Sri Lanka's UNP wants all SOEs under one holding company

ECONOMYNEXT - Sri Lanka's United National Party said it will place all state owned enterprises under a holding company, whose trustees will be appointed with the agreement of political parties and civil society.

"The government owns the biggest commercial enterprises in the country and this ownership is maintained on behalf of the people," the UNP said in its manifesto for the August 17 general elections.

"Unfortunately, for the past 50 years these enterprises have not been managed properly and therefore suffered huge losses.

"As a solution all state enterprises will be placed under holding company."

Both Malaysia and Singapore have holding companies to own and manage enterprises and also sovereign wealth funds.

The document said trustees to the asset holding company would be appointed after consultations with political parties and civil society organization.

State enterprises where the elected ruling class and bureaucrats plays around and do business with taxes extracted from the people. They make large losses frequently indicating that the gamble with people money is lost.

Some SOEs which benefit from the coercive power of the state also have monopoly powers restricting the rights of citizens to engage in similar activities like the Imperial Mercantilist Dutch East India Company and the British East India Company did.

SOEs also have looser financial regulations or 'financial independence' than government departments, allowing the elected ruling class to mis-use them more easily.

As a result the existence of state enterprises have become one of the key causes of corruption in the country.

The UNP which led the way in privatization sharply reducing opportunities for rulers and bureaucrats to steal and mis-use people's money in the 1980s now have 'policy fright' according to some critics.

The UNP said it will also create a pubic wealth trust to manage two retirement funds of private sector workers if it comes to power after August elections.

Both agencies will come under the scrutiny of parliament.

Sri Lanka’s EPF should be managed by public trust, Not allowing Central Bank to manipulate: Eran

(LBO) – Sri Lanka’s Employee Provident Fund should come under a public trust and not allowed to be manipulated by the Central bank, a former deputy minister said.

“This is one of the biggest frauds happening in the country and I have been saying this in parliament for the last five years,” Eran Wickramaratne, a former deputy Minister said.

The Employee Provident Fund of private sector workers is managed by the central bank which also manages government debt.

EPF funds are regularly invested in government debt.

“When the government wants to borrow money it is from these funds that they take it and they want low interest loans while the workers want a high yields for their funds,” Wickramaratne said.

“So who are the winners – is it not the government?”

“Now you see that there is a conflict of interest and a very unfair situation for the workers because after saving for 20-25 years when they are retiring they are saddled with low interest earning savings.” Wickramaratne added.

The UNP’s manifesto released targeting the general election of the August 17th said, if elected they will set up a public trust to manage the provident fund of private sector workers better.

“We are proposing the setting up of a public trust to manage these funds and then the government won’t be able to manipulate it,”

“Then the returns that the workers will be receiving will be protected,”

“The responsibility of the persons in charge of the trust would be to protect the rights of the employees and get the highest possible interest.”

Sri Lanka’s Carsons profits up, Beverage sector revenues affected: Annual Report

(LBO) – Sri Lanka’s Carson Cumberbatch PLC, with investments ranging from oil palms and beer to financial services said revenue were up by 22.8 percent to 785 million rupees in 2014/2015, even though beverage segment of the company was affected due to excise duty.

“Some of the tax proposals presented at the National budget early this year are considered to be, not business friendly,” Tilak de Zoysa Chairman of the Carson Cumberbatch said.

“However, we are confident that the Government will review some of these proposals based on the representations made by the Chambers of Commerce on behalf of the private sector.”

The company recorded a net profit of 645.7 million rupees, up by 71.8 percent compared to the financial year 13/14 where the company reported 375.9 million rupees of profit.

The group revenues rose to 19.7 billion rupees from 12.7 billion rupees in the same period 2011, the group said in a stock exchange filing on Thursday.

Pre-tax profits dived to 8,582 million rupees in the 2015, from 11,223 rupees reported a year earlier.

Net profits slipped to 5,981 million rupees this year from 7966 million rupees reported in 2014.

The Group profit attributable to equity holders of the parent for the year was 3,085 million rupees in 2014/2015 when compared to 3,799 million rupees in 2014.

Carson’s stock closed up 400 rupees on Thursday (23), July 2015.

Oil palms sector net profit was down 40.7 percent to 3.1 billion rupees during the twelve months under consideration, as against a profit of 5.3 billion recorded during the previous financial year.

The Oils & Fats segment reported a revenue of 29.2 billion rupees for the twelve months ended 31st March 2015, which is an increase of 12.7 percent against the figure reported in financial year 13/14.

Carsons says despite revenue growth, sector EBITDA for the year under review, at 211.6 million, declined by 69.2 percent year – on-year, largely due to the challenging business environment that prevailed in India as well as in the key markets in which the Malaysian entity operates in.

Profitability for the year was further impaired by net finance cost of 501.1 million rupees, leading to a loss before tax of 769.4 million rupees.

On account of claims made on capital expenditure incurred, the sector reported a deferred tax gain of 156.2 million against the gain of 55.6 million rupees registered in financial year 13/14.

The annual report says the sector reported an overall net loss of 619.1 million rupees for the year concluded, against a loss of 128.2 million rupees in financial year 13/14.

Carson’s beverage sector reported a 1.2 billion rupee profit for the year up four percent from 1.1 billion profit of the preceding year.

Carsons says the group’s margin had a negative impact on the back to back increases in excise duty of the government in the beverage sector.

In total the sector suffered a total cost of 640 million rupees due to the VAT exemption on the beer industry announced by the Government.

Carson’s asset management segment reported a profit after tax of 1.9 billion rupees on a revenue of 2.1 billion rupees for the year ended 31st March 2015 portraying year-on-year increases of 18.7 percent and 10.3 percent respectively.

Further to increased revenue, the sector profitability for the period also benefited from a 194.9 million rupees unrealized gain from the net change in fair value of short term financial assets, which is an absolute increase of 189.0 million rupees when compared against the gain registered during the previous financial year.

The leisure sector witnessed 11.1 percent year-on-year increase in revenue, to record a figure of 510.5 million rupees for financial year 14/15.

Carson say the overall room revenue however, was comparatively lower during the year, due to competitive room rates across the industry and a meagre growth in occupancy.

The leisure sector concluded the reviewing financial year with a net profit of 83.7 million rupees, which is a commendable increase of 33.9 percent compared to the previous year.

Real estate overall sector profitability for the year was at 365.1 million rupees which is an increase of 84.1 percent compared to the previous year.

However Carson’s Investment Holding and Management Service reported a loss of 119 million rupees in the twelve months ended 31st March 2015, compared to the 238 million rupees loss that was made in the last year.

Sri Lankan shares close at 2-month high

Sri Lankan shares rose for a third straight session on Friday and closed at their highest in two months, as expectations of strong corporate earnings and political stability after the parliamentary polls next month boosted investor sentiment.

The main stock index ended higher 0.78 percent, or 56.43 points, at 7,269.05, its highest since May 25.

Turnover was 1.61 billion rupees ($12.05 million), more than this year's daily average of 1.06 billion rupees.

Foreign investors, who have been net sellers of 401.4 million rupees worth of shares so far this year, were net buyers of 77 million rupees on Friday.

"Next week we could see some dip amid month-end settlements. But overall it's positive sentiment," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Analysts also expect local companies to report strong financial results for the April-June quarter.

Shares in Lion Brewery Ceylon Plc rose 1.81 percent, while conglomerate John Keells Holdings Plc rose 1.84 percent. 

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka Monetary Policy Review – July 2015 - Policy rates unchanged

Press Release By Economic Research Department -CBSL
Inflation, as measured by the year-on-year change in the Colombo Consumers’ Price Index (CCPI), remained at near-zero levels recording 0.1 per cent in June 2015 compared to 0.2 per cent in the previous month. Annual average inflation also continued to moderate further to 1.7 per cent in June 2015 from 1.9 per cent in the previous month. Meanwhile, indicating well contained underlying demand pressures, core inflation also remained low at 2.8 per cent in June 2015 on a year-on-year basis compared to 2.6 per cent in the previous month. It is expected that the current level of inflation will continue in the next few months mainly reflecting the benefit of downward adjustments in administered prices of fuel and energy. 

In the monetary sector, supported by the prevailing low interest rate environment, credit to the private sector by commercial banks grew by 17.6 per cent, year-on-year, in May 2015. In absolute terms, credit to the private sector expanded by Rs. 48.6 billion in the month of May and by Rs. 150 billion on a cumulative basis during the first five months of the year. Driven by the expansion in private sector credit along with increased bank borrowings by the public sector, broad money supply (M2b) increased by 15.4 per cent on a year-on-year basis in May 2015, compared to 13.9 per cent recorded in the previous month. 

With regard to the external sector, increased expenditure on imports relative to earnings from exports widened the trade deficit in May 2015. Gross official reserves, which stood at US dollars 6.8 billion at end May 2015, are estimated to have increased to US dollars 7.5 billion by end June 2015 largely representing the receipt of the proceeds from the International Sovereign Bond and Sri Lanka Development Bond issuances. At the same time, other regular inflows such as earnings from tourism and workers’ remittances also supported the external sector during this period. In addition to the US dollars 400 million made available to the Central Bank of Sri Lanka by the Reserve Bank of India (RBI) in April 2015, the Central Bank entered into another currency swap agreement with RBI on 17 July 2015 enabling the country to draw a further amount of US dollars 1.1 billion. The availability of this new facility strengthened the resilience of the external position of the country while supporting greater stability of the exchange rate. So far during the year, the Sri Lankan rupee has depreciated by 2.0 per cent to Rs. 133.70 against the US dollar. 

Meanwhile, the Department of Census and Statistics (DCS) has replaced the base year for national accounts statistics from 2002 to 2010, while upgrading the compilation methodology to comply with the United Nation’s System of National Accounts - 2008 (SNA 2008). According to the rebased national accounts statistics, real GDP growth for the first quarter of 2015 is estimated at 6.0 per cent with strong performance in the Services sector. 

Taking the above developments in the economy into consideration, the Monetary Board, at its meeting held on 23 July 2015, was of the view that the current monetary policy stance is appropriate. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 per cent and 7.50 per cent, respectively. 

Sri Lanka’s Keells Food Products Q1 profits up 86 pct: Interim Report

 (LBO) – Sri Lanka’s Keells Food Products Plc, part of the John Keells conglomerate said profits rose 86 percent to 70 million rupees in the June 2015 as revenues also grew.

The firm reported earnings of 2.76 rupees per share up from 1.48 rupees in 2014. The stock closed at 141.30 rupees on Thursday.

The firm is a manufacturer and distributor of processed meat, breaded meat and convenience food products which incorporated in 1982.

The firm said revenues grew 18 percent to 682 million rupees in the June quarter and cost of sales grew 15 percent to 486 million rupees allowing gross profits to grow at a faster 26 percent to 195 million rupees.

Selling and distribution expenses rose 21 percent to 66.7 million rupees.

Treasury to release Rs 544 m to pay GK depositors

The Treasury will release Rs.544.3 million needed for the first tranche towards the repayment of the defunct Golden Key Credit Card Company (GK) depositors.

This in response to a pledge made by the Finance Ministry that the government will mediate to settle this much anticipated and long over due issue.

The Cabinet on a proposal made by Finance Minister Ravi Karunanayake approved this payment and the money is now being dispersed.

Accordingly, the depositors who have had their account balance up to Rs two million will be paid within one month from today.

The balance will be repaid before the end of one year.
www.dailynews.lk

CSE nets US$ 58.2 m upto May 2015

Foreign investments in the Colombo Stock Exchange (CSE) recorded a net inflow of US dollars 58.2 million during the first five months of 2015.

This includes net inflows to the secondary market amounting to US dollars 33.5 million and inflows to the primary market amounting to US dollars 24.7 million. Meanwhile, net cumulative inflows to the CSE by 21July 2015 amounted to US dollars 33.1million.

According to Government Data, foreign investments in the government securities market recorded a net outflow of US dollars 237.3 million during the first six months of 2015 compared to a net inflow of US dollars 196.5 million during the corresponding period of 2014. During the first five months of 2015, long term loans obtained by the Government amounted to US dollars 372.0 million compared to US dollars 848.1 million received in the corresponding period of 2014. Meanwhile during the year, up to 21July 2015, the rupee has depreciated by 2.1per cent against the US dollar. However, based on cross currency exchange rate movements, the Sri Lankan rupee appreciated against the euro by 10.0 per cent, the Australian dollar by 9.2 per cent and the Japanese yen by 2.0 per cent, while depreciating against the pound sterling by 2.0 per cent and the Indian rupee by 1.6per cent during this period.

In May 2015, workers' remittances declined marginally by 3.5 per cent, year- on-year, to US dollars 537.7 million from US dollars 557.5 million in May 2014.

Meanwhile, on a cumulative basis, inflows from workers' remittances increased marginally by 1.0 per cent to US dollars 2,803.1 million during the first five months of 2015 in comparison to the corresponding period of 2014. However, workers' remittances are expected to gather momentum during the second half of the year.
www.dailynews.lk