Indrani Sugathadasa is on a mission to develop a transparent capital market that
encourages the masses to invest in national development. Yamini Sequeira reports.

The Chairperson, Securities & Exchange Commission (SEC) of Sri Lanka, Indrani Sugathadasa does not seem unduly worried about the recent volatility in Sri Lanka’s capital market. She attributes the fluctuations to the global economic scenario and the fact that foreign investors were pulling out of Sri Lanka and other regional markets.

“The foreign investors pulling out was a response to the gloomy financial position in some Western markets which concerned these investors. In this situation, the SEC quickly stepped in by allowing stockbrokers to extend credit on liquid assets. I’m glad to see that market correction is happening gradually. Capital markets by their very nature fluctuate and this is something investors are well aware of,” she points out, adding that post war, the SEC has been trying to do the most it can to boost the capital market and maintain transparency through changes in regulation and closer supervision of transactions.

While talking about the capital market, it is hard not to quiz the SEC chief about recent allegations of market manipulation by some investors and overheating in recent months. Needless to say, sudden buyouts and overnight dumping of shares found investors, companies, regulators and the media searching for answers.
“Yes, the market has spiked upwards recently due to the activities of certain players. Although the SEC has been called to take action, few people realise that our mandate is regulatory and as a legislator by nature; therefore, we do not interfere with market behaviour. However, if there are any such unwarranted movements, we will take firm action after due analysis, which is carried out by the Secretariat,” she assures.

The country’s capital market has had its fair share of publicity this year, both good and bad. A prominent investor was quoted as saying that insider trading without
malintention is acceptable, which set-off a heated public debate. Sugathadasa emphati­cally condemns this statement.

“It is wrong and misleading to make such statements because it will scare-away foreign investors and smaller, more serious investors. Insider dealing is not acceptable in any form in our market or in other capital markets around the world. Often, investors make statements like these for personal gain, without realising the damage it can do to the stock market as a whole,” she stresses.

She admits that certain cases require tough action and that mere enforcement of rules is not adequate. “We are looking at several cases of insider dealing. Once again, it is important to understand that this is a tedious process during which we have to unearth evidence, record statements and so on, which takes time whether it is in Sri Lanka or abroad,” she opines. “However, if proven we will not hesitate to take the strongest possible action against such violators,” she adds.

Her dream is to build a stable, transparent capital market with absolute integrity and to extend opportunities of investing in the stock market to everyone, including people in rural areas. She seems determined to achieve this during her tenure. This determination has prompted the SEC to investigate loopholes and seal them, while bringing in new regulations to establish a market that is above board on all counts.

She confesses that much of the SEC’s rules and regulations are over 25 years old, and keeping in mind the increase in size and sophistication of the market over the decades, these regulations need to be re-examined. This exercise is being carried out in consultation with World Bank officials currently, to allow greater civil and criminal powers to be vested in the SEC, to empower it to carry out market intervention if and when needed.

Meanwhile, the Colombo Stock Exchange (CSE) plans to expand its presence countrywide, encouraging the investor base to continue to expand. The nature of investors too has changed, along with the fact that investors from the north and east are showing greater interest in the exchange. A branch of the stock exchange is already operating in Jaffna and the SEC expects the CSE to venture to the east.

The SEC and CSE are exploring the possibility of entering into an agreement with the London Stock Exchange (LSE), which will enable almost 500 stockbrokers from regional markets to converge on Sri Lanka to trade on the LSE. Further, the SEC has introduced the ‘Central Counter Party’, which essentially transfers risk from buyers to sellers, serving to extend confidence to foreign investors while reducing the perception of risk in investing in the CSE.

As someone who claims never to have traded on the stock exchange, Sugathadasa is reluctant to offer advice to investors; but she utters words of caution: “Make informed decisions and avoid following others or indulging in the herd mentality when it comes to investing because each investor’s motivation is different. Instead, investors should examine a company’s financial stability and performance before investing in its stock. Most importantly, it is crucial not to consider the Colombo Stock Exchange as a betting ground to make overnight gains, but rather to see the stock market as a vehicle for medium to long-term investment.”

The current profile of the CSE has a greater emphasis on retail, which is not a favourable situation and she affirms that they are expecting greater foreign and institutional investors to return to the market before long. The establishment of a clearing corporation which is being fast-tracked would no doubt support this cause.

Moreover, the impending entry of several large IPOs will boost the market. In the recent past, some prominent IPOs have failed to attract investor interest and Sugathadasa attributes their failure to overpricing and a surplus of IPOs in the market, which has exhausted investors. Almost 50 IPOs were scheduled to enter the market in 2011.

Sugathadasa adds that it is necessary to investigate if funds raised by a company are being utilised for the purpose for which they were raised. This will protect investors further. “The market capitalisation stands at around Rs. 2.3 trillion and keeping in mind the projected doubling of per capita GDP by 2016, we hope to reach the five trillion rupee mark in market capitalisation by then. Though the target might seem ambitious, we are gearing up all our systems and processes to achieve that growth,” she adds.

Only one-third of listed companies were trading actively during the last few years, but she states that this is no longer true, as post war almost 200 companies have traded in some measure, with many ‘sleeping stocks’ being rejuvenated.

The path to the country’s capital market is, we’re told, being paved with good governance and infused with an atmosphere that is conducive to foreign investment. Moreover, the CSE is no longer seen as being expensive, as the PE of the stock market has come down to below 20 against a backdrop of healthy corporate performance, whereas it was over 25 in the past.

“A diverse group of people from totally different walks of life come to me and tell me that they are active investors in the stock market. They range from clerical workers, to medical professionals and housewives. Much of this interest is being facilitated by online trading, which offers complete privacy and convenience. There is also a greater element of middle class investors, which is heartening. Investing in the stock exchange can be fruitful if investors make careful, informed decisions without expecting windfalls overnight,” she concludes.

The interviewee is the Chairperson of the Securities
& Exchange Commission of Sri Lanka.

Source :

http://lmd.lk

Asia faces increased risks from the ongoing problems in Europe and the slowdown in the US. If the West were to be even weaker than expected – falling into a double-dip recession, for instance – this would take its toll on Asian growth prospects. Across Asia, we anticipate some decline in confidence and a softening in export orders given the challenges facing the US and the Eurozone. Based on annual growth rates, the overall picture in Asia is as before, a region moving from strong to slower but sustainable rates of growth. 

The Asian Development Bank (ADB) now sees growth of 7.5 per cent in both 2011 and 2012, lower than its forecasts five months ago when it expected 7.8 per cent in 2011 and 7.7 per cent in 2012. The message is a positive one, albeit with some concern about the impact from the West. “Continuing growth amid global uncertainty” is the overarching view of the ADB. Despite setbacks in the West spilling over into the region, the ADB says that the economies in developing Asia (i.e. excluding Japan) “are continuing their steady growth” and that “there are signs that growth in the region is shifting to more sustainable sources.” It sees a number of features helping growth so far this year, including stronger domestic demand and intra-regional trade. Domestic demand has been driven by rising income, increasing employment opportunities and investment.

Growth rates across Asia are slowing, but Sri Lanka is an exception. First, we highlight a few key takeaways from the second quarter 2011, which shows that strong domestic demand was a key growth driver. We then discuss an issue that is currently the subject of much debate and discussion – currency and the call for less intervention by the Central Bank in the foreign-exchange market.

Sri Lanka’s second quarter GDP growth rose to 8.2 per cent year-on-year, from 7.9 per cent in the first quarter. First, the agricultural sector rebounded strongly from the adverse impact of floods in the first quarter, recording 1.9 per cent year-on-year growth. This suggests that broad-based growth is back, with both the services and industry sectors expanding sharply – industry by 9.4 per cent and services by 8.8 per cent year-on-year. Second, external demand played a significant role in supporting growth in the second quarter, up 38.9 per cent year-on-year, while private-sector credit growth averaged approximately 33 per cent, reflecting robust domestic demand. Third, industrial growth was broad-based across all sub-sectors. The construction sector grew strongly, by 10.6 per cent year-on-year in the second quarter from 9.3 per cent in the second quarter of 2010, on account of infrastructure-development projects, which continue to be the main growth driver. Finally, wholesale and retail trade – which contributed 23.5 per cent to GDP and grew by 11.4 per cent year-on-year in the second quarter – boosted services-sector growth and was supported by steady progress in transport and communications, while activity in the banking, insurance and real estate was bolstered by the prevailing low-interest-rate environment.

In Asia, pressure on currencies is rising due to dollar demand in non-deliverable forwards, as investors rush to guard against more currency weakness. From the Korean Won to the Turkish Lira currencies are at multi-year or even record lows against the dollar, despite central bank action to stop them falling too sharply. In Asia, the Indian, Thai and Philippines central banks also intervened in the market last month. One thing is certain: emerging central banks certainly have the ammunition to defend their currencies.

Following the conclusion of the IMF’s seventh review for disbursing the next tranche of the USD 2.6 billion Stand-By Arrangement, the main concern raised was the need for less intervention in the foreign-exchange market by the Central Bank, thus allowing for greater exchange-rate flexibility. This IMF policy directive comes at a time when global risks could threaten investor appetite. Greater volatility in capital flows into emerging markets suggests that policy makers should maintain more flexible exchange rates to curb speculative short-term capital inflows. The Central Bank’s response to the IMF’s directive made it clear that its exchange rate policy will remain the same, indicating that intervention in both sides of the market will continue in order to maintain stability while allowing for what the Central Bank called “adequate flexibility”.  

The effectiveness of these actions has been questioned. Such action may succeed in softening depreciation, but it remains to be seen if it can win against the market. Central banks may not be terribly upset at the prospect of weaker currencies, as they provide a welcome boost to export competitiveness. If commodity prices continue to fall and inflation pressures recede, some economies may be more willing to accept a greater degree of currency weakness.

Source :

http://lmd.lk

Sheikha Lubna bint Khalid bin Sultan Al Qasimi, the most powerful Arab woman in the world, who is also the Minister of Foreign Trade of United Arab Emirates, will be arriving in Colombo tomorrow on a three-day official visit amidst renewed bilateral trade efforts between Sri Lanka and UAE.

She is visiting Sri Lanka on a special invitation extended to her by Minister of Industry and Commerce Rishad Bathiudeen on 23 May in Abu Dhabi.

Bathiudeen on 23 November announced her pending visit at his special meeting with top officials of the Department of Commerce of Sri Lanka.

Al Qasimi has been recognised by the Arab media as the most powerful among the Arab female power elite. With her background in IT, Al Qasimi, as the Head of Information Technology at the Dubai Ports Authority, developed a system that reduced cargo turnaround at Dubai Ports Authority from one hour to 10 minutes, thereby challenging the traditional role of Arab women in business.

The Middle East’s first business-to-business marketplace ‘Tejari’ (‘commerce’) was founded in 2000 by Al Qasimi and as a result, more than two thirds of Dubai’s Government purchases are now made online.

In November 2004 she was appointed the UAE’s Minister of Economic and Planning, becoming the first female to hold a ministerial post in the UAE. Al Qasimi also sits on Board of Directors for the Dubai Chamber of Commerce and Industry. In June 2008, she launched her own perfume line, ‘Mukhalat Sheikha Lubna,’ at Saks Fifth Avenue in Dubai.

Al Qasimi, who frequently leads UAE biz delegations abroad, will be leading a trade delegation to Sri Lanka from 23 to 26 November based on the invitation by Minister Bathiudeen, who paid her a courtesy call at the Abu Dhabi’s Ministry of Foreign Trade office in May 2011.

“In our May 2011 meeting, we both agreed that the ‘trading hub’ outlook of both economies could jointly be used to avail global market opportunities,” Minister Bathiudeen added.

During her visit, she will also lead the UAE-Sri Lanka Business Forum to be held in Colombo on 24 November.

Currently, UAE-Sri Lanka trade turnover stands at US$ 548.4 m (2010), of which Sri Lankan exports to UAE amounted to US$ 246.2 m, making UAE one of the key trading partners in the Middle East. During the May 2011 meet, Minister Bathiudeen informed Al Qasimi of the unrealised future trade potential between the two countries in the background of renewed bilateral trade cooperation efforts.

UAE has become the largest foreign direct investor to Sri Lanka among the Gulf countries. Among the well-known UAE conglomerates operating in Sri Lanka are Etisalat (mobile telecom), Al Ghuraia (real estate and manufacturing) and Al Futaim (automobile retailing), boosting Sri Lanka’s corporate sector outlook significantly.

Source :

http://www.ft.lk

AFP News

The Fairfax family has exited the Australian publishing giant which bears its name, ending its connection to The Sydney Morning Herald, a paper it controlled for close to 150 years.

John Brehmer Fairfax's investment company Marinya Media Thursday sold the majority of its shares in Fairfax Media -- a 9.7 percent stake -- for A$193 million (US$196 million), the Sydney Morning Herald said.

John Brehmer Fairfax retired from the company's board a year ago and the sale is expected to see his son Nicholas Fairfax also step down as a director.

Fairfax said the decision to part with the shares was not easy, but said he was selling to balance and diversify his investments and he was confident the current board could take the group forward.

"Importantly, I have every confidence they are fully aware of the need in our democratic society for a vigorous press producing quality journalism," he said in a statement.

"Fairfax does this better than anyone else and I am confident they will continue to do so."

Fairfax Chairman Roger Corbett said the company, which also publishes The Melbourne Age and The Australian Financial Review, would benefit from a broader shareholder base.

Fairfax, which dominates Australian media with Rupert Murdoch's News Ltd, owns websites, newspapers and radio stations.

It has faced sliding advertising and circulation revenues and earlier this year posted a full-year net loss of Aus$390.9 million on writedowns on its mastheads, well down from last year's profit of Aus$282.1 million.

The Fairfax family founded Fairfax Media in 1841 when they bought the Sydney Morning Herald, but they lost control of the company in 1990.

Source: 

http://ph.news.yahoo.com/australias-fairfax-family-cuts-newspapers-045854138.html

By Pam Benson, CNN Senior National Security Producer

Washington (CNN) -- For the first time, the United States is publicly accusing China and Russia of being the top offenders in the theft of U.S. economic and technology information, according to an intelligence report released Thursday.
The two countries are "trying to build their economies" on American research and development, said Robert Bryant, the National Counterintelligence Executive whose office wrote the report.
That office is responsible for mounting an integrated national counterintelligence battle against foreign intelligence threats to the United States, according to its website, and must compile such a report every two years.
An unclassified version of the report to Congress on Foreign Economic Collection and Industrial Espionage was released Thursday and focused primarily on the exploitation of cyberspace from 2009 to 2011.
"U.S. private sector firms and cybersecurity specialists have reported an onslaught of computer network intrusions that have originated in China," said the report.
It noted that analysts could not pinpoint specific responsibility for many of the intrusions, but Bryant said the source of the attacks could be government intelligence services, corporations or individuals.
The report was more specific about Russia.
"Russia's intelligence services are conducting a range of activities to collect economic information and technology from U.S. targets," it said.
"The nations of China and Russia, through their intelligence services and through their corporations, are attacking our research and development. That's a serious issue, because if we build their economies on our information, I don't think that is right," Bryant said at a news conference unveiling the report. He hoped that by pointing out the problem with the two nations, it will help spur solutions.
The latest intelligence community assessment comes on the heels of House Intelligence Committee Chairman Mike Rogers' harsh criticism of what he referred to as China's "predatory campaign" of stealing U.S. intellectual property. Last month, Rogers said the cyber attacks against the United States had reached "an intolerable level" and were harming U.S. national security.
In a statement released Thursday, Rogers said the report "once again underscores the need for America's allies across Asia and Europe to join forces to pressure Beijing to end this illegal behavior."
But foreign economic espionage against the United States isn't limited to China and Russia. The report indicates cyber attacks against America have come from dozens of other countries, but it doesn't name those nations.
The cost to both national security and private business is said to be considerable but difficult to quantify. Bryant said U.S. companies and the U.S. government produce approximately $400 billion of research and development each year. Depending on whose figures you go by, the losses each year range from $2 billion to as much as $400 billion -- estimates that Bryant called "meaningless."
The report broadly states that if a hostile nation such as Iran or North Korea illegally obtains U.S. technology with military applications, it could endanger American lives.
The FBI has prosecuted a number of espionage cases involving private companies, in which the economic impact was cited. The report gives the example of the Valspar Corporation, where an employee downloaded proprietary paint formulas that he planned to take to a job in China. The theft was valued at $20 million, representing one-eighth of Valspar's annual profit.
Tackling the problem isn't easy. Sean Noonan, a tactical analyst for Stratfor, said private companies are often reluctant to report such attacks to the government. "It's a business issue for these companies. If it goes public, they've seen in the past that it could hurt them, hurt their business more and more," said Noonan.
He also noted the privacy issues that inevitably arise when the government is involved in cyberdefense measures.
Another difficult issue is how much information the government can provide to private industries about cyber attacks without compromising secrets. Roger Kubarych, the national intelligence officer for economic issues with the National Intelligence Council, admitted it's a problem.
"There are going to be limits on how much information and expertise and knowledge the government and its expertise agencies can share with the private sector, but there's more available than there was," said Kubarych.
A senior U.S. intelligence official, who briefed journalists on the report on the condition of anonymity, said a public-private partnership is the key.
"There needs to be improved threat reporting by industry,cyber and there needs to be communication back by the government to industry as to best practices and how to prevent the theft of significant economic issues," the official said.
The outlook isn't particularly bright. According to the report, Russia and China will continue to lead the pack in attacking U.S. systems.
"We judge that the governments of China and Russia will remain aggressive and capable collectors of sensitive U.S. economic information and technologies, particularly in cyberspace," it said.
But the report also warns that changing economic and political developments around the world could lead other nations to steal U.S. economic secrets.
There's also the threat of disgruntled insiders within corporations or government agencies leaking sensitive information to activists, who publicly release the information, much like the dissemination of confidential State Department cables on the website WikiLeaks.

Source: 

http://edition.cnn.com/2011/11/03/us/china-russia-industrial-espionage/index.html?hpt=ibu_c2

By Jim Finkle

(Reuters) - At least 48 chemical and defense companies were victims of a coordinated cyber attack that has been traced to a man in China, according to a new report from security firm Symantec Corp.

Computers belonging to these companies were infected with malicious software known as "PoisonIvy," which was used to steal information such as design documents, formulas and details on manufacturing processes, Symantec said on Monday.

It did not identify the companies, but said they include multiple Fortune 100 corporations that develop compounds and advanced materials, along with businesses that help manufacture infrastructure for these industries.

The bulk of the infected machines were based in the United States and United Kingdom, Symantec said, adding that the victims include 29 chemicals companies, some of which developed advanced materials used in military vehicles.

"The purpose of the attacks appears to be industrial espionage, collecting intellectual property for competitive advantage," Symantec said in a white paper on the campaign, which the company dubbed the "Nitro" attacks.

The cyber campaign ran from late July through mid-September and was traced to a computer system in the United States that was owned by a man in his 20s in Hebei province in northern China, according to Symantec.

Researchers gave the man the pseudonym "Covert Grove" based on a literal translation of his name. They found evidence that the "command and control" servers used to control and mine data in this campaign were also used in attacks on human-rights groups from late April to early May, and in attacks on the motor industry in late May, Symantec said.

"We are unable to determine if Covert Grove is the sole attacker or if he has a direct or only indirect role," said Symantec's white paper. "Nor are we able to definitively determine if he is hacking these targets on behalf of another party or multiple parties."

The Nitro campaign is the latest in a series of highly targeted cyber attacks that security experts say are likely the work of government-backed hackers.

Intel Corp's security unit McAfee in August identified "Operation Shady RAT," a five-year coordinated campaign on the networks of 72 organizations, including the United Nations, governments and corporations.

In February, McAfee warned that hackers working in China broke into the computer systems of five multinational oil and natural gas companies to steal bidding plans and other critical proprietary information.

Symantec said on Monday that the Nitro attackers sent emails with tainted attachments to between 100 and 500 employees at a company, claiming to be from established business partners or to contain bogus security updates.

When an unsuspecting recipient opens the attachment, it installs "PoisonIvy," a Remote Access Trojan (:RATRATnull) that can take control of a machine and that is easily available over the Internet.

While the hackers' behavior differed slightly in each case, they typically identified desired intellectual property, copied it and uploaded it to a remote server, Symantec said in its report.

Symantec did not identify the companies that were targeted in its white paper and researchers could not immediately be reached.

Dow Chemical Co said it detected "unusual e-mails being delivered to the company" last summer and worked with law enforcers to address this situation.

"We have no reason to believe our operations were compromised, including safety, security, intellectual property, or our ability to service our customers," a Dow spokesman said.

A spokesman for DuPont declined to comment.

(Reporting by Jim Finkle. Additional reporting by Matt Daily and Ernest Scheyder; Editing by Gerald E. McCormick and Richard Chang)

Source: 

http://beta.finance.yahoo.com/news/cyber-attack-targets-chemical-firms-154813991.html

THE Australian dollar surged today, at one point hitting its highest level in more than a month, as investor confidence grew after European leaders introduced an outline of a plan to contain the region's debt crisis.

Still, the Australian dollar gains did reverse somewhat as the session wore on, with the currency still dependent on an upcoming interest rate decision by the country's central bank. Economists were largely split on what the Reserve Bank of Australia would do on Tuesday, with a weak reading on inflation earlier in the week giving the bank scope to cut rates.

At the same time, a breakthrough in Europe means a rate cut may not be necessary.

Strategists at BNP Paribas said that, given the market is almost fully pricing in a cut of 25 basis points by the RBA even though economists are largely split on what to expect, there is significant risk that the Australian dollar could surge in the near term even beyond its US session high of $US1.0753.

A decision from the RBA to hold steady could see the currency once again near its 30-year highs above $US1.1000 from July, said BNP.

At 4.15pm AEDT today, the Australian dollar was at $US1.0677, up from $US1.0485 late yesterday. Against the yen, the currency changed hands at Y81.025, up from Y79.73.

The sentiment from BNP was echoed by economists at Citigroup, who noted that market pricing of more than 100 basis points of rate cuts over the next year appeared to be misguided.

Citigroup reasons that, with still-low unemployment and the potential for global growth and a rebound in commodity prices, the bank may have to reverse any fine tuning cut.

"We do not expect the cut in official interest rates to herald the start of full easing cycle," said Citigroup chief economist Paul Brennan.

(Source: http://www.theaustralian.com.au/business/markets/australian-dollar-surges-on-european-rescue-deal/story-e6frg94o-1226179757131)

WTI oil futures open Thursday’s trading session at $92 a barrel as stock markets get a boost from news that a deal has been reached on the debt situation surrounding Europe.

Latest WTI Oil Price

US Light crude oil futures for December 2011 delivery was trading at $92.17 a barrel, 07.05 GMT this morning in electronic trading on the NYMEX. The US contract closed yesterday’s session down 2.5 percent at $90.71, mainly on higher than expected weekly US oil stocks data.

Europe Debt Deal

European leaders have finally reached a three pronged agreement which they say is vital to resolving the region’s massive debt crisis, the news pushed Asian stock markets back into a rally and oil prices are following suit.

“The stock markets, if you look at the Japan Nikkei index, are also reacting positively to this development. The macro event and the financial markets are leading and oil futures are reacting even though the crude inventories in the US have increased substantially.” said Victor Shum of Purvin & Gertz.

US crude oil stocks rose 4.74 million barrels to 337.63 million barrels in the week to 21st October, according to the EIA in a their weekly report yesterday, which was sharply higher compared to analysts projection of a 1.3 million build.

US WTI crude has jumped about 21 percent from a price of around $75 reached on 4th October and oil prices are following stock market patterns over the more traditional supply and demand indicators.

(Source: http://www.allvoices.com/contributed-news/10724852-wti-oil-trading-at-92-as-markets-get-boost-from-europe-deal)

Caltex said today it plans to close its propane de-asphalting unit (PDU) by the end of 2012, and its number one fluidised catalytic cracking unit (FCCU) by February 2013.

The decision to close the FCCU has been made because of higher demand for diesel and lower demand for gasoline, which has led to Caltex's two FCCU's operating well below capacity, the company said.

The timing of the closure of the number one FCCU is line with planned maintenance, which requires significant investment, Caltex said.

The PDU is used to make bitumen, and will be closed once Caltex begins importing bitumen and triples its storage capacity in NSW, the company said.

Affected employees will be deployed to other Caltex operations where possible, it said.

The closures will incur a cost of $77.7 million, pre-tax, which consists of $67.7 million in redundancies and impairments and $10 million in demolition costs.

Read more: http://www.news.com.au/business/jobs-to-go-as-caltex-closes-two-units/story-e6frfm1i-1226178172898#ixzz1bxh4IzFX

Economic Development Minister Basil Rajapaksa announced the launch of ‘Divi Neguma Phase II’ on 27 October at a special press conference held at the Economic Development Ministry yesterday.

The second phase of the ‘Divi Neguma’ programme targets more than 1.5 million families to boost the economy of low income groups. Here, Minister Rajapaksa speaks at the press conference. Senior Minister Athauda Seneviratne, Agrarian Services and Wildlife Minister S.M. Chandrasena, Deputy Economic Development Ministers Lakshman Yapa Abeywardena and Muttu Sivalingam and senior Government officials were also present – Pic by Daminda Harsha Perera

Source: http://www.ft.lk

The import and purchasing of essential goods at competitive rates carried out by Lanka Sathosa has now been taken under the Cooperatives and Internal Trade Ministry.

The move has been initiated following pressure from racketeering businessmen affiliated to Cooperatives and Internal Trade Minister Johnston Fernando.

A senior official from Lanka Sathosa said there was a possibility of an increase in the prices of essential goods that were offered at competitive prices at Sathosa outlets following the latest move by the Ministry.

EZY Racing which has become a dominant force in Sri Lankan motor racing, yesterday announced an exciting new alliance, spread over a 5 year period to the value of Rs 40 million, with international clothing giant Crocodile.

EZY Holdings MD/CEO Shafraz Hamzadeen (third from left) and Crocodile Singapore Assistant General Manager Lim Keng Boon shake hands in the background as Crocodile Lanka General Manager Murad Rahimdeen (third from right) and representatives from Crocodile Lanka look on. Also in the picture are EZY Racing Team Muditha Maddamarachchi, Sajad Shuaib, Ryan Todd, Shafraz Junaid and Rizvi Farouk posing on the car – Pic by Daminda Harsha Perera
“Precision as well as style, coupled with the casual aura of both our brands, complement each other, thus making us ideal partners, both off as well as on the Track. The affiliation is further enhanced due to the common values, perceptions and principles that both these significant brands stand for,” EZY Holdings Managing Director and CEO and Team Principal EZY Racing Shafraz Hamzadeen and Crocodile Lanka Ltd, General Manager Murad Rahimdeen said at a joint press briefing yestedray.
The affiliation which aims at bringing the much needed ‘glamour’ element into the local motor racing arena, thereby increasing its appeal, will focus on introducing co-branded racing merchandise and memorabilia which would enable local racing fans get closer and more interactive with the sport. It is the belief of these organizations that glamour and fashion tied to the sport will increase the following of the sport which in turn would bring sustainable development to the racing fraternity as a whole. With specialized co branded merchandise, Crocodile intends on dressing the team up with specific clothing for 5-6 main races during 2012 alone. The special driver wear would also be made available as limited edition merchandise by Crocodile through their partner outlets across the country. In addition, Crocodile will also introduce several EZY Racing associated, co branded clothing to enhance the relationship and penetrate the brands further downstream.
EZY Racing, which is the racing brand of the EZY Motor Racing Corporation, a subsidiary of computer giant EZY Holdings, have designed a successful business model in managing a professional motor racing team through partnerships with the EZY Racing brand. The EZY Motor Racing Corporation has succeeded in raising partnership/sponsorship packages to the value of Rs. 30 million during the course of this year alone. “As part of our corporate vision, we aspire to raise Rs100 million for racing by 2015”, said Hamzadeen, who intends taking Sri Lankan racing to the international tracks!
“When we launched EZY Racing two years back, many people didn’t believe in our vision. Over the last two years we have proved to many that motor racing can be driven as a successful business venture. This partnership with Crocodile serves to only strengthen that belief” said Hamzadeen.
According to Rahimdeen, Crocodile’s affiliation with sport is nothing new to the Crocodile Brand. “Crocodile International Pte Ltd was the official apparel partner for the Youth Olympics held in Singapore in 2010 at which over 5,000 athletes and officials from the 205 National Olympic Committees (NOCs) participated, along with an estimated 800 media representatives. We have made strategic corporate plans to partner sports in the long term. As sponsors it is important that we look at the sustainable development of the sport and the only way this could be done is to increase its following, making the sport more attractive and closer to its fans”.
Crocodile, the internationally acclaimed fashion brand was founded in Singapore by Dato’ Dr Tan Hian-Tsin in 1947. Today Crocodile is recognized as a leading lifestyle fashion provider across the globe with its dominance spreading across Japan to the Middle East, from Mongolia to the Fiji islands and all major cities in between. It’s affiliation with EZY Racing, could be viewed as the beginning of a new era of Corporate sponsorship for Sri Lankan Motor Racing.
Crocodile in its portfolio, caters to a cross segment, offering a variety of lifestyle products that include business as well as casual wear, with accessories for the entire family. Crocodile Lanka (Pvt) Ltd is the sole licensee for Crocodile Brand Apparels and Accessories in Sri Lanka since 2008, and is a fully owned subsidiary of Emerald International (Pvt) Ltd, Sri Lanka’s premier shirt maker.
Rahimdeen said that the total range of Crocodile Products will be made available through this partnership where the EZY Racers will be seen on different occasions wearing appropriate Crocodile clothing, which will be made available across the country.
Today Crocodile is very much a fashion statement and is available through its flag ship store in Bagatale Road, while leading fashion outlets around the country, who are mindful of providing their clients access to high end internationally acclaimed products, stock the Crocodile brand as well.
Hamzadeen sees motor racing as a sport which will one day make Sri Lanka proud and has invested extensively in order that they may attract quality drivers and provide them in turn with the best of resources, thus making racing a viable sport.
“We are confident that this latest partnership will serve to further enhance our image as well as that of Racing in particular, whilst giving the EZY racing team added impetus on the race arena. We are also confident that this partnership and its glamour will without doubt make other brands change their perception about partnering with motor racing,” Hamzadeen added.
Crocodile together with EZY Racing plan on rolling out an activity filled calendar which would focus on increasing the followership for the partnership through their countrywide dealer network.
“Our commitment to sport and thereby society is a common principle and attitude that the Crocodile brand observes locally as well as internationally,” said Rahimdeen.
EZY Racing which entered the sport in 2009, announced their vision for 2015; namely that of being the first Sri Lankan motor racing team to compete in the international circuits; and this affiliation is a definite step towards fulfilling their vision.

In keeping with its promise to make the institute more inclusive, the Sri Lanka Institute of Directors (SLID) took its ‘governance; message to the capital of the Central Province, Kandy, through a seminar on ‘Doing Business Responsibly’.

The seminar was organised in conjunction with the Chamber of Commerce and Industry of the Central Province (CCICP) and was held at the Hotel Suisse on 30 September 2011.

The seminar attracted over 100 keen and enthusiastic, participants representing a wide range of businesses and organisations in the Central Province.
Governor of the Central Province Tikiri Kobbekaduwa in delivering a short address urged the business community in the Central Province to act responsibly and contribute to the economic development of the country.

Welcome addresses were also made by Chamber of Commerce and Industry of the Central Province President Anuruddha Warnakula and Sri Lanka Institute of Directors President Ronnie Peiris.

The presenters at the seminar were Indira Nanayakkara (Head of the Department of Commercial Law, Faculty of Law, Colombo University), who spoke in general about the company as a legal entity and the minimum requirements to be complied with; Gunaratne Dissanayake (Senior Partner KPMG Kandy), who covered the minimum requirements expected of a business from accounting and tax angles; Jayantha Ratnayake (Plant Manager, Holcim Puttalam Cement Plant, Holcim Lanka Ltd); and Yukthi Gunasekera, Head of Corporate Communications, John Keells Holdings PLC, who spoke about the importance of sustainability development and corporate social responsibility.

Following the presentation, the participants posed a variety of questions and these were responded to by the presenters. Buoyed by the keenness shown by the participants in Kandy, SLID plans to take the ‘governance’ message to other parts of the country in an even more aggressive manner.

Long felt need of the business community in Kilinochchi, to have strong chambers to represent their interests, have been fulfilled with the re-launching of Kilinochchi District Chamber of Commerce, Industry and Agriculture (KDCCIA) recently in Kilinochchi.

It was with the support of Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) and LEEDS project of International Labour Organisation (ILO).
The Country Director of the ILO Donglin Li, FCCISL Senior Vice President Ajith Wattuhewa, Board Member Shiran Karunaratne, Secretary General, Dr. Thusitha Tennakoon, Chief Technical Advisor of ILO-LEEDS project Joseph Connory and Iqnatious, Incumbent President of Killinochchi chamber were also presented at the occasion.

Addressing the business community, Li highlighted the role of local entrepreneurs in reviewing the economy and creating more and more opportunities for the local community, especially for female headed households, the disabled and youth. He said that ILO’s LEEDS project which is now implemented in Vauvniya and Kilinochchi, is mainly targeting in developing the SMEs and creating opportunities for poor people by increasing the market access by linking them with major value chains.

Wattuhewa addressing the gathering explained the role which chamber should play in helping the local entrepreneurs to develop their enterprises, especially by assisting them in addressing the common issues, providing business support services and developing market linkages for local produce as well as introducing appropriate technologies. He gave an assurance to the business community in Kilinochchi that FCCISL would extend all possible assistance with its member chamber network of 52 in developing the enterprises in Kilinochchi.

A large gathering of business men and women, government officials and members of the Kilinochchi chamber were also present at the opening.

Sri Lanka has invited top level French business and industry delegations to the mega export exhibition ‘Sri Lanka Expo 2012,’ in addition to welcoming French investors to partner in our economic upswing, said Minister of Industry and Commerce Rishad Bathiudeen. 

Bathiudeen revealed this when he addressed Ambassador of France to Sri Lanka and the Maldives Christine Robichon and Economic and Commercial Counsellor, Embassy of France in Sri Lanka and Maldives Jean Louis Poli yesterday.
Robichon and Poli were making a courtesy call on Minister Bathiudeen yesterday at the Ministry of Industry and Commerce in Colombo. 

“I invite French business and industry delegations to the mega export exhibition, ‘Sri Lanka Expo 2012,’ organised by the EDB, to be held from 28 to 30 March 2012 in Colombo,” Minister Bathiudeen informed Robichon. “I believe that this will be an important step in strengthening our bilateral trade relations,” he added.
“France is now aware of Sri Lanka’s new post-war dynamism. Details on Sri Lanka’s new macroeconomic data should be made available to the business and investor community of France for their awareness,” Robichon said. “France wants to invest in Sri Lanka’s construction sector. We are also keen on power and energy sector, especially on energy efficiency.”

According to the Department of Commerce of Ministry of Industry and Commerce, France is one of the most important trading partners for Sri Lanka, accounting for US$ 310 m of total trade turnover in 2010.
Trade between the two countries has been fluctuating in both directions. In 2010, Sri Lanka reported a positive trade balance of US$ 8.06 m in its trade with France, which in 2005 stood negatively for Sri Lanka at $ 21.62 m.
The trade balance has been in favour of Sri Lanka during the last six years except 2005 and 2008. The main export item from Sri Lanka to France were apparels and clothing accessories accounting for 37% of total exports of 2010. The 2010 total exports to France recorded US$ 159 m.

The other major export items in 2010 were fish fillets (10.5%), bicycles and other cycles (6.3%), articles of vulcanised rubber (4.9%), frozen fish (4.1%) and pneumatic tyres (4%). In 2010, imports from France recorded US$ 151 m, electrical apparatus for line telephony/line telegraphy parts being the largest item imported by Sri Lanka from France at (27% of total imports).The other main imports were sugar, parts of aircrafts, uncoated paper and paper board, railway construction materials iron or steel, woven fabrics, plates, sheet, strip, rod and profile shapes or rubber and instruments and appliances used in medical surgical, dental and veterinary sciences.

Among potential Sri Lankan exports to France as identified by the Department of Commerce are garments (woven and knitted), rubber-based products, wooden toys and games, leather-based products (footwear, bags, etc.), gem and jewellery items, tea, ceramic products, essential oils, spices, coconut fibre-based products, handicraft/ornamental items and packaging items.

Also present during the Courtesy Call was Sri Lanka’s Deputy Director of Commerce Sidath Kumar

BDO has announced that Martin van Roekel, former Managing Partner of BDO in the Netherlands and currently a member of the network’s global leadership team, will succeed Jeremy Newman as CEO of the international BDO network. Jeremy will step down as CEO on 30 September 2011 after three years in the role.
During Jeremy’s time as international CEO, the BDO network has seen growth and development in many of the network’s firms, particularly in emerging markets, enabling BDO to be an increasingly important global accounting network. BDO has also made an important contribution to the ongoing debate about the future of the audit profession, in particular in discussions prompted by the European Commission’s Green Paper.
“I am grateful to all our BDO Member Firms, and specifically all their partners and staff, for giving me the opportunity to lead change in our network and to give BDO stronger central leadership and a more coordinated approach to the development of its business, whilst retaining our heritage and our respect for national culture,” says the outgoing CEO.
He was the Managing Partner of BDO Netherlands for six years and the Netherlands member of the network’s international Policy Board from 2003, becoming Chairman of the Policy Board in October 2007. Martin stood down from both positions at the end of 2009, and immediately joined the global leadership team as the network’s first Global Head of Network Development and CEO Europe. He has been closely involved in the significant changes in BDO over recent years.
Following the announcement of his appointment, van Roekel said: “I am delighted to be taking up this leadership role, and honoured to be following in the footsteps of Jeremy Newman. I intend to continue the same pace of development and level of activity set in motion and trust that I can contribute to the further growth and success of the BDO network.
It is important that the change process which has substantially promoted the positive development of BDO throughout the world is continued.”
The international Policy Board’s agreement to appoint van Roekel as the new CEO of BDO International Limited was unanimous and, thanks to his previous international roles, he is held in high regard throughout the network. He will take up the position with effect from 1 October 2011.
BDO is the world’s fifth largest accounting network with an excellent partner to staff ratio, with 46,930 people working with our clients and offering challenging, ethical and practical advice from 1,082 offices in 119 countries.

The Total Assets of the insurance companies have increased to Rs 241.86 billion at the end of the first six months of 2011 when compared to the Total Assets valued at Rs 222.24 billion at the end of year 2010.

The overall Gross Written Premium (GWP) Income for General Insurance and Long Term Insurance Businesses was Rs 38.59 billion which reflected a growth rate of 23.38% compared with the first six months of 2010.

The General Insurance Business has demonstrated a progress of its overall Gross Written Premium (GWP) Income during the 1st half of 2011 when compared to the same period of 2010.

The Long Term Insurance Business also showed a progress of its overall Gross Written Premium Income during the first half of 2011 when compared to the same of 2010.

The overall Gross Written Premium Income of General Insurance Business amounted to Rs 21.56 billion (1st Half 2010: Rs 18.18 billion) while the overall Gross Written Premium Income of Long Term Insurance Business amounted to Rs 17.04 billion (1st Half 2010: Rs 13.12 billion) during the first six months of 2011.

The insurance industry is regulated by the Insurance Board of Sri Lanka (IBSL) in terms of the Regulation of Insurance Industry Act, No. 43 of 2000 (the Act).

The IBSL was established to develop, supervise and regulate the insurance industry in Sri Lanka.

There are twenty insurers registered with the IBSL. Twelve of them are composite companies (dealing in both General and Long Term Insurance Businesses), six are registered to carry on General Insurance Business and two companies engage only in Long Term (Life) Insurance Business.

However, one company registered to carry on General Insurance Business is prohibited from engaging in insurance business since August 5, 2009.

Insurance Broking Companies as intermediaries, make significant contribution to the insurance industry.

Forty four insurance broking companies, registered with the IBSL currently engage in insurance broking business. Insurance Broking Companies mainly concentrate on General Insurance Business and their Total Gross Written Premium Income from both General Insurance Business and Long Term Insurance Business amounted to Rs 4.94 billion during the first half of 2011.

Sri Lanka is expected to have the largest inflow of foreign direct investment to the country this year. 

Central Bank Governor Ajith Nivard Cabraal said that they will attract an all time record of $ one billion FDIs.

In addition with the decision to allow Sri Lankan companies to borrow from outside, another US $ 196 million is expected to flow into the country. “In addition several Sri Lanka expatriates too have already started investing in Sri Lanka bringing in more investments to the country.”

“We have also been informed of many portfolio investments that are expected to come to the country which would bring in more investments,” the Governor said.

Commenting on the Banking sector he said the banks have tremendous scope to issue fresh Tier Two capital to provide loans through long term debt instruments. “We are happy to support to raise new Tier Two capital from which a substantial portion could come from foreign capital. We have encouraged the banks to issue capital through their balance sheets,” he said.

Governor Ajith Nivard Cabraal
Cabraal said Sri Lanka is getting its fundamental rights and are in looking at even better times in the future with people already seeing the fruits of development.

“We can see that people are enjoying better lifestyles and the country has comfortable levels of infrastructure which are contributing to the national level of uplift of the country. Of course there is more to be done,” the Governor said.

“The Lankan per capita income which was at US $ 2399 end of last year is expected to increase to $ 2700 by the end of 2011 which would be a fairly comfortable mark for a middle income nation like Sri Lanka,” he said.

He said the country is slowly and surely heading towards reaching a US $ 4,000 per capita income country by 2015.

“When we reach that our economy would be a 100 billion dollar economy which would be a large robust economy and it would be an exciting time for Sri Lanka,” the Governor said.

Here are some excerpts of the interview

Q: Some of the super powers and many countries in the world are facing financial crisis. Why not Sri Lanka?

A: Sri Lanka has been getting its fundamental rights in the past few years. Even when Sri Lanka was fighting a separatist war and oil prices were all time high the Sri Lankan economy never collapsed. We have developed firewalls from a long time to cushion risk. If you take US they have a fiscal deficit of nearly 10 percent. Their unemployment is nearly 10 percent. Their debt to GDP is more than 100 percent. Therefore they find it very difficult to go beyond the current 1.5 percent growth they have.

When you have a one and a half percent growth you need more investments to the country. However to have more investments you need more money to be pumped in.

But if you are already in the high end of your fiscal deficit there is very little one can do to obtain more money. In addition if your unemployment is high you need to maintain high growth.

Therefore they have got conflicting problems and a political system that is also not very conducive to growth which is hampering them. However in Sri Lanka we have the opposite. We have a stable political system and a stable government and low unemployment. Sri Lanka has reasonable physical deposits.

We have a debt to GDP ratio which is coming down every year. This way we have built a lot of spaces which has allowed us to move in the case of a risk outside as well.

This has helped us not to fall prey to wiggeries of the world and we are now in a more comfortable position to face these challengers and in the future too we would be more equipped to deal with challenges. Of course global shocks will hurt us but we will be able to survive.

This way we have built a lot of spaces which has allowed us to move in the case of a risk outside as well.

This has helped us not to fall prey to wiggeries of the world and we are now in a more comfortable position to face these challengers and in the future too we would be more equipped to deal with challenges.

Of course global shocks will hurt us but we will be able to survive.

Q: Can Sri Lanka sustain development?

A: Of course we can sustain it. We have left a substantial amount for public investment. One must remember it is not only the government that is investing even the private sector is involved on the back of government investments.

If you take the private sector investments in the Colombo Port development it would bring far reaching benefits to the country by way of employment creation, value addition, support new industries all of which would be towards the sustainability we are now moving in to.

Lowering of poverty levels, high education, better health levels, and better infrastructure environment would certainly help towards the countries forward march.

Q: How do you see the performance of the stock market?

A: It is very impressive. Now it is time for them to tell the world about all these successes.

We experienced this when we performed the road shows to raise the foreign bonds.

At this show, many people did not know Sri Lanka’s success story.

However when Sri Lanka’s success story was is told many people wanted to be a part of that story. When we wanted to raise US one billion we received subscriptions for 7.5 billion.

I think the Stock Market too should take a leaf from our success story and try to continue their forward march.

Q: Your comments on the speculation that the rupee would be devalued?

A: There is a wide range of stake holders who have ideas where the exchange rate should be. Central Bank provides stability to the economy and we have successfully done it.

Due to this our currency is a stable currency and don’t see an imminent danger of it being depreciated. We can’t manipulate it even if we want to do it.

Q: How do you see the development in India and China?

A: They are very stable and strong. In a world of uncertainty and negative growth these two countries stand out.

Both these countries being friends of Sri Lanka has given us huge opportunities to work closely and stand out in the world.

Q: What are your comments of the Sri Lanka’s bid to host the Commonwealth Games in Hambantota?

A: Sri Lanka was a rank outsider and was not even considered as a runner to the other host country Gold Coast Australia. Today we have more than a 50 50 chance and I am very confident that Hambantota would win this bid.

The proposed Finance Business Bill was passed by the Parliament and this new act will enhance the supervisory powers of the regulators over licensed finance companies and provide legal provisions to effectively curb unauthorised deposit taking persons and institutions.

According to the Central Bank this new Act will repeal and replace the Finance Companies Act, No. 78 of 1988, the current law relating to finance business.

Carrying on finance business without authority and accepting deposits without authority are made indictable offences by the Attorney General in the High Court. The provisions in the new Act are expected to enable more effective litigation action and be a deterrent to those who contravene the law.