have disastrous consequences for their tiny countries, many of which rely heavily on banana exports. Meanwhile, Caribbean leaders have threatened to pull out of a security and trade treaty with the United States over its decision to impose unilateral sanctions against European exports.

The banana war could not have come at a worse time. The global trading system is under tremendous strain as a result of the recession in East Asia, collapse of the Russian and Brazilian economies, deflation in Japan and slower world economic growth in general. Instead of providing leadership for economic recovery and trade expansion in this crisis, the leading countries are dissipating their energy on a minor problem. The conflict reveals the power of transnational corporations over governments, particularly in the US and demonstrates clearly that the US is fighting so vehemently for free trade mainly to provide its transnational corporations more opportunities to expand their markets and increase their profits.

The fight over bananas further illustrates the growing power of the United States and the weakening power of the WTO over world trade. The WTO was established to be a strong organization capable of enforcing discipline in world trade. In the days of GATT - WTO's predecessor - the big powers could effectively block any decision that went against them . The WTO was designed with an effective method of enforcement of its decisions in order to overcome this situation. It appears to be working more effectively than GATT. Since 1995, member states have brought 150 cases to the WTO while GATT managed just 300 cases in its 47-year history. The banana war, however, is a new experience for the WTO; never before has a trade dispute ended in stalemate with both sides dissatisfied. What is more, the United States decided to impose trade sanctions unilaterally before the WTO gave a ruling on the European Union's revised banana regime - in defiance of the WTO.

The unilateral use of sanctions bears testimony to the widely held view that the US has ceased to be a benevolent super power. As Harvard's Samuel P. Huntingdon points out as the United States throws its weight around, bombing here, sanctioning there, certifying and decertifying "acceptable" standards on human rights and the war against drugs, it is viewed as a "rogue super power".

Effectiveness of Trade Sanctions

The US has used trade sanctions as a unilateral weapon to impose its will on other countries. It has used them mainly to force open markets for American goods and services but has not hesitated to use them for purposes unconnected with trade such as to penalize those companies which had business dealings/investments in Cuba, Iran and Libya and to punish India and Pakistan for conducting nuclear tests. Under the Helms-Burton Law, US impose sanctions on firms investing in confiscated American properties in Cuba; subsequently, under D'Amato Act, the US imposed sanctions on firms that invest in Iran's or Libya's oil industry. It is no secret that the US threatened South Korea with trade sanctions for not opening the market adequately for US cars, and India for not removing its import restrictions to accommodate US exports. US generally behaves as if there is no WTO to monitor world trade and that it has a right to bully, intimidate, threaten and use trade sanctions on any country unilaterally to protect its domestic industries and to support its transnational corporations in their search for new markets. The multilateral discipline of world trade by the WTO is being undermined by US unilateralism.

The success of trade sanctions varies. The Washington based Institute for International Economics, for instance, has shown in a study of 170 cases that the success rate of US sanctions had fallen dramatically over the decades - from almost 50 per cent in pre-1970 to just about 20 per cent in post-1970 period. The success of unilateral US sanctions has dropped from 70 per cent to about 13 per cent in the same periods. It states that the impact of the sanctions depended on their timing and the economic impact; they are likely to succeed if they are levied timely and decisively and are multilateral. If sanctions are less than 2 per cent of the GDP, they will not succeed. India for example, has not been affected as badly as was expected by the US sanctions. It suffered a total cost of just about $ 500 million which includes the trade loss and welfare costs. The success rate of sanctions against India was moderate; nevertheless they may have persuaded India to sign the Comprehensive Test Ban Treaty (CTBT).

Some countries and firms do not seem to be frightened by the threat of US sanctions. Canada, for example, has openly voiced its opposition to the Helms-Burton Act and has taken measures to protect Canadian firms penalized by US sanctions. A Franco-Italian consortium has signed a deal to invest nearly $1 billion in Iran's oil industry in defiance of US. It is a graphic demonstration that the world's only super power cannot enforce its will unopposed.

Bank employees' demands unreasonable

By Analyst
Mr. I. P. C. Mendis, writing to 'The Island,' has pointed out how unjust our society has become. It is the women folk who are carrying the economy on their shoulders. They labour in the garment factories and in the tea and rubber plantations, earning valuable foreign exchange for the economy. Many thousands have gone to the Middle East to work as housemaids and they send back remittances in foreign exchange which sustains the economy. It is as a result of these remittances that the Balance of Payments continues to have an over-all surplus.

But what do the rest of the nation do? They import luxury vehicles like Pajeros, Volvos, Mercedes etc: and durable consumer goods like television sets and radio receivers and textiles. Instead of conserving the foreign exchange earned by the women, we have squandered it on luxuries. If we thought of the future and if we were committed to economic development to raise the living standards of the people, we would be utilising the foreign exchange not to import luxury vehicles and consumer goods, but for capital goods like machinery and equipment along with the corresponding inputs of raw materials and intermediate goods.

If we want to develop the country we should be manufacturing goods locally applying modern western technology. When the Japanese or the Chinese imported foreign goods which they could not make themselves, they stripped them to their minute components to learn the technology and re-build them themselves through re-engineering. Such is the nature of true development.

As it is, while our women are labouring hard both here and abroad, our men are shirkers. Look at the CMC workers who are engaged in road repairs. How many work and how many idle? Our middle and upper class professionals cream off the surplus generated in the economy by our women.

Our professionals like doctors, lawyers and accountants are like parasites skimming too much of the national product by way of higher incomes, far too high relative to the earnings of the productive manual workers who make the material goods.

Economic development requires that priority be given to the production of material goods, not for services provided by lawyers, accountants or doctors. It is those engaged in agriculture and manufacturing who are producing what the economy primarily requires. Priority must be given to those who labour in the productive sectors, not to parasitical services. It is hard honest work that deserves high reward. But the professionals and those engaged in the service sector are enjoying more than what they should receive - they are parasites on the productive economy.

Now bank clerks, nurses and doctors are resorting to strikes. Clerks in the banks are paid much more than what a clerk elsewhere gets. When they are recruited they are fresh from school and if left to the market they would not get the high salaries they are presently paid. They are getting these high salaries for one reason and one reason only - through trade union power exercised in collective bargaining with their employers.

In the past their employers gave into their extravagant demands because the industry was dominated by the state owned banks and there was little competition and whatever competition there was, was in terms of service and not price.

The two state banks which had nearly 60% market share gave in to unreasonable demand, because the stakeholder was represented by paid managers who could push up their own salaries thereby. The government preferred industrial place and gave in however socially unjust the demands were. So the bank clerks got away with high salaries totally unjustifiable in terms of the market conditions.

The employers bargaining power has been curtailed by law. The employer must be free to retrench staff. Otherwise there is no counter-vailing power for the employer to check the excessive demands of the employees. If the employer has no flexibility to reduce staff and cut down his wage bill, there will never be an end to demands from the employees.

There are other stakeholders and not only the employees. The shareholders must get a reasonable return on their investment. Costs cannot be increased and always passed on to the consumer. We are in the midst of a deflation if not a recession. So profits will be squeezed in a weakening market. The employees have no right to take away too much of the pie.

This is why the Termination of Employment Act, passed by a government in coalition with Marxists should be repealed. The employer must be free to cut pay when employees down tools whatever they call it. There must be a cost to the employee as much as the employer when there is a strike. This cost must increase the longer a strike lasts. Both sides must suffer. Trade unions should not be allowed to cripple the employer without suffering themselves.

It would seem that the bank clerks have even defied a court order and carried out a token strike. The English law is quite relevant. Trade unionists in Britain have been hauled before the courts for contempt and their funds have been seized. They have been forced to compensate their employers for carrying out an illegal strike and causing loss to them.

If a Collective Agreement has lapsed and a new one not negotiated the employer should be free to revert to earlier salary scales for the future otherwise trade unions can only gain but will never lose. No wonder they will hold out for extravagant demands.

The adversarial and combative trade union culture must be changed just as much as the similar political culture which has undermined freedom and the rule of law. Middle class trade unions have used their trade union power to good effect taking advantage of the anti-free market labour laws to widen the gap between the workers in the manufacturing sector and the service sector.

There are thousands of unemployed graduates who would gladly accept the job of bank clerk at the existing salary or even lower. Why then should the bank clerks be allowed by obsolete laws to beat the market and become parasites on the economy by demanding wages much more than their marginal physical product is worth? The labour laws benefit mostly those in the service occupations who are the aristocracy of the working class.

The pay differentials between service jobs and production jobs need to balance the supply and demand for labour across occupations and industries. The bank clerks are already overpaid in relation to the market. Whatever expertise these clerks have acquired, they have acquired on the job. The whole structure of bank clerks, salaries can be brought down if the banks are free to recruit on new lower salary scales below those prevailing under the lapsed Collective Agreement.

Two things are required. The employer should be free to decide the salary scale for the recruitment grade and he should be free to reduce the staff if necessary. A monopolist emerges when the supplier can control both the price and the quantity supplied. The trade union controls the price of labour. The employer should be able to vary the demand for labour.

If the government is not willing to repeal the Termination of Employment Act, it should refer such disputes in service occupations to compulsory arbitration. Either the market should be free to determine relative wages or they should be fixed by the state, not left to the Trade Union to do so.

GMOA strike

The GMOA has begun a new agitation and resorted to a token strike. The GMOA agitation is not for increase in salaries and perks but to change public policy and for better governance. The government is incompetent and is unable to execute its writ. Ministers speak on subjects they know little about. National problems are mainly long term and require stable consistent policies. The ministers have only a mediocre bureaucracy to support them, brought up on the poor quality outdated education imparted in the universities in Sinhala.

The politicians are incapable of taking rational decisions in the public interest. They practise political patronage instead, rewarding their supporters with jobs, contracts and subsidies (Samurdhi). Public money is siphoned off by self-serving politicians. The President herself has made serious blunders as in the Evans contract cancellation which allegedly costs the taxpayer Rs. 250 million.

There is no rule of law with politicians violating the law and the fundamental rights of citizens with impunity. Crime is escalating and the police are not able to either investigate properly or to apprehend the culprits.

A cabinet subcommittee has been set up to look into the demands of the GMOA. It is no doubt true as alleged by the GMOA, that corruption at the provincial and local levels, is much higher and more extensive than at the national level. But the answer is not to centralise again but to combat the corruption, to expose it and charge those responsible.

The free press is doing a yeoman service. The solution to the ills of democracy is not less democracy but more democracy as pointed out by De Tucqueville. Things have to get worse before the people wake up and demand accountability of the local politicians.

The Wayamba election has led to the people realising that democratic freedoms are in danger. It is not enough to elect representatives and give them power. They must be held responsible for the exercise of power - accountable legally and politically.

The GMOA should demand that the Bribery and Corruption Commission be re-activated without further delay. The GMOA should then lodge their complaints before the Bribery Commission. They should press for legislation which will prohibit political patronage and make it an offence.

If local MPs spirit away public funds and cause losses to the public treasury, the Auditor General should be empowered to file action in the courts to recover the loss from the politicians responsible. If local MPs abuse power or violate the fundamental rights of citizens, there should be legal provision for them to be disqualified from holding public office.

Public interest litigation should be allowed as in India so that public organisations like the GMOA could go to courts against the Provincial Council members who are guilty of misdemeanours as alleged by the GMOA. The GMOA is right to raise these problems but the solution is not to take back devolved powers but rather to pass new legislation as in UK. Where local authorities are required by law to act on merit alone disregarding political considerations in the appointment, transfer and promotion of public officials.

Any MP who violates such a law should be punished for abuse of power in addition to giving relief to the victim. Presently our Supreme Court grants relief and compensation to the victims. But the politicians carry on regardless. It is necessary to treat such violations of the law as offences punishable with imprisonment.

The GMOA can render a signal service to the people if it presses for such legislation to hold MPs and Ministers liable for abuse of power. This task cannot be left to politicians but must be taken up by civil organisations for Satan will not act against himself.

Monopoly power of professionals

The government must realise that professionals are drawing remuneration far in excess of what they should, given the low per capita incomes. The manual workers engaged in production get a pittance while the middle class professionals, keep their incomes high by restricting free entry to their professions.

How is this possible in a free market economy? Only because of the monopoly powers exercised by the Professional associations. Remember how an older generation of doctors opposed the establishment of the second Medical School in Peradeniya, how they opposed foreign doctors being brought down to work in government hospitals, how the Vienise specialists were hounded out?

Medical education is the monopoly of the state and the medical students, the doctors in the making, would like to limit the supply to themselves. They fear competition from the English educated middle class children who they know will outdo them in the profession. They know that they are in the Medical College only because of the district quotas and not because of merit. They cannot win on merit if there was open competition.

The middle classes have been forced to send their children abroad at great expense unless they win scholarships awarded by foreign governments. Foreign education leads to a loss of foreign exchange. What is worse is that many professional men migrate or go abroad for long periods in order to educate their children because there are no opportunities for such education locally. If a private medical school is established not only would there be considerable savings in foreign exchange and the expenses for education, it would dampen the brain drain.

So, the medical students attempt to protect their future careers from competition is not in the public interest. The free market economy is characterised by competition. It is the function of the government to see that competition prevails in the economy. Unless there is competition there is no advantage in a free market economy. Competition is the driving force of a free market economy.

Margaret Thatcher took special steps to break the monopolistic practices among doctors, lawyers and accountants. There is no reason to perpetuate a monopoly for the doctors who not only work for the government but also engage in a lucrative private practice. The public visiting government hospitals are suffering because of the government doctors engaging in private practice. Such private practice should be banned as soon as there are sufficient doctors in the private sector.

Competition is the best stimulus for innovation and efficiency. In developed countries like Britain and USA there is a competition policy which involves trust busting and fines for those who resort to anti-competitive practices. Effective competition sets rules and the government then lets the markets get on with it.

The growth of an autonomous private health sector requires private doctors who should be produced by private medical education. These future doctors who are now studying in the medical colleges should think of migrating to Cuba, the last outpost of communism if they don't want to face competition.

Competition is the principle on which a free market economy is based. The public are these days being shown by the doctors the dangers of a monopoly. The GMOA has struck and the people have no alternative to turn to. Since the private sector also engages government medical doctors, the people will be hostage to the government doctors. Monopoly is bad and a government monopoly is worse.

Australian management school lauds Watawala

Mr. Lakshman R. Watawala, past president of the Institute of Chartered Accountants of Sri Lanka was last week awarded a honorary professorship of the Swinburne Graduate School of Management of Melbourne, Australia.

Watawala who is a past president of the South Asian Federation of Accountants and president of the Association of Accounting Technicians of Sri Lanka also received the Professor John Miller AO award.

Professor Miller who was here for the awards ceremony said that he was pleased to make the presentation to an accountant who had made an outstanding contribution to his profession both in the South Asian Region and Sri Lanka.

Watawala had played a key role in the formation of the South Asian Federation of Accountants which he has served both as vice president and president.

Miller said that Watawala has also played a role in the promotion and the setting up of a middle level accountancy body here to cater for accounting technicians.

Professor G.L. Peiris who was present on this occasion said that Watawala had played a leading role in a multy disciplinary field which included education, industry, commerce, human resource development, banking and finance, foreign investment and poverty alleviation where he had made practical use of his professional knowledge and expertise.

This was the first time that a professional from South Asia had received this award. It was a unique achievement and a great honour conferred by Prof. Miller, a leading chartered accountant, educationist and management expert with wide international experience.

Prof. Miller currently serves as Foundation Director of the Swinburne Graduate School of Management.

Purchase agreement for six factories signed
Deal with big British retailer helps Tri Star restructure

The troubled Tri Star Group is coming out of the woods with a big British retailer agreeing to take large volumes of non-quota garments from factories here, a Tri Star spokesman said last week.

He also said that plans to sell some of the rural factories of the group were also moving forward with a buyer signing a purchase agreement to take over six factories which Tri Star will continue to manage for him.

"There is interest both locally and from abroad for some of our factories which are up for sale," the spokesman said. Tri Star agreed with its lenders some weeks ago to sell off 16 of its factories. He declined to name the buyer of the six factories for the time being but said it was a local party and the deal was expected to be completed within three months.

The biggest garment manufacturers here, Tri Star fought to retain ownership of all factories under its umbrella saying that non-performers could be turned around if the quotas promised to new owners would be allowed to Tri Star itself. But the company was unable to win this concession and reluctantly agreed to put up sixteen of its factories that had failed to perform on quotas for sale.

Readmans Ltd., one of the fastest growing clothing retailers in Britain, has agreed to make Tri Star a major supply source by diverting business from British and Far Eastern suppliers to factories here.

Tri Star Chairman Kumar Dewapura said that this partnership would "greatly help" to ease pressure on some of their factories that faced difficulties due to quota losses.

Already a major supplier to Marks and Spencer, serviced through an arrangement with S.R. Gent of the U.K., Dewapura says that the arrangements with Readmans will open "new vistas" for the group.

Stephen Readman, vice-chairman of the family-run Readmans Ltd., was here last week for a 7-day visit to inspect Tri Star factories and capabilities.

He was accompanied by his daughter Daniella and Lindsay Hobson, the group purchasing executive.

Readman said that the partnership with Tri Star was part of their future expansion programme. Their company, which began as a market stall in Leeds and grew to a major retail combine in Britain in 25 years, deals not only with clothing but also with household goods, footwear and luggage.

Readmans which has its headquarters Cleckheaton in West Yorkshire currently posts and annual turnover exceeding 40 million pounds. The firm's founder, Alf Readman, at 76-years of age, is the company's chairman and its chief driving force. In addition to its own chain of department stores, the company also supplies ready-made apparel to several other British retailers.

Stephen Readman, who is Alf Readman's son, said that a meeting with Tri star's Dewapura in London recently led to the partnership. Knowing the local firms capabilities they explored a closer relationship.

"We felt that if we had to expand, the supply base has to be good and strong. Rather than buying for several sources, we thought it would do a world of good for quality if we struck to one strong supply base perhaps through a joint venture. After studying Tri Star's background and experience we feel that this is the best bet," he said.

Tri Star said that their deal with Readman offers more advantages than merely expanding the non-quota market. Readman's are keen on sourcing fabric locally and this would help the local textile manufacturing industry too. During his visit here, Readman visited several textile manufacturing factories in addition to inspecting Tri Star facilities in Colombo, the suburbs and the countryside.

Tri Star laid out the Viceroy Special train to take Readman and is party to some of their rural factories. The spokesman said that the visitor was most impressed saying he had travelled the world over inspecting factories and he had not seen the all round standards he saw at Tri Star.

He said that Readman was most impressed with Tri Star's commitment to its workforce and said he had not seen such commitment in factories in the Far East. "Standards here are very high and that, surely, must come from good leadership," Readman had said.

"The success of our retail business is due to providing quality goods at affordable prices to average buyers. Buying in large volumes year round, including off-season, and passing the advantage on to customers helps," he said. "We've mapped out a vast expansion programme and that is why we are interested in the partnership with Tri Star."

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