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Future role for fast expanding group in hotel sector?
EAP on Hotel Services board

The E. A. P. Edirisinghe Group of Companies, fast expanding from its original pawn broking and jewelry base, is represented in the new board of directors of Hotel Services (Ceylon) Ltd., the owners of the Hotel Ceylon Intercontinental.

Also represented on the new Hotel Services board is the Edna Chocolates owners, related by marriage to the E. A. P. Edirisinghe family.

Mrs. Soma Edirisinghe, the chairperson of the EAP Group, said that they were represented on the Hotel Services board but had not made any investment in the company. As ambitious plans for refurbishing the Intercontinental and bringing it up to the highest five-star standards are part of the buyer’s strategy, business circles speculated on the possibility for a future role for the EAP Group in Hotel Services.

Mr. Uma Kumar Sharma, who has been named as the Hotel Services buyer, is the new chairman of the company’s board of directors with his appointment effective from July 29, the Colombo Stock Exchange (CSE) has been informed.

The other directors are Mrs. S. R. Sharma, Mr. B. R. S. T. Edirisinghe, Mr. P. K. Sharma, Mr. J. H. Edirisinghe, Mr. B. R. N. P. Edirisinghe and Mrs. R. L. Samarasinghe.

Mr. J. H. Edirisinghe is Mrs. Soma Edirisinghe’s son. The other Edirisinghes belong to the family running Edna Chocolates.

CSE has also been notified that the nominees of the Asian Hotels Corporation, owners of the Hotel Lanka Oberoi and part owners of Trans Asia Hotels, who sold out their controlling shares of Hotel Services, have resigned from the latter company’s board.

They are Mr. Daniel Roche, Mrs. Ramya Hewavitarne, Tan Sri Azmi Wan Hamzah (Chairman of Asian Hotels) Messrs. S.H. Amarasekera and Mr. Mano Nanayakkara. Two other local hoteliers, George Ondaatjie and Ravi Thambiayah, who bought stakes in Hotel Services fairly recently and took advantage of Sharma’s Rs. 26 per share offer to take a substantial capital gain and exit the company have also resigned.

However, Mr. Sanjeev Gardiner, who also sold out of Hotel Services, has not yet resigned from the company’s board. His father, the late Cyril Gardiner, acquired his stake in the company many years ago and unlike the Ondaatjie and Thambiayah interest, the Gardiner stake in Hotel Services had been long held.

The new owner’s plans for the Intercontinental include a glassed discotheque with an ocean view, re-doing the hotel’s spectacularly located rooftop restaurant which also commands an ocean and city view and the lobby area. He is also thinking of a new block of 150 rooms to add to the hotel’s existing 250 rooms.

The mandatory offer of the Rs. 26 price to minority shareholders, required under the Securities and Exchange Commission’s (SEC) Takeover and Mergers Code has not yet been made. But it is expected in the next few weeks. Meanwhile whatever Hotel Services shares that are coming up on the market are being transacted at the Rs. 26 price which was paid for the controlling shares.

Serendib under liquidation, Rs. 85-90 mn. deal in the offing
Multi-national owned DC mill up for sale

Serendib Coconut Products Ltd., the owners of a state-of-the-art desiccated coconut milling factory near Kuliyapitiya, is now under liquidation and its factory producing desiccated coconut for the premium confectionery market is up for sale, well informed business circles said.

Serendib’s customers include Mars, the well known chocolate maker, Schweppes and Cadbury’s.

There have been several overseas inquiries and local interest in this factory that occupies a complex of about 20-acres near Kuliyapitiya. Although the factory has a capacity of processing up to 300,000 coconuts per day, it has never worked at beyond 50 - 60 percent of capacity during the ten years it has been in production, sources close to the operation said.

Serendib is owned by Aarhus Oliefabrik A/S of Denmark., the principals of the old established C. W. Mackie Group and Ceylon Trading Co. Ltd. which has long been in business here.

Someswaran and Jayawickrame, Chartered Accountants, are the liquidators appointed by Serendib to close down its business. They will handle the sale of the factory, which is the principal asset of the owners and deal is expected to be closed in the next two or three months.

When the mill was conceived in 1989-90, there was an agreement between its owners and the Janatha Estates Development Board (JEDB) then under Mr. Gamini Dissanayake that it would supply 50 percent of the coconuts needed for the factory on a cost plus formula.

"That was the whole basis of the project. But subsequently with a new minister (Mr. Ranjan Wijeratne) they reneged on the deal," these sources said.

The factory is now closed and the result is that Sri Lankan desiccated coconut is not reaching the premium market because all other producers supply what the trade describes as the "fair and average" market.

"The quicker a deal is struck on the disposal of the factory and it resumes production, the better it is for us coconut producers," one coconut grower unhappy about a current decline in coconut prices said.

The mill had been operating profitably for about five of the ten years after its was commissioned. But 1998 was the worst year due to the East Asian crisis when coconuts were much cheaper in the Philippines and Indonesia than they were in Sri Lanka.

The Danish owners foresee a situation of the availability of coconuts in Sri Lanka decreasing due to coconut land being converted to other purposes. Also, coconut prices here are still running higher than in some other South East Asian countries, mainly the Philippines which is the world’s biggest coconut producer, and Indonesia.

However, the trade believes that an "ordinary operator" as opposed to a multi-national with associated higher costs will be able to work the Serendib factory profitably. The interest shown by various parties including wealthy local desiccated coconut millers suggest that this is a shared view.

A Rs. 85 to 90 million price is being mentioned for the mill which cost around Rs. 100 million to set up ten years ago.

Gujerat Glass upbeat about investment in Ceylon Glass

One of India’s top business groups with an annual sales turnover topping Rs. 23.5 billion that has taken a significant stake in the old established Ceylon Glass Company Ltd. believes that their Rs. 250 million investment can, if successful, catalyse further investment from big players on the subcontinent.

Ajay Piramal, head of Piramal Enterprises Ltd. who own Gujerat Glass told a Colombo news conference on Friday that Gujerat Glass ``plans to restore the past glory of the Ceylon Glass Co. Ltd. by investing in modernisation and upgrading technology.’’

``We saw a good opportunity here. Sri Lanka is leading to be a centre for industry in South Asia. It’s a promising country for the future. That is why we’ve invested in this company,’’ he said.

He said their entry would extend the benefits of economies of scale and substantially improve productivity and help Ceylon Glass to tap export markets in South East Asia. Dr. C.S.T.B. Perera, Managing Director of the company will remain its CEO. Asked whether they were posting their own people to Ceylon Glass, he said ``we are working on it.’’

Gujerat Glass first came to Colombo to explore a possible investment in Lanka Glass Manufacturing Co. Ltd., a relatively young company in which Royal Ceramics is associated and is currently in trouble. Lanka Glass manufactures glass tumblers and glass blocks for architectural use.

Piramal confirmed that they first came to explore possibilities at Lanka Glass and then became interested in Ceylon Glass which had been hurt by the South East Asian crisis and the depreciation of the Sri Lanka rupee. He said that Ceylon Glass had not been able to recover the inflationary increase in cost and that had affected liquidity.

Asked whether they still retained an interest in Lanka Glass, Piramal said that he would prefer not to comment.

Gujerat Glass is a member of Piramal Enterprises Ltd. which describes itself as a large, diversified and leading business group in India which is professionally managed. Their core businesses are textiles, healthcare, glass containers and engineering and they are also entering information technology and life-style plazas.

Gujerat Glass has already acquired a 40% stake of Ceylon Glass from the DFCC at a price of Rs. 20.50 a ten-rupee share. DFCC will continue to hold 10% of the company as will the government which will retain its 7%. DFCC which had a Rs. 250 million cash infusion on the deal has made a capital gain of Rs. 70 million on the disposal of the long-held shares.

Piramal said that in accordance with the Securities and Exchange Commission’s Takeovers and Mergers Code, they will make a mandatory offer to other Ceylon Glass shareholders who will be given the option of exiting from the company at the same Rs. 20.50 price paid to the DFCC Bank.

Asked whether he would recommend this course, he said that was a judgement that the shareholders themselves must make. ``We’ll be very happy if they remain. If they want to sell, we will take their shares,’’ he said.

It is likely that at least some of the present directors of the company will hold their personal shares. One confirmed that he would while another refused to comment.

Discussing the possibility of increased job creation by their entry into Ceylon Glass, Piramal said that it may be possible in the longer term but he was not making any false promises. He was confident of their ability to handle the workforce despite Ceylon Glass’ history of a debilitating strike some years ago which nearly bankrupted the company. ``All that is past history,’’ he said.

Piramal has 17 manufacturing locations in India employing over 14,000 people. The group has several joint ventures/strategic alliances with internationally reputed companies like Roche, Boehringer Mannheim . Scholl , Allergen and Ceytran of the USA, and Reckit and Colman, Boots and Laporte of the UK.

Lower provisioning helps troubled Merchant Bank

The Merchant Bank of Sri Lanka (MBSL) remains in difficulty despite lower provisioning for doubtful loans and fall in value of investments during the first half of the current financial year ended June 30, 1999.

In a half yearly report incorporating unaudited accounts, MBSL has said that its net income was down to Rs.351.9 million from Rs.524.8 million a year earlier. The company has incurred a net loss of Rs.25 million during the half year under review against a profit of Rs.53.3 million for the comparative period the previous year.

However, provision for doubtful loans and fall in value of investments has been reduced to Rs.18.3 million during the period under review from Rs.124.3 million a year earlier. This has enabled the pre-tax loss for the half year to be brought down to Rs.43.3 million against a loss of Rs.71.1 million a year earlier. The after-tax loss of Rs.49.1 million compared with a loss of Rs.75.9 million during the first half of the previous year.

The net loss attributable to shareholders of MBSL during the period under review was Rs.65.7 million, down from Rs.82.9 million during the comparative period last year.

The bank is now carrying forward losses of Rs.1.16 billion as at June 30, 1999 compared to Rs.1.14 billion a year earlier.

MBSL which is a subsidiary of the Bank of Ceylon has an issued share capital of Rs.500 million and a share premium of Rs.770 million in its books.

Globalization - I
The nature of globalization

By Kanes
Globalization is the process of integration of the world’s countries and their people, bringing them closer and increasing their interdependence through economic, technological, cultural and political links. From the economic point of view, which is the most important, globalization is the growing economic interdependence of all countries and the integration of national markets into one global market through the increasing volume and variety of cross-border transactions in goods and services, international capital and money movements and technology transfers. It is the internationalization of production, trade and investment as economic activity spills over national borders for market access, cost advantage and higher profit. Politically, it is the spread of democracy, human rights, basic freedoms, gender equality, transparency in governance and the N.GO.s. Socially, it is the adoption of English as the world language and the spread of Western culture in the forms of pop music, Hollywood films, blue jeans, fast food and affluent life styles. Generally, the globalizing forces radiate from the industrial countries aiming at assimilating the developing countries into the global system shaped by these forces. It is mostly a one-way traffic as Western capital, technology, culture, ideas and life styles penetrate the developing countries. It is consequently a process of homogenization (or Westernization) of economic, cultural, political and ideological systems and policies of the world’s countries.

Modern Technology

Globalization is also the shrinking of space, the shrinking of time and the disappearance of national borders by advances in technology. The new information and communications technologies - the Internet, mobile telephone and the fax machine - with their low cost, high speed and wide coverage have catalysed the integration of financial markets, the spread of multilateral corporations and exchange of ideas and information among people. The cost of a three-minute telephone call from New York to London fell from $245 in 1930 (in 1990 prices) to $3 in 1990 and to about 35 US cents in 1999. Sea freight declined from $SO per ton in 1930 to $29 in 1990; average revenue per passenger mile in air transport fell from $0.68 in 1930 to $0.11 in 1990; the cost of computers in 1990 is one hundred and twenty fifth of that in 1960. The average cost of processing information fell from $75 per million operations to less than a hundredth of a cent in 1969-1990. While more and more people are using the telephone, fax and the Internet, more and more people are watching television. TV sets per 1000 people doubled between 1980 and 1995 from 121 to 235 in the world; they increased from around 50 in 1985 to 250 in 1995 in East Asia and 150 in South-East Asia. A village in Sri Lanka is as likely to be linked to Hollywood films like Dynasty and Baywatch and to advertisements on Cocoa Cola and Kentucky Fried Chicken as it is likely to be linked by road to the next town.

Technological advances in global communications have been accompanied by technological advances in production: new machines to produce more, better and cheaper products and to displace labour by automation; improved or genetically modified seeds which are pest resistant and produce higher yields; transgenetic plants; genetically engineered animals and growth hormones for cattle. It is the tremendous expansion of production by the new technologies which is far in excess of domestic requirements that has led to the drive to liberalize trade to provide easy market access to surplus production.

Globalization, however, is not driven by technology alone. Economic globalization has been facilitated by an ideological shift to neo-liberal/monetarist economics with emphasis on laissez faire and open markets. Neo-liberal economics — espoused by the USA, the IMF, World Bank and the WTO - aims at improving economic efficiency by allowing market forces to operate without hindrance through liberalization, deregulation, privatization and an emasculated role of the state. Developing countries who seek assistance from the IMF are enjoined to pursue such liberalization policies without exception. India for example, reduced its tariffs from 82 per cent in 1990 to 30 per cent in 1997 and liberalized her investment laws. The opening up of economies has contributed much to the expansion of international trade, tourism, foreign investment, technology transfers and to the spread of Western culture and affluent life styles in the developing world. The world is more prosperous with average per capita incomes having more than trebled in the past 50 years, the share of people enjoying medium human development rising from 55 per cent in 1975 to 66 per cent in 1997 and the share of low human development falling from 20 per cent to 10 per cent.

Globalization is not a new phenomenon. It began with the chartered companies like the East India Company in the sixteenth century and gathered momentum under Imperialism and Colonialism. It grew in strength with the breakdown of the Bretton Woods system of fixed exchange rates in 1971 and the collapse of the Soviet style socialist economic systems in the early nineties. Globalization today is different from the old in several ways. While the old system concentrated on trade in goods and services and investment in raw materials, the current one covers in addition foreign exchange and capital markets. It is facilitated by the Internet, media networks and computer-aided design. The launching of the Internet’s Worldwide Web in 1990 and the distribution of free browsers by Netscape in 1994 turned networked communications into a more user friendly and accessible tool. Globalization is promoted by new agents - transnational corporations, WTO, IMF and the World Bank and is supported by new rules, multilateral agreements on trade, services and intellectual property backed with strong enforcement mechanisms resulting from the Uruguay Round of trade negotiations concluded in 1994.

Extent of Globalization

The extent of the interaction between nations and people and their global integration are larger than ever as illustrated by the following figures:

(a) World exports valued at $7 trillion averaged 21 per cent of GDP in the 1990s compared to 17 per cent in the 1970s.

(b) Foreign direct investment reached $400 billion in 1997, seven times the level in real terms in the 1970s. Cross-border mergers and acquisitions of firms has become the major force in foreign direct investment. Such mergers and acquisitions which exceeded $1 billion each numbered 58 in 1997 mainly in financial services, insurance, life sciences, telecommunication and the media. In 1992 mergers and acquisitions amounted to about $70 billion and accounted for 42 per cent of the total foreign direct investment. By 1997 they had risen to $236 billion accounting for 59 per cent of total foreign direct investment. Foreign direct investment is undertaken for internationalizing or trans nationalizing production by breaking the production process into many geographically separated stages in a variety of locations, the labour-intensive stage being located generally in the low wage developing economies. It is mainly such investment in labour-intensive manufacturing industry which has integrated the developing countries into the global economy. Portfolio and other short-term capital flows amount to around $2 trillion in gross terms and are about three times those in the 1980s.

(c) International bank lending grew from $265 billion in 1975 to $4.2 trillion in 1994.

(d) The daily turnover in foreign exchange markets increased from around $10-20 billion in the 1970s to $1.5 trillion in 1998.

(e) The number of tourists more than doubled from 260 million in 1980 to 590 million in 1994.

(f) Some 130-145 million legally registered migrants live outside their countries and migrant workers’ remittances reached $58 billion in 1996.

(g) Time spent on international telephone calls rocketed from 33 billion minutes in 1990 to 70 billion minutes in 1996. Internet had more than 140 million users in mid-1998 and the number is expected to pass 700 million by 2001. The number of Internet hosts - computers with direct connection to the Internet rose — from under 100,000 in 1988 to over 36 million in 1998.

Market Domination

Globalization offers through new technology, foreign investment, trade expansion and media and Internet connections, many opportunities for human advancement, enriching people’s lives, eradicating poverty and building a global community of shared values. It has in fact generated unprecedented wealth for those who have been able to take advantage of the increasing flow of goals, services, capital and knowledge across national boundaries. The best example for developing countries is East Asia where the countries achieved substantial growth of 6 to 8 per cent a year in the last 30 years with high rates of export growth and substantial inflows of foreign capita! until the currency crisis of 1997. However, globalization is being driven increasingly by market expansion - opening national markets for trade, capital and information - outpacing governance of these markets and their repercussions for people.

More attention is being paid to appropriate policies and institutions for open or free markets than for people and their rights and commercial interests have relegated the building a community of shared values and achieving common goals into the background. Competitive markets may achieve efficiency but not necessarily equity, and as long a globalization is dominated by the spread of markets, it will put a squeeze on human development. Many activities and goods essential ,or human development are provided outside the market but they are being squeezed by the pressures of global competition, e.g. fiscal squeeze on public goods, time squeeze on care and an incentive squeeze on the environment.

The UN Human Development Report 1999 has summarized the effects of market domination of globalization as follows:

"When the market goes too far in dominating social and political outcomes, the opportunities and rewards of globalization spread unequally and inequitably - concentrating power and wealth in a select group of people, nations and corporations, marginalizing the others. When the market goes out of hand, the instabilities show up in boom and bust economies, as in the financial crisis in East Asia and its worldwide repercussions, cutting global output by an estimated $2 trillion in 1998-2000. When the profit motives of the market players get out of hand, they challenge peoples’ ethics and sacrifice respect for justice and human rights".

Thus, globalization is proceeding at breakneck speed, but the process is uneven and unbalanced, with uneven participation of countries and people in the expanding opportunities of globalization. The new rules of globalization and the players writing them tend to focus on integrating global markets, neglecting the needs of people that markets cannot meet. The process is concentrating power and marginalizing the poor countries and poor people.

Performance measurement and accountability in public management

By Analyst
"All you have to do is measure something and people respond" says John Pratt. In 1979 Massachusett’s welfare department had 23% error rate (cases in "error" were those lacking proper documentation). "When we began measuring error - nothing happened. But as soon as we published the rates for each office, things changed. Because now the finger was pointed at managers: everyone knew if their office had a high rate. It took only 12 months to cut it down to 12%. Six months later, when we published error rates for each supervisor, it fell to 8% ..." Re-inventing Government by David Osborne and Ted Gaebler.

This is what performance evaluation is all about. The President some time ago proclaimed that she had introduced performance evaluation as if it were for the first time. But what is referred to by her is the system of personnel evaluation of the staff through annual confidential reports, a practice which prevailed even during colonial times.

But when an organisation measures the results of its work, the outcomes not the inputs, then there is a change for better. An Independent Foundation in New York in the 1970’s developed a method to measure the cleanliness of streets, called "scorecard". By using the method it was possible to form a measure of how clean each street was. By comparing the score for each street it was noted that there was a marked improvement in the streets rated "filthy".

Similarly when the British government set up an independent agency to deal with the work of the motor transport department, the number of days required to issue a driving licence was reduced to 12 days. What is counted or measured influences the behaviour of the organization.

Measure to see success or failure

Many public agencies are not clear about their goals or objectives. Often they are aiming at wrong goals or have no goals at all. Much of the rules, regulations of the government were those formulated during colonial times. Many of them are in English. Now a Sinhala educated generation has taken up the offices in government agencies. They don’t seem to have imbibed the spirit of these regulations even when these regulations have been translated into Sinhalese.

They don’t seem to understand the rationale behind such rules and regulations. They are afraid to exercise their discretion and often look for some document to back up every decision they make.

The politicians in charge, the ministers, have no idea whatsoever which programmes are successful, which are failures. No results are measured. Lacking objective information also means that they are free to go on hunches and take decisions on political considerations. Money is being spent blindly and most of it is wasted.

Incentives

Incentives are all important in making public officials work. But if you don’t evaluate performance of the organisation, you don’t know whether it is successful or not. The Municipality carries out the function of garbage collection. Is it successful? How does one evaluate? If we can’t determine whether garbage collection in one area is more efficiently done than another we can’t reward the successful efforts. So we treat the successful and the failures in the same way. Or we may even reward the failures and not those who are successful. Is it any wonder then that garbage collection is so poorly carried out?

Our whole economy is geared to rewarding the dishonest, the slacker, the ideals and the law breaker. Those who work and those who idle are paid the same wages. There is a saying in the public service that more work is more trouble, less work, less trouble and no work is no trouble. So the large majority of public employees do no work or work very little.

Why should they work when they are rewarded whether they work or not? The executives or staff officers no longer engage in the work of supervising their subordinates. They should resign their jobs or be rewarded only as clerks. Since they do not perform the functions of a staff officer. "I work in the private sector, my friend does not work. He is in government" sums up the public perception.

Breaking the law with impunity

After 1956, the government eased up on the enforcement of law. There was the problem of landlessness in the dry zone. The procedures laid down like surveying, demarcating lots etc. took time. So the then Minister adopted an easy but dangerous solution. All encroachments on crown land or state lands were regularised and given to the encroachers. This gave the wrong signal to the landless and encouraged them to take state lands by force.

Today we have the pavement hawkers who carry on their trade illegally. They pay no taxes, can sell even stolen goods, or substandard goods. They are not prosecuted for appropriating the pavement which is for the pedestrians.

Consider the squatters on road, stream, and canal reservations. They are violating the law but no legal action is taken against them. Instead they are rewarded with flats built by the government as part of slum clearance projects. Aren’t they being encouraged to occupy land illegally?

They also engage in illicit sale of hooch, drugs, prostitution or extortion and contract killings. Surely, any crime prevention programme must begin by stopping such illegal activities and clearing the slums or at least preventing the setting up of new squatter settlements.

There are also more and more pavement hawkers. A naive Mayor thought by issuing carts to hawkers they would sell their wares from moving carts. Instead these carts now make it almost impossible for pedestrians to walk on the pavements. What sort of governance is this?

Squatting is an openly defiant act with squatters taking over any urban land which is undeveloped and whose owners public or private do not reside nearby. It is the absence of any legal action to stop squatting that leads to the proliferation of squatter settlements.

The holding down of bus and train fares encourages unnecessary journeys to the city by people to do their shopping and marketing, and prevents the development of secondary towns and cities. The unchecked development of the informal economy is causing the congestion in the city of Colombo.

Owing to the lack of law enforcement, the migrant to the city has no costs invalued to deter him from moving to an over crowded city. The whole system rewards the law breaker not the law abiding citizen. Since these people, squatters, pavement hawkers all have votes. The politicians must of necessity protect them from the enforcers of the law.

Measuring Performance and Pay

Performance measurement is particularly necessary in education. In Japan schools are graded on their results at the University Entrance examination. The Ministry should first establish objective evaluation criteria and grade schools on such evaluation.

In USA the Job Training Partnership Act of 1982 rewarded providers of training on the number of trainees for whom jobs were found.

All government departments should be required to adopt performance measures and publicise them. They may be crude measures but they can be improved with criticism by the public. Even a crude measure is better than no measure at all.

Performance measurement can be used to link pay to performance but our environment at present is not suitable for doing so. Even if we don’t go so far, such measures are a useful tool of management to improve operations and give the public a better service.

Management by results is more effective than management by objectives or as we have, management by guesswork. One modern approach is Total Quality Management - the management philosophy of Edward Deming. He argues that even if we learn about poor performance, we do not necessarily know what is causing it.

In TV discussions on the inefficiency in the public service the blame is cast by speakers, entirely on the politicians and political interference; a factor made out to be outside the control of the administrator.

Similarly, if the students admitted to the universities are unable to follow the courses which incorporate modern knowledge based entirely on Western textbooks and literature, the failure of the universities to educate is not the fault of the lecturers.

In Deming’s view in USA only 15% of the problem in most organisations are caused by the workers and managers involved. The others 85% (in USA) stem from the broader systems within which these people work, such as the educational systems, the budgetary constraints, the personnel system (note our overly protective labour laws) and so on.

Performance pay or other management inducements give people an incentive to improve performance but it does not give them the authority or the tools to change the systems, that lie behind their problems. This is the task of those in authority and of the government.

How many administrators in the public service today, know the Financial Regulations and the Establishment Code? How can these be enforced if the ministers are not bound to follow them? Don’t ministers give directions to top administrators which involve infringements of such regulations? What does the administrator do in such circumstances? Does he follow the minister’s direction or the Financial Regulations?

Of what use are the Financial Regulations if they are not to be followed? They might as well not exist. These regulations must be passed as legal enactment binding on all those who hold public office, whether elected or appointed.

Consider the budgetary system and how the Treasury disburses money in driblets. The Financial Regulations require that money must be available before orders are placed for supplies and services. But today departments not only order but take delivery of supplies and services and pay for them after long delays.

Accountability

If Parliament is to hold ministers to account, it needs information that can only come from officials. In Britain in the last century, officials were summoned personally to appear before Parliament. They were interrogated at length and censured and even dismissed.

This practice of summoning officials before Parliament stopped only after ministers took full responsibility for the actions of officials. Our system of accountability to Parliament has not gone through a similar evolution. So parliament should introduce this practice until ministers themselves take responsibility.

Parliament should be called upon to first approve the appointment of ministers and then dismiss them if they prove to be corrupt or inefficient. Corruption is not an offence that can be proved in a court of law following judicial rules and procedures. The President keeps saying the Bribery Commissioners failed to file single corruption case in the courts.

It’s apparent that corruption as in other countries like Australia, should be dealt with by a tribunal or Commission rather than by the Courts of law. The government should look into the position instead of merely blaming the commissioners. The commissioners should go public with their defence rather than wait only for the select committee of inquiry to give their side of the story.

Historically the concept of accountability to the people arose from the efforts of the kings to levy taxes and spend the proceeds on various grandiose schemes or on wars to extend their empires. With the growth of parliament the all-powerful kings were required to justify to the representatives of the people the need for taxes. When the king became a constitutional monarch, he had to get the taxes passed by parliament.

Parliament began to scrutinise how public revenue was spent by the executive. The concept of accountability now extends to the performance of all state functions and it is enforced in a variety of ways. The term "enforced" is appropriate because accountabilities is not something carried out by an institution. It is a relationship exacted.

The initiative for securing accountability from the executive must be with parliament. It is not upto the Executive the government, to decide what aspects of its activities it will make available for examination by Parliament. Information furnished at the initiative of the Executive is not enough for purposes of accountability.

We see these days massive commitments by the public sector not made available for scrutiny by parliament. The massive expenditure incurred in changing the name and logo of Air Lanka, the handing over the QEQ to P & O joint venture are projects over which public accountability is not enforced.

We also see another undesirable feature. There is the emergence of full time professional politicians with a lust for power. To them retention of power is all important, since loss of power means loss of employment. Apart from the undesirability of government being in the hands of a group of power seekers, the problem has been compounded by their uninhibited pursuit of financial benefits for themselves by way of duty free Pajeros various tax free allowances including subsidised meals in this parliament’s canteen. They now constitute important class of privilege holders similar to the nobles and clergy during the ancient regime in France before the 1789 revolution.

This corps of professional politicians is a serious barrier to good governance and democratic values. In fact democracy itself is in danger from them. As Wayamba elections showed, they may try their damnedest to remain in power resorting to violence, corruption and other undemocratic means during any election that is called.

They are also acting irresponsibily in the exercise of power. The trade unions realising that the elections are not far off, are seizing the opportunity to strike for various demands fully conscious that a government which is getting ready for an election will not antagonise them by turning down their demands.

The economy is sinking and extravagant wage claims if granted will only make things worse, for the poor and unorganised who will have to pay the price for the consequent inflation.

Sri Lanka spreads lunch break to woo South Asian cargo

by Amal Jayesinghe
COLOMBO, Aug. 7 (AFP) — Sri Lanka’s dockers have shed a centuries old tradition to counter competition from other harbours, particularly from rival Singapore, in a race to become South Asia’s hub port.

The plan is simple but effective, says an official of the Sri Lanka Ports Authority (SLPA) who negotiated with workers to end the practice of taking their lunch break together and thereby avoid losing valuable man hours daily.

Put in place just last week, the new lunch deal has shown an immediate improvement in efficiency in a port which boasts the best facilities in the region, has enough capacity but needed a little push on the productivity front.

"Nowadays, shippers are not so worried about cost (of the handling), they are more worried about productivity," says SLPA Operations Manager U. Bopitiya. "They want quick turnaround time and we can now give that."

Bopitiya said that staggering the lunch break alone has had a tremendous improvement and they noticed that dockers handled 74 containers in an hour on board an Evergreen carrier and 78 on a Hanjun vessel three days ago.

In terms of time, Hanjun saved four hours and Evergreen saved six hours. At the port, time is really money. A big ship must be paid about 40,000 dollars a day, an hour saved is about 1,500 dollars earned.

"We pay more in overtime to workers but actually save money for the port and also get telexes from shippers thanking us for the good service," Bopitiya said.

"Earlier all gantry operators took their lunch break together and work came to a standstill, but in the past three days we have changed all that. Everyone benefits from the new arrangement."

They hope to extend the scheme to two tea breaks in the evening too.

Port officials say that Colombo is trying to make up for the loss suffered by the withdrawal of Sea Land and Maersk Lines three months ago which resulted in a lot of transhipment business going to Salallah in Oman.

Official figures show that the projected loss of business to Colombo could be about 350,000 TEU (Twenty foot Equivalent Unit) containers a year with the pull out of the two liners.

Colombo’s capacity utilisation has dropped to 60 to 65 percent.

The Colombo Port handled about 1.7 million TEU containers last year, up from 1.3 million in 1997. This year, the figure is expected to be about 1.8 million although the port can handle over two million TEUs.

About 70 percent of the containers handled in Colombo are transhipment cargo mainly from India, Bangladesh and Pakistan too use Colombo as a gateway to catch post panamax, or large ships that carry 4,000 to 6,000 containers which call here.

Sri Lanka is pleased with the development of Indian ports that will help Sri Lanka to get more transhipment cargo from them but Singapore is a different story.

Sri Lanka considers itself second only to Singapore which is also the main competing port. At one point Sri Lanka was worried that about 40 percent of Indian export cargo was going via Singapore while Colombo got only 20 percent.

That was before Sri Lanka opened a new container terminal in 1996 to handle larger vessels which carry over 4,000 TEU containers.

"Singapore and Sri Lanka are both small countries without much resources of our own, so we are competing in providing this (port) service," Bopitiya said.

Importance of Colombo’s location along the international sea routs from the east to the west was underlined last week when the Peninsular and Oriental Steam Navigation Co., (P & O) signed a deal to invest in the Colombo port.

P & O and its affiliates have floated a company called South Asia Gateway Terminals to develop the Queen Elizabeth Quay at the Colombo port at a cost of 240 million dollars.

The deal envisages a long-term lease of a section of the port will increase the container handling capacity by another 750,000 TEUs.

When P and O chairman Lord Sterling was here in 1996, he saw Colombo as a hub for international shipping.

"We see Colombo as a natural hub port for international trade in the 21st century," Lord Sterling said adding that they were looking forward to the early implementation of "this exciting project."

Tokyo Cement reports ‘outstanding year’, expects more competition

Tokyo Cement Company (Ceylon) Limited, which claims to be the country’s largest cement manufacturer, has closed the financial year ending March 31, 1999 described as the "most outstanding year in the company’s history" with a record pre-tax profit of Rs.325 million, up 38% from the previous year’s Rs.236 million and a consolidated after-tax profit of Rs.284 million, up from Rs.164 million the previous year.

The directors have recommended a first and final dividend of 32% for the year, up from 28% the previous year.

The company’s Chairman Mr. A. Y. S. Gnanam, noted that the construction sector, the biggest market for the cement industry, had been among the few sectors that had recorded positive growth last year with its contribution to the GDP rising from 5.4% to 7.1%.

Tokyo Cement is a collaboration between St. Anthony’s Consolidated Limited of Mr. Gnanam owning 27.5% and the Mitsui Mining Company of Japan which owns 25%. Mitsui has five nominees on the Tokyo Cement board - four Japanese and Mr. S. V. Wanigasekera, a former Chairman/CEO of Ceylon Tobacco Company.

Gnanam estimated cement consumption last year at 2.1 mt., up 10% from the previous year. He said that increase in construction of both residential and non-residential buildings by the private sector had contributed most to the high growth in the construction sector. This complemented the construction activities under public sector infrastructural development projects, he said.,

He reported that several new players have entered the "seemingly lucrative" cement market in Sri Lanka during the year under review. Most of them were "mere bagging operations" with less significant value addition.

"Higher imports and additional output owing to increased capacity, saw severe competition in the market. With several more regional companies planning to set up operations in Sri Lanka, competition is expected to increase substantially," he said.

Gnanam said that manufacturers in the South East Asian region, caught up in a severe economic crisis, had begun to dump sub-standard cement at cheaper prices. He attributed this as the primary cause for unhealthy competition in the market.

He said that Tokyo had responded to these challenges successfully by commissioning their 500 million-rupee ultra modern Fuji cement plant. This will increase their capacity by 300,000 mt. per annum, he said.

He expected greater prospects for the domestic cement industry due to promising growth potential in the construction sector. At present 40% of the country’s cement requirements are met from imports at a substantial cost of scarce foreign exchange. Gnanam alleged that sub-standard cement was part of these imports and the unsuspecting public became the final victim despite temporarily enjoying a marginal price advantage.

Tokyo’s Joint Managing Directors, S. R.Gnanam and K. Yanagihara said that although consolidated turnover had improved by only 2% to Rs.1.76 billion during the year under review, the performance during the year "was the most outstanding in the company’s history."

They said that part of the impressive performance could be attributed to gains made by cheaper raw material prices. But the key contributor to the significant growth was the substantial improvement in efficiency and productivity backed by encouraging cost reduction.

"It must be emphasised that these improvements were not achieved by compromising quality of our products or postponing capital expenditure. Instead, we identified and focused on core areas where effective management and higher performance were required and can be achieved," they said.

Tokyo had cut energy cost by 40% by using their own power plant during the year under review. This saving was achieved despite the increase in production due to greater reliance on self-generated power rather than the national grid.

The joint MDs reported that plans were under way to expand their jetty to handle larger vessels and improve discharging. They were also considering dredging from the present 8.6 metres to a depth of 11 metres to help reduce the cost of clinker transport.

Tokyo is now using its old plant exclusively to produce its new "Atlas" brand serving the lower end of the market.

"The cement market grew by 10% during the year under review and we anticipate a similar growth in the year 1999/2000. We believe that the cement market is getting mature with increased competition, which could be considered as a good sign for both the industry and customers," the joint MDs said.

The directors of the company are: Messrs. A. Y. S. Gnanam (Chairman), S. R. Gnanam (Jt. Managing Director), K. Yanagihara (Jt. Managing Director), M. Radhakrishnan, C. J. E. Anthonisz, E. Gunatunga, S. V. Wanigasekera, K. Sekiya, K. Matano and C. Takahashi.

Aitken Spence gets LOIs for two power projects

The letters of intent for two long delayed 20 MW power plants to be installed in Anuradhapura and Matara were signed last week between the concerned governmental agencies and the developers, the partners said.

The letters of intent have been issued to ACE Power Genera-tion Anuradhapura (Pvt) Ltd and ACE Power Generation Matara (Pvt) Ltd on the proposals submitted by a consortium led by Aitken Spence. The proposals were invited through a competitive bidding process.

The project companies will be owned by Aitken Spence & Co. Ltd., Wartsila NSD Power Develop-ment of Finland, the Commonwealth De-velopment Corpora-tion and major institutional funders.

Each plant is expected to generate 167 gWh per year using Lanka furnace oil to be purchased from the Ceylon Pet-roleum Corporation.

The authorities estimate the total cost of the power project to be around USD 42 million.

Based on the letters of intent, the negotiation of the power purchase ag-reement, the fuel supply agreement and the implementation agre-ement are expected to commence within two weeks.

The Anuradhapura plant is expected to be commissioned by December next year while the Matara plant will begin operations by February 2001, the investors said.

Foreign investors fuel July rally on CSE

After a 11 months lapse, foreign investors were net buyers on the Colombo Stock Exchange (CSE) with a net inflow of Rs.548.8 million in July, the CSE reported in its July monthly market report.

Foreign purchases accounted for 46% of the total turnover during the month while foreign sales accounted for 19%, CSE said.

The renewed foreign interest saw significant price appreciations during the month with the All Share Price Index moving up 10% (53.5 points) while the Milanka Price Index gained 16% (133 points) to close the month at 571.1 and 962.6 respectively.

CSE said that July turnover was Rs.2.1 billion while the average daily turnover had grown 94% to Rs.101 million. This compared with a year to date average a daily turnover of Rs.57.6 million.

Reporting that the market was relatively bullish during the month, CSE said that most South Asian markets had performed well during July. Bombay’s benchmark BSE Sensex index moved up 10% during the month while Karachi’s KSE index appreciated by 19%. In comparison Colombo’s ASPI moved up 10%.

The first Investor Service Centre (ISC) of the Colombo Stock Exchange which was opened in Matara on June 4 had posted a record Rs.5.3 million turnover on July 23. This centre has averaged a daily turnover of Rs.1.1 million during the month.

CSE said that there were 985 new Central Depository System (CDS) accounts opened in July with 82 coming from the ISC at Matara.

Giant multinational’s subsidiary launches ‘economy’ layer feed

Nutrena (Pvt) Limited, a subsidiary of giant feedmiller Cargill Inc. of USA which has a Sri Lankan operation at Ekala, has announced the launch of "Egg Champion", an advanced nutrition product for layers that the manufacturers claim provides higher yield and reduces the cost of eggs.

"Egg Champion is the result of a year-one cooperative research effort between our USA based scientists and our staff in Ekala," said Christopher Langholz, Managing Director, Nutrena. "Egg Champion is designed and priced to provide the farmer with the lowest feed cost per egg prevalent in the market. This is especially important as egg farmers are presently adversely hit by low prices and imports."

Nutrena claims that layer farmers will benefit from nutrition technologies recently developed at the company’s American research centre.

"Egg Champion’s special formulation increases productivity. It also lowers the total feed intake of layers, yet ensuring high quality eggs. The formulation is designed to provide eggs with wholesome, rich golden yolks that would be the delight of many a chef," a company news release said.

The key feature of Egg Champion is Nutrena’s mycotoxin prevention system that reduces losses due to fungal growths. In addition to conducting laboratory analysis for fungii, each bag of Egg Champion will have a preventive element, which will reduce the chance of feed being destroyed by fungus development on farms, it said.

At the launch ceremony Mr. Langholz announced the introduction of a special promotion - a feed holder for layers to be given free with every ton of Egg Champion purchased. The promotion will continue over the next four months.

Egg Champion is available at Nutrena dealers around the country, the company said.

Cement importers warned on use of ‘SLS’ mark

The Sri Lanka Standards Institution (SLSI) has warned cement importers against improper use of the SLS mark on Portland cement bags marketed in Sri Lanka.

Mr. C.D.R.A.Jayawardene, Director General/CEO of the SLSI said that the improper use of the SLS mark had arisen due to certain mis-interpretation of the terms and conditions under which this mark can be applied on products. He said that the SLSI had taken immediate steps to correct this situation.

SLSI explained in a news release that the quality of all locally manufactured cement is monitored under the "SLS" Product Certification Scheme and cannot be marketed unless a license has been granted for this product to carry the SLS mark.

Cement imported in bulk and bagged locally have also been granted licences to carry the SLS mark "based on intense and continuous monitoring and testing of the product."

Under this scheme Sanstha , Mitsui, Atlas, Ruhunu and Marine brands of cement had been granted licences to carry the SLS mark based on Specification for Portland Cement (SLS 107).

"Quality of all brands of imported cements are monitored under the Compulsory Import Inspection Scheme operated by the SLSI. All imported cement consignments have to be accompanied by a Quality Certificate issued by an accredited agency in the exporting country. In addition these consignments are subject to random checks by the SLSI to verify the conformity to Sri Lanka Standards Specification for Port Cement (SLS 107), SLSI said.

"Consignments of imported cement which are monitored only under the Import Inspection Scheme of the SLSI are not permitted to carry the SLS mark. No specific declaration can be made by the importers on these packs unless permission has been obtained from the Institution to make such a declaration."

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