Janathakshi Insurance to buy Sri Lanka's AIA general unit for Rs3.2bn

ECONOMYNEXT - Sri Lanka's Janashakthi Insurance Plc had reached a deal to buy the general business of AIA Insurance Lanka Plc for for 3.2 billion rupees, officials said.

The firm is expecting wrap up the deal by the 31 of the month, Chairman W Ellawala said.

The firm has already announced a 3.3 billion rupee cash call on shareholders to fund the purchase.

Chairman W Ellawala said the acquisition would help boost its market share by 6.5 percent to 17.5 percent of the general insurance business in the country.

Janashakthi group is the third largest insurer in Sri Lanka measured by gross written premium, Chief Executive Jude Fernando said.

Ellawala said AIA business will be integrated with existing business and the firm had experience in acquiring business, from a previous purchase of state-run insurer.

"We have the expertise to handle mergers and acquisitions and we want to grow through that process," he said.

The sale will allow AIA to focus on life insurance according to the strategy of its parent, the firms said in a stock exchange filing.

Both AIA and Janashakthi are listed companies. US$=Rs141

Sri Lanka to sign new deal with China Port City

ECONOMYNEXT - Sri Lanka will sign an amended agreement with a Chinese company that is reclaiming the sea near Colombo, involving the Urban Development Authority with a committee tasked to make changes to the deal.

Sri Lanka has already granted a six-month extension to a temporary agreement signed with Sri Lanka Ports Authority and the CHEC Port City Colombo (Pvt) Ltd.

A committee involving ministries in the new administration is expected to develop a tripartite agreement with CHEC, the UDA and the Government of Sri Lanka.

The committee has been tasked with making 'necessary amendments' and 'evolving a mechanism to ensure that conditions" in the agreement and the extension are followed.

There is an ongoing court proceeding in Colombo also over environmental concerns.

Prime Minister Ranil Wickremesinghe halted the reclamation project amid protests from environmentalists and fears of a Chinese laying claim to the reclaimed land.

China has been bullying and intimidating their neighbours such as Vietnam and the Philippines using its military power and artificial islands, which has scared other Asian countries about the intentions of the larger countries.

Sri Lankan stocks end firmer, banking shares lead

Reuters: Sri Lankan stocks closed at a one-week high on Friday, led by banking shares ahead of the announcement of September-quarter results, brokers said.

The main stock index ended 0.15 percent higher, or up 10.41 points, at 7,096.06, its highest close since Oct. 2.

"We have seen buying starting to come in to market from retail and institutional investors," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

"Things looks a bit more positive ahead of the September quarter earnings."

The index however fell 0.13 percent on the week as uncertainty ahead of Prime Minister Ranil Wickremesinghe's policy statement next month outlining the economic priorities of the newly-formed government weighed.

Foreign investors bought a net 2.93 million rupees worth of shares on Friday, but they have been net sellers of 3.05 billion rupees worth of equities so far this year.

Turnover stood at 1.02 billion rupees ($7.29 million), compared with this year's daily average of 1.11 billion rupees.

Shares in Dialog Axiata Plc rose 0.94 percent while DFCC Bank Plc gained 1.66 percent and National Development Bank Plc climbed 1.47 percent. 

($1 = 139.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal)

Sri Lanka 2016 spending estimated at Rs3,138 billion

ECONOMYNEXT – Sri Lanka’s total spending for 2016 is estimated at 3,138 billion rupees and revenue estimated at 1,789 billion, including foreign grants, according to the Appropriation Bill, a government spokesman said.

Cabinet of minister approved a proposal by Finance Minister Ravi Karunanayake to table the appropriation bill for 2016 in parliament on October 23, government spokesman Health Minister Rajitha Senaratne said.

Government revenue and spending estimates were prepared after talks with ministries, provincial councils and other parties, he told a news conference.

According to the total spending and revenue estimates, a deficit of 1,349 billion rupees needs to be bridged with foreign and domestic loans.

Govt considering special pricing formula for fuel

By Hiran H.Senewiratne

Ceylon Petroleum Corporation (CPC) sources stated that they had recorded losses during the past few months subsequent to the government reducing fuel prices in January.

The government will consider reducing fuel prices to be on par with world market prices, but due to recurring losses registered by the previous government, ‘We are hoping to introduce a special price formula to pass those benefits to the public, Deputy Minister of Petroleum and Petroleum Gas Dr Anoma Gamage said.

She said that with world oil prices seeing a decline in recent times, the government will consider passing on that benefit to the public.

But the CPC is grappling with many problems including employees in excess of requirements and inefficient business practices, which have stood in the way of the authorities going for a cost reduction, she said.

"We are now looking to improve efficiency and also introduce reforms to put the entity in good shape she said.

Meanwhile, petroleum analysts stated that the increase in crude oil prices in the world market last year did not warrant a corresponding increase in Sri Lanka.

Lanka IOC will not be reducing local petroleum prices despite world oil prices being reduced per barrel. At present world oil prices are at US$ 60 per barrel and the loss incurred per litre by the company has come down to Rs 15 from Rs 30,its sources said.

The company imports 20,000 tons of oil to the country per month and enjoys a 20 percent market share. Therefore, the company is not in a position to reduce local oil prices at any cost but will go ahead with their retail business expansions in the country, the sources said.

The price of a barrel of crude oil was US$ 45 when fuel prices were reduced in January.

The losses recorded by both institutions were due to taxes and a request had been submitted to slash taxes on fuel imports, our news source said. 

www.island.lk

Tea prices record negative variances in September

A further descending trend in the prices were witnessed during the month of September. The Sri Lankan Tea Sales Average for the month of September 2015 at Rs.368.18 shows a negative variance of Rs.71.33 when compared to the corresponding period of 2014.

All three elevations recorded negative variances with the biggest drop being recorded in the low grown elevation. The todate, January to September, Tea Sale Average is recorded at Rs.401.08, a negative variance of Rs.66.60 when compared to the same period of 2014.

Today's 1.06 mkgs of Ex-Estate teas on offer met with better demand. The Best Western High Grown BOPs were mostly firm. Improved teas in the below best category gained. The plainer teas with clean leaf gained whilst the others were easier. The Best Western High Grown BOPFs gained quite sharply as the sale progressed. There was special inquiry for the well-made clean teas, whilst the others were irregularly dearer following quality.

Nuwara Eliya BOPs were firm, whilst the BOPFs met with lower demand. The demand for Uva seasonal teas declined following quality whilst other clean leaf coloury teas were firm to dearer. The well-made Low Grown CTC teas met with good demand, whilst the high and medium CTC teas were irregular following quality.



There was reasonably fair demand for the 3.4 mkgs of Low Grown teas that were on offer at this week's auction. In the leafy category, select best OP1s were firm, whilst the better BOP1s advanced a few Rupees above last. Better OP/OPAs too gained a few Rupees on last. Better PEKOEs declined on last levels, however the bolder varieties advanced. The poorer BOP1,OP1 OP and OPAs tended a lower feature. In the small leaf category better FBOP and FBOPF1s advanced a few Rupees on last levels. Poorer FBOPs and FBOPF1s declined in value. Better Tippy varieties maintained however, the poorer sorts met with less demand.

There was reasonably fair demand from Russia, CIS countries and the other Middle Eastern Countries.

(John Keells Tea Market Report)
www.dailynews.lk

EPF shrinking at alarming rate - Deputy FM

Shirajiv Sirimane

The Employee Provident Fund (EPF) is shrinking and if remedies are not introduced, assets will have to be liquidated, Deputy Foreign Minister, Dr. Harsha De Silva said .

Speaking at the National Pensioners’ Day Symposium at the SLFI yesterday he said that in 2013 inflows to the FPF was around Rs. 80 billion while outflows were Rs. 50 billion. In 2014, the inflows were Rs. 90 billion while the outflows saw a steady increase of Rs. 65 billion. “This is an alarming trend.”

He said that one reason for this is that the retirement age of 55. “I think that this should be made 60 soon.” He also said that people being in jobs for a longer period will help the economy as they will become earners and not dependents of the government.

Speaker Karu Jayasuriya said that Sri Lanka is having the biggest public sector and also the biggest security forces, (as against the population.).

He said that Sri Lanka should soon formulate policies for a National Pension Framework.

The Pensions Department expects to create a productive dialogue on the topic ‘Towards National Pension Framework’ and to socialize the outcome of the dialogue. Public Administration and Management Minister Ranjith Maddumabandara, Malaysia’s Public Service Department Senior Deputy Director,Ool Goan Lee, several researchers and academics also participated.
www.dailynews.lk

New valuation to see rise in vehicle prices

Fizel Jabir jabirfizel@yahoo.com

The new valuation method gazetted by the government which is unrealistic will further jeopardize the Motor Industry and create a vehicle price hike, the industry said.

Vehicle Importer’s Association President (VIAL) and WTM Automobiles Managing Director Sampath Merenchige said the new valuation method will propel Japanese vehicle prices to rise by Rs 1 to 1.2 million. This could lead to the import of Japanese vehicles reducing by almost 90%, he said.

The government recently released a gazette notification introducing a set of new valuation guidelines for new and used vehicles to be imported to the country. The amount of tax will now be determined by the vehicle value declared by the Director General of Customs.

Ideal Motors Chief Executive Officer Chaminda Perera said the ultimate result of this new valuation set up will be the huge reduction of vehicle imports and the purchasing capacity of the people dropping drastically.

He said so far the valuation method was based on the manufacturer’s value (FOB).

“However manufacturers normally take into account the per capita income and many more factors when deciding the prices for different regions. If the authorities consider prices for valuation form high per capita income regions it will be unfair from the part of the customers”, he said.

Perera however said what he understands is that these regulations were meant for more or less for those who undervalue vehicles to evade tax payments. He also said that although the government did announce the relaxing of the loan-to value (LTV) to 90%, the Finance Ministry has not conveyed the decision to the leasing companies officially yet.

Eurocars Assistant Sales Manager Ruston Yusuf said they would not be affected by the new valuation guidelines because they directly import Porsche vehicles from the manufacturer. He however said they have yet to receive the new valuation guidelines for Porsche range of vehicles.

Chery Assistant General Manager Trevene Ferdinand said the new valuation is yet under discussion by the top management and it was too early to make any comment.

“However with the rupee depreciating and new valuation guidelines coming into play, the prices of all their Chery vehicles is likely to increase,” he said.

Customs spokesman Leslie Gamini said the new valuation comes to effect for LOC’s opened for vehicles after September 17. When asked as to how there were huge deviations in the new valuation of some vehicle categories he said he was unable to comment on that but assured that as per the guideline they base the valuation on the manufacturer’s price of the vehicle with the addition of freight and insurance cost.

He said as the Customs, their task was to enforce directives issued by the Finance Ministry. WTL Automobiles Administration Manager,Sunil Ranasinghe said the prices of electric vehicles will however not be affected because electric category does not fall under the purview of the gazette notification.

An official of AMW said the Suzuki Indian vehicle brands will not be affected by the new regulations. However the prices of Suzuki vehicles manufactured in Japan will increase.

Micro Cars Chairman Dr Lawrence Perera said their brands are likely to increase.
www.dailynews.lk

Janashakthi to buy AIA’s general insurance biz

Janashakthi Insurance Plc is buying global giant AIA’s Sri Lanka’s general business, in a multi-billion rupee deal.

Parties were tightlipped about the deal but AIA has convened a press conference today evening where an announcement was likely. A disclosure to the Colombo Stock Exchange from both parties is expected today as well. 

AIA’s general business assets amounted to Rs. 6 billion as at 30 June 2015 whilst in the life business it was Rs. 44.2 billion.

In the first half AIA’s general business had Gross Written Premium worth Rs. 1.97 billion up from Rs. 1.43 billion a year earlier. Net earned premium was Rs. 1.19 billion, up from Rs. 1.07 billion and total revenue was Rs. 1.35 billion, up from Rs. 1.16 billion. 

AIA general insurance business finished the first half with a net loss of Rs. 22.15 million, as against a profit of Rs. 59.3 million a year earlier.
www.ft.lk